BLOG VIEW: I am not the type of person to begrudge people for earning large salaries. With the possible exception of trashy starlets on reality television and the executives of the government-sponsored enterprises, I believe that people making large salaries are properly earning their wages.
However, I cannot help but wonder about the circumstances surrounding the abrupt resignation of Howard I. Atkins, chief financial officer (CFO) and senior executive vice president of Wells Fargo. Atkins submitted his resignation on Feb. 8, yet there is still buzz over the circumstances of his departure.Â
Why is this so mysterious? For starters, the official press release stated that Atkins' retirement is based on unspecified ‘personal reasons.’ Yet Wells Fargo felt it was necessary to add this sentence to its announcement: ‘Atkins' retirement is unrelated to the company's financial condition or financial reporting.’ Well, if Atkins' decision had nothing to do with Wells Fargo's financial health, why bring that up?
Even more curious is Wells Fargo's decision to stick this sentence into the press release's second-to-last paragraph: ‘Atkins' retirement becomes effective in August, following an unpaid leave of absence he will begin immediately.’ Clearly, this raises a Kremlin-worthy red flag. After all, why is Atkins giving up his CFO duties now if his retirement is going to occur in six months? And why is Wells Fargo keeping him under its personnel umbrella for six months, even though he won't be doing any work for them?
But there is something that was not mentioned in the press release: Atkins is in line to receive $27 million in deferred compensation, pension benefits and stock grants as part of his retirement. However, he is only eligible for these funds if he puts in a full 10 years at Wells Fargo. And, yes, Atkins' 10th anniversary with Wells Fargo falls in August. Thus, he is attached to the company in a non-salaried, non-titled human resources affiliation for the next six months so he can pocket $27 million.
But wait, the story gets more interesting. Wells Fargo released the news of Atkins' departure after the stock markets closed. No official reason was given by Wells Fargo about the unusual timing of this news announcement – particularly when one considers that Atkins, by all reports, was well-respected by Wall Street.
Even more unsettling is an observation that Rochdale Research analyst Dick Bove made to CNBC: Atkins is leaving his CFO post ahead of Wells Fargo's filing of its 10-K and before the release of the stress-test results being conducted by the Federal Reserve on the San Francisco-based bank. ‘It is not normal for a CFO to leave a company for personal reasons when major disclosures are about to be made,’ Bove complained.
Complicating matters further was a statement by Christopher Whalen, an analyst at Institutional Risk Analytics, who issued a four-page report last week stating that Wells Fargo was in the midst of an ‘ongoing internal dispute.’ Whalen added that Wells Fargo has complained to federal regulators about accounting practices that the bank considers to be too aggressive – though he did not go into depth on where Atkins stood in this argument. However, Whalen was skittish on Wells Fargo and lowered his rating of the bank to ‘negative’ from ‘neutral.’
In all fairness, it needs to be noted that not everyone is concerned about this news. David George, an analyst with Robert W. Baird & Co., announced that he would maintain his ‘Outperform’ rating on Wells Fargo, adding that Atkins' departure ‘should not signal any change in operating performance.’
Running parallel to this story was another piece of unsettling Wells Fargo news: the company's decision to lay off more than 200 refinance workers in the St. Louis market and 142 workers in Des Moines, Iowa. While these workers were mostly temporary, the headlines about this personnel axe swing could not have come at a worse time. After all, how do you explain the firing of hundreds of people while the Wells Fargo C-suite goes out of its way to ensure one of its own will come into $27 million?
During the height of the September 2008 meltdown, many people blamed money-hungry financial services executives for speeding the collapse of the economy. Some people are still holding to that belief, even though the evidence spreads the guilt far and wide.
And even though no laws are being broken by the protocol supporting Atkins' resignation, it sends an unmistakable message that the leaders of the financial services world put themselves first and everyone else at a distant second. That is the kind of publicity the financial services world could do without.
– Phil Hall, editor, Secondary Marketing Executive
(Please address all comments regarding this opinion column to hallp@sme-online.com.)
