What is proxy access and how does it affect Wells Fargo shareholders?

Proxy access is a provision that allows eligible long-term shareholders to nominate their own director candidates and have those candidates included in the company's official proxy materials for annual meetings. For Wells Fargo shareholders, this means a more direct path to influence board composition if they meet the ownership and holding period requirements (3% ownership for 3 years).

What are the eligibility requirements for a shareholder to use the new proxy access provision?

To be eligible, a shareholder, or a group of up to 20 shareholders, must have continuously owned at least 3% of Wells Fargo's outstanding common stock for a minimum of three years.

How many directors can be nominated through proxy access?

Under the new bylaw, eligible shareholders can nominate director candidates representing up to the greater of two directors or 20% of the size of the Board of Directors.

Besides proxy access, what other significant changes were made to Wells Fargo's bylaws?

The bylaws were updated to reflect changes in Delaware law and to improve clarity. This includes adjustments to the majority voting standard, updated requirements for nominating directors and proposing business, clarification on quorum definitions, and specifications regarding voting power and preferred stock rights.

WELLS FARGO & COMPANY/MN 8-K: Corporate Changes

Summary

Wells Fargo & Company filed an 8-K on December 21, 2015, reporting amendments to its By-Laws, effective December 17, 2015. The most significant change for investors is the implementation of a proxy access provision. This allows eligible stockholders, or a group of up to 20 stockholders, who have continuously owned at least 3% of the company's shares for three years, to nominate director candidates and include them in the company's proxy materials. The provision permits the nomination of up to the greater of two directors or 20% of the Board's size, subject to specific terms and conditions outlined in the By-Laws. In addition to proxy access, the By-Laws were updated to reflect recent developments in Delaware law and for general clarification. These updates include adjustments to the majority voting standard for director elections to accommodate proxy access nominations, revised informational requirements for stockholders seeking to nominate directors or propose business, and updated procedures for stockholder meetings and corporate actions by written consent. Other revisions clarify quorum requirements, voting power definitions, preferred stock voting rights for director elections, and the authority of the Board and meeting chairs.

Key Highlights

1Wells Fargo has adopted a proxy access bylaw, allowing eligible long-term stockholders to nominate directors.
2Eligible stockholders must collectively own at least 3% of outstanding shares for a continuous three-year period.
3The proxy access provision permits the nomination of up to two directors or 20% of the Board, whichever is greater.
4The majority voting standard for uncontested director elections has been updated to account for proxy access nominations.
5The company has updated informational requirements for stockholders submitting nominations or proposals.
6By-laws were amended to clarify quorum requirements, changing from a majority of shares to a majority in voting power of shares present.
7Revisions also clarify voting power definitions and preferred stock voting rights for director elections.

WELLS FARGO & COMPANY/MN 8-K Report, Bylaw Amendment (Dec 22, 2015)

Summary

Key Highlights

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