Chicago-based research behemoth Morningstar named John Stumpf of Wells Fargo and Co. the recipient of its 2015 CEO of the Year award. Each year Morningstar recognizes a chief executive who exhibits what it calls “commendable corporate stewardship, demonstrates independent thinking, creates lasting value for shareholders, and puts his or her stamp on an industry.”
Wells Fargo is a diversified financial services company headquartered in San Francisco. It provides retail, corporate, and commercial banking services through multiple distribution channels, including online, mobile, and banking locations, to individuals, businesses, and institutions.
The two other nominees for Morningstar’s 2015 CEO of the Year award were Jeff Bezos of Amazon.com and Jeffrey Immelt of General Electric Co.
“Our three nominees each lead companies our analysts consider to have a ‘Wide’ Economic Moat, or structural competitive advantages that position them to earn above-average returns on capital over a long period of time,” Michael Holt, global head of equity research for Morningstar, said in a statement. “With technological advances, an increasingly global marketplace, and the relentless nature of competition, the stewardship of a moat is not a simple task. We believe assessing the quality of management is a critical step in analyzing any company.
“We named John Stumpf our 2015 CEO of the Year because we think he deserves credit for much of the success Wells Fargo has enjoyed in recent years. He guided the bank through a difficult period in the industry and shunned activities that put profits ahead of customers, building up strength while many of its peers languished. We view Wells Fargo’s dominant market position as its largest structural advantage, and its exceptionally high profitability gives us confidence in the bank’s potential to generate excess returns for some time.”
Stumpf, a 34-year veteran of Wells Fargo, has continued a tradition of consistent strategy and management, helping the company prosper since taking over the helm in mid-2007:
- Wells Fargo’s stock has gained more than 70 percent in value over the past decade, outperforming the SandP Financials Index by 100 percent and most of its large U.S. peers. Book value per share has roughly tripled over the same period.
- Returning capital to shareholders is a priority at Wells Fargo—management targets returning between 55 and 75 percent of earnings through dividends and repurchases. In 2015, the company achieved returns on equity well in excess of Morningstar’s estimate of the cost of equity and returned approximately 58 percent of profits to shareholders.
- Shareholders have benefited from the firm’s conservative balance sheet management and bold mergers and acquisitions. Recent capital-allocation decisions, including the acquisition of large loan portfolios from GE Capital, have continued to demonstrate the company’s disciplined approach to growth.