The Attack of the Clawbacks!

Published: May 1, 2017

By Jim Lichtman
Read More

“[The] wheels of justice grind slow but grind fine.” — Sun Tzu

The board of directors of banking giant Wells Fargo announced “…that it would claw back an additional $75 million in compensation from the two executives on whom it pinned most of the blame for the company’s scandal over fraudulent accounts: the bank’s former chief executive, John G. Stumpf, and its former head of community banking, Carrie L. Tolstedt,” The New York Times reported (Apr. 10).

“Wells Fargo’s board said in a report issued on Monday,” The Times writes, “that Mr. Stumpf had turned a blind eye to the fraudulent accounts being created under his nose and that Ms. Tolstedt, who ran the branch system, had focused obsessively on sales targets and withheld information from her boss and the board.”

While the clawbacks – the forced return of cash and/or stock – is reported to be the largest in history, you might be interested to learn that the action is not rare or unusual.

According to a report in TIME magazine (Apr. 12), “Tyco sought to recover more than half a billion dollars [$505.8 million] in compensation and benefits from former CEO Dennis Kozlowski, and the parties settled for an undisclosed amount days before a trial in 2012. Kozlowski was jailed on charges including fraud in 2005.

“UnitedHealth Group’s former CEO William McGuire forfeited over $400 million in stock options to the SEC and his company to settle an investigation into options practices in 2007. (Total after repricing and penalties: $600 million.)

“Kobi Alexander, former CEO of tech firm Comverse, agreed to settle suits [$54 million] with the SEC and the U.S. Attorney General’s office in 2010 after investigations into stock-option backdating.

“The J.P. Morgan board cut CEO Jamie Dimon’s 2012 pay in half [$11.5 million], after the $6.2 billion London Whale loss.”

Along with their announcement, the Wells Fargo board released an independent report on the fraudulent sales practices and the consequences of those involved.

“The Board has taken numerous actions and supported management steps to address these issues. Wells Fargo has replaced and reorganized the leadership of the Community Bank. It has also eliminated sales goals and reformed incentive compensation. Centralization of control functions is being accelerated. The Board has separated the role of the Chairman and the CEO, strengthened the charters of Board Committees and established regular reporting to the Board by the new Office of Ethics, Oversight and Integrity. As a result of the investigation, the Board has terminated for cause five senior executives of the Community Bank and has imposed forfeitures, clawbacks and compensation adjustments on senior leaders totaling more than $180 million.”

Ethics, oversight and integrity should be standard operating practice at any institution whose work affects the trust and confidence of the public.

All NewEthical Hero.”


There are currently no comments. Why don't you kick things off?

Leave a Comment

Read More Articles
The Latest... And Sometimes Greatest
Fraud at the Polls?
The cancer of false conspiracies, lies, and cynicism eating away at the Republic—lies propagated and fed by the former president and his allies—has metastasized to...
September 20, 2022
“I. Do. Not. Like. Bullies.”
That’s Arizona Republican and Speaker of the House . . . correction, former Speaker of the House, Rusty Bowers who had been abruptly shown the...
September 16, 2022
Debate: How We’re Doing It Wrong
Every time another mass shooting occurs, the debate begins again. FOR GUN CONTROL – Nineteen, the number of mass shootings that have occurred since January...
September 13, 2022
Think It Can’t Happen Here?
     “If there’s one American belief I hold above all others, it’s that those who would set themselves up in judgment on matters of what...
September 9, 2022
The Man Who Made America’s Spirit Come to Life
Of all the books written by historian David McCullough the book I return to is a compilation of his speeches. The American Spirit offers exactly...
September 6, 2022
American Integrity in the Era of Trump
“A long habit of not thinking a thing wrong gives it a superficial appearance of being right and raises at first a formidable outcry in...
July 29, 2022