By Emily Glazer 

CtW Investment Group, an arm of the union federation Change to Win, sent a letter to Wells Fargo & Co.'s board Friday calling for executive clawbacks, two new board directors and an independent review following the bank's sales tactics scandal, according to a copy of the letter reviewed by The Wall Street Journal.

The San Francisco bank has been on the hot seat since news spread that up to 2 million unwanted or fictitious customer accounts were opened by its employees in an effort to meet sales goals. The bank fired 5,300 employees over a five-year period and earlier this month entered into an enforcement action and paid a $185 million settlement to two regulators and a city official.

That action "evinces the board's troubling lack of attention to the company's human capital management practices. It also shows the risks such practices pose to the company's reputation, operations, and long-term value," according to the letter sent by CtW Executive Director Dieter Waizenegger.

A Wells Fargo spokeswoman said the bank had no immediate comment.

The bank's board was pushed deeper into the fray when Wells Fargo Chief Executive John Stumpf referred senators to directors' decision-making power when he was asked about executive clawbacks during a Senate Banking Committee hearing this week. "The board will consider that and I don't want to prejudice the board," he said.

Pension funds of CtW affiliates manage about $250 billion of assets and hold about 12 million Wells Fargo shares, or 0.25% of the bank's shares outstanding.

If Wells Fargo's board "fails to act quickly to contain the damage from the false accounts scandal" including the changes CtW calls for, then it said it won't support the re-election of directors at the bank's 2017 annual shareholder meeting, according to the letter.

CtW asked the board to "exercise its discretion" and claw back "at least part of" the pay from 2011 to 2016 received by former retail-banking head Carrie Tolstedt, who led the unit during the allegedly "widespread illegal" sales tactics. Ms. Tolstedt stepped down from her post in July and is slated to retire at year-end, the bank has said.

CtW asked the bank to appoint two new directors "who have demonstrated a deep understanding of and commitment to effective human capital management practices" such as experience in academia, consulting or corporate management. It noted that Wells Fargo's 15-person board includes seven directors who have served for more than a decade, and two for more than 18 years.

CtW also asked Wells Fargo to commission a "comprehensive review" of the bank's human capital management practices by an independent third party to be supervised by the board's Human Resources Committee. That review should focus, among other things, on assessing the bank's incentive pay, performance review and retention and promotion polices compared with the bank's long-term strategic goals.

Write to Emily Glazer at emily.glazer@wsj.com

 

(END) Dow Jones Newswires

September 23, 2016 10:44 ET (14:44 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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