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The influential advisory group ISS says Wells Fargo shareholders should vote to oust almost the entire board of directors, including the chairman Stephen Sanger, citing a “sustained breakdown of risk oversight” at the bank.
The recommendation dramatically ups the ante ahead of the Wells annual meeting on April 25, when shareholders get their chance to respond to the fake accounts scandal.
Earlier this week, Glass Lewis, another advisory group, recommended votes against six members of Wells’s 15-member board, but ISS has gone further, with “no” recommendations against everyone who was a member of the board when the scandal took place.
Shareholders should support the election only of Tim Sloan, who was appointed chief executive after John Stumpf was fired last year, and two recently-appointed independent directors, Karen Peetz and Ronald Sargent, ISS said.
The report is damning:
The board failed to implement an effective risk management oversight process in a timely way and that could have mitigated the harm to its customers, its employees, and the bank’s brand and reputation…
The bank’s current leadership acknowledges it is critical to rebuild customer trust, and has taken a number of steps to promote accountability; however, shareholder skepticism given board’s track record for insufficient risk oversight appears justified. The long-standing sales practices and unchecked incentive program evidences a sustained breakdown of risk oversight on the part of the board.