AGM 2015

Apr 28, 2015

Ladies and gentlemen, welcome to the Wells Fargo Annual Stockholders Meeting. Please welcome Wells Fargo CEO, John Stumpf. Thank you. Good morning. I'm John Stumpf, the Chairman, President, and CEO of Wells Fargo & Company. On behalf of the Directors and management team of our company, I welcome all stockholders to our annual meeting. I would like to also welcome all those who are listening to the meeting by audiocast over the internet or over the telephone. Thank you for joining us today. We appreciate the opportunity to be here with all of you in St. Louis, which is the home of the headquarters of Wells Fargo Advisors. That's our retail brokerage business. With more than 15,000 financial advisors nationwide, Wells Fargo Advisors is the third largest U.S. retail brokerage firm. I'd like to recognize at this time the head of that business, Mary Mack, who's a 30-year veteran of our company. Mary, would you stand up so we can recognize you? Mary's been in the top job since January of 2014 and the only woman to head a major brokerage company in the United States. Mary is a member of Civic Progress and was a key leader of our last two community support campaigns, raising more than $4 million each year here in Missouri. I am proud to say that Wells Fargo has been doing business in this great state since the 1850s. At Wells Fargo, it is our vision to satisfy all of our customers' financial needs and help them succeed financially. Corporate citizenship and caring for our communities is part of our culture. We understand and embrace our responsibility to help create more resilient and sustainable communities, and focus on developing deep relationships with community partners and other stakeholders to support community economic growth in our communities. I am proud to welcome some of our community partners in St. Louis to our meeting today. Dr. Kelvin Adams, Superintendent, St. Louis Public Schools. Cathy Gardner, Senior Vice President of Community Investment, United Way of Greater St. Louis. Tom Irwin, Executive Director, Civic Progress. Becky James-Hatter, President and CEO of Big Brothers Big Sisters, Eastern Missouri. Tishaura Jones, Treasurer of the City of St. Louis. Greg Lukeman, Executive Director of Food Outreach. Michael McMillan, President and CEO of the Urban League of Metropolitan St. Louis. Cynthia Prost, President of the Arts and Education Council. Please give them a hand. Thank you for joining us today. Our purpose today is to hold our annual meeting of our stockholders, the individuals and institutions that choose to invest in Wells Fargo. We want to make sure our stockholders have a chance to be heard today in an orderly and respectful environment. First, I'd like to outline the agenda and describe how we'll conduct today's meeting. Please refer to the agenda and rules of conduct of the meeting, which were included in the materials handed to you as you entered the room. As a courtesy to all stockholders in attendance, please abide by the rules of conduct so we may have an orderly meeting. We'll begin with a few meeting details, followed by my company report. After my report, we'll have the formal presentation of the items of business to be voted on at this meeting. I will present the first three items. The other two items are stockholder proposals. Each stockholder proposal, or proponent, or stockholder's representative will have a maximum of four minutes to present his or her proposal. After all items have been presented, we will have a brief question and answer period during which stockholders in the room may ask questions about the stockholder proposals. During this time, as stated in the rules of conduct, stockholders should wait to be recognized before addressing the meeting. During the question and answer period, please raise your hand, and after I call on you, a Wells Fargo usher will bring a microphone to you. This will help ensure that stockholders and others present here, as well as those listening by audiocast, will be able to hear the recognized speaker. Please identify yourself and state whether you are a stockholder or hold a proxy for a stockholder, and the number of shares you represent. To maintain an orderly meeting, restrict your question or comment to two minutes during this period. After two minutes, you'll hear this. There you go. That'll be a signal that your allotted time is up. After questions on the items, we'll announce the preliminary results of the vote. We will then have a general question and answer period where stockholders or their proxies who are in the room may ask questions about the business of the company. The notice of the annual meeting of stockholders and the affidavit of the mailing of the notice have been filed with the Corporate Secretary as part of the record of this meeting. We've appointed Rebecca Pohlsen, Wells Fargo Inspector of Election. With me is Anthony Augliera, Corporate Secretary. Anthony, do we have a quorum? Yes, John, we have a quorum. The Inspector of Election has advised me that holders of shares of common stock representing at least 87% of the total number of common shares outstanding and entitled to vote are present in person or represented by proxy, which constitutes a quorum. Thank you, Anthony. I accordingly declare that a quorum is present and that this meeting is duly convened for the purpose of acting on the items of business that are properly before this meeting. We're ready to proceed with the business portion of the meeting. I now declare the polls open at 8:35 A.M. For each of the items of business for consideration at today's meeting, and move for stockholder vote on items one through three, which are management proposals, and if properly presented, items four and five, which are stockholder proposals included in the proxy statement. Stockholder proponents will have an opportunity to present their proposals following my company report. If you would like a ballot to vote on items one through five, please raise your hand at this time, and an usher will give you a ballot. For the proposals listed in the proxy statement, most of you have already submitted your proxy to vote on these items. You will not need to vote again unless you want to change your vote. If you want to change your vote, please indicate in the ballot that you are revoking your proxy. Please raise hands if you want a proxy. So some of you do. There's a couple of hands, one, two, three. I can count over on my left. I don't think there's any on my right. Okay. Oh, there's a hand up right here. Thank you. We will collect the ballots before the polls close. At this time, I'd like to introduce the Wells Fargo executive officers who will vote the proxies on file. Please stand as I call your name. Hope A. Hardison, Director of Human Resources, stay standing. Michael J. Loughlin, Chief Risk Officer, and James M. Strother, General Counsel. If you vote by proxy, Hope, Mike, and Jim, as proxies, will vote your shares if you instructed. Thank you much. Before we get started with my report on the company, I'd like to remind you that during the course of this annual meeting, we will make forward-looking statements. We may make forward-looking statements about our future financial performance and results, and that those forward-looking statements are subject to risks and uncertainties. Please refer to our SEC filings for factors that may cause actual results to differ materially from our expectations. We also may discuss non-GAAP financial measures. Information about non-GAAP financial measures, including a reconciliation to GAAP, can be found in our SEC filings or on our website, wellsfargo.com. Let me now spend a few minutes talking about the results of your company, and those will be 2014 results. We had a very strong financial year last year. Not only we were the nation's most profitable bank, we were the world's most valuable bank. We measured that by, or the market measures that by something called market cap. Market cap is simply the price of your shares times the number of your shares, gives you the value the market values it at. This is remarkable in that in the U.S., we're not the largest bank, we're number four. If you look across the world, we're probably not even in the top 20. We are also a real economy company, meaning that virtually everything we do starts with a customer. If you had to use one word to define Wells Fargo, its culture, I would say relationships. We seek long-term, deep relationships with our team members, with our customers, with our communities, and you met some of our wonderful community leaders here today, and of course, you, our shareholders. Another thing that distinguishes Wells Fargo is that last year we returned $12.5 billion back to our stockholders, and we saw a 21% increase in our stock price. The $12.5 billion of capital return was number one among any bank in the world last year. We put you, our stockholders, as an important constituent of ours. But we don't run the company for just customers, team members, and stockholders. Communities are an equal partner. Last year, our $281 million, some would call it philanthropy, I would call it community investing, for over 17,000 nonprofits, ranked as number two of all companies in the country last year, even though we're not by any stretch of the imagination the second-largest company in the U.S. Our team members, through their own philanthropy, became, for the fifth year running, were the number one United Way campaign nationally. So quite an honor, even though we're the 14th or 15th largest employer. If we look a little bit more deeply into the income statement, you will see compared to 2013, revenue was up a bit, but essentially flat. Expenses were slightly higher as we make more investments in all things risk, especially cyber. You can see there that the provision for loan losses, we had an exceptionally good year on the loan loss side, and a lot of our improvement year-over-year came in this category. I mentioned a few minutes ago that we are a real economy company, and virtually everything we do starts with a customer. Let me just tick off a couple of things that might be of interest to you. No bank in America makes more used car loans than Wells Fargo. No one has more retail checking accounts and deposits than Wells Fargo. No one does more small business business than Wells Fargo, whether you measure it by SBA or just number of accounts. No one makes more mortgages. No one has done more mortgage modifications and debt forgiveness. No one makes more ag loans, energy loans, commercial real estate. That's who we are, and we do this virtually across the U.S. Two of the things I look at most often is whether we're growing deposits, where people keep their money, and are we growing loans, where people borrow their money. In both those categories, we have outstanding results, as you see on this slide for 2014. On the next slide, capital ratios. If I was standing in front of you 10 years ago, we probably wouldn't have spent any time on this slide. Since the downturn in 2008, there's been a lot of focus on especially large institutions and their capital levels. The highest form of capital we have is the bottom line. It's called common equity Tier 1 under Basel III, fully advanced approach. I know it's a long, it's a sure mouthful. But it's the capital that is the highest quality. For a company like ours, the requirements from the different regulatory agencies for this company would be around 9%. You can see at the end of the year, this was at 10.43%. So we have more capital, and we just, as you know, passed our recent CCAR or stress test that even under a highly stressed environment, we would have sufficient capital to continue to operate our business. So we have another almost 1.5% on top of what the regulatory requirements are. Let me end just by saying, I want to thank all of you for your investments in our company. Thank the board of directors who are here with us today for their leadership and counsel. Thank the management team who's here and for many of you in the audience today who are colleagues here in St. Louis in the greater Missouri area for joining us this morning and the work you do for the company. Let me move on now with the business portion of the meeting. We will move to the formal presentation of the items of business to be considered at this year's annual meeting. Stockholders at this meeting will consider and act on the items noted in the agenda. I will take questions about these items, and only these items, after all items have been presented. If you have questions on issues not related to these five items, please hold your questions. We'll have a general question and answer period at the end of the meeting. Now let's move to item one, election of officers. According to the bylaws, the board has set the number of directors to be elected at 16 and has designated 16 nominees. All nominees are here today. Anthony, will you please read the names, and will each nominee for director please stand as his or her name is called. Anthony? The nominees for director are John D. Baker II, Elaine L. Chao, John S. Chen, Lloyd H. Dean, Elizabeth A. Duke, Susan E. Engel, Enrique Hernandez Jr., Donald M. James, Cynthia H. Milligan, Federico F. Peña, James H. Quigley, Judith M. Runstad, Stephen W. Sanger, John G. Stumpf, Susan G. Swenson, and Suzanne M. Vautrinot. Thank you, Anthony. These individuals have been nominated according to our bylaws. Information about each of these nominees is presented beginning on page 2 of our 2015 proxy statement. Item number 2 on the agenda is an advisory resolution to approve executive compensation. The proposal is explained beginning on page 36 of the proxy statement. Item number 3 on the agenda is a proposal to ratify the appointment of KPMG LLP as the company's independent registered public accounting firm for 2015. I'd like to introduce Mark McCauley and Alicia Horsley of KPMG. Will you stand, please? Thank you. As stated in the proxy, the board has recommended to the stockholders for vote four items, 1 through 3. Item number 4 is a proposal from Gerald R. Armstrong, a stockholder of the company, asking the board to adopt a policy requiring that the board's chairman be an independent director. The proposal is explained beginning on page 77 of the proxy statement. Stephanie Montgomery is here today to present the proposal. Ms. Montgomery? There you are. Can we bring a microphone to her, please? She's on my right in the back. Oh, thank you. Good morning. Good morning. I'm going to reiterate what Mr. Armstrong put in his proposal, along with some supporting facts. His proposal is that the shareholders of Wells Fargo & Company request its board of directors to adopt a policy and amend the bylaws as necessary to require the chairman of the board of directors be an independent member of the board of directors. However, this policy should not be implemented to violate any contractual obligation and should specify, A, how to select a new independent chairman if the current chairman ceases to be independent during the time between annual meetings of shareholders. And B, that compliance is excused if no independent director is available and willing to serve as chairman. In support of this proposal's proponent is a long-term shareholder of Wells Fargo & Company and is responsible for the elimination of its poison pill and whose say-on-pay proposals were approved by shareholders on two occasions, despite strong opposition of the board of directors. In last year's annual meeting, he presented a similar proposal, which received votes from owners of 655,988,046 shares, worth $23,504,051,688.18 on the meeting date. He is familiar with Wells Fargo's problems, which were originated under an administration where one person served as chairman and president and was accountable only to himself. Furthermore, at Target Corporation, where a cybersecurity breach, which is reported as the data breach in its reports, is faced with a loss of sales and many lawsuits, which exposed massive amounts of credit card data of 40 million cardholders and personal information of 70 million persons, causing significant losses to customers, shareholders, and banks providing credit debit cards. An article in The American Banker, February 10, 2014, estimated cost to bank, $172 million and rising. Undoubtedly, it has included costs to Wells Fargo & Company, ultimately borne by its shareholders. This is significant to Wells Fargo & Company shareholders because Mr. Stumpf, our chairman, president, and chief executive officer, is a member of the board of directors of Target Corporation, where one person has been serving as its chairman, president, and chief executive officer. The proponent asks if Mr. Stumpf cannot see the weaknesses at Target Corporation, is he blind to possible problems at Wells Fargo & Company? Furthermore, Mr. Stumpf is also the Chairman, President, and CEO on the board of Chevron, which is now faced with borrowing money to meet expenses. Additionally, the board asks that you vote against this proposal in order to maintain independence. However, GMI, formerly GovernanceMetrics in The Corporate Library, have criticized the tenure of directors, citing studies which shows directors with long tenures tend to have lost their independence in order to remain directors. At Wells Fargo, six directors have an average tenure of 21.33 years. Ms. Swenson with 27 years, Mr. Sanger with 12 years, Ms. Runstad with 27 years, Ms. Milligan with 23 years, Mr. Hernandez with 12 years, and Ms. Engel with 27 years. Proponent would like to know when was the last time that the board of directors discussed and reviewed this issue of tenure of its board members and what was concluded, and how is that in support of an independent board. Thank you. Thank you. Item number five is a proposal from Trillium Asset Management LLC on behalf of Mayberry LLC, Persimmon LLC, Episcopal City Mission, and the Sierra Club Foundation, stockholders of the company, requesting report on the company's lobbying practices and policies. The proposal is explained beginning on page 79 of the proxy statement. Sister Barbara Jennings, representing Trillium Asset Management LLC on behalf of Mayberry LLC and the other three proponents, is here today to present the proposal. Sister Barbara? Right here. Good morning. My name is Sister Barbara Jennings, Sister of St. Joseph, and I am here on behalf of Trillium Asset Management clients to hereby move proposal number five, the shareholder proposal asking Wells Fargo to provide a report on its state and federal lobbying expenditures, including indirect funding of lobbying through trade associations and support for other tax-exempt organizations. To read the following statement. Transparency and accountability in corporate spending to influence public policy are in the best interest of Wells Fargo shareholders. Oversight of lobbying is a board responsibility under Sarbanes-Oxley. Without a clear system ensuring accountability, corporate assets can be used to promote public policy objectives that may pose risks to Wells Fargo and its shareholders. Generally speaking, corporations can easily contribute corporate resources to trade associations or other organizations that lobby indirectly on their behalf without specific disclosure. Unfortunately, lobbying by trade associations and the corporate contributions that fund this activity are not itemized or publicly reported. While according to federal reporting, Wells Fargo spent approximately $12 million in 2013 and 2014 on direct federal lobbying activities, it remains unclear how much Wells Fargo spent indirectly through tax-exempt organizations, and we, as shareholders, have no way of understanding whether that money was well spent or consistent with our interest. In contrast, other financial service companies do provide more information. For example, Wells Fargo does not disclose all of its payment to trade associations, but Fifth Third, Genworth, Prudential, and US Bancorp do. Wells Fargo does not disclose its trade association payments that are used for lobbying, but Capital One, Fifth Third, Genworth, MetLife, Prudential, and US Bancorp do. Support for lobbying disclosure is part of emerging governance best practice. The International Corporate Governance Network, representing institutional investors with more than $18 trillion in assets, supports lobbying disclosure as best practice and supports disclosure of any amounts over $10,000, including trade association payments. In closing, we firmly believe shareholders need complete disclosure to be able to evaluate the use of corporate assets for direct and indirect lobbying, and accordingly, we urge shareholders to vote for this proposal. Thank you. Thank you, Sister Barbara. For the reasons stated in the proxy statement, the board has recommended that stockholders vote against items four and five. We will now accept questions or comments from stockholders or their proxies on the items of business. Let me remind you that no items other than the items to be voted on at this meeting are proper subjects for questions or comments at this time. Please raise your hand and wait to be recognized before speaking. After you are recognized, someone will bring a microphone to you. State your name, whether you are a stockholder or hold a proxy for a stockholder, and the number of shares represented. As noted in the rules of conduct, please limit your remarks to two minutes. Again, a chime will sound to remind you when your time is up. Because this meeting is audiocast, I would like to remind you to speak clearly so those who are listening by phone or other means can hear you. If you have a personal matter to discuss, please speak with one of our representatives outside the room. They will take your information and follow up with you. A general question and answer period will follow the formal business portion of the meeting. With that understanding, are there any questions on those five items that we discussed just a few minutes ago? Any question on number one, the board? Questions on number two, executive comp? Questions on number three, KPMG? Number four, independent director? Or five, board disclosure on lobbying. Hearing none, this concludes the question and answer period for the items of business presented for consideration. If you've already done so, please give your completed ballot or proxy card to the nearest usher so your vote may be included in the Inspector of Election's final tabulation. Okay, there's a ballot here. I now declare the polls closed for the items of business for the annual meeting at 8:58 A.M. The preliminary voting results are available. Will the inspector please give the Corporate Secretary the preliminary voting results on the items presented at this meeting? For item one, the inspector's preliminary report indicates that each nominee for director received a majority of votes in favor of his or her election and has been elected a director of Wells Fargo. More than a majority of the shares present in person or by proxy and entitled to vote on the proposal were voted in favor of the advisory resolution to approve executive compensation and the ratification of the appointment of KPMG as the company's auditors for 2015. Therefore, items two and three have been approved. The inspector's preliminary report also indicates that the stockholder proposals, items four and five, did not receive the required majority support and were not adopted. Approximately 16% of shares present in person or by proxy and entitled to vote on the proposal voted in favor of the proposal to require an independent chairman. Approximately 19% of such shares voted in favor of the proposal requesting a report on the company's lobbying policies and practices. Thank you, Anthony. We will now have a brief period for general questions regarding the business of the company. Our management team and I will do our best to respond in the time we have remaining. As noted in our rules of conduct, please raise your hand, and when you're recognized, an usher will bring a microphone to you. Tell us your name, whether you're a stockholder or hold a proxy for a stockholder, and the number of shares you represent. Again, as a courtesy to your fellow stockholders, we ask that you limit your question or comment to the business of the company and to two minutes to give others the opportunity to be heard. Please remember to speak clearly as possible so everyone can hear you. Are there any questions at this time? There's a question right here in the front. The gentleman. I'm a proxy holder of 3,479 shares. Thank you. My name is Reverend Mark Miller, and I'm here on behalf of Missouri's Jobs with Justice, and our organization is a member of the Committee for Better Banks. Okay. Jobs with Justice is a broad coalition of community and labor organizations, and many of our members are customers that Wells Fargo serves. Okay. When Wells Fargo's workers are paid low wages and their livelihoods are tied to sales goals that force them to push products that are not matched to customer needs or their financial capacity, both workers and members of our community are harmed. As members of the community and customers of Wells Fargo, we entrust our financial well-being to your institution, and we expect honest transactions and not pressure tactics that push us towards banking products we do not need and cannot afford. We support the petition by the Wells Fargo bank employees. My question, Mr. Chairman and the Wells Fargo Board of Directors, is what immediate steps will Wells Fargo take to end the excessive sales goals that pit the needs of bank employees against the needs of customers and force workers to pressure customers in order to avoid disciplinary action at work and earn incentive bonuses to supplement their wages? Yeah, thank you. Thank you for your question. First of all, as I mentioned before, our vision for the company is to satisfy all our customers' financial needs and help them succeed financially. It does not say in there to force products. In fact, it is not in our interest, not in our team members' interest, not in our customers' interest, and surely not in our shareholders' interest to have customers buy products, be forced to buy products that they do not need. So that is totally absent from our culture. Secondly, if any team member feels the need or they feel they have to sell something, in fact, we talk even about the word solutions to solving needs. They should talk to their boss or talk to an HR director. We also have an ethics line they can call with total anonymity and so forth. Furthermore, the leverage we have in incentive compensation, we never want to put our team members in a place where they need to make a sale, they need to make incentive comp to make their rent payment. In fact, you might be surprised the leverage for a personal banker is 5% of their comp. It is very low. So I do not recognize much of what you are talking about as far as excessive sales goals, but we are always listening to this. We are always listening to our team. In fact, we do a team member study every year to talk about engagement. Last year, 93% of our team members responded to that, and their engagement, their happy ratio, if you were, was the highest in the industry, four times what other companies in the U.S. have. So thank you for your question. I appreciate it. Another question or comment. There's a question here. Well, maybe we should go back to in the back. We'll start there, and then we'll work our way up. There's a gentleman in the blue shirt. Right here. There's a woman, right. Yes. Right here. Yes. Ms. Montgomery, I believe it is. All right. Again, I'm a proxy here for Mr. Armstrong with 23,934 shares. There are three Directors that own very few shares of Wells Fargo & Company. Ms. Chao, a Director since 2011, owns 150 shares, while her 2014 compensation was $267,035. Mr. Quigley, a Director since 2013, owns 150 shares, while his 2014 compensation was $310,535. Ms. Vautrinot, a Director since last January, owns only 100 shares. As the number of shares owned by these Directors is an insignificant portion of their personal net worth, what will be done to cause increased ownership by Directors to become the partners of the shareholders? That's question one. Well, let me answer that. I know Jerry well. I know he has lots of questions, so I want to make sure that we give others a chance. All Directors, including the three you mentioned, who are relatively new have a step process in which through their board compensation, will be getting more and more shares as part of that process. So they're all in line with where we want them to be. What is their next increase, and when will that be? I don't have that in front of me, but it'll show you in the proxy about what kinds of options and stock grants they've had. Why did Howard Richardson resign as director? Howard Richardson. That was a year or two ago. I can't recall exactly the timeframe, but he left on a good accord. What have the auditors and the audit committee done differently at Wells Fargo than at Target to protect the privacy of its customers and shareholders? Well, the outside auditors are two different companies. It is two different businesses. We have made significant investments in all things cyber, and Jerry might have looked at Suzanne M. Vautrinot's background as being really expert in this field. So we are bringing board skills on that area. We are adding to our team and again, making tons of investment in that area. We take this very seriously. Why do not we move on to someone else, and if we have time, we will get back to other questions. Thank you much. I think there is a gentleman in a blue shirt right in front of me here. Right here, the gentleman in the blue shirt. Individual investor, a proxy statement. I have 6,495 shares. Good, thank you. I was wondering what the board, as far as reducing the float, what their plans are as far as the buybacks. Over the last few years, it seems like the float has stayed roughly the same, and I was wondering what their intentions are on that. Yeah. Thank you. Yeah, it's a good question. Thank you. The gentleman's asking about stock buybacks. As I mentioned in my company review, that we returned $12.5 billion to stockholders last year, and we returned that in two ways. Through dividends. Last year, the dividend was $0.35 a share per quarter, $1.40 per year. We got an approval, subject to board approval, we got an approval from the Federal Reserve to increase that by 7% to $0.375 per share per quarter, or $1.50 per year. But the gentleman's asking a different question. He's asking about the number of shares and about buybacks, and are we going to continue to reduce the number of shares outstanding. And the answer is yes. We got approval to do that. We've not specifically stated the amount of that, which is traditional for us. But as you can see from our capital levels, 10.43% versus the 9% required, and the earnings of the company, that our buybacks will continue. One of the things that we're still working through is the grants we've had from previous years, and as those mature, and as we issue stock for our benefit programs, that's an offset to the buyback, but we'll continue to reduce the outstanding shares. Thank you very much for your question. Okay, other questions or comments. There's a ma'am right here. I think the woman in the blue had her hand up first. But either one. We can take one and then the next one. Hello, ma'am. Thank you. Hi, my name is Tamara Chafe. I'm here on behalf of the AFL-CIO Equity Index Fund that holds 1.5 million shares of Wells Fargo. Good. Thank you. I represent the Communication Workers of America, and we are part of the Committee for Better Banks. The Committee for Better Banks is a coalition of bank workers and community organizations that have come together to advocate for good jobs for bank workers and fair practices in the industry to ensure that the customers receive the products and services they really need. We have learned that many Wells Fargo workers make such low pay that they are forced to seek public assistance to meet the basic needs for themselves and their families. Wells Fargo workers also face excessively high sales goals, which they must meet in order to avoid disciplinary actions at work and to earn the incentive bonuses that supplement their low wages. To meet those sales goals, Wells Fargo's workers are often forced to push unnecessary products on their customers. More than 11,000 people have signed a petition demanding that Wells Fargo Bank immediately review its community banking program and lower the excessive sales targets for the team members. My question for you, Chairman, is the Wells Fargo board of directors is, will Wells Fargo management meet with Wells Fargo workers who are members of the Committee for Better Banks to implement a fair and transparent process for employee compensation that is not dependent on meeting excessive sales goals that force them to push unnecessary products on their customers? Thank you. Well, I think I already answered that question, but let me talk about something else that you're raising. Wells Fargo spends about $50 billion a year in all of its expenses. 60% of that, $30 billion, goes towards compensation. That's the highest ratio of any company of our size. In fact, way oversized, vis-à-vis others. We think it's a good investment to pay our people for the work that they do. Every job that we have in the company has a survey done to make sure it represents the competitive wage in the area. In addition to that, our lowest paying job pays 50% more than the federal minimum wage. We wouldn't need to do that, we just do that. Most of our people get a raise in this company by increasing their skills. Last year, 40,000 team members. Remember, we employ one in 600 working Americans in the private sector. We have 270,000 team members. 40,000 got a promotion last year, and we help them with that. We pay for, in some cases, advanced education, other ways to improve their skills, and they got a salary increase. We do a lot of things. Again, it pours out in the fact that we have the best team, I think, in banking, and the survey results are extremely high. We also have team members who are their bosses, and we think the best way to deal with team members is talk to your boss. These are also team members who care deeply about their people. Another question. I think there's a question right next door. There you go. My name is E- I can't hear. I don't think the microphone's working. My name is Eve Sutton. Hi. I hold five shares. As you know, I've been applying for a loan mod since 2009. I have 40 applications in. But aside from myself, and of course, I would like to have a loan mod. I would like to just let you know that Charlie Bethea sends her greetings from last year when you talked to her. She came to the Texas meeting, and at that time, her house had been illegally sold, and the speculator had decided to reverse the sale after meeting with the Home Defenders League. But it took her coming to you to get the Wells Fargo end of that to work with the sale to be reversed. I would like to report very happily for her that she now has a permanent loan modification. She has a fixed interest rate, not a variable interest rate. She's very happy. She sent me to convey that message to you. Thank you. Her modification includes taxes and insurance in an affordable package, so she and her family are able to stay in their home permanently, and she's very grateful for that. Thank you. Unfortunately, her husband passed, but at least now she knows that she'll be secure in her home. She would like me to ask for the same thing for you, and I know I'm supposed to talk to somebody in the back. My question concerns the many home defenders who have approached Wells Fargo many, many times. I'm at 40 now, and others are somewhere getting close to that. We get this confusing mix of applications to fill out and then denials, and then requests for more paperwork, and then somehow that doesn't work out. I just, for example, got a HAMP starter kit a few weeks ago, as if I had not already applied 39 times. I'm doing my best to fill out all the paperwork, and so are these other home defenders. But when we get repeatedly denied, even though we applied and get approved for Keep Your Home California or other assistance programs, it's very confusing for us. When we get told that our loans are in funds that have investors that don't approve, we can't figure out who those investors are. I myself have called HSBC and found the manager of the fund, and he says it's fine. Could you please provide some clarity on that? Also please provide some clarity on our issue with the Wells Fargo employees that are trying to help us. We find great benefit in some of the employees at branches and in the call centers that really try to help us, and I'm afraid to name them to thank them because they're afraid they're doing the wrong thing by trying to help me in some way. Yeah. Thank you for your comments. I am a little familiar with your situation, and I don't want to talk about it publicly here because it's your private situation. I don't think that'd be fair to you or any other customer. But thank you for that update from one of our guests last year. I can tell you this. There's 1 million families today who are in their homes because we did a modification. What most people don't realize is that we are, in most cases, just like in your case, we are the servicer. Someone made you the loan. We might have, we might have not. But in most cases, the loan is owned by someone else, a pension fund, an investor. It might be an estate, it might be someplace else. For 25 basis points, which is on average $40 a month, we take your payment, and we give it to the investor. We are beholden to the requirements and the rights of the investor. It is their money. It happens to be the home you owe on. We also have a bunch of regulators who are also very interested in making sure that things that we do are done properly. That is the way the process works. We have mortgage people here today. I get lots of letters. I get calls, a lot fewer today. In fact, you might know this or might not know this, less than 6% of our portfolio is past due. 94 point some people are paying on time. Less than 1% of our loans last year, in our primary portfolio, went into foreclosure. We work really hard. When we get to work with someone, 7 out of 10 times, we can figure out a way other than foreclosure. These are hardworking people. They care deeply. All I can tell you is that we will try and try again. I know in your case, you probably know we already had a modification one time some years ago. We will suit up again, and we will give you all the consideration we possibly can. Thank you for coming. Another question right here, sir. There is a gentleman in the middle row here. If he can come to the microphone. Thank you, Mr. Stumpf. My name is Julian Martinez. I carry a proxy for a company, and honestly, I do not know how many shares they own. Okay. I represent Sarah Johnson, SER Jobs for Progress National, a national nonprofit, community-based organization serving the economic needs of Hispanic Americans. We would like to take this opportunity to thank Wells Fargo for their commitment to the Latino community. From your diverse board of directors to your financial literacy programs in the Barrio, Wells Fargo has proven yourselves to be leading corporate America in diversity, especially in serving the Latino community. As a member of the awards selection committee for the Financial Services Roundtable, I had a unique opportunity to compare you in depth to other top financial institutions in the country. You were second to none. You should be very proud of this accomplishment. We appreciate your participation in the Hispanic Association on Corporate Responsibility's Corporate Inclusion Index. Wells Fargo has shown a positive increase in its ratings from 40 in 2009 to 85 in 2014. As you know, the Hispanic population is increasing dramatically. This means companies must harness the power of both the Hispanic consumer and Hispanic employee as a means of sustaining their competitive edge in an ever-changing economy. The continued underrepresentation of Hispanics in key positions throughout corporate America means companies are not leveraging this talent to their fullest potential. Corporate America needs to understand the works that must be done to increase the pipeline of Hispanics into the upper ranks of corporate America, and to further develop the Hispanic entrepreneur and middle class. It is truly a pleasure to see Wells Fargo leading the way. Thank you. What nice comments, and I should have mentioned that earlier in my comments about the company. The advocacy we have for inclusiveness and diversity, whether that be gender, ethnicity, lifestyle, whatever makes us different as a country, we want that same diversity inclusiveness at the company, because those are the people that we serve. One only needs to look at the board of directors here to know that this is the most diverse board in the country. Why don't we take one or two more questions? There's a hand up right here, and I think Jerry's representing, have one more question. So let's make those the final two. I'll get this gentleman's question here. Yes, sir. This is my first Wells Fargo shareholder meeting. Name is Phil Bound. Hi, Phil. Came over from Dayton, where you've got an operation. Yes. I'd like to see more in Dayton than you have. I always been impressed with the firm. Without question to me, the top firm in banking, as you mentioned. A couple of questions I wanted to mention to you, or ask was, the April 13th issue of The Wall Street Journal mentioned Wells Fargo warming up to risk. I would hope that as you get into investment banking and some of these other practices, that you maintain the conservative policies and practices Wells Fargo's always had, unlike some of our competing banks. Correct Which haven't done too well in that area. I would like you to comment on The Wall Street Journal article, March 31st, about the federal regulators holding monthly meetings with individual directors at some of the nation's biggest banks, to the point where they are meeting more often with the directors, and the directors meet formally with the board. I'm very concerned about that, so I'd like to get your comments on that. Yeah. Thank you. Well, first of all, let me just address. Well, in fact, you have a lot of directors going like this here. Let me get the investment banking, capital markets business. We do it the Wells Fargo way. This is very much a relationship business. One famous person once said that investment banking's not that scary, but investment bankers can be. The way our people do it, they really play team ball, and most of the investment banking business we do, and we love that business. We think that we have opportunity to grow in that business, but it's largely with our existing clients, and we have a very disciplined view of risk. With respect to your second question, very insightful question. Ever since 2008, the downturn, there's been a lot more focus and scrutiny, especially on the largest institutions in the country. We are blessed to have the kind of Directors we have here today represent the diversity of the nation. Not only in ethnicity, gender, but in business practice. They bring each a little different skill to the board. Yes, Directors do have a more open and direct process with regulators, but not at the expense of management. Our Directors are pushing back where it's appropriate to say, "This is a management responsibility, and this is where we oversee management," as opposed to, because if they're going to be managers, then we don't need Directors. So we get that, and I think it's a very insightful point. Thank you, Phil, and thank you for joining us. Do you have another Jerry question, Ms. Montgomery? Okay, great. In the April 21st issue of Money and Investing, there's an article that indicates that Wells Fargo is in talks with GE Capital Commercial Lending- Yeah to acquire all or part of it. What is the standing of that, and is there anything else in the process of being acquired by Wells Fargo? Yeah, well. On grander scale. Should I just whisper to you what I can do? We surely can't talk about that. I can talk about the fact that we did do a $9 billion purchase of loans recently from them. At least it was announced. We're also going to finance some of Blackstone's public REIT on some others, and we think that's wonderful business, and we don't talk about other things. Thank you very much for joining us today. We appreciate you being here in St. Louis. We couldn't have been treated better, and we'll go back to continuing our board meeting. Thank you.