NY comptroller pushes Wells Fargo to release details on pay incentives

NY comptroller pushes Wells Fargo to release details on pay incentives
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The New York State Comptroller in a letter urged Wells Fargo shareholders to push the bank to reveal the details of incentive-based payment policies amid a slew of sales scandals.

Thomas DiNapoli said Wells Fargo should explain how it offers rewards to employees for reaching certain sales quotas.

DiNapoli, a Democrat, is the trustee of the New York State public retirement fund, which holds a $722 million stake in Wells Fargo. The comptroller asked fellow shareholders in a Tuesday letter to support a measure at the bank’s April 24 annual meeting that would force Wells Fargo to issue a report on its incentive-based compensation system.

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“Incentive pay practices have been identified as contributing to the multiple crises at Wells Fargo,” DiNapoli said. “Investors need to know whether the company has taken steps to identify employees’ incentive-based compensation that could spur conduct that puts the bank, its customers and investors at risk.”

Wells Fargo has fallen under investigation by federal and state agencies after it opened millions of accounts for customers without authorization and sold thousands of other customers unnecessary insurance and interest rate-locking products.

The bank revealed last week that it's preparing to pay a fine of $1 billion to the Consumer Financial Protection Bureau (CFPB) and Office of the Comptroller of the Currency (OCC).

Tim Sloan, Wells Fargo CEO, said at the time, “I’m confident that our outstanding team will continue to transform Wells Fargo into a better, stronger company; however, we recognize that it will take time to put all of our challenges behind us.”

The CFPB and OCC have been investigating Wells Fargo over reports that the bank charged customers for auto insurance products they did not need, along with unnecessary fees to lock-in mortgage interest rates.

The Federal Reserve in January imposed strict growth restrictions and targeted four Wells Fargo board members for removal in response to the bank’s opening of as many as 3.5 million accounts for customers without their authorization while charging fees for the unwanted services.

The CFPB in September 2016 fined Wells Fargo $100 million for the unauthorized account openings.

“If investors don’t hear from Wells Fargo, we will be left to wonder when the next headline will inform us of a new scandal or more enforcement penalties,” DiNapoli said. “The board’s apparent failure to demonstrate effective oversight of these risky practices demands an overhaul of its directors.”