Wells Fargo 2010 Annual Report Download - page 202

Note 18: Common Stock and Stock Plans (continued)
Employee Stock Ownership Plan
The Wells Fargo & Company 401(k) Plan (401(k) Plan) is a
defined contribution plan with an Employee Stock Ownership
Plan (ESOP) feature. Effective December 31, 2009, the Wachovia
Savings Plan, which also had an ESOP feature, merged into the
401(k) Plan, and all of its shares of our common stock were
transferred to the 401(k) Plan. The ESOP feature enables the
401(k) Plan to borrow money to purchase our preferred or
common stock. From 1994 through 2008, and in 2010, we
loaned money to the 401(k) Plan to purchase shares of our ESOP
Preferred Stock. As our employer contributions are made to the
401(k) Plan and are used by the Plan to make ESOP loan
payments, the ESOP Preferred Stock in the 401(k) Plan is
released and converted into our common shares. Dividends on
the common shares allocated as a result of the release and
conversion of the ESOP Preferred Stock reduce retained
earnings and the shares are considered outstanding for
computing earnings per share. Dividends on the unallocated
ESOP Preferred Stock do not reduce retained earnings, and the
shares are not considered to be common stock equivalents for
computing earnings per share. Loan principal and interest
payments are made from our employer contributions to the
401(k) Plan, along with dividends paid on the ESOP Preferred
Stock. With each principal and interest payment, a portion of the
ESOP Preferred Stock is released and converted to common
shares, which are allocated to the 401(k) Plan participants and
invested in the 401(k) Plan’s ESOP Fund.
The balance of common stock held in the ESOP fund, the
dividends on allocated shares of common stock and unreleased
ESOP Preferred Stock paid to the 401(k) Plan and the fair value
of unreleased ESOP Preferred Stock were:
Shares outstanding
December 31,
(in millions, except shares) 2010 2009 2008
Allocated shares (common) 118,901,327 110,157,999 74,916,583
Unreleased shares (preferred) 618,382 414,019 519,900
Unreleased shares (common) - 203,755 244,506
Fair value of unreleased ESOP Preferred shares $ 618 414 520
Fair value of unreleased ESOP Common shares - 5 7
Dividends paid
Year ended December 31,
2010 2009 2008
Allocated shares (common) $ 23 45 100
Unreleased shares (preferred) 76 51 66
Deferred Compensation Plan for Independent Sales
Agents
WF Deferred Compensation Holdings, Inc. is a wholly-owned
subsidiary of the Parent formed solely to sponsor a deferred
compensation plan for independent sales agents who provide
investment, financial and other qualifying services for or with
respect to participating affiliates.
The Nonqualified Deferred Compensation Plan for
Independent Contractors, which became effective
January 1, 2002, allows participants to defer all or part of their
eligible compensation payable to them by a participating
affiliate. The Parent has fully and unconditionally guaranteed
the deferred compensation obligations of WF Deferred
Compensation Holdings, Inc. under the plan.
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