<PAGE>
===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
NATIONAL COMMERCE BANCORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
NATIONAL COMMERCE BANCORPORATION
One Commerce Square
Memphis, Tennessee 38150
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 28, 1999
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of National
Commerce Bancorporation will be held in the Auditorium at National Bank of
Commerce, Concourse Level, Commerce Tower, One Commerce Square, Memphis,
Tennessee 38150, on Wednesday, April 28, 1999, at 10:00 a.m., local time, for
the following purposes:
1. To elect the six nominees named in the accompanying Proxy Statement as
directors of the Company;
2. To ratify the appointment of Ernst & Young LLP, independent certified
accountants, as auditors of the Company for 1999;
3. To transact any and all other business as may properly come before the
meeting or any adjournment thereof.
Only shareholders of record at the close of business on March 5, 1999, will
be entitled to receive notice of and to vote at the Annual Meeting.
Information relating to the above matters is set forth in the accompanying
Proxy Statement dated March 31, 1999.
By Order of the Board of Directors,
Gus B. Denton
Secretary
Memphis, Tennessee
March 31, 1999
WHETHER OR NOT THEY INTEND TO BE PRESENT AT THE ANNUAL MEETING IN PERSON,
SHAREHOLDERS ARE URGED TO COMPLETE AND SIGN THE ENCLOSED PROXY AND RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES.
<PAGE>
NATIONAL COMMERCE BANCORPORATION
One Commerce Square
Memphis, Tennessee 38150
---------------------
PROXY STATEMENT
---------------------
ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 28, 1999
---------------------
GENERAL
Purposes of Solicitation
The Annual Meeting of the Shareholders of National Commerce Bancorporation
(the "Company" or "NCBC") will be held on April 28, 1999, for the purposes set
forth in the attached Notice of Annual Meeting of Shareholders and in this
Proxy Statement. The accompanying Proxy is solicited on behalf of the Board of
Directors of the Company in connection with such meeting and any adjournments
thereof. The term "NBC" as used in this Proxy Statement refers to National
Bank of Commerce, Memphis, Tennessee, the Company's principal banking
subsidiary. This Proxy Statement and the enclosed Proxy are being first mailed
to the Company's shareholders on or about March 31, 1999.
Outstanding Voting Securities and Persons Entitled to Vote
Only shareholders of record as of the close of business on March 5, 1999,
will be entitled to receive notice of and to vote at the Annual Meeting. As of
that date, the Company had outstanding 101,272,004 shares of Common Stock,
each share being entitled to one vote. Appraisal rights for dissenting
shareholders are not applicable to the matters being proposed.
Voting Procedures
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the election inspectors appointed for the meeting and will determine whether
or not a quorum is present. The election inspectors will treat abstentions as
shares that are present and entitled to vote for purposes of determining the
presence of a quorum but as unvoted for purposes of determining the approval
of any matter submitted to the shareholders for a vote. If a broker indicates
that it does not have discretionary authority to vote certain shares, those
shares will not be considered as present and entitled to vote with respect to
that matter. A majority of the Common Stock outstanding on the record date
must be present to constitute a quorum.
ELECTION OF DIRECTORS
The Company's Charter provides for a Board consisting of not less than three
and not more than twenty-five directors. The Company's Charter divides the
Board into three classes as nearly equal in number as possible, with each
class serving a three-year term and one class elected at each Annual Meeting
of Shareholders. The Board of Directors has set at sixteen the number of
directors constituting the full Board for the ensuing year.
1
<PAGE>
At the Annual Meeting of Shareholders, five directors are to be elected as
Class I directors for terms that expire at the Annual Meeting of Shareholders
to be held in 2002. All of the nominees are members of the present Board and
were elected at the Annual Meeting of Shareholders in 1996, except for
J. Bradbury Reed who was elected by the Board of Directors in 1998 and Phillip
H. McNeill, Sr. and James H. Daughdrill, Jr. who were elected by the Board of
Directors in 1999.
The remaining ten directors presently on the Board will continue as members
of the Board until their respective terms expire as indicated in the table
below. In addition, the Board could, by a majority vote of the entire Board,
increase the number of directors to up to twenty-five and fill the vacancies
resulting from such increase for the remainder of the term of the classes in
which each new directorship is created. Although the Board from time to time
considers qualified candidates to become directors, the Board has made no
decision to increase the number of directors.
The Board of Directors has no reason to believe that any of the nominees for
director will not be available to stand for election as director. However,
should any of such nominees become unable to serve, the proxies may be voted
for a substitute nominee or nominees or to allow the vacancy created thereby
to remain open until filled by the Board.
The presence of a quorum at the Annual Meeting, either in person or by
written proxy, and a favorable vote of a plurality of the votes cast at the
meeting are necessary to elect a nominee as director.
MANAGEMENT OF THE COMPANY
Directors
The following table sets forth the names of the six nominees for election to
the Board as members of Class I, as well as those incumbent directors who are
members of Classes II and III. The table also contains, as to each nominee and
present director, his age, a brief description of his principal occupation and
business experience during the last five years, a description of any position
or office held by him with the Company or NBC, directorships of certain
publicly held companies (other than the Company) presently held by him, the
year in which he was first elected or appointed a director of the Company, the
number of shares and percentage of the Company's outstanding Common Stock
beneficially owned by him as of February 1, 1999, and certain other
information. The information in the table has been furnished by the respective
individuals. Except as indicated in the notes to the following table, the
persons indicated possess sole voting and investment power with respect to all
shares set forth opposite their names.
2
<PAGE>
<TABLE>
<CAPTION>
Shares of
Common Percent of
Stock Class
Principal Beneficially Beneficially
Occupation Year First Owned As Owned As
for Past Five Years Elected of Feb. 1, of Feb. 1,
Name Age and Directorships Director 1999(1) 1999(1)
---- --- ------------------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Class I: Nominees to serve until Annual Meeting of Shareholders in 2002:
Frank G. Barton, Jr.# 66 Chairman of the Board of 1977 512,332(2) .5
the Barton Group, Inc.
(retail equipment
sales).
James H. Daughdrill, Jr. 65 President, Rhodes 1999 -- --
College
Thomas C. Farnsworth, 61 Real Estate and 1977 885,837 .9
Jr. + Investments.
Lewis E. Holland*+ 56 Vice Chairman of the 1997 370,635(3) .4
Company since January
1997, Executive Vice
President from August
1995 to June 1997,
President of NBC since
January, 1998, President
of NBC since January,
1998, Treasurer and
Chief Financial Officer
of the Company and
Director of NBC since
July 1994
J. Bradbury Reed# 58 Member of law firm of 1998 8,186 --
Bass, Berry and Sims,
PLC
Phillip H. McNeill, 60 Chairman and Chief 1999 65,250(4) .1
Sr.+# Executive Officer of
Equity Inns, Inc.
Class II: Incumbents to serve until Annual Meeting of Shareholders in 2000:
John D. Canale, III# 53 President of D. Canale 1989 6,043,320(5)(6) 5.8
Food Services, Inc.
(wholesale food
distributor); President
and CEO of D. Canale &
Co; Secretary-Treasurer
of D. Canale Beverages,
Inc.
R. Lee Jenkins 69 Private investor 1990 48,899(7) .1
W. Neely Mallory, Jr. 65 President of Mallory 1974 422,552(8) .4
Group, Inc. (3rd party
logistics); Mallory
Partners; President,
Mallory Group
Incorporated.
James E. McGehee, Jr.* 69 Chairman, McGehee Realty 1976 3,776,101(9) 3.6
and Development Company.
William R. Reed, Jr. 52 Vice Chairman of the 1997 654,009(10) .6
Company since June 1997,
Executive Vice President
of the Company from
August 1995 until June
1997, Director of NBC,
Chairman of the Board of
Nashville Bank of
Commerce and NBC Bank,
FSB (Knoxville),
Chairman and Chief
Executive Officer of NBC
Bank, FSB (Roanoke)
G. Mark Thompson# 63 President, Nashville 1997 1,600 --
Marketing Area of The
Kroger Company
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Shares of
Common Percent of
Stock Class
Principal Beneficially Beneficially
Occupation Year First Owned As Owned As
for Past Five Years Elected of Feb. 1, of Feb. 1,
Name Age and Directorships Director 1999(1) 1999(1)
---- --- ------------------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Class III: Incumbents to serve until Annual Meeting of Shareholders in 2001:
R. Grattan Brown, Jr. 63 Member of the law firm 1978 139,126(11) .1
of Glankler Brown, PLLC
Bruce E. Campbell, Jr.* 68 Chairman of the 1976 578,690(12) .6
Executive Committee;
Director of RFS Hotel
Investors, Inc. and The
Mallory Group.
Thomas M. Garrott*+ 61 Chairman of the Board, 1977 4,080,263(13) 3.9
President and Chief
Executive Officer of the
Company, Chief Executive
Officer of NBC, Chairman
of the Board of NBC
until July 1998.
Harry J. Phillips, Sr.*+ 69 Chairman of the 1977 1,746,452(14) 1.67
Executive Committee of
Browning-Ferris
Industries, Inc. (waste
disposal service);
Director of RFS Hotel
Investors, Inc., Buckeye
Technologies, Inc.
Buckman Laboratories
International, Inc.
Director of Morgan
Keegan since April 1997.
</TABLE>
4
<PAGE>
- ----------
* Member of the Executive Committee of the Board of Directors
# Member of the Audit Committee of the Board of Directors
+ Member of the Salary and Benefits Committee of the Board of Directors.
(1) Under the rules of the Securities and Exchange Commission, a person is
deemed to be a "beneficial owner" of a security if that person has or
shares "voting power," which includes the power to vote or direct the
voting of such security, or "investment power," which includes the power
to dispose or direct the disposition of such security. A person is also
deemed to be a beneficial owner of any securities of which that person has
the right to acquire beneficial ownership within 60 days. Under these
rules, more than one person may be deemed to be a beneficial owner of the
same securities and a person may be deemed to be a beneficial owner of
securities as to which he has no beneficial interest. For purposes of
calculating the percent of Common Stock beneficially owned, all shares
that are subject to options that are exercisable within 60 days are deemed
to be presently outstanding.
(2) Includes 8,340 shares held by Mr. Barton and his wife as custodians for
their son, as to which Mr. Barton disclaims any beneficial interest.
(3) Includes 2,635 shares attributable to Mr. Holland pursuant to the
Company's Employee Stock Ownership Plan with 401K Provisions
("ESOP/401K") and 328,000 shares that he has the right to purchase upon
the exercise of stock options.
(4) Includes 260 shares owned by Mr. McNeill's wife, as to which he disclaims
any beneficial interest.
(5) Does not include shares owned by Peggy W. Canale or Christopher W.
Canale, either individually or as trustee, who are the mother and
brother, respectively, of John D. Canale, III.
(6) Includes 644,980 shares owned by the estate of his father, John D.
Canale. As an executor of the estate, Mr. Canale shares investment and
voting power. Also includes 5,241,832 shares held by D. Canale & Co. as
to which Mr. Canale has a 50% voting interest. Also includes 200 shares
held by Mr. Canale as custodian for his nephew as to which he disclaims
any beneficial interest.
(7) Includes 6,000 shares owned by Mr. Jenkins's wife, as to which Mr.
Jenkins disclaims any beneficial interest.
(8) Includes 4,000 shares owned by Mr. Mallory's wife, as to which Mr.
Mallory disclaims any beneficial interest.
(9) Includes 2,559,588 shares held by certain family entities or members over
which Mr. McGehee retains voting control but as to which Mr. McGehee
disclaims any beneficial interest. Mr. McGehee has no investment power
with regard to 2,042,150 of those shares.
(10) Includes 59,777 shares attributable to Mr. Reed pursuant to the Company's
ESOP/401K and 176,000 shares that he has the right to purchase upon the
exercise of stock options. Includes 248,600 shares held by Mr. Reed's
wife as to which Mr. Reed disclaims any beneficial interest.
(11) Includes 14,974 shares held by Mr. Brown's wife as to which he disclaims
any beneficial interest.
(12) Includes 71,708 shares held by his wife, sons, and daughter-in-law as to
which he disclaims any beneficial interest, and 251,904 shares held
jointly by Mr. Campbell and his wife.
(13) Includes 168,000 shares that Mr. Garrott has the right to purchase upon
the exercise of stock options, 85,865 shares attributable to Mr. Garrott
pursuant to the Company's ESOP/401K as to which Mr. Garrott has the power
to direct voting. Also includes 302,880 shares held in trust for the
benefit of his children, 95,248 shares held by Mr. Garrott's wife, and
420,000 shares held by MBA Corp., all of which shares of MBA Corp. are
owned by his children, and as to which Mr. Garrott disclaims any
beneficial interest.
(14) Includes 240,332 owned by Mr. Phillips's wife, as to which Mr. Phillips
disclaims any beneficial interest.
5
<PAGE>
Compensation of Directors
During 1998 the Company's directors were paid a fee of $2,000 per Board
meeting attended and, except for directors who are officers of the Company or
its subsidiaries, $150 per committee meeting attended ($250 for the committee
chairman). Except for directors who are officers of the Company or its
subsidiaries, the directors of the Company receive an annual retainer of
$4,000 from the Company, payable semi-annually. Pursuant to the provisions of
the Company's 1994 Stock Plan, the outside directors of the Company who
attended six of six of of the Board's meetings during the year received 100
shares of NCBC stock as additional compensation for their attendance.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors and greater than 10% shareholders ("Reporting
Persons") to file initial reports of ownership and reports of changes in
ownership with the Securities and Exchange Commission. Executive officers and
directors are required by SEC regulations to furnish the Company with copies
of all Section 16(a) forms they file. Based solely on a review of the copies
of such forms furnished to the Company and written representations from such
Reporting Persons with respect to the period from January 1, 1998 through
December 31, 1998, the Company is not aware of any Section 16(a) reports that
were required to be filed by a Reporting Person and were not filed on a timely
basis.
6
<PAGE>
Management Stock Ownership
The following table sets forth the number of shares of Common Stock and the
percentage of shares of Common Stock outstanding beneficially owned by the
Company's Chief Executive Officer, the four other most highly compensated
executive officers of the Company and its subsidiaries and all directors and
officers as a group, as of February 1, 1999.
<TABLE>
<CAPTION>
Number of Shares of
Common Stock Beneficially Percent of
Owned as of February 1, 1999 Class
---------------------------- ----------
<S> <C> <C>
Thomas M. Garrott...................... 4,080,263(1) 3.9%
Lewis E. Holland....................... 370,635(2) .4
William R. Reed, Jr.................... 654,009(3) .6
Gary L. Lazarini....................... 641,383(4) .6
Mackie H. Gober........................ 603,140(5) .6
All directors and executive officers as
a group
(21 persons).......................... 21,800,838(6)(7) 20.9
</TABLE>
- --------
(1) See Note 13 under the caption "MANAGEMENT OF THE COMPANY--Directors"
above.
(2) See Note 3 under the caption "MANAGEMENT OF THE COMPANY--Directors" above.
(3) See Note 10 under the caption "MANAGEMENT OF THE COMPANY--Directors"
above.
(4) Includes 99,047 shares attributable to Mr. Lazarini pursuant to the
Company's ESOP/401K and 156,200 shares that he has the right to purchase
upon the exercise of stock options. Includes 180,672 shares held by Mr.
Lazarini's wife as to which Mr. Lazarini disclaims any beneficial
interest.
(5) Includes 60,972 shares attributable to Mr. Gober pursuant to the Company's
ESOP/401K and 124,000 shares that he has the right to purchase upon the
exercise of stock options.
(6) Includes an aggregate of 1,027,600 shares of Common Stock purchasable upon
the exercise of stock options by the Chief Executive Officer, the four
other most highly compensated executive officers and all directors and
executive officers as a group. Also includes an aggregate of 466,858
shares attributable to the Chief Executive Officer, the four other most
highly compensated executive officers and all directors and executive
officers as a group pursuant to the Company's ESOP/401K.
(7) Does not include Common Stock beneficially owned by Directors Emeritus,
NBC Directors, other officers of the Company, or its Management Committee
who are not listed above (approximately 8%).
7
<PAGE>
Board Committees and Attendance
The Company's Board of Directors has three principal standing committees--
the Executive Committee, the Audit Committee, and the Salary and Benefits
Committee. The Executive Committee, composed of Messrs. Campbell (Chairman),
Garrott, Holland, McGehee, and Phillips, has, and may exercise, all the
authority of the full Board between Board meetings with respect to matters
other than the amendment of the Charter or By-laws of the Company, the
adoption of a plan of merger or consolidation, or the disposition of
substantially all of the assets or dissolution of the Company.
The membership and principal functions of the Audit Committee are described
under the caption "ACCOUNTING MATTERS" below.
The membership and principal functions of the Salary and Benefits Committee
are described under the caption "REPORT OF THE SALARY AND BENEFITS COMMITTEE"
below.
During 1998, the Board of Directors held seven meetings. The Executive
Committee met seven times and the Audit Committee met seven times during 1998.
The Salary and Benefits Committee held three meetings during 1998.
Because of conflicting schedules, in 1998 Mr. Jenkins attended fewer than
75% of the Company's Board meetings and meetings of committees of the Board on
which he served.
8
<PAGE>
COMPENSATION OF MANAGEMENT AND OTHER INFORMATION
Summary Compensation Table
The following table sets forth certain summary information for the years
indicated with respect to the compensation awarded to, earned by, or paid to
the Company's Chief Executive Officer and each of the four other most highly
compensated executive officers of the Company and its subsidiaries
(hereinafter referred to as the "named executive officers").
<TABLE>
<CAPTION>
Annual Long-term
compensation (1) compensation
-------------------- ---------------------
Awards
---------------------
Securities Underlying All other
Options Granted compensa-
Name and principal position Year Salary ($) Bonus ($) (#)(2) tion ($)
--------------------------- ---- ---------- --------- --------------------- ---------
<C> <S> <C> <C> <C> <C> <C>
Thomas M. Garrott. Chairman of the Board, 1998 536,000 510,000 80,000 0
President, Chief 1997 509,000 485,000 160,000 0
Executive
Officer and Director of 1996 417,000 303,750 200,000 4,826(3)
the
Company
Lewis E. Holland . Vice Chairman, 1998 291,000 197,250 40,000 0
Treasurer, and Chief 1997 257,692 187,500 100,000 0
Financial
Officer of the Company 1996 206,000 120,000 100,000 4,826(3)
William R. Reed, Vice Chairman of the 1998 278,000 184,500 40,000 0
Jr. .............
Company 1997 226,660 157,500 60,000 0
1996 190,000 72,000 60,000 4,826(3)
Gary L. Lazarini.. Chairman of 1998 195,000 87,750 15,000 0
NBC Capital Markets 1997 185,000 90,650 20,000 0
Group, Inc. and 1996 175,000 70,000 20,000 4,826(3)
Executive Vice President
of NBC
Mackie H. Gober... Executive Vice President 1998 184,000 57,800 0 0
of
the Company 1997 177,000 57,750 20,000 0
1996 166,000 52,000 60,000 4,826(3)
</TABLE>
- ----------
(1) The Company also provides certain perquisites and other personal benefits
to the named executive officers which do not exceed either $50,000 or 10%
of each named executive officer's total annual salary and bonus. Includes
directors' fees of an aggregate of $26,000 paid to Mr. Garrott, $28,000
paid to Mr. Holland, $32,000 paid to Mr. Reed and $14,000 paid to Mr.
Gober for 1998; an aggregate of $24,000 paid to Mr. Garrott, $20,000 paid
to Mr. Holland, $22,000 paid to Mr. Reed, and $12,000 paid to Mr. Gober
for 1997, and an aggregate of $12,000 paid to Mr. Garrott, $6,000 paid to
Mr. Holland, $10,000 paid to Mr. Reed and $6,000 paid to Mr. Gober for
1996.
(2) Options adjusted for a 2-for-1 stock split effective July 1, 1998.
(3) In 1996, all other compensation to named executive officers included an
allocation of company contributions under the Company's Employee Stock
Ownership Plan of $4,826 each to Messrs. Garrott, Holland, Lazarini, Reed,
and Gober.
9
<PAGE>
Stock Option Plans
During 1994, the shareholders approved the Company's 1994 Stock Plan (the
"1994 Plan"), which reserved 6,200,000 shares of Company's Common Stock for
use under the 1994 Plan. Unoptioned shares under previous plans were
transferred to reserved shares for the 1994 Plan. In 1997, the shareholders
approved an additional 2,000,000 shares for the reserve.
Options are granted at the then prevailing market price. Options become
exercisable in equal parts at the end of the year of grant over the succeeding
five to ten years under the Plan. The Plans are restricted to eligible
officers and key employees. Amounts set forth in the following tables reflect
the effect of all stock dividends and splits declared through 1998.
Option Grants In Last Fiscal Year
The following table sets forth certain information with respect to the grant
of stock options under the Company's Stock Plans to the named executive
officers for the year ended December 31, 1998.
<TABLE>
<CAPTION>
Individual Grants(1)
- -----------------------------------------------------------
Potential
realizable value
Percent of at assumed
Total annual rates
Number of options of stock price
Securities granted to Exercise appreciation
Underlying employees or for option term
Options in Base Price Expiration -------------------
Name granted (#) Fiscal Year ($/SH) date 5% 10%
---- ----------- ----------- ---------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Thomas M.
Garrott..... 80,000 8.1% $15.125 1-12-06 $590,238 $1,452,968
Lewis E.
Holland..... 40,000 4.1 15.125 1-12-06 295,119 726,484
William R.
Reed, Jr. .. 40,000 4.1 15.125 1-12-06 295,119 726,484
Gary L.
Lazarini.... 15,000 1.5 15.125 1-12-06 110,670 272,432
Mackie H.
Gober....... -- -- -- -- -- --
</TABLE>
- --------
(1) Options become exercisable in equal parts over the five years succeeding
the date of grant.
10
<PAGE>
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR
Values
The following table sets forth certain information with respect to options
exercised during 1998 and the value of unexercised options and SARs held by
the named executive officers of the Company and its subsidiaries at December
31, 1998.
<TABLE>
<CAPTION>
1998 Exercises
----------------------
Number of
Securities Value of
Underlying unexercised
Shares unexercised in-the-money
acquired on Value options/SARs options/SARs
exercise realized at FY-End (#) at FY-end($)(2)
Name (#) ($)(1) exercisable/unexercisable exercisable/unexercisable
---- ----------- ---------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Thomas M. Garrott....... 185,120 $1,973,981 168,000/280,000 $1,869,480/$2,596,240
Lewis E. Holland........ 20,000 $ 280,000 328,000/144,000 3,593,730/ 616,872
William R. Reed, Jr. ... 57,600 $1,801,018 176,000/104,000 1,822,848/ 430,872
Gary L. Lazarini........ -- -- 156,200/ 38,000 1,999,657/ 328,686
Mackie H. Gober......... 61,200 $ 936,498 124,000/ 48,000 1,527,980/ 546,372
</TABLE>
- ----------
(1) Market value of underlying securities at exercise minus the exercise
price.
(2) Market price at year end less exercise price.
Pension Plan Table
The Company maintains a non-contributory, defined benefit retirement plan,
which covers all eligible employees of the Company. The following table
describes estimated retirement benefits payable under the retirement plan to
employees in the specified period-of-service and compensation classifications,
assuming retirement at age 65 on February 1, 1999. Retirement benefits are not
subject to social security deductions or offsets.
<TABLE>
<CAPTION>
Credited Service
---------------------------------------------------------
Final Pay 5 Years 15 Years 20 Years 25 Years 30 Years 35 Years
---------- ------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$ 125,000 $11,248 $33,741 $44,986 $56,234 $67,480 $ 78,727
150,000 13,670 41,008 54,676 68,346 82,015 95,684
175,000 14,639* 43,915* 58,552* 73,191* 87,828* 102,467*
200,000 14,639* 43,915* 58,552* 73,191* 87,828* 102,467*
225,000 14,639* 43,915* 58,552* 73,191* 87,828* 102,467*
250,000 14,639* 43,915* 58,552* 73,191* 87,828* 102,467*
300,000 14,639* 43,915* 58,552* 73,191* 87,828* 102,467*
400,000 14,639* 43,915* 58,552* 73,191* 87,828* 102,467*
450,000 14,639* 43,915* 58,552* 73,191* 87,828* 102,467*
500,000 14,639* 43,915* 58,522* 73,191* 87,828* 102,467*
1,050,000 14,639* 43,915* 58,552* 73,191* 87,828* 102,467*
</TABLE>
- ----------
* Represents the maximum legal permissible benefit under the retirement plan
for individuals retiring in 1998.
The retirement plan contains a five-year vesting requirement, effective
January 1, 1989, and provides remuneration upon retirement at age 65 based
generally upon average compensation for the five calendar years preceding
retirement and years of service, with additional preretirement disability and
death benefits. Benefits are calculated on the normal retirement option
available to participants,
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<PAGE>
which is ten years certain and life. Compensation covered by the retirement
plan includes base salaries, overtime pay, commissions and bonuses. Covered
compensation for commissioned employees is limited to $100,000. In 1998,
covered compensation for Messrs. Garrott, Holland, Reed, Lazarini, and Gober
was $1,045,000, $468,250, $455,500, $292,750 and $237,800, respectively. At
December 31, 1998, Messrs. Garrott, Holland, Reed, Lazarini, and Gober had 16,
5, 29, 39 and 28 years of credited service, respectively, under the retirement
plan.
The Board of Directors has also adopted a restoration pension plan that
would restore any portion of the pension payable to any participant in the
retirement plan which cannot be paid from such retirement plan due to the
maximum benefit limitations imposed by Section 415 and by the maximum
compensation limitations imposed by Section 401(a)(17) of the Internal Revenue
Code. If Messrs. Garrott, Holland, Reed, Lazarini and Gober work for NBC until
age 65 at their 1998 rate of compensation, the restoration pension plan will
provide additional annual benefits of $572,692, $130,387, $210,287, $121,106
and $45,985, respectively.
Employment Agreements
NBC entered into employment agreements with Mr. Thomas M. Garrott dated as
of September 1, 1993, Mr. William R. Reed, Jr. dated as of January 1, 1992,
Mr. Mackie H. Gober and Mr. Gary L. Lazarini dated as of September 1, 1993 and
Mr. Lewis E. Holland dated as of July 1, 1994 (the "Agreements"). Except as
noted below, each Agreement contains substantially the same terms and
provisions. The Agreements supersede and terminate any other agreements
previously existing concerning employment or compensation for such officers,
except for the Deferred Compensation Agreement for Mr. Garrott described
below, which remains in effect.
Mr. Garrott will be employed by NBC in his current position for a
continuously renewing term of five years until he reaches age 65, at which
time the term automatically becomes a continuously renewing term of one year
until notice of termination is given by either party. Mr. Garrott is employed
at a guaranteed annual base salary of $535,000 (which may be increased at the
discretion of NBC). Mr. Reed will be employed by NBC in his current position
for a continuously renewing term of three years until he reaches age 65 at a
guaranteed annual base salary of $271,000 (which may be increased at the
discretion of NBC). Mr. Gober will be employed by NBC in his current position
for a continuously renewing term of three years until he reaches age 65 at a
guaranteed annual base salary of $180,000 (which may be increased at the
discretion of NBC). Mr. Lazarini will be employed by NBC in his current
position for a continuously renewing term of three years until he reaches age
65 at a guaranteed annual base salary of $205,000 (which may be increased at
the discretion of NBC). Mr. Holland will be employed by NBC in his current
position for a continuously renewing term of five years until he reaches age
65 at a guaranteed annual base salary of $271,000 (which may be increased at
the discretion of NBC).
Each Agreement may be terminated by NBC for cause (as defined in the
Agreements). In addition, the Agreements of Messrs. Garrott, Reed, Gober and
Lazarini may be terminated without cause upon the giving of five years' notice
for Mr. Garrott and upon the giving of three years' notice to Messrs. Reed,
Gober and Lazarini during which time the officer would be converted to part-
time status as described below. The Agreement of Mr. Holland may be terminated
without cause upon the giving of written notice to Mr. Holland and the officer
would immediately be placed on part-time status, as described below, until age
sixty-five (65). Further, under the Agreements of Messrs. Garrott, Reed,
Gober, Lazarini and Holland, in the event that (i) NBC breaches the terms of
the respective Agreements in any material
12
<PAGE>
respect, (ii) the respective officer is not reelected or reappointed to his
current position (without cause), or (iii) under Mr. Garrott's Agreement, the
officer's duties, responsibilities, powers, authority and functions are
increased, changed or diminished (without cause and without the officer's
consent), or under Mr. Reed's, Mr. Gober's, Mr. Lazarini's and Mr. Holland's
Agreement, their duties, powers, and authority are diminished (without cause
and without the officer's consent), the respective officers are entitled to
convert to part-time status for the terms permitted in their respective
Agreements.
If Messrs. Garrott, Reed, Gober or Lazarini are converted to part-time
status, the officer would be entitled to a guaranteed annual base salary equal
to seventy-five percent (75%) of the officer's average annual total direct
compensation (as defined in the Agreements) for a period of up to five years
for Mr. Garrott and three years for Mr. Reed, Mr. Gober and Mr. Lazarini. If
Mr. Holland converts to part-time status, the officer would be entitled to a
guaranteed minimum annual base salary (a) from the date the officer goes on
part-time status for a period of 5 years or (b) from the date he goes on part-
time status until he attains age 65, whichever is shorter, in an amount equal
to 75% of the officer's average of annual total direct compensation (as
defined in the Agreement) provided that the guaranteed minimum annual base
salary shall not be less than 75% of $300,000. Each Agreement also provides
that the officer may elect to terminate the Agreement at any time upon 90
days' notice (with or without cause) and upon such a termination receive his
salary as provided in the Agreement during the 90-day notice period and a
lump-sum payment equal to three months' pay upon the expiration of such 90-day
period. Under Mr. Garrott's Agreement, on or after November 3, 1999, and while
employed on active status, Mr. Garrott is entitled to convert to part-time
status until age 65.
The Agreements provide that in the event of a "change of control" (as
defined below) involving NBC or the Company, Mr. Garrott and Mr. Holland, if
on full-time or part-time status, and Mr. Reed, Mr. Gober and Mr. Lazarini, if
on full-time status or during the first twelve months of part-time status, may
elect to receive severance pay in an amount equal to three times the officer's
average annual compensation for the most recent five-year period preceding the
change in control minus one dollar. In addition to the foregoing severance
payment, Mr. Garrott, Mr. Holland, Mr. Reed, Mr. Gober and Mr. Lazarini,
within five business days after delivery of a Notice of Exercise (as defined
in the Agreements) are entitled to receive (1) a bonus payment based on the
highest annual bonus paid or payable during the three year period immediately
prior to the date of the Notice of Exercise prorated based on the number of
days in the current fiscal year through the date of Notice of Exercise and
(2) an additional payment equal to the amount which the officer would receive
under the restoration pension plan if his employment had continued for three
years after the Notice of Exercise and assuming that the officer's
compensation in each of the three years is the officer's highest base salary
during the three year period immediately preceding the date of the Notice of
Exercise. Further, for three years after the date of Notice of Exercise, or
such longer period as may be provided by the terms of the appropriate plan,
program, practice or policy, the company shall continue to provide welfare
benefits for three years after the date of the Notice of Exercise. Payment of
such amounts terminate the officer's right to receive the guaranteed annual
base salary pursuant to the Agreement; however, such amount would be in
addition to amounts otherwise payable to the officer under the Agreement
(including reimbursement of expenses and attorney's fees) and other current or
future oral or written agreements or plans. The Agreements further provide
that NBC will indemnify the officer for adverse tax consequences arising out
of the assertion that any payments under the Agreements are subject to any
special excise or similar purpose tax directed at change of control payments.
The value received from accelerated vesting of stock options as a result of a
change in control may also be deemed to be change in control payments. If
aggregate change of control payments equal or exceed three times the officer's
average annual
13
<PAGE>
compensation for the most recent five-year period preceding the change in
control, such an excise tax could be asserted. In such case, the payments also
will not be deductible by the Company for federal income tax purposes. A
change in control is deemed to occur if, with or without the approval of NBC's
Board of Directors, (i) more than 25% of the voting stock of NBC or NBC's
parent (a company owning 25% of the voting stock of NBC) is acquired by any
person other than a person that includes the officer, or (ii) as the result of
a tender offer, merger, consolidation, sale of assets, contested election, or
any combination of such transactions, the persons who were directors of NBC or
NBC's parent immediately before the transaction shall cease to constitute a
majority of the Board of Directors of NBC, NBC's parent, or of any successor
to either.
The Agreements also include provisions that prohibit Messrs. Garrott, Reed,
Gober, Lazarini and Holland during the terms of their respective Agreements
and for two years thereafter from engaging in commercial banking activity in
Shelby County, Tennessee (or in any other county in which NBC or its
affiliates engage in banking activity representing a specified minimum amount
of income of NBC or its affiliates), unless the officer's employment is
terminated for cause (as defined in the Agreement). In addition, Mr. Garrott
is prohibited from engaging in any business related to banking in supermarkets
or other retail stores for the same period. The Agreements provide for
benefits to Messrs. Garrott, Reed, Gober, Lazarini and Holland (or their
designated beneficiaries) in the event of disability or death. Mr. Garrott's
Agreement also provides certain medical and dental insurance benefits for the
employee and his spouse.
On December 1, 1983, NBC and Mr. Garrott entered into a Deferred
Compensation Agreement which entitled Mr. Garrott to receive monthly
retirement benefits equal to the excess, if any, of the monthly retirement
benefits that would have been payable to Mr. Garrott under the Company's
Retirement Plan if Mr. Garrott had been employed by the Company since January
1, 1964, over the monthly retirement benefits actually payable to Mr. Garrott
under his previous employer's pension plan.
14
<PAGE>
REPORT OF THE SALARY AND BENEFITS COMMITTEE
The Salary and Benefits Committee (the "Committee") of the Board of
Directors of the Company reviews the Company's executive compensation policies
and programs and submits recommendations to the Board of Directors. The
members of the Committee are Messrs. Phillips (Chairman), Farnsworth and
McNeill, all of whom are non-employee directors.
The Committee re-engaged the services of Towers Perrin, a nationally
recognized compensation consulting firm, to update the findings and
recommendations their previous 1994 executive compensation study. The study
compares the compensation practices of NCBC to other financial institutions
based on asset size, earnings performance and survey data ( the "Peer Group").
The Committee believes that the Peer Group is an appropriate peer group for
compensation comparison purposes as it indicates how comparably sized
financial institutions were compensating executives with similar
responsibilities as those of the Company's executive officers.
Compensation awarded to executive officers is designed to assure that the
Company continues to attract, motivate and retain executives of superior
abilities. The Company's general goal for compensating its executive officers
is to provide competitive compensation in the median or upper range of that
received by executive officers with similar duties and responsibilities at
financial institutions in the Peer Group.
The compensation of the Company's top executive officers, including the
Chief Executive Officer, is specifically linked to the overall financial
performance of the Company. Annual incentive bonuses are awarded to executive
officers on the basis of group, division, individual and overall corporate
performance. The Company must achieve both a Return on Equity of 20% and
Earnings per Share growth of 16% over prior year for its Executive Officers to
receive any bonus payments. Maximum bonus payments are made if both 20%
Earnings per Share growth and Return on Equity are achieved. The Company's
compensation program rewards key officers for the enhancement of shareholder
value by providing key officers with appropriate ownership interests in the
Company through awards of stock options. In reviewing the performance of the
Company's key officers other than Mr. Garrott, the Committee takes Mr.
Garrott's recommendations into account.
Base Salary
Each executive officer's base salary is based primarily upon the competitive
market for the executive officer's services. However, Messrs. Garrott,
Holland, Reed, Lazarini and Gober are guaranteed minimum base salaries in
accordance with the terms and conditions of their respective employment
agreements with NBC. See "COMPENSATION OF MANAGEMENT AND OTHER INFORMATION--
Employment Agreements."
Annual Incentive Plan
The Company's annual incentive plan is designed to give executive officers
and other key employees additional incentive to maximize the Company's long-
term return for its shareholders. The cash awards under the Company's annual
incentive plan to its executive officers are determined by a
15
<PAGE>
two-step process that considers both the performance of the Company as a whole
during the year and the individual performance of each executive officer.
Annual incentive awards for executive officers in 1998 were awarded pursuant
to an annual incentive plan approved by the Committee and ratified by the
Board of Directors. Under this plan, amounts awarded to the top five members
of executive management were between 34% and 100% of base salary.
In 1998, the annual incentive plan for certain executive officers allowed
participants to earn a bonus based upon (1) the Company's 1998 earnings
growth, defined as the Company's consolidated net income comparing 1998 to
1997, (2) achievement of a minimum return on equity, and if applicable,
(3) individual performance standards. Each component was considered
separately. The individual performance criteria of Messrs. Holland, Reed,
Lazarini and Gober included a targeted increase in the net income of certain
subsidiaries of the Company and the achievement of specific results for the
Company and its subsidiaries.
Stock Option Plans
The Committee considers stock options under the 1994 Plan for key employees,
including key executive officers of the Company and its subsidiaries. Stock
options are designed to align the interests of the Company's officers with
those of its shareholders. Stock options are granted by the Committee to those
key employees whose responsibilities place them in a position to make
contributions to the overall financial success of the Company. These options
are granted with an exercise price equal to the market price of the Common
Stock on the day of grant and vest ratably over a period of five years. Since
the full benefits of these options cannot be realized unless the Company's
stock price appreciates over time, the creation of shareholder value is
facilitated. More than 400 key employees of the Company and its subsidiaries
have been granted stock options. This represents approximately 24% of the
total full-time employees of the Company and its subsidiaries.
In 1998, the Committee approved grants of non-qualified stock options to
executive officers based upon the performance contributions of the particular
executive officer in light of the same individual performance factors utilized
in determining incentive awards, as described above, and the recommendations
of an independent executive compensation consulting firm. The consultants
considered comparable levels of responsibilities at peer banks based on asset
size and overall financial performance.
Chief Executive Officer's 1998 Compensation
The base salary of Mr. Garrott was increased during 1998 to $510,000. The
Committee specifically considered (i) Mr. Garrott's individual performance as
Chairman, President and Chief Executive Officer, (ii) the Company's strong
financial performance and (iii) the compensation paid to the chief executive
officers of banking institutions of comparative size. The factors were
considered subjectively, and none were given any specific weight.
16
<PAGE>
Based on the Company's attaining over 20% growth in consolidated net income
and over 20% return on equity Mr. Garrott earned a bonus equal to 100% of his
base salary (i.e. $510,000 bonus award) in accordance with the terms of the
Company's 1998 Incentive Compensation Plan. Mr. Garrott was also awarded an
option grant of 80,000 shares of common stock. The Committee considered the
Company's overall performance, Mr. Garrott's contribution to the Company's
success and the number of options previously granted to Mr. Garrott.
Harry J. Phillips, Sr.
Thomas C. Farnsworth, Jr.
Phillip H. McNeill, Sr.
The Compensation Committee report of Executive Compensation shall not be
deemed incorporated by reference by any general statement incorporating by
reference this Proxy Statement into any filing under the Securities Act of
1933 or the Securities Exchange Act of 1934 (the "Act"), except to the extent
the Company specifically incorporates this information by reference and shall
not otherwise be deemed filed under such Act.
17
<PAGE>
FIVE-YEAR STOCK PERFORMANCE GRAPH
The line graph below reflects the cumulative five-year shareholder return
(assuming reinvestment of dividends) on the Company's Common Stock compared to
such return of the S&P 500 Stock Index and the KBW 50 Bank Stock Index. The
graph reflects investment of $100 on December 31, 1993 in the Company's Common
Stock, the S&P 500 Index and the KBW 50 Bank Stock Index.
[GRAPH APPEARS HERE]
NCBC S&P 500 KBW 50
---------- --------- ----------
1993 $100.00 $100.00 $100.00
1994 $103.93 $101.33 $ 94.90
1995 $123.32 $139.33 $152.03
1996 $184.15 $171.72 $215.12
1997 $345.50 $299.03 $314.51
1998 $374.76 $294.49 $340.58
18
<PAGE>
CERTAIN TRANSACTIONS WITH DIRECTORS AND MANAGEMENT
Some of the officers and directors of the Company and its subsidiaries,
including some of the nominees described above, and certain of their
associates and immediate family members (including spouses, parents, children,
siblings, mothers- and fathers-in-law, sons- and daughters-in-law, and
brothers- and sisters-in-law) are customers of the Company's subsidiaries. As
customers, they have had transactions with the Company's subsidiaries in the
ordinary course of business, including borrowings. As of December 31, 1998,
the Company's subsidiary banks had an aggregate of approximately $78,940,000
(19.32% of NCBC's equity and 2.47% of NCBC's net loans) in loans outstanding
to such persons. This aggregate amount was comprised of loans to officers,
directors and nominees in the amount of $4,888,000 and loans to immediate
family members and corporations or other organizations that are associates of
such persons in the amount of approximately $74,051,000. An aggregate of
approximately $56,407,000 of this total represented loans outstanding to three
directors and their associates. All of the foregoing loans were made on
substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with other persons,
and, in the opinion of the Company, do not involve more than normal risk of
collectibility or present any other unfavorable features.
Many of the officers, directors and nominees of the Company and their
associates and immediate family members maintain deposit relationships with
the Company's subsidiaries in various types of accounts, including
certificates of deposit. Interest rates paid on deposits of officers,
directors and nominees and their associates and immediate family members are
substantially similar to rates paid for comparable deposits of parties who are
not affiliated with the Company.
In December, 1987, NBC issued $1,025,000 in term notes to the Mallory
Partners, a Tennessee general partnership of which W. Neely Mallory, Jr., a
director of the Company, and two trusts for the benefit of his sons are
general partners. The term notes were issued on substantially the same terms,
including interest rates, as those prevailing for comparable transactions with
other persons.
R. Grattan Brown, Jr., a director of the Company, is a partner in the law
firm of Glankler Brown. PLLC. That firm from time to time represents NBC and
certain other subsidiaries.
During 1993, Bruce E. Campbell, Jr., the former Chief Executive Officer of
the Company exercised his right under his employment agreement to convert to
part-time status until age 65. Upon reaching age 65 on March 7, 1996, Mr.
Campbell retired and has been retained by the Company as a consultant.
Pursuant to his consulting agreement, Mr. Campbell was paid a consulting fee
of $50,000 during 1998. During 1998, he received additional compensation
consisting of director's fees of $14,650.
Compensation Committee Interlocks and Insider Participation
Messrs., Farnsworth, McNeill and Phillips, all of whom are non-employee
directors, served as members of the Company's Salary and Benefits Committee.
Some of the officers and directors of the Company, including Messrs.,
Farnsworth, Phillips and McNeill, and certain of their associates and
immediate family members (including spouses, parents, children, siblings,
mothers- and fathers-in-law, sons- and daughters-in-law, and brothers- and
sisters-in-law) are customers of the Company's subsidiaries. As customers,
they have had transactions with the Company's subsidiaries in the ordinary
course of business, including borrowings. These loans were made on
substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with other persons,
and, in the opinion of the Company, do not involve more than normal risk of
collectibility or present any other unfavorable features.
19
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information concerning each person
known to the Board of Directors of the Company to be a "beneficial owner," as
such term is defined by the rules of the Securities and Exchange Commission,
of more than 5% of the outstanding shares of Common Stock of the Company as of
February 1, 1999.
<TABLE>
<CAPTION>
Amount Beneficially
Owned as of
Name and Address February 1, 1999 Percent of Class(1)
---------------- ------------------- ------------------
<S> <C> <C>
National Bank of Commerce 7,874,985(2) 7.5%
One Commerce Square
Memphis, Tennessee 38150
D. Canale & Company 5,241,832(3) 5.0
P. O. Box 1739
Memphis, Tennessee 38101
</TABLE>
- ----------
(1) For purposes of calculating the percent of Common Stock beneficially
owned, all shares that are subject to options that are exercisable within
60 days are deemed to be presently outstanding.
(2) NBC has sole voting and investment power with respect to 4,380,101 of such
shares, shares voting and investment power with respect to 2,485,631 of
such shares and has no voting or investment power with respect to
1,009,253 of such shares. NBC has no beneficial interest in any of such
shares. NBC intends to vote all of the 4,380,101 shares that it has
discretion to vote in favor of each matter set forth in the attached
Notice of Annual Meeting of Shareholders and in this Proxy Statement. As a
general rule, where NBC shares voting power under these arrangements, it
allows the person with whom that power is shared to vote such shares. The
shares shown are held by NBC in various fiduciary or agency capacities and
do not include 4,104,782 shares (3.9%) owned by the Company's Employee
Stock Ownership Plan.
(3) Includes 5,241,832 shares as to which John D. Canale, III, who is on the
Board of Directors, shares voting power with his brother Christopher W.
Canale. Does not include 69,064 shares owned by their mother Peggy W.
Canale. Also does not include 156,308 shares owned by John D. Canale III
individually and as trustee, nor does it include 141,884 shares held by
Christopher W. Canale individually and as trustee, nor 644,980 shares
owned by the estate of their father, John D. Canale as to which John D.
Canale III and Christopher W. Canale share voting power. D. Canale &
Company disclaims any beneficial interest in these shares which have not
been included. See "MANAGEMENT OF THE COMPANY--DIRECTORS" above.
20
<PAGE>
ACCOUNTING MATTERS
At its March 11, 1999 meeting, the Board of Directors appointed Ernst &
Young LLP, independent certified public accountants, as auditors for the
Company for the current year. Ernst & Young LLP has acted in this capacity
since 1971. The Board of Directors considers Ernst & Young LLP to be well
qualified and recommends that the shareholders vote to ratify that
appointment.
In view of the difficulty and expense involved in changing auditors on short
notice, should the shareholders not ratify the selection of Ernst & Young LLP,
it is contemplated that the appointment of Ernst & Young LLP for the fiscal
year ending December 31, 1999 will be permitted to stand unless the Board of
Directors finds other compelling reasons for making a change. Such disapproval
by the shareholders will be considered a recommendation that the Board select
other auditors for the following year.
A representative of Ernst & Young LLP is expected to be available at the
Annual Meeting. The representative will be given the opportunity to make a
statement if he desires to do so and is expected to be available to respond to
appropriate questions from shareholders.
The Audit Committee serves the principal functions of recommending to the
Board of Directors the persons or firm to be employed as independent auditors
of the Company; reviewing with such auditors the scope of their engagement,
their report of audit and the accompanying management letter, if any;
consulting with the independent auditors and management with regard to the
Company's accounting methods and the adequacy of the Company's internal system
of accounting control; approving professional services provided by the
independent auditors; reviewing the independence of the independent auditors;
and considering the range of the independent auditors' audit and non-audit
fees. The members of the Audit Committee of the Board of Directors are Messrs.
Barton, (Chairman), Canale, McNeill, Bradbury Reed and Thompson.
ANNUAL REPORT TO SHAREHOLDERS
The annual report of the Company for the fiscal year ended December 31,
1998, including all financial statements, is being mailed with this Proxy
Statement.
ANNUAL REPORT ON FORM 10-K
The Company will provide without charge, at the written request of any
beneficial shareholder of record on March 5, 1999, a copy of the Company's
Annual Report on Form 10-K, including the financial statements and financial
statement schedules, as filed with the Securities and Exchange Commission,
except exhibits thereto. The Company will provide copies of the exhibits,
should they be requested by eligible shareholders, and the Company may impose
a reasonable fee for providing such exhibits. Requests for copies of the
Company's Annual Report on Form 10-K should be mailed to:
NATIONAL COMMERCE BANCORPORATION
One Commerce Square
Memphis, Tennessee 38150
Attention: Kathy Shelton
Assistant Treasurer
21
<PAGE>
VOTING OF PROXIES AND REVOCABILITY
When the Proxy is properly executed and returned to the Board of Directors,
the shares represented by the Proxy will be voted as directed by the
shareholder executing the Proxy unless it is revoked. If no directions are
given on the Proxy with respect to any particular matter to be acted upon, the
shares represented by the Proxy will be voted in favor of such matter. Any
shareholder giving a Proxy may revoke it at any time before it is voted.
Revocation of a Proxy is effective upon receipt by the Secretary of the
Company of either (i) an instrument revoking it or (ii) a duly executed Proxy
bearing a later date. A shareholder who is present at the Annual Meeting may
revoke the Proxy and vote in person if he so desires.
EXPENSES OF SOLICITATION
The cost of soliciting proxies will be borne by the Company. The Board of
Directors will request banks and brokers to solicit their customers having a
beneficial interest in the Company's stock registered in the names of
nominees, and the Company will reimburse such banks and brokers for their
reasonable out-of-pocket expenditures made in such solicitations. Proxies may
be solicited by employees of the Company or NBC by mail, telephone, telecopy,
telegraph and personal interview. The Board of Directors does not presently
intend to pay compensation to any individual or firm for the solicitation of
proxies; however, if the Board of Directors should deem it necessary and
appropriate, it may retain the services of an outside individual or firm to
assist in the solicitation of Proxies.
SHAREHOLDER PROPOSALS
Any shareholder proposals intended to be presented at the Company's 2000
Annual Meeting of Shareholders must be received by the Company at its
corporate offices no later than December 28, 1999 in order to be considered by
the Board of Directors for inclusion in the proxy statement and form of proxy
relating to such meeting. The Company shall have discretionary voting
authority with respect to any stockholder proposals that are received by the
Company after February 13, 2000.
OTHER MATTERS
The minutes of the Annual Meeting of the Shareholders held on April 22,
1998, will be presented at the meeting for approval. It is not intended that
approval of the minutes will constitute ratification of the matters referred
to therein.
The Board of Directors knows of no other matters to be brought before the
Annual Meeting. However, if any other matter properly comes before the Annual
Meeting or any adjournment thereof, it is intended that the persons named in
the enclosed Proxy will vote such Proxy on such matter in accordance with
their best judgment.
Gus B. Denton
Secretary
March 31, 1999
22
<PAGE>
NATIONAL COMMERCE BANCORPORATION
PROXY
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON APRIL 28, 1999
The undersigned hereby appoints THOMAS M. GARROTT; JAMES E. MCGEHEE, JR.;
and GUS B. DENTON, and each of them, proxies with full power of substitution and
resubstitution, for and in the name of the undersigned, to vote all shares of
stock of National Commerce Bancorporation which the undersigned would be
entitled to vote if personally present at the Annual Meeting of Shareholders to
be held on Wednesday, April 28, 1999, at 10:00 a.m. local time, in the
Auditorium at National Bank of Commerce, Concourse Level, Commerce Tower, One
Commerce Square, Memphis, Tennessee 38150, and at any adjournments thereof, upon
the matters described in the accompanying Notice of Annual Meeting of
Shareholders and Proxy Statement, receipt of which is hereby acknowledged, and
upon any other business that may properly come before the meeting or any
adjournments thereof. Said proxies are directed to vote on the matters described
in the Notice of Annual Meeting and Proxy Statement as follows, and otherwise in
their discretion upon such other business as may properly come before the
meeting and any adjournments thereof.
(Continued and to be dated and signed on the reverse side.)
- --------------------------------------------------------------------------------
1. ELECTION OF DIRECTORS
[_] FOR all nominees listed below (except as marked to the contrary
below.)
[_] WITHHOLD AUTHORITY to vote for all nominees listed:
(INSTRUCTION: To withhold authority to vote for any individual
nominee(s), strike a line through the nominee's name in the list
below.)
Class I to serve until Annual Meeting of Shareholders in 2002:
Frank G. Barton, Jr.; Thomas C. Farnsworth, Jr.; Lewis E.
Holland; J. Bradbury Reed; Phillip H. McNeill, Sr.
2. RATIFICATION OF THE BOARD OF DIRECTOR'S APPOINTMENT of Ernst & Young LLP,
independent certified public accountants, as auditors of the Company for
the year ending December 31, 1999.
FOR [_] AGAINST [_] ABSTAIN [_]
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED, BUT IF NO
DIRECTION IS INDICATED, THE PROXY WILL BE VOTED "FOR" EACH OF THE
ABOVE-MENTIONED PROPOSALS. IF ANY OTHER MATTERS ARE PROPERLY
PRESENTED AT THE ANNUAL MEETING FOR ACTION TO BE TAKEN THEREUNDER,
THIS PROXY WILL BE VOTED ON SUCH MATTERS BY THE PERSONS NAMED AS
PROXIES HEREIN IN ACCORDANCE WITH THEIR BEST JUDGEMENT.
Please sign and date below and return the proxy material in the enclosed
envelope, whether or not you plan to attend the annual meeting.
Please date this proxy and sign
exactly as your name or names Date 1999
appear hereon. When more than one ----------------------
owner is shown below, each should
sign. When signing in fiduciary
or representative capacity, please ------------------------------
give full title. If this proxy is
submitted by a corporation, it
should be executed in the full ------------------------------
corporate name by a duly authorized
officer. If this proxy is submitted
by a partnership, it should be ------------------------------
executed in partnership name by an
authorized person.
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