<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 240.14a-11(c) or 240.14a-12
Wells Fargo & Company
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other than the Registrant)
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 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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:
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(4) Date Filed:
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<PAGE>
March 22, 1999
Dear Stockholder:
The annual meeting of stockholders will be held on Tuesday, April 27, 1999,
at 1:00 p.m., in the Penthouse Boardroom, 420 Montgomery Street, San
Francisco, California.
At the annual meeting, you will be asked to elect directors, to vote on the
Company's proposals to increase the number of shares that may be awarded under
the Long-Term Incentive Compensation Plan and to ratify the appointment of
independent auditors for the year 1999, and to vote on a stockholder proposal
to adopt cumulative voting in the election of directors.
For reasons explained in the accompanying proxy statement, the Board of
Directors recommends that you vote FOR the first three proposals and AGAINST
the proposal relating to cumulative voting.
We hope that you will be able to attend the meeting. In any case, to make
sure that your vote is received, please complete, sign and return your proxy
card in the enclosed envelope. Thank you for your interest in the Company.
Sincerely,
/s/ Paul Hazen /s/ Richard M. Kovacevich
---------------------- ----------------------------
Chairman President and
Chief Executive Officer
-----------------------------
Please sign and date the enclosed proxy card and return it promptly in the
accompanying envelope regardless of whether you plan to attend the meeting.
You may later decide to vote in person at the meeting, or you may revoke
your proxy for any other reason at any time before it is voted.
-----------------------------
[WELLS FARGO LOGO]
<PAGE>
Notice of Annual Meeting of Stockholders
April 27, 1999
To the Holders of
Common Stock of Wells Fargo & Company:
The annual meeting of stockholders of Wells Fargo & Company (the "Company")
will be held in the Penthouse Boardroom, 420 Montgomery Street, San Francisco,
California, on Tuesday, April 27, 1999, at 1:00 p.m. The purpose of the
meeting is to:
1. Elect directors.
2. Vote on a proposal to increase the number of shares of common stock that
may be awarded under the Long-Term Incentive Compensation Plan by
40,000,000.
3. Vote on a proposal to ratify the appointment by the Board of Directors
of KPMG LLP to audit the books of the Company and its subsidiaries for
the year ending December 31, 1999.
4. Vote on a stockholder proposal requesting the Board of Directors to
provide for cumulative voting for directors.
5. Act on any other matters that may properly come before the meeting.
The Board recommends that stockholders vote FOR the director nominees named
in the accompanying proxy statement, FOR Items 2 and 3, and AGAINST Item 4.
Only holders of common stock at the close of business on March 9, 1999, may
vote at the annual meeting or at any adjournment thereof. A list of
stockholders of record who may vote at such meeting will be available during
business hours for any stockholder of the Company to examine for any purpose
relevant to the meeting. The list will be available for at least ten days
before the meeting at the office of the General Counsel of the Company, 633
Folsom Street, San Francisco, California.
By Order of the Board of Directors,
/s/ Laurel A. Holschuh
--------------------------
Secretary
March 22, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Outstanding Shares.................................................... 2
Voting................................................................ 2
Item 1. Election of Directors......................................... 4
The Board of Directors and Committees................................ 8
Director Compensation................................................ 10
Common Stock Owned by Directors and Executive Officers................ 12
Executive Compensation (How the Company Pays Its Executive Officers).. 14
Report of the Human Resources Committee on Executive Compensation.... 14
Stock Performance Graphs............................................. 20
Compensation Tables and Information.................................. 22
Other Information About Directors and Executive Officers.............. 31
Item 2. Proposal to Amend the Long-Term Incentive Compensation Plan... 34
Item 3. Appointment of Independent Auditors........................... 38
Item 4. Stockholder Proposal Relating to Cumulative Voting............ 38
Deadlines for Submitting Stockholder Proposals........................ 41
Annual Reports........................................................ 41
Addendum to 1998 Annual Report to Stockholders........................ A-1
</TABLE>
<PAGE>
420 Montgomery Street
San Francisco, California 94104
-----------------------------
Proxy Statement
-----------------------------
The Board of Directors of Wells Fargo & Company is soliciting proxies from
its stockholders to be used at the annual meeting on Tuesday, April 27, 1999.
On November 2, 1998, Norwest Corporation changed its name to "Wells Fargo &
Company" upon the merger (the "Merger") of the former Wells Fargo & Company
(the "former Wells Fargo") into a wholly owned subsidiary of Norwest
Corporation. Norwest Corporation as it existed prior to the Merger is referred
to as the "former Norwest." As used in this proxy statement, the "Company"
refers to the corporation named Norwest Corporation before the Merger and now
named Wells Fargo & Company.
This proxy statement and the accompanying proxy card were mailed to
stockholders of the Company beginning on or about March 22, 1999.
Stockholders may vote their shares of common stock in person at the annual
meeting or by proxy by returning their signed proxy cards. Stockholders may
also vote their shares by proxy by telephone. Instructions for stockholders
interested in voting by telephone can be found on the enclosed proxy card. If
shares of common stock are voted by proxy, the shares will be voted as the
stockholder instructs. If a stockholder does not give any voting instructions
in the proxy card, the shares will be voted: FOR the election of the directors
named in this proxy statement (Item 1), FOR the amendment to the Long-Term
Incentive Compensation Plan to increase the number of shares of common stock
that may be awarded under the plan (Item 2), FOR the ratification of the
appointment of KPMG LLP as independent auditors for 1999 (Item 3), and AGAINST
the stockholder proposal relating to cumulative voting (Item 4). A stockholder
may revoke a proxy at any time before it is voted.
The cost of soliciting proxies will be paid by the Company. The Company has
retained Georgeson & Company Inc. to aid in the solicitation for a fee of
$15,000 plus out-of-pocket expenses. Proxies may also be solicited by
employees and directors of the Company by mail, telephone, fax, e-mail or in
person.
As far as the Company's Board of Directors and management know, stockholders
at the meeting will vote only on the matters described in this proxy
statement. However, if any other matters properly come before the meeting, the
persons named as proxies for stockholders will vote on those matters in the
manner they consider appropriate.
<PAGE>
OUTSTANDING SHARES
On March 9, 1999, the record date for stockholders who may vote at the
meeting, there were 1,653,285,689 shares of common stock outstanding. Each
outstanding share is entitled to one vote.
The Company does not know of any person or group that beneficially owned
more than 5% of its common stock on December 31, 1998. A person is the
beneficial owner of securities, as defined by the Securities and Exchange
Commission, if he or she has or shares voting power or investment power for
such securities or has the right to obtain beneficial ownership within 60 days
after such date.
VOTING
Vote Required
To Elect Directors. Under Delaware law, directors are elected by a plurality
of the shares voted, so the 24 nominees receiving the greatest number of votes
will be elected.
To Approve Other Matters. Delaware law requires the affirmative vote of a
majority of the shares represented at the meeting to approve the amendment to
the Long-Term Incentive Compensation Plan (Item 2), the appointment of
independent auditors (Item 3), and the stockholder proposal relating to
cumulative voting (Item 4).
How the Vote is Counted. A quorum consisting of the holders of a majority of
the outstanding shares of common stock on the record date must be present in
person or represented by proxy for the transaction of business at the annual
meeting. Shares present in person at the meeting that are not voted for a
director nominee or shares present by proxy where the stockholder has withheld
authority to vote for a nominee will be counted in determining whether a
quorum is present, but will not count toward a nominee's plurality. Shares
that abstain from voting on a particular matter are considered as shares
present at the meeting for quorum purposes but are treated as having voted
against the matter. Stock exchange rules prohibit a broker from voting shares
held in a brokerage account on some proposals unless the beneficial owner has
given voting instructions to the broker (a "broker non-vote"). Shares that are
subject to a broker non-vote are counted for determining the quorum but not as
having voted. Under New York Stock Exchange rules, a member broker may not
vote in its discretion on Item 4, the stockholder proposal being presented at
the annual meeting.
Confidential Voting Policy
It is the Company's policy that all stockholder meeting proxies, ballots,
and voting records that identify the vote of a particular stockholder are
confidential. The vote of any stockholder will not be disclosed to any third
party before the final vote count at the annual stockholders' meeting except
(i) to meet legal requirements; (ii) to assert claims for or defend claims
against the Company; (iii) to allow the inspectors of election to certify the
results of the stockholder vote; (iv) if a proxy solicitation in opposition to
the Board of Directors takes place; or (v) to respond to stockholders who have
written comments on proxy cards or who have requested disclosure. Inspectors
of election and those who count stockholder votes may not be employees of the
Company but may be employees of an affiliated bank who have been instructed to
comply with this policy.
2
<PAGE>
BOARD OF DIRECTORS
[PHOTO OF [PHOTO OF [PHOTO OF [PHOTO OF
Leslie S. Biller] J.A. Blanchard III] Michael R. Bowlin] Edward M.
Carson]
[PHOTO OF [PHOTO OF [PHOTO OF [PHOTO OF
David A. William S. Davila] Susan E. Engel] Paul Hazen]
Christensen]
[PHOTO OF [PHOTO OF [PHOTO OF [PHOTO OF
William A. Hodder] Rodney L. Jacobs] Reatha Clark King] Richard M.
Kovacevich]
[PHOTO OF [PHOTO OF [PHOTO OF [PHOTO OF
Richard D. Cynthia H. Milligan] Benjamin F. Montoya] Philip J.
McCormick] Quigley]
[PHOTO OF [PHOTO OF [PHOTO OF [PHOTO OF
Donald B. Rice] Ian M. Rolland] Judith M. Runstad] Susan G.
Swenson]
[PHOTO OF [PHOTO OF [PHOTO OF [PHOTO OF
Daniel M. Tellep] Chang-Lin Tien] Michael W. Wright] John A. Young]
3
<PAGE>
ITEM 1. ELECTION OF DIRECTORS
Upon completion of the Merger, the Board of Directors of the Company was
increased to, and currently consists of, 24 persons. The Board has set 24
directors as the number to be elected at the annual meeting and has nominated
the individuals named below. All nominees are currently directors of the
Company.
Twelve of the 24 nominees were directors of the former Norwest who continued
as directors of the Company after the Merger. The remaining nominees were
directors of the former Wells Fargo who became directors of the Company in
November 1998 when the Merger was completed.
Directors are elected to hold office until the next annual meeting and until
their successors are properly elected and qualified. All nominees have
informed the Company that they are willing to serve as directors. If any
nominee is no longer a candidate for director at the annual meeting, the
proxyholders will vote for the rest of the nominees and may vote for a
substitute nominee in their discretion.
Biographical and business experience information about each director appears
below.
Leslie S. Biller Mr. Biller, 51, is vice chairman and chief operating officer
of the Company. Prior to the Merger, he served as president and chief
operating officer of the former Norwest from February 1997 to November 1998
and as executive vice president and head of South Central Community Banking
from 1990 until February 1997. Mr. Biller is also a director of Ecolab Inc.
and Minnesota Life Insurance Company. He became a director of the former
Norwest in 1997.
J. A. Blanchard III Mr. Blanchard, 56, has been president and chief executive
officer of Deluxe Corporation in Shoreview, Minnesota,
since May 1995, and chairman since May 1996. Deluxe Corporation supplies paper
products and electronic payment, payment protection and related services to
the financial and retail industries. From January 1994 until May 1995, he
served as executive vice president of General Instrument Corporation, a
supplier of systems and equipment to the cable and satellite television
industry. Mr. Blanchard is also a director of Deluxe Corporation and Saville
Systems PLC. He became a director of the former Norwest in 1996.
Michael R. Bowlin Mr. Bowlin, 56, has been chairman of the board of Atlantic
Richfield Company (ARCO), an integrated petroleum products company in Los
Angeles, California, since 1995. He has also been chief executive officer of
ARCO since 1994 and president and chief operating officer of ARCO since June
1993. Mr. Bowlin is also a director of ARCO. He became a director of the
former Wells Fargo in 1996.
Edward M. Carson Mr. Carson, 69, was chairman of the board of First Interstate
Bancorp, a bank holding company in Los Angeles, California, from 1990 through
his retirement in April 1995, and chief executive officer from 1990 through
1994. First Interstate Bancorp was acquired by the former Wells Fargo in 1996.
He is also a director of Aztar Corporation, Castle & Cook, Inc., Schuff Steel,
Inc., and Terra Industries, Inc. Mr. Carson was a director of First Interstate
Bancorp from 1985 until 1996, when he joined the board of the former Wells
Fargo.
David A. Christensen Mr. Christensen, 63, has been president and chief
executive officer of Raven Industries, Inc., a diversified manufacturer of
plastics, electronics and special-fabric products in Sioux Falls, South
Dakota, since 1971. He also serves as a director of Beta
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<PAGE>
Raven, Inc., Glasstite, Inc., Northern States Power Company, and Raven
Industries, Inc. Mr. Christensen became a director of the former Norwest in
1977.
William S. Davila Mr. Davila, 67, served as president and chief operating
officer of The Vons Companies, Inc., a Los Angeles-based chain of
supermarkets, from 1984 until his retirement in 1992. He is now president
emeritus of The Vons Companies, Inc., and serves as a director of Geo. A.
Hormel & Company, Pacific Gas and Electric Company, and PG&E Corporation. Mr.
Davila became a director of the former Wells Fargo in 1990.
Susan E. Engel Ms. Engel, 52, became chairwoman, president and chief executive
officer of Department 56, Inc., a designer and marketer of collectibles and
specialty giftware in Eden Prairie, Minnesota, in November 1996. She had been
president and chief operating officer of the company from September 1994 until
November 1996. From 1991 until 1994, Ms. Engel was president and chief
executive officer of Champion Products, Inc., the athletic apparel division of
Sara Lee Corporation. She also serves as a director of Coty Inc., Department
56, Inc., K2 Inc., and The Penn Traffic Company. Ms. Engel became a director
of the former Norwest in May 1998.
Paul Hazen Mr. Hazen, 57, served as chairman of the board and chief executive
officer of the former Wells Fargo from 1995 to November 1998, when he was
named chairman of the board of the Company following the Merger. He served as
president of the former Wells Fargo from 1984 to 1995 and again from July 1997
to May 1998. He is a director of AirTouch Communications, Inc., Phelps Dodge
Corporation, and Safeway, Inc. Mr. Hazen became a director of the former Wells
Fargo in 1984.
William A. Hodder Mr. Hodder, 67, served as chairman and chief executive
officer of Donaldson Company, Inc., a manufacturer of filtration and emission
control products in Minneapolis, Minnesota, from August 1994 until his
retirement in 1996. Prior to August 1994, he served as chairman, president,
and chief executive officer of the company. Mr. Hodder is also a director of
Musicland Stores Corporation, ReliaStar Financial Corp., and SUPERVALU INC.
Mr. Hodder became a director of the former Norwest in 1971.
Rodney L. Jacobs Mr. Jacobs, 58, had been vice chairman and chief financial
officer of the former Wells Fargo from 1991 to May 1998, when he became
president. He held this position until November 1998, when he became vice
chairman and chief financial officer of the Company following the Merger. Mr.
Jacobs became a director of the former Wells Fargo in May 1998.
Reatha Clark King Dr. King, 60, has been president and executive director of
the General Mills Foundation, a charitable foundation in Minneapolis,
Minnesota, since 1988. She also serves as a vice president of General Mills,
Inc., with responsibility for its citizenship programs. She is a director of
Exxon Corporation, H.B. Fuller Company, and Minnesota Life Insurance Company.
Dr. King became a director of the former Norwest in 1986.
Richard M. Kovacevich Mr. Kovacevich, 55, was chief executive officer of the
former Norwest from January 1993 to November 1998. During this time he also
served as president through January 1997 and as chairman from May 1995 to
November 1998. He was named president and chief executive officer of the
Company in November 1998 following the Merger. Mr. Kovacevich also serves as a
director of Cargill, Incorporated, Dayton Hudson Corporation, Northern States
Power
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<PAGE>
Company, and ReliaStar Financial Corp. Mr. Kovacevich became a director of the
former Norwest in 1986.
Richard D. McCormick Mr. McCormick, 58, has been chairman of the board of U S
WEST, Inc., a telecommunications and data networking company in Denver,
Colorado, since June 1998. Before June 1998, when MediaOne Group was separated
from U S WEST, Inc., he had been chairman, president, and chief executive
officer since 1992 of their former parent company, also called U S WEST, Inc.
Mr. McCormick also serves as a director of Concept Five Technologies, U S
WEST, Inc., United Airlines Corporation, and United Technologies Corporation.
He became a director of the former Norwest in 1983.
Cynthia H. Milligan Ms. Milligan, 52, became dean of the College of Business
Administration at the University of Nebraska-Lincoln in June 1998. From 1991
to 1998, she was president and chief executive officer of Cynthia Milligan &
Associates in Lincoln, Nebraska, a consulting firm to financial institutions.
Ms. Milligan also serves as a director of The Gallup Organization. She became
a director of the former Norwest in 1992.
Benjamin F. Montoya Mr. Montoya, 63, has been president and chief executive
officer of Public Service Company of New Mexico, a public utility in
Albuquerque, New Mexico, since August 1993. He is also a director of Brown and
Caldwell, The Environmental Company, Furrs Corp., and Public Service Company
of New Mexico. Mr. Montoya became a director of the former Norwest in 1996.
Philip J. Quigley Mr. Quigley, 56, had been chairman, president, and chief
executive officer since 1994 of Pacific Telesis Group, a telecommunications
holding company, prior to his retirement in December 1997. From 1987 to 1994,
he was president and chief executive officer of Pacific Bell, the California
operating subsidiary of Pacific Telesis Group. Mr. Quigley also serves as a
director of SRI International. Mr. Quigley became a director of the former
Wells Fargo in 1994.
Donald B. Rice Mr. Rice, 59, has been president, chief executive officer, and
a director of UroGenesys, Inc., a biotechnology research and development
company in Santa Monica, California, since 1996. He was president, chief
operating officer, and a director of Teledyne, Inc. from 1993 to 1996, and
Secretary of the Air Force from 1989 to 1993. He is also a director and serves
as chairman of the board of Scios, Inc., and a director of Vulcan Materials
Company and Unocal Corporation. Mr. Rice served as a director of the former
Wells Fargo from 1980 to 1989, and rejoined the board of the former Wells
Fargo in 1993.
Ian M. Rolland Mr. Rolland, 65, retired in June 1998 as chief executive
officer of Lincoln National Corporation, an insurance holding company in Fort
Wayne, Indiana, where he continued as chairman of the board until December
1998. He had been chief executive officer of the company since 1977. Mr.
Rolland also serves as a director of Bright Horizons Family Solutions, Inc.,
Lincoln National Corporation, NIPSCO Industries, Inc., and Tokheim
Corporation. He became a director of the former Norwest in 1993.
Judith M. Runstad Ms. Runstad, 54, is of counsel to Foster Pepper & Shefelman
PLLC, a law firm in Seattle, Washington, and was a partner of the firm from
1979 to 1998. She specializes in real estate development, land use and
environmental law. She is also a director of SAFECO Corporation. Ms. Runstad
became a director of the former Wells Fargo in May 1998.
6
<PAGE>
Susan G. Swenson Ms. Swenson, 50, has been president and chief executive
officer of Cellular One, a cellular telecommunications company in South San
Francisco, California, since 1994. 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. She is also a director of General
Magic, Inc. and Working Assets Funding Service. Ms. Swenson became a director
of the former Wells Fargo in 1994.
Daniel M. Tellep Until his retirement at the end of 1996, Mr. Tellep, 67,
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 and based in Bethesda, Maryland. He had
been chairman and chief executive officer of Lockheed Corporation from 1989
until the merger. He is also a director of Edison International and Southern
California Edison Company. Mr. Tellep had been a director of First Interstate
Bancorp from 1991 until 1996, when he joined the board of the former Wells
Fargo.
Chang-Lin Tien Mr. Tien, 63, holds the NEC Distinguished Professor of
Engineering chair at the University of California, Berkeley, where he was
chancellor from 1990 to 1997. He is also a director of AirTouch
Communications, Inc., Chevron Corporation, and Raychem Corporation. Mr. Tien
became a director of the former Wells Fargo in 1990.
Michael W. Wright Mr. Wright, 60, has been chairman, president, and chief
executive officer of SUPERVALU INC., a food distributor and retailer in
Minneapolis, Minnesota, since 1982. He also serves as a director of Cargill,
Incorporated, Honeywell, Inc., S. C. Johnson & Son, Musicland Stores
Corporation, and SUPERVALU INC. Mr. Wright became a director of the former
Norwest in 1991.
John A. Young Mr. Young, 66, retired in 1992 as president, chief executive
officer, and a director of Hewlett-Packard Company, a manufacturer of
computers and peripheral equipment based in Palo Alto, California. He had held
these positions since 1978. He is a director of Affymetrix Corp., Chevron
Corporation, International Integration, Inc., Lucent Technologies, Novell,
Inc., and SmithKline Beecham PLC. Mr. Young became a director of the former
Wells Fargo in 1977.
7
<PAGE>
THE BOARD OF DIRECTORS AND COMMITTEES
Meetings
The Board of Directors held six regular and one special meeting during 1998.
The Board has established committees, including committees with audit,
compensation, and nominating responsibilities, that also met during 1998.
Director attendance at these meetings averaged 94% during 1998. Each director,
except Ms. Engel and Mr. Rolland, attended 75% or more of the total number of
Board and committee meetings on which he or she served.
Committees
Audit and Examination Committee
Members: Philip J. Quigley (Chair) Cynthia H. Milligan
J. A. Blanchard III Benjamin F. Montoya
David A. Christensen Judith M. Runstad
William S. Davila Susan G. Swenson
Reatha Clark King Chang-Lin Tien
Purpose: Recommends independent auditors for the Company to
the Board of Directors.
Reviews the scope and results of the audit engagement
with the independent auditors; the scope, frequency,
and results of internal audits and examinations; the
adequacy of internal accounting controls; bonding and
insurance coverage; and examination reports.
Number of Meetings
in 1998:
Three
Board Affairs Committee
Members: Donald B. Rice (Chair) William A. Hodder
J. A. Blanchard III Philip J. Quigley
Edward M. Carson Michael W. Wright
David A. Christensen John A. Young
Purpose: Provides advice and assistance relating to corporate
governance, the organization and function of the
Board and its committees, selection of members for
the Board and appointments to its committees, and
director compensation.
Reviews and makes recommendations on matters relating
to the effectiveness of the Board, including the
Board meeting schedule, its agenda, and information
provided to the Board.
The Committee Chair also determines the agenda for,
and presides at executive sessions of the Board at
which management directors are not present other than
sessions involving executive compensation, at which
the Chair of the Human Resources Committee presides.
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<PAGE>
As part of its nominating responsibilities, the Board
Affairs Committee will consider qualified nominees
recommended by a stockholder if the recommendation is
made in writing to the Secretary of the Company no
later than the December 31 before the annual meeting.
Any recommendation must include sufficient
information to enable the Committee to evaluate the
qualifications of the proposed nominee.
Number of Meetings
in 1998:
Three
Credit Committee
Members: David A. Christensen (Chair) Philip J. Quigley
J.A. Blanchard III Susan G. Swenson
Edward M. Carson Daniel M. Tellep
Susan E. Engel Michael W. Wright
Reatha Clark King John A. Young
Purpose: Reviews credit policies and examination reports,
trends in domestic and international loans
outstanding, the adequacy of the allowance for credit
losses, and the Company's Community Reinvestment Act
activities.
Number of Meetings
in 1998:
Three
Finance Committee
Members: Richard D. McCormick (Chair) Benjamin F. Montoya
Michael R. Bowlin Ian M. Rolland
William S. Davila Judith M. Runstad
Susan E. Engel Daniel M. Tellep
Cynthia H. Milligan Chang-Lin Tien
Purpose: Reviews and makes recommendations to the Board
regarding annual and long-term financial plans,
including proposed debt and equity issues and
dividends.
Reviews policies regarding capital structure and
investment portfolio composition.
Number of Meetings
in 1998:
Three
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Human Resources Committee
Members: Michael W. Wright (Chair) Donald B. Rice
Michael R. Bowlin Ian M. Rolland
William A. Hodder Daniel M. Tellep
Richard D. McCormick John A. Young
Purpose: Approves compensation arrangements for senior
management.
Recommends adoption of benefit and compensation plans
to the Board and approves plan awards to senior
management.
Monitors and evaluates management succession plans.
The Committee Chair also coordinates the evaluation
of the Chief Executive Officer and presides at
executive sessions of the Board at which this
evaluation is discussed.
Number of Meetings
in 1998:
Four
Director Compensation
Annual Compensation. Half of the annual retainer for non-employee directors
is paid in common stock under the Directors' Formula Stock Award Plan
discussed below under "Directors' Formula Plan." Within five years after
joining the Board, directors are expected to own common stock having a value
equal to five times the cash portion of the annual retainer. For the period
January 1 until the Merger on November 2, 1998, each non-employee director who
served on the Board of the Company received a cash retainer at an annual rate
of $30,000 plus $1,500 for each Board or committee meeting attended. Effective
November 2, 1998, the annual cash retainer was set at $32,000. The Chairs of
the Audit and Examination, Board Affairs, Credit, Finance, and Human Resources
Committees were paid an additional fee of $5,000.
Directors' Formula Plan. The Directors' Formula Stock Award Plan pays non-
employee directors for their services in shares of Company common stock.
Under this plan, a non-employee director who is on the Board at the end of a
year will receive on February 1 of the following year an award of shares of
Company common stock equal in value to the cash portion of the annual retainer
in effect on the immediately preceding January 1. Stock awards to non-employee
directors who serve less than a full year are prorated.
Each director's award for 1998 services was based on the number of months he
or she served on the Board of the Company and the $32,000 cash retainer in
effect on January 1, 1999. On February 1, 1999, as payment for services in
1998, each person who had been a non-employee director of the Company before
the Merger received 942 shares of Company common stock, except for Susan E.
Engel, who joined the Board in May 1998 and received 628 shares. Each non-
employee director who had served on the board of directors of the former Wells
Fargo and became a director of the Company after the Merger received 157
shares.
Directors' Stock Option Plan. Under this plan, each non-employee director
elected or re-
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<PAGE>
elected at the annual meeting of stockholders will receive an option valued at
$25,000 to purchase Company common stock, at an option exercise price equal to
the market value of the common stock at the date of the stockholders' meeting.
Non-employee directors joining the Board at other times will receive stock
options with a prorated value. The options become exercisable six months after
grant and remain exercisable for ten years. Directors who exercise an option
under the plan by delivering shares of previously owned common stock are
granted a reload option. A reload option allows the director to purchase the
same number of whole shares of common stock, at their fair market value on the
date the original option is exercised, as were used to pay the option exercise
price. A reload option is exercisable at any time during the remaining term of
the original option. The first option grants under this plan will be made to
those persons elected directors at the 1999 annual meeting.
Directors' Retirement Plans. All directors' credited service under the
former Norwest directors' retirement plan and the former Wells Fargo
directors' retirement plan was frozen as of November 2, 1998. Directors who
were participants in either plan have a one-time right to convert the accrued
value of their benefit under the plans (equal to their actual service times
the current annual cash retainer) into phantom shares of Company common stock
under the deferral plan described below. If no conversion election is made, a
director who participated in either plan will receive upon retirement a payout
based on the cash retainer in effect as of the director's retirement date and
up to ten years of his or her actual service as of November 2, 1998.
Deferral Plans. Non-employee directors may defer all or part of their annual
retainer, meeting fees, formula stock awards, and gains from the exercise of
stock options using previously owned stock. Until June 30, 1999, non-employee
directors also have the one-time right to defer accrued benefits under the
directors' retirement plans described above. The annual retainer and meeting
fees may be deferred into either an interest-bearing account or phantom shares
of Company common stock with dividends reinvested. All other deferrals may be
made only into phantom shares of Company common stock with the reinvestment of
dividends. Deferred amounts are paid in the same form in which they are
invested, either in a lump sum or in installments, at the election of the
director.
Consulting Agreement and Other Transactions with Certain Directors. The
Company has entered into a consulting agreement with Chang-Lin Tien for a
yearly fee of $200,000. Under the agreement, Mr. Tien agrees to advise the
Company on its international marketing strategies and to serve on the board of
directors of Shanghai Commercial Bank Limited, in which the Company has a 20%
interest. The agreement is terminable at any time by either party.
Edward M. Carson, who is a director of the Company, is a retired chairman of
the board of First Interstate Bancorp, a predecessor of the former Wells
Fargo. At the time of his retirement, First Interstate agreed to provide Mr.
Carson with office space and secretarial services for his personal use and to
reimburse him for the cost of two club memberships. The Company acquired these
obligations as a result of the Merger. Benjamin F. Montoya, who is also a
director of the Company, received $1,000 in 1998 for serving as a community
(advisory) director of Norwest Bank New Mexico, N.A.
11
<PAGE>
COMMON STOCK OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
The table below shows, as of February 28, 1999, the shares of common stock
beneficially owned by, and phantom common shares credited to accounts for,
current directors, executive officers named in the Summary Compensation Table
on page 22 of this proxy statement, and all directors and executive officers
as a group.
<TABLE>
<CAPTION>
Amount and Nature of Ownership(1)
---------------------------------------------------------
(a) (b) (c) (d)
Options Exercisable Phantom
Shares of Common within 60 Days of Shares
Name Stock(2)(3)(4) 2/28/99 (5)(6) Total
---- ---------------- ------------------- --------- ----------
<S> <C> <C> <C> <C>
Les Biller.............. 471,636 833,729 282,526 1,587,891
J.A. Blanchard III...... 2,108 -- 5,406 7,514
Michael R. Bowlin....... 1,067 19,160 -- 20,227
Edward M. Carson........ 138,739 15,000 -- 153,739
David A. Christensen.... 21,164 -- 57,036 78,200
William S. Davila....... 29,407 35,730 10,662 75,799
Susan E. Engel.......... 1,000 -- 1,268 2,268
Paul Hazen.............. 1,278,663 1,669,790 -- 2,948,453
William A. Hodder....... 21,564 -- 51,885 73,449
Rodney L. Jacobs........ 262,964 773,530 -- 1,036,494
Reatha Clark King....... 16,598 -- 3,042 19,640
Richard M. Kovacevich... 1,191,292 1,935,701 99,210 3,226,203
Richard D. McCormick.... 21,516 -- 14,481 35,997
Cynthia H. Milligan..... 4,964 -- 3,469 8,433
Benjamin F. Montoya..... 323 -- 6,625 6,948
Kenneth R. Murray....... 674,843 652,959 125,999 1,453,801
Philip J. Quigley....... 17,487 34,340 4,733 56,560
Donald B. Rice.......... 73,357 15,000 -- 88,357
Ian M. Rolland.......... 12,474 -- 11,999 24,473
Judith M. Runstad....... 2,187 -- -- 2,187
Susan G. Swenson........ 2,157 21,680 -- 23,837
Daniel M. Tellep........ 4,487 26,730 -- 31,217
Chang-Lin Tien.......... 1,157 54,880 30,741 86,778
Michael W. Wright....... 7,438 -- 22,568 30,006
John A. Young........... 11,377 74,150 -- 85,527
All directors and execu-
tive officers as a
group (37 individu-
als)................... 6,137,425 10,032,474 1,025,746 17,195,645
</TABLE>
- --------
(1) Each individual and all directors and executive officers as a group own
less than 1% of the Company's outstanding shares of common stock. Except
as may otherwise be stated in the footnotes below, each director and
executive officer has sole voting and investment power for all shares of
common stock shown opposite his or her name.
(2) Includes shares of restricted stock held by certain executive officers as
follows: Les Biller, 20,000 shares; Paul Hazen, 289,934 shares; Richard M.
Kovacevich, 158,094 shares.
(3) Amounts include shares of common stock allocated to the accounts of
executive officers under the Norwest Corporation Savings Investment Plan
or to executive officers and a director under the Wells Fargo & Company
Tax Advantage and Retirement Plan as of December 31, 1998.
(4) Share amounts for the following directors and executive officers and for
all directors and executive officers as a group include certain shares
over which they may have shared voting and investment
12
<PAGE>
power: Les Biller, 132,682 shares held by his spouse and 52,753 shares held
in a trust of which he is a beneficiary; Michael R. Bowlin, 1,067 shares
held in a trust for which he is co-trustee; Edward M. Carson, 130,157
shares held in a trust for which he is co-trustee; William S. Davila,
28,407 shares held in a trust for which he is co-trustee; Rodney L. Jacobs,
221,330 shares held in a trust for which he is co-trustee; Richard M.
Kovacevich, 4,324 shares held by his spouse and 3,117 held in a revocable
trust for his children for which he is co-trustee; Kenneth R. Murray, 740
shares held by his spouse and 141,484 held in trusts in which he has a
direct or indirect beneficial interest; Philip J. Quigley, 17,487 shares
held in a trust for which he is co-trustee; Donald B. Rice, 1,520 shares
held by his spouse; Judith M. Runstad, 2,000 shares held by her spouse;
John A. Young, 7,377 shares held in a trust for which he is co-trustee; for
all directors and executive officers as a group, 321,385 shares held by
members of his or her immediate family and 836,094 shares held in trust.
(5) Amounts include phantom shares credited to the accounts of those executive
officers of the Company who were also employees of the former Norwest or
the Company's mortgage lending subsidiary as of December 31, 1998,
pursuant to deferrals made under the terms of various compensation and
deferral plans maintained by the Company.
(6) Amounts include phantom shares credited as of February 28, 1999, to
Deferred Stock Accounts for non-employee directors under deferral
provisions contained in the various plans for the directors described
above under "Director Compensation."
13
<PAGE>
EXECUTIVE COMPENSATION
(How the Company Pays Its Executive Officers)
Report of the Human Resources Committee on Executive Compensation
Each year, the Board's Human Resources Committee (the "Committee")
determines the compensation to be paid to the Company's Chief Executive
Officer and other executive officers, including those named in the Summary
Compensation Table (page 22). Following the Merger, the Committee expanded its
membership to include four directors who were members of the former Wells
Fargo Management Development and Compensation Committee. This report discusses
the Committee's objectives and the procedures used to determine 1998
compensation for the Chief Executive Officer and the four other executive
officers listed in the Summary Compensation Table.
Objectives
The Committee's compensation policies have two goals: first, to help the
Company compete with the largest banking institutions and other large
corporations in the United States in attracting and retaining highly qualified
individuals as executive officers, and second, to pay executive officers based
on their contributions to the Company's performance. The Committee has adopted
its "Performance-Based Compensation Policy" (the "Policy") to comply with
Section 162(m) of the Internal Revenue Code. This law places limits on tax
deductions for annual compensation expense in excess of $1,000,000 to certain
highly paid executive officers. These deduction limits do not apply if:
. The amount of the compensation is subject to a maximum;
. The executive officer has met pre-established business performance goals;
and
. The maximum compensation amount and the business criteria on which the
performance goals are based have been approved by stockholders.
The Policy, which contains these business criteria and the maximum
compensation amount, was originally approved by stockholders at the 1994
annual meeting, and was amended and reapproved by stockholders at the 1998
annual meeting.
The Committee based 1998 annual incentive compensation for the executive
officers named in the Summary Compensation Table, including the Chief
Executive Officer, on each executive officer's achieving one or more pre-
established performance goals, subject to the maximum compensation amount in
the Policy. As a result of the Merger, certain executive officers of the
former Wells Fargo became executive officers of the Company and are included
in the Summary Compensation Table. These executive officers, and their 1998
compensation, were also subject to the Policy. The Policy and the procedures
used by the Committee to make incentive compensation awards are discussed in
greater detail in this report under the heading "Executive Officer
Compensation--Annual Compensation."
Executive Officer Compensation
Compensation for the executive officers named in the Summary Compensation
Table consists of annual compensation (base salary and an incentive
compensation award under the Policy) and long-term compensation. The Committee
sets base salary ranges for executive officers using available compensation
data for the prior year from a comparison group of banking organizations. The
Committee also
14
<PAGE>
awards annual incentive compensation under the Policy and long-term
compensation in the form of stock options under the Company's Long-Term
Incentive Compensation Plan (the "LTICP") to the executive officers named in
the Summary Compensation Table. The following discussion applies generally to
the 1998 annual salary, incentive compensation, and long-term compensation for
Mr. Kovacevich, as Chief Executive Officer of the Company. A more complete
description of Mr. Kovacevich's 1998 compensation can be found under the
heading "Chief Executive Officer" below.
Of the five executive officers named in the Summary Compensation Table,
Richard M. Kovacevich, Les Biller, and Kenneth R. Murray were executive
officers of the Company before the Merger. Paul Hazen and Rodney L. Jacobs,
who were executive officers of the former Wells Fargo, each entered into
employment agreements with the Company in connection with the Merger and
became executive officers of the Company. Mr. Hazen's employment agreement
provides for base salary and annual incentive compensation and is discussed in
detail on pages 28 and 29 of the proxy statement.
Annual Compensation. To establish base salaries and determine final annual
incentive compensation awards under the Policy, the Committee considered
available competitive compensation data from a comparison group (the
"Comparison Group"). The Comparison Group for 1998 was selected from banking
organizations included in the "Peer Group Index" used in the performance graph
that appears in the proxy statement for the 1998 annual meeting of
stockholders/1/. For compensation purposes in 1999 and subsequent years, the
Committee has re-defined the Comparison Group as the 15 largest publicly-
traded bank holding companies based on total market capitalization. The
Committee considers that these banking organizations, based on their size and
prominence in the financial services market, more closely compete with the
Company for talented management, and thus set the competitive compensation
levels the Company must consider in order to retain and attract talented
management.
- --------
1 The Comparison Group, for purposes of 1998 compensation, consisted of the
following 27 banking organizations: BB&T Corporation, BankAmerica
Corporation, BankBoston Corporation, Bank One Corporation, The Bank of New
York Company, Inc., The Chase Manhattan Corporation, Comerica Incorporated,
Fifth Third Bancorp, First Union Corporation, Fleet Financial Group, Inc.,
Huntington Bancshares, Incorporated, KeyCorp, Mellon Bank Corporation,
Mercantile Bancorporation, Inc., National City Corporation, Northern Trust
Corporation, PNC Bank Corp., Regions Financial Corporation, Republic New
York Corporation, State Street Corporation, SouthTrust Corporation, Summit
Bancorp., SunTrust Banks, Inc., Union BanCal Corporation, U.S. Bancorp,
Wachovia Corporation, and Wells Fargo & Company. The "Peer Group Index," for
purposes of the performance graph included in the Company's annual proxy
statement, is defined as the 35 largest publicly-traded banking
organizations (ranked based on their total assets on December 31 of the
immediately preceding year). Information on total assets is obtained from
year-end financial results published by these organizations. (See page 21
for a listing of the banking organizations constituting the 1998 Peer Group
Index for purposes of the performance graph.) Although most of the banking
organizations in the Comparison Group are also included in the 1998 Peer
Group Index, the two groups are not identical. The differences reflect
changes in the banking organizations included in the Peer Group Index due to
mergers occurring or announced in 1998, and the fact that 1998 salary and
incentive compensation decisions are made before the 1998 Peer Group Index
can be determined. They also reflect the Committee's decision in 1994 to
eliminate J.P. Morgan & Co. Incorporated and Bankers Trust Corporation from
the Comparison Group for future incentive compensation purposes, because the
business mix of such banking organizations is not, in the Committee's
judgment, comparable to the businesses of the Company.
15
<PAGE>
Base Salaries. Mr. Kovacevich, as the Company's Chief Executive Officer,
recommends the individual base salaries for all other executive officers. The
Committee approves base salaries for these executive officers and sets Mr.
Kovacevich's base salary. The Company agreed to pay Mr. Hazen a base salary
for 1998 and for each subsequent year during the term of his employment
agreement equal to that set by the Committee for the Chief Executive Officer.
For other executive officers, salaries are reviewed each year and adjusted
periodically, typically at intervals of 12 months or more. The Committee
adjusts salaries after considering the relationship of the executive officer's
current salary to the base salary range for the position and after its
subjective evaluation of the executive officer's overall performance. Base
salaries paid in 1998 to executive officers named in the Summary Compensation
Table were near the median of estimated base salaries paid by the banking
organizations in the Comparison Group.
Incentive Compensation. The Policy governs annual incentive compensation for
each "covered executive officer." The Policy defines a "covered executive
officer" as an individual who, on the last day of a taxable year, is the Chief
Executive Officer of the Company or is acting in such capacity or is among the
four highest paid executive officers (other than the Chief Executive Officer)
of the Company determined under Securities and Exchange Commission rules. Each
person named in the Summary Compensation Table is a covered executive officer
under the Policy.
Under the Policy, payment of an incentive compensation award to a covered
executive officer depends upon achievement of one or more performance goals.
The Committee establishes these goals in writing at the beginning of each
year. The Committee has the discretion under the Policy to reduce the
incentive compensation award to a covered executive officer from the maximum
award permitted by the Policy, even though the officer may have met the
performance goals. In exercising this discretion, the Committee reviews
available competitive market data from the prior year and reasonable estimates
of incentive compensation to be paid by the banking organizations in the
Comparison Group to their executive officers for the most recently completed
year. To set the Chief Executive Officer's incentive compensation award, the
Committee also considers the quality of the Company's earnings based on the
factors discussed below under the heading "Chief Executive Officer." For
covered executive officers other than the Chief Executive Officer, the
Committee also reviews the Chief Executive Officer's recommendations.
For 1998, the Committee established alternative performance goals for Mr.
Kovacevich as Chief Executive Officer and for each other covered executive
officer. These performance goals were based on the Company's "Earnings Per
Share" and "Return on Realized Common Equity," as defined in the Policy. Mr.
Hazen and Mr. Jacobs, as covered executive officers of the Company, were
subject to the Policy and the performance goals set by the Committee. The
Committee also established an additional performance goal for Kenneth R.
Murray based on the "Business Unit Net Earnings" of the business unit managed
by him.
The maximum amount of an incentive compensation award payable under the
Policy for any year to any covered executive officer who has met one or more
of his or her pre-established performance goals may not be greater than eight-
tenths of one percent (0.8%) of the Company's Net Income/2/ for the year.
Based on the Company's 1998 Net Income of $1.472 billion, as adjusted pursuant
to the
16
<PAGE>
Policy, the maximum incentive compensation award payable under the Policy
would have been $11,776,000 (0.8% of $1.472 billion).
For 1998, each covered executive officer, including Mr. Kovacevich, met one
or more of his performance goals. Based on the Committee's certification that
one or more performance goals established by the Committee were met, its
review of projected 1998 executive officer incentive compensation data from
the Comparison Group, and recommendations of the Chief Executive Officer, the
Committee awarded to each executive officer named in the Summary Compensation
Table an incentive award under the Policy. Each incentive award consists of
cash in the amount shown for 1998 in column (d) and, for Mr. Kovacevich and
Mr. Hazen, shares of restricted stock having the market value shown for 1998
in column (f) of the Summary Compensation Table. No covered executive officer,
including the Chief Executive Officer, received the maximum incentive
compensation award under the Policy. The Committee exercised its negative
discretion to establish Mr. Hazen's annual incentive
compensation award for 1998 using the same factors it evaluated in connection
with Mr. Kovacevich's annual incentive compensation
- --------
2 For purposes of the Policy, the term "Net Income" means the Company's net
income as reported in the Company's consolidated financial statements for
the applicable year adjusted to eliminate the effect of (1) restatements of
prior periods' financial results relating to an acquisition accounted for as
a pooling of interests; (2) losses resulting from discontinued operations;
(3) extraordinary gains or losses; (4) the cumulative effect of changes in
generally accepted accounting principles; and (5) any other unusual, non-
recurring gain or loss which is separately identified and quantified in the
Company's financial statements. Net Income for 1998, in accordance with the
Policy, was adjusted to eliminate the effect of pooling-of-interests
accounting on prior period financial results relating to the acquisition of
the former Wells Fargo and of $1.0 billion of merger-related expenses
identified in the Company's 1998 consolidated financial statements.
award. These factors are discussed under the heading "Chief Executive Officer"
below.
Long-Term Compensation. Long-term compensation is provided in the form of
stock options granted under the LTICP. The purpose of long-term compensation
is to increase management ownership of stock and to provide an incentive to
executive officers to improve the long-term performance of the Company. Stock
options granted by the Committee to covered executive officers under the LTICP
are considered performance-based compensation under Section 162(m) of the
Internal Revenue Code and are not subject to the Policy. Each executive
officer is assigned stock ownership goals to be met by specified dates.
Executive officers achieve these goals primarily by exercising stock options
and retaining a substantial portion of the stock acquired. Once the basic
ownership level is met, the goal continues to increase each time an executive
officer exercises a stock option or a restricted stock grant vests. All
executive officers named in the Summary Compensation Table have exceeded their
ownership goals.
In determining original option grants, the Committee considers the number of
shares of common stock owned by the executive officer compared to the
executive officer's ownership goal and the stock option grant practices of the
Comparison Group at the time of grant. Prior to 1999, the Committee made
original grants of stock options every three years. Beginning in 1999, the
Committee expects to make original stock option grants annually. If the
executive officer does not meet his or her stock ownership goal, the number of
stock options granted by the Committee to the executive officer in the future
will be less than banking organizations in the Comparison Group would grant to
their executive officers with comparable positions. The Committee also
encourages executive officers to achieve their stock ownership goals by
including in original option grants a reload feature. If the
17
<PAGE>
optionee exercises the original option by delivering shares of previously
owned common stock to pay for the option shares, the optionee receives a
reload option. Under a reload option, the optionee can purchase the same
number of whole shares of stock, at their fair market value on the date the
original option is exercised, as were used to pay the option exercise price
and related taxes. Reload options are exercisable at any time during the
remaining term of the original option. Reload options allow the exercise of
the original option early in its term while preserving the executive officer's
opportunity for future appreciation in the shares delivered to exercise the
original option. The Committee believes that the reload feature encourages
executive officers to acquire and retain the Company's stock.
Except for Paul Hazen, none of the executive officers named in the Summary
Compensation Table received original option grants under the LTICP in 1998.
Les Biller and Kenneth R. Murray received reload options in 1998 because they
exercised original stock options granted prior to 1998 that had the reload
feature. The reload options granted to these executive officers appear in the
table headed "Option/SAR Grants in Last Fiscal Year" (page 24). On November 2,
1998, Mr. Hazen received an option grant to acquire 500,000 shares of the
Company's common stock pursuant to the terms of his employment agreement.
Other Compensation. Executive officers also receive various perquisites and
supplemental retirement benefits of a type and value comparable to those made
available to executive officers of Comparison Group banking organizations.
They also receive retirement and medical benefits generally available to the
Company's employees.
Chief Executive Officer. The Committee determined Mr. Kovacevich's 1998
salary based on the salary procedures described above for covered executive
officers. With respect to
Mr. Kovacevich's incentive award under the Policy, the Committee certified
that Mr. Kovacevich had met his performance goal based on the Company's 1998
Return on Realized Common Equity, as determined pursuant to the Policy. The
Committee concluded that Mr. Kovacevich was eligible to receive the maximum
incentive compensation award under the Policy, but used its discretion to
reduce the award.
In exercising its discretion, the Committee evaluated the quality of the
Company's earnings based on its review of the following factors: return on
realized common equity, return on assets, earnings per share growth,
efficiency ratio (including a review of these factors on a "cash return"
basis), non-performing assets and loan loss reserves as a percentage of
assets, and Tier 1 capital. To evaluate the Company's overall performance for
purposes of determining Mr. Kovacevich's incentive award under the Policy, the
Committee also compared the Company's performance (adjusted for approximately
$1.15 billion in Merger-related and other charges incurred in the fourth
quarter of 1998 and approximately $320 million of loan losses primarily in
Island Finance, a consumer finance subsidiary of the Company) to that of
banking organizations included in the Comparison Group using these same
factors. The Committee noted particularly that the Company's performance as
adjusted was in the top quartile of the Comparison Group with earnings per
share growth of 18%, cash return on common equity of 31.76%, and cash return
on assets of 1.92%. The Committee ultimately exercised its discretion to set
Mr. Kovacevich's 1998 incentive award based on (a) its subjective evaluation
of the Company's overall performance and the quality of its earnings compared
to the performance of the Comparison Group using the factors described above,
and
18
<PAGE>
(b) the aggregate compensation paid by Comparison Group banking organizations
to their chief executive officers.
Based on Mr. Kovacevich's achievement of his performance goal, and the
Committee's exercise of its discretion under the Policy, the Committee awarded
incentive compensation for 1998 to Mr. Kovacevich of $4,500,000, of which
$3,000,000 was paid in cash and $1,500,000 was paid in the form of 39,934
shares of restricted stock (valued based on a closing market price of $37.5625
on February 22, 1999, the trading day preceding the date of the award). These
shares vest over a five-year period, with the restrictions ending in 2002 for
30% of the shares, in 2003 for an additional 30% and in 2004 for the remaining
shares. Mr. Kovacevich will forfeit any unvested portion of his restricted
stock award unless he remains employed by the Company or an affiliate until
the applicable restrictions terminate. This forfeiture provision does not
apply if Mr. Kovacevich's employment with the Company ends because of his
death, disability, retirement, or a change in control of the Company. Until
the restrictions on these shares end, Mr. Kovacevich is entitled to vote and
receive dividends on the restricted shares but may not sell or otherwise
transfer them. The portion of Mr. Kovacevich's incentive compensation award
under the Policy made in the form of restricted shares is governed by the
provisions (other than the provisions dealing with computation of the award)
of the LTICP.
Members of the Committee:
Michael W. Wright, Chair
Michael R. Bowlin
William A. Hodder
Richard D. McCormick
Donald B. Rice
Ian M. Rolland
Daniel M. Tellep
John A. Young
19
<PAGE>
STOCK PERFORMANCE GRAPHS
The stock performance graphs presented below compare the cumulative total
return on the Company's common stock for the five- and ten-year periods ended
December 31, 1998, with the cumulative total returns for the same periods on
the S&P 500 Index, the Keefe, Bruyette and Woods 50 Total Return Index (the
"KBW 50 Index"), and the "Peer Group Index" described below.
Prior to the Merger, the former Norwest used an index of the stock
performance of a peer group consisting of the 35 largest bank holding
companies ranked by total assets as of the end of the prior year (the "Peer
Group Index") for purposes of the stock performance graph that appeared in its
proxy statement. The former Wells Fargo used the KBW 50, a published banking
industry index prepared by an investment banking firm, for its stock
performance graph. Following the Merger, the Company has elected to measure
the cumulative return on its common stock against that of the banking
organizations included in the KBW 50 and to discontinue using the Peer Group
Index. The Company believes that the total return on the stock of the 50 bank
holding companies in a published index like the KBW 50 represents a more
comprehensive and accessible indicator against which to measure the
performance of the Company's common stock. However, as required by the rules
of the Securities and Exchange Commission, each graph shown below includes a
comparison of the cumulative total return on the Company's common stock with
the cumulative total returns of the Peer Group Index for the indicated
periods. The banking organizations in the 1998 Peer Group Index are listed
following the stock performance graphs.
The cumulative total stockholder return computations in the graphs assume
the investment of $100 in Company common stock, the S&P 500 Index, the KBW 50
Index and the Peer Group Index for the periods indicated and the reinvestment
of all dividends. For purposes of these graphs, the stock performance used to
compute total stockholder return for the Company is the stock performance of
the former Norwest, as the ongoing company after the Merger.
[GRAPH APPEARS HERE]
1993 1994 1995 1996 1997 1998
---------------------------------------------
Wells Fargo $100 99 144 195 355 373
S&P 500 $100 101 140 171 229 294
KBW 50 $100 95 152 206 315 341
Peer Group $100 93 143 199 300 331
20
<PAGE>
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Wells Fargo $100 145 140 255 310 360 355 517 701 1,275 1,340
S&P 500 $100 132 128 168 179 197 200 275 338 451 580
KBW 50 $100 119 85 135 172 182 173 276 391 571 619
Peer Group $100 122 100 176 225 233 217 333 462 699 769
</TABLE>
For purposes of the above graphs, the banking organizations in the 1998 Peer
Group Index are: BankAmerica Corporation; The Chase Manhattan Corporation;
Bank One Corporation; J.P. Morgan & Co. Incorporated; First Union Corporation;
Wells Fargo & Company; Bankers Trust Corporation; Fleet Financial Group, Inc.;
SunTrust Banks, Inc.; National City Corporation; KeyCorp; PNC Bank Corp.; U.S.
Bancorp; BankBoston Corporation; Wachovia Corporation; The Bank of New York
Company, Inc.; Mellon Bank Corporation; Republic New York Corporation; State
Street Corporation; Firstar Corporation; SouthTrust Corporation; Regions
Financial Corporation; Comerica Incorporated; Mercantile Bancorporation Inc.;
BB&T Corporation; Summit Bancorp.; UnionBanCal Corporation; Union Planters
Corporation; Fifth Third Bancorp; Huntington Bancshares Incorporated; Northern
Trust Corporation; MBNA Corporation; Popular, Inc.; First Security
Corporation; and Marshall & Ilsley Corporation.
21
<PAGE>
Compensation Tables and Information
The table below shows the cash and non-cash compensation paid to the Chief
Executive Officer and the four next highest paid executive officers of the
Company for the last three years. The compensation shown for Paul Hazen and
Rodney L. Jacobs for the years 1996 through 1998 is compensation paid to them
in 1996 and 1997, and for part of 1998, by the former Wells Fargo. During that
time, Mr. Hazen served as Chairman and Chief Executive Officer, and as
President from July 1997 to May 1998, and Mr. Jacobs served as Vice Chair and
as President from May 1998 to October 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
Annual Compensation Awards
------------------------------------ ----------------------------
Securities
Other annual Restricted stock underlying All other
compensation award(s) options/ compensation
Name and principal position Year Salary ($) Bonus ($)(1) ($)(2) ($)(3)(4)(5) SARs (#)(5) ($)(6)
(a) (b) (c) (d) (e) (f) (g) (i)
- --------------------------- ---- ---------- ------------ ------------ ---------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Richard M. Kovacevich... 1998 $925,000 $3,000,000 $68,747 $1,500,000 -0- $193,500
President and Chief 1997 900,000 2,300,000 86,111 1,632,313 1,720,844 186,000
Executive Officer 1996 900,000 2,200,000 39,290 814,000 588,706 185,220
Paul Hazen.............. 1998 862,500 3,000,000 8,059 10,796,875 881,000 89,583
Chairman 1997 850,000 2,000,000 7,828 -0- 218,300 85,000
1996 850,000 2,000,000 11,478 -0- 295,600 84,583
Les Biller.............. 1998 525,417 2,500,000 13,896 -0- 236,405 143,125
Vice Chairman and 1997 510,833 1,860,000 162,545 -0- 890,478 93,425
Chief Operating Officer 1996 465,000 1,046,250 31,293 508,750 229,982 90,675
Rodney L. Jacobs........ 1998 570,833 2,000,000 15,309 -0- 213,300 57,083
Vice Chairman and 1997 425,000 1,000,000 14,867 -0- 65,500 42,500
Chief Financial Officer 1996 425,000 750,000 19,188 -0- 118,300 41,667
Kenneth R. Murray....... 1998 465,833 1,457,000 83,674 -0- 100,976 102,470
Group Executive Vice 1997 460,000 1,242,000 21,149 -0- 672,434 89,700
President 1996 451,667 1,035,000 26,677 -0- -0- 86,500
</TABLE>
- --------
(1) The amounts shown for 1998 represent that part of the 1998 incentive
compensation awards paid in cash under the Performance-Based Compensation
Policy. This policy is discussed above in the Report of the Human
Resources Committee on Executive Compensation on pages 14 through 19.
(2) The amounts shown include (i) for the years 1996-1998, reimbursements to
each named executive officer for the payment of taxes on perquisites, and
for Mr. Jacobs, a cash car allowance, and (ii) perquisites and other
personal benefits totaling more than $50,000 received by Messrs.
Kovacevich, Biller, and Murray. The total amount of these perquisites and
personal benefits (and the amount and type of each perquisite or personal
benefit that was greater than 25% of the total received) is: Mr.
Kovacevich: 1997--$58,081 and 1998--$54,502 (includes $29,698 and $27,144,
respectively, for executive life insurance); Mr. Biller, 1997--$86,649,
(includes $51,701 for club dues and fees); Mr. Murray, 1998--$60,386
(includes $21,103 for a car allowance and $24,250 for executive life
insurance). The other named executive officers also received certain
perquisites and personal benefits for the years 1996-1998, none of which
had a total value greater than $50,000.
(3) The amount shown for 1998 for Mr. Kovacevich represents 39,934 shares of
restricted stock. These shares are that part of Mr. Kovacevich's 1998
incentive compensation award paid in
22
<PAGE>
restricted stock under the policy referred to in footnote (1) above. These
shares were valued as of February 22, 1999, based on a closing market price
of the Company's common stock of $37.5625 per share and rounded up to the
nearest whole share.
The amount for 1998 for Mr. Hazen represents 39,934 shares as part of Mr.
Hazen's incentive compensation award paid in restricted stock calculated as
described above for Mr. Kovacevich and an award of 250,000 shares of
restricted stock made on November 2, 1998, the effective date of the
Merger. This award was made pursuant to Mr. Hazen's employment agreement
with the Company and was valued on November 2, 1998, based on a closing
market price of the Company's common stock of $37.1875 per share.
(4) The total number of shares of restricted stock held on December 31, 1998
by each person named and their market value, based on a closing market
price for the Company's common stock of $39.9375 per share on that date,
were as follows: Mr. Kovacevich, 142,580 shares, $5,694,289; Mr. Hazen,
250,000 shares, $9,984,375; and Mr. Biller, 20,000 shares, $798,750.
Dividends are paid on shares of restricted stock on the same dates and at
the same rate as those paid to all holders of the Company's common stock.
Each of the restricted stock awards except Mr. Hazen's vest over a period
of five years, beginning in the third year after the date of the original
award. Mr. Hazen's award vests 20% per year.
(5) Mr. Hazen's options for 1998 include an option to purchase 500,000 shares
of the Company's common stock granted under the terms of his employment
agreement. Additional information about this option is found below in the
table headed "Option/SAR Grants in Last Fiscal Year" and the discussion
under "Employment Agreements." Other than the option granted under
Mr. Hazen's employment agreement, the options shown for Mr. Hazen and
Mr. Jacobs for the years 1996-1998 represent options to acquire shares of
former Wells Fargo common stock that were converted into options to
acquire shares of the Company's common stock upon completion of the
Merger.
(6) The amounts shown for Messrs. Kovacevich, Biller, and Murray are the total
of the Company's contributions to the Savings Investment Plan ("SIP"), a
401(k) plan in which all former Norwest employees are eligible to
participate, and contributions to the Company's Supplemental Savings
Investment Plan, a non-qualified supplemental executive retirement plan
("Supplemental SIP"). For the year ended December 31, 1998, the Company's
contribution to SIP for each such executive officer was $9,600 (the
maximum allowable contribution under SIP). The Company's contributions to
Supplemental SIP for the year ended December 31, 1998, for these officers
were as follows: Mr. Kovacevich, $183,900; Mr. Biller, $133,525; and Mr.
Murray, $92,870.
The amounts shown for Mr. Hazen and Mr. Jacobs are the total of the former
Wells Fargo's contributions to its Tax Advantage and Retirement Plan
("TAP"), a 401(k) plan in which all former Wells Fargo employees are
eligible to participate, and the Benefits Restoration Program ("BRP"), a
non-qualified supplemental executive retirement plan maintained by the
former Wells Fargo for its executive officers. Messrs. Hazen and Jacobs
will continue to participate in TAP and BRP until the Company combines all
qualified and non-qualified retirement plans for all employees and
executive officers. For the year ended December 31, 1998, the contribution
to TAP for each of Messrs. Hazen and Jacobs was $14,044 (the maximum
allowable contribution under TAP). The contributions to BRP for the year
ended December 31, 1998, for these officers were as follows: Mr. Hazen,
$75,539; Mr. Jacobs, $43,039.
23
<PAGE>
Option Grants and Exercises
These tables summarize for 1998 under the Company's Long-Term Incentive
Compensation Plan option grants to and option exercises by the executive
officers named in the Summary Compensation Table, and the value of the options
held by them at December 31, 1998.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential realizable value
at assumed annual rates of
stock price appreciation
Individual Grants for option term(4)
- ----------------------------------------------------------------------------------- ---------------------------
Number of Percent of total
securities options/SARs
underlying granted to
options/SARs employees in Exercise or base Expiration
Name granted (#) fiscal year(3) price ($/Share) date 5% ($) 10% ($)
---- ------------ ---------------- ---------------- ---------- ------------- -------------
(a) (b) (c) (d) (e) (f) (g)
<S> <C> <C> <C> <C> <C> <C>
Richard M. Kovacevich... -0- * $ -- -- -- --
Paul Hazen (1).......... 381,000 * 32.1600 02/04/08 7,705,821 19,528,063
500,000 37.3750 11/01/08 11,752,468 29,783,062
Les Biller.............. 236,405(2) * 39.1250 07/22/07 4,897,548 11,964,738
Rodney L. Jacobs (1).... 213,300 * 32.1600 01/20/08 4,314,046 10,932,640
Kenneth R. Murray....... 100,976(2) * 39.4375 07/23/01 561,020 1,169,387
</TABLE>
- --------
*Represents less than 1.0% of all stock options granted to employees in 1998.
(1) The options listed in the first line opposite Mr. Hazen's name and the
options listed opposite Mr. Jacobs's name represent options to acquire
common stock of the former Wells Fargo granted prior to the Merger. These
options were converted in the Merger into options to acquire shares of the
Company's common stock. The options listed in the second line opposite Mr.
Hazen's name were granted to him on November 2, 1998, pursuant to the
terms of his employment agreement. See "Employment Agreements" below for a
discussion of Mr. Hazen's stock options under the terms of this agreement.
(2) The options listed opposite Mr. Biller's and Mr. Murray's names are
immediately exercisable "reload options" granted as the result of each
officer's exercise of stock options in 1998. The general terms of reload
options are described in the "Report of the Human Resources Committee on
Executive Compensation."
(3) Includes options granted to selected employees under the Company's Long-
Term Incentive Compensation Plan and the former Wells Fargo Long-Term
Incentive Plan and options granted to all eligible employees of the
Company and its subsidiaries under the Best Practices PartnerShares(R)
Plan. Participants in the Long-Term Incentive Compensation Plan are not
eligible for option grants under the PartnerShares Plan.
(4) The dollar amounts under columns (f) and (g) are based on assumed 5% and
10% annual rates of appreciation set by the Securities and Exchange
Commission. These amounts should not be viewed as, and are not intended to
be, a forecast of possible future appreciation, if any, in the Company's
stock price.
24
<PAGE>
AGGREGATED OPTION/SAR EXERCISES
IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of securities Value (*) of unexercised
underlying unexercised in-the-
options/SARs money(*) options/SARs
Shares Value at fiscal year end (#) at fiscal year end ($)
acquired on realized (*) Exercisable/ Exercisable/
Name exercise (#) ($) Unexercisable Unexercisable
---- ------------ ------------ ---------------------- ------------------------
(a) (b) (c) (d) (e)
<S> <C> <C> <C> <C>
Richard M. Kovacevich... -- $ -- 1,935,701 / 986,667 $35,302,111 / $8,934,270
Paul Hazen.............. -- -- 1,475,600 / 1,106,630 37,436,143 / 6,497,486
Les Biller.............. 266,666 2,199,995 833,729 / 533,334 13,896,002 / 4,829,339
Rodney L. Jacobs........ -- -- 680,600 / 296,400 15,778,723 / 2,513,025
Kenneth R. Murray....... 133,333 2,466,661 652,959 / 266,667 7,842,361 / 2,414,670
</TABLE>
- --------
* For purposes of column (c), the "value realized" from exercised options
means the difference between the option exercise price and the market value
of the underlying shares based on the closing price of the Company's common
stock on the option exercise date. For purposes of column (e), the "value"
of unexercised options means the difference between the option exercise
price and the market value of the underlying shares based on $39.9375, the
closing price for the Company's common stock on December 31, 1998. As used
in column (e), an option is "in-the-money" on a particular date if the
option exercise price is less than the market value of the underlying
shares based on the closing price for the Company's common stock on that
date.
Pension Plans and Other Retirement Arrangements
The Company currently maintains the "Norwest Corporation Pension Plan" (the
"Norwest Pension Plan") and the Norwest Corporation Supplemental Pension Plan
(the "Norwest Supplemental Pension Plan") (the "Norwest Plans"). Subject to
any necessary governmental approvals, the Company intends to restate the
Norwest Pension Plan effective July 1, 1999, into a cash-balance, defined
benefit plan. The Company also plans to amend and restate the Norwest
Supplemental Pension Plan to coordinate its provisions with the restated cash
balance plan. For purposes of the following description of the Norwest Plans,
reference to "employees" means only those persons who were employees of the
former Norwest and its participating subsidiaries as of November 2, 1998.
Employees of the former Wells Fargo (including Paul Hazen and Rodney L.
Jacobs) do not currently participate in the Norwest Plans, but will be
eligible to participate in the restated cash balance plan and the amended
supplemental pension plan.
Norwest Pension Plan. The Norwest Pension Plan is a defined benefit plan
qualified under the Employee Retirement Income Security Act of 1974 ("ERISA")
and the Internal Revenue Code (the "Code"). Benefits under the Norwest Pension
Plan are determined by age, years of service, and compensation. The monthly
benefit at regular retirement age is a life annuity equal to 1.1% of final
average monthly earnings up to the "Integration Level" and 1.6% of final
average monthly earnings above the Integration Level for each year of credited
service. The Norwest Pension Plan does not take into account more than 35
years of credited service. Under the Norwest Pension Plan, the Integration
Level for any year is $1,400 times the Social Security wage base for the
current year ($72,600 for 1999) divided by $48,000. The Integration Level
(stated as an amount per month) is $2,117.50 for participants retiring in
1999.
A participant's final average earnings are the highest average monthly
compensation paid during any 36 consecutive months within the
25
<PAGE>
last 120 months of employment. Compensation for purposes of this calculation
means generally all compensation paid to a participant during the year which
is reportable on Form W-2, plus salary reduction amounts made under Section
401(k) and Section 125 of the Code. It generally excludes contributions to any
non-qualified deferred compensation plan maintained by the Company,
perquisites, severance pay, gross-ups, payments in lieu of vacation, and stock
option or equity-like gains. Incentive compensation amounts will be included
in compensation for Norwest Pension Plan purposes in the year received rather
than the year earned.
Compensation under the Norwest Pension Plan for a plan year is limited by
Code Section 401(c)(17). This limit for 1999 is $160,000. In addition, Section
415 of the Code places certain limitations on the amount of the annual pension
that can be paid to a participant from a tax-qualified pension plan. The
annual limit currently in effect is $130,000, which may be increased for
future retirees.
Norwest Supplemental Pension Plan. As permitted by ERISA and the Code,
employees who participate in the Norwest Supplemental Pension Plan will
receive amounts that would be payable under the Norwest Pension Plan but for
limits under Code Sections 401(c)(17) and 415. Compensation under the
Supplemental Pension Plan includes the participant's basic compensation as
well as designated incentive compensation, whether or not that compensation is
deferred. Incentive compensation amounts are included in compensation for plan
purposes in the year received, rather than the year earned.
The table below shows the estimated total annual average retirement benefits
payable under the Norwest Plans for individuals with various combinations of
annualized final average compensation and years of credited service. These
estimated benefits do not take into account any Internal Revenue Code limits
on retirement benefits. The annual amounts shown below, as estimated and when
paid, are not reduced by the amount of Social Security benefits.
<TABLE>
<CAPTION>
Years of Service at Retirement
Final Average ---------------------------------------------------------------
Compensation 10 15 20 25 30 35
------------- -------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
$ 250,000............. $ 38,730 $ 58,094 $ 77,459 $ 96,824 $ 116,189 $ 135,553
500,000............. 78,730 118,094 157,459 196,824 236,189 275,553
750,000............. 118,730 178,094 237,459 296,824 356,189 415,553
1,000,000............. 158,730 238,094 317,459 396,824 476,189 555,553
1,250,000............. 198,730 298,094 397,459 496,824 596,189 695,553
1,500,000............. 238,730 358,094 477,459 596,824 716,189 835,553
1,750,000............. 278,730 418,094 557,459 696,824 836,189 975,553
2,000,000............. 318,730 478,094 637,459 796,824 956,189 1,115,553
2,250,000............. 358,730 538,094 717,459 896,824 1,076,189 1,255,553
2,500,000............. 398,730 598,094 797,459 996,824 1,196,189 1,395,553
2,750,000............. 438,730 658,094 877,459 1,096,824 1,316,189 1,535,553
3,000,000............. 478,730 718,094 957,459 1,196,824 1,436,189 1,675,553
3,250,000............. 518,730 778,094 1,037,459 1,296,824 1,556,189 1,815,553
3,500,000............. 558,730 838,094 1,117,459 1,396,824 1,676,189 1,955,553
3,750,000............. 598,730 898,094 1,197,459 1,496,824 1,796,189 2,095,553
4,000,000............. 638,730 958,094 1,277,459 1,596,824 1,916,189 2,235,553
4,250,000............. 678,730 1,018,094 1,357,459 1,696,824 2,036,189 2,375,553
4,500,000............. 718,730 1,078,094 1,437,459 1,796,824 2,156,189 2,515,553
4,750,000............. 758,730 1,138,094 1,517,459 1,896,824 2,276,189 2,655,553
5,000,000............. 798,730 1,198,094 1,597,459 1,996,824 2,396,189 2,795,553
</TABLE>
26
<PAGE>
For each of the executive officers named in the Summary Compensation Table
who currently participates in the Norwest Plans, the compensation recognized
under the Norwest Plans for 1999 is the amount shown in the table for the year
1998 as "Salary" (column (c)) and the amount shown for the year 1997 as
"Bonus" (column (d)) which was received in 1998. As of December 31, 1998,
their individual credited service was as follows: Mr. Kovacevich, 12 years, 10
months; Mr. Biller, 11 years, 4 months; Mr. Murray, 16 years. Paul Hazen and
Rodney L. Jacobs, who were employees of the former Wells Fargo, do not
currently participate in the Norwest Plans. Information on retirement benefits
payable to Mr. Hazen and Mr. Jacobs under the former Wells Fargo retirement
plans and under their employment agreements is presented below and under the
heading "Employment Agreements" on page 28.
Former Wells Fargo Retirement Plans. Mr. Hazen and Mr. Jacobs also
participated in a defined benefit plan sponsored by the former Wells Fargo.
This plan was terminated in 1994, and annuities were purchased for all
participants eligible to receive benefits under this plan, including Mr. Hazen
and Mr. Jacobs. Because ERISA limited individual annual benefits payable under
the former Wells Fargo plan, Mr. Hazen and Mr. Jacobs also participated in the
former Wells Fargo Benefits Restoration Plan ("BRP"). The BRP is a non-
qualified supplemental executive retirement plan maintained by the former
Wells Fargo for its executive officers, under which they will receive
retirement benefits in excess of the ERISA limits. The combined annual
benefits payable under the annuities and the BRP beginning at age 65 are: Mr.
Hazen, $187,490; and Mr. Jacobs, $27,573.
Long-Term Disability Plans
The Company's Long-Term Disability Plan, which is available to all former
Norwest employees, covers compensation of up to $500,000 in salary and
designated incentive compensation. The plan provides a monthly benefit to an
eligible employee, who is totally disabled for more than 22 weeks, equal to
65% of the participant's average covered compensation, up to a maximum covered
compensation of $500,000 per year and a maximum monthly benefit of $27,083.
The Supplemental Long-Term Disability Plan extends similar disability coverage
for the base salary earned by Richard M. Kovacevich in excess of $500,000. The
monthly benefit payable under either plan may be offset by other sources of
income. Pursuant to the terms of his employment agreement with the Company,
the base salary earned by Paul Hazen will be covered by this supplemental plan
on the same basis as Mr. Kovacevich's base salary.
Severance Agreements
The Company has severance agreements with Richard M. Kovacevich, Les Biller,
and Kenneth R. Murray, all of whom are named in the Summary Compensation
Table. The Company also has termination of employment arrangements with Paul
Hazen and Rodney L. Jacobs, who are also named in the Summary Compensation
Table. These arrangements are included in the terms of the employment
agreements with Messrs. Hazen and Jacobs and are discussed below under the
heading "Employment Agreements."
The severance agreements with Messrs. Kovacevich, Biller, and Murray are
intended to encourage them to continue to carry out their duties if there is a
change of control of the Company. Under the terms of these agreements, these
executive officers may receive certain payments if their employment is
terminated or if their job duties or compensation and benefits are
substantially reduced within three years following a change of control of the
Company. The maximum payments are two times the sum
27
<PAGE>
of the executive officer's (i) base salary rate, (ii) the value of perquisites
provided by the Company, and (iii) the highest potential incentive
compensation award or, in the case of Mr. Kovacevich, an amount equal to the
two-year average of his incentive compensation awards. The agreements also
continue certain medical, dental and life insurance benefits for up to two
years after termination. If payments received by any such officer as a result
of a change of control result in an excise tax liability for such officer, the
Company also will pay to the officer an additional amount equal to the excise
tax plus a gross-up for additional income taxes, interest, and penalties
related to the excise tax.
The Company also has a plan that provides severance pay to employees who are
discharged under certain circumstances. All of the executive officers named in
the Summary Compensation Table may participate in this plan. The amount of
severance pay is based on years of service, job level, and the severance
option the employee chooses, and includes payment of base salary and
continuation of benefits for specified monthly periods. Mr. Kovacevich also
can receive benefits of a minimum payment of 12 months' salary (less the
amount of any other severance payments to which he may be entitled under any
severance plan of the Company then in effect), a pro rata portion of his
incentive compensation, and certain life and health insurance benefits. The
benefits are payable if his employment is terminated by the Company for a
reason other than cause or if his job duties are substantially reduced and he
resigns within 90 days thereafter.
Employment Agreements
In connection with the Merger, the Company entered into employment
agreements with Paul Hazen and Rodney L. Jacobs. Under these agreements, Mr.
Hazen will be employed as Chairman of the Board of Directors for a term of
five years and Mr. Jacobs will be employed as an executive officer of the
Company for a term of three years, in each case beginning on November 2, 1998.
Following the Merger, Mr. Jacobs was elected Vice Chairman and Chief Financial
Officer of the Company, reporting to the Chief Executive Officer. In addition,
Messrs. Hazen and Jacobs will each serve as members of the Board of Directors
during the terms of their employment.
Compensation. Under his employment agreement, Mr. Hazen is entitled to
receive an annual base salary and bonus of not less than the annual base
salary and bonus of the Chief Executive Officer (currently, Richard M.
Kovacevich). The amounts Mr. Hazen received in 1998 as salary and bonus are
shown in columns (b) and (c) of the Summary Compensation Table. Also pursuant
to his employment agreement, Mr. Hazen received a restricted stock award of
250,000 shares, and was granted an option to purchase 500,000 shares of the
Company's common stock under its Long-Term Incentive Compensation Plan on
November 2, 1998. Information about Mr. Hazen's restricted stock award is
included in column (f) of the Summary Compensation Table. Information about
Mr. Hazen's stock option grant is included in column (g) of the Summary
Compensation Table and opposite his name in the table on page 24 of this proxy
statement captioned "Option/SAR Grants in Last Fiscal Year." On November 2,
1999, and November 2, 2000, Mr. Hazen is entitled to receive 125,000
additional shares of restricted stock and options to purchase 250,000
additional shares of the Company's common stock. Under his employment
agreement, Mr. Jacobs' annual base salary, annual bonus, and long-term
incentive compensation (stock option grants and restricted stock grants) will
be determined each year by the Human Resources Committee using the procedures
for executive officers described in the Committee's report beginning on page
14.
28
<PAGE>
Retirement and Other Benefits. Mr. Hazen and Mr. Jacobs will each receive an
annual retirement benefit, commencing immediately upon the termination of
their employment for any reason, equal to not less than 25% of their 1997
taxable compensation as defined in their employment agreements. This benefit
will be reduced by the amount of any retirement benefits accrued after the
date of their employment by the Company that may be payable to them under any
qualified or non-qualified defined benefit retirement plan of the Company.
They are also entitled to participate in all employee benefit, stock
incentive, welfare, and other plans, practices, policies, and perquisites
applicable to, and on the same basis, in Mr. Hazen's case, as the Chief
Executive Officer, and in Mr. Jacobs' case, as his "peer executive officer."
For purposes of his employment agreement, Mr. Jacobs' peer executive officer
is defined as the highest paid executive officer of the Company other than the
Chairman and the Chief Executive Officer (currently, Les Biller, Vice Chairman
and Chief Operating Officer).
Termination of Employment. Mr. Hazen and Mr. Jacobs are each entitled to
certain payments under their employment agreements if their employment is
terminated by the Company other than for cause, death, or disability, or if
they terminate their employment with the Company for "good reason." "Good
reason" includes the Company's assigning any duties, authority, titles,
offices or reporting requirements inconsistent with either Mr. Hazen's or Mr.
Jacobs' positions with the Company specified under the terms of their
employment agreements, failure by the Company to comply (other than
inadvertently) with the compensation provisions of their employment
agreements, an attempt by the Company to terminate Mr. Hazen's or Mr. Jacobs'
employment other than pursuant to the terms of his agreement, or the failure
by any successor to the Company's business or substantially all its assets to
assume and perform the Company's obligations under the employment agreements.
Upon termination of their employment by the Company (other than for cause,
death or disability) or by them for good reason, Mr. Hazen and Mr. Jacobs will
each be entitled to a lump-sum cash payment of (i) any unpaid base salary and
(ii) a pro rata annual bonus, based on the highest bonus he received for the
three years preceding the date his employment terminates (the "termination
date"). Mr. Hazen will also receive a cash payment in an amount equal to (i)
the sum of his base salary and his highest annual bonus in the three years
preceding his termination date times (ii) the number of months from his
termination date to the end of his contractual employment period divided by
12. Mr. Hazen and Mr. Jacobs will also continue to receive lifetime medical
and dental benefits on the same basis as prior to termination, and certain
other benefits.
If either Mr. Hazen's or Mr. Jacobs' employment terminates because of death
or permanent total disability, he (or his estate, in the case of death) will
receive a lump-sum cash payment equal to his unpaid base salary plus a pro
rata annual bonus based on his highest bonus for the three years preceding the
date of his death or disability.
In the event Mr. Hazen's employment terminates under any of the
circumstances described above (other than by the Company for cause or by Mr.
Hazen without "good reason"), all outstanding stock options and awards of
restricted stock held by Mr. Hazen as of the date employment terminates will
become exercisable or vest in full.
If any payment or distribution received by Mr. Hazen or Mr. Jacobs under the
terms of his
29
<PAGE>
employment agreement would result in an excise tax liability, the Company will
make an additional payment to him so that after the payment of all income and
excise taxes, he will be in the same after-tax position as if no excise tax
had been imposed.
Non-Competition. Under their employment agreements, Mr. Hazen and Mr. Jacobs
may not disclose confidential information or compete with the Company during
the term of their employment and for specified periods thereafter. If either
of them breaches the non-competition provision, the Company's obligation to
pay that executive officer's retirement benefit will be suspended and will
recommence only when he is no longer in violation of the provision, but with a
50% reduction of the retirement benefit.
30
<PAGE>
OTHER INFORMATION ABOUT DIRECTORS
AND EXECUTIVE OFFICERS
Loans
During 1998, certain directors (including the directors discussed below
under "Compensation Committee Interlocks and Insider Participation"),
executive officers, one or more members of their immediate families, and one
or more of their associates had banking transactions, including loans, in the
ordinary course of business with the Company's bank subsidiaries. In addition,
Norwest Investment Services, Inc., a broker-dealer subsidiary, made margin
loans in the ordinary course of business to some executive officers. All loans
were made on substantially the same terms, including interest rates and
collateral, as those available at the time for similar transactions with other
persons. The loans did not involve more than the normal risk of collection or
have other unfavorable features.
Certain directors, executive officers, and members of their immediate
families had mortgage and other loans with two of the Company's non-bank
subsidiaries. Information on these loans is given below.
Three non-employee directors and five executive officers of the Company
(including an executive officer named in the Summary Compensation Table), as
well as members of the immediate families of certain non-employee directors
and executive officers, obtained mortgage loans from Norwest Mortgage, Inc.
("NMI"), a mortgage-lending subsidiary of the Company. In connection with
these mortgage loans, NMI waived an origination fee equal to 1% of the loan
amount for each loan to a director or executive officer under its policy
available to all Company employees.
Of the mortgage loans made by NMI, two loans were made to an executive
officer who relocated to San Francisco, California, in connection with the
relocation of the Company's headquarters. These loans were made under the
Company's relocation program for employees who relocate to high-cost areas
(the "Relocation Program"). Under this program, an employee who relocates to a
designated high-cost area is eligible to receive a first mortgage loan
(subject to applicable lending guidelines) from NMI, and a 30-year, interest-
free second mortgage down- payment loan in an amount up to 100% of his or her
annual salary to purchase a new primary residence comparable to the employee's
previous home. The Company will also provide a mortgage interest subsidy on
the first mortgage loan of up to 25% of the employee's annual base salary,
payable over a period not exceeding the first five years of the first mortgage
loan. The second mortgage loan must be repaid in full if the employee
terminates employment with the Company or retires, or if the employee sells
the residence or refinances the mortgage loans.
During 1998, certain executive officers of the Company (including an
executive officer named in the Summary Compensation Table) who were officers
of the former Wells Fargo had outstanding mortgage loans made under its
Executive Loan Program and outstanding loans to facilitate their exercise of
stock options granted under the former Wells Fargo's Long-Term Incentive Plan.
These loans are now held by WFC Holdings Corporation ("WFC Holdings") as
successor to the former Wells Fargo pursuant to the Merger. Under the
Executive Loan Program, an eligible employee could obtain a mortgage loan for
purchasing, constructing, improving, or refinancing the employee's principal
residence. Loans were available in amounts which, when aggregated with
31
<PAGE>
other debt secured by the residence, would not exceed the lesser of $1,500,000
or 100% of the fair market value of the residence. New loans under this loan
program are no longer being made. The stock option loans had maximum terms of
six years and variable interest rates that were adjusted each year based on the
greater of the average annual rate for three-year U.S. Treasury notes for the
immediately preceding calendar year and the applicable rate under the Internal
Revenue Code.
Information about loans made or held by NMI or WFC Holdings, as the case may
be, to directors and to the executive officers named in the Summary
Compensation Table, as well as to members of certain directors' and named
executive officers' immediate families, is shown in the table below.
<TABLE>
<CAPTION>
Highest Outstanding Outstanding
Name and Loan Balance Loan Balance on Annual Interest
Principal Position Since 1/1/98 12/31/98 Rate
------------------ ------------------- --------------- ---------------
<S> <C> <C> <C>
Les Biller................ $ 474,000 $ -0- 7.125%
Vice Chairman and Chief (adjustable)
Operating Officer
Paul Hazen(1)............. 1,344,914 1,313,078 6.17% (fixed)
Chairman 597,777 599,777 6.10% (fixed)
Richard D. McCormick(2)... 628,840 -0- 6.375%
Director (adjustable)
Benjamin F. Montoya....... 61,000 60,803 7.125%
Director (fixed)
Michael W. Wright(3)...... 972,000 -0- 7.875%
Director (fixed)
Immediate Family Members (4) (4) (4)
of Other Directors and
Executive Officers.......
</TABLE>
- --------
(1) The loan shown on the first line opposite Mr. Hazen's name is a first
mortgage, 30-year loan originally made by the former Wells Fargo under its
Executive Loan Program to refinance the purchase of Mr. Hazen's principal
residence. The loan shown on the second line is a loan made under the
former Wells Fargo's Long-Term Incentive Plan in connection with Mr.
Hazen's exercise of a stock option to purchase shares of the former Wells
Fargo's common stock .
(2) The son of Richard D. McCormick had a mortgage loan from NMI during 1998,
as follows: interest rate--6.75% (fixed); highest outstanding loan balance
during 1998--$150,000; loan balance at December 31, 1998--0.
(3) Two daughters of Michael W. Wright had mortgage loans from NMI during
1998, as follows: interest rates--7.125% (fixed) and 6.5% (fixed); highest
outstanding loan balances--$130,400 and $156,800; loan balances at
December 31, 1998--0.
(4) The daughter of Richard M. Kovacevich and the daughter of Ian M. Rolland
had mortgage loans from NMI during 1998, as follows: interest rates:
7.125% (fixed) and 7.25% (adjustable); highest outstanding loan balances--
$225,000 and $74,000; loan balances at December 31, 1998--0 and $73,942,
respectively.
32
<PAGE>
With respect to executive officers who are not named in the Summary
Compensation Table and members of their immediate families, four executive
officers and five immediate family members of executive officers had
outstanding mortgage loans (including the mortgage loans to one executive
officer under the Relocation Program) from NMI during 1998 totaling
$3,443,647. The mortgage loans (other than the down-payment loan) had interest
rates ranging from 5.375% (adjustable) to 8.125% (fixed) per annum. Of these
loans, seven were sold by NMI in the secondary real estate mortgage market.
Two executive officers of the Company who were officers of the former Wells
Fargo had mortgage loans under the Executive Loan Program now held by WFC
Holdings, totaling $2,289,810, with fixed interest rates ranging from 5.33% to
5.69% per annum; and three executive officers of the Company had stock option
loans held by WFC Holdings totaling $1,208,579, with interest rates during
1998 ranging from 4.83% to 6.37% per annum.
Compensation Committee Interlocks and Insider Participation
Each year the Human Resources Committee (the "Committee") determines the
compensation to be paid to Wells Fargo's Chief Executive Officer and other
executive officers, including the executive officers named in the Summary
Compensation Table. The members of the Committee for 1998 were Michael W.
Wright (Chair), Michael R. Bowlin, William A. Hodder, Richard D. McCormick,
Donald B. Rice, Ian M. Rolland, Daniel M. Tellep, and John A. Young. During
1998, Richard D. McCormick and Michael W. Wright had banking transactions,
including loans, in the ordinary course of business with one or more of the
Company's bank subsidiaries. All loans were made on substantially the same
terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons. These loans did not
involve more than the normal risk of collection or present other unfavorable
features. Mr. McCormick, a member of his immediate family, Mr. Wright, two
members of his immediate family, and a member of Mr. Rolland's immediate
family had mortgage loans with Norwest Mortgage, Inc. Information on these
loans is included above under the heading "Loans."
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 and related regulations
require the Company's directors, executive officers, and anyone holding more
than 10% of the Company's common stock ("reporting persons") to report their
initial ownership of the Company's common stock and any changes in that
ownership to the Securities and Exchange Commission and the New York Stock
Exchange. The Company is required to disclose in this proxy statement the
failure of any reporting person to file these reports when due. All reporting
persons of the Company satisfied these filing requirements, except Les Biller
and James R. Campbell, executive officers of the Company. Mr. Biller failed to
file a Form 4 when due to report a gift to him by his spouse made in 1997. Mr.
Campbell failed to file a Form 4 when due to report a gift to his children
made in 1998. Mr. Biller and Mr. Campbell
ultimately reported these transactions on Form 4. In making these disclosures,
the Company relied on written representations of each reporting person and
copies of the reports filed with Commission.
33
<PAGE>
ITEM 2. PROPOSAL TO AMEND THE
LONG-TERM INCENTIVE COMPENSATION PLAN
The Board of Directors has approved an amendment (the "Plan Amendment") to
the Company's Long-Term Incentive Compensation Plan (the "Plan") to increase
the maximum number of shares of common stock that may be awarded under the
Plan by an additional 40,000,000 shares. In order for the Plan Amendment to
take effect, stockholders must approve it at the 1999 annual meeting.
The Plan Amendment would add the underlined language to Section 4 of the
Plan and delete the language enclosed in brackets, as follows:
"4. Shares Available Under the Plan: Limitation on Awards. The maximum
number of Shares that may be issued under this Plan on and after April 27,
1999 [April 28, 1998] (in addition to Shares which prior to April 27, 1999
[April 28, 1998] were subject to Awards) shall not exceed the sum of (i) the
number of Shares available for, but not yet subject to, an Award as of April
27, 1999 [April 28, 1998], plus (ii) 40,000,000 [37,000,000] Shares."
The Board believes that the Plan is an important way to attract, retain and
motivate key employees, and that it is appropriate to increase the number of
shares available for awards under the Plan. Approval of the proposed Plan
Amendment will ensure that enough shares are available under the Plan to
encourage stock ownership by executive officers and key employees and to help
the Company attract and retain individuals who will contribute to the
Company's success.
The Plan
Key employees (including executive officers and directors who are employees)
of the Company and its subsidiaries selected by the Human Resources Committee
(the "Committee") are eligible to become participants in the Plan. Key
employees selected by the Committee may receive awards in the form of stock
options, stock appreciation rights, restricted stock, performance shares,
performance units or stock. As of February 28, 1999, a total of 3,714 persons
participated in the Plan. No employee may be granted stock options or stock
appreciation rights covering more than 7,000,000 shares in any calendar year.
In addition, the Plan limits the number of shares that may be issued pursuant
to certain stock awards that have vesting periods of less than three years.
If the Plan Amendment is approved by stockholders, no more than 5% of the
sum of the number of shares available for awards under the Plan as of April
27, 1999, and 40,000,000 shares may be made subject to (i) restricted stock
awards that vest in fewer than three years from the award date, (ii) stock
awards without restrictions (other than stock awards made in lieu of salary,
bonus, or other cash compensation), or (iii) awards of performance shares or
performance units with a performance cycle of less than three years.
Stock options may be granted as non-qualified stock options or incentive
stock options, and must be granted at a price no lower than the fair market
value of the stock on the day of grant. Fair market value on any day means the
closing price of a share of common stock reported on the New York Stock
Exchange for the immediately preceding trading day. Stock options may be
exercised during a period of time fixed by the Committee, except that no stock
option may be exercised more than ten years
34
<PAGE>
after the day it is granted. At the discretion of the Committee, the option
exercise price may be paid in cash, in other shares of Company common stock,
or by delivering irrevocable instructions to a broker to promptly deliver to
the Company sale proceeds to pay the purchase price.
Stock options granted under the Plan may include a reload feature. When an
option with this feature is exercised, the participant receives a reload
option to purchase the number of shares of common stock equal to the number of
whole shares used by the participant to pay the purchase price of the original
option. If shares are withheld by the Company to pay the participant's
withholding taxes, the reload option will also include a number of shares
related to the number of shares withheld. The exercise price of the reload
option is the fair market value of the Company's common stock on the date the
reload option is granted. A reload option expires on the same date as the
original option and may be exercised at any time between its grant date and
the expiration date of the original option. Reload options are intended to
encourage participants to exercise options early in their terms by allowing
the participant to preserve the opportunity for future appreciation over the
remaining life of the original option.
A stock appreciation right entitles a participant to receive a payment, in
cash or common stock or a combination of both, in an amount equal to the
difference between the fair market value of the stock at the time of exercise
and the fair market value as of the date of grant. Stock appreciation rights
may be exercised during a period of time for up to ten years after the grant
date, as fixed by the Committee.
A grant of restricted stock consists of a specified number of shares of
common stock which are subject to restrictions on transfer, conditions of
forfeiture, and any other terms and conditions for periods determined by the
Committee. Under the terms of each grant, and except in the case of a
participant's death, disability or retirement or a change of control of the
Company, a participant forfeits the right to receive the shares if he or she
is not continuously employed by the Company or an affiliate until the
restrictions end. Prior to the termination of the restrictions, a participant
may vote and receive dividends on the restricted stock but may not sell or
otherwise transfer the shares. The Committee may also make awards of common
stock without restrictions.
A grant of performance shares or performance units entitles a participant to
receive cash, common stock (which may be restricted stock), or a combination
of both, based on the degree of achievement of pre-established performance
targets over a performance cycle of two to five years, as determined by the
Committee. The Committee may set maximum and minimum performance targets
relating to earnings growth, or any other group or individual standard. The
Committee also sets the maximum number of performance shares or dollars of
performance units that may be received if the participant achieves the maximum
performance target. For performance between the maximum and minimum
performance targets, the Committee may pay a portion of the award.
The Committee has the discretion to determine the period of time up to the
original expiration date during which options or stock appreciation rights may
be exercised after a participant's death, permanent disability, or retirement.
The Board of Directors may modify, suspend or terminate the Plan but may not,
without the prior approval of the stockholders of the Company, make any change
to the Plan that
35
<PAGE>
increases the total amount of common stock which may be awarded (except to
reflect changes in capitalization), changes the class of employees eligible to
participate, withdraws the administration from the Committee or permits any
person, while a member of the Committee, to be eligible to participate.
On February 28, 1999, 52,708,103 shares were covered by options (including
reload options) granted under the Plan, at option prices ranging from $4.9375
to $43.375 per share and with expiration dates ranging from June 27, 1999 to
February 23, 2009, and 528,128 shares were subject to restricted stock awards
granted under the Plan that vest in full on dates ranging from May 2, 1999 to
February 23, 2004. On February 26, 1999, the closing market price of a share
of Company common stock was $36.75. Other than stock options and restricted
stock awards, no stock appreciation rights or other types of awards are
outstanding under the Plan.
Information about options granted in 1998 under the Plan to the Chief
Executive Officer and the four other most highly compensated executive
officers can be found in the table under the heading "Options/SAR Grants in
Last Fiscal Year" on page 24 of this proxy statement. In 1998, options
(including reload options) covering 1,419,260 shares were granted to current
executive officers as a group under the Plan, and options (including reload
options) covering 3,965,251 shares were granted under the Plan to all
employees (excluding executive officers) as a group. Options (other than
reload options) generally become exercisable in three annual installments
beginning one year after the date of the option grant. All reload options are
exercisable upon grant.
No information can be provided with respect to options or awards that may be
granted in the future under the Plan, as amended by the Plan Amendment. Such
awards are within the discretion of the Committee. The Committee has not
determined future awards or who might receive them.
The Plan Amendment
Increase in Available Shares. As of February 28, 1999, awards (including
options and restricted stock awards) covering 53,127,119 shares were
outstanding and 45,736,468 shares were available for grant under the Plan. If
stockholders approve the Plan Amendment, the estimated maximum number of
shares that may be issued under the Plan (in addition to shares subject to
awards as of April 27, 1999) would be increased to 85,736,468 shares. This
number represents shares available for, but not yet subject to, an award as of
the date of the annual meeting (45,736,468 shares, assuming no awards are made
under the Plan between February 28, 1999 and that date), and the additional
40,000,000 shares authorized by the Plan Amendment.
Either authorized but unissued shares or treasury shares of common stock may
be issued in connection with awards under the Plan. In addition, the following
shares can also be re-used for a new award: (1) any shares subject to an award
which are forfeited or not issued because the terms and conditions of the
award are not met, (2) any shares used to pay all or part of an option
exercise price, (3) any shares subject to awards paid in cash, and (4) any
shares relating to exercised stock appreciation rights paid in cash.
Certain Federal Income Tax Consequences. The following discussion summarizes
the federal income tax consequences to participants who receive options under
the Plan. This summary is
36
<PAGE>
based upon the provisions, regulations, and interpretations of the Code in
effect as of January 1, 1999.
Non-Qualified Stock Options. A participant who is granted a non-qualified
stock option will not have income and the Company will not be allowed a
deduction at the time the option is granted. When a participant exercises a
non-qualified stock option, the difference between the option price and any
higher market value of the stock on the date of exercise (the "stock option
gains") will be ordinary income to the participant and will be allowed as a
deduction for federal income tax purposes to the Company or a subsidiary. The
capital gain holding period of the shares acquired will begin one day after
the date the stock option is exercised. When a participant disposes of shares
acquired by the exercise of the option, any amount received that is more than
the fair market value of the shares on the exercise date will be treated as
short-term or long-term capital gain, depending upon the holding period of the
shares. If the amount received is less than the market value of the shares on
the exercise date, the loss will be treated as short-term or long-term capital
loss, depending upon the holding period of the shares.
The tax consequences to a participant and to the Company of the exercise of
a non-qualified stock option described above assume that the participant has
not elected to defer stock option gains under the Company's Employees'
Deferred Compensation Plan. The amount of any stock option gains deferred is
credited in the form of shares to the participant's deferral account under the
plan. Dividends paid on Company common stock are also credited to and
reinvested in Company common stock in the participant's deferral account. A
participant who elects to defer stock option gains will not have ordinary
income until shares credited to the deferral account, including dividend
reinvestment shares, are actually distributed to the participant. At that
time, the Company will be entitled to a deduction for federal income tax
purposes equal to the value of all shares distributed.
Incentive Stock Options. A participant who is granted an incentive stock
option also will not have income and the Company will not be allowed a
deduction at the time the option is granted. When a participant exercises an
incentive stock option while employed by the Company or a subsidiary or within
the three-month period (one-year period, in the case of disability) after his
or her employment ends, the participant will not recognize any ordinary income
at that time. However, any excess of the fair market value of the shares
acquired by such exercise over the option price will be an item of tax
preference for purposes of any federal alternative minimum tax applicable to
individuals. If the shares acquired upon exercise are disposed of more than
two years after the date of grant and one year after the date of transfer of
the shares to the participant ("statutory holding periods"), any sale proceeds
that exceed the total option price of these shares will be long-term capital
gain. Except in the event of the optionee's death, if the shares are disposed
of prior to the expiration of the statutory holding periods (a "Disqualifying
Disposition"), generally, the amount by which the fair market value of the
shares at the time of exercise exceeds the total option price will be ordinary
income. If a Disqualifying Disposition occurs, the Company will be entitled to
a federal tax deduction for a similar amount.
Payment of Option Price in Shares. If a participant pays the exercise price
of a non-qualified or incentive stock option with previously owned shares of
Company common
37
<PAGE>
stock and the transaction is not a Disqualifying Disposition, the shares
received equal to the number of shares surrendered are treated as having been
received in a tax-free exchange. The shares received in excess of the number
surrendered will not be taxable if an incentive stock option is being
exercised, but will be taxable as ordinary income to the extent of their fair
market value if a non-qualified option is being exercised. The participant
does not recognize income and the Company receives no deduction as a result of
the tax-free portion of the exchange transaction. If the use of previously
acquired incentive stock option shares to pay the exercise price of another
incentive stock option constitutes a Disqualifying Disposition, the tax
results are as described under the heading "Incentive Stock Options."
Stock Appreciation Rights. A participant who receives stock appreciation
rights will not recognize income and the Company will not be allowed a
deduction at the time such stock appreciation rights are granted. When a
participant exercises stock appreciation rights, the amount of cash and the
fair market value of the shares of common stock of the Company received will
be ordinary income to the participant and will be allowed as a deduction for
federal income tax purposes to the Company or its subsidiary.
Recommendation; Vote Required
Approval of the Plan Amendment requires a vote in favor of the Plan
Amendment by the holders of a majority of the Company's shares of common stock
present in person or represented by proxy at the annual meeting.
The Board of Directors recommends that stockholders vote FOR
the proposal to amend the Long-Term Incentive Compensation
Plan. This proposal is identified as Item 2 on the enclosed
proxy card.
ITEM 3. APPOINTMENT OF INDEPENDENT AUDITORS
Stockholders will also vote at the annual meeting to ratify the appointment
by the Board of Directors of KPMG LLP, certified public accountants, as
independent auditors of the Company and its subsidiaries for the year ending
December 31, 1999. KPMG LLP or its predecessors have examined the financial
statements of the Company each year since 1931.
Representatives of KPMG LLP are expected to be present at the annual meeting
to answer appropriate questions and to make a statement if they wish.
The Board of Directors recommends that stockholders vote FOR
the proposal to ratify the appointment of auditors. This
proposal is identified as Item 3 on the enclosed proxy card.
ITEM 4. STOCKHOLDER PROPOSAL RELATING TO CUMULATIVE VOTING
Mr. Gerald R. Armstrong, 910 Fifteenth Street, No. 754, Denver, Colorado
80202-2924, who held 18,443 shares of common stock on November 9, 1998,
intends to submit a resolution to stockholders for approval at the 1999 annual
meeting. Mr. Armstrong's resolution and supporting statement are printed
below.
38
<PAGE>
Resolution
That the shareholders of WELLS FARGO & COMPANY, assembled in person and by
proxy in an annual meeting, now request the Board of Directors to take those
steps necessary to provide for cumulative voting in the election of directors,
which means that each shareholder shall be entitled to vote as many votes as
shall equal the number of shares owned multiplied by the number of directors
to be elected, and cast all of the accumulated votes for a single nominee, or
for two or more nominees as the shareholder may see fit.
Statement
Within the merger of Wells Fargo and Norwest, there are two groups of
shareholders with each one owning nearly half of the shares outstanding.
If one group were to garner a simple majority of the shares being voted, it
could elect all directors and leave the owners of 49% of the shares without
representation on the board.
The National Bank Act and laws of Minnesota and California require
cumulative voting for shareholders; however, holding companies like Wells
Fargo escape it by incorporating in Delaware.
Many acquisitions made by Wells Fargo, and its predecessors, had cumulative
voting. These included United Banks of Colorado, Goldenbanks of Colorado, Cal
Rep Bancorp, and others. It is the proponent's opinion that the shareholders
of these entities were not compensated for the loss of these voting rights.
The use of cumulative voting was present in the 1996 annual meeting of
Professional Bancorp where shareholders owning significant shares were able to
elect their nominees over the incumbents; however, the former directors,
because of their ownership, were able to elect representatives of their
choice. In 1998, Professional Bancorp paid its first cash dividends.
A California law requires that all state pension holdings and state college
funds invested in voting shares, must be voted in favor of cumulative voting
proposals which shows increasing recognition of the importance of this
democratic means for electing directors.
In view of the large number of shares being allocated to management and
employees, it is essential that voting rights be proportionate. Also, it
appears that fewer acquisitions are being made by holding companies as the
market prices of shares have increased significantly denying the shareholders
a meaningful premium. The proponent believes that enhanced voting rights can
be an attraction to shareholders seeking the best offer and this is why
Westamerica Bancorporation has made many acquisitions.
Many successful corporations have cumulative voting. For example, Pennzoil
which defeated Texaco in litigation. Ingersoll-Rand has cumulative voting and
was recognized by FORTUNE magazine as second in its industry as "America's
Most Admired Corporations" and WALL STREET TRANSCRIPT noted "on almost any
criteria . . . Ingersoll-Rand excels." It has usually increased its dividend
greater than Wells Fargo.
Lockheed-Martin and VWR Corporation now have provisions that if any entity
acquires 40% of their shares, cumulative voting applies for all shareholders.
American Premier adopted cumulative voting in 1995.
IF YOU AGREE WITH THIS PROPOSAL, PLEASE MARK YOUR PROXY FOR.
Position of the Board of Directors
The Board of Directors recommends that stockholders vote AGAINST this
proposal,
39
<PAGE>
which is identified as Item 4 on the enclosed proxy card, for the following
reasons:
Under the Company's Restated Certificate of Incorporation and By-Laws, each
stockholder may cast one vote per share owned in favor of, or may withhold his
or her votes from, each director-nominee at the annual meeting. A director is
elected by receiving the votes of a plurality of the shares represented at the
meeting. Under the cumulative voting proposal advocated by Mr. Armstrong, each
stockholder would be entitled to a number of votes equal to the number of
shares owned by the stockholder multiplied by the number of director-nominees.
These votes could be divided among the nominees for director or they could all
be cast for a single nominee.
Mr. Armstrong also presented a cumulative voting proposal at the 1997 and
1998 annual meetings of Norwest Corporation. His current cumulative voting
proposal is similar to the proposal he submitted in 1997. His 1998 proposal,
however, provided that cumulative voting rights would be triggered only when a
single stockholder, or group of affiliated stockholders, holds at least 30% of
the outstanding common stock. Under his proposal this year, cumulative voting
would be required for all elections of directors.
In 1997, stockholders holding approximately 68% of the outstanding common
stock that voted on the cumulative voting proposal voted against it. In 1998,
stockholders holding approximately 67% of the outstanding common stock that
voted on the cumulative voting proposal also voted against it.
Cumulative voting operates to permit a small faction of the stockholders to
elect a director or directors to the board to represent the faction's point of
view. Cumulative voting will facilitate the election of "special interest"
directors to the Company's Board of Directors. The Board of Directors believes
that a board composed of factions focused on the special interests of one or
more groups will function less effectively than a board whose members are
elected by and consider themselves representatives of all stockholders.
Especially in light of the combination of the companies that formed the new
Wells Fargo & Company, the perspective of every director should be the
interest of all stockholders. Accordingly, the Board of Directors recommends
that stockholders vote AGAINST this proposal.
40
<PAGE>
DEADLINES FOR SUBMITTING STOCKHOLDER PROPOSALS
Any proposal to be presented at the 2000 annual meeting from a stockholder
who wishes to have the proposal included in the Company's proxy materials sent
to stockholders for the 2000 annual meeting using the processes contained in
Rule 14a-8 of the Securities Exchange Act of 1934 must be received by the
President and Chief Executive Officer of the Company at 420 Montgomery Street,
San Francisco, CA 94104, no later than November 23, 1999.
Any proposal from a stockholder to be presented at the 2000 annual meeting
of the stockholders of the Company that is submitted outside the processes of
Rule 14a-8, and therefore not includable in the Company's proxy materials next
year, must be received by the President and Chief Executive Officer at 420
Montgomery Street, San Francisco, CA 94104, not earlier than the close of
business on December 29, 1999 and not later than January 28, 2000, in order to
be considered timely received under the By-laws of the Company.
ANNUAL REPORTS
The Company's 1998 Annual Report has been sent to stockholders. Please read
the Annual Report together with the "Addendum to 1998 Annual Report to
Stockholders" appearing on the last page of this proxy statement. The Company
will send a copy of the Company's Annual Report on Form 10-K for 1998,
including the financial statements and schedules, as filed with the Securities
and Exchange Commission without charge to any stockholder who requests a copy
in writing. A stockholder may also request copies of any exhibit to the Form
10-K. The Company will charge a fee to cover expenses to prepare and send any
exhibits. Please send requests to: Corporate Secretary, Wells Fargo & Company,
Norwest Center, Sixth and Marquette, Minneapolis, Minnesota 55479-1026.
41
<PAGE>
Addendum to 1998 Annual Report to Stockholders
Supplementary Financial Data--Quarterly Financial Information (Unaudited)
The following condensed, consolidated statement of income presents the
Company's results of operations for the eight quarters ended December 31,
1998. This information should be read in conjunction with the Financial Review
and the Financial Statements contained in the 1998 Annual Report to
Stockholders.
<TABLE>
--------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
1998 1997
Quarter ended Quarter ended
------------------------------------------ --------------------------------------------
(inmillions, except per share amounts) Dec. 31 Sept. 30(1) June 30(1) Mar. 31(1) Dec. 31(1) Sept. 30(1) June 30(1) Mar. 31(1)
- --------------------------------------- ------- ----------- ---------- ---------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
interest income $ 3,598 $ 3,528 $ 3,490 $ 3,439 $ 3,445 $ 3,400 $ 3,377 $ 3,380
interest expense 1,297 1,265 1,258 1,245 1,263 1,251 1,230 1,210
------- ------- ------- ------- ------- ------- ------- -------
net interest
income 2,301 2,263 2,232 2,194 2,182 2,149 2,147 2,170
Provision for loan
losses 624 307 309 305 343 320 263 214
------- ------- ------- ------- ------- ------- ------- -------
Net interest
income after
provision for
loan losses 1,677 1,956 1,923 1,889 1,839 1,829 1,884 1,956
------- ------- ------- ------- ------- ------- ------- -------
noninterest income
Service charges on
deposit accounts 364 356 332 305 315 311 308 310
Trust and
investment fees
and commissions 274 267 269 259 244 247 235 228
Credit card fee
revenue 136 136 128 121 126 119 107 96
Other fees and
commissions 252 241 232 221 213 214 206 193
Mortgage banking 252 275 303 276 258 254 188 226
Insurance 70 73 111 95 72 74 100 90
Net venture
capital gains
(losses) (4) 4 53 59 26 53 93 19
Net gains on
securities
available for
sale 8 76 66 19 50 22 22 5
Other 205 193 221 178 175 133 169 173
------- ------- ------- ------- ------- ------- ------- -------
Total noninterest
income 1,557 1,621 1,715 1,533 1,479 1,427 1,428 1,340
------- ------- ------- ------- ------- ------- ------- -------
noninterest
expense
Salaries and
benefits 1,292 1,061 1,055 1,007 979 958 933 940
Equipment 328 192 196 184 195 181 187 176
Net occupancy 200 188 187 189 181 179 176 183
Goodwill 104 108 104 104 112 103 113 105
Core deposit
intangible 60 58 61 63 67 68 71 67
Net losses on
dispositions of
premises and
equipment 270 7 41 7 19 11 7 39
Operating losses 46 35 33 39 72 62 190 50
Other 1,182 698 775 703 633 634 686 612
------- ------- ------- ------- ------- ------- ------- -------
Total noninterest
expense 3,482 2,347 2,452 2,296 2,258 2,196 2,363 2,172
------- ------- ------- ------- ------- ------- ------- -------
income (loss)
before income tax
expense (benefit) (248) 1,230 1,186 1,126 1,060 1,060 949 1,124
Income tax expense
(benefit) (54) 488 467 442 410 430 392 462
------- ------- ------- ------- ------- ------- ------- -------
net income (loss) $ (194) $ 742 $ 719 $ 684 $ 650 $ 630 $ 557 $ 662
======= ======= ======= ======= ======= ======= ======= =======
net income (loss)
applicable to
common stock $ (203) $ 733 $ 710 $ 676 $ 640 $ 619 $ 546 $ 650
======= ======= ======= ======= ======= ======= ======= =======
earnings (loss)
per common share $ (.12) $ .45 $ .44 $ .42 $ .40 $ .38 $ .33 $ .39
======= ======= ======= ======= ======= ======= ======= =======
diluted earnings
(loss) per common
share $ (.12) $ .45 $ .43 $ .41 $ .39 $ .38 $ .33 $ .39
======= ======= ======= ======= ======= ======= ======= =======
dividends declared
per common share $ .185 $ .185 $ .165 $ .165 $ .165 $ .15 $ .15 $ .15
======= ======= ======= ======= ======= ======= ======= =======
Average common
shares
outstanding 1,642.4 1,617.3 1,610.3 1,615.7 1,621.1 1,623.6 1,639.1 1,654.8
======= ======= ======= ======= ======= ======= ======= =======
Diluted average
common shares
outstanding 1,642.4 1,640.7 1,632.2 1,639.1 1,641.9 1,646.4 1,663.1 1,679.7
======= ======= ======= ======= ======= ======= ======= =======
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Amounts have been restated to reflect the pooling-of-interests accounting
treatment of the Merger. The restated amounts include adjustments to conform
the accounting policies of the former Norwest and the former Wells Fargo. In
noninterest expense, salaries and benefits decreased by $2 million in each of
the quarters that preceded the fourth quarter of 1998 to conform the
accounting treatment for the postretirement transition obligation identified
with the implementation of FAS 106, Employers' Accounting for Postretirement
Benefits Other than Pensions. Additionally, equipment expense increased $2
million for the quarter ended June 30, 1998 and $6 million, $4 million,
$6 million and $2 million for the quarters ended December 31, 1997, September
30, 1997, June 30, 1997 and March 31, 1997, respectively.
A-1
<PAGE>
NC54228MSC99
<PAGE>
---------------------
COMPANY #
CONTROL #
---------------------
WELLS FARGO & COMPANY
420 Montgomery Street, San Francisco, California 94104
- --------------------------------------------------------------------------------
This proxy is solicited by the Board of Directors of Wells Fargo &
Company (the "Company") for use at the Annual Meeting of
Stockholders on Tuesday, April 27, 1999 at 1:00 p.m. at 420
Montgomery Street, San Francisco, California 94104.
By signing this proxy, the undersigned revokes all prior proxies, and appoints
Patricia R. Callahan, Ely L. Licht, and Stanley S. Stroup, and each of them,
with full power of substitution, as proxies to vote all shares of the Company's
common stock held of record by the undersigned at the close of business on March
9, 1999, which the undersigned would be entitled to vote if personally present
at the Annual Meeting or at any adjournments or postponements thereof, as
specified on this proxy card:
VOTE BY TELEPHONE - SEE REVERSE SIDE OF THIS PROXY CARD
The Board of Directors recommends a vote "FOR" Items 1 through 3.
Item 1. Election of directors:
<TABLE>
<S> <C> <C> <C> <C>
01 Leslie S. Biller 07 Susan E. Engel 13 Richard D. McCormick 19 Judith M. Runstad [_] Vote FOR
02 J.A. Blanchard III 08 Paul Hazen 14 Cynthia H. Milligan 20 Susan G. Swenson all nominees
03 Michael R. Bowlin 09 William A. Hodder 15 Benjamin F. Montoya 21 Daniel M. Tellep
04 Edward M. Carson 10 Rodney L. Jacobs 16 Philip J. Quigley 22 Chang-Lin Tien
05 David A. Christensen 11 Reatha Clark King 17 Donald B. Rice 23 Michael W. Wright [_] Vote WITHHELD
06 William S. Davila 12 Richard M. Kovacevich 18 Ian M. Rolland 24 John A. Young from all nominees
<CAPTION>
<S> <C>
-------------------------------------
(Instructions: To withhold authority to vote for any indicated nominee, write
the number(s) in the box provided to the right.)
-------------------------------------
<CAPTION>
<S> <C> <C> <C>
Item 2. Approve an increase in the shares available for awards under the
Long-Term Incentive Compensation Plan. [_] For [_] Against [_] Abstain
| |
\ / Please fold here \ /
- ------------------------------------------------------------------------------------------------------------------------------
Item 3. Ratify appointment of KPMG LLP as independent auditors for the
year 1999. [_] For [_] Against [_] Abstain
The Board of Directors recommends a vote "AGAINST" Item 4.
Item 4. Approve stockholder proposal relating to cumulative voting. [_] For [_] Against [_] Abstain
Item 5. In the proxies' discretion, to vote on any matter properly before
the Annual Meeting, or any adjournment or postponement thereof.
</TABLE>
IF PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS DIRECTED ABOVE. IF NO
DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR ITEMS 1 THROUGH 3, AGAINST
ITEM 4, AND IN THE MANNER SET FORTH IN ITEM 5 ABOVE.
This proxy will be valid until the first of the following two dates to occur:
the date that is one year from the date shown below and the date the Annual
Meeting is completed.
PLEASE SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Address change? Mark Box [ ] Dated ________________________________ , 1999
Indicate changes below:
Please sign exactly as name appears on proxy
card
-----------------------------------------------
-----------------------------------------------
Signature(s) in Box
If held in joint tenancy, all persons must
sign. Trustees, administrators, etc., should
include title and authority. Corporations
should provide full name of corporation and
title of authorized officer signing the proxy.
- --------------------------------------------------------------------------------
WELLS FARGO & COMPANY
420 MONTGOMERY STREET
SAN FRANCISCO, CALIFORNIA 94104
1999 ANNUAL MEETING OF STOCKHOLDERS
TUESDAY, APRIL 27, 1999
1:00 P.M.
[LOGO]
- --------------------------------------------------------------------------------
VOTE BY TELEPHONE--Call Toll Free on a Touch-Tone Telephone--1-800-240-6326
Your telephone vote authorizes Patricia R. Callahan, Ely L. Licht, and Stanley
S. Stroup, and each of them, with full power of substitution, as proxies, to
vote your shares in the same manner as if you had marked, signed and returned
the proxy card. The deadline for telephone voting is noon (ET) on April 23,
1999.
1. Using a touch-tone telephone, dial 1-800-240-6326. You may dial this toll
free number at your convenience 7 days/week, 24 hours/day.
2. When prompted, enter the 3-digit Company Number and your 7-digit Control
Number which are located in the box on the upper right hand corner on the
reverse side of the proxy card.
3. Follow the simple instructions when prompted.
IF YOU VOTE BY TELEPHONE, DO NOT MAIL BACK YOUR PROXY CARD.
<PAGE>
------------------
COMPANY #
CONTROL #
------------------
WELLS FARGO & COMPANY
420 Montgomery Street, San Francisco, California 94104
- --------------------------------------------------------------------------------
This instruction card is solicited by the Board of Directors of Wells
Fargo & Company (the "Company") for use at the Annual Meeting of Stockholders
to be held on Tuesday, April 27, 1999, at 1:00 p.m. at 420 Montgomery
Street, San Francisco, California 94104 from persons who participate in the
Wells Fargo & Company Tax Advantage and Retirement Plan ("TAP").
By signing this instruction card, the undersigned revokes any prior
instructions, and hereby instructs Merrill Lynch Trust Company FSB, as Trustee
of the TAP to exercise the voting rights relating to any shares of the Company's
common stock allocable to the undersigned's TAP account as of March 9, 1999, at
the Annual Meeting or any adjournments or postponements thereof, as specified on
this card
This instruction card must be returned to Norwest Bank Minnesota, National
Association, by April 23, 1999, if your instructions are to be honored. The
Trustee will vote the shares allocable to a participant's TAP account as the
participant instructs.
VOTE BY TELEPHONE - SEE REVERSE SIDE OF THE INSTRUCTION CARD
The Board of Directors recommends a vote "FOR" Items 1 through 3.
Item 1. Election of directors:
<TABLE>
<S> <C> <C> <C> <C>
01 Leslie S. Biller 07 Susan E. Engel 13 Richard D. McCormick 19 Judith M. Runstad
02 J.A. Blanchard III 08 Paul Hazen 14 Cynthia H. Milligan 20 Susan G. Swenson [_] Vote FOR all nominees
03 Michael R. Bowlin 09 William A. Hodder 15 Benjamin F. Montoya 21 Daniel M. Tellep
04 Edward M. Carson 10 Rodney L. Jacobs 16 Philip J. Quigley 22 Chang-Lin Tien [_] Vote WITHHELD from
05 David A. Christensen 11 Reatha Clark King 17 Donald B. Rice 23 Michael W. Wright all nominees
06 William S. Davila 12 Richard M. Kovacevich 18 Ian M. Rolland 24 John A. Young
<CAPTION>
<S> <C>
(Instructions: To withhold authority to vote for any indicated nominee, write ----------------------------------------
the number(s) in the box provided to the right.) ----------------------------------------
Item 2. Approve an increase in the shares available for awards under the [_] For [_] Against [_] Abstain
Long-Term Incentive Compensation Plan.
| |
\ / Please fold here \ /
- ---------------------------------------------------------------------------------------------------------------------------------
Item 3. Ratify appointment of KPMG LLP as independent auditors for the
year 1999. [_] For [_] Against [_] Abstain
The Board of Directors recommends a vote "AGAINST" Item 4.
Item 4. Approve stockholder proposal relating to cumulative voting. [_] For [_] Against [_] Abstain
Item 5. In the proxies' discretion, to vote on any matter properly before
the Annual Meeting, or any adjournment or postponement thereof.
</TABLE>
IF THIS INSTRUCTION CARD IS PROPERLY EXECUTED, YOUR SHARES WILL BE VOTED AS
DIRECTED ABOVE. IF NO DIRECTION IS INDICATED, YOUR SHARES WILL BE VOTED FOR
ITEMS 1 THROUGH 3, AGAINST ITEM 4, AND IN THE MANNER SET FORTH IN ITEM 5 ABOVE.
This instruction will be valid until the first of the following two dates to
occur: the date that is one year from the date shown below and the date the
Annual Meeting is completed.
PLEASE SIGN, DATE, AND RETURN THE INSTRUCTION CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
Address change? Mark Box [ ] Dated ________________________________ , 1999
Indicate changes below:
Please sign exactly as name appears on this card
------------------------------------------------------
------------------------------------------------------
Signature(s) in Box
If held in joint tenancy, all persons must sign.
Trustees, administrators, etc., should include title
and authority. Corporations should provide full name
of corporation and title of authorized officer
signing the proxy.
- --------------------------------------------------------------------------------
WELLS FARGO & COMPANY
420 MONTGOMERY STREET
SAN FRANCISCO, CALIFORNIA 94104
1999 ANNUAL MEETING OF STOCKHOLDERS
TUESDAY, APRIL 27, 1999
1:00 P.M.
[LOGO]
- --------------------------------------------------------------------------------
VOTE BY TELEPHONE--Call Toll Free on a Touch-Tone Telephone--1-800-240-6326
Your telephone vote authorizes Merrill Lynch Trust Company FSB to vote your
shares in the same manner as if you had marked, signed and returned your
instruction card. The deadline for telephone voting is noon (ET) on April 23,
1999.
1. Using a touch-tone telephone, dial 1-800-240-6326. You may dial this toll
free number at your convenience 7 days/week, 24 hours/day.
2. When prompted, enter the 3-digit Company Number and your 7-digit Control
Number which are located in the box on the upper right hand corner on the
reverse side of the instruction card.
3. Follow the simple instructions when prompted.
IF YOU VOTE BY TELEPHONE, DO NOT MAIL BACK YOUR INSTRUCTION CARD.
<PAGE>
----------------------
COMPANY #
CONTROL #
----------------------
WELLS FARGO & COMPANY
420 Montgomery Street, San Francisco, California 94104
- --------------------------------------------------------------------------------
This instruction and proxy card is solicited by the Board of Directors of Wells
Fargo & Company (the "Company") for use at the Annual Meeting of Stockholders
on Tuesday, April 27, 1999, from persons who participate in either (1) the
Savings Investment Plan ("SIP"), or (2) Invest Norwest , or (3) both SIP and
Invest Norwest.
By signing this instruction card and proxy: (a) if the undersigned participates
in SIP, the undersigned revokes any prior instructions, and hereby instructs
Norwest Bank Minnesota, N.A., as Trustee of the Norwest Corporation Master
Savings Trust (the "Trust") to exercise the voting rights relating to any shares
of the Company's common stock allocable to the undersigned's SIP account as of
March 9, 1999, at the Annual Meeting or any adjournments or postponements
thereof as specified on the instruction and proxy card, and (b) if the
undersigned participates in INVEST NORWEST, the undersigned revokes any prior
proxies and appoints Patricia R. Callahan, Ely L. Licht and Stanley S. Stroup,
and each of them, as proxies, with full power of substitution to vote all shares
of the Company's common stock held for the undersigned's INVEST NORWEST account
as of March 9, 1999 at the Annual Meeting as specified on the instruction and
proxy card.
This instruction card and proxy must be returned to Norwest Bank Minnesota,
National Association, by April 23, 1999, if your shares are to be voted. For SIP
participants, the Trustee will tabulate the votes from all participants received
by the deadline and will determine the ratio of votes for and against each item.
The Trustee will then vote all shares held in the Trust according to these
ratios.
VOTE BY TELEPHONE - SEE REVERSE SIDE OF THIS INSTRUCTION AND PROXY CARD
The Board of Directors recommends a vote "FOR" Items 1 through 3.
Item 1. Election of directors:
<TABLE>
<S> <C> <C> <C> <C>
01 Leslie S. Biller 07 Susan E. Engel 13 Richard D. McCormick 19 Judith M. Runstad
02 J.A. Blanchard III 08 Paul Hazen 14 Cynthia H. Milligan 20 Susan G. Swenson [_] Vote FOR all
03 Michael R. Bowlin 09 William A. Hodder 15 Benjamin F. Montoya 21 Daniel M. Tellep nominees
04 Edward M. Carson 10 Rodney L. Jacobs 16 Philip J. Quigley 22 Chang-Lin Tien
05 David A. Christensen 11 Reatha Clark King 17 Donald B. Rice 23 Michael W. Wright [_] Vote WITHHELD
06 William S. Davila 12 Richard M. Kovacevich 18 Ian M. Rolland 24 John A. Young from all nominees
<CAPTION>
<S> <C>
(Instructions: To withhold authority to vote for any indicated nominee, write ---------------------------------------
the number(s) in the box provided to the right.) ---------------------------------------
Item 2. Approve an increase in the shares available for awards under the [_] For [_] Against [_] Abstain
Long-Term Incentive Compensation Plan.
| |
\ / Please fold here \ /
- ---------------------------------------------------------------------------------------------------------------------------------
Item 3. Ratify appointment of KPMG LLP as independent auditors for the
year 1999. [_] For [_] Against [_] Abstain
The Board of Directors recommends a vote "AGAINST" Item 4.
Item 4. Approve stockholder proposal relating to cumulative voting. [_] For [_] Against [_] Abstain
Item 5. In the proxies' discretion, vote on any matter properly before the
annual meeting, or any adjournment or postponement thereof.
</TABLE>
IF THIS INSTRUCTION AND PROXY CARD IS PROPERLY EXECUTED, YOUR SHARES WILL BE
VOTED AS DIRECTED ABOVE. IF NO DIRECTION IS INDICATED, YOUR SHARES WILL BE VOTED
FOR ITEMS 1 THROUGH 3, AGAINST ITEM 4, AND IN THE MANNER SET FORTH IN ITEM 5
ABOVE.
This instruction and proxy will be valid until the first of the following two
dates to occur: the date that is one year from the date shown below and the date
the Annual Meeting is completed.
PLEASE SIGN, DATE, AND RETURN THE INSTRUCTION AND PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
Address change? Mark Box [ ] Dated ________________________________ , 1999
Indicate changes below:
Please sign exactly as name appears on this card
------------------------------------------------------
------------------------------------------------------
Signature(s) in Box
If held in joint tenancy, all persons must sign.
Trustees, administrators, etc., should include title
and authority. Corporations should provide full name
of corporation and title of authorized officer
signing the proxy.
- --------------------------------------------------------------------------------
WELLS FARGO & COMPANY
420 MONTGOMERY STREET
SAN FRANCISCO, CALIFORNIA 94104
1999 ANNUAL MEETING OF STOCKHOLDERS
TUESDAY, APRIL 27, 1999
1:00 P.M.
[LOGO]
- --------------------------------------------------------------------------------
VOTE BY TELEPHONE--Call Toll Free on a Touch-Tone Telephone--1-800-240-6326
Your telephone vote authorizes the SIP Trustee, Patricia R. Callahan, Ely L.
Licht, and Stanley S. Stroup, and each of them, with full power of substitution,
as proxies, or both, as applicable, to vote your shares in the same manner as if
you had marked, signed and returned your instruction and proxy card. The
deadline for telephone voting is noon (ET) on April 23, 1999.
1. Using a touch-tone telephone, dial 1-800-240-6326. You may dial this toll
free number at your convenience 7 days/week, 24 hours/day.
2. When prompted, enter the 3-digit Company Number and your 7-digit Control
Number which are located in the box on the upper right hand corner on the
reverse side of the instruction and proxy card.
3. Follow the simple instructions when prompted.
IF YOU VOTE BY TELEPHONE, DO NOT MAIL BACK YOUR INSTRUCTION AND PROXY CARD.
