Here's Why Shareholders May Want To Be Cautious With Increasing Wells Fargo & Company's (NYSE:WFC) CEO Pay Packet

Key Insights

• Wells Fargo to hold its Annual General Meeting on 30th of April
• Salary of US$2.50m is part of CEO Charlie Scharf's total remuneration
• The overall pay is 125% above the industry average
• Over the past three years, Wells Fargo's EPS grew by 53% and over the past three years, the total shareholder return was 45%

Performance at Wells Fargo & Company (NYSE:WFC) has been reasonably good and CEO Charlie Scharf has done a decent job of steering the company in the right direction. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 30th of April. However, some shareholders will still be cautious of paying the CEO excessively.

View our latest analysis for Wells Fargo

How Does Total Compensation For Charlie Scharf Compare With Other Companies In The Industry?

Our data indicates that Wells Fargo & Company has a market capitalization of US$213b, and total annual CEO compensation was reported as US$26m for the year to December 2023. That's just a smallish increase of 5.4% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$2.5m.

On comparing similar companies in the American Banks industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$12m. Accordingly, our analysis reveals that Wells Fargo & Company pays Charlie Scharf north of the industry median. What's more, Charlie Scharf holds US$49m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	US$2.5m	US$2.5m	10%
Other	US$23m	US$22m	90%
Total Compensation	US$26m	US$25m	100%

On an industry level, around 45% of total compensation represents salary and 55% is other remuneration. Wells Fargo pays a modest slice of remuneration through salary, as compared to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Wells Fargo & Company's Growth

Over the past three years, Wells Fargo & Company has seen its earnings per share (EPS) grow by 53% per year. Its revenue is up 5.9% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Wells Fargo & Company Been A Good Investment?

Boasting a total shareholder return of 45% over three years, Wells Fargo & Company has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. Still, not all shareholders might be in favor of a pay raise to the CEO, seeing that they are already being paid higher than the industry.

CEO compensation can have a massive impact on performance, but it's just one element. We've identified 1 warning sign for Wells Fargo that investors should be aware of in a dynamic business environment.

Switching gears from Wells Fargo, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.