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The search for a new CEO by Wells Fargo is hampered by the limits of how much the bank can pay to its next leader, Reuters told a person close to the research and several industry insiders.
A handful of top-level candidates have already stated that they would not continue the job because it is unlikely that Wells Fargo will meet their compensation criteria, said the person who spoke about private negotiations under the guise of # 39; anonymity.
Wells Fargo declined to comment on the research process.
The San Francisco-based bank is looking for a new leader since March, when Tim Sloan became the second CEO to abruptly exit his business following a sales scandal that severely affected him. tarnished the bank's reputation and hindered its financial performance.
The Wells Fargo CEO Compensation Program has left its peers behind in the past few years following a massive scandal of business practices. Wells Fargo is also the smallest of the four largest retail banks in terms of assets.
The board is likely to pay between $ 15 million and $ 20 million a year to the next CEO, "said Robin Ferracone, general manager of compensation consulting firm Farient Advisors. This compares to the $ 25 million that CEOs of the largest retail banks earned on average last year.
Wells Fargo may also need to set aside funds to match the acquired shares of a candidate with a current employer, said compensation consultants and recruiters. This could be difficult in an environment where politicians, regulators and investors are watching Wells Fargo closely.
"If you think about the Wells situation, it has many distressed features," Ferracone said.
The banking sector is subject to specific pay restrictions imposed by regulators after the 2007-2009 financial crisis. Compared to other segments, a greater portion of executive compensation is comprised of deferred shares and the contracts have clawback clauses that require repayment of money in certain circumstances.
Among the peers, Wells Fargo's CEO compensation package is at the bottom of the list.
Sloan's salary was $ 18.4 million last year, compared to $ 31 million for Jamie Dimon of JPMorgan Chase, $ 26.5 million for Brian Moynihan of Bank of America and $ 24 million for Michael Corbat from Citigroup.
Executives from other industries, and even other parts of Wall Street, are significantly better paid.
Blackstone CEO Stephen Schwarzman, for example, earned $ 69.1 million last year. Alphabet Financial Director Ruth Porat, a former Morgan Stanley executive considered a strong candidate for the position of bank CEO, earned $ 47.3 million.
Wells Fargo president Betsy Duke said the board of directors wanted to attract the "best talent in the banking sector". The directors want the next CEO to be an outsider, following criticism from lawmakers that the company's veterans are incapable of making a difference.
The board discussed the possibility of talking to Marianne Lake, JPMorgan's chief financial officer, and Jane Fraser, Citigroup's director for Latin America, Reuters reported. According to their recent deposits, they attributed unvested shares of a respective value of 18.4 and 11.2 million dollars.
Offering a signing bonus to cover these rewards is more difficult in banks than in other types of companies because of the increased focus on the industry, industry experts told Reuters.
Last year, Andrea Orcel of UBS left the Swiss bank to head Banco Santander. But the agreement collapsed after Santander refused to pay Orcel $ 50 million in deferred compensation it had accumulated at UBS.
The case of Wells Fargo could be even more difficult because of the sales scandal that erupted at the end of 2016. Regulators, including the US Federal Reserve, the Office of the Money Controller and the Consumer Financial Protection Bureau also monitor closely the progress of its operational overhaul. , including changes of direction.
The salary of the new CEO will certainly be "closely scrutinized," said Evan Stewart, who pleads as a partner in the law firm Cohen & Gresser.
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