Did Wells Fargo CEO Tim Sloan win his $ 1 million raise?

0
8
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Wells Fargo (NYSE: WFC) CEO Tim Sloan announced this week that his executive director had received a 5.7% salary increase in 2018, which equates to an additional $ 1 million in total compensation compared to 2017. This may come as a surprise. given the recent history of the bank that has experienced a scandal. "data-reactid =" 11 ">Wells Fargo (NYSE: WFC) announced this week that Chief Executive Officer Tim Sloan had received a 5.7% salary increase in 2018, which equates to an additional $ 1 million in total compensation compared to 2017 This may come as a surprise, given the recent history of the bank plagued by scandals.

Why did Sloan get an increase in 2018? Has the bank really made significant improvements to its culture and processes that justify change? Here is what we know so far and what problems remain.

A stack of $ 100 bills

More

Source of the image: Getty Images.

Remuneration of Tim Sloan: 2017 vs. 2018

Digging a little deeper, here's how Sloan's compensation breaks down. Sloan can be paid in three main ways: his base salary, his shares and the board of directors can choose to pay him a bonus.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "In 2017, Sloan received a base salary of 2 , $ 4 million Sloan 's salary has remained unchanged and its share allocations have dropped to $ 14 million, which could be explained by the fact that the bank' s shares fell by 22% in 2018. If this is the case, the shares of the bank have fallen by 22%., It is not surprising that the compensation in shares of Sloan did not increase, but the board of directors granted to Sloan a $ 2 million bonus in 2018 when he had not received no matter what in 2017, the bonus is at the origin of Sloan's increase. "data-reactid =" 27 "> In 2017, Sloan received a base salary of $ 2.4 million, as well as $ 15 million in shares.In 2018, Sloan's salary remained exactly the same, and its share awards fell to $ 14 million, which may be due to the fact that the bank's shares fell by 22% in 2018. If this is the case, it's not surprising that Sloan's stock allowance did not increase., the board granted Sloan a $ 2 million bonus in 2018, while it did not have no matter what in 2017. In summary, the bonus is at the origin of the revival of Sloan.

In total, Sloan's total compensation increased from $ 17.4 million in 2017 to $ 18.4 million in 2018.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "To put this figure in perspective, it is important to: point out that Sloan is still a relatively poorly paid CEO in the realm of America's largest banks. JPMorgan Chase Chief Executive Officer Jamie Dimon received total compensation of $ 31 million in 2018, and Bank of America The total salary of CEO Brian Moynihan was $ 27 million. Again, the other institutions do not run the institutions struggling to recover from the scandals. "Data-reactid =" 29 "> To put this figure in perspective, it is important to point out that Sloan is still a relatively poorly paid CEO of the kingdom of the largest US banks, for example, JPMorgan Chase Chief Executive Officer Jamie Dimon received total compensation of $ 31 million in 2018, and Bank of America The total salary of CEO Brian Moynihan was $ 27 million. Again, others do not run institutions struggling to recover from scandals.

Sloan was hired as CEO to straighten the ship; does he have?

Sloan's compensation announcement by Wells Fargo comes just a day after his appearance before the House Committee on Financial Services. He was there to show the progress made by his bank over the last two years since the publication of the "false accounts" scandal, and a new wave of wrongdoing by the bank has been made public.

As a result of the Wells Fargo's misbehavior, the US Federal Reserve imposed an unprecedented penalty on the bank in February 2018, barring it from growing beyond its size at the end of 2017, until substantial improvements occurred. be brought.

Has Wells Fargo made improvements? In a January 2019 report titled "Learning from the Past, Transforming the Future," Wells Fargo's management presented some of the steps taken. These included:

  • Eliminate product sales targets for retail bankers in branches and call centers, and develop incentives more in line with customer interests
  • Centralize many of its control functions to increase monitoring and consistency
  • Strengthen its focus on risk management
  • Make changes to the board, for example by adding more experienced members in areas such as risk management
  • Restitution to customers affected by the false accounts scandal or by one of the other Wells Fargo scandals
  • To be fair, Wells Fargo has made some pretty important changes to his organization. And judging by the company's last two annual reports, Sloan seems to be doing everything in his power to reinvent Wells Fargo's broken culture and put an end to his scandals. Some of the bank's recent findings suggest that she could be poised to overcome the effect of these scandals on her activities.

    That said, many politicians and investors raised two points by suggesting that Sloan did not justify any increase.

    First, the bank has not made enough satisfactory improvements with regard to the Federal Reserve, so its growth is still not allowed.

    The story continues

    Secondly, and more importantly, Sloan was not really an outsider during the scandals. He had worked for Wells Fargo since 1987 and had held the roles of Chief Operating Officer and President from November 2015. Many observers claim that Sloan is cleaning up a mess that he is partially responsible for. Senator Elizabeth Warren, who serves on the Senate Banking, Housing and Urban Affairs Committee, even went as far as calling for Sloan's dismissal, saying the CEO was "deeply involved in the repeated and blatant mistakes of bank".

    It is fair to say that this increase is likely to generate more criticism – as well as any future increase given to Sloan until the bank scandals are in the rear view mirror.

    <p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = " More from The Motley Fool "data-reactid =" 49 "> More from The Motley Fool

    <p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Matthew Frankel, CFP holds shares of Bank of America. The Motley Fool has no position in any of the actions mentioned. Motley Fool has a disclosure policy."data-reactid =" 57 ">Matthew Frankel, CFP holds shares of Bank of America. The Motley Fool has no position in any of the actions mentioned. Motley Fool has a disclosure policy.