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Wells Fargo & Co. said its chief executive and three other high-ranking executives won't get cash bonuses for 2009, but are receiving performance-based stock awards currently worth a combined $25 million and designed to keep them from being lured away by rival banks.
The Thursday announcement came a week after the bank said it had repaid $25 billion it received under a government financial rescue program that imposes restrictions on executive pay.
The so-called "retention" shares would be forfeited if CEO John Stumpf or three other high-ranking executives leave San Francisco-based Wells Fargo for a competitor. They vest after three years if the nation's fourth-largest bank meets certain performance goals.
The lack of a 2009 cash bonus and the three-year vesting period are similar to a move earlier this month by Goldman Sachs Group Inc. That bank said its top executives will not receive cash bonuses this year, with 30 high-ranking executives instead receiving stock that cannot be sold for at least five years.
Steve Sanger, chair of the Human Resources Committee for Wells Fargo's board, said in a statement that keeping the four executives at the bank after its acquisition of Charlotte's Wachovia Corp. is "absolutely essential for the continued long-term success of Wells Fargo."
Sanger said the four have led Wells "through the largest merger integration in U.S. banking history, and they have played key roles in generating record profits in the first three quarters of 2009, despite the challenging economy."
Wells Fargo is awarding Stumpf a target of 379,600 shares, currently worth $10million. Chief Financial Officer Howard Atkins, wholesale banking head Dave Hoyt and consumer finance head Mark Oman are each getting 189,800 shares, worth about $5 million. The totals could be adjusted over the next three years based on the company's performance.
Wells Fargo's announcement comes more than four months after the bank increased the four executives' salaries, with the increases paid not in cash, but through issuance of company stock.
The stock couldn't be issued until Wells Fargo repaid funds it received from the Treasury Department under the Troubled Asset Relief Program. Wells Fargo acquired Wachovia around the same time.
