Categories Finance

Wells Fargo awards 35% pay hike for its CEO despite bank scandals

Wells Fargo (WFC) has given its CEO Timothy Sloan an almost 35% hike in compensation for 2017. The compensation, which amounts to slightly more than $17 million, comes from an increase in stock awards value. Sloan, who succeeded John Stumpf in 2016, saw an increase of 3% in his take-home pay. He chose to forego an annual incentive.

Sloan had taken over the reins of Wells Fargo following the scandal over the unlawful customer accounts two years ago. Earlier this year, he said that there was still uncertainty regarding the issues being fully fixed despite his efforts to restore customer and investor confidence in the bank.

Wells Fargo CEO Timothy Sloan
Image Courtesy: Wells Fargo

Internal investigations have unveiled issues in areas such as mortgage lending and auto insurance, while the wealth and investment management division is being analyzed for problems.

Apart from the illegal customer accounts scandal, Wells Fargo has faced several other controversies too, the most recent one being the possibility of regulatory sanctions for taking payouts on auto insurance policies that were forced on auto borrowers.

Last October, Sloan was criticized by US Senator Elizabeth Warren over the fake accounts scandal. While defending himself, Sloan dismissed her comments as ‘misinformed’.

Wells Fargo’s net earnings growth of slightly above 1% and its flat revenues in 2017 does not corroborate the company’s justification for Sloan’s pay package, which it said reflected solid financial performance. The bank’s shares had a moderate increase last year.

Just last week, Walt Disney’s (DIS) shareholders rejected a compensation plan, which would have increased CEO Bob Iger’s salary significantly despite Iger being considered instrumental in the proposed Fox acquisition. At Tesla (TSLA), CEO Elon Musk’s high remuneration also has been criticized and shareholders will take a decision later this month on how much he gets to take home.

“Greed has increasingly become a virtue among Wall Street bankers and corporate CEOs in the U.S. Nowhere else in the world do CEOs insist on receiving compensation as high compared to what their employees earn.” – Simon Mainwaring

It seems only fair that a CEO earns a package proportionate to the profits of the company for which he or she stands responsible.

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