Banking, finance, and taxes

As Wells Fargo Continues to Fall Apart, CEO Sloan Makes $17.6 Million

Douglas A. McIntyre

Published: March 15, 2018 6:25 am

Last Updated: January 12, 2020 2:24 am

Though Wells Fargo & Co. (NYSE: WFC) continues to implode, CEO Timothy Sloan made $17.6 million last year. It is hard to imagine how the board, led by Chair Elizabeth A. Duke, could justify the number.

Sloan has been the chief executive officer since October 2016, just after a scandal rocked the bank. He was able to win the promotion from the president’s job, which means he was in management while the events that led to the scandal were brewing. Wells Fargo had just been charged with the creation of over 2 million fake bank accounts.

Wells Fargo also paid $50 million to settle charges it overcharged hundreds of thousands of homeowners for appraisals after they defaulted on mortgages. This occurred in November of 2016. In December, the Financial Industry Regulatory Authority fined Wells Fargo $5.5 million for failing to store electronic records, after some of the documents had been destroyed. Most recently, Reuters recently exposed that the bank received commissions from almost 500,000 people it helped get car insurance. The news agency reported:

U.S. regulators are preparing to sanction Wells Fargo for receiving commissions on auto insurance policies it helped force on more than half a million drivers, people with direct knowledge of the probes told Reuters.

In July, Wells Fargo blamed a third-party vendor for wrongly layering insurance policies on its auto borrowers. Wells Fargo did not explain that it received payouts when those policies were written.

The fact that Wells Fargo stood to profit from the insurance program will form the backbone of fresh sanctions against the bank, said people with knowledge of the matter who were not authorized to speak publicly.

Each and every one of these happened when Sloan was either president or CEO.

To make matters worse, Wells Fargo’s stock underperformed the market in 2017. It rose 8% while the S&P 500 was up 19%. Over the same period, the shares of rival JPMorgan Chase & Co. (NYSE: JPM) rose 24%. Shares of its other major rival, Citigroup Inc. (NYSE: C), were up 21% in that time.

Sloan’s compensation for 2017 was made up of $2.4 million in base salary, $15 million in stock awards and $100,000 in other benefits. It was a raise from his 2016 compensation of $13 million and his 2015 compensation of $11 million.

The board paid Sloan for driving Wells Fargo backward.