Wells Fargo board members face protest, but keep jobs
Ponte Vedra Beach, Fla. — Wells Fargo’s top management faced a series of protesters and apologized to investors Tuesday, but board members kept their jobs — albeit barely in some cases — at the first big shareholder meeting since a scandal over sales practices erupted.
Shareholders clearly were irritated or angry at Wells’ management. In a preliminary tally, three out of 15 board members received a bare majority of votes to keep their jobs. That includes Chairman Stephen Sanger, the bank’s independent chairman, who received 56 percent of shareholder votes. That’s in a world where it’s common for a current director at a major corporation to receive north of 90 percent of shareholders’ votes.
“Wells Fargo stockholders today have sent the entire board a clear message of dissatisfaction,” Sanger said.
Although they voted everyone in, shareholders were clearly unhappy. All the directors who were at Wells Fargo before the scandal broke got 80 percent or less of shareholders’ votes. The three who got 99 percent were CEO Tim Sloan —who got his job in October after former CEO John Stumpf departed — and two independent directors who started earlier this year.
Wells’ nearly three-hour long shareholder meeting was interrupted several times by protesters, with one man, Bruce Marks with the Neighborhood Assistance Corporation of America, effectively dragged out by armed security guards. Sanger said Marks had to be removed because he physically approached a board member, something people sitting close to the incident disputed.
During the meeting, Sanger said “we are deeply sorry,” as he addressed shareholders. And Sloan, who has repeatedly talked of making things right with customers, called it “unacceptable.” That follows apologies already given to customers and employees.
The biggest question was whether Wells Fargo shareholders would oust the board, as two major proxy advisory firms advised them to vote out at least some of the directors. Other shareholder proposals related to retail sales practices and other corporate governance issues were also not approved by shareholders.
At the meeting, shareholders, current and former employees and customers vented their anger, questioning how board members did their jobs and the work of the company’s auditor.
Many employees who spoke were affiliated with the Committee for Better Banks, a union-backed advocacy group, and called for additional investigation into Wells Fargo’s sales practices, or even calling for union organization. Some customers who came to speak were at the meeting to plead for mortgage relief.
Since the scandal broke in September, the bank has changed the way it pays branch employees, reclaimed promised compensation to several executives and apologized to customers after regulators imposed $185 million in fines last September. Authorities said Wells Fargo workers opened up to 2 million accounts without customer permission as employees tried to meet aggressive sales goals.
An investigation by the bank’s own board of directors, released earlier this month, found that the problems at Wells Fargo and its overly aggressive sales culture date back at least 15 years, and that executives had little interest in dealing with the issue until it spiraled out of control. It also clawed back another $75 million in pay from Stumpf and former community bank executive Carrie Tolstedt, saying both dragged their feet for years about the problems.
The board’s investigation also said both Stumpf and Tolstedt, when presented with the growing problems in the community banking division, were unwilling to hear criticism. It rescinded $47.3 million in stock options to Tolstedt, on top of $19 million the board had already clawed back. It took back $28 million more from Stumpf’s compensation, on top of $41 million already clawed back.
Along with the millions taken back from other executives earlier this year, the roughly $180 million in clawbacks are among the largest in U.S. corporate history. Wells Fargo has also said it will pay $142 million to customers for damages caused by any accounts opened without their permission, and expand its window for unauthorized accounts back to May 1, 2002.
Wells remains under investigation by various authorities and has seen a sharp decline in new customers.