Wells Fargo’s CEO will work remotely from New York. Is a headquarters move next?
Wells Fargo & Co.’s interim chief, Allen Parker, tried to bring a New York urgency to the California bank. The new boss, Charlie Scharf, is bringing New York.
Scharf, who three years ago left the top spot at San Francisco-based Visa Inc. to rejoin his family on the East Coast, made staying in New York a prerequisite to taking the Wells Fargo job. He’ll run the $2-trillion lender about 3,000 miles away from its San Francisco headquarters and make an already spread-out operating committee even more dispersed.
The decision to appoint a remote CEO raises questions about how important proximity is in a modern workplace, and whether a management team sprinkled across the country will face more issues enacting a turnaround than one sharing the same hallway. On Scharf’s introductory investor call, the second question was about his location, following only one query on whether the bank needs a broad overhaul.
“Whether it’s the Wells Fargo job or any other job I had, you spend very little time actually in your office,” Scharf said Friday on the call. “I don’t think anyone would ever say in the places I’ve worked that I’ve not been present. I think it’s just the opposite.”
Some analysts and big investors say they can’t advocate buying more Wells Fargo stock until the bank installs a leader with a plan for the future.
Mary Mack, who runs the consumer bank, Wells Fargo’s largest division, is based in Charlotte, N.C. Wholesale banking leader Perry Pelos is in Portland, Ore. Wealth chief Jon Weiss and technology head Saul Van Beurden are in New York. The firm’s mortgage business, the largest in the nation, is centered in Des Moines, Iowa.
The spread-out leadership team raises the specter of a potential headquarters move down the line. Charlotte and Des Moines are among cities that have lobbied the bank on making its home base there, said people with knowledge of the discussions.
While Wells Fargo traces its roots back almost two centuries through the entirety of California’s modern history, executives may not feel great loyalty toward the bank’s home state after the latest scandal-plagued years. California politicians — including former Treasurer John Chiang and Rep. Maxine Waters, who this year became chairwoman of the House Financial Services Committee — have been among its sharpest critics.
Parker, who has served as interim CEO over the last six months, moved to San Francisco when he joined the bank as general counsel two years ago. He left New York after a three-decade career as a lawyer in the city and said he was bringing that town’s approach to fixing Wells Fargo’s regulatory issues.
“I was trained in the crucible of New York,” Parker said at an investor conference in May. “I understand what it takes to be given a deadline and what it takes to drive to it.”
Grab a cheeseburger at the new Shake Shack in West Hollywood, buy a roll of paper towels at the 99 Cents Only store or take in a show at the Dolby Theatre in Hollywood and, in a small way, you’re contributing to the legacy of Michael Milken.
Wells Fargo, like most of its giant rivals, is a company built through major acquisitions, including the crisis-era purchase of Wachovia and the merger with Norwest a decade earlier. That has left it with a major presence in those firms’ home bases of Charlotte and Minneapolis, respectively.
San Francisco, for all of its tech-fueled growth in recent years, isn’t a major banking hub anymore. The Bay Area’s high cost of living has made it a weakness rather than an asset for hiring, including in its recent CEO hunt, according to people with knowledge of the effort.
“We can’t help but think that Wells Fargo struggled to attract top talent for this position, and perhaps a compromise on the location of the CEO post was necessary in order to recruit Mr. Scharf,” Citigroup Inc. analyst Keith Horowitz wrote in a note to clients Friday.
Wells Fargo has more employees in Charlotte than any other city, and has been bulking up in many hubs outside California. The firm has more than five times as many Charlotte-based job openings on its website as San Francisco listings. Scharf called San Francisco “a very important place for us,” but noted the wide spread of operations.
“We have over 25,000 or 26,000 people in Charlotte, we have thousands of people in New York, we have thousands of people in Des Moines, thousands of people in St. Louis, thousands of people in Minneapolis, thousands of people in San Francisco,” Scharf said Friday. “I’m looking forward to just spending the time wherever it’s necessary for me to be.”
