Tim Sloan sued Wells Fargo & Co. for greater than $34 million, saying the corporate illegally withheld years of unpaid compensation after he stepped down as chief govt officer in 2019.
Sloan is in search of to drive Wells Fargo to honor a number of canceled inventory awards and a bonus he says he was promised, based on a criticism filed Friday in California state court docket. He’s additionally in search of unspecified damages for, amongst different issues, emotional misery.
The previous CEO led Wells Fargo from October 2016 to March 2019, a interval during which problems multiplied throughout enterprise traces and the financial institution was hit with pricey regulatory penalties, together with a Federal Reserve-imposed cap on progress that has but to be resolved.
Sloan claims in his swimsuit that these issues predated his tenure, and that he labored to appropriate them as CEO. He mentioned nobody on the board blamed him till they turned the topic of political and media criticism after his departure from the financial institution.
Wells Fargo is “depriving Mr. Sloan of tens of millions of dollars in deferred compensation he had earned during his career,” based on the criticism. “To this day, Wells Fargo has failed to identify anything Mr. Sloan did or failed to do that would justify its decision.”
Whereas it’s common for monetary companies to face authorized battles over deferred pay, it’s uncommon on the CEO degree. When Wells Fargo introduced Sloan’s exit, it described the transfer as “his decision” and mentioned it mirrored his “commitment” to the corporate, characterizations cited in Sloan’s criticism.
“Compensation decisions are based on performance, and we stand by our decisions in this matter,” a spokesperson for Wells Fargo mentioned.
Sloan, 63, took over Wells Fargo weeks after a scandal involving pretend buyer accounts erupted on the agency. John Stumpf, his predecessor who had run the financial institution since 2007, stepped down amid intense scrutiny from Washington and past.
Reform makes an attempt
As president and chief working officer, Sloan was Stumpf’s apparent substitute from contained in the agency. He rose by the wholesale arm moderately than the buyer division the place workers had created tens of millions of unauthorized accounts to satisfy gross sales targets.
After taking on, Sloan launched a sequence of reforms, saying in a 2018 Bloomberg interview: “You name it, we’ve changed it.” However as an insider, he confronted criticism from the beginning that he wasn’t the correct individual to repair the financial institution, regardless of being largely exonerated in a 2017 board investigation into the fake-accounts scandal. These objections grew louder as issues multiplied and regulators turned more and more — and publicly — annoyed with the tempo of the clean-up.
In March 2019, Sloan abruptly stepped down, saying on the time that the deal with him turned “a distraction that impacts our ability to successfully move Wells Fargo forward.” The board started an exterior seek for a substitute, and later that yr employed the present CEO, Charlie Scharf.
Since then, regulators have slapped penalties on a number of former Wells Fargo executives — however not Sloan — over their roles within the firm’s retail-banking scandals. Stumpf and Carrie Tolstedt, who led Wells Fargo’s neighborhood financial institution for almost a decade, each agreed to bans from the trade. Tolstedt was the one govt to be criminally charged over the difficulty and pleaded responsible earlier this yr to obstructing a financial institution examination.
Shares of the corporate rose about 8.3% whereas Sloan was in cost, in contrast with a 29% improve within the KBW Financial institution Index over the identical interval. After leaving San Francisco-based Wells Fargo, Sloan joined Fortress Funding Group in March of 2020. That very same month, Wells Fargo mentioned in its proxy assertion to shareholders that it had canceled a $15 million inventory award it had given him a yr earlier — “unlawfully” and “making a public show,” based on the criticism.
The agency “used Mr. Sloan as a scapegoat even though he was not responsible for the sales-practices abuses that prompted the congressional review, and despite the energy and resources he committed to meeting regulatory demands and righting the ship,” based on the criticism.
Wells Fargo agreed in mid-2021 to overview fairness awards from earlier years that had vested and had been as a consequence of be paid out, and later that yr notified Sloan that it had canceled these too, based on the criticism.
“Other than politically charged, financially motivated and factually unsupported rhetoric from the bank’s critics, there is no documented criticism of his performance regarding the outstanding regulatory matters or anything else prior to his retirement,” based on the criticism.
