Proxy firms urge Wells Fargo shareholders to dump directors

An influential proxy advisory firm is urging shareholders to vote against 12 of Wells Fargo’s 15 directors over the bank’s sales scandal.

In a report last week, Institutional Shareholder Services said that the 12 members of the board’s audit, risk and human resources committees had “failed over a number of years to provide a timely and sufficient risk oversight process that should have mitigated the harmful impact of the unsound retail banking sales practices” that occurred from 2011 to 2016.

Proxy advisory firms like ISS play an important role in shaping the voting of big institutional investors such as pension funds.

In September, regulators fined the San Francisco bank $185 million to settle allegations that its employees had opened as many as 2 million accounts without customers’ knowledge in efforts to meet sales goals.

“The extreme and unprecedented ISS voting recommendation on directors fails to recognize the active engagement of the board and the substantial actions it has already taken to strengthen oversight and increase accountability at all levels of Wells Fargo, including important improvements to corporate governance,” the board said.

Another proxy advisory firm, Glass Lewis, has recommended that Wells Fargo shareholders vote against the re-election of four directors who sit on the corporate responsibility committee — John Baker, Lloyd Dean, Enrique Hernandez and Cynthia Milligan — because of what it said was their failure to uphold their duties amid the scandal.