Wells Fargo does U-turn on cutting perk for high-earning workers

[NEW YORK] On Wednesday, Wells Fargo & Co told high-earning employees it would stop matching contributions to their 401(k) plans. By Friday, the bank reversed course.

The about-face followed a swift backlash from affected employees, who earn more than US$250,000 a year, according to people with knowledge of the situation.

The measure was part of a larger set of changes the San Francisco-based firm rolled out this week to put "greater emphasis on how we support our lower-paid employees through our compensation and benefits programme", company spokesperson Beth Richek said in a statement. "After additional review and consideration, we have decided to continue offering the 6 per cent company matching contribution to all 401(k) plan eligible employees."

The drama unfolded as Wells Fargo undertakes a years-long cost-cutting initiative under chief executive officer Charlie Scharf, who took over last October. He has repeatedly lamented the firm's spending and pledged to eventually shave US$10 billion in annual expenses.

The company, which employed 274,900 people at the end of September, has embarked on workforce reductions that could ultimately number in the tens of thousands.

BLOOMBERG