<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 Rule 14a-11(c) or Rule 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)(1) 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:
- --------------------------------------------------------------------------------
<PAGE> 2
[COMMERCE BANCSHARES, INC. LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 19, 2000
The annual meeting of the shareholders of Commerce Bancshares, Inc., will
be held in the Plaza Room at the Ritz-Carlton, St. Louis, 100 Carondelet Plaza,
Clayton, Missouri, on April 19, 2000, at 9:30 a.m., for the following purposes:
(1) To elect five directors to the 2003 Class for a term of three years;
and
(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 25,
2000, 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 16, 2000
IT IS IMPORTANT THAT YOUR STOCK BE REPRESENTED AT THE MEETING. YOU ARE
URGED TO DATE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY.
<PAGE> 3
PROXY STATEMENT
COMMERCE BANCSHARES, INC.
ANNUAL MEETING APRIL 19, 2000
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 19, 2000. 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 16, 2000.
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 25, 2000, are entitled to
vote at the meeting, and at the close of business on said date there were
outstanding 61,856,051 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, 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, 1999, the trust departments of the Company's subsidiary
banks beneficially owned 3,541,942 shares representing 5.67% of the Company's
outstanding common stock as of that date. Of those shares the subsidiary banks
had (i) sole voting power over 2,082,426 shares; (ii) shared voting power over
1,459,516 shares, (iii) sole investment power over 2,082,426 shares and (iv)
shared investment power over 1,459,516 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, 1999. Such persons have sole voting and sole investment power as to
such shares unless otherwise noted.
1
<PAGE> 4
<TABLE>
<CAPTION>
NAME AND ADDRESS OF NUMBER PERCENT
BENEFICIAL OWNER OF SHARES OF CLASS
------------------- --------- --------
<S> <C> <C>
Giorgio Balzer.............................................. 6,381 **
Kansas City, Missouri
Fred L. Brown............................................... 6,266 **
St. Louis, Missouri
John Capps.................................................. 2,288 **
Creve Coeur, Missouri
Seth M. Leadbeater.......................................... 13,579 **
Clayton, Missouri........................................... 97,931(3)
W. Thomas Grant, II......................................... 2,882 **
Shawnee Mission, Kansas
James B. Hebenstreit........................................ 23,113 **
Kansas City, Missouri
Mary Ann Krey............................................... 5,003 **
St. Peters, Missouri
David W. Kemper............................................. 8,354
Clayton, Missouri........................................... 100,961(1)*
792,100(2)
207,814(3)
112,464(4)
641,730(5) 3.0
Jonathan M. Kemper.......................................... 11,607
Kansas City, Missouri....................................... 421,068(1)
641,730(5)
186,481(3)
112,464(4)
792,100(2) 3.5
Robert C. Matthews, Jr. .................................... 17,492
Kansas City, Missouri....................................... 107,329(3) **
Terry O. Meek............................................... 11,895 **
Springfield, Missouri
Benjamin F. Rassieur, III................................... 2,745 **
St. Louis, Missouri
John H. Robinson, Jr. ...................................... 4,395 **
Kansas City, Missouri
L. W. Stolzer............................................... 355,293(6) **
Manhattan, Kansas
William A. Sullins, Jr. .................................... 39,603
Clayton, Missouri........................................... 157,441(3) **
Andrew C. Taylor............................................ 10,881 **
St. Louis, Missouri
Robert H. West.............................................. 10,636 **
Kansas City, Missouri
All 25 directors, nominees and executive officers as a
group..................................................... 376,054
(including those listed above).............................. 522,029(1)
792,100(2)
756,996(3)
112,464(4)
641,730(5)
355,293(6) 5.7
</TABLE>
- ---------------
(1) Shared voting power and investment power.
2
<PAGE> 5
(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 875,754 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, 1999, Mr. James M. Kemper, Jr., father of David W. Kemper
and Jonathan M. Kemper was the beneficial owner of 2,818,695 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 5,200,417 shares of Company Common Stock representing 8.3% 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 2003 annual
meeting (the 2003 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
AND BUSINESS EXPERIENCE
NAME AND AGE DURING PAST 5 YEARS
------------ --------------------------
<S> <C>
2003 CLASS:
Giorgio Balzer, 59................ 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, 46............ Elected a director in January, 1997. He is 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.
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
PERIODS SERVED AS DIRECTOR
AND BUSINESS EXPERIENCE
NAME AND AGE DURING PAST 5 YEARS
------------ --------------------------
<S> <C>
Mary Ann Krey, 52................. Elected a director in April, 1996. She is the Chief
Executive Officer of Krey Distributing Company. Krey
Distributing Company is the exclusive Anheuser Busch
wholesaler for St. Charles and Lincoln counties in
Missouri. 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., a subsidiary of the
Company.
Terry O. Meek, 56................. 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., a
subsidiary of the Company.
L. W. Stolzer, 65................. Elected a director in October, 1995. He is the Chairman and
Chief Executive Officer of Griffith Lumber, Inc. Griffith
Lumber Company is a retail lumber and building materials
business located in Manhattan, Kansas, marketing to
commercial, industrial and construction accounts. Mr.
Stolzer 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.
</TABLE>
The following directors of the Company are not nominees for election, and
their terms will continue after the 2000 annual meeting.
<TABLE>
<S> <C>
2002 CLASS:
John R. Capps, 49................. Elected a director in February, 2000. Mr. Capps has served
as the President and Chief Executive Officer of Plaza Motor
Company since 1981. Plaza Motor Company is a retail
dealership for eight luxury automobile franchises. Mr.
Capps is a director of Whitfield School (from
1995-present), St. Louis Priory School (from 1988-present)
and Muny Opera (from 1999-present). He also served as a
director of Commerce Bank, N.A., a subsidiary of the
Company.
W. Thomas Grant, II, 49........... Elected a director in June, 1983. Mr. Grant became the
Chairman of the Board of LabOne, Inc. in October, 1995.
LabOne, Inc. is a national laboratory services provider
that performs insurance, clinical and substance abuse
testing. Mr. Grant also serves on the board of directors
for Kansas City Power and Light Company, Response
Oncologies, Inc., AMC Entertainment, Inc., and Business
Men's Assurance Company.
James B. Hebenstreit, 54.......... 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.
John H. Robinson, Jr., 49......... Elected a director in August, 1995. He is Vice Chairman of
Black & Veatch, an engineering, construction and technical
consulting services firm. He has been a director of
Alliance Resources Management, GP since September 1999,
Coeur d'Alenes Mines Corp. since April 1998, and
Protection One, Inc. since January 2000. He was a director
of Lab Holdings Inc. until August 1999. He has also served
as a director of Commerce Bank, N.A., a subsidiary of the
Company.
</TABLE>
4
<PAGE> 7
<TABLE>
<S> <C>
William A. Sullins, Jr., 61....... Elected a director in February, 1999. He is Vice Chairman of
the Company and is Vice Chairman of Commerce Bank, N.A., a
subsidiary of the Company.
2001 CLASS:
Fred L. Brown, 59................. Elected a director in February, 1994. Mr. Brown is Vice
Chairman (as of January 1, 1999) and a member of the board
of directors (since June, 1993) of BJC Health System which
provides acute, long-term care and related health care
services in Missouri and southern Illinois. He is also
immediate past Chairman of the American Hospital
Association (resigned December 31, 1999). He is a director
of Citation Computer Systems, Inc., Morrison Management
Specialists, Inc., America's Doctor.com (June 1999) and
Xcare.net (December 1999). He was a director of Senior
Assist until June 1999. He has also served as a director
of Commerce Bank, N.A., a subsidiary of the Company.
David W. Kemper, 49............... 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, III, 45..... Elected a director in August, 1997. Mr. Rassieur became
President of Paulo Products Co. in August, 1987. The company
is engaged in commercial heat treating, electroplating,
and furnace brazing services.
Andrew C. Taylor, 52.............. 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., a
subsidiary of the Company.
Robert H. West, 61................ Elected a director in October, 1985. Mr. West retired as
Chairman of the Board of Butler Manufacturing Company and
from its board of directors on July 1, 1999. He is a
director of Kansas City Power & Light Company and
Burlington Northern Santa Fe Corporation. Mr. West has
also served as a director of Commerce Bank, N.A., 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 three meetings during
1999.
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
5
<PAGE> 8
option plans. Directors Giorgio Balzer, Mary Ann Krey and Andrew C. Taylor
presently comprise the committee which held two meetings during 1999 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, Terry O. Meek
and Dolph C. Simons, Jr. (retired effective February 7, 2000), were members of
the committee which held one meeting in January 2000. By mid-February of each
year, the committee makes its recommendations to the Board of its proposed slate
of directors for the class of director to be submitted to the shareholders of
the Company at the annual meeting to be held the following April. The committee
will consider shareholder nominations, which should be submitted in writing by
the previous October 31 to the Company's Secretary, J. Daniel Stinnett, at its
principal office in Kansas City. The Board of Directors held four meetings
during 1999. Each director, except John H. Robinson, 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 1999, subsidiaries of the Company paid Tower Properties Company
$1,242,928 in rentals, $1,177,850 in leasing fees, $354,877 for operation of
parking garages, $751,424 for building management fees, $95,371 in parking fees,
and $2,769,557 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 48% of the outstanding
stock of Tower Properties Company.
The Company made the decision in 1999 to renovate the Commerce Trust
Building in Kansas City. Two of the three lots on which the Commerce Trust
Building is situated are not owned by the Company or any subsidiary. In order to
receive consideration for tax abatement on the project, the Company made the
decision to acquire the underlying fee interests. The two lots are owned by
various trust and individuals including trusts for which Commerce Bank, N.A. is
trustee. Messrs. David W. Kemper and Jonathan M. Kemper and certain of their
family have interests in the property sought to be purchased. Because of the
conflict of interest a petition was filed in the Circuit Court of Jackson
County, Missouri, Probate Division on November 3, 1999 seeking Court approval of
the sale of the lots to the Company for $554,000. Independent appraisals have
been obtained and the Court has appointed a Trustee Ad Litem to report on the
fairness of the offer. The Company has also agreed to pay the costs associated
with obtaining Court approval. A decision is expected soon.
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 nonemployee 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.
6
<PAGE> 9
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., Seth M. Leadbeater and Robert C.
Matthews, Jr. 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.
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 $100,000, during the fiscal year ended December 31, 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-----------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------- ------------------------ -------
(E) (G) (I)
OTHER (F) SECURITIES ALL
ANNUAL RESTRICTED UNDERLYING (H) OTHER
(C) (D) COMPEN- STOCK OPTIONS/ LTIP COMPEN-
(A) (B) SALARY BONUS SATION AWARDS SARS PAYOUTS SATION(1)
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($) $
--------------------------- ---- ------- ------- ------- ---------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
David W. Kemper................. 1999 574,584 470,000 0 0 63,000 0 65,785
Chairman, President & CEO 1998 542,500 306,000 0 0 57,881 0 37,211
Commerce Bancshares, Inc. 1997 534,500 240,000 0 0 60,774 0 13,814
Jonathan M. Kemper.............. 1999 309,000 165,000 0 0 28,350 0 19,524
Vice Chairman 1998 298,125 135,000 0 0 26,459 0 14,720
Commerce Bancshares, Inc. 1997 293,375 115,000 0 0 28,650 0 11,110
William A. Sullins, Jr. ........ 1999 246,500 125,000 0 0 15,750 0 29,229
Vice Chairman 1998 240,750 100,000 0 0 16,537 0 23,738
Commerce Bancshares, Inc. 1997 237,999 85,000 0 0 20,836 0 17,196
Seth M. Leadbeater.............. 1999 209,917 125,000 0 0 15,750 0 12,546
Executive Vice President 1998 190,750 100,000 0 0 14,883 0 10,589
Commerce Bancshares, Inc. 1997 178,290 75,000 99,150 0 15,627 0 8,687
Robert C. Matthews, Jr. ........ 1999 199,000 82,500 0 0 13,125 0 15,281
Executive Vice President, 1998 191,250 85,000 0 0 13,229 0 13,361
Commerce Bancshares, Inc. 1997 186,750 60,000 0 0 15,627 0 11,081
</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 1999, 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 1999, those amounts for the CERP and 401(k),
respectively, are as follows: David W. Kemper --59,597 and $5,000; Jonathan
M. Kemper--$13,433 and $5,000; William A. Sullins, Jr.--$19,859 and $5,000;
Seth M. Leadbeater--$6,722 and $5,000; and Robert C. Matthews, Jr.--$8,914
and $5,000. Other amounts are for the Group Term Life Insurance plan of the
Company.
7
<PAGE> 10
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM
- --------------------------------------------------------------------------------------- ----------------------
(C)
% OF
(B) TOTAL
NUMBER OF OPTIONS/
SECURITIES SARS
UNDERLYING GRANTED
OPTIONS/ TO (D)
SARS EMPLOYEES EXERCISE OR (E) (F) (G)
(A) GRANTED IN FISCAL BASE PRICE EXPIRATION 5% 10%
NAME (#) YEAR ($/SH) DATE ($) ($)
---- ---------- --------- ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
David W. Kemper................ 63,000 13.10% $36.4286 2/1/2009 1,443,313 3,657,639
Jonathan M. Kemper............. 28,350 5.89% $36.4286 2/1/2009 649,491 1,645,938
William A. Sullins, Jr......... 15,750 3.27% $36.4286 2/1/2009 360,828 914,410
Seth M. Leadbeater............. 15,750 3.27% $36.4286 2/1/2009 360,828 914,410
Robert C. Matthews, Jr......... 13,125 2.73% $36.4286 2/1/2009 300,690 762,008
</TABLE>
Options granted (column b) include only Incentive Stock Options (ISO),
subject to IRS limitations, and Non-Qualified Stock Options (NQ). All
substantive terms are identical--four (4) equal vesting periods with 25%
exercisable at date of grant and an additional 25% exercisable on each
anniversary date thereof, the exercise price is defined as the closing market
price on the date of grant, and the options are not exercisable following
voluntary termination. The options are not assignable but may be exercised by
the optionee's estate or beneficiary, subject to certain limitations, in the
case of the death of the optionee.
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR
VALUES
<TABLE>
<CAPTION>
(D) (E)
NUMBER OF VALUE OF
SECURITIES UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS/SARS
(B) OPTIONS/SARS AT
SHARES (C) AT FY-END FY-END
ACQUIRED VALUE (#) ($)
(A) ON EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
---- ----------- -------- ------------- -------------
<S> <C> <C> <C> <C>
David W. Kemper................................ 63,993 1,645,111 162,402 1,398,575
91,381 104,796
Jonathan M. Kemper............................. 0 0 165,616 2,390,967
41,653 49,404
William A. Sullins, Jr......................... 0 0 144,161 2,223,487
25,287 35,925
Seth M. Leadbeater............................. 1,365 29,542 86,366 1,218,897
23,159 26,944
Robert C. Matthews, Jr......................... 0 0 96,835 1,438,207
20,362 26,944
</TABLE>
8
<PAGE> 11
PERFORMANCE GRAPH:
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
COMMERCE (CBSH) NASDAQ FINANCIAL S&P 500
--------------- ---------------- -------
<S> <C> <C> <C>
1994 100.00 100.00 100.00
1995 152.00 146.00 138.00
1996 197.00 187.00 169.00
1997 309.00 286.00 226.00
1998 307.00 278.00 292.00
1999 261.00 275.00 354.00
</TABLE>
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 Restated 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 1999, 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 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
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<PAGE> 12
retirement age under the Plan is 65. Reduced benefits are available as early as
age 55. Messrs. D. Kemper, Jonathan Kemper, Sullins, Leadbeater and Matthews
have, respectively, 21, 17, 24, 9 and 29 years of service as of December 31,
1999.
Compensation covered by the Plan for 1999 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 1999 covered by the Plan
was: Mr. D. Kemper $160,000; Mr. Jonathan Kemper $160,000; Mr. Sullins $160,000;
Mr. Leadbeater $160,000; and Mr. Matthews $160,000.
The estimated annual benefits payable at normal retirement age for Messrs.
David Kemper, Jonathan Kemper, Sullins, Leadbeater and Matthews are $80,268,
$71,596, $46,683, $39,980, and $57,268, 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 1999 includes salary and bonuses as
reported in the Summary Compensation Schedule. The compensation for 1999 covered
by the CERP was: Mr. David Kemper $880,584; Mr. Jonathan Kemper $309,000; Mr.
Sullins $346,500; Mr. Leadbeater $309,917; and Mr. Matthews $284,000.
The estimated annual benefits payable under the CERP at normal retirement
age for Messrs. David Kemper, Jonathan Kemper, Sullins, Leadbeater and Matthews
are $233,079, $47,951, $18,124, $26,879 and $23,709, 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 earnings per share, 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.
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, 1999, 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
10
<PAGE> 13
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. The Committee conducted a total
compensation study during 1999 and recommended base salary adjustments to
certain executives.
(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 1999
performance ranged from 78.3% in the case of the chief executive officer to
4.0%. The Committee approved increases in the targeted bonus percent in
1999 for certain executives based on a study of total compensation.
(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. A new long term incentive
component was added during 1999 based on a study reviewed by the
Compensation and Benefit Committee. This new component is restricted stock
awards based on the overall long-term performance of the Company.
The overall executive compensation policy described above also applies to
the compensation of the Chief Executive Officer. The Compensation and Benefits
Committee reviews Mr. David Kemper's performance each year and makes
recommendations to the board for any increases. Mr. Kemper completes a
self-appraisal which the Committee considers before making its final
recommendation. Several factors were considered in the review of Mr. Kemper's
performance in 1999 with an overall focus on the increase in the franchise value
of the company. The Committee noted that the Company exceeded budgeted earnings
per share during 1999 with a growth rate of 13%. Besides financial performance
the Committee also considered factors such as growth in the human capital of the
organization, the continued reinvestment and improvement of the company's
product offerings and the overall focus on risk management.
The Compensation and Benefits Committee also reviews annually the total
compensation of key executives to determine whether the Company's compensation
package is competitive when compared to national survey data as well as a peer
group of executives at bank holding companies in geographic proximity,
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<PAGE> 14
comparable asset size and considered to be direct competitors with the Company.
The Committee determined in 1999 that Mr. Kemper's total cash compensation was
below the market average and recommended increases to both his base pay and
target bonus percent. Mr. Kemper's base pay was increased from $565,000 to
$600,000 and his target bonus percent was increased from 50% to 75% of base pay.
The Committee presented its recommendations to the full Board at a meeting on
July 30, 1999 where the Board approved the changes to Mr. Kemper's compensation
and that of other key executives.
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 1999, 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 was paid compensation in 1999 which would exceed
$1,000,000 per year. By amending the NonQualified 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 nonqualified 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 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 1999, the Committee consisted of Ms. Mary Ann Krey and Messrs. Giorgio
Balzer and Andrew C. Taylor.
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 Kevin G. Barth, a Senior Vice President of the Company, filed a
monthly report on Form 4 relating to one transaction after the due date; and
Terry O Meek, a director of the Company, filed a monthly report on Form 4
relating to one transaction after the due date. The Company's review determined
that the late filings were 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 LLP
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, 2000, 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 LLP 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.
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<PAGE> 15
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, 2001 shareholder proposals
must be received by the Company on or prior to November 20, 2000.
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 16, 2000
13
<PAGE> 16
PROXY
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 19, 2000, 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 CHOICE BY MARKING THE APPROPRIATE BOX, SEE
REVERSE SIDE. IF YOU SIGN THE CARD AND DO NOT MARK A BOX, YOUR SHARES WILL BE
VOTED IN FAVOR OF THE NOMINEES. YOUR SHARES CANNOT BE VOTED UNLESS YOU SIGN
AND RETURN THIS CARD.
[SEE REVERSE SIDE]
- --------------------------------------------------------------------------------
- DETACH AND RETURN PROXY CARD -
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 1-800-317-4445 FOR
ASSISTANCE IN CONSOLIDATING COMMON OWNERSHIP POSITIONS. REDUCING MAILINGS WILL
IMPROVE THE COMPANY'S OPERATING EFFICIENCIES.
<PAGE> 17
<TABLE>
<S><C>
Please mark your
| X | vote 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
1. 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 to vote at
said meeting or any adjournments thereof.
--------------------------------------------------------------------
--------------------------------------------------------------------
SIGNATURE(S) DATE
- -----------------------------------------------------------------------------------------------------------------------------------
/\ FOLD AND DETACH HERE /\
IMPORTANT: PLEASE VOTE AND SIGN YOUR
PROXY AND RETURN IT IN THE ENVELOPE PROVIDED
</TABLE>
