Advisory firm recommends Wells Fargo investors vote out bank's board
08 April 2017
An influential shareholder advisory firm has recommended that Wells Fargo & Co investors vote against most of the company's incumbent board members in an upcoming election, in a strong step which the board termed ''extreme and unprecedented.''
In a report issued yesterday, Institutional Shareholder Services said that board members failed to exercise oversight of the San Francisco bank and prevent ''unsound retail banking sales practices.''
The firm, which advises big investment firms on corporate governance issues and on how to vote in annual shareholder elections, had called on shareholders to vote against 12 of the bank's 15 board members, including chairman Stephen Sanger.
It called on investors to vote in favour of the remaining three members all of whom joined the board after the bank's unauthorised accounts surfaced in September of last year.
The three are - Timothy Sloan, who joined the board when he was named chief executive in October, and directors Karen Peetz and Ronald Sargent, who joined the board in February.
Responding to the ISS' observation, the board said yesterday, that the ISS recommendations failed to account for all the actions the bank and board had taken in the wake of the scandal, in which as many as 2.1 million checking, savings and other accounts were created without customers' permission.
In September the bank was fined $185 million to settle allegations that its employees had opened as many as 2 million accounts without customers' knowledge as they sought to meet targets. The scandal had soiled the bank's reputation, cost former CEO John Stumpf his job and had led to congressional hearings and new investigations.
''The extreme and unprecedented ISS voting recommendation on directors fails to recognize the active engagement of the board and the substantial actions it has already taken to strengthen oversight and increase accountability at all levels of Wells Fargo, including important improvements to corporate governance,'' the board saidin its defence in a statemnt.