Wells defends spending on employee 'recognition events'

Wells Fargo & Co. today came out swinging against critics of the bank's spending on corporate events to recognize top employees.

The company took out full-page ads in the New York Times and Washington Post to defend events held to award high achievers. One such meeting -- a trip to Las Vegas for key mortgage employees -- had been scheduled for last week, but was canceled by Wells after some in Congress said it was inappropriate spending for a bank that has received $25 billion in government funds to bolster its finances.

In the newspaper ads, headlined "The Value of Team Member Recognition," Wells CEO John Stumpf wrote that "many media stories on this subject have been deliberately misleading. These one-sided stories lead you to believe every employee recognition event is a junket, a boondoggle, a waste, or that it’s for highly paid executives. Nonsense!”

He said the events were an important way for the bank to acknowledge workers' contributions, including their efforts to fuel new lending to help lift the housing market.

“For many, it’s the only time in their lives that they’re publicly recognized and thanked for a job well done,” Stumpf wrote. “This recognition energizes them. It inspires them."

Nonetheless, San Francisco-based Wells said last week that it decided to cancel the mortgage event "in light of the current environment." The meeting had been planned for the Wynn Las Vegas hotel and resort.

The bank said it had no other recognition events planned for 2009.

Wells got $25 billion in government capital last fall as part of the Bush administration's plan to strengthen major banks and encourage them to boost lending.

Here's my modest suggestion for all banks: If you want to hold awards dinners or other get-togethers for your valued employees, do it in your headquarters city or somewhere other than a lavish resort. And in particular, avoid lavish resorts in Sin City. No matter how you try to defend it, a meeting of bankers in Las Vegas just isn't going to sit right with the public "in the current environment," to borrow Wells' phrase.

-- Tom Petruno

Photo: Wells Fargo CEO John Stumpf. Credit: Jim R. Bounds/Bloomberg News

Comments

[Mrs. Georgia Peach]

In times like this Wells Fargo should not have even CONSIDERED spending any money on junkets.....nor full page ads in newspapers.

Waste is rampant with taxpayers bailout money. Banks are doing EXACTLY what I thought they would do with bailout money. Waste it.

That is why they are in this situation to begin with.

WASTEFUL SPENDING.

[crackedmuse]

Tom, you are completely correct. Taking out full page ads only compounds the issue, and just goes to show how clueless these folks are. They've become so accustomed to a certain lifestyle they cannot even COMPREHEND anything other than 'business as usual' no matter the circumstance.

Does it occur to no one that there are other ways of recognizing achievement that are far more personal and satisfying than a weekend jaunt, handing out iPods, or the proverbial BS pep talks? Has any of that EVER kept employees from taking a better job as soon as one came along?

How about this: instead of taking everyone to Vegas, do a company retreat with Habitat for Humanity. Have everyone visit, feed and entertain at senior centers or shelters. Or perhaps the CEOs can go around the building and introduce themselves to every employee and ask them what's on their mind. What ideas do they have. LISTEN to what they have to say and then personally thank them for their service. Even better, work in a different department every day - from maintenance to accounting. Allow employees to actually see you doing something - delivering mail, making sales calls, working as a teller.

Many, many people would find such things to be infinitely fulfilling and worth far more than a "you are valued" certificate and a handshake.

[smb1691]

The subprime mortage business made big money for Wells Fargo, those subprime mortgages were repackaged and sold as the toxic debt that has derailed this market. Wells can BS everyone that they are rewarding good mortgage brokers, but how many of those mortgage brokers knowingly pushed subprime mortages on people who would normally never qualify for a loan. In the Mortgage business, its all about closing the deal and sealing the commission, damm the consequences after the fact. Mortgage brokers are now viewed as equals to the dirt lot used car salesman, who are ony concerned about making the fast buck

[Al]

I think it is overblown, of course Banks should be prudent if they are taking TARP money, but remember Wells is in good shape, probably didn't need the funds....as a past mortgage loan officer (not subprime mind you) these incentive trips are Production Driven, only the top producers make these trips, and it is due to excellence....in some cases Wells pays less in income than other companies, and trips like this are incentive based, and earned. I would agree Vegas may be a bit over the top.....but then they probably saved money by not going out of the country, if anything this would have been good money circulated in the economy, here in the US.
Wells has a large amount of employees.....these were a fraction of them, and only the top producers....

[Preston]

Wells Fargo among others say they have no lavish events planned for this year simply because they are being watched closely. As soon as they think the heat has died down They will be doing it all over again. The American people are sick and tired of these banks and insurance companies and others spending our money so freely after needing help to stay afloat, while so many of their fellow citizens are losing homes jobs and their life savings. It is time for the days of lavish spending on their part to end once and for all.

[Orlando]

How about just telling these high achievers - thank you for a job well done and wehn you get your company out of the mess its in - and you start to make some PROFIT - THEN you cna reward them - They are on a team and you dont reward one or two or a hunderd players on your team if it finishes in last place. GET REAL - If you want mytax dollars - there will be no BONUS till you turn your company around.

[victor rivas]

Bailouts its to corrupt all these people that even if they call themselves CEOs are nothing but self oriented individuals that prophecing to be wise became FOOLS with the so call lidership positions and according to their twisted mind their not able to see the whole picture because they are been bound by corruption,selfisness,and depravity and because of that made themselves big rewards at expenses of you and me and they are no better than parasites to society. I dont blain them, I blain those who are above them releasing all those billions of dollars.We are going to Hell and a huge basket and we are being boiled in slow flame gradualy dying.

[Dennis]

What's most sad about them buying a full page is that they felt it was necessary. There are so many real issues to cover...it's pathetic that journalists have made this an issue.

Tom, your 'modest suggestion' is a great illustration of how journalists can really screw things up. First, to have this in headquarters city? How does that save money? Wells Fargo is kinda a big company, and I'm kinda confident people would be coming from all over the place.

And 'lavish resorts in Sin City?' Talk about loaded language. First of all, Las Vegas is a destination that offers tremendous value for the dollar. Look at the bad bermuda shorts walking around those so-called 'lavish' resorts. Compare rates at five-star Las Vegas hotels versus other major US cities. Plus, flights to Las Vegas are frequent and thus relatively expensive, a lot moreso than to a lot of other resort destinations - like Hilton Head.

But most flawed is the logic of this 'problem' to begin with...when Wells Fargo buys airline tickets, hotel room, bus rides, meals, etc., where, Tom, do you think that money goes? Into a fiery pit? To Al Queda?

It's goes into the economy. You and your fellow journalists are helping trash another industry for a cheap, easy story.

The problem here is not 'public perception'? It's journalists fanning flames of a scared angry public. You are creating that perception for a 'cheap' story, rather focusing on stories on the economy that really matter.

[Cory Vandergeld]

I'm appalled by the audacity of some Corporate Heads to take Federal Money and use it
without any remorse while their bottom line in the Banks come up RED

Cory

[The middle class]

Dear Wells Fargo,

For years to come, my family and I are going to be paying for your past failures. A little humility will help ease our pain.

Sincerely,

The middle class

[Bill Carson]

Amazing how ignorant the commentators here are. Wells Fargo carefully avoided the option ARMS and other cheesy mortgage instruments so popular with other companies like Countrywide, WAMU and Golden West. To say that Wells Fargo benefitted from these by acquiring Wachovia, which was nearly ruined by its earlier acquisition of Golden West, is asinine. The other point you people miss is that most people who attend those "recognition events" are poorly-paid tellers, branch bankers, and back-office clerks who could never afford a vacation otherwise. Finally, Wells Fargo never asked for any government money and was forced to take it by Paulson, for the purpose of expanding the money supply through increased lending. Those of you who know anything at all about economics will understand this. You people need to educate youselves before you run off at the mouth.

[Evil rules this country]

These guys are vile.

Why don't they do something to thank their customers, the ones who pay the bills and salaries.

Or, why don't they take the Vegas money and use it to help others in need, or to help those who are going to default not because they took on an irresponsible loan but because the deteriorating economy has trickled down to responsible people.

There are countless things to be done with the Vegas money other than squandering it on gambling, hookers and otherwise.

Their employees should be thankful just to have jobs at this point.

Also, the whiny useless ads Wells took out cost a pretty penny. What a waste. Meanwhile, they're offering nearly zero interest and barely lending.

Meanwhile, the Democratic Caucus, in between outrage at corporate retreats, just went on a half million dollar "retreat" largely on taxpayer money.

[maria]

Thank you Tom for your comments. You are so right about what banks should be doing during these tough times to recognize their employees. NOT go to resorts and Vegas. You are in touch with the little people. Thank you

[LizMnLA]

What an arrogant display of entitlement! This is one example of a CEO that doesn't get it and therefore, needs to go! Those people whom he felt needed recognition and reward, got plenty of reward with the money they made selling lots of mortgage loans to people who really shouldn't have received one. They DID do a very good job. The extra money Wells Fargo received to stay viable, was not money to let Wells Fargo do business as usual and that includes lavish spending. Bonuses? Out! Top performer recognition trips? Out! CEO Stumpf? I say out! Only when EVERYONE is doing well, from the bottom up, should any consideration be given to rewarding anyone.

[Sam Overton]

Time to cut Stumpf into kindling. As a state employee, I don't get recognition junketts, even after 30 years. State employees get furloughs instead.

I was about to open a large cd at Wells Fargo for my uncle's trust, but now I am rethinking that decision.

[Sally]

Thank you Dennis and Bill! It's so sad to see the press taking the opportunity to destroy the reputation of one of the few banks that's still in business and employs so many people. If the press would just stop feeding on every little piece of news maybe we can start working our way out of this mess. I'm sure one way NOT to help the economy is to have businesses like wells fargo stop having meetings and events. Businesses need to keep going to keep other businesses going and to keep jobs! And by the way, they didn't use the government's stupid money. If they were smart, they'd just pay it all back tomorrow and tell everyone to pound sand.

[Tom Petruno]

@Dennis and Bill:

Dennis: I have no problem with Wells trying to recognize top employees. But you're kidding yourself if you think there's no "public perception" problem with banks and bank practices. The media didn't make the astounding number of bad loans that now have crippled the financial system. The fact is, given that taxpayer money now has to support the banks, these lenders have no choice but to be sensitive to how their actions are perceived. As a banker, why would you want to make more trouble for yourself? Vegas may be cheap destination, but in this economy it's still going to look like a poor choice for a gathering of bankers.

Bill: As for Wells' financial health, it's supposedly true that Wells said it didn't want or need the $25 billion government capital infusion. But as you may have noticed from the action in Wells' stock this year, there are more than a few people who are wondering whether the bank will in fact need more capital (hopefully from private investors) to bolster its finances against future loan losses. Please see this blog post from last week:

http://latimesblogs.latimes.com/money_co/2009/02/wells-fargo-cap.html

Tom Petruno

[Erik]

I am going on welfare. I will, of course, be taking taxpayer money, not unlike Wells Fargo did in the form of TARP funds. My wife will still be working, so we won't be living entirely off the government. But times are rough. I need this money! And as soon as I get my first welfare check -- I'M GOING TO DISNEYLAND!! If anyone complains, I'll take out some newspaper ads to explain why my decision was sound. It's amazing that some of the commenters here are actually defending Wells Fargo's use of ANY funds for bonuses or trips when they have just taken a taxpayer bailout. Hey Wells, forget Vegas, baby! Come join me at the happiest place on earth!

[Dan]

Someone wrote,
The other point you people miss is that most people who attend those "recognition events" are poorly-paid tellers, branch bankers, and back-office clerks who could never afford a vacation otherwise.

Sounds like you're the one whot needs educating. I don't know where you got the idea that the people attending these 'recognition events' are tellers and back office clerks. Its obvious that these events are for bank officers and vps who are already getting a six figure annual salary Besides, there are other forms of employee recognition reward that are more meaningful and personal and cost much less.

[Vega]

Tom, you apparently have no idea about actual prices in so called "lavish Sin City" vs San Francisco. Nowhere in US you can hold a conference for less money than in Vegas. Check the actual prices before you speak. You (and it appears many others as well) have a huge disconnect between your perception and reality. Las Vegas has great facilities for fraction of a cost of any major (if not any) city in US. They also offer discounts on airfare, and group incentives. And if you think airfare wouldn't be required if it was held in SF - think again - most Wells Fargo employees don't work in SF, so they still would need to be flied into (btw, there are plenty of Wells Fargo telles in Las Vegas). Also, events like that one are planned way in advance (months and sometimes years) and they are paid for in advance. And if a company decides to cancel, guess what, they lose the money they paid. And as someone who has been to tech conferences in Vegas (not Wells ones), I can assure you, there is often very little time to do anything but attend a conference and sleep since the schedules sometime run from 8AM to 11PM. So please learn to check your facts before you speak - it might actually help you in your job.

[odell]

.....wasn't government money.....

Hmmmmm, where I went to school, I was taught that money is fungible.

[kanye east]

the easiest way to show your displeasure with this or any other banks behavior is to simply CLOSE your accounts and take your money to another company. it's what i did.

[Dennis]

Tom, I completely agree that the banks and the banking system and the bailout in the fall --- all disasters. And I have little empathy for any bank.

My point is that journalists are wasting time and energy by focusing on such a non-issue. Go after the banks and the regulators and Congress and President Bush. Don't in effect give them a pass by focusing on something so unimportant.

[Paul]

Where does one begin to lecture these myopic morons on what's going on in this country?

[Vega]

Dan, it's actually you who missed the point. This particular event was for tellers, bank office clerks, and other regular employees - not for executives. There is a lot of information about it - Google it.

[Phil]

As a longtime shareholder of Wells Fargo, I was furious that they bowed to media pressure and cancelled the employee recognition event. This is not an AIG-exec-at-the-St-Regis situation. This is a celebration of the top performering rank and file employees of the business. Wells is by far the best run large bank, and is the only one who has INCREASED lending the last 4 months to get the economy going. They didn't want TARP money but are doing more with it than anyone else who has received the money.
On top of that, the cancellation fee to Wynn resorts this close to the event was almost as much as the cost of event itself. That is why it hadn't been cancelled already, like the other events for 2009. So they still have to spend the money, only now there is no benefit to the employees. Now it really IS a total waste of money.

[grandpa]

This is MY bank. Hey, how much did the newspaper ads cost? Your little "recognition event" certainly received recognition -- for all the wrong reasons. Take care of MY money better than this!

[charlie]

i have been trying to do a workout with Wells Fargo since December
I can't even get them to phone me back and yet this knucklehead takes out a full page ad defending his companies entitlement issues and doing it with our money.
So, does anyone out there trust of feel of these folks.
I think we will be all better off using "street" money at least there we know for sure we are dealing with criminals as oppose to wolves in sheep's clothing

[andy]

Recognition come every 2 weeks in the form of a PAYCHECK !!! when will people realize that your salary is your recognition. To much effort is made these days to "recognize" peoples achievements for the job they are paid to do in the first place.

[Marvin]

I'm a former Wells Fargo banker. I'm disheartened by comments from people who know nothing about the crummy job of being a banker. The pay is notoriously terrible and the working conditions are miserable. I would say that out of every ten bank customers who would meet with me on a daily basis, nine of them were too stupid to tie their shoelaces, let alone manage their money. Yet all they could do was complain about why their mistake was really the bank’s mistake. All I could do was sit and listen to their complaints with a concerned look on my face and try and make them feel better.

Each year Wells Fargo provided me with a compensation plan. It defined what I needed to do to earn a bonus: how many checking accounts I needed to open, how many on-line banking accounts I could talk people into, how many debit cards I needed to have distributed, etc. Bonuses were something that was critical to my income since my base salary was so low. If I failed to earn at least a minimum bonus for two consecutive quarters, I would get fired. If I did a job better than 99.9999 percent of the other bankers, there was a good chance that I might be recognized by being invited, along with the fraction of a fraction of a fraction of other bankers to attend one of these events. A shared hotel room, a few meals, and transportation would be provided by the company. Everything else would be on my dime.

Of the banks, Wells Fargo is definitely one of the best, primarily because of their conservative financial policy. They didn't make this mess and they didn't contribute to it in any significant way - far less than past and current congresses. When things looked really bad, they were asked to come to the aid of their country and they answered the call.

I don't understand how people can support the way our congress and its lackey President can throw away trillions of dollars on nonsense and complain about a company spending a relatively small amount of money to recognize some of their best rank and file employees, members of the middle class, who add so much to making a great company better. And I don't understand how people who support silly government projects as a way to supposedly create or save jobs can criticize a company spending money in the US economy that will help those hotel employees put groceries on their tables and cloths on the back of their children.

Come on people - if you want to be angry, be angry at the right people. Yell at the Times and other media for being ignorant and not doing their homework like responsible journalist. Yell at your congressman and senators for being stupid, especially with our money. Yell at the President for being naïve and lacking the kind of leadership we deserve. Then, go look in the mirror and yell at yourself for not knowing better.

Marvin

[Nes Villanueva]

Are these employees not paid to do their job? So, Wells Fargo has to spend more of the bailout fund on employees for doing their job? Are these not the same people who also contributed to the mortgage meltdown? No wonder we are experiencing these financial problems. We are rewarding people who put us into this situation but the irresponsible management of Wells Fargo sees them as worthy to receive the perks courtesy of the suffering people of the United States.

[JonSE of Arizona]

Stumpf the Dumpf certainly may spend his personal money on whatever frivolities he wishes. I only object to his spending my tax money on unnecessary perks, and the like. Once he took the public money, he is subject to public scrutiny. Now that he is a public welfare case, he needs to adjust and quit whining.

[Jack Franchek]

I spent 20 years operating and hosting the incentive events you describe. The wasted funds and excessive events are beyond belief. The entire industry should be examined as it is a drain on needed funds when economy is collapsing. Any underpaid tellers should step aside as there are 10 unemployed workers who will be pleased to take that position without Las Vegas.

Jack

[JonSE of Arizona]

To Bill Carson. The federal government cannot force any business to take public money. Wells Fargo took the bailout funds by choice. They may have been pressured, but certainly not forced. Were they threatened with being shot, put in jail, forced into bankruptcy? I think not. It was a business decision. They now are public welfare recipients and need to start acting like all recipients of welfare, that is, subjective and compliant to regulation by their financiers.

[Robert]

These people just do not get it. Where I come from, if the company does not do well, we all suffered not just the part that didn't do well. Do you think the shareholders cared that the deck chairs are neat when the ship is sinking?

I am beginning to understand the mentality of those who stormed the Bastille.

[Carla]

Like many people, I've been recognized for efforts at work before, sometimes with a bonus, other times with a plaque or certificate. Sometimes, I'd get the certificate along with an expression of regret that there was no money for a bonus. If the company was teetering, the bonus would be small, usually reserved for those who saved the company money, protected it from a significant risk, or had a stellar idea that was pretty sure to provide a revenue increase down the line. Hasn't that been the experience of most of you?

I've never worked for a company that had just received an enormous cash infusion courtesy of American taxpayers, but my gut says, go with the certificates and plaques.

[Susan]

Marvin,

If Wells is such a great bank, why did it need to take money from me (that's me the taxpayer) to stay in business? You say, "When things looked really bad, they were asked to come to the aid of their country and they answered the call." That would be the "call" to take taxpayer bailout money?

Phil,

You say, "They didn't want TARP money." Well then, they shouldn't have taken it.

He who pays the piper calls the tune, an ancient adage of our capitalist system. I don't want my money used to take bankers to party in Vegas. Wells doesn't like the restrictions I place on the use of my money? Well then, they should run their bank without it.

[Laura]

Hmmm, a while ago I was recognized as a "top performer" at my job (mathematics professor at a state university). It got me $500 and a lunch at the Alumni Center, and I didn't feel shorted. Why do mortgage brokers need a trip to Vegas to feel appreciated?

[sally]

We should be thankful Wells and the other banks still have their doors open. If the media had their way we'd all be out of jobs, on welfare, in a shelter and watching them tell us how we should feel about everything. We can't give up on the american dream and spending money on local businesses is part of that dream. The meetings were for 40 people for goodness sakes. But guess the press would rather talk about Wells and phelps smoking pot than how we can all work together to get back our American dream. What happened to yes we can??

[Tom Petruno]

Sally, I'm curious: Exactly how would it benefit the media to have everyone out of jobs, on welfare and in a shelter?

I'd like to see the math on that one.

Tom Petruno

[Hilary Smith]

Wells Fargo should spend their play money building homeless shelters for the working-class families they've kicked out onto the streets.

[Frank]

Rewarding employees for performance is a business decision whether you are taking gov't money or not. By denying companies the right to stimulate performance by awarding trips and bonuses, you are in essense dumbing down the industry and providing a template for socialism and communism. The reason these two idealogies do not work is that there is no incentive to do a good job. Look at the USSR in the 80's - for a country that was a "Super Power" they couldn't even stock the bread shelves. Now, I do realize that executives have been receiving obscene bonuses, but if you take away all incentives for regular folks, like the Wells mortgage employees, then you are socializing the workforce. How is that going to improve performance - don't people realize that one of the things that come of meetings like the Vegas one is that you build comraderie( no pun intended) and culture. Not to mention all of the discretionery income these folks were going to spending at the airport, taxi's, casinos, restaurants, clubs, etc.... Isn't that what we want. People to spend their money. I say as soon as you can Wells Fargo - pay off the gov't and never ever take money from them again - even though you were forced to.

[Bill]

Wells CEO John Stumpf is in the same basket of BS as John Thain, living a dream world of private jets and outrageous "compensation". I thought Wells was better than the rest, but I am going to vote with my dollars and take them elsewhere. Just when do these egotistic jerks GET IT ??

[Johann Wagener]

If Mr. Stumph want's to celebrate the train wreck he and his incompitent employees helped create let him personally write the check; not use our money to reward failure.

[Calisto in Oakland]

Rewarding incompetence?

My Wells Fargo account manager invested my kids' college funds and lost almost 40% in the past 8 months. She's considered a "top employee" of Wells Fargo.

I don't think she deserves a reward.

[M Schulman]

Employee recognition? These days employee recognition is when an employee recognizes that they have a job today and it may be gone tomorrow.

This article proves to us that corporate "leaders", despite the bailouts we have given them still live in castles high above reality.

Main street will remember the intelligence and sensitivity of these choices they now make for a long time to come.

[crackedmuse]

To @Marvin who said:
"I'm a former Wells Fargo banker... I would say that out of every ten bank customers who would meet with me on a daily basis, nine of them were too stupid to tie their shoelaces, let alone manage their money. Yet all they could do was complain about why their mistake was really the bank’s mistake. All I could do was sit and listen to their complaints with a concerned look on my face and try and make them feel better."
--------

If this is the prevailing attitude among Wells Fargo bankers towards their customers, then there is no achievement to be recognized. Unless having complete disdain for the people who make your paycheck possible is now something to be rewarded.

[Kent]

If I were a teller making close to minimum wage, I'd rather have a few extra dollars as a "thanks for your hard work" bonus in my paycheck over a trip to Vegas. Even though Wells Fargo lost a lot of money due to pure greed and needed taxpayer money to keep from going under, I would support small, lower level employee "bailout" bonuses over wasteful trips as a valid use of taxpayer money to reward the common people. The newspaaper ad is pure clueless baloney from clueless execs who are way out of touch with the working public.

[nick]

I am a physician, Primary care.
I have numerous patients who can't afford their meds, due to job losses, etc. We have worked hard to find which generic drug programs can help these patients; we've bent over backwards to help these strapped patients; this economy has clobbered us also.

It's fine to want to reward your employees, but not when MY dollars , OR my patients' dollars are used, as the taxpayers who are helping to fund you in this mess.

[Marvin]

To Phil,

Wells Fargo was asked to buy either Wacovia or WAMU to lower the cost to us, the taxpayer of bankruptcy or either of those institutions. In the end, Wells agreed to buy Wacovia and saved us all a lot more than the $25 billion that the government offered to sweeten the deal. Wells had no desire to buy either Wacovia or WAMU but were asked to do so. The money they received was a cheap throw for us and didn't even come close to covering the cost Wells Fargo had to incur. They appear to be a very socially responsible company and we should all be thankful and proud that they are one of our great American companies.

To the math professor,

If you didn't have tenure and your salary was based on the independently determined quantitative performance of your students, you just might not have been a top performer. I know most of the professors I had when I attended a California State University were sub-par and definitely not worth the salaries I was paying them through my taxes. I think you live in a glass house and don't really have the right to compare yourself to what real people have to do to earn a living. You know the saying, "When you can't succeed at anything else, you can always be a teacher." Many people believe that educators are the least appreciated professionals and there's a reason for it, and now you know it.

Marvin