2017-05-06reuters.com

Wells Fargo, whose largest shareholder is Berkshire with a 10 percent stake worth $27 billion, gave employees too much autonomy to engage in "cross-selling" multiple products to meet sales goals, Buffett said.

This "incentivized the wrong type of behavior," and former Chief Executive John Stumpf, who lost his job over the scandal, was too slow to fix the problem, Buffett said.

"If there's a major problem, the CEO will get wind of it. At that moment, that's the key to everything. The CEO has to act," Buffett said. "The main problem was they didn't act."

Still, Buffett's support of current management and board was key to ensuring the reelection of the entire board last month.

...

Asked whether Berkshire's decentralized structure could lead to a similar scandal - Berkshire subsidiaries employ some 367,000 people but just 25 work in the main office - Buffett said Berkshire welcomes being alerted to misbehavior via an internal "hotline" that gets 4,000 calls a year.

"As we sit here, somebody is doing something wrong at Berkshire," and the Wells Fargo situation shows the potential "damage" from inaction.



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