Bank

Investors keep Wells Fargo board at contentious meeting

The entire Wells Fargo board of directors was reelected Tuesday after a bruising, rowdy annual meeting where shareholders castigated the bank's leadership over a fake accounts scandal that severely damaged the company's image.

The entire Wells Fargo board of directors was reelected after a bruising, rowdy annual meeting where shareholders castigated the bank's leadership over a fake accounts scandal
The entire Wells Fargo board of directors was reelected after a bruising, rowdy annual meeting where shareholders castigated the bank's leadership over a fake accounts scandal (AFP)

NEW YORK - The entire Wells Fargo board of directors was reelected Tuesday after a bruising, rowdy annual meeting where shareholders castigated the bank's leadership over a fake accounts scandal that severely damaged the company's image.

Even so five members, including the chairman, received only tepid support from investors.

The cantankerous gathering in Ponte Vedra Beach, in northeast Florida, lasted nearly three hours and was repeatedly interrupted by irate shareholders, and even a Catholic nun.

After the meeting the bank announced that Chairman Stephen Sanger was reelected with just 56 percent of the vote, and four other board members received scant support of 60 percent or less. Companies often replace board members who barely achieve reelection.

"The Wells Fargo investors have sent a clear statement of dissatisfaction," Sanger said at the end of the gathering. "I assure you that the board has heard that message."

The bank's leaders opened the meeting in by apologizing anew for the fake accounts scandal and reviewing the changes made since it became public, including replacing the chief executive, eliminating product sales goals for retail bank staff and raising pay for lower-ranking employees.

The scandal came to light in September 2016 when the bank reached a settlement with regulators to pay $185 million after opening some two million deposit and credit card accounts without customers approval or knowledge.

New York City Comptroller Scott Stringer, who opposed 10 of the board members, called the vote a "stunning rebuke" to leadership.

"Investors have lost faith in Wells Fargo's board," Stringer said on Twitter. "Investors want change. These wrongs need to be made right. Accountability matters."

Morningstar analyst Jim Sinegal said the board "holds some responsibility" for the debacle and the company's "painfully slow response."

In addition, results in the first quarter "show that the scandal is having an effect on the business, and the lack of action today certainly won't do anything to help them repair their reputation."

Getting an earful

"We are facing these problems head on and Wells Fargo is emerging a much stronger company," said chief executive and board member Tim Sloan, who was reelected with 99 percent of the vote.

But Sloan and Sanger got an earful from agitated shareholders. One investor interrupted the executives to demand a response from each board member on whether they were "complicit or incompetent" in the affair.

"Let each one speak to say what they knew and when they knew it," said the investor who was ultimately led out of the meeting.

Sanger declined to open the floor to individual board members.

Sister Nora Nash called for a report on the "root causes" that led to the retail sales scandal.

She represented the Sisters of St. Francis of Philadelphia, a Catholic order of nuns which holds 14,832 shares of Wells Fargo stock.

Nash characterized the lapses on retail sales as part of a "systemic" problem in the bank, which extends to mortgage lending and other practices. The proposal garnered 22 percent of the votes.

Shares of Wells Fargo rose 1.7 percent to $54.56.