Wells Fargo Shareholders Urged to Cut Wachovia Ties on Bank Board
Wells Fargo holds its annual shareholder meeting this afternoon in San Francisco and an influential group is calling for the bank to sever its remaining ties to Wachovia on the board of directors. Only three of Wells Fargo's fifteen board members are holdovers from Wachovia's board before the 2008 acquisition. This is the second year that a firm called Glass, Lewis & Co. is advising the bank's major institutional investors to get rid of the three. Glass, Lewis & Co. says those board members failed to oversee the bank's risk-taking activities and are partly to blame for Wachovia's downfall. Former Wachovia executive Lawrence Baxter "it would be a pity from the point of view of former Wachovia employees, shareholders and customers." "Just to remove the last three (board members) is to make Wells seem a little more distant a company," says Baxter. Wells Fargo has recommended keeping the three ex-Wachovia board members. UNC Charlotte banking professor Tony Plath says their removal would leave Wells Fargo's board without much representation from the South or East Coast. He expects Wells Fargo shareholders at today's meeting will be more concerned about some of the bank's gaffes this last year. "There'll be a degree of animosity and the questions are likely to be a little more pointed and a little more specific," says Plath. While Wells Fargo has pulled through the financial crisis better than Bank of America, Plath says some cracks have appeared. "Management at the bank has been really specific about indicating that credit quality in the mortgage book was fine - it wasn't," says Plath. "Then management was really specific about saying that Wells Fargo was not involved in robo-signing. Well it turns out they were involved in robo-signing through their mortgage subsidiary here in Rock Hill." Plath says the sudden, unexplained departure of Wells Fargo's CFO in February also troubled investors. Charlotte remains a major East Coast hub for Wells Fargo, but the Wachovia name is disappearing. Only six states, including North Carolina, still have Wachovia bank branches. They are expected to transition to the Wells Fargo brand by the end of this year.