Wells Fargo & Company (WFC) Earnings Call Transcript & Summary

Good day, and welcome to the Wells Fargo & Company Annual Meeting of Shareholders. Wells Fargo owns all rights to any photographs and audio/video recordings of the annual meeting. Photographing or audio/video recording of any portion of the annual meeting is prohibited. Any rebroadcast, retransmission or other audio/video distribution of the annual meeting without the expressed written consent of Wells Fargo is prohibited. I would now like to turn the meeting over to Charles Noski, Chairman of the Board of Directors.

Thank you, operator, and welcome, everyone. I'm Chuck Noski, Chairman of the Board of Directors of Wells Fargo. On behalf of the independent directors of the Board and the senior management team of our company, all of whom are in virtual attendance today, I welcome all shareholders and guests to our annual meeting. Thank you for joining us. We're in an unprecedented time, facing a global health challenge associated with the COVID-19 pandemic. We know that each of you is taking actions necessary to care for yourself, your families and your communities. In light of the pandemic, our Board determined that this year, for health and safety reasons, it was not appropriate to hold an in-person annual meeting in Salt Lake City, Utah as originally planned. We're grateful that technology allows us the opportunity to meet together in this format today. Please note that if we experience technical issues, such as loss of audio or webcast connection, we ask that shareholders and guests stand by and allow us time to try to resolve the issue and resume the meeting or otherwise provide an update relating to the meeting. If a technical disruption occurs that prevents us from continuing the meeting and the polls have been opened but the meeting is not adjourned, the polls will be closed immediately. In that situation, votes received prior to the time the polls were closed will be counted, the meeting will not be reconvened and the results will be announced publicly. All of us are facing this situation that has created extraordinary disruptions throughout the world, and Wells Fargo is responding in real time to dynamic and fluid events. We are taking steps every day to serve our customers and along with our industry peers, playing an important role in the U.S. economy. Our company is working tirelessly to make sure that we are putting the most appropriate and helpful measures in place to support the varying needs of our customers and employees as the world grapples with COVID-19. This is significant work, and I want to thank our employees for their outstanding efforts and support of our customers, each other and our communities. We'll share specific actions Wells Fargo is taking to contribute to COVID-19 relief later in this meeting. As we get underway, I would first like to thank all of our shareholders for your investment in Wells Fargo. Please take a look at our agenda today posted under Meeting Materials located on the bottom right of the virtual meeting site as it lists the order of business for our time together. Following the business portion of the meeting, we will have a general question-and-answer session. Our rules of conduct for the meeting are also posted under Meeting Materials located on the bottom right of the virtual meeting site. The rules of conduct explain how we will conduct the meeting, including the 2 question-and-answer sessions. During the first question-and-answer session, shareholders may submit questions on the items of business to be considered at the meeting. After the company update, we will hold a general question-and-answer period. As noted in our rules of conduct, the company does not intend to address questions or comments relating to certain types of matters, including matters not pertinent to the meeting or business of the company and matters about a personal concern or agreements. If you have a personal financial or employee workplace matter to discuss, we have customer service and human resources representatives available to help you. Contact information for each of those groups is included in our rules of conduct. In addition, if you are unable -- if we are unable, for any reason, to answer all of your questions during today's meeting, please contact us directly through our Investor Relations website. We may group, summarize and answer together questions from multiple shareholders on the same topic or that are otherwise related. I'd like to start with some brief remarks from the Board of Directors, after which we will proceed to the presentation of business items to be considered at this meeting. Following the presentation of all company and shareholder proposals, we will hold a question-and-answer session on the proposals. At the end of that question-and-answer session, we will close the polls and then announce the preliminary voting results. We will then adjourn the business portion of the meeting. After the business portion of the meeting, I will introduce our CEO who will provide an update on the company. After that update, we will hold a general question-and-answer session. Before we get to the business of the meeting, I'd like to offer some brief comments on some of management's accomplishments to date, our Board's current focus and how we are working together to bring value to our shareholders and customers. There is a transformation underway here at Wells Fargo. The past few years have brought significant change to the company, yet our foundational commitment of helping customers succeed financially remains. We are charting a new course. Led by our new CEO, Charlie Scharf, company management and employees are working hard together every day to help Wells Fargo build the strong foundation necessary to reach its potential. It is because of our 263,000 dedicated employees that Wells Fargo serves 1 in 3 U.S. households, remains one of the largest lenders in the country, offers its products through industry-leading distribution channels and has deep and enduring customer relationships. One of the Board's most important efforts in 2019 was to conduct a CEO search and choose the right person to lead our company, and we found that person in Charlie. The Board sought a leader who will bring a new approach to help move forward from the past and pivot to the future. Charlie brings a rich set of experiences in the banking and payments industries to Wells Fargo, where he is already making his mark in a short period of time. Charlie is building on the efforts of the last few years by focusing on addressing our outstanding regulatory matters with a sense of urgency, driving important cultural change and setting company goals and strategy. Since he joined Wells Fargo in October of last year, Charlie has restructured the leadership team, including with outside hires, with each individual bringing unique and valued perspective to the task of transforming Wells Fargo and has made some initial organizational changes to ensure clear authority and accountability. Like your Board of Directors, Charlie is committed to fixing past wrongs, operating with the highest standards of integrity and excellence and regaining the trust of all stakeholders. Charlie will provide a company update after we conclude the business portion of this meeting. Turning to my thoughts about the Board. I am honored to serve as Chairman and lead an exceptional group of Board members that is dedicated to Wells Fargo's success. It is our responsibility to both oversee and support Charlie and the management team as they execute on Wells Fargo's priorities and business strategy while bringing our skills and experience to bear on particular areas of focus. During this past year, we added new directors with expertise in several key areas, including financial services, regulatory matters, business operations and corporate governance. We have a broad range of collective skills represented on the Board that are relevant to our company and business. Today, we're also proposing the election of a new director, Steven Black, who brings additional financial services skills and deep experience advising large multinational corporations. In addition, I'd like to take this opportunity to thank John Baker, who is retiring from the Board at this meeting, for his hard work and valuable contributions to the Board over the years. You can be certain that we are an active and engaged Board, one that is focused on holding management accountable for meeting its regulatory commitments, continuing to strengthen the company's risk management framework and corporate governance and overseeing management as it develops and implements the company's strategy. We believe we have the right management team in place and we are headed in a clear direction. We will work jointly with company leadership on transforming this fine institution and restoring its reputation, with a focus on serving our customers and delivering long-term value for you, our shareholders. While there is much work to be done, my fellow directors and I are confident in Wells Fargo's future. And again, thank you for your investment in Wells Fargo. We will now proceed to present the items of business to be considered at this annual meeting. The first 3 items on the agenda are management proposals that will be presented on behalf of the company. The next 3 items on the agenda are shareholder proposals. Shareholder proponents or their authorized representatives will present their respective proposals. While the items of business are being presented, shareholders may submit questions on these items by typing them in the Ask a Question box on the lower left side of the virtual meeting website. After all agenda items have been presented, we will respond to questions on these proposals. Polls will close after the question-and-answer period on the business items is completed, and we will announce the preliminary results of the vote. The business portion of the annual meeting will then be adjourned. I confirm that the notice of the annual meeting of shareholders, the affidavit of the mailing of the notice and the supplemental notice about this virtual meeting filed with the Securities and Exchange Commission and posted on our website have been filed with the corporate secretary as part of the record of this meeting. We have appointed Bradley J. Kreager of EQ Shareowner Services as inspector of election. Also joining us virtually today is Anthony Augliera, our Corporate Secretary. Anthony, please confirm the presence of a quorum.

The inspector of election has advised me that holders of shares of common stock representing at least 85% of the total number of common shares outstanding entitled to vote are present in person or represented by proxy, which constitutes a quorum.

Thank you, Anthony. I 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 are ready to proceed with the items to be voted upon in this meeting. It is 9:11 a.m. Pacific daylight time, and the polls are open. I move for a vote by shareholders items 1 through 3, which are management proposals, and have properly presented items 4 through 6, which are shareholder proposals included in the proxy statement. For the proposals listed in the proxy statement, most of you have already submitted your proxy to vote, and you do not need to vote again unless you want to change your vote. If you wish to change your vote and you are a record holder of Wells Fargo shares, you may vote online by the following -- by following the instructions in your proxy materials and notice of our virtual meeting mailed to you beginning on April 6, 2020. If you wish to change your vote and you are a beneficial holder of Wells Fargo shares, you may vote by proxy by following the instructions on the notice of our virtual meeting filed with the Securities and Exchange Commission. At this time, I'd like to introduce the Wells Fargo executive officers who will vote the proxies submitted: William M. Daley, Vice Chairman of Public Affairs; Mary T. Mack, CEO of Consumer and Small Business Banking; and Amanda G. Norton, Chief Risk Officer. Each of them is attending virtually today. If you submitted your proxy, Bill, Mary and Mandy as proxies will vote your shares as you have instructed. We will now move to the formal presentation of the items of business to be considered at this year's annual meeting. I will now present item 1 through 3, the items being presented by the company for approval by shareholders. Item 1, election of directors. According to the bylaws, the Board has set the number of directors to be elected at 12 and has designated 12 nominees for election. Anthony, will you please read the names of each nominee for director.

The nominees for director are Steven D. Black; Celeste A. Clark; Theodore F. Craver, Jr.; Wayne M. Hewett; Donald M. James; Maria R. Morris; Charles H. Noski; Richard B. Payne, Jr.; Juan A. Pujadas; Ronald L. Sargent; Charles W. Scharf; and Suzanne M. Vautrinot.

Thank you, Anthony. These individuals have been nominated according to our bylaws. Information about each of the nominees is presented beginning on Page 23 of our 2020 proxy statement. Item 2 on the agenda is an advisory resolution to approve executive compensation. The proposal appears on Page 65 of the proxy statement. Item 3 on the agenda is a proposal to ratify the appointment of KPMG LLP as the company's independent registered public accounting firm for 2020. The proposal appears beginning on Page 102 of the proxy statement. Michael Pierce and Chris Hosmer of KPMG are also in attendance virtually at today's annual meeting. As stated in the proxy statement, the Board has recommended that shareholders vote for each of the director nominees for election under item 1 and for items 2 and 3. Items 4 through 6 are proposals being presented by shareholders for approval at this meeting. Let me remind the presenters that the rules of conduct for this annual meeting allow each presenter 4 minutes to present their proposal. Item 4 is a proposal from John Chevedden, a shareholder of the company, requesting shareholder approval of bylaw amendments. The proposal appears beginning on Page 107 of the proxy statement. Mr. Chevedden will now present proposal 4.

Hello, this is John Chevedden. Can you hear me okay?

Yes. Thank you, John.

This is proposal 4, let shareholders vote on bylaw amendments. Shareholders request that the Board of Directors amend the bylaws to require that any amendment to the bylaws that is approved by the Board shall be subject to a nonbinding shareholder vote as soon as practical, unless such amendment is already subject to a binding shareholder vote. It is important that bylaw amendments take into consideration the impact such amendments can have on reducing the accountability of directors and managers and/or on limiting the rights of shareholders. For example, directors could adopt a narrowly crafted exclusive form bylaw to suit the unique circumstances of management. A proxy adviser recently adopted a policy to vote against directors who unilaterally adopt bylaw provisions or amendments to the articles of incorporation that materially diminish shareholder rights. This proposal is in support of greater transparency for management. According to a March 2020 New York Times article, more than 3 years after Wells Fargo's misdeeds erupted in public view, the bank is still trying to change its culture. Rank and file employees have said that they remain under heavy pressure to squeeze cash from customers. 9 of Wells Fargo's Board of Directors -- 12 Directors joined in 2017 or later, after the end of the period when Wells Fargo opened fake accounts on a massive scale. Yet, a March 2020 House Financial Services Committee Report was deeply critical. According to the report, Ms. Elizabeth Duke who stepped down as Chairwoman in March 2020 and other Board members were still reluctant to meet [Audio Gap] Please vote yes, let shareholders vote on bylaw amendments, proposal 4, to increase transparency at Wells Fargo.

Thank you, Mr. Chevedden. Item 5 is a proposal from Thomas P. DiNapoli as Trustee for the New York State Common Retirement Fund, a shareholder of the company, requesting a report on incentive-based compensation and risks and material losses. The proposal appears beginning on Page 109 of the proxy statement. Gianna McCarthy will now present proposal 5.

Good morning, Chairperson Noski and Mr. Scharf, members of the Board of Directors, fellow shareowners and stakeholders. My name is Gianna McCarthy. I'm a Director at the New York State Common Retirement Fund, the third largest public pension fund in the United States. As long-term Wells Fargo & Company shareholders, the fund and co-filer AFL-CIO reserve fund remain concerned about compensation practices, which time and again, have been a culprit in numerous scandals that have resulted in the destruction of shareholder value. Shareholders are seeking more transparency into employee compensation so that we can evaluate risk it may pose to the bank. In 2016, Wells Fargo agreed to pay fines of approximately $185 million related to investigations and enforcement actions concerning the company's retail banking sales practices. Among other things, the company entered into a consent order with the Department of the Treasury, Comptroller of the Currency on September 6, 2016, in which the comptroller found that Wells Fargo set sales goals and established an incentive compensation structure that emphasize sales of bank products and services to customers by bank employees. Moreover, the comptroller identified numerous deficiencies and unsafe or unsound practices in Wells Fargo's risk management and oversight of its sales practices that related to incentive-based compensation programs. In February 2020, the U.S. Department of Justice announced that Wells Fargo had agreed to pay $3 billion to settle criminal charges and a civil suit stemming from a practice between 2002 and 2016 of pressuring employees to meet unrealistic sales goals that led thousands of employees to provide millions of accounts or products to customers under false pretenses without consent, often by creating false records or misusing customers' identities. In 2018, the Federal Reserve limited Wells Fargo's assets to $1.95 trillion until the bank improves governance and internal oversight. And that has only been recently partially relaxed and only because of necessity created by the pandemic and the need to support the payroll protection program. Because investors have significant interest in understanding risks that could expose Wells Fargo to material losses, the bank should disclose the information requested about employee compensation to its shareholders. Thank you.

Thank you, Ms. McCarthy. Item 6 is a proposal from Arjuna Capital on behalf of Julia Bamburg and Judith Bamburg as trustees of the Harold B. Bamburg Revocable Trust, a shareholder of the company, requesting a report on the company's global median pay gap. The proposal appears beginning on Page 113 of the proxy statement. Natasha Lamb will present the proposal. Operator, please play Ms. Lamb's prerecorded presentation of proposal 6.

Good morning. My name is Natasha Lamb, and I move proposal #6 on behalf of Arjuna Capital, asking for a report on gender and racial pay equity. On its face, Wells Fargo has taken an important first step by publishing statistically adjusted pay parity numbers, assessing the pay of men and women performing similar jobs and the pay of minority and nonminority employees performing similar jobs in the United States. Yet, this statistically adjusted pay parity reporting is only half the story. The other half is median pay disclosure, which is the objective of this proposal. Pay gaps are comprised of 2 parts: equal pay for your current job versus direct peers and equal opportunity to high-paying jobs. Median pay gaps reflect a lack of equal opportunity by measuring whether women and minorities are holding as many high-paying jobs. The gender pay gap is literally defined as the median pay of women working full time compared to the median pay of men. Women in the U.S. make $0.82 on the dollar on this basis. African-American women make $0.62, and Latino women make $0.54. Median pay gaps are considered the valid way of measuring pay and equity by the U.S. Census Bureau, the Department of Labor; the Organization for Economic Cooperation and Development, the OECD; and the International Labor Organization, the ILO; not to mention the United Kingdom, which now mandates disclosure of median pay gaps. For the Board to say measuring median pay gaps is not "an accurate representation of progress" is a disservice to the group's these pay gaps affect. And for Wells Fargo to choose to evaluate median pay gap internally, noting "Our median pay gap for women and people of color are higher than they should be" but not share these numbers with shareholders is an exercise in pure opacity. We can see Wells Fargo's pay gap in the U.K. because they are mandated. Our company reported a 21% hourly pay gap and a 44% bonus pay gap for its U.K. operations. But our company refuses to publish median information beyond the U.K. Yet, companies like Citigroup, MasterCard and Starbucks, are already showing leadership by publishing their median pay gap data globally. These disclosures can improve performance and provide a baseline for measuring progress moving forward. A 2019 study in the Harvard Business Review found that wage transparency in countries that mandate it narrowed the median wage gap. There are many ways to shrink gender and racial pay gaps at a company, improving diversity, ensuring statistically adjusted pay parity, advancing women and minorities into positions of leadership, but the only benchmark to measure whether the pay gap is actually shrinking from these various levers is to publish the pay gap itself. Thank you for your time as we firmly believe our company is best served by a transparent and fulsome accounting of pay equity.

Thank you, Ms. Lamb. As stated in the proxy statement, the Board has recommended that shareholders vote against items 4 through 6. That concludes the presentation of the company and the shareholder proposals. We will now respond to questions from shareholders or their proxies on these 6 items of business. We will address questions on proposals in the order in which the proposals were presented. Please refer to the rules of conduct for information about the question-and-answer sessions. We are joined virtually today by Arati Randolph of our corporate communications team who will assist with our Q&A sessions. Arati, would you please let us know how many shareholders and guests are attending the meeting today and if there are any questions on the company and shareholder proposals.

Thank you, Chuck. There are approximately 1,175 shareholders and approximately 410 guests in attendance in today's meeting. We will now begin the Q&A session on the proposals. We have a question on Item 1, the election of directors. And the question is, how are Board candidates recruited? Do you use an executive recruitment firm? And if so, what is the name of that firm?

As you may be aware, we have a governance and nominating committee of the Board that is responsible for selecting and evaluating directors and director candidates. We seek input obviously from shareholders, from third-party search firms, current or former Board members, leaders, other participants in the financial services industry and a variety of inputs as we try to select the best candidates to be considered for directors. We do -- the governance and nominating committee does have the authority to engage executive search firms. We engage several different firms based upon the needs and the requirements that we're seeking to fulfill. And of course, we consider all number of factors, including experience, diversity and other characteristics.

Thank you. We do not have any questions on items 2 through 5. We do have a question on Item 6, which is around global median pay gap. And the question is, have you addressed the pay gap between men and women?

This is Charlie Scharf. I'll answer the question. And I guess I'll answer the question in 2 ways. I think we look at a series of things, including equal pay for equal work as well as representation. We are completely committed to equal pay for equal work, and we'll take all the appropriate actions to ensure that that's happening. We go through a regular process where we benchmark individuals inside the company against each other as well as outside the company within and outside of the industry. We use a series of experts outside the company to help us do this work, and we disclose that work publicly. The results are reviewed by not just the management team but by the Board's human resource committee as they have the ultimate oversight for human capital management, including work. Based upon the reviews that we've done, we take appropriate actions to ensure that all employees at the company continue to be paid fairly and equitably. But we also do look at representation. And our median pay gaps for women and people of color are higher than they should be, and we are working on a series of very specific actions to address the factors that contribute to those differences, the biggest piece which is increasing the diverse representation at the more senior levels of the company. We do have a strong record of recruiting, promoting and rewarding gender and racially, ethnically diverse employees at all levels of the company, but we know that we need to continue to advance those efforts at the more senior levels of the company. At the end of 2019, 41% of our senior leaders within 2 to 4 reporting levels down from me were women and 20% were racially diverse, both measures showing improvement over the last 5 years. But we do recognize that we have substantial work in front of us, and we will continue to close the gap.

Thank you, Charlie. We have just received a question on proposal 3. And the question is, please confirm that the bylaws have not been amended since 2018.

The last time the bylaws were amended was in March 2018. Our bylaws and other corporate governance documents contain provisions that reflect sound and effective corporate governance practices and principles, including provisions that are reflective of and enhance shareholder rights. Our Board amended the bylaws in 2011 to provide for shareholders to call a special meeting. The Board amended the bylaws in 2018 to enhance the rights of our shareholders by reducing the threshold for shareholders to call a special meeting of shareholders from 25% to 20%. Our Board amended -- sorry about that. Our Board amended the bylaws in 2016 to require that the Chair of the Board be an independent director. We adopted a standard proxy access bylaw provision in 2015. Our certificates and bylaws permit shareholders to act by written consent by the minimum number of votes that would be necessary to take such an action at a meeting at which shareholders entitled to vote were present and voting. And all of our company directors are elected annually by a majority vote in an uncontested director election.

Thank you, Chuck. We have an additional question or 2 coming in also on the proposal. This is -- this question is, the company has a policy stating a retirement age of 72 for its Board members. Why then did it nominate 2 persons, 1 who is 72 years old and the other is 71 years old, may be -- that will be 72 during his tenure if elected? This seems consistent -- inconsistent with company policies.

Well, as the question states, our policy is as described. There are instances though where, as we look for particular skills and capabilities needed by the Board to fulfill our obligations, we will consider exceptions to the policy. We don't view that as a regular and routine undertaking by the Board, but it is one consideration that we look at when we make the decision to elect directors or propose the election of directors to shareholders.

Thank you, Chuck. We have one more question on gender pay. And that question is, can you expand on what you mean when saying that women and minorities pay gaps are "higher than they should be?" Shouldn't there be no gap? I would also like -- I'm sorry, there's just another piece to this around an explanation as to why Wells Fargo is against making pay gap median information available. Does Wells Fargo agree the best way to make a company accountable is by being completely transparent by showing how fairly and equitably its pay gap disparity is being enforced? It is an odd statement to say pay gap disparity are higher than they should be pay gap disparity ends when both women and men earn 1:1.

Yes. So we -- as I said, we do believe that we do need to make more progress. And if you have equal pay for equal work and you have equal representation across all areas of the company, then you would consider that to be perfect equity. We look at each of those items individually and we do disclose, both internally and externally, what the equal pay for equal work looks like. And we do disclose representation data at different levels of the company, which we agree is extremely important. And you can see that information to see where the differences are, and that is what we use to help guide us to make sure that we're focused on what we do need to be focused on.

Thank you, Charlie. Chuck, we have responded to all pertinent questions submitted on the items of business before the meeting.

Thank you, Arati. This concludes the question-and-answer period for the business items presented for consideration at the annual meeting. I now declare the polls closed for the items of business for the annual meeting at 9:35 a.m. Pacific daylight time. We will pause for a moment to receive the preliminary voting results. The preliminary voting results are now available. The inspector has given the corporate secretary the preliminary voting results on the items presented at this meeting. Anthony, please read the preliminary results.

The inspector's preliminary report indicates that each of the nominees have been elected to the Board and all of the other management proposals received the required majority support of the shares present in person or by proxy and entitled to vote on the proposals and have been approved. For Item 1, each nominee for Director received more than 96% of votes cast in favor of his or her election, with the range from approximately 96% to 99%, and has been elected a director of Wells Fargo. Item 2, the advisory resolution to approve executive compensation was approved with approximately 92% voted in favor of the proposal. Last year, this proposal also received approximately 92%. Item 3, the appointment of KPMG as the company's auditors for 2020 was ratified with approximately 90% voted in favor of the proposal. The inspector's preliminary report also indicates that the shareholder proposals, items 4 through 6, did not receive the required majority support of the shares present in person or by proxy and entitled to vote on the proposals and were not adopted. Approximately 3% of shares voted in favor of the proposal regarding shareholder approval of bylaw amendments. Approximately 23% of shares voted in favor of the proposal regarding a report on incentive compensation and risks of material losses, and approximately 9% of shares voted in favor of the proposal regarding a report on the company's global median pay gap. The company will report the final voting results on an 8-K to be filed with the SEC.

Thank you, Anthony. This concludes the business portion of the annual meeting, and I declare that the meeting is now adjourned from a legal perspective. On behalf of the Board of Directors and management of the company, I want to thank you for participating in this meeting. Now I am pleased to introduce Charlie Scharf, the company's CEO, who will provide an update on the company.

Thank you, Chuck, and my thanks to all the shareholders who joined us today. These certainly are unprecedented times, but we're all adjusting and adapting as best we can. I'm honored to be here as the CEO of Wells Fargo. It's been a little over 6 months since I joined the company, and it's hard to fully grasp how much the world has changed in that short period of time. I've seen firsthand both the dedication of Wells Fargo employees and the important role this company plays in the U.S. economy. I'm extremely proud of the work every one of Wells Fargo's employees is doing during this crisis, and I am humbled to be part of this organization. Today, I will spend a few minutes discussing how we are navigating the current environment and the actions we are taking to support our customers, our employees and our communities during the COVID-19 pandemic. Then I'll provide a brief update on our business performance and an overview of the ongoing work we are doing to transform the company. I want to start by saying that our thoughts are with those directly impacted by COVID-19. This includes those who have contracted the virus, which includes health workers -- health care workers who are on the front lines treating those directly impacted and all of those who provide essential services to ensure the country continues to function, including the many Wells Fargo employees who continue to serve our customers. The global economy and the financial services industry are dealing with an unprecedented crisis, and there is no good playbook. Here at Wells Fargo, we are working tirelessly to keep moving our company, our industry, the U.S. and every person who works at Wells Fargo forward. We've been aggressive in our actions to ensure we can best serve customers while also prioritizing employee and customer safety. We've temporarily closed approximately 1,500 branches, which is about 1/4 of our network nationwide, choosing locations to close based on the historical branch traffic and the physical design of each branch that would allow appropriate social distancing. Consumer and small business contact centers remain open in all other U.S. locations to serve our customers. We've also deployed social distancing and safety measures in all sites to help keep our employees safe. To better serve our customers, we've also been rapidly expanding digital access and deploying new tools, including increasing limits for mobile deposits and wires, new digital mortgage deferment tools and expanded e-signature support. We're providing significant credit and accommodations to our customers. In the month of March alone, our commercial clients utilized over $80 billion of their loan commitments, and we're providing accommodations for many customers in need. Beginning in early March through just a couple of days ago, Wells Fargo has helped more than 1.5 million consumers and small business customers by deferring payments and waiving fees. We've suspended residential property foreclosure sales, evictions and involuntary auto repossessions. And we continue to engage with various government and industry associations to identify other ways to assist customers facing financial challenges in the current environment. In terms of operating the company, we have enabled approximately 180,000 employees to work remotely. For jobs that cannot be done from home, in addition to modifying branch formats, we've taken significant actions to help ensure employee safety, including adopting social distancing measures, staggering staff in shifts and implementing enhanced cleaning programs. These measures are also important for the safety of our customers. In addition, we continue to pay all employees. We made a onetime cash award to approximately 165,000 employees who make less than $100,000, and we're making additional payments to employees who work on the front lines as a way to recognize their unique contributions. We've made changes to our benefit plan to support those who are being tested or those who have the coronavirus. And to assist our employees who need childcare, we've granted eligible employees up to 5 to 8 business days off so they can arrange for childcare. During this difficult time, Wells Fargo continues to support our communities, and we're directing $175 million in charitable donations from the Wells Fargo Foundation to help address food, shelter, small business and housing stability as well as providing help to public health organizations fighting to contain the spread of COVID-19. Let me take a minute to briefly touch on our first quarter performance and a few key highlights. For the quarter, we reported net income of $653 million or $0.01 per diluted common share. Our first quarter results were meaningfully impacted by a $3.1 billion reserve build, which reflected the expected impact these unprecedented times could have on our customers and clients. We maintained strong liquidity and capital, and we are committed to using our financial strength to help support the U.S. economy while still operating in compliance with the asset cap under the Federal Reserve consent order. In the first quarter, we continued to serve our customers, and as a result, commercial loans grew by $52 billion. Deposits increased by $54 billion. We originated $48 billion of residential mortgage loans, and we raised $40 billion of debt capital for our clients. In the first part of the year, we also took a number of actions aimed at investing in our employees and helping our customers succeed financially. Here are 2 significant examples. For employees, we raised minimum hourly pay levels in the majority of U.S. markets, with a minimum hourly pay ranging from $15 to $20 an hour based on employee location. The pay increases will take effect by the end of 2020. For customers, we announced plans to introduce 2 new bank accounts offering convenient, secure banking services and customer support while eliminating or limiting overdraft fees. Now turning to our ongoing efforts to transform the company. We continue to move full speed ahead on significant changes. As I said when I joined Wells Fargo, we have one of the most enviable financial services franchises in the world and employees who want to do what's necessary to again be one of the most respected and successful banks in the U.S. Our top priority remains meeting our regulatory requirements and serving our customers every day with the highest operational and ethical standards. We're moving with an extreme sense of urgency to fix what was wrong with the bank, and while we still have much more work to do, I'm confident we can do what's needed to move this company in a significantly improved direction. We've made significant changes to our management structure and processes to accomplish our work. In December of 2019, we hired Scott Powell as Chief Operating Officer, and we created an integrated operations organization that will enable us to strengthen how we serve our customers, drive operational executes -- excellence and execute on our regulatory priorities. In February 2020, we announced a new organizational model that creates a flatter line of business structure and provides leaders with clear authority, accountability and responsibility. The new model has 5 lines of business CEOs, each reporting to me. We continue to add senior talent across the organization. In addition to Scott, we've added a number of key leaders to our operating committee over the past year: Julie Scammahorn as our Chief Auditor, Saul Van Beurden as our Head of Technology, Bill Daley as Head of Public Affairs. Ellen Patterson joined us just recently as our new General Counsel. Mike Weinbach will join us just in a few days as the CEO of our Consumer Lending businesses. And just yesterday, we announced that Lester Owens will be -- will join in the newly created role of Head of Operations for the entire company. These important additions complement the talent that's here at Wells Fargo. Even with the significant amount of time being devoted to COVID-19 response, we're not reducing our efforts on our regulatory commitments. We continue to move forward on implementing the structural, process and cultural change necessary to get the work done. We don't have all the answers yet, but I commit to you that we intend to make the right decisions, not the easy decisions. We introduced a new set of disciplines in how we run the company. We want to preserve some important pieces of the culture while recognizing where we need to change. These changes are critical for our future. Going forward, we will operate as one company, not a series of decentralized businesses. We will continue to foster a culture of partnership, but we will move past the need for consensus and have open and direct fact-based discussions where we emerge with decisions. We will have a different level of management discipline than we've had in the past, and we'll value and expect high-quality execution. There will be clear responsibility and accountability. We will judge ourselves based upon our outcomes, not our words, and we will ultimately judge ourselves against the best because we believe we should be the best. Turning back to some broader thoughts on the current environment and the outlook for Wells Fargo. We've all entered into a world we haven't seen before. Much of the economy remains essentially closed. Unemployment has grown beyond what we've traditionally modeled. And while there is hope that this is time bound, we don't know what that time frame is or how quickly the economy will recover. What we do know is the contraction is real and we must do all we can to be safe and to ensure that we do our part to help recover as quickly as possible. It's equally important to note that the response from business and government is beyond what we've historically seen. Banks have provided significant amounts of credit and liquidity as well as deferred payments on loans, waived fees and made numerous other accommodations for customers in need. The response by the Federal Reserve has been fast, comprehensive in scope and significant in size. And the response of Congress has been equally impressive. The question remains what this means for our collective future. What's important is controlling the spread of the virus, so the economy can reopen. We're hopeful that our actions, those of others and especially government support, will provide needed relief and help many customers bridge this difficult period. The length of the shutdown will ultimately determine the severity. What we do know is Wells Fargo's liquidity position and strong levels of capital enable us to support our customers and the broader U.S. economy. There are many unknowns and the year will look quite different than we expected. But as I said, we're focused on delivering for our customers, our employees and our communities to get through these unprecedented times. And Wells Fargo remains committed to the financial and performance improvements we've discussed as we get beyond the crisis. Thank you for all your support and investment in the company. Next on our meeting agenda, we will now hold a general question-and-answer session. As a reminder, please refer to the rules of conduct for information about the general question-and-answer session. Shareholders may submit questions on these items by typing them in the Ask a Question box on the lower left side of the virtual meeting website. Arati Randolph, from our Corporate Communications team, will again assist with our general Q&A session. Arati, would you please let us know if there are any questions?

Thank you, Charlie. We do have questions, and the first one comes from the Human Capital Management Coalition relating to the company's disclosures in response to the COVID-19 pandemic, including in light of the SEC's recent statements relating to public company's disclosures. The question is focused on how the Board is overseeing the following 5 areas: first, enterprise risk management, business and supply chain continuity and pandemic planning; second, financial implication; third, workforce composition and adjustments; fourth, employee benefits and protections; and fifth, workplace health and safety.

Okay. So I addressed some of those topics in my remarks, but let me go ahead and talk about some more information that's asked for in the question. First of all, let me just start by talking about how involved our Board has been since this crisis started. We have regular formal meetings with the Board, where we update them on exactly what's going on in the markets, our business, our customers, the operating environment and all of the other relevant information. That's in addition to conversations that take place between those meetings amongst select members of the Board, including conversations that I have with Chuck as Chairman of the Board. Specifically on risk management and on business continuity planning, we're following the CDC and WHO and the guidance that we received from those organizations across our businesses. We should remind everyone on the call that we are an essential business, and so we are continuing to offer our services to our customers and doing all we can to do it in a safe way for both our employees as well as our customers. As I said in my remarks, we've enabled more than 180,000 of our employees to work from home and we continue to serve our customers through many, many different ways in our call centers, digitally as well as physically in our branches. As part of our risk management practices, we focused on ensuring that we continue to serve our customers as we balance protecting everyone and making sure we have the appropriate environment. Our businesses have continuity plans in place. But as I said, this is different than what we've experienced before and given the nature of this virus, I feel very good about our ability continue -- our ability to continue to serve our clients while continuing to manage the company appropriately from a risk perspective. Second piece was financial implications. I think everyone knows that the health crisis has had a swift and severe impact on the financial markets. We at Wells Fargo as well as the other banks are financially strong and are working really hard to continue to provide the kinds of services that we're expected to provide. We're not the only industry that's doing this. But I think as a group, we do feel good about the continuity of our services without huge implications from an operational standpoint at this place, at this point. As I said in my remarks, in the first quarter, we were impacted by $3.1 billion of addition to our loan loss reserves. That is -- that was -- at that point in time, our expectation of what the impact of the pandemic can have on our customers' ability to pay across all the different parts of the business. That being said, we have the capital liquidity needed to support times like this, our common equity Tier 1 and LCR ratios were both well above regulatory minimums at the end of March. We continue to monitor the potential impacts on the rest of our business. Certainly, the low rate environment will continue to put pressure on our net interest income. We're doing our best to manage our exposure and minimize the impact as much as possible. There's -- depending on the day, it can be material volatility in the markets and we're working hard to manage our performance where that volatility can impact us. And I think, I guess lastly, on financial impact, I'd say that we're trying to be very prudent about ensuring that we can continue to be there to support our customers. And so Wells Fargo, along with several other big banks, did suspend our share buybacks for the remaining period of the first and second quarter of 2020 to ensure that we were in a position to play the role that we expect to play. And then, I guess, the last 2 parts of the question were employee benefits, protections and workplace health and safety. So let me just maybe lump those together and talk about some on a series of things. As I said in my remarks, we're doing a whole series of things with respect to our employee benefits, workplace health and safety, and I did cover those. I will say we're fully committed to providing a safe work environment for everyone and we have taken significant actions to do that while continuing to carry out the role that we have as a provider of vital services to the public. Throughout this, we listened to feedback from external sources as well as our employees and we have channels available for them to raise concerns. We see them, we read them and we act on them. This includes our confidential ethics hotline and protections against retaliation for raising concerns. As I said, we have 180,000 people now enabled to work remotely. For jobs that cannot be done from home, we've taken significant actions to help ensure that they're -- for their safety, including social distancing, staggering shifts and the other things that I mentioned. And we're supporting our frontline employees in a variety of ways with compensation and benefits. So this is -- I can assure you, this is an ongoing dialogue that the management team has very regularly. As we continue to make sure that we're doing what we should be doing to protect our employees as well as our customers.

Thank you, Charlie. The next question is also related to employees. What percent of the work done by Wells Fargo employees can be done from home? And does Wells Fargo pay for equipment that employees can use at home to work?

Sure. So as I said, we have 180,000 people enabled to work from home of approximately 270,000 or so. We continue to look for ways for people who are -- who are not enabled to work from home to figure out if we can enable that and we'll continue to move forward with that work. And the second part of the question was, do we pay for their equipment? And the answer is, yes, we do.

Thank you. The next question is on the dividend. Are the dividends safe for the rest of the year? And please address Wells Fargo's ability to pay out the dividend at the current rate. I'm a senior citizen living on a fixed income and rely on the quarterly distribution to meet some of my expenses.

Sure. So I guess, let me just start with a couple of things. Number one is, the decision on the dividend is something that is reviewed as part of our CCAR process with Federal Reserve. And it is ultimately a Board decision. It's not my decision or the management team's decision. We make recommendations, and it's a full Board discussion. I would also want to say that I think we have great appreciation for the importance of the dividend, especially to our retail investors, as stated in the question. The way I think we need to think about the dividend is severalfold. As I've said in my prepared remarks, we're going through an unprecedented environment. And so when you go through an unprecedented environment, you need to step back and make sure that your thinking is clearly about what the future could hold and evaluate what that means for the position of the company. First and foremost, we have an extremely strong capital position. And as we look at that capital position today, that informs us about our ability to use our financial resources to continue the dividend. Over a period of time beyond the very short term, it really is important that we look at what the earnings capacity of the company is. Because our ability to pay our dividend over an extended period of time isn't supported just by the capital base of the company, it's supported about -- it's supported by the earnings levels of the company. So we're spending, as you would imagine, as I'm sure all companies in all industries are doing right now, a lot of time looking at what those forecasts can look like, reviewing them with our Board, and that's something that we'll continue to do. And what those forecasts inform us will ultimately inform how we feel about the dividend. And so hopefully, that gives you a context for how we think about the dividend in our discussions.

Thank you, Charlie. I would note, we've also had other similar questions on the dividend. So thank you. The next question, why has it taken so long to resolve Wells Fargo's consent orders? And what is the current status?

Sure. Listen, I guess, let me start with that -- with saying, I think it's a very appropriate question, given the length of time that we have had a series of these consent orders. What I can tell you is that in the time that I've been here, we have done a tremendous amount to ensure that everyone understands that our #1 priority by far is to these issues behind us. And to do that, we've taken a series of very specific actions. The management changes that we've made are numerous. They're important in each one individually as well as what they mean collectively, and I think are an important part of forming the foundation to do the work that's necessary under the consent orders. I talked about the realign structure, which is about driving more accountability at the right levels inside the organization. And we've substantially changed the processes both in terms of how we go about doing the work, but how we go about reviewing that work with a level of accountability, which I think is very different than what we've had in the past. So we add all of these things up, we believe -- I believe that these things will, in fact, make us more effective. And we'll do whatever it takes to get these -- all these pieces of work behind us. I'll also say, speaking on behalf of the Board, it is the #1 priority of the Board. I don't think the conversation goes by with the Board, whether it's an individual one-off conversation or a formal meeting, where we don't talk substantively about the work that we're doing, what the progress is and are we doing everything we can? And that is an important role that they play, and they're certainly taking that responsibility and executing in a way that they need to.

Next question is what will you do to meet Wells Fargo's stated goal in the proxy statement of honoring the Paris Climate Accord and fostering a sustainable economy? Will you stop funding fossil fuels and fossil fuel infrastructure?

So I guess, Arati, let me start by just talking about the fact that we do believe that climate change is one of the most urgent both environmental and social issues of our time. And we support the principles of the Paris Agreement, including its goal to keep warming below a 2-degree scenario. We think the policy is essential, make meaningful progress against the agreement's goals. And we are constantly doing work to figure out how we can do our part. As one of the largest financial institutions and employer in the U.S., we embed sustainability across the entire enterprise and are doing all the things that we can to transition to a low-carbon economy. And I will say, just let me just add, that includes the fact that we have committed $1 billion to investments in sustainable projects.

Charlie, the next couple of questions are COVID-related. The first is, what is the company doing to help customers during the coronavirus crisis? Is the Board or management giving back part of their compensation to help?

Yes. So let me -- I'll try not to be repetitive, so that we can get other questions in. But I think, I guess, I'll just say, we have, literally, daily conversations with the entire senior management team and people that work with them where we review all of the things that we're doing to support our customers during the crisis. We started that at the beginning of this crisis, and we continue. And as I said, between the deferral of payments, the waiving of the fees, the amounts are substantial. The deferral of payments represent, I think, around $3 billion today of principal and interest, and the fee waivers are also substantial today. Talked about the fact that we have suspended property foreclosures on residences, evictions and automobile repossessions as well as continuing to support our customers through the extension of credit, where we can. And I referred to the $80 billion of loan commitments. So I think hopefully, I covered what you would like me to cover in that answer.

In addition, assuming COVID-19 becomes seasonal and returns in the fall, are there additional precautions Wells Fargo is taking in anticipation of this event?

Sure. And the other thing -- and that I think is important is we're -- in terms of answering the question of how do we help our customers as best we can, we have a substantial amount of communications both with our colleagues internally and with our customers to ensure that they understand that we're here from them -- that we're here for them and what they can do. The question, Arati, that you just asked is also a great question and one that I don't yet know the answer to, other than to say we have been actively talking about what reopening could look like in different parts of the country. And I guess what I'll say is we're going to be very, very careful to ensure that when we do take steps to reopen more broadly, which means bringing more of our employees back to our physical facilities, we do it in a way that we're extremely comfortable, that provides the right environment and the right protections for them. And part of that is because we feel very good about our ability to continue operating the way we've been operating. We -- as I said, 75% of our branches are open. We are emphasizing drive-throughs and barriers where we have them so that the protection exists. Social distancing of our customers who are physically coming into the branches and the ability to serve our customers, both on the telephone as well as digitally. So first and foremost, we're going to continue to be very conscious of our customer and our employee's safety in terms of how we deal with the next phases of this.

Questions are still continuing to come in. This next question is on the expense ratio. The expense ratio has increased significantly to 74%. Revenue growth is challenging due to the asset cap. What are the plans to reduce expenses so that the ER will be more in line with peer banks?

Sure. I guess let me start with just repeating what I said in my prepared remarks is we are committed to being more efficient as an organization. We look at the same numbers that you all look at in terms of what our efficiency ratios look like versus our competitors. And we're not happy with where we are, and we're not content. We are working. We had started the work prior to COVID of laying out detailed road maps by business to determine what actions we could and should take to become a more efficient organization without impacting any of the control or regulatory work that we do have to accomplish. Part of the discrepancy that we're seeing is because we are spending and will continue to spend a significant amount of money on the remediation work that has to occur. But beyond that, we know that we can be more efficient. The reality of COVID has meant that for a period of time, when we were getting used to operating in this new normal, we turn the majority of our attention to standing up a different way of working inside the company and serving our customers. And so that work was put on hold. But as we continue to move forward, we will bring that work back inside. It's something our Board is keenly interested in. I can assure you of that. And we will continue to come up with a road map for what a more efficient Wells Fargo looks like, and we'll share that with you at the appropriate time.

And can you provide an update on customer credit deterioration through the month of April?

I guess what I would say is, the deterioration is what you would expect in our different portfolios. But I would also comment that one of the things that we're spending a lot of time making sure that we're doing our best to understand is what the impact of the deferral programs that we have in place. Again, we have a tremendous number of customers that have asked for deferrals and we've provided for them. And again, that's appropriate because these programs are meant to help bridge our customers to an environment where they can afford to pay us. And in the interim, it's not completely clear as to what that outcome ultimately looks like. But what we do know is that we have to provide the opportunity for our customers to get through this period of time. And so I think over the next quarter and 2, we'll really gain a much deeper understanding of what the credit picture actually looks like, especially for individuals. But again, I would say, as I said in my prepared remarks, it is really dependent on the duration of the effective closure of the economy, especially here in the U.S., for us here at Wells Fargo.

The next question is on diversity and inclusion. What is the Board's view on diversity and inclusion, including gender diversity and the number of women currently on the Board?

Well, as Charlie mentioned earlier this morning, Wells Fargo values and promotes diversity and inclusion in every aspect of its business and every level of the company, and that goes for the Board of Directors as well. Our corporate governance guidelines and the Governance and Nominating Committee's charter specify that the Board and Governance and Nominating Committee incorporate a broad view of diversity into its director nomination process. In addition, the Board has a diverse candidate pool for each director search the Board undertakes. Current composition of our Board reflects the importance the Board places on diversity. 25% of our director nominees are women and 25% of our director nominees are racially or ethnically diverse.

Thank you, Chuck. We have several questions related to PPP. I'm going to go ahead and ask kind of 3 of them together. So the first is, what is Wells Fargo doing today to keep their name out of negative news headlines? Most recently, the company was named in another lawsuit regarding the PPP program. The second is, what happened in Round 1 of the SBA PPP process? Did Wells Fargo really fund just $120 million? And the third is, I'm a small business owner and a Wells Fargo current customer. Wells Fargo seems woefully behind the curve on supporting these programs. What is your plan to correct this? Why are you so far behind compared to smaller regional or local banks?

Okay. I'll take that. Thank you for the question. So first of all, I would start by saying there's obviously a tremendous amount in the news about PPP, and there is a -- we understand how important it is for small businesses in this country to get through this crisis. And PPP is just one of the things that we, across the industry, are doing to help support those small businesses. I think from Wells Fargo's perspective, I think it's -- first of all, what we're really focused on is ensuring that we do as much for our customers as we can. At the same time, we're ensuring that we're doing everything that is required of us under the rules of the program. We initially had made the decision to focus on not for profits. And the smallest -- small business customers out there, believing that because of our situation that we had to prioritize that group of people before the others. And the smaller companies require a tremendous amount more work. And that is the group that we focused on until we opened it more broadly. Because of that, as we went into Round 2, we were then able to open the program up much more broadly. And I can just tell you that the amount of applications that we have ready to submit or have been already submitted to the SBA is hugely much more meaningful than where we were in the first round. And I would say that there's still a tremendous focus on ensuring that we're doing all we can for the smaller customers. As of several days ago, I'm not sure where we are sitting here today. I think something like 90% of the applications that we had were for businesses that had less than 20 people. And so we continue to press forward, and we'll continue to do all we can to serve as many of our small business clients as we can.

Thank you, Charlie. The next question is, what sense of urgency does the overall Board have to fix the issues of customer service inside the bank? What are the top 3 to 5 goals of the Board? Does the Board have an actual list of priorities and a time line to accomplish these goals over the next 12 months?

Thanks, Arati. Resolving our regulatory issues is our highest priority. And I think Charlie expressed that as well on behalf of the management team. Company is different today, but we know we still have significant work to do to regain the trust of all stakeholders. Obviously, managing through this unprecedented COVID-19 environment is another high priority, as is improving the company's financial performance as we all get to the other side of this pandemic and its economic consequences. Board is focused on overseeing our CEO and management team as they focus on moving with a sense of urgency to strengthen our risk management framework and corporate governance that clear aligned and consistent direction regarding strategy and address outstanding regulatory matters. The Board is focused on the company's ability to satisfy the financial needs of customers while creating value for shareholders. We're changing the way we run the company and our culture and the leadership team is focused on operating as one company. Charlie said, not a series of decentralized businesses, fostering a culture of partnership and driving to our decisions, expecting high-quality execution with clear responsibility and accountability and judging ourselves based upon outcomes, not words.

Thank you, Chuck. The next question is the following. My question today is about respect for human rights at Wells Fargo. ICCR members have been engaging on human rights, ethics and culture with the bank for years. How is the company embedding respect for human rights into its response to COVID-19, centering on the most vulnerable employees and customers in its response? More systematically, what does the company identify as the most salient human rights impact on its business?

First of all, I should start by saying we appreciate the engagement of ICCR as we developed our business standards report. Very important for us to have that level of engagement back. I would say we do have our statement of human rights. In that, we articulate that we recognize at Wells Fargo, that governments have a duty to protect human rights. But we also agree that businesses such as Wells Fargo have a duty to respect human rights as well. We think about human rights and seek to do so through our operations, our products and services, including consistent treatment among people, employees, well-being, security, economic and social freedom as well as environmental stewardship, which is critical. I've commented multiple times, I think, since this meeting started about how focused we are on supporting our employees, our customers and our communities. And I think I've shared some of the things that we've done. But some of the things, I think, that I haven't mentioned, which I think are important in terms of supporting our customers include pausing for 30 days on collecting negative balances at a time when the government stimulus payments are being deposited to customers. We're cashing stimulus payment checks for noncustomers in our branches with no fees. And we're helping, as I said, more than 1 million consumers and small businesses through our deferral programs and payment waiver programs. I'd also say when we think more broadly about just human rights and the way we think about our responsibility as a company, we did sign the BRT principles after I arrived to the company, which I think says how we think about who the stakeholders of this company are and who we need to be thinking about as we make different decisions. And as we move forward, we're reviewing how we treat all of our stakeholders, and we'll continue to do that.

Thank you, Charlie. The next question is, senior officers at the bank took a well-deserved haircut in their bonus funding pool for 2019 of approximately 25%. How does the Board then justify the differences in the individual executives pay with some flat since last year and others with pay increases? There's also a related question, which I'll read as well. Will bonuses be affected by those not getting financial support next year due to all the subsidizing of pay that needs -- that need the help as a result of the health crisis?

I think I'll - let me take the first question. I'll ask Charlie to handle the second. With respect to first question, in the fourth quarter of 2019, our Human Resources Committee, that's the Board committee, decided to move to a full total variable compensation model. And under that new model, every executive is given a single total variable compensation target. The payout is based on a performance assessment that includes company performance, individual performance and risk management. This strengthens the connection between performance and pay by tying both annual and long-term incentive compensation to performance. In addition, the majority, and I think this is important, the majority of variable compensation is made up of long-term incentives that vest over or at the end of 3 years and are subject to performance conditions that can result in forfeiture. I would -- as Charlie's getting ready to handle the second half. I'd also mention, as it relates to the pay subsidies and the other actions that many of our employees are receiving. I don't believe any of those are received by any of our senior officers.

Thank you, Chuck. I'll ask a related question again. Will bonuses be affected by those not getting financial support next year due to all of the subsidizing of pay that need the help as a result of the health crisis?

Sure. So I guess I'll start the answer by just reiterating what I've said internally here that as we think about where we are targeting the specific efforts as we go through the crisis, we're targeting those that we think are the most needy inside the company. And in our case, it's those that make $100,000. We think that is appropriate, given the level of stress that the lower paid people will generally face during a time like this. And we think being targeted of it and as opposed to targeting it more broadly, including the higher paid people, is the right thing to do. Relative to incentive comp, I guess I would just say, I think it's way, way too early in the year to talk about what we're going to do. What we will do, and this is, again, something that we as management will recommend to the Board, it's a series of conversations that take place throughout the year as the year unfolds, is we will look at the performance of the company. We'll look at the performance of an individual area. We'll certainly look at what people have been through and we'll make our judgments based upon what that looks like at the time we do that, which is not until the end of the year. So we -- as we've done on all of the things related to compensation, we will try and be as fair as we possibly can. We will be thinking about accountability both in terms of those who haven't delivered and those who have done a tremendous amount as we've gone through this crisis, which there are many.

Thank you, Charlie. Next question. Over $600,000 for a Board member is ridiculous. A teacher with 20 years' experience entrusted with a parent's most cherished entity is lucky to make $100,000 a year. Why do you pay Board members so much?

Thanks for the question. I would want to point out that, that amount that was referenced in the question relates to a single director who took on substantial additional responsibilities on behalf of the Board, the rest of our directors make substantially less that amount. We certainly look through our governance and nominating committee efforts at the competitiveness of director pay and we try to be competitive, but not generous. I believe the last time we considered and made a change in director cash compensation was in 2007. And the last time there was a change with respect to the stock portion of the director compensation was in 2015. So we're not giving directors raises, and we don't see that in the foreseeable future.

Thank you, Chuck. The next. We have a couple -- a few questions around discretionary profit sharing and 401(k) questions. So I'll just ask them together. Why did the company suspend the discretionary profit sharing contribution to the 401(k) plan for 2019? Will the company consider an increase to 401(k) loan availability or other limits. And why are there limited investment options for the 401(k) plan? Due to the coronavirus outbreak and many families struggling to put food on their tables and pay bills, has Wells Fargo considered lifting the 401(k) withdrawal restrictions from only one loan at a time. And in addition, will Wells Fargo continue to match 401(k) contribution?

So I guess, let me just start with the statement that we provide what we think is very competitive compensation and benefits to our employees, which includes a 401(k) plan match. And we -- I would say we have been and continue to be committed to being competitive in what we provide. There's some specific questions here. Let me just take them piece by piece. I think in the context of the benefits, I do think it's important to understand that we invest about $13,000 per employee in our benefits plan, which doesn't include vacation time or anything like that. And as I said during prior answers to questions, we have been very focused on those that we think are more needy based upon their level of pay. And whether that's the changes that we've made to -- that we announced that we're going to be making to minimum hourly pay, the onetime compensation payments that we've made to people who make less than $100,000 or the payments that we're making to those who continue to have to go into work, we do think that we're being very thoughtful about thinking about that lower paid population. Regarding the loan provisions in the 401(k) plan, 2 loans are available today up to the IRS maximum, which I think is the lesser $50,000 or 50% of the vested account balance. We are currently looking at provisions in the CARES Act, which allow plan sponsors to modify their loan and withdrawal provisions, and working with our record keeper to understand and explore all those capabilities. And we'll be sharing more information with everyone who participates when that work is finished. And then I think the last part of the question was the number of investment options. We have, I think, about 20 investment options within the 401(k) plan. They're selected and monitored by an independent fiduciary committee, which has the sole authority to control and manage the assets in what's an official qualified plan. Consideration is given to the types of funds that are being offered and I do understand that they work to strike the right balance between providing the range of choices so that customers -- so our employees can achieve a well-diversified investment strategy. At the same time, avoiding excess number of choices that can make it difficult to make well-informed decisions. So that's a balance that we work towards. And as I said, it's the responsibility of the committee to do that.

Thank you, Charlie. It is now 1:31 p.m., and we have time for about 3 more questions. If we have not been able to answer your question, I just want to reiterate that you can contact us directly through our Investor Relations website. But let me go ahead and we'll do 3 more questions. So the next question is, does the Board now only meet virtually?

At present, that's the case. Obviously, along with the company, we're taking our guidance from state and local public health authorities. Our directors are spread out from the East to the West Coast. And at the present time, we've been having both telephonic meetings as well as taking advantage of technology and having virtual meetings as well, and we will continue that, again, following the guidance of public health officials.

Thank you, Chuck. The next question is, has the bank's stance on firearms and financing firearms-related companies changed relative to what has been previously communicated?

Yes. So I would say, I do know that our relationship with the NRA has been declining and our lending exposure is minimal. And I don't think we participate any longer in the organization's line of credit and mortgage loan commitments. And we have funded some independent research on firearms and that's something that we'll continue to support as we move forward, as we deal with the difficult issue.

Thank you. The final question is, given our recent focal campaign highlighting all of our virtual banking options, can you predict the viability of bank branches for the next 5 to 10 years? Will more branches be closed? Do you have a plan in place to retain as many branch employees as possible should those closures occur? And if so, what is the plan?

So this is a great question. And I could probably spend 30 minutes talking about this question. So I guess, let me -- I'll start with -- I absolutely do believe that branches will be viable for the next 5 to 10 years. Whenever we talk about this as a team, I certainly remind myself and I remind the management team that I remember back in 2000, right before the initial Internet bubble came into effect and then burst, everyone was talking about that branches were a thing of the past and the whole world was going to move to online channels. And now we sit here some 19, 20 years later, and there's still a lot of branches in this country. Now having said that, things are very, very different and things will continue to evolve and change, and we need to continue to evolve and change with both the things that -- the capabilities that now exist as well as customer preferences. And so while people still continue to use our physical branches, the usage of digital channels is extremely important in all aspects of the relationship. But that digital interaction is usually, it's alongside personal assistance that's available, either in branch or on a telephone when a customer is in need. So we believe that the branch will continue to evolve. Traffic will likely go down over a period of time. This environment that we're in today does show us and the world that people can continue to perform their services with less physical interaction. But I also always remind ourselves that what we do is very personal. It is, in fact, important to have the right products and services and the right pricing and the right capabilities. But when people are talking about managing their financial affairs, most people when they're establishing that relationship, they still want to know who they're dealing with and know who they can call. And so the physical layout of branches have changed over the last 10 years. They will continue to change. The size of branches will change. And as we look forward, one of the things that we are very focused on inside the company, not just for branches but all around the company is asking the question, are we doing everything we can to position our employees to be able to take on other roles if things evolve and change? And so we do have a lot of turnover each year, so that gives us the opportunity to provide training where we can and to move people into new roles, and that's something across the entire organization that we will continue to focus on. And before I turn it back to Chuck to close, I also want to just make sure I say thank you to all the shareholders for your time and your patience through this call, but also the confidence that you've shown in us. Back to Chuck.

Thank you. Chuck, we have now responded to all the pertinent questions submitted for the general Q&A session.

Thanks, Arati. This concludes our general question-and-answer session. On behalf of the Board of Directors and management of the company, I want to thank you, again, for joining us today. Once again, importantly, I would like to thank our employees. They are truly an inspiration to the Board of Directors and management. This concludes our meeting. Thank you for attending.

The conference has now concluded. We thank you for attending and you may now disconnect your lines.