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- Al Gore 'Not Very Smart,’ But Became Filthy Rich Using Simple Investing Formula - Charlie Munger
- U.S. Regulators, Lawmakers Support Volcker Rule Revamp at Hearing
- Morgan Stanley Opts for Frankfurt as New EU Hub
- A New Risk for Goldman, Morgan Stanley in Stress Tests (subsc reqd)
- A Trump Bump for Law Firm of President’s Lawyer - Kasowitz Benson Torres
- JPMorgan, BofA, Goldman, Citi, Wells Fargo Pass Fed's Stress Test
- Blackstone Stock Still Trading at $31 - Its IPO Price From 10 Years Ago
- NJ Resident and NY-Based Global FX Club Charged with Solicitation Fraud, Misappropriation - CFTC
- Senate Republicans Release Plan to Replace Obamacare - The Details
- Berkshire Hathaway Throws $1.5Bn Lifeline to Canada's Home Capital
- Inside Nomura: Day in the Life of a Junior Banker
- Inside Travis Kalanick’s Resignation as Uber’s C.E.O.
- Creative Planning, KS Investment Firm, Spurring Change on Wall Street
- SEC Obtains Judgment Against Attorney Who Defrauded Escrow Clients
- SEC Files Fraud Charges Against Stock Promoters in Market Manipulation Scheme
- Power Lunches and Dinners in New York, London, Washington
- Banks to Cut $1.2Bn in Research Spending, Analyst Jobs - McKinsey
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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.