Wells Fargo CEO Charlie Scharf won’t get a raise this year, according to a recent securities filing from the bank.
Scharf asked the bank’s board of directors to keep his pay for 2022 the same as the prior year, at $24.5 million in total compensation, the bank stated. That includes a $2.5 million base salary and $22 million in variable compensation, such as stock awards.
Scharf, the bank’s chief executive since 2019, is still navigating the aftermath of a number of regulatory investigations and penalties at Wells Fargo, many of which can be traced back to its 2016 fake accounts fiasco.
The scandal — which revealed that bank employees had created millions of fraudulent accounts for customers — led to a Federal Reserve asset cap that still limits the bank’s growth.
In the bank’s filing, the board of directors “expressed strong confidence” in Scharf’s leadership of the bank.
“Mr. Scharf acknowledged the strong performance of the company and significant progress in its transformation journey (in 2022), but noted the remaining work left to be completed,” the filing stated. “Therefore, (he) did not believe an increase in compensation level was appropriate this year.”
Based on Wells Fargo’s usual pay structure for executives — which takes into account the bank’s performance as well as his own — Scharf’s total compensation would have landed at about $27 million for last year, the filing said.
Wells Fargo is based in San Francisco but has its largest employee base in Charlotte, with about 27,000 workers here.
Another tough year for Wells Fargo
Wells Fargo continued to make headlines last year, most notably for a $3.7 billion regulatory charge levied against the bank by the Consumer Financial Protection Bureau in December. The penalty was the largest in the federal agency’s history.
Over a period of several years, the bank charged surprise overdraft fees, incorrectly applied car loan payments and improperly denied mortgage modifications, the CFPB found — the last of which caused customers to lose their vehicles or homes.
Those charges led to billions worth of losses on the bank’s balance sheet and a 50% drop in profits for the fourth quarter.
The bank also found itself under fire for diversity and equity issues in 2022.
In March, a Bloomberg investigation highlighted how the bank approved fewer than half of Black homeowners’ mortgage refinancing applications in 2020, compared with 72% of white applicants.
Former customers filed a class action lawsuit against the bank, and eleven senators called for a review of the bank’s home loan refinancing processes.
Wells Fargo also revamped its hiring guidelines after a report from The New York Times found the bank had conducted “fake” interviews for diverse candidates. The bank interviewed women and candidates of color for roles that sometimes had already been promised to someone else, the Times found, in order to boost diversity efforts on paper.
The bank also had to cut hundreds of jobs in its mortgage division last year, as the home lending industry buckled under rising interest rates.
This story was originally published January 30, 2023, 12:18 PM.
