SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
WELLS FARGO & COMPANY
(Name of Registrant as Specified In Its Charter)
WELLS FARGO & COMPANY
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
_______________________________________________________________
2) Aggregate number of securities to which transaction applies:
_______________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11.
_______________________________________________________________
4) Proposed maximum aggregate value of transaction.
_______________________________________________________________
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
_______________________________________________________________
2) Form, Schedule or Registration Statement No.:
_______________________________________________________________
3) Filing Party:
_______________________________________________________________
4) Date Filed:
_______________________________________________________________
<PAGE>
<PAGE>
LOGO
WELLS FARGO & COMPANY
March 15, 1994
To Our Shareholders:
You are cordially invited to attend the annual meeting of shareholders to
be held on Tuesday, April 19, 1994. Enclosed are the Secretary's official
notice of this meeting, a proxy statement and a form of proxy. Please note
that the meeting will be held at 2:00 p.m. in the Ballroom of the Four
Seasons Hotel, 690 Newport Center Drive, Newport Beach, California.
At this meeting you will be asked to elect directors to serve until the
next annual meeting, to approve the adoption of a new Long-Term Incentive
Plan as well as a new Senior Executive Performance Plan and to ratify the
selection of the Company's independent auditors for 1994.
We hope that you will attend. In any event, please complete, date, sign
and promptly return the enclosed proxy. It is important that your shares be
represented at the meeting.
Sincerely yours,
Carl E. Reichardt
Chairman of the Board
and Chief Executive Officer
YOUR VOTE IS IMPORTANT
WE ENCOURAGE YOUR TO COMPLETE, DATE, SIGN AND PROMPTLY RETURN YOUR
PROXY IN THE ENCLOSED ENVELOPE REGARDLESS OF WHETHER YOUR PLAN TO ATTEND THE
ANNUAL MEETING.
<PAGE>
WELLS FARGO & COMPANY
420 Montgomery Street
San Francisco, California 94163
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 19, 1994
To the Shareholders of Wells Fargo & Company:
The annual meeting of shareholders of Wells Fargo & Company (the
"Company") will be held in the Ballroom of the Four Seasons Hotel, 690
Newport Center Drive, Newport Beach, California, at 2:00 p.m. on Tuesday,
April 19, 1994, in order to:
1. Elect directors to serve until the next annual meeting of
shareholders or until their successors have been elected and qualified;
2. Approve the adoption of the new Long-Term Incentive Plan;
3. Approve the adoption of the new Senior Executive Performance
Plan; and
4. Ratify the selection of KPMG Peat Marwick as independent
auditors for the Company
for 1994.
The meeting will also act upon such other matters as may properly come
before the meeting or any adjournment thereof. Shareholders of record at
the close of business on February 18, 1994, will be entitled to vote the
number of shares held of record in their names on that date. The transfer
books will not be closed.
Regardless of whether you plan to attend the shareholders' meeting,
please complete, date and sign the enclosed proxy card and return it in the
enclosed envelope. You may revoke your proxy at any time prior to the time
it is voted.
Guy Rounsaville, Jr.
Secretary
March 15, 1994
<PAGE>
PROXY STATEMENT
These proxy materials are furnished in connection with the solicitation
by the Board of Directors of Wells Fargo & Company, a Delaware
corporation (the "Company"), of proxies to be used at the annual meeting of
shareholders of the Company and at any adjournment thereof. The meeting
will be held in the Ballroom of the Four Seasons Hotel, 690 Newport Center
Drive, Newport Beach, California, at 2:00 p.m. on Tuesday, April 19, 1994.
These proxy materials are being mailed to shareholders on or about March
15, 1994.
PURPOSE OF MEETING
At the meeting, shareholders will be asked to (i) elect directors to serve
until the next annual meeting of shareholders or until their successors are
elected and qualified; (ii) approve the adoption of the new Long-Term
Incentive Plan; (iii) approve the adoption of the new Senior Executive
Performance Plan; and (iv) ratify the selection of KPMG Peat Marwick as
independent auditors for the Company for the year 1994. In addition, the
shareholders may act upon such other matters as may properly come before
the meeting.
VOTING
Holders of record of the Company's Common Stock, $5.00 par value (the
"Common Stock"), at the close of business on the record date, February 18,
1994, will be entitled to vote on all matters to be presented at the annual
meeting. On the record date, 55,827,132 shares of Common Stock were
outstanding. Votes may be cast in person or by proxy, and each share of
Common Stock entitles its holder to one vote.
A quorum comprising the holders of the majority of the outstanding
shares of Common Stock on the record date must be present or represented
for the transaction of business at the annual meeting. Abstentions and
broker non-votes will be counted in establishing the quorum. Directors are
elected by holders of shares representing a plurality of the quorum.
Abstentions and broker non-votes are not counted in the election of
directors. In order for the Long-Term Incentive Plan to receive favorable
treatment under Rule 16b-3 of the Securities and Exchange Commission,
Proposal 2 must receive the affirmative votes of the holders of a majority of
the shares present and entitled to vote at the meeting. An abstention would
thus have the effect of a vote against Proposal 2. In accordance with the
Company's By-Laws, Proposals 3 and 4 must be adopted by the holders of a
majority of the shares present and voting, and an abstention would not be
counted in this determination. A broker non-vote would have no effect on
the outcome of Proposals 2, 3 or 4.
Proxies in the accompanying form which are properly executed and
returned to the Company will be voted at the annual meeting in accordance
with the shareholders' instructions contained in such proxies and, at the
discretion of the proxy holders, on such other matters as may properly come
before the meeting. Where no such instructions are given, the shares will be
voted for the election of directors as described herein, for the approval of
the adoption of the new Long-Term Incentive Plan as well as the new Senior
Executive Performance Plan and for the ratification of the selection of
independent auditors. The Board of Directors does not know of any matters
to be acted upon at the meeting other than the items specifically described
in this Proxy Statement. Any shareholder has the power to revoke his or
her proxy at any time before it is voted.
CORPORATE GOVERNANCE
The Company is a bank holding company registered under the Bank
Holding Company Act of 1956, as amended, and is incorporated in the State
of Delaware. The Company's principal subsidiary is Wells Fargo Bank,
National Association (the "Bank"), a national banking association organized
under the laws of the United States. The Company's 1993 Annual Report
provides a review of certain activities of the Company during the past year.
<PAGE>
The Board of Directors of the Company met 11 times during 1993 and
now consists of 12 members. These 12 incumbent directors have been
nominated for reelection. Biographies of all nominees are provided under
"Proposal 1-Election of Directors."
The Company and the Bank have each established the Board committees
described below. The membership of each committee is the same for the
Company and the Bank, and the corresponding committees of both
institutions usually hold joint meetings.
The Executive Committee may exercise all of the power and authority of
the Board when it is unable to meet, except for certain fundamental
responsibilities such as amending the By-Laws, which are reserved to the
Board. In addition, subject to the authority of the Board, the Committee is
authorized to supervise the general management and direction of the
business and affairs of the Company. Directors serving on the Executive
Committee since the last annual meeting are: Carl E. Reichardt, Chairman;
H. Jesse Arnelle; William R. Breuner; Rayburn S. Dezember; Paul Hazen;
Robert K. Jaedicke; Chang-Lin Tien; and John A. Young. The Committee
met once in 1993. The former Special Subcommittee of the Executive
Committee, consisting only of the non-officer members of the Committee,
met eight times in 1993 under the chairmanship of Mr. Young to monitor the
enhancement of the Company's credit-related policies and procedures and
associated operational matters. The Special Subcommittee was disbanded in
September 1993 upon the completion of its duties.
The Committee on Examinations and Audits oversees the adequacy of
the Company's control environment. The Committee meets regularly with
management, the Company's general auditor, risk control officer and chief
credit officer and with its independent auditors to review the scope and
results of their work. The Committee also recommends the appointment of
the independent auditors. See "Proposal 4-Ratification of Selection of
Independent Auditors." In addition, the Committee reviews the Company's
quarterly and annual financial statements, including the adequacy of the
allowance for loan losses, and all other reports that law or regulation
requires to be reviewed on behalf of the Board. The Committee also reviews
all reports of examinations conducted by bank regulators and ensures that
audit and examination findings and recommendations are followed up by
appropriate management personnel and corrective actions are implemented
on a timely basis. Directors serving on the Committee since the last annual
meeting are: Robert K. Jaedicke, Chairman; H. Jesse Arnelle; William R.
Breuner; William S. Davila; and Rayburn S. Dezember. The Committee met
eight times during 1993.
The Management Development and Compensation Committee
administers the executive compensation programs (including employee stock
plans) of the Company and its subsidiaries and advises the chief executive
officer concerning salary policy for employees of the Company and its
subsidiaries below the executive level. Directors serving on the Committee
since the last annual meeting are: Paul A. Miller, Chairman; William R.
Breuner; Rayburn S. Dezember; Ellen M. Newman; Donald B. Rice; and
John A. Young. The Committee met four times during 1993.
The Nominating Committee is responsible for proposing candidates to fill
vacancies on the Board as they occur and recommending yearly to the Board
the director nominees to be elected by the shareholders at the annual
meeting. At its meeting in 1994, the Committee recommended the 12
nominees for director named in this Proxy Statement. Directors serving on
the Committee since the last annual meeting are: John A. Young, Chairman;
William S. Davila; Paul A. Miller; and Ellen M. Newman. In carrying out its
responsibilities, the Committee will consider candidates suggested by
shareholders. Suggestions for candidates, accompanied by biographical
material for evaluation, may be sent to the Secretary, Wells Fargo &
Company, 420 Montgomery Street, San Francisco, CA 94163.
The following two committees are committees of the Bank only:
The Trust and Investment Products Committee supervises the
administration and proper exercise of the fiduciary powers of the Bank as
well as the administration of the Bank's non-fiduciary investment
management activities. Directors serving on the Committee since the last
annual meeting are: Paul Hazen, Chairman; Paul A. Miller; Ellen M.
Newman; Carl E. Reichardt; Donald B. Rice; and Chang-Lin Tien. The
Committee met four times in 1993.
The Directors' CRA Committee reviews the Bank's compliance with the
Community Reinvestment Act and the statement made by the Bank under
the Act with respect to the communities it serves. Directors serving on the
Committee since the last annual meeting are: Robert K. Jaedicke, Chairman;
H. Jesse Arnelle; William S. Davila; Ellen M. Newman; and Chang-Lin Tien.
The Committee met five times in 1993.
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS
Average attendance at Board meetings during 1993 was approximately
96 percent. During 1993, each director attended at least 81 percent of the
total number of Board meetings and meetings of the committees of which he
or she was a member.
DIRECTOR REMUNERATION AND RETIREMENT POLICY
Directors who are officers of the Company or the Bank do not receive an
annual retainer or meeting fees for service on either Board or as a member
of any Company or Bank committees. Non-officer directors of the Company
and the Bank are paid a basic annual retainer of $23,000, with additional
amounts payable in accordance with committee service. Robert K. Jaedicke,
as chairman of the Committee on Examinations and Audits, and the other
members of such committee receive additional amounts of $7,500 and $2,500,
respectively. John A. Young, formerly chairman of the Special
Subcommittee of the Executive Committee, and Chang-Lin Tien, the only
other member of such subcommittee who was not also a member of the
Committee on Examinations and Audits, received additional amounts of
$5,625 and $1,875, respectively, for the nine months of 1993 that the
subcommittee functioned. Paul A. Miller, as chairman of the Management
Development and Compensation Committee, and the other members of such
committee receive additional amounts of $4,000 and $1,500, respectively.
Non-officer directors are paid a fee of $1,000 for each Board meeting
attended, except that when Board meetings of the Company and the Bank
are on the same day, the total fee is limited to $1,000. All non-officer
directors receive a fee of $800 for each committee meeting attended, except
that when the same committees of the Company and the Bank have a
combined meeting, the total fee for such meeting is limited to $800. The
receipt of annual retainer and meeting fees may be deferred by a director,
who may choose either to receive interest on the deferred amount or to
receive a return based upon the hypothetical investment of the deferred fees
in Common Stock. Directors are also reimbursed for travel, food, lodging
and other expenses incurred in attending Board and committee meetings.
Two directors have consulting arrangements with the Company or the
Bank. Rayburn S. Dezember serves as a consultant to the Company under
an agreement that runs until 1996 at a yearly fee of $75,000. Ellen M.
Newman provides consulting services to the Bank for a monthly fee of
$2,500.
The Directors' Retirement Plan provides that a non-officer director with
at least five years' service on the Board is entitled to receive, during a
period equal to the lesser of 10 years or the number of full years the director
actually served on the Board, an annual retirement benefit equal to the
annual retainer in effect at the time of the director's retirement, without
regard to that director's service on particular committees of the Board.
Non-officer directors may participate in the 1987 Director Option Plan.
Under the 1987 Plan, a non-officer director may elect to receive at the
beginning of a year an option to purchase Common Stock in lieu of the
director's annual retainer for that year. The number of shares subject to
option is the quotient of the participant's annual retainer divided by the
excess of the market value of the Common Stock at the beginning of the
year over $1.00. In general, options become exercisable at $1.00 per share
on the first anniversary of the date they are granted and remain exercisable
for nine years thereafter. During 1993, options to purchase an aggregate of
400 shares of Common Stock were issued to one director under the Plan. In
addition, under the 1990 Director Option Plan, each non-officer director
elected or reelected each year at the annual meeting automatically receives
an option to purchase 500 shares of Common Stock. Directors joining the
Board at other times receive options to purchase a prorated number of
shares. The exercise price per share of each such option is the fair market
value of a share of Common Stock as of the date the option is granted.
During 1993, options to purchase 5,084 shares of Common Stock were
granted to 10 directors under the 1990 Plan.
The Board of Directors has adopted a retirement policy which precludes
any non-officer director from standing for election or appointment as a
director after age 70. This policy also precludes any director who was an
active officer at the time of his or her first appointment from continuing to
serve as a director after retirement, except that a director who has held the
office of chairman of the board or president continues to be eligible to stand
for election as a director until age 70.
<TABLE>
BENEFICIAL OWNERSHIP
The following table shows the number of shares of Common Stock
beneficially owned as of January 31, 1994, by all directors and nominees for
director, each of the five most highly compensated executive officers and all
directors, nominees and executive officers as a group. Executive officers are
defined as all Company officers at the level of vice chairman and above and
all Company staff heads on January 31, 1994 (14 persons). No individual
director, nominee or executive officer beneficially owned more than 1
percent of all outstanding Common Stock as of January 31, 1994. All
directors, nominees and executive officers as a group owned beneficially 2.7
percent of all outstanding Common Stock as of such date. No share of any
other class of equity security was then beneficially owned by any member of
the group.
<CAPTION>
SHARES SHARES
SUBJECT TO HELD
OPTIONS THROUGH
SHARES SHARES EXERCISABLE COMPANY
DIRECTORS HELD HELD WITHIN 401(K)
AND NOMINEES DIRECTLY INDIRECTLY 60 DAYS PLAN TOTAL
------------- -------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
H. Jesse Arnelle .................. 190 0 1,102 0 1,292
William R. Breuner ................ 2,054 0 1,500 0 3,554
William S. Davila ................. 100 0 2,325 0 2,425
Rayburn S. Dezember ............... 0 60,619 1,500 5,055 67,174
Paul Hazen ....................... 188,613 0 215,335 3,267 407,215
Robert K. Jaedicke ................ 400 0 1,500 0 1,900
Paul A. Miller .................... 9,188 2,600(1) 1,500 0 13,288
Ellen M. Newman ................... 2,650 0 1,500 0 4,150
Carl E. Reichardt ................ 145,943 20 402,845 0 548,808
Donald B. Rice .................... 595 4,490 84 0 5,169
Chang-Lin Tien .................... 100 0 1,252 0 1,352
John A. Young .................... 400 0 3,895 0 4,295
MOST HIGHLY
COMPENSATED OFFICERS
--------------------
Carl E. Reichardt ................ 145,943 20 402,845 0 548,808
Paul Hazen ....................... 188,613 0 215,335 3,267 407,215
Rodney L. Jacobs .................. 12,508 0 30,835 940 44,283
Clyde W. Ostler ................... 9,893 0 52,718 0 62,611
William F. Zuendt ................. 33,144 0 96,315 0 129,459
GROUP
-----
Directors, Nominees and Executive
Officers as a Group (24 persons).. 452,046 68,357 998,498 17,142 1,536,043
- ----------
1. These shares are held in trusts for which Mr. Miller acts as trustee. As
to 600 of these shares, Mr. Miller disclaims any beneficial interest.
</TABLE>
<PAGE>
The following are the only persons known to the Company to have been
the beneficial owners of more than 5 percent of the outstanding Common
Stock on December 31, 1993:
NAME AND ADDRESS OF AMOUNT AND NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT
------------------- -------------------- -------
Walter H. Annenberg
St. Davids Center, Suite A-200
150 Radnor-Chester Road
St. Davids, Pennsylvania 19087.... 4,025,130(1) 7.2
Warren E. Buffett
1440 Kiewit Plaza
Omaha, Nebraska 68131............. 6,819,218(2) 12.2
The Capital Group, Inc.
333 South Hope Street
Los Angeles, California 90071 .... 3,396,410(3) 6.1
- ----------
1. Mr. Annenberg shares voting and dispositive power over 6,100 of the
reported shares with his wife. He has sole voting and dispositive power
over the balance.
2. Mr. Buffett shares dispositive power over all of the reported shares. As
to 6,791,218 of them, subject to the following two sentences, he shares
voting power and dispositive power with Berkshire Hathaway Inc., a
diversified holding company he may be deemed to control, and certain of
its subsidiaries. In connection with obtaining the approval of the Board
of Governors of the Federal Reserve System to acquire up to 22 percent
of the Common Stock, Bershire Hathaway and the Company have
entered into an agreement, and Berkshire Hathaway has made
commitments to the Board of Governors, designed to assure that its
investment in the Company will at all times be passive. Accordingly,
Berkshire Hathaway has granted its proxy to the Company to vote
Berkshire Hathaway's shares in accordance with the recommendations of
the Board of Directors of the Company. The 28,000-share balance of the
shares identified as beneficially owned by Mr. Buffett is held by certain
defined-benefit-type employee benefit plans for Berkshire Hathaway
employees. While Mr. Buffett may be deemed to have beneficial
ownership of such 28,000 shares due to his power to direct the
investments of such plans, Mr. Buffett does not have or share voting
power over such shares.
3. The Capital Group, Inc., an investment manager, through subsidiaires
has sole dispositive power with respect to all of the reported shares, sole
power to vote 813,830 of such shares and no power to vote the
remaining shares. The Capital Group, Inc., disclaims beneficial
ownership of all such shares.
PROPOSAL 1
ELECTION OF DIRECTORS
Directors will be elected to serve until the next annual meeting or until
their successors are elected and qualified. Directors are elected by a
plurality of the votes cast by holders of Common Stock on the record date
present in person or represented by proxy at the annual meeting. The proxy
holders named on the enclosed proxy card, unless otherwise instructed, intend
to vote all of the shares they represent as proxies for each of the nominees
named herein. Although it is not contemplated that any nominee will decline or
be unable to serve, if either occurs prior to the annual meeting, the Board of
Directors will select a substitute nominee or amend the By-Laws to reduce the
authorized number of directors.
The Board of Directors recommends a vote FOR authority for the proxy
holders to vote in favor of the nominees named below or their substitutes as
described above.
All nominees are directors of the Bank and, if reelected as directors of the
Company, will also be reelected as directors of the Bank.
H. JESSE ARNELLE Mr. Arnelle, 60, since 1985
has been the senior partner of Arnelle & Hastie, a
law firm in San Francisco specializing in corporate
litigation and public finance. He is also a director of
Eastman Chemical Corporation, FPL Group, Inc.,
Textron Corporation and WMX Technologies, Inc.
Mr. Arnelle is the vice chairman of the Pennsylvania
State University board of trustees and a past
chairman of its educational policy committee. Mr.
Arnelle also serves on the boards of Bay Area
UNICEF, the World Centre and the San Francisco
Opera. He has been a director of the Company since
1990.
WILLIAM R. BREUNER Mr. Breuner, 68, was
chairman and chief executive officer of John Breuner
Co., retail and rental home and office furnishers,
until his retirement in 1986. He is a general partner
in Breuner Associates, Breuner Properties and
Breuner Pevarnick Real Estate Developers. He is
also honorary chairman of the California State
Railroad Museum Foundation. He has been a director
of the Company since 1969.
WILLIAM S. DAVILA Mr. Davila, 62, until his
retirement in May 1992 had been president of The
Vons Companies, Inc., a Los Angeles-based chain of
supermarkets, since 1985. He is now president
emeritus and a director of The Vons Companies, Inc.,
and a director of Pacific Gas and Electric Company
and Geo. A. Hormel & Company. Mr. Davila is an
officer of the Western Association of Food Chains and
serves on the board of the Mexican American Grocers
Association and on the foundation boards of
Methodist Hospital, Arcadia, and Santa Marta
Hospital, Los Angeles. He has been a director of the
Company since 1990.
RAYBURN S. DEZEMBER Mr. Dezember, 63,
served as chairman of the board and chief executive
officer of Central Pacific Corporation from 1981 until
its acquisition by the Company in 1990. Mr.
Dezember is a director of CalMat Co., Tejon Ranch
Company, Turner Casting Inc., The Bakersfield
Californian and ARB, Inc., and is chairman of the
board of trustees of Whittier College. He has been a
director of the Company since 1990.
PAUL HAZEN Mr. Hazen, 52, has been president
of the Company and the Bank since 1984. He is a
director of Pacific Telesis Group, Phelps Dodge
Corporation and Safeway, Inc. He has been a
director of the Company since 1984.
ROBERT K. JAEDICKE Mr. Jaedicke, 65, is a
professor (emeritus) of accounting at the Graduate
School of Business, Stanford University, where he
served as dean from 1983 to 1990. He is a director of
Homestake Mining Company, California Water
Service Company, Boise Cascade Corporation, Enron
Corporation, GenCorp, Inc. and State Farm
Insurance Companies. He has been a director of the
Company since 1983.
PAUL A. MILLER Mr. Miller, 69, is chairman of
the executive committee of Pacific Enterprises, a
diversified holding company. He is a trustee of
Mutual Life Insurance Company of New York and a
director of Newhall Management Corporation. He is
also a member of the executive committee of the
California Business Roundtable and a trustee of the
University of Southern California. He has been a
director of the Company since 1970.
ELLEN M. NEWMAN Mrs. Newman, 65, has
been president of Ellen Newman Associates,
consumer relations consultants, since its founding in
1974. She is chair emeritus of the board of trustees
and a trustee of the University of California, San
Francisco, Foundation, a vice president of the board
of governors of the San Francisco Symphony, a
director of the California Chamber of Commerce and
a director of the Library Foundation of San
Francisco. Mrs. Newman has been a director of the
Company since 1976.
CARL E. REICHARDT Mr. Reichardt, 62, has
been chairman of the board of the Company and the
Bank since 1983. Mr. Reichardt's directorships
include Columbia/HCA Healthcare Corporation,
ConAgra, Inc., Ford Motor Company, Pacific Gas
and Electric Company and Newhall Management
Corporation. He has been a director of the Company
since 1979.
DONALD B. RICE Mr. Rice, 54, has been
president of Teledyne, Inc., a diversified holding
company, since March 1993 after serving as Secretary
of the Air Force from 1989 to January 1993. Prior
thereto he had been president and chief executive
officer since 1972 of The RAND Corporation, a
nonprofit research and educational institution. He is
also a director of Teledyne, Inc. and Vulcan Materials
Company. Mr. Rice originally served as a director of
the Company from 1980 to 1989 and was reelected to
the Board in February 1993.
CHANG-LIN TIEN Mr. Tien, 58, was appointed
chancellor of the University of California, Berkeley,
in 1990. From 1988 to 1990, he served as executive
vice chancellor at the University of California, Irvine.
Currently serving on the board of trustees of
Princeton University and the board of directors of
the American Association for the Advancement of
Science, he is also an elected member of the
American Academy of Arts and Sciences and of the
National Academy of Engineering. Mr. Tien has been
a director of the Company since 1990.
JOHN A. YOUNG Mr. Young, 61, retired in 1992
as chief executive officer and a director of
Hewlett-Packard Company, positions he had held
since 1978. He is a director of Affymetrix Corp.,
Chevron Corporation, Shaman Pharmaceuticals Inc.
and Smithkline Beecham PLC. Mr. Young is also a
director and trustee of the Foundation for the
Malcolm Baldridge National Quality Award, as well
as its president during 1990, and also a member of
the Business Council and the executive committee of
the Council on Competitiveness. He has been a
director of the Company since 1977.
<PAGE>
<TABLE>
EXECUTIVE COMPENSATION
The following table summarizes for the last five years compensation earned
by or awarded to the chief executive officer and the other four most highly
compensated executive officers during 1993. No stock appreciation rights
were awarded during any period covered by the table.
SUMMARY COMPENSATION TABLE
<CAPTIONS>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------- ------------------------------
COMMON
SHARES
UNDERLYING
OTHER ANNUAL RESTRICTED STOCK ALL OTHER
NAME AND SALARY BONUS COMPENSATION STOCK AWARDS OPTIONS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($) ($)(1) (#) ($)(2)
------------------- ---- ------ --------- ------------ ------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Carl E. Reichardt ......... 1993 775,000 1,350,000 186 0 50,000 96,875
Chairman and Chief......... 1992 775,000 0 186 0 50,000 96,875
Executive Officer......... 1991 775,000 0 158 0 55,000 96,874
1990 768,333 700,000 158 0 55,000 96,040
1989 697,500 825,000 158 1,183,125 0 87,188
Paul Hazen ............... 1993 658,333 1,000,000 186 0 40,000 65,833
President 1992 575,000 0 186 0 40,000 57,500
1991 575,000 0 158 0 41,000 57,500
1990 566,667 515,000 158 0 41,000 56,667
1989 497,502 625,000 158 887,344 0 49,750
Rodney L. Jacobs........... 1993 333,333 400,000 11,466 0 27,000 33,333
Vice Chairman 1992 241,667 175,000 11,466 0 16,000 24,167
1991 200,000 100,000 11,438 0 9,000 20,000
1990 195,000 250,000 11,438 0 9,000 19,500
1989 165,004 200,000 11,438 177,469 0 16,500
Clyde W. Ostler............ 1993 362,500 400,000 12,092 0 15,000 36,250
Vice Chairman 1992 300,000 175,000 11,466 0 16,000 30,000
1991 300,000 50,000 11,438 0 16,000 30,000
1990 282,500 300,000 11,438 0 15,000 28,250
1989 187,500 300,000 11,438 197,188 0 18,750
William F. Zuendt.......... 1993 466,667 600,000 11,466 0 20,000 46,667
Vice Chairman.............. 1992 425,000 200,000 11,466 0 20,000 42,500
1991 425,000 0 11,438 0 20,000 42,500
1990 413,333 340,000 11,438 0 20,000 41,333
1989 342,500 375,000 11,438 444,066 0 34,250
- ----------
1. On December 31, 1993, the number and value of the restricted share
rights held by the persons named were as follows: Mr. Reichardt, 6,000,
$776,250; Mr. Hazen, 4,500, $582,188; Mr. Jacobs, 900, $116,438; Mr.
Ostler, 1,000, $129,375; and Mr. Zuendt, 2,252, $291,353. Holders of
restricted share rights receive dividend equivalent payments equal in
amount to the dividend paid on the underlying Common Stock.
2. Amounts shown for 1993 represent Company contributions to its Tax
Advantage and Retirement Plan ("TAP") and its unfunded Benefits
Restoration Program (the "BRP"). As permitted by law, the BRP was
credited with contributions which otherwise would have been made to
TAP but for the limits imposed on TAP by the Internal Revenue Code.
Amounts contributed during 1993 to TAP and the BRP respectively on
behalf of the named officers were as follows: Mr. Reichardt, $21,006,
$75,869; Mr. Hazen, $21,006, $44,827; Mr. Jacobs, $17,748, $15,585; Mr.
Ostler, $17,050, $19,200; and Mr. Zuendt, $16,160, $30,507.
</TABLE>
<PAGE>
<TABLE>
Shown below is further information regarding employee stock options
awarded during 1993 under the Company's Equity Incentive Plan to the five
officers named above. No stock appreciation rights were awarded during the
year.
OPTION GRANTS DURING 1993
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR 10-YEAR OPTION TERM(1), (4)
----------------------------------------------------- --------------------------------------
0% ($) 5% ($) 10% ($)
-------- -------- ---------
ASSUMED ASSUMED ASSUMED
COMMON COMMON COMMON COMMON
SHARES % OF TOTAL STOCK STOCK STOCK
UNDERLYING OPTIONS PRICE ON PRICE ON PRICE ON
OPTIONS GRANTED TO EXERCISE NOV. 16, NOV. 16, NOV. 16,
GRANTED EMPLOYEES IN PRICE EXPIRATION 2003- 2003- 2003-
NAME (#)(2) FISCAL YEAR(3) ($/SH) DATE $110.75 $180.52 $286.84
------ ---------- -------------- -------- ------------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Carl E. Reichardt .......... 50,000 12.5 $110.75 Nov. 16, 1999(4) 0 1,883,280(4) 4,272,520(4)
Paul Hazen ................. 40,000 10.0 $110.75 Nov. 16, 2003 0 2,790,900 7,043,700
Rodney L. Jacobs............ 12,000 3.0 $107.25 Jul. 20, 2003 0 810,810 2,046,330
15,000 3.8 $110.75 Nov. 16, 2003 0 1,046,590 2,641,390
Clyde W. Ostler............. 15,000 3.8 $110.75 Nov. 16, 2003 0 1,046,590 2,641,390
William F. Zuendt........... 20,000 5.0 $110.75 Nov. 16, 2003 0 1,395,450 3,521,850
Five Named Officers as
a Group................... 152,000 38.0 0 8,973,620 22,167,180
Total Shareholder Benefit.............................................................. 0 3,894,200,000 9,828,200,000
Benefit of Five Named Officers as a Percent of Total................................... 0 0.2% 0.2%
- ----------
1. The amounts shown are not the values of the options on the date they
were granted. Instead, these are hypothetical future values based on the
difference between the option exercise price and an assumed future
Common Stock price at the end of the 10-year term of the options using
rates of growth prescribed by the Securities and Exchange Commission.
For all grants shown except the 12,000-share award to Mr. Jacobs, at an
assumed appreciation rate of 5 percent per year starting at $110.75 per
share, the Common Stock price would be $180.52 and the total increase
in shareholder value would be $3,894,200,000 ($69.77 increase per share
x 55.8 million outstanding shares). At an assumed appreciation rate of 10
percent per year starting at $110.75 per share, the Common Stock price
would be $286.84 and the total increase in shareholder value would be
$9,828,200,000 ($176.09 increase per share x 55.8 million outstanding
shares). In the case of the 12,000-share grant to Mr. Jacobs, at assumed
appreciation rates of 5 percent and 10 percent per year starting at
$107.25 per share, the Common Stock price at the end of the 10-year
term of those options would be $174.82 and $277.78, respectively.
2. The options become exercisable with respect to one-third of their
underlying shares on each of the first, second and third anniversaries of
their grant, except that Mr. Reichardt's options become exercisable
upon his retirement if sooner. The exercise price may be paid in cash or
Common Stock or by means of a loan under the Equity Incentive Plan.
See "Other Transactions with Officers and Directors-Equity Incentive
Plan," below. No stand-alone or tandem stock appreciation rights were
granted during 1993.
3. Options to purchase a total of 400,400 shares of Common Stock were
granted during 1993.
4. Since employee stock options may be exercised for only three years
beyond the Company's mandatory retirement age of 65, Mr. Reichardt's
options must be exercised within six years as he is now 62. Accordingly,
the potential realizable values shown for his options are given as of
November 16, 1999. At assumed appreciation rates of 5 percent and 10
percent per year, the Common Stock price would be $148.42 and
$196.20, respectively, on November 16, 1999.
</TABLE>
<PAGE>
<TABLE>
The following table shows the value realized upon exercise of options
during 1993 and certain information about unexercised options at year-end
with respect to the named officers. There were no stock appreciation rights
exercised during the year or outstanding at year-end.
AGGREGATED OPTION EXERCISES DURING 1993 AND YEAR-END OPTION VALUES
<CAPTIONS>
COMMON SHARES UNDERLYING VALUE(1) OF UNEXERCISED
OPTIONS EXERCISED UNEXERCISED OPTIONS ON IN-THE-MONEY OPTIONS(2) ON
DURING 1993 DECEMBER 31, 1993 DECEMBER 31, 1993 ($)
-------------------------- -------------------------------- ------------------------------
SHARES
ACQUIRED VALUE
ON EXERCISE REALIZED
NAME (#) ($)(1) EXERCISABLE(3) UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------ ----------- --------- -------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Carl E. Reichardt ..... 3,700 178,988 384,510 101,670 29,771,547 3,765,809
Paul Hazen ........... 0 0 201,665 80,335 13,925,405 2,955,725
Rodney L. Jacobs....... 0 0 27,835 40,665 1,718,694 1,288,744
Clyde W. Ostler ....... 0 0 47,383 31,000 3,068,153 1,156,047
William F. Zuendt...... 8,350 460,706 89,645 40,005 6,245,736 1,468,613
- ----------
1. "Value" represents the difference between the option exercise price and
the market value of the underlying Common Stock on December 31,
1993, in the case of unexercised options, or on the date of exercise, in
the case of exercised options.
2. An option is "in the money" on a particular date if the market value of
the underlying Common Stock on that date exceeds the option exercise
price.
3. These amounts are not the same as the amounts shown under "Beneficial
Ownership," above, because these amounts do not include shares subject
to options first becoming exercisable after January 31, 1993, but on or
before April 1, 1994.
</TABLE>
Pension Benefits. The Company terminated its defined-benefit
retirement plan on December 31, 1984, and purchased annuities for
participants eligible to receive benefits under such plan. Since the Employee
Retirement Income Security Act of 1974 limited individual annual benefits
payable under the defined benefit retirement plan, benefits that otherwise
would have been payable under the annuities in excess of that limit will be
paid under the Company's Benefits Restoration Program. The combined
annual benefit payable from such annuities and under the Benefits
Restoration Program to each of the named executive officers beginning at
age 65 is as follows: Carl E. Reichardt, $185,226; Paul Hazen, $187,490;
Rodney L. Jacobs, $27,573; Clyde W. Ostler, $108,638; and William F.
Zuendt, $141,619.
REPORT OF MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The Management Development and Compensation Committee (the
"Committee") of the Board of Directors, which consists solely of non-officer
directors, has provided the following report on executive compensation:
The Committee has responsibility for an executive compensation
program designed to attract, motivate, reward and retain the management
talent required to lead the Company, achieve its business objectives and
increase shareholder value. An executive's compensation consists of three
elements-base salary, bonus and option grants-which are determined
separately based on different sets of criteria. The Committee and the
management of the Company believe that the latter two elements of
compensation should be primarily based on the performance of both the
Company and the executive officer. In addition, each element of
compensation is evaluated relative to positions of similar responsibility at the
other institutions that comprise Wells Fargo's peer group of the 15 largest
U.S. bank holding companies (the "Peer Group").
BASE SALARIES
Generally, base salaries for executives, including the Chief Executive
Officer, are designed to be competitive with the median salary for positions
of similar responsibility in the Peer Group. Salaries are then adjusted up or
down based on the strategic importance of the position and the skills of the
executive. Generally, increases in salary occur only in response to market
changes or when warranted by an executive's change in responsibilities.
Based on the Committee's evaluation of competitive compensation
information, the salaries of several executive officers, including the Chief
Executive Officer, were increased effective March 1, 1994.
BONUSES
Annual cash bonus awards vary substantially depending primarily on the
performance of the Company. The key shareholder performance criteria are
the Company's return to its shareholders compared to the returns of our
Peer Group, the 50 bank holding companies represented in the Keefe,
Bruyette & Woods, Inc., 50 Total Return Index for Bank Holding
Companies (the "KBW 50") and the 500 stocks represented in the Standard
& Poor's 500 Stock Price Index (the "S&P 500"). Additional Company
performance criteria include measures of Company profitability. In addition,
consideration is given to Peer Group compensation information and
individual performance. To the extent that executive positions, including the
Chief Executive Officer, can be matched with positions in the Peer Group,
bonuses are also keyed to members of the Peer Group with similar financial
performance. This year, bonuses are competitive with those in the upper
range of bonuses paid by the Peer Group in 1992. The performance of
individual executive officers, including the Chief Executive Officer, in
meeting the Company financial goals referred to below and other relevant
business unit financial plans is always considered. The number of variables
under review, including the Company's performance relative to its annual
financial plan, prevents any strict correlation between any one performance
factor and an executive's annual bonus. An executive's performance is also
evaluated in such areas as leadership, vision, initiative, personnel selection
and retention and community relations. In awarding bonuses, all of the
foregoing factors are evaluated in a qualitative manner and are not given
preassigned weights.
1993 PERFORMANCE
Results for the Company for 1993 follow:
* The return to our shareholders in 1993, assuming full reinvestment of
dividends, was 73 percent, which was the highest of our Peer Group.
This compares favorably with 15 percent on average for the Peer
Group, 10 percent on average for the companies comprising the S&P
500 and 6 percent for the bank holding companies in the KBW 50.
* Wells Fargo's 1993 performance significantly improved from 1992. The
Company's profitability improved steadily through the course of the
year, and by the fourth quarter reached levels last attained in 1990.
Full-year return on equity of 16.74 percent was below the median of
the Peer Group, while fourth-quarter return on equity of 19.85 percent
was in the upper range of the Peer Group. The Company met or
exceeded all financial goals for 1993, including measures of
profitability, credit quality and capital adequacy, which improved
markedly from 1992.
* Our five-year return to shareholders of 162 percent compares
favorably with the 97 percent average for the companies comprising
the S&P 500 and the 82 percent average for the bank holding
companies in the KBW 50. Our 10-year return to shareholders of 870
percent compares favorably with the 300 percent average for the
companies comprising the S&P 500.
LONG-TERM INCENTIVE COMPENSATION
Stock options motivate executives to make decisions leading to sustained
growth in shareholder value. Our focus in granting awards, in order of
importance, is on the executive's potential impact on shareholder value,
performance and strategic responsibility. Performance is always considered
in making option grants, with the exception that a grant may be awarded to
a new executive if his or her position has substantial strategic importance
and potential impact on shareholder value. Stock options are an additional
tool used to ensure that the total compensation of our executives is generally
competitive, and we analyze individual grants on a Peer Group basis when
data is available. The grants in 1993 varied from the median to the upper
range when compared to the Peer Group. All of the foregoing factors are
evaluated in a qualitative manner and are not assigned predetermined
weights. Stock options are granted only at current market price, thereby
linking an executive's potential compensation to shareholder gain and
encouraging management to operate the Company from the perspective of
an owner.
Based on these considerations, the Committee awarded 1993 stock option
grants to the five officers named in the above table, "Option Grants During
1993." The award to the Chief Executive Officer was based, among other
things, on the Committee's view of his past and expected future
contributions to the long-term success of the Company, a review of Peer
Group compensation information, his total compensation and his prior
long-term compensation awards. These factors are evaluated in a qualitative
manner and are not assigned predetermined weights.
STOCK OWNERSHIP GUIDELINES
In 1993, the Company introduced minimum stock ownership guidelines
for officers at the level of senior vice president and above. These guidelines
support the view that management risk and rewards should have a direct
relationship to shareholder returns. Based on their stock ownership, the
Chief Executive Officer's and the President's investments at risk are among
the largest in the Peer Group and exceed the guidelines set forth by the
Company.
SPECIAL DEDUCTION LIMIT
Section 162(m) of the Internal Revenue Code limits federal income tax
deductions for compensation paid after 1993 to the Company's Chief
Executive Officer and its four other most highly compensated officers to $1
million per year but includes an exception for performance-based
compensation that satisfies certain conditions. The Company's policy is to
make use of this exception so that all bonus and option compensation paid to
its most highly compensated officers for years starting with 1994 will be
deductible in accordance with Section 162(m). For this reason, the Board of
Directors has adopted the Senior Executive Performance Plan and believes
that, if the Plan is approved by shareholders at the annual meeting, bonuses
for 1994 paid under the Plan will qualify for deductibility under Section
162(m). The Company also believes that stock options and stock appreciation
rights granted pursuant to the 1990 Equity Incentive Plan and, if approved
by shareholders at the annual meeting, the new Long-Term Incentive Plan
will also qualify for the performance-based exception to the limits of Section
162(m). Where required to comply with Section 162(m), bonus and option
awards under these plans will be determined by a subcommittee of the
Management Development and Compensation Committee consisting only of
those committee members whose only renumeration from the Company is
paid in their capacity as directors. Because final regulations have not yet
been adopted interpreting Section 162(m), however, there can be no
assurance that deductions will be available for all such compensation.
Paul A. Miller, Chairman
William R. Breuner
Rayburn S. Dezember
Ellen M. Newman
Donald B. Rice
John A. Young
<PAGE>
COMPARATIVE TOTAL RETURN ON COMMON STOCK
The following graphs present the yearly percentage change in the
cumulative total shareholder return on the Common Stock for the five years
and the ten years ended December 31, 1993. The graphs compare the
cumulative total returns during those periods on the Common Stock, the
Standard & Poor's 500 Stock Price Index ("S&P 500") and, in the five-year
comparison only, the Keefe, Bruyette & Woods, Inc., 50 Total Return Index
("KBW 50"), which is not available for the ten-year period shown below. The
KBW 50 is a market-capitalization-weighted stock price index composed of
50 bank holding company stocks. All computations have been made to give
effect to the reinvestment of dividends.
FIVE-YEAR PERFORMANCE COMPARISON
AS OF
DECEMBER 31, WELLS FARGO S&P 500 K B W 50
- ------------ ----------- ------- --------
1988............. $100 $100 $100
1989............. 127 132 119
1990............. 105 127 85
1991............. 111 166 135
1992............. 151 179 172
1993............. 262 197 182
Assuming the reinvestment of all dividends, a hypothetical investment of
$100 made as of December 30, 1988, in the Common Stock of the Company,
and pro rata in the 500 stocks comprising the S&P 500 and in the 50 stocks
included in the KBW 50 would have been worth $262, $197 and $182,
respectively, as of December 31, 1993.
TEN-YEAR PERFORMANCE COMPARISON
AS OF
DECEMBER 31, WELLS FARGO S&P 500
- ------------ ----------- -------
1983............. $100 $100
1984............. 124 106
1985............. 174 140
1986............. 287 166
1987............. 251 174
1988............. 367 203
1989............. 470 268
1990............. 389 259
1991............. 413 338
1992............. 561 364
1993............. 970 400
Assuming the reinvestment of all dividends, a hypothetical investment of
$100 made as of December 31, 1983, in the Common Stock of the Company
and pro rata in the 500 stocks included in the S&P 500 would have been
worth $970 and $400, respectively, as of December 31, 1993.
OTHER TRANSACTIONS WITH OFFICERS AND DIRECTORS
Executive Loan Plan. The Company's Executive Loan Plan was adopted
by the Board of Directors in 1984. The persons eligible under the Plan to
receive mortgage or general purpose loans or loan guarantees from the
Company include executive officers of the Company and are selected by the
chairman of the board or the president pursuant to authority delegated by
the Management Development and Compensation Committee, which
administers the Plan. Loans bear interest at the applicable rate in effect
under Section 1274(d) of the Internal Revenue Code at the time the loan is
made (currently between 3.94 and 6.35 percent for loans made in March
1994, depending on the term of the loan and certain other factors) and may
be reduced by up to 5 percentage points while the borrower is an employee
of the Company.
Mortgage loans must be for the purpose of purchasing, constructing or
improving the executive's principal residence or refinancing outstanding
indebtedness with respect to such residence, cannot have a term exceeding
30 years and, when aggregated with other outstanding debt secured by such
residence, must have a maximum principal balance of the lesser of
$1,500,000 or 100 percent of the fair market value of such residence. General
purpose loans may not have a term exceeding 10 years and must be for
personal household expenses, education or support of dependents,
extraordinary medical or dental expenses, income taxes or other purposes
deemed appropriate by the Management Development and Compensation
Committee. General purpose loans cannot be used for investment purposes
or to acquire shares of Common Stock under a stock option or similar plan of
the Company or its subsidiaries, although such loans are available under the
Equity Incentive Plan. See "Equity Incentive Plan," below. The maximum
principal balance of all general purpose loans to the same executive cannot
exceed the lesser of $250,000 or 150 percent of the executive's annual base
salary.
The following table gives information regarding the unpaid principal
balances under the Plan for those of the five most highly compensated
executive officers in 1993 with loans under the Plan and for all 1993
executive officers as a group during the time they served as such.
BALANCE AS OF MAXIMUM
DECEMBER 31, BALANCE
1993 DURING 1993
Paul Hazen ---------------- -------------
President ......................... $1,444,322 $1,460,489
Clyde W. Ostler
Vice Chairman ..................... $2,207,209 $2,214,412
All 1993 Executive Officers as a
Group(1)........................... $8,404,962 $8,561,608
- ----------
1. The balance as of December 31, 1993, represents loans to seven persons;
the maximum balance during 1993 represents loans to eight persons.
Equity Incentive Plan. The Management Development and
Compensation Committee may authorize an extension of credit from the
Company to an employee (including an employee who is an officer or director
of the Company) to assist the employee in the purchase of Common Stock
under the Plan. Under current policy adopted pursuant to provisions of the
Plan, the Company may extend or guarantee loans with a maximum term of
six years. Loans extended under the Plan bear interest at a variable rate
that is adjusted each year to equal the greater of the average annual rate for
three-year U.S. Treasury notes for the immediately preceding calendar
year, currently estimated to be 4.44 percent during 1994, and the applicable
rate in effect under Section 1274(d) of the Internal Revenue Code at the
time the loan is made (currently between 3.94 and 4.01 percent for loans
made in March 1994, depending on the term of the loan and certain other
factors).
<PAGE>
The following table gives information about the unpaid principal balances
under the Plan for those of the five most highly compensated executive
officers in 1993 with loans under the Plan and for all 1993 executive officers
as a group during the time they served as such.
BALANCE AS OF MAXIMUM
DECEMBER 31, BALANCE
1993 DURING 1993
Carl E. Reichardt -------------- ------------
Chairman of the Board ........... $1,119,974 $1,119,974
Paul Hazen
President ....................... $3,003,590 $3,003,590
Clyde W. Ostler
Vice Chairman ................... $ 107,000 $ 302,322
All 1993 Executive Officers as a
Group(1) .......................... $4,591,688 $4,787,010
- ----------
1. The balance as of December 31, 1993, and the maximum balance during
1993 represent loans to five persons.
Other Transactions. The Bank has had and expects in the future to have
banking transactions in the ordinary course of its business with many of the
Company's directors and executive officers and their associates, including
transactions with corporations of which such persons are directors, officers
or controlling shareholders, on substantially the same terms (including
interest rates and collateral) as those prevailing at the time for comparable
transactions with others. The Company believes that the loans included
among such transactions did not involve more than the normal risk of
collectibility or present other unfavorable features at the time such loans
were made.
Loans by the Bank to directors and executive officers of the Company
and to entities controlled by them are subject to limitations as to amount
and purpose prescribed by the Federal Reserve Act. For example,
extensions of credit by the Bank in excess of $500,000 to directors and
executive officers of the Company and their related interests require the
prior approval of a majority of the disinterested directors of the Bank. All
extensions of credit to such persons must be made on nonpreferential terms.
In addition, the Bank may not extend credit in excess of $100,000 to any
executive officer of the Bank, which includes most executive officers of the
Company, unless the purpose is to finance the education of the officer's
children or the purchase, construction, maintenance or improvement of the
officer's residence.
Because of the complexity of the reporting requirements imposed on the
Company's directors and executive officers under Section 16 of the Securities
Exchange Act of 1934, the Company has assumed responsibility for
preparing and filing the reports of changes in beneficial ownership required
of these persons by this statute. Based on a review of beneficial ownership
reporting forms and representations of its directors, executive officers and
10 percent shareholders, the Company believes that such persons were in
compliance during 1993 with these reporting requirements, except that a
timely filed report prepared by the Company for Guy Rounsaville, Jr., an
executive officer, inadvertently failed to describe completely an exercise and
sale transaction in August 1993. A corrective amendment was filed in
December 1993.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following directors served as members of the Management
Development and Compensation Committee during 1993: Paul A. Miller,
Chairman; William R. Breuner; Rayburn S. Dezember; Ellen M. Newman;
Donald B. Rice; and John A. Young. Of these, Messrs. Breuner, Dezember
and Miller and Mrs. Newman, members of their families and entities
controlled by them individually had loans or other extensions of credit
outstanding from the Bank during 1993 made in the ordinary course of
business, on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons. Such loans did not involve more than the normal risk of
collectibility or present other unfavorable features.
<PAGE>
PROPOSAL 2
APPROVAL OF NEW LONG-TERM INCENTIVE PLAN
The Wells Fargo & Company Long-Term Incentive Plan (the "LTIP" or
the "Plan") was adopted by the Board of Directors of the Company on
February 15, 1994, subject to and effective upon approval by the
shareholders at the annual meeting. The new LTIP is the successor to the
existing 1990 Equity Incentive Plan (the "1990 EIP"), approved by
shareholders in 1990, which is itself the successor to the original Equity
Incentive Plan, approved by shareholders in 1982. Upon approval by the
shareholders, the LTIP will supersede the 1990 EIP and no further grants
will be made under the latter. No awards may be made under the LTIP
after February 14, 2004. A copy of the new LTIP is attached to this Proxy
Statement as Exhibit A. The following description of the LTIP is a summary
and does not purport to be fully descriptive. Reference is made to Exhibit A
for more detailed information. Approval of the LTIP requires the affirmative
vote of the holders of a majority of the shares entitled to vote at the
meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE NEW
LTIP.
INTRODUCTION
While similar to the existing 1990 EIP, in that the LTIP includes
provisions for the same kinds of awards that could have been made under
the 1990 EIP, the LTIP varies from the 1990 EIP in certain respects. The
following are certain of the more important differences. The LTIP provides
for awards of restricted shares in addition to the stock options, stock
appreciation rights and share rights that could have been awarded under the
1990 EIP. Stock appreciation rights awarded under the LTIP need not be in
tandem with stock options, as was the case under the 1990 EIP, but may
stand alone. Share rights under the LTIP can be made payable entirely in
cash rather than 50 percent in cash and 50 percent in stock, as under the
1990 EIP. Employee stock options granted under the LTIP can be granted
with exercise prices at or, unlike the 1990 EIP, above the then current value
of the Common Stock and, except for incentive stock options, can have
terms longer than 10 years, the maximum provided in the 1990 EIP. The
LTIP also provides for grants to recipients not limited to present key
employees of the Company.
The purpose of the LTIP is to promote the interests of the Company and
its subsidiaries by offering incentives and rewards in order to encourage
recipients to view the Company as owners, create shareholder value and
continue in the employ or service of the Company or its subsidiaries.
AWARDS
The LTIP provides for grants of options to purchase Common Stock,
share rights (entitling grantees to receive Common Stock in the future
subject to conditions), restricted shares of Common Stock (the retention and
transfer of which are subject to conditions), stock appreciation rights, or
SAR's (entitling the grantee to receive the difference in value between the
underlying Common Stock on the date of exercise and the date of grant), or
a combination of them. Grants under the LTIP may be made a portion of a
tandem award, whereby one portion of the award becomes payable or free of
restrictions only to the extent that the other portion of the award is not
exercised or is forfeited.
ADMINISTRATION
The LTIP will be administered by the Management Development and
Compensation Committee of the Company's Board of Directors (the
"Committee") or a subcommittee thereof. Awards under the LTIP intended
to qualify for exemption from the limitation imposed by Section 162(m) of
the Internal Revenue Code (applicable to compensation paid to an executive
officer in excess of $1 million per year) will be made by a subcommittee
which, to the extent required by Section 162(m), consists only of Committee
members who receive compensation from the Company only as directors.
The Committee is composed of non-employee directors, and no member of
the Committee is eligible to participate in the LTIP. In the case of awards
to persons who are not statutory insiders subject to the reporting provisions
and short-swing trading restrictions of Section 16 of the Securities Exchange
Act of 1934, the LTIP would permit the Board to delegate administration to
a committee on which employee directors would be eligible to serve. No such
delegation is presently contemplated.
ELIGIBILITY
The persons eligible to receive awards under the LTIP are such
employees of the Company or its subsidiaries (including officers, whether or
not they are directors) as the Committee from time to time may select.
Awards may also be made to former employees of corporations acquired by
or merged with the Company in replacement or assumption of awards
granted by the disappearing corporation and to others providing services to
the Company or its predecessors, excluding non-employee directors of the
Company.
DESCRIPTION OF COMMON STOCK
The Company's Restated Certificate of Incorporation authorizes it to
issue up to 150 million shares of Common Stock, par value $5.00 per share,
upon further authorization from time to time by the Board of Directors. As
of February 18, 1994, the record date for the annual meeting, there were
55,827,132 shares of Common Stock issued and outstanding. Holders of
Common Stock are entitled to one vote for each share of Common Stock
held. All shares of Common Stock issuable under the LTIP will be fully paid
and nonassessable. Holders of Common Stock are entitled to receive such
dividends as are declared by the Board of Directors out of funds legally
available therefor, subject to the limitations described below. In the event of
liquidation, holders of Common Stock are entitled to receive pro rata any
assets distributable after payment of liabilities and the liquidation
preference, if any, on any shares of preferred stock then outstanding. There
are no conversion, preemptive or redemption rights of the Common Stock.
The dividend rights and liquidation preferences relating to the preferred
stock are superior to those applicable to the Common Stock. The Company
will apply to list the Common Stock to be issued under the Plan for trading
on the New York Stock Exchange.
SHARES AVAILABLE; AWARD LIMITS
The Common Stock available for the LTIP may be either newly issued or
treasury shares. Except as provided below, the total number of shares of
Common Stock issuable under the Plan may not exceed 2,500,000, of which
no more than 25 percent may be issued as restricted shares or may be
subject to share rights. Shares not issued because of the termination or
cancellation of an award either under the LTIP or the 1990 EIP are not
counted against this limit and may be granted again. Except in the case of
shares subject to incentive stock options or awards to statutory insiders
subject to Section 16 of the Securities Exchange Act of 1934, shares
awarded under either the LTIP or the 1990 EIP which are either (i) subject
to an option exercised by delivering the same or a greater number of shares
or (ii) not issued because cash is issued instead will not count against this
limit. Thus, under the limited circumstances described in the two
immediately preceding sentences, shares of Common Stock originally made
subject to awards under the 1990 EIP may be made subject to awards under
the LTIP. Similarly, except for awards to statutory insiders, restricted
shares awarded under the LTIP which are forfeited or repurchased at the
same price paid by the grantee will also not count against the foregoing
limit. In addition, disregarding the adjustments discussed above in this
paragraph, no individual may receive awards covering more than 25 percent
of all shares initially or subsequently authorized under the LTIP. Finally, all
of these limits and the terms of individual awards are subject to appropriate
adjustment in the case of stock dividends, stock splits, combination of
shares, mergers and other corporate changes.
In order to assure their exemption from the limitation of Section 162(m)
of the Internal Revenue Code, options granted under the 1990 EIP after
February 17, 1993, will be assumed under the LTIP. Shares underlying such
assumed options will not count against the 2,500,000 aggregate share limit,
but will count against the 25 percent individual limit with respect to any
grantee of an assumed option (computed as 25 percent of 2,500,000 plus the
aggregate number of assumed options).
For purposes of comparison, the total number of shares of Common
Stock authorized for issuance under the 1990 EIP was also 2,500,000, and
annual awards under the 1990 EIP were also limited to grants relating to
800,000 shares. If the new LTIP is approved by shareholders, no further
stock options, share rights or stock appreciation rights will be granted under
the 1990 EIP. The total of all shares of Common Stock subject to
outstanding options and share rights as of February 28, 1994, combined with
the 2,500,000 shares that would be available under the new LTIP did not
exceed 9.05 percent of the shares of Common Stock then outstanding.
TERMS OF OPTIONS
Options granted under the LTIP may be either "incentive stock options"
qualifying under Section 422 of the Internal Revenue Code or nonstatutory
options. Incentive options may be granted only to employees. To the extent
that the aggregate value of shares (determined at the time of grant) subject
to incentive stock options first becoming exercisable in any one year exceeds
$100,000 (or such greater amount as may be permitted under the Code),
such options shall be treated as nonstatutory options. Options will have an
option price no less than the value of the Common Stock at the time of
grant; provided, however, that in the case of a nonstatutory option granted
in tandem with or in substitution for a previously granted SAR, the exercise
price per share must be no less than the value of the Common Stock when
the SAR was granted. Such options will be exercisable on such date or dates
during such period and for such number of shares as is determined by the
Committee, except that no incentive option granted under the LTIP can
have a term in excess of ten years. An option may also provide for the
payment of dividend equivalents for the period prior to exercise, subject to
such limitations as the Committee may determine.
Payment of the option price may be made by delivery of a promissory
note as authorized by the Committee, the delivery of other Common Stock,
the proceeds of a simultaneous sale of the underlying Common Stock or
other consideration approved by the Committee, including the surrender of
an outstanding award.
The terms of each option shall include the circumstances, as determined
by the Committee, under which the option will be exercisable, if at all, in
the event an optionee ceases to provide services to the Company or one of
its subsidiaries.
TERMS OF STOCK APPRECIATION RIGHTS
A stock appreciation right, or SAR, gives its holder the right to receive
an appreciation distribution from the Company equal to the difference
between the value of the Common Stock subject to the right at the time of
exercise and an amount not less than the value of such Common Stock on
the date the right was granted. In the case of SAR's granted in tandem with
or substitution for a previously granted option, the appreciation distribution
may be measured using an amount not less than the value of the Common
Stock on the date the option was granted. The appreciation distribution will
be paid in Common Stock, cash or a combination thereof. An SAR may
provide for the payment of dividend equivalents for the period prior to
exercise, subject to such restrictions as the Committee may determine.
TERMS OF RESTRICTED SHARES
A restricted share is a share of Common Stock issued under the LTIP
subject to restrictions on retention and transfer determined by the
Committee. These restrictions may include repurchase or forfeiture rights in
favor of the Company. The Committee may determine whether any
consideration other than the services of the grantee must be paid for
restricted shares.
TERMS OF SHARE RIGHTS
A share right gives a grantee the right to receive shares of Common
Stock (together with dividend equivalents payable in cash or stock if so
determined by the Committee) subject to such restrictions as the Committee
may impose. The Committee may require, or permit the grantee to elect,
that share rights be paid entirely in cash or partly in shares of Common
Stock and partly in cash. The Committee may determine whether any
consideration (other than the services of the grantee) must be paid for
Common Stock issued pursuant to share rights. The Committee may also
permit a grantee to defer the receipt of a payment in settlement of a share
right.
EXTENSION OF CREDIT
The Committee may authorize an extension of credit from the Company
to a grantee (including an employee who is an officer or director of the
Company) to assist in the purchase of Common Stock issuable pursuant to an
LTIP award. The credit may take the form of (i) a loan by the Company, (ii)
permitting the purchase price to be paid in installments or (iii) the guarantee
by the Company of a third-party loan. The maximum credit available is the
purchase price of the Common Stock to be acquired plus the maximum
federal and state income and employment tax liability arising out of the
acquisition. The remaining terms of the credit, including security, if any,
interest rate and terms of repayment, will be subject to the discretion of the
Committee. Credit outstanding under the 1990 EIP is described above. See
"Proposal 1-Other Transactions with Officers and Directors - Equity
Incentive Plan."
ACCELERATION OF AWARDS
In the event the Company is acquired, reorganized or liquidated or
undergoes a change in control, the Committee may accelerate and pay
awards under the LTIP.
AWARD MODIFICATION; PLAN AMENDMENT AND TERMINATION
The Committee may modify or waive any or all of the terms of any
outstanding award; provided, however, that without the consent of the
grantee and except as may be necessary to qualify an award as an incentive
option, no such modification or waiver may adversely affect the grantee's
rights thereunder. With certain exceptions, the Board of Directors may
amend, suspend or discontinue the LTIP in whole or in part at any time.
Without shareholder approval, however, no modification of the Plan by the
Board of Directors can materially increase the number of shares of Common
Stock which may be issued under the Plan (except for certain adjustments in
connection with the corporate changes described above), materially modify
the eligibility requirements for awards under the Plan or make any other
change which in the Board's judgment requires shareholder approval under
applicable law or regulation. No awards may be made under the LTIP after
February 14, 2004.
MISCELLANEOUS
The LTIP permits the Committee to provide for income and employment
withholding taxes by the payment of cash in lieu of a portion of the Common
Stock issuable pursuant to an award or by the delivery of shares already
held by the grantee.
The terms of options, share rights, restricted shares and stock
appreciation rights may vary from grant to grant. No options, share rights,
restricted shares or stock appreciation rights may be transferred except
upon death.
For all purposes under the Plan, the value of the Common Stock on a
particular date is the closing price reported for it on the New York Stock
Exchange Composite Tape for the trading day preceding such date, unless
the Committee determines that such price does not reflect fair market value
in which event the Committee will determine it.
FEDERAL INCOME TAX CONSEQUENCES
Incentive Stock Options. No taxable income will be recognized by the optionee
upon the grant of an incentive stock option under the ltip, and no taxable
income is recognized at the time the option is exercised. For purposes of the
alternative minimum tax, however, an optionee will incur alternative minimum
taxable income upon exercise of an incentive stock option equal to the amount of
ordinary income that the optionee would have recognized upon exercise had the
incentive stock option been a nonstatutory option. If the optionee does not make
a disposition of the purchased shares within two years of the date of the option
grant, nor within one year of the day the shares are transferred to the
optionee, any profit or loss recognized upon a subsequent disposition will be
long-term capital gain or loss.
Generally, if the optionee disposes of the purchased shares within either
the two-year period or one-year period mentioned above, the optionee will
recognize ordinary income in the year of disposition equal to the amount by
which the fair market value of the shares on the date the option was
exercised exceeds the exercise price. Any additional gain recognized upon
the disposition will be capital gain, which will be long-term if the shares are
held for more than one year. If the disposition is an arm's-length sale or
exchange with an unrelated party, however, the ordinary income will be
limited to the amount by which the lesser of the amount realized or the fair
market value at the date of exercise exceeds the exercise price.
So long as the optionee does not dispose of any shares purchased under
an incentive stock option before the expiration of the two- and one-year
holding periods described two paragraphs above, no business expense
deduction may be taken by the Company. To the extent that the optionee
must recognize ordinary income upon disposition of his or her stock, the
Company may deduct a like amount from its taxable income in the year
recognized by the optionee.
Nonstatutory Options. No taxable income would be recognized by the
optionee upon the grant of a nonstatutory stock option under the LTIP.
Generally, the optionee will recognize ordinary income on the date the option
is exercised. Such ordinary income will be in an amount equal to the excess
of the fair market value of the purchased shares on such date of recognition
over the exercise price. The Company may deduct from its taxable income
an amount equal to the optionee's ordinary income in the year recognized by
the optionee.
Stock Appreciation Rights. If a stock appreciation right granted under
the LTIP is exercised for Common Stock or a combination of Common Stock
and cash, the grantee will recognize ordinary income equal in amount to the
fair market value of the Common Stock as of the later of the date of the
exercise or the date of Committee approval of the exercise, if required, plus
any cash received. The Company may deduct from its taxable income an
amount equal to the grantee's ordinary income in the year recognized by the
grantee.
Restricted Shares. A holder of restricted shares recognizes ordinary
income with respect to such shares at the time the restrictions lapse or, if
the holder so elects, at the time of receipt of the shares. The amount of
ordinary income is the fair market value of the shares at the applicable time,
less any consideration paid by the holder for the shares. The Company will
be entitled to deduct from its taxable income an amount equal to the
ordinary income recognized by the holder in the year so recognized.
Dividends paid with respect to restricted shares will be taxable
compensation income to the holder and the Company will be entitled to a
corresponding deduction, unless the holder elects to be taxed on such shares
at the time of receipt, in which case the holder would recognize taxable
dividend income upon receipt of the dividends and the Company would not
be entitled to any corresponding deduction with respect to such dividends.
Share Rights. A grantee of share rights under the Plan would recognize
no taxable income by reason of such grant. When the conditions precedent to
the payment of cash or issuance of shares pursuant to such share rights are
satisfied, however, the grantee would recognize ordinary income equal in
amount to the cash received and the fair market value on the date of
issuance of the shares issued pursuant to the share rights less any cash
consideration paid by the grantee. Any cash dividend equivalent paid to a
grantee of share rights is ordinary income. The Company will be entitled to
deduct from its taxable income an amount equal to the grantee's ordinary
income in the year recognized.
Certain Restrictions. If a Plan participant is an officer subject to the
insider reporting provisions and short-swing trading restrictions of Section
16 of the Securities Exchange Act of 1934 and does not otherwise elect, any
ordinary income recognized upon the acquisition of Common Stock under an
award or upon the premature disposition of Common Stock acquired under
an incentive stock option would be determined as of the date of the lapse of
such restrictions, to the extent applicable to such shares, and the
participant's holding period would commence on that date.
Special Deduction Limits. If an award is accelerated as a result of a
change in control of the Company, all or a portion of the value of the award
at that time may be a parachute payment for purposes of the Internal
Revenue Code's excess parachute provisions. Those provisions generally
provide that if parachute payments exceed three times a grantee's average
compensation for the five tax years preceding the change in control, the
Company loses its deduction and the grantee is subject to a 20 percent
excise tax for the amount of the parachute payments in excess of such
average compensation.
Recently enacted Section 162(m) of the Internal Revenue Code limits
federal income tax deductions for compensation paid after 1993 to the
Company's Chief Executive Officer and its four other most highly
compensated officers to $1 million per year, but contains an exception for
performance-based compensation that satisfies certain conditions. The
Company believes that stock options and stock appreciation rights granted
pursuant to the LTIP will qualify for the performance-based compensation
exception to the deduction limit. Because final regulations have not been
issued under Section 162(m), however, there can be no assurance that such
options or stock appreciation rights will so qualify.
ACCOUNTING TREATMENT
The initial granting of options will not result in any charge to expense in
the Company's consolidated statement of income. Provided the number of
shares to be acquired and the exercise price are known on the grant date, no
charge to expense subsequently occurs unless the optionee, instead of
exercising the option, surrenders it to exercise a tandem stock appreciation
right. If the option grant is subject to performance criteria and other factors
such that the number of shares of Common Stock that may be acquired
cannot be determined at the time of grant, compensation expense will be
recorded for, and adjusted for changes in, any net increase in appreciation of
the fair market value of the Common Stock subject to the option over the
option price until the date upon which the number of shares of Common
Stock that may be acquired is known. If a Plan participant is granted a
stand-alone stock appreciation right and, to the extent that options which
include a tandem stock appreciation right are or are likely to be surrendered
in order to exercise the stock appreciation right, compensation expense
arises. For a stand-alone stock appreciation right, an expense will be
recorded for, and adjusted for changes in, any net increase in appreciation of
the fair market value of the Common Stock over the fair market or other
value established at the date of grant until the time of exercise. The expense
recorded for a stock appreciation right issued in tandem with a stock option
will be equal to, and adjusted for changes in, any net increase in
appreciation of the fair market value of the Common Stock subject to an
option over the option price until the time the stock appreciation right is
exercised.
The Company will recognize compensation expense for grants of
restricted shares based on the fair market value of the Common Stock
(disregarding restrictions) at the time of grant less the consideration to be
received, if any, for the shares granted. This expense will be recorded
during the service period, which generally will be the period the shares are
subject to restrictions on retention and transfer (e.g., forfeiture or
repurchase by the Company).
The granting of share rights results in compensation expense to the
Company equal in amount to the fair market value of the underlying shares
of Common Stock on the date of grant less any consideration to be received.
This expense will generally be recorded over the vesting period for the
share rights, but the expense will be subject to periodic adjustment
depending on any performance criteria which may be attached to the share
rights, cash settlements and other factors.
Any cash dividend equivalents paid to grantees of options, stock
appreciation rights or share rights will result in compensation expense to the
Company which will be recognized during the period earned. Cash dividends
paid to holders of restricted stock will be recorded either as an expense or
as a reduction in retained earnings.
The number of options, stock appreciation rights and share rights
outstanding will be considered in computing the Company's earnings per
share and, if material, would reduce the amount otherwise reported.
In 1993 the Financial Accounting Standards Board proposed changing
the accounting treatment for stock-based compensation, including stock
options. Under the proposal, which has generated considerable public
comment, the Company would recognize an expense with respect to stock
options granted under the LTIP equal to the estimated fair value of such
options as of the date of grant. Expense recognition would be required for
stock options granted after 1996, although earlier application would be
permitted. Disclosure of the pro forma effect on net income and earnings per
share would be required for stock options granted after 1993 but prior to
application of the expense recognition provisions of the proposal. It is
impossible to forecast whether or in what form such proposal may be
adopted.
<PAGE>
<TABLE>
NEW PLAN BENEFITS
Since awards under the LTIP will be discretionary, awards under the
LTIP for the current fiscal year are not presently determinable. For
purposes of comparison, the following table contains information about
awards made and benefits received under the Company's 1990 EIP during
1993 to the named executive officers and groups indicated. All awards
granted were either stock options or share rights. Approximately 770
persons received awards in respect of 1993 under the 1990 EIP; it is not
anticipated that the number of persons receiving awards in respect of 1994
under the LTIP would be substantially greater. No non-officer nominee for
election as a director and no non-officer director or associate of any nominee,
director or executive officer of the Company received awards under the 1990
EIP during 1993. No person other than those shown in the table below
received more than 5 percent of all stock options awarded under the 1990
EIP during 1993. On February 28, 1994, the closing price of the Common
Stock in New York Stock Exchange consolidated trading was $138 per
share.
BENEFITS UNDER 1990 EQUITY INCENTIVE PLAN
DURING 1993
<CAPTIONS>
NUMBER OF
NUMBER OF SHARES OF COMMON
SHARES OF COMMON AVERAGE EXERCISE STOCK UNDERLYING NET VALUE
STOCK UNDERLYING PRICE OF OPTIONS SHARE RIGHTS REALIZED FROM
NAME OPTIONS GRANTED GRANTED(1) GRANTED(2) EXERCISED OPTIONS
---- ----------------- ---------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Carl E. Reichardt
Chairman and Chief Executive
Officer.......................... 50,000 $110.75 0 $ 178,988
Paul Hazen
President ....................... 40,000 $110.75 0 0
Rodney L. Jacobs
Vice Chairman ................... 27,000 $109.19 0 0
Clyde W. Ostler
Vice Chairman ................... 15,000 $110.75 0 0
William F. Zuendt
Vice Chairman ................... 20,000 $110.75 0 $ 460,706
All 1993 Executive Officers as a
Group ........................... 233,000 $110.57 500 $7,490,904
Non-Executive Officers and Other
Employees as a Group ........... 167,400 $110.75 110,145 $4,216,654
- ----------
1. The options expire on the tenth anniversary of their grant, except that
Mr. Reichardt's options expire three years after he reaches age 65, the
Company's mandatory retirement age. The options become exercisable
with respect to one-third of their underlying shares on each of the first,
second and third anniversaries of their grant, except that Mr.
Reichardt's options become exercisable upon his retirement if sooner.
2. The share rights entitle grantees to one share of Common Stock for each
share right awarded after a period of 51 or 60 months, depending on the
grant, provided the grantee is still employed by the Company at that
time.
</TABLE>
<PAGE>
PROPOSAL 3
APPROVAL OF NEW SENIOR EXECUTIVE PERFORMANCE PLAN
The Wells Fargo & Company Senior Executive Performance Plan (the
"SEPP" or the "Plan") was adopted by the Board of Directors on February
15, 1994, subject to approval by the shareholders at the annual meeting. For
the officers eligible to participate in the new SEPP, it will supersede the
discretionary cash bonus plan presently in effect. A copy of the new SEPP is
attached as Exhibit B to this Proxy Statement. The following description of
the SEPP is a summary and does not purport to be fully descriptive.
Reference is made to Exhibit B for more detailed information. Approval of
the SEPP requires the affirmative vote of the holders of a majority of the
shares voting at the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE NEW SEPP.
INTRODUCTION
Section 162(m) of the Internal Revenue Code was signed into law on
August 10, 1993, and provides that, effective January 1, 1994, publicly
owned corporations like the Company may not deduct compensation in
excess of $1 million per year paid to the Chief Executive Officer and the four
other most highly paid executive officers unless the compensation is
performance-based and paid under a shareholder-approved plan that satisfies
certain conditions of Section 162(m). The new SEPP provides for the award
of annual cash bonuses for each year through 1998 to the Chief Executive
Officer, the President and each Vice Chairman if a profitability target set for
each year is met. The SEPP is intended to promote the interest of the
Company by providing incentives and rewards to its most senior executive
officers and to qualify their compensation as performance-based within the
meaning of Section 162(m). Because final regulations have not been issued
under Section 162(m), however, there can be no assurance that such
compensation will so qualify. The Plan is administered by the Management
Development and Compensation Committee of the Board of Directors or a
subcommittee that meets the requirements of Section 162(m) (the
"Committee"). The Plan is not a guarantee of any bonus or continued
employment to any participant.
ELIGIBILITY
To participate in the Plan, the Chief Executive Officer, President and
each Vice Chairman must be designated by name or position as eligible by
the Committee no later than March 31 during a year the Plan is in effect or
by such earlier date as may be required by Section 162(m). No executive
may participate in the Plan for any year in which he or she terminates
employment for any reason other than normal retirement, death, disability
or involuntary termination without cause. In the event of termination for
any of such reasons, the Committee may reduce or cancel the participation
of the executive. No executive subject to the SEPP may participate in any
other Company incentive or bonus plan unless approved by the Committee.
BONUS POOL; SHARES
Cash bonuses under the SEPP are awarded out of a pool whose size is
determined by the Committee no later than March 31 in the year in respect
of which awards are made or by such earlier date as may be required by
Section 162(m). The Committee first sets a target threshold for return on
common equity ("ROE"), in no event less than 8 percent. The Committee
then determines the percentage of net income applicable to Common Stock
in excess of the ROE target threshold, never more than 4 percent, which
will fund the pool.
In determining the size of the pool, the Committee shall adjust annual
net income applicable to Common Stock to disregard the following if they
have a material effect: changes in tax rates and unusual or infrequent events
like restructuring charges, sale of a business or investment securities,
litigation losses, the cumulative effect of changes in accounting principles
and natural disasters.
No participant's share in the pool may exceed 30 percent. The exact size
of each participant's share must be determined by the Committee no later
than March 31 of the calendar year in respect of which the bonuses are
awarded or by such earlier date as may be required by Section 162(m).
Share size may be determined by position or name and may be prorated for
a partial year of service. The final payout must be approved by the
Committee and shall occur as soon as practical after the Company closes it
financial books for the year. The Committee may reduce, but not increase,
an executive's award in its sole discretion based on the performance of the
Company or the executive.
NEW PLAN BENEFITS
For 1994, the ROE target threshold has been set at 10 percent and the
specified percentage at 2-1/2 percent of net income applicable to Common
Stock in excess of the ROE target threshold. If such levels had been in
effect for 1993, when net income applicable to Common Stock was $562
million, a 10 percent ROE would have represented approximately $336
million of that amount, leaving approximately $226 million in excess of the
ROE target threshold. Applying the specified 21/2 percent to this excess
would have made approximately $6 million available for the pool. Had the
Plan been in effect, there would have been no adjustments to such amount
because of unusual or infrequent events during 1993. By comparison, the
five most highly paid executive officers and the three additional vice
chairmen eligible to participate in the SEPP received an aggregate of
$4,985,000 in cash bonuses for 1993 under the discretionary cash bonus plan
to be replaced by the SEPP. Nevertheless, because the amount payable to
an executive under the SEPP is subject to discretion both as to the share of
the pool initially allocated and whether the amount resulting from such share
(or a reduced amount) will actually be paid, neither the amount that will be
paid in the future to any eligible executive nor the amount that would have
been paid last year had the SEPP been in effect is presently determinable.
DEFERRAL
All or part of an award made under the Plan may be deferred. Any
amounts deferred will accrue interest at the average annual rate for
three-year Treasury notes for the immediately preceding calendar year.
Amounts deferred and the interest thereon will be distributed to the
executive at such time or times and in such manner as he or she may
specify, subject, however, to any restrictions imposed by the Committee.
Amounts deferred and interest accrued thereon are unfunded and unsecured
obligations of the Company. A participant may not assign, pledge or
otherwise encumber his or her interest in any deferred bonus but may
designate a beneficiary to receive it in the event of the participant's death.
AMENDMENT
The Company may amend, discontinue or terminate the Plan in whole or
in part at any time, except that any amendment to the Plan which would
change the class of executives eligible to receive awards, the permissible
amount of such awards or any other amendment required to be made by the
shareholders under Section 162(m) must receive shareholder approval.
<PAGE>
PROPOSAL 4
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has appointed KPMG Peat Marwick, certified
public accountants, Three Embarcadero Center, San Francisco, California,
as independent auditors for the Company for 1994. Shareholders are being
asked to ratify this selection at the annual meeting. This firm or a
predecessor has served as the independent auditors for the Company since
1969. Ratification of the appointment of KPMG Peat Marwick as
independent auditors requires the affirmative vote of the holders of a
majority of the shares voting at the meeting.
As in the past, representatives of KPMG Peat Marwick will be present
at the annual meeting. They will have an opportunity to make a statement if
they so desire and will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
COST OF SOLICITATION
In addition to solicitation by mail, proxies may also be solicited by
directors, officers and employees of the Company and the Bank, who will not
receive additional compensation for such solicitation. The Company has also
engaged D.F. King & Co. Inc. to assist in contacting shareholders whose
stock is held in the names of brokers or other custodians and will pay $7,000
plus out-of-pocket expenses for these services. Brokerage firms and other
custodians, nominees and fiduciaries will be reimbursed by the Company for
their reasonable expenses incurred in sending proxy materials to beneficial
owners of the Common Stock.
MISCELLANEOUS
A shareholder who intends to present a proposal at the 1995 annual
meeting of shareholders for inclusion in the Company's proxy statement and
form of proxy relating to such meeting must submit such proposal by
November 15, 1994. The proposal must be mailed to the Company's principal
executive offices at 420 Montgomery Street, San Francisco, California 94163,
Attention: Secretary.
Guy Rounsaville, Jr.
Secretary
March 15, 1994
<PAGE>
EXHIBIT A
WELLS FARGO & COMPANY
LONG-TERM INCENTIVE PLAN
1. PURPOSE
This Long-Term Incentive Plan (the "Plan") is intended to promote the
interests of Wells Fargo & Company (the "Corporation") and its subsidiaries
by providing a method whereby employees, consultants and independent
contractors performing services for the Corporation and its subsidiaries may
be offered incentives and rewards which will encourage them to view the
Corporation from an ownership perspective, create shareholder value and
continue in the employ or service of the Corporation or its subsidiaries.
The Plan will become effective and will supersede the 1990 Equity
Incentive Plan (the "Prior Plan") upon stockholder approval of the Plan.
Stock options granted under the Prior Plan after February 17, 1993, and
before the effective date of the Plan shall be assumed under the Plan (and
shall hereinafter be referred to as "Assumed Options"), but shall continue in
accordance with the terms of the agreements evidencing such options unless
and until modified in accordance with the terms of the Plan.
2. ADMINISTRATION
The Plan will be administered by a committee or committees (which term
includes subcommittees) appointed by, and consisting of one or more
members of, the Board of Directors of the Corporation (the "Board"). The
Board may delegate the responsibility for administration of the Plan with
respect to designated classes of eligible award recipients to different
committees, subject to such limitations as the Board deems appropriate. The
composition of any committee responsible for administration of the Plan with
respect to persons who are subject to trading restrictions of Section 16(b) of
the Securities Exchange Act of 1934 (the "1934 Act") with respect to
securities of the Corporation shall comply with the applicable requirements
of Rule 16b-3 of the Securities and Exchange Commission (or a successor
provision). Members of a committee will serve for such term as the Board
may determine, subject to removal by the Board at any time. Any
committee appointed by the Board shall have full authority to administer the
Plan within the scope of its delegated responsibilities, including authority to
interpret and construe any relevant provision of the Plan and to adopt such
rules and regulations as it may deem necessary. Decisions of a committee
made within the discretion delegated to it by the Board are final and binding
on all persons who have an interest in the Plan. With respect to any matter,
the term "Committee" refers to the committee that has been delegated
authority with respect to such matter.
3. ELIGIBILITY FOR AWARDS
Awards may be granted under the Plan to those employees of the
Corporation and its subsidiaries (including officers, whether or not they are
directors) as the Committee from time to time selects. Awards may also be
made to consultants and other independent contractors who provide services
to the Corporation and its subsidiaries. Awards may also be made to a
former employee, consultant or independent contractor of an entity acquired
by or merged into or with the Corporation or a subsidiary pursuant to the
assumption, replacement or substitution of awards issued by such entity or
an affiliate of such entity. However, in no event may an award be made to
any individual who is a director, but not an officer, of the Corporation.
Except as expressly provided otherwise, subsidiary includes, for purposes of
the Plan, any entity in which the Corporation has a significant ownership
interest, and any entity which may become a direct or indirect parent of the
Corporation.
<PAGE>
4. STOCK SUBJECT TO THE PLAN
(a) Class. The stock which is the subject of awards granted under the
Plan is the Corporation's authorized but unissued or reacquired common
stock ("Common Stock"). In connection with the issuance of shares of
Common Stock under the Plan, the Corporation may repurchase shares in
the open market or otherwise.
(b) Aggregate Award Limit. The total number of shares made subject
to awards issued under the Plan may not exceed 2,500,000 shares (subject to
adjustment under Section 4(c) and (e)). No more than 25% of that number
may be issued as restricted shares or may be subject to share rights.
(c) Share Counting Rules.
(1) For purposes of this Section 4, the number of shares subject to
an award is the maximum, gross number of shares which could be issued
(or for which cash could be issued in lieu thereof) under the award,
except that the number of shares subject to a stock appreciation right is
the maximum number of shares to which the right relates. Shares that
are subject to tandem awards are counted only once.
(2) The maximum number of shares that may be made subject to
awards under the Plan shall be increased by the number of shares
subject to the unexercised or unpaid portion of an award granted under
the Plan (or outstanding under the Prior Plan as of the effective date of
the Plan) if such award expires or is terminated or cancelled for any
reason before being exercised or paid in full (whether in shares of
Common Stock or cash), to the extent that such shares do not remain
subject to a tandem award under the Plan.
(3) Except for the purpose of applying the limitations of Section 4(b)
to awards granted to employees who are subject to Section 16 of the
1934 Act or to Incentive Options (as defined in Section 6), the maximum
number of shares that may be made subject to awards under the Plan
shall be increased by:
(i) the number of shares of Common Stock issued to the holder
of an award under the Plan (or the holder of an award outstanding
under the Prior Plan as of the effective date of the Plan) upon
exercise or payment of the award to the extent that such number
does not exceed the number of shares, if any, tendered by the holder
as payment of the option price or other consideration required of the
holder under the award;
(ii) the number of shares subject to an award under the Plan (or
an award outstanding under the Prior Plan as of the effective date of
the Plan) for which cash is paid in lieu thereof (whether to satisfy tax
withholding obligations or otherwise); and
(iii) the number of restricted shares granted under the Plan that
are forfeited to the Company (including pursuant to the exercise by
the Company of a repurchase right pursuant to which the Company
pays no more than the amount, if any, originally paid for such shares
by the holder thereof).
(d) Individual Award Limit. No individual may be granted awards
under the Plan covering or related to more than 25% of the number of
shares of Common Stock initially authorized for issuance under the Plan
pursuant to the first sentence of Section 4(b) (disregarding any
adjustments pursuant to Section 4(c)), plus 25% of any additional shares
subsequently authorized for issuance by the Corporation's shareholders
(subject, in each case, to adjustment under Section 4(e)).
(e) Adjustments. In the event any change is made to the Common
Stock subject to the Plan or subject to any outstanding award granted
under the Plan (whether by reason of merger, consolidation,
reorganization, recapitalization, stock dividend, stock split, combination
of shares, exchange of shares, or other change in corporate or capital
structure of the Corporation), then, unless such change results in the
termination of all outstanding awards, the Committee shall make
appropriate adjustments to the maximum number of shares subject to
the Plan; the maximum number of shares for which options, stock
appreciation rights, restricted shares or share rights may be granted in
any one calendar year; the maximum number of restricted shares and
share rights that may be granted under the Plan; and the number of
shares and price per share of stock subject to outstanding options, stock
appreciation rights and share rights.
(f) Assumed Options. Shares of Common Stock underlying
Assumed Options shall not count against the aggregate limit of (b)
above. However, solely for purposes of applying the individual limit of
(d) above to any individual, (i) the aggregate limit of (b) above shall be
deemed increased by the number of such shares and (ii) the number of
such shares underlying Assumed Options granted to any individual shall
count against such limit with respect to such individual.
5. FORM AND GRANT OF AWARDS
An award must be in the form of a stock option meeting the
specifications of Section 6 or a stock appreciation right, restricted share or
share right meeting the specifications of Section 7 or a combination thereof,
as the Committee may determine. The Committee may grant awards
independently of other compensation or in lieu of compensation that would
otherwise be paid, whether at the election of the grantee or otherwise. Any
award granted in lieu of any other compensation need not be equal in fair
market value to such other compensation. In addition, awards may be
granted in tandem with other awards, so that a portion of such award
becomes payable or becomes free of restrictions only if and to the extent
that the other award is not exercised or is forfeited.
6. STOCK OPTIONS
Stock options granted under the Plan may be either incentive stock
options ("Incentive Options") qualifying under Section 422 of the Internal
Revenue Code of 1986, as amended ("Internal Revenue Code"), or
nonstatutory options, and will be appropriately designated. Options will be
evidenced by instruments in such form as the Committee may from time to
time approve and must conform to the following terms and conditions:
(a) Option Price. The oprtion price per share must be no less than
the fair market value of a share of Common Stock on the day the option
is granted; provided that if an option other than an Incentive Option is
granted in tandem with or in substitution for a previously granted stock
appreciation right, the exercise price per share must be no less than the
fair market value of a share of Common Stock on the date that the stock
appreciation right was granted.
(b) Number of Shares, Term and Exercise
(1) Each option granted under the Plan will be exercisable during
such period and for such number of shares as is determined by the
Committee and set forth in the instrument evidencing such option.
No option that is intended to be an Incentive Option may expire
more than 10 years after the date of the option grant. Each option
may contain such other terms, conditions and restrictions, which may
vary from grant to grant, as the Committee may determine.
(2) After an option granted under the Plan becomes exercisable,
it may be exercised by notice to the Corporation at any time prior to
the termination of such option.
(3) The option price must be paid in full in cash upon exercise of
the option; provided, however, that the Committee may, either at
the time the option is granted or at any time before it is exercised
and subject to such limitations as it may determine, authorize
payment of all or a portion of the option price in cash and/or one or a
combination of the following alternative forms:
(i) a promissory note authorized pursuant to Section 8;
(ii) shares of Common Stock valued as of the exercise date;
(iii) by delivering a properly executed exercise notice
together with irrevocable instructions to a broker to promptly
deliver to the Corporation the amount of sale or loan proceeds to
pay the option price; or
(iv) such other consideration as the Committee may specify,
including the surrender of an outstanding award.
(4) An option may provide for the payment, either currently or at
the time of exercise, of dividend equivalents for the period the option
is held before exercise, subject to such requirements and limits as
the Committee may specify.
(c) Termination of Services. The Committee shall determine and set
forth in each instrument which evidences an option whether the option
will continue to be exercisable, and the terms and conditions of such
exercise, if an optionee ceases to be employed by, or to provide services
to, the Corporation or any of its subsidiaries.
(d) Incentive Options. Options granted under the Plan which are
intended to be Incentive Options are subject to the following additional
terms and conditions:
(1) Dollar Limitation. To the extent that the aggregate fair
market value (determined as of the date or respective dates of grant)
of shares with respect to which options that would otherwise be
Incentive Options are exercisable for the first time by any individual
during any calendar year under the Plan (or any other plan of the
Corporation, a parent or subsidiary corporation or predecessor
thereof) exceeds the sum of $100,000 (or such greater amount as may
be permitted under the Internal Revenue Code), whether by reason
of acceleration or otherwise, such options shall be "nonstatutory"
options. Such options shall be taken into account in the order in
which they were granted.
(2) 10% Shareholder. If any employee to whom an Incentive
Option is to be granted pursuant to the provisions of the Plan is on
the date of grant the owner of stock (determined by application of
the ownership attribution rules of Section 425(d) of the Internal
Revenue Code) possessing more than 10% of the total combined
voting power of all classes of stock of his or her employer corporation
or of its parent or subsidiary corporation, then the following special
provisions will apply to the option:
(i) The option price per share of the Common Stock subject
to such Incentive Option may not be less than 110% of the fair
market value of one share of Common Stock on the date of grant;
and
(ii) The option may not have a term in excess of five years
from the date of grant.
(3) Eligible Employees. Individuals who are not employees of
the Corporation or one of its parent or subsidiary corporations may
not be granted Incentive Options.
(4) Parent; Subsidiary. For purposes of this Section 6(d) "parent
and subsidiary corporation" and "parent or subsidiary corporation"
shall have the meaning attributed to those terms under Section
422(b) of the Internal Revenue Code (or a successor provision).
7. STOCK APPRECIATION RIGHTS, RESTRICTED SHARES AND
RESTRICTED SHARE RIGHTS
The terms, conditions and restrictions to which stock appreciation rights,
restricted shares and share rights are subject shall be evidenced by
instruments in such form as the Committee may from time to time approve
and may vary from grant to grant, but shall conform to the following:
(a) Stock Appreciation Rights. A stock appreciation right shall
consist of the right, subject to such terms, conditions and restrictions as
the Committee shall determine, to receive an appreciation distribution in
an amount equal to the difference between (i) the fair market value of a
share of Common Stock on the date of the exercise of the right and (ii)
an amount not less than the fair market value of one such share on the
date that the right is granted (or, in the case of a stock appreciation
right granted in tandem with or in substitution for a previously granted
option, an amount not less than the fair market value of a share of
Common Stock on the date that the option was granted). The
appreciation distribution may be made in the form of Common Stock,
cash or a combination thereof. A stock appreciation right may provide
for the payment, either currently or at the time of exercise, of dividend
equivalents for the period the right is held before exercise, subject to
such requirements and limits as the Committee may specify.
(b) Restricted Shares. A restricted share issued under the Plan
shall consist of a share of Common Stock, the retention and transfer of
which are subject to such terms, conditions and restrictions (including
repurchase and/or forfeiture rights in favor of the Corporation) as the
Committee shall determine. The Committee shall have the absolute
discretion to determine whether any consideration (other than the
services of the grantee) is to be received by the Corporation or its
subsidiaries as a condition to the issuance of restricted shares.
(c) Share Rights. A share right granted under the Plan shall
consist of the right, subject to such terms, conditions and restrictions as
the Committee shall determine, to receive a share of Common Stock
(together with dividend equivalents, payable in cash or stock, if so
determined by the Committee). The Committee may require that a
grantee receive, or permit a grantee to elect to receive, all or a portion
of the total value of the Common Stock subject to share rights in the
form of a cash payment (based on the fair market value of a share of
Common Stock on the date of settlement of the right), subject to such
terms, conditions and restrictions as the Committee may specify. The
Committee shall have the absolute discretion to determine whether any
consideration (other than the services of the grantee) is to be received by
the Corporation or its subsidiaries as a condition to the issuance of
shares pursuant to share rights and may permit a holder to elect to defer
the receipt of any payment in settlement of such a right.
8. LOANS, LOAN GUARANTEES AND INSTALLMENT PAYMENTS
In order to assist a grantee (including a grantee who is an officer or
director of the Corporation) in the acquisition of shares of Common Stock
pursuant to an award granted under the Plan, the Committee may
authorize, either at the time of the grant of an award or at any time before
the acquisition of Common Stock pursuant to the award, (i) the extension of
a loan to the grantee by the Corporation, (ii) the payment by the grantee of
the purchase price, if any, of the Common Stock in installments, or (iii) the
guarantee by the Corporation of a loan obtained by the grantee from a third
party. The terms of any loans, guarantees or installment payments,
including the interest rate and terms of repayment, will be subject to the
discretion of the Committee. Loans, installment payments and guarantees
may be granted with or without security. The maximum credit available is
the purchase price, if any, of the Common Stock acquired plus the maximum
federal and state income and employment tax liability which may be incurred
in connection with the acquisition.
9. ASSIGNABILITY
No option, stock appreciation right or share right granted under the Plan
may be assigned or transferred by the grantee other than by will or by the
laws of descent and distribution, and during the lifetime of the grantee,
options, stock appreciation and share rights granted under the Plan may be
exercised only by the grantee. However, an award may permit the grantee
to designate a beneficiary who may exercise the award or receive
compensation under the award after the grantee's death.
10. WITHHOLDING
The Corporation's obligation to deliver shares or cash upon the exercise
or settlement of any award under the Plan is subject to the satisfaction of all
applicable federal, state and local income and employment tax withholding
obligations. The Committee may, in its discretion and subject to such rules
as it may adopt, permit the optionee to satisfy withholding obligations, in
whole or in part, by delivering shares of Common Stock already held by the
optionee or by electing that a portion of the total value of the shares of
Common Stock otherwise issuable under the award be paid in the form of
cash in lieu of the issuance of Common Stock and that such cash payment be
applied to the satisfaction of the withholding obligations.
11. ACCELERATION AND TERMINATION OF AWARDS
The Committee shall have the discretion, exercisable at any time before
a sale, merger, consolidation, reorganization, liquidation or change in control
of the Corporation, as defined by the Committee, to provide for the
acceleration of vesting and/or payment under an award granted under the
Plan and/or the settlement of any such award in cash upon or immediately
before the effective time of such event. However, the grant of awards under
the Plan will in no way affect the right of the Corporation to adjust,
reclassify, reorganize, or otherwise change its capital or business structure
or to merge, consolidate, dissolve, liquidate or sell or transfer all or any
part of its business or assets.
12. VALUATION OF COMMON STOCK
For all valuation purposes under the Plan, the fair market value of a
share of Common Stock will be its closing price, as quoted on the New York
Stock Exchange Composite Tape, on the day immediately prior to the date
in question. If there is no quotation available for such day, then the closing
price on the next preceding day for which there does exist such a quotation
shall be used. If, however, the Committee determines that, as a result of
circumstances existing on any date, the use of such price is not a reasonable
method of determining fair market value on that date, the Committee may
use such other method as, in its judgment, is reasonable.
13. EFFECTIVE DATE AND TERM OF PLAN
(a) Effective Date. The Plan will become effective on the date it is
approved by the holders of at least a majority of the Corporation's voting
stock represented and voting at a duly held meeting at which a quorum is
present. If such shareholder approval is not obtained within 12 months of
adoption by the Board, no awards may be granted hereunder and the Prior
Plan will continue in accordance with its terms.
(b) Term. No further grants may be made under the Plan after the
tenth anniversary of the date of adoption of the Plan by the Board.
14. AMENDMENT OR DISCONTINUANCE
(a) Plan. The Board may amend, suspend or discontinue the Plan in
whole or in part at any time; provided, however, that, except to the extent
necessary to qualify as Incentive Options any or all options granted under
the Plan which are intended to so qualify, such action may not adversely
affect rights and obligations with respect to awards at the time outstanding
under the Plan. The Board may not, without the approval of the Corpora-
tion's shareholders (i) materially increase the number of shares of Common
Stock which may be issued under the Plan (unless necessary to effect the
adjustments required under Section 4(e)), (ii) materially modify the
eligibility requirements for awards under the Plan or (iii) make any other
change with respect to which the Board determines that shareholder
approval is required by applicable law or regulatory standards.
(b) Awards. The Committee shall have full power and authority to
modify or waive any or all of the terms, conditions or restrictions applicable
to any outstanding award, to the extent not inconsistent with the Plan;
provided, however, that no such modification or waiver may, without the
consent of the holder, adversely affect the holder's rights thereunder.
15. NO OBLIGATION
Nothing contained in the Plan (or in any award granted pursuant to the
Plan) shall confer upon any person any right to continue in the employ of, or
to provide services to, the Corporation or any affiliate or constitute any
contract or agreement of employment or service or interfere in any way with
the right of the Corporation or an affiliate to reduce such person's
compensation from the rate in existence at the time of the granting of an
award or to terminate such person's employment or services at any time,
with or without cause, but nothing contained herein or in any award shall
affect any contractual rights of any person pursuant to a written
employment, consulting or service agreement.
16. USE OF PROCEEDS
The cash proceeds received by the Corporation from the issuance of
shares pursuant to awards under the Plan will be used for general corporate
purposes.
17. REGULATORY APPROVALS
The implementation of the Plan, the granting of any award under the
Plan, and the issuance of Common Stock or cash upon the exercise under
any such award are subject to the Corporation's procurement of all
approvals and permits required by regulatory authorities having jurisdiction
over the Plan, the awards granted under it or the Common Stock issued
pursuant to it.
18. GOVERNING LAW
To the extent not otherwise governed by federal law, the Plan and its
implementation shall be governed by and construed in accordance with the
laws of the State of California.
<PAGE>
EXHIBIT B
WELLS FARGO & COMPANY
SENIOR EXECUTIVE PERFORMANCE PLAN
This Senior Executive Performance Plan (the "Plan" or "SEPP Plan") is
established by Wells Fargo & Company (the "Company") effective January
1, 1994, to supersede the Executive Incentive Pay Plan ("EIPP") for any
calendar year with respect to those executives who are selected for
participation in the Plan for such year.
1. PURPOSE
The purposes of the Plan are to:
(a) Promote the interests of the Company;
(b) Provide incentives and rewards to key senior executives, as a group
and individually, who are largely responsible for the management, growth
and profitability of the Company; and
(c) Qualify compensation under the Plan as performancebased
compensation within the meaning of Section 162(m) of the Internal Revenue
Code of 1986 or a successor provision ("Section 162(m)").
2. ADMINISTRATION
The Plan will be administered by the Management Development and
Compensation Committee or a subcommittee thereof that satisfies the
requirements of Section 162(m) (the "Committee"). The Committee will have
full authority to administer the Plan, including authority to interpret and
construe any relevant provision of the Plan and to adopt such rules and
regulations as it may deem necessary. Decisions of the Committee are final
and binding on all persons who have an interest in the Plan.
3. ELIGIBILITY AND PARTICIPATION
(a) The executives eligible to participate in the Plan for any calendar
year shall be the Chairman and/or Chief Executive Officer, the President
and each Vice Chairman of the Company.
(b) Participants are approved for each calendar Plan year by the
Committee by name or position and will not be eligible for an award for any
year unless explicitly approved for such year. Participants may, at the
discretion of the Committee, be approved for participation for part of a Plan
year on a pro-rata basis.
(c) No executive shall participate in the Plan for any year if he/she
participates in any other Company-sponsored incentive, sales or bonus plan
for that year, unless such participation is approved by the Committee.
(d) No participant shall receive an award under the Plan for any
calendar year if he/she terminates employment before the end of that
calendar year for any reason other than normal retirement, death, disability
or involuntary termination without cause. If an executive's employment is
terminated for any of those specified reasons during a calendar year, the
Committee may, in its sole discretion, reduce or cancel the participation of
such executive for that year.
<PAGE>
4. DETERMINATION OF THE SEPP POOL
(a) The total amount of bonuses available for payout ("SEPP Pool") for
any calendar year shall be a specified percentage of that portion, if any, of
the Company's net income attributable to common stock for the year that
exceeds a specified threshold percentage return on common equity for the
year. Both the specified percentage and the specified threshold return on
common equity for each year shall be determined by the Committee no later
than March 31 of the calendar year for which the SEPP Pool is determined
or such earlier date as shall be required under Section 162(m). In no event
shall the specified percentage exceed 4%, nor shall the threshold return on
common equity be less than 8%.
(b) For purposes of determining the SEPP Pool, net income attributable
to common stock shall be net income of the Company and its consolidated
subsidiaries attributable to common stock as reported by the Company and
certified by its independent public accountants, but excluding the following if
they have a material effect on annual net income attributable to common
stock: events or transactions that are either unusual in nature or infrequent
in occurrence (such as restructuring/reorganization charges, the sale or
discontinuance of a business segment, the sale of investment securities,
losses from litigation, the cumulative effect of changes in accounting
principles, and natural disasters) and changes in federal, state or local
income or franchise tax rates.
5. DETERMINATION OF PARTICIPANTS' SHARES OF THE SEPP POOL
(a) The Committee shall have the sole discretion to determine the share
of the SEPP Pool available to each participant. In no event shall any
participant's share of the SEPP Pool exceed 30%.
(b) Share awards shall be specified by the Committee no later than
March 31 of the calendar year for which the share is awarded or such earlier
date as shall be required under Section 162(m). Share size may be
determined by position or name and may be prorated for a partial year of
service.
(c) Final payouts are subject to the approval of the Committee and shall
occur as soon as practical after the close of the Company's financial books for
the year. The Committee reserves the right to reduce or cancel any payout
that would otherwise be due to a participant if, in its sole discretion, the
Committee deems such action warranted based on other circumstances
relating to the performance of the Company or the participant.
6. DEFERRAL ELECTION
(a) Each participant in the Plan may defer part or all of the bonus
awarded to him/her with respect to any calendar year by executing the
SEPP Deferral Election Forms and delivering them to the Executive
Compensation Department no later than the date specified in the notification
to the participant of his/her participation for such year, which date shall be
the later of:
(1) a date prior to December 31 of the calendar year preceding the
year in which the participant may earn a bonus or
(2) a date within 30 days following the date of such notification.
(b) A participant may elect to defer either a specific dollar amount or a
percentage of his/her bonus. If the dollar amount to be deferred exceeds the
bonus actually awarded, 100% of the bonus will be deferred. Any election to
defer a percentage less than 100% of the bonus must be made in multiples of
25% of the bonus. The election, once made, shall be irrevocable with respect
to the year for which it is made.
(c) The deferred bonus will be credited to a special book account
maintained for each participant and will accrue interest each year,
commencing as of March 1 of the year following the calendar year in which
the bonus is earned. The rate each year will be equal to the average annual
rate for 3-year Treasury Notes for the immediately preceding calendar year.
Distribution of the deferred bonus plus accrued interest will be made at such
time or times and in such manner as the participant shall specify at the time
he/she files the SEPP Deferral Election Forms, subject, however, to such
restrictions and limitations as the Committee may from time to time impose.
7. DEFERRED AMOUNTS
The obligation to pay the deferred bonus plus interest shall at all times
be an unfunded and unsecured obligation of the Company. The participant
and his/her beneficiary(ies) shall look exclusively to the general assets of the
Company, as general creditors of the Company. The Plan is intended to be
unfunded for purposes of the Employee Retirement Income Security Act of
1974 and the Internal Revenue Code of 1986. The participant shall have no
right to assign, pledge or encumber his/her interest in the amount credited
to the deferred bonus account. The participant may, however, designate one
or more beneficiaries to receive the account balance in the event of his/her
death.
8. AMENDMENT/TERMINATION
The Company hereby reserves the right, exercisable by the Committee,
to amend the Plan at any time and in any respect or to discontinue and
terminate the Plan in whole or in part at any time, subject to Section 9.
Amendment or termination may be effective with respect to any amount
which has not yet been paid out, except that amounts which have been
credited to a deferred bonus account shall be paid out in accordance with the
applicable deferral election or, if the Committee so determines upon
termination of the Plan, distributed to such participant as soon as practicable
after termination of the Plan. In no event shall the SEPP Pool or any award
be increased, other than pursuant to Section 4(b), after the last day that an
award must be specified for qualification as performance-based compensation
under Section 162(m).
No provision of the Plan shall be deemed to constitute a commitment of
the Company to pay, or to confer any contractual or other rights upon a
participant to receive, a bonus award for any one or more calendar years or
to confer upon any participant any right to continue in the employ of the
Company or to constitute any contract or agreement of employment or to
interfere in any way with the right of the Company to terminate a
participant's employment at any time, with or without cause, but nothing
contained herein shall affect any contractual right of a participant pursuant
to a written employment agreement.
9. TERM AND SHAREHOLDER APPROVAL
In no event shall any award be made under the Plan for any year after
calendar year 1998. The Plan, awards under the Plan, and any amendment
to the Plan which would change the class of executives who are eligible to
receive awards under the Plan or the permissible amount of such awards
shall be subject to approval of the Company's shareholders in such manner
and with such frequency as shall be required under Section 162(m).
P R O X Y
WELLS FARGO & COMPANY
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS APRIL 19, 1994
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) CARL E. REICHARDT, PAUL HAZEN, ROBERT K.
JAEDICKE and PAUL A. MILLER, and each of them, the proxy or proxies of the
undersigned, with full power of substitution, to vote all shares of Common
Stock, $5 par value, of Wells Fargo & Company (the "Company") which the
undersigned is entitled to vote at the Annual Meeting of Shareholders of the
Company to be held in Newport Beach, California, on Tuesday, April 19, 1994,
at 2:00 p.m., and at any adjournment thereof, with the same force and effect
as the undersigned might or could do if personally present thereat.
UNLESS A CONTRARY INSTRUCTION IS INDICATED, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF DIRECTORS, IN FAVOR OF THE PROPOSALS TO APPROVE THE ADOPTION OF
BOTH THE NEW LONG-TERM INCENTIVE PLAN AND THE NEW SENIOR EXECUTIVE PERFORMANCE
PLAN AND TO RATIFY THE SELECTION OF INDEPENDENT AUDITORS FOR 1994, ALL AS
DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT. THIS PROXY WILL ALSO BE VOTED AT
THE DISCRETION OF THE PROXY HOLDERS ON SUCH MATTERS OTHER THAN THE FOUR
SPECIFIED ITEMS AS MAY COME BEFORE THE MEETING.
A majority of such proxies or their substitutes as shall be present and acting
at the meeting, or if only one be present and acting then that one, shall have
and may exercise all of the powers of all of said proxies hereunder.
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| SEE REVERSE SIDE |
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/ X / PLEASE MARK YOUR |
VOTES AS IN THIS | 3651
EXAMPLE. --------
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
STOCKHOLDER. IF NO DIRECTION IS GIVEN WHEN THE DULY EXECUTED PROXY IS RETURNED,
SUCH SHARES WILL BE VOTED "FOR" AUTHORITY IN PROPOSAL 1 AND "FOR" PROPOSALS 2,
3 AND 4.
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| THE BOARD OF DIRECTORS FAVORS A VOTE "FOR" AUTHORITY IN PROPOSAL 1 AND |
| "FOR" PROPOSALS 2, 3 AND 4. |
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1. Authority to vote for the following nominees for director:
H.J. Arnelle; W.R. Breuner; W.S. Davila; R.S. Dezember; P. Hazen;
R.K. Jaedicke; P.A. Miller; E.M. Newman; C.E. Reichardt; D.B. Rice;
C-L. Tien; J.A. Young.
FOR, except vote withheld from the following nominee(s):
- --------------------------------------------------------------
FOR WITHHELD
/ / / /
2. Approve adoption of Long-Term Incentive Plan.
FOR AGAINST ABSTAIN
/ / / / / /
3. Approve adoption of Senior Executive Performance Plan.
FOR AGAINST ABSTAIN
/ / / / / /
4. Ratify selection of KPMG Peat Marwick as independent auditors for 1994.
FOR AGAINST ABSTAIN
/ / / / / /
Will attend meeting / /
The signer hereby revokes all proxies heretofore given by the signer to vote at
said meeting or any adjournment thereof.
SIGNATURE(S) DATE
------------------------------------- ---------------
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
========================================================================
PROXY
WELLS FARGO & COMPANY
THIS PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS ON APRIL 19, 1994,
IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) CARL E. REICHARDT, PAUL HAZEN, ROBERT K.
JAEDICKE and PAUL A. MILLER, and each of them, the proxy or proxies of the
undersigned, with full power of substitution, to vote all shares of Common
Stock, $5 par value, of Wells Fargo & Company (the "Company") which the
undersigned is entitled to vote at the Annual Meeting of Shareholders of the
Company to be held in Newport Beach, California, on Tuesday, April 19, 1994, at
2:00 p.m., and at any adjournment thereof, with the same force and effect as
the undersigned might or could do if personally present thereat.
UNLESS A CONTRARY INSTRUCTION IS INDICATED, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF DIRECTORS, IN FAVOR OF THE PROPOSALS TO APPROVE THE ADOPTION OF BOTH
THE NEW LONG-TERM INCENTIVE PLAN AND THE NEW SENIOR EXECUTIVE PERFORMANCE PLAN
AND TO RATIFY THE SELECTION OF INDEPENDENT AUDITORS FOR 1994, ALL AS DESCRIBED
IN THE ACCOMPANYING PROXY STATEMENT. THIS PROXY WILL ALSO BE VOTED AT THE
DISCRETION OF THE PROXY HOLDERS ON SUCH MATTERS OTHER THAN THE FOUR SPECIFIED
ITEMS AS MAY COME BEFORE THE MEETING.
A majority of such proxies or their substitutes as shall be present and acting
at the meeting, or if only one be present and acting then that one, shall have
and may exercise all of the powers of all of said proxies hereunder.
The undersigned hereby revoke(s) all proxies heretofore given by the undersigned
to vote at said meeting or any adjournment thereof.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE.
PLEASE MARK, DATE AND SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY.
The Board of Directors favors a vote "FOR" authority in Proposal 1 and "FOR"
Proposals 2, 3 and 4.
Proposal 1--Authority to vote for the following nominees as described in the
accompanying Proxy Statement: H.J. Arnelle; W.R. Breuner; W.S. Davila; R.S.
Dezember; P. Hazen; R.K. Jaedicke; P.A. Miller; E.M. Newman; C.E. Reichardt;
D.B. Rice; C-L. Tien; J.A. Young.
FOR WITHHELD
/ / / /
(INSTRUCTION: To withhold authority to vote for one or more individual nominees,
write such name or names in the space provided below.)
Proposal 2--Approve adoption of Long-Term Incentive Plan.
/ / FOR / / AGAINST / / ABSTAIN
Proposal 3--Approve adoption of Senior Executive Performance Plan.
/ / FOR / / AGAINST / / ABSTAIN
Proposal 4--Ratify selection of KPMG Peat Marwick as independent auditors for
1994.
/ / FOR / / AGAINST / / ABSTAIN
Date: , 1994
-------------------
---------------------------------
Signature
---------------------------------
Signature
Please mark, date and sign exactly as your name appears at the side and return
in the enclosed envelope. Joint owners should each sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title
as such. If signer is a corporation or other organization, please sign in full
name of corporation or other organization and designate capacity of signing
officer.
APPENDIX OF GRAPHIC AND IMAGE DIFFERENCES
The following description of graphic and image differences is provided
pursuant to Rule 304 of Regulation S-T under the Securities Exchange
Act of 1934:
On pages 6 through 8 of the document in paper format there appears
a photograph of each nominee for director beside the nominee's biography.
These photographs have been omitted from lines 466 through 603 of the
document in electronic format, which is where the information on pages
6 through 8 of the paper format document is located.
The graphs depicting the Five-Year and Ten-Year Performance Comparisons
appearing on pages 14 and 15, respectively, of the document in paper
format are being filed under cover of Form SE in accordance with
Rule 304(d)(1) of Regulation S-T. Information derived from the graphs
is given in the charts in the electronic format document comprising lines
994 through 1004 for the Five-Year Performance Comparison and lines
1016 through 1031 for the Ten-Year Performance Comparison.
