Wells Fargo's John Stumpf Is No Jeff Skilling

If you read the media reports, you’d think Wells Fargo’s outgoing CEO, John Stumpf, robbed the company blind and escaped with a whopping exit package: “Disgraced Wells Fargo CEO John Stumpf set for $134M exit.” “Wells Fargo CEO walks with $130 million.” “Wells Fargo CEO Stumpf retires with $134M.”

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The Wall Street Journal actually pegs the figure at $120 million, but that’s neither here nor there.

To say the headlines are overwrought and the rhetoric has reached lynch mob-like proportions, is putting it mildly. Everyone I talk to is ready to brand this guy a white collar criminal of the Jeff Skilling or Bernie Ebbers variety.

While I hate to put a damper on everyone’s favorite pastime of piling on the big bad corporate villain, many of the facts are being misrepresented by a click-hungry media that feeds off of executive train wrecks.

Regardless of the actual sum, Stumpf’s long-term compensation is neither retirement nor severance pay. It isn’t a golden parachute or an exit package. Rather, it’s the value of Stumpf’s stock, pension and 401K accumulated over 34 years with the bank and Northwestern National Bank, where he worked prior to their 1998 merger.

For the vast majority of his tenure, Stumpf was a senior executive and for nine years the CEO of one of the world’s biggest banks. Considering how many CEOs earn more than that in a year (David Zaslav of Discovery Communications made $156 million in 2015 alone), $120 million for 34 years of service is not extraordinary.

Meanwhile, Senator Elizabeth Warren, who called for Stumpf’s head during his little trip to Capitol Hill, tweeted that he is “leaving with all of his ill-gotten millions.” While none of us should expect Congress to pass up a golden opportunity to grandstand and gloat over a fallen CEO, it would help if their accusations were true.

In my view, not a penny of the $120 million in question appears to be “ill-gotten.”

On the contrary, Stumpf has voluntarily forfeited all of his unvested equity awards, valued at $41 million, as well as his 2016 bonus and salary. In addition, the vast majority of his long-term compensation – about $100 million in stock – already includes a drop in share value of about $25 million since the scandal hit.

Do the math. Stumpf has lost at least one third of the $200 million or so he would have walked away with had none of this happened. And according to a PwC analysis reported by the Journal, roughly 2% of the new accounts issued during the timeframe in question were fake, so their impact on Stumpf’s compensation were negligible.

In other words, any “ill-gotten gains” have since been wiped out, and then some.

Of course Stumpf should hold himself accountable for what occurred on his watch, but contrary to media reports, by voluntarily stepping down and relinquishing at least $45 million, he seems to have done that. Meanwhile the media’s mischaracterizations go well beyond the former CEO’s compensation.

In “For John Stumpf, the Buck Stopped Where It Should Have,” New York Times columnist James Stewart calls the Wells Fargo situation an “example of corporate governance working the way it should.” He says the board “moved swiftly and decisively” on the $41 million “claw back” and by “securing [Stumpf’s] resignation.”

While Stewart is usually on the money when it comes to this sort of thing, in this case, I don’t believe his conclusions are backed up by facts, at least as we know them today.

I have seen no evidence to support the implication that the board initiated either the claw back or Stumpf’s resignation. In testimony before the House, Stumpf said the claw back was his own recommendation, and a Journal report confirmed that. And it’s been widely reported that Stumpf voluntarily stepped down. Nobody refutes that.

If we’re going to hold the man accountable for the misconduct and overly aggressive sales culture that he presided over, we should also give him credit when it’s due.

In a TV interview on Friday, Stewart said Wells Fargo’s leadership was “slow to see this coming” and “isolated,” like an “echo chamber.” I couldn’t agree more, but that goes for the board, as well. From what I can see, both the executive team and the board terribly mishandled this crisis. The latter deserves neither a pass nor accolades.

The facts behind this train wreck are bad enough. There’s no need to embellish.