Troubles seem to be continuing for Wells Fargo WFC with regard to finding its next CEO. At a Senate Banking Committee hearing, the Comptroller of the Currency Joseph Otting stated that the regulator will be reviewing the bank’s pick for its CEO.
The Office of the Comptroller of the Currency will be using special powers that are reserved for financially troubled lenders to review proposed candidates. Nonetheless, the regulator, at present, has no plans to make the findings from the review public.
This development will likely to further complicate the matter as the bank is already facing a number of problems in finding replacement for former CEO Tom Sloan, who abruptly resigned in March. He became the second CEO to leave Wells Fargo since the sales practice scandal was revealed in September 2016. (Read more: Wells Fargo CEO Sloan Announces Plan to Step Down)
Though the bank has hired an executive search firm for finding the next CEO, the search is getting hampered by limitations on pay, per a Reuters report.
Notably, the bank’s CEO pay package is at the bottom of the pack when compared with other U.S. big banks. Last year, Sloan’s pay package was $18.4 million compared with $31 million for JPMorgan's JPM Jamie Dimon, $26.5 million for Bank of America's BAC Brian Moynihan and $24 million for Citigroup's C Michael Corbat.
Well Fargo is looking for an outsider (preferably from outside the banking sector) as the company is facing heavy criticism for top management’s failure to turn things around. However, stringent regulatory and congressional scrutiny of the new CEO is likely to narrow down the number of candidates.
Additionally, the next CEO will be required to work for 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 the company’s progress on corporate governance issues.
Currently, the company’s general counsel C. Allen Parker is acting as the interim CEO. Notably, during first-quarter 2019 earnings conference call, Parker commented that new CEO will likely be appointed by 2020.
Over the past year, shares of Wells Fargo have lost 15.4% compared with industry’s decline of 9.4%.
Currently, Wells Fargo 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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