Wells Fargo Discloses Carrie Tolstedt's Compensation, Answers If Any Will Be "Clawed Back"

Following today's dramatic grilling of Wells Fargo CEO John Stumpf in the Senate which culminated with Elizabeth Warren shouting at Stumpf that "You Should Resign, You Should Be Criminally Investigated"" moments ago Elizabeth Warren, and four Senate Democrats released answers from Wells Fargo Senior Executive VP Hope Hamilton to questions about compensation of Senior Executive Carrie Tolstedt, who as reported last week by Fortune would be departing the bank with total compensation of $125 million after her decision to retire in July, shortly before the bank's fraudulent practices involving the creation of 2 million fake client accounts was made public in a group run by Tolstedt.

With regard to her compensation, this is what Wells Fargo responded:

Wells Fargo is aware of various reports in the media regarding Ms. Tolstedt's compensation. To clarify, Ms. Tolstedt will not receive an award of approximately $125 million in stock options and restricted stock upon her retirement. No incentive compensation was granted as a result of Ms. Tolstedt's retirement, and none of her equity awards will be "triggered" or otherwise increased or accelerated by her retirement. Ms. Tolstedt will not receive any severance payment as a result of her retirement.

The bank provided the following breakdown of Toldstedt's existing stock holdings of WFC stock as well as outstanding compensation, which between her current share ownership ($43.6 million), her vested stock options ($34.1 million) and her unvested awards ($18.9 million), amounts to roughly $97 million.

This excludes the millions in pay she had received over the 27 years during which she was employed by the bank. All told, the amount probably sums up to the previously quoted figure of $125 million, although as per Wells' classification, the banks would likely have a difficult time clawing any of it back.

Which brings us to the next part of the letter, namely specific questions about whether compensation will be clawed back from the scandalous executive. Here are the relevant sections:

1.    Will Wells Fargo take action to claw back any or all parts of Ms. Tolstedt's incentive awards that were triggered by her retirement or that she received in the form of annual bonuses in any prior years?

No incentive compensation was granted as a result of Ms. Tolstedt's retirement, and none of her equity awards will be "triggered" or otherwise increased or accelerated by her retirement. As described above, the Board has the discretion to determine whether to cancel all or any portion of Ms. Tolstedt's unpaid restricted share rights or performance share awards under the performance-based vesting conditions within the applicable award agreements. The Board also has the authority to evaluate previously-paid incentive compensation, including prior annual incentive awards, under our Extended Clawback Policy. It will assess the relevant facts and circumstances, our award terms, and the Extended Clawback Policy to determine whether to cancel or clawback any incentive compensation.

2.    Will Wells Fargo take action to claw back any or all parts of any other senior executive's incentive compensation — including your own — as a result of the settlement with the CFPB and other entities?

As noted, the Board is responsible for this decision. The Board will assess the relevant facts and circumstances, our performance-based vesting conditions for unpaid equity awards, and our Extended Clawback Policy for previously-paid incentive compensation awarded to our Chief Executive Officer and other senior executives, as appropriate.

3.    Has Wells Fargo conducted any internal assessment of whether the clawback triggers created in 2013 and described in Wells Fargo's proxy statements apply to Ms. Tolstedt's incentive compensation that were triggered by her retirement, or that she received in 2016 or earlier years for any reason? Has the Human Resources Committee conducted such an analysis? If so, please provide us with a copy of this assessment.

No incentive compensation was granted as a result of Ms. Tolstedt's retirement, and none of her equity awards will be "triggered" or otherwise increased or accelerated by her retirement. As noted, the Board will assess the relevant facts and circumstances, our performance-based vesting conditions for unpaid equity awards, and our Extended Clawback Policy for previously-paid incentive compensation.

4.    Were you or any other Wells Fargo senior executives aware of the company's potential liability for the creation of the false consumer accounts prior to Ms. Tolstedt's decision to retire? Were these matters discussed by you, by the Board of Director's Executive Compensation Committee, or by any other company officials in the context of the timing of her retirement or the compensation that she would receive as part of her retirement package? If so, please provide all communications regarding these discussions.

Senior management and the Board were aware of the pending litigation, investigations, and discussions with our regulators relating to sales practices when Ms. Tolstedt indicated her decision to retire. No incentive compensation was granted as a result of Ms. Tolstedt's retirement, and none of her equity awards will be "triggered" or otherwise increased or accelerated by her retirement. Ms. Tolstedt will not receive any severance payment as a result of her retirement. No consideration was given by Mr. Stumpf or the Board to providing incentive compensation or awards as a result of her retirement.

5.    Although Ms. Tolstedt has announced her retirement, she plans to stay at the bank through the end of the year. Will Ms. Tolstedt be eligible for another annual incentive award, performance share award, or other long-term equity incentive award despite her announced retirement? If so, does the Board plan on offering Ms. Tolstedt such compensation?

Ms. Tolstedt is eligible to be considered for a 2016 annual incentive award. The Board is responsible for determining the amount of this award, if any, and will exercise its judgment and discretion to determine whether to decline to make an award

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In short, as we suggested earlier, following today's Congressional kangaroo court, nothing will change, and Toldstedt will walk away with million in "accrued" compensation, while Elizabeth Warren's rage will keep building leading to... precisely nothing.

Well's full response below (pdf link)