Pay of Wells and First Interstate Chiefs Fell in ’91

The top executives of Wells Fargo & Co. and First Interstate Bancorp, both of which had a difficult 1991, took sharp pay cuts last year amid growing controversy over the issue of tying executive compensation to performance.

Proxy statements sent to shareholders show that Wells Fargo Chairman Carl E. Reichardt’s pay fell 47% to $775,000, while First Interstate Chairman Edward M. Carson’s dropped 27% to $665,200.

The two California bankers are the latest of several prominent executives nationwide, including IBM Chief Executive John F. Akers, to take pay cuts as the debate intensifies over whether executive compensation in the United States is too high relative to performance.

The executives’ pay cuts came in the wake of poor performances in 1991 at both Wells Fargo and First Interstate. Both have been hurt by bad real estate loans and the state’s continuing economic slump.

Los Angeles-based First Interstate lost $288.1 million in 1991, contrasted with a profit of $468.7 million in 1990. San Francisco-based Wells Fargo’s profit plunged 97% to $21 million last year from $712 million in 1990.

Kim Kellogg, a Wells Fargo spokeswoman, said the drop in pay reflects a “run it as if you own it” management philosophy. “When you have a good year, everyone benefits. When you have a mediocre year, you do what you do if you’re owner and take a pay cut,” she said.

First Interstate declined to comment on the pay cut.

According to Wells Fargo’s proxy statement, Reichardt’s pay consisted of a $775,000 salary with no bonus. That compared to cash and bonuses of nearly $1.5 million in 1990.

First Interstate’s proxy statement shows that Carson earned $665,200 in salary in 1991, also with no bonus. That compared to $909,007 in 1990, which included salary of $556,254 and bonuses of $352,753.

Other executives at the two banks saw their paychecks shrink as well.

At Wells Fargo, President Paul Hazen’s pay fell 47% to $575,000 with no bonus, compared to nearly $1.1 million in salary and bonuses in 1990.

First Interstate President William E. B. Siart’s pay fell 25% to $545,167 in 1991, with no bonus. That compares to $729,270 in compensation in 1990, which included salary of $443,750 and bonuses of $285,520.

First Interstate’s proxy also reveals that it has arranged a potential severance agreement with Harold J. Meyerman, who heads the First Interstate Bank Ltd. merchant banking operation. First Interstate has been selling off chunks of the operation and shrinking it amid speculation that it may be jettisoned.

According to the agreement, Meyerman may receive up to twice his annual base salary as severance if he does not continue working for either First Interstate or a buyer of the merchant banking operations. Last year, Meyerman made $337,500 in salary and a bonus of $182,100, according to First Interstate’s proxy.