Wells Fargo and Company (WFC)

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Wall Street powerhouse wants to eviscerate Wells Fargo

By Kevin Dugan

April 7, 2017 | 9:40pm | Updated



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One of the loudest voices in corporate America wants to clean house at Wells Fargo.
Institutional Shareholder Services, which advises large owners of stock — like mutual funds and hedge funds — how to vote on crucial corporate issues, said Friday that Wells Fargo shareholder should vote out 80 percent of the company’s board of directors.
Twelve of the bank’s 15 board candidates should get the thumb’s down for their “failures” to prevent the San Francisco-based bank’s disastrous fake-accounts scandal, ISS said in an explosive report.
The 12 directors targeted by ISS oversaw committees that were in a position to stop the bank from opening millions of fake accounts and credit cards in order to boost sales numbers for five years, ISS said.

The revelations, which came to light in a $185 million settlement last year, led to the ouster of the bank’s last CEO, John Stumpf in October.


“The Audit and Examination, Risk, and Human Resources Committees, tasked with risk oversight, failed over a number of years to provide a timely and sufficient risk oversight process that should have mitigated the harmful impact of the unsound retail banking sales practices that occurred from 2011-2016,” ISS said in its report.
“Votes against 12 directors and members of the committees are warranted for the committees’ failures in this regard.”
If shareholders break that way during the April 25 meeting, the only board members left would be the CEO Tim Sloan, and two other directors who joined this year: Karen Peetz, a former president of BNY Mellon, and Ronald Sargent, a former CEO of Staples.
Wells Fargo blasted the ISS recommendations, calling them “extreme and unprecedented.”
“The ISS report was also issued without taking into account findings of the Board’s independent investigation, which was launched last September and will be made public shortly,” the company said.

ISS’ recommendations are significantly harsher than those of Glass Lewis, a rival proxy advisory.

Glass Lewis recommended that six directors lose their jobs.
It’s rare for proxy firms to recommend that boards get rid of any director, much less whole groups of them.
While it’s no guarantee that shareholders will oust the board, CEOs pay attention — and often lash out — when proxies make recommendations counter to what board want.
“God knows how any of you can place your vote based on ISS or Glass Lewis,” Jamie Dimon, JPMorgan Chase’s CEO said in 2015 when the proxy firms recommended splitting the bank’s CEO and chairman roles.