NEW YORK (Reuters Breakingviews) - It’s time to add Wells Fargo’s chairman to the list of fake-accounts firings. Just 56 percent of shareholders backed Stephen Sanger at the bank’s annual meeting on Tuesday. That’s a stinging rebuke for his failure as lead director. After 5,300 employees and the Chief Executive John Stumpf paid with their jobs, Sanger and other board members with lackluster support should go, too, to help the bank rehabilitate.
Much of the nearly three-hour gathering at Ponte Vedra Beach, Florida – clear across the country from Wells Fargo’s San Francisco headquarters – felt like a full-blown airing of grievances. Investors, customers and employees past and present took turns lambasting executives and directors.
Complaints ranged beyond just the opening of at least 2 million unwanted bank and credit-card accounts by staff aiming for aggressive sales goals. Also garnering controversy were mortgage foreclosures, equal pay for women and the decision to finance the Dakota Access pipeline amid protests from Native Americans.
The duping of customers dominated, however, with shareholder dissatisfaction coalescing around a dozen of the company’s directors up for re-election. None of them secured more than 80 percent of the vote. Only newcomers Karen Peetz, Ronald Sargent and CEO Tim Sloan won nearly unanimous support.
Sanger, the 71-year-old former boss of Cheerios maker General Mills who took the chairman’s seat when Stumpf departed, wasn’t the only one to just squeak by either. Although Warren Buffett’s Berkshire Hathaway voted its 10 percent stake in favor of the whole board, Enrique Hernandez, Federico Peña and Cynthia Milligan fell short of the 60 percent mark. Each leads or sits on one or more of the risk, governance and corporate responsibility committees.
Five more directors failed to clear the 70 percent threshold that typically denotes a serious protest vote and which often forces companies to respond on such matters as say on pay. Not only does it suggest shareholders are displeased that board members were too slow to act, but also that the bank’s internal investigation into the years-long affair was too soft on them.
Sanger called it a “clear message of dissatisfaction” that “the board has heard.” The appropriate response now is for him and some of his colleagues to step down.
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