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Wells Fargo execs get big salary bumps
Bank said raises tied to rules of federal bailouts.
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NEW YORK - Wells Fargo & Co. is boosting Chief Executive John Stumpf's base salary to $5.6 million, six times its previous level, to offset what would have been a mammoth pay cut forced by the rules of the federal bailout program.
The fourth-largest U.S. bank, with major operations in Minnesota, said Thursday that it also increased annual base salaries for Chief Financial Officer Howard Atkins and two other senior executives by between four and six times apiece.
The increases are based on restricted stock the executives can't sell until after Wells Fargo repays the $25 billion in taxpayer-funded capital it got last year through the U.S. Treasury Department's Troubled Asset Relief Program (TARP).
Wells Fargo said it boosted the executives' salaries because rules governing TARP banks place strict limits on nonsalary pay. "We must pay our senior people fairly," said Melissa Murray, a spokeswoman for Wells Fargo. "We are using stock to increase their salaries to keep the pay of these leaders closely tied to the success of the shareholder."
The bank's move illustrates the tricky mix of politics and government oversight that TARP recipients must navigate in running their businesses. Banks insist they must continue to offer competitive pay packages to avoid losing key talent. To do so, some are skirting rules designed to limit such pay, risking further public backlash.
Wells Fargo's new pay program is also highly unorthodox, and it reflects the ever-shifting terrain of how top bankers are paid.
Wells Fargo's four executives will receive shares every pay period worth a predetermined market value; if Wells Fargo's stock price falls in the near term, executives will actually receive more shares, leaving them greater long-term upside.
Under more conventional compensation programs, executives receive a specific number of shares or options to purchase shares.
A spokesperson in Washington for the administration's special inspector general for TARP, who's charged with enforcing the program's rules, could not immediately be reached for comment.
Stumpf was originally slated to make $900,000 in base salary this year. Last year, Stumpf made more than $9 million, $7.9 million of which came in the form of stock options.
Wells Fargo said its decision is an effort to keep executive pay on par with leaders of other big banks.
The board also approved raises for Dave Hoyt, head of wholesale banking, and Mark Oman, head of home and consumer finance.
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