<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF
1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
WELLS FARGO & COMPANY
-----------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $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 ActRule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] 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 statement
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>
[LOGO OF WELLLS FARGO & COMPANY]
March 13, 1996
To Our Shareholders:
You are cordially invited to attend the annual meeting of shareholders to be
held on Tuesday, April 16, 1996. Enclosed are the Secretary's official notice
of this meeting, a proxy statement and a form of proxy. This year the meeting
will be held at 2:00 p.m. in the Penthouse at the Company's headquarters, 420
Montgomery Street, San Francisco, California.
At this meeting you will be asked to elect directors to serve until the next
annual meeting, to adopt an amendment to the Company's Restated Certificate of
Incorporation increasing the authorized shares of Common Stock from 150
million to 500 million, to approve the adoption of the 1996 Employee Stock
Purchase Plan and to ratify the selection of the Company's independent
auditors for 1996.
We hope that you will attend. But whether you plan to attend or not, please
complete, date, sign and return the enclosed proxy as soon as possible. It is
important that your shares be represented at the meeting.
Sincerely yours,
Paul Hazen
Chairman of the Board and Chief Executive
Officer
YOUR VOTE IS IMPORTANT
WE ENCOURAGE YOU TO COMPLETE, DATE, SIGN AND PROMPTLY RETURN YOUR PROXY IN
THE ENCLOSED ENVELOPE REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE ANNUAL
MEETING.
<PAGE>
WELLS FARGO & COMPANY
420 Montgomery Street
San Francisco, California 94104
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 16, 1996
To the Shareholders of Wells Fargo & Company:
The annual meeting of shareholders of Wells Fargo & Company (the "Company")
will be held in the Penthouse at the Company's headquarters, 420 Montgomery
Street, San Francisco, California, at 2:00 p.m. on Tuesday, April 16, 1996, in
order to:
1. Elect 20 directors to serve until the next annual meeting of shareholders
or until their successors have been elected and qualified;
2. Adopt an amendment to the Company's Restated Certificate of Incorporation
increasing the authorized shares of Common Stock from 150 million to 500
million;
3. Approve the adoption of the 1996 Employee Stock Purchase Plan; and
4. Ratify the selection of KPMG Peat Marwick LLP as independent auditors for
the Company for 1996.
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 16, 1996, 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.
Whether you plan to attend the shareholders' meeting or not, please
complete, date and sign the enclosed proxy card and return it in the
accompanying envelope. You may revoke your proxy at any time prior to the time
it is voted.
Guy Rounsaville, Jr.
Secretary
March 13, 1996
<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
Penthouse at the Company's headquarters, 420 Montgomery Street, San Francisco,
California, at 2:00 p.m. on Tuesday, April 16, 1996. These proxy materials are
being mailed to shareholders on or about March 13, 1996.
PURPOSE OF MEETING
At the meeting, shareholders will be asked to (i) elect 20 directors to
serve until the next annual meeting of shareholders or until their successors
are elected and qualified; (ii) adopt an amendment to the Company's Restated
Certificate of Incorporation increasing the authorized shares of Common Stock
from 150 million to 500 million; (iii) approve the adoption of the 1996
Employee Stock Purchase Plan; and (iv) ratify the selection of KPMG Peat
Marwick LLP as independent auditors for the Company for the year 1996. 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 16,
1996, will be entitled to vote on all matters to be presented at the annual
meeting. On the record date, 46,994,234 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 a 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. Proposal 2 must
be approved by the holders of a majority of the outstanding shares of Common
Stock. Proposal 3 must receive the affirmative votes of the holders of a
majority of the shares present and entitled to vote at the meeting. In
accordance with the Company's By-Laws, Proposal 4 must be adopted by the
holders of a majority of the shares present and voting. An abstention on
Proposal 2 or 3 would have the effect of a negative vote but would not be
counted in the voting on Proposal 4. A broker non-vote would count as a vote
against Proposal 2 but would have no effect on the outcome of Proposal 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
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 amendment to the Restated Certificate
of Incorporation, for the approval of the 1996 Employee Stock Purchase 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 foregoing items. Any shareholder has the power to revoke his or
her proxy at any time before it is voted.
<PAGE>
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 1995 Annual Report provides a review of the
Company's operations during the past year.
The Board of Directors of the Company met 12 times during 1995 and now
consists of 14 members. William R. Breuner, currently a member of the Board,
has reached the mandatory age for retirement under the Company's tenure policy
for directors and accordingly will not stand for reelection at the annual
meeting. The nominees consist of the remaining 13 incumbent directors of the
Company and seven members of the Board of Directors of First Interstate
Bancorp ("First Interstate"). These seven nominees have been jointly selected
by the Boards of the Company and First Interstate pursuant to the merger
agreement signed on January 23, l996, providing for the merger of First
Interstate into the Company. 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, 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: Paul
Hazen, Chairman; Rayburn S. Dezember; Robert K. Jaedicke; Philip J. Quigley;
Carl E. Reichardt; Susan G. Swenson; Chang-Lin Tien; John A. Young; and
William F. Zuendt. The Committee met seven times in 1995.
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 and 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 legally required to be
reviewed on behalf of the Board. The Committee also reviews all reports of
examinations conducted by bank regulatory agencies and ensures that
appropriate management personnel follow up on audit and examination findings
and recommendations and implement corrective actions 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; Philip J. Quigley; and Chang-Lin Tien. The Committee met seven times
during 1995.
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: John A. Young, Chairman; William R. Breuner; William S.
Davila; Rayburn S. Dezember; Ellen M. Newman; Philip J. Quigley; and Donald B.
Rice. The Committee met four times during 1995.
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.
Directors serving on the Committee since the last annual meeting are: William
R. Breuner, Chairman; H. Jesse Arnelle; Carl E. Reichardt; Donald B. Rice; and
John A.
2
<PAGE>
Young. 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 94104. At its
meeting on January 16, 1996, the Committee recommended the 13 nominees for
director who are currently directors of the Company. On January 23, the
Company entered into an agreement with First Interstate providing for the
merger of First Interstate into the Company and, in connection therewith, the
joint selection of up to seven members of the First Interstate Board of
Directors to serve on the Board of Directors of the Company. Seven First
Interstate directors were subsequently selected by the Boards of both First
Interstate and the Company and are included among the nominees identified
below. See "Proposal l --Election of Directors."
The following 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: William
F. Zuendt, Chairman; Rayburn S. Dezember; Paul Hazen; Ellen M. Newman; Carl E.
Reichardt; Donald B. Rice; and Susan G. Swenson. The Committee met five times
in 1995.
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: Chang-Lin Tien, Chairman; H. Jesse Arnelle;
William S. Davila; Robert K. Jaedicke; Ellen M. Newman; and Susan G. Swenson.
The Committee met three times in 1995.
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS
Average attendance at Board and committee meetings during 1995 was
approximately 98 percent. During 1995, all directors attended at least 75
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 Board committee. Non-officer directors of the Company and the Bank were
paid a basic annual retainer of $28,000 in 1995, 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 received additional amounts of $10,000 and $5,000, respectively,
during 1995. John A. Young, as chairman of the Management Development and
Compensation Committee commencing in April 1995, received $3,333 (the portion
of the chairman's yearly fee of $5,000 prorated for that portion of the year
Mr. Young served as such), and the other members of such committee received
additional amounts of $2,000 during the year. Non-officer directors were paid
a fee of $1,200 for each Board meeting attended during 1995, except that when
Board meetings of the Company and the Bank were held on the same day, the
total fee was limited to $1,200. During 1995, all non-officer directors
received a fee of $1,000 for each committee meeting attended, except that when
the same committees of the Company and the Bank had a combined meeting, the
total fee for such meeting was limited to $1,000. A director may defer the
receipt of his or her annual retainer and meeting fees and elect to receive
either interest on the deferred amount or a return based upon the hypothetical
investment of the deferred fees in Common Stock. The Company also reimburses
directors for travel, food, lodging and other expenses incurred in attending
Board and committee meetings.
Two directors have consulting arrangements, one with the Company and the
other with the Bank. Rayburn S. Dezember promotes customer, community and
trade association relations and provides
3
<PAGE>
customer referrals under a consulting agreement with the Company that runs
until at a yearly fee of $75,000. Ellen M. Newman provides consulting
services relating to the Bank's retail marketing strategies for a monthly fee
of $2,500.
Carl E. Reichardt retired as chairman of the board of the Company on
December 31, 1994, but remained as a member of the Board of Directors during
1995. In connection with his retirement, the Company made available during
1995 office space and the services of a secretary and a driver on an as-needed
basis for Mr. Reichardt's personal use.
The Board of Directors has evaluated various matters affecting the Board as
a result of the proposed First Interstate merger, including the Directors'
Retirement Plan. As a result of such evaluation, the Board terminated the
Directors' Retirement Plan for all persons elected to the Board at any time
after the 1996 annual meeting. For those eligible to participate, 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 of service 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. First Interstate has a similar
retirement plan for non-officer directors with at least five years' service on
the First Interstate Board. The First Interstate plan provides for payments to
retired directors for a period of 20 years or the number of years served on
the First Interstate Board if less. All nominees with previous service on the
First Interstate Board who are elected to the Company Board at the annual
meeting will be eligible to participate in the Company Directors' Retirement
Plan, with credit for service on the First Interstate Board, except that such
nominees with more than 10 years' service on the First Interstate Board will
upon retirement from the Company Board be entitled to receive retirement
benefits for the same number of years they served on the First Interstate
Board.
Non-officer directors may participate in the Director Option Plan,
originally approved by shareholders in 1987 and amended with shareholder
approval in 1995. Under the 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 50
percent of the fair market value of a share of Common Stock as of January 2 of
the year granted. In general, options become exercisable on the first
anniversary of the date they are granted and remain exercisable for nine years
thereafter. The option price is 50 percent of the fair market value of a share
of Common Stock as of the date the option is granted. During 1995, options to
purchase an aggregate of 1,138 shares of Common Stock were issued to five
directors under the Plan.
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 1995, options to
purchase 6,l26 shares of Common Stock were granted to 12 directors under the
1990 Plan.
The Board of Directors has adopted a retirement policy which precludes any
non-officer director from standing for election to the Board 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. Seven of the nominees for election to the Board of
Directors at the annual meeting are directors of First Interstate and have
been jointly selected by the Boards of Directors of First Interstate and the
Company pursuant to the merger agreement between the Company and First
Interstate. In participating in this joint selection, the Company Board
determined that exceptions to the Company's director retirement policy should
be made where necessary to carry out the merger agreement.
4
<PAGE>
BENEFICIAL OWNERSHIP
The following table shows the number of shares of Common Stock beneficially
owned as of January 31, 1996, by all directors and nominees for director, each
of the six most highly compensated executive officers during 1995 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, 1996 (12 persons). As of such date, no
individual director, nominee or executive officer beneficially owned more than
1 percent of all outstanding Common Stock. All directors, nominees and
executive officers as a group owned beneficially 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.
<TABLE>
<CAPTION>
SHARES SHARES
SUBJECT TO HELD
OPTIONS THROUGH
NON-OFFICER 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 2,102 0 2,292
William R. Breuner.............. 2,554 0 1,000 0 3,554
William S. Davila............... 100 0 3,564 0 3,664
Rayburn S. Dezember............. 0 52,954 2,500 5,296 60,750
Robert K. Jaedicke.............. 400 0 2,500 0 2,900
Ellen M. Newman................. 2,650 27 2,500 0 5,177
Philip J. Quigley............... 0 400 659 0 1,059
Carl E. Reichardt............... 0 148,509 126 0 148,635
Donald B. Rice.................. 610 4,490 1,483 0 6,583
Susan G. Swenson................ 50 0 168 0 218
Chang-Lin Tien.................. 100 0 2,660 0 2,760
John A. Young................... 400 0 5,309 0 5,709
<CAPTION>
MOST HIGHLY COMPENSATED
OFFICERS DURING 1995
-----------------------
<S> <C> <C> <C> <C> <C>
Paul Hazen/2/................... 125,717 65,800 242,005 3,423 436,945
William F. Zuendt/2/............ 36,643 0 130,775 0 167,418
Michael J. Gillfillan........... 8,330 498 53,300 0 62,128
Rodney L. Jacobs................ 3,000 13,088 61,500 1,062 78,650
Charles M. Johnson.............. 19,050 0 59,500 4,162 82,712
Clyde W. Ostler................. 11,479 0 58,625 0 70,104
<CAPTION>
GROUP
-----
<S> <C> <C> <C> <C> <C>
Directors, Nominees, and
Executive Officers as a
Group (31 persons)............. -- -- -- 16,841 --
</TABLE>
- --------
1. Share ownership reported for present members of the First Interstate Board
represents shares of Common Stock they will have the right to receive when
the merger of First Interstate into the Company is completed and their
First Interstate shares are converted into Common Stock and their options
become exercisable for Common Stock.
2.Also a director.
5
<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
January 31, 1996:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT
------------------- -------------------- -------
<S> <C> <C>
Walter H. Annenberg
St. Davids Center, Suite A-200
150 Radnor-Chester Road
St. Davids, Pennsylvania 19087............... 3,785,010/1/ --
Warren E. Buffett
1440 Kiewit Plaza
Omaha, Nebraska 68131........................ 6,819,218/2/ --
</TABLE>
- --------
1. Mr. Annenberg shares voting and dispositive power over 10,000 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, Berkshire 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.
6
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
Upon completion of the Company's merger with First Interstate Bancorp
("First Interstate"), as more fully explained in the following paragraph, 20
persons will be elected to serve on the Board of Directors 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 accompanying 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 of the Company to reduce the authorized number of directors.
In its merger agreement with First Interstate, the Company agreed that up to
seven directors of First Interstate jointly selected by the Boards of
Directors of the Company and First Interstate would become directors of the
Company upon the consummation of the merger of First Interstate into the
Company, presently scheduled for April l. Accordingly, , , ,
, , and , currently directors of First Interstate,
have been jointly selected by the two Boards and are expected to join the
Board of Directors of the Company upon completion of the merger. Such nominees
are also being proposed for election by shareholders at the annual meeting,
subject to the completion of the First Interstate merger. If the merger has
not been completed by the time of the annual meeting, those nominees now
serving on the First Interstate Board who receive sufficient votes to be
elected at the annual meeting had the merger been completed at that time will
join the Company's Board of Directors when the merger is completed.
Biographical information about all nominees may be found below.
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.
Except for those nominees who are currently directors of First Interstate,
all nominees are directors of the Bank. If elected as directors of the
Company, all nominees will also be elected as directors of the Bank.
H. JESSE ARNELLE Mr. Arnelle, 62, is the senior partner
of Arnelle, Hastie, McGee, Willis & Greene, a corporate
law firm in San Francisco. Mr. Arnelle has held this
position since 1994 and held a similar position in a
predecessor firm since 1985. He is also a director of
Armstrong World Industries, Inc., Eastman Chemical
Corporation, FPL Group, Inc., Textron Corporation, Union
Pacific Resources, Inc. and WMX Technologies, Inc. Mr.
Arnelle is the chairman of the Pennsylvania State
University board of trustees. He has been a director of
the Company since 1990.
7
<PAGE>
WILLIAM S. DAVILA Mr. Davila, 64, 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 Geo. A. Hormel &
Company and Pacific Gas and Electric Company. Mr. Davila
is president of the California Retailers Association 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, 65, 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 and The Bakersfield
Californian and is also a trustee of Whittier College.
He has been a director of the Company since 1990.
PAUL HAZEN Mr. Hazen, 54, became chairman of the board
of the Company and the Bank in 1995, having been
president of the Company and the Bank since 1984. He is
a director of AirTouch Communications, Phelps Dodge
Corporation and Safeway, Inc. He has been a director of
the Company since 1984.
ROBERT K. JAEDICKE Mr. Jaedicke, 67, 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 ,Boise Cascade
Corporation, California Water Service Company, Enron
Corporation, GenCorp, Inc., Homestake Mining Company and
State Farm Insurance Companies. He has been a director
of the Company since 1983.
ELLEN M. NEWMAN Mrs. Newman, 67, 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 member of the
board of governors of the San Francisco Symphony and a
director of the California Chamber of Commerce, the
Library Foundation of San Francisco and the National
Foundation for Advancement in the Arts. Mrs. Newman has
been a director of the Company since 1976.
8
<PAGE>
PHILIP J. QUIGLEY Mr. Quigley, 53, has been chairman,
president and chief executive officer since 1994 of
Pacific Telesis Group, a telephone holding company with
operating subsidiaries in California and Nevada. From
1987 to 1994 he was president and chief executive
officer of Pacific Bell, the California operating
subsidiary of Pacific Telesis Group. Mr. Quigley is also
a director of Pacific Telesis Group and Varian
Associates. He has been a director of the Company since
1994.
CARL E. REICHARDT Mr. Reichardt, 64, retired as chairman
of the board of the Company and the Bank at the end of
1994, having occupied those positions since 1983. Mr.
Reichardt's directorships include Columbia/HCA
Healthcare Corporation, ConAgra, Inc., Ford Motor
Company, McKesson Corp., Newhall Management Corporation,
Pacific Gas and Electric Company and SunAmerica Inc. He
has been a director of the Company since 1979.
DONALD B. RICE Mr. Rice, 56, has been president and
chief operating officer of Teledyne, Inc., a diversified
manufacturing company, since March 1993 after serving as
Secretary of the Air Force from 1989 to January 1993. 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.
SUSAN G. SWENSON Ms. Swenson, 47, has been president and
chief executive officer since 1994 of Cellular One, a
cellular telecommunications company. From 1979 to 1994
she held various operating positions within Pacific
Telesis Group, including president of PacTel Cellular
for two and a half years and general manager of Pacific
Bell's second largest operating area for one year. Ms.
Swenson has been a director of the Company since 1994.
CHANG-LIN TIEN Mr. Tien, 60, has been chancellor of the
University of California, Berkeley, since 1990.
Currently serving on the boards of trustees of the Asian
Foundation and the Carnegie Foundation for the
Advancement of Teaching 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.
9
<PAGE>
JOHN A. YOUNG Mr. Young, 63, retired in 1992 as
president, 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, Ciphergen Corp., Novell, Inc., Shaman
Pharmaceuticals Inc. and Smithkline Beecham PLC. Mr.
Young is also a member of the Business Council, the
National Academy of Engineering and the executive
committee of the Council on Competitiveness. He serves
as chairman of Smart Valley Inc., a nonprofit
corporation formed to facilitate an electronic community
in Silicon Valley. He has been a director of the Company
since 1977.
WILLIAM F. ZUENDT Mr. Zuendt, 49, became president of
the Company and the Bank at the beginning of 1995. Prior
thereto he had been a vice chairman of the Company and
the Bank since 1986. He is also a director of 3Com
Corporation and MasterCard International and a trustee
of Golden Gate University. Mr. Zuendt has been a
director of the Company since 1995.
10
<PAGE>
EXECUTIVE COMPENSATION
The following table summarizes for the last five years compensation earned
by or awarded to the chief executive officer and the other five most highly
compensated executive officers during 1995. No stock appreciation rights were
awarded during any period covered by the table.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------ -------------
COMMON SHARES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND SALARY BONUS COMPENSATION STOCK OPTIONS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)/1/
------------------ ---- ------- --------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Paul Hazen.............. 1995 812,500 2,000,000 291 44,400 81,250
Chairman and Chief 1994 737,500 1,250,000 291 40,000 73,750
Executive Officer 1993 658,333 1,000,000 186 40,000 65,833
1992 575,000 0 186 40,000 57,500
1991 575,000 0 158 41,000 57,500
William F. Zuendt....... 1995 537,500 1,200,000 11,571 26,640 52,709
President 1994 475,000 850,000 11,571 27,500 47,500
1993 466,667 600,000 11,466 20,000 46,667
1992 425,000 200,000 11,466 20,000 42,500
1991 425,000 0 11,438 20,000 42,500
Michael J. Gillfillan... 1995 367,500 475,000 11,571 10,660 36,750
Vice Chairman 1994 325,000 475,000 11,571 15,000 32,500
1993 291,667 435,000 11,466 15,000 29,167
1992 237,500 200,000 11,466 28,000 17,741
1991 175,000 140,000 11,438 7,500 17,500
Rodney L. Jacobs........ 1995 375,000 750,000 11,571 15,990 37,500
Vice Chairman 1994 370,833 475,000 11,571 15,000 37,083
1993 333,333 400,000 11,466 27,000 33,333
1992 241,667 175,000 11,466 16,000 24,167
1991 200,000 100,000 11,438 9,000 20,000
Charles M. Johnson...... 1995 367,500 550,000 11,571 13,320 36,750
Vice Chairman 1994 325,000 475,000 11,571 15,000 32,500
1993 291,667 400,000 11,466 15,000 29,167
1992 240,833 175,000 11,466 28,000 24,083
1991 195,000 160,000 11,438 9,000 19,500
Clyde W. Ostler......... 1995 375,000 475,000 11,571 10,660 37,500
Vice Chairman 1994 375,000 475,000 11,571 15,000 36,790
1993 362,500 400,000 12,092 15,000 36,250
1992 300,000 175,000 11,466 16,000 30,000
1991 300,000 50,000 11,438 16,000 30,000
</TABLE>
- --------
1. Amounts shown for 1995 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 by
the Internal Revenue Code on contributions made to TAP. Amounts contributed
during 1995 to TAP and the BRP respectively on behalf of the named officers
were as follows: Mr. Hazen, $13,107, $68,143; Mr. Zuendt, $13,107, $39,602;
Mr. Gillfillan, $13,107, $23,643; Mr. Jacobs $13,107, $24,393; Mr. Johnson,
$15,000, $21,750; and Mr. Ostler $14,443, $23,057.
11
<PAGE>
Shown below is further information regarding employee stock options awarded
during 1995 under the Company's Long-Term Incentive Plan to the six officers
named above. No stock appreciation rights were awarded during the year.
OPTION GRANTS DURING 1995
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR 10-YEAR OPTION TERM/1/
---------------------------------------------------- -------------------------------------
0% ($) 5% ($) 10% ($)
-------- ------------- --------------
ASSUMED ASSUMED ASSUMED
COMMON COMMON COMMON
COMMON % OF TOTAL STOCK STOCK STOCK
SHARES OPTIONS PRICE ON PRICE ON PRICE ON
UNDERLYING GRANTED TO EXERCISE NOV. 21, NOV. 21, NOV. 21,
OPTIONS EMPLOYEES IN PRICE EXPIRATION 2005-- 2005-- 2005--
NAME GRANTED/2/ (#) FISCAL YEAR/3/ ($/SH) DATE $211.38 $344.54 $547.46
---- -------------- -------------- -------- ------------- -------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Paul Hazen.............. 44,400 15.6 $211.38 Nov. 21, 2005 0 5,912,590 14,922,230
William F. Zuendt....... 26,640 9.4 $211.38 Nov. 21, 2005 0 3,547,550 8,953,340
Michael J. Gillfillan... 10,660 3.7 $211.38 Nov. 21, 2005 0 1,419,560 3,582,680
Rodney L. Jacobs........ 15,990 5.6 $211.38 Nov. 21, 2005 0 2,129,330 5,374,020
Charles M. Johnson...... 13,320 4.7 $211.38 Nov. 21, 2005 0 1,773,780 4,476,670
Clyde M. Ostler......... 10,660 3.7 $211.38 Nov. 21, 2005 0 1,419,560 3,582,680
Six Named Officers as a
Group.................. 121,670 42.7 $211.38 Nov. 21, 2005 0 16,202,370 40,891,620
Total Shareholder Benefit.................................................... 0 6,258,800,000 15,796,000,000
Benefit of Six Named Officers as a Percent of Total.......................... 0 0.3% 0.3%
</TABLE>
- --------
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, at an assumed appreciation rate of 5 percent per year starting at
$211.38 per share, the Common Stock price would be $344.54 and the total
increase in shareholder value would be $6,258,800,000 ($133.16 increase per
share x 47 million outstanding shares). At an assumed appreciation rate of
10 percent per year starting at $211.38 per share, the Common Stock price
would be $547.46 and the total increase in shareholder value would be
$15,796,000,000 ($336.08 increase per share x 47 million outstanding
shares).
2. The options generally become exercisable with respect to one-third of their
underlying shares on each of the first, second and third anniversaries of
their grant. The exercise price may be paid in cash or Common Stock or by
means of a loan under the Long-Term Incentive Plan. See "Other Transactions
with Officers and Directors--Long-Term Incentive Plan," below. No stand-
alone or tandem stock appreciation rights were granted during 1995. The
Management Development and Compensation Committee of the Board, or a
subcommittee thereof, has the discretion to provide for the acceleration of
the exercisability of options if it determines that a change in control of
the Company has occurred, but the Committee has not exercised that
discretion.
3. Options to purchase a total of 284,700 shares of Common Stock were granted
during 1995.
12
<PAGE>
The following table shows the value realized upon exercise of options during
1995 and certain information about unexercised options at year-end with respect
to the named officers. There were no stock appreciation rights exercised during
the year or outstanding at year-end.
AGGREGATED OPTION EXERCISES DURING 1995 AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
OPTIONS EXERCISED DURING 1995
------------------------------
VALUE/1/ OF UNEXERCISED
COMMON SHARES UNDERLYING IN-THE-
UNEXERCISED OPTIONS ON MONEY OPTIONS/2/ ON
DECEMBER 31, 1995 DECEMBER 31, 1995($)
------------------------- -------------------------
SHARES ACQUIRED VALUE
NAME ON EXERCISE(#) REALIZED($)/1/ EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Paul Hazen.............. 0 0 242,005 84,395 34,244,846 3,454,884
William F. Zuendt....... 0 0 130,775 51,640 18,680,973 2,094,580
Michael J. Gillfillan... 10,200 1,038,275 53,300 25,660 6,894,000 1,268,053
Rodney L. Jacobs........ 3,000 307,500 61,500 34,990 7,840,250 1,727,704
Charles M. Johnson...... 15,500 1,820,223 59,500 28,320 7,790,750 1,280,355
Clyde W. Ostler......... 14,988 1,809,818 58,625 25,660 7,627,238 1,268,053
</TABLE>
- --------
1. "Value" represents the difference between the option exercise price and the
market value of the underlying Common Stock on December 31, 1995, 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.
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: Paul Hazen, $187,490; William F.
Zuendt, $141,619; Michael J. Gillfillan, $78,898; Rodney L. Jacobs, $27,573;
Clyde W. Ostler, $108,638; and Charles M. Johnson, $109,913.
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 executive compensation programs 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 major elements -- base salary, bonus
and stock options -- which are determined separately based on different sets of
criteria. Each element of compensation is evaluated relative to recent levels
of compensation for positions of similar responsibility at the 15 bank holding
companies with the largest stock market capitalization, which comprise Wells
Fargo's peer group (the "Peer Group"). The Committee believes that these
institutions, in light of their similarity to the Company, are significant
potential competitors for the executive talent Wells Fargo seeks to attract and
retain. Members of the Peer Group are among the 50 largest bank holding
companies in the United States and are included in the Keefe, Bruyette & Woods,
Inc., 50 Total Return Index for Bank Holding Companies shown on page [ ]. The
Committee also reviews the compensation levels of non-bank financial service
providers to ensure that Wells Fargo's pay levels are competitive.
13
<PAGE>
BASE SALARIES
Base salaries for executives, including the chief executive officer,
typically approximate the median salary for positions of similar responsibility
in the Peer Group. Salaries are adjusted up or down from the median based on
the strategic importance of the position and the skills of the executive.
Generally, increases in salary occur only in response to job market changes or
when warranted by an executive's change in responsibilities.
BONUSES
Executive officers, including the chief executive officer, are generally
eligible for bonuses that are based on shareholder, Company and individual
performance and on the Peer Group comparison described below.
Shareholder Performance Criteria. The Company's return to its shareholders is
compared to:
. the returns of our Peer Group.
. a broader measure of bank holding company stocks, the 50 bank holding
companies represented in the Keefe, Bruyette & Woods, Inc., 50 Total
Return Index for Bank Holding Companies (the "KBW 50"). All members of the
Peer Group are included in the KBW 50.
. a broad measure of market performance, the 500 stocks represented in the
Standard & Poor's 500 Stock Index (the "S&P 500").
Company Performance Criteria. As in prior years, in 1995 the Committee
focused on such measures of company profitability as return on equity ("ROE")
and return on assets ("ROA").
Individual Performance Criteria. The Committee considered the contribution
individual executive officers make to the performance of the Company, as
described above. An executive's individual performance was also evaluated in
such areas as leadership, vision, initiative, and personnel selection and
development.
Peer Group Comparison. To the extent that executive positions can be matched
with positions in the Peer Group, bonuses are compared to those of the Peer
Group. This year, bonuses are competitive with those from the median to the
75th percentile of the range of bonuses paid by the Peer Group in 1994, which
reflects Wells Fargo's performance in 1995. The Peer Group is used for these
evaluations rather than the KBW 50 because we believe the Peer Group reflects
the market in which we compete for executives.
In awarding bonuses, all of the foregoing factors are evaluated in a
qualitative manner, are not weighted, and their relative importance may vary in
view of individual circumstances.
Deductibility of Compensation. The chief executive officer, president and
vice chairmen are eligible for bonuses under the terms of the Senior Executive
Performance Plan ("SEPP"), which is designed to qualify bonuses paid thereunder
for tax deductibility under Section 162(m) of the Internal Revenue Code. The
Company's policy with regard to Section 162(m) is stated below. The Board of
Directors adopted the SEPP on February 15, 1994. The shareholders approved the
plan on April 18, 1994.
In accordance with the terms of the SEPP, in February 1995 the Committee set
a target threshold for ROE of 12 percent, then set 2.5 percent as the
percentage of net income applicable to Common Stock in excess of the ROE target
threshold, to fund the maximum pool available for 1995 bonuses. At that time,
the Committee also determined the size of each participant's percentage share
of the pool, based on such participant's potential individual contribution to
the success of the Company. At its meeting in February 1996, the Committee
decided to award each participant in the Plan an amount smaller than the
maximum amount permitted by the available pool. The criteria used in making
such decision and in determining the amount of the reduced bonuses were the
shareholder, Company and individual performance criteria and Peer Group
comparison described above. At such meeting, the Committee also set a target
threshold for ROE of 8 percent and 3 percent of net income applicable to Common
Stock in excess of the ROE target threshold to determine the 1996 bonus pool.
Such amounts were determined in light of the impact of the amortization of
goodwill and intangibles from the First Interstate merger on the Company's
reported return on equity.
14
<PAGE>
1995 Performance. Highlights of the Company's 1995 performance are as
follows:
. The return to our shareholders in 1995, assuming full reinvestment of
dividends, was 53 percent, compared to 15.2 percent in 1994. This compares
with 61.5 percent on average for the Peer Group, 60.2 percent for the bank
holding companies in the KBW 50 and 37.6 percent for the companies
comprising the S&P 500.
. Our five-year return to shareholders of 336 percent compares with the 345
percent average for the Peer Group, 224 percent for the bank holding
companies in the KBW 50 and 115 percent for the companies comprising the
S&P 500.
. Our ten-year return to shareholders of 874 percent compares with the 323
percent average for the Peer Group and 298 percent for the S&P 500. This
data is not available for the KBW 50.
. Company performance ranked at the top of the Peer Group in 1995. Our ROA
of 2.03 percent was the highest of the Peer Group and compares favorably
with the 1.15 percent average of the Peer Group. Our ROE of 29.70 percent
was the highest of the Peer Group and compares favorably with the Peer
Group average of 16.26 percent.
LONG-TERM INCENTIVE COMPENSATION
Stock options are awarded to motivate executives, including the chief
executive officer, to make decisions leading to sustained growth in
shareholder value. To determine award levels the Committee focuses on
individual impact on shareholder value, individual performance and strategic
responsibility. All of the foregoing factors are evaluated in a qualitative
manner, are not weighted, and their relative importance may vary in view of
individual circumstances. Occasionally stock options may be granted to a new
executive if his or her position has substantial strategic value and potential
impact on shareholder value. Stock options are granted at fair market value on
the date of grant, thereby linking individual potential compensation to
shareholder gain and encouraging management to operate the Company from the
perspective of an owner.
Stock options are an integral 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
1995 are in general between the median and 75th percentile when compared to
the Peer Group. Based on the foregoing considerations, the Committee awarded
1995 stock option grants to the six officers named in the above table, "Option
Grants During 1995."
POLICY REGARDING SECTION 162(M) OF THE INTERNAL REVENUE CODE
Section 162(m) of the Internal Revenue Code ("Section 162(m)") limits
federal income tax deductions for compensation paid to the chief executive
officer and the four other most highly compensated officers of a public
company to $1 million per year, but contains an exception for performance-
based compensation that satisfies certain conditions, including limitations on
the discretion of the Committee in determining the amount of such
compensation.
The Committee believes that a substantial portion of an executive's
compensation should be based on Company performance and, in determining the
amount and form of compensation, the Committee considers the net cost of that
compensation, including whether it will generate a tax deduction. As a result,
the Committee will generally seek to award performance-based compensation that
would otherwise be deductible in a manner that complies with the performance-
based compensation exception to Section 162(m). In that regard, the Committee
believes that stock options granted at fair market value under the Long-Term
Incentive Plan and bonuses awarded under the Senior Executive Performance Plan
will qualify for the performance-based compensation exception to the Section
162(m) deduction limit. However, because the net cost of compensation is
weighed against many other factors in determining executive compensation, the
Committee may determine that it is appropriate to authorize compensation that
is not deductible, whether by reason of Section 162(m) or otherwise.
15
<PAGE>
STOCK OWNERSHIP GUIDELINES
In 1993, the Company introduced minimum stock ownership guidelines to be met
within five years by 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. The investment at risk of the
executive officers meets these guidelines.
Management Development and
Compensation Committee:
John A. Young, Chairman
William R. Breuner
William S. Davila
Rayburn S. Dezember
Ellen M. Newman
Philip J. Quigley
Donald B. Rice
16
<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, 1995. 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.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG WELLS FARGO & COMPANY, S&P 500 AND KBW50
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
Measurement Period WELLS FARGO &
(Fiscal Year Covered) COMPANY S&P 500 KBW50
- --------------------- ---------- ------- -----
<S> <C> <C> <C>
Measurement Pt- 12/31/90 $100 $100 $100
FYE 12/31/91 $106 $130 $158
FYE 12/31/92 $140 $144 $202
FYE 12/31/93 $249 $154 $213
FYE 12/31/94 $287 $156 $202
FYE 12/31/95 $436 $215 $324
</TABLE>
Assuming the reinvestment of all dividends, a hypothetical investment of
$100 made as of December 31, 1990, 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 $436, $215 and $324, respectively, as of
December 31, 1995.
17
<PAGE>
TEN YEAR PERFORMANCE COMPARISON
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) WELLS FARGO S&P 500
- --------------------- ----------- -------
<S> <C> <C>
Measurement Pt- 12/31/85 $100 $100
FYE 12/31/86 $165 $118
FYE 12/31/87 $144 $124
FYE 12/31/88 $211 $145
FYE 12/31/89 $270 $191
FYE 12/31/90 $224 $185
FYE 12/31/91 $241 $238
FYE 12/31/92 $322 $260
FYE 12/31/93 $558 $286
FYE 12/31/94 $642 $290
FYE 12/31/95 $974 $398
</TABLE>
Assuming the reinvestment of all dividends, a hypothetical investment of $100
made as of December 31, 1985, in the Common Stock of the Company and pro rata
in the 500 stocks included in the S&P 500 would have been worth $974 and $398,
respectively, as of December 31, 1995.
18
<PAGE>
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 and
percent for loans made in March 1996, 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 Long-Term Incentive Plan. See
"Long-Term 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 six most highly compensated executive
officers in 1995 with loans under the Plan and for all 1995 executive officers
as a group during the time they served as such.
<TABLE>
<CAPTION>
BALANCE AS OF MAXIMUM BALANCE
DECEMBER 31, 1995 DURING 1995
----------------- ---------------
<S> <C> <C>
Paul Hazen
Chairman of the Board.. $1,398,392 $1,422,762
Michael J. Gillfillan
Vice Chairman.......... $1,657,912 $1,690,669
Clyde W. Ostler
Vice Chairman.......... $1,709,837 $1,730,488
All 1995 Executive
Officers as a Group(1).. $4,766,141 $5,658,121
</TABLE>
- ---------------------
(1) The balance as of December 31, 1995, represents loans to three persons;
the maximum balance during 1995 represents loans to four persons.
Long-Term 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 upon exercise of employee stock
options granted under the Plan or a predecessor plan. Under current policy,
the Company may extend or guarantee such loans with a maximum term of six
years. Such loans 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
percent during 1996, and the applicable rate in effect under Section
1274(d) of the Internal Revenue Code at the time the loan is made (currently
between and percent for loans made in March 1996, depending on the
term of the loan and certain other factors).
19
<PAGE>
The following table gives information about the unpaid principal balances
under the Plan and a predecessor plan for those of the six most highly
compensated executive officers in 1995 with loans under the Plan or a
predecessor plan and for all 1995 executive officers as a group during the
time they served as such.
<TABLE>
<CAPTION>
BALANCE AS OF MAXIMUM BALANCE
DECEMBER 31, 1995 DURING 1995
----------------- ---------------
<S> <C> <C>
Paul Hazen
Chairman of the Board.................... $2,699,798 $2,699,798
Michael J. Gillfillan
Vice Chairman............................ $ 251,700 $ 251,700
Clyde W. Ostler
Vice Chairman............................ $ 748,782 $ 748,782
All 1995 Executive Officers as a Group (4
persons).................................. $3,760,044 $3,815,412
</TABLE>
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 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 as 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 (not counting up to $15,000 of
open-end credit) 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.
During 1995 Berkshire Hathaway Credit Corp. ("Berkshire") purchased a
proportionate interest known as a participation in two loans previously made
by the Bank. Berkshire is a wholly owned subsidiary of Berkshire Hathaway,
Inc., and may be deemed to be under the control of Warren Buffett, the
beneficial owner of percent of the Common Stock. Berkshire paid
$98,750,000 in the aggregate for the two participations, an amount equal to
their book value. The borrowers of both loans originally paid the Bank an
aggregate of $1.5 million in commitment fees with respect to the portions of
their loans purchased by Berkshire, of which $750,000 was used to reduce
Berkshire's purchase price. Payments of interest and principal on Berkshire's
participations are payable by the borrowers of the loans and are not
guaranteed by the Bank. The terms and conditions of Berkshire's purchases were
determined by the Bank to be non-preferential and are consistent with other
third-party transactions of a similar nature. The Company has obtained the
approval of the Federal Reserve System for the Berkshire purchases.
In June 1995 the Company agreed as part of its Common Stock repurchase
program to purchase from time to time shares of Common Stock beneficially
owned by Walter H. Annenberg, the beneficial owner of percent of the
Common Stock. The amounts purchased would be calculated to keep Mr.
Annenberg's percentage ownership of the Common Stock at or below 9 percent
when computed after each such purchase. The purchases were to take place at
Mr. Annenberg's option after the close of the market at the end of a month,
and the purchase price was to be the average of the high and low sales prices
of the Common Stock on the last day of the month. In accordance with this
agreement, the
20
<PAGE>
Company purchased the following amounts of Common Stock from Mr. Annenberg on
the following dates at the following aggregate prices:
<TABLE>
<CAPTION>
DATE SHARES PRICE
---- ------- -----------
<S> <C> <C>
June 30, 1995......................................... 160,000 $29,110,000
July 31, 1995......................................... 20,000 $ 3,658,750
August 31, 1995....................................... 60,000 $11,212,500
</TABLE>
In addition to the above shares purchased pursuant to its June l995 agreement
with Mr. Annenberg, the Company also purchased 500,000 shares beneficially
owned by him on October 2, 1995, for an aggregate purchase price of
$93,093,750. The purchase price per share represented the average of the high
and low sales prices per share of Common Stock on September 29, 1995.
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
1995 with these reporting requirements.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following persons served as members of the Management Development and
Compensation Committee during all or part of 1995: John A. Young and Paul A.
Miller (Director Emeritus), Chairmen; William R. Breuner; William S. Davila;
Rayburn S. Dezember; Ellen M. Newman; Philip J. Quigley; and Donald B. Rice.
In the case of each such director, either the individual director, a family
member or an entity controlled by the director had loans or other extensions
of credit outstanding from the Bank or one of its affiliates during 1995.
These loans were made in the ordinary course of business and 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 at the time they were made.
PROPOSAL 2
INCREASE IN AUTHORIZED COMMON STOCK
The Company's Restated Certificate of Incorporation currently provides that
the Company is authorized to issue two classes of stock, consisting of
150,000,000 shares of Common Stock, $5.00 par value, and 25,000,000 shares of
Preferred Stock, $5.00 par value. In February 1996 the Board of Directors
authorized an amendment to the Restated Certificate to increase the authorized
number of shares of Common Stock to 500,000,000. The amendment would have no
effect on the number of shares of Preferred Stock authorized by the Restated
Certificate. The stockholders are being asked to approve such amendment at the
annual meeting.
The Board of Directors recommends a vote FOR the proposal to increase the
authorized shares of Common Stock.
As of December 31, l995, the Company had 46,973,319 shares of Common Stock
outstanding, leaving 103,026,681 authorized but unissued shares of Common
Stock. Of this amount, an aggregate of 11,555,655 shares were reserved for
issuance for various purposes, including 4,186,142 shares under director and
employee stock option plans, 542,358 under the 1990 Employee Stock Purchase
Plan, 2,718,226 under the Tax Advantage and Retirement Plan and 4,094,173
under the Dividend Reinvestment
21
<PAGE>
and Common Stock Purchase and Share Custody Plan. On January 23, l996, the
Company entered into a merger agreement with First Interstate Bancorp
providing for the merger of First Interstate into the Company. When the merger
is completed, up to approximately 53 million shares of Common Stock will be
issued upon conversion of First Interstate common stock outstanding at the
time and thereafter upon exercise of stock purchase options assumed by the
Company in the merger. Subtracting the shares required to complete the First
Interstate merger and the shares reserved for the purposes stated above from
the Company's authorized but unissued shares of Common Stock, approximately
38.5 million shares remain for other purposes under the Company's Restated
Certificate in its present form.
The amendment to the Company's Restated Certificate is being proposed by the
Board of Directors in order to make available additional shares of Common
Stock as the need may arise without the expense and delay of a special meeting
of stockholders. Authorized but unissued shares of Common Stock would be
available for issuance from time to time for such purposes and for such
consideration as the Board of Directors may determine to be appropriate
without further action by the shareholders, except for those instances in
which applicable law or stock exchange rules require shareholder approval.
Such shares may be issued in the event the Board of Directors determines that
it is necessary or appropriate to permit a future stock dividend or stock
split, to raise additional capital, to acquire another corporation or its
business or assets, to establish a strategic relationship with a corporate
partner or to be issued under management incentive or employee benefit plans.
The Board does not intend to authorize the issuance of any such shares except
upon terms the Board deems to be in the best interests of the Company. Except
as noted in the preceding paragraph, the Company has no present plans to issue
any additional shares of Common Stock.
The additional shares for which authorization is sought would be identical
to the shares of Common Stock now authorized. The increase in authorized
Common Stock will not have any immediate effect on the rights of existing
stockholders. To the extent that the additional authorized shares are issued
in the future, they will decrease the percentage ownership of existing
stockholders and, depending upon the price at which they are issued, could be
dilutive to existing stockholders. Holders of Common Stock have no preemptive
rights.
Substantial amounts of additional Common Stock could be issued to delay or
defeat a change in control of the Company. The Company does not currently
expect to use unissued Common Stock for this purpose. In such an event, the
Bank Holding Company Act of 1956, and the Change in Bank Control Act of 1978
in the case of individuals, require reporting to and approval by federal bank
regulatory agencies prior to acquisition of control of the Company. The Board
of Directors is not aware of any effort to effect a change in control or
takeover of the Company.
The Company last increased its authorized Common Stock from 75,000,000 to
150,000,000 shares in June l987 and prior to that from 50,000,000 to
75,000,000 shares in April 1986.
The Company intends to apply to the New York Stock Exchange for the listing
of any additional shares of Common Stock if and when such shares are issued.
22
<PAGE>
PROPOSAL 3
APPROVAL OF NEW EMPLOYEE STOCK PURCHASE PLAN
The Wells Fargo & Company 1996 Employee Stock Purchase Plan (the "ESPP") was
adopted on January l6 and amended on February 20, l996, by the Board of
Directors, subject to approval by the shareholders at the annual meeting. A
copy of the new ESPP is attached as Exhibit A to this Proxy Statement. The
following description of the ESPP is a summary and does not purport to be
fully descriptive. Reference is made to Exhibit A for more detailed
information. Approval of the ESPP requires the affirmative vote of the holders
of a majority of the shares present and entitled to vote at the meeting.
The Board of Directors recommends a vote FOR approval of the new ESPP.
INTRODUCTION
The ESPP is the successor to a similar employee stock purchase plan which
was approved by shareholders in 1990 but which will expire by its terms on
July 31, 1996. No additional options will be issued under that plan. The
purpose of the ESPP is to provide employees of the Company, the Bank and
designated subsidiaries (collectively, "Participating Companies") an
opportunity to participate in the ownership of the Company through the
granting of options to purchase an aggregate of up to 750,000 shares of the
Company's Common Stock at a price which is likely to be less than market value
at the time of purchase. The Common Stock issuable under the ESPP may be
either newly issued or treasury shares. On March , 1996, the closing price
of a share of Common Stock in New York Stock Exchange composite trading was
$ .
The ESPP is intended to benefit the Company as well as its shareholders and
employees. Management believes that many of the estimated eligible
employees will regard the ESPP as a significant benefit, giving them an
opportunity to purchase shares of Common Stock at a favorable price.
Management also believes that the shareholders will correspondingly benefit
from the increased interest on the part of participating employees in the
profitability of the Company.
The Management Development and Compensation Committee of the Company's Board
of Directors, which also administers certain of the Company's other executive
compensation and employee benefit plans (including the expiring employee stock
purchase plan), or a subcommittee thereof (the "Committee"), will administer
the ESPP.
The Company may make offerings under the ESPP which would permit the ESPP to
meet the requirements of an "employee stock purchase plan," as defined in
Section 423 of the Internal Revenue Code of 1986 (the "Code"), or not to meet
such requirements, as the Committee may determine from time to time.
ELIGIBILITY
Generally, each employee of a Participating Company who, at the beginning of
an Option Period, as defined below, has been an employee for at least three
months, or such other minimum period of service as may be specified by the
Committee, will be eligible to participate. At the discretion of the Committee
in the case of an offering under the ESPP not intended to qualify under
Section 423 of the Code, employees not eligible to participate in the ESPP may
include any employee not compensated on a salaried or full-commission basis or
such other class of employees as the Committee may specify.
23
<PAGE>
OPTION PERIODS
It is anticipated that under the ESPP there will be a series of "Option
Periods." The length of each Option Period will be specified by the Committee
but may not exceed 27 months. Option Periods need not be of the same length
and may run successively or concurrently, in whole or in part. Under the
expiring plan Option Periods have been one year in length and have run
successively.
Each eligible employee may elect at the commencement of each Option Period
to purchase at the end of such period a number of shares of Common Stock whose
aggregate value, calculated as of the first day of the Option Period, is equal
to a portion of his or her eligible compensation as designated by the employee
(which may be no greater as of a certain day than a percentage designated by
the Committee not to exceed 15 percent) plus interest at a rate determined by
the Committee. The participant is then granted an option to purchase up to
that number of shares of Common Stock determined by dividing the total amount
of his or her designated eligible compensation, plus interest, by the fair
market value of the Common Stock on the first day of the Option Period and
multiplying the result by a factor between 1 and 1 1/2, as determined by the
Committee at the commencement of the Option Period.
LIMITATIONS
No option will be granted to any person who immediately thereafter would
own, directly or indirectly, stock possessing 5 percent or more of the total
combined voting power or value of all classes of stock of the Company or any
of its subsidiary corporations. Furthermore, the right to purchase Common
Stock under the ESPP (or any other employee stock purchase plan that the
Company or any of its parent or subsidiary corporations may establish) may not
accrue at a rate that exceeds $15,000 in fair market value of such Common
Stock (determined at the time such option is granted) for any calendar year in
which such option is outstanding, regardless of whether the offering in which
such option is granted is intended to qualify or not under Section 423 of the
Code.
TERMS OF OPTIONS; TERMINATION
The option price will be the lower of a specified percentage (not less than
85 percent) of the fair market value of the Common Stock on the first day of
an Option Period or a specified percentage (not less than 85 percent) of the
fair market value of the Common Stock on the last day of that Option Period.
These two percentages (the "Applicable Percentages") are determined by the
Committee prior to the commencement of the Option Period. For this purpose,
the fair market value of the Common Stock on any given day will be calculated
by taking the average of the closing prices in New York Stock Exchange
composite trading for the five preceding trading days. Payment for shares by
participating employees shall be made solely from amounts collected from
participants in such manner and at such time as the Committee shall determine.
Under circumstances specified by the Committee, participants may cease future
contributions without terminating their options.
Unless previously terminated, options will be exercised automatically on the
last day of each Option Period. An option will terminate if the employee
voluntarily terminates the option or ceases to be an employee. An eligible
employee may irrevocably elect to participate in an Option Period and may
agree to additional conditions to withdrawal if necessary for regulatory
purposes, subject to the Plan's provisions governing termination of
employment. The Committee may also determine with respect to an Option Period
that a leave of absence or period of salary continuation of a certain length
will be deemed a termination of employment for this purpose. Common Stock
subject to a terminated option will be available for purchase pursuant to
options subsequently granted.
Options are not assignable or transferable.
24
<PAGE>
AMENDMENT AND TERMINATION
The Board of Directors may at any time alter, amend, suspend or discontinue
the ESPP with respect to any shares of Common Stock not already subject to
options; provided, however, that without the approval of the shareholders no
modification or amendment may (i) increase the available number of shares
(unless necessary for reasons described in the following paragraph), (ii)
unless the Committee determines thereafter to make only offerings that do not
qualify under Section 423 of the Code, change the class of companies eligible
to become Participating Companies or (iii) make any other change which in the
Board's judgment requires shareholder approval under applicable law or
regulation.
ADJUSTMENTS TO SHARES
If any change is made in the Common Stock (through merger, consolidation,
reorganization, recapitalization, stock dividend, split-up, combination of
shares, exchange of shares, change in corporate structure or otherwise),
appropriate adjustments shall be made to the maximum number of shares subject
to the ESPP and to the number of shares and price per share of Common Stock
subject to outstanding options.
TAX CONSEQUENCES
Offerings under the ESPP may permit the ESPP to qualify or not under Section
423 of the Code, as the Committee may determine from time to time. In the case
of a qualifying offering, no taxable income results to the employee at the
time of the grant of the option or upon its exercise. If the employee does not
dispose of the purchased shares within two years of the date of the option
grant, or within one year of the date the shares are transferred to him or
her, and the purchase price was equal to 100 percent of the fair market value
of the Common Stock at the date of grant, any profit or loss recognized upon
subsequent disposition will be long-term capital gain or loss. If the shares
are held for the prescribed period and the purchase price was less than 100
percent of the fair market value of the Common Stock at the date of grant, the
lesser of (i) the excess of the fair market value of the shares at the time of
disposition over the purchase price or (ii) the excess of the fair market
value of the shares at the time the option was granted over the option price
(determined as if the option were exercised on the date of grant) will be
treated as ordinary income with any remaining profit treated as long-term
capital gain; any loss will be a long-term capital loss. In either case there
will be no tax effect upon the Company. If the shares are disposed of before
the end of the prescribed holding period (a "disqualifying disposition"), the
employee must report as ordinary income, and the Company may deduct from its
taxable income, the excess of the fair market value of the Common Stock on the
date of exercise over the option price; the balance of any gain or loss will
be a capital gain or loss to the employee.
In the case of options offered under circumstances which would disqualify
the offering under Section 423 of the Code, the employee would recognize the
difference between the option exercise price and the fair market value of the
Common Stock at the time of exercise as ordinary income in the year of
exercise. The Company may deduct a corresponding amount from its taxable
income.
25
<PAGE>
PROPOSAL 4
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has appointed KPMG Peat Marwick LLP, certified public
accountants, Three Embarcadero Center, San Francisco, California, as
independent auditors for the Company for 1996. 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 $ 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 1997 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 , 1996.
The proposal must be mailed to the Company's principal executive offices at
420 Montgomery Street, San Francisco, California 94104, Attention: Secretary.
Guy Rounsaville, Jr.
Secretary
March 13, 1996
26
<PAGE>
EXHIBIT A
WELLS FARGO & COMPANY
1996 EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE
The Wells Fargo & Company 1996 Employee Stock Purchase Plan (the "Plan") is
intended to provide an opportunity to participate in the ownership of Wells
Fargo & Company (the "Company") for eligible employees of the Company and such
other companies ("Participating Companies") as the Committee (as defined
below) shall from time to time designate; provided that each such company
shall qualify as a "parent corporation" or "subsidiary corporation," as
defined in Section 424(e) and (f) of the Internal Revenue Code of 1986 (the
"Code"), on the first day of the relevant period determined in accordance with
Section 4 (the "Option Period"). It is further intended that the Plan shall
qualify as an "employee stock purchase plan," as defined in Section 423 of the
Code, but shall permit offerings that do not qualify under Section 423.
2. ADMINISTRATION
The Plan shall be administered by a committee (the "Committee") appointed by
the Board of Directors of the Company (the "Board"). The Committee shall have
full authority to administer the Plan, including authority to interpret and
construe any provision of the Plan and to adopt such rules and regulations for
administering the Plan as it may deem necessary. The Committee may delegate
part or all of its obligations and authority hereunder to one or more
employees or directors of the Company or a parent or subsidiary company, in
which case the term "Committee" shall relate to such delegate. Decisions of
the Committee shall be final and binding on all parties who have an interest
in the Plan.
3. EFFECTIVE DATE AND TERM OF PLAN
(a) No Option Period shall commence and no options shall be granted under
the Plan until the Plan has been approved by the Company's shareholders. If
shareholder approval is not obtained within 12 months after the date of the
Board's adoption of the Plan, then the Plan shall terminate.
(b) Unless terminated under Section 3(a) above, the Plan shall terminate at
such time as the Committee shall designate, but in no event shall the Plan
continue beyond the date on which all shares available for issuance under the
Plan shall have been issued.
4. OPTION PERIODS
The Plan shall have one or more Option Periods. The existence and the first
day of any Option Period shall be determined by the Committee. Each Option
Period shall run for a period specified by the Committee not to exceed 27
months, and the Committee shall designate the final day of each Option Period
so as to facilitate administration of the Plan. Option Periods need not be of
the same length and may run successively or concurrently, in whole or in part.
5. ELIGIBILITY AND PARTICIPATION
Each employee of the Company or any of the Participating Companies shall be
eligible to participate in the Plan during an Option Period except (i)
employees who have not completed an introductory period of employment of three
months (or such other minimum period of service as may be specified by the
Committee) as of the initial date of that Option Period (including service
with the Company, a Participating Company or an acquired employer that is
credited for purposes of determining eligibility under the Company's qualified
retirement plan), (ii) any one or more employees excluded in the sole
discretion of the Committee who are members of that classification of
employees described in Code Section 423(b)(4), and (iii) at the discretion of
the Committee in the case of an offering that is not
A-1
<PAGE>
intended to qualify under Section 423 of the Code, any employee not
compensated on a salaried or full-commission basis or such other class of
employees as the Committee may specify. All eligible employees may become
participants with respect to an Option Period by executing such instruments or
taking such other action, if any, as the Committee may specify.
6. STOCK
The stock subject to the Plan shall be shares of the Common Stock of the
Company which are authorized but unissued or which have been reacquired. In
connection with the sale of shares under the Plan, the Company may repurchase
shares of Common Stock in the open market or otherwise. The aggregate amount
of stock which may be sold pursuant to the Plan shall not exceed 750,000
shares (subject to adjustment as provided in Section 8).
7. OPTIONS
Options shall be granted in such form as the Committee may from time to time
approve and shall conform to the following terms and conditions:
(a) Option Price. The option price shall be not less than the lower of:
(1) a specified percentage (not less than 85 percent) of the fair
market value of the Company's Common Stock on the first day of the
Option Period or
(2) a specified percentage (not less than 85 percent) of the fair
market value of the Company's Common Stock on the last day of the
Option Period,
as determined by the Committee prior to the commencement of an Option
Period (the "Applicable Percentages"). For purposes of the Plan the fair
market value of the Company's Common Stock on any day shall be the average
of the closing prices as recorded by the New York Stock Exchange Composite
Tape for the five preceding trading days.
(b) Payment. Payment for Common Stock to be purchased under the Plan
shall be solely from amounts collected from participants in such manner and
at such time as the Committee shall decide, plus interest at a rate
determined by the Committee. The maximum amount which may be applied to the
purchase of Common Stock under the Plan may not exceed a stated percentage
of a participant's benefits compensation (not to exceed 15 percent)
calculated as of a certain day for each Option Period, as specified by the
Committee. The Committee may exclude or average certain items of
compensation including, but not limited to, certain incentive compensation,
bonuses, overtime pay, deferred compensation or contributions or benefits
under any employee benefit plan. If an offering is intended to qualify
under Section 123 of the Code, however, no item of compensation will be
included which would cause the offering to fail to so qualify.
(c) Number of Shares. On the first day of any Option Period, a
participant shall be granted an option to purchase up to a fixed number of
shares of Common Stock determined as of such date by dividing the total
amount estimated to be collected pursuant to Section 7(b) (including
estimated interest thereon) by 100 percent of the fair market value of the
Company's Common Stock on the first day of the Option Period and
multiplying the result by a constant number, not to exceed one and one-
half, specified by the Committee for such Option Period. If the total
number of shares of Common Stock for which options are to be granted on any
date in accordance with the terms of the Plan exceed the number of shares
then remaining available under the Plan (after deduction of all shares for
which options have been exercised or are then outstanding), the Committee
shall make a pro rata allocation of the shares remaining available in as
near as uniform a manner as shall be practicable and as it shall deem
equitable. The Committee shall give written notice of such allocation to
each participant affected thereby.
A-2
<PAGE>
(d) Termination of Employment. If, prior to the end of an Option Period,
a participant ceases to be employed by the Company or a Participating
Company for any reason, including death or retirement, the participant's
option shall terminate, and any amounts collected from the participant,
together with interest thereon, shall be paid to the participant or the
participant's personal representative.
(e) Termination of Option. A participant may, during an Option Period,
terminate his or her option, by giving written notice, in such manner and
at such time as the Committee may specify. If an option is terminated, any
amounts collected from the participant, together with interest thereon,
shall be paid to the participant and no further amounts will be collected
from the participant during the Option Period. However, a participant may
irrevocably elect to participate in an Option Period and may agree to
additional conditions to withdrawal if necessary for regulatory purposes,
subject to the termination of employment provisions in Section 7(d).
(f) Change in Status. The Committee may determine on a uniform basis with
respect to any Option Period whether a participant who is on a leave of
absence or on salary continuation or who experiences a significant
reduction in pay beyond the participant's control or converts from a
salaried to an hourly position will be deemed to have terminated employment
after a specified period for purposes of Section 7(d) or under what
circumstances such a participant may continue his or her option in effect
during such Option Period.
(g) Exercise. Each option shall be exercised automatically on the last
day of the Option Period, unless the option has been previously terminated
pursuant to Section 7(d) or 7(e). Any balance in the participant's account
(including interest) shall be promptly paid to the participant.
(h) Assignability. Options under the Plan shall not be assignable or
transferable by the participant and shall be exercisable only by the
participant.
(i) Rights as Shareholder. A participant shall have no rights as a
shareholder with respect to shares covered by any option granted under the
Plan until the option is exercised. No adjustments will be made for
dividends or other rights for which the record date is prior to the date of
exercise.
(j) Accrual Limitations. No option that is granted under the Plan shall
permit the rights of a participant to purchase stock under the Plan and all
"employee stock purchase plans" (as defined in Section 423 of the Code) of
the Company or its "parent corporations" or "subsidiary corporations" (as
defined in Section 424(f) of the Code) to accrue at a rate, specified by
the Committee (not to exceed $15,000 of fair market value of such stock
determined at the time such option is granted) for each calendar year in
which such option is outstanding at any time. The Committee shall specify
at the beginning of each Option Period whether the offering for such Option
Period is intended to qualify under Section 423 of the Code. No option
shall be granted to an employee if the employee would own (within the
meaning of Section 424(d) of the Code), or hold outstanding options to
purchase, immediately after the grant, stock possessing 5 percent or more
of the total combined voting power or value of all classes of stock of the
Company or any of its subsidiary corporations.
(k) Other Provisions. Options may contain terms, not inconsistent with
the Plan, as the Committee deems advisable.
8. CAPITAL ADJUSTMENTS
If any change is made in the Common Stock subject to the Plan, or subject to
any option granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, split-up, combination of
shares, exchange of shares, change in corporate structure or otherwise),
appropriate adjustments shall be made as to the maximum number of shares
subject to the Plan, and the number of shares and price per share of stock
subject to outstanding options.
A-3
<PAGE>
9. AMENDMENTS
The Board or Committee may from time to time alter, amend, suspend, or
discontinue the Plan at any time not subject to options; provided, however,
that no such action may, without the approval of shareholders of the Company,
(i) increase the number of shares subject to the Plan (unless necessary to
effect the adjustments required under Section 8), (ii) unless the Committee
determines thereafter to grant only offerings that do not qualify under
Section 423 of the Code, change the class of companies eligible to become
Participating Companies or (iii) make any other change with respect to which
the Board or Committee determines that shareholder approval is required by
applicable law or regulatory standards.
10. NO EMPLOYMENT OBLIGATION
Nothing contained in the Plan (or in any option granted pursuant to the
Plan) shall confer upon any employee any right to continue in the employ of
the Company or any affiliate or constitute any contract or agreement of
employment or interfere in any way with the right of the Company or an
affiliate to reduce such employee's compensation from the rate in existence at
the time of the granting of an option or to terminate such employee's
employment at any time, with or without cause, but nothing contained herein or
in any option shall affect any contractual rights of an employee pursuant to a
written employment agreement.
11. USE OF PROCEEDS
The cash proceeds received by the Company from the issuance of shares
pursuant to options under the Plan shall be used for general corporate
purposes.
12. REGULATORY APPROVALS
The implementation of the Plan, the granting of any option under the Plan,
and the issuance of Common Stock upon the exercise of any such option shall be
subject to the Company's procurement of all approvals and permits required by
regulatory authorities having jurisdiction over the Plan, the options granted
under it or the Common Stock issued pursuant to it.
13. 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.
A-4
<PAGE>
[LOGO RECYCLED PAPER]
PRINTED ON RECYCLED PAPER
<PAGE>
PROXY
WELLS FARGO & COMPANY
THIS PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS ON APRIL 16, 1996,
IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) PAUL HAZEN, ROBERT K. JAEDICKE and WILLIAM F.
ZUENDT, 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 San
Francisco, California, on Tuesday, April 16, 1996, 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 AND IN FAVOR OF THE PROPOSALS TO AMEND THE RESTATED
CERTIFICATE OF INCORPORATION TO INCREASE THE AUTHORIZED COMMON STOCK TO 500
MILLION SHARES, TO APPROVE THE 1996 EMPLOYEE STOCK PURCHASE PLAN AND TO RATIFY
THE SELECTION OF INDEPENDENT AUDITORS FOR 1996, 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.S. Davila; R.S. Dezember; P. Hazen; R.K. Jaedicke;
E.M. Newman; P.J. Quigley; C.E. Reichardt; D.B. Rice; S.G. Swenson;
C-L. Tien; J.A. Young; W.F. Zuendt.
/ / 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--Amend Restated Certificate of
Incorporation to increase
authorized Common Stock. / / FOR / / AGAINST / / ABSTAIN
Proposal 3--Approve 1996 Employee Stock
Purchase Plan. / / FOR / / AGAINST / / ABSTAIN
Proposal 4--Ratify selection of KPMG Peat
Marwick LLP as independent
auditors for 1996. / / FOR / / AGAINST / / ABSTAIN
Date:
---------------------------- , 1996
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.
