A mediocre chief executive does more than hold a company back. He or she occupies a position that a great CEO might otherwise step into. The opportunity cost can be immense, and reversing the downward trajectory later can be costly and painful.
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Totally agree that Charlie isn't in this for the long haul. I liken him to someone who flips houses for a living. His job is to go in and make substantial improvements that buyers (i.e. Wall Street) will find enticing, find a buyer as quickly and efficiently as possible, make a big profit and move on. He wouldn't be planting little saplings in the back yard, and dreaming about them growing into big leafy shade trees someday. Heck, he probably wouldn't hang around long enough to mow the lawn once.
Charlie is the hatch man. He has a life of 2-3 years. His job is to make the hard cuts no one wants to (k–ling morale in the process). Once that’s done, no one will want to work for him. Even the exec team (minus his cronies) have gotten crushed. Once he’s done slashing and burning, a new CEO will come in to actually “lead”
OP here. Some really good feedback on this thread. You can tell from my post that I am not a fan of letting him stay. I’m a fan of recognizing and taking your losses early, and then making your money back in a better investment. Not a fan of being indecisive and watching a stock collapse and then wondering what went wrong. (Because I’ve done it.) But there are some good points here about giving him more time.
My thing is that I don’t think you can lead a company to success without rallying your employees behind you. It is the ultimate failure in leadership if your employees have lost confidence in you or have concluded you don’t care. I don’t like that he is so disrespectful that we learn everything from the news before we hear it from him. And I’m not a fan of “sticking with the only guy who would accept the job at the time.” Understand how it happened, but it’s almost absurd.
But! I agree with the point someone made about the BOD not wanting egg on their face, so axing him might be a last resort. In the end, shareholder pressure and stock price might force the BOD in to action they would rather not have to take. We simply cannot continue to have earnings disappointments, trail our competitors, and allow so much uncertainty regarding our future without expecting calls for change.
The BOA comparison and then the counterpoint were interesting too.
Enjoyed the conversation, so thank you.
Unless we start getting our act together in all ways soon, future Wells Fargo ticker symbol will be: WFC.PK
I think/hope if they have a time frame in mind (probably extended due to COVID) it's been communicated (or at least implied) to Charlie. Just not to us, or the media. WAG: he probably has through 2021 – the target to have the layoffs done. If he meets cost cut expectations, and clears one or two major MRAs, I figure they'll give him a bit more rope because layoffs won't = great financial results overnight.
Shouldn't forget how hard it was to find a CEO, and how much WF had to fork over, to get Charlie to take the job. The board MUST really, really want Charlie to succeed or else they'll have even more egg on their faces. So axing him is probably a last resort.
Unless he stops lying he should go now. Keeps saying he wants to be open and honest, said it again today,. but tells the employees not in his inner circle absolutely nothing.
I am a level 6 manager and I have no clue what is happening or the companies strategy.
Managers at level 5 are saying exactly the same, don't know what our strategy is, no idea on regulatory progress, meanwhile Charlie bags $50MM (including his signing on fee) but cuts 1000's of jobs of people actually doing the work. He is the worst CEO out of the last 3 and that's saying something.
He will survive as he surrounded himself with his cronies. Jobs for the boys was never truer than now!
It’s not Charlie we should be worried about, it’s the milquetoast BOD that is our problem. Not to mention the “everybody has to feel good HR”
Bank of America is very different. I worked there for many years, here are some key differences
- Constant investment in tech
- Few if any deep seated cultural problems, ML and CW created problems but were rooted out quickly
- Insistence on truth and facts, obfuscating and ignoring bad news was not a thing
- Few consent order level problems, no asset cap
- Efficiency and lean operation were key priorities
- Rigor required for project investments and hiring
Scharf has one more year, the bank cannot survive with the asset cap. It’s been two years already.
Part of getting the cap lifted includes reducing management layers and unprofitable businesses. The cap wasn’t simply put in place because wells was naughty. It was put in place because there was a lack of oversight in many of the business lines. Decreasing layers and business lines creates more accountability for managers which should make it easier to get the cap lifted
Charlie has all the time in the world. Let’s not forget the previous CEOs were essentially fired by the HOR. Charlie passed the house test which indicates to me he has their blessing to implement his plan.
It might be rough at first but I think we should be hoping his plan works because if it doesn’t who will want to run this bank...
My wager is a year. He managed to turn a profit this quarter, so that will ease pressure.
A year is long enough to succeed or fail in making the changes the company needs to get out from under the asset cap. If he can't do it in a year then he's simply an ineffective leader.
I agree with many others that Scharf is not a long term CEO. He's the one to come in and do the unpopular stuff that employees hate. Then he'll sail off with a golden parachute. The cleaned up company, out from under the asset cap, will be much more attractive to better qualified candidates for the next CEO.
I think you have to look at Moynihan at Bank of America. Very similar situation. Moynihan was appointed CEO in 2010 when BoA was absolutely reeling, just like wells is boss
So he did exactly what Charlie is doing now. Layoffs, trim the fat, get out of the businesses that weren’t making money and slowly build up the other areas.
His first years were rough as the layoffs and downsizing were brutal with no benefit showing for them. Employee morale was at an all time low and people were fleeing the bank voluntarily almost as fast as others were getting laid off.
Moynihan stayed the course, weathered all the early criticism and managed to pull off a great turnaround for BoA. Moynihan was just named CEO of the year 2020.
Charlie is still very early in his tenure and the board is not expecting him to pull a rabbit out of the hat. He will be given ample time needed to turn this Titanic around.
By far his biggest battle will be the old saying “culture eats governance for breakfast”
He’ll make it through mid 2022 but if not out from the cap, pressure will mount.
Post ID: @jcv+17p5sf9V
Not disagreeing with you, but to OP’s point, finding a “someone” to take the job doesn’t speak very highly about the likelihood of a successful outcome with Charlie.
After the hurricanes in Florida, it is difficult to find a good contractor to repair your home due to demand exceeding supply. Oftentimes the contractors who are “available”, when the best are not, are those who price gouge (highest paid CEO in the industry) while overselling and underdelivering.
OP here:
What proof does anyone have that he is accomplishing what the BOD wants him to do? I’ve seen very little evidence that he is getting the P&L in shape, or making any strides towards getting the cap lifted. Do you see something I am not in a position to see?
He is doing exactly what BOD and the regulators want done. Get the P&L in shape (cost cutting since we can't grow for the forseeable future) and do the work to get the cap lifted - which is years out, not months. Why would they get rid of him
To jcv’s point:
https://dealbreaker.com/2019/06/literally-no-one-wants-to-be-ceo-of-wells-fargo
Has everyone forgotten how long it took to find someone to take the job?
Another question: How much time SHOULD the Board of Directors give Charlie?