Wells Fargo Holders Expected to Re-Elect Board, Send Message -- Update
April 25 2017 - 10:12AM
Dow Jones News
By David Benoit and Emily Glazer
Wells Fargo & Co.'s shareholders are expected to re-elect
all of the bank's directors in a pitched contest over the board
that resulted from last fall's sales-practices scandal, according
to people familiar with the matter. But levels of support for some
directors are likely to be uncomfortably low, sending a message to
the bank that shareholders seek further change at the bank.
The bank is scheduled to release the results of the shareholder
vote on directors at its annual shareholders meeting, to be held
Tuesday morning. The bank and its 15 board directors were on edge
through the night and early morning as key institutional
shareholders placed their votes, people familiar with the process
said.
Some votes were still coming in Tuesday, meaning vote tallies
could still shift or shareholders could still change their votes,
the people familiar with the matter said. Although the shareholder
meeting begins at 10 a.m. EDT in Ponte Vedra Beach, Fla., the
technical deadline for casting votes is when the meeting ends.
Much of the shareholder discontent is rooted in the bank's
sales-practices scandal that led to a $185 million settlement with
regulators last September and a more recent, pending $142
settlement with customers. Its reputation has been hit hard with
two congressional grillings and a spate of state and federal
investigations. The bank has said it is cooperating with those.
In an unusual move, Institutional Shareholder Services Inc., one
of the largest and most influential proxy advisory services, had
recommended earlier this month that shareholders vote against
re-electing 12 long-serving directors.
While the re-election of directors, if confirmed, will be a
relief for the bank, the likelihood that at least a few board
members will receive below 60% of votes cast is concerning.
Directors, who usually run unopposed, typically receive more than
95% or more of the votes cast.
Other long-serving directors are expected to receive less than
80% of the vote, which is also worrisome, one of the people
familiar with the matter said. The board's two newest directors,
appointed in February, are expected to receive more than 90% of the
vote, this person said.
The collective low votes for long-serving directors sends a
clear message to the bank of "dissatisfaction," one of the people
familiar with the matter said.
The bank has told large shareholders that six directors will hit
retirement age in the next four years and will step away from the
board with "significant turnover," emphasizing that point in recent
days, people familiar with the conversations said.
Many large shareholders thought the board was slow to react to
the sales-practices problem but in the last six months has taken
appropriate action, some of these people said.
While no specific deals were struck with shareholders on
changing directors, there were some backdoor negotiations, some of
these people said. It is possible that committee chairs could
change but not as a result of an explicit agreement, one of these
people said.
Write to David Benoit at david.benoit@wsj.com and Emily Glazer
at emily.glazer@wsj.com
(END) Dow Jones Newswires
April 25, 2017 09:57 ET (13:57 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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