<PAGE>
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
[ ] Confidential, for Use of the Commission Only (as Permitted
by Rule 14a-6(e)(2))
CHEMICAL FINANCIAL CORPORATION
- ---------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- ---------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
--------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
--------------------------------------------------------------------
<PAGE>
(4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------------
(5) Total fee paid:
--------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
--------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
--------------------------------------------------------------------
(3) Filing party:
--------------------------------------------------------------------
(4) Date filed:
--------------------------------------------------------------------
<PAGE>
MARCH 5, 1999
[CHEMICAL FINANCIAL CORPORATION LOGO]
333 EAST MAIN STREET
MIDLAND, MICHIGAN 48640
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 19, 1999
TO THE HOLDERS OF COMMON STOCK:
The annual meeting of shareholders of CHEMICAL FINANCIAL CORPORATION
("Chemical") will be held on MONDAY, APRIL 19, 1999 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 (i) elect a board
of eight directors; and (ii) transact any other business that may properly
be brought before the meeting.
You are invited to attend the meeting and, even though you sign and
return the enclosed proxy, you may vote your shares in person if you are
present at the meeting.
The Board of Directors has fixed the close of business on February 19,
1999 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 5,
1999.
By Order of the Board of Directors
/s/ David B. Ramaker
David B. Ramaker
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.
<PAGE>
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
CHEMICAL FINANCIAL CORPORATION
APRIL 19, 1999
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, $1 par value ("Common Stock"), on and after March 5,
1999, for use at the annual meeting of Chemical shareholders to be held on
April 19, 1999 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 19, 1999 will be entitled to notice of and to vote
at the annual meeting of shareholders on April 19, 1999 and any adjournment
of that meeting. As of February 19, 1999, there were 13,506,385 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 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.
Chemical's management is not aware of any other matters intended to be
presented for action at the meeting. If other matters are presented, the
shares represented by the proxy will be voted in accordance with the
<PAGE>
judgement of the persons named as proxies on such other matters that may
come before the meeting.
-1-
<PAGE>
The 1998 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 1998, INCLUDING THE FINANCIAL STATEMENTS AND THE
FINANCIAL STATEMENT SCHEDULES, WILL BE PROVIDED, WITHOUT CHARGE, TO ANY
SHAREHOLDER UPON WRITTEN REQUEST. REQUESTS SHOULD BE MADE IN WRITING
ADDRESSED TO LORI A. GWIZDALA, CHIEF FINANCIAL OFFICER, CHEMICAL FINANCIAL
CORPORATION, 333 EAST MAIN STREET, MIDLAND, MICHIGAN 48640.
ELECTION OF DIRECTORS
The Board of Directors has nominated the individuals listed below for
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. If
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 who was
elected at the Corporation's prior annual meeting of shareholders.
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.
-2-
<PAGE>
NOMINEES FOR ELECTION
TO SERVE UNTIL
THE ANNUAL MEETING OF SHAREHOLDERS IN 2000
JAMES A. CURRIE, age 40, has been a director of the Corporation since
August 1993 and is a member of the Audit and Compensation Committees. Mr.
Currie is an investor and a certified teacher with a Masters Degree in
Special Education from Michigan State University in East Lansing, Michigan.
Mr. Currie has served as a director and member of various committees of
Chemical Bank since February 1992.
MICHAEL L. DOW, age 64, 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 has served as a director and member of various committees
of Chemical Bank since February 1982.
TERENCE F. MOORE, age 55, has served as a director of the Corporation since
January 20, 1998 and is a member of the Audit and Compensation Committees.
Mr. Moore has been President and Chief Executive Officer of MidMichigan
Health in Midland, Michigan since 1982. MidMichigan Health is a health care
organization operating three hospitals, two nursing homes and nine other
health care subsidiaries in central and northern Michigan. Mr. Moore is
also a director of the Michigan Molecular Institute. Mr. Moore has served
as a director and member of various committees of Chemical Bank since
February 1991 and as a director of CFC Data Corp, the Corporation's data
processing subsidiary, since June 1995.
ALOYSIUS J. OLIVER, age 58, has served as President, Chief Executive
Officer and a director of the Corporation since January 1997 and as
Executive Vice President and Secretary from January 1985 to December 1996.
Mr. Oliver joined the Corporation from Chemical Bank in January 1985. Mr.
Oliver joined Chemical Bank in 1957 and served in various management
capacities. Mr. Oliver became Vice President and Cashier of Chemical Bank
in 1975, Secretary of the Board of Directors in 1979 and Senior Vice
President in 1981. Mr. Oliver was elected to the Board of Directors of
Chemical Bank in August 1996. During the last five years, Mr. Oliver has
served as a director and member of various committees of the Corporation's
subsidiaries, as follows: Chemical Bank Michigan (also Chairman), Chemical
Bank Thumb Area, Chemical Bank Key State (also Chairman), Chemical Bank
South and CFC Data Corp (also President and Treasurer), all of which are
wholly-owned subsidiaries of the Corporation.
ALAN W. OTT, age 67, has served as Chairman of the Board since April 1994
and a director of the Corporation since October 1973. Mr. Ott was Chief
Executive Officer and President from October 1973 until his retirement on
December 31, 1996. Mr. Ott was Treasurer from May 1987 through April 1994.
<PAGE>
Mr. Ott is a member of the Pension Committee. Mr. Ott is also Chairman of
the Board of Directors of Chemical Bank. Mr. Ott joined Chemical Bank as
Cashier in 1962, 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.
Mr. Ott retired as Chief Executive Officer of Chemical Bank on December 31,
1996. During the last five years, Mr. Ott has also served as a director and
member of various committees of all of the Corporation's other
subsidiaries. Mr. Ott is a director of the Michigan Molecular Institute.
-3-
<PAGE>
FRANK P. POPOFF, age 63, 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, and
hydrocarbons and energy. 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 the Michigan Molecular
Institute, American Express Company, US WEST, Inc. and United Technologies
Corporation. Mr. Popoff has served as a director and member of various
committees of Chemical Bank since July 1985.
LAWRENCE A. REED, age 59, 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 Corporation in 1964 and served in various senior management
positions, including Vice President and Chief Financial Officer and
President and Chief Executive Officer. Mr. Reed has served as a director
and member of various committees of Chemical Bank since December 1981.
WILLIAM S. STAVROPOULOS, age 59, 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, and hydrocarbons and energy. 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, NCR Corporation and BellSouth Corporation.
Mr. Stavropoulos has served as a director and member of various committees
of Chemical Bank since April 1992.
-4-
<PAGE>
VOTING SECURITIES
Listed below is the only shareholder of the Corporation known by
management to have been the beneficial owner of 5% or more of the
outstanding shares of Common Stock as of January 31, 1999:
<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 979,991 303,404 1,283,395 9.45%
Trust Department<F3>
333 E. Main Street
Midland, MI 48640
</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 January 31, 1999:
<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 93,830 13,902 107,732 <F*>
M. L. Dow 75,778 66,985<F4> 142,763<F4> 1.05%
B. M. Groom 26,386<F5> 12,624 39,010<F5> <F*>
L. A. Gwizdala 29,868<F5> 16,512 46,380<F5> <F*>
T. F. Moore 3,671 3,625 7,296 <F*>
A. J. Oliver 97,336<F5> 97,336<F5> <F*>
A. W. Ott 73,715 377,833<F6> 451,548<F6> 3.32
F. P. Popoff 13,811 13,811 <F*>
D. B. Ramaker 9,718<F5> 9,718<F5> <F*>
L. A. Reed 3,188 14,585 17,773 <F*>
W. S. Stavropoulos 4,457 287,687<F7> 292,144<F7> 2.15
All directors and executive
officers as a group 463,872<F8> 506,615 970,487<F8> 7.14
<PAGE>
<FN>
- --------------------
<F*>Less than 1%
-5-
<PAGE>
<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 that, 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 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 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 1,389,062 shares of
Common Stock over which it does not have voting or dispositive power
and which are not included in these numbers. Although Messrs. Groom
and Ramaker 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 60,292 shares owned by two trusts as of January
31, 1999, of which Mr. Dow is a trustee. Mr. Dow disclaims beneficial
ownership of these shares.
<PAGE>
<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 January 31, 1999 as follows: Mr. Groom -
19,616 shares, Ms. Gwizdala - 29,313 shares, Mr. Oliver - 15,870
shares and Mr. Ramaker - 6,337 shares.
<F6> These numbers include 287,687 shares owned by the Rollin M. Gerstacker
Foundation and 50,771 shares owned by the Elsa U. Pardee Foundation
for both of which Mr. Ott served as a trustee and treasurer as of
January 31, 1999. Mr. Ott has no beneficial interest in the shares
owned by the foundations and disclaims beneficial ownership of these
shares.
-6-
<PAGE>
<F7> These numbers include 287,687 shares owned by the Rollin M. Gerstacker
Foundation as of January 31, 1999. Mr. Stavropoulos is a trustee of
that 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 80,250 shares that the executive officers of the
Corporation have the right to acquire presently or within 60 days from
January 31, 1999, through the exercise of stock options granted by the
Corporation.
</FN>
</TABLE>
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Corporation has standing Audit, Pension and Compensation
Committees of the Board of Directors. The Corporation does not have a
nominating committee.
The Audit Committee, composed of Mr. Dow, Chairman, and Messrs.
Currie, Moore, Popoff, Reed and Stavropoulos, met two times during 1998.
This committee recommends a firm of independent public accountants to be
appointed by the Board; consults with the independent public accountants
and the Corporation's 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 1998. This committee oversees
the administration of the Corporation's employees' pension plan.
The Compensation Committee, composed of Mr. Popoff, Chairman, and
Messrs. Currie, Dow, Moore, Reed and Stavropoulos, met once during 1998.
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 meetings in 1998. All directors
attended 75% or more of the aggregate meetings of the Board and applicable
committees of which they were members during 1998, except for Mr.
Stavropoulos.
-7-
<PAGE>
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,
1998, by the Chief Executive Officer and each of the Corporation's other
executive officers whose total annual salary and bonus for 1998 exceeded
$100,000:
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG TERM COMPENSATION
---------------------------------
ANNUAL COMPENSATION<F1> 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<F2>
-------- ---- ------ ----- ------------ ------ ------- ------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Aloysius J. Oliver 1998 $160,000 $40,150 2,500 $ 60
President and Chief 1997 140,000 35,150 2,625 60
Executive Officer 1996 94,000 25,150 5,512 60
of the Corporation
David B. Ramaker 1998 $150,000 $35,150 2,500 $ 408
President and Chief 1997 130,000 30,150 2,625 468
Executive Officer of 1996 90,000 16,150 5,512 417
Chemical Bank and
Executive Vice President
and Secretary of the
Corporation
Bruce M. Groom 1998 $101,250 $28,150 1,875 $1,053
Senior Vice President 1997 97,500 24,150 1,203
and Senior Trust Officer 1996 94,000 21,150 2,756 1,275
of Chemical Bank
Lori A. Gwizdala 1998 $ 96,000 $30,150 2,375 $ 377
Senior Vice President, 1997 90,000 28,150 2,625 294
Chief Financial Officer 1996 76,000 23,150 2,756 247
and Treasurer of the
Corporation
<FN>
- -----------------------
<F1> Includes compensation deferred under the Corporation's 401(k) savings
plan.
<PAGE>
<F2> Dollar value of term life insurance premiums paid by the Corporation.
</FN>
</TABLE>
-8-
<PAGE>
The following table sets forth information concerning stock
options granted to the specified individuals during the last fiscal
year:
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
INDIVIDUAL GRANTS
- ------------------------------------------------------------------------------------
NUMBER OF PERCENT OF TOTAL
SHARES OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES IN PRICE EXPIRATION GRANT DATE
NAME GRANTED<F1> FISCAL YEAR PER SHARE<F1> DATE PRESENT VALUE<F2>
- ------------------ ----------- ------------- ------------- ---------- -----------------
<S> <C> <C> <C> <C> <C>
Aloysius J. Oliver 2,500 2.0% $33.25 11/16/2008 $17,400
David B. Ramaker 2,500 2.0 33.25 11/16/2008 17,400
Bruce M. Groom 1,875 1.5 33.25 11/16/2008 13,050
Lori A. Gwizdala 2,375 1.9 33.25 11/16/2008 16,530
<FN>
- ------------------
<F1> The per share exercise price of each option is equal to the
market value of Common Stock on the date each option was granted.
The outstanding options were granted for a term of 10 years.
Options terminate, subject to certain limited exercise
provisions, in the event of death, retirement or other
termination of employment. All options become exercisable one
year after the date of grant, except for Mr. Ramaker's, which
become exercisable three years after the date of grant. All
options permit the option price to be paid by delivery of cash or
other shares of Common Stock owned by the option holder,
including shares acquired through the exercise of other options.
The number of shares underlying options and the exercise price
have been adjusted to reflect a 5 for 4 stock split paid by the
Corporation on December 16, 1998.
<F2> The dollar amounts in this column are the result of calculations
made using the Black-Scholes model, a theoretical method for
estimating the present value of stock options based on complex
assumptions about the stock's price volatility and dividend rate
as well as interest rates. Because of the unpredictability of the
assumptions required, the Black-Scholes model, or any other
valuation model, is incapable of accurately predicting the
Corporation's stock price or of placing an accurate present value
on options to purchase its stock. In performing the calculations
it was assumed that: the options had an estimated average life of
6.5 years; the volatility of the stock price was equal to 16.9%,
<PAGE>
which was the volatility calculated on a natural logarithmic
basis of the Corporation's stock price for the eighty-four month
period preceding the date of grant; the risk-free rate of return
was equal to the United States Treasury Note Rate with a
remaining term of 6.5 years effective the week of the grant, to
correspond to the estimated average life of the options; and the
dividend yield was 2.2%, approximately equal to the Corporation's
annualized dividend yield at the end of the third calendar
quarter of 1998. No adjustments were made for vesting
requirements, non-transferability, or risk of forfeiture. In
spite of any theoretical value which may be placed on a stock
option grant, no increase of the stock option's value is possible
without an increase in the market value of the underlying stock.
</FN>
</TABLE>
-9-
<PAGE>
The following table provides information concerning options
exercised during 1998 and unexercised options held as of December 31,
1998, 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
NUMBER OF UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES ACQUIRED OPTIONS AT FISCAL YEAR-END OPTIONS AT FISCAL YEAR-END<F2>
ON -------------------------- ------------------------------
NAME EXERCISE<F1> VALUE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Aloysius J. Oliver 2,500 $56,786 15,870 2,500 $155,637 $ 625
David B. Ramaker 1,312 31,971 6,337 12,704 106,379 75,482
Bruce M. Groom 1,500 36,141 19,616 1,875 362,518 469
Lori A. Gwizdala 3,528 91,632 29,313 2,375 494,160 594
<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 $33.50
per share, the closing bid price of Common Stock on The NASDAQ
Stock Market on December 31, 1998.
</FN>
</TABLE>
STOCK OPTION PLANS. The Chemical Financial Corporation 1987 Award
and Stock Option Plan ("1987 Plan") and the Stock Incentive Plan of
1997 ("1997 Plan") provide for awards of nonqualified stock options,
incentive stock options, stock appreciation rights, or a combination
thereof.
The 1997 Plan was approved by the shareholders at the April 21,
1997 annual meeting of shareholders. 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 and
extend the Plan to April 20, 1997. As of December 31, 1998, there were
options outstanding to purchase 491,867 shares of the Corporation's
Common Stock under the 1997 and 1987 Plans, and 522,391 shares
available for future awards under the 1997 Plan.
<PAGE>
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 1997 Plan. No
employee of the Corporation may receive any awards under the 1997 Plan
while the employee is a member of the Compensation Committee.
-10-
<PAGE>
The plans provide that the option price of incentive stock
options awarded shall not be less than the fair market value of Common
Stock on the date of grant. Historically, options granted under the
plans 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 cash or a number of shares of
Common Stock without payment to the Corporation that have a market
value equal to the difference between the option price and the market
price of the total number of shares awarded under the option at the
time of exercise of the stock appreciation right. The plans provide,
at the discretion of the Compensation Committee, that payment for
exercise of an option 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 up to the maximum amount deductible for federal income
tax purposes 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.
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 the named executive
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 1999. 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.
-11-
<PAGE>
<TABLE>
PENSION PLAN TABLE
<CAPTION>
YEARS OF SERVICE
---------------------------------------------------------
30 OR
AVERAGE REMUNERATION 10 15 20 25 MORE
-------------------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
$ 75,000 $12,994 $19,491 $25,987 $32,484 $ 38,981
100,000 17,744 26,616 35,488 44,360 53,232
125,000 22,493 33,740 44,987 46,233 67,480
150,000 27,244 40,866 54,487 68,109 81,731
175,000 31,994 47,991 63,988 79,985 95,982
200,000 36,743 55,115 73,487 91,858 110,230
</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, 1998, Mr. Oliver had 30 years of
credited service (the maximum) under the Pension Plan, Mr. Ramaker had
9.2 years, Mr. Groom had 13.7 years and Ms. Gwizdala had 14 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 1999 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
benefit for the employee would be adjusted. The benefits listed in the
Pension Plan Table are not subject to a deduction for Social Security
or any other offset amount.
<PAGE>
DIRECTOR COMPENSATION. During 1998, the Corporation paid director
fees of $800 per meeting attended and committee fees of $400 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.
-12-
<PAGE>
Effective December 31, 1997, the Corporation entered into a
Retirement Agreement with Mr. Ott. Under that agreement, the
Corporation agreed to pay Mr. Ott annual compensation of $50,000 and
provide group health benefits consistent with those available under
Chemical's retiree medical plan. Mr. Ott agreed to continue to serve
as Chairman of the Board of Directors of the Corporation and Chemical
Bank through December 31, 1998. Mr. Ott also agreed to a covenant not
to compete with the Corporation as long as payments were being made to
him under the agreement. The Corporation has renewed this agreement
with Mr. Ott for the 1999 fiscal year.
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 a variable rate money market savings 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, Moore, 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
compensation is linked to corporate performance through stock option
awards.
<PAGE>
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.
-13-
<PAGE>
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
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) 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.
Mr. Oliver's base salary for 1998 was established at the
beginning of the year to provide a competitive level of compensation
and took into account corporate performance through December 31, 1997.
The Corporation's performance during 1997 exceeded both its targeted
goals and that of its Federal Reserve Bank peer group.
Mr. Oliver's 1998 incentive bonus was established at the end of
the year based upon performance of the Corporation during 1998. The
Corporation's net income in 1998 exceeded targeted performance for
1998. The Corporation achieved record operating earnings in 1998. In
1998, the Corporation's earnings per share increased 8.5% over 1997
<PAGE>
earnings per share. Return on assets increased to 1.44% in 1998,
compared to 1.38% in 1997. Nonperforming loans represented .35% of
total loans outstanding as of December 31, 1998.
During 1998, the named executive officers were granted stock
options to purchase the following numbers of shares of Common Stock
(adjusted for the 5 for 4 stock split paid on December 16, 1998): Mr.
Oliver - 2,500 shares, Mr. Ramaker - 2,500 shares, Mr. Groom - 1,875
shares and Ms. Gwizdala - 2,375 shares. The Compensation Committee
granted stock options to purchase a total of 125,000 shares of Common
Stock to executive and other officers of the Corporation and its
subsidiaries during 1998.
-14-
<PAGE>
In 1993, Congress amended the Code to add Section 162(m). Section
162(m) 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 1999 or in future years by reason of actions expected to be taken
in 1999.
During 1998, 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 Michael L. Dow Lawrence A. Reed
James A. Currie Terence F. Moore William S. Stavropoulos
-15-
<PAGE>
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
("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,
1993.
[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>
1993 $100.0 $100.0 $100.0
1994 99.6 94.9 101.3
1995 146.8 152.0 139.4
1996 161.6 215.0 171.4
1997 196.8 314.3 228.6
1998 190.9 340.3 293.9
</TABLE>
-16-
<PAGE>
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 1998. 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.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires
directors, officers and persons who beneficially own 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 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, 1998,
all applicable filing requirements were satisfied, except that Mr.
Moore inadvertently filed late two reports concerning shares of the
Corporation's Common Stock.
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. Harris Trust and Savings
Bank, 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,
Harris Trust and Savings Bank will vote as recommended by the Board of
Directors.
<PAGE>
SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Proposals of shareholders that are intended to be presented at
the 2000 annual meeting of shareholders of the Corporation and that
the proponent would like included in the Corporation's proxy statement
and form of proxy relating to that meeting must be made in accordance
with Securities and Exchange Commission Rule 14a-8 and must be
received by the Corporation by November 5, 1999, to be considered for
inclusion in the proxy statement and form of proxy relating to that
meeting. To be considered timely, all other proposals of shareholders
intended to be presented at the 2000 annual meeting of shareholders of
the Corporation must similarly be received by the Corporation by
November 5, 1999.
-17-
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
Ernst & Young LLP served as the independent public accountants
for the Corporation for 1998 and, pursuant to the recommendation of
the Audit Committee, the Board of Directors reappointed them for the
1999 fiscal year. In accordance with prior practice, 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 judgement of the persons named as proxies
with respect to that matter.
By Order of the Board of Directors
/s/ David B. Ramaker
David B. Ramaker
Secretary
March 5, 1999
-18-
<PAGE>
PROXY NO. NO. OF SHARES
CHEMICAL The undersigned hereby appoints Michael L.
FINANCIAL CORPORATION Dow, Alan W. Ott and Frank P. Popoff,
PROXY FOR jointly and severally, proxies, with full
ANNUAL power of substitution, to vote all the shares
MEETING of capital stock of CHEMICAL FINANCIAL CORPORATION
APRIL 19, 1999 which the undersigned may be entitled to vote,
including dividend reinvestment plan shares, if
any, held of record by the undersigned on February
19, 1999, 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 19,
1999, 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 in
accordance with their discretion on such
other matters that may 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: ____________________ 1999
________________________________
Signature
CONTINUED ON ________________________________
REVERSE SIDE Signature
<PAGE>
[CHEMICAL FINANCIAL CORPORATION LOGO]
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF THE CORPORATION
FOR THE ANNUAL MEETING - APRIL 19, 1999
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 ALOYSIUS J. OLIVER LAWRENCE A. REED
MICHAEL L. DOW ALAN W. OTT WILLIAM S. STAVROPOULOS
TERENCE F. MOORE FRANK P. POPOFF
(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 [ ] Please place
VOTE THE SHARES REPRESENTED BY THIS PROXY FOR a check here
THE ELECTION OF ALL NOMINEES LISTED FOR if you plan
DIRECTORS AND IN ACCORDANCE WITH THEIR DISCRETION to attend the
ON SUCH OTHER MATTERS THAT MAY COME BEFORE THE Annual Meeting.
MEETING.
