Hundreds Interviewed

The special panel of independent directors led the review, working with law firm Shearman & Sterling LLP. The lawyers, overseen by Stuart Baskin, drew on interviews with hundreds of employees, examined information on at least 1,000 firings and sifted more than 35 million documents, including thousands flagged by the bank in its own review. It also enlisted forensic consultant and data analytics firm  FTI Consulting Inc.

Among the board’s biggest findings was that two management styles that long drove Wells Fargo’s success also contributed to its undoing. Within the community bank, Tolstedt encouraged an aggressive sales culture, pursing rising targets that some managers complained weren’t attainable. Above her, leaders including Stumpf preached a hands-off approach, encouraging division chiefs to deliver results as they saw fit.

For branch workers, Tolstedt instituted “scorecards,” tracking how well they met targets. For higher-ups, there were daily and monthly “motivator reports.” Careers “lived and died” by those figures, the directors found. For years, as problems arose, Tolstedt defended the system, making only incremental changes, according to the report. As employees moved around the country, so did abuses, with some coaching their colleagues on how to improperly drive up their numbers.

Yet Tolstedt “resisted and rejected the near-unanimous view of senior regional bank leaders that the sales goals were unreasonable and led to negative outcomes and improper behavior,” the board members said.

‘Own It’

Stumpf, meanwhile, adhered to a mantra oft-repeated for empowering business heads within the bank: “Run it like you own it.” He was especially hesitant to second-guess Tolstedt, who had followed him up through the ranks and whom he regarded as the “most brilliant” community banker he had ever met, the board said.

“Stumpf was by nature an optimistic executive who refused to believe that the sales model was seriously impaired,” according to the report. “His reaction invariably was that a few bad employees were causing issues.”

In late 2013, Stumpf reacted positively when told that roughly 1,000 community bank employees were being fired annually for improper sales.

“In his view, the fact that only 1 percent of Wells Fargo employees were terminated meant that 99 percent of employees were doing their jobs correctly,” the board wrote. “It does not appear that he initiated any follow-up investigation or inquiry” that year or the next.