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Friday, September 23, 2016 2:19:31 PM
MIDNIGHT TRADER 2:18 PM ET 9/23/2016
Symbol Last Price Change
WFC 45.705down -0.015 (-0.03%)
QUOTES AS OF 02:18:48 PM ET 09/23/2016
02:18 PM EDT, 09/23/2016 (MT Newswires) -- Wells Fargo & Co.(WFC) should make several changes including implementing a policy that allows the bank to take back pay from executives and adding directors to address a recent scandal in which employees created fake accounts to meet or exceed performance standards, CtW Investment Group said in a letter to Stephen W. Sanger, the lead director for the bank.
The company should execute its executive clawback policy to recover all or part of the compensation given to Carrie Tolstedt, the executive in charge of the community banking unit where the fraudulent accounts originated, from 2011 to 2016, CtW said. Wells Fargo(WFC) also should add two directors who understand human capital management, and review its human capital management practices with a focus on incentive pay, performance reviews and retention.
Company policy and practices should be changed to ensure the board and managment are provided "reliable, uncoerced, systematic feedback" from employees and be sure they don't face retaliation for providing information to top brass, CtW said.
"Federal regulators' recent enforcement action against Wells Fargo(WFC) for creating millions of fake accounts
without customers' knowledge or permission evinces the board's troubling lack of attention to the
company's human capital management practices," the investment group said in a note to clients. "It also shows the risks such practices pose to the company's reputation, operations, and long-term value."
Of particular concern is that false accounts were created in response to sales and cross-selling goals set by the company, and that the board failed to address the effects of those policies when they were reported in the Los Angeles Times three years ago, CtW said.
About 5,300 employees have been terminated since the company was first made aware of the fraudulent accounts, and the board must take steps to address the risks created by its policies, the investment group said in Friday's statement. CtW has union-sponsored pension funds with about $250 billion under management and is a "substantial" investor in Wells Fargo(WFC).
"If the board fails to act quickly to contain the damage from the false accounts scandal, including adopting
the steps outlined here to address the long-term consequences of its human capital management practices,
we will be unable to support the re-election of directors at next year's annual meeting," CtW said.
Price: 45.71, Change: -0.01, Percent Change: -0.01
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