Banking

Wells Fargo CEO sees big boost in pay despite the bank’s scandals

Wells Fargo CEO Timothy Sloan testifies before a Senate hearing on the bank’s sales scandal in this October 2017 file photo.
Wells Fargo CEO Timothy Sloan testifies before a Senate hearing on the bank’s sales scandal in this October 2017 file photo. AP

Wells Fargo CEO Tim Sloan was awarded $17.4 million in compensation for his work last year, a more than 35 percent increase from the year as the bank continued to struggle with scandals.

But Wells noted it did not award Sloan a cash bonus “based on his ultimate responsibility, as CEO, for our company’s performance.” Sloan also had recommended he not get that bonus. That performance included “significant but incomplete progress on addressing compliance and operational risk-management issues,” the bank said in its annual proxy filing.

The announcement comes as Wells Fargo continues to recover from a major sales scandal over unauthorized accounts that erupted in 2016 – and from revelations of new problems that have emerged since then.

Last year, the bank disclosed problems with a growing list of products, from auto insurance to mortgages to identity theft protection.

The wave of scandals led the Federal Reserve to slap restrictions on Wells Fargo’s growth last month and order it to improve its governance and risk-management processes. The regulator said the unprecedented actions were in response to “widespread consumer abuses and other compliance breakdowns” at Wells.

In its latest stumble, Wells disclosed this month a host of new areas with potential problems. Those include its wealth and investment management business, which the bank said federal authorities are examining, as well as its foreign exchange business.

Also Wednesday, Wells Fargo disclosed the pay gap between Sloan and workers earning the median compensation at Wells. Public companies must disclose the ratio this year to comply with new federal rules.

Sloan earned 291 times the estimated median total compensation figure of $60,446, according to the bank. The gap is based on a different pay calculation for Sloan that takes into account other compensation, such as company 401(k) matches.

Last year marked Sloan’s first full year as CEO, after being promoted to the position in 2016 to replace John Stumpf, who abruptly retired following the sales scandal.

Wednesday’s disclosures show Sloan’s compensation included a base salary of $2.4 million and stock awards of $15 million. That compares with a base salary of $2.3 million and stock awards of $10.5 million that he was awarded the year before. Sloan won’t actually receive the stock unless the bank hits certain performance measures over a three-year period, Wells said.

In announcing the new compensation figures, Wells said the company had solid financial performance last year as it continued to execute its plan of building a better bank and making progress on efficiency initiatives. That performance also included ending the year with record deposit balances, and customer satisfaction scores for branch visits returning to pre-sales-scandal levels, the bank said.

But Wells continues to lag its big-bank peers in the area of share-price performance.

Stocks at big banks have soared under President Donald Trump, amid expectations of looser regulations and rising interest rates. Wells shares have not been buoyed as much as some competitors’ as it grappled with scandals. Last year, Wells shares rose 10, far below gains at Bank of America and Citigroup, whose stock prices rose about 34 and 25 percent, respectively.

Other executives whose compensation was disclosed in last year’s proxy also received overall increases.

Unlike last year, Wells Fargo’s board did not initiate punitive actions affecting executive compensation, Wednesday’s report shows.

Last year, the board said eight executives, including Sloan, would not be awarded cash bonuses for their 2016 performance following the scandal over unauthorized accounts.

But the executives ended up receiving more overall compensation in 2016 compared with the year before, because of higher salaries and stock awards, which offset the loss of cash bonuses.

The bank also disclosed Wednesday that Des Moines, Iowa, will be the location of its April 24 annual shareholders meeting. Wells headquarters its mortgage business in that city.

At the gathering, investors will vote on three proposals from shareholders, including one requesting Wells disclose whether it has identified employees eligible to receive incentive-based compensation tied to metrics that could expose the bank to possible material losses, Wells said Wednesday. The bank is urging shareholders to vote against the measure.

Wells Fargo employs roughly 25,000 people in the Charlotte metropolitan area, its largest employment hub.

Wells Fargo joins other banks that have released fresh compensation details for top executives.

Last month, Charlotte-based Bank of America disclosed that CEO Brian Moynihan received $23 million in salary and stock for his performance in 2017, a 15 percent jump from the previous year.

Moynihan’s pay for 2017 included $21.5 million in stock, as well as an unchanged base salary of $1.5 million. As in previous years, he did not receive a cash bonus.

Deon Roberts: 704-358-5248, @DeonERoberts

  Comments