Wells Fargo (WFC) - Get Report named banking veteran Charles Scharf as group CEO Friday, some six months after the sudden resignation of Tim Sloan, sending shares sharply higher in early Wall Street trading.
Scharf, 54, will leave his role as chairman and CEO of Bank of New York Mellon (BNY) - Get Report to join Wells Fargo on October 21, the bank said, and has served as CEO of Visa Inc. V during a multi-decade career in banking and finance. He also sits on the board of Microsoft Inc. (MSFT) - Get Report . Scharf replaces interim CEO C. Allen Parker at the helm of the U.S.'s fourth largest U.S. lender.
Scarf will be paid a base salary of $2.5 million, the bank revealed, with a performance-based bonus of $7.5 million in one year's time. He'll also have $26 million in Bank of New York Mellon options bought out by his new employers.
"I am honored and energized by the opportunity to assume leadership of this great institution, which is important to our financial system and in the midst of fundamental change," Scharf said. "I have deep respect for all the work that has taken place to transform Wells Fargo, and I look forward to working closely with the board, members of the management team, and team members."
"I am committed to fully engaging with all of our stakeholders including regulators, customers, elected officials, investors, and communities," he added. ""I also want to note the wonderful job Allen has done as general counsel and interim CEO in providing strong leadership. Given his experiences and accomplishments, I know we will work closely together as we move forward."
Wells Fargo shares were marked 4.13% higher at the start of trading immediately following the naming of Scharf as CEO, indicting an opening bell price of $50.86 each, a move that would leave the stock only modestly higher since Sloan's surprise resignation on March 28. BNY shares, meanwhile, slipped 3.8% to $44.89 as investors priced in Scharf's departure.
Sloan stepped down after just three years at the helm after failing to quell years of scandals and political criticism linked to the tenure of ousted CEO John Stumpf, who left the bank in 2016 amid revelations that staff had created millions of fake accounts in order to boost internal performance targets.
Several investors, as well as high-level political figures such as Democratic Presidential candidate Elizabeth Warren, questioned whether Sloan, a 31-year veteran of the bank, was the right person to address cultural and systemic issues within the sprawling banking group.
Wells Fargo has seen some improvement in its bottom line since Sloan's departure, with the bank reporting diluted earnings for the three months ending in June of $1.30 per share, up 32.6% from the same period last year and well ahead of the Street consensus forecast of $1.15 per share.
However, the bank's net interest margin, a key measure of bank profitability, slipped 9 basis points from the first three months of this year to 2.82% and was down 11 basis points from the same period last year. Net interest income was also lower, down $533 million to $13.4 billion, the bank said.