NEW YORK – An influential firm that advises big shareholders says the majority of Wells Fargo’s board of directors should be removed at the bank’s annual shareholders meeting later this month, accusing the board of having a lack of oversight over the bank’s sales practices.
Institutional Shareholder Services said Friday that Wells Fargo investors should vote against retaining 12 of the 15 members of the bank’s board. The only members of the board ISS advises investors to vote for are the two members of the board who were elected after the sales practices scandal broke, and Tim Sloan, who was appointed CEO after John Stumpf abruptly retired.
ISS is also advising investors to vote in favor of a report on the bank’s business practices.
Large institutional shareholders rely on ISS and other similar firms to help them decide how to vote on certain company proposals. While ISS’s decision is not binding, many shareholders take ISS’s opinions seriously. It’s also the second shareholder advisory firm to come out against part of Wells Fargo’s board. The firm Glass Lewis is advising shareholders to remove six of the bank’s board members.
Wells Fargo’s board issued a statement strongly disagreeing with ISS, saying the firm is not taking into account the board’s independent investigation into the bank’s sales practices. That report is expected to be released before Wells Fargo’s annual meeting on April 25.
“The extreme and unprecedented ISS voting recommendation on directors fails to recognize the active engagement of the board and the substantial actions it has already taken to strengthen oversight and increase accountability at all levels of Wells Fargo,” the board said.
While ISS did acknowledge that the board is doing its own investigation and has taken other actions like clawing back executive pay, ISS said that the board’s actions have been “largely reactive,” and driven not by oversight but by customer complaints and actions taken by the bank’s regulators.
In its decision, ISS also said that it was particularly disturbed by reports that employees who did see and report unethical behavior were, in some cases, fired for being whistleblowers.
Wells Fargo’s annual shareholders meeting is being held near Jacksonville, Florida. The bank will also report its first-quarter results on April 13.
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