“Wells Fargo CEO Stumpf Retires with $134M”
Note: In addition to the video, please see the following article, also included at the above-referenced internet address:
“Wells Fargo CEO Stumpf Retires with $134M”
According to the article, John Stumpf, the embattled CEO of Wells Fargo, unexpectedly retired from the company effective immediately.
Stumpf’s move comes just weeks after he was grilled by two congressional panels over the way the bank handled an alleged scam where upwards of 2 million accounts were created by employees without the knowledge of customers. The accounts were allegedly opened so thousands of employees could meet aggressive sales goals set by management. Stumpf was widely criticized for the way he handled the questioning, pushing the blame to lower-level employees and not holding upper-level executives, including himself, responsible.
Stumpf, 63, is resigning as both CEO and chairman. He has been CEO since June 2007 and has worked for the company for 34 years. The fact that Stumpf, the company’s top executive, was also the chairman of the board was another point brought up by lawmakers questioning why the bank didn’t act sooner to deal with the widening scandal. The roles are split, now. The company’s president and chief operating officer, Tim Sloan, 55, will replace Stumpf as CEO. Sloan was head of the Wells Fargo unit that made loans to large corporate customers and not directly tied to the alleged consumer banking fraud. Stephen Sanger, a former Yoplait USA president and member of the Wells Fargo board since 2003, was named as the board’s non-executive chairman.
“I have decided it is best for the Company that I step aside. I know no better individual to lead this company forward than Tim Sloan,” Stumpf said in a statement.
While Stumpf doesn’t receive a special retirement payout, executive-pay tracker Equilar estimates he’ll walk with $134.1 million. The package remains that large even after Stumpf last month agreed to a $41 million clawback following a grilling he received from the Senate Banking Committee reprimanding him for not taking responsibility. He agreed to give up unvested stock, but still owns shares vested in previous years.
During his nearly four-hour testimony before the House Financial Services Committee last month, Stumpf was called upon several times to resign by representatives. Stumpf said at the hearing he wasn’t planning to resign, and that remaining at the bank and seeing through the reforms was part of taking responsibility. He also indicated such decisions are up to the board.
While Stumpf walks with millions, the fraud has been much costlier for the bank’s once-stellar reputation and for those who hold Wells Fargo stock. Investors have lost $23.1 billion in market value as the shares have fallen nearly 10% from when the scandal broke. Wells Fargo was formerly the most valuable U.S. bank but has since fallen behind JP Morgan Chase.
“As one of millions of Americans who has a Wells Fargo account, I found the bank’s conduct outrageous,” says Carl Tobias, law professor at the University of Richmond. “The bad corporate behavior justifies what happened to him.”
1. As the article indicates, before he retired, John Stumpf was both chief executive officer and chairman of the board of directors at Wells Fargo. In your reasoned opinion, is it appropriate for one individual to be both chief executive officer and chairperson of the board of directors at a corporation? Why or why not?
This is an opinion question, so student responses may vary. In your author’s opinion, a classic “conflict of interest” occurs when one individual is both chief executive officer and chairperson of the board of directors for a corporation. The board’s obligation is charged with the responsibility of overseeing the corporation’s employees and the corporation itself. How can this been done effectively if one person serves as both the “overseer” and the “overseen?”
2. As the article indicates, Wells Fargo’s president and chief operating officer, Tim Sloan, 55, will replace John Stumpf as CEO. Sloan was head of the Wells Fargo unit that made loans to large corporate customers and not directly tied to the alleged consumer banking fraud. Also, Stephen Sanger, a former Yoplait USA president and member of the Wells Fargo board since 2003, was named as the board’s non-executive chairman. Comment on the propriety of these appointments.
Tim Sloan, the new highest-ranking executive, was promoted from within the company. Wells Fargo certainly has the right to make such an appointment, but reasonable minds might differ in terms of whether real change in corporate culture can come about with such an appointment. The same could be said for Stephen Sanger’s selection as chairperson of the board of directors, since he was also promoted from “within the ranks.” Although promotion from within is often a good move, since it promotes and recognizes loyalty to the firm and a well-developed knowledge base unique to the company, external hiring is often preferred as a means to “shake up” corporate culture, something arguably very much needed in Wells Fargo’s situation.
2. In light of the fact that John Stumpf will retire with $134 million, has justice been served in this case? Why or why not?
This is an opinion question, so student responses may vary. Despite his departure, Stumpf still faces the possibility of civil and/or criminal liability for his alleged involvement in the “fake accounts” scandal.
“Gov. McCrory: Caitlyn Jenner Must Use Men’s Public Facilities in NC”
Note: In addition to the video, please see the following article included at the above-referenced internet address:
“NC Gov. Pat McCrory Would Relegate Caitlyn Jenner to the Men’s Room”
According to the article, Caitlyn Jenner will be required to use the men’s room at public facilities in North Carolina if she ever visits the Tar Heel State, Governor Pat McCrory said.
McCrory made the remark recently when responding to a question at the state’s gubernatorial debate, in which Democratic challenger Roy Cooper slammed the Republican governor for signing House Bill 2, dubbed the bathroom bill, which negates local anti-discrimination protections for LGBT people and bars people from using public bathrooms that don’t match the gender indicated on their birth certificate.
Jenner, who has become a leading advocate for transgender rights since coming out as a trans woman, came up during the heated discussion. When asked which restroom Jenner should be allowed to use, McCrory said, “In the private sector in North Carolina, she can go wherever the private sector wants her to, because we don’t want to be in the private business of the private sector.”
“If she’s going to a shower facility at UNC–Chapel Hill after running around the track, she’s going to use the men’s shower,” he said, referring to the University of North Carolina campus.
Jenner did not immediately respond to the media’s request for comment.
Cooper, the state’s attorney general, avoided a direct answer when posed the same question, instead saying the state shouldn’t be involved in making that decision and local governments should be trusted to handle such issues.
He vowed to repeal House Bill 2. The law has triggered a wave of cancellations in North Carolina, ranging from concerts and athletic events to plans by major corporations.
“We need a good jobs governor, not an HB2 governor,” Cooper said during the debate, at UNC-TV studios in Research Triangle Park.
1. Describe North Carolina House Bill 2 (HB2).
North Carolina House Bill 2 (HB2) is controversial legislation most known for requiring transgendered individuals to use the restroom corresponding to their gender at birth, rather than the gender with which they currently identify. The “bathroom law” portion of HB2 applies only to government-operated facilities.
HB2 contains other provisions that are less known to the public, perhaps due to the media’s failure to address the remaining portions of the law. HB2 eliminates an individual’s right to sue in state court for discrimination. It also forbids municipal and local governments from increasing the minimum wage.
2. As the article indicates, gubernatorial candidate Roy Cooper has vowed to repeal North Carolina House Bill 2 if he is elected governor. As governor, would he have the legal authority to repeal the law? Why or why not?
As governor, Roy Cooper would not have the right to strike down HB2. Change in the law would have to originate from either a) the North Carolina legislature’s repeal of it (although that is highly unlikely to occur if Republicans maintain control of the state legislature) or b) the United States Justice Department’s lawsuit against the State of North Carolina resulting in a federal court’s (most likely the United States Supreme Court’s) decision that HB 2 is an unconstitutional violation of the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution. The 14th Amendment holds that “(n)o state shall…deny to any person within its jurisdiction the equal protection of the laws.”
3. Comment on the propriety of North Carolina House Bill 2. In your reasoned opinion, is HB2 good law? Why or why not?
This is an opinion question, so student responses may vary. As mentioned in response to Video 2, Discussion Question Number 2, the crux of the United States Department of Justice’s lawsuit against the State of North Carolina is that HB2 violates the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution, denying the transgendered population “equal protection of the laws.” Historically, in order to justify discrimination against a certain category of individuals, the government must articulate a reasonable basis for so doing. During litigation, it will be the State of North Carolina’s burden to prove that the “bathroom law” portion of HB2 constitutes a “reasonable classification.”