Wells Fargo CEO salary is one of the juiciest in the American banking and financial sector. Wells Fargo is one of the “big four” American banks. The big four are a group of four of the largest American banks with asset values running into trillions. They aren’t big in America alone, their strength towers high over banks in other climes. These banks rank high amongst banks worldwide in market capitalization and value. The big four include JP Morgan Chase, Bank of America, Citibank, and Wells Fargo itself. Wells Fargo has an estimated asset value of $1.779 billion as of June 2022.
Though Wells Fargo has had a long and great history haven been established in 1852. Charles Scharf has contributed his quota to the success of the 170-year-old bank, especially in the areas of reduction in recurrent expenditures and excesses. Charles is often called “Chainsaw Charlie” by staff within the bank for his commitments to major cuts his policies have affected the bank. Scharf joined the board of Wells Fargo on the 17th of September, 2019 with a plethora of experience in the American banking and finance sector. He was before the CEO of Bank of New York Mellon from July 2017 to October 2019. He also became the Chairman of the bank’s board. He also served as CEO of Visa from November 2012 to October 2016. He attained this position at age 48. He helped increase the company’s revenue to $11.7 billion which saw it make the Fortune 500 list at the 238th spot. He also served previously as the CFO of Salomon Smith Barney, CFO of Citibank’s Global Corporate and Investment Bank division, CFO of Bank One, head of the retail division at Bank One Corp., and the Managing Director of One Equity Partners of JPMorgan Chase & Co.
Though relatively new at Wells Fargo, Scharf brings his expertise and in-depth knowledge to the bank. At the first town hall meeting, Scharf said he would reposition the company to the highest standards of operational excellence whilst making a tremendous positive impact on people. He asked his executive members and colleagues to be ready to give more when called upon. They should also be free to contribute during brainstorming sessions rather than leave everything to him based on his 25 years of experience in the industry. He advised them to make true their promises by flawless execution and to always do the right thing at the right time.
Wells Fargo is still on 3 regulatory sanctions
One might recall that the major lender hasn’t had the best of times as a financial institution recent. The bank currently operates under nine regulatory actions as a result of the penalty imposed on it in 2016. This was caused by employees opening millions of phony accounts with customers’ profiles (without their knowledge or permission) just to hit sales targets. Wells Fargo was slapped with a 12 regulatory actions penalty. This number has reduced by 3 since the emergence of Charles Scharf. The most prominent of the penalties which are still ongoing is the $1.95 trillion asset cap imposed in 2018 by the Federal Reserve. But, Scharf has been able to guide the bank to make a return of 14.3% on tangible common equity despite the penalty still being in place. This isn’t surprising as Scharf pledged to solve the bank’s regulatory woes with a different kind of resolve and a sense of urgency.
Charles Scharf is now the fifth highest-paid bank executive
On joining the bank in 2019, the Wells Fargo CEO salary was the highest in the banking industry. His salary at the time, $36.4 million in total compensation, was ahead of those of his closest rivals which are Jamie Dimon of JPMorgan Chase t $31.6 million, Michael Corbat of Citibank at $25.5 million, and Brian Moynihan of Bank of America at $25.4 million. The total take home package for the Wells Fargo CEO consisted salary at the time included a cash compensation of $7.6 million and a reserved stock option of $28.8 million. Following this, Scharf took a massive pay cut in 2020 and we all know why it was so. The COVID-19 pandemic had a very destabilizing effect on various sectors of the economy. Many banks were affected as trading activities reduces, stock prices dropped and bank revenues were slashed. like some other CEOs in banking and other industries, Scharf also took a pay cut. The CEO’s salary and total compensation were pegged at $20.3 million for 2020, a 12% drop from what he before earned in 2020.
Last year, 2021, provided a turning point for many banks in the US. Deposits increased as well as bank stock and revenues. Wells Fargo was not left out as it saw its share prices increase more in comparison to its peers in the sector. The bank’s share price increased by almost 59% in 2021 alone. This and others led to the bank posting a profit of $21.5 billion for the year alone. The Wells Fargo CEO salary wasn’t left out of the increase. The board gave Scharf a 20% in his wages. The new salary, which is now $24.5 million, consists of $2.5 million in base salary, $5.4 million in cash bonus, a $10.8 million performance shares award, and $5.8 million in restricted stock instruments. This securities filing submitted by the board explained this in detail.
This new Wells Fargo CEO salary makes him the fifth highest-paid CEO in the American banking system. He’s the least in the big four but also fifth in the big six earning $2 million more than Jane Fraser, the CEO of Citibank who is currently on a total of $22.5 million for 2021.
The board of Wells Fargo justified this pay citing Scharf’s commitment and steady progress in fulfilling the bank’s risk and strategic priorities. The board also lauds the CEO’s tact in handling the restriction which has yielded tremendous successes. The reduction in the number of penalties and an increase in common equities did not go unnoticed by the board. The Office of the Comptroller of Currency (OCC) even terminated a regulatory order against the bank in January this year. They had before let one expire (without renewal in September 2021) much to Scharf’s credit.
Other aspects of Charles Scharf’s business models the board recognized and praised were his inspirational, effective leadership style and drive for excellence. The CEO’s move to optimize the makeup of the Wells Fargo business areas is a welcomed development. This led to the sale of the bank’s student loan portfolio and asset management units. In justifying the sale of the asset management portfolio responsible for managing over $603 billion worth of assets, the CEO of Wells Fargo’s Wealth and Investment Division, Barry Sommers, said the move was necessary as it reflects the bank’s new strategies aimed at focusing on customer-centered businesses that would allow for the bank’s wealth growth and brokerage businesses. Scharf has also remodeled the chain of command, placing chief risk officers in every line of business. The bank’s mobile app was also retooled with a better customer experience to allow for seamless transactions for customers.