Wells Fargo Drops CEO Pay to $20M
This puts Charlie Scharf's compensation behind that of Morgan Stanley's James Gorman but ahead of Goldman's David Solomon.
Wells Fargo CEO Charlie Scharf’s compensation fell 12% in 2020, according to a recent regulatory filing. Scharf’s total pay was $20.3 million for 2020, down from $23 million for 2019.
This puts him behind Morgan Stanley CEO James Gorman, whose pay rose 22% last year to $33 million; and JPMorgan Chase CEO Jamie Dimon, whose compensation remained unchanged in 2020 at $31.5 million.
However, Scharf fared better than Goldman Sachs CEO David Solomon, whose compensation was reduced by 36% to $17.5 million due to the bank’s ties to a Malaysian investment fund at the center of a global corruption ring.
For for the full year 2020, Wells Fargo’s net revenues declined 15% from 2019 to $72.34 billion. Net income dropped 83% to $3.30 billion, while earnings per share fell 90% to $0.41.
As of the fourth quarter, Wells Fargo’s headcount of both financial and wealth advisors stood at 13,513 — versus 14,414 a year ago and 13,793 in the prior quarter. In its third-quarter financial report, Wells Fargo reported that it had 12,908 financial advisors, down 815, or 6%, from a year ago and 391, or 3%, from the prior quarter.
Recent Results
Wells Fargo topped estimates with net income of $2.99 billion, or $0.64 per share, in the fourth quarter of 2020, a 4% rise from $2.87 billion, or $0.60 cents per share, a year earlier. Revenue, though, fell by 10% to $17.93 billion in the quarter from $19.86 billion a year earlier and missed estimates.
“Although our financial performance improved and we earned $3 billion in the fourth quarter, our results continued to be impacted by the unprecedented operating environment and the required work to put our substantial legacy issues behind us,” CEO Charlie Scharf said in a statement in mid-January.
While consumer and small-business banking revenue dropped 8% to $4.70 billion from the year-ago quarter, home loans rose 2% to about $2 billion. Non-performing assets, though, jumped 9% to $8.89 billion from the year-ago level of $5.65 billion.
Net charge-offs were $584 million. In addition, the bank’s earnings included a $781 million restructuring charge and a $757 million reserve release tied to the sale of its student loan portfolio.
Wells Fargo’s board has approved an increase in its authority to buy back common stock by an additional 500 million shares, which puts its total authorized amount at 667 million shares.
Earlier Issues
The bank reported its first quarterly loss since since 2008 in July. It lost $2.4 billion in the second quarter of 2020, or $0.66 per share, vs. profits of $6.2 billion, or $1.30 per share, a year ago and $653 million, or $0.01 per share, in the first quarter.
Also, Wells Fargo set aside $9.57 billion in Q2’20 for potential loan losses, more the doubling the $3.83 billion it put aside in the prior quarter. Its total revenues were $17.8 billion in Q2, up slightly from $17.7 billion in Q1, but down from $21.6 billion in the year-ago quarter.
Scharf, 55, joined the firm in late 2019.
— Check out Ex-Wells Fargo General Counsel to Pay $3.5M Penalty for Role in Phony Account Scandal on ThinkAdvisor.