Bill O’Donnell was the terror of my grade school, or at least from grades one through three. He disappeared after that. I don’t know what became of him. I suspect he was sent to some kind of juvenile facility.
Bill O’Donnell would misbehave for no reason at all, just as a matter of principle. His brazenness was breathtaking. It seems that he would say anything or do anything, so long as it was something he was not supposed to do or say. On a near daily basis some nun would take Bill into the cloakroom and whack his knuckles with a ruler. More than one ruler was broken across his hands, which must have been made of steel. Bill would laugh it off and go on misbehaving, a cost of doing business. I call that a Bill O’Donnell moment.
That was back in the early 1960’s. Fast forward to the present time. A sociopathic corporation (is that a redundancy?) named Wells Fargo got caught doing something naughty, namely opening 2 million bank and credit card accounts in the names of individuals who never asked for those accounts to be opened. For this indiscretion, Wells Fargo was fined $185 million. That’s all of $9 per unauthorized account.
Can you imagine? I’ve seen 30 year employees fired for much less. The case comes to mind of a long time bank manager who was fired for using the bank’s Federal Express account once or twice of personal purposes (like that never happens in corporate America, right?). The real reason she was fired was because somebody wanted to get rid of her, for illegal reasons. Fortunately we were able to settle that case and avoid the risk of dismissal. The bank pretended that integrity was the most critical attribute expected of bank managers. Except when it comes to duping its own customers, apparently. Note: my client was not given the opportunity of paying $9 per transgression and moving on.
But that’s not what this post is about. It’s just that there’s just so much hypocrisy in this whole Wells Fargo story that I can barely contain myself. I tend to get sidetracked.
It has been widely reported that Wells Fargo is “clawing back” $75 million from the two wayward executives most responsible for the bank’s aberrant behavior. For those of you naive enough to believe that this somehow foreshadows an era of executive responsibility for corporate crimes, think again. First of all, neither of the two executives in question, former CEO John Stumpf and former Director of Community Banking (whatever that means) Carrie Tolstedt, have to dig into their own pockets. There are no claws in the “clawback.” All that is happening is that the bank is not letting Stumpf and Tolstedt cash in on certain stock options for 2016. In other words, this is $75 million that they never received. They are not paying back a dime. They are laughing all the way to the bank, or, in their case, from the bank.
Bill O’Donnell would be proud.
A couple of facts that I learned in connection with this story blew my mind. From 2011 through 2016, Stumpf was paid $286 million. That’s about $47.5 million a year. Tolstedt was paid $9 million last year, and she was due to receive $125 million when she retired.
These are fortunes. I am not using the word in the hyperbolic or figurative sense. These sums are literally fortunes, such that their heirs will lives of luxury for generations to come, without having to lift a finger.
But isn’t that what capitalism and the free market is all about? No. These people were employees. They never had a dime of their own money at risk, and they didn’t build a business or discover the cure for cancer. But Wells Fargo wouldn’t pay them so much if they weren’t worth it, right? Wrong. They run (but do not own) Wells Fargo, so they basically set their own salaries. What we are seeing here is organized thievery. Whose money is being stolen? If you are covered by a pension plan, have a 401-k or own shares in a mutual or exchange traded fund, Yours and mine, chances are pretty good that some portion of your money is invested in Wells Fargo.
There is something seriously wrong with our system. I have no problem with executives being well compensated, even to the point where they would be considered wealthy or modestly rich (if there is such a thing). The rules of society should be such that it’s hard and a relatively rare occurrence for a person to accumulate a fortune. It should be a reward for doing something remarkable and beneficial to society, not bilking two million of your employer’s customers.