<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 Section 240.14a-11(c) or Section 240.14a-2.
</TABLE>
THE CHASE MANHATTAN CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-12.
(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 1999
ANNUAL MEETING
OF STOCKHOLDERS
AND PROXY
STATEMENT
Meeting Date: May 18, 1999
The Chase Manhattan Corporation
270 Park Avenue
New York, New York 10017-2070
Copyright 1999. The Chase Manhattan Corporation
All Rights Reserved
<PAGE> 3
[CHASE LOGO]
THE CHASE MANHATTAN CORPORATION
270 Park Avenue
New York, New York 10017-2070
March 25, 1999
Dear Stockholder:
I am pleased to invite you to the Annual Meeting of Stockholders to be held
on May 18, 1999, at the offices of our subsidiary, Chase Manhattan Mortgage
Corporation, 3415 Vision Drive, Columbus, Ohio. As we have done in the past, in
addition to considering the matters described in the Proxy Statement, we will
review major developments since our last stockholders' meeting.
We hope that you will attend the meeting in person, but even if you are
planning to come, we strongly encourage you to designate the proxies named on
the enclosed card to vote your shares. This will ensure that your common stock
will be represented at the meeting. The Proxy Statement explains more about
proxy voting. Please read it carefully. We look forward to your participation.
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 10017-2070
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
DATE: Tuesday, May 18, 1999
TIME: 11:00 a.m.
PLACE: Chase Manhattan Mortgage Corporation
3415 Vision Drive
Columbus, OH 43219
MATTERS TO BE VOTED ON:
- Election of sixteen directors
- Ratification of appointment of PricewaterhouseCoopers LLP as our
independent accountants for 1999
- Re-approval of Key Executive Performance Plan
- Stockholder proposals included in the attached Proxy Statement, if they
are introduced at the meeting
- Any other matters that may be properly brought before the meeting
By Order of the Board of Directors
Anthony J. Horan
Secretary
March 25, 1999
PLEASE VOTE PROMPTLY
<PAGE> 5
PROXY STATEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GENERAL INFORMATION ABOUT VOTING............................ 1
PROPOSAL 1: ELECTION OF DIRECTORS........................... 2
Information About the Nominees......................... 3
About the Board and its Committees..................... 8
Security Ownership of Directors and Executive
Officers.............................................. 9
Executive Compensation................................. 11
Compensation and Benefits Committee Report on Executive
Compensation.......................................... 11
Comparison of Five-Year Cumulative Total Return........ 13
Executive Compensation Tables.......................... 14
I. Summary Compensation Table....................... 14
II. Stock Option/SAR Grants Table -- 1998 Grants..... 15
III. Aggregated Stock Option/SAR Exercises in 1998
and Option/SAR Values as of Year-End 1998....... 15
IV. Long-Term Incentive Plans--1998 Awards.......... 16
Retirement Benefits and Termination Arrangements....... 16
Additional Information About Our Directors and
Executive Officers.................................... 17
PROPOSAL 2: APPOINTMENT OF INDEPENDENT ACCOUNTANTS.......... 18
PROPOSAL 3: RE-APPROVAL OF KEY EXECUTIVE PERFORMANCE PLAN
(KEPP).......................................... 18
STOCKHOLDER PROPOSALS....................................... 20
Proposal 4: Annual Reports of Political Contributions
Made by Chase......................................... 20
Proposal 5: Policy for Lending to, Servicing, and
Operations in, Lesser Developed
Countries.................................. 21
STOCKHOLDER PROPOSALS AND NOMINATIONS FOR THE 2000 ANNUAL
MEETING................................................... 22
</TABLE>
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<PAGE> 6
PROXY STATEMENT
Your vote is very important. For this reason, the Board of Directors is
requesting that you allow your Common Stock to be represented at the Annual
Meeting by the Proxies named in the enclosed Proxy Card. This Proxy Statement is
being sent to you in connection with this request and has been prepared for the
Board by our management. "We", "our", "Chase" and the "Corporation" refer to The
Chase Manhattan Corporation. The Proxy Statement is first being sent to our
stockholders on or about March 25, 1999.
------------------------------------------------------------------------
GENERAL INFORMATION ABOUT VOTING
WHO CAN VOTE. You are entitled to vote your Common Stock if our records
showed that you held your shares as of March 19, 1999. At the close of business
on that date, a total of 847,163,749 shares of Common Stock were outstanding and
entitled to vote. Each share of Common Stock has one vote. The enclosed Proxy
Card shows the number of shares that you are entitled to vote. Your individual
vote is confidential and will not be disclosed to third parties.
VOTING BY PROXIES. If your Common Stock is held by a broker, bank or other
nominee, you will receive instructions from them which you must follow in order
to have your shares voted. If you hold your shares in your own name as a holder
of record, you may instruct the Proxies how to vote your Common Stock by using
the toll free telephone number or the Internet voting site listed on the Proxy
Card or by signing, dating and mailing the Proxy Card in the postage paid
envelope that we have provided to you. Of course, you can always come to the
meeting and vote your shares in person. When you use the telephone system or our
Internet voting site, the system verifies that you are a stockholder through the
use of a unique Personal Identification Number that is assigned to you. The
procedure allows you to instruct the Proxies how to vote your shares and to
confirm that your instructions have been properly recorded. Specific directions
for using the telephone and Internet voting systems are on the Proxy Card.
Whichever of these methods you select to transmit your instructions, the Proxies
will vote your shares in accordance with those instructions. If you sign and
return a Proxy Card without giving specific voting instructions, your shares
will be voted as recommended by our Board of Directors. We are not now aware of
any matters to be presented other than those described in this Proxy Statement.
If any matters not described in the Proxy Statement are properly presented
at the meeting, the Proxies will use their own judgment to determine how to vote
your shares. If the meeting is adjourned, your Common Stock may be voted by the
Proxies on the new meeting date as well, unless you have revoked your proxy
instructions.
HOW YOU MAY REVOKE YOUR PROXY INSTRUCTIONS. To revoke your proxy
instructions, you must advise the Secretary in writing before your Common Stock
has been voted by the Proxies at the meeting, deliver later proxy instructions,
or attend the meeting and vote your shares in person. Unless you decide to
attend the meeting and vote your shares in person after you have submitted
voting instructions to the Proxies, you should revoke or amend your prior
instructions in the same way you initially gave them -- that is, by telephone,
Internet or in writing. This will help to ensure that your shares are voted the
way you have finally determined you wish them to be voted.
HOW VOTES ARE COUNTED. The Annual Meeting will be held if a majority of
the outstanding Common Stock entitled to vote is represented at the meeting. If
you have returned valid proxy instructions or attend the meeting in person, your
Common Stock will be counted for the purpose of determining whether there is a
quorum, even if you wish to abstain from voting on some or all matters
introduced at the meeting. If you hold your Common Stock through a broker, bank
or other nominee, generally the nominee may only vote the Common Stock that it
holds for you in accordance with your instructions. However, if it has not
received your instructions within ten days of the meeting, a nominee that is a
broker may vote on matters which the New
<PAGE> 7
York Stock Exchange determines to be routine. If a nominee cannot vote on a
particular matter because it is not routine, there is a "broker non-vote" on
that matter. Broker non-votes count for quorum purposes, but we do not count
either abstentions or broker non-votes as votes for or against any proposal.
COST OF THIS PROXY SOLICITATION. We will pay the cost of this proxy
solicitation. In addition to soliciting proxies by mail, we expect that a number
of our employees will solicit stockholders for the same type of proxy,
personally and by telephone. None of these employees will receive any additional
or special compensation for doing this. We have retained ChaseMellon 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. We will, upon request,
reimburse brokers, banks and other nominees for their expenses in sending proxy
material to their customers who are beneficial owners and obtaining their voting
instructions.
ATTENDING THE ANNUAL MEETING. There is a map at the end of this Proxy
Statement showing the location of the Annual Meeting. If you are a holder of
record and you plan to attend the Annual Meeting, please indicate this when you
vote. The lower portion of the Proxy Card is your admission ticket. IF YOU ARE A
BENEFICIAL OWNER OF COMMON STOCK HELD BY A BROKER, BANK OR OTHER NOMINEE (I.E.,
IN "STREET NAME"), YOU WILL NEED PROOF OF OWNERSHIP TO BE ADMITTED TO THE
MEETING. A recent brokerage statement or letter from a bank or broker are
examples of proof of ownership. If you want to vote in person your Common Stock
held in street name, you will have to get a written proxy in your name from the
broker, bank or other nominee who holds your shares.
------------------------------------------------------------------------
PROPOSAL 1: ELECTION OF DIRECTORS
An entire Board of Directors, consisting of sixteen members, is to be
elected at this annual meeting to hold office until the next annual meeting and
the election of their successors.
VOTE REQUIRED. Directors must be elected by a plurality of the votes cast
at the meeting. This means that the nominees receiving the greatest number of
votes will be elected. Votes withheld for any Director will not be counted.
Although we know of no reason why any of the nominees would not be able to
serve, if any nominee is unavailable for election, the Proxies would vote your
Common Stock to approve the election of any substitute nominee proposed by the
Board of Directors. The Board may also choose to reduce the number of Directors
to be elected, as permitted by our By-laws.
GENERAL INFORMATION ABOUT THE NOMINEES. All of the nominees are currently
Directors. Each has agreed to be named in this Proxy Statement, and to serve if
elected. Each of the nominees was a Director in 1998 and attended at least 75%
of the meetings of the Board and committees on which the nominee served in that
year.
In the following biographies and the remainder of the Proxy Statement,
"heritage Chase" means the corporation which merged into the Corporation on
March 31, 1996. "MHC" means Manufacturers Hanover Corporation, which merged into
the Corporation on December 31, 1991. Unless stated otherwise, all of the
nominees have been continuously employed by their present employers for more
than five years. All are actively involved in community and charitable affairs.
The age indicated in each nominee's biography is as of May 18, 1999 and all
other biographical information is as of the date of this Proxy Statement. George
V. Grune, currently a Director, plans to retire from the Board on the eve of the
Annual Meeting and his biography is therefore omitted.
2
<PAGE> 8
INFORMATION ABOUT THE NOMINEES
<TABLE>
<S> <C>
- -----------------------------------------------------------------------------------------------
HANS W. BECHERER (AGE 64)
[PHOTO OF HANS W. BECHERER]
Chairman of the Board and Chief Executive Officer of Deere &
Company. Mr. Becherer is also a Director of AlliedSignal
Inc. and Schering-Plough Corporation. Mr. Becherer became a
Director of the Corporation in 1998.
- -----------------------------------------------------------------------------------------------
FRANK A. BENNACK JR. (AGE 66)
[PHOTO OF FRANK A. BENNACK
JR.] President and Chief Executive Officer of The Hearst
Corporation. Mr. Bennack is a Director of The Hearst
Corporation, Hearst-Argyle Television, Inc., American Home
Products Corporation, and Polo Ralph Lauren Corporation. He
had been a Director of MHC since 1981, and became a Director
of the Corporation in 1991.
- -----------------------------------------------------------------------------------------------
SUSAN V. BERRESFORD (AGE 56)
[PHOTO OF SUSAN V.
BERRESFORD] President of The Ford Foundation. Ms. Berresford had been a
Director of heritage Chase since 1995, and became a Director
of the Corporation in 1996.
- -----------------------------------------------------------------------------------------------
M. ANTHONY BURNS (AGE 56)
[PHOTO OF M. ANTHONY BURNS]
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. and Pfizer Inc. He had been a Director
of heritage Chase since 1990, and became a Director of the
Corporation in 1996.
- -----------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE> 9
<TABLE>
<S> <C>
- -----------------------------------------------------------------------------------------------
H. LAURANCE FULLER (AGE 60)
[Photo of H. Laurance
Fuller] Co-Chairman of BP Amoco Plc. Mr. Fuller is also a Director
of Abbott Laboratories, Motorola, Inc. and Security Capital
Group, Inc. He had been a Director of heritage Chase since
1985, and became a Director of the Corporation in 1996.
- -----------------------------------------------------------------------------------------------
MELVIN R. GOODES (AGE 64)
[Photo of Melvin R. Goodes]
Chairman of the Board and Chief Executive Officer of
Warner-Lambert Company. Mr. Goodes is also a Director of
Ameritech Corporation and Unisys Corporation. He became a
Director of the Corporation in 1986.
- -----------------------------------------------------------------------------------------------
WILLIAM H. GRAY III (AGE 57)
[Photo of William H. Gray
III] President and Chief Executive Officer of The College
Fund/UNCF. Mr. Gray was a member of the United States House
of Representatives from 1979 to 1991. He is also a Director
of CBS Corp., Electronic Data Systems Corporation, MBIA
Inc., The Prudential Insurance Company of America, Rockwell
International Corporation, Union Pacific Corporation and
Warner-Lambert Company. He had been a Director of heritage
Chase since 1992, and became a Director of the Corporation
in 1996.
- -----------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE> 10
<TABLE>
<S> <C>
- -----------------------------------------------------------------------------------------------
WILLIAM B. HARRISON JR. (AGE 55)
[PHOTO OF WILLIAM B.
HARRISON JR.] Vice Chairman of the Board and a Director of the Corporation
since 1991. Mr. Harrison is also a Director of Dillard
Department Stores, Inc. and Freeport-McMoRan Copper & Gold
Inc.
- -----------------------------------------------------------------------------------------------
HAROLD S. HOOK (AGE 67)
[PHOTO OF HAROLD S. HOOK]
Retired Chairman of the Board and Chief Executive Officer of
American General Corporation. Mr. Hook had served as both
Chairman and Chief Executive Officer of American General
Corporation from 1978 until October 1996 and retired as
Chairman in April 1997. Mr. Hook is also a Director of
Cooper Industries, Inc., Duke Energy Corporation and Sprint
Corporation. He became a Director of the Corporation in
1987.
- -----------------------------------------------------------------------------------------------
HELENE L. KAPLAN (AGE 65)
[PHOTO OF HELENE L. KAPLAN]
Of Counsel to the firm of Skadden, Arps, Slate, Meagher &
Flom LLP. Mrs. Kaplan is also a Director of Bell Atlantic
Corporation, The May Department Stores Company, Metropolitan
Life Insurance Company and Mobil Corporation. She became a
Director of the Corporation in 1987.
- -----------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE> 11
<TABLE>
<S> <C>
- -----------------------------------------------------------------------------------------------
THOMAS G. LABRECQUE (AGE 60)
[Photo of Thomas G.
Labrecque] President and Chief Operating Officer of the Corporation
since 1996, having served as Chairman of the Board and Chief
Executive Officer of heritage Chase since 1990. He had been
a Director of heritage Chase since 1980, and became a
Director of the Corporation in 1996. Mr. Labrecque is also a
Director of Pfizer Inc.
- -----------------------------------------------------------------------------------------------
HENRY B. SCHACHT (AGE 64)
[Photo of Henry B. Schacht]
Director and Senior Advisor of E.M. Warburg, Pincus & Co.,
LLC, commencing in 1999. Mr. Schacht served as Chairman of
Lucent Technologies, Inc. from 1996 to 1998, as Chief
Executive Officer from 1996 to 1997, and as Senior Advisor
from 1998 to 1999. He served as Chairman of the Board of
Cummins Engine Company, Inc. from 1977 to 1995 and as Chief
Executive Officer from 1973 to 1994. Mr. Schacht is also a
Director of Alcoa Inc., Cummins Engine Company, Johnson &
Johnson, Knoll, Inc. and Lucent Technologies, Inc. He had
been a Director of heritage Chase since 1982, and became a
Director of the Corporation in 1996.
- -----------------------------------------------------------------------------------------------
WALTER V. SHIPLEY (AGE 63)
[Photo of Walter V. Shipley]
Chairman of the Board and Chief Executive Officer of the
Corporation from 1983-1992 and 1994 to the present. Mr.
Shipley is also a Director of Bell Atlantic Corporation,
Champion International Corporation and Exxon Corporation. He
became a Director of the Corporation in 1982.
- -----------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE> 12
<TABLE>
<S> <C>
- -----------------------------------------------------------------------------------------------
ANDREW C. SIGLER (AGE 67)
[Photo of Andrew C. Sigler]
Retired as Chairman of the Board and Chief Executive Officer
of Champion International Corporation in October 1996. Mr.
Sigler is a Director of AlliedSignal Inc. 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.
- -----------------------------------------------------------------------------------------------
JOHN R. STAFFORD (AGE 61)
[Photo of John R. Stafford]
Chairman, President and Chief Executive Officer of American
Home Products Corporation. Mr. Stafford is also a Director
of AlliedSignal Inc., Bell Atlantic Corporation and Deere &
Company. He had been a Director of MHC since 1982, and
became a Director of the Corporation in 1991.
- -----------------------------------------------------------------------------------------------
MARINA V.N. WHITMAN (AGE 64)
[Photo of Marina N. Whitman]
Professor of Business Administration and Public Policy,
University of Michigan. Prior to her appointment at the
University of Michigan in 1992, Dr. Whitman was Vice
President and Group Executive of General Motors Corporation.
She is also a Director of Alcoa Inc., Browning-Ferris
Industries, Inc., The Procter & Gamble Company and Unocal
Corp. Dr. Whitman had been a Director of MHC since 1973, and
became a Director of the Corporation in 1991.
- -----------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE> 13
ABOUT THE BOARD AND ITS COMMITTEES
THE BOARD. Chase is governed by a Board of Directors and various
committees of the Board which meet throughout the year. During 1998, there were
12 meetings of the Board. Directors discharge their responsibilities throughout
the year at Board and committee meetings, and also through considerable
telephone contact and other communications with the Chairman and others
regarding matters of concern and interest to Chase.
COMMITTEES OF THE BOARD. The Board has five principal committees. The
following chart describes for each committee the function, current membership,
and number of meetings held during 1998.
<TABLE>
<CAPTION>
AUDIT AND EXAMINING COMMITTEES -- 7 MEETINGS IN 1998
----------------------------------------------------
<S> <C>
FUNCTIONS CURRENT MEMBERS
Review and discuss reports and other communications Hans W. Becherer
concerning management's responsibilities to: Frank A. Bennack Jr.
- - safeguard the assets and income of stockholders and Susan V. Berresford
customers M. Anthony Burns (Chairman)
- - provide for reliable and timely financial information George V. Grune (Vice Chairman)
and statements
- - maintain compliance with Chase's ethical standards,
policies, plans and procedures, as well as applicable
laws and regulations
</TABLE>
<TABLE>
<CAPTION>
COMPENSATION AND BENEFITS COMMITTEE -- 7 MEETINGS IN 1998
---------------------------------------------------------
<S> <C>
FUNCTIONS CURRENT MEMBERS
- - Determine compensation and benefits policies and H. Laurance Fuller (Vice Chairman)
procedures Melvin R. Goodes
- - Approve senior officer compensation William H. Gray III
John R. Stafford (Chairman)
GOVERNANCE COMMITTEE -- 1 MEETING IN 1998
- --------------------------------------------------------------------------------------------------
FUNCTIONS CURRENT MEMBERS
- - Consider nominees for election to the Board, including Frank A. Bennack Jr.
any written recommendation by a stockholder which is M. Anthony Burns
mailed to the attention of the Secretary H. Laurance Fuller
- - Review duties and composition of Board committees Helene L. Kaplan
- - Counsel the Board on other Board governance matters Henry B. Schacht (Vice Chairman)
Andrew C. Sigler (Chairman)
John R. Stafford
PUBLIC POLICY AND TRUST COMMITTEE -- 3 MEETINGS IN 1998
- --------------------------------------------------------------------------------------------------
FUNCTIONS CURRENT MEMBERS
- - Review our charitable and community oriented activities, Hans W. Becherer
including strategy with respect to charitable Susan V. Berresford
contributions and projects undertaken to improve the Melvin R. Goodes
communities we serve William H. Gray III (Chairman)
- - Review our community reinvestment activities Harold S. Hook
- - Review the trust, other fiduciary and investment Marina v.N. Whitman (Vice Chairman)
advisory activities of our subsidiaries
RISK POLICY COMMITTEE -- 6 MEETINGS IN 1998
- --------------------------------------------------------------------------------------------------
FUNCTIONS CURRENT MEMBERS
- - Act in a general advisory capacity to management in Harold S. Hook (Vice Chairman)
respect of activities that give rise to credit risk and Helene L. Kaplan (Chairman)
market risk Henry B. Schacht
- - Be fully apprised of these risks and how they are Andrew C. Sigler
created and managed Marina v.N. Whitman
- - Review and approve a general risk management mandate to
govern these activities
- - Re-evaluate regularly our risk exposure, risk tolerance
and the established mandate
- - Review and, as appropriate, approve policies to control
risk exposure
</TABLE>
8
<PAGE> 14
DIRECTORS' COMPENSATION. Directors who are Chase officers do not receive
any fees for their services as Directors. Each non-employee Director receives an
annual retainer of $25,000. The Chairmen of the Audit and Examining Committees,
the Compensation and Benefits Committee and the Risk Policy Committee each
receives an additional fee of $16,000 per year and each other member of these
committees receives an additional fee of $8,000 per year. The Chairmen of the
Governance Committee and the Public Policy and Trust Committee each receives an
additional fee of $10,000 per year and each other member of these committees
receives an additional fee of $5,000 per year. Each non-employee Director
receives $1,250 for each meeting of the Board of Directors of the Corporation
and The Chase Manhattan Bank (the Bank) and each Board committee meeting
attended. Only one fee is paid for attendance at meetings that serve both the
Corporation and the Bank. Non-employee Directors also receive an annual grant of
1,000 shares of Common Stock, which is subject to increase or decrease as
appropriate so that the value of the shares at the time of the grant will not be
less than $37,500 or more than $50,000.
Non-employee Directors are included in a group term life insurance policy and a
business travel accident insurance policy. During 1998, Chase paid average
premiums for these coverages of approximately $1,221 per Director. A Director
may elect to participate in Chase's medical insurance coverage, with the cost of
the coverage paid by the Director.
DEFERRED COMPENSATION ARRANGEMENTS FOR NON-EMPLOYEE DIRECTORS. Each year
non-employee Directors may elect to defer until they leave the Board all or part
of their cash compensation and/or all of their Common Stock compensation. A
Director's right to receive future payments under any deferred compensation
arrangement is an unsecured claim against Chase's general assets. Cash amounts
may be deferred into various investment equivalents, including a Common Stock
equivalent, and will be paid and distributed in cash. Stock compensation may
only be deferred as Common Stock and is distributable only in Common Stock.
Deferred cash compensation may be exchanged for benefits under a split-dollar
life insurance program.
------------------------------------------------------------------------
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table shows the number of shares of Common Stock and Common
Stock equivalents beneficially owned as of December 31, 1998 by each nominee for
Director, the executive officers named in the Summary Compensation Table and all
nominees and executive officers as a group. Unless otherwise indicated, each of
the named individuals and each member of the group has sole voting power and
sole investment power with respect to the shares shown. The number of shares
beneficially owned, as that term is defined by Rule 13d-3 under the Securities
Exchange Act of 1934, by all nominees and executive officers as a group totals
less than 1% of the outstanding Common Stock. Totals include shares acquired
pursuant to the 2-for-1 stock split effective as of the close of business on May
20, 1998. No nominee or executive officer beneficially owns any Chase preferred
stock.
9
<PAGE> 15
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial Ownership
Name of Individual (1)
- ------------------------------------ -----------------------
<S> <C>
Hans W. Becherer 4,716
Frank A. Bennack Jr. 17,349
Susan V. Berresford 8,734
Donald L. Boudreau 587,511(2)(5)
M. Anthony Burns 11,592
H. Laurance Fuller 27,782
Melvin R. Goodes 15,612
William H. Gray III 11,785
William B. Harrison Jr. 1,220,739(2)(3)(5)
Harold S. Hook 92,959(4)
Helene L. Kaplan 21,024
Thomas G. Labrecque 1,749,843(2)
Henry B. Schacht 16,905
Marc J. Shapiro 825,255(2)
Walter V. Shipley 2,364,238(2)(3)(5)
Andrew C. Sigler 18,460
John R. Stafford 22,670(5)
Marina v.N. Whitman 14,948(5)
All nominees and executive officers
as a group (22 persons) 8,379,630
</TABLE>
(1) The amounts reported include shares of Common Stock, receipt of which has
been deferred under deferred compensation plan arrangements as follows: Mr.
Becherer: 805 shares; Ms. Berresford: 2,755 shares; Mr. Boudreau: 31,757
shares; Mr. Burns: 3,973 shares; Mr. Fuller: 8,020 shares; Mr. Gray: 5,383
shares; Mr. Harrison: 62,444 shares; Mr. Hook: 6,284 shares; Mrs. Kaplan:
1,709 shares; Mr. Labrecque: 167,598 shares; Mr. Schacht: 8,020 shares; Mr.
Shapiro: 112,077 shares; Mr. Shipley: 355,869 shares; Mr. Stafford: 4,068
shares; and all nominees and executive officers as a group: 954,001 shares.
The amounts reported also include the number of units of Common Stock
equivalents held by certain Directors under deferred compensation
arrangements entitling those Directors, upon termination of service, 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. Becherer: 871 units; Mr.
Bennack: 8,948 units; Ms. Berresford: 5,771 units; Mr. Burns: 4,722 units;
Mr. Fuller: 11,442 units; Mr. Goodes: 7,723 units; Mr. Gray: 6,402 units;
Mr. Hook: 50,167 units; Mrs. Kaplan: 11,515 units; Mr. Schacht: 8,469 units;
Mr. Sigler: 10,421 units; Mr. Stafford: 13,754 units; Dr. Whitman: 7,723
units; and all nominees as a group: 147,928 units.
(2) The amounts reported include shares of Common Stock which could be acquired
on or before March 1, 1999, through the exercise of stock options as
follows: Mr. Boudreau: 419,138 shares; Mr. Harrison: 947,332 shares; Mr.
Labrecque: 1,129,296 shares; Mr. Shapiro: 661,000 shares; Mr. Shipley:
1,664,000 shares; and all nominees and executive officers as a group:
5,790,038 shares. The amounts reported also include shares of Common Stock
that may be received at the end of a restricted period and/or when Common
Stock price targets are met pursuant to forfeitable awards of restricted
stock and/or restricted stock units as follows: Mr. Boudreau: 50,544 shares;
Mr. Harrison: 66,992 shares; Mr. Labrecque: 134,620 shares; Mr. Shapiro:
36,230 shares; Mr. Shipley: 94,492 shares; and all nominees and executive
officers as a group: 511,968 shares.
(3) The amounts reported include Common Stock allocated to accounts under a
Section 401(k) plan as follows: Mr. Harrison: 11,133 shares; Mr. Shipley:
54,905 shares; and all executive officers as a group: 66,296 shares.
(4) The amount reported includes beneficial ownership of 184 shares of Common
Stock owned through a controlled corporation.
(5) The amounts reported include shares for which beneficial ownership is
disclaimed as follows: Mr. Boudreau: 9,504 shares; Mr. Harrison: 44,028
shares; Mr. Shipley: 29,816 shares; Mr. Stafford: 600 shares; Dr. Whitman:
1,036 shares; and all nominees and executive officers as a group: 85,702
shares.
10
<PAGE> 16
EXECUTIVE COMPENSATION
COMPENSATION AND BENEFITS COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION POLICIES
The Compensation and Benefits Committee, which consists solely of
non-employee Directors, administers the executive compensation program of the
Corporation and its subsidiaries and determines the compensation of senior
management.
Chase's compensation program seeks to attract, retain and motivate top
quality professionals. Our compensation policy for executive officers emphasizes
performance-based pay over fixed salary and uses long-term pay based on the
performance of Chase's stock to further align the interests of senior management
with Chase's stockholders. Chase seeks to provide compensation levels that are
competitive with those provided by the appropriate peer groups of financial
institutions in each of the markets and businesses in which Chase competes.
During 1998, the Committee again received reports and information from
independent consultants to ensure that the program, in the Committee's judgment,
remains competitive and able to meet its objectives.
Peer groups will differ for each of the businesses headed by executive
officers and, in general, will consist for each business of those comparable
financial institutions that compete in the same markets and seek to sell similar
groups of financial services and products. Appropriate peer groups will change
over time and will consist of other U.S. bank holding companies and other
competitors. The peer groups will not correspond to the large list of
institutions that make up the indices shown on page 13 of the Proxy Statement.
RELATIONSHIP OF CORPORATE PERFORMANCE TO COMPENSATION. Compensation paid
to the Corporation's executive officers for 1998 consisted primarily of salary,
bonuses and awards of stock options and restricted stock awarded under the Key
Executive Performance Plan (KEPP) and the Corporation's 1996 Long-Term Incentive
Plan. The payment of bonuses and the awards of stock options and restricted
stock are directly related to corporate and individual performance and, where
relevant, business unit performance.
CASH COMPENSATION. An executive officer's cash compensation is made up of
base salary and an annual performance bonus.
For each executive, the Committee reviews salaries paid to similarly
situated executives in a peer group of other U.S. bank holding companies and
other competitors. A particular executive's actual salary will be set based on
this competitive review and the executive's performance, level of experience and
Chase's emphasis on performance-based rather than salary-based compensation. In
general, base salaries are not reviewed more often than every 24 months.
Annual performance bonuses are awarded based on the executive's success in
achieving corporate, business unit and individual performance goals. In setting
these awards, the Committee takes account of data and trends in the appropriate
peer groups.
Quantitative performance goals may vary from year to year, and have
included such factors as earnings per share growth, revenue growth, return on
common equity, income before income tax expense, credit quality and expense
management indicators. In 1998 on a transitional basis, and in 1999 on a primary
basis, shareholder value added (cash net income less an explicit charge for
capital) has become a primary factor in assessing financial performance.
Qualitative measures include the Committee's assessment of the executive's
success in the carrying out of the Chase Vision and exemplifying the Chase
Values. The 1998 awards gave primary consideration to operating net income,
return on common equity, revenue growth, and earnings per share growth, both for
Chase overall and for individual business units, as well as in comparison to
other comparable financial institutions.
Each executive is required to defer a portion of each annual performance
bonus in excess of a certain amount. The mandatorily deferred amount will be
paid out over several years or upon retirement and is subject to certain
forfeiture provisions upon termination of employment.
EQUITY-BASED COMPENSATION. Chase believes that the grant of significant
annual equity awards further links the interests of senior management and
Chase's stockholders. The Committee sets targeted ranges for equity-based awards
for each executive based upon the award practices of a peer group of U.S. bank
holding companies and other competitors. Actual awards reflect the Committee's
assessment of the individual's current and potential contribution to Chase's
success. All award information has been adjusted to reflect the 2-for-1 stock
split effective as of the close of business on May 20, 1998.
On January 20, 1998, when the price of Chase's Common Stock was $52.955 per
share, the Committee granted to executive officers stock
11
<PAGE> 17
options which become exercisable over four years and expire on January 20, 2008
and performance accelerated restricted stock units. Half the units vest after
five years of continued employment. Twenty-five percent of the units vest only
if the price of Chase's Common Stock averages $75 for a ten day period before
January 20, 2003, a condition that was met on July 13, 1998. Twenty-five percent
of the units vest only if the price of Chase's Common Stock averages $82.50 for
a ten day period before January 20, 2003. All awards vest in the case of death,
disability or retirement, except that after retirement awards related to a
target price vest only if the target price is met.
Final compensation data for Chase's peer group companies for calendar year
1998 is not yet available. Chase estimates that total compensation amounts for
executive officers (base salary, annual bonus and equity-based awards) will
place Chase in approximately the 75th percentile of compensation levels of
applicable peer groups.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
In May 1994, Chase stockholders approved KEPP, a plan designed to allow
Chase a tax deduction for incentive compensation payments to the Chief Executive
Officer and the other four most highly paid executive officers. Absent KEPP,
such incentive compensation payments would not be deductible to the extent such
amounts for any such officer in any year exceeded $1 million. In administering
this plan, the Compensation Committee will promote its policy of maximizing
corporate tax deductions, wherever feasible.
Under the plan, the Committee sets an objective formula under which a bonus
pool amount will be created and allocates a percentage of this pool to each
participant. The bonus pool for each year is an amount equal to the sum of (i) a
percentage of Chase's income before provision for income tax expense for that
year in excess of a percentage of total stockholders' equity and (ii) the
amount, not to exceed $2,000,000 (the "Carryover Amount"), that was available to
pay bonuses under the Plan for prior years but was not so paid. The Committee
may also make provisions for excluding the effect of extraordinary events and
changes in accounting methods, practices or policies. This calculation sets the
amount of incentive compensation (that is, annual performance bonus and stock
awards other than options and performance-based stock awards granted under the
1996 Long-Term Incentive Plan) for each participant. There is a separate limit
that no participant may receive compensation greater than (i) .002 of Chase's
income before income tax expense, extraordinary items and effect of accounting
changes in the calendar year plus (ii) one half of any Carryover Amount. The
Committee may, based on other factors, reduce any incentive awards determined
pursuant to this formula.
COMPENSATION ACTIONS IN 1998 FOR MR. SHIPLEY
In accordance with the Committee's general practice of reviewing base
salary not more often than every 24 months, Mr. Shipley's base salary was
increased in June of 1998 to $1,100,000. The Committee had previously granted a
base salary increase to Mr. Shipley in May 1996.
For 1998, the Committee, with the approval of the Board of Directors,
awarded Mr. Shipley under KEPP a performance bonus of $3,531,250 (a portion of
which was mandatorily deferred) and 6,378 restricted stock units which vest
after three years. In making this award, the Committee gave primary
consideration to the specific financial results for 1998 summarized below.
Additionally, the Committee considered the Corporation's 1998 operating goals,
including goals related to leadership development and workforce diversity. The
1998 award reflects the achievement of an operating return on average common
stockholders' equity of 18.4% for 1998 compared with 19.5% in 1997. Operating
net income was $4.0 billion compared to $3.8 billion in 1997. Diluted operating
earnings per share were $4.51 in 1998 compared to $4.17 in 1997. Operating
revenues grew by 12% in 1998 versus 7.6% in 1997. The Committee also considered
these financial results against a competitive environment in which Chase
distinguished itself. Mr. Shipley had been awarded $3.531 million and 8,852
restricted stock units for 1997.
In January 1998, the Committee also awarded to Mr. Shipley 300,000
nonqualified stock options with an exercise price of $52.955 that vest over four
years and 90,000 performance accelerated restricted stock units. These
restricted stock units will vest as described above. In January 1997, the
Committee awarded to Mr. Shipley 240,000 nonqualified stock options with an
exercise price of $46.1563 that vest over three years.
Dated as of January 19, 1999
COMPENSATION AND BENEFITS COMMITTEE
H. Laurance Fuller (Vice Chairman)
Melvin R. Goodes
William H. Gray III
John R. Stafford (Chairman)
12
<PAGE> 18
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
Below is a line graph that compares the yearly percentage change in the
cumulative total stockholder return of Chase's Common Stock against the
cumulative total return of the S&P Financials Index, the S&P 500, the KBW 50
Index and the KBW Money Center Bank Index for each of the five years in the
period commencing December 31, 1993 and ending December 31, 1998.
The results are based on an assumed $100 invested on December 31, 1993 and
the reinvestment of dividends. We are changing our basis for comparison from the
KBW 50 and KBW Money Center Banks Indices to the S&P Financials Index. We
believe the S&P Financials Index is a more appropriate index for measuring
Chase's performance in the future because the S&P Financials Index is not
limited to banks and includes competitors from the asset management, brokerage,
consumer finance, insurance, and investment banking industries.
[Comparison Performance Chart]
<TABLE>
<CAPTION>
S&P FINANCIALS KBW MONEY
CHASE INDEX S&P 500 KBW 50 CENTER BANKS
----- -------------- ------- ------ ------------
<S> <C> <C> <C> <C> <C>
'1993' 100 100 100 100 100
'1994' 93.23 96.46 101.32 94.9 98.79
'1995' 158.92 148.57 139.39 152 160.68
'1996' 249.14 200.83 171.4 215.01 237.57
'1997' 312.52 297.43 228.58 314.32 317.79
'1998' 414.31 331.41 293.91 340.34 355.25
</TABLE>
13
<PAGE> 19
EXECUTIVE COMPENSATION TABLES
In the following Executive Compensation Tables, all award information has
been adjusted to reflect the 2-for-1 stock split effective as of the close of
business on May 20, 1998.
I. SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation(1) Long-Term Compensation
------------------------------------ --------------------------------------
Awards(2) Payouts
------------------------- ----------
Restricted Securities
Stock Underlying LTIP All Other
Special(3) Awards Options/SARs Payouts Compensation
Name and Principal Position Year Salary($) Bonus($) Bonus($) ($)(4) Granted(#) ($)(5) ($)(6)
- --------------------------- ---- --------- -------- ---------- ---------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Walter V. Shipley 1998 $1,030,769 $3,531,250 $1,666,667 $2,851,725 300,000 $1,675,548 $ 51,538
Chairman and 1997 950,000 3,531,250 1,666,667 468,750 240,000 3,544,220 47,500
Chief Executive Officer 1996 903,846 3,093,750 1,666,667 2,378,750 240,000 1,343,750 6,000
Thomas G. Labrecque 1998 1,007,692 3,093,750 1,666,667 2,789,225 300,000 1,675,548 50,385
President and 1997 900,000 3,093,750 1,666,667 406,250 200,000 3,101,192 45,000
Chief Operating Officer 1996 888,024 2,656,250 1,666,667 2,069,688 208,000 0 39,466
William B. Harrison Jr. 1998 769,231 4,406,250 666,667 2,182,400 220,000 1,117,032 38,462
Vice Chairman 1997 675,000 3,968,750 666,667 531,250 170,000 2,215,137 33,750
of the Board 1996 640,385 2,218,750 666,667 1,514,062 150,000 839,844 6,000
Donald L. Boudreau 1998 642,308 1,168,750 500,000 1,190,350 120,000 744,688 32,115
Vice Chairman, 1997 575,000 1,256,250 500,000 143,750 90,000 1,476,758 28,750
National Consumer Services
Marc J. Shapiro 1998 628,846 1,168,750 0 1,190,350 120,000 744,688 1,064,931
Vice Chairman, 1997 575,000 1,081,250 0 118,750 90,000 1,476,758 570,866
Finance and Risk
Management
</TABLE>
- ---------------
(1) Includes amounts paid or deferred during each year.
(2) All award information has been adjusted to reflect the 2-for-1 stock split
effective as of the close of business on May 20, 1998.
(3) Amounts shown are special merger-related bonuses awarded in 1996 to Messrs.
Shipley, Labrecque, Harrison and Boudreau payable in three equal
installments in June 1996, September 1997 and December 1998.
(4) All awards of restricted stock units are or were subject to certain vesting
requirements including continued employment and are valued as of the date of
grant. The amounts shown in the column include awards made in the year
indicated as well as awards made in the subsequent year but relating to the
performance bonus for the year indicated. They do not include forfeitable
awards that vest only if Common Stock price targets are met. Forfeitable
awards are reported when granted on the Long-Term Incentive Plan Awards
Table and, when vested, on the Summary Compensation Table as LTIP payouts.
Dividend equivalents are payable on all restricted stock units. The number
and aggregate market value of restricted stock units as of December 31, 1998
(including forfeitable awards and awards of restricted stock units made on
January 19, 1999 relating to the 1998 performance bonus) were as follows:
Mr. Shipley: 100,870 units ($7,161,770); Mr. Labrecque: 140,148 units
($9,950,508); Mr. Harrison: 75,071 units ($5,330,041); Mr. Boudreau 52,330
units ($3,715,430); and Mr. Shapiro: 38,016 units ($2,699,136).
(5) The 1998 LTIP payouts represent the market value of Common Stock distributed
when Long-Term Incentive Plan restricted stock units granted on January 20,
1998 at a stock price of $52.955 per share vested on July 13, 1998. The
vesting of these units was contingent upon Common Stock trading at an
average of $75 per share for ten consecutive business days. The 1997 and
1996 LTIP payouts represent the market value of Common Stock distributed
pursuant to the vestings of restricted stock units awarded in prior years,
the vesting of which was dependent on Common Stock trading at certain target
prices per share. In all cases, payouts reflected in this column would have
been forfeited if the stock price targets had not been met prior to the end
of the vesting periods.
(6) Principally includes employer contributions to 401(k) plans, except for Mr.
Shapiro. Amounts for Mr. Shapiro include allowances and reimbursements
related to his relocation to New York ($367,085 in 1997 and $722,651 in
1998) and tax reimbursements related to such payments ($177,093 in 1997 and
$310,837 in 1998).
14
<PAGE> 20
II. STOCK OPTION/SAR GRANTS TABLE -- 1998 GRANTS (1)
<TABLE>
<CAPTION>
% of Total
# of Options/SARs
Securities Granted Exercise
Underlying to All or Base Grant Date
Options/SARs Employees Price Expiration Present
Name Granted in 1998 ($/Share) Date Value(2)(3)
---- ------------ ------------ --------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Walter V. Shipley 300,000 0.91 $ 52.955 1/20/2008 $5,105,393
Thomas G. Labrecque 300,000 0.91 $ 52.955 1/20/2008 $5,105,393
William B. Harrison Jr. 220,000 0.67 $ 52.955 1/20/2008 $3,743,955
Donald L. Boudreau 120,000 0.36 $ 52.955 1/20/2008 $2,042,157
Marc J. Shapiro 120,000 0.36 $ 52.955 1/20/2008 $2,042,157
</TABLE>
- ---------------
(1) All award information has been adjusted to reflect the 2-for-1 stock split
effective as of the close of business on May 20, 1998. All grants were
nonqualified stock options and become exercisable in four equal annual
installments beginning on January 20, 1999.
(2) Present values on the grant dates were determined by using the Black-Scholes
option pricing model modified to take dividends into account. The model as
applied used the applicable grant dates, the exercise prices shown on the
table, and the fair market value of Common Stock on the respective grant
dates, which was in each case the same as the exercise price. The model
assumed (i) a risk-free rate of return of 5.57%, which was the implied rate
on 10-year U.S. Treasury zero coupon bonds on the grant date; (ii) a stock
price volatility of 23%; (iii) a constant dividend yield of 2.34%, which was
based on the historical Common Stock dividend as of the grant date; and (iv)
the exercise of all options on the final day of their 10-year terms. No
discount from the theoretical value was taken to reflect the waiting period
prior to vesting, the limited transferability of the options and the
likelihood of the options being exercised in advance of the final day of
their terms.
(3) There is no assurance that the values actually realized upon the exercise of
these options will be at or near the present values shown in the table as of
the date of grant. The Black-Scholes option pricing model is a widely used
mathematical formula for estimating option values that incorporates various
assumptions that may not hold true over the 10-year life of these options.
For example, assumptions are required about the risk-free rate of return as
well as about the dividend yield on Common Stock and the volatility of the
Common Stock over the 10-year period. Also, the Black-Scholes model assumes
that an option holder can sell the option at any time at a fair price that
includes a premium for the remaining time value of the option. However, an
optionee can realize an option's value before maturity only by exercising
and thereby sacrificing the option's remaining time value. Although the
negative impact of this and other restrictions on the value of this type of
option is well recognized, there is no accepted method for adjusting the
theoretical option value for them. The values set forth in the table should
not be viewed in any way as a forecast of the performance of our Common
Stock, which will be influenced by future events and unknown factors.
- --------------------------------------------------------------------------------
III. AGGREGATED STOCK OPTION/SAR EXERCISES IN 1998 AND
OPTION/SAR VALUES AS OF YEAR-END 1998 (1)
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options/SARs In-the-Money Options/SARs
Shares as of December 31, 1998 as of December 31, 1998(3)
Acquired on Value --------------------------- ---------------------------
Name Exercise (#) Realized ($)(2) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ --------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Walter V. Shipley 75,000 $3,665,625 1,429,000 540,000 $73,425,758 $12,765,988
Thomas G. Labrecque 56,158 3,421,111 987,630 433,332 52,703,290 8,725,960
William B. Harrison Jr. 54,000 2,932,999 785,666 383,334 38,437,885 8,896,471
Donald L. Boudreau 20,800 1,267,126 359,138 180,000 18,642,131 3,656,022
Marc J. Shapiro 24,000 1,173,000 573,000 208,000 29,063,604 4,838,146
</TABLE>
- ---------------
(1) All award information has been adjusted to reflect the 2-for-1 stock split
effective as of the close of business on May 20, 1998.
(2) Amounts indicated include those values which would have been realized on
exercise but were deferred into Common Stock units. Most option exercises
were in connection with options expiring during 1998.
(3) Value based on $71.00 closing price per share of Common Stock on December
31, 1998.
15
<PAGE> 21
IV. LONG-TERM INCENTIVE PLANS -- 1998 AWARDS (1)
<TABLE>
<CAPTION>
Payout in Shares if average
Performance Period price of Common Stock for
Number of Until 10 consecutive business days
Name Shares(#)(2) Maturation or Payout is $82.50(3)
---- ------------ -------------------- ----------------------------
<S> <C> <C> <C>
Walter V. Shipley 45,000 01/20/98-01/25/03 22,500
Thomas G. Labrecque 45,000 01/20/98-01/25/03 22,500
William B. Harrison Jr. 30,000 01/20/98-01/25/03 15,000
Donald L. Boudreau 20,000 01/20/98-01/25/03 10,000
Marc J. Shapiro 20,000 01/20/98-01/25/03 10,000
</TABLE>
- ---------------
(1) All award information has been adjusted to reflect the 2-for-1 stock split
effective as of the close of business on May 20, 1998. All payouts are in
shares of Common Stock.
(2) These restricted stock units were granted on January 20, 1998 at a stock
price of $52.955 per share and would be forfeited if the applicable target
prices were not met by January 25, 2003. One-half of the restricted stock
units shown vested on July 13, 1998 in accordance with their terms when the
average price of Common Stock for ten consecutive business days exceeded $75
per share. The value of those shares is included in the Summary Compensation
Table under the heading "LTIP Payouts".
(3) The restricted stock units shown in this column vest when the average price
of Common Stock for 10 consecutive business days exceeds $82.50, but not
earlier than January 25, 2001. The price target for these units was met on
March 10, 1999, and the units will therefore vest in 2001 and will be
reported as an LTIP Payout for that year.
RETIREMENT BENEFITS AND TERMINATION ARRANGEMENTS
CHASE RETIREMENT PLAN. Most salaried employees of our subsidiary companies
participating in the Chase Retirement Plan earn benefits under the Plan if they
have been employed for at least one year. Benefits generally become vested after
five years of service. On a monthly basis, a bookkeeping account in a
participant's name is credited with an amount equal to a percentage of the
participant's base salary depending on years of credited service, as follows:
<TABLE>
<CAPTION>
Years of Credited Service % of Salary
------------------------- -----------
<S> <C> <C>
less than 4 4
4-6 5
7-10 6
11-15 8
16-20 10
21-25 12
26 or more 14
</TABLE>
These accounts also receive interest credits based on average U.S. Treasury
Bill rates for the previous year plus 1%. In addition, certain annuity benefits
earned by participants under prior plans of heritage Chase as of December 31,
1988, or the Corporation as of December 31, 1996, were converted to additional
credit balances under the Chase Retirement Plan as of January 1, 1997. When a
participant terminates employment, the amount credited to the participant's
account is converted into an annuity or paid to the participant in a lump sum.
SUPPLEMENTAL RETIREMENT BENEFITS. Supplemental retirement benefits are
provided to all of the executive officers and certain other participants under
various nonqualified, unfunded plans. Unfunded benefits are provided to certain
employees, including each executive officer, whose benefits under the Chase
Retirement Plan are limited by type of compensation or amount under applicable
federal tax laws and regulations. Designated employees may also receive an
unfunded annual benefit at retirement equal to a percentage of final average
base pay multiplied by years of service reduced by the amount of all benefits
received under the Chase Retirement Plan and other nonqualified, unfunded
arrangements. Chase also provides a fixed retirement benefit per year of service
to certain designated persons.
ESTIMATED ANNUAL RETIREMENT BENEFITS PAYABLE TO CERTAIN EXECUTIVE
OFFICERS. The following table shows the estimated annual retirement benefits,
including supplemental retirement benefits under the plans applicable to the
individuals, which would be payable to each executive officer listed if he were
to retire at age 65 at his 1998 base salary
16
<PAGE> 22
and payments were made in the form of a joint
and 50% surviving spouse annuity, which is the
normal form of payment for married employees.
Estimated Annual Retirement Benefits
<TABLE>
<CAPTION>
Year of Estimated
Name 65th Birthday Annual Benefit
---- ------------- --------------
<S> <C> <C> <C>
Walter V. Shipley 2000 $897,577(1)
Thomas G. Labrecque 2003 964,144(2)
William B. Harrison Jr. 2008 700,634(1)
Donald L. Boudreau 2005 617,616(2)
Marc J. Shapiro 2012 574,011(1)
</TABLE>
- ---------------
(1) Amounts include (i) interest credits for cash balances projected to be 5.5%
per year on annual salary credits and 6.9% per year on prior service
balances, if any, and (ii) accrued benefits as of December 31, 1998 under
retirement plans then applicable to the named executive officer. Benefits
are not subject to any deduction for Social Security payments.
(2) Certain persons who were participating in the heritage Chase retirement
plans and had met certain age and service requirements as of December 31,
1988 may elect to have retirement benefits for all of their years of service
up to their retirement calculated according to a final pay formula which is
determined by years of service less a part of the Social Security benefit
payable to the employee.
TERMINATION ARRANGEMENTS. As part of Chase's efforts to foster the
continued employment of key management personnel, Chase has termination
agreements with various members of senior management, including the named
executive officers. Under the general form of the agreement, Chase will provide
severance benefits upon a termination of employment, under applicable
conditions, in an amount equal to the product of two times (three times in the
case of Messrs. Shipley, Labrecque, Harrison and Boudreau) the sum of the
executive's (i) current annual rate of salary, plus (ii) bonus based on an
average bonus (expressed as a percentage of salary multiplied by the current
annual rate of salary of the executive). In addition, the executive may elect to
continue coverage under the applicable welfare benefit plans. In the event of a
termination qualifying an executive for severance, the executive's outstanding
stock options under Chase's Long-Term Incentive Plan would become vested and
remain exercisable following termination of employment. In addition, restricted
stock or similar awards under the Plan would vest, provided that if vesting of
any options or restricted stock awards is based on satisfaction of performance
criteria, then those awards will not vest until those criteria are satisfied. If
the executive were to incur federal excise tax in certain circumstances on any
severance payment or benefit, the executive would be entitled to an additional
cash payment to put the executive in the same position as if the excise tax were
not applicable.
ADDITIONAL INFORMATION ABOUT OUR DIRECTORS AND EXECUTIVE OFFICERS
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE. Our Directors and
executive officers file reports with the Securities and Exchange Commission and
the New York Stock Exchange indicating the number of shares of any class of our
equity securities they owned when they became a Director or executive officer
and, after that, any changes in their ownership of our equity securities. Copies
of any of these reports must also be provided to us. These reports are required
by Section 16(a) of the Securities Exchange Act of 1934. We have reviewed the
copies of the reports that we have received and written representations from the
individuals required to file the reports. Based on this review, we believe that
each of our executive officers and Directors has complied with applicable
reporting requirements for transactions in our securities during 1998.
EXTENSIONS OF CREDIT TO DIRECTORS AND OFFICERS. Our 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 our Directors, officers and their
associates,
17
<PAGE> 23
including corporations of which a Director is a director, officer or both. None
of these loans is preferential or nonperforming.
DIRECTOR AND OFFICER TRANSACTIONS AND OTHER BUSINESS RELATIONSHIPS. In the
ordinary course of business, we use the products or services of a number of
organizations of which Directors are officers or directors and in the future we
expect to have similar transactions with those organizations. Mrs. Kaplan is Of
Counsel to a law firm that provides certain legal services to us from time to
time. We believe that these transactions were on terms that were at least as
favorable to us as would have been available from other service providers.
COMPENSATION AND BENEFITS COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION. No member of the Compensation and Benefits Committee is or ever
was a Chase officer or employee. No member of the Committee is, or was during
1998, an executive officer of another company whose board of directors has a
comparable committee on which one of Chase's executive officers serves.
------------------------------------------------------------------------
PROPOSAL 2: APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed the firm of PricewaterhouseCoopers
LLP, 1177 Avenue of the Americas, New York, New York 10036, as independent
accountants to examine the financial statements of the Corporation and its
subsidiaries for the year ending December 31, 1999, and to perform other
appropriate accounting services. A resolution will be presented to the meeting
to ratify the appointment. The affirmative vote of a majority of the number of
votes entitled to be cast by the Common Stock represented at the meeting is
needed to ratify the appointment. If the stockholders do not ratify the
appointment of PricewaterhouseCoopers LLP, the selection of independent
accountants will be reconsidered by the Board of Directors.
PricewaterhouseCoopers LLP has examined the financial statements of Chase
since 1965. A member of PricewaterhouseCoopers LLP will be present at the
meeting and will be available to respond to appropriate questions by
stockholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR RATIFICATION
OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP.
------------------------------------------------------------------------
PROPOSAL 3: RE-APPROVAL OF KEY EXECUTIVE PERFORMANCE PLAN (KEPP)
KEPP was initially approved by the stockholders in 1994. We are seeking
re-approval in accordance with Section 162(m) of the Internal Revenue Code of
1986, as amended, and implementing regulations (the Code). KEPP, as amended, is
substantially the same as approved in 1994.
PURPOSE OF PLAN. KEPP was and is in response to provisions of Section
162(m) of the Code, which has the effect of eliminating a federal income tax
deduction for annual compensation in excess of one million dollars paid by Chase
to any officer required to be named in the Summary Compensation Table unless
that compensation is paid on account of attainment of one or more
"performance-based" goals. One requirement for compensation to be
performance-based is that the compensation is paid or distributed pursuant to a
plan that has been approved by the stockholders -- in this case, every five
years.
KEPP is consistent with Chase's historical emphasis on performance-based
compensation and its current compensation philosophy, as more fully described in
the Report of the Compensation and Benefits Committee set forth on pp. 11 and 12
of the Proxy Statement. Moreover, KEPP reflects Chase's belief in the need to
(i) recruit, motivate and retain senior officers through compensation and
benefits that are competitive with those of Chase's peer institutions and (ii)
enhance stockholder value by aligning the compensation of senior officers with
corporate performance and, to the extent possible, by preserving the tax-
deductibility of senior officer compensation.
SUMMARY OF PLAN. KEPP is administered by the Compensation and Benefits
Committee of the Board of Directors, which is composed of non-employee
Directors. KEPP provides for the determination each year of a bonus pool (the
bonus pool), which would be established by the Committee by the date permitted
by the Code.
18
<PAGE> 24
KEPP provides that the bonus pool for each year is (i) a percentage of
Chase's income before provision for income tax expense for that year less (ii)
an amount equal to a percentage of total stockholders' equity as of the
beginning of that year. Each year, the Committee establishes the percentages
applicable for that year. At the same time, the Committee may make provisions
for excluding the effect of extraordinary events and changes in accounting
methods, practices or policies on the amount of the bonus pool.
Coincident with the establishment of the bonus pool, the Committee will
allocate to each participant a share of the bonus pool; however, no participant
may receive an award under KEPP in excess of .002 of Chase's income before
income tax expense, extraordinary items and the effect of accounting changes for
the relevant calendar year (as reflected in Chase's Consolidated Statement of
Income) plus $1,000,000. This maximum is a limitation and does not represent a
target bonus. The bonuses provided under KEPP will be payable in the form of (i)
cash awards under KEPP and (ii) stock-based awards (other than options and
performance-based stock awards) under Chase's Long-Term Incentive Plan, in the
Committee's discretion. A participant's award may be reduced by the Committee at
any time before payment. Prior to any payments being made under KEPP, the
Committee will certify in writing, which may be in the form of minutes of
meetings of the Committee, that all of the performance goals and other material
terms of KEPP relating to the pertinent award have been met.
The Committee may permit any Chase employee to participate in KEPP.
However, it is anticipated that eligible employees would be limited to Chase's
chief executive officer and those other executive officers that the Securities
and Exchange Commission's proxy rules require to be named in our Proxy
Statement's executive compensation tables, currently five persons. All
compensation paid to these persons during 1998 under KEPP is disclosed in the
Summary Compensation Table on page 14 of this Proxy Statement. KEPP may be
amended by the Board of Directors at any time; however, no amendment that would
require stockholder approval in order for bonuses paid under KEPP to continue to
be deductible under the Code may be made without stockholder approval.
The affirmative vote of a majority of the total number of votes entitled to
be cast by holders of shares of Common Stock represented at the Annual Meeting
is needed to re-approve KEPP.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE PROPOSAL
TO RE-APPROVE THE KEY EXECUTIVE PERFORMANCE PLAN.
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<PAGE> 25
STOCKHOLDER PROPOSALS
If a majority of the shares of Common Stock entitled to vote at the meeting
are voted in favor of any of the following proposals, then the proposal will be
approved.
PROPOSAL 4: ANNUAL REPORTS OF POLITICAL CONTRIBUTIONS MADE BY CHASE
Mrs. Evelyn Y. Davis, Watergate Office Building, 2600 Virginia Avenue,
N.W., Suite 215, Washington, D.C. 20037, the holder of record of 1044 shares of
Common Stock, has advised the Corporation that she plans to introduce the
following resolution:
"RESOLVED: That the shareholders recommend that the Board direct management
that within five days after approval by the shareholders of this proposal, the
management shall publish in newspapers of general circulation in the cities of
New York, Washington, D.C., Detroit, Chicago, San Francisco, Los Angeles,
Dallas, Houston and Miami, and in the Wall Street Journal and U.S.A. Today, a
detailed statement of each contribution made by the Company, either directly or
indirectly, within the immediately preceding fiscal year, in respect of a
political campaign, political party, referendum or citizens' initiative, or
attempts to influence legislation, specifying the date and amount of each such
contribution, and the person or organization to whom the contribution was made.
Subsequent to this initial disclosure, the management shall cause like data to
be included in each succeeding report to shareholders. And if no such
disbursements were made, to have that fact publicized in the same manner."
"REASONS: This proposal, if adopted, would require the management to advise
the shareholders how many corporate dollars are being spent for political
purposes and to specify what political causes the management seeks to promote
with those funds. It is therefore no more than a requirement that the
shareholders be given a more detailed accounting of these special purpose
expenditures that they now receive. These political contributions are made with
dollars that belong to the shareholders as a group and they are entitled to know
how they are being spent."
"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 of Directors believes that it would not be in the best interests
of Chase and its stockholders to adopt this proposal. Chase does not, and may
not by law, use corporate funds to make political contributions in connection
with federal elections. On a very limited basis, some political contributions
are made by Chase to state or local candidates or committees and to non-federal
accounts of party committees, subject to the restrictions and reporting
requirements of applicable law. In all cases, these contributions are reported
by the recipient to the applicable election authority and are a matter of public
record.
The Chase Manhattan Corporation sponsors a political action committee
called the Fund For Good Government which makes political contributions to
federal, state and local candidates and committees. No corporate funds are used
to make these contributions; rather, monies in the Fund come solely from
voluntary contributions by Chase officers. Political contributions made by the
Fund For Good Government are determined by officers of the Bank's Government
Affairs Department, and, in some instances, a committee comprised of senior
officers representing the major areas of the Corporation. Contributions are
generally made by the Fund to office holders and candidates who are involved in
banking issues or other legislative matters which directly affect Chase. These
include issues as wide-ranging as corporate taxes, employee benefits, fee
restrictions, regulatory reform, or international trade. As required by law, all
contributions made by the Fund For Good Government are reported on a periodic
basis to the Federal Election Commission and to certain state election
authorities. Reports made to those agencies are a matter of public record; many
are now available on the Internet.
The Board of Directors believes that the disclosures currently being made
by Chase and the Fund For Good Government, as well as by the recipients of our
political contributions, are adequate and that any additional disclosures would
serve no useful purpose and constitute an unnecessary expense for Chase's
stockholders. Accordingly, the Board recommends a vote against this proposal.
20
<PAGE> 26
PROPOSAL 5: POLICY FOR LENDING TO, SERVICING, AND OPERATIONS IN, LESSER
DEVELOPED COUNTRIES
Sisters of Charity of St. Elizabeth, P.O. Box 476, Convent Station, NJ
07961-0476, beneficial owners of 1,500 shares of Common Stock, have advised
Chase that they intend to introduce the following resolution which is
co-sponsored by the Sisters of Charity of the Incarnate Word, P. O. Box 230969,
6510 Lawndale, Houston, Texas 77223-0969, The Passionists, 526 Monastery Place,
Union City, NJ 07087, Congregation of the Passion, 5700 N. Harlem Avenue,
Chicago, IL 60631-2342, Sisters of St. Joseph, St. Joseph Convent, 1725
Brentwood Road, Brentwood, NY 11717-5587, Sisters of Mercy of Connecticut, Inc.,
249 Steele Road, West Hartford, CT 06117, Mercy Consolidated Asset Management
Program, 20 Washington Square North, New York, NY 10011, Congregation of the
Mission, 3826 Gilbert Avenue, Dallas, TX 75219, and Dominican Sisters of Hope
Ministry Trust, 205 Avenue C, Apartment 10E, New York, NY 10009, each of whom
beneficially owns shares of Common Stock having a market value in excess of
$1,000:
EFFICIENT USE OF CAPITAL AND FINANCIAL STABILIZATION
"WHEREAS recent financial crises in less economically developed countries
(LDCs) have been exacerbated if not triggered by short-term capital flows and
the large amount of foreign portfolio investment relative to their small equity
markets;
"WHEREAS our corporation's balance sheet has been adversely affected by the
debt crisis of the 1980's as well as the more recent crises culminating in the
current East Asian melt-down, and therefore we believe that our corporation
should take steps that encourage the LDCs to develop better policies to minimize
these cyclic financial crises;
"WHEREAS we believe that the economic development of LDCs is often hampered
by a lack of internal investment by their own nationals, by poor regulation of
financial intermediaries and by the inefficient use of capital through
corruption and the lack of transparency in transactions, with the result of a
lack of indigenous business development required for stability;
"WHEREAS UNCTAD maintains that in Latin America much of the increase in
capital flows in the 1990s has been used for private consumption rather than
investment for development, and much of these capital in-flows have been short
term: for Mexico that short-term foreign debt increased to 16% of GDP by the
time of the 1994 crisis;
"WHEREAS economic crises have played havoc with small and medium sized
businesses in the LDCs because the high interest rates imposed by the IMF
arrangements have dried up the small amount of business credit for these
domestic firms and have resulted in massive bankruptcies and unemployment;
"WHEREAS in order to stem these flows while maintaining domestic interest
rates low enough to prevent massive bankruptcies in the present East Asia
crisis, the MIT economist Paul Krugman has taken the radical step to suggest
that exchange controls be used;
"WHEREAS we believe that our corporation can set policies which both serve
the long-term interests of our corporation in the LDCs and foster their balanced
economic growth;
"WHEREAS one goal should be to perform due diligence and lend to
creditworthy borrowers and provide services only to businesses with good
business practices;
"WHEREAS we also believe that controls on short-term capital flows could
diminish the extent of these recurring crises and thus provide for more stable
development, reducing our corporation's losses on loans and diminished profits
on services during crises; an example of such controls would be some variation
of those imposed by Chile which required a portion of all short-term funds to be
deposited with the central bank for a period of up to one-year.
"RESOLVED that, in order to diminish the effects on the corporation's
balance sheet of the cyclical financial crises of less developed countries, the
Board of Directors develop a policy for its lending and services to, and
operations in, LDCs to actively encourage the efficient use of capital and
financial stabilization, including the corporation's encouragement, support of
and continued services to LDCs that institute short-term capital controls."
21
<PAGE> 27
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL FOR THE
FOLLOWING REASONS:
To the extent the foregoing proposal seeks to further a stable
macroeconomic climate in which business activity can prosper, we support that
goal. However, we do not believe it would be in the best interests of
stockholders to support this proposal. The circumstances of individual countries
vary greatly, and so do the nature and scope of national efforts to address
those circumstances. Even if it were agreed that a particular remedy was helpful
in a particular case, no single remedy is likely to apply in all instances, and
the efficacy of any particular approach would depend on the context in which it
was applied, as well as the details of its structure and implementation. Chase
provides lending and other services to clients and counterparties based on our
assessments of such parties and subject to a variety of controls, including
country risk limits that are reviewed periodically and which we judge to be
appropriate. Accordingly, the Board recommends a vote against this proposal.
STOCKHOLDER PROPOSALS AND NOMINATIONS FOR THE 2000 ANNUAL MEETING
PROXY STATEMENT PROPOSALS. Under the rules of the Securities and Exchange
Commission, proposals that stockholders seek to have included in the Proxy
Statement for our next annual meeting of stockholders must be received by the
Secretary of Chase not later than November 26, 1999.
OTHER PROPOSALS AND NOMINATIONS. Our By-laws govern the submission of
nominations for director or other business proposals that a stockholder wishes
to have considered at a meeting of stockholders, but which are not included in
Chase's Proxy Statement for that meeting. Under our By-laws, nominations for
director or other business proposals to be addressed at our next annual meeting
may be made by a stockholder entitled to vote who has delivered a notice to the
Secretary of Chase no later than the close of business on February 18, 2000 and
not earlier than January 19, 2000. The notice must contain the information
required by the By-laws.
These advance notice provisions are in addition to, and separate from, the
requirements that a stockholder must meet in order to have a proposal included
in the Proxy Statement under the rules of the Securities and Exchange
Commission.
A proxy granted by a stockholder will give discretionary authority to vote
on any matters introduced pursuant to the above advance notice By-law
provisions, subject to applicable rules of the Securities and Exchange
Commission.
Copies of our By-laws may be obtained from the Secretary.
ANTHONY J. HORAN
SECRETARY
22
<PAGE> 28
LOCATION OF ANNUAL MEETING OF STOCKHOLDERS OF THE CHASE MANHATTAN CORPORATION
[LOCATION MAP]
Chase Manhattan Mortgage Corporation is located on 3415 Vision Drive in the
Easton development on the east side of Columbus, Ohio, approximately one mile
from I-270.
FROM I-270: Exit #33 at Easton.
Follow Easton Way west to Morse Crossing.
Turn Left onto Morse Crossing to Vision Drive.
Turn Right onto Vision Drive.
Annual Meeting of Stockholders of
The Chase Manhattan Corporation
Tuesday, May 18, 1999, at 11:00 a.m.
Chase Manhattan Mortgage Company
3415 Vision Drive
Columbus, OH 43219
NOTE: If you are a beneficial owner of Common Stock held by a broker, bank or
other nominee (i.e., in "street name"), you will need proof of ownership to be
admitted to the meeting. A recent brokerage statement or letter from a bank or
broker are examples of proof of ownership.
<PAGE> 29
[PRINTED ON RECYCLED PAPER LOGO]
<PAGE> 30
KEY EXECUTIVE PERFORMANCE PLAN
OF
THE CHASE MANHATTAN CORPORATION
AS AMENDED AND RESTATED
JANUARY 1, 1999
SECTION 1 - PURPOSE
1.1 The Key Executive Performance Plan of The Chase Manhattan Corporation
(the "Plan") is designed to attract and retain the services of selected
employees who are in a position to make a material contribution to the
successful operation of the business of The Chase Manhattan Corporation or one
or more of its Subsidiaries. The Plan shall become effective as of January 1,
1999, subject to approval by stockholders in the manner required by Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code").
SECTION 2 - DEFINITIONS
2.1 For purposes of this Plan, the following terms shall have the following
meanings:
(a) "Award" means an amount payable to a Participant pursuant to
Section 4 of this Plan.
(b) "Board of Directors" means the Board of Directors of the
Corporation.
(c) "Compensation Committee" or "Committee" means the Compensation
and Benefits Committee of the Board of Directors.
(d) "Corporation" means The Chase Manhattan Corporation.
<PAGE> 31
(e) "Participant" means an employee of the Corporation or of a
Subsidiary who has been designated by the Committee as eligible
to receive an Award pursuant to the Plan for the Plan Year.
(f) "Plan Year" means the calendar year.
(g) "Subsidiary" means (i) any corporation, domestic or foreign, more
than 50 percent of the voting stock of which is owned or
controlled, directly or indirectly, by the Corporation; or, (ii)
any partnership, more than 50 percent of the profits interest or
capital interest of which is owned or controlled, directly or
indirectly, by the Corporation; or (iii) any other legal entity,
more than 50 percent of the ownership interest, such interest to
be determined by the Committee, of which is owned or controlled,
directly or indirectly, by the Corporation.
SECTION 3 - DETERMINATION OF BONUS POOL
3.1 Not later than three months after the beginning of the Plan Year, the
Committee shall prescribe an objective formula pursuant to which a pool of funds
(a "bonus pool") will be created for that Plan Year. The bonus pool will consist
of a percentage, established by the Committee, of the Corporation's income
before income tax expense for that Plan Year in excess of a percentage,
established by the Committee, of total stockholders' equity of the Corporation
at the beginning of that Plan Year. At the time that it determines the bonus
pool formula, the Committee may make provision for excluding the
<PAGE> 32
effect of extraordinary events and changes in accounting methods, practices or
policies on the amount of the bonus pool.
SECTION 4 - AWARDS
4.1 Coincident with the establishment of the formula under which the bonus
pool will be created for a Plan Year the Committee shall assign shares of the
bonus pool for that Plan Year to those individuals whom the Committee designates
as Participants for that Plan Year; provided that such shares shall not exceed,
in the aggregate, 100% of the bonus pool. The maximum annual Award which can be
made to any one Participant for a Plan Year is the sum of (a) .2% of the
Corporation's total income before income tax expense, extraordinary items and
effect of accounting changes, as set forth on the Corporation's Consolidated
Statement of Income for such Plan Year and (b) $1 million.
4.2 Notwithstanding the provisions of Section 4.1, the Committee may, in
its sole discretion, reduce the amount otherwise payable to a Participant at any
time prior to the payment of the Award to the Participant.
SECTION 5 - ELIGIBILITY FOR PAYMENT OF AWARDS
5.1 Subject to Section 4.2, a Participant who has been assigned a share of
the bonus pool shall receive payment of an Award if he or she remains employed
by the Corporation or its Subsidiaries through the end of the applicable Plan
Year; provided, however, that no Participant shall be entitled to payment of an
Award hereunder until the Committee certifies in writing that the performance
goals and any other material terms
<PAGE> 33
of the Plan have in fact been satisfied. (Such written certification may take
the form of minutes of the Committee).
SECTION 6 - FORM AND TIMING OF PAYMENT OF AWARDS
6.1 Awards may be paid, in whole or in part, in cash, in the form of grants
of stock based awards (other than options) made under the Corporation's Long
Term Incentive Plan, as amended from time to time, or any successor plan, or in
any other form prescribed by the Committee, and may be subject to such
additional restrictions as the Committee, in its sole discretion, shall impose.
Where Awards are paid in property other than cash, the value of such Awards, for
purposes of the Plan, shall be determined by reference to the fair market value
of the property on the date of the Committee's certification required by Section
5.1. For this purpose the fair market of shares of common stock of the
Corporation on a particular date shall equal the "Fair Market Value" (as
determined under the Long-Term Incentive Plan as in effect on January 1, 1999)
of such shares on that date.
6.2 If an Award is payable in shares of common stock of the Corporation or
in another form permitted under the Long-Term Incentive Plan, such Awards will
be issued in accordance with the Long-Term Incentive Plan.
6.3 Subject to Sections 5 and 7 hereof, Awards shall be paid at such time
as the Committee may determine.
SECTION 7 - DEFERRAL OF PAYMENT OF AWARDS
7.1 The Committee may, in its sole discretion, permit a Participant to
defer receipt of a cash Award, subject to such terms and conditions as the
Committee shall impose.
<PAGE> 34
SECTION 8 - ADMINISTRATION
8.1 The Plan shall be administered by the Compensation Committee.
8.2 Subject to the provisions of the Plan, the Committee shall have
exclusive power to determine the amounts that shall be available for Awards each
Plan Year and to establish the guidelines under which the Awards payable to each
Participant shall be determined.
8.3 The Committee's interpretation of the Plan, grant of any Award pursuant
to the Plan, and all actions taken within the scope of its authority under the
Plan, shall be final and binding on all Participants (or former Participants)
and their executors.
8.4 The Committee shall have the authority to establish, adopt or revise
such rules or regulations relating to the Plan as it may deem necessary or
advisable for the administration of the Plan.
SECTION 9 - AMENDMENT AND TERMINATION
9.1 The Board of Directors or a designated committee of the Board of
Directors (including the Committee) may amend any provision of the Plan at any
time; provided that no amendment which requires stockholder approval in order
for bonuses paid pursuant to the Plan to be deductible under the Code, as
amended, may be made without the approval of the stockholders of the
Corporation. The Board of Directors shall also have the right to terminate the
Plan at any time.
<PAGE> 35
SECTION 10 - MISCELLANEOUS
10.1 The fact that an employee has been designated a Participant shall not
confer on the Participant any right to be retained in the employ of the
Corporation or one or more of its Subsidiaries, or to be designated a
Participant in any subsequent Plan Year.
10.2 No Award under this Plan shall be taken into account in determining a
Participant's compensation for the purpose of any group life insurance or other
employee benefit plan unless so provided in such benefit plan.
10.3 This Plan shall not be deemed the exclusive method of providing
incentive compensation for an employee of the Corporation and its Subsidiaries,
nor shall it preclude the Committee or the Board of Directors from authorizing
or approving other forms of incentive compensation.
10.4 All expenses and costs in connection with the operation of the Plan
shall be borne by the Corporation and its Subsidiaries.
10.5 The Corporation or other Subsidiary making a payment under this Plan
shall withhold therefrom such amounts as may be required by federal, state or
local law, and the amount payable under the Plan to the person entitled thereto
shall be reduced by the amount so withheld.
<PAGE> 36
10.6 The Plan and the rights of all persons under the Plan shall be
construed and administered in accordance with the laws of the State of New York
to the extent not superseded by federal law.
10.7 In the event of the death of a Participant, any payment due under this
Plan shall be made to his or her estate (or designated beneficiary, with respect
to amounts payable in the form of the common stock of the Corporation).
<PAGE> 37
PROXY
THE CHASE MANHATTAN CORPORATION
THIS PROXY IS SOLICITED FROM YOU BY THE BOARD OF DIRECTORS FOR USE AT THE
ANNUAL MEETING OF STOCKHOLDERS OF THE CHASE MANHATTAN CORPORATION ON MAY 18,
1999.
You, the undersigned stockholder, appoint each of John J. Farrell,
Frederick W. Hill and Thomas Jacob, your ATTORNEY-IN-FACT AND PROXY, WITH FULL
POWER OF SUBSTITUTION, TO VOTE ON YOUR BEHALF SHARES OF CHASE COMMON STOCK that
you would be entitled to vote at the 1999 Annual Meeting, and any adjournment of
the Meeting, with all powers that you would have if you were personally present
at the Meeting. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS INSTRUCTED
BY YOU 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.
VOTING BY MAIL. If you wish to vote by mailing this proxy, please sign
your name exactly as it appears on this proxy and mark, date and return it in
the enclosed envelope. When signing as attorney, executor, administrator,
trustee, guardian or officer of a corporation, please give your full title as
such.
VOTING BY INTERNET OR TELEPHONE. If you wish to vote by Internet or
telephone, please follow the instructions on the reverse side of the detachable
admission ticket below.
CHASE EMPLOYEES. If you are a current or former employee of Chase and have
an interest in Common Stock through the 401(k) Savings Plan, you proportionate
interest as of the latest available valuation date is shown on this card and
your vote will provide voting instructions to the Trustee of the Plan. If no
instructions are given, the Trustee will vote the shares pursuant to the terms
of the Savings Plan.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE.
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY OR VOTE BY INTERNET
OR TELEPHONE.
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
YOUR VOTE IS IMPORTANT!
YOU CAN VOTE IN ONE OF THREE WAYS:
1. Vote by Internet at our Internet Address:
[CHASE LOGO] http://www.eproxy.com/CMB/
OR
ADMISSION TICKET 2. Call TOLL-FREE 1-800-840-1208 on a touch tone
telephone and follow the instructions on the reverse
THE CHASE MANHATTAN side. There is NO CHARGE to you for this call.
CORPORATION
1999 Annual Meeting OR
of Stockholders
Tuesday, May 18, 1999 3. Mark, sign and date your proxy card and return it
11:00 AM promptly in the enclosed envelope.
at the offices of
Chase Manhattan
Mortgage Corporation PLEASE VOTE
3415 Vision Drive
Columbus, OH 43219
<PAGE> 38
Please mark
your votes as /X/
indicated in
this example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3.
WITHHOLD
FOR FOR ALL
Item 1 -- ELECTION OF DIRECTORS / / / /
Nominees:
01 Hans W. Becherer 09 Harold S. Hook
02 Frank A. Bennack Jr. 10 Helene L. Kaplan
03 Susan V. Berresford 11 Thomas G. Labrecque
04 M. Anthony Burns 12 Henry B. Schacht
05 H. Laurance Fuller 13 Walter V. Shipley
06 Melvin R. Goodes 14 Andrew G. Sigler
07 William H. Gray III 15 John R. Stafford
08 William B. Harrison Jr. 16 Marina v.N. Whitman
WITHHELD FOR: (Write nominee name(s) in the space
provided below).
_________________________________________________
FOR AGAINST ABSTAIN
Item 2 -- APPOINTMENT OF / / / / / /
INDEPENDENT
ACCOUNTANTS
FOR AGAINST ABSTAIN
Item 3 -- RE-APPROVE KEY / / / / / /
EXECUTIVE
PERFORMANCE PLAN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST ITEMS 4 AND 5
FOR AGAINST ABSTAIN
Item 4 -- STOCKHOLDER PROPOSAL -- / / / / / /
ANNUAL REPORTS OF
POLITICAL CONTRIBUTIONS
MADE BY CHASE.
FOR AGAINST ABSTAIN
Item 5 -- STOCKHOLDER PROPOSAL -- / / / / / /
POLICY FOR LENDING TO,
SERVICING, AND OPERATIONS
IN, LESSER DEVELOPED
COUNTRIES.
YES NO
WILL ATTEND MEETING / / / /
IF YOU VOTE BY INTERNET OR TELEPHONE AS INSTRUCTED BELOW, THERE IS NO NEED TO
MAIL BACK YOUR PROXY.
Signature(s)____________________________________________________ Date________
NOTE: Please sign your name as it appears above. When signing as attorney,
executor, administrator, trustee, guardian or officer of a corporation,
please give full title as such.
- -----------------------------------------------------------------------------
- FOLD AND DETACH HERE -
_______________________________________________________________
IF YOU WISH TO VOTE BY INTERNET OR TELEPHONE, PLEASE FOLLOW THE
INSTRUCTIONS BELOW.
_______________________________________________________________
HAVE YOUR PROXY CARD IN HAND.
TO VOTE BY INTERNET: Go to http://www.eproxy.com/CMB/
TO VOTE BY PHONE:
- On a touch tone telephone call Toll-Free 1-800-840-1208 -- 24 hours
a day -- 7 days a week.
- Enter your eleven-digit personal identification number which is
indicated in the box located in the lower right corner of this
instruction form.
__________________________________________________________________
Option 1: To vote as the Board of Directors recommends on all
proposals, Press 1. If you wish to vote on each
proposal separately, Press 0.
__________________________________________________________________
WHEN YOU PRESS 1, YOUR VOTE WILL BE CONFIRMED AND CAST AS YOU DIRECTED,
END OF CALL
__________________________________________________________________
Option 2: If you selected 0 to vote on each proposal separately,
you will hear the following instructions.
Proposal 1: To VOTE FOR ALL nominees, press 1;
To WITHHOLD FOR ALL nominees, press 9;
To WITHHOLD FOR AN INDIVIDUAL nominee, press 0,
enter the two digit number that appears next to
the name of the nominee for whom you DO NOT wish
to vote.
Once you have completed voting for Directors,
press 0.
Proposal 2: You may make your selection at any time.
To vote FOR, press 1;
To vote AGAINST, press 9;
To ABSTAIN, press 0
The instructions are the same for all remaining
proposals.
__________________________________________________________________
YOUR VOTE WILL BE REPEATED AND YOU WILL HAVE AN OPPORTUNITY TO
CONFIRM IT.
- You will be asked if you plan to attend the meeting. When prompted,
please respond.
IF YOU VOTE BY INTERNET OR TELEPHONE, THERE IS NO NEED TO MAIL BACK
YOUR PROXY CARD.
THANK YOU FOR VOTING
<PAGE> 39
[CHASE LOGO]
THE CHASE MANHATTAN CORPORATION
270 Park Avenue
New York, New York 10017-2070
March 25, 1999
Dear Fellow Shareholder:
In addition to the information contained in the enclosed Annual Report and
Proxy Statement, we are pleased to tell you of some important organizational
changes.
Almost four years ago, Tom and I set out as partners to form one of the
best financial services companies in the world, characterized by market
leadership positions, quality products, a focus on client relationships and a
team-based culture. As Chase's competitive financial performance in 1998
demonstrated, we have made outstanding progress.
From the outset we have been aware of the need to develop the next
generation of senior management and to orchestrate a smooth transition to them
at the appropriate time. Fifteen months ago, we formed a nine person Executive
Committee and started sharing more of our responsibilities with the members of
that committee in order to prepare them for an eventual transition.
Over the last year, we have had an extensive series of meetings with our
Board of Directors to consider the substance and timing of management
succession. We and the Board concluded that Chase has a wealth of talent on its
senior management team and that the next generation is ready to take over. The
Board has agreed with our recommendation that the right time for management
transition has come. The changes, effective June 1, 1999 are as follows:
- Tom will retire.
- Walter will continue as Chairman of the Board.
- Bill Harrison will become President and Chief Executive Officer.
As we went through the succession process with the Board, we were committed
to making decisions based upon what is in the best interests of shareholders,
customers, and employees. We are convinced that Bill Harrison is the right
person to continue that commitment and to lead Chase into the next century.
Bill is currently Vice Chairman of the Board of Chase, where he has served
since 1990. Since 1987, he has also been responsible for the operations of the
Global Bank, which consist of Chase's Investment Bank, Global Markets, middle
market, the private bank and private equity investing. He has been with Chase
for over 30 years and managed the successful integration of the wholesale
operations of Chemical Bank and Chase into one of the world's most profitable
wholesale-investment banks.
We have tremendous confidence in Bill and in Chase's management team and we
look forward to seeing them build on what we have all accomplished. Tom and I
very much appreciate your support, and we are sure you will extend the same
support to Bill.
Sincerely,
/s/ Walter V. Shipley /S/ Thomas G. Labrecque
Walter V. Shipley Thomas G. Labrecque
