Wells Fargo proxy vote - yay or nay?
September 14, 2021 9:39 AM   Subscribe

I have an old 401k from a previous job that I haven’t rolled over. Part of its holdings (like, less than 10%) are in a Wells Fargo fund. There’s a special shareholder meeting being held tomorrow for which I have to enter my proxy vote by midnight tonight. Should I vote yay or nay? Does it matter?

Let me just say that, if I could, I would shift my assets so that there were no holdings associated with Wells Fargo, but for Reasons I can’t do that right now.

The vote is for whether or not to approve a spin-off of the asset management part of their business to be taken over by two private equity firms.

My instinct, because I am allergic to anything to do with private equity, is to vote “no,” but I can’t seem to find any analysis on the internet of whether this would be a good or bad thing for the ordinary shareholder. Googling has turned up plenty of articles with a PR bent, from how it would be good for Wells Fargo (the parent company), which will retain a 10% stake, to separate out this sector of their business, to how it’s a deal for those two PE firms. But I Googled a number of phrases about which way to vote and couldn’t find anything useful.

I guess my question is twofold:

1. I know my one little vote doesn’t mean much, and also voting seems like pretty much a formality at this point before the transfer takes place, but how should I vote? What’s best for the little shareholder?

2. Where on the internet are people talking about / analyzing things like this with more of a critical eye?
posted by SomethinsWrong to Work & Money (9 answers total)
Should I vote yay or nay? Does it matter?

In terms of impacting the vote, it doesn't matter. Institutional investors own 72.94% of outstanding shares in Wells Fargo, compared to individual investors like yourself who only own 12.22%. All the institutional investors will vote their shares; relatively few individual investors will. End end result is that your personal vote is largely irrelevant.
posted by NotMyselfRightNow at 9:57 AM on September 14 [3 favorites]

I think the idea your vote "doesn't matter" is mostly bogus. If you don't like management vote against what ever they propose. Managements do not like it when shareholders vote against them.

That said this is pretty non-controversial and will pass regardless.
posted by JPD at 10:51 AM on September 14 [1 favorite]

Managements do not like it when shareholders vote against them.

Management (and often more relevant, directors) care very much how institutional investors vote. They are almost entirely indifferent about individual shareholders.
posted by NotMyselfRightNow at 11:09 AM on September 14 [1 favorite]

For what it's worth, I get those from a few different sources. I always just throw them away.

Best case scenario, enough people research a proposal enough to overturn an evil board proposal. The board will just find another way to accomplish their goal anyway.

Most likely scenario, a few people research and vote for a proposal, but it falls into the sea of institutional investors doing whatever is best for their (and our!) investments.
posted by bbqturtle at 11:15 AM on September 14

Eh…we currently live in a weird age of unexpectedly consequential retail investing. I wouldn’t assume your vote means nothing even with the high institutional holdings. That said, this particular issue isn’t terribly exciting to anyone (it’s not a huge chunk of WF, not the most brilliantly priced sale, it won’t fix the brand, the AM won’t flourish under its new ownership—but there’s little reason to think they can do better, either ) so abstaining doesn’t seem craven.
posted by michaelh at 11:27 AM on September 14

Management (and often more relevant, directors) care very much how institutional investors vote. They are almost entirely indifferent about individual shareholders.

Management cares very much if the say on pay vote or a board election moves 5% against them. Retail can easily do that. Not to mention a lot of "Institutional" votes are really bundled retail voters, so if the retail voters tell their plan sponsors in sufficient numbers they want something, they will get it.
posted by JPD at 1:00 PM on September 14

Response by poster: Interesting answers, all of them.

But why is this issue non-controversial and not terribly exciting? Does it not set off alarm bells for anyone that private equity taking over asset management within retirement accounts might become a trend, at the very moment when it seems to me like PE is taking over many aspects of American life? Has it already been a trend? Is anyone talking about this?

Oh, wait - I found at least one person talking about this. Scroll down to the interview with Eileen Appelbaum - middle of the page - from about a year ago. It looks like this change, this trend of private equity into our 401k’s and IRAs, is just beginning. The floodgates were opened by Eugene Scalia, Trump’s labor secretary.

Well, anyway, I missed the voting window because yesterday was kuh-razy, but I agree that my one vote didn’t really matter up against all the institutional investors. What worries me is they count on people not thinking too much about it.
posted by SomethinsWrong at 12:57 AM on September 15

Best answer: no. That's not what this is.

Yes there is an argument (That I agree with!) that allowing private investments (of which Private Equity is one of many) to be placed into 401ks is a questionable idea for a bunch of reasons.

But in this case, Wells is selling its own Asset Management business to Private Equity companies. The actual way assets are invested in this business that is being disposed of will not change. This is just about who owns the asset manager, not what the asset manager itself invests in for its clients.
posted by JPD at 8:32 AM on September 15

Response by poster: Ahh, thank you, JPD. Got it.
posted by SomethinsWrong at 11:54 AM on September 15

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