Some Wells Fargo Directors Said to Face Ouster Risk in VoteBy
Shareholder advisers have called for ousters at annual meeting
Initial tally shows not all directors may win majority backing
Some Wells Fargo & Co. board members including Enrique Hernandez are in danger of being voted out by shareholders at the company’s annual meeting Tuesday, based on ballots counted so far, according to a person with knowledge of the matter.
The outcome remains uncertain because not all large shareholders have submitted their votes, according to the person, who asked not to be named discussing a preliminary tally. The bank’s leaders have been meeting and calling investors in recent days, urging them not to shake up the 15-member board as it responds to a bogus-account scandal that set off public outcry and hurt the stock last year.
Hernandez runs the board’s risk and finance committees, and sits on its corporate responsibility panel. He’s among five directors targeted for expulsion by both shareholder adviser Glass Lewis & Co. and California Treasurer John Chiang. Another adviser, Institutional Shareholder Services Inc., also included him on a list of 12 board members it says should be rejected at the meeting. The two advisers and Chiang all advocate removing at least most of the responsibility panel.
Oscar Suris, a spokesman for the San Francisco-based bank, declined to comment. Paul Scarpetta, a spokesman for the board at Sard Verbinnen & Co., didn’t immediately respond to a message seeking comment outside business hours. The Wall Street Journal reported the preliminary tally earlier Sunday, noting Chairman Stephen Sanger isn’t among directors in danger.
The California State Teachers’ Retirement System voted its 11.6 million shares against nine long-tenured board members, including Hernandez and Sanger. They “bear responsibility for the failure of oversight of sales practices at Wells Fargo,” the pension fund said in a statement Monday, adding the firm should bring on directors with more banking experience. Parnassus Investments also said Monday it opposed the re-election of Hernandez, Sanger and three other members of the risk committee.
Chief Executive Officer Tim Sloan, who took over in October amid the public backlash, said in an interview with Bloomberg last week that it would be a “mistake” to oust any board members over the scandal.
In a 113-page report this month, a panel of independent board members found that senior Wells Fargo executives failed to alert directors over the course of a decade to mounting incidents of employees opening accounts without customers’ permissions to help meet sales targets. The report largely exonerated Sloan.
That review found Hernandez, the CEO of Inter-Con Security Systems Inc., “vigorously questioned” executives during a 2015 presentation on efforts to detect abuses and fire employees. Later that year, he and Sanger told Sloan’s predecessor, John Stumpf, that the bank needed to replace the head of its retail division. The review also credited the risk committee with strengthening companywide operations for detecting problems.