<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:
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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:
-------------------------------------------------------------------------
(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:
-------------------------------------------------------------------------
(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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Notes:
<PAGE>
[LOGO OF COMMERCE BANCSHARES, INC.]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 21, 1999
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 21, 1999,
at 9:30 a.m., for the following purposes:
(1) To elect five directors to the 2002 Class for a term of three years;
(2) To consider and act upon a proposal to amend the Articles of
Incorporation to increase the number of shares of 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 26, 1999,
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 18, 1999
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 21, 1999
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 21, 1999. 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 18, 1999.
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 26, 1999, are entitled to
vote at the meeting, and at the close of business on said date there were
outstanding 60,781,916 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.
As of December 31, 1998, the trust departments of the Company's subsidiary
banks beneficially owned 3,789,838 shares representing 6.19% of the Company's
outstanding common stock as of that date. Of those shares the subsidiary banks
had (i) sole voting power over 2,387,443 shares; (ii) shared voting power over
1,402,395 shares; (iii) sole investment power over 2,387,443 shares and (iv)
shared investment power over 1,402,395 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, 1998. 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........................................ 5,280 **
Kansas City, Missouri
Fred L. Brown......................................... 5,080 **
St. Louis, Missouri
Seth M. Leadbeater.................................... 12,819 **
St. Louis, Missouri 79,803(3)
W. Thomas Grant, II................................... 2,028 **
Kansas City, Missouri
James B. Hebenstreit.................................. 21,084 **
Kansas City, Missouri
Mary Ann Krey......................................... 3,967 **
St. Peters, Missouri
David W. Kemper....................................... 7,890
Clayton, Missouri 96,156(1)*
750,246(2)
200,613(3)
107,109(4)
611,172(5) 2.9
Jonathan M. Kemper.................................... 10,746
Kansas City, Missouri 401,563(1)
611,172(5)
150,981(3)
107,109(4)
750,246(2) 3.3
Robert C. Matthews, Jr................................ 16,213
Kansas City, Missouri 89,098(3) **
Terry O. Meek......................................... 10,473 **
Springfield, Missouri
Benjamin F. Rassieur, III............................. 1,755 **
St. Louis, Missouri
John H. Robinson, Jr.................................. 2,180 **
Kansas City, Missouri
Dolph C. Simons, Jr................................... 7,393 **
Lawrence, Kansas
L. W. Stolzer......................................... 343,586(6) **
Manhattan, Kansas
William A. Sullins, Jr................................ 37,718
St. Louis, Missouri 133,546(3) **
Andrew C. Taylor...................................... 9,544 **
St. Louis, Missouri
Robert H. West........................................ 9,198 **
Kansas City, Missouri
All 25 directors, nominees and executive officers as a
group................................................ 686,576
(including those listed above) 497,719(1)
750,246(2)
654,041(3)
107,109(4)
611,172(5)
343,586(6) 6.0
</TABLE>
2
<PAGE>
- --------
(1) Shared voting power and investment power.
(2) Mr. David W. Kemper has sole investment power, but shares voting power
with Mr. Jonathan M. Kemper.
(3) Shares which could be acquired within 60 days by exercise of options.
(4) Owned by corporation as to which Messrs. David W. Kemper and Jonathan M.
Kemper share voting and investment power. Messrs. David W. Kemper and
Jonathan M. Kemper disclaim beneficial ownership as to such shares.
(5) Mr. Jonathan M. Kemper has sole investment power, but shares voting power
with Mr. David W. Kemper.
(6) Does not include 833,989 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.
** Less than 1%.
At December 31, 1998, Mr. James M. Kemper Jr., father of David W. Kemper and
Jonathan M. Kemper, is the beneficial owner of 2,749,474 shares of Company
Common Stock, representing 4.5% of the outstanding shares of the Company.
Messrs. James M. Kemper, David W. Kemper and Jonathan M. Kemper beneficially
own in the aggregate 4,860,986 shares of Company Common Stock representing
7.9% of the outstanding shares of the Company.
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 2002
annual meeting (the 2002 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
-------- --------------------------
2002 Class:
W. Thomas Grant, II, 48.. Elected a director in June, 1983. Mr. Grant became
the Chairman of the Board, of LabOne, Inc. in
October, 1995. He also serves on the board of
directors for Kansas City Power and Light Company,
Response Oncologies, Inc., and AMC Entertainment,
Inc.
James B. Hebenstreit, Elected a director in October, 1987. He is
53....................... 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.
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 a Vice
48....................... Chairman of Black & Veatch, an engineering,
construction and technical consulting services
firm. He is also a director of Lab Holdings Inc.
and Coeur Precious Metals. He has served as a
director of Commerce Bank, N.A., a subsidiary of
the Company.
Dolph C. Simons, Jr., Elected a director in October, 1992. Mr. Simons is
68....................... President of The World Company which publishes the
Lawrence Journal-World and owns Sunflower
Cablevision. He is also a member of WorldWest LLC
which is engaged in newspaper publishing. He has
served as a director of Commerce Bank, N.A., a
subsidiary of the Company.
William A. Sullins, Jr., Elected a director in February, 1999. He is Vice
60....................... Chairman of the Company and is Vice Chairman of
Commerce Bank, N.A., a subsidiary of the Company.
The following directors of the Company are not nominees for election, and
their terms will continue after the 1999 annual meeting.
2001 Class:
Fred L. Brown, 58........ Elected a director in February, 1994. Mr. Brown is
Vice Chairman (as of January 1, 1999) of BJC
Health System which provides acute, long-term care
and related health care services in Missouri and
southern Illinois. He is also Chairman of the
American Hospital Association. He is a director of
Citation Computer Systems, Inc., Morrison's
Healthcare, Inc. and Senior Assist. He has also
served as a director of Commerce Bank, N.A. (St.
Louis).
David W. Kemper, 48...... 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, President,
and Chief Executive Officer of Commerce Bank,
N.A., a subsidiary of the Company. He is also a
director of Wave Technologies International, Inc.,
Ralcorp Holdings, Inc., and Tower Properties
Company. Mr. David Kemper is the brother of
Jonathan M. Kemper.
Benjamin F. Rassieur, Elected a director in August, 1997. Mr. Rassieur
III, 44.................. became President of Paulo Products Co. in August,
1987. The company is engaged in the commercial
heat treating, electroplating, and furnace brazing
services.
Andrew C. Taylor, 51..... 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 GenAmerica 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, 60....... Elected a director in October, 1985. Mr. West is
Chairman of the Board 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., a
subsidiary of the Company.
4
<PAGE>
Periods Served as Director
Name and and Business Experience
Age During Past 5 Years
-------- --------------------------
2000 Class:
Giorgio Balzer, 58....... 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,
U.S. Branch, an Italian insurance group, as well
as Chairman of Worldwide Assistance Services,
Inc., Washington, D.C. He is also a director of
Jones and Babson; CNA Surety, Chicago, Illinois;
and Transocean Holding Corp., a Generali financial
company in the U.S.
Jonathan M. Kemper, 45... Elected a director in January, 1997. He is the Vice
Chairman of the Company and Vice Chairman of
Commerce Bank, N.A., a subsidiary of the Company.
He is also a director of Tower Properties. Mr.
Jonathan Kemper is the brother of David W. Kemper.
Mary Ann Krey, 51........ 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, CPI
Corporation, and Masco Corporation. She has served
as a director of Commerce Bank, N.A. (St. Louis),
a subsidiary of the Company.
Terry O. Meek, 55........ Elected a director in April, 1989. Mr. Meek is
President of Meek Lumber Yard, Inc., which
operates as 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, 64........ He is the Chairman and Chief Executive Officer of
Griffith Lumber, Inc. He is also Chairman of the
Community Board of the Manhattan, Kansas branch of
Commerce Bank, N.A. and has served as a director
of Commerce Bank, N.A., 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 1998.
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 (replaced by Director Mary Ann Krey on April 15,
1998) and Andrew C. Taylor presently comprise the committee which held one
meeting during 1998 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 1998. 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
5
<PAGE>
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 1998. Each director, except W. Thomas
Grant II, Andrew C. Taylor, John H. Robinson, Jr., and Dolph C. Simons, Jr.,
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 1998, subsidiaries of the Company paid Tower Properties Company
$766,406 in rentals, $18,100 in leasing fees, $334,189 for operation of parking
garages, $707,375 for building management fees, $133,730 in parking fees, and
$1,484,629 for other property repairs. 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 $9,000 (paid on a quarterly basis), fees of $2,500 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.
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
$100,000, during the fiscal year ended December 31, 1998.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term Compensation
-----------------------------
Annual Compensation Awards Payouts
---------------------------- --------------------- -------
(e) (g) (i)
Other (f) Securities All
Annual Restricted Underlying (h) Other
(a) (c) (d) Compen- Stock Options/ LTIP Compen-
Name and Principal (b) Salary Bonus sation Awards SARs Payouts sation(1)
Position Year ($) ($) ($) ($) (#) ($) ($)
- ------------------------ ---- ------- ------- ------- ---------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
David W. Kemper......... 1998 542,500 306,000 0 0 55,125 0 37,211
Chairman, President &
CEO, 1997 534,500 240,000 0 0 57,880 0 13,814
Commerce Bancshares,
Inc. 1996 521,750 225,000 0 0 57,302 0 13,302
Jonathan M. Kemper...... 1998 298,125 135,000 0 0 25,200 0 14,720
Vice Chairman, 1997 293,375 115,000 0 0 27,286 0 11,110
Commerce Bancshares,
Inc. 1996 281,760 105,000 0 0 26,045 0 10,538
William A. Sullins, Jr.. 1998 240,750 100,000 0 0 15,750 0 23,738
Vice Chairman, 1997 237,999 85,000 0 0 19,844 0 17,196
Commerce Bancshares,
Inc. 1996 231,750 80,000 0 0 22,573 0 17,010
Seth M. Leadbeater...... 1998 190,750 100,000 0 0 14,175 0 10,589
Executive Vice
President, 1997 178,290 75,000 99,150 0 14,883 0 8,687
Commerce Bancshares,
Inc. 1996 165,654 62,000 0 0 13,889 0 7,611
Robert C. Matthews, Jr.. 1998 191,250 85,000 0 0 12,600 0 13,361
Executive Vice
President, 1997 186,750 60,000 0 0 14,883 0 11,081
Commerce Bancshares,
Inc. 1996 179,500 59,000 0 0 16,495 0 9,540
</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 benefit of these
individuals. For 1998, 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 1998, those amounts for the CERP and 401(k), respectively, are as
follows: David W. Kemper--$30,645 and $5,000; Jonathan M. Kemper--$8,335
and $5,000; William A. Sullins, Jr.--$14,603 and $5,000; Robert C.
Matthews, Jr.--$6,994 and $5,000; Seth M. Leadbeater--$4,765 and $5,000.
Other amounts are for the Group Term Life Insurance plan of the Company.
7
<PAGE>
Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation
Individual Grants for Option Term
- --------------------------------------------------------------------- ---------------------
(c)
% of
(b) Number Total
of Options/
Securities SARs
Underlying Granted
Options/ to (d)
SARs Employees Exercise or (e) (f) (g)
(a) Granted in Fiscal Base Price Expiration 5% 10%
Name (#) Year ($/Sh) Date ($) ($)
---- ---------- --------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
David W. Kemper......... 55,125 12.38% $42.7000 02/05/2008 1,480,261 3,751,271
Jonathan M. Kemper...... 25,200 5.66% $42.7000 02/05/2008 676,690 1,714,867
William A. Sullins, Jr.. 15,750 3.54% $42.7000 02/05/2008 422,932 1,071,792
Seth M. Leadbeater...... 14,175 3.18% $42.7000 02/05/2008 380,638 964,613
Robert C. Matthews, Jr.. 12,600 2.83% $42.7000 02/05/2008 338,345 857,433
</TABLE>
Options granted (column b) include only Incentive Stock Options (ISO),
subject to IRS limitations, and Non-Qualified Stock Options (NQ). All
substantive terms are identical--four (4) equal vesting periods with 25%
exercisable at date of grant and an additional 25% exercisable on each
anniversary date thereof, the exercise price is defined as the closing market
price on the date of grant, and the options are not exercisable following
voluntary termination. The options are not assignable but may be exercised by
the optionee's estate or beneficiary, subject to certain limitations, in the
case of the death of the optionee.
Aggregated Options/SAR Exercises in Last Fiscal Year and FY-End Option/SAR
Values
<TABLE>
<CAPTION>
(d) (e)
Number of Value of
Securities Unexercised
Underlying In-the-Money
Unexercised Options/SARs
(b) Options/SARs at
Shares (c) at FY-End FY-End
Acquired Value (#) ($)
(a) on Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
---- ----------- --------- ------------- -------------
<S> <C> <C> <C> <C>
David W. Kemper.............. 53,454 1,703,243 158,035 3,270,207
84,612 725,179
Jonathan M. Kemper........... 0 0 131,348 3,110,370
39,057 336,552
William A. Sullins, Jr....... 0 0 119,004 2,900,229
27,380 264,728
Seth M. Leadbeater........... 1,500 44,811 69,066 1,624,278
21,548 181,849
Robert C. Matthews, Jr....... 0 0 78,102 1,868,741
21,019 196,182
</TABLE>
8
<PAGE>
Performance Graph:
1993 1994 1995 1996 1997 1998
Commerce (CBSH) 100.00 101.70 154.42 199.98 312.36 312.59
NASDAQ Financial 100.00 100.24 145.98 187.13 285.87 276.58
S&P 500 100.00 101.32 139.40 171.40 228.59 293.91
Assumes $100 invested 12/31/93 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 cash balance formula effective
January 1, 1995. 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 by Section 401(a)(17) of
the Internal Revenue Code. 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 a rate not less than 5% of the account
balance at the end of the prior Plan Year (for 1998, the rate of interest was
7%). 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,
19, 16, 23, 23 and 8 years of service as of December 31, 1998.
Compensation covered by the Plan for 1998 includes salary (as reported in the
Summary Compensation Schedule) and was limited by Section 401(a)(17) of the
Internal Revenue Code to $160,000. The compensation for 1998 covered by the
Plan was: Mr. D. Kemper $160,000; Mr. Jonathan Kemper $160,000; Mr. Sullins
$160,000; Mr. Matthews $160,000; and Mr. Leadbeater $160,000.
The estimated annual benefits payable at normal retirement age for Messrs.
David Kemper, Jonathan Kemper, Sullins, Matthews and Leadbeater are $78,140,
$69,252, $45,944, $55,530, and $38,244, 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 any bonus deferred under a nonqualified deferred compensation
plan maintained by the Company and without regard to the pay limit of Section
401(a)(17) of the Internal Revenue Code and (2) is the benefit actually payable
under the Commerce Bancshares Retirement Plan.
Compensation covered by the CERP for 1998 includes salary and bonuses as
reported in the Summary Compensation Schedule. The compensation for 1998
covered by the CERP was: Mr. David Kemper $782,500; Mr. Jonathan Kemper
$298,125; Mr. Sullins $325,750; Mr. Matthews $251,250; and Mr. Leadbeater
$265,750.
The estimated annual benefits payable under the CERP at normal retirement age
for Messrs. David Kemper, Jonathan Kemper, Sullins, Matthews and Leadbeater are
$212,455, $47,169, $17,248, $19,601 and $20,874, 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 bank holding companies in geographic proximity, comparable asset size 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.
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<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, 1997, 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 comparable 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 base salary for senior executives for 1998
performance ranged from 56.1% in the case of the chief executive officer to
4.0%.
(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. However, the Company has
implemented targeted guidelines in determining option awards to all
participants in the option program including senior executives. Targeted
percents range from 25% to 400% of base pay depending on the grade of the
individual officer. Targeted percents may be exceeded when individual
participants' performance exceed expectations.
The Internal Revenue Code ("Code") contains a limitation on the
deductibility for tax purposes of certain executive compensation in excess of
$1,000,000. 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 1998, 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 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.
11
<PAGE>
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 Mary Ann Krey
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 1998, the Committee consisted of Ms. Mary Ann Krey and Messrs. Giorgio
Balzer and Andrew C. Taylor.
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 80,000,000 shares of common stock of
the par value of the $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 100,000,000 shares of common stock of the par value
of $5 per share.
Of the 80,000,000 shares of common stock, $5 par value, presently authorized
under the Articles of Incorporation, approximately 61,092,904 shares were
issued and outstanding as of January 31, 1998. Of the remaining 18,907,096
authorized but unissued shares of common stock (including 259,730 shares in
treasury), approximately 4,408,268 shares have been reserved for issuance under
the stock option, deferred compensation 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.
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.
12
<PAGE>
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 102,000,000 shares, consisting of (i)
2,000,000 shares of preferred stock of the par value of $1 per share and
(ii) 100,000,000 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 below.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSED AMENDMENT.
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 Jonathan M. Kemper, a Director and Executive Officer of the
Company, filed a monthly report on Form 4 relating to one transaction after
the due date, and Andrew Anderson, an executive officer of the Company, filed
a year-end Form 5 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, 1999, 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, 2000, shareholder proposals
must be received by the Company on or prior to November 20, 1999.
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 18, 1999
13
<PAGE>
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7 7 7 7 7 7 7 7 7 7
COMMERCE BANCSHARES, INC.
Proxy Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Jonathan M. Kemper and David W. Kemper, or
either of them, as agents and proxies with full power of substitution in each,
to represent the undersigned at the annual meeting of shareholders to be held
on April 21, 1999, or any adjournment thereof, on all matters coming before the
meeting.
Election of Directors. Nominees: change of address
W. Thomas Grant, II; James B. -------------------------------------
Hebenstreit; John H.
Robinson, Jr.; Dolph C.
Simons, Jr.; and William A.
Sullins, Jr.
-------------------------------------
-------------------------------------
-------------------------------------
(If you have written in the above
space, please mark the corresponding
box on the reverse side of this
card)
P R O X Y
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 you sign and return this card.
SEE REVERSE
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 CHI-
CAGO TRUST COMPANY OF NEW YORK, OUR TRANSFER AGENT, AT 1-800-317-4445 FOR AS-
SISTANCE IN CONSOLIDATING COMMON OWNERSHIP POSITIONS. REDUCING MAILINGS WILL
IMPROVE THE COMPANY'S OPERATING EFFICIENCIES.
<PAGE>
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7 7 7 7 7 7 7 7 7 7
1573
----
Please mark your votes as in this example.
X
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.
The Board of Directors recommends a vote FOR proposal 2
- --------------------------------------------------------------------------------
FOR
WITHHELD
FOR
AGAINST
ABSTAIN
1. Election of Directors
(see reverse)
2. To amend Articles of Incorporation to increase authorized common stock.
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
