Wells Fargo chief hears complaints, gets backing

Shareholders also approved a “say-on-pay” resolution supporting executive compensation at Wells Fargo, where CEO John G. Stumpf made $21.4 million last year.

The nation's fourth-largest bank held its annual meeting at the Ritz-Carlton in Clayton, the first time it has met in the St. Louis area. The bank owns Wells Fargo Advisors, the nation's third-largest retail brokerage, headquartered on Jefferson Avenue.

The resolution for an independent chairman garnered 16 percent of the vote in a preliminary tally announced at the meeting. It was filed by Gerald Armstrong, of Denver, a large investor in the bank's stock. Stumpf now holds both the CEO and chairman's title.

In a proxy statement, Armstrong argued that Stumpf is “accountable only to himself,” absent an independent chairman. Armstrong also noted that Stumpf is a board member at the retail chain Target, which suffered a data breach leading to a spate of credit card fraud that cost banks millions.

“If Mr. Stumpf could not see the weaknesses at Target Corporation, is he blind to possible problems at Wells Fargo & Company?” Armstrong asked.

The bank argued that its financial performance is evidence that its governance is effective, and it has a lead director willing to discuss concerns with shareholders.

The lobbying resolution drew 19 percent of the vote. It was pushed by Trillium Asset Management, a socially-responsible investment firm.

Wells Fargo spends about $12 million a year on direct lobbying, a Trillium representative said. But shareholders can't tell how much it spends on on persuasion through “grassroots” campaigns and through trade associations. That makes it hard to tell what the bank is advocating.

The company opposed the resolution, arguing that it discloses lobbying information on its website, complies with lobbying rules and that its directors provide oversight.

Speaking to shareholders, Stumpf boasted that Wells Fargo was “the nation's most profitable bank” last year. It earned $21.8 billion in 2014 and $5.8 billion in this year's first quarter.

It was also the world's most valuable bank judged by stock market value, he said, and it gave $281 million to charity.

First-quarter earnings were down by 2 percent. The bank's expenses are “slightly higher,” he said, “as we make investments in all things risk, especially cyber.”

The bank passed its latest “stress test,” performed by federal regulators to assess if the bank could endure a severe recession. Its common equity capital stood at 10.14 percent, while the government requires 9 percent. Stumpf noted.

Shareholders were met by a small group of about 30 demonstrators, sponsored by the Communications Workers of America, calling for less pressure on bank employees to meet sales goals. The union complains that the bank pushes employees, who are not unionized, to sell customers products they don't need and penalizes workers when they fail.

Stumpf said that incentive pay amounts to only 5 percent of compensation. “We never want to put our team members in a position where they need to make incentive goals to make the rent payment,” he said.