Wells Fargo is asking investors to vote against a pension fund-led shareholder proposal that calls for a comprehensive report from the bank on its retail banking sales practices, according to its proxy statement released Wednesday.
The proposal, put forth by the $7.8 billion Rhode Island Employees' Retirement System, Providence, Board of Pensions of the Presbyterian Church (USA), Philadelphia, which oversees roughly $9.4 billion in assets, and several money managers and religious groups, calls for Wells Fargo to provide a comprehensive report to shareholders by October on “the root causes of the (bank’s) fraudulent activity and steps taken to improve risk management and control processes.”
The proposal points to the bank’s $185 million settlement in September over allegations it set up two million deposit and credit card accounts for clients without their permission, as an example of the alleged fraud. It also points to a $175 million settlement in 2012 over “allegations of widespread ‘discriminatory steering’ of African-American and Hispanic borrowers into high-cost loans."
“Shareholders believe a full accounting of the systemic failures allowing these unethical practices to flourish are critical to rebuilding credibility with all stakeholders and will strengthen risk management systems going forward,” according to the shareholders’ proposal.
Other co-filers include Rockefeller Asset Management, Calvert Investment Management, The Boston Trust & Walden Funds, and the Sisters of St. Francis of Philadelphia.
Wells Fargo argues in its proxy statement, however, that it has already made improvements to its “corporate governance, risk management practices, compensation programs and culture,” and that an additional report is not necessary.
Some of the improvements described in the proxy statement are:
- separated the roles of chairman and CEO, and elected an independent chairman and vice chairwoman;
- engaged independent culture experts to help identify cultural weaknesses;
- created a Rebuilding Trust Office and a new Office of Ethics, Oversight, and Integrity; and
- eliminated product sales goals for retail bank staff, changed performance review processes and enhanced oversight of sales processes.
Wells Fargo also noted in its proxy statement that findings from an independent investigation of its retail banking sales practices will be available before its April 25 shareholder meeting.