To the editor:
I want to commend you for your editorial "Strengthening oversight at Wells Fargo," wherein you point out that Wells Fargo's recent decision to create an independent board chair came only after institutional investors pushed for the change. And beyond recognizing this fact, your editorial resolutely encourages shareholders to continue pressuring companies for sensible corporate governance policies. I could not agree more.
As the treasurer of Illinois, I am responsible for investing approximately $26 billion in institutions that offer good value to taxpayers and are good community partners. When I learned about the abuses at Wells Fargo, I immediately suspended investment activities with the company and collaborated with fellow investors to file a shareholder proposal calling for separation of the chair and CEO roles, which ultimately helped instigate the change.
As a large, long-term institutional investor, I know that a vital part of my fiduciary duty is pushing companies to embrace good governance practices, like board independence, board diversity and transparency. That's why in addition to corporate engagements, my office actively advocates for greater inclusion on corporate boards, we enforce Community Reinvestment Act standards for banking counterparties and we advocate for greater fee transparency in the industry. By doing so, not only are we positioning ourselves for enhanced long-term returns, but we can help foster a business culture that is more accountable and attentive to the environmental, social, and governance values of the community.
Your editorial's encouragement is not only timely, it's energizing. I plan to continue pushing for good governance practices, and I hope other institutional investors will as well.
Sincerely,
Michael Frerichs
Illinois State Treasurer
