Crab Hands

Wells Fargo beats Yahoo hands down in the crisis clawback stakes. Both West Coast companies on Wednesday announced that they are docking executives’ pay for failing to deal with long-term scandals. The $305 billion bank, though, has come up with an altogether more apt response to its multi-year mess than the $44 billion search firm.

Yahoo is still dealing with the fallout of a 2014 security breach that hit at least 500 million user accounts, and an earlier incident that compromised a billion accounts. Shareholders are already out $350 million, the amount by which it agreed to trim the sale price of its search business to Verizon last month.

But the company, which on Wednesday parted company with General Counsel Ronald Bell over the matter, is treating Chief Executive Marissa Mayer with kid gloves, denying her only a cash bonus for 2016 for the 2014 breach. It’s worth noting she didn’t get a cash bonus in 2015, when her comp was a cool $36 million.

Granted, the board accepted Mayer’s suggestion that she forgo any annual equity award for 2017, but that may have been peanuts in any event. Once Yahoo concludes its Verizon deal, she will be running little more than a shell company comprising stakes in companies she has no control over. Moreover, she may still be in line for a golden parachute that could be worth as much as $44 million once the sale is closed.

Wells, meanwhile, is reaching further back in time to punish executives who did not get a handle on the five-year saga of bankers creating up to 2.1 million fake retail and credit-card accounts to hit sales targets. In addition to eliminating all 2016 bonuses for the eight people who were members of the operating committee before November, it is halving equity awards from their 2014 long-term incentive plans.

That’ll save the bank around $32 million, on top of the $60 million or so in unvested stock awards former Chief Executive John Stumpf and retail boss Carrie Tolstedt surrendered when they resigned in September.

The lender could have gone further. It was handing out pink slips to employees creating fake accounts as early as 2011, after all. And its stock price has underperformed the KBW Nasdaq Bank index by 19 percentage points since early September, when regulators fined the bank over the scandal. That translates to some $48 billion of lost value.

At the very least, though, Wells is doing a better job of executive punishment than Yahoo.

_______________________________________________________________________________________

Request a free trial of Breakingviews here.