<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
U. S. BANCORP
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[LOGO]
111 Southwest Fifth Avenue
Portland, Oregon 97204
DEAR SHAREHOLDERS:
Enclosed with this letter is the formal notice of the annual meeting of
shareholders of U. S. Bancorp to be held Tuesday, April 18, 1995, at 1:30 p.m.,
Pacific Time.
At the meeting, the shareholders will be asked to elect directors, to
approve an amendment to the U. S. Bancorp 1993 Stock Incentive Plan, and to
approve the selection of independent auditors. In addition, the executive
officers of U. S. Bancorp will report on the operations of U. S. Bancorp and
will be available to respond to questions from shareholders.
I hope you will be able to attend the meeting and if you do so, you may vote
in person even if you have previously mailed in your Proxy form. Your interest
and continued support are indeed appreciated.
Sincerely yours,
Gerry B. Cameron
CHAIRMAN OF THE BOARD, CHIEF EXECUTIVE
OFFICER
AND PRESIDENT
March 13, 1995
<PAGE>
U. S. BANCORP
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 18, 1995
TO THE SHAREHOLDERS:
The annual meeting of shareholders of U. S. BANCORP will be held on Tuesday,
April 18, 1995, at 1:30 p.m., Pacific Time, at the Intermediate Theatre of the
Portland Center for the Performing Arts, 1111 S.W. Broadway, Portland, Oregon
for the following purposes:
1. Electing directors for the ensuing year.
2. Approving an amendment to the U. S. Bancorp 1993 Stock Incentive Plan.
3. Approving the selection of independent auditors for U. S. Bancorp.
4. Transacting such other business as may properly come before the meeting.
Only shareholders of record at the close of business on February 16, 1995,
shall be entitled to vote at the meeting.
By order of the Board of Directors
CLIFFORD N. CARLSEN, Jr.
SECRETARY
March 13, 1995
WE URGE YOU TO DATE, SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE
- - -- WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON. IF YOU DO ATTEND THE
MEETING, YOU MAY WITHDRAW YOUR PROXY AND VOTE IN PERSON.
<PAGE>
DIRECTIONS TO:
Portland Center for the Performing Arts -- Intermediate Theatre
The entrance to the Intermediate Theatre is located on the east side of the
Portland Center for the Performing Arts building between S.W. Broadway and Park
Avenue and S.W. Main and S.W. Madison.
FROM 1-5 NORTH OR 1-84 EAST
Follow 1-5 south to the "City Center/Oregon City" Exit. Follow the signs
toward "City Center." After crossing the Morrison Bridge, follow S.W. Washington
five blocks to S.W. Broadway. Turn left and go six blocks to S.W. Main. The
Intermediate Theatre is on the right.
FROM 1-5 SOUTH
Follow 1-5 north to 1-405. Follow 1-405 to "6th Ave." Exit. Continue north
on S.W. 6th Avenue 11 blocks to S.W. Main. Turn left and travel one block to
S.W. Broadway. The Intermediate Theatre is on the left.
FROM HIGHWAY 26 WEST (SUNSET)
After going through the Vista Ridge Tunnel, follow signs to 1-405/St.
Helens. Take the "Salmon St./ City Center" Exit. Continue on S.W. Salmon to S.W.
Broadway. Turn right onto S.W. Broadway. The Intermediate Theatre is one block
up on the right.
FROM HIGHWAY 26 EAST (ROSS ISLAND BRIDGE) OR HIGHWAY 99 EAST (MCLOUGHLIN BLVD.)
After crossing the Ross Island Bridge, follow signs to "Highway 26/Front
Ave." Turn right onto S.W. Front and continue for six blocks to S.W. Taylor.
Turn left and follow S.W. Taylor seven blocks to S.W. Broadway. Turn left onto
S.W. Broadway. The Intermediate Theatre is two blocks up on the right.
TRI-MET OPERATES AN EXCELLENT TRANSPORTATION NETWORK THROUGHOUT THE PORTLAND
METROPOLITAN AREA WHICH INCLUDES BOTH BUS AND LIGHT RAIL (MAX) SERVICE. ALL BUS
AND MAX RIDES ARE FREE WITHIN THE DOWNTOWN CORE (FARELESS SQUARE).
PARKING, AT YOUR OWN EXPENSE, IS CONVENIENTLY LOCATED NEAR THE PORTLAND
CENTER FOR THE PERFORMING ARTS.
<PAGE>
U. S. BANCORP
111 Southwest Fifth Avenue
Portland, Oregon 97204
PROXY STATEMENT
SOLICITATION, VOTING AND REVOCABILITY OF PROXY
The enclosed Proxy is solicited on behalf of the Board of Directors of U. S.
Bancorp, an Oregon corporation, for use at the annual meeting of shareholders to
be held on Tuesday, April 18, 1995. The Proxy and Proxy Statement were mailed to
shareholders on or about March 13, 1995.
U. S. Bancorp will pay all soliciting costs that it incurs in connection
with the annual meeting, including the cost of preparing and mailing the Proxy,
Proxy Statement, 1994 Annual Report to Shareholders, Annual Report on Form 10-K
for 1994, and any other materials furnished to the shareholders by U. S.
Bancorp. Proxies will be solicited by use of the mails, and officers and other
employees of U. S. Bancorp may also solicit Proxies by telephone or personal
contact. Employees of U. S. Bancorp who may be engaged in the solicitation of
Proxies will not receive additional compensation for such services. U. S.
Bancorp has also retained Beacon Hill Partners, Inc., to assist in the
solicitation of Proxies, primarily from beneficial owners whose stock is held in
the name of brokers, banks and other nominees, at an estimated fee of $5,000
plus reimbursement of expenses.
When a Proxy in the enclosed form is properly executed and returned, the
shares represented thereby will be voted at the annual meeting in accordance
with the instructions specified in the spaces provided on the form. If no
instructions are specified, the shares will be voted (1) FOR the election of
directors named in the Proxy; (2) FOR approval of an amendment to the U. S.
Bancorp 1993 Stock Incentive Plan; and (3) FOR approval of the selection of
independent auditors. Shareholders may expressly abstain from voting on
proposals (2) and (3) by so indicating on the Proxy. An abstention with respect
to proposal (2) will have the same effect as a vote against the proposal.
Abstentions on the proposal for approval of selection of auditors will have no
effect on the required vote for the proposal. Shares represented by duly
executed and returned proxies of brokers or other nominees which are expressly
not voted on any matter to be presented at the annual meeting ("broker
nonvotes") will have no effect on the required vote on the matter.
Any person giving a Proxy in the form accompanying this Proxy Statement has
the power to revoke it at any time before its exercise. The Proxy may be revoked
by filing with the Secretary of U. S. Bancorp written notice of revocation or a
duly executed Proxy bearing a later date. The Proxy may also be revoked by
affirmatively electing to vote in person while in attendance at the meeting.
However, a shareholder who attends the meeting need not revoke the shareholder's
Proxy and vote in person unless the shareholder wishes to do so. Written
revocations or Proxies bearing a later date should be sent to First Chicago
Trust Company of New York, Attention: Inspectors of Election, P. O. Box 8640,
Edison, New Jersey 08818-9142.
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS
The only outstanding voting security of U. S. Bancorp is its $5 Par Value
Common Stock ("Common Stock"). The record date for determining shareholders
entitled to vote at the annual meeting is February 16, 1995, on which date there
were 98,120,077 shares of Common Stock outstanding entitled to one vote per
share. A majority of the shares entitled to vote, represented in person or by
proxy, including proxies reflecting broker nonvotes or abstentions as to one or
more items, will constitute a quorum at the meeting. All references to shares of
Common Stock and per share prices thereof in this Proxy Statement have been
adjusted where appropriate to reflect stock splits and stock dividends. U. S.
Bancorp also has outstanding 6,000,000 shares of 8 1/8% Cumulative Preferred
Stock, Series A (the "Preferred Stock"), which are not entitled to vote at the
annual meeting.
1
<PAGE>
The following persons are known by U. S. Bancorp to beneficially own more
than 5% of the outstanding shares of Common Stock as of December 31, 1994:
<TABLE>
<CAPTION>
Amount Approximate
Beneficially Percent of
Name and Address of Beneficial Owner Owned Class
- - --------------------------------------------------------------------------------------- ------------ -----------
<S> <C> <C>
Trust Group (1)
United States National Bank of Oregon
P. O. Box 3168
Portland, Oregon 97208-9933........................................................... 10,932,689 11.14%
Joshua Green III (2)
1425 Fourth Avenue
Seattle, Washington 98101............................................................. 8,532,250 8.73%
<FN>
- - ------------------------
(1) The Trust Group of United States National Bank of Oregon ("U. S. Bank of
Oregon"), a wholly owned subsidiary of U. S. Bancorp, held the indicated
shares as of December 31, 1994, in fiduciary capacities for various
beneficiaries, including participants in the U. S. Bancorp Employee
Investment Plan. The Trust Group has sole voting power as to 699,977
shares, shared voting power as to 118,031 shares, sole investment power as
to 9,678,531 shares, and shared investment power as to 1,231,624 shares.
(2) Includes 125,302 shares owned by Mr. Green; 32,355 shares owned by Mr.
Green's wife and daughter; 2,280,316 shares held by Joshua Green
Corporation, of which Mr. Green is chairman and chief executive officer;
5,088,265 shares held by a limited partnership of which Joshua Green
Corporation is the general partner; 575,181 shares held by various estates,
trusts, and custodianships as to which Mr. Green has shared voting power
and in which various family members of Mr. Green are beneficiaries; 391,231
shares held by a charitable foundation of which Mr. Green is president; and
39,600 shares subject to stock options that are currently exercisable or
will become exercisable on or before March 1, 1995. Mr. Green owns 59% of
the voting common stock of Joshua Green Corporation and has sole voting
power over another 20% of such stock; accordingly, the other shareholders
and directors of Joshua Green Corporation are not deemed to have shared
voting and dispositive power over the shares of Common Stock beneficially
owned by Joshua Green Corporation by reason of their capacities as such.
</TABLE>
2
<PAGE>
The following table gives, as of December 31, 1994, certain information
concerning the beneficial ownership of Common Stock by each of U. S. Bancorp's
directors and nominees for director, by certain of U. S. Bancorp's executive
officers and by U. S. Bancorp's present directors and executive officers as a
group. Unless otherwise indicated, all shares listed as beneficially owned are
held with sole voting and investment power. No shares of Preferred Stock are
beneficially owned by the indicated persons or group.
<TABLE>
<CAPTION>
Amount Approximate
Beneficially Percent of
Name Owned Class
- - ------------------------------------------------------------------------------- ----------- ------------
<S> <C> <C>
Roger L. Breezley.............................................................. 62,962(2)(3) *
Gerry B. Cameron............................................................... 126,624(1)(2) *
Carolyn Silva Chambers......................................................... 1,305(3) *
Franklin G. Drake.............................................................. 38,829(3) *
Robert L. Dryden............................................................... 8,720(3) *
Gary T. Duim................................................................... 33,991(1)(2) *
John D. Eskildsen.............................................................. 45,165(1)(2) *
Joshua Green III............................................................... 8,532,250(3)(4) 8.73%
Arland D. Hatfield............................................................. 53,786(1)(2) *
Robert Stevens Miller, Jr...................................................... 4,000(3) *
Paul A. Redmond................................................................ 3,200(3) *
N. Stewart Rogers.............................................................. 15,884(3) *
Andrew V. Smith................................................................ 43,595(3) *
Robert D. Sznewajs............................................................. 3,115 *
Benjamin R. Whiteley........................................................... 10,346(3) *
All present directors and executive officers as a group (20 persons)........... 9,123,281(1)(2)(3) 9.26%
<FN>
- - ------------------------
* Excluded because percentage beneficially owned is less than 1% of the
Common Stock.
(1) Includes shares subject to employee stock options that are currently
exercisable or will become exercisable on or before March 1, 1995, as
follows: Mr. Cameron, 25,000 shares; Mr. Duim, 25,860 shares; Mr.
Eskildsen, 28,800 shares; Mr. Hatfield, 31,560 shares; and all executive
officers of U. S. Bancorp as a group, 226,144 shares.
(2) Includes the indicated number of shares allocated to the accounts of
participants under the U. S. Bancorp Employee Investment Plan as follows:
Mr. Breezley, 6,710 shares; Mr. Cameron, 27,974 shares; Mr. Duim, 5,131
shares; Mr. Eskildsen, 6,275 shares; Mr. Hatfield, 11,837 shares; and all
executive officers of U. S. Bancorp as a group, 80,451 shares. Participants
in the plan may direct the voting of the shares allocated to their
accounts.
(3) Includes shares subject to stock options held by non-employee directors or
director-nominees of U. S. Bancorp that are currently exercisable or will
become exercisable on or before March 1, 1995, as follows: Mr. Breezley,
53,525 shares; Ms. Chambers, 1,205 shares; Mr. Drake, 12,532 shares; Mr.
Dryden, 7,970 shares; Mr. Green, 39,600 shares; Mr. Miller, 3,000 shares;
Mr. Redmond, 2,000 shares; Mr. Rogers, 7,246 shares; Mr. Smith, 2,881
shares; Mr. Whiteley, 4,946 shares; and all present nonemployee directors
of U. S. Bancorp as a group, 125,730 shares.
(4) See note 2 to the preceding table for additional information regarding Mr.
Green's share ownership.
</TABLE>
Section 16 of the Securities Exchange Act of 1934 ("Section 16") requires
that reports of beneficial ownership of Common Stock and Preferred Stock and
changes in such ownership be filed with the Securities and Exchange Commission
(the "SEC") by Section 16 "reporting persons," including directors, certain
officers, holders of more than 10% of the outstanding Common Stock or Preferred
Stock, and certain trusts of which reporting persons are trustees. U. S. Bancorp
is required to disclose in the Proxy Statement each reporting person whom it
knows to have failed to file any required reports under Section 16 on a timely
basis.
3
<PAGE>
Based solely upon a review of copies of Section 16 reports furnished to U. S.
Bancorp and written statements confirming that no other reports were required,
to U. S. Bancorp's knowledge, all Section 16 reporting requirements applicable
to known reporting persons were complied with during 1994.
PROPOSAL 1: ELECTION OF DIRECTORS
The directors of U. S. Bancorp are elected at the annual meeting of
shareholders in April to serve for one year. The Board of Directors has set the
number of positions on the Board at nine. The names of U. S. Bancorp's nominees
for director are given below together with certain information about each of
them, including their ages, their business experience during the past five
years, directorships in other corporations, and periods of service as a director
of U. S. Bancorp. There are no family relationships among the directors or
nominees for director. All the nominees other than Ms. Chambers and Mr. Dryden
are currently directors of U. S. Bancorp.
If for some unforeseen reason one or more of the nominees is not available
as a candidate for director, the number of directors constituting the Board of
Directors may be reduced prior to the annual meeting, or the Proxies may be
voted for such other candidate or candidates as may be nominated by the Board.
U. S. Bancorp's Bylaws provide that nominations for election to the Board of
Directors may be made by the Board or by any holder of record of U. S. Bancorp
securities entitled to vote for the election of directors. Nominations other
than those made by or on behalf of the Board must be made in writing and
delivered or mailed to the Chairman of the Board not less than 25 days and not
more than 60 days prior to the shareholders meeting at which directors are to be
elected. The Bylaws provide for a shorter deadline if less than 30 days' notice
of the meeting is given to shareholders.
Nominees for Director
GERRY B. CAMERON, age 56, has been Chief Executive Officer and a director of
U. S. Bancorp since January 1994 and Chairman of the Board and President of U.
S. Bancorp since April 1994. He was Vice Chairman of U. S. Bancorp from January
1993 through April 1994. He was Executive Vice President of U. S. Bancorp and U.
S. Bank of Oregon from March 1979 until January 1993 and July 1993,
respectively. Mr. Cameron was elected a director of U. S. Bank of Oregon in
January 1993 and was elected Chairman of the Board in July 1993. He was
President and Chief Executive Officer of U. S. Bank of Washington, National
Association ("U. S. Bank of Washington"), a wholly owned subsidiary of U. S.
Bancorp, from October 1991 until January 1993, and was President and Chief
Operating Officer of U. S. Bank of Washington from February 1988 until October
1991. Mr. Cameron is a member of the Executive Management Committee composed of
seven senior U. S. Bancorp executive officers.
CAROLYN SILVA CHAMBERS, age 63, has been a director of U. S. Bank of Oregon
since 1993. Ms. Chambers has been President and Chief Executive Officer of
Chambers Communication Corp., a cable television company, since 1983 and
Chairman and Chief Executive Officer of Chambers Construction Company, a
construction firm, since 1986, both based in Eugene, Oregon. Ms. Chambers is
also a director of Portland General Corporation.
FRANKLIN G. DRAKE, age 66, has been a director since 1969. Mr. Drake is
Chairman of the Board of Donald M. Drake Company, a construction firm in
Portland, Oregon. He was previously President and Chief Executive Officer of
Donald M. Drake Company for more than five years until July 1993.
ROBERT L. DRYDEN, age 61, has been a director of U. S. Bank of Washington
since 1991. Mr. Dryden serves as Executive Vice President, Airplane Production,
of The Boeing Company (Commercial Airplane Group), an airplane manufacturer
headquartered in Seattle, Washington, and has held this position since 1990.
From 1987 until 1990, he was President of the Boeing Military Airplane Company
in Wichita, Kansas. Mr. Dryden is also a director of Washington Energy Company.
JOSHUA GREEN III, age 58, has been a director since 1987. Mr. Green is
Chairman of the Board and Chief Executive Officer of Joshua Green Corporation, a
family investment firm. He has also been Chairman of the
4
<PAGE>
Board and a director of U. S. Bank of Washington since February 1988. Mr. Green
was also Vice Chairman of U. S. Bancorp from December 1987 until January 1993
and Chief Executive Officer of U. S. Bank of Washington from February 1988 until
October 1991. Mr. Green is also a director of Safeco Corporation.
ROBERT STEVENS MILLER, JR., age 53, has been a director since 1992. Mr.
Miller retired as a senior partner of James D. Wolfensohn, Inc., an investment
banking firm, in 1993. He was previously Vice Chairman of Chrysler Corporation
from 1990 to 1992 and Executive Vice President and Chief Financial Officer of
Chrysler Corporation from 1981 to 1990. Mr. Miller is also a director of Coleman
Co., Federal-Mogul Corp., Fluke Corp., Pope and Talbot, Inc., Symantec Corp.,
and Moore Mill and Lumber Co.
PAUL A. REDMOND, age 58, has been a director since 1994. From 1992 to April
1994, Mr. Redmond was a director of U. S. Bank of Washington. Since 1985, he has
been Chairman of the Board and Chief Executive Officer of The Washington Water
Power Company, an electric and gas utility with headquarters in Spokane,
Washington. Mr. Redmond is also a director of Itron, Inc.
N. STEWART ROGERS, age 65, has been a director since 1988. Mr. Rogers is
Chairman of the Board and a director of Penwest, Ltd. He is also a director of
Fluke Corp., VWR Corp., and Univar Corporation. Mr. Rogers was Senior Vice
President of Univar Corporation, a distributor of chemicals, for more than two
years until his retirement in December 1991.
BENJAMIN R. WHITELEY, age 65, has been a director since 1994. Mr. Whiteley
was a director of U. S. Bank of Oregon from 1986 through April 1994. He was
previously a director of U. S. Bancorp from 1986 until 1988. Mr. Whiteley has
been Chairman of the Board of Standard Insurance Company, a life insurance
company, since August 1994. He served as Chairman and Chief Executive Officer of
Standard Insurance Company from January 1993 until August 1994 and, prior to
that, as President and Chief Executive Officer for more than five years. Mr.
Whiteley is also a director of Northwest Natural Gas Company, Willamette
Industries, Inc. and The Greenbrier Companies, Inc.
Recommendation by the Board of Directors; Vote Required
The Board of Directors recommends that the shareholders vote FOR the
election as directors of the nominees listed above. A nominee will be elected if
the nominee receives a plurality of the votes cast by the shares entitled to
vote in the election, provided that a quorum is present at the meeting.
BOARD OF DIRECTORS AND BOARD COMMITTEES
Board Committees
The U. S. Bancorp Board of Directors has a standing Audit Committee, which
recommends to the Board the accounting firm to be selected as independent
auditors and reviews matters relating to public disclosure, corporate practices,
regulatory and financial reporting, accounting procedures and policies,
financial and accounting controls, and transactions involving potential
conflicts of interest. The Audit Committee receives and evaluates on behalf of
the Board reports of reviews by the Board of Governors of the Federal Reserve
System, which is the federal supervisory agency for bank holding companies, and
the Office of the Comptroller of the Currency, which is the primary supervisory
agency for U. S. Bancorp's national bank subsidiaries. Reports of examinations
by supervisory agencies for other U. S. Bancorp subsidiaries, including the
Federal Deposit Insurance Corporation (the "FDIC"), and various state agencies,
are also received by the Audit Committee.
The Audit Committee also reviews the planned scope and results of the audit
and the annual reports to the SEC and to the shareholders and the Proxy
Statement and makes recommendations regarding approval to the Board of
Directors. The Audit Committee is responsible for examining the financial
affairs of U. S. Bancorp and its nonbanking subsidiaries or for causing the
internal auditor to make such examinations on behalf of the Audit Committee. The
examination of each bank subsidiary with an independent audit committee
generally is the responsibility of that bank's audit committee. Otherwise, the
Audit Committee's responsibilities extend to the bank subsidiaries as well. The
Audit Committee also performs for U. S. Bancorp's domestic bank subsidiaries
(other than U. S. Bank of Oregon) certain audit functions required under FDIC
regulations.
5
<PAGE>
Current members of the Audit Committee are Messrs. Smith (chairperson),
Drake, Miller, Redmond, Rogers, and Whiteley. The Audit Committee held five
meetings in 1994.
The Board of Directors also has a standing Compensation Committee composed
of six non-employee directors, Messrs. Rogers (chairperson), Drake, Miller,
Redmond, Smith, and Whiteley. The Compensation Committee reviews and makes
recommendations to the Board of Directors from time to time regarding salary
levels for each member of the Executive Management Committee. It also recommends
the terms of awards to be granted to members of U. S. Bancorp's Executive
Management Committee pursuant to the U. S. Bancorp Executive Annual Incentive
Plan. The Compensation Committee administers U. S. Bancorp's stock-based
compensation plans and makes decisions regarding the grant of stock options and
other awards to officers and employees thereunder. The operation of U. S.
Bancorp's compensation and benefit plans and practices and the annual retainer
and meeting fees payable to non-employee directors of U. S. Bancorp and its
subsidiaries are also subject to the Compensation Committee's review from time
to time; the Committee may recommend such changes to the Board as it deems
appropriate. The Compensation Committee met seven times in 1994.
Additionally, the Board of Directors has a standing Nominating Committee,
which meets as necessary. The Nominating Committee met in January 1995, but did
not hold any meetings in 1994. The members of the Nominating Committee are
Messrs. Green (chairperson), Breezley, Cameron, Drake, and Miller. The
Nominating Committee will consider proposals for nominees for the Board
suggested by shareholders. Any shareholder who wishes to suggest nominees for
election as director at the 1996 Annual Meeting should submit his or her
suggestions in writing no later than November 13, 1995, to U. S. Bancorp,
Attention: Corporate Secretary Division, P.O. Box 2200, Portland, Oregon
97208-2200. The shareholder should specify the name of each proposed nominee and
should set forth information as to the nominee's qualifications for membership
on the Board of Directors. A person to be considered for nomination to the Board
of Directors should be a recognized leader in his or her profession and should
have, among other things, the ability to exercise sound business judgment and
such broad personal and professional experience as to enable the nominee to make
productive contributions to the deliberations of the Board of Directors. See
also "Proposal 1: Election of Directors" for an explanation of the procedure by
which shareholders may nominate directors for election.
Meetings
The Board of Directors held ten meetings during 1994. Each director attended
at least 75% of the total number of meetings of the Board and meetings held by
all committees of the Board on which the director served during 1994.
6
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The table below shows the compensation awarded or paid to, or earned by, U.
S. Bancorp's chief executive officer and each of its four other most highly
compensated executive officers, as well as one individual who served as chief
executive officer for a portion of 1994 (together, the "named executive
officers"), during each of the years in the three-year period ended December 31,
1994.
<TABLE>
<CAPTION>
Long-Term Compensation
------------------------
Annual Compensation Number of Long-Term
---------------------- Securities Incentive All Other
Salary Bonus (4) Underlying Payouts (5) Compensation
Name and Principal Position (1) Year ($) ($) Options (#) ($) ($)
- - ----------------------------------------- --------- ---------- ---------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gerry B. Cameron......................... 1994 $ 508,750 $ 250,000 58,252 $ -- $ 28,241(6)
Chairman of the Board, Chief Executive 1993 248,750 225,000 50,000 200,000 13,397
Officer and President, U. S. Bancorp 1992 235,000 74,848 -- -- 11,451
Roger L. Breezley (2) ................... 1994 183,333 -- -- -- 71,026(7)
Chairman of the Board and Chief 1993 475,000 275,000 80,000 300,000 28,613
Executive Officer, U. S. Bancorp 1992 475,000 216,125 -- -- 23,940
Robert D. Sznewajs (3) .................. 1994 233,750 175,000 20,408 -- --
Executive Vice President, U. S. Bancorp 1993 -- -- -- -- --
1992 -- -- -- -- --
Arland D. Hatfield ...................... 1994 210,000 88,310 19,417 -- 11,710(6)
Executive Vice President, U. S. Bancorp 1993 168,750 80,332 30,000 100,000 9,172
1992 155,000 52,785 -- -- 7,553
Gary T. Duim ............................ 1994 200,000 97,084 19,417 -- 11,868(6)
Executive Vice President, U. S. Bancorp 1993 164,589 95,611 30,000 100,000 8,717
1992 130,833 45,974 -- -- 4,710
John D. Eskildsen ....................... 1994 200,000 76,930 15,534 -- 10,810(6)
Executive Vice President, U. S. Bancorp; 1993 164,583 60,327 30,000 100,000 8,594
President and Chief Executive Officer, 1992 135,000 42,998 -- -- 6,411
U. S. Bank of Oregon
<FN>
- - ------------------------
(1) Includes principal capacities in which each officer served during 1994.
(2) Mr. Breezley held the position of Chief Executive Officer until January 26,
1994, and Chairman of the Board until April 19, 1994, and is included in
the executive compensation tables in accordance with SEC rules governing
proxy disclosure.
(3) Mr. Sznewajs became a U. S. Bancorp employee in April 1994.
(4) Represents amounts paid or accrued under annual cash incentive plans in
effect for 1994 and 1993 and as discretionary cash bonuses for 1992 awarded
in January 1993.
(5) Represents amounts paid or accrued under the U. S. Bancorp Long-Term
Management Incentive Plan for the three-year period ended December 31,
1993.
(6) Represents amounts that were contributed by U. S. Bancorp under the U. S.
Bancorp Employee Investment Plan, a qualified plan under Section 401(k) of
the Internal Revenue Code (the "Code"), as a pro-rata matching contribution
and invested in Common Stock or that would have been allocated to each
officer's matching contribution account under the Employee Investment Plan
had compensation subject to the plan included deferred compensation and had
Code limits not been applicable, but instead were credited under the U. S.
Bancorp Supplemental Benefits Plan.
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
(7) Includes $22,750 contributed or credited by U. S. Bancorp for Mr.
Breezley's account under the U. S. Bancorp Employee Investment Plan and
Supplemental Benefits Plan. Also includes $48,276 attributable to the
transfer to Mr. Breezley of title to an automobile previously owned by U.S.
Bancorp and used by Mr. Breezley, together with reimbursement of taxes
associated with income imputed from the receipt of the automobile, in
connection with his retirement in 1994.
</TABLE>
Stock-Based Compensation
The following table provides information regarding options to purchase
Common Stock granted to the named executive officers pursuant to the U. S.
Bancorp 1993 Stock Incentive Plan during 1994.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants
----------------------------------------------------
Number of % of
Securities Total Options
Underlying Granted to Exercise Grant Date
Options Employees in Price Expiration Present
Name Granted (1) Fiscal Year ($/Share) Date Value (2)
- - --------------------------------------------------- ----------- -------------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Gerry B. Cameron................................... 58,252 8.1% $ 25.75 3/24/2004 $ 284,852
Roger L. Breezley.................................. -- -- -- -- --
Robert D. Sznewajs................................. 20,408 2.8 24.50 4/17/2004 94,897
Arland D. Hatfield................................. 19,417 2.7 25.75 3/24/2004 94,949
Gary T. Duim....................................... 19,417 2.7 25.75 3/24/2004 94,949
John D. Eskildsen.................................. 15,534 2.2 25.75 3/24/2004 75,961
<FN>
- - ------------------------
(1) No stock appreciation rights ("SARs") were granted to the named executive
officers during 1994. Options were granted for the numbers of shares
indicated at exercise prices equal to the fair market value of the Common
Stock on the date of grant. All shares subject to options which have not
previously been canceled or terminated will become exercisable in full one
year prior to the expiration date shown in the table. The maximum amounts
of shares as to which exercisability may be accelerated during 1994, 1995,
1996, and 1997 are 0%, 33%, 50% and 100%, respectively. Vesting may be
accelerated subject to the foregoing schedule to the extent that U. S.
Bancorp achieves specified levels of return on assets and a market-to-book
performance percentage based on the ratio of (i) U. S. Bancorp's ratio of
per share market price to book value to (ii) the median ratio of market
price to book value of the Standard & Poor's Major Regional Banks Index
("S&P Major Regional Banks Index"). Exercisability of the options is not
subject to acceleration upon a change in control of U. S. Bancorp. But see
"Proposal 2: Approval of Amendment to U. S. Bancorp 1993 Stock Incentive
Plan."
(2) The values shown have been calculated based on the Black-Scholes option
pricing model and do not reflect the effect of restrictions on
transferability. The values indicated were calculated based on the
following assumptions: (i) expectations regarding volatility were based on
quarterly stock price data during the five-year period ended March 31,
1994; (ii) the risk-free rate of return was assumed to be 7%; (iii) values
were discounted by 3% for each year in the nine-year period during which
vesting is restricted; (iv) the time of exercise was assumed to be the
expiration date; and (v) the dividend yield was assumed to be 3.61% (the
annual dividend rate divided by the stock price on the grant date). The
value which may ultimately be realized by the holders of the reported
options will depend on the market value of the Common Stock during the
periods during which the options are exercisable, which may vary
significantly from the assumptions underlying the Black-Scholes model.
</TABLE>
8
<PAGE>
Information regarding exercises of stock options during 1994, and
unexercised options held as of December 31, 1994, by the named executive
officers is summarized in the table below.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values (1)
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Number of Securities Underlying in-the-Money
Shares Unexercised Options at Options at Fiscal
Underlying Fiscal Year-End Year-End (3)
Options Value --------------------------- -------------------
Name Exercised Realized (2) Exercisable Unexercisable Exercisable
- - ------------------------------- ---------------- ------------ ------------- ------------ -------------------
<S> <C> <C> <C> <C> <C>
Gerry B. Cameron............... 5,400 $ 73,127 25,000 83,252 $ --
Roger L. Breezley.............. 200,000 3,147,022 53,525 40,000 160,403
Robert D. Sznewajs............. -- -- -- 20,408 --
Arland D. Hatfield............. 6,480 100,745 31,560 34,417 157,847
Gary T. Duim................... 3,000 36,702 25,860 34,417 113,761
John D. Eskildsen.............. 9,000 120,795 28,800 30,534 136,501
<FN>
- - ------------------------
(1) No SARs were exercised during 1994 and no named executive officer held any
SARs at December 31, 1994.
(2) Represents the amount by which the fair market value of the shares of
Common Stock underlying employee stock options at the date of exercise
exceeded the exercise price.
(3) Value is calculated based on the amount, if any, by which the low sale
price of the Common Stock, $22.375, reported in THE WALL STREET JOURNAL for
the last trading day in 1994, exceeds the per share exercise price of
unexercised options. All options reflected in the table were granted at an
exercise price equal to the fair market value of a share of Common Stock on
the date of grant. No unexercisable options were "in-the-money" at December
31, 1994.
</TABLE>
The following table sets forth information regarding awards of performance
shares to the named executive officers pursuant to the U. S. Bancorp 1993 Stock
Incentive Plan during 1994.
Long-Term Incentive Plans--Awards in Last Fiscal Year
<TABLE>
<CAPTION>
Performance
or Other
Period Estimated Future Payouts Under Non-Stock
Until Price Based Plans (2)
Number Maturation -------------------------------------------
of Shares (1) or Payout Threshold (#) Target (#) Maximum (#)
------------- ----------- --------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Gerry B. Cameron............................. 19,417 3 years 1,941 19,417 38,834
Roger L. Breezley............................ -- -- -- -- --
Robert D. Sznewajs........................... 6,802 3 years 680 6,802 13,604
Arland D. Hatfield........................... 5,825 3 years 582 5,825 11,650
Gary T. Duim................................. 5,825 3 years 582 5,825 11,650
John D. Eskildsen............................ 4,854 3 years 485 4,854 9,708
<FN>
- - ------------------------
(1) Represents target awards of performance shares.
(2) Following the three-year performance period ending December 31, 1996,
awards will be settled pursuant to a performance matrix based on the levels
of attainment of specified goals with respect to (i) U. S. Bancorp's return
on assets and (ii) the percentage by which U. S. Bancorp's total
shareholder return exceeds the median total shareholder return of the S&P
Major Regional Banks Index. Any shares not issued because of failure to
achieve specified performance levels will be forfeited. Awards may be paid
in shares of Common Stock or a combination of cash and shares, provided
that, if the participant elects to receive cash, the portion settled in
shares must equal at least 25 percent of the award. A special calculation
</TABLE>
9
<PAGE>
<TABLE>
<S> <C>
method for determining performance shares earned on the basis of less than
a full performance cycle may apply in certain circumstances following a
change in control of U. S. Bancorp. See "Proposal 2: Approval of Amendment
to U. S. Bancorp 1993 Stock Incentive Plan."
</TABLE>
Retirement Plan
The U. S. Bancorp Retirement Plan (the "Retirement Plan") covers salaried
employees, including officers, and certain hourly rate (part-time) employees of
U. S. Bancorp and its participating subsidiaries. The Retirement Plan provides
for payment of monthly pension benefits based upon a formula that considers
years of benefit service (as defined), average monthly compensation, and the
excess of such compensation over the 35-year average Social Security wage base.
Pursuant to the U. S. Bancorp Supplemental Benefits Plan (the "Supplemental
Plan"), designated key employees, including each U. S. Bancorp executive
officer, will receive benefits upon retirement in addition to those payable
under the Retirement Plan.
The following table shows the estimated annual benefits payable under the
Retirement Plan (including amounts payable pursuant to applicable provisions of
the Supplemental Plan) for participants with various years of benefit service
and specified levels of compensation (based on the average during the five
consecutive calendar years out of the last ten years for which compensation was
highest).
Pension Plan Table
<TABLE>
<CAPTION>
Years of Service
Compensation ----------------------------------------------------------
Level 15 20 25 30 35
- - ------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$ 125,000 $ 30,300 $ 40,400 $ 50,500 $ 53,700 $ 56,800
150,000 36,700 48,900 61,200 64,900 68,700
175,000 43,100 57,400 71,800 76,200 80,500
200,000 49,400 65,900 82,400 87,400 92,400
225,000 55,800 74,400 93,000 98,700 104,300
250,000 62,200 82,900 103,700 109,000 116,200
300,000 74,900 99,900 124,900 132,400 139,900
350,000 87,700 116,900 146,200 154,900 163,700
400,000 100,400 133,900 167,400 177,400 187,400
450,000 113,200 150,900 188,700 199,900 211,200
500,000 125,900 167,900 209,900 222,400 234,900
550,000 138,700 184,900 231,200 244,900 258,700
600,000 151,400 201,900 252,400 267,400 282,400
650,000 164,200 218,900 273,700 289,900 306,200
700,000 176,900 235,900 294,900 312,400 329,900
750,000 189,700 252,900 316,200 334,900 353,700
800,000 202,400 269,900 337,400 357,400 377,400
850,000 215,200 286,900 358,700 379,900 401,200
</TABLE>
Compensation, for purposes of determining retirement benefits payable under
the Retirement Plan, generally consists of a participant's nondeferred
compensation up to a maximum annual limit imposed by the Code and excludes
amounts paid in excess of limits on variable items such as commissions,
long-term incentive compensation, and severance pay. Code limits are
disregarded, and deferred compensation (other than pursuant to the U. S. Bancorp
Long-Term Management Incentive Plan) is included in determining retirement
benefits payable under the combined provisions of the Retirement Plan and the
Supplemental Plan.
Retirement benefits in the table above are expressed in terms of single life
annuities and are not subject to reduction for Social Security benefits.
Benefits may be reduced from the amounts shown in the table if the participant
retires early (before age 65) or if the participant elects to have benefits paid
as a joint and survivor annuity.
10
<PAGE>
During 1994, Messrs. Breezley, Cameron, and Sznewajs were each awarded an
enhanced retirement benefit under the Supplemental Plan. Under this benefit, Mr.
Breezley, who retired during 1994, is receiving Retirement Plan payments,
primary Social Security benefits, and Supplemental Plan payments each year
equal, in the aggregate, to 55% of his average annual compensation during the
past five calendar years. Mr. Breezley's retirement benefits were also exempted
from the provisions of the Supplemental Plan providing for a percentage
reduction in benefits for retirement after age 55 but before age 62 ("Reduction
Percentage"). Accordingly, the annual retirement benefit payable with respect to
Mr. Breezley by U. S. Bancorp, assuming a single life annuity and reduction for
Social Security benefits, is $338,428.
Similarly, Mr. Cameron will receive aggregate payments upon retirement equal
to 55% of his average annual compensation during the highest five consecutive
calendar years out of the last ten years ("Highest Average Compensation") and,
in addition, will be entitled to a Reduction Percentage of zero if (i) he
continues to be chief executive officer of U. S. Bancorp through at least
December 31, 1998, or (ii) his employment as chief executive officer terminates
following a change in control of U. S. Bancorp. If Mr. Cameron were to retire
after December 31, 1998, with his Highest Average Compensation unchanged from
the average at December 31, 1994, his annual retirement benefit, assuming a
single life annuity and reduction for estimated Social Security benefits, would
be $218,671.
Mr. Sznewajs will become entitled to payments under the enhanced retirement
benefit only upon being credited with 20 years of benefit service. He has been
credited with 11 years of benefit service for service with a prior employer. Mr.
Sznewajs has also been designated to receive certain benefits under the
Supplemental Plan in the event of a change in control of U. S. Bancorp,
including (i) credit for up to 25 years of benefit service and (ii) entitlement
to receive benefits under the Retirement Plan that are not subject to reduction
due to retirement before age 65 (but at or after age 55) if his employment with
U. S. Bancorp or a subsidiary is terminated within three years following a
change in control either involuntarily without cause (as defined) or voluntarily
for good reason (as defined). At December 31, 1994, Mr. Sznewajs had 11.7 years
of benefit service credited to his account and a compensation level of $408,750
for purposes of calculating retirement benefits under the Pension Plan Table
above.
If Mr. Hatfield's employment with U. S. Bancorp is terminated after January
1, 1997, he will be entitled to credit for 25 years of benefit service and to
receive benefits under the Retirement Plan that are not subject to reduction due
to retirement before age 65 (but at or after age 55). Mr. Hatfield was entitled
to 40% of the foregoing benefits at December 31, 1994, became entitled to an
additional 10% on January 1, 1995, and will become entitled to an additional 10%
on January 1, 1996, provided that he continues to be employed by U. S. Bancorp
or a subsidiary. At December 31, 1994, Mr. Hatfield had 14.2 credited years of
benefit service and a compensation level of $228,071 for purposes of calculating
retirement benefits under the Pension Plan Table above.
The compensation levels and credited years of benefit service under the
combined provisions of the Retirement Plan and Supplemental Plan for purposes of
calculating the retirement benefits payable under the Pension Plan Table above
to the other named executive officers as of December 31, 1994, are as follows:
Mr. Duim, $210,577, 7 years; and Mr. Eskildsen, $202,570, 35.7 years.
For purposes of the Supplemental Plan, a change in control includes (i) any
occurrence which would be required to be reported as such by the SEC's proxy
disclosure rules, (ii) the acquisition by a person or group (other than U. S.
Bancorp or any of its subsidiaries or employee benefit plans) of 30% or more of
the combined voting power of U. S. Bancorp's voting securities, (iii) with
certain exceptions, the existing directors' ceasing to constitute a majority of
the Board of Directors, (iv) certain transactions involving the merger, or sale
or other transfer of a majority of the assets, of U. S. Bancorp, or (v) approval
by the U. S. Bancorp shareholders of a plan of liquidation or dissolution of U.
S. Bancorp.
Executive Agreements
At March 1, 1995, U. S. Bancorp was a party to agreements (the "CIC
Agreements") with 11 of its executive officers, including each of the named
executive officers, providing for severance compensation in the event of
termination of employment following a change in control of U. S. Bancorp.
"Change in control" is defined in the CIC Agreements in the same manner as in
the Supplemental Plan. See "Retirement Plan" above.
11
<PAGE>
Each CIC Agreement has been renewed for a term ending December 31, 1995,
subject to automatic extension annually unless 90 days' prior notice of an
intention to terminate a CIC Agreement is given by either party. Also, if a
change in control of U. S. Bancorp occurs during the term of the CIC Agreements,
the term shall be extended automatically for two additional calendar years
(three years in the case of Mr. Cameron) beyond the year in which the change in
control occurs. A CIC Agreement will terminate if the executive's employment is
terminated prior to a change in control or for cause (as defined) following a
change in control.
Pursuant to the CIC Agreements, each executive has agreed to remain as a U.
S. Bancorp employee throughout the pendency of any tender or exchange offer for
more than 30 percent of U. S. Bancorp's voting securities. Such obligation will
terminate if a change in control of U. S. Bancorp occurs or if the executive's
compensation is reduced.
The CIC Agreements further provide that if, within two years following the
occurrence of a change in control (three years in the case of Mr. Cameron), an
executive's employment with U. S. Bancorp is terminated by U. S. Bancorp without
cause or by the executive for good reason (as defined), the executive shall be
entitled to receive (i) his or her full base salary through the date of
termination at the rate in effect on the date the change in control occurred,
plus (ii) an amount equal to two times (three times in the case of Mr. Cameron)
the sum of (x) his or her annual base salary at such rate plus (y) his or her
average annual incentive compensation during the two calendar years ending prior
to the year in which the change in control occurred. Special payment provisions
apply in the event of the executive's death or disability. The amounts payable
pursuant to clause (ii) to the following persons if their employment had been
terminated on January 1, 1995, under the circumstances described above would
have been as follows: Mr. Cameron, $2,812,500; Mr. Sznewajs, $1,100,000; Mr.
Hatfield, $668,642; Mr. Duim, $692,695; and Mr. Eskildsen, $577,257.
The CIC Agreements also provide for reimbursement of legal fees and expenses
and reasonable amounts for out-placement services and for the continuation of
health, disability and life insurance benefits following termination of
employment voluntarily for good reason or involuntarily without cause. The
amounts payable under a CIC Agreement will be reduced to the extent that the
executive receives payment under U. S. Bancorp's Severance Benefits Plan, which
covers U. S. Bancorp employees generally and provides for severance benefits
based on the number of years of service if an employee's job is eliminated, if
his or her hours are significantly reduced, or if his or her office is closed,
subject to certain exceptions. Amounts payable under the CIC Agreements are also
subject to reduction to the extent that the executive receives salary
continuation and incentive compensation benefits under an employment agreement.
Payments under the CIC Agreements to executives other than to Mr. Cameron will
be decreased to the extent that they would be deemed excess parachute payments
under the Code. Mr. Cameron's CIC Agreement was amended in 1994 to delete the
terms providing for reduction of benefits deemed to be excess parachute payments
and to provide for reimbursement of any excise tax imposed on benefits payable
to Mr. Cameron that constitute excess parachute payments plus any related
federal and state income taxes.
Directors' Compensation
ANNUAL AND MEETING FEES. Directors, other than officer-directors, receive
an annual retainer of $20,000, as well as $1,000 for each Board meeting and $850
for each committee meeting attended. Outside directors also receive $1,000 for
each day spent at planning retreats. In addition, the chairs of the Audit
Committee and the Compensation Committee receive an annual retainer of $5,000
and $3,500, respectively. Mr. Green receives an annual retainer of $25,000 in
his capacity as Chairman of the Board of U. S. Bank of Washington, as well as
$1,000 for each U. S. Bank of Washington board meeting and $850 for each U. S.
Bank of Washington board committee meeting attended. U. S. Bancorp has a
deferred compensation plan under which any director may defer payment of the
annual retainer and meeting fees.
NON-EMPLOYEE DIRECTOR STOCK OPTIONS. U. S. Bancorp has adopted two stock
option plans for non-employee directors of U. S. Bancorp to encourage increased
ownership of Common Stock and to provide enhanced incentives for such directors
to exert their best efforts on U. S. Bancorp's behalf. The 1990 Non-Employee
Director Stock Option Plan (the "1990 Director Plan") and the 1993 Non-Employee
Director Stock Option
12
<PAGE>
Plan (the "1993 Director Plan") authorize the issuance of up to 187,500 and
25,000 shares of Common Stock, respectively. The 1990 Director Plan and the 1993
Director Plan are collectively referred to as the "Director Plans."
Pursuant to the 1990 Director Plan, each person serving as a non-employee
director of U. S. Bancorp on October 18, 1990, received an option to purchase
6,000 shares of Common Stock (the "Initial Options") at an exercise price of
$11.33 per share. As the 1990 Director Plan provided for Initial Options to be
granted only to persons who were non-employee directors on October 18, 1990, the
Board of Directors adopted the 1993 Director Plan in June 1993, to provide for
the grant of an option to each person who becomes a non-employee director after
October 18, 1990. Messrs. Miller, Redmond, and Whiteley have each received an
Initial Option to purchase 4,000 shares of Common Stock at exercise prices of
$24.125, $24.625, and $24.625, respectively, which were equal to the fair market
value of the Common Stock on the date of grant.
The 1990 Director Plan also provides for the grant, as of each annual
shareholders meeting, of an option (an "Annual Option") to each non-employee
director for 2,000 shares of Common Stock with an exercise price equal to fair
market value on the date of grant. Accordingly, each non-employee director
received an option for 2,000 shares on April 19, 1994, at an exercise price of
$24.625.
Each non-employee director is permitted to elect to receive a grant of
deferred compensation options under the 1990 Director Plan in lieu of all or a
portion of the retainer and meeting fees otherwise payable for service on the
Board of Directors (or the board of directors of a U. S. Bancorp subsidiary).
The exercise price of a deferred compensation option is calculated so that the
value of the option (that is, the excess of the total market value of the shares
subject to the option over the aggregate exercise price) on the date of grant
equals the amount of director's fees foregone.
All options granted under the 1993 Director Plan, and Initial Options and
Annual Options granted under the 1990 Director Plan, become exercisable as
follows: none during the first year following the date of grant; up to 50%
during the second year; up to 80% during the third year; and 100% thereafter.
Deferred compensation options granted under the 1990 Director Plan become fully
exercisable six months after the date of grant. An option generally will become
exercisable in full notwithstanding the above vesting schedules in the event of
the director's death, disability or retirement from the Board of Directors or
upon the occurrence of a change in control of U. S. Bancorp.
Payment of the exercise price of all options granted under the Director
Plans may be in cash, in shares of Common Stock already owned by the director,
or in a combination of cash and shares. The term of each option shall be
unlimited unless terminated earlier pursuant to the applicable Director Plan.
Under both Director Plans, if an optionee ceases to be a director, the term of
his or her option will expire after five years in the case of retirement, after
one year in the case of death or disability, and after three months upon ceasing
to be a director for any other reason (except that no deferred compensation
option will expire less than seven months after the date of grant).
HEALTH INSURANCE REIMBURSEMENT. A portion of the cost of premiums incurred
by any non-employee director of U. S. Bancorp for health care insurance coverage
of such director and his or her dependents will be reimbursed by U. S. Bancorp
upon the director's request, provided that no portion of such premiums are
subsidized by any other employer. Such reimbursement is subject to the same
conditions and limits as are applicable to active employees. No director
received reimbursement during 1994.
OFFICE. As former chief executive officer, Mr. Breezley has been given use
of an office in U. S. Bancorp's headquarters office tower in Portland, Oregon,
until June 30, 1999. The estimated rental value of the office space is less than
$12,000 annually.
13
<PAGE>
REPORT OF COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
Objectives of U. S. Bancorp's Compensation Program
The Compensation Committee (the "Committee") of the U. S. Bancorp Board of
Directors reviews and approves guiding principles for U. S. Bancorp's executive
compensation program, as well as administering certain specific elements of the
program. The Committee is comprised of six outside directors. See "Board of
Directors and Board Committees." Members of the Committee are not eligible to
participate in any U. S. Bancorp compensation plans other than the following:
the Director Plans, a deferred compensation plan and a medical insurance premium
reimbursement plan.
U. S. Bancorp has adopted, with the Committee's approval, a philosophy of
"total compensation," encompassing a broad mix of salary, incentive
compensation, and retirement and health and welfare benefits. It seeks to
provide all its employees with appropriate incentives for current performance as
well as for achieving the long-term objectives of the corporation. Through its
compensation program, U. S. Bancorp also strives to attract and retain the best
individuals, essential to a successful organization.
Employee Benefits
U. S. Bancorp's employees (other than certain part-time employees),
including its executive officers, are eligible to participate in its health and
welfare benefits program, which includes medical, dental, life, and disability
insurance and assorted other benefits selected by employees in accordance with
their individual needs. Subject to years of service requirements, U. S.
Bancorp's employees (other than certain part-time employees) also participate in
its Retirement Plan, a qualified defined benefit pension plan. They may also
choose to participate in its Employee Investment Plan, a salary deferral plan
qualified under Code Section 401(k). Under the U. S. Bancorp Supplemental
Benefits Plan, executive officers and other key employees may be designated to
receive certain additional benefits which are not provided by the Retirement
Plan and Employee Investment Plan.
Decisions Regarding Cash Compensation
Decisions regarding salary and cash incentive compensation to be paid to
individuals serving as U. S. Bancorp's chief executive officer during 1994 were
made by the Board of Directors pursuant to the recommendations of the Committee.
Mr. Breezley, who served as chief executive officer during January 1994, and Mr.
Cameron, who served as chief executive officer during the remainder of 1994, did
not participate in Committee or Board deliberations regarding their own
compensation. Decisions regarding cash compensation paid to executive officers
(other than Messrs. Breezley, Cameron, and Sznewajs) who were members of the
Executive Management Committee were made by the Board in October 1993 following
review of recommendations by Mr. Breezley. The Executive Management Committee or
individual Executive Management Committee members have been delegated authority
to make decisions regarding cash compensation to be paid to other executive
officers. Compensation to be paid to certain U. S. Bancorp executive officers
who are also employees of one of U. S. Bancorp's subsidiaries is subject to
approval by the respective boards of directors of such subsidiaries.
Members of the Executive Management Committee are selected by the Board from
U. S. Bancorp's top executive officers. During 1994, the Executive Management
Committee was composed of seven members, including Messrs. Cameron, Sznewajs,
Hatfield, Duim, and Eskildsen.
Periodically, U. S. Bancorp engages consultants to survey and report on
executive compensation paid by a group of bank holding companies with total
assets and net earnings at levels comparable to those at U. S. Bancorp. The
comparison group includes the S&P Major Regional Banks Index appearing under
"Stock Performance Graph" below except for one company for which data was not
available.
APPROVAL OF 1994 SALARY LEVELS. In October 1993, the Committee reviewed
market analyses of base salaries and total compensation paid by the comparison
group. Following that review, the Committee recommended, and the Board of
Directors approved, a salary level for Mr. Breezley in 1994 of $550,000, a 16%
increase over 1993. This salary level fell in the lowest quartile of bank
holding companies in the market survey. In establishing Mr. Breezley's salary,
the Committee considered U. S. Bancorp's ability to compete for new
14
<PAGE>
executives and retain executives currently in U. S. Bancorp's employ and the
problems being experienced with salary compression at the top levels of U. S.
Bancorp management. The Committee also reviewed U. S. Bancorp's three-year
average total shareholder return, return on assets, and return on common equity
as compared to the S&P Major Regional Banks Index. Salary levels for 1994 for U.
S. Bancorp's other executive officers were approved by the Board pursuant to
recommendations by Mr. Breezley affirmed by the Committee based on similar
factors as those considered in establishing Mr. Breezley's salary.
Following the assumption by Mr. Cameron of the position of chief executive
officer in January 1994, the Committee recommended, and the Board approved, an
increase in his annual salary level to $525,000, effective February 1, 1994,
commensurate with his new responsibilities.
ANNUAL CASH INCENTIVE COMPENSATION. Annual cash incentive plans for U. S.
Bancorp executive and management personnel which first became effective January
1, 1993, continued in effect for 1994. The Executive Annual Incentive Plan (the
"Executive Plan") covers members of the Executive Management Committee
(including Mr. Cameron throughout 1994) and is administered by the Committee.
The Management Annual Incentive Plan (the "Management Plan") covers selected
management executives who are not Executive Management Committee members and is
administered by the Executive Management Committee. The two plans are otherwise
quite similar. The Executive Plan and the Management Plan are collectively
referred to as the "Annual Plans."
The Annual Plans are designed to reward participants for the achievement of
objective, measurable performance goals established to support U. S. Bancorp's
strategic planning process. The Annual Plans contemplate the establishment each
year of target awards, performance components and related success factors and
relative weights, performance goals and additional modifier goals within each
component, and performance percentages for each component. Performance
components may relate to performance by U. S. Bancorp and its subsidiaries as a
whole or by a principal operating group, business unit, support unit, or project
shared by two or more operating groups or units. For each performance component,
based on the level of achievement for the related success factors, a performance
percentage is determined ranging from 0% for performance below a specified
threshold level, to a minimum value of not less than 50% for performance equal
to the threshold level, to 100% for performance equal to a specified target
level, to a maximum value not to exceed 200% for performance equal to or above a
specified outstanding performance level.
The two corporate performance goals established for 1994 under the Annual
Plans related to the degree of U. S. Bancorp's success in attaining specified
levels for return on assets and operating revenue growth and were given equal
weight. The Committee also recommended and the Board approved two corporate
modifier goals, each weighted equally. The first compared U. S. Bancorp's 1994
return on assets, ratio of market price to book value per share ("market to book
value ratio"), and ratio of market price to earnings per share with results
achieved by a group of peer banks included in the S&P Major Regional Banks
Index. The second modifier was based on U. S. Bancorp's overhead ratio for the
1994 fourth quarter. In February 1995, the Committee determined that the level
of attainment of U. S. Bancorp's 1994 corporate performance goals, as adjusted
by the degree to which the corporate modifier goals were achieved, was 84%.
The 1994 target award established under the Executive Plan for Mr. Cameron
by the Board of Directors, following the Committee's recommendation, was set at
50% of his 1994 base salary. An actual award of 47.6% of Mr. Cameron's 1994 base
salary was approved in February 1995 in light of his contribution to the level
of attainment of U.S. Bancorp's performance goals.
With respect to other Executive Management Committee members (except Mr.
Sznewajs, who was hired in April 1994), the Committee established target awards
under the Executive Plan equal to 35% of their 1994 base salaries. The
determination of each participant's performance components (other than corporate
goals), relative weights, modifier goals, success factors and performance
percentages was reviewed and approved by the Committee. In February 1995, the
Committee approved, with Board concurrence, Mr. Cameron's determination of
levels of achievement of the performance components assigned to other Executive
Management Committee members, resulting in awards for 1994 ranging from 110% to
139% of target levels.
15
<PAGE>
Decisions Regarding Stock-Based Incentive Compensation
During 1993, the Committee undertook a comprehensive review and analysis of
U. S. Bancorp's long-term incentive compensation programs, which led to the
adoption of the U. S. Bancorp 1993 Stock Incentive Plan (the "1993 Plan"). In
adopting the 1993 Plan, the Committee, with Board concurrence, determined that
long-term remuneration should be exclusively stock-based, and terminated the
cash long-term incentive plan previously used to compensate top U. S. Bancorp
executives.
In March 1994, the Committee considered operational aspects of the 1993 Plan
and approved annual grants of stock options and performance shares. The
Committee then approved stock-based awards to members of the Executive
Management Committee. Nonqualified stock options were awarded with a performance
vesting component based on achievement of corporate performance goals for return
on assets and market to book value ratio. Awards of performance shares intended
to replace the cash component of U. S. Bancorp's long-term incentive
compensation in prior years were made concurrently with the option grants. The
performance shares are subject to vesting requirements based on attainment of
specified levels of return on assets and the excess, if any, of total
shareholder return over the median return of the S&P Major Regional Banks Index.
See "Executive Compensation--Stock-Based Compensation."
The grants of performance vesting options and performance shares are
intended to provide a strong motivation among top executives to create
additional equity value to shareholders by tying long-term compensation to
measures of shareholder return. The size of individual grants, including grants
to Mr. Cameron, were based upon a synthesis of three criteria: (i) potential
payouts from both awards, under various performance scenarios, in relation to
shareholder return; (ii) the market compensation surveys described above
regarding levels of compensation for various executive positions; and (iii) the
anticipated effect of the awards on U. S. Bancorp's ability to retain current
executives and attract new talent. Past corporate performance was not considered
in establishing the level of awards.
Discussion of Corporate Tax Deduction on Compensation in Excess of $1 Million
Section 162(m) was added to the Code in 1993 to limit the deductibility of
compensation paid to a covered employee in a taxable year to $1,000,000 plus
performance-based and other qualifying compensation. The 1993 Plan was prepared
and adopted with a view to qualifying awards of stock options, SARs and
performance shares as performance-based compensation in light of requirements
included in Section 162(m) and proposed regulations thereunder. The Committee
has not otherwise adopted any policies under Section 162(m) with respect to
compensation paid to U. S. Bancorp's executive officers. However, under the
transition provisions of the proposed regulations, compensation attributable to
options granted under prior stock option plans is expected to qualify as
performance-based.
Compensation Committee Members
N. Stewart Rogers, Chairman
Franklin G. Drake
Robert Stevens Miller, Jr.
Paul A. Redmond
Andrew V. Smith
Benjamin R. Whiteley
16
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total returns for the
five-year period ended December 31, 1994, for the Common Stock, for the Standard
& Poor's 500 composite stock index (the "S&P 500"), and for the S&P Major
Regional Banks Index, in each case assuming investment of $100 at the close of
business on the last trading day prior to January 1, 1990, and reinvestment of
dividends.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
U.S. Bancorp S&P 500 S&P Major Regional Banks
<S> <C> <C> <C>
Dec. 31, 1989 100 100 100
1990 81 97 71
1991 140 126 128
1992 170 136 163
1993 166 150 172
1994 156 152 163
</TABLE>
TRANSACTIONS WITH U. S. BANCORP
Compensation Committee Interlocks and Insider Participation
Franklin G. Drake, Gerald W. Frank, Robert Stevens Miller, Jr., Paul A.
Redmond, N. Stewart Rogers, Andrew V. Smith and Benjamin R. Whiteley were
members of the Compensation Committee during 1994.
Donald M. Drake Company, of which Mr. Drake is the chairman of the board,
was awarded a contract in November 1992 to implement structural changes to
upgrade the seismic capacity of the U. S. Bank Plaza, a 7-story building which
adjoins U. S. Bancorp's headquarters office tower in Portland, Oregon. Payments
under the contract were completed in 1994 and totaled approximately $6.25
million. Mr. Drake abstained from the discussion and voting on the award of the
seismic improvement project by the Board of Directors following a competitive
selection process.
During 1994, certain directors (including each member of the Compensation
Committee) and executive officers of U. S. Bancorp, their associates, and
members of their immediate families were customers of U. S. Bancorp and its
subsidiary banks. It is expected that directors, executive officers, their
associates, and members of their immediate families will continue to be
customers of U. S. Bancorp and its subsidiary banks in the future. Generally,
transactions between U. S. Bancorp or its subsidiary banks and executive
officers and directors of U. S. Bancorp, their associates and family members are
made in the ordinary course of business on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons and do not involve more than the
normal risk of collectibility or present other unfavorable features. A loan to
one executive officer that was made on terms other than those summarized above
is described below under "Other Transactions."
Other Transactions
In connection with the relocation in 1989 of executive officer Phyllis J.
Campbell to Seattle, Washington, U. S. Bancorp made a real estate loan to
finance her purchase of a residence. The loan was made on the same
17
<PAGE>
terms as loans made to other U. S. Bancorp employees except that the interest
rate per annum was fixed at 7 1/4%. Such interest rate would increase to 10 1/4%
in the event of termination of her employment with U. S. Bancorp. The highest
outstanding balance on Ms. Campbell's loan during 1994 and the balance at
December 31, 1994, were $257,673 and $242,130, respectively.
In connection with the Merger Agreement relating to the acquisition of
Peoples Ban Corporation ("Peo-ples") in 1987, U. S. Bancorp entered into a
shareholder agreement with certain holders of the common stock of Peoples
pursuant to which such holders agreed to vote in favor of the merger of Peoples
with a U. S. Bancorp subsidiary. Pursuant to this agreement, U. S. Bancorp has
agreed to afford such holders, which are the holders of approximately 8.5
million shares of Common Stock included in those listed as beneficially owned by
Mr. Green under "Voting Securities and Principal Shareholders" above, certain
registration rights with respect to such shares of Common Stock (as well as
shares issued as a result of any change in capitalization) (the "Registrable
Securities"). U. S. Bancorp is obligated, under certain circumstances and
subject to specified terms and conditions, to use its best efforts to register
for sale under the federal and state securities laws the Registrable Securities
of such holders (and certain transferees). Such holders may make written
requests of U. S. Bancorp, until December 22, 1997, to effect a registration for
sale of at least 1,080,000 shares (as adjusted) of Registrable Securities.
Holders of Registrable Securities are entitled to an aggregate of three such
registrations. U. S. Bancorp has also agreed to permit such holders to include
their Registrable Securities in certain other registrations of Common Stock;
under certain circumstances, any such registration would be counted against the
holders' three registration opportunities. All expenses of such registration,
other than underwriters' discounts and commissions applicable to the holders'
Registrable Securities and fees and disbursements of the holders' counsel, will
be paid by U. S. Bancorp. The agreement also contains certain indemnification
provisions.
PROPOSAL 2: APPROVAL OF AMENDMENT
TO U. S. BANCORP
1993 STOCK INCENTIVE PLAN
The U. S. Bancorp 1993 Stock Incentive Plan (the "Plan") was adopted in
October 1993, amended and restated in February 1994, and approved as restated by
the U. S. Bancorp shareholders at the 1994 annual meeting. The purpose of the
Plan is to promote and advance the interests of U. S. Bancorp and its
shareholders by enabling U. S. Bancorp to attract, retain, and reward key
employees of U. S. Bancorp and its subsidiaries. The Plan is intended to
strengthen the mutuality of interests between such employees and shareholders by
offering stock options and other equity-based incentive awards to promote a
proprietary interest in pursuing the long-term growth, profitability, and
financial success of U. S. Bancorp.
The Plan provides for stock-based awards ("Awards") to officers and other
key employees of U. S. Bancorp and its subsidiaries, including employees who are
also directors of U. S. Bancorp or one of its subsidiaries. The pool of U. S.
Bancorp employees currently considered potentially eligible to receive Awards
under the Plan numbers approximately 1,700.
Awards which may be granted under the Plan include stock options, stock
appreciation rights, restricted shares, performance shares, and other
stock-based Awards. The Compensation Committee of the U. S. Bancorp Board of
Directors (the "Committee") is charged with administering the Plan and
determining the employees who are to receive Awards under the Plan and the
types, amounts, and terms of such Awards. The Committee may delegate, to one or
more officers of U. S. Bancorp, the power, authority and discretion of the
Committee with respect to Awards granted to recipients who are not executive
officers or directors of U. S. Bancorp.
The securities which may be issued under the Plan are shares of Common
Stock, which may be either authorized and unissued shares or reacquired
(treasury) shares. Subject to adjustment for changes in capitalization, the
maximum number of shares which may be made the subject of Awards under the Plan
shall not exceed 6,000,000 shares, plus the number of shares that remain
authorized but not granted under the U. S. Bancorp 1985 Stock Option and SAR
Plan (the "1985 Plan") (including shares subject to prior stock option plans and
referred to in the 1985 Plan). At March 1, 1995, such additional number was
approximately 279,100 shares. If
18
<PAGE>
an Award granted under the Plan or previously granted under a prior plan is
canceled or expires, the shares covered by such Awards shall again become
available for additional Awards under the Plan. The low sale price of the Common
Stock on March 1, 1995, as reported in THE WALL STREET JOURNAL was $25.00.
Plan Amendment Relating to Change in Control
As originally adopted, the Plan prohibited the acceleration of the time of
vesting or exercisability of Awards upon the occurrence of a change in control,
except for a special provision relating to performance shares. During 1994, the
Committee revisited the issue and concluded that, due to the inclusion of change
in control acceleration provisions in a substantial majority of comparable plans
adopted by public companies in the United States, U. S. Bancorp had been placed
at a competitive disadvantage in attracting and retaining top management
personnel as a result of the Plan's general prohibition on acceleration.
Accordingly, the Committee recommended and the Board approved an amendment
to the Plan, subject to shareholder approval, to provide that each Award granted
after November 17, 1994, shall be subject to the following acceleration
provisions upon the occurrence of a change in control:
(1) Any stock option or other Award requiring exercise, including stock
options which contain restrictions on exercisability based on the attainment
of performance goals, shall become exercisable in full immediately;
(2) Any Award subject to restrictions on vesting, such as restricted
stock, shall become fully vested; and
(3) Performance shares and other Awards subject to performance goals
except stock options shall be deemed to be earned to the extent of the
greater of:
(a) A number of shares determined by the Committee based on the
extent to which the specified performance goals had been achieved by the
end of the fiscal quarter ending before the change in control occurred;
or
(b) A pro rata number of shares based on the percentage of shares
subject to the Award equal to the proportion of whole months in the
performance period elapsed prior to occurrence of the change in control
compared to the total number of months in the performance period.
The foregoing provisions shall not apply to an Award, unless the applicable
Award Agreement expressly provides otherwise, to the extent that such
acceleration would result in an excess parachute payment under the Code. Also,
such provisions shall not apply if the Committee determines that the use of the
pooling method of accounting with respect to the change in control transaction
would be materially beneficial to U. S. Bancorp and the acceleration of vesting,
exercisability or payment of the Award would have a materially adverse effect on
U. S. Bancorp's ability to use such accounting method.
For purposes of the Plan, a change in control is defined to include the
following events: (i) any occurrence which would be required to be reported as a
change in control by the SEC's proxy disclosure rules; (ii) the acquisition by a
person or group (other than U. S. Bancorp or any of its subsidiaries or employee
benefit plans) of 30% or more of the combined voting power of U. S. Bancorp's
voting securities; (iii) individuals who, at the beginning of any period of 12
consecutive calendar months, constitute the Board of Directors, cease to
constitute at least a majority thereof, unless each new director was approved by
at least a majority of the directors then still in office who were directors at
the beginning of such period; (iv) certain transactions involving the merger, or
sale or other transfer of substantially all the assets, of U. S. Bancorp; or (v)
approval by the shareholders of U. S. Bancorp of a plan of liquidation or
dissolution of U. S. Bancorp.
The general effect of the foregoing amendment to the Plan will be to
accelerate the vesting or exercisability of Awards (other than performance
shares) where such Awards would not have been accelerated under the original
terms of the Plan. With respect to performance shares, the amendment provides
two alternate formulas for determining the number of shares earned prior to
occurrence of the change in control. Under the original terms of the Plan,
performance shares, upon the occurrence of a change in control, would be deemed
to have been earned pro rata based on the extent to which the specified
performance goals had been attained prior to the
19
<PAGE>
change in control. The amendment will not affect the options in the table shown
above under "Option Grants in Last Fiscal Year" or the performance shares shown
in the table above under "Long-Term Incentive Plans-- Awards in Last Fiscal
Year."
In August 1994, the Committee recommended and the Board approved amendment
of the Plan to provide for acceleration of exercisability in full of stock
options granted after June 1, 1994 (other than options providing for
acceleration of exercisability based upon attainment of specified performance
goals) upon the occurrence of a change in control (except where acceleration
would result in excess parachute payments or jeopardize use of the pooling
method of accounting). This amendment, which did not apply to options held by
Section 16 "reporting persons," was not subject to shareholder approval.
Summary of Other Plan Provisions
Following is a summary of other material provisions of the Plan.
STOCK OPTIONS. Stock options granted under the Plan may be either incentive
stock options meeting the requirements of Section 422 of the Code (or other
tax-favored forms of options) or nonqualified options which are not entitled to
favorable income tax treatment. Options granted under the Plan may expire not
more than ten years from the date of grant. The exercise price per share must be
at least 100 percent of the fair market value (defined as the low sale price as
reported in THE WALL STREET JOURNAL) of a share of Common Stock on the date the
option is granted.
The Committee may specify other terms of a given option, including times of
and conditions to exercisability and whether the shares issuable upon exercise
shall be subject to any restrictions. Also, the Committee, in its discretion,
may provide that, to the extent the option is exercised using
previously-acquired shares of Common Stock, the option holder shall
automatically be granted a replacement ("reload") option for a numbers of shares
equal to (or equal to a portion of) the number of shares delivered upon exercise
with an option price equal to the fair market value of a share of Common Stock
on the date of exercise and subject to such other terms as the Committee shall
determine. The number of shares subject to options granted to any employee
during any five-calendar-year period shall not exceed 500,000.
STOCK APPRECIATION RIGHTS. A recipient of SARs will receive, upon exercise,
a payment (in cash or in shares of Common Stock or in any other form approved by
the Committee) based on the excess (or portion of the excess) of the fair market
value of a share of Common Stock on the date of exercise over the base price of
the SARs, which shall not be less than the fair market value of a share of
Common Stock on the date of grant. SARs may be granted in connection with
options or other Awards granted under the Plan or may be granted as independent
Awards. The number of shares subject to SARs granted to any participant during
any five-calendar-year period shall not exceed 500,000.
RESTRICTED SHARES. Awards of restricted shares of Common Stock shall be
subject to such terms and conditions as the Committee deems appropriate. The
restrictions will generally include a requirement that the restricted shares be
forfeited upon termination of the participant's employment prior to the
expiration of a specified period of time. From the date of issuance of
restricted shares and prior to forfeiture, the recipient is entitled to the
rights of a shareholder, including voting and dividend rights, except that any
shares issued as a stock dividend shall be treated as additional restricted
shares covered by the Award. The maximum number of restricted shares which may
be granted during any calendar year shall not exceed 400,000.
PERFORMANCE SHARES. Awards of performance shares are shares of Common Stock
that are earned only if specified performance goals are attained during a
designated performance cycle. Such performance goals may relate to U. S. Bancorp
as a whole, a subsidiary, or an operating group, division or unit, as specified
by the Committee. Earned performance Awards are paid at the end of the
performance cycle in shares of Common Stock or a combination of cash and shares.
20
<PAGE>
Awards of performance shares to U. S. Bancorp executive officers shall be
subject to the following additional requirements:
(a) The performance goals specified for such Awards shall be based on
(i) U. S. Bancorp's return on average assets and (ii) the percentage by
which U. S. Bancorp's total shareholder return (as defined in the Plan)
exceeds the median total shareholder return of the S&P Major Regional Banks
Index; and
(b) The maximum number of shares which may be granted to any U. S.
Bancorp executive officer pursuant to Awards of performance shares granted
in any calendar year shall not exceed 60,000.
OTHER STOCK-BASED AWARDS. The Committee may grant other Awards that involve
payments or grants of shares of Common Stock or are measured by share equivalent
units, including Awards valued using measures other than the market value of the
Common Stock. The Plan thus provides needed flexibility to design future types
of stock-based or stock-related Awards to attract and retain employees in a
competitive environment. The number of shares of Common Stock subject to such
Awards granted to any participant during any five-calendar-year period shall net
exceed 500,000.
OTHER TERMS OF AWARDS. The Committee, in its discretion, may provide that a
recipient may pay the purchase or option price of shares subject to an Award, or
any federal, state or local taxes or tax withholding associated with exercise or
payment of an Award, by delivering previously owned shares of Common Stock
(including restricted or performance shares), by surrendering other outstanding
vested Awards, by reducing the number of shares otherwise issuable under the
Award, by delivering a promissory note with terms acceptable to the Committee,
or as otherwise approved by the Committee.
In the event of a change in capitalization, the Committee may make such
proportionate adjustments in the aggregate number of shares for which Awards may
be granted under the Plan, the maximum number of shares which may be awarded to
any participant, and the number of shares covered by, and the exercise or base
price of, any outstanding Awards, as the Committee in its sole discretion may
deem appropriate.
DURATION, TERMINATION AND AMENDMENT. The Plan shall remain in effect until
Awards have been granted covering all available shares under the Plan or the
Plan is otherwise terminated by the Board of Directors. The Board may terminate
the Plan at any time, but any such termination shall not affect any outstanding
Awards. The Board of Directors may also amend the Plan from time to time, but
may not, without shareholder approval, materially increase the benefits accruing
to participants under the Plan, materially increase the aggregate number of
shares of Common Stock which may be issued under the Plan, or materially modify
the requirements as to eligibility for participation in the Plan. The Board or
the Committee may also amend the Plan without shareholder approval to take into
account changes in certain laws and regulations.
21
<PAGE>
The following table summarizes the benefits related to outstanding Awards
under the Plan.
PLAN BENEFITS TABLE
1993 STOCK INCENTIVE PLAN
<TABLE>
<CAPTION>
Number of
Number of Dollar Performance Dollar
Name and Position Options Value (4) Shares (5) Value (6)
- - ------------------------------------------------------------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Gerry B. Cameron ............................................ 58,252(1) $ 0 19,417 $ 485,425
Chairman of the Board, Chief
Executive Officer and President,
U. S. Bancorp
Roger L. Breezley ........................................... -- -- -- --
Chairman of the Board and Chief Executive Officer,
U. S. Bancorp
Robert D. Sznewajs .......................................... 20,408(1) 10,204 6,802 170,050
Executive Vice President,
U. S. Bancorp
Arland D. Hatfield .......................................... 19,417(1) 0 5,825 145,625
Executive Vice President,
U. S. Bancorp
Gary T. Duim ................................................ 19,417(1) 0 5,825 145,625
Executive Vice President,
U. S. Bancorp
John D. Eskildsen ........................................... 15,534(1) 0 4,854 121,350
Executive Vice President,
U. S. Bancorp;
President and Chief Executive Officer,
U. S. Bank of Oregon
All Executive Officers as a Group............................ 203,365(2) 10,204 51,460 1,286,500
All Employees as a Group,
Excluding Executive Officers................................ 513,500(3) 0 -- --
<FN>
- - ------------------------
(1) Represents nonqualified options granted during 1994 as described under
"Option Grants in Last Fiscal Year."
(2) Includes nonqualified options granted during 1994 as follows: options for
139,804 shares at an exercise price of $25.75; options for 20,408 shares at
an exercise price of $24.50; options for 22,000 shares at an exercise price
of $27.25; and options for 21,153 shares at an exercise price of $26.00. Of
the foregoing, options for 160,212 shares are subject to acceleration of
exercisability based on the satisfaction of performance goals. Options for
43,153 shares become exercisable as follows: 50% after one year, 80% after
two years, and 100% after three years, and are subject to acceleration upon
the occurrence of a change in control, subject to shareholder approval of
the amendment to the Plan described above under "Plan Amendment Relating to
Change in Control."
(3) Includes nonqualified options granted during 1994 as follows: options for
24,000 shares at an exercise price of $27.25 and options for 489,500 shares
at an exercise price of $26.00. The options become exercisable as follows:
50% after one year, 80% after two years, and 100% after three years. The
options are not subject to acceleration of exercisability based on the
satisfaction of performance goals. The exercisability of such options will
be accelerated upon the occurrence of a change in control.
(4) Dollar value is calculated based on the amount by which the low sale price
for the Common Stock reported in THE WALL STREET JOURNAL for March 1, 1995,
$25.00, exceeds the exercise price of the indicated options, none of which
were exercisable on March 1, 1995.
</TABLE>
22
<PAGE>
<TABLE>
<S> <C>
(5) Represents target awards of performance shares granted in 1994 as described
under "Long-Term Incentive Plans--Awards in Last Fiscal Year."
(6) Dollar value is calculated by multiplying $25.00, the low sale price for
the Common Stock on March 1, 1995, by the number of performance shares.
</TABLE>
Federal Income Tax Consequences of Awards
The following discussion summarizes the principal anticipated federal income
tax consequences of grants of Awards under the Plan to participants and to U. S.
Bancorp.
TAX CONSEQUENCES TO PARTICIPANTS
Incentive Stock Options
Incentive stock options under the Plan are intended to meet the requirements
of Section 422 of the Code. No income results to a participant upon the grant of
an incentive stock option or upon the issuance of shares when the option is
exercised. The amount realized on the sale or taxable exchange of such shares in
excess of the exercise price will be considered a capital gain, except that if
such disposition occurs within one year after exercise of the option or two
years after grant of the option, the participant will recognize compensation
taxable at ordinary income tax rates measured by the amount by which the lesser
of (i) the fair market value on the date of exercise or (ii) the amount realized
on the sale of shares, exceeds the exercise price. For purposes of determining
alternative minimum taxable income, an incentive stock option is treated as a
nonqualified option.
Nonqualified Stock Options
No taxable income is recognized upon the grant of a nonqualified option. In
connection with the exercise of a nonqualified option, a participant will
generally realize ordinary income measured by the difference between the
exercise price and the fair market value of the shares acquired on the date of
exercise. The participant's cost basis in the acquired shares is the fair market
value of the shares on the exercise date. Any gain upon sale of the shares is
capital gain.
Payment of Exercise Price in Shares
The Committee may permit participants to pay all or a portion of the
exercise price using previously owned shares of Common Stock. If an option is
exercised and payment is made in previously held shares, there is no taxable
gain or loss to the participant other than any gain recognized as a result of
exercise of the option, as described above.
Stock Appreciation Rights
The grant of a SAR to a participant will not cause the recognition of income
by the participant. Upon exercise of a SAR, the participant will realize
ordinary income equal to the amount of cash payable to the participant plus the
fair market value of any shares of Common Stock or other property delivered to
the participant.
Restricted and Performance Share Awards
Generally, a participant will not recognize any income upon issuance of an
Award of restricted shares or performance shares which are subject to
forfeiture. Dividends paid with respect to Awards during a restriction period or
performance cycle prior to the vesting of such Awards will be taxable as
ordinary income to the participant. Generally, a participant will recognize
compensation income upon the vesting of restricted shares or performance shares
in an amount equal to the amount of cash payable to the participant plus the
fair market value of shares of Common Stock or other property delivered to the
participant. However, a participant may elect to recognize compensation income,
upon the grant of restricted shares, based on the fair market value of the
shares of Common Stock subject to such Award at the date of grant. If a
participant makes such an election, dividends paid with respect to such
restricted shares will not be treated as compensation income, but rather as
dividend income, and the participant will not recognize additional income when
the restricted shares vest.
TAX CONSEQUENCES TO U. S. BANCORP AND ITS SUBSIDIARIES (THE "EMPLOYERS")
To the extent participants qualify for capital gains treatment with respect
to the sale of shares acquired pursuant to exercise of an incentive stock
option, the Employers will not be entitled to any tax deductions in
23
<PAGE>
connection with incentive stock options. In all other cases, the Employers will
be entitled to receive a federal income tax deduction at the same time and in
the same amount as the amount which is taxable to participants as ordinary
income with respect to Awards. If a participant who receives an Award of
restricted shares makes the special election described above, the Employers will
not be entitled to deduct dividends paid with respect to such restricted shares.
Recommendation by the Board of Directors; Vote Required
The Board of Directors recommends that the shareholders vote FOR approval of
the amendment to the U. S. Bancorp 1993 Stock Incentive Plan relating to
acceleration of Awards upon a change in control. The affirmative vote of the
holders of a majority of the shares of Common Stock present, in person or by
proxy, and entitled to vote on the proposal at the 1995 annual meeting is
required for approval.
PROPOSAL 3: SELECTION OF AUDITORS
The Board of Directors has selected Deloitte & Touche LLP as independent
auditors for the current year. Deloitte & Touche LLP has examined the financial
statements of U. S. Bancorp since January 1, 1969. It is expected that
representatives of Deloitte & Touche LLP will be present at the shareholders
meeting, will have the opportunity to make a statement if they so desire, and
will be available to respond to appropriate questions.
Recommendation by the Board of Directors; Vote Required
Although the selection of auditors is not required to be submitted to a vote
of the shareholders, the Board has decided to ask the shareholders to approve
the selection and recommends that the shareholders vote FOR approval. If a
majority of the shares of Common Stock represented at the annual meeting does
not vote to approve the selection, the Board will reconsider the selection.
SHAREHOLDER PROPOSALS
Shareholder proposals submitted for inclusion in the 1996 proxy materials
and consideration at the 1996 annual meeting must be received on or before
November 13, 1995. Proposals should be sent to U. S. Bancorp, Attention:
Corporate Secretary Division, P.O. Box 2200, Portland, Oregon 97208-2200.
OTHER BUSINESS
While the Notice of Annual Meeting of Shareholders provides for transaction
of such other business as may properly come before the meeting, U. S. Bancorp
has no knowledge of any matters to be presented at the meeting other than the
election of directors, an amendment to the U. S. Bancorp 1993 Stock Incentive
Plan, and selection of auditors. However, the enclosed Proxy gives discretionary
authority in the event that any other matters should be presented. U. S.
Bancorp's Bylaws permit business to be brought before the annual meeting by a
shareholder of record, provided that the shareholder has given written notice to
U. S. Bancorp of his or her intention to present such business at the meeting,
including a brief description of such business, in the time and manner specified
for shareholder director nominations discussed above under "Proposal 1: Election
of Directors."
By order of the Board of Directors
CLIFFORD N. CARLSEN, Jr.
SECRETARY
March 13, 1995
24
<PAGE>
PROXY
U.S. BANCORP
ANNUAL MEETING, APRIL 18, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Franklin G. Drake, Paul A. Redmond, and Benjamin
R. Whiteley, and each of them, Proxies with power of substitution to vote on
behalf of the undersigned all shares which the undersigned may be entitled to
vote at the annual meeting of shareholders of U.S. Bancorp ("Bancorp") on April
18, 1995, and any adjournments thereof, with all powers that the undersigned
would possess if personally present. A majority of the Proxies or substitutes
present at the meeting may exercise all powers granted hereby.
Election of Director, Nominees:
G. Cameron, C. Chambers, F. Drake, R. Dryden, J. Green,
R. Miller, P. Redmond, N. Rogers, B. Whiteley
Change of Address
- - --------------------------------------------------------------------------
- - --------------------------------------------------------------------------
- - --------------------------------------------------------------------------
- - --------------------------------------------------------------------------
(If you have a change of address please indicate above.)
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES ON
THE REVERSE SIDE. YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE
WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. YOUR SHARES CANNOT BE VOTED
UNLESS YOU SIGN AND RETURN THIS CARD.
SEE REVERSE
SIDE
FOLD AND DETACH HERE
<PAGE>
/X/ PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE. 9318
In their discretion, the Proxies are authorized to vote upon such other business
as may properly come before the meeting. This proxy when properly executed will
be voted in the manner directed herein by the undersigned shareholder. If no
direction is made, this proxy will be voted FOR proposals 1, 2, and 3.
FOR WITHHOLD
1. ELECTION OF DIRECTORS / / / /
WITHHELD AS TO ALL NOMINEES
FOR ALL NOMINEES EXCEPT
THE FOLLOWING:
-------------------------
FOR AGAINST ABSTAIN
2. PROPOSAL TO APPROVE AN AMENDMENT TO / / / / / /
THE U.S. BANCORP 1993 STOCK INCENTIVE
PLAN
FOR AGAINST ABSTAIN
3. PROPOSAL TO APPROVE THE SELECTION OF / / / / / /
DELOITTE & TOUCHE LLP AS INDEPENDENT
AUDITORS FOR BANCORP
Signature(s) DATE
------------------------------------------------- --------------
Note: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such. If a corporation, please sign in full corporate
name by President or other authorized officer. If a partnership, please sign in
partnership name by authorized person. PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
FOLD AND DETACH HERE
<PAGE>
U. S. BANCORP
1993 STOCK INCENTIVE PLAN
AS AMENDED AND RESTATED
NOVEMBER 17, 1994
<PAGE>
U. S. BANCORP
1993 STOCK INCENTIVE PLAN
TABLE OF CONTENTS
PAGE
ARTICLE 1 ESTABLISHMENT AND PURPOSE . . . . . . . . . . . . . . . . . . . . 1
1.1 Establishment; Restatement . . . . . . . . . . . . . . . . . . . . 1
1.2 Purpose. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Other Option Plans . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Defined Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Gender and Number. . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 3 ADMINISTRATION. . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.1 General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.2 Composition of the Committee . . . . . . . . . . . . . . . . . . . 7
3.3 Authority of the Committee . . . . . . . . . . . . . . . . . . . . 7
3.4 Delegation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.5 Liability of Committee Members . . . . . . . . . . . . . . . . . . 8
3.6 Costs of Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 4 DURATION OF THE PLAN AND SHARES SUBJECT TO THE PLAN . . . . . . . 8
4.1 Duration of the Plan . . . . . . . . . . . . . . . . . . . . . . . 8
4.2 Shares Subject to the Plan . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 5 ELIGIBILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE 6 AWARDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.1 Types of Awards. . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.2 General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.3 Nonuniform Determinations. . . . . . . . . . . . . . . . . . . . . 10
6.4 Award Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.5 Provisions Governing All Awards. . . . . . . . . . . . . . . . . . 10
ARTICLE 7 OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.1 Types of Options . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.2 General; Limitation on Number of Options . . . . . . . . . . . . . 14
7.3 Option Price . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.4 Option Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.5 Time of Exercise . . . . . . . . . . . . . . . . . . . . . . . . . 15
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<PAGE>
7.6 Special Rules for Incentive Stock Options. . . . . . . . . . . . . 15
7.7 Restricted Shares. . . . . . . . . . . . . . . . . . . . . . . . . 15
7.8 Reload Options . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 8 STOCK APPRECIATION RIGHTS . . . . . . . . . . . . . . . . . . . . 16
8.1 General; Limitation on Number of SARs. . . . . . . . . . . . . . . 16
8.2 Nature of Stock Appreciation Right . . . . . . . . . . . . . . . . 16
8.3 Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.4 Form of Payment. . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 9 RESTRICTED SHARE AWARDS . . . . . . . . . . . . . . . . . . . . . 16
9.1 General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
9.3 Restriction Period . . . . . . . . . . . . . . . . . . . . . . . . 17
9.4 Forfeiture . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
9.5 Settlement of Restricted Share Awards. . . . . . . . . . . . . . . 18
9.6 Rights as a Shareholder. . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE 10 PERFORMANCE SHARE AWARDS . . . . . . . . . . . . . . . . . . . . 18
10.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
10.2 Nature of Performance Share Awards. . . . . . . . . . . . . . . . 18
10.3 Performance Cycles. . . . . . . . . . . . . . . . . . . . . . . . 18
10.4 Performance Goals . . . . . . . . . . . . . . . . . . . . . . . . 18
10.5 Determination of Awards . . . . . . . . . . . . . . . . . . . . . 19
10.6 Timing and Form of Payment. . . . . . . . . . . . . . . . . . . . 19
10.7 Rights as a Shareholder . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE 11 OTHER STOCK BASED AND COMBINATION AWARDS . . . . . . . . . . . . 20
11.1 Other Stock-Based Awards. . . . . . . . . . . . . . . . . . . . . 20
11.2 Combination Awards. . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE 12 DEFERRAL ELECTIONS . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE 13 DIVIDEND EQUIVALENTS . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE 14 ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, ETC. . . . . . . . . 21
14.1 Plan Does Not Restrict Bancorp. . . . . . . . . . . . . . . . . . 21
14.2 Adjustments by the Committee. . . . . . . . . . . . . . . . . . . 21
ARTICLE 15 AMENDMENT AND TERMINATION. . . . . . . . . . . . . . . . . . . . 22
ARTICLE 16 MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . 22
16.1 Tax Withholding . . . . . . . . . . . . . . . . . . . . . . . . . 22
16.2 Unfunded Plan . . . . . . . . . . . . . . . . . . . . . . . . . . 22
16.3 Payments to Trust . . . . . . . . . . . . . . . . . . . . . . . . 22
16.4 Annulment of Awards . . . . . . . . . . . . . . . . . . . . . . . 22
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<PAGE>
16.5 Engaging in Competition With Bancorp. . . . . . . . . . . . . . . 23
16.6 Other Bancorp Benefit and Compensation Programs . . . . . . . . . 23
16.7 Securities Law Restrictions . . . . . . . . . . . . . . . . . . . 23
16.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE 17 SHAREHOLDER APPROVAL . . . . . . . . . . . . . . . . . . . . . . 24
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<PAGE>
U. S. BANCORP
1993 STOCK INCENTIVE PLAN
ARTICLE 1
ESTABLISHMENT AND PURPOSE
1.1 ESTABLISHMENT; RESTATEMENT. U. S. Bancorp, an Oregon corporation
("Bancorp"), established the U. S. Bancorp 1993 Stock Incentive Plan (the
"Plan") effective as of October 21, 1993, amended and restated the Plan
effective February 17, 1994, and further amended and restated the Plan in the
present form effective November 17, 1994, subject to shareholder approval as
provided in Article 17.
1.2 PURPOSE. The purpose of the Plan is to promote and advance the
interests of Bancorp and its shareholders by enabling Bancorp to attract,
retain, and reward key employees of Bancorp and its Subsidiaries. It is also
intended to strengthen the mutuality of interests between such employees and
Bancorp's shareholders. The Plan is designed to serve these purposes by
offering stock options and other equity-based incentive awards, thereby
providing a proprietary interest in pursuing the long-term growth,
profitability, and financial success of Bancorp.
1.3 OTHER OPTION PLANS. The Plan shall be separate from the
following existing plans (the "Prior Plans"):
U. S. Bancorp 1973 Nonqualified Stock Option Plan (the "1973
Plan")
U. S. Bancorp 1984 Incentive Stock Option Plan (the "1984 Plan")
U. S. Bancorp 1985 Stock Option and SAR Plan (the "1985 Plan")
The Plan shall neither affect the operation of the Prior Plans nor be affected
by the Prior Plans, except as follows:
(a) No further stock options will be granted under any of the
Prior Plans after the date the Plan is approved by Bancorp's
shareholders as described in Article 17; and
(b) The number of Shares which may be made subject to Awards
under the Plan shall be adjusted, pursuant to Section 4.2, to reflect
cancellation or expiration of options previously granted under the
Prior Plans.
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<PAGE>
ARTICLE 2
DEFINITIONS
2.1 DEFINED TERMS. For purposes of the Plan, the following terms
shall have the meanings set forth below:
"ACQUIRING PERSON" shall mean any person or related person or
related persons which constitute a "group" for purposes of Section 13(d) and
Rule 13d-5 under the Securities Exchange Act of 1934 (the "Exchange Act"), as
such Section and Rule are in effect as of the Grant Date; provided, however,
that the term Acquiring Person shall not include (a) Bancorp or any of its
Subsidiaries, (b) any employee benefit plan of Bancorp or any of its
Subsidiaries, (c) any entity holding voting capital stock of Bancorp for or
pursuant to the terms of any such employee benefit plan, or (d) any person or
group solely because such person or group has voting power with respect to
capital stock of Bancorp arising from a revocable proxy or consent given in
response to a public proxy or consent solicitation made pursuant to the Exchange
Act.
"AWARD" means an award or grant made to a Participant of Options,
Stock Appreciation Rights, Restricted Share Awards, Performance Share Awards, or
Other Stock-Based Awards pursuant to the Plan.
"AWARD AGREEMENT" means an agreement as described in Section 6.4
evidencing an Award under the Plan.
"BOARD" means the Board of Directors of Bancorp.
"CHANGE IN CONTROL" shall mean:
(a) A change in control of Bancorp of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A as in effect on the Grant Date pursuant to the Exchange
Act; provided that, without limitation, such a change in control shall
be deemed to have occurred at such time as any Acquiring Person
hereafter becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of 30 percent or more
of the combined voting power of Voting Securities; or
(b) During any period of 12 consecutive calendar months,
individuals who at the beginning of such period constitute the Board
cease for any reason to constitute at least a majority thereof unless
the election, or the nomination for election, by Bancorp shareholders
of each new director was approved by a vote of at least a majority of
the directors then still in office who were directors at the beginning
of the period; or
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<PAGE>
(c) There shall be consummated (i) any consolidation or merger
of Bancorp in which Bancorp is not the continuing or surviving
corporation or pursuant to which Voting Securities would be converted
into cash, securities, or other property, other than a merger of
Bancorp in which the holders of Voting Securities immediately prior to
the merger have the same proportionate ownership of common stock of
the surviving corporation immediately after the merger, or (ii) any
sale, lease, exchange, or other transfer (in one transaction or a
series of related transactions) of all, or substantially all, of the
assets of Bancorp, provided that any such consolidation, merger, sale,
lease, exchange, or other transfer consummated at the insistence of an
appropriate banking regulatory agency shall not constitute a Change in
Control; or
(d) Approval by the shareholders of Bancorp of any plan or
proposal for the liquidation or dissolution of Bancorp.
"CHANGE IN CONTROL DATE" shall mean the first date following the Grant
Date on which a Change in Control has occurred.
"CODE" means the Internal Revenue Code of 1986, as amended and in
effect from time to time, or any successor thereto, together with rules,
regulations, and interpretations promulgated thereunder. Where the context so
requires, any reference to a particular Code section shall be construed to refer
to the successor provision to such Code section.
"COMMITTEE" means the Compensation Committee of the Board (or a
successor committee appointed by the Board to administer the Plan as provided in
Article 3 of the Plan).
"COMMON STOCK" means the $5 par value Common Stock of Bancorp or any
security of Bancorp issued in substitution, exchange, or lieu thereof.
"CONTINUING RESTRICTION" means a Restriction described in Sections
6.5(g), 16.4, 16.5, and 16.7 of the Plan and any other Restrictions expressly
designated by the Committee in an Award Agreement as a Continuing Restriction.
"BANCORP" means U. S. Bancorp, an Oregon corporation, or any successor
corporation.
"DISABILITY" means the condition of being permanently "disabled"
within the meaning of Section 22(e)(3) of the Code, namely being unable to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a continuous period of
not less than 12 months. However, the Committee may, by
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<PAGE>
resolution, change the foregoing definition of "Disability" or may adopt a
different definition for purposes of specific Awards.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
and in effect from time to time, or any successor statute. Where the context so
requires, any reference to a particular section of the Exchange Act, or to any
rule promulgated under the Exchange Act, shall be construed to refer to
successor provisions to such section or rule.
"FAIR MARKET VALUE" - For all purposes of the Plan, the "Fair Market
Value" of Shares on a particular day shall be determined without regard to any
restrictions (other than a restriction which, by its terms, will never lapse)
and shall mean:
(a) The low sale price as reported for that day in THE WALL
STREET JOURNAL by the National Market System of the National
Association of Securities Dealers Automated Quotation System (NASDAQ);
or
(b) If the low sale price is not reported in THE WALL STREET
JOURNAL for that day, the low sale price quoted by NASDAQ for that
day.
If no sale price is reported in THE WALL STREET JOURNAL or quoted by
NASDAQ for that day, the low sale price reported or quoted for the immediately
preceding day on which it was reported or quoted shall be used. In the event
Common Stock becomes listed on a stock exchange, the Committee may, by
resolution, revise the foregoing definition of Fair Market Value by reference to
trading prices as reported for such stock exchange.
"INCENTIVE STOCK OPTION" or "ISO" means any Option granted pursuant
to the Plan that is intended to be and is specifically designated in its Award
Agreement as an "incentive stock option" within the meaning of Section 422 of
the Code.
"NONQUALIFIED OPTION" or "NQO" means any Option granted pursuant to
the Plan that is not a Statutory Option.
"OPTION" includes a Statutory Option, an ISO, and an NQO.
"OTHER STOCK-BASED AWARD" means an Award as defined in Section 11.1.
"PARTICIPANT" means an employee of Bancorp or a Subsidiary who is
granted an Award under the Plan.
"PERFORMANCE SHARE AWARD" means an Award granted pursuant to the
provisions of Article 10 of the Plan, the Vesting of which is contingent on
performance attainment.
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<PAGE>
"PERFORMANCE CYCLE" means a designated performance period pursuant to
the provisions of Section 10.3 of the Plan.
"PERFORMANCE GOAL" means a designated performance objective pursuant
to the provisions of Section 10.4 of the Plan.
"PERFORMANCE SHARE" means a Share granted under and subject to a
Performance Share Award.
"PLAN" means this U. S. Bancorp 1993 Stock Incentive Plan, as set
forth herein and as it may be hereafter amended and from time to time.
"PRIOR PLANS" mean the previous stock option plans of Bancorp
described in Section 1.3.
"ROAA" or "RETURN ON AVERAGE ASSETS" means a performance goal equal
to, for any fiscal period, the ratio, expressed as a percentage, of Bancorp's
net income for the period (excluding extraordinary gains from the sale of
assets) to the daily average of the book value of Bancorp's assets during the
period.
"REPORTING PERSON" means a Participant who is subject to the reporting
requirements of Section 16(a) of the Exchange Act.
"RESTRICTED SHARE" means a Share granted under and subject to a
Restricted Share Award.
"RESTRICTED SHARE AWARD" means an Award granted pursuant to the
provisions of Article 9 of the Plan.
"RESTRICTION" means a provision in the Plan or in an Award Agreement
which limits the exercisability or transferability, or which governs the
forfeiture, of an Award or the Shares, cash, or other property payable pursuant
to an Award.
"RETIREMENT" means retirement under the U. S. Bancorp Retirement Plan.
However, the Committee may, by resolution, change the foregoing definition of
"Retirement" or may adopt a different definition for purposes of specific
Awards.
"SHARE" means a share of Common Stock.
"STATUTORY OPTION" means an Incentive Stock Option or any other form
of stock option that is intended to meet the requirements specified in the Code
(as the Code may be amended from time to time) for favorable income tax
treatment for the Participant, for Bancorp, or for both.
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<PAGE>
"STOCK APPRECIATION RIGHT" or "SAR" means an Award providing a benefit
based on the appreciation of Common Stock granted pursuant to the provisions of
Article 8 of the Plan.
"SUBSIDIARY" means a "subsidiary corporation" of Bancorp, within the
meaning of Section 425 of the Code, namely any corporation in which Bancorp
directly or indirectly controls 50 percent or more of the total combined voting
power of all classes of stock having voting power.
"TSR" or "TOTAL SHAREHOLDER RETURN" means a performance goal equal to,
for any fiscal year, the ratio, expressed as a percentage, of:
(a) The excess of:
(1) The average daily stock price (based on the mean
between the high and low stock trading prices for each day)
of the Shares for each trading day of the last fiscal
quarter of a fiscal year of Bancorp (or, for purposes of a
short fiscal period, of the last fiscal quarter of such
period); less
(2) The average daily stock price (computed in the
same manner as described above) of the Shares for the last
fiscal quarter of the preceding fiscal year (the "Base
Price"); plus
(3) The sum of all cash dividends paid with respect to
the Shares during the fiscal year (or, for purposes of a
short fiscal period, during the portion of the fiscal year),
treating each cash dividend as if it was reinvested in
Shares at the Base Price on the dividend payment date; over
(b) The Base Price.
"VEST" or "VESTED" means:
(a) In the case of an Award that requires exercise, to be or to
become immediately and fully exercisable and free of all Restrictions
(other than Continuing Restrictions);
(b) In the case of an Award that is subject to forfeiture, to be
or to become nonforfeitable, freely transferable, and free of all
Restrictions (other than Continuing Restrictions);
(c) In the case of an Award that is required to be earned by
attaining specified Performance Goals, to be or to become earned and
nonforfeitable,
- 30 -
<PAGE>
freely transferable, and free of all Restrictions (other than Continuing
Restrictions); or
(d) In the case of any other Award as to which payment is not
dependent solely upon the exercise of a right, election, exercise, or
option, to be or to become immediately payable and free of all
Restrictions (except Continuing Restrictions).
"VOTING SECURITIES" shall mean Bancorp's issued and outstanding
securities ordinarily having the right to vote at elections of directors.
2.2 GENDER AND NUMBER. Except where otherwise indicated by the
context, any masculine or feminine terminology used in the Plan shall also
include the opposite gender; and the definition of any term in Section 2.1 in
the singular shall also include the plural, and vice versa.
ARTICLE 3
ADMINISTRATION
3.1 GENERAL. The Plan shall be administered by the Committee or a
successor committee as described in Section 3.2.
3.2 COMPOSITION OF THE COMMITTEE. The Committee shall consist of not
less than a sufficient number of members of the Board who are "disinterested
persons" within the meaning of Rule 16b-3 under the Exchange Act. The Board may
from time to time remove members from, or add members to, the Committee.
Vacancies on the Committee, however caused, shall be filled by the Board. The
Board may, without amendment of the Plan, transfer the duties of the Committee
to another committee meeting the requirements of Rule 16b-3.
3.3 AUTHORITY OF THE COMMITTEE. The Committee shall have full power
and authority to administer the Plan in its sole discretion, including the
authority to:
(a) Construe and interpret the Plan and any Award Agreement;
(b) Promulgate, amend, and rescind rules and procedures
relating to the implementation of the Plan;
(c) Select the employees who shall be granted Awards;
(d) Determine the number and types of Awards to be granted to
each such Participant;
(e) Determine the number of Shares, or Share equivalents, to
be subject to each Award;
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<PAGE>
(f) Determine the option price, purchase price, base price, or
similar feature for any Award; and
(g) Determine all the terms and conditions of all Award
Agreements, consistent with the requirements of the Plan.
Decisions of the Committee, or any delegate as permitted by the Plan, shall be
final, conclusive, and binding on all Participants.
3.4 DELEGATION. Notwithstanding the foregoing, the
Committee may delegate to one or more officers of Bancorp the authority to
exercise on behalf of the Committee any power, authority, or discretion of the
Committee with respect to Awards granted to Participants who are not Reporting
Persons. Matters which the Committee may delegate include, but are not limited
to: (a) determining the recipients, types, amounts, and terms of Awards to be
granted to Participants who are not Reporting Persons; (b) the acceleration of
the time when such an Award becomes Vested; and (c) elections and determinations
with respect to exercise or payment of such an Award.
3.5 LIABILITY OF COMMITTEE MEMBERS. No member of the Committee shall
be liable for any action or determination made in good faith with respect to the
Plan, any Award, or any Participant.
3.6 COSTS OF PLAN. The costs and expenses of administering the Plan
shall be borne by Bancorp.
ARTICLE 4
DURATION OF THE PLAN AND SHARES SUBJECT TO THE PLAN
4.1 DURATION OF THE PLAN. The Plan is effective October 21, 1993,
subject to approval by Bancorp's shareholders as provided in Article 17. The
Plan shall remain in effect until Awards have been granted covering all the
available Shares or the Plan is otherwise terminated by the Board. Termination
of the Plan shall not affect outstanding Awards.
4.2 SHARES SUBJECT TO THE PLAN.
(a) SHARES. The shares which may be made subject to Awards under the
Plan shall be Shares of Common Stock, which may be either authorized and
unissued Shares or reacquired Shares. No fractional Shares shall be issued
under the Plan.
(b) GENERAL LIMITATION ON AWARDS. Subject to adjustment pursuant to
Article 14, the maximum number of Shares for which Awards may be granted under
the Plan shall not exceed 6,000,000 Shares, plus the number of Shares that
remain available for grants of options under the Prior Plans as of the date the
Plan is approved by Bancorp's shareholders as provided in Article 17. The
aggregate number of Shares which may be subject to
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Awards under the Plan and options under the Prior Plans (including options
previously granted and exercised or outstanding under the Prior Plans as of the
effective date of the Plan) shall not exceed 8,250,000 Shares, as adjusted under
the Plan and the Prior Plans to reflect changes in capitalization.
(c) ANNUAL LIMITATION. Subject to adjustment pursuant to Article 14,
the maximum number of Shares for which Restricted Share Awards may be granted
during any calendar year shall not exceed 400,000 Shares.
(d) CANCELLATION OR EXPIRATION OF AWARDS. If an Award under the Plan
(or any option previously granted under the Prior Plans) is canceled or expires
for any reason prior to having been fully Vested or exercised by a Participant
or is settled in cash in lieu of Shares or is exchanged for other Awards, all
Shares covered by such Awards (or options under the Prior Plans) shall again
become available for additional Awards under the Plan.
ARTICLE 5
ELIGIBILITY
Officers and other key employees of Bancorp and its Subsidiaries
(including employees who may also be directors of Bancorp or a Subsidiary) who,
in the Committee's judgment, are or will be contributors to the long-term
success of Bancorp shall be eligible to receive Awards under the Plan.
ARTICLE 6
AWARDS
6.1 TYPES OF AWARDS. The types of Awards that may be granted under
the Plan are:
(a) Options governed by Article 7 of the Plan;
(b) Stock Appreciation Rights governed by Article 8 of the
Plan;
(c) Restricted Share Awards governed by Article 9 of the Plan;
(d) Performance Share Awards governed by Article 10 of the
Plan; and
(e) Other Stock-Based Awards or combination awards governed by
Article 11 of the Plan.
In the discretion of the Committee, any Award may be granted alone, in addition
to, or in tandem with other Awards under the Plan.
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6.2 GENERAL. Subject to the limitations of the Plan, the Committee
may cause Bancorp to grant Awards to such Participants, at such times, of such
types, in such amounts, for such periods, with such option prices, purchase
prices, or base prices, and subject to such terms, conditions, limitations, and
restrictions as the Committee, in its discretion, shall deem appropriate.
Awards may be granted as additional compensation to a Participant or in lieu of
other compensation to such Participant. A Participant may receive more than one
Award and more than one type of Award under the Plan.
6.3 NONUNIFORM DETERMINATIONS. The Committee's determinations under
the Plan or under one or more Award Agreements, including without limitation,
(a) the selection of Participants to receive Awards, (b) the type, form, amount,
and timing of Awards, (c) the terms of specific Award Agreements, and (d)
elections and determinations made by the Committee with respect to exercise or
payments of Awards, need not be uniform and may be made by the Committee
selectively among Participants and Awards, whether or not Participants are
similarly situated.
6.4 AWARD AGREEMENTS. Each Award shall be evidenced by a written
Award Agreement between Bancorp and the Participant. Award Agreements may,
subject to the provisions of the Plan, contain any provision approved by the
Committee.
6.5 PROVISIONS GOVERNING ALL AWARDS. All Awards shall be subject to
the following provisions:
(a) ALTERNATIVE AWARDS. If any Awards are designated in their
Award Agreements as alternative to each other, the exercise of all
or part of one Award automatically shall cause an immediate equal
(or pro rata) corresponding termination of the other alternative
Award or Awards.
(b) RIGHTS AS SHAREHOLDERS. No Participant shall have any
rights of a shareholder with respect to Shares subject to an Award
until such Shares are issued in the name of the Participant.
(c) EMPLOYMENT RIGHTS. Neither the adoption of the Plan nor
the granting of any Award shall confer on any person the right to
continued employment with Bancorp or any Subsidiary, nor shall it
interfere in any way with the right of Bancorp or a Subsidiary to
terminate such person's employment at any time for any reason,
with or without cause.
(d) NONTRANSFERABLE. Each Award (other than Shares after they
Vest) shall not be transferable otherwise than by will or the laws
of descent and distribution and shall be exercisable (if exercise
is required) during the lifetime of the Participant, only by the
Participant or, in the event the Participant becomes legally
incompetent, by the Participant's guardian or legal
representative. Notwithstanding the foregoing, Awards may be
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surrendered to Bancorp pursuant to Section 6.5(h) in connection with the
payment of the purchase or option price of another Award.
(e) TERMINATION OF EMPLOYMENT. The terms and conditions under
which an Award may be exercised, if at all, after a Participant's
termination of employment shall be determined by the Committee and
specified in the applicable Award Agreement.
(f) PAYMENT OF PURCHASE PRICE AND WITHHOLDING. The Committee,
in its discretion, may include in any Award Agreement a provision
permitting the Participant to pay the purchase or option price, if
any, for the Shares or other property issuable pursuant to the
Award, or the Participant's federal, state, or local tax, or tax
withholding, obligation with respect to such issuance in whole or
in part by any one or more of the following:
(i) By delivering previously owned Shares (including
Restricted Shares or Performance Shares, whether or not
Vested);
(ii) By surrendering other outstanding Vested Awards
under the Plan denominated in Shares or in Share equivalent
units;
(iii) By reducing the number of Shares or other
property otherwise Vested and issuable pursuant to the
Award;
(iv) By delivering to Bancorp a promissory note
payable on such terms and over such period as the Committee
shall determine;
(v) By delivery (in a form satisfactory to the
Committee) of an irrevocable direction to a securities
broker acceptable to the Committee:
(A) To sell Shares subject to the Award and
to deliver all or a part of the sales proceeds to
Bancorp in payment of all or a part of the option
price and taxes or withholding taxes attributable
to the issuance; or
(B) To pledge Shares subject to the Award to
the broker as security for a loan and to deliver
all or a part of the loan proceeds to Bancorp in
payment of all or a part of the option
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price and taxes or withholding taxes attributable to the
issuance; or
(vi) In any combination of the foregoing or in any
other form approved by the Committee.
If Restricted Shares or Performance Shares are surrendered in full
or partial payment of the purchase or option price of Shares
issuable under an Award, a corresponding number of the Shares
issued upon exercise of the Award shall be Restricted Shares or
Performance Shares subject to the same Restrictions as the
surrendered Restricted Shares or Performance Shares. Shares
withheld or surrendered as described above shall be valued based
on their Fair Market Value on the date of the transaction. Any
Shares withheld or surrendered with respect to a Reporting Person
shall be subject to such additional conditions and limitations as
the Committee may impose to comply with the requirements of the
Exchange Act.
(g) REPORTING PERSONS. With respect to all
Awards granted to Reporting Persons:
(i) Options (or other Awards
requiring exercise) shall not be
exercisable until at least six months
after the date the Award was granted,
except in the case of the death or
Disability of the Participant; and
(ii) Shares issued pursuant to any
Award (other than Options or other
Awards requiring exercise) may not be
sold by the Participant for at least six
months after acquisition, except in the
case of the death or Disability of the
Participant;
provided, however, that (unless an Award Agreement
expressly provides otherwise) the limitation of
this Section 6.5(g) shall apply only if or to the
extent required by Rule 16b-3 under the Exchange
Act. Award Agreements for Awards to Reporting
Persons shall also comply with any future
restrictions imposed by such Rule 16b-3.
(h) SERVICE PERIODS. At the time of
granting Awards, the Committee may specify, by
resolution or in the Award Agreement, the period
or periods of service performed or to be performed
by the Participant in connection with the grant of
the Award.
(i) CHANGE IN CONTROL PROVISIONS. Each
Award Agreement with respect to an Award granted
after November 17, 1994, shall include a provision
that as of a Change in Control Date:
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(A) An Option or other
Award requiring exercise shall
become fully and immediately
exercisable, notwithstanding
any other limitations on
exercise;
(B) An Award subject to
Restrictions shall become
fully Vested; or
(C) A Performance Share
or other Award subject to
Performance Goals (other than
an Option Award where the
exercisability of the Option
is wholly or partially based
on attaining Performance
Goals, which shall be governed
by paragraph A above) shall be
deemed to have been earned to
the extent of the greater of:
(1) A number
of Shares determined
by the Committee
based on the extent
to which the
Performance Goals
specified in the
Award Agreement have
been achieved during
the portion of the
Performance Cycle
ending on the last
day of the last
fiscal quarter of
Bancorp ending on or
before the Change in
Control Date; or
(2) A pro rata
number of Shares
equal to the product
of the Target Shares
identified in the
Award Agreement
multiplied by a
fraction with a
numerator equal to
the whole number of
calendar months
beginning on or
after the Grant Date
and ending on or
before the Change in
Control Date and a
denominator equal to
the number of
calendar months in
the entire
Performance Cycle
specified in the
Award Agreement.
Each Award Agreement with respect to outstanding
Option Awards (other than Option Awards where the
exercisability of the Option can be accelerated
based on attaining Performance Goals) granted
before November 17, 1994,
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shall be amended to include similar Change in Control provisions.
However, each Award Agreement that includes a Change in Control
provision shall be subject to the following limitation:
If the Committee in good faith
adopts a resolution that (i) the use of
the pooling method of accounting with
respect to the Change in Control
transaction would be materially
beneficial to Bancorp, and (ii) the
acceleration of the exercisability,
Vesting, or earning of the Award in
connection with the Change in Control
would have a materially adverse effect
on Bancorp's ability to use the pooling
method of accounting with respect to the
Change in Control, then the Award shall
not be accelerated on account of the
Change in Control.
Unless the Committee expressly provides otherwise
in a specific Award Agreement, an Award shall
become exercisable, become Vested, or become
earned as of a Change in Control Date only if, or
to the extent, such acceleration in the
exercisability, Vesting, or earning of the Award
does not result in an "excess parachute payment"
within the meaning of Section 280G(b) of the Code.
ARTICLE 7
OPTIONS
7.1 TYPES OF OPTIONS. Options granted under the Plan may be in the
form of Statutory Options (including Incentive Stock Options) or Nonqualified
Options. The grant of each Option and the Award Agreement governing each Option
shall identify the Option as an ISO, other Statutory Option, or an NQO. In the
event the Code is amended to provide for tax-favored forms of Statutory Options
other than or in addition to Incentive Stock Options, the Committee may grant
Options under the Plan meeting the requirements of such forms of Statutory
Options.
7.2 GENERAL; LIMITATION ON NUMBER OF OPTIONS. Options shall be
subject to the terms and conditions set forth in Article 6 and this Article 7
and Award Agreements governing Options shall contain such additional terms and
conditions, not inconsistent with the express provisions of the Plan, as the
Committee shall deem desirable. The number of Shares subject to Options granted
under the Plan to any Participant during any five-calendar-year period shall not
exceed 500,000.
7.3 OPTION PRICE. Each Award Agreement for Options shall state the
option exercise price per Share of Common Stock purchasable under the Option,
which shall not be less than 100 percent of the Fair Market Value of a Share on
the date an Option is granted.
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7.4 OPTION TERM. The Award Agreement for each Option shall specify
the term, which shall not exceed 10 years from the date of grant, during which
the Option may be exercised, as determined by the Committee.
7.5 TIME OF EXERCISE. The Award Agreement for each Option shall
specify, as determined by the Committee:
(a) The time or times when the Option shall become exercisable
and whether the Option shall become exercisable in full or in
graduated amounts based on: (i) continuation of employment over a
period specified in the Award Agreement, (ii) satisfaction of
performance goals or criteria specified in the Award Agreement, or
(iii) a combination of continuation of employment and satisfaction
of performance goals or criteria;
(b) Such other terms, conditions, and restrictions as to when
the Option may be exercised as shall be determined by the
Committee; and
(c) The extent, if any, that the Option shall remain
exercisable after the Participant ceases to be an employee of
Bancorp or a Subsidiary.
An Award Agreement for an Option may, in the discretion of the Committee,
provide whether, and to what extent, the time when an Option becomes exercisable
shall be accelerated or otherwise modified in the event of the death,
Disability, or Retirement of the Participant. The Committee may, at any time in
its discretion, accelerate the time when all or any portion of an outstanding
Option becomes exercisable.
7.6 SPECIAL RULES FOR INCENTIVE STOCK OPTIONS. In the case of an
Option designated as an Incentive Stock Option, the terms of the Option and the
Award Agreement shall conform with the statutory and regulatory requirements
specified pursuant to Section 422 of the Code, as in effect on the date such ISO
is granted. ISOs may be granted only to employees of Bancorp or a Subsidiary.
ISOs may not be granted under the Plan after ten years following the date
specified in Section 4.1, unless the ten-year limitation of Section 422(b)(2) of
the Code is removed or extended.
7.7 RESTRICTED SHARES. In the discretion of the Committee, the Award
Agreement for an Option may provide that the Shares issuable upon exercise of an
Option shall be Restricted Shares, subject to Restrictions specified in the
Award Agreement.
7.8 RELOAD OPTIONS. The Committee, in its discretion, may provide in
an Award Agreement for an Option that in the event all or a portion of the
Option is exercised by the Participant using previously acquired Shares, the
Participant shall automatically be granted (subject to the available pool of
Shares subject to grants of Awards as specified in Section 4.2 of the Plan) a
replacement Option (with an option price equal to the Fair Market Value of a
Share on the date of such exercise) for a number of Shares equal to (or equal to
a portion of) the number of Shares surrendered upon exercise of the Option.
Such
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Reload Option features may be subject to such terms and conditions as the
Committee shall determine, including without limitation, a condition that the
Participant retain the Shares issued upon exercise of the Option for a specified
period of time.
ARTICLE 8
STOCK APPRECIATION RIGHTS
8.1 GENERAL; LIMITATION ON NUMBER OF SARS. Stock Appreciation Rights
or SARs shall be subject to the terms and conditions set forth in Article 6 and
this Article 8 and Award Agreements governing Stock Appreciation Rights shall
contain such additional terms and conditions, not inconsistent with the express
terms of the Plan, as the Committee shall deem desirable. The number of Shares
subject to SARs granted under the Plan to any Participant during any
five-calendar-year period shall not exceed 500,000.
8.2 NATURE OF STOCK APPRECIATION RIGHT. A Stock Appreciation Right
is an Award entitling a Participant to receive an amount equal to the excess
(or, if the Committee shall determine at the time of grant, a portion of the
excess) of the Fair Market Value of a Share of Common Stock on the date of
exercise of the SAR over the base price, as described below, on the date of
grant of the SAR, multiplied by the number of Shares with respect to which the
SAR shall have been exercised. The base price shall be designated by the
Committee in the Award Agreement for the SAR and shall be the Fair Market Value
of a Share on the grant date of the SAR or such other higher price as the
Committee shall determine.
8.3 EXERCISE. A Stock Appreciation Right may be exercised by a
Participant in accordance with procedures established by the Committee. The
Committee may also provide that a SAR shall be automatically exercised on one or
more specified dates or upon the satisfaction of performance goals or criteria
or one or more other conditions specified by the Committee in the SAR Award
Agreement. In the case of SARs granted to Reporting Persons, exercise of the
SAR shall be limited by the Committee to the extent required to comply with the
applicable requirements of Rule 16b-3 under the Exchange Act.
8.4 FORM OF PAYMENT. Payment upon exercise of a Stock Appreciation
Right may be made in cash, in installments, in Shares, or in any other manner or
combination of such methods, or in any other form as the Committee, in its
discretion, shall determine.
ARTICLE 9
RESTRICTED SHARE AWARDS
9.1 GENERAL. Restricted Share Awards shall be subject to the terms
and conditions of Article 6 and this Article 9 and Award Agreements governing
Restricted Shares shall contain such additional terms and conditions, not
inconsistent with the express provisions of the Plan, as the Committee shall
deem desirable.
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9.2 NATURE OF RESTRICTED SHARE AWARDS. A Restricted Share is an
Award of Shares transferred to a Participant subject to such terms and
conditions as the Committee deems appropriate, including, without limitation,
restrictions on the sale, assignment, transfer, or other disposition of such
Restricted Shares and may include a requirement that the Participant forfeit
such Restricted Shares back to Bancorp upon termination of Participant's
employment for specified reasons within a specified period of time or upon other
conditions, as set forth in the Award Agreement for such Restricted Shares.
Each Participant receiving a Restricted Share may be issued a stock certificate
in respect of such Shares, registered in the name of such Participant, and
bearing a legend referring to the Restrictions set forth in the Award Agreement,
and shall execute a stock power in blank with respect to the Shares evidenced by
such certificate. The certificate evidencing such Restricted Shares and the
stock power shall be held in custody by Bancorp until the Restrictions thereon
shall have lapsed.
9.3 RESTRICTION PERIOD. Award Agreements for Restricted Share Awards
shall provide that Restricted Shares may not be transferred, and may provide
that, in order for a Participant to Vest in such Restricted Shares, the
Participant must remain in the employment of Bancorp or its Subsidiaries,
subject to relief for reasons specified in the Award Agreement, for a period
commencing on the grant date of the Award and ending on such later date or dates
as the Committee may designate at the time of the Award (the "Restriction
Period"). During the Restriction Period, a Participant may not sell, assign,
transfer, pledge, encumber, or otherwise dispose of a Restricted Share Award or
the Restricted Shares received under or governed by the Restricted Share Award
(other than surrender to Bancorp pursuant to Section 6.5(h)). The Committee, in
its sole discretion, may provide for the lapse of restrictions in installments
during the Restriction Period. Upon expiration of the applicable Restriction
Period (or lapse of Restrictions during the Restriction Period where the
Restrictions lapse in installments) the Participant shall be entitled to
settlement of the Restricted Share Award or portion thereof, as the case may be.
Although Restricted Share Awards shall usually Vest based on continued
employment and Performance Share Awards under Article 10 shall usually Vest
based on attainment of Performance Goals, the Committee, in its discretion, may
condition Vesting of Restricted Share Awards on attainment of Performance Goals
as well as continued employment. In such case, the Restriction Period for such
a Restricted Share Award shall include the period prior to satisfaction of the
Performance Goals. The Committee, in its discretion, may accelerate the Vesting
of any Restricted Share Award.
9.4 FORFEITURE. If a Participant ceases to be an employee of Bancorp
or a Subsidiary during the Restriction Period for any reason other than reasons
which may be specified in an Award Agreement (such as death, Disability, or
Retirement) or otherwise fails to satisfy the conditions specified in an Award
Agreement, the Award Agreement may require that all non-Vested Restricted Shares
previously granted to the Participant be forfeited and returned to Bancorp.
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9.5 SETTLEMENT OF RESTRICTED SHARE AWARDS. Upon Vesting of a
Restricted Share Award, the legend on such Shares will be removed and the
Participant's stock power will be returned and the Shares will no longer be
Restricted Shares.
9.6 RIGHTS AS A SHAREHOLDER. A Participant shall have, with respect
to unforfeited Restricted Shares for which a certificate has been issued in the
Participant's name under a Restricted Share Award, all the rights of a
shareholder of Bancorp, including the right to vote the Shares, and the right to
receive any cash dividends. Stock dividends issued with respect to Restricted
Shares shall be treated as additional Restricted Shares covered by the
Restricted Share Award and shall be subject to the same Restrictions.
ARTICLE 10
PERFORMANCE SHARE AWARDS
10.1 GENERAL. Performance Share Awards shall be subject to the terms
and conditions set forth in Article 6 and this Article 10 and Award Agreements
governing Performance Share Awards shall contain such other terms and conditions
not inconsistent with the express provisions of the Plan, as the Committee shall
deem desirable.
10.2 NATURE OF PERFORMANCE SHARE AWARDS. A Performance Share Award
is an Award of Shares granted to a Participant subject to such terms and
conditions as the Committee deems appropriate, including, without limitation,
the requirement that the Participant forfeit such Award or a portion thereof in
the event specified performance criteria are not met within a designated period
of time. A Participant receiving a Performance Share Award may (but need not)
be issued a stock certificate in respect of such Shares, registered in the name
of Participant, and bearing a legend referring to the terms and conditions set
forth in the Award Agreement and shall execute a stock power in blank with
respect to the Shares evidenced by such certificate. Any certificate evidencing
such Performance Shares and the stock power shall be held in custody by Bancorp
until the Performance Goals are satisfied.
10.3 PERFORMANCE CYCLES. For each Performance Share Award, the
Committee shall designate a performance period (the "Performance Cycle") with a
duration to be determined by the Committee in its discretion within which
specified Performance Goals are to be attained. There may be several
Performance Cycles in existence at any one time and the duration of Performance
Cycles may differ from each other.
10.4 PERFORMANCE GOALS. The Committee shall establish Performance
Goals for each Performance Cycle on the basis of such criteria and to accomplish
such objectives as the Committee may from time to time select. Performance
Goals selected by the Committee may include performance criteria for Bancorp, a
Subsidiary, or an operating group, division, or unit of Bancorp and its
Subsidiaries. During any Performance Cycle, the Committee may adjust the
Performance Goals for such Performance Cycle as it deems equitable in
recognition of unusual or nonrecurring events affecting Bancorp, changes in
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applicable tax laws or accounting principles, or such other factors as the
Committee may determine.
10.5 DETERMINATION OF AWARDS. As soon as practicable after the end
of a Performance Cycle, the Committee shall determine the extent to which
Performance Share Awards have been earned on the basis of performance in
relation to the established Performance Goals.
10.6 TIMING AND FORM OF PAYMENT. Settlement of earned Performance
Shares shall be made to the Participant as soon as practicable after the
expiration of the Performance Cycle and the Committee's determination under
Section 10.5 by the issuance and delivery of unrestricted Shares equal to the
number of earned Performance Shares or by a combination of cash and Performance
Shares, as determined by the Committee.
10.7 RIGHTS AS A SHAREHOLDER. Unless a stock certificate is issued
with respect to a Performance Share Award as provided in Section 10.2, a
Participant shall not have any rights as a shareholder with respect to unearned
Performance Shares. With respect to unearned Performance Shares for which a
certificate has been issued in the Participants name under a Performance Share
Award, a Participant shall have all the rights of a shareholder of Bancorp,
including the right to vote the Shares, and the right to receive any cash
dividends. Stock dividends issued with respect to Performance Shares shall be
treated as additional Performance Shares covered by the Performance Share Award
and shall be subject to the same terms and conditions.
10.8 AWARDS FOR EXECUTIVE OFFICERS. All Performance Share Awards to
executive officers of Bancorp and its Subsidiaries shall be subject to the
following specific requirements:
(a) The Performance Goals shall be Bancorp's Return on Average
Assets ("ROAA") and the extent (expressed as a percentage) by
which Bancorp's Total Shareholder Return ("TSR") exceeds the
median TSR of the Standard and Poors Regional Banks index (the
"TSR Percentage").
(b) The maximum number of Shares which may be granted to any
executive officer pursuant to Performance Share Awards granted in
any calendar year shall not exceed 60,000 (subject to adjustment
pursuant to Article 14.
(c) For Performance Share Awards granted prior to November 17,
1994, upon the occurrence of a Change in Control Date prior to the
expiration of a Performance Cycle, the number of Performance
Shares shall (except as otherwise provided in this Section 10.8(c)
or in Section 10.8(d)) be determined based on the achievement of
the ROAA and TSR Percentage goals during the portion of the
Performance Cycle ending on the last day of the last fiscal
quarter of Bancorp ending on or before the Change in Control
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Date. However, if the Committee in good faith adopts a resolution that
(i) the use of the pooling method of accounting with respect to the
Change in Control transaction would be materially beneficial to Bancorp
and (ii) the computation of earned Performance Shares as described in
this Section 10.8(c) would have a materially adverse effect on Bancorp's
ability to use the pooling method, then the provisions of this
Section 10.8(c) shall not apply and the earned Performance Shares shall
be computed based on the full Performance Cycle.
(d) Unless the Committee expressly provides otherwise in a
specific Award Agreement, the acceleration of the earning of the
Performance Shares pursuant to the provisions of paragraph 10.8(c)
shall occur only if, or to the extent, such acceleration of the
earning of the Performance Shares does not result in an "excess
parachute payment" within the meaning of Section 280G(b) of the
Code.
ARTICLE 11
OTHER STOCK BASED AND COMBINATION AWARDS
11.1 OTHER STOCK-BASED AWARDS. The Committee may grant other Awards
under the Plan pursuant to which Shares are or may in the future be acquired, or
Awards denominated in or measured by Share equivalent units, including Awards
valued using measures other than the market value of Shares. Other Stock-Based
Awards are not restricted to any specified form or structure and may include,
without limitation, Share purchase warrants, other rights to acquire Shares, and
securities convertible into or redeemable for Shares. The number of Shares
subject to Other Stock-Based Awards granted to any Participant during any
five-calendar-year period shall not exceed 500,000. Such Other Stock-Based
Awards may be granted either alone, in addition to, or in tandem with, any other
type of Award granted under the Plan.
11.2 COMBINATION AWARDS. The Committee may also grant Awards under
the Plan in tandem or combination with other Awards or in exchange of Awards, or
in tandem or combination with, or as alternatives to, grants or rights under any
other employee plan of Bancorp, including the plan of any acquired entity. No
action authorized by this section shall reduce the amount of any existing
benefits or change the terms and conditions thereof without the Participant's
consent.
ARTICLE 12
DEFERRAL ELECTIONS
If a Participant in the Plan who is eligible to participate in the
U. S. Bancorp 1991 Executive Deferred Compensation Plan, or any successor or
other similar deferred compensation plan maintained by Bancorp or a Subsidiary,
makes an effective deferral election under such deferred compensation plan which
covers Awards under this Plan, the payment of cash (or, if permitted by such
deferred compensation plan, the delivery of
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Shares) that would otherwise be due to such Participant by virtue of the
exercise, earn out, or Vesting of an Award under this Plan may be deferred under
the terms of the deferred compensation plan.
ARTICLE 13
DIVIDEND EQUIVALENTS
Restricted Share Awards and Performance Share Awards for which no
certificate is issued in the Participants name before Vesting (and other Awards
other than Options or Awards requiring exercise) may, at the discretion of the
Committee, earn dividend equivalents. In respect of any such Award which is
outstanding on a dividend record date for Common Stock, the Participant may be
credited with an amount equal to the amount of cash or stock dividends that
would have been paid on the Shares covered by such Award, had such covered
Shares been issued and outstanding on such dividend record date. The Committee
shall establish such rules and procedures governing the crediting of dividend
equivalents, including the timing, form of payment, and payment contingencies of
such dividend equivalents, as it deems are appropriate or necessary.
ARTICLE 14
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, ETC.
14.1 PLAN DOES NOT RESTRICT BANCORP. The existence of the Plan and
the Awards granted under the Plan shall not affect or restrict in any way the
right or power of the Board or the shareholders of Bancorp to make or authorize
any adjustment, recapitalization, reorganization, or other change in Bancorp's
capital structure or its business, any merger or consolidation of the Bancorp,
any issue of bonds, debentures, preferred or prior preference stocks ahead of or
affecting Bancorp's capital stock or the rights thereof, the dissolution or
liquidation of Bancorp or any sale or transfer of all or any part of its assets
or business, or any other corporate act or proceeding.
14.2 ADJUSTMENTS BY THE COMMITTEE. In the event of any change in
capitalization affecting the Common Stock of Bancorp, such as a stock dividend,
stock split, recapitalization, merger, consolidation, split-up, combination or
exchange of shares or other form of reorganization, or any other change
affecting the Common Stock, such proportionate adjustments, if any, as the
Committee, in its sole discretion, may deem appropriate to reflect such change,
shall be made with respect to the aggregate number of Shares for which Awards in
respect thereof may be granted under the Plan, the maximum number of Shares
which may be sold or awarded to any Participant, the number of Shares covered by
each outstanding Award, and the base price or purchase price per Share in
respect of outstanding Awards. The Committee may also make such adjustments in
the number of Shares covered by, and price or other value of any outstanding
Awards in the event of a spin-off or other distribution (other than normal cash
dividends), of Bancorp assets to shareholders.
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ARTICLE 15
AMENDMENT AND TERMINATION
Without further approval of Bancorp's shareholders, the Board may at
any time terminate the Plan, or may amend it from time to time in such respects
as the Board may deem advisable, except that the Board may not, without approval
of the shareholders, make any amendment which would (i) materially increase the
benefits accruing to Participants under the Plan, (ii) materially increase the
aggregate number of shares of Common Stock which may be issued under the Plan
(except for adjustments pursuant to Article 14 of the Plan), or (iii) materially
modify the requirements as to eligibility for participation in the Plan.
Without further shareholder approval, the Board or the Committee may amend the
Plan to take into account changes in applicable securities, federal income tax
laws, and other applicable laws. Further, should the provisions of Rule 16b-3,
or any successor rule, under the Exchange Act be amended, the Board or the
Committee, without further shareholder approval, may amend the Plan as necessary
to comply with any modifications to such rule.
ARTICLE 16
MISCELLANEOUS
16.1 TAX WITHHOLDING. Bancorp shall have the right to deduct from
any settlement of any Award under the Plan, including the delivery or vesting of
Shares, any federal, state, or local taxes of any kind required by law to be
withheld with respect to such payments or to take such other action as may be
necessary in the opinion of Bancorp to satisfy all obligations for the payment
of such taxes. The recipient of any payment or distribution under the Plan
shall make arrangements satisfactory to Bancorp for the satisfaction of any such
withholding tax obligations. Bancorp shall not be required to make any such
payment or distribution under the Plan until such obligations are satisfied.
16.2 UNFUNDED PLAN. The Plan shall be unfunded and Bancorp shall not
be required to segregate any assets that may at any time be represented by
Awards under the Plan. Any liability of Bancorp to any person with respect to
any Award under the Plan shall be based solely upon any contractual obligations
that may be effected pursuant to the Plan. No such obligation of Bancorp shall
be deemed to be secured by any pledge of, or other encumbrance on, any property
of Bancorp.
16.3 PAYMENTS TO TRUST. The Committee is authorized to cause to be
established a trust agreement or several trust agreements whereunder the
Committee may make payments of amounts due or to become due to Participants in
the Plan.
16.4 ANNULMENT OF AWARDS. Any Award Agreement may provide that the
grant of an Award payable in cash is revocable until cash is paid in settlement
thereof or that grant of an Award payable in Shares is revocable until the
Participant becomes entitled to the certificate (without Restriction or legend)
in settlement thereof. In the event the employment of a Participant is
terminated for cause (as defined below), any Award which
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is revocable shall be annulled as of the date of such termination for cause.
For the purpose of this Section 16.4, the term "for cause" shall have (in the
event the Participant has an employment agreement) the meaning set forth in the
Participant's employment agreement or otherwise means any discharge (or removal)
for material or flagrant violation of the policies and procedures of Bancorp or
for other job performance or conduct which is materially detrimental to the best
interests of Bancorp, as determined by the Committee.
16.5 ENGAGING IN COMPETITION WITH BANCORP. Any Award Agreement may
provide that, if a Participant terminates employment with Bancorp or a
Subsidiary for any reason whatsoever, and within a period of time (as specified
in the Award Agreement) after the date of such termination accepts employment
with any competitor of (or otherwise engages in competition with) Bancorp, the
Committee, in its sole discretion, may require such Participant to return to
Bancorp the economic value of any Award that is realized or obtained (measured
at the date of exercise, Vesting, or payment) by such Participant at any time
during the period beginning on the date that is six months prior to the date of
such Participant's termination of employment with Bancorp.
16.6 OTHER BANCORP BENEFIT AND COMPENSATION PROGRAMS. Payments and
other benefits received by a Participant under an Award made pursuant to the
Plan shall not be deemed a part of a Participant's regular, recurring
compensation for purposes of the termination indemnity or severance pay law of
any state or country and shall not be included in, nor have any effect on, the
determination of benefits under any other employee benefit plan or similar
arrangement provided by Bancorp or a Subsidiary unless expressly so provided by
the Award Agreement or by such other plan or arrangements. Awards under the
Plan may be made in combination with or in tandem with, or as alternatives to,
grants, awards, or payments under any other Bancorp or Subsidiary plans,
arrangements, or programs. The Plan notwithstanding, Bancorp or any Subsidiary
may adopt such other compensation programs and additional compensation
arrangements as it deems necessary to attract, retain, and reward employees for
their service with Bancorp and its Subsidiaries.
16.7 SECURITIES LAW RESTRICTIONS. No Shares shall be issued under
the Plan unless counsel for Bancorp shall be satisfied that such issuance will
be in compliance with applicable federal and state securities laws.
Certificates for Shares delivered under the Plan may be subject to such
stop-transfer orders and other restrictions as the Committee may deem advisable
under the rules, regulations, and other requirements of the Securities and
Exchange Commission, any stock exchange upon which the Common Stock is then
listed, and any applicable federal or state securities law. The Committee may
cause a legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.
16.8 GOVERNING LAW. Except with respect to references to the Code or
federal securities laws, the Plan and all actions taken thereunder shall be
governed by and construed in accordance with the laws of the state of Oregon.
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ARTICLE 17
SHAREHOLDER APPROVAL
The amendment and restatement of the Plan effective November 17, 1994,
is expressly subject to the approval of the Plan, as amended and restated, by
the holders of a majority of the Shares present, or represented, and entitled to
vote on such approval at the 1995 annual meeting of Bancorp's shareholders.
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[LOGO]
111 Southwest Fifth Avenue
Portland, Oregon 97204
TO PARTICIPANTS IN THE U. S. BANCORP
EMPLOYEE INVESTMENT PLAN
Each Participant in the Investment Plan may direct the Trustee on voting the
full shares of common stock of U. S. Bancorp credited to his or her account.
Enclosed is a copy of the Notice of Annual Meeting and Proxy Statement dated
March 13, 1995, of U. S. Bancorp and a form on which you may direct the voting
of shares of U. S. Bancorp common stock credited to your account.
The voting directive form should be completed and sent to PL-6, Trust
Operations Administration, Attn: Barbara Schocko, Assistant Vice President. In
order to allow time for processing and tallying, voting directives must be
received by the Trust Group by 5 p.m. on April 11, 1995.
These instructions do NOT apply to any stock of U. S. Bancorp that you may
own apart from the Investment Plan. You should receive proxy materials relating
to any such shares under separate cover; follow the usual procedures applicable
to personally owned stock in voting such shares.
