Wells Fargo CEO John Stumpf’s grilling by bipartisan members of the Senate Banking Committee last week, following revelations of a sales culture run amok at the giant bank, was a public takedown of the silver-maned farm boy from Pierz, Minn.
Some question whether Stumpf’s reputation and job are in jeopardy in the ignominious aftermath of a $185 million settlement disclosed earlier in September by California and federal regulators over allegations that thousands of Wells Fargo employees, driven by management sales quotas, opened a couple million new accounts for customers without their knowledge. The head of community banking and a top compliance executive left weeks before the announcement.
But it will be Wells Fargo’s board, not the Senate, and big shareholders such as Warren Buffett, who will determine if Stumpf loses any of the tens of millions he’s made recently in compensation, or his job. Wells Fargo is down billions in market value in September.
Regulators, former employees and senators used words like “fraudulent,” “illegal” and “toxic” to describe the bank’s sales-crazy culture.
“Buffett will leave Wells Fargo alone if he thinks that the company is doing everything it is asked by the government and everything needed to make amends,” Bill Smead, portfolio manager at Smead Capital Management, told Bloomberg last week. “If he concludes that more is needed or that there is no way to be confident in management’s integrity, he will get involved.”
Jaret Seiberg, an analyst at Cowen & Co., said Stumpf’s guarded responses to senators and deferral to the board proved to be “a losing argument” and “just further inflamed the populist dislike of megabanks.”
At best, Stumpf has presided over a financial and reputational mess. He is the latest public poster boy for big-banking excesses. Wells Fargo’s stock has been eclipsed by that of titanic rival JPMorgan Chase. CEO Jamie Dimon, had his own near-corporate-death experience several years ago over a mortgage debacle and an institutional securities-trading scandal that cost the bank several billion but didn’t hurt consumers.
Stumpf, 63, CEO since 2007 and board chairman since 2010, joined then-Norwest Corp. in the Twin Cities in 1982 from then-First Bank.
The graduate of St. Cloud State University, who earned an MBA from the University of Minnesota, succeeded Dick Kovacevich as CEO.
Three Minnesota businesses make annual list of 100 biggest ESOP companies
The National Center for Employee Ownership reported that three Minnesota companies with 1,100 or more employees have made the organization’s annual list of the 100 largest companies that are at least majority owned by an employee stock ownership plan (ESOP).
They are Eden Prairie-based Lifetouch, the photography company; Thrifty White Pharmacy, the Plymouth-based druggist that focuses on smaller Midwest communities; and TPI Hospitality, the Willmar-based hotel developer and manager. The largest company is Publix Supermarkets with 182,000 employees.
The center, backed by academic studies, contends that ESOP companies outperform others and are a way to close the income-and-wealth gaps by giving employees stakes in their companies in addition to wages. Advocates say employee-owners also are more productive and loyal.
National Executive Director Loren Rodgers said, “The [top 100] … include many of the most awarded, innovative companies in the country. It is a model the economy would do well to follow.”