BOSTON, April 7 (Reuters) - Influential proxy adviser Institutional Shareholder Services recommended investors vote to replace the majority of directors at Wells Fargo & Co in the wake of the bank’s phony-account scandal.
ISS, in a report released on Friday by a spokesman, said votes against 12 of the bank’s 15 directors are warranted after board committees failed for years “to provide a timely and sufficient risk oversight process” that could have mitigated the problems.
Wells Fargo reached a $185 million settlement with regulators in September after it emerged that branch employees opened as many as 2 million accounts without customers’ permission, to meet sales goals.
Directors ISS recommended votes against included the San Francisco bank’s chairman, Stephen Sanger, although it suggested investors vote in support of Timothy Sloan, who took over as chief executive in October.
The report sets the stage for a contentious April 25 annual meeting for the bank. On Tuesday, proxy adviser Glass Lewis recommended investors vote against six Wells Fargo directors.
In a statement, Wells Fargo called ISS’ voting recommendations “extreme and unprecedented” and urged shareholders to make their own judgments about reforms the bank has taken.
“The Board has already taken numerous actions and supported management’s steps to promote accountability, strengthen oversight, and hold to account those responsible for improper sales practices,” Wells Fargo said in its statement.
Reporting by Ross Kerber; Editing by Dan Grebler