It promised to be one of the most contentious annual shareholder meetings since the financial crisis, but in the end, despite recommendations from at least two leading proxy firms opposing the re-election of many board members and the removal of several enraged attendees, Wells Fargo shareholders on Tuesday re-elected all 15 members of the bank’s board of directors, and supported the bank’s position on all other proxy items.
Those items included ratification of the bank’s auditor, KPMG, which failed to detect the cross-selling sales scandal that has plagued the bank, and votes against shareholder proposals requesting reports on executive compensation, gender pay equity, divestment of noncore businesses and retail sales practices to uncover the root practices of the bank’s fraudulent activity and steps taken to improve risk management and control processes.
Those sales practices involved setting up 2 million deposit and credit-card accounts for bank clients without their permission, which led to a $185 million settlement with the Consumer Financial Protection Bureau in September. In addition, 5,300 employees were dismissed along with CEO John Stumpf and former retail banking hand Carrie Tolstedt, who have both had to give back millions of dollars in compensation.
(Related on ThinkAdvisor: Wells Fargo Fined $185M for Opening Secret Unauthorized Accounts)
Also on Tuesday, Sens. Elizabeth Warren and Edward Markey, both Democrats from Massachusetts, wrote to the Public Company Accounting Oversight Board, asking whether the board, which sets standard for audits of public company financial statements, has conducted a review of KPMG’s financial report and if board rules hold auditors responsible for reporting illegal activity by their clients.
Shareholders at the annual meeting were told by Wells Fargo Board Chairman Stephen Sanger that KPMG’s role was “to certify financial results” and “improper behavior wasn’t something in their purview.”
Just 56% of shareholders voted in favor of Sanger remaining on the board; 99% voted for the three newest board members, including CEO Timothy Sloan; between 53% and 80% voted for the remaining board members.
Sanger called the vote a “clear message of dissatisfaction.”
Institutional Shareholder Services had recommended that investors oppose 12 of the 15 directors of the board, and Glass Lewis has recommended against voting for six of them.
Earlier this month, the board released a 110-page report based on an independent investigation into the company’s retail banking sales practices and related matters, assisted by Shearman & Sterling LLP to understand the factors that led to the sales practices issues, and Sanger recounted changes the bank has made in response to the fraud that was uncovered by the CFPB, including the naming of the new CEO Tim Sloan and new head of Community Banking Mary Mack.
But some shareholders at Tuesday’s meeting weren’t satisfied.