<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
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
FIRST INTERSTATE BANCORP
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[LOGO]
633 West Fifth Street, Los Angeles, California 90071
March 20, 1995
Dear Stockholder:
On behalf of your Board of Directors, I am pleased to invite you to attend
the 1995 Annual Meeting of Stockholders of First Interstate Bancorp, which will
be held on Friday, April 28, 1995, at The Sheraton Grande Hotel, 333 South
Figueroa Street, Los Angeles, California, commencing at 10:00 a.m., local time.
The Notice of Meeting and Proxy Statement following this letter describe the
business to be transacted at the meeting. As in the past, there will be a report
on the operations of the Corporation. Stockholders will have the opportunity to
comment on and ask questions about the affairs of the Corporation that may be of
interest to stockholders generally. If you have a disability requiring an
accommodation, please contact the Events Management Department of First
Interstate Bancorp, 633 West Fifth Street, T11-54, Los Angeles, California 90071
at (213) 614-4335 prior to the meeting.
It is important that your shares be represented at the meeting. WHETHER OR
NOT YOU PLAN TO ATTEND, PLEASE VOTE, SIGN, DATE AND RETURN YOUR PROXY CARD AT
YOUR EARLIEST CONVENIENCE. If you attend the meeting and wish to vote in person,
you may withdraw your proxy at that time.
The Board of Directors joins me in hoping that you will attend the meeting.
Sincerely,
Edward M. Carson
CHAIRMAN OF THE BOARD
<PAGE>
[LOGO]
633 West Fifth Street, Los Angeles, California 90071
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 28, 1995
TO THE STOCKHOLDERS:
The Annual Meeting of Stockholders of First Interstate Bancorp (the
"Corporation") will be held on Friday, April 28, 1995, at The Sheraton Grande
Hotel, 333 South Figueroa Street, Los Angeles, California, at 10:00 a.m., local
time, to consider and take action on the following matters described in the
accompanying Proxy Statement:
1. The election of fifteen directors to hold office until the next
Annual Meeting of Stockholders or until their successors are duly elected
and qualified;
2. The ratification of the selection of Ernst & Young LLP as
independent public accountants to examine the accounts of the Corporation
for the year 1995;
3. The approval of the First Interstate Bancorp Corporate Executive
Incentive Plan;
4. The approval of the First Interstate 1995 Performance Stock Plan;
5. A stockholder proposal concerning cumulative voting; and
6. The transaction of such other business as may properly come before
the meeting or any adjournments or postponements thereof.
Only stockholders of record at the close of business on March 9, 1995, are
entitled to notice of and to vote at the meeting. A list of such stockholders
will be open for examination by any stockholder at the meeting and for a period
of ten days prior to the date of the meeting during ordinary business hours at
the office of the Corporation's Secretary, 633 West Fifth Street, Los Angeles,
California.
For the Board of Directors
Edward S. Garlock
SECRETARY
March 20, 1995
IT IS IMPORTANT THAT THE ENCLOSED PROXY CARD BE
COMPLETED AND RETURNED PROMPTLY.
<PAGE>
[LOGO]
633 West Fifth Street, Los Angeles, California 90071
March 20, 1995
PROXY STATEMENT
This statement is furnished in connection with the solicitation by the Board
of Directors of First Interstate Bancorp, a Delaware corporation (the
"Corporation"), of proxies to be used at the Annual Meeting of Stockholders of
the Corporation to be held on Friday April 28, 1995, at 10:00 a.m. at The
Sheraton Grande Hotel, 333 South Figueroa Street, Los Angeles, California, and
at any adjournments or postponements thereof.
A form of proxy is enclosed for use at the meeting. The proxy may be revoked
by the stockholder at any time before it is voted by giving notice of revocation
in writing or submitting a signed proxy card bearing a later date to First
Interstate Bancorp, 633 West Fifth Street, T7-10, Los Angeles, California 90071,
Attention: Corporate Secretary, provided that such notice or proxy card is
actually received by the Corporation before the vote of stockholders, or in open
meeting prior to the taking of the stockholder vote at the Annual Meeting.
Unless contrary instructions are indicated on the proxy, all shares represented
by valid proxies received pursuant to this solicitation (and not revoked before
they are voted) will be voted for the election of the fifteen nominees for
Director named on the following pages, for the ratification of the selection of
Ernst & Young LLP as independent public accountants to examine the accounts of
the Corporation for the year 1995, for the adoption of the First Interstate
Bancorp Corporate Executive Incentive Plan (the "Executive Incentive Plan"), for
the adoption of the First Interstate Bancorp 1995 Performance Stock Plan (the
"1995 Performance Stock Plan"), and against the stockholder proposal regarding
cumulative voting for the election of Directors.
This proxy material is being mailed to stockholders beginning on or about
March 20, 1995, accompanied by the Corporation's Annual Report for the year
ended December 31, 1994.
The Corporation has adopted a policy that all stockholder proxies, consents,
authorizations, ballots and tabulations that identify the particular vote of a
stockholder are to be maintained in confidence, and that the identity and vote
of any stockholder shall not be disclosed to any third party, except as may be
necessary to meet applicable legal requirements or to allow the inspectors of
election to certify the results of the stockholder vote, and except during a
contested election. In addition, all comments directed to management from
stockholders, whether written on the proxy card or elsewhere, are given to
management. The policy provides that inspectors of election who also tabulate
stockholder votes shall not be employees of the Corporation, but may be
employees of an affiliated bank. The inspectors of election are required to
acknowledge their responsibility to comply with this policy of confidentiality.
The affirmative vote of the holders of a plurality of the votes cast at the
Annual Meeting by stockholders entitled to vote thereon is required for the
election of each nominee for Director of the Corporation, ratification of the
appointment of Ernst & Young LLP as independent public accountants and adoption
of
1
<PAGE>
the stockholder proposal on cumulative voting for the election of Directors. The
adoption of the Executive Incentive Plan and the 1995 Performance Stock Plan
each requires the affirmative vote of the holders of a majority of the votes
cast at the Annual Meeting by stockholders entitled to vote on those matters.
A stockholder entitled to vote for the election of Directors may withhold
authority to vote for all nominees for Director or may withhold authority to
vote for certain nominees for Director; votes that are withheld will be excluded
entirely from the vote and will have no effect. Abstentions may also be
specified on the ratification of the appointment of Ernst & Young LLP, on
approval of the Executive Incentive Plan and the 1995 Performance Stock Plan,
and on adoption of the stockholder proposal. An abstention will be counted as
present for purposes of determining the existence of a quorum on the item on
which the abstention is noted. Since the adoption of the Executive Incentive
Plan and the 1995 Performance Stock Plan each requires the approval of the
holders of a majority of the votes cast at the Annual Meeting and entitled to
vote thereon, abstentions with regard to those items will have the effect of a
negative vote. An abstention on ratification of the appointment of Ernst & Young
LLP and adoption of the stockholder proposal will have no effect on the outcome
of those votes.
Under the rules of the New York Stock Exchange, brokers who hold shares in
street name have the authority to vote on certain items if they do not receive
instructions from beneficial owners. Brokers that do not receive instructions
will be entitled to vote on the election of Directors, ratification of the
appointment of Ernst & Young LLP and approval of the Executive Incentive Plan,
but will not be entitled to vote on adoption of the stockholder proposal or
approval of the 1995 Performance Stock Plan. A broker non-vote will have the
same effect as a vote against the adoption of the 1995 Performance Stock Plan
and Executive Incentive Plan, since approval by a majority of the votes cast at
the Annual Meeting and entitled to vote thereon is required. A broker non-vote
will have no effect on the outcome of voting on the election of Directors,
ratification of the selection of Ernst & Young LLP, or adoption of the
stockholder proposal.
The cost of soliciting proxies on behalf of the Board of Directors will be
borne by the Corporation. Proxies may be solicited by Directors, officers or
regular employees of the Corporation in person or by telephone, telegraph or
telex. In addition, the Corporation will retain Georgeson & Co. Inc. to aid in
the solicitation for an estimated cost of $8,500 plus out-of-pocket expenses.
The Corporation will also request persons, firms and corporations holding shares
in their names, or in the names of their nominees, which are beneficially owned
by others, to send or cause to be sent proxy materials to, and obtain proxies
from, such beneficial owners and will reimburse such holders for their
reasonable expenses in so doing.
OUTSTANDING SHARES AND VOTING RIGHTS
Only stockholders of record at the close of business on March 9, 1995, will
be entitled to vote at the Annual Meeting. The only voting securities of the
Corporation are shares of common stock, $2.00 par value ("Common Stock"), each
share of which entitles the holder thereof to one vote. At the close of business
on such record date the Corporation had outstanding 76,268,424 shares of Common
Stock.
ITEM 1.
THE ELECTION OF DIRECTORS
It is intended that the persons named in the proxy will, unless otherwise
instructed, vote for the election of the fifteen nominees shown on the following
pages to serve as Directors until the succeeding Annual Meeting of Stockholders
and until their respective successors are elected and qualified. In the event
that any of the original nominees for Director becomes unavailable to be elected
and to serve as a Director, the
2
<PAGE>
shares represented by valid proxies will be voted in favor of the remaining
nominees and may be voted for the election of a substitute nominee designated by
the Board of Directors or the Executive Committee (or the number of nominees may
be reduced), unless the inability to serve is believed to be temporary in
nature. In this case, the shares represented by valid proxies will be voted for
the person named, but such person, if elected, will not serve until he or she is
able to do so.
All of the nominees, with the exception of William S. Randall, were elected
to their respective terms of office at the last Annual Meeting of Stockholders.
Under the Corporation's retirement policy for members of the Board of Directors,
William F. Kieschnick, who joined the Board in 1980, is not standing for
reelection this year. J. J. Pinola, former Chairman of the Board and Chief
Executive Officer of the Corporation, is also not standing for reelection. Mr.
Kieschnick and Mr. Pinola leave the Board with the appreciation of the remaining
members for their significant contributions to the progress of the Corporation
during their years of service. Mary M. Gates, who ably served as a Director of
the Corporation since 1993, died on June 9, 1994.
A picture and brief statement of the business experience for at least the
past five years, positions with the Corporation, a listing of other
directorships and associations for each nominee and their ages at the time of
the Annual Meeting are set forth below and on the following pages. There are no
family relationships between any of the nominees and executive officers of the
Corporation.
<TABLE>
<S> <C>
[PHOTO OF JOHN E. JOHN E. BRYSON
BRYSON] CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
SCECORP AND SOUTHERN
CALIFORNIA
EDISON COMPANY
Director since 1991
Age: 51
</TABLE>
MR. BRYSON JOINED SOUTHERN CALIFORNIA EDISON COMPANY IN 1984. IN 1990, MR.
BRYSON WAS ELECTED CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER OF SCECORP
AND SOUTHERN CALIFORNIA EDISON COMPANY. IMMEDIATELY PRIOR TO JOINING SOUTHERN
CALIFORNIA EDISON IN 1984, MR. BRYSON WAS A PARTNER IN THE LAW FIRM OF MORRISON
& FOERSTER. HE SERVED AS PRESIDENT OF THE CALIFORNIA PUBLIC UTILITIES COMMISSION
FROM 1979 THROUGH 1982. MR. BRYSON IS ALSO A DIRECTOR OF THE TIMES MIRROR
COMPANY AND THE BOEING COMPANY, AND IS A TRUSTEE OF STANFORD UNIVERSITY.
COMMITTEES: AUDIT AND COMPENSATION.
<TABLE>
<S> <C>
[PHOTO OF EDWARD M. EDWARD M. CARSON
CARSON] CHAIRMAN OF THE BOARD
FIRST INTERSTATE BANCORP
Director since 1985
Age: 65
</TABLE>
MR. CARSON HAS SERVED AS CHAIRMAN OF THE BOARD OF FIRST INTERSTATE BANCORP
SINCE JUNE 1990 AND ALSO SERVED AS CHIEF EXECUTIVE OFFICER FROM JUNE 1990
THROUGH DECEMBER 1994. PRIOR TO THAT TIME HE WAS PRESIDENT OF FIRST INTERSTATE
BANCORP FROM FEBRUARY 1985 TO MAY 1990, AND PRESIDENT AND CHIEF EXECUTIVE
OFFICER OF FIRST INTERSTATE BANK OF ARIZONA, N.A., FROM OCTOBER 1977 TO JANUARY
1985. MR. CARSON IS ALSO A DIRECTOR OF TERRA INDUSTRIES INC., AZTAR CORPORATION
AND SEVERAL FIRST INTERSTATE SUBSIDIARIES.
COMMITTEE: EXECUTIVE (CHAIRMAN).
3
<PAGE>
<TABLE>
<S> <C>
[PHOTO OF DR. JEWEL DR. JEWEL PLUMMER COBB
PLUMMER COBB] PRESIDENT EMERITA
CALIFORNIA STATE UNIVERSITY,
FULLERTON AND
TRUSTEE PROFESSOR OF
CALIFORNIA
STATE UNIVERSITY SYSTEM AT
CALIFORNIA STATE UNIVERSITY,
LOS ANGELES
Director since 1985
Age: 71
</TABLE>
DR. COBB HAS TAUGHT AT A NUMBER OF COLLEGES AND UNIVERSITIES, INCLUDING
CONNECTICUT COLLEGE AND RUTGERS UNIVERSITY'S DOUGLASS COLLEGE. IN OCTOBER 1981,
SHE BECAME PRESIDENT OF CALIFORNIA STATE UNIVERSITY, FULLERTON. DR. COBB RETIRED
AS PRESIDENT IN AUGUST 1990, AND IS A TRUSTEE PROFESSOR OF CALIFORNIA STATE
UNIVERSITY. DR. COBB IS ALSO A DIRECTOR OF GEORGIA-PACIFIC CORPORATION. IN
ADDITION, SHE SERVES AS A MEMBER OF THE NATIONAL INSTITUTE OF MEDICINE OF THE
NATIONAL ACADEMY OF SCIENCES, A FELLOW OF THE NEW YORK ACADEMY OF SCIENCES, A
TRUSTEE OF THE CALIFORNIA INSTITUTE OF TECHNOLOGY, AND A MEMBER OF THE BOARD OF
DREW UNIVERSITY OF MEDICINE AND SCIENCE.
COMMITTEE: COMPLIANCE.
- ------------------------------------------------
<TABLE>
<S> <C>
[PHOTO OF RALPH P. RALPH P. DAVIDSON
DAVIDSON] FORMER CHAIRMAN
THE JOHN F. KENNEDY
CENTER FOR THE
PERFORMING ARTS
Director since 1987
Age: 67
</TABLE>
MR. DAVIDSON JOINED TIME INC. IN 1954, AND AFTER SEVERAL EUROPEAN
ASSIGNMENTS, HE BECAME A VICE PRESIDENT OF TIME INC. AND WAS NAMED PUBLISHER OF
TIME IN 1972. IN 1980 MR. DAVIDSON WAS ELECTED A DIRECTOR OF TIME INC. AND
BECAME ITS CHAIRMAN OF THE BOARD LATER THAT YEAR. HE SERVED AS CHAIRMAN UNTIL
SEPTEMBER 1986, WHEN HE BECAME CHAIRMAN OF THE EXECUTIVE COMMITTEE OF TIME'S
BOARD OF DIRECTORS. MR. DAVIDSON RETIRED FROM TIME INC. IN DECEMBER 1987. HE
BECAME PRESIDENT OF THE JOHN F. KENNEDY CENTER FOR THE PERFORMING ARTS IN
NOVEMBER 1987 AND SERVED AS CHAIRMAN FROM AUGUST 1988 TO MAY 1990. MR. DAVIDSON
IS ALSO A DIRECTOR OF KELLEY OIL CORP., AND IS TRUSTEE OF THE JOHN F. KENNEDY
CENTER FOR THE PERFORMING ARTS. HE SERVES AS A DIRECTOR OF THE PHOENIX HOUSE, A
DRUG REHABILITATION CENTER, AND AS CHAIRMAN OF PEOPLE'S HOUSE, A CHARITABLE
ORGANIZATION IN WASHINGTON, D.C.
COMMITTEES: AUDIT AND NOMINATING.
<TABLE>
<S> <C>
[PHOTO OF MYRON DU MYRON DU BAIN
BAIN] CHAIRMAN AND CHIEF
EXECUTIVE OFFICER, RETIRED
FIREMAN'S FUND
CORPORATION
Director since 1983
Age: 71
</TABLE>
MR. DU BAIN WAS CHAIRMAN OF THE BOARD OF SRI INTERNATIONAL FROM DECEMBER
1985 TO DECEMBER 1989, AND WAS PRESIDENT AND CHIEF EXECUTIVE OFFICER OF AMFAC,
INC. FROM 1983 TO SEPTEMBER 1985. PRIOR TO THAT TIME MR. DU BAIN WAS CHAIRMAN OF
THE BOARD, PRESIDENT AND CHIEF EXECUTIVE OFFICER OF FIREMAN'S FUND INSURANCE
COMPANIES FROM 1975 TO 1981 AND CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF
FIREMAN'S FUND CORPORATION FROM 1981 TO 1982. MR. DU BAIN IS ALSO A DIRECTOR OF
SCIOS NOVA INC., TRANSAMERICA CORPORATION, SRI INTERNATIONAL AND THE CHRONICLE
PUBLISHING COMPANY. HE SERVES AS CHAIRMAN OF THE BOARD OF THE JAMES IRVINE
FOUNDATION AND IS A DIRECTOR OF THE SAN FRANCISCO OPERA ASSOCIATION.
COMMITTEES: CREDIT (CHAIRMAN), COMPLIANCE AND NOMINATING.
- ------------------------------------------------
<TABLE>
<S> <C>
[PHOTO OF DON C. DON C. FRISBEE
FRISBEE] CHAIRMAN EMERITUS
PACIFICORP
(PUBLIC UTILITY)
Director since 1985
Age: 71
</TABLE>
MR. FRISBEE SERVED AS CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF PACIFICORP
FROM DECEMBER 1972 UNTIL JANUARY 1, 1989, WHEN HE RETIRED AS CHIEF EXECUTIVE
OFFICER. HE RETIRED AS CHAIRMAN AND DIRECTOR ON FEBRUARY 9, 1994. HE IS ALSO A
DIRECTOR OF PRECISION CASTPARTS CORP., STANDARD INSURANCE COMPANY, WEYERHAEUSER
COMPANY AND FIRST INTERSTATE BANK OF OREGON, N.A. MR. FRISBEE SERVES AS THE
CHAIRMAN OF THE BOARD OF TRUSTEES OF REED COLLEGE.
COMMITTEE: AUDIT (CHAIRMAN).
4
<PAGE>
<TABLE>
<S> <C>
[PHOTO OF GEORGE M. GEORGE M. KELLER
KELLER] CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER,
RETIRED
CHEVRON CORPORATION
(PETROLEUM PRODUCTS)
Director since 1974
Age: 71
</TABLE>
MR. KELLER JOINED CHEVRON IN 1948, AND WAS ELECTED A DIRECTOR IN 1970, VICE
CHAIRMAN IN 1974 AND CHAIRMAN IN MAY 1981. HE RETIRED FROM CHEVRON ON JANUARY 1,
1989. MR. KELLER SERVED AS CHAIRMAN OF THE BOARD OF SRI INTERNATIONAL FROM
JANUARY 1990 UNTIL DECEMBER 1993, AND CONTINUES TO SERVE AS A DIRECTOR. HE IS
ALSO A DIRECTOR OF THE BOEING COMPANY, MCKESSON CORPORATION, METROPOLITAN LIFE
INSURANCE COMPANY, THE CHRONICLE PUBLISHING COMPANY AND FIRST INTERSTATE BANK OF
CALIFORNIA.
COMMITTEES: COMPENSATION (CHAIRMAN) AND NOMINATING.
- ------------------------------------------------
<TABLE>
<S> <C>
[PHOTO OF THOMAS L. THOMAS L. LEE
LEE] CHAIRMAN AND CHIEF EXECUTIVE
OFFICER
THE NEWHALL LAND AND FARMING
COMPANY (PLANNED COMMUNITY
DEVELOPMENT AND AGRICULTURE)
Director since 1993
Age: 52
</TABLE>
MR. LEE HAS BEEN CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF THE NEWHALL LAND
AND FARMING COMPANY SINCE 1989. HE JOINED NEWHALL LAND IN 1970, SERVING IN
VARIOUS POSITIONS WITH RESIDENTIAL, COMMERCIAL AND INDUSTRIAL REAL ESTATE
OPERATIONS WHILE DEVELOPING THE NEW TOWN OF VALENCIA, CALIFORNIA. FROM 1985 TO
1987 HE WAS PRESIDENT AND CHIEF OPERATING OFFICER, AND HE SERVED AS PRESIDENT
AND CHIEF EXECUTIVE OFFICER FROM 1987 UNTIL ELECTED TO HIS PRESENT POSITION IN
1989. MR. LEE IS A DIRECTOR OF FIRST INTERSTATE BANK OF CALIFORNIA AND CALMAT
CO. HE IS A DIRECTOR OF THE LOS ANGELES AREA CHAMBER OF COMMERCE AND SERVED AS
ITS CHAIRMAN IN 1994. HE ALSO IS A MEMBER OF THE CALIFORNIA BUSINESS ROUNDTABLE
AND THE URBAN LAND INSTITUTE.
COMMITTEE: AUDIT.
<TABLE>
<S> <C>
[PHOTO OF DR. DR. WILLIAM F. MILLER
WILLIAM F. MILLER] PROFESSOR OF PUBLIC
AND PRIVATE MANAGEMENT
STANFORD UNIVERSITY
PRESIDENT EMERITUS
SRI INTERNATIONAL
(RESEARCH INSTITUTE)
Director since 1980
Age: 69
</TABLE>
DR. MILLER RETIRED AS PRESIDENT AND CHIEF EXECUTIVE OFFICER OF SRI
INTERNATIONAL IN DECEMBER 1990. PRIOR TO JOINING SRI INTERNATIONAL IN SEPTEMBER
1979, HE SERVED AS VICE PRESIDENT AND PROVOST OF STANFORD UNIVERSITY FROM 1971
TO 1979. DR. MILLER IS NOW PROFESSOR OF PUBLIC AND PRIVATE MANAGEMENT IN THE
GRADUATE SCHOOL OF BUSINESS OF STANFORD UNIVERSITY. HE IS ALSO A DIRECTOR OF
PACIFIC GAS & ELECTRIC CO., VARIAN ASSOCIATES, INC., SCIOS NOVA INC. AND FIRST
INTERSTATE BANK OF CALIFORNIA. DR. MILLER ALSO SERVES AS VICE CHAIRMAN OF THE
BOARD OF SMART VALLEY, INC. AND CHAIRMAN OF THE BOARD OF THE MANAGEMENT
INSTITUTE FOR THE ENVIRONMENT AND BUSINESS. HE IS A DIRECTOR OF THE CENTER FOR
EXCELLENCE IN NON-PROFITS AND THE JOINT VENTURE SILICON VALLEY NETWORK.
COMMITTEES: COMPLIANCE (CHAIRMAN), EXECUTIVE AND CREDIT.
- ------------------------------------------------
<TABLE>
<S> <C>
[PHOTO OF WILLIAM S. WILLIAM S. RANDALL
RANDALL] EXECUTIVE VICE PRESIDENT AND
CHIEF OPERATING OFFICER
FIRST INTERSTATE BANCORP
Nominee for Director
Age: 54
</TABLE>
MR. RANDALL WAS ELECTED EXECUTIVE VICE PRESIDENT AND CHIEF OPERATING OFFICER
OF FIRST INTERSTATE BANCORP IN JANUARY 1995. HE JOINED FIRST INTERSTATE BANK OF
ARIZONA, N.A., IN 1969, AND WAS NAMED EXECUTIVE VICE PRESIDENT AND CHIEF
FINANCIAL OFFICER IN 1981. IN DECEMBER 1981, HE WAS NAMED PRESIDENT AND CHIEF
EXECUTIVE OFFICER OF FIRST INTERSTATE BANK OF WASHINGTON, N.A., AND CHAIRMAN IN
JUNE 1985. MR. RANDALL WAS ELECTED CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE
OFFICER OF FIRST INTERSTATE BANK OF ARIZONA, N.A., IN JANUARY 1990, WAS
APPOINTED CHIEF EXECUTIVE OFFICER OF FIRST INTERSTATE'S SOUTHWEST REGION IN
1991, AND SERVED IN THOSE CAPACITIES UNTIL ELECTED TO HIS PRESENT POSITION. MR.
RANDALL IS ALSO A DIRECTOR OF THE LOS ANGELES BRANCH OF THE FEDERAL RESERVE BANK
OF SAN FRANCISCO, AND SEVERAL FIRST INTERSTATE SUBSIDIARIES.
5
<PAGE>
<TABLE>
<S> <C>
[PHOTO OF DR. STEVEN DR. STEVEN B. SAMPLE
B. SAMPLE] PRESIDENT
UNIVERSITY OF SOUTHERN
CALIFORNIA
Director since 1991
Age: 54
</TABLE>
PRIOR TO JOINING THE UNIVERSITY OF SOUTHERN CALIFORNIA IN 1991 AS PRESIDENT,
DR. SAMPLE SPENT NINE YEARS AS PRESIDENT OF THE STATE UNIVERSITY OF NEW YORK AT
BUFFALO. HE HAS TAUGHT ELECTRICAL ENGINEERING AT SEVERAL UNIVERSITIES, AND HOLDS
A NUMBER OF PATENTS. DR. SAMPLE IS ALSO A DIRECTOR OF THE REGENSTRIEF INSTITUTE,
THE PRESLEY COMPANIES, WESTERN ATLAS CORP., REBUILD L.A. AND LOS ANGELES
METROPOLITAN PROJECT.
COMMITTEES: CREDIT AND NOMINATING.
- ------------------------------------------------
<TABLE>
<S> <C>
[PHOTO OF FORREST N. FORREST N. SHUMWAY
SHUMWAY] FORMER VICE CHAIRMAN AND
CHAIRMAN OF THE EXECUTIVE
COMMITTEE
ALLIED-SIGNAL INC.
(MULTI-INDUSTRY COMPANY)
Director since 1982
Age: 68
</TABLE>
MR. SHUMWAY FORMERLY WAS VICE CHAIRMAN AND CHAIRMAN OF THE EXECUTIVE
COMMITTEE OF ALLIED-SIGNAL INC. PRIOR TO THE COMBINATION OF ALLIED CORPORATION
AND THE SIGNAL COMPANIES, INC. IN 1985, HE WAS PRESIDENT, CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE OFFICER OF THE SIGNAL COMPANIES FOR 20 YEARS. MR. SHUMWAY IS
ALSO A DIRECTOR OF ALUMINUM COMPANY OF AMERICA, AMERICAN PRESIDENT COMPANIES,
LTD., THE CLOROX COMPANY AND TRANSAMERICA CORPORATION.
COMMITTEES: EXECUTIVE AND NOMINATING.
<TABLE>
<S> <C>
[PHOTO OF WILLIAM E. WILLIAM E. B. SIART
B. SIART] PRESIDENT AND CHIEF
EXECUTIVE OFFICER
FIRST INTERSTATE BANCORP
Director since 1990
Age: 48
</TABLE>
MR. SIART WAS ELECTED CHIEF EXECUTIVE OFFICER OF FIRST INTERSTATE BANCORP IN
JANUARY 1995, AND HAS SERVED AS PRESIDENT OF FIRST INTERSTATE BANCORP SINCE JUNE
1990. HE JOINED FIRST INTERSTATE BANCORP IN JULY 1978, SERVING AS VICE PRESIDENT
IN THE CHAIRMAN'S OFFICE AND THEN AS SENIOR VICE PRESIDENT AND HEAD OF MARKETING
UNTIL APRIL 1981. IN APRIL 1981, HE WAS NAMED PRESIDENT AND CHIEF OPERATING
OFFICER OF FIRST INTERSTATE BANK OF NEVADA, N.A., AND WAS NAMED CHIEF EXECUTIVE
OFFICER IN 1982 AND CHAIRMAN OF THE BOARD IN JULY 1984. MR. SIART WAS ELECTED
PRESIDENT AND CHIEF EXECUTIVE OFFICER OF FIRST INTERSTATE BANK OF CALIFORNIA IN
JANUARY 1985, AND WAS NAMED CHAIRMAN OF THE BOARD IN DECEMBER 1985. MR. SIART IS
ALSO A DIRECTOR OF SEVERAL OTHER FIRST INTERSTATE SUBSIDIARIES AND A MEMBER OF
THE U.S. REGION BOARD OF DIRECTORS OF MASTERCARD INTERNATIONAL.
COMMITTEES: EXECUTIVE AND COMPLIANCE.
- ------------------------------------------------
<TABLE>
<S> <C>
[PHOTO OF RICHARD J. RICHARD J. STEGEMEIER
STEGEMEIER] CHAIRMAN OF THE BOARD
UNOCAL CORPORATION
(ENERGY RESOURCES)
Director since 1989
Age: 67
</TABLE>
MR. STEGEMEIER HAS BEEN CHAIRMAN OF UNOCAL CORPORATION SINCE APRIL 1989, AND
WAS CHIEF EXECUTIVE OFFICER FROM JULY 1988 THROUGH APRIL 1994; HE WAS ALSO
PRESIDENT FROM JULY 1988, THROUGH MAY 1992. FROM DECEMBER 1985 THROUGH JUNE
1988, HE WAS PRESIDENT AND CHIEF OPERATING OFFICER, AND PRIOR TO THAT TIME, HE
SERVED AS SENIOR VICE PRESIDENT. MR. STEGEMEIER IS ALSO A DIRECTOR OF OUTBOARD
MARINE CORPORATION, FOUNDATION HEALTH CORPORATION, NORTHROP GRUMMAN CORPORATION
AND HALLIBURTON COMPANY.
COMMITTEES: NOMINATING (CHAIRMAN) AND COMPENSATION.
6
<PAGE>
<TABLE>
<S> <C>
[PHOTO OF DANIEL M. DANIEL M. TELLEP
TELLEP] CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
LOCKHEED CORPORATION
(AEROSPACE)
Director since 1991
Age: 63
</TABLE>
MR. TELLEP JOINED LOCKHEED IN 1955 AND SERVED AS PRESIDENT OF LOCKHEED
MISSILES & SPACE COMPANY, INC. A WHOLLY-OWNED SUBSIDIARY OF LOCKHEED, FROM 1984
TO 1988. HE ALSO SERVED AS GROUP PRESIDENT-MISSILES AND SPACE SYSTEMS FROM 1986
TO 1988. FROM AUGUST 1988 TO DECEMBER 1988, MR. TELLEP SERVED AS PRESIDENT OF
LOCKHEED CORPORATION, AND WAS ELECTED CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE
OFFICER ON JANUARY 1, 1989. HE IS ALSO A DIRECTOR OF SCECORP AND SOUTHERN
CALIFORNIA EDISON COMPANY.
COMMITTEES: AUDIT AND COMPENSATION
INFORMATION REGARDING THE BOARD OF DIRECTORS
COMMITTEES OF THE BOARD
The Corporation's Board of Directors has six standing committees: Executive,
Audit, Compensation, Compliance, Credit and Nominating. Except for the Executive
and Compliance Committees, each of these committees is composed of members who
are not officers or employees of the Corporation or its subsidiaries. The
membership and principal responsibilities of those committees are described
below. The Management Advisory Committee, a standing committee which met twice
during 1994, was dissolved on May 4, 1994. Members of the Management Advisory
Committee during 1994 were William F. Kieschnick (Chairman), John E. Bryson,
George M. Keller and Richard J. Stegemeier.
EXECUTIVE COMMITTEE
Members: Edward M. Carson (Chairman), William F. Kieschnick, William F.
Miller, J. J. Pinola, Forrest N. Shumway and William E. B. Siart.
Between meetings of the Board of Directors, the Executive Committee has all
powers which may be delegated to it under Delaware law. In general, the
Executive Committee may supervise the management of all business of the
Corporation except for matters which by law specifically require the action of
the full Board or the stockholders. The Executive Committee did not meet during
1994.
7
<PAGE>
AUDIT COMMITTEE
Members: Don C. Frisbee (Chairman), John E. Bryson, Ralph P. Davidson,
Thomas L. Lee and Daniel M. Tellep.
The Audit Committee reviews with the independent public accountants the
scope and results of the annual audit, monitors the adequacy of the
Corporation's system of internal controls and procedures, oversees the
Corporation's internal audit activities, recommends the selection of the
independent public accountants subject to approval of the Board and ratification
by the stockholders, and meets periodically with representatives of bank
regulatory agencies to discuss the condition of the Corporation and the
subsidiary banks. Mary M. Gates served as a member of the Audit Committee until
her death in June 1994. During 1994, the Audit Committee met six times.
COMPENSATION COMMITTEE
Members: George M. Keller (Chairman), John E. Bryson, William F. Kieschnick,
Richard J. Stegemeier and Daniel M. Tellep.
The Compensation Committee reviews and approves the compensation of all
officers whose salary exceeds $150,000 per year other than officers who are also
Directors, whose salaries are fixed by the Board of Directors. This Committee
administers the several performance stock plans of the Corporation, providing
for the award of stock, stock options and other derivative securities. The
Committee also administers and makes awards under the Corporation's Executive
Incentive Plan, Regional Executive Incentive Plan and Management Incentive Plan,
and, if approved by the stockholders at the Annual Meeting of Stockholders, the
new Corporate Executive Incentive Plan and the 1995 Performance Stock Plan. It
also approves benefit plans and programs for the employees of the Corporation
and its subsidiaries. During 1994, the Compensation Committee met seven times.
COMPLIANCE COMMITTEE
Members: William F. Miller (Chairman), Jewel Plummer Cobb, Myron Du Bain and
William E. B. Siart.
The Compliance Committee reviews the Corporation's compliance program, the
laws and regulations governing its activities, the Corporation's response to
changes in laws and regulations, and management reports on the effectiveness of
subsidiaries' compliance activities. The Compliance Committee met five times
during 1994.
CREDIT COMMITTEE
Members: Myron Du Bain (Chairman), William F. Miller, J. J. Pinola and
Steven B. Sample.
The Credit Committee reviews and approves all appropriate credit policies
and Risk Management standards by which the Corporation's credit process is
managed. This Committee reviews sufficient information on a regular basis to
ensure that the credit process is managed consistent with the Corporation's
policies and regulatory and accounting standards; meets periodically with
representatives of bank regulatory agencies to discuss the condition of the
Corporation and the subsidiary banks; reviews management's evaluation of the
Corporation's credit risk elements and performance objectives; reviews, on a
quarterly
8
<PAGE>
basis, management's evaluation of the Corporation's consolidated Allowance for
Credit Losses; and reviews with the Corporation's independent public accountants
any report or opinion related to the credit Risk Management process of the
Corporation, including the adequacy of the Allowance. The Committee also reviews
and approves the Corporation's independent credit review program and, on a
regular basis, receives reports and recommendations made by the Corporation's
Senior Credit Review Officer to ensure that the program is managed consistent
with standards. The Credit Committee met five times during 1994.
NOMINATING COMMITTEE
Members: Richard J. Stegemeier (Chairman), Ralph P. Davidson, Myron Du Bain,
George M. Keller, Steven B. Sample and Forrest N. Shumway.
The Nominating Committee considers and reviews the qualifications of
potential nominees for Director and recommends to the Board of Directors a slate
of nominees for election as Directors at the Annual Meeting of Stockholders and,
when vacancies occur, candidates for election by the Board of Directors. The
Committee will consider nominees recommended by stockholders. Such
recommendations for nominees for election at the 1996 Annual Meeting should be
submitted in writing to the Committee in care of the Secretary of the
Corporation at its address set forth on the first page of this Proxy Statement.
During 1994, the Nominating Committee met one time.
Under the Corporation's Bylaws, nominations of persons for election to the
Board of Directors may be made at a meeting of stockholders by any stockholder
of the Corporation, provided that the Secretary of the Corporation receives
written notice not less than thirty (30) days nor more than sixty (60) days
prior to the meeting. If less than forty (40) days' notice or prior public
disclosure of the date of the meeting is given or made by the Corporation to
stockholders, the notice of a nomination must be received not later than the
close of business on the 10th day following the day on which such notice of the
date of the meeting was mailed or such public disclosure was made. Notices of
nominations must state the nominee's name, age, business and residential
addresses and principal occupation or employment. The notice must also include
the class and number of shares of the Corporation beneficially owned by such
nominee and any other information about the nominee required to be disclosed in
solicitations for proxies for the election of directors pursuant to Regulation
14A under the Securities Exchange Act of 1934. In addition, the notice must
state the name and record address of the nominating stockholder and the class
and number of shares of the Corporation beneficially owned by the stockholder.
The Board of Directors believes that this notification procedure gives the Board
and the stockholders a better opportunity to consider the qualifications of
nominees for Director.
DIRECTORS' FEES AND OTHER COMPENSATION
Directors who are salaried officers of the Corporation receive no fees as
Directors of the Corporation. All other Directors are paid an annual retainer
for Board service of $20,000, and an attendance fee of $1,000 and $600 for each
Board and committee meeting attended, respectively. Directors are also
reimbursed for any expenses incurred in connection with attendance at regular or
special meetings of the Board or any of its committees. The Chairmen of the
standing committees are paid an additional $5,000 annual retainer. The
Corporation has a standard arrangement pursuant to which Directors may elect to
defer all or part of their Directors' fees. During 1994 Messrs. Bryson, Du Bain,
Keller and Dr. Sample deferred the annual retainer and all attendance fees.
9
<PAGE>
During 1994 the Corporation continued to provide Mr. Pinola, as former
Chairman of the Board and Chief Executive Officer, with certain services and
property, resulting in imputed income to him of approximately $15,511. The
Corporation paid Mr. Pinola a tax gross-up amount of approximately $18,096 in
connection with such imputed income.
DIRECTORS' RETIREMENT PLAN
The Corporation adopted the First Interstate Bancorp Retirement Plan for
Directors, effective January 1, 1988, to provide retirement benefits to eligible
Directors who have not served as Directors while being employed by the
Corporation or any of its subsidiaries, and who retire from Board service with
at least five years of service as a Director. Each eligible Director is entitled
to an annual retirement benefit equal to the annual retainer for Directors as in
effect at the time of the eligible Director's resignation or retirement, or the
Director may elect, not less than one year prior to retirement, to receive a
lump sum payment upon retirement. Upon attainment of the later of age 65 or
retirement, an eligible Director will receive one year of retirement payments
for each year of service as an outside Director, with a maximum payment period
of 20 years and with certain spousal rights in the event of death.
1991 DIRECTOR OPTION PLAN
The First Interstate 1991 Director Option Plan ("Director Plan") was
authorized by the Board of Directors on October 15, 1990, and approved by the
Corporation's stockholders on April 19, 1991. A total of 200,000 shares of
Common Stock has been reserved for issuance under the Director Plan, which
provides for the non-discretionary granting of non-qualified options to purchase
Common Stock to Directors who have not served as Directors while being employed
by the Corporation or any of its subsidiaries. Each option grant is exercisable
in its entirety one year from its date of grant. The Director Plan is designed
to operate automatically and not require administration. To the extent that
administration is necessary, the Director Plan is administered by the
Compensation Committee of the Board of Directors.
The purchase price of the Common Stock covered by each option is 100% of the
fair market value of the stock on the date of the option grant. The options are
generally non-transferable. Each option has a termination date, but in any
event, all options granted under the Director Plan terminate upon the first to
occur of the following events: (i) the expiration of ten years from the date the
option is granted; (ii) the expiration of three months from the date an optionee
ceases to serve as a Director for any reason other than death, disability or
retirement eligibility; (iii) the expiration of one year from the date an
optionee ceases to serve as a Director of the Corporation because of disability
or death; (iv) the expiration of three years from the date an optionee ceases to
serve as a Director of the Corporation if the Director is eligible for
retirement benefits under the First Interstate Bancorp Retirement Plan for
Directors; or (v) the termination of the Director Plan pursuant to its terms.
Upon first being elected, each eligible Director is awarded an option to
purchase 5,000 shares of Common Stock. Thereafter, on the first business day
following each annual stockholders meeting of the Corporation, each eligible
Director is granted an option to purchase 1,000 shares of Common Stock.
10
<PAGE>
INSURANCE AGREEMENTS FOR DIRECTORS
The Corporation purchased universal life insurance policies on the lives of
outside Directors, except for Messrs. Lee and Davidson and Mrs. Gates. The death
benefits of the policies depend on the length of time a Director has served and
do not exceed $200,000 (except in the case of Mr. Pinola, whose death benefit is
$2,000,000). The Corporation will continue to pay the premium on such policies
for the period the Director remains a member of the Board. The Directors have
entered into "split-dollar" life insurance agreements which provide that a
Director will become fully entitled to the policy upon the occurrence of certain
events, including continuation of service to a future date and resignation for
good reason following a change in control. If a Director becomes entitled to the
policy, the cash value of the policy reduces the payment of benefits under the
Directors' Retirement Plan and deferrals of Director's fees. During 1994, the
Directors covered by these insurance agreements received imputed income ranging
from $30 to $13,160 and tax gross-up amounts ranging from $28 to $12,463
relating to such imputed income. The varying amounts were due to factors such as
the Director's age and length of service.
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS
During 1994, each incumbent Director of the Corporation attended at least
75% of the meetings of the Board of Directors and the committees on which he or
she served, with the exception of Mr. Frisbee. The Board of Directors held ten
meetings during the year 1994.
11
<PAGE>
BENEFICIAL OWNERSHIP OF THE CORPORATION'S SECURITIES
BY MANAGEMENT
The following table sets forth the number of shares of each class of equity
securities of the Corporation beneficially owned as of February 21, 1995 by each
Director and executive officer named in the Summary Compensation Table and by
all Directors and executive officers as a group, with the exception of shares
held in the Employee Savings Plan, which are reported as of December 31, 1994.
For the purposes of this Proxy Statement, beneficial ownership is defined in
accordance with the rules of the Securities and Exchange Commission and means
generally the power to vote or dispose of securities, regardless of any economic
interest.
<TABLE>
<CAPTION>
COMMON STOCK TOTAL PERCENT OF
OPTION COMMON COMMON
NAME OF BENEFICIAL OWNER(1) COMMON STOCK(2) SHARES(3) STOCK STOCK
- -------------------------------------------------------- ---------------- -------------- ---------- -----------
<S> <C> <C> <C> <C>
John E. Bryson(4)(5).................................... 1,140 6,500 7,640 *
Edward M. Carson(4)(6).................................. 31,644 223,750 255,394 *
Dr. Jewel Plummer Cobb.................................. 1,776 6,514 8,290 *
James J. Curran(6)(7)................................... 21,891 64,750 86,641 *
Ralph P. Davidson....................................... 1,500 8,000 9,500 *
Myron Du Bain(4)........................................ 28,939 8,000 36,939 *
Don C. Frisbee.......................................... 872 3,000 3,872 *
Mary M. Gates(8)........................................ 2,335 6,000 8,335 *
George M. Keller(4)..................................... 5,896 5,000 10,896 *
William F. Kieschnick(4)................................ 7,100 1,000 8,100 *
Thomas L. Lee........................................... 1,300 5,000 6,300 *
Dr. William F. Miller(4)................................ 2,310 8,000 10,310 *
J. J. Pinola(4)......................................... 8,842 0 8,842 *
William S. Randall(5)(6)................................ 29,690 86,250 115,940 *
Dr. Steven B. Sample.................................... 500 6,500 7,000 *
Forrest N. Shumway(4)................................... 2,000 8,000 10,000 *
William E. B. Siart(6).................................. 46,254 168,750 215,004 *
Richard J. Stegemeier(4)................................ 4,800 3,000 7,800 *
Daniel M. Tellep........................................ 500 7,000 7,500 *
Bruce G. Willison(5)(6)(7).............................. 24,254 91,250 115,504 *
All Directors and executive officers as a group
(30 persons)(4)(5)(6)(7)(8)(9)(10)(11)................ 282,327 1,009,739 1,292,066 1.69%
<FN>
- ---------
* Represents less than 1% of the outstanding Common Stock.
(1) Subject to applicable community property and similar statutes, the persons
listed as beneficial owners of the shares have sole voting and investment
power with respect to such shares except as noted.
</TABLE>
12
<PAGE>
<TABLE>
<C> <S> <C> <C>
(2) Fractional shares resulting from participation in the Dividend Reinvestment
and Stock Purchase Plan and the Employee Savings Plan of First Interstate
Bancorp have been rounded to the nearest whole share.
(3) Reflects the number of shares that could be purchased by exercise of
options presently exercisable or exercisable within 60 days from February
21, 1995, under the Corporation's stock option plans.
Includes the the following shares of Common Stock held by a living or
(4) family trust formed by the named individual in which voting or investment
power may be shared: Mr. Bryson, 500 shares; Mr. Carson, 30,482 shares; Mr.
Du Bain, 23,839 shares; Mr. Keller, 5,896 shares; Mr. Kieschnick, 7,100
shares; Dr. Miller, 2,310 shares; Mr. Pinola, 8,842 shares; Mr. Shumway,
2,000 shares; and Mr. Stegemeier, 4,800 shares. Also includes 4,000 shares
of Common Stock held in an Individual Retirement Account by Mr. Du Bain.
(5) Includes shares held jointly, or in other capacities, as to which in some
cases beneficial ownership may be disclaimed.
(6) Includes the following shares held by the Trustee of the Employee Savings
Plan in the accounts of the named individuals as of December 31, 1994:
Edward M. Carson ....................................... 801
William E. B. Siart .................................... 16,527
William S. Randall ..................................... 9,830
Bruce G. Willison ...................................... 4,972
James J. Curran ........................................ 13,338
All executive officers as a group (15 persons) ......... 56,479
(7) Includes the following performance units awarded pursuant to the 1991, 1992
and 1993 annual incentive plans and issued under the 1991 Performance Stock
Plan (each performance stock unit represents one share of Common Stock):
Mr. Willison ........................................... 1,777
Mr. Curran ............................................. 1,543
All executive officers as a group (15 persons) ......... 7,692
The performance stock units will be paid in Common Stock or cash upon the
occurrence of certain events, at the executive officer's election,
including the first to occur of termination of employment, retirement or a
specified date. Additional performance unit credit will be received based
on the value of dividends paid on the underlying performance stock units.
(8) Mrs. Gates' stock ownership is reported as of June 9, 1994, the date of her
death.
(9) Includes 97,213 shares of Common Stock held in living or family trusts in
which voting or investment power may be shared.
(10) No Directors or executive officers owned any shares of Series F or Series G
Preferred Stock of the Corporation.
(11) Includes shares of Restricted Stock awarded by the Compensation Committee
pursuant to the Corporation's 1991 Performance Stock Plan.
</TABLE>
13
<PAGE>
BY OTHERS
The following entities are the only stockholders known to the Corporation to
be the beneficial owners of more than 5% of the Corporation's equity securities
outstanding at December 31, 1994:
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS OF BENEFICIAL PERCENT OF
TITLE OF CLASS BENEFICIAL OWNER OWNERSHIP CLASS
- ----------------- ----------------------------------------------- ----------- -------------
<S> <C> <C> <C>
Common Stock DI Associates and KKR Associates 6,131,693(1) 8.26%
c/o Kohlberg Kravis
Roberts & Co.
9 West 57th Street
New York, NY 10019
Common Stock Oppenheimer Group, Inc. 5,170,191(2) 6.78%(2)
Oppenheimer Tower,
World Financial Center
New York, NY 10281
<FN>
- ---------
(1) This information is based upon a Schedule 13D dated February 3, 1993 filed
with the Securities and Exchange Commission ("SEC") jointly by DI
Associates ("DI") and KKR Associates ("KKR"). DI and KKR have sole voting
and dispositive power as to all of the shares.
(2) This information is based upon a Schedule 13G dated February 1, 1995 filed
with the SEC by Oppenheimer Group, Inc. ("Group"), as a parent holding
company on behalf of Oppenheimer & Co., L.P. and Group's subsidiary
companies and/or certain investment advisory clients or discretionary
accounts of such subsidiaries. Group does not have sole voting and
dispositive power with respect to any of the shares, and has shared voting
and dispositive power as to all of the shares. An investment advisory
subsidiary, Oppenheimer Capital, has shared voting and dispositive power as
to 5,130,281 of such shares, and sole voting and dispositive power as to
none of the shares.
</TABLE>
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's executive officers and Directors, and persons who own more than
ten percent of a registered class of the Corporation's equity securities, to
file reports of ownership and changes in ownership with the Securities and
Exchange Commission.
The Corporation believes that during 1994 it complied with all Section 16(a)
filing requirements applicable to its executive officers, Directors and greater
than ten percent beneficial owners, except for the following reports. One report
on Form 4 was filed late for Mr. Davidson, who inadvertently failed to report
the sale in 1994 of 500 shares of Common Stock by his wife. An amended Form 4
reflecting the sale was filed approximately one month after the due date. An
amended Form 4 was also filed in 1994 for Mr. Willison to reflect his gift in
1992 of 50 shares of Common Stock to his son; the amendment was filed
immediately upon his discovery of the omission.
14
<PAGE>
PURSUANT TO ITEM 402(A)(9) OF REGULATION S-K OF THE SECURITIES AND EXCHANGE
COMMISSION ("SEC"), THE FOLLOWING REPORT OF THE COMPENSATION COMMITTEE ON
EXECUTIVE COMPENSATION AND THE COMMON STOCK PERFORMANCE GRAPH ON PAGE 21 SHALL
NOT BE DEEMED TO BE FILED WITH THE SEC FOR PURPOSES OF THE SECURITIES EXCHANGE
ACT OF 1934. IN ADDITION, THEY SHALL NOT BE DEEMED TO BE INCORPORATED BY
REFERENCE INTO ANY OF THE CORPORATION'S PAST OR FUTURE FILINGS UNDER THE
SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT OF 1934.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The members of the First Interstate Bancorp Compensation Committee are all
non-employee Directors, and no member of the Committee is a former officer or
employee of the Corporation or any of its subsidiaries. Mr. Stegemeier was
selected by the Board of Directors to serve on the Compensation Committee on May
4, 1994, and participated in the modification of existing employment agreements,
the evaluation of corporate and regional performance and the assignment of
incentive awards for 1994.
The Compensation Committee of the Board is committed to providing a total
compensation program which supports the Corporation's business strategy and
enhances shareholder value. The Committee is responsible for the review and
approval of total compensation elements, including the competitive market
posture, the level of pay at risk, and the mixture of pay components for the
Corporation's executives and key management employees. In addition to these
broad responsibilities, the Compensation Committee reviews and approves
employment agreements, base salary increases, annual incentive awards and stock
option grants to executives and other key management employees, including the
five named executives on the Summary Compensation Table in the Proxy Statement.
The base salaries of the Chairman of the Board and Chief Executive Officer and
the President receive final approval from the Board of Directors.
COMPENSATION PHILOSOPHY
The Corporation's overall compensation philosophy, endorsed by the
Compensation Committee, is to encourage and reward financial performance and,
through the encouragement of stock ownership, to align the interests of
management with those of the stockholders. The Committee bases its compensation
decisions on the executives' performance, as defined in this Report, and
experience and on the competitive compensation levels at other banks. The banks
with which the Corporation compares its compensation levels include a group of
superregional banks with similar characteristics as the Corporation and its
subsidiary banks, i.e., retail focus, multi-state operations, with a minimum of
400 branches and $20 billion in assets. Many of these banks are represented in
the KBW 50 Index published by Keefe, Bruyette & Woods, Inc., which is used by
the Corporation as its peer comparison on the Common Stock Performance Graph in
the Proxy Statement.
The decisions of the Compensation Committee are based on the principle that
a substantial portion of annual compensation for the Chairman of the Board and
Chief Executive Officer and the President and other executive officers should be
contingent upon the Corporation's performance and return to stockholders.
Officers and employees participating in the executive incentive plans have
approximately 50% to 55% of their direct compensation (base salary plus bonus)
dependent on measured achievement of corporate and regional goals.
15
<PAGE>
COMPENSATION PROGRAM ELEMENTS
The Corporation's executive compensation program consists of three elements:
-- Base salary
-- Annual incentive compensation
-- Long-term incentive compensation
BASE SALARY
Each executive officer's base salary is reviewed annually. When determining
salary levels, the Compensation Committee considers internal equity (the
relationship of an executive's salary to the value of his or her position to the
Corporation as measured by the midpoint of the position's salary grade and the
appropriateness of such salary level compared to the salaries of other
executives), the average of competitive pay practices and the executive's
performance. While all three of these determinants are considered by the
Committee, adjustments to salaries are based on individual performance.
Competitive salary data enables the Compensation Committee to assess the salary
of each executive officer relative to the market, and internal equity
considerations require the differentiation of salaries based on job size,
experience, responsibility level and organizational complexity. The base
salaries of executives range from somewhat below the median to slightly above
the median of the competitive market. The 1994 base salary increases approved
for executive officers, including the five named executives on the Summary
Compensation Table in the Proxy Statement, reflected the Committee's assessment
that these executives contributed substantially to the Corporation's performance
in exceeding its overall goals, as described below.
1994 ANNUAL INCENTIVE COMPENSATION
The Corporate Executive Incentive Plan (the "Executive Incentive Plan"), the
Regional Executive Incentive Plan and the Management Incentive Plan provide
annual incentive compensation opportunities to executive officers based on the
Corporation's performance and the performance of the subsidiary banks.
Incentive awards for Mr. Carson and Mr. Siart are based on the performance
of the entire Corporation against goals established by the Committee at the
start of the year. The awards for the Chief Executive Officers of the
California, Texas, Northwest and Southwest regions are based 50% on the
achievement of specific regional goals, as set at the beginning of each year,
and 50% on the Corporation's performance. The objectives are established by
executive management and reviewed and approved by the Compensation Committee.
The specific goal categories and their weighting for the Corporation and for the
regions are identified below. The actual level of performance required for each
of the goals is confidential for competitive reasons.
The primary goal category for the Corporation for 1994 was return on equity,
with 50% weighting based on the Corporation's performance relative to the peer
bank group median return on equity over an eleven
16
<PAGE>
year historical performance period. The remaining 50% weighting was based on the
Corporation's performance relative to the peer bank group median return on
equity in 1994. Performance against both goals placed the Corporation in the
highest performing quartile of its peer group.
Each of the four regions had their own unique objectives for net income,
revenue and efficiency ratio (which measures expenses relative to revenue). The
weights for the goal categories in all four regions were 60% net income, 20%
revenue and 20% efficiency ratio. Three of the four regions exceeded all of
their goals, while all four exceeded their net income goals.
The incentive awards for the Chairman of the Board and Chief Executive
Officer and the President were directly based on the Corporation's achievement
percentage against its goals applied to the target award percentage for these
two positions. Fifty percent (50%) of the incentive awards for the regional
Chief Executive Officers was directly linked to their own region's performance
against the region's goals described above, and 50% was linked to the
Corporation's performance against its goals, also described above.
The executive officers serving on the Corporation's Executive Operating
Committee, including the five named executives on the Summary Compensation
Table, receive 25% of their annual incentive award in stock. Such executive
officers may elect to defer payment of the stock award in the form of
performance stock units, each of which represents one share of Common Stock. Any
dividends paid on the Common Stock underlying the performance stock units are
credited and converted into additional performance stock units. At the time of
distribution, shares of Common Stock will be issued equal to the number of whole
performance stock units, and any fractional performance stock unit will be
payable in cash.
Executive officers who do not participate in either the Executive Incentive
Plan or Regional Executive Incentive Plan participate in the Management
Incentive Plan. The Managment Incentive Plan provides for awards based on a
blend of corporate performance and the performance of the unit by which the
participant is employed. Adjustments are made to the blended awards based on
individual performance.
LONG-TERM INCENTIVE COMPENSATION
The Compensation Committee believes that awards of stock options promote the
interests of the stockholders by providing performance incentives to senior
executives and key employees who are responsible for the management, growth and
financial success of the Corporation. Options are priced at 100% of the market
value on the date of grant, and the Compensation Committee's policy precludes
any subsequent repricing of options. Since recipients of stock options will not
profit from their options until the price of the Corporation's stock exceeds the
grant price, the executives are motivated to manage their businesses in ways
that over the long term will benefit stockholders through increased stock price.
The Chairman of the Board and Chief Executive Officer considers the level of
the optionee's job responsibility, his or her potential impact on the
Corporation's performance and the median to 75th percentile of competitive
practice in arriving at the number of shares to be recommended to the
Compensation Committee. Stock option guidelines have been established using the
Black-Scholes Pricing Model. Each year, the Corporation uses compensation
surveys published by various consulting firms and compares the present value of
its option grants to the competitive market long-term incentive value, also
17
<PAGE>
measured by the Black-Scholes Pricing Model. The competitive market as surveyed
by the consultants includes the same superregional banks described above in the
section on Compensation Philosophy. Organizational performance and individual
performance are also factors which serve to increase or decrease option
recommendations from the guidelines. The regional Chief Executive Officers'
option grants in 1994 were at the median of competitive practice as calculated
by the Black-Scholes Pricing Model.
The Committee, in granting options, did not consider either the amount and
value of options currently held or the number of shares owned by those
individuals who were granted options in 1994. The Corporation has established
ownership level guidelines for equity holdings in the Corporation by senior
managers.
The Corporation does not grant tandem stock appreciation rights to its
executive officers. In addition, the Corporation currently uses restricted stock
as a compensation vehicle only on a very selective basis.
COMPENSATION OF MR. CARSON
In assessing the accomplishments of Mr. Carson, the Compensation Committee
considered that, under his direction, the results for 1994 demonstrate continued
significant strengthening in the Corporation's performance. Net income for the
Corporation for 1994 was $733.5 million, compared to income of $561.4 million
for 1993, which is before the cumulative effect of accounting changes and an
extraordinary item. Return on average common equity for the Corporation in 1994
was 21.56%, up from 17.33% in 1993 and significantly higher than the peer bank
group median return on equity of 16.59% for 1994. The Corporation's return on
average assets for 1994 was 1.38%, compared to 1.14% in 1993. In addition, no
provision for credit losses for the Corporation was reported for 1994.
The Compensation Committee believes that Mr. Carson's base salary should
approximate the average of the competitive market and that his total
compensation, including incentive pay, should be related to the Corporation's
performance as compared to its competitive market. The Corporation's performance
for 1994 as compared to its competitive market was in the top quartile for
return on equity.
Mr. Carson's 1994 base salary is slightly above the median base salary of
chief executive officers of the banks identified above as the Corporation's
competitive market. His direct compensation for 1994 is estimated to be between
the 50th and 75th percentiles when compared to the Corporation's competitive
market. In determining his 1994 incentive award, the Committee took into account
Mr. Carson's accomplishments as specified above.
The present value of the 1994 grant to Mr. Carson of 50,000 options, as
determined by the Black-Scholes Pricing Model, was approximately 25% lower than
the competitive market long-term incentive value. In Mr. Carson's case, the
option grant will have an effective term of four years, instead of the normal
ten years, when he retires this year. The Black-Scholes valuation methodology
results in a lower value as the term of the grant shortens.
In addition to the annual incentive compensation awarded to Mr. Carson under
the Executive Incentive Plan and the 1991 Performance Stock Plan, the Committee
made an award to him in recognition of his significant contribution to the
Corporation.
18
<PAGE>
THE TAX DEDUCTIBILITY LIMITATION
As a result of the OMNIBUS BUDGET RECONCILIATION ACT of 1993, Section 162(m)
of the Internal Revenue Code of 1986, as amended (the "Code"), provides that any
publicly held corporation will be denied a deduction for compensation paid to a
"covered employee" to the extent that the compensation exceeds $1,000,000. The
deduction limit applies to any compensation that could otherwise be deducted
except for specific types of payments. As one of the exclusions, the deduction
limit does not apply to "compensation that meets the requirements for
performance-based compensation".
Under the requirements for performance-based compensation set forth in the
proposed Internal Revenue Service regulations, compensation will not be subject
to the deduction limit if (1) it is payable on account of the attainment of one
or more performance goals; (2) the performance goals are established by a
compensation committee of the board of directors; (3) the material terms of the
compensation and the performance goals are disclosed to and approved by the
stockholders before payment; and (4) the compensation committee certifies that
the performance goals have been satisfied before payment.
Awards issued under First Interstate's 1991 Performance Stock Plan satisfy
the requirements of the regulations, because the 1991 Performance Stock Plan was
approved by the stockholders in accordance with Section 16(b) of the Securities
Exchange Act of 1934 and because the Plan provides for an aggregate limit on the
number of shares with respect to which awards may be made under the Plan. At the
1995 Annual Meeting, the 1995 Performance Stock Plan will be presented to the
stockholders for their approval. If approved by the stockholders, the
Corporation believes that stock options granted under this Plan, and stock
awards issued under this Plan which are based upon the achievement of the
performance goals established under the Executive Incentive Plan, will satisfy
the requirements for performance-based compensation set forth in the proposed
Internal Revenue Service regulations.
The Compensation Committee has decided to introduce in 1995 additional goal
categories to the annual Executive Incentive Plan which should serve to enhance
its qualification as performance-based compensation. The additional goal
categories will affect those executives who are identified in the statute as
"covered employees". Under Section 162(m) of the Code, the term "covered
employees" refers to the Chief Executive Officer and those individuals whose
compensation is required to be reported to the stockholders under the Securities
Exchange Act of 1934 who are employed on the last day of the taxable year.
Therefore, the Proxy Statement contains a detailed description of the terms
and conditions of the Executive Incentive Plan, including the class of employees
eligible to receive compensation under performance goals, a general description
of the terms of the goals and the maximum dollar amount that could be paid to
any one participant for the plan years 1995 through 1999 if the performance
goals are satisfied. At the 1995 Annual Meeting of Stockholders, the Executive
Incentive Plan will be presented to the stockholders for their approval. The
Board of Directors adopted the Executive Incentive Plan on February 21, 1995,
subject to the approval of the stockholders.
19
<PAGE>
EMPLOYMENT AGREEMENTS
In 1994, the Compensation Committee invited an independent outside
compensation consulting firm to assess the appropriateness of the Corporation's
existing executive Employment Agreements. The consultant's review included a
review of current practices with respect to such agreements by employers of
similar size across major industries and within the banking segment peers. The
consultant's report to the Committee suggested that modifications to certain
elements within these Employment Agreements were appropriate in order to ensure
the effectiveness, and to maintain the overall competitiveness, of the
Corporation's Employment Agreements. Amended and Restated Employment Agreements
were therefore reviewed and approved by the Compensation Committee on June 20,
1994 and by the Board of Directors on July 18, 1994. It is the Committee's
belief that, upon a termination of employment, a minimum amount of disruption
takes place when the terms and conditions of payments and benefits upon
termination have been incorporated into an agreement. In addition, the
agreements also serve to enhance continuity of management in the event of a
change in control.
Therefore, the Proxy Statement contains a description of the terms and
conditions of the Employment Agreements, as amended and restated, including the
class of employees eligible for these Agreements.
COMPENSATION COMMITTEE OF THE BOARD OF
DIRECTORS
George M. Keller, Chairman
John E. Bryson
William F. Kieschnick
Richard J. Stegemeier
Daniel M. Tellep
20
<PAGE>
COMMON STOCK PERFORMANCE GRAPH
The following Common Stock Performance Graph compares the yearly percentage
change, on a dividend reinvested basis, in the cumulative total stockholder
return on the Common Stock with the cumulative total return of the Standard &
Poor's 500 Stock Index (which includes the Corporation) and the KBW 50 Index,
published by Keefe, Bruyette & Woods, Inc., for the five-year period commencing
December 31, 1989. The stock price performance depicted in the Performance Graph
is not necessarily indicative of future price performance.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN (1)
FIRST INTERSTATE BANCORP, S&P 500 INDEX AND KBW 50 INDEX
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
FIRST INTERSTATE BANCORP $ 100.00 $ 63.94 $ 85.88 $ 137.40 $ 192.99 $ 211.22
KBW 50 INDEX $ 100.00 $ 71.81 $ 113.67 $ 144.84 $ 182.86 $ 145.07
S & P 500 INDEX $ 100.00 $ 96.89 $ 126.41 136.04 $ 149.75 $ 151.73
<FN>
- ------------
(1) ASSUMES $100 INVESTED ON DECEMBER 31, 1989 IN FIRST INTERSTATE BANCORP
COMMON STOCK, S&P 500 INDEX AND KBW 50 INDEX AND ASSUMES QUARTERLY DIVIDEND
REINVESTMENT.
</TABLE>
21
<PAGE>
EXECUTIVE OFFICERS' COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth the compensation for the Chief Executive
Officer of the Corporation and the four most highly compensated executive
officers of the Corporation (other than the Chief Executive Officer) who served
as executive officers on December 31, 1994:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
OTHER
ANNUAL COMPENSATION ANNUAL
---------------------------- COMPEN-
NAME AND PRINCIPAL POSITION YEAR SALARY ($)(1) BONUS ($)(2) SATION ($)(3)
- ---------------------------------------- ---- ------------- ------------ --------------
<S> <C> <C> <C> <C>
Edward M. Carson 1994 $783,333 $1,500,000 --
Chairman of the 1993 784,133 1,062,000 --
Board (7) 1992 718,967 1,118,000
William E.B. Siart 1994 629,500 930,000 --
President and 1993 645,358 836,000 --
Chief Executive Officer (8) 1992 571,483 884,000
William S. Randall 1994 440,852 498,400 --
Executive Vice 1993 453,833 453,000 --
President and Chief Operating Officer 1992 408,833 491,000
(9)
Bruce G. Willison 1994 430,833 513,300 --
Chief Executive 1993 405,833 455,000 --
Officer, California Region (10) 1992 381,967 484,000
James J. Curran 1994 375,004 444,600 --
Chief Executive Officer, 1993 374,200 395,000 --
Northwest Region (11) 1992 357,500 415,000
<CAPTION>
LONG-TERM COMPENSATION
--------------------------------------
AWARDS
---------------------------- PAYOUTS
SECURITIES -------
RESTRICTED UNDERLYING LTIP
STOCK OPTIONS/ PAYOUTS ALL OTHER
NAME AND PRINCIPAL POSITION AWARDS ($)(4) SARS (#)(5) ($) COMPENSATION ($)(6)
- ---------------------------------------- ------------- ------------ ------- -------------------
<S> <C> <C> <C> <C>
Edward M. Carson -0- 50,000 -0- $56,699
Chairman of the -0- 75,000 -0- 35,229
Board (7) -0- 60,000 -0-
William E.B. Siart -0- 30,000 -0- 19,638
President and -0- 45,000 -0- 18,556
Chief Executive Officer (8) -0- 45,000 -0-
William S. Randall -0- 17,000 -0- 14,530
Executive Vice -0- 20,000 -0- 22,839
President and Chief Operating Officer -0- 20,000 -0-
(9)
Bruce G. Willison -0- 17,000 -0- 11,420
Chief Executive -0- 20,000 -0- 25,057
Officer, California Region (10) -0- 20,000 -0-
James J. Curran -0- 17,000 -0- 12,877
Chief Executive Officer, -0- 20,000 -0- 11,383
Northwest Region (11) -0- 18,000 -0-
<FN>
- ----------
(1) Included in this column are salaries and directors' fees paid for services
rendered to the Corporation's subsidiaries before any salary reduction for
contributions to the Corporation's Employee Savings Plan under section
401(k) of the Internal Revenue Code of 1986, as amended (the "Code"), and
salary reductions for contributions for welfare plan coverages under
section 125 of the Code.
(2) The bonus amounts are payable pursuant to the Corporation's Executive
Incentive Plan, Regional Executive Incentive Plan and 1991 Performance
Stock Plan, as applicable. In addition, the bonus for Mr. Carson includes
an award in recognition of his significant contribution to the Corporation.
This column reflects amounts awarded, even if deferred.
(3) "Other Annual Compensation", if any, is only required to be reported for
1993 and 1994; amounts which total the lesser of $50,000 or 10% of the
total annual salary and bonus for the named executive officer have been
omitted.
(4) Of the persons named above, only Mr. Randall had restricted stock holdings
at December 31, 1994, aggregating 3,000 shares with a value of $202,857,
based on a year-end stock price of $67.625. None of the restricted stock
awards vested in less than three years from the date of grant. Holders of
restricted stock accrue dividends at the
</TABLE>
22
<PAGE>
<TABLE>
<S> <C>
same time and at the same rate as other holders of Common Stock. In the
event of a change in control of the Corporation, the restrictions on
restricted stock lapse immediately. Restricted stock awards are valued at
the closing stock price on the date of grant.
(5) No tandem Stock Appreciation Rights ("SARs") have been granted since 1991,
and no freestanding SARs have ever been granted.
(6) "All Other Compensation" is only required to be reported for 1993 and 1994.
The total amounts shown in this column for 1994 consist of the following:
(i) Mr. Carson, $23,500 for matching Corporation contributions under the
Employee Savings Plan and Supplemental Savings Plan; $29,955 for the
benefit attributable to payments of premiums on universal life insurance;
and a tax gross-up amount of $3,243 relating to brokerage fees on stock
option exercises; (ii) Mr. Siart, $18,450 for matching Corporation
contributions under the Employee Savings Plan and Supplemental Savings
Plan; and $1,188 for the benefit attributable to payments of premiums on
universal life insurance; (iii) Mr. Randall, $13,726 for matching
Corporation contributions under the Employee Savings Plan and Supplemental
Savings Plan; and $1,304 for the benefit attributable to payments of
premiums on universal life insurance; (iv) Mr. Willison, $10,675 for
matching Corporation contributions under the Employee Savings Plan and
Supplemental Savings Plan; and $745 for the benefit attributable to
payments of premiums on universal life insurance; and (v) Mr. Curran,
$11,250 for matching Corporation contributions under the Employee Savings
Plan and Supplemental Savings Plan; and $1,627 for the benefit attributable
to payments of premiums on universal life insurance. The Corporation has
purchased universal life insurance policies on the lives of the named
executives, who have no immediate right to receive the cash surrender value
of the policies and may never have any right to receive the cash surrender
value. If, and only if, certain conditions are met, will the executives
become vested in the cash surrender value. An executive's benefits under
various deferred compensation plans will be reduced dollar for dollar by
the amount of the cash surrender value of the policy at the time it vests.
The premiums paid on the policies are designed to produce a cash surrender
value which is less than the accrued benefits under the various plans.
(7) Mr. Carson also served as Chief Executive Officer of the Corporation
through December 31, 1994.
(8) Mr. Siart served as President of the Corporation throughout 1994, and was
also named its Chief Executive Officer on January 1, 1995.
(9) Mr. Randall became Executive Vice President and Chief Operating Officer of
the Corporation on January 1, 1995. He was Chief Executive Officer,
Southwest Region, through December 31, 1994, and also served as Chairman of
the Board, President and Chief Executive Officer of First Interstate Bank
of Arizona through December 31, 1994.
(10) Mr. Willison serves as Chairman of the Board, President and Chief Executive
Officer of First Interstate Bank of California.
(11) Mr. Curran's position includes serving as Chairman of the Board, President
and Chief Executive Officer of First Interstate Bank of Oregon, and Chief
Executive Officer and President of First Interstate Banks of Idaho, Montana
and Washington.
</TABLE>
23
<PAGE>
STOCK OPTIONS
The following tables summarize grants of options and exercises of options to
purchase Common Stock during 1994 to or by the executive officers of the
Corporation named in the Summary Compensation Table above, and the grant date
present value of options held by such persons at the end of 1994. All
outstanding SARs were surrendered by the executive officers of the Corporation
in 1993, and no SARs were granted during 1994.
OPTION/SAR GRANTS IN LAST FISCAL YEAR (1994)
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS EXERCISE OR
UNDERLYING GRANTED TO BASE PRICE GRANT DATE
OPTIONS/SARS EMPLOYEES IN PER SHARE EXPIRATION PRESENT
NAME GRANTED(#)(1) FISCAL YEAR ($/SH) DATE VALUE(2)
- -------------------------------------------- ------------- ----------------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Edward M. Carson............................ 50,000 6.0% $ 66.875 1/2/98 $ 672,000(3)
William E. B. Siart......................... 30,000 3.6 66.875 2/22/04 426,900(4)
William S. Randall.......................... 17,000 2.0 66.875 2/22/04 241,910(4)
Bruce G. Willison........................... 17,000 2.0 66.875 2/22/04 241,910(4)
James J. Curran............................. 17,000 2.0 66.875 2/22/04 241,910(4)
<FN>
- ---------
(1) Options were granted under the 1991 Performance Stock Plan, which provides
for the granting of options at an option exercise price of 100% of the fair
market value of the stock on the date of grant. Options granted in 1994 are
exercisable beginning 12 months after the grant date, with 25% of the
shares covered thereby becoming exercisable at that time and with an
additional 25% of the option shares becoming exercisable on each successive
anniversary date, with full vesting occurring on the fourth anniversary
date. Mr. Carson's options vest according to the same schedule, except that
any unexercised options will become immediately exercisable upon his
retirement in 1995. In the event of a change in control of the Corporation,
stock options become immediately exercisable to their full extent.
(2) Present market value determinations were made using the Black-Scholes
option pricing model. There is no assurance that any value realized by
optionees will be at or near the value estimated by that model. The
ultimate values of the options will depend on the future market price of
the Common Stock, which cannot be forecast with reasonable accuracy. The
actual value, if any, an optionee will realize upon exercise of an option
will depend upon the excess, if any, of the market value of the Common
Stock on the date the option is exercised over the exercise price of the
option. The assumptions and calculations used for the model were provided
to the Corporation by an independent consulting firm.
(3) The estimated grant date present value for Mr. Carson under the
Black-Scholes model is based on the following assumptions and adjustments:
an exercise price of $66.875 per share, equal to the fair market value of
the underlying stock on the date of grant; an annual dividend yield of
$2.00 per share, representing the annualized dividend paid on a share of
Common Stock at the date of grant; a stock price volatility of 27.898%,
based on daily stock prices for the one-year period prior to the grant
date; and an option term of four years to reflect that he will retire in
1995. In addition, the calculation was
</TABLE>
24
<PAGE>
<TABLE>
<S> <C>
based on an interest rate of 5.12%, representing the interest rate on a
U.S. Treasury security on the date of grant with a maturity date
corresponding to that of the four-year option term. Reductions of
approximately 5.0% were made to reflect the probability of forfeiture due
to termination prior to vesting, and approximately 5.72% to reflect the
probability of a shortened option term due to termination of employment
prior to the option expiration date.
(4) The estimated grant date present value under the Black-Scholes model is
based on the same assumptions and adjustments used to calculate Mr.
Carson's present value as to exercise price, volatility and dividends.
Different assumptions and adjustments were made, however, as follows: an
option term of 10 years; an interest rate of 5.97%, representing the
interest rate on a U.S. Treasury security on the date of grant with a
maturity date corresponding to that of the ten-year option term; and
reductions of approximately 21.70% to reflect the probability of forfeiture
due to termination prior to vesting, and approximately 13.39% to reflect
the probability of a shortened option term due to termination of employment
prior to the option expiration date.
</TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR (1994)
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS IN-THE-MONEY OPTIONS/SARS
AT FISCAL YEAR-END(#)(3) AT FISCAL YEAR-END($)(4)
SHARES ACQUIRED VALUE -------------------------- ---------------------------
NAME ON EXERCISE(#)(1) REALIZED($)(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------- ----------------- ------------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Edward M. Carson....... 42,000 $ 1,126,375 132,000 145,000 $ 3,922,938 $ 2,235,000
William E.B. Siart..... 4,000 132,000 132,000 93,000 3,579,313 1,528,313
William S. Randall..... 7,000 290,125 69,250 44,750 1,810,781 673,469
Bruce G. Willison...... 1,600 62,000 73,250 45,750 1,951,906 707,594
James J. Curran........ 3,000 126,875 48,250 43,750 1,463,781 643,219
<FN>
- ---------
(1) No tandem SARs have been granted since 1991, and no freestanding SARs have
ever been granted. All unexercised SARs were surrendered in 1993.
(2) Value is based upon the difference between the market value at the date of
exercise and the exercise price.
(3) In the event of a change in control of the Corporation, stock options
become immediately exercisable to their full extent.
(4) Value is based upon the difference between the market value at the end of
1994 and the exercise price.
</TABLE>
25
<PAGE>
PENSION PLANS
The following table indicates the estimated annual benefit payable to a
covered participant at normal retirement age under The Retirement Plan for
Employees of First Interstate Bancorp and its Affiliates ("Retirement Plan")
based on covered compensation and years of service with the Corporation and its
subsidiaries. The table includes benefits under the Corporation's Excess Benefit
Retirement Plan ("Excess Plan") and Supplemental Executive Retirement Plan
("SERP"), both of which are unfunded. The Excess Plan provides benefits that
would otherwise be denied a participant by reason of certain Internal Revenue
Code limitations on the Retirement Plan. The SERP covers a select group of
management who have attained age 55 and supplements the basic Retirement Plan by
including bonuses in the definition of covered compensation.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE(1)
----------------------------------------------------------
REMUNERATION 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- ------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$ 300,000 $ 83,677 $ 111,569 $ 139,461 $ 167,353 $ 195,245
400,000 112,177 149,569 186,961 224,353 261,745
500,000 140,677 187,569 234,461 281,353 328,245
600,000 169,177 225,569 281,961 338,353 394,745
1,200,000 340,177 453,569 566,961 680,353 793,745
1,400,000 397,177 529,569 661,961 794,353 926,745
<FN>
- ---------
(1) The maximum number of years of service that may be credited under the
pension plans is 35. Mr. Carson has 43 years of service, of which 35 years
of service are credited.
</TABLE>
The compensation covered by the pension plans for the individuals named in
the Summary Compensation Table includes basic monthly salary or wage rate and
certain bonuses described in the Summary Compensation Table and excludes
director's fees, amounts paid for life insurance premiums, matching amounts
under the Corporation's Employee Savings Plan and imputed income. The
remuneration of a participant is an average of the compensation (as stated in
the Summary Compensation Table) covered by such plans for the five of the last
ten calendar years of the participant's employment with the Corporation for
which such average is highest. The remuneration covered by the pension plans for
Mr. Carson is $1,296,111; Mr. Siart, $549,000; Mr. Randall, $396,004; Mr.
Willison, $372,000; and Mr. Curran, $525,727. The credited service in full years
for Mr. Carson is 35 years; Mr. Siart, 16 years; Mr. Randall, 25 years; Mr.
Willison, 16 years; and Mr. Curran, 17 years. The benefits shown in the table
are computed on a single-life annuity basis and are not reduced or adjusted for
receipt of Social Security benefits or other offset amounts.
EMPLOYMENT AGREEMENTS
In January, 1995, the Corporation entered into amended and restated
employment agreements with certain of its key executives which are designed to
encourage them to remain employees of the Corporation
26
<PAGE>
by providing them with greater security. Similar agreements have been entered
into between some of the Corporation's bank subsidiaries and certain of their
key executives. Messrs. Siart, Randall, Willison and Curran are parties to such
agreements.
Absent a change in control as defined in the agreements, the amended and
restated employment agreements are continuous and generally may be terminated
with 14 months' notice. The agreements, as amended, provide for liquidated
damages equal to 24 months' base salary in the event that the executive is
terminated for a non-allowable reason. Unless the Corporation decides otherwise,
such damages are payable at the same time and in the same manner as if the
executive had remained employed by the Corporation.
As defined in the agreements, as amended, a change in control occurs when
any person or group becomes the beneficial owner of the Corporation's securities
having 20% or more of the combined voting power of its then outstanding
securities, when a majority of the Corporation's Board of Directors is replaced
as a result of a contest for the election of Directors, or upon the occurrence
of certain mergers, acquisitions and other events.
In the event of a change in control, the term of the agreements, as amended,
is extended to the date two years following the change in control, and the
duties of executives may not thereafter be modified. In addition, if an
executive is terminated without cause, as defined in the agreements, after a
change in control, such person is entitled to a payment equal to the sum of
three times annual base salary and target bonus for the year in which the
executive's employment terminates, an amount equivalent to three additional
years of participation in the Corporation's retirement plan, and $30,000 to
cover the cost of three years' health and welfare benefit plan coverage. A
prorated portion of any bonus that may be accelerated as a result of a change in
control will be deducted from the payment. Such a payment to an executive is
payable as a cash lump sum within ten days following termination of employment.
Mr. Carson remains a party to the original employment agreement entered into
effective January 1, 1990, due to his retirement as Chief Executive Officer of
the Corporation at the end of 1994, and his upcoming retirement in April as
Chairman. Mr. Carson's employment agreement is similar to the amended and
restated employment agreements described above, except that his agreement
provides for liquidated damages equal to 12 months' base salary if he is
terminated for a non-allowable reason, and that upon the attainment of age 65,
no additional amounts would be payable in respect of termination of employment
following a change in control.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1994, the Compensation Committee of the Corporation's Board of
Directors consisted of Messrs. Keller (Chairman), Bryson, Kieschnick, Stegemeier
and Tellep.
The Corporation instituted an executive loan program on January 14, 1991 to
provide fixed rate principal residence mortgage loans and general purpose loans
at favorable rates to members of the Managing Committee of the Corporation. All
loan requests under the new executive loan program require the approval of the
Chairman or the President of the Corporation and the Compensation Committee of
the Board of Directors and are documented in accordance with standard
requirements for loans made outside
27
<PAGE>
the program. Two of the individuals named in the Summary Compensation Table had
loans under the program. Mr. Siart had a principal residence mortgage loan, with
a principal balance of $874,502 at December 31, 1994, a maximum balance during
1994 of $885,221 and an interest rate of 6.34%. Mr. Willison obtained a general
purpose loan in 1994 under the program in the form of a floating rate
installment note in the principal amount of $150,000. The note had a maximum
balance during 1994 of $150,000 and an interest rate of 5.76% from the date of
origination through October 27, 1994, and an interest rate of 7.32% from October
28 through December 31, 1994. No other executive officers have loans under the
program.
RELATED TRANSACTIONS
During 1994 a number of the Corporation's subsidiary banks had loan
transactions, in the ordinary course of business, with officers and Directors of
the Corporation. There were also, during 1994, a number of loan transactions in
the ordinary course of business between the Corporation's subsidiary banks and
associates of officers and Directors of the Corporation. Except as described in
the Compensation Committee Interlocks and Insider Participation section above,
all of such transactions 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 did not involve more than a normal risk of
collectibility or present other unfavorable features.
ITEM 2.
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
By resolution of the Board of Directors, the firm of Ernst & Young LLP,
Certified Public Accountants, was chosen as the independent public accountants
to examine the accounts of the Corporation for the year 1995. In accordance with
that same resolution, this selection is being presented to the stockholders for
ratification. Ernst & Young LLP has audited the Corporation's books annually
since 1958 and is considered well qualified. Representatives of the firm are
expected to be present at the Annual Meeting of Stockholders on April 28, 1995
with an opportunity to make a statement if they desire to do so, and are
expected to be available to respond to appropriate questions. If the
stockholders do not ratify the employment of Ernst & Young LLP, the selection of
independent accountants will be reconsidered by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
SELECTION OF ERNST & YOUNG LLP AS THE CORPORATION'S INDEPENDENT PUBLIC
ACCOUNTANTS FOR THE YEAR 1995.
28
<PAGE>
ITEM 3.
PROPOSAL FOR APPROVAL OF CORPORATE EXECUTIVE INCENTIVE PLAN
The First Interstate Bancorp Corporate Executive Incentive Plan (the
"Executive Incentive Plan") was authorized by the Corporation's Compensation
Committee and was adopted by the Board of Directors of the Corporation on
February 21, 1995, subject to the affirmative vote of the holders of at least a
majority of the shares of the Corporation's voting stock present in person or by
proxy and entitled to a vote at the 1995 Annual Meeting. The Executive Incentive
Plan is only effective if approved by stockholders.
Commencing in 1995, the Executive Incentive Plan, the 1995 Performance Stock
Plan, if approved by the stockholders at the 1995 Annual Meeting, and the 1991
Performance Stock Plan are the exclusive means for the Corporation's Chairman of
the Board, President and Chief Executive Officer, and Executive Vice President
and Chief Operating Officer to earn annual incentive compensation. The Chief
Executive Officers of each Region will earn Awards under the Executive Incentive
Plan based on achievement of goals established for the Corporation. In addition
to participating in the Executive Incentive Plan, the 1995 Performance Stock
Plan, if approved, and the 1991 Performance Stock Plan, the Chief Executive
Officers of the Regions will also participate in the First Interstate Bancorp
annual Regional Executive Incentive Plan, which rewards the Chief Executive
Officer of each Region for the performance of his or her Region.
SUMMARY OF CORPORATE EXECUTIVE INCENTIVE PLAN
The full text of the Executive Incentive Plan is set forth in Exhibit A to
this Proxy Statement. The following summary of the provisions of the Executive
Incentive Plan is qualified in its entirety by reference to the text of the
Executive Incentive Plan.
PURPOSE
The purpose of the Executive Incentive Plan is to focus the efforts of
certain key executive employees on the continued improvement in the performance
of the Corporation and to aid the Corporation in attracting, motivating and
retaining superior executives by providing an incentive and reward to those key
employees who contribute most to the operating progress and performance of the
Corporation.
ELIGIBILITY
The Chairman of the Board, the President and Chief Executive Officer of the
Corporation, the Executive Vice President and Chief Operating Officer of the
Corporation, and the Chief Executive Officers of the California, Northwest,
Southwest, and Texas Regions are eligible to receive Awards as defined in the
Executive Incentive Plan. At present, these are the seven key employees eligible
to participate in the Executive Incentive Plan.
ADMINISTRATION
The Executive Incentive Plan will be administered by the Compensation
Committee of the Board of Directors of the Corporation (the "Committee"), which
Committee will consist of at least two Directors, each of which is a
"disinterested person" as defined in Rule 16b-3 under the Securities Exchange
Act of 1934 and an "outside director" as defined in Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code").
29
<PAGE>
AWARDS
The Executive Incentive Plan authorizes the payment of cash Awards, as
defined therein, based on the attainment of specific goals for the Corporation
with respect to return on equity, revenue, gross income, pre-tax income,
deposits, assets, non-interest expenses, non-performing assets and total
shareholder return, which goals will be established in writing and approved by
the Committee prior to the beginning of each year (not later than 90 days after
the commencement of the period of service to which the performance goals
relate). Awards are based on a formula of multiplying year-end base salary by a
percentage determined by the level of achievement. The maximum attainable Award
is 135% of year-end base salary for Messrs. Carson and Siart, 123.75% of
year-end base salary for Mr. Randall, and 56.25% of year-end base salary for the
remaining Participants. For purposes of calculating Awards, year-end base salary
shall not be treated as increasing in any Performance Year by more than the
average salary increases for employees at this level at comparable banks, taking
into consideration increases on account of promotions. An Award will be made to
a Participant, as defined in the Executive Incentive Plan, after the completion
of the year based upon the satisfaction of the Corporation's goals under the
Executive Incentive Plan, which achievement has been certified by the Committee,
in writing, as having satisfied such goals. The Committee has the discretion to
reduce an Award that becomes payable upon attainment of the goal. The Committee
or the Board of Directors of the Corporation may neither increase an Award to a
Participant beyond the Award established for a specific level of achievement nor
alter the allocation of the Awards among the Participants. Since any such Awards
will not exceed the Awards which can be earned for specified goals, it is
generally expected that such Awards will be "performance based" and as such the
deduction limitation contained in the Omnibus Budget Reconciliation Act of 1993
will not apply to such compensation.
The following chart specifies the maximum Award that can be granted to each
Participant under the Executive Incentive Plan for the 1995 Performance Year:
<TABLE>
<CAPTION>
NAME AND POSITION DOLLAR VALUE($)
- --------------------------------------------------------------------------------------- ---------------
<S> <C>
Edward M. Carson, Chairman of the Board $ 1,066,500
William E. B. Siart, 972,000
President and Chief Executive Officer of the Corporation
William S. Randall, 643,500
Executive Vice President and Chief Operating Officer of the Corporation
Bruce G. Willison, 253,125
Chief Executive Officer, California Region
James J. Curran, 222,188
Chief Executive Officer, Northwest Region
Linnet F. Deily, 202,500
Chief Executive Officer, Texas Region
John S. Lewis, 154,688
Chief Executive Officer, Southwest Region
</TABLE>
30
<PAGE>
The maximum Award that can be paid to a Participant for any one year during
the years 1996 through 1999 is $1,500,000. The actual amount of the Award will
be based on corporate performance. Designation of a maximum amount is required
to satisfy proposed Treasury regulations under Section 162(m) of the Code.
CHANGE IN CONTROL
In the event of a change in control, within ten days after the change in
control of the Corporation, each Participant will be paid 100% of his or her
target Award for the year in which the change in control occurs, based on the
base pay rate then in effect.
DEFERRALS
Awards are generally payable shortly after the end of the Performance Year
for which the Award has been earned. A Participant may elect, however, to defer
commencement of payment for a period extending until the termination of
employment. Participants may elect that deferred amounts earn interest (at a
rate specified in the Executive Incentive Plan) or, in the alternative, be
invested in the form of Performance Units under the 1995 Performance Stock Plan
(see the discussion of the 1995 Performance Stock Plan under Item 4 of this
Proxy Statement, "Proposal For Approval of 1995 Performance Stock Plan").
AMENDMENTS AND DISCONTINUANCE
The Board of Directors of the Corporation or the Committee may, at any time,
modify, terminate or suspend the provisions of the Executive Incentive Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL FOR APPROVAL OF
THE CORPORATE EXECUTIVE INCENTIVE PLAN.
ITEM 4
PROPOSAL FOR APPROVAL OF 1995 PERFORMANCE STOCK PLAN
The First Interstate Bancorp 1995 Performance Stock Plan (the "1995
Performance Stock Plan") was authorized by the Corporation's Board of Directors
on February 21, 1995, subject to the affirmative vote of the holders of at least
a majority of the shares of the Corporation's Common Stock present in person or
by proxy and entitled to vote at the 1995 Annual Meeting. The 1995 Performance
Stock Plan authorizes the granting of stock awards, performance units, stock
options, stock appreciation rights and restricted stock awards of up to
5,000,000 shares of Common Stock to key employees of the Corporation and its
subsidiaries who are responsible for the management, growth and financial
success of the Corporation.
The Board of Directors believes that the future success of the Corporation
and its subsidiaries is dependent upon the quality and continuity of management,
and that compensation programs have been important in attracting and retaining
individuals of superior ability and in motivating their efforts on behalf of the
Corporation and its business interests. As of February 21, 1995, approximately
500,000 shares of Common Stock were available to grant additional awards under
the First Interstate Bancorp 1991
31
<PAGE>
Performance Stock Plan (the "1991 Stock Plan"). Regardless of whether the 1995
Performance Stock Plan is approved by the stockholders, the Board of Directors
intends to continue to grant additional awards under the 1991 Stock Plan.
SUMMARY OF 1995 PERFORMANCE STOCK PLAN
The full text of the 1995 Performance Stock Plan is set forth in Exhibit B
to this Proxy Statement. The following summary of provisions of the 1995
Performance Stock Plan is qualified in its entirety by reference to the text of
the 1995 Performance Stock Plan.
SHARES SUBJECT TO THE PLAN
The 1995 Performance Stock Plan permits the Corporation to grant stock
awards, performance units, accelerated ownership stock options, incentive stock
options, non-qualified stock options, stock appreciation rights and restricted
stock awards. The aggregate number of shares of Common Stock reserved for awards
under the 1995 Performance Stock Plan is 5,000,000 shares.
ELIGIBILITY
Key employees of the Corporation and its subsidiaries (including officers,
whether or not directors) are eligible to receive awards under the 1995
Performance Stock Plan. At present there are approximately 1,000 employees
eligible to participate in the 1995 Performance Stock Plan. The Corporation has
full discretion to select those key employees who will receive awards under the
1995 Performance Stock Plan. Directors who are not officers are not eligible to
participate in the Plan.
PLAN BENEFITS
The nature and amounts of any awards under the 1995 Performance Stock Plan
will be determined by the Committee in its sole discretion, except that special
rules exist under the Plan with respect to the issuance of awards of Common
Stock to participants in the Executive Incentive Plan. See the discussion below
under "Stock Awards." Except in the case of such stock awards, benefits and
amounts are not presently determinable that may be received by each of the
executive officers identified in the Summary Compensation Table of this Proxy
Statement, all executive officers as a group and all other key employees under
the 1995 Performance Stock Plan.
ADMINISTRATION
The 1995 Performance Stock Plan will be administered by the members of the
Compensation Committee (the "Committee") of the Board of Directors, which
Committee will consist of at least two Directors, each of which is a
"disinterested person" as defined in Rule 16b-3 under the Securities Exchange
Act of 1934 and an "outside director" as defined in Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code").
32
<PAGE>
ADJUSTMENTS AND OTHER PROVISIONS
The 1995 Performance Stock Plan provides for adjustments in the number of
shares reserved and in option prices in the event of a stock dividend or stock
split and for other equitable adjustments in the event of a recapitalization,
merger or similar occurrence. Any shares of Common Stock or other securities
received by a holder of restricted stock with respect to such restricted stock
by reason of any such change is subject to the same restrictions. Similar
adjustments will be made to performance units.
STOCK AWARDS
An award of Common Stock may be made to an employee at the discretion of the
Committee, and is not subject to any restrictions under the 1995 Performance
Stock Plan. Special rules apply under the Plan however, with regard to stock
awards to participants in the Executive Incentive Plan. In the case of
participants in the 1995 Performance Stock Plan who are also participants in the
Executive Incentive Plan, the award of Common Stock will be based on the
achievement of the performance goals established under the Executive Incentive
Plan for the year in question. For each year that the goals established under
the Executive Incentive Plan are attained, each participant may receive a
maximum stock award based on the achievement of such goals equal to that number
of shares of Common Stock which is equivalent in value to one-third of the
participant's cash award under the Executive Incentive Plan, based on the fair
market value of the Common Stock on the date such award is approved by the
Committee. In 1995, stock awards to participants in the Executive Incentive Plan
will not exceed the following:
<TABLE>
<CAPTION>
DOLLAR VALUE
NAME AND POSITION ($)
- --------------------------------------------------------------------------------------- ---------------
<S> <C>
Edward M. Carson, Chairman of the Board $ 355,500
William E. B. Siart,
President and Chief Executive Officer of the Corporation 324,000
Willaim S. Randall,
Executive Vice President and Chief Operating Officer of the Corporation 214,500
Bruce G. Willison,
Chief Executive Officer, California Region 84,375
James J. Curran,
Chief Executive Officer, Northwest Region 74,062
Linnet F. Deily,
Chief Executive Officer, Texas Region 67,500
John S. Lewis,
Chief Executive Officer, Southwest Region 51,562
</TABLE>
The maximum value of the stock award to a participant for any one year
during the years 1996 through 1999 is $500,000. The actual amount of a stock
award will be based on corporate performance. Designation of a maximum amount is
required to satisfy proposed Treasury regulations under Section 162(m) of the
Code.
33
<PAGE>
STOCK OPTIONS
Stock options granted under the 1995 Performance Stock Plan may be either
incentive stock options, qualifying for special tax treatment under Section 422
of the Code, or non-qualified stock options. Each option will be evidenced by a
written document containing such terms and provisions consistent with the 1995
Performance Stock Plan as the Committee approves. The exercise price of each
option will be not less than the fair market value of the shares covered by the
option on the date of grant. As of February 21, 1995, the fair market value of a
share of Common Stock was $79.75. Payment on each option exercised must be made
in cash or in whole shares of Common Stock already owned by the optionee for at
least six months or partly in cash and partly in Common Stock. Common Stock
received by the Corporation in payment of the option price will be valued at its
fair market value on the date of exercise.
Each option will be exercisable in one or more installments within a fixed
option period and during employment, subject to certain restrictions or
extensions in the event of death, retirement or termination, but in no event
more than ten years from the date of grant. Unless otherwise provided in the
employee's stock option agreement, no option will be transferable other than by
will or the laws of descent and distribution. No employee may be issued stock
options (including those containing stock appreciation rights, as described
below) for more than 150,000 shares of Common Stock in any single calendar year
pursuant to the 1995 Performance Stock Plan.
ACCELERATED OWNERSHIP STOCK OPTION
If an employee's stock option agreement so provides, an employee, in
connection with the grant of stock options, will be granted an accelerated
ownership non-qualified stock option ("AO") to purchase at the fair market
value, as of the date of exercise of the underlying option, additional shares of
Common Stock equal to the number of shares of Common Stock used by the employee
in payment of the purchase price of the underlying option. An AO is only
available during the period that the optionee remains an employee, and, in
addition, the optionee must remain an employee at least six months after the
exercise of the underlying option in order for the AO to vest. The AO may be
exercised once it vests only for the remaining term of the underlying option
agreement.
STOCK APPRECIATION RIGHTS
The Committee may issue stock appreciation rights in tandem with stock
options granted under the 1995 Performance Stock Plan. Employees who are granted
stock options containing stock appreciation rights may elect to surrender,
rather than exercise, such options and to receive the excess of the fair market
value of the Common Stock subject to the options on the date of surrender over
the option price. Such excess may be paid in Common Stock, in cash, or in a
combination of Common Stock and cash, as determined by the Committee.
PERFORMANCE UNITS
An award of performance units may be made to an employee. A performance unit
that only requires the passage of time to vest is commonly called a "stock
unit." If performance conditions are also required of an employee, the award is
commonly called a "performance unit." Each stock unit or performance unit
34
<PAGE>
represents one share of Common Stock which, at the time and to the extent
vested, will be payable by the delivery of one share of Common Stock.
Alternatively, as provided in the applicable agreement, cash may be payable to
the employee based upon the fair market value of the Common Stock at the time of
payment. In addition, an employee who has been awarded a stock unit or
performance unit shall receive additional unit credit based on the value of any
dividends which would have been paid to the employee if he or she owned the
Common Stock represented by the units.
Certain performance units may be attributable to an employee's election to
defer compensation under the Management Incentive Plan, the Regional Incentive
Plan, the Executive Incentive Plan, or any successor plans. Performance units
will be payable at the time selected by the employee and permitted by the
Committee. The maximum number of performance units which may be issued to
employees under the 1995 Performance Stock Plan will not exceed 150,000 in any
single calendar year.
RESTRICTED STOCK AWARDS
The Committee may issue restricted stock awards. Each restricted stock award
will be evidenced by a written document containing such terms and provisions
including the price, if any, to be paid by the recipient, consistent with the
1995 Performance Stock Plan as the Committee approves. The Committee will
determine the restricted period during which the restricted stock and dividends
paid with respect to the restricted stock may not be sold, assigned,
transferred, pledged or otherwise encumbered, except as permitted by the 1995
Performance Stock Plan or the restricted stock agreement. The Committee may at
any time reduce or terminate the restricted period.
If a holder of restricted stock ceases to be an employee of the Corporation
or a subsidiary during the restricted period for any reason other than death,
disability or retirement, all shares of restricted stock which are then subject
to the restrictions imposed by the Committee will be forfeited and returned to
the Corporation. If a holder of restricted stock ceases to be an employee of the
Corporation or a subsidiary during the restricted period by reason of death,
disability or retirement, shares of the restricted stock shall, to the extent
determined by the Committee, become free of the restriction.
CHANGE IN CONTROL
In the event of a change in control as defined in the 1995 Performance Stock
Plan, each option, accelerated ownership stock option and stock appreciation
right will become immediately exercisable, the restricted period for restricted
stock will immediately expire, and, unless otherwise provided in performance
unit agreements, all performance units will be immediately payable in Common
Stock in the maximum amount available under the terms of the agreement.
AMENDMENTS AND DISCONTINUANCE
The Board of Directors may amend or terminate the 1995 Performance Stock
Plan in any respect, provided no such action shall, without consent of the
participants, affect or impair any award previously
35
<PAGE>
granted. In addition, no such action shall be taken without stockholder approval
if required by Rule 16b-3 of the Securities Exchange Act of 1934 or the federal
tax rules applicable to incentive stock options or other applicable law.
FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of the principal federal income tax
consequences of stock options granted under the 1995 Performance Stock Plan. The
summary is based on the Corporation's understanding of the currently applicable
provisions of the Code and Treasury regulations, as well as administrative and
judicial interpretations. State, local and foreign tax consequences of options
granted under the 1995 Performance Stock Plan are not covered in this summary,
which is not intended to cover all tax consequences that may apply to an
optionee or to the Corporation.
INCENTIVE STOCK OPTIONS. If an optionee holds the shares acquired upon the
exercise of an incentive stock option for more than one year after exercise and
two years after the date of grant of the option, and if at all times from the
date of grant of the option until three months preceding the exercise of the
option (one year in the case of disability) the optionee was an employee of the
corporation or a subsidiary, (a) the optionee will not be taxed at the time the
option is granted or exercised; (b) the difference between the option price and
the amount realized upon disposition of the shares will constitute long-term
capital gain or loss, as the case may be; and (c) the Corporation will not be
allowed an income tax deduction for granting the option or issuing shares
pursuant to the exercise of the option. If after the exercise of an incentive
stock option the optionee fails to observe the holding rule, the portion of any
gain realized upon disposition of the shares which does not exceed the excess of
the value at date of exercise over the option price will be treated as ordinary
income. The balance of any gain (or any loss) will be treated as capital gain
(or loss), long-term or short-term, depending on the length of time the stock
was held after the option was exercised. To the extent the optionee is subject
to the alternative minimum tax provisions of the Code, the amount by which the
fair market value of the shares at the time the incentive stock option is
exercised exceeds the option price will be an item of tax preference which must
be included when making the alternative minimum tax calculation for the tax year
in which the incentive stock option is exercised. The Corporation will be
entitled to a deduction equal to the amount of ordinary income upon which the
optionee is taxed. If an optionee exercises an incentive stock option at a time
when he or she was not an employee of the Corporation or a subsidiary within the
preceding three months (one year in the case of disability), the option will be
treated as a non-qualified option with the consequences described below.
NON-QUALIFIED OPTIONS. Under present Treasury regulations holding that an
option does not have a readily ascertainable fair market value unless it is
freely transferable and meets certain other conditions, an optionee who is
granted a non-qualified option will not realize taxable income at the time the
option is granted. If an optionee exercises the option by paying cash to acquire
the shares subject to option, he or she will be taxed in the year of exercise at
ordinary income tax rates on an amount equal to the excess of the fair market
value of the shares on the date of exercise over the option price. The
Corporation will receive a corresponding deduction. The optionee's basis in the
shares so acquired will be equal to the option price plus the amount of ordinary
income upon which he or she is taxed. Upon subsequent disposition of the shares,
an optionee will realize capital gain or loss, long-term or short-term,
depending upon the length of time he or she has held the shares since the option
was exercised.
36
<PAGE>
PAYMENT OF OPTION EXERCISE PRICE WITH SHARES. If an optionee uses existing
shares in full or partial payment of the option exercise price, the optionee
generally will not recognize taxable income with respect to the shares
surrendered. The optionee's tax basis and holding period for the shares
surrendered generally will apply to an equal number of shares issued pursuant to
the exercise. However, if the shares surrendered were originally acquired
through an incentive stock option exercise, an exchange within two years of such
earlier incentive stock option grant or within one year of such earlier
incentive stock option exercise will be a disqualifying disposition of such
shares surrendered. In such case, the holding period for the shares surrendered
cannot be used to meet the one year and two year periods for determining a
disqualifying disposition of the new shares acquired in the exchange.
With an incentive stock option, no taxable income will be recognized by the
optionee on the exercise of the incentive stock option with existing shares
(except as described above with respect to a disqualifying disposition of the
shares surrendered). The shares issued in excess of the number of shares
surrendered will have a tax basis equal to zero (or the amount of cash, if any,
used in the exercise). The holding period for such excess shares will be
measured from the date of exercise.
With a non-qualified option, the optionee will recognize the same amount of
ordinary income on the exercise, as described above (i.e., regardless of whether
the exercise price is paid in cash or in shares). The shares issued in excess of
the number of shares surrendered will have a tax basis equal to the amount of
ordinary income recognized on the exercise plus the amount of cash (if any) used
in the exercise. The holding period for such excess shares will be measured from
the date of exercise.
DEDUCTIBILITY OF BENEFITS. As discussed above, the Corporation generally
will be entitled to a deduction at the time an optionee is subject to ordinary
income tax, and such deduction will be equal to the amount of ordinary income
upon which an optionee is taxed. The Corporation believes that stock options
granted under the 1995 Performance Stock Plan will qualify as
"performance-based" under Section 162(m) of the Code, and therefore,
compensation attributable to such options will be deductible without regard to
the $1,000,000 limitation of Code Section 162(m). (See discussion of Section
162(m) at "Compensation Program Elements -- The Tax Deductibility Limitation" in
the Report of the Compensation Committee on Executive Compensation above).
TAX WITHHOLDING AND REPORTING. The Corporation has the right and obligation
to withhold any sums required by federal, state, local and foreign tax laws to
be withheld with respect to the exercise of stock options. Such withholding may
be in cash or in shares, or the Corporation may require the person exercising
the stock option to pay such sums to the Corporation to satisfy the withholding
requirements. The Corporation is also required to file information returns with
the appropriate taxing authorities with respect to the exercise of stock options
as well as with respect to any disqualifying disposition of an incentive stock
option.
THE BOARDS OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL FOR APPROVAL OF
THE 1995 PERFORMANCE STOCK PLAN.
37
<PAGE>
ITEM 5.
STOCKHOLDER PROPOSAL
The Corporation has been advised that a representative of the Washington, DC
and Vicinity District Council of Carpenters Pension Trust Fund (the "Fund"),
Weaver Associates, 6196 Oxon Hill Road, Suite 500, Oxon Hill, Maryland 20745,
intends to present at the Annual Meeting of Stockholders the proposal set forth
below. The Corporation has been advised that the Fund beneficially owns 20,000
shares of Common Stock.
TEXT OF THE STOCKHOLDER PROPOSAL
"RESOLVED: That the shareholders of First Interstate Bancorp ("Company")
recommend that our Board of Directors take the necessary steps to adopt and
implement a policy of cumulative voting for all elections of directors."
Supporting Statement
"National banking associations organized under federal banking laws are
required to allow cumulative voting in all elections of directors according to
12 U.S.C. Section61 (1989). The judge in Capobianco v. First National Bank of
Palmerton, D.C.Pa.1974 stated the rationale for this provision as follows: "In
giving shareholders the right to cumulate their shares, Congress no doubt sought
to encourage minority and diverse representation on the board of directors."
First Interstate Bancorp is a bank holding company, not a national banking
association, so it is not subject to this legal requirement for cumulative
voting. However, since the principal assets of First Interstate Bancorp are
national banking associations, we believe First Interstate Bancorp should
voluntarily adopt a policy of cumulative voting to comply with the intention of
federal banking laws.
In the American corporate governance system, the election of corporate
directors is the primary vehicle for shareholders to influence corporate affairs
and exert accountability on management. We believe that the Company's financial
performance is affected by its corporate governance policies and procedures and
the level of accountability they impose. We believe cumulative voting increases
the possibility of electing independent-minded directors that will enforce
management's accountability to shareholders.
The election of independent-minded directors can have an invigorating effect
on the Board of Directors, fostering improved financial performance and
increased shareholder wealth. Management nominees often bow to a Chairman's
desires on business strategies and executive pay without question.
Currently, the Company's Board of Directors is composed entirely of
management nominees. Cumulative voting places a check and balance on management
nominees by creating more competitive elections.
The argument that the adoption of cumulative voting will lead to the
election of dissidents to the Board of Directors who represent the "special
interests" of a minority of shareholders instead of the best interests
38
<PAGE>
of all shareholders is misleading. Legally binding standards of fiduciary duty
compel all directors, no matter what combination of shareholders elected them,
to act in the best interest of all shareholders. Any director who fails to
respect the fiduciary duties of loyalty and/or care exposes himself or herself
to significant liability. Legal recourse is available to correct any breaches of
fiduciary duty.
We do not accept the claim that in the complex world our Company competes
in, an honest difference of opinion over business strategies and other policies
of the Company makes the minority view a so called "special interest." Quite the
contrary, dissent stimulates debate which leads to thoughtful action. Cumulative
voting will increase the competitiveness of director elections. We believe
competitive elections for director will deter complacency on the Board of
Directors, which in turn will improve the performance of our Company and
increase shareholder wealth.
We urge your support for this proposal."
THE CORPORATION'S RESPONSE TO THE STOCKHOLDER PROPOSAL
The Board of Directors believes that the Corporation's present system of
voting for directors, like that of most major corporations, is the fairest
system and the most conducive to producing a Board which can effectively work
together to represent the interests of all stockholders and not just the
interests of a minority group or special constituency of stockholders.
The Corporation is a bank holding company incorporated under the laws of
Delaware, which, like most states, permits but does not require cumulative
voting for directors. In addition, First Interstate Bank of California, the
Corporation's largest bank representing almost half of the Corporation's assets,
is a California state bank and member of the Federal Reserve System. California
corporate law permits a company listed on a stock exchange, such as the
Corporation, to eliminate cumulative voting if it so chooses.
The Board of Directors believes that directors are most effective when they
feel a responsibility to represent all stockholders. Under the present system,
each Director is elected by a plurality of the votes cast by stockholders as a
whole, with stockholders voting on the basis of their share ownership. Twelve of
the fifteen nominees for election to the Board at the Annual Meeting are
independent non-employee Directors who have never been officers or employees of
the Corporation or any of its subsidiaries. These Directors have been nominated
upon the recommendation of the Nominating Committee of the Board, which is also
comprised totally of independent, non-employee Directors who have never been
officers or employees of the Corporation.
Cumulative voting, on the other hand, is directed toward the election of one
or more directors by a special group of stockholders, and may result in a small
group of stockholders electing one or more directors who could be primarily
concerned with representing the interests of that special group rather than the
interests of all stockholders. Cumulative voting could therefore result in
factionalism among directors and hinder a board's ability to work together
towards common goals. The Board is convinced that retention of the present
system will enable it to continue to focus on successful long-term performance
by the Corporation, and that this proposal will not promote the welfare of all
stockholders.
39
<PAGE>
Approval of this stockholder proposal requires an affirmative vote of the
holders of a plurality of the Corporation's stock represented at the Annual
Meeting and entitled to vote on this matter.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" THE STOCKHOLDER PROPOSAL.
ITEM 6.
OTHER BUSINESS
BUSINESS PRESENTED BY MANAGEMENT
The Board of Directors knows of no other business to be presented at the
Annual Meeting, but if other matters do properly come before the meeting, the
persons named on the enclosed proxy will have discretionary authority to vote
all proxies in accordance with their best judgment.
BUSINESS PRESENTED BY STOCKHOLDERS
Under the Corporation's Bylaws, only such business shall be transacted at an
annual meeting of stockholders as is properly brought before the meeting. For
business to be properly brought before an annual meeting by a stockholder, in
addition to any other applicable requirements, timely notice of the matter must
be first given to the Secretary of the Corporation. To be timely, written notice
must be delivered to or mailed and received by the Secretary of the Corporation
not less than thirty (30) days nor more than sixty (60) days prior to the
meeting. If less than forty (40) days' notice or prior public disclosure of the
date of the meeting has been given or made to stockholders, then notice by a
stockholder of the proposed business matter must be received by the Secretary
not later than the close of business on the tenth day following the day on which
notice of the date of the annual meeting was mailed or such public disclosure
was made. Any notice to the Secretary must include as to each matter the
stockholder proposes to bring before the meeting (i) a brief description of the
business desired to be brought before the meeting and the reasons for conducting
such business at the annual meeting, (ii) the name and record address of the
stockholder proposing such business, (iii) the class and number of shares of the
Corporation which are beneficially owned by the stockholder, and (iv) any
material interest of the stockholder in such business. The Board of Directors
believes that this procedure offers stockholders an opportunity to consider more
fully the merits of proposals presented at annual meetings.
40
<PAGE>
STOCKHOLDER PROPOSALS FOR THE 1996 ANNUAL MEETING
In order for stockholder proposals for the 1996 Annual Meeting of
Stockholders to be eligible for inclusion in the Corporation's Proxy Statement,
they must be received by the Secretary of the Corporation at its principal
office at 633 West Fifth Street, Los Angeles, California 90071, no later than
November 21, 1995.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY AND THAT YOUR SHARES BE
REPRESENTED. STOCKHOLDERS ARE URGED TO VOTE, SIGN AND PROMPTLY RETURN THE
ACCOMPANYING FORM OF PROXY IN THE ENCLOSED ENVELOPE.
For the Board of Directors
Edward S. Garlock
SECRETARY
41
<PAGE>
EXHIBIT A
FIRST INTERSTATE
CORPORATE EXECUTIVE INCENTIVE PLAN
EFFECTIVE JANUARY 1, 1995
1. OBJECTIVES. The Corporate Executive Incentive Plan is designed to focus
the efforts of certain key executive employees of First Interstate Bancorp and
the Regions on the continued improvement in the performance of First Interstate,
and to aid in attracting, motivating and retaining superior executives by
providing an incentive and reward for those executive employees who contribute
most to the operating progress and performance of First Interstate.
2. DEFINITIONS. The following definitions shall be applicable to the terms
used in the Plan:
(a) "Award" means a cash distribution to be made to a Participant for a
Performance Year as determined in accordance with the provisions of the
Plan.
(b) "Bancorp" means First Interstate Bancorp, a Delaware corporation.
(c) "Change in Control" shall have the meaning set forth in Section 16.
(d) "Committee" means the Compensation Committee of the Board of
Directors of Bancorp.
(e) "First Interstate" means the consolidated group of companies
comprising Bancorp.
(f) "Fiscal Year" means the customary fiscal year of Bancorp.
(g) "Management Incentive Plan" means the First Interstate annual
Management Incentive Plan.
(h) "Offset Value" shall have the meaning set forth in Section 17(b) and
(c).
(i) "Participant" means an eligible executive who, pursuant to Section 4
hereof, automatically becomes a participant in the Plan for a Fiscal Year.
(j) "Performance Year" means the Fiscal Year.
(k) "Plan" means this First Interstate Corporate Executive Incentive
Plan, as set forth herein.
(l) "Policies" shall have the meaning set forth in Section 17(a).
(m) "PSP" shall have the meaning set forth in Section 6(c).
(n) "Region" means any of the California, Northwest, Southwest or Texas
regions as defined by Bancorp consisting of First Interstate banks.
(o) "Split-Dollar Life Insurance Agreement" shall have the meaning set
forth in Section 17(a).
(p) "Subsidiary" means a bank, corporation, association or similar
organization of which the majority of the outstanding shares of voting stock
is owned by Bancorp, directly or indirectly.
A-1
<PAGE>
(q) "Target Award" is determined for each Participant by multiplying the
Participant's base pay rate in effect at the end of the Performance Year by
the Target Award Percentage applicable to the Participant set forth under
Item I of the Target Award Guidelines attached as Table A.
3. ADOPTION AND ADMINISTRATION OF THE PLAN. The Plan shall become effective
as of January 1, 1995 upon adoption by the Board of Directors of Bancorp,
subject to shareholder approval. Subject to the provisions of this Plan and in
the absence of specific action by the Committee, this Plan shall be administered
by the Committee. The Plan shall not be modified, terminated or suspended except
with the consent of the Committee. All decisions of the Committee shall be final
and binding.
4. PARTICIPATION AND TARGET AWARDS.
(a) DETERMINATION OF PARTICIPANTS AND TARGET AWARDS. The Chairman of the
Board of Directors of Bancorp, the Chief Executive Officer of Bancorp, the
Chief Operating Officer of Bancorp and the Chief Executive Officer of each
Region shall be Participants in the Plan. Except as provided in Sections
7(b) and 9, to be considered eligible for an Award, a Participant must be
participating in the Plan, the Regional Executive Incentive Plan or the
Management Incentive Plan for at least six months during the Performance
Year.
(b) NOTIFICATION. Each Participant shall be notified of his or her
eligibility for participation in the Plan for such Performance Year or shall
be notified of his or her termination, as applicable, by a letter from the
Administrator or his or her designee. A copy of this Plan shall be provided
to each Participant. A Participant shall have no right to or interest in an
Award unless and until the Participant's Award has been determined and
certified by the Committee.
5. DETERMINATION OF AWARD.
(a) PERFORMANCE REVIEW. As soon as practicable after the close of each
Performance Year, a determination of First Interstate's performance will be
made by the Committee.
(b) AWARDS. The Awards shall be available to Participants on the basis
of the goals and percentages described in Table B. Based on the goals and
the extent to which they are achieved, the Committee shall calculate the
Award by using the formula contained in Table B. The Committee shall compare
First Interstate's performance with the performance goals and, if achieved,
shall certify, in writing, that the performance goals and any other material
terms were in fact satisfied.
(c) LIMITATIONS. The Committee shall have the right to reduce an Award
to an actual award percentage of no less than 0% upon attainment of a goal
for which an Award is payable.
6. TIME OF PAYMENT OF AWARDS, DEFERRALS, HARDSHIPS.
(a) PAYMENT DATE. Except as provided in (b) below, as soon as
practicable after the determination of Awards and certification by the
Committee, any Award, less any legally required withholding, shall be paid
to the Participant or, in the event of a Participant's death, in accordance
with Section 7 hereof.
(b) DEFERRALS. In the year prior to the year in which an Award is
earned, a Participant may elect, on a form specified by Bancorp, to defer
the receipt of any Award to which he or she may be entitled for
A-2
<PAGE>
such Performance Year until the earlier of (1) termination of employment
(the first to occur of retirement, death, disability, or termination of
employment) or (2) January 1 of a specified calendar year. In such event:
(i) The amount the Participant elects, net of any legally required
withholding, shall become the deferred Award;
(ii) Interest on such deferred Award will be the Moody's Investment
Grade Corporate Bond Yield as shown in Moody's Yield Average for the last
full month of each previous calendar year and will be credited quarterly;
and
(iii) Such deferred Award, plus accumulated interest, shall be paid
upon the earlier of (1) or (2) above, in the form of a lump sum, equal
annual installments over not more than 10 years, or such other method as
may be selected by the Participant and agreed to by the Committee.
(c) DEFERRALS INTO PERFORMANCE UNITS. As an alternative to a deferral
payable in cash, as described in subsection (b), the deferred Award may, if
the Participant elects and the Committee permits, be invested in Performance
Units under Section 7.3 of the First Interstate Bancorp 1995 Performance
Stock Plan (the "PSP"). The amount deferred shall be deemed to be converted
into Performance Units under Section 7.3 of the PSP as of the date the Award
would have been payable if no deferral had occurred, based on the fair
market value, determined in accordance with the terms of the PSP, of the
common stock of Bancorp on that date. The timing and manner of payment of
deferrals shall be governed by a Performance Unit Agreement entered into by
the Participant under the PSP.
(d) HARDSHIP WITHDRAWAL. A Participant may request in writing, citing
the reasons for the request, that the Committee permit the early payment of
all or part of a deferred Award. Within 90 days after receipt, the Committee
shall rule on the request. The Committee shall grant the request only if, in
its sole discretion, the Committee makes a specific finding of financial
hardship that is an unanticipated emergency caused by an event beyond the
control of the Participant. The amount payable hereunder shall not exceed
the amount necessary to avoid such hardship.
(e) ACCELERATION OF DEFERRALS. Anything in this Plan to the contrary
notwithstanding, the Committee may accelerate the payment of all deferred
Awards with respect to Bancorp or any Subsidiary at any time in its sole
discretion. In addition, the Committee reserves the right to pay any
deferred Awards in the form of a lump sum if the amount is less than
$10,000.00.
7. DEATH OF A PARTICIPANT.
(a) BENEFICIARY DESIGNATION. A Participant may file a designation of a
beneficiary or beneficiaries on a form to be provided which designation may
be changed or revoked by the Participant's sole action, provided that such
change or revocation is filed in written form.
(b) DEATH DURING PERFORMANCE YEAR. In case of the death of a Participant
during a Performance Year, Bancorp may pay a pro rata portion of the Award
to which the Participant would have been entitled for such Performance Year.
Such pro rata portion shall be equal to (1) the ratio which the
A-3
<PAGE>
Participant's completed calendar months of participation during the
Performance Year bears to 12 multiplied by (2) the amount the Committee
determines the Participant would have been entitled to had he or she lived.
(c) DEATH AFTER PERFORMANCE YEAR. In case of the death of a Participant
after the end of a Performance Year, but before the delivery of an Award to
which he or she may be entitled, such Award shall be delivered to the
Participant's designated beneficiary.
(d) FAILURE TO DESIGNATE BENEFICIARY. If a Participant dies having
failed to designate any beneficiary, or if no beneficiary survives the
Participant or survives to the date of any payment in question, the amount
otherwise payable to such beneficiary shall be paid to the Participant's
surviving spouse, if any, and otherwise to the Participant's heirs at law,
as determined under the law governing succession to personal property for
the state in which the Participant resided on the day the Participant died.
8. TRANSFER OF A PARTICIPANT. In the event a Participant for any
Performance Year is transferred during such Performance Year from Bancorp or a
Subsidiary to another Subsidiary or Bancorp, such Participant's Award,
consistent with Subsection 4(a), shall normally be calculated as the sum of the
following:
(a) the Award the Participant would have received, had he or she not
been transferred, multiplied by the ratio which his or her completed months
of participation during such Performance Year prior to the transfer bears to
12, plus
(b) the Award, if any, the Participant is entitled to receive based on
service after the transfer determined on a Performance Year basis and then
multiplied by the ratio which his or her completed months of participation
during such Performance Year subsequent to such transfer bears to 12.
9. RETIREMENT OR DISABILITY OF PARTICIPANT. In case a Participant becomes
totally and permanently disabled during a Performance Year, or retires from
active employment after attaining age 55 during a Performance Year, the
Committee may but need not grant the Participant an Award. Generally, if an
Award is granted, it will be based on a pro rata portion of the Award (but in no
event greater than the full Award that the Participant would have received upon
satisfaction of the performance goals).
10. TERMINATION OF EMPLOYMENT. If the employment of a Participant with
Bancorp or a Subsidiary is terminated prior to the certification of the
Committee for reasons other than those specified in Sections 7, 8 or 9 hereof,
the right to and the amount of an Award shall be forfeited.
11. TERMINATION AND MODIFICATION. No Award shall be granted under the Plan
after any date as of which the Plan shall have been terminated. The Board of
Directors of Bancorp or the Committee may at any time modify, terminate or from
time to time suspend and, if suspended, may reinstate the provisions of this
Plan, including any of the tables. No Award shall be increased and no Award
shall be reallocated to increase the Award to another Participant.
12. EFFECT OF OTHER PLANS. Eligibility in or the receipt of any Award under
the Plan shall not be affected by or affect any other compensation or benefit
plans in effect for Bancorp or a Subsidiary.
A-4
<PAGE>
13. NO EMPLOYMENT RIGHTS. Nothing contained in nor any action under the
Plan will confer upon any individual any right to continue in the employment of
Bancorp or a Subsidiary and does not constitute any contract or agreement of
employment or interfere in any way with the right of Bancorp or a Subsidiary to
terminate any individual's employment.
14. WITHHOLDING TAX. As required by law, federal, state or local taxes that
are subject to the withholding of tax at the source shall be withheld by Bancorp
or a Subsidiary as necessary to satisfy such requirements.
15. EFFECTIVE DATE. Subject to stockholder approval, this Plan shall be
effective as of January 1, 1995.
16. PROVISIONS APPLICABLE IN THE EVENT OF A CHANGE IN CONTROL.
(a) In the event of a "Change in Control" (as defined below),
notwithstanding any provisions to the contrary in this Plan, the operation
of this Plan shall be modified as set forth below in this Section 16. These
modifications shall only apply with respect to Target Awards for the
Performance Year in which a Change in Control occurs.
(b) Notwithstanding any provision to the contrary in this Plan, within
ten (10) days after the Change in Control of Bancorp each Participant shall
be paid 100% of his or her Target Award for the year in which the Change in
Control occurs, based on the base pay rate then in effect.
(c) A "Change in Control" of Bancorp means and shall be deemed to have
occurred if and when any one of the following five events occurs: (i) within
the meaning of Section 13(d) of the Securities Exchange Act of 1934, any
person or group becomes a beneficial owner, directly or indirectly, of
securities of Bancorp representing 20% or more of the combined voting power
of Bancorp's then out-standing securities; (ii) individuals who were members
of the Board of Directors of Bancorp immediately prior to a meeting of the
stockholders of Bancorp involving a contest for the election of Directors
shall not constitute a majority of the Board of Directors following such
election; (iii) the stockholders of Bancorp approve the dissolution or
liquidation of Bancorp; (iv) the stockholders of Bancorp approve an
agreement to merge or consolidate, or otherwise organize, with or into one
or more entities which are not subsidiaries, as a result of which less than
50% of the outstanding voting securities of the surviving or resulting
entity are, or are to be, owned by former stockholders of Bancorp (excluding
from the term "former stockholders" a stockholder who is, or as a result of
the transaction in question becomes, an "affiliate," as that term is used in
the Securities Exchange Act of 1934 and the Rules promulgated thereunder, of
any party to such merger, consolidation or reorganization); or (v) the
stockholders of Bancorp approve the sale of substantially all of Bancorp's
business and/or assets to a person or entity which is not a subsidiary.
(d) Any Participant shall be entitled to refuse all or any portion of
any Target Award under this Plan if he or she determines that receipt of
such payment may result in adverse tax consequences to him or her. Bancorp
shall be totally and permanently relieved of any obligation to pay any Award
which a Participant explicitly so refuses in writing.
A-5
<PAGE>
17. PROVISIONS APPLICABLE TO OFFSETS FOR SPLIT-DOLLAR LIFE INSURANCE
AGREEMENTS.
(a) Notwithstanding anything contained herein to the contrary, any
benefits payable under this Plan shall be offset by the value of benefits
received by the Participant under certain life insurance policies as set
forth in this Section. Participants in this Plan may own life insurance
policies (the "Policies") purchased on their behalf by Bancorp. The
ownership of these Policies by each Participant is, however, subject to
certain conditions (set forth in a "Split-Dollar Life Insurance Agreement"
between each Participant and Bancorp) and, if the Participant fails to meet
the conditions set forth in the Split-Dollar Life Insurance Agreement, the
Participant may lose certain rights under the Policy.
(b) In the event that a Participant satisfies the conditions specified
in Section 4 or 5 of the Split-Dollar Life Insurance Agreement, so that the
Participant or his or her beneficiary becomes entitled to benefits under one
of those sections, the value of those benefits shall constitute an offset to
any benefits otherwise payable under this Plan. As the case may be, this
offset (the "Offset Value") shall be equal to the value of benefits payable
under the Split-Dollar Life Insurance Agreement and shall be determined as
of the date that the Participant satisfies the conditions specified in
Section 4 or 5 of the Split-Dollar Life Insurance Agreement, that is, the
cash value of the Policy or, in the case of the Participant's death, the
death benefit payable to the beneficiary under the Policy reduced by one
times the Participant's annual base salary (maximum $500,000) at the time of
death. The Offset Value shall then be compared to the Participant's deferred
award (including interest accumulated on such award) under this Plan, and
such amounts shall be reduced, but not to less than zero, by the Offset
Value.
(c) If the Policy in subsection (a) is not on the life of the
Participant and the insured dies prior to distribution of benefits under
this Plan, then the value of the benefits received by the Participant under
the Policy will offset the Participant's deferred award (including interest
accumulated on such award) under this Plan. This offset ("Offset Value")
shall be equal to the amount of death benefit payable to the Participant and
shall be determined as of the date of death of the insured. This Offset
Value shall then be compared to the Participant's deferred award (including
interest accumulated on such award) under this Plan, and such amounts shall
be reduced, but not to be less than zero, by the Offset Value.
(d) Notwithstanding anything contained herein to the contrary, if, in
addition to the benefits otherwise payable under this Plan, the Participant
or his or her beneficiary is entitled to benefits under any of the plans set
forth in Table C, the "Offset Value" shall be applied to offset the benefits
payable under this Plan and such plans in the order set forth in Table C.
18. DISPUTE RESOLUTION.
(a) If a Participant who has applied for retirement under the Retirement
Plan for Employees of First Interstate Bancorp and its Affiliates, or, in
the case of the Participant's death, his or her beneficiary, disagrees with
the Committee regarding the interpretation of this Plan, and if the
Participant or his or her beneficiary has exhausted the claims review and
appeal procedure under Section 503 of the Employee Retirement Income
Security Act of 1974 with respect to his or her claim for benefits under
this Plan, then the Participant or his or her beneficiary may, if he or she
desires, submit any claim for benefits under this Plan or dispute regarding
the interpretation of this Plan to arbitration; provided that, the request
for arbitration must be brought within the time limit for bringing a
judicial proceeding with respect to such claim for benefits, or if less,
within one year after the Committee's final denial of such claim for
benefits. This right to select arbitration shall be solely that of
A-6
<PAGE>
the Participant or his or her beneficiary and the Participant or his or her
beneficiary may decide whether or not to arbitrate in his or her discretion.
The "right to select arbitration" is not mandatory on the Participant or his
or her beneficiary and the Participant or his or her beneficiary may choose
in lieu thereof to bring an action in an appropriate civil court. Once an
arbitration is commenced, however, it may not be discontinued without the
mutual consent of both parties to the arbitration. During the lifetime of
the Participant only he or she can use the arbitration procedure set forth
in this section.
(b) Any claim for arbitration may be filed in writing with an arbitrator
of Participant's or beneficiary's choice who is selected by the method
described in the next four sentences. The first step of the selection shall
consist of the Participant or his or her beneficiary submitting a list of
five potential arbitrators to the Committee. Each of the five arbitrators
must be either (1) a member of the National Academy of Arbitrators located
in the State of California or (2) a retired California Superior Court or
Appellate Court judge. Within one week after receipt of the list, the
Committee shall select one of the five arbitrators as the arbitrator for the
dispute in question. If the Committee fails to select an arbitrator in a
timely manner, the Participant or his or her beneficiary shall then
designate one of the five arbitrators as the arbitrator for the dispute in
question.
(c) The arbitration hearing shall be held within seven days (or as soon
thereafter as possible) after the picking of the arbitrator. No continuance
of said hearing shall be allowed without the mutual consent of the
Participant or his or her beneficiary and the Committee. Absence from or
nonparticipation at the hearing by either party shall not prevent the
issuance of an award. Hearing procedures which will expedite the hearing may
be ordered at the arbitrator's discretion, and the arbitrator may close the
hearing in his or her sole discretion when he or she decides he or she has
heard sufficient evidence to satisfy issuance of an award.
(d) The arbitrator's award shall be rendered as expeditiously as
possible and in no event later than one week after the close of the hearing.
In the event the arbitrator finds that Bancorp has violated the terms of
this Plan, he or she shall order Bancorp immediately to take the necessary
steps to remedy such violation. The award of the arbitrator shall be final
and binding upon the parties. The award may be enforced in any appropriate
court as soon as possible after its rendition. If an action is brought to
confirm the award, both Bancorp and the Participant agree that no appeal
shall be taken by either party from any decision rendered in such action.
(e) Solely for purposes of determining the allocation of the costs
described in this Section 18(e), the Committee will be considered the
prevailing party in a dispute if the arbitrator determines (1) that Bancorp
has not violated the terms of this Plan, and (2) the claim by the
Participant or his or her beneficiary was not made in good faith. Otherwise,
the Participant or his or her beneficiary will be considered the prevailing
party. In the event that Bancorp is the prevailing party, the fee of the
arbitrator and all necessary expenses of the hearing (excluding any
attorneys' fees incurred by Bancorp) including stenographic reporter, if
employed, shall be paid by the other party. In the event that the
Participant or his or her beneficiary is the prevailing party, the fee of
the arbitrator and all necessary expenses of the hearing (INCLUDING all
attorneys' fees incurred by the Participant or his or her beneficiary in
pursuing his or her claim), including the fees of a stenographic reporter if
employed, shall be paid by Bancorp.
A-7
<PAGE>
EXHIBIT B
FIRST INTERSTATE BANCORP
1995 PERFORMANCE STOCK PLAN
1. PURPOSE. The purpose of the 1995 Performance Stock Plan (the "Plan") is
to promote the interests of First Interstate Bancorp (the "Company") and its
Subsidiaries by providing performance incentives to certain of its key employees
who are responsible for the management, growth and financial success of the
Company. Pursuant to the Plan, stock options, stock appreciation rights,
restricted stock awards, performance units and stock awards may be granted.
2. ADMINISTRATION. The Plan shall be administered by a Committee (the
"Committee") consisting of those members of the Compensation Committee of the
Board of Directors of the Company who are (a) at least the minimum number of
members required under Rule 16b-3 (or any successor rule) promulgated by the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934 ("Rule 16b-3"), (b) "disinterested persons" as defined under such rule and
(c) "outside directors" as defined in Section 162(m) of the Internal Revenue
Code of 1986, as amended ("Internal Revenue Code") and the regulations
thereunder. The Committee shall have full authority to administer the Plan,
including authority to interpret and construe any provision of the Plan and to
adopt such rules and regulations for administering the Plan as it may deem
necessary. Decisions of the Committee shall be final and binding on all persons
who have an interest in the Plan.
3. ELIGIBILITY. The persons eligible to participate in the Plan shall be
those key employees (including officers, whether or not directors) of the
Company and its Subsidiaries selected by the Committee. Directors who are not
officers are not eligible to participate in the Plan.
4. SHARES SUBJECT TO THE PLAN. The shares subject to the Plan shall be
shares of the Company's $2 par value Common Stock ("Common Stock"). The
aggregate number of shares of Common Stock which may be delivered pursuant to
awards granted under this Plan shall not exceed 5,000,000, subject to adjustment
pursuant to Section 9. The maximum number of shares of Common Stock for which
stock options, including those containing Stock Appreciation Rights, may be
granted under this Plan shall not exceed 150,000 per Participant during any
calendar year, subject to adjustment pursuant to Section 9. If Restricted Stock
is forfeited or if an option shall expire or terminate for any reason, except
for the surrender thereof upon exercise of a related Stock Appreciation Right,
without having been exercised in full, such Restricted Stock or the shares
applicable to the unexercised portion of such option shall become available
under the Plan for all purposes. To the extent any award of Performance Units is
paid in cash rather than shares, the number of shares represented by such
Performance Units shall again be available for purposes of the Plan. If shares
of Common Stock already owned by a Participant are tendered or exchanged under
Section 5.3(b) in full or partial payment of the purchase price of an exercised
option, such tendered or exchanged shares shall be added back to the number of
shares available for issuance or delivery under this Plan; provided that for
purposes of determining the number of shares available for the granting of
Incentive Options, the aggregate number of shares available for delivery or
issuance under this Plan shall not be increased by the number of shares tendered
or exchanged. If any of the foregoing provisions for determining the number of
shares
B-1
<PAGE>
available for issuance under the Plan would cause the Plan to not be considered
to be described under Rule 16b-3, such provision shall have no effect, and the
number of shares available for issuance shall instead be determined in a manner
which complies with such rule. Either authorized and unissued shares or treasury
shares may be delivered under the Plan; provided, however, that unissued shares
shall not be awarded as Restricted Stock, or pursuant to Performance Units, or
as Stock Awards to any Participant unless the Committee expressly determines,
after consideration of all other remuneration paid or payable to the
Participant, that the services already rendered to the Company and its
Subsidiaries by the Participant have a value of not less than the par value of
the shares so awarded.
5. STOCK OPTIONS. Stock options granted under the Plan may be either
incentive stock options qualifying under Section 422 of the Internal Revenue
Code ("Incentive Options") or non-qualified stock options ("Non-Qualified
Options"). The options shall be evidenced by agreements in such form as the
Committee may, from time to time, approve ("Stock Option Agreement") and shall
be subject to the following terms and conditions.
5.1 OPTION PRICE. The option price of the shares of Common Stock subject
to each option shall be determined by the Committee but shall be not less than
100% of the Fair Market Value of such shares on the date of granting of the
option.
5.2 TERMS OF EXERCISE. Each option granted under the Plan shall be
exercisable in whole or in part on such terms as the Committee may determine,
but in no event shall the option be exercisable within six months of or more
than 10 years after the date the option is granted.
5.3 MANNER OF EXERCISE. The option shall be exercised in the manner
specified by the Committee. Payment of the option price may be by any of the
following methods, as determined by the Committee at the date of grant and
provided for in the Stock Option Agreement:
(a) In cash;
(b) In shares of Common Stock already owned by the holder of the option
("Optionee") or partly in cash and partly in shares of Common Stock. If
Common Stock is used to pay the purchase price (i.e., a "Stock-for-Stock
Swap Transaction"), the Common Stock used must have been owned by the
Optionee for at least six months prior to the date of exercise and must not
have been used in a Stock-for-Stock Swap Transaction within the preceding
six months (i.e., the Common Stock must be "mature"). Payments made in
Common Stock shall be valued at the Fair Market Value of the Common Stock on
the date of exercise. Any portion of the option price representing a
fraction of a share shall be paid in cash.
(c) Subject to such guidelines as may be promulgated by the Committee,
an Optionee may deliver a notice instructing the Company to deliver the
shares being purchased to a broker, subject to the broker's delivery of cash
to the Company equal to the purchase price and any applicable tax
withholding amount.
5.4 ADDITIONAL TERMS OF INCENTIVE OPTIONS. An Incentive Option granted
pursuant to the Plan:
(a) Must be designated as an Incentive Option by the Committee.
(b) Shall only be an Incentive Option to the extent that the aggregate
Fair Market Value of the Common Stock (determined as of the date of grant of
the option) with respect to which the option is
B-2
<PAGE>
first exercisable in any calendar year does not exceed $100,000. For the
purpose of the preceding sentence all options granted by the Company and any
Parent or Subsidiary which are intended to be incentive stock options under
Section 422 of the Internal Revenue Code shall be taken into account. To the
extent the $100,000 limit is exceeded, the $100,000 in options (measured as
described above) granted earliest in time will be treated as incentive stock
options; and
(c) If issuable to an employee who on the date of grant is the owner of
stock (determined with application of the ownership attribution rules of
Section 424(d) of the Internal Revenue Code) possessing more than 10% of the
total combined voting power of all classes of stock of the Company or any
Parent or Subsidiary, the Incentive Option price shall not be less than 110%
of the Fair Market Value of the Common Stock on the date of grant and the
Incentive Option shall not have a term in excess of five years from the date
of grant.
5.5 TERMINATION OF RIGHT TO EXERCISE OPTIONS. Each option granted under
this Plan shall set forth a termination date thereof, which date shall be
determined by the Committee. In any event, all options granted pursuant to the
Plan shall terminate upon the first to occur of the following events:
(a) The expiration of 10 years from the date such option was granted, or
any earlier termination date specified in the Stock Option Agreement;
(b) The expiration of three months from the date an Optionee ceases to
be employed by the Company or a Subsidiary other than by reason of death,
Retirement, Disability or termination of employment for cause as determined
by the Committee;
(c) The expiration of one year from the date an Optionee ceases to be
employed by the Company or a Subsidiary by reason of Disability or death;
(d) The expiration of three years from the date an Optionee ceases to be
employed by the Company or a Subsidiary by reason of Retirement;
(e) The termination of the Optionee's employment for cause, as
determined by the Committee; or
(f) The termination of the Plan pursuant to Section 10;
provided, that if an Optionee's death occurs after the Optionee ceases to be
employed by the Company or a Subsidiary for a reason other than Retirement but
at a time when the Optionee has a right to exercise any options pursuant to the
foregoing, the right to exercise such option shall not expire prior to one year
from the date of death of the Optionee. Subsequent to termination of the
Optionee's employment for any reason, only that portion of an option which was
exercisable on the date of termination of employment shall be exercisable, and
only during the period, if any, set forth above. Failure to exercise an
Incentive Option within three months of the date the Optionee ceases to be
employed by the Company or a Subsidiary by reason of Retirement shall cause an
Incentive Option to cease to be treated as an incentive stock option for
purposes of Section 421 of the Internal Revenue Code.
5.6 STOCK APPRECIATION RIGHTS. Any option granted pursuant to the Plan
may, in the discretion of the Committee, contain a stock appreciation right
("Stock Appreciation Right"). A Stock Appreciation Right will permit the holder
thereof to exercise such right by the surrender of the option or portion thereof
which is then exercisable and receive in exchange therefor, upon such terms,
restrictions and conditions as the
B-3
<PAGE>
Committee deems advisable, an amount equal to the excess of the Fair Market
Value of the shares of Common Stock offered by the option surrendered, or
portion thereof, determined on the date of surrender, over the aggregate option
exercise price of such shares. Such payment may be made in shares of Common
Stock valued at Fair Market Value, in cash, or partly in cash and partly in
shares of Common Stock as the holder may elect, subject to the consent or
disapproval of the Committee in its sole discretion. If a Stock Appreciation
Right extends to less than all the shares of Common Stock covered by the related
option and if a portion of the related option is thereafter exercised, the
number of shares subject to the unexercised Stock Appreciation Right shall be
reduced only if and to the extent that the remaining number of shares covered by
such related option is less than the remaining number of shares subject to such
Stock Appreciation Right.
The Stock Appreciation Right, in addition to any other restrictions imposed
by the Committee:
(a) shall expire no later than the underlying stock option;
(b) shall not permit the issuance of cash or shares of a value which
exceeds the difference between the exercise price of the underlying stock
option and the Fair Market Value of the Common Stock subject to the
underlying option at the time the Stock Appreciation Right is exercised;
(c) shall be transferable only when the underlying stock option is
transferable, and under the same conditions;
(d) shall be exercisable only when the underlying stock option is
eligible to be exercised and then only when the Fair Market Value of the
stock subject to the underlying option exceeds the option exercise price;
and
(e) shall contain such conditions upon exercise (including, without
limitation, conditions limiting the time of exercise to specified periods)
as may be required to satisfy applicable regulatory requirements, including,
without limitation, Rule 16b-3 (or any successor rule) promulgated by the
Securities and Exchange Commission.
In the event of the exercise of a Stock Appreciation Right, shares
represented by the option or part thereof surrendered upon such exercise shall
not be available for reissuance under the Plan.
5.7 AWARD OF ACCELERATED OWNERSHIP STOCK OPTION. If the Committee so
provides in the Stock Option Agreement, effective as of the date of exercise by
an Optionee of all or part of an option using "mature" Common Stock as defined
in Section 5.3 of the Plan as payment for the full purchase price (except that
cash may be used to purchase the nearest whole share of Common Stock), an
Employee shall be granted an accelerated ownership Non-Qualified Option ("AO")
to purchase at the Fair Market Value as of the date of said exercise and grant,
the number of shares of Common Stock equal to the sum of the number of whole
shares used by the Optionee in payment of the purchase price. An AO may be
exercised between the date of vesting and the original date of expiration of the
underlying option to which the AO is related. No AO shall vest sooner than six
months after its date of grant. The AO shall be evidenced by an agreement
containing such additional terms and conditions as the Committee shall approve,
which conditions may provide that upon exercise of any AO, an additional AO may
be granted with respect to the number of whole shares used to exercise the AO.
B-4
<PAGE>
5.8 OPTIONS NON-TRANSFERABLE. Except as otherwise provided in the Stock
Option Agreement, no option rights shall be assignable or transferable except by
will or the laws of descent and distribution (except to the extent not permitted
in the case of an Incentive Option). During the lifetime of an Optionee, an
option or Stock Appreciation Right shall be exercisable only by the Optionee or
by the Optionee's guardian or legal representative. After the death of an
Optionee, the option or Stock Appreciation Right may be exercised prior to its
termination by the Optionee's legal representative, heir or legatee. The
foregoing shall not restrict, to the extent permitted by the Committee and
provided for in the Stock Option Agreement, and subject to such terms and
conditions as deemed appropriate by the Committee, transfers for estate and
financial planning purposes, provided the inclusion of such features would not
render the particular award ineligible for the benefits of Rule 16b-3. Nothing
contained herein shall require the Committee to permit such other transfers.
6. RESTRICTED STOCK AWARDS. The award of restricted stock ("Restricted
Stock") to employees may be made in the discretion of the Committee pursuant to
agreements in such forms as the Committee may, from time to time, approve
("Restricted Stock Agreement"), subject to the following terms and conditions.
6.1 RESTRICTED PERIOD. The Committee shall set a restricted period during
which the Restricted Stock may not be sold, assigned, transferred, pledged or
otherwise encumbered, except as permitted by this Plan and the Restricted Stock
Agreement (the "Restricted Period"). If a holder of Restricted Stock ceases to
be an employee of the Company or a Subsidiary during the Restricted Period for
any reason other than death, Disability or Retirement, all shares of Restricted
Stock which are then subject to the restrictions imposed by the Committee shall
upon such termination of employment be immediately forfeited and returned to the
Company. If a holder of Restricted Stock ceases to be an employee of the Company
or a Subsidiary during the Restricted Period by reason of death, Disability or
Retirement, shares of Restricted Stock shall become free of the restrictions
imposed by the Committee only to the extent determined by the Committee, and the
Company will deliver to the holder, or the holder's successor, as the case may
be, within 60 days, such shares of Common Stock as are freed from restrictions,
and all other shares shall be forfeited and returned to the Company. The
Committee may, at any time, reduce or terminate the Restricted Period. Subject
to the foregoing, at the end of the Restricted Period, the holder of Restricted
Stock shall be entitled to receive the Restricted Stock free of restrictions. In
the event that employees of the Company or its Subsidiaries become employees of
another company pursuant to a stock or asset sale, merger or similar
transaction, or in the event of a corporate reorganization, reduction in force
or similar event, the Committee shall have the authority, which shall be
exercised in its sole discretion, to continue to credit service for purposes of
satisfying the restricted period requirements set forth in the Restricted Stock
Agreement. Such Committee authority shall only apply to Restricted Stock granted
to individuals who are not subject to Section 16 of the Securities Exchange Act
of 1934.
B-5
<PAGE>
6.2 RESTRICTIVE LEGEND AND DEPOSIT OF CERTIFICATES. Each certificate
issued in respect of shares of Restricted Stock awarded under the Plan shall be
registered in the name of the Participant, shall be deposited by the Participant
with the Company together with a stock power endorsed in blank and shall bear
the following legend:
"The transferability of this certificate and the shares of stock represented
hereby are subject to the terms and conditions contained in an Agreement
entered into between the registered owner and First Interstate Bancorp. A
copy of such Agreement is on file in the office of the Secretary of First
Interstate Bancorp, 633 West Fifth Street, Los Angeles, California 90071."
6.3 RIGHTS AS SHAREHOLDER. Subject to the terms of the Restricted Stock
Agreement, the holder of Restricted Stock shall have all the rights of a
shareholder with respect to the Restricted Stock, including the right to vote
such shares; provided, however, that dividends paid with respect to the shares
of Restricted Stock shall be deposited with the Company and shall be subject to
forfeiture until the expiration of the Restricted Period, subject to the
condition that the sums so deposited shall be free of restriction and not
subject to forfeiture to the extent applied by the Company to satisfy that
employee's withholding obligations with respect to Restricted Stock pursuant to
Section 13 of the Plan, or otherwise released by the Committee in its sole
discretion. The holder of Restricted Stock shall not be entitled to interest
with respect to the dividends so deposited.
6.4 PURCHASE PRICE. Unless the purchase price of Restricted Stock is its
par value, it shall be at least equal to 50% of Fair Market Value, unless
otherwise allowed under Rule 16b-3.
7. PERFORMANCE UNITS. The award of performance units ("Performance Units")
to employees shall be made in the discretion of the Committee pursuant to
agreements in such form as the Committee may, from time to time, approve
("Performance Unit Agreement"), subject to the following terms and conditions.
7.1 PAYMENT OF SHARES AND DIVIDENDS. Each Performance Unit shall represent
one share of Common Stock and shall, at the time and to the extent it becomes
vested, be payable by the delivery of one share of Common Stock, subject to the
provisions of Section 9 of this Plan, or, if and to the extent provided in the
Performance Unit Agreement, cash based on the Fair Market Value of the Common
Stock at the time of payment. In addition, each Participant who has been awarded
Performance Units shall receive additional Performance Unit credit based on the
value of any dividends which would have been paid to the Participant if he or
she had owned a number of shares of Common Stock equal to the number of his or
her Performance Units. The amount of such dividend credit shall be applied
towards additional Performance Units for the Participant at the value of shares
of Common Stock on the dividend date.
7.2 PERFORMANCE CONDITIONS. The Performance Unit Agreements shall specify
any terms and conditions relating to performance or otherwise which may be
established in the discretion of the Committee.
7.3 INCENTIVE PLAN DEFERRALS. Performance Units under this Plan may be
attributable to a Participant's deferral election under the annual Management
Incentive Plan, Regional Incentive Plan or Corporate Executive Incentive Plan,
or any successor plan thereto. Such Performance Units will be payable at the
time selected by the Participant and permitted by the Committee in the
applicable Performance Unit Agreement
B-6
<PAGE>
in shares of Common Stock, one share for each Performance Unit or, if permitted
by the Committee and provided in the Performance Unit Agreement, in cash based
on the Fair Market Value of the Common Stock at the time of payment.
8. STOCK AWARDS. The award of Common Stock ("Stock Award") to employees
may be made in the discretion of the Committee at such times and in such amounts
as the Committee deems appropriate.
8.1 NO RESTRICTIONS. Common Stock issued to a Participant pursuant to a
Stock Award shall not be subject to any restrictions under the Plan.
8.2 CORPORATE EXECUTIVE INCENTIVE PLAN. The Committee may, in its
discretion, issue Stock Awards to key employees who are also participants in the
Corporate Executive Incentive Plan ("CEIP"). A Stock Award to participants in
the CEIP pursuant to this Plan shall be made solely on account of the
achievement of the performance goals established by the Committee under the CEIP
for the year in question. No such award shall be issued under this Plan until
the Committee has certified in writing that such performance goals have been
achieved and has determined the amount of the participant's cash award under the
CEIP. The maximum Stock Award attainable by participants in the CEIP under this
Plan shall be that number of shares which is equivalent in value to one-third of
the participant's cash award under the CEIP, based on the Fair Market Value of
the Common Stock on the date that such cash award is approved by the Committee.
9. CHANGES IN CAPITALIZATION. If there are any changes in the
capitalization of the Company affecting in any manner the number or kind of
outstanding shares of Common Stock of the Company, whether such changes have
been occasioned by declaration of stock dividends, stock split-ups,
reclassifications or recapitalization of such stock, or because the Company has
merged or consolidated with some other corporation (and provided the option is
not thereby terminated pursuant to Section 10 hereof), or for any other reason
whatsoever, then the number and kind of shares then subject to this Plan and to
outstanding options and the prices to be paid therefor, as well as any related
Stock Appreciation Right, and the number of Performance Units then outstanding
shall be proportionately adjusted by the Committee whenever and to the extent
that the Committee determines that any such change equitably requires an
adjustment. Any shares of Common Stock or other securities received by a holder
of Restricted Stock with respect to such Restricted Stock by reason of any such
change shall be subject to the same restrictions and shall be deposited with the
Company.
10. MERGERS OR CONSOLIDATIONS. If the Company, at any time, should elect
to dissolve, undergo a reorganization, merge or consolidate with any other
corporation and the Company is not the surviving corporation, then (unless in
the case of a reorganization, merger or consolidation, one or more of the
surviving corporations assumes the options under the Plan or issues substitute
options in place thereof) each Optionee holding outstanding options not yet
exercised shall be notified of the Optionee's right to exercise such options and
any related Stock Appreciation Right to the extent then exercisable prior to
such dissolution, reorganization, merger or consolidation. Subject to Section
11, the Committee may, in its discretion and on such terms and conditions as it
deems appropriate, accelerate the vesting of such options and any related Stock
Appreciation Right with respect to all shares covered thereby. Any option and
related Stock Appreciation Right not so exercised within 30 days of such
notification shall thereupon be deemed terminated and simultaneously the Plan
itself shall be deemed terminated.
B-7
<PAGE>
11. ACCELERATION OF OPTIONS, STOCK APPRECIATION RIGHTS, AND RESTRICTED
STOCK AWARDS. In the event of a Change in Control, (i) each option and each
related Stock Appreciation Right shall become immediately exercisable to the
full extent theretofore not exercisable, (ii) the Restricted Period for
Restricted Stock shall immediately expire, and (iii) unless otherwise provided
in Performance Unit Agreements, all Performance Units shall be immediately
payable in Common Stock in the maximum amount available under the terms of such
Performance Unit Agreements; provided, however, that Awards other than
Restricted Stock Awards shall not, in any event, be so accelerated to a date
less than six months after the date of grant. Acceleration of Awards shall
comply with applicable regulatory requirements, including, without limitation,
Rule 16b-3. Notwithstanding the foregoing, any Participant shall be entitled to
decline the acceleration of all or any of his or her options, Stock Appreciation
Rights or Restricted Stock if he or she determines that such acceleration may
result in adverse tax consequences to him or her.
12. EXPIRATION OF OPTIONS. In the event employees of the Company or its
Subsidiaries become employees of another company pursuant to a stock or asset
sale, merger, or similar transaction or in the event of a corporate
reorganization, reduction in force or similar event, the Committee shall have
the authority, which shall be exercised in its sole discretion, to modify the
dates upon which options previously granted (including any related Stock
Appreciation Rights) shall expire. Such Committee authority shall only apply to
options granted to individuals who are not subject to Section 16 of the
Securities Exchange Act of 1934. Any modification to the terms under which the
option would otherwise expire shall not cause the option to expire later than
the date the option was originally scheduled to expire pursuant to the terms of
the original Stock Option Agreement.
13. EFFECT ON EMPLOYMENT. Nothing herein shall be construed to limit or
restrict the right of the Company or any of its Subsidiaries to terminate the
employment of any Participant in the Plan, at any time, with or without cause,
or to increase or decrease the compensation of such Participant from the rate of
compensation in existence at the time the employee became a Participant.
14. WITHHOLDING. The Company shall have the right to withhold from amounts
due Participants, or to collect from Participants directly, the amount which the
Company deems necessary to satisfy any taxes required by law to be withheld by
reason of participation in the Plan. There is no obligation under this Plan that
any Participant be advised of the existence of the tax or the amount required to
be withheld. The Participant may, prior to the payment of any Award, pay such
amounts to the Company in cash or in shares of Common Stock already owned (which
shall be valued at their Fair Market Value on the date of payment). The Company
may also require, or grant Participants the right to elect, subject to such
terms and conditions as the Committee may establish, that shares be withheld to
satisfy tax withholding requirements arising from the exercise of an option, the
receipt of a Stock Award or the vesting of a Restricted Stock award.
Notwithstanding any other provision of this Plan, the Committee may impose such
conditions on the payment of any withholding obligation as may be required to
satisfy applicable regulatory requirements, including, without limitation, Rule
16b-3 (or any successor rule) promulgated by the Securities and Exchange
Commission.
15. ADDITIONAL DEFINITIONS. "Awards" shall mean an Incentive Option, a
Non-Qualified Option, a Stock Appreciation Right, a Restricted Stock award, a
Performance Unit or a Stock Award.
B-8
<PAGE>
"Change in Control" of the Company means and shall be deemed to have
occurred if and when any one of the following five events occurs: (a) any
"person" (as such term is used in Section 13(d) of the Securities Exchange Act
of 1934) or group becomes a beneficial owner, directly or indirectly, of
securities of the Company representing 20% or more of the combined voting power
of the Company's then outstanding securities; (b) individuals who were members
of the Board of Directors of the Company immediately prior to a meeting of the
stockholders of the Company involving a contest for the election of Directors do
not constitute a majority of the Board of Directors following such election; (c)
the stockholders of the Company approve the dissolution or liquidation of the
Company; (d) the stockholders of the Company approve an agreement to merge or
consolidate, or otherwise reorganize, with or into one or more entities which
are not Subsidiaries, as a result of which less than 50% of the outstanding
voting securities of the surviving or resulting entity are, or are to be, owned
by former stockholders of the Company (excluding from the term "former
stockholders" a stockholder who is, or as a result of the transaction in
question becomes, an "affiliate", as that term is used in the Exchange Act and
the Rules promulgated thereunder, of any party to such merger, consolidation or
reorganization); or (e) the stockholders of the Company approve the sale of
substantially all of the Company's business and/or assets to a person or entity
which is not a Subsidiary.
"Disability" shall mean such physical or mental condition affecting the
employee as shall be determined by the Committee, in its sole discretion, to
constitute a disability causing a termination of employment.
"Fair Market Value" on a specified day means the closing price on that day
of the Common Stock as reported on the New York Stock Exchange-Composite Tape,
or if no sale of the Common Stock was so reported on that date, on the next
preceding day on which there was such a sale.
"Parent" means any corporation owning directly or indirectly 50% or more of
the total combined voting power of all classes of stock of the Company.
"Participant" means an eligible employee selected by the Committee to
participate in the Plan.
"Retirement" means normal or early retirement in accordance with the
provisions of the Retirement Plan of First Interstate Bancorp and its
Affiliates.
"Subsidiary" means any corporation of which the Company owns, directly or
indirectly, 50% or more of the total combined voting power of all classes of
stock. If an entity ceases to be a Subsidiary, each employee of that entity
shall no longer be deemed employed by the Company or a Subsidiary under the Plan
(unless the employee continues to be employed by the Company or another entity
which is a Subsidiary).
16. AMENDMENT OF PLAN. The Board of Directors of the Company may make such
amendments to this Plan and to any agreements thereunder as it shall deem
advisable, including, but not limited to, accelerating the time at which an
option may be exercised or the time when restrictions on Restricted Stock shall
expire. Such amendments shall be subject to shareholder approval to the extent
such approval is required by Rule 16b-3 or the federal tax rules applicable to
Incentive Options or other applicable law. Without the consent of the
Participant, no amendment shall impair rights of any Participant under the Plan,
except as permitted by the Plan.
17. CONSTRUCTION OF PLAN. It is the intent of the Company that this Plan
and the Awards hereunder satisfy and be interpreted in a manner that, in the
case of Participants who are or may be subject to Section 16 of the Securities
Exchange Act of 1934, satisfies the applicable requirements of Rule 16b-3 so
that
B-9
<PAGE>
such persons (unless they otherwise agree) will be entitled to the benefits of
Rule 16b-3 or other exemptive rules under Section 16. If any provision of this
Plan or of any Award would conflict with this intent, that provision to the
extent possible shall be interpreted and deemed amended so as to avoid such
conflict, but to the extent such conflict cannot be avoided, such provision
shall be disregarded as to such Participants.
18. EFFECTIVE DATE AND TERMINATION OF PLAN. The Plan shall be effective
upon filing with the Securities and Exchange Commission, subject to receipt of
shareholder approval of the Plan at the 1995 Annual Shareholder Meeting. All
Awards pursuant to the Plan prior to the receipt of shareholder approval shall
be subject to receipt of such approval. If such approval is not received the
Awards shall be forfeited. The Plan shall terminate 10 years from the effective
date; provided, however, that the Board of Directors of the Company may
terminate the Plan at any prior time within its absolute discretion. No such
termination, other than as provided for in Section 10 hereof, shall in any way
affect any Award then outstanding.
B-10
<PAGE>
[LOGO]
<PAGE>
FIRST INTERSTATE BANCORP
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF STOCKHOLDERS
APRIL 28, 1995
The undersigned hereby appoints EDWARD M. CARSON, WILLIAM E. B. SIART AND
EDWARD S. GARLOCK, and each or any of them, Proxies for the undersigned, with
power of substitution, to vote with the same force and effect as the undersigned
at the Annual Meeting of stockholders of FIRST INTERSTATE BANCORP on April 28,
1995 and any adjournments or postponements thereof, upon the following matters:
1. ELECTION OF DIRECTORS FOR all nominees listed below WITHHOLD AUTHORITY TO
(EXCEPT AS MARKED TO THE VOTE FOR ALL NOMINEES
CONTRARY BELOW) / / LISTED BELOW / /
John E. Bryson, Edward M. Carson, Jewel Plummer Cobb, Ralph P. Davidson,
Myron Du Bain, Don C. Frisbee, George M. Keller,Thomas L. Lee, William F.
Miller, William S. Randall, Steven B. Sample, Forrest N. Shumway, William E.B.
Siart,Richard J. Stegemeier, Daniel M. Tellep.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE WRITE
THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)
- --------------------------------------------------------------------------------
The Board of Directors recommends a vote "FOR" Items 2, 3 and 4 below.
2. PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & YOUNG as the independent
public accountants of the Corporation for the year 1995.
/ / FOR / / AGAINST / / ABSTAIN
3. APPROVAL OF FIRST INTERSTATE BANCORP Corporate Executive Incentive Plan.
/ / FOR / / AGAINST / / ABSTAIN
4. APPROVAL OF FIRST INTERSTATE BANCORP 1995 Performance Stock Plan.
/ / FOR / / AGAINST / / ABSTAIN
The Board of Directors recommends a vote "AGAINST" Item 5 below.
5. STOCKHOLDER PROPOSAL regarding cumulative voting.
/ / FOR / / AGAINST / / ABSTAIN
(PLEASE DATE AND SIGN ON OTHER SIDE)
<PAGE>
(CONTINUED FROM OTHER SIDE)
6. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournments or
postponements thereof.
This proxy will be voted as you specify above. Unless otherwise specified,
this proxy will be voted FOR Items 1, 2, 3 and 4 and AGAINST Item 5 as set forth
in the Proxy Statement. If any nominee for director becomes unavailable, and if
the size of the Board of Directors is not reduced accordingly, the Proxies will
vote for a substitute designated by the Board of Directors or its Executive
Committee. STOCKHOLDERS WHO ARE PRESENT AT THE MEETING MAY WITHDRAW THEIR PROXY
AND VOTE IN PERSON IF THEY SO DESIRE.
Dated _________________, 1995
_____________________________
(signature)
_____________________________
(signature)
Please sign exactly as name
appears on this proxy. When
signing as executor,
administrator, attorney,
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.
NO POSTAGE IS REQUIRED IF THIS PROXY IS RETURNED IN THE ENCLOSED ENVELOPE AND
MAILED IN THE UNITED STATES.
