Wells Fargo & Co. is expected to unveil a companywide stock option plan as its merger deal with Norwest Corp. heads toward closure today.
Minneapolis-based Norwest has a stock option available to all its employees, a spokesman said.
Though upper-level Wells Fargo managers also have stock option plans, 95% of the bank's employees do not.
A senior Norwest official said that offering the same benefits to all employees at the new Wells Fargo would help foster a sense of unity in the merged company.
"We are going to be one company, and it's important that all employees have the same incentives and the same opportunities," said the executive, who spoke on condition of anonymity. "It creates incentives for all employees to keep finding greater efficiencies and new ways to improve profitability, which translates into higher stock prices."
With 90,000 employees, the new Wells Fargo would become one of a growing group of banks that offer across-the-board stock option programs. That list includes Chase Manhattan Corp., BankAmerica Corp., Citigroup, and BankBoston Corp.
Under the Wells Fargo plan, which was first reported in Friday's San Francisco Chronicle, employees would receive options, which could be exercised within five years, to buy up to 200 shares. The shares would be valued at the price at which the stock trades on the day the merger closes.
The new plan is expected to resemble Norwest's offering, called Best Practices PartnerShares. The first option offering was exercised July 10, 1997, when Norwest's stock price reached $60.
The second, which was announced Sept. 23, would take effect in five years or when the stock price reaches $60, whichever comes first.
The program, described as a price-vested or performance-contingent option plan, is similar to one offered to top executives at Citigroup, the company formed Oct. 8 when Citicorp merged with Travelers Group.
Observers applauded the move to include all of Wells Fargo's staff in a stock option plan. They said that employees up and down the corporate ladder will feel more involved and take a more active interest in the company's performance.
"Banks tend to be so big and bureaucratic that employees can feel alienated," said Charles B. Wendel, president of Financial Institutions Consulting in New York. "A stock option plan is one step to try and eliminate that problem."
It is especially important to create a companywide option plan when one merger partner has a program while the other does not, Mr. Wendel added.
"This is obviously a situation where they are trying to create a sense of unity between Wells Fargo and Norwest," he said.