The state’s two largest public pension systems each said Friday they are voting against nine of Wells Fargo’s 15 directors, all of whom are standing for re-election at the company’s annual meeting in Florida Tuesday.
“We believe these directors failed in their oversight responsibilities during the retail banking controversy at the company. Additionally, some of these nominees have tenures of 12 years or more, which we believe could compromise director independence,” the California Public Employees Retirement System said.
On Sept. 8, in a settlement with regulators, Wells disclosed that about 5,300 employees had been fired since 2011 for opening deposit and credit card accounts that customers probably did not know about or want, allegedly to meet aggressive sales goals.
CalPERS and the California State Teachers’ Retirement System are voting against John Baker II, John Chen, Lloyd Dean, Donald James, Cynthia Milligan, Federico Peña, Stephen Sanger, Susan G. Swenson and Enrique Hernandez, Jr.
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“These board members bear responsibility for the failure of oversight of sales practices at Wells Fargo, which (a board report issued last week) indicated had been growing since 2007 and which peaked in 2013,” the teachers system said in a statement.
They are voting for the board members who have served three years or less: Elizabeth Duke, Karen Peetz, James Quigley, Ronald Sargent, Suzanne Vautrinot and Tim Sloan. In October, Sloan was named CEO and joined the board as its only non-independent director. At the same time, John Stumpf resigned as CEO and chairman and Sanger became chairman.
A CalPERS spokesman said it was focusing its “no” votes on directors who had served from 2013 or earlier, because “that is the time frame the primary oversight failures had occurred.”
On Wednesday, California Treasurer John Chiang, who is a board member of both retirement systems, issued a press release urging shareholders and to vote against all five directors on Wells Fargo’s corporate responsibility committee, which oversees the bank’s reputational risk and customer service and complaints. They are Baker, Dean, Hernandez, Milligan and Peña. He also recommended voting against the bank’s two longest-serving directors who are not on that committee, Sanger and Swenson.
CalPERS owns about 13.9 million Wells Fargo shares and the teachers’ system owns 11.6 million. Together they own about 0.5 percent of the company’s shares.
CalPERS is also voting against the ratification of KPMG as the company’s auditor. “We have concerns over a potential lapse of internal controls during the extended period of abusive sales tactics at the company. Additionally, KPMG has a tenure of 86 years we believe the company should explore auditor rotation to ensure a fresh perspective,” it said.
Two companies that advise large investors on how to vote in corporate elections have also recommended against some directors for failing to do more to stop the fraud. Institutional Shareholder Services is recommending against 12. Glass Lewis of San Francisco is recommending against four, plus two others because they serve on too many boards.
Last week, Berkshire Hathaway, Wells Fargo’s largest shareholder with a roughly 10 percent stake, said it and was voting its shares in favor of all 15 directors.
Kathleen Pender is a San Francisco Chronicle columnist. Email: firstname.lastname@example.org Twitter: @kathpender