Wells Fargo current CEO John Stumpf, and outgoing community bank leader Carrie Tolstedt, are forfeiting tens of millions of stock compensation in the aftermath of widespread fraud from entry-level employees.
Now whether it was from knowingly tolerating (or even encouraging) fraud or just being massively incompetent I don’t know. To be honest I’m not sure which would be more disgusting, although part of me would be unsurprised if they were truly in the dark. It’d be entirely appropriate that a job-class that amounted to a closed social network of self-reinforcing wealth would be structurally ignorant of what’s happening below them.
Either way, their personal forfeitures are a good thing. It seeks to fulfill a long-overdue promise of executive clawbacks, or the idea that leadership performance should be judged by more than a company’s stock price.
It’s also not good enough. Stumpf and Tolstedt are having their names raked over the media coals, and getting grilled before Congress, because they got caught. When someone at my level of the economic food chain fails it’s the difference between food and no food, a roof or necessary medication. They’re still going to walk away with multiple millions. The critiques, and our examinations, shouldn’t stop at corporate governance or the incentive structure for firm executives.
I believe we should understand that this is a scripted competition written by those who reap obscene rewards even when they do not succeed. These are not simply bad actors in an otherwise fair set of economic arrangements whose victims were customers that ended up with unwanted credit cards or lost money. They were complicit in a system that exploited some 5,300 workers that were fired for meeting basic needs by cheating to meet Wells Fargo’s profit goals, as well as the unknown number of employees who were fired for failing to meet their basic needs by not cheating. It’s a fundamentally corrupt institution. That’s where our analysis, and proposed solutions, should lead us.