Wells Fargo CEO John Stumpf Still Faces Risks, Following $41 Million Clawback

Can $41 million in forfeited compensation buy John Stumpf job security at embattled Wells Fargo & Co.?

For now, there are no signs that he is contemplating giving up his roles as chairman and chief executive over the bank's sales-tactics scandal, according to people familiar with the matter. And there haven't been any formal discussions at the board about Mr. Stumpf's resigning from either of his positions, according to the people.

That is despite the extraordinary rebuke handed down by the board Tuesday night. The bank's board said Mr. Stumpf agreed to: forgo all unvested equity awarded to him, worth $41 million; not take a bonus during 2016; take no salary during an independent investigation by the board; and recuse himself from all deliberations related to the bank's sales-tactics scandal.

But Mr. Stumpf's position is far from secure. On Thursday, he will return to Capitol Hill for the second time in as many weeks, appearing before the House Financial Services Committee to explain the bank's allegedly "widespread illegal" sales tactics that led to as many as 2 million accounts opened with fictitious or unauthorized customer information. The bank has fired 5,300 employees over five years related to the bad behavior.

The board's investigation could be another potential factor in Mr. Stumpf's future at the San Francisco lender. It is expected to take a few months, and there is hope it could wrap up by year-end, people familiar with the board said.

It is likely that Mr. Stumpf would stay on through that process, but the situation could change depending on the board's findings, these people said.

How Mr. Stumpf handles his House appearance could also play into his longevity at the bank. The 63-year-old executive's performance before the Senate Banking Committee a week ago was widely viewed as flawed, in part because he wasn't able to show any substantive steps by the bank or by the board following the scandal. He also deflected many of the toughest questions. At the House hearing, Mr. Stumpf will be able to point to the board's most recent actions.

In a message from Mr. Stumpf sent to employees, the executive said he "should have acted sooner and more aggressively to correct weaknesses in our operations that allowed wrongful sales practices to occur in our retail banking business." He said he recommended to the board, and it approved, his forfeiting of about $41 million of stock awards, "reflecting years of performance dating back to 2013."

Wells Fargo released a statement late Tuesday night saying it "fully supports the decision of the independent directors...Our management team will cooperate fully and is dedicated to strengthening our culture and taking strong actions to ensure this conduct does not happen again."

Write to Emily Glazer at [e-mail]

(END) Dow Jones Newswires

September 28, 2016 13:15 ET (17:15 GMT)

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