SHAREHOLDER ACTIVISTS REBUFFED
Wells Fargo not eager to probe cause of scandal
Draft document shows Wells Fargo board plans to oppose resolution filed by shareholder activists led by the Sisters of St Francis of Philadelphia
Boston — The board of Wells Fargo plans to oppose a resolution filed by shareholder activists led by the Sisters of St Francis of Philadelphia seeking a review of the root causes of the bank’s unauthorised accounts scandal, according to a draft document seen by Reuters.
The draft, dated February 10, states the board’s position on the measure, which is to be included in its forthcoming proxy for the upcoming shareholder meeting. The board’s position is that because the bank has its own investigation and reforms under way, the concerns raised by the proposal are being attended to.
"Our board and our company believe we are already providing through our current and anticipated future disclosures … the information requested by this proposal," says the document. A continuing disagreement over the resolution could complicate the bank’s drive to regain shareholder confidence.
A Wells Fargo spokesman, Mark Folk, declined to comment on whether the draft was still the bank’s position.
Tim Smith, director of shareowner engagement at Walden Asset Management, one of the filers of the resolution, said talks were still under way between the bank and proponents.
Whatever the outcome, Smith said he was pleased the board had embraced other reforms and what he called "the need for more transparency".
Wells Fargo has changed how it compensates its retail bank staff and reformed risk controls since it emerged that branch employees opened as many as 2-million accounts without customers’ permission to meet sales goals. The bank agreed in September to pay a $185m settlement over the accounts scandal.
Shortly after the settlement, some investors called on the bank to split the roles of CEO and chairman.
When the San Francisco bank’s veteran boss John Stumpf resigned a month later, those roles were separated and the bank codified the new board structure. That led activists including Connecticut pension fund officials to withdraw a resolution calling for an independent board chair.
Boards often oppose shareholder resolutions but then go on to adopt some that receive high support.
But Wells Fargo is challenging whether other shareholder proposals will appear on its proxy. One is a call for it to study divestitures or a break-up and another resolution is for a review of pay tied to metrics that could lead to material losses.
In one case the investor Bart Naylor, who works for consumer advocacy group Public Citizen, said the bank has asked permission from US securities regulators to omit his resolution calling for it to study divestitures or a break-up.
The bank also wants to skip a resolution by New York State retirement officials that would have it review pay tied to metrics that could lead to material losses.