Few fireworks at Wells Fargo's first annual meeting under Scharf
Wells Fargo’s first annual meeting under CEO Charlie Scharf was a much tamer affair than its protest-filled gatherings of recent years.
The meeting, which was held online Tuesday, offered an initial opportunity for shareholders to appraise Scharf’s vision for the company, which has been plagued by scandal in recent years. Their votes largely affirmed the course he has set over the last six months.
Every member of Wells Fargo’s board of directors who was up re-election, including Scharf, received at least 96% of the vote, and a nonbinding vote on the compensation awarded last year to top executives received 92% approval, according to preliminary tallies.
Wells Fargo’s shareholders also rejected three proposals — including one related to pay disparities by race and gender — that drew opposition from the company’s board.
The bank’s last three annual meetings — held in Florida, Iowa and Texas — were the sites of high-profile protests by the bank’s critics. This year, Wells adopted the virtual format in response to the COVID-19 pandemic, which eliminated the possibility that protesters would interrupt the proceedings.
The vote results showed greater shareholder satisfaction with the company’s direction. Three years ago, when the bank’s sales practices scandal was still fresh, 10 of the company’s board members received less than 76% of the vote. All 10 of them are now gone.
The most recent directors to depart were James Quigley and Chair Elizabeth “Betsy” Duke, both of whom resigned last month in advance of a congressional hearing where they faced criticism for allegedly failing to provide proper oversight of the bank’s management.
“You can be certain that we are an active and engaged board,” the recently elected board chair, Charles “Chuck” Noski, promised Tuesday. “We believe we have the right management team in place, and we are headed in the right direction.”
The hiring of Scharf, who arrived in October, marked a new chapter for a bank that long made key hires mostly from within. He has sought to change a culture in the bank’s executive ranks that was blamed for the avalanche of scandals that have hobbled the company.
Scharf, a former CEO at Bank of New York Mellon and Visa, vowed Tuesday to focus on execution and accountability, and to move past the need for consensus. In the past, Wells Fargo’s top leaders often failed to hold people’s feet to the fire, according to critics.
“We will have a different level of management discipline than we’ve had in the past,” Scharf said Tuesday. “We will judge ourselves based upon our outcomes, not our words.”
Scharf did face pointed questions Tuesday about the bank’s response to the pandemic.
Some critics of the bank have argued recently that Wells Fargo initially dragged its feet on the transition to telework, and that the firm continues to require certain employees to report to worksites without a strong rationale for doing so.
Alex Ross, who works for Wells Fargo at an administrative office in Minneapolis, said Monday that he is still required to go to the office even though he communicates via Skype with managers who are working from home.
“It’s time for the workers to be heard,” said Ross, who is a member of the Committee for Better Banks, which is seeking to organize employees at Wells Fargo and other banks.
In response to concerns about the risk to employees who still must report to work, Scharf said Tuesday that the company is using social distancing, enhanced cleaning programs and staggered schedules. He also noted that approximately two-thirds of the bank’s workforce is enabled to work remotely.
Earlier in the meeting, Wells Fargo shareholders expressed satisfaction with the pay awarded to Scharf and other top executives last year.
Scharf received $23 million in total compensation in 2019. Chief Financial Officer John Shrewsberry, consumer banking head Mary Mack and commercial banking head Perry Pelos all received between $8 million and $8.5 million.
Meanwhile, shareholders rejected a proposal from the New York state employee pension fund, which sought to require Wells Fargo to disclose information about the compensation of lower-ranking employees who receive incentive-based pay. That proposal garnered approximately 23% of the vote, according to the company’s preliminary tally.
Another proposal would have required Wells Fargo to disclose its median pay gap for women and minority employees around the globe. Wells has said that its female employees in the U.S. earn more than 99% of what men in similar jobs receive, but activists want the San Francisco bank to follow the example set by Citigroup, which reports its gender pay gap on an unadjusted basis.
On Tuesday, the pay gap disclosure proposal got about 9% of the shareholder vote, according to the preliminary count.
Scharf said Tuesday that median pay gaps for women and minorities at Wells Fargo are higher than they should be.
“We do have a strong record of recruiting, promoting and rewarding gender and racially, ethnically diverse employees at all levels,” he said. “But we know that we need to continue to advance those efforts at the more senior levels of the company.”