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 lasted nearly three hours and was repeatedly interrupted by irate shareholders who refused to quiet themselves, forcing the board to call a recess.
After the meeting the bank announced that Chairman Stephen Sanger was reelected with just 56 percent of the vote.
Other board members also received scant support including Enrique Hernandez with 53 percent, Federico Pena 54 percent, Cynthia Milligan 57 percent, and Lloyd Dean 62 percent. The other 10 members all garnered at least 65 percent, according to a Wells Fargo press release.
“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.”
Companies often replace board members who barely achieve reelection. In 2013, two JPMorgan Chase board members, who garnered less than 60 percent of shareholder vote in the wake of the London Whale trading losses, resigned two months after the meeting.
The bank’s leaders opened the meeting 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.
“We are facing these problems head on and Wells Fargo is emerging a much stronger company,” chief executive Tim Sloan said.
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 and said his remarks “can be taken as speaking for the board.”
Wells Fargo management also succeeded in turning back a proposal from Sister Nora Nash, who sought a report on the “root causes” that led to the retail sales scandal. Nash represented the Sisters of St. Francis of Philadelphia, 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 ethics, the moral values are in a paper, they are not in operation,” Nash said. “They must be put in operation.”
Shareholders were more decisive in rejecting a series of proposals that touched on a range of hot issues, including financing of the controversial Dakota Access Pipeline and requiring more disclosure about political lobbying.
Shares of Wells Fargo rose 2.1 percent in midday trading to $54.78.
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