NEW YORK (Reuters) – Wells Fargo & Co’s hunt for a new CEO is being impeded by limits on how much the bank can pay its next leader, a person close to the search and several industry insiders told Reuters.
A handful of top candidates have already said they would not pursue the job because Wells Fargo is unlikely to meet their pay requirements, said the person, who spoke about private negotiations on the condition of anonymity.
Wells - Fargo - Search - Process
Wells Fargo declined to comment on the search process.
The San Francisco-based bank has been looking for a new leader since March, when Tim Sloan became the second CEO to abruptly depart in the wake of a sales scandal that has badly bruised the bank’s reputation and crimped its financial performance.
Wells - Fargo - CEO - Pay - Package
Wells Fargo’s CEO pay package has trailed peers in recent years in the aftermath of a wide-ranging sales practices scandal. Wells Fargo is also the smallest of the top four retail banks by assets.
The board will likely pay the next CEO $15 million-$20 million a year, said Robin Ferracone, the chief executive of compensation consultancy Farient Advisors LLC. That compares with the $25 million that CEOs of top retail banks earned last year on average.
Wells - Fargo - Funds - Shares - Candidate
Wells Fargo may also need to set aside funds to match vested shares a candidate has at a current employer, compensation consultants and recruiters said. That could be difficult in an environment where politicians, regulators and investors are closely scrutinizing Wells Fargo.
“If you think about the Wells situation, it has a lot of distressed features to it,” Ferracone said.
Banking - Industry - Restrictions - Compensation - Regulators
The banking industry faces special restrictions on compensation that regulators imposed after the 2007-2009 financial crisis. Relative to other sectors, a bigger portion of executive pay comes in deferred stock, and contracts feature clawback provisions, which require money to be paid back under certain...
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