Wells Fargo Holders Expected to Re-Elect Board, Send Message -- 5th Update
April 25 2017 - 2:56PM
Dow Jones News
By Emily Glazer and David Benoit
Wells Fargo & Co.'s shareholders voted to re-elect all of
the bank's directors, but in some cases by slim majorities rarely
seen in big corporate votes and that reflect persistent unease
about the lender's sales-practices scandal last fall.
After a contentious three-hour shareholder meeting, the bank
said that all 15 directors were re-elected, but longer-serving
directors who were around before the problems erupted got approvals
as low as 53% of shares voted.
Nonexecutive Chairman Stephen Sanger, who received only 56%
approval according to a press release, said shareholders "sent the
entire board a clear message of dissatisfaction." The head of the
bank's risk committee, Enrique Hernandez, received the lowest
majority, 53%. None of the more tenured directors could muster more
than 80% of the vote.
While the re-election of directors is a relief for the bank, the
fact that a majority of directors received less than three-quarters
support is concerning and suggests Wells Fargo directors may face
pressure to make more changes in coming months. Directors, who
usually run unopposed, typically receive more than 95% or more of
the votes cast.
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 Mr. Sanger to halt the meeting for several minutes.
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.
At the meeting, one bank 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." There were two other
shareholder outbursts during the nearly three-hour 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.
The board's two newest directors, appointed in February,
received 99% of the vote. The firm's CEO, Timothy Sloan, who was
promoted after former CEO and Chairman John Stumpf resigned, also
garnered 99% of the vote.
The bank has told 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 Emily Glazer at emily.glazer@wsj.com and David Benoit
at david.benoit@wsj.com
(END) Dow Jones Newswires
April 25, 2017 14:41 ET (18:41 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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