Wells Fargo Holders Expected to Re-Elect Board, Send Message -- 2nd Update
April 25 2017 - 12:09PM
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 -- but at uncomfortably low vote totals
-- in a pitched contest over the board that resulted from last
fall's sales-practices scandal, according to people familiar with
the matter.
Shareholders' limited support for the board suggested
shareholders seek further changes and explanations following the
scandal. Tensions were high at the bank's shareholder meeting
Tuesday in Florida as shareholders voiced their complaints,
prompting Wells Fargo Chairman Stephen Sanger to halt the meeting
for several minutes.
The bank is scheduled to release the results of the shareholder
vote on directors at the meeting. 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. The technical deadline
for casting votes is when the meeting ends.
At the meeting, a bank's shareholder refused to stop asking
individual directors to explain what they knew about the sales
practices scandal. Mr. Sanger and Chief Executive Timothy Sloan
repeatedly asked the shareholder to sit down and wait until the
question-and-answer period began. The shareholder said the bank and
board's response was "not good enough," and he wanted more details
from each director.
When the meeting restarted a few minutes later, Mr. Sanger said
the shareholder made a "physical approach to our board members and
ultimately we removed him from the meeting."
Much of the discontent among shareholders 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 million 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 11:54 ET (15:54 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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