<PAGE> 1
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:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
THE CHASE MANHATTAN 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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
[CHASE LOGO]
NOTICE OF 1996
ANNUAL MEETING
OF STOCKHOLDERS
AND PROXY
STATEMENT
Meeting Date: May 21,1996
The Chase Manhattan Corporation
270 Park Avenue
New York, New York 10017-2036
<PAGE> 3
[CHASE LOGO]
THE CHASE MANHATTAN CORPORATION
270 Park Avenue
New York, New York 10017-2036
April 17, 1996
Dear Stockholder:
You are cordially invited to attend the 1996 Annual Meeting of Stockholders
of The Chase Manhattan Corporation. This meeting will be held in the Grand
Ballroom of The Waldorf-Astoria Hotel, located at 301 Park Avenue, New York, New
York, at 10:00 a.m. on May 21, 1996.
The Chase Manhattan Corporation ("Old Chase") merged with and into Chemical
Banking Corporation ("Chemical") on March 31, 1996 (the "Merger"). Upon the
Merger, Chemical changed its name to The Chase Manhattan Corporation (the
"Corporation"). This will be the first Annual Meeting of Stockholders of the
Corporation following the Merger.
All holders of record of the Corporation's Common Stock as of April 8,
1996, are entitled to vote at the Corporation's Annual Meeting, including
holders of certificates representing shares of Chemical common stock and holders
of certificates formerly representing Old Chase common stock who have not
tendered those certificates for exchange.
We urge all holders of certificates formerly representing Old Chase common
stock, if you have not already done so, to forward your certificates to Chemical
Mellon Shareholder Services, L.L.C. using the transmittal forms that have been
sent to you. Holders of certificates formerly representing Old Chase common
stock will not be paid dividends or distributions declared or made after April
30, 1996, on the Corporation's Common Stock until such certificates are
surrendered for exchange. Forwarding your certificates will not affect your
right to vote.
Twenty Directors are to be elected at the Annual Meeting. In addition, you
will be asked to vote on ratification of the appointment of independent
accountants; on the approval of the Corporation's 1996 Long-Term Incentive Plan;
and on certain stockholder proposals, if introduced at the meeting. The
Corporation's Annual Report is enclosed. Following the custom of past meetings,
we shall review the major developments since our last annual meeting. A report
of the meeting will be included in the next Quarterly Report to Stockholders.
We hope you will be able to attend the meeting. However, even if you
anticipate attending in person, we urge you to mark, sign and return the
enclosed proxy card promptly to ensure that your shares will be represented. If
you attend, you will, of course, be entitled to vote in person. You may obtain
an admission ticket for the meeting by using the ticket request form on the last
page of the Proxy Statement.
Sincerely,
/s/ Walter V. Shipley
Chairman of the Board and
Chief Executive Officer
<PAGE> 4
[CHASE LOGO]
THE CHASE MANHATTAN CORPORATION
270 Park Avenue
New York, New York 10017-2036
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD TUESDAY, MAY 21, 1996
The Annual Meeting of Stockholders of The Chase Manhattan Corporation (the
"Corporation") will be held in the Grand Ballroom of The Waldorf-Astoria Hotel,
301 Park Avenue, New York, New York 10017 on Tuesday, May 21, 1996, at 10:00
a.m. to consider the following matters:
(1) the election of twenty directors;
(2) the ratification of the appointment of independent accountants for the
current year;
(3) the approval of the Corporation's 1996 Long-Term Incentive Plan; and
(4) the transaction of such other business as may properly be brought
before the meeting, including, if introduced at the meeting, taking
action upon the resolutions which are quoted under the heading
"Stockholder Proposals" in the accompanying Proxy Statement.
Pursuant to the By-laws of the Corporation, the Board of Directors has
fixed the close of business on April 8, 1996, as the time for determining
stockholders of record entitled to notice of, and to vote at, the meeting. Each
share of the Corporation's Common Stock will entitle the holder thereof to one
vote on all matters which may properly come before the meeting.
By Order of the Board of Directors
JOHN B. WYNNE
Secretary
April 17, 1996
PLEASE DATE AND SIGN THE ENCLOSED FORM OF PROXY AND MAIL IT PROMPTLY IN THE
ENCLOSED RETURN ENVELOPE. IF YOU PLAN TO ATTEND THE MEETING, PLEASE USE THE
TICKET REQUEST FORM PRINTED ON THE LAST PAGE OF THE PROXY STATEMENT.
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Proxy Statement......................................................... 1
Proposal 1: Election of Directors.................................. 2
Information Regarding the Nominees................................. 3
Security Ownership of Certain Beneficial Owners and Management..... 8
Compliance with Section 16(a) of the Securities Exchange Act....... 9
Board Meetings, Committees and Attendance.......................... 9
Directors' Compensation............................................ 10
Director and Officer Transactions.................................. 11
Executive Compensation............................................. 12
Compensation and Benefits Committee Report on
Executive Compensation........................................ 12
Comparison of Five-Year Cumulative Total Return.................. 14
Compensation Committee Interlocks and Insider Participation...... 14
Executive Compensation Tables.................................... 15
Summary Compensation Table.................................... 15
Stock Option/SAR Grants Table--1995 Grants.................... 16
Aggregated Stock Option/SAR Exercises in 1995 and
Option/SAR Values as of Year-End 1995....................... 17
Long-Term Incentive Plan Awards in 1995....................... 17
Pension and Other Defined Benefit or Actuarial Plans............. 17
Employment Contracts and Termination of Employment
Arrangements.................................................... 20
Proposal 2: Appointment of Independent Accountants................. 20
Proposal 3: Approval of the Corporation's 1996 Long-Term Incentive
Plan.............................................................. 20
Stockholder Proposals.............................................. 23
Proposal 4: Term Limits for Directors............................ 24
Proposal 5: Endorsement of Efforts of G-7 Ministers.............. 24
Miscellaneous...................................................... 26
Ticket Request..................................................... 27
</TABLE>
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<PAGE> 6
PROXY STATEMENT
This Proxy Statement has been prepared on behalf of the Board of Directors
by the management of The Chase Manhattan Corporation and is furnished in
connection with the solicitation of proxies to be used at the Annual Meeting of
Stockholders of the Corporation to be held on May 21, 1996, and any adjournment
thereof. The approximate date on which this Proxy Statement is first being sent
to stockholders is April 17, 1996.
The merger (the "Merger") of The Chase Manhattan Corporation ("Old Chase")
with and into Chemical Banking Corporation ("Chemical"), pursuant to an
Agreement and Plan of Merger dated August 27, 1995 (the "Merger Agreement"), was
effected March 31, 1996 (the "Merger Date"). Upon the Merger, Chemical changed
its name to The Chase Manhattan Corporation (the "Corporation"). To the extent
appropriate, the information contained in this Proxy Statement includes certain
information concerning the two pre-merger entities as well as The Chase
Manhattan Bank (National Association) ("Chase Bank") and Chemical Bank, the two
principal banking subsidiaries of the Corporation.
All holders of record of the Corporation's common stock ("Common Stock") as
of April 8, 1996, are entitled to vote at the Corporation's Annual Meeting,
including holders of certificates representing shares of Chemical common stock
and holders of certificates formerly representing Old Chase common stock who
have not tendered such stock certificates for exchange. Holders of certificates
formerly representing Old Chase common stock who have not tendered their
certificates for exchange as of April 8, 1996, are entitled to vote a number of
shares equal to the number of whole shares of Common Stock into which such
holders' shares of Old Chase common stock were converted pursuant to the Merger
Agreement.
All holders of certificates formerly representing Old Chase common stock,
if they have not already done so, are urged to forward their certificates to
Chemical Mellon Shareholder Services, L.L.C. using the transmittal forms that
have been sent to them. Holders of certificates formerly representing Old Chase
common stock will not be paid dividends or distributions declared or made after
April 30, 1996 on the Corporation's Common Stock until such certificates are
surrendered for exchange. The forwarding of such certificates for exchange will
have no affect on the holders' voting rights. Holders of certificates
representing Chemical common stock do not need to exchange their certificates as
a result of the Merger because those certificates continue to represent an equal
number of shares of Common Stock.
As of April 8, 1996, there were outstanding 434,637,133 shares of Common
Stock (excluding shares held in treasury). Each share of Common Stock is
entitled to one vote on each matter to be voted on at the Annual Meeting. Shares
representing a majority of the votes entitled to be cast by the outstanding
shares of Common Stock must be represented in person or by proxy at the Annual
Meeting in order for a quorum to be present.
The form of proxy solicited by the Board of Directors affords stockholders
the ability to specify a choice among approval of, disapproval of, or abstention
with respect to each matter to be acted upon at the Annual Meeting. Shares
represented by the proxy will be voted and, where the solicited stockholder
indicates a choice on the form of proxy with respect to any matter to be acted
upon, the shares will be voted as specified. Abstentions and broker nonvotes
will not be counted as either "for" or "against" the items being voted on in the
tabulation of votes on proposals.
<PAGE> 7
PROPOSAL 1: ELECTION OF DIRECTORS
One of the purposes of the meeting is the election of twenty Directors, who
will constitute the entire Board of Directors of the Corporation as of the
Annual Meeting, to hold office until the next Annual Meeting and until their
successors are elected and have qualified.
The election of Directors requires a plurality of the votes cast at the
meeting. Shares represented by proxies solicited by the Board of Directors will,
unless contrary instructions are given, be voted for the election of the
nominees named in the following pages as Directors of the Corporation. If any
nominee is unavailable for election, the shares may be voted for the election of
such substitute nominee as the Board of Directors of the Corporation may propose
or the number of Directors to be elected may be reduced accordingly.
If a stockholder wishes to withhold authority to vote for any nominee, such
stockholder can do so by following the directions set forth on the form of proxy
solicited by the Board of Directors or, if such stockholder wishes to vote in
person, on the ballot distributed at the Annual Meeting.
Each nominee is currently a Director of the Corporation. Except as noted,
all of the nominees have been continuously employed by their present employers
for more than five years. All of the nominees are heavily involved in community
and charitable affairs.
The name of each nominee, the year each first joined the Board of Directors
of the Corporation and the Boards of Directors of Old Chase or Manufacturers
Hanover Corporation ("MHC"), and each nominee's age as of the date of the Annual
Meeting and principal occupation are set forth in the following pages.
2
<PAGE> 8
INFORMATION REGARDING THE NOMINEES
<TABLE>
<S> <C>
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FRANK A. BENNACK JR. (AGE 63)
President and Chief Executive Officer of The Hearst Corporation. In
[PHOTO OF addition to serving as a Director of The Hearst Corporation, Mr.
FRANKLIN A. BENNACK JR.] Bennack is a Director of American Home Products Corporation. He had
been a Director of MHC since 1981, became a Director of the
Corporation in 1991 and serves on the Audit and Examining Committees
and the Governance Committee.
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SUSAN V. BERRESFORD (AGE 53)
President of The Ford Foundation. Ms. Berresford had been a Director
[PHOTO OF of Old Chase since May 1995, became a Director of the Corporation on
SUSAN V. BERRESFORD] the Merger Date and serves on the Audit and Examining Committees and
the Public Policy and Trust Committee.
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M. ANTHONY BURNS (AGE 53)
Chairman of the Board, President and Chief Executive Officer of Ryder
System, Inc. Mr. Burns is also a Director of J.C. Penney Company, Inc.
[PHOTO OF and Pfizer Inc. He had been a Director of Old Chase since 1990 and
M. ANTHONY BURNS] became a Director of the Corporation on the Merger Date. Mr. Burns
serves as Chairman of the Audit and Examining Committees and is a
member of the Governance Committee.
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H. LAURANCE FULLER (AGE 57)
Chairman of the Board and Chief Executive Officer of Amoco
[PHOTO OF Corporation. Mr. Fuller is also a Director of Abbott Laboratories and
LAURANCE FULLER] Motorola, Inc. He had been a Director of Old Chase since 1985, became
a Director of the Corporation on the Merger Date and serves on the
Compensation and Benefits Committee and the Governance Committee.
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</TABLE>
3
<PAGE> 9
<TABLE>
<S> <C>
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MELVIN R. GOODES (AGE 61)
[PHOTO OF Chairman of the Board and Chief Executive Officer of Warner-Lambert
MELVIN R. GOODES] Company. Mr. Goodes is also a Director of Ameritech Corporation and
Unisys Corporation. He became a Director of the Corporation in 1986
and serves on the Compensation and Benefits Committee and the Public
Policy and Trust Committee.
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WILLIAM H. GRAY III (AGE 54)
President and Chief Executive Officer of the United Negro College
[PHOTO OF Fund, Inc. since 1991. Mr. Gray was a member of the United States
WILLIAM H GRAY III] House of Representatives from 1979 to 1991. He is also a Director of
MBIA Inc., The Prudential Insurance Company of America, Rockwell
International Corporation, Union Pacific Corporation, Warner-Lambert
Company and Westinghouse Electric Corporation. He had been a Director
of Old Chase since 1992 and became a Director of the Corporation on
the Merger Date. Mr. Gray serves as Chairman of the Public Policy and
Trust Committee and is a member of the Compensation and Benefits
Committee.
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GEORGE V. GRUNE (AGE 66)
Chairman of the DeWitt Wallace-Reader's Digest Fund and the Lila
[PHOTO OF Wallace-Reader's Digest Fund. Mr. Grune retired as Chairman and Chief
GEORGE V. GRUNE] Executive Officer of The Reader's Digest Association, Inc. in August
1994 and served as Chairman of the Board until August 1995. He is also
a Director of Avon Products, Inc., CPC International, Inc. and
Federated Department Stores, Inc. Mr. Grune became a Director of the
Corporation in 1986 and serves on the Audit and Examining Committees
and the Public Policy and Trust Committee.
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WILLIAM B. HARRISON JR. (AGE 52)
Vice Chairman of the Board and Director of the Corporation since 1991.
[PHOTO OF Mr. Harrison is responsible for global wholesale banking, including
WILLIAM B. HARRISON JR.] private banking. He is also a Director of Dillard Department Stores,
Freeport-McMoRan Inc., Freeport-McMoRan Copper & Gold Inc. and McMoRan
Oil & Gas Co.
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</TABLE>
4
<PAGE> 10
<TABLE>
<S> <C>
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HAROLD S. HOOK (AGE 64)
Chairman and Chief Executive Officer of American General Corporation.
[PHOTO OF Mr. Hook is also a Director of Cooper Industries, Inc., PanEnergy Corp
HAROLD S. HOOK] and Sprint Corporation. He became a Director of the Corporation in
1987, and serves on the Public Policy and Trust Committee and the Risk
Policy Committee.
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HELENE L. KAPLAN (AGE 62)
Of Counsel to the firm of Skadden, Arps, Slate, Meagher & Flom. Mrs.
[PHOTO OF Kaplan is also a Director of The May Department Stores Company,
HELENE L. KAPLAN] Metropolitan Life Insurance Company, Mobil Corporation and NYNEX
Corporation. She became a Director of the Corporation in 1987. Mrs.
Kaplan serves as Chairman of the Risk Policy Committee and is a member
of the Governance Committee.
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E. MICHEL KRUSE (AGE 52)
Vice Chairman of the Board, having served as Vice Chairman of the
[PHOTO OF Board and Director of Old Chase since May 1995. Mr. Kruse is
E. MICHEL KRUSE] responsible for market and credit risk management, finance, and
information and transaction services. He became a Director of the
Corporation on the Merger Date.
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THOMAS G. LABRECQUE (AGE 57)
President and Chief Operating Officer of the Corporation, having
[PHOTO OF served as Chairman of the Board and Chief Executive Officer of Old
THOMAS G. LABRECQUE] Chase since 1990. He became a Director of the Corporation on the
Merger Date, having been a Director of Old Chase since 1980. Mr.
Labrecque is also a Director of Pfizer Inc.
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</TABLE>
5
<PAGE> 11
<TABLE>
<S> <C>
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J. BRUCE LLEWELLYN (AGE 68)
Chairman of the Boards of The Philadelphia Coca-Cola Bottling Company,
[PHOTO OF The Coca-Cola Bottling Company of Wilmington, Inc. and Queen City
J. BRUCE LLEWELLYN] Broadcasting, Inc. Mr. Llewellyn is a Director of Coors Incorporated
and Essence Magazine. He had been a Director of MHC since 1989, became
a Director of the Corporation in 1991 and serves on the Compensation
and Benefits Committee and the Public Policy and Trust Committee.
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EDWARD D. MILLER (AGE 55)
Senior Vice Chairman of the Board with responsibility for merger
[PHOTO OF integration, regional banking, nationwide consumer services,
EDWARD D. MILLER] technology and operations, and administration. Mr. Miller was
President of the Corporation from 1994 to the Merger Date, after
serving as Vice Chairman of the Board from 1991. From 1988 until the
MHC Merger, he served as Vice Chairman and a Director of MHC. He
became a Director of the Corporation in 1991. Mr. Miller is also a
Director of The Brooklyn Union Gas Company.
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EDMUND T. PRATT JR. (AGE 69)
Chairman Emeritus of Pfizer Inc. since 1992, after serving as Chairman
[PHOTO OF of the Board of that company from 1972 and as its Chief Executive
EDMUND T. PRATT JR.] Officer from 1972 to 1991. Mr. Pratt continues as a Director of
Pfizer, and is also a Director of General Motors Corporation, Hughes
Electronics Corporation, International Paper Company and Minerals
Technologies Inc. He had been a Director of Old Chase since 1974,
became a Director of the Corporation on the Merger Date and serves on
the Audit and Examining Committees and the Public Policy and Trust
Committee.
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HENRY B. SCHACHT (AGE 61)
Chairman of the Board and Chief Executive Officer of Lucent
[PHOTO OF Technologies Inc., the new communications, systems and technology
HENRY B. SCHACHT] company of AT&T Corp., since February 1996, having served as
"designate" since September 1995. He was Chairman of the Executive
Committee of Cummins Engine Company, Inc. from February to November
1995, after serving as Chairman of the Board from 1977 to 1995 and as
Chief Executive Officer from 1973 to 1994. Mr. Schacht continues as a
Director of Cummins Engine Company and is also a Director of Aluminum
Company of America. He had been a Director of Old Chase since 1982,
became a Director of the Corporation on the Merger Date and serves on
the Governance Committee and the Risk Policy Committee.
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</TABLE>
6
<PAGE> 12
<TABLE>
<S> <C>
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WALTER V. SHIPLEY (AGE 60)
Chairman of the Board and Chief Executive Officer of the Corporation
[PHOTO OF 1983-1992 and 1994 to the present. Mr. Shipley is also a Director of
WALTER V. SHIPLEY] Champion International Corporation, NYNEX Corporation and The Reader's
Digest Association, Inc. He became a Director of the Corporation in
1982.
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ANDREW C. SIGLER (AGE 64)
Chairman of the Board and Chief Executive Officer of Champion
[PHOTO OF International Corporation. Mr. Sigler is also a Director of
ANDREW C. SIGLER] AlliedSignal Inc., Bristol-Myers Squibb Company and General Electric
Company as well as a member of the Board of Trustees for Dartmouth
College. He became a Director of the Corporation in 1979. He serves as
Chairman of the Governance Committee and is a member of the Risk
Policy Committee.
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JOHN R. STAFFORD (AGE 58)
Chairman, President and Chief Executive Officer of American Home
[PHOTO OF Products Corporation. Mr. Stafford is also a Director of AlliedSignal
JOHN R. STAFFORD] Inc., Metropolitan Life Insurance Company and NYNEX Corporation. He
had been a Director of MHC since 1982 and became a Director of the
Corporation in 1991. He serves as Chairman of the Compensation and
Benefits Committee and is a member of the Governance Committee.
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MARINA V.N. WHITMAN (AGE 61)
Professor of Business Administration and Public Policy, University of
[PHOTO OF Michigan. Prior to her appointment at the University of Michigan in
MARINA V.N. WHITMAN] 1992, Dr. Whitman was Vice President and Group Executive of General
Motors Corporation. She is also a Director of Aluminum Company of
America, Browning-Ferris Industries, Inc., The Procter & Gamble
Company and Unocal Corp. Dr. Whitman had been a Director of MHC since
1973, became a Director of the Corporation in 1991 and serves on the
Public Policy and Trust Committee and the Risk Policy Committee.
- --------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE> 13
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of December 31, 1995, each Director-nominee, each executive officer
named in the Summary Compensation Table and all Directors and executive officers
as a group, unless otherwise noted, beneficially owned the number of shares of
Common Stock set forth in the following table. Shares of common stock of Old
Chase held as of such date were deemed converted into shares of Common Stock in
accordance with the Merger Agreement. Unless otherwise indicated, each of the
named individuals and each person in the group has sole voting power and sole
investment power with respect to the shares shown. These shares, which include
shares of Common Stock currently subject to acquisition, represent less than 1%
of the outstanding Common Stock.
<TABLE>
<CAPTION>
Amount and Nature of
Name of Individual Beneficial Ownership(a)
- ------------------------------------- -----------------------
<S> <C>
Frank A. Bennack Jr. 1,356
Susan V. Berresford 104
M. Anthony Burns 1,948
H. Laurance Fuller 7,839
Melvin R. Goodes 2,600
William H. Gray III 2,215
George V. Grune 2,639
William B. Harrison Jr. 323,518(b)(c)
Harold S. Hook 36,316(d)
Helene L. Kaplan 2,400
E. Michel Kruse 113,100(b)
Thomas G. Labrecque 634,105(b)
William C. Langley 134,877(b)(c)
J. Bruce Llewellyn 8,695
Edward D. Miller 304,536(b)(c)
Edmund T. Pratt Jr. 45,972
Henry B. Schacht 2,704
Walter V. Shipley 639,939(b)(c)
Andrew C. Sigler 2,675
John R. Stafford 4,921(e)
Peter J. Tobin 175,940(b)(c)
Marina v.N. Whitman 2,268
All Directors and executive officers
as a group (37 persons) 2,807,354
</TABLE>
- ---------------
(a) The amounts reported include shares of Common Stock, receipt of which has
been deferred under deferred compensation plan arrangements as follows: Mr.
Burns 1,844 shares; Mr. Fuller 2,443 shares; Mr. Gray 1,219 shares; Mr.
Grune 345 shares; Mr. Harrison 28,950 shares; Mr. Hook 1,635 shares; Mr.
Llewellyn 826 shares; Mr. Miller 22,301 shares; Mr. Pratt 2,443 shares; Mr.
Schacht 2,443 shares; Mr. Shipley 57,715 shares; Mr. Stafford 608 shares;
and all Directors and executive officers as a group 144,945 shares.
The amounts reported also include the number of units of Common Stock
equivalents held by certain Directors under deferred compensation
arrangements, entitling each such Director, upon retirement, to receive a
cash payment for each unit equal to the fair market value at that time of a
share of Common Stock as follows: Mr. Fuller 1,236 units; Mr. Gray 476
units; Mr. Hook 16,427 units; Mr. Llewellyn 5,155 units; Mr. Pratt 43,321
units; Mr. Stafford 1,889 units; and all Directors as a group 98,039 units.
(b) The amounts reported include shares of Common Stock which as of December 31,
1995 could be acquired within 60 days through the exercise of stock options
and/or stock appreciation rights ("SARs") as follows: Mr. Harrison 237,500
shares; Mr. Kruse 66,869 shares; Mr. Labrecque 453,891 shares; Mr. Langley
97,178; Mr. Miller 213,307 shares; Mr. Shipley 450,750 shares; and Mr. Tobin
139,554 shares. The amounts reported also include shares of Common Stock
which may be received at
8
<PAGE> 14
the end of a restricted period as a result of awards of restricted stock
and/or restricted stock units as follows: Mr. Harrison 12,500 shares; Mr.
Kruse 19,760 shares; Mr. Labrecque 67,912 shares; Mr. Langley 4,213 shares;
Mr. Miller 15,855 shares; Mr. Shipley 20,000 shares; and Mr. Tobin 6,107
shares.
(c) The amounts reported include shares of Common Stock allocated to accounts
under a Section 401(k) plan as follows: Mr. Harrison 5,140 shares; Mr.
Langley 13,852 shares; Mr. Miller 16,601 shares; Mr. Shipley 25,589 shares;
and Mr. Tobin 8,545 shares.
(d) The amount reported includes beneficial ownership of 92 shares of Common
Stock owned through a controlled corporation. The amount reported also
includes shares of Common Stock which could be acquired through the exercise
of warrants to purchase an additional 333 shares of Common Stock.
(e) The amount reported includes 300 shares of Common Stock owned by Mr.
Stafford's spouse as to which Mr. Stafford disclaims beneficial ownership.
As of December 31, 1995, none of the Directors or executive officers of the
Corporation beneficially owned shares of preferred stock of Chemical or Old
Chase.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's executive officers, Directors and persons who own more than ten
percent of a registered class of the Corporation's equity securities ("Reporting
Persons") to file reports of ownership and changes in ownership on Forms 3, 4
and 5 with the Securities and Exchange Commission (the "SEC") and the New York
Stock Exchange (the "NYSE"). These Reporting Persons are required by SEC
regulation to furnish the Corporation with copies of all Forms 3, 4 and 5 they
file with the SEC and the NYSE.
Based solely on the Corporation's review of the copies of the Forms it has
received and written representations from certain Reporting Persons, the
Corporation believes that all of its Reporting Persons complied with all filing
requirements applicable to them with respect to transactions during fiscal year
1995.
BOARD MEETINGS, COMMITTEES AND ATTENDANCE
In the following discussion of Board and committee meetings, reference to
the Corporation in 1995 should be deemed reference to Chemical. In 1995,
thirteen meetings of the Board of Directors of the Corporation were held. During
1995, each Director-nominee who was prior to the Merger a Director of Chemical
and each Director-nominee who was prior to the Merger a Director of Old Chase
attended 75% or more of the aggregate number of the respective Board meetings
and meetings of the committees of which such Director was a member. It should be
noted that the Corporation's Directors discharge their responsibilities
throughout the year not only at such Board and committee meetings, but through
personal meetings and other communications, including considerable telephone
contact, with the Chairman and others regarding matters of interest and concern
to the Corporation.
The Audit and Examining Committees of the Boards of Directors of the
Corporation and Chemical Bank met ten times in 1995. The functions of the
Committees are to examine the affairs of the Corporation, Chemical Bank and,
commencing with the Merger, Chase Bank as the Committees deem necessary, and to
report the results to the Boards of Directors. Their duties include the annual
review of the audit services provided by the independent accountants and the
making of recommendations to the Boards of Directors with respect to the
selection of independent accountants.
The Compensation and Benefits Committee of the Board of Directors of the
Corporation met five times in 1995. Its functions are to determine the
compensation and benefits policies and procedures of the Corporation. No member
of the Compensation and Benefits Committee may be an executive officer of the
Corporation and no executive officer of the Corporation may be a member of the
parallel committee of a corporation of which any of the Corporation's outside
Directors is an officer or director. No executive officer of
9
<PAGE> 15
the Corporation is a Director of another entity having an executive officer who
is a member of the Compensation and Benefits Committee.
The Governance Committee of the Board of Directors of the Corporation met
twice in 1995. Prior to the Merger, the Governance Committee was known as the
Nomination and Board Affairs Committee. The functions of the Committee include
the authority to consider and recommend to the Board of Directors nominees for
election to the Board of Directors and to counsel on other Board related
matters. The Governance Committee will consider any written recommendations by
stockholders for nominees for election to the Board mailed to the attention of
the Secretary of the Corporation.
The Public Policy and Trust Committee of the Board of Directors of the
Corporation met twice in 1995. Prior to the Merger, the Public Policy and Trust
Committee was known as the Public Policy Committee. The Committee reviews
charitable and community oriented activities of the Corporation and its
subsidiaries. The Committee makes specific recommendations regarding projects
undertaken to improve the communities served by Chemical Bank and, since the
Merger, Chase Bank. The Public Policy and Trust Committee also reviews the
community reinvestment activities of the Corporation and its subsidiaries. Since
the Merger, the Committee has also assumed responsibility for reviewing the
trust, other fiduciary and investment advisory activities of the subsidiaries of
the Corporation.
The Risk Policy Committee of the Board of Directors of the Corporation was
formed in May 1995 and met five times during 1995. The Risk Policy Committee's
purpose is to act in a general advisory and consultative capacity in respect to
the activities of the Corporation that give rise to credit risk and market risk;
to be fully apprised of these risks; to set a general risk management mandate to
govern these activities; to regularly re-evaluate the risk exposure of the
Corporation, its risk tolerance and the established mandate; and to review and,
where appropriate, approve policies to control risk exposure.
DIRECTORS' COMPENSATION
Directors who are officers of the Corporation do not receive any fees for
their services as Directors. Each outside Director receives an annual retainer
in the form of $25,000 cash and 500 shares of Common Stock, in addition to
$1,250 for each meeting of the Board of Directors attended. The Chairman and
members, respectively, of the Audit and Examining Committees, the Compensation
and Benefits Committee and the Risk Policy Committee each receives an additional
fee of $16,000 and $8,000 per year. The Chairman and members, respectively, of
the Governance Committee and the Public Policy and Trust Committee each receives
an additional fee of $10,000 and $5,000 per year. Members of all committees of
the Board of Directors of the Corporation, Chemical Bank and Chase Bank receive
fees of $1,250 for each committee meeting attended, provided that only one fee
is paid for attendance at meetings of Committees that serve both the Corporation
and the banks. During 1995, outside Directors of the Corporation were included
in a group term life insurance policy and in a group accident insurance policy
for which the Corporation paid average premiums of approximately $1,700 per
Director. Directors may also elect to participate in the Corporation's medical
insurance coverage, with the cost of such coverage paid by the Director.
Outside Directors of the Corporation are eligible to defer their fees under
deferred compensation arrangements. Prior to the beginning of each year or, if
later, the commencement of service as a Director, each eligible Director may
elect to defer all or a specified portion of his or her cash compensation during
such year or all stock compensation or both. The right to receive future
payments under deferred compensation arrangements is an unsecured claim against
the general assets of the Corporation.
The Board of Directors has determined that, as of the date of the 1996
Annual Meeting, the Corporation will no longer grant benefits under the
Post-Retirement Compensation Plan for Non-Employee Directors (the
"Post-Retirement Compensation Plan"). Under the Post-Retirement Compensation
Plan, outside Directors who retire from, or otherwise cease to be a member of,
the Board after completing ten years of service are entitled to receive the
dollar value of such Director's annual retainer at the time the Director leaves
the Board, set and fixed for life. In lieu of this, Directors elected at the
1996 Annual Meeting will receive units of Common Stock equivalents, in an amount
that is the actuarial equivalent of the amount that would have been due to such
Directors upon their retirement, assuming the Directors had completed the
vesting period.
10
<PAGE> 16
Following termination of their service on the Board, such Directors will be
entitled to receive cash in an amount equal to the then-current value of such
units.
DIRECTOR AND OFFICER TRANSACTIONS
The Corporation's subsidiaries have made loans and extended credit, and
expect in the future to make loans and extend credit, in the ordinary course of
business to the Directors and officers of the Corporation and their associates,
including corporations of which a Director of the Corporation is a director,
officer or both, on substantially the same terms (including interest rates and
collateral) as those prevailing for comparable transactions with others. No such
loans or extensions of credit are nonperforming. All such loans involve only the
normal risk of collectibility and are not otherwise unfavorable.
In the ordinary course of business, the Corporation and its subsidiaries
use the products or services of a number of organizations with which Directors
of the Corporation are or were affiliated as officers or directors and Mrs.
Kaplan is Of Counsel to a law firm that the Corporation utilizes for certain
legal services. Management believes that such transactions were on terms that
were at least as favorable to the Corporation or the subsidiaries of the
Corporation involved as would have been available from unaffiliated parties. It
is expected that the Corporation and its subsidiaries will in the future have
transactions with organizations with which Directors of the Corporation are
affiliated as officers or directors.
11
<PAGE> 17
EXECUTIVE COMPENSATION
COMPENSATION AND BENEFITS COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee, which consists solely of disinterested outside
Directors, administers the compensation and benefits programs of the Corporation
and its subsidiaries and determines the compensation of senior management.
The Corporation's compensation strategy is to (1) emphasize variable and
performance-based pay over fixed and salary-based pay and (2) align the
interests of senior management and the Corporation's stockholders through the
use of long term equity-based pay.
The overall program is designed to attract, retain and motivate top quality and
experienced professionals, recognizing the diversity of market influences among
the various businesses in which the Corporation chooses to compete. Accordingly,
one of the program's objectives is to provide cash and stock compensation levels
which are competitive with various peer groups comprised of financial
institutions in each of various businesses and markets in which the Corporation
competes.
Inasmuch as every financial institution does not compete in every marketplace or
with the same grouping of financial services and products, peer groups will
differ for each of the businesses headed by members of the senior management
team and, therefore, cannot be compared against the complete list of
institutions which make up the Keefe, Bruyette & Woods (KBW) 50 and the KBW
Money Center Banks Indices, which are used in the Performance Graph below.
In 1994 the Corporation's stockholders approved the Key Executive Performance
Plan ("KEPP") which will allow the Corporation a tax deduction for the
compensation costs of its Chief Executive Officer and the Corporation's other
four most highly compensated executive officers in excess of $1 million annually
under the 1993 amendments to the Internal Revenue Code. In administering this
plan, the Compensation Committee will promote its policy of maximizing corporate
tax deductions, wherever feasible. KEPP requires that the Compensation Committee
prescribe an objective formula pursuant to which a pool of funds (i.e., "bonus
pool") will be created for that year. Coincident with the establishment of the
bonus pool, the Compensation Committee is also required to allocate to each
participant a share of such bonus pool. These individual allocations represent a
limitation on the amount of incentive compensation (that is, annual performance
bonuses and grants of stock-based awards other than options made under the
Corporation's Long-Term Stock Incentive Plan) and do not represent a target
award. In addition, there is a further limitation that no participant may
receive an award under KEPP in excess of .002 of the Corporation's income before
income tax expense, extraordinary items and the effect of accounting changes for
the relevant calendar year (as reflected in the Corporation's Consolidated
Statement of Income) plus 50% of an amount carried over from the prior plan
year. The Compensation Committee retains the discretion to reduce these
formula-determined amounts based on its evaluation of other factors. Such other
factors include: (a) the Corporation's strategic progress and profit performance
including income tax expense, net income and return on equity relative to the
Corporation's profit plan, (b) the performance of each executive's business
group relative to the business group's profit plan, (c) the organizational role,
current performance and future potential of the individual executive and (d) a
review of the ranges of competitive practice by and performance of the
applicable peer groups.
CASH COMPENSATION: Cash compensation includes base salary and an annual
performance bonus. The base salary of each member of senior management is set at
an amount within a predetermined salary range which reflects the level of
responsibility and competitive salaries paid to similarly situated executives in
a peer group consisting of six other United States bank holding companies. The
exact amount paid to each executive is a function of performance, level of
experience and the desire of the Corporation to emphasize variable compensation
rather than salary-based compensation. In general, these base salaries are
reviewed no more frequently than every 24 months.
Annual performance bonuses, which are awarded on a discretionary basis by the
Committee, reflect the degree of success achieved in the attainment of
corporate, business unit and individual performance goals as well as competitive
market data and trends within the appropriate peer group. Performance measures
used in
12
<PAGE> 18
determining incentive awards would include qualitative as well as quantitative
measures. While the measures used may differ from year to year, examples of
quantitative measures would include income before income tax expense, return on
common equity, earnings per share growth, loan charge-offs and the ratio of non-
performing assets to total assets and efficiency ratio (i.e. noninterest expense
as a percentage of total net interest income and noninterest revenue).
Qualitative measures would include the Committee's assessment of the executives'
achievements in carrying out the Corporation's mission statement. While 1995
awards were discretionary, the Committee gave primary consideration to the
Corporation's income before income tax expense and the efficiency ratio.
Individual awards to members of the Office of the Chairman (i.e., Messrs.
Shipley, Miller and Harrison) are based solely on corporate performance. With
respect to other members of the Management Committee, 50% of their individual
awards reflects their personal performance and that of their business units and
50% reflects the performance of the Corporation. The Corporation's annual
incentive program incorporates a mandatory deferral component whereby a portion
of each bonus award which exceeds a certain amount is deferred and paid out over
a multi-year payment schedule or at retirement, if sooner. The deferred amount
is subject to forfeiture provisions to further link senior management to longer
term stockholder horizons.
STOCK COMPENSATION: The primary objective of the long-term stock compensation
program is to link the interests of senior management and stockholders through
the grant of significant annual equity awards to members of senior management.
Targeted award ranges are based on award practices of a peer group consisting of
six other United States bank holding companies, while actual awards reflect an
individual's current and expected contribution to the success of the
Corporation. From time to time, the Committee is updated with information by
independent consultants to ensure that the program continues to be competitive
and meets its stated objectives. During 1995, shares of restricted stock (or,
for a few executives, restricted stock units) were granted as well as options in
order to align total compensation with competitive practice. The restricted
stock and units vest when the Corporation's common stock price reaches and
sustains targeted prices for ten consecutive business days. In the event that
the first target was not attained before January 1, 2000, one half of the 1995
awards would vest on that date and the remaining one half would be forfeited. An
independent consultant assisted in developing this award program and confirmed
that targeted award levels are within the median range of the peer group's long
term incentive plan award granting practices.
1995 COMPENSATION ACTIONS: While competitive compensation data is not yet
available for the 1995 calendar year, it is believed that based upon
year-to-year trends, the total compensation levels awarded to executive
officers -- base, bonus and option awards -- fall between the 50th and 75th
percentiles of the applicable peer groups. The 1995 awards of restricted stock,
restricted stock units and options were based on an independent consultant's
analysis of long-term incentive award practices within the peer group as well as
the Committee's assessment of each individual's contribution to the
Corporation's success.
In keeping with the Corporation's strategy of maintaining stable base
compensation and emphasizing variable reward opportunities, Mr. Shipley did not
receive an increase in base salary in 1995. The Compensation Committee last
granted Mr. Shipley an increase in base salary to $850,000 effective January 1,
1994 in recognition of his promotion to Chairman and Chief Executive Officer on
that date. This increase was the first granted to Mr. Shipley since May 1990.
For 1995, the Compensation Committee, with the approval of the Board of
Directors, awarded Mr. Shipley a discretionary cash performance bonus of
$2,400,000 (a portion of which was mandatorily deferred pursuant to the
Corporation's annual bonus plan). This award reflects the achievement of an 18%
increase in before tax income, a continued improvement in credit quality and the
overall risk profile of the Corporation and an improvement in the Corporation's
efficiency ratio, to 59.4% compared with 63.4% in 1994. Before tax income was
$2,976 million compared to $2,520 million before a $308 million restructuring
charge in 1994. During 1995, non-performing assets declined 20%, or $233
million. Mr. Shipley had been awarded $1.65 million for 1994 and $1.5 million
for 1993 performance.
In June 1995, the Compensation Committee, with the approval of the Board of
Directors, awarded Mr. Shipley 40,000 restricted stock units and options to
purchase 120,000 shares of Common Stock with an exercise price per share of
$47.3125 (the average market price per share of the Common Stock on the date of
13
<PAGE> 19
grant). As mentioned above, the restricted stock units will vest when the Common
Stock price reaches and sustains targeted prices for ten consecutive business
days. In the event that the first target was not attained before January 1,
2000, one-half of the 1995 award would vest on that date and the remaining
one-half would be forfeited. Two of the three targeted prices set for restricted
stock units awarded in 1995 and 1994 were attained during 1995. The options vest
pro-rata over a three year period or, if earlier, upon retirement if such
retirement commences at least one year after the options were awarded.
Dated as of March 19, 1996
COMPENSATION AND BENEFITS COMMITTEE
Michel C. Bergerac
Melvin R. Goodes
J. Bruce Llewellyn
John R. Stafford (Chairman)
Richard D. Wood
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
<TABLE>
<CAPTION>
MEASUREMENT PERIOD KBW MONEY
(FISCAL YEAR COVERED) THE CORPORATION S&P 500 KBW 50 CENTER BANKS
<S> <C> <C> <C> <C>
1990 100.00 100.00 100.00 100.00
1991 207.75 130.47 158.27 162.74
1992 390.69 140.41 201.68 228.91
1993 419.44 154.58 212.85 278.96
1994 392.24 156.60 201.99 275.59
1995 661.89 214.86 323.62 448.23
</TABLE>
* Assumes $100 invested on December 31, 1990. Total return assumes reinvestment
of dividends.
Note: Total returns based on market capitalization.
COMPENSATION AND BENEFITS COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation and Benefits Committee at the time the above report was
adopted was comprised of the above-named outside Directors. No Director who
served as a member of the Compensation and Benefits Committee was a party to any
reportable interlock during 1995. Two of the members of such Committee received
loans from Chemical Bank in 1995. Such loans were made in the ordinary course of
business on substantially the same terms as those prevailing for comparable
transactions with others.
14
<PAGE> 20
EXECUTIVE COMPENSATION TABLES
SUMMARY COMPENSATION TABLE(1)
<TABLE>
<CAPTION>
Long-Term Compensation
------------------------------------------
Awards
---------------------------
Securities Payouts
Restricted Underlying ----------
Annual Compensation Stock Options/ LTIP
---------------------------- Awards SARs Granted Payouts
Name and Principal Position Year Salary($)(2) Bonus($)(2) ($)(3) (#) ($)(4)
- ------------------------------ ---- ------------ ----------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Walter V. Shipley 1995 $850,000 $2,400,000 $ 946,250 120,000 $1,267,500
Chairman and Chief 1994 846,154 1,650,000 778,750 120,000 0
Executive Officer 1993 750,000 1,500,000 0 90,000 0
Thomas G. Labrecque 1995 870,000 2,600,000 1,289,062 52,000 3,000,000
President 1994 820,000 2,600,000 0 41,600 0
1993 750,000 1,500,000 0 41,600 1,800,000
Edward D. Miller 1995 700,000 1,750,000 709,688 90,000 950,625
Senior Vice Chairman 1994 696,154 1,175,000 584,063 90,000 0
1993 600,000 1,050,000 0 75,000 0
William B. Harrison Jr. 1995 600,000 1,600,000 591,406 75,000 792,188
Vice Chairman 1994 596,154 1,150,000 486,719 75,000 0
1993 500,000 1,050,000 0 75,000 0
E. Michel Kruse 1995 545,417 1,100,000 516,625 20,800 1,000,000
Vice Chairman 1994 325,000 750,000 0 15,600 0
1993 300,000 450,000 0 10,400 300,000
Peter J. Tobin 1995 400,000 650,000 283,875 36,000 364,406
Chief Financial Officer 1994 398,077 525,000 214,156 33,000 0
1993 350,000 450,000 0 40,000 0
William C. Langley 1995 325,000 550,000 165,594 21,000 221,813
Executive Vice President 1994 325,000 500,000 136,281 21,000 0
1993 316,346 400,000 0 30,000 0
<CAPTION>
All Other
Compensation
Name and Principal Position ($)(5)
- ------------------------------ ------------
<S> <C>
Walter V. Shipley $ 6,000
Chairman and Chief 6,000
Executive Officer 8,994
Thomas G. Labrecque 38,613
President 36,430
37,491
Edward D. Miller 6,000
Senior Vice Chairman 6,000
8,994
William B. Harrison Jr. 6,000
Vice Chairman 6,000
8,994
E. Michel Kruse 28,994
Vice Chairman 17,311
16,067
Peter J. Tobin 6,000
Chief Financial Officer 6,000
8,994
William C. Langley 6,000
Executive Vice President 6,000
8,994
</TABLE>
- ---------------
(1) The Summary Compensation Table sets forth the compensation for each of the
previous three years to Chemical's Chief Executive Officer and each of its
four highest paid executive officers at December 31, 1995. The Table also
sets forth, for informational purposes, the compensation paid by Old Chase
for the previous three years to Messrs. Labrecque and Kruse who became
Executive Officers of the Corporation at the Merger Date.
(2) Includes amounts paid or deferred for each respective year.
(3) In the case of Messrs. Shipley, Miller, Harrison, Tobin and Langley,
restricted stock units awarded in 1995 were to vest upon the earlier to
occur of January 1, 2000 or when the price of the Common Stock was at least
$55 for at least 10 consecutive business days. Such units vested during 1995
when the price of the Common Stock exceeded the target price.
In the case of Messrs. Labrecque and Kruse, the awards were made under Old
Chase's 1994 Long-Term Incentive Plan, and the share amounts shown give
effect to the conversion terms specified in the Merger Agreement. Such
amounts vest in equal annual installments on each of the third, fourth and
fifth anniversaries of the date of grant.
All awards reported consist of restricted stock units which were subject to
certain vesting requirements relating to continued employment and are valued
as of their date of grant. Dividend equivalents are payable on all
restricted stock units.
The total restricted stock and/or units held and their aggregate market
value as of December 29, 1995 (including those restricted stock units
reflected in the Long-Term Incentive Plan Awards Table) were as follows:
Messrs. Shipley: 20,000 ($1,175,000), Labrecque: 67,912 ($3,989,830),
Miller: 15,855 ($931,481), Harrison: 12,500 ($734,375), Kruse: 19,760
($1,160,900), Tobin: 6,107 ($358,786) and Langley: 4,213 ($247,514).
(4) The 1995 payments to Messrs. Shipley, Miller, Harrison, Langley and Tobin
represent payouts of restricted stock granted in 1994 and in 1995 and
subject to vesting based on the attainment of stock price targets by 1999
and 2000, which targets were met in 1995. The 1995 payments to Messrs.
Labrecque and Kruse reflect cash payments made under the Three Year
Arrangement for Certain Executive Officers, a
15
<PAGE> 21
plan approved by the stockholders of Old Chase and similar in structure to
the plans in effect at Chemical, based on the attainment of certain stock
price targets by 1996, which targets were met in 1995. The foregoing
payments would have been forfeited if the price of the Common Stock (in the
case of Messrs. Labrecque and Kruse, the price of Old Chase common stock)
had not achieved the respective price targets prior to the end of the
respective performance periods.
(5) Principally includes employer contributions under Section 401(k) plans and
related defined contribution plans.
STOCK OPTION/SAR GRANTS TABLE--1995 GRANTS
<TABLE>
<CAPTION>
% of Total
# of Options/SARs Potential Realizable Value at
Securities Granted Exercise Assumed Annual Rate of Stock Price
Underlying to All or Base Appreciation for Option Term (1)(2)
Options/SARs Employees Price Expiration ------------------------------------
Name Granted in 1995 ($/Share) Date 0% 5% 10%
----- ------------ ------------ --------- ---------- --- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Walter V. Shipley 120,000(3) 3.84% $47.3125 6/20/05 $0 $ 3,570,549 $ 9,048,473
Thomas G. Labrecque(4) 52,000 -- 33.0529 1/18/05 0 1,080,913 2,739,246
Edward D. Miller 90,000(3) 2.88 47.3125 6/20/05 0 2,677,912 6,786,355
William B. Harrison Jr. 75,000(3) 2.40 47.3125 6/20/05 0 2,231,593 5,655,296
E. Michel Kruse(4) 20,800 -- 33.0529 1/18/05 0 432,365 1,095,698
Peter J. Tobin 36,000(3) 1.15 47.3125 6/20/05 0 1,071,165 2,714,542
William C. Langley 21,000(3) 0.67 47.3125 6/20/05 0 624,846 1,583,483
All Common Stockholders -- -- 58.7500 N/A 0 16,056,670,000 40,690,755,000
</TABLE>
- ---------------
(1) Net gains from potential stock option exercises are estimated based on the
SEC-provided assumed rates of stock price appreciation over the option's
term and are not intended to forecast possible future appreciation of the
Common Stock. THE ACTUAL NET GAINS, IF ANY, ARE DEPENDENT ON THE ACTUAL
FUTURE PERFORMANCE OF THE COMMON STOCK AND OVERALL STOCK MARKET CONDITIONS.
THERE CAN BE NO ASSURANCE THAT THE ASSUMED RATES OF STOCK PRICE APPRECIATION
UTILIZED IN CALCULATING THE AMOUNTS REFLECTED IN THESE COLUMNS WILL BE
ACHIEVED.
(2) For "All Common Stockholders", the gain is calculated from the closing price
of Common Stock on December 29, 1995, $58.75, based on the outstanding
shares of Common Stock on that date after giving effect to the Merger. No
gain to the executives to whom stock options have been granted is possible
without an increase in the Common Stock price. An increase in the Common
Stock price will benefit stockholders and executives commensurately.
(3) All nonqualified stock options; no SARs were granted to any employee during
1995. Options become exercisable in 33 1/3% installments on each of June 20,
1996, 1997 and 1998.
(4) Information presented for Messrs. Labrecque and Kruse is for informational
purposes only and is with respect to Old Chase's nonqualified stock options
for its fiscal year ended December 31, 1995, giving effect to the conversion
terms specified in the Merger Agreement. No SARs were granted. Such options
will become exercisable one year after the date of grant. Options awarded to
Messrs. Labrecque and Kruse were awarded under the 1994 Long-Term Incentive
Plan of Old Chase and therefore no figure is given for the awards as a
percentage of awards to all employees, which refers to Chemical employees.
16
<PAGE> 22
AGGREGATED STOCK OPTION/SAR EXERCISES IN 1995 AND
OPTION/SAR VALUES AS OF YEAR-END 1995
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Shares Options/SARs In-the-Money Options/SARs
Acquired on Value as of December 31, 1995 as of December 31, 1995(1)
Exercise Realized ----------------------------- -----------------------------
Name (#)(2) ($) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Walter V. Shipley 0 0 420,750 230,000 $13,379,313 $ 3,499,375
Thomas G. Labrecque(3) 20,616 $352,723 401,891 52,000 13,818,906 1,336,249
Edward D. Miller 2,850 51,141 188,307 175,000 5,086,131 2,669,688
William B. Harrison Jr. 0 0 212,500 150,000 6,302,375 2,300,000
E. Michel Kruse(3) 1,700 21,613 46,069 20,800 1,339,631 534,500
Peter J. Tobin 1,140 12,791 139,554 71,334 3,602,264 1,055,969
William C. Langley 2,280 40,627 97,178 45,000 2,537,833 673,813
</TABLE>
- ---------------
(1) Value based on $58.75 closing price of a share of Common Stock on December
29, 1995.
(2) The majority of option exercises were in connection with options expiring
within one year of their scheduled expiration dates.
(3) Information presented for Messrs. Labrecque and Kruse is for informational
purposes only and is with respect to Old Chase for its fiscal year ended
December 31, 1995, giving effect to the conversion terms specified in the
Merger Agreement.
LONG-TERM INCENTIVE PLAN AWARDS IN 1995
<TABLE>
<CAPTION>
Estimated Future Payouts Under
Number of Performance Period Until Non-Stock Price Based Plans(#)
Name(1) Shares(#)(2) Maturation or Payout at a Common Stock Price of $65
------- ------------ ------------------------ ---------------------------------
<S> <C> <C> <C>
Walter V. Shipley 20,000 6/20/95 - 12/31/99 10,000
Edward D. Miller 15,000 6/20/95 - 12/31/99 7,500
William B. Harrison Jr. 12,500 6/20/95 - 12/31/99 6,250
Peter J. Tobin 6,000 6/20/95 - 12/31/99 3,000
William C. Langley 3,500 6/20/95 - 12/31/99 1,750
</TABLE>
- ---------------
(1) Messrs. Labrecque and Kruse were not officers of Chemical during 1995 and
accordingly did not participate in Plan awards.
(2) One half of the restricted stock units shown vested on October 11, 1995 in
accordance with their terms when the price of the Common Stock exceeded $60
for 10 consecutive days. The value of such shares is included in the Summary
Compensation Table under the heading "LTIP Payouts ($)." The remainder of
the restricted stock units shown vested on February 12, 1996, in accordance
with their terms when the price of the Common Stock exceeded $65 for 10
consecutive business days. All of the restricted stock units shown would
have been forfeited if their target prices had not been achieved prior to
January 1, 2000.
PENSION AND OTHER DEFINED BENEFIT OR ACTUARIAL PLANS
In connection with the Merger, the Corporation is in the process of
creating common employee benefit plans, including a common retirement plan.
Until a new plan is established, the retirement plans described below remain in
effect with respect to employees covered by those plans.
Plans of Chemical
Chemical Bank's Retirement Plan (the "Chemical Retirement Plan") provides
retirement benefits to eligible employees of participating employers, which
include the Corporation and certain other affiliates of
17
<PAGE> 23
Chemical Bank. Benefits under the Chemical Retirement Plan generally become
vested after five years of service.
The Chemical Retirement Plan, as amended, provides for benefits pursuant to
both a cash balance feature and a final average pay feature for salaried staff
members who have at least one year of service. Under the cash balance feature,
the accrual of benefits for years of service is expressed in terms of quarterly
credits to a bookkeeping account made at a rate of 3% of eligible base salary
for Participants with less than six years of service, 4% for Participants with
service between six and 10 years, 5% for Participants with service between 11
and 20 years and 6% for Participants with service of 21 years or more. (The
accounts receive quarterly interest credits at a rate established at the
beginning of each Plan year.) The credits to the account will be converted into
annuity benefits or distributed as a single sum payment after termination of
employment.
The final average pay feature provides for accrual of benefits equal to one
percent of a participant's final average pay for each year of participation
after December 31, 1992, payable in the form of a life annuity at age 65. Final
average pay is the highest average base salary received in any five consecutive
12-month periods during the last 10 years of service. If a participant has
attained age 55 and terminates employment with at least 10 years of service,
such participant may elect to receive a reduced benefit commencing at any time
after attaining such age.
Certain benefits accrued under the Chemical Retirement Plan (or the
Retirement Plan of Manufacturers Hanover Trust Company and Certain Affiliated
Companies which merged with the Chemical Retirement Plan in 1993) for service
prior to January 1, 1993 are added to benefits accrued after January 1, 1993.
The Corporation provides supplemental retirement benefits on an unfunded
basis to certain participants. Similar to the Chemical Retirement Plan, the
Corporation provides certain designated executives with an unfunded annual
benefit at retirement equal to a percentage of final average base pay of the
executive multiplied by years of service. The amount of the benefit is reduced
by all benefits received by the designated executive under the Chemical
Retirement Plan and certain other nonqualified unfunded arrangements, including
those described in the next two succeeding sentences. Unfunded benefits are also
provided to the extent that benefits from the Chemical Retirement Plan are
limited by the Internal Revenue Code (the "Code") under provisions governing the
amount and type of benefits that a qualified plan may provide to participants,
such as base salary in excess of the Code's Section 401(a)(17) limitations of
$150,000 or the maximum benefits permitted under Section 415 of the Code. The
Corporation also provides a fixed retirement benefit per year of service to
designated participants. Each of the executive officers named below participates
in, and is vested in, these supplemental retirement benefits.
Estimated projected annual retirement benefits payable to the executive
officers named below are as follows:
<TABLE>
<CAPTION>
Estimated Annual
Year Attains Benefit if Retires
Age 65 at Normal Retirement Age(1)
------------ ---------------------------
<S> <C> <C>
Walter V. Shipley 2000 $ 751,441
Edward D. Miller 2005 718,882
William B. Harrison Jr. 2008 534,884
Peter J. Tobin 2009 507,955
William C. Langley 2003 394,098
</TABLE>
- ---------------
(1) Under the Chemical Retirement Plan, the normal retirement age is 65. The
projected estimated annual retirement benefits (including the final average
pay and cash balance features) shown above reflect the normal form of
payment for married employees, i.e., a joint and 50% surviving spouse
annuity, and include each individual's accrued benefits as of December 31,
1995 under the retirement plans then applicable to the individual. Projected
benefits for years of service after 1995 reflected in the above table have
been determined by assuming no increase in base salaries. With respect to
the cash balance feature, interest credits are projected to be 8% per annum
on annual salary credits and 10% per annum on the prior service balance, if
any. In the case of Messrs. Tobin and Langley, projected benefits include
supplemental retirement benefits earned following the merger with MHC.
Benefits are not subject to any deduction for Social Security payments.
18
<PAGE> 24
Plans of Old Chase
Chase Bank's Retirement Plan provides retirement benefits to eligible
employees of participating "Employers" (Old Chase and certain subsidiaries of
Old Chase, principally Chase Bank). The Retirement Plan was amended, effective
as of January 1, 1989 and subject to Internal Revenue Service approval, to
provide a cash balance type of defined benefit retirement plan under which the
accrual of benefits for years of service after 1988 can be expressed in terms of
monthly credits to an account. Such credits ultimately will be converted into
annuity benefits or distributed as a lump sum payment.
Under the amended Retirement Plan, including Chase Bank's Supplemental
Retirement Plan adopted in 1981 which is applicable to certain key executives of
Chase Bank and its affiliates, benefits accrued through December 31, 1988 under
the formula in effect as of that date (the "Old Formula") are preserved. Credits
for periods after December 31, 1988 are made on a monthly basis at the annual
rate of 3% of compensation for compensation not exceeding the Social Security
wage base for the year, and 6% of compensation for compensation in excess of the
Social Security wage base. Participants with 10 or more years of service receive
an additional annual credit equal to 1% of compensation for compensation not
exceeding the Social Security wage base, and an additional 2% of compensation
for compensation in excess of the Social Security wage base. Additional annual
transition credits will also be provided through 1996, except that benefits
under Chase Bank's Supplemental Retirement Plan are determined without regard to
the annual transition credits. The amounts of such transition credits depend on
the length of a participant's service as of December 31, 1988, and range from
0.6% to a maximum of 5% of compensation. For purposes of the amended Retirement
Plan, a participant's compensation is base salary plus, in the case of Chase
Bank's Supplemental Retirement Plan, awards or portions of awards made under
certain incentive compensation plans and programs. Both the regular annual
credits and annual transition credits receive interest credits at a rate that is
set each year by Chase Bank. In lieu of the credits described above,
participants who met certain age and service requirements as of December 31,
1988 may elect when they retire to receive their retirement benefits for all
years of service (including service after December 31, 1988) under the Old
Formula, as modified to comply with the Tax Reform Act of 1986 and subsequent
legislation. Under the Retirement Plan, the normal retirement age is 65.
The estimated annual retirement benefits payable to Mr. Kruse at normal
retirement age in 2009 shown as a joint and 50% surviving spouse annuity,
including his accrued benefits as of December 31, 1988 under the Old Formula,
but in the case of benefits determined under the Old Formula after the reduction
for Social Security benefits, is $354,928.
Mr. Labrecque is eligible to elect to receive his entire retirement
benefits under the Old Formula. The estimated annual retirement benefits payable
to Mr. Labrecque under the Old Formula is greater than the estimated benefit as
determined under the amended provisions of the Retirement Plan used to compute
Mr. Kruse's estimated benefit. The following table illustrates the estimated
annual retirement benefit payable under the Old Formula (before any reduction
for Social Security benefits) as a joint and 50% surviving spouse annuity to any
employee retiring at normal retirement age in specified average covered
compensation and years-of-service classifications.
Pension Plan Table
<TABLE>
<CAPTION>
Years of Service
------------------------------------
Remuneration 30 35 40
------------ -------- -------- ----------
<S> <C> <C> <C>
$ 750,000 $431,250 $468,750 $ 506,250
1,000,000 575,000 625,000 675,000
1,250,000 718,750 781,250 843,750
1,500,000 862,500 937,500 1,012,500
</TABLE>
Retirement benefits under the Old Formula are computed by a formula the
factors of which are base salary (plus, in the case of Chase Bank's Supplemental
Retirement Plan, awards or portions of awards under certain incentive
compensation plans) and years of service (not in excess of 40), reduced by a
portion of the primary Social Security benefit payable to the employee. Such
benefits are reduced on a actuarial basis where
19
<PAGE> 25
survivorship benefits are provided. The amounts of covered compensation for 1995
under the Old Formula (including Chase Bank's Supplemental Retirement Plan) for
Mr. Labrecque was $1,305,000 and his credited period of service at the end of
1995 for purposes of the Old Formula was 31 years and six months.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
In connection with the Merger, Chemical and Old Chase entered into
agreements or amended existing agreements with respect to employment and
severance arrangements with certain of their respective senior officers, other
than Messrs. Shipley, Labrecque, Miller, Harrison and Kruse, who together
constitute the Corporation's Office of the Chairman following the Merger and do
not have employment contracts or other termination of employment arrangements
with the Corporation or its subsidiaries. Under such agreements, Messrs. Langley
and Tobin would receive a cash severance payment on an involuntary termination
of employment on or before December 31, 1997 (other than for cause, death or
disability) or a termination by such officer for "good reason" on or before such
date (where good reason includes matters related to the executive officer's
compensation and role in the Corporation). This cash payment would be equal to
the product of two times the sum of such officer's (i) current annual rate of
salary, plus (ii) bonus based on such officer's average bonus for the past five
years (expressed as a percentage of salary, multiplied by such officer's current
annual rate of salary). In the event of a termination qualifying such officer
for severance, such officer would receive continued coverage under the
applicable welfare benefit plans for two years; and such officer's options would
become vested and exercisable for a period of time after such termination and
equity rights other than options would become vested. If Messrs. Langley or
Tobin were to incur a federal excise tax in certain circumstances on any
severance payment or benefit, the agreements or amended agreements provide an
additional cash payment to put such officer in the same position as if such
excise tax were not applicable.
PROPOSAL 2: APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The firm of Price Waterhouse LLP, 1177 Avenue of the Americas, New York,
New York 10036, has examined the financial statements of the Corporation since
1968 and of Chemical Bank since 1965. Such firm also examined the financial
statements of Old Chase since 1983. The Board of Directors wishes to utilize its
services for the Corporation and its subsidiaries for the year ending December
31, 1996. A resolution will be presented to the meeting to ratify the
appointment of that firm by the Board of Directors as independent accountants to
examine the financial statements of the Corporation and its subsidiaries for the
year ending December 31, 1996, and to perform other appropriate accounting
services. A member of that firm will be present at the meeting and will be
available to respond to appropriate questions by stockholders.
If the stockholders do not ratify the selection of Price Waterhouse LLP by
the affirmative vote of a majority of the number of votes entitled to be cast by
the Common Stock represented at the meeting, the selection of independent
accountants will be reconsidered by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR RATIFICATION
OF THE APPOINTMENT OF PRICE WATERHOUSE LLP.
PROPOSAL 3: APPROVAL OF THE CORPORATION'S 1996 LONG-TERM INCENTIVE PLAN
The Chase Manhattan Corporation 1996 Long-Term Incentive Plan (the
"Incentive Plan") was adopted by the Board of Directors on March 19, 1996 and
will become effective on May 21, 1996, subject to approval by the stockholders
at the Annual Meeting. The Board of Directors believes that in order to attract,
retain and reward key personnel more directly for improvement in the Common
Stock price, it is critical for the Corporation to adopt a flexible long-term
incentive plan, which is both responsive to the Corporation's growth and
competitive. The Incentive Plan would be the replacement plan for the
Corporation's existing incentive plan, the Long-Term Stock Incentive Plan (the
"LTSIP"), and is designed to permit the Corporation to take a deduction under
Section 162(m) of the Internal Revenue Code (the "Code") with respect to
performance-based awards. In the event the Incentive Plan is approved by the
stockholders, no further awards will be made under the LTSIP.
20
<PAGE> 26
The Incentive Plan is to be administered by the Compensation and Benefits
Committee (the "Compensation Committee") of the Board of Directors, no members
of which may receive awards under the Incentive Plan and each of whom is an
"outside director" for purposes of Section 162(m) of the Code.
SUMMARY OF THE INCENTIVE PLAN
Purpose. The Incentive Plan is designed to encourage selected key
employees of the Corporation and its subsidiaries to acquire a proprietary and
vested interest in the growth and performance of the Corporation and its
subsidiaries. The Incentive Plan also serves to attract and retain individuals
of exceptional managerial talent.
Participants. All employees of the Corporation and its subsidiaries who
the Compensation Committee determines to have demonstrated significant
management potential, have contributed to the successful performance of the
Corporation and its subsidiaries or have the potential to make such
contributions in the future, may be selected by the Compensation Committee to
become participants in the Incentive Plan. The Corporation currently estimates
that approximately 3,000 employees may receive awards each year under the
Incentive Plan.
Number of Shares. The Incentive Plan provides that 2% of the outstanding
shares of the Common Stock (including treasury shares) as of each December 31 is
available for issuance as awards under the Incentive Plan in the next succeeding
calendar year plus any carryover shares from prior years or plans. The LTSIP
provides that 1.5% of the outstanding shares (including treasury shares) plus
carryover shares are available for issuance.
For awards in 1996 assuming the Incentive Plan is approved by stockholders,
the number of outstanding shares will be measured as of March 31, 1996 after
giving effect to the Merger. Based on the foregoing 2% formula, approximately
8.8 million shares would be available for issuance in 1996 under the Incentive
Plan. With respect to awards made in 1997 and succeeding calendar years,
carryover shares include (i) 1.8 million shares available for issuance but
unissued under the LTSIP and The Chase Manhattan 1994 Long-Term Incentive Plan
(the "Old Chase Incentive Plan") and (ii) shares available for issuance under
the Incentive Plan in any prior year or years based on the 2% formula but not
awarded in such calendar year or years. The Incentive Plan provides that no more
than 15 million shares may be awarded as "incentive stock options" as defined in
Section 422 of the Code.
In the event that an award of a stock option expires or is not exercised or
any other award is forfeited, the shares of Common Stock allocated to such award
are again available for grant under the Incentive Plan. This would also include
shares under expiring or forfeited awards which were granted under the LTSIP and
the Old Chase Incentive Plan, not to exceed 500,000 shares with respect to the
LTSIP and the Old Chase Incentive Plan.
The Incentive Plan restricts the number of shares that can be awarded as
Other Stock-Based Awards (as described below), such as restricted stock, to
one-third the number of shares available for issuance in any calendar year. The
LTSIP did not contain any restriction on the number of shares available for
award as Other Stock-Based Awards.
Term. No awards may be made after May 20, 2001.
Awards. Unless the Compensation Committee specifically provides to the
contrary, awards under the Incentive Plan are non-transferable except by will or
the laws of descent and distribution. The Incentive Plan, unlike the LTSIP,
provides for individual maximum limits on the number of shares available for
issuance in the form of stock options (or stock appreciation rights) and Other
Stock-Based Awards. These annual limits per participant are 800,000 shares in
the form of stock option awards (or stock appreciation rights) and 250,000
shares in the form of Other Stock-Based Awards plus, beginning in 1997, a number
of shares equal to the maximum number of shares that the participant was
eligible to receive under the Incentive Plan in each prior calendar year less
the number of shares actually awarded to the participant in each such prior
calendar year. In addition, the Incentive Plan provides that the Committee may
specify performance targets in connection with awards. Such performance targets
would be with respect to stock price, earnings per share, income before income
tax expense, return on stockholders' equity, loan charge-offs, ratio of
non-performing
21
<PAGE> 27
assets to total assets and efficiency ratio. These performance targets further
ensure that the incentive goals are aligned with stockholder interests. Awards
under the Key Executive Performance Plan and similar programs may be paid or
distributed, in whole or part, in the form of Other Stock-Based Awards under the
Incentive Plan.
The forms of the awards that may be granted under the Incentive Plan are:
Stock Options. The Compensation Committee may award a stock option in
the form of an "incentive" stock option (as defined in Section 422 of the
Code) or a non-qualified stock option. Such awards expire no more than 10
years after the date they are granted. The exercise price per share of
Common Stock covered by a stock option is determined by the Compensation
Committee; provided, however, that the exercise price may not be less than
100% of the fair market value of a share of Common Stock on the date of
grant. The exercise price is payable, at the Compensation Committee's
discretion, in cash, by tendering shares of already owned Common Stock, by
pledging the proceeds received from sale of Common Stock received upon
exercise of the option, or any combination thereof.
Stock Appreciation Rights ("SARs"). SARs may be granted independently
of any stock option or in conjunction with all or any part of a stock
option granted under the Incentive Plan, upon such terms and conditions as
the Compensation Committee may determine. However, to the extent required
by law, no SAR is exercisable within less than six months after grant,
except in the case of death or total disability prior to the end of such
six-month period. Upon exercise, an SAR entitles a participant to receive
an amount equal to the positive difference between the fair market value of
one share of Common Stock on the date the SAR is exercised and the grant or
stock option price, as applicable, times the number of shares of Common
Stock with respect to which the SAR is exercised.
An SAR or applicable portion thereof shall terminate and no longer be
exercisable upon the termination or exercise of any related stock option,
except that an SAR granted with respect to fewer than the full number of
shares covered by a related stock option shall not be reduced until the
number of shares which, due to exercise or termination of the related stock
option, cease to be covered by the option exceeds the number of shares
covered by the SAR. The Compensation Committee will determine whether the
SAR shall be settled in cash, Common Stock or a combination of cash and
Common Stock.
Other Stock-Based Awards. The Compensation Committee may grant other
types of awards of Common Stock, or awards based in whole or in part by
reference to the fair market value of Common Stock ("Other Stock-Based
Awards"). Such Other Stock-Based Awards include, without limitation,
restricted share units, restricted shares of Common Stock or performance
share units. Non-qualified stock options or SARs may be awarded in
connection with or as a part of Other Stock-Based Awards. The Compensation
Committee shall determine whether any Other Stock-Based Awards shall be
settled in cash, Common Stock or any combination thereof.
Deferrals. The Compensation Committee may permit the deferral of payment
of any awards under the Incentive Plan or may amend existing award agreements
under any predecessor plans of the Corporation (including Old Chase) to provide
for a deferral feature.
Adjustments. In the event there is a change in the capital structure of
the Corporation as a result of any stock dividend or split, recapitalization,
merger, consolidation, spin-off or other similar corporate change, or any
distribution to stockholders of Common Stock other than regular cash dividends,
the Compensation Committee may make an equitable adjustment in the number of
shares of Common Stock reserved for issuance and to any outstanding awards.
General. The Incentive Plan is intended to constitute an unfunded plan for
long-term incentive compensation. Nothing in the Incentive Plan shall give the
participant any rights greater than those of a general creditor. However, the
Compensation Committee, in its sole discretion, can establish arrangements to
meet the obligations of the Corporation consistent with the unfunded status of
the Incentive Plan.
Amendments and Termination. The Board of Directors may amend, suspend or
terminate the Incentive Plan at any time, without stockholder approval unless
otherwise required by law.
22
<PAGE> 28
FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes the Federal income tax consequences to
participants who may receive awards under the Incentive Plan and to the
Corporation arising out of the granting of such awards. The discussion is based
upon interpretations of the Code in effect as of January 1996 and regulations
promulgated thereunder as of such date.
Incentive Stock Options. A participant will not be in receipt of
taxable income upon the grant or exercise of an incentive stock option (an
"ISO"). If the participant holds the shares acquired on the exercise of an
ISO for the requisite ISO holding period set forth in the Code, he or she
will recognize a long-term capital gain or loss upon their subsequent sale
or exchange. (The requisite holding period requires that a participant make
no disposition of the shares transferred pursuant to the ISO within two
years from the date of grant or within one year after the transfer of such
shares to the participant.) In such case, the Corporation will not be
entitled to a tax deduction. If a participant does not hold the shares
acquired on the exercise of an ISO for that holding period, he or she may
be in receipt of ordinary income based upon a formula set forth in the
Code. To the extent that the amount realized on such sale or exchange
exceeds the market value of the shares on the date of the ISO exercise, the
participant will recognize capital gains. The Corporation will be entitled
to a tax deduction in the amount of the ordinary income reportable by the
participant. The excess of the fair market value on date of exercise of an
ISO of the shares acquired over the exercise price may in certain
circumstances be an "adjustment" for purposes of the alternative minimum
tax.
Nonqualified Stock Options. Upon the grant of a nonqualified stock
option, a participant will not be in receipt of taxable income. Upon
exercise of such stock option, a participant will be in receipt of ordinary
income in an amount equal to the excess of the market value of the acquired
shares over their exercise price. The Corporation will be entitled to a tax
deduction, in the year of such exercise, equal to the amount of such
ordinary income; provided that the exercise price was equal to the fair
market value of the stock at the date of grant.
Stock Appreciation Rights. Upon the grant of SARs, a participant will
not be in receipt of taxable income. Upon the exercise of SARs, a
participant will be in receipt of ordinary income in an amount equal to any
cash payment and the market value of any shares distributed. The
Corporation will be entitled to a tax deduction equal to the income
reportable by the participant, provided that the exercise price was equal
to the fair market value of stock at the date of grant.
Other Stock-Based Awards. The income tax consequences of the Other
Stock-Based Awards will depend on how such Awards are structured.
Generally, the Corporation will be entitled to a deduction with respect to
such Awards only to the extent that the participant recognizes ordinary
income in connection with such Awards. In particular, the Corporation will
be entitled to a tax deduction with respect to Awards to those individuals
subject to Section 162(m) limitations if such Awards are subject to the
achievement of performance-based objectives specified by the Compensation
Committee. It is anticipated that Other Stock-Based Awards will generally
result in ordinary income to the participant in some amount.
The affirmative vote of a majority of the number of votes entitled to be
cast by holders of shares of Common Stock represented at the Annual Meeting is
needed to approve the Incentive Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF
THE CORPORATION'S 1996 LONG-TERM INCENTIVE PLAN.
STOCKHOLDER PROPOSALS
Stockholder proposals for the 1997 Annual Meeting of Stockholders must be
received by the Secretary of the Corporation not later than December 19, 1996.
The affirmative vote of a majority of the number of votes entitled to be cast by
holders of shares of Common Stock represented at the 1996 Annual Meeting is
needed to approve the following stockholder proposals.
23
<PAGE> 29
PROPOSAL 4: TERM LIMITS FOR DIRECTORS
Mrs. Evelyn Y. Davis, Watergate Office Building, 2600 Virginia Avenue,
N.W., Suite 215, Washington, D.C. 20037, the holder of record of 314 shares of
Common Stock, has advised the Corporation that she plans to introduce the
following resolution:
"RESOLVED: That the stockholders of The Chase Manhattan Corporation
recommend that the Board take the necessary steps so that future outside
directors shall not serve for more than six years."
The reasons given by the stockholder for such resolution are as
follows:
"The President of the U.S.A. has a term limit, so do Governors of many
states.
"Newer directors may bring in fresh outlooks and different approaches
with benefits to all shareholders.
"No director should be able to feel that his or her directorship is
until retirement.
"Term limits for members of Congress was part of the Contract With
America.
"If you AGREE, please mark your proxy FOR this resolution."
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE AGAINST THIS
PROPOSAL FOR THE FOLLOWING REASONS:
The Board believes that adoption of an arbitrary limit on the term a
Director may serve would deprive the Corporation of the benefit of its most
experienced Directors. The Corporation is a large and complex diversified
financial services company. Directors must approve the Corporation's overall
business strategies and significant policies. In the area of risk management,
regulators, such as the Federal Reserve, have emphasized the importance of
active Board oversight in the identification, measurement, monitoring and
control of risks. These are matters which require for the Board as a whole a
high degree of experience with the Corporation's management and products, an
understanding of the business and regulatory environment in which the
Corporation operates, and experience with different phases of the economic
cycle. Indeed, the experience of members of the Audit and Examining Committees
is a factor which must, as a matter of law, be considered by the Board in
selecting among its members for service on those Committees.
Moreover, the effectiveness of the Board is enhanced by the cohesiveness
that is developed over a period of years working together under different
circumstances. Freshness of outlook and differences in approaches are achieved
by the Board's diversity of background.
Based on the foregoing, the Board believes the proposed resolution would
not be in the interests of stockholders and accordingly recommends that
stockholders vote against this resolution.
PROPOSAL 5: ENDORSEMENT OF EFFORTS OF G-7 MINISTERS
The Sisters of Charity of the Incarnate Word, P.O. Box 230969, 6510
Lawndale, Houston, Texas 77223-0969, the beneficial owners of 6,100 shares of
Common Stock; the Sisters of Charity of Saint Elizabeth, P.O. Box 476, Convent
Station, New Jersey 07961-0476, the beneficial owners of 100 shares of Common
Stock; the Sisters of the Humility of Mary, 1515 Eastern Avenue, Morgantown,
West Virginia 26505, the beneficial owners of 40 shares of Common Stock;
Providence Trust, P.O. Box 197, Helotes, Texas 78023-0197, the beneficial owner
of 1,750 shares of Common Stock; Mercy Consolidated Asset Management Program, 20
Washington Square North, New York, New York 10011, the beneficial owner of 100
shares of Common Stock; and the Maryknoll Sisters, P.O. Box 311, Maryknoll, New
York 10545-0311, the beneficial owners of 100 shares of Common Stock, have
indicated their intention to sponsor the following resolution:
"WHEREAS in 1994, the World Bank estimated total external debt of the
developing world was $1.9 trillion, 7 percent greater than in 1993. At the
end of 1992, commercial banks held 26.3 percent of total outstanding long
term debt to all developing countries, a 9 percent drop from only three
years earlier. By the end of 1994, approximately $190 billion or 85 percent
of all international debt owed to commercial banks had been restructured
due to the inability of these countries to repay the loans.
"WHEREAS US financial institutions play a crucial role by providing
policy advice and by gathering resources for international loans to
businesses.
24
<PAGE> 30
"WHEREAS the growth and integration of global capital markets have
created both opportunities and new risks for financial institutions.
However, the developments in the Mexican economy, particularly the
devaluation of the peso, during the past year and the repercussions of that
crisis have led many investors to question the stability of the financial
system there and in other emerging markets.
"WHEREAS we believe development and publication of concrete and
appropriate safeguards, standards, transparency and systems are necessary
to reduce potential risks such as those which occurred in Mexico.
"WHEREAS the G-7 Finance Ministers and Central Bank Governors have
called for the development and "further enhancement of concrete
international understandings, where necessary and appropriate, on the
safeguards, standards, transparency, and systems necessary to reduce
potential risks." (The Halifax Summit Review of the International Financial
Institutions, Background Document, 6/16/95)
"WHEREAS the G-7 Economic Summit in Halifax in June 1995 stated that
'closer international cooperation in the regulation and supervision of
financial institutions and markets is essential to safeguard the financial
system and prevent an erosion of prudential standards.
We urge:
-- a deepening of cooperation among regulators and supervisory
agencies to ensure an effective and integrated approach, on a global
basis, to developing and enhancing the safeguards, standards,
transparency and systems necessary to monitor and contain risks;...
-- finance ministers to commission studies and analysis from the
international organizations responsible for banking and securities
regulations and to report on the adequacy of current arrangements,
together with proposals for improvement where necessary, at the next
Summit.' (G-7 Economic Communique Text, Halifax, June 1995)
"RESOLVED: the shareholders request the Board of Directors to endorse
and work to implement the efforts of the G-7 Ministers to safeguard the
financial system and prevent an erosion of prudential standards by
encouraging greater international cooperation in the regulation and
supervision of financial institutions and markets."
The reasons given by the stockholders for such resolution are as follows:
"Prudential standards are essential to protect the bank, its
shareholders, the financial community, and the people of developing
countries, to assess the potential risk of failed ventures to the global
financial system and to safeguard the poor from bearing a disproportionate
share of the burden from failed enterprises."
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THIS PROPOSAL
FOR THE FOLLOWING REASONS:
The 1995 Economic Summit in Halifax was the 21st annual summit of the heads
of State and Government of seven major industrialized nations -- the United
States, Japan, Germany, France, Britain, Italy and Canada (the "G-7") -- and the
President of the European Commission. The Summit Communique stated the
commitment of the participants to establishing an economic environment conducive
to accomplishing the central purpose of their economic policy, the improvement
of the well being of people. The Communique noted the challenge of managing the
increased economic interdependence resulting from the globalization driven by
technological change and the enormous opportunities and new risks created from
the growth and integration of global capital markets. In addition to the
deepening of cooperation among regulators and supervisory agencies and the
commissioning of studies on the adequacy of current arrangements, the Summit
participants also urged continued encouragement to countries to remove capital
market restrictions, coupled with strengthened policy advice from international
financial institutions on the appropriate supervisory structures.
The Board endorses these objectives. The Corporation actively works in
support of such efforts through participation in a wide range of trade and
advisory groups, as well as direct initiatives of the Corporation, in
discussions with governmental and other bodies, including regulators, central
banking authorities and self-regulatory organizations. Accordingly, the Board
recommends that stockholders vote for this resolution.
25
<PAGE> 31
MISCELLANEOUS
The management does not know of any other matters to be brought before the
meeting. A proxy in the accompanying form will confer discretionary authority
with respect to any such other matter. The shares covered by any such proxy
properly executed and received prior to the meeting will be voted and, if the
stockholder who executes such proxy specifies in the manner stated therein how
such shares are to be voted on the proposals which are referred to therein, they
will be voted as so specified.
A stockholder who signs and returns a proxy in such form will have the
power to revoke it by giving written notice of revocation to the Secretary of
the Corporation before the proxy is voted at the meeting, by executing and
delivering a later-dated proxy or by attending the meeting and voting such
shares in person.
The cost of the solicitation of proxies in the accompanying form will be
borne by the Corporation. In addition to the solicitation of proxies in such
form by use of the mails, the Corporation expects that a number of officers and
regular employees of the Corporation, The Chase Manhattan Bank (National
Association) and Chemical Bank (none of whom will receive any compensation
therefor in addition to regular compensation) will solicit proxies in such form
personally and by telephone. The Corporation has retained Chemical Mellon
Shareholder Services L.L.C. to assist in the solicitation of proxies for a fee
of $18,000, plus reasonable out-of-pocket costs and expenses. The Corporation
will, upon request, reimburse brokerage houses and other custodians, nominees
and fiduciaries for their expenses in sending proxy material to their principals
and obtaining their proxies.
JOHN B. WYNNE
Secretary
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<PAGE> 32
TICKET REQUEST
If you plan to attend the Annual Meeting of Stockholders of The Chase
Manhattan Corporation to be held on May 21, 1996, in the Grand Ballroom of The
Waldorf-Astoria Hotel, 301 Park Avenue, New York, New York, the form below
should be completed and mailed with your proxy card.*
(Cut along dotted line)
- -------------------------------------------------------------------------------
I PLAN TO ATTEND THE ANNUAL MEETING OF STOCKHOLDERS OF THE CHASE MANHATTAN
CORPORATION ON MAY 21, 1996, IN NEW YORK, NEW YORK.
Name(s)
------------------------------------------------------------------------
(Please print)
Street Address
--------------------------------------------------------------------
City State Zip Code
------------------------------- -------------------- ----------
/ / Check box if you request an assistive listening device.
/ / Check box if you request sign interpretation.
* If you are a beneficial owner of Common Stock held by a bank or broker (i.e.,
in "street name"), you may need proof of ownership to be admitted to the
meeting. A recent brokerage statement or letter from a bank or broker are
examples of such proof of ownership.
27
<PAGE> 33
THE CHASE MANHATTAN CORPORATION
SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT THE ANNUAL MEETING OF
STOCKHOLDERS OF THE CHASE MANHATTAN CORPORATION ON MAY 21, 1996.
The undersigned stockholder appoints each of John J. Lynagh, Patrick J.
Scollard and Stanley van den Heuvel attorney and proxy, with full power of
substitution, on behalf of the undersigned and with all powers the undersigned
would possess if personally present, to vote all shares of Common Stock of The
Chase Manhattan Corporation that the undersigned would be entitled to vote at
the above Annual Meeting and any adjournment thereof. THE SHARES REPRESENTED BY
THIS PROXY WILL BE VOTED AS SPECIFIED AND IN THE DISCRETION OF THE PROXIES ON
ALL OTHER MATTERS. IF NOT OTHERWISE SPECIFIED, SHARES WILL BE VOTED IN
ACCORDANCE WITH THE RECOMMENDATIONS OF THE DIRECTORS.
Please mark, date and sign your name exactly as it appears on this proxy
and return this proxy in the enclosed envelope. When signing as attorney,
executor, administrator, trustee, guardian or officer of a corporation, please
give your full title as such. For joint accounts, each owner should sign.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE.
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY.
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 34
PLEASE MARK YOUR VOTES AS THIS /X/
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, 3 AND 5.
Item 1 -- ELECTION OF DIRECTORS FOR / / WITHHELD FOR ALL / /
Nominees:
Frank A. Bennack Jr. E. Michel Kruse
Susan V. Berresford Thomas G. Labrecque
M. Anthony Burns J. Bruce Llewellyn
H. Laurance Fuller Edward D. Miller
Melvin R. Goodes Edmund T. Pratt Jr.
William H. Gray III Henry B. Schacht
George V. Grune Walter V. Shipley
William B. Harrison Jr. Andrew C. Sigler
Harold S. Hook John R. Stafford
Helene L. Kaplan Marina v.N. Whitman
WITHHELD FOR: (Write the nominee's name in the space provided below).
- ---------------------------------------------------------------------
Item 2 -- APPOINTMENT OF INDEPENDENT ACCOUNTANTS
FOR / / AGAINST / / ABSTAIN / /
Item 3 -- APPROVAL OF LONG-TERM INCENTIVE PLAN
FOR / / AGAINST / / ABSTAIN / /
Item 5 -- STOCKHOLDER PROPOSAL--EFFORTS OF G-7 MINISTERS
FOR / / AGAINST / / ABSTAIN / /
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST ITEM 4.
Item 4 -- STOCKHOLDER PROPOSAL--TERM LIMITS FOR DIRECTORS
FOR / / AGAINST / / ABSTAIN / /
- --------------------------------------------------------------
RECEIPT IS HEREBY ACKNOWLEDGED OF THE CHASE MANHATTAN CORPORATION NOTICE OF
MEETING AND PROXY STATEMENT.
Signature(s) Date
-------------------------------------------- ----------------
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee, guardian or officer of a
corporation, please give full title as such.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 35
THE CHASE MANHATTAN CORPORATION
SAVINGS INCENTIVE PLAN OF CHEMICAL BANK
Voting Instructions to Trustee
Enclosed is a Notice of the Annual Meeting of Stockholders of The Chase
Manhattan Corporation to be held on May 21, 1996, together with the Proxy
Statement for such Meeting. The Savings Incentive Plan of Chemical Bank allows
you to instruct the Trustee in writing to vote, as you specify, the number of
shares of Common Stock of The Chase Manhattan Corporation representing your
proportionate interest in Investment Funds D, X and Y on April 8, 1996. Your
signature on this instruction card constitutes your confidential instruction to
the Trustee to vote at the Annual Meeting and any adjournment or postponement
thereof, the number of shares held by you in those Funds in accordance with
your instructions specified on this card. If you do not return this card, the
Trustee will vote shares in accordance with the Savings Incentive Plan.
______________________________________
Please indicate on the reverse side of this card how your stock is to be voted.
Unless you specifically direct otherwise, the shares represented by this proxy
will be voted "FOR" Items (1), (2), (3) and (5) and "AGAINST" Item (4).
Employee Benefit Plans Committee
(continued and to be signed on reverse side)
- FOLD AND DETACH HERE -
<PAGE> 36
PLEASE MARK YOUR VOTES AS THIS /X/
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, 3 AND 5.
Item 1 -- ELECTION OF DIRECTORS FOR / / WITHHELD FOR ALL / /
Nominees:
Frank A. Bennack Jr. E. Michel Kruse
Susan V. Berresford Thomas G. Labrecque
M. Anthony Burns J. Bruce Llewellyn
H. Laurance Fuller Edward D. Miller
Melvin R. Goodes Edmund T. Pratt Jr.
William H. Gray III Henry B. Schacht
George V. Grune Walter V. Shipley
William B. Harrison Jr. Andrew C. Sigler
Harold S. Hook John R. Stafford
Helene L. Kaplan Marina v.N. Whitman
WITHHELD FOR: (Write the nominee's name in the space provided below).
- ---------------------------------------------------------------------
Item 2 -- APPOINTMENT OF INDEPENDENT ACCOUNTANTS
FOR / / AGAINST / / ABSTAIN / /
Item 3 -- APPROVAL OF LONG-TERM INCENTIVE PLAN
FOR / / AGAINST / / ABSTAIN / /
Item 5 -- STOCKHOLDER PROPOSAL--EFFORTS OF G-7 MINISTERS
FOR / / AGAINST / / ABSTAIN / /
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST ITEM 4.
Item 4 -- STOCKHOLDER PROPOSAL--TERM LIMITS FOR DIRECTORS
FOR / / AGAINST / / ABSTAIN / /
- --------------------------------------------------------------
RECEIPT IS HEREBY ACKNOWLEDGED OF THE CHASE MANHATTAN CORPORATION NOTICE OF
MEETING AND PROXY STATEMENT.
Signature(s) Date
-------------------------------------------- ----------------
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee, guardian or officer of a
corporation, please give full title as such.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 37
THE CHASE MANHATTAN CORPORATION
THE THRIFT INCENTIVE PLAN OF THE CHASE MANHATTAN BANK, N.A.
Voting Instructions to Trustee
Enclosed is a Notice of the Annual Meeting of Stockholders of The Chase
Manhattan Corporation to be held on May 21, 1996, together with the Proxy
Statement for such Meeting. The Thrift Incentive Plan allows you to instruct
the Trustee in writing to vote, as you specify, the number of shares of Common
Stock of The Chase Manhattan Corporation representing your proportionate
interest in the Chase Common Stock Fund on April 8, 1996. Your signature on
this instruction card constitutes your confidential instruction to the Trustee
to vote at the Annual Meeting and any adjournment or postponement thereof, the
number of shares held by you in the Fund in accordance with your instructions
specified on this card. If you do not return this card, the Trustee will vote
shares in accordance with the Thrift Incentive Plan.
______________________________________
Please indicate on the reverse side of this card how your stock is to be voted.
Unless you specifically direct otherwise, the shares represented by this proxy
will be voted "FOR" Items (1), (2), (3) and (5) and "AGAINST" Item (4).
(continued and to be signed on reverse side)
- FOLD AND DETACH HERE -
<PAGE> 38
PLEASE MARK YOUR VOTES AS THIS /X/
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, 3 AND 5.
Item 1 -- ELECTION OF DIRECTORS FOR / / WITHHELD FOR ALL / /
Nominees:
Frank A. Bennack Jr. E. Michel Kruse
Susan V. Berresford Thomas G. Labrecque
M. Anthony Burns J. Bruce Llewellyn
H. Laurance Fuller Edward D. Miller
Melvin R. Goodes Edmund T. Pratt Jr.
William H. Gray III Henry B. Schacht
George V. Grune Walter V. Shipley
William B. Harrison Jr. Andrew C. Sigler
Harold S. Hook John R. Stafford
Helene L. Kaplan Marina v.N. Whitman
WITHHELD FOR: (Write the nominee's name in the space provided below).
- ---------------------------------------------------------------------
Item 2 -- APPOINTMENT OF INDEPENDENT ACCOUNTANTS
FOR / / AGAINST / / ABSTAIN / /
Item 3 -- APPROVAL OF LONG-TERM INCENTIVE PLAN
FOR / / AGAINST / / ABSTAIN / /
Item 5 -- STOCKHOLDER PROPOSAL--EFFORTS OF G-7 MINISTERS
FOR / / AGAINST / / ABSTAIN / /
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST ITEM 4.
Item 4 -- STOCKHOLDER PROPOSAL--TERM LIMITS FOR DIRECTORS
FOR / / AGAINST / / ABSTAIN / /
- --------------------------------------------------------------
RECEIPT IS HEREBY ACKNOWLEDGED OF THE CHASE MANHATTAN CORPORATION NOTICE OF
MEETING AND PROXY STATEMENT.
Signature(s) Date
-------------------------------------------- ----------------
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee, guardian or officer of a
corporation, please give full title as such.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 39
CHASE MANHATTAN CORPORATION
LONG-TERM INCENTIVE PLAN
(EFFECTIVE AS OF MAY 21, 1996)
1. PURPOSE. The purposes of The Chase Manhattan Corporation 1996
Long-Term Incentive Plan (the "Plan") are to encourage selected key employees
of the Company to acquire a proprietary and vested interest in the growth and
performance of the Company, to generate an increased incentive to contribute to
the Company's future success and prosperity, thus enhancing the value of the
Company for the benefit of stockholders, and to enhance the Company's ability
to attract and retain individuals of exceptional managerial talent upon whom,
in large measure, the sustained progress, growth and profitability of the
Company depends.
The purposes of the Plan are to be achieved through the grant of
various types of stock-based awards.
2. DEFINITIONS. For purposes of the Plan, the following terms
shall have the meanings set forth in this Section 2:
(a) "Act" shall mean the Securities Exchange Act of 1934.
(b) "Award" shall mean any type of stock-based award
granted pursuant to the Plan.
(c) "Board" shall mean the Board of Directors of CMC;
provided that any action taken by a duly authorized committee of the
Board within the scope of authority delegated to such committee by the
Board shall be considered an action of the Board for purposes of this
Plan.
(d) "CMC" shall mean The Chase Manhattan Corporation,
and, except as otherwise specified in this Plan in a particular
context, any successor thereto, whether by merger, consolidation,
purchase of substantially all its assets or otherwise.
(e) "Code" shall mean the Internal Revenue Code of 1986,
as from time to time amended.
(f) "Committee" shall mean the Compensation and Benefits
Committee of the Board (or any successor committee) or any
subcommittee thereof composed of not less than two directors, each of
whom is a "disinterested person" as defined in Rule 16 b-3 promulgated
by the Securities and Exchange Commission under the Act, or any
successor definition adopted by the Commission and is an "outside
director" for purposes of Section 162(m) of the Code.
<PAGE> 40
(g) "Common Stock" shall mean the common stock of CMC,
par value $1 per share.
(h) "Company" shall mean CMC and its Subsidiaries.
(i) "Employee" shall mean any employee of the Company.
(j) "Executive Officer" shall mean a Participant who is
subject to the requirements of Sections 16(a) and 16(b) of the Act.
(k) "Fair Market Value" shall mean, per share of Common
Stock, the average of high and low sale prices of the Common Stock as
reported on the New York Stock Exchange (the "NYSE") composite tape on
the applicable date, or, if there are no such sale prices of Common
Stock reported on the NYSE composite tape on such date, then the
average price of the Common Stock on the last previous day on which
high and low sale prices are reported on the NYSE composite tape.
(l) "Merger" shall mean the merger of The Chase Manhattan
Corporation with and into Chemical Banking Corporation.
(m) "Other Stock-Based Award" shall mean any of those
Awards described in Section 9 hereof.
(n) "Participant" shall mean an Employee who is selected
by the Committee to receive an Award under the Plan.
(o) "Retirement" shall mean normal or early retirement
under the terms of a retirement plan of CMC or a Subsidiary applicable
to the Participant or a voluntary termination of employment;provided,
however, that in either case, CMC must have given its prior consent to
treat the individual's termination of employment as a retirement.
(p) "Subsidiary" shall mean any corporation which at the
time qualifies as a subsidiary of CMC under the definition of
"subsidiary corporation" in Section 424(f) of the Code, as amended
from time to time.
(q) "Total Disability" shall mean a physical or mental
incapacity, which would entitle the individual to benefits under the
long term disability program sponsored by the Company employing such
individual; provided that if an individual has not elected coverage
under the applicable program, the Committee shall determine utilizing
the criteria of such program whether the individual has incurred a
Total Disability.
3. SHARES SUBJECT TO THE PLAN. (a) Shares of Common Stock which
may be issued under the Plan may be either authorized and unissued shares of
Common Stock or authorized and issued shares of Common Stock held in CMC's
Treasury. Subject to adjustment as provided in Sections 3(b), (c) and 15, the
number of shares of Common Stock with respect to which Awards (whether
distributable in shares of Common Stock or in cash) may be granted under the
Plan in any calendar year shall be 2 percent of the total number of shares of
Common Stock outstanding
2
<PAGE> 41
on the last day of the preceding calendar year (including treasury shares);
provided, that for calendar year 1996 with respect to Awards made on or after
April 1, 1996, the total number of shares of Common Stock shall be based on
those outstanding on March 31, 1996 after giving effect to the Merger;
provided, further, that no more than a total of 15 million shares of Common
Stock during the term of the Plan may be subject to incentive stock options;
provided, further that grants excluded from the definition of derivative
security by Rule 16a-1(c)(3)(ii) promulgated under the Act shall not be subject
to the limit placed on the total shares of Common Stock with respect to which
Awards may be granted hereunder.
(b) In addition to the number of shares provided for in Section
3(a), there shall be available for issuance and for grant under the Plan in
calendar year 1997 and in succeeding calendar years (to the extent not issued
hereunder) a number of shares equal to the sum of:
(i) the number of shares that remained available for
issuance under the Chemical Banking Corporation Long-Term Stock
Incentive Plan as of March 31, 1996 and under The Chase Manhattan 1994
Long-Term Incentive Plan as of March 31, 1996 (in each instances, prior
to giving effect to the Merger), and
(ii) the excess of (X) the total number of shares of
Common Stock with respect to which Awards may be granted under the Plan
in any calendar year under Section 3(a) over (Y) the total number of
shares of Common Stock with respect to which Awards were granted under
the Plan during that calendar year.
(c) In the event that (i) a stock option expires or is
terminated unexercised as to any shares of Common Stock covered thereby (except
with respect to a stock option which terminates on the exercise of a stock
appreciation right) or (ii) any other Award is forfeited for any reason under
the Plan, any Common Stock allocated in connection such Award, shall thereafter
again be available for grant pursuant to the Plan. This provision shall also
be applicable to the plans described in Section 3(b)(i), not to exceed 500,000
shares of Common Stock in the aggregate with respect to such Plans.
4. ELIGIBILITY. All Employees who have demonstrated significant
management potential, have contributed to the successful performance of the
Company, or have the potential of making such contributions to the Company in
the future, in each case as determined by the Committee, are eligible to be
Participants in the Plan.
5. LIMITATIONS. The Committee may not grant Other Stock-Based
Awards to Participants with respect to shares of Common Stock in excess of one
third of the number determined to be available for issuance under Section 3 for
any calendar year. In addition, the Committee may not grant stock options and
stock appreciation rights to any Participant with respect to more than 800,000
shares of Common Stock and may not grant Other Stock-Based Awards to any
Participant with respect to more than 250,000 shares of Common Stock in any
calendar year. Notwithstanding the foregoing limitation on Awards to
individual Participants, the Committee may, in its sole discretion, effective
for Awards after calendar year 1996 increase the number of shares with respect
to which awards may be made by the excess of (x) 800,000 in the case of stock
options and stock appreciation rights, or 250,000 in the case of Other
Stock-Based Awards for any prior calendar year in which the Participant
received (or was eligible to
3
<PAGE> 42
receive) a grant of stock options (including stock appreciation rights) or an
Other Stock-Based Award under the Plan, as applicable, over (y) the actual
number of optioned shares or stock appreciation rights granted as Awards to the
Participant under the Plan for such calendar year or the actual number of
shares granted as Other Stock-Based Awards to the Participant for such calendar
year, as applicable. The foregoing limitations shall not require the
aggregation of stock options and stock appreciation rights to the extent that
rights under the stock options or the stock appreciation rights terminate upon
the exercise of either.
6. ADMINISTRATION. The Plan shall be administered by the
Committee. The Committee may operate through subcommittees established by it,
consisting of not fewer than two members of the Committee. As to the selection
of, and Awards to, Participants who are not Executive Officers, the Committee
may delegate any or all of its responsibilities to officers or employees of the
Company.
Subject to the provisions of the Plan, the Committee shall be
authorized to interpret the Plan, to establish, amend, and rescind any rules
and regulations relating to the Plan, to determine the terms and provisions of
any agreements entered into hereunder, and to make all other determinations
necessary or advisable for the administration of the Plan. The Committee may
correct any defect, supply any omission or reconcile any inconsistency in the
Plan or in any Award in the manner and to the extent it shall deem desirable to
carry the Plan or any such Award into effect. The determinations of the
Committee in the administration of the Plan, as described herein, shall be
final and conclusive.
The validity, construction and effect of the Plan and any rules
and regulations relating to the Plan shall be determined in accordance with the
laws of the State of New York and applicable Federal law.
7. STOCK OPTIONS. Any stock options granted under the Plan shall
be in such form as the Committee may from time to time approve and shall be
subject to the terms and conditions provided herein and such additional terms
and conditions not inconsistent with the terms of the Plan, as the Committee
shall deem desirable.
Stock options may be granted to any Participant. In the case of
incentive stock options, the terms and conditions of such grants shall be
subject to and comply with such requirements as may be prescribed by Section
422 (b) of the Code, and any implementing regulations, including, but not
limited to, the requirement that such stock options are exercisable during the
Participant's lifetime, only by such Participant. The Committee shall
establish the option price at the time each stock option is granted, which
price shall not be less than 100% of the Fair Market Value of the Common Stock
on the date of grant.
Stock options may not be exercisable later than 10 years after
their date of grant. The option price of each share of Common Stock as to
which a stock option is exercised shall be paid in full at the time of such
exercise. Such payment may be made at the sole discretion of the Committee,
pursuant to and in accordance with criteria and guidelines established by the
Committee (which criteria and guidelines may be different for Executive
Officers and for other Participants), as the same may be modified from time to
time, (i) in cash, (ii) by tender of shares
4
<PAGE> 43
of Common Stock already owned by the Participant, valued at Fair Market Value
as of the date of exercise, (iii) if authorized by the Committee, by delivery
of a properly executed exercise notice together with irrevocable instructions
to a securities broker (or, in the case of pledges, lender) approved by the
Company to, (a) sell shares of Common Stock subject to the option and to
deliver promptly to the Company a portion of the proceeds of such sale
transaction on behalf of the exercising Participant to pay the option price, or
(b) pledge shares of Common Stock subject to the option to a margin account
maintained with a broker or lender, as security for a loan, and such broker or
lender, pursuant to irrevocable instructions, delivers to the Company the loan
proceeds, at the time of exercise to pay the option price, or (iv) by any
combination of (i), (ii), or (iii) above.
8. STOCK APPRECIATION RIGHTS. Stock appreciation rights may be
granted independent of any stock option or in conjunction with all or any part
of any stock option granted under the Plan, either at the same time as the
stock option is granted or at any later time during the term of the option.
Stock appreciation rights shall be subject to such terms and conditions as
determined by the Committee, not inconsistent with the provisions of the Plan.
To the extent required by Rules promulgated under the Act or
otherwise required by law, no stock appreciation right shall be exercisable
earlier than six months after grant, except in the event of the death or Total
Disability of the Participant prior to the expiration of such six-month period.
Upon exercise, a stock appreciation right shall entitle the Participant to
receive from CMC an amount equal to the positive difference between the Fair
Market Value of a share of Common Stock on the exercise of the stock
appreciation right and the per share grant or option price, as applicable
multiplied by the number of shares of Common Stock with respect to which the
stock appreciation right is exercised. A stock appreciation right or
applicable portion thereof shall terminate and no longer be exercisable upon
the termination or exercise of any related stock option, except that a stock
appreciation right granted with respect to less than the full number of shares
covered by a related stock option shall not be reduced until the exercise or
termination of the related stock option exceeds the number of shares not
covered by the stock appreciation right. The Committee shall determine at
issuance or upon exercise whether the stock appreciation right shall be settled
in cash, Common Stock or a combination of cash and Common Stock.
9. OTHER STOCK-BASED AWARDS. Other Awards of Common Stock and
Awards that are valued in whole or in part by reference to, or otherwise based
on the Fair Market Value of Common Stock (all such Awards being referred to
herein as "Other Stock-Based Awards"), may be granted under the Plan in the
discretion of the Committee. Other Stock-Based Awards shall be in such form as
the Committee shall determine, including without limitation, (i) shares of
Common Stock, (ii) shares of Common Stock subject to restrictions on transfer
until the completion of a specified period of service, the occurrence of an
event or the attainment of performance objectives, each as specified by the
Committee, (iii) shares of Common Stock issuable upon the completion of a
specified period of service, and (iv) conditioning the right to an Award
(including vesting or exercisability) upon the occurrence of an event or the
attainment of one or more of the following performance objectives, each as
specified by the Committee--attaining targets with respect to stock price,
earnings per share, net income before income tax expenses, return on assets,
loan loss provision, efficiency ratio, and ratio of non-performing assets to
performing assets and/or return on shareholder equity. (In the discretion of
the
5
<PAGE> 44
Committee, such performance objectives may be absolute or relative to a prior
year's performance and may be applicable to the Company or any business unit
thereof.) Other Stock-Based Awards may be granted alone or in addition to any
other Awards made under the Plan. Subject to the provisions of the Plan, the
Committee shall have the sole and absolute discretion to determine to whom and
when such Other Stock-Based Awards will be made, the number of shares of Common
Stock to be awarded under (or otherwise related to) such Other Stock-Based
Awards and all other terms and conditions of such Awards. The Committee shall
determine whether Other Stock-Based Awards shall be settled in cash, Common
Stock or a combination of cash and Common Stock.
10. DIVIDENDS, EQUIVALENTS AND VOTING RIGHTS. Awards, other than
stock options, may provide the Participant with dividends or dividend
equivalents and voting rights prior to either vesting or earnout.
11. AWARD AGREEMENTS. Each Award under the Plan shall be evidenced
by an agreement setting forth the terms and conditions, not inconsistent with
the provisions of the Plan, as determined by the Committee, which shall apply
to such Award. Such provisions may include, but are not limited to, those that
would result in a deferral of receipt of income, including that attributable to
the exercise of a stock option or vesting of Other Stock-Based Awards and may
be imposed, in the discretion of the Committee, on Awards under this Plan and
predecessor plans, including the plans specified by Section 3(b)(i).
12. WITHHOLDING. The Company shall have the right to deduct from
all amounts paid to any Participant in cash (whether under this Plan or
otherwise) any taxes required by law to be withheld therefrom. In the case of
payments of Awards in the form of Common Stock, at the Committee's discretion,
the Participant may be required to pay to the Company the amount of any taxes
required to be withheld with respect to such Common Stock, or, in lieu thereof,
the Company shall have the right to retain the number of shares of Common Stock
the Fair Market Value of which equals the amount required to be withheld.
Without limiting the foregoing, the Committee may, in its discretion and
subject to such conditions as it shall impose, permit share withholding to be
done at the Participant's election.
13. NONTRANSFERABILITY. No Award shall be assignable or
transferable, and no right or interest of any Participant in any Award shall be
subject to any lien, obligation or liability of the Participant, except by
will, the laws of descent and distribution, or as otherwise set forth in the
Award agreement; provided, that with respect to Awards (other than an Award of
an incentive stock option) under the Plan and predecessor plans (including the
plans specified by Section 3(b)(i)), the Committee may, in its sole discretion,
permit certain Participants or classes of Participants to transfer Awards of
nonqualified stock options or Other Stock-Based Awards to such individuals or
entities as the Committee may specify consistent with the provisions of Section
16(b) of the Act, the Code and other applicable law.
14. NO RIGHT TO EMPLOYMENT OR CONTINUED PARTICIPATION IN PLAN. No
person shall have any claim or right to the grant of an Award, and the grant of
an Award shall not be construed as giving a Participant the right to be
retained in the employ of the Company or to be eligible for any subsequent
Awards. Further, the Company expressly reserves the right at any time to
dismiss a Participant free from any liability, or any claim under the Plan,
except as
6
<PAGE> 45
provided herein or in any agreement entered into hereunder.
15. ADJUSTMENT OF AND CHANGES IN COMMON STOCK. In the event of any
change in the outstanding shares of Common Stock by reason of any Common Stock
dividend or split, recapitalization, merger, consolidation, spin-off,
combination or exchange of shares or other similar corporate change, or any
distributions to shareholders of Common Stock other than regular cash
dividends, the Committee may make such substitution or adjustment, if any, as
it deems to be equitable, as to the number or kind of shares of Common Stock or
other securities issued or reserved for issuance pursuant to the Plan, and to
outstanding Awards.
16. AMENDMENT. The Board may amend, suspend or terminate the Plan
or any portion hereof at any time without stockholder approval, except to the
extent otherwise required by the Act.
17. UNFUNDED STATUS OF PLAN. The Plan is intended to constitute an
"unfunded" plan for long-term incentive compensation. With respect to any
payments not yet made to a Participant, including any Participant optionee, by
CMC, nothing herein contained shall give any Participant any rights that are
greater than those of a general creditor of CMC. In its sole discretion, the
Committee may authorize the creation of trusts or other arrangements to meet
the obligations created under the Plan to deliver Common Stock or payments in
lieu thereof or with respect to options, stock appreciation rights and other
Awards under the Plan; provided, however, that the existence of such trusts or
other arrangements is consistent with the unfunded status of the Plan.
18. EFFECTIVE DATE. Subject to shareholder approval hereof, this
Plan shall be effective on May 21, 1996. No Awards may be granted under the
Plan after May 20, 2001.
7
