<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:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Commerce Bancshares, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
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Notes:
<PAGE>
[COMMERCE BANCSHARES, INC. LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 16, 1997
The annual meeting of the shareholders of Commerce Bancshares, Inc., will be
held in the Board of Directors Room on the Eighteenth Floor of the Commerce
Bank Building, 1000 Walnut Street, Kansas City, Missouri, on April 16, 1997,
at ten o'clock a.m., Kansas City Time, for the following purposes:
(1) To elect five directors to the 2000 Class for a term of three years;
(2) 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 28, 1997,
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 11, 1997
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 16, 1997
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 16, 1997. 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 11, 1997.
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 28, 1997, are entitled to
vote at the meeting, and at the close of business on said date there were
outstanding 36,968,580 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 and are not counted for the election of directors. 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 December 31, 1996, was James M. Kemper, Jr., 911 Main
Street, Kansas City, Missouri, having sole investment and sole voting power as
to 2,016,279 shares and shared voting and investment power as to 64,768 shares
(aggregating 5.6% of the class).
As of December 31, 1996, the trust departments of the Company's subsidiary
banks beneficially owned 2,192,422 shares representing 5.86% of the Company's
outstanding common stock. Of those shares the subsidiary banks had (i) sole
voting power over 1,166,952 shares; (ii) shared voting power over 1,025,470
shares; (iii) sole investment power over 1,138,079 shares and (iv) shared
investment power over 963,413 shares. The Company has been advised by the
subsidiary banks that the shares held by them and as to which they have sole
voting power will be voted at the annual meeting for the election of
directors. 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.
(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, 1996. 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....................................... 2,855 **
Kansas City, Missouri
Fred L. Brown........................................ 2,688 **
St. Louis, Missouri
Seth M. Leadbeater................................... 6,984 **
St. Louis, Missouri 31,852(3)
W. Thomas Grant, II.................................. 2,280 **
Kansas City, Missouri
James B. Hebenstreit................................. 12,405 **
Kansas City, Missouri
Mary Ann Krey........................................ 1,308 **
St. Peters, Missouri
David W. Kemper...................................... 4,816
Clayton, Missouri 58,151(1)*
440,612(2)
138,107(3) 1.7
James M. Kemper, Jr.................................. 2,016,279*
Kansas City, Missouri 64,768(4) 5.6
Jonathan M. Kemper................................... 6,342
Kansas City, Missouri 253,710(1)
361,926(5)
59,516(3) 1.8
Robert C. Matthews, Jr............................... 14,103
Kansas City, Missouri 35,798(3) **
Terry O. Meek........................................ 5,996 **
Springfield, Missouri
B. Franklin Rassieur, Jr............................. 6,428 **
St. Louis, Missouri
John H. Robinson, Jr................................. 1,094 **
Kansas City, Missouri
Dolph C. Simons, Jr.................................. 4,250 **
Lawrence, Kansas
L. W. Stolzer........................................ 221,182(6) **
Manhattan, Kansas
William A. Sullins, Jr............................... 40,286
St. Louis, Missouri 56,339(3) **
Andrew C. Taylor..................................... 5,440 **
St. Louis, Missouri
Robert H. West....................................... 5,873
Kansas City, Missouri 694(1)* **
All 26 directors, nominees and executive officers as
a group............................................. 2,378,901
(including those listed above) 312,555(1)
440,612(2)
321,612(3)
64,768(4)
361,926(5)
221,182(6) 11.0
</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 513,247 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 191,005 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 2000 annual meeting (the 2000
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:
<TABLE>
<CAPTION>
PERIODS SERVED AS DIRECTOR
NAME AND AND BUSINESS EXPERIENCE
AGE DURING PAST 5 YEARS
-------- --------------------------
<S> <C>
2000 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 Assicurazioni-Generali, S.p.A., an Italian
insurance group, and Chairman of its U.S. Branch;
as well as Chairman of Worldwide Assistance
Services, Inc., Washington, D.C. He is also a
director of Jones and Babson, and Transocean
Holding Corp., a general financial company in the
U.S.
Jonathan M. Kemper, 43... Elected a director in January, 1997. He is the Vice
Chairman of Commerce Bancshares, Inc. and the
Chairman, President and Chief Executive Officer of
Commerce Bank, N.A. (Kansas City). He is also a
director of Tower Properties. Mr. Jonathan Kemper
is the son of James M. Kemper, Jr. and the brother
of David W. Kemper.
Mary Ann Krey, 49........ Elected a director in April, 1996. She is the Chief
Executive Officer of Krey Distributing Company. She
is also a director of Laclede Gas Company and CPI
Corporation. She has served as a director of
Commerce Bank, N.A. (St. Louis), a subsidiary of
the Company.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
PERIODS SERVED AS DIRECTOR
NAME AND AND BUSINESS EXPERIENCE
AGE DURING PAST 5 YEARS
-------- --------------------------
<S> <C>
Terry O. Meek, 53........ 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), a
subsidiary of the Company.
L. W. Stolzer, 62........ Elected a director in October, 1995. He is Chairman
of the Community Board of the Manhattan, Kansas
branch of Commerce Bank, N.A. (Kansas City) and has
served as a director of Commerce Bank, N.A. (Kansas
City), a subsidiary of the Company.
</TABLE>
The following directors of the Company are not nominees for election, and
their terms will continue after the 1997 annual meeting.
<TABLE>
<S> <C>
1999 CLASS:
W. Thomas Grant, II, 46.. 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,
50....................... Elected a director in October, 1987. He is
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 and feed 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.,
75....................... Elected a director in August, 1966. Mr. Kemper
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 M. Kemper.
John H. Robinson, Jr.,
46....................... Elected a director in August, 1995. He is a
Managing Partner of Black & Veatch, an engineering,
construction and technical consulting services
firm. He is also a director of Seafield Capital
Corporation and CompuSpeak Laboratories. He has
served as a director of Commerce Bank, N.A. (Kansas
City), a subsidiary of the Company.
Dolph C. Simons, Jr.,
67....................... Elected a director in October 1992. Mr. Simons is
President of The World Company which is engaged in
newspaper publishing, printing and cable television
in Kansas, Colorado, Arizona and New Mexico. He has
served as a director of Commerce Bank, N.A. (Kansas
City), a subsidiary of the Company.
1998 CLASS:
Fred L. Brown, 56........ 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).
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
PERIODS SERVED AS DIRECTOR
NAME AND AND BUSINESS EXPERIENCE
AGE DURING PAST 5 YEARS
-------- --------------------------
<S> <C>
David W. Kemper, 46...... 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) 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,
Jr., 70.................. Elected a director in April, 1986. Mr. Rassieur
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), a
subsidiary of the Company.
Andrew C. Taylor, 49..... Elected a director in February, 1990. Mr. Taylor is
President and Chief Executive Officer 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 and
Anheuser-Busch Companies. Mr. Taylor has served as
a director of Commerce Bank, N.A. (St. Louis), a
subsidiary of the Company.
Robert H. West, 58....... Elected a director in October, 1985. Mr. West is
Chairman of the Board and Chief Executive Officer
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 and Burlington Northern Santa
Fe Corporation. Mr. West has served as a director
of Commerce Bank, N.A., (Kansas City), a subsidiary
of the Company.
</TABLE>
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 1996.
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 1996 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 1996. 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
5
<PAGE>
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 1996.
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.
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 1996, subsidiaries of the Company paid Tower Properties Company
$545,197 in rentals, $12,720 in leasing fees, $316,101 for operation of
parking garages, $73,472 in parking fees, and $28,073 for other property
repairs. 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.
The agreement with Mr. Kemper terminated on September 30, 1996. For his
services for the year 1996, Mr. Kemper was paid $75,002 during the period in
which the agreement was in effect. Effective October 1, 1996, Mr. Kemper
became compensated in the same manner as other non-employee directors.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
The Corporation has a Severance Agreement with each of David W. Kemper,
Jonathan M. Kemper, William A. Sullins, Jr., Robert C. Matthews, Jr. and Seth
M. Leadbeater which provides among other things, that, if his employment is
terminated by the Corporation without "cause" or by him for "good reason"
either during the twelve months before or the three years after a "change in
control," or if he voluntarily terminates for any reason during the 30 days
following one year after a "change of control," he shall receive three times
his annualized base salary in effect twelve months prior to the "change in
control," three times his average annual bonus for the prior three years, the
greater of his actual bonus for the preceding first year or his target bonus
for the current year (prorated for the year in which the termination occurs),
and continuation of health and welfare benefits at a cost equal to such rates
paid from time to time by similarly situated employees of the Corporation,
"grossed up" to cover any excise tax imposed by Section 4999 of the Internal
Revenue Code.
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
$100,000, during the fiscal year ended December 31, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-----------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
---------------------------- --------------------- -------
(E) (I)
OTHER (F) (G) ALL
ANNUAL RESTRICTED SECURITIES (H) OTHER
(A) (C) (D) COMPEN- STOCK UNDERLYING LTIP COMPEN-
NAME AND PRINCIPAL (B) SALARY BONUS SATION AWARDS OPTIONS/ PAYOUTS SATION(1)
POSITION YEAR ($) ($) ($) ($) SARS (#) ($) ($)
- ------------------------ ---- ------- ------- ------- ---------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
David W. Kemper......... 1996 521,750 225,000 0 0 34,650 0 13,302
Chairman, President &
CEO 1995 509,443 210,000 0 0 34,387 0 11,200
Commerce Bancshares,
Inc. 1994 498,018 180,000 0 0 29,463 0 6,633
Jonathan M. Kemper...... 1996 281,760 105,000 0 0 15,710 0 10,538
Chairman & CEO 1995 267,909 80,000 0 0 14,910 0 9,138
Commerce Bank, N.A.
(Kansas City) 1994 241,349 70,000 0 0 12,870 0 4,891
William A. Sullins, Jr.. 1996 231,750 80,000 0 0 13,650 0 17,010
Vice Chairman & COO 1995 226,676 65,000 0 0 14,595 0 21,594
Commerce Bank, N.A. (St.
Louis) 1994 222,365 70,000 0 0 12,402 0 4,663
Robert C. Matthews, Jr.. 1996 179,500 59,000 0 0 9,975 0 9,546
Executive Vice President 1995 170,868 45,000 0 0 9,660 0 7,029
Commerce Bancshares,
Inc. 1994 156,971 35,000 0 0 7,551 0 5,267
Seth M. Leadbeater...... 1996 165,654 62,000 0 0 8,400 0 7,611
President 1995 156,741 50,000 0 0 7,875 0 6,015
Commerce Bank, N.A. (St.
Louis) 1994 149,241 35,000 0 0 7,854 0 3,830
</TABLE>
- --------
(1) All Other Compensation (i) includes the total of the amounts contributed
by the Company to the CERP and 401(k) Plans for the benefits of these
individuals. For 1996, 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 1996, those amounts for the CERP and
401(k), respectively, are as follows: David W. Kemper--$6,908 and $4,750;
Jonathan M. Kemper--$5,028 and $4,750; William A. Sullins, Jr.--$9,705 and
$4,629; Robert C. Matthews, Jr.--$3,969 and $4,750; Seth M. Leadbeater--
$2,174 and $4,750. Other amounts are for the Group Term Life Insurance
plan of the Company.
7
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
- --------------------------------------------------------------------- ---------------------
(C)
% OF
(B) NUMBER TOTAL
OF OPTIONS/
SECURITIES SARS
UNDERLYING GRANTED
OPTIONS/ TO (D)
SARS EMPLOYEES EXERCISE OR (E) (F) (G)
(A) GRANTED IN FISCAL BASE PRICE EXPIRATION 5% 10%
NAME (#) YEAR ($/SH) DATE ($) ($)
---- ---------- --------- ----------- ---------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
David W. Kemper......... 34,650 12.30% $33.9286 02/08/2006 739,344 1,873,645
Jonathan M. Kemper...... 15,750 5.59% $33.9286 02/08/2006 336,066 851,656
William A. Sullins, Jr.. 13,650 4.85% $33.9286 02/08/2006 291,257 738,102
Robert C. Matthews, Jr.. 9,975 3.54% $33.9286 02/08/2006 212,841 539,382
Seth M. Leadbeater...... 8,400 2.98% $33.9286 02/08/2006 179,235 454,217
</TABLE>
Options granted (column b) include only Incentive Stock Options (ISO),
subject to IRS limitations, and Non-Qualified Stock Options (NQ). All
substantive terms are identical--four (4) equal vesting periods with 25%
exercisable at date of grant and an additional 25% exercisable on each
anniversary date thereof, the exercise price is defined as the closing market
price on the date of grant, and the options are not exercisable following
voluntary termination. The options are not assignable but may be exercised by
the optionee's estate or beneficiary, subject to certain limitations, in the
case of the death of the optionee.
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR
VALUES
<TABLE>
<CAPTION>
(D) (E)
NUMBER OF VALUE OF
SECURITIES UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS/SARS
(B) OPTIONS/SARS AT
SHARES (C) AT FY-END FY-END
ACQUIRED VALUE (#) ($)
(A) ON EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
---- ----------- -------- ------------- -------------
<S> <C> <C> <C> <C>
David W. Kemper............... 0 0 112,685 2,297,709
51,775 829,216
Jonathan M. Kemper............ 13,891 284,655 48,287 979,718
23,020 366,754
William A. Sullins, Jr........ 0 0 45,840 931,930
21,157 341,688
Robert C. Matthews, Jr........ 7,465 155,639 28,787 581,403
14,536 231,519
Seth M. Leadbeater............ 4,107 84,650 25,617 524,110
12,517 200,210
</TABLE>
8
<PAGE>
PERFORMANCE GRAPH:
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG COMMERCE (CBSH), S&P 500 INDEX AND NASDAQ FINANCIAL
Measurement Period S&P
(Fiscal Year Covered) COMMERCE 500 INDEX NASDAQ FINANCIAL
- ------------------- -------- --------- ----------------
<S> <C> <C> <C>
Measurement Pt-
12/31/91 $100.00 $100 $100
FYE 12/31/92 $139.96 $107.62 $143.02
FYE 12/31/93 $136.31 $118.46 $166.23
FYE 12/31/94 $138.63 $120.03 $166.62
FYE 12/31/95 $210.50 $165.13 $242.61
FYE 12/31/96 $272.60 $203.05 $311.06
</TABLE>
Assumes $100 invested 12/31/91 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 4% 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 minimum rate not less than 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
9
<PAGE>
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, Matthews and Leadbeater have, respectively,
17, 14, 21, 21 and 6 years of service as of December 31, 1996.
Compensation covered by the Plan for 1996 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 1996 covered by
the Plan was: Mr. D. Kemper $150,000; Mr. Jonathan Kemper $150,000; Mr.
Sullins $150,000; Mr. Matthews $150,000; and Mr. Leadbeater $150,000.
The estimated annual benefits payable at normal retirement age for Messrs.
David Kemper, Jonathan Kemper, Sullins, Matthews and Leadbeater are $75,656,
$66,601, $44,965, $53,329, and $36,359 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 1996 includes salary and bonuses (as
reported in the Summary Compensation Schedule) and was limited by the terms of
the CERP to $254,075. The compensation for 1996 covered by the CERP was: Mr.
David Kemper $254,075; Mr. Jonathan Kemper $254,075; Mr. Sullins $254,075; Mr.
Matthews $225,327; and Mr. Leadbeater $254,075.
The estimated annual benefits payable under the CERP at normal retirement
age for Messrs. David Kemper, Jonathan Kemper, Sullins, Matthews and
Leadbeater are $33,624, $35,052, $12,664, $13,035 and $9,253, 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. 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.
10
<PAGE>
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. The Committee has established performance targets that
affect the granting of and size of a bonus for the top executives of the
Company. 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. Bonuses
earned as a percentage of salary for senior executives for 1996 performance
ranged from 43% in the case of the chief executive officer to 12%.
(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 200% 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 ranging from 10%-150% 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.
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 1996, the Committee consisted of Messrs. Giorgio Balzer, Terry O. Meek,
and Andrew C. Taylor. 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.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16 of the Securities Exchange Act of 1934, the Company's
Directors and certain executive officers are required to report, within
specified monthly and annual due dates, their initial ownership of the
Company's common stocks and all subsequent acquisitions, dispositions or other
transfers of interest in such securities, if and to the extent reportable
events occur which require reporting by such due dates. The Company is
required to identify in its proxy statement whether it has knowledge that any
person required to file such a report may have failed to do so in a timely
manner. Based on that review, all of the Company's directors and all executive
officers subject to the reporting requirements satisfied such requirements in
full, except that Mary Ann Krey, a Director of the Company, filed her initial
report on Form 3 after the due date; Robert C. Matthews, Jr., a executive
officer of the Company, filed two monthly reports on Form 4, each representing
one transaction after the due dates; and Seth M. Leadbeater and Peter F.
Mackie, executive officers of the Company, each filed one monthly report on
Form 4 relating to one transaction after the due date. The Company's review
determined that the late filings were all due to inadvertent oversight and had
been properly corrected.
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, 1997, 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, 1998, shareholder proposals
must be received by the Company on or prior to November 20, 1997.
12
<PAGE>
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 11, 1997
13
<PAGE>
- --------------------------------------------------------------------------------
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. Kemper, or
O either of them, as agents and proxies with full power of substitution in
X each, to represent the undersigned at the annual meeting of shareholders to
Y be held on April 16, 1997, or any adjournment thereof, on all matters coming
before the meeting.
ELECTION OF DIRECTORS. NOMINEES: CHANGE OF ADDRESS
Giorgio Balzer; Jonathan M. -------------------------------
Kemper; Mary Ann Krey; Terry
O. Meek; and L.W. Stolzer -------------------------------
-------------------------------
-------------------------------
(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
-------------
- --------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
IMPORTANT: PLEASE VOTE AND SIGN YOUR
PROXY AND RETURN IT IN THE ENVELOPE PROVIDED
ANY SHAREHOLDER WHO IS RECEIVING MULTIPLE COPIES OF THE ANNUAL REPORT AND ANY
OTHER MAILINGS FROM COMMERCE BANCSHARES, INC. ARE ENCOURAGED TO CALL FIRST
CHICAGO TRUST COMPANY OF NEW YORK, OUR TRANSFER AGENT, AT (201) 324-0313 FOR
ASSISTANCE IN CONSOLIDATING COMMON OWNERSHIP POSITIONS. REDUCING MAILINGS WILL
IMPROVE THE COMPANY'S OPERATING EFFICIENCIES.
<PAGE>
- --------------------------------------------------------------------------------
| 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.
- --------------------------------------------------------------------------------
FOR WITHHELD
Election of [_] [_]
Directors
(see reverse)
FOR, EXCEPT VOTE WITHHELD FROM THE FOLLOWING NOMINEE(S):
- -------------------------------------------------------
- --------------------------------------------------------------------------------
Change of [_]
Address on
Reverse Side
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. The
signer hereby revokes all proxies here-
tofore given by the signer to vote at
said meeting or any adjournments thereof.
-----------------------------------------
-----------------------------------------
SIGNATURE(S) DATE
- --------------------------------------------------------------------------------
IMPORTANT: PLEASE VOTE AND SIGN YOUR
PROXY AND RETURN IT IN THE ENVELOPE PROVIDED
