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2017-04-25 14:15:02
Wells Fargo Shareholders Tepidly Re-elect Bank’s Directors

PONTE VEDRA BEACH, Fla. — Despite the turmoil that has engulfed Wells Fargo in the past year, shareholders voted on Tuesday to re-elect all of the bank’s 15 directors. But some edged in just barely, sending a message that many shareholders want further changes in the bank’s leadership.

Activist shareholders had hoped to remove some or all of the board’s incumbents in the aftermath of the company’s sales scandal, but every board member won support from at least 53 percent of the shareholders casting votes.

Still, in corporate governance circles, that level of support is remarkably tepid. Last year, every member of Wells Fargo’s board had at least 95 percent of votes cast in favor of election — including John G. Stumpf, the bank’s former chairman and chief executive, who abruptly retired in October.

Wells Fargo has been in turmoil since its admission in September that over the course of several years, employees trying to meet aggressive sales quotas had opened as many as two million fraudulent accounts. The company paid $185 million to settle cases brought by two federal regulators and the Los Angeles city attorney and refunded $3.2 million to customers who were charged fees on unauthorized accounts.

Wells Fargo has made extensive changes since then, including the replacement of its chief executive and the leader of its retail bank, alterations to governance and risk-management structure, and the elimination of sales goals for its retail bank employees.

“There is no doubt that the last seven months have been one of the most difficult periods in our company’s 165-year history,” Timothy J. Sloan, the bank’s chief executive, said at the start of Tuesday’s meeting. “I can assure you that we are facing these problems head-on and that Wells Fargo is emerging a much stronger company.”

But the tight margin by which some directors were elected is a sign that many shareholders are still dissatisfied with the company’s reformation.

Some giant pension funds — like Calpers, which manages the retirement funds of California’s public employees, and its New York City counterpart — cast their votes against most of Wells’s board members, saying they failed in their duties to oversee the company.

“A low acceptance vote is a signal to the board that it needs to immediately begin to reconstitute itself,” said Charles M. Elson, a professor of finance at the University of Delaware and an expert on corporate governance. “That ought to be the appropriate reaction.”