Big Holders Target Wells -- WSJ

A number of public pension funds have come out against directors on Wells Fargo & Co.'s board, just days ahead of the what is shaping up to be a contentious annual shareholder meeting for the embattled bank.

New York City's Office of the Comptroller, which oversees pension funds that own about 11.5 million shares or about 0.23% of Wells Fargo shares outstanding, said it would oppose re-election of 10 out of 15 of the San Francisco bank's directors. That includes the bank's nonexecutive chairman, Stephen Sanger, plus all but two members of the board's risk, audit and human-resources committees.

Additionally, California State Teachers' Retirement System, or Calstrs, said it voted its 11.6 million shares against nine board members, including Mr. Sanger.

The other large public-pension system in California, the California Public Employees' Retirement System, or Calpers, is voting its 13.9 million shares similarly, the San Francisco Chronicle reported Friday evening.

Together, the two largest public pension systems in California hold about 0.5% of Wells Fargo's shares outstanding.

"These board members bear responsibility for the failure of oversight of sales practices at Wells Fargo," a spokesman for Calstrs said.

Wells Fargo's shareholders meeting is scheduled for Tuesday and directors face a tough election battle following the bank's sales-practices scandal last fall. That was the result of the bank's $185 million settlement and agreement to an enforcement action over employees opening as many as 2.1 million accounts without customers' knowledge.

Earlier this month, influential proxy advisory firm Institutional Shareholder Services Inc. recommended shareholders vote against Mr. Sanger and 11 of his colleagues on Wells Fargo's 15-member board.

The second-largest proxy advisory firm, Glass Lewis & Co., recommended investors vote for Mr. Sanger but against six directors.

The comptroller's office also said New York City pension funds will support Vice Chairman Betsy Duke, a former regulator, and Suzanne Vautrinot, a cybersecurity expert, because they only joined the board in 2015. The former is on the risk panel, and the latter serves on the audit committee.

"When banks take shortcuts like this, everyone loses," said NYC Comptroller Scott M. Stringer. "Customers become victims. Public confidence dissipates. And long-term investors like the New York City pension funds are undercut."

He added that the sales-practices scandal was the "result of a serious oversight failure by Wells Fargo's board, and the directors responsible need to be held accountable. It's time for change at the top."

A Wells Fargo spokesman declined to comment on individual shareholders. But in an interview this week, Chief Executive Timothy Sloan said "to the extent we have any shareholder that votes against certain directors or doesn't agree with proposals...we'll make sure to reach out to them."

As of Wednesday afternoon, Mr. Sloan said he hadn't heard from shareholders who wanted to make changes to the board.

A spokesman for the bank's board declined to comment.

Write to Joann S. Lublin at and Emily Glazer at

(END) Dow Jones Newswires

April 22, 2017 02:47 ET (06:47 GMT)