Skip to main content

Wells Fargo plans major layoffs in coming year, CEO says

A man in a suit with a red tie is about to speak in front of a mike.
Former Wells Fargo CEO Timothy Sloan has sued the bank for $34 million he says he's owed in compensation. | Source: Chip Somodevilla/Getty Images

San Francisco-based Wells Fargo is being hit with a lawsuit from its former CEO just as its current leader announced the bank may have to pay nearly $1 billion in severance related to forthcoming layoffs. 

Ex-CEO Timothy Sloan filed suit in San Francisco Superior Court for breach of contract against the bank, arguing that Wells Fargo owes him some $34 million in illegally withheld compensation.

Sloan’s version of events presents a sanguine overview of his time leading the company, where he worked for more than 30 years before his departure in June 2019. Sloan was made CEO in October 2016 as the bank was reeling from revelations that it created millions of fraudulent savings and checking accounts for customers without their consent.

READ MORE: Wells Fargo Accused of Anti-Black Discrimination in Lawsuit Backed by Willie Brown, Ben Crump

The lawsuit states that, as CEO, Sloan was responsible for helping the bank “regain its ethical and financial footing” through better management and by working with regulators in the wake of the fake accounts scandal. It also credits him for asking the bank’s board to cancel his bonus in 2017. Sloan still earned $17.5 million in compensation that year, a 36% increase from the prior year.

The lawsuit accuses the bank of unlawfully canceling a $14 million equity grant in 2020. The decision to cut the bonus was publicly announced during congressional hearings about the bank’s misconduct. 

The lawsuit accuses Wells Fargo of using Sloan as a “scapegoat even though he was not responsible for the sales-practices abuses that prompted the congressional review.” 

According to the complaint, the bank’s board of directors expressed approval for Sloan’s performance as CEO and assured him he would receive his equity grants and bonuses. The lawsuit says Sloan decided to forgo a severance payment based on that promise. 

Sloan’s lawsuit accuses the bank of breaching the terms of his compensation agreements.  

As for the bank itself? Wells Fargo was relatively terse in its response to Sloan’s lawsuit. 

“Compensation decisions are based on performance, and we stand behind our decisions in this matter,” the bank said in a statement.

Man in a suit sitting with his hands out
Wells Fargo CEO Charlie Scharf has earned the nickname "Chainsaw Charlie" for his intensive cost-cutting while leading the bank. | Source: Patrick T. Fallon

The effort to claw back more money comes as current CEO Charlie Scharf said Tuesday at the Goldman Sachs conference in New York that the company will have to be “more aggressive” in managing its headcount because of a lack of turnover, likely meaning major layoffs in the year ahead. 

“We’re looking at something like $750 million to a little less than a billion dollars of severance in the fourth quarter that we weren’t anticipating, just because we want to continue to focus on efficiency,” Scharf told conference attendees. 

Since joining the bank in 2019, Scharf has focused intensely on increasing efficiency and cutting costs, so much so that aggrieved employees christened him “Chainsaw Charlie.”

This year, amid challenges of higher financing costs due to interest rate hikes and the decision by Wells Fargo to cut back on its home lending business, the bank has slashed more than 11,000 jobs, or nearly 5% of its workforce. 

According to reporting from CNBC, Scharf is looking to locate employees near the bank’s offices, with some workers offered paid relocation benefits and some offered severance payments. Those who opt not to move may see their jobs cut. 

Kevin Truong can be reached at