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Wells Fargo (WFC) Slashes Bonus for Executives Post Scandal
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Following Wells Fargo & Company’s (WFC - Free Report) $185-million settlement in Sep 2016 to resolve regulators’ claims of illegally opening millions of unauthorized accounts, the U.S. lender now plans to cut back 2016 cash bonuses for eight top executives and withhold stock awards received in 2014 by 50%. The clawback of bonuses will reduce Wells Fargo's bonus pay by $32 million.
Notably, eight top executives included the new CEO Tim Sloan and CFO John Shrewsberry as well. After the disclosure of malpractices related to the opening of around two million bank and credit card accounts without customers’ consent, Wells Fargo has been facing issues with clients as they are reluctant to conduct business with the lender. Following this scandal, new account openings slumped about 44%.
The allegation led to many setbacks, including the bank’s shattered image, numerous lawsuits; triggered federal and state investigations, and congressional hearings. However, the bank has undertaken many steps to restore its reputation, post exposure of the scam.
The actions, “though not related to any findings of improper behavior, are part of the board’s ongoing efforts to promote accountability and ensure Wells Fargo puts customer interests first,” stated Chairman Stephen Sanger. “We will continue to work to make right what went wrong and remain focused on providing the accountability and oversight that our customers, employees, and investors expect and deserve,” Sanger noted further.
Notably, Wells Fargo is planning to investigate accounts related in 2009 and 2010 as well. As per latest records, the back has returned around $3.2 million to customers which cover 130,000 accounts. The investigation is likely to resolve in Apr 2017, prior to its annual shareholder meeting of the bank.
Amid its crisis, shares of Wells Fargo gained 18.1% over the last six months; significantly underperforming the 29.1% growth for the Zacks categorized Banks – Major Regional industry.
Nevertheless, we believe that over the long term, investors will not be disappointed with their investment in Wells Fargo, given its diverse geographic and business mix, which enables it to sustain consistent earnings growth. Going forward, we believe that strategic acquisitions and the bank’s efforts to address current adversities will help expand its business and enhance profitability.
Wells Fargo currently carries a Zacks Rank #3 (Hold).
The PNC Financial Services Group, Inc. (PNC - Free Report) has been witnessing upward estimate revisions for the last 30 days. Also, the company’s shares have risen nearly 44.5% over the past six months. It currently holds a Zacks Rank #2.
JPMorgan Chase & Co. (JPM - Free Report) has been witnessing upward estimate revisions for the last 30 days. Over the past six months, the company’s share price has been up more than 38%. It carries a Zacks Rank #2.
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Wells Fargo (WFC) Slashes Bonus for Executives Post Scandal
Following Wells Fargo & Company’s (WFC - Free Report) $185-million settlement in Sep 2016 to resolve regulators’ claims of illegally opening millions of unauthorized accounts, the U.S. lender now plans to cut back 2016 cash bonuses for eight top executives and withhold stock awards received in 2014 by 50%. The clawback of bonuses will reduce Wells Fargo's bonus pay by $32 million.
Notably, eight top executives included the new CEO Tim Sloan and CFO John Shrewsberry as well. After the disclosure of malpractices related to the opening of around two million bank and credit card accounts without customers’ consent, Wells Fargo has been facing issues with clients as they are reluctant to conduct business with the lender. Following this scandal, new account openings slumped about 44%.
The allegation led to many setbacks, including the bank’s shattered image, numerous lawsuits; triggered federal and state investigations, and congressional hearings. However, the bank has undertaken many steps to restore its reputation, post exposure of the scam.
The actions, “though not related to any findings of improper behavior, are part of the board’s ongoing efforts to promote accountability and ensure Wells Fargo puts customer interests first,” stated Chairman Stephen Sanger. “We will continue to work to make right what went wrong and remain focused on providing the accountability and oversight that our customers, employees, and investors expect and deserve,” Sanger noted further.
Notably, Wells Fargo is planning to investigate accounts related in 2009 and 2010 as well. As per latest records, the back has returned around $3.2 million to customers which cover 130,000 accounts. The investigation is likely to resolve in Apr 2017, prior to its annual shareholder meeting of the bank.
Amid its crisis, shares of Wells Fargo gained 18.1% over the last six months; significantly underperforming the 29.1% growth for the Zacks categorized Banks – Major Regional industry.
Nevertheless, we believe that over the long term, investors will not be disappointed with their investment in Wells Fargo, given its diverse geographic and business mix, which enables it to sustain consistent earnings growth. Going forward, we believe that strategic acquisitions and the bank’s efforts to address current adversities will help expand its business and enhance profitability.
Wells Fargo currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
U.S. Bancorp (USB - Free Report) has been witnessing upward estimate revisions for the last 60 days. Further, the stock surged over 27% over the past six months. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The PNC Financial Services Group, Inc. (PNC - Free Report) has been witnessing upward estimate revisions for the last 30 days. Also, the company’s shares have risen nearly 44.5% over the past six months. It currently holds a Zacks Rank #2.
JPMorgan Chase & Co. (JPM - Free Report) has been witnessing upward estimate revisions for the last 30 days. Over the past six months, the company’s share price has been up more than 38%. It carries a Zacks Rank #2.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>