Wells Fargo executives score big raises despite the bank’s continued problems
Wells Fargo & Co. gave multimillion-dollar raises to some top executives in 2017, a year that saw the San Francisco bank continue to deal with the fallout from its unauthorized accounts scandal, ultimately leading to additional strict sanctions from federal regulators.
Chief Executive Timothy Sloan’s compensation package totaled $17.6 million, a 35% increase from the $13 million he received in 2016, according to documents filed Wednesday with the Securities and Exchange Commission.
Last year was Sloan’s first full one as CEO. He took over the top spot in late 2016 after former CEO John Stumpf resigned after the bank acknowledged in September 2016 that it might have created millions of unauthorized accounts and agreed to pay $185 million in fines to regulators.
John Shrewsberry, the bank’s chief financial officer, made $11.9 million last year, up from $9.3 million in 2016, according to the annual proxy filing. Avid Modjtabai, a senior executive vice president in charge of the bank’s payments and online initiatives, made $10.6 million, up from $9.3 million in 2016.
The bank’s human resources committee, which reviews executive pay, said it believes the 2017 compensation for top leaders was “reasonable and appropriate,” the filing said.
Like other public companies, Wells Fargo this year was required by a new rule to disclose not only the pay granted to top executives but also the pay of the average worker — and to report the ratio of that pay to the CEO’s total compensation.
The company’s median employee made $60,446 last year. That means Sloan made 291 times as much as the median worker.
For all three executives, the vast majority of their compensation comes in the form of stock awards. Sloan, for instance, took home a salary of $2.4 million and stock awards estimated to be worth $15 million assuming the company meets certain financial goals.
Those awards, while granted in 2017, will vest over several years and can be increased or decreased based on the company’s financial performance, while their value could fluctuate with the stock price. So the executives could ultimately earn substantially more or less than the figures reported to the SEC.
Wells Fargo shares are down from a recent high, following a stinging enforcement action from the Federal Reserve announced last month. They closed at $56.63 on Wednesday, down 1.6%.
The Fed, in one of its last acts under now-former Chairwoman Janet L. Yellen, ordered the bank last month to cap its growth and improve its corporate governance to address what Fed officials called “widespread consumer abuses and other compliance breakdowns.”
The action came after a year of new revelations, many of them discovered or acknowledged by the bank itself, about bad practices that went beyond the creation of unauthorized accounts.
The bank last year said it had forced some auto loan customers to pay for unneeded auto insurance policies and charged improper fees to some mortgage borrowers. The bank remains under investigation by federal regulators over practices in its wealth management division and other matters.
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