The Director Compensation Project: Wells Fargo & Company (WFC)

October 10, 2017 Daniel Hamilton

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

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.