Wells Fargo 2006 Annual Report Download - page 92

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90
We are authorized to issue 20 million shares of preferred
stock and 4 million shares of preference stock, both without
par value. Preferred shares outstanding rank senior to common
shares both as to dividends and liquidation preference but
have no general voting rights. We have not issued any
preference shares under this authorization.
ESOP CUMULATIVE CONVERTIBLE PREFERRED STOCK All shares of
our ESOP (Employee Stock Ownership Plan) Cumulative
Convertible Preferred Stock (ESOP Preferred Stock) were
issued to a trustee acting on behalf of the Wells Fargo &
Company 401(k) Plan (the 401(k) Plan). Dividends on the
ESOP Preferred Stock are cumulative from the date of initial
issuance and are payable quarterly at annual rates ranging
Note 13: Preferred Stock
from 8.50% to 12.50%, depending upon the year of
issuance. Each share of ESOP Preferred Stock released
from the unallocated reserve of the 401(k) Plan is converted
into shares of our common stock based on the stated value
of the ESOP Preferred Stock and the then current market
price of our common stock. The ESOP Preferred Stock is
also convertible at the option of the holder at any time,
unless previously redeemed. We have the option to redeem
the ESOP Preferred Stock at any time, in whole or in part,
at a redemption price per share equal to the higher of
(a) $1,000 per share plus accrued and unpaid dividends
or (b) the fair market value, as defined in the Certificates
of Designation for the ESOP Preferred Stock.
Shares issued Carrying amount
and outstanding (in millions) Adjustable
December 31, December 31, dividend rate
2006 2005 2006 2005 Minimum Maximum
ESOP Preferred Stock (1):
2006 115,521 —$ 116 $ — 10.75% 11.75%
2005 84,284 102,184 84 102 9.75 10.75
2004 65,180 74,880 65 75 8.50 9.50
2003 44,843 52,643 45 53 8.50 9.50
2002 32,874 39,754 33 40 10.50 11.50
2001 22,303 28,263 22 28 10.50 11.50
2000 14,142 19,282 14 19 11.50 12.50
1999 4,094 6,368 46 10.30 11.30
1998 563 1,953 12 10.75 11.75
1997 —136 ——9.50 10.50
Total ESOP Preferred Stock 383,804 325,463 $ 384 $ 325
Unearned ESOP shares (2) $(411) $(348)
(1) Liquidation preference $1,000. At December 31, 2006 and 2005, additional paid-in capital included $27 million and $23 million, respectively, related to preferred stock.
(2) In accordance with the American Institute of Certified Public Accountants (AICPA) Statement of Position 93-6, Employers’ Accounting for Employee Stock Ownership Plans,
we recorded a corresponding charge to unearned ESOP shares in connection with the issuance of the ESOP Preferred Stock.The unearned ESOP shares are reduced as
shares of the ESOP Preferred Stock are committed to be released. For information on dividends paid, see Note 14.