<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
THE CHASE MANHATTAN CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
THE CHASE MANHATTAN CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registrations statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
- ---------------
(1) Set forth the amount on which the filing fee is calculated and state
how it was determined.
<PAGE> 2
NOTICE OF 1995
ANNUAL MEETING
OF STOCKHOLDERS
AND PROXY
STATEMENT
Meeting Date: April 18, 1995
Mailing Date: March 10, 1995
The Chase Manhattan Corporation
1 Chase Manhattan Plaza
New York, New York 10081-0001
<PAGE> 3
THE CHASE MANHATTAN CORPORATION
1 Chase Manhattan Plaza
New York, New York 10081-0001
[LOGO]
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of The
Chase Manhattan Corporation to be held at the main office of the Corporation on
Tuesday, April 18, 1995 at 2:30 p.m. Further information about the meeting and
the nominees for election as Directors is in the formal Notice of the meeting
and Proxy Statement on the following pages.
It is important that your shares be represented at this meeting. Even if you
plan to attend this meeting, we hope that you will sign, date and return your
proxy promptly in the enclosed envelope. This will not limit your right to vote
in person or to attend the meeting.
A report of the voting at the meeting will be included in the Corporation's
report to stockholders for the first quarter of 1995.
Sincerely yours,
Thomas G. Labrecque
Chairman of the Board
March 10, 1995
<PAGE> 4
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 18, 1995
TO THE STOCKHOLDERS:
The Annual Meeting of Stockholders of The Chase Manhattan Corporation will be
held at the main office of the Corporation, 1 Chase Manhattan Plaza, New York,
New York, on Tuesday, April 18, 1995 at 2:30 p.m., for the following purposes:
Act upon resolutions proposed by the Board of Directors to
- elect six Directors
- approve the appointment of independent auditors for the current year
- approve the material terms of a proposed Annual Incentive Arrangement
- approve the material terms of a proposed Three-Year Incentive
Arrangement
Act upon resolutions, expected to be proposed by certain stockholders,
which are opposed by management, recommending or requesting that the Board of
Directors take action to
- reinstate the annual election of Directors
- provide for cumulative voting in the election of Directors
- prepare a report stating an official position on structural adjustment
programs and analyzing their impact on debtor countries
- withdraw the retirement plan for Directors with six years or more of
Board service
Transact such other business as may properly be brought before the meeting.
The close of business on February 21, 1995 has been fixed as the time as of
which holders of Common Stock of the Corporation entitled to notice of and to
vote at the meeting shall be determined.
RONALD C. MAYER
Secretary
March 10, 1995
<PAGE> 5
CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Proxy Statement........................................................ 1
Election of Directors............................................. 1
Board Meetings, Committees, Attendance, Fees and Retirement
Plan........................................................... 4
Stock Ownership................................................. 6
Executive Compensation.......................................... 8
Compensation Committee Report on Executive Compensation......... 11
The Retirement Plan............................................. 15
Termination of Employment and Change in Control Arrangements.... 16
Performance Graph............................................... 19
Transactions with Management and Others......................... 20
Approval of Auditors.............................................. 20
Annual Incentive Arrangement for Certain Executive Officers....... 20
Purpose of the Annual Incentive Arrangement..................... 21
Administration.................................................. 21
Eligibility..................................................... 21
Awards Under the Annual Incentive Arrangement................... 21
Payment of Awards............................................... 22
Amendment and Termination....................................... 22
Approval of Material Terms...................................... 23
Three-Year Incentive Arrangement for Certain Executive Officers... 23
Purpose of the Three-Year Incentive Arrangement................. 23
Administration.................................................. 23
Eligibility..................................................... 24
Awards Under the Three-Year Incentive Arrangement............... 24
Payment of Awards............................................... 25
Effect of Change in Control..................................... 25
Amendment and Termination....................................... 25
Approval of Material Terms...................................... 25
Stockholder Proposals............................................. 26
Other Matters..................................................... 31
Exhibit A......................................................... A-1
Exhibit B......................................................... B-1
</TABLE>
- --------------------------------------------------------------------------------
<PAGE> 6
THE CHASE MANHATTAN CORPORATION
1 Chase Manhattan Plaza
New York, New York 10081-0001
PROXY STATEMENT
This Proxy Statement, with the accompanying proxy card, is being mailed to
stockholders starting on March 10, 1995 and is furnished in connection with the
solicitation by the Board of Directors of The Chase Manhattan Corporation of
proxies to be used at the Annual Meeting of Stockholders of the Corporation to
be held on April 18, 1995, and at any adjournment thereof. Only holders of
shares of Common Stock of record at the close of business on February 21, 1995
will be entitled to vote. On that date there were 177,393,154 shares of Common
Stock of the Corporation outstanding and entitled to one vote per share.
A stockholder executing the enclosed proxy may revoke it any time before it
is exercised. No formal procedure is specified for revocation. Shares
represented by an unrevoked proxy will be voted as authorized by the
stockholder.
ELECTION OF DIRECTORS (Item 1 on Proxy)
The Certificate of Incorporation of the Corporation provides that the Board of
Directors shall be divided into three classes, as nearly equal in number as
possible, with the members of each class to hold office for three-year terms.
The Board, upon the recommendation of its Governance Committee, has nominated
six of the seven Directors whose terms will expire at the 1995 Annual Meeting
for election as members of a class of Directors to hold office for three-year
terms until the Annual Meeting to be held in 1998 and until their successors are
respectively elected and qualified. The other Director whose term will expire at
the 1995 Annual Meeting, Joan Ganz Cooney, has determined not to stand for
reelection. It is anticipated that, effective immediately following the 1995
Annual Meeting, the Board will take appropriate action to reduce the number of
Directors constituting the Board, thereby eliminating the vacancy which would
otherwise result from the retirement of Director Cooney. Accordingly, proxies
cannot be voted for a greater number of persons than the number of nominees
named below.
It is intended that the shares represented by the enclosed proxy will be
voted (unless such authority is withheld by a stockholder) for the election of
the six nominees referred to above, i.e., Thomas G. Labrecque, Richard J. Boyle,
David T. Kearns, Paul W. MacAvoy, Edmund T. Pratt, Jr. and Donald H. Trautlein.
If any nominee shall become unavailable, which is not anticipated, the persons
named in the proxy may vote the shares represented by them for the election of
such other person, if any, as Director, as may be nominated by the Board of
Directors, upon the recommendation of its Governance Committee, or the Board may
reduce the number of Directors. A plurality of the votes cast at the meeting by
the holders of the shares of Common Stock of the Corporation entitled to vote
thereat is required to elect Directors. Each of the nominees was elected as a
Director of the Corporation at the 1992 Annual Meeting with the exception of
Directors Kearns and MacAvoy, who were appointed as Directors by the Board
effective February 1993, and August 1992, respectively. In keeping with the
Board's general policy on retirement at the age of 70, it is anticipated that if
elected Directors Pratt and Trautlein will retire in February 1997 and August
1996, respectively, prior to completion of the three-year terms for which they
have been nominated. Each of the current Directors, except for Directors
Ferguson, Gray, Lewis and McArthur, is currently serving as a Director of the
Corporation's subsidiary, The Chase Manhattan Bank (National Association) (the
"Bank"), and, except for those four Directors and Director Cooney, is proposed
to be elected a Director of the Bank at the Bank's annual meeting in April 1995.
The name of each current Director of the Corporation, including each nominee,
the year each of them first joined the Board, their ages, principal occupations
and the class of or for which each is a member or nominee, are as follows:
<PAGE> 7
<TABLE>
<S> <C> <C> <C>
[PICTURE] [PICTURE]
DIRECTOR SINCE THOMAS G. LABRECQUE became DIRECTOR SINCE JAIRO A. ESTRADA has served
1980 chairman of the board and 1993 as chairman of the board and
AGE 56 chief executive officer of AGE 47 chief executive officer of
NOMINEE FOR the Corporation and the Bank CLASS OF 1997 Garden Way Incorporated
CLASS OF 1998 in 1990, after serving as since 1985. Mr. Estrada is
president and chief also a director of Frontier
operating officer from 1981. Corporation.
Mr. Labrecque is also a
director of Alumax Inc. and
Pfizer Inc.
[PICTURE] [PICTURE]
DIRECTOR SINCE RICHARD J. BOYLE became a DIRECTOR SINCE JAMES L. FERGUSON retired as
1987 vice chairman of the board 1975 chairman of the executive
AGE 51 of the Corporation and the AGE 68 committee of General Foods
NOMINEE FOR Bank in 1987, after serving CLASS OF 1997 Corporation in 1989. He
CLASS OF 1998 as a senior vice president became chief executive
from 1975 to 1984 and as an officer of General Foods in
executive vice president 1973 and chairman in 1974,
from 1984. Mr. Boyle is also holding these positions
a trustee of Prudential until 1987 when he became
Realty Trust. chairman of the executive
committee. He is also a
director of DNA Plant Tech-
nology Corporation, Glaxo
p.l.c. and ICOS Corporation.
[PICTURE] [PICTURE]
DIRECTOR SINCE M. ANTHONY BURNS has served DIRECTOR SINCE H. LAURANCE FULLER has
1990 as chairman of the board of 1985 served as chairman of the
AGE 52 Ryder System, Inc. since AGE 56 board and chief executive
CLASS OF 1997 1985. He has also served as CLASS OF 1996 officer of Amoco Corporation
chief executive officer of since 1991. He has also
Ryder since 1983 and as served as president of Amoco
president since 1979. Mr. since 1983. Mr. Fuller is
Burns is also a director of also a director of Abbott
J.C. Penney Company, Inc. Laboratories and Motorola,
and Pfizer Inc. Inc.
[PICTURE] [PICTURE]
DIRECTOR SINCE JOAN GANZ COONEY has served DIRECTOR SINCE WILLIAM H. GRAY, III has
1983 as chairman of the executive 1992 served as president and
AGE 65 committee of the Children's AGE 53 chief executive officer of
CLASS OF 1995 Television Workshop since CLASS OF 1997 the United Negro College
1990. She co-founded the Fund, Inc. since 1991. He
Workshop in 1968, and served was a member of the United
as president and chief States House of
executive officer from 1970 Representatives from 1979 to
to 1988 and as chairman and 1991. He is also a director
chief executive officer from of Lotus Development
1988 to 1990. She is also a Corporation, MBIA Inc., The
director of Johnson & Prudential Insurance Company
Johnson, Metropolitan Life of America, Rockwell
Insurance Company and Xerox International Corporation,
Corporation. Union Pacific Corporation,
Warner-Lambert Company and
Westinghouse Electric
Corporation.
</TABLE>
2
<PAGE> 8
<TABLE>
<S> <C> <C> <C>
[PICTURE] [PICTURE]
DIRECTOR SINCE DAVID T. KEARNS has been DIRECTOR SINCE DAVID T. MCLAUGHLIN has
1982 senior university fellow at 1980 served as chief executive
AGE 64 Harvard University since AGE 62 officer of the Aspen
NOMINEE FOR 1993. He is retired chairman CLASS OF 1997 Institute since 1988. He has
CLASS OF 1998 and chief executive officer also served as chairman of
of Xerox Corporation, having the Institute since July
served as chairman from 1985 1994, after serving as
to 1991. From 1991 to 1993 president from 1988 to 1994
he served as deputy and as chairman from 1987 to
secretary of education. He 1988. From 1981 to 1987 he
was a Director of the was president of Dartmouth
Corporation from 1982 to College. He is also a
1991, and was reappointed as director of Atlantic
a Director in 1993. He is Richfield Company, PartnerRe
also a director of Ryder Holdings Ltd. and
System, Inc. and Time Warner Westinghouse Electric
Inc. Corporation.
[PICTURE] [PICTURE]
DIRECTOR SINCE DELANO E. LEWIS became DIRECTOR SINCE EDMUND T. PRATT, JR., became
1993 president and chief 1974 chairman emeritus of Pfizer
AGE 56 executive officer of AGE 68 Inc. in 1992, after serving
CLASS OF 1996 National Public Radio in NOMINEE FOR as chairman of the board of
January 1994, after serving CLASS OF 1998 that company from 1972 and
as chief executive officer as its chief executive
of Chesapeake & Potomac officer from 1972 to 1991.
Telephone Company from 1990 He continues as a director
and as its president from of Pfizer, and is also a
1988. He is also a director director of General Motors
of Apple Computer, Inc., Corporation, International
Black Entertainment Paper Company and Minerals
Television Holdings, Inc., Technologies Inc.
Colgate-Palmolive Company
and GEICO Corporation.
[PICTURE] [PICTURE]
DIRECTOR SINCE PAUL W. MACAVOY has served DIRECTOR SINCE HENRY B. SCHACHT has served
1992 as the Williams Brothers 1982 as chairman of the executive
AGE 60 Professor of Management AGE 60 committee of Cummins Engine
NOMINEE FOR Studies at Yale University CLASS OF 1997 Company, Inc. since February
CLASS OF 1998 since 1991. He also served 1995, after serving as
as dean of the Yale School chairman of the board from
of Organization and 1977 to 1995 and as chief
Management from 1992 to executive officer from 1977
1994. He was dean of the to 1994. He is also a
William E. Simon School of director of Aluminum Com-
Business Administration at pany of America, AT&T Corp.
the University of Rochester and CBS Inc.
from 1983 to 1991. He is
also a director of Alumax
Inc. and Lafarge Corpora-
tion.
[PICTURE] [PICTURE]
DIRECTOR SINCE JOHN H. MCARTHUR has served DIRECTOR SINCE DONALD H. TRAUTLEIN is
1980 as dean of the Harvard 1981 retired chairman and chief
AGE 60 Graduate School of Business AGE 68 executive officer of
CLASS OF 1996 Administration since 1980. NOMINEE FOR Bethlehem Steel Cor-
Mr. McArthur is also a CLASS OF 1998 poration, having served in
director of Cabot those capacities from 1980
Corporation, Rohm & Haas until 1986. Mr. Trautlein is
Company and Springs In- also a director of Data
dustries, Inc. General Corporation and PXRE
Corporation.
</TABLE>
3
<PAGE> 9
BOARD MEETINGS, COMMITTEES, ATTENDANCE, FEES AND RETIREMENT PLAN
The Board of Directors held thirteen meetings during 1994.
The Board has the following committees:
EXECUTIVE COMMITTEE
This committee held one meeting during 1994. This committee, when the Board is
not in session, is entitled to exercise all the powers of the Board to the
extent permitted by law.
The current members of this committee are Directors Labrecque (chairman)
and Boyle, each of whom is a member ex-officio, Estrada, Gray, MacAvoy,
McLaughlin, Pratt and Trautlein.
COMPENSATION COMMITTEE
This committee held six meetings during 1994. This committee approves the
compensation and appointment of certain senior officers, approves certain
aspects of the compensation of officer-directors and reviews and makes
recommendations to the Board concerning major compensation policies and the
other aspects of the compensation of officer-directors.
The current members of this committee are Directors Fuller (chairman),
Ferguson, Kearns, Lewis and McLaughlin, none of whom is an officer of the
Corporation.
AUDIT COMMITTEE
This committee held four meetings during 1994. This committee is responsible for
reviewing the financial condition of the Corporation, its internal controls and
audit program, the performance and findings of the internal audit staff and any
action to be taken thereon by management. It reviews loan, internal audit and
internal control policies. It also reviews audit and examination reports of
governmental agencies and of the independent auditors. The committee selects the
independent auditors for appointment by the Board.
The current members of this committee are Directors Burns (chairman),
Ferguson, Gray, McArthur,
Pratt and Trautlein, none of whom is an officer of the Corporation.
EMPLOYEE BENEFITS REVIEW COMMITTEE
This committee held three meetings during 1994. This committee reviews the
reports regarding the employee benefit plans of the Bank made by the Named
Fiduciaries, who are appointed pursuant to the Employee Retirement Income
Security Act of 1974, as amended.
The current members of this committee are Directors McLaughlin (chairman),
Gray, Kearns, Lewis and Trautlein, none of whom is an officer of the
Corporation.
INVESTMENT COMMITTEE
This committee held four meetings during 1994. This committee is responsible for
supervising the trust, other fiduciary and investment advisory activities of the
subsidiaries of the Corporation.
The current members of this committee are Directors MacAvoy (chairman),
Burns, Estrada and McArthur, none of whom is an officer of the Corporation.
GOVERNANCE COMMITTEE
This committee held three meetings during 1994. This committee is responsible
for exercising general oversight with respect to the governance of the
Corporation, and in that connection for reviewing and making reports and
recommendations to the Board regarding the functioning of the Board, including
its size and composition and the tenure of Directors, the qualifications of
nominees for election to the Board, the duties
4
<PAGE> 10
and composition of committees of the Board, continuity and succession in the
offices of chairman of the board, president and vice chairmen of the board and
the performance of the chief executive officer.
The current members of this committee are Directors Pratt (chairman),
Burns, Ferguson, Fuller, Kearns, McArthur and McLaughlin, none of whom is an
officer of the Corporation.
The Governance Committee will consider recommendations for nominees for
election to the Board which may be submitted by stockholders. These nominations
should be submitted to the secretary of the Corporation for review by the
committee. Such nominations for the 1996 Annual Meeting of Stockholders are
required to be submitted not later than January 20, 1996.
DIRECTOR ATTENDANCE
During 1994, all of the Directors attended 75% or more of the meetings of the
Board and of the committees of which they were members.
DIRECTORS' FEES
Directors' fees are paid only to Directors who are not officers. Directors
receive a retainer at the rate of $25,000 per year. The chairman of the Audit
Committee receives an additional retainer at the rate of $16,000 per year and
the other members receive an additional retainer at the rate of $8,000 per year.
The chairman of the Compensation Committee receives an additional retainer at
the rate of $12,000 per year and the other members receive an additional
retainer at the rate of $6,000 per year. The chairman of each Board committee,
other than the Audit and Compensation Committees, receives an additional
retainer at the rate of $6,000 per year and the other members of those
committees receive an additional retainer at the rate of $3,000 per year. Fees
for attendance at Board and Board committee meetings are $1,250 for each meeting
attended. The Corporation and the Bank have standard arrangements pursuant to
which Directors may elect to defer all or part of their fees. These arrangements
include the option to have such fees credited as "phantom stock" units as
described under the caption Stock Ownership. The annual retainer and fee
arrangements for Directors provide that in the event of a change in control of
the Corporation, as described under the caption Termination of Employment and
Change in Control, any retainer or fees previously deferred by a Director will
be paid to the Director in a single sum.
Directors who are not officers also receive an annual entitlement to
receive 500 shares of Common Stock of the Corporation. The actual delivery of
such shares is deferred until the Director is no longer a Director of the
Corporation or any of its subsidiaries. The shares to be delivered include the
additional shares that the Director would have been entitled to receive if the
Director had acquired each annual entitlement of shares on a current basis and
had reinvested the cash dividends paid on such shares pursuant to the
Corporation's Dividend Reinvestment and Stock Purchase Plan. In the event of a
change in control, as described under the caption Termination of Employment and
Change in Control, each Director will receive a stock certificate for the shares
of Common Stock to which the Director is entitled pursuant to this arrangement.
DIRECTORS' RETIREMENT PLAN
Directors who have served on the Board for at least six years, and who are not
officers and are not eligible to receive a retirement benefit under the Bank's
Retirement Plan, are entitled to benefits on an unfunded basis under a
non-qualified retirement plan. Any such Director who ceases to be a Director
prior to the calendar year of the Director's 65th birthday (or, in the event of
the Director's death prior to such year, the Director's surviving spouse) is
entitled to receive an annual benefit equal in amount to the then annual cash
retainer for a Director, such annual benefit to be paid for the number of years
that the Director served in that capacity. Any such Director who ceases to be a
Director in or after the calendar year of the Director's 65th birthday is
entitled to receive the same annual benefit, payable for the remaining years of
the Director's life, provided that if the Director dies before receiving such
annual benefit for at least a number of years equal to the number of years the
Director served in that capacity the Director's surviving spouse is entitled to
receive such annual benefit for a number of years equal to the remainder of such
number of years of service. The retirement plan provides that in the event of a
change in control of the Corporation, as described under the caption Termination
of Employment and Change in Control, each Director's interest in the plan will
be fully vested and will be paid to the Director in a single sum.
5
<PAGE> 11
STOCK OWNERSHIP
STOCK OWNERSHIP OF MANAGEMENT
The following table shows, as of December 31, 1994, the number of shares of the
Corporation beneficially owned by all current Directors, nominees for Director
and Executive Officers of the Corporation named under the caption Executive
Compensation, individually, and, together with all current Executive Officers of
the Corporation, as a group. All shares referred to in the table and related
footnotes are shares of Common Stock. The table also shows the number of
"phantom stock" units held by certain Directors as of December 31, 1994,
entitling each such Director, upon retirement or an earlier change in control of
the Corporation (as described under the caption Termination of Employment and
Change in Control), to receive a cash payment for each unit equal to the fair
market value at that time of a share of Common Stock of the Corporation. Such
units have been credited to the accounts of those Directors who have elected to
defer all or part of their Directors' fees and to have such deferred fees
treated as though invested in shares of Common Stock of the Corporation
participating in its Dividend Reinvestment and Stock Purchase Plan.
<TABLE>
<CAPTION>
Name of Individual or Number of Shares Number of "Phantom
Identity of Group Beneficially Owned(a) Stock" Units Held
- ----------------------------------- ----------------------- -------------------
<S> <C> <C>
Thomas G. Labrecque 544,158 (b) --
Richard J. Boyle 221,028 (b)(c) --
M. Anthony Burns 1,310 --
Joan Ganz Cooney 2,764 --
Jairo A. Estrada 35,490 1,212
James L. Ferguson 2,254 6,370
H. Laurance Fuller 5,764 1,145
William H. Gray, III 1,133 440
David T. Kearns 1,033 --
Delano E. Lewis 883 --
Paul W. MacAvoy 2,033 1,353
John H. McArthur 2,207 --
David T. McLaughlin 4,437 --
Edmund T. Pratt, Jr. 1,964 38,752
Henry B. Schacht 2,013 --
Donald H. Trautlein 2,728 1,740
E. Michel Kruse 69,753 (b) --
Donald L. Boudreau 174,298 (b) --
L. Edward Shaw, Jr. 126,619 (b)(d) --
Directors, nominees and Executive
Officers as a group (27 persons) 1,767,904 (e) 51,012
</TABLE>
- ---------------
(a) Except as otherwise noted, the individuals referred to have sole voting and
investment power with respect to the shares listed. Each of such
individuals beneficially owns less than 1% of the outstanding shares of
Common or of any Series of Preferred Stock of the Corporation. The number
of shares shown for each Director other than Directors Labrecque, Boyle,
Burns, Estrada, Gray, Kearns, Lewis and MacAvoy includes in each case 1,764
shares that such Director is entitled to receive, after ceasing to be a
Director, pursuant to the annual retainer arrangement for non-officer
Directors. The number of shares shown for Directors Gray, Kearns, Lewis and
MacAvoy includes in each case 633 shares that such Director is entitled to
receive, after ceasing to be a Director, pursuant to such arrangement. The
number of shares shown for Directors Burns and Estrada includes 1,210
shares and 310 shares, respectively, that they are entitled to receive,
after ceasing to be Directors, pursuant to such arrangement. Each Director
entitled to receive shares pursuant to such arrangement disclaims
beneficial ownership with respect thereto.
(b) Includes shares which as of December 31, 1994 could be acquired within 60
days by Directors Labrecque and Boyle, Messrs. Kruse, Boudreau and Shaw and
all Executive Officers included in the group described above upon the
exercise of options for the purchase of 448,199, 186,838, 45,935, 163,000,
100,466 and 1,367,742 shares, respectively, as well as 6,173, 5,000, 1,865,
1,810, 1,905 and 25,128 shares, respectively, issued during such 60-day
period to Directors Labrecque and Boyle, Messrs. Kruse, Boudreau and Shaw
and all Executive Officers included in the group described above upon the
lapse of restrictions applicable to restricted stock units.
6
<PAGE> 12
(c) Includes 676 shares as to which Director Boyle shares voting and investment
power with his wife.
(d) Includes a beneficial interest in 3,255 shares which as of December 31, 1994
was held by the trustee under the Bank's Thrift-Incentive Plan.
(e) See (b) through (d) above. Includes the beneficial interests of two
Executive Officers included in the group described above in 26,238 shares
which as of December 31, 1994 were held by the trustee under the Bank's
Thrift-Incentive Plan. Includes 2,990 shares held by a general partnership
of which one of the Executive Officers included in the group is general
partner, as to which shares he disclaims beneficial ownership except to the
extent of his pecuniary interest therein. Does not include 114 shares held
by the wife of one of the Executive Officers included in the group, as to
all of which shares he disclaims beneficial ownership. The total shown in
the table represents approximately 0.99% of the shares of Common Stock of
the Corporation outstanding on December 31, 1994. The current Executive
Officers are the 13 officers of the Corporation determined to fall within
the definition of "executive officer" set forth in Rule 3b-7 under the
Securities Exchange Act of 1934, as amended (the "Securities Exchange Act").
OTHER STOCK OWNER
The entity referred to below is the only person known by the Corporation to own
beneficially more than 5% of any class of the Corporation's voting securities.
According to information furnished by that entity in a Schedule 13G filed
pursuant to the Securities Exchange Act, the number of shares of Common Stock of
the Corporation beneficially owned by it as of January 31, 1995 and the
percentage of the total outstanding Common Stock of the Corporation represented
thereby was as follows:
<TABLE>
<CAPTION>
Number of
Shares
Beneficially Percent
Name and Address Owned of Class
------------------------------------------- ------------ --------
<S> <C> <C>
Barrow, Hanley, Mewhinney & Strauss, Inc.
280 Crescent Court, 19th Floor
Dallas, Texas 75201 9,190,491(a) 5.07%
</TABLE>
- ---------------
(a) According to the information furnished by them, Barrow, Hanley, Mewhinney &
Strauss, Inc. holds sole investment power with respect to all of such
shares, sole voting power with respect to 2,339,827 of such shares and
shared voting power with respect to the remaining 6,850,664 of such shares.
7
<PAGE> 13
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth cash and certain other compensation paid or
accrued by the Corporation and its subsidiaries for the chief executive officer
(Mr. Labrecque) and for each of the four other most highly compensated Executive
Officers of the Corporation. The Bank, which is the principal subsidiary of the
Corporation, has paid or accrued substantially all of the cash compensation
shown.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
------------------------------------- ----------------------------------------
Awards Payouts
------------------------- ----------
Securities
Other Annual Restricted Underlying All Other
Compen- Stock Options/ LTIP Compen-
Name and Principal Position Year Salary Bonus sation Awards(a)(b) SARs(#)(a) Payouts(c) sation(d)
- ---------------------------- ----- -------- ---------- ------------ ------------ ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Thomas G. Labrecque, 1994 $820,000 $2,600,000 $3,630 $1,289,062 50,000 0 $32,800
Chairman of the 1993 750,000 1,500,000 7,491 0 40,000 $1,800,000 30,000
Board of the Bank 1992 750,000 625,000 5,791 0 40,000 0 30,000
Richard J. Boyle, 1994 500,000 500,000 4,311 515,625 22,000 0 20,000
Vice Chairman of 1993 500,000 425,000 4,067 0 22,000 400,000 20,000
the Board of the Bank 1992 500,000 285,000 2,647 0 22,000 0 20,000
E. Michel Kruse, 1994 325,000 750,000 4,311 515,625 20,000 0 13,000
Senior Executive 1993 300,000 450,000 4,067 0 15,000 300,000 12,000
Vice President of the Bank 1992 266,667 340,000 5,295 0 10,000 0 8,728
Donald L. Boudreau, 1994 437,500 420,000 0 378,125 16,000 0 17,500
Senior Executive 1993 425,000 400,000 3,425 0 16,000 325,000 17,000
Vice President of the Bank 1992 425,000 320,000 0 0 15,000 0 17,000
L. Edward Shaw, Jr., 1994 386,667 470,000 0 326,562 14,000 0 15,467
Executive Vice President 1993 360,000 420,000 2,354 0 11,000 250,000 14,400
of the Bank 1992 360,000 195,000 993 0 11,000 0 14,400
</TABLE>
- ---------------
(a) Reflects awards in January of the succeeding year taking into account
performance during the year for which reported.
(b) The 1994 awards reported consisted of restricted stock units awarded under
the Corporation's 1994 Long-Term Incentive Plan entitling the recipient,
upon the lapse of the restrictions applicable thereto, to receive shares of
Common Stock of the Corporation. The restrictions applicable to such
restricted stock units lapse in equal annual installments on each of the
third, fourth and fifth anniversaries of the date of grant. Such restricted
stock units will be canceled if the holder's employment is terminated for
any reason other than disability prior to the lapse of the applicable
restrictions. The holder of a restricted stock unit is entitled to receive
cash payments equivalent to the dividends which would have been received if
the unit were a share of Common Stock. The amounts reported in the above
table represent the market value at the date of grant, without giving effect
to diminution in value attributable to the applicable restrictions.
At January 18, 1995, following the grant of the 1994 awards, aggregate
holdings of shares of restricted stock and restricted stock units were as
shown in the table below, which also shows the market value of such shares
and units at December 31, 1994, without giving effect to diminution in value
attributable to the restrictions applicable thereto:
<TABLE>
<CAPTION>
Name Number Value
--------------- ------ ----------
<S> <C> <C>
Mr. Labrecque 83,100 $2,872,144
Mr. Boyle 30,000 1,036,875
Mr. Kruse 22,083 763,244
Mr. Boudreau 20,000 691,250
Mr. Shaw 19,000 656,688
</TABLE>
(c) The 1993 LTIP payouts reported consisted of cash payments and, in the case
of Mr. Labrecque, shares of restricted stock awarded pursuant to the
three-year incentive arrangement established by the Compensation Committee
under the Bank's Management Incentive Plan in January 1991. The restricted
stock award to Mr. Labrecque consisted of 23,400 shares of Common Stock of
the Corporation. Normal quarterly dividends are paid on such shares. The
contractual restrictions on the transfer of such shares will lapse in equal
annual installments on each of the first three anniversaries of the date of
grant, or upon earlier termination of employment due to death or disability.
Such shares are non-forfeitable, and termination of employment for any other
reason will have no effect on Mr. Labrecque's ownership thereof. Such shares
may also not be sold or transferred unless registered under the Securities
Act of 1933, as amended, and applicable state securities laws or unless the
transfer qualifies for an exemption from the registration provisions
thereof.
(d) Reflects annual contributions or other allocations to the Bank's
Thrift-Incentive Plan and related defined contribution plans.
8
<PAGE> 14
STOCK OPTION GRANTS
The table below contains information relating to stock options granted to the
Executive Officers named above.
Option/SAR Grants in Last Fiscal Year(a)
<TABLE>
<CAPTION>
Individual Grants
--------------------------------------------------------------------------------------
Number of % of Total
Securities Options/SARs
Underlying Granted to Grant Date
Options/SARs Employees in Exercise Price Expiration Present
Name Granted Fiscal Year ($/sh)(b) Date Value(c)
-------------------- ------------ ------------- -------------- ---------------- -----------
<S> <C> <C> <C> <C> <C>
Thomas G. Labrecque 50,000 2.89% $ 34.375 January 18, 2005 $ 440,000
Richard J. Boyle 22,000 1.27 34.375 January 18, 2005 193,600
E. Michel Kruse 20,000 1.16 34.375 January 18, 2005 176,000
Donald L. Boudreau 16,000 0.92 34.375 January 18, 2005 140,800
L. Edward Shaw, Jr. 14,000 0.81 34.375 January 18, 2005 123,200
</TABLE>
- ---------------
(a) Reflects non-qualified stock options granted on January 18, 1995 under the
1994 Long-Term Incentive Plan of the Corporation taking into account
performance during the year ended December 31, 1994. No stock appreciation
rights were granted. Such options will become exercisable one year after
the date of grant, and expire ten years after the date of grant or upon
earlier termination of employment, other than by reason of retirement with
the consent of the Corporation (in which case the options will expire on
their original expiration date) or death (in which case the options will
expire on the earlier of their original expiration date or 36 months after
the date of death), subject to extension of the period of exercisability
(if the Compensation Committee so determines) for up to 90 days following
termination of employment or in the event of a change in control.
(b) The stock options were granted with an exercise price equal to the fair
market value per share of the Common Stock of the Corporation on the date
of grant.
(c) Present values were calculated using the Black-Scholes option pricing model
modified to take dividends into account. The model as applied used the
grant date of January 18, 1995 and the exercise price and fair market value
on that date of $34.375 per share referred to above. It also assumed (i) a
risk-free rate of return of 7.7%, which was the rate on 10-year U.S.
Treasury bonds on the grant date, (ii) a stock price volatility of 24%,
calculated using daily closing prices of the Common Stock of the
Corporation for a one-year period ending on the grant date, (iii) a
constant dividend yield of 4.65%, which was the yield on the grant date
based on the quarterly cash dividend rate of 40 cents per share paid by the
Corporation on its Common Stock and (iv) that the options normally would be
exercised on the final day of their 10-year term. No discount from the
theoretical value was taken to reflect the one-year waiting period prior to
vesting, the restrictions on the transfer of the options and the likelihood
that the options will be exercised in advance of the final day of their
term.
------------------------
There is no assurance that the values actually realized upon the exercise
of the stock options referred to above will be at or near the present values as
of the date of grant shown in the foregoing table. As noted above, such present
values were calculated using the Black-Scholes option pricing model, which is a
widely used mathematical formula for estimating option values that incorporates
various assumptions that may not hold true over the 10-year life of these
options. For example, assumptions are required about the risk-free rate of
return as well as about the dividend yield on the Corporation's Common Stock and
the volatility of the Common Stock over the 10-year period. Also, the
Black-Scholes model assumes that an option holder can sell the option at any
time at a fair price that includes a premium for the remaining time value of the
option. The holder of an option granted under the Corporation's 1994 Long-Term
Incentive Plan, however, can realize its value before maturity only by
exercising and thereby sacrificing the option's remaining time value. Although
the negative impact of this and other restrictions on the value of this type of
option is well recognized, there is no accepted method for adjusting the
theoretical option value for them. The values set forth in the table should not
be viewed in any way as a forecast of the future performance of the
Corporation's Common Stock, which will be influenced by future events and
unknown factors.
9
<PAGE> 15
OPTION/SAR EXERCISES, HOLDINGS AND YEAR-END VALUES
The table below contains information with respect to the Executive Officers
named above concerning the exercise of stock options and stock appreciation
rights during 1994 and the number and value of unexercised options and stock
appreciation rights at the end of such year.
Aggregated Option/SAR Exercises
in 1994 and Year-End Option/SAR Values
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options/SARs at In-the-Money Options/SARs
December 31, 1994 at December 31, 1994(d)
Shares ----------------------------- -----------------------------
Acquired on Value
Name Exercise(a) Realized(b) Exercisable Unexercisable(c) Exercisable Unexercisable
------------------------- ----------- ----------- ----------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Thomas G. Labrecque 0 0 408,199 90,000 $ 4,181,088 0
Richard J. Boyle 4,761 $72,903 164,838 44,000 1,256,299 0
E. Michel Kruse 0 0 30,935 35,000 229,139 0
Donald L. Boudreau 0 0 147,000 32,000 1,368,251 0
L. Edward Shaw, Jr. 5,144 81,661 89,466 25,000 603,305 0
</TABLE>
- ---------------
(a) Includes the number of shares of Common Stock of the Corporation with
respect to which stock appreciation rights were exercised.
(b) Reflects market value of underlying shares of Common Stock of the
Corporation on the date of exercise, minus the exercise price.
(c) Includes stock options granted on January 18, 1995 under the 1994 Long-Term
Incentive Plan of the Corporation taking into account performance during
the year ended December 31, 1994.
(d) Reflects market value of underlying shares of Common Stock of the
Corporation on December 31, 1994, minus the exercise price.
LONG-TERM INCENTIVE PLAN AWARDS
In March 1994, the Compensation Committee of the Board of Directors approved the
long-term incentive arrangement described in detail under the caption Three-Year
Incentive Arrangement for Certain Executive Officers. The Three-Year Incentive
Arrangement is designed to qualify the amounts paid thereunder to certain of the
Corporation's Executive Officers as "qualified performance based-compensation"
under Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Internal Revenue Code"), and certain proposed regulations thereunder. Awards
are to be paid under this Arrangement to the five Executive Officers of the
Corporation who are "covered employees" under Section 162(m) and such proposed
regulations. Awards under the Arrangement are to be based on achieving certain
performance targets related to the average over 10 consecutive trading days
between January 1, 1994 and March 31, 1997 of the mean between the highest and
lowest quoted selling prices of the Common Stock of the Corporation on the New
York Stock Exchange. The specific performance targets provided for in this
Arrangement are a $52 per share average price (the "$52 Target") and a $60 per
share average price (the "$60 Target"). The table below contains information
concerning estimated future payouts under the Arrangement treating the Executive
Officers named above as the "covered employees" who will receive awards.
10
<PAGE> 16
Long-Term Incentive Plans -- Awards in Last Fiscal Year
<TABLE>
<CAPTION>
Estimated Future Payouts
Under Non-Stock
Price-Based Plans
----------------------------
Name Performance Period(a) Target(b)(d) Maximum(c)(d)
----------------------- -------------------------------- ---------- -------------
<S> <C> <C> <C>
Thomas G. Labrecque January 1, 1994-March 31, 1997 $1,500,000 $3,000,000
Richard J. Boyle January 1, 1994-March 31, 1997 500,000 1,000,000
E. Michel Kruse January 1, 1994-March 31, 1997 500,000 1,000,000
Donald L. Boudreau January 1, 1994-March 31, 1997 500,000 1,000,000
L. Edward Shaw, Jr. January 1, 1994-March 31, 1997 500,000 1,000,000
</TABLE>
- ---------------
(a) The performance period is the period during which the $52 Target and the $60
Target must be achieved. Awards which are earned are payable prior to the
end of the performance period on or after December 31, 1996 depending upon
when the Target is reached. In the event of a change in control of the
Corporation awards are payable upon the latter to occur of the change in
control and the achievement of the Target.
(b) The target award is the maximum amount payable if the $52 Target is reached
before the end of the performance period. The Compensation Committee, at its
discretion, can reduce the amount paid upon achieving the $52 Target below
such maximum amount.
(c) The maximum award is the maximum amount payable if the $60 Target is reached
before the end of the performance period. Such maximum amount is required to
be reduced by any amounts paid upon achieving the $52 Target. The
Compensation Committee, at its discretion, can reduce the amount paid upon
achieving the $60 Target below such maximum amount.
(d) If either the $52 Target or the $60 Target is reached by December 31, 1996,
the maximum amount payable as a result of achieving such Target will be
adjusted up or down as appropriate by multiplying such maximum amount by a
fraction, the numerator of which is the average over the 10 consecutive
trading days ending on December 31, 1996 of the mean between the highest and
lowest quoted selling prices for shares of the Corporation's Common Stock on
the New York Stock Exchange and the denominator of which is the Target which
was reached. The maximum amount is also subject to adjustment if a change in
control occurs after one or both of the Targets are reached but before
December 31, 1996, treating the date on which the change in control occurred
as if it were December 31, 1996.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION POLICIES FOR EXECUTIVE OFFICERS
This report is submitted by the Compensation Committee of the Corporation's
Board of Directors, which consists of five members, none of whom is an officer
of the Corporation.
Decisions on compensation of the Corporation's Executive Officers are made
by the Compensation Committee, except that salary and bonus determinations for
the Chairman of the Board and the Vice Chairman of the Board are made by the
Board of Directors (without such officers being present) after receiving
recommendations from the Compensation Committee.
The Corporation's executive compensation policies are designed to provide
competitive levels of compensation that align compensation with the
Corporation's annual and long-term performance goals, reward good performance at
the corporate and business unit levels, recognize individual initiative and
achievements and assist the Corporation in attracting and retaining qualified
executives.
The Committee annually sets target levels of compensation for all of the
Corporation's Executive Officers, including Mr. Labrecque. The Committee reviews
recent historical levels of compensation at other money center banks and large
regional banks, all of which are included in the KBW 50 Index charted in the
Performance Graph appearing on page 19 below, and then establishes an overall
target level of compensation
11
<PAGE> 17
for each Executive Officer. The Compensation Committee believes that not all of
the companies included in the KBW 50 Index are competitors with the Corporation
for executive talent, although these companies are competitors for purposes of
an investor seeking a return on investment. Therefore, the Committee only
reviews historical levels of compensation for officers holding comparable
positions at certain of the organizations included in the KBW 50 Index.
Following the establishment of overall compensation targets for each
Executive Officer, a determination is made, based upon the individual
responsibilities and business function performed by the Executive Officer, as to
what portion of the target for each Executive Officer is to be represented by
each of the three principal elements of compensation: salary, bonus opportunity
and long-term incentive compensation opportunity. These targets are reviewed by
the Compensation Committee when making bonus and long-term incentive
compensation awards and salary determinations. The particular target for each
element of each Executive Officer's compensation may be above, below or
comparable to the compensation paid by those competing organizations having
comparable positions. Because a significant portion of an Executive Officer's
potential compensation is performance related, actual compensation levels vary
from year to year and in any particular year may be above or below those of the
Corporation's competitors.
The Compensation Committee believes that stock ownership by management of
the Corporation is beneficial in aligning the interests of management and the
Corporation's stockholders, and that awards under the Corporation's Long-Term
Incentive Plans provide an incentive for Executive Officers to remain with the
Corporation. Accordingly, the Compensation Committee intends to continue to
utilize stock-based compensation arrangements in compensating the Corporation's
Executive Officers.
RELATIONSHIP OF CORPORATE PERFORMANCE TO COMPENSATION
Compensation paid to the Corporation's Executive Officers for 1994 consisted
primarily of salary, bonuses awarded under The Chase Manhattan Management
Incentive Plan and awards of stock options and restricted stock units under the
Corporation's 1994 Long-Term Incentive Plan. The payment of bonuses and the
awards of stock options and restricted stock units under the Long-Term Incentive
Plan are directly related to corporate and individual performance and, where
relevant, business unit performance.
SALARY ARRANGEMENTS
Each Executive Officer's salary is determined on the basis of the individual's
responsibilities. About three-quarters of the Corporation's Executive Officers
received salary increases in 1994. For most of these Executive Officers, such
increases were their first salary increases in twenty-one months or more. In
several cases, salary increases were given in connection with the assignment to
the Executive Officer of new responsibilities.
BONUS ARRANGEMENTS
All Executive Officers at or above the Executive Vice President level are
eligible to participate in the Management Incentive Plan, which is administered
by the Compensation Committee. Executive Officers who do not participate in the
Management Incentive Plan are awarded bonuses based upon the recommendations of
the Executive Officer to whom they report.
Corporate performance determines the amount of annual bonuses, if any,
awarded to the Corporation's Executive Officers under the Management Incentive
Plan. In awarding annual bonuses based on 1994 performance, the Compensation
Committee gave primary consideration to the Corporation's return on average
common equity, which improved to 15.79% for 1994 from 14.59% in 1993. The
increases in earnings per share and the price of the shares of the Corporation's
Common Stock also were given significant consideration by the Compensation
Committee, but they were not assigned the same significance as return on average
common equity. Earnings per share were $5.87 in 1994, up approximately 23% from
$4.79 in 1993. The price of a share of Common Stock increased approximately 1.5%
in 1994 (shareholders realized a 5.7% return assuming reinvestment of
dividends), as compared to a 1.4% increase in the Standard & Poor's 500 Stock
Index and a 5.1% decrease in the KBW 50 Index charted under the caption
Performance Graph on page 19 below, both of which assume the reinvestment of
dividends.
12
<PAGE> 18
The Compensation Committee also considered the improvement in certain
measures of asset quality and profitability and the Corporation's capital
strength both in absolute terms and in relation to the Corporation's largest
competitors whose performance is, in the view of the Compensation Committee,
most suitable for evaluating the relative performance of the Corporation. These
measures included the decrease in the levels of non-performing assets, the
increase in the return on average assets and the continued strength in the
Corporation's capital ratios. The decline in the level of the Corporation's
criticized assets and the decrease in the provision for credit losses was also
reviewed. Consideration was also given to performance against the Corporation's
objective of reducing its basic expense to revenue ratio. Certain subjective
factors, such as the achievement of qualitative goals relating to customers and
employees and the Corporation's corporate values were also considered. These
secondary factors were considered as a whole without assigning specific weights
to any of them. After the Committee's evaluation of overall corporate
performance, the performance of individual business units and of each of the
Executive Officers was evaluated in light of the factors described above that
are relevant to such performance.
LONG-TERM INCENTIVE PLAN ARRANGEMENTS
The long-term incentive component of the Executive Officers' compensation for
1994 consisted of awards of stock options and restricted stock units under the
1994 Long-Term Incentive Plan. The Plan is designed to link rewards for
Executive Officers and other key personnel to increases in stockholder value,
foster share ownership by the Corporation's executives and enable the
Corporation to retain and attract key employees with superior management skills.
As stated above, the Committee believes that stock-based compensation
serves an important compensation objective. Accordingly, the Compensation
Committee typically awards restricted stock units once every three years, while
stock options are awarded annually. The restricted stock units awarded by the
Compensation Committee vest equally over three years commencing on the third
anniversary of the grant date. The stock options granted to the Corporation's
Executive Officers have an exercise price equal to the market value of the
Corporation's Common Stock on the date of grant and become exercisable one year
after the date of grant.
Awards under the 1994 Long-Term Incentive Plan are made at the beginning of
each year, taking into account performance during the prior year and an
assessment of each Executive Officer's potential future contribution to the
Corporation. Performance for 1994 was measured by the same criteria which were
considered by the Compensation Committee in awarding annual bonuses under the
Management Incentive Plan. The improvement in return on average common equity
and earnings per common share and the increase in the price of the Corporation's
Common Stock were the primary factors considered by the Compensation Committee.
The Corporation's progress toward meeting longer-term objectives, emphasizing
profitability and capital strength as indicated by the increase in return on
equity, earnings per share and other profitability ratios and the continued
strength in the Corporation's capital ratios, was also considered.
The Compensation Committee also considered the amount of stock options and
restricted stock units already held by the Executive Officers. It concluded that
the awards made to the Executive Officers were appropriate in light of the
purposes which the 1994 Long-Term Incentive Plan is designed to achieve.
COMPENSATION OF MR. LABRECQUE
As discussed above, the Compensation Committee establishes an annual target for
Mr. Labrecque's total compensation in light of historical levels of chief
executive officer compensation at other money center and large regional banks
and determines what portion of this target is to be represented by salary, bonus
opportunity and long-term incentive compensation opportunity. Mr. Labrecque's
target bonus opportunity increases at higher levels of return on average common
equity so as to be comparable to bonuses paid by other money center and large
regional banks which achieve similar levels of return on average common equity.
Targets for salary and long-term incentive compensation are also intended to be
comparable to the amounts paid by other money center and large regional banks to
their chief executive officers, although no specific ranking compared to these
other organizations is sought to be achieved. Because a significant portion of
13
<PAGE> 19
Mr. Labrecque's potential compensation is performance related, his actual
compensation varies from year to year and in any particular year may be above or
below his counterparts at competing organizations.
Mr. Labrecque's target salary was increased in 1994 primarily as a result
of increases in salaries paid chief executive officers at competing
organizations. After considering Mr. Labrecque's responsibilities and that Mr.
Labrecque had not had a salary increase since he became Chief Executive Officer
in November 1990, the Compensation Committee increased Mr. Labrecque's salary
during 1994 to $870,000 per annum.
The Compensation Committee proposed that Mr. Labrecque receive an annual
bonus for 1994 under the Management Incentive Plan in the amount of $2,600,000.
The Board of Directors approved this recommendation. The Compensation Committee
also awarded Mr. Labrecque options to acquire 50,000 shares of the Corporation's
Common Stock and 37,500 restricted stock units under the 1994 Long-Term
Incentive Plan. The Compensation Committee based its decision with respect to
these awards on the continuing improvement in 1994 in the performance of the
Corporation and the central role of Mr. Labrecque in the future in achieving the
Corporation's long-term objectives. Corporate performance was measured by the
same criteria used to determine awards to the Corporation's other Executive
Officers (see "Annual Bonus Arrangements" and "Long-Term Incentive Plan
Arrangements" above). The Compensation Committee also considered the amount of
stock options and restricted stock units owned by Mr. Labrecque in proposing the
award of stock options and restricted stock units to him and concluded that the
award was consistent with the purposes which the 1994 Long-Term Incentive Plan
is designed to achieve.
PHILOSOPHY ON THE DEDUCTIBILITY OF COMPENSATION
Under the Internal Revenue Code, the amount of compensation paid to or accrued
for the Chief Executive Officer and the four other most highly compensated
Executive Officers which may be deductible by the Corporation for federal income
tax purposes is limited to $1 million per person per year, except that
compensation which is considered to be "performance-based" under the Internal
Revenue Code and the applicable regulations is excluded for purposes of
calculating the amount of deductible compensation. The Internal Revenue Service
has proposed regulations to implement this provision, but they have not been
finalized.
As stated above (see "Compensation Policies for Executive Officers"), the
Compensation Committee designs its compensation arrangements to achieve various
objectives. To the extent these objectives can be achieved in a manner which
maximizes the deductibility of compensation paid by the Corporation, the
Compensation Committee will seek to do so. Accordingly, the 1994 Long-Term
Incentive Plan which was approved by the stockholders at the 1994 Annual Meeting
was designed to cause compensation expense associated with grants of options to
qualify as performance-based compensation.
No action was taken in 1994, however, to modify bonus arrangements under
the Management Incentive Plan to conform with the Internal Revenue Code and the
proposed regulations. The Compensation Committee determined that it was
desirable to await the adoption of final regulations and to evaluate whether it
was possible to achieve its compensation objectives in a manner which causes the
incentive compensation paid to the Corporation's Executive Officers to be
deductible. Although final regulations still have not been adopted, the
Compensation Committee believes that it is possible to construct an incentive
compensation plan which both achieves its desired compensation objectives and
allows for the deduction by the Corporation of such compensation. Accordingly,
The Chase Manhattan Annual Incentive Arrangement for Certain Executive Officers
is being submitted to the stockholders at the 1995 Annual Meeting. The
Compensation Committee also established the Three-Year Incentive Arrangement for
Certain Executive Officers that the stockholders are being asked to approve at
the 1995 Annual Meeting, which is intended to provide deductible performance-
based compensation to the Chief Executive Officer and the Corporation's four
other most highly compensated Executive Officers based on achieving the
specified multi-year performance criteria.
The Compensation Committee also has evaluated the desirability of causing
all compensation expense associated with grants of restricted stock units under
the 1994 Long-Term Incentive Plan to qualify as deductible performance-based
compensation and has determined not to take any action at this time. The
Compensation Committee seeks to promote the retention of the Corporation's
Executive Officers through
14
<PAGE> 20
awards of restricted stock units. This objective would be adversely affected by
the changes which the Committee would be required to make in the terms of the
restricted stock units in order to qualify such awards as performance-based
compensation. Because compensation expense associated with stock option awards
under the Long-Term Incentive Plan and bonus payments under both of the
arrangements being submitted to the shareholders at the 1995 Annual Meeting will
qualify for deduction, the Committee believes that the amount of compensation
expense associated with restricted stock unit awards which will not be
deductible will be minor. Accordingly, the Committee has determined not to
modify the terms of the 1994 Long-Term Incentive Plan applicable to restricted
stock units to cause such awards to qualify as performance-based compensation.
THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
H. Laurance Fuller (Chairman)
James L. Ferguson
David T. Kearns
Delano E. Lewis
David T. McLaughlin
THE RETIREMENT PLAN
The Bank's Retirement Plan provides retirement benefits to eligible employees of
participating "Employers" (the Corporation and certain subsidiaries of the
Corporation, principally the Bank). The Retirement Plan was amended, effective
as of January 1, 1989 and subject to Internal Revenue Service approval, to
provide a cash balance type of defined benefit retirement plan under which the
accrual of benefits for years of service after 1988 can be expressed in terms of
monthly credits to an account. Such credits ultimately will be converted into
annuity benefits or distributed as a lump sum payment.
Under the amended Retirement Plan, including the Bank's Supplemental
Retirement Plan adopted in 1981 which is applicable to certain key executives of
the Bank and its affiliates, benefits accrued through December 31, 1988 under
the formula in effect as of that date (the "Old Formula") are preserved. Credits
for periods after December 31, 1988 are made on a monthly basis at the annual
rate of 3% of compensation for compensation not exceeding the Social Security
wage base for the year, and 6% of compensation for compensation in excess of the
Social Security wage base. Participants with 10 or more years of service receive
an additional annual credit equal to 1% of compensation for compensation not
exceeding the Social Security wage base, and an additional 2% of compensation
for compensation in excess of the Social Security wage base. Additional annual
transition credits will also be provided through 1995, except that benefits
under the Bank's Supplemental Retirement Plan are determined without regard to
the annual transition credits. The amounts of such transition credits depend
upon the length of a participant's service as of December 31, 1988, and range
from 0.6% to a maximum of 5% of compensation. For purposes of the amended
Retirement Plan a participant's compensation is base salary plus, in the case of
the Bank's Supplemental Retirement Plan, awards or portions of awards made under
certain incentive compensation plans and programs. Both the regular annual
credits and annual transition credits receive interest credits at a rate that is
set each year by the Bank. For 1995, the interest credit has been set at an
annual rate of 9.5%. In lieu of the credits described above, participants who
met certain age and service requirements as of December 31, 1988 may elect when
they retire to receive their retirement benefits for all years of service
(including service after December 31, 1988) under the Old Formula, as modified
to comply with the Tax Reform Act of 1986 and subsequent legislation. Under the
Retirement Plan, the normal retirement age is 65.
15
<PAGE> 21
The estimated annual retirement benefits payable to the individuals named
under the caption Executive Compensation with the exception of Messrs. Labrecque
and Boudreau are as follows:
<TABLE>
<CAPTION>
Estimated Annual
Year Attains Benefit If Retires
Name Age 65 At Normal Retirement Age(a)
---- ------------ ---------------------------
<S> <C> <C>
Richard J. Boyle 2008 $ 593,715
E. Michel Kruse 2009 347,369
L. Edward Shaw, Jr. 2009 345,294
</TABLE>
- ---------------
(a) The estimated annual retirement benefits shown above are in the form of a
single life annuity, including the individuals' accrued benefits as of
December 31, 1988 under the Old Formula, but in the case of benefits
determined under the Old Formula after the reduction for Social Security
benefits. Benefits for years of service after 1994 have been determined by
assuming no increase in base salaries and annual bonuses equal to the
average annual bonuses received in the last five years, and, for benefits
determined under the amended Retirement Plan, an interest credit at a 9.5%
annual rate, which is the 1995 rate for the interest credit. Benefits are
computed without reference to limitations on compensation and benefits to
which the Retirement Plan is subject under the Internal Revenue Code,
because any benefits affected by such limitations are made up under the
Bank's supplemental benefit plans.
------------------
Messrs. Labrecque, Boyle and Boudreau are eligible to elect to receive
their entire retirement benefits under the Old Formula. The estimated annual
retirement benefits payable to Messrs. Labrecque and Boudreau under the Old
Formula are greater than the estimated benefits as determined under the amended
provisions of the Retirement Plan used to compute the estimated benefits shown
in the above table. The following table illustrates the estimated annual
retirement benefit payable under the Old Formula (before any reduction for
Social Security benefits) as a single life annuity to any employee retiring at
normal retirement age in specified average covered compensation and
years-of-service classifications:
Pension Plan Table
<TABLE>
<CAPTION>
Years of Service
------------------------------------
Remuneration 30 35 40
- ------------------- -------- -------- ----------
<S> <C> <C> <C>
$ 500,000 $287,500 $312,500 $ 337,500
750,000 431,250 468,750 506,250
1,000,000 575,000 625,000 675,000
1,250,000 718,750 781,250 843,750
1,500,000 862,500 937,500 1,012,500
</TABLE>
Retirement benefits under the Old Formula are computed by a formula the
factors of which are base salary (plus, in the case of the Bank's Supplemental
Retirement Plan, awards or portions of awards under certain incentive
compensation plans) and years of service (not in excess of 40), reduced by a
portion of the primary Social Security benefit payable to the employee. Such
benefits are reduced on a actuarial basis where survivorship benefits are
provided. The amounts of covered compensation for 1994 under the Old Formula
(including the Bank's Supplemental Retirement Plan) for Messrs. Labrecque and
Boudreau were $1,255,000 and $662,500, respectively, and their credited periods
of service at the end of 1994 for purposes of the Old Formula were 30 years and
six months and 33 years and four months, respectively.
TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS
The Corporation has adopted a program that, in the event of a change in control,
as described below, protects compensation awards which have already been granted
to employees (i.e., stock options, deferred compensation, retirement benefits
and defined contribution plan accounts). The program also provides that if an
employee is terminated within 24 months after a change in control, he or she
would be paid twice the amount of severance payable under the Corporation's
salary continuation policy. Under the program certain senior officers who are
not covered by the Corporation's salary continuation policy would receive one
year's salary plus payments based on service to a maximum of two year's salary
if their employment is terminated under
16
<PAGE> 22
limited circumstances before or within 24 months following a change in control,
and, subject to certain limitations, would continue to participate in the
Corporation's life, disability, accident and insurance plans for a period equal
to the number of weeks of salary being paid to the officer.
As part of the program, the Corporation also has entered into agreements
with certain officers, including the Executive Officers named under the caption
Executive Compensation, who are not covered by the Corporation's salary
continuation policy or by the arrangement for certain senior officers described
above. These agreements provide that the officer agrees to remain in the employ
of the Corporation and its subsidiaries for a period of 12 months following a
change in control of the Corporation. They also provide generally that if the
officer's employment is terminated under certain limited circumstances before or
within 24 months after a change in control, the officer (a) will receive a
single sum payment equal to two or three times, depending on the officer's
position, the sum of (i) such officer's current annual base salary and (ii) an
amount equal to such current annual base salary multiplied by such officer's
average percentage annual bonus paid or payable over the preceding five years
(expressed as a percentage of annual base salary) and (b) subject to certain
limitations will continue to participate in the Corporation's life, disability,
accident and health insurance plans for up to 24 or 36 months, depending on the
officer's position, after such officer's termination. The agreements continue in
effect until December 31, 1995, and are automatically renewed thereafter for
additional one year periods unless at least three months prior notice is given;
however, each agreement terminates when the officer reaches age 65. The
agreements also provide that if an officer's change in control benefits, less
the 20% excise tax imposed under Section 4999 of the Internal Revenue Code,
would exceed the maximum amount which could be paid to the officer without such
excise tax being imposed, the Corporation will pay the officer an additional
amount so that the net amount retained by the officer equals the full amount of
the officer's change in control benefits. In all other situations, the officer's
change in control benefits are limited to the amount which can be paid without
incurring such excise tax.
The 1982, 1987 and 1994 Long-Term Incentive Plans of the Corporation
provide that in the event of a change in control of the Corporation, or in
certain limited circumstances upon termination of employment prior to a change
in control, (i) all non-qualified stock options and related stock appreciation
rights will be exercisable as of the date of the change in control or, in the
case of the 1982, 1987 and 1994 Plans, six months after the option or stock
appreciation right was granted, if later, and (ii) the terms and conditions
which must be satisfied with respect to any restricted stock units or shares of
restricted stock will be deemed satisfied. The Plans also provide that in the
case of termination of employment under certain limited circumstances before or
within 24 months after a change in control of the Corporation, incentive stock
options granted after July 17, 1990 and all non-qualified stock options (and
related stock appreciation rights) will be exercisable within 24 months after
any such termination. The 1982, 1987 and 1994 Plans further provide that in the
event of a change in control of the Corporation, the value of any earned
performance share units previously deferred will be paid in a single sum after
the change in control.
The amended Retirement Plan provides that, in the event of a change in
control of the Corporation on or prior to December 31, 1995, each participant's
interest in the Plan will be fully vested and the Plan may not be merged or
consolidated with, or transfer its assets or liabilities to, any other plan. The
Bank's Supplemental Retirement Plan and the Bank's supplemental benefit plans
also provide that in the event of a change in control of the Corporation, and in
certain limited circumstances as a result of a participant's termination of
employment prior to a change in control, each participant's interest in the
Supplemental Retirement Plan or benefit under a supplemental benefit plan will
be fully vested and paid in a single sum.
The Bank's Thrift-Incentive Plan provides that in the event of a change in
control of the Corporation on or prior to December 31, 1995, each participant's
interest in the Plan will be fully vested. Further, under the program, in the
event of a change in control of the Corporation, compensation awards deferred
under the management incentive program maintained by the Bank will be paid in a
single sum.
17
<PAGE> 23
Under the program, agreements, plans and arrangements referred to above and
elsewhere in this Proxy Statement, a "change in control" will be deemed to have
occurred if any one of the following conditions shall have been satisfied:
(a) any Person is or becomes the Beneficial Owner (as defined in Rule
13d-3 under the Securities Exchange Act), directly or indirectly, of
securities of the Corporation (not including in the securities beneficially
owned by such Person any securities acquired directly from the Corporation
or its affiliates) representing 25% or more of the combined voting power of
the Corporation's then outstanding securities; or
(b) during any period of 24 consecutive months, individuals who at the
beginning of such period constitute the Board of Directors of the
Corporation and any new Director (other than a Director designated by a
Person who has entered into an agreement with the Corporation to effect a
transaction described in subparagraph (a) above or subparagraphs (c) or (d)
below) whose election by the Board of Directors or nomination for election
by the Corporation's stockholders was approved by a vote of at least
two-thirds of the Directors then still in office who either were Directors
at the beginning of the period or whose election or nomination for election
was previously so approved, cease for any reason to constitute a majority
of the Board of Directors; or
(c) the stockholders of the Corporation approve a merger or
consolidation of the Corporation with any other corporation, or a plan of
complete liquidation of the Corporation, other than (i) a merger,
consolidation or liquidation which would result in the voting securities of
the Corporation outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or being converted into voting
securities of the surviving entity), in combination with the ownership of
any trustee or other fiduciary holding securities under an employee benefit
plan of the Corporation or a Subsidiary (as such term is defined in the
change in control provision in question), at least 80% of the combined
voting power of the voting securities of the Corporation or such surviving
entity outstanding immediately after such merger, consolidation or
liquidation or (ii) a merger, consolidation or liquidation effected to
implement a recapitalization of the Corporation (or similar transaction) in
which no Person acquires more than 50% of the combined voting power of the
Corporation's then outstanding securities; or
(d) the stockholders of the Corporation approve an agreement for the
sale or disposition by the Corporation (other than to a Subsidiary) of all
or substantially all the Corporation's assets.
Notwithstanding the foregoing, with respect to a particular employee, a change
in control will not include any event, circumstance or transaction occurring
during the 12-month period following a Potential Change in Control which results
from the action of any entity or group which includes, is affiliated with or is
wholly or partly controlled by one or more executive officers of the Corporation
in which the employee participates (a "Management Group"); provided, however,
that such action shall not be taken into account for this purpose if it occurs
within a 12-month period following a Potential Change in Control resulting from
the action of any Person which is not a Management Group.
For purposes of the foregoing definition of "change in control," the term
"Person" shall have the meaning given in Section 3(a)(9) of the Securities
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof; provided
however, a Person shall not include (i) the Corporation or any Subsidiary, (ii)
a trustee or other fiduciary holding securities under an employee benefit plan
of the Corporation or a subsidiary of the Corporation, (iii) an underwriter
temporarily holding securities pursuant to an offering of such securities or
(iv) a corporation owned, directly or indirectly, by the stockholders of the
Corporation in substantially the same proportions as their ownership of stock of
the Corporation.
For purposes of the foregoing definition of "change in control," a
"Potential Change in Control" shall be deemed to have occurred if any one of the
following conditions shall have been satisfied:
(a) the Corporation enters into an agreement, the consummation of
which would result in the occurrence of a change in control;
(b) the Corporation or any Person publicly announces an intention to
take or to consider taking action which, if consummated, would constitute a
change in control;
18
<PAGE> 24
(c) any Person who is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Corporation representing 15% or more of
the combined voting power of the Corporation's then outstanding securities,
increases such Person's beneficial ownership of such securities by five
percentage points or more over the percentage so owned by such Person on
the date specified in the change in control provision in question; or
(d) the Board of Directors adopts a resolution to the effect that a
Potential Change in Control has occurred.
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on the
Common Stock of the Corporation with that of the Standard & Poor's 500 Stock
Index (the "S&P 500 Index") and the KBW 50 Index, a bank stock index published
by Keefe, Bruyette & Woods, Inc. The KBW 50 Index is made up of 50 of the
nation's most important banking companies, including all money-center and
super-regional banking companies and most major regional banking companies. The
comparison for each of the periods assumes that $100 was invested on December
31, 1989 in each of the Common Stock of the Corporation, the stocks included in
the S&P 500 Index and the stocks included in the KBW 50 Index. These indexes,
which reflect formulas for dividend reinvestment and weighting of individual
stocks, do not necessarily reflect returns that could be achieved by individual
investors.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG THE CORPORATION, THE S&P 500 INDEX AND THE KBW 50 INDEX
<TABLE>
<CAPTION>
THE CHASE
MEASUREMENT PERIOD MANHATTAN S&P 500
(FISCAL YEAR COVERED) CORPORATION INDEX KBW 50 INDEX
--------------------- ----------- ------- ------------
<S> <C> <C> <C>
1989 100.00 100.00 100.00
1990 33.58 96.89 71.81
1991 59.09 126.28 113.67
1992 100.97 135.88 144.84
1993 124.73 149.52 152.86
1994 131.87 151.55 145.07
</TABLE>
19
<PAGE> 25
TRANSACTIONS WITH MANAGEMENT AND OTHERS
Directors and officers of the Corporation and their associates were customers
of, and had transactions with, the Bank and other subsidiaries of the
Corporation in the ordinary course of business during 1994, and additional
transactions in the ordinary course of business may be expected to take place in
the future with the Bank and other subsidiaries of the Corporation. All loans or
extensions of credit included in such transactions in 1994, or which were
outstanding during 1994, were made in the ordinary course of business on
substantially the same terms, including interest rates and collateral, if any,
as those prevailing at the time for comparable transactions with other persons
and when made did not involve more than normal risk of collectibility or present
other unfavorable features.
In the ordinary course of business the Corporation and its subsidiaries,
including the Bank, use the products or services of a number of organizations
with which Directors of the Corporation are or were affiliated as officers or
directors. Management believes that such transactions were on terms that were at
least as favorable to the Corporation or the subsidiaries of the Corporation
involved as would have been available from unaffiliated parties. It is expected
that the Corporation and its subsidiaries will in the future have transactions
with organizations with which Directors of the Corporation are affiliated as
officers or directors.
APPROVAL OF AUDITORS (Item 2 on Proxy)
The firm of Price Waterhouse has been selected by the Audit Committee and
appointed by the Board of Directors to serve as the Corporation's independent
auditors for the fiscal year beginning January 1, 1995. In line with past
practice, the Board is requesting stockholder approval of the appointment. A
partner in the firm will be present at the meeting to answer questions and will
have the opportunity to make a statement, if he so desires. The firm is
presently serving both the Corporation and the Bank as independent auditors.
Management recommends that the stockholders vote FOR approval of this
appointment. If the appointment is not approved by a majority of the votes cast
at the meeting on this proposal by the holders of the shares of Common Stock of
the Corporation entitled to vote thereat, the appointment of the independent
auditors will be reconsidered by the Board and the Audit Committee of the Board.
The Corporation's expense for the auditing and auditing related services
provided by the firm during 1994 was approximately $8,800,000. If not otherwise
specified, proxies will be voted FOR approval of this appointment.
ANNUAL INCENTIVE ARRANGEMENT FOR CERTAIN EXECUTIVE OFFICERS (Item 3 on Proxy)
The Board of Directors believes that the future success of the Corporation and
its subsidiaries is dependent upon the quality of management, and that
compensation programs are important in attracting and retaining individuals of
superior ability and motivating their efforts on behalf of the Corporation and
its business interests.
Under Section 162(m) of the Internal Revenue Code and certain proposed
regulations thereunder (the "Proposed Regulations"), the amount of compensation
paid by a publicly-held corporation, like the Corporation, to its chief
executive officer and four other most highly compensated executive officers
during any year which may be deductible for federal income tax purposes is
limited to $1,000,000 per person per year except that compensation which is
"qualified performance-based compensation" will be excluded for purposes of
calculating the amount of deductible compensation.
For many years, one element of the incentive compensation provided by the
Corporation to its Executive Officers has been the payment of an annual bonus
under The Chase Manhattan Management Incentive Plan (the "MIP"). The MIP is
designed to reward the Corporation's Executive Officers for their contribution
to the Corporation's performance. Bonus awards to the Corporation's Executive
Officers under the MIP are based on performance, but do not constitute
"qualified performance-based compensation" as that term is used in the Internal
Revenue Code and the Proposed Regulations.
The Board of Directors believes that where the Corporation can seek to
accomplish its compensation objectives in a manner which maximizes the
deductibility of such compensation for federal income tax purposes, the
Corporation should seek to do so. Accordingly, the Board of Directors adopted,
effective January
20
<PAGE> 26
1995 and subject to stockholder approval, an annual bonus arrangement, The Chase
Manhattan Annual Incentive Arrangement for Certain Executive Officers (the
"Annual Incentive Arrangement"), which is designed to qualify the amounts paid
from time to time thereunder to certain of the Corporation's Executive Officers
as "qualified performance-based compensation" under Section 162(m) of the
Internal Revenue Code and the Proposed Regulations.
The following summary of the material terms of the Annual Incentive
Arrangement is qualified in its entirety by reference to the terms of the Annual
Incentive Arrangement, a copy of which is attached to this Proxy Statement as
Exhibit A.
PURPOSE OF THE ANNUAL INCENTIVE ARRANGEMENT
The purpose of the Annual Incentive Arrangement is to provide a means of
rewarding certain Executive Officers of the Corporation who have contributed to
the profitability of the Corporation in a manner in which permits such
compensation to be deductible by the Corporation or any of its subsidiaries for
federal income tax purposes.
ADMINISTRATION
The administration of the Annual Incentive Arrangement is vested in the
Compensation Committee of the Corporation's Board of Directors. Under the Annual
Incentive Arrangement, each member of the Committee is required to qualify as an
"outside director" as that term is used in Section 162(m) of the Internal
Revenue Code and the Proposed Regulations.
ELIGIBILITY
All Executive Officers of the Corporation at or above the level of an Executive
Vice President (of which there are presently 12) are eligible to participate in
the Annual Incentive Arrangement. Neither other employees of the Corporation nor
members of the Compensation Committee are eligible for awards under the Annual
Incentive Arrangement.
In accordance with the Proposed Regulations, within the first three months
of each calendar year, the Compensation Committee is required to designate those
Executive Officers who will participate in the Annual Incentive Arrangement for
that year. All eligible Executive Officers who are not designated to participate
in the Annual Incentive Arrangement and any person who becomes an eligible
Executive Officer of the Corporation during a calendar year will be eligible to
participate in the MIP.
If any participant in the Annual Incentive Arrangement ceases to be
employed by the Corporation or any of its subsidiaries during any calendar year
other than due to retirement, death or disability, such participant will not be
entitled to receive any award under the Annual Incentive Arrangement for such
year unless the Compensation Committee, in its sole discretion, determines that
the payment of such award is in the best interests of the Corporation.
AWARDS UNDER THE ANNUAL INCENTIVE ARRANGEMENT
Within the first three months of each year, the Compensation Committee is
required to specify in writing the percentage of the consolidated after-tax net
income of the Corporation and its subsidiaries for such year that will be
included in the bonus pool from which awards will be made to the participants in
the Annual Incentive Arrangement for that calendar year (the "Bonus Pool"). The
Bonus Pool will also include up to $3,000,000 of the aggregate amount of the
Bonus Pools from prior years as to which awards were not made (the "Carryforward
Amount"). Within such three-month period, the Committee is also required to
allocate in writing the portion of each of the two components of the Bonus Pool
that each participant may receive in respect of such calendar year, subject to
the requirement in the Annual Incentive Arrangement that no participant may
receive an award under the Annual Incentive Arrangement which exceeds the sum of
.40% of the consolidated after-tax net income of the Corporation and its
subsidiaries for such year and 40% of the
21
<PAGE> 27
Carryforward Amount. The Committee may not allocate more than 100% of each
component of the Bonus Pool.
Because the amount of the Bonus Pool is based upon the consolidated
after-tax net income of the Corporation and its subsidiaries, the amount of any
awards that may be payable to participating Executive Officers under the Annual
Incentive Arrangement cannot currently be determined. If the Annual Incentive
Arrangement had been in effect during 1994 and assuming that there was no
Carryforward Amount, the maximum amount that could have been awarded thereunder
to any participant would have been approximately $4,800,000. Although this
amount is greater than the amount of any individual award under the MIP, the
Compensation Committee is permitted, under the Proposed Regulations and the
Annual Incentive Arrangement, to use its discretion to reduce the amount of any
award below the maximum amount determined pursuant to the formula contained in
the Annual Incentive Arrangement. The Committee believes that it would have used
such discretion to award each Executive Officer an amount equal to the amount
actually awarded under the MIP. It is the Committee's intention to use this
discretion in the future, when appropriate, to reduce the size of awards to a
level which it believes is appropriate based upon its assessment of the
performance of the Corporation and of each participant.
PAYMENT OF AWARDS
Following the end of each calendar year, the Compensation Committee is required
to certify in writing (i) the amount, if any, of the consolidated after-tax net
income of the Corporation and its subsidiaries for such year, (ii) the amount of
the Bonus Pool and (iii) the amount of bonus awards to each participant. The
existence of consolidated after-tax net income for the Corporation and its
subsidiaries is a prerequisite to the payment of any awards under the Annual
Incentive Arrangement, even if the Bonus Pool includes a Carryforward Amount.
In the event the Compensation Committee determines, upon the advice of
counsel to the Corporation, that payment of an award may be made under the
Annual Incentive Arrangement before the end of a calendar year without
materially adversely affecting the ability of the Corporation or any of its
subsidiaries to deduct for federal income tax purposes the amounts payable under
the Annual Incentive Arrangement, including, without limitation, by making a
partial payment of an award based upon the consolidated after-tax net income of
the Corporation and its subsidiaries for the first nine months or any other
portion of a calendar year (which payment may be contingent upon the repayment
to the Corporation of any amount of any award in excess of the amount payable on
account of the consolidated after-tax net income of the Corporation and its
subsidiaries for the entire year), the Committee may elect during December of
any year to pay awards under the Annual Incentive Arrangement prior to the
expiration of the year. In the event of any such election by the Committee, the
Committee is required to certify in writing the portion of the year for which
awards are to be paid, and to make the certifications in writing specified in
the preceding paragraph with respect to such portion of the year as if such
portion were a full calendar year.
Awards may be paid in cash, stock (which may have such restrictions on
transferability or vesting as the Compensation Committee shall determine and may
be granted in the form of restricted stock units pursuant to the 1994 Long-Term
Incentive Plan if the Committee so determines), any other form of consideration
determined by the Committee or any combination thereof. Each bonus award will be
paid first from the consolidated after-tax net income of the Corporation and its
subsidiaries included in the Bonus Pool and then from the Carryforward Amount to
the extent necessary.
Each Executive Officer is permitted to defer payment of all or any part of
any award under the Annual Incentive Arrangement in accordance with the
Corporation's deferred compensation arrangements.
AMENDMENT AND TERMINATION
The Compensation Committee may amend the Annual Incentive Arrangement at any
time, provided, that such changes may be made consistent with the provisions of
Section 162(m) of the Internal Revenue Code and the Proposed Regulations without
adversely affecting the ability of the Corporation or any of its subsidiaries to
deduct the compensation which may be paid pursuant to the Annual Incentive
Arrangement for
22
<PAGE> 28
federal income tax purposes and, provided, further, that no amendment that
requires stockholder approval under Section 162(m) of the Internal Revenue Code
or the Proposed Regulations may be made without such approval. The Board of
Directors of the Corporation may terminate the Annual Incentive Arrangement at
any time.
APPROVAL OF MATERIAL TERMS
In order for the compensation payable pursuant to the Annual Incentive
Arrangement to constitute "qualified performance-based compensation" under the
Internal Revenue Code and the Proposed Regulations, the material terms of the
Annual Incentive Arrangement must be approved by the affirmative vote of a
majority of the votes cast at the meeting on this proposal by the holders of the
shares of Common Stock of the Corporation entitled to vote thereat. No awards
will be made pursuant to the Annual Incentive Arrangement unless such approval
is obtained.
The Board of Directors recommends that the stockholders vote FOR approval
of the material terms of the Annual Incentive Arrangement. If not otherwise
specified, proxies will be voted FOR approval.
THREE-YEAR INCENTIVE ARRANGEMENT FOR CERTAIN EXECUTIVE OFFICERS (Item 4 on
Proxy)
As stated under the caption Annual Incentive Arrangement for Certain Executive
Officers, the Board of Directors believes that the future success of the
Corporation and its subsidiaries is dependent upon the quality of management,
and that compensation programs are important in attracting and retaining
individuals of superior ability and motivating their efforts on behalf of the
Corporation and its business interests. The Board of Directors also believes
that where the Corporation can seek to accomplish its compensation objectives in
a manner which maximizes the deductibility of such compensation for federal
income tax purposes, the Corporation should seek to do so.
In March 1994, the Compensation Committee of the Corporation's Board of
Directors adopted, subject to stockholder approval, a long-term incentive
arrangement, the Three-Year Incentive Arrangement for Certain Executive Officers
(the "Three-Year Incentive Arrangement"), which is designed to qualify the
amounts paid thereunder to certain of the Corporation's Executive Officers as
"qualified performance-based compensation" under Section 162(m) of the Internal
Revenue Code and the Proposed Regulations. For a discussion of the treatment of
"qualified performance-based compensation" under Section 162(m) of the Internal
Revenue Code and the Proposed Regulations, see the explanation under the caption
Annual Incentive Arrangement for Certain Executive Officers. The Three-Year
Incentive Arrangement was ratified by the Board of Directors in February 1995.
The following summary of the material terms of the Three-Year Incentive
Arrangement is qualified in its entirety by reference to the terms of the
Three-Year Incentive Arrangement, a copy of which is attached to this Proxy
Statement as Exhibit B.
PURPOSE OF THE THREE-YEAR INCENTIVE ARRANGEMENT
The Three-Year Incentive Arrangement is intended to provide competitive
compensation opportunities for sustained improved corporate performance in a
manner in which permits such compensation to be deductible by the Corporation
and its subsidiaries for federal income tax purposes.
ADMINISTRATION
The administration of the Three-Year Incentive Arrangement is vested in the
Compensation Committee. Under the Three-Year Incentive Arrangement, each member
of the Committee is required to qualify as an "outside director" as that term is
used in Section 162(m) of the Internal Revenue Code and the Proposed
Regulations.
23
<PAGE> 29
ELIGIBILITY
Any Executive Officer of the Corporation at or above the level of an Executive
Vice President on December 31, 1996 or such later date as a performance target
provided for in the Three-Year Incentive Arrangement is achieved may be eligible
to receive an award under the Three-Year Incentive Arrangement. At present,
there are twelve Executive Officers of the Corporation eligible to participate
in the Three-Year Incentive Arrangement. Awards may be paid under the Three-Year
Incentive Arrangement only to the five Executive Officers of the Corporation who
are "covered employees." (The term "covered employees" is defined in Section
162(m) of the Internal Revenue Code and the Proposed Regulations to mean the
chief executive officer and the four other most highly compensated executive
officers of a corporation as determined in accordance with the executive
compensation disclosure rules under the Securities Exchange Act.) Executive
Officers of the Corporation who are not "covered employees" may receive awards
under other compensation arrangements, but if such awards are paid on the basis
of performance criteria similar to those contained in the Three-Year Incentive
Arrangement, such awards may not exceed the amounts that could be paid to such
Executive Officers under the Three-Year Incentive Arrangement if they were
"covered employees." Neither other employees of the Corporation nor members of
the Compensation Committee are eligible for awards under the Three-Year
Incentive Arrangement.
AWARDS UNDER THE THREE-YEAR INCENTIVE ARRANGEMENT
Awards may be made under the Three-Year Incentive Arrangement based upon the
achievement of certain performance targets related to the average over 10
consecutive Trading Days (as defined below) between January 1, 1994 and March
31, 1997 of the mean between the highest and lowest quoted selling prices of the
Common Stock of the Corporation on the New York Stock Exchange (the "NYSE"). A
Trading Day is defined in the Three-Year Incentive Arrangement as any day on
which the NYSE is open for trading of shares of the Corporation's Common Stock.
The specific performance targets provided for in the Three-Year Incentive
Arrangement are a $52 per share average price (the "$52 Target") and a $60 per
share average price (the "$60 Target"). Such Targets are subject to adjustment
upon the occurrence of certain events which result in an increase or decrease in
the number of outstanding shares of the Corporation's Common Stock.
Subject to the adjustments described below in the event a Target is reached
by December 31, 1996, the maximum amounts payable under the Three-Year Incentive
Arrangement upon reaching the $52 Target and the $60 Target are $4,500,000 and
$9,000,000, respectively. The maximum amount payable under the Three-Year
Incentive Arrangement if the $60 Target is reached is required to be reduced by
any amounts paid under the Three-Year Incentive Arrangement upon having reached
the $52 Target.
If either the $52 Target or the $60 Target is reached by December 31, 1996,
the maximum amount payable as a result of reaching such Target will be adjusted
by multiplying such maximum amount by a fraction, the numerator of which is the
average over the 10 consecutive Trading Days ending on December 31, 1996 of the
mean between the highest and lowest quoted selling prices for shares of the
Corporation's Common Stock on the NYSE and the denominator of which is the
Target which was reached. For example, if the $52 Target were reached by
December 31, 1996 and the average price determined during the 10 consecutive
trading days ending December 31, 1996 was $57.20 per share, the maximum amount
payable pursuant to the Three-Year Incentive Arrangement would be $4,950,000
(i.e., $4,500,000 x $57.20/$52.00).
The Three-Year Incentive Arrangement contains a limitation on the portion
of the maximum amount payable pursuant thereto which any "covered employee" may
receive. The Chairman of the Board and the President, if any, may each receive
one-third, and the Vice Chairman of the Board and each other "covered employee"
may each receive one-ninth of the maximum award payable upon reaching a
performance target. If Messrs. Labrecque, Boyle, Boudreau, Kruse and Shaw were
the "covered employees" who received awards based upon reaching the $60 Target
(without any adjustment due to reaching such Target by December 31, 1996), Mr.
Labrecque would be eligible to receive $3,000,000, each of the other "covered
employees" would be eligible to receive $1,000,000, so that a total of
$7,000,000 would be available for award under the Three-Year Incentive
Arrangement to the Executive Officers of the Corporation. Information concerning
estimated future payouts under the Three-Year Incentive Arrangement is presented
in tabular form under the caption
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Executive Compensation -- Long-Term Incentive Plan Awards. In the event one of
the "covered employees" other than Mr. Labrecque were to be the President of the
Corporation, such "covered employee" would be eligible to receive $3,000,000, so
that the total amount available for award to the Executive Officers of the
Corporation under the Three-Year Incentive Arrangement would be $9,000,000.
The Compensation Committee is permitted, under the Proposed Regulations and
the Three-Year Incentive Arrangement, to use its discretion to reduce the amount
of any award below the maximum amount determined pursuant to the formula
contained in the Three-Year Incentive Arrangement. It is the Committee's
intention to use this discretion, if appropriate, to reduce the size of awards
to a level which it believes is appropriate based upon its assessment of the
performance of the Corporation and any other factors which it deems relevant
over the period during which the award was earned.
PAYMENT OF AWARDS
Unless deferred by the Compensation Committee, awards based upon achieving
Targets on or before December 31, 1996 will be paid on or as soon as possible
after December 31, 1996 and awards based upon achieving Targets after December
31, 1996 but on or before March 31, 1997 will be paid on or as soon as possible
after the date of the Targets are met.
Awards may be paid in cash, shares of the Corporation's Common Stock (which
may have such restrictions on transferability or vesting as the Compensation
Committee shall determine and may be granted in the form of restricted stock
units pursuant to the 1994 Long-Term Incentive Plan if the Committee so
determines), any other form of consideration determined by the Committee or any
combination thereof. Each "covered employee" is permitted to defer payment of
all or any part of any award under the Three-Year Incentive Arrangement in
accordance with the Corporation's deferred compensation arrangements.
EFFECT OF CHANGE IN CONTROL
In the event of a change in control of the Corporation, as described under the
caption Termination of Employment and Change in Control, the Executive Officers
who are "covered employees" are required to be paid the maximum amount payable
under the Three-Year Incentive Arrangement for each Target which is reached upon
the latter of the change in control or the achievement of a Target. If the
change in control occurs after one or both Targets are reached but before
December 31, 1996, the maximum aggregate amount payable upon the achievement of
the higher Target shall be adjusted in the manner provided in the Three-Year
Incentive Arrangement for Targets achieved on or before December 31, 1996 as if
the date on which such change in control occurred was December 31, 1996.
AMENDMENT AND TERMINATION
The Compensation Committee may amend the Three-Year Incentive Arrangement at any
time, provided that such changes may be made consistent with the provisions of
Section 162(m) of the Internal Revenue Code and the Proposed Regulations without
adversely affecting the ability of the Corporation or any of its subsidiaries to
deduct the compensation which may be paid pursuant to the Three-Year Incentive
Arrangement for federal income tax purposes and provided, further, that no
amendment that requires stockholder approval under the Internal Revenue Code or
the Proposed Regulations may be made without such approval. The Board of
Directors may terminate the Three-Year Incentive Arrangement at any time.
APPROVAL OF MATERIAL TERMS
In order for the compensation payable pursuant to the Three-Year Incentive
Arrangement to constitute "qualified performance-based compensation" under the
Internal Revenue Code and the Proposed Regulations, the material terms of the
Three-Year Incentive Arrangement must be approved by the affirmative vote of a
majority of the votes cast at the meeting on this proposal by the holders of the
shares of Common Stock of the Corporation entitled to vote thereat. No awards
will be made pursuant to the Three-Year Incentive Arrangement unless such
approval is obtained.
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The Board of Directors recommends that the stockholders vote FOR approval
of the material terms of the Three-Year Incentive Arrangement. If not otherwise
specified, proxies will be voted FOR approval.
STOCKHOLDER PROPOSALS (Items 5, 6, 7 and 8 on Proxy)
Stockholders submit a number of proposals each year. In prior years, the
Corporation has adopted some of these recommendations, either as proposed or in
modified form. As announced at prior Annual Meetings, a stockholder proposal
generally will be voted on only if the stockholder or the stockholder's
representative attends the meeting and presents the proposal.
This year, the management of the Corporation, with the approval of the
Board of Directors, has determined that each of the following proposals should
be opposed. For approval, a proposal must receive the affirmative vote of a
majority of the votes cast at the meeting on such proposal by the holders of the
shares of Common Stock of the Corporation entitled to vote thereat. In addition,
formal implementation of the proposals described below under Items 5 and 6 on
Proxy would require the adoption at a later stockholders' meeting of amendments
to the Certificate of Incorporation of the Corporation approved by the
affirmative vote of the holders of 75% or more of the voting power of the then
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of Directors, voting together as a single class.
(Item 5 on Proxy)
Evelyn Y. Davis, Watergate Office Building, 2600 Virginia Avenue, N.W., Suite
215, Washington, D.C. 20037, who owned 200 shares of Common Stock of the
Corporation of record on February 21, 1995, has stated that she intends to
introduce the following resolution at the meeting for the reasons given:
RESOLVED: "That the shareholders of Chase Manhattan Corp. recommend
that the Board of Directors take the necessary steps to reinstate the
election of directors ANNUALLY, instead of the stagger system which was
recently adopted."
REASONS: "Until recently, directors of Chase Manhattan were elected
annually by all shareholders."
"The great majority of New York Stock Exchange listed corporations
elect all their directors each year."
"This insures that ALL directors will be more accountable to ALL
shareholders each year and to a certain extent prevents the
self-perpetuation of the Board."
"Last year the owners of 54,930,221 shares, representing approximately
49% of shares voting, voted FOR this proposal."
"If you AGREE, please mark your proxy FOR this resolution."
------------------------
The management of the Corporation again recommends a vote AGAINST this
proposal, which was defeated at seven prior Annual Meetings. At the 1994 Annual
Meeting over 56,786,000 shares were voted against it.
In 1986, the stockholders approved an amendment to the Corporation's
Certificate of Incorporation which, in addition to related matters, classified
the Board into three classes of nearly equal size. The members of each class
serve for three years and one class is elected at each Annual Meeting.
The Board recommended the amendment in 1986 to help assure a measure of
continuity in the management of the business and affairs of the Corporation and
provide the Board with sufficient time to review any proposal from a substantial
stockholder and to take appropriate actions which are believed to be in the best
interests of all of the Corporation's stockholders. Management believes that the
reasons for the Board's recommendation are still valid.
(Item 6 on Proxy)
John J. Gilbert, and Margaret P. Gilbert, 29 East 64th Street, New York, New
York 10021-7043, who owned 200 shares of Common Stock of the Corporation of
record on February 21, 1995 (and who have stated that
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they represent interests in an additional 200 shares of such Common Stock) have
stated that they intend to introduce the following resolution at the meeting for
the reasons given:
RESOLVED: That the stockholders of Chase Manhattan Corporation,
assembled in annual meeting in person and by proxy, hereby request the
Board of Directors to take the steps necessary to provide for cumulative
voting in the election of directors, which means each stockholder shall be
entitled to as many votes as shall equal the number of shares he or she
owns multiplied by the number of directors to be elected, and he or she may
cast all of such votes for a single candidate, or any two or more of them
as he or she may see fit.
REASONS
Continued very strong support along the lines we suggest were shown at
the last annual meeting when 31.14%, an increase over the previous year,
4,278 proxies from owners of 34,835,762 shares, were cast in favor of this
proposal. The vote against included unmarked proxies.
A law enacted in California provides that all state pension holdings
and state college funds, invested in shares must be voted in favor of
cumulative voting proposals, showing increasing recognition of the
importance of this democratic means of electing directors.
The National Bank Act provides for cumulative voting. Unfortunately,
in many cases companies get around it by forming holding companies without
cumulative voting. Banking authorities have the right to question the
capability of directors to be on banking boards. Unfortunately, in many
cases authorities come in after and say the director or directors were not
qualified. We were delighted to see that the SEC has finally taken action
to prevent bad directors from being on the boards of public companies.
We think cumulative voting is the answer to find new directors for
various committees. Additionally, some recommendations have been made to
carry out the Valdez 10 points. The 11th should be having cumulative voting
and ending stagger systems of electing directors, in our opinion.
When Alaska became a state it took away cumulative voting over our
objections. The Valdez oil spill might have been prevented if environmental
directors were elected through cumulative voting. Also, the huge derivative
losses might have been prevented with cumulative voting.
Many successful corporations have cumulative voting. For example,
Pennzoil having cumulative voting defeated Texaco in that famous case.
Another example is Ingersoll-Rand, which has cumulative voting and won two
awards. In FORTUNE magazine it was ranked second in its industry as
"America's Most Admired Corporations" and the WALL STREET TRANSCRIPT noted
"on almost any criteria used to evaluate management, Ingersoll-Rand
excels." In 1994 they raised their dividend. We believe that Chase should
follow these examples.
Another reason for cumulative voting is to get more directors like
David McLaughlin, who is on the boards of Atlantic Richfield and
Westinghouse, both of which have ended their stagger system, which Chase
still has; and William Gray, who is also on the board of Westinghouse. My
resolution was withdrawn when the Westinghouse directors agreed to end
their stagger system.
If you agree, please mark your proxy for this resolution; otherwise it
is automatically cast against it, unless you have marked to abstain.
------------------------
The management of the Corporation again recommends a vote AGAINST this
proposal. A similar proposal has been submitted to the stockholders at 12
earlier Annual Meetings and each time was defeated. At the 1994 Annual Meeting
over 77,027,000 shares were voted against the proposal.
Management continues to believe that the Directors should represent
stockholders as a group rather than each Director representing a different
special interest faction. Cumulative voting could result in a Director being
committed to serve the special interests of the faction responsible for the
Director's election rather than the overall best interests of the stockholders.
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(Item 7 on Proxy)
The Congregation of the Passion-Holy Cross Province, 4127 N. Central Park,
Chicago, Illinois 60618, the Sisters of Mercy of Connecticut, Inc., 249 Steele
Road, West Hartford, Connecticut 06117, the Catholic Foreign Mission Society of
America, Inc., P.O. Box 306, Maryknoll, New York 10545-0306, and the Sisters of
Charity of Cincinnati, 5900 Delhi Road, Mount St. Joseph, Ohio 45051, who have
stated that they beneficially owned, respectively, 1,700 shares, 3,900 shares,
200 shares and 1,000 shares of Common Stock of the Corporation on February 21,
1995, have stated that they intend to introduce the following resolution at the
meeting:
Our bank has outstanding loans in many developing countries currently
undergoing austerity and structural adjustment programs strongly urged by
the International Monetary Fund and World Bank. These programs aim to
stabilize heavily indebted economies, and enable countries to service their
debts.
However, we believe that while these policies press debtor nations to
pay interest, they often erode those countries' human and natural
resources, increase their domestic inequalities and international
dependency, and undermine their long-term capacity to repay their actual
debts.
Structural adjustment programs typically include:
- Export promotion strategies including removal of import tariffs,
reducing local industries' ability to compete against foreign
companies and deregulation, which often increases destructive
exploitation of human and natural resources,
Cuts in spending for health, education and housing,
- Wage controls and reduction of subsidies for basic products which
shrink workers' real incomes,
- Restricted domestic credit and higher interest rates, limiting
entrepreneurial possibilities for small producers (especially women),
- Higher taxes which fall disproportionately on poor and working people,
- Wholesale privatization of state-owned enterprises, which reduce
government assets available to finance future infrastructural and
social development and repay debts.
We believe adjustment programs have contributed heavily to the following
circumstances:
Brazil: Real minimum wages dropped 40% during the 1980's, as the
percentage of Brazilians in poverty rose from 24% to 39%. Today more than
one in five confronts hunger daily.
Nicaragua: Unemployment totals 60%, while teachers, nurses and
policemen earn less than the official subsistence level. Cuts in spending
for health and sanitation fuel cholera and malaria epidemics, and the
reemergence of diseases previously eradicated by national programs. Hunger
and starvation cause more deaths than ever in Nicaragua's history.
Privatization measures provoked massive strikes, while other adjustment
policies sparked armed rebellions.
Peru: Infant mortality has risen to 60 deaths per 100 live births
nationally, and 260/1000 in southern regions. Primary school enrollment has
dropped 11%, as fewer families can afford the fees. Programs to cushion the
adjustment programs' impact since 1990 have been grossly underfunded and
underspent.
Philippines: Half the population (and 75% of rural dwellers) are un or
underemployed. Starvation has doubled since 1985. Tight money policies have
resulted in usurious interest rates (up to 400%) for small farmers. Poverty
and unemployment drive landless poor to migrate seeking food and work --
devastating forests, soil and fisheries. Debt servicing absorbs 40% of the
national budget and 31% of export earnings, limiting resources available
for development.
We believe these issues warrant our bank's attention since they affect
its creditors, customers and potential markets.
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RESOLVED: Shareholders request our bank prepare a report stating its
official position on structural adjustment programs and analyzing those
programs' impact where the bank has outstanding loans, including debtor
countries'
- Ability to repay our bank's loan
- Present and future labor forces
- Natural resources
- Social and political stability
- Potential for sustainable, democratic development.
This report should be pre-pared at a reasonable cost and excluding
confidential information.
------------------------
The management of the Corporation recommends a vote AGAINST this proposal.
As a private financial institution, the Corporation evaluates its exposure
in each country on its merits, including the capacity and willingness of its
customers to repay their obligations. It also considers a variety of other
criteria, such as the political system, economic policies, social structure,
natural resources, environmental conditions and quality of labor pool. In this
evaluation the effects of a structural adjustment program are considered along
with many other factors in a constantly changing environment.
The International Monetary Fund and the World Bank establish programs that
are designed to promote the long term economic growth of a particular country.
In our experience these programs often differ from country to country and, in
addition, the programs are often adjusted over time in view of changing
conditions in particular countries.
It would be unproductive for a private financial institution, such as the
Corporation, to prepare a general report analyzing structural adjustment
programs, including each of the five factors set forth in the proposed
resolution. Such a report would be of little use to the Corporation because of
the wide differences among structural adjustment programs from one country to
another and because a structural adjustment program is only one of many issues
that affect the capacity and willingness of debtors in particular countries to
repay their obligations. Accordingly, management is opposed to this resolution.
(Item 8 on Proxy)
Milton A. Laitman, 31 Roberts Circle, Basking Ridge, New Jersey 07920, who has
stated that he beneficially owned 2,000 shares of Common Stock of the
Corporation on February 21, 1995, has stated that he intends to introduce the
following resolution at the meeting:
The Company has a retirement plan for non-employee directors with six
years or more of Board Service. Upon retirement after 6 years of service,
eligible directors will receive an annual retirement benefit equal to 100%
of the then annual cash retainer.
RESOLVED: That the stockholders of The Chase Manhattan Corporation
assembled in person and by proxy hereby recommend that the Board of
Directors withdraw the retirement plan, thus making such a plan unavailable
to current and future non-employee directors.
REASON: Non-employee directors are more than adequately compensated by
The Chase Manhattan Corporation.
SUPPORTING STATEMENT:
a) At present the non-employee director receives an annual retainer of
$25,000.00 plus $1,000 for each meeting attended plus additional
retainer if a member or chairman of a committee. Based on 13
meetings, this provides a minimum of $38,000 annually.
b) After six years of service, each non-employee director would be
eligible to receive a retirement benefit equal to 100% of the then
annual cash retainer for a guaranteed period of years equal to
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the period of years that he served as director. If retirement is
after age 65, payments will continue for life with the same
guarantee. If we assume an average of 10 years of service and
retirement at age 70, the director receives a life annuity, 10 years
certain, worth $452,000.00 or an average additional annual income of
$45,200.
c) Each director is annually entitled to receive 300 shares of Common
Stock and the dividends on same. Currently, this amounts to an
additional $10,500 of stock plus $480 of dividends.
d) The total compensation would average -- over a ten year
period -- $94,100 per year.
This amount is overly excessive, especially when one considers the
further points that:
1. The non-employee director is already or will be eligible for a major
pension as well as other benefits from his primary employer.
2. The rate of the pension benefit (100% of annual fees after 6 years or
16.67% per year for the first 6 years) far exceeds the normal rate of
pension benefits for employees (1 1/2% per year).
3. The average non-employee director already serves on the Board of
Directors of about 2.5 additional commercial companies and is
eligible to receive a similar set of benefits from many of these
companies.
4. The cancellation of these benefits would still mean that each
non-employee director would be receiving $48,980.00 per year
exclusive of any additional fees or benefits.
5. The current retirement benefit for non-employee directors after six
years -- without any personal contributions -- is MORE THAN DOUBLE
THE maximum Social Security retirement benefit available to an
employee who has contributed steadily for 40 years.
The above supporting statements demonstrate that the provision of
these retirement benefits for non-employee directors is wasteful,
duplicative, contrary to economic wisdom and reflects a profligate use of
company assets. Moreover, this policy cannot help but undermine the morale
and productivity of full-time employees. The current minimum annual
compensation for directors should be more than adequate to attract and
retain those who are business leaders and whose counsel could benefit the
Company.
------------------------
The management of the Corporation recommends a vote AGAINST this proposal.
In order to attract and retain Directors who are qualified to fulfill their
important responsibilities, it is necessary to provide compensation that is
commensurate with these responsibilities, the qualifications of the individuals
and the time required to perform effectively. Management believes that the
qualifications of the Corporation's Directors speak for themselves. The time
spent at meetings and in preparation is also consistent with the level of
Director compensation, in management's judgment.
The Directors' retirement plan is similar to those adopted by other
substantial publicly-held companies. A survey conducted in 1994 revealed that
75% of the industrial companies and 70% of the service companies surveyed
provided retirement plans for outside Directors. The survey also showed that the
Corporation's practice of paying an annual benefit equal to the annual Board
retainer (currently $25,000) is by far the most frequently used means of
determining retirement benefits.
Elimination of the retirement plan would make the Corporation uncompetitive
with other corporations, would make it increasingly difficult to attract new
Directors and most seriously would be a sign to a group of individuals, who
served the Corporation loyally through difficult times, that such efforts were
unappreciated.
The amount of money that would be saved by eliminating the Directors'
retirement plan is minor compared to the cost to the Corporation of being unable
to attract and retain the best Directors.
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OTHER MATTERS
Management of the Corporation knows of no other matters to be presented for
action at the meeting by or on behalf of the Corporation or its management. If
any other matters shall be brought before the meeting, it is the intention of
the persons named in the accompanying proxy to vote on such matters in
accordance with their judgment. Neither abstentions nor broker non-votes will be
counted as votes cast at the meeting on any proposal.
The cost of soliciting proxies will be borne by the Corporation. In
addition to solicitations by mail, officers and regular employees of the
Corporation and the Bank may solicit proxies personally and by telephone,
telegraph or other means, for which they will receive no compensation in
addition to their normal compensation. Arrangements may also be made with
brokerage houses and other custodians, nominees and fiduciaries for the
forwarding of solicitation material to the beneficial owners of stock held of
record by such persons, and the Corporation may reimburse them for their
reasonable out-of-pocket and clerical expenses. Morrow & Co. Inc. has been
retained to aid in the solicitation of proxies for a fee of $15,000 plus out-of-
pocket expenses.
Proposals of stockholders to be presented at the 1996 Annual Meeting must
be received by the Corporation by November 10, 1995.
RONALD C. MAYER
Secretary
March 10, 1995
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EXHIBIT A
THE CHASE MANHATTAN ANNUAL
INCENTIVE ARRANGEMENT FOR CERTAIN EXECUTIVE OFFICERS
1. PURPOSE OF THE ARRANGEMENT
The purpose of The Chase Manhattan Annual Incentive Arrangement for Certain
Executive Officers (the "Arrangement") is to provide a means of rewarding
certain executive officers of The Chase Manhattan Corporation (the
"Corporation") who have contributed to the profitability of the Corporation in a
manner which permits such compensation to be deductible by the Corporation or
any of its subsidiaries for federal income tax purposes.
2. ADMINISTRATION OF THE ARRANGEMENT
The administration of this Arrangement shall be vested in the Compensation
Committee of the Board of Directors of the Corporation, or such other committee
of such Board of Directors which shall succeed to the functions and
responsibilities, in whole or in part, of said Compensation Committee (the
"Committee") which shall make all determinations necessary under this
Arrangement. All members of the Committee shall qualify as "outside directors"
(as that term is defined in Section 162(m) of the Internal Revenue Code of 1986,
as amended (the "Code"), and the regulations thereunder as currently proposed or
as may from time to time be in effect (the "Regulations")). No member of the
Committee shall be entitled to participate in this Arrangement.
3. PARTICIPATION IN THE ARRANGEMENT
All executive officers of the Corporation at or above the Executive Vice
President level shall be eligible to participate in the Arrangement. Within the
period specified in the Regulations within which performance goals are required
to be established to qualify as a pre-established performance goal (the
"Designation Period"), the Committee shall designate the executive officers of
the Corporation (each, a "Participant") who shall participate in the Arrangement
for the Performance Period (as that term is defined in Section 6 below). All
executive officers of the Corporation who are not designated by the Committee as
Participants for the applicable Performance Period and any person who becomes an
executive officer of the Corporation during the Performance Period shall be
eligible to participate in The Chase Manhattan Management Incentive Plan.
4. BONUS POOL
Prior to the end of the Designation Period for the Performance Period, the
Committee shall designate in writing a percentage of the consolidated after-tax
net income of the Corporation and its subsidiaries for such Performance Period
that will be included in the bonus pool from which awards may be made for the
Performance Period (the "Bonus Pool"). There shall also be available for
inclusion in the Bonus Pool for any Performance Period the aggregate amount of
the Bonus Pools from all prior Performance Periods as to which bonus awards were
not made (the "Carryforward Amount"); provided, however, that no more than $3
million of the Carryforward Amount may be included in the Bonus Pool for any
Performance Period. The Committee shall certify in writing the Carryforward
Amount for the Performance Period prior to the end of the Designation Period.
The total amount of the Bonus Pool need not be paid as bonus awards under this
Arrangement.
5. ALLOCATION OF THE BONUS POOL
Prior to the end of the Designation Period for the Performance Period, the
Committee shall allocate in writing, on behalf of each Participant, a portion of
the Bonus Pool to be paid for such Performance Period. Such allocation shall
consist of separate allocations of a portion of the Corporation's after-tax net
income which is included in the Bonus Pool and of the Carryforward Amount. The
total amount of the Bonus Pool allocated to all Participants (and of each
component thereof) shall not exceed 100% thereof (except to the extent permitted
by Section 162(m) of the Code and the Regulations). The annual maximum award
payable to any Participant shall equal the sum of (a) .40% of the consolidated
after-tax net income of the Corporation and its subsidiaries for such
Performance Period plus (b) 40% of the Carryforward Amount.
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6. PERFORMANCE PERIOD
The Performance Period as to which awards may be made under this
Arrangement shall be the twelve-month period commencing January 1 of a calendar
year and ending on December 31 of such calendar year.
7. PAYMENT OF BONUS AWARDS UNDER THE ARRANGEMENT
(a) No bonus awards may be made pursuant to this Arrangement for any
Performance Period unless the Committee is able to certify pursuant to Section
7(b) of this Arrangement that there was consolidated after-tax net income of the
Corporation and its subsidiaries for such Performance Period.
(b) Following the completion of each Performance Period, the Committee
shall certify in writing (i) the amount, if any, of consolidated after-tax net
income of the Corporation and its subsidiaries for such Performance Period (ii)
the amount of the Bonus Pool and (iii) the bonus awards payable to the
Participants. The total of all individual bonus awards shall not exceed the
amount of the Bonus Pool. The Committee shall have the authority, in its sole
and absolute discretion, to reduce the amount of any bonus award below the
amount which would be payable based on the terms of this Arrangement or to not
grant bonus awards if, in its judgment, such action is warranted. Subject to the
limitations in the last sentence of Section 5 of this Arrangement, each bonus
award shall be paid first from the portion of the percentage of the consolidated
after-tax net income of the Corporation and its subsidiaries included in the
Bonus Pool and shall be paid from the Carryforward Amount only to the extent
necessary.
(c) In the event the Committee determines, upon the advice of counsel to
the Corporation, that payment of an award may be made under this Arrangement
before the expiration of the Performance Period without materially adversely
affecting the ability of the Corporation or any of its subsidiaries to deduct
for federal income tax purposes the amounts payable under this Arrangement,
including, without limitation, by making a partial payment of an award based
upon the consolidated after-tax net income of the Corporation and its
subsidiaries for the first nine months or any other portion of the Performance
Period (which payment may be contingent upon the repayment to the Corporation of
any amount of any award in excess of the amount payable on account of the
consolidated after-tax net income of the Corporation and its subsidiaries for
the entire Performance Period), the Committee may elect during December of any
Performance Period to pay awards under this Arrangement prior to the expiration
of the Performance Period. In the event of any such election by the Committee,
the Committee shall certify in writing the portion of the Performance Period for
which awards are to be paid, and shall make the certifications in writing
required by Section 7(b) of this Arrangement with respect to such portion of the
Performance Period as if such portion of the Performance Period were the
Performance Period.
(d) Except as provided in Section 7(e) or Section 8 of this Arrangement,
each Participant shall receive payment, subject to all required tax
withholdings, of his or her bonus award as soon as practicable following the
determination of the amount of such award.
(e) Awards may be paid in cash, stock (which may have such restrictions as
to transferability or vesting as the Committee shall determine), any other form
of consideration determined by the Committee or any combination thereof. Any
stock so granted may be awarded as restricted stock units pursuant to The Chase
Manhattan 1994 Long-Term Incentive Plan, as it may be amended from time to time,
if the Committee so determines. The value of any share of stock so granted shall
be the mean between the highest and lowest quoted selling prices for such shares
as reported on the composite tape on the date of grant (or, if such date shall
not be a business day, then the next preceding day which shall be a business
day); or, if no sale takes place, then the mean between the bid and asked prices
on such date; and if no bid and asked prices are quoted for such date, then such
value as shall be determined by such method as the Committee shall deem to
reflect fair market value as of such date. The value of any other non-cash
consideration shall be determined by the Committee at the time it is granted.
8. DEFERRAL OF PAYMENT OF AWARDS
At the discretion of the Committee, any Participant, subject to such terms
and conditions as the Committee may determine, may elect to defer payment of all
or part of any award which such Participant might earn with respect to a
Performance Period (together with a return thereon from the date as of which the
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award would have been paid but for such Participant's election to defer payment
at the rate, if any, fixed by the Committee) by complying with such procedures
as the Committee may from time to time prescribe.
9. SEPARATION FROM THE CORPORATION AND ITS SUBSIDIARIES
(a) Participants who cease to be employed by the Corporation or its
subsidiaries prior to the end of the Performance Period, other than due to
retirement under any retirement plan maintained by the Corporation or any of its
subsidiaries under which such Participant is covered, death or disability (as
defined in any disability plan of the Corporation or any of its subsidiaries
applicable to the Participant), shall not be eligible to receive a bonus award
for the Performance Period in which such termination of employment occurs;
provided, however, that the Committee may, in its sole discretion, when it finds
that a waiver may be in the best interest of the Corporation, waive in whole or
in part any or all of the provisions of this Section 9(a).
(b) Any Participant may designate in writing the beneficiary of the unpaid
amount of a bonus award (including the amount of any bonus award which was
previously deferred) in case of death and if no designation has been made, or if
any such designation shall become ineffective, any such unpaid amount will be
paid to the Participant's estate. Such designation shall be effective upon
receipt thereof by the Corporation. Any such designation may be revoked in
writing by a Participant at any time without the consent of any such
beneficiary.
10. AMENDMENTS
The Committee may amend this Arrangement at any time, provided, that such
changes may be made consistent with the provisions of Section 162(m) of the Code
and the Regulations without adversely affecting the ability of the Corporation
or any of its subsidiaries to deduct the compensation which may be paid pursuant
to this Arrangement for federal income tax purposes and, provided, further, that
no amendment that requires stockholder approval under Section 162(m) of the Code
or the Regulations may be made without such approval.
11. TERMINATION
The Board of Directors of the Corporation may terminate this Arrangement at
any time. No termination of this Arrangement shall adversely affect the right of
any person to receive any award paid pursuant to Section 7 of this Arrangement
regardless of the vesting date of such award, or amounts previously awarded to
such person but deferred in accordance with Section 8 of this Arrangement plus
any earnings thereon.
12. MISCELLANEOUS
(a) Nothing contained in this Arrangement shall be construed as giving any
executive officer of the Corporation the right to continued employment or any
interest in any asset of the Corporation or any of its subsidiaries, nor to
prevent the Corporation or any of its subsidiaries or affiliates from taking any
action which it deems to be appropriate or in its best interests, whether or not
such action would have an adverse effect on this Arrangement or the amounts
payable hereunder.
(b) This Arrangement shall be unfunded and the Corporation shall not be
required to establish any segregation of assets to assure payment of any awards
made hereunder.
(c) A Participant may not sell, transfer or assign any right or interest in
the Arrangement except as provided in Section 9(b) hereof and any attempted
sale, transfer or assignment shall be null and void.
(d) This Arrangement shall be governed by and construed in accordance with
the laws of the State of New York and the applicable provisions of the Code and
the Regulations.
13. EFFECTIVE DATE
This Arrangement shall be effective as of January 1, 1995, subject to the
subsequent approval hereof by the Corporation's stockholders at the 1995 Annual
Meeting and, if so approved, shall remain in effect until terminated in
accordance with Section 11 hereof.
A-3
<PAGE> 40
EXHIBIT B
THREE-YEAR INCENTIVE ARRANGEMENT
FOR CERTAIN EXECUTIVE OFFICERS
PURPOSE
This Three-Year Incentive Arrangement for certain Executive Officers of The
Chase Manhattan Corporation is intended to provide competitive compensation
opportunities for sustained improved corporate performance in a manner which
permits such compensation to be deductible for federal income tax purposes.
ADMINISTRATION
The administration of this arrangement shall be vested in the Compensation
Committee of the Board of Directors of The Chase Manhattan Corporation (the
"Corporation"), or such other committee of such Board of Directors which shall
succeed to the functions and responsibilities, in whole or in part, of said
Compensation Committee (the "Committee") which shall make all determinations
necessary under this arrangement. All members of the Committee shall qualify as
"outside directors" (as that term is defined in Section 162(m) of the Internal
Revenue Code of 1986, as amended from time to time (the "Code"), and the
regulations thereunder as currently proposed or as may from time to time be in
effect (the "Regulations")), and no member of the Committee shall be entitled to
participate in this arrangement.
ELIGIBILITY
Any Executive Officer of the Corporation at the Executive Vice President
level or above on December 31, 1996 or such later date as a performance target
is achieved may be eligible to receive an award. Awards may be paid under this
arrangement only to the Executive Officers who are "covered employees" (as that
term is defined in Section 162(m) of the Code or the Regulations. Awards under
other compensation arrangements to all Executive Officers who are not "covered
employees" shall be subject to the provisions below under "Limitations on Other
Awards".
PERFORMANCE TARGETS
Performance targets relate to the price of Common Stock as defined below.
The "Sixty Dollar Target" shall be deemed to have been reached on any date if on
such date the average over the 10 consecutive trading days ending on such date
of the mean between the highest and the lowest quoted selling prices for shares
of Common Stock on the New York Stock Exchange, Inc. is at least $60. Each of
such 10 days must fall within the period commencing on January 1, 1994, and
ending on March 31, 1997. The "Fifty Two Dollar Target" shall be deemed to have
been reached on any date if on such date the average over the 10 consecutive
trading days ending on such date of the mean between the highest and the lowest
quoted selling prices for shares of Common Stock on the New York Stock Exchange,
Inc. is at least $52. Each of such 10 days must fall within the period
commencing on January 1, 1994, and ending on March 31, 1997. A trading day is
any day on which the New York Stock Exchange, Inc. is open for trading of shares
of Common Stock.
As used herein, "Common Stock" means the common stock, par value $2.00 per
share, of the Corporation. In the event of a change in the designation thereof
to "Capital Stock" or other similar designation, or a change in the par value
thereof, or from par value to no par value, without increase or decrease in the
number of shares outstanding, the shares resulting from any such change shall be
deemed to be Common Stock within the meaning of this arrangement.
The Sixty Dollar Target and the Fifty Two Dollar Target shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a subdivision or consolidation of shares
or other capital adjustments, or the payment of a stock dividend or other
increase or decrease in such shares, effected without receipt of consideration
by the Corporation or any of its subsidiaries or affiliates.
B-1
<PAGE> 41
AGGREGATE AWARDS
The maximum amount payable under this arrangement, subject to adjustment as
described below, if the Sixty Dollar Target is reached is $9 million. The
maximum amount payable under this arrangement, subject to adjustment as
described below, if the Fifty Two Dollar Target is reached is $4.5 million. If
either Target has been reached by December 31, 1996 then the maximum amount
payable will be adjusted by multiplying such amount by a fraction (X) the
numerator of which is the average over the 10 consecutive trading days ending on
December 31, 1996 of the mean between the highest and lowest quoted selling
price for shares of Common Stock on the New York Stock Exchange, Inc. and (Y)
the denominator of which is the Target reached. The maximum amount payable under
this arrangement if the Sixty Dollar Target is reached shall be reduced by any
amounts paid under this arrangement upon having reached the Fifty Two Dollar
Target.
ALLOCATION OF AGGREGATE AWARDS
<TABLE>
<CAPTION>
MAXIMUM AMOUNT EXPRESSED
POSITION HELD BY AS A PERCENTAGE OF THE
PARTICIPATING EXECUTIVE AGGREGATE AWARD
-------------------------------------------------------------- ------------------------
<S> <C>
Chairman...................................................... 33 1/3%
President..................................................... 33 1/3%
Vice Chairman and other Covered Employees (each).............. 11 1/9%
</TABLE>
LIMITATION ON OTHER AWARDS
Because participation in this arrangement is designed to enable the
Corporation and its subsidiaries to receive federal income tax deductions for
awards paid to participants, awards are payable under this arrangement only to
those Executive Officers who are "covered employees". Eligible Executive
Officers who are not within the group of such "covered employees" may receive
awards under other compensation arrangements, but not in an amount in excess of
the amount that could be paid to such Executive Officers under this arrangement
if they were "covered employees", if such awards were paid on the basis of
similar performance criteria.
In the event awards are paid under this arrangement on the basis of
achieving a performance Target in 1997 and awards are paid under other
compensation arrangements on the basis of similar performance criteria, so long
as the limitations in the preceding paragraph are complied with, any such awards
to the Executive Officers who are "covered employees" with respect to 1997 shall
be paid under this arrangement and such awards to all other Executive Officers
shall be paid under such other compensation arrangements.
PAYMENT OF AWARDS
Awards under this arrangement may be paid in cash, Common Stock (which may
have such restrictions as to transferability or vesting as the Committee shall
determine), any other form of consideration determined by the Committee or any
combination thereof. Any Common Stock so granted may be awarded as restricted
stock units pursuant to The Chase Manhattan 1994 Long-Term Incentive Plan, as it
may be amended from time to time, if the Committee so determines. The value of
any share of Common Stock so granted shall be the mean between the highest and
lowest quoted selling prices for such shares as reported on the composite tape
on the date of grant (or, if such date shall not be a business day, then the
next preceding day which shall be a business day); or if no sale takes place,
then the mean between the bid and asked prices on such date; and if no bid and
asked prices are quoted for such date, then the value as shall be determined by
such method as the Committee shall deem to reflect the fair market value as of
such date. The value of any other non-cash consideration shall be determined by
the Committee at time it is granted.
The awards may be payable immediately or on a deferred basis at the
discretion of the Committee. The Committee will determine the amount and form of
payment to a participant. The Committee shall have the authority to reduce or
eliminate any award which would be payable under this arrangement. The Committee
may not, however, increase the amount of any such award above the maximum amount
provided under this arrangement.
B-2
<PAGE> 42
Unless deferred by the Committee, payments based on achieving performance
Targets on or before December 31, 1996 will be paid on or as soon as possible
after December 31, 1996. Unless deferred by the Committee, payments based on
achieving performance Targets after December 31, 1996 but on or before March 31,
1997 will be paid on or as soon as possible after the date the performance
Targets are met. All payments may be subject to the satisfaction of all required
tax withholding obligations.
No payments may be made under this arrangement unless the material terms of
this arrangement are approved by the stockholders of the Corporation in
accordance with the requirements of Section 162(m) and the Regulations.
DEFERRAL OF PAYMENT OF AWARDS
At the discretion of the Committee, any "covered employee", subject to such
terms and conditions as the Committee may determine, may elect to defer payment
of all or part of any award under this arrangement (together with a return
thereon from the date as of which the award would have been paid but for such
"covered employee's" election to defer payment at the rate, if any, fixed by the
Committee) by complying with such procedures as the Committee may from time to
time prescribe.
Any "covered employee" may designate in writing the beneficiary of the
unpaid amount of any award which was deferred in case of death and if no
designation has been made, or if such designation shall become ineffective, any
such unpaid amount will be paid to such "covered employee's" estate. Such
designation shall be effective upon receipt thereof by the Corporation. Any such
designation may be revoked in writing by a "covered employee" at any time
without the consent of any such beneficiary.
CHANGE IN CONTROL
Notwithstanding the provisions under "Payment of Awards", in the event of a
Change in Control (as that term is defined in The Chase Manhattan Stock Option
Program for Employees) the Executive Officers who are "covered employees" shall
be paid the maximum amount payable under this arrangement for each performance
Target which is reached upon the latter of the Change in Control or the
achievement of a performance Target. This payment obligation shall be binding
upon the Corporation and its successors and assigns.
In the event a Change in Control occurs after one or both performance
Targets are reached but before December 31, 1996, the maximum aggregate amount
payable upon achievement of such higher performance Target shall be adjusted in
the manner provided in the last sentence under "Aggregate Awards" as if the date
on which such Change in Control occurred was December 31, 1996.
AMENDMENTS
The Committee may amend this arrangement at any time, provided, that such
changes may be made consistent with the provisions of Section 162(m) of the Code
and the Regulations without adversely affecting the ability of the Corporation
or any of its subsidiaries to deduct the compensation which may be paid pursuant
to this arrangement for federal income tax purposes and, provided, further, that
no amendment that requires stockholder approval under Section 162(m) of the Code
or the Regulations may be made without such approval.
TERMINATION
The Board of Directors of the Corporation may terminate this arrangement at
any time. No termination of this arrangement shall adversely affect the right of
any person to receive any award paid under this arrangement regardless of the
vesting date of such award, or amounts previously awarded to such person but
deferred in accordance with the terms of this arrangement plus any earnings
thereon.
MISCELLANEOUS
Nothing contained in this arrangement shall be construed as giving any
Executive Officer the right to continued employment or any interest in any
asset, nor to prevent the Corporation or any of its subsidiaries or
B-3
<PAGE> 43
affiliates from taking any action which it deems to be appropriate or in its
best interests, whether or not such action would have an adverse effect on this
arrangement.
This arrangement shall be unfunded and the Corporation shall not be
required to establish any segregation of assets to assure payment of any awards
made hereunder.
An Executive Officer may not sell, transfer or assign any right or interest
in this arrangement except as provided under "Deferral of Payment of Awards" and
any attempted sale, transfer or assignment shall be null and void.
This arrangement shall be governed by and construed in accordance with the
laws of the State of New York and the applicable provisions of the Code and the
Regulations.
B-4
<PAGE> 44
THE CHASE MANHATTAN CORPORATION
1 Chase Manhattan Plaza
New York, New York 10081-0001
(212) 552-2222
<PAGE> 45
PROXY- THE CHASE MANHATTAN CORPORATION
COMMON STOCK
PROXY SOLICITED BY BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS-APRIL 18, 1995
Deborah L. Duncan and Kent T. Stauffer, and each of them, with full power of
substitution, are hereby appointed proxies to vote all shares (unless a lesser
number is specified on the other side) of Common Stock of The Chase Manhattan
Corporation that the undersigned would be entitled to vote at the Annual
Meeting of Stockholders of the Corporation to be held at 1 Chase Manhattan
Plaza, New York, New York, on April 18, 1995, at 2:30 P.M., and any adjournments
thereof, with all powers the undersigned would possess if personally present,
for the Election of Directors, on each of the other matters described in the
Proxy Statement and otherwise in their discretion.
The Shares represented by this proxy will be voted as directed by the
stockholder. AUTHORITY TO VOTE SUCH SHARES "FOR" THE ELECTION OF DIRECTORS
(NO.1) WILL BE DEEMED GRANTED BY THE SIGNED PROXY UNLESS WITHHELD. IF NO
CONTRARY DIRECTION IS GIVEN, SUCH SHARES WILL BE VOTED "FOR" THE APPROVAL OF
AUDITORS (NO.2), THE ANNUAL INCENTIVE ARRANGEMENT (NO.3) AND THE THREE-YEAR
INCENTIVE ARRANGEMENT (NO. 4) AND "AGAINST" THE STOCKHOLDER PROPOSALS (NOS.
5-8).
(Continued, and To Be Signed and Dated, on the Other Side)
FOLD AND DETACH HERE
<PAGE> 46
MANAGEMENT RECOMMENDS A VOTE FOR NOS. 1,2,3 AND 4:
1 Election of Directors: Labrecque Boyle, Kearns, MacAvoy, Pratt and
Trautlein
(To withhold authority to vote for any
WITHHOLD particular nominee write the name below.)
FOR AUTHORITY
/ / / / ----------------------------------------------
2
Approval of
Auditors
FOR AGAINST ABSTAIN
/ / / / / /
3
Annual Incentive
Arrangement
FOR AGAINST ABSTAIN
/ / / / / /
4
Three-Year Incentive
Arrangement
FOR AGAINST ABSTAIN
/ / / / / /
MANAGEMENT RECOMMENDS A VOTE AGAINST NOS. 5-8:
5
Reinstate Annual Election
of All Directors
FOR AGAINST ABSTAIN
/ / / / / /
6
Cumulative Voting
for Directors
FOR AGAINST ABSTAIN
/ / / / / /
7
Structural Adjustment
Programs
FOR AGAINST ABSTAIN
/ / / / / /
8
Withdraw Retirement
Plan for Directors
FOR AGAINST ABSTAIN
/ / / / / /
P SIGNATURE(S) SHOULD AGREE WITH NAME(S) SHOWN AT LEFT. IF
R SIGNING FOR ESTATES, TRUSTS OR CORPORATIONS, TITLE OR CAPAC-
O ITY SHOULD BE STATED. IF SHARES ARE HELD JOINTLY, EVERY HOLD-
X ER SHOULD SIGN.
Y
-------------------------------------------------------------
SIGNATURE
-------------------------------------------------------------
SIGNATURE
DATE , 1995
--------------------------------------------------
FOLD AND DETACH HERE
PLEASE COMPLETE AND RETURN THE ATTACHED
PROXY CARD AS SOON AS POSSIBLE.
