By Christina Rexrode
Wells Fargo & Co. is the latest big bank to announce that it will begin webcasting its annual shareholder meeting.
Starting next year, Wells Fargo expects to provide an audio webcast of its annual meeting "given the recent interest," a bank spokesman said Friday. He added that the bank is committed to holding "an annual meeting that is open, informative and serves the interests of the shareholders." Wells Fargo isn't planning to webcast its annual meeting Tuesday, however.
The topic of webcasting the meetings has gained attention of late as big banks pay billions of dollars in regulatory fines, generating more questions about their business practices. Many big banks also are holding their annual meetings far from the cities where they have headquarters.
As of earlier this week, New-York based Citigroup Inc. and San Francisco-based Wells Fargo were the only U.S. banks of the six largest that didn't webcast their annual meetings. That rankled some individual investors and analysts who said the banks should do more to build broader lines of communication with investors.
Citigroup said at its annual meeting in St. Louis on Tuesday that it will start webcasting next year. Wells Fargo said Friday that it would follow suit.
Other banks such as Bank of America Corp., Goldman Sachs Group Inc., J.P. Morgan Chase & Co. and Morgan Stanley already provide audio webcasts of their annual meetings. Most companies still don't webcast their annual meetings, though more big companies from a variety of industries have adopted the practice, including Alcoa Inc., Google Inc. and Walt Disney Co.
Wells Fargo's shareholder meeting Tuesday is being held in San Antonio.
Wells Fargo has enjoyed a good stretch of performance in recent years, surpassing J.P. Morgan., the nation's largest bank by assets, in both market value and net income. But corporate governance experts are taking some issue with the company.
Glass Lewis & Co., a firm that advises big shareholders on how to vote at annual meetings, is recommending that Wells Fargo separate the roles of chairman and chief executive, roles currently held by John Stumpf.
Another proxy adviser, Institutional Shareholder Services Inc., wants investors to ask the bank to review its mortgage and foreclosure practices to make sure it is complying with fair-lending laws.
Glass Lewis and another proxy advisory firm, Egan-Jones Proxy Services, are recommending that shareholders vote off certain members of the board.
Wells Fargo disagrees with the firms' recommendations.
To be sure, Wells Fargo has turned in consistent profits even as other firms suffered from the fallout of the financial crisis. But this year, Wells Fargo is the only U.S. banking giant to face proposals on its chairman and CEO roles, along with its mortgage-lending practices.
The shareholder resolution is nonbinding, meaning the bank wouldn't have to change its management structure even if the resolution were to pass.
Other banks have made the split, usually in periods when investors are frustrated with performance. Bank of America split its chairman and CEO jobs in 2009. Citigroup split the jobs in 2007.
At four of the six largest U.S. banks, the chairman and CEO roles are held by the same person. At J.P. Morgan, James Dimon holds both positions. Earlier this year, the bank made concessions to an investor, the Needmor Fund, to keep a proposal to split the jobs off the ballot. At Goldman Sachs, Lloyd Blankfein holds both roles, and at Morgan Stanley, James Gorman does.
Wells Fargo says there is no need to separate the jobs, given the bank's strong performance under the current structure. Similar measures have been put on the ballot for nine years in a row at the bank and never won. Last year's proposal got 22% support, about 10 percentage points less than a similar proposal at J.P. Morgan. Several times, the proposal has gotten support of more than 35%.
The proxy-advisory firm Egan-Jones is recommending that shareholders vote against two directors, Enrique Hernandez Jr. and Cynthia Milligan. Mr. Hernandez, a director since 2003, runs a security company that was paid nearly $2 million last year to provide guard services at some of Wells Fargo's branches, according to bank filings. Ms. Milligan, former dean of the business school of the University of Nebraska-Lincoln, has been on the board since 1992. She has a brother who works as a wealth-management adviser at the bank and was paid about $236,000 last year.
Glass Lewis says shareholders should vote against board members John Baker and Donald James. Both were directors at Wachovia in 2008, when it teetered near collapse and was bought at a bargain-basement price by Wells Fargo. Glass Lewis also is recommending that shareholders vote against Ms. Milligan.
Wells Fargo says it doesn't believe that Ms. Milligan's and Mr. Hernandez's relationships to the bank impair their ability to act independently. It adds that all its board members offer "particular expertise, knowledge, and experience." But the board did, in 2010, agree to "strongly discourage" the bank from hiring any more immediate family members of directors, according to its proxy.
The bank declined to make the board members available for comment. Mr. Hernandez, Ms. Milligan and Mr. James couldn't be reached for comment. Mr. Baker declined to comment.
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