Wells Fargo Shareholders Tepidly Re-elect Bank’s Directors

Wells Fargo Shareholders Tepidly Re-elect Bank’s Directors

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Most of the meeting proceeded more tamely, but emotions ran high throughout.

“There is no doubt that the last seven months have been one of the most difficult periods in our company’s 165-year history,” Timothy J. Sloan, the bank’s chief executive, said at the meeting’s start. “I can assure you that we are facing these problems head-on and that Wells Fargo is emerging a much stronger company.”

A Wells Fargo branch in New York. The tight margin by which some of the bank’s directors were elected was a sign that many shareholders are still dissatisfied with the company’s reformation.

Credit
Ali Asaei

Wells Fargo has been in crisis since its admission in September that over the course of several years, employees trying to meet aggressive sales quotas had opened as many as two million fraudulent accounts. Since then, the bank has made extensive changes, including the replacement of its chief executive — Mr. Sloan took over after his predecessor abruptly retired — alterations to its governance and risk-management structure, and the elimination of sales goals for its retail bank employees.

Shareholders strongly backed Mr. Sloan, re-electing him to the board with the support of 99 percent of the votes cast.

But the board’s chairman, Mr. Sanger, was re-elected far more narrowly, with 56 percent of the vote. Enrique Hernandez Jr., the head of the board’s risk committee, was elected with just 53 percent of the vote in his favor, the thinnest margin of any director.

“A low acceptance vote is a signal to the board that it needs to immediately begin to reconstitute itself,” said Charles M. Elson, a professor of finance at the University of Delaware and an expert on corporate governance. “That ought to be the appropriate reaction.”

However, Mr. Sanger said that he viewed the large number of votes cast against some incumbent directors as a rebuke of the full board, not any individual members. No members planned to resign because of the shareholder vote, he said.

That stance frustrated Brandon Rees, the deputy director of the A.F.L.-C.I.O.’s investment office, which holds 1.6 million shares of Wells Fargo. Mr. Rees said he voted against all of the company’s incumbent directors.

Some giant pension funds — like Calpers, which manages the retirement funds of California’s public employees and its New York City counterpart — also cast their votes against most of Wells’s board members, saying they failed in their duties to oversee the company.

Meet Wells Fargo’s Board

“Fresh blood is needed to ensure that the board has sufficient independence,” Mr. Rees said. “The narrow vote puts incredible pressure on some directors to reconsider their membership. I hope that by this time next year, we have a new slate.”

Tuesday’s meeting turned cathartic at times, with those who said they were harmed by Wells Fargo’s misdeeds offering firsthand accounts. Joseph Torres, 55, a Wells Fargo employee who works as a personal banker in Newburgh, N.Y., spoke about the physical and mental toll that the relentless pressure to meet unrealistic sales goals had taken on him and his colleagues.

In an interview, Mr. Torres said that he had exchanged several emails recently with Mr. Sloan, who promised that he would personally ensure that employees’ voices were heard as the bank worked to reform its sales culture. Mr. Torres, who joined Wells Fargo five years ago, said he hoped the bank’s leaders would follow through on that commitment.

“I used every available resource to speak up about the unethical things I saw, and for years all of that was ignored,” Mr. Torres said in the interview. “The board needs to be aware that the employees can be a resource to them, if they listen to us. We know what’s going on in the bank. We live it, every day.”

Although none of Wells Fargo’s directors were ousted, some turnover is likely. The board has a mandatory retirement age of 72. Six directors will reach that threshold within the next four years, Mr. Sanger said.

At 71, Mr. Sanger is one of them, and he indicated that he was likely to leave at the end of his term.

“This could be my last meeting,” he said in an interview afterward. “We are committed to refreshing the board over time.”

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