<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>
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] 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:
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(4) Date Filed:
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<PAGE> 2
NOTICE OF 2000
ANNUAL MEETING
OF STOCKHOLDERS
AND PROXY
STATEMENT
Meeting Date: May 16, 2000
The Chase Manhattan Corporation
270 Park Avenue
New York, New York 10017-2070
Copyright 2000. The Chase Manhattan Corporation
All Rights Reserved
[CHASE LOGO]
<PAGE> 3
[CHASE LOGO]
THE CHASE MANHATTAN CORPORATION
270 Park Avenue
New York, New York 10017-2070
March 29, 2000
Dear Fellow Stockholder:
I am pleased to invite you to the Annual Meeting of Stockholders to be held on
May 16, 2000, at The Old Federal Reserve Bank Building, on Battery Street
between Clay and Sacramento Streets, San Francisco, California, near the offices
of Chase H&Q, the newest addition to the Chase family. 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,
William B. Harrison Jr.
Chairman 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 16, 2000
TIME: 10:00 a.m.
PLACE: Old Federal Reserve Bank Building
Battery Street, between Clay and Sacramento Streets
San Francisco, California
MATTERS TO BE VOTED ON:
- Election of directors
- Ratification of appointment of PricewaterhouseCoopers LLP as our
independent accountants for 2000
- Amendment of restated Certificate of Incorporation to increase authorized
Common Stock and to effect stock split
- Amendments to 1996 Long-Term Incentive 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 29, 2000
PLEASE VOTE PROMPTLY
<PAGE> 5
PROXY STATEMENT
TABLE OF CONTENTS
<TABLE>
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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..................... 7
Security Ownership of Management and Certain Other
Beneficial Owners..................................... 8
Executive Compensation................................. 10
Compensation and Benefits Committee Report on Executive
Compensation.......................................... 10
Comparison of Five-Year Cumulative Total Return........ 12
Executive Compensation Tables.......................... 13
I. Summary Compensation Table...................... 13
II. Stock Option/SAR Grants Table -- 1999 Grants.... 14
III. Aggregated Stock Option/SAR Exercises in 1999
and Option/SAR Values as of Year-End 1999....... 15
IV. Long-Term Incentive Plans -- 1999 Awards........ 15
Retirement Benefits and Termination Arrangements....... 16
Additional Information About Our Directors and
Executive Officers.................................... 17
PROPOSAL 2: APPOINTMENT OF INDEPENDENT ACCOUNTANTS.......... 18
PROPOSAL 3: AMENDMENT OF RESTATED CERTIFICATE OF
INCORPORATION TO INCREASE AUTHORIZED COMMON STOCK AND TO
EFFECT STOCK SPLIT........................................ 18
PROPOSAL 4: AMENDMENTS TO 1996 LONG-TERM INCENTIVE PLAN..... 20
STOCKHOLDER PROPOSALS....................................... 24
STOCKHOLDER PROPOSALS AND NOMINATIONS FOR THE 2001 ANNUAL
MEETING................................................... 27
APPENDIX A.................................................. [29]
</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 29, 2000.
------------------------------------------------------------------------
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 17, 2000. At the close of business
on that date, a total of [ ] 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 persons other
than those recording the vote.
VOTING BY PROXIES. If your Common Stock is held by a broker, bank or other
nominee, you will receive instructions from them that you must follow in order
to have your shares voted. If your broker, bank or other nominee uses ADP to
distribute proxy materials to its clients, you can vote your shares by telephone
or by Internet. You will receive instructions from your nominee.
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.
MATTERS TO BE PRESENTED. 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, the Proxies can vote your Common Stock 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 the Proxies vote
your Common Stock 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 nominee,
generally the nominee may only vote the Common Stock that it holds for you in
accordance with your instructions. Brokers who are members of the National
Association of
<PAGE> 7
Securities Dealers, Inc. may not vote shares held by them in nominee name unless
they are permitted to do so under the rules of any national securities exchange
to which they belong. Under the New York Stock Exchange Rules, a member broker
which has transmitted proxy soliciting materials to a beneficial owner may vote
on matters that the Exchange has determined to be routine if the beneficial
owner has not provided the broker with voting instructions within 10 days of the
meeting. 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. The New York Stock Exchange has advised that
all of the proposals in this Proxy Statement are "routine," except for:
[management's proposals three and four.]
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, 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 nominee name, you must get
a written proxy in your name from the broker, bank or other nominee who holds
your shares.
------------------------------------------------------------------------
PROPOSAL 1: ELECTION OF DIRECTORS
Our entire Board of Directors, consisting of fourteen 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 1999 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 that 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 16, 2000 and all other
biographical information is as of the date of this Proxy Statement.
2
<PAGE> 8
INFORMATION ABOUT THE NOMINEES
<TABLE>
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HANS W. BECHERER (AGE 65)
[PHOTO OF HANS W. BECHERER]
Chairman and Chief Executive Officer of Deere & Company. Mr.
Becherer is also a Director of Honeywell International Inc.
and Schering-Plough Corporation. Mr. Becherer became a
Director of the Corporation in 1998.
- -----------------------------------------------------------------------------------------------
[PHOTO OF FRANK A. BENNACK FRANK A. BENNACK JR. (AGE 67)
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.
- -----------------------------------------------------------------------------------------------
[PHOTO OF SUSAN V. SUSAN V. BERRESFORD (AGE 57)
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.
- -----------------------------------------------------------------------------------------------
[Photo of M. Anthony Burns] M. ANTHONY BURNS (AGE 57)
Chairman of the Board 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>
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H. LAURANCE FULLER (AGE 61)
[Photo of Laurance Fuller]
Co-Chairman of BP Amoco p.l.c. 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.
- -----------------------------------------------------------------------------------------------
[Photo of Melvin R. Goodes] MELVIN R. GOODES (AGE 65)
Retired Chairman of the Board and Chief Executive Officer of
Warner-Lambert Company. Mr. Goodes is also a Director of
Unisys Corporation. He became a Director of the Corporation
in 1986.
- -----------------------------------------------------------------------------------------------
[Photo of William H. Gray WILLIAM H. GRAY III (AGE 58)
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, and Warner-Lambert Company. He
had been a Director of heritage Chase since 1992, and became
a Director of the Corporation in 1996.
- -----------------------------------------------------------------------------------------------
WILLIAM B. HARRISON JR. (AGE 56)
[Photo of William B.
Harrison] Chairman and Chief Executive Officer. President and Chief
Executive Officer from June to December 1999, Vice Chairman
of the Board from 1991 to June 1999 and a Director of the
Corporation since 1991. Mr. Harrison is also a Director of
Dillard's, Inc. and Merck & Co., Inc.
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</TABLE>
4
<PAGE> 10
<TABLE>
<S> <C>
HAROLD S. HOOK (AGE 68)
[Photo of Harold S. Hook
III] 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 Duke
Energy Corporation and Sprint Corporation. He became a
Director of the Corporation in 1987.
- -----------------------------------------------------------------------------------------------
[Photo of Helene L. Kaplan] HELENE L. KAPLAN (AGE 66)
Of Counsel to the firm of Skadden, Arps, Slate, Meagher &
Flom LLP. Mrs. Kaplan is also a Director of Bell Atlantic
Corporation, Exxon Mobil Corporation, The May Department
Stores Company and Metropolitan Life Insurance Company. She
became a Director of the Corporation in 1987.
- -----------------------------------------------------------------------------------------------
[Photo of Henry B. Schacht] HENRY B. SCHACHT (AGE 65)
Managing Director and Senior Advisor of E.M. Warburg, Pincus
& Co., LLC and Chairman-designate of the newly-announced
spin-off of Lucent Technologies, Inc. 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., Lucent Technologies, Inc.,
and The New York Times Company. He had been a Director of
heritage Chase since 1982, and became a Director of the
Corporation in 1996.
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</TABLE>
5
<PAGE> 11
<TABLE>
<S> <C>
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ANDREW C. SIGLER (AGE 68)
[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 General Electric Company and
Honeywell International Inc. He became a Director of the
Corporation in 1979.
- -----------------------------------------------------------------------------------------------
[Photo of John R. Stafford] JOHN R. STAFFORD (AGE 62)
Chairman, President and Chief Executive Officer of American
Home Products Corporation. Mr. Stafford is also a Director
of Bell Atlantic Corporation, Deere & Company and Honeywell
International Inc. He had been a Director of MHC since 1982,
and became a Director of the Corporation in 1991.
- -----------------------------------------------------------------------------------------------
[Photo of Marina v.N. MARINA V.N. WHITMAN (AGE 65)
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., 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>
6
<PAGE> 12
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. 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. During
1999, there were 13 meetings of the Board.
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 1999. All members of these committees are
non-employee directors.
<TABLE>
<S> <C>
AUDIT AND EXAMINING COMMITTEES -- 7 MEETINGS IN 1999
- --------------------------------------------------------------------------------------------------
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 the Corporation Susan V. Berresford
- - provide for reliable and timely financial information M. Anthony Burns (Chairman)
and statements
- - maintain compliance with Chase's ethical standards,
policies, plans and procedures, as well as applicable
laws and regulations
COMPENSATION AND BENEFITS COMMITTEE -- 8 MEETINGS IN 1999
- --------------------------------------------------------------------------------------------------
FUNCTIONS CURRENT MEMBERS
- - Determine compensation and benefits policies and H. Laurance Fuller
procedures Melvin R. Goodes
- - Approve senior officer compensation William H. Gray III
John R. Stafford (Chairman)
GOVERNANCE COMMITTEE -- 1 MEETING IN 1999
- --------------------------------------------------------------------------------------------------
FUNCTIONS CURRENT MEMBERS
- - Consider nominees for election to the Board, including Frank A. Bennack Jr.
any written recommendation by a stockholder that 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
Andrew C. Sigler (Chairman)
John R. Stafford
PUBLIC POLICY COMMITTEE -- 5 MEETINGS IN 1999
- --------------------------------------------------------------------------------------------------
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
Marina v.N. Whitman
RISK POLICY COMMITTEE -- 6 MEETINGS IN 1999
- --------------------------------------------------------------------------------------------------
FUNCTIONS CURRENT MEMBERS
- - Act in a general advisory capacity to management in Harold S. Hook
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
- - Review the fiduciary and investment advisory activities
of our subsidiaries
</TABLE>
7
<PAGE> 13
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 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 $70,000 worth of
Common Stock.
Non-employee Directors are also included in a group term life insurance
policy and a business travel accident insurance policy. During 1999, Chase paid
average premiums for these coverages of approximately $1,494 per Director. A
Director may elect to participate in Chase's medical insurance coverage, with
the cost of the coverage paid by the Director.
Directors may invest in a pool of investments that become available to
Chase primarily through the activities of Chase Capital Partners.
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 be
deferred only as Common Stock and is distributable only in Common Stock.
Deferred cash compensation may be relinquished for benefits under a split-dollar
life insurance program.
------------------------------------------------------------------------
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN OTHER BENEFICIAL OWNERS
The following table shows the number of shares of Common Stock and Common
Stock equivalents beneficially owned as of December 31, 1999 by each nominee for
Director, the executive officers named in the Summary Compensation Table and all
nominees and executive officers as a group. Executive officers include those
persons who were executive officers as of December 31, 1999, including Walter V.
Shipley who retired as Chairman January 1, 2000. 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
1.0% of the outstanding Common Stock as of December 31, 1999. No nominee or
executive officer beneficially owns any Chase preferred stock.
Fidelity Management & Research Company (Fidelity), 82 Devonshire Street,
Boston, MA 02109, a wholly owned subsidiary of FMR Corp. and a registered
investment advisor, has filed a Schedule 13G dated February 11, 2000 with the
Securities and Exchange Commission. The following information is based upon such
filing. Fidelity indicated that as of December 31, 1999, in its capacity as
investment advisor to various mutual funds, it was the beneficial owner of
64,767,490 shares, or 7.9% of the Common Stock outstanding as of that date.
Edward C. Johnson 3(rd), FMR Corp., and the mutual funds advised by Fidelity
each has sole dispositive power of the shares held by the funds. Members of the
Johnson family may be deemed to control FMR Corp.
8
<PAGE> 14
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
Name of Individual Common Stock(1)
- ----------------------------------- ---------------
<S> <C>
Hans W. Becherer 6,196(2)
Frank A. Bennack Jr. 18,171(2)
Susan V. Berresford 9,550(2)
M. Anthony Burns 12,411(2)
H. Laurance Fuller 28,391(2)
Melvin R. Goodes 16,410(2)
William H. Gray III 12,664(2)
William B. Harrison Jr. 1,387,186(3)(4)(6)
Harold S. Hook 95,524(2)(5)
Helene L. Kaplan 22,830(2)
Donald H. Layton 850,896(3)
James B. Lee Jr. 629,194(3)(4)
Henry B. Schacht 18,616(2)
Marc J. Shapiro 943,538(3)
Walter V. Shipley 2,610,351(3)(4)(6)
Andrew C. Sigler 19,311(2)
John R. Stafford 24,581(2)(6)
Marina v.N. Whitman 15,746(2)(6)
All nominees and executive officers
as a group (29 persons) 10,266,760
</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: 1,467 shares; Ms. Berresford: 3,456 shares; Mr. Burns: 4,052
shares; Mr. Fuller: 8,824 shares; Mr. Gray: 6,135 shares; Mr. Harrison:
63,685 shares; Mr. Hook: 7,054 shares; Mrs. Kaplan: 2,388 shares; Mr.
Layton: 18,419 shares; Mr. Schacht: 8,824 shares; Mr. Shapiro: 130,698
shares; Mr. Shipley: 362,940 shares; Mr. Stafford: 4,794 shares; and all
nominees and executive officers as a group: 865,587 shares.
(2) 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: 1,689 units; Mr.
Bennack: 9,124 units; Ms. Berresford: 5,886 units; Mr. Burns: 4,816 units;
Mr. Fuller: 11,667 units; Mr. Goodes: 7,875 units; Mr. Gray: 6,529 units;
Mr. Hook: 51,962 units; Mrs. Kaplan: 12,642 units; Mr. Schacht: 9,376 units;
Mr. Sigler: 10,626 units; Mr. Stafford: 14,939 units; Dr. Whitman: 7,875
units; and all nominees as a group: 155,006 units.
(3) The amounts reported include shares of Common Stock that may be acquired on
or before March 1, 2000 through the exercise of stock options as follows:
Mr. Harrison: 1,076,000 shares; Mr. Shipley: 1,834,000 shares; Mr. Layton:
690,182 shares; Mr. Lee: 428,000 shares; Mr. Shapiro: 733,000 shares; and
all nominees and executive officers as a group: 7,263,160 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. Harrison: 112,446 shares; Mr. Shipley: 156,376
shares; Mr. Layton: 88,625 shares; Mr. Lee: 113,343 shares; Mr. Shapiro:
64,892 shares; and all nominees and executive officers as a group: 1,078,660
shares.
(4) The amounts reported include Common Stock allocated to accounts under a
Section 401(k) plan as follows: Mr. Harrison: 11,396 shares; Mr. Shipley:
56,204 shares; Mr. Lee: 5,430 shares; and all executive officers as a group:
87,688 shares.
(5) The amount reported includes beneficial ownership of 184 shares of Common
Stock owned through a controlled corporation.
(6) The amounts reported include shares for which beneficial ownership is
disclaimed as follows: Mr. Harrison: 20,166 shares; Mr. Shipley: 29,816
shares; Mr. Stafford: 600 shares; Dr. Whitman: 1,036 shares; and all
nominees and executive officers as a group: 64,848 shares.
9
<PAGE> 15
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 1999, 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 group will not correspond to the large list of
institutions that make up the financial index shown on page 12 of the Proxy
Statement.
RELATIONSHIP OF CORPORATE PERFORMANCE TO COMPENSATION. Compensation paid
to the Corporation's executive officers for 1999 consisted primarily of salary,
bonuses and awards of stock options and restricted stock awarded under the Key
Executive Performance Plan 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 as well as 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 management
indicators. In 1999, shareholder value added (cash net income less an explicit
charge for capital) was 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 1999 awards gave primary consideration to operating net income,
shareholder value added, 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 a several year period or upon retirement with consent 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
10
<PAGE> 16
individual's current and potential contribution to Chase's success.
In January 1999, the Committee granted stock options to executive officers
which become exercisable over four years and expire on January 19, 2009 and
performance accelerated restricted stock units. Fifty percent of 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 $110 for a ten-day period on
or before January 25, 2004. Twenty-five percent of the units vest only if the
price of Chase's Common Stock averages $125 for a ten-day period on or before
January 25, 2004. All awards vest in case of death or disability or retirement
with consent, 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
1999 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 1999, Chase stockholders renewed the Key Executive Performance Plan
(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 (i) a percentage
of corporate income before provision for income tax expense, extraordinary
items, and the effect of accounting changes, less (ii) an amount representing a
percentage of return on shareholders equity. 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 .002 of the Chase's income
before income tax expense, extraordinary items and effect of accounting changes
in the calendar year plus $1 million. The Committee may, based on other factors
reduce any incentive awards determined pursuant to this formula.
COMPENSATION ACTIONS IN 1999 FOR MR. HARRISON
The Committee increased Mr. Harrison's base salary to $1,000,000 in June
1999 in recognition of his promotion to Chief Executive Officer. The Committee
had last granted a base salary increase to Mr. Harrison in June 1998.
For 1999, the Committee, with the approval of the Board of Directors,
awarded Mr. Harrison under KEPP a performance bonus of $5,281,250 (a portion of
which was mandatorily deferred) and an award of 9,737 restricted stock units
which vest after three years. In making this award, the Committee gave primary
consideration to the specific financial results for 1999 summarized below. The
Committee also considered the Corporation's 1999 operating goals, including
goals related to leadership development and workforce diversity. The 1999 award
reflects the achievement of operating net income of $5.4 billion compared to
$4.0 billion in 1998. Shareholder value added increased by $2.8 billion versus
$1.4 billion in 1998. Operating return on average common stockholders' equity of
24.2% for 1999 compared with 18.4% in 1998. Diluted operating earnings per share
were $6.21 in 1999 compared to $4.51 in 1998 and operating revenues grew by 17%
in 1999 versus 11% in 1998.
In December 1999, the Committee awarded Mr. Harrison a special award of
600,000 nonqualified stock options with an exercise price of $74.3125 that vest
over five years. In January 1999, the Committee awarded to Mr. Harrison 220,000
nonqualified stock options with an exercise price of $73.50 that vest over four
years and 43,239 performance accelerated restricted stock units. These
restricted stock units vest as described above.
Dated as of January 18, 2000
COMPENSATION AND BENEFITS COMMITTEE
H. Laurance Fuller
Melvin R. Goodes
William H. Gray III
John R. Stafford (Chairman)
11
<PAGE> 17
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 and the S&P 500 for each of
the five years in the period commencing December 31, 1994 and ending December
31, 1999.
The results are based on an assumed $100 invested on December 31, 1994 and
the reinvestment of dividends.
[Comparison Performance Chart]
<TABLE>
<CAPTION>
CHASE S&P FINANCIALS INDEX S&P 500
----- -------------------- -------
<S> <C> <C> <C>
1994 100.00 100.00 100.00
1995 170.46 154.02 137.58
1996 267.23 208.20 169.17
1997 335.21 308.35 225.62
1998 444.39 343.58 290.10
1999 495.88 357.22 351.14
</TABLE>
12
<PAGE> 18
EXECUTIVE COMPENSATION TABLES
I. SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation(1) Long-Term Compensation
------------------------ --------------------------------------
Awards Payouts
------------------------- -------
Restricted Securities
Stock Underlying LTIP All Other
Awards Options/SARs Payouts Compensation
Name and Principal Position Year Salary($) Bonus($)(2) ($)(3) Granted(#) ($)(4) ($)(5)
--------------------------- ---- --------- ----------- ---------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
William B. Harrison Jr.
Chairman and CEO 1999 $ 930,769 $5,281,250 $2,307,783 820,000 $ 0 $ 46,539
(President and CEO June to 1998 769,231 5,072,917 2,182,400 220,000 1,117,032 38,462
December 1999) 1997 675,000 4,635,417 531,250 170,000 2,215,137 33,750
Walter V. Shipley 1999 1,100,000 10,000,000 2,383,017 300,000 0 55,000
Chairman through 1998 1,030,769 5,197,917 2,851,725 300,000 1,675,548 51,538
December 1999 (Chairman and 1997 950,000 5,197,917 468,750 240,000 3,544,220 47,500
CEO through May 1999)
Donald H. Layton 1999 500,000 7,031,250 2,028,253 120,000 0 625,000
Vice Chairman, Global
Markets, Global Services and
International
James B. Lee Jr. 1999 300,000 12,281,250 2,778,253 120,000 0 615,000
Vice Chairman, Global Client
Management and Investment
Banking
Marc J. Shapiro 1999 675,000 1,781,250 1,278,253 120,000 0 964,468
Vice Chairman, Finance, 1998 628,846 1,168,750 1,190,350 120,000 744,688 1,064,931
Risk Management and 1997 575,000 1,081,250 118,750 90,000 1,476,758 570,866
Administration
</TABLE>
- ---------------
(1) Includes amounts paid or deferred during each year.
(2) Amounts shown for 1997 and 1998 include for each of Messrs. Harrison and
Shipley a special merger-related bonus payable in three equal installments
in June 1996, September 1997 and December 1998, that was previously
disclosed in a separate column captioned Special Bonuses.
(3) 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, 1999
(including forfeitable awards and awards of restricted stock units made on
January 18, 2000 relating to the 1999 performance bonus) were as follows:
Mr. Harrison: 122,183 units ($9,492,092); Mr. Shipley: 156,376 units
($12,148,461); Mr. Layton: 101,749 units ($7,904,625); Mr. Lee: 136,626
units ($10,614,132); and Mr. Shapiro: 67,856 units ($5,271,563).
(4) 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 LTIP
payout represents 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.
(5) Principally includes employer contributions to 401(k) plans, except for
Messrs. Layton, Lee and Shapiro. Messrs. Layton and Lee, as well as other
executive officers and certain other employees, may invest on an after-tax
basis in a pool of investments which become available to Chase primarily
through the activities of Chase Capital Partners. The investment is in the
form of an interest in a limited partnership in which the general partner is
a Chase subsidiary. Chase makes a preferred equity capital contribution to
the partnership in an amount equal to three times the amounts invested by
the employee participants and is entitled to receive a fixed annual return
specified under the terms of the limited partnership agreement. Upon
distribution of partnership assets, Chase is entitled to a priority in the
return of its preferred equity contribution, plus the fixed annual return,
before distribution of any remaining assets to the partners based on their
capital contributions. During 1999, Messrs. Layton and Lee purchased limited
partnership interests in the partnership established for that year and Chase
made preferred equity contributions to that partnership in the amount of
$600,000 in respect of each of them, which amount is included in the total
indicated. Amounts for Mr. Shapiro include allowances and reimbursements
related to his relocation to New York ($367,085 in 1997, $722,651 in 1998
and $673,300 in 1999) and tax reimbursements related to such payments
($177,093 in 1997, $310,837 in 1998 and $257,418 in 1999).
13
<PAGE> 19
II. STOCK OPTION/SAR GRANTS TABLE -- 1999 GRANTS (1)
<TABLE>
<CAPTION>
% of Total
# of Options/SARs
Securities Granted Exercise
Underlying to All or Base Grant Date
Options/SARs Employees Price Expiration Present
Name Granted in 1999 ($/Share) Date Value(2)
---- ------------ ------------ --------- ---------- -----------
<S> <C> <C> <C> <C> <C>
William B. Harrison Jr. 220,000 1.5% $73.50 01/19/2009 $ 7,022,400
600,000 4.1 74.3125 12/21/2009 20,058,000
Walter V. Shipley 300,000 2.1 73.50 01/19/2009 9,576,000
Donald H. Layton 120,000 0.8 73.50 01/19/2009 3,830,400
James B. Lee Jr. 120,000 0.8 73.50 01/19/2009 3,830,400
Marc J. Shapiro 120,000 0.8 73.50 01/19/2009 3,830,400
</TABLE>
- ---------------
(1) All grants were nonqualified stock options and become exercisable in four
equal annual installments beginning on January 19, 2000, except Mr.
Harrison's grant expiring 12/21/2009, which becomes exercisable in five
equal annual installments beginning on December 21, 2000.
(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 price 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 which was the implied rate on 10-year
U.S. Treasury zero coupon bonds on the grant date; (ii) stock price
volatility; (iii) a constant dividend yield 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.
The specific assumptions used to value the option grants shown in the table
above were:
<TABLE>
<CAPTION>
Date of Grant Stock Price Risk Free Rate Dividend Yield Volatility
------------- ----------- -------------- -------------- ----------
<S> <C> <C> <C> <C>
01/19/1999 $ 73.50 6.73% 2.23% 34.0%
12/21/1999 74.3125 6.37 2.21 37.5
</TABLE>
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.
14
<PAGE> 20
III. AGGREGATED STOCK OPTION/SAR EXERCISES IN 1999 AND
OPTION/SAR VALUES AS OF YEAR-END 1999
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options/SARs In-the-Money Options/SARs
Shares as of December 31, 1999 as of December 31, 1999(2)
Acquired on Value --------------------------- ---------------------------
Name Exercise(#) Realized ($)(1) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- --------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William B. Harrison Jr. 38,000 $2,416,944 909,332 1,041,668 $46,734,620 $8,813,923
Walter V. Shipley 60,000 3,586,248 1,604,000 605,000 87,589,625 9,343,559
Donald H. Layton 0 0 600,182 240,000 31,845,395 3,674,361
James B. Lee Jr. 50,000 3,160,935 338,000 240,000 16,076,400 3,674,361
Marc J. Shapiro 18,000 1,095,750 643,000 240,000 34,848,076 3,674,361
</TABLE>
- ---------------
(1) 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 1999.
(2) Value based on $77.6875, the closing price per share of Common Stock on
December 31, 1999.
IV. LONG-TERM INCENTIVE PLANS -- 1999 AWARDS
<TABLE>
<CAPTION>
Payout in Shares if
average
price of Common Stock
for
10 consecutive business
Performance Period days is
Number of Until -----------------------
Name Shares(#)(1) Maturation or Payout $110 $125
---- ------------ -------------------- ---------- ----------
<S> <C> <C> <C> <C>
William B. Harrison Jr. 21,620 See footnote (2) 10,810 10,810
Walter V. Shipley 32,422 16,211 16,211
Donald H. Layton 14,414 7,207 7,207
James B. Lee Jr. 14,414 7,207 7,207
Marc J. Shapiro 14,414 7,207 7,207
</TABLE>
- ---------------
(1) These restricted stock units were granted on January 19, 1999 at a stock
price of $73.50 per share and will be forfeited if the applicable target
prices are not met on or before January 25, 2004.
(2) The restricted stock units will vest when the relevant target price is
reached, but in no event earlier than January 25, 2000 for units having a
$110 target price and no earlier than January 25, 2002 for those units
having a target price of $125.
15
<PAGE> 21
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>
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 compensation 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 1999 base salary 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(1)
<TABLE>
<CAPTION>
Year of Estimated
Name 65th Birthday Annual Benefit
- ---- ------------- --------------
<S> <C> <C>
William B. Harrison Jr. 2008 $1,088,602
Donald H. Layton 2015 756,349
James B. Lee Jr. 2017 449,081
Marc J. Shapiro 2012 958,347
</TABLE>
- ---------------
(1) Amounts include (i) interest credits for cash balances projected to be 6.4%
per year on annual salary credits and 8% per year on prior service balances,
if any, and (ii) accrued benefits as of December 31, 1999 under retirement
plans then applicable to the named executive officer. Benefits are not
subject to any deduction for Social Security payments.
Mr. Shipley retired as of January 1, 2000 at the age of 64 and began
receiving an annual pension of $1,600,000, payable as a 100% joint and
survivor annuity.
TERMINATION ARRANGEMENTS. As part of Chase's efforts to foster the
continued employment of key management personnel, Chase has termination
agreements with various members
16
<PAGE> 22
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 Mr. Harrison) 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 1999 with the
exception of the following reports, which were filed on behalf of the executive
officers noted within two weeks of their respective due dates: a Form 4 on
behalf of Donald L. Boudreau reporting the exercise and deferral of an expiring
option, and Form 5s on behalf of Donald H. Layton, Marc J. Shapiro and Robert S.
Strong reporting charitable gifts made by each during 1999.
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, 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 has provided and is expected during 2000 to provide
certain legal services to us from time to time. Mr. Schacht is a Managing
Director and Senior Advisor of E.M. Warburg, Pincus & Co., LLC, an investment
firm that manages various funds in which Chase subsidiaries invest from time to
time. In the ordinary course of business, Chase engages in various transactions
with, and provides various products and services to, FMR Corp., its subsidiaries
and funds advised by FMR Corp. and its affiliates. 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
1999, an executive officer of another company whose board of directors has a
comparable committee on which one of Chase's executive officers serves.
------------------------------------------------------------------------
17
<PAGE> 23
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, 2000, 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: APPROVAL OF AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION TO
INCREASE AUTHORIZED COMMON STOCK AND TO EFFECT STOCK SPLIT
OVERVIEW; PURPOSES AND EFFECTS OF PROPOSAL. On March 21, 2000, the Board of
Directors approved a proposal to amend Chase's restated Certificate of
Incorporation to increase the number of authorized shares of Common Stock from
1.5 billion to 4.5 billion shares and to effect a 3-for-2 split of the Common
Stock. The amendment and stock split will not affect the par value of the Common
Stock, which would remain $1 per share, or the number of authorized shares of
preferred stock, which would remain 200,000,000. The proposal to effect the
amendment and stock split requires the approval of holders of a majority of the
outstanding Common Stock. Holders of preferred stock are not entitled to vote on
the proposal. The text of the proposed amendment is set forth in the Appendix to
this Proxy Statement.
As of March 17, 2000, the record date for the Annual Meeting, [ ]
shares of Common Stock were issued, and outstanding including [ ] shares
held in Chase's treasury. Approximately [ ] million additional shares were
reserved for issuance under various Chase compensation and benefit plans. As of
March 17, 2000, Chase could issue [ ] shares of Common Stock.
The Board would like to increase the number of shares of Common Stock that
Chase can issue (i) to effect the 3-for-2 stock split declared by the Board and
(ii) to position Chase for possible future stock splits, stock dividends,
acquisitions, financings and other corporate purposes. The Board believes that
stock splits enhance the marketability of Common Stock by increasing the number
of shares while lowering the price per share to a range that may be more
attractive to investors, particularly individuals, and may as a result broaden
the market for Common Stock. Prior to the Board's approval of the proposed
3-for-2 stock split, the Board last approved a 2-for-1 stock split for
shareholders of record at the close of business on May 20, 1998.
After effecting the proposed 3-for-2 stock split, the additional share
authorization for which stockholder approval is requested would, for example,
enable the Board to declare a stock split in an amount up to a ratio of 2-for-1
without depleting the shares available for general corporate purposes.
Chase does not currently have any specific plans to issue any of the
additional shares of Common Stock except as necessary to effect the 3-for-2
split and as may be provided for in connection with any previously-announced
transactions under consideration. We are subject to some restrictions on our
ability to issue shares. New York Stock Exchange rules require stockholder
approval of issuances of a listed company's common stock under certain
circumstances, including when the number of shares to be issued equals or
exceeds 20% of the voting power outstanding (for Chase, currently, issuance of
more than approximately 165 million shares of Common Stock). However, unless
required by law, regulation or stock exchange rule
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or believed advisable by the Board of Directors, no further stockholder approval
would be sought for the issuance of any such newly authorized shares. While the
issuance of shares in certain instances may have the effect of forestalling a
hostile takeover, the Board does not intend or view the increase in authorized
Common Stock as an anti-takeover measure nor is Chase aware of any proposed or
contemplated transactions of this type.
Holders of Common Stock do not have preemptive rights to subscribe for
additional securities that may be issued by Chase, which means that current
stockholders do not have a prior right to purchase any new issue of Chase stock
in order to maintain their proportionate ownership interests. Newly authorized
shares would have the same rights as the presently authorized shares, including
the right to cast one vote per share and to receive dividends paid by Chase to
holders of Common Stock.
On March 21, 2000, the Board of Directors also announced an increase in the
dividend payable on the Common Stock to $0.48 per share, from $0.41 per share,
effective for the dividend payable on April 30, 2000 to holders of record of the
Common Stock at the close of business on April 6, 2000. If the stock split is
approved, dividends payable on the Common Stock after May 1, 2000 will be
proportionately adjusted. As a result, if the Board of Directors declares a
dividend on the Common Stock in the 2000 second quarter and makes no further
changes in dividend policy, the dividend on the Common Stock would be $0.32 per
share. Future dividend policies will be determined by the Board of Directors in
light of the earnings and financial condition of Chase and its subsidiaries and
other factors, including applicable governmental regulations and policies.
If adopted, we expect the amendment and the stock split would become
effective on May 17, 2000. This means that each holder of record of Common Stock
at the close of business on that date would become the record owner of one
additional share of Common Stock for every two shares of Common Stock then owned
of record by such holder.
If the proposed amendment is adopted and the stock split effected, please
keep your present stock certificates. They will remain valid for the number of
shares shown on them. Please do not destroy them and do not send them to Chase
or our transfer agent, ChaseMellon Shareholder Services (CMSS). We currently
expect that on or about June 9, 2000, the shares issued as a result of the stock
split will be distributed to all stockholders of record at the close of business
on May 17, 2000. No fractional shares will be issued. Instead, stockholders will
receive cash for any fractional shares due them in an amount equal to the value
of such fractional share based on the closing price of a whole share of Common
Stock as reported on the New York Stock Exchange Composite tape on May 17, 2000,
adjusted to give effect to the 3-for-2 split of the Common Stock.
Whether or not you are now participating in Direct Registration, a program
whereby your Chase shares are held in book entry form, the shares that are to be
distributed to you as a result of the split will be in book-entry form and
credited to a Direct Registration account established in your name at CMSS. On
or about June 9, 2000, CMSS will send you an advice that tells you the number of
shares you have received and, under separate cover, a check in an amount
representing the value of any fractional share due you. You may request a paper
stock certificate at any time. If you are not a registered stockholder and
instead hold your shares with a broker, bank or other nominee in street name,
your account statement will be adjusted to reflect the split.
If the stock split is effected, Chase will make appropriate adjustments to
the number of shares covered by, and, where applicable, the exercise prices of,
stock options and restricted stock awards outstanding or granted under its
stock-based benefit plans, in accordance with the provisions of those plans.
Shares covered by outstanding stock options or restricted stock awards would be
multiplied by 3/2 and the per share exercise prices of outstanding stock options
would be multiplied by 2/3. In addition, for plans under which stock
appreciation rights, stock units and similar stock-based awards are granted, the
number of rights or units covered would also be multiplied by 3/2 and, where
applicable, the per share exercise prices would be multiplied by 3/2.
Because the stock split will effectively increase the number of shares of
Common Stock representing a stockholder's investment in Chase by approximately
one and one-half times, stockholders may have to pay a higher brokerage
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commission to sell their investment after the stock split. Stockholders may wish
to consult their respective brokers to ascertain the brokerage commission that
would be charged for selling the greater number of shares.
FEDERAL INCOME TAX CONSEQUENCES. Chase has been advised by tax counsel
that the additional shares acquired pursuant to the proposed stock split would
result in no gain or loss or realization of taxable income to owners of Common
Stock under existing United States federal income tax laws. The cost basis for
federal tax purposes of original shares of Common Stock and new shares of Common
Stock would be apportioned between the original shares and those acquired as a
result of the split. The holding periods for the additional shares issued
pursuant to the stock split would be deemed to be the same as the holding
periods for the original shares of Common Stock. The cash received in lieu of a
fractional share would be reportable for income tax purposes as proceeds from
the sale of a capital asset with the appropriate allocation of basis to the
fractional share. The laws of jurisdictions other than the United States may
impose income taxes on the issuance of the additional shares. All stockholders
are urged to consult their tax advisors.
ACCOUNTING TREATMENT. If the stock split is effected, there will be no
change in Chase's total stockholders' equity, except for the aggregate cash
payments in lieu of fractional shares. The Common Stock capital account will be
increased to reflect the $1 per share par value of the additional shares issued
and the capital surplus account will be reduced by a like amount. The capital
surplus account will also be charged in an amount equal to the aggregate amount
paid out in lieu of fractional shares. The number of shares of Common Stock
issued and outstanding and held in the treasury would increase by one and
one-half times.
LISTING. Chase will apply to list the additional shares issued in the
stock split on the New York Stock Exchange and the London Stock Exchange, the
stock exchanges on which the Common Stock is currently listed.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF
THE PROPOSAL TO AMEND THE RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE
AUTHORIZED COMMON STOCK AND TO EFFECT THE STOCK SPLIT.
------------------------------------------------------------------------
PROPOSAL 4: APPROVAL OF AMENDMENTS TO 1996 LONG-TERM INCENTIVE PLAN
Chase's 1996 Long-Term Incentive Plan (the Plan) was adopted by the Board
of Directors on March 19, 1996 and became effective on May 21, 1996, after
approval by stockholders. On March 21, 2000, the Board of Directors adopted a
number of amendments to the Plan that will become effective upon approval by
stockholders at the Annual Meeting.
The Board of Directors recommends that the stockholders approve the
amendments to the Plan. Chase believes the Plan is an essential element in its
ability to attract, retain and reward selected employees and to align the
interests of its employees and stockholders. Chase further believes the Plan is
a critical tool allowing it to respond to the changing environment of the
financial services industry by permitting stock-based awards that meet the needs
of the various business units of Chase. The Plan is designed to permit Chase to
take a federal income tax deduction with respect to performance-based awards
made to named executive officers.
The amendments to the Plan for which stockholder approval is sought would:
-- Extend the expiration date of the Plan from May 21, 2001 to May 15,
2005.
-- Provide that, in addition to the shares under the 2% formula described
below and other continuing provisions, shares available for grant as
awards under the Plan include shares granted in lieu of cash payments
under any compensation arrangement or program.
-- Reduce the number of Other Stock-Based Awards (as described below),
such as restricted stock and restricted stock units, that can be
granted under the Plan from 33 1/3% to 25% of the aggregate number
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of shares available for grant in any calendar year.
-- Prohibit the repricing of outstanding stock options and stock
appreciation rights with lower exercise prices or their surrender for
new awards with lower exercise prices.
The Plan, as modified by these amendments, is described in more detail
below. Stockholder approval of these amendments will have the effect of
approving the amended and restated Plan as described below.
SUMMARY OF THE PLAN AS AMENDED
Purpose. The Plan is designed to encourage selected employees of Chase and
its subsidiaries to acquire a proprietary and vested interest in the growth and
performance of Chase. The Plan also serves to attract, retain and reward
employees of exceptional talent and permits Chase to respond in a flexible
manner to the changes within the financial services industry.
Administration. The Plan is administered by the Compensation and Benefits
Committee (the Committee) of the Board of Directors, no member of which may
receive awards under the Plan and each of whom is an "outside director" for
purposes of deductibility of performance-based awards under the Internal Revenue
Code (the Code). Subject to the specific limitations set forth in the Plan and
described below, the Committee has the authority, in its discretion, to
determine when awards will be granted, the award recipients, the size and type
of awards and all other provisions relating to an award, including form of
payment of an exercise price with respect to an option and the terms and
conditions with respect to vesting, cancellation and forfeiture of awards. It
also has the authority to modify and amend the terms and conditions of any
outstanding award, subject to Plan limitations. The Committee may delegate to
officers or employees of Chase responsibility for awards to officers and
employees not subject to 16(b) of the Securities Exchange Act of 1934.
Participants. All employees of Chase and its subsidiaries, including
entities in which Chase has a significant equity interest, whom the Committee
determines to have demonstrated significant management potential, contributed to
the successful performance of Chase and its subsidiaries or have the potential
to make such contributions in the future, may be selected by the Committee to
become participants in the Plan. Recipients of annual awards under the Plan
(about 6,000 employees) are not currently eligible to receive awards under
Chase's Value Sharing Program.
Number of Shares. The Plan continues to provide that 2% of the outstanding
shares of the Common Stock (including treasury shares) as of December 31st of
any year is available for grant as awards under the Plan in the next succeeding
calendar year. Based on the foregoing 2% formula, approximately 17.6 million
shares would be available for grant each year under the Plan.
The Plan continues to provide that the number of shares that were available
for grant as awards since the 1996 inception of the Plan, but were not granted,
as well as awards under the Plan that expire or are forfeited, currently in the
aggregate approximately 19 million shares, will be available for grant as
awards. The Plan, as amended, provides that shares available for grant as awards
include shares granted under the Plan in lieu of cash payments under any
compensation arrangement or program after May 16, 2000.
The Plan provides that during its term no more than 30 million shares may
be awarded as "incentive stock options" as defined in Section 422 of the Code.
The Plan, as amended, reduces the number of shares that can be awarded as
Other Stock-Based Awards in any calendar year from 33 1/3% to 25% of the shares
available for grant as awards in such calendar year.
Term. The amendments to the Plan, if approved by stockholders, will become
effective May 16, 2000. The Plan, as amended, will end on May 15, 2005, after
which date no awards may be made under the Plan.
Awards. The Plan provides for the issuance of stock-based awards to
employees of Chase and its subsidiaries, including nonqualified stock options,
incentive stock options, stock appreciation rights and Other Stock-Based Awards.
The Plan provides that the Committee may specify performance targets, the
satisfaction of which will cause an award to vest. Such performance targets
could include stock price,
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shareholder value added, earnings per share, income before or after income tax
expense, return on common equity, revenue growth, efficiency ratio, expense
management, return on investment, ratio of non-performing assets to performing
assets, return on assets, profitability or performance of an identifiable
business unit, and credit quality. In addition, where relevant, the foregoing
targets may be applied to Chase, one or more Chase subsidiaries or one or more
of Chase's divisions or business units. To ensure that the incentive goals are
aligned with stockholder interests, awards under the Key Executive Performance
Plan and similar programs may be paid or distributed, in whole or part, in the
form of Other Stock-Based Awards under the Plan.
Types of Awards
Stock Options. The Committee may award a stock option in the form of an
incentive stock option (as defined in Section 422 of the Code) or a nonqualified
stock option having such terms and conditions as the Committee may specify.
Options will expire no more than 10 years after the date they are granted. The
exercise price per share of Common Stock covered by a stock option is determined
by the Committee but cannot be less than 100% of the fair market value of a
share of Common Stock on the date of grant. The exercise price is payable in
such form and by such method as the Committee may specify.
Stock Appreciation Rights (SARs). SARs may be granted independently of any
stock option or in conjunction with all or any part of a stock option granted
under the Plan, upon such terms and conditions as the Committee may determine.
Upon exercise, an SAR entitles a participant to receive an amount equal to the
positive difference between the fair market value of one share of Common Stock
on the date the SAR is exercised and the exercise price, times the number of
shares of Common Stock with respect to which the SAR is exercised. An SAR or
applicable portion thereof shall terminate and no longer be exercisable upon the
termination or exercise of any related stock option. The Committee will
determine whether an SAR shall be settled in cash, Common Stock or any
combination thereof.
No Repricing. Except in connection with a change in Chase's capital
structure, the Committee may not reduce the exercise price of an outstanding
option or SAR or substitute a new option and/or SAR with a lower exercise price
in return for the surrender of an outstanding option or SAR.
Other Stock-Based Awards. The Committee may grant other types of awards of
Common Stock, or awards based in whole or in part by reference to the fair
market value of Common Stock (Other Stock-Based Awards). Such Other Stock-Based
Awards include, without limitation, restricted share units, restricted shares of
reference to the fair market value of Common Stock (Other Stock-Based Awards).
Such Other Stock-Based Awards include, without limitation, restricted share
units, restricted shares of Common Stock or performance shares or performance
share units. Nonqualified stock options or SARs may be awarded in connection
with or as a part of Other Stock-Based Awards. The Committee shall determine
whether any Other Stock-Based Awards shall be settled in cash, Common Stock or
any combination thereof.
Maximum Limits on Awards to a Participant. The Plan, as amended, continues
the individual maximum limits on the number of shares available for grant in the
form of stock options (or SARs) and Other Stock-Based Awards. These annual
limits per participant are 1,600,000 shares in the form of stock option awards
(or SARs) and 500,000 shares in the form of Other Stock-Based Awards, together
with, for each form of an award, a number of shares equal to the maximum number
of shares that the individual was eligible to receive under the Plan (utilizing
such annual limits) since its inception on May 21, 1996, less the number of
shares actually awarded to the participant under the Plan.
Deferrals. The Committee may permit the deferral of payment of any awards
under the Plan or may amend existing award agreements under any predecessor
plans to provide for a deferral feature.
Capital Structure Change and Adjustments to Awards. In the event there is
a change in the capital structure of Chase as a result of any stock dividend or
split, recapitalization, issuance of a new class of common stock, merger,
consolidation, spin-off or other similar corporate change, or any distribution
to stockholders of Common Stock other than regular cash dividends, the Committee
may make an equitable adjustment in the number
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of shares of Common Stock and forms of the award authorized to be granted under
the Plan (including any limitation imposed on the number of shares of Common
Stock with respect to which an award may be granted in the aggregate under the
Plan or to any participant) and to make appropriate adjustments (including
exercise price) to any outstanding awards.
Transferability. The Committee may permit participants to transfer certain
awards to an immediate family member or a trust for the benefit of immediate
family members. Generally, however, awards are not transferable other than by
will or the laws of descent and distribution.
Amendments and Termination. The Board of Directors may amend, suspend or
terminate the Plan at any time. However, except in the case of an adjustment in
connection with a capital structure change (as described above), stockholder
consent is required for any amendment to the Plan that would (i) increase the
number of shares that may be granted as awards under the Plan or the percentage
that may be granted as Other Stock-Based Awards, (ii) increase the maximum
number of shares to be granted to any participant as stock options (or SARs) or
the maximum to be granted as Other Stock-Based Awards to any participant or
(iii) eliminate or change the restrictions regarding the surrender and repricing
of options and SARs.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes the federal income tax consequences to
participants who may receive awards under the Plan and to Chase arising out of
the granting of such awards. The discussion is based upon interpretations of the
Code in effect as of March 1, 2000.
Incentive Stock Options. A participant will not be in receipt of taxable
income upon the grant or exercise of an incentive stock option (ISO). If the
participant holds the shares acquired on the exercise of an ISO for the
requisite ISO holding period set forth in the Code, he or she will recognize a
long-term capital gain or loss upon the subsequent sale or exchange of the
shares. (The requisite holding period requires that a participant make no
disposition of the shares transferred pursuant to the ISO within two years from
the date of grant or within one year after the transfer of such shares to the
participant.) In such case, Chase will not be entitled to a tax deduction. If a
participant does not hold the shares acquired on the exercise of an ISO for the
requisite holding period, he or she may be in receipt of ordinary income based
upon a formula set forth in the Code. To the extent that the amount realized on
such sale or exchange exceeds the market value of the shares on the date of the
ISO exercise, the participant will recognize capital gains. Chase will be
entitled to a tax deduction in the amount of the ordinary income reportable by
the participant. The excess of the fair market value on date of exercise of an
ISO of the shares acquired over the exercise price may in certain circumstances
be an "adjustment" for purposes of the alternative minimum tax.
Nonqualified Stock Options. Upon the grant of a nonqualified stock option,
a participant will not be in receipt of taxable income. Upon exercise of such
stock option, a participant will be in receipt of ordinary income in an amount
equal to the excess of the market value of the acquired shares over their
exercise price and will have tax basis in the stock equal to the exercise price
plus the ordinary income realized. Chase will be entitled to a tax deduction, in
the year of such exercise, equal to the amount of such ordinary income.
Stock Appreciation Rights. Upon the grant of SARs, a participant will not
be in receipt of taxable income. Upon the exercise of SARs, a participant will
be in receipt of ordinary income in an amount equal to any cash payment and the
market value of any shares distributed. Chase will be entitled to a tax
deduction equal to the income reportable by the participant.
Other Stock-Based Awards. The income tax consequences of the Other
Stock-Based Awards will depend on how such awards are structured. Generally,
Chase will be entitled to a deduction with respect to such awards only to the
extent that the participant recognizes ordinary income in connection with the
awards. In particular, Chase will be entitled to a tax deduction with respect to
awards to those named executive officers subject to limitations under Section
162(m) of the Code if such awards are subject to the achievement of
performance-based objectives specified by the Committee. It is anticipated that
Other Stock-Based Awards will generally result in ordinary income to the
participant in some amount.
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The affirmative vote of a majority of the number of votes entitled to be
cast by holders of shares of Common Stock represented at the Annual Meeting is
needed to approve the amendments to the Plan. Such approval will have the effect
of approving the amended and restated Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF
THE AMENDMENTS TO THE 1996 LONG-TERM INCENTIVE PLAN.
------------------------------------------------------------------------
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 5: 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 Chase that she plans to introduce the following
resolution:
RESOLVED: "That the shareholders of The Chase Manhattan Corporation
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 stringent 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
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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 constitutes a large, unnecessary expense for Chase's
stockholders.
PROPOSAL 6: DEVELOP POLICY FOR THE CANCELLATION OF LOANS TO HIPC COUNTRIES
The Sisters of Charity of St. Elizabeth, P.O. Box 476, Convent Station, New
Jersey 07961-0476, the holders of 1,000 shares of common stock, have advised the
corporation that they intend to introduce the following resolution which is
co-sponsored by The Passionist Community, 5700 N. Harlem Avenue, Chicago, IL
60631-2343; Sisters of Charity of the Incarnate Word, P.O. Box 230969, 6510
Lawndale, Houston, Texas 77223-0969; Sisters of Charity of Cincinnati, Mount St.
Joseph, Ohio 45051; American Friends Service Committee, 1501 Cherry Street,
Philadelphia, PA 19102-1479; The Marianist Society, Inc. (New York Province),
4301 Roland Avenue, Baltimore, MD 212210-2793; Mercy Consolidated Asset
Management Program, 20 Washington Square North, New York, NY 10011; Maryknoll
Fathers and Brothers, P.O. Box 305, Maryknoll, NY 10545-0305; and Sisters of St
Joseph of Carondelet, Albany Province, 385 Watervliet-Shaker Road, Latham, NY
12110-4799 each of whom is the beneficial owner of at least 1,000 shares of
Common Stock:
CHASE CANCELLATION OF THE DEBT OF COUNTRIES WITH EXCEPTIONALLY HIGH
EXTERNAL DEBT RELATIVE TO EXPORT EARNINGS
WHEREAS the Heavily Indebted Poor Countries (HIPC) program, which was
established by the World Bank and the IMF in 1996 to address both the unpayable
character and the social consequences of the debt overhang in lesser developed
nations, has been sharply criticized for being too little, too late, too
limited, too rigid and too unrealistic.
WHEREAS the leaders of the major industrialized countries at their G-7
summit in June 1999 endorsed a new initiative to enable these countries to
receive broader, faster debt relief by calling on International Financial
Institutions to develop a framework for linking debt relief with poverty
reduction that centers around better targeting of budgetary resources for
priority social expenditures for health, child survival, aids prevention,
education and greater transparency in government budgeting.
WHEREAS these debt relief initiatives should require the government of the
country receiving debt relief to establish a human development Fund through
transparent and participatory processes including civil society, the resources
of which Fund to be dedicated to reducing the number of persons living in
poverty, expanding access of the poorest members of society to basic social
services, indulging education, health, clean water and sanitation.
WHEREAS the G-7 also proposed lowering the threshold for relief to
countries whose debt-to-export ratio exceeds 150%, which expanded the number of
countries from the 41 of HIPC to a total of 46, of these 46 countries, 35 are in
Africa. These 5 added countries are Bangladesh, Cambodia, Comoros, Haiti and
Malawi.
WHEREAS the G-7 has called for total cancellation of all bilateral
concessional debt and asked for forgiveness of certain commercial debt,
including defaulted loans under the cover of bilateral export-import agencies.
WHEREAS U.S. banks hold total cross-border claims on the HIPC+5 countries
amounting to $1.4 billion as of the end of 1998, with an estimated $0.4 billion
to $0.5 billion subject to debt cancellation, being without guarantees and in
the public banking sectors.
WHEREAS we believe that our corporation should follow the initiative of the
G-7 to help promote a more transparent and businesslike structure in these
countries as well as to help promote human development by developing
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policies for debt cancellation of and future lending to these very heavily
indebted countries,
RESOLVED: that the Shareholders request the Board of Directors of Chase to
develop a policy for the cancellation of debt and new lending to the 46 HIPC+5
countries. The policy should include:
- The debt to be cancelled should include government and bank-sector debt of
medium and long-term original maturity without external guarantees, as well
as government and bank-sector short-term debt without external guarantees
that has been converted into medium and long-term debt.
- Conditions for cancellation should include country requirements that the
savings from the cancellation should be used by the indebted nation to
supplement present human development funding.
- Conditions for new lending should include transparency and accountability in
the use of these new funds.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL FOR THE
FOLLOWING REASONS:
The Board of Directors respects the concerns evidenced by the foregoing
proposal, but does not believe it is either necessary or appropriate to develop
new policies as recommended by the proponents. Chase's lending activities in the
countries referred to above are minimal. As a result, a Chase policy for the
cancellation of debt of such countries owed to Chase is neither necessary nor
relevant to the business of Chase. Also, as a general matter, we do not believe
that the adoption of a policy on debt forgiveness outside a formal framework
that includes all lenders is in the best interest of Chase and its stockholders.
As for new lending, Chase provides lending and other services to clients
and counterparties based on our assessments of the creditworthiness 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. Notwithstanding
broad classifications, the circumstances of individual countries and individual
borrowers vary greatly. Any future loans to any of the countries referred to
above would be considered on a case by case, country by country basis. We
believe that that approach has served shareholders well and should be continued.
PROPOSAL 7: REPORT ON UNDERWRITING CRITERIA RELATING TO A TRANSACTION'S
IMPACT ON ENVIRONMENT, HUMAN RIGHTS AND REPUTATION
Trillium Asset Management, on behalf of Greg and Maria-Jobin Leeds, 711
Atlantic Avenue, Boston, MA 02111-2809, the beneficial owners of 30 shares of
Common Stock, have advised Chase that they intend to introduce the following
proposal at the Annual Meeting:
WHEREAS: In May 1999, Chase Securities underwrote bonds for the China
Development Bank, whose largest outstanding lending commitment, according to the
bond prospectus, is to the Three Gorges Development Corporation;
Despite being imprisoned for ten months for speaking out against the
project, the Chinese journalist and author Dai Qing has compiled and published
numerous essays and field reports from Chinese scientists and intellectuals that
outline the irreversible economic and environmental impacts, technical problems,
loss of cultural antiquities, and potential catastrophic failure of the Three
Gorges Dam;
In February 1995, Human Rights Watch reported how the Chinese government
has planned to suppress dissent and forcibly relocate nearly two million people
to make way for the Three Gorges Dam;
In a memo dated September 1995, the US National Security Council advised
the US Export-Import Bank not to finance contracts connected to the Three Gorges
Dam because of environmental problems and human rights abuses connected to the
project, and because it was "concerned about the project's financial strength;"
In May 1996 US Export-Import bank announced they would not provide
guarantees and loans for transactions relating to the Three Gorges Dam based on
their environmental guidelines;
In March 1998, Chinese sociologist Wu Ming revealed significant corruption
and falsification of resettlement figures as well as a lack of sufficient
farmland, money or employment for the nearly two million people that must be
moved to make way for the Three Gorges Dam, thus indicating
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that the Chinese government may well require military force to relocate the
people;
In May 1999, Chinese Premier Zhu Rongji publicly admitted that there was
insufficient land in the neighboring Three Gorges area for those who would be
displaced by the proposed reservoir;
BankAmerica has pledged not to commit any direct lending to the Three
Gorges Project and not to finance an entity whose primary business is
construction of the Three Gorges project;
Over 150 financial institutions have endorsed the United Nations
Environmental Program (UNEP) Statement by Banks on the Environment, which states
that "we recognized that identifying and quantifying environmental risks should
be part of the normal process of risk assessment and management, both in
domestic and international operations;"
Even through indirect involvement in the Three Gorges Dam, Chase Manhattan
Bank risks exposing itself to negative publicity and possible boycott of its
consumer businesses;
BE IT RESOLVED: the shareholders request the Board to issue a report,
prepared at reasonable cost and omitting proprietary information, to
shareholders by October 2000, reviewing the underwriting criteria of Chase
Manhattan Bank with the view to incorporating and fully disclosing criteria
related to a transaction's impact on the environment, human rights and risk to
the company's reputation.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL FOR THE
FOLLOWING REASONS:
Chase has neither lent money to, nor arranged financing for, China's Three
Gorges development project. In 1999, Chase was one of a number of underwriters
of a bond offering of the China Development Bank, an entity that finances
infrastructure development in China. The proceeds of the offering were not
directed to any specific project.
As a general matter, Chase will, when circumstances make it appropriate,
consider noneconomic factors in evaluating a potential financing transaction,
including political and environmental factors. Also, in the context of the
impact of a given transaction on Chase's reputation, we recognize that our
reputation for integrity is our most valuable asset. Our statement of Chase
Values begins with the proviso that "our behavior is guided by fundamental
values that flow from a total commitment to integrity". This is the standard
that drives all of our businesses.
We do not, however, believe it would be beneficial to prepare and publish
general criteria related to a transaction's impact on the environment, human
rights and the company's reputation. There are wide differences from country to
country, from borrower to borrower, and from financing to financing. Of
necessity, the impact of a particular transaction depends upon a variety of
factors that are specific to that transaction. Wide differences in circumstances
necessitate flexible underwriting criteria, and most competitors of Chase do not
publish their criteria. As a result, we do not believe that it is in the
interest of Chase stockholders for us to prepare and publish our underwriting
criteria.
STOCKHOLDER PROPOSALS AND NOMINATIONS FOR THE 2001 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 [insert date 120 days before date of mailing]
2000.
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 15,
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<PAGE> 33
2001 and not earlier than January 16, 2001. 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
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APPENDIX A
Proposed Amendment to
Restated Certificate of Incorporation
of The Chase Manhattan Corporation
The first paragraph of Article FOURTH is hereby amended to read in its entirety
as follows: "FOURTH: The total number of shares of all classes of capital stock
that the Corporation shall have authority to issue is FOUR
BILLION SEVEN HUNDRED MILLION, of which TWO HUNDRED
MILLION shares shall be shares of preferred stock of the
par value of $1 per share (hereinafter called "Preferred
Stock") and FOUR BILLION FIVE HUNDRED MILLION shares shall
be shares of common stock of the par value of $1 per share
(hereinafter called "Common Stock")." Every two shares of
Common Stock, issued and outstanding or held in the
treasury of the Corporation immediately prior to the close
of business on such day when the amendment of this first
paragraph FOURTH of the restated Certificate of
Incorporation shall become effective, shall be subdivided
and changed and reclassified into three fully paid and
nonassessable shares of Common Stock, par value $1 per
share, of the Corporation, and at the close of business on
such date, each holder of record of Common Stock shall,
without further action, be and become the holder of one
additional share of Common Stock for every two shares of
Common Stock held of record by such holder immediately
prior thereto; provided, however, that the Corporation
shall not issue any fractional share and shall pay cash in
lieu of any fractional share in an amount equal to the
value of such fractional share based on the closing price
of a whole share of Common Stock as reported on the New
York Stock Exchange Composite tape on the effective date
hereof, adjusted to give effect to the 3-for-2 split of
the Common Stock."
<PAGE> 35
LOCATION OF ANNUAL MEETING OF STOCKHOLDERS OF
THE CHASE MANHATTAN CORPORATION, SAN FRANCISCO, CALIFORNIA
[LOCATION MAP]
NOTE: If you are a beneficial owner of Common Stock held by a broker, bank or
other nominee, 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> 36
[PRINTED ON RECYCLED PAPER LOGO]
<PAGE> 37
THE CHASE MANHATTAN CORPORATION
1996 LONG-TERM INCENTIVE PLAN
Restated and Effective as of May 16, 2000
1. PURPOSE. The purposes of The Chase Manhattan Corporation 1996
Long-Term Incentive Plan (the "Plan"), as amended and restated by the Board (as
defined below) on March 21, 2000 with certain amendments effective following
stockholder approval at the May 16, 2000 annual meeting, are to encourage
selected employees of the Company (as defined below) to acquire a proprietary
and vested interest in the growth and performance of the Company, to generate an
increased incentive to contribute to the Company's future success and
prosperity, thus enhancing the value of the Company for the benefit of
stockholders, to enhance the Company's ability to attract, retain and reward
employees of exceptional talent upon whom, in large measure, the sustained
progress, growth and profitability of the Company depends and to allow the
Company to respond to a changing business environment in a flexible manner.
The purposes of the Plan are to be achieved through the grant of
various types of stock-based awards.
2. DEFINITIONS. For purposes of the Plan, the following terms shall
have the meanings set forth in this Section 2:
(a) "Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(b) "Award" shall mean any type of stock-based award granted
pursuant to the Plan.
(c) "Board" shall mean the Board of Directors of CMC; provided
that any action taken by a duly authorized committee of the Board
within the scope of authority delegated to such committee by the Board
shall be considered an action of the Board for purposes of this Plan.
(d) "CMC" shall mean The Chase Manhattan Corporation, and,
except as otherwise specified in this Plan in a particular context, any
<PAGE> 38
successor thereto, whether by merger, consolidation, purchase of all or
substantially all its assets or otherwise.
(e) "Code" shall mean the Internal Revenue Code of 1986, as
from time to time amended.
(f) "Committee" shall mean the Compensation and Benefits
Committee of the Board (or any successor committee) or any subcommittee
thereof composed of not less than two directors, each of whom is a
"non-employee director" as defined in Rule 16b-3 promulgated by the
Securities and Exchange Commission under the Act, or any successor
definition adopted by the Commission and is an "outside director" for
purposes of Section 162(m) of the Code.
(g) "Common Stock" shall mean the common stock of CMC, par
value $1 per share.
(h) "Company" shall mean CMC and its Subsidiaries.
(i) "Employee" shall mean any employee of the Company.
(j) "Fair Market Value" shall mean, per share of Common Stock,
the average of high and low sale prices of the Common Stock as reported
on the New York Stock Exchange ("NYSE") composite tape on the
applicable date, or, if there are no such sale prices of Common Stock
reported on the NYSE composite tape on such date, then the average
price of the Common Stock on the last previous day on which high and
low sale prices are reported on the NYSE composite tape.
(k) "Other Stock-Based Award" shall mean any of those Awards
described in Section 9 hereof.
(l) "Participant" shall mean an Employee who is selected by
the Committee to receive an Award under the Plan.
(m) "Retirement" shall mean termination of employment with the
consent of the Committee after having satisfied such age and service
requirements as the Committee may specify in any Award agreement as
described in Section 11.
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<PAGE> 39
(n) "Subsidiary" shall mean any corporation that at the time
qualifies as a subsidiary of CMC under the definition of "subsidiary
corporation" in Section 424(f) of the Code, as amended from time to
time. Notwithstanding the foregoing, the Committee, in its sole and
absolute discretion, may determine that any entity in which CMC has a
significant equity or other interest is a "Subsidiary."
(o) "Total Disability" shall mean a physical or mental
incapacity, which would entitle the individual to benefits under a long
term disability program sponsored by the Company; provided that if an
individual has not elected coverage under the applicable program, the
Committee shall determine, utilizing the criteria of such program,
whether the individual has incurred a Total Disability.
3. SHARES SUBJECT TO THE PLAN. (a) Shares of Common Stock which may be
granted pursuant to Awards under the Plan may be either authorized and unissued
shares of Common Stock or authorized and issued shares of Common Stock held in
CMC's Treasury. Subject to adjustment as provided in Sections 3(b) and 15, the
number of shares of Common Stock with respect to which Awards may be granted
under the Plan in any calendar year shall be 2 percent of the total number of
shares of Common Stock outstanding on the last day of the preceding calendar
year (including treasury shares); provided that no more than a total of 30
million shares of Common Stock during the term of the Plan may be subject to
incentive stock options.
(b) In addition to the number of shares of Common Stock provided
for in Section 3(a), there shall be available for grant under the Plan in any
calendar year:
(i) the excess of (X) the total number of shares of Common
Stock with respect to which Awards could have been granted
in all preceding calendar years under Section 3(a) over
(Y) the total number of shares of Common Stock with
respect to which Awards shall have been granted during all
such calendar years;
(ii) to the extent not re-granted hereunder, the sum of
the number of shares of Common Stock allocable to (i) any
stock option granted under the Plan that expires or is
forfeited as to any shares of Common Stock covered thereby
(except with respect to a
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stock option which terminates on the exercise of a stock
appreciation right) and (ii) any other Award that expires
or is forfeited;
(iii) shares of Common Stock awarded under the Plan after
May 16, 2000 which are used to satisfy any obligation
under a compensation arrangement or program where the
compensation can be paid in either cash or shares of
Common Stock ; provided that such Awards shall also not
reduce the number of shares of available for grant under
Section 3(b)(i) and Section 3(b)(ii); and
(iv) the numbers of shares determined under Sections
3(b)(i) and 3(b)(ii) shall be adjusted to take into
consideration the split of Common Stock on May 20,1998.
4. ELIGIBILITY. All Employees who have demonstrated significant
management potential, have contributed to the successful performance of the
Company, or have the potential of making such contributions to the Company in
the future, in each case as determined by the Committee, are eligible to be
Participants in the Plan.
5. LIMITATIONS. (a) The Committee may not grant Other Stock-Based
Awards to Participants with respect to shares of Common Stock in excess of
twenty-five percent of the number determined to be available for issuance under
Section 3 for any calendar year.
(b) The Committee shall not grant stock options and stock appreciation
rights to any Participant with respect to more than 1.6 million shares of Common
Stock in any calendar year and shall not grant Other Stock-Based Awards to any
Participant with respect to more than 500,000 shares of Common Stock in any
calendar year except as otherwise specified in Sections 5(c) and 5(d).
(c) In addition to the annual limit specified in Section 5(b) with
respect to stock options and stock appreciation rights, there shall be available
for grant to a Participant in any calendar year an additional number of stock
options and stock appreciation rights equal to the excess of (i) the number that
could have been granted to such Participant under the Plan in all prior calendar
years, over (ii) the number actually granted, if any, in such prior calendar
years; provided that the foregoing numbers shall be adjusted to take into
consideration the split of
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<PAGE> 41
Common Stock on May 20, 1998.
(d) In addition to the annual limit specified in Section 5(b) with
respect to Other Stock-Based Awards, there shall be available for grant to a
Participant in any calendar year an additional number of Other Stock-Based
Awards equal to the excess of (i) the number that could have been granted to
such Participant under the Plan in all prior calendar years, over (ii) the
number actually granted, if any, in such prior calendar years; provided that the
foregoing numbers shall be adjusted to take into consideration the split of
Common Stock on May 20, 1998.
(e) The foregoing limitations of Section 5 shall not require the
aggregation of stock options and stock appreciation rights to the extent that
rights under the stock options or the stock appreciation rights terminate upon
the exercise of either.
6. ADMINISTRATION. The Plan shall be administered by the Committee. The
Committee may operate through subcommittees established by it, consisting of not
fewer than two members of the Committee. As to the selection of, and Awards to,
Participants who are not subject to Section 16 of the Act, the Committee may
delegate any or all of its responsibilities to officers or employees of the
Company.
Subject to the provisions of the Plan, the Committee shall be
authorized to interpret the Plan, to establish, amend, and rescind any rules and
regulations relating to the Plan, to determine the terms and provisions of any
agreements entered into hereunder, and to make all other determinations in its
discretion that it may deem necessary or advisable for the administration of the
Plan. The Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or in any Award in the manner and to the extent it
shall deem desirable to carry the Plan or any such Award into effect. The
determinations of the Committee in the administration of the Plan, as described
herein, shall be final and conclusive.
The validity, construction and effect of the Plan, and any rules
and regulations relating to the Plan shall be determined in accordance with the
laws of the State of New York without reference to principles of conflict of
laws.
7. STOCK OPTIONS. Any stock options granted under the Plan shall be in
such form as the Committee may from time to time approve and shall be subject to
the terms and conditions provided herein and such additional terms and
conditions
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<PAGE> 42
not inconsistent with the terms of the Plan, as the Committee shall deem
desirable.
Stock options may be granted to any Participant. In the case of
incentive stock options, the terms and conditions of such grants shall be
subject to and comply with such requirements as may be prescribed by Section 422
(b) of the Code, and any implementing regulations. The Committee shall establish
the option price at the time each stock option is granted, which price shall not
be less than 100% of the Fair Market Value of the Common Stock on the date of
grant; provided that the per share price of any stock option may not be
decreased after it has been granted (other than as provided for in Section 15);
provided, further, that an option may not be surrendered as consideration in
exchange for the grant of a new Award under this Plan if such Award were to have
a lower per share exercise price.
Stock options may not be exercisable later than 10 years after
their date of grant. The option price of each share of Common Stock as to which
a stock option is exercised shall be paid in full at the time of such exercise.
Such payment may be made at the sole discretion of the Committee, pursuant to
and in accordance with criteria and guidelines established by the Committee, as
the same may be modified from time to time, (i) in cash, (ii) by tender (in such
manner as the Committee shall authorize) of shares of Common Stock already owned
by the Participant, valued at Fair Market Value as of the date of exercise,
(iii) if authorized by the Committee, by delivery of a properly executed
exercise notice together with irrevocable instructions to a securities broker
(or, in the case of pledges, lender) approved by the Company to, (a) sell shares
of Common Stock subject to the option and to deliver promptly to the Company a
portion of the proceeds of such sale transaction on behalf of the exercising
Participant to pay the option price, or (b) pledge shares of Common Stock
subject to the option to a margin account maintained with a broker or lender, as
security for a loan, and such broker or lender, pursuant to irrevocable
instructions, delivers to the Company the loan proceeds, at the time of exercise
to pay the option price, or (iv) by any combination of (i), (ii), or (iii)
above.
8. STOCK APPRECIATION RIGHTS. Stock appreciation rights may be granted
independent of any stock option or in conjunction with all or any part of any
stock option granted under the Plan, either at the same time as the stock option
is granted or at any later time during the term of the option; provided that the
exercise price of a stock appreciation right granted in tandem with a stock
option shall not be less than 100% of the Fair Market Value at the date of the
grant of such option. Stock appreciation rights shall be subject to such terms
and
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<PAGE> 43
conditions as determined by the Committee, not inconsistent with the provisions
of the Plan; provided that the per share exercise price of any stock
appreciation right may not be decreased after it has been granted other than as
provided for in Section 15; provided, further, that a stock appreciation right
may not be surrendered as consideration in exchange for the grant of a new Award
under this Plan if such Award were to have a lower per share exercise price.
Upon exercise, a stock appreciation right shall entitle the
Participant to receive from the Company an amount equal to the positive
difference between the Fair Market Value of a share of Common Stock on the
exercise date of the stock appreciation right and the per share grant or option
price, as applicable, multiplied by the number of shares of Common Stock with
respect to which the stock appreciation right is exercised. A stock appreciation
right or applicable portion thereof allocated to a stock option shall terminate
and no longer be exercisable upon the termination or exercise of any related
stock option. In addition, the Committee shall determine at issuance or upon
exercise whether the stock appreciation right shall be settled in cash, Common
Stock or a combination of cash and Common Stock.
9. OTHER STOCK-BASED AWARDS. (a) Other Awards of Common Stock and
Awards that are valued in whole or in part by reference to, or otherwise based
on the Fair Market Value of Common Stock (all such Awards being referred to
herein as "Other Stock-Based Awards"), may be granted under the Plan in the
discretion of the Committee. Other Stock-Based Awards shall be in such form as
the Committee shall determine, including without limitation, (i) shares of
Common Stock, (ii) shares of Common Stock subject to restrictions on transfer
until the completion of a specified period of service, the occurrence of an
event or the attainment of performance objectives, each as specified by the
Committee, (iii) shares of Common Stock issuable upon the completion of a
specified period of service, and (iv) conditioning the right to an Award upon
the occurrence of an event or the attainment of one or more of performance
objectives, as more fully described in Section 9(b).
(b) Notwithstanding anything to the contrary herein, certain Other
Stock-Based Awards granted under this Section 9 may be granted in a manner which
is deductible by the Company under Section 162(m) of the Code (or any successor
section thereto) ("Performance-Based Awards"). A Participant's Performance-Based
Award shall be determined based on the attainment of written performance goals
approved by the Committee for a performance period established by the
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<PAGE> 44
Committee (i) while the outcome for that performance period is substantially
uncertain and (ii) no more than 90 days after the commencement of the
performance period to which the performance goal relates or, if less, the number
of days which is equal to 25 percent of the relevant performance period. The
performance goals, which must be objective, shall be based upon one or more of
the following criteria: (i) income before or after taxes (including income
before interest, taxes, depreciation and amortization); (ii) earnings per share;
(iii) return on common equity; (iv) expense management; (v) return on
investment; (vi) stock price; (vii) revenue growth; (viii) efficiency ratio;
(ix) credit quality; (x) ratio of non-performing assets to performing assets;
(xi) shareholder value added; (xii) return on assets; and (xii) profitability or
performance of identifiable business units. Additionally, the foregoing criteria
may relate to the CMC, one or more of its Subsidiaries or one or more of its
divisions or units. In addition, to the degree consistent with Section 162(m) of
the Code (or any successor section thereto), the performance goals may be
calculated without regard to extraordinary items. The maximum number of shares
awarded to a Participant in the form of a Performance-Based Award during a
calendar year shall be the aggregate number determined under Section 5(b), (c)
and (d) as applicable. The Committee shall determine whether, with respect to a
performance period, the applicable performance goals have been met with respect
to a given Participant and, if they have, to so certify and ascertain the amount
of the applicable Performance-Based Award. No Performance-Based Awards will be
paid for such performance period until the Committee makes such certification.
The amount of the Performance-Based Award actually paid to a given Participant
may be less than the amount determined by the applicable performance goal
formula, at the discretion of the Committee. The amount of the Performance-Based
Award determined by the Committee for a performance period shall be paid to the
Participant at such time as determined by the Committee in its sole discretion
after the end of such performance period; provided, however, that a participant
may, if and to the extent permitted by the Committee and consistent with the
provisions of Section 162(m) of the Code, elect to defer payment of the
Performance-Based Award.
(c) Subject to the provisions of the Plan, the Committee shall have the
sole and absolute discretion to determine to whom and when such Other
Stock-Based Awards will be made, the number of shares of Common Stock to be
awarded under (or otherwise related to) such Other Stock-Based Awards and all
other terms and conditions of such Awards. The Committee shall determine whether
Other Stock-Based Awards shall be settled in cash, Common Stock or a combination
of cash and Common Stock.
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<PAGE> 45
10. DIVIDENDS, EQUIVALENTS AND VOTING RIGHTS. Awards of Other
Stock-Based Awards in the form of restricted stock and restricted stock units
may provide the Participant with dividends or dividend equivalents; and Awards
of Other Stock-Based Awards in the form of restricted stock may provide for
voting rights prior to vesting.
11. AWARD AGREEMENTS. Each Award under the Plan shall be evidenced by
an agreement setting forth the terms and conditions, not inconsistent with the
provisions of the Plan, as determined by the Committee, which shall apply to
such Award. Such provisions may include, but are not limited to, those that
could result in a deferral of receipt of income, including that attributable to
the exercise of a stock option or vesting of Other Stock-Based Awards, and may
be imposed, in the discretion of the Committee, on Awards and awards under any
prior shareholder approved long term incentive plan of CMC.
The Committee may amend any Award agreement to conform to the
requirements of law, including the law of the jurisdiction where the Participant
resides.
12. WITHHOLDING. The Company shall have the right to deduct from all
amounts paid to any Participant in cash (whether under this Plan or otherwise)
any taxes required by law to be withheld therefrom. In the case of payments of
Awards in the form of Common Stock, at the Committee's discretion, the
Participant may be required to pay to the Company the amount of any taxes
required to be withheld with respect to such Common Stock, or, in lieu thereof,
the Company shall have the right to retain the number of shares of Common Stock
the Fair Market Value of which equals the amount required to be withheld.
Without limiting the foregoing, the Committee may, in its discretion and subject
to such conditions as it shall impose, permit share withholding to be done at
the Participant's election.
13. NONTRANSFERABILITY. No Award shall be assignable or transferable,
and no right or interest of any Participant in any Award shall be subject to any
lien, obligation or liability of the Participant, except by will, the laws of
descent and distribution, or as otherwise set forth in the Award agreement;
provided that with respect to Awards (other than an Award of an incentive stock
option) and awards under any prior shareholder approved long term incentive plan
of CMC, the Committee may, in its sole discretion, permit certain Participants
or classes of Participants to transfer Awards of nonqualified stock options or
Other Stock-Based Awards to such individuals or entities as the Committee may
specify.
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14. NO RIGHT TO EMPLOYMENT OR CONTINUED PARTICIPATION IN PLAN. No
person shall have any claim or right to the grant of an Award prior to the date
that an Award agreement is delivered to such person and the satisfaction of the
appropriate formalities specified in the Award agreement, and the grant of an
Award shall not be construed as giving a Participant the right to be retained in
the employ of the Company or to be eligible for any subsequent Awards. Further,
the Company expressly reserves the right to dismiss at any time a Participant
free from any liability or any claim under the Plan, except as provided herein
or in any agreement entered into hereunder.
15. ADJUSTMENT OF AND CHANGES IN COMMON STOCK. In the event of any
change in the outstanding shares of Common Stock by reason of any stock dividend
or split, recapitalization, issuance of a new class of common stock, merger,
consolidation, spin-off, combination or exchange of shares or other similar
corporate change, or any distributions to stockholders of Common Stock other
than regular cash dividends, the Committee may make such substitution or
adjustment, if any, as it deems to be equitable, as to the number or kind of
shares of Common Stock or other securities issued or reserved for issuance
pursuant to the Plan, including, but not limited to, adjustments with respect to
the limitations imposed by Sections 3 and 5 and the numerical limitations
imposed on individual Awards by Section 5 (without regard to the re-pricing
restrictions set forth in Sections 7 and 8) and to make appropriate adjustments
(including the number of shares and the exercise price) to outstanding Awards
(without regard to the re-pricing restrictions set forth in Sections 7 and 8).
16. AMENDMENT. The Board may amend, suspend or terminate the Plan or
any portion hereof at any time without stockholder approval, except to the
extent otherwise required by the Act. Notwithstanding the foregoing, except in
the case of an adjustment under Section 15, any amendment by the Board shall be
conditioned on stockholder approval if it increases (i) the number of shares of
Common Stock authorized for grant under Section 3, (ii) the percentage to be
awarded as Other Stock-Based Awards as set forth in Section 5(a) or (iii) the
number of shares authorized for grant to individual participants under any form
of an Award as set forth in Sections 5(b), 5(c) and 5(d), or if such amendment
eliminates restrictions applicable to the reduction of the exercise price of an
option or stock appreciation right or the surrender of such Award in
consideration for a new Award with a lower exercise price as set forth in
Sections 7 and 8.
17. UNFUNDED STATUS OF PLAN. The Plan is intended to constitute an
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<PAGE> 47
"unfunded" plan for long-term incentive compensation. Nothing herein shall
construed to give any Participant any rights with respect to unpaid Awards that
are greater than those of a general unsecured creditor of CMC.
18. SUCCESSORS AND ASSIGNS. The Plan and Awards made thereunder shall
be binding on all successors and assigns of the Company and each Participant,
including without limitation, the estate of such Participant and the executor,
administrator or trustee of such estate, or any receiver or trustee in
bankruptcy or representative of the Participant's creditors.
19. EFFECTIVE DATE. The amendments to the Plan specified in the Proxy
Statement in connection with the 2000 annual meeting of stockholders shall,
subject to stockholder approval, become effective May 16, 2000 (i.e. such
approval will have the effect of approving the amended and restated Plan). Any
other amendment to this Plan contained in this amended and restated Plan became
effective March 21, 2000. Subject to such stockholder approval, this amended and
restated Plan ends May 15, 2005, after which date no Awards may be granted under
the Plan. Absent such approval, no Awards under the Plan may be made after May
21, 2001.
11
<PAGE> 48
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 16,
2000.
You, the undersigned stockholder, appoint each of Dina Dublon, John J.
Farrell and Fredrick W. Hill 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 2000 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
BOARD OF 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 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, your 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 -
[CHASE LOGO]
ADMISSION TICKET
THE CHASE MANHATTAN CORPORATION
2000 Annual Meeting of Stockholders
Tuesday, May 16, 2000
10:00 AM at
The Old Federal
Reserve Bank Building
Battery Street, between Clay
and Sacramento Streets
San Francisco, California
YOUR VOTE IS IMPORTANT!
YOU CAN VOTE IN ONE OF THREE WAYS:
1. Vote by Internet at our Internet Address:
http://www.eproxy.com/CMB/
If you wish to access future stockholder communications on-line instead of
receiving printed materials by mail, please indicate your consent when you
vote by Internet.
OR
2. Call TOLL-FREE IN THE U.S., CANADA OR PUERTO RICO 1-800-840-1208 on a touch
tone telephone and follow the instructions on the reverse side. There is NO
CHARGE to you for this call.
OR
3. Mark, sign and date your proxy card and return it promptly in the enclosed
envelope. If you would like to view future stockholder communications
on-line, please let us know by checking the consent box when you mark your
proxy card.
PLEASE VOTE
If you wish to view our Proxy materials on-line, go to
http://www.chase.com/pages/aboutchase/invreln/am00
<PAGE> 49
Please mark
your votes as [X]
indicated in
this example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, 3 AND 4.
WITHHOLD
FOR FOR ALL
Item 1 -- ELECTION OF DIRECTORS [ ] [ ]
Nominees:
01 Hans W. Becherer 08 William B. Harrison Jr.
02 Frank A. Bennack Jr. 09 Harold S. Hook
03 Susan V. Berresford 10 Helene L. Kaplan
04 M. Anthony Burns 11 Henry B.Schacht
05 H. Laurance Fuller 12 Andrew C. Sigler
06 Melvin R. Goodes 13 John R. Stafford
07 William H. Gray III 14 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 -- APPROVAL OF INCREASE IN [ ] [ ] [ ]
AUTHORIZED COMMON STOCK
FOR AGAINST ABSTAIN
Item 4 -- APPROVAL OF AMENDMENTS [ ] [ ] [ ]
TO 1996 LONG-TERM
INCENTIVE PLAN
YES NO
WILL ATTEND MEETING [ ] [ ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST ITEMS 5 THROUGH 7
FOR AGAINST ABSTAIN
Item 5 -- STOCKHOLDER PROPOSAL -- [ ] [ ] [ ]
ANNUAL REPORTS OF
POLITICAL CONTRIBUTIONS
MADE BY CHASE.
FOR AGAINST ABSTAIN
Item 6 -- STOCKHOLDER PROPOSAL -- [ ] [ ] [ ]
LOANS TO HIPC COUNTRIES
FOR AGAINST ABSTAIN
Item 7 -- STOCKHOLDER PROPOSAL -- [ ] [ ] [ ]
REPORT ON UNDERWRITING
CRITERIA
CONSENT TO ELECTRONIC DELIVERY [ ]
By checking the box to the right, I consent to future access of the Annual
Report, Proxy Statements, prospectuses and other stockholder communications
on-line. I understand that unless I request otherwise or revoke my consent,
Chase will not distribute printed materials to me. Chase will tell me when any
communications are on-line and how to access them. I understand that costs
associated with the use of the Internet will be my responsibility. To revoke my
consent, I can contact Chase's transfer agent, ChaseMellon Shareholder Services
at 1-800-758-4651.
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
