DEF 14A 1 d699854ddef14a.htm DEFINITIVE NOTICE AND PROXY STATEMENT DEFINITIVE NOTICE AND PROXY STATEMENT
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SCHEDULE 14A

 

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No.      )

 

Filed by the Registrant        
Filed by a Party other than the Registrant        

 

Check the appropriate box:

 

☐    Preliminary Proxy Statement

 

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☒    Definitive Proxy Statement

 

☐    Definitive Additional Materials

 

☐    Soliciting Material Pursuant to §240.14a-12

 

Wells Fargo & Company


(Name of Registrant as Specified In Its Charter)

 

  


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Table of Contents

LOGO

 

Proxy Statement Wells Fargo & Company | 2019 annual meeting of shareholders


Table of Contents

LOGO

Letter to our Shareholders from

our Chair and our Chief Executive Officer

March 13, 2019

Dear Fellow Shareholders,

Thank you for your continued support of Wells Fargo. In 2018, we further strengthened the foundation of our Company through new products and services, improvements in the customer experience, greater operational efficiency, and deepened commitments to our communities and our team members. We continued our work to assess and shape the Company’s culture, make progress in our efforts to address past issues, meet the expectations of our regulators, and rebuild trust with all of our stakeholders.

We are learning from the past and transforming for the future, which happens to be the title of our Business Standards Report published in January 2019. As discussed in that report, we have made – and continue to make – fundamental changes as we transform the Company. We have centralized many aspects of our organizational structure, strengthened risk management, and improved governance practices and oversight. While we have more work to do, we believe we are on the right path and are making real progress.

Our Company and Board of Directors look and operate very differently today. Over the past year, the Company has hired several new leaders, including our chief risk officer, head of human resources, head of technology, and chief auditor. In addition, our Board has added more directors with expertise in financial services, risk management, technology/cyber, regulatory, human capital management, finance, consumer, business process and operations, and social responsibility matters; adjusted committee structures, charters, and membership; enhanced agenda planning; and worked with management to better focus materials provided to the Board. While the Board and its committees have experienced much change, we remain focused on responding to stakeholders, enhancing oversight, and creating long-term value for shareholders.

We are confident that Wells Fargo is well-positioned for the future, with the right vision and strategy to achieve our goals. The changes we are making are showing positive signs. We will continue working to build the most customer-focused, efficient, and innovative Wells Fargo ever – characterized by a strong financial foundation, a leading presence in the markets we serve, focused growth within a strong risk management framework, operational excellence, and highly engaged team members.

On behalf of our Board and management team, we are pleased to invite you to attend our 2019 Annual Meeting of Shareholders on April 23, 2019, at 10:00 a.m., Central Daylight Time, at the Grand Hyatt DFW, 2337 South International Parkway, Dallas, Texas 75261. A notice of the meeting and our 2019 Proxy Statement containing important information about the matters to be voted upon and instructions on how you can vote your shares follow this letter.

Your vote is important to us. Please vote as soon as possible even if you plan to attend the annual meeting. Thank you for your interest in and support of Wells Fargo.

Sincerely,

 

LOGO         

LOGO

 

Elizabeth A. Duke

Chair

                 LOGO         

LOGO

 

Timothy J. Sloan
CEO and President

   


Table of Contents

 

LOGO

 

Notice of 2019 Annual
Meeting of Shareholders

  

 

Meeting

Information

 

Date & Time

Tuesday, April 23, 2019

10:00 a.m., CDT

 

Location

Grand Hyatt DFW

2337 South International Pkwy
Dallas, Texas 75261

 

Record Date

February 26, 2019

 

 

How to Vote

Your vote is important! Please vote your shares in person or in one of the following ways:

 

By Internet

Visit the website listed in your notice of internet availability of proxy materials or your proxy or voting instruction form

  

By Phone

Call the toll-free voting number in your voting materials

  

By Mail

Mail your completed and signed proxy or voting instruction form

  

By Mobile Device

Scan the QR Barcode on your voting materials

 

  Items of Business

 

    1       Elect as directors the 12 nominees named in our proxy statement
 
    2       Vote on an advisory resolution to approve executive compensation
 
    3       Approve the Company’s Amended and Restated Long-Term Incentive Compensation Plan
 
    4       Ratify the appointment of KPMG LLP as the Company’s independent registered public accounting firm for 2019
 
    5       Vote on two shareholder proposals (Items 5 – 6), if properly presented at the meeting and not previously withdrawn
 
    6       Consider any other business properly brought before the meeting
     

 

By Order of our Board of Directors,   

LOGO

Anthony R. Augliera

Deputy General Counsel and Corporate Secretary

 

Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be Held on April 23, 2019: Wells Fargo’s 2019 Proxy Statement and Annual Report to Shareholders for the year ended December 31, 2018 are available at: www.proxypush.com/wfc (for record holders) or www.proxyvote.com (for street name holders and Company Plans participants).

This notice and the accompanying proxy statement, 2018 annual report, and proxy card or voting instruction form were first made available to shareholders beginning on March 13, 2019. You may vote if you owned shares of our common stock at the close of business on February 26, 2019, the record date for notice of and voting at our annual meeting.


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Table of Contents

Proxy Summary

This summary highlights certain information contained in this proxy statement. You should read the entire proxy statement carefully before voting.

Our work is guided by our Vision, Values & Goals, which capture the fundamental beliefs of our Company. Our vision is foundational and is clearly focused on acting in the best interests of our customers to help them succeed financially. Our values express how we go about delivering on our vision, and our goals describe our aspirations and align priorities across our Company. We bring our vision and values to life through six goals established by our CEO, Timothy J. Sloan, in 2017. We aspire to be the financial services leader in each of those six areas, which are reflected below.

 

 

LOGO

 

 

Our Consumer Strategy and How it Aligns with Our Culture

Our long-standing commitment to understand our customers’ financial needs and to help them achieve their financial goals has been foundational to our business since 1852.

Our Consumer Strategy

We have a single strategy for how we want to meet the needs of our customers, collaborating across businesses to provide offerings that allow customers to engage with us how, when, and where they choose. We designed our strategy based on customer research, analyzing current businesses in the context of shifting industry dynamics and reviewing competitive trends. Our strategy is guided by what our customers tell us they want: simplicity, ease, and speed; transparency, security, and control; relevant advice and guidance; convenience and access, wherever and however they choose; and differentiated value that recognizes their unique needs.

Based on customer input and our research, we are pursuing a three-pronged approach to our consumer strategy. The first is to elevate the baseline experience for all our customers to meet their rapidly evolving expectations. Second, and building on that work, we are enhancing our focus on defined consumer segments to ensure we meet the unique needs that matter most today and over time. Third, we are improving core enterprise capabilities to create the necessary operational infrastructure, enabling us to deliver on the other two elements of our consumer strategy.

Our Culture

Creating an intentional, healthy, and consistent culture, aligned to our values as a company, is central to our long-term success and viability. In alignment with our consumer strategy, we are transitioning to a more customer-centric, One Wells Fargo culture that is guided by our Vision, Values & Goals, that is clear and consistent, that drives accountability, and which leaders and team members can articulate and live every day. We continue to assess and shape our culture, including by aligning what we say with how we act, promoting accountability at all levels of the organization, and continuing to measure our progress (see Human Capital Management section starting on page 62).

 


 

       2019 Proxy Statement       i


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Deepening Commitments to our Team Members and Communities and Improving our Customer Experience

 

 

Our Team Members

 

Our team members are our most valuable resource and we continue to listen to and invest in them and their well-being in many ways.

 

  We have a continuous listening program through which we monitor team member engagement and experience and which includes collecting feedback from team members through pulse surveys, focus groups, company-wide assessments and surveys, and confidential exit surveys and interviews.

 

  Team members are the source of some of our best ideas, including ways that we can improve our team member and customer experiences.

 

  Diversity and inclusion is one of our five primary values and is essential to our success. Consistent with our core values, we promote diversity and inclusion in every aspect of our business. We are committed to increasing team member diversity and inclusion through inclusive policies and programs that attract, develop, engage, and retain the best talent, including by paying our team members fairly and competitively.

 

  We raised the minimum hourly wage to $15 per hour for 36,000 U.S.-based team members in March 2018. For team members already at or close to the minimum hourly wage, the Company reviewed their pay relative to the new $15 minimum. This additional review resulted in approximately 50,000 pay adjustments in April 2018.

 

  We granted restricted share rights to approximately 250,000 eligible team members in first quarter 2018. All eligible full-time team members in the U.S., and eligible team members outside the U.S., received the equivalent of 50 shares of Wells Fargo stock. All eligible part-time team members in the U.S. received the equivalent of 30 shares of Wells Fargo stock.

 

  We increased the number of paid holidays for U.S.-based team members from 8 to 12, including adding personal holidays that can be used for religious, family, cultural, patriotic, community, or diversity observances.

 

  Wells Fargo has long been committed to market competitive compensation, career-development opportunities, a broad array of benefits, and strong work-life programs. Each year Wells Fargo invests approximately $13,000 per team member in our benefits programs.

 

        

 

Our Customers

 

We are making changes to better serve our customers, as we continue to put them at the center of everything we do.

 

   

 

Our Communities

 

We want to help people and communities succeed financially in all of the places where we live and do business.

 

  Our team members are committed to serving our customers.

 

  We serve one in three U.S. households.

 

  We offer a broad range of products to meet our customers needs and are among the largest lenders in the U.S.

 

  We have industry-leading distribution, both physical and digital, in order to allow our customers to interact with us in the ways that are most convenient to them.

 

  We continue to innovate for our customers and clients, resulting in expansion of our services to meet customer needs.

 

  We are focused on operational excellence throughout our businesses to reduce the number of processes we have and make them more efficient and are investing in technology tools and capabilities. These efforts should allow us to improve our customer experience and do a better job serving our customers’ existing and emerging needs.

 

        

  Our team members are committed to making the communities where they live and work stronger, including through their own philanthropy and volunteerism.

 

  Wells Fargo has taken a comprehensive approach to increasing access to economic opportunities in disadvantaged neighborhoods, combining philanthropy with our market-leading lending business.

 

  We have reduced our Company’s environmental footprint and are helping to accelerate the transition to a low-carbon economy through our commitment to finance sustainable businesses and projects, including those focused on clean technology and renewable energy.

 

  We have concentrated our philanthropy on addressing five community issues: affordable housing, small business growth, equity and economic inclusion, education and minimizing impacts of climate change.

 

  We surpassed our $400 million philanthropy target for 2018, donating $444 million to nearly 11,000 nonprofits helping communities and people in need.

 

 


 

ii       Wells Fargo & Company       


Table of Contents

 

Year Round Investor Engagement Through Board-Led Program

Since 2010, we have had an investor engagement program with independent director participation to help us better understand the views of our investors on key corporate governance topics. In addition to engagement with our largest institutional investors, we have enhanced our engagement efforts with additional investors and stakeholders to hear their perspectives and help identify focus and priorities for the coming year. The constructive and candid feedback we receive from our investors and other stakeholders during these meetings continues to be important and helps us inform our priorities, assess our progress, and enhance our corporate governance practices and disclosures each year.

 

 

LOGO

More than 35% outstanding shares represented Held in-person meetings and calls with institutional investors representing a significant number of shares outstanding Over 50 engagement calls and meetings Continued to hold substantial number of engagement meetings throughout the year to discuss governance and other topics Over 25 engagement meetings with Board Chair Held a significant number of engagement meetings and calls with independent chair participation Board-led engagement program conducted year round

 

 

 

Shareholder Engagement Topics – Feedback Shared with the Full Board and Other Board Committees

 

   Board skills and experience and Board matrix

 

   Board composition and diversity

 

   Board size and tenure

 

   Board oversight of risk, including committee responsibilities

 

   Board-level engagement and oversight of management

 

 

 

   Recent changes in the Company’s senior leadership

 

   Company performance and progress

 

   Regulatory relationships and status of satisfying consent order requirements

 

   Status of Company reviews of its businesses

 

 

   Culture and team member engagement

 

   Executive compensation and compensation metrics

 

   Shareholder proposals

 

   Environmental, Social, and Governance practices and reporting

 

 

LOGO

Governance Practices Year Enhanced Transparency and Disclosures Enhanced Board qualifications and experience, by electing an additional director in Jan. 2019 Continued to implement formal and thoughtful Board and committee succession plans, including for the Chair of the Risk Committee Continued implementation of risk management framework, including enhanced reporting, management-level governance committee structure, and escalation processes in support of the Board's risk oversight Published our Business Standards Report, titled "Learning from the past, transforming for the future," which addresses actions our Company has taken - and continues to take - to improve our culture, make things right for customers who were harmed, reconstitute our organizational structure, and strengthen risk management and controls Enhanced Board experience matrix to include diversity information as self-identified by Board members Increased disclosure about our performance management program and compensation practices, including efforts and metrics to promote diversity and inclusion in our workforce Enhanced existing shareholder right to call a special meeting by reducing required ownership threshold from 25% to 20% of outstanding shares Continued Board refreshment process begun in 2017; six of seven standing Board committee chair roles rotated since 2017 Enhanced Corporate Governance Guidelines to more fully articulate the role of the Board and work it is doing to enhance governance and oversight practices Disclosed our Company's gender and racial/ethnic pay gaps in the U.S. Introduced Board qualifications and experience matrix disclosures in 2018 proxy statement, including definitions of qualifications and experience identified by the Board as important in light of our Company's strategy, risk profile, and risk appetite Significantly enhanced culture and human capital management disclosures in 2018 proxy statement Continued to enhanced disclosure about incentive compensation risk management program, including incentive plans, risk takers, and financial and other risk covered

* See page 18 for extended timeline

 


 

       2019 Proxy Statement       iii


Table of Contents

 



 

Results of Recent Board Refreshment and Current Board Composition

Over the past two years, the Board has focused on enhancing its composition, oversight, and governance practices. Changes the Board has made have been informed by its own comprehensive self-evaluation of Board performance and effectiveness and feedback provided by investors since our 2017 annual meeting. The Board’s succession planning process has enabled the Board to maintain Board composition and structure that is appropriate in light of the Company’s strategy, risk profile, and risk appetite. These processes also enable the Board to adapt its composition in response to the changing needs of the Board and our Company over time.

 

Board Leadership Structure

 

 

  Separated the roles of Chairman and CEO and amended By-Laws in 2016 to require an independent Board Chair

 

  Strong independent Chair (Elected Elizabeth A. “Betsy” Duke, former member of the Federal Reserve Board of Governors, as independent Chair effective Jan. 2018)

 

  Refreshed leadership of six of seven standing Board committees with new committee chairs since Sept. 2017

Board Composition

 

  Significant Board refreshment, with a majority of the Board’s independent director nominees having joined the Board since January 2017

 

  Maintained an appropriate balance of tenure, experience, and perspectives on the Board during transition

 

  Enhanced skills and experience represented on Board, including financial services, risk management, information security/cyber, technology, regulatory, human capital management, finance, consumer, business process and operations, and social responsibility experience

Governance Practices

 

  Board engaged a third-party to facilitate its last two Board self-evaluations (2018 and 2017)

 

  Enhanced director onboarding, director recruitment and nomination, and Board succession planning processes

 

  Held meetings with Stakeholder Advisory Council formed in 2017 to gain insights from leading experts and national thought leaders of external stakeholder groups

LOGO

 

 

 

 

 

Board Diversity Highlights

   

 

While our Board does not have a specific policy on diversity, our Corporate Governance Guidelines and the Governance and Nominating Committee’s charter specify that the Board and Governance and Nominating Committee incorporates a broad view of diversity into its director nomination process. In addition, the Board has a diverse candidate pool for each director search the Board undertakes. The current composition of our Board reflects those efforts and the importance our Board places on diversity on the Board.

 

LOGO

 

 

 


 

iv       Wells Fargo & Company       


Table of Contents

 

Our Director Nominees

 

 

 Our Board recommends that you vote FOR each of

 these director nominees for a one-year term

 

 

 John D. Baker II

 Independent

 

Celeste A. Clark

Independent

 

Theodore F. Craver, Jr.

Independent

 

Elizabeth A. (“Betsy”) Duke

Independent Chair

 

 Executive Chairman and

 CEO, FRP Holdings, Inc.

 

 Age: 70 Director Since: 2009

 Committees: AEC, CC*

 Other Public Boards: 1

 

 

Principal, Abraham Clark Consulting, LLC; retired Sr. VP, Global Public Policy and External Relations, and Chief Sustainability Officer, Kellogg Company

 

Age: 65 Director Since: 2018

Committees: CRC*, CC, GNC

Other Public Boards: 1

 

 

 

Retired Chairman, President, and CEO, Edison International

 

Age: 67 Director Since: 2018

Committees: AEC, FC*

Other Public Boards: 1

 

 

Former member of the Federal Reserve Board of Governors

 

Age: 66 Director Since: 2015

Committees: CC, FC, GNC, RC

Other Public Boards: 0

     

 Wayne M. Hewett

 Independent

 

Donald M. James

Independent

 

Maria R. Morris

Independent

 

Juan A. Pujadas

Independent

 

 Senior Advisor, Permira;  Chairman, DiversiTech  Corporation

 

 Age: 54 Director Since: 2019

 Committees: CRC, HRC, RC

 Other Public Boards: 1

 

 

Retired Chairman and CEO,

Vulcan Materials Company

 

Age: 70 Director Since: 2009

Committees: FC, GNC*, HRC

Other Public Boards: 1

 

 

Retired Executive Vice President and head of Global Employee Benefits business, MetLife, Inc.

 

Age: 56 Director Since: 2018

Committees: HRC, RC*

Other Public Boards: 1

 

 

Retired Principal,

PricewaterhouseCoopers LLP,

and former Vice Chairman,

Global Advisory Services, PwC

Intl.

 

Age: 57 Director Since: 2017

Committees: CC, FC, RC

Other Public Boards: 0

     

 James H. Quigley

 Independent

 

Ronald L. Sargent

Independent

 

Timothy J. Sloan

CEO & President

 

Suzanne M. Vautrinot

Independent

 

 CEO Emeritus and a retired

 Partner of Deloitte

 

 Age: 67 Director Since: 2013

 Committees: AEC*, RC

 Other Public Boards: 2

 

 

Retired Chairman and CEO, Staples, Inc.

 

Age: 63 Director Since: 2017

Committees: AEC, CRC, GNC, HRC*

Other Public Boards: 2

 

 

CEO and President,

Wells Fargo & Company

 

Age: 58 Director Since: 2016

Committees: None

Other Public Boards: 0

 

 

President, Kilovolt Consulting Inc.; Major General (retired), U.S. Air Force

 

Age: 59 Director Since: 2015

Committees: CRC, CC, RC

Other Public Boards: 2

 

AEC   Audit and Examination Committee   FC   Finance Committee    HRC   Human Resources Committee
CRC   Corporate Responsibility Committee   GNC   Governance and Nominating Committee   

RC

 

 

Risk Committee

 

CC   Credit Committee    
*   Committee Chair         

 

 

  Highlights of Qualifications and Experience of our Director Nominees

 

 

92%

are

independent

   

 

63 years

average

age

of independent director nominees

   

 

6 of 11

current

independent

directors
joined the
Board

since 2017

 

   

 

42%

of director nominees
have

financial

services

experience

   

 

67%

of director nominees
have

risk management

experience

   

 

33%

of director nominees
have

human capital management

experience

 

   

 

67%

have

CEO

experience

 


 

       2019 Proxy Statement       v


Table of Contents

 

Guided by Our Four Compensation Principles and Enhanced Performance Objective Framework

Compensation Principles

The Board’s Human Resources Committee, in making compensation decisions for our executive officers named in the Summary Compensation Table (named executives), applies its discretion within a governance framework that is based on the following four compensation principles and includes consideration of risk management, absolute and relative Company performance, business line performance for business line leaders, individual performance, and independent advice.

 

 

Pay for Performance

 

 

Attract and Retain Top Executive Talent

 

 

Foster Risk Management Culture

 

 

Encourage Creation of Long-Term Shareholder Value

Enhanced 2018 Annual Incentive Performance Objective Framework

We are committed to designing and implementing incentive compensation arrangements that align with and reinforce our Vision, Values & Goals. For 2018, the Human Resources Committee introduced an enhanced performance objective framework for annual incentives for senior leaders that focuses on pre-established financial, strategic, and risk management objectives. The new framework, which is reflected in the chart below, covers expectations for both “what” is achieved and “how” it is achieved, and includes an evaluation of performance consistent with the Company’s leadership and risk accountability expectations.

 

LOGO

Company Performance The Human Resources Committee considers Company performance in its determination of annual incentive awards What is Achieved? How is it Achieved? Focuses on financial, strategic, and risk management objectives Focuses on how the executive performed his or her role and acts as an overlay that can increase, reduce, or eliminate the final award Performance is based on an evaluation of Company results taking into account quantity (financial outcomes), quality (consistency with strategic plan, risk appetite), degree of difficulty (accounting for environmental factors), and execution of key initiativesEffective Management and Business Performance Effective Management is based on strategic deliverables, initiatives, and expenses the business or functional area Business Performance is determined based on an evaluation of business line results (if applicable) taking into account quantity (consistency with strategic plan, risk appetite) and degree of difficulty (accounting for environmental factors) Risk Management Risk management is evaluated on effectiveness across all risk types, including compliance, operational, financial, strategic, and reputation Leadership Based on upholding the Vision, Values & Goals of Wells Fargo through the behaviors set forth in our comprehensive Leadership Success Criteria Risk Accountability Leaders are accountable for fostering a sound risk environment and setting the tone at the top

This enhanced annual performance objective framework, along with other features of our executive compensation structure, enables the Human Resources Committee to assess performance against set objectives, to reward senior leaders when expectations are met or exceeded, and to hold them accountable for both what they achieve and how they achieve it.

 


 

vi       Wells Fargo & Company       


Table of Contents

 

Executive Compensation Decision Highlights

Continuing to Strengthen Performance Share Award Design

The Human Resources Committee has continued to make performance, risk management, and governance enhancements to the Performance Share award design for executives since we first introduced this award type in 2009. The following chart reflects the key forfeiture and adjustment provisions applicable to Performance Share awards granted in each of 2019, 2018, and 2017. For more information on these provisions and awards, see 2018 Long-Term Incentive Compensation, 2019 Long-Term Incentive Compensation, and Executive Accountability Actions Taken in Recent Years.

 

 

2019 Performance Share Awards

 

Absolute and Relative Return on Realized Common Equity (RORCE)
Performance Criteria for Vesting

 

       

 

2018 Performance Share Awards

 

Absolute and Relative RORCE Performance
Criteria
for Vesting

 

 

1. New regulatory performance condition incorporated in Performance Share awards granted in 2019 that gives the HRC discretion to forfeit all or a portion of an unpaid award based on the executive’s role and responsibility for the Company’s progress in resolving outstanding regulatory matters

 

2. Total Shareholder Return (TSR) governor added to Performance Shares awarded to our executives beginning in 2018 that reduces the maximum payout from 150% to 125% if our TSR for the performance period is not in the top quartile of our Financial Performance Peer Group

 

3. Forfeiture conditions giving the HRC discretion to forfeit all or a portion of unpaid awards upon the occurrence of specified conditions, including behavior that may have caused material reputation harm to the Company

 

4. Net Operating Loss (NOL) adjustor that reduces the target number of Performance Shares awarded by one-third for any year in the three-year performance period that our Company incurs a NOL

   

 

1.  TSR governor

 

2.  Forfeiture conditions

 

3.  NOL adjustor

   
     
   

 

2017 Performance Share Awards

 

Absolute and Relative RORCE Performance Criteria for Vesting

 

   

 

1.  Forfeiture conditions

   

2.  NOL adjustor

 

 

     
     

 

 

 CEO Compensation Decision Highlights

 

 

 

  The Board’s and the Human Resources Committee’s compensation decisions for our CEO reflect the following:

 

 

 

 

 

Continued Enhancement of Performance Share Award Design

 

  

 

 

76% of CEO’s 2018 Compensation in Long-Term, Performance-Based Equity Award

 

  

 

 

No Salary Increase

 

  

 

 

No Annual Incentive Was Awarded for 2017 or 2016

 

Annual Incentive Award Granted for 2018

 

    
 

 

   New regulatory performance condition added in 2019

 

   TSR modifier added in 2018

 

   Vesting of awards continue to be tied to absolute and relative RORCE performance, which focuses on the creation of long-term shareholder value

   

 

   CEO compensation continues to be substantially in the form of long-term, performance-based equity that vests over 3 years

 

   Awards are contingent on longer-term financial performance and risk assessments, and have substantial holding requirements

 

   Performance Share Award for Mr. Sloan was $1 million less in 2018 compared with 2017

   

 

   CEO has not received a salary increase since March 2016

 

   Mr. Sloan’s last salary increase occurred prior to his becoming CEO in October 2016

   

 

   The HRC and the Board awarded Mr. Sloan a 2018 annual incentive award of $2 million based on the Company’s financial performance, Mr. Sloan’s continued leadership on the Company’s top priority of rebuilding trust, and his performance against his 2018 individual qualitative performance objectives

 

   He did not receive an annual incentive award for 2017 or 2016

 
 

 

See pages 81-82; 95-96

   

 

See pages 93-94

   

 

See page 88

   

 

See pages 88-92

 

 


 

       2019 Proxy Statement       vii


Table of Contents

2018 Executive Compensation Decisions

The Human Resources Committee maintained the same overarching framework for our named executives’ 2018 compensation that it used in 2017. The following table summarizes the Human Resources Committee’s compensation decisions for our named executives. It is not a substitute for, and should be read together with, the Summary Compensation Table, which presents compensation paid, accrued, or awarded for 2018 in accordance with Securities and Exchange Commission (SEC) disclosure rules and includes additional compensation elements and other important information.

 

Named Executive

and Position

  Base Salary ($)     Annual
Incentive
Award ($)
    Long-Term
Performance
Share Award ($)
    Total ($)  

 

Timothy J. Sloan

Chief Executive Officer and President

 

 

 

 

2,400,000

 

 

 

 

 

 

2,000,000

 

 

 

 

 

 

14,000,000

 

 

 

 

 

 

18,400,000

 

 

 

John R. Shrewsberry

Senior Executive Vice President and

Chief Financial Officer

 

 

 

 

2,000,000

 

 

 

 

 

 

1,250,000

 

 

 

 

 

 

9,250,000

 

 

 

 

 

 

12,500,000

 

 

 

Mary T. Mack

Senior Executive Vice President, Consumer Banking

 

 

 

 

1,413,793

 

 

 

 

 

 

1,650,000

 

 

 

 

 

 

5,500,000

 

 

 

 

 

 

8,563,793

 

 

 

Avid Modjtabai

Senior Executive Vice President, Payments, Virtual Solutions, and Innovation

 

 

 

 

1,750,000

 

 

 

 

 

 

1,350,000

 

 

 

 

 

 

7,250,000

 

 

 

 

 

 

10,350,000

 

 

 

Perry G. Pelos

Senior Executive Vice President, Wholesale Banking

 

 

 

 

1,456,896

 

 

 

 

 

 

1,000,000

 

 

 

 

 

 

6,500,000

 

 

 

 

 

 

8,956,896

 

 

2018 Pay Mix

The charts below summarize the percentage of each element of pay above, based on the actual annual incentive awards earned and the value of the long-term performance shares (at target) at the time of grant for our CEO and for our other named executives as a group.

 

 

LOGO

CEO PAY MIX OTHER NAMED EXECUTIVE PAY MIX 86% 85% At Risk At Risk

 


 

viii       Wells Fargo & Company       


Table of Contents

 

Long-Term Incentive Compensation Plan Highlights

 

 Our Board recommends that you vote FOR the approval of the

 Amended and Restated Long-Term Incentive Compensation Plan

 

Purpose of our LTICP

The Company’s equity plan, our Long-Term Incentive Compensation Plan (LTICP), is an important way to attract, retain, and motivate key team members to produce growth in shareholder value and provide incentive compensation. The LTICP also allows us to deliver compensation aligned with our compensation principles focused on fostering a risk management culture and encouraging the creation of long-term shareholder value.

In addition, in 2018 the Human Resources Committee used approximately 23,703,940 shares of the LTICP share reserve (taking into account that restricted share rights count as two shares against the LTICP share reserve) to grant restricted share rights to approximately 250,000 eligible team members in first quarter 2018. All eligible full-time team members in the U.S., and eligible team members outside the U.S., received the equivalent of 50 shares of Wells Fargo stock. All eligible part-time team members in the U.S. received the equivalent of 30 shares of Wells Fargo stock. This grant was given to team members for the important role they play in the Company’s efforts to rebuild trust and to show team members that we value their contributions to our long-term success.

Amendments to LTICP

On February 26, 2019, the Board approved an amendment and restatement (Plan Amendment) of our LTICP. The primary purposes of the Plan Amendment are as follows:

 

     

Share Increase

200 million shares

 

Estimated to allow for the grant of equity awards over the next four to five years

    

Plan Extension

10 years subject to share limitations

    

Other Best Practice Changes

Accumulated dividends and dividend equivalents will not be paid on unvested awards

 

At least 95% of awards must have at least a one year vesting period

     

The Plan Amendment will not take effect unless shareholders approve it at our 2019 annual meeting. We are asking shareholders to approve the LTICP in the form included at the end of this proxy statement as Appendix A.

Potential Dilution

Based on shares of our common stock outstanding as of December 31, 2018, if all shares subject to outstanding awards and all shares available for future awards as of December 31, 2018 are ultimately issued, the shareholder dilution would be approximately 3.3%. If all of the additional 200 million shares authorized by the Plan Amendment are also ultimately issued, the shareholder dilution would be approximately 7.7%. Both dilution percentages assume that shares subject to awards will be issued on a one-for-one basis even though since March 1, 2009 each share issued under awards other than options or stock appreciation rights (SARs) counts as two shares against the LTICP share reserve.

Recommendation for Approval

The Board believes the additional 200 million shares for which we are requesting approval will provide a reasonable pool of equity awards that will allow us to continue using equity awards as a fundamental part of our compensation framework in alignment with our compensation principles.

For additional information, see Item 3 — Approve the Company’s Amended and Restated Long-Term Incentive Compensation Plan beginning on page 116.

 


 

       2019 Proxy Statement       ix


Table of Contents

 

Compensation Best Practices

The Board’s Human Resources Committee (HRC) has adopted and continues to enhance numerous best practices that are consistent with our Vision, Values & Goals, reinforce our pay-for-performance compensation philosophy, and are aligned with the long-term interests of our shareholders.

 

Strong and Independent Board

Oversight

  

Independent Board oversight through the HRC of the Company’s culture, human capital management, ethics and conflicts of interest program, performance management and compensation programs, and annual pay equity reviews

 

Strong Tie to Performance   

Pay-for-performance compensation philosophy and approach consistent with compensation philosophy approved by the HRC

 

Annual consideration of financial performance and labor market peer group information, including financial performance and compensation practices

 

Overall executive compensation design and structure is weighted heavily toward long-term, performance-based equity that vests over three years, and is contingent on longer-term financial performance and risk assessments

 

Use of multiple financial metrics (RORCE performance metric and Relative TSR modifier) tied to our long-term strategy in our long-term performance share awards to strengthen alignment with long-term performance and shareholder interests

 

Focus on Risk Management and

Risk Outcomes

  

How an executive officer leads and manages risk can reduce or eliminate incentive compensation for outcomes that are inconsistent with the HRC’s expectations or increase awards for exceptional risk management

 

The design and risk management features of our incentive compensation programs provide for the use of discretion, including HRC discretion in the case of the Company’s executive compensation program, to account for risk outcomes

 

The HRC and the Board have exercised their discretion, as they determined appropriate, to adjust compensation based on risk management outcomes

 

Substantial Stock Ownership and

Retention Policies

  

Substantial holding requirements (both stock ownership and retention policies) for our non-employee directors and executive officers to further support long-term focus, strong risk management, and accountability

 

Stock retention requirements extend beyond retirement

 

Multiple Forfeiture and Clawback

Policies and Provisions

  

Multiple executive compensation clawback and recoupment policies, including provisions that allow for forfeiture of compensation without a financial restatement, including the reduction or forfeiture of equity awards if the Company or the executive’s business group suffers a material failure of risk management

 

Dividend Policy   

No cash dividends on unearned restricted share rights or performance share awards

 

No Repricing   

No repricing of stock options without shareholder approval

 

No Pledging   

No pledging of Company securities by directors or executive officers under the Board’s Corporate Governance Guidelines

 

No Hedging   

No hedging of Company securities by directors, executive officers, or other employees under our Code of Ethics and Business Conduct

 

No Employment Contracts   

No executive employment, severance, or change in control agreements

 

No Gross Ups   

No tax gross-ups for named executives

 

No Additional Service Credit in

Pension Plans

  

No additional retirement benefits or additional years of credited service other than investment or interest credits provided under applicable pension plans since July 1, 2009

 

Limited Perquisites   

Limited perquisites for executive officers

 

Leading Independent

Compensation Consultant Advice

  

The HRC has engaged a leading independent compensation consultant to advise it in determining executive compensation and evaluating program design and structure

 

 


 

x       Wells Fargo & Company       


Table of Contents

 

 

 

 

Table of Contents

 

   
Transforming Wells Fargo for the Future      2  

Our Vision, Values & Goals

     2  

Our Business and Strategy

     3  

How We Are Measuring Our Progress

     5  
  
   
Our Commitment to Corporate Citizenship      8  
  
   
Corporate Governance      11  

Corporate Governance Framework and Documents

     11  

Comprehensive Annual Evaluation of Board Effectiveness

     14  

Our Investor Engagement Program

     17  

Strong Independent Board Leadership

     19  

Management Succession Planning and Development

     21  

Board Composition

     23  

Board Succession Planning

     23  

Overall Board Composition and Size

     24  

Board Qualifications and Experience

     25  

Importance of Board Diversity

     28  

Item 1 — Election of Directors

     29  

Director Nominees for Election

     29  

Director Election Standard and Nomination Process

     36  

Director Orientation Process and Continuing Education

     38  

Director Independence

     38  

Our Board and its Committees

     40  

Board and Committee Meetings; Annual Meeting Attendance

     40  

Our Board’s Role in Risk Oversight

     40  

Committees of our Board

     42  

Compensation Committee Interlocks and Insider Participation

     51  

Director Compensation

     52  
  
   
Information About Related Persons      55  

Related Person Transactions

     55  

Related Person Transaction Policy and Procedures

     56  
  
   
Ownership of Our Common Stock      58  

Directors and Executive Officers

     58  

Stock Ownership Requirements and Other Policies

     58  

Director and Executive Officer Stock Ownership Table

     59  

Section 16(a) Beneficial Ownership Reporting Compliance

     60  

Principal Shareholders

     61  
  
   
Human Capital Management      62  

Our Culture

     62  

Our Commitment to the Highest Ethical Standards

     64  

Listening to and Investing in our Team Members

     65  

Performance Management and Compensation

     69  

Performance Management

     69  

Incentive Compensation Risk Management

     71  

Board and Management Committee Governance

     73  

Our Workforce

     75  
 

 

 

 


Table of Contents

 

 

 

 

 

 

   
Executive Compensation      79  

Item 2 — Advisory Resolution to Approve Executive Compensation

     79  

Compensation Discussion and Analysis

     80  

Introduction

     80  

Enhanced Performance Objective Framework

     81  

Strengthened Performance Share Award Design

     81  

Compensation Highlights

     82  

Financial Performance Highlights

     83  

Governance Framework for Compensation Decisions

     83  

Compensation Principles

     83  

Risk Management

     84  

Company Performance

     85  

Business Line Performance

     85  

Individual Performance

     85  

Peer Group Analysis

     85  

Independent Compensation Consultant Advice

     85  

HRC Discretion

     86  

How the HRC Considers Prior Say on Pay Votes and Investor Feedback

     86  

Compensation Elements

     87  

2018 Pay Mix

     88  

Compensation Decisions for Named Executives

     88  

Executive Accountability

     97  

Other Compensation Components

     98  

Peer Group Analysis and Independent Compensation Consultant

     99  

Tax Considerations

     100  

Compensation Committee Report

 

    

 

101

 

 

 

Executive Compensation Tables

     102  

2018 Summary Compensation Table

     102  

2018 Grants of Plan-Based Awards

     104  

Outstanding Equity Awards at Fiscal Year-End 2018

     106  

2018 Option Exercises and Stock Vested

     107  

2018 Pension Benefits

     108  

2018 Nonqualified Deferred Compensation

     109  

Potential Post-Employment Payments

     112  

Equity Compensation Plan Information

     114  

Item 3 — Approve the Company’s Amended and Restated Long-Term Incentive Compensation Plan

     116  
  
   
Audit Matters      124  

Item 4 — Ratify Appointment of Independent Registered Public Accounting Firm for 2019

     124  

Annual Evaluation Process for Selection of Independent Auditors

     124  

Auditor Independence Controls

     125  

KPMG Fees

     126  

Audit and Examination Committee Pre-Approval Policies and Procedures

     126  

Audit and Examination Committee Report

     127  
  
   
Items 5 through 6 — Shareholder Proposals      128  
  
   
Voting and Other Meeting Information      137  

Voting Information

     137  

Meeting Admission Information

     140  

Shareholder Information for Future Annual Meetings

     142  

Other Information

     143  
  
   
Appendix A – Amended and Restated Long-Term Incentive Compensation Plan      A-1  
 

 

 

 

 


Table of Contents

 

 


Proxy Statement

 

 

Your vote is important! You may vote if you owned shares of our common stock at the close of business on February 26, 2019, the record date for notice of and voting at our annual meeting. Information about the annual meeting, admission to the annual meeting, and voting your shares appears under the Voting and Other Meeting Information section of this proxy statement. The proxy materials were first made available to shareholders beginning on March 13, 2019.

 





2019 Annual

Meeting Of

Shareholders

Date & Time

Tuesday, April 23, 2019

10:00 a.m., CDT

Location

Grand Hyatt DFW

2337 South International Pkwy

Dallas, Texas 75261

Record Date

February 26, 2019

Mailing Date

March 13, 2019

 

 

You should read the entire proxy statement carefully before voting. We also encourage you to read the 2018 annual report accompanying this proxy statement, including the letters from our independent Chair and our CEO contained in that report.

 

 

Voting Matters

 

Items for Vote

   Board
Recommendation

Management Proposals

     
1    Elect 12 directors    For all nominees
     
2    Advisory resolution to approve executive compensation (Say on Pay)    For
     
3    Approve the Company’s Amended and Restated Long-Term Incentive Compensation Plan    For
     
4    Ratify the appointment of KPMG LLP as the Company’s independent registered public accounting firm for 2019    For
     

Shareholder Proposals

  5-6      Vote on two shareholder proposals, if properly presented at the
meeting and not previously withdrawn
   Against
 

 

Live Audio of Meeting

Please visit our “Investor Relations” page under “About Wells Fargo” on www.wellsfargo.com several days before the annual meeting for information on how to listen to the live annual meeting. You will not be able to vote your shares or ask questions while you are listening to the meeting.

 

Each shareholder’s vote is important

Please submit your vote and proxy over the internet, using your mobile device, or by telephone, or complete, sign, date, and return your proxy or voting instruction form.

 

 

 

       2019 Proxy Statement       1


Table of Contents

 

Transforming Wells Fargo

for the Future

In 2018, we further strengthened the foundation of our Company through new products and services, improvements in the customer experience, greater operational efficiency, and deepened commitments to our communities and our team members. We continued our work to assess and shape the Company’s culture, make progress in our efforts to address past issues, meet the expectations of our regulators, and rebuild trust with stakeholders. While we have more work to do, we have learned from our mistakes and are making fundamental changes as we transform Wells Fargo for the future.

 

 

Our Vision, Values & Goals

Our work is guided by our Vision, Values & Goals, which capture the fundamental beliefs of our Company. Our vision is foundational and is clearly focused on acting in the best interests of our customers to help them succeed financially. Our values express how we go about delivering on our vision, and our goals describe our aspirations and align priorities across our Company. We bring our Vision and Values to life through six goals our CEO, Timothy J. Sloan, established in 2017. We aspire to be the financial services leader in each of those six areas, which are reflected below.

 

 

 

 

Our Vision

 

 

 

 

 

 

 

We want to satisfy our customers’ financial needs and help them succeed financially.

 

 

 

 

 

Our Values

 

 

 

 

  What’s right for customers. We place customers at the center of everything we do. We want to exceed customer expectations and build relationships that last a lifetime.

 

  People as a competitive advantage. We strive to attract, develop, motivate, and retain the best team members – and collaborate across businesses and functions to serve customers.

 

  Ethics. We’re committed to the highest standards of integrity, transparency, and principled performance. We do the right thing, in the right way, and hold ourselves accountable.

 

  Diversity and inclusion. We value and promote diversity and inclusion in all aspects of business and at all levels. Success comes from inviting and incorporating diverse perspectives.

 

  Leadership. We’re all called to be leaders. We want everyone to lead themselves, lead the team, and lead the business – in service to customers, communities, team members, and shareholders.

 

 

 

 

 

Our Goals

 

 

 

 

We want to become the financial services leader in these areas:

 

 

 

 

 

Customer service and advice

 

 

 

  

 

 

 

Team member engagement

 

 

      

 

 

Innovation

 

 

 

       
 

 

 

Risk management

 

 

   

 

 

Corporate citizenship

 

 

   

 

 

Shareholder value

 

 

 

 

               

As discussed under Human Capital Management – Our Culture, we have introduced a clear set of behavioral expectations for our team members that are aligned with our Vision, Values & Goals, and we measure performance against the expectations through a new common leadership objective that all team members have as part of their 2018 performance plans.

 


 

2       Wells Fargo & Company       


Table of Contents

Transforming Wells Fargo for the Future

 

 

Our Business and Strategy

Our Business Groups

Wells Fargo & Company is a diversified, community-based financial services company with $1.9 trillion in assets. Founded in 1852 and headquartered in San Francisco, we provide banking, investment and mortgage products and services, as well as consumer and commercial finance, through 7,800 locations, more than 13,000 ATMs, digital (online, mobile, and social), and contact centers (phone, email, and correspondence), and we have offices in 37 countries and territories to support customers who conduct business in the global economy. With approximately 260,000 active, full-time equivalent team members, we serve one in three households in the United States.

Wells Fargo operates the following four primary business groups:

 

Consumer Banking

 

 

 

Payments, Virtual Solutions,
and Innovation (PVSI)

 

 

Wealth and Investment
Management

 

 

Wholesale Banking

 

  Community Banking

 

  Home Lending

 

  Wells Fargo Auto

 

  Personal Lending and Small Business

 

  Payments businesses

 

  Virtual Channels

 

  Operations

 

  Innovation

 

  Merchant Services

 

  Deposit Products

 

  Wells Fargo Advisors

 

  Institutional Retirement and Trust  

 

  Wells Fargo Asset Management

 

  Wells Fargo Private Bank  

 

  Abbot Downing

 

  Wells Fargo Investment Institute

 

 

  Wells Fargo Commercial Banking

 

  Commercial Capital

 

  Commercial Real Estate

 

  Corporate and Investment Banking

 

  Investment Portfolio

 

Our Strategy

Two major components of our transformation are learning from our challenges and becoming more customer-focused than ever before. These are core to our enterprise strategy which includes delivering excellent customer experiences through collaborating across business lines, becoming more customer-centric, simplifying our businesses and offerings, improving operational excellence, and strengthening our risk oversight and controls.

Our long-standing commitment to understand our customers’ financial needs and to help them achieve their financial goals has been foundational to our business since 1852.

Our Consumer Strategy

A key learning from our recent challenges is that – although Wells Fargo has a long history of helping customers – our focus in the past too often was product- and channel-centered. In the past two years, we have evolved toward an unified consumer strategy, which looks at how we serve consumers across all of our retail business lines and products in a way that recognizes their distinct needs. As a result, we now have a single strategy for how we want to meet the needs of our customers, collaborating across businesses to provide offerings that allow customers to engage with us how, when, and where they choose. We designed our strategy based on customer research, analyzing current businesses in the context of shifting industry dynamics and reviewing competitive trends.

Our strategy is guided by what our customers tell us they want:

 

 

Simplicity, ease, and speed

 

 

Transparency, security, and control

 

 

Relevant advice and guidance

 

 

Convenience and access, wherever and however they choose

 

 

Differentiated value that recognizes their unique needs

Based on customer input and our research, we are pursuing a three-pronged approach to our consumer strategy. The first is to elevate the baseline experience for all our customers to meet their rapidly evolving expectations. Second, and building on that work, we are enhancing our focus on defined consumer segments to ensure we meet the unique needs that matter most today and over time. Third, we are improving core enterprise capabilities to create the necessary operational infrastructure, enabling us to deliver on the other two elements of our consumer strategy.

 


 

       2019 Proxy Statement       3


Table of Contents

Transforming Wells Fargo for the Future

 

We are focusing on five key areas:

 

 

Providing relevant and personalized financial advice, delivering guidance through an integrated experience supported with the right products and services

 

 

Personalizing the transaction and borrowing experience, empowering customers with options that are in line with their priorities and transactional needs

 

 

Offering simple and intuitive digital and cross-channel experiences that are consistent and centered on customer needs

 

 

Delivering timely issue resolution and improving our ability to prevent issues that are harmful to customers

 

 

Providing optimized offerings with transparent pricing, ensuring product offerings are simple and customer-centric with easy-to-understand terms

All of our customer segments are important – but because they have different needs, we have distinct strategies for each one: Mass market, Student, Emerging affluent, Affluent, High net worth, and Small business. By understanding our customers across product lines and engaging them throughout their journey, we can anticipate their needs and proactively help them with financial decisions as they progress.

 


 

4       Wells Fargo & Company       


Table of Contents

Transforming Wells Fargo for the Future

 

 

How We Are Measuring Our Progress

In March 2017, our CEO and President Timothy J. Sloan announced six new goals for our Company. While our vision and values should guide every action we take and every decision we make, our goals are designed to clearly state our aspirations for the future, and to make sure that we are all focusing on activities that will build a better, stronger Wells Fargo. As we work to meet these goals, our vision and values come to life in the way we conduct business and the way we prioritize our day-to-day activities. These are important because they help keep the focus on what matters most.

We look at a variety of internal metrics, many of which are publicly disclosed, to measure our progress. Below are some examples. We also track a number of third-party rankings that you can find on our Wells Fargo Today quarterly fact sheet available at: www.wellsfargo.com on our “Who We Are” page under “About Wells Fargo.”

We want to become the financial services leader in the six areas below and the following chart summarizes our progress on these Goals:

 

LOGO          Customer Service and Advice
 

  Continued to improve the customer experience within Consumer Banking with speed, convenience, and new digital offerings in retail banking: customer experience scores for “Customer Loyalty” and “Overall Satisfaction with Most Recent Visit” reached a 24-month high in December 2018.

 

  Sent an average of more than 37 million monthly zero-balance and customer-specific balance alerts to our customers.

 

  Helped more than 2.3 million customers avoid overdraft charges with our Overdraft Rewind® service.

 

  Created or updated financial plans for 70% of our affluent and high-net-worth customers to help those customers feel they have the guidance necessary to succeed financially.

 

  Introduced “predictive banking,” an in-app feature that provides consumer and small business deposit and credit card customers personalized insights into their spending and opportunities to save.

 

  Made changes to become better connected with our customers: between May and December 2018, our bankers reached out to 3.3 million customers to thank them for their business, respond to their questions, and make appointments for in-person consultations.

LOGO       Team Member Engagement
   

  In 2018, voluntary team member attrition improved to its lowest level in six years.

 

  Introduced new behavioral expectations for all team members to deliver a disciplined and objective approach to defining, monitoring, and sustaining our culture.

 

  Increased the minimum base pay in the U.S. to $15 an hour, which benefitted approximately 36,000 team members, and reviewed pay for team members whose salaries were at or slightly above the new minimum wage that resulted in pay increases for approximately 50,000 team members.

 

  Granted broad-based restricted share rights awards to eligible team members; for full-time team members, equivalent to 50 shares of Wells Fargo stock that vests in two years (for part-time team members, 30 shares).

 

  Each year Wells Fargo invests approximately $13,000 per team member in our benefits programs.

 

  Invest $300 million annually in team member learning and development, which includes functional training, leadership and professional development, early talent programs, and tuition reimbursement.

 

  Introduced a new Manager Excellence learning program to provide new managers a consistent foundation and understanding of what is expected and the tools and resources available to them.

 

  Diversity and inclusion efforts recognized externally by the Bloomberg Gender Equality Index, DiversityInc, the Human Rights Campaign, and the National Organization for Disability.

 


 

       2019 Proxy Statement       5


Table of Contents

Transforming Wells Fargo for the Future

 

LOGO          Innovation
 

  Creating digital account opening experiences for many products, including our online mortgage application, which increased in usage throughout 2018. Online mortgage applications represented 30% of our total retail applications in December 2018.

 

  Enhancing our payments capabilities so customers can easily make payments as well as gain more visibility into and control over their accounts.

 

  Launched CEO Mobile® for our wholesale customers – with half of the users now using biometrics to authenticate.

 

  Introduced a pilot of GreenhouseSM by Wells Fargo, our mobile-first banking experience that combines consumer bank accounts with money management tools to help customers plan and save.

 

  Launched Wells Fargo Propel American Express® Card, one of the most compelling rewards programs for no-annual-fee credit cards.

 

  Building capabilities and technologies that enable innovation, such as artificial intelligence, identity management, distributed ledger, and application programming interfaces.

LOGO          Risk Management
 

  Introduced an updated and expanded risk management framework, a foundational document detailing the Company’s revised approach to achieving a global standard in risk management.

 

  Announced changes to how we organize ourselves to manage risk across our three lines of defense so that our lines of business have the appropriate structure to understand and manage their risk and to provide clear stature and authority for our independent risk management function.

 

  Focused on multiple transformative risk initiatives, including work related to our risk target operating state, compliance, operational risk, and regulatory consent orders.

 

  Added new leaders to the risk management team, through both internal and external hires, including more than 3,200 risk management team members hired from outside the Company over the past three years.

 

  Investing $1.8 billion on important initiatives as part of our total technology expense on cyber, data, and risk management.

 

  Continued emphasis on our “Raise Your Hand” program, in which every team member is encouraged to speak up if they need help or see something that does not look right.

LOGO       Corporate Citizenship
   

  Increased our philanthropic impact by donating $444 million to nearly 11,000 nonprofits, surpassing our 2018 target of $400 million; beginning in 2019, we have increased our annual corporate philanthropy target to 2% of after-tax profits.

 

  Made a five-year commitment of $1.6 billion through philanthropy, investing and lending in disadvantaged areas of Washington, D.C., to help revitalize local neighborhoods that are most in need.

 

  Recognized as the No. 2 corporate cash giver in the U.S. and the top financial institution in overall giving, according to a ranking by The Chronicle of Philanthropy based on 2017 data.

 

  Named United Way Worldwide’s largest workplace giving campaign (U.S.) (10th consecutive year).

 

  Expanded NeighborhoodLIFT® program in 2018, financing 31,800 affordable rental units, establishing 3,900 homeowners and investing $75 million to revitalize communities and offer support and assistance to military service members and veterans, teachers, law enforcement officers, firefighters, and emergency medical technicians, in recognition of the service they provide to their communities.

 

  Spent more than $1 billion with diverse suppliers during 2018.

 


 

6       Wells Fargo & Company       


Table of Contents

Transforming Wells Fargo for the Future

 

   

 

  Team members volunteered 2 million hours in their communities.

 

  Met 100% of our electricity needs with renewable energy in 2017 and 2018.

 

  Announced our commitment to provide $200 billion in financing to sustainable businesses and projects by 2030, with more than 50% focused on clean technology and renewable energy transactions to help accelerate the transition to a low-carbon economy.

 

  Issued a comprehensive Business Standards Report detailing the many changes Wells Fargo has made since 2016 to address causes of past issues and transform the Company.

LOGO       Shareholder Value
   

  Generated net income of $22.4 billion and diluted earnings per common share (EPS) of $4.28 in 2018, the highest EPS in the Company’s history.

 

  Return on assets of 1.19% and return on equity of 11.53% in 2018, both up from 2017.

 

  Strong credit quality and high levels of capital and liquidity.

 

  Continued disciplined focus on credit risk management with our net charge-off rate near historic lows, and our nonperforming assets declined 16% from a year ago.

 

  Returned $25.8 billion to our shareholders through common stock dividends and net share repurchases, up 78% from 2017.

 

  Reduced our period-end common shares outstanding by 6%, the sixth year in a row we have reduced our common share count.

 

  Increased our quarterly common stock dividend to 43 cents per share in July 2018, and in January 2019, we increased our quarterly common stock dividend to 45 cents per share.

 

  Continued focus on efficiency and reducing expenses; we achieved our 2018 expense target and remain committed to meeting expense targets for 2019 and 2020.

 


 

       2019 Proxy Statement       7


Table of Contents

Our Commitment to

Corporate Citizenship

 

 

Our Commitment and Strategic Priorities

Corporate citizenship is included among our Company’s Vision, Values & Goals

We understand our role as a community partner and the positive impact we can have on society, local, and global economies, and the environment. We strive to be the financial services leader in corporate citizenship by making positive contributions to every community we serve — through our products and services, operations and culture, and our philanthropy. A strong, thriving economy is good for our communities, our business, and our shareholders.

The Corporate Responsibility Committee of our Board of Directors has primary oversight for Wells Fargo’s policies, programs, and strategies regarding significant corporate citizenship matters and our relationship with stakeholders as outlined in the committee’s charter. Three key priorities guide our strategy:

 

     

Diversity and social inclusion

Help ensure that all people feel valued and respected and have equal access to resources, services, products, and opportunities to succeed

    

Economic empowerment

Strengthen financial self-sufficiency and economic opportunities in underserved communities

    

Environmental sustainability

Accelerate the transition to a low-carbon economy and help reduce the impacts of climate change on our communities

     

For each of our three key priorities, we have made commitments to be accomplished by 2020. We are committed to being transparent with key stakeholders about our progress and performance, and disclose our progress annually through our Corporate Responsibility Report prepared in accordance with Global Reporting Initiative (GRI) Standards Sustainability Reporting Guidelines. Learn more at https://www.wellsfargo.com/about/corporate-responsibility/goals-and-reporting/.

Stakeholder Engagement

The constructive and candid feedback we receive from our key stakeholders is important and informs our priorities, strategy, and progress throughout the year. In 2017, the Company formed an external Stakeholder Advisory Council to provide insights to our Board and our Company. This advisory group includes individuals with expertise in a variety of areas affecting Wells Fargo, including expertise in serving the financial needs of underserved communities, diversity and social inclusion, climate change and sustainability, and governance matters. Since 2013, we have conducted periodic materiality assessments to obtain input and feedback from internal and external stakeholders to help us identify both asset- and company-level risks and prioritize topics with the highest importance to our business and our stakeholders. To learn more about our materiality assessment, and the methodology we employ to prioritize topics most relevant to our Company and our stakeholders, please view “Shaping our CSR Priorities” on our website at https://www.wellsfargo.com/assets/pdf/about/corporate-responsibility/corporate-social-responsibility-priorities.pdf.

Environmental and Social Risk Management (ESRM)

We seek to do business with customers who demonstrate responsible management of their environmental and social risks. We expanded our ESRM Policy and ESRM Framework, which supplement our traditional due diligence practices, across all lines of business to help us more deeply understand how customers in certain sectors are managing these risks. As a result of our enhanced ESRM Framework, in 2016 we began implementing an industry-leading, robust modular carbon risk tool to account for general portfolio emissions, percentage of coal generation, and related risk factors for all regulated corporate utility borrowers engaged in certain electricity and natural gas activities. To learn more about our ESRM Framework and our other environmental, social, and governance (ESG) initiatives, we encourage you to visit our ESG Guide at https://www.wellsfargo.com/about/investor-relations/environmental-social-governance-guide/.

 


 

8       Wells Fargo & Company       


Table of Contents

Our Commitment to Corporate Citizenship

 

Diversity and Social Inclusion Highlights

 

Committed to Diversity and Inclusion

CEO, Timothy J. Sloan, signed the Statement of Support for the National Guard and Reserve for the 15th year in a row, pledging to develop and promote supportive work environments for service members and ensure their jobs are protected while serving.

 

Building an Inclusive Culture

Approximately one-third of our team members actively participate in Company-sponsored business resource groups, based on shared backgrounds or interests, and offering career development, mentoring programs, networking, and community involvement activities.

 

Advancing Economic Equity and Inclusion

We donated $216 million in 2018 to nonprofits that directly serve diverse and historically underserved groups, including women, people of color, military veterans, and people with disabilities.

   

Top Military Employer

and Top Military Spouse Friendly Employer (2018) Victory Media

 

Perfect Score – 100

Disability Equality Index® (DEI®)

Best Places to Work (2018, 3rd year)

 

14th Top Company

For Diversity (2018) DiversityInc.

Economic Empowerment Highlights

 

Revitalizing Neighborhoods

In 2018, we expanded our
NeighborhoodLIFT® program, investing
$75 million to revitalize low-to-moderate
income neighborhoods through down
payment assistance, home lending,
homebuyer education, and other
support.

 

Supporting Economic Opportunity

In 2018, we launched Where We Live in
collaboration with the National
Community Reinvestment Coalition and
local organizations. The new five-year
program will invest more than
$1.6 billion in lending, investing and
philanthropy to support affordable
housing, small business growth, and job
skills in underserved neighborhoods in
Washington, D.C.

 

Growing Diverse Small Businesses

During 2018, Wells Fargo exceeded its
initial $75 million commitment to grow
diverse small businesses through the
Wells Fargo Works for Small Businesses®:
Diverse Community Capital Program, and
committed an additional $100 million in
grants and lending capital
by 2020.

   

Increasing affordable housing

In 2018, we financed 31,800 affordable rental units and created over 3,900 homeowners through NeighborhoodLIFT®.

 

Improving Financial Health

Reached 2.1 million people with financial education through our Hands on Banking® Program, including new content for veterans and people with disabilities.

 

Supporting American Indian/

Alaska Native Communities

Expanded philanthropy programs to help address the needs and challenges facing tribal communities in the U.S., including nearly $13 million in 2018 to support homeownership, energy sovereignty and workforce development on tribal lands, and the development of native-owned small businesses.

Environmental Sustainability Highlights

 

Commitment to Advancing Clean Technology and Renewable Energy

Wells Fargo committed to providing $200 billion in financing to sustainable businesses and projects by 2030, with more than $100 billion set aside to promote clean technology and renewable energy and the remainder to fund sustainable projects and businesses.

 

Expanding Access to Clean Energy

In 2018, Wells Fargo co-founded the Tribal Solar Accelerator Fund with a $5 million commitment over three years to bring solar energy and job training opportunities to tribal lands.

 

Increasing Team Member Commitment

We continue to engage team members through our sustainable commitments initiative. As of December 31, 2018 we achieved 48% of our 2020 goal to reach 250,000 team member commitments.

   

Engaging Our Suppliers

We achieved 52% participation on our inaugural Supplier Climate Change Survey distributed to more than 200 suppliers who were invited to provide information on their progress in reducing greenhouse gas emissions.

 

Recognized Leadership in Operational Sustainability

Ranked #4 on U.S. Environmental Protection Agency’s Green Power Partnership National Top 100, and ranked #1 among financial services firms.

 

Met Aggressive Sustainability Goals

Achieved 47% reduction in greenhouse gas emissions in 2017, beating our 2020 goal three years ahead of schedule and meeting 100% of our electricity needs with renewable energy in 2017 and 2018.

 


 

       2019 Proxy Statement       9


Table of Contents

Our Commitment to Corporate Citizenship

 

 

Contributions to Our Communities

The following are ways that we give back to our communities through philanthropy, community outreach and volunteerism.

Philanthropy

 

We are proud to be recognized as the No. 2 corporate cash giver in the U.S. and the top financial institution in overall giving, according to a ranking by The Chronicle of Philanthropy based on 2017 data. In 2018, we increased our philanthropic impact by donating $444 million to nearly 11,000 nonprofits serving underserved communities. Wells Fargo concentrated its 2018 philanthropy on addressing five community issues: affordable housing, small businesses growth, equity and economic inclusion, education, and minimizing the impacts of climate change.

Philanthropy plays a critical role in our corporate citizenship efforts because it enables us to support innovation and our communities. Beginning in 2019, we will target 2% of our after-tax profits for corporate philanthropy. Through the Wells Fargo Foundation, we direct approximately 60% of our corporate philanthropy to initiatives that align with our three priorities. The remaining philanthropic contributions are allocated to local market teams and may support the three priorities or other specific community needs and opportunities.

 

 

Community Outreach

 

We collaborate with a wide range of nonprofits and community organizations to stabilize and strengthen low-to-moderate income neighborhoods, as well as address global social, economic, and environmental challenges. These are just a few of the areas we support through our community outreach and grant programs:

 

  Sustainable home ownership and affordable housing

 

  Disaster relief, resiliency, and rebuilding

 

  Military and veterans

 

  Financial education and capability

 

  Education

 

  Clean technology and innovation

The long-term success and resiliency of our communities, and our business, depend on our ability to collaborate internally and across the public and private sectors to create sustainable solutions that meet local needs. We work with a range of stakeholders to promote inclusive economic opportunities, expand access to financial products and services, increase financial capability, and improve financial stability in underserved and diverse communities. As an example, through our Resilient Communities grant program, a collaboration with the National Fish and Wildlife Foundation, we are helping cities enhance and protect natural habitats to help prepare for, withstand, and recover from natural disasters. In 2018 we donated more than $16 million to support nonprofits, universities, and other organizations focused on community-based environmental projects and supporting clean technology innovation and entrepreneurs.

 

 

Team Member Volunteerism and Giving

 

Our success as a company is the result of the care and compassion of our team members who bring our culture to life each day. Our team members generously volunteered more than 2 million hours in their communities in 2018, making these communities stronger for everyone and improving lives. Team members across the U.S. volunteered at a number of organizations, including local schools, animal shelters, and food pantries, to name a few.

We know that our long-term success is directly linked to the success of our customers and the communities we serve. In 2018, team members collectively pledged a total of $75.3 million during Wells Fargo’s internal Community Support Campaign, which aims to lift communities and help take on the challenges they face.

 

 

Select Awards and Recognition

Top 50

Most community-minded companies (2018) Points of Light

  

Perfect Score 100

Corporate Equality Index (2018, 15th year) Human Rights Campaign

  

A-

CDP (2018) S&P 500 Climate Performance Leadership Index and Climate Disclosure Leadership Index

 

  

Largest Workplace Giving Campaign

(U.S.) (2019, 10th consecutive year) United Way Worldwide

 


 

10       Wells Fargo & Company       


Table of Contents

Corporate Governance

 

 

Corporate Governance Framework and Documents

Our Board is committed to sound and effective corporate governance principles and practices, and has adopted Corporate Governance Guidelines to provide the framework for the governance of our Board and our Company. These Guidelines address, among other matters, the role of our Board, Board membership criteria, director retirement and resignation policies, our Director Independence Standards, information about the committees and other policies and procedures of our Board, including the majority vote standard for directors, management succession planning, our Board’s leadership structure, and director compensation. Our Board reviews its Corporate Governance Guidelines annually as part of its Board self-evaluation process.

Our Corporate Governance Framework

In February 2018, our Board amended its Corporate Governance Guidelines to more fully articulate the role of the Board and work it is doing to enhance governance and oversight practices, including as part of our plans to satisfy the requirements of the consent order that the Company entered into with the Board of Governors of the Federal Reserve System on February 2, 2018. The following are fundamental aspects of our Board’s governance framework:

 

 

Board Oversight of Strategic Plan, Risk Tolerance,
and Financial Performance

 

  Reviewing, monitoring and, where appropriate, approving the Company’s strategic plan, risk tolerance, risk management framework, and financial performance, including reviewing and monitoring whether the strategic plan and risk tolerance are clear and aligned and include a long-term perspective on risks and rewards that is consistent with the capacity of the Company’s risk management framework

 

 

   

    

 

 

Board Composition, Governance Structure,

and Practices

 

  Maintaining a Board composition, governance structure, and practices that support the Company’s risk profile, risk tolerance, and strategic plans, including having directors with diverse skills, knowledge, experience, and perspectives, and engaging in an annual self-evaluation process of the Board and its committees

 
       

 

CEO and Other Senior Management Succession Planning and Performance

 

  Selecting, and engaging in succession planning for, the Company’s Chief Executive Officer and, as appropriate, other members of senior management

 

  Monitoring and evaluating the performance of senior management, and holding senior management accountable for implementing the Company’s strategic plans and risk tolerance and maintaining the Company’s risk management and control framework

 

  Monitoring and evaluating the alignment of the compensation of senior management with the Company’s compensation principles

 

 

     

 

Board Oversight of Independent Risk Management

and Integrity and Reputation

 

  Supporting the stature and independence of the Company’s independent risk management (including compliance), legal, and internal audit functions

 

  Reinforcing a culture of ethics, compliance, and risk management, and overseeing the processes adopted by senior management for maintaining the integrity and reputation of the Company

 
       

 

Board Reporting and Accountability

 

  Working in consultation with management in setting the Board and committee meeting agendas and schedules

 

  Managing and evaluating the information flow to the Board to facilitate the Board’s ability to make sound, well-informed decisions by taking into account risk and opportunities and to facilitate its oversight of senior management

 

 

 

 

 


 

       2019 Proxy Statement       11


Table of Contents

Corporate Governance

 

Our Corporate Governance Documents

Information about our Board’s and our Company’s corporate governance, including the following corporate governance documents, is available on our website at https://www.wellsfargo.com/about/corporate/governance:

 

 

The Board’s Corporate Governance Guidelines, including its Director Independence Standards

 

 

Our Code of Ethics and Business Conduct applicable to our team members, including our executive officers, and directors

 

 

Charters for each of the Board’s seven standing committees, including the Audit and Examination Committee, the Governance and Nominating Committee, and the Human Resources Committee

 

 

An overview of our Board Communication Policy, which describes how shareholders and other interested parties can communicate with the Board

 

 

Our By-Laws, which require that the Chair of our Board be independent

Insight into the Boardroom and the Board’s Priorities

Agenda Planning and Information Flow to the Board

In addition to enhancing its corporate governance framework, the Board and management continue to improve information flow and escalation of matters to the Board as well as the reporting and analysis provided to the Board.

 

 

The Board has set clear expectations for management for providing timely, accurate, candid, focused, appropriately detailed, and meaningful information and reporting to the Board in order to facilitate the Board’s understanding of and engagement on the Company’s strategy, business, operations, and risks, including its oversight of management.

 

 

The Board’s independent Chair is actively managing Board agendas to provide sufficient time for key business, strategy, risk, culture, and other discussions, and additional time for Board focus on strategic planning, risk appetite alignment, and talent planning

 

 

A two-day strategy review session was added to the Board’s meeting schedule beginning in 2018

 

 

Board committee chairs are focused on setting and prioritizing Board and committee meeting agendas

 

 

The Board and Board committees are requiring detailed action plans with clearly defined milestones and management accountability in order to assess progress in addressing regulatory matters and other issues

Enhanced Level of Board Engagement

While a substantial amount of work happens during meetings convened by the Board, its committees, and their subcommittees, there is a significant amount of engagement and interaction that occurs outside of Board and committee meetings. Our Board and its committees are deeply engaged in oversight of our business, strategy, and financial performance, our plans and progress to meet regulatory expectations, our risk transformation program, our culture and human capital management practices, and many other risks and areas. The following are some of the ways our directors are engaged with our CEO, other members of senior management, and other stakeholders.

 

 

Engagement between Directors, the CEO, and Senior Management

 

  ¡   

Independent Chair serves as the principal liaison among the independent directors and between the independent directors and the CEO and other members of senior management

 

  ¡   

Independent Chair and Board committee chairs meet regularly with members of management as part of agenda planning for Board and committee meetings

 

 

Engagement Relating to Our Business and Strategy

 

  ¡   

Board and Board committees hold “deep dive” sessions with members of management on various topics

 

  ¡   

Directors attend off-site visits from time to time, including to our bank branches and other facilities such as our cyber threat fusion center

 

  ¡   

Directors receive weekly or more frequent updates from management on recent developments, press coverage, and current events that relate to our business

 

 

Engagement with Team Members, Customers, and Regulators

 

  ¡   

Directors, including our independent Chair, periodically attend CEO Town Halls and other business group and team member network engagement meetings

 


 

12       Wells Fargo & Company       


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Corporate Governance

 

  ¡   

Directors meet with customers, including as part of a customer reception held in the fall each year in various markets

 

  ¡   

Independent Chair, Board committee chairs, and other directors meet periodically with our primary regulators on various matters

Board Priorities

The Board is focused on making progress across key priorities as we work to transform Wells Fargo, meet the expectations of our regulators, and rebuild trust with our stakeholders. Below are key priorities for the Board in connection with the continual enhancement of its governance practices and oversight of the Company’s operations and goals.

 

 

Meeting Regulatory Expectations

 

 

 

  Satisfying regulatory expectations and the requirements of the Company’s outstanding consent orders with its regulators

 

  Enhancing our risk and reporting systems to meet the heightened regulatory expectations for systemically important financial institutions and our own goal of industry leadership in risk management

 

  Engaging in frequent and open communication with our regulators about our progress

 

Enhancing Risk Management

 

 

 

  Remaining an industry leader in credit, market, and liquidity risk management

 

  Improving the Company’s risk management program

 

  Implementing plans to continue building our operational and compliance risk management systems to a level that matches our business, structure, and strategies

 

  Enhancing management-level governance committee structures, oversight, monitoring and controls, and escalation processes and procedures

 

Operational Excellence

 

 

 

  Strengthening operations across the organization, including progress on the Company’s project to inventory and map all of our business processes

 

  Improving control testing and monitoring functions and reducing the number and complexity of our business processes in order to offer the potential for improving the efficiency and effectiveness of core operations

 

Oversight of Culture and Human Capital Management

 

 

 

  Continuing to assess and shape the Company’s culture with an emphasis on ethics, training and development, and diversity and inclusion

 

  Focusing on human capital management practices, including talent management strategies such as plans to attract, retain, reward, develop, and care for the best talent

 

Technology

 

 

 

  Consistent with the Company’s consumer strategy, meeting the needs of our customers by collaborating across businesses to provide offerings that allow customers to engage with us how, when, and where they choose

 

  Making sure all of our systems operate on up-to-date platforms, are able to process and protect massive amounts of data, and contribute to our vision of operational excellence and leadership in innovation

 

 


 

       2019 Proxy Statement       13


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Corporate Governance

 

 

Comprehensive Annual Evaluation of Board Effectiveness

 

Each year, our Board conducts a comprehensive self-evaluation in order to assess its own effectiveness, review our governance practices, and identify areas for enhancement. Our Board’s annual self-evaluation also is a key component of its director nomination process and succession planning.

The Governance and Nominating Committee (GNC), in consultation with our independent Chair, reviews and determines the overall process, scope, and content of our Board’s annual self-evaluation process. As provided in its charter, each of our Board’s standing committees also conducts a separate self-evaluation process annually which is led by the committee chair. Our Board’s and each committee’s self-evaluation includes a review of the Corporate Governance Guidelines and its committee charter, respectively, to consider any proposed changes.

 

The GNC has continued to enhance the form and scope of the Board’s self-evaluation process based on director feedback, best practices, experience, and regulatory expectations.

The GNC reviews best practices annually relating to Board and committee self-evaluation processes and makes changes to the form and scope of its evaluation so that the process continues to provide the Board an effective mechanism to evaluate the Board’s performance and effectiveness and make changes the Board determines are necessary and appropriate.

The Board engaged a third party (Mary Jo White, senior partner at Debevoise & Plimpton, LLP and former Chair of the U.S. Securities and Exchange Commission) in 2018 and 2017 to facilitate its annual self-evaluation.

 

Recent Enhancements to Board Self-Evaluation Process

The following are some of the enhancements made to the self-evaluation process over the last few years:

 

 

Evaluation of the individual contributions of directors to the Board and its committees

 

 

Annual assessment of the most effective format for the Board’s and each committee’s self-evaluation and that the Board may determine to engage a third party to facilitate the evaluation periodically

 

 

Coordinated review and assessment by the full Board of the results of both the Board’s and each committee’s and subcommittee’s self-evaluations

 

 

Review of progress made in implementing changes made based on feedback provided in connection with the Board’s prior year self-evaluation

Board Self-Evaluation Process – How Candid Feedback is Obtained

The following chart reflects the key components of the Board’s annual self-evaluation process. Additional information on the topics covered in the scope of the evaluation is included below.

 

 

LOGO

Evaluation Survey Form is approved by GNC and sent by the GNC Chair to each director to request feedback on various topics One-on-One Director Discussions Individual meetings (typically with the Chair and GNC Chair) held with each director to obtain candid feedback Executive Session Discussion of evaluation led by the Chair and GNC Chair in executive session and summary of assessment is provided to Board Feedback Communicated and Acted Upon Feedback is provided to management by the Chair and GNC Chair on areas for improvement and changes are implemented

 


 

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Corporate Governance

 

Topics Covered in the Scope of the Board Self-Evaluation

In 2018, the Board self-evaluation included an assessment of the following topics, among others:

 

 

Overall Context for Assessment

 

 

 

LOGO

 

 

 

Evaluation of the Board’s efforts with respect to the following responsibilities:

 

  Setting clear, aligned, and consistent direction regarding strategy and risk tolerance,

 

  Actively managing information flow and board discussions,

 

  Holding senior management accountable,

 

  Supporting the independence and stature of independent risk management (including compliance and internal audit), and

 

  Maintaining a capable board composition and governance structure.

 

 

Board Performance and Effectiveness

 

 

 

LOGO

 

 

 

  Board performance, including as a team, active engagement of management during and between Board meetings, exercising challenge when appropriate, and the quality of the Board decision-making process

 

  Individual director contributions to the work of the Board and its committees

 

  Quality and candidness of Board discussions and deliberations, including encouragement of diverse views

 

  Quality of committee reports to the full Board

 

 

Board Composition, Structure, and Meetings

 

 

 

LOGO

 

 

 

  Board composition, including size and mix of skills, knowledge, experience, perspectives, tenure, background, and diversity

 

  Committee structure and functioning, including the number of committees and their roles and responsibilities

 

  Effectiveness of meeting structure, including the frequency and quality of Board meetings and executive sessions of independent directors

 

  Board agenda planning, including agenda content, organization, and time allocation

 

 

Key Board Responsibilities

 

 

 

LOGO

 

 

 

  Communication with the CEO

 

  Knowledge of the Company

 

  Knowledge of and access to information regarding industry trends

 

  Strategic planning, including the process, format, and materials for the Board’s strategy review sessions

 

  Talent management and succession planning for the CEO and other senior management, including compensation decision-making process

 

 

Management Interactions and Board and Committee Materials

 

 

 

LOGO

 

 

 

  Board materials and management reporting, including the quality of materials

 

  Access to management, including members of the Corporate Risk function, and quality and effectiveness of those interactions

 

  Responsiveness of senior management and other staff to Board feedback

 

  Level and performance of staff and related support for Board meetings and functions

 

 

Tone at the Top

 

 

 

LOGO

 

 

 

  Board’s role in establishing the tone at the top

 

  Tone being set and embodied by senior management at the top of the organization and degree of absorption of the tone at all levels of the organization

 

 

Effectiveness of Risk Management and Compliance

 

 

 

LOGO

 

 

 

  Communications with management related to the Company’s risk tolerance, risk management, and controls

 

  Board oversight of risk management and control functions, including compliance and operational risk, and quality of risk management reporting to the Board

 

 

 


 

       2019 Proxy Statement       15


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Corporate Governance

 

 

Board Leadership Structure

 

 

 

LOGO

 

 

 

  Board leadership structure

 

  Ideal characteristics of an independent chair, and potential successors for that role

 

 

Individual Director’s Views and Preferences

 

 

 

LOGO

 

 

 

  Individual director’s views on her or her own role, performance, and contribution

 

  Identification of criteria in selecting new Board members

 

 

Training and Orientation

 

 

 

LOGO

 

 

 

  Form of director training and effectiveness of past training sessions and programs

 

  Specific areas in which the Board and committees would benefit from additional training or education

 

  Quality of the orientation program for new Board and committee members

 

 

Escalated Matters

 

 

 

LOGO

 

 

 

  Opportunities for enhancing Board practices of addressing escalated matters

 

 

Access to Third-Party Advisors

 

 

 

LOGO

 

 

 

  Board access to third-party advisors and consultants

 

 

Governance and best practices

 

 

 

LOGO

 

 

 

  Governance practices, including review of the Board’s Corporate Governance Guidelines

 

  Best practices for boards generally, including based on directors’ service on other boards

 

 


 

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Table of Contents

Corporate Governance

 

 

Our Investor Engagement Program

As part of our commitment to effective corporate governance practices, since 2010 we have had an investor outreach program with independent director participation to help us better understand the views of our investors on key corporate governance topics. In addition to engagement with our largest institutional investors, we have enhanced our engagement efforts with additional investors and stakeholders to hear their perspectives and help identify focus areas and priorities for the coming year. The constructive and candid feedback we receive from our investors and other stakeholders during these meetings is important and helps us inform our priorities, assess our progress, and enhance our corporate governance practices and disclosures each year. The following chart highlights our investor engagement program and process for considering the feedback we receive.

 

 

 

Board-led Engagement Program

 

  Independent director participation since 2010

 

  Following the 2018 annual meeting, our Chair and members of management considered the annual meeting voting results and continued engaging with institutional investors

 

  Our independent Chair held in-person engagement meetings and calls with institutional investors representing more than 35% of our outstanding shares

 

  We also held engagement meetings and calls with other investors and stakeholders, including upon their request

 

  Our independent Chair leads our external Stakeholder Advisory Council which was formed to provide our
Board and senior management with feedback on current and emerging issues

 

 

     

 

Year-Round Engagement Process

 

  Our engagement occurs year round

 

  Active outreach to institutional investors during the year as well as engagement meetings with investors and other stakeholders at their request to understand their priorities and concerns in the areas of corporate governance, executive compensation, sustainability and corporate responsibility, and other matters

 

  Continual review of our governance practices and framework in light of best practices, recent developments, and regulatory expectations

 

  Provide institutional investors with courtesy copies of periodic updates, including news of significant corporate governance and Board changes, as part of our ongoing engagement process

 

  Coordinated engagement efforts with our Stakeholder Relations group, which includes Investor Relations, Government Relations and Public Policy, Corporate Communications, Corporate Philanthropy and Community Relations, and Sustainability and Corporate Responsibility

 

 

 
       

 

Reporting and Evaluation of Investor Feedback

 

  Feedback from investor and other stakeholder engagement is summarized and shared with:

 

¡  the full Board

 

¡  the Board’s Governance and Nominating Committee, Human Resources Committee, and Corporate Responsibility Committee

 

¡  senior management

 

  Our Board conducts a comprehensive annual self-evaluation, which includes consideration of investor and other stakeholder feedback on various matters such as our annual say-on-pay vote, other annual meeting
voting results, and investor and stakeholder sentiment on various other matters

 

  Our Board reviews our governance practices annually, and more frequently when appropriate, and uses investor and other stakeholder feedback to identify
areas for potential enhancements to our policies, practices, and disclosures

 

 

     

 

Topics Discussed Since 2018 Annual Meeting

 

  Board skills and experience and Board matrix

 

  Board composition, diversity, size, and tenure

 

  Board oversight of risk, including committee oversight responsibilities

 

  Board-level engagement and oversight of management

 

  Recent changes in the Company’s senior leadership

 

  Company performance and progress, including the status of Company reviews of its business

 

  Regulatory relationships and status of satisfying consent order requirements

 

  Culture and team member engagement

 

  Executive compensation and compensation metrics

 

  Shareholder proposals

 

  ESG practices and reporting

 

 

 

 


 

       2019 Proxy Statement       17


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Corporate Governance

 

Demonstrated Track Record of Responsiveness to Investors and Other Stakeholders

Our Board and our Company value and consider the feedback we receive from our investors and other stakeholders and have consistently acted to enhance our governance practices and transparency through our disclosures in response to those perspectives.

 

LOGO

Governance Practices Enhanced Board composition, including qualifications, by electing an additional business operations director in Jan. 2019 Continued to implement formal and thoughtful Board and committee succession plans, including for the Chair of the Risk Committee Continued implementation of risk management framework, including enhanced reporting, management-level governance committee structure, and escalation processes in support of the Boards risk oversight Enhanced existing shareholder right to call a special meeting by reducing required ownership threshold from 25% to 20% of outstanding shares Continued Board refreshment process begun in 2017; six of seven standing Board committee chair roles rotated since 2017 Enhanced Corporate Governance Guidelines to more fully articulate the role of the Board and work it is doing to enhance governance and oversight practices Elected six new Board members and reconstituted the leadership and composition of key Board committees Launched external Stakeholder Advisory Council to provide feedback on current and emerging issues-Seven external experts and national thought leaders represent groups focused on consumer rights, fair lending, the environment, human rights, civil rights, and governance Adopted an over boarding policy applicable to the Companys directors which limits the number of boards on which our directors may serve to a total of 4 public company boards (total of 3 for public company CEOs), unless the GNC determines that such other board service would not impair the directors service to the Company Separated the roles of Chair and CEO Amended By-Laws to require that the Chair be an independent director Amended Corporate Governance Guidelines to reflect changes made in the Boards leadership structure and specify certain duties of the independent Chair Board took significant executive accountability actions in 2016 and early 2017, resulting in a total compensation impact of over $180 million Enhanced Transparency and Disclosures Published our Business Standards Report, which addresses actions our Company has taken -and continues to take - to improve our culture, make things right for customers who were harmed, reconstitute our organizational structure, and strengthen risk management and controls (https://www.wellsfargo.com/assets/pdf/ about/corporate/ business-standards-report.pdf) Enhanced Board experience matrix to include diversity information as self-identified by Board members Increased disclosure about our performance management program and compensation practices, including efforts and metrics to promote diversity and inclusion in our workforce Disclosed our Companys gender and racial/ethnic pay gaps in the U.S. on our website at http://stories.wf.com/ wells-fargo-releases-pay-equity-study-results/ Introduced Board qualifications and experience matrix disclosures in 2018 proxy statement, including definitions of qualifications and experience identified by the Board as important in light of our Companys strategy, risk profile, and risk appetite Significantly enhanced culture and human capital management disclosures in 2018 proxy statement Continued to enhanced disclosure about incentive compensation risk management program Increased environmental, social and governance (ESG) disclosures on our website at https://www. wellsfargo.com/about/investor-relations/ Added disclosure to our website relating to our commitment to gender and racial/ethnic pay equity, our annual pay equity analysis conducted by outside compensation experts, and oversight of our pay equity reviews by the Human Resources Committee Updated our Code of Ethics and Business Conduct to incorporate our standards related to our commitment on core ESG principles, such as supporting our communities, respecting human rights and protecting the environment Created online resources and a dedicated hotline (877-924-8697) to answer questions and address concerns for customers as part of our efforts to rebuild trust Disclosed significant executive accountability actions for certain of our executive officers and other members of senior management consistent with our commitment to consider disclosure of senior executive clawback actions

 


 

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Corporate Governance

 

 

Strong Independent Board Leadership

Our Board Leadership Structure

 

During 2016, taking into account feedback from our investors, our Board made changes in its leadership structure by:

 

  Separating the roles of Chair and CEO

 

  Amending our Company’s By-Laws and its Corporate Governance Guidelines to require that the Chair of the Board be independent

Our Board elected Elizabeth A. (“Betsy”) Duke, former member of the Federal Reserve Board of Governors, as independent Chair effective January 1, 2018. Ms. Duke

has a strong leadership background, is actively engaged as Chair on Board matters, and works closely with the CEO. She has extensive financial services and bank regulatory experience. Ms. Duke frequently interacts with Mr. Sloan and other members of management to provide her perspectives on important issues facing our Company and the informational needs of our Board. She also communicates with the chairs of each of the Board’s committees and subcommittees and with the other independent directors both inside and outside of the Board’s normal meeting schedule to discuss Board and Company issues as they arise.

 

 

LOGO

 

 

Elizabeth A. (“Betsy”) Duke

Independent Chair of Wells Fargo’s Board of Directors

 

 

  Member of Wells Fargo’s Board since January 2015

 

  First female Chair of a large U.S. financial institution

 

  Member of the Risk Committee, Governance and Nominating Committee, Credit Committee, and Finance Committee
  Former member of the Board of Governors of the Federal Reserve System

 

  Former teller and former community bank executive

 

  Consumer focus, including through her prior service as Chair of the Federal Reserve’s Committee on Consumer and Community Affairs
 

 

 

“Looking back on my first year as chair of the Wells Fargo Board of Directors, I am encouraged by the progress the Company and our Board have made as we build Wells Fargo for the future. Our Board has made significant changes to its leadership, composition, and governance practices informed by the Board’s self-evaluation process and engagement with shareholders and other stakeholders. Our new directors have brought important experience in several areas, including financial services, other highly regulated industries, and consumer brand management. We recognize that we have more work to do and are committed to meeting the expectations of the Company’s regulators and enhancing risk management and operational excellence, as we work to transform Wells Fargo.”

 

Annual Independent Chair Selection

Our Board’s Governance and Nominating Committee is responsible for periodically evaluating our Board’s leadership structure and, based on the recommendation of the GNC, our Board selects the Chair of the Board annually and may elect a Vice Chair to assist the Chair from among its members. Our Board believes that having strong independent Board leadership in the form of an independent Chair, with clearly defined authority and responsibilities shown in the chart below, provides enhanced independent leadership and oversight for our Company and our Board. The separation of the CEO and Chair positions allows Ms. Duke to focus on governance of our Board (including Board composition and the recruitment of new directors, Board meeting schedule and agenda setting, Board committee succession planning, Board committee responsibilities, managing the information flow and management reporting to the Board, and investor engagement and outreach on governance matters), and allows Mr. Sloan to focus his attention on our business and strategy, including restoring the trust of our customers, team members, and other stakeholders.

In addition to an independent Chair, our Board has a significant majority of independent directors (11 of the 12 director nominees are independent under the Director Independence Standards) and independent Board committees. James H. Quigley, Chair of the Audit and Examination Committee, serves as independent Chairman of Wells Fargo Bank, N.A., our Company’s principal banking subsidiary.

 


 

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Area of Responsibility

 

 

Authority and Responsibilities of Independent Board Chair

 

 

Board Effectiveness

 

 

 

  Promote the efficient and effective functioning of the Board

 

Board Agendas and Information

 

 

  Approving Board meeting agendas and schedules

 

  Working with committee chairs to have coordinated coverage of Board responsibilities

 

  Facilitating communication between the Board and senior management, including advising the CEO and other members of senior management of the Board’s informational needs and approving the types and forms of information sent to the Board

 

 

Board Meetings and Executive Sessions

 

 

  Presiding at meetings and executive sessions of the Board

 

  Calling and chairing special meetings of the Board and executive sessions or meetings of non-management or independent directors

 

 

Board Communications and External Stakeholders

 

 

  Serving as the principal liaison among the independent directors, and between the independent directors and the CEO and other members of senior management

 

  Facilitating effective communication between the Board and shareholders

 

  Facilitating the Board’s review and consideration of shareholder proposals

 

  Serving as an additional point of contact for the Company’s primary regulators

 

  Presiding over each meeting of shareholders

 

 

Board Composition and Membership

 

 

  Evaluating potential Board candidates and making director candidate recommendations to the GNC

 

  Advising on the membership of Board committees and the selection of committee chairs

 

  Working with committee chairs to oversee coordinated coverage of Board responsibilities

 

 

Advisory Role

 

 

 

  Serving as an advisor to the CEO

 

 

CEO Performance Evaluation

 

 

 

  Participating, along with other directors, in the performance evaluation of the CEO

 

 

Ethics

 

 

 

  Setting the ethical tone for the Board and reinforcing a strong ethical culture

 

 

Company Strategy

 

 

  Reinforcing the expectation for all Board members to stay informed about the strategy and performance of the Company

 

  Leading the Board’s review of the Company’s strategic initiatives and plans and discussing the implementation of those initiatives and plans with the CEO

 

 

External Advisors

 

 

 

  Recommending the retention of advisors or consultants who report directly to the Board

 

Although the CEO’s performance evaluation is led by the Chair of the HRC, the Chair of our Board also has an important role in the evaluation, which is a multi-step process involving, among other things, individual director feedback and Board discussions regarding the CEO’s performance and discussions with the CEO regarding his assessment of his own performance. Ms. Duke participates, along with other directors, in the CEO performance evaluation and in the Board’s review of management succession and development plans. Her participation in those processes helps her evaluate the most effective Board leadership structure for our Company. In addition, Ms. Duke’s participation in our Company’s investor engagement program, engagement with our regulators, and leadership role with our external Stakeholder Advisory Council as well as facilitation of our Board’s review and consideration of shareholder proposals provide her with valuable insight into the views of our investors and other stakeholders regarding our Company’s corporate governance practices, including its Board leadership structure. Our Board believes that these and the other activities of the independent Chair serve to enhance the independent leadership of our Board in order to provide robust oversight and promote overall Board effectiveness.

 


 

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Management Succession Planning and Development

A primary responsibility of our Board is identifying and developing executive talent at our Company, especially the CEO and other senior leaders of our Company. Continuity of excellent leadership at all levels of our Company is part of our Board’s mandate for delivering superior performance to shareholders. Toward that goal, the executive talent development and succession planning process is integrated into our Board’s annual activities.

Our Board has assigned to the HRC, as set forth in its charter, the responsibility to oversee our Company’s talent management and succession planning process, including CEO evaluation and succession planning. Our Corporate Governance Guidelines require that the CEO and management annually report to the HRC and our Board on succession planning (including plans in the event of an emergency) and management development. Our Board’s Corporate Governance Guidelines also require that the CEO and management provide the HRC and Board with an assessment of persons considered potential successors to certain senior management positions at least once each year.

Management and our Board take succession planning very seriously and while the Corporate Governance Guidelines require an annual review, the process for management development and succession planning occurs much more frequently.

 

 

LOGO

Summer HRC Annually Reviews Talent Management and Succession Planning The CEO and Human Resources executives collaborate with the HRC to prepare and evaluate management development and succession plans, and the HRC reports to the full Board on its reviews The HRC conducts an in-depth review of talent management and succession plans and provides input and feedback, typically in July of each year Fall Full Board Annually Reviews Talent Management and Succession Planning The full Board conducts an in-depth review of talent management and succession plans in executive session and provides input and feedback, typically in November of each year Winter Board Self-Evaluation Process Includes An Assessment of Talent Management and Succession Planning Processes As discussed under Comprehensive Annual Evaluation of Board Effectiveness, the Board assesses CEO and management talent development and succession planning processes, including diversity and inclusion, each year as part of its evaluation of the Boards effectiveness Ongoing Interactions Throughout the Year between Management, the HRC, our Chair, and our Board Management also regularly identifies high potential executives for additional responsibilities, new positions, promotions, or similar assignments to expose them to diverse operations within our Company, with the goal of developing well-rounded, experienced, and discerning senior leaders Identified individuals are often positioned to interact more frequently with our Board so that directors may gain familiarity with these executives as part of our talent management and succession planning process

Wells Fargo’s management changes over the last few years continue to reflect our thoughtful management succession planning process. We identify and develop a credible pipeline of leaders in support of our ongoing business needs, to promote the stability of our Company over time, and to reflect the communities we serve. We leverage ongoing talent and succession planning to make sure we have sufficient talent to meet the short-term and long-term needs of the Company. As part of our Board’s and management’s transformation efforts, our Company also identifies specific needs and hires external talent to strengthen our Company’s capabilities in various areas. For example, over the past year the Company has hired several new leaders, including our Chief Risk Officer, Head of Human Resources, Head of Technology, and Chief Auditor.

 


 

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Continuing to Enhance How We Think About Management Succession Planning

Our Board and senior management have continued to enhance our talent planning and succession program. Annually, the Board and its Human Resource Committee review succession plans to assess internal talent readiness for executive roles and associated development plans to support their readiness. Enhancements to the succession planning approach include:

 

 

Enhanced the CEO attributes used by the Board to evaluate potential candidates as part of CEO succession planning

 

 

Created Operating Committee (direct reports to our CEO) attributes used by management and the Board to evaluate potential candidates as part of Operating Committee succession planning

 

 

Added a new succession bench analysis process to ensure succession plans are appropriate and are not over-reliant on individual leaders across multiple benches

 

 

Enhanced the talent attributes used by management to calibrate talent on succession plans and expanded these attributes to include focus on risk management capabilities

 

 

Continued to review and seek diverse representation for our leadership benches and talent pools

 

 

Focused on developing our talent pipeline and providing experience-based development opportunities and solutions

 

 

Evaluated the need to augment succession plans with external talent as appropriate

 


 

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Board Composition

Board Succession Planning

Over the past two years, our Board’s succession planning focused primarily on the composition of our Board and its committees, upcoming retirements under our director retirement policy, succession plans for committee chairs and committee members, our commitment to Board diversity, and recruiting strategies for adding new directors. In its succession planning, the GNC and our Board consider the results of our Board’s annual self-evaluation, as well as other appropriate information, including the types of skills and experience desirable for future Board members and the needs of our Board and its committees at the time in light of the Company’s strategy and risk profile.

 

 

Thoughtful, Deliberate Board Refreshment Process. The Board’s refreshment actions reflect a thoughtful and deliberate process that was informed by our Company’s engagement with shareholders and other stakeholders as well as the Board’s annual self-evaluation and director nomination processes.

 

 

Appropriately Balance Experience and Perspectives While Ensuring an Orderly Transition. Our Board has taken care as part of its Board refreshment process to appropriately balance new perspectives and the experience of existing directors while undergoing an orderly transition of roles and responsibilities on the Board and its committees.

 

 

Importance of Board Diversity. In addition, our Board continues to focus on the importance of maintaining Board diversity (both gender and ethnic); three of the seven directors who joined our Board from 2017 to 2019 are women and three of those directors are ethnically diverse.

Director Tenure and Retirement Age Policies

 

 

In February 2018, our Board amended its Corporate Governance Guidelines to better reflect its recognition of the importance of periodic Board refreshment and maintaining an appropriate balance of tenure, experience, and perspectives on the Board.

 

 

The Board values the contributions of both newer perspectives as well as directors who have developed extensive experience and insight into the Company, and as a result does not believe arbitrary term limits are appropriate.

 

 

The Board believes that directors should not have an expectation of being renominated annually and that the Board’s annual self-evaluation is a key component of its director nomination process.

 

 

In connection with the Board’s annual self-evaluation and director nomination processes, the Board considers at least annually upcoming retirements under its director retirement policies, the average tenure and overall mix of individual director tenures of the Board, the overall mix of the diverse skills, knowledge, experience, and perspectives of directors, each individual director’s performance and contributions to the work of the Board and its committees, the personal circumstances and other time commitments of directors, along with other factors the Board deems appropriate.

Director Retirement Age of 72

 

 

Our Board established the retirement age of 72 for directors with the understanding that directors may not necessarily serve until their retirement age.

 

 

Our Board’s retirement age policy is intended to facilitate our Board’s recruitment of new directors with appropriate skills, experience, and backgrounds and provide for an orderly transition of leadership on our Board and its committees.

 


 

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Overall Board Composition and Size

The Board has made changes to its composition that resulted from a thoughtful process informed by the Board’s comprehensive self-evaluation and director nomination processes and feedback received from the Company’s engagement with shareholders and other stakeholders. As part of Board succession planning, the Board will seek to add new directors that complement the overall skills and capabilities of the Board in ways identified through the Board’s self-evaluation. Although the Board’s size may fluctuate in the near term as it recruits new directors, the Board expects that its size will settle over time toward the lower end of its recent historical range of 12 to 16 directors. As always, gender and ethnic diversity remain a priority for the Board in its director recruitment efforts.

 

 

LOGO

Financial Services 45% 5 of 11 Independent Director Nominees have Financial Services Experience Tenure of Independent Director Nominees* 2.7 Average Years of Tenure Financial Services Risk Experience On Risk Committee 57% 4 of 7 Members of Risk Committee have Large Financial institution Risk Management Experience * Based on completed years of service from date first elected to Board

 

 

 Board Composition Snapshot

 

 

11 of 12 (or 92%) Director nominees are independent

 

 

Board size is 12 and expected to settle over time toward the lower end of historical range of 12 to 16 directors

 

 

More than half of independent director nominees elected since 2017, enhancing financial services, risk management, information

security/cyber, technology, regulatory, human capital management, finance, consumer, business process and operations, and social responsibility experience on the Board

 

 

Highly qualified directors with a diverse mix of qualifications, skills, and experience consistent with the Company’s strategy, risk profile, and risk appetite

 

 

 

Current focus on recruitment of new directors to complement existing Board skills and experience in areas identified by the Board, including:

   Banking, bank regulatory, and financial services,

   Former CFO and/or accounting, and

   Technology and information security experience

 

 

 


 

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Board Qualifications and Experience

Minimum Qualifications

Our Board has identified the following minimum qualifications for its directors:

 

LOGO  

Character and Integrity

Must be an individual of the highest character and integrity

 

CEO / Leadership Experience

Demonstrated breadth and depth of management and/or leadership experience preferably in a senior leadership role, in a large or recognized organization or governmental entity

 

Financial Literacy or Other Relevant Professional or Business Experience

Financial literacy or other professional or business experience relevant to an understanding of our Company and its business

 

Independence and Constructive Collegiality

Must have a demonstrated ability to think and act independently as well as the ability to work constructively in a collegial environment

Our Board believes that CEO or other senior management and/or leadership experience provides our directors with substantial experience relevant to serving as a director of our Company, including in many of the areas discussed below that our Board views as important when evaluating director nominees. Our Board believes that each of our nominees satisfies our director qualification standards and during the course of their business and professional careers as a chief executive officer or other senior leader has acquired extensive executive management experience in these and other areas.

Additional Qualifications and Experience Identified by Our Board as Important to Our Company, Strategy, and Operations

The GNC and our Board desire that the Board as a whole has an appropriate balance of skills, knowledge, experience, and perspectives that are relevant to our Vision, Values & Goals. In addition to the minimum qualifications required for Board services under the Board’s Corporate Governance Guidelines, the following are additional qualifications and experience that the Board has previously identified through its annual self-evaluation process as desirable in light of Wells Fargo’s business, strategy, risk profile, and risk appetite.

Categories of Additional Qualifications/Experience and Their Relevance to Wells Fargo

 

       
LOGO  

Financial Services Industry

Experience in one or more of the Company’s specific financial services areas, including retail banking, wholesale banking, wealth and investment management, or global payments

  LOGO  

Corporate Governance

Experience or expertise in corporate governance matters, including through service as the executive or independent chair or lead director of a board of directors

LOGO  

Accounting, Financial Reporting

Experience as an accountant or auditor at a large accounting firm, chief financial officer, or other relevant experience in accounting and financial reporting

  LOGO  

Management Succession Planning

Experience or expertise in CEO and senior management succession planning, including through service as a current or former chief executive officer or president of a large organization

LOGO

 

 

Risk Management

Experience managing risks in a large organization, including specific types of risk (e.g., financial, cyber) or risks facing large financial institutions

 

LOGO

 

 

Environmental, Social, and Governance (ESG)

Experience in ESG matters, including as part of a business and managing corporate, environmental, and social responsibility issues as business imperatives

 


 

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Categories of Additional Qualifications/Experience and Their Relevance to Wells Fargo

 

LOGO  

Human Capital Management

Experience or expertise through a human resources leadership role in the management and development of human capital, including management of a large retail workforce, compensation, culture and other human capital issues

  LOGO  

Community Affairs

Experience in community affairs matters, including as part of a business and managing community relations and/or relationships with communities and other stakeholders

LOGO  

Strategic Planning, Business Development, Business Operations

Experience defining and driving strategic direction and growth and managing the operations of a business or large organization

  LOGO  

Government, Public Policy

Experience in governmental affairs and public policy matters, including as part of a business and/or through positions with government organizations and regulatory bodies

LOGO

 

 

Information Security, Cybersecurity, Technology

Experience or expertise in information security, data privacy, cybersecurity, or use of technology to facilitate business operations and customer service

 

LOGO

 

 

Regulatory

Experience in regulatory matters or affairs, including as part of a regulated financial services firm or other highly regulated industry

LOGO

 

 

Consumer, Marketing, Digital

Experience in a client services or consumer retail business, including mobile and digital consumer experiences, or marketing

 

LOGO

 

 

Global Perspective or International

Experience doing business internationally or focused on international issues and operations

 

LOGO

 

 

Legal

Experience acquired through a law degree and as a practicing attorney in understanding legal risks and obligations

       

 


 

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Board Qualifications and Experience Matrix

The following chart reflects areas of qualifications and experience that our Board views as important when evaluating director nominees. Additional information on the business experience and other skills and qualifications of each of our director nominees is included under Item 1 – Election of Directors. Each director also contributes other important skills, expertise, experience, and personal attributes to our Board that are not reflected in the chart below.

 

 

LOGO

Baker Clark Craver Duke Hewett James Morris Pujadas Quigley Sargent Sloan Vautrinot Total # Qualifications and Experience Financial Services 5Consumer Banking 2 Wholesale/Institutional 3 Other (e.g., Insurance, Retirement Services) 3 Accounting, Financial Reporting 3Prior Large Public Company CFO ExperienceII8Risk Management 4 Human Capital Management 5 Strategic Planning, Business Development, Business Operations 11 Information Security, Cybersecurity, Technology 4 Consumer, Marketing, Digital 4 Corporate Governance 9 Management Succession Planning 8 Environmental, Social, and Governance (ESG) 2 Community Affairs3 Government, Public Policy 4 Regulatory 7 Financial Services 6 Other Regulated Industry 2 Global Perspective, International 9 Legal 2 Additional Qualifications and Information Financial Services Risk Expertise Other Risk Expertise Audit Committee Financial Expert# of Other Public Company Boards1110111102202Board Tenure and Diversity Tenure (# completed years of service)** 10114010115223 Annual Meeting Retirement Year (Age 72 Retirement Policy)2021202620242025203720212035203420242028N/A2032Age at 2019 Annual Meeting706567665470565767635859GenderMFMFMMFFMMMMFAfrican-American/BlackIIAsian, Hawaiian, or Pacific Islander Latino/HispanicI Geographic Location FL FL CA VA CT AL NJ NY UT OH CA CO

 

  *   Diversity characteristics based on information self-identified by each director to the Company.
  **   Based on completed years of service from date first elected to Board.

 


 

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Importance of Board Diversity

Although the GNC does not have a separate policy specifically governing diversity, as described in the Corporate Governance Guidelines and its charter the GNC will consider, in identifying first-time candidates or nominees for director, and in evaluating individuals recommended by shareholders, the current composition of our Board in light of the diverse communities and geographies we serve and the interplay of the candidate’s or nominee’s experience, education, skills, background, gender, race, ethnicity, and other qualities and attributes with those of the other Board members. The GNC also incorporates this broad view of diversity into its director nomination process by taking into account all of the factors above, in addition to having a diverse candidate pool for each director search the Board undertakes, when evaluating and recommending director nominees to serve on our Board so that our Board’s composition as a whole appropriately reflects the current and anticipated needs of our Board and our Company.

In implementing its practice of considering diversity, the GNC may place more emphasis on attracting or retaining director nominees with certain specific skills or experience, such as industry, regulatory, operational, or financial expertise, depending on the circumstances and the composition of our Board at the time. Gender, race, and ethnic diversity also have been, and will continue to be, a priority for the GNC and our Board in its director nomination process because the GNC and our Board believe that it is essential that the composition of our Board appropriately reflects the diversity of our Company’s team members and the customers and communities they serve. The GNC considers the self-identified diversity characteristics of each director or potential director candidate.

The GNC believes that it has been successful in its efforts over the years to promote gender, race, and ethnic diversity on our Board. The GNC and our Board believe that our 12 director nominees for election at our 2019 annual meeting bring to our Board a variety of different backgrounds, skills, professional and industry experience, and other personal qualities, attributes, and perspectives that contribute to the overall diversity of our Board. The charts below show the diversity of our 12 director nominees. The Board expects to maintain its focus on the importance of Board diversity as well as desired qualifications and experience identified by the Board in future director recruitment efforts.

The GNC and our Board will continue to monitor the effectiveness of their practice of considering diversity through assessing the results of any new director search efforts, and through the GNC’s and our Board’s annual self-evaluation processes in which directors discuss and evaluate the composition and functioning of our Board and its committees.

 

LOGO

 


 

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Item 1 – Election of Directors

Our Board understands the critical role it plays in protecting and serving the interests of shareholders and meeting the expectations of our regulators and other stakeholders. This has been reflected in every change our Board has made over the past two years to its composition and practices, including many that reflect valuable feedback we have received from investors and other stakeholders. Our Board believes that it has the right mix of professional experiences and diverse perspectives to provide effective oversight and governance of our Company and management. See Board Composition for more information about our Board.

Director Nominees for Election

Below we provide information about our Board’s nominees, including their age and the month and year in which they first became a director of our Company, their business experience for at least the past five years, the names of publicly-held companies (other than our Company) where they currently serve as a director or served as a director during the past five years, and additional information about the specific experience, qualifications, skills, or attributes that led to our Board’s conclusion that each nominee should serve as a director of our Company.

Our Board has set 12 directors as the number to be elected at the annual meeting and has nominated the individuals named below. All nominees are currently directors of Wells Fargo & Company and have been previously elected by our shareholders, except for Wayne M. Hewett (elected by our Board effective January 7, 2019). Mr. Hewett is standing for election by our shareholders for the first time at the annual meeting. Karen B. Peetz, a current director, is not standing for re-election and will retire from our Board at the 2019 annual meeting. Our Board has determined that each nominee for election as a director at the annual meeting is an independent director, except for Timothy J. Sloan, as discussed under Director Independence. Directors are elected to hold office until our next annual meeting and until their successors are elected and qualified. All nominees have told us that they are willing to serve as directors. If any nominee is no longer a candidate for director at the annual meeting, the proxy holders will vote for the rest of the nominees and may vote for a substitute nominee in their discretion, or our Board may reduce its size. In addition, as described under Director Election Standard and Nomination Process, each of the nominees has tendered his or her resignation as a director in accordance with our Corporate Governance Guidelines to be effective only if he or she fails to receive the required vote for election to our Board and our Board accepts the resignation.

 

Item 1 – Election of Directors

Our Board recommends that you vote FOR each of the director nominees below for a one year term.

 

    

 


 

       2019 Proxy Statement       29


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LOGO

John D. Baker II

 

Age: 70

Director since: January 2009

Other Current Public Company Directorships: FRP Holdings, Inc.

Committees: Audit and Examination, Credit (Chair)

Mr. Baker has served as Executive Chairman since October 2010 and chief executive officer since March 2017 of FRP Holdings, Inc. (formerly Patriot Transportation Holding, Inc.), a real estate company located in Jacksonville, Florida. He served as President and Chief Executive Officer of Patriot from February 2008 until October 2010. He served as President from May 1989, and Chief Executive Officer from February 1996 of Florida Rock Industries, Inc., Jacksonville, Florida until November 2007. Mr. Baker also currently serves as a director of Blue Water Industries Holdings, LLC, a construction aggregates company located in Jacksonville, Florida, and a senior advisor for Brinkmere Capital Partners, LLC, a private equity firm.

Mr. Baker was formerly a director of Texas Industries, Inc. and Patriot Transportation Holding, Inc.

Qualifications and Experience

 

  Leadership, Governance, Succession Planning. As the CEO or chairman of three public companies during the past 20 years, including a company involved in real estate activities, Mr. Baker brings leadership, governance, and executive management experience to our Board.

 

  Strategic Planning, Business Development, Business Operations. Mr. Baker has led or founded several public and private companies doing business in the Southeast, including as the lead investor and senior advisor for a private equity firm, and his business development skills and deep knowledge of the business climate in the Southeast provide unique insight into the operating environment of some of our Company’s largest banking markets.

 

  Financial Acumen. Mr. Baker has extensive financial management expertise that he gained as a CEO or chairman and as a past member of the audit committees of two other public companies.

 

  Legal, Risk Management, and Other Capabilities. Mr. Baker has a law degree from the University of Florida School of Law, and his experience as a lawyer and former member of the board of a large public utility company also contribute important risk management, regulatory oversight, and public policy skills to our Board.

LOGO

Celeste A. Clark

 

Age: 65

Director since: January 2018

Other Current Public Company Directorships: The Hain Celestial Group, Inc.

Committees: Corporate Responsibility (Chair), Credit, Governance and Nominating Committee

Dr. Clark has served as a principal of Abraham Clark Consulting, LLC, Battle Creek, Michigan (health and regulatory policy consulting firm) since 2011. She was Sr. VP of Global Public Policy and External Relations from 2010 and Chief Sustainability Officer from 2008 of Kellogg Company, Battle Creek, Michigan, (food manufacturing company) until 2011.

Dr. Clark was formerly a director of AdvancePierre Foods Holdings, Inc., Diamond Foods, Inc., Mead Johnson Nutrition Company, and Omega Protein Corporation.

Qualifications and Experience

 

  Leadership, Consumer, Global Perspective. As a former member of the global executive management team at Kellogg Company, Dr. Clark has extensive executive management and consumer retail experience having led the development and implementation of health, nutrition, and regulatory science initiatives and worked across 180 global markets to ensure consistency in approach and implementation within regulatory guidelines.

 

  ESG, Community Affairs, Public Policy. She brings insights on social responsibility matters to our Board as a trustee of the W.K. Kellogg Foundation, one of the largest philanthropic foundations in the U.S., a former Sr. VP of Global Public Policy and External Relations and Chief Sustainability Officer at Kellogg, and President of the Kellogg Company 25-year Employees’ Fund, Inc.

 

  Corporate Governance. Dr. Clark’s experience as the former chair of the governance and nominating committees of AdvancePierre Foods and AAA Michigan (travel, road service, and insurance business) and as a current or former member of the governance and nominating committees of three other public companies contribute important corporate governance, risk management, and corporate strategy insights to our Board.

 

  She holds a Bachelor of Science degree from Southern University, a Master of Science from Iowa State University, and a Ph.D. from Michigan State University, and is an adjunct professor at Michigan State University.
 

 


 

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LOGO

Theodore F. Craver, Jr.

 

Age: 67

Director since: January 2018

Other Current Public Company Directorships: Duke Energy Corporation

Committees: Audit and Examination, Finance (Chair)

Mr. Craver served as President from April 2008 until May 2016 and Chairman and CEO from August 2008 until his retirement in September 2016 of Edison International (Edison), Rosemead, California (electric utility holding company). Prior to joining Edison in 1996, Mr. Craver served as executive vice president and corporate treasurer of First Interstate Bancorp (First Interstate), a predecessor company of Wells Fargo. He also served as chairman of both the electric utility trade group, Edison Electric Institute (June 2014 to June 2015), and the industry’s technology research arm, the Electric Power Research Institute (April 2011 to April 2012).

Mr. Craver was formerly a director of Edison and Health Net, Inc.

Qualifications and Experience

 

  Leadership, Regulatory, Risk Management, Information Security, Strategic Planning, Business Operations, Corporate Governance, Management Succession Planning. Mr. Craver has acquired extensive executive management, corporate governance, risk management, and information security experience in highly regulated industries from his service in senior management positions at Edison (a regulated utility company) and First Interstate.

 

  Financial Acumen, Financial Reporting. His service as the CFO and treasurer of Edison, corporate treasurer of First Interstate and CFO of First Interstate’s wholesale banking subsidiary, and audit committee chair of Duke Energy Corporation provide him with extensive financial experience.

 

  Financial Services. As a former corporate treasurer of First Interstate and a chief financial officer of First Interstate’s wholesale banking subsidiary with 23 years of experience in the banking industry, he brings an understanding of our industry and insights relevant to our businesses to our Board.

 

  Other Capabilities. Mr. Craver serves on the Federal Reserve Bank of San Francisco’s Economic Advisory Council. He earned a CERT certificate in Cybersecurity Oversight from the National Association of Corporate Directors.

 

  He holds a Bachelor of Arts degree and a Master of Business Administration degree from the University of Southern California.

LOGO

Elizabeth A. Duke

 

Age: 66

Director since: January 2015

Independent Chair

Other Current Public Company Directorships: None

Committees: Credit, Finance, Governance and Nominating, Risk

Ms. Duke has served as Chair of Wells Fargo’s Board of Directors since January 2018, and served as Vice Chair from October 2016 to December 2017. Ms. Duke served as a member of the Federal Reserve Board of Governors from August 2008 to August 2013, where she served as chair of the Federal Reserve’s Committee on Consumer and Community Affairs and as a member of its Committee on Bank Supervision and Regulation, Committee on Bank Affairs, and Committee on Board Affairs. From March 2014 to September 2015, she served as executive-in-residence at Old Dominion University, Norfolk, Virginia (higher education). Previously, she was chief operating officer of TowneBank from 2005 to 2008, and was an executive vice president at Wachovia Bank, N.A. (2004 to 2005), and at SouthTrust Bank (2001 to 2004), which was acquired by Wachovia in 2004. Ms. Duke also served as CEO of Bank of Tidewater, which was acquired by SouthTrust, and CFO of Bank of Virginia Beach.

Qualifications and Experience

 

  Leadership, Financial Services, Government, Regulatory, Risk Management, Corporate Governance, Public Policy. As a former member of the Federal Reserve Board of Governors, Ms. Duke has broad experience and knowledge of the U.S. financial system, financial regulation, and economic and public policy, and governance matters.

 

  Financial Acumen, Financial Services Risk Management, Consumer, Community Affairs. Ms. Duke’s service as a Federal Reserve Governor during a critical time for the U.S. economy and banking system and focus on consumer regulation and protection in that role provides her with experience identifying, assessing, and managing risk exposures of financial firms such as our Company, and a unique understanding of risks and opportunities that contribute important consumer, community affairs, and risk management experience to our Board.

 

  Leadership, Financial Services, Strategic Planning, Business Development, Business Operations. She also brings extensive financial services and financial management experience to our Board as a result of various senior leadership roles leading banking operations in markets where our Company does business.

 

  Ms. Duke has an M.B.A. from Old Dominion University.
 

 


 

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LOGO

Wayne M. Hewett

 

Age: 54

Director since: January 2019

Other Current Public Company Directorships: The Home Depot, Inc.

Committees: Corporate Responsibility, Human Resources, Risk

Mr. Hewett served as Chief Executive Officer of Klöckner Pentaplast Group, founded in Montabaur, Germany (packaging) from August 2015 to November 2017. He was President from February 2015 and a director from March 2015 of Platform Specialty Products Corporation, West Palm Beach, Florida (specialty chemicals) until August 2015. Mr. Hewett was President and Chief Executive Officer of Arysta LifeScience Corporation, Tokyo, Japan (crop protection and life sciences) from January 2010 until its acquisition by Platform Specialty Products Corporation in February 2015. Since March 2018, he has served as a senior advisor to Permira (private equity) and Non-Executive Chairman of DiversiTech Corporation (HVAC manufacturer and distributor), a portfolio company of the Permira Funds.

Mr. Hewett was formerly a director of Ingredion Incorporated and Platform Specialty Products Corporation.

Qualifications and Experience

 

  Leadership, Strategic Planning, Management Succession Planning, Global Perspective/International. As a former Chief Executive Officer and/or President of three companies and as a former executive at General Electric Company (1986 – 2007), Mr. Hewett has extensive executive management experience. His service as Chief Executive Officer of two companies based in Europe and Asia Pacific and as an executive with oversight of international businesses at General Electric Company results in Mr. Hewett bringing a global perspective to oversight of the Company’s businesses.

 

  Business Operations, Risk Management. Mr. Hewett brings insights on business operations and risk management through his senior management experience, including VP, Supply Chain & Operations at General Electric Company, and roles leading technologically sophisticated businesses, including at Klöckner Pentaplast Group, Platform Specialty Products Corporation, Arysta LifeScience Corporation, and General Electric Company where he was President and CEO, GE Advanced Materials, and President and CEO, GE Silicones.

 

  Financial Acumen, Corporate Governance. As a current director, and audit committee member, of The Home Depot, Inc., as well as a former board member of other public company boards, Mr. Hewett has insight into corporate governance, financial, and strategic matters relevant to the Company and its businesses.

 

  Mr. Hewett has Master of Science and Bachelor of Science degrees in Industrial Engineering from Stanford University.

LOGO

Donald M. James

 

Age: 70

Director since: January 2009

Other Current Public Company Directorships: The Southern Company

Committees: Finance, Governance and Nominating (Chair), Human Resources

Mr. James served as Chairman and a director from 1997 until December 2015 and Chief Executive Officer from 1997 until July 2014 of Vulcan Materials Company, Birmingham, Alabama (construction materials).

Mr. James was formerly a director of Vulcan Materials Company.

Qualifications and Experience

 

  Leadership, Strategic Planning, Business Operations, Legal. Mr. James brings extensive leadership and executive management experience to our Board as the former chairman and CEO of Vulcan Materials Company where he also served in various senior management positions, including as president, chief operating officer, and general counsel.

 

  Legal, Regulatory. Before joining Vulcan, Mr. James practiced law as a partner in a large law firm in Alabama and was a member of the firm’s Executive Committee, which also provides him with additional perspective in dealing with complex legal, regulatory, and risk matters affecting our Company.

 

  Financial Acumen, Regulatory, Corporate Governance, Risk Management, Management Succession Planning. As a former board member of Wachovia, SouthTrust Corporation (which was acquired by Wachovia), and Protective Life Corporation, Mr. James has substantial knowledge and experience in the banking and financial services industry, and his service as Lead Director and chairman of both the Governance Committee and Finance Committee of The Southern Company, a large public utility company, also brings important corporate governance, regulatory oversight, succession planning, financial management and business strategy experience to our Board. Mr. James’ service as the chief executive officer of a public company provides him with an important perspective on risk management and corporate governance.

 

  Legal. Mr. James has an M.B.A. from the University of Alabama and a law degree from the University of Virginia.
 

 


 

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LOGO

Maria R. Morris

 

Age: 56

Director since: January 2018

Other Current Public Company Directorships: S&P Global Inc.

Committees: Human Resources, Risk (Chair)

Ms. Morris served as executive vice president and head of the Global Employee Benefits business from 2011 and interim head of the U.S. Business from 2016 until July 2017 of MetLife, Inc. (MetLife), New York, New York (global provider of life insurance, annuities, employee benefits, and asset management). She was Chief Marketing Officer from April 2014 until January 2015 and executive vice president of Technology and Operations from January 2008 to September 2011.

Qualifications and Experience

 

  Leadership, Financial Services, Regulatory, Global Perspective/International. As a result of her 33-year career with MetLife, including service as the head of the Global Employee Benefits business and interim head of the U.S. Business, with responsibility for MetLife’s U.S. business and employee benefits business in more than 40 countries, including its relationships with multinational companies and distribution relationships with financial institutions, Ms. Morris brings extensive executive management and leadership experience at a large financial institution to our Board.

 

  Financial Services Risk Management, Global Perspective/International. Ms. Morris’ experience in risk management, retail, and international matters, including addressing prior sales practices issues in the insurance industry, at a large financial institution adds an important perspective to our Board. Her service as chair of the audit committee of S&P Global Inc. provides her with additional risk management experience in the financial services industry.

 

  Technology, Business Operations, Consumer, Marketing, Human Capital Management. Her service as MetLife’s head of Global Technology and Operations and Chief Marketing Officer provides her with valuable insights into technology, operations, and marketing relevant to our industry and our businesses. Her operations and integration experience, including oversight of the successful integration of MetLife’s acquisition of American Life Insurance Company, provides her with a unique human capital management perspective.

 

  She holds a Bachelor of Arts degree from Franklin & Marshall College.

LOGO

Juan A. Pujadas

 

Age: 57

Director since: September 2017

Other Current Public Company Directorships: None

Committees: Credit, Finance, Risk

Mr. Pujadas served as vice chairman, Global Advisory Services of PricewaterhouseCoopers International Limited, London, United Kingdom (audit, financial advisory, risk management, tax, and consulting, the PricewaterhouseCoopers global network), from 2008 until his retirement in June 2016. He served as the leader of the U.S. Advisory practice of PricewaterhouseCoopers LLP (PWC), the U.S. member firm of PricewaterhouseCoopers International Limited (PWCIL), from 2003 to 2009.

Qualifications and Experience

 

  Leadership, Financial Services, Financial Services Risk Management, Regulatory, Business Operations. Mr. Pujadas brings extensive executive management experience and expertise in risk management and the financial services industry to our Board as a result of his service in a wide range of leadership activities at PWC and PWCIL, including as vice chair, Global Advisory Services, leader of the U.S. Advisory practice, managing partner for Strategy and leader of the Global Risk Management Solutions practice for the Americas.

 

  Information Security, Technology. His experience as a principal in PWC’s financial services industry practice provides him with an important perspective on risk management, information security, and technology in the financial services industry.

 

  Financial Services Risk Management, Global Perspective/International. Mr. Pujadas brings further international experience in the financial services industry and insight into financial risk management to our Board as a result of his service as chief risk officer of Santander Investment, the international investment banking arm of Banco Santander from 1995 to 1998 and his service as a member of the executive committee of Santander Investment and the management committee of the commercial banking division of Banco Santander.

 

  Technology, Other Capabilities. He holds a Bachelor of Science in Economics in Finance and Bachelor of Applied Science in Applied Science/Technology, with a concentration in Computer Science, from the University of Pennsylvania.
 

 


 

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LOGO

James H. Quigley

 

Age: 67

Director since: October 2013

Other Current Public Company Directorships: Hess Corporation, Merrimack Pharmaceuticals, Inc.

Committees: Audit and Examination (Chair), Risk

Mr. Quigley served as senior partner of Deloitte LLP, New York, New York (audit, financial advisory, risk management, tax, and consulting) from June 2011 until his retirement in June 2012, when he was named CEO Emeritus. Prior to his retirement, he served as CEO of Deloitte Touche Tohmatsu Limited (DTTL, the Deloitte global network) from June 2007 to June 2011, and as CEO of Deloitte LLP, the U.S. member firm of DTTL, from 2003 until 2007.

Qualifications and Experience

 

  Leadership, Accounting, Financial Reporting, Risk Management. Mr. Quigley brings extensive leadership, accounting and financial reporting, auditing, and risk management experience to our Board. He served Deloitte for over 35 years in a wide range of leadership positions, including as CEO, and provided accounting, financial advisory, and consulting services to many of Deloitte’s leading clients in a range of industries.

 

  Global Perspective/International, Strategic Planning, Regulatory, Corporate Governance, Management Succession Planning. Mr. Quigley’s broad management experience running a global firm, as well as his experience advising diverse multinational companies operating in complex environments, provides a key perspective on business operations, strategic planning, risk, regulatory, and corporate governance matters. His service as a former trustee of the International Financial Reporting Standards Foundation and a former member of the Board of Trustees of The German Marshall Fund of the United States also provides valuable insight on international business affairs.

 

  Corporate Governance. Mr. Quigley’s service as the non-executive chairman and a director of Hess Corporation provides additional corporate governance insights.

 

  Accounting, Financial Reporting, Public Policy. He previously was a member of the U.S. Securities and Exchange Commission Advisory Committee on Improvements to Financial Reporting and numerous committees of the American Institute of Certified Public Accountants.

 

  He earned a Bachelor of Science degree and honorary Doctorate of Business from Utah State University.

LOGO

Ronald L. Sargent

 

Age: 63

Director since: February 2017

Other Current Public Company Directorships: Five Below, Inc., The Kroger Co.

Committees: Audit and Examination, Corporate Responsibility, Governance and Nominating, Human Resources (Chair)

Mr. Sargent served as Chairman from March 2005 until January 2017 and Chief Executive Officer from February 2002 until June 2016 of Staples, Inc., Framingham, Massachusetts (business products retailer).

Mr. Sargent was formerly a director of Staples, Inc.

Qualifications and Experience

 

  Leadership, Corporate Governance, Management Succession Planning, Consumer, Marketing. As the former chairman and CEO of Staples, Inc. and as the Lead Director of The Kroger Co., Mr. Sargent brings leadership, executive management, corporate governance, and consumer retail and marketing experience to our Board.

 

  Marketing, Digital, Business Operations. He has over 35 years of retail experience and brings significant insight related to the transition toward more online and digital customer experiences.

 

  Human Capital Management, Global Perspective/ International. His experience relating to the management of a large global workforce serving customers globally through a variety of channels is beneficial to our Company in light of our large workforce and diversified business model.

 

  Financial Acumen, Strategic Planning. Mr. Sargent brings to our Board finance and business strategy experience as a result of his service at Staples and as the former chair of the audit committee of The Kroger Co.

 

  Consumer, Public Policy. As a current member of Kroger’s public responsibilities committee, he also adds a perspective on public and social policy issues facing a large consumer retail business.

 

  Mr. Sargent has an M.B.A. from Harvard Business School.
 

 


 

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LOGO

Timothy J. Sloan

 

Age: 58

Director since: October 2016

Other Current Public Company Directorships: None

Mr. Sloan has served as our Company’s Chief Executive Officer and a director since October 2016, and President since November 2015. He also served as our Chief Operating Officer from November 2015 to October 2016, Senior Executive Vice President (Wholesale Banking) from May 2014 to November 2015, and our Senior Executive Vice President and Chief Financial Officer from February 2011 to May 2014.

Mr. Sloan was formerly a director of California Resources Corporation.

Qualifications and Experience

 

  Leadership, Financial Services, Regulatory, Strategic Planning, Consumer, Digital. Mr. Sloan has served with our Company or its predecessors for 31 years in a variety of management and senior management positions and he brings to our Board tremendous experience and knowledge regarding the financial services industry, the regulatory environment for financial services companies, and our Company’s Consumer and Wholesale businesses.

 

  Financial Reporting, Business Operations, Global Perspective, Human Capital Management, Strategic Planning. He has extensive leadership, financial, business strategy, and business operations experience, including through his prior roles as our Company’s Chief Financial Officer with responsibility for our financial management functions including controllers, financial reporting, asset liability management, treasury, investor relations, and investment portfolios; our Chief Operating Officer with responsibility for the operations of our four main business groups; and our Chief Administrative Officer with responsibility for managing Corporate Communications, Corporate Social Responsibility, Enterprise Marketing, Government Relations, and Corporate Human Resources.

 

  Risk Management, Management Succession Planning. Mr. Sloan’s service as our Company’s Chief Executive Officer and in other senior management positions, provide him with extensive risk management experience relevant to the Company’s industry and businesses, as well as extensive experience in management succession planning.

 

  Mr. Sloan has an M.B.A. in finance and accounting from the University of Michigan.

LOGO

Suzanne M. Vautrinot

 

Age: 59

Director since: February 2015

Other Current Public Company Directorships: Ecolab Inc., Symantec Corporation

Committees: Corporate Responsibility, Credit, Risk

Ms. Vautrinot has served as President of Kilovolt Consulting Inc., Colorado Springs, Colorado (a cyber security strategy and technology consulting firm) since October 2013. Ms. Vautrinot retired from the United States Air Force in October 2013 after 31 years of service. During her distinguished career with the United States Air Force, she served in a number of leadership positions including as Major General and Commander, 24th Air Force, Air Forces Cyber and Air Force Network Operations from April 2011 to October 2013, Special Assistant to the Vice Chief of Staff of the United States Air Force in Washington, D.C. from December 2010 to April 2011, Director of Plans and Policy, U.S. Cyber Command from May 2010 to December 2010 and Deputy Commander, Network Warfare, U.S. Strategic Command from June 2008 to December 2010, and Commander, Air Force Recruiting Service from July 2006 to June 2008. She has been awarded numerous medals and commendations, including the Defense Superior Service Medal and Distinguished Service Medal.

Qualifications and Experience

 

  Leadership, Cybersecurity, Risk Management, Government, Business Operations. As a result of more than 30 years of service in various leadership and command roles in the United States Air Force, Ms. Vautrinot brings extensive space and cyber technology and operations expertise to our Board at a time when protecting financial institutions and the financial system from cyber threats is a top priority.

 

  Global Perspective/International, Cybersecurity, Technology, Strategic Planning. In addition to her vast cyber expertise, Ms. Vautrinot has led large, complex, and global organizations, which brings operational, strategic, and innovative technology skills to our Board. She retired as a Major General and Commander, 24th Air Force, where she oversaw a multi-billion dollar cyber enterprise responsible for operating, extending, maintaining, and defending the Air Force portion of the Department of Defense global network.

 

  Human Capital Management, Public Policy. As Commander, 24th Air Force, she led a workforce unit of approximately 14,000 military, civilian, and contractor personnel, which along with her other leadership roles and assignments in the United States Air Force, provides her with significant planning and policy, strategic security, and workforce development expertise.

 

  Technology and Other Capabilities. She has a Bachelor of Science from the United States Air Force Academy, a Master of Science in systems management from the University of Southern California, and was a National Security Fellow at the John F. Kennedy School of Government at Harvard University. Ms. Vautrinot was elected a member of the National Academy of Engineering in 2017.
 

 


 

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Director Election Standard and Nomination Process

Director Election Standard

Our By-Laws provide that directors will be elected using a majority vote standard in an uncontested director election (i.e., an election where, as of the record date, the only nominees are those nominated by our Board, such as at this meeting). Under this standard, a nominee for director will be elected to our Board if the votes cast for the nominee exceed the votes cast against the nominee. However, directors will be elected by a plurality of the votes cast in a contested election.

Under Delaware law, directors continue in office until their successors are elected and qualified or until their earlier resignation or removal. Our Corporate Governance Guidelines provide that our Board will nominate for election and appoint to fill Board vacancies only those candidates who have tendered or agreed to tender an advance, irrevocable resignation that would become effective upon their failure to receive the required vote for election and Board acceptance of the tendered resignation. Each director nominee named in this proxy statement has tendered an irrevocable resignation as a director in accordance with our Corporate Governance Guidelines, which resignation will become effective if he or she fails to receive the required vote for election at the annual meeting and our Board accepts his or her resignation.

Our Corporate Governance Guidelines also provide that the GNC will consider the tendered resignation of a director who fails to receive the required number of votes for election, as well as any other offer to resign that is conditioned upon Board acceptance, and recommend to our Board whether or not to accept such resignation. The GNC, in deciding what action to recommend, and our Board, in deciding what action to take, may consider any factors they deem relevant. The director whose resignation is under consideration will abstain from participating in any decision of the GNC or our Board regarding such resignation. If our Board does not accept the resignation, the director will continue to serve until his or her successor is elected and qualified. Our Board will publicly disclose its decision on the resignation within 90 days after certification of the voting results.

Director Nomination Process

GNC Leadership of the Director Nomination Process

The GNC is responsible for leading the director nomination process, which includes identifying, evaluating, and recommending for nomination candidates for election as new directors and incumbent directors, regardless of who nominates a candidate for consideration. The goal of the GNC’s nominating process is to assist our Board in attracting and retaining competent individuals with the requisite leadership, executive management, financial, industry, and other expertise who will act as directors in the best interests of our Company and its shareholders. The GNC regularly reviews the composition of our Board in light of its understanding of the backgrounds, industry, professional experience, personal qualities and attributes, and various geographic and demographic communities represented by current members. As discussed above, the GNC also oversees our Board’s self-evaluation process.

Identification and Assessment of Director Candidates

The GNC identifies potential candidates for first-time nomination as a director through various sources, including recommendations it receives from the following:

 

 

Current and former Board members,

 

 

Third-party search firms,

 

 

Shareholders and other stakeholders, and

 

 

Contacts in the communities we serve.

The GNC has the authority to engage a third party search firm to identify and provide information on potential candidates. A key objective of the GNC in connection with its identification of potential director candidates is to use multiple sources and actively seek out qualified women and ethnically diverse candidates in order to have a diverse candidate pool for each search the Board undertakes.

Wayne M. Hewett, who became a director in January 2019, was identified and recommended to the GNC by a third-party search firm retained by the GNC. In addition to identifying and providing information on a number of potential director candidates, the third party search firm reviewed and provided information about Mr. Hewett for review by the GNC and our Board.

 


 

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When the GNC has identified a potential new director nominee, it obtains publicly available information on the background of the potential nominee to make an initial assessment of the candidate in light of the following factors:

 

 

Whether the individual meets our Board-approved minimum qualifications for director nominees described under Board Qualifications and Experience;

 

 

Whether there are any apparent conflicts of interest in the individual serving on our Board; and

 

 

Whether the individual would be considered independent under our Director Independence Standards, which are described under Director Independence.

In addition, as discussed under Comprehensive Annual Evaluation of Board Effectiveness, the GNC considers the results of the Board’s annual self-evaluation, including the individual contributions of directors to the work of the Board and its committees, in connection with its determination to nominate existing directors for election at each annual meeting of shareholders.

The GNC determines, in its sole discretion after considering all factors it considers appropriate, whether a potential new director nominee meets the Board’s minimum qualifications and also considers the composition of the entire Board taking into account the particular qualifications, skills, experience, and attributes that our Board believes are important to our Company such as those described under Board Qualifications and Experience.

If a candidate passes this initial review, the GNC arranges introductory meetings with the candidate and our Chair, the GNC Chair, and the CEO to discuss the candidate’s background and determine the candidate’s interest in serving on our Board. If determined appropriate by the Chair and GNC Chair and if the candidate is interested in serving on our Board, the GNC arranges additional meetings with members of the GNC and other members of our Board. The candidate also may meet with Company executives, including as part of the candidate’s consideration of potentially joining our Board. If our Board and the candidate are both still interested in proceeding, the candidate provides us additional information for use in determining whether the candidate satisfies the applicable requirements of our Corporate Governance Guidelines, Code of Ethics and Business Conduct, and any other rules, regulations, or policies applicable to members of our Board and its committees and for making any required disclosures in our proxy statement. Assuming a satisfactory conclusion to the process outlined above, the GNC then presents the candidate’s name for approval by our Board or for nomination for approval by the shareholders at the next shareholders’ meeting, as applicable.

Board Nomination Process

 

 

LOGO

1. Evaluation of Board Composition The GNC and the Board evaluate Board composition annually and identify skills, experience, and capabilities desirable for new directors in light of the Companys business and strategy 2. Identification of Diverse Pool of Candidates Identification of a diverse pool of potential director candidates using multiple sources, including a third party search firm and input from stakeholders 3. Assessment of and Meetings with Potential Candidates Evaluation and assessment of candidate interest, minimum qualifications, conflicts, independence, background and other information Members of the GNC and other Board members meet with qualified candidates 4. Recommendation of Potential Director for Approval GNC recommends potential directors to the Board for approval Shareholders vote on nominees at our annual meeting

Process for Shareholders to Recommend Individuals for Consideration by the GNC

The GNC will consider an individual recommended by one of our shareholders for nomination as a new director. In order for the GNC to consider a shareholder-recommended nominee for election as a director, the shareholder must submit the name of the proposed nominee, in writing, to our Corporate Secretary at: Wells Fargo & Company, MAC# D1130-117, 301 South Tryon Street, 11th Floor, Charlotte, North Carolina 28282. All submissions must include the following information:

 

 

The shareholder’s name and address and proof of the number of shares of our common stock he or she beneficially owns;

 

 

The name of the proposed nominee and the number of shares of our common stock he or she beneficially owns;

 


 

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Sufficient information about the nominee’s experience and qualifications for the GNC to make a determination whether the individual would meet the minimum qualifications for directors; and

 

 

Such individual’s written consent to serve as a director of our Company, if elected.

Our Corporate Secretary will present all shareholder-recommended nominees to the GNC for its consideration. The GNC has the right to request, and the shareholder will be required to provide, any additional information with respect to the shareholder-recommended nominee as the GNC may deem appropriate or desirable to evaluate the proposed nominee in accordance with the nomination process described above.

 

Communicating with our Board

Shareholders and other interested parties may communicate with our Board, including our Board’s Chair or our non-employee or independent directors as a group, in the following ways:

 

   

Sending an e-mail to BoardCommunications@wellsfargo.com, or

 

 

   

Sending a letter to Wells Fargo & Company, P.O. Box 63750, San Francisco, California 94163.

 

Additional information about communicating with our directors and our Board’s process for reviewing communications sent to it or its members is provided on our website at https://www.wellsfargo.com/about/corporate/governance.

Director Orientation Process and Continuing Education

New Director Orientation

All new directors on our Board receive an orientation to the Company and training that is individually tailored, taking into account the director’s experience, background, education and committee assignments. Our new director orientation program is led by members of senior management, in consultation with the Chair of our Board and each of our new directors, and covers a review of our business groups, strategic plans, financial statements and policies, risk management framework and significant risks, regulatory matters, our internal and external auditors, corporate governance and key policies and practices (including our Code of Ethics and Business Conduct), as well as the roles and responsibilities of our directors. Orientation sessions are typically held in-person and also may include specific site visits.

Ongoing Director Training

The Board and its committees participate in and receive various forms of training and education throughout the year, including business update sessions; management presentations on the Company’s businesses, services, and products; and information on industry trends, regulatory developments, best practices, and emerging risks in the financial services industry. Other educational and reference materials on governance, regulatory, risk, and other relevant topics are regularly included in Board and committee meeting materials and maintained in an electronic library available to directors.

Continuing Director Education

We also encourage our directors to attend outside director and other continuing education programs and make available to directors information on director education programs that might be of interest on developments in our industry, corporate governance, regulatory requirements and expectations, the economic environment, or other matters relevant to their duties as a director of our Company.

Director Independence

Our Corporate Governance Guidelines provide that a significant majority of the directors on our Board, and all members of the Audit and Examination Committee, Governance and Nominating Committee, Human Resources Committee, and Risk Committee must be independent under applicable independence standards. Each year our Board affirmatively determines the independence of each director and each nominee for election as a director. Under New York Stock Exchange (NYSE) rules, in order for a director to be considered independent, our Board must determine that the director has no material relationship with our Company (either directly or as a partner, shareholder, or officer of an organization that has a relationship with our Company). To assist our Board in making its independence determinations, our Board adopted the Director Independence Standards appended to our Corporate Governance Guidelines. These Director Independence Standards consist of the NYSE’s “bright line” standards of independence as well as additional standards, known as categorical standards of independence, adopted by our Board. The Director Independence Standards are available on our website at: https://www.wellsfargo.com/about/corporate/governance.

Based on the Director Independence Standards, our Board considered information in early 2019 regarding banking and financial services, commercial, charitable, familial, and other relationships between each director, his or her respective immediate family members, and/or certain entities affiliated with such directors and immediate family members, on the

 


 

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one hand, and our Company, on the other, to determine the director’s independence. After reviewing the information presented to it and considering the recommendation of the GNC, our Board determined that, except for Timothy J. Sloan, who is a Wells Fargo employee, all current directors and director nominees (John D. Baker II, Celeste A. Clark, Theodore F. Craver, Jr., Elizabeth A. Duke, Wayne M. Hewett, Donald M. James, Maria R. Morris, Karen B. Peetz, Juan A. Pujadas, James H. Quigley, Ronald L. Sargent, and Suzanne M. Vautrinot) are independent under the Director Independence Standards, including the NYSE “bright line” standards of independence. Ms. Peetz, a current director, is not standing for re-election and will retire from our Board at the 2019 annual meeting. Our Board determined, therefore, that 11 of our Board’s 12 director nominees are independent. The Board previously determined that each of John S. Chen, Lloyd H. Dean, Enrique Hernandez, Jr., and Federico F. Peña was an independent director prior to their retirement from our Board in April 2018.

In connection with making its independence determinations, our Board considered the following relationships, as well as the relationships with certain directors described under Related Person Transactions, under the Director Independence Standards and determined that all of these relationships satisfied the NYSE “bright line” standards of independence and were immaterial under our Board’s categorical standards of independence:

 

   

Banking and

Financial

Services

Relationships

  

Our Company’s banking and other subsidiaries had ordinary course banking and financial services relationships in 2018 with certain of our directors, some of their immediate family members, and/or certain entities affiliated with such directors and their immediate family members, all of which were on substantially the same terms as those available at the time for comparable transactions with persons not affiliated with our Company and complied with applicable banking laws.

 

Business

Relationships

  

The spouse of a sibling of Wayne M. Hewett is affiliated with an entity which has ordinary course business relationships with the Company. The aggregate amount of payments made by our Company to this entity did not exceed 1% of that entity’s or our Company’s 2018 consolidated gross revenues.

 

Other

Relationships

  

Elizabeth A. Duke has outstanding pension and supplemental retirement plan balances with an aggregate actuarial present value of approximately $157,000 earned from her prior employment with SouthTrust Corporation and its successor, Wachovia Corporation, which employment ended in 2005. Our Company assumed these pre-existing obligations under the applicable plans following the Wachovia merger at the end of 2008.

 

Theodore F. Craver, Jr. has an outstanding pension balance with an aggregate actuarial present value of approximately $478,000 earned from his prior employment with First Interstate Bancorp, which employment ended when First Interstate was acquired by legacy Wells Fargo in April 1996.

 

No additional service-based contributions or accruals will be made to any of these plan balances. Payment of the plan balances is not conditioned on any future service or performance by Ms. Duke or Mr. Craver and are currently being made in accordance with the applicable plan documents.

 

 


 

       2019 Proxy Statement       39


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Corporate Governance

 

 

Our Board and its Committees

Board and Committee Meetings; Annual Meeting Attendance

Directors are expected to attend all Board meetings and meetings of committees on which they serve. Directors also are expected to attend each annual shareholders’ meeting. All of our current directors, with the exception of Wayne M. Hewett who joined our Board in 2019, attended our Company’s 2018 annual shareholders’ meeting.

Our Board held 15 meetings during 2018. Attendance by our Board’s current directors at meetings of our Board and its committees (including subcommittees) averaged 97.23% during 2018. Each current director who served as a director during 2018 attended at least 75% of the total number of 2018 meetings of our Board and committees on which he or she served. Our Board met in executive session without management present during 7 of its 2018 meetings. During 2018, our independent Chair, Elizabeth A. Duke, chaired each of the executive sessions of the non-management and independent directors.

Our Board’s Role in Risk Oversight

Wells Fargo manages a variety of risks that can significantly affect our financial performance and our ability to meet the expectations of our customers, shareholders, regulators, and other stakeholders. We operate under a Board approved risk management framework which outlines our company-wide approach to risk management and oversight and describes the structures and practices employed to manage current and emerging risks inherent to Wells Fargo. We believe that enhancements made during 2018 to our risk management framework transform and clarify our risk management approach by emphasizing the role of risk management when setting corporate strategy and by further rationalizing and integrating certain risk management organizational, governance, and reporting practices.

Risk Management Framework

Our risk management framework defines how we manage risk in a comprehensive, integrated, and consistent manner and lays out our vision for the risk management of the organization. It reinforces each team member’s personal accountability for risk management and is built on a foundation that begins with a deep understanding of the Company’s processes, risks, and controls. Our risk management framework also supports members of senior management in achieving the Company’s strategic objectives and priorities, and it supports the Board as it carries out its risk oversight responsibilities.

The risk management framework consists of three lines of defense: (1) the front line which consists of Wells Fargo’s risk-generating activities, including all activities of its four primary business groups (Consumer Banking; Wholesale Banking; Wealth and Investment Management; and Payments, Virtual Solutions, and Innovation) and certain activities of its enterprise functions (Human Resources, Enterprise Finance, Technology, Legal Department, Corporate Risk, Stakeholder Relations, and Wells Fargo Audit Services); (2) independent risk management, which consists of our Corporate Risk function and is led by our Chief Risk Officer who reports to the Board’s Risk Committee; and (3) internal audit, which is Wells Fargo Audit Services and is led by our Chief Auditor who reports to the Board’s Audit and Examination Committee. In addition to the three lines of defense, our risk management framework includes enterprise control activities, which are certain specialized activities performed within centralized enterprise functions (such as Human Resources and the Legal Department) with a focus on controlling specific risks.

 


 

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Key elements of our risk management framework include:

 

  A strong culture that emphasizes each team member’s ownership and understanding of risk. We want to cultivate an environment that expects and promotes robust communication and cooperation among the three lines of defense and supports identifying, escalating, and addressing current and emerging risk issues.

 

  A company-wide statement of risk appetite that guides business and risk leaders as they manage risk on a daily basis. The company-wide statement of risk appetite describes the nature and magnitude of risk that the Company is willing to assume in pursuit of its business and strategic objectives, consistent with capital, liquidity, and other regulatory requirements.

 

  A risk management governance structure, including escalation requirements and a committee structure that helps provide comprehensive oversight of the risks we face.

 

  A company-wide risk inventory that promotes a standardized and systematic process to identify and quantify risks at the business group and enterprise level to guide strategic business decisions and capital planning efforts.

 

  Policies, procedures, and controls which form an integrated risk management program that promotes active, prompt, and consistent identification, measurement, assessment, control, mitigation, reporting, and monitoring of current and emerging risk exposures across Wells Fargo and are integrated with clear enterprise risk roles and responsibilities for the three lines of defense.

 

  Three lines of defense that are closely integrated, each with specific roles and responsibilities for risk management and a clear engagement model that promotes challenge and appropriate escalation of issues and information.
 

 

Board Risk Oversight

The business and affairs of the Company are managed under the direction of the Board, whose responsibilities include overseeing management’s implementation of the Company’s risk management framework and ongoing oversight and governance of the Company’s risk management activities. The Board carries out its risk oversight responsibilities directly and through the work of its seven standing committees, including its Risk Committee. All of these committees report to the full Board and are comprised solely of independent directors. Each Board committee has defined authorities and responsibilities for considering a specific set of risk issues, as outlined in its charter, and works closely with management to understand and oversee our Company’s key risk exposures.

The Risk Committee oversees company-wide risks and the Company’s Corporate Risk function and plays an active role in approving and overseeing the Company’s risk management framework. The Risk Committee and the full Board review and approve the enterprise statement of risk appetite annually, and the Risk Committee also actively monitors the Company’s risk profile relative to the approved risk appetite. The Board’s other standing committees also have primary oversight responsibility for certain specific risk matters. The full Board receives reports at each of its regular meetings from the Board committee chairs about committee activities, including risk oversight matters, and the Risk Committee receives periodic reports from management regarding current or emerging risk matters. Additional information about our risk management framework and practices, as well as the risk oversight responsibilities of each of our Board committees, is described in the Financial Review—Risk Management section in our 2018 annual report on Form 10-K and under Our Board and Its Committees in this proxy statement.

Our standing Board committee structure and the primary risk oversight responsibilities of each of those committees is shown in the chart below.

 

 

Board of Directors

Annually approves strategic plan and company-wide statement of risk appetite

 

 

Audit and

Examination

Committee

 

 

Corporate Responsibility Committee

 

 

Credit Committee

 

 

Risk Committee

 

 

 

Finance Committee

 

 

 

Governance and Nominating Committee

 

 

 

Human Resources Committee

 

 

Financial, regulatory and risk reporting and controls

 

 

Social and public responsibility matters

 

 

Credit Risk

 

 

COMPANY-WIDE RISKS

- Compliance

(includes Conduct and Financial Crimes)

- Liquidity

- Model

- Operational

(includes Data Management, Information Security/Cyber, and Technology)

- Reputation

- Strategic

 

 

Interest Rate Risk

Market Risk

 

 

 

Board-level governance matters

 

 

Culture, ethics, human capital management, and compensation

 


 

       2019 Proxy Statement       41


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The Corporate Risk function, which is the Company’s independent risk management organization, is headed by the Company’s Chief Risk Officer who, among other things, is responsible for setting the strategic direction and driving the execution of Wells Fargo’s risk management activities. The Chief Risk Officer is appointed by and reports to our Board’s Risk Committee. The Chief Risk Officer, as well as the Chief Risk Officer’s direct reports, work closely with the Board’s committees and frequently provide reports and updates to the committees and the committee chairs on risk matters, as appropriate. Corporate Risk develops the Company’s enterprise statement of risk appetite in the context of our risk management framework described above. The Corporate Risk function provides senior management and the Board with an independent perspective of the level of risk to which the Company is exposed.

As part of our Board’s and its committee’s annual self-evaluation process, our Board’s committees annually review their respective charters in light of regulatory expectations, best practices, changes in the Company’s strategy, risk appetite, and identified enterprise risks, updates to our Company’s risk management framework, and director and committee feedback. As a result of its continuing review of committee responsibilities and oversight of risks, our Board has continued to enhance the risk oversight responsibilities of various Board committees and will continue to review our Board’s and its committees’ oversight responsibilities as part of its annual self-evaluation process or more frequently as needed. For additional information on recent enhancements made to the Board’s oversight of risk, including through its committees, see Our Board and Its Committees.

Our Board believes that its Board leadership structure with separate CEO and independent Chair roles has the effect of enhancing our Board’s risk oversight function because of our independent Chair’s involvement in risk oversight matters, including as a member of our Board’s Risk Committee. Our Board also believes that Mr. Sloan’s knowledge of our Company’s businesses, strategy, and risks significantly contributes to our Board’s understanding and appreciation of risk issues.

Board Oversight Of Cyber Risk

Information security is a significant operational risk for financial institutions such as Wells Fargo, and includes the risk resulting from cyber attacks and other information security events relating to Wells Fargo technology, systems, networks, and data that would disrupt Wells Fargo’s businesses, result in the disclosure of confidential data which could damage Wells Fargo’s reputation, cause losses or increase costs. Wells Fargo’s Board is actively engaged in the oversight of the Company’s information security risk management and cyber defense programs. The Board’s Risk Committee has primary oversight responsibility for information security risk and approves the Company’s information security program, which includes the information security policy and the cyber defense program. The Risk Committee formed a Technology Subcommittee to assist it in providing oversight of technology, information security, and cyber risks as well as data management risk. The Technology Subcommittee reviews and recommends to the Risk Committee for approval any significant supporting information security (including cyber security) risk, technology risk, and data management risk programs and/or policies, including the Company’s data management strategy. The Technology Subcommittee reports to the Risk Committee and both provide updates to the full Board.

Committees of our Board

Continuing to Enhance Board Committees and Risk Oversight

During 2017 and 2018, the Board reviewed, clarified, and enhanced Board committee oversight responsibilities through amendments to Board committee charters in order to restructure the Board’s oversight activities and enhance its oversight of risk, including conduct risk, compliance risk, operational risk, information security/cyber risk and technology risk. The Board amended committee charters further during 2018 to align with the Company’s enhanced Risk Management Framework, which was reviewed and approved by the Risk Committee.

In connection with the GNC’s and the Board’s annual review of committee member assignments and chair positions, the GNC considers best practices with respect to committee refreshment and committee chair rotations. The GNC also reviews a director qualifications and experience matrix for each Board committee to assist it in evaluating the collective experience of directors on each committee in light of the particular committee’s oversight responsibilities. The collective qualifications and experience of directors on each committee are reflected in the charts under Board Committee Composition and Oversight Responsibilities below. The Board has reconstituted the membership and leadership of its Board committees since 2016, including based on the addition of new directors to the Board. Six of the Board’s seven standing Board committees have new chairs since September 2017.

 


 

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Current Board Committee Membership and Charters

Our Board has established seven standing committees: Audit and Examination, Corporate Responsibility, Credit, Finance, Governance and Nominating, Human Resources, and Risk. Our Board’s committees act on behalf of our Board and report on their activities to the entire Board. Our Board appoints the members and chair of each committee based on the recommendation of the GNC. Certain of our directors also serve as members of the Wells Fargo Bank, National Association board of directors. The following table provides current membership information for each of our Board’s standing committees and Wells Fargo Bank’s board of directors.

 

Name

 

 

AEC

 

   

CRC

 

   

Credit

 

   

Finance

 

   

GNC

 

   

HRC

 

   

Risk

 

   

 

Wells Fargo Bank

board of directors

 

 
                                                                 

 

John D. Baker II

 

 

 

 

 

 

·

 

 

 

 

         

 

 

 

 

Chair

 

 

 

 

                                       

 

Celeste A. Clark

 

         

 

 

 

 

Chair

 

 

 

 

 

 

 

 

 

·

 

 

 

 

         

 

 

 

 

·

 

 

 

 

                       

 

Theodore F. Craver, Jr.

 

 

 

 

 

 

·

 

 

 

 

                 

 

 

 

 

Chair

 

 

 

 

                         

 

 

 

 

·

 

 

 

 

 

Elizabeth A. Duke

 

                 

 

 

 

 

·

 

 

 

 

 

 

 

 

 

·

 

 

 

 

 

 

 

 

 

·

 

 

 

 

         

 

 

 

 

·

 

 

 

 

       

 

Wayne M. Hewett

 

         

 

 

 

 

·

 

 

 

 

                         

 

 

 

 

·

 

 

 

 

 

 

 

 

 

·

 

 

 

 

       

 

Donald M. James

 

                         

 

 

 

 

·

 

 

 

 

 

 

 

 

 

Chair

 

 

 

 

 

 

 

 

 

·

 

 

 

 

               

 

Maria R. Morris

 

                                         

 

 

 

 

·

 

 

 

 

 

 

 

 

 

Chair

 

 

 

 

 

 

 

 

 

·

 

 

 

 

 

Karen B. Peetz

 

                                         

 

 

 

 

·

 

 

 

 

 

 

 

 

 

·

 

 

 

 

 

 

 

 

 

·

 

 

 

 

 

Juan A. Pujadas

 

                 

 

 

 

 

·

 

 

 

 

 

 

 

 

 

·

 

 

 

 

                 

 

 

 

 

·

 

 

 

 

       

 

James H. Quigley

 

 

 

 

 

 

Chair

 

 

 

 

                                         

 

 

 

 

·

 

 

 

 

 

 

 

 

 

Chair

 

 

 

 

 

Ronald L. Sargent

 

 

 

 

 

 

·

 

 

 

 

 

 

 

 

 

·

 

 

 

 

                 

 

 

 

 

·

 

 

 

 

 

 

 

 

 

Chair

 

 

 

 

               

 

Suzanne M. Vautrinot

 

         

 

 

 

 

·

 

 

 

 

 

 

 

 

 

·

 

 

 

 

                         

 

 

 

 

·

 

 

 

 

       

 

Number of Members

 

 

 

 

 

 

4

 

 

 

 

 

 

 

 

 

4

 

 

 

 

 

 

 

 

 

5

 

 

 

 

 

 

 

 

 

4

 

 

 

 

 

 

 

 

 

4

 

 

 

 

 

 

 

 

 

5

 

 

 

 

 

 

 

 

 

7

 

 

 

 

 

 

 

 

 

5^

 

 

 

 

• = Member

^ = Mr. Sloan also serves as a member of the Wells Fargo Bank board of directors

Our Board has adopted a charter for each standing Board committee that addresses its purpose, authority, and responsibilities and contains other provisions relating to, among other matters, membership and meetings. In its discretion each committee may form and delegate all or a portion of its authority to subcommittees of one or more of its members. As required by its charter, each committee annually reviews and assesses its charter’s adequacy and reviews its performance, and also is responsible for overseeing reputation risk related to its responsibilities. Committees may recommend charter amendments at any time, and our Board must approve any recommended charter amendments. Additional information about our Board’s seven standing committees, including their key responsibilities, appears below and a current copy of each committee’s charter is available on our website at: https://www.wellsfargo.com/about/corporate/governance.

 


 

       2019 Proxy Statement       43


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Board Committee Composition and Oversight Responsibilities

 

LOGO   

Risk Committee

Maria R. Morris, Chair

  

Members:

Morris (Chair)

Duke

Hewett

 

  

Peetz

Pujadas

Quigley

Vautrinot

  

Number of

meetings in 2018:

14 (includes

1 joint meeting with AEC)

 

 

 

 

 

“In my new role as chair of the Risk Committee, I am working closely with Karen Peetz to provide for a smooth transition of chair responsibilities as we continue our important work to oversee the Company’s progress in strengthening its risk management, including operational and compliance risk management, and achieving operational excellence across the organization in order to reduce risk and improve the experiences of our team members and our customers. In 2018, the Risk Committee approved significant enhancements to the Company’s Risk Management Framework, which defines how the Company manages risk, and is overseeing the Company’s overall risk transformation program and Corporate Risk function. The two new subcommittees of the Risk Committee have been providing focused oversight of compliance and technology-related risks, including the Company’s investment in technology capabilities and systems, as we continue to strengthen the foundation of the Company for the future.

 

 

Primary Responsibilities:

  Approves and oversees our company-wide risk management framework and structure, including through the approval of the risk management framework which outlines our Company’s approach to risk management and the policies, processes, and governance structures necessary to execute the risk management program, and approves the framework and policies for managing our major risks;

 

  Oversees the Corporate Risk function and the performance of the Chief Risk Officer, approves the appointment and compensation of the Chief Risk Officer, and monitors the effectiveness of our company-wide independent risk management program;

 

  Annually recommends to our Board, and monitors adherence to, our risk appetite, and reviews our aggregate company-wide risk profile and its alignment with our strategy and risk appetite;

 

  Oversees operational risk, compliance risk (including annual compliance plan), financial crimes risk (Bank Secrecy Act and Anti-Money Laundering), information security risk (including cyber), technology risk, and data management risk, and approves significant supporting operational risk, compliance, financial crimes, information security, technology, and data management programs and/or policies, including our business continuity and regulatory compliance risk management programs and third party risk management policy;

 

  Oversees our company-wide risk culture;

 

  Oversees Conduct Risk group activities and company-wide conduct risk; and
  Oversees liquidity and funding risks, and risks associated with acquisitions and significant new business or strategic initiatives.

Formed Compliance Subcommittee and Technology Subcommittee: The Risk Committee formed two subcommittees which report to the Risk Committee and began meeting in January 2018.

 

  The Risk Committee delegated oversight for compliance risk to a Compliance Subcommittee (members are Quigley (chair), Duke, Hewett, and Peetz), which met 12 times in 2018.

 

  The Risk Committee delegated oversight for technology, information security/cyber, and data management risk to a Technology Subcommittee (members are Vautrinot (chair), Morris, and Pujadas), which met 14 times in 2018.

Independence: Our Board has determined that each member of the Risk Committee is independent, as independence is defined by NYSE rules.

Risk Expertise: The Federal Reserve’s Enhanced Prudential Standards for large U.S. bank holding companies require at least one member of the Risk Committee to have experience identifying, assessing, and managing risk exposures of large financial firms. Our Board has determined, in its business judgment, that four members (Duke, Morris, Peetz, and Pujadas) have large financial institution risk management experience. In addition, other members of the Risk Committee bring additional risk management experience in specific areas, including financial reporting (Quigley), technology/cyber (Pujadas and Vautrinot), and operations (Hewett).

 

 

 

 

 

  Risk Committee Qualifications and Experience:

 

    
 

  Financial Services

  Accounting, Financial Reporting

  Risk Management

  Human Capital Management

 

  Strategic Planning, Business Development, Business Operations

  Information Security, Cybersecurity, Technology

 

 

  Consumer, Marketing, Digital

  Corporate Governance

  Management Succession Planning

  Environmental, Social, and Governance (ESG)

 

 

  Community Affairs

  Government, Public Policy

  Regulatory

  Global Perspective, International

 

 

 


 

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LOGO   

Audit and Examination

Committee (AEC)

James H. Quigley, Chair

  

Members:

Quigley (Chair)

Baker

 

  

Craver

Sargent

 

  

Number of

meetings in 2018:

12 (includes

1 joint meeting with Risk Committee)

 

 

 

 

“In 2018, the Audit and Examination Committee focused heavily on oversight of the integrity of the Company’s financial statements, strength of internal controls over financial reporting, efforts to enhance capabilities relating to risk reporting, and the independence of and actions by the Company’s external auditor to continue to enhance the quality of its audit practice. Another one of our key responsibilities is overseeing the performance of Wells Fargo Audit Services, our internal audit function and third line of defense which is a critical part of our Risk Management Framework. In early 2019, we also approved the appointment of a new Chief Auditor to lead our internal audit function and look forward to working with her, including in connection with our oversight of the scope and execution of our internal audit plan and performance of the internal audit function. We continue to focus on oversight of regulatory activities and monitoring management’s progress addressing those matters.”

 

 

Primary Responsibilities:

 

  Assists our Board in fulfilling its responsibilities to oversee the integrity of our financial statements and the adequacy and reliability of disclosures to our shareholders, including our internal control over financial reporting;

 

  Selects and evaluates our independent auditor, including its qualifications and independence and approves all audit engagement fees and terms and all non-audit engagements of the independent auditor and engagement fees of any other external auditor for additional required audit, review or attest services;

 

  Approves the appointment and compensation of our Company’s Chief Auditor and oversees the performance of the Chief Auditor and the internal audit function;

 

  Assists the Board and the Risk Committee in the oversight of compliance with regulatory and legal requirements, including review of regulatory examination reports and communications;

 

  Oversees our regulatory and risk reporting disclosure control framework for data; and

 

  May perform audit committee and fiduciary audit committee functions on behalf of our bank subsidiaries in accordance with federal banking regulations.

Independence: Our Board has determined that each member of the AEC is independent, as independence for audit committee members is defined by NYSE and SEC rules.

Financial Expertise: Our Board has determined, in its business judgment, that all current members of the AEC listed above are financially literate as required by NYSE rules and each current AEC member (John D. Baker II, Theodore F. Craver, Jr., James H. Quigley, and Ronald L. Sargent) qualifies as an “audit committee financial expert” as defined by SEC regulations. No AEC member may serve on the audit committee of more than two other public companies.

 

 

 

 

 

  Audit and Examination Committee Qualifications and Experience:

 

 
 

  Financial Services

  Accounting, Financial Reporting

  Risk Management

  Human Capital Management

 

  Strategic Planning, Business Development, Business Operations

  Information Security, Cybersecurity, Technology

 

 

  Consumer, Marketing, Digital

  Corporate Governance

  Management Succession Planning

  Government, Public Policy

 

  Regulatory

  Global Perspective, International

  Legal

 

 


 

       2019 Proxy Statement       45


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LOGO   

Governance and Nominating

Committee (GNC)

Donald M. James, Chair

  

Members:

James (Chair)

Clark

  

Duke

Sargent

  

Number of

meetings in 2018:

7

 

 

 

 

“During 2018, the Governance and Nominating Committee continued to enhance the Board’s governance practices, including by formalizing the framework used by the Board for its own succession planning and approving guidance to management reflecting the Board’s and our Committee’s expectations of management for support of the Board and its committees, including relating to the quality and focus of management reporting. In light of the significant changes the Board made to its composition, leadership, oversight responsibilities, and governance practices that were informed by the Board’s 2017 self-evaluation process and engagement with shareholders and other stakeholders, we again decided to engage a third party to facilitate the Board’s 2018 self-evaluation, including to assist the Board in assessing the implementation and effectiveness of changes made. In addition, we continue to focus on making sure we maintain a Board composition and structure that is appropriate in light of the Company’s strategy, risk profile, and risk appetite. We have added important experience to the Board through recent director recruiting and refreshment, and are currently focused on recruitment of new directors to compliment existing Board skills and experience in areas identified by the Board, including banking, bank regulatory, and financial services, former CFO and/or accounting, and technology and information security experience.”

 

 

Primary Responsibilities:

 

  Assists our Board by identifying individuals qualified to become Board members and recommends to our Board nominees for director and committee leadership and membership;

 

  Annually reviews and assesses the adequacy of our Corporate Governance Guidelines and oversees a review of our Board’s performance;

 

  Recommends to our Board a determination of each non-employee director’s “independence” under applicable rules and guidelines;
  Reviews director compensation and recommends any changes for approval by our Board; and

 

  Oversees our Company’s engagement with shareholders and other interested parties concerning governance matters and works with our Board’s other committees in connection with shareholder engagement on matters subject to the oversight of such other committees.

Independence: Our Board has determined that each member of the GNC is independent, as independence is defined by NYSE rules.

 

 

 

 

 

  Governance and Nominating Committee Qualifications and Experience:

 

 
 

  Financial Services

  Risk Management

  Human Capital Management

  Strategic Planning, Business Development, Business Operations

 

 

  Consumer, Marketing, Digital

  Corporate Governance

  Management Succession Planning

 

 

  Environmental, Social, and Governance (ESG)

  Community Affairs

  Government, Public Policy

 

  Regulatory

  Global Perspective, International

  Legal

 

 


 

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LOGO   

Human Resources Committee (HRC)

Ronald L. Sargent, Chair

  

Members:

Sargent (Chair)

Hewett

 

  

James

Morris

Peetz

  

Number of

meetings in 2018:

6

 

 

 

 

 

“The Human Resources Committee’s oversight responsibilities were expanded in 2017 to include oversight of the Company’s culture, ethics program, and human capital management. An important focus of our Committee is to oversee the alignment of our culture with our performance management and incentive compensation programs so that they are consistent with the Company’s Vision, Values & Goals, including doing what is right for customers. We continue to invest in our team members in order to improve our overall team member experience, including through profit sharing contributions to the Company’s 401(k) plan and our benefits programs. Another key responsibility of our Committee is to oversee the Company’s incentive compensation risk management program, which we have expanded to cover all team members who are eligible to receive incentive compensation and all potential risk types, including risks associated with misconduct and reputational harm. For 2018, we introduced new behavioral expectations for all team members that are aligned with our Vision and Values as well as an enhanced performance objective framework for our senior leaders that focuses on expectations for both “what” is achieved and “how” it is achieved, and includes an evaluation of performance consistent with the Company’s leadership and risk accountability expectations.”

 

 

Primary Responsibilities:

 

  Approves our Company’s compensation philosophy and principles, and discharges our Board’s responsibilities relating to our Company’s overall compensation strategy and the compensation of our executive officers;

 

  Oversees our Company’s incentive compensation risk management program and practices for senior executives and employees in a position, individually or collectively, to expose our Company to material financial or reputational risk;

 

  Evaluates the CEO’s performance and approves and recommends the CEO’s compensation to our Board for ratification and approval and approves compensation for our other executive officers and any other officers or employees as the HRC determines appropriate;

 

  Oversees human capital management, including talent management and succession planning, diversity and inclusion initiatives and results, and pay equity reviews and results;

 

  Oversees our Company’s culture, including management’s efforts to foster a culture of ethics throughout our Company;

 

  Oversees our Company’s Code of Ethics and Business Conduct and ethics, business conduct, and conflicts of interest program;
  Oversees actions taken by our Company regarding shareholder approval of executive compensation matters, including advisory votes on executive compensation; and

 

  Has the sole authority to retain or obtain the advice of and terminate any compensation consultant, independent legal counsel or other advisor to the HRC, and evaluates the independence of its advisors in accordance with NYSE rules.

The HRC may delegate certain of its responsibilities to one or more HRC members or to designated members of senior management or committees. The HRC has delegated authority to the Head of Human Resources and the Director of Compensation and Benefits for the administration of our Company’s benefit and compensation programs; however, the HRC generally has sole authority relating to incentive compensation plans applicable to executive officers, the approval of awards under any equity-based plans or programs and material amendments to any benefit or compensation plans or programs.

Independence: Our Board has determined that each member of the HRC is a “non-employee director” under Rule 16b-3 of the Securities Exchange Act of 1934, as amended, and is independent, as independence for compensation committee members is defined by NYSE rules.

 

 

 

 

 

  Human Resources Committee Qualifications and Experience:

 

 
 

  Financial Services

  Risk Management

  Human Capital Management

  Strategic Planning, Business Development, Business Operations

 

 

  Information Security, Cybersecurity, Technology

  Consumer, Marketing, Digital

  Corporate Governance

 

 

  Management Succession Planning

  Environmental, Social, and Governance (ESG)

  Community Affairs

  Regulatory

 

  Global Perspective, International

  Legal

 

 


 

       2019 Proxy Statement       47


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Corporate Governance

 

LOGO   

Corporate Responsibility

Committee (CRC)

Celeste A. Clark, Chair

  

Members:

Clark (Chair)

Hewett

  

Sargent

Vautrinot

  

Number of meetings in
2018:

5

 

 

 

 

“Wells Fargo’s Vision, Values & Goals reflect our aspiration to be the financial services leader in corporate citizenship. We are committed to making a positive contribution to the communities where we live and do business. The Corporate Responsibility Committee’s responsibilities are focused on oversight of Wells Fargo’s policies, programs, and strategies for corporate citizenship matters, our brand, and our relationship with external stakeholders. In 2017, we formed a new Stakeholder Relations group, which was expanded in 2018 to include sustainability and corporate responsibility, community relations, and philanthropy, as we do the fundamental work needed to transform our Company and restore our brand and reputation with stakeholders. Among my priorities in my new role as chair of the Corporate Responsibility Committee is a continued focus on community reinvestment, how we evaluate and manage environmental and social risks in connection with our Environmental and Social Risk Management Policy and framework, increasing our spend with diverse suppliers, and continuing to use our philanthropy to address community issues like affordable housing, small business growth, and equity and economic inclusion. I also want to thank our team members who continue to demonstrate their significant commitment and dedication to our communities through their own personal philanthropy and volunteerism.”

 

 

Primary Responsibilities:

 

  Oversees our Company’s policies, programs, and strategies regarding social responsibility matters of significance to our Company and the public at large, including our Company’s community development and reinvestment activities and performance, fair and responsible lending, support of charitable organizations, and policies and programs related to environmental sustainability and human rights;

 

  Oversees our Company’s government relations and public advocacy policies and programs and at least annually receives reports from management on political and lobbying activities, including payments made to trade associations by Wells Fargo;
  Monitors our Company’s relationships with external stakeholders regarding significant social and public responsibility matters, as well as the Company’s reputation with its stakeholders; and

 

  Receives reports and updates from management on significant social and public responsibility matters of interest to our Company and its stakeholders, metrics relating to our Company’s brand and stakeholder perception of our Company, and strategies for enhancing our Company’s reputation among its stakeholders.
 

 

 

 

 

  Corporate Responsibility Committee Qualifications and Experience:

 

 
 

  Risk Management

  Human Capital Management

  Strategic Planning, Business Development, Business Operations

 

 

  Information Security, Cybersecurity, Technology

  Consumer, Marketing, Digital

  Corporate Governance

 

  Management Succession Planning

  Environmental, Social, and Governance (ESG)

  Community Affairs

 

  Government, Public Policy

  Global Perspective, International

 

 


 

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LOGO

  

Credit Committee

John D. Baker II, Chair

  

Members:

Baker (Chair)

Clark

Duke

  

 

Pujadas

Vautrinot

 

  

Number of

meetings in 2018:

4

 

 

 

 

 

 

“Wells Fargo continues to maintain its strong and conservative credit risk discipline. Wells Fargo is to be one of the few large financial institutions to have a separate board committee focused on credit risk management and credit quality, which is reflective of the importance of effective credit risk management to the Company and the Board in order to enable performance through credit cycles. This strength was evident through the financial crisis and remains a priority of the Credit Committee. During 2018, we continued to focus on maintaining appropriate underwriting standards and credit quality as well as consideration of various components of our credit portfolio, economic conditions, and emerging risks that could impact credit performance in particular industries and sectors. The Credit Committee also oversees the ongoing enhancement of our credit risk management policies and practices which are fundamental to maintaining this core strength of our Company.”

 

 

Primary Responsibilities:

 

  Monitors and reviews the performance and quality of, and the trends affecting our credit portfolios;

 

  Oversees the effectiveness and administration of the credit risk management components of our risk management framework and credit policies, including the organizational structure of Risk Asset Review (RAR), RAR’s examination of our Company’s credit portfolios, processes, and practices, our Company’s adherence to credit risk appetite metrics, and credit risk aggregation and concentration limits;
  Reviews management’s assessment of the appropriateness of the allowance for credit losses, including the methodology and governance supporting the allowance for credit losses; and

 

  Reviews and approves other credit-related activities as it deems appropriate or that are required to be approved by law or regulation, including our Company’s net credit loss forecast, credit stress testing framework and related stress test results.
 

 

 

 

 

  Credit Committee Qualifications and Experience:

 

 
 

  Financial Services

  Risk Management

  Human Capital Management

  Strategic Planning, Business Development, Business Operations

 

 

  Information Security, Cybersecurity, Technology

  Consumer, Marketing, Digital

  Corporate Governance

 

  Management Succession Planning

  Environmental, Social, and Governance (ESG)

  Community Affairs

 

  Government, Public Policy

  Regulatory

  Global Perspective, International

  Legal

 

 


 

       2019 Proxy Statement       49


Table of Contents

Corporate Governance

 

LOGO

  

Finance Committee

Theodore F. Craver, Jr., Chair

  

Members:

Craver (Chair)

Duke

  

 

James

Pujadas

  

Number of

meetings in 2018:

7

 

 

 

 

“During 2018, the Finance Committee continued to focus on oversight of the Company’s financial risk management, financial forecast, and capital management and planning, including stress-testing policies. The Company maintained a high level of capital in 2018, and received a non-objection from the Federal Reserve on its 2018 Capital Plan. The Finance Committee will continue to oversee progress against capital objectives in the 2018 Capital Plan, and future capital planning. We also monitor our progress on meeting our efficiency goals and reducing expenses. Following the consolidation of oversight of recovery and resolution planning as part of the Finance Committee’s oversight responsibilities in 2017, we receive coordinated updates on our recovery and resolution strategies, monitor how those processes and practices are incorporated as part of our day-to-day business operations, and review and approve related plans in connection with our regulatory obligations. Given the current interest rate environment, monitoring our market risk and interest rate risk, and the Company’s strategies to manage these risks, have been and will continue to be a priority for the Finance Committee. ”

 

 

Primary Responsibilities:

 

  Oversees the administration and effectiveness of financial risk management policies and processes used to assess and manage market risk, interest rate risk, and investment risk;

 

  Reviews our Company’s capital levels relative to budgets and forecasts as well as our Company’s risk profile, approves our Company’s capital management and stress-testing policies, and oversees the administration and effectiveness of our Company’s capital management and planning activities;
  Reviews our Company’s financial forecast and financial and investment performance, and recommends to our Board the declaration of common stock dividends, the repurchase of securities, and the approval of significant capital expenditures; and

 

  Oversees resolution and recovery planning.
 

 

 

 

 

  Finance Committee Qualifications and Experience:

 

 

  Financial Services

  Accounting, Financial Reporting

  Risk Management

 

  Strategic Planning, Business Development, Business Operations

  Information Security, Cybersecurity, Technology

 

 

  Corporate Governance

  Management Succession Planning

  Community Affairs

  Government, Public Policy

 

  Regulatory

  Global Perspective, International

  Legal

 


 

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Other Special Purpose Board Committees

From time to time, the Board or Wells Fargo Bank board of directors may form special purpose committees to which each board may delegate responsibility for oversight of particular matters.

Regulatory Compliance Oversight Committee

 

 

Wells Fargo Bank’s board of directors has delegated oversight of compliance with various regulatory consent orders to this committee to provide appropriate Board-level oversight of progress against consent order requirements.

 

 

This committee is comprised of Mses. Morris (Chair), Duke, and Peetz and Messrs. Pujadas and Quigley, and met 15 times during 2018.

Other Special Purpose Committees

 

 

From time to time, the Board may establish other limited or special purpose committees as it determines appropriate.

 

 

Compensation Committee Interlocks And Insider Participation

Current directors Donald M. James, Maria R. Morris, Karen B. Peetz, and Ronald L. Sargent and former directors John S. Chen and Lloyd H. Dean served as members of the HRC during 2018. During 2018, no member of the HRC was an employee, officer, or former officer of the Company. None of our executive officers served in 2018 on the board of directors or compensation committee (or other committee serving an equivalent function) of any entity that had an executive officer serving as a member of our Board or the HRC. As described under Related Person Transactions, some HRC members had banking or financial services transactions in the ordinary course of business with our banking and other subsidiaries.

 


 

       2019 Proxy Statement       51


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Director Compensation

The table below provides information on 2018 compensation for our non-employee directors other than Wayne M. Hewett who joined our Board effective January 7, 2019. Mr. Sloan is an employee director and does not receive separate compensation for his Board service. Our Company reimburses directors for expenses incurred in their Board service, including the cost of attending Board and committee meetings. Additional information on our director compensation program follows the table.

2018 Director Compensation Table

 

Name(1)

(a)

  Fees
Earned
or Paid
in Cash
($)(2)(3)(b)
    Stock
Awards
($)(4)(c)
    Option
Awards
($)(5)(d)
    Non-Equity
Incentive
Plan
Compensation
($)(e)
   

Change in
Pension Value
and Nonqualified
Deferred
Compensation
Earnings

(f)

    All Other
Compensation
($)(6)(g)
    Total ($)(h)  

 

John D. Baker II

 

 

 

 

170,000

 

 

 

 

 

 

180,004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

350,004

 

 

 

John S. Chen

 

 

 

 

37,542

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

37,542

 

 

 

Celeste A. Clark

 

 

 

 

123,000

 

 

 

 

 

 

240,056

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

363,056

 

 

 

Theodore F. Craver, Jr.

 

 

 

 

163,542

 

 

 

 

 

 

240,056

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

403,598

 

 

 

Lloyd H. Dean

 

 

 

 

58,167

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

58,167

 

 

 

Elizabeth A. Duke

 

 

 

 

451,000

 

 

 

 

 

 

180,004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

631,004

 

 

 

Enrique Hernandez, Jr.

 

 

 

 

68,167

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

68,167

 

 

 

Donald M. James

 

 

 

 

178,000

 

 

 

 

 

 

180,004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

358,004

 

 

 

Maria R. Morris

 

 

 

 

172,556

 

 

 

 

 

 

240,056

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

412,612

 

 

 

Karen B. Peetz

 

 

 

 

215,750

 

 

 

 

 

 

180,004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

395,754

 

 

 

Federico F. Peña

 

 

 

 

62,194

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

62,194

 

 

 

Juan A. Pujadas

 

 

 

 

157,000

 

 

 

 

 

 

180,004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

337,004

 

 

 

James H. Quigley

 

 

 

 

237,000

 

 

 

 

 

 

180,004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

417,004

 

 

 

Ronald L. Sargent

 

 

 

 

174,153

 

 

 

 

 

 

180,004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,000

 

 

 

 

 

 

359,157

 

 

 

Suzanne M. Vautrinot

 

 

 

 

168,153

 

 

 

 

 

 

180,004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

348,157

 

 

 

(1)   The following directors who appear in the table above left our Board during 2018:

•    Messrs. Chen, Dean, Hernandez, and Peña retired as directors effective April 24, 2018, the date of our 2018 annual meeting.

 

(2)   Includes fees earned, whether paid in cash or deferred, for service on our Company’s Board in 2018 (including any such amounts paid in 2019) as described under Cash Compensation. Also includes fees paid to non-employee directors who serve on the board of directors of Wells Fargo Bank, National Association (the “Bank”), a wholly owned subsidiary of our Company, or are members of one or more special purpose committees. Messrs. Craver and Quigley and Mses. Morris and Peetz, as current directors of the Bank, and Messrs. Dean, Hernandez, and Peña as former directors of the Bank from January 2018 to April 2018, received an annual cash retainer of $10,000, payable quarterly in arrears, and a fee of $2,000 for any separate meeting of the Bank Board not held concurrently with, immediately prior to, or following a Company Board or committee meeting. In 2018, all except two Bank Board meetings were held concurrently with, immediately prior to, or following a Company Board or committee meeting. A fee of $2,000 was paid for special purpose committee meetings attended which were not held concurrently with, immediately prior to, or following a Company Board or committee meeting.

 


 

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(3)   Includes fees earned in 2018 but deferred at the election of the director. The following table shows the number of stock units credited on a quarterly basis to our non-employee directors under our deferral program for deferrals of 2018 cash compensation paid quarterly in arrears and the grant date fair value of those stock units based on the closing price of our common stock on the date of deferral:

 

Name

 

Stock

Units (#)

    Grant Date
Fair Value ($)
 

 

John D. Baker II

 

 

 

 

858.6148

 

 

 

 

 

 

45,000

 

 

    847.7633       47,000  
    708.1340       37,000  
     

 

889.7569

 

 

 

   

 

41,000

 

 

 

 

Celeste A. Clark

 

 

 

 

178.8781

 

 

 

 

 

 

9,375

 

 

    169.1017       9,375  
    179.4258       9,375  
     

 

203.4505

 

 

 

   

 

9,375

 

 

 

 

Lloyd H. Dean

 

 

 

 

357.7561

 

 

 

 

 

 

18.750

 

 

    78.1625       4,333  
           
     

 

 

 

 

   

 

 

 

 

 

Elizabeth A. Duke

 

 

 

 

839.5344

 

 

 

 

 

 

44,000

 

 

    541.1255       30,000  
    497.6077       26,000  
     

 

564.2361

 

 

 

   

 

26,000

 

 

 

 

Ronald L. Sargent

 

 

 

 

815.6840

 

 

 

 

 

 

42,750

 

 

    710.7284       39,403  
    861.2440       45,000  
     

 

1,019.9653

 

 

 

   

 

47,000

 

 

 

 

(4)   We granted 3,428 shares of our common stock to each non-employee director elected at the 2018 annual meeting of shareholders on April 24, 2018. In addition, we granted 983 shares to each of Mses. Clark and Morris and Mr. Craver upon their election to the Board effective January 1, 2018. The grant date fair value of each award is based on the number of shares granted and the NYSE closing price of our common stock on April 24, 2018 and January 2, 2018, respectively.

 

(5)   The table below shows for each non-employee director with outstanding options, the aggregate number of shares of our common stock underlying unexercised options at December 31, 2018. All options were fully exercisable at December 31, 2018. Directors who are not reflected in the table below do not hold any outstanding options with respect to our common stock.

 

Name

 

 

Number of

Securities Underlying

Unexercised Options

 

 

 

John D. Baker II

 

 

 

 

7,570

 

 

 

Lloyd H. Dean

 

 

 

 

7,570

 

 

 

Donald M. James

 

 

 

 

19,900

 

 

 

(6)   The amount under “All Other Compensation” for Mr. Sargent represents a Company matching contribution during 2018 under our Company’s charitable matching contribution program, which for 2018 matched charitable donations to qualified schools and educational institutions of up to $5,000 per year, on a dollar-for-dollar basis, per employee and per non-employee director of our Company.

 


 

       2019 Proxy Statement       53


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Corporate Governance

 

Structure of our Director Compensation Program

Cash Compensation

The following table shows the components of cash compensation paid to non-employee directors in 2018. Cash retainers and fees are paid quarterly in arrears. Directors who join the Board during the year receive a prorated annual cash retainer.

 

2018 Component

  Amount ($)  

Annual Cash Retainer

    75,000  

Annual Independent Chairman Retainer1

    250,000  

Annual Independent Vice Chairman Retainer2

    100,000  

Annual Committee Chair Fees

 

Each of AEC and Risk Committee

    40,000  

Each of CRC, Credit Committee, Finance Committee, GNC and HRC

    25,000  

Regular or Special Board or Committee Meeting Fee3

    2,000  

 

(1)   The Company’s independent Chairman receives a $250,000 annual retainer, in lieu of any Committee Chair fee the Chairman might otherwise receive.

 

(2)   The Company’s independent Vice Chairman (if any) receives a $100,000 annual retainer, in lieu of any Committee Chair fee the Vice Chairman might otherwise receive.

 

(3)   Includes standing committee meetings as well as special purpose committee meetings not held concurrently with or immediately prior to or following a Company Board or standing committee meeting.

Effective March 1, 2019, our Board and the GNC approved the payment of meeting fees for subcommittees.

In addition, Bank directors receive an additional $10,000 annual cash retainer. Since November 1, 2018, the Chair of the Bank Board’s Regulatory Compliance Oversight Committee (RCOC), to which each of the Bank’s board of directors and the Company’s Board have delegated oversight of compliance with various regulatory consent orders, also receives an RCOC Chair fee of $25,000.

Equity Compensation

For 2018, each non-employee director elected to our Board at our Company’s annual meeting of shareholders received on that date an award of Company common stock having a value of $180,000. Each non-employee director who joins our Board as of any other date receives, as of such other date, an award of Company common stock having a value of $180,000 prorated to reflect the number of months (rounded up to the next whole month) until the next annual meeting of shareholders. The dollar value of each stock award is converted to a number of shares of Company common stock using the closing price on the grant date, rounded up to the nearest whole share.

Deferral Program

A non-employee director of our Company or the Bank may defer all or part of his or her cash compensation and stock awards. Cash compensation may be deferred into either an interest-bearing account or common stock units with dividends reinvested. The interest rate paid in 2018 on interest-bearing accounts was 2.33%. Stock awards may be deferred only into common stock units with dividends reinvested. Deferred amounts are paid either in a lump sum or installments as elected by the director.

Stock Ownership Policy

Our Board has adopted a director stock ownership policy that each non-employee director, within five years after joining our Board, own shares of our common stock having a value equal to five times the annual cash retainer, and maintain at least that ownership level while a member of our Board and for one year after service as a director ends. Each director who has been on our Board for five years or more exceeded this ownership level as of December 31, 2018, and each director who has served less than five years is on track to meet this ownership level.

GNC Use of Compensation Consultant

The GNC is authorized to retain and obtain advice of legal, accounting, or other advisors at our expense without prior permission of management or our Board. The GNC retained FW Cook, a nationally recognized compensation consulting firm, to provide independent advice on non-employee director compensation matters for 2018. FW Cook compiles compensation data for the financial services companies the GNC considers our Labor Market Peer Group (which is the same peer group used to evaluate our Company’s executive compensation program) from time to time, and reviews with the GNC our Company’s non-employee director compensation program generally and in comparison to those of our Labor Market Peer Group. FW Cook also advises the GNC on the reasonableness of our non-employee director compensation levels compared to our Labor Market Peer Group.

 


 

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Information About Related Persons

 

 

Related Person Transactions

Lending and Other Ordinary Course Financial Services Transactions

During 2018, some of our executive officers, directors (including certain of our HRC members), and each of the persons we know of that beneficially owned more than 5% of our common stock on December 31, 2018 (Warren E. Buffett/Berkshire Hathaway Inc., BlackRock, Inc., and The Vanguard Group), and some of their respective immediate family members and/or affiliated entities had loans, other extensions of credit and/or other banking or financial services transactions with our banking and other subsidiaries in the ordinary course of business, including deposit and treasury management services, brokerage, investment advisory, capital markets, investment banking, and insurance transactions. All of these lending, banking, and financial services transactions were on substantially the same terms, including interest rates, collateral, and repayment (as applicable), as those available at the time for comparable transactions with persons not related to our Company, and did not involve more than the normal risk of collectability or present other unfavorable features. In the ordinary course of business, we also sell or purchase insurance and other products and services, including the purchase of aviation services, of Berkshire Hathaway and its affiliates and purchase investment management technology products and advisory services from BlackRock and its affiliates. We and our customers also may invest in mutual funds, exchange traded funds and other products affiliated with BlackRock and Vanguard in the ordinary course of business. All of these transactions were entered into on an arms’ length basis and under customary terms and conditions.

Transactions with Entities Affiliated with Directors

Enrique Hernandez, Jr., a former director, is chairman and chief executive officer and a majority owner of Inter-Con Security Systems, Inc. In 2018, Inter-Con provided guard services to certain of our Company’s retail banking stores under an agreement we first entered into in 2005. Payments in 2018 to Inter-Con under this contract did not exceed 1% of Inter-Con’s or our Company’s 2018 consolidated gross revenues, and each year since this contractual relationship began our Board determined that our relationship with Inter-Con did not impair Mr. Hernandez’s independence under our Director Independence Standards. In 2018, we paid Inter-Con approximately $1.18 million for services under this contract. We believe that these services were provided on terms at least as favorable as would have been available from other parties. Mr. Hernandez retired from our Board at our 2018 annual meeting.

Family and Other Relationships

Since 1986, our Company has employed Mary T. Mack’s sister, Susan T. Hunnicutt, who is currently a Wholesale Banking relationship manager. In 2018, Ms. Hunnicutt received compensation of approximately $196,000. In February 2018, we also granted her 167 RSRs, which will convert to shares of common stock upon vesting and which had a grant date fair value of approximately $10,000 (based on the NYSE closing price per share of our common stock on the grant date of $59.97). Since 2015, our Company has employed Richard D. Levy’s son-in-law, Matthew T. Bush, who is currently a Technology relationship manager in our Information Security group. In 2018, Mr. Bush received compensation of approximately $147,000. In February 2018, we also granted him 50 RSRs, which will convert to shares of common stock upon vesting and which had a grant date fair value of approximately $2,864 (based on the NYSE closing price per share of our common stock on the grant date of $57.28). We established the compensation paid to Ms. Hunnicutt and Mr. Bush in 2018 in accordance with our employment and compensation practices applicable to team members with equivalent qualifications and responsibilities and holding similar positions. In addition to this compensation, Ms. Hunnicutt and Mr. Bush also received employee benefits generally available to all of our team members. Neither Ms. Hunnicutt nor Mr. Bush is an executive officer of our Company and neither individual directly reports to an executive officer of our Company.

In 2010, our Board, based on the recommendation of the GNC, agreed as a matter of policy to strongly discourage our Company’s employment of any immediate family members of directors.

 


 

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Information About Related Persons

 

 

Related Person Transaction Policy and Procedures

Our Board has adopted a written policy and procedures for the review and approval or ratification of transactions between our Company and its related persons and/or their respective affiliated entities. We refer to this policy and procedures as our Related Person Policy. “Related persons” under this policy include our directors, director nominees, executive officers, holders of more than 5% of our common stock, and their respective immediate family members. Their “immediate family members” include spouses, parents, stepparents, children, stepchildren, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, and brothers- and sisters-in-law and any person (other than a tenant or employee) who shares the home of a director, director nominee, executive officer, or holder of more than 5% of our common stock.

Except as described below, the Related Person Policy requires either the GNC or AEC, depending upon the related person involved, to review and either approve or disapprove transactions, arrangements, or relationships in which:

 

 

The amount involved will, or may be expected to exceed $120,000 in any fiscal year;

 

 

Our Company is, or will be, a participant; and

 

 

A related person or an entity affiliated with a related person has, or will have a direct or indirect interest.

We refer to these transactions, arrangements, or relationships in the Related Person Policy as “Interested Transactions.” Any potential Interested Transactions that are brought to our Company’s attention are analyzed by our Company’s Legal Department, in consultation with management and with outside counsel, as appropriate, to determine whether the transaction or relationship does, in fact, constitute an Interested Transaction requiring compliance with the Related Person Policy. Our Board has determined that the GNC or AEC does not need to review or approve certain Interested Transactions even if the amount involved will exceed $120,000, including the following transactions:

 

  Lending and other financial services transactions with related persons or their affiliated entities that comply with applicable banking laws and are in the ordinary course of business, non-preferential, and do not involve any unfavorable features;

 

  Employment of a “named executive officer” or of an executive officer if he or she is not an immediate family member of another Company executive officer or director and his or her compensation would be reported in our proxy statement if he or she was a “named executive officer” and the HRC approved (or recommended that our Board approve) such compensation;

 

  Compensation paid to one of our directors if the compensation is reported pursuant to SEC rules in our proxy statement;

 

  Transactions with another entity at which a related person’s only relationship with that entity is as a director, limited partner, or beneficial owner of less than 10% of that entity’s ownership interests (other than a general partnership interest);
  Transactions with another entity at which a related person’s only relationship with that entity is as an employee (other than an executive officer), if such transactions are in the ordinary course of business, non-preferential, and the amount involved does not exceed the greater of $1 million or 2% of such other entity’s consolidated gross revenues;

 

  Charitable contributions by our Company or a Company-sponsored charitable foundation to tax-exempt organizations at which a related person’s only relationship is as an employee (other than an executive officer) or a director or trustee (other than chairman of the board or board of trustees), if the amount involved (excluding Company matching funds) does not exceed the lesser of $1 million or 2% of such organization’s consolidated gross revenues; and

 

  Transactions with holders of more than 5% of our common stock and/or such holders’ immediate family members or affiliated entities, if such transactions are in the ordinary course of business of each of the parties, unless such shareholder is one of our executive officers, directors or director nominees, or an immediate family member of one of them.
 

 


 

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Information About Related Persons

 

The GNC approves, ratifies, or disapproves those Interested Transactions required to be reviewed by the GNC which involve a director and/or his or her immediate family members or affiliated entities. The AEC approves, ratifies, or disapproves those Interested Transactions required to be reviewed by the AEC that involve our executive officers, holders of more than 5% of our common stock, and/or their respective immediate family members or affiliated entities. Under the Related Person Policy, if it is not feasible to get prior approval of an Interested Transaction, then the GNC or AEC, as applicable, will consider the Interested Transaction for ratification at a future committee meeting. When determining whether to approve or ratify an Interested Transaction, the GNC and AEC will consider all relevant material facts, such as whether the Interested Transaction is in the best interests of our Company, whether the Interested Transaction is on non-preferential terms, and the extent of the related person’s interest in the Interested Transaction. No director is allowed to participate in the review, approval, or ratification of an Interested Transaction if that director, or his or her immediate family members, or their affiliated entities are involved. The GNC or AEC, as applicable, annually reviews all ongoing Interested Transactions.

 


 

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Ownership of Our Common Stock

 

 

Directors and Executive Officers

Stock Ownership Requirements and Other Policies

Stock Ownership Requirements

To reinforce the long-term perspective of stock-based compensation and emphasize the relationship between the interests of our directors and executive officers with your interests as shareholders, we require our non-employee directors and our executive officers to own shares of our common stock. Our Board has adopted robust stock ownership policies that apply to our directors and executive officers as summarized in the chart below.

 

 

Director Stock Ownership Policy

Requirements

 

After five years on the Board, each non-employee director must own stock having a value equal to five times the annual cash retainer we pay our directors, and maintain at least that stock ownership level while a member of the Board and for one year after service as a director terminates.

     

Executive Officer Stock Ownership Policy

Requirements

 

Until one year following retirement, our executive officers must hold shares equal to at least 50% of the after-tax profit shares (assuming a 50% tax rate) acquired upon the exercise of options or vesting of RSRs and Performance Shares, subject to a maximum requirement of ten times the executive officer&#