The three-hour-long drama ended with the entire board of Wells Fargo surviving somehow at the annual shareholder meeting on Tuesday. It was the first meeting after the scandal surfaced that tarnished the image of the bank and led to shareholders’ ire. The investors were really angry that the board had been ignorant about the prevalent fraudulent sales practices and voiced their scepticism about the same.
The deputy director of the Office of Investment for the American Federation of Labor and Congress of Industrial Organizations Brandon Rees compared the directors to mushrooms that are “kept in dark and fed horse manure.” Channing Lushbough of Round Hill Asset Management mocked by saying that even if the entire board resigns the company would do just fine. He was, in fact, pointing out that they do virtually nothing for the company.
It is a very rare moment when the corporate directors are voted out or they receive voting percentages that are not in the high 90s. Yesterday, all but three of the directors received less than 81 percent of the shares cast. The lowest in the tally was risk committee chairman Enrique Hernandez Jr. with 53 percent.
Stephen Sanger, the board chairman who managed to get 56% of shares cast said, “The Wells Fargo stockholders today I think have sent the entire board a clear message of dissatisfaction. And let me assure you that the board has heard that message.”
The fact of the matter is that all 15 directors somehow survived the vote with some barely making it to the finish line. There were recommendations from Institutional Shareholder Services Inc. the influential proxy adviser to support only three of the existing directors. Even other large investors like the California Public Employees’ Retirement System and California State Teachers’ Retirement System had announced that will support only six out of the 15 directors.
In fact, if Berkshire Hathaway Inc., the bank’s largest shareholder has not used its 10% stake to support the existing board, the results would have been much different. In that case, four of the 15 would surely be shown the door and Stephen Sanger would have been one of them.
Now that all of them have somehow managed to survive, Tim Sloan, the Chief Executive Officer has promised the shareholders that the company is now on the right track. Sanger also assured the investors that the board will now work to prove their worth. He assured that the bank will bring in improvement in the transparency levels and review the sales practices that are adopted across the various business lines.