Wells Fargo CEO’s Pay Tops $5.6 Million
In his first year at the helm of Wells Fargo & Co., Paul Hazen earned a pay package valued at over $5.6 million, making him one of the banking industry’s most highly paid chief executives, according to Wells Fargo’s proxy statement for this year’s annual meeting.
However, Wells shareholders are not expected to complain, as the San Francisco-based company’s stock price rose 49% in 1995, and on April 1 it will cap an audacious hostile takeover campaign by completing its $12-billion-plus acquisition of Los Angeles rival First Interstate Bancorp.
One of the main factors driving the merger was estimated annual cost savings of $700 million, to be achieved by slashing as many as 10,000 employees from the two banks.
Felix Castro, executive director of Youth Opportunities Foundation, a Los Angeles-based educational organization that serves the Latino community, was one of the community activists who opposed the merger proposal.
“I’m glad he’s getting his,” Castro said sarcastically, referring to Hazen’s pay package. “They’re going to empty out the First Interstate tower and thousands of people are going to be put out of work.”
Hazen’s pay package “will come out somewhat high based on the size of the company, but not enough so’s you’d call him” overpaid, executive compensation expert Graef Crystal said Thursday.
By contrast, Citicorp Chairman John Reed earned about $5.5 million in a year that the New York banking behemoth saw its stock price soar 62.5%. At a bank closer to Wells’ size, John B. McCoy, chairman of Columbus, Ohio-based Banc One Corp. earned $4.4 million as his company’s stock rose 48%.
BankAmerica Corp., California’s largest banking company, whose stock was up 64% last year, has not yet filed its proxy statement.
According to the Wells filing, Hazen earned a 1995 base salary of $812,500, up 10% from the year earlier. He received a bonus of $2 million, 60% higher than the previous year’s $1.25 million. Hazen also was granted long-term options on Wells Fargo stock, which Crystal estimated have a current value of $2.8 million.
Analyst Campbell K. Chaney of the San Francisco-based brokerage Rodman & Renshaw said investors consider Wells Fargo to be progressive in its compensation schemes, in that the top executives’ bonuses are largely tied to the company’s stock performance.
In 1991 and ‘92, when the bank struggled through real estate problems brought on by the deep California recession, neither Hazen nor his predecessor, Carl E. Reichardt, earned any bonus at all.
“At Wells, if you don’t perform, you don’t get paid,” Chaney said, noting that other banks have followed Wells lead at pegging more of their executives’ pay to stock performance.
Wells, in the proxy statement dated Wednesday, also disclosed the names of the seven First Interstate directors who will join its board after the takeover.
They are former First Interstate Chairman Edward M. Carson; Myron Du Bain, former chairman and chief executive of Fireman’s Fund Corp.; Don C. Frisbee, former chairman and chief executive of PacificCorp.; Thomas L. Lee, chairman and chief executive of Newhall Land & Farming Co.; William F. Miller, former president and chief executive of research institute SRI International; Richard J. Stegemeier, former Unocal Corp. chairman; and Daniel M. Tellep, chairman and chief executive of Lockheed Martin Corp.
