Wells Fargo, still struggling to overcome a series of scandals that has tarnished its reputation, on Friday named Bank of New York Mellon chief Charles Scharf as its new CEO. And he's getting a 40% pay raise to take the job.
Scharf, who also previously served as CEO of Visa, spent much of his early career as a close deputy to JPMorgan Chase's Jamie Dimon, moving with the executive from Banc One and eventually becoming head of retail operations at the nation's largest bank. He is due to start his new role in October.
"Charlie is a proven leader and an experienced CEO who has excelled at strategic leadership and execution and is well-positioned to lead Wells Fargo's continued transformation," Wells Fargo board chair Betsy Duke said in a statement.
Continued transformation is a must at Wells, whose reputation has been badly scarred by a number of scandals in recent years. In 2016, the company was fined $200 million for opening millions of fake accounts in order to meet sales goals. Two years later, it had toover consumer abuses related to its auto lending and mortgage businesses.
Former CEO and veteran Wells executive Tim Sloan, who once denied that the phony accounts were a problem, abruptly.
Since then, the bank has struggled to find a new top executive from outside the company. In a possible sign of the concession it had to make to get Scharf on board, he will be based in New York City, where he currently lives, rather than at the bank's headquarters in San Francisco.
Another sign of the difficulty Wells Fargo had in landing a new CEO: Scharf is getting a 40% pay increase from what he was making at Bank of New York Mellon. Scharf will get a base salary at Wells Fargo of $2.5 million and a cash bonus in his first year of $5 million. He will also get a stock bonus in his first year of $15.5 million, for a total annual compensation of $23 million. That's nearly $5 more than former CEO Sloan made at Wells Fargo.
Scharf's base salary is $1 million more than that of the nation's highest compensated banking CEO, Scharf's old boss Dimon, although Dimon's overall pay package of $31 million in larger than Scharf's.
Wall Street analysts praised Wells Fargo's move to hire Scharf.
"The appointment of Mr. Scharf removes a major overhang and Mr. Scharf's experience in leadership roles at a diverse array of public traded financial institutions provides valuable experience and, importantly, suggests that shareholder value will be an important prism through which decisions are made," UBS analysts said in a research note.