<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
WELLS FARGO & COMPANY
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / 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:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
-----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
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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.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
[LOGO]
March 11, 1997
To Our Shareholders:
You are cordially invited to attend the annual meeting of shareholders to be
held on Tuesday, April 15, 1997. 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 1:00 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 and to ratify the selection of the Company's independent auditors
for 1997.
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 CARD
IN THE ENCLOSED ENVELOPE REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE ANNUAL
MEETING.
<PAGE>
[LOGO]
420 Montgomery Street
San Francisco, California 94104
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 15, 1997
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 1:00 p.m. on Tuesday, April 15, 1997, in
order to:
1. Elect 18 directors to serve until the next annual meeting of shareholders
or until their successors have been elected and qualified; and
2. Ratify the selection of KPMG Peat Marwick LLP as independent auditors for
the Company for 1997.
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 14, 1997, 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 11, 1997
<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 1:00 p.m. on Tuesday, April 15, 1997. These proxy materials are
being mailed to shareholders on or about March 11, 1997.
PURPOSE OF MEETING
At the meeting, shareholders will be asked to (1) elect directors to serve
until the next annual meeting of shareholders or until their successors are
elected and qualified; and (2) ratify the selection of KPMG Peat Marwick LLP as
independent auditors for the Company for the year 1997. 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 14, 1997,
will be entitled to vote on all matters to be presented at the annual meeting.
On the record date, 90,869,162 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. In accordance with the Company's
By-Laws, Proposal 2 must be adopted by the holders of a majority of the shares
present and voting. Abstentions and broker non-votes would have no effect on the
outcome of Proposal 2.
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 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.
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 1996 Annual Report provides a review of the
Company's operations during the past year.
The Board of Directors of the Company met 13 times during 1996 and now
consists of 21 members. Myron Du Bain, Don C. Frisbee and William F. Miller,
currently members of the Board, have reached the
2
<PAGE>
mandatory age for retirement under the Company's tenure policy for directors and
accordingly will not stand for reelection at the annual meeting. The 18
remaining incumbent directors have been nominated for reelection. Biographies of
the nominees are provided under "Proposal 1 -- Election of Directors."
The directors of the Company also serve as the directors of the Bank. 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;
Michael R. Bowlin; Edward M. Carson; William S. Davila; Rayburn S. Dezember; Don
C. Frisbee; Philip J. Quigley; Carl E. Reichardt; John A. Young; and William F.
Zuendt. The Committee met five times in 1996.
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 2 -- 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 S. Davila; Thomas L. Lee; William F. Miller; Ellen M.
Newman; Richard J. Stegemeier; Susan G. Swenson; and Chang-Lin Tien. The
Committee met six times during 1996.
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; Michael R. Bowlin; Myron Du Bain; Philip J. Quigley;
Donald B. Rice; Richard J. Stegemeier; Susan G. Swenson; and Daniel M. Tellep.
The Committee met four times during 1996.
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: Donald B.
Rice, Chairman; Edward M. Carson; William S. Davila; Myron Du Bain; Don C.
Frisbee; Ellen M. Newman; Carl E. Reichardt; and Daniel M. Tellep. 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 21, 1997,
the Committee recommended the 18 nominees identified in this Proxy Statement.
See "Proposal 1 -- 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.
3
<PAGE>
Zuendt, Chairman; Edward M. Carson; Rayburn S. Dezember; Myron Du Bain; Don C.
Frisbee; Carl E. Reichardt; Donald B. Rice; and Daniel M. Tellep. The Committee
met twice in 1996.
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; Rayburn
S. Dezember; Robert K. Jaedicke; Thomas L. Lee; William F. Miller; and Ellen M.
Newman. The Committee met twice in 1996.
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS
Average attendance at Board and committee meetings during 1996 was
approximately 92 percent. During 1996, all directors attended at least 75
percent of the total number of Board meetings and meetings of the committees to
which they belonged, except for William F. Miller, who attended 67 percent of
such meetings.
DIRECTOR REMUNERATION AND RETIREMENT POLICY
Directors who are officers of the Company do not receive an annual retainer
or meeting fees for service on the Board or as a member of any Board committee.
Non-officer directors of the Company were paid a basic annual retainer of
$31,000 in 1996, increasing to $32,000 in 1997, 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 1996.
John A. Young, as chairman of the Management Development and Compensation
Committee, and the other members of such committee received additional amounts
of $5,000 and $2,000, respectively, during the year. Non-officer directors were
paid a fee of $1,200 for each Board meeting attended during the first quarter of
1996 and $1,500 per meeting during the remainder of the year, except that when
Board meetings of the Company and the Bank were held on the same day, only one
meeting fee was paid. During 1996, all non-officer directors received a fee of
$1,000 for each committee meeting attended during the first quarter of 1996 and
$1,150 per meeting thereafter, except that when the same committees of the
Company and the Bank had a combined meeting, only one meeting fee was paid. 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 customer referrals under a consulting
agreement with the Company that runs until 1999 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 in
December 1994 and has continued as a member of the Board of Directors. In
connection with his retirement, the Company agreed to make available office
space and the services of a secretary and a driver on an as-needed basis for Mr.
Reichardt's personal use.
Edward M. Carson retired as chairman of the board of First Interstate
Bancorp in April 1995 and was elected to the Company Board in April 1996 upon
the completion of the Company's merger with First Interstate. When he retired
from First Interstate, First Interstate agreed to provide Mr. Carson with office
4
<PAGE>
space and secretarial services for his personal use and to reimburse him for the
cost of two club memberships. The Company has assumed those obligations pursuant
to the First Interstate merger.
The Board of Directors terminated the Directors' Retirement Plan in 1996 for
all persons elected to the Board at any time after the 1996 annual meeting of
shareholders. For those eligible to participate, the Directors' Retirement Plan
provides that a non-officer director with at least five years' combined service
on the Board or the Board of First Interstate Bancorp is entitled to receive,
during a period equal to the lesser of 10 years or the number of full years of
service, an annual retirement benefit equal to the basic 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, except for certain
former directors of First Interstate. Directors of the Company with more than 10
years' service on the Board of First Interstate will receive their retirement
benefit for such longer period. First Interstate was acquired by the Company in
1996.
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 1996, options to purchase an
aggregate of 1,929 shares of Common Stock were issued to six 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 1996, options to purchase 9,462 shares
of Common Stock were granted to 19 directors under the 1990 Plan.
The Company reimburses members of the Board of Directors for up to $7,500
per year for expenses incurred in personal financial planning.
As successor to First Interstate Bancorp, the Company owns universal life
insurance policies originally purchased by First Interstate on the lives of
seven former directors of First Interstate who now serve on the Board of
Directors. The death benefits of the policies depend on the length of service
and do not exceed $200,000. The Company will continue to pay the premiums on
such policies while the director remains a member of the Board. The seven
directors have entered into "split-dollar" life insurance agreements which
provide that they will become fully entitled to the policy upon the occurrence
of certain events, including continuation of service to a future date and
resignation for good reason following a change in control. If a director becomes
entitled to the policy, the cash value of the policy reduces the payment of
benefits under the Directors' Retirement Plan and deferrals of director's fees.
During 1996, the directors covered by these insurance agreements received
imputed income ranging from $124 to $3,100, which varied according to the
director's age and length of service.
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.
5
<PAGE>
BENEFICIAL OWNERSHIP
The following table shows the number of shares of Common Stock beneficially
owned as of February 14, 1997, by all directors and nominees for director, each
of the five most highly compensated executive officers during 1996 and all
directors, nominees and executive officers as a group. Executive officers are
defined as all Company officers at the level of vice chair and above and all
Company staff heads on February 14, 1997 (14 persons). As of such date, no
individual director, nominee or executive officer beneficially owned more than
0.5 percent of all outstanding Common Stock. All directors, nominees and
executive officers as a group owned beneficially 1.5 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
SUBJECT TO
OPTIONS SHARES HELD
NON-OFFICER SHARES SHARES EXERCISABLE THROUGH
DIRECTORS AND HELD HELD WITHIN 60 COMPANY
NOMINEES DIRECTLY INDIRECTLY DAYS 401(k) PLAN TOTAL
- - ------------------------------- ---------- ---------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
H. Jesse Arnelle............... 191 0 2,602 0 2,793
Michael R. Bowlin.............. 0 5 0 0 5
Edward M. Carson............... 240 15,000 0 604 15,844
William S. Davila.............. 100 0 4,404 0 4,504
Rayburn S. Dezember............ 0 47,564 3,294 5,382 56,240
Myron Du Bain.................. 733 18,558 6,663 0 25,954
Don C. Frisbee................. 581 0 3,330 0 3,911
Robert K. Jaedicke............. 400 0 3,000 0 3,400
Thomas L. Lee.................. 866 0 4,665 0 5,531
William F. Miller.............. 0 666 0 0 666
Ellen M. Newman................ 2,350 227 3,000 0 5,577
Philip J. Quigley.............. 0 733 1,480 0 2,213
Carl E. Reichardt.............. 0 148,509 626 0 149,135
Donald B. Rice................. 610 4,490 2,289 0 7,389
Richard J. Stegemeier.......... 0 3,915 1,998 0 5,913
Susan G. Swenson............... 50 0 668 0 718
Daniel M. Tellep............... 433 0 666 0 1,099
Chang-Lin Tien................. 100 0 3,494 0 3,594
John A. Young.................. 400 0 6,143 0 6,543
<CAPTION>
MOST HIGHLY COMPENSATED
OFFICERS DURING 1996
- - -------------------------------
<S> <C> <C> <C> <C> <C>
Paul Hazen(1).................. 0 188,766 252,090 3,478 444,334
William F. Zuendt(1)........... 51,562 0 133,270 0 184,832
Rodney L. Jacobs............... 3,000 16,358 70,410 1,103 90,871
Charles M. Johnson............. 19,125 0 55,990 4,274 79,389
Clyde W. Ostler................ 9,985 0 69,258 0 79,243
<CAPTION>
GROUP
- - -------------------------------
<S> <C> <C> <C> <C> <C>
Directors, Nominees and
Executive Officers as a Group
(33 persons)................. 136,494 448,703 793,895 19,010 1,398,102
</TABLE>
- - ---------
1. Also a director.
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<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 as of
December 31, 1996:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT
- - -------------------------------------------------- ---------------------- -----------
<S> <C> <C>
Warren E. Buffett
Berkshire Hathaway, Inc.
1440 Kiewit Plaza
Omaha, Nebraska 68131............................. 7,319,418(1) 8.00
Janus Capital Corporation
100 Fillmore Street
Denver, Colorado 80206............................ 6,415,594(2) 7.01
Oppenheimer Group, Inc.
Oppenheimer Tower
World Financial Center
New York, New York 10281.......................... 5,476,665(3) 5.99
</TABLE>
- - ---------
1. Mr. Buffett shares dispositive power over all of the reported shares. As to
7,291,418 of them, 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. 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.
2. Janus Capital Corporation is a registered investment adviser whose clients
hold the reported shares. Thomas H. Bailey, in his capacity as president and
chairman of the board of Janus, shares voting and dispositive power over all
of the reported shares. Both Janus and Mr. Bailey disclaim beneficial
ownership of them.
3. Oppenheimer Group, Inc., a holding company in the securities business, shares
voting and dispositive power over the reported shares with certain affiliated
companies and investment advisory clients. As to 5,418,505 of the reported
shares, voting and dispositive power are shared with Oppenheimer Capital, an
affiliated investment adviser. Oppenheimer Group and its affiliates disclaim
beneficial ownership of the reported shares.
7
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
A total of 18 persons have been nominated 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.
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.
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.
<TABLE>
<S> <C>
[Photo] H. JESSE ARNELLE Mr. Arnelle, 63, 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.
[Photo] MICHAEL R. BOWLIN Mr. Bowlin, 54, has been chairman of the board
since 1995 of Atlantic Richfield Company, or ARCO, an integrated
petroleum products company. He has also been chief executive
officer of ARCO since 1994 and president and chief operating
officer of ARCO since June 1993. Mr. Bowlin was an executive vice
president of ARCO from 1992 to 1993. Mr. Bowlin is also chairman
of the board of ARCO Chemical Company. He is a director of ARCO
and ARCO Chemical Company. He has been a director of the Company
since 1996.
[Photo] EDWARD M. CARSON Mr. Carson, 67, was chairman of the board from
1990 through April 1995 of First Interstate Bancorp, where he was
also chief executive officer from 1990 through 1994. He is also a
director of Aztar Corporation, Castle & Cook, Inc., and Terra
Industries, Inc. Mr. Carson had been a director of First
Interstate Bancorp from 1985 until 1996, when he was elected to
the Board of the Company for the first time.
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
[Photo] WILLIAM S. DAVILA Mr. Davila, 65, 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 serves on the foundation boards of
Methodist Hospital, Arcadia, and Santa Marta Hospital, Los
Angeles. He has been a director of the Company since 1990.
[Photo] RAYBURN S. DEZEMBER Mr. Dezember, 66, 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.
[Photo] PAUL HAZEN Mr. Hazen, 55, 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.
[Photo] ROBERT K. JAEDICKE Mr. Jaedicke, 68, 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 Bailard Biehl & Kaiser Real Estate Investment Trust
Inc., Boise Cascade Corporation, California Water Service Company,
C. M. Capital, Enron Corporation, GenCorp, Inc., Homestake Mining
Company and State Farm Insurance Companies. He has been a director
of the Company since 1983.
[Photo] THOMAS L. LEE Mr. Lee, 54, has been chairman and chief executive
officer since 1989 of The Newhall Land and Farming Company, which
is engaged in planned community development and agriculture. He is
also a director of CalMat Co. In addition, Mr. Lee is a director
of the Los Angeles Area Chamber of Commerce, a trustee of the
California Institute of the Arts and a member of the California
Business Roundtable and the Urban Land Institute. He had been a
director of First Interstate from 1993 to 1996, when he was first
elected to the Board of the Company.
</TABLE>
9
<PAGE>
<TABLE>
<S> <C>
[Photo] ELLEN M. NEWMAN Mrs. Newman, 68, 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, a director of the California Chamber of
Commerce and a founding director of the Retail Management
Institute of the University of Santa Clara. Mrs. Newman has been a
director of the Company since 1976.
[Photo] PHILIP J. QUIGLEY. Mr. Quigley, 54, 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. He has been a director of the
Company since 1994.
[Photo] CARL E. REICHARDT Mr. Reichardt, 65, 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.
[Photo] DONALD B. RICE Mr. Rice, 57, since 1996 has been president and
chief executive officer of UroGenesys, Inc., a biotechnology
research and development company. He was president and chief
operating officer of Teledyne, Inc., from 1993 to 1996 and
Secretary of the Air Force from 1989 to 1993. He is also a
director of UroGenesys, Inc., and Vulcan Materials Company. Mr.
Rice originally served as a director of the Company from 1980 to
1989 and rejoined the Board in 1993.
[Photo] RICHARD J. STEGEMEIER Mr. Stegemeier, 68, is chairman emeritus of
Unocal Corporation, an integrated petroleum company, where he was
chairman of the board from 1989 until his retirement in May 1995.
He also served as chief executive officer from 1988 to 1994. He is
a director of Foundation Health Corporation, Halliburton Company,
Northrop Grumman Corporation, Outboard Marine Corporation and
Pacific Enterprises. Mr. Stegemeier had been a director of First
Interstate from 1989 to 1996, when he was first elected to the
Company Board.
</TABLE>
10
<PAGE>
<TABLE>
<S> <C>
[Photo] SUSAN G. SWENSON Ms. Swenson, 48, 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.
[Photo] DANIEL M. TELLEP Until his retirement at the end of 1996, Mr.
Tellep, 65, served during 1996 as chairman of the board and during
1995 as chairman of the board and chief executive officer of
Lockheed Martin Corporation, an aerospace manufacturer created by
merger in 1995. He had been chairman and chief executive officer
of Lockheed Corporation from 1989 until the merger. He is also a
director of Edison International, Lockheed Martin Corporation and
Southern California Edison Company. Mr. Tellep had been a director
of First Interstate from 1991 to 1996, when he was first elected
to the Company Board.
[Photo] CHANG-LIN TIEN Mr. Tien, 61, has been chancellor of the
University of California, Berkeley, since 1990. He is also a
director of Raychem Corporation. Currently serving on the boards
of trustees of the Asia Foundation and the Carnegie Foundation for
the Advancement of Teaching, 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.
[Photo] JOHN A. YOUNG Mr. Young, 64, 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, Lucent Technologies, Novell, Inc.,
Shaman Pharmaceuticals Inc. and SmithKline Beecham PLC. Mr. Young
is also co-chair of the President's Committee of Advisors on
Science and Technology, a member of the executive committee of the
Council on Competitiveness and a member of the Business Council.
He has been a director of the Company since 1977.
[Photo] WILLIAM F. ZUENDT Mr. Zuendt, 50, became president of the Company
and the Bank at the beginning of 1995 after serving as a vice
chairman of the Company and the Bank since 1986. He is also a
director of 3Com Corporation and the California Chamber of
Commerce. Mr. Zuendt is a member of the Federal Advisory Council
of the Federal Reserve System. He has been a director of the
Company since 1995.
</TABLE>
11
<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 four most highly
compensated executive officers during 1996. No stock appreciation rights were
awarded during any period covered by the table.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL 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 ................ 1996 850,000 2,000,000 11,478 29,560 84,583
Chairman and Chief 1995 812,500 2,000,000 291 44,400 81,250
Executive Officer 1994 737,500 1,250,000 291 40,000 73,750
1993 658,333 1,000,000 186 40,000 65,833
1992 575,000 0 186 40,000 57,500
William F. Zuendt ......... 1996 600,000 1,200,000 19,188 17,740 59,167
President 1995 537,500 1,200,000 11,571 26,640 52,709
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
Rodney L. Jacobs .......... 1996 425,000 750,000 19,188 11,830 41,667
Vice Chair 1995 375,000 750,000 11,571 15,990 37,500
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
Charles M. Johnson ........ 1996 375,000 550,000 18,804 8,870 37,500
Vice Chair 1995 367,500 550,000 11,571 13,320 36,750
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 23,147
Clyde W. Ostler ........... 1996 375,000 475,000 15,687 7,100 46,500
Vice Chair 1995 375,000 475,000 11,571 10,660 37,500
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
</TABLE>
- - ---------
1. Amounts shown for 1996 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 1996 to TAP and the BRP respectively on behalf of the named officers
were as follows: Mr. Hazen, $13,750, $70,833; Mr. Zuendt, $8,969, $50,198;
Mr. Jacobs, $13,750, $27,917; Mr. Johnson, $4,170, $33,330; and Mr. Ostler,
$7,392, $39,108.
12
<PAGE>
Shown below is further information regarding employee stock options awarded
during 1996 under the Company's Long-Term Incentive Plan to the five officers
named above. No stock appreciation rights were awarded during the year.
OPTION GRANTS DURING 1996
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
FOR 10-YEAR OPTION TERM(1)
-------------------------------------------------
0% ($) 5% ($) 10% ($)
--------------- --------------- ---------------
ASSUMED ASSUMED ASSUMED
INDIVIDUAL GRANTS COMMON COMMON COMMON
------------------------------------------------------------ STOCK STOCK STOCK
COMMON SHARES % OF TOTAL PRICE ON PRICE ON PRICE ON
UNDERLYING OPTIONS GRANTED EXERCISE NOV. 19, NOV. 19, NOV. 19,
OPTIONS TO EMPLOYEES IN PRICE EXPIRATION 2006-- 2006-- 2006--
NAME GRANTED(2) FISCAL YEAR(3) ($/SH) DATE $277 $451.51 $717.43
- - ------------------- ------------- ----------------- ----------- ------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Paul Hazen......... 29,560 12.7 $ 277 Nov. 19, 2006 0 5,158,516 13,019,111
William F.
Zuendt........... 17,740 7.6 $ 277 Nov. 19, 2006 0 3,095,807 7,813,228
Rodney L. Jacobs... 11,830 5.1 $ 277 Nov. 19, 2006 0 2,064,453 5,210,287
Charles M.
Johnson.......... 8,870 3.8 $ 277 Nov. 19, 2006 0 1,547,904 3,906,614
Clyde W. Ostler.... 7,100 3.1 $ 277 Nov. 19, 2006 0 1,239,021 3,127,053
Five Named Officers
as a Group....... 75,100 32.3 $ 277 Nov. 19, 2006 0 13,105,701 33,076,293
Total Approximate Shareholder Benefit............................................ 0 15,963,000,000 40,288,000,000
Benefit of Five Named Officers as a Percent of Total............................. 0 0.1% 0.1%
</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 $277
per share, the Common Stock price would be $451.51 and the total increase in
shareholder value would be approximately $15,963,000,000 ($174.51 increase
per share X approximately 91.5 million outstanding shares). At an assumed
appreciation rate of 10 percent per year starting at $277 per share, the
Common Stock price would be $717.43 and the total increase in shareholder
value would be approximately $40,288,000,000 ($440.43 increase per share X
approximately 91.5 million outstanding shares).
2. The options generally become exercisable with respect to one-third of their
underlying shares on each of the first, second and third anniversaries of
their grant. The exercise price may be paid in cash or Common Stock or by
means of a loan under the Long-Term Incentive Plan. See "Other Transactions
with Officers and Directors -- Long-Term Incentive Plan," below. No
stand-alone or tandem stock appreciation rights were granted during 1996. The
Management Development and Compensation Committee of the Board, or a
subcommittee thereof, has the discretion to provide for the acceleration of
the exercisability of options under various circumstances, including its
determination that a change in control of the Company has occurred, but the
Committee has never exercised that discretion.
3. Options to purchase a total of 232,600 shares of Common Stock were granted
under the Company's Long-Term Incentive Plan during 1996.
13
<PAGE>
The following table shows the value realized upon exercise of options during
1996 and certain information about unexercised options at year-end with respect
to the named officers. There were no stock appreciation rights exercised during
the year or outstanding at year-end.
AGGREGATED OPTION EXERCISES DURING 1996 AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
COMMON SHARES UNDERLYING VALUE(1) OF UNEXERCISED
OPTIONS EXERCISED DURING 1996 UNEXERCISED OPTIONS ON IN-THE-MONEY OPTIONS(2) ON
------------------------------- DECEMBER 31, 1996(#) DECEMBER 31, 1996($)
SHARES ACQUIRED VALUE ----------------------------- ----------------------------
NAME ON EXERCISE(#) REALIZED($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - -------------------- ----------------- ------------ ------------ --------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Paul Hazen.......... 5,550 992,756 277,920 72,490 50,678,828 3,367,490
William F. Zuendt... 22,220 3,853,265 133,270 44,665 23,649,479 2,164,035
Rodney L. Jacobs.... 10,420 2,060,658 70,410 27,490 11,374,299 1,237,278
Charles M. Johnson.. 5,625 1,087,528 68,315 22,750 11,538,891 1,133,370
Clyde W. Ostler..... 1,600 285,963 70,578 19,207 12,082,638 1,029,871
</TABLE>
- - ---------
1. "Value" represents the difference between the option exercise price and the
market value of the underlying Common Stock on December 31, 1996, 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; Rodney L. Jacobs, $27,573; Charles M. Johnson, $109,913; and Clyde W.
Ostler, $108,638.
REPORT ON EXECUTIVE COMPENSATION BY
MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE
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 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 18. The
Committee also reviews the compensation levels of non-bank financial service
providers to ensure that Wells Fargo's pay levels are competitive.
14
<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 market changes or when warranted
by an executive's change in responsibilities. No adjustments in base salary were
made this year for the most senior executive officers, including the chief
executive officer.
BONUSES
Executive officers are 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. In 1996 the Committee focused on such measures
of Company profitability as return on equity, "cash" return on equity and "cash"
return on assets. Following the First Interstate merger, the cash return
measurements are believed to be the most relevant measures of financial
performance for shareholders and are the most comparable with prior periods.
INDIVIDUAL PERFORMANCE CRITERIA. The Committee considered the contribution
individual executive officers made 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 for executive officers, including the chief executive
officer, are intended to be near the Peer Group median. 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. The 1996 cash bonuses for executive officers
took into account individual contributions to business performance and, except
for the most senior executive officers, contributions towards integrating the
Company's operations following the First Interstate merger.
SENIOR EXECUTIVE PERFORMANCE PLAN. The five most highly compensated officers
from among the chief executive officer, the president and the vice chairs 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 by the Company 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.
15
<PAGE>
In accordance with the terms of the SEPP, in February 1996 the Committee set
a target threshold for return on equity of 8 percent, then set 3 percent as the
percentage of net income applicable to Common Stock in excess of that target
threshold, to fund the maximum pool available for 1996 bonuses. In February 1996
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. In accordance with SEPP provisions approved by the
shareholders in 1994, the Committee is permitted to adjust net income for
certain restructuring charges. In determining the size of the 1996 SEPP pool,
the Committee, at its February 1997 meeting, adjusted the 1996 net income
applicable to Common Stock by $260 million in order to remove the effect of
certain expenses related to severance and integration costs associated with the
First Interstate merger.
At its meeting in February 1997, the Committee also decided to award each
participant in the Plan an amount smaller than the maximum amount permitted by
the available pool based on the shareholder, Company and individual performance
criteria and the Peer Group comparison described above. In particular, the
Committee determined that cash bonuses awarded under the SEPP for 1996,
including the chief executive officer's bonus, should not exceed bonuses awarded
under the SEPP for 1995 performance.
At such meeting, the Committee also set target thresholds of 3 percent of
net income applicable to Common Stock in excess of 8 percent return on equity to
determine the 1997 bonus pool. Such amounts were determined in light of the
reduction in the Company's reported return on equity resulting from the
amortization of goodwill and intangibles associated with the First Interstate
merger.
1996 PERFORMANCE. Highlights of the Company's 1996 performance, taking into
account the impact of the First Interstate merger, are as follows:
- The return to our shareholders in 1996, assuming full reinvestment of
dividends, was 27.6 percent, compared to 53 percent in 1995. This
compares with 38.2 percent on average for the Peer Group, 41.5 percent
for the bank holding companies in the KBW 50 and 22.9 percent for the
companies comprising the S&P 500.
- Our five-year return to shareholders of 426 percent compares with the 250
percent average for the Peer Group, 189 percent for the bank holding
companies in the KBW 50 and 103 percent for the companies comprising the
S&P 500.
- Our ten-year return to shareholders of 658 percent compares with the 442
percent average for the Peer Group and 314 percent for the S&P 500. This
data is not available for the KBW 50.
- Our return on equity of 8.83 percent compares with the Peer Group average
of 17.58 percent. Our cash return on average common equity of 28.46
percent ranked first in the Peer Group, whose estimated average was 18.65
percent. Our 1996 cash return on average assets was 1.66 percent. The
Peer Group average return on assets was 1.32 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.
16
<PAGE>
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 value of
grants in 1996 to the executive officers, including the chief executive officer,
are in general between the median and the 75th percentile when compared to the
Peer Group. Based on the foregoing considerations, the Committee awarded 1996
stock option grants to the five officers named in the above table, "Option
Grants During 1996."
At its meeting in February 1997, the Committee decided to award the
Company's most senior executive officers with an additional stock option grant
to recognize their efforts thus far towards the successful integration of the
Company's operations following the First Interstate merger. The options were
granted at fair market value on the date of grant, have an exercise price of
$314.25 per share and vest annually over a three-year period. To the extent that
the Company's future performance resulting from the successful completion of the
First Interstate merger generates additional value to shareholders, it will also
result in value to these executives through these grants.
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 by the Company for compensation paid to the chief
executive officer and the four other most highly compensated officers to $1
million per year, but contains an exception for performance-based compensation
that satisfied 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 for the
Company. As a result, the Committee will generally seek to award
performance-based compensation that would otherwise be deductible by the Company
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 by the
Company, whether by reason of Section 162(m) or otherwise.
STOCK OWNERSHIP GUIDELINES
In 1993 the Company introduced minimum stock ownership guidelines to be met
by officers at the level of senior vice president and above within five years
after promotion to such levels. These guidelines support the view that
management risk and rewards should have a direct relationship to shareholder
returns. The investment at risk of each of the executive officers substantially
exceeds these guidelines.
Management Development and
Compensation Committee:
John A. Young, Chairman
Michael R. Bowlin
Myron Du Bain
Philip J. Quigley
Donald B. Rice
Richard J. Stegemeier
Susan G. Swenson
Daniel M. Tellep
17
<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, 1996. The graphs compare the cumulative total returns
during those periods on the Common Stock, the Standard & Poor's 500 Stock Price
Index ("S&P 500") and, in the five-year comparison only, the Keefe, Bruyette &
Woods, Inc., 50 Total Return Index ("KBW 50"), which is not available for the
ten-year period shown below. The KBW 50 is a market-capitalization-weighted
stock price index composed of 50 bank holding company stocks. All computations
have been made to give effect to the reinvestment of dividends.
FIVE-YEAR PERFORMANCE COMPARISON
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AS OF DECEMBER 31, WELLS FARGO S&P 500 KBW50
<S> <C> <C> <C>
1991 100 100 100
1992 136 108 127
1993 235 118 134
1994 270 120 128
1995 413 165 204
1996 526 203 289
</TABLE>
Assuming the reinvestment of all dividends, a hypothetical investment of
$100 made as of December 31, 1991, in the Common Stock of the Company, and pro
rata in the 50 stocks included in the KBW 50 and in the 500 stocks comprising
the S&P 500 would have been worth $526, $289 and $203, respectively, as of
December 31, 1996.
18
<PAGE>
TEN-YEAR PERFORMANCE COMPARISON
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AS OF DECEMBER 31, WELLS FARGO S&P 500
<S> <C> <C>
1986 100 100
1987 87 105
1988 128 123
1989 164 162
1990 135 156
1991 144 204
1992 195 220
1993 338 242
1994 389 245
1995 595 337
1996 758 414
</TABLE>
Assuming the reinvestment of all dividends, a hypothetical investment of
$100 made as of December 31, 1986, in the Common Stock of the Company and pro
rata in the 500 stocks included in the S&P 500 would have been worth $758 and
$414, respectively, as of December 31, 1996. A 10-year performance comparison is
not available for the KBW 50.
19
<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 5.83 and 6.42 percent for loans
made in March 1997, 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 five most highly compensated executive
officers in 1996 with loans under the Plan and for all 1996 executive officers
as a group during the time they served as such.
<TABLE>
<CAPTION>
BALANCE AS OF MAXIMUM BALANCE
DECEMBER 31, 1996 DURING 1996
------------------- ------------------
<S> <C> <C>
Paul Hazen
Chairman of the Board........................................ $ 1,372,476 $ 1,398,392
Clyde W. Ostler
Vice Chair................................................... $ 1,687,979 $ 1,709,837
All 1996 Executive Officers as a Group(1)...................... $ 4,451,165 $ 4,766,141
</TABLE>
- - ---------
1 Both the balance as of December 31, 1996, and the maximum balance during 1996
represent loans to three 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, which was 6.25 percent for 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 6.36 and 6.75 percent for loans
made in March 1997, depending on the term of the loan and certain other
factors).
20
<PAGE>
The following table gives information about the unpaid principal balances
under the Plan and a predecessor plan for those of the five most highly
compensated executive officers in 1996 with loans under the Plan or a
predecessor plan and for all 1996 executive officers as a group during the time
they served as such.
<TABLE>
<CAPTION>
BALANCE AS OF MAXIMUM BALANCE
DECEMBER 31, 1996 DURING 1996
------------------- ------------------
<S> <C> <C>
Paul Hazen
Chairman of the Board........................................ 0 $ 2,699,798
William F. Zuendt
President.................................................... 0 $ 1,804,609
Clyde W. Ostler
Vice Chair................................................... $ 758,283 $ 866,283
All 1996 Executive Officers as a Group(1)...................... $ 1,928,945 $ 6,779,352
</TABLE>
- - ---------
1 The balance as of December 31, 1996, represents loans to five persons; the
maximum balance during 1996 represents loans to seven persons.
OTHER TRANSACTIONS. The Bank has had and expects in the future to have
banking transactions in the ordinary course of its business with many of the
Company's directors and executive officers and their associates, including
transactions with corporations of which such persons are directors, officers or
controlling shareholders, on substantially the same terms (including interest
rates and collateral) as those prevailing at the time for comparable
transactions with others. The loans included among such transactions did not
involve more than the normal risk of collectibility or present other unfavorable
features when 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 non-preferential 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 of the loan is to finance the
education of the officer's children or the purchase, construction, maintenance
or improvement of the officer's residence or unless the loan is secured by
collateral of the types specified by federal law.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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
1996 with these reporting requirements, except as follows. The initial
beneficial ownership reports on behalf of directors Edward M. Carson and Richard
J. Stegemeier were filed two and seven days late, respectively. The initial
beneficial ownership report filed on behalf of Paul M. Watson, an executive
officer, understated his Common Stock ownership by 130 shares; this was
corrected by amendment four months later. And the sale of 1,130 shares of Common
Stock by Robert M. Nahas, a former director emeritus, was reported approximately
2 1/2 months late.
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following persons served as members of the Management Development and
Compensation Committee during all or part of 1996: John A. Young, Chairman;
Michael R. Bowlin; Myron Du Bain; William R. Breuner (retired); William S.
Davila; Rayburn S. Dezember; Ellen M. Newman; Philip J. Quigley; Donald B. Rice;
Richard J. Stegemeier; Susan G. Swenson; and Daniel M. Tellep. With the
exception of Messrs. Bowlin, Du Bain, Stegemeier and Tellep, each director on
the Committee, 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 1996. 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 when they were made.
PROPOSAL 2
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 1997. 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 LLP 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 LLP will be present at
the annual meeting. They will have an opportunity to make a statement if they so
desire and will be available to respond to appropriate questions.
The Board of Directors recommends a vote FOR this proposal.
COST OF SOLICITATION
In addition to solicitation by mail, proxies may also be solicited by
directors, officers and employees of the Company and the Bank, who will not
receive additional compensation for such solicitation. The Company has also
engaged D. F. King & Co. Inc. to assist in contacting shareholders whose stock
is held in the names of brokers or other custodians and will pay $7,500 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 1998 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 11, 1997. 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 11, 1997
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PROXY
WELLS FARGO & COMPANY
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS APRIL 15, 1997
THIS PROXY 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 15, 1997, at l: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 PROPOSAL TO RATIFY THE SELECTION OF
INDEPENDENT AUDITORS FOR 1997, 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 TWO 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.
PLEASE MARK, DATE AND SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY
[Reverse Side]
The shares represented by this proxy will be voted as directed by the
stockholder. If no direction is given when the duly executed proxy is returned,
such shares will be voted "FOR" authority in Proposal 1 and "FOR" Proposal 2.
The Board of Directors favors a vote "FOR" authority in Proposal 1 and "FOR"
Proposal 2.
1. Authority to vote for the following nominees for director:
H.J. Arnelle; M.R. Bowlin; E.M. Carson; W.S. Davila; R.S.
Dezember; P. Hazen; R.K. Jaedicke; T.L. Lee; E.M. Newman; P.J.
Quigley; C.E. Reichardt; D.B. Rice; R.J. Stegemeier; S.G. Swenson;
D.M. Tellep; C-L. Tien; J.A. Young; W.F. Zuendt.
/ / FOR / / WITHHELD
FOR, except vote withheld from the following nominee(s):
_______________________________________________________
<PAGE>
2. Ratify selection of KPMG Peat Marwick LLP as independent auditors
for 1997.
/ / FOR / / AGAINST / / ABSTAIN
Signature(s):_____________________________________ Date:____________
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such. If signer is a corporation or other
organization, please sign in full name of corporation or other organization and
indicate capacity of signing officer.
The signer hereby revokes all proxies heretofore given by the signer to vote at
said meeting or any adjournment thereof.
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