Wells Fargo Setting the Stagecoach Thundering Again

Wells Fargo: Setting the Stagecoach Thundering Again 1
Wells Fargo: Setting the
Stagecoach Thundering Again
Mahendra R. Gujarathi, Bentley University
Samir Kumar Barua, Former Director, IIMA
“The reason we wake up in the morning is to help our customers
succeed financially and to satisfy all their financial needs. The
result is
we make money because of our focus on serving customers, not
the
other way around. This time-tested vision will forever be what
matters
to Wells Fargo. We’ll never put the stagecoach ahead of the
horses.”
— John Stumpf, in the 2011 annual report of Wells Fargo1
The September 20, 2016 hearing of the Senate Banking
Committee2 will be
remembered for the relentless grilling of John Stumpf,
Chairman and CEO of Wells
Fargo (hereafter, Wells Fargo, or the Bank). Senator Elizabeth
Warren (D-Mass.) began
with the question, “Have you returned one single nickel of the

millions of dollars you
were paid while the scam was going on?” As Stumpf stuttered
and fumbled in
responding to a series of incisive questions, she concluded, "So
you haven’t resigned.
You haven’t returned a single nickel of your personal earnings.
You haven’t fired a
single senior executive. Instead, evidently, your definition of
accountable is to push the
blame to your low-level employees who don’t have the money
for a fancy PR firm to
defend themselves. It's gutless leadership."3
The Senate Banking Committee hearing followed imposition of
fines on Wells
Fargo on September 8, 2016 by the Consumer Financial
Protection Bureau ($100
million), the Los Angeles City Attorney ($50 million) and the
Office of the Comptroller
of the Currency ($35 million). The reason for the fines (totaling
$185 million) was that
the Bank had allegedly opened over two million unauthorized
checking and credit card
accounts without the consent of the customers between May
2011 and July 2015. Wells
Fargo settled with the regulatory agencies without admitting or
denying the alleged
misconduct.4
The hearing of the House Financial Services Committee5 on
September 29, 2016
echoed views expressed in the Senate Banking Committee
hearing. Congressman
Gregory Meeks (D-New York) said to Stumpf, “I can’t believe
what I’m hearing here.
You're going to tell me there's not a problem with the culture"

at Wells Fargo. Patrick
McHenry (R-North Carolina) accused Stumpf of being “tone
deaf” for how he didn’t
-----------------------------
Copyright © 2017 by Case Research Journal and by Samir
Kumar Barua and Mahendra R. Gujarathi. All rights
reserved. The case was prepared by the authors for the sole
purpose of providing material for classroom
discussion. It is not intended to illustrate either effective or
ineffective handling of a managerial situation. The
authors would like to thank Professors Nader Asgary, Jill
Brown, Atul Gupta, Mike Hoffman, and Joseph
Weiss for their comments on earlier drafts of the case.
Research and editorial assistance of Richard Garwood,
Megan Pitkin, and Diane Wilson is gratefully acknowledged,
and so are the helpful and insightful comments
of three anonymous reviewers and the editor John Lawrence.
NA0467
This document is authorized for use only by Kenneth St Vincent
in MBA-635-Q5943 Ethics Corp Culture & Soc Res 20TW5 at
Southern New Hampshire University, 2020.
2 Case Research Journal • Volume 37 • Issue 2 • Spring
2017
grasp the impact the scandal could have on societal trust in the
banking system. Stumpf
was clearly on the defensive as he confirmed that Wells Fargo

had fired 5,300
employees in the last five years and that customers had been
refunded $2.6 million of
the wrongfully charged fees. However, he insisted: "We never
directed nor wanted our
employees, whom we refer to as team members, to provide
products and services to
customers they did not want or need."6
Under relentless criticism, Stumpf revealed to the House
Financial Services
Committee that he had recommended that Wells Fargo’s board
rescind $41 million of
unvested stock awarded to him, and $19 million to Carrie
Tolstedt, who led the bank's
community banking unit where the wrongful sales practices
(aggressive “cross-selling”
of products without customer authorization) occurred.7 Would
that be an adequate
atonement for what had transpired under their watch at Wells
Fargo? “You have
broken long-standing ethical standards inside the company. How
can you rebuild
trust?” asked Congressman Patrick McHenry (R-North
Carolina).8
EVOLUTION OF WELLS FARGO
Wells, Fargo and Company was founded on March 18, 1852 by
Henry Wells and
William Fargo. It began by offering banking and express
services in California. Over
the years, Wells Fargo got indelibly linked with the striking
image of a stagecoach drawn

by six thundering stallions. In 1857, it formed an Overland Mail
Company to deliver
mail using its stagecoach network. In 1905, Wells Fargo
established banking as a
separate business. The Bank survived the Great Depression as
well as the difficult
period of World War II.9 The prosperity of the 1960s saw the
Bank emerge as a major
regional bank in the western part of the U.S. By the 1980s,
when it started its online
banking service, Wells Fargo had become one of the top ten
banks in the U.S.
The Bank weathered the financial crisis of 2007-08 relatively
unscathed. In fact,
Wells Fargo used it as an opportunity to grow inorganically, by
acquiring Wachovia,
another bank which was facing unprecedented financial troubles
as a result of the
mortgage crisis. On October 3, 2008, in a dramatic takeover
battle, Wells Fargo
triumphed over Citigroup to acquire Wachovia for $15.1 billion.
The acquisition
allowed Wells Fargo to double the number of its branches, and
more than double its
total deposits. Wachovia’s extensive retail network in the
eastern U.S. complemented
Wells Fargo’s presence primarily in the western U.S., and
allowed it to become North
America’s most extensive distribution network for financial
services. In a conference
call10 announcing the acquisition of Wachovia, Richard
Kovacevich, the then chairman
of the board of Wells Fargo said, “Wachovia’s number one
industry position in service
with Wells Fargo’s number one ranking in sales and cross-

selling is unbeatable. But,
most importantly our competitive advantage is our people. We
share a common culture
with strong ethical values of doing what’s right.”11 Although
the Wachovia acquisition
was completed by December 31, 2008, it took three years to
fully integrate the
operations of Wells Fargo and Wachovia.
By the end of 2015, Wells Fargo had become a diversified
banking and financial
services company with assets of over $1.8 trillion and
approximately 265,000
employees. It provided banking, insurance, investments,
mortgages, consumer and
commercial finance through 8,700 locations, 13,000 ATMs, and
internet and mobile
banking. Wells Fargo’s vision and values statement12 in 2015
alluded to the size and
scope of its activities:
“We’ve become one of the nation’s largest financial
institutions, serving one
in three U.S. households and employing approximately one in
600 working

Americans. We have team members in 36 countries, serving 70
million
customers in more than 130 countries around the world. Forbes
magazine
ranks us among the top 10 publicly traded companies in the
world based on
a composite of sales, assets, profits, and market value.”13
The three major, fairly autonomous, segments of Wells Fargo’s
business in 2015
were: Community Banking, Wholesale Banking, and Wealth and
Investment
Management. The Community Banking Division offered a
complete suite of diversified
financial products and services to consumers and small
businesses with annual sales of
up to $5 million. Its loan products included lines of credit,
automobile inventory
financing, equity lines, equipment loans, education loans,
residential mortgage loans
and credit cards. Consumer and business deposit products
include checking accounts,
savings deposits, money market accounts, Individual Retirement
Accounts, time
deposits, global remittance, and debit cards. The Wholesale
Banking Division provided
financial solutions to businesses with annual sales exceeding $5
million. It provided a
complete line of business banking, commercial, corporate,
capital markets, cash
management and real estate banking products and services.
These included traditional
commercial loans and lines of credit, letters of credit, asset-
based lending, equipment
leasing, international trade facilities, trade financing, collection
services, foreign

exchange services, and treasury management. The Wealth and
Investment Management
Division provided a full range of personalized wealth
management, investment, and
retirement products and services. It also delivered financial
planning, private banking,
credit, investment management and fiduciary services to high-
net worth and ultra-high-
net worth individuals and families.
FINANCIAL PERFORMANCE,
STOCK RETURNS, AND EXECUTIVE COMPENSATION
The financial performance of Wells Fargo for six years (2010-
2015) is presented in
Exhibit 1. During this period, although its net revenues did not
change much, Wells
Fargo’s assets grew by 46% and net income by over 85%. By
early 2015, it had posted
18 consecutive quarters of profit growth. Wells Fargo
performed better than its
competitors. As can be seen in Exhibit 2, compared to Bank of
America, J. P. Morgan
Chase and Goldman Sachs, Wells Fargo’s Return on Assets
(ROA) as well as the
Return on Equity (ROE) were higher in most years. Historically,
its efficiency ratio –
the cost incurred to generate a dollar of revenue – had also been
low. In Q1 of 2016,
while the Bank’s efficiency ratio was 58.7%, that of JPMorgan,
Citigroup, and Bank of
America was 60.5%, 61.4%, and 75.9%, respectively.14
Of the three major segments of business, Community (i.e.,

Retail) banking
contributed most to the revenues, operating income and net
income of Wells Fargo
(see Exhibit 3). In 2015, the Community Banking division
contributed 57% of the
revenues, 59% of operating income and net income, and 51% of
the total assets of
Wells Fargo. In his letter to the stockholders in the 2015 annual
report, Stumpf said,
“Our time-tested business model – which produced a balanced
mix of net interest
income and noninterest income across more than 90 businesses
– allowed us to deliver
consistent performance despite the challenging environment.”15
Wells Fargo’s financial performance was reflected in the
increase in its stock price.
In July 2015, with market capitalization of about $300 billion,
Wells Fargo became the
most valuable bank in the world. Its stock outperformed the
broader benchmark KBW
NASDAQ Bank Index (BKX) consisting of about 24 leading
national and regional
2017
banks. An investment of $100 in the Bank’s stock at the end of

2009 would have
fetched $230 by the end of December 2015, earning investors a
compounded annual
return of 12.4% over the six-year period. For the same period,
an investment of $100
in the Bank Index, BKX would have netted investors $171, a
compounded annual
return of only 9.4%.16 Wells Fargo stock had also outperformed
the broader stock
market index over longer periods of time. For the decade ending
December 2015, its
stock yielded a 14.3% compounded annual return to the
stockholders compared with
the 7.3% for S&P 500 index.
The impressive financial and stock performance of Wells Fargo
was reflected in
the compensation packages given to its senior management. The
Human Resources
Committee (HRC) of the Board took into account the Bank’s
financial performance
(including comparison with peers), progress on strategic
priorities, strong and effective
leadership, business line performance (for business line
leaders), proactive assessment
and management of risks, and independent compensation
consultant’s advice in
determining executive compensation.17 In 2015, Stumpf (CEO
and Chairman) and
Tolstedt (head of community banking) received total
compensation of $19.3 million
and $9.1 million, respectively.
Wells Fargo’s exceptional performance stemmed, in part, from
its success in cross-
selling. In the Senate hearings, Senator Elizabeth Warren (D-

Mass.) referred to a
sample of reports from stock analysts, all recommending a buy
on Wells Fargo stock
because of the strong cross-sell numbers year after year. The
senator noted that Ms.
Tolstedt received more than $20 million in annual bonuses
during 2010 to 2015,
“justified by the company in certain instances because of the
‘strong cross-sell ratios’
in her division. That is a direct reference to the extraordinary
number of accounts
created by her division, many of which were never authorized
by customers.”18
WELLS FARGO’S VISION, VALUES AND CODE OF ETHICS
The vision of Wells Fargo was enunciated on its website as
follows:
“We aspire to create deep and enduring relationships with our
customers by
providing them with an exceptional experience and by
discovering their needs
and delivering the most relevant products, services, advice, and
guidance.”19
The five primary values that defined the foundation for Wells
Fargo’s actions were
described as follows:
“First, we value and support our people as a competitive
advantage and strive
to attract, develop, retain and motivate the most talented people
we can find.

Second, we strive for the highest ethical standards with our
team members,
our customers, our communities and our shareholders. Third,
with respect to
our customers, we strive to base our decisions and actions on
what is right for
them in everything we do. Fourth, for team members we strive
to build and
sustain a diverse and inclusive culture – one where they feel
valued and
respected for who they are as well as for the skills and
experiences they bring
to our company. Fifth, we also look to each of our team
members to be leaders
in establishing, sharing and communicating our vision. In
addition to our five
primary values, one of our key day-to-day priorities is to make
risk
management a competitive advantage by working hard to ensure
appropriate
controls are in place to reduce risks to our customers, maintain
and increase
our competitive market position, and protect Wells Fargo’s
long-term safety,
soundness and reputation.”20

Wells Fargo’s Code of Ethics and Business Conduct21
reiterated the employee
responsibility to protect the reputation and integrity of Wells
Fargo and asked them to
contact their manager, HR advisor, or Office of Global Ethics
and Integrity for help.
Employees could also report any concern regarding accounting,
internal accounting
controls and auditing matters directly to the Audit and
Examinations Committee of
the Board, and could call the Bank’s ethics hotline (called
“EthicsLine”) if “you see or
suspect illegal or unethical behavior involving Wells Fargo”22
The Bank’s Code of
Ethics and Business Conduct not only described the importance
of ethical behavior
but also provided a systematic approach for employees when
faced with an ethical
dilemma (see Exhibit 4).
BOARD OF DIRECTORS AND CORPORATE
GOVERNANCE23
In 2016, Wells Fargo’s Board of Directors consisted of 15
directors. Except for John
Stumpf, every board member was an independent director as
defined by the rules of
the New York Stock Exchange (NYSE). All standing
committees of the Board,
including the Human Resources Committee (HRC) that
determined the compensation
of senior executives, consisted solely of independent directors.

The Board had also
adopted Wells Fargo’s Codes of Ethics for its members. In
2016, NYSE Governance
Services, a subsidiary of New York Stock Exchange, bestowed
the Best Board Diversity
Initiative Award on Wells Fargo in recognition of the wide
breadth of experience,
industry, age, ethnicity, and gender the Board possessed. In
view of the financial
performance of the Bank and of Wells Fargo’s stock, the
shareholders approved
generous compensation to the Board of Directors. For 2015, the
compensation to
board members consisting of cash and stock awards ranged from
$279,027 to
$402,027.24
The offices of the Chairman of the Board and the Chief
Executive Officer were
combined, with Mr. Stumpf serving as Chairman and CEO. On
several occasions,
including the 2016 proxy statement, shareholders had proposed
a separation of the role
of CEO and Chairman of the Board. The justifications for the
proposal included: (a)
the worldwide trend of separating the positions of Chairman and
CEO of companies,
(b) weakening of leadership due to over-extension of duties that
may result in
inadequate oversight and (c) fundamental differences between
the roles of Chairman
and CEO and therefore the incongruity if the positions were
held by one person. The
Board advised the shareholders to vote against the proposal by
arguing that the Bank’s
governance structure was working effectively, and that the

Board’s Lead Director
provided effective independent oversight of management and
Board accountability and
responsiveness to shareholders. The Board also pointed out that
such a proposal had
been rejected by the shareholders eleven times in succession
already. The Proxy
Statements of the Bank from 2012-2016, which included some
proposals pertaining to
the efficacy of internal controls at the Bank, reveal that the
Board advised to vote
against every proposal from the shareholders in every year
because (a) the changes
required in the proposals were considered unnecessary and (b)
the policies and
practices of the Bank were robust and were reviewed and
monitored adequately.
JOHN STUMPF, CHAIRMAN AND CEO25
Life for John Gerard Stumpf, who received several accolades,
such as inclusion in
Bloomberg’s list of 50 Most Influential Business people in
2012, and Banker of the
2017

Year in 2013, started rather modestly. Born on September 15,
1953, he grew up as one
of eleven children on a dairy and poultry farm in Minnesota.
Stumpf would rise at 4:30
a.m. to collect eggs and would milk cows after school. “Even
though we were very
poor financially we learned the value of plural pronouns—us,
we and ours,” said
Stumpf. “There wasn’t a lot of time for I, me and my.” 26
Mediocre grades and limited
family finances required Stumpf to work as a bread-maker while
getting a bachelor's
degree in finance from St. Cloud State University. After
graduation, he worked as
a repossession agent at First Bank in St. Paul, Minnesota before
completing an MBA
degree in finance from the Carlson School of Management at the
University of
Minnesota.
In 1982, Stumpf joined Northwestern National Bank where he
held a number of
management positions before assuming responsibility for
Norwest Bank Arizona in
1989. He became regional president for Norwest Banks in
Colorado and Arizona in
1991. During the four years (1994-98) in which he was regional
president for Norwest
Bank Texas, he led Norwest’s acquisition of 30 Texas banks
with total assets of more
than $13 billion. In 1998, following the merger of Norwest
Corporation with Wells
Fargo, Stumpf became head of the combined entity -
Southwestern Banking Group

(Arizona, New Mexico and Texas). Two years later he became
head of the new Western
Banking Group (Arizona, Colorado, Idaho, Nevada, New
Mexico, Oregon, Texas,
Utah, Washington and Wyoming). In 2000, he led the
integration of Wells Fargo’s $23
billion acquisition of the First Security Corporation.
In 2002, Stumpf was named Group Executive Vice President
(EVP) of
Community Banking. He was elected to Wells Fargo’s Board of
Directors in June 2006.
Stumpf succeeded Richard Kovacevich as CEO in June 2007.27
In January 2010, he
also became Chairman of the Board of Directors. As the CEO,
Stumpf instituted a
policy of open debate on issues concerning the Bank. “Around
here if you have
something to say, you say it—nobody is going to be offended.
We’ve learned how to
disagree without being disagreeable.”
CARRIE TOLSTEDT, HEAD OF COMMUNITY BANKING
Carrie Tolstedt headed the community banking division of
Wells Fargo from June 2007
until July 2016. She was set to retire from the Bank at the end
of 2016. Tolstedt was a
30-plus year veteran in the financial services industry with 27
years at Wells Fargo. A
graduate of the University of Nebraska (BS degree in Business
Administration) she
joined Wells Fargo as a Norwest Bank team member in 1986.
Tolstedt had been

included four times in Fortune magazine’s “50 Most Powerful
Women in Business.”
In recognizing Tolstedt at the top of its list of the 25 Most
Powerful Women in Banking
in 2010, American Banker28 noted her cross-selling prowess
and the challenges she
faced from integration of Wachovia with Wells Fargo:
“The task of the integration is monumental, but the company's
enviable cross-sell ratings -
now above 6.1 products per household - suggest that her team
has been able to take on the
extra work from the merger without losing its focus on serving
its original customer base.
One risk of such a large integration would be that the company's
internal service culture
would begin to drift … but Tolstedt ‘thinks up ways to
communicate values to the front
line’."
Tolstedt rose through the ranks at Wells Fargo to become a key
associate of John
Stumpf. When her retirement was announc ed, Stumpf praised
Tolstedt as one of Wells
Fargo’s most valuable leaders, “a standard-bearer of our
culture, a champion for our

customers, and a role model for responsible, principled and
inclusive leadership.”29 In
the Senate Banking Committee hearings, Stumpf defended her
compensation. He said
that Tolstedt did not receive any severance upon her retirement
in July and that the
reported $124 million amount she was set to receive upon
retirement was instead from
the previous years’ compensation.
ECONOMICS OF CROSS-SELLING
Cross-selling is the practice of selling related or complementary
products to an existing
customer of an organization. In 2007, a White Paper by
Equifax30 noted: “With 5+
billion pieces of direct mail blanketing U.S. consumers each
year, marketers can no
longer afford undisciplined ‘blast marketing’ approaches.
Reaching the right customer,
at the right time, through the right channel, with the right offer
is a must for those
required to justify direct marketing expenditures and realize the
full potential of their
cross-sell strategy.” The White Paper further mentioned that
cross-selling enabled a
firm to (a) increase a customer's reliance on the firm, while
decreasing the likelihood
of the customer switching to a competitor, and (b) profitabl y
extract the maximum
revenue potential from a client, improving the top-line revenue
and marketing ROI.

Efficiency gains also flow from servicing one account rather
than several.
Cross-selling has become the cornerstone of the marketing
strategy of the financial
services industry. Its importance increased as the net interest
margin - the difference
between the average interest rate charged to the customers and
the average cost of
funds for the banks - declined from 3.83% in 2010 to 2.98% in
2015.31 The Equifax32
paper noted: “Successful cross-selling and customer retention
are highly correlated.
For most institutions we have worked with, about 50% of
single-service checking
households are lost each year. The addition of a savings
relationship improves retention
to about 67%; and adding a loan relationship as well improves
retention to 90% or
more.” It also mentioned a finding in a report by A.T. Kearney
that a 5% increase in
retention could increase profits from 25% to 85%, and observed
that acquiring new
customers was seven times more expensive than retaining
existing customers. Another
A. T. Kearney report claimed that “the average profit generated
by a U.S. bank
customer holding two products at a bank is $150. If the
customer holds nine or more
products, the return is $1000 or more.”33
WELLS FARGO: “KING OF CROSS-SELL”
Cross-selling at the Bank was the brainchild of Mr. Stumpf's

predecessor, Richard
Kovacevich, when he led Norwest Corp., which merged with
Wells Fargo in 1998.34
Indeed, Norwest stated that the rationale for the merger was to
increase cross-selling
opportunities to attract new customers and earn more of their
business. The financial
analysts agreed as well. A First Union analyst mentioned that
the greatest opportunity
and the greatest challenge was to get the employees from the
former Wells Fargo side
of the Bank to adopt the sales culture and enthusiasm of the
former Norwest.35 Richard
Kovacevich lucidly explained Wells Fargo’s rationale for cross -
selling in the Bank’s
vision and values statement in 2006:
“Cross-Selling—or what we call ‘needs-based’ selling— is our
most important
strategy. Why? Because it is an ‘increasing returns’ business
model. It’s like the
‘network effect’ of e-commerce. It multiplies opportunities
geometrically. The
more you sell customers, the more you know about them. The
more you know
2017

about them, the easier it is to sell them more products. The
more products
customers have with you, the better value they receive and the
more loyal they
are. The longer they stay with you, the more opportunities you
have to meet
even more of their financial needs. The more you sell them, the
higher the
profit because the added cost of selling another product to an
existing
customer is often only about ten percent of the cost of selling
that same
product to a new customer.”36
At the time of Wachovia acquisition, the cross-sell ratio for
Wells Fargo (5.95) was
much higher than that for Wachovia (4.65). The customers
acquired from Wachovia
therefore provided an opportunity to Wells Fargo to offer
additional products and
services. Wells Fargo’s senior management was so proud of its
impressive cross-sell
ratio that it mentioned the ratio in virtually every annual report
since 1998, and in
dozens of quarterly earnings calls.
The emphasis on cross-selling continued under the stewardship
of Stumpf. In
addition to signing up existing customers for additional services
offered by Wells
Fargo, the Bank offered customers a set of inter-related
products with discounts
integrated into the package. For example, its premier
relationship package (called PMA)
offered customers free current account and free bill payments,

together with options
to add a savings account, credit card, mortgage loan, and a
discount brokerage account.
About 63% of new current account customers opted for such
packages with an average
of four products per package.37
To improve the cross-sell ratio, Wells Fargo developed a system
of incentivizing
its staff. According to a Wells Fargo spokesperson, “We target
loyalty, not just
customer satisfaction. Gallup [the market research agency]
surveyed 50,000 of our
customers per month. This gives us a statistically meaningful
sample across our entire
network. We can measure indicators of customer satisfaction
and customer loyalty. We
take action on these results and increasingly our incentive
compensation is based on
these results.”38
Exhibit 5 depicts the cross-sell ratio of Wells Fargo from 1998
to 2016. In the
testimony before the Senate Banking Committee, Senator
Elizabeth Warren (D-Mass.)
mentioned that in 12 quarterly earnings calls, Stumpf had
personally cited Wells Fargo’s
success at cross-selling accounts as one of the main reasons to
buy stock of the Bank.39
During the Senate hearings, however, Stumpf denied the
allegation and called cross-
selling “shorthand for deepening relationships.” 40
By 2009, Wells Fargo had recorded an increased cross-sell ratio
for eleven
consecutive years. In a March 2010 speech to investors41,

Stumpf said: “If we stay
squarely focused on our customers, cross-selling them, helping
them, we’ll win.” In the
2010 annual report, Stumpf proposed Wells Fargo's sales goal
of eight accounts per
customer by declaring, "it rhymed with 'great'," and that
"Perhaps our new cheer should
be: 'Let's go again, for 10!'" In the same report, he also
mentioned the challenges in
cross-sell:
“If anyone tells you it’s easy to earn more business from current
customers in
financial services, don’t believe them. We should know. We’ve
been at it
almost a quarter century. We’ve been called, true or not, the
‘king of cross-
sell’.”42
In 2012, Stumpf had remarked43:
“There are only three ways a company can grow. First, earn
more business
from your current customers. Second, attract customers from
your

competitors. Or third, buy another company. If you can’t do the
first, what
makes you think you can earn more business from your
competitors’
customers or from customers you buy through acquisition?”
The mantra of cross-sell reverberated not only in the corporate
corridors and
company statements of Wells Fargo but was also implicit in the
booklet on vision and
values44:
“Retention is an important part of any long-term plan to keep up
Wells
Fargo’s above-average returns on assets and equity.
Extraordinary profitability
emanates from differentiating your product or service from the
ones from the
competition. Increasing customer stickiness and reducing ‘price
comparisons’
is actually a key component of maintaining extraordinary
profitability.”
Wells Fargo was not alone in using cross-selling as a marketing
tool. Several large
and regional banks including Bank of America, Citizens Bank,
PNC Bank, SunTrust
Bank, and Fifth Third Bank used it too. However, the success in
cross-selling achieved
by Wells Fargo was unparalleled. A report by A.T. Kearney45
mentioned that while the
cross-sell figure (number of products or accounts per customer)
for the U.S. banks
averaged 2.71, Wells Fargo’s cross-sell ratio in the second
quarter of 2016 was 6.27.

INCENTIVES FOR AND EFFECTS OF CROSS-SELLING
The financial incentives offered to employees for “cross -
selling” were significant.
Branch employees who hit sales targets could earn bonuses of
$500 to $2,000 per
quarter. The base salaries of branch employees were about
$25,000 to $30,000 a year.
Hence, the bonuses for “cross-sell” made a big difference to the
paychecks of the
junior employees.46 The district managers could get bonuses of
$10,000 to $20,000 a
year.
In addition to providing bonuses, the Bank mandated ‘quotas’
for the number and
types of products to be sold by employees. An employee
remarked: “We were
constantly told we would end up working for McDonald’s . . . If
we did not make the
sales quotas, we had to stay for what felt like after-school
detention, or report to a call
session on Saturdays.”47 While many employees sincerely tried
to sell the right products
to the right customers, some employees forced products on
whichever customer they
could. A homeless woman, for instance had been talked into
opening six checking and
savings accounts with fees totaling $39 a month.48
An internal investigation by the Bank revealed that as many as
1,534,280 deposit
accounts and another 565,443 credit card accounts that were
unauthorized got

opened.49 The employees transferred funds, when needed, from
the customers’
authorized accounts, ordered credit cards without customers’
permission, created
phony PIN numbers and fake e-mail addresses to enroll existing
customers for ‘Net
Banking’ services, and forged client signatures on paperwork.50
Many of the questionable accounts were created by moving a
small amount of
money from the existing accounts of customers to open a new
one. Shortly thereafter,
the employees would close the new accounts and move the
money back to the original
accounts, yet getting the credit towards meeting their quotas.
Sometimes, the
customers were told, on phone calls, that Wells Fargo planned
to send them a new
credit card as a "thank you" for their business. If a customer
didn't want the card, he
or she was told to cut up the card when it arrived in the mail.
However, the customers
did not know that issuing each new card required a credit check,
which could
potentially lower their credit score.
2017

In many cases, customers did not know that an account had been
opened in their
name until they received a letter congratulating them on
opening a new account.
Sometimes, when the customers complained about the unwanted
credit cards, the
branch manager would blame a computer glitch or say the card
had been requested by
someone with a similar name. On several occasions, upon
receiving the customer
complaint, Wells Fargo refunded the amount charged to the
customer. However, such
refund would not restore the deterioration in the credit
worthiness of the customer,
who would have to pay higher charges on borrowings and
perhaps be denied access to
credit in the future.51
The external auditors of Wells Fargo – KPMG52 - did not raise
any red flags in
their audit reports or in their reports on the effectiveness of
internal controls at the
Bank.
CUSTOMER CONSENTS FOR ADDITIONAL ACCOUNTS
A 2007 internal document titled "Sales Quality Manual" stated
that customer consent
for each specific solution or service was required every time
(including each product in
a package). The document also stated that "splitting a customer
deposit and opening
multiple accounts for the purpose of increasing potential

Incentive Compensation (IC)
is considered a sales integrity violation."53
The official policy above was consistent with the Bank’s vision:
“We want to satisfy
our customers’ financial needs and help them succeed
financially.”54 Elaborating on
vision further, the website of the Bank stated, “Our vision has
nothing to do with
transactions, pushing products, or getting bigger for the sake of
bigness. It’s about
building lifelong relations one customer at a time. Forcing
employees to engage in
illegal or unethical activities is also not Wells Fargo’s way of
doing business. Our people
are resources to be invested in, not expenses to be managed –
because teamwork is
essential to our success in helping customers.”55 And it
conveyed the importance for
the employees to understand Wells Fargo’s vision: “We define
‘culture’ as
understanding our vision and values so well that you
instinctively know what you need
to do when you come to work each day.”56
Despite the stated vision and policy of the Bank, two million
unauthorized
accounts were opened. When the Senate Banking Committee
questioned Stumpf on
the issue of unauthorized accounts, he repeatedly stated that the
vast majority of
employees did the right thing, and whenever the internal
investigations found that an
employee had created an account and funded it on behalf of the
customer without that
customer’s permission, the employee was terminated. He said

the 5,300 terminated
employees had “violated the company’s code of ethics, were
dishonest, and did not
honor our culture.”
Responding to Stumpf’s testimony, Senator Jeff Merkley (D-
Oregon) remarked
during the Senate Banking Committee hearing: “This was a
systemic problem that you
benefited from enormously, that the bank benefited from
enormously, and you are
scapegoating the people at the very bottom.” In a rare display of
bipartisanship, the
Senate Republicans also took a tough stance on the Bank’s
“cross-selling” activities.
Senator Pat Toomey (R-Pennsylvania) said, “This isn’t cross-
selling, this is fraud. Wells
Fargo executives were completely out of touch.”
EMPLOYEE REACTION TO
INCENTIVES AND MANDATES FOR CROSS-SELLING
Employee displeasure with high-pressure sales quotas had
started much earlier, though

it did not receive wide publicity until after the Bank was fined
in September 2016.57
For instance, employees delivered petitions with over 10,000
signatures to the Board
at both the 2014 and 2015 annual meetings urging the Board to
recognize the link
between high-pressure sales quotas and the fraudulent opening
of accounts without
customer permission.58
Dozens of fired employees spoke to the media to express their
views on the alleged
scam. The Wall Street Journal59 reported the story of one
employee (Scott Trainor)
who said that managers suggested that employees hunt for sales
prospects at bus stops
and retirement homes. The employees who refused to act on
such suggestions were
harassed, penalized and even terminated. The employees who
quit or were fired also
mentioned that many branch managers routinely monitored
employees' progress
toward meeting sales goals, sometimes hourly, and sales
numbers at the branch level
were reported to higher-ranking managers as many as seven
times a day. If an employee
did not meet the sales goals, the employee was reportedly
chastised and embarrassed
by the community banking president in front of other staff. 60
The New York Times61 reported that another employee (Dennis
Russell) who was
fired in 2010 said that as a telephone banker, he handled
incoming customer service
calls and was expected to refer 23 percent of his callers to a
sales representative for

additional product sales. But the customers Mr. Russell spoke
with were usually in dire
financial shape. Looking at their accounts, he could see
mortgages in foreclosure, credit
cards in collections and cars being repossessed for overdue loan
payments. “The
people calling didn’t have assets to speak of,” Mr. Russell said.
“What products could
you possibly offer them in a legitimate way? It’s a crock, they
established the culture
that made this happen - it comes down from the top.”
Employees acknowledged that the Bank had a dispute resolution
policy (See
Exhibit 6 for a summary) but added that it was a sham. CBS
News62 reported that a
former banker (Yesenia Guitron) sued Wells Fargo in 2010
claiming that intense sales
pressure and unrealistic quotas drove employees to falsify
documents and game the
system to meet their sales goals. She did everything Wells
Fargo had asked employees
to do to report such misconduct. She told her manager about her
concerns. She called
Wells Fargo’s ethics hotline. When those steps yielded no
results, she went up the
chain, contacting a human resources representative and the
bank’s regional manager.
After months of retaliatory harassment, Guitron was fired for
insubordination.
ETHICS HOTLINE AND RETALIATION
CNN Money63 reported several instances of harassment of

employees at Wells Fargo.
Refusing to act on orders to open unauthorized bank and credit
accounts, an employee
(Mr. Bado) called the ethics hotline of Wells Fargo and sent an
email to human
resources in September 2013, flagging unethical sales he was
being instructed to
execute. Eight days after that email, he was terminated on the
grounds of tardiness.
Another employee (Mr. Johnson) said that after he started
working, his manager began
pressuring him to open accounts for his friends and family —
with or without their
knowledge. When he refused, Johnson was criticized for not
being a team player.
Following up on the instructions he had received during
training, he called the
2017
company’s ethics hotline. Three days later, Johnson was fired
for “not meeting
expectations.”64
The dismissals of Mr. Bado and Mr. Johnson occurred despite
the Bank’s explicit
non-retaliation policy (see Exhibit 7) outlined in the handbook

that was given to every
employee. A story in CNN News65 confirmed that the “can the
whistleblowers”
process was institutionalized at the Bank. The Human Resources
department provided
business units with tips on how to create trumped-up charges on
employees to cover
up the real reason for their dismissal. One former Wells Fargo
human resources official
even said the Bank had a method in place to retaliate against
tipsters.66
In December 2015, Wells Fargo added an arbitration clause to
the employment
contract. This clause required employees to bring any
complaints privately and
individually, making it difficult for them to band together to sue
the Bank. The Bank
also forced customers into private arbitration. Customers signed
a form at the time of
opening their accounts waving their right to file a lawsuit in
case of a dispute with the
Bank and instead agree to private arbitration to settle the
dispute.67 Wells Fargo had
had other earlier brushes with legal authorities, albeit in
different contexts.68
REACTION OF WELLS FARGO AND JOHN STUMPF
In response to employee concerns expressed in the media, Wells
Fargo said: “We
disagree with the allegations in the complaint and will
vigorously defend against the
misrepresentations it contains about Wells Fargo and all of the

Wells Fargo team
members whose careers have been built on doing the right thing
for our customers
every day.”69 The Bank said that it would get rid of the goals
(i.e. “quotas”) for cross-
selling but would not back away from cross-selling. Stumpf
mentioned in his
Congressional testimony that the Bank does not have “quotas”;
it has sales “goals”.
Sales targets or goals are not illegal or pernicious. In 2012, the
United States District
Court for the Northern District of California had ruled that even
if its sales targets
were unreasonable, the Bank had the right to use them as an
employment yardstick.70
In the Congressional hearing, Stumpf was asked when the
problem of sham
accounts and other malfeasance was first discovered. He
testified that the first
occurrence was in 2011 when one thousand employees were
terminated for unethical
behavior. The Board of the Bank had also been made aware of
the termination and its
reasons.71 Stumpf also asserted that the number of employees
terminated was
insignificant for a large firm such as Wells Fargo with 268,000
employees. Although
the settlement on September 8, 2016 involved conduct that
began in 2011, Stumpf said
that the Bank was going back to 2009 and 2010, when Wachovia
was being absorbed,
to determine whether the misconduct was taking place then.
In August 2015, Wells Fargo hired PricewaterhouseCoopers
LLP (PwC) to carry

out detailed analysis of the sales practices pertaining to all the
82 million deposit
accounts and nearly 11 million credit card accounts that had
been opened between
2011 and 2015 to quantify the remediation needed to
compensate the customers who
had suffered as a result of accounts fraudulently opened in their
names. About a dozen
PwC employees worked on the assignment for about a year and
confirmed prevalence
of fraudulent sales practices at the Bank.72
During the testimony, Stumpf apologized several times, stating:
“We recognize now that we should have done more sooner to
eliminate
unethical conduct or incentives that may have unintentionally
encouraged that
conduct.”
Congressman Gregory Meeks (D-New York) charged that what
had happened in
Wells Fargo was an example of irresponsible leadership. When
Stumpf responded that
he held the leadership job at the pleasure of the Board, Meeks
said, "The whole Board

needs to go."73
STUMPF’S RESIGNATION, APPOINTMENT OF A NEW CEO
AND
UNRESOLVED QUESTIONS
The pressure on Wells Fargo and its CEO was relentless. Many
Senators and
Congressmen demanded resignation of Stumpf and claw-back of
his compensation of
about $200 million during the years of misconduct. They also
demanded a claw-back
from Tolstedt, who was set to retire at the end of 2016 with a
$124 million paycheck
(a mix of shares, options and restricted stock).74 The lawsuits
against the Bank — from
customers, former employees and shareholders — had started
piling up. Shareholders
filed a class action lawsuit alleging that the Bank misled
investors about its financial
performance and the success of its sales practices. The stock
price of Wells Fargo had
fallen more than 10% since September 8, 2016 when it reached
a settlement with
regulators, wiping off more than $25 billion of market
capitalization.75
On October 12, 2016, Stumpf, who navigated Wells Fargo
through the financial
crisis and created the most valuable bank in the world, resigned
from the Board and
CEO positions.76 The Board appointed Tim Sloan, a 29-year
veteran at Wells Fargo,
as CEO of the Bank. The Board also separated the position of

Chairman from that of
CEO, appointed the incumbent Lead Director, Stephen Sanger
as non-executive
Chairman of the Board, and Elizabeth Duke, as the Vice
Chair.77 Stumpf, who had
famously declared on the Bank’s website, “Integrity is not a
commodity. It’s the most
rare and precious of personal attributes. It is the core of a
person’s – and a company’s
– reputation” would leave the challenge to restore the Bank’s
credibility to his
successor, Tim Sloan. Tim Sloan had served as chief operating
officer of Wells Fargo
from November 2015 to October 2016. Prior to that, he had
served the Bank as the
chief financial officer and chief administrative officer. From
1991 to 2010, Sloan had
held various leadership roles in the Wholesale Banking divisi on
of Wells Fargo.
As Sloan took over the reins of Wells Fargo, several questions
remained answered.
How could unethical behavior have persisted for so long at the
iconic Bank that was
respected for its integrity and dedication to customer service?
As the new CEO, Sloan
faced many questions. What role, if any, should cross-selling
play in the future without
running the risk of employee misconduct and customer
dissatisfaction? How should
the compensation policies at Wells Fargo be calibrated to
provide incentives to cross-
sell, but without impairing the interests of its customers? How
should the reputation
of Wells Fargo as an ethical organization be restored? How to
continue the trajectory

of enhanced financial performance? What kind of relationship to
foster with the Board
of Wells Fargo and its new Chairman? How to restore employee
morale and improve
public perception of Wells Fargo? In an interview with the
Washington Post78, he said,
“I am going to do the right thing by repairing the reputation of
the company. As a new
CEO, my immediate and highest priority is to restore trust in
Wells Fargo.” Mr. Sloan’s
task was clearly cut out. He had to make key decisions on
strategy, structure and
systems at Wells Fargo to set the stagecoach thundering again
across the length and
breadth of the U.S.
2017
Exhibit 1: Summary Financials 2010-2015 of Wells Fargo
(in millions, except per share amounts)
Source: Wells Fargo, 2015 Annual Report, Six-year Summary

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Exhibit 2: ROA and ROE of Wells Fargo and Competitors,
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Source: Bloomberg
-0.2
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Bank of America
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2017
Exhibit 3: Wells Fargo: Segment Financials, 2010-2015

Source: Bloomberg
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Exhibit 4: Wells Fargo: Recommended Process for Resolving
Ethical Dilemma

Source: Wells Fargo, “Our Code of Ethics and Business
Conduct,” 2016. Accessed at:
https://www08.wellsfargomedia.com/assets/pdf/about/corporate/
code-of-ethics.pdf

2017
Exhibit 5: Wells Fargo Cross-Sell Ratios, 1998 – 2016
Source: Wells Fargo annual reports
Exhibit 6: Dispute Resolution Policy of Wells Fargo
Included in the 229-page Wells Fargo Team Member Handbook
is a step-by-step
dispute resolution process. It also states that Wells Fargo
prohibits retaliation against
any team member for using the dispute resolution process.
The document states that team members should begin the
process of dispute resolution
early (normally within 30 days) and first try to resolve the
dispute with their managers
because the manager is the closest to the situation and in the
best position to review it.

However, it recognizes that team members might need
alternative avenues to escalate
the dispute further. In that case, it recommends using the
dispute resolution resources
- manager, manager’s manager, Human Resources Advisor – in
that order. If the team
member disagrees with the outcome of the review in these steps,
an escalated review
can be requested to an Employee Relations Manager. The
determination of the
escalated review will be considered final. However, if the
escalated review still has
unresolved issues (discrimination, harassment or retaliation, for
instance), the team
member or Wells Fargo can request mediation. Mediation
involves an external,
objective, professional mediator who will provide a neutral
forum to resolve the issues
through open discussion and compromise.
Source: Wells Fargo Team Member Handbook July 2016
Exhibit 7: Non-Retaliation Policy of Wells Fargo
• No team member may be retaliated against for providing
information in good faith
about suspected unethical or illegal activities including fraud,
securities law or
regulatory violations or possible violations of any Wells Fargo
policies, including
the Code of Ethics and Business Conduct and the Information
Security Policy.

• No team member may be retaliated against because that team
member has in some
manner opposed an employment practice that the team member,
in good faith,
believes violates federal or state laws, rules or regulations.
• No team member may be retaliated against because he or she
filed a charge,
truthfully testified, provided assistance, or participated, in good
faith, in an
investigation, proceeding, or hearing related to or arising from
an allegedly
unlawful employment practice.
• No team member may be retaliated against for asserting rights
established by a
federal or state law.
If you believe that you or someone else has been retaliated
against, you must report it
as soon as possible to your supervisor or manager, your HR
Advisor team, or
Corporate Employee Relations. Wells Fargo will take measures
to protect team
members from retaliation.
Important: Engaging in retaliatory behavior in violation of this
policy is grounds for
corrective action, which may include termination of your
employment.
Source: Wells Fargo Team Member Handbook July 2016

2017
NOTES
1 Stumpf, John. Wells Fargo. 2011 Annual Report to
Stockholders. pg. 26. Accessed at:
https://www08.wellsfargomedia.com/assets/pdf/about/investor -
relations/annual-
reports/2011-annual-report.pdf
2 A video recording of the Senate Banking Committee Hearing
on September 20, 2016
(Title: Wells Fargo CEO Grilled At Hearing on Fraudulent
Accounts SCAM on Their
Customers) can be accessed on YouTube at:
https://www.youtube.com/watch?v=5STIt3j3BTw
3 Corkery, Michael. New York Times. September 20, 2016.
Elizabeth Warren Accuses
Wells Fargo Chief of ‘Gutless Leadership’. Accessed at:
https://www.nytimes.com/2016/09/21/business/dealbook/wells-
fargo-ceo-john-
stumpf-senate-testimony.html?_r=0

4 Wall Street Journal, September 14, 2016, Federal Prosecutors
Investigating Wells Fargo
Over Sales Tactics, Accessed at:
https://www.wsj.com/articles/federal-prosecutors-
investigating-wells-fargo-over-sales-tactics-1473881424
5 A video recording of the House Financial Services Committee
Hearing on September 29,
2016 (Title: Wells Fargo CEO John Stumpf Grilled by Congress
- House Financial
Services Committee) can be accessed on YouTube at:
https://www.youtube.com/watch?v=fjcp0mmMiUQ
6 U.S. Senate. Testimony of John Stumpf Chairman and Chief
Executive Officer of
Wells Fargo & Co. Before the U.S. Senate Committee on
Banking, Housing and Urban
Affairs. Sept. 20, 2016. Accessed at:
https://www.banking.senate.gov/public/_cache/files/18312ce0-
5590-4677-b1ab-
981b03d1cbbb/3B18AA6E3A96E50C446E2F601B854CF1.0920
16-stumpf-
testimony.pdf
7 Tolstedt also agreed not to exercise her stock options worth
roughly $35 million until
the Board’s independent investigation was completed.
8 Gordon, Marcy. PBS Newshour at pbs.org. September 29,
2016. Wells Fargo CEO
faces lawmakers, apologizes again. Accessed at:
http://www.pbs.org/newshour/rundown/wells-fargo-ceo-

lawmakers-defense/
9 Wells Fargo. History of Wells Fargo. Accessed at:
https://www.wellsfargo.com/about/corporate/history/
10 Seekingalpha.com. Wells Fargo Acquisition of Wachovia
Conference Call Transcript.
Oct. 3, 2008. Accessed at:
http://seekingalpha.com/article/98468-wells-fargo-
acquisition-of-wachovia-conference-call-transcript
11 Ibid.
12 Wells Fargo. The Vision and Values of Wells Fargo.
Accessed at:
https://www.wellsfargo.com/about/corporate/vision-and-
values/index
13 Ibid.
14 Wells Fargo, Financial Overview (John Shrewsberry, Senior
EVP, Chief Financial
Officer) accessed at:
https://www08.wellsfargomedia.com/assets/pdf/about/investor-
relations/presentations/2016/financial-overview.pdf

relations/annual-reports/2011-annual-report.pdf
https://www.youtube.com/watch?v=5STIt3j3BTw
fargo-ceo-john-stumpf-senate-testimony.html?_r=0
fargo-ceo-john-stumpf-senate-testimony.html?_r=0
https://www.wsj.com/articles/federal-prosecutors-investigating-
wells-fargo-over-sales-tactics-1473881424
https://www.wsj.com/articles/federal-prosecutors-investigating-
wells-fargo-over-sales-tactics-1473881424
https://www.youtube.com/watch?v=fjcp0mmMiUQ
5590-4677-b1ab-
16-stumpf-testimony.pdf
5590-4677-b1ab-
5590-4677-b1ab-
http://www.pbs.org/newshour/rundown/wells-fargo-ceo-
lawmakers-defense/
https://www.wellsfargo.com/about/corporate/ history/
http://seekingalpha.com/article/98468-wells-fargo-acquisition-
of-wachovia-conference-call-transcript
http://seekingalpha.com/article/98468-wells-fargo-acquisition-
of-wachovia-conference-call-transcript

values/index
15 Wells Fargo. 2015 Annual Report. Page 3. Accessed at
relations/annual-
16 The returns are calculated by the case authors using the stock
prices obtained from
finance.yahoo.com
17 Wells Fargo. Wells Fargo Human Resources Committee
Charter. November 18, 2014.
Accessed at:
human-resources-
committee-charter.pdf
18 Glazer, Emily. Wall Street Journal. September 19, 2016.
Carrie Tolstedt: In the eye of
the Wells Fargo storm. Accessed at:
http://www.wsj.com/amp/articles/carrie-

tolstedt-in-the-eye-of-the-wells-fargo-storm-1474326652
19 Wells Fargo. Our Culture. Accessed at:
values/our-culture/
20 Ibid.
21 Wells Fargo. Our Code of Ethics and Business Conduct:
Living Our Vision and
Values. Accessed at:
code-of-ethics.pdf
22 Wells Fargo. Wells Fargo Team Member Code of Ethics and
Business Conduct.
Accessed at:
https://www.sec.gov/Archives/edgar/data/72971/0001193125091
27827/dex991.htm
23 Wells Fargo. Wells Fargo 2016 Proxy Statement. March 16,
2016. Accessed at:
relations/annual-
reports/2016-proxy-statement.pdf
24 Ibid.
25 Information in this section and the next one is obtained from

public sources and from
the web site of Wells Fargo & Company.
26 Bradley, Richard. Worth.com. Mr. Stumpf Stakes His Claim.
Feb. 8, 2016. Accessed at:
http://www.worth.com/mr-stumpf-stakes-his-claim/
27 Startribune.com. Wells Fargo’s Kovacevich to step down at
Years End. Sept. 22, 2009.
Accessed at: http://www.startribune.com/wells-fargo-s-
kovacevich-to-step-down-at-
year-s-end/60465152/
28 American Banker. No. 4: Carrie Tolstedt, Wells Fargo. Sept.
22, 2015. Accessed at:
https://www.americanbanker.com/news/no-4-carrie-tolstedt-
wells-fargo
29 Eshet, Mary. Wells Fargo. Wells Fargo’s Carrie Tolstedt to
retire at year’s end; Mary
Mack to succeed her as head of Community Banking effective
July 31. July 12, 206.
Accessed at:
https://www.wellsfargo.com/about/press/2016/tolstedt-to-
retire_0712/
30 Equifax. Cross-Selling Check-Up: Are You Effectively
Timing Consumer
Interactions?. July 2007. Accessed at:
http://www.equifax.com/pdfs/corp/Cross-
sell_Cross-Sell_Check-up_0707.pdf

31 The numbers are based on data from the Federal Reserve
Bank, accessed at:
https://fred.stlouisfed.org/series/USNIM)
32 Ibid.
human-resources-committee-charter.pdf
https://www08.wellsfargomedia.com/assets/pd f/about/corporate/
human-resources-committee-charter.pdf
http://www.wsj.com/amp/articles/carrie-tolstedt-in-the-eye-of-
the-wells-fargo-storm-1474326652
http://www.wsj.com/amp/articles/carrie-tolstedt-in-the-eye-of-
the-wells-fargo-storm-1474326652
values/our-culture/
code-of-ethics.pdf
https://www.sec.gov/Archives/edgar/data/72971/0001193125091
27827/dex991.htm
relations/annual-reports/2016-proxy-statement.pdf
relations/annual-reports/2016-proxy-statement.pdf

http://www.worth.com/mr-stumpf-stakes-his-claim/
http://www.startribune.com/wells-fargo-s-kovacevich-to-step-
down-at-year-s-end/60465152/
http://www.startribune.com/wells-fargo-s-kovacevich-to-step-
down-at-year-s-end/60465152/
https://www.americanbanker.com/news/no-4-carrie-tolstedt-
wells-fargo
https://www.wellsfargo.com/about/press/2016/tolstedt-to-
retire_0712/
http://www.equifax.com/pdfs/corp/Cross-sell_Cross-
Sell_Check-up_0707.pdf
http://www.equifax.com/pdfs/corp/Cross-sell_Cross-
Sell_Check-up_0707.pdf
https://fred.stlouisfed.org/series/USNIM
2017
33Dr. J. Sethuraman. Indian Overseas Bank. Retail Banking -
Models, Strategies,
Performances and the Future The Indian Scenario. Accessed at:
http://docplayer.net/9321697-Retail-banking-models-strategies-
performances-and-the-
future-the-indian-scenario.html
34 Glazer, Emily. Wall Street Journal. From ‘Gr-eight’ to
‘Gaming,’ a Short History of
Wells Fargo and Cross-Selling. Sept. 16, 2016. Accessed at:
http://blogs.wsj.com/moneybeat/2016/09/16/from-gr-eight-to-
gaming-a-short-

history-of-wells-fargo-and-cross-selling/
35 Chang, Victoria, O’Reilly, Charles, and Pfeffer, Jeffery.
Stanford Graduate School of
Business. Wells Fargo and Norwest: Merger of Equals (A).
2004. Accessed at:
https://www.gsb.stanford.edu/faculty-research/case-
studies/wells-fargo-norwest-
merger-equals-b
36 Wells Fargo. The Vision and Values of Wells Fargo.
Accessed
at:https://www.wellsfargo.com/about/corporate/vision-and-
values/
37 Wells Fargo. Compare Checking Accounts. Accessed at:
https://www.wellsfargo.com/checking/compare-accounts/
38 Sethuraman, 2012. Retail Banking - Models, Strategies,
Performances and the
Future - The Indian Scenario. Accessed at:
http://www.iibf.org.in/documents/reseach-report/Report-12.pdf
39 Flanagin, Jake. Qz.com. Elizabeth Warren to Wells Fargo
CEO: ‘You should resign’.
Sept. 20, 2016. Accessed at: https://qz.co m/786760/elizabeth-
warren-to-wells-fargo-
ceo-john-stumpf-you-should-resign/

5590-4677-b1ab-
16-stumpf-
testimony.pdf
41 Reported in The Washington Post, ‘It goes well beyond
Wells Fargo’: Concerns grow
over sales tactics in banking industry’, September 16, 2016.
Accessed at:
https://www.washingtonpost.com/business/economy/it-goes-
beyond-wells-fargo-
concerns-grow-over-sales-tactics-in-banking-
industry/2016/09/16/d83bf4c0-7b73-
11e6-beac-57a4a412e93a_story.html
42 Wells Fargo. 2010 Annual Report. Accessed at:
relations/annual-
43 Forbes. The Bank that Works. 25 January 2012. Accessed
at:
http://www.forbes.com/forbes/2012/0213/feature-john-stumpf-
wells-fargo-
bank-that-works.html
44 Wells Fargo. Our Seven Priorities. Accessed at:

values/our-priorities
45 Ensign, Rachel Louise. Wall Street Journal. What the Wells
Fargo Cross Selling Mess
Means For Banks” Sept. 28, 2016. Sept. 15, 2016. Accessed at:
https://www.wsj.com/articles/what-the-wells-fargo-cross-
selling-mess-means-for-
banks-1473965166
performances-and-the-future-the-indian-scenario.html
performances-and-the-future-the-indian-scenario.html
gaming-a-short-history-of-wells-fargo-and-cross-selling/
gaming-a-short-history-of-wells-fargo-and-cross-selling/
studies/wells-fargo-norwest-merger-equals-b
studies/wells-fargo-norwest-merger-equals-b
https://www.wellsfargo.com/about/corporate/vision-and-values/
https://www.wellsfargo.com/checking/compare-accounts/
http://www.iibf.org.in/documents/reseach-report/Report-12.pdf
https://qz.com/786760/elizabeth-warren-to-wells-fargo-ceo-
john-stumpf-you-should-resign/
https://qz.com/786760/elizabeth-warren-to-wells-fargo-ceo-
john-stumpf-you-should-resign/

5590-4677-b1ab-
5590-4677-b1ab-
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banking-industry/2016/09/16/d83bf4c0-7b73-11e6-beac-
57a4a412e93a_story.html
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selling-mess-means-for-banks-1473965166
46Tayan, Brian. Harvard Law School. The Wells Fargo Cross
Selling Scandal. December
2, 2016. Accessed at:
https://corpgov.law.harvard.edu/2016/12/19/the-wells-fargo-
cross-selling-scandal/
47 Glazer, Emily. Wall Street Journal. Wells Fargo to Roll Out
New Compensation Plan
to Replace Sales Goals. Jan. 6, 2017. Accessed at:
https://www.wsj.com/articles/wells-
fargo-to-roll-out-new-compensation-plan-to-replace-sales-goals-
1483719468
48 Reckard, Scott. Los Angeles Times. December 21, 2013.
Wells Fargo’s pressure-
cooker sales culture comes at a cost. Accessed at:
http://www.latimes.com/business/la-fi-wells-fargo-sale-
pressure-20131222-story.html
49 The Financial Brand. Has Wells Fargo’s Phony Account
Scam Ruined Cross-Selling
For The Entire Banking Industry? Sept. 12, 2016. Accessed at:
https://thefinancialbrand.com/60947/wells-fargo-bank-cross-
selling/

50 Egan, Matt. CNN.com. Wells Fargo dumps toxic 'cross-
selling' metric. January 13,
2017. Accessed at:
http://money.cnn.com/2017/01/13/investing/wells-fargo-cross-
selling-fake-accounts/
51 NPR. September 26, 2016. Wells Fargo's Unauthorized
Accounts Likely Hurt
Customers' Credit Scores. Accessed at:
http://www.npr.org/2016/09/26/495501008/wells-fargos-
unauthorized-accounts-
likely-hurt-customers-credit-scores
52 Rapoport, Michael. Wall Street Journal. Wells Fargo: Where
Was the Auditor?. Nov. 1,
2016. Accessed at: https://www.wsj.com/articles/wells-fargo-
where-was-the-auditor-
1478007838
53 Egan, Matt. CNN.com. Wells Fargo workers: Fake accounts
began years ago. Sept. 26,
2016. Accessed
at:http://money.cnn.com/2016/09/26/investing/wells-fargo-fake-
accounts-before-2011/
54 Wells Fargo. Our Vision. Accessed at:
values/our-vision/

55 Ibid.
56 Ibid.
57 Neither the annual reports from 2011-2015 nor the
Chairman’s statements
contained therein mentioned the large-scale dismissals that had
occurred in the
Bank in those years.
58 Waizenegger, Dieter. CTW Investment Group. Sept. 23,
2016. Accessed at:
http://ctwinvestmentgroup.com/wp-
content/uploads/2016/09/CtW-to-WF-9-23-16-
final.pdf
59 Glazer, Emily. Wall Street Journal. How Wells Fargo’s
High-Pressure Sales Culture
Spiraled Out of Control. Sept. 16, 2016. Accessed at:
https://www.wsj.com/articles/how-wells-fargos-high-pressure-
sales-culture-spiraled-
out-of-control-1474053044
60 Kieler, Ashlee. Consumerist.com. 4 Things Former Wells
Fargo Workers Revealed
About Pressure To Meet Sales Goals. Sept. 19, 2016. Accessed
at:
https://consumerist.com/2016/09/19/4-things-former-wells-
fargo-workers-revealed-
about-pressure-to-meet-sales-goals/

https://www.wsj.com/articles/wells-fargo-to-roll-out-new-
compensation-plan-to-replace-sales-goals-1483719468
https://www.wsj.com/articles/wells-fargo-to-roll-out-new-
compensation-plan-to-replace-sales-goals-1483719468
http://www.latimes.com/business/la-fi-wells-fargo-sale-
pressure-20131222-story.html
https://thefinancialbrand.com/60947/wells-fargo-bank-cross-
selling/
unauthorized-accounts-likely-hurt-customers-credit-scores
unauthorized-accounts-likely-hurt-customers-credit-scores
https://www.wsj.com/articles/wells-fargo-where-was-the-
auditor-1478007838
https://www.wsj.com/articles/wells-fargo-where-was-the-
auditor-1478007838
http://money.cnn.com/2016/09/26/investing/wells-fargo-fake-
values/our-vision/

content/uploads/2016/09/CtW-to-WF-9-23-16-final.pdf
content/uploads/2016/09/CtW-to-WF-9-23-16-final.pdf
sales-culture-spiraled-out-of-control-1474053044
fargo-workers-revealed-about-pressure-to-meet-sales-goals/
fargo-workers-revealed-about-pressure-to-meet-sales-goals/
2017
61 New York Times. September 26, 2016. Wells Fargo
workers claim retaliation for
playing by the rules. Accessed at:
fargo-workers-
claim-retaliation-for-playing-by-the-rules.html?_r=0
62 CBS News. Wells Fargo whistleblower says she flagged
fraud years ago. Oct. 4, 2016.
Accessed at: http://www.cbsnews.com/news/wells-fargo-
accounts-fraud-california-
whistleblower-yesenia-guitron/

63 Egan, Matt. CNN.com. I called the Wells Fargo Ethics line
and was fired. Sept. 21,
2016. Accessed at:
http://money.cnn.com/2016/09/21/investing/wells-fargo-fired-
workers-retaliation-fake-accounts/
64 Ibid.
65 Quoted in Naked Capitalism. September 22, 2016. Wells
Fargo Fake Accounts
Hidden by Fake Whistleblowing: Former Employees, Including
HR Officials, Allege
Systematic Retaliation. Accessed at:
http://www.nakedcapitalism.com/2016/09/wells-
fargo-fake-accounts-hidden-by-fake-whistleblowing-former-
employees-including-hr-
officials-allege-systematic-retaliation.html
66 Shazar, Jon. Dealbreaker.com. Things Definitely Not Getting
Better For Wells Fargo.
Sept. 21, 2016. Accessed at:
http://dealbreaker.com/2016/09/wells-fargo-fired-
employees/
67 New York Times. November 24, 2016. Wells Fargo asks
court to force
customers to arbitration in fake account cases. Accessed at:
https://www.nytimes.com/2016/11/24/business/wells-fargo-
asks-court-to-
force-customers-to-arbitration-in-fake-accounts-
cases.html?_r=0

68 Prins, Nomi. billmoyers.com. Jail Wells Fargo CEO and
Chairman John Stumpf!. Sept. 30,
2016. Accessed at: http://billmoyers.com/story/jail -wells-fargo-
ceo-chairman-john-
stumpf/
69 Quoted in New York Times. September 26, 2016. Wells
Fargo Workers Claim
Retaliation for Playing by the Rules. Accessed at:
fargo-workers-
claim-retaliation-for-playing-by-the-rules.html
70 Wells Fargo. Wells Fargo Announces Settlement with U.S.
Department of Justice
Regarding Mortgages. July 12, 2012. Accessed at:
https://www.wellsfargo.com/about/press/2012/20120712_Wells
FargoAnnouncesSett
lment/
5590-4677-b1ab-
16-stumpf-
testimony.pdf

72 Glazer, Emily. Wall Street Journal. How Wells Fargo’s
High-Pressure Sales Culture
Spiraled Out of Control. Sept. 16, 2016. Accessed at:
sales-culture-spiraled-
out-of-control-1474053044
fargo-workers-claim-retaliation-for-playing-by-the-
rules.html?_r=0
fargo-workers-claim-retaliation-for-playing-by-the-
rules.html?_r=0
http://www.cbsnews.com/news/wells-fargo-accounts-fraud-
california-whistleblower-yesenia-guitron/
http://www.cbsnews.com/news/wells-fargo-accounts-fraud-
california-whistleblower-yesenia-guitron/
http://www.nakedcapitalism.com/2016/09/wells-fargo-fake-
accounts-hidden-by-fake-whistleblowing-former-employees-
including-hr-officials-allege-systematic-retaliation.html

http://dealbreaker.com/2016/09/wells-fargo-fired-employees/
http://dealbreaker.com/2016/09/wells-fargo-fired-employees/
asks-court-to-force-customers-to-arbitration-in-fake-accounts-
cases.html?_r=0
asks-court-to-force-customers-to-arbitration-in-fake-accounts-
cases.html?_r=0
http://billmoyers.com/story/jail-wells-fargo-ceo-chairman-john-
stumpf/
http://billmoyers.com/story/jail-wells-fargo-ceo-chairman-john-
stumpf/
fargo-workers-claim-retaliation-for-playing-by-the-rules.html
fargo-workers-claim-retaliation-for-playing-by-the-rules.html
FargoAnnouncesSettlment/
FargoAnnouncesSettlment/
5590-4677-b1ab-
5590-4677-b1ab-

5590-4677-b1ab-
73 Walters, Natalie. TheSteet. September 29, 2016. Rep.
Meeks to Wells Fargo (WFC)
CEO STumpf: ‘You Should be Fired!”. Accessed at:
https://www.thestreet.com/story/13836358/1/rep-meeks-to-
wells-fargo-wfc-ceo-
stumpf-you-should-be-fired.html
74 CNN Money. September 13, 2016. $124 million payday for
Wells Fargo exec who led
fake accounts unit. Accessed at:
http://money.cnn.com/2016/09/12/investing/wells-
fargo-fake-accounts-exec-payday/
75 Fortune, September 27, 2016. Wells Fargo Was Just Hit
With a Shareholder Class
Action Lawsuit. Accessed at:
http://fortune.com/2016/09/27/wells-fargo-

shareholder-class-action-lawsuit/
76 Beckerman, Josh. Wall Street Journal. John Stumpf Resigns
from Boards of Target and
Chevron. Oct. 18, 2016. Accessed at:
https://www.wsj.com/articles/john-stumpf-resigns-
from-boards-of-target-and-chevron-1476823883
77 Rothacker, Rick. Charletteobserver.com. Can Charlotte’s
Mary Mack fix Wells Fargo’s
retail bank? Oct. 19, 2016. Accessed at:
http://www.charlotteobserver.com/news/business/banking/articl
e109305592.html
78 Washington Post. October 13, 2016. The new CEO for
Wells Fargo faces his biggest
challenge yet. Accessed at:
https://www.washingtonpost.com/business/economy/the-new-
ceo-for-wells-fargo-
faces-biggest-challenge-yet/2016/10/13/70a16e34-9172-11e6-
9c52-
0b10449e33c4_story.html
wells-fargo-wfc-ceo-stumpf-you-should-be-fired.html
wells-fargo-wfc-ceo-stumpf-you-should-be-fired.html
accounts-exec-payday/

accounts-exec-payday/
http://fortune.com/2016/09/27/wells-fargo-shareholder-class-
action-lawsuit/
http://fortune.com/2016/09/27/wells-fargo-shareholder-class-
action-lawsuit/
https://www.wsj.com/articles/john-stumpf-resigns-from-boards-
of-target-and-chevron-1476823883
https://www.wsj.com/articles/john-stumpf-resigns-from-boards-
of-target-and-chevron-1476823883
http://www.charlotteobserver.com/news/business/banking/articl
e109305592.html
ceo-for-wells-fargo-faces-biggest-challenge-
yet/2016/10/13/70a16e34-9172-11e6-9c52-
yet/2016/10/13/70a16e34-9172-11e6-9c52-
yet/2016/10/13/70a16e34-9172-11e6-9c52-

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