Celebrate Wells Fargo s 150th Anniversary! PartnerShares March 18, 2002 Stock Option Grant

Transcription

1 Celebrate Wells Fargo s 150th Anniversary! PartnerShares March 18, 2002 Stock Option Grant

2 PartnerShares March 18, 2002 Stock Option Grant Overview Congratulations From Dick Kovacevich i A Rich History of Employee Ownership ii Legal Information Table of Contents iii iv Frequently Asked Questions History of PartnerShares Stock Option Grants Glossary of Key Terms Plan Information Additional Information

3 Happy 150th! Celebrate! i March 18, 2002 Dear Wells Fargo Team Member, Today we re celebrating Wells Fargo s 150th anniversary. To mark this special event, thank you for your hard work and recognize your important role in helping Wells Fargo achieve its vision of satisfying all of our customers financial needs, I m pleased to announce you ve been awarded a PartnerShares stock option grant. With this PartnerShares grant the company s fifth in seven years we rededicate ourselves to our company s vision and to the commitment of Henry Wells and William Fargo to provide outstanding service dependable, convenient, fast, secure and trustworthy. We ve seen a lot of change over the past 150 years, but what has not changed is the commitment to our team members and to outstanding customer service hallmarks of our company since its founding by Henry Wells and William Fargo on March 18, Today we re one of America s oldest, continuous brands still connecting one market to another and connecting customers to the next stage of their success. Only about a dozen or so Fortune 500 companies have been around longer than we have, still using their founding name, still identifying with their founders vision. If we continue providing outstanding service the implicit promise of our brand I have no doubt our customers will entrust us with more of their assets and come to us for sound financial advice and products. Wells Fargo has survived for 150 years from stagecoaches that went 10 miles an hour to at 30,000 miles a second because we haven t been afraid to re-invent ourselves. We have continually adapted new business models and technology to create better ways to save customers time and money. In the 1870s, we recognized we were not a stagecoach company we were a connecting company. We became an express business using ocean steamers and the railroad, and a secure, cost-effective competitor in local mail delivery. In the 1890s, we invented the refrigerator railroad car to move fresh vegetables east. We diversified into hauling passengers, goods, the mail and money. In the 20th century, we were among the first to diversify from just banking to all of financial services including investments, mortgage, insurance, and consumer finance and give customers choices for when, where and how they wanted to be served. Today, thanks to your contributions, we re among the top 10 percent of Fortune magazine s most admired companies. Thank you for your outstanding contributions to the Company and for your commitment to provide outstanding customer service. Congratulations on your PartnerShares stock option grant and Happy Anniversary! All the best, Dick Kovacevich Chairman & CEO

4 ii PartnerShares 02 A Rich History of Employee Ownership In 1866, Wells Fargo & Company brought together all the major stagecoach companies and was formally incorporated. It had operated since 1852 under a joint stock agreement. The stock certificate, on the previous page, is dated April 5, William G. Fargo, president of Wells Fargo & Company, made sure that his company was not only a leader in banking, communications and customer service, but also a supporter of forward-thinking businesses, like the Northern Pacific Railroad. Though we live in a more modern world than William Fargo did, Wells Fargo holds the same values today. The future of Wells Fargo is dependent on all team members, and each one of us can help move our company forward. Through PartnerShares stock options, we share in the financial success of Wells Fargo!

5 Celebrate! iii Legal Information This document is a part of a prospectus covering shares of Wells Fargo common stock that may be issued to team members as a result of the March 18, 2002 PartnerShares grant. All amounts are in U.S. dollars. This document does not cover the uly 23, 1996, September 23, 1997, November 3, 1998 or November 3, 2000 PartnerShares grants or other interim grants. Please refer to the applicable prospectus for the terms of each of those grants. This document may also cover Wells Fargo stock that may be issued as a result of PartnerShares grants made after March 18, If this document is used for a grant made after March 18, 2002, we will provide a supplement to this document describing the important differences between the terms of that grant and the terms of the March 18, 2002 grant. If the information in the supplement differs from the information in this document, rely on the supplement. control. Refer to the Plan documents for definitions of capitalized terms not defined in this document. You can obtain a copy of the Plan, free of charge, by calling the HR Service Center at HRWELLS, and following the prompts to the PartnerShares Line. This document is part of a prospectus covering securities that have been registered under the Securities Act of Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this document is truthful or complete. Any representation to the contrary is a criminal offense. This document is dated March 17, The terms of the March 18, 2002 grant are governed by the Wells Fargo & Company PartnerShares Stock Option Plan as in effect at the time of grant, unless we later change those terms specifically as to the March 18, 2002 grant. If the information in this document differs from the information in the Plan documents, the Plan documents will

6 iv PartnerShares 02 Table of Contents Frequently Asked Questions Who received the March 18, 2002 PartnerShares stock option grant? 2. What are the features of the March 18, 2002 PartnerShares stock option grant? 3. What is a stock option? 4. How does this stock option work? 5. Are stock option shares free? 6. What does exercising my stock option mean? 7. What is the exercise price? 8. How is the exercise price set? 9. Can I exercise my option in different ways? 10. How could I profit from a stock option? 11. Is the gain the amount I would receive if I buy and sell shares on the same day? 12. What should I think about before exercising my stock option? 13. When can I exercise my option? 14. Do I have to exercise my option as soon as it vests? 15. Do I have to exercise my entire option at once? 16. What happens if the stock splits? 17. When should I exercise my option? 18. What happens if I don t exercise before my option expires or is terminated? 19. How do I exercise my stock option? 20. How much will I have to pay in transaction fees? 21. How should I exercise my option? 22. What happens to my March 18, 2002 PartnerShares stock option if I leave Wells Fargo? 23. How can I help increase the value of my stock options? 24. How can I determine the value of my stock options? 25. Why are stock options important to me? 26. Why would I want to hold on to my option after it vests? Shouldn t I exercise it as soon as I can? 27. Are PartnerShares stock options Incentive Stock Options for tax purposes? 28. What are the tax consequences of non-qualified stock options? 29. Are there other tax issues I need to think about? 30. What are the tax withholding rates? 31. How are withholding taxes paid? 32. Can I request a change to the amount of taxes that are withheld? 33. Will I receive dividends on my stock option? 34. What happens if my employer is sold or spun off? 35. Can Wells Fargo delay the exercise of my option? 36. Are there any risks to holding Wells Fargo common stock? 37. Does Wells Fargo plan on issuing PartnerShares grants on a regular basis? History of PartnerShares Stock Option Grants Glossary of Key Terms Plan Information Additional Information

7 Celebrate! 1 Frequently Asked Questions We have written this document in a question and answer format based on the types of questions that team members have asked since the first PartnerShares stock option grant in Please read this document carefully and keep it for future reference. You will not receive any additional documents evidencing this PartnerShares grant. However, you may verify your grant(s) by visiting the PartnerShares web site on Teamworks, partnershares.wellsfargo.com or by calling HRWELLS ( ), option 1 for the PartnerShares Line. 1. Who received the March 18, 2002 PartnerShares stock option grant? Generally, Participant team members include all regular, part-time and flexible team members employed by Wells Fargo on the date of grant (March 18, 2002) except: Team members on extended leave of absence without pay. Team members on a salary continuation or severance leave of absence. Team members who are disabled and are not receiving short-term disability benefits. Team members who received since March 1, 2001, a stock option grant(s) under the Long-Term Incentive Compensation Plan. Team members who are classified as flexible and who have not received pay or performed services for Wells Fargo at any time during the period beginning October 1, 2001 and ending March 18, Team members who are subject to income taxation in Argentina, Aruba, the Netherlands Antilles, Hong Kong, Taiwan, Trinidad and Tobago, or the United Kingdom which are foreign jurisdictions where it is impractical to grant options because of foreign tax or legal restrictions. Grants prior to March 18, 2002 had different terms and different participating team members. 2. What are the features of the March 18, 2002 PartnerShares stock option grant? Grant date: March 18, 2002 Award size: 150 option shares to regular Participant team members 75 option shares to part-time and flexible Participant team members Exercise price (fixed): $50.50 Vesting date: The earlier of: The date Wells Fargo common stock closes at or above $90.00 per share on the New York Stock Exchange, or March 18, 2007 (five years from the grant date). Expiration date: Generally the earliest of: March 18, 2012 (10 years from the grant date), or Three months after your employment ends for reasons other than your Retirement, Disability, death, for cause, or One year after your death. Upon your termination of employment due to Retirement or Disability, your March 18, 2002 option becomes exercisable immediately and continues to be exercisable until its expiration date. (see question 22) Refer to the Glossary of Key Terms for the definitions of Retirement and Disability. If your employment is terminated for cause, your option terminates immediately without notice and whether or not vested. You should note that the expiration terms for this grant are different from those for prior PartnerShares grants. The expiration terms for prior grants do not change.

8 2 PartnerShares What is a stock option? A stock option is an award that gives the option holder the right to buy stock at a fixed price for a specified period of time. 4. How does this stock option work? This stock option gives you the right to exercise your stock option to buy shares of Wells Fargo common stock at the fixed exercise price of $50.50 after your option vests. However, you don t have to exercise your option as soon as it vests. As long as you remain an active team member, you have until March 18, 2012 before the option expires. If you wait to exercise your option and the stock price increases above the vesting price, your gain is increased. Grant date: The grant date is the date Wells Fargo awards you PartnerShares stock options, or the right to purchase Wells Fargo stock at a fixed price. In this case, the grant date is March 18, Vesting date: The vesting date is the date your stock option first becomes exercisable and you may exercise your right to buy your option shares. For this PartnerShares stock option grant, the vesting date is the earlier of the following: The date Wells Fargo common stock closes at or above $90.00 per share on the New York Stock Exchange, or March 18, 2007 (five years from the grant date). Exercising your option: Once your option vests, you can buy the shares at the exercise price at any time before the option expires or is terminated. Holding your shares: Once you exercise (buy), you may hold or sell the shares. This is your choice. Selling your shares: Once you purchase your shares, you may do with them as you please. At some point, you may choose to sell the shares. 5. Are stock option shares free? No. Stock options are not shares. They are simply a right to buy shares. When you exercise your vested PartnerShares stock option, you deliver the exercise price per share to buy Wells Fargo stock and the required applicable tax withholding, and (depending on how you exercise) brokerage/sec fees. 6. What does exercising my stock option mean? Once your option vests, you can buy shares at the exercise price. For example: Let s say you were granted a stock option to buy 100 shares of Wells Fargo stock at an exercise price of $40 per share. Further let s say the option vested a couple of years ago and currently Wells Fargo s stock price is $90 per share. You decide you want to take advantage of the $50 difference between the option price and Wells Fargo s stock price, so you decide to exercise your right to buy 100 shares of Wells Fargo stock at the option price of $40 per share. The result: You have a gain of $5,000 because you bought 100 shares of Wells Fargo stock for $4,000 at a time when you would have had to pay $9,000 to buy the same 100 shares of Wells Fargo stock on the open market. (see question 11)

9 Celebrate! 3 7. What is the exercise price? The exercise price is the fixed, or guaranteed, price that you pay for each share of Wells Fargo stock when you exercise your option. 8. How is the exercise price set? The exercise price is the closing price of Wells Fargo stock on the New York Stock Exchange only on the day prior to the grant date. Because stock prices fluctuate, each option grant date will most likely have a different exercise price. The exercise price, once set, remains fixed for the life of the option. (see question 16) 9. Can I exercise my option in different ways? Yes. There are two ways to exercise your vested PartnerShares stock option(s). When you do a: Cash exercise: You buy the stock by sending Wells Fargo a check for the exercise price and required applicable taxes. (see question 30) Once you buy the shares, you own the stock and can hold it or sell it whenever you choose - even if you leave Wells Fargo. Cashless exercise: A broker buys and sells your shares on the same day. You receive the gain, minus applicable withholding taxes and transaction fees in your paycheck. (see questions 20 and 30) 10. How could I profit from a stock option? The exercise price is fixed or locked for the life of the option. When the stock price goes up, the difference between the stock price and your fixed exercise price is your potential gain. As the charts on the following page illustrate, your gain could be substantial depending on how high Wells Fargo s stock price rises. For example, let s say you have a vested option for 100 shares with an exercise price of $40. When you exercise, your gain before taxes and transaction fees is the potential spread as shown in the graph. To further illustrate the value of stock options, the historical graph shows the price of Wells Fargo stock over the last 10 years. Although the stock price fluctuates, the holder of a 10-year option would be in a position to benefit from the long-term price increase. Because it is impossible to predict the future value of Wells Fargo or any stock, the market price could rise or fall in value. Past performance is no guarantee of future performance. 11. Is the gain the amount I would receive if I buy and sell shares on the same day? The gain or spread is the difference between the exercise price and the market price on the date of exercise. The spread is considered to be compensation, and tax withholding is due and payable at the time of exercise. The amount you receive is the net, after taxes have been withheld. (see questions 27-32)

10 01/01/02 11/01/01 10/01/01 09/01/01 08/01/01 07/01/01 06/01/01 05/01/01 04/01/01 03/01/01 02/01/01 01/01/01 12/01/00 11/01/00 10/01/00 09/01/00 08/01/00 07/01/00 06/01/00 05/01/00 04/01/00 03/01/00 02/01/00 01/01/00 12/01/99 11/01/99 10/01/99 09/01/99 08/01/99 07/01/99 06/01/99 05/01/99 04/01/99 03/01/99 02/01/99 01/01/99 12/01/98 11/01/98 10/01/98 09/01/98 08/01/98 07/01/98 06/01/98 05/01/98 04/01/98 03/01/98 02/01/98 01/01/98 12/01/97 11/01/97 10/01/97 09/01/97 08/01/97 07/01/97 06/01/97 05/01/97 04/01/97 03/01/97 02/01/97 01/01/97 12/01/96 11/01/96 10/01/96 09/01/96 08/01/96 07/01/96 06/01/96 05/01/96 04/01/96 03/01/96 02/01/96 01/01/96 12/01/95 11/01/95 10/01/95 09/01/95 08/01/95 07/01/95 06/01/95 05/01/95 04/01/95 03/01/95 02/01/95 01/01/95 12/01/94 11/01/94 10/01/94 09/01/94 08/01/94 07/01/94 06/01/94 05/01/94 04/01/94 03/01/94 02/01/94 01/01/94 12/01/93 11/01/93 10/01/93 09/01/93 08/01/93 07/01/93 06/01/93 05/01/93 04/01/93 03/01/93 02/01/93 01/01/93 12/01/92 11/01/92 10/01/92 09/01/92 08/01/92 07/01/92 06/01/92 05/01/92 04/01/92 03/01/92 02/01/92 01/01/92 12/01/91 11/01/91 10/01/91 09/01/91 08/01/91 07/01/91 06/01/91 05/01/91 04/01/91 03/01/91 02/01/91 01/01/91 12/01/90 11/01/90 10/01/90 09/01/90 08/01/90 07/01/90 06/01/90 05/01/90 04/01/90 03/01/90 02/01/90 01/01/90 e ic r ock P t Potential Growth (Spread) 20% annual growth = $247.67/share Potential gain: $103.75/share Exercise $20,767 Price $40 10% annual growth = Potential gain: S$6, Dollars $ Monthly Historical Wells Fargo Stock Price Performance Years % annual growth = $65.16/share Potential gain: $2, an 1990 an 1991 an 1992 an 1993 an 1994 an 1995 an 1996 an 1997 an 1998 an 1999 an 2000 an 2001 an What should I think about before exercising my stock option? While the March 18, 2002 stock option will vest on March 18, 2007, or earlier if the stock price closes at or above $90.00, you don t have to exercise your option immediately. In fact, you may want to wait and see if the stock price rises higher after the option vests. The higher the stock price on the day you exercise, the more your gain will be. When your option vests, you have the choice of exercising or waiting. If you wait and the stock price rises, the value of your option will increase. Take a look at the Potential Growth (Spread) graph to see what your option could be worth if exercised at different stock prices. Remember, this is not a prediction of the Wells Fargo stock price, but just an example of what your option could be worth if the stock price continued to rise. 13. When can I exercise my option? You can exercise your option at any time after it has vested and before it expires or is terminated. PartnerShares stock options generally vest 5 years from the grant date. They could vest earlier if the stock price reaches a certain level. The level varies by grant. 14. Do I have to exercise my option as soon as it vests? No. As long as you remain an active Wells Fargo team member, you may exercise your vested option at any time before the option expires. Wells Fargo stock options generally expire 10 years from the grant date. (see questions 22 and 34)

11 Celebrate! Do I have to exercise my entire option at once? No, you may exercise your option in any quantity you want, subject to a minimum of 20 shares per transaction. Remember, you must exercise all your outstanding stock options before they expire or terminate, otherwise you lose them. (see questions 14 and 22) 16. What happens if the stock splits? If the stock splits while you are holding an option, your option splits as well. So, if you hold a stock option to buy 100 shares at $40.00 per share, after a 2-for-1 stock split you would hold an option for 200 shares at $20.00 per share. Therefore, the value of your option is identical after the stock split (100 shares x $40.00 = 200 shares x $20.00). 17. When should I exercise my option? When to exercise your vested stock option is entirely up to you. You are not required to exercise your option as soon as it vests. Some issues you may want to consider before exercising include: The vesting and expiration dates of your option. You never want an option that is in the money to expire unexercised - it s like throwing money away. An option is in the money whenever the stock price is greater than the exercise price. Taxes. Since you will have to pay withholding taxes when you exercise, you should consult your tax advisor before exercising your option. (see questions 27-32) The stock price. Although we d all like to exercise when the stock price is at its highest, no one can predict when that will be. Still, it s a good idea to keep an eye on the stock price, particularly as your option gets closer to its expiration date. Life needs. Your financial and life goals will help you decide when to begin planning to exercise your option. Remember, these are 10 year options. As long as you remain an active Wells Fargo team member, you may exercise your option until it expires. (see question 22) 18. What happens if I don t exercise before my option expires or is terminated? If you are an active team member and you do not exercise before the expiration date, you forfeit your option. Your option may terminate before the expiration date if your employment with Wells Fargo ends. (see question 22) 19. How do I exercise my stock option? To exercise your vested options, you may call HRWELLS ( ), option 1 for the PartnerShares Line or call the PartnerShares Line directly at , Monday through Friday and follow the instructions. Operating hours are: 3:30 AM - 10:30 AM (Alaska Time) 4:30 AM - 11:30 AM (Pacific Time) 5:30 AM - 12:30 PM (Mountain Time) 6:30 AM - 1:30 PM (Central Time) 7:30 AM - 2:30 PM (Eastern Time) To complete a cash exercise, your funds must be received no later than the next business day after you begin your transaction by calling the PartnerShares Line.

12 6 PartnerShares How much will I have to pay in transaction fees? There are no fees for cash exercises. Wells Fargo Investments, LLC is the exclusive broker for PartnerShares stock options. The Wells Fargo PartnerShares commission rate for cashless exercises is $19.95 per transaction. Commission rates are subject to change from time to time without notice. 21. How should I exercise my option? Only you can decide how to exercise your stock option. Depending on your individual goals, you may wish to buy and hold the shares or you may wish to do a cashless exercise. Before deciding, you are encouraged to consider your financial and life goals, read the PartnerShares materials you received at the time of grant carefully, and consult with a tax advisor. (see question 9) 22. What happens to my March 18, 2002 PartnerShares stock option if I leave Wells Fargo? It depends on why you are no longer employed and, in some cases, on whether your option has vested. If you leave Wells Fargo for any reason other than death, Retirement or Disability, you should exercise your vested options before they expire which, for the 1996, 1997 and 1998 grants, is your last day of work. In the case of the 2000 and 2002 grants, you will have 3 months from your last day of work (but not beyond the 10 year expiration date) to exercise your stock option unless you are terminated for cause. If you are terminated for cause, your option will immediately terminate. If you Retire or die your options may have a longer exercise period (but not beyond the 10 year expiration date). Refer to the Glossary of Key Terms for definitions of Retirement and Disability for the 2002 grant. For prior grants, you should refer to the applicable prospectus you received at the time of grant for details of each grant. Disability or Retirement. Upon Termination due to Retirement or Disability, your March 18, 2002 stock option becomes exercisable immediately and continues to be exercisable until its expiration date. Death. In the event of death, your option becomes exercisable immediately by the person or persons surviving you at the time of your death in the first of the following classes of beneficiaries listed below in which there is a survivor. The stock option continues to be exercisable until the earlier of one year after your death or its expiration date. Classes of beneficiaries: Your surviving spouse; Equally to your children, except that if any of your children predecease you but leave descendants surviving, the surviving descendants will take, by the right of representation, the share their parent would have taken if living; Your surviving parents equally; Your surviving brothers and sisters equally; or The representative of your estate. For Cause. If your employment is terminated for cause, your option terminates immediately without notice and whether or not vested. Other Reasons. If you leave Wells Fargo for any reasons other than death, Disability, Retirement, or for cause, including, due to divestitures, or because your employer is no longer an Affiliate of Wells Fargo (see question 34), then: If your option is not vested at the time your employment terminates the option will expire without notice of any kind; or If your option is vested at the time your employment terminates you must exercise your March 18, 2002 stock option prior to the earlier of 3 months from the date your employment terminates or the option s expiration date.

13 Celebrate! 7 The Value of Your Stock Option 23. How can I help increase the value of my stock options? The value of your option will increase as the price of Wells Fargo s stock increases. You can help increase the stock price by: Providing excellent customer service; Selling more Wells Fargo products to every customer; Sharing and implementing Best Practices; and Connecting with each other and your customer. 24. How can I determine the value of my stock options? An easy way to determine the current paper gain or value of your stock option is to take the difference between the cost of the option (total number of shares multiplied by the exercise price) and the market value of the shares (total number of shares multiplied by Wells Fargo s current stock price). The resulting figure is your paper gain at that point in time. As Wells Fargo s stock price increases in value, so too will the amount of your paper gain. Paper gain does not take into account required withholding taxes. 25. Why are stock options important to me? Stock options are an opportunity for you to gain financial rewards from Wells Fargo s success. As Wells Fargo s stock increases in value, your option becomes more valuable. 26. Why would I want to hold on to my option after it vests? Shouldn t I exercise it as soon as I can? The decision of when and how to exercise your stock option is entirely up to you and should be based on your personal financial goals and your views on the stock market and Wells Fargo s stock price. If the stock price goes up, then holding on to the stock option would make it more valuable. Although we d all like to exercise when the stock price is at its highest, no one can predict when that will be. Still, it s a good idea to keep an eye on the stock price, particularly as your option gets closer to its expiration date. Tax Consequences 27. Are PartnerShares stock options Incentive Stock Options for tax purposes? No. PartnerShares stock options are non-qualified stock options for tax purposes and do not qualify for preferential tax treatment under the current IRS rules. Non-qualified stock options are also known as non-statutory stock options. 28. What are the tax consequences of non-qualified stock options? To you. There are generally no tax consequences to you at the time your option is granted. When you exercise your option (i.e., buy your shares of stock), you are taxed on the spread - the difference between the exercise price and the market price on the date of exercise. The spread or gain is considered to be compensation, and tax withholding is due and payable at the time of exercise. The amount of spread or gain will be included on the W-2 form you will receive from your employer; the taxes withheld will also be included on your W-2 form. Sale of the shares. If you later decide to sell your shares, you may be subject to a capital gain or loss. Upon the sale of some or all of the shares you bought by exercising your stock option, you will generally incur a capital gain or loss equal to the difference between the sale proceeds and the adjusted cost basis of the shares sold. (Although not always the case, the adjusted cost basis generally will equal the fair market value of the

14 8 PartnerShares 02 Wells Fargo common stock received upon exercise of the option plus any brokerage or other costs of purchasing the shares.) To Wells Fargo. The excess of the fair market value of the shares received by you upon exercise of the option over the exercise price of the option (your spread or gain) is deducted by Wells Fargo as compensation expense. 29. Are there other tax issues I need to think about? The tax questions covered in this document are a brief description of some of the U.S. federal income tax effects of your participation in the Plan. The description is based on the U.S. tax code, regulations under the U.S. tax code, administrative rulings and court decisions, as in effect as of the date of this document, all of which are subject to change at any time, possibly with retroactive effect. These questions assume that you are, and will continue to be, subject to the tax laws of the United States for all purposes of this stock option award, including the receipt and exercise of the option and sale of the Wells Fargo common stock issued to you when you exercise the option. If this is not the case, the tax effects of your participation in the Plan may vary from those described in one or more important ways. Even if this is the case, the tax effects of your participation may still be different because of circumstances unique to your tax situation or because of a change to the U.S. tax code, regulations, administrative rulings or court decisions on which this discussion is based. For these reasons, you should consult your tax advisor regarding the tax effects of your participation in the Plan, including a determination as to whether your participation may be subject to taxation by more than one jurisdiction. The tax consequences related to a stock option exercise can be complex and will vary with each individual. You are strongly advised to read the materials you received at the time of grant and consult with your tax advisor before exercising your option. 30. What are the tax withholding rates? This type of stock option (non-qualified for tax purposes) requires payment and withholding of federal and state income taxes and employment taxes (such as Medicare and Social Security taxes) on the difference, if any, between the exercise price and the fair market value of Wells Fargo stock on the date of exercise. Statutory tax withholding is required at the time of exercise. Currently, the statutory tax withholding rates are as follows: 27% Federal, 6% CA and 6.25% MN (other state rates may vary), 1.45% FICA-Medicare, and up to 6.2% FICA-Social Security. These statutory tax withholding rates (plus any applicable local taxes) may be different at the time you exercise your option. Taxes will be withheld based on the state where you work, or, if you leave Wells Fargo, the state in which you last worked. The statutory tax withholding rates may be less than your actual tax liability (your marginal tax rates). As a result, you may owe additional taxes when you file your tax return for the year you exercise your option. 31. How are withholding taxes paid? If you elect a cash exercise, you must pay the required withholding taxes in cash at the time you exercise the option. If you elect a cashless exercise, the required withholding taxes are deducted from the sale proceeds. 32. Can I request a change to the amount of taxes that are withheld? No. The rates and state jurisdictions (where you work or where you last worked) at which Wells Fargo is required to withhold taxes, are fixed regardless of whether your individual tax rate is actually higher or lower.

15 Celebrate! Will I receive dividends on my stock option? The option grant gives you a right to purchase stock. You do not become a shareholder until you exercise the option and purchase the shares. If you hold on to the shares after you exercise the option, you will receive the same dividends per share as other shareholders of Wells Fargo common stock. 37. Does Wells Fargo plan on issuing PartnerShares grants on a regular basis? Assuming Wells Fargo continues to perform and meet, or exceed, its financial goals, we expect PartnerShares stock options may be granted in the future, but we can t guarantee this. 34. What happens if my employer is sold or spun off? If your employer is sold or spun off so that it ceases to be an Affiliate of Wells Fargo, you will no longer be employed by Wells Fargo or an Affiliate of Wells Fargo. If this occurs before your option is vested, the option will terminate immediately without notice of any kind. If this occurs after your March 18, 2002 stock option is vested, you must exercise your option prior to the earlier of 3 months after your employer ceases to be an Affiliate or the option s expiration date. See the Glossary of Key Terms for the definition of Affiliate. 35. Can Wells Fargo delay the exercise of my option? Wells Fargo can delay the exercise of your option (a) to ensure that at the time of exercise there is a registration statement in effect under the Securities Act of 1933 for the shares underlying the option, (b) to comply with all other applicable laws, regulations and guidelines, or (c) to the extent a PartnerShares Committee deems it in the best interests of Wells Fargo. 36. Are there any risks to holding Wells Fargo common stock? An investment in Wells Fargo common stock carries risk just as it does owning stock in any other publicly traded company. Because the stock price may decline, you may lose money on your investment.

16 10 PartnerShares 02 History of PartnerShares Stock Option Grants Here s a look at the history of PartnerShares stock options. All amounts are in U.S. dollars and are adjusted to reflect a 2-for-1 stock split on October 10, Different eligibility criteria applied to each grant. Not all employees received grants. Refer to the applicable prospectus for more information about the uly 23, 1996, September 23, 1997, November 3, 1998 and November 3, 2000 grants. For the March 18, 2002 grant, refer to questions 1, 2, 18 and 22 of this document. Grant Date uly 23, 1996 September 23, 1997 November 3, 1998 November 3, 2000 March 18, 2002 Participants/# Options Granted* Generally, team members of Norwest Corporation and Affiliates on 7/23/1996.* Full-time and high-time participants received an option to buy 200 shares. Part-time and low-time participants received an option to buy 100 shares. Generally, team members of Norwest Corporation and Affiliates on 9/23/1997.* Participants (full-time, part-time, high-time, low-time) received an option to buy 400 shares. Generally, team members of Wells Fargo & Company and Affiliates on 11/3/1998 and temporary and casual Norwest or former Wells Fargo team members who performed services during period between 6/8/98 up to 11/3/1998.* Participants received an option to buy 200 shares. Generally, team members of Wells Fargo & Company and Affiliates on 11/3/2000*. Regular participants with an annualized base salary equal to or greater than $60,000 as of 9/30/2000 received an option to buy 400 shares. Regular participants with an annualized base salary less than $60,000 as of 9/30/2000 received an option to buy 200 shares. Part-time and flexible participants received an option to buy 100 shares. Generally, team members of Wells Fargo & Company and Affiliates on 3/18/2002*. Regular participants received an option to buy 150 shares. Part-time and flexible participants received an option to buy 75 shares. * This is a general description of the terms of each grant. Details may be found in the individual grant prospectuses.

17 Celebrate! 11 Exercise Price Vesting Triggers Expiration Date $ years or earlier if the stock price closes at or above $30.00 (these options vested on uly 10, 1997) uly 23, 2006 $ years or earlier if the stock price closes at or above $60.00 September 23, 2007 $ years or earlier if the stock price closes at or above $70.00 November 3, 2008 $ years or earlier if the stock price closes at or above $80.00 November 3, 2010 $ years or earlier if the stock price closes at or above $90.00 March 18, 2012

18 12 PartnerShares 02 Glossary of Key Terms Here are some common terms used in the world of stock options along with their definitions. Affiliate - A corporation or limited liability company, a majority of the voting stock or membership interest of which is directly or indirectly owned by Wells Fargo & Company, and any partnership or joint venture designated by the Committee in which any such corporation or limited liability company is a partner or joint venturer. Cashless Exercise/Same-day Sale - Allows you to simultaneously buy and sell your option shares. The net effect is that you use the proceeds from the sale of some of the shares to pay for the exercise cost and any related taxes and broker or transaction fees. Capital Gains Tax - Taxes paid based upon the difference between the selling price of an asset and its cost when purchased. If the difference is positive, a gain is realized; if negative, a loss results. Current IRS rules require a holding period of more than one year before claiming long term capital gains on investment securities. Please consult your tax advisor for further discussion of capital gains issues that may affect you. Committee - A PartnerShares Committee appointed by the Board of Directors of Wells Fargo & Company. Common Stock - Units of ownership of a corporation. Disability - Means a disability which would entitle a Participant to receive a disability benefit under any long-term disability plan maintained by the Company or an Affiliate, as from the time to time in effect, whether or not the Participant is then participating in such plan. Disposition - The relinquishment by sale, gift or other transfer of shares of stock by a shareholder. Exercise an Option - Make use of a right to buy shares of stock at a fixed price. Exercise Price - Also referred to as the option price or grant price. This price is locked-in or fixed for the life of the stock option. It is the price you pay per share when you exercise your option(s). For PartnerShares stock options granted on or after November 3, 2000, the exercise price is the New York Stock Exchange-only closing price of a share of Wells Fargo common stock on the day prior to the date of grant. Expiration Date - The last day an option can be exercised to purchase shares. For PartnerShares stock options, you have 10 years from the grant date unless your option terminates before then because your employment with Wells Fargo ends. Fair Market Value (FMV ) - The prior business day s closing price for a share of Wells Fargo & Company common stock on the New York Stock Exchange. Grants prior to November 3, 2000 used a slightly different definition of Fair Market Value. Gain (or appreciation or spread) - The increase in asset value through a rise in market price, appraised value or income earned as compared to an earlier period. In the case of stock options, the gain is the spread. The spread is the difference between the exercise price and the market price on the date of exercise. Grant Date - The date the stock option award is approved by the Board of Directors of Wells Fargo & Company or an authorized Committee of the Board.

19 Celebrate! 13 In the Money - An option is in the money on a particular date if the stock price is higher than the exercise price. Non-Qualified Stock Options (NQSOs) - Stock options that do not qualify for preferential tax treatment in accordance with the current Internal Revenue Code. The difference between the exercise price and FMV on exercise date is considered taxable income. Option Price - See Exercise Price. Optionee - An optionee is a participant team member who has been granted a stock option by the Board of Directors or by a designated committee of the Board of Directors of Wells Fargo & Company. Ordinary Income Tax - The taxation of reportable income at ordinary rates in contrast to income taxed at the more advantageous capital gains rates. This term includes income from regular sources such as wages, commissions, interest and dividends. Participant - Means an eligible employee who is granted an award under the Plan. Retirement - Retirement means termination of employment after reaching the earlier of: 55 years of age with 10 completed years of service, or age 65, or 80 points (with one point credited for each completed age year and one point for each completed year of service). SEC Fees - These are fees charged by the Securities and Exchange Commission. The fee is imposed on all shares bought or sold in the marketplace. The fee is small and is calculated as follows: $.03 per $1,000 worth of stock - bought or sold. Share - Unit of equity ownership in a corporation. Shareholder - One who owns shares of stock in a corporation. An optionee who exercises a stock option and holds the stock becomes a shareholder. Spread - See Gain. Stock Option - The right to buy stock at a fixed price for a specified period of time. Stock Split - An increase in a corporation s number of outstanding shares of stock without any change in the shareholder s equity or the aggregate market value at the time of the split. Underwater - When the stock price is less than the exercise price, a stock option is said to be underwater. Vested Option - An option that can be exercised. Vesting Period - The length of time or waiting period before an option may be exercised.

20 14 PartnerShares 02 Plan Information General Purpose. The Wells Fargo & Company PartnerShares Stock Option Plan (the Plan ) is intended to enhance the profitability and value of Wells Fargo by providing performance-based incentives and additional equity ownership opportunities to eligible employees of Wells Fargo and its affiliates. Duration. The Plan will remain in effect until all shares of Wells Fargo common stock available for issuance under the Plan have been issued, unless the Plan is terminated earlier as provided under the Plan. Amendment; Termination. Wells Fargo s Board of Directors or the Human Resources Committee of the Board of Directors may at any time terminate, suspend or amend the Plan. ERISA. The Plan is NOT subject to the provisions of the Employee Retirement Income Security Act of Administration. One or more PartnerShares Committees administer the Plan. Each Committee is comprised of one or more members of Wells Fargo s Board of Directors, as named from time to time by the Board of Directors. In addition to administering and interpreting the Plan, each Committee is authorized to determine, subject to the Plan, the Eligible Employees who receive Plan awards, the date of issuance and duration of each Plan award, the purchase price of each Plan award, and such other terms, conditions and restrictions as the Committee deems advisable. Continued Employment. Neither the adoption of the Plan nor the grant of any award to you will (a) confer upon you any right to continued employment with Wells Fargo or any Affiliate of Wells Fargo or (b) interfere in any way with the right of Wells Fargo or any Affiliate of Wells Fargo to terminate your employment at any time. Change of Control. On the date that (a) substantially all of the assets of Wells Fargo are acquired by another corporation, (b) there is a reorganization of Wells Fargo involving an acquisition of Wells Fargo by another entity, or (c) a majority of Wells Fargo s Board of Directors are persons other than persons (i) for whose election proxies shall have been solicited by the Board or (ii) who are then serving as directors appointed by the Board to fill vacancies on the Board caused by death or resignation (but not by removal) or to fill newly-created directorships, then (1) all options and other awards that require exercise by participants will become immediately exercisable in full and (2) with respect to all other awards, all conditions or restrictions to the receipt thereof will immediately terminate. Securities to be Offered As of February 28, 2002, a total of approximately 24,270,295 shares of Wells Fargo common stock were available for awards and as a basis for calculating awards under the Plan. The number of shares will be adjusted to reflect changes in the number of outstanding shares occurring as a result of stock splits, reverse stock splits or stock dividends. Plan awards consist of options and stock rights granted to eligible employees. Shares of Wells Fargo common stock issued with respect to an award may be treasury or original issue or a combination of treasury or original issue, as Wells Fargo determines. Shares identified with awards that for any reason terminate or expire unexercised will thereafter be available for other awards under the Plan. Shares that are used to pay any portion of the purchase price of an award or any portion of an participant s income tax withholding resulting from an award, and shares used as a basis for calculating cash amounts that are used to pay any portion of the purchase price of an award or any portion of a participant s income tax withholding resulting from an award, will also thereafter be available for awards or as a basis for calculating awards under the Plan. Eligibility Any employee of Wells Fargo or an Affiliate of Wells Fargo is eligible to be selected by the Board of Directors or a PartnerShares Committee to participate other than: An employee who is subject to Section 16 of the Securities Exchange Act of 1934, as amended from time to time; A leased employee; Any person classified by Wells Fargo or an Affiliate of Wells Fargo as an independent contractor as of the date of an award regardless of whether the person is subsequently determined by any court or governmental agency to then have been an employee; and Any employee excluded by any PartnerShares Committee. If a Participant s employer ceases to be an Affiliate of Wells Fargo, the participant immediately thereupon ceases to be an Eligible Employee and a Participant.

21 Celebrate! 15 Additional Information This document incorporates important business and financial information about Wells Fargo that is not included in or delivered with this document. You can find this information in the Wells Fargo documents identified below, each of which is incorporated by reference into this document. All of the documents were filed under SEC File No Annual Report on Form 10-K for the year ended December 31, 2001, including information specifically incorporated by reference into the Form 10-K from Wells Fargo s 2001 Annual Report to Stockholders and Wells Fargo s definitive Notice and Proxy Statement for Wells Fargo s 2002 Annual Meeting of Stockholders; Current Report on Form 8-K filed anuary 15, 2002; The description of Wells Fargo common stock contained in the Current Report on Form 8-K filed October 14, 1997, including any amendment or report filed to update such description; and The description of preferred stock purchase rights contained in the Registration Statement on Form 8-A dated October 21, 1998, including any amendment or report filed to update such description. All reports and definitive proxy or information statements filed by Wells Fargo pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the date of this document and before deregistration of the securities then remaining unsold are incorporated by reference into this document and are part of this document from the date of filing. You can obtain, without charge, a copy of any document that is incorporated by reference by contacting Wells Fargo s Corporate Secretary at MAC N , Wells Fargo & Company, Sixth & Marquette, Minneapolis, Minnesota If you want a copy of the Plan Documents call HRWELLS and follow the prompts.

22 16 PartnerShares 02 Wells Fargo & Company MAC # A Folsom Street, 4th Floor San Francisco, CA View PartnerShares online at: Teamworks or partnershares.wellsfargo.com