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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /x/
Filed by a Party other than the Registrant //
Check the appropriate box:
// Preliminary Proxy Statement
// Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2)
/x/ Definitive Proxy Statement
// Definitive Additional Materials
// Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
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(Name of Registrant as Specified In Its Charter)
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Payment of Filing Fee (Check the appropriate box):
// $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2)or
Item 22(a)(2) of Schedule 14A.
// $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:
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/x/ Fee paid previously with preliminary materials.
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FIRST SECURITY CORPORATION
79 SOUTH MAIN STREET
SALT LAKE CITY, UTAH 84111
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MONDAY, APRIL 22, 1996 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 Empire Room of the Joseph Smith
Memorial Building located at 15 East South Temple Street, Salt Lake City, Utah
on Monday, April 22, 1996, at 3:00 p.m. for the following purposes:
1. TO ELECT A BOARD OF DIRECTORS TO SERVE FOR THE ENSUING YEAR;
2. TO CONSIDER AND VOTE ON THE PROPOSED INCREASE IN THE NUMBER OF AUTHORIZED
SHARES OF COMMON STOCK THAT CAN BE ISSUED BY THE COMPANY, FROM THE
PRESENT 150,000,000 SHARES TO A NEW LEVEL OF 300,000,000 SHARES.
3. TO TRANSACT SUCH OTHER BUSINESS AS MAY BE PROPERLY BROUGHT BEFORE THE
ANNUAL MEETING OR AT ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
The close of business on Monday, March 4, 1996, 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 1996 Annual Meeting. In accordance with
Delaware law, a list of the Company's Shareholders entitled to vote at the 1996
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 1996 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 1995 Annual Report to Shareholders, which contains the audited
financial statements of the Company and certain other information about the
Company and its 1995 operating results.
BY ORDER OF THE BOARD OF DIRECTORS
Dated: March 15, 1996
/S/ BRAD D. HARDY
BRAD D. HARDY
Executive Vice President, General
Counsel and Secretary of the
Company
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[LOGO]
PROXY STATEMENT
March 15, 1996
TABLE OF CONTENTS
PAGE
GENERAL INFORMATION FOR SHAREHOLDERS.......................................... 3
LAST YEAR'S (April 24, 1995) ANNUAL MEETING................................... 5
INDEPENDENT AUDITORS.......................................................... 5
MANAGEMENT OF THE COMPANY..................................................... 6
Board of Directors....................................................... 6
Executive Officers....................................................... 7
COMPENSATION OF MANAGEMENT.................................................... 9
Director Compensation................................................... 9
Summary of Compensation To Certain Executive Officers................... 10
Stock Options and Similar Awards to Executive Officers.................. 12
Retirement Benefits to Executive Officers............................... 13
Compensation Committee Report on Executive Compensation................. 14
Compensation Committee Interlocks and Insider Participation............. 15
CERTAIN TRANSACTIONS BY AND WITH MANAGEMENT AND OTHERS....................... 15
Credit Extensions....................................................... 15
Other Transactions...................................................... 16
Severance Agreements.................................................... 16
PRINCIPAL SHAREHOLDERS....................................................... 17
COMPARATIVE PERFORMANCE OF THE COMPANY'S COMMON STOCK........................ 18
PROPOSALS FOR SHAREHOLDER ACTION............................................. 19
1. Election of Directors............................................... 19
2. Proposed Increase in the Number of Authorized Shares................ 22
OTHER BUSINESS............................................................... 22
DEADLINE FOR SHAREHOLDER PROPOSALS FOR 1996 ANNUAL MEETING................... 23
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 Empire Room of
the Joseph Smith Memorial Building at 15 East South Temple Street, Salt Lake
City, Utah, on Monday, April 22, 1996 at 3:00 p.m., and at any and all
adjournments thereof.
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.
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VOTING SECURITIES
The Board of Directors has fixed the close of business on March 4, 1996 as
the Record Date for determination of shareholders entitled to notice of and to
vote at the 1996 Annual Meeting (the "Record Date"). As of the Record Date,
there were issued and outstanding 75,298,058 shares of Common Stock and 10,704
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. ALL SHARE NUMBERS, AND ALL
OTHER SHARE NUMBERS USED IN THIS PROXY STATEMENT, REFLECT THE THREE-FOR-TWO
STOCK SPLIT EFFECTED BY MEANS OF A STOCK DIVIDEND OF ONE NEW SHARE FOR EACH TWO
SHARES HELD AS OF FEBRUARY 12, 1996.
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 $29.63 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 increase in the number of
authorized common shares to 300,000,000; 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 22, 1996, 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.
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 1996
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 1996 Annual
Meeting.
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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 $30,000. 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 18, 1996. Mailed together with this Proxy
Statement is a copy of the Company's 1995 Annual Report to Shareholders.
SHAREHOLDERS WHO DO NOT RECEIVE A COPY OF THE 1995 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 1996 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 nineteen (19) nominees receiving the
highest number of votes cast in their favor will be elected as the Board of
Directors of the Company for the 1996-97 period until the 1997 Annual Meeting.
Accordingly, abstentions and broker non-votes will not affect the outcome of the
election of Directors.
The proposed approval of the increase in the authorized common stock to
300,000,000 shares requires that a majority of the shares present and entitled
to vote at the meeting vote in favor. Abstentions and broker non-votes will be
counted as a "no" vote with respect to this proposal, and could thereby affect
the outcome of the vote on this proposal.
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 24, 1995) ANNUAL MEETING
The 1995 Annual Meeting of the Shareholders was held on April 24, 1995 in
Salt Lake City, Utah. There were 41,293,270 shares of Common Stock and 7,441
shares of Preferred Stock represented at the 1995 Annual Meeting in person or by
proxy, which shares constituted a legal quorum. (For comparison purposes, there
were 61,939,903 shares of Common Stock present at last year's Annual Meeting
after giving effect to the three-for-two stock split reflected in the other
share numbers contained in this Proxy Statement.) Each of the nominees to the
Board of Directors presented to the 1995 Annual Meeting was voted upon
separately, and each was elected by the affirmative vote of more than 93% of the
shares present and voting. The three proposals for shareholder action set out
in last year's Proxy Statement were also approved by the vote of more than 93%
of the shares present and voting at the 1995 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
1996 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
1996 Annual Meeting to make a statement on behalf of the firm if he so desires
and to answer appropriate questions, if any, from Shareholders.
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MANAGEMENT OF THE COMPANY
BOARD OF DIRECTORS
The business of the Company is managed under the direction of its Board of
Directors. The Board has responsibility for establishing broad corporate
policies, for the overall performance of the Company and for the election and
compensation of officers of the Company. It is not, however, involved in
managing the Company and its operating units on a day-to-day basis. The Board
is kept advised of the Company's operations and results through regular written
reports from, and discussions with, the Chairman, the President, the Chief
Financial Officer and other executive officers of the Company.
The Board of Directors meets regularly during the year to review significant
developments affecting the Company and to act on matters requiring Board
approval. It also holds special meetings when one or more important matters
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 1996 Annual
Meeting) beneficially own AS A GROUP 4,331,639 shares, or approximately 5.8% of
the Company's outstanding Common Stock as of the Record Date, including
1,046,666 option shares exercisable within 60 days of the Record Date but which
were unexercised as of the Record Date, and including 35,557 shares beneficially
owned by the three (3) Honorary Directors as a group.
The Board of Directors held five (5) meetings during 1995. All Directors
attended all of the Board meetings except Messrs. Gardner, Haight, Joklik,
Kastler, Maloof and Mrs. Hunstman, who each attended four (4) of the meetings.
The Company regrets the decision of U. Edwin Garrison not to stand for re-
election to the Board of Directors of the Company this year. Mr. Garrison's
experience, wise counsel and support will be missed by his fellow Directors and
by Management.
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 twelve (12) times during
1995. Messrs. Beardall, Evans and Heiner attended all of the meetings; Messrs.
Brady, Dee, and Eccles attended eleven (11) of the meetings, and Mr. Parker
attended nine (9) of the meetings.
The AUDIT COMMITTEE of the Board, which met four (4) times during 1995,
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.
The COMPENSATION COMMITTEE administers the various incentive award and equity
plans of the Company on behalf of the Board of Directors. The Compensation
Committee also determines compensation for the Executive Officers of the Company
who serve on the Management Committee (Messrs. Eccles, Evans, Hardy, Howell,
King, McMurray, Nelson and Ulbrich). The Compensation Committee met once during
1995. All members of the Committee attended this meeting except Mr. Joklik.
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 8,264 shares, 337 shares, and 26,956 shares, respectively, of the
Company's Common Stock at year-end 1995.
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EXECUTIVE OFFICERS
Set forth on Table 1, below, are the names, ages, primary areas of
responsibility, and economic and beneficial stock ownership (as of December 31,
1995, but adjusted to reflect the effect of the three-for-two stock split
effected by means of a stock dividend as of February 12, 1996) 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 1
EXECUTIVE OFFICERS OF FIRST SECURITY CORPORATION
JAY S. BACHMAN, 46, is a Senior Vice President and a Project VISION
Implementation Coordinator for the Company. Previously Mr. Bachman held the
title of Treasurer. At year-end 1995, Mr. Bachman was the beneficial owner of
14,001 shares of Common Stock, including 10,109 option shares exercisable within
60 days of the Record Date, but not yet exercised, and 1,792 shares held in his
account in the Company's Incentive Savings Plan.
BRAD D. HARDY, 42, is Executive Vice President-Corporate Services, General
Counsel and Secretary of the Company, and is a member of the Company's
Management Committee. Previously Mr. Hardy was a shareholder and Director of
Ray, Quinney & Nebeker (law firm). At year-end 1995, Mr. Hardy beneficially
owned 15,300 shares of Common Stock, including 15,000 option shares exercisable
within 60 days of the Record Date, but not yet exercised.
MARK D. HOWELL, 43, is Executive Vice President-Business Lending Services of the
Company, and is a member of the Company's Management Committee. Previously, Mr.
Howell was an Executive Vice President of First Security Bank of Utah. At year
end 1995, Mr. Howell beneficially owned 50,312 shares of Common Stock, including
48,242 option shares exercisable within 60 days of the Record Date, but not yet
exercised, and 2,070 shares held in his account in the Company's Incentive
Savings Plan. These share numbers do not include 20,342 shares of the
Company's Common Stock held by a revocable trust as to which Mr. Howell is a
named beneficiary upon the death of the currently living trustor, and as to
which Mr. Howell disclaims any beneficial interest.
T. EUGENE KING, 62, is Executive Vice President-Technology and Processing
Services 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 1995, he was the beneficial owner of 147,524
shares of Common Stock, including 125,150 option shares exercisable within 60
days of the Record Date, but not yet exercised, and 7374 shares held in his
account in the Company's Incentive Savings Plan. This number of shares is
approximately 0.2% of the total outstanding shares of Common Stock at the Record
Date. Mr. King exercised options covering, and subsequently sold, 17,700 shares
of the Company's Common Stock during the first quarter of 1996 and prior to the
Record Date.
KELLY K. MATTHEWS, 51, is Senior Vice President (Economist). At year-end 1995,
Mr. Matthews was the beneficial owner of 46,621 shares of Common Stock,
including 30,839 option shares exercisable within 60 days of the Record Date,
but not yet exercised, and 5,311 shares held in his account in the Company's
Incentive Savings Plan.
J. PATRICK MCMURRAY, 47, is Executive Vice President-Community Bank Services 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 1995, he was
the beneficial owner of 166,298 shares of Common Stock, including 143,151 option
shares exercisable within 60 days of the Record Date, but not yet exercised, and
11,467 shares held in his account in the Company's Incentive Savings Plan. This
number of shares is approximately 0.2% of the total outstanding shares of Common
Stock at the Record Date.
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L. SCOTT NELSON, 57, is Executive Vice President-Retail Lending Services of the
Company, and also serves as Chairman, President and Chief Executive Officer of
First Security Bank of Utah, as Chairman of First Security Bank of New Mexico,
and as a member of the Company's Management Committee. At year-end 1995, he was
the beneficial owner of 268,349 shares of Common Stock including certain shares
held by Mr. Nelson's spouse in her own name, and including 249,565 option shares
exercisable within 60 days of the Record Date, but not yet exercised, and 9,476
shares held in his and his wife's accounts in the Company's Incentive Savings
Plan. This total number of shares is approximately 0.4% of the total
outstanding shares of Common Stock at the Record Date.
LESLIE F. PASKETT, 51, is Senior Vice President and Comptroller. Previously Mr.
Paskett served as Tax Officer of the Company. At year-end 1995, he was the
beneficial owner of 30,977 shares of Common Stock, including 25,589 option
shares exercisable within 60 days of the Record Date, but not yet exercised, and
3,532 shares held in his account in the Company's Incentive Savings Plan.
DENNIS G. REEVES, 56, is Senior Vice President and Chief Auditor of the Company.
At year-end 1995, Mr. Reeves was the beneficial owner of 3,509 shares of Common
Stock, including 2136 option shares exercisable within 60 days of the Record
Date, but not yet exercised, and 473 shares held in his account in the Company's
Incentive Savings Plan.
JOHN L. RUDISILL, 39, is Senior Vice President and Director of the Company's
Mutual Funds Center. Previously Mr. Rudisill was Executive Vice President and
Manager of the Trust Group at First Security Bank of New Mexico and at its
predecessor, The First National Bank in Albuquerque. At year-end 1995, Mr.
Rudisill was the beneficial owner of 3,365 shares of Common Stock, including
3,024 option shares exercisable within 60 days of the Record Date, but not yet
exercised, and 217 shares held in his account in the Company's Incentive Savings
Plan.
SCOTT C. ULBRICH, 41, is Executive Vice President-Finance and Capital Markets,
is Chief Financial Officer of the Company, and is a member of the Company's
Management Committee. At year-end 1995, he was the beneficial owner of 64,284
shares of Common Stock, including 60,481 option shares exercisable within 60
days of the Record Date, but not yet exercised, and 803 shares held in his
account in the Company's Incentive Savings Plan. Mr. Ulbrich exercised options
covering, and subsequently sold, 4,894 shares of the Company's Common Stock
during the first quarter of 1996 and prior to the Record Date.
GARY R. VANCE, 60, is a Senior Vice President of the Company. Previously Mr.
Vance served as Comptroller of the Company. At year-end 1995, he was the
beneficial owner of 51,297 shares of Common Stock, including 44,383 option
shares exercisable within 60 days of the Record Date, but not yet exercised, and
5,440 shares held in his account in the Company's Incentive Savings Plan.
ALONZO W. WATSON, JR., 73, is Assistant Secretary of the Company, and is a
Director of Ray, Quinney & Nebeker (law firm). At year-end 1995, he was the
beneficial owner of 2,217 shares of Common Stock, which does not include 298,213
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
1,566,138 shares held by the George S. and Dolores Dore Eccles Foundation, of
which Mr. Watson is a director; does not include 91,125 shares held by the
Marriner S. Eccles Charitable Trust, of which Mr. Watson is a Director; and does
not include 222,000 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, 56, is an Executive Vice President and Manager of the Company's
Capital Markets operations. At year-end 1995, he was the beneficial owner of
42,797 shares of Common Stock including 38,254 option shares exercisable within
60 days of the Record Date, but not yet exercised, and 3,031 shares held in his
account in the Company's Incentive Savings Plan. Mr. Wilson exercised options
covering, and subsequently sold, 4,500 shares of the Company's Common Stock
during the first quarter of 1996 and prior to the Record Date.
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Based on their disclosed share holdings at December 31, 1995, all of the
Company's Executive Officers as a group (sixteen (16) persons, including
Messrs. Eccles and Evans, whose stock holdings are described in the Election
of Directors section, below), beneficially owned a total of 4,554,558 shares,
or approximately 6.0%, of the Company's Common Stock (including 1,815,589
shares subject to unexercised options exercisable within 60 days of the
Record Date, and 86,818 shares held in accounts in the Company's Incentive
Savings Plan), and 63 shares, or approximately 0.6%, of the Company's
Preferred Stock, all percentages calculated as of the Record Date.
COMPENSATION OF MANAGEMENT
DIRECTOR COMPENSATION
CASH COMPENSATION. During 1995, 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 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 1995 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 receive 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 attended
and $300 per Directors' Meeting not attended.
DIRECTOR STOCK OPTIONS. Each Non-Employee Director elected at the 1995
Annual Shareholders Meeting was granted, as of May 1, 1995, an Option to
purchase 3,000 shares of the Company's Common Stock. (As a result of the
three -for-two stock split these outstanding stock options in the hands of
non-employee Directors as of May 1, 1995 were automatically increased to
4,500 shares each on February 15, 1996.) Thereafter, 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 will 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 as yet
unvested Director Options. If a Non-Employee Director remains a Director
through the three-year vesting period of an Option, that Director
automatically will be granted another Option to purchase an additional 3,000
shares of Company common stock vesting over another three year period.
Each Option vests 33 1/3% (normally 1,000 shares) per year over a vesting
term of three (3) years from the date of grant. Persons who are first elected
as a Non-Employee Director after the beginning of a three (3) year vesting
9
<PAGE>
period for Options granted to pre-existing Non-Employee Directors will receive
an 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' Options.
The term of each Option is ten years from the date the Option is granted,
subject to earlier termination under specified circumstances. Options become
immediately exercisable in full for their full term upon (i) the death or
disability of the Director, or (ii) the liquidation, dissolution, merger,
consolidation or reorganization of the Company. Upon a Director's retirement
from the Board of Directors or an unsuccessful attempt by a Director to win
re-election to the Board, the Director's Options will be honored strictly
according to their terms.
Options are not transferable other than by will or the laws of descent and
distribution, and may be exercised during a Director's lifetime only by the
Director.
The exercise price per share of an Option will be equal to the fair market
value per share of Common Stock on the Grant Date. 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.
SUMMARY OF COMPENSATION TO CERTAIN EXECUTIVE OFFICERS
Set out in Table 2, below, is a Summary Compensation Table showing the
various elements of compensation earned during 1995 and during the previous two
years by the Company's Chief Executive Officer and to the next four highest paid
Executive Officers (whose compensation for each year was determined for this
purpose on the same basis as for the Chief Executive Officer):
(see table next page)
10
<PAGE>
<TABLE>
<CAPTION>
TABLE 2
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
Awards
Name and Year Salary(1) Bonus(2) Restricted Options/ All Other
Principal Position Stock SARs(3) Compensation(4)
Award(s) (#)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SPENCER F. ECCLES, 1995 $543,715 $162,785 $-0- -0- $33,437
Chairman and Chief 1994 515,915 192,941 -0- -0- 26,564
Executive Officer of the 1993 467,450 280,404 -0- -0- 20,794
Company
MORGAN J. EVANS, 1995 382,901 98,724 -0- -0- 29,679
President and Chief 1994 344,001 115,587 -0- 28,160 23,894
Operating Officer of the 1993 296,736 162,445 -0- 32,000 12,715
Company
L. SCOTT NELSON, 1995 297,006 99,438 -0- -0- 15,496
Executive Vice President- 1994 276,706 115,307 -0- 22,784 15,286
Retail Lending Services 1993 248,641 145,604 -0- 27,136 10,110
J. PATRICK MCMURRAY, 1995 25,417 68,665 -0- -0- 13,654
Executive Vice President- 1994 230,816 60,128 -0- 19,840 13,440
Community Bank Services 1993 209,951 105,607 -0- 23,616 7,576
T. EUGENE KING, 1995 207,000 74,817 -0- -0- 17,564
Executive Vice President- 1994 192,000 72,549 -0- 11,328 9,239
Technology and Processing 1993 177,055 97,456 -0- 13,888 10,079
Services
</TABLE>
(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.
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. 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 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. At December 31, 1995, the named Executive
Officers had the following balances in their deferred income accounts: Mr.
Eccles $0.00; Mr. Evans, $171,736; Mr. Nelson $33,048; Mr. McMurray $35,705 and
Mr. King $17,934.
11
<PAGE>
STOCK OPTIONS AND SIMILAR AWARDS TO MANAGEMENT.
The following two tables provide information concerning the stock options and
similar awards provided to the Executive Officers listed in Table 2 during 1995
(Table 3) and exercises of Options and similar awards by these listed Executive
Officers during 1995 (Table 4):
<TABLE>
<CAPTION>
TABLE 3
OPTION GRANTS TO CERTAIN EXECUTIVE OFFICERS DURING 1995
INDIVIDUAL GRANTS
% OF
TOTAL
OPTIONS/SARS BLACK-
OPTIONS/SARS GRANTED TO EXERCISE OR SCHOLES
GRANTED ALL EMPLOYEES BASE PRICE EXPIRATION METHOD GRANT
NAME (#)(1) IN FISCAL YEAR ($/SH) DATE DATE VALUE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Spencer F. Eccles -0- -0-% -0- -0- -0-
Morgan J. Evans -0- -0-% -0- -0- -0-
L. Scott Nelson -0- -0-% -0- -0- -0-
J. Patrick McMurray -0- -0-% -0- -0- -0-
T. Eugene King -0- -0-% -0- -0- -0-
</TABLE>
(1)As a consequence of Project VISION, undertaken in 1995, no stock options were
granted to any of the named Executive Officers during 1995. Consistent with the
purpose of stock options as incentive compensation to management, Mr. Eccles
will recommend to the Compensation Committee, which administers the Company's
stock option program for Executive Officers, that stock options be granted in
1996 in amounts sufficient to make up for the lack of options in 1995.
<TABLE>
<CAPTION>
TABLE 4
OPTION EXERCISES BY CERTAIN EXECUTIVE OFFICERS DURING 1995
AND YEAR-END OPTION VALUES
VALUE OF UNEXERCISED
UNEXERCISED SHARE OPTIONS IN-THE-MONEY SHARE OPTIONS
SHARES
ACQUIRED
ON VALUE
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Spencer F. Eccles 0 $ 0 704,841 185,664 $11,468,614 $1,636,014
Morgan J. Evans 0 $ 0 220,744 98,448 $ 3,350,095 $ 867,359
L. Scott Nelson 6,225 $86,285 222,877 80,640 $ 3,530,078 $ 710,963
J. Patrick McMurray 0 0 122,487 65,064 $ 1,940,327 $ 576,546
T. Eugene King 0 0 111,902 40,200 $ 1,686,263 $ 354,697
TOTAL 6,225 $86,285 1,382,852 470,016 $21,975,375 $4,145,579
</TABLE>
12
<PAGE>
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"). 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, shares of "Restricted Stock" may be granted to employees of
the Company and its subsidiaries, including the five (5) Executive Officers
named in Table 2, above. Shares of Restricted Stock have been awarded to
Executive Officers of the Company in the past under the CMIP and its predecessor
plans. As of December 31, 1995, Messrs. Eccles, Evans, Nelson, McMurray and
King held no shares of Restricted Stock. No shares of Restricted Stock were
granted in 1995.
RETIREMENT BENEFITS
The Company provides a RETIREMENT PLAN to its employees, including
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 5, below, illustrates the estimated annual retirement benefits payable
to the Executive Officers listed in TABLE 2, above, under all applicable
retirement plans based on various assumptions of final compensation levels and
service years upon which retirement benefits are based:
<TABLE>
<CAPTION>
TABLE 5
PENSION PLAN TABLE
--------------------------------------------------------
Final
Average 15 Years 20 Years 24 or More
Earnings of Service of Service Years
--------------------------------------------------------
<C> <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 5 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 1995 included in the earnings base for
the purpose of calculating total retirement benefits as shown in Table 5 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 2 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.
13
<PAGE>
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 2, above. The Committee met on January 23, 1995
and on January 29, 1996 to consider actions which, among other things, affect
the short-term incentive program for these Executive Officers and others.
TO THE SHAREHOLDERS OF FIRST SECURITY CORPORATION:
The Compensation Committee normally performs an annual review of all
major elements of compensation for the Executive Officers of the Company
who are members of the Company's Management Committee, and, if
appropriate, adjusts compensation levels for the following year. During
the second half of 1995 First Security was involved with a corporate
redesign affecting the entire organization. As a result, from early in
the second quarter, the primary focus of the Executive Officers and many
others within the Company was to successfully manage and complete the
reorganization project, VISION. The redesign of First Security included
a new organizational structure and significant changes in the jobs of
many employees. Because of this focus on the corporate redesign and
changes in organizational structure, the Compensation Committee
determined to defer much of its work on Executive Officer Compensation,
which normally would have been accomplished in a second meeting during
the fourth quarter of 1995, until the first quarter of 1996.
Accordingly, though we have seen some significant changes (including
two additions to the Management Committee), there have been no increases
in the salaries of the Named Executive Officers since our last report.
Also, with the exception of Brad D. Hardy, who joined First Security in
July 1995 as an Executive Vice President and General Counsel, and a
member of the Management Committee, no employee has received a grant of
stock options since our last report.
This Committee will meet one or more times during the first half of
1996, as needed, to review the entire compensation program for the
Management Committee members and to review long-term incentive proposals
for all Executive Officers and other key employees. We expect to
continue to adhere to the structured approach we have utilized in the
past, whereby an average or below-average base salary is coupled with an
average short-term performance incentive and an above-average long-term
incentive tied to shareholder value. It is probable that at these
meetings in the first half of 1996 we will award stock option grants of
sufficient magnitude to replace all or part of the long term incentive
value that likely would have been conferred if a 1995 stock option award
had taken place.
At the January Compensation Committee meetings of 1995 and 1996,
the discussions considered:
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 and 1995, the MACIBP corporate performance
measurement was divided equally between the Company's net income and the
Company's return on average assets (ROAA).
INCENTIVE TARGETS. For net income, target performance represents
the achievement of the annual business plan. The ROAA target is
relative rather than absolute, and is defined as the mean ROAA of
a select group of peer companies. This peer group, consisting of
approximately a dozen companies with similarities to the Company
in size, lines of business and/or market area, is proposed
annually by the Company's Chief Financial Officer and is reviewed
and approved by this Committee.
INCENTIVE THRESHOLDS. Threshold performance for both net
income and ROAA is set at 90% of the target, and no bonus
is paid in any category for performance which is below
threshold.
At its January, 1996 meeting, the Committee reviewed and validated the
1995 MACIBP performance results and approved the Corporate and Affiliate
profit-plan goals to be used in MACIBP for 1996.
14
<PAGE>
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 1995, performance results for both net income and ROAA
fell between threshold and target. Accordingly, Mr. Eccles' earned a
1995 bonus equal to 40.9% of his maximum bonus opportunity, the bonus
amount being entirely determined by the relationship of the
performance result to the performance target as stipulated by the
terms of MACIBP.
OTHER NAMED EXECUTIVE OFFICERS. The other named Executive Officers
may receive bonuses of up to 65% of their base salaries for
outstanding performance under MACIBP. A minimum of 80% of each bonus
is derived from some combination of corporate and affiliate net
income and corporate ROAA. In 1995, these other named Executive
Officers earned bonuses ranging from 40.8% to 51.3% of their maximum
bonus opportunities.
/s/ Thomas D. Dee II, Chair
/s/ Rodney H. Brady
/s/ U. Edwin Garrison
/s/ G. Frank Joklik
/s/ Arthur K. Smith
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Garrison, Brady and Smith, 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 1995. 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 (or his affiliates) had credit
extensions and/or credit commitments during 1995 of $1,000,000 or more but less
than $5,000,000; Mr. Garrison (or his affiliates) had credit extensions and/or
credit commitments during 1995 of $10,000,000 or more but less than $20,000,000;
and Mr. Smith (or his affiliates) had credit extensions and/or credit
commitments during 1995 of $20,000,000 or more but less than $50,000,000.
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 Risk Management Associates, Inc. The
current policy was effective on September 30, 1995 and will lapse on
September 30, 1996. The annual premium for this period was $395,000, 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 1995, 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, Hardy, Howell, Matthews,
15
<PAGE>
McMurray, Nelson, Ulbrich, Watson and Wilson (or their affiliates) had credit
extensions and/or credit commitments during 1995 in excess of $60,000 but less
than $500,000; Mr. Haight (or his affiliates) had credit extensions and/or
credit commitments of $500,000 or more but less than 1,000,000; Messrs. Kastler,
Sorenson (or their affiliates) had credit extensions and/or credit commitments
during 1995 of $1,000,000 or more but not in excess of $5,000,000; Mrs.
Huntsman, and Messrs. Brady, Harris, Heiner and Maloof (or their affiliates) had
credit extensions and/or credit commitments during 1995 of $10,000,000 or more
but less than $20,000,000; Messrs. Beardall, Garff, Garrison, Parker, Smith and
Steele (or their affiliates) had credit extensions and/or credit commitments
during 1995 of $20,000,000 or more but less than $50,000,000; and Mr. Eccles,
(or his affiliates) had credit extensions and/or credit commitments during 1995
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.
COMPLIANCE WITH SECTION 16 REPORTING OBLIGATIONS
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 1995 except Mr. Howell, who
determined that his timely-filed December 1995 Form 3 contained an error, and
promptly corrected this filing when the error was noticed during January, 1996.
SEVERANCE AGREEMENTS
Messrs. Eccles, Evans, Hardy, Howell, 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.
16
<PAGE>
PRINCIPAL SHAREHOLDERS
The following Table 6 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 6
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>
The Capital Group Companies, Common 5,043,750 shares,(1) in connection with managed 6.70%
Inc. and Capital Research Stock investment funds
Management Company
First Security Bank of Utah, N.A. Common 7,691,489 shares,(2) as Trustee of separate trust 10.21%
Trust Group Stock accounts
79 South Main Street
Salt Lake City, UT 84111
</TABLE>
(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, 1995, investment discretion with respect to
5,043,750 shares, or 6.70% 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 7,691,489 shares which the Trust Group of First Security Bank of
Utah, N.A. holds in various fiduciary capacities, it has voting power over
6,996,868 shares (9.34% of the total outstanding shares) and no power to vote
the remaining 694,620 shares.
17
<PAGE>
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 INDEX2
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
INDEX 1990 1991 1992 1993 1994 1995
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
First Security Corporation 100.00 139.98 206.55 201.50 185.05 320.98
NASDAQ Broad Mkt Index 100.00 159.61 185.20 214.39 207.37 287.97
KBW 50 Index 100.00 158.27 201.68 212.85 201.99 323.52
</TABLE>
5-YEAR CUMULATIVE MARKET INDEX
[PERFORMANCE 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.
18
<PAGE>
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 1996 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 Brad D. Hardy, Secretary, First Security Corporation,
79 South Main Street, Salt Lake City, Utah 84111 with any suggestions concerning
nominations to the Board of Directors.
The nineteen (19) 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 1996 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.
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
1996 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 nineteen (19) nominees, listed below, are elected at the 1996 Annual
Meeting, the composition of the new Board will be fifteen (15) 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 were elected to their present term of office by a vote
of the Shareholders at the 1995 Annual Meeting.
There is set forth below a Table 8 as to each of the nineteen (19)
nominees of the Executive Committee 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
December 31, 1995, adjusted for the three-for-two stock split, effected by
means of a 50% stock dividend, declared and paid in the first quarter of
1996. 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, 56, 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 1995, Mr. Beardall
was the beneficial owner of 2,850 shares of the Company's Common Stock,
including 1500 option shares exercisable within 60 days of the Record Date, but
not yet exercised.
*#RODNEY H. BRADY, 63, 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), Deseret Mutual Benefit Association
(employee benefit insurance) and Management Training Corporation (operator of
training centers). At year-end 1995, he beneficially owned 42,025 shares of the
Company's Common Stock, including 1500 option shares exercisable within 60 days
of the Record Date, but not yet exercised.
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JAMES E. BRUCE, 75, has been a Director of the Company since 1983. He
retired as Chairman and Chief Executive Officer of Idaho Power Company. At
year-end 1995, Mr. Bruce beneficially owned 21,562 shares of the Company's
Common Stock, including 1,500 option shares exercisable within 60 days of the
Record Date, but not yet exercised. Mr. Bruce has informed the Company that
he has acquired an additional 1,500 shares of the Company's Common Stock
during the first quarter of 1996 which will be able to be voted at the Annual
Meeting.
*#THOMAS D. DEE II, 75, 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 1995, Mr. Dee beneficially owned 104,805
shares of the Company's Common Stock, including 1500 option shares exercisable
within 60 days of the Record Date, but not yet exercised.(1)
*SPENCER F. ECCLES, 61, 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. At
year-end 1995, Mr. Eccles was the beneficial owner of 2,837,598 shares of the
Company's Common Stock(2,3) (including 766,257 option shares exercisable
within 60 days but not yet exercised and 27,900 shares held in his account in
the Company's Incentive Savings Plan). He also owned 63 shares of the
Company's Preferred Stock.
*MORGAN J. EVANS, 58, 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 1995, Mr. Evans was the beneficial owner of 292,103
shares of the Company's Common Stock, including 253,409 option shares
exercisable within 60 days of the Record Date, but not yet exercised, and 7,932
shares held in his account in the Company's Incentive Savings Plan. Mr. Evans
exercised options for, and subsequently sold, 21,600 shares of the Company's
Common Stock during the first quarter of 1996, which reduce the number of shares
held as of the end of 1995.
DR. DAVID P. GARDNER, 62, 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 1995,
Dr. Gardner beneficially owned 6,525 shares of the Company's Common Stock,
which number includes 2,343 shares held in a trust established by his
deceased spouse as to which Dr. Gardner acts as trustee, and 1,500 option
shares exercisable within 60 days of the Record Date, but not yet
exercised.(1,3)
ROBERT H. GARFF, 51, has been a Director of the Company since 1995. He is
Chief Executive Officer of Garff Enterprises, Inc. (management of Garff
family ownership of a number of automobile sale and related enterprises). At
year-end 1995, Mr. Garff beneficially owned 2,512 shares of the Company's
Common Stock, including 1,500 option shares exercisable within 60 days of the
Record Date, but not yet exercised.(6)
DAVID B. HAIGHT, 89, 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). At year-end
1995, Elder Haight beneficially owned 3,750 shares of the Company's Common
Stock, including 1,500 option shares exercisable within 60 days of the Record
Date, but not yet exercised.(4) He is the father of Karen H. Huntsman, who
also is a Director of the Company.
JAY DEE HARRIS, 78, 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 3,187 shares of the Company's Common Stock,
including 1,500 option shares exercisable within 60 days of the Record Date,
but not yet exercised.
*+ROBERT T. HEINER, 71, has been a Director of the Company since 1981. He
retired as President and Chief Administrative Officer of the Company. Mr.
Heiner is a Director of Management Training Corporation (operator of training
centers). At year-end 1995, Mr. Heiner was the beneficial owner of 39,000
shares of the Company's Common Stock, including 1,500 option shares
exercisable within 60 days of the Record Date, but not yet exercised.
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KAREN H. HUNTSMAN, 58, has been a Director of the Company since 1992. Since
1982 she has been a Director and Executive Officer of Huntsman Chemical
Corporation. At year-end 1995, Mrs. Huntsman beneficially owned 9,000 shares
of the Company's Common Stock, including 1,500 option shares exercisable
within 60 days of the Record Date, but not yet exercised. Mrs. Huntsman is
the daughter of Elder David B. Haight, also a Director of the Company.
#G. FRANK JOKLIK, 68, has been a Director of the Company since 1981. Mr.
Joklik is President and Chief Executive Officer of MK Gold Company (gold
exploration and development). He retired as President and Chief Executive
Officer of Kennecott Corporation (mining) in 1994. Mr. Joklik is also a
director of Cleveland Cliffs, Inc., a company engaged in mining and related
businesses, and Chairman of the Board of the Salt Lake Olympic Organizing
Committee. At year-end 1995, Mr. Joklik beneficially owned 1,500 shares of
the Company's Common Stock, consisting of 1,500 option shares exercisable
within 60 days of the Record Date, but not yet exercised.
+B.Z. KASTLER, 75, has been a Director of the Company since 1979. Mr.
Kastler retired as Chairman, Chief Executive Officer and a Director of
Questar Corporation (integrated oil and gas company). He is a Director of
Bonneville International Corporation (broadcasting). At year-end 1995, Mr.
Kastler beneficially owned 5,550 shares of the Company's Common Stock,
including 1,500 option shares exercisable within 60 days of the Record Date,
but not yet exercised.
JOSEPH G. MALOOF, 40, has been a Director of the Company since 1995. Mr.
Maloof 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 1995, Mr. Maloof beneficially
owned 751,446 shares of the Company's Common Stock, including 1,500 option
shares exercisable within 60 days of the Record Date, but not yet exercised.
*+SCOTT S. PARKER, 61, has been a Director of the Company since 1985. He is
President of Intermountain Health Care, Inc. (integrated health care
provider). At year-end 1995, Mr. Parker beneficially owned 3,185 shares of
the Company's Common Stock, including 1,500 option shares exercisable within
60 days of the Record Date, but not yet exercised.
#DR. ARTHUR K. SMITH, 58, has been a Director of the Company since 1992. Dr.
Smith is President of the University of Utah. He is a Director of American
Stores Company (retail grocery and drug stores). At year-end 1995, Dr. Smith
was the beneficial owner of 2,100 shares of the Company's Common Stock,
including 1,500 option shares exercisable within 60 days of the Record Date,
but not yet exercised.
JAMES L. SORENSON, 73, 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 1995, Mr. Sorenson beneficially owned
1,500 shares of the Company's Common Stock, consisting of 1,500 option shares
exercisable within 60 days of the Record Date, but not yet exercised.
HAROLD J. STEELE, 82, has been a Director of the Company since 1959. He
retired as 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 1995, Mr. Steele beneficially owned 165,874 shares of
the Company's Common Stock, including 1,500 option shares exercisable within
60 days of the Record Date, but not yet exercised.(5)
(1)A daughter of Dr. Gardner is married to a son of Mr. Dee.
(2)Includes 1,356,620 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 91,125
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 250,324 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 222,000 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 1,566,138 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 any 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 144,145 shares of Common Stock owned by Mr. Steele's spouse for
which Mr. Steele has voting power, but does not include 91,125 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.
(6)Mr. Garff is the son of Kendall Garff, an Honorary Director of the
Corporation.
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ITEM NO. 2: PROPOSED INCREASE IN NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
Article IV of the Corporation's Certificate of Incorporation currently
authorizes the issuance of 150,000,000 shares of Common Stock with a par value
of $1.25 per share, of which there were 75,298,058 shares issued and outstanding
on the Record Date. It is proposed that the authorized Common Stock be
increased to 300,000,000 shares, with a par value of $1.25 each. The
Certificate of Incorporation also authorizes the issuance of 400,000 shares of
Preferred Stock, 18,052 of which have been designated as Series A Preferred
Stock. There are 10,704 shares of Series A Preferred Stock currently issued and
outstanding.
In addition to the 75,298,058 Common shares issued and outstanding,
5,683,397 shares are reserved for exercise of already existing stock options,
conversions of preferred stock, issuances under the Dividend Reinvestment Plan
or the Employee Stock Purchase Plan, or issuance pursuant to existing agreements
for the acquisition of certain designated companies.
The Corporation has had three three-for-two stock splits (1991, 1992, and
1996) which have used a significant number of authorized and unissued shares.
Additionally, the Corporation is continuing its acquisition strategy and has
completed thirty-three (33) transactions during the period 1990-1996, in
which 18,946,000 shares of the Corporation's Common Stock have been issued.
The Corporation has no present plans, agreements or understandings to issue
any of the proposed new authorized Common Stock except as described elsewhere
in this Proxy Statement.
The Board of Directors has unanimously approved an amendment to Article
IV of the Corporation's Certificate of Incorporation to increase the total
authorized Common Stock of First Security Corporation to 300,000,000 shares.
There would be no change in the authorized preferred stock. All such shares
not heretofore issued and outstanding would be issuable at any time or from
time to time by action of the Board of Directors without further
authorization from the shareholders unless required pursuant to applicable
law or the rules of the National Association of Securities Dealers (NASDAQ)
National Market System. Each holder of a share of Common Stock would
continue to be entitled to one vote in respect of each share. As in the
past, no holder of Common Stock has preemptive rights.
The Directors believe it is desirable to increase the number of authorized
shares of Common Stock. This action will provide the Corporation with
flexibility in the future by assuring that there will be sufficient authorized
but unissued Common Stock available for possible stock splits, stock dividends,
acquisitions, financing requirements, and other corporate purposes without the
necessity of further shareholder action at any special or annual meeting.
The Directors do not presently intend to secure any further approval from
the shareholders prior to authorizing or issuing such Common Stock, except for
such approval as required by the NASDAQ National Market System or other
applicable rules or laws.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE ADOPTION OF THE
AMENDMENT TO ARTICLE IV OF THE CERTIFICATE OF INCORPORATION AUTHORIZING THE
INCREASE IN THE AUTHORIZED COMMON SHARES OF THE CORPORATION.
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.
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DEADLINE FOR SHAREHOLDER PROPOSALS
If any Shareholder wishes to present a proposal for action at the 1997
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, 1996.
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