Wells Fargo 2014 Annual Report Download - page 240

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, 2014.
Number of shares
Dividend reinvestment and common stock
purchase plans 9,892,201
Director plans 942,715
Stock plans (1) 524,917,342
Convertible securities and warrants 104,259,902
Total shares reserved 640,012,160
Shares issued 5,481,811,474
Shares not reserved 2,878,176,366
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, 2014, we have warrants outstanding and
exercisable to purchase 38,424,434 shares of our common stock
with an exercise price of $33.996 per share, expiring on October
28, 2018. We did not purchase any of these warrants in 2014 or
2013. Warrants to purchase 684,430 and 435 shares of our
common stock were exercised in 2014 and 2013, respectively.
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 by reinvesting dividends and/or making
optional cash payments, under the plan's terms.
Employee Stock Plans
We offer stock-based employee compensation plans as described
below. For information on our accounting for stock-based
compensation plans, see Note 1 (Summary of Significant
Accounting Policies).
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, restricted stock rights (RSRs),
performance share awards (PSAs), performance units and stock
awards with or without restrictions.
Beginning in 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 vesting over three to five
years after the RSRs were granted. RSRs generally continue to
vest after retirement according to the original vesting schedule.
Except in limited circumstances, RSRs are canceled when
employment ends.
Holders of each vested PSA are entitled to the related shares
of common stock at no cost. PSAs continue to vest after
retirement according to the original vesting schedule subject to
satisfying the performance criteria and other vesting conditions.
Holders of RSRs and PSAs may be entitled to receive
additional RSRs and PSAs (dividend equivalents) or cash
payments equal to the cash dividends that would have been paid
had the RSRs or PSAs been issued and outstanding shares of
common stock. RSRs and PSAs granted as dividend equivalents
are subject to the same vesting schedule and conditions as the
underlying award.
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 canceled.
Compensation expense for most of our RSRs, and PSAs
granted prior to 2013, is based on the quoted market price of the
related stock at the grant date; beginning in 2013 certain RSRs
and all PSAs granted include discretionary performance based
vesting conditions and are subject to variable accounting. For
these awards, the associated compensation expense fluctuates
with changes in our stock price. 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) 2014 2013 2012
RSRs $ 639 568 435
Performance shares 219 157 112
Stock options — — 13
Total stock incentive
compensation expense $ 858 725 560
Related recognized tax benefit $ 324 273 211
For various acquisitions and mergers, 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. In addition, we converted restricted
stock awards into awards that entitle holders to our stock after
the vesting conditions are met. Holders receive cash dividends
on outstanding awards if provided in the original award.
The total number of shares of common stock available for
grant under the plans at December 31, 2014, was 245 million.
238