<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:
[X] Preliminary Proxy Statement [ ] Confidential, for use of the
[ ] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to Section
240.14a-11(c) or Section 240.14a-12]
FIRST COMMERCIAL CORPORATION
------------------------------------------------------------------
(Name of Registrant as Specified In its Charter)
FIRST COMMERCIAL CORPORATION
------------------------------------------------------------------
(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), 14a-6(i)(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 or each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies
(3) Per unit price or other underlying value of transaction computed
pursunat to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
FIRST COMMERCIAL CORPORATION
400 West Capitol Avenue
Little Rock, Arkansas 72201
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
April 16, 1996
------------------------
To the Shareholders of First Commercial Corporation:
Notice is hereby given that the annual meeting of shareholders of First
Commercial Corporation ("Company") will be held at the Arkansas' Excelsior
Hotel, Grand Ballroom, Three Statehouse Plaza, Little Rock, Arkansas, on
Tuesday, April 16, 1996, at 3:00 p.m. local time for the following purposes:
1. To elect six (6) Directors.
2. To amend the Articles of Incorporation to increase the number of
authorized shares of common stock of the Company from 34,000,000 to
50,000,000.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only shareholders of record on February 22, 1996, will be entitled to vote
at the meeting or any adjournment thereof.
The Company's Proxy Statement and 1995 Annual Report to Shareholders are
enclosed.
Shareholders are cordially invited to attend the meeting in person.
Management requests that you sign and return the enclosed proxy card as
promptly as possible, regardless of whether or not you plan to be present in
person. A postage paid envelope is enclosed for your convenience in returning
your proxy.
By Order of the Board of Directors,
/s/ Donna Rogers
Donna B. Rogers, Secretary
Little Rock, Arkansas
March 18, 1996
YOUR VOTE IS IMPORTANT
YOU ARE URGED TO DATE, SIGN AND PROMPTLY RETURN YOUR PROXY SO THAT YOUR
SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES AND IN ORDER THAT THE
PRESENCE OF A QUORUM MAY BE ASSURED. THE PROMPT RETURN OF YOUR SIGNED PROXY,
REGARDLESS OF THE NUMBER OF SHARES YOU HOLD, WILL AID THE COMPANY IN REDUCING
THE EXPENSE OF ADDITIONAL PROXY SOLICITATION. YOU MAY REVOKE YOUR PROXY AT ANY
TIME BEFORE IT IS VOTED AT THE MEETING BY WRITTEN NOTICE TO THE SECRETARY OF
THE BOARD OF DIRECTORS OR BY ATTENDING THE MEETING AND VOTING IN PERSON.
<PAGE>
FIRST COMMERCIAL CORPORATION
400 West Capitol Avenue
Little Rock, Arkansas 72201
----------------------------
PROXY STATEMENT
ANNUAL SHAREHOLDERS MEETING
April 16, 1996
---------------------------
Approximate date proxy material first sent to shareholders:
March 18, 1996
SOLICITATION OF PROXIES
This Proxy Statement is furnished to the shareholders of First Commercial
Corporation ("Company") in connection with solicitation of proxies for the
purposes stated herein by the Company's Board of Directors for use at the
annual meeting of shareholders ("Annual Meeting") to be held at the Statehouse
Conference Center, Five Statehouse Plaza, Little Rock, Arkansas, on April 16,
1996, at 3:00 p.m. local time, or any adjournment thereof. Such solicitation
is being made by mail and may also be made in person or by telephone or
telegraph by officers, directors or employees of the Company. All expenses
incurred in such solicitation will be paid by the Company. The shares
represented by proxy will be voted in accordance with the directions therein,
unless the proxy is received in such form or at such time as to render it
ineligible to be voted or unless properly revoked. If no directions are given
in the proxy, it will be voted "FOR" all of the proposals identified in the
proxy and discussed herein. If other matters of business properly come before
the Annual Meeting, the persons named in the proxy will vote in accordance with
their best judgment on such matters.
REVOCATION OF PROXY
The Company encourages the personal attendance of shareholders at the
Annual Meeting, and the giving of the proxy does not preclude the right to vote
in person should the person giving the proxy so desire. The person giving the
proxy has the power to revoke the same by so informing, in writing, the
Secretary of the Board of Directors of the Company at any time prior to its use
or by attending the meeting and voting in person.
The proxy shall not confer the authority to vote at any meeting of
shareholders other than the Annual Meeting or any adjournment thereof.
OUTSTANDING SHARES; VOTING RIGHTS; VOTE REQUIRED FOR APPROVALS
At the close of business on February 22, 1996, the record date for the
meeting, the Company had outstanding 27,353,428 shares of $3.00 par value per
share common stock, each of which is entitled to one vote on all matters to be
presented at the Annual Meeting. Each nominee for Director, to be elected,
must receive a plurality of the votes cast for that position. Cumulative
voting for directors is not permitted. Approval of the proposed amendment
requires that the number of votes cast at the meeting in favor of the amendment
exceeds the number of votes cast opposing the amendment. Abstentions will not
be counted as votes cast, but will be counted as present at the meeting for the
purpose of calculating whether a quorum exists. If
shares are held by a broker which has indicated that it does not have
discretionary authority to vote on a particular matter, those shares will not
be considered as present and entitled to vote with respect to that matter but
will count toward the existence of a quorum.
<PAGE>
PRINCIPAL HOLDERS OF SHARES
Listed in the following table are those shareholders, as of February 22,
1996, who owned beneficially more than 5% of the Company's common stock and the
number of shares owned by the named executive officers in the Summary
Compensation Table and by all Directors and Executive Officers as a group:
Percentage of
Name and Address of Amount of Common Stock
Beneficial Owner Beneficial Ownership Outstanding
------------------------------------------ -------------------- -------------
Charles H. Murphy
Union Building, Suite 400
El Dorado, Arkansas ..................... 1,717,862 6.28%
Barnett Grace ........................... 402,227 (1) 1.47%
Jack Fleischauer, Jr. ................... 4,616 (2) .02%
Edwin P. Henry .......................... 110,341 (3) .40%
Neil S. West ............................ 9,029 (4) .03%
Bill I. Crutchfield ..................... 89,148 (5) .33%
All Directors and Executive Officers
as a Group ............................. 7,177,208 (6) 26.05%
- - ----------
(1) For information with regard to form of ownership, see the footnotes to
the table that appears in "Election of Directors."
(2) Includes an interest in 237 shares under the Company's payroll based
stock ownership plan and employee stock ownership plan and includes
exercisable options for 4,269 shares granted under the 1987 Incentive and
Nonqualified Stock Option Plan.
(3) Includes an interest in 24,885 shares under the Company's payroll based
stock ownership plan and employee stock ownership plan and includes
exercisable options for 72,705 shares granted under the 1987 Incentive
and Nonqualified Stock Option Plan.
(4) Includes an interest in 944 shares under the Company's payroll based
stock ownership plan and employee stock ownership plan and includes
exercisable options for 7,878 shares granted under the 1987 Incentive and
Nonqualified Stock Option Plan.
(5) Includes an interest in 1,006 shares under the Company's payroll based
stock ownership plan.
(6) Includes interests in 111,145 shares under the Company's payroll based
stock ownership plan and employee stock ownership plan and includes
exercisable options for 196,156 shares granted under the 1987 Incentive
and Nonqualified Stock Option Plan.
2
<PAGE>
ELECTION OF DIRECTORS
Six (6) persons have been nominated for election as directors at the Annual
Meeting to serve for a term of three years, with the exception of Directors
Bowen and Cupp, who have been nominated for a term of one year. Such persons
and the ten (10) directors whose terms have not expired will serve as the full
Board of Directors of the Company. Should any of the nominees listed below
become unavailable for election for any reason, presently unknown, the persons
named in the enclosed proxy will vote for the election of such other person or
persons as management may recommend. For information regarding the composition
of the Company affiliate banks' Boards of Directors, see the listing in the
Company's Annual Report to Shareholders accompanying this Proxy Statement.
The following table presents for each nominee and present director of the
Company his principal occupation, the number of shares of common stock of the
Company beneficially owned at February 22, 1996, and certain other information.
Percentage
Common Stock of Common
Name and Principal Occupation Director Beneficially Stock
or Employment (1) Age Since Owned (2) Outstanding
----------------------------- ----- -------- -------------- -----------
(A) John W. Allison
President and Chief Executive
Officer, Spirit Homes, Inc. 49 1985 699,147(5) 2.56%
(D) Truman Arnold
Chairman and Chief Executive
Officer, Truman Arnold
Companies, Inc. 58 1994 833,473(6) 3.05%
(B) William H. Bowen
Retired Chairman of the Company
Dean, University of Arkansas at
Little Rock School of Law 72 1971 627,300(3)(7) 2.29%
(C) Peggy Clark
Manager/Partial Owner,
Clark Timberlands 46 1994 1,229 .00%
(C) Robert G. Cress
Chairman and Chief Executive
Officer, J.A. Riggs
Tractor Company 63 1985 25,697 .09%
(B) Cecil W. Cupp, Jr.
Retired Chairman,
Arkansas Bank & Trust
Company 71 1990 709,146(8) 2.59%
(A) Barnett Grace
Chairman, President and
Chief Executive Officer of
the Company 51 1981 402,227(3)(4)(9) 1.47%
3
<PAGE>
Percentage
Common Stock of Common
Name and Principal Occupation Director Beneficially Stock
or Employment (1) Age Since Owned (2) Outstanding
----------------------------- ----- -------- -------------- -----------
(D) Frank D. Hickingbotham
Chairman,
TCBY Enterprises, Inc. 59 1995 1,365,414 4.99%
(C) Walter E. Hussman, Jr.
Publisher,
Arkansas Democrat-Gazette 49 1994 1,992(10) .01%
-------------------------
(D) Frederick E. Joyce, M.D.
Physician 61 1994 217,893 .80%
(A) Jack G. Justus
Executive Vice President,
Arkansas Farm Bureau
Federation 64 1984 6,964(11) .03%
(C) William M. Lemley
Retired Associate Professor
of Accounting, Arkansas Tech
University 68 1987 30,272(12) .11%
(E) Charles H. Murphy, Jr.
Retired Chairman,
Murphy Oil Corporation 76 1984 1,717,862 6.28%
(A) Michael W. Murphy
President,
Marmik Oil Company 48 1985 7,837(13) .03%
(C) William C. Nolan, Jr.
Nolan & Alderson, Attorneys 56 1989 43,541(14) .16%
(C) Sam C. Sowell
Chairman,
Harvey Press, Inc. 62 1976 25,613(15) .09%
(D) Paul D. Tilley
President and Chief
Executive Officer, Highland
Resources, Inc. 54 1989 123,079(16) .45%
- - ---------------
(A) Nominee for election at this year's annual meeting for a three year term.
(B) Nominee for election at this year's annual meeting for a one year term.
(C) Term expires at annual meeting in 1997.
(D) Term expires at annual meeting in 1998.
(E) Charles H. Murphy, Jr.'s term expires at this year's annual meeting, but
he will remain as Chairman Emeritus of the Executive Committee of the
Board of Directors.
4
<PAGE>
(1) All persons have been engaged in the occupation identified in the
foregoing table for at least five years with the exception of William H.
Bowen, Cecil W. Cupp, Jr., William M. Lemley and Charles H. Murphy, Jr..
Mr. Bowen's retirement was effective December 31, 1990, and his
employment with the University of Arkansas School of Law began in July
1995. Mr. Bowen also served as President and Chief Executive Officer to
Healthsource Arkansas Ventures, Inc., from September 1993 to December
1995. Mr. Lemley's retirement was effective May 16, 1992. Mr. Cupp's
and Mr. Murphy's retirements were effective December 31, 1994.
(2) All shares listed are owned of record, except as described in notes (3)
through (16).
(3) Includes interests in the Company's common stock under the Company's
payroll based stock ownership plan and employee stock ownership plan as
of December 31, 1994, which interests include sole voting power with
respect to the shares, as follows: Mr. Bowen (27,652) and Mr. Grace
(27,514).
(4) Includes exercisable options granted under the 1987 Incentive and
Nonqualified Stock Option Plan as follows: Mr. Grace (84,740).
(5) John W. Allison owned of record 582,693 shares; 12,667 shares were owned
by his wife; 13,362 shares were owned by various trusts for which Mr.
Allison is trustee with the right to vote such shares; 90,425 shares were
owned by Capital Buyers, Inc., of which Mr. Allison is President.
(6) Truman Arnold owned of record 526,540 shares; 80,625 shares, of which Mr.
Arnold has the right to direct the voting, were owned by a trust; 187,400
shares were owned by Truman Arnold Companies, Inc., of which Mr. Arnold
is Chairman and Chief Executive Officer; 38,908 shares, of which Mr.
Arnold has the right to direct the voting, were owned by Truman Arnold
Companies, Inc., Retirement Trust.
(7) William H. Bowen owned of record 517,064 shares; 82,584 shares were owned
by his wife.
(8) 706,203 shares were owned by a trust for which Cecil W. Cupp, Jr. is
trustee with the right to vote such shares; 2,943 shares were owned by a
trust for which his wife is trustee with the right to vote such shares.
(9) Barnett Grace owned of record 194,839 shares; 1,678 shares were owned by
his wife; 93,456 shares were owned by various trusts for which Mr. Grace
is trustee with the right to vote such shares.
(10) Walter E. Hussman, Jr., owned of record 1,439 shares; 553 shares were
owned by various trusts for which Mr. Hussman is trustee with the right
to vote such shares.
(11) Jack G. Justus owned 6,964 shares jointly with his wife.
(12) William M. Lemley owned of record 2,952 shares; 27,320 shares were owned
by his wife.
(13) Michael W. Murphy owned of record 2,371 shares; 1,653 shares were owned
by his wife; 3,813 shares were owned by trusts for which Mr. Murphy is
trustee with the right to vote such shares.
5
<PAGE>
(15) Sam C. Sowell owned of record 10,138 shares; 15,475 shares were owned
jointly with his wife.
(16) Paul D. Tilley owned of record 2,223 shares; 120,856 shares were owned by
Highland Resources, Inc., of which Mr. Tilley is President and Chief
Executive Officer.
The following directors occupy directorships in other registered companies
as indicated:
William H. Bowen TCBY Enterprises, Inc.
Frank D. Hickingbotham TCBY Enterprises, Inc.
Frederick E. Joyce, M.D. Southwestern Electric Power Company
Charles H. Murphy, Jr. Murphy Oil Corporation
Michael W. Murphy Murphy Oil Corporation
William C. Nolan, Jr. Murphy Oil Corporation
OTHER INFORMATION
The Board of Directors of the Company held twelve meetings during 1995.
The Board of Directors has Audit and Compensation committees. The Board of
Directors does not have a standing nominating committee.
The Audit Committee, which met six times during 1995, presently consists of
Directors Clark, Cress and Lemley. The functions of the Audit Committee are
(a) to review and approve the adequacy of the Company's internal audit program,
internal audit staff and financial organization; (b) to evaluate the Company's
internal control structure; (c) to recommend annually to the Board of Directors
the appointment of independent auditors at determined fees; (d) to approve the
scope of the prospective annual audit; and (e) to review the results of various
examinations of the Company and its affiliates and management's response
thereto.
The Compensation Committee, which met six times during 1995, presently
consists of Directors Allison, Arnold, Cress, Cupp, Nolan and Sowell. The
function of the Compensation Committee is to establish and review the
compensation and benefits of certain officers of the Company.
All of the incumbent members of the Board of Directors attended at least
75% of the aggregate number of meetings of the Board and of the Committees on
which they served during the last fiscal year, with the exceptions of Directors
Arnold, Hussman and M. Murphy.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE ELECTION
AS DIRECTORS OF THE SIX PERSONS IDENTIFIED ABOVE AS NOMINEES FOR ELECTION AT
THIS YEAR'S ANNUAL MEETING.
6
<PAGE>
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Cash and Other Compensation
The following table sets forth the annual and long-term compensation for
the Company's Chief Executive Officer and the four highest-paid executive
officers during the Company's last three fiscal years:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-term Compensation
------------------------
Annual Compensation Awards
--------------------------------- ------------------------
Other Annual Restricted Securities All Other
Compensation Stock Underlying Compensation
Name and Principal Position Year Salary($) Bonus($) ($)(1) Awards(s)($) Options(#) ($)(2)
- - --------------------------- ---- --------- -------- ------------ ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Barnett Grace 1995 363,216 210,549 -- -- 24,075(3) 11,341
Chairman, President and 1994 357,782 164,270 -- -- -- 6,032
Chief Executive Officer 1993 314,350 162,000 -- -- 30,672(3) 5,148
of the Company
Jack Fleischauer, Jr.(4) 1995 220,801 107,768 -- -- 13,793(3) 870
President and Chief 1994 129,400 91,558 -- -- 21,347(3) 870
First Commercial Bank, N.A.1993 N/A N/A N/A N/A N/A N/A
Edwin P. Henry 1995 203,316 90,291 -- -- 12,821(3) 7,501
Executive Vice President 1994 182,333 79,235 -- -- -- 5,205
of the Company 1993 147,225 61,312 -- -- 7,029(3) 5,665
Neil S. West(5) 1995 199,500 64,950 -- -- 18,171(3) 6,504
President and Chief 1994 182,333 52 752 -- -- -- 3,128
State First Financial 1993 N/A N/A N/A N/A N/A N/A
Bill I. Crutchfield 1995 153,816 40,800 -- -- 5,528(3) 1,440
Chairman, President and 1994 N/A N/A N/A N/A N/A N/A
Chief Executive Officer, 1993 N/A N/A N/A N/A N/A N/A
State First National Bank,
Texarkana, Texas; Exective
Vice President, State First
Financial Corporation
</TABLE>
- - ---------------
(1) Amounts representing personal benefits are not included in this table.
The Company has a policy of providing country club memberships to some of
its officers. The recipients of these items are selected by the
Company's executive management. The Company also provides a medical
expense allowance to certain executive officers. In the Company's
estimation, the dollar amount of such items for the personal benefit of
each named officer does not exceed the lesser of $50,000 or ten percent
(10%) of the aggregate remuneration for any individual.
(2) "All Other Compensation" for the year ended December 31, 1995, includes
the following for Messrs. Grace, Fleischauer, Henry, West and
Crutchfield: (i) Company contributions to the 401(k) Retirement Savings
7
<PAGE>
Plan of $2,610, $0, $2,917, $2,610 and $0 on behalf of each of the named
executives, respectively, (ii) Company contributions to the Non-Qualified
Deferred Compensation Plan of $7,291, $0, $2,335, $2,454 and $0 on behalf
of each of the named executives, respectively, and (iii) Company
contributions to the Company's group life insurance policy of $1,440,
$870, $2,250, $1,440 and $1,440, respectively. There is no arrangement
or understanding, formal or informal, whereby the named executive
officers have or will receive or be allocated an interest in any cash
surrender value under the Company's insurance policy.
(3) Reflects a seven percent stock dividend paid January 2, 1996, a five
percent stock dividend paid January 3, 1995, and a three-for-two stock
split effected in the form of a stock dividend paid January 3, 1994.
(4) Jack Fleischauer, Jr., was employed with the Company as president and
chief executive officer of First Commercial Bank, N.A., in May 1994.
(5) Neil S. West was elected president and chief executive officer of State
First Financial Corporation in May 1994.
Options Granted and Options Exercised in the Last Fiscal Year
The following table sets forth certain information concerning options
granted during 1995 to the named executive officers:
<TABLE>
<CAPTION>
OPTION GRANTS IN 1995
Individual Grants
- - ---------------------------------------------------------------------------------
Number of % of Total
Securities Options Grant Date Present Value
Underlying Granted to Exercise or as Calculated per the
Options Employees in Base Price Black-Scholes Option
Name Granted(#)(1) Fiscal Year(3) ($/Share) Expiration Date Pricing Model($)(2)
- - --------------------- ------------- ------------- ----------- ---------------- ------------------------
<S> <C> <C> <C> <C> <C>
Barnett Grace ....... 10,700 8.3 22.90 March 21, 2005 62,777
13,375 11.2 32.13 December 13, 2005 110,009
Jack Fleischauer, Jr. 6,123 4.8 22.90 March 21, 2005 35,924
7,670 6.4 32.13 December 13, 2005 63,137
Edwin P. Henry ...... 5,691 4.4 22.90 March 21, 2005 33,389
7,130 5.9 32.13 December 13, 2005 58,692
Neil S. West ........ 5,691 4.4 22.90 March 21, 2005 33,389
12,480 10.4 32.13 December 13, 2005 102,732
Bill I. Crutchfield.. 2,853 2.2 22.90 March 21, 2005 16,738
2,675 2.2 32.13 December 13, 2005 22,020
</TABLE>
- - ----------
(1) Options become exercisable with respect to 20% of the shares covered
thereby on the anniversary of the grant date in 1996, 1997, 1998, 1999
8
<PAGE>
and 2000. If the Company is acquired by another company, any
unexercisable portion of the options will become immediately exercisable.
(2) Based on the Black-Scholes option pricing model as adjusted for the
payment of dividends. Valuations under the model depend on such factors
as the volatility of a security's return, the level of interest rates,
the relationship of the underlying stock's price to the strike price of
the option, current dividends and the time remaining until the option
expires. Valuations under the same model could change if different
assumptions as to factors such as volatility and interest rates were
made. Option values are dependent on the future performance of the
common stock and overall stock market conditions. There can be no
assurance that the values reflected in this table will be realized. The
specific variables used for the Black-Scholes valuation in the above
table are as follows: annual volatility of the Company's rate of return
on stock of 17.40%; risk-free rate of 6.25%; annual dividend yield as of
date of option grant of 3.07%; and time to exercise of ten years. The
option's exercise price equals 100% of the fair market value of the
Company's stock on the date of the grant.
(3) The Company made two stock options grants in 1995. No options were
granted during 1994.
The following table summarizes options exercised during 1995 and presents
the value of unexercised options held by the named executive officers at
December 31, 1995:
<TABLE>
<CAPTION>
OPTION EXERCISES IN 1995 AND YEAR-END OPTION VALUES
Value Realized Number of Securities Value of Unexercised
(Market price Underlying Unexercised in-the-Money
Shares at exercise Options at 12/31/95(#) Options at 12/31/95($)(1)
Acquired on less exercise --------------------------- ---------------------------
Name Exercise(#) price)($) Exercisable Unexercisable Exercisable Unexercisable
- - -------------------- ----------- -------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Barnett Grace ...... 3,210 68,951 84,740 45,553 1,982,635 404,732
Jack Fleischauer, Jr. -- -- 4,269 30,871 60,022 305,184
Edwin P. Henry ..... -- -- 72,705 20,060 1,791,334 463,848
Neil S. West ....... -- -- 7,878 25,978 108,039 169,469
Bill I. Crutchfield. -- -- -- 5,528 -- 29,761
</TABLE>
- - ----------
(1) Amounts represent the excess of the market value over the exercise price
for all exercisable shares and all unexercisable shares at December 31,
1995.
9
<PAGE>
Pension Plan
The following table sets forth the annual life annuity payable under the
Company's qualified pension plans to participating employees in the specified
remuneration and years of service classification:
ESTIMATED ANNUAL BENEFITS
Final 5 Year Years of Service at Retirement
Average Annual ----------------------------------------------------------
Compensation 15 20 25 30 35
-------------- ---------- ---------- ---------- ---------- ----------
$100,000 $25,507 $34,010 $42,512 $42,512 $42,512
150,000 40,507 54,010 67,512 67,512 67,512
200,000 40,507 54,010 67,512 67,512 67,512
300,000 40,507 54,010 67,512 67,512 67,512
400,000 40,507 54,010 67,512 67,512 67,512
500,000 40,507 54,010 67,512 67,512 67,512
600,000 40,507 54,010 67,512 67,512 67,512
Covered compensation comprises basic compensation, and bonuses or incentive
compensation up to 20% of basic compensation, paid to all plans' participants.
Beginning with the 1989 plan year, a $200,000 annual pay limit became effective
for all qualified plans. The annual pay limit was reduced in 1994 to $150,000
as a result of the Budget Reconciliation Act of 1993. This limit is adjusted
annually for increases in the cost-of-living index in $10,000 increments. The
limit for 1996 is $150,000. Transitional rules preserve an employee's accrued
benefit if such person had an accrued benefit based on compensation greater
than $200,000 prior to January 1, 1989, or greater than $150,000 prior to
January 1, 1994. The final average compensation is averaged over the highest
five consecutive years out of the final ten years of employment. Benefits
commence at age 70 1/2 or at retirement if earlier, and continue for the
lifetime of the participant. The pension benefits are on the basis of a life
only annuity and are not reduced for Social Security or other benefits received
by the participants. The estimated years of service at December 31, 1995, for
each of the named executive officers is as follows: Barnett Grace, 24; Jack
Fleischauer, Jr., 2; Edwin P. Henry, 34; Neil S. West, 3; and Bill I.
Crutchfield, 17.
Remuneration of Directors
All members of the Board of Directors are paid a fee of $350 per month for
advice and assistance called for on a day-to-day basis as well as $400 per
meeting for all regular and special meetings of the Board which they attend.
Members of the Board serving on Board committees are paid a fee of $400 for
each meeting they attend and $175 for each meeting via telephone conference in
which they participate.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee consists of the following directors: Allison,
Arnold, Cress, Cupp, Nolan and Sowell.
Cecil W. Cupp, Jr., who serves as a director of the Company and as a member
of the Compensation Committee, formerly served as Chairman of the Board of
Arkansas Bank & Trust Company, a subsidiary of the Company. His retirement
from that position was effective December 31, 1994.
10
<PAGE>
FIRST COMMERCIAL CORPORATION'S 1995 COMPENSATION
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors of the Company
presents its report which documents the elements of the Company's executive
compensation programs and describes the basis on which 1995 compensation
determinations were made by the Committee with respect to the named executive
officers in the Proxy Statement.
COMPENSATION PHILOSOPHY
The following compensation guidelines have been adopted by the Committee
and represent the general principles that the Committee considers regarding the
remuneration of officers of the Company.
The compensation principles of the Company are:
- - --The Company should provide a compensation package that is competitive given
our relative size and performance within the banking industry. Our pay
posture should enable the Company to attract and retain key executives.
- - --Our incentive programs should focus attention on the Company's annual and
long-term business objectives and strategy, and should focus executive
behavior on meeting those goals.
- - --Our pay programs should not provide incentives for our executives to take
undue risks in managing the enterprise, nor lead executives to expose the
Company and our customers to policies or practices that would undermine the
financial strength and reputation of our institution.
- - --Our pay program should provide incentive opportunities to improve overall
corporate performance relative to other financial institutions with which we
compete.
- - --The Company should provide stock-based, long-term incentive opportunities to
key executives so that executives experience a link between their
performance and the returns they generate on behalf of shareholders.
COMPENSATION PROGRAM COMPONENTS
The particular pay programs for executive officers currently in place at
the Company are described below. The Committee actively administers these
programs to ensure that they adhere to our compensation principles.
Base Salary
The Committee establishes base pay levels for executives according to
industry salary practices as reflected by published salary surveys. Base pay
levels are determined through comparisons with other financial institutions of
similar asset size to the Company with a return on assets of at least 1.00%.
These comparisons are with companies contained in national, regional and local
salary surveys conducted by compensation consultants. These surveys differ
from the NASDAQ Financial Stocks Index which the Company uses for the
performance graph appearing herein. This index was selected because it is
broad-based and thus less subject to volatility on a year-to-year basis. While
median levels of compensation are used in survey comparisons, experience within
the Company and experience within the actual position are taken into
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consideration when establishing appropriate salary levels. It is generally the
Committee's practice to move executives toward the midpoint of their salary
range once they have attained three to five years experience within the
position. Thus, executive salary increases are based on competitive practices
(i.e., industry survey research), corporate guidelines (i.e., the Company's
annual budget and salary administration process), and individual performance
(i.e., each executive's stated personal objectives established on an annual
basis in accordance with the Company's three year strategic and annual
operating plans).
Annual Incentive Compensation
All executive officers are eligible for and participate in incentive
compensation plans. The purpose of the plans is to encourage the achievement
of the Company's key financial and operational objectives and to directly link
total cash compensation to the performance of the Company and its affiliates.
In addition to a stated target award percentage for each participant, there is
a threshold level of performance before any incentive pay can be generated from
a plan. Basic components of the Corporate plan for Messrs. Grace and Henry
include growth (earnings per share), profitability (return on average common
stockholders' equity) and quality (accomplishment of personal objectives of
each executive officer), each weighted equally. For 1995, the Company's Growth
Factor target and the Profitability Factor target were exceeded; and for the
third factor, Quality, each executive's accomplishment of personal objectives
was reviewed and found to be acceptable.
In his capacity as affiliate bank chief executive officer, Mr. Fleischauer
received his incentive compensation which was determined by the performance of
First Commercial Bank, N.A. In their capacities as affiliate bank chief
executive officers and executive officers of State First Financial Corporation,
Messrs. West and Crutchfield received their incentive compensation which was
determined by the performance of Tyler Bank & Trust, N.A., for Mr. West and
State First National Bank, Texarkana, Texas, for Mr. Crutchfield, and State
First Financial Corporation for both. Basic components of the affiliate bank
chief executive officer plan include bank performance indicators (return on
average assets, growth in pre-tax, pre-provision for loan and lease losses
income and loan portfolio rating), the Company's earnings per share and an
individual rating. The bank performance is weighted 50%, with earnings per
share and individual rating weighted 25% each. For 1995, the bank performance
targets and earnings per share target were exceeded for First Commercial Bank,
N.A., Tyler Bank & Trust, N.A., and State First National Bank, Texarkana,
Texas, and the individual ratings were reviewed. State First Financial
Corporation did not reach its target; however, results were above threshold.
Stock Option Program
In 1987, the Company adopted the 1987 Incentive and Nonqualified Stock
Option Plan. The purpose of the Plan is to retain employees with a high degree
of training, experience and ability, to attract highly qualified new employees,
to encourage a sense of ownership in the Company, and to stimulate the active
interest of participants in the development and financial success of the
Company. The Plan allows for the issuance of incentive stock options and
nonqualified stock options at no less than fair market value of the Company's
stock on the date the option is granted. Options granted under the Plan vest
in 20% cumulative installments after the first, second, third, fourth and fifth
anniversaries of the granting of the option. No executive
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officer may receive in a single year more than 25% of the total number of
options granted in that year or receive over the life of the Plan more than 25%
of the total number of options granted over the life of the Plan.
Prior to any grant, the Committee reviews the performance of the Company as
well as the authorized and outstanding options. The Company's Board of
Directors' policy is that five percent will be the maximum number of options
outstanding as a percent of total shares outstanding at any one time.
DISCUSSION OF 1995 COMPENSATION FOR THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER
The following is a description of the decisions made by the Committee
regarding compensation for Mr. Barnett Grace for 1995:
- - --Base salary was increased to $363,216 per annum in 1995. The Committee
regards Mr. Grace's pay as being appropriate considering his years of
experience in this position and competitive compared to financial
institutions of similar size to the Company. Mr. Grace's base compensation
is reviewed annually utilizing the process discussed under the heading "Base
Salary."
- - --The Compensation Committee has awarded Mr. Grace an annual bonus for 1995 in
the amount of $210,549. The Company has exceeded target levels established
in the annual incentive plan, as described under the heading, "Annual
Incentive Compensation," in terms of earnings per share growth and return on
average common stockholders' equity. The Committee has deemed the 10.7%
growth in earnings per share and the 15.02% return on average common
stockholders' equity in comparison with Company target and peer group
performance to be of a sufficient magnitude to warrant this payout under the
Company's incentive plan.
SUMMARY
The Committee's compensation decisions for the Chairman and other executive
officers in 1995 are consistent with the Company's performance, our stated
compensation guidelines, and the provisions of our compensation programs. The
Committee will continue to monitor and administer all compensation programs for
the Company.
The Compensation Committee
John W. Allison
Truman Arnold
Robert G. Cress
Cecil W. Cupp, Jr.
William C. Nolan, Jr.
Sam C. Sowell, Chairperson
STOCK PERFORMANCE CHART
The following chart compares the yearly percentage change in the cumulative
total stockholder return on the Company's Common Stock during the five fiscal
years ended December 31, 1995, with the cumulative total returns on the S&P
SmallCap 600 Index and the NASDAQ Financial Stocks Index. The comparison
assumes $100 was invested on December 31, 1990, in the Company's Common Stock
and in each of the foregoing indices and assumes reinvestment of dividends.
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Comparison of First Commercial Corporation, S&P SmallCap 600 Index,
and NASDAQ Financial Stocks Index
[EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC]
First Commercial S&P SmallCap 600 NASDAQ Financial
---------------- ---------------- ----------------
[S] [C] [C] [C]
1990 $ 100.00 $ 100.00 $ 100.00
1991 222.40 148.49 154.74
1992 243.22 179.74 221.32
1993 253.27 213.50 257.23
1994 268.21 203.31 257.83
1995 409.45 264.22 375.64
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers and persons who own more than ten percent of
the Company's common stock to file with the Securities and Exchange Commission
(the "Commission") initial reports of ownership and reports of changes in
ownership of Company stock.
Based upon a review of copies of such reports filed with the Commission and
written representations that no other reports were required to be filed, it is
the Company's belief that all Section 16(a) filing requirements applicable to
its directors, executive officers and greater than ten percent beneficial
owners were complied with during the fiscal year ended December 31, 1995,
except as discussed below.
A statement of changes in beneficial ownership report relating to three
transactions for one trust in which Truman Arnold has the right to direct the
voting was filed late. The trust is current on its Section 16(a) filings at
the time of this mailing.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
The Company and its subsidiaries have had, and expect to have in the
future, banking transactions in the ordinary course of business with executive
officers of the Company, directors of the Company and principal shareholders.
Loans made to members of this group, including companies in which they are
principal owners (10% or more ownership interest) amounted to approximately
$37.4 million at the highest point in 1995, which represents 9.9% of the
Company's average equity capital. Such transactions have been made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons. The
loans do not include more than a normal risk of collectibility and do not
involve any unfavorable features.
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PROPOSAL TO AMEND THE ARTICLES OF INCORPORATION
The authorized capital stock of the Company presently consists of:
34,000,000 shares of common stock, $3 par value per share
400,000 shares of preferred stock, $1 par value per share
The Board of Directors believes that the number of unreserved shares of
common stock presently available for issuance is not sufficient to take care of
future contingencies and needs of the Company. Although the Company has no
specific plans at this time for the issuance of additional common stock, it is
desirable to have additional shares available for possible future financing,
stock distributions, or other corporate purposes. In the event that additional
shares of common stock are sold or otherwise issued by the Company, the present
holders of common stock shall have no preemptive right under the Articles of
Incorporation of the Company to purchase any of such shares.
The Board of Directors has unanimously adopted a resolution and will
present to the stockholders the following resolution at the Annual Meeting:
RESOLVED, that the Board recommends that stockholders approve at the
annual meeting of stockholders to be held on April 16, 1996, an amendment
to Subsection (a) of Article FIFTH of the Second Amended and Restated
Articles of Incorporation, as amended, so that such subsection, as
amended, shall be and read as follows:
(a) AUTHORIZED SHARES. The total number of shares of capital stock
which this Corporation shall have authority to issue is 50,400,000,
which shall consist of 50,000,000 shares of common stock, all of
which shall be Three Dollars ($3.00) par value per share (the "Common
Stock"), and 400,000 shares of preferred stock, all of which shall be
One Dollar ($1.00) par value per share (the "Preferred Stock").
The Amendment will be adopted if the number of votes cast at the meeting in
favor of the Amendment exceeds the number of votes cast opposing the Amendment
and will become effective upon the filing of Articles of Amendment with the
Secretary of State of the State of Arkansas. No changes will be made in the
respective rights and privileges pertaining to the outstanding shares of common
stock of the Corporation.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE PROPOSAL
TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK.
RELATIONSHIP WITH INDEPENDENT AUDITORS
The principal auditor for the Company is the independent certified public
accounting firm of Ernst & Young LLP. The Audit Committee recommended to the
Board of Directors the appointment of Ernst & Young LLP to examine the
Company's consolidated financial statements for the year ended December 31,
1995 The Company has been advised by Ernst & Young LLP that neither it nor any
of its partners or associates has any relationship with the Company other than
the usual relationships that exist between independent auditors and clients.
The Audit Committee will recommend to the Board of Directors the principal
auditors for the year ended December 31, 1996, at the Board's July 1996
meeting.
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Representatives of Ernst & Young LLP will be present at the shareholders'
meeting, will have an opportunity to make a statement to the shareholders, if
desired, and will be available to respond to appropriate questions from
shareholders.
OTHER MATTERS
So far as is now known to the management of the Company, there is no
business other than that described above to be presented to the shareholders
for action at the Annual Meeting. Should any other matters properly come
before the Annual Meeting, the persons named in the attached Proxy will have
discretionary authority to vote all proxies in accordance with their judgment.
FINANCIAL STATEMENTS
Financial statements of the Company appear in the Company's 1995 Annual
Report to Shareholders which is being delivered herewith.
SHAREHOLDER PROPOSALS
Shareholder proposals, if any, to be included in the Company's 1997 Proxy
Statement and presented at the Company's 1997 annual meeting of shareholders
must be received by the Company at its office in Little Rock, Arkansas,
addressed to the Secretary, not later than November 19, 1996.
By Order of the Board of Directors,
/s/ Donna Rogers
Donna B. Rogers, Secretary
Little Rock, Arkansas
March 18, 1996
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PROXY CARD
FIRST COMMERCIAL CORPORATION
First Commercial Building
400 West Capitol Avenue
Little Rock, Arkansas 72201
Telephone No. (501) 371-7000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY
The undersigned hereby appoints Guy Amsler, Jr. and James H. Rice, Jr. as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated below, all the shares of the
common stock of First Commercial Corporation, held of record by the undersigned
on February 22, 1996, at the annual meeting of shareholders to be held on April
16, 1996, or any adjournment thereof.
A vote "FOR" the following proposals is recommended by the Board of Directors.
1. ELECTION OF DIRECTORS
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all
nominees
(INSTRUCTION: To withhold authority to vote for an individual nominee,
strike a line through the nominee's name in the list below.)
Nominees:
JOHN W. ALLISON * WILLIAM H. BOWEN * CECIL W. CUPP, JR.
BARNETT GRACE * JACK G. JUSTUS * MICHAEL W. MURPHY
2. To approve the amendment to the Articles of Incorporation to increase the
number of authorized shares of common stock of the Company from 34,000,000
to 50,000,000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
(Continued on other side)
<PAGE>
(Continued from other side)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THE PROXY WILL
BE VOTED FOR PROPOSAL 1 AND 2.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Dated , 1996
------------------------ ---------------------------------
Signature
---------------------------------
Signature if jointly held
PLEASE MARK, SIGN, DATE AND
RETURN THIS PROXY PROMPTLY
USING THE ENCLOSED ENVELOPE.
