Paul M. Hazen - Wells Fargo & Co. Chairman and CEO - Nota Bene

Chief Executive, The, April, 1995 by Sam Zuckerman

When Paul Hazen took the CEO job at Wells Fargo & Co. at the beginning of the year, it was as if Clark had gone off to explore the Louisiana Purchase without Lewis. For 28 years, Hazen had been the junior partner of the renowned Carl Reichardt in one of banking's most successful duos. As the Nos. 1 and 2 executives since 1984, they had turned San Francisco-based Wells, the nation's 15th largest bank company, into a prolific moneymaker. So when Reichardt retired as chairman and chief executive last year and was succeeded by the 53-year-old Hazen, the new boss had to show he could take the act solo.

The Michigan-born, Arizona-raised chief executive has spent virtually his entire professional life in Reichardt's shadow. In 1966, just two years out of the MBA program at the University of California Berkeley, he joined Reichardt at Union Bank, making loans to Southern California real estate developers from a trailer in Orange County. Four years later, they jumped ship to Wells. Reichardt became CEO in 1983, and a year later, he tapped his young lieutenant for the bank's No. 2 job.

Once in power, Reichardt and Hazen ran Wells following simple business practices that often had been ignored in an industry then sheltered by protective regulations. The two executives focused on a few key business lines, kept costs under tight control, and maintained high credit standards. They displayed strict financial discipline in dealmaking and an unsentimental attitude about shedding businesses and slashing jobs.

The formula gave Wells a reputation for harshness, but it also made the bank an industry profit leader. While earnings suffered during California's recession, they have rebounded vigorously. Wells' 1994 net of $841 million, up 37 percent from the previous year, represented a return on equity of 22.4 percent, among banking's best. Growth has been secondary. 1994 year-end assets of $53.4 billion were only 2 percent above the 1993 level.

Although Reichardt is only 10 years Hazen's senior, the two men developed a sort of father/son relationship. Both typically arrived at Wells headquarters before dawn and spent the time before others arrived in animated conversation. "We talked about what we had read, politics, world economics, whatever was in the newspaper - things that might have been far removed from any decision we had to make," Hazen recalls.

Reichardt was the domineering leader, a hyperkinetic, florid-faced bulldog with a visceral knack for running a business. Hazen was the quiet lieutenant, reed-thin and austere, operating in the background while Reichardt took center stage. A brilliant, cool-thinking analyst with a flair for numbers, Hazen became known as a stern taskmaster in his dealings with subordinates, an image he plays down. "There is some mythology that evolves in any organization," he says. "I don't struggle with it at all."

Still, Hazen seems to understand that as leader, he needs to pay more attention to the human dimension. Colleagues report that the new CEO has been taking more time to chat and is trying to get to know subordinates better. "There is a softer side to Paul," says Donaldson, Lufkin & Jenrette analyst Thomas Brown.

Hazen faces a tougher challenge maintaining, let alone improving on, Reichardt's performance record. Like most other banks, Wells finds revenue hard to come by. The bank has three principal business lines: retail banking, mainly through its network of more than 600 California branches; wholesale banking to middle-market and commercial real estate customers; and money management. While loans have been growing lately, interest income has remained flat because of narrower margins and a smaller securities portfolio.

As loan quality has improved in recent quarters, the bank temporarily has boosted profits by setting aside less money to cover losses. To lift earnings per share, Wells has been buying back stock at a rate of 1.6 million shares per quarter from a base of 52 million shares outstanding at the end of 1993.

For the long term, Hazen is looking to save money and attract new business by closing dozens of traditional branches and increasing use of alternative channels for reaching customers - telephones, automated teller machines, computers. Wells also is experimenting with supermarket-based electronic banking stations that combine ATMs with telephone hookups to sales offices. Still, Hazen refuses to be wowed by technological glitz. "We are going through some tremendous transitions, but we have to be mindful of what got us here in terms of expense control and efficiency," he stresses.

Profile: Paul Mandeville Hazen, chairman and chief executive, Wells Fargo & Co.

Born: November 29, 1941, Lansing, MI.

Education: B.S., University of Arizona, 1963; MBA, University of California, Berkeley, 1964.

Family: Married, two children.

Boards: AirTouch Communications; Safeway; Phelps Dodge Corp., Intermountain Center for Human Development.

Other business interests: Partner with his two brothers in Arizona development and property management firm.