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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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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
BANK ONE CORPORATION
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(Name of Registrant as Specified In Its Charter)
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Notes:
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BANK ONE CORPORATION
One First National Plaza
Chicago, Illinois 60670
[BANK ONE LOGO]
March 30, 1999
To Our Stockholders:
We are pleased to invite you to attend the Annual Meeting of
Stockholders of BANK ONE CORPORATION, which will be held at 9:30 a.m.,
Chicago time, Tuesday, May 18, 1999, at the First Chicago Center located
in the Plaza area adjacent to The First National Bank of Chicago. Please
use the Dearborn Street entrance to the Bank Building.
The election of twenty-one directors is scheduled for consideration at
this Meeting. The Meeting will also provide an opportunity to review with
you the business and affairs of the Corporation and its subsidiaries
during 1998 and give you a chance to meet your directors.
Whether you plan to attend or not, please date, sign and return the
proxy card in the accompanying envelope. In the alternative, you may vote
your shares by telephone or via the Internet. Instructions are included
with the proxy card. Your vote is important no matter how many shares you
own. If you do attend the Meeting and desire to vote in person, you may
do so even though you have previously submitted your proxy.
We look forward to seeing you at the Meeting.
Sincerely,
Verne G. Istock John B. McCoy
Chairman of the Board President and Chief Executive
Officer
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[BANK ONE LOGO]
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
MAY 18, 1999
To Our Stockholders:
The Annual Meeting of Stockholders of BANK ONE CORPORATION will be held on
Tuesday, May 18, 1999, at 9:30 a.m., Chicago time, at the First Chicago
Center, One First National Plaza, Chicago, Illinois, for the purpose of
considering and voting upon:
1. The election of twenty-one directors for a term of one year; and
2. Such other business as may properly come before the Meeting or any
adjournments thereof.
The record date for determining stockholders entitled to notice of, and to
vote at, the Meeting is the close of business March 22, 1999.
By order of the Board of Directors,
Sherman I. Goldberg
Secretary
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED FORM
OF PROXY IN THE ENVELOPE PROVIDED FOR THAT PURPOSE.
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BANK ONE CORPORATION
One First National Plaza
Chicago, Illinois 60670
PROXY STATEMENT
FOR
ANNUAL MEETING TO BE HELD MAY 18, 1999
This proxy statement is furnished in connection with the solicitation on
behalf of the Board of Directors of BANK ONE CORPORATION (the "Corporation")
of proxies for use at the Annual Meeting of Stockholders (the "Annual
Meeting") of the Corporation to be held at 9:30 a.m., Chicago time, on
Tuesday, May 18, 1999, and at any adjournments thereof.
The Board of Directors has fixed the close of business on March 22, 1999, as
the record date for determining stockholders entitled to notice of, and to
vote at, the Annual Meeting. On the record date, the Corporation had
outstanding and entitled to vote 1,180,143,858 shares of Common Stock. Each
share of Common Stock entitles the holder to one vote. The presence, in person
or by proxy, of the holders of a majority of the shares of Common Stock
entitled to vote at the Annual Meeting shall constitute a quorum.
Directors will be elected by a plurality of the votes cast at the Annual
Meeting; therefore, the twenty-one nominees who receive the largest number of
votes cast will be elected as directors. Shares represented by proxies marked
to withhold authority to vote with respect to any nominee will be counted for
purposes of establishing a quorum, but will have no effect on the election of
that nominee.
The proxy statement, form of proxy and the Corporation's 1998 Annual Report
will be mailed to each stockholder commencing on or about April 6, 1999.
The principal executive offices of the Corporation are located at One First
National Plaza, Chicago, Illinois 60670.
The Corporation was formed as the result of the merger (the "Merger") of
First Chicago NBD Corporation ("First Chicago NBD"), a Delaware corporation,
and BANC ONE CORPORATION ("BANC ONE"), an Ohio corporation, with and into the
Corporation pursuant to an Agreement and Plan of Reorganization, dated as of
April 10, 1998, by and among First Chicago NBD, BANC ONE, and the Corporation
(the "Merger Agreement"), as amended. The Merger became effective October 2,
1998.
ELECTION OF DIRECTORS
At the Annual Meeting, 21 directors are proposed to be elected to hold
office until the next annual meeting of stockholders and until their
successors are elected and have qualified. Mr. William G. Lowrie, a director
of the Corporation, will not be standing for re-election. Management thanks
Mr. Lowrie for his advice and counsel during his years of service as a
director.
It is intended that shares represented by proxies solicited on behalf of the
Board of Directors will be voted for the nominees listed below. In the event
that any nominee is unable or declines to serve, an event which is not
anticipated, proxies may be voted at the Annual Meeting for another person in
place of such nominee, or the number of directors constituting the entire
Board may be reduced.
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The name, principal occupation, certain biographical information and Board
committee memberships of each nominee are provided below. Each of the nominees
is currently serving as a director of the Corporation and has served as a
director since the effective date of the Merger, October 2, 1998, except for
Messrs. McCoy and Lehmann, who have served as directors since the Corporation
was incorporated on April 9, 1998. In the following biographies and the
remainder of this proxy statement, "First Chicago" means the corporation which
merged with and into NBD Bancorp, Inc. ("NBD") on December 1, 1995. NBD was
renamed "First Chicago NBD" upon its merger with First Chicago. The year in
which each director commenced his or her period of service with BANC ONE,
First Chicago, NBD or First Chicago NBD is also given below.
John H. Bryan
Mr. Bryan, 62, is Chairman and Chief Executive Officer of Sara
Lee Corporation, a global packaged food and consumer products
PHOTO company, and has held that position since 1976. In addition to
Sara Lee Corporation, Mr. Bryan is a director of BP Amoco p.l.c.
and General Motors Corporation. Mr. Bryan became a director of
First Chicago in 1982. He is a member of the Risk Management
Committee.
Siegfried Buschmann
Mr. Buschmann, 61, is Chairman and Chief Executive Officer of
The Budd Company, a producer of automotive parts and assemblies
and a subsidiary of Thyssen AG, and has held that position since
PHOTO 1989. He also serves as President of Thyssen Holding Corporation
and as Chief Executive Officer of Thyssen Budd Automotive GmbH.
He is a director of both The Budd Company and Thyssen Holding
Corporation. Mr. Buschmann became a director of NBD in 1991. He
is a member of the Audit Committee.
James S. Crown
Mr. Crown, 45, is a General Partner of Henry Crown and Company
(Not Incorporated), a diversified investment company, a position
he has held since 1985. In addition, Mr. Crown is a director of
PHOTO General Dynamics Corporation and Sara Lee Corporation. Mr. Crown
became a director of First Chicago in 1991. He is a member of
the Employee and Public Responsibility Committee and the
Organization, Compensation and Nominating Committee.
Bennett Dorrance
Mr. Dorrance, 53, is a private investor and Chairman and
Managing Director of DMB Associates, Inc., a real estate
investment and development company. Mr. Dorrance is a director
PHOTO of Campbell Soup Company, Inc. and UDC Homes, Inc. He became a
director of BANC ONE in 1996. He is a member of the Employee and
Public Responsibility Committee and the Organization,
Compensation and Nominating Committee.
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Dr. Maureen A. Fay, O.P.
Dr. Fay, 64, is President of the University of Detroit Mercy.
She has held that position since 1990, and was President of its
predecessor, Mercy College of Detroit, from 1983 through 1990.
PHOTO She is a director of Kelly Services, Inc. Dr. Fay became a
director of NBD in 1985. She serves on the Employee and Public
Responsibility Committee, of which she is Chair, the
Organization, Compensation and Nominating Committee and the
Executive Committee.
John R. Hall
Mr. Hall, 66, is the retired Chairman and Chief Executive
Officer of Ashland, Inc., an oil refiner, manufacturer and
distributor of chemicals. Mr. Hall served as Chairman of Ashland,
Inc. from 1981 to 1997 and as Chief Executive Officer from 1981
PHOTO to 1996. Mr. Hall serves as a director of Arch Coal, Inc., CSX
Corporation, Humana, Inc., Reynolds Metals Company, UCAR
International, Inc. and United States Enrichment Corporation. He
became a director of BANC ONE in 1987. Mr. Hall is a member of
the Executive Committee and is Chair of the Organization,
Compensation and Nominating Committee.
Verne G. Istock
Mr. Istock, 58, has been Chairman of the Board of the
Corporation since the Merger. Mr. Istock was Chairman of First
Chicago NBD from 1996 to 1998 and served as President and Chief
Executive Officer of First Chicago NBD from 1995 to 1998. Mr.
Istock, who joined NBD Bank (Michigan) in 1963, served as Vice
PHOTO Chairman of NBD Bancorp, Inc. and NBD Bank (Michigan) from 1985
to 1994, and served as Chairman and Chief Executive Officer of
NBD Bancorp, Inc. from 1994 until December 1995. Mr. Istock also
is a director of Kelly Services, Inc., and Masco Corporation. He
became a director of NBD in 1985 and is Chair of the Executive
Committee.
Laban P. Jackson, Jr.
Mr. Jackson, 56, has been Chairman and Chief Executive Officer
of Clear Creek Properties, Inc., a real estate development
PHOTO company, since 1989. Prior to that time, he served as Chairman
and Chief Executive Officer of International Spike, Inc. He
became a director of BANC ONE in 1993. He is a member of the
Audit Committee.
John W. Kessler
Mr. Kessler, 63, has been Chairman of The New Albany Company, a
real estate development firm, since 1988. He also serves as
Chairman of the real estate development firms Marsh and McLennan
PHOTO Real Estate Advisors, Inc. and John W. Kessler Company. Mr.
Kessler is a director of Abercrombie & Fitch Co. Mr. Kessler
served as a director of BANC ONE from 1986 to 1992 and from 1995
until the Merger. He is a member of the Organization,
Compensation and Nominating Committee.
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Richard J. Lehmann
Mr. Lehmann, 54, has been Vice Chairman of the Board of the
Corporation since the Merger. He served as President of BANC ONE
from 1995 until the Merger, and Chief Operating Officer of BANC
ONE from 1996 to 1998. Mr. Lehmann was Chairman and Chief
PHOTO Executive Officer of Banc One Arizona Corporation (formerly,
Valley National Corporation) and of Bank One, Arizona, N.A.
(formerly Valley National Bank) from 1991 to 1995. Mr. Lehmann
serves as a director of Moore Corporation Limited. He became a
director of BANC ONE in 1995. He is an ex officio member of the
Executive Committee.
Richard A. Manoogian
Mr. Manoogian, 62, is Chairman and Chief Executive Officer of
Masco Corporation, a diversified manufacturer, a position he has
held since 1985. Prior to that time, he held a number of other
PHOTO executive positions within the company. In addition, Mr.
Manoogian serves as the Chairman and a director of MascoTech,
Inc. He became a director of NBD in 1978. He is a member of the
Organization, Compensation and Nominating Committee.
William T. McCormick, Jr.
Mr. McCormick, 54, is Chairman and Chief Executive Officer of
CMS Energy Corporation, a diversified energy company, a position
he has held since 1988. He is also Chairman of its principal
subsidiary, Consumers Energy. In addition to CMS Energy
PHOTO Corporation and Consumers Energy, Mr. McCormick is a director of
Rockwell International Corporation and Schlumberger Limited. He
became a director of NBD in 1985. He is a member of the Risk
Management Committee.
John B. McCoy
Mr. McCoy, 55, has been President and Chief Executive Officer
of the Corporation since the Merger. He served as Chairman of
BANC ONE from 1987 until the Merger, and as President of BANC
PHOTO ONE from 1983 to 1987. Mr. McCoy serves as a director of
Ameritech Corporation, Cardinal Health, Inc., Federal Home Loan
Mortgage Corporation and Paymentech, Inc. He became a director
of BANC ONE in 1983. He is a member of the Executive Committee.
Thomas E. Reilly, Jr.
Mr. Reilly, 59, is Chairman and Chief Executive Officer of
Reilly Industries, Inc., a diversified chemical manufacturing
company. He has held that position since 1990, and prior to that
time held other executive positions within the company. In
PHOTO addition to Reilly Industries, Inc., Mr. Reilly is a director of
Herff Jones, Inc. and Lilly Industries, Inc. He became a
director of First Chicago NBD in 1995. He serves on the Employee
and Public Responsibility Committee, the Executive Committee and
the Audit Committee, of which he is Chair.
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John W. Rogers, Jr.
Mr. Rogers, 40, is President and founder of Ariel Capital
Management, Inc., an institutional money management firm. He has
held that position since 1983. Mr. Rogers is a director of Aon
PHOTO Corporation, Burrell Communications Group, Inc. and GATX
Corporation. He became a director of First Chicago NBD in 1998.
He is a member of the Employee and Public Responsibility
Committee and the Risk Management Committee.
Thekla R. Shackelford
Ms. Shackelford, 64, is an educational consultant. Ms.
Shackelford founded School Selection Consulting, an admissions
service for independent secondary schools and colleges, in 1978.
PHOTO Ms. Shackelford serves as a director of Fiserv Inc. and Wendy's
International, Inc. She became a director of BANC ONE in 1993.
She serves on the Employee and Public Responsibility Committee
and the Risk Management Committee.
Alex Shumate
Mr. Shumate, 48, has been the Office Managing Partner of
Squire, Sanders & Dempsey LLP, a law firm, since 1991. Mr.
Shumate, who joined Squire, Sanders & Dempsey in 1988, served as
PHOTO Chief Counsel and Deputy Chief of Staff to the Governor of Ohio
from 1985 to 1988. Mr. Shumate serves as a director of Intimate
Brands, Inc. and Wm. Wrigley Jr. Company. He became a director
of BANC ONE in 1993. He serves on the Audit Committee and the
Employee and Public Responsibility Committee.
Frederick P. Stratton, Jr.
Mr. Stratton, 60, has been Chairman and Chief Executive
Officer of Briggs & Stratton Corporation, a manufacturer of air
cooled gasoline engines for outdoor power equipment, since 1986.
Mr. Stratton also serves as a director of Briggs & Stratton
PHOTO Corporation, Midwest Express Holdings, Inc., Weyco Group, Inc.,
Wisconsin Electric Power Company and Wisconsin Energy
Corporation. He became a director of BANC ONE in 1988. He is a
member of the Audit Committee and the Employee and Public
Responsibility Committee.
John C. Tolleson
Mr. Tolleson, 50, is Chief Executive Officer of The Tolleson
Group, a private investment firm, and a General Partner in Arena
Capital Partners, LLC, a private equity fund. Mr. Tolleson
served as Chairman and Chief Executive Officer of First USA,
PHOTO Inc. from 1985 to June 1997. Mr. Tolleson serves as a director
of Capstead Mortgage Corporation, Haggar Corp., Paymentech, Inc.
and Viad Corporation. He became a director of BANC ONE in 1997.
He is a member of the Risk Management Committee.
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David J. Vitale
Mr. Vitale, 52, has been Vice Chairman of the Board of the
Corporation since the Merger. Mr. Vitale, who served as Vice
Chairman of the Board of First Chicago NBD from 1995 to 1998,
joined The First National Bank of Chicago in 1968, was named
PHOTO Executive Vice President of First Chicago in 1986, became Vice
Chairman of the Board of First Chicago in 1993, and served as
President of The First National Bank of Chicago from 1995 to
1998. Mr. Vitale became a director of First Chicago in 1992. He
is an ex officio member of the Executive Committee.
Robert D. Walter
Mr. Walter, 53, has been Chairman and Chief Executive Officer
of Cardinal Health, Inc., a pharmaceutical service provider,
since 1971. Mr. Walter is a director of CBS Corporation, Infinity
PHOTO Broadcasting Corporation and Karrington Health, Inc. He became a
director of BANC ONE in 1987. He is a member of the Executive
Committee and serves as Chair of the Risk Management Committee.
COMMITTEES OF THE BOARD OF DIRECTORS
It is the primary responsibility of the Board of Directors of the Corporation
to oversee the management of the business of the Corporation and its
subsidiaries. To assist in carrying out its responsibilities, the Board of
Directors has established five standing committees which are described below.
Audit Committee
The members of the Audit Committee of the Corporation are Siegfried
Buschmann, William G. Lowrie, Laban P. Jackson, Jr., Alex Shumate, Frederick P.
Stratton, Jr., and Thomas E. Reilly, Jr., who serves as Chair. The Audit
Committee, which met twice in 1998 after the Merger, is the successor to BANC
ONE's and First Chicago NBD's Audit Committees, each of which met four times in
1998 before the Merger.
Included among the functions performed by the Audit Committee are (i)
appointment of the Corporation's independent public accountants; (ii) review of
the plan and results of the independent public accountants' auditing
engagement; (iii) approval of the professional services provided by the
independent public accountants and related fees and consideration of the
possible effect the performance and fees would have on the independence of the
accountants; (iv) review of the plan and findings with respect to the internal
audit, credit review and market risk oversight functions; (v) review of the
representations of management and the findings of the independent public
accountants as to the adequacy of the Corporation's systems of internal
controls in order to obtain reasonable assurance that the Corporation's annual
and quarterly financial reports are prepared in accordance with generally
accepted accounting principles and are free from material fraud or error; (vi)
review of the assessment of management regarding compliance by subsidiary banks
with laws and regulations designated by bank regulatory agencies as essential
for safety and soundness; (vii) review of the expenses of the inside directors;
(viii) approval of the selection and discharge of the Corporation's General
Auditor; and (ix) review of reports of examinations by regulatory agencies
relating to the Corporation and its subsidiaries.
Employee and Public Responsibility Committee
The members of the Employee and Public Responsibility Committee of the
Corporation are James S. Crown, Bennett Dorrance, Thomas E. Reilly, Jr., John
W. Rogers, Jr., Thekla R. Shackelford, Alex Shumate, Frederick P. Stratton, Jr.
and Maureen A. Fay, who serves as Chair. The Employee and Public Responsibility
Committee, which did not meet in 1998 after the Merger, is the successor to
First Chicago NBD's Employee and Public Responsibility Committee, which met
twice in 1998 before the Merger. The Employee and Public Responsibility
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Committee has responsibility and authority for matters relating to the
Corporation's and its subsidiaries' charitable contributions; diversity,
affirmative action, leadership development and equal employment opportunity
policies and procedures; practices in handling customer inquiries and
complaints; compliance with the Community Reinvestment Act, fair lending laws
and applicable consumer-related laws; neighborhood and social initiatives; and
current and emerging public policy issues.
Executive Committee
The members of the Executive Committee of the Corporation are Maureen A.
Fay, John R. Hall, John B. McCoy, Thomas E. Reilly, Jr., Robert D. Walter, and
Verne G. Istock, who serves as Chair. Richard J. Lehmann and David J. Vitale
serve as ex officio members. The Executive Committee, which did not meet in
1998 after the Merger, is the successor to BANC ONE's Executive Committee,
which met once in 1998 before the Merger, and First Chicago NBD's Executive
Committee, which did not meet in 1998 before the Merger. The Executive
Committee exercises all the powers of the Board of Directors in the management
of the business and affairs of the Corporation while the Board of Directors is
not in session.
Risk Management Committee
The members of the Risk Management Committee of the Corporation are John H.
Bryan, William T. McCormick, Jr., John W. Rogers, Jr., Thekla R. Shackelford,
John C. Tolleson and Robert D. Walter, who serves as Chair. The Risk
Management Committee, which met twice in 1998 after the Merger, is the
successor to First Chicago NBD's Risk Management Committee, which met three
times in 1998 before the Merger. The Risk Management Committee has
responsibility and authority for reviewing, advising on, approving where
appropriate and providing guidance with respect to risk management, financial
securities transactions and capital actions, and financial planning and
performance.
Organization, Compensation and Nominating Committee
Committee Interlocks and Insider Participation
The Organization, Compensation and Nominating Committee, which met twice in
1998 after the Merger, is the successor to BANC ONE's Personnel and
Compensation Committee, which met three times in 1998 before the Merger, and
First Chicago NBD's Organization, Compensation and Nominating Committee, which
met four times in 1998 before the Merger. The members of the Organization,
Compensation and Nominating Committee of the Corporation are James S. Crown,
Bennett Dorrance, Maureen A. Fay, John W. Kessler, Richard A. Manoogian and
John R. Hall, who serves as Chair.
All of the members of the Organization, Compensation and Nominating
Committee, or their associates, were customers of, or had transactions with,
the Corporation or the Corporation's banking or other subsidiaries in the
ordinary course of business during 1998. Additional transactions may be
expected to take place in the future. All outstanding loans to the directors
and their associates, commitments and sales, purchases and placements of
investment securities and other financial instruments included in such
transactions were made in the ordinary course of business, on substantially
the same terms, including interest rates and collateral, where applicable, as
those prevailing at the time for comparable transactions with other persons,
and, except for the loan described below, did not involve more than normal
risk of collectibility or present other unfavorable features.
In October 1998, Intelledge Corporation ("Intelledge"), a company engaged in
the development of retail automation solutions, filed for bankruptcy. At that
time, American National Bank and Trust Company of Chicago ("ANB"), a
subsidiary of the Corporation, had a $200,000 loan ("Loan") outstanding to
Intelledge. Henry Crown and Company (Not Incorporated), an Illinois limited
partnership ("Partnership"), is an owner of Intelledge preferred stock. James
S. Crown, a director of the Corporation, is a general partner of the
Partnership. Prior to notification of the Loan by ANB in January, 1999,
neither James S. Crown, nor any other partner of the Partnership knew that a
loan had been made to Intelledge by ANB. In addition, neither James S. Crown,
nor any other partner of the Partnership, has ever participated in the
management of Intelledge. The Loan, originally made in August 1997, bears
interest at the ANB base rate plus .50%, which was 8.25% in November 1998, was
secured by a certificate of deposit in the amount of $50,000 and was due on
August 31, 1999. In November 1998,
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the certificate of deposit was applied against the loan. The Loan was made by
ANB in the ordinary course of business and on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable loans to other persons. The largest principal amount outstanding
during 1998 was $200,000, and the principal amount outstanding on March 1,
1999, was $149,358.
Committee Responsibilities and Authorities
Included among the functions related to human resources management and
compensation performed by the Organization, Compensation and Nominating
Committee are (i) ensuring the effectiveness of senior management and
appropriate management continuity; (ii) ensuring the reasonableness and
appropriateness of senior management compensation arrangements and levels;
(iii) overseeing senior management officer titling; (iv) reviewing the
succession plan for the Office of the Chief Executive; (v) reviewing plans to
be followed should the Chairman or the Chief Executive Officer be absent or
disabled; (vi) monitoring the overall soundness and effectiveness of the
Corporation's compensation and benefit programs; and (vii) providing advice
and counsel regarding the Corporation's human resources strategy and key human
resources practices and issues.
Regarding formal authorities for compensation matters, the Corporation's
Board of Directors approves, upon recommendation of the Committee, (i) the
adoption and amendment of stock-based plans (subject to stockholder approval
where required); (ii) the adoption and amendment of all compensation plans
that cover executive management (subject to stockholder approval where
required); and (iii) all compensation actions, including employment and
separation arrangements, for officers at or above the level of vice chairman.
The Board of Directors has delegated authority to the Committee to approve
(i) the terms and conditions of stock-based grants for executive management;
(ii) the total number of available shares to be used each year in stock-based
plans; and (iii) funding for senior management annual incentive awards.
Additionally, the Committee is responsible for (i) proposing new directors
and reviewing the performance of the Board of Directors; (ii) providing
counsel regarding the organization of the Board of Directors and its committee
structure, committee charters, and membership; and (iii) overseeing director
compensation arrangements.
The Organization, Compensation and Nominating Committee will consider
candidates for nominees for election as directors of the Corporation submitted
by stockholders. Any stockholder who wishes to have the Committee consider a
candidate should submit the name of the candidate, along with any biographical
or other relevant information the stockholder wishes the Committee to
consider, to the Secretary of the Corporation at the address appearing on the
first page of this proxy statement.
DIRECTOR MEETING ATTENDANCE AND FEE ARRANGEMENTS
The Board of Directors of the Corporation met twice in 1998 after the
Merger. BANC ONE's Board of Directors met four times and First Chicago NBD's
Board of Directors met six times in 1998 before the Merger. Each incumbent
director attended 75% or more of the total number of meetings held during 1998
by the Board of Directors of the Corporation or the respective predecessor
corporation or Committees thereof on which the director served.
The Corporation: Each non-officer director of the Corporation receives an
annual cash retainer of $60,000 and an annual grant of shares of the
Corporation's Common Stock equal in value to one-half of the annual cash
retainer. The non-officer Chair of each Committee receives a chairperson
retainer of $6,000. Maureen A. Fay, John R. Hall, Thomas E. Reilly, Jr., and
Robert D. Walter are the current Committee Chairs receiving the chairperson
retainer. In addition, each non-officer director who is a member of the
Executive Committee receives a fee of $1,000 for each meeting of the Executive
Committee which he or she attends.
A director's prior election with respect to deferral of directors' fees
under the terms of a plan or program maintained by BANC ONE or First Chicago
NBD prior to the Merger, which are described below, remains in effect for fees
payable prior to April 1, 1999. The Board of Directors will establish a new
deferral plan for directors' cash retainer fees paid on and after April 1,
1999, but the terms of the deferral plan have not yet been
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established. The First Chicago NBD Director Stock Plan, which is described
below, has been amended and restated as the Corporation's Director Stock Plan
and permits non-officer directors to have their annual retainers paid in the
form of various stock and stock-related awards with respect to fees payable on
and after April 1, 1999.
Banc One: During 1998, directors who were not officers of BANC ONE or one of
its affiliates received $3,000 as a monthly retainer, $2,500 for each Board
meeting attended and $1,600 for each Board committee meeting attended.
Committee chairpersons received $2,000 for each committee meeting chaired.
BANC ONE had established a voluntary deferred compensation plan for non-
officer directors. Under that plan, a non-officer director could elect, on or
before December 31 of any year (or, in the case of a new director, before such
director's term began), to defer payment of all retainer, meeting and
committee fees earned during the calendar year following such election and,
unless such election has been subsequently terminated, all succeeding calendar
years. Fees deferred at the election of a director were credited to an account
established by BANC ONE in the director's name and invested, at the director's
election, in The One Group(R) Prime Money Market Fund and/or the BANC ONE
stock program. Amounts invested in the BANC ONE stock program were invested in
stock units, and cash dividends were reinvested in additional stock units.
With certain limited exceptions, deferred amounts are paid in cash in a lump
sum payment or in approximately equal annual installments over a five- or ten-
year period at the election of the director, commencing as soon as
administratively feasible after the first business day of the calendar year
following the date the plan administrator is notified that the director has
ceased to be a director. Currently, eight non-officer directors participate in
the deferred compensation plan.
The 1995 Stock Incentive Plan (the "1995 Plan") provided for the automatic
grant of nonqualified stock options ("Director Stock Options") to each
director who was not an employee of BANC ONE or one of its affiliates (an
"Eligible Director") upon the terms and conditions set forth in the 1995 Plan
(including the condition that each Director Stock Option have an option price
equal to the fair market value of Common Stock on the date of grant).
Commencing immediately after the adjournment of the BANC ONE annual meeting
each year, each Eligible Director who was an Eligible Director immediately
preceding such BANC ONE annual meeting and who was re-elected as a director at
such annual meeting was automatically granted Director Stock Options for that
number of shares of Common Stock having a fair market value of $60,000 on the
date of grant if, but only if, the return on common equity of BANC ONE as set
forth in BANC ONE's annual report to shareholders for the immediately
preceding fiscal year was equal to or greater than 10%. In 1998, each Eligible
Director received an option on 1,020 shares of Common Stock at an exercise
price of $58.8125 per share. The 1995 Plan further provided that each person
who was first elected or appointed to serve as a Director and who was an
Eligible Director is, upon such person's initial appointment or election as an
Eligible Director, automatically granted Director Stock Options for that
number of shares of Common Stock having a fair market value of $100,000 on the
date of grant.
First Chicago NBD: Each non-officer director of First Chicago NBD received
an annual cash retainer of $50,000 and an annual grant of shares of common
stock equal in value to one-half of the director's annual cash retainer. The
Chairperson of each Committee received a chairperson retainer of $5,000. No
additional fees were paid to directors for attending Board or Committee
meetings. Non-officer directors could elect each year to have their annual
cash retainer paid in any combination of the following: (i) cash paid on a
quarterly basis; (ii) deferral of payment pursuant to First Chicago NBD's Plan
for Deferring the Payment of Directors' Fees (the "Director Deferral Plan");
or (iii) pursuant to the First Chicago NBD Director Stock Plan: (a) an
outright grant of shares of First Chicago NBD's common stock; (b) stock
options, with three options issued for every share of common stock that could
be granted; and (c) stock units. Amounts deferred into the Director Deferral
Plan earned a return equivalent to the rate of return on one or more of the
investment funds in First Chicago NBD's Savings and Investment Plan. Officers
of First Chicago NBD and its subsidiaries did not receive an annual retainer,
meeting fees, shares of common stock, or other compensation for service as
directors of First Chicago NBD or on Committees of the Board.
9
<PAGE>
CONVERSION OF FIRST CHICAGO NBD
COMMON STOCK SHARE EQUIVALENTS
Pursuant to the Merger Agreement, each outstanding share of First Chicago
NBD common stock was converted into the right to receive 1.62 shares of the
Corporation's Common Stock (the "Exchange Rate") at the time of the Merger.
For consistency of presentation, all references in this Proxy Statement to
shares of First Chicago NBD common stock prior to the Merger reflect the 1.62
Exchange Rate, unless otherwise noted. Since each share of BANC ONE common
stock outstanding prior to the Merger equals one share of the Corporation's
Common Stock, all references to shares of BANC ONE common stock prior to the
Merger reflect the original number of shares.
BENEFICIAL OWNERSHIP OF THE CORPORATION'S COMMON STOCK
Generally, under the rules of the Securities and Exchange Commission (the
"Commission"), a person is deemed to be the beneficial owner of a security
with respect to which such person, through any contract, arrangement,
understanding, relationship or otherwise, has or shares voting power (which
includes power to vote, or direct the voting of, such security) or investment
power (which includes power to dispose of, or direct the disposition of, such
security). In addition, a person is deemed to be the beneficial owner of a
security if he or she has the right to acquire such voting power or investment
power over the security within sixty days, such as through the exercise of a
stock option.
The following table shows the beneficial ownership of the Corporation's
Common Stock as of December 31, 1998 by (i) each director, (ii) each executive
officer named in the Summary Compensation Table on page 18, and (iii) all
directors and executive officers as a group.
<TABLE>
<CAPTION>
Amount and
Nature of
Beneficial Percent
Ownership of Class
as of (if 1%
December 31, or
Name 1998 greater)
- ---- ------------ --------
<S> <C> <C>
John H. Bryan....... 13,042 -- %
Siegfried Busch-
mann............... 4,197 --
James S. Crown...... 9,028,748(a) --
Bennett Dorrance.... 12,718 --
Maureen A. Fay...... 4,738 --
John R. Hall........ 46,743 --
Verne G. Istock..... 1,014,943(b)(c) --
Laban P. Jackson,
Jr................. 22,460 --
John W. Kessler..... 25,411 --
Richard J. Lehmann.. 181,959(b) --
William G. Lowrie... 3,659 --
Richard A.
Manoogian.......... 15,127 --
</TABLE>
<TABLE>
<CAPTION>
Amount and
Nature of
Beneficial Percent
Ownership of Class
as of (if 1%
December 31, or
Name 1998 greater)
- ---- ------------ --------
<S> <C> <C>
William T. McCormick,
Jr.................. 20,392 -- %
John B. McCoy........ 836,843(b) --
Thomas E. Reilly,
Jr.................. 219,168(d) --
John W. Rogers, Jr... 2,088 --
Thekla R. Shackel-
ford................ 198,780 --
Alex Shumate......... 8,014 --
Frederick P.
Stratton, Jr........ 39,797 --
John C. Tolleson..... 1,103,546 --
Richard W. Vague..... 994,228(b) --
David J. Vitale...... 1,007,162(b) --
Robert D. Walter..... 104,538 --
All Directors and Ex-
ecutive Officers as
a Group(e).......... 17,259,670(b) 1.5
</TABLE>
- -------
(a) The number of shares of Common Stock shown as beneficially owned by James
S. Crown comprises 61,555 shares Mr. Crown owns individually; 13,151
shares subject to options which Mr. Crown could exercise within sixty
days; 5,227,611 shares owned by partnerships of which Mr. Crown is a
partner; 1,172,063 shares owned by a partnership, of which a corporation,
of which Mr. Crown is a director, officer and shareholder, and a trust, of
which Mr. Crown is a beneficiary, are partners; 781,404 shares owned by a
not-for-profit corporation of which Mr. Crown is a director; and 1,517,820
shares owned by a partnership, of which a corporation, of which Mr. Crown
is a shareholder, and a partnership, of which Mr. Crown is a partner, are
partners. Also included are 5,998 shares owned by a trust of which Mr.
Crown is a beneficiary, which Mr. Crown had the right to own individually
within sixty days; 244,761 shares owned by trusts of which Mr. Crown is a
co-trustee, and 4,385 shares owned by Mr. Crown's spouse. Mr. Crown
disclaims beneficial ownership of the shares held by the various persons
and entities described above except for the shares he owns or has a right
to own individually and, with respect to shares owned by entities, except
to the extent of his interest in such entities.
(b) As set forth in the following table, for Messrs. McCoy, Istock, Lehmann,
Vitale and Vague and all directors and executive officers as a group, the
share amounts include any shares subject to options held by such
10
<PAGE>
persons as of December 31, 1998, that were exercisable within sixty days,
and also include any shares held pursuant to BANC ONE's or First Chicago
NBD's 401(k) plans as of December 31, 1998. Shares held pursuant to the
401(k) plans as of February 28, 1999, will be subject to the voting
direction of such persons at the Annual Meeting.
<TABLE>
<CAPTION>
All Directors
and Executive
John B. Verne G. Richard J. David J. Richard W. Officers as
McCoy Istock Lehmann Vitale Vague a Group
------- -------- ---------- -------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Shares subject to op-
tions exercisable
within sixty days.... 270,487 447,213 0 521,114 426,395 2,738,024
Shares held pursuant
to 401(k) plans...... 8,406 0 2,215 17,442 0 82,870
</TABLE>
(c) This figure includes 7,954 shares, of which Mr. Istock disclaims
beneficial ownership, held by Mr. Istock's spouse.
(d) This figure includes 7,237 shares subject to options which Mr. Reilly
could exercise within sixty days; 193,440 shares held in trusts of which
Mr. Reilly is co-trustee; 965 shares held by Mr. Reilly's spouse; and
2,096 shares, of which Mr. Reilly disclaims beneficial ownership, held by
Mr. Reilly's spouse as custodian for an adult child.
(e) For purposes of this table, the term "executive officers" includes all
persons who were executive officers of the Corporation on December 31,
1998.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires each of the
Corporation's directors and officers, and each beneficial owner of more than
ten percent of a registered class of the Corporation's equity securities, to
file with the Commission an initial report of the person's beneficial
ownership of the Corporation's equity securities and subsequent reports
regarding changes in such ownership. To the best of the Corporation's
knowledge, except as described below, each person who was so subject to
Section 16(a) with respect to the Corporation at any time during 1998, filed,
on a timely basis, all reports required for the year pursuant to Section
16(a). As a result of their routine deferral of director's fees in connection
with their participation in BANC ONE's deferred compensation plan for
directors, eight of the Corporation's directors acquired stock units, each in
a single transaction, in late 1998. Due to an administrative delay in
transmitting information about these transactions, the respective Forms 5
filed for 1998 by Messrs. Dorrance, Hall, Jackson, Kessler, Stratton, Tolleson
and Walter and Ms. Shackelford inadvertently omitted these transactions. These
directors have amended their respective Forms 5, and, to the best of the
Corporation's knowledge, these transactions were the only transactions not
reported by these persons on a timely basis for 1998. In addition, the
Corporation recently has learned of two transactions that occurred in 1996
that were not timely reported pursuant to Section 16(a). In June 1996, Mr.
Donald A. Winkler, an executive officer of the Corporation, acquired a total
of 16 shares of Common Stock in two transactions, as a result of his
participation in a BANC ONE employee stock purchase plan. Due to a
miscommunication between BANC ONE and Mr. Winkler, the requisite report was
not timely filed. Mr. Winkler amended his Form 5 for 1996 to report these
transactions, and, to the best of the Corporation's knowledge, these
transactions were Mr. Winkler's only transactions not reported on a timely
basis for 1996.
ORGANIZATION, COMPENSATION AND NOMINATING
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Organization, Compensation and Nominating Committee (the "Committee")
was created as a committee of the Corporation's Board of Directors on October
20, 1998, shortly after the Merger of BANC ONE and First Chicago NBD. Prior to
the Committee's creation, the Boards of Directors of each predecessor
corporation had a similar committee which addressed compensation issues. Since
the Merger occurred during the fourth quarter, the Committee had limited
opportunity to implement a consolidated executive compensation program during
1998. Implementation of consolidated compensation and benefits programs for
all employees of the Corporation is expected to be completed by January 1,
2000.
11
<PAGE>
Objective and Policies
The Committee established its guiding principles for the Corporation in
December 1998. The Committee's primary objectives with regard to compensation
are to attract, motivate and retain executives with the experience and
capabilities needed to maximize shareholder value, provide outstanding
leadership to employees, and deliver superior products and services to
customers.
Performance Criteria and Competitive Posture
For 1999, the Committee defined the "Peer Group" to consist of the 13
largest bank holding companies and two diversified financial institutions. In
February 1999, the Committee reviewed and analyzed the existing executive
compensation programs with respect to each major component of compensation and
aggregate total compensation to ensure competitiveness against the Peer Group.
Prior to the Merger each of the predecessor committees conducted similar
executive compensation reviews relative to the peer groups of each respective
company. The peer group for First Chicago NBD during 1998 was defined as the
top twenty-five banking organizations, ranked by assets at December 31, 1998.
The peer group for BANC ONE during 1998 consisted of major U.S. bank holding
companies and selected diversified financial services businesses.
Each year the Committee will establish the Corporation's executive
compensation programs based on trends and practices within the Peer Group as
well as on information provided by third-party consultants and special
compensation surveys. The Committee will annually review the Peer Group the
Corporation uses for compensation comparison purposes. Appropriate peer groups
will be developed for each of the Corporation's lines of business to ensure a
competitive total compensation program. The Committee believes that the
Corporation's most direct competitors for executive talent are not necessarily
the same companies that would be included in a peer group established to
compare shareholder returns. Thus, the Peer Group used for compensation
purposes differs from the bank holding companies included in the S&P Bank
Composite Index used in the Performance Graph on page 17.
Deductibility
The Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"
or "Code") limits allowable Federal income tax deductions for compensation
paid by a publicly held corporation. Specifically, section 162(m) of the Code
limits deductible compensation to $1 million for the Corporation's chief
executive officer and for each of the four other most highly compensated
executive officers employed at year end. However, performance-based
compensation may be excluded from this limit provided, among other things,
that payment is made pursuant to a plan approved by stockholders; that it is
payable upon attainment of pre-determined, objective goals; and that the board
committee approving such payments is made up of "outside" directors as defined
in section 162(m). The Corporation currently believes that all performance-
based compensation paid for 1998 qualifies for maximum deductibility under
section 162(m), except for a portion of the performance share awards paid to
Messrs. Istock and Vitale that were accelerated as a result of the Merger, all
of the 1996 performance share awards paid to Messrs. McCoy and Lehmann, and a
portion of the bonus paid to Mr. Vague under the BANC ONE Performance
Improvement Plan.
The Committee believes that executive compensation should be reasonable and
competitive and that a substantial portion of total compensation should be
based upon the Corporation's performance. It has approved both annual cash and
long-term incentive compensation programs and developed target award
opportunities accordingly. It is the Committee's policy to optimize both the
effectiveness and tax-efficiency of the Corporation's executive compensation
plans by utilizing performance-based compensation that allows for maximum
deductibility under section 162(m) of the Code. However, tax deductibility is
only one of many factors that must be considered in any final decision
regarding executive compensation. In order to serve best the Corporation and
the interests of its stockholders, the Committee may determine that payment of
non-deductible compensation is necessary to provide an appropriate award
consistent with its overall philosophy and the intent of the performance-based
programs.
Compensation Program
The key components of the Corporation's executive compensation program are
base salary, annual incentive compensation and long-term stock incentive
compensation. The program is designed to provide competitive and performance-
contingent current compensation, as well as opportunities to earn longer-term
rewards
12
<PAGE>
commensurate with superior shareholder value creation. Each component of
executive compensation is discussed below.
Base Salaries
Base salaries for executive officers are reviewed annually and adjusted to
reflect competitive practices within the Peer Group for positions with similar
roles or responsibilities. Individual performance, time in position, prior
experience and specific knowledge are also considered during the annual salary
review process. Base salaries may be adjusted at other times of the year for
changes in position, level of responsibility, special assignments or
competitive situations.
The overall rate of increase for base salaries of executive officers is
intended to be consistent with competitive trends in the industry. Base
salaries will reflect the median of the Peer Group. All base salary increases
for executive officers in 1998 were reviewed and approved by the Committee or
a predecessor committee.
Effective in April, 1998, Mr. Istock's base salary was increased from
$800,000 to $825,000 reflecting both his normal annual review and his
competitive position relative to the First Chicago NBD peer group. The base
salary earnings of $818,270 reported in the Summary Compensation Table differ
only due to the timing of the increase during the year. In 1998, Mr. McCoy's
base salary remained fixed at $995,000.
Annual Incentive Compensation
In 1998, each of the Corporation's executive officers participated in an
annual incentive plan appropriate to their predecessor employer. All executive
officers of First Chicago NBD participated in the First Chicago NBD Senior
Management Annual Incentive Plan ("AIP"). Messrs. McCoy and Lehmann
participated in the BANC ONE Executive Management Incentive Compensation Plan
("EMIC"), while all other BANC ONE executive officers participated in the BANC
ONE Performance Improvement Plan ("PIP").
The AIP was approved by First Chicago NBD stockholders at their Annual
Meeting in May 1996. The AIP established a bonus funding level ("bonus pool")
based on the aggregate of target cash incentive awards for all participants.
The target awards were based on competitive practices. The predecessor First
Chicago NBD committee established performance goals and set minimum or
threshold levels of performance each year. Actual or final pool funding was
based on performance results measured against two standards: earnings per
share ("EPS") compared to a pre-determined target; and return on equity
("ROE") compared to the median ROE of the peer group.
For 1998, EPS and ROE results for First Chicago NBD were reviewed on a pro-
forma basis due to the Merger. Annual bonuses were paid to executive officers
of First Chicago NBD, including Mr. Istock and Mr. Vitale, based on a
subjective assessment of the performance of First Chicago NBD, the Corporation
and the executive relative to his or her specific financial, strategic and
organizational objectives. As a result of this assessment Mr. Istock received
a bonus of $1,750,000 for 1998.
Both of the BANC ONE annual incentive award plans for executive officers,
EMIC and PIP, established incentive award opportunities for each participant
based on his or her level of responsibility. The predecessor BANC ONE
committee established a goal of targeting annual incentive opportunities at or
above the median of the BANC ONE peer group in conjunction with performance
targets set at equivalently high or higher performance levels.
Under the terms of the EMIC covering Messrs. McCoy and Lehmann, the
predecessor BANC ONE committee established a matrix of specific EPS and return
on assets ("ROA") performance levels as the determining mechanism for annual
incentive awards. Award opportunities were provided based upon achievement of
specific EPS and ROA performance levels as set forth in the matrix. Target
award levels for each participant were fixed by the predecessor BANC ONE
committee at the beginning of the performance period as a percentage of
average base compensation.
13
<PAGE>
In 1998, BANC ONE exceeded its performance thresholds for the funding of
EMIC, and, based upon a subjective assessment of the performance of BANC ONE,
the Corporation and Mr. McCoy, the Committee awarded annual incentive
compensation to Mr. McCoy of $2,200,000.
PIP awards to all other executive officers were based upon pre-established
earnings goals for BANC ONE and each line of business and a subjective
evaluation of each participant's contribution. Minimum performance thresholds
were established for earnings objectives at all levels of consolidation,
including the holding company level.
Long Term Stock Incentive Compensation
Stock incentive compensation provides a long-term link between the results
achieved for shareholders and the rewards provided to executive officers and
other selected managers. Both BANC ONE and First Chicago NBD included stock
incentive awards, principally stock options, restricted stock and performance
shares, as key elements in their total compensation package. In February 1999,
the Corporation's Board of Directors amended and restated the First Chicago
NBD Stock Performance Plan, which was adopted by First Chicago NBD
stockholders in May 1996. The Committee will grant all 1999 stock incentive
awards under the BANK ONE CORPORATION Stock Performance Plan ("Stock Plan").
Each year, as part of its annual executive compensation review, the
Committee will analyze competitive data based on the Peer Group to determine
appropriate levels of stock incentive compensation for executive officers and
other selected members of management. The Committee intends to provide stock
incentive award opportunities that are at or above the Peer Group median when
measured on a total economic value basis. In granting stock incentive awards,
the Committee will also give consideration to the aggregate amount, type, mix
and conditions associated with the Peer Group's use of stock incentive
compensation. For 1999, the Committee has elected to use a combination of
stock options and restricted stock as its normal grant vehicle but may use
other types of stock incentives if the need arises. All stock options will be
granted with an exercise price equal to the market price of a share of Common
Stock on the date of grant.
All stock incentive compensation granted to executive officers in 1998 was
granted prior to the Merger and was, therefore, reviewed and approved by one
of the predecessor committees.
In 1998, the predecessor First Chicago NBD committee provided long-term
incentive awards in the form of stock options, performance shares and
restricted shares. Target long-term award levels were based on competitive
practices within the peer group and the financial industry in general, with
different award levels established for each level of management. Typically,
higher level executives received performance shares and options; less senior
managers and professionals received restricted shares and options. Restricted
share awards generally vested after four years of continuous employment from
the grant date. During the restricted period, recipients received dividends
and had voting rights on the restricted shares.
First Chicago NBD performance shares were shares of Common Stock granted
contingent upon the achievement of certain financial goals. The performance
shares awarded in 1998 provided for a four-year performance period commencing
January 1, 1998. At the end of such period, between 0% and 150% of the
original grant could be earned by recipients. The percentage earned was based
on First Chicago NBD's relative performance on two measures: ROE and total
shareholder return compared with that of the peer banking institutions for
each year averaged for the four years in the performance period. During the
performance period, recipients received dividends and could exercise voting
rights on performance shares.
First Chicago NBD stock option grants were made using non-qualified stock
options with a ten-year term. The exercise price of the options was the fair
market value of the Common Stock on the date of grant. Options vested in three
equal installments at the end of the first, second and third years of the ten-
year term. To encourage early exercise of options and thus increase stock
ownership, the Committee approved a restorative option feature enabling option
recipients, upon exercise of an option, to purchase shares by exchanging
currently owned shares of Common Stock and to receive restorative options
equal to the number of shares used for the option purchase. The exercise price
for restorative options is the fair market value of the Common Stock on the
date of the restorative grant. Restorative options may be exercised six months
from the date of grant through
14
<PAGE>
the end of the original ten-year term. The opportunity to receive a
restorative option is limited to one restorative grant per year attributable
to any single, original stock option grant.
Under the First Chicago NBD Stock Performance Plan, Mr. Istock received
35,640 performance shares and 106,920 stock options in February 1998. The
number of shares granted reflected above-median award levels within the First
Chicago NBD peer group as well as the predecessor committee's subjective
assessment of Mr. Istock's past performance and expected future contribution
to First Chicago NBD's success. As a result of the Merger and the applicable
change in control provisions, vesting restrictions on all First Chicago NBD
stock incentive awards expired, including all unvested stock incentives
pertaining to Mr. Istock and all other executive officers. Specifically, all
outstanding restricted stock awards vested, all outstanding performance share
awards became payable at the maximum level and all outstanding stock options
vested and became immediately exercisable.
In 1998, the predecessor BANC ONE committee provided long-term incentive
awards in the form of stock options and restricted shares. Target stock
incentive award guidelines were established for each executive grade level
based on competitive practices within BANC ONE's peer group and the financial
industry. In general, stock options granted to executive officers in 1998 vest
in three equal installments at the end of the second, third and fourth year of
the option term. Restricted shares granted to executive officers in 1998 vest
in two equal installments on the third and sixth anniversaries of the grant.
During the restricted period, the recipients receive cash dividends and have
voting rights on these shares.
In 1998, the BANC ONE committee made stock option awards to Mr. McCoy based
on a subjective evaluation of BANC ONE's performance, similar awards granted
by the BANC ONE peer group and BANC ONE's past grant practices. As a result,
in 1998 Mr. McCoy received a total of 165,126 non-qualified stock options.
In early 1997, the predecessor BANC ONE committee established a matrix of
specific earnings growth per share ("EPS Growth") and ROA performance levels
as the determining mechanism for 1998 restricted stock awards to Messrs. McCoy
and Lehmann. The matrix included threshold or minimum performance levels,
achievement of which was required for any restricted stock awards to be
granted to these individuals. Target restricted stock award levels for each
participant were also fixed by the predecessor BANC ONE committee at the
beginning of the performance period. Award opportunities were provided as a
percentage of the target award based upon achievement of specific EPS Growth
and ROA performance levels as set forth in the matrix. In 1997, BANC ONE did
not meet its minimum performance threshold. As a result, neither Messrs. McCoy
nor Lehmann received a restricted stock award in 1998. However, the
predecessor BANC ONE committee felt that shareholder value was significantly
enhanced in 1997 by the overall financial results and other activities under
the leadership of Mr. McCoy and Mr. Lehmann that were not reflected in BANC
ONE's earnings. Therefore, in 1998 BANC ONE made deferred compensation awards
to Messrs. McCoy and Lehmann of $3,528,800 and $1,500,000, respectively. The
deferred compensation awards are subject to a three-year vesting requirement
and are payable after termination of employment.
In 1996, BANC ONE made three-year performance stock award grants pursuant to
BANC ONE's Stock Incentive Plan. These grants were designed to foster
management continuity during a critical period (1996-1998). Participation was
limited to those senior executives who were expected to make essential
contributions to the organization over the performance period, and included 39
participants on December 31, 1998. Participants' awards were based on a pre-
established scale of compounded EPS Growth for BANC ONE over the performance
period and expressed as a percentage of each participant's target award.
Following the completion of the performance period, the Committee concluded
that awards would be paid at 100% of each participant's target based on the
pre-established scale and the Corporation's EPS Growth for the performance
period, adjusted for non-recurring gains and merger-related, restructuring and
other charges in 1998. Without these adjustments, no awards would have been
payable. Award payments were made in the form of restricted shares of Common
Stock with a six-month vesting period.
Other Compensation
In 1994, BANC ONE introduced a "Split Dollar" life insurance plan covering,
among others, the executive officers. Under this plan, which replaced the
employee group term life insurance plan for covered officers, BANC ONE will be
reimbursed for its contributions to premium cost from each policy's cash value
or death benefit.
15
<PAGE>
Stock Ownership Guidelines
Consistent with the importance of long-term, stock-based incentives and to
further ensure that the interests of senior managers are in line with those of
stockholders, the Committee established formal stock ownership guidelines for
executive management. These guidelines apply to all executive officers and
require stock ownership ranging from four to six times the executive's base
salary. Executive officers are expected to reach the ownership target within
five years.
Conclusion
Through the new and revised plans for 1999, a majority of the Corporation's
executive compensation is linked directly to long-term share price
appreciation and other appropriate corporate and individual performance
measures. The Committee will continue to review all elements of executive
compensation to ensure that they continue to meet the Corporation's business
objectives.
Respectfully submitted,
The Organization, Compensation and
Nominating Committee
John R. Hall, Chairman
James S. Crown
Bennett Dorrance
Maureen A. Fay, O.P.
John W. Kessler
Richard A. Manoogian
16
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total return on the
Corporation's Common Stock with the Standard & Poor's 500 Index (the "S&P 500
Index") and the Standard & Poor's Bank Composite Index ("S&P Bank Composite
Index"). The S&P 500 Index and the S&P Bank Composite Index are market-
capitalization-weighted indices, meaning that companies with a higher market
value count more in each index. The S&P Bank Composite Index is comprised of
the larger "Major Regional" and "Money Center" banks selected by Standard &
Poor's. As of December 31, 1998, the S&P Bank Composite Index included 25
Major Regional and five Money Center banks and bank holding companies. Each of
these indices includes the Corporation's Common Stock. The values in the graph
show the relative performance of a $100 investment made on December 31, 1993,
in the Corporation's Common Stock, the S&P 500 Index and S&P Bank Composite
Index.
Comparison of Five Year Cumulative Total Return(/1/)
Among the Corporation, S&P 500 Index and S&P Bank Composite Index.(/2/)
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
Corporation 100 74 115 149 195 207
S&P 500 100 101 139 171 228 293
S&P Bank
Composite 100 95 151 214 308 329
</TABLE>
- -------
(1) Assumes $100 invested at December 31, 1993, with quarterly reinvestment of
dividends.
(2) At December 31 in each year.
17
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
Executive Officer Compensation Table
The following table sets forth the compensation paid, earned or awarded for
the years indicated therein, to the Corporation's chief executive officer and
its other four most highly compensated executive officers.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term Compensation
----------------------------------
Annual Compensation Awards Payouts
---------------------------- ----------------------- ----------
Other All
Annual Restricted Securities Other
Compen- Stock Underlying LTIP Compen-
Name and Principal Salary sation Awards Options/SARs Payouts sation
Position Year ($) Bonus ($) ($)(1) ($)(2) (#)(3) ($)(4) ($)(5)
------------------ ---- -------- ---------- -------- ---------- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John B. McCoy........... 1998 $995,000 $2,200,000 $366,075 $ 0 165,126 $1,828,474 $ 3,708,241
President and 1997 995,000 1,500,000 345,089 1,079,764 102,623 0 4,116,872
Chief Executive Officer 1996 995,000 1,250,000 334,769 1,017,897 119,370 0 116,217
Verne G. Istock......... 1998 818,270 1,750,000 177,091 0 333,567 0 13,806,873
Chairman of the Board 1997 796,797 1,100,000 131,153 0 281,615 657,628 35,856
1996 774,416 1,000,000 297,261 691,431 300,033 163,309 6,000
Richard J. Lehmann...... 1998 749,700 1,000,000 139,779 0 82,563 1,166,754 1,563,065
Vice Chairman of the 1997 717,500 900,000 74,472 619,715 61,573 0 3,023,866
Board 1996 700,000 625,000 125,381 613,416 67,340 0 21,844
David J. Vitale......... 1998 519,616 1,000,000 68,082 0 38,880 0 5,108,136
Vice Chairman of the 1997 499,615 675,000 61,967 0 99,377 711,425 11,241
Board 1996 481,580 650,000 45,521 0 156,656 516,520 14,822
Richard W. Vague........ 1998 689,575 870,000 80,472 1,011,500 90,211 0 2,400
Executive Vice President 1997(6) 333,769 419,344 2,509 2,295,616 440,000 0 2,388
and Head of Credit Card
</TABLE>
- -------
(1) This column includes the following:
<TABLE>
<CAPTION>
Name 1998 1997 1996
---- ------- ------- -------
<S> <C> <C> <C> <C>
John B. McCoy........... Personal use of company aircraft $24,244 $22,913 $33,694
Annual club dues 25,177 24,628 23,951
Verne G. Istock......... Moving expenses -- -- 98,642
Richard J. Lehmann...... Moving expenses 40,189 -- --
Personal use of company aircraft -- 24,713 --
One-time club initiation fees and annual club dues -- 21,445 76,390
Richard W. Vague........ Personal use of company aircraft 54,928 -- --
</TABLE>
(2) As of December 31, 1998, the total number of outstanding restricted shares
and the value of the shares (based upon the $51.0625 per share closing
price) were as follows:
<TABLE>
<CAPTION>
Name Shares Value
---- ------ ----------
<S> <C> <C>
John B. McCoy.......................................... 86,152 $4,399,137
Verne G. Istock........................................ 0 0
Richard J. Lehmann..................................... 57,338 2,927,822
David J. Vitale........................................ 0 0
Richard W. Vague....................................... 67,001 3,421,239
</TABLE>
Dividends on these shares are payable in cash.
In February 1996, Mr. Istock received 28,814 restricted shares of First
Chicago NBD common stock in connection with the modification of certain
prior awards of performance shares originally granted by NBD in 1993
through 1995. These shares vested on December 31, 1996, 1997 and 1998 in
the following amounts: 10,851; 12,798; and 5,165. As a result of the Merger
and the applicable change in control provisions, the 5,165 restricted
shares that would have vested on December 31, 1998, vested as of the
effective date of the Merger.
18
<PAGE>
(3) For Messrs. Istock and Vitale, the number of stock options listed in this
column represents the sum of new and restorative stock options granted
during the year. The number of new stock options granted to Messrs. Istock
and Vitale were as follows:
<TABLE>
<CAPTION>
Name 1998 1997 1996
---- ------- ------- -------
<S> <C> <C> <C>
Verne G. Istock.................................. 106,920 170,100 162,000
David J. Vitale.................................. 38,880 48,600 58,320
</TABLE>
For a description of restorative stock options, see the Organization,
Compensation and Nominating Committee Report on Executive Compensation (the
"Committee Report") contained herein and footnote (2) to the "Options/SAR
Grants in Last Fiscal Year" table on page 20.
(4) The dollar values equal the market value of the Common Stock on the date
the payouts of performance share awards were effective. See the discussion
included in the Committee Report on page 15.
(5) This column consists of the following:
a. Deferred Compensation Awards to Messrs. McCoy and Lehmann for 1998 in
the amounts of $3,528,800 and $1,500,000; and Special Recognition Awards
for 1997 in the amounts of $4,000,000 and $3,000,000, respectively. The
1998 awards are described in the Committee Report on page 15. The 1997
awards recognize the outstanding and significant contributions of BANC
ONE's executive management and their extraordinary contributions towards
BANC ONE's restructuring efforts.
b. Payment of shares of Common Stock to Messrs. Istock and Vitale pursuant
to performance share awards outstanding at the time of the Merger. Based
upon the market value of the Common Stock on the effective date of the
Merger, the values of the shares of Common Stock paid to Messrs. Istock
and Vitale were $13,769,667 and $5,096,445. Under applicable change in
control provisions, outstanding awards became payable as a result of the
Merger at the maximum level.
c. The values of split-dollar life insurance arrangements in the amount of
$104,591 and $13,574 for 1998; $106,872 and $13,866 for 1997; and $108,439
and $14,066 for 1996 for Messrs. McCoy and Lehmann, respectively. The
split dollar life insurance program is structured so that all premium
payments are returned to the Corporation at the later of (i) the executive
attaining age 65 or (ii) the expiration of 15 policy years. In addition to
the executive split-dollar policies, Mr. McCoy is covered by a split-
dollar arrangement that insures the lives of Mr. McCoy and his wife, the
value of which is included above.
d. Employer matching contributions in the following amounts to the 401(k)
and supplemental 401(k) plans in which the named executive officers
participated.
<TABLE>
<CAPTION>
1998 1997 1996
------- ------- ------
<S> <C> <C> <C>
John B. McCoy...................................... $74,850 $10,000 $7,778
Verne G. Istock.................................... 37,206 35,856 6,000
Richard J. Lehmann................................. 49,491 10,000 7,778
David J. Vitale.................................... 11,691 11,241 14,822
Richard W. Vague................................... 2,400 2,388 --
</TABLE>
(6) Mr. Vague's employment with BANC ONE began on June 27, 1997, upon the
acquisition of First USA, Inc. ("First USA") by BANC ONE. Amounts
disclosed for 1997 reflect compensation earned or awarded on or after that
date.
19
<PAGE>
Option Grants Table
The following table provides information on stock options granted in 1998 to
the executive officers named in the Summary Compensation Table. In 1998, First
Chicago NBD granted both new and restorative non-qualified stock options
("NQSOs"), and BANC ONE granted both NQSOs and incentive stock options
("ISOs"). All options granted to the named executive officers were NQSOs
except for 1,680 ISOs granted to Mr. Vague. No stock appreciation rights
("SARs") were granted, and BANC ONE did not grant restorative options.
Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants
----------------------------------------------------
Number of Percent of Total
Securities Options/SARs
Underlying Granted to Grant Date
Options/ Employees in Exercise or Present
SARs Granted Fiscal Year Base Price Expiration Value ($)
Name (#) (1)(2) (3) ($/Sh) Date (4)
---- ------------ ---------------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
John B. McCoy........... 165,126 1.86% $59.50 05/01/2018 $2,775,768
Verne G. Istock......... 106,920 1.20 48.93 02/13/2008 1,901,038
12,215 0.14 46.24 03/13/1998 49,349
15,324 0.17 46.24 06/29/2000 144,812
21,088 0.24 46.24 06/15/2002 266,341
24,569 0.28 46.24 06/20/2004 367,307
29,194 0.33 46.24 03/08/2006 474,986
24,106 0.27 56.00 03/08/2006 461,871
37,774 0.42 56.00 02/14/2007 755,480
13,819 0.16 51.27 06/29/2000 123,542
19,017 0.21 51.27 06/15/2002 242,086
29,541 0.33 51.27 06/20/2004 454,931
Richard J. Lehmann...... 82,563 0.93 59.50 05/01/2018 1,387,884
David J. Vitale......... 38,880 0.44 48.93 02/13/2008 691,286
Richard W. Vague........ 1,680 0.02 59.50 05/01/2008 27,334
88,531 1.00 59.50 05/01/2018 1,488,206
</TABLE>
- -------
(1) For Mr. Istock, the first line denotes new grants made by First Chicago
NBD; all other grants to Mr. Istock were restorative options. One-third of
each new option grant by First Chicago NBD was to become exercisable on
the first, second and third anniversaries of the grant date, which was
February 13, 1998. However, as a result of the Merger and applicable
change in control provisions, all options granted in 1998 to Messrs.
Istock and Vitale vested and became exercisable upon the Merger.
The option grants to Messrs. McCoy and Lehmann become exercisable in three
equal installments on the second, third and fourth anniversaries of the
grant date, which was May 1, 1998. The option grants to Mr. Vague become
exercisable as follows: one-fifth on the grant date, May 1, 1998, and one-
fifth on each of the first four anniversaries of the grant date.
(2) Restorative Option Feature: The new stock options granted by First Chicago
NBD in 1998, 1997 and 1996 and the new stock options granted by First
Chicago or NBD that were outstanding at the time of the Merger include a
feature which provides for the issuance of restorative options. The
restorative feature allows a participant who exercises a stock option
during the participant's employment, and who pays all or a part of the
exercise price of a stock option with shares of Common Stock held by the
participant for at least six months, to receive a restorative option to
purchase the number of shares of Common Stock equal to the number of whole
shares used by the participant in payment of the stock option's exercise
price. Restorative options become exercisable six months after the date of
grant. However, all restorative stock options outstanding at the time of
the Merger became immediately exercisable. The expiration date of a
restorative option is the expiration date of the original stock option to
which it relates, and the exercise price is not less than 100% of the fair
market value of the Common Stock on the date the restorative option is
granted.
Under the restorative feature of stock options issued by First Chicago,
additional restorative options are granted with respect to shares exchanged
to pay tax withholding obligations related to the option exercise; the
market price of the Common Stock must be at least 25% higher than the
exercise price of the outstanding stock option at the time of exercise of
the new stock option; and a restorative stock option will not be granted
upon the exercise of a restorative stock option.
20
<PAGE>
(3) The percentages shown are based on total options granted in 1998 (both new
and restorative options) on 8,895,859 shares of Common Stock.
(4) The grant date present values were determined using the Black-Scholes
standard option pricing model based on the following assumptions:
<TABLE>
<CAPTION>
Dividend Risk free
Option Type Vesting Duration Yield Volatility Rate of Return
----------- ------- -------- -------- ---------- --------------
<S> <C> <C> <C> <C> <C>
BANC ONE NQSOs 1/3 at 2, 3 and 4 years 20 years 3.56% 25.74% 5.65%
Vague ISOs 1/5 at 0, 1, 2, 3 and 4 years 10 years 3.56 25.74 5.65
Vague NQSOs 1/5 at 0, 1, 2, 3, and 4 years 20 years 3.56 25.74 5.65
FCNBD NQSOs 1/3 at 1, 2 and 3 years 10 years 2.02 26.10 5.57
FCNBD Restorative 6 months Remainder of
Options original term 2.02 26.70-28.62 5.23-5.70
</TABLE>
No adjustments were made in calculating the grant date present value of an
option to account for potential forfeiture or the non-transferable nature
of the option.
The actual value of the options will depend on the market value of the
Common Stock on the dates the options are exercised. No realization of
value from the options is possible without an increase in the price of the
Common Stock, which would benefit all stockholders.
1998 Option Exercises and Year-End Option Value Table
The following table provides information on options exercised in 1998 by the
executive officers named in the Summary Compensation Table, the number of
unexercised options held at December 31, 1998, and the value of the
unexercised in-the-money options held as of that date. No SARs were
outstanding at any time during 1998.
Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values
<TABLE>
<CAPTION>
Number of Securities
Shares Underlying Unexercised Value of Unexercised
Acquired Options/SARs In-the-Money Options/SARs
on Value at FY-End (#) at FY-End ($) (1)
Exercise Realized ------------------------- -------------------------
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
---- --------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John B. McCoy........... 0 $ 0 270,487 820,453 $ 7,502,040 $14,596,639
Verne G. Istock......... 302,635 4,079,951 447,213 0 3,950,853 0
Richard J. Lehmann...... 0 0 0 290,671 0 4,091,563
David J. Vitale......... 46,481 1,416,741 521,114 0 12,420,122 0
Richard W. Vague........ 1,045,000 40,623,761 426,395 468,170 12,100,676 2,292,021
</TABLE>
- -------
(1) The values are based on the $51.0625 per share closing price of the Common
Stock on December 31, 1998, less the exercise price of the options.
Long-Term Incentive Plans--Awards in Last Fiscal Year Table
The following table provides information on performance share awards made by
First Chicago NBD in 1998 to Messrs. Istock and Vitale.
Long-Term Incentive Plans--Awards in Last Fiscal Year
<TABLE>
<CAPTION>
Estimated Future
Performance
Share Payouts Under Non-
Performance Stock
Number of or Other Price-Based Plans
Performance Period Until ------------------------
Shares Maturation or Threshold Target Maximum
Name (#) (1) Payout (2) (#) (#) (#)
---- ----------- ------------- --------- ------ -------
<S> <C> <C> <C> <C> <C>
Verne G. Istock............. 35,640 1998-2001 0 35,640 53,460
David J. Vitale............. 12,960 1998-2001 0 12,960 19,440
</TABLE>
- -------
(1) Each performance share awarded in 1998 consisted of one share of Common
Stock, contingently granted and earned by achievement of certain financial
goals. During the performance period, the shares were issued and
outstanding and the executive officer had the right to vote the shares and
to receive cash dividends.
21
<PAGE>
(2) The performance shares granted in 1998 provided for a four-year
performance period commencing January 1, 1998. At the end of this period,
the performance shares awarded were to be earned in a stated percentage of
the award which would range from 0% to 150% of the original share award.
The percentage earned was to be determined based on First Chicago NBD's
relative performance on two measures, return on equity and total
stockholder return, as compared with that of the peer banking institutions
for each year averaged for the four years in the performance period. As a
result of the Merger and applicable change in control provisions, all
performance shares granted in 1998 were paid at the maximum level.
Pension Plans
Prior to the Merger, BANC ONE and First Chicago NBD had established separate
pension plans for the benefit of their respective employees. Each of these
plans continues to be in effect and is described below. In addition, the
Corporation maintains separate pension plans for the employees, including Mr.
Vague, of First USA, which was acquired by BANC ONE in June 1997.
BANC ONE
Pension Plan
Prior to December 31, 1997, BANC ONE had a final average pay defined benefit
pension plan (the "Old Plan") for its employees. Contributions to the Old Plan
were determined on an actuarial basis for all employees as a group and not
individually. Through December 31, 1997, plan benefits were based upon a
percentage of final average compensation defined as the average of the highest
consecutive five years of eligible compensation (as described below) out of
the last ten full plan years, multiplied by the employee's years of credited
service, to a maximum of 35 years. The eligible compensation for each employee
under the Old Plan equaled base salary, plus 50% of bonuses, overtime,
commissions, shift differential and incentive pay paid to each such person,
including executive officers, covered by the Old Plan.
Effective January 1, 1998, BANC ONE adopted the Cash Balance Plan. Under the
terms of the Cash Balance Plan, a separate "account" is maintained for each
employee participating in the plan. Each year, credits of from 3% to 9% of the
participant's covered compensation for that year are made to an account for
the participant. Covered compensation includes base pay, any performance-based
bonuses, commissions or other incentive pay, overtime and shift differential
(up to a Code-imposed maximum of $160,000). The pay credits vary depending
upon the participant's age and years of service, as shown in the following
schedule:
<TABLE>
<CAPTION>
Pay
Age + Years of Service Credits
---------------------- -------
<S> <C>
0 to 34..................................... 3.0%
35 to 44..................................... 3.5%
45 to 54..................................... 4.5%
55 to 64..................................... 6.0%
65 to 74..................................... 7.5%
75 +......................................... 9.0%
</TABLE>
Interest is credited to participants' accounts at a rate equal to the one-
year U.S. Treasury bill rate (subject to a minimum rate of 4.5% per annum). In
addition, the Cash Balance Plan provides certain special additional credits
for the accounts of participants who had at least five years of service and
who were age 45 or older as of January 1, 1998. At the time of normal or early
retirement, the accumulated account value of the participant is converted into
one of several available forms of lifetime annuities.
The following table provides the estimated annual benefits payable for life,
beginning at normal retirement age (65), for Messrs. McCoy and Lehmann based
on years of service through December 31, 1998, and with projected interest
credits on cash balances estimated at a rate of 5.5% per annum.
<TABLE>
<CAPTION>
Year of Estimated
Name 65th Birthday Annual Benefit
---------------- ------------- --------------
<S> <C> <C>
John B. McCoy................................ 2008 $130,000
Richard J. Lehmann........................... 2009 66,615
</TABLE>
22
<PAGE>
The Internal Revenue Code currently limits the maximum annual benefit
payable under the Cash Balance Plan to $130,000. BANC ONE established an
unfunded non-qualified pension plan, known as the Cash Balance Restoration
Plan, to provide retirement benefits which would have been provided under the
normal formulas of the Cash Balance Plan but for the limitations established
under the Code. Participants in the BANC ONE Supplemental Executive Retirement
Plan (including Messrs. McCoy and Lehmann) are not eligible to participate in
the Cash Balance Restoration Plan.
Supplemental Executive Retirement Plan
Effective January 1, 1998, BANC ONE adopted a Supplemental Executive
Retirement Plan ("SERP") which provides benefits to certain executives who
have attained age 55 and completed 10 or more years of service at the time of
termination of employment or death. The SERP generally provides retirement
benefits at age 65 equal to 60% (reduced for less than 30 years of service) of
an executive's average compensation during his or her last five full years of
employment. For each full year of employment prior to 1998, compensation will
be calculated using the definition set forth in the Old Plan; for 1998 and
years subsequent to 1998, compensation will be calculated using the definition
set forth in the Cash Balance Plan. Payments under the SERP are reduced by
other sources of retirement income, including benefits under the Cash Balance
Plan and Social Security. Lesser benefits are available in the event of
termination prior to age 65.
The SERP provides that an eligible employee may retire prior to age 65 with
full benefits under the SERP, provided that such employee has total age and
years of service equal to or exceeding 85 at retirement. Eligibility for this
benefit is limited to participants having a base salary of $250,000 or more as
of January 1, 1997, and is contingent upon the employee's execution of and
compliance with a non-competition agreement.
The SERP provides for payment of benefits to be made in the form of a single
lump sum or as annuity payments. SERP participants employed at BANC ONE on
January 1, 1998, will receive the greater of the benefit provided by the SERP
or the benefit that would have been provided by the Old Plan prior to the
adoption of the Cash Balance Plan, ignoring limitations established under the
Code.
The following table illustrates the approximate maximum annual benefits
payable to a participant under the SERP at various levels of final average
compensation and years of service, assuming continuation of the SERP and
retirement at age 65:
<TABLE>
<CAPTION>
Credited Years of Service at Age 65 (2) (3) (4)
----------------------------------------------------------------
Final Average Compensation
(1) 10 yrs. 15 yrs. 20 yrs. 25 yrs. 30 yrs. 35 yrs.
- -------------------------- --------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
$1,500,000............ $ 283,900 $ 433,900 $ 583,900 $ 733,900 $ 883,900 $ 932,700
1,750,000............ 333,900 508,900 683,900 858,900 1,033,900 1,089,300
2,000,000............ 383,900 583,900 783,900 983,900 1,183,900 1,245,900
2,500,000............ 483,900 733,900 983,900 1,233,900 1,483,900 1,559,200
3,000,000............ 583,900 883,900 1,183,900 1,483,900 1,783,900 1,872,400
3,500,000............ 683,900 1,033,900 1,383,900 1,733,900 2,083,900 2,185,700
</TABLE>
- -------
(1) The current eligible compensation that would be used in calculating the
final average compensation for Messrs. McCoy and Lehmann is $2,739,665 and
$1,649,700.
(2) As of January 1, 1999, the credited years of service for Messrs. McCoy and
Lehmann were 32 and 29 years. For purposes of the SERP, the credited years
of service for Mr. Lehmann include his service with certain previous
employers.
(3) In 1998, annual benefits under the Cash Balance Plan were limited by the
Code to a maximum benefit of $130,000, and covered compensation to
$160,000. The benefit amount in excess of such limitations will be paid
through the SERP.
(4) Benefits set forth in the table are straight life annuity amounts and are
not subject to deductions for Social Security or other offset amounts and
include benefits payable under the Cash Balance Plan.
23
<PAGE>
First Chicago NBD
Personal Pension Account Plan
In general, salaried employees and regular hourly employees (scheduled to
work at least 20 hours per week) of designated subsidiaries of First Chicago
NBD were eligible during 1998 to participate in First Chicago NBD's Personal
Pension Account Plan ("PPAP") upon both attaining age 21 and completing one
year of service. The PPAP provides that a participant is 100% vested after
completing five years of vesting service; however, all participants became
vested on October 2, 1998, under the PPAP's change in control provisions. The
PPAP became effective as of January 1, 1997, reflecting the merger of the
prior First Chicago and NBD pension plans, the provisions of which were
maintained as a minimum benefit entitlement for participants in the former
plans whose age plus service (with a minimum of five years) as of December 31,
1996, equaled or exceeded 65.
After becoming eligible to participate in the PPAP, an employee's PPAP
account is credited with a percentage of the employee's covered compensation
for the month, as reflected in the following chart. Covered compensation
includes base pay, commissions, overtime, shift differential, and certain
amounts deducted on a pre-tax basis, plus the employee's annual management
incentive award (up to 50% of annual salary at the time of the award).
<TABLE>
<CAPTION>
Completed Anniversary Years
of Service Percent of Eligible Monthly Pay
For PPAP Contributions Credited to PPAP Account
--------------------------- -------------------------------
<S> <C>
1- 4................... 3.0%
5- 9................... 4.0
10-14................... 5.5
15-19................... 7.0
20-24................... 9.0
25-34................... 12.0
35-39................... 7.0
40+..................... 0.0
</TABLE>
Also at the end of each month, the participant's beginning account balance
is credited with interest for the month at a rate equal to the one-year U.S.
Treasury bill rate plus 1% (subject to a minimum rate of 5.33%). Interest
rates are determined on a quarterly basis.
Generally, an employee who has attained age 65 (with a minimum of five years
of vesting service) is entitled to receive annual retirement income (in
monthly installments) for life equal to the actuarial equivalent of the
employee's balance. Participants may commence a reduced annuity benefit at any
earlier age after separation from service, and (with spousal consent) may
elect a lump sum payment of their PPAP account balance.
Supplemental Personal Pension Account Plan
First Chicago NBD's Supplemental Personal Pension Account Plan
("Supplemental PPAP") was adopted to permit the payment of supplemental
benefits to employees whose annual benefits upon retirement under the PPAP
would exceed those permitted by the Internal Revenue Code. The Supplemental
PPAP provides that if the amount of the annual retirement benefit that would
otherwise be payable under the PPAP to a person who has completed five or more
years of vesting service is limited by reason of compliance with the Code,
such person shall be entitled to a supplemental benefit equal to the
difference between the benefit such person receives under the PPAP and the
benefit such person would have received if such limitation had not been
included. The benefit is payable from the general assets of the Corporation.
Estimated Annual Benefits Payable to Executive Officers
The following table provides the estimated annual benefits (including any
Supplemental PPAP benefits) payable for life, beginning at normal retirement
age (65), for Messrs. Istock and Vitale based on years of service through
December 31, 1998, and with projected interest credits on cash balances
estimated at a rate of 5.53% per annum.
<TABLE>
<CAPTION>
Year of Estimated
Name 65th Birthday Annual Benefit
---------------- ------------- --------------
<S> <C> <C>
Verne G. Istock.............................. 2005 $795,220
David J. Vitale.............................. 2011 524,091
</TABLE>
24
<PAGE>
First USA
The Corporation maintains a noncontributory, tax qualified defined benefit,
"cash balance" retirement plan (the "First USA Pension Plan") that provides
retirement benefits for participating employees. Each year, each participant's
cash balance account is credited with an amount equal to 4% of the
participant's covered compensation. Covered compensation includes base pay,
bonuses, incentive pay, overtime pay and commissions. Interest on account
balances is credited to participants' accounts at a rate of 5% per annum. Each
participant becomes vested in benefits under the First USA Pension Plan after
5 years of employment. Benefits may be paid under the First USA Pension Plan,
subject to limitations and conditions imposed by the Internal Revenue Code,
upon a participant's termination of employment, retirement (early, normal or
late) or death. The First USA Pension Plan specifies various options that
participants may select for the distribution of their accrued balance,
including forms of annuity payments and lump sum distributions.
First USA Supplemental Executive Retirement Plan. The First USA Supplemental
Executive Retirement Plan (the "First USA SERP") operates in conjunction with
the First USA Pension Plan to provide eligible employees with benefits that
cannot be provided under the terms and conditions of the First USA Pension
Plan due to Code limitations on the amount of compensation that may be
considered under the First USA Pension Plan and Code limitations on the annual
benefits that may be provided under the First USA Pension Plan. The estimated
aggregate annual benefit under the First USA Pension Plan and the First USA
SERP payable for life to Mr. Vague, beginning at normal retirement age (65),
based on years of service through December 31, 1998, and with projected
interest credits on cash balances at a rate of 5% per annum, is $138,082.
Management Security Plan. The Management Security Plan (the "MSP") provides
supplemental retirement income benefits to members of First USA's management
previously selected by the Board of Directors of First USA. The MSP is an
unfunded plan and is not designed as a tax-qualified plan. Individuals
selected to participate in the MSP are eligible to receive a supplemental
monthly retirement allowance in the amount of 100% of final compensation
payable for 12 months, and 50% of final compensation payable for the next 108
months, commencing at age 65. Final compensation for this purpose is base
salary for the most recently completed calendar year. In addition, a death
benefit is provided under the MSP in an amount equal to the actuarial
equivalent of an eligible employee's accrued benefit under the MSP at the time
of the employee's death. As of December 31, 1998, the annual benefit payable
to Mr. Vague (assuming he continues to work to age 65 at the same rate of
compensation) under the MSP is $689,575 in the first year and $344,788 in each
of the next nine years.
Change of Control and Employment Agreements
Change of control severance agreements are in effect between the Corporation
and certain key executives (including Messrs. Istock and Vitale). These
executive change of control agreements (the "Change of Control Agreements")
provide, generally, that if an executive officer terminates his employment for
any reason during the 30-day period which begins one year after a Change of
Control (as defined) or if, during the three years following a Change of
Control, the executive's employment is terminated (other than for cause as
defined or due to death or disability) or the executive terminates employment
for good reason (as defined), the executive will be entitled to receive a
severance payment consisting of: (a) the executive's base salary through the
date of termination, (b) a proportionate bonus based upon the average bonus
paid to the executive with respect to the three fiscal years prior to the date
of the Change of Control (the "Average Bonus"), (c) two and one-half times the
sum of the executive's base salary and the Average Bonus, and (d) unpaid
deferred compensation and vacation pay. The Merger constituted a Change of
Control of First Chicago NBD. In addition to the severance payment, upon a
covered termination, the executive will also be entitled to a payment having
an actuarial present value equal to the additional pension benefits under
First Chicago NBD's qualified and supplemental retirement plans that the
executive would have received had the executive remained employed for 30
months after the date of termination. The Corporation will also provide the
executive with continued medical and welfare benefits coverage for 30 months
after the date of termination and with outplacement services. If any amounts
payable to an executive under the Change of Control Agreements or otherwise
would subject such executive to the excise tax under section 4999 of the Code,
the Corporation will make a payment to the executive such that after the
payment of all income and excise taxes, the executive will be in the same
after-tax position as if no excise tax under section 4999 had been imposed,
provided that, if such payments (excluding additional amounts payable due to
the excise tax) are not at least $50,000 in excess of the greatest amount that
could be paid without giving rise
25
<PAGE>
to the excise tax, no additional payments will be made with respect to the
excise tax, and the payments otherwise due to the executive will be reduced to
an amount necessary to prevent the application of the excise tax.
The Corporation and Mr. Lehmann are parties to an agreement relating to Mr.
Lehmann's benefits under the Old Plan and the SERP, the terms of which were
originally set forth in an agreement (the "VNB Agreement") between Mr. Lehmann
and Valley National Bank of Arizona (now Bank One, Arizona, N.A.). The
agreement provides that, consistent with the VNB Agreement, Mr. Lehmann's
retirement benefits under the Old Plan will be the greater benefit as between:
(a) the sum of (i) the frozen accrued benefit under the Retirement Plan for
Employees of the Valley National Bank of Arizona plus (ii) the benefit accrued
under the Old Plan, recognizing credited service from and after January 1,
1994; or (b) the benefit accrued under the Old Plan recognizing credited
service for all eligible periods of employment. Eligible periods of employment
include his employment with the Corporation, Valley National Bank of Arizona
and Citigroup, Inc., Mr. Lehmann's former employer. Mr. Lehmann's benefits
under the SERP will, consistent with the VNB Agreement, be calculated using
credited service for all eligible periods of employment, less the amount
payable under the Old Plan as calculated in the preceding sentence, and offset
by the actual retirement benefits to be received under the retirement plan(s)
of Citigroup, Inc. Under certain circumstances, Mr. Lehmann will, consistent
with the VNB Agreement, be entitled to receive the greater of the benefit
described in the preceding sentence or the benefit calculated and payable
under the Valley National Supplemental Retirement Plan. If Mr. Lehmann's
employment is terminated due to death or retirement or is terminated by the
Corporation for any reason other than gross negligence or malfeasance, Mr.
Lehmann will be fully vested in the benefits described in the VNB Agreement.
The estimated annual benefit payable to Mr. Lehmann pursuant to the VNB
Agreement upon retirement at age 65 is $1,021,451, reduced by the annual
retirement benefits received by Mr. Lehmann under the Citigroup, Inc.
retirement plan(s).
Mr. Vague and BANC ONE entered into an employment agreement in June 1997 in
anticipation of BANC ONE's acquisition of Mr. Vague's employer, First USA. The
agreement provides that during the employment period, which will end on June
27, 1999, Mr. Vague will be entitled to annual salary, bonus and long-term
compensation consistent with past practices (as defined) of First USA, and to
participate in savings and retirement plans and welfare benefit plans and to
receive other perquisites and personal benefits on a basis no less favorable
than that applicable to peer executives of the Corporation. The agreement also
provided that Mr. Vague would receive options to purchase 300,000 shares of
the Corporation's Common Stock and 45,455 restricted shares, in addition to
any other stock-based awards that he would receive after the date of the
agreement at the time the Corporation made such awards to its other
executives. These stock options will vest on December 31, 2000, and have an
exercise price equal to the market price on the date of grant. The restricted
shares vest on December 31, 2001, but the number of shares that will vest will
be reduced if certain specified earnings hurdles for the credit card business
are not met. Restricted shares that do not vest in 2001 as a result of
reductions for earnings hurdles will vest on December 31, 2006. The agreement
includes a non-competition provision, which, as defined, applies to Mr. Vague
for one year following his termination of employment. If Mr. Vague's
employment is terminated (other than for cause as defined or due to death or
disability) or if Mr. Vague terminates his employment for good reason (as
defined), Mr. Vague will be entitled to a severance payment equal to Mr.
Vague's annual base salary and bonus for the preceding fiscal year prorated
for the remainder of the term of the employment period, or the non-compete
period, if it extends beyond the date of the employment period. In addition,
the stock-based awards granted pursuant to the agreement will be immediately
vested, and Mr. Vague will be entitled to welfare and other benefits as if he
retired at the end of the term of the agreement.
TRANSACTIONS WITH DIRECTORS, EXECUTIVE OFFICERS, STOCKHOLDERS AND ASSOCIATES
Directors and executive officers of the Corporation and their associates
were customers of, or had transactions with, the Corporation or the
Corporation's banking or other subsidiaries in the ordinary course of business
during 1998. Additional transactions may be expected to take place in the
future. All outstanding loans to directors, executive officers and their
associates, commitments and sales, purchases and placements of investment
securities and other financial instruments included in such transactions, were
made in the ordinary course of business, on substantially the same terms,
including interest rates and collateral, where applicable, as those prevailing
at the time for comparable transactions with other persons, and, except for
the loan described beginning on page 7, did not involve more than normal risk
of collectibility or present other unfavorable features.
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<PAGE>
All other transactions described below were entered into in the ordinary
course of business and on substantially the same terms as those prevailing at
the time for comparable transactions with other persons.
During 1998, subsidiaries of the Corporation paid approximately $166,000 for
rent and incidental services pursuant to leases for office space to two real
estate partnerships in which REI Investments, Inc. has indirect ownership
interests. In 1998, a subsidiary of the Corporation entered into a lease
agreement with REI Investments, Inc., to lease real property for a term of ten
years commencing March 1, 1999, at an annualized rent of approximately
$2,400,000. Thomas E. Reilly, Jr., a director of the Corporation, is a
director of and has an indirect equity ownership interest in REI Investments,
Inc.
Alex Shumate, a director of the Corporation, is Office Managing Partner of
the Columbus, Ohio, office of Squire, Sanders & Dempsey LLP. The Corporation
and its subsidiaries retained Squire, Sanders & Dempsey for legal services in
1998 and will utilize the law firm in 1999. Payments to Squire, Sanders &
Dempsey by the Corporation and its affiliates in 1998 did not exceed 5% of the
law firm's gross revenues for the year and were comparable to payments that
would have been paid by the Corporation and its subsidiaries to non-affiliated
persons for similar services.
On January 22, 1998, John C. Tolleson, a director of the Corporation, sold
2,800,000 shares of BANC ONE common stock to BANC ONE for an aggregate amount
of approximately $146,300,000. The shares were acquired by Mr. Tolleson on
various dates at an average cost basis of $36.04 per share. The per share
purchase price paid by BANC ONE was equal to the closing price of a share of
common stock of BANC ONE on the New York Stock Exchange as of the day of
purchase, less $0.50.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Arthur Andersen LLP ("Andersen") to
serve as the Corporation's independent public accountants. Representatives of
Andersen will be present at the Annual Meeting to make a statement if they
desire to do so and to respond to appropriate questions.
Prior to the Merger, BANC ONE had engaged Coopers & Lybrand, LLP, now
PricewaterhouseCoopers LLP ("PwC"), as its independent public accountant while
First Chicago NBD had engaged Andersen. In anticipation of the Merger, a
process was initiated to select the independent public accountant for the
merged entity. Selection of Andersen as the independent public accountant was
recommended to the BANC ONE Audit Committee on July 20, 1998. The BANC ONE
Audit Committee approved the selection and so reported to the BANC ONE Board
of Directors on July 21, 1998, and PwC was notified that, effective
immediately, the firm would no longer be engaged as independent public
accountant.
The PwC audit reports on the consolidated financial statements of BANC ONE
for the years ended December 31, 1996 and 1997, respectively, did not contain
an adverse opinion or disclaimer of opinion and were not qualified or modified
as to uncertainty, audit scope or accounting principles. During the two fiscal
years ended December 31, 1997, and the interim period preceding the change of
independent accountants, there were no disagreements between BANC ONE and PwC
on any matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedures, which disagreements, if not
resolved to the satisfaction of PwC, would have caused it to make reference to
the subject matter of the disagreement in connection with its report. Further,
PwC did not advise BANC ONE of any reportable events during the aforementioned
time period.
SUBMISSION OF STOCKHOLDER PROPOSALS
Any proposal that a holder of Common Stock intends to present at next year's
Annual Meeting of Stockholders must be received by the Corporation, at the
address appearing on the first page of this proxy statement, no later than
December 8, 1999, in order to be included in the proxy statement and form of
proxy relating to that meeting.
27
<PAGE>
ANNUAL MEETING ADVANCE NOTICE REQUIREMENTS
The Corporation's Restated Certificate of Incorporation (the "Certificate")
and By-Laws (the "By-Laws") provide that stockholder nominations for election
as directors or proposals of other business may be made in compliance with
certain advance notice, informational and other applicable requirements. In
order to be considered, a stockholder's notice of director nomination or other
proposals must be delivered to or mailed and received by the Secretary of the
Corporation at One First National Plaza, Chicago, Illinois 60670 at least 60
but no more than 90 days prior to the anniversary date of the Corporation's
immediately preceding annual meeting; provided, however, that in the event the
annual meeting is more than 30 days before or 60 days after such anniversary
date, notice by the stockholder must be delivered not earlier than the close
of business on the 90th day prior to the annual meeting and not later than the
close of business on the later of the 60th day prior to such annual meeting or
the 10th day following the day on which public announcement of the date of
such meeting is first made by the Corporation. A shareholder's notice of
director nominations or other proposals must contain certain information
required by the Certificate and By-Laws. Copies of the Certificate and By-Laws
are available upon request made to the Secretary of the Corporation at the
above address. The requirements described above do not supersede the
requirements or conditions established by the Commission for shareholder
proposals to be included in the Corporation's proxy materials for a meeting of
stockholders.
OTHER MATTERS
As of the date of this proxy statement, the Board of Directors of the
Corporation does not know of any matters to be presented at the Annual Meeting
other than those specifically set forth in the Notice of Annual Meeting of
Stockholders. If other proper matters, however, should come before the Annual
Meeting or any adjournment thereof, the persons named in the enclosed proxy
intend to vote the shares represented by them in accordance with their best
judgment in respect to any such matters.
MISCELLANEOUS
The cost of soliciting proxies will be borne by the Corporation. The
solicitation will be primarily by mail. In addition to the use of the mail,
some of the officers, directors and regular employees of the Corporation and
its subsidiaries may solicit proxies by telephone, telegram or personal
interview without additional remuneration therefor. The Corporation intends to
reimburse banks, brokerage houses and other institutions, custodians, nominees
and fiduciaries for reasonable expenses in forwarding proxy material to their
principals. The Corporation has also made arrangements with Georgeson &
Company, Inc. to assist the Corporation in soliciting proxies from banks,
brokers and nominees and has agreed to pay approximately $20,000 plus expenses
for such services.
Stockholders are urged to sign and date the enclosed proxy and return it as
promptly as possible in the envelope enclosed for that purpose. Stockholders
of record can also give proxies by calling a toll-free telephone number or by
using the Internet. The telephone and Internet voting procedures are designed
to authenticate stockholders' identities, to allow stockholders to give their
voting instructions and to confirm that stockholders' instructions have been
recorded properly. The Corporation has been advised by counsel that the
procedures that have been put in place are consistent with the requirements of
applicable law. Specific instructions for stockholders of record who wish to
use the telephone or Internet voting procedures are included with the enclosed
proxy card.
Properly executed proxies will be voted in accordance with stockholders'
directions. If no directions are given, proxies will be voted for the election
of directors. The proxy does not affect the right to vote in person at the
Annual Meeting and may be revoked at any time prior to the voting at the
meeting by submitting a later dated proxy (including a proxy via telephone or
the Internet) or by giving written notice of such revocation to the Secretary
of the Corporation.
28
<PAGE>
The First Chicago Center, in which the Meeting will be held, offers special
access for people in wheelchairs and headsets for the hearing-impaired.
Stockholders who wish to arrange for either of these services are invited to
call (312) 732-3150 by Friday, May 14, 1999.
By order of the Board of
Directors,
March 30, 1999 Sherman I. Goldberg
Secretary
29
<PAGE>
BANK ONE CORPORATION
PROXY/VOTING INSTRUCTIONS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS, MAY 18, 1999
The undersigned hereby appoints Timothy P. Moen and Susan S. Moody and each
of them, as proxies, with full power of substitution, to represent the
undersigned and to vote all shares of stock of BANK ONE CORPORATION that the
undersigned is entitled to vote at the Annual Meeting of Stockholders of the
Corporation to be held on May 18, 1999, and any adjournments thereof, upon all
matters that may properly come before the Meeting. This proxy/instructions card
when properly executed will be voted in the manner specified by the undersigned
stockholder, but if no choice as to the manner of voting the proxy/instructions
card is specified, this proxy/instructions card will be voted FOR the election
of all nominees for director listed below.
This card also provides voting instructions for any shares held in the
Corporation's dividend reinvestment and stock purchase plan and to the trustees
of any 401(k) plan maintained by the Corporation or its subsidiaries for all
shares held by such trustees that the undersigned is entitled to vote.
Your vote for the election of the Directors may be indicated on the other
side. The nominees are 1. Bryan, 2. Buschmann, 3. Crown, 4. Dorrance, 5. Fay, 6.
Hall, 7. Istock, 8. Jackson, 9. Kessler, 10. Lehmann, 11. Manoogian, 12.
McCormick, 13. McCoy, 14. Reilly, 15. Rogers, 16. Shackelford, 17. Shumate, 18.
Stratton, 19. Tolleson, 20. Vitale and 21. Walter.
Please date and sign on the reverse side and return promptly in the
enclosed business reply envelope.
If you are a stockholder of record and do not sign and return a proxy, or
vote your shares over the telephone or the Internet, or attend the meeting and
vote by ballot, your shares cannot be voted. If your shares are held by the
trustees for a plan and your voting instructions are not timely received, the
trustees of the plan will cause your shares to be voted in the same manner and
proportion as the other shares of the plan for which timely instructions have
been received.
. FOLD AND DETACH HERE .
DIVIDEND DIRECT DEPOSIT
BANK ONE CORPORATION offers common stockholders the convenience of having
dividends electronically deposited without charge into their checking, savings
or money market account at most U.S. financial institutions. To obtain an
enrollment card, contact First Chicago Trust, a Division of Equiserve, at
1-888-764-5592.
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
Stockholders can increase their ownership in the Corporation without
brokerage commissions or service fees through the Dividend Reinvestment and
Stock Purchase Plan. For a prospectus and an enrollment card, contact First
Chicago Trust, a Division of Equiserve, at 1-888-764-5592.
<PAGE>
[X] Please mark your vote as in this example.
This proxy/voting instruction card, when properly executed, will be voted in
the manner specified, but if no choice is specified on this card, it will be
voted FOR the election of directors.
- --------------------------------------------------------------------------------
FOR WITHHELD
1. Election of Directors (see reverse) [_] [_]
Except vote withheld from the following nominee(s);
__________________________________________________________
- --------------------------------------------------------------------------------
The signer hereby revokes all proxies/instructions
heretofore given by the signer to vote at said
meeting or any adjournments thereof.
Please sign exactly as name appears hereon. Joint
owners should each sign. When signing as attorney,
executor, administrator, trustee or guardian,
please give full title as such.
__________________________________________________
__________________________________________________
SIGNATURE(S) DATE
- --------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
IMPORTANT: PLEASE VOTE AND SIGN YOUR
PROXY/INSTRUCTION CARD AND RETURN IT IN THE ENVELOPE PROVIDED
BANK ONE CORPORATION
Annual Meeting of Stockholders
May 18, 1999
9:30 A.M. (Chicago Time)
First Chicago Center
One First National Plaza
Chicago, Illinois
BANK ONE common stockholders can now vote their shares either over the telephone
or the Internet. This eliminates the need to return the proxy/instruction
card.
To vote your shares over the telephone or the Internet you must have your
proxy/instruction card and SSN available. The series of numbers that appear in
the box above must be used to access the system.
1. To vote over the telephone:
On a touch-tone telephone call 1-800-OK2-VOTE (1-800-652-8683) 24 hours a
day, 7 days a week.
2. To vote over the Internet:
Log on to the Internet and go to the website http://www.vote-by-net.com
Your vote over the telephone or the Internet authorizes the named proxies in the
same manner as if you marked, signed, dated and returned your proxy/instruction
card.
If you choose to vote your shares over the telephone or the Internet, there is
no need for you to mail back your proxy/instruction card.
<PAGE>
[PRICEWATERHOUSECOOPERS LOGO APPEARS HERE]
________________________________________________________________________________
PricewaterhouseCoopers LLP
100 East Broad Street
Suite 2100
Columbus, OH 43215-3671
Telephone (614) 225-8700
Facsimile (614) 224-1044
March 15, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Commissioners:
We have read the statements made by BANK ONE CORPORATION (copy attached), which
we understand will be filed with the Commission, pursuant to Schedule 14A - Item
9(d)(2) of the Company's proxy statement for the 1999 Annual Meeting of
Stockholders. We agree with the statements concerning our Firm in such proxy
statement.
Very truly yours,
/s/PricewaterhouseCoopers LLP
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Arthur Andersen LLP ("Andersen") to
serve as the Corporation's independent public accountants. Representatives of
Andersen will be present at the Annual Meeting to make a statement if they
desire to do so and to respond to appropriate questions.
Prior to the Merger, BANC ONE had engaged Coopers & Lybrand, LLP, now
PricewaterhouseCoopers LLP("PwC"), as its independent public accountant while
First Chicago NBD had engaged Andersen. In anticipation of the Merger, a process
was initiated to select the independent public accountant for the merged entity.
Selection of Andersen as the independent public accountant was recommended to
the BANC ONE Audit Committee on July 20, 1998. The BANC ONE Audit Committee
approved the selection and so reported to the BANC ONE Board of Directors on
July 21, 1998, and PwC was notified that, effective immediately, the firm would
no longer be engaged as independent public accountant.
The PwC audit reports on the consolidated financial statements of BANC ONE
for the years ended December 31, 1996 and 1997, respectively, did not contain an
adverse opinion or disclaimer of opinion and were not qualified or modified as
to uncertainty, audit scope or accounting principles. During the two fiscal
years ended December 31, 1997, and the interim period preceding the change of
independent accountants, there were no disagreements between BANC ONE and PwC on
any matter of accounting principles or practices, financial statement disclosure
or auditing scope or procedures, which disagreements, if not resolved to the
satisfaction of PwC, would have caused it to make reference to the subject
matter of the disagreement in connection with its report. Further, PwC did not
advise BANC ONE of any reportable events during the aforementioned time period.
