Wells Fargo trims CEO’S pay to US $20.3M

Wells Fargo & Co. cut chief executive Charlie Scharf’s compensation about 12 per cent for 2020, a year in which shares tumbled and the company slashed its dividend and reported its first quarterly loss since 2008.

The board paid Scharf us$20.3 million for 2020, his first full year atop Wells Fargo, down from us$23 million for 2019. The San Francisco-based firm was the worst performer in the KBW Bank Index for the year, sinking 44 per cent compared with the index’s 14 per cent decline.

Wells Fargo is still operating under a Federal reserve-imposed cap on growth, which bit harder last year by limiting the bank’s ability to finance clients and react to the changing economic environment. Net interest income, the firm’s biggest source of revenue, sank 16 per cent for the year, with the regulatory restriction hampering efforts to offset lower interest rates with volume.

Scharf, 55, joined the firm in late 2019 with a mission of moving it past a series of scandals that began with the 2016 revelation that employees opened millions of fake accounts. Last year, he started a restructuring by conducting strategic reviews, installing new leaders and splitting what was three business lines into five.

He’s also repeatedly lamented Wells Fargo’s high costs and pledged to ultimately cut us$10 billion from annual expenses. Headcount reductions that could ultimately number in the tens of thousands will pare u.s. banking’s largest workforce.

Earlier this month, Scharf told analysts the firm has identified more than 250 expense initiatives that will take three to four years. He also said the company has a “clear line of sight” to a 10 per cent return on tangible common equity, a key measure of profitability, and expects to get to 15 per cent over the longer term. The bank had a 1.3 per cent return in 2020.