- Wells Fargo plans to freeze increases in base pay in the coming year for employees making more than $150,000, the bank told some managers Wednesday, according to Bloomberg, which cited anonymous sources.
- The move marks the bank's second attempt in as many weeks to limit expenses or perks given to its higher earners.
- CEO Charlie Scharf said in July he's aiming to cut $10 billion in annual expenses from the bank's costs.
Wells Fargo on Oct. 21 said it was eliminating — for employees earning $250,000 or more — a 6% matching contribution it makes to 401(k) retirement accounts, AdvisorHub reported, citing anonymous sources. The bank backtracked on that decision two days later amid a firestorm of internal complaints.
Wells Fargo had initially painted the maneuver as an attempt to focus resources on lower earners — opening 401(k) accounts with a 1% contribution for workers earning $75,000 per year or less who hadn't saved for retirement.
However, the bank's human resources unit said in a memo Wells would also "reflect competitive practice by limiting the company's contribution toward benefits for our highest-paid employees," considering those workers' other benefits and sources of income. The policy was to have taken effect Jan. 1.
Bank spokesperson Beth Richek said at the time Wells did "not expect to realize significant savings" from the 401(k) restriction, according to AdvisorHub.
However, a source told the publication a significant number of advisers, managers and executives in the bank's wealth and investment management division would be affected by the policy change. AdvisorHub reported the government caps retirement plan matching at $17,100 per employee in 2020.
Wells Fargo has considered a number of moves over the past several months to cut expenses. The bank reportedly is weighing selling its asset-management unit — a prospect that could fetch a $3 billion price tag — as well as a corporate-trust unit that could be worth $1 billion. Scharf has also indicated he wants to slash the bank's spending on consultants, a move that could save the company up to $1.5 billion a year.
Personnel moves could also help the bank shore up some savings.
A Wells Fargo spokesperson declined to comment Wednesday to Bloomberg about the reported freeze in raises for high-income employees.
In a wider-ranging personnel effort, the bank in August resumed job cuts that had been paused since the coronavirus pandemic began in March. People familiar with Wells Fargo's plans have estimated the bank could shed tens of thousands of positions.