Wells Fargo’s Board Has Big Problems With ISS Recommendation

Wells Fargo’s Board of Directors issued a statement late last week taking issue with proxy advisory firm Institutional Shareholder Services (ISS) recommendation to vote against 12 of the bank’s 15 board members at the annual shareholder meeting April 25.

In a statement, the board said, “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, including important improvements to corporate governance. We strongly disagree with the unwarranted recommendation by ISS to vote against 12 of Wells Fargo’s 15 directors.”

Wells Fargo also took issue with the timing of the recommendation, saying it hasn’t issued the findings of its own internal investigation, which was launched in late September and will be made public soon. The board noted it has already taken actions to strengthen oversight and has held those responsible for the fake bank accounts scandal accountable, including John Stumpf, CEO, and Mary Mack, head of community banking. Other activities highlighted in the statement included bringing on board Steve Sanger as chairman and Betsy Duke as vice chair; eliminating compensation tied to sales goals; appointing two new board members, Karen Peetz and Ronald Sargent; firing four senior managers in the Community Bank division; taking executive compensation actions with an impact of around $100 million; and centralized previously decentralized risk management and enterprise functions.

This comes just a few days after Wells Fargo’s Chief Executive Tim Sloan issued an open letter in which he discussed “progress that I want to share with you” in the wake of the well-publicized settlement over the bank’s retail sales practices; many of those initiatives were previously reported. Among those achievements, as noted by the executive, and to reiterate is that the company has refunded $3.2 million to retail and small business accounts, totaling 130,000 in number.