Paul Hazen's rocky tenure at Wells Fargo & Co. will end with a lucrative pay package from Norwest Corp.
According to a regulatory filing, Mr. Hazen, who agreed to sell Wells Fargo on June 8, is to be compensated at least as highly as Richard M. Kovacevich, the Norwest chief executive who will head the combined company. Mr. Kovacevich was paid $3.2 million last year, and Mr. Hazen, who will remain as chairman, received $2.9 million.
Additionally, Mr. Hazen is to receive 500,000 restricted shares from Norwest when the merger is completed, plus options on one million shares. Should Mr. Hazen, 57, leave his post "for any reason," according to the filing with the Securities and Exchange Commission, his retirement benefits will equal not less than 25% of his 1997 compensation.
Shortly after Mr. Hazen assumed the CEO mantle in 1995, Wells launched a hostile takeover bid for First Interstate Bancorp. Wells won the bitter battle, but thousands of First Interstate employees lost their jobs and difficulties in rapidly combining the two companies alienated thousands more and drove away customers.
Wells' earnings suffered, its stock lagged the bull market, and ultimately Mr. Hazen opted to sell his company.
As lucrative as Mr. Hazen's package is-his restricted shares alone are worth $16 million-it's not nearly as bountiful as the windfall Barnett Banks Inc. chief Charles E. Rice got for selling to NationsBank Corp. or the deal CoreStates Financial Corp. chief Terrence A. Larsen received for selling his company to First Union Corp. Those two men collected well over $100 million each.
Mr. Hazen's package could jump in size if the Wells board determines a "change in control" has taken place. Then, Mr. Hazen's unvested options could become immediately exercisable and he could cash them and stock he beneficially owns for approximately $55 million at current share values.
A Wells spokesman declined to comment.
Goldman, Sachs Co. stands to collect around $37 million for advising both companies in the merger.Credit Suisse First Boston, which Wells hired to provide a fairness opinion three days before the merger agreement was signed, stands to collect $10 million for its bankers' labors.