Wells Fargo CEO Charlie Scharf asked the bank’s board to pay him less than it could have, according to a Securities and Exchange Commission filing Thursday.
The bank will pay Scharf $24.5 million for 2022, the same amount it did for the previous year, it said.
Wells Fargo’s board had established a target compensation level of $27 million — a 10.2% increase — upon reviewing peer CEO pay last February, the bank said Thursday.
But before Wells Fargo’s human resources committee had solidified its recommendation, Scharf asked the panel’s chair and the bank’s board to consider not giving him a raise, saying it would be inappropriate given the amount of work remaining in what the bank calls its “transformation journey.”
Wells Fargo saw a 38.8% drop in profit throughout 2022, but its net interest income increased 25.6% over the year, the bank reported this month.
Scharf has long advocated a deep look into which parts of the bank are most profitable or warrant long-term investment, and he has sought to offload business units seen as “non-core.” Wells Fargo this month announced it would streamline its mortgage business and exit correspondent lending. The moves come after the bank initiated several rounds of job cuts in its home-lending unit throughout 2022.
In justifying its compensation decision, the bank noted “continued progress in addressing risk, control and regulatory issues,” including reaching a $3.7 billion settlement with the Consumer Financial Protection Bureau that resolves several issues.
Wells, however, still operates under a Federal Reserve order from 2018 that caps its assets at $1.95 trillion.
The bank also found itself in hot water at least twice last year over matters of race.
A Bloomberg analysis in March found the bank approved 47% of refinance applications from Black homeowners in 2020 but 72% from White borrowers. The bank boosted its acceptance rate in 2021, to 58% of Black mortgage refinancing applicants. But the figure for White borrowers also increased, to 79%, leaving a 21-percentage-point gap.
Then in May, a dozen current and former Wells employees told The New York Times the bank held phony job interviews for nonwhite and female job-seekers for positions that had already been offered to other candidates. The interviews allegedly represented an attempt to make good on a bank policy mandating that at least half the candidates for open positions paying $100,000 or more per year be women, nonwhite or otherwise disadvantaged. Wells Fargo paused, reviewed and updated that policy last summer and agreed to a racial-equity audit in September.
In its filing Thursday, the bank also lauded Scharf’s role in “expanding a high-performance leadership team,” succession planning and rolling out new products — the bank revamped its mobile app and launched a virtual assistant, for example — and in pivoting away from overdraft fees.
Based on the bank’s metrics, Scharf’s performance would have qualified him for more than the $27 million target compensation, Wells Fargo said.
But the Human Resources Committee “agreed with Mr. Scharf’s suggestion and exercised negative discretion by recommending to the Board a lower compensation level,” the bank said in its filing.
Scharf’s $24.5 million compensation package comprises a $2.5 million base salary, a $5.4 million cash bonus, a $10.8 million long-term performance share award and $5.8 million in restricted share rights, according to the filing.
Wells Fargo is the third of the six largest U.S. banks to report CEO compensation so far this year. JPMorgan Chase reported last week it is keeping CEO Jamie Dimon’s pay at its 2021 level of $34.5 million. Morgan Stanley last week revealed it is giving CEO James Gorman a 10% pay cut, to $31.5 million.
Goldman Sachs filed its paperwork Friday. Bank of America and Citi are expected to follow in the coming weeks.