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Richard Kovacevich

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Richard M. Kovacevich
BornOctober 30, 1943 (age 82)
Tacoma, Washington, United States
NationalityAmerican
EducationStanford University (BA, 1965; MS, industrial engineering); Stanford Graduate School of Business (MBA, 1967)
OccupationBanker, business executive
CompanyWells Fargo & Company
TitleFormer president, chief executive officer and chairman
SpouseMary Jo Kovacevich
ChildrenThree

Richard M. Kovacevich (born 30 October 1943) is an American retired banker who served as president, chief executive officer and later chairman of Wells Fargo & Company between 1998 and 2009. He rose to that position after two decades running Norwest Corporation, the Minneapolis based bank he joined in 1986 and led as president, chief executive and chairman before Norwest acquired Wells Fargo in 1998 and adopted its name.[1]

Before entering banking, Kovacevich worked in planning and general management roles at General Mills and a Long Island company. He joined Citicorp in 1975, working in consumer banking in New York, before moving to Norwest Bank in 1986. At Norwest and then Wells Fargo, he became known for a strategy of selling multiple financial products to each customer, for diversifying the bank's business away from concentrated lending risk, and for expanding an initially regional bank into one of the largest financial institutions in the United States.[2] That cross-selling strategy, later summarised internally as a goal of eight products per household, is also the practice most often linked to the unauthorised account opening scandal that became public at Wells Fargo several years after Kovacevich retired.[3]

As chairman, Kovacevich led Wells Fargo through its October 2008 acquisition of Wachovia Corporation, a stock deal reached after Wells outbid Citigroup for the troubled bank, and through the period in which Wells Fargo accepted a $25 billion federal capital injection under the Troubled Asset Relief Program (TARP), a step Kovacevich later said he did not believe the bank needed.[4]

Kovacevich left Wells Fargo in 2010, having stepped down as chairman at the end of 2009 and already handed the chief executive title to John Stumpf in 2007.[5][6] In retirement he joined the board of the blood-testing startup Theranos, became a partner at the activist hedge fund Hudson Executive Capital, and continued to comment publicly on banking regulation and policy; as of 2020 he was reported still to keep an office and an assistant at Wells Fargo.[7][8]

Early life and education

Kovacevich was born on 30 October 1943 in Tacoma, Washington.[1] He attended Stanford University, earning a bachelor's degree in 1965 and a master's degree in industrial engineering, followed by a Master of Business Administration from the Stanford Graduate School of Business in 1967.[9][10]

Kovacevich was drafted out of high school by the New York Yankees organisation and later by the Baltimore Orioles, but he chose to attend Stanford instead. He played baseball there until a rotator cuff injury in his junior year ended his prospects of a professional playing career.[11]

Career

General Mills (circa 1968 to 1971)

Kovacevich began his career in strategic planning at General Mills.[10] He served as chief financial officer of Palitoy, General Mills' British toy subsidiary, and went on to become general manager of Kenner Products, General Mills' domestic toy division, from 1970 to 1971.[10][11]

American Photographic Corporation (1972 to 1975)

Kovacevich then headed American Photographic Corporation, a company based on Long Island, New York, before moving into banking.[10]

Citicorp (1975 to 1986)

Kovacevich joined Citicorp in 1975, brought in by future Citicorp chairman John Reed. He built out the bank's automated teller machine network, oversaw a doubling of its credit card market share, and eventually managed international consumer banking operations spanning 33 countries and about 23,000 employees.[11] He aspired to lead Citicorp's retail banking division but was passed over for that role and left the company in 1986 to join Norwest Bank.[1][3]

Norwest Corporation (1986 to 1998)

Kovacevich joined Norwest Corporation of Minneapolis in March 1986 as vice chairman, chief operating officer and head of its banking group. He became president of Norwest in 1989, chief executive officer in 1993, and chairman in 1995.[1][12] Norwest's banking business rebounded from an $82 million loss in 1987 to a $140 million profit in 1988 under his early leadership, and the company completed 17 acquisitions between 1986 and 1993 as Kovacevich pursued growth through consolidation.[11]

Kovacevich pursued a strategy of selling a broader range of financial, investment and insurance products to existing customers rather than relying solely on traditional lending, on the view that diversification across products and geography, rather than sheer size, was what made a bank resilient.[2] In 1994 he told an interviewer that "the banking industry is dead, and we should bury it," arguing that the future belonged to diversified financial services companies rather than narrow lenders, and in 1995 he told Norwest managers that "the war we are in will be won on the field of revenue."[3]

On 8 June 1998, Norwest and the San Francisco based Wells Fargo & Company announced an agreement for Norwest to acquire Wells Fargo, with Kovacevich and Wells Fargo chief executive Paul Hazen jointly announcing the deal. The all stock transaction was reported at the time to be worth about $31 billion. The combined company adopted the better known Wells Fargo name and was headquartered in San Francisco, California.[1][11]

Wells Fargo & Company (1998 to 2010)

Following the 1998 merger, Kovacevich became president and chief executive officer of the combined Wells Fargo & Company, serving as chief executive from November 1998 to June 2007, and he was named chairman in April 2001.[1][5][12] In a 2005 interview, Kovacevich compared selling banking products to selling breakfast cereal or toys, recalling his earlier career at General Mills: "Marketing is important, but you have to get in there and get your goods on the shelf." He said his strategy was to win more business from existing customers with better service and pricing rather than to chase new customers with incentives.[13] He extended Norwest's sales culture across the enlarged company, setting a household target that became known internally as "Going for Gr-Eight," after the goal of selling each household eight Wells Fargo products. Asked years later whether the number eight held any particular significance, Kovacevich acknowledged, "Well, it wasn't." By 2007 the company's cross-sell ratio had reached 5.5 products per household, and Kovacevich's chief lieutenants in building the sales culture included John Stumpf and Carrie Tolstedt.[3] Wells Fargo completed 39 acquisitions in the years after the 1998 merger, adding a further $40 billion in assets, and Kovacevich favoured a three year post-merger integration built around revenue growth rather than the aggressive cost-cutting used by rival acquirers; the integration was completed six months ahead of schedule.[11]

Under his direction, Wells Fargo's assets grew to about $334 billion by 2003, making it the fifth largest bank in the United States at that point, and continued to grow over the remainder of his tenure.[1] A retrospective interview with Kovacevich put the bank's overall asset growth during his years leading Norwest and then Wells Fargo at roughly $50 billion to $610 billion.[5]

Kovacevich relinquished the Wells Fargo presidency to Stumpf in 2005 and the chief executive title to him in June 2007, while remaining chairman.[5][12] Wells Fargo's 2007 proxy statement, covering 2006, listed Kovacevich as Chairman and Chief Executive Officer and noted that, having held a reload stock-option feature that would lapse on his retirement, he would need to exercise certain options before his "expected retirement in 2008."[14] In the event, he remained chairman through the 2008 financial crisis, stepping down at the end of 2009, and left the company in 2010.[5][6] A Wells Fargo press release from October 2008 confirms that by that date Stumpf held the title of president and chief executive officer while Kovacevich remained chairman.[15]

Leadership and management style

Kovacevich's leadership at Norwest and Wells Fargo was defined by an emphasis on cross-selling: encouraging each customer to hold multiple financial products, from checking accounts to insurance and investment services, rather than a single deposit or loan product. By 2003, Wells Fargo customers held an average of four products each, roughly double the industry standard at the time.[1] He explained the underlying economics directly: "selling an additional product to an existing customer saves us about 10 percent versus selling it to a new customer."[11] Kovacevich referred to bank branches as "stores," described employees as "team members," tracked sales per square foot, and modelled the bank's growth strategy on retail chain expansion. He said Wells Fargo was "not in the banking business" but "in the money business."[11][2]

He described lending as inherently the riskiest part of banking, and advocated spreading that risk across many products and regions in a manner comparable to the insurance industry, rather than concentrating it in a single business line.[2] On acquisitions, he said he had made "every mistake there is to make" across roughly 1,000 transactions over his career, and Wells Fargo's own deals were typically priced at around two and a half times book value at a time when competitors were paying considerably more.[11] Kovacevich is quoted as saying, "Integrity is not a commodity. It's the most rare and precious of personal attributes," reflecting a management philosophy that emphasised customer trust alongside sales growth.[1] Wells Fargo's Human Resources Committee recorded that Kovacevich's formal performance objectives for 2006, his last full year as chief executive, included continuing the company's progress on senior management succession planning, including his own eventual succession as chief executive, strengthening the company's business model, culture, regulatory compliance and information security, and personally supervising the development of Stumpf, then chief operating officer, for larger responsibilities.[14]

During the run-up to the 2007 to 2008 financial crisis, Kovacevich has said Wells Fargo deliberately avoided the exotic subprime mortgage products he later called "toxic waste," even as the bank lost market share, by his account about four percent annually from 2005 to 2007, to competitors willing to originate them.[5] The Federal Reserve's own view of Kovacevich's team was similarly favourable: after Citigroup lost the bidding contest for Wachovia to Wells Fargo in October 2008, Roger Cole, then the Fed's head of banking supervision, told the Financial Crisis Inquiry Commission that the market saw it as "an indication of bad management at Citi that they lost the deal, and had it taken away from them by a smarter, more astute Wells Fargo team."[4]

Major deals and strategic decisions

The defining transaction of Kovacevich's career at Norwest was the company's 1998 acquisition of Wells Fargo & Company, an all stock deal reported at roughly $31 billion that made Norwest the effective survivor of the merger while the combined bank retained the Wells Fargo name and San Francisco headquarters.[1][11]

Wells Fargo's acquisition of Wachovia Corporation was the largest deal of Kovacevich's chairmanship. In late September 2008, with Wachovia facing a deposit run following the collapse of Washington Mutual, Kovacevich contacted Wachovia chief executive Robert Steel about a possible acquisition. On 29 September 2008, Wachovia instead agreed to sell its banking operations to Citigroup in a transaction backed by Federal Deposit Insurance Corporation loss protection. Kovacevich told the FCIC that Wells needed additional time to review Wachovia's commercial real estate holdings before it could bid without government assistance, and that the extra diligence, not a tax ruling issued that week, was what drove Wells's decision to return with a rival offer.[4] On 3 October 2008, it announced an agreement to acquire all of Wachovia in a stock for stock deal valued at approximately $15.1 billion and requiring no federal assistance, with Wachovia shareholders to receive stock worth about $7.00 per Wachovia share. "This agreement won't require even a penny from the FDIC," Kovacevich said in the companies' joint announcement, adding that the deal represented "a compelling value for Wachovia shareholders" and combined "the best in service and the best in sales, an unbeatable combination," while Stumpf, by then president and chief executive officer, committed to a smooth integration.[15][4] Citigroup sued to block the transaction, but the Wachovia board voted unanimously for the offer, and the deal closed in December 2008.[4] Weeks before the announcement, Kovacevich told an Association for Corporate Growth conference in Beverly Hills that Wells Fargo had a long-standing reputation as a disciplined acquirer that preferred buying troubled institutions cheaply: "Wells Fargo often buys fixer uppers," he said. "Given the financial conditions today, I feel like a kid in a candy store. There is a lot out there today. We are buying with both hands right now, as we have done for the past year." He also said Wells Fargo's decision not to sell risky mortgage products such as option adjustable rate mortgages cost the bank an estimated $160 billion in fees in 2006 alone, even as the bank's mortgage business lost about four percent of market share annually between 2005 and 2007.[12]

That same October, the bank was among nine major financial institutions, along with Bank of America, Citigroup, JPMorgan Chase, Goldman Sachs, Morgan Stanley, Merrill Lynch, Bank of New York Mellon and State Street, summoned to Washington on 13 October 2008 by Treasury Secretary Henry Paulson and told to accept government capital under TARP's newly created Capital Purchase Program. Wells Fargo, Citigroup and JPMorgan Chase were each allocated $25 billion, the largest amounts among the nine firms. Kovacevich has said the bank was effectively required to take the funds regardless of its own capital position; it repaid the investment within about a year, at a cost of roughly $2.5 billion.[4][5]

Financial and market performance

Under Kovacevich, Wells Fargo's asset base expanded substantially: by 2003 the bank held about $334 billion in assets and ranked as the fifth largest bank in the United States.[1] Looking across his full tenure leading first Norwest and then Wells Fargo, Kovacevich has described the institution's assets as having grown from roughly $50 billion to about $610 billion.[5] The bank's cross-selling performance, an average of four products per retail customer by 2003 against an industry norm of about two, was cited at the time as a specific driver of that growth in revenue relative to the bank's more stable fixed costs.[1]

Wells Fargo's 2007 proxy statement disclosed Kovacevich's 2006 compensation as chairman and chief executive officer: a salary of $995,000, non-equity incentive (bonus) compensation of $8,500,000, option awards reported at $16,826,148, a change in pension value of $2,982,214 and other compensation of $543,521, for total reported compensation of $29,846,883. The company's Human Resources Committee said a more accurate figure for his 2006 total compensation was $20,481,415, after excluding $9,365,468 attributable to "reload" stock options granted when he exercised earlier option grants. As of 28 February 2007, Kovacevich beneficially owned 13,008,466 Wells Fargo shares and share equivalents, including 3,551,643 shares owned outright, 9,079,796 shares subject to options exercisable within 60 days, and 377,027 common stock units.[14]

Kovacevich was named one of BusinessWeek's best managers in both 2003 and 2004 in recognition of Wells Fargo's performance during this period.[1]

Board memberships and outside roles

Kovacevich has served as a director of Target Corporation, appearing in the retailer's proxy statements filed with the U.S. Securities and Exchange Commission between 2001 and 2011, and of Cisco Systems, Inc., appearing in that company's proxy statements between 2005 and 2014.[16] The company's own 2007 proxy statement likewise lists him as a director of Cargill, Incorporated, Cisco Systems and Target Corporation while he was chairman and chief executive.[14] He has also served as vice president of the board of governors of the San Francisco Symphony and vice chairman of the board of trustees of the San Francisco Museum of Modern Art, and was chairman of the California Business Roundtable.[10][12] As of October 2008 he was also a member of Governor Arnold Schwarzenegger's California Commission for Jobs and Economic Growth.[12]

In September 2002, President George W. Bush appointed Kovacevich, then identified as chairman and chief executive officer of Wells Fargo, to the newly created National Infrastructure Advisory Council, a body of private sector executives asked to advise the federal government on the security of the country's critical infrastructure and information systems.[17]

Kovacevich was interviewed by staff of the federal Financial Crisis Inquiry Commission on 24 August 2010 as part of its investigation into the causes of the 2008 financial crisis.[18]

In June 2015, Kovacevich joined Hudson Executive Capital, an activist hedge fund founded earlier that year by former JPMorgan Chase chief financial officer Douglas Braunstein and lawyer James Woolery, as one of its "CEO Partners," alongside former Securities and Exchange Commission chairwoman Mary Schapiro, who joined as a senior adviser.[6] By 2016, Kovacevich was also a director of Theranos, the Palo Alto blood-testing company founded by Elizabeth Holmes; after regulators proposed banning Holmes from the blood-testing business over failures at a California laboratory, Kovacevich told CNBC in April 2016 that the treatment of Holmes had been "unfair" and that "the company is a good company and will survive and will achieve its objectives."[8]

Since his retirement from Wells Fargo, Kovacevich has continued to write and comment publicly on banking regulation and policy. American Banker identifies him as "a retired chairman and CEO of Wells Fargo" in its listing of his contributed opinion pieces, which include a July 2020 article arguing against the repeal of federal restrictions on brokered deposits.[19]

Controversies

Kovacevich became a prominent critic of the federal government's response to the 2008 financial crisis. He has said Wells Fargo was pressed to accept its $25 billion TARP capital injection regardless of whether the bank needed it, and he called the broader TARP program "one of the worst economic decisions in the history of the United States." He has also argued that regulators' failure to enforce existing rules, together with credit rating agencies' mis-rating of subprime mortgage securities as investment grade, did more to cause the crisis than the conduct of large commercial banks such as Wells Fargo. These are Kovacevich's own stated positions, given in an interview after he left Wells Fargo.[5]

The pursuit of Wachovia in 2008 also brought Wells Fargo into direct legal conflict with Citigroup, which had reached its own preliminary, FDIC-backed agreement to acquire Wachovia's banking operations only days before the higher, unassisted offer was announced; Citigroup sued unsuccessfully to block it.[4]

Kovacevich's tenure on the Theranos board also drew scrutiny. Speaking to CNBC in April 2016, after U.S. health regulators had proposed barring Elizabeth Holmes from the blood-testing business over problems at the company's California laboratory, Kovacevich defended Holmes, called her treatment "unfair," and said unspecified "misinformation" about the company had entered the public domain, without providing further detail.[8]

The sales culture Kovacevich built at Norwest and Wells Fargo, and the "Going for Gr-Eight" cross-selling target in particular, is widely identified as the origin of the aggressive incentive structure that bank employees were later found to have exploited by opening millions of unauthorised customer accounts, a scandal that became public in 2016, after Kovacevich's retirement.[3] Kovacevich has disputed any personal responsibility for that scandal. According to a 2020 account published by Duke University's Global Financial Markets Center, he has maintained that the bank's sales practices were "fundamentally sound," said he first learned of the unauthorised-account abuses from a 2013 Los Angeles Times investigation, and called it "impossible" that the bank's sales targets could have caused employees to open fraudulent accounts. The same account states that Kovacevich paid no financial penalty in connection with the scandal.[7]

Personal life

Kovacevich is married to Mary Jo Kovacevich and has three children.[10] He is described as 6 feet 3 inches tall.[11] A published business biography describes him as an avid golfer with a handicap of about 10.2 who belonged to golf clubs in California.[1]

Recognition

  • American Banker's Banker of the Year, 2003.[10]
  • Named one of BusinessWeek's best managers of the year, 2003 and 2004.[1]

See also

References

  1. ↑ 1.00 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 1.12 1.13 1.14 <ref>"Richard M. Kovacevich".Reference for Business.Retrieved 28 September 2026.</ref>
  2. ↑ 2.0 2.1 2.2 2.3 <ref>"9 Critical Insights About Banking From Former Wells Fargo CEO Richard Kovacevich".The Motley Fool.2 March 2015.Retrieved 28 September 2026.</ref>
  3. ↑ 3.0 3.1 3.2 3.3 3.4 <ref>"A Brief History of Wells Fargo's Sales Culture".American Banker.Retrieved 28 September 2026.</ref>
  4. ↑ 4.0 4.1 4.2 4.3 4.4 4.5 4.6 <ref>"The Financial Crisis Inquiry Report".Financial Crisis Inquiry Commission, U.S. Government Publishing Office.2011.Retrieved 28 September 2026.</ref>
  5. ↑ 5.0 5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8 <ref>"Richard Kovacevich".FRONTLINE, PBS, oral history interview, "The Financial Crisis".Retrieved 28 September 2026.</ref>
  6. ↑ 6.0 6.1 6.2 <ref>"Mary Schapiro and Richard Kovacevich to Join Hedge Fund".The New York Times.5 June 2015.Retrieved 28 September 2026.</ref>
  7. ↑ 7.0 7.1 <ref>"The Denials of Dick Kovacevich: Wells Fargo's "Godfather of Salesmanship" Says Everyone Else Is to Blame".The FinReg Blog, Duke University Global Financial Markets Center.8 October 2020.Retrieved 28 September 2026.</ref>
  8. ↑ 8.0 8.1 8.2 <ref>"Theranos director: Treatment of CEO Holmes 'unfair'".CNBC.20 April 2016.Retrieved 28 September 2026.</ref>
  9. ↑ <ref>"Cream of the Crop Gone Sour: America's Troubled CEOs".Fox News.Retrieved 28 September 2026.</ref>
  10. ↑ 10.0 10.1 10.2 10.3 10.4 10.5 10.6 <ref>"Kovacevich, Dick".Encyclopedia.com.Retrieved 28 September 2026.</ref>
  11. ↑ 11.00 11.01 11.02 11.03 11.04 11.05 11.06 11.07 11.08 11.09 11.10 <ref>"Bank to the Future".Institutional Investor.Retrieved 28 September 2026.</ref>
  12. ↑ 12.0 12.1 12.2 12.3 12.4 12.5 <ref>"A Look at Wells Fargo's Chairman".Silicon Valley/San Jose Business Journal.3 October 2008.Retrieved 28 September 2026.</ref>
  13. ↑ <ref>"At Wells Fargo, Big Results by Catering to the Little Guy".The New York Times.17 June 2005.Retrieved 28 September 2026.</ref>
  14. ↑ 14.0 14.1 14.2 14.3 <ref>"Wells Fargo & Company, Notice of Annual Meeting of Stockholders and Proxy Statement".Wells Fargo & Company, filed with the U.S. Securities and Exchange Commission.16 March 2007.Retrieved 28 September 2026.</ref>
  15. ↑ 15.0 15.1 <ref>"Wells Fargo to Acquire Wachovia, Creating Coast to Coast Franchise".Wells Fargo & Company, filed as Exhibit 99.1 to Form 8-K with the U.S. Securities and Exchange Commission.3 October 2008.Retrieved 28 September 2026.</ref>
  16. ↑ <ref>"Full text search results for "Kovacevich" in DEF 14A filings".U.S. Securities and Exchange Commission, EDGAR full text search.Retrieved 28 September 2026.</ref>
  17. ↑ <ref>"President Announces Members of National Infrastructure Advisory Council".The White House, George W. Bush Administration.18 September 2002.Retrieved 28 September 2026.</ref>
  18. ↑ <ref>"Richard Kovacevich, Wells Fargo, interview by FCIC staff".Financial Crisis Inquiry Commission Records, Stanford Law School.24 August 2010.Retrieved 28 September 2026.</ref>
  19. ↑ <ref>"Repealing Brokered Deposit Law Would Be a Costly Mistake".American Banker.6 July 2020.Retrieved 28 September 2026.</ref>
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