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Wells Fargo & Co. is opposing a request from the Sisters of St. Francis of Philadelphia and other shareholders to report on the “root causes” of its bogus-account scandal because it says such information is already being provided in current and planned disclosures.
The bank plans to make public before its April 25 annual meeting the findings of its board’s independent investigation into a system of sales targets that regulators said encouraged retail bank employees to open fake accounts for customers without permission. It has since eliminated product sales goals for retail bankers and introduced a new incentive plan.
“We are not waiting for the completion of our Board’s investigation to take action to address retail banking sales practices matters,” Wells Fargo said in its proxy statement March 15. “We have already taken action and will continue to take action to rebuild trust in Wells Fargo, including making improvements to our corporate governance, risk management practices, compensation programs, and culture as highlighted throughout this proxy statement.”
Then-Chief Executive Officer John Stumpf forfeited part of his compensation and later resigned after the bank was fined $185 million by the Consumer Financial Protection Bureau and other regulators in September. Wells Fargo has also fired the head of its consumer credit-card business and three other senior managers.
The shareholders’ resolution, which will go to a vote at the annual meeting, is requesting a review of what led to the scandal and what’s being done to prevent future lapses. It has gotten support from the Boston Trust & Walden Funds, Mercy Investment Services and other faith- and values-based investors.
“Our request is to do a tremendous amount of explaining on what caused the scandal,” Sister Nora Nash, who directs the Catholic religious order’s corporate social responsibility efforts, told Bloomberg BNA March 16. “We have seen nothing really that has gotten to the roots of the scandal.”
The requested report would also look at the scandal’s impacts on customers, operations, reputation and shareholder value.
Wells Fargo got another resolution from the Unitarian Universalist Association and Clean Yield Asset Management that asked about tying executive compensation and bonuses to standards for ethical behavior and sustainability. Shareholders withdrew it after the bank said those factors are already incorporated into compensation.
A shareholder proposal seeking separation of the bank’s CEO and chair positions to provide stronger oversight was also withdrawn after its bylaws were amended to split them.
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