Wells Fargo & Company’s (WFC - Free Report) announced the appointment of Charles W. Scharf, chairman and CEO of Bank of New York Mellon (BK - Free Report) , as its second CEO post public and political outrage concerning the sales scam in September 2016. The news was taken positively by the Wall Street, as the bank’s shares rose nearly 4% in the last trading day.
Scharf is said to have experience in retail banking zone, having served roles in JPMorgan Chase (JPM - Free Report) and Bank One previously. In July 2017, he became CEO of BNY Mellon, prior to which served as leader in Visa (V - Free Report) for nearly four years.
"Charlie is a proven leader and an experienced CEO who has excelled at strategic leadership and execution and is well positioned to lead Wells Fargo's continued transformation," said Chairwoman Betsy Duke.
On Oct 21, Scharf will replace interim CEO C. Allen Parker, who will continue to serve as the company’s General Counsel.
Wells Fargo kept its promise to appoint someone from outside to complete its transformation. The tough task took six long months as the candidate had to satisfy The Office of the Comptroller of the Currency as well.
The prior CEO and president, Timothy J. Sloan, had made a hasty exit from his position in March 2019 calling his presence a “distraction” that kept the bank from moving past previous wrongdoings.
The new CEO will be required to work toward turning around the company’s fortune and name, which nosedived following the sales and subsequent auto lending scandals. Further, the Federal Reserve has placed a cap on its asset size until regulators are satisfied with its progress on corporate governance issues.
Scharf had received $9 million as total pay package at BNY Mellon in 2018. At Wells Fargo, his base salary will match Sloan’s $2.5 million. Also, per a sec filing, he will be entitled to a cash bonus of between $5 million and $7.5 million in 2019.
Further, he will receive $26 million as Wells Fargo share rights over five years to make up for the income that was deferred at BNY Mellon. Moreover, board has agreed to award $15.5 million in performance shares for February 2020, subject to certain conditions.
Shares of Wells Fargo have lost 2.9% over the past 12 months compared with 1.3% decline recorded by the industry.
Currently, the stock carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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