Wells Fargo & Co.'s board asks shareholders to reject three proposals at the April 24 annual meeting, two of which relate to compensation.
The New York State Common Retirement Fund's trustee is proposing that positions with incentive-based compensation be identified, if those incentives potentially expose the company to material losses. The trustee beneficially holds 13,102,460 Wells Fargo shares.
Jing Zhao, who owns 60 Wells Fargo shares, is proposing the hiring of "multiple outside independent experts" in order to incorporate social responsibility in the company's executive compensation policy. Wells Fargo's Human Resource Committee has retained consulting firm FW Cook for advice, but the shareholder reasons that a paid firm "cannot provide any independent voice which the company does not want to hear."
The board, in urging shareholders to vote down the proposals, argues that the Human Resources Committee already takes into account several factors in determining compensation, including social responsibility. It additionally oversees the Incentive Compensation Risk Management program, which looks into potential risk types beyond those leading to material financial loss, such as reputational harm.
The third shareholder proposal was by John Chevedden, who holds at least 100 Wells Fargo shares. Chevedden recommends allowing investors with an aggregate 10% stake in the company to call special shareowner meetings, in light of "the ethics crisis at [the] company that has a serious bottom line impact."
The board called Chevedden's proposal "unnecessary," saying the company had lowered the related threshold to 20% from 25% in March. A further decrease, it argued, would risk the calling of "costly and burdensome special meetings ... by a small group of shareholders seeking to advance their own narrowly supported interests."
Wells Fargo's proxy statement additionally disclosed a 2017 CEO pay ratio of 291 to 1. CEO Timothy Sloan was paid $17.6 million in total compensation that year. The estimated median of all Wells Fargo team members was $60,446.
