On Tuesday, April 25, 2017, Wells Fargo's top management and board of directors will face irritated investors for the bank's first big shareholder meeting since the scandal over its sales practices led to an executive shake-up, fines and a dented reputation. His 56% approval vote fell far short of that.
Sanger said on CNBC's "Power Lunch", however, that shareholders weren't sending a message to any particular director. "Let me assure you that the Board has heard that message, and we recognize there is still a great deal of work to do to rebuild the trust of stockholders, customers, and employees".
Preliminary vote totals show that four directors received less than 60% of the vote: Sanger, Federico Pena, Cynthia Milligan and Enrique Hernandez, Jr.
That scandal brought national attention to the almost three-hour-long shareholders meeting at the Ponte Vedra Beach resort, with some advocates calling for stockholders to vote out the 12 board members (out of 15 total) who served while the improper sales practices took place. There was a brief recess after one shareholder made what Sanger called a "physical approach" toward a board member and was removed.
Wells Fargo & Company (NYSE:WFC) has presented the Federal Reserve with a satisfactory plan on how to unwind its business in case of bankruptcy, the US central bank said Monday.
Other shareholders were escorted out, as they demanded answers related to the bank having created as many as 2.1 million accounts in customers' names without their permission.
Earlier this month, Institutional Shareholder Services, an influential advisor, had recommended that 80 percent of the bank's board should get the boot.
When pressed at the meeting on whether any members would resign given the tepid shareholder support, CEO Timothy Sloan said the company had one of the "best boards" in the financial services industry.
Support ranged from 53 to 99 percent of votes cast, a board representative said, indicating that while all of the directors technically received majority votes, at least some have too little support to remain on the board with confidence.
Sloan said the improper sales practices resulted from an incentive program that pressured employees to make sales, coupled with a decentralized organizational structure that kept the issues from upper management.
"Each board member should be allowed to speak so they can state what they knew and when they knew it", Marks demanded loudly of the bank's leaders.
"We elected you to protect us!" one shareholder, Fred Hornbuckle, said. "You expect and deserve much more from us".
Wells Fargo will have to file its next resolution plan by July 1, which will also be subject to review by regulators.
Sanger tried to get Marks to sit down and wait until a specific Q&A session, telling him he was "out of order". Two borrowers gave emotional recountings of their ordeal with Wells Fargo's mortgage operation, both breaking into tears.
In response, a campaign to oust the board members was launched and had the backing of major pension funds including Calpers, the public pension fund for California.
Marks, and a handful of other opponents who spoke out of turn, received little support from the more than 100 shareholders in attendance, mainly for being out of order. "Simply declaring "off with their heads' is not reasonable".
Over the past 10 years, only 22 directors a year, on average, out of almost 40,000 directors at S&P 500 companies received less than 60% of the vote for re-election, according to ISS Analytics, the data arm of proxy advisory firm Institutional Shareholder Services Inc. But low vote totals concentrated on certain directors would likely force them to step down soon, he added."The only thing they haven't really changed substantially is the board", he said.
Even so, several shareholder elections experts called the vote tally unprecedented, especially at a company the size of Wells Fargo, and predicted it would spur change. It's extremely rare for corporate directors to be voted out or even to have a poor showing in annual shareholder votes.