<PAGE> 1
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:
<TABLE>
<S> <C>
/ / 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
GTE CORPORATION
- --------------------------------------------------------------------------------
(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), or 14a-6(i)(1), or 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> 2
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 16, 1996, at 1:30 p.m.,
Pacific Time.
At the meeting, the shareholders will be asked to elect directors, and to
approve the Third Amendment and Restatement of the 1993 Stock Incentive Plan,
performance goals under the Executive Annual Incentive Plan and the Performance
Cash Award Plan, and 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,
/s/ Gerry B. Cameron
--------------------------------
Gerry B. Cameron
Chairman of the Board and Chief
Executive Officer
March 11, 1996
<PAGE> 3
U. S. BANCORP
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 16, 1996
TO THE SHAREHOLDERS:
The annual meeting of shareholders of U. S. BANCORP will be held on
Tuesday, April 16, 1996, 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 the Third Amendment and Restatement of the U. S. Bancorp 1993
Stock Incentive Plan.
3. Approving performance goals under the U. S. Bancorp Executive Annual
Incentive Plan and the U. S. Bancorp Performance Cash Award Plan.
4. Approving the selection of independent auditors for U. S. Bancorp.
5. Transacting such other business as may properly come before the meeting.
Only shareholders of record at the close of business on February 9, 1996,
shall be entitled to vote at the meeting.
By order of the Board of Directors
JOHN J. DEMOTT
Secretary
March 11, 1996
WE URGE YOU TO 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> 4
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 between S.W. Main and S.W. Madison.
FROM 1-5 NORTH OR I-84 EAST
Follow I-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 I-5 SOUTH
Follow I-5 north to I-405. Follow I-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 I-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> 5
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 16, 1996. The Proxy and Proxy Statement were mailed
to shareholders on or about March 11, 1996.
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, 1995 Annual Report to Shareholders, Annual Report on Form 10-K
for 1995, 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 the Third Amendment and
Restatement of the U. S. Bancorp 1993 Stock Incentive Plan; (3) FOR approval of
performance goals under the U. S. Bancorp Executive Annual Incentive Plan and
the U. S. Bancorp Performance Cash Award Plan; and (4) FOR approval of the
selection of independent auditors. Shareholders may expressly abstain from
voting on proposals (2), (3), and (4) by so indicating on the Proxy. Abstentions
with respect to either proposal (2) or (3) will have the same effect as a vote
against the proposal. An abstention 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 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 9, 1996, on which date there
were 150,907,902 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, 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.
<PAGE> 6
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, 1995:
<TABLE>
<CAPTION>
AMOUNT APPROXIMATE
BENEFICIALLY PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED CLASS
------------------------------------------------------------ ----------- -----------
<S> <C> <C>
Trust Group 16,261,473 10.8%
(1).........................................................
United States National Bank of Oregon
P. O. Box 3168
Portland, Oregon 97208-9933
Joshua Green III 8,530,156 5.7%
(2).........................................................
1425 Fourth Avenue
Seattle, Washington 98101
</TABLE>
- ---------------
(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, 1995, 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 4,025,939
shares, shared voting power as to 307,568 shares, sole investment power as
to 14,747,413 shares, and shared investment power as to 1,717,204 shares.
(2) Includes 125,302 shares owned by Mr. Green; 28,355 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;
5,089,171 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
40,600 shares subject to stock options that are currently exercisable or
will become exercisable on or before March 1, 1996. 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.
2
<PAGE> 7
The following table gives, as of December 31, 1995, certain information
concerning the beneficial ownership of Common Stock by each of U. S. Bancorp's
directors, 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>
Harry Bettis.......................................... 3,074,114(5)(6) 2.0%
Gerry B. Cameron...................................... 166,147(1)(2) *
Carolyn Silva Chambers................................ 2,100(3) *
Franklin G. Drake..................................... 43,115(3) *
Robert L. Dryden...................................... 10,200(3) *
Gary T. Duim.......................................... 50,298(1)(2) *
John B. Fery.......................................... 20,573(6) *
Joshua Green III...................................... 8,530,156(3)(4) 5.7%
Arland D. Hatfield.................................... 70,384(1)(2) *
Daniel R. Nelson...................................... 351,110(1)(2) *
Allen T. Noble........................................ 6,870 *
Paul A. Redmond....................................... 7,976(3) *
N. Stewart Rogers..................................... 20,496(3) *
V. Lamoine Saunders................................... 7,602(1) *
Robert D. Sznewajs.................................... 11,789(1)(2) *
Benjamin R. Whiteley.................................. 13,346(3) *
All directors and executive officers as a group (28
persons)............................................ 12,908,862(1)(2)(3) 8.4%
</TABLE>
- ---------------
* 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, 1996, as
follows: Mr. Cameron, 64,646 shares; Mr. Nelson, 313,899 shares; Mr.
Sznewajs, 8,310 shares; Mr. Hatfield, 47,247 shares; Mr. Duim, 41,547
shares; Mr. Saunders, 7,602 shares; and all executive officers of U. S.
Bancorp as a group, 886,121 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. Cameron, 29,251 shares; Mr. Nelson, 4,984 shares; Mr. Sznewajs, 364
shares; Mr. Hatfield, 12,748 shares; Mr. Duim, 5,751 shares; and all
executive officers of U. S. Bancorp as a group, 102,860 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 of
U. S. Bancorp that are currently exercisable or will become exercisable on
or before March 1, 1996, as follows: Ms. Chambers, 2,000 shares; Mr. Drake,
16,818 shares; Mr. Dryden, 9,450 shares; Mr. Green, 40,600 shares; Mr.
Redmond, 6,776 shares; Mr. Rogers, 11,858 shares; Mr. Whiteley, 6,746
shares; and all present non-employee directors as a group, 94,248 shares.
(4) See note 2 to the preceding table for additional information regarding Mr.
Green's share ownership.
(5) Includes 84,720 shares subject to shared voting and investment power.
(6) Include shares subject to restrictions on transferability as to which the
holders have voting power, as follows: Mr. Bettis, 3,760 shares; and Mr.
Fery, 1,876 shares.
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> 8
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 1995.
PROPOSAL 1: ELECTION OF DIRECTORS
The directors of U. S. Bancorp are elected at the annual meeting of
shareholders in April to serve until the next annual meeting and until their
respective successors are elected. The Board of Directors has set the number of
positions on the Board at twelve. 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. All the
nominees 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
Harry Bettis, age 61, has been a director since the merger of West One
Bancorp ("West One") with and into U. S. Bancorp in December 1995. He was a
director of West One from 1971 until 1995. For more than five years, Mr. Bettis
has been a rancher in Payette, Idaho.
Gerry B. Cameron, age 57, has been Chief Executive Officer and a director
of U. S. Bancorp since January 1994 and Chairman of the Board of U. S. Bancorp
since April 1994. He was also President of U. S. Bancorp from April 1994 until
December 1995 and Vice Chairman of U. S. Bancorp from January 1993 through April
1994. He was Executive Vice President of U. S. Bank of Oregon from March 1979
until July 1993. 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 and Executive Vice President of U. S. Bancorp from
March 1979 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 twelve senior U. S.
Bancorp executive officers.
Carolyn Silva Chambers, age 64, has been a director since 1995. Ms.
Chambers was a director of U. S. Bank of Oregon from 1993 until April 1995. Ms.
Chambers was President and Chief Executive Officer of Chambers Communications
Corp., a broadcast and television company, from 1983 to 1995; she is currently
Chairwoman and Chief Executive Officer. Ms. Chambers has been President and
Chief Executive Officer of Chambers Construction Company, a construction firm,
since 1986. Both Chambers Communications Corp. and Chambers Construction Company
are based in Eugene, Oregon. Ms. Chambers is also a director of Portland General
Corporation.
Franklin G. Drake, age 67, has been a director since 1969. Mr. Drake is
Chairman of the Board, retired, of Donald M. Drake Company, a construction firm
headquartered in Portland, Oregon. He is President and Chief Executive Officer
of Drake Management Company, a real estate investment and management company. He
was previously President and Chief Executive Officer of Donald M. Drake Company
for more than five years until July 1993.
4
<PAGE> 9
Robert L. Dryden, age 62, has been a director since 1995. From 1991 until
April 1995, Mr. Dryden was a director of U. S. Bank of Washington. 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. Mr. Dryden is also a director
of Washington Energy Company.
John B. Fery, age 65, has been a director since the West One merger in
December 1995. He was a director of West One from 1976 until 1995. Mr. Fery is
the retired Chairman and Chief Executive Officer of Boise Cascade Corporation, a
paper and forest products company headquartered in Boise, Idaho. He served as
Chief Executive Officer from 1972 through July 1994, and retired as Chairman in
July 1995. Mr. Fery also serves as a director of Albertson's Inc., The Boeing
Company, and Hewlett-Packard Company.
Joshua Green III, age 59, 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 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.
Daniel R. Nelson, age 58, was Chairman and Chief Executive Officer of West
One until the merger in December 1995 and has been a director, President and
Chief Operating Officer of U. S. Bancorp since the merger. Mr. Nelson also
serves as an Executive Vice President of U. S. Bank of Oregon and U. S. Bank of
Washington and is a member of the U. S. Bancorp Executive Management Committee.
Allen T. Noble, age 67, has been a director since the West One merger in
December 1995. Mr. Noble is President of Farm Development Corporation, a
corporate agricultural management company based in Boise, Idaho, Allen Noble
Farms, Inc., A-D Cattle Company, Campbell Tractor Company comprised of four John
Deere dealerships in Treasure Valley, Idaho, ALVAC, a Life Flight Helicopter
Company, and Noble Linear Irrigation Company. Mr. Noble served as a director of
West One from 1975 until 1983 and from 1984 until 1995.
Paul A. Redmond, age 59, 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, President and Chief Executive Officer of The
Washington Water Power Company, an electric and gas utility headquartered in
Spokane, Washington. Mr. Redmond is also a director of Itron, Inc.
N. Stewart Rogers, age 66, 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, until his
retirement in December 1991.
Benjamin R. Whiteley, age 66, 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. From January 1993 until August 1994, he served as
Chairman and Chief Executive Officer of Standard Insurance Company, 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.
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
5
<PAGE> 10
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 state member banks, 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 bank subsidiaries (other than
U. S. Bank of Oregon) certain audit functions required under FDIC regulations.
Current members of the Audit Committee are Messrs. Whiteley (chairperson),
Bettis, Drake, Dryden, Fery, Noble, Redmond, Rogers and Ms. Chambers. The Audit
Committee held six meetings in 1995.
The Board of Directors also has a standing Compensation Committee composed
of nine non-employee directors, Messrs. Rogers (chairperson), Bettis, Drake,
Dryden, Fery, Noble, Redmond, Whiteley, and Ms. Chambers. 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 U. S. Bancorp's
Executive Annual Incentive Plan and Performance Cash Award 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
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 1995.
In February 1996, the Board of Directors appointed an Executive Committee
composed of five directors, Messrs. Cameron (chairperson), Bettis, Drake, Green,
and Nelson. The Executive Committee will hold meetings at the call of the
Chairman of the Board and may exercise all the authority of the Board of
Directors during intervals between Board meetings except to the extent
restricted by law. During 1995 the Board of Directors had a standing Nominating
Committee, which held one meeting in 1995. In connection with establishing the
Executive Committee, the Board of Directors dissolved the Nominating Committee
and assigned its functions to the Executive Committee. Accordingly, the
Executive 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 1997 Annual Meeting should submit his or her suggestions in
writing no later than November 11, 1996, 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 nine meetings during 1995. 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 1995.
6
<PAGE> 11
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 (the "named executive officers") during each of
the years in the three-year period ended December 31, 1995.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
-----------------------
ANNUAL COMPENSATION NUMBER OF
--------------------------------------- SECURITIES LONG-TERM ALL
OTHER ANNUAL UNDERLYING INCENTIVE OTHER
SALARY BONUS COMPENSATION(4) OPTIONS PAYOUTS(5) COMPENSATION(6)
NAME AND PRINCIPAL POSITION(1) YEAR ($) ($) ($) (#) ($) ($)
- ---------------------------------- ---- -------- -------- --------------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Gerry B. Cameron.................. 1995 $700,000 $630,000(3) $53,622 116,250 $ - $ 50,970
Chairman of the Board and Chief 1994 508,750 250,000(3) 58,252 - 28,241
Executive Officer 1993 248,750 225,000(3) 50,000 200,000 13,397
Robert D. Sznewajs(2)............. 1995 375,000 271,575(3) 36,989 - 8,344
Vice Chairman 1994 233,750 175,000(3) 20,408 - 23,940
1993 - - - - -
Arland D. Hatfield................ 1995 250,000 190,993(3) 21,138 - 18,066
Executive Vice President 1994 210,000 88,310(3) 19,417 - 11,710
1993 168,750 80,332(3) 30,000 100,000 9,172
Gary T. Duim...................... 1995 250,000 181,134(3) 21,138 - 18,534
Executive Vice President 1994 200,000 97,084(3) 19,417 - 8,717
1993 164,589 95,611(3) 30,000 100,000 4,710
V. Lamoine Saunders(2)............ 1995 260,000 124,370(3) 21,138 - -
Executive Vice President 1994 108,974 166,955(7) 11,538 - -
1993 - - - - -
</TABLE>
- ---------------
(1) Includes principal capacities in which each officer served during 1995. Each
position shown is with U. S. Bancorp.
(2) Messrs. Sznewajs and Saunders became U. S. Bancorp employees in April 1994
and July 1994, respectively.
(3) Represents amounts paid or accrued under the U. S. Bancorp Executive Annual
Incentive Plan.
(4) Represents the aggregate incremental cost to U. S. Bancorp of providing
various perquisites and personal benefits to Mr. Cameron in 1995, including
a one-time, automobile-related benefit of $41,250 in association with the
elimination of executive automobiles. Amounts which total the lesser of
$50,000 or 10% of the total annual salary and bonus for a given named
executive officer have been omitted pursuant to SEC disclosure rules.
(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.
(7) Includes signing bonus in the amount of $125,000; the balance represents
amounts paid or accrued under the U. S. Bancorp Executive Annual Incentive
Plan.
7
<PAGE> 12
STOCK-BASED COMPENSATION
The following table provides information regarding options to purchase
Common Stock granted to the named executive officers pursuant to the U. S.
Bancorp 1993 Stock Incentive Plan during 1995.
OPTION GRANTS IN LAST FISCAL YEAR(1)
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
SECURITIES PERCENT OF SECURITIES
UNDERLYING TOTAL OPTIONS UNDERLYING PERCENT OF
PERFORMANCE GRANTED TO TIME LAPSE TOTAL OPTIONS
VESTING EMPLOYEES VESTING GRANTED TO EXERCISE GRANT DATE
OPTIONS IN FISCAL OPTIONS EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME GRANTED(2) YEAR GRANTED(3) FISCAL YEAR ($/SHARE) DATE VALUE (4)
- --------------------------- ----------- ------------- ------------- ------------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Gerry B. Cameron........... 61,112 6.9% 55,138 6.2% $ 25.50 3/15/2005 $615,707
Robert D. Sznewajs......... 19,455 2.2% 17,544 2.0% 25.50 3/15/2005 195,908
Arland D. Hatfield......... 11,112 1.2% 10,026 1.1% 25.50 3/15/2005 111,956
Gary T. Duim............... 11,112 1.2% 10,026 1.1% 25.50 3/15/2005 111,956
V. Lamoine Saunders........ 11,112 1.2% 10,026 1.1% 25.50 3/15/2005 111,956
</TABLE>
- ---------------
(1) No stock appreciation rights ("SARs") were granted to the named executive
officers during 1995. All options were granted for the number of shares
indicated at exercise prices equal to the fair market value of the Common
Stock on the date of grant. All options will automatically become
exercisable in full immediately upon a change in control of U. S. Bancorp;
provided that (i) except for options granted to Mr. Cameron and Mr.
Sznewajs, such acceleration of exercisability may not occur to the extent
that the executive would be left in a better position after payment of
applicable taxes, including the excise tax with respect to "excess parachute
payments" under the Code, and (ii) exercisability will not be accelerated if
the Compensation Committee determines that use of the pooling of interests
method of accounting would be materially beneficial to U. S. Bancorp and the
acceleration would have a materially adverse effect on U. S. Bancorp's
ability to use such accounting method. The events which would result in a
change in control are listed under "Retirement Plan" below.
(2) Unless vesting is accelerated as described below, these performance vesting
options will become exercisable in full on the ninth anniversary of the date
of grant. Vesting may be accelerated to the extent that U. S. Bancorp
achieves specified levels of return on assets and a 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"). The maximum amounts of shares as to which exercisability may be
accelerated during 1995, 1996, 1997, and 1998 are 0%, 33%, 50%, and 100%,
respectively.
(3) These time lapse vesting options will become exercisable following the date
of grant as follows: during the first year -- none; during the second
year -- 33%; during the third year -- 66%; and after three years -- 100%.
(4) 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 February 28, 1995; (ii)
the risk-free rate of return was assumed to be 7.40% for performance vesting
options and 7.08% for time lapse vesting options; (iii) values were
discounted for forfeitability by 25% for performance vesting options, and 6%
for time lapse vesting options; (iv) the time of exercise was assumed to be
six years after the date of grant for time lapse vesting options and 10
years after the date of grant for performance vesting options; and (v) the
dividend yield was assumed to be 3.53% (the annual dividend rate divided by
the stock price on the grant date). The values 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.
8
<PAGE> 13
Information regarding exercises of stock options during 1995, and
unexercised options held as of December 31, 1995, 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 UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY
UNDERLYING OPTIONS OPTIONS AT YEAR-END(2)
OPTIONS VALUE --------------------------- ---------------------------
NAME EXERCISED REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------- --------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gerry B. Cameron...... 0 $0 48,842 175,660 $ 342,999 $ 1,279,390
Robert D. Sznewajs.... 0 $0 3,097 54,300 25,938 417,774
Arland D. Hatfield.... 0 $0 43,507 43,608 520,724 315,242
Gary T. Duim.......... 0 $0 37,807 43,608 416,791 315,242
V. Lamoine Saunders... 0 $0 5,769 26,907 39,662 195,555
</TABLE>
- ---------------
(1) No SARs were exercised during 1995 and no named executive officer held any
SARs at December 31, 1995.
(2) Value is calculated based on the amount by which the low sale price of the
Common Stock, $32.875, reported in The Wall Street Journal for the last
trading day in 1995, exceeds the per share exercise price of unexercised
options. All options reflected in the table were granted in-the-money at
year end 1995 and were at an exercise price equal to the fair market value
of a share of Common Stock on the date of grant.
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 1995.
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERFORMANCE
OR OTHER ESTIMATED FUTURE PAYOUTS UNDER
PERIOD NON-STOCK
NUMBER UNTIL PRICE BASED PLANS (2)
OF SHARES MATURATION -------------------------------------
NAME (1) OR PAYOUT THRESHOLD(#) TARGET(#) MAXIMUM(#)
- ------------------------------------- ------------ ----------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C>
Gerry B. Cameron..................... 19,078 3 years 1,907 19,078 38,156
Robert D. Sznewajs................... 6,071 3 years 607 6,071 12,142
Arland D. Hatfield................... 3,469 3 years 346 3,469 6,938
Gary T. Duim......................... 3,469 3 years 346 3,469 6,938
V. Lamoine Saunders.................. 3,469 3 years 346 3,469 6,938
</TABLE>
- ---------------
(1) Represents target awards of performance shares.
(2) Following the three-year period ending December 31, 1997, 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 method for determining
performance shares earned on the basis of less than a full performance cycle
may apply following a change in control of U. S. Bancorp. The provisions for
a shortened performance cycle will not apply in certain circumstances where
use of the pooling of interests method of accounting is desirable or, with
respect to awards made other than to Mr. Cameron or Mr. Sznewajs, to the
extent that such acceleration of payment would result in a less favorable
after-tax position for the executive.
9
<PAGE> 14
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 retirement benefits 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 ("Highest Average Compensation")).
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
COMPENSATION ------------------------------------------------------------
LEVEL 15 20 25 30 35
---------------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$125,000................... $ 30,200 $ 40,300 $ 50,400 $ 53,500 $ 56,600
150,000................... 36,600 48,800 61,000 64,700 68,500
175,000................... 43,000 57,300 71,600 76,000 80,400
200,000................... 49,300 65,800 82,200 87,200 92,200
225,000................... 55,700 74,300 92,900 98,500 104,100
250,000................... 62,100 82,800 103,500 109,700 116,000
300,000................... 74,800 99,800 124,700 132,200 139,700
350,000................... 87,600 116,800 146,000 154,700 163,500
400,000................... 100,300 133,800 167,200 177,200 187,200
450,000................... 113,100 150,800 188,500 199,700 211,000
500,000................... 125,800 167,800 209,700 222,200 234,700
550,000................... 138,600 184,800 231,000 244,700 258,500
600,000................... 151,300 201,800 252,200 267,200 282,200
650,000................... 164,100 218,800 273,500 289,700 306,000
700,000................... 176,800 235,800 294,700 312,200 329,700
750,000................... 189,600 252,800 316,000 334,700 353,500
800,000................... 202,300 269,800 337,200 357,200 377,200
850,000................... 215,100 286,800 358,500 379,700 401,000
</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 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.
Certain executive officers have been awarded an enhanced retirement benefit
under the Supplemental Plan. With respect to Mr. Cameron, this benefit will
result in his receiving payments upon retirement pursuant to the Retirement
Plan, primary Social Security benefits, and the Supplemental Plan equal in the
aggregate to
10
<PAGE> 15
55% of his Highest Average Compensation and, in addition, in his being exempted
from the provisions of the Supplemental Plan providing for a percentage
reduction (normally 7%) in benefits for retirement after age 55 but before age
62 ("Reduction Percentage"), 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, 1995, his annual
retirement benefit, assuming a single life annuity and reduction for estimated
Social Security benefits, would be $335,808.
The enhanced retirement benefit for Messrs. Sznewajs and Saunders will
depend on their respective years of benefit service when they retire. Their
enhanced retirement benefits will equal a fraction (2.75% multiplied by their
years of benefit service, up to a maximum of 55%) multiplied by their respective
Highest Average Compensation. For this purpose, Mr. Sznewajs has been credited
with 11 years of benefit service for service with a prior employer and, as of
December 31, 1995, had a total of 12.735 years of benefit service credited to
his account. Mr. Saunders has been credited with ten years of benefit service
with a prior employer and, as of December 31, 1995, had a total of 11.480 years
of benefit service credited to his account. Mr. Sznewajs is fully vested in his
enhanced retirement benefit, but Mr. Saunders will not be vested in this benefit
until he completes five years of service with U. S. Bancorp. Mr. Sznewajs will
also be entitled to a Reduction Percentage of 3% (applicable to retirement
before age 62) if his employment is terminated by U. S. Bancorp prior to
December 31, 2002. If Messrs. Sznewajs and Saunders were each to retire at age
62 with Highest Average Compensation unchanged from December 31, 1995, their
annual retirement benefits, assuming single life annuity, reduction for
estimated Social Security benefits, and benefits from previous employers, would
be $302,312 and $126,255, respectively.
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 a Reduction
Percentage. Mr. Hatfield was entitled to 60% of the foregoing benefits on
January 1, 1996. At December 31, 1995, Mr. Hatfield had 16.5 credited years of
benefit service and a compensation level of $279,528 per year for purposes of
calculating retirement benefits under the Pension Plan Table above, while Mr.
Duim had a compensation level of $266,064 per year and 8 credited years of
benefit service.
For purposes of U. S. Bancorp's compensation plans, including the
Supplemental Plan, and, with certain exceptions, employment or change-in-control
agreements with its executive officers, a change in control includes (i) the
acquisition (other than directly from U. S. Bancorp) by a person or group (other
than U. S. Bancorp or any employee benefit plan or corporation controlled by U.
S. Bancorp) of 20% or more of the combined voting power of U. S. Bancorp's
voting securities, (ii) with certain exceptions, the existing directors' ceasing
to constitute a majority of the Board of Directors, (iii) consummation of a
reorganization, merger, or sale or other disposition of all or substantially all
of the assets of U. S. Bancorp (a "Business Combination"), unless substantially
all of the beneficial owners of U. S. Bancorp's voting securities immediately
prior to such Business Combination beneficially own more than 50% of the
outstanding common stock and combined voting power of the corporation resulting
from such Business Combination, in substantially the same proportions as their
ownership immediately prior to such Business Combination, and certain other
conditions are met, and (iv) approval by the shareholders of a complete
liquidation or dissolution of U. S. Bancorp.
EXECUTIVE AGREEMENTS
At February 15, 1996, 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. Each
CIC Agreement has been renewed for a term ending December 31, 1996 (December 31,
2002 in the case of Mr. Sznewajs), subject to automatic extension annually
thereafter 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 will be extended
automatically for two additional calendar years (three years in the case of
Messrs. Cameron and Sznewajs) 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
11
<PAGE> 16
cause (as defined) following a change in control. The definition of change in
control for purposes of the CIC Agreements is summarized under "Retirement Plan"
above.
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
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 Messrs. Cameron
and Sznewajs), 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 will 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
Messrs. Cameron and Sznewajs) 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, 1996, under the
circumstances described above would have been as follows: Mr. Cameron,
$3,720,000; Mr. Sznewajs, $1,944,864; Mr. Hatfield, $839,304; Mr. Duim,
$838,218; and Mr. Saunders, $736,326.
The CIC Agreements also provide for reimbursement of legal fees and
expenses and reasonable amounts for outplacement services and for the
continuation of health, disability and life insurance benefits for two years
(three years in the case of Messrs. Cameron and Sznewajs) 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 Messrs. Cameron and
Sznewajs will be decreased if the executive would be left in a better position
after payment of applicable taxes, including the excise tax with respect to
excess parachute payments under the Code. Under the CIC Agreements with Messrs.
Cameron and Sznewajs, they will be reimbursed for any excise tax imposed on
benefits that constitute excess parachute payments plus any related federal,
state and local income taxes.
In connection with the West One merger, U. S. Bancorp has entered into
employment agreements with several West One executives who are now executive
officers of U. S. Bancorp, including Daniel R. Nelson. See "Proposal 1: Election
of Directors." Mr. Nelson's employment agreement provides that he will be
entitled to a monthly salary equal to or greater than the highest monthly base
salary paid to him by West One during the year preceding the effective date of
the West One merger, an annual bonus opportunity, and participation in
applicable employee benefit plans at a level commensurate with that of similarly
situated executives. The employment agreement also provides that Mr. Nelson will
serve as President and Chief Operating Officer of U. S. Bancorp until the
earlier of January 15, 1999, and the date that he becomes Chief Executive
Officer of U. S. Bancorp.
In the event that (i) Mr. Nelson's employment is involuntarily terminated
by U. S. Bancorp within the three years following the West One merger for any
reason other than death, disability, or cause (as defined), (ii) Mr. Nelson
voluntarily terminates his employment within 30 days following the first
anniversary of the West One merger or (iii) Mr. Nelson terminates his employment
for good reason (as defined), including failure to be appointed chief executive
officer of U. S. Bancorp on or prior to January 1, 1999, he will be entitled to
receive a severance payment consisting of (A) his base salary through the
termination date, (B) a proportionate bonus through the termination date based
upon the highest annual bonus paid to him during the prior three years ("Recent
Bonus"), (C) the product of three times the sum of his base salary and Recent
Bonus, (D) unpaid deferred compensation and vacation pay, and (E) certain other
benefits. Mr. Nelson will
12
<PAGE> 17
also be reimbursed for any excise tax imposed on benefits that constitute excess
parachute payments plus any related federal, state and local income taxes. If
Mr. Nelson's employment had been terminated on December 26, 1995, the effective
date of the West One merger, he would have been entitled to receive a lump sum
cash payment, including estimated tax reimbursement, of $3,466,203 under his
employment agreement.
U. S. Bancorp has also entered into an agreement with Mr. Sznewajs
providing for compensation in the event his employment with U. S. Bancorp is
terminated under specified circumstances prior to the earlier of December 31,
2002, and the date, if any, on which he becomes chief executive officer of U. S.
Bancorp. Upon termination of Mr. Sznewajs' employment by U. S. Bancorp during
the term of the agreement (the "Term") without cause (as defined) or by Mr.
Sznewajs with good reason (as defined), he will be entitled to his full base
salary through termination, together with (i) an amount equal to three times the
sum of (A) his annual base salary plus (B) his average annual incentive
compensation paid or accrued during the last two fiscal years, and (ii)
continued benefits under U. S. Bancorp's welfare benefit plans for three years
following termination. If Mr. Sznewajs dies during the Term, or voluntarily
terminates his employment without good reason, or his employment is terminated
for cause, he will be paid all compensation and benefits to which he was
entitled on the date of death or termination. The agreement also specifically
lists the benefits for which Mr. Sznewajs has been designated under the
Supplemental Plan (see "Retirement Plan").
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. Mr. Bettis receives an
annual retainer of $8,500 in his capacity as a director of West One Bank, Idaho,
as well as $600 for each West One Bank, Idaho board 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 also adopted a
series of stock option plans for non-employee directors (the "Director Plans")
to encourage increased ownership of Common Stock by non-employee directors and
to provide enhanced incentives for such directors to exert their best efforts on
U. S. Bancorp's behalf. An aggregate of 237,500 shares of Common Stock are
authorized for issuance under the Director Plans.
The Director Plans provide for the grant of an Initial Option to purchase
4,000 shares of Common Stock when a person first becomes a non-employee director
of U. S. Bancorp (or was serving as a non-employee director on October 18, 1990)
and of an Annual Option to purchase 2,000 shares of Common Stock to each person
who is re-elected to serve as a non-employee director as of each annual
shareholders meeting. Initial Options and Annual Options are granted at an
exercise price equal to fair market value of the Common Stock on the date of
grant.
Each non-employee director is permitted to elect to receive a grant of
deferred compensation options 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.
Pursuant to the foregoing provisions, U. S. Bancorp non-employee directors
were granted options pursuant to the Director Plans during 1995 as follows: Ms.
Chambers and Mr. Dryden were each granted an Initial Option to purchase 4,000
shares at an exercise price of $26.50 per share; Messrs. Bettis, Fery, and Noble
were each granted an Initial Option to purchase 4,000 shares at an exercise
price of $32.25 per share;
13
<PAGE> 18
and Messrs. Drake, Dryden, Green, Redmond, Rogers, Whiteley and Ms. Chambers
were each granted an Annual Option to purchase 2,000 shares at an exercise price
of $26.50 per share.
Initial Options and Annual Options 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 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. 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 a 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 1995.
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 composed of nine 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 Director
Plans, a deferred compensation plan for non-employee directors, 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.
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DECISIONS REGARDING CASH COMPENSATION
Decisions regarding salary and cash incentive compensation to be paid to
Gerry B. Cameron, U. S. Bancorp's chief executive officer, were made by the
Board of Directors pursuant to the recommendations of the Committee. Mr. Cameron
did not participate in Committee or Board deliberations regarding his own
compensation. Decisions regarding cash compensation paid to executive officers
(other than Mr. Cameron) who were members of the Executive Management Committee
were made by the Committee in November 1994 following review of recommendations
by Mr. Cameron. 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 presidents and chief executive officers of U. S. Bancorp's
subsidiaries is also 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. At December 31, 1995, the Executive
Management Committee was composed of twelve members, including Messrs. Cameron,
Sznewajs, Hatfield, Duim, and Saunders.
Periodically, U. S. Bancorp engages outside 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 of U. S. Bancorp.
The comparison group includes the bank holding companies in 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 1995 Salary Levels. In November 1994, the Committee reviewed
market analyses of base salaries and total compensation paid by the comparison
group referred to above. Following that review, the Committee recommended, and
the Board of Directors approved, an increase in Mr. Cameron's salary level for
1995 to $700,000 from $525,000 in 1994. The 1995 salary level fell in the second
quartile (between the 25th and 50th percentiles) of bank holding companies in
the market survey. In establishing Mr. Cameron's salary, the Committee
considered the effect of salary compression at the top levels of U. S. Bancorp's
management on U. S. Bancorp's ability to compete for new executives and retain
executives currently in U. S. Bancorp's employ. The Committee also reviewed U.
S. Bancorp's 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 1995 for members of the Executive Management Committee were approved by the
Board of Directors pursuant to recommendations by Mr. Cameron affirmed by the
Committee based on similar factors as those considered in establishing Mr.
Cameron's salary.
Annual Cash Incentive Compensation. Annual cash incentive plans for
executive and management personnel which first became effective January 1, 1993,
continued in effect for 1995. The Executive Annual Incentive Plan (the
"Executive Plan") covers members of the Executive Management Committee
(including Mr. Cameron) 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 for 1995 not to exceed 187.5%.
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<PAGE> 20
The corporate performance targets established for 1995 under the Annual
Plans by the Board of Directors following the Committee's recommendation were
based on core earnings for U. S. Bancorp, which is defined as sustainable
operating earnings excluding all extraordinary items. In February 1996, the
Committee determined that the level of attainment of the corporate performance
targets corresponded to a 150% payout with respect to target awards under the
Annual Plans.
The 1995 target award established under the Executive Plan for Mr. Cameron
by the Board of Directors in November 1994 pursuant to the Committee's
recommendation was set at 60% of his 1995 base salary. An actual award of 90% of
base salary was approved in February 1996 in light of Mr. Cameron's contribution
to the level of attainment of U. S. Bancorp's corporate performance targets.
With respect to other Executive Management Committee members, the Committee
established target awards under the Executive Plan in December 1994 ranging from
35% to 50% of their 1995 base salaries. In February 1996, 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 pursuant to authority delegated to Mr. Cameron, resulting in
awards for 1995 ranging from 42.8% to 76.4% of 1995 base salaries.
DECISIONS REGARDING STOCK-BASED INCENTIVE COMPENSATION
In March 1995, Mr. Cameron presented recommendations to the Committee with
respect to stock-based awards to executive management team members under the U.
S. Bancorp 1993 Stock Incentive Plan. Pursuant to Mr. Cameron's recommendations,
the Committee granted an award to each executive comprised of three different
stock-based components. The awards included (i) nonqualified stock options with
a time lapse vesting component, (ii) nonqualified stock options with a
performance vesting component based on achievement of corporate performance
goals for return on assets and market to book value ratio, and (iii) performance
shares 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.
The award of stock options and performance shares was 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 comparison to similar grants by peer institutions reflected in the market
survey referred to above and 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.
See "Executive Compensation -- Stock-Based Compensation."
RECENT CHANGES IN INCENTIVE COMPENSATION PROGRAM
In October 1995, the Committee authorized management to retain a national
compensation consulting firm to review U. S. Bancorp's existing long-term
incentive program and develop new strategies for long-term incentive
compensation in light of the Committee's goals of retaining key employees and
encouraging significant equity ownership in U. S. Bancorp by executive
management and the changes anticipated for the organization following the
pending merger with West One. After reviewing U. S. Bancorp's existing program
and studying competitive compensation data for 22 peer banks, all of which are
included in the S&P Major Regional Banks Index, the consulting firm concluded
that the long-term incentive awards granted by the Committee in 1994 and 1995
were overly complex in terms of performance measurement to serve as a
motivational force with respect to U. S. Bancorp's post-merger business
strategy.
The outside consultant presented a conceptual framework for improvements in
U. S. Bancorp's long-term incentive arrangements to the Committee in December
1995. Final recommendations were developed for implementation throughout January
and early February of 1996 and approved by the Committee and the Board of
Directors at their February 1996 meetings, including the adoption of a new
Performance Cash Award Plan and amendment of the 1993 Stock Incentive Plan.
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In connection with the changes being implemented, the shareholders are
being asked to approve two compensation-related proposals at the 1996 annual
meeting. The first proposal relates to various amendments made to the 1993 Stock
Incentive Plan. The second proposal submits for approval performance goals for
awards to be granted under the Executive Annual Incentive Plan and the new
Performance Cash Award Plan.
A major reason for submitting these proposals to the shareholders is to
preserve for the corporation the tax deductible status of payments made under
the plans. Section 162(m), which was added to the Internal Revenue Code in 1993,
limits the deductibility of compensation paid to a given covered employee in a
taxable year to $1,000,000 plus qualifying performance-based compensation and
other qualifying compensation.
The proposed changes will qualify the incentive payments as
performance-based, effectively assuring the deductibility of such compensation
payments. Other changes were intended to reduce potential exposure to federal
excise tax liability with respect to excess parachute payments under the Code.
For a more detailed explanation of the changes being proposed for shareholder
approval, see "Proposal 2: Approval of Third Amendment and Restatement of the
1993 Stock Incentive Plan" and "Proposal 3: Approval of Performance Goals under
the Executive Annual Incentive Plan and the Performance Cash Award Plan."
COMPENSATION COMMITTEE MEMBERS
N. Stewart Rogers, Chairman
Harry Bettis
Carolyn Silva Chambers
Franklin G. Drake
Robert L. Dryden
John B. Fery
Allen T. Noble
Paul A. Redmond
Benjamin R. Whiteley
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STOCK PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total returns for the
five-year period ended December 31, 1995, 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, 1991, and reinvestment of
dividends.
<TABLE>
<CAPTION>
S & P Major
Measurement Period Regional
(Fiscal Year Covered) U. S. Bancorp S & P 500 Banks Index
<S> <C> <C> <C>
1990 100.00 100.00 100.00
1991 171.86 130.47 171.85
1992 209.18 140.41 212.07
1993 205.09 154.53 218.02
1994 192.43 156.57 198.77
1995 269.92 215.48 310.01
</TABLE>
TRANSACTIONS WITH U. S. BANCORP
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Carolyn Silva Chambers, Franklin G. Drake, Robert L. Dryden, Robert Stevens
Miller, Jr., Paul A. Redmond, N. Stewart Rogers, Andrew V. Smith and Benjamin R.
Whiteley were members of the Compensation Committee during 1995.
During 1995, 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. Loans to
certain executive officers that were made on terms other than those summarized
above are 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 terms as
loans made to other U. S. Bancorp employees except that the interest rate per
annum was fixed at 7 1/4% for Ms. Campbell. Such interest rate would increase to
10 1/4% in the event of termination of her
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employment with U. S. Bancorp. The highest outstanding balance on Ms. Campbell's
loan during 1995 and the balance at December 31, 1995, respectively, were
$242,130 and $225,168.
In connection with the Merger Agreement relating to the acquisition of
Peoples Ban Corporation ("Peoples") 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 THIRD AMENDMENT AND RESTATEMENT OF THE
1993 STOCK INCENTIVE PLAN
The U. S. Bancorp 1993 Stock Incentive Plan (the "Incentive Plan") was
approved by the U. S. Bancorp shareholders at the 1994 annual meeting. An
amendment relating to change in control provisions in the Incentive Plan was
approved by the shareholders at the 1995 annual meeting. Additional amendments
to the Incentive Plan described below are being submitted for approval by the
shareholders at the 1996 annual meeting.
The purpose of the Incentive 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
Incentive 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 Incentive Plan provides for incentive 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 Incentive Plan numbers approximately 2,500.
Awards which may be granted under the Incentive Plan include stock options,
stock appreciation rights, restricted awards, performance awards, and other
stock-based Awards. The Committee is charged with administering the Incentive
Plan and determining the employees who are to receive Awards under the Incentive
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 Incentive 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
Incentive 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 February 15, 1996, such additional number
was
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approximately 308,177 shares. If an Award granted under the Incentive 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
Incentive Plan.
The following summary of the material provisions of the Incentive Plan as
amended by the Third Amendment and Restatement is qualified in its entirety by
reference to the full text of the Incentive Plan, a copy of which is attached to
this Proxy Statement as Exhibit A. The low sale price of the Common Stock on
February 15, 1996, as reported in The Wall Street Journal was $31.00.
PLAN AMENDMENTS ADOPTED IN FEBRUARY 1996
The Board of Directors approved various amendments to the Incentive Plan at
its February meeting, subject to shareholder approval at the 1996 annual
meeting. Many of the amendments are related to the requirements of Section
162(m) of the Code, enacted in 1993, which provides that compensation in excess
of $1 million paid for any year to a corporation's chief executive officer and
the four other highest paid executive officers at the end of such year ("Covered
Employee") will not be deductible by the corporation for federal income tax
purposes unless certain conditions are met. A change effected by a given
amendment approved in February 1996 will not be given effect if the Committee
later determines that such change is likely to have a materially adverse effect
on the ability of U. S. Bancorp to use the pooling of interests method of
accounting.
Performance Awards. In general, U. S. Bancorp intends that all long-term
compensation awards be made under the Incentive Plan. At the recommendation of
its outside compensation consultant, the Board of Directors approved an
amendment to the Incentive Plan to authorize performance cash Awards in addition
to the performance share Awards already authorized under the Incentive Plan. A
separate new Performance Cash Award Plan was also adopted to permit performance
cash awards to be granted immediately. See "Proposal 3: Approval of Performance
Goals under the Executive Annual Incentive Plan and the Performance Cash Award
Plan."
The maximum number of shares issuable with respect to Awards of performance
shares to any executive officer for any calendar year has been increased from
60,000 to 100,000. The maximum amount payable with respect to performance cash
Awards granted to any executive officer (including awards under the separate
Performance Cash Award Plan) may not exceed $2,000,000 in any calendar year.
The performance goals which may be established by the Committee with
respect to performance Awards granted under the Incentive Plan to U. S. Bancorp
executive officers are the same as described under "Proposal 3: Approval of
Performance Goals under the Executive Annual Incentive Plan and the Performance
Cash Award Plan." Approval by the shareholders of the Third Amendment and
Restatement of the 1993 Stock Incentive Plan will be deemed to be approval of
such performance goals in compliance with the requirements of Section 162(m).
The performance goals to be used will be any one or a combination of the
following: net income, cash flow, or any profit-related return ratios or
calculations. For any performance period, such performance objectives may be
measured on an absolute basis or relative to a group of peer banks selected by
the Committee, relative to internal goals, or relative to levels attained in
prior performance periods. The Committee will establish specified performance
goals for each performance period (generally a three-year period) not later than
90 days after the beginning of the performance period. During any performance
period, the Committee may adjust the performance goals as it deems equitable in
recognition of unusual or nonrecurring events affecting U. S. Bancorp, changes
in applicable tax laws or accounting principles, or such other factors as the
Committee deems relevant; provided that the Committee may not adjust the
performance goals for an award held by a Covered Employee with respect to the
year in which the award is settled so as to increase the amount of compensation
payable to such Covered Employee.
Restricted Unit Awards. The amendments include a provision specifically
authorizing Awards of restricted stock units, which are similar to restricted
share Awards already authorized under the Incentive Plan, but provide that
shares of Common Stock will not be issued until the restrictions lapse, rather
than at the time of grant. Upon vesting of a restricted unit Award, a
participant will be entitled to receive a certificate for a number of
unrestricted shares of Common Stock equal to the number of vested units, cash
equal to the fair market value of such shares, or a combination of cash and
shares, as determined by the Committee. A
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<PAGE> 25
participant will receive cash payments equal to dividends declared on the Common
Stock, but otherwise will have no rights as a shareholder with respect to
restricted unit Awards until unrestricted shares have been issued. The maximum
number of restricted units which may be granted to any U. S. Bancorp executive
officer in any calendar year will not exceed 400,000.
Limit on Option and SAR Awards. The maximum number of shares subject to
options or SARs which may be granted to any participant during any
five-calendar-year period has been increased from 500,000 to 750,000.
Calculation of Limit on Total Shares Issued under Incentive Plan. To the
extent that options or other Awards requiring exercise are exercised by
delivering previously acquired shares of Common Stock in payment of the exercise
price, the number of previously acquired shares so delivered will be added to
the shares available for additional Awards under the Incentive Plan.
Transferability of Awards. Awards are generally not transferable other
than by will or the laws of descent and distribution. The amendments to the
Incentive Plan, however, permit the Committee to provide in Award Agreements (i)
for transfers, without payment of consideration, of subject Awards to immediate
family members of the participant or to trusts or partnerships for such family
members, and (ii) to the extent permitted by rules promulgated by the SEC
relating to exemptions from the short-swing profit provisions of the Securities
Exchange Act of 1934, that Awards may be freely transferred subject to any
limitations or conditions specified in the Award Agreement.
SUMMARY OF OTHER PLAN PROVISIONS
Following is a summary of other material provisions of the Incentive Plan.
Stock Options. Stock options granted under the Incentive 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 number 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 (or SARs) granted to any
employee during any five-calendar-year period may not exceed 750,000.
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 may 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 (or options) granted to
any participant during any five-calendar-year period may not exceed 750,000.
Restricted Share Awards. Awards of restricted shares of Common Stock will
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 for specified reasons
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 will be treated as additional restricted
shares covered by the Award.
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The maximum number of shares of Common Stock for which restricted Awards may be
granted during any calendar year may not exceed 400,000.
Performance Share Awards. 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. See "Plan Amendments Adopted in February
1996 -- Performance Awards" above for a discussion of the performance goals
which will be applicable to performance Awards made to U. S. Bancorp executive
officers. Earned performance share Awards are paid at the end of the performance
cycle in unrestricted shares of Common Stock, in cash equal to the fair market
value of the earned performance shares, or by a combination of cash and shares.
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
may not exceed 100,000.
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 Incentive 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 may not exceed 750,000.
Change in Control Provisions. Awards granted under the Incentive Plan are
subject to the following acceleration provisions upon the occurrence of a change
in control of U. S. Bancorp:
(1) Any stock option or other Award requiring exercise, including
stock options which contain restrictions on exercisability based on the
attainment of performance goals, will become exercisable in full
immediately;
(2) Any Award subject to restrictions on vesting, such as restricted
shares, will become fully vested; and
(3) Performance Awards and other Awards subject to performance goals
(except stock options) will be deemed to be earned to the extent of the
greater of:
(a) A number of shares or a portion of the target cash award
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 or a portion of the target cash
award 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 events which would result in a change in control of U. S. Bancorp are
listed under "Executive Compensation -- Retirement Plan." The definition of
change in control was modified in some respects in the Third Amendment and
Restatement to conform to the definition being used in other U. S. Bancorp
compensation plans and executive agreements.
The foregoing provisions will not apply (other than to performance cash
Awards) if the Committee determines that the use of the pooling of interests
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.
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
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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 Incentive Plan will 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 Incentive Plan at any time, but any such termination shall not
affect any outstanding Awards. The Board of Directors may also amend the
Incentive Plan from time to time, subject to any applicable shareholder approval
requirement imposed by applicable securities laws, federal income tax laws, or
NASDAQ or securities exchange rules.
NEW PLAN BENEFITS
The following table summarizes the benefits related to Awards granted under
the Incentive Plan since approval of the Third Amendment and Restatement by the
Board of Directors.
PLAN BENEFITS TABLE
1993 STOCK INCENTIVE PLAN
<TABLE>
<CAPTION>
NUMBER OF
NAME AND POSITION(1) RESTRICTED UNITS(2)
------------------------------------------------------------ -------------------
<S> <C>
Gerry B. Cameron............................................ 19,800
Chairman of the Board and Chief Executive Officer
Robert D. Sznewajs.......................................... 8,500
Vice Chairman
Arland D. Hatfield.......................................... 6,000
Executive Vice President
Gary T. Duim................................................ 6,000
Executive Vice President
V. Lamoine Saunders......................................... 5,500
Executive Vice President
All Executive Officers as a Group........................... 65,700
All Employees as a Group, Excluding Executive Officers...... 6,000
</TABLE>
- ---------------
(1) Non-employee directors do not participate in the Incentive Plan.
(2) Represents Awards of restricted units which vest in 20% installments over
five years. The restricted units will become vested in full, to the extent
not earlier vested, in the event the participant's employment is terminated
by death, disability, retirement or within 24 months following a change in
control without cause or by the participant for good reason, provided that
such acceleration of vesting upon a change in control is not determined by
the Committee to have a materially adverse effect on U. S. Bancorp's ability
to use the pooling of interests method of accounting with respect to the
change in control transaction where the use of such method would be
materially beneficial to U. S. Bancorp, and provided further that benefits
to executives other than Messrs. Cameron and Sznewajs may be reduced if they
would be left in a better after-tax position. The restricted unit Awards
will be canceled if (i) the shareholders do not approve the Third Amendment
and Restatement of the 1993 Stock Incentive Plan at the 1996 annual meeting
or (ii) the Committee determines that the grant of the Awards will have a
materially adverse effect on U. S. Bancorp's ability to use the pooling of
interests method of accounting with respect to any future transaction.
23
<PAGE> 28
Information regarding grants of stock options and performance share Awards
to the named executive officers during 1995 is set forth under "Executive
Compensation -- Stock-Based Compensation." Since January 1, 1996, no performance
shares had been granted and no stock options had been granted to the named
executive officers through the date of this Proxy Statement. The following table
sets forth the numbers of stock options granted in 1995 and 1996 to the
following groups:
<TABLE>
<CAPTION>
STOCK OPTIONS
-----------------
1995 1996
------- ------
<S> <C> <C>
All Executive Officers as a Group.................. 349,946 6,000
All Other Employees................................ 542,000 55,000
</TABLE>
The following table sets forth the numbers of performance shares granted in
1995 for the three-year performance period ending December 31, 1997:
<TABLE>
<CAPTION>
PERFORMANCE SHARES(1)
---------------------
TARGET
---------------------
<S> <C>
All Executive Officers as a Group................. 48,652
All Other Employees............................... -0-
</TABLE>
- ---------------
(1) Payout potential ranges from 0% to 200% of Target.
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.
24
<PAGE> 29
STOCK APPRECIATION RIGHTS
The grant of an SAR to a participant will not cause the recognition of
income by the participant. Upon exercise of an 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 AWARDS AND PERFORMANCE SHARE AWARDS
Generally, a participant will not recognize any income upon issuance of an
Award of restricted shares, restricted units, 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, restricted
units, 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.
PERFORMANCE CASH AWARDS
Unless deferred under the U. S. Bancorp Executive Deferred Compensation
Plan, cash payouts under performance cash Awards will be taxable to the
participant as compensation income at the time of payment.
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 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 Third Amendment and Restatement of the U. S. Bancorp 1993 Stock Incentive
Plan. 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 1996 annual meeting is required for approval.
PROPOSAL 3: APPROVAL OF PERFORMANCE GOALS
UNDER THE EXECUTIVE ANNUAL INCENTIVE PLAN AND
THE PERFORMANCE CASH AWARD PLAN
BACKGROUND
U. S. Bancorp has for several years made cash awards to certain designated
executive officers under the U. S. Bancorp Executive Annual Incentive Plan (the
"Annual Plan"). Short-term performance is emphasized under the Annual Plan,
pursuant to which annual bonuses are paid based on reaching specified
performance goals for the year that are set by the Committee.
On February 15, 1996, the Board of Directors adopted a new Performance Cash
Award Plan (the "Performance Plan") for U. S. Bancorp executives. The
Performance Plan emphasizes long-term perform-
25
<PAGE> 30
ance through awards based on reaching specified performance goals over a
specified period (generally three years).
Changes in the Code enacted in 1993 affect the deductibility of awards paid
under the Annual Plan and the Performance Plan. Section 162(m) of the Code
provides that compensation in excess of $1 million paid for any year to a
corporation's chief executive officer and the four other highest paid executive
officers at the end of such year ("Covered Employees") will not be deductible by
the corporation for federal income tax purposes unless certain conditions are
met. One such condition is that the compensation qualify as "performance-based
compensation." In addition to the other requirements for qualification as
performance-based compensation, shareholders must be advised of and must approve
the material terms of the performance goals under which such compensation is to
be paid.
The Board of Directors intends that awards to Covered Employees under the
Annual Plan and the Performance Plan qualify as performance-based compensation
within the meaning of Section 162(m). In order to maintain the deductibility of
awards paid to Covered Employees under the Annual Plan and the Performance Plan,
shareholders will be asked at the 1996 annual meeting to approve the material
terms of the performance goals, which are described below.
INDIVIDUALS ELIGIBLE
The executives eligible to participate in the Annual Plan and the
Performance Plan are executives of U. S. Bancorp and its subsidiaries who are
members of the Executive Management Committee and any other officers and
executives (who may also be directors) with comparable responsibilities.
Participants are selected by the Committee. For 1996, the participants include
the Covered Employees and approximately seven other senior executives.
BUSINESS CRITERIA UPON WHICH PERFORMANCE GOALS ARE BASED
The performance goals to be used for both the Annual Plan for Covered
Employees and the Performance Plan will be any one or a combination of the
following: net income, cash flow, or any profit-related return ratios or
calculations. For any plan year or performance period, such performance
objectives may be measured on an absolute basis or relative to a group of peer
banks selected by the Committee, relative to internal goals, or relative to
levels attained in prior plan years. The specific performance criteria selected
need not be the same for the Annual Plan and the Performance Plan.
The Committee will establish specific performance objectives for each plan
year under the Annual Plan not later than 90 days after the beginning of the
plan year. For the Performance Plan, the Committee will similarly establish
specified performance goals for each performance period established under the
plan (generally a three-year period) not later than 90 days after the beginning
of the performance period. During any performance period, the Committee may
adjust the performance goals as it deems equitable in recognition of unusual or
nonrecurring events affecting U. S. Bancorp, changes in applicable tax laws or
accounting principles, or such other factors as the Committee deems relevant;
provided that the Committee may not adjust the performance goals for an award
held by a Covered Employee with respect to the year in which the award is
settled so as to increase the amount of compensation payable to such Covered
Employee.
TARGET AND MAXIMUM AWARDS
Under both the Annual Plan and the Performance Plan, the Committee
specifies for each participant a targeted incentive award, which is generally
expressed as a percentage of the participant's base salary (exclusive of bonuses
and other incentive compensation). With respect to the performance criteria
selected by the Committee for each plan year or performance period, the
Committee specifies threshold, target, and outstanding performance levels and a
method of combining the performance results for each performance criteria. At
the end of the plan year, the Committee determines the extent to which the
specified performance criteria have been met and determines a performance
percentage (from 0% to 200%) to be multiplied by a participant's targeted
incentive award to arrive at the amount payable under the Annual Plan for the
plan year or under the Performance Plan for the performance period. The highest
level of compensation that may be
26
<PAGE> 31
paid to any participant under the Annual Plan for any plan year will not exceed
$2,000,000. The highest level of compensation that may be paid to any
participant under the Performance Plan during any calendar year also will not
exceed $2,000,000. The $2,000,000 limitation under the Performance Plan applies
in the aggregate to awards under the Performance Plan and to performance cash
awards granted under the 1993 Stock Incentive Plan. See "Proposal 2: Approval of
Third Amendment and Restatement of the 1993 Stock Incentive Plan."
NEW PLAN BENEFITS
The Committee, with respect to Executive Management Committee members, and
certain officers pursuant to delegated authority, with respect to other
participants, have established target levels for awards under the Annual Plan
for 1996. The following table sets forth the amounts which would be paid to the
individuals and groups referred to below pursuant to awards made under the
Annual Plan for 1996 at the specified levels of attainment of performance goals
established by the Committee, provided that such awards shall be canceled if the
proposal to approve the performance goals as described above is not approved by
the shareholders at the 1996 annual meeting. No awards had been made pursuant to
the Performance Plan at the date of this Proxy Statement.
PLAN BENEFITS TABLE
<TABLE>
<CAPTION>
EXECUTIVE ANNUAL INCENTIVE PLAN
ESTIMATED FUTURE PAYOUTS (2)
---------------------------------------------------
BELOW
NAME AND PRINCIPAL POSITION(1) THRESHOLD THRESHOLD TARGET MAXIMUM
- -------------------------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
Gerry B. Cameron............................ $ 0 $ 240,000 $ 480,000 $ 960,000
Chairman of the Board and Chief Executive
Officer
Robert D. Sznewajs.......................... 0 106,250 212,500 425,000
Vice Chairman
Arland D. Hatfield.......................... 0 70,000 140,000 280,000
Executive Vice President
Gary T. Duim................................ 0 70,000 140,000 280,000
Executive Vice President
V. Lamoine Saunders......................... 0 57,000 114,000 228,000
Executive Vice President
All Executive Officers as a Group........... 0 929,131 1,858,261 3,716,522
</TABLE>
- ---------------
(1) Non-employee directors and employees who are not executive officers do not
participate in the Annual Plan.
(2) Threshold represents 50% of target, and maximum represents 200% of target.
SHAREHOLDER APPROVAL REQUIREMENTS; RECOMMENDATION BY THE BOARD OF DIRECTORS
Pursuant to regulations promulgated under Section 162(m), if the Committee
retains authority to change the objectives under the performance goals from year
to year, as provided in both the Annual Plan and the Performance Plan, the
material terms of the performance goals must be reapproved by the shareholders
five years after initial shareholder approval. Otherwise, the Board of Directors
or the Committee may amend the Annual Plan or Performance Plan in any respect
without shareholder approval.
If the material terms of the performance goals are not approved by the
shareholders, awards granted for the 1996 plan year under the Annual Plan and
any awards which may be granted under the Performance Plan will be canceled.
However, the Board of Directors and the Committee retain authority to develop
and implement alternate means of providing fair compensation for executive
officers, including the Covered Employees. Such alternative means might include
discretionary annual and long-term bonus programs.
The Board of Directors believes it is in the best interests of U. S.
Bancorp for the shareholders to approve the material terms of the performance
goals under which awards are paid pursuant to the Annual Plan and the
27
<PAGE> 32
Performance Plan. Thus, the Board recommends that the shareholders vote FOR the
proposal described above. 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 1996 annual meeting is required for approval.
PROPOSAL 4: 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 1997 proxy materials
and consideration at the 1997 annual meeting must be received on or before
November 11, 1996. Proposals should be sent to U. S. Bancorp, Attention:
Corporate Secretary Division, P.O. Box 2200, Portland, Oregon 97208-2200.
OTHER BUSINESS
While the accompanying 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 those listed as Items 1 through 4 in the Notice. 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
JOHN J. DEMOTT
Secretary
March 11, 1996
28
<PAGE> 33
EXHIBIT A
U. S. BANCORP
1993 STOCK INCENTIVE PLAN
THIRD AMENDMENT AND RESTATEMENT
FEBRUARY 15, 1996
<PAGE> 34
U. S. BANCORP
1993 STOCK INCENTIVE PLAN
THIRD AMENDMENT AND RESTATEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 1 -- ESTABLISHMENT AND PURPOSE................................................ 1
1.1 Establishment; Restatement................................................. 1
1.2 Purpose.................................................................... 1
1.3 Other Option Plans......................................................... 1
ARTICLE 2 -- DEFINITIONS.............................................................. 1
2.1 Defined Terms.............................................................. 1
2.2 Gender and Number.......................................................... 5
ARTICLE 3 -- ADMINISTRATION........................................................... 5
3.1 General.................................................................... 5
3.2 Composition of the Committee............................................... 5
3.3 Authority of the Committee................................................. 5
3.4 Delegation................................................................. 5
3.5 Liability of Committee Members............................................. 5
3.6 Costs of Plan.............................................................. 5
ARTICLE 4 -- DURATION OF THE PLAN AND SHARES SUBJECT TO THE PLAN...................... 6
4.1 Duration of the Plan....................................................... 6
4.2 Shares Subject to the Plan................................................. 6
ARTICLE 5 -- ELIGIBILITY.............................................................. 6
ARTICLE 6 -- AWARDS................................................................... 6
6.1 Types of Awards............................................................ 6
6.2 General.................................................................... 7
6.3 Nonuniform Determinations.................................................. 7
6.4 Award Agreements........................................................... 7
6.5 Provisions Governing All Awards............................................ 7
6.6 Dividend Equivalents....................................................... 9
ARTICLE 7 -- OPTIONS.................................................................. 9
7.1 Types of Options........................................................... 9
7.2 General; Limitation on Number of Options................................... 9
7.3 Option Price............................................................... 9
7.4 Option Term................................................................ 10
7.5 Time of Exercise........................................................... 10
7.6 Special Rules for Incentive Stock Options.................................. 10
7.7 Restricted Shares.......................................................... 10
7.8 Reload Options............................................................. 10
ARTICLE 8 -- STOCK APPRECIATION RIGHTS................................................ 10
8.1 General; Limitation on Number of SARs...................................... 10
8.2 Nature of Stock Appreciation Right......................................... 10
8.3 Exercise................................................................... 11
8.4 Form of Payment............................................................ 11
</TABLE>
i
<PAGE> 35
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 9 -- RESTRICTED AWARDS........................................................ 11
9.1 Types of Restricted Awards................................................. 11
9.2 General.................................................................... 11
9.3 Restriction Period......................................................... 11
9.4 Forfeiture................................................................. 12
9.5 Settlement of Restricted Awards............................................ 12
9.6 Rights as a Shareholder.................................................... 12
ARTICLE 10 -- PERFORMANCE AWARD....................................................... 12
10.1 Types of Performance Awards................................................ 12
10.2 Performance Cycles......................................................... 13
10.3 Performance Goals.......................................................... 13
10.4 Determination of Awards.................................................... 13
10.5 Settlement of Performance Awards........................................... 13
10.6 Rights as a Shareholder.................................................... 13
10.7 Performance Awards for Executive Officers.................................. 13
ARTICLE 11 -- OTHER STOCK BASED AND COMBINATION AWARDS................................ 14
11.1 Other Stock-Based Awards................................................... 14
11.2 Combination Awards......................................................... 14
ARTICLE 12 -- DEFERRAL ELECTIONS...................................................... 14
ARTICLE 13 -- ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, ETC......................... 14
13.1 Plan Does Not Restrict Bancorp............................................. 14
13.2 Adjustments by the Committee............................................... 14
ARTICLE 14 -- AMENDMENT AND TERMINATION............................................... 15
ARTICLE 15 -- MISCELLANEOUS........................................................... 15
15.1 Tax Withholding............................................................ 15
15.2 Unfunded Plan.............................................................. 15
15.3 Payments to Trust.......................................................... 15
15.4 Annulment of Awards........................................................ 15
15.5 Engaging in Competition With Bancorp....................................... 15
15.6 Other Bancorp Benefit and Compensation Programs............................ 16
15.7 Securities Law Restrictions................................................ 16
15.8 Governing Law.............................................................. 16
15.9 Accounting Matters......................................................... 16
ARTICLE 16 -- SHAREHOLDER APPROVAL.................................................... 16
</TABLE>
ii
<PAGE> 36
U. S. BANCORP
1993 STOCK INCENTIVE PLAN
THIRD AMENDMENT AND RESTATEMENT
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 effective
as of October 21, 1993, as amended and restated effective February 17, 1994,
November 17, 1994, and further amended and restated in the present form
effective February 15, 1996 (the "Plan"), subject to shareholder approval as
provided in Article 16.
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 cash and 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 1984 Incentive Stock Option Plan
U. S. Bancorp 1985 Stock Option and SAR 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 was initially approved by Bancorp's
shareholders; 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.
ARTICLE 2
DEFINITIONS
2.1 Defined Terms. For purposes of the Plan, the following terms shall
have the meanings set forth below:
"ACQUIRING PERSON" means 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 or related trust 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 Awards, Performance Awards, or Other Stock-Based
Awards pursuant to the Plan.
-1-
<PAGE> 37
"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" of Bancorp means:
(a) The acquisition by any Acquiring Person of beneficial ownership
(within the meaning of Rule 13d-3 under the Exchange Act) of 20 percent or
more of the combined voting power of the then outstanding Voting
Securities; provided, however, that for purposes of this paragraph (a) the
following acquisitions shall not constitute a Change in Control: (i) any
acquisition directly from Bancorp, (ii) any acquisition by Bancorp, (iii)
any acquisition by any employee benefit plan (or related trust) sponsored
or maintained by Bancorp or any corporation controlled by Bancorp, or (iv)
any acquisition by any corporation pursuant to a transaction that complies
with clauses (i), (ii), and (iii) of paragraph (c) of this definition of
Change in Control; or
(b) During any period of 12 consecutive calendar months, individuals
who at the beginning of such period constitute the Board (the "Incumbent
Board") cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual who becomes a director during
the period whose election, or nomination for election, by Bancorp's
shareholders was approved by a vote of at least a majority of the directors
then constituting the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than the Board; or
(c) Consummation of a reorganization, merger, or consolidation or sale
or other disposition of all or substantially all of the assets of Bancorp
(a "Business Combination") in each case, unless, following such Business
Combination, (i) all or substantially all of the individuals and entities
who were the beneficial owners of the Voting Securities outstanding
immediately prior to such Business Combination beneficially own, directly
or indirectly, more than 50 percent of, respectively, the then outstanding
shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such
Business Combination (including, without limitation, a corporation which as
a result of such transaction owns Bancorp or all or substantially all of
Bancorp's assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior to
such Business Combination, of the Voting Securities, (ii) no Person
(excluding any employee benefit plan, or related trust, of Bancorp or such
corporation resulting from such Business Combination) beneficially owns,
directly or indirectly, 20 percent or more of, respectively, the then
outstanding shares of common stock of the corporation resulting from such
Business Combination or the combined voting power of the then outstanding
voting securities of such corporation except to the extent that such
ownership existed prior to the Business Combination and (iii) at least a
majority of the members of the board of directors of the corporation
resulting from such Business Combination were members of Incumbent Board at
the time of the execution of the initial agreement, or of the action of the
Board, providing for such Business Combination; or
(d) Approval by the shareholders of Bancorp of any plan or proposal
for the liquidation or dissolution of Bancorp.
"CHANGE IN CONTROL DATE" means 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.
-2-
<PAGE> 38
"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),
15.4, 15.5, and 15.7 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 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 means:
(a) If the Shares are listed on a stock exchange, the low sale price
as reported for that day by the principal stock exchange on which the
Shares are listed; or
(b) If the Shares are not listed on a stock exchange:
(i) 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
(ii) 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 by the principal stock exchange or, if the
Shares are not listed on a stock exchange, 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.
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"PERFORMANCE AWARD" means a Performance Cash Award or a Performance Share
Award granted pursuant to the provisions of Article 10 of the Plan, the Vesting
of which is contingent on performance attainment.
"PERFORMANCE CASH AWARD" means an Award described in Section 10.1(a) of the
Plan.
"PERFORMANCE CYCLE" means a designated performance period pursuant to the
provisions of Section 10.2 of the Plan.
"PERFORMANCE GOAL" means a designated performance objective pursuant to the
provisions of Section 10.3 of the Plan.
"PERFORMANCE SHARE" means a Share granted under and subject to a
Performance Share Award. "Performance Share Award" means an Award described in
Section 10.1(b) of the Plan.
"PLAN" means this Third Amendment and Restatement of the 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.
"REPORTING PERSON" means a Participant who is subject to the reporting
requirements of Section 16(a) of the Exchange Act.
"RESTRICTED AWARD" means a Restricted Share Award or a Restricted Unit
Award granted pursuant to Article 9 of the Plan.
"RESTRICTED SHARE" means a Share granted under and subject to a Restricted
Share Award. "Restricted Share Award" means an Award described in Section 9.1(a)
of the Plan.
"RESTRICTED UNIT AWARD" means an Award described in Section 9.1(b) 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.
"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.
"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,
freely transferable, and free of all Restrictions (other than Continuing
Restrictions); or
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(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" means 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;
(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.
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ARTICLE 4
DURATION OF THE PLAN AND SHARES SUBJECT TO THE PLAN
4.1 Duration of the Plan. The Plan initially became effective October 21,
1993. 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
13, 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 16. The aggregate
number of Shares which may be subject to 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 13, the
maximum number of Shares for which Restricted 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.
(e) Share for Share Exercises. In the event any Option or other Award
requiring exercise is exercised (pursuant to the terms of the applicable Award
Agreement) in whole or in part by delivery or attestation to Bancorp of
previously acquired Shares, the Shares delivered or attested to Bancorp in lieu
of payment of the exercise price of the Option or other Award will be added to
the Shares 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 Awards governed by Article 9 of the Plan, which may
include Restricted Share Awards and Restricted Unit Awards;
(d) Performance Awards governed by Article 10 of the Plan, which may
include Performance Cash Awards and Performance Share Awards; and
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(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.
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) Transferability. Except as otherwise provided in this Section
6.5(d), each Award (other than Shares after they Vest) will not be
transferable other than by will or the laws of descent and distribution and
will be exercisable (for Awards which require exercise) 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, the Committee, in its
discretion, may provide in any Award Agreement that the Award is
transferable, without payment of consideration, to immediate family members
of the Participant or to trusts or partnership for such family members
("Permitted Family Transferees"). The Committee may, in its discretion,
also amend outstanding Award Agreements for Awards granted prior to 1996 to
allow transfer of such Awards, without payment of consideration, to
Permitted Family Transferees. Furthermore, in the event Rule 16b-3 under
the Exchange Act is amended to eliminate restrictions on transferability as
a condition of exemption under Rule 16b-3, the Committee, in its
discretion, may provide in any Award Agreement that the Award may be freely
transferred, may be freely transferred to any class of transferees
identified in the Award Agreement, or may be transferred subject to any
terms and conditions specified in the Award Agreement. Notwithstanding the
foregoing, Awards may be 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.
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(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;
(ii) By reducing the number of Shares or other property otherwise
Vested and issuable pursuant to the Award;
(iii) By delivering to Bancorp a promissory note payable on such
terms and over such period as the Committee shall determine;
(iv) 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 price and taxes
or withholding taxes attributable to the issuance; or
(v) In any combination of the foregoing or in any other form
approved by the Committee.
For purposes of exercising an Option by delivery of previously owned
Shares, the Participant may deliver, in lieu of an actual delivery of
Shares, an attestation by the Participant in a form satisfactory to Bancorp
that the Participant owns freely transferable previously acquired Shares
having a Fair Market Value equal to the Option exercise price. 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 (or the Shares issuable upon exercise of the Options shall
not be transferable) 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:
(A) An Option or other Award requiring exercise shall become
fully and immediately exercisable;
(B) An Award subject to Restrictions shall become fully Vested
if the Participant's employment is terminated (by Bancorp without
Cause, or by the Participant for Good Reason,
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as those terms are defined in the Award Agreement) within a specified
period following the Change in Control Date; or
(C) A Performance Award 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 or a portion of the target cash award
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 or a portion of the target
cash award equal to the product of the Target Shares or target
cash award 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.
However, each Award Agreement (other than an Award Agreement for a Performance
Cash Award) 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.
6.6 Dividend Equivalents. The Committee, in its discretion, may provide
that any Award will earn dividends or dividend equivalents. An Award Agreement
may provide that such dividends or dividend equivalents will be paid currently
or will be credited to the Participant's account. Any crediting of dividends or
dividend equivalents will be subject to such restrictions and conditions as the
Committee may establish in an Award Agreement, including reinvestment in
additional Shares or share equivalents.
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
750,000.
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 or previously
acquired Shares are surrendered in payment of the Participant's federal, state,
or local tax or tax withholding obligation with respect to such exercise, the
Participant shall automatically be granted 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 or for payment of taxes. Such 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 750,000.
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
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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 AWARDS
9.1 Types of Restricted Awards. Restricted Awards granted under the Plan
may be in the form of either Restricted Share Awards or Restricted Unit Awards.
(a) Restricted Share Awards. A Restricted Share Award 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 Award may
be issued a stock certificate in respect of such Restricted 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 Restricted 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.
(b) Restricted Unit Awards. A Restricted Unit Award is an Award of
Restricted Units (with each Restricted Unit having a value equivalent to
one Share) granted to a Participant subject to such terms and conditions as
the Committee deems appropriate, and may include a requirement that the
Participant forfeit such Restricted Units 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
Units.
9.2 General. Restricted Awards shall be subject to the terms and
conditions of Article 6 and this Article 9 and Award Agreements governing
Restricted Awards shall contain such additional terms and conditions, not
inconsistent with the express provisions of the Plan, as the Committee shall
deem desirable.
9.3 Restriction Period. Award Agreements for Restricted Awards shall
provide that Restricted Awards, and the Shares subject to Restricted Awards, may
not be transferred, and may provide that, in order for a Participant to Vest in
such Restricted Awards, 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
Award or the Shares received under or governed by the Restricted Award. The
Committee, in its sole discretion, may provide for a single lapse of
restrictions at the expiration of the Restriction Period or for the lapse of
restrictions in installments during the Restriction Period. Upon expiration of
the applicable Restriction Period (or lapse of
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Restrictions during the Restriction Period where the Restrictions lapse in
installments) the Participant shall be entitled to settlement of the Restricted
Award or portion thereof, as the case may be. Although Restricted Awards will
usually Vest based on continued employment and Performance Awards under Article
10 will usually Vest based on attainment of Performance Goals, the Committee, in
its discretion, may condition Vesting of Restricted Awards on attainment of
Performance Goals as well as continued employment. In such case, the Restriction
Period for such a Restricted Award shall include the period prior to
satisfaction of the Performance Goals. The Committee, in its discretion, may
accelerate the Vesting of any Restricted 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 Awards
previously granted to the Participant be forfeited and returned to Bancorp.
9.5 Settlement of Restricted Awards.
(a) Restricted Shares. 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.
(b) Restricted Units. Upon Vesting of a Restricted Unit Award, a
Participant shall be entitled to receive a certificate for a number of
unrestricted Shares equal to the number of Vested Restricted Units, cash equal
to the then Fair Market Value of a number of Shares equal to the Vested
Restricted Units, or a combination of cash and Shares, as determined by the
Committee.
9.6 Rights as a Shareholder. A Participant shall have, with respect to
unforfeited Restricted Shares received 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 Shares covered by the
Restricted Share Award and shall be subject to the same Restrictions. A
Participant will have no rights as a shareholder with respect to Restricted Unit
Awards until Shares have been issued in settlement of such Awards.
ARTICLE 10
PERFORMANCE AWARDS
10.1 Types of Performance Awards. Performance Awards under the Plan may be
in the form of either Performance Cash Awards or Performance Share Awards.
Performance Awards shall be subject to the terms and conditions set forth in
Article 6 and this Article 10. Performance Awards for executive officers are
subject to Section 10.7.
(a) Performance Cash Awards. A Performance Cash Award is an Award
providing for a cash award subject to such terms and conditions as the
Committee deems appropriate including, without limitation, the requirement
that the Participant will earn such cash award or a portion thereof only in
the event specified Performance Goals are met within a specified
Performance Cycle, as set forth in the Award Agreement for the Performance
Cash Award.
(b) Performance Share Awards. A Performance Share Award is an Award of
Performance Shares granted to a Participant subject to such terms and
conditions as the Committee deems appropriate, including, without
limitation, the requirement that the Participant will earn such Performance
Shares or a portion thereof only in the event specified Performance Goals
are met within a specified Performance Cycle, as set forth in the Award
Agreement for the Performance Share Award. 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. Performance Share Awards for
executive officers are subject to Section 10.7(b)(ii).
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<PAGE> 48
10.2 Performance Cycles. For each Performance 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.
10.3 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
applicable tax laws or accounting principles, or such other factors as the
Committee may determine; provided, however, that the Committee may not adjust
Performance Goals for any Participant who is a covered employee for purposes of
Section 162(m) of the Code for the year in which such Performance Award is
settled, in such a manner as would increase the amount of compensation otherwise
payable to such covered employee.
10.4 Determination of Awards. As soon as practicable after the end of a
Performance Cycle, the Committee shall determine the extent to which Performance
Awards have been earned on the basis of performance in relation to the
established Performance Goals.
10.5 Settlement of Performance Awards.
(a) Performance Cash Awards. Settlement of earned Performance Cash Awards
shall be made to the Participant as soon as practicable after the expiration of
the Performance Cycle and the Committee's determination under Section 10.4 of
the extent to which the Award has been earned by the payment of cash equal to
the earned portion of the Award, by the issuance of unrestricted Shares having a
Fair Market Value equal to the earned portion of the Award, or by a combination
of cash and Shares, as determined by the Committee.
(b) Performance Share Awards. 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 10.4 of the
extent to which the Award has been earned by the issuance and delivery of
unrestricted Shares equal to the number of earned Performance Shares, by the
payment of cash equal to the then Fair Market Value of the earned Performance
Shares, or by a combination of cash and Performance Shares, as determined by the
Committee.
10.6 Rights as a Shareholder. Unless a stock certificate is issued with
respect to a Performance Share Award as provided in Section 10.1(b), a
Participant will 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 Participant's 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. A Participant will have
no right as a shareholder with respect to Performance Cash Awards.
10.7 Performance Awards for Executive Officers. All Performance Awards to
executive officers of Bancorp and its Subsidiaries shall be subject to the
following additional specific requirements:
(a) Performance Goals. The Performance Goals shall be any one or a
combination of:
- net income
- cash flow
- any profit-related return ratios or
calculations.
Such Performance Goals may be measured on an absolute basis or relative to
a group of peer banks selected by the Committee, relative to internal
goals, or relative to levels attained in prior years. The Committee will
establish specific Performance Goals for each Performance Award not later
than 90 days after the beginning of the Performance Cycle for the Award.
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<PAGE> 49
(b) Award Limitations.
(i) Performance Cash Awards. The maximum amount of compensation
payable with respect to Performance Cash Awards granted to any
individual executive officer (under the Plan and under the U. S. Bancorp
Performance Cash Award Plan) will not exceed $2 million for each
calendar year in a Performance Cycle.
(ii) Performance Share Awards. The maximum number of Shares
issuable with respect to Performance Share Awards granted to any
individual executive officer will not exceed 100,000 Shares (subject to
adjustment pursuant to Article 13) for any calendar year in a
Performance Cycle.
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 750,000. 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, including without limitation
payment of dividend equivalents (or, if permitted by such deferred compensation
plan, the delivery of 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
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, ETC.
13.1 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 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.
13.2 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-
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<PAGE> 50
up, spin-off, 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.
ARTICLE 14
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, subject to any applicable shareholder approval
requirement imposed by applicable securities laws, federal income tax laws, or
NASDAQ or securities exchange rules.
ARTICLE 15
MISCELLANEOUS
15.1 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.
15.2 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.
15.3 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.
15.4 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 or without good reason (as defined in an Award Agreement),
any Award that is revocable shall be annulled as of the date of such
termination, and the Award Agreement may require the Participant to return to
Bancorp any Shares issued under the Award or the proceeds from any sale of such
Shares within a specified period prior to such termination.
15.5 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 a
specified period prior to the date of such Participant's termination of
employment with Bancorp.
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<PAGE> 51
15.6 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.
15.7 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.
15.8 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.
15.9 Accounting Matters. In the event that the Compensation Committee
determines that any provision of the Plan added or amended by the Third
Amendment and Restatement of the Plan is likely to have a materially adverse
impact on the ability of Bancorp to use the pooling method of accounting, such
added provision or amendment of a provision shall not be given any effect.
ARTICLE 16
SHAREHOLDER APPROVAL
The Third Amendment and Restatement of the Plan effective February 15,
1996, 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 1996 annual meeting of Bancorp's shareholders.
All Award Agreements granted prior to the 1996 annual meeting of shareholders
that incorporate provisions authorized or allowed solely by reason of this Third
Amendment and Restatement of the Plan shall be subject to such shareholder
approval.
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<PAGE> 52
P U. S. BANCORP
R ANNUAL MEETING, APRIL 16, 1996
O THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
X The undersigned hereby appoints Harry Bettis, Carolyn Silva Chambers, and
Robert L. Dryden, and each of them, Proxies with power of substitution to
Y 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 on
April 16, 1996, 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.
Nominees for Election as Directors: Change of Address
H. Bettis J. Green
G. Cameron D. Nelson ------------------------------------
C. Chambers A. Noble
F. Drake P. Redmond ------------------------------------
R. Dryden N. Rogers
J. Fery B. Whiteley ------------------------------------
------------------------------------
(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
-----------
<PAGE> 53
Please mark your
votes as in this
/X/ example.
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, the proxy will be voted FOR proposals 1,
2, 3, and 4.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FOR WITHHELD FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
1. ELECTION OF / / / / 2. PROPOSAL TO / / / / / / 3. PROPOSAL TO APPROVE THE / / / / / /
DIRECTORS APPROVE THE PERFORMANCE GOALS
THIRD AMENDMENT UNDER THE EXECUTIVE
For all nominees except WITHHELD AND RESTATEMENT ANNUAL INCENTIVE PLAN
for the following: AS TO ALL OF THE 1993 STOCK AND THE PERFORMANCE
NOMINEES INCENTIVE PLAN CASH AWARD PLAN
____________________________________
FOR AGAINST ABSTAIN
4. PROPOSAL TO APPROVE THE / / / / / /
SELECTION OF DELOITTE &
TOUCHE LLP AS INDEPENDENT
AUDITORS FOR U.S. BANCORP
SIGNATURE(S)_____________________________________________________________________________________ DATE ___________________________
</TABLE>
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.
<PAGE> 54
U.S. BANCORP
ANNUAL MEETING APRIL 16, 1996
DIRECTIVE to the Trustee Solicited on Behalf of the Board of Directors from
Participants in the U.S. Bancorp Employee Investment Plan.
The undersigned participant in the U.S. Bancorp Employee Investment Plan
("Plan") hereby directs the Trustee to vote all shares held for the
participant's account under the Plan at the annual meeting of shareholders of
U.S. Bancorp on April 16, 1996, and any adjournments thereof with respect to
the following:
PROPOSAL 1. ELECTION OF DIRECTORS
/ / FOR all nominees listed below (except as marked to the contrary below)
/ / WITHHOLD AUTHORITY to vote for all nominees listed below.
(INSTRUCTIONS: TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
H. Bettis, G. Cameron, C. Chambers, F. Drake, R. Dryden, J. Fery, J. Green,
D. Nelson, A. Noble, P. Redmond, N. Rogers, B. Whiteley
PROPOSAL 2. PROPOSAL TO APPROVE THE THIRD AMENDMENT AND RESTATEMENT of the U.S.
Bancorp 1993 Stock Incentive Plan.
/ / FOR / / AGAINST / / ABSTAIN
PROPOSAL 3. PROPOSAL TO APPROVE PERFORMANCE GOALS under the Executive Annual
Incentive Plan and the Performance Cash Award Plan.
/ / FOR / / AGAINST / / ABSTAIN
PROPOSAL 4. PROPOSAL TO APPROVE SELECTION OF DELOITTE & TOUCHE LLP as
independent auditors for U.S. Bancorp.
/ / FOR / / AGAINST / / ABSTAIN
IN ITS DISCRETION, THE TRUSTEE IS AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS
AS MAY PROPERLY COME BEFORE THE MEETING.
THIS DIRECTIVE WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED PARTICIPANT. IF NO DIRECTION IS MADE, THIS DIRECTIVE
WILL BE VOTED FOR PROPOSALS 1, 2, 3 AND 4.
<TABLE>
<S> <C> <C>
PLEASE MARK, SIGN, DATE, AND RETURN Dated:_______________________________, 1996
Total Number of Shares: THE DIRECTIVE BY APRIL 9, 1996, USING
THE ENCLOSED ENVELOPE. ___________________________________________
Signature of Participant
Employee# (Please sign exactly as name appears hereon)
</TABLE>
<PAGE> 55
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 11, 1996 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, 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 9, 1996.
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.
