In the first annual stockholders meeting since Wells Fargo’s retail banking sales practices settlements, stockholders elected all 15 directors who were up for election at the 2017 meeting. Each director received a majority of the votes cast by stockholders.
According to preliminary results, the vote total for all but the Board’s newest directors was 80 percent or less of shares voted — a signal that stockholders were not entirely satisfied with the Board’s performance on the sales practices issue, said Board Chairman Stephen Sanger.
“Wells Fargo stockholders today sent the entire Board a clear message of dissatisfaction,” he said. “And let me assure you that the Board has heard that message and we recognize there’s still a great deal of work to do to rebuild the trust of stockholders, customers, and employees.”
Sanger and CEO Tim Sloan responded to some tough questions from activist stockholders and highlighted the company’s far-reaching efforts to regain the public’s trust.
From leadership changes and the elimination of retail sales goals to the centralization of its risk functions, Sanger emphasized the positive initiatives Wells Fargo has taken to address the improper sales practices.
“We are confident that we have identified the root causes of the improper practices that occurred, as well as the people responsible for them, and that we have taken appropriate actions,” Sanger said, pointing to the Board’s own action once it learned the full extent of the retail sales practices problem. Sanger cited the recently released findings of a six-month, independent investigation, which documented past issues with culture, practice, and leadership in the retail bank.
“While we certainly have more work to do, we are encouraged by the progress that the company has been making,” he said. “The Board has complete confidence in Tim Sloan and in the rest of the company’s senior leadership team. The Board believes that the company has a strong foundation to serve our customers and earn back the trust of all our key stakeholders.”
The Board drew criticism from certain stockholders, some of whom shouted and interrupted the meeting to express their displeasure about sales practices and other issues.
Sister Nora Nash, who represents stockholder The Sisters of St. Francis of Philadelphia, said the disruptions were not appropriate, but she felt those who spoke out had some valid points.
“I don’t agree with being disrespectful, but I think we need to hear the voices that are here today,” said Nash, who sponsored a proposal that the Board conduct an in-depth study of Wells Fargo’s business practices, ethics, and transparency. “We have engaged with Wells Fargo for several years on various topics. Wells Fargo has been put on notice that its reporting lacked transparency and its business standards were inadequate in several areas, including responsible lending.”
Such comments motivated others to speak up like Kevin Gay, CEO and founder of Operation New Hope in Jacksonville, Florida.
“I’ve got to say I wasn’t planning on speaking today. However, I felt it was important to go on record,” he said. “Chairman Sanger and the Board, I’d like to thank you on behalf of the hundreds, if not thousands, of individuals and families that have benefited from the incredible engagement of Wells Fargo here over the many years in northeast Florida. I have been doing this work now for 18 years, and I can tell you that the commitment of Wells Fargo to this work is unparalleled in the community development world.”
Following the comments, stockholders voted against the business practices study proposal and five other stockholder-sponsored proposals, according to preliminary results.
Stockholders also approved four company-sponsored proposals, including the re-appointment of KPMG LLP as independent auditors for 2017 and approval of 2016 compensation for executives identified in the proxy statement.
‘We are facing these problems head-on’
In his presentation, Sloan noted the wide-ranging actions the company has already taken to enhance ethics and transparency.
“We’ve significantly strengthened ethics and risk management throughout the company, including creating a new Office of Ethics, Oversight and Integrity, to provide us with a better view to enterprise trends, enhancing our ability to investigate issues, understand complaints, oversee sales practices, and promote ethics,” he said.
Sanger said the Board remains committed to strengthening oversight and accountability while working closely with management to keep improving Wells Fargo.
“We thank the stockholders who supported us,” Sanger said. “We commit to continue our engagement with stockholders and other stakeholders to build a better Wells Fargo in the months and years ahead.”
Sloan personally apologized to the stockholders, noting that company leaders moved too slowly to fix the sales practices problems and failed to take adequate actions over the years.
“This is all unacceptable and we accept full responsibility and take complete accountability,” Sloan said. “We are deeply sorry for letting you, our stockholders, down, and letting down our customers, our team members, and the communities that we do business in. You deserve much more from us, and as I stand before you today, I can assure you that we are facing these problems head-on and that Wells Fargo is emerging a much stronger company.”