<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 24, 1995 AT 3:00 P.M.
Pursuant to the Bylaws of First Security Corporation ("the Company"), we
are pleased to invite all of the Company's Shareholders to the Company's Annual
Shareholders Meeting, 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 24, 1995, 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 1994 EMPLOYEE STOCK PURCHASE
PLAN, WHICH WILL PROVIDE MANAGEMENT WITH THE AUTHORITY TO GRANT
EMPLOYEES THE RIGHT TO PURCHASE UP TO AN AGGREGATE OF 1,000,000 SHARES
OF THE COMPANY'S COMMON STOCK THROUGH GENERAL OFFERINGS AT FAIR MARKET
VALUE MADE FROM TIME TO TIME DURING THE TERM OF THE PLAN.
3. TO CONSIDER AND VOTE ON THE PROPOSED 1995 NON-EMPLOYEE DIRECTOR STOCK
OPTION PLAN, WHICH ESTABLISHES A MECHANISM FOR THE AUTOMATIC GRANT OF
STOCK OPTIONS, WITH EXERCISE PRICES AT FAIR MARKET VALUE AS OF THE
DATE OF GRANT, TO NON-EMPLOYEE DIRECTORS OF THE COMPANY ON A PERIODIC
BASIS, AND WHICH RESERVES AN AGGREGATE OF 500,000 SHARES OF THE
COMPANY'S COMMON STOCK FOR OPTION EXERCISES BY NON-EMPLOYEE DIRECTORS
UNDER THE TERMS OF THE PLAN.
4. TO CONSIDER AND VOTE ON AMENDMENTS TO THE INCENTIVE SAVINGS PLAN,
INCLUDING AN AMENDMENT WHICH WILL CREATE AN EMPLOYEE STOCK OWNERSHIP
PLAN (ESOP) WITHIN THE PLAN, AND AMENDMENTS TO EXPAND THE AVAILABLE
CHOICES FOR EMPLOYEE-DIRECTED INVESTMENT UNDER THE PLAN.
5. 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 6, 1995, 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 1995 Annual Meeting. In accordance with
Delaware law, a list of the Company's Shareholders entitled to vote at the 1995
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 1995 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 1994 Annual Report to Shareholders, which contains the audited
financial statements of the Company and certain other information about the
Company and its 1994 operating results.
BY ORDER OF THE BOARD OF DIRECTORS
Dated March 15, 1995
/s/ ALONZO W. WATSON, JR.
-------------------------
ALONZO W. WATSON, JR.
Secretary of the Company
<PAGE>
[Logo]
PROXY STATEMENT
March 15, 1995
TABLE OF CONTENTS
-----------------
Page
----
GENERAL INFORMATION FOR SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . 1
LAST YEAR'S (April 25, 1994) ANNUAL MEETING. . . . . . . . . . . . . . . . . . 4
INDEPENDENT AUDITORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
MANAGEMENT OF THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Board of Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Director Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Executive Officers. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
COMPENSATION OF MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . 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 . . . . . . . . . . . . . . . . . . . . . . .18
1. Election of Directors. . . . . . . . . . . . . . . . . . . . . . . .18
2. Proposed Approval of 1994 Employee Stock Purchase Plan . . . . . . .22
3. Proposed Approval of 1995 Non-Employee Director Stock Option Plan. .24
4. Proposed Approval of Amendments to the Incentive Savings Plan,
including the creation of an Employee Stock Ownership Plan (ESOP).27
OTHER BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
DEADLINE FOR SHAREHOLDER PROPOSALS FOR 1996 ANNUAL MEETING . . . . . . . . . .32
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 24, 1995 at 3:00 p.m., and at any and all adjournments thereof.
<PAGE>
-2-
A Proxy Designation and Instruction Card ("Proxy" "or Proxy Card") 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
Proxy Cards and you are requested to date and sign BOTH of these Proxy Cards,
and return them in the envelope provided.
VOTING SECURITIES
The Board of Directors has fixed the close of business on March 6, 1995 as
the RECORD DATE for determination of shareholders entitled to notice of and to
vote at the 1995 Annual Meeting (the "Record Date"). As of the Record Date,
there were issued and outstanding 49,934,680 shares of Common Stock and 11,644
shares of $3.15 Series "A" Cumulative Convertible Preferred Stock ("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 to attach to 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
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 approval of the 1994 Employee Stock
Purchase Plan, the 1995 Non-Employee Director Stock Option Plan and the
amendments to the Incentive Savings Plan; and, in the discretion of the
designated Proxy holders, as to any other matters which may properly come before
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 24, 1995, BY SIGNING
AND DATING A LATER PROXY AND SUBMITTING THE NEW PROXY IN TIME TO BE COUNTED FOR
THE ANNUAL MEETING, OR BY VOICING SUCH REVOCATION IN PERSON AT THE ANNUAL
MEETING AT THE TIME VOTES ARE REQUESTED.
<PAGE>
-3-
If a Shareholder wishes to designate someone other than the designated
persons named on the Proxy Card as his authorized agent to vote at the 1995
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 designation signed by the Shareholder(s) must be
presented at the Annual Meeting by the person or persons you have designated on
the Proxy 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 a participant in the Dividend Reinvestment Plan
fails to sign and return a Proxy Card, the participant's shares held in the Plan
will not be voted at all, nor will they be considered present at the 1995 Annual
Meeting.
The cost of preparing, assembling and mailing this Proxy Statement and
related 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 $25,000. 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 Cards and this
Proxy Statement to Shareholders.
This Proxy Statement and the enclosed form of Proxy are being mailed to
Shareholders beginning on March 22, 1995. Mailed together with this Proxy
Statement is a copy of the Company's 1994 Annual Report to Shareholders.
SHAREHOLDERS WHO DO NOT RECEIVE A COPY OF THE 1994 ANNUAL REPORT WITH THIS PROXY
STATEMENT, OR WHO DESIRE EXTRA COPIES, SHOULD CONTACT THE COMPANY AT (801)
246-5706.
VOTES REQUIRED FOR ACTION TO BE TAKEN AT THE 1995 ANNUAL MEETING
A majority of the share votes entitled to be cast at the Annual Meeting
(legal ownership of outstanding shares as of the Record Date) must be present in
person or by Proxy for a quorum to exist at the Annual Meeting. Abstentions and
broker non-votes are counted "present" for determining the presence or absence
of a quorum for the transaction of business.
In the election of Directors, the twenty (20) nominees receiving the
highest number of votes cast in their favor will be elected as the Board of
Directors of the Company for the 1995-96 period until the 1996 Annual Meeting.
Accordingly, abstentions and broker non-votes will not affect the outcome of the
election of Directors.
The proposed approvals of the 1994 Employee Stock Purchase Plan, the 1995
Non-Employee Director Stock Option Plan, and the amendments to the Incentive
Savings Plan, including the creation of an ESOP, require that a majority of the
shares present and entitled to vote at the meeting vote in favor of these plan
proposals. Abstentions and broker non-votes will be counted as a "no" vote with
respect to these proposals, and could thereby affect the outcome of the vote on
these proposals.
<PAGE>
-4-
Holders of shares of Preferred Stock and Common Stock are entitled to one
vote at the Annual Meeting for each share held of record at the Record Date.
LAST YEAR'S (APRIL 25, 1994) ANNUAL MEETING
The 1994 Annual Meeting of the Shareholders was held on April 25, 1994 in
Salt Lake City, Utah. There were 40,813,379 shares of Common Stock and 7,771
shares of Preferred Stock represented at the 1994 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 1994 Annual Meeting was voted upon
separately, and each was elected by the affirmative vote of more than 98.7% of
the shares present and voting. The proposal to increase the number of
authorized shares of common stock (par value $1.25) available under the
Comprehensive Management Incentive Plan was also approved by the vote of more
than 85% of the shares present and voting at the 1994 Annual Meeting.
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
1995 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 partner in Deloitte & Touche will be in attendance at the
1995 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>
Title of Amount and Nature of Percent
Name and Address Class Beneficial Ownership of Class
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common 2,938,400 shares,(1) in connection with managed 5.89%
The Capital Group Companies Stock investment funds
Companies, Inc. and Capital
Research Management Company
- -------------------------------------------------------------------------------------------------------
First Security Bank of Utah, Common 5,127,659.1 shares,(2) as Trustee of separate 10.27%
N.A. Trust Group Stock trust accounts
79 South Main Street
Salt Lake City, UT 84111
- -------------------------------------------------------------------------------------------------------
<PAGE>
-5-
<FN>
- -------------------------------------------------------------------------------
(1) CAPITAL RESEARCH AND MANAGEMENT COMPANY, A REGISTERED INVESTMENT ADVISOR,
AND AN OPERATING SUBSIDIARY OF THE CAPITAL GROUP COMPANIES, INC., EXERCISED AS
OF DECEMBER 31, 1994, INVESTMENT DISCRETION WITH RESPECT TO 2,938,400 SHARES, OR
5.89% OF THE OUTSTANDING SHARES OF THE CLASS,WHICH WERE OWNED BY VARIOUS
INSTITUTIONAL INVESTORS. SAID SUBSIDIARY HAS NO POWER TO DIRECT THE VOTE OF THE
ABOVE SHARES.
(2) OF THE 5,127,659.1 SHARES WHICH THE TRUST GROUP OF FIRST SECURITY BANK OF
UTAH, N.A. HOLDS IN VARIOUS FIDUCIARY CAPACITIES, IT HAS VOTING POWER OVER
4,664,578.9 SHARES (9.34% OF THE TOTAL OUTSTANDING SHARES) AND NO POWER TO VOTE
THE REMAINING 463,080.2 SHARES.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
<PAGE>
-6-
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 for the first time at the
1995 Annual Meeting) beneficially own AS A GROUP 2,793,076.2 shares, or
approximately 5.6% of the Company's outstanding Common Stock as of the Record
Date, including 617,057 option shares exercisable within 60 days of the Record
Date but which were unexercised as of the Record Date, and including 23,456.7
shares beneficially owned by the three (3) Honorary Directors as a group.
The Board of Directors held six (6) meetings during 1994. All Directors
attended all of the meetings of the Board except Howard W. Hunter, Karen
Huntsman and Joseph G. Maloof, who each attended five (5) of the meetings, and
Thomas D. Dee, who attended four (4) of the meetings.
The Company's Board of Directors mourns the death in March 1995 of
President Howard W. Hunter of the Church of Jesus Christ of Latter-Day Saints, a
long time and faithful Director of the Company. President Hunter was a gifted
corporate lawyer in Southern California before assuming his ecclesiastical
responsibilities, and he was a source of strength and inspiration to millions
worldwide, as well as an able business counsellor. His counsel and support will
be greatly missed.
During 1994, Kendall D. Garff resigned from the Board and became an
Honorary Director. Robert H. Garff, the son of Kendall Garff, was elected as a
Director by action of the Board on January 23, 1995.
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 thirteen (13) times during
1994. Messrs. Beardall and Eccles attended all of the meetings, Messrs. Evans,
Heiner and Parker attended twelve (12) of the meetings, and Messrs. Brady and
Dee attended eleven (11) of the meetings.
The AUDIT COMMITTEE of the Board, which met four (4) times during 1994,
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 only one(1) meeting. Mr. Ashton
passed away in 1994 and was not replaced on the Audit Committee.
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
<PAGE>
-7-
Committee (Messrs. Eccles, Evans, King, McMurray, Nelson, and Ulbrich). The
Compensation Committee met once during 1994. All members of the Committee
attended this meeting.
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 Kendall D. Garff, Dr. Chase N. Petersen, and James E. Phelps
are serving as Honorary Directors of the Company. These persons beneficially
owned 5,260.7 shares, 225 shares, and 17,971 shares, respectively, of the
Company's Common Stock at year end 1994.
The Company mourns the passing of Val Browning, a longtime Director and
Honorary Director, during 1994; and the passing of Ralph J. Comstock, a long-
time Director and Honorary Director, in February 1995. Val Browning's counsel
and support will be greatly missed. Ralph Comstock was a life-long First
Security contributor, having retired as Chairman and Chief Executive Officer of
First Security Bank of Idaho, N.A. His friendship and value to the Corporation
in Idaho will be sorely missed.
DIRECTOR COMPENSATION
During 1994, 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 1994 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.
<PAGE>
-8-
EXECUTIVE OFFICERS
Set forth on TABLE 2, below, are the names, ages, primary areas of
responsibility, and economic and beneficial stock ownership (as of December 31,
1994) of the Company's Executive Officers 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.
TABLE 2
EXECUTIVE OFFICERS OF FIRST SECURITY CORPORATION
------------------------------------------------
JAY S. BACHMAN, 45, is Senior Vice President and Treasurer. At year end 1994,
Mr. Bachman was the beneficial owner of 6,416 shares of Common Stock, including
4,235 option shares exercisable within 60 days of the Record Date, but not yet
exercised, and 1,105 shares held in his account in the Company's Incentive
Savings Plan(1).
BRAD D. HARDY, 41, is Assistant Secretary of the Company and is a Director of
Ray, Quinney & Nebeker (law firm). At year end 1994, Mr. Hardy beneficially
owned 200 shares of Common Stock.
T. EUGENE KING, 61, is an Executive Vice President of the Company and is also
Chairman, President and Chief Executive Officer of First Security Service
Company, and is a member of the Company's Management Committee. At year end
1994, he was the beneficial owner of 89,330 shares of Common Stock, including
74,601.5 option shares exercisable within 60 days of the Record Date, but not
yet exercised, and 4,728.5 shares held in his account in the Company's Incentive
Savings Plan. This amount is approximately 0.18% of the total outstanding
shares of Common Stock at the Record Date.
KELLY K. MATTHEWS, 50, is Senior Vice President (Economist). At year end 1994,
Mr. Matthews was the beneficial owner of 26,985 shares of Common Stock,
including 17,049 option shares exercisable within 60 days of the Record Date,
but not yet exercised, and 3,355 shares held in his account in the Company's
Incentive Savings Plan.
J. PATRICK MCMURRAY, 46, is 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 1994, he was the beneficial owner
of 93,591 shares of Common Stock, including 81,658 option shares exercisable
within 60 days of the Record Date, but not yet exercised, and 6,999 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.
L. SCOTT NELSON, 56, is 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 1994, he was the beneficial owner
of 159,555.5 shares of Common Stock including certain shares held by Mr.
Nelson's spouse in her own name, and including 152,734 option shares exercisable
within 60 days of the Record Date, but not yet exercised, and 3,232 shares held
in his account in the Company's Incentive Savings Plan. This amount is
approximately 0.32% of the total outstanding shares of Common Stock at the
Record Date.
LESLIE F. PASKETT, 50, is Senior Vice President and Tax Officer. At year end
1994, he was the beneficial owner of 18,991 shares of Common Stock, including
15,678.5 option shares exercisable within 60 days of the Record Date, but not
yet exercised, and 2,230 shares held in his account in the Company's Incentive
Savings Plan.
DENNIS G. REEVES, 55, is Senior Vice President and Audit Director of the
Company. He previously was a Vice President and accounting manager in the
Comptroller's Division of the Company. At year end 1994, Mr. Reeves was the
beneficial owner of 813 shares of Common Stock, including 448 option shares
exercisable within 60 days of the Record Date, but not yet exercised, and 265
shares held in his account in the Company's Incentive Savings Plan.
JOHN L. RUDISILL, 38, was elected on February 21, 1995 as Senior Vice President
and Director of the Company's Mutual Funds Center. Prior to this election, he
was Executive Vice President and Manager of the Trust Group at First Security
Bank of New Mexico. Prior to that, Mr. Rudisill was Executive Vice President
and Manager of the Trust Group at The First National Bank in Albuquerque. At
year end 1994, Mr. Rudisill was the beneficial owner of 835 shares of Common
Stock, including 704 option shares exercisable within 60 days of the Record
Date, but not yet exercised, and 48 shares held in his account in the Company's
Incentive Savings Plan.
--------------------
(1)Shares held in the Incentive Savings Plan are beneficially owned
under applicable legal definition, but are not voted by the officer under
the current plan provisions. These shares are voted by the Plan Trustee,
First Security Bank of Utah, N.A.
<PAGE>
-9-
SCOTT C. ULBRICH, 40, is Executive Vice President and Chief Financial Officer of
the Company, and is a member of the Company's Management Committee. At year end
1994, he was the beneficial owner of 32,800.5 shares of Common Stock, including
29,910.5 option shares exercisable within 60 days of the Record Date, but not
yet exercised, and 474 shares held in his account in the Company's Incentive
Savings Plan.
GARY R. VANCE, 59, is Senior Vice President and Comptroller. At year end 1994,
he was the beneficial owner of 31,178 shares of Common Stock, including 26,761.5
options shares exercisable within 60 days of the Record Date, but not yet
exercised, and 3,479 shares held in his account in the Company's Incentive
Savings Plan.
ALONZO W. WATSON, JR., 72, is Secretary of the Company, and is a Director of
Ray, Quinney & Nebeker (law firm). At year end 1994, he was the beneficial
owner of 1,450 shares of Common Stock, which does not include 191,290.7664
shares as to which Mr. Watson holds voting and investment power as Personal
Representative of the Estate of Mrs. 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 a director; or 60,750 shares held by the Marriner S. Eccles
Charitable Trust, of which Mr. Watson is a Director; or 148,000 shares of the
Company's Common Stock owned by the Nora Eccles Treadwell Foundation, as to
which Mr. Watson serves as a Director and disclaims beneficial ownership; but
does include certain shares held by Mr. Watson's spouse in her own name.
DAVID R. WILSON, 55, is Executive Vice President and Manager of the Company's
Capital Markets operations. At year end 1994, he was the beneficial owner of
22,666 shares of Common Stock including 19,932.5 option shares exercisable
within 60 days of the Record Date, but not yet exercised, and 1,725 shares held
in his account in the Company's Incentive Savings Plan.
Based on their disclosed share holdings at December 31, 1994, all of the
Company's Executive Officers as a group (15 persons, including Messrs. Eccles
and Evans, whose stockholdings are described in the Election of Directors
section, below), beneficially owned a total of 2,494,313.5 shares, or
approximately 5%, of the Company's Common Stock (including 1,040,770 shares
subject to unexercised options exercisable within 60 days of the Record Date),
50,373 shares held in accounts in the Company's Incentive Savings Plan, and 63
shares, or approximately 0.54%, 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 1994 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 1994):
<PAGE>
-10-
TABLE 3
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
Awards
- -----------------------------------------------------------------------------------------------------------------------------
Name Restricted All Other
and Stock Options/ Compensation(4)
Principal Salary(1) Bonus(2) Award(s) SARs(3) ($)
Position Year ($) ($) ($) (#)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SPENCER F.ECCLES, Chairman and 1994 515,915 192,941 -0- 53,952 26,564
Chief Executive Officer of the 1993 467,450 280,404 -0- 59,648 20,794
Company 1992 431,222 318,306 -0- 50,176 18,236
MORGAN J. EVANS, President and 1994 344,001 115,587 -0- 28,160 23,894
Chief Operating Officer of the 1993 296,736 162,445 -0- 32,000 12,715
Company 1992 260,509 178,665 -0- 26,944 12,403
L. SCOTT NELSON, 1994 276,706 115,307 -0- 22,784 15,286
Executive Vice President of the 1993 248,641 145,604 -0- 27,136 10,110
Company and Chairman, 1992 245,702 136,814 -0- 21,248 10,085
President and Chief Executive
Officer of
First Security Bank of Utah
J. PATRICK McMURRAY 1994 230,816 60,128 -0- 19,840 13,440
Executive Vice President of the 1993 209,951 105,607 -0- 23,616 7,576
Company and Chairman, 1992 199,027 117,965 -0- 11,648 7,398
President and Chief Executive
Officer of
First Security Bank of Idaho
T. EUGENE KING, 1994 192,000 72,549 -0- 11,328 9,239
Executive Vice President of the 1993 177,055 97,456 -0- 13,888 10,079
Company and Chairman, 1992 173,682 104,590 -0- 10,112 9,760
President
and Chief Executive Officer of
First Security Service Company
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
<FN>
(1)Includes Director's Fees paid by the Company or its affiliates, 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, 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, and contributions made by the Company to the deferred
compensation accounts of these Executive Officers under a program open to all
Executive Officers of the Company.
</TABLE>
Executive Officers may enter into a compensation deferral agreement with
the Company whereby compensation otherwise receivable for service as an
Executive Officer may be deferred and held in an account for the benefit of the
Executive Officer. Under a mechanism substantially similar to that in the
Incentive Savings Plan (see description of this plan at page , below), the
Company will match 50% of the Executive Officer's annual deferred amount up to a
maximum of 3% of total compensation, and will add this amount to the Executive
Officer's deferral account. The Executive Officer may choose whether this
deferred compensation will be invested in "stock equivalency units" or earn
interest at a predetermined rate. An Executive Officer 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
on the Quarterly Evaluation Date (last day of each quarter) by the market price
of the Company's common stock on that date. Moreover, additions are made to the
Executive Officer's account to represent the value of dividends that otherwise
would be paid on the "stock equivalency units" if they were actual shares of
stock. An Executive Officer electing to earn interest, will have interest added
quarterly on the Valuation Date (last day of the quarter) at a rate equal to the
yield on ten (10) year treasury securities plus 1%. Treasury yields will be
measured as the average monthly yield each December, March, June and September,
as
<PAGE>
-11-
published by the Federal Reserve. Such rate shall be effective for the quarter
commencing three months later. Executive Officers using this deferred
compensation option may choose a lump sum distribution upon death, disability or
retirement, or in quarterly or annual installments over a period of up to twenty
(20) years. Amounts remaining in a deferral account during any term of periodic
distributions will continue to be revalued quarterly. No switching between the
stock equivalency units and the interest rate option will be permitted. All
payouts to employees will be in cash.
STOCK OPTIONS AND SIMILAR AWARDS TO MANAGEMENT.
The following two tables provide information concerning the stock options
and similar awards provided to the Executive Officers listed in TABLE 3 during
1994 (TABLE 4) and exercises of options and similar awards by these Executive
Officers during 1994 (TABLE 5):
TABLE 4
OPTION GRANTS TO CERTAIN EXECUTIVE OFFICERS DURING 1994
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
% of
Total Black-
Options/SARs Scholes
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 53,952 14.9% 24.75 11/22/2004 $461,331
Morgan J. Evans 28,160 7.8% 24.75 11/22/2004 240,790
L. Scott Nelson 22,784 6.3% 24.75 11/22/2004 194,821
J. Patrick McMurray 19,840 5.5% 24.75 11/22/2004 169,647
T. Eugene King 11,328 3.1% 24.75 11/22/2004 96,863
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
<FN>
(1)The Company has never issued SARs. Options granted in 1994 vest in four (4)
equal installments on January 15 of 1996, 1997, 1998 and 1999.
(2)The 1994 grants of options were awarded by the Compensation Committee on
November 22, 1994. The exercise price is the "last sale" price quotation 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 0.2559; (b) a risk-
free interest rate of 7.94%; (c) a dividend rate of 3.35%; (d) a full 10-year
term; and (e) no discount for risk of forfeiture or restrictions on
transferability.
</TABLE>
<PAGE>
-12-
TABLE 5
OPTION EXERCISES BY CERTAIN EXECUTIVE OFFICERS DURING 1994
AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
UNEXERCISED SHARE OPTIONS 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 $ 0 442,438 151,232 $4,400,931 $ 0
- ----------------------------------------------------------------------------------------------------------------------------------
Morgan J. Evans 10,000 196,111 132,427 80,368 1,158,583 0
- ----------------------------------------------------------------------------------------------------------------------------------
L. Scott Nelson 0 0 140,638 65,856 1,358,621 0
- ----------------------------------------------------------------------------------------------------------------------------------
J. Patrick McMurray 0 0 72,842 52,192 722,114 0
- ----------------------------------------------------------------------------------------------------------------------------------
T. Eugene King 10,000 211,111 68,601 32,800 569,198 0
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL 20,000 $407,222 856,946 382,448 $8,209,447 $0
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</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", below.)
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, 1994, Messrs. Eccles, Evans, Nelson,
McMurray and King held no shares of Restricted Stock. No shares of Restricted
Stock were granted in 1994.
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:
<PAGE>
-13
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 1994 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. If they remain
employed until they reach the age of 65, the years of credited service for the
five named Executive Officers in Table 3 will be as follows: 38 years for Mr.
Eccles, 39 years for Mr. Evans, 34 years for Mr. Nelson, 42 years for Mr.
McMurray, and 40 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 5 named officers in TABLE 3, above. The Committee met on November 22, 1994
and passed resolutions affecting base salary and both short-term and long-term
incentive compensation for these Executive Officers.
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 Executives, including the 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.
<PAGE>
-14
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. For 1995, executive salary midpoints were increased by
approximately 2.3%. This movement places the overall structure slightly
below the market median, as of January 1, 1995, as determined from job-by-
job market comparisons derived from the compensation surveys. This modest
increase was designed to keep executive base salaries below market levels
in the aggregate, and is one of several steps recommended by FSC management
to control expenses. It is intended that this deficiency to the market be
made up through the opportunities presented in the performance-based, at-
risk portions of the executive compensation program. (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 6.0% in Mr. Eccles' base salary to become effective
January 1, 1995. This increase places Mr. Eccles' salary
approximately 5.7% below the appropriate market median for his
position. Mr. Eccles' salary was limited to this amount by the salary
range midpoint established for 1995 and is actually somewhat low 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 9.1%, also effective
January 1, 1995. This group's salaries are placed, on average, 3.2%
below the market medians for these positions. Again these levels were
set based on a combination of the salary range midpoints established
for 1995 and 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 1994,
the MACIBP corporate performance measurement was divided equally between
the Company's NET INCOME and the Company's RETURN ON AVERAGE ASSETS (ROAA).
For net income, target performance represents the achievement of the annual
business plan and is set as an absolute amount. The ROAA target is
relative rather than absolute, and is defined as the mean 1994 ROAA of a
select group of peer companies. Threshold performance for both net income
and ROAA is set at 90% of the target. No bonus is paid in any category for
which the performance result is below threshold. The Committee has
approved the continuation of this plan for 1995 without changing the basic
design or bonus opportunity levels.
<PAGE>
-15-
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 the company's
performance in the two performance measurement categories listed
above. In 1994 the Company's performance was 3.02% below target for
net income and 1.61% above target for ROAA. Accordingly, Mr. Eccles'
earned a 1994 bonus equal to 51% of his maximum bonus opportunity, the
bonus amount being entirely determined by the relationship of the
performance results to the performance targets 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 77% of each bonus is derived
from some combination of corporate and affiliate net income and
corporate ROAA. In 1994, the performance results for each of the
named Executive Officers other than Mr. Eccles were below the maximums
established by this Committee in all cases. Accordingly, the other
named Executive Officers earned bonuses ranging from 37% to 61% of
their maximum bonus opportunities.
LONG-TERM INCENTIVES. In 1994, 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 80 Executive Officers and
other managers under the Comprehensive Management Incentive Plan (CMIP).
The size of these awards is determined by: 1) using information obtained
from 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 group
approaches the 60th percentile of the appropriate market comparison group.
81 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.
INTERNAL REVENUE CODE SECTION 162(M) MATTERS. No Executive Officer was
compensated during the year in an amount that would be denied
deductibility from the Company's federally taxable income under the
operation of Section 162(m) of the Internal Revenue code of 1986, as
amended. Not only was cash and other current compensation under
$1,000,000 for each Executive Officer, but incentive awards were
granted under plans that meet the requirements for exclusion from the
compensation calculations under Section 162(m).
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 1994. 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 1994 in excess of $10,000,000 but less than $20,000,000.
<PAGE>
-16-
CERTAIN TRANSACTIONS BY AND WITH MANAGEMENT AND OTHERS
DIRECTORS' AND OFFICERS' LIABILITY INSURANCE
The Company has purchased directors' and officers' liability and corporate
reimbursement insurance on behalf of the Directors and Executive Officers of the
Company, as well for most if not all officers and directors of the Company's
subsidiaries, from Executive Management Associates, Inc. The current policy was
effective on September 30, 1994 and will lapse on September 30, 1995. The
annual premium for this period was $569,500, which was paid by the Company.
This policy will indemnify and reimburse attorney fees and other legal
action defense costs to Executive Officers and Directors of the Company in
connection with claims made against them by third parties, including
Shareholders' claims under certain circumstances.
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 1994, 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 collectability or present other unfavorable features to the Company.
Specifically, Messrs. Evans, King, Matthews, Nelson, Peterson, Reeves, Ulbrich
and Wilson (or their affiliates) had credit extensions and/or credit commitments
during 1994 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
$500,000 or more but less than 1,000,000; Messrs. Brady, Sorenson (or their
affiliates) had credit extensions and/or credit commitments during 1994 of
$1,000,000 or more but not in excess of $5,000,000; Mrs. Hunstman, and Messrs.
Haight and Heiner (or their affiliates) had credit extensions and/or credit
commitments during 1994 of $5,000,000 or more but less than $10,000,000;
Messrs. Harris, Maloof and Parker (or their affiliates) had credit extensions
and/or credit commitments during 1994 of $10,000,000 or more but less than
$20,000,000; Messrs. Beardall, Bruce, Garrison, Kastler, and Steele (or their
affiliates) had credit extensions and/or credit commitments during 1994 of
$20,000,000 or more but less than $50,000,000; and Messrs. Eccles and Garff, (or
their affiliates) had credit extensions and/or credit commitments during 1994 of
$50,000,000 or more but less than $100,000,000. 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 1994, the Company paid approximately $2.7 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 1994 except Mr. Maloof, who
determined that he had filed an incomplete Form 3 upon his election to the Board
of Directors, and promptly corrected this filing when the error was noticed
during 1994.
<PAGE>
-17-
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, 1990 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:
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 1989 1990 1991 1992 1993 1994
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
First Security Corporation 100.00 80.18 146.73 216.39 211.06 193.77
NASDAQ Broad Market Index 100.00 82.20 128.92 148.84 170.79 165.33
KBW 50 Index 100.00 71.80 113.64 144.81 152.83 144.73
</TABLE>
<PAGE>
-18-
5-YEAR CUMULATIVE MARKET INDEX
[graph]
(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.
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 1995 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 W. Watson, Secretary, 79 South Main Street, Salt
Lake City, Utah 84111 with any suggestions concerning nominations to the Board
of Directors.
The twenty (20) persons named in TABLE 8, below, will be placed in
nomination by the Executive Committee of the Board of Directors for election as
Directors of the Company at the 1995 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.
<PAGE>
-19-
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
1995 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 (20) nominees, listed below, are elected at the 1995 Annual
Meeting, the composition of the new Board will be sixteen (16) 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. Robert H. Garff were elected to their
present term of office by a vote of the Shareholders at the 1994 Annual Meeting.
Mr. Garff was elected a Director by action of the Board of Directors on October
31, 1994.
There is set forth below as to each of the twenty (20) 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:
TABLE 8
NOMINEES FOR DIRECTOR
*+JAMES C. BEARDALL, 55, 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, 62, 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.,
Deseret Mutual Benefit Association (employee benefit insurance) and Management
Training Corporation (operator of training centers). At year end 1994, he
beneficially owned 25,995 shares of the Company's Common Stock.
JAMES E. BRUCE, 74, has been a Director of the Company since 1983. He was the
retired Chairman and Chief Executive Officer of Idaho Power Company. Mr. Bruce
recently retired as a Director of Idaho Power Company and of Albertsons, Inc.
(supermarkets). At year end 1994, Mr. Bruce beneficially owned 11,375 shares of
the Company's Common Stock.
*#THOMAS D. DEE II, 74, 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 1994, Mr. Dee beneficially owned 67,500
shares of the Company's Common Stock.(1)
*SPENCER F. ECCLES, 60, 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
1994, he was the beneficial owner of 1,841,875.6 shares of the Company's Common
Stock(2),(3) (including 469,894 option shares exercisable within 60 days but not
yet
<PAGE>
-20-
exercised and 17,643.4 shares held in his account in the Company's Incentive
Savings Plan), and 63 shares of the Company's Preferred Stock.
*MORGAN J. EVANS, 57, 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 1994, Mr. Evans was the beneficial owner of 167,626.9
shares of the Company's Common Stock, including 147,163 option shares
exercisable within 60 days of the Record Date, but not yet exercised, and
5,088.9 shares held in his account in the Company's Incentive Savings Plan.
DR. DAVID P. GARDNER, 61, 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 1994, Dr. Gardner beneficially owned 3,350
shares of the Company's Common Stock, which number includes 1,562 shares held in
a trust established by his deceased spouse as to which Dr. Gardner acts as
trustee.(1)(3)
ROBERT H. GARFF, 50, was elected as a Director of the Company on October 31,
1994. He is Vice President and General Manager of Garff Enterprises, Inc.
(management of Garff family ownership of a number of automobile sale and related
enterprises). At year end 1994, Mr. Garff beneficially owned 675 shares of the
Company's Common Stock. Mr. Garff is the son of Kendall Garff, an Honorary
Director of the Corporation.
#U. EDWIN GARRISON, 67, 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 1994, he beneficially
owned 3,926 shares of the Company's Common Stock.
DAVID B. HAIGHT, 88, 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 1994,
beneficially owned 1,500 shares of the Company's Common Stock.(4) He is the
father of Karen H. Huntsman, who also is a Director of the Company.
JAY DEE HARRIS, 77, 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, 70, 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), and
Management Training Corporation (operator of training centers). At year end
1994, Mr. Heiner was the beneficial owner of 25,000 shares of the Company's
Common Stock.
KAREN H. HUNTSMAN, 57, 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 1994, Mrs. Huntsman
beneficially owned 5,000 shares of the Company's Common Stock. Mrs. Huntsman is
the daughter of Elder David B. Haight, also a Director of the Company.
#G. FRANK JOKLIK, 67, has been a Director of the Company since 1981. Mr. Joklik
retired as President and Chief Executive Officer of Kennecott Corporation
(mining). He is now a private consultant in the natural resources area, and a
director of Cleveland Cliffs, Inc., a company engaged in mining and related
businesses. At year end 1994, Mr. Joklik beneficially owned no shares of the
Company's Common Stock.
<PAGE>
-21-
B.Z. KASTLER, 74, has been a Director of the Company since 1979. Mr. Kastler is
the retired Chairman, Chief Executive Officer and Director of Questar
Corporation (integrated oil and gas company). He is a Director of Bonneville
International Corporation (broadcasting). At year end 1994, Mr. Kastler
beneficially owned 2,700 shares of the Company's Common Stock.
JOSEPH G. MALOOF, 39, was elected a Director of the Company by the Board in 1994
following the merger of First National Financial Corporation ("FNFC") with and
into the Company. Mr. Maloof was a Director of FNFC for a number of years prior
to the merger. He is President and Chief Executive Officer of the Maloof
Companies of Albuquerque, New Mexico (diversified operating investments in
liquor distributing, hotels and gaming). At year end 1994, Mr. Maloof
beneficially owned 499,964 shares of the Company's Common Stock.
*+SCOTT S. PARKER, 60, has been a Director of the Company since 1985. He is
President of Intermountain Health Care, Inc. (integrated health care provider).
At year end 1994, Mr. Parker beneficially owned 1,124 shares of the Company's
Common Stock.
#DR. ARTHUR K. SMITH, 57, 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 1994, Dr. Smith was the beneficial owner of 400 shares of the Company's
Common Stock.
JAMES L. SORENSON, 72, 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 1994, Mr. Sorenson beneficially owned no
shares of the Company's Common Stock.
HAROLD J. STEELE, 81, has been a Director of the Company since 1959. He is a
retired President of First Security Bank of Utah, and is also a Director of
Anderson Lumber Company. Mr. Steele is married to a cousin of Spencer F.
Eccles. At year end 1994, 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 897,193.2 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 a Director and disclaims
beneficial ownership, does not include 166,883 shares of the Company's
Common Stock owned by the Emma Eccles Jones Foundation, as to which Mr.
Eccles serves as a Trustee and disclaims beneficial ownership, and does not
include 148,000 shares of the Company's Common Stock owned by the Nora
Eccles Treadwell Foundation, 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 Directors and disclaim beneficial
ownership.
(4)Does not include the 919,352 shares of the Company's Common Stock owned
by the Corporation of the President of the Church of Jesus Christ of
Latter-Day Saints, as to which Elder Haight disclaims 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
Charitable Trust, of which Mr. Steele is a Director, and as to which shares
Mr. Steele disclaims beneficial ownership.
<PAGE>
-22-
ITEM NO. 2: PROPOSED APPROVAL OF THE 1994 EMPLOYEE STOCK PURCHASE PLAN.
On December 20, 1994, the Executive Committee of the Board of Directors
approved the 1994 First Security Employee Stock Purchase Plan ("the 1994 Plan").
The Shareholders are being asked to approve the 1994 Plan to fulfill
requirements of the NASDAQ National Market System listing of the Company's
common stock relating to plans under which shares may be issued to Executive
Officers of the Company.
The following summary of the 1994 Plan is qualified in its entirety by
reference to the full text of the 1994 Plan, a copy of which may be obtained by
a Shareholder upon written request directed to Mr. K. Tad Jeppesen at 801-246-
1840.
The purpose of the 1994 Plan is to increase the stock ownership in the
Company by the employees of the Company's operating subsidiaries, including
Executive Officers, thus aligning the interests of the employees more closely to
the interests of the Shareholders as a group. The purpose and operation of the
1994 Plan are substantially similar to the 1983 Employee Stock Purchase Plan and
to the 1976 Employee Stock Purchase Plan of the Company. All of the shares
authorized for these earlier plans have been purchased by eligible employees,
and a new plan with new authorized and reserved shares of Company common stock
is needed.
The 1994 Plan provides for 1,000,000 shares of the Company's common stock
to be reserved for sale to employees pursuant to offers made under the 1994
Plan. Since the 1983 Employee Stock Purchase Plan was approved by the
Shareholders, and through the Record Date, a total of 698,448 shares of Company
common stock (adjusted for intervening splits) have been sold to employees of
the Company's operating subsidiaries, including to Executive Officers of the
Company.
Pursuant to the 1994 Plan, from time to time, in the discretion of the 1994
Plan Committee (which is comprised of the non-employee Directors of the Company
who sit on the Executive Committee), an opportunity may be offered generally to
all eligible (substantially all fulltime) employees of the Company's operating
subsidiaries to purchase up to a specified number of shares of the Company
common stock at 100% of the market price for such shares determined at the start
of the opportunity. Within a short specified window of time, eligible employees
must decide if and for how many shares they will accept the opportunity. Shares
may be purchased for the full purchase price in cash (number of shares X
established market price), or the Company will finance the eligible employee's
purchase of shares over 120 pay periods through payroll deduction. Interest
payments, for those eligible employees who finance their purchase of shares
under the 1994 Plan, are timed to generally coincide with the quarterly dividend
payment, so that dividends on the purchased shares can pay most, if not all, of
the interest due. The interest rate on amounts "borrowed" from the Company
under the 1994 Plan will always been the lowest amount allowed under applicable
IRS regulations.
Shares purchased under the 1994 Plan are always fully vested in the
purchasing employee. The employee will have all incidents of ownership of
shares of the Company's common stock, including the ability to vote these shares
and to receive dividends and stock splits as and when declared. Shares are held
by the Company as collateral for any financed purchase until the purchase price
is fully paid, at which time the shares are delivered to the purchasing
employee. In the event of death, retirement or other terminations of
employment, shares purchased under the 1994 Plan which are fully paid for remain
the property of the employee or his estate, while shares being purchased under
financing arrangements will be paid for in full or forfeited after a reasonable
time period.
<PAGE>
-23-
The 1994 Plan is not intended to be qualified under Rule 16b-3 of the
Securities and Exchange Commission, and hence Executive Officers purchasing
shares under the 1994 Plan must understand that this purchase will be matched
with any sale within 6 months to reach a rebate to the Company required by
Section 16(b) of the Securities Exchange Act. Further, the 1994 Plan is not
intended to qualify under Section 423 of the Internal Revenue Code, and many
provisions of the 1994 Plan and its administration do not comply with Section
423. Therefore no special tax treatment is obtained for purchases of shares
under the 1994 Plan.
6,114 employees of the Company's operating subsidiaries were eligible to
participate in the offering of shares under the 1994 Plan which was made in
December 1994. Of this number, 1,123 eligible employees purchased a total of
221,738 shares at the market price at the time of the offering of $22.00 per
share.
NEW PLAN BENEFITS TABLE
The 1994 Plan is open to Executive Officers of the Company on the same
basis as all other eligible employees. Table 9 summarizes the shares purchased
under the 1994 Plan to date by the five (5) Executive Officers named in Table 3,
the price differential, if any, between the price paid under the 1994 Plan and
the last sale price on the actual date of purchase, as well as the projected
benefit to each of named Executive Officers who chose to finance their purchase
of shares under the 1994 Plan as a result of the favorable interest rate used by
the Company over the term of the financing compared to the interest payments
over the same projected term using the Prime Rate as it was on December 31,
1994. This same information is also given for all Executive Officers and all
participants under the 1994 Plan as groups. Because the offering of shares
under the 1994 Plan is at the discretion of the Plan Committee, and may not
happen every year or at all in the future, future benefits to Executive Officers
under the 1994 Plan are not readily or accurately discernable.
TABLE 9
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
NAME Dollar Interest Rate Shares
Value (1) Benefit(2) Purchased(3)
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Spencer F. Eccles $6,022.00 $ 6,498.30 12,044
- -------------------------------------------------------------------------------
Morgan J. Evans 500.00 539.53 1,000
- -------------------------------------------------------------------------------
L. Scott Nelson 0.00 0.00 0
- -------------------------------------------------------------------------------
J. Patrick McMurray 1,250.00 1,348.88 2,500
- -------------------------------------------------------------------------------
T. Eugene King 0.00 0.00 0
- -------------------------------------------------------------------------------
All Executive Officers (as a group)
(15 persons) $ 8,934.00 $ 9,641.64 17,768
- -------------------------------------------------------------------------------
All Employees who are not
Executive Officers (as a group)
(1,103 persons) $90,062.00 $97,644.94 188,426
- -------------------------------------------------------------------------------
<FN>
(1) The difference, if any between the per share value of the Company's
Common Stock on the actual date of purchase and the price paid for the shares as
offered under the 1994 Plan.
(2) The projected difference between the total interest cost over the term
of the Company-provided financing compared to the total interest cost over the
same term using the prime rate as it was quoted on December 31, 1994 as the
applicable interest rate throughout the period.
(3) The total number of shares purchased through the 1994 Plan.
</TABLE>
<PAGE>
-24
FEDERAL INCOME TAX CONSEQUENCES
There is no taxable event to either the Company or the purchasing employee
at the time of purchase of shares under the 1994 Plan. When the shares
purchased under the 1994 Plan are sold, the gain, if any, realized over the
amount paid for the shares will be taxable income to the employee. To the
extent the shares have been held for the applicable period, the gain will be
long term capital gain. To the extent the shares have not been held for the
required period, the gain will be short term capital gain.
The interest paid by employees financing their purchase of shares under the
1994 Plan through the Company, or otherwise, should be deductible to the extent
of the investment income of the employee, under current tax laws. The receipt
of interest will be ordinary income to the Company.
CERTAIN INTERESTS OF DIRECTORS
In considering the recommendation of the Board of Directors with respect to
the 1994 Plan, Shareholders should be aware that the employee members of the
Board of Directors are eligible to participate in the 1994 Plan which presents
these Directors with a conflict of interest in connection with this proposal.
As discussed above, all eligible employees, including all current directors who
are employees of the Company (Messrs. Eccles and Evans) are eligible to
participate in the 1994 Plan. The Board of Directors recognizes that adoption
of the 1994 Plan may benefit such individual Directors of the Company and their
successors, but it believes that approval of the 1994 Plan will strengthen the
Company's ability to continue to attract, motivate and retain qualified
employees and officers. Furthermore, the Board of Directors believes that
approval of the 1994 Plan will advance the interest of the Company and its
Shareholders by encouraging employees to make significant contributions to the
long-term success of the Company. The Board of Directors believes that the 1994
plan is in the best interests of the Company and its Shareholders, and
therefore, unanimously recommends a vote FOR the proposal to approve the 1994
Plan. In considering the foregoing recommendation of the Board of Directors,
Shareholders should be aware that the current members of the Board of Directors
own, in the aggregate, approximately 5.6% of the shares of the Company's issued
and outstanding Common Stock, including 617,057 option shares exercisable within
60 days of the Record Date.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE APPROVAL OF THE
1994 EMPLOYEE STOCK PURCHASE PLAN.
ITEM NO. 3: PROPOSED APPROVAL OF THE 1995 NON-EMPLOYEE DIRECTOR
STOCK OPTION PLAN.
On January 23, 1995, the Board of Directors adopted the 1995 First Security
Non-Employee Director Stock Option Plan ("the Director Plan") effective May 1,
1995, subject to obtaining Shareholder approval of the Director Plan within one
year. The Company is seeking shareholder approval of the Director Plan for
purposes of meeting certain statutory guidelines that would increase the
flexibility of, and the benefits to the Company's Eligible Directors (as defined
below) associated with, the Director Plan. Particularly, shareholder approval
of the Director Plan would allow the Company to issue stock options to Eligible
Directors of the Company who are subject to the reporting requirements of
Section 16(a) of the Securities and Exchange Act in compliance with the
provisions of Rule 16b-3 promulgated under the Act.
<PAGE>
-25-
SUMMARY OF THE DIRECTOR PLAN
The following summary of the Plan is qualified in its entirety by reference
to the full text of the Director Plan, a copy of which may be obtained by
shareholders upon request directed to K. Tad Jeppesen, 801-246-1840.
The purpose of the Director Plan is to promote the success of the Company
by attracting and retaining non-employee Directors by supplementing their cash
compensation and providing a means for such non-employee Directors to increase
their holdings of the Company's common stock in order to better align the
Director's viewpoint with that of the Shareholders, generally. The Director
Plan provides for the award of options to acquire shares of the Company's common
stock ("Director Options") to persons who are members of the Board of Directors
of the Company and who are not employees of the Company or any of its
subsidiaries ("Eligible Directors"). There are currently eighteen (18) non-
employee Directors eligible to participate in the Director Plan. 500,000 shares
of Company common stock, subject to adjustment in accordance with the provisions
of the Director Plan, have been reserved for issuance under the Director Plan.
The Director Plan is administered by the Executive Committee of the Board of
Directors of the Company.
All awards granted under the Director Plan will be granted for no cash
consideration or for such minimal cash consideration as may be required by
applicable law. Director Options granted under the Director Plan will be
nonqualified stock options under income tax laws.
Awards under the Director Plan will be made as follows:
Each person who is elected as a Non-Employee Director at the 1995
Annual Shareholders Meeting shall be granted, as of May 1, 1995, an Option
to purchase 3,000 shares of Company common stock. On May 1 immediately
following the date as of which a new Non-Employee Director is first elected
to the Board of Directors, such new Non-Employee Director shall be granted
an Option to purchase a number of shares of Company common stock which
corresponds to the remaining vesting period for any pre-existing Director
Options.
Each Eligible Director who has been granted a Director Option who
remains as a Non-Employee Director through the vesting period of that
Director Option automatically shall be granted another Director Option to
purchase an additional 3,000 shares of Company common stock.
Each Director Option shall vest 33 1/3% (1,000 shares) per year over a
vesting term of three (3) years from the date of grant, such vesting to
become effective as of the anniversary date of the grant of the Option;
PROVIDED that persons who are first elected as a Non-Employee Director
after the beginning of a three (3) year vesting period for Director Options
granted to pre-existing Non-Employee Directors shall receive a Director
Option for fewer shares and with a shortened vesting schedule to coincide
with the operation of the then pending three (3) year vesting period
applicable to the pre-existing Non-Employee Directors' Director Options.
FOR EXAMPLE, ASSUME THAT A FULL DIRECTOR OPTION FOR 3,000 SHARES WAS
GRANTED TO THE EXISTING NON-EMPLOYEE DIRECTORS ON MAY 1 OF YEAR 1, AND THAT
A NEW NON-EMPLOYEE DIRECTOR IS ELECTED TWO MONTHS LATER IN YEAR 1. THE NEW
NON-EMPLOYEE DIRECTOR AUTOMATICALLY WILL BE GRANTED AN OPTION FOR 2,000
SHARES (3,000 SHARES LESS 33 1/3%) AS OF MAY 1 IN YEAR 2, WHICH WILL VEST
50% ON MAY 1 IN YEAR 3 (1,000 SHARES) AND YEAR 4 (1,000 SHARES). FOR
ANOTHER EXAMPLE, ASSUME THAT AN OPTION FOR 3,000 SHARES WAS GRANTED TO THE
EXISTING NON-EMPLOYEE DIRECTORS AS OF MAY 1 OF YEAR 1, AND
<PAGE>
-26-
THAT A NEW NON-EMPLOYEE DIRECTOR IS ELECTED AS OF JULY 1 OF YEAR 2. THE
NEW NON-EMPLOYEE DIRECTOR AUTOMATICALLY WILL BE GRANTED AN OPTION FOR 1,000
SHARES (3,000 SHARES LESS 66 2/3%) AS OF MAY 1 IN YEAR 3, WHICH OPTION WILL
VEST 100% ON MAY 1 OF YEAR 4.
The term of each Director Option shall be ten years from the date such
Director Option is granted (the "Grant Date"), subject to earlier termination as
described below. Director Options will be exercisable according to their
vesting schedule, as described above.
Director Options become immediately exercisable in full for their full term
upon (i) the death or disability of the Eligible Director, or (ii) the
liquidation, dissolution, merger, consolidation or reorganization of the
Company. Upon an Eligible Director's retirement from the Board of Directors
or an unsuccessful attempt by an Eligible Director to win re-election to the
Board, the Director Options then held will be honored strictly according to
their terms.
Director Options are not transferable other than by will or the laws of
descent and distribution, and may be exercised during an Eligible Director's
lifetime only by the Eligible Director.
The exercise price per share of a Director Option will be equal to the fair
market value per share of Common Stock on the date immediately preceding the
Grant Date. For purposes of the Director Plan, the fair market value per share
of Common Stock on any date is equal to the Last Sale price per share of the
Company's common stock as reported on the NASDAQ National Market System on the
date immediately preceding such date or, in the event such immediately preceding
date is not a day on which the NASDAQ National Market System is operating, the
next previous date on which the NASDAQ National Market System was operating.
Subject to certain limitations, the Director Plan may be amended by the
Board of Directors from time to time; PROVIDED, however, that in no event may
the Director Plan be amended more than once every six (6) months and provided
further that if an amendment would (i) materially increase the number of Shares
that may be issued under the Plan; (ii) materially modify the requirements as to
eligibility for participation; (iii) otherwise materially increase the benefits
accruing to participants under the Director Plan; (iv) cause Rule 16b-3 under
the Exchange Act to become unavailable with respect to the Director Plan; or
(v) violate the rules or regulations of the NASDAQ National Market System, such
amendment shall require approval of the Company's shareholders.
The closing price per share of the Company's Common Stock on March 6, 1995, as
reported by the NASDAQ National Market System, was $25.00.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the principal federal income tax consequences
generally applicable to awards of Director Options under the Director Plan.
Director Options granted to Eligible Directors will be treated as nonqualified
stock options for federal income tax purposes, and the grant of a Director
Option is not expected to result in any taxable income for the recipient. Upon
exercising a Director Option, the optionee generally will be required to
recognize ordinary income equal to the excess of the fair market value of the
shares of Common Stock acquired on the date of exercise over the exercise price
paid by the recipient, and the Company will be entitled at that time to a tax
deduction for the same amount. The tax consequence to an optionee upon a
disposition of shares acquired through the exercise of a Director Option will
depend on whether the shares were held as a capital asset and how long
<PAGE>
-27-
the shares were held. Generally, there will be no tax consequence to the
company in connection with the disposition of shares acquired under a Director
Option.
CERTAIN INTERESTS OF DIRECTORS
In considering the recommendation of the Board of Directors with respect to
the Directors Plan, Shareholders should be aware that the non-employee members
of the Board of Directors would participate in the Directors Plan which presents
these Directors with a conflict of interest in connection with this proposal.
As discussed above, all non-employee Directors will receive automatic grants of
stock options every three years, including all current non-employee Directors.
The Board of Directors recognizes that adoption of the Directors Plan may
benefit such individual Directors of the Company and their successors, but it
believes that approval of the Directors Plan will strengthen the Company's
ability to continue to attract, motivate and retain qualified outside Directors.
Furthermore, the Board of Directors believes that approval of the Directors Plan
will advance the interest of the Company and its Shareholders by providing non-
employee Directors with a greater stake in the long-term success of the Company.
The Board of Directors believes that the Directors Plan is in the best interests
of the Company and its Shareholders, and therefore, unanimously recommends a
vote FOR the proposal to approve the Directors Plan. In considering the
foregoing recommendation of the Board of Directors, Shareholders should be aware
that the current non-employee members of the Board of Directors own, in the
aggregate, approximately 5.6% of the shares of the Company's issued and
outstanding Common Stock, including no option shares exercisable within 60 days
of the Record Date.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE APPROVAL OF THE
1995 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN.
ITEM NO. 4: PROPOSED APPROVAL OF THE AMENDMENTS TO THE INCENTIVE SAVINGS PLAN,
INCLUDING THE CREATION OF AN EMPLOYEE STOCK OWNERSHIP PLAN ("ESOP").
SUMMARY OF THE CURRENT PLAN
The First Security Incentive Savings Plan ("the Savings Plan") was
implemented on January 1, 1985, with the approval of the Shareholders obtained
at the 1985 Annual Shareholders Meeting, to replace some prior profit sharing
plans and to provide improved incentives to employee savings and investment.
The Savings Plan is commonly known as a "401(k) Plan", referring to the section
of the Internal Revenue Code that allows for pre-tax employee contributions to a
plan and deferred taxation on any earnings within the plan. The Savings Plan
allows substantially all employees of the Company's operating subsidiaries,
including the Company's Executive Officers, to contribute a portion of their
compensation to their Savings Plan accounts on a pre-tax basis, thus reducing
the employees' taxable income. Moreover, since 1985, the Company has matched
employee contributions by making Company contributions into the employees'
Savings Plan accounts. The Company has contributed $1.00 for every $2.00
contributed by an employee, up to a maximum of 3% of an employee's compensation.
Between January 1, 1985 and December 31, 1994, the Company's employees have
contributed an aggregate total of $24,918,553.89 into their Savings Plan
accounts, and the Company has matched that with an aggregate total of
$12,908,453.93 contributed to the employees' Savings Plan accounts.
<PAGE>
-28-
Employees are always 100% vested in their own contributions to the Savings
Plan, and become vested over time in the Company contributions. Federal tax
rules provide penalties and prohibitions on an employee's early withdrawal of
Savings Plan account balances before retirement, disability or death.
Employee contributions may be directed by the employee into one of four
investment funds within the Savings Plan: the Diversified Fund, the First
Security Stock Fund, the Income Fund (short and medium-term debt instruments)
and the Growth Fund (a group of common stocks). Employees may also redirect
their investments in their Savings Plan accounts as permitted by the Savings
Plan Committee. Contributions from the Company have been invested 75% in a
diversified fund managed by First Security Investment Management, Inc., and 25%
into the "First Security Stock Fund", which is always fully invested in shares
of the Company's common stock.
As of December 31, 1994, the total investments in the four investment funds
available under the Savings Plan aggregated as follows:
<TABLE>
<CAPTION>
FUND EMPLOYEE CONTRIBUTIONS COMPANY CONTRIBUTIONS
---- ---------------------- ---------------------
<S> <C> <C>
Diversified Fund * $12,769,826.08 $9,570,349.30
Growth Fund * 6,344,719.66 2,079.16
Income Fund 4,801,001.64 185,758.88
First Security Stock Fund 5,959,084.93 3,188,748.33
<FN>
*As of December 29, 1994, these First Security-managed funds were invested
in the Achievement Balanced Fund and the Achievement Equity Fund,
respectively. Management of these funds remains the same, with First
Security Investment Management, Inc. acting as investment manager of these
two Achievement Funds.
</TABLE>
First Security Bank of Utah, N.A., a subsidiary of the Company, acts as
trustee under the Savings Plan, and actually holds all of the investments and
contributions made under the Plan for the benefit of the participating
employees.
As of December 31, 1994, there were 3,634 employees participating in the
Savings Plan, out of a possible 5,268 Company employees who are eligible to
participate.
PROPOSED AMENDMENTS TO THE SAVINGS PLAN
The complete text of the amended and restated Savings Plan being presented
to the Shareholders for approval at the 1995 Annual Shareholders Meeting is
available by request of any Shareholder directed to K. Tad Jeppesen at 801-246-
1840. There are three (3) material changes to the Savings Plan being submitted
for Shareholder approval: (a) providing the Corporation, with the agreement of
the Trustee, with authority to add to the number and types of investment options
available to employees under the Savings Plan; (b) the formation of an Employee
Stock Ownership Plan ("ESOP") within the Savings Plan; and (c) changing the
direction of Company contributions so that 50% of Company contributions to the
Savings Plan go into the new ESOP, with 50% of Company contributions to the
Savings Plan to be invested in accordance with the direction of participating
employee.
<PAGE>
-29-
-MORE INVESTMENT CHOICES
In an effort to expand the investment choices available to employees
participating in the Savings Plan, including Executive Officers of the Company,
and particularly to offer employees the choice of one or more investment
managers, it is proposed that the Savings Plan be amended to allow investment of
employee contributions in Savings Plan accounts in a wider variety of investment
funds, including one or more investment funds managed by third-party investment
managers not affiliated with the Company. This concept expands on the previous
choices which were all managed by an affiliate of the Company. The Company,
with the agreement of the Trustee, now will have the discretion to add or delete
investment options from the list of available investment funds under the Savings
Plan, as proposed.
-REALLOCATION OF THE COMPANY CONTRIBUTIONS
In order to more fully take advantage of the benefits of the proposed ESOP
(see below), and to increase the ownership of the employees, and their
proprietary interest, in the Company, it is proposed that the portion of the
Company's contributions into the Savings Plan going into the Company's common
stock be increased from 25% to 50% of the Company contributions. This higher
50% amount will be deposited into the ESOP for the benefit of the participating
employees. The remaining 50% of Company contributions will be invested as
directed by the participating employees. Participating employees will not have
ownership of the Company contributions made for their benefit until the passing
of the required vesting periods, even though the participating employees will
now be able to direct the investment of 50% of the Company's contributions to
the Savings Plan.
As an adjunct to this amendment directing more Company contributions into
Company common stock within the Savings Plan, it is also proposed that employees
be given investment discretion over all Company contributions invested otherwise
than in the ESOP or the First Security Stock Fund. Historically, employees had
no investment discretion over Company contributions, even when deposited into
funds other than the First Security Stock Fund.
-CREATING AN ESOP
By creating an ESOP within the Savings Plan, the Company can provide a more
efficient vehicle for employee investment in the Company's common stock which
gives common stock voting rights and dividends to the participating employees.
The ESOP also provides tax benefits to the Company in connection with
contributions it makes to the ESOP. ESOP's are governed by provisions of the
Internal Revenue Code different than for the Savings Plan generally.
The ESOP will be formed by transferring all of the historical aggregate
Company contributions that have been made to the Savings Plan, and that are now
held in the First Security Stock Fund within the Savings Plan, together with
accumulated earnings, and all amounts previously invested in Company common
stock under prior plans, into the new ESOP accounts. Each participating
employee will have a separate ESOP account just as he or she will continue to
have a separate Savings Plan account. Going forward, 50% of the Company's
contributions into the Savings Plan each year will be deposited into the ESOP,
rather than into the First Security Stock Fund.
All employee contributions that have been, or in the future may be,
directed into the First Security Stock Fund, will remain there and will not
become part of the ESOP. Thus a participating employee who so chooses may have
investments in two separate accounts within the Savings Plan that are both
invested in shares of the Company's common stock: the
<PAGE>
-30-
employee's ESOP account, which will always be fully invested in Company common
stock, and the employee's regular Savings Plan account, which may be invested in
the First Security Stock Fund under the Savings Plan.
The Company may, in any plan year, make contributions to the ESOP in either
shares of its common stock or cash. From time to time, the ESOP may purchase
outstanding shares of the Company's common stock in the market or from the
treasury shares of the Company, to the extent of cash held in the ESOP.
Forfeitures of shares in the ESOP by employees who fail to meet the vesting
requirements as to Company contributions under the Savings Plan are reallocated
in the same manner as under the Savings Plan generally. Generally, a
participating employee will have no investment power or discretion over his ESOP
account. However, a participant who has attained the age of 55 and completed
ten years of participation in the ESOP may direct that a portion of his ESOP
account be diversified into other investments preparatory to retirement. Such
diversification is governed by specific rules in the Savings Plan and under
applicable federal laws.
Shares of Company Common Stock held by the ESOP will be voted as directed
by the participating employees according to their shares of the ESOP's share
holdings. Dividends on shares held by the ESOP will be distributed to the
participating employees either directly or through the payroll system. In the
discretion of the Plan Committee, the Company may allow additional deferral
contributions to be made to the Savings Plan by participating employees in
amounts equal to dividends received from the ESOP. For highly compensated
employees, like Executive Officers, there may not be an ability to defer
additional income into the Savings Plan to compensate for this receipt of
dividends from the ESOP.
BENEFITS TO EXECUTIVE OFFICERS
Table 10, below shows the dollar amount of Company contributions made since
1985 for the Savings Plan accounts of the five Executive Officers named in Table
3, and for the Savings Plan accounts of all Executive officers as a group.
TABLE 10
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
NAME Company
Contributions
1985-1994
- -------------------------------------------------------------------------------
<S> <C>
Spencer F. Eccles $51,866.12
- -------------------------------------------------------------------------------
Morgan J. Evans 39,014.05
- -------------------------------------------------------------------------------
L. Scott Nelson 37,175.97
- -------------------------------------------------------------------------------
J. Patrick McMurray 34,200.07
- -------------------------------------------------------------------------------
T. Eugene King 37,272.43
- -------------------------------------------------------------------------------
All Executive Officers (as a group; 15 persons) $361,391.61
- -------------------------------------------------------------------------------
All Employees who are not Executive Officers (as a group) $12,585,544.06
- -------------------------------------------------------------------------------
</TABLE>
<PAGE>
-31-
FEDERAL INCOME TAX CONSEQUENCES
The Company obtains a tax deduction for amounts contributed to the ESOP, as
well as amounts contributed to the Savings Plan generally. Employees are not
taxed on the amount of their own contributions or on Company contributions until
the amounts are withdrawn from their Savings Plan and ESOP accounts. As and
when distributions are taken by participating employees from their Savings Plan
or ESOP accounts, income tax may become due and payable, depending on a variety
of factors specific to the employee. No general rules can accurately be stated
that would describe all or even substantially all participating employees' tax
situations with respect to the Savings Plan. Moreover, tax laws may change
significantly with respect to the taxation of Savings Plan accounts during the
time that an employee is participating in the Savings Plan.
CERTAIN INTERESTS OF DIRECTORS
In considering the recommendation of the Board of Directors with respect to
the ESOP, Shareholders should be aware that the employee members of the Board of
Directors are eligible to participate in the ESOP which presents these Directors
with a conflict of interest in connection with this proposal. As discussed
above, all eligible employees, including all current directors who are employees
of the Company (Messrs. Eccles and Evans) are eligible to participate in the
ESOP. The Board of Directors recognizes that adoption of the ESOP may benefit
such individual Directors of the Company and their successors, but it believes
that approval of the ESOP will strengthen the Company's ability to continue to
attract, motivate and retain qualified employees and officers. Furthermore, the
Board of Directors believes that approval of the ESOP will advance the interest
of the Company and its Shareholders by encouraging employees to make significant
contributions to the long-term success of the Company. The Board of Directors
believes that the ESOP is in the best interests of the Company and its
Shareholders, and therefore, unanimously recommends a vote FOR the proposal to
approve the ESOP. In considering the foregoing recommendation of the Board of
Directors, Shareholders should be aware that the current members of the Board of
Directors own, in the aggregate, approximately 5.6% of the shares of the
Company's issued and outstanding Common Stock, including 617,057 option shares
exercisable within 60 days of the Record Date.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE APPROVAL OF THE
AMENDMENTS TO THE INCENTIVE SAVINGS PLAN, INCLUDING THE CREATION OF THE ESOP.
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.
The Company's Annual Report to Shareholders is being sent to you together
with this Proxy Statement. This report includes the Company's financial
statements and the schedules thereto. Any questions regarding the Annual
Report, including a request for the copy that may not have arrived with this
Proxy Statement, may be directed to Scott C. Ulbrich, Executive Vice President
and Chief Financial Officer, P.O. Box 30006, Salt Lake City, Utah 84130.
<PAGE>
-32-
DEADLINE FOR SHAREHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
If any Shareholder wishes to present a proposal for action at the 1996
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, 1995.
<PAGE>
FIRST SECURITY CORPORATION
79 SOUTH MAIN STREET
SALT LAKE CITY, UTAH 84111
PROXY DESIGNATION
AND INSTRUCTION CARD
THIS PROXY DESIGNATION AND INSTRUCTION IS SOLICITED 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 24th day of April, 1995 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.
FOR ALL Nominees listed below (except as marked to the contrary below)
WITHOLD AUTHORITY TO VOTE for all nominees listed below
1. ELECTION OF DIRECTORS
IMPORTANT INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.
James C. Beardall Robert H. 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 Karen H. Huntsman James L. Sorenson
Dr. David P. Gardner Harold J. Steele
FOR AGAINST
2.TO APPROVE THE 1994 EMPLOYEE STOCK PURCHASE PLAN
FOR AGAINST
3. TO APPROVE THE 1995 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN.
FOR AGAINST
4. TO APPROVE THE AMENDMENTS TO THE INCENTIVE SAVINGS PLAN.
FOR AGAINST
(continued and to be SIGNED on the other side)
<PAGE>
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 THIS PROXY INSTRUCTION CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.
The undersigned acknowledges receipt of the Proxy Statement and the 1994 Annual
Report, and executes this Proxy Instruction card.
Dated , 1995
--------------------------
--------------------------
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.
