Coming clean after a scandal is never easy. Wells Fargo's board has clawed back an additional $75 million in pay from former retail boss Carrie Tolstedt and ex-Chief Executive John Stumpf, who are being held responsible for aggressive sales practices that led to the $270 billion bank's embarrassing fake-accounts scandal. But an internal report released on Monday suggests there were red flags directors should have focused on earlier.
The report, conducted by independent directors with the assistance of law firm Shearman & Sterling, details a flawed management system and a warped sales culture. Wells gave wide leeway to business heads under the mantra "run it like you own it." Although the buck theoretically stopped with Stumpf, he was not perceived "as someone who wanted to hear bad news or deal with conflict," the report states. That mindset filtered down.