Final act for First Security

First Security Corp. has set July 31 for its historic shareholders meeting to vote on the proposed merger with Wells Fargo, a gathering that in all likelihood will close the book on one of Utah's largest and longest-running banking companies.

If the deal is approved, as expected, FSCO shareholders (First Security's stock symbol) will receive 0.355 share of San Francisco-based Wells Fargo for each of their FSCO shares. That equates to about $15 per share with Wells Fargo's stock closing Monday at $42.62.

Because of the relatively small size of the deal to Wells Fargo, a vote by Wells Fargo shareholders is not required, as it was with the "merger of equals" in the failed Zions/First Security deal and the merger of Wells Fargo and Norwest.

Federal regulatory approvals also must be received and are expected by early fall, but it was a last-minute regulatory hurdle that kept the Zions deal from closing by the end of last year and eventually led to its downfall. Still, that scenario seems unlikely this time.

In papers filed with the Securities and Exchange Commission, Wells Fargo has agreed to a compensation package with Spencer F. Eccles, chairman and chief executive officer of First Security, in which, as previously announced, he will become a Wells Fargo director. His pay, until 2002, will be an annual salary of at least $613,000, the same salary as he was being paid prior to the merger, plus a minimum of the same, pro-rated $343,901 bonus he received in 1998.

After Wells Fargo's annual stockholders' meeting in 2002, he will by paid an annual base salary of $800,000 until he reaches age 70 in 2004.

The benefits package also calls for Eccles to be granted an option to acquire 85,000 shares of Wells Fargo's common stock in three equal installments at the price on the day of the grant and will have a 10-year term. He gets additional options on 100,000 shares in 2000 with the same provisions.

After Eccles retires in 2004, the agreement calls for him to receive $1 million per year until his death, after which his spouse, assuming she outlives him, will get $500,000 annually. Eccles also will get a special $1.5 million special bonus on his 70th birthday.

The package includes medical and dental health benefits until 2002.

Eccles benefits package is considered to be on a par with "golden parachutes" awarded bank CEOs in similar bank deals.

Smaller benefits packages have also been worked out for other First Security officers.

A spokesman for Wells Fargo said the company would have no comment on the SEC filing, which was made June 27. "It's all part of the transaction already approved by (FSCO) shareholders," he said.

First Security's merger with Wells Fargo came only days after Zions shareholder voted in late March to kill their merger with First Security that was first announced in June 1999 and was expected to create a powerhouse regional bank based in Salt Lake City.

Shareholders were unhappy with the terms of the deal after the shares of both banks plummeted in early March when First Security announced its earnings for the first quarter would be below market expectations.

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E-mail: max@desnews.com