SecProbe.io

CORRESP
1
filename1.htm

Correspondence Letter

Law Department

MAC A0149-072

633 Folsom Street, 7th Floor

San Francisco, CA 94107

James M. Strother

Executive Vice President, General Counsel

415.396.1793

415.975.7865 Fax

james.strother@wellsfargo.com

 VIA EDGAR

 October 25, 2007

 Christian N. Windsor, Esq.

 Special Counsel

 Division of Corporation Finance

 Securities and Exchange Commission

 450 Fifth Street, N.W.

 Mail Stop 4563

 Washington, D.C. 20549

Re:
Wells Fargo & Company

 Definitive 14A

 Filed March 16, 2007

 File No. 01-2979

 Dear Mr. Windsor:

 I am Executive Vice
President and General Counsel of Wells Fargo & Company (Wells Fargo). This letter responds to the comments to Wells Fargo’s executive compensation and other related disclosure in our 2007 proxy statement dated March 16, 2007
contained in your letter dated September 26, 2007 on behalf of the Securities and Exchange Commission (SEC) to Richard M. Kovacevich, Chairman of Wells Fargo.1

 Our responses to these comments appear below. All page references in this response are to page numbers in
our 2007 proxy statement where the information requested by a particular comment can be found. For purposes of this response, when we refer to our “2007 CD&A,” we mean the discussion under the heading “Compensation Discussion and
Analysis” appearing on pages 37 through 51 of our 2007 proxy statement. Any capitalized terms used in this response letter that we do not separately define have the meanings given to them in our 2007 proxy statement.

1
Until June 2007, Mr. Kovacevich served as Chairman and Chief Executive Officer of Wells Fargo. Effective in June 2007, John G. Stumpf was elected as Chief Executive Officer of Wells
Fargo. Prior to that date, Mr. Stumpf served as President and Chief Operating Officer beginning in August 2005.

 Christian N. Windsor, Esq.

 October 25, 2007

  Page
 2

 Compensation Discussion and Analysis, page 37

 SEC Comment No. 1:

 Disclose the
quantitative performance targets which the Committee uses to determine the size of awards under your incentive compensation programs. Also discuss any material changes to your performance targets determined during the Committee’s meetings early
in the new fiscal year. Revise your disclosure to discuss the specific items of company performance, such as those relating to earnings per share, return on average shareholders’ equity, and other operational and strategic objectives and how
your incentive awards are specifically structured around such performance goals. For example, discuss the performance necessary to reach the target performance threshold necessary to allow cash bonuses to be paid, the target amount necessary to
reach the target bonus amount and the performance which would be necessary to allow for the maximum business performance adjustment. Please note that qualitative goals generally need to be presented to conform to the requirements of 402(b)(1)(v) and
402(b)(2)(v). If you did not include performance targets because you concluded that their disclosure would cause competitive harm to Wells Fargo, please provide the staff with your confidentiality analysis. Also, for any excluded targets revise your
disclosure to provide the discussion of the level of difficulty necessary to reach the targets contemplated by Instruction 4 to Item 402(b) of Regulation S-K. In discussing how difficult it will be for the executive or how likely it will be for
the registrant to achieve the target levels or other factors, provide as much detail as necessary without providing information that poses a reasonable-risk of competitive harm.

 Wells Fargo Response to SEC Comment No. 1:

 Before we respond to this comment, we would
like to make two preliminary observations:

 First, no named executive officer will qualify for any incentive compensation award unless
Wells Fargo achieves one or more alternative financial goals as established by the Human Resources Committee of the Board of Directors (HRC), the board committee that functions as our compensation committee, at the beginning of each fiscal year
under the “Performance-Based Compensation Policy” (the Performance Policy). The HRC has no discretion to award any compensation to a named executive officer covered by this policy if at least one of these alternative goals is not met.
Second, the payment of incentive compensation to all named executives is also subject to Wells Fargo achieving a pre-established EPS goal that operates as a “knockout”—meaning generally no incentive compensation would be awarded if
this goal is not met. The financial goals set under our Performance Policy and the “knockout” EPS goal are discussed below in response to SEC Comment No. 2.

 The information and process the HRC uses to award incentive compensation to our CEO and COO1 differs in some important

1
Throughout our response to the SEC’s comment letter, when we use the terms “CEO and COO,” we mean Richard M. Kovacevich, who currently serves as Chairman of Wells
Fargo, and who served as CEO during 2006, and John G. Stumpf, who served as COO during 2006, and currently serves as President and CEO. (See Footnote No. 1). Since the process for determining incentive compensation for Messrs. Kovacevich and Stumpf
remains the same as that described for them in our 2007 CD&A in their former capacities as CEO and COO despite the change in their titles and duties, we decided to retain the references to “CEO and COO” in this letter to keep our
terminology consistent with that in the 2007 CD&A.

 Christian N. Windsor, Esq.

 October 25, 2007

  Page
 3

respects from that used for our other named executives. The HRC does not set pre-established individual financial performance “targets” for our CEO
and COO to meet. We discuss how CEO and COO compensation is determined in more detail in response to SEC Comment No. 2 below.

 Assuming at least one of the Performance Policy alternative, and the “knockout” EPS goals have been met, the HRC determines Wells Fargo’s annual incentive compensation awards for our other named executive officers primarily
by considering (1) Wells Fargo’s overall financial performance and quality of performance compared to its Peer Group as discussed in the second and third bullet points on page 45 of the 2007 CD&A and (2) whether a named executive
has met or exceeded his or her specified quantitative performance goals described on page 39 of the 2007 CD&A. Individual group earnings goals for those named executives who manage business lines are established based on Wells Fargo’s
internal management reporting system and reflect the projected contribution of the business groups managed by each named executive to Wells Fargo’s internally derived profit plan. This system and profit plan has been structured to support Wells
Fargo’s unique business model that fosters and encourages business collaboration, cross sell and teamwork among our numerous businesses. Wells Fargo has designed its management reporting system and goal-setting process to facilitate and reward
these behaviors. A named executive’s business line goals include duplicate credit for sales, services and cross sell/lead generation across business lines and also reflect internal transfer pricing, investment and costs of funds allocation
arrangements, unbudgeted discretionary expenditures and allocation of expenses incurred outside of the businesses for which the named executive had management responsibility. As a result, the sum of these group earnings goals, if aggregated, would
exceed total earnings for Wells Fargo and would not reflect our reported results under GAAP.

 As stated in Instruction 1 to
Item 402(b), the purpose of the CD&A in our proxy statement is to provide our stockholders with material information that is necessary to understand the HRC’s compensation decisions for Wells Fargo’s named executives. Because the
specific performance goals reflect internal management, and not GAAP reporting, investors would be unable to tie any specific goal to our GAAP results. Consequently, disclosure of the specific goals would be at best meaningless, and at worst,
potentially misleading to investors. We described the process and the factors we considered in setting these goals in our 2007 CD&A, and the HRC’s evaluation of whether they were met. We intend to make a similar disclosure in the CD&A
for 2008. We submit that this disclosure provided, and will provide our stockholders with all material information about our executive compensation decisions in accordance with the principles-based approach contemplated by the SEC’s rules on
executive compensation and as required by the instruction to Item 402(b) cited above.

 Christian N. Windsor, Esq.

 October 25, 2007

  Page
 4

 SEC Comment No. 2:

 Your disclosure suggests that individual performance was a significant factor considered by the Committee in awarding cash incentive compensation and determining annual equity grants. Please discuss and analyze how
individual performance contributed to actual 2006 compensation for the named executive officers. For example, disclose the elements of individual performance, both quantitative and qualitative, and specific contributions the compensation committee
considered in its evaluation, and if applicable, how the committee weighted and factored them into specific compensation decisions. See Item 402(b)(2)(vii) and Item 402(b)(1)(v) of Regulation S-K.

 Wells Fargo Response to SEC Comment No. 2:

 SEC Comment No. 2 asks us to explain the elements of individual performance and the specific contributions of each named executive that the HRC evaluated in making its 2006 compensation decisions in light of the requirements of Items
401(b)(2)(vii) and 402(b)(1)(v) of Regulation S-K. The first of these two items requires us to describe how specific forms of compensation are structured and implemented to reflect a named executive’s individual performance and the elements of
individual performance taken into account in making final compensation decisions. Item 402(b) (1) (v) requires Wells Fargo to describe how the HRC determined the amount and formula (if applicable) for each element of pay. As discussed
below, we respectfully submit that we have provided all of the information required by these items and addressed in SEC Comment No. 2.

 2006 Annual Incentive Compensation. We note that payment of any incentive compensation for 2006 to our named executives depended in the first instance on Wells Fargo’s achievement of specified company goals before any individual
performance contributions were considered. First, Wells Fargo had to achieve one or more alternative performance goals set by our HRC in February 2006 under the Company’s Performance Policy—namely EPS of $2.25 or a return on realized
common equity of 15%. Second, Wells Fargo had to achieve a threshold EPS goal ($2.415) that operated as a “knockout’—meaning that no incentive compensation would generally have been paid if this EPS threshold goal had not been met.
All of these company goals were met for 2006. In addition, in making its 2006 annual incentive compensation decisions for all named executives, the HRC reviewed and evaluated Wells Fargo’s financial performance compared to that of its Peer
Group over one-, three-, and five-year periods, using the measures described on pages 44 and 45 of our 2007 CD&A under the heading “2006 Company and Peer Group Performance Review,” and noted in particular the factors described on page
45 under “2006 Performance Conclusions.”

 With respect to individual performance, we would direct the SEC’s attention to
those sections of our 2007 CD&A cited below which, taken together, we submit respond fully to SEC Comment No. 2 and to the provisions of Item 402 summarized above:

•

 The description of Wells Fargo’s overall process for determining annual incentive compensation for our named executives (other than our CEO and COO, as
explained below) appearing on pages 38 through 41 of our 2007 CD&A, particularly the information under “Objective No. 2—Pay for Performance”(page 39) regarding individual quantitative performance goals and the related
weightings given by the HRC to these goals and to the qualitative objectives referred to below;

 Christian N. Windsor, Esq.

 October 25, 2007

  Page
 5

•

 Information under the heading “Objective No. 4—Achieve Qualitative Objectives” (page 41), describing the qualitative objectives we give our
named executive officers by type and impact on compensation;

•

 The “benchmarking” process used to set competitive pay opportunities if these goals and objectives are met described under “Determining 2006
Competitive Pay for Named Executive Officers” (pages 42 to 43);

•

 The analysis of how the HRC determined 2006 incentive compensation for our named executives, specifically including the information appearing under the headings
“2006 Compensation Decisions” and “Incentive Compensation Awards” (pages 43 to 44) that describe the criteria used; and

•

 Our detailed explanation of the process used to determine the 2006 incentive awards for our CEO and COO under “2006 CEO and COO Incentive Awards” (pages
45 to 46), and for our other named executives under “2006 Incentive Compensation Awards for Other Named Executive Officers” (pages 46 to 47), including an analysis of the objective and subjective criteria the HRC considered in determining
2006 incentive compensation awards to named executives other than the CEO and COO.

 As permitted by Item 402 of
Regulation S-K, to the extent named executives had substantially similar objectives and performance, we discussed their achievements as a group (see, for example, page 47 of the 2007 CD&A).

 With respect to 2006 incentive compensation for our CEO and COO, we would point out that these executives, because they are responsible for the
performance of Wells Fargo as a whole, are rewarded based on the HRC’s objective and subjective evaluation of Wells Fargo’s overall performance relative to its peers, as described in the 2007 CD&A under “2006 Company and Peer
Group Performance Review,” “2006 Performance Conclusions,” and “2006 CEO and COO Incentive Awards.” They do not have individual objective quantitative performance goals. They do have individual qualitative goals that we also
describe in the first paragraph at the top of page 46.

 Annual Equity Awards. Wells Fargo grants annual equity awards, almost
exclusively in the form of stock option grants, to named executives as long-term compensation, rather than as compensation for the prior year’s performance. As stated in our 2007 CD&A under “Objective No. 3” on page 41, Wells
Fargo grants stock options to motivate our named executives to achieve long-term sustainable growth and corresponding growth in total stockholder returns and stock price increases. We further explain the purpose for granting stock options in 2006 to
our named executives and how the sizes of those grants were determined by the HRC in response to SEC Comment No. 4 below.

 Christian N. Windsor, Esq.

 October 25, 2007

  Page
 6

 SEC Comment No. 3

 In your discussion of pay for performance on page 38, you indicate that your pay targets are set so that the named executives would receive compensation in the top quartile of comparable compensation if performance
is “close to or in” the top quartile and would receive compensation in the median of comparable compensation if performance is “approximately” at the median. Please clarify these terms and provide more specificity in the targets
and deviations from the targets. Also, disclose actual compensation and its resulting percentile rank among the peer group. If the resulting percentile was materially different from the targeted percentile, please discuss the factors which resulted
in the divergence from the target relationship.

 Wells Fargo Response to SEC Comment No. 3:

 Peer Group pay, including annual cash, long-term equity and total com