$23M pay package lured new Wells CEO
Plus: Homeowners insurance rates to rise; Charlotte Knights attendance slips; Boy, can Roy Williams do the electric slide
|Tony Mecia||Sep 30, 2019|| 1|
Good morning! Today is Monday, September 30, 2019.
Scharf’s big payday might draw political attention. And San Francisco worries it might lose Wells HQ.
By all accounts, Wells Fargo’s new CEO will inherit a tough job.
But at least he will get paid handsomely for it: Securities documents filed Friday show Charles Scharf will have an annual target compensation of $23M a year — a 40% premium over what he made at Bank of New York Mellon. That’s on top of $26M in stock Wells Fargo is giving him to compensate for stock awards he’s missing out on by taking the new job. Not bad.
Conventional pick: Before Wells announced Scharf as its new CEO on Friday, the conventional wisdom had been that the big bank might take the opportunity to fill the top job with a woman, and that in any event, it probably wouldn’t pay the new CEO too much because the bank was mindful of being depicted as being run by millionaire Wall Street types. Now, Wells has picked a leader with a Wall Street pedigree and plans to pay him a ton. That’s the traditional way of doing things.
Some analysts are saying Scharf’s selection could draw the wrath of Congress. Political pressure helped force out Scharf predecessors Tim Sloan and John Stumpf. Sloan’s total compensation at the time he was ousted six months ago was $18.4M. Scharf could earn about the same as BofA’s Brian Moynihan, who took home $22.8M last year.
[His] broad experience makes Scharf a safe political choice, who is already well known by both regulators and lawmakers, industry analysts said. But it could also work against him.
“Yes, Scharf is an outsider to Wells Fargo,” Jaret Seiberg, a financial services analyst at Cowen Washington Research Group, wrote in a research note Friday. But “he also is another white male in the CEO seat. … What is more likely is that they [House Democrats] will define him as another Wall Street insider taking over another big bank.”
According to Scharf’s offer letter, his compensation consists of:
an annual $2.5M salary
a $5M target cash bonus
$15.5M in stock
“use of a car and driver for business purposes”
“new installation and regular maintenance of home security systems”
“spousal travel to attend business-related events where spousal attendance is expected or customary”
use of corporate aircraft
Tax forms, access to Wells employee handbook: On his first day, the letter says, he will “receive access to the Handbook for Wells Fargo Team Members, tax forms, and additional paperwork that you will need to get started.” It asks him to “please be sure to bring acceptable documents for establishing your employment eligibility.” (Wow, wouldn’t that be embarrassing if he were ineligible?)
San Francisco frets
Meanwhile, San Francisco media seem to be worried that Scharf will be based in New York, not at the HQ in San Francisco. But Scharf and Wells spokespeople insisted they still think San Francisco is a great and important city. San Franciscans might see through that flattery, though, and wonder if Scharf’s hire portends a move out of a high-cost region to somewhere more affordable and where climate protestors aren’t regularly barricading themselves in front of the bank’s HQ.
The bank has about 39,000 employees in California, including 15,200 in the Bay Area. It has about 35,000 in North Carolina, 18,000 in Minnesota, 15,000 in Iowa and 4,600 in New York. Its total workforce is 262,800.
On the call, Scharf said he is “looking forward to be present in all of those places, including San Francisco, which is, obviously, a very important place for us.”
The San Francisco Business Times (paywall) was a little more blunt:
A more immediate concern to Bay Area readers is Wells Fargo’s commitment to keeping its headquarters in San Francisco, which has been a concern since Bank of America’s San Francisco headquarters was uprooted and moved to Charlotte in 1998. …
Wells was eager to allay concerns about a headquarters move.
“Wells Fargo will continue to be headquartered in San Francisco,” Wells Fargo spokeswoman Edith Robles told the San Francisco Business Times Friday.
None of the accounts ever seem to mention that Wells Fargo gobbled up Charlotte’s Wachovia in 2008. In Charlotte, there’s a lot of hope out there that the new CEO might correct that injustice.
Ledger readers sound off on recent articles:
In response to “I fought my sky-high Atrium bill — and won” (Sept. 23):
“It’s nice to hear about others having similar struggles with Atrium. They practice monopoly pricing and are impossible to deal with. … Their providers are top-notch and we have received great care, but the company is a behemoth and takes advantage of their lack of competition.”
In response to “New crown monument for Charlotte’s airport” (Sept. 23):
“All that money for politicos’ ego trips for a monument at the airport. I would have done it for far less. Irony is choosing a crown, when Charlotte left Great Britain to end the monarchy.”
In response to “Huge Ballantyne land sale stirs high school hopes” (Sept. 27):
“It will be something high density with that price tag. But ideal mid-point for a school.”
“The unfortunate problem is all the ‘best’ land in residential-oriented areas is already developed or accounted for. … The high school should be walking distance to future or existing light rail, which would give new desirable career learning opportunities and access to business partners along that corridor and UNCC.”
“Perfect location, but too high of a price.”
“Excellent place for another QT, CBD store and mattress store. Ohh, and title loan place.”
“More Jimmy Johns, UPS Stores, and real estate offices!”
“Storage units!! Need more storage units!”
Loves me some internet
Wearing a pink blazer, 69-year-old UNC basketball coach Roy Williams does the electric slide Friday night at the Tar Heels’ opening practice:
Equitable drinking punishment: Davidson College is changing the consequences for underage drinking on campus by replacing fines with community service. Administrators say it is an “equity issue” because not all students can afford to pay, including one senior quoted by the campus paper who said the $100 fine for her second offense was “frustrating, because it was a lot of money.” (The Davidsonian)
Rates to increase: Homeowners insurance rates are set to rise 3.5% in Charlotte next year, following a settlement between North Carolina’s insurance commissioner and insurance companies. Insurers had proposed raising rates statewide by 17% but settled for an average of 4%, the Department of Insurance said.
Evictions on the rise: Charlotte landlords sought nearly 33,000 evictions last year, up 15% from 2015-16, which experts say is another symptom of Charlotte’s lack of affordable housing. The county has increased funding to provide lawyers for tenants who can’t pay their bills. (WFAE)
County sensitivity training: County Manager Dana Diorio says the county is planning daylong mandatory “racial equity training” for its 5,000 employees. She tells WFAE: “Every employee has to get trained. … the training is really designed to have you look at yourself and really look internally and really understand, you know, how you approach these issues and to really, you know, take away some of the myths that people may have, and I think there are tough conversations.” She says she understands that “you can only bring people the water — you can’t make them drink” and plans to follow up with “countywide book reads.” The county has budgeted $250,000 for the training.
Striking out with fans? Attendance at Charlotte Knights games this year slipped to an all-time low since the club moved uptown in 2014. Season attendance was 581,000, “the first time the Knights fell below 600,000 fans in a season since moving back to uptown.” That’s an average of about 8,500 fans per game at the 10,000-seat BB&T Park. Execs blamed the decline on a couple rainouts and say “the Triple A club remains healthy and profitable.” (Biz Journal)
Rural layoffs: Brake-system manufacturer Continental Automotive announced last week that it is laying off 650 workers in the town of Fletcher, south of Asheville (population: 8,300). It’s the largest layoff of the year in North Carolina, according to state records.
Oprah donation and leadership advice: At a Charlotte lunch on Saturday, Oprah Winfrey announced she is donating $1.1M to the United Negro College Fund. She also told people attending the Maya Angelou Women Who Lead Luncheon at the Westin uptown that “the first rule of leadership is to put yourself first on the list … You cannot give what you do not have. That’s not selfish, it’s ‘self-full.’” (Observer)
Unless you are a day trader, checking your stocks daily is unhealthy. So how about weekly? How local stocks of note fared last week (through Friday’s close), and year to date:
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The Charlotte Ledger is published by Tony Mecia, an award-winning former Charlotte Observer business reporter and editor. He lives in Charlotte with his wife and three children.