Wells Fargo 2005 Annual Report Download - page 86

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Note 14: Common Stock and Stock Plans
Common Stock
Our reserved, issued and authorized shares of common stock
at December 31, 2005, were:
Options also may include the right to acquire a “reload”
stock option. If an option contains the reload feature and
if a participant pays all or part of the exercise price of the
option with shares of stock purchased in the market or
held by the participant for at least six months, upon exercise
of the option, the participant is granted a new option to
purchase, at the fair market value of the stock as of the date
of the reload, the number of shares of stock equal to the
sum of the number of shares used in payment of the exercise
price and a number of shares with respect to related statutory
minimum withholding taxes. Options granted after 2003 did
not include a reload feature.
We did not record any compensation expense for the
options granted under the plans during 2005, 2004 and
2003, as the exercise price was equal to the quoted market
price of the stock at the date of grant. The total number of
shares of common stock available for grant under the plans
at December 31, 2005, was 116,604,733.
Holders of restricted shares and restricted share rights
are entitled to the related shares of common stock at no cost
generally over three to five years after the restricted shares
or restricted share rights were granted. Holders of restricted
shares generally are entitled to receive cash dividends paid
on the shares. Holders of restricted share rights generally are
entitled to receive cash payments equal to the cash dividends
that would have been paid had the restricted share rights
been issued and outstanding shares of common stock. Except
in limited circumstances, restricted shares and restricted
share rights are canceled when employment ends.
In 2005, 26,400 restricted shares and restricted share
rights were granted with a weighted-average grant-date
per share fair value of $61.59. In 2004, no restricted shares
or restricted share rights were granted. In 2003, 61,740
restricted shares and restricted share rights were granted
with a weighted-average grant-date per share fair value
of $56.05. At December 31, 2005, 2004 and 2003, there
were 353,022, 448,150 and 577,722 restricted shares
and restricted share rights outstanding, respectively. The
compensation expense for the restricted shares and restricted
share rights equals the quoted market price of the related
stock at the date of grant and is accrued over the vesting
period. We recognized total compensation expense for the
restricted shares and restricted share rights of $2 million
in 2005, $3 million in 2004 and $4 million in 2003.
For various acquisitions and mergers since 1992, we
converted employee and director stock options of acquired
or merged companies into stock options to purchase our
common stock based on the terms of the original stock
option plan and the agreed-upon exchange ratio.
Dividend Reinvestment and Common Stock Purchase Plans
Participants in our dividend reinvestment and common stock
direct purchase plans may purchase shares of our common
stock at fair market value by reinvesting dividends and/or
making optional cash payments, under the plan’s terms.
Director Plans
We provide a stock award to non-employee directors as
part of their annual retainer under our director plans. We
also provide annual grants of options to purchase common
stock to each non-employee director elected or re-elected
at the annual meeting of stockholders. The options can be
exercised after six months and through the tenth anniversary
of the grant date.
Employee Stock Plans
LONG-TERM INCENTIVE PLANS Our stock incentive plans provide
for awards of incentive and nonqualified stock options, stock
appreciation rights, restricted shares, restricted share rights,
performance awards and stock awards without restrictions.
Options must have an exercise price at or above fair market
value (as defined in the plan) of the stock at the date of grant
(except for substitute or replacement options granted in
connection with mergers or other acquisitions) and a term
of no more than 10 years. Options granted in 2003 and
prior generally become exercisable over three years from
the date of grant. Options granted in 2004 and the beginning
of 2005 generally were fully vested upon grant. Effective
April 26, 2005, options granted under our plan generally
cannot fully vest in less than one year. Options granted
generally have a contractual term of 10 years. Except as
otherwise permitted under the plan, if employment is ended
for reasons other than retirement, permanent disability or
death, the option period is reduced or the options are canceled.
Number of shares
Dividend reinvestment and
common stock purchase plans 3,088,307
Director plans 651,102
Stock plans (1) 307,357,126
Total shares reserved 311,096,535
Shares issued 1,736,381,025
Shares not reserved 3,952,522,440
Total shares authorized 6,000,000,000
(1) Includes employee option, restricted shares and restricted share rights, 401(k),
profit sharing and compensation deferral plans.