Wells Fargo 2011 Annual Report Download - page 210

Note 19: Common Stock and Stock Plans
Common Stock
The following table presents our reserved, issued and authorized
shares of common stock at December 31, 2011.
Number of shares
Dividend reinvestment and
common stock purchase plans
6,916,421
Director plans
921,682
Stock plans (1)
746,119,381
Convertible securities and warrants
105,014,977
Total shares reserved
858,972,461
Shares issued
5,358,522,061
Shares not reserved
2,782,505,478
Total shares authorized
9,000,000,000
(1) Includes employee options, restricted shares and restricted share rights, 401(k),
profit sharing and compensation deferral plans.
At December 31, 2011, we have warrants outstanding and
exercisable to purchase 39,179,509 shares of our common stock
with an exercise price of $34.01 per share, expiring on
October 28, 2018. In 2011 we purchased 264,972 of these
warrants. These warrants were issued in connection with our
participation in the TARP CPP.
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 under the terms of the plan.
Employee Stock Plans
We offer stock based employee compensation plans as described
below. We measure the cost of employee services received in
exchange for an award of equity instruments, such as stock
options, restricted share rights (RSRs) or performance shares,
based on the fair value of the award on the grant date. The cost is
normally recognized in our income statement over the vesting
period of the award; awards with graded vesting are expensed on
a straight line method. Awards that continue to vest after
retirement are expensed over the shorter of the period of time
between the grant date and the final vesting period or between
the grant date and when a team member becomes retirement
eligible; awards to team members who are retirement eligible at
the grant date are subject to immediate expensing upon grant.
LONG-TERM INCENTIVE COMPENSATION PLANS Our Long-
Term Incentive Compensation Plan (LTICP) provides for awards
of incentive and nonqualified stock options, stock appreciation
rights, restricted shares, RSRs, performance share awards and
stock awards without restrictions.
During 2011 and 2010 we granted RSRs and performance
shares as our primary long-term incentive awards instead of
stock options. Holders of RSRs are entitled to the related shares
of common stock at no cost generally over three to five years
after the RSRs were granted. Holders of RSRs may be entitled to
receive additional RSRs (dividend equivalents) or cash payments
equal to the cash dividends that would have been paid had the
RSRs been issued and outstanding shares of common stock.
RSRs granted as dividend equivalents are subject to the same
vesting schedule and conditions as the underlying RSRs. RSRs
generally continue to vest after retirement according to the
original vesting schedule. Except in limited circumstances, RSRs
are cancelled when employment ends.
Holders of each vested performance share are entitled to the
related shares of common stock at no cost. Performance shares
continue to vest after retirement according to the original vesting
schedule subject to satisfying the performance criteria and other
vesting conditions.
Stock 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. Except for options granted in 2004 and
2005, which generally vested in full upon grant, options
generally become exercisable over three years beginning on the
first anniversary of the date of grant. Except as otherwise
permitted under the plan, if employment is ended for reasons
other than retirement, permanent disability or death, the option
exercise period is reduced or the options are cancelled.
Options granted prior to 2004 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 and, in either case,
not used in a similar transaction in the last 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. Reload grants are fully vested upon grant and
are expensed immediately.
Compensation expense for RSRs and performance shares is
based on the quoted market price of the related stock at the
grant date. Stock option expense is based on the fair value of the
awards at the date of grant. The following table summarizes the
major components of stock incentive compensation expense and
the related recognized tax benefit.
Year ended December 31,
(in millions)
2011
2010
2009
RSRs
$
338
252
3
Performance shares
128
66
21
Stock options
63
118
221
Total stock incentive compensation
expense
$
529
436
245
Related recognized tax benefit
$
200
165
92
208