Wells Fargo Needs Board Overhaul: Proxy Firm

Updated to include Wells Fargo statement.

NEW YORK (TheStreet) -- Wells Fargo(WFC) is in need of a major boardroom overhaul, while the entire board of Goldman Sachs(GS) deserves the support of the company's shareholders, according to proxy advisory firm Glass, Lewis & Co.

At Wells Fargo, Glass Lewis renewed its call for shareholders to get rid of former Wachovia directors John Baker II, Donald James and Mackey McDonald, at the bank's May 3 annual meeting, citing their "failure to properly oversee risk management at the bank in the years preceding the financial crisis."

Wells Fargo acquired Wachovia in 2008 for $7 per share, well below its $40 high for that year, after it lost $9 billion.

Glass Lewis also suggests Wells Fargo shareholders vote against Philip Quigley, chair of the governance and nominating committee, for inadequate disclosures about potential business conflicts involving other board members. Cynthia Milligan, another board member, should not be approved because her son and brother both work for Wells Fargo, relationships Glass Lewis deems "problematic."

A Wells Fargo spokesman defended the directors, saying they meet the standards of the New York Stock Exchange, the Securities and Exchange Commission, and Wells Fargo's own criteria for director independence.

"They have extensive experience and significant skills and attributes which make them them extremely valuable directors for the benefit of our stockholders," the spokesman said.

As for Goldman, Glass Lewis cited improvements in the way it discloses transactions involving board members and other parties with business ties to Goldman. In 2010, the proxy firm had recommended shareholders vote to get rid of John Bryan, chair of Goldman's corporate governance committee, due to "insufficient disclosure" regarding these issues.

Last year, Goldman underwent a highly publicized internal review of its business practices, a process that appears to have paid some dividends, at least as far as Glass Lewis is concerned.

"They really kind of revamped their whole proxy, actually, so it was much more readable, but particularly around related party transactions," said Bob McCormick, chief policy officer at Glass, Lewis. A Goldman spokesman declined comment.