By Emily Glazer 

Wells Fargo & Co.'s board tapped Shearman & Sterling LLP to advise it on executive-compensation matters, amid calls to claw back certain executives' pay over the bank's sales-tactics scandal, people familiar with the matter said.

Robert Mundheim, a lawyer at the firm, is advising the Wells Fargo board on whether it should claw back pay of Chief Executive John Stumpf, Chief Operating Officer and President Timothy J. Sloan and former retail-banking head Carrie Tolstedt, one of these people said.

Ms. Tolstedt, who oversaw the unit responsible for the questionable sales tactics during the time in which regulators said they occurred, has stepped down from her position and is due to retire at year-end.

Mr. Mundheim represented the board of J.P. Morgan Chase & Co. during the time of the $6 billion trading loss known as the "London whale" scandal.

Wells Fargo's decision to allow Ms. Tolstedt to retire with tens of millions of dollars in compensation sparked heated questions during a Senate Banking Committee hearing this week. In response, Mr. Stumpf said that is a matter for the board's human-resources committee.

While Mr. Stumpf is chairman of the board, he isn't a member of that committee, which is led by Lloyd H. Dean, president and chief executive of Dignity Health, a San Francisco-based not-for-profit health-care system.

Mr. Stumpf said at the Tuesday hearing that the board committee had already met on the matter.

A Wells Fargo spokeswoman declined to comment.

Wells Fargo has been on the hot seat since news spread that up to two 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 this month entered into an enforcement action and paid a $185 million settlement to two regulatory agencies and the Los Angeles city attorney's office.

The board's human-resources committee has been discussing a range of options, but as of Thursday evening, it didn't have a proposal to present the full board laying out specific recommendations regarding executive pay packages, a person familiar with the discussions said.

This person added that there has been tension among directors over following "good corporate governance" versus the ticking clock the board faces to move quickly on the matter, given public calls for changes.

Wells Fargo faces another congressional hearing next week. Mr. Stumpf has been asked to appear before the House Financial Services Committee.

The bank's board is likely to make a decision regarding compensation before that hearing, one of the people familiar with the matter said.

Meanwhile, on Friday, a union-affiliated investment group and some public pension funds sent separate letters to the bank's board calling for clawbacks of executive pay following the sales-tactics scandal, according to copies of the letters reviewed by The Wall Street Journal.

CtW Investment Group, an arm of the union federation Change to Win, also called for the appointment of two new board directors and an independent review of what went wrong at the bank. Pension funds of CtW affiliates hold about 12 million Wells Fargo shares, or 0.25% of shares outstanding.

Scott M. Stringer, comptroller for New York City, urged the board's human-resources committee to consider taking back incentive pay "from those ultimately responsible for the systemic misconduct" at the bank, including Mr. Stumpf and Ms. Tolstedt.

Mr. Stringer oversees city public pension funds that own about 10.5 million Wells Fargo shares. In 2013, Wells Fargo agreed to enhance its clawback policy in exchange for New York City pension funds dropping a related shareholder resolution on the clawback measure.

Under the revised policy, bank directors can recover pay from employees engaged in misconduct and from executives who supervised them.

In its letter, CtW said the bank's sales practices "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.

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.

--Joann S. Lublin contributed to this article.

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

 

(END) Dow Jones Newswires

September 24, 2016 02:48 ET (06:48 GMT)

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