SAN FRANCISCO–A year of scandals and new abuses of customers at Wells Fargo has led to two surprises: a big raise for the bank’s CEO and no customer run-off.
Wells Fargo reported CEO Tim Sloan received a 35% pay increase during 2017, an announcement that brought criticism from consumer advocates as well as Sen. Elizabeth Warren (D-MA), who has been a long-time critic.
The compensation announcement comes at the same time a federal investigation into the bank’s sales practices has expanded to include the bank’s wealth-management business.
The Justice Department, the Securities and Exchange Commission and the FBI are all involved in the investigation, the Wall Street Journal reported.
Sloan was named CEO of Wells Fargo in October 2016 following the resignation of former CEO John Stump after disclosures the bank had created more than two-million bogus accounts as staff tried to meet hyper-aggressive sales targets. That led to more than $185 million in fines and another $110-million to settle a lawsuit. Among other things, the bank has been punished by the Fed, announced it was closing 400 branches, has been sued by both former employees and states and municipalities, was found to have changed the terms of mortgages without telling borrowers, paid a $4.1-million fine to settle Justice Department charges that it seized 413 cars owned by service members without a court order, forced auto loan borrowers into auto insurance coverage that wasn’t needed, and acted illegally with some small business accounts, among other illegal and unethical activities.
After all that, the bank’s board approved a pay package for Sloan that increased his total compensation to $17.4 million, compared with almost $13 million in 2016. Sloan also received $87,203 worth of installation and upgrades to his home security system and stock bonuses in February 2017 that are currently valued at $15 million. That's up 50% from his 2016 stock awards.
In approving the increases, Wells Fargo's board of directors cited the bank's "solid financial performance," including low credit losses, strong capital and a slight increase in annual profits to $22.2 billion.
Wells Fargo noted that its execs receive a high proportion of their pay in stock awards, a way to link pay to the long-term performance of the company. For Sloan, about 86% of his total pay in 2017 was in stock awards. Wells Fargo has the right to claw back the pay in the event of another scandal. Sloan's stock awards don't vest until the first quarter of 2020.
Wells Fargo said Sloan's pay was about 291 times what the median Wells Fargo worker made last year, according to new disclosures that American companies are required to make. The median salary at Wells Fargo was $60,446.
In an interview, Sloan said Wells Fargo’s scandals and other issues have not resulted in any net loss of retail customers.
"We’ve had certain customers on the retail side that have left, but the net number of customers during this entire period continues to grow," he said.