Wells Fargo 2010 Annual Report Download - page 198

Common Stock
Note 18: Common Stock and Stock Plans
The following table presents our reserved, issued and authorized
shares of common stock at December 31, 2010.
Number of shares
Dividend reinvestment and
common stock purchase plans 8,791,078
Director plans 837,516
Stock plans (1) 667,226,530
Convertible securities and warrants 105,279,949
Total shares reserved 782,135,073
Shares issued 5,272,414,622
Shares not reserved 2,945,450,305
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, 2010, we have warrants outstanding and
exercisable to purchase 39,444,481 shares of our common stock
with an exercise price of $34.01 per share, expiring on October
28, 2018. 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 the stock based employee compensation plans
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 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.
A target number of 1,602,336 and 949,000 performance
shares were granted in 2010 and 2009, respectively, with a fair
value of $27.46 per share and $27.09 per share, respectively.
The final number of performance shares that will vest is subject
to the achievement of specified performance criteria over a
three-year period ending June 30, 2013 and December 31, 2012,
for the 2010 and 2009 awards, respectively, and has a cap of
150% of the target number of performance shares. 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. As of December 31, 2010, no performance shares
were forfeited or vested and unrecognized compensation cost for
unvested performance shares was $18 million and is expected to
be recognized over a weighted-average period of 2.2 years.
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.
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