All Those Cash Bonuses Wells Fargo Yanked From Execs Magically Turned Into Stock Awards

And then some.
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Wells Fargo got some good press earlier this month when the chairman of the board stomped his foot, thrust an index finger into the air, and declared the bank would award no cash bonuses to eight top executives for 2016, collectively depriving them of $32 million in compensation. It was a rare and dramatic showing of spinal integrity for the red stagecoach. Of course, as you may recall, the announcement included the explicit proviso that no one did anything improper, necessarily. But the board didn't need to use words to communicate its displeasure – cash would do just fine.

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But something funny happened in the intervening weeks: Those callously withheld cash bonuses miraculously transformed themselves into equity awards. CEO Tim Sloan, whose overall pay increased 17 percent to $13 million, saw his stock award grow $2.5 million as his $1 million cash bonus from 2015 disappeared. CFO John Shrewsberry's $850,000 cash bonus vanished as his stock award grew by $1 million, according to Wells Fargo's 2017 proxy filing.

The pattern holds down the line: With the exception of the now-departed Carrie Tolstedt and John Stumpf – who forfeited their stock awards in the wake of the sham account scandal – each of Wells Fargo's four named executives watched their stock awards rise to compensate for lost cash bonuses. And then some. Thanks to 2016's bumper crop of stock awards, each of the top executives' compensation increased. (We're also excluding Chief Risk Officer Michael Loughlin, who is new to the named executive list in 2016.)

What's more, the increase in stock bonuses for the four executives between 2015 and 2016 exceeded that of the previous year. Between 2014 and 2015, the total equity bonuses for these four grew by $2.7 million. Last year their stock awards grew by $5.5 million, even as they lost a combined $3.55 million in cash bonuses.

 

Year

Stock awards

Cash awards

Salary

Other comp

Total

Tim Sloan

2015

$8,000,084

$1,000,000

$2,000,000

$18,550

$11,018,634

2016

10,500,038

0

2,329,502

18,550

12,848,090

John Shrewsberry

2015

6,500,036

850,000

1,700,000

18,550

9,068,586

2016

7,500,041

0

1,741,188

18,550

9,259,779

David Carroll

2015

6,500,036

850,000

1,700,000

18,550

9,068,586

2016

7,500,041

0

1,741,188

18,550

9,259,779

Avid Modjtabai

2015

6,500,036

850,000

1,700,000

18,550

9,068,586

2016

7,500,041

0

1,741,188

18,550

9,259,779

Of course, it's not for Dealbreaker to say how Wells Fargo's board of directors, in their infinite wisdom, should approach executive pay in their mission to promote accountability around a massive scandal for which the C-suite has been found “collectively responsible,” according to the proxy. But it does look a bit funny to yank cash awards away with the left hand as the right hand extends even more in company stock.

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