<PAGE>
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:
[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 (S)240.14a-11(c) or (S)240.14a-12
Commerce Bancshares, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
LOGO
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 17, 1996
The annual meeting of the shareholders of Commerce Bancshares, Inc., will be
held in Salon I, Ritz-Carlton, St. Louis, One Ritz Carlton Drive, Clayton,
Missouri, on April 17, 1996, at ten o'clock a.m., St. Louis Time, for the
following purposes:
(1) To elect five directors to the 1999 Class for a term of three years;
(2) To consider and act upon a proposal to amend the Articles of
Incorporation to increase the authorized common stock; and
(3) To transact such other business as may properly come before the meeting
or any adjournment thereof.
The Board of Directors has fixed the close of business on February 29, 1996,
as the time as of which the shareholders of Commerce Bancshares, Inc.,
entitled to notice of and to vote at the meeting shall be determined.
By Order of the Board of Directors
J. Daniel Stinnett, Secretary
March 12, 1996
IT IS IMPORTANT THAT YOUR STOCK BE REPRESENTED AT THE MEETING. YOU ARE URGED
TO DATE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY.
<PAGE>
PROXY STATEMENT
COMMERCE BANCSHARES, INC.
ANNUAL MEETING APRIL 17, 1996
SOLICITATION:
This proxy statement is furnished in connection with the solicitation by the
Board of Directors of Commerce Bancshares, Inc. (the "Company"), P.O. Box
13686, Kansas City, Missouri 64199, of proxies to be used at the annual
meeting of shareholders of the Company to be held April 17, 1996. The cost of
solicitation of proxies will be borne by the Company. In addition to
solicitation by mail, proxies may be solicited personally or by telephone or
telegram by regular employees of the Company. Brokerage houses and other
custodians, nominees and fiduciaries may be requested to forward soliciting
material to their principals and the Company will reimburse them for the
expense of doing so. This proxy statement and proxy will be first sent to
security holders on or about March 12, 1996.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is exercised; there is no formal method
required for revocation.
VOTING SECURITIES AND OWNERSHIP THEREOF BY CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT:
Only shares at the close of business on February 29, 1996, are entitled to
vote at the meeting, and at the close of business on said date there were
outstanding 33,506,285 shares of common stock of the Company. Each holder of
common stock is entitled to one vote for each share held. In the election of
directors and, abstentions and broker nonvotes will be considered solely for
quorum purposes. In connection with the proposal to increase the authorized
shares of common stock, abstentions and broker nonvotes will be treated as
votes against the proposal. On all other matters presented for shareholder
vote, abstentions will be treated as votes against such matters and broker
nonvotes will have no effect on the outcome.
(a) Under applicable Securities and Exchange Commission Rules, beneficial
ownership of shares includes shares as to which a person has or shares voting
power and/or investment power. The only person, to the knowledge of the
Company, to own beneficially more than 5% of the outstanding common stock of
the Company as of February 29, 1996, was James M. Kemper, Jr., 1000 Walnut
Street, Kansas City, Missouri, having sole investment and sole voting power as
to 1,930,266 shares and shared voting and investment power as to 61,684 shares
(aggregating 5.4% of the class).
With respect to Commerce Bank, N.A. (Kansas City, MO) and its nominees, an
aggregate of 8,067,731 shares were held in various fiduciary capacities;
however, it beneficially owned with sole voting authority only % of the
Company's common stock. Commerce Bank has advised the Company that the shares
held by it and as to which it has sole voting power will be voted at the
annual meeting for the election of directors and for the increase in
authorized shares of common stock. Shares held in all other fiduciary accounts
will be voted as specifically directed by the co-trustees and co-executors.
Shares held in agency and custodial accounts will be voted by the owners. The
trust departments of the other subsidiary banks hold, in the aggregate with
sole voting power, less than 1% of the Company's outstanding shares.
(b) The following information pertains to the common stock of the Company
beneficially owned, directly or indirectly, by all directors and nominees for
director, the executive officers named in the Summary Compensation Table, and
by all directors, nominees and executive officers of the Company as a group as
of December 31, 1995. Such persons have sole voting and sole investment power
as to such shares unless otherwise noted.
1
<PAGE>
<TABLE>
<CAPTION>
NAME AND
ADDRESS OF
BENEFICIAL NUMBER PERCENT
OWNER OF SHARES OF CLASS
---------- --------- --------
<S> <C> <C>
Giorgio Balzer....................................... 2,225 **
Kansas City, Missouri
Fred L. Brown........................................ 2,097 **
St. Louis, Missouri
John O. Brown........................................ 57,252 **
Kansas City, Missouri 39,756(3)
W. Thomas Grant, II.................................. 4,582 **
Kansas City, Missouri
James B. Hebenstreit................................. 11,225 **
Kansas City, Missouri
David W. Kemper...................................... 4,602
Clayton, Missouri 55,382(1)*
420,234(2)
99,072(3) 1.6
James M. Kemper, Jr.................................. 1,930,266*
Kansas City, Missouri 61,684(4) 5.4
Jonathan M. Kemper................................... 5,871
Kansas City, Missouri 291,629(1)
331,461(5)
55,471(3) 1.9
Robert C. Matthews, Jr............................... 11,451
Kansas City, Missouri 32,154(3) **
Terry O. Meek........................................ 5,169 **
Springfield, Missouri
B. Franklin Rassieur, Jr............................. 5,636 **
St. Louis, Missouri
John H. Robinson, Jr................................. 556 **
Kansas City, Missouri
Dolph C. Simons, Jr.................................. 3,610 **
Lawrence, Kansas
L. W. Stolzer........................................ 213,286(6) **
Manhattan, Kansas
William A. Sullins, Jr............................... 46,199
St. Louis, Missouri 40,411(3) **
Andrew C. Taylor..................................... 4,690 **
St. Louis, Missouri
Robert H. West....................................... 4,397
Kansas City, Missouri 661(1)* **
All 26 directors, nominees and executive officers as
a group............................................. 2,207,370
(including those listed above) 347,672(1)
420,234(2)
266,864(3)
61,684(4)
331,461(5)
213,286(6) 10.2
</TABLE>
2
<PAGE>
- --------
(1) Shared voting power and investment power.
(2) Sole investment power, shared voting power with Mr. Jonathan Kemper.
Shares are not included in Mr. Jonathan Kemper's holdings.
(3) Shares which could be acquired within 60 days by exercise of options.
(4) Owned by corporation as to which Mr. James Kemper shares voting and
investment power with Mr. David Kemper; these shares are not included in
the share ownership of Mr. David Kemper. Both Messrs. Kemper disclaim
beneficial ownership as to such shares.
(5) Sole investment power, shared voting power with Mr. David Kemper. Shares
are not reported in Mr. David Kemper's holdings.
(6) Does not include 488,614 shares owned by spouse or by trust for benefit of
spouse. Mr. Stolzer disclaims beneficial ownership as to such shares.
* Mr. David Kemper disclaims beneficial ownership as to such shares; Mr.
James M. Kemper, Jr. disclaims beneficial ownership as to 181,910 shares;
and Mr. West disclaims beneficial ownership as to such shares.
** Less than 1%.
ELECTION OF DIRECTORS
Under the Articles of Incorporation and the By-Laws of the Company, the
Board of Directors is divided into three classes, each as nearly equal as
possible, and the Board is authorized to determine the number of persons
constituting the board. The Board has fixed the number of directors at
fifteen. Therefore, it is proposed that five directors (constituting one-third
of the board of directors) be elected at the meeting to serve until the 1999
annual meeting (the 1999 Class), and until their successors shall be elected
and qualified unless otherwise directed. The persons acting under the
accompanying proxy intend to vote for the election of the nominees hereinafter
named. Should any nominee become unable to accept nomination or election, it
is intended, unless otherwise directed, that the person acting under the proxy
will vote for the election of such other person as the Board of Directors of
the Company may recommend. The five nominees for election as directors who
receive the greatest number of votes cast for the election of directors at the
meeting, a quorum being present, shall become directors. Vacancies occurring
in a class during a term are filled by the Board pursuant to the Company's By-
Laws. There are no arrangements or understandings between any nominee and any
other person pursuant to which the nominee was selected.
The following information is provided with respect to each nominee:
PERIODS SERVED AS DIRECTOR
NAME AND AND BUSINESS EXPERIENCE
AGE DURING PAST 5 YEARS
-------- --------------------------
1999 CLASS:
W. Thomas Grant, II, 45.. Elected a director in June, 1983. In July, 1993,
Mr. Grant became Chairman of the Board and Chief
Executive Officer of Seafield Capital Corp. (known
as BMA Corp. until May, 1991), with subsidiaries
providing health care and insurance administration,
underwriting services and premium financing. Prior
to July 1993, Mr. Grant had been President and
Chief Executive Officer of Seafield Capital Corp.
James B. Hebenstreit, Elected a director in October, 1987. He is
49....................... President since January, 1992 (Executive Vice
President from September, 1989; Senior Vice
President since November, 1987) of Bartlett &
Company which is engaged in grain merchandising and
storage, flour milling and cattle feeding. Prior to
November, 1987, he had served as President of
Capital for Business, Inc., a subsidiary of the
Company, and Senior Vice President of the Company.
James M. Kemper, Jr., Elected a director in August, 1966. Mr. Kemper
74....................... served as Chairman of the Board of the Company
until November 1, 1991, when he retired as an
officer of the Company. Mr. Kemper serves as
President and as a director of Tower Properties
Company. Mr. Kemper is the father of David W.
Kemper and Jonathan Kemper.
3
<PAGE>
PERIODS SERVED AS DIRECTOR
NAME AND AND BUSINESS EXPERIENCE
AGE DURING PAST 5 YEARS
-------- --------------------------
John H. Robinson, Jr., Elected a director in August, 1995. He is the
45....................... Managing Partner of the Facilities Group of Black &
Veatch, an engineering, construction and technical
consulting services firm. He has served as a
director of Commerce Bank, N.A. (Kansas City, MO),
a subsidiary of the Company.
Dolph C. Simons, Jr., Elected a director in October 1992. Mr. Simons is
65....................... President of The World Company which is engaged in
newspaper publishing, printing and providing cable
television services in Kansas and Colorado. He has
served as a director of Commerce Bank, N.A. (Kansas
City, MO), a subsidiary of the Company.
The following directors of the Company are not nominees for election, and
their terms will continue after the 1996 annual meeting.
1998 CLASS:
Fred L. Brown, 55........ Elected a director in February, 1994. Mr. Brown is
President and Chief Executive Officer of BJC Health
System which provides acute, long-term care and
related health care services in Missouri and
southern Illinois. He is also a director of
Citation Computer Systems, Inc. and has served as a
director of Commerce Bank, N.A. (St. Louis, MO).
David W. Kemper, 45...... Elected a director in February, 1982. Mr. Kemper is
Chairman of the Board (since November, 1991),
President and Chief Executive Officer of the
Company and is Chairman of the Board of Commerce
Bank, N.A., (St. Louis, MO) a subsidiary of the
Company. He is also a director of Seafield Capital
Corporation, (known as BMA Corp. until May, 1991)
Wave Technologies International, Inc., Ralcorp
Holdings, Inc., and Tower Properties Company. Mr.
David Kemper is the son of James M. Kemper, Jr.,
and the brother of Jonathan M. Kemper. He served as
a director of Venture Stores, Inc. prior to
December, 1995.
B. Franklin Rassieur, Elected a director in April, 1986. Mr. Rassieur
Jr., 69.................. became Chairman of the Board of Paulo Products Co.,
Inc., in August, 1987, having served as President
prior thereto. The company is engaged in the
commercial heat treating, electroplating, and
furnace brazing services. Mr. Rassieur has served
as a director of Commerce Bank, N.A. (St. Louis,
MO), a subsidiary of the Company.
Andrew C. Taylor, 48..... Elected a director in February, 1990. Mr. Taylor is
President of Enterprise Rent-A-Car Company
(formerly Enterprise Leasing Co.) which is engaged
in automobile leasing, rental and related services.
He is also a director of General American Life
Insurance Company. Mr. Taylor has served as a
director of Commerce Bank, N.A. (St. Louis, MO), a
subsidiary of the Company.
Robert H. West, 57....... Elected a director in October, 1985. Mr. West is
Chairman of the Board and CEO of Butler
Manufacturing Company, a manufacturer of systems
and components for non-residential structures. He
is also a director of Kansas City Power & Light
Company. Mr. West has served as a director of
Commerce Bank, N.A., (Kansas City, MO), a
subsidiary of the Company. He formerly served as a
director of Santa Fe Pacific Corporation.
4
<PAGE>
PERIODS SERVED AS DIRECTOR
NAME AND AND BUSINESS EXPERIENCE
AGE DURING PAST 5 YEARS
-------- --------------------------
1997 CLASS:
Giorgio Balzer, 55....... Elected a director in December, 1990. Mr. Balzer
is, since August 1990, Chairman of the Board and
Chief Executive Officer of Business Men's Assurance
Company of America. He is also U.S. Representative
for Assicurazoni-Generali, S.p.A., an Italian
insurance group, and Chairman and CEO of its U.S.
Branch. He is also a director of Home Office
Reference Laboratory Inc., Jones and Babson, and
Transocean Holding Corp., a general financial
company in the U.S.
Terry O. Meek, 52........ Elected a director in April, 1989. Mr. Meek is
President of Meek Lumber Yard, Inc., which operates
a chain of builders' materials centers under the
name Meeks Building Centers. He has served as a
director of Commerce Bank, N.A. (Springfield, MO),
a subsidiary of the Company.
L. W. Stolzer, 61........ Elected a director in October, 1995. He is Chairman
of the Board of Commerce Bank, N.A. (Manhattan, KS)
and has served as a director of Commerce Bank, N.A.
(Kansas City, MO), a subsidiary of the Company.
The following directors currently serve as members of the audit committee of
the Board: Fred L. Brown, James B. Hebenstreit and Robert H. West, none of
whom is an officer of the Company. The audit committee annually receives the
proposal of the independent public accountants for the performance of audit
services for the Company and its subsidiaries, reviews the scope of audits to
be performed by the independent public accountants and the internal auditing
staff of the Company, reviews annually the program of the internal auditing
staff both with respect to audits performed in the prior year and scheduled
audits for the ensuing year and receives, reviews and takes action which it
deems appropriate with respect to reports submitted by the internal auditing
staff and the independent public accountants. The audit committee held four
meetings during 1995.
The Board of Directors has appointed a compensation and benefits committee
to review and establish compensation to be paid to officers of the Company and
to grant options pursuant to the Company's stock option plans. Directors
Giorgio Balzer, Terry O. Meek and Andrew C. Taylor presently comprise the
committee which held one meeting during 1995 for these purposes.
The Board of Directors has established a committee on directors for the
purpose of considering and recommending to the full Board the nominees for
election to the Board of Directors of the Company. W. T. Grant II, James B.
Hebenstreit and Dolph C. Simons, Jr., are presently members of the committee
which held one meeting in 1995. By mid-February of each year, the committee
makes its recommendations to the Board of its proposed slate of directors for
the class of director to be submitted to the shareholders of the Company at
the annual meeting to be held the following April. The committee will consider
shareholder nominations, which should be submitted in writing by the previous
October 31 to the Company's Secretary, J. Daniel Stinnett at its principal
office in Kansas City. The Board of Directors held six meetings during 1995.
Each director attended 75% or more of the total number of meetings of the
Board and meetings held by committees of the Board on which the respective
director served.
Under the Securities Exchange Act of 1934, the executive officers, directors
and persons who own more than 10% of the Company's equity securities are
required to file reports of ownership and changes therein with the Securities
and Exchange Commission with copies of such forms to be furnished to the
Company. Based solely on a review of the copies of such forms supplied to the
Company or representations that no Forms 5 were required, the Company believes
that during 1995 all filing requirements applicable to its executive officers,
directors and greater than 10% beneficial owners were complied with.
5
<PAGE>
Directors and officers of the Company and the nominees for directors and
their associates have deposit accounts with the subsidiary banks of the
Company, and some directors, nominees for directors and officers and their
associates also have other transactions with the subsidiary banks, including
loans in the ordinary course of business, all of which were made on
substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with other persons,
and did not involve more than normal risk of collectibility or present other
unfavorable features.
During 1995, subsidiaries of the Company paid Tower Properties Company
$340,087 in rentals, $12,231 in leasing fees, $297,522 for operation of
parking garages, and $80,460 in parking fees. Mr. James Kemper is President
and a director and Messrs. David Kemper and Jonathan Kemper are directors of
Tower Properties Company and together with members of their immediate families
own beneficially approximately 50% of the outstanding stock of Tower
Properties Company.
DIRECTOR COMPENSATION:
An employee of the Company or a subsidiary of the Company receives no
additional compensation for serving as a director. Non-employee directors of
the Company are required to participate in the Stock Purchase Plan for Non-
Employee Directors. Under this Plan, all compensation payable to a non-
employee director is credited to an account in the name of such director as
earned and the Company contributes to the account of such director an amount
equal to 25% of the compensation credited to the director's account. As of the
last business day of each month, the cash balance is used to purchase from the
Company whole shares of common stock of the Company based on the last sale
price of the Company's common stock on such date. Each non-employee director
of the Company contributes (as adjusted for the 25% contribution by the
Company) the annual retainer of $8,000 (paid on a quarterly basis), fees of
$1,750 for each meeting of the Board of Directors attended, and fees of $500
for attendance at each meeting of a committee of which the director was a
member and attended. Prior to Mr. James Kemper's retirement as an officer of
the Company on October 31, 1991, the Company entered into an agreement with
him whereby he would perform certain services for the Company for which he
will be paid at the annual rate of $100,000 per year. These services include
serving on various subsidiary banks' boards of directors, assisting in special
assignments in connection with the acquisition of additional banks and
providing other services where his experience and expertise can be utilized.
For his services for the year 1995, Mr. Kemper was paid $100,000. Mr. Kemper
receives no additional compensation for his services as a director of the
Company or of the subsidiary banks.
6
<PAGE>
EXECUTIVE COMPENSATION:
The following information is given as to the Chief Executive Officer ("CEO")
and as to each of the four most highly compensated executive officers of the
Company, other than the CEO, who received total cash compensation of more than
$100,000, during the fiscal year ended December 31, 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-----------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
---------------------------- --------------------- -------
(E) (I)
OTHER (F) (G) ALL
ANNUAL RESTRICTED SECURITIES (H) OTHER
(A) (C) (D) COMPEN- STOCK UNDERLYING LTIP COMPEN-
NAME AND PRINCIPAL (B) SALARY BONUS SATION AWARDS OPTIONS/ PAYOUTS SATION(1)
POSITION YEAR ($) ($) ($) ($) SARS (#) ($) ($)
- ------------------------ ---- ------- ------- ------- ---------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
David W. Kemper......... 1995 509,443 210,000 0 0 34,387 0 11,200
Chairman, President &
CEO 1994 498,018 180,000 0 0 29,463 0 6,633
Commerce Bancshares,
Inc. 1993 467,500 150,000 0 0 31,669 0 7,816
Jonathan M. Kemper...... 1995 267,909 80,000 0 0 14,910 0 9,138
Chairman & CEO 1994 241,349 70,000 0 0 12,870 0 4,891
Commerce Bank, N.A.
(Kansas City) 1993 229,219 40,000 0 0 13,560 0 6,188
William A. Sullins, Jr.. 1995 226,676 65,000 0 0 14,595 0 21,594
Vice Chairman & COO 1994 222,365 70,000 0 0 12,402 0 4,663
Commerce Bank, N.A. (St.
Louis) 1993 204,500 55,000 0 0 12,899 0 5,992
John O. Brown........... 1995 196,817 22,000 0 0 7,875 0 30,880
Vice Chairman 1994 189,138 20,000 0 0 7,854 0 4,264
Commerce Bank, N.A.
(Kansas City) 1993 185,413 20,000 0 0 8,930 0 5,423
Robert C. Matthews, Jr.. 1995 170,868 45,000 0 0 9,660 0 7,029
Executive Vice President 1994 156,971 35,000 0 0 7,551 0 5,267
Commerce Bancshares,
Inc. 1993 134,333 25,000 0 0 7,938 0 4,085
</TABLE>
- --------
(1) All Other Compensation (i) includes the total of the amounts contributed
by the Company to the Commerce Executive Retirement Plan ("CERP") and
401(k) Plans for the benefit of these individuals. For 1995, this is based
on a maximum of 1.2% of salary in column (c) for the 401(k) Plan plus the
amount allocated to each individual under the CERP Plan. For 1995, those
amounts for the CERP and 401(k), respectively, are as follows: David W.
Kemper--$4,781 and $4,620; Jonathan M. Kemper--$3,848 and $4,620; William
A. Sullins, Jr.--$16,189 and $2,824; John O. Brown--$22,904 and $4,620;
Robert C. Matthews, Jr.--$1,733 and $4,620. Other amounts are for the
Group Term Life Insurance plan of the Company.
7
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
- --------------------------------------------------------------------- ---------------------
(C)
% OF
(B) NUMBER TOTAL
OF OPTIONS/
SECURITIES SARS
UNDERLYING GRANTED
OPTIONS/ TO (D)
SARS EMPLOYEES EXERCISE OR (E) (F) (G)
(A) GRANTED IN FISCAL BASE PRICE EXPIRATION 5% 10%
NAME (#) YEAR ($/SH) DATE ($) ($)
---- ---------- --------- ----------- ---------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
David W. Kemper......... 34,387 11.64% $27.6190 02/03/2005 597,283 1,513,634
Jonathan M. Kemper...... 14,910 5.05% $27.6190 02/03/2005 258,978 656,303
William A. Sullins, Jr.. 14,595 4.94% $27.6190 02/03/2005 253,507 642,437
John O. Brown........... 7,875 2.67% $27.6190 02/03/2005 136,784 346,638
Robert C. Matthews, Jr.. 9,660 3.27% $27.6190 02/03/2005 167,789 425,210
</TABLE>
Options granted (column b) include only Incentive Stock Options (ISO),
subject to IRS limitations, and Non-Qualified Stock Options (NQ). All
substantive terms are identical--four (4) equal vesting periods with 25%
exercisable at date of grant and an additional 25% exercisable on each
anniversary date thereof, the exercise price is defined as the closing market
price on the date of grant, and the options are not exercisable following
voluntary termination. The options are not assignable but may be exercised by
the optionee's estate or beneficiary, subject to certain limitations, in the
case of the death of the optionee.
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR
VALUES
<TABLE>
<CAPTION>
(D) (E)
NUMBER OF VALUE OF
SECURITIES UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS/SARS
(B) OPTIONS/SARS AT
SHARES (C) AT FY-END FY-END
ACQUIRED VALUE (#) ($)
(A) ON EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
---- ----------- -------- ------------- -------------
<S> <C> <C> <C> <C>
David W. Kemper............... 18,824 373,764 75,191 933,151
48,441 491,955
Jonathan M. Kemper............ 11,576 134,069 45,134 714,432
21,011 213,417
William A. Sullins, Jr........ 24,804 452,588 30,435 374,443
20,375 207,082
John O. Brown................. 9,922 118,457 33,589 557,720
12,069 121,976
Robert C. Matthews, Jr........ 3,307 38,694 25,865 402,606
13,008 132,455
</TABLE>
8
<PAGE>
PERFORMANCE GRAPH:
FIVE YEAR CUMULATIVE TOTAL RETURN
[GRAPH APPEARS HERE]
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
COMMERCE (CBSH) 100.00 144.72 202.56 197.28 200.63 304.63
---------------------------------------------------------------------------
NASDAQ FINANCIAL 100.00 154.74 221.32 257.23 257.83 375.64
---------------------------------------------------------------------------
S&P 500 100.00 130.47 140.41 154.56 156.60 215.45
</TABLE>
Assumes $100 invested 12/31/90 with dividends reinvested on a Total
Return basis with Commerce (CBSH) compared to the above named indices.
RETIREMENT BENEFITS:
The Company maintains the Commerce Bancshares Retirement Plan. All employees
are eligible to participate on the later of January 1st or July 1st after
completion of one year of service and the attainment of age 21. The Plan
provides benefits based upon earnings, age and years of participation.
The annual benefit is determined under a new cash balance formula as of
January 1, 1995. The new formula is intended to comply with the Tax Reform Act
of 1986 and is subject to final approval by the Internal Revenue Service.
Under the cash balance formula, a retirement account balance is maintained for
each participant. At the end of each Plan Year beginning after December 31,
1994, the participant's account will be credited with a cash balance credit
equal to a percentage of total pay for the year plus the same percentage of
pay in excess of 50% of the Social Security taxable wage base for the year.
Pay for this purpose is limited to $150,000 by the Omnibus Budget
Reconciliation Act of 1993. The applicable percentage is determined by the sum
of the participant's age and years of participation at the beginning of the
Plan Year, and ranges from 1% for a sum of less than 30 to 40% for a sum of 75
or more. Interest is credited to the participant's account at the end of each
Plan Year beginning after 1995 at the rate of 5% of the account balance at the
end of the prior Plan Year. At retirement, the retirement account balance is
converted to various annual benefit options based on actuarial factors defined
in the Plan.
In addition, the participant shall receive an annual benefit equal to his
annual benefit accrued through December 31, 1994 under the Plan's prior
formula, adjusted for increases in the cost of living (but not in excess
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of 4% per year) for each year of participation after December 31, 1994. This
Plan is fully paid for by the Company and employees covered by the Plan become
fully vested after five years of service. The normal retirement age under the
Plan is 65. Reduced benefits are available as early as age 55. Messrs. D.
Kemper, Jonathan Kemper, Sullins, Brown and Matthews have, respectively, 16,
13, 20, 31 and 20 years of service as of December 31, 1995.
Compensation covered by the Plan for 1995 includes salary (as reported in
the Summary Compensation Schedule) and was limited by the Omnibus Budget
Reconciliation Act of 1993 to $150,000. The compensation for 1995 covered by
the Plan was: Mr. D. Kemper $150,000; Mr. Jonathan Kemper $150,000; Mr.
Sullins $150,000; Mr. Brown $150,000; and Mr. Matthews $150,000.
The estimated annual benefits payable at normal retirement age for Messrs.
David Kemper, Jonathan Kemper, Sullins, Brown and Matthews are $75,576,
$66,324, $44,616, $49,728, and $53,010 respectively. These benefits assume the
election of a retirement allowance payable as a straight life annuity to the
participant.
The Company also maintains the Commerce Executive Retirement Plan ("CERP"),
effective January 1, 1995, to provide nonqualified deferred compensation for a
select group of executives. The CERP is unfunded; benefits are payable from
the assets of the Company. The Board of Directors may designate the CEO as a
participant; other participants are selected by the CEO.
A participant's benefit under the CERP is the amount by which (1) exceeds
(2), where (1) is the benefit that would be payable under Commerce Bancshares
Retirement Plan if that benefit were calculated using the participant's "total
pay" (including (i) any bonus deferred under a nonqualified deferred
compensation plan maintained by the Company and (ii) compensation up to an
annual limit determined under the Tax Reform Act but without regard to the
$150,000 limit added by the Omnibus Budget Reconciliation Act of 1993 and the
rounding rules added by the Retirement Protection Act of 1994); and (2) is the
benefit actually payable under the Commerce Bancshares Retirement Plan.
Compensation covered by the CERP for 1995 includes salary and bonuses (as
reported in the Summary Compensation Schedule) and was limited by the terms of
the CERP to $247,540. The compensation for 1995 covered by the CERP was: Mr.
David Kemper $247,540; Mr. Jonathan Kemper $247,540; Mr. Sullins $247,540; Mr.
Brown $247,540; and Mr. Matthews $206,544.
The estimated annual benefits payable under the CERP at normal retirement
age for Messrs. D. Kemper, Jonathan Kemper, Sullins, Brown and Matthews are
$29,928, $27,936, $6,528, $3,717 and $12,756 respectively. These benefits
assume the election of a retirement allowance payable as a straight life
annuity to the participant.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION:
The Company's executive compensation policy is intended to be competitive
with four bank holding companies in geographic proximity and considered as
direct competitors with the Company so that total compensation received by the
executive officers of the Company is believed to be comparable on a long-term
basis. The policy is also intended to offer an incentive for performance for
the Company's executive officers and managers, including the chief executive
officer and the four other most highly paid executive officers (collectively
with the chief executive officer, the "senior executives"). The overall
compensation program is designed to retain and reward on both a short and
long-term basis. In the case of the Chief Executive Officer, the Committee
pays particular attention to the total compensation paid to the chief
executive officers of the competing bank holding companies described above but
taking into consideration the relative size of the companies and their
financial returns. The Committee has deliberately avoided establishing a
formula-based salary program rewarding only short-term results but looks
rather toward the quality of assets and earnings over a longer term.
Statistical measurements including return on assets, return on equity, net
income, and asset quality are considered over a one to five year time frame
but not weighted in regard to base salary considerations. With no formula
tying the Chief Executive Officer's compensation directly to the Company's
performance or other weighted factors, the Committee operates under informal
policies subjectively applied.
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The three members of the Compensation and Benefits Committee are all non-
employee directors. The principal elements of the Company's executive
compensation program for the fiscal year ended December 31, 1995, applicable
to the Company's executive officers, including the senior executives, were:
(1) Salary levels are reviewed and determined annually. Consideration is
given to the scope of responsibilities and to being comparable with similar
positions with immediate competitors. In this regard, comparison is made
with the compensation paid to the top five officers of four bank holding
companies which, by virtue of their location, are considered immediate
competitors. Factors included in the comparison are relative size of
companies, the financial results obtained, both currently and over a period
of time, and the experience and responsibility of the individuals. While
the base salary compensation paid to the senior executives is somewhat
below the average of the immediate competitors, the Committee believes such
compensation is in line considering the relative size of the companies and
also considering the Company's strong emphasis on long-term shareholder
alignment through incentives such as stock options. In addition, the
Committee reviews individual performance ratings, being the result of
reviews conducted by an officer's superior. The Committee also considers
responsibility changes, taking into account outstanding or improved
performance. The Committee approves salary increases and salary levels
after consideration of both internal and external information as set forth
above. In establishing base salaries, the Committee does not assign any
weight to any particular factor.
(2) Cash Bonus awards are considered annually. In awarding bonus
payments, factors considered by the Compensation Committee include: (i) a
review of the Company's financial performance as determined by the level of
overall net income, as well as statistical measurements, return on assets,
return on equity, asset quality and asset growth, as compared to internal
trends and selected competitors; (ii) the value created for shareholders in
both the most recent year and five year trends as determined by market
price of the Company stock compared to the NASDAQ financial indices; and
(iii) the performance of individuals to the extent measurable in meeting
budget expectations. However, the Committee has not established any
performance targets that would affect the granting of or size of a bonus.
Performance of the Company in relation to competitors' performance is
considered but not weighted in the granting of a bonus. The Chief Executive
Officer is also subject to the previous measurements. While the factors set
forth are major considerations in determining the amount of a bonus for a
senior executive, there is no predetermined specific formula that defines
the amount of bonus payment based on the results in the factors set forth
above. Bonuses earned as a percentage of salary for senior executives for
1995 performance ranged from 41% in the case of the chief executive officer
to 11%.
(3) Stock Options are also awarded annually. They are awarded to provide
individuals with long term incentives for profitable growth and closer
align the Company's senior executives with the interest of the Company's
shareholders. Retention and long-term reward are both factors considered in
granting stock options. With respect to the amount of options to be
granted, consideration is given to the scope of responsibility and the
degree of its effect on the Company's performance as well as the degree of
importance in providing incentive to the individual to stay with the
Company over time. The Committee, in determining whether to grant options
or in the granting of options, does not take into consideration the amounts
of options previously granted or outstanding. The Chief Executive Officer
and the other senior executives are granted options generally ranging from
100% to 140% of total cash compensation for the year divided by the share
price of the Company's common stock on the date of the grant. Some other
individuals in the Company are granted options on the same basis and
additional people receive options based on 70% or 40% of their total cash
compensation.
A limitation on the deductibility for tax purposes of certain executive
compensation in excess of $1,000,000 was recently added to the Internal
Revenue Code ("Code"). The limitation contained in Section 162(m) of the Code
applies to compensation paid to the executive officers of the Company named in
the Summary Compensation Table. While this limitation was applicable to the
compensation paid by the Company in 1995, the Committee, although aware of the
provisions of Section 162(m), was not required to address the provisions of
that section since no officer of the Company earned compensation which would
exceed $1,000,000 per year. By amending the Non-Qualified Stock Option Plan in
1995 to provide for a formula to determine the maximum
11
<PAGE>
number of options which may be granted in any one year to any one person, the
income recognized on the exercise of a non-qualified stock option will qualify
as "performance-based compensation" and will not be included in determining
the compensation which is limited to $1,000,000.
Executives other than senior executives also participate in both the bonus
and stock option programs. Other elements of compensation offered to the
senior executives and to all other eligible employees include participation in
a 401(k) deferred contribution plan and an Employee Stock Ownership Plan.
Submitted by the Compensation and Benefits Committee of the Company's Board
of Directors:
Andrew C. Taylor Giorgio Balzer Terry O. Meek
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION:
The Compensation and Benefits Committee consists of three members of the
Board of Directors of the Company, none of whom are officers of the Company.
During 1995, the Committee consisted of Messrs. Giorgio Balzer, Terry O. Meek,
and Andrew C. Taylor from April 19, 1995 (Mr. Hebenstreit prior thereto). Mr.
David Kemper is serving as a member of the board of directors and compensation
committee of Seafield Capital Corp., of which Mr. Grant is an executive
officer. Mr. Hebenstreit was formerly an officer of the Company and a
subsidiary of the Company.
AMENDMENT OF ARTICLES OF INCORPORATION
The Board of Directors has unanimously approved and recommends that the
shareholders adopt an amendment to the Articles of Incorporation of the
Company which would increase the authorized number of shares of common stock
which the Company would have the power to issue.
The first paragraph of ARTICLE III of the Articles of Incorporation
presently provides that the Company is authorized to issue 2,000,000 shares of
preferred stock of the par value of $1 per share and 60,000,000 shares of
common stock of the par value of $5 per share. The proposed amendment to this
paragraph of ARTICLE III would provide that the maximum number of shares which
the Company is authorized to issue shall be 2,000,000 shares of preferred
stock of the par value of $1 per share and 80,000,000 shares of common stock
of the par value of $5 per share.
Of the 60,000,000 shares of common stock, $5 par value, presently authorized
under the Articles of Incorporation, approximately 36,703,418 shares were
issued and outstanding as of January 31, 1996. Of the remaining 23,296,582
authorized but unissued shares of common stock (including 861,951 shares in
treasury), approximately 3,285,000 shares have been reserved for issuance
under the stock option and restricted stock plans. The Company continues to
seek further acquisitions of banks and bank-related businesses, and the Board
believes it should have the necessary shares of common stock available to
issue should appropriate opportunities to effect acquisitions be presented.
This amendment to the Articles of Incorporation might be considered as
having the effect of discouraging attempts to take over control of the Company
since the issuance of such shares could be used to dilute the stock ownership
of persons seeking to obtain control and increase the cost for any such
person. However, this is not the purpose of the proposed amendment.
As noted above, the existing Articles of Incorporation presently provide for
the Board of Directors to issue up to 2,000,000 shares of preferred stock and
to designate the rights and preferences of such stock. The Board may determine
the voting rights of any preferred stock issued which may include more than
one vote per share. The issuance of preferred stock under certain
circumstances may have the effect of discouraging an attempt to change control
of the Company by, for example, creating voting impediments to the approval of
mergers or other similar transactions involving the Company. The Board has no
present intention to issue preferred stock for such purposes and no preferred
stock has yet been issued by the Company.
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<PAGE>
The proposed amendment to the Articles of Incorporation requires the
affirmative vote of the holders of a majority of the shares of common stock
issued and outstanding. It is not anticipated that the Company will seek
authorization from its shareholders for the issuance of such additional shares
from time to time unless required by applicable laws. There are no preemptive
rights available to shareholders in connection with the issuance of any such
shares.
The proposed amendment would cause the first paragraph of ARTICLE III of the
Articles of Incorporation to be amended to read as follows:
"The total number of shares of all classes of stock which the Corporation
shall have authority to issue is 82,000,000 shares, consisting of (i)
2,000,000 shares of preferred stock of the par value of $1 per share and
(ii) 80,000,000 shares of common stock of the par value of $5 per share."
If the proposal to amend the Articles of Incorporation is not approved by
the shareholders, it is anticipated the Board of Directors would resubmit the
proposal to the shareholders in the future.
Unless otherwise directed, the persons named in the enclosed proxy intend to
vote for approval of the proposed amendment to the Articles of Incorporation
of the Company as set forth above.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSED AMENDMENT.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS:
Since the Company began operations in 1967, the accounting firm of KPMG Peat
Marwick has examined and reported on the financial statements of the Company
and has rendered certain non-audit services. The Board of Directors, upon the
recommendation of its Audit Committee, has determined to continue the services
of this firm for the current fiscal year, ending December 31, 1996, to examine
the financial statements of the Company for the fiscal year ending on such
date and to perform other appropriate accounting services. A member of KPMG
Peat Marwick will attend the annual meeting and will have the opportunity to
make a statement if desired. Such member will also be available to respond to
questions of the shareholders.
SHAREHOLDER PROPOSALS:
In order to be considered for inclusion in the proxy statement for the
annual meeting of the Company to be held in April, 1997, shareholder proposals
must be received by the Company on or prior to November 20, 1996.
OTHER MATTERS:
The management does not know of any matter or business to come before the
meeting other than that referred to in the notice of meeting but it is
intended that, as to any such other matter or business, the person named in
the accompanying proxy will vote said proxy in accordance with the judgment of
the person or persons voting the same.
By Order of the Board of Directors
J. Daniel Stinnett
Secretary
March 12, 1996
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COMMERCE BANCSHARES, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
P
R The undersigned hereby appoints James M. Kemper, Jr. and David W.
O Kemper, or either of them, as agents and proxies with full power of
X substitution in each, to represent the undersigned at the annual meeting
Y of shareholders to be held on April 17, 1996, or any adjournment
thereof, on all matters coming before the meeting.
ELECTION OF DIRECTORS. NOMINEES: CHANGE OF ADDRESS
W. Thomas Grant, II; James B. -------------------------------
Habenstrait; James M. Kemper,
Jr.; John H. Robinson, Jr.; -------------------------------
and Dolph C. Simons, Jr.
-------------------------------
-------------------------------
(If you have written in the
above space, please mark the
corresponding box on the
reverse side of this card)
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE
APPROPRIATE BOXES, SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY
BOXES IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF -------------
DIRECTORS' RECOMMENDATIONS. YOUR SHARES CANNOT BE VOTED UNLESS SEE REVERSE
YOU SIGN AND RETURN THIS CARD. SIDE
-------------
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| 1573
[X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF DIRECTORS AND FOR PROPOSAL 2.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 2.
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1. Election of Directors (see reverse)
FOR WITHHELD
[_] [_]
FOR, EXCEPT VOTE WITHHELD FROM THE FOLLOWING NOMINEE(S):
------------------------------------------------------------
2. To amend Articles of Incorporation to increase authorized common stock.
FOR AGAINST ABSTAIN
[_] [_] [_]
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SIGNATURE(S)______________________________________________DATE ________________
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
Change of Address on Reverse Side [_]
The signer hereby revokes all proxies heretofore given by the signer to vote at
said meeting or any adjournments thereof.
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