Wells Fargo pushes back on shareholder reform plans

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Charlotte Observer business reporter, Deon Roberts explains the error that Wells Fargo disclosed involving a computer error that offered or denied mortgage modifications.
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Charlotte Observer business reporter, Deon Roberts explains the error that Wells Fargo disclosed involving a computer error that offered or denied mortgage modifications.

Wells Fargo is opposing two separate requests from shareholders, including the AFL-CIO, urging for more changes at the San Francisco-based bank as it grapples with a series of scandals.

The proposals are the latest evidence that the bank still has work to do to rebuild trust with shareholders more than two years after revelations that bankers opened as many as 3.5 million unauthorized accounts to meet high-pressure sales goals.

The AFL-CIO, a large federation of unions representing 12.5 million workers, is calling for a rank-and-file Wells Fargo employee to be appointed to an advisory group the bank announced in 2017 as part of its efforts to turn itself around.

In launching the Stakeholder Advisory Council, Wells said that it would be made of seven members who do not work for the bank, including National Urban League CEO Marc Morial. The bank has said the members represent groups that are especially important to Wells, including those focused on human rights, consumer rights, fair lending, the environment, civil rights and governance.

But the council’s membership should also include a Wells Fargo employee who is not part of upper management, Brandon Rees, deputy director of AFL-CIO’s office of investment, told the Observer on Wednesday.

“Having a rank-and-file Wells Fargo employee participate in the committee would help provide the input of employees as stakeholders,” he said. Wells Fargo has said the group will be led by its chairwoman, Betsy Duke, with the participation of CEO Tim Sloan.

The AFL-CIO has asked Wells Fargo to bring the idea to a shareholder vote at its next annual meeting of shareholders, which is typically held in the spring.

But the bank has told the Securities and Exchange Commission that it intends not to include the proposal among the items that shareholders will vote on, regulatory filings show.

Wells Fargo declined to comment on Wednesday, referring a reporter to the SEC filings.

In the filings, the bank noted steps it said it’s taken to build a better, stronger company. The bank said those include enhancements to the company’s ethics line and continued efforts to seek feedback directly from employees, such as during company town hall events with Sloan and other senior management.

In the second shareholder request, Harrington Investments is calling on Wells’ board to commission an independent study recommending options the board can take to enhance its oversight “of matters related to customer service and satisfaction,” according to the proposal that it wants shareholders to vote on.

California-based Harrington cites in the proposal various instances of customer harm at Wells Fargo in recent years. The bank is “rapidly losing its ability to compete in banking because of disregard for lawful conduct,” the proposal says.

Wells told the SEC it believes it doesn’t have to bring the item to a shareholder vote because it deals with matters related to its ordinary business operations. The bank also said the proposal is vague and, therefore, shareholders and the company would not be able to determine with any reasonable certainty what actions it requires.

The SEC has not publicly disclosed whether it agrees with Wells that it should not allow shareholders to vote on the two proposals.

The regulator typically releases such opinions before public companies publish their annual proxy filings, which list the items that will be up for shareholder votes at their annual meetings.

The date for this year’s Wells Fargo meeting has not been announced, but the bank usually holds the gatherings in late April.

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Deon Roberts has covered Charlotte’s financial services industry for The Charlotte Observer since 2013. His beat includes Bank of America and Wells Fargo. He attended Loyola University in New Orleans and is a native of Lafitte, La.