DEF 14A 1 d864220ddef14a.htm DEFINITIVE NOTICE AND PROXY STATEMENT DEFINITIVE NOTICE AND PROXY STATEMENT
Table of Contents

SCHEDULE 14A

 

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

Exchange Act of 1934 (Amendment No.      )

 

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☒    Definitive Proxy Statement

 

☐    Definitive Additional Materials

 

☐    Soliciting Material Pursuant to §240.14a-12

 

Wells Fargo & Company


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Table of Contents

LOGO

 

  

 

  

Notice of Annual Meeting

and Proxy Statement

                   
  

Wells Fargo & Company

2020 Annual Meeting of Shareholders

  


Table of Contents

LOGO

Letter to our Shareholders from our

Chairman of the Board and our Chief Executive Officer

March 16, 2020

Dear Fellow Shareholders,

Under new leadership, Wells Fargo is moving with a sense of urgency to remediate our historical issues and establish the strong foundation necessary to regain the trust of all stakeholders and position the Company for the future. We are supported by the strength of our franchise, including Wells Fargo’s diversified business model, strong distribution across both physical and digital channels, and leading market positions in many areas. Going forward, we recognize it is imperative that we maintain the highest standards of operational excellence and integrity. We have made significant changes to our governance, management, structure, processes, and culture over the past year.

Your Board also has continued to enhance its oversight, including by adding new directors with expertise in areas relevant to our business such as financial services, regulatory matters, and business operations. In addition to overseeing the centralization of Wells Fargo’s organizational structure, the strengthening of its risk management program and the development of its strategy, the Board is focused on holding management accountable for implementing our strategy consistent with our risk management framework and executing on our regulatory commitments.

On behalf of Wells Fargo, we would like to thank Betsy Duke and Jim Quigley, who resigned as directors on March 8, 2020, for their contributions to Wells Fargo. We are honored that we have the opportunity to lead this great franchise as we, together with the other directors, management team, and employees, do what is necessary to again make Wells Fargo one of the most respected and successful banks in the country. We have a lot of work ahead, but we are optimistic about our future and confident that Wells Fargo has the ability to realize its potential.

We are pleased to invite you to attend our 2020 Annual Meeting of Shareholders to be held on April 28, 2020, at 10:00 a.m., Mountain Daylight Time, at The Grand America Hotel, 555 South Main Street, Salt Lake City, Utah 84111. The matters to be considered include the election of directors, an advisory vote to approve the 2019 compensation of our named executive officers, the ratification of the appointment of our independent registered public accounting firm for 2020, and up to three shareholder proposals.

Your vote is important to us. Please vote as soon as possible even if you plan to attend the annual meeting. The notice and proxy statement provide you with information about how you can vote your shares over the internet, using your mobile device, by telephone, or by mail. Thank you for your continued investment in and support of Wells Fargo.

Sincerely,

 

LOGO         

LOGO

 

Charles H. Noski

Chairman

                 LOGO         

LOGO

 

Charles W. Scharf

CEO

   

 


Table of Contents

 

 

LOGO

 

    

Notice of 2020 Annual
Meeting of Shareholders

 

  

 

Meeting

Information

 

Date & Time

Tuesday, April 28, 2020

10:00 a.m., MDT

 

Location*

The Grand America Hotel

555 South Main Street

Salt Lake City, Utah 84111

 

Record Date

February 28, 2020

 

 

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 card

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    

 

 

 

Ratify the appointment of KPMG LLP as the Company’s independent registered public accounting firm for 2020

 

 

    4    

 

 

 

Vote on three shareholder proposals (Items 4 – 6), if properly presented at the meeting and not previously withdrawn

 

 

    5    

 

 

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

 

*   We are monitoring developments regarding the coronavirus or COVID-19 and preparing in the event any changes for our annual meeting are necessary or appropriate. If we determine to make any change, such as to the location or to hold the meeting by remote communication, we will announce the change in advance and provide instructions on how shareholders can participate at https://www.wellsfargo.com/about/investor-relations/annual-reports. If we determine to hold our annual meeting by remote communication, a list of our shareholders of record will be made available to shareholders during the meeting at: www.virtualshareholdermeeting.com/WFC2020.

 

 

Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be Held on April 28, 2020: Wells Fargo’s 2020 Proxy Statement and Annual Report to Shareholders for the year ended December 31, 2019 are available at: www.proxypush.com/wfc (for record holders) or www.proxyvote.com (for street name holders and participants in Company Plans).

This notice and the accompanying proxy statement, 2019 annual report, and proxy card or voting instruction form were first made available to shareholders beginning on March 16, 2020. You may vote if you owned shares of our common stock at the close of business on February 28, 2020, the record date for notice of and voting at our annual meeting.


Table of Contents

 

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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 Leadership and Business

Wells Fargo went through a leadership transition during 2019 as part of the significant changes the Board and management are making to our management, structure, processes, and culture.

 

     

CEO Succession

The Board appointed Charles W. Scharf as CEO, effective October 21, 2019, following a thorough external search led by a search committee of independent members of our Board.

 

Charlie Scharf embodies the attributes that the Board sought in the leader of the Company, including financial and business acumen, integrity, passion for diversity and inclusion, and commitment to strong talent management.

 

The Board selected an interim CEO, C. Allen Parker, in March 2019 who provided leadership through the transition and continued to move the Company forward on our top priorities.

    

Focus on Remediating Historical Issues

The Board, our CEO, and management are focused on moving with a sense of urgency to strengthen our risk and control foundation and address outstanding regulatory matters.

 

We are changing the way we run the Company and our culture in order to:

 

  Operate as one company, not a series of decentralized businesses

 

  Foster a culture of partnership, but drive toward decisions

 

  Expect high quality execution with clear responsibility and accountability

 

  Judge ourselves based upon our outcomes, not our words

    

New Organizational Model

Under Mr. Scharf’s leadership, the Company announced in February 2020 a new organizational model with five lines of business:

 

  Consumer & Small Business Banking

 

  Consumer Lending

 

  Commercial Banking

 

  Corporate & Investment Banking

 

  Wealth & Investment Management

 

These changes create a flatter line-of-business organizational structure and provide leaders with clear authority, accountability, and responsibility.

 

We also are making fundamental changes to how we manage our operations and are enhancing our risk management capabilities.

 

 

Our Broader Role and Engagement with Stakeholders

 

 

Proud Signatory of the Business Roundtable’s Statement on the Purpose of a Corporation

 

 

 

Wells Fargo has long believed that focusing on the needs of all of our stakeholders, including customers, employees, regulators, suppliers, communities, and shareholders, drives long-term value creation.

 

We understand that we have a fundamental commitment to all of our stakeholders, and one of Mr. Scharf’s first actions as our new CEO was to express his support for, and sign on to, the Business Roundtable’s Statement on the Purpose of a Corporation, which is a clear statement that businesses are responsible to a broad set of constituents.

 

 

 

The statement of purpose sets forth a commitment by the companies signing the document in areas that Wells Fargo believes are consistent with our priorities and goals, including:

 

   Delivering value to our customers

 

   Investing in our employees

 

   Dealing fairly and ethically with our suppliers

 

   Supporting our communities in which we work

 

   Generating long-term value for our shareholders

 


 

       2020 Proxy Statement       i


Table of Contents

 

Board Leadership and Composition Highlights

The Board has enhanced its composition, oversight, and governance practices and continues to focus on Board succession planning to enable the Board to continue to oversee the Company and its business effectively.

 

Board Leadership Structure

 

 

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

 

  Well-defined authority and responsibilities of the independent Chairman

 

  All standing Board committees(1) have new independent chairs since 2017

Board Composition

 

  Significant Board refreshment – 9 of our independent nominees are new since January 2017

 

  Enhanced financial services, regulatory, financial reporting, business operations, and corporate governance skills and experience represented on the Board through the addition of three new independent directors in 2019 and our proposal of an additional director nominee for election at our 2020 annual meeting

 

  Continue to recruit directors and adapt the composition of the Board to meet the needs of the Company

Governance Practices

 

  Conducted comprehensive annual self-evaluation of Board effectiveness for 2019; Engaged third party to facilitate self-evaluation in each of 2017 and 2018

 

  Enhanced Board succession planning processes, including for committee chair roles

 

  Contacted institutional investors representing over 35% of our common shares and engaged with other stakeholders during 2019; continued to demonstrate our strong track record of responsiveness

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 incorporate 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 of the Board.

 

 

LOGO

 

 

 

 


 

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 and other topics.

 

 

During 2019, we contacted institutional investors representing more than 35% of our outstanding shares and engaged with a significant number of our investors and other stakeholders to provide updates on the Company, discuss governance and other matters, and hear their perspectives.

 

 

The feedback we receive from our investors and other stakeholders during these meetings helps inform the Company’s and the Board’s decision-making and we have consistently acted to enhance our governance practices and transparency through our disclosures in response to those perspectives.

 

LOGO

Board-led engagement program conducted year round

 

 

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

 

   External CEO search, including attributes for the qualities and experience the Board sought in the leader of the Company

 

   Company strategy, including expense initiatives

 

   Company performance and progress

 

 

 

   Board composition, diversity, and Board experience matrix disclosure

 

   Board oversight of risk, including committee oversight responsibilities

 

   Board-level engagement and oversight of management, including changes in the Company’s senior leadership

 

 

   Culture and employee engagement

 

   Performance management and incentive compensation program, including compensation metrics

 

   Environmental, Social, and Governance (ESG) practices and reporting

 

   Shareholder proposals

 

 

LOGO

Governance Practices Proposing a new nominee for election as a director by shareholders at our 2020 annual meeting Announced changes to our business organizational structure to enable the Company to more effectively pursue our goals and take advantage of opportunities Enhanced performance assessment framework for our executive officers and other senior leaders to drive outcomes of both annual and long-term incentive awards Became a signatory to the Business Roundtables Statement on the Purpose of a Corporation Enhanced financial services, regulatory, financial reporting, and business operations experience on the Board through the election of three new independent directors during 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 Transparency and Disclosures Published Issue Brief on Climate Change disclosing our support of the principles of the Paris Agreement and actions Wells Fargo is taking to embed sustainability across the enterprise Disclosed that Wells Fargo will not require mandatory arbitration for future sexual harassment claims 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 Enhanced Board experience matrix to include diversity information self-identied by Board members Increased disclosure about our human capital management and performance management program and compensation practices, including efforts and metrics to promote diversity and inclusion in our workforce 2020 2019Governance Practices Proposing a new nominee for election as a director by shareholders at our 2020 annual meeting Announced changes to our business organizational structure to enable the Company to more effectively pursue our goals and take advantage of opportunities Enhanced performance assessment framework for our executive officers and other senior leaders to drive outcomes of both annual and long-term incentive awards Became a signatory to the Business Roundtables Statement on the Purpose of a Corporation Enhanced financial services, regulatory, financial reporting, and business operations experience on the Board through the election of three new independent directors during 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 Transparency and Disclosures Published Issue Brief on Climate Change disclosing our support of the principles of the Paris Agreement and actions Wells Fargo is taking to embed sustainability across the enterprise Disclosed that Wells Fargo will not require mandatory arbitration for future sexual harassment claims 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 Enhanced Board experience matrix to include diversity information self-identified by Board members Increased disclosure about our human capital management and performance management program and compensation practices, including efforts and metrics to promote diversity and inclusion in our workforce 2020 2019

* See page 12 for extended timeline

 


 

       2020 Proxy Statement       iii


Table of Contents

 

Our Director Nominees

 

 

 Our Board recommends that you vote FOR each of

 these director nominees for a one-year term

 

 

 Steven D. Black

 Independent Nominee

 

Celeste A. Clark

Independent

 

Theodore F. Craver, Jr.

Independent

 

Wayne M. Hewett

Independent

 

 Co-CEO, Bregal Investments, Inc.;

 Former Vice Chairman,

 JPMorgan Chase & Co.

 

 Age: 67

 Director Since: N/A

 Committees: None

 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: 66

Director Since: 2018

Committees: CRC*, CC, GNC

Other Public Boards: 1

 

 

 

Retired Chairman, President, and CEO, Edison International

 

Age: 68

Director Since: 2018

Committees: AC, FC*

Other Public Boards: 1

 

 

Senior Advisor, Permira;

Chairman, DiversiTech

Corporation and Cambrex

Corporation

 

Age: 55

Director Since: 2019

Committees: CRC, HRC, RC

Other Public Boards: 1

     

 Donald M. James

 Independent

 

Maria R. Morris

Independent

 

Charles H. Noski

Independent Chairman

 

Richard B. Payne, Jr.

Independent

 

 Retired Chairman and CEO,

 Vulcan Materials Company

 

 Age: 71

 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: 57

Director Since: 2018

Committees: HRC, RC*

Other Public Boards: 1

 

 

Retired Vice Chairman and former Chief Financial Officer, Bank of America Corporation

 

Age: 67

Director Since: 2019

Committees: AC*, GNC

Other Public Boards: 1

 

 

 

Retired Vice Chairman,

Wholesale Banking, U.S.

Bancorp

 

Age: 72

Director Since: 2019

Committees: CC*

Other Public Boards: 0

     

 Juan A. Pujadas

 Independent

 

Ronald L. Sargent

Independent

 

Charles W. Scharf

CEO & President

 

Suzanne M. Vautrinot

Independent

 

 Retired Principal,

 PricewaterhouseCoopers LLP,

 and former Vice Chairman,

 Global Advisory Services, PwC

 Intl.

 

 Age: 58

 Director Since: 2017

 Committees: CC, FC, RC

 Other Public Boards: 0

 

 

Retired Chairman and CEO, Staples, Inc.

 

Age: 64

Director Since: 2017

Committees: AC, GNC, HRC*

Other Public Boards: 2

 

 

 CEO

 Wells Fargo & Company

 

 Age: 54

 Director Since: 2019

 Committees: None

 Other Public Boards: 1

 

 

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

 

Age: 60

Director Since: 2015

Committees: CRC, CC, RC

Other Public Boards: 3

 

AC   Audit 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

   

 

58%

have

financial services

experience

   

 

75%

have

risk management

experience

   

 

42%

have
information security/
cyber and

technology
experience

   

 

25%

have

human capital management

experience

 

   

 

50%

have

CEO experience

 


 

iv       Wells Fargo & Company       


Table of Contents

 

Our Compensation Principles and Disciplined Performance Assessment Framework

Compensation Principles

Our executive compensation programs are designed and administered in accordance with the following compensation principles, each of which is an essential component to driving strong, risk-managed performance.

 

     
LOGO    Pay for Performance   

Compensation is linked to Company, business line, and individual performance, including meeting regulatory expectations and creating long-term value consistent with the interests of shareholders

 

     
LOGO    Promote Effective Risk Management   

Compensation promotes effective risk management and discourages imprudent or excessive risk-taking

 

     
LOGO    Attract and Retain Talent   

People are one of the Company’s competitive advantages; therefore, compensation helps attract, motivate, and retain people with the skills, talent, and experience to drive superior long-term Company performance

 

Consistent with our compensation principles, the combination of annual and long-term incentives are designed to motivate executives to achieve short-, medium-, and long-term performance that generates sustained shareholder value. Beginning with compensation for the 2019 performance year, the long-term incentive grant value is determined based on performance. Additionally, we continued to have an accountability framework that, under specified conditions, enables the forfeiture or recovery of compensation in the event named executives’ actions, or inactions, result in a negative outcome for our Company.

Disciplined Performance Assessment Framework

A cornerstone of our Company’s compensation program is the performance assessment, which is guided by our robust performance assessment framework, supported by a process overseen by our Board’s Human Resources Committee. Our performance assessment framework evaluates the performance of our named executives on the basis of three distinct categories:

 

 

LOGO

Company Performance Reflects a wide range of financial and non-financial metrics, with performance assessed on both an absolute and relative basis. Financial metrics include, amongst other factors, revenue, expenses, returns, profitability, deposits, and capital returned to shareholders. Non-financial metrics include, among other factors, Company progress against regulatory deliverables, progress against Company's strategic plan, advancement of risk management framework and strengthening our controls, and rebuilding our reputation with our customers, regulators, and broader public Individual Performance Reflects execution against strategic deliverables and initiatives, as well as business line results (for enterprise roles, such as CFO, named executives are assessed against performance of their enterprise function/department, and not business line results). Individual performance also includes leadership, investment in employees, progress against diversity initiatives, succession planning, and enhancements to our culture. Risk Management Reflects progress each named executive made against risk management specific to their roles and business/function. Risk is evaluated across risk types including compliance, operational, financial, strategic, and reputation. Evaluations reflect how well named executives managed risks, and accountability for any identified risk items Named executives are also assessed and held accountable for fostering a sound risk environment and setting the tone at the top.

 


 

       2020 Proxy Statement       v


Table of Contents

 

Executive Compensation Decision Highlights

Compensation Is Aligned with Performance and Promotes Accountability

The Human Resources Committee (HRC) is committed to an executive compensation program that drives pay for performance, appropriately balances risk, rewards the creation of sustained shareholder value, and reinforces individual accountability through a robust performance management program and compensation forfeiture and recovery provisions.

As approved by the Board, Mr. Scharf’s compensation under his offer letter reflected forgone compensation opportunities at his prior employer, with his go-forward compensation tied to future Company performance. In accordance with his offer letter, for 2019, he was guaranteed a target bonus of at least $5 million and the Board’s independent directors determined in March 2020 that this amount was appropriate. Mr. Scharf was also guaranteed $15.5 million in Performance Shares (granted in March 2020, subject to performance conditions, vesting, and other conditions). For 2020 and beyond, Mr. Scharf did not receive ongoing compensation guarantees or minimums (other than base salary), and we did not enter into an employment agreement with him.

 

 

2019 CEO Compensation — Charles W. Scharf

 

 

The Board awarded Mr. Scharf total direct compensation (excluding awards to replace forfeited equity) in the amount of $23 million, of which $2.5 million was in base salary (actual base salary paid for 2019 was $0.5 million) and the remaining $20.5 million was awarded in variable compensation, consisting of $5 million in a cash annual incentive and $15.5 million in Performance Shares

 

 

 

 

 

 

LOGO

 

 

 

 

2019 was a year of leadership transition for Wells Fargo.

 

  C. Allen Parker served as Interim CEO from March 2019 until October 2019. He received total compensation of $8.30 million, including a restricted share rights (RSRs) award of $2.0 million for his service as Interim CEO.

 

  Timothy J. Sloan previously stepped down as CEO effective March 28, 2019 and retired from the Company on June 30 2019.

 

¡   He did not receive any severance benefits.

 

¡   He did not receive any annual incentive for 2019.

 

¡   The HRC exercised its discretion to cancel the Performance Share award in the amount of $15 million granted to Mr. Sloan in February 2019.

 

See the Compensation Discussion and Analysis in this proxy statement for additional information.

 

 

 

LOGO

 


 

vi       Wells Fargo & Company       


Table of Contents

Total Variable Compensation Model

 

Historical Annual and Long-Term Incentive Award Approach

 

  We determined annual incentive awards based on a target opportunity and a performance assessment.

 

  We determined long-term incentive awards based on a named executive’s role and responsibilities in advancing the Company’s long-term success.

 

 

Change to Total Variable Compensation Model

 

In the fourth quarter of 2019, the HRC and Mr. Scharf determined to move to a total variable compensation model.

 

  Under our new model, each named executive will be provided a single total variable compensation target level, with payout based on performance assessed using our holistic performance assessment framework.

 

  The total variable earned amount will be awarded part in cash and the majority in long-term incentives that vest over or at the end of a three-year period and that are subject to performance conditions that can result in forfeiture.

 

  The HRC believes that this approach reinforces pay for performance and provides greater transparency to shareholders regarding compensation decisions.

 

Application of the Performance Assessment Framework for 2019

The HRC’s compensation decisions reflect the application of the enhanced performance assessment framework for the 2019 performance year:

 

 

Company performance was assessed at 75%, reflecting lower profits and higher expenses and additional progress required to address outstanding regulatory matters and execute against strategic priorities

 

 

Company performance directly impacted and resulted in reduced named executive officer (NEO) incentive compensation, reflected in both annual incentives earned and long-term incentives granted for performance year 2019

 

 

Variability in compensation also reflects individual performance and risk outcomes and demonstrates commitment to paying for performance

The following table provides our named executives’ total direct compensation for performance year 2019 in the form of base salary rate for 2019 and annual and long-term incentive compensation awarded in March 2020 based on 2019 performance. It is not a substitute for, and should be read together with, the Summary Compensation Table, which presents compensation paid, accrued, or awarded for 2019 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 ($)
   

2019 Pay-for-Performance Outcome

 
  Annual
Incentive ($)
    Performance
Shares ($)
    RSRs ($)     Total
Compensation ($)
 

 

Charles W. Scharf

Chief Executive Officer and President

 

 

 

 

2,500,000

 

 

 

 

 

 

5,000,000

 

 

 

 

 

 

15,500,000

 

 

 

 

 

 

 

 

 

 

 

 

23,000,000

 

 

 

C. Allen Parker

Former Interim Chief Executive Officer and President; Former General Counsel

 

 

 

 

1,781,609

 

(1) 

 

 

 

 

1,287,637

 

 

 

 

 

 

1,613,990

 

 

 

 

 

 

3,613,990

 

 

 

 

 

 

8,297,226

 

 

 

Timothy J. Sloan

Former Chief Executive Officer and President

 

 

 

 

1,567,816

 

(2) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,567,816

 

 

 

John R. Shrewsberry

Sr. EVP and Chief Financial Officer

 

 

 

 

2,000,000

 

 

 

 

 

 

1,147,500

 

 

 

 

 

 

2,653,594

 

 

 

 

 

 

2,653,594

 

 

 

 

 

 

8,454,688

 

 

 

Mary T. Mack

Sr. EVP, CEO of Consumer & Small Business Banking (formerly Head of Consumer Banking)

 

 

 

 

1,750,000

 

 

 

 

 

 

1,378,125

 

 

 

 

 

 

2,854,688

 

 

 

 

 

 

2,854,688

 

 

 

 

 

 

8,837,501

 

 

 

Perry G. Pelos

Sr. EVP, CEO of Commercial Banking

(formerly Head of Wholesale Banking)

 

 

 

 

1,750,000

 

 

 

 

 

 

1,184,531

 

 

 

 

 

 

2,538,282

 

 

 

 

 

 

2,538,282

 

 

 

 

 

 

8,011,095

 

 

 

Saul Van Beurden

Sr. EVP and Head of Technology

 

 

 

 

1,000,000

 

 

 

 

 

 

1,000,000

 

 

 

 

 

 

1,000,000

 

 

 

 

 

 

1,000,000

 

 

 

 

 

 

4,000,000

 

 

 

*   The table does not include long-term incentive compensation granted in 2019 to named executives as reported in the 2019 Summary Compensation Table except for the $2 million RSR award granted to Mr. Parker in March 2019 in connection with his appointment as Interim CEO.

 

(1)   Reflects Mr. Parker’s base salary rate of $1,500,000 as General Counsel before and after his service as Interim CEO and his adjusted base salary rate of $2,000,000 while serving as Interim CEO from March 28, 2019 to October 21, 2019.

 

(2)   Reflects actual salary paid to Mr. Sloan, including accrued but unused paid time off, through his retirement on June 30, 2019. Mr. Sloan’s base salary rate was $2,400,000.

 


 

       2020 Proxy Statement       vii


Table of Contents

 

Compensation Best Practices

The Human Resources Committee has adopted and continues to enhance numerous best practices that reinforce our pay-for-performance compensation philosophy, promote effective risk management, 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 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

 

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 (RSRs) 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

 

 


 

viii       Wells Fargo & Company       


Table of Contents

 

 

 

 

Table of Contents

 

   
Our Leadership and Business      2  
  
   
Our Broader Role and Engagement with Stakeholders      3  
  
   
Corporate Governance      7  

Corporate Governance Framework and Documents

     7  

Comprehensive Annual Evaluation of Board Effectiveness

     8  

Our Investor Engagement Program

     11  

Strong Independent Board Leadership

     13  

Management Succession Planning and Development

     15  

Board Composition

     17  

Board Succession Planning

     17  

Overall Board Composition and Size

     18  

Board Qualifications and Experience

     18  

Importance of Board Diversity

     21  

Item 1 — Election of Directors

     22  

Director Nominees for Election

     22  

Director Election Standard and Nomination Process

     29  

Director Orientation Process and Continuing Education

     31  

Director Independence

     32  

Our Board and its Committees

     33  

Our Board’s Role in Risk Oversight

     33  

Board and Committee Meetings; Annual Meeting Attendance

     35  

Committees of our Board

     35  

Compensation Committee Interlocks and Insider Participation

     36  

Director Compensation

     41  
  
   
Information About Related Persons      44  

Related Person Transactions

     44  

Related Person Transaction Policy and Procedures

     45  
  
   
Ownership of Our Common Stock      47  

Directors and Executive Officers

     47  

Stock Ownership Requirements and Other Policies

     47  

Director and Executive Officer Stock Ownership Table

     48  

Principal Shareholders

     50  
  
   
Human Capital Management      51  

We Are Redefining Parts of Our Culture

     51  

We Are Responsible For Leading Our Transformation

     51  

We Are Committed to Acting With Integrity

     52  

We Are Listening to Our Employees

     53  

Performance Management and Compensation

     54  

Performance Management

     54  

Incentive Compensation Risk Management

     56  

Board and Management Committee Governance

     58  

Our Workforce

     59  
 

 

 

 


Table of Contents

 

 

 

 

 

 

 

 

 


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 28, 2020, 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 16, 2020.

 





2020 Annual

Meeting Of

Shareholders

Date & Time

Tuesday, April 28, 2020

10:00 a.m., MDT

Location*

The Grand America Hotel

555 South Main Street

Salt Lake City, Utah 84111

Record Date

February 28, 2020

Mailing Date

March 16, 2020

 

 

You should read the entire proxy statement carefully before voting. We also encourage you to read the 2019 annual report accompanying this proxy statement, including the letters from our independent Chairman 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    Ratify the appointment of KPMG LLP as the Company’s independent registered public accounting firm for 2020    For
     

Shareholder Proposals

 

  4-6      Vote on three 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 about the audiocast of our live annual meeting or any updates about the meeting and how to participate.

 

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. We encourage you to vote your shares prior to the annual meeting.

 

 

*   We are monitoring developments regarding the coronavirus or COVID-19 and preparing in the event any changes for our annual meeting are necessary or appropriate. If we determine to make any change, such as to the location or to hold the meeting by remote communication, we will announce the change in advance and provide instructions on how to participate at https://www.wellsfargo.com/about/investor-relations/annual-reports.

 

       2020 Proxy Statement       1


Table of Contents

 

Our Leadership and Business

Wells Fargo is a diversified, community-based financial services company, with $1.9 trillion in assets and approximately 260,000 employees working to serve one in three households in the United States. Wells Fargo provides banking, investment and mortgage products and services, as well as consumer and commercial finance, through 7,400 locations, more than 13,000 ATMs, the internet (wellsfargo.com) and mobile banking, and has offices in 32 countries and territories to support customers who conduct business in the global economy.

 

LOGO

In February 2020, Wells Fargo announced a new organizational model that creates a flatter line of business structure and brings greater focus and provides leaders with clear authority, accountability, and responsibility. The new model has five line of business CEOs, each reporting to our CEO.

 

 

Charles W. Scharf, CEO

 

(joined the Company on October 21, 2019 as CEO and a member of our Board of Directors)

 

 

LOGO   LOGO   LOGO   LOGO   LOGO
       
Consumer & Small
Business Banking
  Consumer Lending   Commercial Banking  

Corporate & Investment
Banking

 

  Wealth & Investment
Management
Mary Mack, CEO  

Mike Weinbach (CEO to
join in May 2020)

 

Mary Mack, Interim CEO

 

Perry Pelos, CEO

 

 

Jon Weiss, CEO

 

  Jon Weiss, Interim CEO
   

   Delivers a full range of deposit, lending, investment, and payment products

 

   Includes:

 

¡  Branch Banking (through our 5,400 branches)

¡   Small Business

¡  Deposits

¡   New Digital team focused on digital channel acquisition

 

   Elevates a core competency of the Company that provides critical capabilities to fulfill the financial needs of customers

 

   Includes:

 

¡  Home Lending

¡   Auto

¡  Cards & Merchant Services

¡   Personal Loans

 

   Brings together relationship and product capabilities in serving businesses with annual sales generally in excess of $5 million

 

   Includes:

 

¡  Commercial Capital

¡   Treasury Management

¡  Business Banking

¡   Middle Market Banking

¡  Government and Institutional Banking

 

 

   Creates a separate business line for Corporate & Investment Banking (previously part of Wholesale Banking)

 

   Focused on supporting the capital markets, banking, and investment needs of our corporate, government, and institutional clients

 

   Includes Commercial Real Estate

 

   Provides a full range of personalized wealth management, investment, asset management, and retirement products and services

 

   Includes.

 

¡   Wells Fargo Advisors

¡  The Private Bank

¡   Abbot Downing

¡  Wells Fargo Asset Management

 

We Have Made Fundamental Changes to How

We Manage Our Operations

   We Remain Focused on Serving Our Customers and
Delivering Long-Term Value for our Shareholders
LOGO

   Deployed significant resources to address outstanding regulatory and legal issues, including further enhancing our risk management capabilities

 

   Hired a Chief Operating Officer (Scott Powell) in December 2019; Creating an integrated operations organization that will enable us to strengthen how we serve our customers, drive operational excellence, and execute on our regulatory priorities

 

   Operations leaders for each line of business manage core operations functions and now report to the Chief Operating Officer, with joint reporting relationships to business line CEOs

 

   Created a new Sales Practices Oversight and Management role (led by Michael Cleary who joined the Company in February 2020) that will establish an integrated and consistent approach to sales practice monitoring, analysis, and reporting across the Company

  

   Focused on rebuilding customers’ trust and enhancing their experience, which resulted in higher year-over-year scores for both “Customer Loyalty” and “Overall Satisfaction with Most Recent Visit” (Dec. 2019 branch survey scores)

 

   Overall financial performance, including profits and expenses, were below expectations, but business showed positive momentum with solid customer activity including growth in loans and deposits and strong credit performance

 

   Remained well-capitalized with high levels of liquidity while still managing to return $30.2 billion to shareholders through common stock dividends and net share repurchases

 

   Created a new Strategy, Digital & Innovation Group, reporting to the CEO, with responsibility for Corporate Strategy and our Digital and Innovation Teams (lead by the Chief Operating Officer on an interim basis)

 

 

Our top priority is the work we need to do to strengthen our
risk and control foundation and address outstanding regulatory matters

 

 


 

2       Wells Fargo & Company       


Table of Contents

 

Our Broader Role and Engagement with Stakeholders

 

 

Our Purpose

Wells Fargo has long believed that focusing on the needs of all of our stakeholders, including customers, employees, regulators, suppliers, communities, and shareholders, drives long-term value creation. We understand that we have a fundamental commitment to all of our stakeholders, and one of the first actions of our new CEO, Charlie Scharf, was to express his support for, and sign on to, the Business Roundtable’s Statement on the Purpose of a Corporation (statement of purpose). The statement of purpose sets forth a commitment by the companies signing the document in the following five areas that Wells Fargo believes are consistent with the Company’s priorities and goals, including:

 

 

Delivering value to our customers

 

 

Investing in our employees

 

 

Dealing fairly and ethically with our suppliers

 

 

Supporting our communities in which we work

 

 

Generating long-term value for our shareholders

 

 

Our Customers

 

Our vision is to satisfy our customers’ financial needs and help them succeed financially. We serve one in three households in the United States. The Statement on the Purpose of a Corporation starts with delivering value to customers and we must be guided by delivering for our customers every day in a manner that will make us and our stakeholders proud.

 

  We are America’s #1 small business lender and #1 lender to small businesses in low-and moderate-income areas for the 17th year1

 

  We have helped 435,000 minority households purchase a home since 2016 through our commitment to increase homeownership among all minority communities

 

  Wells Fargo offers more than 13,000 ATMs and approximately 5,400 retail banking branches coast to coast

 

  We have helped 2.7 million customers avoid overdraft charges with Overdraft Rewind®

 

  We have provided 9.2 million customers with free access to their FICO® Score to help them monitor and better manage their credit

 

  In Wholesale Banking, we were the #1 Treasury Management provider according to the 2019 Ernst & Young Annual Cash Management survey, measured by “fee-equivalent revenue” (November 2019 survey)

 

  In Wealth & Investment Management, total client assets reached $1.9 trillion as of December 31, 2019, up 10% from a year ago

 

  In Consumer Banking, fourth quarter 2019 branch customer experience surveys reflected higher year-over-year scores for both “Customer Loyalty” and “Overall Satisfaction with Most Recent Visit”

         LOGO

 


 

       2020 Proxy Statement       3


Table of Contents

Our Broader Role and Engagement with Stakeholders

 

 

Our Employees

Wells Fargo employs approximately 260,000 employees. Our people are what set Wells Fargo apart and are critical to our success. Wells Fargo continues to invest in our employees, including by offering market competitive compensation, career-development opportunities, a broad array of benefits, and strong work-life programs.

 

 

We value and promote diversity and inclusion in our workforce – As of December 31, 2019, 56.8 percent of our U.S. workforce is gender diverse and more than 44.6 percent of our U.S. workforce is racially/ethnically diverse

 

 

We are committed to delivering equal pay for equal work – We conduct annual pay equity reviews and take action to make changes based on those reviews; women at Wells Fargo earn more than 99 cents for every $1 earned by men in similar jobs and people of color in the U.S. earn more than 99 cents for every $1 earned by white peers

 

 

We continue to invest in our employees and offer competitive pay and comprehensive benefits

 

  In March 2020, we announced a further increase in our U.S. minimum hourly base pay in the majority of our markets. Our minimum hourly pay range in the U.S. will be $15 to $20, based on the cost of labor in each Wells Fargo market. We also will be reviewing and adjusting the hourly pay for those whose pay is already at or close to the new minimum hourly wage. In recent years, we raised our minimum hourly base pay by 32%, most recently to $15 in March 2018.

 

  We have invested $100 million toward making health care more affordable for the majority of our U.S.-based employees. Because of this, about 70% of employees are seeing lower or no increases in premiums, and 40% are seeing lower out-of-pocket healthcare costs. Our investment included a Health Savings Account (HSA) contribution of up to $1,000 for employees at the lower range of the pay scale.

 

  In total, Wells Fargo invests approximately $13,000 per employee in annual benefits programs, not including paid time away and holidays.

 

  In February 2020, restricted share rights vested for our employees who received the broad-based awards in 2018. This amounted to approximately $2,400 pre-tax per employee at the time of vesting. Wells Fargo had awarded these restricted share rights to 250,000 employees to recognize their contributions and commitment to Wells Fargo and our customers and clients.

        

 

LOGO

 

 

We support employees in their development and make training accessible to all employees. We launched an enhanced learning platform (Develop You) in March 2019 that provides access to training required for our employee’s jobs and courses related to their interests and career goals

 

 

We have a continuous listening program to monitor employee engagement and experience that includes collecting feedback through town halls, pulse surveys, focus groups, company-wide assessments and surveys, and confidential exit surveys and interviews

 

 

We have zero tolerance for retaliation. We previously developed our Speak Up and Non-retaliation policy, launched a program to encourage employees to raise their hands when they see something that concerns them, and enhanced our EthicsLine processes in response to feedback from employees and a third-party review

 


 

4       Wells Fargo & Company       


Table of Contents

Our Broader Role and Engagement with Stakeholders

 

 

Our Suppliers

We believe our suppliers and their actions are an extension of our own actions and reputation. We expect our suppliers to demonstrate strong values and ethical practices and to respect human rights. In addition, as we focus on the needs of diverse markets, expanding our work with diverse vendors and suppliers becomes essential.

 

  For 2019, Wells Fargo achieved its sixth consecutive year of spending over $1 billion with certified diverse suppliers

 

  We recognize the opportunity that working with diverse business owners presents and are working to grow our diverse supplier pipeline – We spent 11.3 percent of our controllable spend in 2019 with diverse suppliers, and continue making progress toward achieving 15 percent of our procurement spend with diverse suppliers by 2020; and a key success was the Hudson Yards Development Project in New York City where Wells Fargo spent $145 million, or 45% of the build out, with local diverse suppliers

 

  We were recognized as one of 159 companies to the CDP Supplier Engagement Leaderboard based on our work to encourage our suppliers to demonstrate their commitment to environmental sustainability.

 

  We maintain a supplier diversity code of conduct that reflects our additional expectations of our suppliers through complimentary programs related to risk, information security, and corporate responsibility

         LOGO

 

 

Our Communities

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 seek to make positive contributions to every community we serve—through our products and services, operations, and our philanthropy. The following are ways that we give back to our communities through philanthropy, community outreach, and volunteerism.

 

  We committed $1 billion in philanthropic capital to address the U.S. housing affordability crisis through 2025

 

  We invested $455 million in grants in the last year, funding national organizations to deliver programs at scale and nonprofits that specifically address the needs of local markets, in order to unlock economic opportunity for people and communities

 

  Our employees generously volunteered 1.9 million hours in their communities in 2019, making these communities stronger for everyone and improving lives

 

  Wells Fargo’s NeighborhoodLIFT® program assisted more than 3,300 homeowners by offering homebuyer education plus down payment assistance grants across a dozen communities including Los Angeles; Washington, D.C. and Prince George’s County; Houston; Sacramento; Omaha, Nebraska; Baltimore; the state of Alaska; Dallas and Fort Worth, Texas; Newark and Essex County, New Jersey; the state of Montana; Pittsburgh and Allegheny County, Pennsylvania; and Portland, Oregon

 

  We made a $10 million grant to the National Association for Latino Community Asset Builders to support growth-oriented lending to minority-owned businesses across the U.S.

         LOGO

 

 

  Through our third annual Holiday Food Bank program, we provided 65 million meals and donated $6.5 million to Feeding America

 

  We have provided approximately $49 billion in financing to sustainable business and projects since 2018, toward our goal to invest $200 billion by 2030 to accelerate the transition to a low-carbon economy

 

  We have a long-standing history of providing support for our communities when disaster strikes; we made a $400,000 donation to help Californians recover from the recent devastating wildfires

 


 

       2020 Proxy Statement       5


Table of Contents

Our Broader Role and Engagement with Stakeholders

 

 

Our Shareholders

We believe in the strength of our diversified business model and are making changes to build a stronger foundation for the Company. In addition to the new organizational model we announced that creates a flatter line of business structure, we are conducting business reviews to look at our businesses and plans, including opportunities, as well as all of our enterprise functions. Our reported 2019 business performance, including higher expenses and lower profits, reflected significant steps that the Company is taking to resolve outstanding regulatory and legal issues, to transform Wells Fargo through enhanced risk-management capabilities, to improve technology and operational excellence to better serve our customers, and to make significant investments in our employees.

 

 

Generated net income of $19.5 billion and diluted earnings per common share (EPS) of $4.05 in 2019

 

 

Return on equity of 10.23% in 2019

 

 

Loans increased $9.2 billion (up 1%) from a year ago, with growth in both commercial and consumer loans; Net charge-offs of 0.29%, flat from 2018

 

 

Average deposits of $1.3 trillion, up 1% from 2018

 

 

Primary consumer checking account customers grew 2% year-over-year in fourth quarter 2019

 

 

Remained well capitalized with high levels of liquidity, while managing to return $30.2 billion to our shareholders through common stock dividends and net share repurchases

 

 

Increased our quarterly common stock dividend to 51 cents per share, up 19% from fourth quarter 2018

We 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. See Demonstrated Track Record of Responsiveness to Investors and Other Stakeholders and Shareholder Proposals – Our Engagement with and Responsiveness to Shareholders in this proxy statement for examples of the constructive result of our engagement with shareholders and other stakeholders and our responsiveness to the issues they have raised.

 

Select Awards and Recognition

Top 50

Most community-minded companies (2019), Points of Light

  

Perfect Score 100

Corporate Equality Index (2020, 17th year) Human Rights Campaign

  

13th Top Company for Diversity

2019, DiversityInc

 

  

14th Top

Company for

LGBT Employees

2019, DiversityInc

 

(1)   Measured by loans under $1 million; 2018 Community Reinvestment Act data, released December 2019

 


 

6       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

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 appetite 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 CEO 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 plan 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

 

 

 

 

 


 

       2020 Proxy Statement       7


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 employees, including our executive officers, and directors

 

 

Charters for each of the Board’s seven standing committees, including the Audit 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

 

 

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 GNC considers each year whether to engage a third-party to assist the Board in conducting its self-evaluation. The Board previously engaged a third party to facilitate its annual self-evaluation in 2018 and 2017.

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

Ongoing Enhancements Based on Self-Evaluation Results

We continue to make changes and enhancements based on feedback from the Board and committee self-evaluations, including the following:

 

  Prioritizing Board and committee meeting agendas in order to allow sufficient time for discussion of our business, strategy, regulatory matters, and key issues and risks;

 

  Ongoing improvement of the focus and quality of management reports to the Board and committees, including risk reports, in order to streamline meeting materials and highlight the most important information;

 

  Enhancing new director orientation and director training, including training on compliance topics; and

 

  Continuing to assess and enhance the tools and processes that the Governance and Nominating Committee and the Board use, including to evaluate Board and committee composition and structure.
 

 


 

8       Wells Fargo & Company       


Table of Contents

Corporate Governance

 

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

Topics Covered in the Scope of the Board Self-Evaluation

In 2019, 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)

 

  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

 

 

 


 

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Key Board Responsibilities

 

 

 

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  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

 

 

 

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  Board materials and management reporting, including the quality of materials

 

  Access to management, including members of the Independent Risk Management 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

 

 

 

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  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

 

 

 

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  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

 

 

Board
Leadership
Structure

 

 

 

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  Board leadership structure

 

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

 

 

Individual
Director’s
Views and
Preferences

 

 

 

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

 

  Identification of criteria in selecting new Board members

 

 

Training and
Orientation

 

 

 

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  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

 

 

 

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  Opportunities for enhancing Board practices for overseeing escalated matters

 

 

Access to
Third-Party
Advisors

 

 

 

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  Board access to third-party advisors and consultants

 

 

Governance
and best
practices

 

 

 

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  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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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. 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

 

  During 2019, we contacted institutional investors representing more than 35% of our outstanding shares

 

  We held engagement meetings and calls with a significant number of our investors and other stakeholders to provide updates on the Company, discuss governance and other matters, and hear their perspectives

 

  The feedback we receive from investors and other stakeholders during these meetings helps inform the Company’s and the Board’s decision-making and we have consistently acted to enhance our governance practices and transparency through our disclosures in response to those perspectives.

 

  Our independent Chair and other independent directors participate in meetings with 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 Investor Relations and our Public Affairs function, which includes 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 2019 Annual Meeting

 

  External CEO search, including attributes for the qualities and experience the Board sought in the leader of the Company

 

  Company strategy, including expense initiatives

 

  Company performance and progress

 

  Board composition, diversity, and Board experience matrix disclosure

 

  Board oversight of risk, including committee oversight responsibilities

 

  Board-level engagement and oversight of management, including changes in the Company’s senior leadership

 

  Culture and employee engagement

 

  Performance management and incentive compensation program, including compensation metrics

 

  ESG practices and reporting

 

  Shareholder proposals

 

 


 

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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.

 

 

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12       Wells Fargo & Company       


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Corporate Governance

 

 

Strong Independent Board Leadership

Our Board Leadership Structure

 

Wells Fargo has had an independent Chair separate from the CEO role since 2016. During 2016, taking into account feedback from our investors, the Board also amended our Company’s By-Laws and its Corporate Governance Guidelines to require that the Chair of the Board be independent. The Board has adopted, and annually reviews and approves, well-defined authority and responsibilities of the independent Chair as reflected in the chart below.

The Board elected Charles H. Noski as our independent Chair to succeed Elizabeth A. (Betsy) Duke effective March 8, 2020.

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.

 

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. Our Board believes that our current Board leadership structure with an independent Chair, with clearly defined authority and responsibilities shown in the chart below, provides strong independent leadership and oversight for our Company and our Board. As independent Chair, Mr. Noski can 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. As CEO, Mr. Scharf can focus his attention on our business and strategy, including the risk, regulatory, and control work we have to do.

 

 

Area of Responsibility

 

 

Authority and Responsibilities of Independent Board Chair

 

 

Board Effectiveness

 

 

 

  Promoting 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

 

 


 

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Area of Responsibility

 

 

Authority and Responsibilities of Independent Board Chair

 

 

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 and Culture

 

 

 

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

 

 

Company Strategy

 

 

 

  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

 

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

 

 

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. Our independent Chair participates, along with other directors, in the CEO performance evaluation and in the Board’s review of management succession and development plans. His participation in those processes will help him evaluate the most effective Board leadership structure for our Company. In addition, our independent Chair’s and other independent directors’ 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 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 and oversight of our Board.

 


 

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Management Succession Planning and Development

A primary responsibility of our Board is identifying and developing executive talent at our Company, particularly the CEO and other senior leaders of our Company. The Board has assigned to the HRC, as set forth in its charter, the responsibility to oversee the Company’s talent management and succession planning process, including CEO evaluation and succession planning. The Board’s Corporate Governance Guidelines require that the CEO and management annually report to the HRC and the Board on succession planning (including plans in the event of an emergency) and management development. The 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.

The Board engages in an annual succession planning process through which it identifies potential successors both within and outside of the Company. After Timothy J. Sloan stepped down as CEO in March 2019, the Board decided to conduct an external search for a new CEO based on its conclusion that seeking someone from outside the Company was the most effective way to complete the transformation at Wells Fargo.

The Board formed a search committee, which was comprised of former director James H. Quigley (Chair), and current directors Wayne M. Hewett, Maria R. Morris, and Ronald L. Sargent, to lead the Board’s efforts in connection with its external search for the Company’s next CEO. The Board also elected C. Allen Parker, previously the General Counsel, as the Company’s Interim CEO and President and worked closely with Mr. Parker and the Company’s leadership team to continue to move Wells Fargo forward on its goals and commitments.

As part of talent and succession planning, the Board uses defined attributes for the qualities the Board seeks in the CEO of the Company and other senior leaders. In connection with the external CEO search, the Board used those attributes, which include financial and business acumen, integrity, risk management, passion for diversity and inclusion, and commitment to strong talent management. The HRC and the Board annually assess and update, as appropriate, those CEO attributes as part of our succession planning process.

 

 

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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 the HRC 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 have included:

 

 

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

Recent Results of Management Succession Planning Process

Wells Fargo has made management changes over the last few years that continue to reflect a balance between development of strong internal and leadership talent and enhancement of our leadership with external talent. The Company has used identified succession plans to fill executive roles in the last year and to continue to 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. We also identify specific needs and hire external talent to strengthen our Company’s capabilities in various areas.

 

CEO who

Embodies Key CEO

Attributes Identified by

the Board

 

    

 

Created new

Operating Committee Roles
and Enhanced Leadership
with

External Talent

 

    

  

Strong Internal
Leadership and Talent
Leading Major Lines

of Business

 

    

  

Enhanced Risk
Management

Leadership and Talent

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   Appointed Charles W. Scharf as CEO and a member of the Board of Directors, effective October 21, 2019

 

   Mr. Scharf embodies the traits and attributes that the Board sought in the Company’s leader, including:

 

¡  Financial and business acumen

 

¡   Integrity

 

¡  Passion for diversity and inclusion

 

¡  Commitment to strong talent management

   

 

6 of 12 current members of Operating Committee hired externally since 2017

 

   Chief Operating Officer (December 2019)

 

   Vice Chairman of Public Affairs (November 2019)

 

   Head of Technology (April 2019)

 

   Chief Auditor (April 2019)

 

   Head of HR (July 2018)

 

   Chief Risk Officer (June 2018)

 

In addition, the new CEO of Consumer Lending (Mike Weinbach) will join Wells Fargo in May 2020

    

 

Strong internal talent in key leadership roles:

 

   CEO of Consumer & Small Business Banking

 

   CEO of Commercial Banking

 

   CEO of Corporate & Investment Banking

 

   Head of Community Banking

 

   Head of Wells Fargo Advisors

 

   Head of Wells Fargo Auto

    

 

Hired additional external talent to strengthen risk management capabilities:

 

   Chief Strategic Enterprise Risk Officer (January 2020)

 

   Chief Operating Officer, Independent Risk Management (September 2019)

 

   Chief Compliance Officer (January 2018)

 


 

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Board Composition

Board Succession Planning

Over the past few years, our Board’s succession planning has focused 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, including with banking and financial services experience. 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, risk appetite, and risk profile.

Board Succession Planning Framework

Our Board conducts formal succession planning annually and has adopted a Board Succession Planning Framework to assist the Board in its annual succession planning. That framework provides for consideration of succession planning for the Board as well as succession planning for the independent Chair and Board committee chairs to enable the Board to maintain a composition and structure aligned to the Company’s needs at the time. As part of succession planning framework, the Board considers how current and evolving risks may create needs for particular qualifications and experience on the Board and its committees, including relevant banking, bank regulatory, and financial services experience. The GNC and the Board use various tools for succession planning, including to review upcoming director retirements under the Board’s director retirement policy, individual director tenure, and average director tenure, and the tenure of each director’s service on Board committees and in committee chair roles.

 

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.

 

  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’s current composition has resulted from a thoughtful process informed by the Board’s own evaluation of its composition and effectiveness and feedback received from the Company’s engagement with shareholders and other stakeholders. As part of Board succession planning, the Board seeks to add new directors that complement the overall skills and capabilities of the Board. The Board’s current size is 12 directors and may fluctuate in the near term as the Board recruits new directors.

 

 

LOGO

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.

 


 

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Additional Qualifications and Experience Identified by Our Board as Important to Our Business and Strategy

The GNC and our Board desire that the Board as a whole has an appropriate balance of skills, knowledge, experience, viewpoints, and perspectives that are relevant to our business and strategy. 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 Identified Based on Relevance to Wells Fargo

 

       
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Financial Services Industry

Experience in one or more of the Company’s specific financial services areas

 

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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

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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

 

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Risk Management

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

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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

 

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

 

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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

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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, viewpoints, and personal attributes to our Board that are not reflected in the chart below.

 

LOGO

 

  *   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 employees 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 director nominees for election at our 2020 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 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.

 

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Corporate Governance

 

 

Item 1 – Election of Directors

Our Board plays a critical role in protecting and serving the interests of shareholders and meeting the expectations of our regulators and other stakeholders. Over the last few years, our Board has made changes 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, capabilities, 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 each incumbent director 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, except for Steven D. Black who is being nominated by the Board for election as a director at the Company’s 2020 annual meeting, are currently directors of Wells Fargo & Company. In addition to Mr. Black, who is a director nominee, the following directors are standing for election by our shareholders for the first time at the annual meeting and were previously elected by the Board as directors effective on the dates indicated below:

 

 

Charles W. Scharf joined the Company as CEO and was elected by the Board as a director effective October 21, 2019;

 

 

Richard B. Payne, Jr. was elected by the Board as a director effective October 17, 2019; and

 

 

Charles H. Noski was elected by the Board as a director effective June 1, 2019.

John D. Baker II, a current director, is not standing for re-election and will retire from our Board at the 2020 annual meeting. In addition, Elizabeth A. (Betsy) Duke and James H. Quigley each resigned from our Board on March 8, 2020. The Board is grateful to each of Ms. Duke and Messrs. Baker and Quigley for their dedication, service, and contributions as directors of our Company.

Our Board has determined that each nominee for election as a director at the annual meeting is an independent director, except for Mr. Scharf, 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 incumbent director nominee 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.

 

 


 

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Steven D. Black

 

Age: 67

Independent Nominee

Other Current Public Company Directorships: Nasdaq, Inc.

Committees: None

Mr. Black has been Co-Chief Executive Officer of Bregal Investments, Inc., New York, New York (private equity firm) since September 2012. He was Vice Chairman of JPMorgan Chase & Co. from March 2010 until February 2011, where he was a member of the Operating and Executive Committees. Prior to that position, Mr. Black was Executive Chairman of JPMorgan’s investment bank from October 2009 until March 2010. He served as co-chief executive officer of JPMorgan’s investment bank from 2004 until 2009. Mr. Black was the deputy co-chief executive officer of JPMorgan’s Investment Bank from 2003 until 2004. He also served as head of JPMorgan investment bank’s Global Equities business from 2000 until 2003 following a career at Citigroup Inc. and its predecessor firms.

Mr. Black was formerly a director of The Bank of New York Mellon Corporation.

Qualifications and Experience

 

  Leadership, Financial Services, Financial Services Risk Management, Management Succession Planning, Regulatory. Mr. Black has extensive leadership, strategic planning, and business operations experience with systematically important financial institutions acquired during his 45-year career in the investment banking and private equity industries, including as a member of JPMorgan’s operating and executive committees and as Executive Chairman and co-CEO of JPMorgan’s investment bank. Mr. Black brings significant risk management, regulatory, and international experience to our Board, particularly in the area of wholesale/institutional banking, including as a result of his service as co-CEO of JPMorgan’s investment bank during the financial crisis. His current experience as co-CEO of Bregal Investments and prior leadership roles at JPMorgan and Citigroup and predecessor companies provide him with extensive experience in risk management, including strategic and international risks, in the financial services industry.

 

  Corporate Governance, Global Perspective/International. Mr. Black’s leadership roles with large, international financial services companies and his service as a board member of Nasdaq, Inc. and as a former board member of The Bank of New York Mellon Corporation provides him with international and corporate governance experience in the financial services industry that is relevant to our Company and our Company’s businesses.

 

  Mr. Black has a Bachelor of Arts in Political Science from Duke University.

LOGO

Celeste A. Clark

 

Age: 66

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 chair of the board of trustees 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 corporate citizenship fund and 25-year Employees’ Fund.

 

  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 has 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: 68

Director since: January 2018

Other Current Public Company Directorships: Duke Energy Corporation

Committees: Audit, 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.

 

  Mr. Craver has a Bachelor of Arts degree and a M.B.A. from the University of Southern California.

LOGO

Wayne M. Hewett

 

Age: 55

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). Since March 2018, he has been Non-Executive Chairman of DiversiTech Corporation (HVAC manufacturer and distributor) and, since December 2019, Non-Executive Chairman of Cambrex Corporation (small molecule therapeutics), both portfolio companies 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.
 

 


 

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LOGO

Donald M. James

 

Age: 71

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, 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, Strategic Planning, Corporate Governance, 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 also 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.

LOGO

Maria R. Morris

 

Age: 57

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 financial and 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.

 

  Ms. Morris has a Bachelor of Arts degree from Franklin & Marshall College.
 

 


 

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LOGO

Charles H. Noski

 

Age: 67

Director since: June 2019

Independent Chair

Other Current Public Company Directorships: Booking Holdings Inc.; Hewlett Packard Enterprise Company (director nominee for election at annual meeting to be held on April 1, 2020)

Committees: Audit (Chair), Governance and Nominating

Mr. Noski is the retired Vice Chairman of Bank of America Corporation (Bank of America), Charlotte, North Carolina, where he served as Vice Chairman from June 2011 until September 2012, and executive vice president & Chief Financial Officer from May 2010 until June 2011. He was Chief Financial Officer of Northrop Grumman Corporation (Northrop Grumman), Los Angeles, California (a leading aerospace and defense company) from 2003 until 2005 and AT&T Corp. (AT&T), Basking Ridge, New Jersey (a leading telecommunications company) from 1999 until 2002. Previously, Mr. Noski served in various leadership positions, including president, chief operating officer, and Chief Financial Officer of Hughes Electronics Corporation (Hughes Electronics), El Segundo, California (a diversified electronics and communications company). Prior to joining Hughes Electronics he was a partner at Deloitte & Touche LLP.

Mr. Noski was formerly a director of Avon Products, Inc. and Microsoft Corporation (Microsoft).

Qualifications and Experience

 

  Leadership, Financial Services, Financial Services Risk Management, Regulatory. Mr. Noski has experience in financial services, regulatory matters, risk management, and strategic planning from his service as Vice Chairman and as Chief Financial Officer of Bank of America, and as a director of Morgan Stanley. As Chief Financial Officer of Bank of America, he had responsibility for all finance functions as well as corporate treasury, global corporate strategy planning and development, investor relations, corporate investments, and global principal investments.

 

  Financial Acumen, Financial Reporting, Corporate Governance, Public Policy, Technology, Global Perspective/International. His service as the CFO of multiple public companies, including AT&T and Bank of America, as the audit committee chair or audit committee member of other public companies, including Microsoft and Morgan Stanley, and as chairman of the Board of Trustees of the Financial Accounting Foundation provide him with extensive accounting and financial reporting experience relevant to the Company’s businesses and an important perspective on information security and technology. Mr. Noski’s service as a board member at various public companies provides him with an important perspective on corporate governance.

 

  Mr. Noski has a Bachelor of Science, Business Administration and a Master of Science in Accountancy from California State University, Northridge.

LOGO

Richard B. Payne, Jr.

 

Age: 72

Director since: October 2019

Other Current Public Company Directorships: None

Committees: Credit (Chair)

Mr. Payne served as vice chairman, Wholesale Banking, of U.S. Bancorp from November 2010 until he retired in April 2016, and as vice chairman, Corporate Banking, at U.S. Bancorp, Minneapolis, Minnesota from July 2006 to November 2010. Prior to joining U.S. Bancorp, he served as executive vice president for National City Corporation, Cleveland, Ohio, from 2001 to 2006. Prior to joining National City, Mr. Payne was a managing director at First Union Corporation and served in various roles of increasing responsibility in corporate banking at Bank of America Corporation predecessor banks. He also served in the corporate finance group of Morgan Stanley and in roles of increasing responsibility at a predecessor bank of JPMorgan Chase & Co.

Qualifications and Experience

 

  Leadership, Financial Services, Regulatory, Financial Services Risk Management, Business Operations. Mr. Payne brings extensive executive management experience and expertise in risk management in the financial services industry to our Board as a result of his service in a wide range of leadership experience during his approximately 40-year career with U.S. Bancorp, Morgan Stanley, and predecessor banks of The PNC Financial Services Group, Inc., Wells Fargo & Company, Bank of America Corporation, and JPMorgan Chase & Co., as well as his service as a past board member of the Securities Industry and Financial Markets Association and past member of the Financial Services Roundtable. As Vice Chairman, Wholesale Banking of U.S. Bancorp, Mr. Payne had responsibility throughout the United States for U.S. Bank’s national corporate banking, commercial banking, capital markets, commercial real estate, financial institutions, equipment finance, global treasury management, government and nonprofit banking, leveraged lending, specialty finance, and high-grade fixed income businesses. His experience as an executive in the financial services industry provides him with an important perspective on wholesale/institutional banking, risk management, community affairs, public policy, and regulatory matters in the financial services industry.

 

  Community Affairs, Public Policy. Mr. Payne brings leadership experience in community affairs and public policy matters relevant to our Company to our Board, including through his service as a past board member of each of the Securities Industry and Financial Markets Association, the Financial Services Roundtable, and the U.S. Bank Foundation and U.S. Bancorp’s “Proud to Serve” Veterans network. Prior to beginning his banking career, Mr. Payne served for over two years in the U.S. Navy.

 

  Mr. Payne has a Bachelor of Arts from the University of Virginia and a M.B.A. from Harvard Business School.
 

 


 

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LOGO

Juan A. Pujadas

 

Age: 58

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 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. Mr. Pujadas has 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.

LOGO

Ronald L. Sargent

 

Age: 64

Director since: February 2017

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

Committees: Audit, 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. 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 a Bachelor of Arts from Harvard College and a M.B.A. from Harvard Business School.
 

 


 

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LOGO

Charles W. Scharf

 

Age: 54

Director since: October 2019

Other Current Public Company Directorships: Microsoft Corporation

Mr. Scharf has served as our Company’s President and Chief Executive Officer, and as a director since October 2019. He served as Chief Executive Officer of The Bank of New York Mellon Corporation, New York, New York, from July 2017, and as chairman from January 2018 to September 2019. Mr. Scharf was the Chief Executive Officer and a director of Visa Inc., San Francisco, California (digital commerce), from November 2012 to December 2016. Prior to joining Visa Inc., he served in several senior positions at JPMorgan Chase & Co. and Citigroup Inc., and their predecessors.

Mr. Scharf was formerly a director of The Bank of New York Mellon Corporation and Visa Inc.

Qualifications and Experience

 

  Leadership, Financial Services, Corporate Governance, Management Succession Planning, Regulatory, Global Perspective/International. Mr. Scharf has served in a variety of leadership positions during his approximately 32-year career in leadership roles in the banking and payments industries. He brings extensive financial services experience to our Board and has an important perspective regarding the regulatory environment for financial services companies and our Company.

 

  Business Operations, Strategic Planning, Technology, Digital. Mr. Scharf brings experience in business operations, strategic planning, and technological transformation in the financial services industry from his tenure as Chief Executive Officer of Visa Inc. where he transformed the firm into a technology-driven digital commerce company by partnering with the world’s leading technology companies to drive new payment experiences and introduce new technologies to improve payment system security. His experience as a chief executive officer and leader of business units at JPMorgan and a predecessor bank provide him a perspective on operations and strategic planning relevant to our Company’s businesses.

 

  Risk Management, Financial Acumen, Financial Reporting. Mr. Scharf’s experience as chief executive officer and other leadership positions provide him with extensive risk management experience in the financial services industry. He gained financial reporting experience relevant to our Company through his service as the CFO of a JPMorgan predecessor bank and a Citigroup Inc. predecessor bank.

 

  Mr. Scharf has a Bachelor of Arts degree from Johns Hopkins University and a M.B.A. from New York University.

LOGO

Suzanne M. Vautrinot

 

Age: 60

Director since: February 2015

Other Current Public Company Directorships: CSX Corporation, Ecolab Inc., Parsons 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.

Ms. Vautrinot was formerly a director of NortonLifeLock Inc. (formerly Symantec Corporation).

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. Ms. Vautrinot 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 directors 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 incumbent 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:

 

 

Third-party search firms,

 

 

Board members,

 

 

Leaders and other participants in the financial services industry,

 

 

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.

Charles H. Noski, who became a director in June 2019, was recommended to the GNC for consideration by a third party search firm engaged by the GNC. Richard B. Payne, Jr., who became a director in October 2019, was recommended to the GNC for consideration by certain leaders in the financial services industry. Steven D. Black, who is a director nominee for election at our 2020 annual meeting, was recommended to the GNC for consideration by our CEO. In addition to providing information on a number of potential director candidates, the third party search firm reviewed and provided information about Messrs. Black, Noski, and Payne for review by the GNC and our Board.

 


 

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Corporate Governance

 

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.

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 company's 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

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.

As reflected in our Corporate Governance Guidelines and discussed under Board Composition above, our Board has established a retirement age of 72 for directors. Under that retirement age policy, non-management directors will not be nominated for election for a term that would begin after the director’s 72nd birthday, although the GNC may recommend and the Board may approve the nomination of a non-management director after the age of 72 if, due to special or unique circumstances, it is in the best interests of the Company and its shareholders that the director continue to be nominated for reelection to the Board. One of the Board’s director nominees, Richard B. Payne, Jr., will be age 72 at the time of the Company’s 2020 annual meeting. Consistent with our disclosure made at the time Mr. Payne was initially elected to the

 


 

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Board in October 2019, the Board, based on the recommendation of the GNC, determined to nominate Mr. Payne for election at the 2020 annual meeting to serve as a director of the Company in light of the particular skills and experience that he brings to the Board. In determining that Mr. Payne’s nomination is in the best interests of the Company and its shareholders, the Board considered, among other factors, his substantial corporate and commercial banking experience, extensive knowledge of the bank regulatory environment for large financial institutions, and credit expertise. Effective March 1, 2020, Mr. Payne succeeded John D. Baker II as chair of the Credit Committee.

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;

 

 

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 plan, financial statements and policies, risk management framework and significant risks, regulatory matters, 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.

 


 

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Director Independence

Our Corporate Governance Guidelines provide that a significant majority of the directors on our Board, and all members of the Audit 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 2020 regarding banking and financial services, commercial, charitable, familial, and other relationships between each director and director nominee, his or her respective immediate family members, and/or certain entities affiliated with such directors, director nominees, and immediate family members, on the one hand, and our Company, on the other, to determine the director’s or director nominee’s independence. After reviewing the information presented to it and considering the recommendation of the GNC, our Board determined that, except for Charles W. Scharf, who is a Wells Fargo employee, all current directors and director nominees (Steven D. Black, John D. Baker II, Celeste A. Clark, Theodore F. Craver, Jr., Wayne M. Hewett, Donald M. James, Maria R. Morris, Charles H. Noski, Richard B. Payne, Jr., Juan A. Pujadas, Ronald L. Sargent, and Suzanne M. Vautrinot) are independent under the Director Independence Standards, including the NYSE “bright line” standards of independence. John D. Baker II, a current director, is not standing for re-election and will retire from our Board at the 2020 annual meeting. Our Board determined, therefore, that 11 of our Board’s 12 director nominees are independent. The Board previously determined that Karen B. Peetz was an independent director prior to her retirement from our Board in April 2019 and each of Elizabeth A. Duke and James H. Quigley was an independent director prior to their resignation from our Board in March 2020.

In connection with making its independence determinations, our Board considered the following relationships, as well as the relationships with a director nominee 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 2019 with certain of our directors and director nominees, 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 2019 consolidated gross revenues.

 

Other

Relationships

  

Theodore F. Craver, Jr. has an outstanding pension balance with an aggregate actuarial present value of approximately $519,000 earned from his prior employment with First Interstate Bancorp, which employment ended when First Interstate was acquired by legacy Wells Fargo in April 1996. Elizabeth A. Duke has outstanding pension and supplemental retirement plan balances with an aggregate actuarial present value of approximately $173,000 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. 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 Mr. Craver or Ms. Duke and are currently being made in accordance with the applicable plan documents.

 

 


 

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Our Board and its Committees

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.

 

Risk Is Part of Our Business Model

The Company measures and manages risk as part of our business, including in connection with the products and services we offer to our customers. The risks we take include financial and non-financial risks.

Risk Profile

The Company monitors and the Board oversees the Company’s risk profile, which is an assessment of aggregate risks associated with our size, business mix, and the external environment in which we operate.

Risk Appetite

Management defines and the Board approves the Company’s risk appetite, which is the amount of risk the Company is comfortable taking given its current level of resources. Risk appetite boundaries are set within the Company’s risk capacity, or the maximum level of risk that the Company could assume given its current level of resources before triggering regulatory and other constraints on its capital and liquidity needs.

Risk and Strategy

Our CEO drives the strategic planning process, which identifies the Company’s most significant opportunities and challenges, develops options to address them, and evaluates the risks and trade-offs of each, and articulates the resulting decisions in the form of a Company-wide strategic plan. The Company’s risk profile, risk capacity, risk appetite, and risk management effectiveness (e.g., the holistic measure of the quality and effectiveness of the Company’s risk management activities, including the functional or programmatic use of controls and capabilities to manage risks) are considered in the strategic planning process.

Risk and Culture

Every employee has a role to play in managing risk at Wells Fargo because risk is everyone’s responsibility. The Board also holds management accountable for establishing and maintaining the right risk culture and effectively managing risk. See the Performance Management and Compensation section of this proxy statement for additional information on the ways in which performance evaluations and incentive compensation decisions are tied to, and take into account, effective risk management. The Board, through its Human Resources Committee, plays an important role in overseeing the Company’s performance management and incentive compensation programs.

Risk Management Framework

The Board’s Risk Committee annually reviews and approves our risk management framework and oversees its implementation, including the processes established by management to identify, measure, monitor, and manage risks. It also monitors the Company’s adherence to its risk appetite. In addition, the Risk Committee oversees Independent Risk Management and the appointment, performance, and replacement of the Chief Risk Officer who reports functionally to the Risk Committee and administratively to the CEO.

The Company’s risk management framework sets forth the core principles on how the Company seeks to manage and govern its risk. Many Company policies and documents anchor to the risk management framework’s core principles.

Within our risk operating model, the Company has three lines of defense: (1) the front line, which is composed of business groups and certain activities of enterprise functions; (2) Independent Risk Management; and (3) Internal Audit. Our risk operating model creates necessary interaction, interdependencies, and ongoing engagement among the three lines of defense.

 

 


 

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Risk Governance

Role of the Board and Board Committee Structure

The Board oversees the Company’s business, including its risk management. The Board assesses management’s performance, provides credible challenge, and holds management accountable for maintaining an effective risk management program and for adhering to risk management expectations.

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 about committee activities, including risk oversight matters and are comprised solely of independent directors. Each Board committee has defined authorities and responsibilities for primary oversight of specific risks, as outlined in its charter, and works closely with management to understand and oversee our Company’s key risk exposures. Additional information about our risk management, as well as the risk oversight responsibilities of each of our Board committees, including the Risk Committee, is described in the Financial Review—Risk Management section in our Annual Report on Form 10-K for the year ended December 31, 2019 and under Committees of our Board in this proxy statement.

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, the Board has enhanced the risk oversight responsibilities of various Board committees and will continue to review their oversight responsibilities as part of its annual self-evaluation process.

The Board believes that its Board leadership structure with separate CEO and independent Chair roles has the effect of enhancing our Board’s risk oversight because of the independent Chair’s involvement in risk oversight matters, including through the Board agenda planning process. The Board also believes that Mr. Scharf’s experience and

leadership of the Company’s business, including strategy aligned with risk, significantly contributes to our Board’s understanding and appreciation of risk issues.

Management Committee Structure

The Company also has established management committees, including those focused on risk, that support management in carrying out its governance and risk management responsibilities. Certain management-level governance committees are decision-making bodies that operate for a particular purpose and are overseen directly by and/or report to a Board committee. The Enterprise Risk and Control Committee (ERCC) is a management-level governance committee that is chaired by the Chief Risk Officer and governs the management of all risk types, including financial and non-financial risks. The ERCC receives information about risk and control events, addresses escalated risks and issues, actively oversees risk control, and provides regular updates to the Risk Committee regarding current and emerging risks and management’s assessment of the effectiveness of the Company’s risk management program.

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 unauthorized access, use, disclosure, disruption, modification, or destruction of information or information systems. The 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 cybersecurity risks as well as data management risk. The Technology Subcommittee reviews and recommends to the Risk Committee for approval any significant supporting information security risk (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.

 

 


 

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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 Charles W. Scharf, Richard B. Payne, Jr., and Charles H. Noski who joined our Board after April 2019, attended our Company’s 2019 annual shareholders’ meeting.

Our Board held 15 meetings during 2019. Attendance by our Board’s current directors at meetings of our Board and its committees (including subcommittees) averaged 98% during 2019. Each current director who served as a director during 2019 attended at least 75% of the total number of 2019 meetings of our Board and committees on which he or she served. Our Board met in executive session without management present during 12 of its 2019 meetings. As described in Strong Independent Board Leadership, the independent Chair of our Board chairs executive sessions of the non-management and independent directors. During 2019, our former independent Chair, Elizabeth A. Duke, chaired each of the executive sessions of the non-management and independent directors. Mr. Noski, our current independent Chairman, now chairs all such executive sessions.

Committees of our Board

Our Board has established seven standing committees: Audit, Corporate Responsibility, Credit, Finance, Governance and Nominating, Human Resources, and Risk. Our Board’s committees act on behalf of the Board and report on their activities to the entire Board. The Board appoints the members and chair of each committee based on the recommendation of the GNC.

Over the last few years, the Board has 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.

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. All of the Board’s seven standing Board committees have new chairs since January 2017. 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 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.

 


 

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The following table provides current membership information for each of our Board’s standing committees.

 

Name(1)

  AC     CRC     Credit     Finance     GNC     HRC     Risk  
                                                         

John D. Baker II

    ·               ·       ·                          

Celeste A. Clark

            Chair       ·               ·                  

Theodore F. Craver, Jr.

    ·                       Chair                          

Wayne M. Hewett

            ·                               ·       ·  

Donald M. James

                            ·       Chair       ·          

Maria R. Morris

                                            ·       Chair  

Charles H. Noski(2)

    Chair                               ·                  

Richard B. Payne, Jr.(3)

                    Chair                                  

Juan A. Pujadas

                    ·       ·                       ·  

Ronald L. Sargent(4)

    ·                               ·       Chair          

Suzanne M. Vautrinot

            ·       ·                               ·  

Number of Members

    4       3       5       4       4       4       4  

· = Member

 

(1)   Steven D. Black is a nominee who does not currently serve on our Board or any of its committees.

 

(2)   Effective March 1, 2020, Mr. Noski became a member of the GNC. Effective March 8, 2020, Mr. Noski succeeded James H. Quigley as chair of the Audit Committee.

 

(3)   Effective March 1, 2020, Mr. Payne succeeded John D. Baker II, who will retire from our Board at the 2020 annual meeting, as chair of the Credit Committee.

 

(4)   Effective February 1, 2020, Mr. Sargent ceased to be a member of the CRC.

Other Special Purpose Board Committees

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

 

 

Compensation Committee Interlocks and Insider Participation

Current directors Wayne M. Hewett, Donald M. James, Maria R. Morris, and Ronald L. Sargent and former director Karen B. Peetz served as members of the HRC during 2019. During 2019, no member of the HRC was an employee, officer, or former officer of the Company. None of our executive officers served in 2019 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.

 


 

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Board Committee Composition and Oversight Responsibilities

 

LOGO   

Risk Committee

Maria R. Morris, Chair

  

Members:

Morris (Chair)

Hewett

 

  

Pujadas

Vautrinot

 

  

Number of

meetings in 2019:

10 (includes

1 joint meeting with Audit Committee)

 

 

 

 

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 Independent Risk Management 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/Anti-Money Laundering), information security (including cyber security) risk, 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 resiliency and compliance risk management programs and third party risk management policy;

 

  Oversees our company-wide risk culture and 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 which met 12 times in 2019.

 

  The Risk Committee delegated oversight for technology, information security/cyber, and data management risk to a Technology Subcommittee which met 14 times in 2019.

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 two members (Morris 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 technology/cyber (Pujadas and Vautrinot), and operations (Hewett).

 

 


 

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LOGO

  

Audit Committee

Charles H. Noski, Chair

  

Members:

Noski (Chair)

Baker

  

Craver

Sargent

  

Number of

meetings in 2019:

12 (includes

1 joint meeting with Risk Committee)

 

 

 

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; and

 

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

Independence: Our Board has determined that each member of the Audit Committee 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 Audit Committee listed above are financially literate as required by NYSE rules and each current Audit Committee member (John D. Baker II, Theodore F. Craver, Jr., Charles H. Noski, and Ronald L. Sargent) qualifies as an “audit committee financial expert” as defined by SEC regulations. No Audit Committee member may serve on the audit committee of more than two other public companies.

 

 

LOGO   

Corporate Responsibility

Committee (CRC)

Celeste A. Clark, Chair

  

Members:

Clark (Chair)

Hewett

  

Vautrinot

 

  

Number of

meetings in 2019:

4

 

 

 

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.
 

 


 

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Corporate Governance

 

 

LOGO

  

Governance and Nominating

Committee (GNC)

Donald M. James, Chair

  

Members:

James (Chair)

Clark

  

Noski

Sargent

  

Number of

meetings in 2019:

8

 

 

 

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;

 

  Reviews and assesses our governance practices and the adequacy of our Corporate Governance Guidelines;

 

  Oversees an annual evaluation of the performance of our Board and its committees;

 

  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.

 

 

LOGO   

Human Resources Committee (HRC)

Ronald L. Sargent, Chair

  

Members:

Sargent (Chair)

Hewett

  

James

Morris

  

Number of

meetings in 2019:

17

 

 

 

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 performance management, 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.

 

 

 


 

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LOGO   

Credit Committee

Richard B. Payne, Jr., Chair

  

Members:

Payne (Chair)

Baker

Clark

  

Pujadas

Vautrinot

 

  

Number of

meetings in 2019:

4

 

 

 

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 the review of our Company’s net credit loss forecast, credit stress testing framework and related stress test results.
 

 

LOGO   

Finance Committee

Theodore F. Craver, Jr., Chair

  

Members:

Craver (Chair)

Baker

  

James

Pujadas

  

Number of

meetings in 2019:

7

 

 

 

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 plan 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.
 

 


 

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Corporate Governance

 

 

Director Compensation

The table below provides information on 2019 compensation for our non-employee directors. Mr. Scharf is an employee director and does not receive separate compensation for his Board service. In addition, Timothy J. Sloan and C. Allen Parker each served as an employee director during a portion of 2019 and did 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.

2019 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

 

 

 

 

168,000

 

 

 

 

 

 

180,025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,000

 

 

 

 

 

 

353,025

 

 

 

Celeste A. Clark

 

 

 

 

157,833

 

 

 

 

 

 

180,025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

337,858

 

 

 

Theodore F. Craver, Jr.

 

 

 

 

180,000

 

 

 

 

 

 

180,025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

360,025

 

 

 

Elizabeth A. Duke

 

 

 

 

455,000

 

 

 

 

 

 

180,025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

635,025

 

 

 

Wayne M. Hewett

 

 

 

 

183,790

 

 

 

 

 

 

240,051

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

423,841

 

 

 

Donald M. James

 

 

 

 

196,000

 

 

 

 

 

 

180,025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

376,025

 

 

 

Maria R. Morris

 

 

 

 

273,333

 

 

 

 

 

 

180,025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

453,358

 

 

 

Charles H. Noski

 

 

 

 

67,750

 

 

 

 

 

 

165,036

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

232,786

 

 

 

Richard B. Payne, Jr.

 

 

 

 

23,847

 

 

 

 

 

 

105,024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

128,871

 

 

 

Karen B. Peetz

 

 

 

 

67,111

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

67,111

 

 

 

Juan A. Pujadas

 

 

 

 

201,065

 

 

 

 

 

 

180,025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

381,089

 

 

 

James H. Quigley

 

 

 

 

245,000

 

 

 

 

 

 

180,025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

425,025

 

 

 

Ronald L. Sargent

 

 

 

 

214,000

 

 

 

 

 

 

180,025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

394,025

 

 

 

Suzanne M. Vautrinot

 

 

 

 

169,167

 

 

 

 

 

 

180,025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

349,191

 

 

 

 

(1)   Ms. Peetz retired as a director effective April 23, 2019, the date of our 2019 annual meeting. Ms. Duke and Mr. Quigley resigned as directors on March 8, 2020.

 

(2)   Includes fees earned, whether paid in cash or deferred, for service on our Company’s Board in 2019 (including any such amounts paid in 2020) 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 (WFBNA), a wholly owned subsidiary of our Company, or are members of one or more special purpose committees. Messrs. Craver, Payne, and Pujadas and Ms. Morris, as current directors of WFBNA, Mr. Quigley as a former director of WFBNA during 2019 and until March 2020, and Ms. Peetz as a former director of WFBNA from January 2019 to April 2019, received an annual cash retainer of $10,000, payable quarterly in arrears, and a fee of $2,000 for any separate meeting of the WFBNA Board not held concurrently with a Company Board or committee meeting. In 2019, all except two WFBNA Board meetings were held concurrently with a Company Board meeting. A fee of $2,000 was paid for certain special purpose committee meetings attended which were not held concurrently with a Company Board or committee meeting.

 


 

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Corporate Governance

 

(3)   Includes fees earned in 2019 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 2019 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

 

 

 

 

799.0166

 

 

 

 

 

 

$39,000

 

 

    901.6565     $43,000  
    835.7114     $41,000  
     

 

836.4312

 

 

 

   

 

$45,000

 

 

 

 

 

Celeste A. Clark

 

 

 

 

729.8709

 

 

 

 

 

 

$35,625

 

 

    686.7268     $32,750  
    667.5499     $32,750  
     

 

608.7361

 

 

 

   

 

$32,750

 

 

 

 

 

Elizabeth A. Duke

 

 

 

 

696.5786

 

 

 

 

 

 

$34,000

 

 

    754.8752     $36,000  
    611.4961     $30,000  
     

 

557.6208

 

 

 

   

 

$30,000

 

 

 

 

 

Wayne M. Hewett

 

 

 

 

405.0432

 

 

 

 

 

 

$19,770

 

 

    532.0822     $25,375  
    435.6910     $21,375  
     

 

471.6543

 

 

 

   

 

$25,375

 

 

 

 

 

Charles. H. Noski

 

 

 

 

 

 

 

 

 

 

 

 

    172.9922     $8,250  
    626.7835     $30,750  
     

 

534.3866

 

 

 

   

 

$28,750

 

 

 

 

 

Richard B. Payne, Jr.

 

 

 

 

 

 

 

 

 

 

 

 

         
         
     

 

443.2485

 

 

 

   

 

$23,847

 

 

 

 

 

Ronald L. Sargent

 

 

 

 

1085.8431

 

 

 

 

 

 

$53,000

 

 

    1153.2816     $55,000  
    998.7770     $49,000  
    

1059.4796

 

   

$57,000

 

 

 

(4)   We granted 3,802 shares of our common stock to each non-employee director elected at the 2019 annual meeting of shareholders on April 23, 2019. Prior to the 2019 annual meeting, we granted 1,260 shares to Mr. Hewett upon his election to the Board effective January 7, 2019. In addition, we granted 3,707 shares to Mr. Noski upon his election to the Board effective June 3, 2019 and 2,117 shares to Mr. Payne upon his election to the Board effective October 17, 2019. 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 23, 2019, January 7, 2019, June 3, 2019, and October 17, 2019, 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, 2019. All options were fully exercisable at December 31, 2019. 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

 

 

Donald M. James

 

 

 

 

7,570

 

 

 

(6)   The amount under “All Other Compensation” for Mr. Baker represents a Company matching contribution during 2019 under our Company’s charitable matching contribution program, which for 2019 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. The director charitable matching contribution program was discontinued effective June 30, 2019.

 


 

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Corporate Governance

 

Structure of our Director Compensation Program

The GNC and the Board review the director compensation program annually. No changes have been made to the annual cash retainer since 2007 and the annual equity award amount since 2015.

Cash Compensation

The following table shows the components of cash compensation paid to non-employee directors in 2019. Cash retainers and fees are paid quarterly in arrears. Directors who join the Board during the year receive a prorated annual cash retainer.

 

 

2019 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 Audit and Risk Committee

 

 

40,000

 

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

 

 

25,000

 

Regular or Special Board or Committee/Subcommittee Meeting Fee3

 

 

2,000

 

 

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

 

(2)   The Company’s independent Vice Chairman (if any) would receive 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 committee/subcommittee meeting. Effective March 1, 2019, our Board and the GNC approved the payment of meeting fees for subcommittees.

WFBNA directors receive an additional $10,000 annual cash retainer. The Chair of WFBNA Board’s Regulatory Compliance Oversight Committee (RCOC), to which each of WFBNA’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 2019, 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 WFBNA 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 2019 on interest-bearing accounts was 2.91%. 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, 2019, 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 2019. 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.

 


 

       2020 Proxy Statement       43


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Information About Related Persons

 

 

Related Person Transactions

Lending and Other Ordinary Course Financial Services Transactions

During 2019, some of our executive officers, directors (including certain of our HRC members) and director nominees, and each of the persons we know of that beneficially owned more than 5% of our common stock on December 31, 2019 (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, and investment banking 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 other products and services, including the purchase of insurance products and aviation services, from Berkshire Hathaway and its affiliates and the purchase of 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.

Relocation Program

Prior to July 30, 2002, Wells Fargo had a relocation program for executives who relocated at our request and were eligible to receive a first mortgage loan (subject to applicable lending guidelines) from Wells Fargo Home Lending on the same terms as those available to our employees, which terms included waiver of the loan origination fee. Certain participants also were eligible to receive a mortgage interest subsidy on the first mortgage loan of up to 25% of the executive’s annual base salary, payable over a period of not less than the first three years of the first mortgage loan, and a 30-year, interest-free second mortgage down payment loan in an amount up to 100% of his or her annual base salary to purchase a new primary residence. This relocation program was revised effective as of July 30, 2002 to eliminate the provision of such loan benefits in the future for executive officers in compliance with the requirements under the Sarbanes-Oxley Act of 2002.

We currently have an interest-free loan outstanding under this prior relocation program to one of our executive officers. In 2011 and prior to his becoming an executive officer during 2019, we made a loan in the original amount of $275,000 at a zero percent interest rate to Derek A. Flowers, our current Head of Strategic Execution and Operations, in connection with his relocation. The highest principal balance of the loan during 2019 and balance as of December 31, 2019 were $275,000. No principal and interest were paid on the loan during 2019. The loan was repaid in full in the first quarter of 2020.

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 2019, Ms. Hunnicutt received compensation of approximately $327,000. 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. Mr. Levy is retiring from the Company on March 31, 2020. In 2019, Mr. Bush received compensation of approximately $170,000. Since 2017, the Company has employed Steven D. Black’s sister-in-law, Laine Murdock, who is currently an employee in our Marketing group. In 2019, Ms. Murdock received compensation of approximately $131,000. Since 2015, Wells Fargo also has employed a relative of Mr. Black who is not an “immediate family member” for purposes of the SEC’s related person transaction rules. We established the compensation paid to each of these employees in 2019 in accordance with our employment and compensation practices applicable to employees with equivalent qualifications and responsibilities and holding similar positions. In addition to this compensation, each of these employees also received employee benefits generally available to all of our employees. Each of these employees is in a non-strategic business line or enterprise function role, is not an executive officer of our Company, and does not directly report to an executive officer of our Company.

 


 

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Information About Related Persons

 

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

 

 

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 Audit Committee, 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 Audit Committee 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.
 

 


 

       2020 Proxy Statement       45


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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 Audit Committee approves, ratifies, or disapproves those Interested Transactions required to be reviewed by the Audit Committee 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 Audit Committee, 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 Audit Committee 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 Audit Committee, 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’s cash salary.

 

 

Shares counted toward ownership include shares a non-employee director has deferred pursuant to the Directors Stock Compensation and Deferral Plan (Directors Plan) and any applicable predecessor director compensation and deferral plans, shares (or share equivalents) an executive officer holds in the Company 401(k) Plan, Supplemental 401(k) Plan, Deferred Compensation Plan, Direct Purchase and Dividend Reinvestment Plan, and shares owned by an executive officer’s spouse. Compliance with these stock ownership requirements is calculated annually and reported to the Governance and Nominating Committee (for non-employee directors) or to the Human Resources Committee (for executive officers).

Anti-Hedging Policies

To further strengthen the alignment between stock ownership and your interests as shareholders, our Code of Ethics and Business Conduct requirements prohibit all employees, including our executive officers, and directors from engaging in derivative or hedging transactions involving any Company securities, including our common stock. This hedging prohibition with respect to Company securities applies to any type of transaction in securities that limits investment risk with the use of derivatives, such as options, puts, calls, futures contracts, or other similar instruments.

No Pledging Policy

Our Board has adopted policies which are reflected in our Corporate Governance Guidelines that prohibit our directors and executive officers from pledging Company equity securities as collateral for margin or other similar loan transactions.

 


 

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Ownership of Our Common Stock

 

Director and Executive Officer Stock Ownership Table

The following table shows how many shares of common stock our current directors and nominees for director, our named executives, and all directors, named executives, and executive officers as a group owned on February 24, 2020, and the number of shares they had the right to acquire within 60 days of that date, including restricted share rights (RSRs) and Performance Shares that are scheduled pursuant to the applicable award agreements to vest within 60 days of that date. This table also shows, as of February 24, 2020, the number of common stock units credited to the accounts of our non-employee directors, named executives, and all directors, director nominees, named executives, and executive officers as of that date as a group under the terms of the benefit and deferral plans in which they participate. None of our directors, named executives, or executive officers, individually or as a group, beneficially own more than 1% of our outstanding common stock.

 

   

 

Amount and Nature of Ownership(1)

 

 

Name

 

Common
Stock

Owned(2)(3)
(a)

 

   

Options
Exercisable
within 60 days
of 2/24/20(4)
(b)

 

   

Common
Stock
Units(5)(6)
(c)

 

   

Total(7)
(d)

 

 

 

Non-Employee Directors and Director Nominees

 

                               

 

John D. Baker II

 

    52,832       7,570       106,571       166,973  

 

Steven D. Black

 

                       

 

Celeste A. Clark

 

    4,022      

 

 

 

 

    7,968       11,990  

 

Theodore F. Craver, Jr.

 

    11,589             8,522       20,111  

 

Wayne M. Hewett

 

    101             6,996       7,097  

 

Donald M. James

 

    17,160       7,570       91,133       115,863  

 

Maria R. Morris

 

    89             8,522       8,611  

 

Charles H. Noski

 

    309             5,050       5,359  

 

Richard B. Payne, Jr.

 

    212             2,366       2,578  

 

Juan A. Pujadas

 

    9,585                   9,585  

 

Ronald L. Sargent

 

    18,131             22,266       40,397  

 

Suzanne M. Vautrinot

 

    2,007             17,795       19,802  

Named Executives

                               

 

Charles W. Scharf*

 

    4,019                   4,019  

 

John R. Shrewsberry

 

    482,631       217,804       19,281       719,716  

 

Mary T. Mack

 

    89,928       92,516             182,444  

 

Perry G. Pelos

 

    99,876       127,270       62,674       289,820  

 

Saul Van Beurden

 

          33,449             33,449  

 

Timothy J. Sloan

 

    1,075,396       335,968       40,699       1,452,063  

 

C. Allen Parker

 

    109       144,101             144,210  

 

All directors, director nominees, named executives, and executive officers as a group (27 persons)(8)

 

    2,325,866       1,134,234       411,910       3,872,010  

 

*   Mr. Scharf also serves as a director.

 

(1)   Unless otherwise stated in the footnotes below, each of the named individuals and each member of the group have sole voting and investment power for the applicable shares of common stock shown in the table.

 

(2)   The amounts shown for named executives and executive officers include shares of common stock allocated to the account of each named executive and executive officer under one or both of the Company’s 401(k) Plan and Stock Purchase Plan as of February 24, 2020.

 

(3)   For the following directors, named executives, and for all directors, named executives, and executive officers as a group, the share amounts shown in column (a) of the table include certain shares over which they may have shared voting and investment power:
   

John D. Baker II, 5,275 shares held in a trust of which he is a co-trustee and in a trust by a partnership in which he is a partner; also includes 25 shares held for the benefit of a family member for which he disclaims beneficial ownership;

   

Theodore F. Craver, Jr., 11,500 shares held in a trust of which he is a co-trustee;

   

Mary T. Mack, 54,083 shares held in a joint account;

   

Charles H. Noski, 235 shares held in a trust of which he is a co-trustee;

 


 

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Ownership of Our Common Stock

 

   

Charles W. Scharf, 3,863 shares held in a joint account;

   

John R. Shrewsberry, 474,419 shares held in a trust of which he is a co-trustee;

   

Timothy J. Sloan, 1,013,869 shares held in a trust of which he is a co-trustee, and 61,527 shares held in a grantor retained annuity trust of which he is a co-trustee;

   

Suzanne M. Vautrinot, 1,901 shares held in a trust of which she is a co-trustee; and

   

All directors, named executives, and executive officers as a group, 1,812,613 shares.

 

(4)   Includes the following number of RSRs and 2017 Performance Shares (including whole share dividend equivalents credited as of or within 60 days of February 24, 2020) that are scheduled pursuant to the applicable award agreements to vest within 60 days of February 24, 2020, subject to the terms and conditions of the award: Mr. Scharf – No RSRs and no Performance Shares; Mr. Shrewsberry – 16,223 RSRs and 201,581 Performance Shares; Ms. Mack – 14,124 RSRs and 78,392 Performance Shares; Mr. Pelos – 15,280 RSRs and 111,990 Performance Shares; Mr. Van Beurden – 33,449 RSRs and no Performance Shares; Mr. Sloan – No RSRs and 335,968 Performance Shares; Mr. Parker – 50,481 RSRs and 93,620 Performance Shares; and all named executives and executive officers as a group – 173,493 RSRs and 945,601 Performance Shares. The 2017 Performance Shares (including dividend credits) remain subject to forfeiture under the terms and conditions of the awards, and the HRC has delayed payment of the awards as discussed under Compensation Discussion and Analysis – 4. Pay Practices – Performance Shares Outstanding.

 

(5)   For named executives and executive officers, includes the following whole common stock units credited to their accounts as of February 24, 2020 under the terms of the Supplemental 401(k) Plan and/or Deferred Compensation Plan, which amounts will be paid only in shares of common stock:

 

Name

 

 

 

Supplemental
401(k) Plan

 

   

 

Deferred

Compensation Plan

 

 

 

Charles W. Scharf

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

John R. Shrewsberry

 

 

 

 

 

 

10,315

 

 

 

 

 

 

 

 

 

8,966

 

 

 

 

 

Mary T. Mack

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Perry G. Pelos

 

 

 

 

 

 

8,148

 

 

 

 

 

 

 

 

 

54,526

 

 

 

 

 

Saul Van Beurden

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Timothy J. Sloan

 

 

 

 

 

 

40,699

 

 

 

 

 

 

 

 

 

 

 

 

 

 

C. Allen Parker

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

All named executives and executive officers as a group

 

 

 

 

 

 

71,229

 

 

 

 

 

 

 

 

 

63,492

 

 

 

 

 

(6)   For non-employee directors, includes common stock units credited to their accounts as of February 24, 2020 pursuant to deferrals made under the terms of the Directors Plan and predecessor director compensation and deferral plans. All of these units, which are credited to individual accounts in each director’s name, will be paid in shares of our common stock except for 26,341 shares in the aggregate, which will be paid in cash.

 

(7)   Total does not include the following RSRs and/or target number of Performance Shares (including dividend equivalents credited on that target number as of February 24, 2020) granted under the Company’s Long-Term Incentive Compensation Plan that were not vested as of February 24, 2020, or scheduled pursuant to the applicable award agreements to vest within 60 days after February 24, 2020. Upon vesting, each RSR and Performance Share will convert to one share of common stock. Performance Share amounts are subject to increase or decrease depending upon the Company’s satisfaction of performance criteria and other conditions. The table below does not include 311,787 Performance Shares (including dividend credits) that were granted to Mr. Sloan in February 2019 while he was CEO. Following completion of the compensation process for 2019 performance, the HRC exercised its discretion to cancel this award. See also the Outstanding Equity Awards at Fiscal Year-End table.

 

Name

 

 

            RSRs

 

   

 

Performance Shares

 

 

 

Charles W. Scharf

 

 

 

 

 

 

575,762

 

 

 

 

 

 

 

 

 

 

 

 

 

 

John R. Shrewsberry

 

 

 

 

 

 

32,044

 

 

 

 

 

 

 

 

 

308,243

 

 

 

 

 

Mary T. Mack

 

 

 

 

 

 

25,115

 

 

 

 

 

 

 

 

 

210,561

 

 

 

 

 

Perry G. Pelos

 

 

 

 

 

 

25,982

 

 

 

 

 

 

 

 

 

232,193

 

 

 

 

 

Saul Van Beurden

 

 

 

 

 

 

66,075

 

 

 

 

 

 

 

 

 

31,632

 

 

 

 

 

Timothy J. Sloan

 

 

 

 

 

 

7,515

 

 

 

 

   

 

248,278

 

 

 

 

C. Allen Parker

 

 

 

 

 

 

15,589

 

 

 

 

 

 

 

 

 

118,778

 

 

 

 

 

All named executives and executive officers as a group

 

 

 

 

 

 

1,145,314

 

 

 

 

   

 

1,527,391

 

 

 

 

(8)   One of our executive officers also owns 25 shares of 7.50% Non-Cumulative Perpetual Convertible Class A Preferred Stock, Series L.

 


 

       2020 Proxy Statement       49


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Ownership of Our Common Stock

 

 

Principal Shareholders

The following table contains information regarding the only persons and groups we know of that beneficially owned more than 5% of our common stock as of December 31, 2019.

 

Name and Address

of Beneficial Owner(1)(2)(3)

(a)

 

 

 

 

Amount and Nature

of Beneficial Ownership

of Common Stock(1)(2)(3)

(b)

 

   

 

Percent

of Common

Stock Owned(1)(2)(3)

(c)

 

 

Warren E. Buffett

Berkshire Hathaway Inc.

3555 Farnam Street

Omaha, Nebraska 68131

 

 

   

 

347,604,686

 

 

 

   

 

8.4%

 

 

 

The Vanguard Group, Inc.

100 Vanguard Boulevard

Malvern, Pennsylvania 19355

 

 

   

 

311,751,138

 

 

 

   

 

7.37%

 

 

 

BlackRock, Inc.

55 East 52nd Street

New York, New York 10055

 

   

 

278,802,132

 

 

 

   

 

6.6%

 

 

 

 

(1)   Based on a Schedule 13G/A filed on February 14, 2020 with the SEC by Warren E. Buffett and Berkshire Hathaway Inc., a diversified holding company which Mr. Buffett may be deemed to control. Mr. Buffett and Berkshire Hathaway share voting and dispositive power over 345,688,918 reported shares, which include shares beneficially owned by certain subsidiaries of Berkshire Hathaway. Mr. Buffett reports sole voting and dispositive power over 1,915,768 of the shares.

 

(2)   Based on a Schedule 13G/A filed on February 12, 2020 with the SEC by The Vanguard Group, Inc., on behalf of itself and certain of its subsidiaries. The Vanguard Group has sole voting power over 5,819,270 of the shares and shared voting power over 1,191,138 of the shares. The Vanguard Group has sole dispositive power over 305,254,014 of the shares and shared dispositive power over 6,497,124 of the shares.

 

(3)   Based on a Schedule 13G/A filed on February 10, 2020 with the SEC by BlackRock, Inc. on behalf of itself and certain of its subsidiaries. Each of BlackRock and its subsidiaries has sole voting power over 243,850,533 of the shares and shared voting power over none of the shares. Each of BlackRock and its subsidiaries has sole dispositive power over 278,802,132 of the shares and shared dispositive power over none of the shares.

 


 

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Table of Contents

 

Human Capital Management

 

 

We Are Redefining Parts of Our Culture

 

Over the last two years, we provided information in our proxy statement about how we were working to strengthen and monitor our culture. We acknowledged that process would take time.

Wells Fargo went through a leadership transition during 2019 and the Board and management are making significant changes to our management, structure, processes, and culture. There are parts of our culture which we seek to preserve and parts that require change. Our CEO, Charlie Scharf, articulated in his letter to shareholders, which accompanies our 2019 annual report, the following changes that we are making to our culture in order to be more effective:

 

 

   

We will operate as one company, not a series of decentralized businesses.

 

   

We will continue to foster a culture of partnership, but we will move past the need for consensus and have open and direct fact-based discussions where we emerge with decisions.

 

   

We will have a different level of management discipline than we’ve had in the past and will value and expect high quality execution.

 

   

There will be clear responsibility and accountability.

 

   

We will judge ourselves based upon our outcomes – not our words.

 

   

And we will ultimately judge ourselves versus the best as we believe that we should be the best.

In February 2020, Wells Fargo also announced a new organizational model that creates a flatter line of business structure and brings greater focus and provides leaders with clear authority, accountability, and responsibility. We also are making fundamental changes to how we manage our operations with a focus on high quality execution, clear accountability, and operational excellence.

Our Board and Human Resources Committee are overseeing our culture efforts and receive reporting from management on our progress. The Human Resources Committee also oversees our performance management and compensation programs and how those align with our desired culture. More information about those programs is provided below.

 

 

We Are Responsible for Leading Our Transformation

All of our employees contribute to Wells Fargo’s transformation by doing what is right, doing it well, and leading with an enterprise mindset. In addition, we all have responsibility for managing risk every day.

We continue to drive enhancements that contribute to our Company’s transformation, including by:

 

 

Updating our Risk Management Framework, which is a foundational document that provides a clear and concise description of how we expect risk to be managed across the company. It also describes the core principles of managing risk – tied to culture, governance, roles and responsibilities across three lines of defense, tools and programs, and risk types. All employees are now required to take Risk Essentials training annually as part of our focus on risk management and strengthening the risk components of our culture.

 

 

Incorporating clear expectations for employees in their performance objectives since 2018 in order to provide consistent guidance of our expectations in order to create a more consistent culture. The expectations apply to all employees, regardless of role or location.

 


 

       2020 Proxy Statement       51


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Human Capital Management

 

New Expectations for All Employees in 2020

 

Embrace candor

  

 

  Say what you mean in the moment

 

  Share clear, honest, direct feedback with your colleagues and managers

 

  Be both direct and respectful

 

 

 

Do what’s right

  

 

  Set high standards for being helpful and trustworthy

 

  If you see a problem, take ownership or get support to make things right

 

Be great at execution

  

 

  Make decisions that benefit clients and shareholders in the long term over any single business in the short term

 

  Use data to make decisions

 

  Act with a sense of urgency

 

  Strive to simplify transactions and end-to-end processes

 

  Measure success based on business results and customer/team satisfaction

 

Learn and grow

  

 

  Embrace challenges with enthusiasm

 

  Be tenacious in overcoming obstacles

 

  Ask others for feedback; dedicate the time and effort to learn and grow

 

  Take personal accountability for understanding and delivering on your goals and commitments

 

Champion diversity &

inclusion

  

 

  Contribute to an inclusive environment where differences are respected

 

  Solicit diverse ideas that challenge your thinking

 

  Build relationship with customers and colleagues who are different from you

 

  Actively help each other succeed

 

Build high-performing teams (for managers)

  

 

  Set clear performance objectives

 

  Provide ongoing, actionable coaching and feedback

 

  Reward successful execution

 

  Hold people accountable

 

  Encourage community involvement through your works and actions

 

  Solicit input from your team and take action on feedback and concerns

 

 

 

We Are Committed to Acting With Integrity

We are committed to doing what is right, acting with integrity, and holding ourselves accountable.

Our Code of Ethics and Business Conduct

Our Code of Ethics and Business Conduct provides additional clarity and focus on the ethical behavior we expect of all employees and members of our Board. The Code is supported by underlying policies as well as by interactive online training that all employees complete annually. Members of the Board also acknowledge annually that they have read and understand their obligations under the Code of Ethics and Business Conduct. It is critical for employees to understand our expectations and always do what is right. Employees also need to be comfortable speaking up with no fear of retaliation if they have a concern or see something that does not seem quite right.

 


 

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Human Capital Management

 

Our Non-Retaliation Policy

We learned through employee feedback that some employees were reluctant to raise concerns because of fear of retaliation. We have taken a number of actions to improve this situation, including enhancing our EthicsLine process. Our Speak Up and Non-Retaliation Policy requires all employees to adhere to the Code of Ethics and Business Conduct and supporting policies, recognize unethical behavior, and report suspected unethical or illegal conduct. The policy also sets additional expectations for managers to guard against retaliatory conduct, watch for signs of retaliation, and report any conduct that may violate policies.

 

 

We Are Listening to Our Employees

Employee feedback has been essential in helping enhance our culture and improve the employee experience. Employees have shared their voices in a number of ways, including surveys, town halls, and two-way dialogue on our intranet and internal social media platforms.

Team Member Listening Program

Our continuous listening program monitors employee engagement and experience and includes collecting feedback from employees through pulse surveys, focus groups, company-wide assessments and surveys, and confidential exit surveys and interviews. The following are among the many ways that enable employees to voice their opinions and us to gain valuable insights.

 

   

Company-wide surveys – An annual opportunity for employees to share opinions about working for Wells Fargo

 

 

   

CEO Town Halls – CEO Charlie Scharf holds town hall forums with employees that are televised internally and live-streamed to computers. These town halls provide an opportunity for employees to hear directly from Mr. Scharf and other senior leaders about our priorities and our business and to ask questions live from the local audience and via video from all over the Company

 

 

   

Idea Builder – A company-wide tool that employees use to submit ideas and offer suggestions; Coordinators review new ideas daily and assign them to appropriate areas within Wells Fargo for evaluation and disposition

 

 

   

Periodic employee sentiment “pulse” surveys – We conduct periodic pulse surveys targeted to a representative random sample of employees from across the organization to gauge employee sentiment about topics such as Wells Fargo as a place to work and build a career, leadership trust and accountability, internal communications, and culture

 

 

   

Focus groups – We convene focus groups of employees to provide feedback and input on specific topics

 

 

   

Exit surveys – Exit surveys help us gain a deeper understanding of why employees have chosen to leave Wells Fargo and identify ways to make sure we provide a more consistent and compelling employee experience

 

 

   

Team Moments live chats – Our senior leaders periodically join “live” chats to interact with employees and participate in Q&A sessions

 

 

   

Team Moments internal social – Employees are welcome to join Team Moments groups to post and comment on a variety of topics

 

 

   

Teamworks (Wells Fargo intranet) articles/news comments – Employees have the ability to post comments in response to articles and news that are posted on the Teamworks intranet

 

 

 


 

       2020 Proxy Statement       53


Table of Contents

Human Capital Management

 

 

Performance Management and Compensation

Overview

Our Company is committed to designing and implementing performance management and compensation programs that establish a balanced framework, promote risk management, discourage imprudent or excessive risk-taking, and enable the ability to hold employees accountable when expectations are not met and reward employees when expectations are exceeded.

Performance management is a key facet of how we align our culture, values, and Company expectations for our employees. Our Performance Management Policy establishes a framework and standards that reinforce personal accountability and risk management, and provides an opportunity for personal recognition and development. Managers and employees work together to set performance objectives in support of enterprise strategy, business goals and their roles and responsibilities through the lens of strong risk management practices. Managers and employees engage in ongoing coaching and feedback activities throughout the year and an annual performance evaluation process at the end of each year. Performance improvement opportunities are addressed as needed.

Our compensation program is linked to performance management and promotes prudent risk management and reinforces our culture, values, and Company expectations. The Company’s compensation principles are:

 

 

Pay for performance. Compensation is linked to Company, line of business, and individual performance, including meeting regulatory expectations and creating long-term value consistent with the interests of shareholders.

 

 

Promote effective risk management. Compensation promotes risk management and discourages imprudent or excessive risk-taking.

 

 

Attract and retain talent. People are one of the Company’s competitive advantages; therefore, compensation helps attract, motivate, and retain people with the skills, talent, and experience to drive superior long-term Company performance.

Through our Incentive Compensation Risk Management (ICRM) program, supported by the ICRM Policy, we develop, execute and govern all incentive compensation plans that balance risk and financial reward in a manner that supports our customers, employees, and Company. The scope of the ICRM program has evolved to reflect Wells Fargo’s current risk appetite and Risk Management Framework, account for new risk management goals, and address changing regulatory requirements and expectations. Our goal is to have an ICRM program that accounts for all potential risk types, including risks associated with misconduct and reputational harm.

Our Board oversees our performance management and compensation programs through its Human Resources Committee (HRC). The HRC oversees and challenges the Company’s performance management and incentive compensation programs to drive accountability among a broad range of employees, promote and incentivize the right behaviors, and enable the Company and the Board to hold employees accountable when they do not meet expectations, including for risk management. The HRC is supported by management’s Incentive Compensation Committee, and a collaborative partnership among Human Resources, Independent Risk Management, Legal Department, Internal Audit and the front line.

Performance Management

Enhanced Performance Management Framework

Outlined in our Performance Management Policy, our performance management framework establishes key requirements and expectations related to setting and evaluating employee performance across the organization.

Each year, employees must have defined performance objectives so that they focus time and resources appropriately and know how their performance will be evaluated. On an annual basis, managers complete a performance evaluation that provides each employee with an assessment of his/her/their performance for the year. The annual performance evaluation documents feedback, performance against each objective and for risk accountability, and includes an overall performance rating based on the performance rating scale established by the Company for the particular performance year.

We endeavor to refine how we evaluate and manage our employees’ performance. Recent enhancements to our performance management framework include objectives for the Company, objectives for the employee’s business group

 


 

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Human Capital Management

 

or enterprise function, and individual objectives. Success criteria related to risk management are an important component of each of these. Risk accountability serves as an overlay to address significant risk management issues or failures, including certain types of misconduct.

Enhanced Performance Framework for High Priority Sales Practices Employees