The Director Compensation Project: Wells Fargo & Company (WFC)
This post is part of an ongoing series that examines the way stock exchange independence rules relate to director compensation. We are for the most part including companies from 2017’s Fortune 500 and using information found in their 2017 proxy statements.
NASDAQ and the NYSE have similar rules with respect to director independence. NYSE Rule 303A.01 requires that each listed company’s board of directors be comprised of a majority of independent directors. A director does not qualify as “independent” if he or she has a “material relationship with the company.” NYSE Rule 303A.02(a). In addition, the director is not considered independent under NYSE Rule 303A.02(b)(ii) if the director received more than $120,000 in direct compensation, other than director’s fees, during any of the previous three years. The NYSE imposes a higher independence standard for directors serving on the company’s audit committee by requiring them to comport with Rule 10A-3 (C.F.R. §240.10A-3) (see Rule 303A.06) and requires consideration by the board of directors of certain specified factors in designating directors for the Compensation Committee. See NYSE Rule 303A.02(a)(ii).
Finally, as the Commission has noted with respect to director independence:
All compensation committee members must meet the general independence standards under NYSE’s rules in addition to the two new criteria being adopted herein. The Commission therefore expects that boards, in fulfilling their obligations, will apply this standard to each such director’s individual responsibilities as a board member, including specific committee memberships such as the compensation committee. Although personal and business relationships, related party transactions, and other matters suggested by commenters are not specified either as bright-line disqualifications or explicit factors that must be considered in evaluating a director’s independence, the Commission believes that compliance with NYSE’s rules and the provision noted above would demand consideration of such factors with respect to compensation committee members, as well as to all Independent Directors on the board.
Exchange Act Release No. 68639 (Jan. 11, 2013); see also Exchange Act Release No. 68641 (Jan. 11, 2013).
The members of the Board are compensated for their services to the company. The total amount of compensation for each director can be found in the director compensation table (p. 37) of the Wells Fargo & Company’s (NYSE: WFC) 2017 proxy statement. According to the proxy statement, the directors were paid the following amounts:
Name
Fees Earned or Paid in Cash ($)
Stock Awards
($)
Option Awards
($)
All Other Compensation ($)
Total
($)
John D. Baker II
207,000
180,002
-
5,000
392,002
Elaine L. Chao*
127,000
180,002
-
5,000
312,002
John S. Chen
123,000
180,002
-
-
303,002
Lloyd H. Dean**
196,000
180,002
-
-
376,002
Elizabeth A. Duke
201,131
180,002
-
5,000
386,133
Susan E. Engel
159,000
180,002
-
-
339,002
Enrique Hernandez, Jr.**
236,000
180,002
-
5,000
421,002
Donald M. James
141,000
180,002
-
5,000
326,002
Cynthia H. Milligan**
192,000
180,002
-
5,000
377,002
Federico F. Peña**
200,673
180,002
-
5,000
385,675
James H. Quigley**
249,000
180,002
-
-
429,002
Judith M. Runstad**
76,327
-
-
-
76,327
Stephen W. Sanger**
300,628
180,002
-
5,000
485,630
Timothy J. Sloan***
-
-
-
-
-
John G. Stumpf****
-
-
-
-
-
Susan G. Swenson
177,000
180,002
-
-
357,002
Suzanne M. Vautrinot
153,000
180,002
-
-
333,002
*Resigned effective January 31, 2017
**Received an annual cash retainer of $10,000, payable quarterly in arrears, and a fee of $2,000 for any separate meeting Bank Board not held concurrently with or immediately prior to or following a Company Board or committee meeting.
***Current Employee Director
****Former Employee Director, Retired October 12, 2016
Effective March 1, 2016, Mr. Peña succeeded Ms. Runstad, who retired from the Board at the 2016 annual meeting (March 1st), as a director of the Bank.
Director Compensation: During the 2016 fiscal year, Wells Fargo held fourteen regular and special Board meetings and sixty-one committee meetings. The directors averaged 97.5% attendance at Board and committee meetings and each current director who served during 2016 attended at least 75% of the total Board and committee meetings during period they served. Directors are reimbursed for expenses incurred from attending board and committee meetings.
Director Tenure: In 2016, Ms. Milligan, who has been on the Board since 1992, held the longest tenure as a member of the Board of Directors. Mr. Sloan holds the shortest tenure, joining the Board in 2016. Thirteen Board members serves as directors for other public companies; Mr. Baker serves as a director for FRP Holdings, Inc., Ms. Chao serves as a director for News Corp. and Vulcan Materials Company, Mr. Chen serves as a director for BlackBerry Limited and The Walt Disney Company, Mr. Dean serves as a director for McDonald’s Corp., Mr. Hernandez serves as a director for Chevron Corp., McDonald’s Corp., and Nordstrom, Inc., Mr. James serves as a director for The Southern Company, Ms. Milligan serves as a director for the Kellogg Company, Mr. Peña serves as a director for Sonic Corp., Mr. Quigley serves as a director for Hess Corp. and Merrimack Pharmaceuticals, Inc., Mr. Sanger serves as a director for Pfizer Inc., Mr. Sargent serves as a director for Five Below, Inc. and The Kroger Co., Ms. Swenson serves as a director for Harmonic Inc. and Inseego Corp., and Ms. Vautrinot serves as a director for Ecolab Inc. and Symantec Corporation.
Executive Compensation: John G. Stumpf, Wells Fargo’s Former Chairman & CEO ending in 2016, earned total compensation of $21,341,898. He earned a base salary of $2,070,498, stock awards of $16,500,032, deferred earnings of $2,687,722, and other compensation of $83,646. Timothy J. Sloan, Wells Fargo’s President and CEO beginning in 2016, earned total compensation of $13,014,714 in 2016. He earned a base salary of $2,329,502, stock awards of $10,500,038, deferred earnings of $166,624, and other compensation of $18,550.