MARCH 8, 1996
[CHEMICAL FINANCIAL CORPORATION LOGO]
333 EAST MAIN STREET
MIDLAND, MICHIGAN 48640
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 15, 1996
TO THE HOLDERS OF COMMON STOCK:
The annual meeting of shareholders of CHEMICAL FINANCIAL CORPORATION
will be held on MONDAY, APRIL 15, 1996 at 2:00 p.m. (local time) at the
Midland Center for the Arts, 1801 W. St. Andrews Drive, Midland, Michigan,
at which meeting the shareholders will elect a board of six directors and
transact any other business that may properly be brought before the
meeting.
You are invited to attend the meeting and, even though you execute and
return the enclosed proxy, you may vote your stock in person if you are
present at the meeting.
The Board of Directors has fixed the close of business on February 16,
1996 as the record date for the determination of holders of Common Stock
entitled to notice of and to vote at the meeting and any adjournment of the
meeting. The following Proxy Statement and enclosed form of proxy are
being furnished to holders of Chemical Common Stock on and after March 8,
1996.
By Order of the Board of Directors
/s/ Aloysius J. Oliver
Aloysius J. Oliver
Secretary
It is important that your shares be represented at the meeting.
Even if you expect to attend the meeting,
PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY.
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
CHEMICAL FINANCIAL CORPORATION
APRIL 15, 1996
The enclosed proxy is being solicited by the Board of Directors of
Chemical Financial Corporation ("Chemical" or the "Corporation"). This
proxy statement and the enclosed proxy are being furnished to holders of
Chemical Common Stock, $10 par value ("Common Stock"), on and after March
8, 1996, for use at the annual meeting of Chemical shareholders to be held
on April 15, 1996 and any adjournment of that meeting. The annual meeting
will be held at the Midland Center for the Arts, 1801 W. St. Andrews Drive,
Midland, Michigan at 2:00 p.m. local time.
Solicitation of proxies will be made initially by mail. Directors,
officers and employees of Chemical and its subsidiaries may also solicit
proxies in person, by telephone or by electronic communication without
additional compensation. Proxies may be solicited by nominees and other
fiduciaries who may mail materials to, or otherwise communicate with, the
beneficial owners of Common Stock held by them. All expenses of
solicitation of proxies will be paid by Chemical.
Shareholders of record of the Corporation's Common Stock at the close
of business on February 16, 1996 will be entitled to notice of and to vote
at the annual meeting of shareholders on April 15, 1996 and any adjournment
of that meeting. As of February 16, 1996, there were 9,212,005 shares of
Common Stock issued and outstanding. Representation of the holders of a
majority of the shares of Common Stock outstanding at the record date is
necessary to constitute a quorum at the annual meeting. Abstentions and
broker non-votes are counted for purposes of determining the presence or
absence of a quorum for the transaction of business. Each share of Common
Stock is entitled to one vote on each matter presented for shareholder
action.
The shares represented by the enclosed proxy will be voted at the
annual meeting and any adjournment of that meeting if the proxy is properly
signed and returned to Chemical prior to the date of the meeting. A proxy
may be revoked at any time prior to its exercise by written notice
delivered to the Secretary of the Corporation or by attending and voting at
the annual meeting. The shares represented by each proxy will be voted in
accordance with the specifications of the shareholder. If the shareholder
does not specify a choice, the shares represented by the proxy will be
voted "FOR" the election of all nominees listed in this proxy statement as
directors and in accordance with the judgment of the persons named as
proxies on any other matter that may come before the meeting.
-1-
The 1995 Annual Report of the Corporation, including financial
statements, is enclosed with this proxy statement. A COPY OF THE
CORPORATION'S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION ON
FORM 10-K FOR THE YEAR 1995, INCLUDING FINANCIAL STATEMENTS, WILL BE
PROVIDED, WITHOUT CHARGE, TO ANY SHAREHOLDER UPON WRITTEN REQUEST. REQUESTS
SHOULD BE MADE IN WRITING ADDRESSED TO ALOYSIUS J. OLIVER, SECRETARY,
CHEMICAL FINANCIAL CORPORATION, 333 EAST MAIN STREET, MIDLAND, MICHIGAN
48640.
ELECTION OF DIRECTORS
The Board of Directors has nominated individuals listed below for
re-election as directors of the Corporation to serve until the next annual
meeting of shareholders or until their successors are elected and
qualified. The proposed nominees are willing to be elected and to serve. In
the event that any nominee is unable to serve or is otherwise unavailable
for election, which is not contemplated, the incumbent Chemical Board of
Directors may or may not select a substitute nominee. If a substitute
nominee is selected, all proxies will be voted for the person so selected.
If a substitute nominee is not selected, all proxies will be voted for the
election of the remaining nominees. Proxies will not be voted for a greater
number of persons than the number of nominees named in this proxy
statement. A plurality of the shares represented and voted at the meeting
is required to elect directors. For the purpose of counting votes on the
election of directors, abstentions, broker non-votes and other shares not
voted will not be counted as shares voted, and the number of votes of which
a plurality is required will be reduced by the number of shares not voted.
Each nominee is currently a member of the Board of Directors.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
ELECTION OF ALL NOMINEES AS DIRECTORS
Biographical information concerning each nominee for election to the
Board of Directors is presented below. Unless otherwise indicated, each
nominee has had the same principal occupation for more than five years. In
this proxy statement, "Chemical Bank" means Chemical Bank and Trust Company
in Midland, Michigan, the Corporation's principal banking subsidiary.
NOMINEES FOR ELECTION
TO SERVE UNTIL
THE ANNUAL MEETING OF SHAREHOLDERS IN 1997
JAMES A. CURRIE, age 37, has been a director of the Corporation since
August 1993 and is a member of the Audit and Compensation Committees. Mr.
Currie is a certified teacher and, over the past five years, has served in
this capacity in a number of school districts in the Lansing, Michigan
-2-
area, while also pursuing a Masters Degree in Special Education at Michigan
State University, which he obtained in December 1994. Mr. Currie is
currently teaching in the Holt, Michigan School District. Mr. Currie has
served as a director and member of various committees of Chemical Bank
since February 1992.
MICHAEL L. DOW, age 61, has served as a director of the Corporation since
April 1985 and is Chairman of the Audit and a member of the Pension and
Compensation Committees. Mr. Dow is Chairman of the Board and owner of
General Aviation, Inc. in Lansing, Michigan, a provider of aviation related
services. Mr. Dow was elected to the Board of Directors of The Dow Chemical
Company in January 1988. Mr. Dow has served as a director and member of
various committees of Chemical Bank since February 1982.
ALAN W. OTT, age 64, has served as Chairman of the Board since April 1994,
Chief Executive Officer, President and a director of the Corporation since
October 1973, and as Treasurer from May 1987 through April 1994. Mr. Ott is
a member of the Pension Committee. Mr. Ott is also Chairman of the Board of
Directors and Chief Executive Officer of Chemical Bank. Mr. Ott joined
Chemical Bank as Cashier in 1962 and became a Vice President in 1964,
President and Chief Executive Officer in 1972 and Chairman of the Board and
Chief Executive Officer in 1986. He has served as a director of Chemical
Bank since 1969. During the last five years, Mr. Ott has served as a
director and member of various committees of Chemical Bank (also Chief
Executive Officer and Chairman), Chemical Bank Michigan (also Chairman),
Chemical Bank Huron (also Chairman), Chemical Bank West (also Chairman),
Chemical Bank Montcalm (also Chairman), Chemical Bank North (also
Chairman), Chemical Bank South, Chemical Bank Bay Area (also Chairman),
Chemical Bank Central (also Chairman), Chemical Bank Key State and CFC Data
Corp (also Treasurer), all of which are wholly-owned subsidiaries of the
Corporation. Mr. Ott is a director of the Michigan Molecular Institute, a
director of Midland County Economic Growth and Development Corporation and
a trustee of Albion College.
FRANK P. POPOFF, age 60, has served as a director of the Corporation since
February 1989 and is a member of the Audit and Chairman of the Pension and
Compensation Committees. Mr. Popoff is Chairman of the Board of Directors
of The Dow Chemical Company in Midland, Michigan, a diversified
manufacturer of chemicals and performance products, plastics, hydrocarbons
and energy, and consumer specialty products. Mr. Popoff joined The Dow
Chemical Company in 1959 and has served in senior positions in sales,
marketing, operations and business management, including responsibilities
for international areas of the company. Mr. Popoff was named President of
Dow Europe in 1981, became a Vice President in 1984, Executive Vice
President in 1985, President and Chief Executive Officer in 1987 and
Chairman of the Board of Directors in December 1992. He was elected to the
Board of Directors of The Dow Chemical Company in 1982. Mr. Popoff is also
a director of American Express Company and US WEST, Inc. Mr. Popoff has
served as a director and member of various committees of Chemical Bank
since July 1985.
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LAWRENCE A. REED, age 56, has served as a director of the Corporation since
December 1986 and is a member of the Audit and Compensation Committees. Mr.
Reed retired in 1992 after serving as President of Dow Corning Corporation,
a diversified company specializing in the development, manufacture and
marketing of silicones and related silicon based products. Mr. Reed joined
Dow Corning in 1964 and served in various senior management positions
including Vice President and Chief Financial Officer and President and
Chief Executive Officer. Mr. Reed is also a director of CPI Engineering
Services, Inc. Mr. Reed has served as a director and member of various
committees of Chemical Bank since December 1981.
WILLIAM S. STAVROPOULOS, age 56, has been a director of the Corporation
since August 1993 and is a member of the Audit, Pension and Compensation
Committees. Mr. Stavropoulos is President and Chief Executive Officer of
The Dow Chemical Company, a diversified manufacturer of chemicals and
performance products, plastics, hydrocarbons and energy, and consumer
specialty products. Mr. Stavropoulos joined The Dow Chemical Company in
1967 and has served in various senior management positions. Mr.
Stavropoulos was named President of Dow Latin America in 1984, Group Vice
President in 1987, Vice President in 1990, President of Dow U.S.A. in 1990,
Senior Vice President in 1991, President and Chief Operating Officer in
1993 and Chief Executive Officer in November 1995. He was elected to the
Board of Directors of The Dow Chemical Company in 1990. Mr. Stavropoulos is
also a director of Dow Corning Corporation. Mr. Stavropoulos has served as
a director and member of various committees of Chemical Bank since April
1992.
VOTING SECURITIES
Listed below is the only shareholder of the Corporation known by
management to have been the beneficial owner of five percent or more of the
outstanding shares of Common Stock as of February 7, 1996:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP<F1>
NAME AND ADDRESS SOLE VOTING SHARED VOTING TOTAL
OF BENEFICIAL AND DISPOSITIVE OR DISPOSITIVE BENEFICIAL PERCENT OF
OWNER OF COMMON STOCK POWER POWER<F2> OWNERSHIP CLASS
<S> <C> <C> <C> <C>
Chemical Bank and Trust Company
Trust Department
333 E. Main Street
Midland, MI 48640<F3> 653,156 267,425 920,581 9.68%
</TABLE>
The following table sets forth information regarding beneficial
ownership of Common Stock by each director and nominee for director, each
named executive officer and all directors and executive officers as a group
as of February 1, 1996:
-4-
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP<F1>
SOLE VOTING SHARED VOTING TOTAL
NAME OF BENEFICIAL AND DISPOSITIVE OR DISPOSITIVE BENEFICIAL PERCENT OF
OWNER OF COMMON STOCK POWER POWER<F2> OWNERSHIP CLASS
<S> <C> <C> <C> <C>
J. A. Currie 68,587 400 68,987 <F*>
M. L. Dow 54,988 48,610<F4> 103,598<F4> 1.09%
B. M. Groom 14,982<F5> 8,995 23,977<F5> <F*>
A. J. Oliver 65,417<F5> -- 65,417<F5> <F*>
A. W. Ott 69,023<F5> 265,595<F6> 334,618<F5><F6> 3.52%
F. P. Popoff 3,628 -- 3,628 <F*>
L. A. Reed 2,235 9,936 12,171 <F*>
W. S. Stavropoulos 2,783 208,754<F7> 211,537<F7> 2.22%
All directors and executive
officers as a group 298,393<F8> 342,945 641,001<F8> 6.74%
<FN>
__________________________
<F*>Less than 1%
<F1> The numbers of shares stated are based on information furnished by
each person listed and include shares personally owned of record by
that person and shares, which under applicable regulations, are
considered to be otherwise beneficially owned by that person. Under
these regulations, a beneficial owner of a security includes any
person who, directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise, has or shares voting power
or dispositive power with respect to the security. Voting power
includes the power to vote or direct the voting of the security.
Dispositive power includes the power to dispose or direct the
disposition of the security. A person will also be considered the
beneficial owner of a security if the person has a right to acquire
beneficial ownership of the security within 60 days. Shares held in
various fiduciary capacities, through the trust department of Chemical
Bank, are not included unless otherwise indicated. The Corporation and
the directors and officers of the Corporation and of Chemical Bank
disclaim beneficial ownership of shares held by the trust department
in fiduciary capacities.
<F2> These numbers include shares over which the listed person is legally
entitled to share voting or dispositive power by reason of joint
ownership, trust, or other contract or property right, and shares held
by spouses and children over whom the listed person may have
substantial influence by reason of relationship. Shares held in
fiduciary capacities by the trust department of Chemical Bank are not
included unless otherwise indicated. The directors and officers of the
Corporation may, by reason of their positions, be in a position to
influence the voting or disposition of shares held in trust by
-5-
Chemical Bank to some degree, but disclaim beneficial ownership of
these shares.
<F3> These numbers consist of certain shares held in various fiduciary
capacities through the trust department of Chemical Bank. Although
Chemical Bank has voting or dispositive powers with respect to these
shares, it is the trust department's policy to transfer voting rights
by proxy to the beneficiaries whenever possible. Chemical Bank also
holds in various fiduciary capacities a total of 761,862 shares of
Common Stock over which it does not have voting or dispositive power
and which are not included in these numbers. Although Mr. Ott and Mr.
Groom are members of Chemical Bank's Trust Investment Committee, they
disclaim beneficial ownership of shares held by the trust department
in a fiduciary capacity. The Corporation and the directors and
officers of the Corporation and Chemical Bank also disclaim beneficial
ownership of shares held by the trust department in a fiduciary
capacity.
<F4> These numbers include 43,752 shares owned by two trusts as of February
1, 1996, of which Mr. Dow is a trustee. Mr. Dow disclaims beneficial
ownership of these shares.
<F5> These numbers include shares that executive officers of the
Corporation have the right to acquire through the exercise of stock
options within 60 days from February 1, 1996 as follows: Mr. Groom -
10,648 shares; Mr. Oliver - 12,306 shares; and Mr. Ott - 10,953
shares.
<F6> These numbers include 208,754 shares which the Rollin M. Gerstacker
Foundation owns or is a beneficiary of, and 36,841 shares owned by the
Elsa U. Pardee Foundation, as of February 1, 1996. Mr. Ott is a
trustee and treasurer of both of these foundations. Mr. Ott has no
beneficial interest in the shares owned by the foundations and
disclaims beneficial ownership of these shares.
<F7> These numbers include 208,754 shares which the Rollin M. Gerstacker
Foundation owns or is a beneficiary of, as of February 1, 1996. Mr.
Stavropoulos is a trustee of this foundation. Mr. Stavropoulos has no
beneficial interest in the shares owned by the foundation and
disclaims beneficial ownership of these shares.
<F8> These numbers include 50,254 shares that the executive officers of the
Corporation have the right to acquire presently or within 60 days from
February 1, 1996, through the exercise of stock options granted by the
Corporation.
</FN>
</TABLE>
-6-
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Corporation has a standing Audit, Pension and Compensation
Committee of the Board of Directors. The Corporation does not have a
nominating committee.
The Audit Committee, composed of Mr. Dow, Chairman, and Messrs.
Currie, Popoff, Reed and Stavropoulos, met two times during 1995. This
committee recommends a firm of independent public accountants to be
appointed by the Board; consults with the independent public accountants
and the internal auditors with regard to the adequacy of internal controls
and the quality of ongoing operations; reviews with the independent public
accountants significant accounting matters and policies, the proposed plan
of audit and the results of their audit; and submits a formal annual report
to the Board of Directors covering the adequacy, effectiveness and
efficiency of the internal systems of control and the quality of ongoing
operations.
The Pension Committee, composed of Mr. Popoff, Chairman, and Messrs.
Dow, Ott and Stavropoulos, met once during 1995. This committee oversees
the administration of the Corporation's employees' pension plan.
The Compensation Committee, composed of Mr. Popoff, Chairman, and
Messrs. Currie, Dow, Reed and Stavropoulos, met once during 1995. This
committee reviews salaries, bonuses and other compensation of all officers
of the Corporation, administers the Corporation's stock option plans and
makes recommendations to the Board regarding the awards of stock options
under these plans.
The Board of Directors meets regularly each month for approximately
two hours. There were a total of twelve regular meetings in 1995. There
were no special meetings of the Board of Directors in 1995. All directors
attended 75% or more of the aggregate of board and applicable committee
meetings of which they were members during 1995.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
The following table provides information concerning the compensation
earned during each of the three years in the period ended December 31,
1995, by each of the Corporation's executive officers whose total annual
salary and bonus for 1995 exceeded $100,000:
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<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION AWARDS PAYOUTS
NUMBER OF
NAME AND OTHER RESTRICTED SHARES
PRINCIPAL ANNUAL STOCK UNDERLYING LTIP ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION AWARDS OPTIONS PAYOUTS COMPENSATION<F1>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Alan W. Ott 1995 $ 275,000 $ 70,150 $ 60
Chairman of the Board, 1994 260,000 70,150 60
Chief Executive 1993 250,000 65,150 15,750 60
Officer and President
of the Corporation and
Chairman of the Board
and Chief Executive Officer
of Chemical Bank
Bruce M. Groom 1995 $ 90,300 $ 19,150 $ 815
Senior Vice President 1994 86,300 19,150 763
and Senior Trust Officer 1993 83,000 16,150 3,150 838
of Chemical Bank
Aloysius J. Oliver 1995 $ 87,700 $ 20,150 $ 60
Executive Vice President 1994 84,200 20,150 1,500 60
and Secretary of the 1993 81,000 18,150 3,150 60
Corporation
<FN>
<F1> Dollar value of term life insurance premiums paid by the Corporation.
</FN>
</TABLE>
The following table provides information concerning options
exercised during 1995 and unexercised options held as of December 31,
1995, by the listed individuals.
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<CAPTION>
NUMBER OF SHARES VALUE OF UNEXERCISED
SHARES ACQUIRED UNDERLYING UNEXERCISED IN-THE-MONEY
ON OPTIONS AT FISCAL YEAR-END OPTIONS AT FISCAL YEAR-END<F2>
NAME EXERCISE<F1> VALUE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
Alan W. Ott 15,013 $192,555 9,703 3,395 $241,126 $30,750
Bruce M. Groom 3,000 41,022 11,164 3,150 271,988 28,525
Aloysius J. Oliver 2,500 34,809 12,306 224,381
-8-
<FN>
<F1> The number of shares shown is the gross number of shares covered
by options exercised. Officers may deliver other shares owned in
payment of the option price and shares may be withheld for tax
withholding purposes, resulting in a smaller net increase in
their share holdings.
<F2> The values reported are based on a fair market value of $38.50
per share, the closing bid price of Common Stock on the NASDAQ
Stock Market on December 31, 1995.
</FN>
</TABLE>
STOCK OPTION PLANS. The Chemical Financial Corporation 1983 Stock
Option Plan ("1983 Plan") and the 1987 Award and Stock Option Plan
("1987 Plan") provide for awards of nonqualified stock options,
incentive stock options, stock appreciation rights, or a combination
thereof. In addition, the 1987 Plan provides for awards of deferred
stock.
By its terms, the 1983 Plan expired on May 1, 1988. No further
options have been granted under the 1983 Plan since that date. At the
April 20, 1992 annual meeting of shareholders, the shareholders voted
to increase the authorized shares issuable under the 1987 Plan by
100,000 shares. As of December 31, 1995, there were options
outstanding to purchase 316,678 shares of the Corporation's Common
Stock under the 1983 and 1987 Plans, and 97,472 shares available for
future awards under the 1987 Plan.
Key employees of the Corporation and its subsidiaries, as the
Compensation Committee of the Board of Directors may select from time
to time, are eligible to receive awards under the 1987 Plan. No
employee of the Corporation may receive any awards under the 1987 Plan
while the employee is a member of the Compensation Committee. In
addition, no stock options, stock appreciation rights or deferred
stock may be granted to any employee who owns, directly or indirectly,
five percent or more of the Corporation's outstanding Common Stock.
The plans provide that the option price of options awarded under
the plans shall not be less than the fair market value of Common Stock
on the date of grant, and that options under the 1983 Plan are
exercisable after one year from the date of grant and expire ten years
after the date of grant. Options and deferred stock granted under the
1987 Plan are first exercisable from one to five years from the date
of grant, at the discretion of the Compensation Committee, and expire
not later than ten years and one day after the date of grant. Options
granted may be designated nonqualified stock options or incentive
stock options. Options granted may include stock appreciation rights
that entitle the recipient to receive a number of shares of Common
Stock without payment to the Corporation, calculated by dividing the
-9-
difference between the option price and the market price of the total
number of shares awarded under the option at the expiration date of
the option, by the market price of a single share. The plans provide
that payment for exercise of any option granted under the plans may be
made in the form of shares of stock of the Corporation having a fair
market value equal to the exercise price of the option at the time of
exercise, or in cash. The plans also provide for the payment of the
required tax withholding generated upon the exercise of a nonqualified
stock option in the form of shares of stock of the Corporation having
a fair market value equal to the amount of the required tax
withholding at the time of exercise, upon prior approval and at the
discretion of the Compensation Committee.
PENSION PLAN. The Corporation and its subsidiaries make annual
contributions to the Chemical Financial Corporation Employees' Pension
Plan ("Pension Plan"), which is a defined benefit plan qualified under
the Internal Revenue Code of 1986, as amended (the "Code"). The
Corporation has the authority to terminate the Pension Plan at any
time. Sections 401(a)(17) and 415 of the Code limit the annual
benefits that may be paid from a tax-qualified retirement plan. As
permitted by the Employee Retirement Income Security Act of 1974, the
Corporation has established a supplemental pension plan that provides
for the payment to certain executive officers of the Corporation, as
determined by the Compensation Committee, benefits to which they would
have been entitled, calculated under the provisions of the Pension
Plan, as if the limits imposed by the Code did not apply. These
benefits have been awarded to Mr. Ott.
The following table shows the estimated combined annual pension
benefits that would be payable under the Pension Plan and supplemental
pension plan to salaried employees, including officers, at the various
salary levels with the number of years of credited service under the
Pension Plan listed in the table upon normal retirement in 1996. The
"Average Remuneration" is the average annual base salary, excluding
any bonus, for the five highest consecutive years during the ten years
preceding the date of retirement.
-10-
<TABLE>
PENSION PLAN TABLE
<CAPTION>
YEARS OF SERVICE
AVERAGE REMUNERATION FOR 30 OR
PENSION PLAN PURPOSES 10 YEARS 15 YEARS 20 YEARS 25 YEARS MORE YEARS
<S> <C> <C> <C> <C> <C> <C>
$ 80,000 $ 14,152 $ 21,228 $ 28,304 $ 35,380 $ 42,456
100,000 17,952 26,928 35,904 44,880 53,856
125,000 22,702 34,053 45,404 56,755 68,106
150,000 27,452 41,178 54,904 68,630 82,356
175,000 32,202 48,303 64,404 80,505 96,606
200,000 36,952 55,428 73,904 92,380 110,856
225,000 41,702 62,553 83,404 104,255 125,106
250,000 46,452 69,678 92,904 116,130 139,356
275,000 51,202 76,803 102,404 128,005 153,606
300,000 55,952 83,928 111,904 139,880 167,856
325,000 60,702 91,053 121,404 151,755 182,106
350,000 65,452 98,178 130,904 163,630 196,356
</TABLE>
The Pension Plan covers the annual base salary of all salaried
employees as of January 1 of each year. Upon retirement at age 65, a
retiree will receive an annual benefit of 1.52% of his or her average
annual base salary for the five highest consecutive years during the
ten years preceding his or her date of retirement, plus .38% of
average annual pay in excess of covered compensation, multiplied by
the retiree's number of years of credited service (subject to a
maximum of 30 years). Benefits at retirement ages under 65 are also
determined based upon length of service and pay, as adjusted in
accordance with the Pension Plan. The Pension Plan provides for
vesting of benefits after attaining five years of service, for
disability and death benefits and for optional joint and survivor
benefits for the employee and his or her spouse.
The amount shown under the caption "Salary," excluding the amount
shown under the caption "Bonus," in the Summary Compensation Table in
this proxy statement is representative of the most recent calendar
year compensation used in calculating average remuneration under the
Pension Plan. As of December 31, 1995, Mr. Ott and Mr. Oliver each had
30 years of credited service (the maximum) under the Pension Plan and
Mr. Groom had 10.7 years of credited service under the Pension Plan.
The retirement benefits shown in the preceding Pension Plan Table
are based on the assumption that an employee retires in 1996 at normal
retirement age and will elect a benefit for his or her life with 120
monthly payments guaranteed. If the employee were to elect a benefit
payable to a surviving spouse of 50% or more of the employees'
retirement benefit or for the employees' life only, the retirement
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benefit for the employee would be adjusted. The benefits listed in the
Pension Plan Table are not subject to any deduction for Social
Security or any other offset amount.
DIRECTOR FEES. During 1995, the Corporation paid director fees of
$600 per meeting attended and committee fees of $300 per meeting
attended to all of its directors who were not regular salaried
employees of the Corporation. Regular salaried employees of the
Corporation or its subsidiaries do not receive fees for serving on, or
attending meetings of, the Board of Directors of the Corporation or
its subsidiaries or meetings of any of their committees.
The Board of Directors has adopted the Chemical Financial
Corporation Plan for Deferral of Directors' Fees. This plan is
available to all directors of the Corporation and its subsidiaries who
receive fees. Under the plan, directors must elect before December 31
of each year to defer either 50% or 100% of fees to be earned in the
following year. These fees will be paid out in any number of calendar
years from one to ten commencing during or following the year the
director ceases to be a director or the year after the director
attains age 70. During the deferral period, the plan provides that the
Corporation shall accrue to the directors' credit interest on the
accumulated amount of deferred fees at the rate paid by Chemical Bank
on its short term investors account.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Corporation's Board of
Directors reviews and determines the Corporation's compensation
programs, including individual salaries of executive and senior
officers. The Compensation Committee is composed of Messrs. Currie,
Dow, Popoff, Reed and Stavropoulos. All members are non-employee
directors of the Corporation.
Under the supervision of the Compensation Committee, the
Corporation has developed and implemented compensation plans which
seek to align the financial interests of the Corporation's senior
officers with those of its shareholders. The Corporation's executive
compensation program is comprised of three primary components: base
salary, annual cash incentive bonus opportunities and longer-term
incentive opportunities in the form of stock option awards.
To attract and retain officers with exceptional abilities and
talent, annual base salaries are set to provide competitive levels of
compensation recognizing individual performance and achievements.
Annual cash incentive bonuses are used to reward senior officers for
individual performance, accomplishments and achievement of annual
business targets. A significant portion of potential career
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compensation is linked to corporate performance through stock option
awards.
The Compensation Committee determines the annual base salary,
incentive bonus and stock option awards for the Chief Executive
Officer. Annual base salary, incentive bonus and stock option awards
with respect to the Corporation's other senior officers are
recommended by the Chief Executive Officer to, and ultimately
determined by, the Compensation Committee. All other senior executives
of the Corporation are eligible to participate in the same executive
compensation plans that are available to the Chief Executive Officer.
In evaluating the performance of and determining the annual base
salary, incentive bonus and stock option awards for the Chief
Executive Officer and other senior management, the Compensation
Committee takes into account management's contribution to the
long-term success of the Corporation. The Compensation Committee
considers return to shareholders to be primary in measuring financial
performance. The philosophy of the Corporation is to maximize
long-term return to shareholders consistent with its commitments to
maintain the safety and soundness of the institution and provide the
highest possible level of service at a fair price to the customers and
communities that it serves. The Compensation Committee has taken these
subjective and qualitative factors into account, along with other
quantitative measures of corporate performance, in establishing the
annual salary, incentive bonus and stock option awards for the Chief
Executive Officer and the Corporation's other senior management,
giving at least equal weight to the subjective and qualitative factors
and no particular weight to any given factor. The determination of
the size of stock option awards is based upon a subjective analysis of
each recipient's position within the organization, his or her
individual performance and his or her growth potential within the
organization. The number of stock option awards previously granted to
a recipient is not a factor considered in the determination of the
grant of a new stock option award.
The Compensation Committee primarily considers five quantitative
measures of corporate performance in establishing the compensation to
be paid to the Chief Executive Officer and the Corporation's other
senior management. These measures of performance are: (i) after-tax
earnings per share and earnings per share growth; (ii) the level of
net loan losses; (iii) capital position; (iv) targeted as compared to
actual annual operating performance; and (v) the Corporation's annual
performance and financial condition as compared to that of its Federal
Reserve Bank peer group. These measures were considered by the
Compensation Committee in determining each component of executive
compensation, although no particular weight was given to any specific
factor.
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Mr. Ott's base salary for 1995 was established at the beginning
of the year to provide a competitive level of compensation and took
into account corporate performance through December 31, 1994. The
Corporation's performance during 1994 exceeded both its targeted goals
and that of its Federal Reserve Bank peer group.
Mr. Ott's 1995 incentive bonus was established at the end of the
year based upon performance during 1995 of the Corporation and
Chemical Bank. The Corporation exceeded its targeted performance for
1995, achieving record operating earnings. In 1995, the Corporation's
earnings per share increased 7.6% over 1994 earnings per share. Return
on assets increased to 1.24% in 1995, compared to 1.14% in 1994. The
Corporation recorded record earnings in 1995, even though the
Corporation added $583,000 to the reserve for future possible loan
losses, bringing the balance in the reserve to $15.7 million at
December 31, 1995, or 2.12% of total loans and 604% of nonperforming
loans.
There were no stock options granted during 1995 to Messrs. Ott,
Groom or Oliver. The Compensation Committee did not grant any stock
options to executive or senior officers of the Corporation during the
past fiscal year.
In 1993, Congress amended the Code to add Section 162 (m). This
section provides that publicly held corporations may not deduct
compensation paid to certain executive officers in excess of $1
million annually, with certain exemptions. The Compensation Committee
has examined the Corporation's executive compensation policies in
light of Section 162 (m) and the regulations that have been adopted to
implement that section. It is not expected that any portion of the
Corporation's deduction for employee remuneration will be disallowed
in 1996 or in future years by reason of actions expected to be taken
in 1996.
During 1995, all recommendations of the Compensation Committee
were unanimously approved by the Board of Directors without
modification.
Submitted by the Compensation Committee of the Board of
Directors:
Frank P. Popoff, Chairman James A. Currie Michael L. Dow
Lawrence A. Reed William S. Stavropoulos
FIVE-YEAR SHAREHOLDER RETURN COMPARISON
The following line graph compares the Corporation's cumulative
total shareholder return on its Common Stock over the last five years,
assuming the reinvestment of dividends, to the Standard and Poor's
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("S&P") 500 Stock Index and the KBW 50 Index. Both of these indices
are also based upon total return (including reinvestment of dividends)
and are market-capitalization-weighted indices. The S&P 500 Stock
Index is a broad equity market index published by Standard and Poor's.
The KBW 50 Index is published by Keefe, Bruyette & Woods, Inc., an
investment banking firm that specializes in the banking industry. The
KBW 50 Index is composed of 50 money center and regional bank holding
companies. The line graph assumes $100 was invested on December 31,
1990.
[GRAPH]
The dollar values for total shareholder return plotted in the
graph above are shown in the table below:
<TABLE>
<CAPTION>
CHEMICAL S&P
FINANCIAL KBW 50 500
DECEMBER 31 CORPORATION INDEX INDEX
<S> <C> <C> <C> <C>
1990 $100.0 $100.0 $100.0
1991 115.0 158.3 130.5
1992 184.9 201.7 140.4
1993 219.5 212.8 154.6
1994 206.3 201.9 156.6
1995 321.0 323.5 215.5
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Directors, officers, principal shareholders and their associates
were customers of, and had transactions (including loans and loan
commitments) with, the Corporation's banking subsidiaries in the
ordinary course of business during 1995. All such loans and
commitments were made on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons and did not involve more
than a normal risk of collectibility or present other unfavorable
features. Similar transactions may be expected to take place in the
ordinary course of business in the future. None of these loan
relationships presently in effect are in default as of the date of
this proxy statement.
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SECTION 16(A) REPORTING DELINQUENCIES
Section 16(a) of the Securities Exchange Act of 1934 requires
directors, officers and persons beneficially owning more than 10% of
the Corporation's Common Stock to file reports of ownership and
changes in ownership of shares of Common Stock with the Securities and
Exchange Commission. Directors, officers and greater than 10%
beneficial owners are required by the Securities and Exchange
Commission regulations to furnish the Corporation with copies of all
Section 16(a) reports they file. Based upon its review of copies of
Section 16(a) reports provided to it, or written representations from
certain reporting persons that no Form 5 reports were required, the
Corporation believes that, from January 1 through December 31, 1995,
all applicable filing requirements were satisfied, except for one Form
5. Mr. Currie timely filed a Form 5 report, however inadvertently
omitted to report one transaction of a gift of the Corporation's
shares to his minor son. Upon discovery, an amended Form 5 was
immediately filed.
DIVIDEND REINVESTMENT PROGRAM SHARES
If a shareholder is enrolled in the Corporation's Dividend
Reinvestment Program, the enclosed proxy card covers: (1) all shares
of Common Stock owned directly by the shareholder at the record date,
and (2) all shares of Common Stock held for the shareholder in the
Dividend Reinvestment Program at that time. KeyCorp Shareholder
Services, Inc., as the shareholder's agent under the Dividend
Reinvestment Program, will vote any Common Stock held by it under the
Program in accordance with the shareholder's written direction as
indicated on the proxy card. All such shares will be voted the way the
shareholder directs. If no specific instruction is given on a returned
proxy, KeyCorp Shareholder Services, Inc. will vote as recommended by
the Board of Directors.
PROPOSALS FOR 1997 ANNUAL MEETING
Proposals of shareholders intended to be presented at the 1997
annual meeting of shareholders of the Corporation must be made in
accordance with Securities and Exchange Commission Rule 14a-8 and must
be received by the Corporation by November 8, 1996, to be considered
for inclusion in the proxy statement and form of proxy relating to
that meeting.
INDEPENDENT PUBLIC ACCOUNTANTS
Ernst & Young LLP served as the independent public accountants
for the Corporation for the year 1995 and, pursuant to the
recommendation of the Audit Committee, the Board of Directors
reappointed them for the year 1996. In accordance with prior practice,
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representatives of Ernst & Young LLP are expected to be present at the
annual meeting of shareholders, will have the opportunity to make a
statement if they desire to do so and are expected to be available to
respond to appropriate questions.
OTHER MATTERS
Management does not intend to present to the meeting any business
other than the election of directors. If any matter not known to
management at the time this proxy statement was being prepared should
be presented for action at the meeting, the enclosed proxy will be
voted in accordance with the judgment of the persons named as proxies
with respect to that matter.
By Order of the Board of Directors
/s/ Aloysius J. Oliver
Aloysius J. Oliver
Secretary
March 8, 1996
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PROXY NO. SHARES IN YOUR NAME REINVESTMENT SHARES
[CHEMICAL FINANCIAL The undersigned hereby appoints Michael L. Dow,
CORPORATION LOGO] Alan W. Ott and Frank P. Popoff, jointly and
severally, proxies, with full power of
substitution to vote all the shares of
PROXY FOR capital stock of CHEMICAL FINANCIAL CORPORATION
ANNUAL which the undersigned may be entitled to vote,
MEETING including dividend reinvestment plan shares if
APRIL 15, 1996 any, held on record by the undersigned on
February 16, 1996, at the Annual Meeting of
Shareholders of Chemical Financial Corporation
to be held at the Midland Center for the Arts,
1801 W. St. Andrews, Midland, MI, on Monday,
April 15, 1995, and at any adjournments
thereof, such proxies being directed to vote as
specified on the reverse side of this card or,
if no specification is made, FOR the election
of all nominees listed for directors and to
vote in accordance with their discretion on
such other matters that may properly come
before the meeting.
Please date this Proxy and sign
exactly as your name or names
appear on the card. If you are
acting in a representative capacity
as attorney, executor,
administrator, trustee, or
guardian, please sign name and
title.
Dated: _____________________, 1996
CONTINUED ON __________________________________
REVERSE SIDE Signature
__________________________________
Signature
[CHEMICAL FINANCIAL CORPORATION LOGO]
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE CORPORATION FOR THE ANNUAL MEETING - APRIL 15, 1996
To vote in accordance with the Board of Directors' recommendations,
just sign the reverse side; no boxes need be checked. To withhold
authority to vote or to otherwise vote differently, please
indicate your specifications below.
______________________________________________________________________
[ ] FOR all nominees listed below [ ] AUTHORITY WITHHELD
JAMES A. CURRIE ALAN W. OTT LAWRENCE A. REED
MICHAEL L. DOW FRANK P. POPOFF WILLIAM S. STAVROPOULOS
(INSTRUCTION: To withhold authority to vote for any individual nominee
strike a line through the nominee's name in the list above)
______________________________________________________________________
Where a vote is not specified, the proxies will vote the shares
represented by this proxy FOR the election of all nominees listed for
directors, and will vote in accordance with their discretion on such
other matters that may properly come before the meeting.
______________________________________________________________________
[ ] Please place a check
here if you plan to
attend the annual
meeting.
