Wells Fargo plans to raise the pay for some of its lower-paid workers next month, in a move that would boost compensation for about 50,000 employees, the bank’s CEO told the Observer on Tuesday.
The San Francisco-based bank is taking the step after raising the minimum wage for its lowest-paid employees over the past year. Starting this month, those workers will receive $15 per hour, after a $1.50 per hour raise announced after President Donald Trump signed a tax reform law in December.
After bringing the lowest-paid employees up to $15 per hour, “it’s appropriate to look at the folks that were in and around $15 and say, ‘Gosh, maybe you should make adjustments there, too,’” CEO Tim Sloan said during an interview in Charlotte. “That’s the next group that will be impacted.”
The bank hasn’t yet said what the new pay rate for this group will be, but a spokesman said it would be “competitive and fair relative to the new minimum base pay.” Wells is based in San Francisco but has its biggest employee hub in Charlotte, with around 25,100 of its 263,000 employees here.
The move comes as other banks, including Charlotte-based Bank of America, have also been raising compensation for their lowest-paid workers. Bank of America and other companies also doled out special bonuses to their workers following the new tax law.
Wells Fargo did not pay out these types of cash bonuses. However, the bank did award restricted stock grants this month to 250,000 workers, Sloan said. Full-time employees received 50 shares, while part-time workers received 30.
The shares, which went to employees who don’t typically receive stock as part of their compensation, can be cashed out after two years. The bank’s shares are currently trading around $52.
Sloan rose to CEO in October 2016 after John Stumpf retired amid a scandal over sales practices in Wells Fargo’s retail bank. Since then, he has been working to rebuild the bank’s image and tamp down new problems in its auto lending and mortgage businesses.
The Wall Street Journal reported last week that the bank was making changes to its risk management operations that included the retirement of four executives. The paper also said the Office of the Comptroller of the Currency, the regulator of national banks, was close to finalizing an enforcement action and civil penalty tied to the firm’s risk management, citing people familiar with the matter.
In the Observer interview, Sloan said the departures were normal retirements. He declined to comment on discussions with regulators.
Some critics, including Democratic Sen. Elizabeth Warren, have questioned whether an insider like Sloan can turn Wells Fargo around. Asked whether he’s the best pick for the job, Sloan said he thinks he is, but added that ultimately it’s up to the board.
“So far they’ve concluded that I am the right person,” he said, noting changes Wells has made during his tenure to change its practices, including naming new leadership, centralizing many functions like risk and human resources, and overhauling how it compensates employees.
“I promised that we were going to look at all of our business and all of our product and services, and if we found anything that needed to be improved that we would be very transparent about it,” Sloan said.
Wells has been publicly disclosing issues it’s uncovered, even when some of those matters have no material impact on the company’s finances, he said. “Sometimes, unfortunately, transparency in the short term creates a lot of focus by stakeholders but over the long term it’s the absolute right thing to do,” he said.
Among other initiatives as CEO, Sloan has announced plans to trim more than $4 billion in annual costs by 2019. The first $2 billion will be re-invested in the company, while the second $2 billion will fall to the bottom line, the company has said.
Wells has said it plans to wring costs from the nation’s No. 3 bank by assets through a variety of steps, including consolidating duplicative processes across lines of business, automating manual processes and outsourcing certain functions. Wells has not provided details on any possible job cuts.
“I don’t know what the impact will be in terms of the number of people who work at Wells Fargo,” Sloan said. “Candidly, I think that technology, the change in customer tastes and demand for products will have more of an impact on how many people work at the company, where they work, what they do, than an incremental $2 billion (in cost savings).”
In a proxy filing this month, Wells said Sloan was awarded $17.4 million in compensation for his work in 2017, a more than 35 percent increase from the previous year even as the bank struggled to recover from its scandals. The bank noted that he did not receive a cash bonus.
The filing also showed that Sloan earned 291 times the estimated median total compensation of the company’s workforce: $60,446. All public companies are required to disclose a similar figure for the first time this year. Wells Fargo’s calculation included pay for part-time workers, the company noted.
The ratio “doesn’t really drive how we think about compensation at Wells Fargo,” said Sloan, who made less than other big-bank CEOs in 2017. “We are being very transparent in terms of what compensation for senior leaders will be. Those are the rules. We’re going to follow those rules. But we’re also going to make sure that we provide appropriate compensation (for the company’s workforce).”