SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
WELLS FARGO & COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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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
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or the Form or Schedule and the date of its filing.
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WELLS FARGO & COMPANY
March 16, 1998
To Our Shareholders:
You are cordially invited to attend the annual meeting of shareholders to be
held on Tuesday, April 21, 1998. Enclosed are the Secretary's official notice of
this meeting, a proxy statement and a form of proxy. This year the meeting will
be held at 1:00 p.m. at the Hotel Inter-Continental, 251 South Olive Street, Los
Angeles, California.
At this meeting you will be asked to elect directors to serve until the next
annual meeting and to ratify the selection of the Company's independent auditors
for 1998.
We hope that you will attend. But whether you plan to attend or not, please
complete, date, sign and return the enclosed proxy as soon as possible. It is
important that your shares be represented at the meeting.
Sincerely yours,
PAUL HAZEN
CHAIRMAN OF THE BOARD, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
YOUR VOTE IS IMPORTANT
WE ENCOURAGE YOU TO COMPLETE, DATE, SIGN AND PROMPTLY RETURN YOUR PROXY CARD
IN THE ENCLOSED ENVELOPE REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE ANNUAL
MEETING.
[LOGO]
WELLS FARGO & COMPANY
420 Montgomery Street
San Francisco, California 94104
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 21, 1998
To the Shareholders of Wells Fargo & Company:
The annual meeting of shareholders of Wells Fargo & Company (the "Company")
will be held at the Hotel Inter-Continental, 251 South Olive Street, Los Angeles
California, at 1:00 p.m. on Tuesday, April 21, 1998, in order to:
1. Elect 14 directors to serve until the next annual meeting of shareholders
or until their successors have been elected and qualified; and
2. Ratify the selection of KPMG Peat Marwick LLP as independent auditors for
the Company for 1998.
The meeting will also act upon such other matters as may properly come
before the meeting or any adjournment thereof. Shareholders of record at the
close of business on February 20, 1998, will be entitled to vote the number of
shares held of record in their names on that date. The transfer books will not
be closed.
Whether you plan to attend the shareholders' meeting or not, please
complete, date and sign the enclosed proxy card and return it in the
accompanying envelope. You may revoke your proxy at any time prior to the time
it is voted.
GUY ROUNSAVILLE, JR.
SECRETARY
March 16, 1998
PROXY STATEMENT
These proxy materials are furnished in connection with the solicitation by
the Board of Directors of Wells Fargo & Company, a Delaware corporation (the
"Company"), of proxies to be used at the annual meeting of shareholders of the
Company and at any adjournment thereof. The meeting will be held at the Hotel
Inter-Continental, 251 South Olive Street, Los Angeles, California, at 1:00 p.m.
on Tuesday, April 21, 1998. These proxy materials are being mailed to
shareholders on or about March 16, 1998.
PURPOSE OF MEETING
At the meeting, shareholders will be asked to (1) elect directors to serve
until the next annual meeting of shareholders or until their successors are
elected and qualified; and (2) ratify the selection of KPMG Peat Marwick LLP as
independent auditors for the Company for the year 1998. In addition, the
shareholders may act upon such other matters as may properly come before the
meeting.
VOTING
Holders of record of the Company's Common Stock, $5.00 par value (the
"Common Stock"), at the close of business on the record date, February 20, 1998,
will be entitled to vote on all matters to be presented at the annual meeting.
On the record date, 85,746,327 shares of Common Stock were outstanding. Votes
may be cast in person or by proxy, and each share of Common Stock entitles its
holder to one vote.
A quorum comprising the holders of a majority of the outstanding shares of
Common Stock on the record date must be present or represented for the
transaction of business at the annual meeting. Abstentions and broker non-votes
will be counted in establishing the quorum. Directors are elected by holders of
shares representing a plurality of the quorum. Abstentions and broker non-votes
are not counted in the election of directors. In accordance with the Company's
By-Laws, Proposal 2 must be adopted by the holders of a majority of the shares
present and voting. Abstentions and broker non-votes would have no effect on the
outcome of Proposal 2.
Proxies in the accompanying form which are properly executed and returned to
the Company will be voted at the annual meeting in accordance with the
instructions contained in such proxies and, at the discretion of the proxy
holders, on such other matters as may properly come before the meeting. Where no
such instructions are given, the shares will be voted for the election of
directors as described herein and for the ratification of the selection of
independent auditors. The Board of Directors does not know of any matters to be
acted upon at the meeting other than the foregoing items. Any shareholder has
the power to revoke his or her proxy at any time before it is voted.
CORPORATE GOVERNANCE
The Company is a bank holding company registered under the Bank Holding
Company Act of 1956, as amended, and is incorporated in the State of Delaware.
The Company's principal subsidiary is Wells Fargo Bank, National Association
(the "Bank"), a national banking association organized under the laws of the
United States. The Company's 1997 Annual Report provides a review of the
Company's operations during the past year.
The Board of Directors of the Company met 10 times during 1997 and now
consists of 17 members. Ellen M. Newman and Richard J. Stegemeier, currently
members of the Board, have reached the mandatory age for retirement under the
Company's tenure policy for directors and accordingly will not stand for
reelection at the annual meeting. In addition, Carl E. Reichardt, also a
director, has decided not to stand for
reelection to the Board. The 14 remaining incumbent directors have been
nominated for reelection. Biographies of the nominees are provided under
"Proposal 1 -- Election of Directors."
The directors of the Company also serve as the directors of the Bank. The
Company and the Bank have each established the Board committees described below.
The membership of each committee is the same for the Company and the Bank, and
the corresponding committees of both institutions usually hold joint meetings.
The Executive Committee may exercise all of the power and authority of the
Board, except for certain fundamental responsibilities such as amending the
By-Laws, which are reserved to the Board. In addition, subject to the authority
of the Board, the Committee is authorized to supervise the general management
and direction of the business and affairs of the Company. Directors serving on
the Executive Committee since the last annual meeting are: Paul Hazen, Chairman;
Michael R. Bowlin; Edward M. Carson; William S. Davila; Rayburn S. Dezember;
Philip J. Quigley; Carl E. Reichardt; Donald B. Rice; and John A. Young. The
Committee met four times in 1997.
The Committee on Examinations and Audits oversees the adequacy of the
Company's control environment. The Committee meets regularly with management,
the Company's general auditor and its independent auditors to review the scope
and results of their work. The Committee also recommends the appointment of the
independent auditors. See "Proposal 2 -- Ratification of Selection of
Independent Auditors." In addition, the Committee reviews the Company's
quarterly and annual financial statements, including the adequacy of the
allowance for loan losses, and all other reports legally required to be reviewed
on behalf of the Board. The Committee also reviews all reports of examinations
conducted by bank regulatory agencies and ensures that appropriate management
personnel follow up on audit and examination findings and recommendations and
implement corrective actions on a timely basis. Directors serving on the
Committee since the last annual meeting are: Robert K. Jaedicke, Chairman; H.
Jesse Arnelle; William S. Davila; Thomas L. Lee; Ellen M. Newman; Richard J.
Stegemeier; Susan G. Swenson; Daniel M. Tellep; and Chang-Lin Tien. The
Committee met eight times during 1997.
The Management Development and Compensation Committee administers the
executive compensation programs (including employee stock plans) of the Company
and its subsidiaries and advises the chief executive officer concerning salary
policy for employees of the Company and its subsidiaries below the executive
level. Directors serving on the Committee since the last annual meeting are:
John A. Young, Chairman; Michael R. Bowlin; Philip J. Quigley; Donald B. Rice;
Richard J. Stegemeier; Susan G. Swenson; and Daniel M. Tellep. The Committee met
six times during 1997.
The Nominating Committee is responsible for proposing candidates to fill
vacancies on the Board as they occur and recommending yearly to the Board the
director nominees to be elected by the shareholders at the annual meeting. The
Committee met once since the last annual meeting, and the Committee members
serving since that time are: Donald B. Rice, Chairman; Edward M. Carson; William
S. Davila; Rayburn S. Dezember; Ellen M. Newman; Carl E. Reichardt; and Daniel
M. Tellep. In carrying out its responsibilities, the Committee will consider
candidates suggested by shareholders. Suggestions for candidates, accompanied by
biographical material for evaluation, may be sent to the Secretary, Wells Fargo
& Company, 420 Montgomery Street, San Francisco, CA 94104. The persons named in
this proxy statement as candidates for election to the Board have been
recommended by the Committee. See "Proposal l -- Election of Directors."
The Directors' CRA Committee is a committee of the Bank Board only. The
Committee reviews the Bank's compliance with the Community Reinvestment Act and
the statement made by the Bank under the Act with respect to the communities it
serves. Directors serving on the Committee since the last annual meeting are:
Chang-Lin Tien, Chairman; H. Jesse Arnelle; Edward M. Carson; Rayburn S.
Dezember;
2
Robert K. Jaedicke; Thomas L. Lee; Ellen M. Newman; and Carl E. Reichardt. The
Committee met twice in 1997.
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS
Average attendance at Board and committee meetings during 1997 was
approximately 95 percent. During 1997, all directors attended at least 75
percent of the total number of Board meetings and meetings of the committees to
which they belonged.
DIRECTOR REMUNERATION AND RETIREMENT POLICY
Directors who are officers of the Company do not receive an annual retainer
or meeting fees for service on the Board or as a member of any Board committee.
Non-officer directors of the Company were paid a basic annual retainer of
$32,000 in 1997, with additional amounts payable in accordance with committee
service. Robert K. Jaedicke, as chairman of the Committee on Examinations and
Audits, and the other members of such committee received additional amounts of
$10,000 and $5,000, respectively, during 1997. John A. Young, as chairman of the
Management Development and Compensation Committee, and the other members of such
committee received additional amounts of $5,000 and $2,000, respectively, during
the year. Non-officer directors were paid a fee of $1,500 for each Board meeting
attended during 1997, except that when Board meetings of the Company and the
Bank were held on the same day, only one meeting fee was paid. During 1997, all
non-officer directors received a fee of $1,150 for each committee meeting
attended, except that when the same committees of the Company and the Bank had a
combined meeting, only one meeting fee was paid. A director may defer the
receipt of his or her annual retainer and meeting fees and elect to receive
either interest on the deferred amount or a return based upon the hypothetical
investment of the deferred fees in Common Stock. The Company also reimburses
directors for travel, food, lodging and other expenses incurred in attending
Board and committee meetings.
Three directors have consulting arrangements with the Company. Chang-Lin
Tien has agreed to advise the Company on its international marketing strategy
for a yearly fee of $100,000 until July 1998. Rayburn S. Dezember promotes
customer, community and trade association relations and provides customer
referrals under a consulting agreement with the Company that runs until 1999 at
a yearly fee of $75,000. Ellen M. Newman provides consulting services relating
to the Bank's retail marketing strategies for a monthly fee of $2,500.
Carl E. Reichardt retired as chairman of the board of the Company in
December 1994 and has continued as a member of the Board of Directors. In
connection with his retirement, the Company agreed to make available office
space and the services of a secretary and a driver on an as-needed basis for Mr.
Reichardt's personal use.
Edward M. Carson retired as chairman of the board of First Interstate
Bancorp in April 1995 and was elected to the Company Board in April 1996 upon
the completion of the Company's merger with First Interstate. When he retired
from First Interstate, First Interstate agreed to provide Mr. Carson with office
space and secretarial services for his personal use and to reimburse him for the
cost of two club memberships. The Company has assumed those obligations pursuant
to the First Interstate merger.
The Board of Directors terminated the Directors' Retirement Plan in 1996 for
all persons elected to the Board at any time after the 1996 annual meeting of
shareholders. For those eligible to participate, the Directors' Retirement Plan
provides that a non-officer director with at least five years' combined service
on the Board or the Board of First Interstate Bancorp is entitled to receive,
during a period equal to the lesser of 10 years or the number of full years of
service, an annual retirement benefit equal to the basic
3
annual retainer in effect at the time of the director's retirement, without
regard to that director's service on particular committees of the Board.
Non-officer directors may participate in the Director Option Plan,
originally approved by shareholders in 1987 and amended with shareholder
approval in 1995. Under the Plan, a non-officer director may elect to receive at
the beginning of a year an option to purchase Common Stock in lieu of the
director's annual retainer for that year. The number of shares subject to option
is the quotient of the participant's annual retainer divided by 50 percent of
the fair market value of a share of Common Stock as of January 2 of the year
granted. In general, options become exercisable on the first anniversary of the
date they are granted and remain exercisable for nine years thereafter. The
option price is 50 percent of the fair market value of a share of Common Stock
as of the date the option is granted. During 1997, options to purchase an
aggregate of 2,389 shares of Common Stock were issued to nine directors under
the Plan.
Under the 1990 Director Option Plan, each non-officer director elected or
reelected each year at the annual meeting automatically receives an option to
purchase 500 shares of Common Stock. Directors joining the Board at other times
receive options to purchase a prorated number of shares. The exercise price per
share of each such option is the fair market value of a share of Common Stock as
of the date the option is granted. During 1997, options to purchase 8,000 shares
of Common Stock were granted to 16 directors under the 1990 Plan.
The Company reimburses members of the Board of Directors up to $7,500 per
year for expenses incurred in personal financial planning.
As successor to First Interstate Bancorp, the Company owns universal life
insurance policies originally purchased by First Interstate on the lives of
three former directors of First Interstate who now serve on the Board of
Directors. The death benefits of the policies depend on the director's length of
service and do not exceed $200,000. The Company will continue to pay the
premiums on such policies while the director remains a member of the Board. The
three directors have entered into "split-dollar" life insurance agreements which
provide that they will become fully entitled to the policy upon the occurrence
of certain events, including continuation of service to a future date and
resignation for good reason following a change in control. If a director becomes
entitled to the policy, the cash value of the policy reduces the payment of
benefits under the Directors' Retirement Plan and deferrals of director's fees.
During 1997, the directors covered by these insurance agreements received
imputed income ranging from $216 to $1,654, which varied according to the
director's age and length of service.
The Board of Directors has adopted a retirement policy which precludes any
non-officer director from standing for election to the Board after age 70. This
policy also precludes any director who was an active officer at the time of his
or her first appointment from continuing to serve as a director after
retirement, except that a director who has held the office of chairman of the
board or president continues to be eligible to stand for election as a director
until age 70.
4
BENEFICIAL OWNERSHIP
The following table shows the number of shares of Common Stock beneficially
owned as of February 20, 1998, by all directors and nominees for director, each
of the five most highly compensated executive officers during 1997 and all
directors, nominees and executive officers as a group. Executive officers are
defined as all Company officers at the level of vice chair and above and all
Company staff heads on February 20, 1998 (16 persons). As of such date, no
individual director, nominee or executive officer beneficially owned more than 1
percent of all outstanding Common Stock. All directors, nominees and executive
officers as a group owned beneficially 1.4 percent of all outstanding Common
Stock as of such date. No share of any other class of equity security was then
beneficially owned by any member of the group.
SHARES
SUBJECT TO
OPTIONS SHARES HELD
NON-OFFICER SHARES SHARES EXERCISABLE THROUGH
DIRECTORS AND HELD HELD WITHIN 60 COMPANY
NOMINEES DIRECTLY INDIRECTLY DAYS 401(k) PLAN TOTAL
- ------------------------------- ---------- ---------- ------------ ----------- ------------
H. Jesse Arnelle............... 192 0 3,602 0 3,794
Michael R. Bowlin.............. 0 91 1,215 0 1,306
Edward M. Carson............... 240 14,000 1,000 614 15,854
William S. Davila.............. 100 0 5,679 0 5,779
Rayburn S. Dezember............ 0 39,443 4,532 5,471 49,446
Robert K. Jaedicke............. 400 0 4,000 0 4,400
Thomas L. Lee.................. 866 0 5,665 0 6,531
Ellen M. Newman................ 2,350 207 3,500 0 6,057
Philip J. Quigley.............. 0 1,733 2,733 0 4,466
Carl E. Reichardt.............. 0 8,509 1,626 0 10,135
Donald B. Rice................. 2,830 4,490 1,000 0 8,320
Richard J. Stegemeier.......... 0 3,915 3,288 0 7,203
Susan G. Swenson............... 50 0 1,668 0 1,718
Daniel M. Tellep............... 433 0 1,943 0 2,376
Chang-Lin Tien................. 100 0 4,769 0 4,869
John A. Young.................. 400 381 7,037 0 7,818
MOST HIGHLY COMPENSATED
OFFICERS DURING 1997
- -------------------------------
Paul Hazen(1).................. 0 215,836 241,655 3,536 461,027
Terri A. Dial.................. 7,672 0 60,493 789 68,954
Rodney L. Jacobs............... 3,000 22,133 58,787 1,142 85,062
Charles M. Johnson............. 20,025 0 68,213 4,391 92,629
Clyde W. Ostler................ 8,035 0 68,287 0 76,322
GROUP
- -------------------------------
Directors, Nominees and
Executive Officers as a Group
(32 persons)................. 101,936 317,297 738,161 20,834 1,178,228
- ---------
1. Also a director.
5
The following is the only person known to the Company to have been the
beneficial owner of more than 5 percent of the outstanding Common Stock as of
December 31, 1997:
NAME AND ADDRESS OF AMOUNT AND NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT
- -------------------------------------------------- ---------------------- -----------
Warren E. Buffett
Berkshire Hathaway, Inc.
1440 Kiewit Plaza
Omaha, Nebraska 68131............................. 6,718,218(1) 7.7
- ---------
1. Mr. Buffett shares dispositive power over all of the reported shares. As to
6,690,218 of them, he shares voting power and dispositive power with
Berkshire Hathaway Inc., a diversified holding company he may be deemed to
control, and certain of its subsidiaries. The 28,000-share balance of the
shares identified as beneficially owned by Mr. Buffett is held by certain
defined-benefit-type employee benefit plans for Berkshire Hathaway employees.
While Mr. Buffett may be deemed to have beneficial ownership of such 28,000
shares due to his power to direct the investments of such plans, Mr. Buffett
does not have or share voting power over such shares.
6
PROPOSAL 1
ELECTION OF DIRECTORS
The 14 persons named below have been nominated to serve on the Board of
Directors until the next annual meeting or until their successors are elected
and qualified. Directors are elected by a plurality of the votes cast by holders
of Common Stock on the record date present in person or represented by proxy at
the annual meeting. The proxy holders named on the accompanying proxy card,
unless otherwise instructed, intend to vote all of the shares they represent as
proxies for each of the nominees named herein. Although it is not contemplated
that any nominee will decline or be unable to serve, if either occurs prior to
the annual meeting, the Board of Directors will select a substitute nominee or
amend the By-Laws of the Company to reduce the authorized number of directors.
Biographical information about all nominees may be found below.
The Board of Directors recommends a vote FOR authority for the proxy holders
to vote in favor of the nominees identified below or their substitutes as
described above.
All nominees are directors of the Bank. If elected as directors of the
Company, all nominees will also be reelected as directors of the Bank.
[Photo] H. JESSE ARNELLE Mr. Arnelle, 64, has been of counsel to Womble
Carlyle Sandridge & Rice, a law firm in Winston-Salem, North
Carolina, since September 1997. At that time he retired from the
law firm of Arnelle, Hastie, McGee, Willis & Greene in San
Francisco, where he had been senior partner of the firm and a
predecessor since 1985. He is also a director of Armstrong World
Industries, Inc., Eastman Chemical Corporation, FPL Group, Inc.,
Textron Corporation, Union Pacific Resources, Inc., and WMX
Technologies, Inc. Mr. Arnelle is the immediate past chairman of
the Pennsylvania State University board of trustees. He has been a
director of the Company since 1990.
[Photo] MICHAEL R. BOWLIN Mr. Bowlin, 55, has been chairman of the board
since 1995 of Atlantic Richfield Company, or ARCO, an integrated
petroleum products company. He has also been chief executive
officer of ARCO since 1994 and president and chief operating
officer of ARCO since June 1993. Mr. Bowlin is also a director of
ARCO. He serves as a trustee of the California Institute of
Technology, a member of the Business Roundtable and a trustee of
the Los Angeles County Museum of Art. He has been a director of
the Company since 1996.
[Photo] EDWARD M. CARSON Mr. Carson, 68, was chairman of the board from
1990 through April 1995 of First Interstate Bancorp, where he was
also chief executive officer from 1990 through 1994. He is also a
director of Aztar Corporation, Castle & Cook, Inc., Schuff Steel,
Inc., and Terra Industries, Inc. Mr. Carson had been a director of
First Interstate Bancorp from 1985 until 1996, when he was elected
to the Board of the Company for the first time.
7
[Photo] WILLIAM S. DAVILA Mr. Davila, 66, until his retirement in 1992
had been president of The Vons Companies, Inc., a Los
Angeles-based chain of supermarkets, since 1985. 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 serves on the foundation
boards of Methodist Hospital, Arcadia, and Santa Marta Hospital,
Los Angeles. He has been a director of the Company since 1990.
[Photo] RAYBURN S. DEZEMBER Mr. Dezember, 67, served as chairman of the
board and chief executive officer of Central Pacific Corporation
from 1981 until its acquisition by the Company in 1990. Mr.
Dezember is a director of CalMat Co., Tejon Ranch Company and The
Bakersfield Californian and is also a trustee of Whittier College.
He has been a director of the Company since 1990.
[Photo] PAUL HAZEN Mr. Hazen, 56, became chairman of the board of the
Company and the Bank in 1995 and president of both entities in
July 1997. Prior to 1995 he served as president of the Company and
the Bank since 1984. He is a director of AirTouch Communications,
Phelps Dodge Corporation and Safeway, Inc. He has been a director
of the Company since 1984.
[Photo] ROBERT K. JAEDICKE Mr. Jaedicke, 69, is a professor (emeritus) of
accounting at the Graduate School of Business, Stanford
University, where he served as dean from 1983 to 1990. He is a
director of Bailard Biehl & Kaiser Real Estate Investment Trust
Inc., Boise Cascade Corporation, C. M. Capital, California Water
Service Company, Enron Corporation, GenCorp, Inc. and State Farm
Insurance Companies. He has been a director of the Company since
1983.
[Photo] THOMAS L. LEE Mr. Lee, 55, has been chairman and chief executive
officer since 1989 of The Newhall Land and Farming Company, which
is engaged in planned community development and agriculture. He is
also a director of CalMat Co. In addition, Mr. Lee is a trustee of
the California Institute of the Arts and a member of the
California Business Roundtable and the Urban Land Institute. He
had been a director of First Interstate from 1993 to 1996, when he
was first elected to the Board of the Company.
[Photo] PHILIP J. QUIGLEY. Mr. Quigley, 55, prior to his retirement in
December 1997, had been chairman, president and chief executive
officer since 1994 of Pacific Telesis Group, a telephone holding
company. 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 the chairman of
the California Business Roundtable. He has been a director of the
Company since 1994.
8
[Photo] DONALD B. RICE Mr. Rice, 58, since 1996 has been president and
chief executive officer of UroGenesys, Inc., a biotechnology
research and development company. He was president and chief
operating officer of Teledyne, Inc., from 1993 to 1996 and
Secretary of the Air Force from 1989 to 1993. He is also a
director of UroGenesys, Inc., Scios, Inc., and Vulcan Materials
Company. Mr. Rice originally served as a director of the Company
from 1980 to 1989 and rejoined the Board in 1993.
[Photo] SUSAN G. SWENSON Ms. Swenson, 49, has been president and chief
executive officer since 1994 of Cellular One, a cellular
telecommunications company. From 1979 to 1994 she held various
operating positions within Pacific Telesis Group, including
president of PacTel Cellular for two and a half years and general
manager of Pacific Bell's second largest operating area for one
year. She is also a director of General Magic, Inc., and Working
Assets Funding Service. Ms. Swenson has been a director of the
Company since 1994.
[Photo] DANIEL M. TELLEP Until his retirement at the end of 1996, Mr.
Tellep, 66, served during 1996 as chairman of the board and during
1995 as chairman of the board and chief executive officer of
Lockheed Martin Corporation, an aerospace manufacturer created by
merger in 1995. He had been chairman and chief executive officer
of Lockheed Corporation from 1989 until the merger. He is also a
director of Edison International, Lockheed Martin Corporation and
Southern California Edison Company. Mr. Tellep had been a director
of First Interstate from 1991 to 1996, when he was first elected
to the Company Board.
[Photo] CHANG-LIN TIEN Mr. Tien, 62, holds the NEC Distinguished
Professor of Engineering chair at the University of California,
Berkeley, where he had been chancellor from 1990 to 1997. He is
also a director of AirTouch Communications, Chevron Corporation
and Raychem Corporation. Mr. Tien also serves as a trustee of the
Asia Foundation and as a director of Kaiser Permanente and is also
an elected member of the American Academy of Arts and Sciences and
of the National Academy of Engineering. Mr. Tien has been a
director of the Company since 1990.
[Photo] JOHN A. YOUNG Mr. Young, 65, retired in 1992 as president, chief
executive officer and a director of Hewlett-Packard Company,
positions he had held since 1978. He is a director of Affymetrix
Corp., Chevron Corporation, Lucent Technologies, Novell, Inc.,
Shaman Pharmaceuticals Inc. and SmithKline Beecham PLC. Mr. Young
is also co-chair of the President's Committee of Advisors on
Science and Technology, a member of the executive committee of the
Council on Competitiveness and a member of the Business Council.
He has been a director of the Company since 1977.
9
EXECUTIVE COMPENSATION
The following table summarizes for the last five years compensation earned
by or awarded to the chief executive officer and the other four most highly
compensated executive officers during 1997. No stock appreciation rights were
awarded during any period covered by the table.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION -----------------
----------------------------------------- COMMON SHARES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND SALARY BONUS COMPENSATION STOCK OPTIONS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)(1)
- ----------------------------- --------- ---------- ------------ --------------- ----------------- ---------------
Paul Hazen .................. 1997 850,000 2,000,000 7,828 21,830 85,000
Chairman, President and Chief 1996 850,000 2,000,000 11,478 29,560 84,583
Executive Officer 1995 812,500 2,000,000 291 44,400 81,250
1994 737,500 1,250,000 291 40,000 73,750
1993 658,333 1,000,000 186 40,000 65,833
Terri A. Dial ............... 1997 366,667 700,000 16,961 2,180 36,667
Vice Chair 1996 312,500 480,000 11,280 8,280 31,250
1995 241,667 300,000 11,280 10,660 24,167
1994 195,000 250,000 11,280 10,000 19,500
1993 165,000 200,000 11,280 9,000 16,500
Rodney L. Jacobs ............ 1997 425,000 1,000,000 14,867 6,550 42,500
Vice Chair 1996 425,000 750,000 19,188 11,830 41,667
1995 375,000 750,000 11,571 15,990 37,500
1994 370,833 475,000 11,571 15,000 37,083
1993 333,333 400,000 11,466 27,000 33,333
Charles M. Johnson .......... 1997 375,000 700,000 16,064 2,180 37,500
Vice Chair 1996 375,000 550,000 18,804 8,870 37,500
1995 367,500 550,000 11,571 13,320 36,750
1994 325,000 475,000 11,571 15,000 32,500
1993 291,667 400,000 11,466 15,000 29,167
Clyde W. Ostler ............. 1997 375,000 700,000 11,280 3,270 37,500
Vice Chair 1996 375,000 475,000 15,687 7,100 46,500
1995 375,000 475,000 11,571 10,660 37,500
1994 375,000 475,000 11,571 15,000 36,790
1993 362,500 400,000 12,092 15,000 36,250
- ---------
1. Amounts shown for 1997 represent Company contributions to its Tax Advantage
and Retirement Plan ("TAP") and its unfunded Benefits Restoration Program
(the "BRP"). As permitted by law, the BRP was credited with contributions
which otherwise would have been made to TAP but for the limits imposed by the
Internal Revenue Code on contributions made to TAP. Amounts contributed
during 1997 to TAP and the BRP respectively on behalf of the named officers
were as follows: Mr. Hazen, $14,350, $70,650; Ms. Dial, $14,350, $22,317; Mr.
Jacobs, $14,350, $28,150; Mr. Johnson, $14,350, $23,150; and Mr. Ostler,
$16,000, $21,500.
10
Shown below is further information regarding employee stock options awarded
during 1997 under the Company's Long-Term Incentive Plan to the five officers
named above. No stock appreciation rights were awarded during the year.
STOCK OPTION GRANTS DURING 1997
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
FOR 10-YEAR OPTION TERM(1)
-------------------------------------------------
0% ($) 5% ($) 10% ($)
--------------- --------------- ---------------
ASSUMED ASSUMED ASSUMED
INDIVIDUAL GRANTS COMMON COMMON COMMON
------------------------------------------------------------ STOCK STOCK STOCK
COMMON SHARES % OF TOTAL PRICE ON PRICE ON PRICE ON
UNDERLYING OPTIONS GRANTED EXERCISE FEB. 18, FEB. 18, FEB. 18,
OPTIONS TO EMPLOYEES IN PRICE EXPIRATION 2007 -- 2007 -- 2007 --
NAME GRANTED(2) FISCAL YEAR(3) ($/SH) DATE $314.25 $511.88 $815.08
- ------------------- ------------- ----------------- ----------- ------------- --------------- --------------- ---------------
Paul Hazen......... 21,830 4.6 $ 314.25 Feb. 18, 2007 0 4,314,266 10,933,197
Terri A. Dial...... 2,180 0.5 $ 314.25 Feb. 18, 2007 0 430,834 1,091,817
Rodney L. Jacobs... 6,550 1.4 $ 314.25 Feb. 18, 2007 0 1,294,477 3,280,460
Charles M.
Johnson.......... 2,180 0.5 $ 314.25 Feb. 18, 2007 0 430,834 1,091,817
Clyde W. Ostler.... 3,270 0.7 $ 314.25 Feb. 18, 2007 0 646,251 1,637,726
Five Named Officers
as a Group....... 36,010 7.6 $ 314.25 Feb. 18, 2007 0 7,116,661 18,035,017
Total Approximate Shareholder Benefit............................................ 0 17,026,385,741 43,148,203,707
Benefit of Five Named Officers as a Percent of Total............................. 0 0.04% 0.04%
- ---------
1. The amounts shown are not the values of the options on the date they were
granted. Instead, these are hypothetical future values based on the
difference between the option exercise price and an assumed future Common
Stock price at the end of the 10-year term of the options using rates of
growth prescribed by the Securities and Exchange Commission. For all grants
shown, at an assumed appreciation rate of 5 percent per year starting at
$314.25 per share, the Common Stock price would be $511.88, and the total
increase in shareholder value would be approximately $17,026,385,471 ($197.63
increase per share multiplied by approximately 86.2 million outstanding
shares). At an assumed appreciation rate of 10 percent per year starting at
$314.25 per share, the Common Stock price would be $815.08, and the total
increase in shareholder value would be approximately $43,148,203,707 ($500.83
increase per share multiplied by approximately 86.2 million outstanding
shares).
2. The options generally become exercisable with respect to one-third of their
underlying shares on each of the first, second and third anniversaries of
their grant. The exercise price may be paid in cash or Common Stock or by
means of a loan under the Long-Term Incentive Plan. See "Other Transactions
with Officers and Directors -- Long-Term Incentive Plan," below. No
stand-alone or tandem stock appreciation rights were granted during 1997. The
Management Development and Compensation Committee of the Board, or a
subcommittee thereof, has the discretion to provide for the acceleration of
the exercisability of options under various circumstances, including its
determination that a change in control of the Company has occurred, but the
Committee has never exercised that discretion.
3. Options to purchase a total of 475,375 shares of Common Stock were granted
under the Company's Long-Term Incentive Plan during 1997.
11
The following table shows the value realized upon exercise of options during
1997 and certain information about unexercised options at year-end with respect
to the named officers. There were no stock appreciation rights exercised during
the year or outstanding at year-end.
AGGREGATED OPTION EXERCISES DURING 1997 AND YEAR-END OPTION VALUES
COMMON SHARES UNDERLYING VALUE(1) OF UNEXERCISED
OPTIONS EXERCISED DURING 1997 UNEXERCISED OPTIONS ON IN-THE-MONEY OPTIONS(2) ON
------------------------------- DECEMBER 31, 1997(#) DECEMBER 31, 1997($)
SHARES ACQUIRED VALUE ----------------------------- ----------------------------
NAME ON EXERCISE(#) REALIZED($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------- ----------------- ------------ ------------ --------------- ------------ --------------
Paul Hazen.......... 81,525 20,172,674 234,378 56,337 51,959,979 3,675,624
Terri A. Dial....... 600 149,550 59,766 11,254 13,314,496 854,698
Rodney L. Jacobs.... 28,080 6,466,051 56,603 19,767 10,718,212 1,339,996
Charles M. Johnson.. 13,225 2,980,151 67,486 12,534 14,513,320 992,762
Clyde W. Ostler..... 1,420 291,835 80,077 11,558 18,224,211 833,076
- ---------
1. "Value" represents the difference between the option exercise price and the
market value of the underlying Common Stock on December 31, 1997, in the case
of unexercised options, or on the date of exercise, in the case of exercised
options.
2. An option is "in the money" on a particular date if the market value of the
underlying Common Stock on that date exceeds the option exercise price.
PENSION BENEFITS. The Company terminated its defined-benefit retirement plan
on December 31, 1984, and purchased annuities for participants eligible to
receive benefits under such plan. Since the Employee Retirement Income Security
Act of 1974 limited individual annual benefits payable under the defined-benefit
retirement plan, benefits that otherwise would have been payable under the
annuities in excess of that limit will be paid under the Company's Benefits
Restoration Program. The combined annual benefit payable from such annuities and
under the Benefits Restoration Program to each of the named executive officers
beginning at age 65 is as follows: Paul Hazen, $187,490; Terri A. Dial, $55,411;
Rodney L. Jacobs, $27,573; Charles M. Johnson, $109,913; and Clyde W. Ostler,
$108,638.
REPORT ON EXECUTIVE COMPENSATION BY
MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE
The Management Development and Compensation Committee (the "Committee") of
the Board of Directors, which consists solely of non-officer directors, has
provided the following report on executive compensation:
The Committee has responsibility for executive compensation programs
designed to attract, motivate, reward and retain the management talent required
to lead the Company, achieve its business objectives and increase shareholder
value. An executive's compensation consists of three elements -- base salary,
bonus and stock options -- which are determined separately based on different
sets of criteria. Each element of compensation is evaluated relative to recent
levels of compensation for positions of similar responsibility at the 15 bank
holding companies with the largest stock market capitalization, which comprise
Wells Fargo's peer group (the "Peer Group"). The Committee believes that these
institutions, in light of their similarity to the Company, are significant
potential competitors for the executive talent Wells Fargo seeks to attract and
retain. Members of the Peer Group are among the 50 largest bank holding
companies in the United States and are included in the Keefe, Bruyette & Woods,
Inc., 50 Total Return Index for Bank Holding Companies shown on pages 16 and 17.
The Committee also reviews the compensation levels of non-bank financial service
providers to ensure that Wells Fargo's pay levels are competitive.
12
BASE SALARIES
Base salaries for executives, including the chief executive officer,
typically approximate the median salary for positions of similar responsibility
in the Peer Group. Salaries are adjusted up or down from the median based on the
strategic importance of the position and the skills of the executive. Generally,
increases in salary occur only in response to market changes or when warranted
by an executive's change in responsibilities. For 1997 there were no adjustments
in base salary for the chief executive officer or for three of the other five
most highly compensated officers. Increases in base salary are being made in
1998 for some of the most senior executive officers, including the chief
executive officer, in response to market changes and to reflect increased
responsibilities.
BONUSES
Executive officers are eligible for bonuses that are based on shareholder,
Company and individual performance and on the Peer Group comparison, described
below.
SHAREHOLDER PERFORMANCE CRITERIA. The Company's return to its shareholders
is compared to:
- the returns of our Peer Group.
- a broader measure of bank holding company stocks, the 50 bank holding
companies represented in the Keefe, Bruyette & Woods, Inc., 50 Total
Return Index for Bank Holding Companies (the "KBW 50"). All members of
the Peer Group are included in the KBW 50.
- a broad measure of market performance, the 500 stocks represented in the
Standard & Poor's 500 Stock Index (the "S&P 500").
COMPANY PERFORMANCE CRITERIA. In 1997 the Committee focused on such measures
of Company profitability as return on equity, "cash" return on equity and "cash"
return on assets. Following the First Interstate merger, the cash return
measurements are believed to be the most relevant measures of financial
performance for shareholders and are the most comparable with prior periods.
INDIVIDUAL PERFORMANCE CRITERIA. The Committee considered the contribution
individual executive officers made to the performance of the Company, as
described above. An executive's individual performance was also evaluated in
such areas as leadership, vision, initiative and personnel selection and
development.
PEER GROUP COMPARISON. To the extent that executive positions can be matched
with positions in the Peer Group, bonuses are compared to those of the Peer
Group. This year bonuses for executive officers, including the chief executive
officer, are intended to be near the Peer Group median. The Peer Group is used
for these evaluations rather than the KBW 50 because we believe the Peer Group
reflects the market in which we compete for executives.
In awarding bonuses, all of the foregoing factors are evaluated in a
qualitative manner, are not weighted, and their relative importance may vary in
view of individual circumstances.
SENIOR EXECUTIVE PERFORMANCE PLAN. The five most highly compensated officers
from among the chief executive officer and the vice chairs are eligible for
bonuses under the terms of the Senior Executive Performance Plan ("SEPP"), which
is designed to qualify bonuses paid thereunder for tax deductibility by the
Company under Section 162(m) of the Internal Revenue Code. The Company's policy
with regard to Section 162(m) is stated below. The Board of Directors adopted
the SEPP on February 15, 1994. The shareholders approved the plan on April 18,
1994.
13
In accordance with the terms of the SEPP, in February 1997 the Committee set
a target threshold for return on equity of 8 percent, then set 3 percent as the
percentage of net income applicable to Common Stock in excess of that target
threshold, to fund the maximum pool available for 1997 bonuses. In February 1997
the Committee also determined the size of each participant's percentage share of
the pool, based on such participant's potential individual contribution to the
success of the Company. In accordance with SEPP provisions regarding the
adjustment of net income for unusual events, the 1997 SEPP pool was based on
1997 net income as adjusted by $268 million to remove the effect of certain
integration expenses and adjustments associated with the First Interstate
merger.
At its February 1998 meeting, the Committee approved the amount of the 1997
bonus pool in accordance with the terms of the SEPP. At the same meeting, the
Committee also decided to award each participant in the Plan, including the
chief executive officer, an amount equal to the maximum amount payable to each
participant as permitted by the available pool based on the shareholder, Company
and individual performance criteria and the Peer Group comparison described
above.
At such meeting, the Committee also set target thresholds of 4 percent of
net income applicable to Common Stock in excess of 8 percent return on equity to
determine the 1998 bonus pool. Such amounts were determined in light of the
reduction in the Company's reported return on equity resulting from the
amortization of goodwill and intangibles associated with the First Interstate
merger.
1997 PERFORMANCE. Highlights of the Company's 1997 performance, taking into
account the impact of the First Interstate merger, are as follows:
- The return to our shareholders in 1997, assuming full reinvestment of
dividends, was 28.2 percent, compared to 27.6 percent in 1996. This
compares with 47.1 percent on average for the Peer Group, 46.2 percent
for the bank holding companies in the KBW 50 and 33.4 percent for the
companies comprising the S&P 500.
- Our five-year return to shareholders of 397.3 percent compares with the
230.8 percent average for the Peer Group, 231.9 percent for the bank
holding companies in the KBW 50 and 151.6 percent for the companies
comprising the S&P 500.
- Our ten-year return to shareholders of 1,010.3 percent compares with the
885.9 percent average for the Peer Group, 610.7 percent for the bank
holding companies in the KBW 50 and 425.4 percent for the S&P 500.
- Our return on equity of 8.79 percent compares with the Peer Group average
of 17.86 percent. Our cash return on average common equity of 34.4
percent ranked first in the Peer Group, whose estimated average was 23.6
percent. Our 1997 cash return on average assets was 1.8 percent, compared
with the Peer Group average of 1.5 percent.
LONG-TERM INCENTIVE COMPENSATION
Stock options are awarded to motivate executives, including the chief
executive officer, to make decisions leading to sustained growth in shareholder
value. To determine award levels the Committee focuses on individual impact on
shareholder value, individual performance and strategic responsibility. Stock
options may also be used to ensure that the total compensation of our executives
is generally competitive, and we analyze individual grants on a Peer Group basis
when data is available. All of the foregoing factors are evaluated in a
qualitative manner, are not weighted, and their relative importance may vary in
view of individual circumstances. Occasionally stock options may be granted to a
new executive if his or her position has substantial strategic value and
potential impact on shareholder value. Stock options are granted at fair market
value on the date of grant, thereby linking individual potential
14
compensation to shareholder gain and encouraging management to operate the
Company from an owner's perspective.
Based on the foregoing considerations, in February 1997 the Committee
granted the Company's five most highly compensated officers stock options to
recognize their efforts towards the integration of the Company's operations
following the First Interstate merger and without regard to Peer Group
comparisons. No further stock option grants were made to such officers during
1997 because the Committee decided to delay grants from the usual November date
to early in the next calendar year when the full preceding year's financial
results and market performance relative to the Peer Group are known.
POLICY REGARDING SECTION 162(m) OF THE INTERNAL REVENUE CODE
Section 162(m) of the Internal Revenue Code ("Section 162(m)") limits
federal income tax deductions by the Company for compensation paid to the chief
executive officer and the four other most highly compensated officers to $l
million per year, but contains an exception for performance-based compensation
that satisfies certain conditions, including limitations on the discretion of
the Committee in determining the amount of such compensation.
The Committee believes that a substantial portion of an executive's
compensation should be based on Company performance and, in determining the
amount and form of compensation, the Committee considers the net cost of that
compensation, including whether it will generate a tax deduction for the
Company. As a result, the Committee will generally seek to award
performance-based compensation that would otherwise be deductible by the Company
in a manner that complies with the performance-based compensation exception to
Section 162(m). In that regard, the Committee believes that stock options
granted at fair market value under the Long-Term Incentive Plan and bonuses
awarded under the Senior Executive Performance Plan will qualify for the
performance-based compensation exception to the Section 162(m) deduction limit.
However, because the net cost of compensation is weighed against many other
factors in determining executive compensation, the Committee may determine that
it is appropriate to authorize compensation that is not deductible by the
Company, whether by reason of Section 162(m) or otherwise.
STOCK OWNERSHIP GUIDELINES
In 1993 the Company introduced minimum stock ownership guidelines to be met
by officers at the level of senior vice president and above within five years
after promotion to such levels. These guidelines support the view that
management risk and rewards should have a direct relationship to shareholder
returns. The investment at risk of each of the five most highly compensated
officers substantially exceeds these guidelines.
Management Development and
Compensation Committee:
John A. Young, Chairman
Donald B. Rice
Michael R. Bowlin
Richard J. Stegemeier
Philip J. Quigley
Susan G. Swenson
Daniel M. Tellep
15
COMPARATIVE TOTAL RETURN ON COMMON STOCK
The following graphs present the yearly percentage change in the cumulative
total shareholder return on the Common Stock for the five years and the ten
years ended December 31, 1997. The graphs compare the cumulative total returns
during those periods on the Common Stock, the Standard & Poor's 500 Stock Price
Index ("S&P 500") and the Keefe, Bruyette & Woods, Inc., 50 Total Return Index
("KBW 50"). The KBW 50 is a market-capitalization-weighted stock price index
composed of 50 bank holding company stocks. All computations have been made to
give effect to the reinvestment of dividends.
FIVE-YEAR PERFORMANCE COMPARISON
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
AS OF DECEMBER 31, WELLS FARGO S&P 500 KBW 50
1992 $100 $100 $100
1993 173 110 106
1994 199 111 100
1995 305 153 160
1996 388 189 227
1997 497 252 332
Assuming the reinvestment of all dividends, a hypothetical investment of
$100 made as of December 31, 1992, in the Common Stock of the Company, and pro
rata in the 50 stocks included in the KBW 50 and in the 500 stocks comprising
the S&P 500 would have been worth $497, $332 and $252, respectively, as of
December 31, 1997.
16
TEN-YEAR PERFORMANCE COMPARISON
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
AS OF DECEMBER 31, WELLS FARGO S&P 500 KBW 50
1987 $ 100 $ 100 $ 100
1988 146 117 124
1989 187 154 148
1990 155 149 106
1991 165 194 168
1992 223 209 214
1993 386 230 226
1994 445 233 214
1995 680 320 344
1996 866 394 486
1997 1,110 525 711
Assuming the reinvestment of all dividends, a hypothetical investment of
$100 made as of December 31, 1987, in the Common Stock of the Company and pro
rata in the 50 stocks included in the KBW 50 and in the 500 stocks included in
the S&P 500 would have been worth $1,110, $711 and $525, respectively, as of
December 31, 1997.
17
OTHER TRANSACTIONS WITH OFFICERS AND DIRECTORS
EXECUTIVE LOAN PLAN. The Company's Executive Loan Plan was adopted by the
Board of Directors in 1984. The persons eligible under the Plan to receive
mortgage or general purpose loans or loan guarantees from the Company include
executive officers of the Company and are selected by the chairman of the board
or the president pursuant to authority delegated by the Management Development
and Compensation Committee, which administers the Plan. Loans bear interest at
the applicable rate in effect under Section 1274(d) of the Internal Revenue Code
at the time the loan is made (currently between 5.39 and 5.91 percent for loans
made in March 1998, depending on the term of the loan and certain other factors)
and may be reduced by up to 5 percentage points while the borrower is an
employee of the Company.
Mortgage loans must be for the purpose of purchasing, constructing or
improving the executive's principal residence or refinancing outstanding
indebtedness with respect to such residence, cannot have a term exceeding 30
years and, when aggregated with other outstanding debt secured by such
residence, must have a maximum principal balance of the lesser of $1,500,000 or
100 percent of the fair market value of such residence. General purpose loans
may not have a term exceeding 10 years and must be for personal household
expenses, education or support of dependents, extraordinary medical or dental
expenses, income taxes or other purposes deemed appropriate by the Management
Development and Compensation Committee. General purpose loans cannot be used for
investment purposes or to acquire shares of Common Stock under a stock option or
similar plan of the Company or its subsidiaries, although such loans are
available under the Long-Term Incentive Plan. See "Long-Term Incentive Plan,"
below. The maximum principal balance of all general purpose loans to the same
executive cannot exceed the lesser of $250,000 or 150 percent of the executive's
annual base salary.
The following table gives information regarding the unpaid principal
balances under the Plan for those of the five most highly compensated executive
officers in 1997 with loans under the Plan and for all 1997 executive officers
as a group during the time they served as such.
BALANCE AS OF MAXIMUM BALANCE
DECEMBER 31, 1997 DURING 1997
------------------- ------------------
Paul Hazen
Chairman and President....................................... $ 1,344,916 $ 1,372,476
Clyde W. Ostler
Vice Chair................................................... $ 1,664,845 $ 1,687,979
All 1997 Executive Officers as a Group(1)...................... $ 4,374,615 $ 4,451,165
- ---------
1. Both the balance as of December 31, 1997, and the maximum balance during the
year represent loans to three persons.
LONG-TERM INCENTIVE PLAN. The Management Development and Compensation
Committee may authorize an extension of credit from the Company to an employee
(including an employee who is an officer or director of the Company) to assist
the employee in the purchase of Common Stock upon exercise of employee stock
options granted under the Plan or a predecessor plan. Under current policy, the
Company may extend or guarantee such loans with a maximum term of six years.
Such loans bear interest at a variable rate that is adjusted each year to equal
the greater of the average annual rate for three-year U.S. Treasury notes for
the immediately preceding calendar year, which was 5.99 percent for 1997, and
the applicable rate in effect under Section 1274(d) of the Internal Revenue Code
at the time the loan is made (currently between 5.84 and 6.17 percent for loans
made in March 1998, depending on the term of the loan and certain other
factors).
18
The following table gives information about the unpaid principal balances
under the Plan and a predecessor plan for those of the five most highly
compensated executive officers in 1997 with loans under the Plan or a
predecessor plan and for all 1997 executive officers as a group during the time
they served as such.
BALANCE AS OF MAXIMUM BALANCE
DECEMBER 31, 1997 DURING 1997
------------------- ------------------
Paul Hazen
Chairman and President....................................... $ 597,777 $ 597,777
Terri A. Dial
Vice Chair................................................... $ 42,600 $ 42,600
Clyde W. Ostler
Vice Chair................................................... $ 367,978 $ 897,283
All 1997 Executive Officers as a Group(1)...................... $ 3,089,063 $ 3,618,368
- ---------
1. Both the balance as of December 31, 1997, and the maximum balance during the
year represent loans to eight persons.
OTHER TRANSACTIONS. The Bank has had and expects in the future to have
banking transactions in the ordinary course of its business with many of the
Company's directors and executive officers and their associates, including
transactions with corporations of which such persons are directors, officers or
controlling shareholders, on substantially the same terms (including interest
rates and collateral) as those prevailing at the time for comparable
transactions with others. The loans included among such transactions did not
involve more than the normal risk of collectibility or present other unfavorable
features when such loans were made. Loans by the Bank to directors and executive
officers of the Company and to entities controlled by them are subject to
limitations as to amount and purpose as prescribed by the Federal Reserve Act.
For example, extensions of credit by the Bank in excess of $500,000 to directors
and executive officers of the Company and their related interests require the
prior approval of a majority of the disinterested directors of the Bank. All
extensions of credit to such persons must be made on non-preferential terms. In
addition, the Bank may not extend credit in excess of $100,000 (not counting up
to $15,000 of open-end credit) to any executive officer of the Bank, which
includes most executive officers of the Company, unless the purpose of the loan
is to finance the education of the officer's children or the purchase,
construction, maintenance or improvement of the officer's residence or unless
the loan is secured by collateral of the types specified by federal law.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Because of the complexity of the reporting requirements imposed on the
Company's directors and executive officers under Section 16 of the Securities
Exchange Act of 1934, the Company has assumed responsibility for preparing and
filing the reports of changes in beneficial ownership required of these persons
by this statute. Based on a review of beneficial ownership reporting forms and
representations of its directors and executive officers, the Company believes
that such persons were in compliance during 1997 with these reporting
requirements, except that the total number of shares reported as beneficially
owned by Michael J. Gillfillan, an executive officer, did not include four
additional shares owned by his children until corrected by amendments to his
reports filed on February 9, 1998.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following persons served as members of the Management Development and
Compensation Committee during all or part of 1997: John A. Young, Chairman;
Michael R. Bowlin; Myron Du Bain (retired); William S. Davila; Philip J.
Quigley; Donald B. Rice; Richard J. Stegemeier; Susan G. Swenson; and Daniel M.
Tellep. With the exception of Messrs. Bowlin, Du Bain, Stegemeier and Tellep,
each director on the Committee, a family member or an entity controlled by the
director had loans or other extensions of credit outstanding from the Bank or
one of its affiliates during 1997. These loans were made in the
19
ordinary course of business and on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with other persons. Such loans did not involve more than the normal
risk of collectibility or present other unfavorable features when they were
made.
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has appointed KPMG Peat Marwick LLP, certified public
accountants, Three Embarcadero Center, San Francisco, California, as independent
auditors for the Company for 1998. Shareholders are being asked to ratify this
selection at the annual meeting. This firm or a predecessor has served as the
independent auditors for the Company since 1969. Ratification of the appointment
of KPMG Peat Marwick LLP as independent auditors requires the affirmative vote
of the holders of a majority of the shares voting at the meeting.
As in the past, representatives of KPMG Peat Marwick LLP will be present at
the annual meeting. They will have an opportunity to make a statement if they so
desire and will be available to respond to appropriate questions.
The Board of Directors recommends a vote FOR this proposal.
COST OF SOLICITATION
In addition to solicitation by mail, proxies may also be solicited by
directors, officers and employees of the Company and the Bank, who will not
receive additional compensation for such solicitation. The Company has also
engaged D. F. King & Co. Inc. to assist in contacting shareholders whose stock
is held in the names of brokers or other custodians and will pay $7,500 plus
out-of-pocket expenses for these services. Brokerage firms and other custodians,
nominees and fiduciaries will be reimbursed by the Company for their reasonable
expenses incurred in sending proxy materials to beneficial owners of the Common
Stock.
SHAREHOLDER PROPOSALS
A shareholder who intends to present a proposal at the 1999 annual meeting
of shareholders for inclusion in the Company's proxy statement and form of proxy
relating to such meeting must submit such proposal by November 16, 1998. The
proposal must be mailed to the Company's principal executive offices at 420
Montgomery Street, San Francisco, California 94104, Attention: Secretary.
Guy Rounsaville, Jr.
SECRETARY
March 16, 1998
20
PROXY
WELLS FARGO & COMPANY
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS ON APRIL 21, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) RAYBURN S. DEZEMBER, PAUL HAZEN and ROBERT K.
JAEDICKE, and each of them, the proxy or proxies of the undersigned, with full
power of substitution, to vote all shares of Common Stock, $5 par value, of
Wells Fargo & Company (the "Company") which the undersigned is entitled to vote
at the Annual Meeting of Shareholders of the Company to be held in Los Angeles,
California, on Tuesday, April 21, 1998, at l:00 p.m., and at any adjournment
thereof, with the same force and effect as the undersigned might or could do if
personally present thereat.
UNLESS A CONTRARY INSTRUCTION IS INDICATED, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF DIRECTORS AND IN FAVOR OF THE PROPOSAL TO RATIFY THE SELECTION OF
INDEPENDENT AUDITORS FOR 1998, ALL AS DESCRIBED IN THE ACCOMPANYING PROXY
STATEMENT. THIS PROXY WILL ALSO BE VOTED AT THE DISCRETION OF THE PROXY
HOLDERS ON SUCH MATTERS OTHER THAN THE TWO SPECIFIED ITEMS AS MAY COME BEFORE
THE MEETING.
A majority of such proxies or their substitutes as shall be present and acting
at the meeting, or if only one be present and acting then that one, shall have
and may exercise all of the powers of all of said proxies hereunder.
PLEASE MARK, DATE AND SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY
[Reverse Side]
The shares represented by this proxy will be voted as directed by the
stockholder. If no direction is given when the duly executed proxy is
returned, such shares will be voted "FOR" authority in Proposal 1 and "FOR"
Proposal 2.
The Board of Directors favors a vote "FOR" authority in Proposal 1 and "FOR"
Proposal 2.
1. Authority to vote for the following nominees for director:
H.J. Arnelle; M.R. Bowlin; E.M. Carson; W.S. Davila; R.S. Dezember; P.
Hazen; R.K. Jaedicke; T.L. Lee; P.J. Quigley; D.B. Rice; S.G. Swenson; D.M.
Tellep; C-L. Tien; J.A. Young.
/ / FOR / / WITHHELD
FOR, except vote withheld from the following nominee(s):
_______________________________________________________
2. Ratify selection of KPMG Peat Marwick LLP as independent auditors for 1998.
/ / FOR / / AGAINST / / ABSTAIN
The signer hereby revokes all proxies heretofore given by the signer to vote at
said meeting or any adjournment thereof.
Signature(s): Date:
------------------------------------- ---------------------
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such. If signer is a corporation or other
organization, please sign in full name of corporation or other organization and
indicate capacity of signing officer.
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