1. In Wells Fargo, there are 20, 17, 15, 16, 16 directors from the fiscal years 2008 to 2012 respectively. We can say that there is a decreasing trend in the size of Wells Fargo’s board of directors, and the annual meeting of stockholders of 2013 will elect 14 directors, which means the number will be further reduced.
The board size may affect a firm’s performance, an increase in board membership can bring both advantages and disadvantages to a company. On one hand, larger board size can facilitate key board functions such as advisory function and monitoring function, especially when there is an increase in outside directors. More directors can bring valuable expertise and potentially important connections, therefore the corporation can possess greater collective information and make more rational decisions. Also, a larger size offers the benefits of increased monitoring, it can help remove ineffective management teams and ensure that managers are pursuing the interests of shareholders. On the other hand, larger board size might cause some problems. First, there could be coordination and communication problems since it becomes more difficult to arrange board meetings or reach a consensus, and this will lead to a less efficient decision-making. Secondly, board cohesiveness can be undermined because board members will be less likely to share a common purpose or communicate with each other clearly, and some of their ideas may not be heard.
2. Under NYSE rules, in order for a director to be considered independent, the Board must determine that the director has no direct or indirect material relationship with the Company. To assist the Board in making its independence determinations, the Board of Wells Fargo adopted the Director Independence Standards appended to the corporation’s Corporate Governance Guidelines. These Director Independence Standards consist of the NYSE’s “bright line” standards of independence and the Board’s categorical standards of independence. After reviewing the information presented by Wells Fargo, I can say that except for John G. Stumpf, who is a Wells Fargo employee, all current directors and director nominees are independent under the Director Independence Standards and NYSE rules, including applicable SEC rules.
An outside director is a member of a company's board of directors who is not an employee or stakeholder in the company, and they do not form part of the executive management team. Here in wells Fargo, among these 16 directors, except for John Stumpf, the CEO and Chairman, all the other 15 directors are non-employee directors or outside directors.
So based on this data, we can say this corporation’s board of directors is “independent” since 15 out of 16 directors are independent or outside directors.
3. The Board has established seven standing committees: Audit and Examination, Corporate Responsibility, Credit, Finance, Governance and Nominating, Human Resources, and Risk. The Board’s committees act on behalf of the Board and report on their activities to the entire Board. The Board appoints the members and chair of each committee based on the recommendation of the Governance and Nominating Committee.
In Wells Fargo, all standing Board committees consist solely of independent directors. The following table provides current membership information for each of the Board’s standing committees, we can find that all these membership come form those 15 non-employee directors or outside directors, so all these committees should be independent.
4. Personally, I think Wells Fargo does a very good job at corporate governance, they have all those essential committees and these 7 standing committees have covered issues like company’s policies, programs, and strategies, social responsibility, government relations, environmental sustainability and human rights; performance and