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- Sarah ten Siethoff is New Associate Director of SEC Investment Management Rulemaking Office
- Catherine Keating Appointed CEO of BNY Mellon Wealth Management
- Credit Suisse to Pay $47Mn to Resolve DOJ Asia Probe
- SEC Chair Clayton Goes 'Hat in Hand' Before Congress on 2019 Budget Request
- SEC's Opening Remarks to the Elder Justice Coordinating Council
- Massachusetts Jury Convicts CA Attorney of Securities Fraud
- Deutsche Bank Says 3 Senior Investment Bankers to Leave Firm
- World’s Biggest Hedge Fund Reportedly ‘Bearish On Financial Assets’
- SEC Fines Constant Contact, Popular Email Marketer, for Overstating Subscriber Numbers
- SocGen Agrees to Pay $1.3 Billion to End Libya, Libor Probes
- Cryptocurrency Exchange Bitfinex Briefly Halts Trading After Cyber Attack
- SEC Names Valerie Szczepanik Senior Advisor for Digital Assets and Innovation
- SEC Modernizes Delivery of Fund Reports, Seeks Public Feedback on Improving Fund Disclosure
- NYSE Says SEC Plan to Limit Exchange Rebates Would Hurt Investors
- Deutsche Bank faces another challenge with Fed stress test
- Former JPMorgan Broker Files racial discrimination suit against company
- $3.3Mn Winning Bid for Lunch with Warren Buffett
- Julie Erhardt is SEC's New Acting Chief Risk Officer
- Chyhe Becker is SEC's New Acting Chief Economist, Acting Director of Economic and Risk Analysis Division
- Getting a Handle on Virtual Currencies - FINRA
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NEWSLETTERS & ALERTS
Wells Fargo CEO, CFO, Wealth Mgmt Head Get Pay Raises - That's OK
[Photo: CEO Tim Sloan / eastbaytimes.com]
Wells Fargo Board of Directors awarded CEO Tim Sloan $12.8 million for his work in 2016. Sloan, 56, was the bank President and COO when he replaced John Stumpf as CEO on 10/12/16. Pay raises also went to CFO John Shrewsberry and David Carroll, who heads wealth and investment management. In all cases, compensation was devoid of any bonuses.
The numbers, which were included in a Wells Fargo proxy filing, took some observers by surprise.
SUPPORT FOR SLOAN’S PAY BOOST. Tim Sloan has been with Wells Fargo for nearly 30 years, and he’s now been the CEO for 5 months, after taking over for the beleaguered John Stumpf. Going from the ‘frying pan to the fire’ was a risky career move for Mr. Sloan, but he seems to have weathered the storm so far - at least there’s been nothing to report to the contrary, so ‘no news is good news’. Of course, it remains to be seen whether Mr. Sloan had any role in the sales scandal - direct or indirect. We expect to learn more later in 2017.
When considering Sloan’s proper level of compensation, it’s probably best to first compare it to compensation received by his predecessor, John Stumpf. For 2012, 2013, 2014 and 2015, Stumpf received the identifcal amount each year - $19.3 million. For 2015, that consisted of $6Mn in cash and $13.3Mn in stock. For 2015, Stumpf was the 4th highest paid CEO among the big banks:
- Jamie Dimon: $27Mn
- Lloyd Blanfein: $23Mn
- James Gorman: $21Mn
- John Stumpf; $19.3Mn
- Michael Corbat $16.5Mn
- Brian Moynihan $16Mn
So, by comparison, Sloan’s compensation of $12.8Mn would seem to be reasonable.
Next, let's consider what credit, if any, Mr. Sloan as CEO should get for the ebbs and flows of his company’s stock since October. When Sloan took over as CEO on 10/12/16, Wells Fargo shares were trading at $45.32. Yesterday, 3/15/17, WFC shares closed at $58.71. That’s an increase of $13.39, or nearly 30%. Even with the ‘Trump Bump’, that’s an impressive upswing.
Concluding Thoughts. Wells Fargo is expected to announce the results of its internal review into the bank’s sales scandal prior to its annual meeting, scheduled around 4/20/17. Various government agencies, including the Justice Department, are similarly conducting investigations and probes. It's therefore likely that some time in 2017 the facts and circumstances underlying the sales scandal will be disclosed.
At that point, we should have a pretty good idea as the size and scope of the misconduct, as well as any direct or indirect role that Mr. Sloan and other senior management may have had. That will give plenty of time for the bank to clawback undue compensation to Mr. Sloan and others, should that be necessary.
In the meantime, let’s grant these top executives their due rewards.