Wells Fargo suspends bonuses for top executives
28 Feb 2009
The board of Wells Fargo & Co. has suspended its bonus for CEO John Stumpf and other top executives. According to a US Securities and Exchange Commission filing, the executives will not receive cash bonuses for 2008 either because the company failed to meet performance goals. The board suspended the policy Tuesday. It is retroactive to 1 January.
The suspension applies to CEO Stumpf, chairman Richard Kovacevich, CFO Howard Atkins and senior executive vice presidents David Hoyt and Mark Oman. At the same time, Wells Fargo granted 127,937 restricted share rights (RSR) to Atkins, 147,928 restricted share rights to Hoyt and 147,928 restricted share rights to Oman.
Each restricted share right, or RSR, entitles the executive to receive one share of Wells Fargo common stock upon vesting. The RSRs will vest in three installments in 2012, 2013 and 2014, under certain conditions. Additionally, Wells Fargo also plans to boost the annual base salaries of Atkins and Hoyt to $700,000 from $600,000 on 1 March.
Stumpf had already said he would not receive a bonus when he spoke along with seven other bank executives called before the US Congress earlier this month to answer questions on how banks have used billions of dollars in government bailout money. Earlier this month, Wells Fargo canceled an employee event in Las Vegas after the Associated Press said the bank had booked two of the city's more upscale hotels.
This month, Wells Fargo increased its estimated fourth-quarter losses. The bank, which recently acquired Charlotte, North Carolina-based Wachovia Corp., now expects a fourth-quarter loss of $2.73 billion, or 84 cents per share, instead of previous estimates of $2.55 billion, or 79 cents per share. (See: Wells Fargo's buyout of Wachovia cleared)
The company cites a non-cash charge to earnings of $328.4 million in the fourth quarter for investments in certain perpetual preferred securities. San Francisco-based Wells Fargo says the charge will reduce its full-year 2008 net income to $2.65 billion, or 70 cents per share, from $2.84 billion, or 75 cents per share.
Wells Fargo received $25 billion under the federal government's Troubled Asset Relief Program (TARP). The program is designed to unfreeze the credit markets and boost the economy.
