Is Wells Fargo’s board to blame?
Shareholders set to weigh in
Top corporate bosses who failed to change a flawed system before it went out of control. Midlevel executives who pushed workers too far. Bank regulators who for years were blind to warning signs.
Over the past few months, there’s been plenty of blame to go around for the widespread misdeeds of Wells Fargo & Co., where workers, driven by onerous sales goals, opened as many as 2.1 million bank and credit card accounts for customers without authorization, moved customers’ money around without permission and forged signatures along the way.
This week, yet more blame may be assigned.
On Tuesday, the San Francisco financial giant will hold its annual shareholder meeting, its first since a $185 million regulatory settlement in September thrust the bank’s unethical practices into the national spotlight. The results of a shareholder vote will show the extent to which Wells Fargo investors believe the company’s board members are responsible for the scandal.
Shareholder votes are often rubber-stamp affairs, but Wells Fargo’s could prove more dramatic. All 15 of the company’s directors are up for election, and two firms that advise mutual fund managers and other major shareholders on how to vote have recommended casting ballots against several board members for failing to properly oversee the bank.
Advisory firm Glass Lewis recommended voting against six directors — four because of the accounts scandal and two others because the firm believes they serve on too many other corporate boards. Institutional Shareholder Services went further, recommending votes against 12 board members, including Chairman Stephen Sanger, saying their lax oversight has led to “untold reputational harm” at Wells Fargo.
The firm recommended voting for the other three directors, who all joined the board after the scandal become public. That includes Chief Executive Timothy Sloan.
Wells Fargo board members called the Institutional Shareholder Services recommendation “extreme and unprecedented,” and said the firm had not taken into account all of the board’s actions over the past several months.