Wells Fargo to oppose nuns on review resolution: document

[February 16, 2017]  By Ross Kerber

BOSTON (Reuters) - The board of Wells Fargo & Co plans to oppose a resolution filed by shareholder activists led by the Sisters of St. Francis of Philadelphia seeking a review of the root causes of the bank's unauthorized accounts scandal, according to a draft document seen by Reuters.

The draft dated Feb. 10 states the board's position on the measure, to be included in its forthcoming proxy for this year’s springtime shareholder meeting, is that because the bank has its own investigation and reforms under way, the concerns raised by the proposal are being addressed.

According to the document, "our Board and our Company believe we are already providing through our current and anticipated future disclosures...the information requested by this proposal."

An ongoing disagreement over the resolution could complicate the bank’s drive to regain shareholder confidence.

A Wells Fargo <WFC.N> spokesman, Mark Folk, declined to comment on whether the draft was still the bank's current position. He said via e-mail that "We are committed to regular engagement with our investors in order to understand and discuss points of view on governance and related matters."

Through a representative the lead filer of the proposal, Nora Nash of the Sisters of St. Francis, declined to comment.

Tim Smith, director of shareowner engagement at Walden Asset Management, a co-filer of the resolution, said talks are still underway between the bank and proponents. Whatever the outcome, Smith said he is pleased the board has embraced other reforms and what he called "the need for more transparency."

Wells Fargo has changed how it compensates its retail bank staff and reformed risk controls since it emerged branch employees opened as many as 2 million accounts without customers’ permission to meet sales goals. The San Francisco bank agreed in September to pay a $185 million settlement with regulators and the City Attorney of Los Angeles over the accounts scandal.

A Wells Fargo logo is seen in New York City, U.S. January 10, 2017. REUTERS/Stephanie Keith

Shortly after the settlement, some investors called on the bank to split the roles of CEO and chairman. When the San Francisco bank's veteran boss John Stumpf resigned a month later, those roles were separated and the bank codified the new board structure. That led activists including Connecticut pension fund officials to withdraw a resolution calling for an independent board chair.

Corporate boards often oppose shareholder resolutions but then go on to adopt some that receive high support.

Wells Fargo is challenging whether other shareholder proposals will appear on its proxy, however. In one case the investor Bart Naylor, who works for consumer advocacy group Public Citizen, said the bank has asked permission from U.S. securities regulators to omit his resolution calling for it to study divestitures or a break-up.

The bank also wants to skip a resolution by New York State retirement officials that would have it review pay tied to metrics that could lead to material losses. Among other things the bank says the New York proposal overlaps with the Sisters of Saint Francis proposal already set for the proxy, according to its request to regulators.

(Reporting by Ross Kerber; Editing by Andrew Hay)

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