Wells Fargo CEO quits amid scandal over bogus accounts, successor named

October 12, 2016
Silicon Valley

Embattled Wells Fargo Chief Executive Officer John Stumpf has stepped down in the wake of the far-reaching unauthorized accounts scandal, effective immediately, the bank announced Wednesday.

Stumpf, who presided over a culture that enabled employees to secretly open up to 2 million bogus accounts and fund them with customer money, retired as chairman and CEO. The bank’s board of directors appointed President and Chief Operating Officer Timothy Sloan, a longtime Wells insider, as CEO.

“While I have been deeply committed and focused on managing the company through this period, I have decided it is best for the company that I step aside,” Stumpf said in a prepared release.

Stumpf’s departure comes at a time when the bank is under heavy scrutiny from the U.S. Department of Justice and following a stream of congressional calls for Stumpf to step down. But whether his exit will be enough to benefit the San Francisco-based bank remains unclear, experts said.

“The resignation of the Wells Fargo CEO is really a culmination of bad press that the board simply could not overlook any more,” said Michael Yoshikami, a banking industry expert and president of Walnut Creek-based Destination Wealth Management. “It’s clear their perspective was that this was needed for Wells Fargo to move past the scandal.”

But the board may have proceeded at a too leisurely pace to placate critics, some analysts said.

“This is too little, too late,” said Ken Thomas, a Miami-based independent banking analyst. “The board knew they had to do this. Everybody knew they had to do it. I would have expected a lot more, such as bringing in somebody from outside of Wells to run the bank. But better late than never.”

Despite a “clawback” in which he was forced to forfeit $41 million in stock and salary, Stumpf will walk away from the scandal with a robust payday. The 34-year Wells veteran will not receive a severance package as part of his retirement. But he has accumulated $137.1 million in company stock, deferred compensation and a pension, according to Equilar, a San Mateo-based research firm.

Joe Cotchett, a Burlingame-based attorney who has filed a lawsuit in San Francisco on behalf of bank shareholders, says the board’s decision to enforce the clawback doesn’t go far enough... (To read the entire article, please click HERE)