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Wells Fargo Lures New CEO by Boosting Pay 40% to $23 Million

Wells Fargo Lures New CEO by Boosting Pay 40% to $23 Million

(Bloomberg) -- A significant pay raise may have helped persuade Charlie Scharf to take on the top job at Wells Fargo & Co. -- a role spurned by many of his peers in the finance industry as the bank seeks to recover from a series of scandals.

The incoming chief executive officer’s annual target compensation was set at $23 million, the San Francisco-based lender said Friday in a filing. That’s a 40% jump from what he was entitled to in his final full year leading Bank of New York Mellon Corp.

Scharf’s pay package signals that Wells Fargo’s board didn’t go out of its way to get a new leader on the cheap even as the bank’s executive compensation has been a central sticking point for critics. While it’s smaller than those handed to the heads of rivals such as JPMorgan Chase & Co. and Bank of America Corp., it tops the annual pay given to Scharf’s two immediate predecessors, who both left amid the fallout from the fake-accounts scandal.

“His appointment is a coup for Wells Fargo,” said Dale E. Jones, CEO of Diversified Search, calling it a “perfect marriage of a strong personal brand with a company that needs a lift in brand and credibility.”

Wells Fargo Lures New CEO by Boosting Pay 40% to $23 Million

Friday’s announcement that Scharf, 54, will replace interim chief Allen Parker on Oct. 21 caps a search that dragged on for almost six months as several people who were seen as contenders demurred, including PNC Financial Services Inc. CEO Bill Demchak, 57, and former U.S. Bancorp CEO Richard Davis, 61.

Scharf’s annual compensation will include a $2.5 million salary, $5 million target cash bonus and $15.5 million in equity. His contract also entitles him to a car and driver, home security systems and to keep his primary residence in New York.

He’ll also get an additional $26 million of Wells Fargo stock in lieu of awards he has to forfeit for leaving his current job.

Compensation is a key part of any executive search, but especially so for Wells Fargo. Former CEO John Stumpf was lambasted for walking away with millions of dollars even as scores of employees were fired on far-less-lucrative terms as a result of the bank’s bogus-accounts scandal. U.S. Senator Elizabeth Warren criticized his successor, Tim Sloan, after the bank boosted his pay as part of the promotion.

That put the board in a difficult position, forcing it to balance between offering enough to attract solid candidates but not so much as to draw the ire of the public and lawmakers and further damage its already tattered reputation.

Stumpf had a $19.3 million target compensation in his last full year on the job, while Sloan’s was $18.4 million.

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