Battle For Wells Fargo’s Board Goes Down To The Wire

Will they or won’t they?

That is the question of the day as Wells Fargo’s board of directors is determining whether or not to re-elect several directors when the bank’s annual shareholders meeting gets underway tomorrow.

As of yesterday, early voting indicated that quite a few of Wells directors are at risk of losing their seats tomorrow — though a few large institutional shareholders have yet to weigh in (their votes are expected into today).

On the at-risk list?

Enrique Hernandez, head of the bank’s board risk committee, is vulnerable, one of the people said, as are several other members of the risk committee.

If directors get less than 80 percent of the vote for re-election, it would send a clear message to the San Francisco bank that shareholders are seeking bigger changes after its sales-practices scandal, said Charles Elson, director of the University of Delaware’s John L. Weinberg Center for Corporate Governance. It is a bit unclear what would happen in the event of a vote-again, since many of the board members are at present running unopposed for their sets.

CEO Timothy Sloan has made his opinion public — he does not believe the  bank needs to make any changes to its board’s risk committee. He further noted that Mr. Hernandez was one of the early voices questioning aggressive sales practices as a potential risk area for the bank.

According to reports, some institutional investors briefed in recent days by Wells Fargo executives and directors noted that change is coming to the board soon anyway, since many of the members are facing mandatory retirement.  Bank officials reportedly did not promise to rotate committee memberships or chairmen, but one institutional shareholder did note an admission that “there needs to be a thoughtful but accelerated response to constitute a new board.”

Meanwhile, influential proxy-advisory firm Institutional Shareholder Services Inc. has recommended that shareholders vote against Mr. Sanger (the board’s chair) and 11 of the 15 members on the board.

The second-largest proxy-advisory firm, Glass Lewis & Co., recommended investors vote for Mr. Sanger, but against six directors.


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