<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
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
FIRST SECURITY CORPORATION
(Name of Registrant as Specified In Its Charter)
(same)
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/x/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies: n/a
2) Aggregate number of securities to which transaction applies: n/a
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: (1) n/a
4) Proposed maximum aggregate value of transaction:
__________________
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / 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: n/a
2) Form, Schedule or Registration Statement No.: n/a
3) Filing Party: n/a
4) Date Filed: n/a
<PAGE>
FIRST SECURITY CORPORATION
79 SOUTH MAIN STREET
SALT LAKE CITY, UTAH 84111
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MONDAY, APRIL 25, 1994 AT 3:00 P.M.
TO THE SHAREHOLDERS OF FIRST SECURITY CORPORATION:
Pursuant to the Bylaws of First Security Corporation, we are pleased to
invite you to the Annual Meeting of the Shareholders of the Company, which will
be held in the Auditorium of the Utah Power & Light Company building located at
40 East First South Street, Salt Lake City, Utah on Monday, April 25, 1994, at
3:00 p.m. for the following purposes:
1. TO ELECT A BOARD OF DIRECTORS TO SERVE FOR THE ENSUING YEAR;
2. TO CONSIDER AND VOTE ON THE PROPOSED INCREASE IN THE NUMBER OF SHARES
AVAILABLE UNDER THE COMPANY'S COMPREHENSIVE MANAGEMENT INCENTIVE PLAN
FROM THE CURRENT 3,937,500 SHARES TO 6,437,500 SHARES FOR USE AS
INCENTIVE AWARDS UNDER THE PLAN AND THE PROPOSED CAP ON THE NUMBER OF
SHARES THAT CAN BE AWARDED TO ANY SINGLE EMPLOYEE;
3. TO TRANSACT SUCH OTHER BUSINESS AS MAY BE PROPERLY BROUGHT BEFORE THE
ANNUAL MEETING OR AT ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
The close of business on Monday, March 7, 1994, was fixed by the Board of
Directors as the Record Date for the determination of the Shareholders entitled
to notice of, and to vote at the 1994 Annual Meeting. In accordance with
Delaware law, a list of the Company's Shareholders entitled to vote at the 1994
Annual Meeting will be available for examination at the offices of the Company,
2nd Floor, 79 South Main Street, Salt Lake City, Utah 84111, for ten business
days prior to the Annual Meeting, between the hours of 9:00 a.m. and 5:00 p.m.,
and during the Annual Meeting.
The Annual Meeting is expected to conclude before 4:30 p.m. so that a Board
of Directors meeting can be held in the afternoon. We hope you will attend the
Annual Meeting.
WHETHER OR NOT YOU EXPECT TO ATTEND, PLEASE IMMEDIATELY SIGN AND COMPLETE
THE ENCLOSED PROXY DESIGNATION AND INSTRUCTION CARD ("PROXY") AND RETURN IT IN
THE ENVELOPE PROVIDED SO THAT YOUR SHARES MAY BE REPRESENTED AT THE ANNUAL
MEETING. NO POSTAGE IS REQUIRED IF A PROXY IS MAILED IN THE UNITED STATES. IF
YOU OWN BOTH COMMON STOCK AND CUMULATIVE CONVERTIBLE PREFERRED STOCK, PLEASE
SIGN AND RETURN BOTH PROXIES. IF A MAJORITY OF OUTSTANDING SHARES ARE NOT
PRESENT AT THE MEETING EITHER IN PERSON OR BY PROXY, THE MEETING MUST BE
ADJOURNED WITHOUT CONDUCTING BUSINESS, AND ADDITIONAL EXPENSE WILL BE INCURRED
TO RESOLICIT THE SHAREHOLDERS FOR A NEW MEETING DATE.
Sent to you with this Notice and the accompanying Proxy Statement is the
Company's 1993 Annual Report to Shareholders, which contains the audited
financial statements of the Company and certain other information about the
Company and its operating results for 1993.
BY ORDER OF THE BOARD OF DIRECTORS
Dated March 15, 1994
/s/ ALONZO W. WATSON, JR.
-------------------------
ALONZO W. WATSON, JR.
Secretary of the Company
<PAGE>
[Logo]
PROXY STATEMENT
March 15, 1994
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
GENERAL INFORMATION FOR SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
LAST YEAR'S (April 26, 1993) ANNUAL MEETING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
INDEPENDENT AUDITORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
MANAGEMENT OF THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Board of Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Director Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Executive Officers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
COMPENSATION OF EXECUTIVE OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Compensation Committee Report on Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Summary of Compensation To Certain Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Stock Options and Similar Awards to Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Retirement Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Compensation Committee Interlocks and Insider Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
CERTAIN TRANSACTIONS BY AND WITH MANAGEMENT AND OTHERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Credit Extensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Other Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Severance Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
COMPARATIVE PERFORMANCE OF THE COMPANY'S COMMON STOCK. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
PRINCIPAL SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
PROPOSALS FOR SHAREHOLDER ACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
1. Election of Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
2. Proposed Increase in the Number of Shares Available Under the Company's Comprehensive ManagementIncentive Plan and
Proposed Cap on Shares That May Be Awarded to Any Single Employee Under the Plan . . . . . . . . . . . . . . . . . . . .21
OTHER BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
DEADLINE FOR SHAREHOLDER PROPOSALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
</TABLE>
GENERAL INFORMATION FOR SHAREHOLDERS
This Proxy Statement is furnished to its Shareholders by First Security
Corporation, a Delaware corporation (hereinafter called the "Company"), in
connection with the solicitation by the current Board of Directors of proxies
for use at the Annual Meeting of Shareholders to be held in the Auditorium of
the Utah Power building at 40 East First South Street, Salt Lake City, Utah, on
Monday, April 25, 1994 at 3:00 p.m., and at any and all adjournments thereof.
<PAGE>
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VOTING SECURITIES
The Board of Directors has fixed the close of business on March 7, 1994 as
the RECORD DATE for determination of shareholders entitled to notice of and to
vote at the Annual Meeting (the "Record Date"). As of the Record Date, there
were issued and outstanding 48,388,707 shares of Common Stock and 13,274 shares
of $3.15 Series "A" Cumulative Convertible Preferred Stock. The holders of
record of the shares of the Company's Common Stock and of shares of the
Company's Preferred Stock on the Record Date entitled to be voted at the Annual
Meeting are entitled to cast one vote per share on each matter submitted to a
vote at the Annual Meeting.
As of August 28, 1989, the Company adopted a Shareholder Rights Agreement
("the Plan") and the Board of Directors of the Company on that date (a) declared
a dividend of one "Right" for each share of Common Stock held of record as of
the close of business on September 8, 1989, and (b) authorized the issuance of
one Right in respect of each share of Common Stock issued after September 8,
1989, and prior to the occurrence of certain events described in the Plan. Each
Right entitles the registered holder to purchase from the Company a unit
consisting of one-thousandth of a share of Junior Series B Preferred Stock at a
purchase price of $44.44 per unit. The Rights are attached to all Common Stock
certificates that were outstanding on September 8, 1989, or have been issued
since that date, and no separate Rights Certificates have been or will be
distributed until the occurrence of certain events described in the Rights
Agreement. Until such separation, no Right may be exercised or traded
separately from the Common Stock certificate to which it is attached. Following
separation, the Rights may, depending upon the occurrence of certain events
described in the Rights Agreement, entitle the holders thereof to either
purchase or receive additional shares of Common Stock. The Rights will expire
at the close of business on August 28, 1999, unless earlier redeemed by the
Company in accordance with the terms of the Plan.
PROXIES
A Proxy Designation and Instruction Form ("proxy") for your use in
connection with the Annual Meeting is enclosed. IF you own BOTH Common Stock
and Cumulative Convertible Preferred Stock, you should have received TWO
proxies, and you are requested to date and sign BOTH of the enclosed proxies,
and return them in the envelope provided.
Shares of Preferred Stock and Common Stock which are entitled to be voted
at the Annual Meeting and which are represented by properly executed proxies
will be voted in accordance with the instructions indicated on such proxies. If
no instructions are indicated, such shares will be voted FOR the election of
each of the Director nominees; FOR the proposed additional shares for the
Comprehensive Management Incentive Plan and cap on shares that can be awarded to
any single employee; and, in the discretion of the proxy holders, as to any
other matters which may properly come before the Annual Meeting. A Shareholder
who has executed and returned a proxy may revoke it at any time prior to its
exercise at the Annual Meeting by executing and returning a proxy bearing a
later date, by filing with the Secretary of the Company, at the address set
forth above, a written notice of revocation bearing a later date than the proxy
being revoked, or by voting the Preferred Stock or Common Stock covered thereby
in person at the Annual Meeting.
ANY SHAREHOLDER SIGNING AND DELIVERING A PROXY HAS THE POWER TO REVOKE IT
AT ANY TIME BEFORE THE VOTE AT THE ANNUAL MEETING BY NOTIFYING THE SECRETARY OF
THE COMPANY IN WRITING PRIOR TO 3:00 P.M. M.S.T. ON APRIL 25, 1994, OR BY
VOICING SUCH REVOCATION IN PERSON AT THE ANNUAL MEETING AT THE TIME VOTES ARE
REQUESTED.
If a Shareholder wishes to designate someone other than the designated
persons named on the proxy card as his authorized agent to vote by proxy at the
Annual Meeting, you may do so by crossing out the names of all of the designated
persons printed on the proxy card and by writing in the name of another person
or persons (not more than 2) to act as agent for the Shareholder in voting his
shares. Such a special proxy designation signed by the Shareholder(s) must be
presented at the Meeting by the person or persons you have designated on the
card.
For Shareholders participating in the Dividend Reinvestment Plan offered by
the Company, the Plan will vote all shares of First Security Common Stock that
it holds for a participant's account in accordance with the Proxy card returned
by the participant with respect to the shares of Common Stock which the
participant holds of record. If such proxy is not returned by the participant,
the participant's shares held in the Plan will not be voted.
<PAGE>
-3-
VOTE REQUIRED
A majority of the share votes entitled to be cast at the Annual Meeting is
required for a quorum at the Annual Meeting. Abstentions and broker non-votes
are counted for purposes of determining the presence or absence of a quorum for
the transaction of business. In the election of Directors, the nominees
receiving the highest number of votes will be elected. Accordingly, abstentions
and broker non-votes will not affect the outcome of the election of Directors.
The proposed amendments to the Comprehensive Management Incentive Plan require
that the number of votes cast in favor of the respective proposals exceeds the
number of votes cast in opposition. Abstentions and broker non-votes will not
affect the outcome of the proposals. Holders of shares of Preferred Stock and
the Company's Common Stock are entitled to one vote at the Annual Meeting for
each share held of record at the Record Date.
The cost of preparing, assembling and mailing these proxy materials will be
borne by the Company. The solicitation of proxies by the Directors is being
made by mail, and may also be made by agents of the Company, in person, by
telephone, or by mail. No additional compensation will be given to employees or
Directors for such solicitation. Non-employee agents may be retained to assist
in the proxy solicitation process at a cost to the Company, if any, not expected
to exceed $15,000. Custodians of securities held for Shareholders of record
(for example, banks, brokers, etc.) may be paid their reasonable out-of-pocket
expenses incurred in forwarding proxy materials to Shareholders.
This Proxy Statement and the enclosed form of proxy are being mailed to
Shareholders beginning on March 21, 1994. Mailed together with this Proxy
Statement is a copy of the Company's 1993 Annual Report to Shareholders.
SHAREHOLDERS WHO DO NOT RECEIVE A COPY OF THE 1993 ANNUAL REPORT WITH THIS PROXY
STATEMENT, OR WHO DESIRE EXTRA COPIES, SHOULD CONTACT THE COMPANY AT (801)
246-5048.
<PAGE>
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LAST YEAR'S (APRIL 26, 1993) ANNUAL MEETING
The 1993 Annual Meeting of the Shareholders was held on April 26, 1993 in
Salt Lake City, Utah. There were 31,273,236 shares of Common Stock and 8,680
shares of Preferred Stock represented at the 1993 Annual Meeting in person or by
proxy, which shares constituted a legal quorum. Each of the nominees to the
Board of Directors presented to the 1993 Annual Meeting was voted upon
separately, and each was elected by the affirmative vote of more than 98% of the
shares present and voting. The proposal to increase the number of authorized
shares of common stock (par value $1.25) from 65,000,000 to 150,000,000 shares
was also approved by the approximate vote of more than 87% of the shares present
and voting.
INDEPENDENT AUDITORS
The Board of Directors has appointed Deloitte & Touche as the independent
auditors to examine the accounts of the Company and its subsidiaries for the
1994 calendar year. This firm or a predecessor firm has audited the Company's
accounts since at least 1940 and is one of the largest and best known firms of
independent certified public accountants. Deloitte & Touche rotates its
personnel assigned to First Security Corporation at least once every five years,
with assignments beyond three years of supervising partners responsible for the
First Security Corporation engagement reviewed and approved in advance by the
Audit Committee. A member of the firm will be in attendance at the Annual
Meeting to make a statement on behalf of the firm if he so desires and to answer
appropriate questions, if any, from Shareholders.
PRINCIPAL SHAREHOLDERS
The following TABLE 1 provides information with respect to any person known
to the Company to be the beneficial owner (within the meaning of applicable
governmental regulations) of five percent (5%) or more of any class of the
Company's voting securities as of the Record Date:
TABLE 1
PRINCIPAL SHAREHOLDERS OF THE COMPANY
-------------------------------------
<TABLE>
<CAPTION>
Amount and Nature of Percent
Name and Address Title of Class Beneficial Ownership of Class
- - - ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
First Security Bank of Utah,
N.A. Common Stock 4,661,613 shares, (1) as 9.54%
Trust Group Trustee of separate trust
79 South Main Street accounts
Salt Lake City, UT 84111
<FN>
(1) Of the 4,661,613 shares which the Trust Group of First Security Bank of
Utah, N.A. holds in various fiduciary capacities, it has voting power over
4,466,574 shares ( 9.14% of the total outstanding shares) and no power to
vote the remaining 195,039 shares.
</TABLE>
<PAGE>
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MANAGEMENT OF THE COMPANY
BOARD OF DIRECTORS
The business of the Company is managed under the direction of its Board of
Directors. The Board has responsibility for establishing broad corporate
policies, for the overall performance of the Company and for the election and
compensation of officers of the Company. It is not, however, involved in
managing the Company and its operating units on a day-to-day basis. The Board
is kept advised of the Company's operations and results through regular written
reports from, and discussions with, the Chairman, the President, the Chief
Financial Officer and other executive officers of the Company.
The Board of Directors meets regularly during the year to review
significant developments affecting the Company and to act on matters requiring
Board approval. It also holds special meetings when an important matter
requires Board action between scheduled meetings. Executive officers
responsible for significant operations or supervisory activities are frequently
invited to meet with the Board of Directors to discuss their areas of
responsibility.
As disclosed to the Company, the Board of Directors as presently
constituted (including any new nominees to be voted on at the 1994 Annual
Meeting) beneficially own AS A GROUP 2,933,181.1 shares, or approximately 6% of
the Company's outstanding Common Stock, including 584,865 option shares
exercisable within 60 days of the Record Date but which were unexercised as of
the Record Date, and including the 260,395 shares beneficially owned by the four
(4) Honorary Directors as a group.
The Board of Directors held six (6) meetings during 1993. All Directors
attended all of the meetings of the Board during the period they held office
except Elder Haight and Mrs. Huntsman, who each attended 4 of the meetings, and
Messrs. Ashton, Gardner, Hunter and Sorenson, who each attended five (5) of the
meetings.
The EXECUTIVE COMMITTEE of the Board of Directors exercises the powers of
the Board in the management of the business and affairs of the Company between
Board of Directors meetings or when the Board could not reasonably or timely be
convened. The Executive Committee also serves as the Board's nominating
committee for the election of Directors. The Executive Committee keeps regular
minutes of its meetings and reports to the Board of Directors at the regular
meetings of the Board. The Executive Committee met monthly during 1993.
Messrs. Eccles, Evans and Heiner attended all of the meetings, Messrs. Dee,
Parker and Brady attended 11 of the meetings, and Mr. Beardall attended 8 of the
meetings (following his election to the Executive Committee in 1993).
Mr. Harold Steele retired from the Executive Committee in January 1993
after many years of dedicated and faithful service to the Shareholders in this
important assignment.
The AUDIT COMMITTEE of the Board, which met 4 times during 1993, reports to
the Board of Directors with respect to various auditing and accounting matters,
the scope of audit procedures, the performance of the internal auditors and
examiners, and accounting and compliance practices of the Company. All members
of the Audit Committee attended all of the scheduled meetings, except Mr.
Ashton, who attended 3 out of the 4 meetings.
The COMPENSATION COMMITTEE administers the various incentive award and
equity plans of the Company on behalf of the Board of Directors. The
Compensation Committee also determines compensation for the Executive Officers
of the Company who serve on the Management Committee (Messrs. Eccles, Evans,
King, McMurray, Nelson and Ulbrich). The Compensation Committee met twice
during 1993. All members of the Committee attended both meetings, except Mr.
Joklik, who attended only one of the meetings.
HONORARY DIRECTORS are provided information about the Company on the same
basis as regular Directors, and are invited to meetings of the Board of
Directors, although Honorary Directors do not vote on any matter before the
Board. Currently Val A. Browning, Ralph J.
<PAGE>
-6-
Comstock, Dr. Chase N. Petersen, and James E. Phelps are serving as Honorary
Directors of the Company. These persons beneficially owned 195,000 shares,
47,199 shares, 225 shares and 17,971 shares, respectively of the Company's
Common Stock at year end 1993.
DIRECTOR COMPENSATION
During 1993, a cash retainer of $12,000 was paid to each Director, as well
as a $1,000 fee for attendance at each meeting of the Board of Directors (or a
fee of $300.00 for each scheduled meeting not attended). Director compensation
is paid in four quarterly installments in arrears to those Directors who do not
defer their compensation, as described below, but the full amount of the
retainer is paid in advance at the start of the year for those Directors who
defer their compensation as described below. Messrs. Eccles and Evans do not
receive the annual retainer, but they are paid the per meeting fees. The Bylaws
permit payment of Directors' expenses incurred in travelling to and attending
Board of Directors meetings.
Directors of the Company who are not Executive Officers may enter into a
compensation deferral agreement with the Company whereby the payment of
retainers and fees otherwise receivable by a Director for service as a Director
may be deferred and held in an account for the benefit of the Director. The
Director may choose whether this deferred compensation will be invested in
"stock equivalency units" or earn interest at a predetermined rate. A Director
selecting "stock equivalency units" will be credited with that number of stock
equivalency units equal to the result of dividing the total amount of deferred
compensation in the Director's account on the Annual Evaluation Date (usually
May 1) by the market price of the Company's common stock on that date.
Moreover, additions are made to the Director's account to represent the value of
dividends that otherwise would be paid on the stock equivalent units if they
were actual shares of common stock. A Director electing to earn interest only
will have interest added annually on the Valuation Date at a rate equal to the
Company's cost of funds for the applicable period. Directors may choose a lump
sum cash distribution upon retirement from the Board of Directors or a periodic
distribution program which could involve up to ten annual cash payment
installments. Amounts remaining in a Director's deferral account during any
term of periodic distributions will continue to be revalued annually.
Additional per meeting fees of $1,000 were paid in 1993 to Directors who
were members of the Audit Committee and the Compensation Committee, with the
Chairmen of these committees being paid an annual retainer of $2,000 in addition
to the per meeting fees. Directors who were members of the Executive Committee
and who are not Executive Officers of the Company were paid an additional fee of
$15,000 annually. Committee members who do not attend a meeting will get no
compensation for the missed committee meeting. These additional fees for
Directors' committee service may be deferred in the same manner (discussed
above) as are regular Directors' fees.
Honorary Directors are paid $1,000 per Board of Directors' Meeting that
they attend and $300 per Directors' Meeting not attended.
EXECUTIVE OFFICERS
Set forth on TABLE 2, below, are the names, ages, responsibilities and
beneficial stock ownership (as of December 31, 1993) of all Executive Officers
holding office as of the Record Date except Messrs. Eccles (Chairman and Chief
Executive Officer) and Evans (President and Chief Operating Officer), whose
biographical and share ownership information is found with the other Director
nominees later in this Proxy Statement. Executive Officers serve at the
pleasure of the Board of Directors, although as disclosed later in this Proxy
Statement, certain Executive Officers have entered into agreements governing the
termination of their employment with the Company.
<PAGE>
-7-
TABLE 2
EXECUTIVE OFFICERS OF FIRST SECURITY CORPORATION
JAY S. BACHMAN, 44, is Senior Vice President and Treasurer. At year end 1993,
Mr. Bachman was the beneficial owner of 4,374 shares of Common Stock, including
2,258 option shares exercisable within 60 days of the Record Date, but not yet
exercised, and 1,040 shares held in his account in the Company's Incentive
Savings Plan (1).
C. THOMAS COOK, 54, is Senior Vice President and Chief Information Officer of
the Company. Prior to joining the Company, he was Senior Vice President and
Director of Information Systems at Security Pacific Bank-Washington between
October 1984 and October 1992. At year end 1993, Mr. Cook was the beneficial
owner of 1,747 shares of Common Stock, including 1,744 shares under options
exercisable within 60 days of the Record Date, but not yet exercised, and 3
shares held in his account in the Company's Incentive Savings Plan.
BRAD D. HARDY, 40, is Assistant Secretary of the Company and is a Director of
Ray, Quinney & Nebeker (law firm). At year end 1993, Mr. Hardy beneficially
owned no shares of Common Stock, and he acquired 200 shares in February 1994.
T. EUGENE KING, 60, is an Executive Vice President of the Company and is also
Chairman, President and Chief Executive Officer of First Security Service
Company, Chairman of First Security Information Technologies, Inc., and is a
member of the Company's Management Committee. At year end 1993, he was the
beneficial owner of 93,119.5 shares of Common Stock, including 78,601.5 option
shares exercisable within 60 days of the Record Date, but not yet exercised, and
4,518 shares held in his account in the Company's Incentive Savings Plan. This
amount is approximately 0.19% of the total outstanding shares of Common Stock at
the Record Date.
KELLY K. MATTHEWS, 49, is Senior Vice President (Economist). At year end 1993,
Mr. Matthews was the beneficial owner of 35,626 shares of Common Stock,
including 25,847 option shares exercisable within 60 days of the Record Date,
but not yet exercised, and 3,198 shares held in his account in the Company's
Incentive Savings Plan.
J. PATRICK MCMURRAY, 45, is an Executive Vice President of the Company, and also
serves as Chairman, President and Chief Executive Officer of First Security Bank
of Idaho, as Chairman of First Security Bank of Nevada, and as a member of the
Company's Management Committee. At year end 1993, he was the beneficial owner
of 83,977 shares of Common Stock, including 72,842 option shares exercisable
within 60 days of the Record Date, but not yet exercised, and 6,378 shares held
in his account in the Company's Incentive Savings Plan. This amount is
approximately 0.17% of the total outstanding shares of Common Stock at the
Record Date.
L. SCOTT NELSON, 55, is an Executive Vice President of the Company, and also
serves as Chairman, President and Chief Executive Officer of First Security Bank
of Utah, Chairman of First Security Bank of New Mexico, and as a member of the
Company's Management Committee. At year end 1993, he was the beneficial owner
of 149,525.5 shares of Common Stock including certain shares held by Mr.
Nelson's spouse in her own name, and including 140,638.5 option shares
exercisable within 60 days of the Record Date, but not yet exercised, and 3,074
shares held in his account in the Company's Incentive Savings Plan. This amount
is approximately 0.30% of the total outstanding shares of Common Stock at the
Record Date.
LESLIE F. PASKETT, 49, is Senior Vice President and Tax Officer. At year end
1993, he was the beneficial owner of 24,229.5 shares of Common Stock, including
16,851.50 option shares exercisable within 60 days of the Record Date, but not
yet exercised, and 6,335 shares held in his account in the Company's Incentive
Savings Plan.
DENNIS G. REEVES, 54, was elected a Senior Vice President and Chief Auditor of
the Company in 1993. He previously was a Vice President and accounting manager
in the Comptroller's Division of the Company. At year end 1993, Mr. Reeves was
the beneficial owner of 335 shares of Common Stock, including no option shares
exercisable within 60 days of the Record Date, but not yet exercised, and 235
shares held in his account in the Company's Incentive Savings Plan.
SCOTT C. ULBRICH, 39, is an Executive Vice President and Chief Financial Officer
of the Company, and is a member of the Company's Management Committee. At year
end 1993, he was the beneficial owner of 27,540.5 shares of Common Stock,
including 25,707.50 option shares exercisable within 60 days of the Record Date,
but not yet exercised, and 417 shares held in his account in the Company's
Incentive Savings Plan.
GARY R. VANCE, 58, is Senior Vice President and Comptroller. At year end 1993,
he was the beneficial owner of 28,689.50 shares of Common Stock, including
24,462.50 options shares exercisable within 60 days of the Record Date, but not
yet exercised, and 3,322 shares held in his account in the Company's Incentive
Savings Plan.
ALONZO W. WATSON, JR., 71, is Secretary of the Company, and is a Director of
Ray, Quinney & Nebeker (law firm). At year end 1993, he was the beneficial
owner of 1,450 shares of Common Stock, which does not include 62,630.061 shares
as to which Mr. Watson holds voting and investment power as Personal
Representative of the Estate of Mrs. George S. Eccles and of the Estate of
George S. Eccles; does not include 1,044,092 shares held by the George S. and
Dolores Dore Eccles Foundation, of which Mr. Watson is an officer; or 60,750
shares held by the Marriner S. Eccles Charitable Trust, of which Mr. Watson is a
Director; but does include certain shares held by Mr. Watson's spouse in her own
name.
---------------
(1) These shares are beneficially owned under applicable legal definition,
but are not voted by the officer. These shares are voted by the Plan
Trustee, First Security Bank of Utah, N.A.
<PAGE>
-8-
DAVID R. WILSON, 54, is Executive Vice President and Manager of the Capital
Markets Department of the Company. At year end 1993, he was the beneficial
owner of 24,277.5 shares of Common Stock including 21,647.50 option shares
exercisable within 60 days of the Record Date, but not yet exercised, and 1,622
shares held in his account in the Company's Incentive Savings Plan.
Based on their disclosed share holdings at December 31, 1993, all of the
Company's Executive Officers as a group for 15 persons (including Messrs. Eccles
and Evans, whose stockholdings are described in the Election of Directors
section, below), beneficially owned a total of 2,394,931.85 shares, or
approximately 4.9%, of the Company's Common Stock (including 995,465 shares
subject to unexercised options exercisable within 60 days of the Record Date),
55,632 shares held in accounts in the Company's Incentive Savings Plan, and 63
shares, or approximately 0.47%, of the Company's Preferred Stock, all
percentages calculated as of the Record Date.
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY OF COMPENSATION TO CERTAIN EXECUTIVE OFFICERS
Set out in TABLE 3, below, is a Summary Compensation Table showing the
various elements of compensation paid during 1993 and during the previous two
years to the Company's Chief Executive Officer and to the next four highest paid
Executive Officers (determined by compensation levels during 1993):
<PAGE>
-9-
TABLE 3
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
AWARDS
- - - -----------------------------------------------------------------------------------------------------------------------------
NAME RESTRICTED All Other
AND STOCK Options/ Compens-
PRINCIPLE SALARY (1) BONUS (2) AWARD(S) SARs (3) ation (4)
POSITION YEAR ($) ($) (#) ($) ($)
- - - -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SPENCER F. ECCLES, Chairman 1993 467,450 280,404 -0- 59,648 20,794
and Chief Executive Officer 1992 431,222 318,306 -0- 50,176 18,236
of the Company 1991 416,149 238,389 -0- 97,875 17,244
MORGAN J. EVANS, President 1993 296,736 162,445 -0- 32,000 12,715
and Chief Operating Officer 1992 260,509 178,665 -0- 26,944 12,403
of the Company 1991 242,409 120,713 -0- 44,730 10,025
L. SCOTT NELSON, 1993 248,641 145,604 -0- 27,136 10,110
Executive Vice President of the 1992 245,702 136,814 -0- 31,248 10,085
Company and Chairman, 1991 236,525 142,288 -0- 35,955 10,252
President and Chief Executive
Officer of
First Security Bank of Utah
J. PATRICK MCMURRAY, 1993 209,951 105,607 -0- 23,616 7,576
Executive Vice President of the 1992 199,027 117,966 -0- 11,648 7,398
Company and Chairman, 1991 175,064 103,250 -0- 28,845 6,767
President and Chief Executive
Officer of
First Security Bank of Idaho
T. Eugene King, 1993 177,055 97,456 -0- 13,888 10,079
Executive Vice President of the 1992 173,682 104,590 -0- 10,112 9,760
Company and Chairman, 1991 158,463 80,004 -0- 22,770 9,848
President
and Chief Executive Officer of
First Security Service Company
<FN>
(1) Includes Director's Fees, if applicable.
(2) Bonuses are listed in the year earned and normally accrued, although
such bonuses may be paid in the following year. Stock bonuses are
valued at the market value on the date of receipt.
(3) First Security Corporation has never issued SARs.
(4) Amounts shown include premiums paid on insurance policies and
contributions by the Company to the account of each of the named
Executive Officers in the First Security Incentive Savings Plan, a
401(k) plan open to all full time employees of the Company. The named
Executive Officers were allowed to contribute up to 6% of their salary
to this plan not exceeding the IRS limitation ($8,994 in 1993) and the
Company contributed a matching amount equal to half of the Executive
Officer's contribution. The amounts accumulating in the accounts
under this plan are invested as directed by the Executive Officer in
one of several investment choices, including a fund which invests
solely in shares of the Company's common stock. After 5 years of
service, a participant is vested in the employer contributions in his
account in this plan.
</TABLE>
STOCK OPTIONS AND SIMILAR AWARDS TO MANAGEMENT.
Table 9, found later in this Proxy Statement, shows the options that have
been granted and the value thereof for the Executive Officers listed in Table 3
and for all Executive Officers as a group during the history of the CMIP Plan.
The following two tables provide information concerning the stock options and
similar awards provided to the Executive Officers listed in
<PAGE>
-10-
Table 3 during 1993 (TABLE 4) and exercises of options and similar awards by
these Executive Officers during 1993 (TABLE 5):
TABLE 4
OPTION GRANTS TO CERTAIN EXECUTIVE OFFICERS DURING 1993
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- - - ----------------------------------------------------------------------------------------------------------------------------
% OF
TOTAL BLACK-
OPTIONS/SARS SHOLES
OPTIONS/SARS GRANTED TO EXERCISE OR METHOD
GRANTED ALL EMPLOYEES BASE PRICE EXPIRATION GRANT
NAME (#) (1) IN FISCAL YEAR ($/SH) (2) DATE DATE VALUE (3)
- - - ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Spencer F. Eccles 59,648 14.8% 24.625 11/20/2003 415,747
Morgan J. Evans 32,000 8.0% 24.625 11/20/2003 223,040
L. Scott Nelson 27,136 6.8% 24.625 11/20/2003 189,138
J. Patrick McMurray 23,616 5.9% 24.625 11/20/2003 164,604
T. Eugene King 13,888 3.5% 24.625 11/20/2003 96,799
<FN>
(1) First Security Corporation has never issued SARs. Options granted in 1993
vest in four (4) equal installments on January 15 of 1995, 1996, 1997 and
1998.
(2) The 1993 grants of options were awarded by the Compensation Committee on
November 20, 1993. The exercise price is the average of the NASDAQ
National Market System "bid" and "asked" price quotations for First
Security Corporation Common Stock on the last business day prior to that
date.
(3) The Black-Scholes Model assumes: (a) stock volatility of 0.242; (b) a risk-
free interest rate of 5.80%; (c) a dividend rate of 3.60%; (d) a full 10-
year term; and (e) no discount for risk of forfeiture or restrictions on
transferability.
</TABLE>
TABLE 5
OPTION EXERCISES BY CERTAIN EXECUTIVE OFFICERS DURING 1993
AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
UNEXERCISED SHARE OPTIONS VALUE OF UNEXERCISED
IN-THE-MONEY SHARE OPTIONS
---------------------------- -------------------------------
SHARES
ACQUIRED VALUE
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - - ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Spencer F. Eccles 0 $ 0 429,894 109,824 $5,744,350 $ 94,560
- - - ---------------------------------------------------------------------------------------------------------------------------
Morgan J. Evans 10,000 172,361 135,691 58,944 1,722,479 50,736
- - - ---------------------------------------------------------------------------------------------------------------------------
L. Scott Nelson 7,100 116,558 135,327 48,384 1,781,516 42,624
- - - ---------------------------------------------------------------------------------------------------------------------------
J. Patrick McMurray 33,066 449,975 69,930 35,264 940,645 35,384
- - - ---------------------------------------------------------------------------------------------------------------------------
T. Eugene King 10,000 171,111 76,074 24,000 946,790 21,624
- - - ---------------------------------------------------------------------------------------------------------------------------
GRAND TOTAL 60,166 $910,006 846,915 276,416 $11,135,780 $244,928
- - - ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
Stock options are awarded to key employees, including the named Executive
Officers, upon recommendation of the Compensation Committee under the First
Security Comprehensive Management Incentive Plan ("CMIP Plan"). Under this
plan, the Company may grant key employees bonus shares of common stock, stock
options, stock appreciation rights, and other equity-based incentive awards.
This plan is geared to creating a unity of interest between management and the
Shareholders in looking toward maximizing the share price of the Company's
common stock. The grant of options and bonus shares is also a key element of
the Company's compensation policy for its senior managers. (SEE "Report of the
Compensation Committee", above.)
Under the CMIP Plan, shares of "Restricted Stock" may be granted to
employees of the Company and its subsidiaries, including the five (5) Executive
Officers named in Table 3, above. Shares of Restricted Stock have been awarded
to Executive Officers of the Company in the past under the CMIP Plan and its
predecessor plans. As of December 31, 1993, Messrs.
<PAGE>
-11-
Eccles, Evans, Nelson, McMurray and King held no shares of Restricted Stock. No
shares of Restricted Stock were granted in 1993.
RETIREMENT BENEFITS.
The Company provides a RETIREMENT PLAN to its employees, including to
Executive Officers, that is funded by the Company. The Company also maintains
an ERISA EXCESS PLAN which provides for payment to highly paid executive
officers and their beneficiaries of that portion of otherwise payable benefits
under the terms of the Retirement Plan which cannot be paid by the Retirement
Plan because of benefit restrictions imposed on the Retirement Plan by Section
415 of the Internal Revenue Code. Executive Officers also have benefits
available under a SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN which provides for the
payment of a competitive level of retirement income to certain key managers in
order to attract, retain and motivate qualified executive officers.
TABLE 6, below, illustrates the estimated annual retirement benefits
payable to the Executive Officers listed in TABLE 3, above, under ALL applicable
retirement plans based on various assumptions of final compensation levels and
service years upon which retirement benefits are based:
TABLE 6
PENSION PLAN TABLE
<TABLE>
<CAPTION>
Final 24 or More
Average 15 Years 20 Years Years
Earnings of Service of Service of Service
- - - ----------------------------------------------------------------------
<S> <C> <C> <C>
$150,000 $ 56,250 $ 75,000 $ 90,000
200,000 75,000 100,000 120,000
225,000 84,375 112,500 135,000
250,000 93,750 125,000 150,000
300,000 112,500 150,000 180,000
400,000 150,000 200,000 240,000
450,000 168,750 225,000 270,000
500,000 187,500 250,000 300,000
600,000 225,000 300,000 360,000
750,000 281,250 375,000 450,000
</TABLE>
The estimated retirement benefits shown in TABLE 6 are subject to reduction
for Social Security payments received by the retiree and income from accumulated
employer contributions to the Incentive Savings Plan. These benefits are
computed on a joint survivor annuity basis.
Compensation to Executive Officers for 1993 included in the earnings base
for the purpose of calculating total retirement benefits as shown in TABLE 6 is
equal to the three year final average salary including bonus. As of December
31, 1993, the credited years of service under all retirement plans for the
Executive Officers named in TABLE 3 were 33 years for Mr. Eccles, 30 years for
Mr. Evans, 25 years for Mr. Nelson, 22 years for Mr. McMurray, and 35 years for
Mr. King.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors consists of five non-
employee Directors. The Committee meets one or more times annually to review
and determine matters pertaining to the compensation of the Executive Officers
of the Company who are members of the Company's Management Committee, including
the five (5) named officers in TABLE 3, above. In 1993, the Committee met on
November 17 and passed resolutions affecting base salary and both short-term and
long-term incentive compensation for these Executive Officers.
<PAGE>
-12-
TO THE SHAREHOLDERS OF FIRST SECURITY CORPORATION:
The Compensation Committee annually reviews the elements of compensation
for the Executive Officers of the Company who are members of the Company's
Management Committee, and sets the level of compensation for these Executive
Officers for the following year. The Committee is provided with detailed
information and proposals from independent compensation consultants as well as
from internal compensation specialists. The Committee's decisions are made
within the context of a uniform structure and set of compensation principles
which apply to all of the Company's Executive Officers, including those
Executive Officers subject to the Committee's review.
Chief among these principles is that First Security will provide total
compensation opportunities that are competitive with those provided by
comparable financial institutions and commensurate with First Security's overall
performance. The three main elements of the compensation package are base
salary, short-term (annual) incentives, and long-term incentives. Total
compensation for Executive Officers can be described as consisting of an average
or below-average base salary, an average annual cash incentive opportunity based
on performance, and an above-average long-term equity-based incentive
opportunity tied to increases in Shareholder value. The Committee believes that
this compensation mix is in the best interests of the Shareholders and supports
the business and financial objectives of the Company.
BASE SALARY. Executive Officer base salaries at First Security are managed
using a structured approach. Each year, the Company participates in formal
third-party compensation surveys that provide compensation statistics from
over 175 financial institutions, both independent and affiliated,
nationwide. Salary data from these surveys are carefully matched by
position and adjusted for institutional size to provide a reliable measure
of median executive officer salaries for comparable positions at comparable
financial institutions. These market median salaries are used to establish
salary ranges within which the Company's Executive Officers' base salaries
may be periodically increased based on considerations of performance,
experience, and internal equity. (Participants in the two market surveys
relied upon most heavily by the Company include 47 of the 50 companies
represented in the KBW index that is used in the cumulative stock
performance comparison shown in TABLE 7, below.)
The base salary for each Executive Officer is allowed to vary only within a
23% range determined by the appropriate market median salary for his/her
position. One of the Company's key salary administration policies is that
the market median represents the MAXIMUM base salary that any Executive
Officer can be paid. The Committee believes it is necessary to maintain
salaries within the designated ranges through periods of both strong and
weak corporate performance if the Company is to attract and retain top
quality executives. In times of excellent corporate performance, Executive
Officers may receive substantial supplemental rewards through the short-
term and long-term incentives.
CHIEF EXECUTIVE OFFICER SALARY ACTION. The Committee approved an
increase of 10.1% in Mr. Eccles' base salary to become effective
January 1, 1994. This increase places Mr. Eccles' salary less than
1.0% below the appropriate market median for his position, and this
positioning of Mr. Eccles is based on our judgment of his
contributions and worth to the Company.
OTHER NAMED EXECUTIVE OFFICERS. The other four Executive Officers
named in TABLE 3 received increases averaging 9.6%, also effective
January 1, 1994. This group's salaries are placed, on average, 2.6%
below the market medians for these positions. Again these levels were
set based on our judgment of these Executive Officers' contributions
and worth to the Company.
SHORT-TERM INCENTIVES. All the named Executive Officers participate in the
MANAGEMENT ANNUAL CASH INCENTIVE BONUS PLAN (MACIBP), which pays Executive
Officers for achieving pre-set corporate and affiliate financial goals and,
in some cases, for achieving specific individual or unit goals. In 1993,
the MACIBP corporate performance measurement was divided equally between
growth in the Company's NET INCOME and growth in the Company's RETURN ON
AVERAGE ASSETS (ROAA). The Committee has approved the continuation of this
plan for 1994 without changing the basic design or bonus opportunity
levels.
CHIEF EXECUTIVE OFFICER BONUS. Mr. Eccles is eligible to receive a
bonus of up to 75% of his base salary for outstanding performance
under MACIBP. Mr. Eccles' bonus is based entirely on his measured
achievement levels compared to the two performance measurements listed
above. In 1993 the Company significantly exceeded the performance
targets established by this Committee for both net income and ROAA,
although results fell somewhat short of the maximum award levels
defined by the MACIBP. Accordingly, Mr. Eccles' earned a 1993 bonus
equal to 80.4% of his maximum bonus opportunity, the bonus amount
being entirely
<PAGE>
-13-
determined by the relationship of the performance result to the performance
target as stipulated by the terms of the MACIBP.
OTHER NAMED EXECUTIVE OFFICERS. The other named Executive Officers
may receive bonuses of up to 65% of their base salaries for
outstanding performance under MACIBP. A minimum of 80% of each bonus
is derived from some combination of corporate and affiliate net income
and corporate ROAA. In 1993, the performance results for each of the
named Executive Officers other than Mr. Eccles exceeded the targets
established by this Committee in all cases. Accordingly, the other
named Executive Officers earned bonuses ranging from 76.3% to 91.4% of
their maximum bonus opportunities based on individual and unit
performance.
LONG-TERM INCENTIVES. In 1993, as in the prior four years, the Committee
has awarded NON-STATUTORY STOCK OPTIONS (NSO's) as the only long-term
incentive award for Executive Officers. The Committee determines the
number of NSO's to be granted to approximately 75 Executive Officers and
other managers under the Comprehensive Management Incentive Plan (CMIP)
(Note: the Shareholders are being asked to approve an increase in the
number of shares available under the CMIP Plan, and a cap on the number of
shares that may be awarded under the Plan to any single employee, all as
described later in this Proxy Statement.) The size of these awards is
determined by: 1) using information obtained from the Company's
compensation surveys of comparable financial institutions to assign
relative award levels between the different grades, or groups; 2)
obtaining an approximate value for each option share awarded using the
Black-Scholes model; and 3) adjusting the total number of options awarded
until the total direct compensation (salary, bonus, and options) of this
entire 75 member group approaches the 60th percentile of the appropriate
market comparison group. 73 participants, including Mr. Eccles and the
other Executive Officers named in TABLE 3, received stock option awards
determined by this process.
REPRICING OF OPTIONS. The Company has never repriced options (other
than as a result of stock splits). The Compensation Committee has no
such intention at this time.
Thomas D. Dee II, Chair
Rodney H. Brady
U. Edwin Garrison
G. Frank Joklik
Arthur K. Smith
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs Garrison, Brady and Joklik, members of the Company's Board of
Directors' Compensation Committee, through companies with whom each of these
Directors is affiliated, had borrowing and similar credit transactions with one
or more of the Company's subsidiary banks during 1993. The terms of each of
these transactions is believed by the Company to have been done in the ordinary
course of the subsidiary bank's lending business, and on the same or
substantially similar terms to other similar loan or credit transactions with
unrelated persons. Specifically, Mr. Brady, Mr. Garrison and Mr. Joklik
(through affiliated companies) had credit extensions and/or credit commitments
during 1993 in excess of $10,000,000 but less than $20,000,000.
CERTAIN TRANSACTIONS BY AND WITH MANAGEMENT AND OTHERS
CREDIT EXTENSIONS
Most of the Directors and Executive Officers of the Company, members of
their immediate families, and corporations and other organizations of which they
are affiliates, are borrowers from one or more of the Company's subsidiary
banks. During 1993, these persons, firms and corporations have had loan
transactions with one or more of these banks, all of which were done in the
ordinary course of business and were on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with unaffiliated persons, and did not involve more than the normal
risk of collectibility or present other unfavorable features to the Company.
Specifically, Messrs. Comstock, Cook, Evans, Matthews, McMurray, Nelson,
Peterson, Sorenson, Ulbrich and Wilson (or their affiliates) had credit
extensions and/or credit commitments during 1993 in excess of $60,000 but less
than $500,000; Messrs. Hardy and Watson (or their affiliates) had credit
extensions and/or credit commitments of over $500,000 but less than 1,000,000;
Mrs. Huntsman (or her affiliates) had
<PAGE>
-14-
credit extensions and/or credit commitments during 1993 in excess of $5,000,000
but less than $10,000,000; Messrs. Brady, Browning, Garrison, Haight, Harris,
Joklik and Parker (or their affiliates) had credit extensions and/or credit
commitments during 1993 in excess of $10,000,000 but less than $20,000,000;
Messrs. Beardall, Bruce, Garff, and Heiner (or their affiliates) had credit
extensions and/or credit commitments during 1993 in excess of $20,000,000 but
less than $50,000,000; and Mr. Eccles (or his affiliates) had credit extensions
and/or credit commitments during 1993 in excess of $50,000,000 but less than
$75,000,000. The Company's subsidiary banks expect to continue to have such
transactions on similar terms with Directors and Executive Officers and their
affiliates in the future.
OTHER TRANSACTIONS
For 1993, the Company paid approximately $1.2 million in legal fees to a
law firm of which Messrs. Watson and Hardy, the Secretary and Assistant
Secretary of the Company respectively, are members.
The Directors and Executive Officers of the Company are required under the
Securities Exchange Act of 1934 to file reports with the Securities and Exchange
Commission evidencing their ownership of, and their current transactions in, the
Company's equity securities. This is a personal obligation of the Executive
Officers and Directors. Based on information provided to the Company by its
Directors and Executive Officers, it appears that all Directors and Executive
Officers have timely filed these reports during 1993 except Mr. Smith, who was
late in filing one report evidencing one transaction.
SEVERANCE AGREEMENTS
Messrs. Eccles, Evans, King, McMurray, Nelson and Ulbrich have entered
into agreements with the Company providing that in the event of a "change of
control" of the Company, or the Executive Officer's previous employer if
different, if the Executive Officer is terminated without cause; or if the
Executive Officer's duties are significantly changed, he is entitled to a
special compensation payment equal to 36 multiplied by a calculation of the
Executive Officer's then-regular monthly compensation plus his derived monthly
bonus compensation. Such agreements are for three (3) year terms with automatic
renewals for additional three (3) year renewal terms. These agreements also
deal with any other termination of the employment of these officers with the
Company, other than retirement. Payments received by these officers under these
agreements will be offset by certain other payments to be received by these
Executive Officers through other plans maintained by the Company.
A SEVERANCE PAY PLAN is available to Executive Officers who do not
have an employment contract providing benefits for certain involuntary
terminations of employment. In case of certain involuntary terminations of
employment, the basic benefit payable under this Plan is one week of pay for
each year of service, up to a maximum of twenty-six weeks of then-current
salary. In the event of a change of control of the Company (as defined in the
Plan), the Board has authority to activate a provision to provide for those
covered employees who have five or more years of service a benefit equal to two
times the regular benefit under the Plan; additionally, certain classes of
senior officers may receive an additional one month of compensation for each
full $10,000 of compensation for a maximum severance payment of twenty-four
months. This Plan is unfunded, and benefits will be paid out of general
corporate funds.
COMPARATIVE PERFORMANCE OF THE COMPANY'S COMMON STOCK
Set out in TABLE 7, below, is a five year comparison and graphic display of
the relative performance of $100 invested on January 1, 1989 in the Company's
Common Stock and the same amount invested on the same day in the NASDAQ Broad
Market Index and in the KBW 50 Index, respectively:
<PAGE>
-15-
TABLE 7
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN (1)
AMONG FIRST SECURITY CORPORATION, THE NASDAQ BROAD MARKET INDEX
AND THE KBW 50 INDEX (2)
<TABLE>
<CAPTION>
INDEX 1988 1989 1990 1991 1992 1993
- - - ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FIRST SECURITY 100.00 136.06 109.54 200.03 292.63 285.55
CORPORATION
NASDAQ BROAD MKT 100.00 121.24 109.96 165.21 192.10 219.21
KBW 50 INDEX 100.00 118.91 85.40 135.17 172.23 181.77
<FN>
(1) Total Return Assumes Quarterly Reinvestment of Dividends.
(2) The KBW 50 Index is published by Keefe, Bruyette & Woods, Inc., an
investment banking firm specializing in the bank and thrift industry. This
index is weighted according to market capitalization and is made up of 50
of the nation's most important banking companies, including all money
center and most major regional banks, and is meant to be representative of
the price performance of the nation's large banks. Dividends are assumed
to be reinvested quarterly. First Security Corporation is included in the
KBW 50.
</TABLE>
[GRAPHIC]
<PAGE>
-16-
PROPOSALS FOR SHAREHOLDER ACTION
ITEM NO. 1: ELECTION OF DIRECTORS
The Executive Committee of the Board serves as the nominating committee for
the current Directors. Nominations for election as a Director also will be
accepted from the floor by any Shareholder at the 1994 Annual Meeting. While no
formal procedure exists with respect to nominations for Director outside of the
Annual Meeting other than through the function of the Executive Committee as the
Board's own nominating committee, Shareholders are free to write to the
Executive Committee, c/o Alonzo Watson, Secretary, 79 South Main Street, Salt
Lake City, Utah 84111 with any suggestions concerning nominations to the Board
of Directors.
The persons named in TABLE 8, below, will be placed in nomination by the
Board of Directors for election as Directors of the Company at the 1994 Annual
Meeting, to serve until the next Annual Meeting or until their successors are
elected and qualified. The Bylaws of the Company provide for a Board of
Directors of up to 35 members. Twenty-one (21) persons will be nominated by the
Executive Committee of the Board for election as Directors at the 1994 Annual
Meeting.
The Company's Board of Directors mourns the death in February 1994 of Elder
Marvin J. Ashton, a long time and faithful Director of the Company. Elder
Ashton was a pillar of the Salt Lake City business community before his call to
full time ecclesiastical service, and he inspired millions worldwide with his
sage advice and good humor. His counsel and support wil be greatly missed.
ALL DULY SIGNED AND DELIVERED PROXIES WILL BE VOTED FOR THE ELECTION OF ALL
OF THE NOMINEES LISTED BELOW IN THE ABSENCE OF CONTRARY DIRECTION. The
Directors know of no reason why any nominee listed below may be unable to serve
as a Director. If any nominee is unable to serve, the shares present at the
1994 Annual Meeting through proxies WILL BE VOTED FOR the election of such other
person(s) as the Board of Directors may nominate at the Annual Meeting, or the
current Directors may conclude to reduce the number of Directors to be elected.
If all twenty-one (21) nominees, listed below, are elected at the 1994
Annual Meeting, the composition of the new Board will be seventeen (17)
Directors whose principal occupation or employment is and has been outside of
First Security Corporation, two (2) Directors who are retired First Security
Executive Officers, and two (2) Directors who are currently Executive Officers
of the Company.
All of the nominees except Mr. Maloof were elected to their present term of
office by a vote of the Shareholders at the 1993 Annual Meeting. Mr. Maloof was
elected a Director by action of the Board of Directors in 1993.
There is set forth below as to each of the twenty-one (21) nominees for
election as a Director of the Company, his/her age, the year he/she first became
a Director of the Company, his/her principal occupation, his/her business
experience during the past five years, other material officerships or
directorships in other companies held at this time, and beneficial stock
ownership in the Company as of the Record Date. Directors serving on the
Executive(*), Audit(+), or Compensation(#) Committees of the Board of Directors
are also so identified:
<PAGE>
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TABLE 8
NOMINEES FOR DIRECTOR
*+JAMES C. BEARDALL, 54, has been a Director of the Company since 1989 and is
Chairman of the Board's Audit Committee. He is Chairman, President and Chief
Executive Officer of Anderson Lumber Company. At year end 1993, Mr. Beardall
was the beneficial owner of 900 shares of the Company's Common Stock.
*#RODNEY H. BRADY, 61, has been a Director of the Company since 1985. He is
President and Chief Executive Officer of Bonneville International Corporation
(broadcasting, radio and television). Mr. Brady is also a Director of Bergen
Brunswig Corporation (pharmaceuticals), Smith's Food & Drug Centers, Inc.,
Flying J, Inc. (integrated oil company), Deseret Mutual Benefit Association
(employee benefit insurance) and Management Training Corporation (operator of
training centers). At year end 1993, he beneficially owned 25,063 shares of the
Company's Common Stock.
JAMES E. BRUCE, 73, has been a Director of the Company since 1983. He was the
retired Chairman and Chief Executive Officer of Idaho Power Company. Mr. Bruce
is a Director of Idaho Power Company and of Albertsons, Inc. (supermarkets). At
year end 1993, Mr. Bruce beneficially owned 10,375 shares of the Company's
Common Stock.
*#THOMAS D. DEE II, 73, has been a Director of the Company since 1976, and is
Chairman of the Board's Compensation Committee. He is President of The Dee
Company (investments). At year end 1993, Mr. Dee beneficially owned 67,500
shares of the Company's Common Stock. (1)
*SPENCER F. ECCLES, 59, has been a Director of the Company since 1967. He is
Chairman and Chief Executive Officer of the Company and Chairman of the
Executive Committee and of the Management Committee. Mr. Eccles is a Director
of ZCMI, Anderson Lumber Company, and Union Pacific Corporation; and at year end
1993, was the beneficial owner of 1,757,438.1 shares of the Company's Common
Stock (2), (3) (including 442,438 option shares exercisable within 60 days but
not yet exercised and 16,626 shares held in his account in the Company's
Incentive Savings Plan), and 63 shares of the Company's Preferred Stock.
*MORGAN J. EVANS, 56, has been a director since 1991. He is President and Chief
Operating Officer of the Company and is a member of the Company's Management
Committee. At year end 1993, Mr. Evans was the beneficial owner of 162,666
shares of the Company's Common Stock, including 142,427 option shares
exercisable within 60 days of the Record Date, but not yet exercised, and 4,864
shares held in his account in the Company's Incentive Savings Plan.
DR. DAVID P. GARDNER, 60, has been a Director of the Company since 1976. He
retired as President of the University of California in 1992, and is presently
President of the William and Flora Hewlett Foundation and Chairman and Chief
Executive Officer of the George S. and Delores Dore Eccles Foundation. Dr.
Gardner is also a Director of Fluor Corporation (construction) and of John Alden
Financial Corporation. At year end 1993, Dr. Gardner beneficially owned 1,350
shares of the Company's Common Stock. (1), (3)
+KENDALL D. GARFF, 87, has been a Director of the Company since 1962. He is
Chairman of Garff Enterprises Inc. (automobile dealerships). At year end 1993,
Mr. Garff beneficially owned 5,072 shares of the Company's Common Stock.
#U. EDWIN GARRISON, 66, has been a Director of the Company since 1989. Mr.
Garrison is Chairman and a Director of Thiokol Corporation (space propulsion and
other modern technologies). Mr. Garrison is also a Director of Questar
Corporation (integrated oil and gas company). At year end 1993, he beneficially
owned 2,926 shares of the Company's Common Stock.
<PAGE>
-18-
DAVID B. HAIGHT, 87, has been a Director of the Company since 1983. He is a
member of the Quorum of the Twelve of The Church of Jesus Christ of Latter-day
Saints, and is a Director of Bonneville International Corporation (broadcasting)
and Huntsman Chemical Corporation (plastics). Elder Haight at year end 1993,
beneficially owned 1,500 shares of the Company's Common Stock. (4) He is the
father of Karen H. Huntsman, also a Director of the Company.
JAY DEE HARRIS, 76, has been a Director of the Company since 1975. He is the
President and a Director of Harris Truck and Equipment, Inc. At year end, Mr.
Harris beneficially owned 1,125 shares of the Company's Common Stock.
*+ROBERT T. HEINER, 69, has been a Director of the Company since 1981. He is
the retired President and Chief Administrative Officer of the Company. Mr.
Heiner is a Director of Browning, Inc. (firearms and sporting goods), Flying J,
Inc. (integrated oil company), and Management Training Corporation (operator of
training centers). At year end 1993, Mr. Heiner was the beneficial owner of
25,000 shares of the Company's Common Stock.
HOWARD W. HUNTER, 86, has been a Director of the Company since 1971. He is
President of the Quorum of the Twelve of The Church of Jesus Christ of
Latter-day Saints. At year end 1993, Elder Hunter beneficially owned no shares
of the Company's Common Stock. (4)
KAREN H. HUNTSMAN, 56, was elected a Director of the Company by the Board of
Directors on October 26, 1992. Since 1982 she has been a Director and Executive
Officer of Huntsman Chemical Corporation. At year end 1993, Mrs. Huntsman
beneficially owned no shares of the Company's Common Stock, but she purchased
5,000 shares in January 1994. Mrs. Huntsman is the daughter of Elder David B.
Haight, also a Director of the Company.
#G. FRANK JOKLIK, 66, has been a Director of the Company since 1981. During
1993, Mr. Joklik retired as President and Chief Executive Officer of Kennecott
Corporation (mining), but remains as a Director of that company. He is also a
director of U.S. Borax, Inc. and Cleveland Cliffs, Inc., both companies engaged
in mining and related businesses. At year end 1993, Mr. Joklik beneficially
owned no shares of the Company's Common Stock.
B.Z. KASTLER, 73, has been a Director of the Company since 1979. Mr. Kastler is
a Senior Director, and is the retired Chairman and Chief Executive Officer of
Questar Corporation (integrated oil and gas company). He is also a Director of
Mountain Fuel Supply Company (natural gas distribution) and Bonneville
International Corporation (broadcasting). At year end 1993, Mr. Kastler
beneficially owned 1,000 shares of the Company's Common Stock.
JOSEPH G. MALOOF, 38, was elected a Director of the Company by the Board in 1993
following the merger between the Company and First National Financial
Corporation ("FNFC"). Mr. Maloof was a Director of FNFC for a number of years
prior to the merger. He is also President and Chief Executive Officer of the
Maloof Companies of Albuquerque, New Mexico. (diversified investments in beer
distributing, hotels, etc.) At year end 1993, Mr. Maloof beneficially owned
499,964 shares of the Company's Common Stock.
*+SCOTT S. PARKER, 59, has been a Director of the Company since 1985. He is
President of Intermountain Health Care, Inc. (integrated health care provider).
At year end 1993, Mr. Parker beneficially owned 1,124 shares of the Company's
Common Stock.
#DR. ARTHUR K. SMITH, 56, has been a Director of the Company since 1992. He
assumed the presidency of the University of Utah in September, 1991. Formerly,
Dr. Smith was a senior administrator at the University of South Carolina. He is
a Director of American Stores Company (retail grocery and drug stores). At year
end 1993, Dr. Smith was the beneficial owner of 200 shares of the Company's
Common Stock.
<PAGE>
-19-
JAMES L. SORENSON, 71, has been a Director of the Company since 1980. He is
Chairman and Chief Executive Officer of Sorenson Development, Inc. (holding
company and investments). At year end 1993, Mr. Sorenson beneficially owned no
shares of the Company's Common Stock.
HAROLD J. STEELE, 80, has been a Director of the Company since 1959. He is also
a Director of Anderson Lumber Company, and is married to a cousin of Spencer F.
Eccles. At year end 1993, Mr. Steele beneficially owned 109,583 shares of the
Company's Common Stock. (5)
(1) A daughter of Dr. Gardner is married to a son of Mr. Dee.
(2) Includes 853,233.1 shares of Common Stock as to which Mr. Eccles has
power of attorney or is trustee for living and/or deceased family members
and has shared voting and investment powers; but does not include 60,750
shares of the Company's Common Stock owned by the Marriner S. Eccles
Charitable Trust, as to which Mr. Eccles serves as Director/trustee and
disclaims beneficial ownership, and does not include 148,000 shares of the
Company's Common Stock owned by a trust which funds the Nora Eccles
Treadwell Charitable Trust as to which Mr. Eccles serves as a Director and
disclaims beneficial ownership.
(3) Does not include 1,044,092 shares of the Company's Common Stock held of
record by the George S. and Dolores Dore Eccles Foundation as to which
Messrs. Eccles and Gardner serve as trustees and disclaim beneficial
ownership.
(4) Does not include any shares of the Company's Common Stock owned by the
Company of the President of the Church of Jesus Christ of Latter-Day Saints
as to which Elders Ashton, Haight and Hunter disclaim beneficial ownership.
(5) Includes 96,097 shares of Common Stock owned by Mr. Steele's spouse for
which Mr. Steele has voting power, but does not include 60,750 shares of
Common Stock of the Company held of record by the Marriner S. Eccles
Foundation, of which Mr. Steele is a Director, and as to which shares Mr.
Steele disclaims beneficial ownership.
ITEM NO. 2: PROPOSED INCREASE IN THE NUMBER OF SHARES AVAILABLE UNDER THE FIRST
SECURITY CORPORATION COMPREHENSIVE MANAGEMENT INCENTIVE PLAN AND CAP ON NUMBER
OF SHARES THAT MAY BE AWARDED TO ANY SINGLE EMPLOYEE UNDER THE PLAN.
GENERAL
The First Security Comprehensive Management Incentive Plan (the "CMIP
Plan") was first adopted by the Board of Directors in 1989 as a successor and
replacement for two previously approved incentive plans. The original 950,000
shares approved for the CMIP Plan in 1989 was increased to 1,750,000 in 1991 by
action of the Shareholders. In the interim, two 3-for-2 stock splits in the
form of 50% stock dividends have been declared by the Company's Board of
Directors, having the aggregate effect on the CMIP Plan of increasing the number
of shares available to 3,937,500 shares. Because these shares have been
substantially exhausted through incentive awards over the life of the CMIP Plan
to date, on February 22, 1994, the Company's Executive Committee by delegation
of the Board of Directors amended and restated the CMIP Plan, including, subject
to Shareholder approval, an increase of the maximum number of shares that may be
awarded under the Plan from 3,937,500 shares to 6,437,500 shares. Moreover, the
CMIP Plan was amended, subject to Shareholder approval, to limit the total value
of awards that may be granted to a particular participant in order to meet the
requirements of new Federal Income Tax legislation dealing with executive
officer compensation. The restatement of the CMIP Plan also included a number
of changes to bring the administrative operation of the CMIP Plan into line with
current procedures and rules applicable to such plans.
The following description of the CMIP Plan, as amended, does not purport to
be complete and is qualified in its entirety by reference to the full text of
the CMIP Plan. A copy of the full text of the CMIP Plan, as amended and
restated, may be obtained by a Shareholder from the Company by calling 801-246-
5266 during normal business hours (9 AM to 5 PM Mountain Time).
<PAGE>
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DESCRIPTION OF THE CMIP PLAN
PURPOSE. The purpose of the CMIP Plan is to promote the long-term success
of the Company and the creation of incremental shareholder value by (a)
encouraging key employees of the Company and its subsidiaries to focus on
critical long-range objectives, (b) encouraging the attraction and retention of
key employees with exceptional qualifications, and (c) linking the interests of
key employees of the Company directly to shareholder interests through increased
stock ownership.
ADMINISTRATION. The CMIP Plan is administered by the Compensation
Committee (the "Committee") of the Board of Directors consisting of a sufficient
number of disinterested members of the Board of Directors so as to qualify the
Committee to administer the CMIP Plan as contemplated by Rule 16b-3 promulgated
pursuant to the Exchange Act. The Committee selects the key employees who are
to receive awards under the CMIP Plan, determines the amount, vesting
requirements and other conditions of such awards, interprets the CMIP Plan,
executes agreements setting forth the terms of such awards (each, an "Award
Agreement") and makes all other decisions relating to the operation of the CMIP
Plan.
DURATION OF THE CMIP PLAN. The CMIP Plan became effective in 1989 and will
remain in effect until 1999, unless earlier terminated by the Company's Board of
Directors. Notwithstanding the termination of the CMIP Plan, the CMIP Plan will
continue in effect after such termination for purposes of the administration of
any award granted prior to the termination of the Plan.
SHARES SUBJECT TO THE CMIP PLAN. The CMIP Plan provides for the issuance
of Incentive Stock Options (the "Incentive Options"), as that term is defined in
Section 422 of the Code (Section 422A before redesignation by the Revenue
Reconciliation Act of 1990), nonqualified stock options which are not governed
by the provisions of Section 422 of the code ("Nonqualified Options") for shares
of Common Stock (the Incentive Options and the Nonqualified Options may be
referred to collectively as the "Options"), certain corresponding stock
appreciation rights ("SARs"), restricted shares of Common Stock ("Restricted
Shares") and other stock based units, described below, or any combination
thereof (the various awards are referred to collectively as the "Awards"). The
maximum number of Options, Restricted Shares and other stock based awards that
may be awarded under the CMIP Plan is currently equal to 3,937,500 shares. THE
SHAREHOLDERS ARE ASKED TO APPROVE AN INCREASE IN THIS NUMBER TO 6,437,500
SHARES. If any Options, Restricted Shares or stock units are forfeited or if
any Option terminates for any reason before being exercised, then such Options,
Restricted Shares or stock units again become available for Awards under the
Plan. Notwithstanding the above, if any Options are surrendered because
corresponding SARs are exercised, such Options will not become available again
for Awards under the CMIP Plan. Any Common Stock issued pursuant to the CMIP
Plan may be authorized but unissued shares or treasury shares. Shares of Common
Stock to be issued upon the exercise of Awards granted pursuant to the CMIP Plan
have been registered with the Commission under a Registration Statement on Form
S-8, on file with the Commission. An amendment to this Registration Statement
will be filed to cover the additional shares available under the Plan if the
amended Plan is approved by the Shareholders.
In the event of a subdivision of the outstanding shares of the Company's
Common Stock, a declaration of a dividend payable in Common Stock, a declaration
of a dividend payable in a form other than Common Stock in an amount that has a
material effect on the price of the shares of Common Stock, a combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise) into a lesser number of shares of Common stock, a recapitalization or
similar occurrence (the occurrence of each of which may be referred to as a
<PAGE>
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"Capital Change"), the Committee will make appropriate adjustments to the
shares subject to the Plan and to then-outstanding Options, Restricted Shares
and stock units.
ELIGIBILITY. Awards may be granted only to employees of the Company and
its subsidiaries that the Committee, in its sole discretion, determines to be
key employees (the "Key Employees"), including, without limitation, executive
officers of the Company who are determined by the Committee to be Key Employees;
and may also be granted in the Committee's discretion to outside consultants and
advisors to the Company. Members of the Committee are not eligible to
participate in the CMIP Plan.
STOCK OPTIONS. The Committee, in its sole discretion, may grant both
Incentive Options and Nonqualified Options from time to time. The Committee has
complete authority, subject to the terms of the CMIP Plan, to determine the
persons to whom and the time or times at which grants of Options will be made.
The CMIP Plan provides that the exercise price of Options, restrictions upon the
exercise of Options and restrictions on the transferability of shares issued
upon the exercise of Options, will be determined by the Committee in its sole
discretion, except that (i) the exercise price of any Incentive Option may not
be less than the fair market value of a share of Common Stock as of the date of
the grant, (ii) in the case of an Incentive Option granted to any individual
who, at the time that the Incentive Option is granted, owns more than ten
percent of the total combined voting power of all classes of stock of the
Company or any of its subsidiaries (a "Restricted Shareholder"), the exercise
price of such Incentive Option may not be less than 110% of the fair market
value, determined pursuant to the CMIP Plan, of a share of Common Stock as of
the date on which the Option is granted, and (iii) the exercise price of any
Nonqualified Option may be not less than the par value of the Common Stock. The
Committee, in its sole discretion, may determine the time or times when each
Option vests and becomes exercisable. The term of an Incentive Option, however,
may not be more than ten years from the date of grant and the term of any
Incentive Option granted to a Restricted Shareholder may not be more than five
years from the date of grant. During the lifetime of the employee receiving the
Option (the "Optionee"), the Option may be exercisable only by the Optionee and
shall not be assignable or transferrable. Each Option will become exercisable
in such installments, at such time or times, and is subject to such conditions,
as the Committee, in its discretion, may determine at or before the time the
Option is granted. The Committee may provide for the accelerated exercisability
of an Option in the event of the death, disability or retirement of the Optionee
and may provide for expiration of the Option prior to the end of its term in the
event of the termination of the Optionee's employment.
PAYMENT. The exercise price of Options granted under the CMIP Plan is
payable at the time of exercise in cash or, in the discretion of the Committee,
in shares of Common Stock or other forms approved by the Committee. In the case
of an Incentive Option, payment must be made only pursuant to the express
provisions with regard to exercise that the Committee determines to include in
the applicable Award Agreement. Any payment method approved by the Committee
must be consistent with applicable law, regulations and rules as well as the
terms and conditions of the Plan.
STOCK APPRECIATION RIGHTS. In connection with the grant of any Option, the
Committee, in its sole discretion, may also grant an SAR, which shall relate to
a specific Option granted to the Optionee. Such SAR shall entitle the Optionee
to surrender to the Company, unexercised, all or any part of that portion of the
Option which then is exercisable and to receive from the Company an amount equal
to the difference between the aggregate exercise price of the shares of Common
Stock subject to the Option and the fair market value, as determined under the
CMIP Plan, of such shares on the date of such exercise. Payment by the Company
of any amount owing pursuant to the exercise of an SAR may be made in shares of
Common Stock, cash, or any combination of cash and shares, as determined in the
sole discretion of the
<PAGE>
-22-
Committee. The determination of the Committee to include an SAR in an Incentive
Option may be made only at the time of the grant of the Incentive Option. The
Committee may include an SAR in a Nonqualified Option at the time of the grant,
and any time thereafter until six months before the expiration of the
Nonqualified Option.
An SAR may be exercised only to the extent the Option to which it is
applicable is exercisable and may not be exercised unless both the SAR and the
related Option have been outstanding for more than six months. If, on the date
an Option expires, the exercise price of the Option is less than the fair market
value of the shares of Common Stock on such date, then any SARs included in such
Option shall automatically be deemed to be exercised as of such date with
respect to any portion of such Option that has not been exercised or
surrendered.
RESTRICTED STOCK AWARDS. The Committee may grant shares of Common Stock
which are subject to vesting conditions as an Award under the CMIP Plan (the
"Restricted Shares"). The award of Restricted Shares may be made at any time
and for any year of the CMIP Plan. The Restricted Shares shall become vested,
in full or in installments, upon satisfaction of the conditions specified in the
Stock Award Agreement. The Committee shall select the vesting conditions, which
may be based upon the recipient's service and/or performance, the Company's
performance, or such other criteria as the Committee may adopt. The Award
Agreement may also provide for accelerated vesting in the event of the
recipient's death, disability or retirement. A recipient of Restricted Shares,
as a condition to the grant of such Restricted Shares, shall be required to pay
the Company, in cash, an amount equal to the par value of the Restricted Shares.
The holders of Restricted Shares shall have the same voting, dividend and other
rights as the Company's other shareholders.
OTHER STOCK UNIT AWARDS. A stock unit or other similar equity-based award
is an unfunded and unsecured bookkeeping entry representing the equivalent of
one share of Common Stock which is subject to certain vesting conditions (a
"Stock Unit"). Holders of Stock Units have no voting rights or other rights of
a shareholder, but are entitled to receive "Dividend Equivalents" in an amount
equal to the amount of cash dividends paid on the number of shares of Common
Stock represented by the Stock Units while the Stock Units are outstanding.
Stock Units and corresponding Dividend Equivalents will be settled at a time
determined by the Committee and may be paid, in the discretion of the Committee,
in the form of cash, shares of Common Stock or a combination thereof.
Stock Units may be awarded in combination with Restricted Shares or
Nonqualified Options, and the Committee may provide that the Stock Units will be
forfeited in the event that the related Nonqualified Options are exercised. No
cash consideration shall be required for an award of a Stock Unit. The
Committee may grant Stock Units at anytime during the term of the CMIP Plan.
The Committee may, in its sole discretion, select the vesting conditions for
each award of a Stock Unit. The vesting conditions may be based upon the
recipient's service or performance, the Company's performance, or such other
criteria that the Committee may adopt.
AMENDMENTS TO CMIP PLAN. The Board of Directors may, at any time and for
any reason amend or terminate the CMIP Plan. Any amendment to the CMIP Plan,
however, is subject to the approval of the Company's Shareholders to the extent
required by applicable laws, regulations or rules, and the Plan itself. For
example, no increase in the number of shares available under the Plan and no
change in the exercise price of outstanding options under the CMIP Plan may be
made without Shareholder approval. No amendment, suspension or termination of
the CMIP Plan shall affect an Award granted on or prior to the effective date of
such amendment.
<PAGE>
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GENERAL PROVISIONS. Neither the CMIP Plan nor the grant of any Award
thereunder will be deemed to give any individual the right to remain employed by
the Company or any of its subsidiaries. The CMIP Plan shall not inhibit the
Company's ability to terminate or modify the terms of the employment of any
employee at anytime, with or without cause. Participants in the CMIP Plan will
have no rights with respect to dividends, voting or any other privileges
accorded to the Company's shareholders prior to the issuance of stock
certificates for shares of Common Stock. Recipients of Options under the CMIP
Plan will have no obligation to exercise such Options. Participants in the CMIP
Plan will not have any rights or interest under the Plan in any Option or shares
of the Company's Common Stock prior to the grant of an Option, Restricted Share
or Stock Unit to such participant.
OUTSTANDING CMIP PLAN AWARDS
The benefits to be awarded to and received by Executive Officers of the
Company under the CMIP Plan, as proposed to be amended, in the future are not
presently determinable. Table 9 summarizes the benefits under the CMIP Plan
which, upon satisfaction of the applicable vesting, have been and will be
received by the five (5) Executive Officers named in Table 3, as well as this
information for the broader group of all Executive Officers and all participants
under the CMIP Plan:
TABLE 9
<TABLE>
<CAPTION>
NAME Dollar Options
Value (1) Granted (2)
- - - --------------------------------------------------------------------------------------
<S> <C> <C>
Spencer F. Eccles $7,486,174 553,623
Morgan J. Evans 2,581,341 213,353
L. Scott Nelson 2,721,875 221,576
J. Patrick McMurray 1,733,630 139,790
T. Eugene King 1,647,363 124,949
All Executive Officers (as a group) (15 persons) 2,723,756 217,953
All Employees who are not Executive Officers (as a 27,883,228 2,590,184
group) (173 persons)
<FN>
(1) Includes the value of restricted stock on the date such shares vested, the
net value realized from options exercised, and the difference (if positive)
between the per share value of the Company's Common Stock on March 4, 1994
and the exercise price of outstanding options. The last sale price of the
Common Stock on March 4, 1994, as reported on the NASDAQ/NMS was $28.75 per
share.
(2) Cancelled and/or repurchased options and shares may be re-awarded under the
terms of the Plan. The grants in Table 9 include 143,038 option shares
that were awarded and subsequently cancelled, and 550 option shares that
were awarded and subsequently repurchased.
</TABLE>
<PAGE>
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FEDERAL INCOME TAX CONSEQUENCES
The following tax discussion is a brief summary of federal income tax law
applicable to the CMIP Plan. The discussion is intended solely for general
information and omits certain information which does not apply generally to all
participants in the CMIP Plan.
INITIAL GRANT OF OPTIONS AND STOCK APPRECIATION RIGHTS. A recipient of
Options, whether Nonqualified Options or Incentive Options, or SARs incurs no
income tax liability, and the Company obtains no deduction, from the grant of
Options or SARs.
INCENTIVE STOCK OPTIONS. The holder of an Incentive Option will not be
subject to federal income tax upon the exercise of the Incentive Option, and the
Company will not be entitled to a tax deduction by reason of such exercise,
provided that the holder is still employed by the Company (or terminated
employment no longer than three months before the exercise date). Additional
exceptions to this exercise timing requirement apply upon the death or
disability of the Optionee. A sale of the shares of Common Stock received upon
the exercise of an Incentive Option which occurs both more than one year after
the exercise of the Incentive Option and more than two years after the grant of
the Incentive Option will result in the realization of long-term capital gain or
loss in the amount of the difference between the amount realized on the sale and
the exercise price for such shares. Generally, upon a sale or disposition of
the shares prior to the foregoing holding requirements (referred to as a
"disqualifying disposition"), the Optionee will recognize ordinary compensation
income, and the Company will receive a corresponding deduction, equal to the
lesser of (i) the excess of the fair market value of the shares on the date of
transfer to the Optionee over the exercise price, or (ii) the excess of the
amount realized on the disposition over the exercise price.
The excess of the fair market value of the shares of Common Stock at the
time of the exercise of an Incentive Stock Option over the Option price will
increase the Optionee's alternative minimum taxable income subject to the
alternative minimum tax, unless a subsequent disqualifying disposition occurs in
the same taxable year of the Optionee in which the Common Stock was purchased.
NON-QUALIFIED STOCK OPTIONS. Upon the exercise of a Nonqualified Option,
the amount by which the fair market value of the shares of Common Stock on the
date of exercise exceeds the exercise price will be taxed to the Optionee as
ordinary compensation income. The Company will generally be entitled to a
deduction in the same amount, provided it satisfies certain requirements
relating to the terms of the option and makes all required wage withholdings on
the compensation element attributable to the exercise. In general, the
Optionee's tax basis in the shares acquired by exercising a Nonqualified Option
is equal to the fair market value of such shares on the date of exercise. Upon
a subsequent sale of any such shares in a taxable transaction, the Optionee will
realize capital gain or loss in an amount equal to the difference between his or
her basis in the shares and the sale price.
RESTRICTED STOCK. The recipient of an award of Restricted Shares will be
required to recognize income in the first year that (i) the Restricted Shares
become transferable by the recipient, or (ii) the Restricted Shares are not
subject to a substantial risk of forfeiture. The various vesting conditions
imposed upon the Restricted Shares in the applicable Award Agreement will
determine if the Restricted Shares are subject to a substantial risk of
forfeiture. The amount of income that must be recognized in connection with a
grant of Restricted Shares will be equal to the difference between the fair
market value of the Restricted Shares in the year that income is recognized and
the value paid by the recipient for the Restricted Shares. The income
recognized will be taxed as ordinary income. The tax basis in the Restricted
Shares will be the value paid by the recipient plus any income recognized by the
recipient.
<PAGE>
-25-
A recipient may elect to recognize income in the year he or she receives an
award of Restricted Shares even if the Restricted Shares are non-transferable
and subject to a substantial risk of forfeiture. The recipient's tax basis in
the Restricted Shares will be the value paid by the recipient plus any income
recognized by the recipient. By making such election, the recipient can defer
recognizing as income the increase in value of the Restricted Shares during such
period until the Restricted Shares are sold or transferred. Upon the subsequent
sale of any Restricted Shares in a taxable transaction, the recipient will
realize capital gain or loss (long-term or short-term, depending on whether the
Restricted Shares were held for more than twelve months before the sale) in an
amount equal to the difference between his or her basis in the Restricted Shares
and the sale price.
OTHER STOCK UNITS . Upon the exercise of an SAR and/or the payment of
Stock Units and corresponding Dividend Equivalents, a participant under the CMIP
Plan will recognize ordinary compensation income in the amount of both the cash
and the fair market value of the shares of Common Stock received upon the
exercise of the SAR or the payment of the Stock Unit and Dividend Equivalent,
and generally the Company will be entitled to a corresponding deduction. In the
event the participant receives shares of Common Stock upon the exercise of the
SAR or the payment of the Stock Unit or Dividend Equivalent, any shares so
acquired will have a tax basis equal to their fair market value on the date of
such exercise or payment, and the holding period of the shares will commence on
the day following that date. Upon a subsequent sale of such shares, the
participant will recognize capital gain or loss (long-term or short-term,
depending on whether the shares were held for more than twelve months before the
sale) in an amount equal to the difference between his or her basis in the
shares and the sale price.
WITHHOLDING TAX OBLIGATIONS. To the extent required by applicable federal,
state, local or foreign law, the recipient of any payment or distribution under
the CMIP Plan will make arrangements satisfactory to the Company for the
satisfaction of any withholding tax obligations that arise by reason of such
payment or distribution. The Company will not be required to make such payment
or distribution until such obligations are satisfied. The Committee may permit
a CMIP Plan participant who exercises a Nonqualified Option to satisfy all or
part of his or her withholding tax obligation by having the Company withhold a
portion of the Common Stock that otherwise would be issued to the participant
under such Nonqualified Option.
PROPOSED AMENDMENTS TO THE CMIP PLAN
As disclosed earlier, numerous ministerial and stylistic amendments to the
CMIP Plan were adopted by the Company's Executive Committee that do not require
Shareholder action. Only the increase in the number of Shares available under
the CMIP Plan is of such a nature as to require Shareholder approval. This
Shareholder-approval amendment is discussed as follows:
INCREASING THE NUMBER OF SHARES. Currently, the CMIP Plan provides that
the aggregate number of Restricted Shares, Stock Units and Stock Options that
may be awarded under the CMIP Plan may not exceed 3,937,500 shares. As of
January 31, 1994, the Committee had granted Restricted Shares, Stock Units and
Options relating to an aggregate of 3,918,317 shares of Common Stock; leaving
only 19,183 shares available to be awarded under the CMIP Plan. Following a
review of the Awards made under the CMIP Plan to date and the Awards which the
Board of Directors believes should be granted in order to achieve the CMIP
Plan's stated purposes, the Board of Directors has determined that the number of
Restricted Shares, Stock Units and Options currently permitted under the CMIP
Plan is insufficient to achieve the purposes of the CMIP Plan. Based upon that
determination, the Board of Directors has amended and restated the CMIP Plan to
provide for, among other things, an increase in the aggregate number of shares
that may be granted under the Plan from 3,937,500 to 6,437,500
<PAGE>
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shares. The Board of Directors believes that the best interests of the Company
will be served by increasing the number of shares available to be awarded under
the Plan.
LIMIT ON THE NUMBER OF SHARES THAT CAN BE AWARDED TO ANY SINGLE PERSON
UNDER THE CMIP PLAN. New Section 162(m) of the Internal Revenue Code places a
limit of $1 million on the tax-deductibility of compensation paid to individuals
listed in the proxy statements of publicly held corporations. Compensation for
the individual executives listed in company proxy statements which exceeds $1
million on an individual basis may not be tax-deductible unless it meets certain
requirements with respect to being performance-based.
To ensure that its executive compensation program is in full compliance
with the provisions regarding performance-based compensation, the Board of
Directors has approved an amendment to the CMIP Plan to establish a specific
limit on the number of stock options which may be granted to an individual under
the Plan. The individual limit is 20% of the shares authorized and approved for
grants under the CMIP Plan. This 20% figure would equal 1,287,500 shares, based
on the requested 6,437,500 Share authorization. The Shareholders are being
asked to approve this amendment as well as the increase in the number of shares
under the Plan.
SHAREHOLDER APPROVAL; EFFECT OF NON-APPROVAL.
Approval of the amended and restated CMIP Plan, and specifically the
increased number of shares and the cap on individual awards, requires that the
number of votes cast in favor of the amendments at the Annual Meeting exceed the
number of votes cast in opposition to the amendment of the CMIP Plan. Approval
of the amended and restated CMIP Plan will not result directly in the grant of
any Awards to Executive Officers, Directors, key employees or consultants of the
Company. Shareholder approval will, however, increase the number of shares
which may be granted as incentive awards under the CMIP Plan and will limit the
number of shares that can be awarded under the Plan to any single employee. If
the increase in the number of shares available under the CMIP Plan is not
approved by the Shareholders, the amended and restated CMIP Plan (including the
cap on individual awards) will remain in effect as adopted by the Executive
Committee except that the aggregate number of shares will remain at 3,937,500.
CERTAIN INTERESTS OF DIRECTORS
In considering the recommendation of the Board of Directors with respect to
the CMIP Amendments, Shareholders should be aware that the members of the Board
of Directors have certain interests which may present them with conflicts of
interest in connection with such proposal. As discussed above, all Key
Employees, including all current directors who are employees of the Company
(Messrs. Eccles and Evans) are eligible to participate in the CMIP Plan.
The Board of Directors recognizes that adoption of the increase in the
number of Shares under the CMIP Plan may benefit such individual Directors of
the Company and their successors, but it believes that approval of the
additional Shares will strengthen the Company's ability to continue to attract,
motivate and retain certain qualified employees and officers. Furthermore, the
Board of Directors believes that approval of the CMIP Amendments will advance
the interest of the Company and its Shareholders by encouraging Key Employees to
make significant contributions to the long-term success of the Company. The
Board of Directors believes that the CMIP Amendments are in the best interests
of the Company and its Shareholders, and therefore, unanimously recommends a
vote FOR the proposal to approve the CMIP Amendments. In considering the
foregoing recommendation of the Board of Directors,
<PAGE>
-27-
Shareholders should be aware that the current members of the Board of Directors
own, in the aggregate, approximately 6% of the shares of the Company's issued
and outstanding Common Stock, including option shares exercisable within 60 days
of the Record Date.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE APPROVAL OF THE
INCREASE IN SHARES AVAILABLE UNDER THE COMPREHENSIVE MANAGEMENT INCENTIVE PLAN
AS PROPOSED AND THE CAP ON AWARDS TO ANY SINGLE EMPLOYEE.
OTHER BUSINESS
Management does not know of any other business to be presented at the
Meeting. However, if any other business is presented, it is the intention of
the Proxies to vote according to their best judgment with respect to such other
business.
This year, the Company has combined its Annual Report on Form 10-K with its
Annual Report to Shareholders, which is being sent to you together with this
Proxy Statement. This combined report includes the Company's financial
statements and the schedules thereto, and a list describing the exhibits
thereto. Any questions regarding the report may be directed to Scott C.
Ulbrich, Executive Vice President and Chief Financial Officer, P.O. Box 30006,
Salt Lake City, Utah 84130.
DEADLINE FOR SHAREHOLDER PROPOSALS
If any Shareholder wishes to present a proposal for action at the 1995
ANNUAL MEETING of the Shareholders, the Shareholder must comply with applicable
Securities and Exchange Commission Regulations, including adequate notice to the
Company. Any proposal must be submitted in writing by Certified Mail -- Return
Receipt Requested, to First Security Corporation, Attention: Secretary of the
Company, 79 South Main Street, Salt Lake City, Utah 84111, on or before December
31, 1994.
<PAGE>
-28-
FIRST SECURITY CORPORATION PROXY DESIGNATION THIS PROXY DESIGNATION
79 SOUTH MAIN STREET AND INSTRUCTION CARD AND INSTRUCTION IS SOLICITED
SALT LAKE CITY, UTAH 84111 BY YOUR BOARD OF DIRECTORS
The undersigned shareholder of First Security Corporation hereby appoints
SPENCER F. ECCLES, MORGAN J. EVANS and ALONZO W. WATSON,JR., or any one or more
of them severally or jointly with full power of substitution, the attorneys and
agents of the undersigned to vote as proxy with respect to all shares registered
in the name of the undersigned, or which the undersigned would be entitled to
vote, at the Annual Meeting of the Shareholders of First Security Corporation to
be held at the Utah Power & Light Company Auditorium, 40 East First South, Salt
Lake City, Salt Lake County, Utah, on Monday the 25th day of April, 1994 at 3:00
p.m. and at all adjournments thereof, provided however, that such vote shall be
specified below on the proposals more fully set forth in the First Security
Corporation Proxy Statement.
1. ELECTION OF DIRECTORS
FOR ALL Nominees listed below WITHOLD AUTHORITY
(except as marked to the TO VOTE for all
contrary below) nominees listed below
IMPORTANT
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.
Dr. David P. Gardner Karen H. Huntsman
James C. Beardall Kendall D. Garff G. Frank Joklik
Rodney H. Brady U. Edwin Garrison B. Z. Kastler
James. E. Bruce David B. Haight Joseph G. Maloof
Thomas D. Dee II Jay Dee Harris Scott S. Parker
Spencer F. Eccles Robert T. Heiner Dr. Arthur K. Smith
Morgan J. Evans Howard W. Hunter James L. Sorenson
Harold J. Steele
2. AMENDING THE COMPREHENSIVE MANAGEMENT INCENTIVE PLAN.
FOR AGAINST
(Continued and to be SIGNED on the other side)
<PAGE>
-29-
THE SHARES INDICATED ON THIS PROXY INSTRUCTION CARD, WHEN THIS CARD IS PROPERLY
EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED
SHAREHOLDER. IF NO DIRECTION IS MADE ON THE PROXY CARD, THESE SHARES WILL BE
VOTED FOR ALL OF THE LISTED NOMINEES FOR DIRECTORS AND FOR ALL PROPOSALS.
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
PLEASE MARK, SIGN, DATE AND RETURN The undersigned
THIS PROXY INSTRUCTION CARD PROMPTLY acknowledges receipt of
USING THE ENCLOSED ENVELOPE. the Proxy Statement and
the 1993 Annual Report,
and executes this Proxy
Instruction card.
Dated________________________________ , 1994
_______________________________________
Signature of Shareholder
_______________________________________
Signature of Shareholder
NOTE: (a) Proxy instruction cards for shares registered
in the names of joint tenants must be signed
by each of the joint owners or by the
survivor of them as such.
(b) When signing as attorney, executor,
administrator or guardian, please give
your full title as such.
(c) Proxy instruction cards for shares registered in the names
of trustees must be signed by
all trustees or by one trustee as co-trustee
for self and other trustees.
