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Wells Fargo investors back leaders despite protests
[DES MOINES, Iowa] Wells Fargo & Co investors gave strong backing to the bank's directors and executives on Tuesday, indicating they are ready to give its revamped leadership time to rebuild from scandal despite a noisy annual shareholder meeting.
Wells Fargo executives said each of the bank's 12 director nominees received more than about 89 per cent support from investors and about 92 per cent of shares were cast in favour of the pay of chief executive Tim Sloan and other leaders.
The figures amounted to a relatively strong outcome, especially when compared with last year.
At the bank's 2016 meeting in Florida, only three of the board's 12 directors received more than 90 per cent of shareholders' support, and then-Chairman Stephen Sanger received just 56 per cent approval.
On average, S&P 500 directors usually get around 92 per cent, and pay is backed by around 89 per cent of votes cast, according to pay consultant Semler Brossy.
Jill Fisch, a University of Pennsylvania Law School professor and corporate governance expert, said it is a sign that investors are giving the bank's new board members and other changes a chance.
"The company has made a lot of dramatic moves, and shareholders seem to be saying they appreciate it and are going to wait to see if they are successful," said Fisch.
Though occasionally confronted by protesters and skeptics, Mr Sloan and bank Chair Elizabeth Duke mostly stayed on their message of atonement during the gathering, which lasted about 2-1/2 hours.
"We have made mistakes, and we've acknowledged those mistakes," Mr Sloan said at one point.
Mr Sloan and Ms Duke both faced tough questioners but also received loud applause at several points from the audience of several hundred in the Des Moines Marriott hotel ballroom.
When California State Treasurer John Chiang rose to challenge Mr Sloan's pay, Ms Duke responded that "I disagree with your analysis of it. Tim's time with the company is an advantage," a comment that received louder applause.
Speaking before the meeting, individual investor Cherie Mortice of Des Moines said she voted for Mr Sloan and other directors, saying it was worth giving the bank a chance to recover.
"I think he's kind of hoping to restore trust. I'm really hopeful," she said.
The event came days after Wells Fargo said it would pay regulators US$1 billion to settle matters related to mortgage and auto lending abuses.
Just before the meeting started, about 100 protesters marched into the lobby of the hotel holding signs for causes including predatory lending reforms and controls on lending to firearm companies. A few protesters scuffled briefly with guards, who prevented them from entering the meeting.
The bank had already agreed to publish a review of business standards, prompting shareholders led by the Sisters of St. Francis of Philadelphia to withdraw a resolution that demanded details on the cultural and ethical causes of recent scandals.
In 2016 the bank admitted employees had opened potentially millions of sham accounts, triggering a leadership revamp. Regulatory issues have persisted, with the Federal Reserve in February ordering it to halt growth until governance and controls improve.
Wells Fargo, though based in San Francisco, has held the meeting in other locations in recent years, including Florida and St. Louis.
Tuesday's meeting at moments laid bare divisions in Iowa over the role of the bank, one of the state's largest private employers. State leaders, including Senate Majority Leader Jack Whitver, a Republican, spoke to welcome executives and to recount the bank's help in local development or business loans.
But others questioned whether Mr Sloan and others were right for the task of reform.
"If I ran my farm the way Wells Fargo ran their business, I'd be kicked out of Marshall County. I'd be a failure," said one speaker, who identified himself as a retired Iowa farmer.
Wells Fargo's home mortgage and home equity businesses has about 14,500 workers in and around Des Moines.
Wells Fargo shares were down 11 cents, or nearly one-tenth of a per cent, at US$52.50 on Tuesday afternoon.