Wells Fargo CEO Charles Scharf. (Photo: Kyle Grillot/Bloomberg) Wells Fargo’s incoming CEO, Charles Scharf. (Photo: Kyle Grillot/Bloomberg)

Plenty of advisors, investors, regulators, politicians, clients and ex-clients have had their eyes on Wells Fargo, wondering who the bank would choose as its CEO. Six months after then-CEO Tim Sloan resigned in the face of criticism from lawmakers and others, the bank announced early Friday that it tapped Bank of New York Mellon Chairman and CEO Charles Scharf to take the reins, effective Oct. 21.

The news comes about a month since a report of the bank allegedly imposing fees on clients months after they’d closed accounts at the institution and three years since its fake-accounts scandal came to dominate headlines. 

(See A Timeline of Wells Fargo Scandals)

“It has been a long search,” said Chip Roame, head of the consultancy Tiburon Strategic Advisors. “It is possible that the board may have gotten surprised by Tim Sloan’s departure and was flat-footed without a target-replacement list.”

Now, the pressure is really on the new leader. “Scharf is going to have a lot of people watching — regulators, Sen. Elizabeth Warren, the media, customers, etc.,” explained Roame. 

In addition, Wells Fargo’s asset growth has been restricted by the Federal Reserve, as it navigates a series of consent orders tied to different regulatory and compliance matters. 

“It [still] needs to rebuild credibility,” according to Roame. Much of the cleanup was done under Sloan, but everyone will be watching for continual issues under Scharf.”

Big Pay Raise

Apparently Scharf requested a big bump in compensation to take on the challenge. 

He is set to have a yearly salary of $23 million, Bloomberg reported Friday — a 40% jump from his $16.5 million target pay in 2018 at BNY Mellon. Plus, he’ll receive $26 million of Wells Fargo stock.

Wells Fargo shares rose 4% Friday, while BNY Mellon’s sank 4.5%.

Over the past two years under Scharf’s leadership, BNY Mellon’s stock price has dropped 18.6%. Wells Fargo’s has weakened 8.5% in comparison. 

Meanwhile, the S&P 500 improved 16% over the two-year period, and the Financial Select Sector SPDR Fund moved up 6.4%

“It’s interesting that JPMorgan Chase CEO Jamie Dimon recently … stated that the long delay [in Wells Fargo’s naming of a permanent CEO] was unprofessional and then one of his former chiefs was chosen,” said Roame.

Before Scharf’s time at BNY Mellon, Scharf was CEO of Visa and earlier was CEO of Retail Financial Services for JPMorgan Chase for nine years. 

While his resume includes retail banking, credit cards and similar sectors, “wealth and investment management do not appear to be his strength … ,” added Roame, “though I’m not sure what that will mean at Wells.” 

As of June 30, Wells Fargo Advisors included 13,799 FAs and some $1.7 trillion in assets. That’s down 29 from the prior quarter, 427 from the second quarter of 2018 and 1,287 from Sept. 30, 2016, when news of some 1.5 million fake accounts and 500,000 credit cards in the Community Bank operations spread.

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