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A Call For Management Pay 'Clawbacks' At Wells Fargo

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CLSA analysts believe Wells Fargo & Co (NYSE: WFC) should institute clawbacks for the head of Community Banking (Carrie Tolstedt), clawbacks and/or pay reduction for the CEO (John Stumpf). But, the brokerage wants the CEO to be retained given improvements in top line and returns during his tenure.

"[T]he CEO should remain in our opinion given revenue, return, risk, and stock price outperformance versus peer over his nine years, and lack of evidence that unauthorized account openings were driven from the top," analyst Mike Mayo wrote in a note.

Under the CEO, Wells Fargo shares gained 27 percent versus a loss of 40 percent for the BKX from June 1, 2007 through September 15, 2016. There is no evidence showing that the CEO wanted the unauthorized opening of 2 million accounts that cost Wells Fargo an estimated $5 million.

Related Link: Wells Fargo Upgraded To Outperform, Baird Says $25 Billion In Lost Market Cap Is Enough

Mayo expects the closing of thousands of additional branches and the reduction of tens of thousands of branch jobs over the next several years.

The reputation of Wells Fargo came under the scanner after 5,300 employees opened an average of 377 unauthorized accounts over five years.

The analyst believes the bank should replace the head of the board's Corporate Responsibility Committee (Federico Peña), whose job is to monitor the culture and its reputation with customers and their complaints.

However, Mayo has an Outperform rating and $57 price target on the stock, which was currently up 1.12 percent to $45.94.

Latest Ratings for WFC

DateFirmActionFromTo
Mar 2021Morgan StanleyMaintainsOverweight
Feb 2021Raymond JamesMaintainsOutperform
Feb 2021JP MorganUpgradesUnderweightNeutral

View More Analyst Ratings for WFC
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Posted-In: CLSA Mike MayoAnalyst Color Price Target Reiteration Management Analyst Ratings

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