As first noted by Fortune Magazine, Tolstedt, 56, retirement package is expected to reach almost $125 million, including thousands of shares of Wells Fargo stock, options, and restricted shares.
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The announcement by Chief Executive John Stumpf came as the Senate Banking Committee said Monday night that it would hold a hearing next week on Wells Fargo’s sales practices, which pushed thousands of employees to open as many as 2 million accounts without customers’ authorization.
Wells Fargo has said it has responded swiftly to the crisis.
But the company’s shares have lost around 7 percent of their value since last week, when US regulators unveiled the fines against the bank, and it has ceded its position as the largest USA bank by market capitalization to rival JPMorgan Chase & Co. Wells Fargo also said it had fired 5,300 people over the past few years due to improper sales tactics.
The fine is the largest the agency has levied against a financial institution since it was formed five years ago. “This is a major victory for consumers”, said Los Angeles City Attorney Mike Feuer, touting the $50 million the city extracted from the bank. He also notes that the number of sacked employees – 5,300 – accounts for less than 2% of the bank’s total employee strength of 268,000.
It marked a significant shift by Wells Fargo, which prides itself on “cross selling” customers as many “products” – like checking accounts and debit cards – as possible. Cook predicts that many Wells Fargo customers may now take their business to other banks or credit unions. Executives highlight this so-called cross-sale ratio every quarter, according to the Associated Press.
The targets, pushed from the company’s top executives, included a program called go for “Gr-Eight”, a companywide push to get more than eight products per household – a level that was never reached.
“Our objective has always been and continues to be to meet our customers’ financial needs and drive customer satisfaction”, CEO John Stumpf said in a press release. In the wake of the unfolding story at Wells Fargo, Bove said a sea change could be coming to Wall Street.
Now Wells Fargo is also facing political repercussions.
Tolstedt led the Wells Fargo division that created the false accounts in question and in the past her pay was linked to “cross selling”. The ratio hovers around six, which means every Wells Fargo household has on average six different types of products with the bank. The CFPB declined to tell Fortune whether it had referred the Wells Fargo case.
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Stumpf, whose presence has been requested at the September 20 hearing, said Tuesday that the company has “significantly strengthened our training programs, controls and oversight”.
