It looks like Warren Buffett has saved the board of embattled US banking giant, Wells Fargo from ignominy at a heated and noisy annual meeting overnight in Florida.
The Wells Fargo board narrowly survived a shareholder revolt after almost half of the votes cast at the bank’s shareholder meeting on Tuesday went against the reelection of some of its board directors.
It is clear that without Buffett and Berkshire Hathaway’s near 10% stake some of the board including the chairman, would have been defeated on the polls and proxies of smaller institutions and retail shareholders.
Chairman, Stephen Sanger narrowly survived rejection with only 56% of votes cast in his favour instead the more normal plus. And another director, Enrique Hernandez could only manage a 53% vote in favour of his re-election.
He is one of the leaders of the American business community being chairman of fast food giant, McDonald’s and a director of the bank since 2003. Reputations didn’t matter.
And a third director, Federico Peña received a yes vote of just 54%. He is a former Mayor of Denver and was a senior member of Bill Clinton’s two cabinets in the mid 1990s.
Only three directors received more than 90% support from voting shareholders, a benchmark cited by chairman Sanger as what would be the outcome of a normal vote. His 56% approval vote fell far short of that.
“Wells Fargo stockholders today have sent the entire Board a clear message of dissatisfaction," Sanger said in a statement. “Let me assure you that the Board has heard that message, and we recognize there is still a great deal of work to do to rebuild the trust of stockholders, customers and employees."
The meeting ran nearly three hours and was repeatedly interrupted by angry shareholders seeking answers about how and why thousands of bank employees were able to open 2.1 million fake accounts in customers’ names without their permission.
Warren Buffett and his Berkshire Hathaway company control just on 10% of Wells Fargo and his assistant told Reuters before the meeting that her boss had already voted the shares and he normally supported company boards.
Before the meeting the biggest public service super fund, Calpers and the retirement fund for California’s school teachers, both announced they would vote against some of the board at the meeting. It is clear from the size of the no votes, that other institutional holders voted against the board.
Reuters reported that the directors who received the lowest support had faced negative recommendations from influential proxy adviser Institutional Shareholder Services (ISS), which argued they failed in their oversight duties.
All but three directors received support of 80% or less. The other three received 99% approval, and were the most recent additions: Sloan, who was named CEO in October after the scandal erupted, as well as Ronald Sargent and Karen Peetz, who were newly elected to the board this year.
