It isn't often that a bank's entire board of directors comes within the line of fire, so to speak, but that's the situation at Wells Fargo (NYSE:WFC) right now, with shareholder advisory firms urging investors to vote against most of the board at the bank's upcoming annual meeting. One silver lining for the board is that it has the support of the bank's biggest shareholder, Warren Buffett's Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B).

This story traces back to the Consumer Financial Protection Bureau's revelation last September that thousands of Wells Fargo employees had opened millions of fake accounts for customers in order to meet strict sales quotas and drive up the bank's coveted cross-sell ratio -- the number of its financial products used by its average customer.

Berkshire Hathaway Chairman and CEO Warren Buffett.

Berkshire Hathaway Chairman and CEO Warren Buffett. Image source: The Motley Fool.

The bank initially responded by minimizing the extent of the scandal, saying it wasn't material and placing the blame on rogue employees in its branches. As the details of the scandal were revealed, however, it became clear that the bank's top executives had known about the illicit practices for years but swept the problem under the rug.

To add insult to injury, when employees started blowing the whistle about the creation of fake accounts as early as 2004, sometimes emailing former-CEO John Stumpf directly, they risked demotion and termination. Managers at the bank would even insert defamatory information in whistleblowers' regulatory paperwork to ensure they could never work in the financial services industry again.

After an amateurish attempt to explain away the scandal to the media and Congress, Stumpf resigned as chairman and CEO. He turned the corner office over to new CEO Tim Sloan and the chairmanship to Stephen Sanger, the former CEO of General Mills who joined the bank's board in 2003. A subsequent investigation commissioned by the independent directors found that Stumpf and former retail banking head Carrie Tolstedt had misled the board for years about the extent of illicit cross-selling. All told, $136 million in compensation was clawed back from the two executives with once-sterling reputations.

Former Chairman and CEO of Wells Fargo John Stumpf.

Former Chairman and CEO of Wells Fargo John Stumpf. Image source: Wells Fargo.

But these changes haven't been enough to appease all shareholders. Proxy advisory firm Institutional Shareholder Services, which advises institutional investors on how to vote in corporate referendums, is urging shareholders to vote for only three of Wells Fargo's current slate of 15 directors -- two who joined this year and new CEO Sloan. New York City's Office of the Comptroller, which oversees pension funds with sizable stakes in the bank, will vote against 10 of the current directors. And proxy advisory firm Glass Lewis & Co. recommends against voting for six members.

The saving grace for Wells Fargo's board may be the 86-year-old billionaire from Omaha, Nebraska, Warren Buffett, whose Berkshire Hathaway is the bank's biggest shareholder. According to CNBC's Berkshire Hathaway portfolio tracker, the conglomerate owns $25 billion worth of Wells Fargo stock, equating to a little under 10% of the bank's shares outstanding.

It was reported last week that Berkshire Hathaway will vote all of its shares in favor of reelecting the current board, and Buffett intends to do the same with his personal stake in the bank. Whether this is enough to overcome proponents of change remains to be seen, but given Buffett's deep understanding and appreciation for well-run banks, his perspective is good food for thought.

Investors will know either way this week, following Wells Fargo's annual meeting on Tuesday.

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