One powerful member of the Wells Fargo board of directors has a son who works for Wells, making more than $700,000 last year.
Another has a brother who works at the bank. Two directors run software firms that sell products to Wells, and another runs a security company that did $2.6 million worth of business with the bank last year.
Those five board members, along with 11 others, are up for re-election Tuesday at Wells' annual meeting in San Francisco. The bank has 19,000 employees in Charlotte after scooping up crippled Wachovia in 2008.
There is nothing illegal about the directors' business and personal ties. Wells Fargo says its board meets the New York Stock Exchange standards for independence. The bank also says its directors have "particular expertise, knowledge and experience" to fulfill "oversight responsibility" to bank shareholders.
Still, perceived coziness between board members and the companies they oversee has been a key theme — and arguably, a cause — of the financial crisis.
Board members are supposed to oversee the CEO and protect shareholders. Given the meltdown on Wall Street, activists say it's no longer enough for directors to meet only technical definitions of independence. Shareholders soon could have more power to hire and fire directors under reform bills making their way through Congress.
Government pressure already has forced the boards of Bank of America and Citigroup to purge longtime directors in favor of new, financially experienced members. Up to now, the Wells board hasn't undergone that kind of public scrutiny.
"Citigroup and Bank of America both have boards that are more capable than they were a year ago," said James Post, who teaches corporate governance at Boston University. "Now the focus turns to other banks."
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