As a big bank goes, so goes its CEO compensation.
That, at least, is the dynamic at the most troubled of the big four American banks, Wells Fargo (WFC 2.73%). Last year, the company paid leader Charlie Scharf just over $20.3 million, including base salary and incentive payouts. That was down from $23 million in 2019, the year he took the reins.
Wells Fargo continues to lag behind its peer group. While other major banks managed to turn a profit and maintain their dividends throughout the year despite heavy second-quarter loan-loss provisioning, Wells Fargo posted its first quarterly net loss since 2008. It also cut its dividend by a steep 80%, slicing it to $0.10 per share from the previous $0.51.
Image source: Getty Images.
To be fair, not all of Wells Fargo's struggles can be laid at Scharf's feet. These began in 2016 with the explosive revelation that thousands of employees working at the bank's branches had created millions of unauthorized accounts for existing customers.
This was an attempt to meet the bank's aggressive sales targets that backfired spectacularly. The company still hasn't recovered from the damage to its reputation.
In 2018, the Federal Reserve placed a $1.95 trillion asset cap on the bank. With such a hard ceiling, Wells Fargo has no room to grow its business like a proper lender. While there has been speculation that the cap will soon be permanently lifted, operating under it for so long has put the company behind its better-performing peers.
While not all of Wells Fargo's woes are his fault, Scharf has to take a hit for the bank's continued weakness.
