By Ross Kerber and Sohini Podder
(Reuters) -Wells Fargo & Co's executive pay plan for 2020 received backing from only about 57% of investor votes on Tuesday, a narrow win for the company and the latest evidence of the tougher scrutiny that shareholders are putting on CEO compensation this year.
CEO and President Charles Scharf was paid $20.4 million in 2020, down from $34.3 million in 2019, when he was first named to lead the bank, according to the company's proxy statement filed in March. On an annualized basis his total direct compensation in 2020 fell about 12% from $23 million the prior year, according to a January filing.
The board cited the drop in Wells Fargo (NYSE:WFC)'s financial results for 2020, which were hit by the COVID-19 pandemic, as one of the reasons for the lower compensation.
But the adjustments were not enough to satisfy investors, who generally cast 90% or more of their advisory votes in favor of corporate compensation. Levels below 80% usually result in revamped pay structures, consultants say.
Influential proxy advisor Institutional Shareholder Services recommended that investors vote against Wells Fargo's pay.
ISS cited concerns including relatively high salaries for top executives, the pay discretion given to its compensation committee, and a decline in the use of performance-based stock awards.
A Wells Fargo spokeswoman said via e-mail that its directors "will take into consideration the feedback that we have heard through this process, and we will continue our engagement and dialogue with our shareholders going forward."
The bank gave the figure of 57% support for its pay during its annual meeting held Tuesday, which was webcast. The spokeswoman said the figure included votes cast for and against the pay, and abstentions.
Pending a final tally, the vote would be among the lowest for a major U.S. bank in the decade since pay votes were required, according to a separate review by ISS.
The vote was only the latest rebuke from investors against a major U.S. company during this year's proxy season. Just on Monday, Johnson & Johnson (NYSE:JNJ) won backing for its executive pay from only 57% of votes cast.
As of April 15, about 5% of Russell 3000 companies had failed to win a majority of support for their executive pay, about four times the frequency of last year, according to pay consultant Semler Brossy.