Wells Fargo 2012 Annual Report Download - page 224

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, 2012.
Number of shares
Dividend reinvestment and
common stock purchase plans 4,818,377
Director plans 1,215,481
Stock plans (1) 652,061,838
Convertible securities and warrants 104,944,767
Total shares reserved 763,040,463
Shares issued 5,481,811,474
Shares not reserved 2,755,148,063
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, 2012, we have warrants outstanding and
exercisable to purchase 39,109,299 shares of our common stock
with an exercise price of $34.01 per share, expiring on
October 28, 2018. We purchased 70,210 and 264,972 of these
warrants in 2012 and 2011, 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.
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 2012, 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) 2012 2011 2010
RSRs $ 435 338 252
Performance shares 112 128 66
Stock options 13 63 118
Total stock incentive compensation
expense $ 560 529 436
Related recognized tax benefit $ 211 200 165
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, 2012, was 173 million.
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