<PAGE> 1
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
/ / Definitive Proxy Statement Rule 14a-6(e)(2))
/ / Definitive Additional Materials
/ / Soliciting Materials Pursuant to Rule 14a-11(c) or Rule 14a-12
MAGNA GROUP, INC.
----------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No Fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
----------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------------------------
(3) Filing Party:
----------------------------------------------------------------------------
(4) Date Filed:
----------------------------------------------------------------------------
<PAGE> 2
PRELIMINARY COPY
[LOGO] MAGNA GROUP, INC.
ONE MAGNA PLACE
1401 SOUTH BRENTWOOD BOULEVARD
ST. LOUIS, MISSOURI 63144-1401
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD
MAY 7, 1997
The Annual Meeting of Stockholders of Magna Group, Inc. will be
held on Wednesday, May 7, 1997, at 10:00 a.m., local time, at the
Regal Riverfront Hotel, 200 South 4th Street, St. Louis, Missouri,
for the following purposes:
1. To elect five Class III directors to hold office for a term of
three years or until their successors shall have been duly
elected and qualified;
2. To consider and act upon the adoption of an amendment to
Article 4 of Magna Group, Inc.'s Certificate of Incorporation;
and
3. To transact such other business as may properly come before
the Annual Meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on March
12, 1997 as the record date for the determination of the stockholders
entitled to notice of, and to vote at, the Annual Meeting.
/s/ G. Thomas Andes
G. THOMAS ANDES
Chairman of the Board and
Chief Executive Officer
March 31, 1997
YOUR VOTE IS IMPORTANT. ACCORDINGLY, YOU ARE REQUESTED TO MARK, DATE,
SIGN AND RETURN THE PROXY SUBMITTED HEREWITH IN THE RETURN ENVELOPE
PROVIDED FOR YOUR USE. THE GIVING OF SUCH PROXY WILL NOT AFFECT YOUR
RIGHT TO REVOKE SUCH PROXY OR VOTE IN PERSON SHOULD YOU LATER DECIDE
TO ATTEND THE MEETING.
<PAGE> 3
<TABLE>
MAGNA GROUP, INC.
PROXY STATEMENT
TABLE OF CONTENTS
<CAPTION>
PAGE
----
<S> <C>
SOLICITATION OF PROXIES....................................................................................... 1
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF............................................................... 1
ITEM 1--ELECTION OF DIRECTORS................................................................................. 2
BOARD OF DIRECTORS AND COMMITTEES............................................................................. 5
COMPENSATION OF DIRECTORS..................................................................................... 6
Directors' Fees........................................................................................... 6
Directors' Compensatory Plans............................................................................. 6
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................................................................ 8
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE
COMPENSATION................................................................................................ 9
Committee Responsibilities................................................................................ 9
Statement of Policy....................................................................................... 9
IRC Section 162(m)........................................................................................ 10
Base Salary............................................................................................... 10
Annual Incentive Compensation............................................................................. 10
Long Term Incentive Compensation.......................................................................... 11
CEO Compensation.......................................................................................... 12
Conclusion................................................................................................ 12
COMPENSATION OF EXECUTIVE OFFICERS............................................................................ 13
Summary Compensation Table................................................................................ 13
Change in Control and Termination Arrangements............................................................ 14
Option/SAR Grants in Last Fiscal Year..................................................................... 15
Long Term Incentive Plans--Awards in Last Fiscal Year..................................................... 16
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR
Values.................................................................................................. 17
Retirement Plans.......................................................................................... 17
COMPARISON OF FIVE-YEAR TOTAL RETURN.......................................................................... 19
ITEM 2--PROPOSAL TO AMEND ARTICLE 4 OF MAGNA'S CERTIFICATE
OF INCORPORATION............................................................................................ 20
SECURITY OWNERSHIP OF MANAGEMENT.............................................................................. 21
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE.................................................................................................. 23
INDEPENDENT PUBLIC ACCOUNTANTS................................................................................ 23
FUTURE STOCKHOLDER PROPOSALS.................................................................................. 23
ANNUAL REPORT................................................................................................. 23
OTHER BUSINESS................................................................................................ 23
APPENDIX A--CERTIFICATE OF AMENDMENT OF CERTIFICATE OF
INCORPORATION OF MAGNA GROUP, INC........................................................................... A-1
</TABLE>
i
<PAGE> 4
[LOGO] MAGNA GROUP, INC.
ONE MAGNA PLACE
1401 SOUTH BRENTWOOD BOULEVARD
ST. LOUIS, MISSOURI 63144-1401
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD
MAY 7, 1997
Magna Group, Inc. ("Magna") is a bank holding company headquartered in
St. Louis, Missouri, the business of which consists primarily of the ownership,
supervision and control of banking institutions located in the States of
Missouri, Illinois and Iowa and other non-banking subsidiaries.
SOLICITATION OF PROXIES
This proxy statement, which is first being mailed to the holders of the
Common Stock, $2.00 par value (the "Common Stock"), and the Class B Voting
Preferred Stock, $20.00 par value (the "Class B Preferred Stock"), of Magna
(collectively, the "Voting Stock") on or about March 31, 1997, is being
furnished in connection with the solicitation of proxies for use at the Annual
Meeting of Stockholders (the "Annual Meeting") to be held at the Regal
Riverfront Hotel, 200 South 4th Street, St. Louis, Missouri, on Wednesday, May
7, 1997, at 10:00 a.m., local time, and any adjournments thereof, for the
purposes set forth in the accompanying Notice of Annual Meeting of
Stockholders.
The accompanying proxy is being solicited by the Board of Directors of
Magna. Any holder of the Voting Stock giving a proxy may revoke it at any time
prior to its use by filing with the Secretary of Magna a written notice of
revocation or a duly executed proxy bearing a later date, or by attending the
Annual Meeting and voting in person. Unless so revoked, all Voting Stock
represented by properly executed proxies received prior to the voting will be
voted at the Annual Meeting or any adjournments thereof. Abstentions and
withholding of authority will be treated as shares that are present for
purposes of determining a quorum but as voted "no" for purposes of
determining the approval of any matters submitted to the stockholders for a
vote. Shares not voted by an institution holding shares in "street name,"
because no instructions were received from the beneficial owner and such
institutional holder lacks discretionary voting power, will have no effect on
the vote.
Magna will bear the entire cost of soliciting proxies. Proxies will be
solicited primarily by mail; however, directors, officers and certain employees
of Magna and its subsidiaries also may solicit proxies personally or by
telephone or other means, but such persons will not be specially compensated
for such services. In addition, Magna has retained Corporate Investor
Communications, Inc. to assist in the solicitation of proxies on its behalf for
a fee of approximately $5,000, plus reasonable out-of-pocket expenses. Certain
holders of record, such as brokers, custodians and nominees, are being
requested to distribute proxy materials to each beneficial owner and to obtain
such beneficial owner's instructions concerning the voting of proxies and will
be reimbursed by Magna for their reasonable expenses incurred in providing such
services.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Only stockholders of record at the close of business on March 12, 1997
are entitled to notice of, and to vote at, the Annual Meeting. On such
date, there were 33,352,717 shares of Common Stock and 1,996 shares of Class B
Preferred Stock outstanding. The Common Stock and Class B Preferred Stock vote
as a single class on each matter submitted to the stockholders and each share
is entitled to one vote on each such matter. Holders of Magna's Voting Stock do
not have the right to cumulate votes in the election of directors.
1
<PAGE> 5
To the knowledge of Magna, no person beneficially owned more than 5% of the
shares of Common Stock outstanding on March 12, 1997 (which class of securities
represents approximately 99.9% of Magna's total outstanding Voting Stock). Of
the shares of Class B Preferred Stock outstanding on such date, there were five
stockholders who each owned more than 5% (100 shares or more) of such
securities.
ITEM 1. ELECTION OF DIRECTORS
Magna's Certificate of Incorporation, as amended (the "Certificate of
Incorporation"), and By-laws provide for the division of the Board of
Directors into three classes. Approximately one-third of the members of the
Board of Directors are nominated each year to serve as directors for a
three-year term or until their successors shall have been duly elected and
qualified.
Two current directors, Messrs. Wendell J. Kelley and Robert E. McGlynn,
will retire from the Board of Directors effective May 7, 1997. In connection
therewith, pursuant to action previously taken by the Board of Directors, the
total number of directors will be 15, and the holders of Magna's Voting Stock
will vote on the election of five Class III directors to serve for a term of
three years or until their successors shall have been duly elected and
qualified. Under Magna's By-laws, a plurality of the votes cast at the Annual
Meeting will elect the new directors.
Each properly executed proxy in the form enclosed that is received by Magna
prior to the vote will be voted for the five Class III nominees listed below,
except as directed otherwise by the stockholder executing such proxy. The
nominees have been designated as such by the Board of Directors (on the
recommendation of its Nominating Committee), and it is anticipated that all
nominees will be candidates when the Annual Meeting is held. However, if for
any reason any nominee is not a candidate at that time, proxies will be voted
for any substitute nominee designated by the Board of Directors (except where a
proxy withholds authority with respect to the election of directors) or the
Board of Directors may reduce the number of directors to be elected. All
nominees are currently directors of Magna.
Certain information with respect to the nominees and the other directors
whose terms of office will continue after the Annual Meeting is set forth
below. Each of the directors has held the same position or another executive
position with the entity shown or an affiliated entity for at least the past
five years except as otherwise noted.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES.
<TABLE>
<CAPTION>
MAGNA
DIRECTOR
NAME; AGE; PRINCIPAL OCCUPATION OR POSITION SINCE
------------------------------------------- --------
CLASS III (TO BE ELECTED TO SERVE A THREE-YEAR TERM):
<C> <S> <C>
[PHOTO
OF WAYNE T. EWING; 63; Coal Industry Management Consultant, The Ewing Group, since October 1996. 1984
MR. EWING] Prior thereto, Mr. Ewing served as President of Peabody Development Company, a subsidiary
of Peabody Holding Company, until October 1990, as a consultant to Peabody Holding Company
until February 1993, as Executive Vice President--Marketing of Kerr-McGee Coal Corporation,
a subsidiary of Kerr-McGee Corporation, until November 1995 and thereafter as Senior Vice
President of Kerr-McGee Corporation.
[PHOTO
OF JOHN G. HELMKAMP, JR.; 49; Former Chairman of the Board and Chief Executive Officer of River 1996
MR. Bend Bancshares, Inc. ("River Bend"), which was acquired by Magna in February 1996.
HELMKAMP]
2
<PAGE> 6
<CAPTION>
MAGNA
DIRECTOR
NAME; AGE; PRINCIPAL OCCUPATION OR POSITION SINCE
------------------------------------------- --------
<C> <S> <C>
[PHOTO
OF FRANKLIN A. JACOBS; 64; Chairman of the Board and Chief Executive Officer, Falcon Products, 1991
MR. JACOBS] Inc., commercial furniture manufacturer. Mr. Jacobs is a director of Falcon Products, Inc.
and Top Air Manufacturing, Inc.
[PHOTO
OF S. LEE KLING; 68; Chairman of the Board, Kling Rechter & Co., merchant banking. Mr. Kling 1991
MR. KLING] served as Chairman of the Board, and prior to October 1990, Chief Executive Officer, of
Landmark Bancshares Corporation ("Landmark"), which was acquired by Magna in December
1991. Mr. Kling is a director of Bernard Chaus, Inc., E-Systems, Inc., Falcon Products,
Inc., Hanover Direct, Inc., Lewis Galoob Toys, Inc., National Beverage Corp. and Top Air
Manufacturing, Inc.
[PHOTO
OF GEORGE T. WILKINS, JR.; 64; Physician. 1987
MR. WILKINS]
CLASS I (TO CONTINUE IN OFFICE FOR ONE YEAR):
[PHOTO
OF JAMES A. AUFFENBERG, JR.; 46; President and Director of St. Clair AutoMall, Auffenberg 1995
MR. AUFFENBERG] Belleville and Auffenberg Enterprises of Illinois, Inc.
[PHOTO
OF C. E. HEILIGENSTEIN; 67; Attorney, Heiligenstein & Badgley, P.C. 1984
MR. HEILIGENSTEIN]
3
<PAGE> 7
<CAPTION>
MAGNA
DIRECTOR
NAME; AGE; PRINCIPAL OCCUPATION OR POSITION SINCE
------------------------------------------- --------
<C> <S> <C>
[PHOTO
OF CARL G. HOGAN, SR.; 67; Chairman of the Board and Chief Executive Officer, Hogan Motor 1991
MR. HOGAN] Leasing, Inc., a truck leasing and transportation firm.
[PHOTO
OF RALPH F. KORTE; 62; Chairman of the Board, Korte Construction Company, a general construction 1991
MR. KORTE] firm.
[PHOTO
OF FRANK R. TRULASKE, III; 48; Owner and President of True Fitness Technology, Inc., a 1995
MR. TRULASKE] manufacturer of treadmills for residential, commercial and medical use.
CLASS II (TO CONTINUE IN OFFICE FOR TWO YEARS):
[PHOTO
OF G. THOMAS ANDES; 54; Chairman of the Board and Chief Executive Officer of Magna. 1981
MR. ANDES]
[PHOTO
OF DONALD P. GALLOP; 64; Chairman of the law firm of Gallop, Johnson & Neuman, L.C. Mr. Gallop 1991
MR. GALLOP] is a director of Falcon Products, Inc. and Data Research Associates, Inc.
4
<PAGE> 8
<CAPTION>
MAGNA
DIRECTOR
NAME; AGE; PRINCIPAL OCCUPATION OR POSITION SINCE
------------------------------------------- --------
<C> <S> <C>
[PHOTO
OF RANDALL E. GANIM; 43; Certified Public Accountant; Managing Partner, Ganim, 1996
MR. GANIM] Medor, Childers & Hoering, P.C.
[PHOTO
OF ERL A. SCHMIESING; 56; Former Chairman of the Board and Chief Executive Officer of Homeland 1997
MR. SCHMIESING] Bancshares Corporation ("Homeland"), which was acquired by Magna in March 1997.
[PHOTO
OF DOUGLAS K. SHULL; 54; Treasurer and Chief Financial Officer of Casey's General Stores, Inc., 1997
MR. SHULL] a chain of convenience stores located in the Midwest. Mr. Shull is a director of Casey's
General Stores, Inc.
</TABLE>
BOARD OF DIRECTORS AND COMMITTEES
During 1996, there were 13 meetings of the Board of Directors of Magna. All
of the directors attended not less than 75% of the meetings of the Board of
Directors, and of the committees of which they were members, during the period
in which they were directors in 1996.
Magna has a standing Audit and Compliance Committee. The current members of
the Audit and Compliance Committee are Messrs. C. E. Heiligenstein (Chairman),
John G. Helmkamp, Jr., Robert E. McGlynn, Erl A. Schmiesing, who became a member
on March 1, 1997, Frank R. Trulaske, III and George T. Wilkins, Jr. The
committee met four times during 1996. The duties of the Audit and Compliance
Committee include meeting periodically with Magna's independent public
accountants, management and internal auditors to review the work of each and to
ensure that each is properly discharging its responsibilities.
Magna has a standing Compensation Committee. The current members of the
Compensation Committee are Messrs. Wendell J. Kelley (Chairman), James A.
Auffenberg, Jr., Randall E. Ganim, Carl G. Hogan, Sr. and Franklin A. Jacobs.
There were four Compensation Committee meetings during 1996. The report of the
Compensation Committee on executive compensation is contained herein under the
caption "Report of Compensation Committee on Executive Compensation."
Magna has a standing Nominating Committee. The current members of the
Nominating Committee are Messrs. S. Lee Kling (Chairman), Wayne T. Ewing,
Donald P. Gallop, Ralph F. Korte and Douglas K. Shull, who became a member
on March 1, 1997. The committee met two times in 1996. The duties of the
Nominating Committee include
5
<PAGE> 9
the evaluation and recommendation to the Board of qualified nominees for
election as directors of Magna, and other matters pertaining to the size and
composition of the Board. The Nominating Committee will give appropriate
consideration to a written recommendation by a stockholder for the nomination of
a qualified person as a director, provided that such recommendation must contain
certain information regarding the proposed nominee. Stockholder nominations for
director which have not been approved by the Nominating Committee must comply
with certain requirements as set forth in Magna's By-laws prior to submission to
the stockholders at a meeting.
COMPENSATION OF DIRECTORS
DIRECTORS' FEES
Currently, all directors of Magna, except those directors who are officers
of Magna or one of its subsidiaries, receive an annual retainer of $8,000, plus
$1,000 for each meeting of the Board of Directors attended. Directors of Magna
who serve on a committee of the Board of Directors or as Chairman of such
committee receive a fee of $600 or $700, respectively, for each committee
meeting attended. During 1996, directors of Magna also were afforded the
opportunity to obtain medical insurance benefits. The policy premiums for these
benefits were paid by the directors.
DIRECTORS' COMPENSATORY PLANS
Each director may, at such director's option, participate in Magna's
Directors' Survivor Benefit Plan (the "Fee Continuation Plan"). Pursuant to
the Fee Continuation Plan, if the director is serving as a director of Magna at
the time of his death, his designated beneficiaries will be entitled to receive
from Magna an amount of survivors' benefits specified in the participation
agreement of the individual director. No benefits are payable under the Fee
Continuation Plan if the director terminates his service as a director of Magna
or a subsidiary of Magna for any reason prior to his death. In addition, the
payment of benefits under the Fee Continuation Plan may be offset by certain
benefits received by beneficiaries under the former Directors' Deferred
Compensation Plan. The survivors' benefits payable in a particular case are
computed on the basis of actuarial assumptions made at the date of enrollment
of the director in the Fee Continuation Plan. Benefits are payable in equal
monthly installments over ten years. During 1996 the increase in the cash
values of the insurance policies funding the Fee Continuation Plan approximated
the cost of premiums paid by Magna. The Directors' Deferred Compensation Plan
was terminated in 1996 with respect to new and continuing participation, but
will provide benefits to former participants upon retirement, disability for 12
consecutive months or other termination of service based upon the amount of
compensation previously deferred and the amount of interest credited thereto.
Magna maintains the Directors' Stock Option Plan, which was approved by the
stockholders in 1992 and subsequently amended and restated by the Board of
Directors in 1996 (the "1992 Directors' Plan"). The 1992 Directors' Plan
provides for the granting of non-qualified stock options to the non-employee
directors of Magna, pursuant to a formula which determines the number of shares
which will be subject to the options granted. The exercise price of an option
is the fair market value of a share of Common Stock on the date of grant. On
May 2, 1996, each non-employee director of Magna received an option to purchase
906 shares of Common Stock at an exercise price of $22.00 per share. In each
subsequent year, on the first business day after the annual meeting, each
director will receive an option to purchase a number of shares of Common Stock
determined by dividing the average of the annual directors' fees (including
committee fees) of all non-employee directors who have served continuously
during the past year by the fair market value of the Common Stock on the date
of grant. All non-employee directors serving on the date of grant shall be
entitled to receive a grant of an option to purchase the full number of shares
determined under the formula described above. The options become exercisable at
the rate of 33%, 67% and 100% of the total grant on each of the first, second
and third anniversaries, respectively, of the date of grant and have a term of
ten years. Options outstanding and unexercised at the time the holder ceases to
be an outside director of Magna will terminate on the earlier of (i) the
expiration date or (ii) 24 months after the month in which the holder ceases to
be an outside director of Magna.
Magna also maintains the 1996 Directors' Stock Option Plan, which was
approved by the stockholders in 1996 and subsequently amended and restated by
the Board of Directors in 1996 (the "1996 Directors' Plan"). The 1996
Directors' Plan provides that each non-employee director of Magna, on the first
business day after the date of the annual meeting of stockholders in each year,
will be granted an option to acquire 1,000 shares of Common Stock at the fair
market value of Common Stock on such date. With respect to options granted in
1996, each option will
6
<PAGE> 10
become exercisable at the rate of one-third of the number of shares subject
thereto on the first anniversary of the date of grant and the remainder of the
option will become exercisable on the second anniversary of the date of grant.
Options granted in 1997 will not be exercisable during the first year after the
date of grant; however, such options will become fully exercisable on the first
anniversary of the date of grant. Options granted in 1998 or thereafter will be
fully exercisable as of the date of grant. Options outstanding and unexercised
at the time the holder ceases to be an outside director of Magna terminate on
the earlier of (i) the expiration date or (ii) 24 months after the month in
which the holder ceases to be an outside director of Magna.
In 1994, Magna adopted the Magna Group, Inc. Board of Directors' Retirement
Plan (the "Directors' Retirement Plan"), which has since been terminated. The
Directors' Retirement Plan provided for the payment of a retirement benefit to
each director of Magna who has completed five years of service as a director to
Magna (or as a director of an organization acquired by Magna). Such retirement
benefits are payable to a director in the event of (i) retirement of the
director from the Board of Directors on or after such director having attained
age seventy or (ii) termination of the director within one year following a
change in control of Magna. A director entitled to benefits under the Directors'
Retirement Plan will receive an annual payment equal to the retainer fee ($8,000
as of January 1, 1996) in effect at the time such director terminated their
position as a director of Magna until the sooner to occur of the death of the
director or the number of years (up to a maximum of ten years) the director
served as a director of Magna (or on the board of directors of any company
acquired by Magna). The Directors' Retirement Plan was terminated effective
September 1, 1996 as to all current and future directors of Magna, and any
accrued benefits with respect to current directors as of such date were
transferred to the Magna Group, Inc. Directors' Deferred Plan, which was adopted
by the Board of Directors on August 21, 1996 and effective September 1, 1996
(the "1996 Deferred Plan").
On August 21, 1996, the Board of Directors adopted the 1996 Deferred Plan
which provides that any accrued benefit of any current director of Magna under
the Directors' Retirement Plan as of September 30, 1996 would be transferred to
the 1996 Deferred Plan and Magna would establish a stock unit account for each
such director that would be credited with a number of stock units equal to the
accrued benefit transferred to the 1996 Deferred Plan divided by the fair
market value of Common Stock on September 30, 1996. In addition, each stock
unit account will be credited with a number of stock units equal to the
per-share dividend payable with respect to a share of Common Stock multiplied
by the number of stock units held in such stock unit account as of the first
business day prior to such dividend payment date divided by the fair market
value of the Common Stock on such date (the "Dividend Stock Units"). No other
amounts will be paid or credited to any stock unit account. The time and form
of distribution from a director's stock unit account will be governed by the
terms of such director's irrevocable election made on or before December 31,
1996, which election permitted a single sum distribution or an annual
distribution over a period of not to exceed 10 years (each distribution being
payable in a whole number of shares of Common Stock and a cash payment for any
fractional share interest).
On August 21, 1996, the Board of Directors also adopted the Magna Group,
Inc. Directors Deferred Compensation Plan (the "1996 Deferred Compensation
Plan") which provides for the deferral by a non-employee director of Magna of
all or any portion of a retainer, committee chair and/or meeting fees payable
by Magna or any of its subsidiaries (the "Fees"). Such Fees will be credited
to a bookkeeping reserve account and converted into a number of stock units
equal to 125% of the Fees divided by the fair market value of a share of Common
Stock on the last day of the month in which such Fees would have been paid but
for the deferral. Such stock units will then be credited to a participating
director's stock unit account. Additionally, each stock unit account will be
credited with any Dividend Stock Units. On or before December 31 of each
calendar year, a director is permitted to make an irrevocable election with
respect to the deferral of Fees for the following year. Distributions may be
made in a single sum distribution or an annual distribution over a period of
not to exceed 10 years (each distribution being payable in a whole number of
shares of Common Stock and a cash payment for any fractional share interest).
The director must elect the form of distribution with respect to the Fees being
deferred pursuant to each deferral election and may elect a different form of
distribution for the Fees being deferred pursuant to each such election.
7
<PAGE> 11
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The law firm of Gallop, Johnson & Neuman, L.C., of which Mr. Donald P.
Gallop is a member, provided legal services to Magna or its subsidiaries during
1996. This firm is providing legal services to Magna or its subsidiaries during
1997.
During 1996, Magna entered into various construction contracts with Korte
Construction Company, of which Mr. Ralph F. Korte, a director of Magna, is
Chairman of the Board, pursuant to which Korte Construction Company was paid
approximately $959,000 with respect to the renovation and/or expansion of
certain banking facilities. In connection with such projects, Korte
Construction Company provided various consultation and other services in the
design phase of the projects and, during the construction phase of the
projects, was responsible for all aspects of coordination and construction of
the projects. Magna believes that the terms of these contracts were typical for
agreements of this type and commensurate with those that could have been
obtained from unrelated parties.
In connection with the acquisition of Homeland, Magna entered into a letter
agreement (the "Letter Agreement") with Mr. Erl A. Schmiesing, the former
Chairman, President and Chief Executive Officer of Homeland and a current
director of Magna, pursuant to which Magna agreed (i) to pay Mr. Schmiesing
annual compensation payments equal to $261,714 for three years beginning July
1, 1997, (ii) to allow Mr. Schmiesing and his wife to participate in Magna's
health insurance plan, at their sole expense, until March 2005, (iii) that
Mr. Schmiesing would receive, pursuant to the terms of the Homeland Supplemental
Retirement Income Plan, $94,039 annually for fifteen years, (iv) to maintain
Mr. Schmiesing's current country club membership for three years and (v) to
appoint Mr. Schmiesing to the Board of Directors for a term of three years. The
amounts due pursuant to the Letter Agreement are in lieu of any and all amounts
to which Mr. Schmiesing was entitled pursuant to his severance agreement with
Homeland. In addition, pursuant to the Letter Agreement, Mr. Schmiesing agreed
not to become associated with any business enterprise in substantial direct
competition with Magna for a period ending three years after Mr. Schmiesing
ceases to be a member of the Board of Directors.
In connection with the acquisition of River Bend, Magna entered into a
Supplemental Agreement (the "Supplemental Agreement") with Mr. John G.
Helmkamp, Jr., the former Chairman and Chief Executive Officer of River Bend
and a current member of the Board of Directors of Magna, pursuant to which
Magna agreed to allow Mr. Helmkamp and his wife and children to participate in
Magna's health insurance plan, at Mr. Helmkamp's sole expense, and to provide
Mr. Helmkamp with an office, telephone, mail and secretarial service until Mr.
Helmkamp attains the age of 65. In addition, pursuant to the Supplemental
Agreement, Mr. Helmkamp agreed not to become associated with any business
enterprise in substantial direct competition with Magna for a period ending
three years after Mr. Helmkamp ceases to be a member of the Board of Directors.
In connection with its acquisition of Landmark, Magna assumed the
employment agreement of Mr. S. Lee Kling. The agreement provided that upon Mr.
Kling's retirement, which was effective June 30, 1994, Mr. Kling would be
entitled to payments for ten years thereafter equal to one-half of his total
average annual compensation for the five years prior to retirement (and whereby
his annual compensation for the years 1991, 1992 and 1993 was deemed to equal
$375,000 per year) less payments due to Mr. Kling under any retirement plans.
Pursuant to such employment agreement, Mr. Kling will receive annual
compensation payments equal to $130,246 through June 30, 2004. Magna also
assumed the obligation to pay amounts due Mr. Kling under Landmark's retirement
plans, including its former Supplemental Retirement Plan. All medical,
hospitalization and life insurance coverage (other than a split-dollar
insurance policy) provided to Mr. Kling during his employment will be continued
at Magna's expense for the remainder of Mr. Kling's life.
Certain of the executive officers, directors and some of their associates
and affiliated businesses are and have been customers of Magna's subsidiary
banks and have had and are expected to have transactions with such banks in the
ordinary course of business. All such transactions were made in the ordinary
course of business on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable transactions
with other persons. In the opinion of management, such transactions did not
involve more than the normal risk of collectibility or present other
unfavorable or unusual features. The percentage of stockholders' equity
represented by loans to executive officers and directors and certain of their
associates and affiliated businesses was 13.8% at December 31, 1996.
8
<PAGE> 12
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS OF MAGNA HAS ISSUED THE
FOLLOWING REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996.
COMMITTEE RESPONSIBILITIES:
The Compensation Committee of the Board of Directors of Magna (the
"Committee") is responsible for the following matters with respect to the
compensation of executive officers of Magna and its subsidiaries:
* Reviews and recommends the base salaries of the executive officers of
Magna and its subsidiaries;
* Reviews and recommends all aspects of Magna's annual incentive
compensation plan;
* Administers all aspects of Magna's non-trustee, stock-based compensation
and purchase plans;
* Reviews and recommends all employment related agreements and amendments
thereof;
* Reviews and recommends all aspects of Magna's retirement plans and
Savings and Stock Investment Plan;
* Reviews and recommends all supplemental compensation or benefits; and
* Reviews, approves and authorizes the process and substance of all other
aspects of compensation.
The Committee continually monitors market practices and trends, and makes
revisions as necessary to ensure that Magna's programs are adequate to attract
and retain the best possible executive talent.
STATEMENT OF POLICY
Magna's executive compensation program is designed to be closely linked to
corporate performance and returns to stockholders. To this end, Magna has
developed an overall compensation strategy and specific compensation plans that
tie a significant portion of executive compensation to Magna's success in
meeting specified performance goals and to appreciation in the Common Stock
price.
The overall objectives of Magna's executive compensation strategy are:
* To attract and retain the best possible executive talent;
* To provide additional incentives to these executives to achieve the goals
inherent in Magna's business strategy;
* To link executive and stockholder interests through equity based plans;
and
* To provide a compensation package that recognizes individual
contributions as well as overall business results.
Each year the Committee conducts a full review of Magna's executive
compensation program. This review includes a comprehensive report from an
independent compensation consultant assessing the effectiveness of Magna's
compensation program and comparing Magna's executive compensation and corporate
performance to a peer group of bank holding companies of comparable market
capitalization as well as selected bank holding companies operating in the St.
Louis marketplace.
The Committee reviews the selection of peer companies used for compensation
analysis. This peer group is currently comprised of fourteen bank holding
companies of comparable market capitalization, nine of which represent a
sub-set of the companies used to prepare the performance graph contained
herein, and five of which are comparable companies traded on the New York Stock
Exchange. It also reviews the compensation of selected bank holding companies
in the St. Louis marketplace. The Nasdaq Bank Stock Index and The Dow Jones
Bank Index used to prepare the performance graph include companies of various
sizes. The annual compensation review permits an ongoing evaluation of the link
between Magna's performance and its executive compensation practices within the
context of the compensation programs of other companies.
9
<PAGE> 13
The basic elements of Magna's executive compensation packages are base
salary, annual incentive compensation and long term incentive compensation. The
Committee's policies with respect to each of these elements, including the
basis for the compensation awarded to Mr. G. Thomas Andes, Magna's Chief
Executive Officer, are discussed below. In addition, while the elements of
compensation described below are considered separately, the Committee takes
into account the full compensation package afforded by Magna to each
individual, including pension benefits, supplemental retirement benefits,
insurance and other benefits. All actions of the Committee with respect to
executive compensation in 1996 were subsequently unanimously approved by the
Board of Directors.
IRC SECTION 162(m)
The Committee has considered Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code"), regarding qualifying compensation paid to
Magna's executive officers for deductibility in structuring compensation
arrangements for 1996. The Committee intends to make every effort to ensure
that all compensation awarded to Magna's executives is fully deductible, except
where Magna has or may determine to pay an excise tax as provided in Section
4999 of the Code or related income tax liabilities. See "Change in Control and
Termination Arrangements" herein.
BASE SALARY
The Committee's approach to base compensation for Magna's executives,
including the Chief Executive Officer and the named executives in the Summary
Compensation Table, has been to offer base salaries which are competitive after
reviewing Magna's peer group and selected St. Louis bank holding companies.
However, in November 1995, Mr. Andes, Magna's Chief Executive Officer,
recommended to the Committee that it depart from its historic method of setting
base salaries. Mr. Andes reported to the Committee that in his view Magna's
performance, as reflected in results then-anticipated for fiscal 1995, was not
comparable to institutions in the St. Louis marketplace and in peer groups to
which Magna's results have been compared. Mr. Andes stated his view that unless
Magna were to achieve comparable performance the stockholders were not being
well served. Based upon this, he recommended to the Committee that the total
compensation package of Magna's executives be changed to place a greater
emphasis on incentive compensation and suggested that the base salaries for
1996 for substantially all the 50 most highly compensated officers of Magna
be the same as the base salaries for 1995. He also recommended adjustments to
the annual bonus compensation portion of such executives' total compensation
package. The Committee, and subsequently the Board of Directors, unanimously
approved Mr. Andes' proposal and adopted it as the base line for compensation in
1996.
ANNUAL INCENTIVE COMPENSATION
Magna's historic practice has been to determine desired annual earnings
based on achievable goals expressed as a per share dollar amount. To the extent
Magna achieved its goal, after a threshold level was reached, a bonus was paid
to designated executive officers. As part of the base line program described
above, the Committee modified the manner in which bonuses were determined for
Magna's 50 most highly compensated officers. In 1996, a two part test was used,
in which the achievement of an earnings per share goal, established by the
Committee, accounted for up to 80% of the bonus amount (with additional
percentage points added for company performance in excess of the targeted
earnings goal) and the achievement of individual goals accounted for the
remaining 20%. After the two elements were added, the resulting percentage was
multiplied by a percentage of base salary used to determine individual
responsibility for Magna's results of operations. This percentage was 60% for
Mr. Andes and 45% for all other executive officers. Awards determined
under the foregoing formula could then be adjusted upwards or downwards by as
much as 20%, to reflect the quantity and quality of individual efforts. In Mr.
Andes' case, the adjustment would be made by the Committee in its collective,
subjective judgment. In the case of all other executive officers, the adjustment
would be made by Mr. Andes in his subjective judgment. In addition, the
threshold level required to be met before any bonus was paid was increased to
95% of the targeted earnings per share goal.
In 1996, the threshold level and the target amount were exceeded.
Accordingly, a percentage of 81% was used in the bonus calculation for company
performance. In addition, the Committee approved the award of the remaining 20%
to each eligible participant, reflecting the substantial achievement of
individual goals. The resulting amounts, calculated under the method described
above, were in the case of all other executive officers, subsequently reviewed
by Mr. Andes, and, in certain cases, increased, in accordance with the authority
granted to him by the Committee. The
10
<PAGE> 14
Committee believes that the payment of the bonus amounts in 1996 was fully
justified, given the substantial challenge of meeting the earnings per share
goal set for 1996 and the fact that such goal was exceeded. The Committee also
believes that the greater emphasis placed on incentive compensation was
effective in reaching Magna's goals.
LONG TERM INCENTIVE COMPENSATION
Magna maintains, for senior officers of Magna and its subsidiaries, certain
stock-based compensation plans which allow the Committee to award the
individuals it selects stock options, stock appreciation rights, restricted
stock and performance shares. Awards under Magna's stock-based compensation
plans directly link potential participant rewards to increases in stockholder
value.
Magna historically has provided the majority of its stock-based
compensation in the form of stock options. Stock options are granted with an
exercise price equal to the market price of Common Stock on the date of the
grant and become exercisable within a two-year period. This approach is
designed to encourage the creation of stockholder value and the retention of
the executives over the long term, as this element of the compensation package
has value only to the extent that stock price appreciation occurs.
To further motivate the executives, the Committee reaffirmed its guidelines
for executive stock ownership. The program establishes levels of stock
ownership expressed as a multiple of base salary. These levels are as follows:
<TABLE>
<S> <C>
Chairman and CEO 5 times base salary
President and COO 4 times base salary
Executive Vice President 3 times base salary
Other Senior Executives 2 times base salary
Other Executives 1 times base salary
</TABLE>
It is the Committee's expectation that these levels of ownership will be
attained by October 2000 for those executives who have held their position for
at least five years. The stock ownership requirement can be met with shares
beneficially owned by the executive, shares allocated to the executive through
Magna's 401(k) plan, shares purchased through the Employee Stock Purchase Plan
and restricted stock awards. Unexercised stock options do not apply toward the
ownership guidelines.
The total number of options granted to Magna's executive officers in
September 1996 was determined pursuant to the recommendations of an independent
compensation consultant and the Committee's collective, subjective judgment as
to individual performance on a qualitative basis. In making this determination,
the Committee considered (without assignment of relative weights) the
recommendations of Mr. Andes as to such personal qualities of the executive
officers (other than himself) as leadership, team-building, the ability to
respond effectively to change in Magna and the industry and to creatively
satisfy changing market demands, all considered in the context of Magna's
performance during 1996. The Committee considered the amount of options already
held by the executive officers in determining the amount of the 1996 grants.
In view of Mr. Ronald A. Buerges' appointment as Executive Vice President
and Chief Financial Officer of Magna in April 1996 and in order to better align
his compensation to that of Magna's other executive vice presidents, the
Committee determined to make a conditional award of 10,000 shares of restricted
stock to Mr. Buerges. This award was of the same number of shares as granted to
other executive vice presidents in 1995 and 1994, but reflected the
then-current market price of the Common Stock.
Ms. Linda K. Fabel and Mr. Robert M. Olson, Jr. were each issued 8,000
shares of restricted stock pursuant to awards made to them in 1994 under
Magna's 1992 Amended and Restated Long Term Performance Plan, which awards
provided that shares of restricted stock would be issued only if certain target
share prices for the Common Stock were attained by December 30, 1998. The
restricted shares were issued, in blocks of 3,000 and 5,000 shares,
as a result of the Common Stock reaching and maintaining a price of at
least $25.00 and $28.00, respectively, for twenty consecutive trading days.
Similarly, in 1996, 2,000 shares of restricted stock were issued to Mr. David D.
Harris pursuant to an award made to him in 1995 under Magna's 1992 Amended and
Restated Long Term Performance Plan, which award provided that shares of
restricted stock would be issued only if certain target share prices for the
Common Stock were attained by December 31, 1999. The restricted shares were
issued as a result of the Common Stock reaching and maintaining a price of at
least $28.00, for twenty consecutive trading days.
11
<PAGE> 15
CEO COMPENSATION
At the November 1995 Committee meeting, Mr. Andes' base salary was
reviewed. Based on Mr. Andes' recommendation that salaries for senior officers
for 1996 be the same as those for 1995, the Committee recommended, and the
Board of Directors unanimously approved, no increase in Mr. Andes' base salary
of $375,000.
Mr. Andes' 1996 bonus award was $171,266 in cash, plus $58,292 in the form
of 1,976 shares of restricted stock. This award was equal to 61% of his 1996
base salary and was determined based on Magna's performance exceeding the
targeted earnings per share goal and the substantial achievement of the
individual performance goals.
Mr. Andes received a stock option grant to purchase 40,000 shares at
$26.00, the fair market value on the date of grant. The Committee considered the
amount of options already held by Mr. Andes in making such awards. The
Committee believes that Mr. Andes' stock option grant continues to align his
compensation more directly with the interests of Magna's stockholders.
Similarly, the Committee granted a restricted stock award to Mr. Andes
totaling 50,000 shares of Common Stock, which award provides that shares of
restricted stock will be issued only if certain target share prices for the
Common Stock are attained by March 10, 2000. This award directly links Mr.
Andes' total potential compensation to the appreciation in Magna's Common Stock
price and increases his potential ownership position in Magna. In 1996, Mr.
Andes was issued 12,500 shares of restricted stock under this award as a result
of the Common Stock reaching and maintaining an average price of at least
$29.00 for twenty consecutive trading days.
CONCLUSION
Through the programs described above, a significant portion of Magna's
executive compensation is linked directly to individual and corporate
performance and stock price appreciation. The Committee intends to continue the
policy of linking executive compensation to individual and corporate
performance and returns to stockholders, recognizing that the business cycle
from time to time may result in an imbalance for a particular period.
THE MEMBERS OF
THE COMPENSATION COMMITTEE
Wendell J. Kelley, Chairman
James A. Auffenberg, Jr.
Randall E. Ganim
Carl G. Hogan, Sr.
Franklin A. Jacobs
March 31, 1997
12
<PAGE> 16
COMPENSATION OF EXECUTIVE OFFICERS
Unless otherwise indicated, the following table sets forth the compensation
of Magna's Chief Executive Officer, the four most highly compensated executive
officers, other than the Chief Executive Officer, and each individual who would
have been one of the four most highly compensated executive officers had they
been serving as an executive officer at December 31, 1996, for each of the last
three years:
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
---------------------------------------------------------------------------------
ALL OTHER
OTHER RESTRICTED SECURITIES COM-
ANNUAL STOCK UNDERLYING LTIP PENSA-
NAME AND SALARY BONUS COMPENSATION AWARD(S) OPTIONS/SARS PAYMENTS TION
PRINCIPAL POSITION YEAR ($) ($) ($) ($)<F1> (#) ($) ($)
------------------ ---- ------ ----- ------------ ---------- ------------ -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
G. Thomas Andes, 1996 375,000 171,266 9,238 58,292 40,000 368,750 20,496<F2>
Chairman and Chief 1995 375,000 128,870 5,375 42,940 32,252 356,250 20,138
Executive Officer 1994 323,400<F3> 98,365 4,012 32,777 34,258 175,000 13,700
Linda K. Fabel, 1996 190,000 65,106 1,245 22,125 10,000 236,000 10,275<F4>
Executive Vice President, 1995 190,000 45,712 635 15,224 15,048 47,500 10,029
Retail Banking 1994 185,000 46,416 350 15,453 13,416 0 8,135
Robert M. Olson, Jr. 1996 182,500 62,519 430 21,269 10,000 236,000 9,123<F5>
Executive Vice President, 1995 182,500 43,900 132 14,630 14,483 47,500 8,858
Operations and Technology 1994 116,667<F6> 43,894 31,736<F7> 14,630 12,777 0 11,524
David D. Harris, 1996 173,000 59,278 623 20,148 10,000 59,000 9,921<F8>
Executive Vice President, 1995 173,000 40,711 887 13,561 13,720 0 9,691
Credit Administration 1994 163,000 46,050 114 15,347 11,925 0 8,799
Ronald A. Buerges, 1996 152,750 59,618 186 20,266 15,000 0 5,590<F9>
Executive Vice President 1995 108,000 11,759 0 3,895 2,400 0 4,310
and Chief Financial Officer 1994 100,000 10,763 0 3,570 2,400 0 4,202
<FN>
- - ---------
<F1> Represents the dollar value of shares of restricted stock issued in lieu of
cash compensation payable under Magna's annual incentive compensation plan.
The aggregate value of restricted stock holdings for the individuals named
in the Summary Compensation Table at the end of the last completed fiscal
year was $215,143 for Mr. Andes, $91,214 for Ms. Fabel and $64,103, $84,045
and $31,122 for Messrs. Olson, Harris and Buerges, respectively, based upon
a per share price of $29.50 being the last transaction price on December
31, 1996. The aggregate number of shares of restricted stock held by the
individuals named in the Summary Compensation Table at the end of the last
completed fiscal year was 7,293 for Mr. Andes, 3,092 for Ms. Fabel, 2,173
for Mr. Olson, 2,849 for Mr. Harris and 1,055 for Mr. Buerges. The
restrictions applicable to such restricted stock holdings lapse upon the
earliest of (i) the date on which the executive's employment with Magna
ends by reason of retirement, death or disability, (ii) the date on which
a Change in Control of Magna (as described herein under "Change in Control
and Termination Arrangements") occurs or (iii) within five years of the
date of award. The holders thereof are entitled to receive dividends on
their shares to the same extent as other holders of the Common Stock.
The foregoing amounts do not include (i) 50,000 shares of restricted stock
subject to an award made to Mr. Andes in 1992 under Magna's 1992 Amended
and Restated Long Term Performance Plan (the "1992 Performance Plan"),
which award provided that shares of restricted stock would be issued only
if certain target share prices for the Common Stock were attained by March
9, 1996, or (ii) 50,000 shares of restricted stock subject to an award made
to Mr. Andes in 1996 under Magna's 1996 Amended and Restated Long Term
Performance Plan (the "1996 Performance Plan"), which award provided that
shares of restricted stock would be issued only if certain target share
prices for the Common Stock were attained by March 10, 2000. During 1994
and 1995, 10,000 and 15,000 shares, respectively, of restricted stock were
issued to Mr. Andes under the 1992 award. During 1996, 12,500 shares of
restricted stock were issued to Mr. Andes under the 1996 award. Based upon
a per share price of $29.50, the aggregate value of such 37,500 shares at
December 31, 1996 was $1,106,250. Pursuant to the terms of the Mr. Andes'
Restricted Stock Agreement, the remaining 25,000 shares of restricted
stock subject to the 1992 award were forfeited on March 9, 1996.
The foregoing amounts do not include 10,000 shares of restricted stock
subject to awards made to each of Ms. Fabel and Mr. Olson in 1994 under
the 1992 Performance Plan, which awards provided that shares of
restricted stock would be issued only if certain target share prices for
the Common Stock are attained by December 30, 1998. During 1995 and 1996,
2,000 and 8,000 shares, respectively, of restricted stock were issued to
each of Ms.
13
<PAGE> 17
Fabel and Mr. Olson under these awards. Based upon a per share price of
$29.50, the aggregate value of such shares at December 31, 1996 was
$295,000 for each of Ms. Fabel and Mr. Olson.
The foregoing amounts do not include 10,000 shares of restricted stock
subject to an award made to Mr. Harris in 1995 under the 1992 Performance
Plan or 10,000 shares of restricted stock subject to an award made to Mr.
Buerges in 1996 under the 1996 Performance Plan. During 1996, 2,000 shares
of restricted stock were issued to Mr. Harris under his award. Based upon a
per share price of $29.50, the aggregate value of such shares at December
31, 1996 was $59,000. See "Long Term Incentive Plans--Awards in Last
Fiscal Year."
<F2> Includes the following: $2,003 for split-dollar life insurance, $3,354 for
premiums paid by Magna on a carve-out life insurance policy owned by the
executive which builds cash value, $12,268 in matching contributions to
Magna's Executive Supplemental Deferral Plan and $2,871 in matching
contributions to Magna's Savings and Stock Investment Plan.
<F3> Includes $18,400 in fees for serving on the Board of Directors during 1994.
<F4> Includes the following: $3,168 for premiums paid by Magna on a carve-out
life insurance policy owned by the executive which builds cash value,
$4,221 in matching contributions to Magna's Executive Supplemental Deferral
Plan and $2,886 in matching contributions to Magna's Savings and Stock
Investment Plan.
<F5> Includes the following: $2,266 for premiums paid by Magna on a carve-out
life insurance policy owned by the executive which builds cash value,
$3,943 in matching contributions to Magna's Executive Supplemental Deferral
Plan and $2,914 in matching contributions to Magna's Savings and Stock
Investment Plan.
<F6> Mr. Olson joined Magna early in 1994 and became an executive officer of
Magna at that time. Accordingly, compensation information for the year 1994
relates only to the period Mr. Olson was employed by Magna.
<F7> Includes a one-time fee of $27,620 paid in connection with a country club
membership.
<F8> Includes the following: $3,509 for premiums paid by Magna on a carve-out
life insurance policy owned by the executive which builds cash value,
$1,912 in matching contributions to Magna's Executive Supplemental Deferral
Plan and $4,500 in matching contributions to Magna's Savings and Stock
Investment Plan.
<F9> Includes the following: $796 for premiums paid by Magna on a carve-out life
insurance policy owned by the executive which builds cash value, $968 in
matching contributions to Magna's Executive Supplemental Deferral Plan and
$3,826 in matching contributions to Magna's Savings and Stock Investment
Plan.
</TABLE>
CHANGE IN CONTROL AND TERMINATION ARRANGEMENTS
Each of the executive officers named in the Summary Compensation Table, and
certain other executive officers of Magna, have individual agreements under
which each such executive officer will receive severance benefits in certain
circumstances either prior to (with respect to Mr. Andes) or after (with
respect to all executive officers) a "Change in Control" (as defined below)
of Magna. The employment agreement of Mr. Andes is for a term through December
31, 1999. The agreements of the other executive officers continue until
terminated pursuant to their terms or December 31 of any calendar year if
notice is given, by December 1 of such year, by either party of such party's
intention not to renew the agreement.
If prior to a Change in Control of Magna, Magna terminates the employment
of Mr. Andes without "cause" (generally, willful failure to perform his
duties, willful misconduct injurious to Magna or a material breach of the
agreement) or if Mr. Andes terminates his employment with "good reason" (as
defined below), Magna will be required to pay severance benefits to Mr. Andes
in an amount equal to Mr. Andes' then-current annual salary through December
31, 1999. Additionally, Mr. Andes would be entitled to the continuation of
certain welfare benefits to which he otherwise would have been entitled through
December 31, 1999. In the event Mr. Andes became reemployed, the obligation of
Magna to provide such welfare benefits would be secondary to the obligation of
Mr. Andes' new employer to provide any such benefit. The agreements with the
other executive officers do not provide for the payment of severance or welfare
benefits if such officers are terminated prior to a Change in Control of Magna.
The employment agreement of Mr. Andes and the agreements of Ms. Fabel and
Messrs. Olson, Harris and Buerges and certain other executive officers provide
substantially similar protection in the event of a termination of the executive
officer's employment after a Change in Control of Magna but differ somewhat in
the severance payments made available to such executive officers. "Change in
Control" is defined in the agreements to mean, generally, (i) the acquisition
by any person of 20% or more of the then outstanding voting power of Magna;
(ii) a change in the composition of Magna's Board of Directors such that during
any two consecutive years incumbent directors and their nominees do not
constitute a majority of the Board; (iii) a reorganization, merger or
consolidation of Magna unless owners of all of the Common Stock or voting
securities of Magna prior to such event own voting securities of the surviving
corporation following such event in the same proportions as they owned Magna
voting
14
<PAGE> 18
securities prior to such event; (iv) a merger or consolidation in which Magna
is the surviving corporation and the holders of Magna's Common Stock do not own
at least 50% (70% in the case of Mr. Andes) of the stock of the surviving
corporation; (v) any sale, lease, exchange or transfer of all, or substantially
all, of the assets of Magna; or (vi) the liquidation or dissolution of Magna.
If an executive officer terminates his or her employment with Magna or the
successor corporation for "good reason" (generally, the assignment of duties
inconsistent with the executive's position, a material diminution in authority
or responsibilities, a reduction in any benefit specified in the agreement, any
material breach of the agreement by Magna, or, within one year following the
Change in Control, resignation by the executive in his or her sole and absolute
discretion), or if Magna or the successor corporation terminates the executive
officer's employment without cause within two years after the Change in Control
of Magna, Magna or the successor corporation will be required to pay severance
benefits. In the case of Mr. Andes, Magna or its successor will be required to
pay a lump-sum cash amount equal to 2.99 times his "cash compensation" (as
defined in his employment agreement) for the most recent calendar year prior to
the Change in Control. If the receipt of benefits upon a Change in Control of
Magna subjects Mr. Andes to any Federal excise tax pursuant to Section 4999 of
the Code, Magna also will be obligated to pay him an additional amount equal to
the entire excise tax due. In the case of the other executive officers, Magna
or its successor will be required to pay a lump-sum cash amount equal to two
times the executive officer's "annual base salary" plus the executive
officer's "incentive bonus" (each as defined in the agreements). The cash
payments to the executive officers (other than Mr. Andes) are subject to
reduction to the extent that such payment would require the executive officer
to pay a Federal excise tax under the Code.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning stock option grants
made in the fiscal year ended December 31, 1996 to the individuals named in the
Summary Compensation Table. No SARs were granted to the named individuals in
1996.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT
--------------------------------------------------------------- ASSUMED ANNUAL
NUMBER OF PERCENT OF TOTAL RATES OF STOCK PRICE
SECURITIES OPTIONS/SARS EXERCISE APPRECIATION FOR
UNDERLYING GRANTED TO OR BASE OPTION TERM<F1>
OPTIONS/SARS EMPLOYEES IN PRICE<F3> EXPIRATION -------------------
NAME GRANTED<F2>(#) FISCAL YEAR ($/SH) DATE<F4> 5%($) 10%($)
---- -------------- ---------------- --------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
G. Thomas Andes.................... 40,000 12.54 26.00 Sept. 17, 2006 654,000 1,657,600
Linda K. Fabel..................... 10,000 3.13 26.00 Sept. 17, 2006 163,500 414,400
Robert M. Olson, Jr................ 10,000 3.13 26.00 Sept. 17, 2006 163,500 414,400
David D. Harris.................... 10,000 3.13 26.00 Sept. 17, 2006 163,500 414,000
Ronald A. Buerges.................. 15,000 4.70 26.00 Sept. 17, 2006 245,250 621,600
<FN>
- - ---------
<F1> The indicated 5% and 10% rates of appreciation are provided to
comply with Securities and Exchange Commission regulations and do
not necessarily reflect the views of Magna as to the likely trend
in Magna's Common Stock price. The effect of 5% and 10% rates of
appreciation on Common Stock held for ten years is demonstrated
by the following: a share of Common Stock purchased on September
18, 1996 at a price per share of $26.00 and held until September
17, 2006 would have a value of $42.35 at a 5% rate of
appreciation, and a value of $67.44 at a 10% rate of
appreciation. Actual gains, if any, on stock option exercises and
Common Stock holdings will be dependent on, among other things,
the future performance of the Common Stock and overall market
conditions. There can be no assurance that the amounts reflected
herein will be achieved. Additionally, these values do not take
into consideration the provisions of the options providing for
nontransferability or delayed exercisability.
<F2> Each option became exercisable with respect to 33% and will be
exercisable with respect to 67% of the total number of shares subject to
the option on March 17, 1997 and September 17, 1997, respectively, and
after September 17, 1998 will be exercisable as to all such shares. On a
Change in Control of Magna, as described herein under "Change in Control
and Termination Arrangements," and upon death, disability or retirement,
all options become fully exercisable.
15
<PAGE> 19
<F3> The exercise price may be paid in cash or, at the discretion of the
Committee, by shares of Common Stock already owned or to be issued
pursuant to the exercise, valued at fair market value on the date of
exercise, or a combination of cash and Common Stock.
<F4> The options terminate on the earlier of ten years after grant or,
generally, immediately on termination for reasons other than
retirement, disability or death.
</TABLE>
LONG TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
The following table sets forth information concerning shares of restricted
stock subject to awards made to Messrs. Andes and Buerges in 1996 pursuant to
the 1996 Performance Plan. The shares of restricted stock subject to such
awards will be forfeited if certain target share prices for the Common Stock
are not attained by certain specified dates, as described below.
<TABLE>
<CAPTION>
NUMBER OF PERFORMANCE OR
SHARES, UNITS OTHER PERIOD
OR OTHER UNTIL MATURATION
NAME RIGHTS OR PAYOUT
---- ------------- ----------------
<S> <C> <C>
G. Thomas Andes<F1>................................. 50,000 Through March 10, 2000
Ronald A. Buerges<F2>............................... 10,000 Through December 18, 2000
<FN>
- - --------
<F1> Restricted stock vests as follows: 25% if the average closing stock
price of the Common Stock is at least $29.00 for 20 consecutive trading
days; 50% if the average closing stock price of the Common Stock is at
least $32.00 for 20 consecutive trading days; 75% if the average
closing stock price of the Common Stock is at least $35.00 for 20
consecutive trading days; and 100% if the average closing stock price
of the Common Stock is at least $39.00 for 20 consecutive trading days.
Shares of restricted stock subject to the award will be issued if such
price is reached before the earliest to occur of (i) the date on which
Mr. Andes' employment with Magna ends, (ii) the date on which a Change
in Control (as described herein under "Change in Control and
Termination Arrangements") or (iii) the first business day after March
10, 2000, unless such date occurs during a valuation period in which a
price set forth above is met on one or more occasions, in which event
the date will be extended and mean a date including and ending 19
consecutive trading days thereafter. Shares of restricted stock issued
under the awards, if any, will be forfeited if employment terminates
prior to the fifth anniversary of the date of issuance of such shares,
other than by reason of retirement, disability or death, unless a
Change in Control has occurred. Such shares will not be forfeited if a
Change in Control has occurred.
<F2> Restricted stock vests as follows: 20% if the average closing price of
the Common Stock is at least $34.25 for 20 consecutive trading days;
50% if the average closing price of the Common Stock is at least
$38.625 for 20 consecutive trading days; and 100% if the average
closing price of the Common Stock is at least $43.625 for 20
consecutive trading days. Shares of restricted stock subject to the
awards will be issued if such price is reached before the earliest of
(i) the date on which Mr.Buerges' employment with Magna ends, (ii) the
date on which there occurs a Change in Control or (iii) the first
business day after December 18, 2000, unless such date occurs during a
valuation period in which a price set above is met on one or more
occasions, in which event the date will be extended and mean a date
including and ending 19 consecutive trading days thereafter. Shares of
restricted stock issued under the awards, if any, will be forfeited if
employment terminates prior to or on the eighth anniversary of the date
of issuance of such shares, other than by reason of retirement,
disability or death unless a Change in Control has occurred. Such
shares will not be forfeited if a Change in Control has occurred.
</TABLE>
16
<PAGE> 20
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR
VALUES
The following table sets forth information concerning the aggregate dollar
value realized upon exercise of options during 1996, the number of securities
underlying options outstanding at year-end 1996 and the value of options
outstanding at year-end 1996 having an exercise price lower than the market
price of the Common Stock ("in-the-money" options), held by the individuals
named in the Summary Compensation Table. As of December 31, 1996, no SARs were
outstanding.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT FISCAL OPTIONS AT FISCAL
ACQUIRED VALUE YEAR-END YEAR-END
ON EXERCISE REALIZED (#) EXERCISABLE/ ($) EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE<F1>
---- ----------- -------- ----------------- -----------------
<S> <C> <C> <C> <C>
G. Thomas Andes............................................. 0 0 85,085/50,644 780,402/198,542
Linda K. Fabel.............................................. 0 0 39,682/14,966 379,830/62,313
Robert M. Olson, Jr......................................... 0 0 22,480/14,780 163,569/61,290
David D. Harris............................................. 12,000 123,810 35,176/14,528 332,573/59,904
Ronald A. Buerges........................................... 0 0 6,608/15,792 58,144/56,856
<FN>
- - --------
<F1> Based on a price per share of $29.50, being the last transaction price on
December 31, 1996.
</TABLE>
RETIREMENT PLANS
Officers and employees of Magna and its subsidiaries participate in Magna's
Pension Plan, as amended (the "Retirement Plan"). The annual retirement
benefit at normal retirement age (age 65) is accrued for each year of service
based upon percentages of the designated portions of the participant's
compensation for that year. The annual retirement benefit is 1.35% of the
participant's Basic Compensation (as defined below) plus an annual benefit
equal to the applicable percentage of the participant's Basic Compensation and
the applicable percentage of the participant's Excess Compensation (as defined
below) as follows:
<TABLE>
<CAPTION>
PERCENT OF PERCENT OF
BASIC EXCESS
YEAR OF BIRTH COMPENSATION COMPENSATION
------------- ------------ ------------
<S> <C> <C>
Prior to 1938..................................................... .00% .60%
1938-1954......................................................... .05 .55
1955 and thereafter............................................... .10 .50
</TABLE>
17
<PAGE> 21
"Basic Compensation" under the Retirement Plan is the participant's
annual base rate salary on January 1 received for services rendered to Magna or
its subsidiaries, but does not include payments by Magna or its subsidiaries
under Magna's Section 401(k) plan or any bonus plan of Magna or its
subsidiaries. "Excess Compensation" is the amount by which the participant's
Basic Compensation exceeds one-half of the maximum amount that may be
considered as wages under the Federal Social Security Act for a particular tax
year. The maximum number of years that may be utilized in computing a
participant's total retirement benefit under the Retirement Plan is 35 or a
participant's total period of service as of December 31, 1988, if greater.
Generally, accrued benefits are not vested for participants who have been
employed by Magna or its subsidiaries for less than five years. Benefits
payable under the Retirement Plan are subject to the maximum annual benefit
which may be paid pursuant to Section 415 of the Code. Maximum annual benefits
at age 65 for 1996 were based upon year of birth as follows:
<TABLE>
<CAPTION>
MAXIMUM
ANNUAL
YEAR OF BIRTH BENEFIT
------------- -------
<S> <C>
Prior to 1938......................................................................... $114,441
1938-1954............................................................................. 106,126
1955 and thereafter................................................................... 97,831
</TABLE>
These maximum benefits are subject to future cost-of-living increases and
potential reduction by reason of contributions under the tax-qualified defined
contribution plans maintained by Magna. The Basic Compensation used in
computing retirement benefits is limited by Section 401(a)(17) of the Code. For
1997, this limit is $160,000. The limit is subject to future cost-of-living
increases. Magna has established the Magna Group, Inc. Supplemental Executive
Retirement Plan (the "Supplemental Plan") for its executive officers which
will provide retirement benefits (at age 65 with a minimum of 35 years of
service) of 60% of the five-year final average salary, less the Retirement Plan
benefits. Mr. Andes was a participant in the Supplemental Plan during 1996.
Benefits payable pursuant to the Retirement Plan generally are paid in the
form of monthly life income, with 120 monthly payments guaranteed in any event.
If a participant is married at the time of their retirement, they will receive,
unless they elect otherwise and their spouse executes a written consent, such
retirement income in the form of a joint and survivor annuity. In lieu of the
amount and form of retirement income otherwise payable, a participant has the
option, with spousal consent, of electing a lump sum distribution from the
Retirement Plan. As specified in the Retirement Plan and required by Internal
Revenue Service regulations, the lump sum amount is actuarially determined
based on standard mortality rates published by the Pension Benefit Guaranty
Corporation. These published interest rates vary with market conditions.
At December 31, 1996, the annual accrued benefits payable by Magna upon
retirement at the normal retirement age of 65 under the Retirement Plan (and
the Supplemental Plan for Mr. Andes) for each of the executive officers named
in the Summary Compensation Table was as follows: $171,266 for Mr. Andes,
$11,619 for Ms. Fabel and $4,078, $23,672 and $4,726 for each of Messrs. Olson,
Harris and Buerges, respectively.
18
<PAGE> 22
COMPARISON OF FIVE-YEAR TOTAL RETURN AMONG MAGNA, THE DOW JONES EQUITY
MARKET INDEX, THE DOW JONES BANK INDEX, THE NASDAQ STOCK MARKET INDEX AND
THE NASDAQ BANK STOCK INDEX DECEMBER 31, 1991 -- DECEMBER 31, 1996
The following graph and Table I compare the five-year cumulative total
stockholder return (including reinvestment of dividends) on an indexed basis
among Magna, the Dow Jones Equity Market Index, the Dow Jones Bank Index, the
Nasdaq Stock Market Index and the Nasdaq Bank Stock Index. The Dow Jones Bank
Index is comprised of the following companies: BankAmerica Corporation; Bankers
Trust New York Corporation; The Chase Manhattan Corporation; Citicorp; First
Chicago NBD Corporation; J.P. Morgan & Company, Incorporated; and Republic New
York Corporation. The Nasdaq Bank Stock Index is composed of all stocks of all
companies traded on the Nasdaq Stock Market with Standard Industrial
Classification codes of 602 (commercial banks) and 671 (holding companies), as
provided by Nasdaq, and adjusted for market capitalization. The graph and Table
I assume that the value of the investment in Magna's Common Stock and each
Index was $100 on December 31, 1991. Table II sets forth the annual return on
the investment on a fiscal year-end basis, non-cumulatively. All data assumes
that all dividends were reinvested on the ex-dividend date. Based upon the
change of listing of the Common Stock from the Nasdaq National Market to the
New York Stock Exchange on November 20, 1996, Magna has included the Dow Jones
Equity Market Index and the Dow Jones Bank Index, each of which is comprised of
companies traded on the New York Stock Exchange.
[Graph of Magna Common Stock as
compared to the Dow Jones Bank Index,
the Dow Jones Equity Market Index,
the Nasdaq Bank Stock Index and the
Nasdaq Stock Market Index for the years
1992, 1993, 1994, 1995 and 1996.]
<TABLE>
TABLE I--CUMULATIVE VALUE OF $100 INVESTMENT
<CAPTION>
DECEMBER 31,
----------------------------------------------------------------
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Dow Jones Equity Market Index................... $100.00 $109.00 $119.00 $120.00 $167.00 $206.00
Dow Jones Bank Index............................ $100.00 $134.00 $145.00 $139.00 $224.00 $316.00
Nasdaq Stock Market Index....................... $100.00 $116.40 $133.60 $130.60 $184.70 $227.20
Nasdaq Bank Stock Index......................... $100.00 $145.60 $166.00 $165.40 $246.30 $325.60
Magna Common Stock.............................. $100.00 $170.40 $201.10 $190.00 $267.70 $344.60
</TABLE>
<TABLE>
TABLE II--NON-CUMULATIVE ANNUAL RETURN
<CAPTION>
DECEMBER 31,
----------------------------------------------------------
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Dow Jones Equity Market Index................... N/A 9.00% 9.17% 0.84% 39.17% 23.35%
Dow Jones Bank Index............................ N/A 34.00% 8.21% (4.14%) 61.15% 41.07%
Nasdaq Stock Market Index....................... N/A 16.40% 14.78% (2.25%) 41.42% 23.01%
Nasdaq Bank Stock Index......................... N/A 45.60% 14.01% (0.36%) 48.91% 32.20%
Magna Common Stock.............................. N/A 70.40% 18.02% (5.52%) 40.89% 28.73%
</TABLE>
19
<PAGE> 23
ITEM 2. PROPOSAL TO AMEND ARTICLE 4 OF MAGNA'S
CERTIFICATE OF INCORPORATION
On February 28, 1997, the Board of Directors adopted a resolution amending,
subject to stockholder approval at the Annual Meeting, Article 4 of Magna's
Certificate of Incorporation to increase the number of shares of authorized
Common Stock from 40,000,000 to 80,000,000 shares (the "Amendment"). A copy
of the Amendment is attached to this Proxy Statement as Appendix A. The
additional authorized shares of Common Stock would have the same rights and
privileges as the shares of Common Stock presently authorized and/or
outstanding.
The Board of Directors believes it is desirable to have the additional
authorized shares of Common Stock available for possible future acquisitions,
financing transactions and other general corporate purposes.
As of March 5, 1996, (i) 33,352,717 shares of Common Stock were issued,
(ii) an aggregate of 3,756,458 shares of Common Stock were reserved for
issuance pursuant to stock option and other employee benefit plans and Magna's
dividend reinvestment plan, (iii) 1,305,013 shares of Common Stock were
reserved for issuance upon the conversion of Magna's Subordinated Debentures
and Subordinated Capital Notes and (iv) 1,585,812 shares of Common Stock were
authorized, unissued and unreserved.
If the number of authorized shares is not increased as proposed, as of
March 5, 1997, the Company could only issue, in the aggregate, the 1,585,812
shares of Common Stock currently remaining available for issuance. The calling
of a meeting of Magna's stockholders would be required to authorize the
issuance of any additional shares of Common Stock. Such a procedure is
cumbersome, and the delay inherent therewith could restrict Magna from taking
prompt advantage of acquisition opportunities or favorable market conditions.
It is therefore desirable to increase the number of authorized shares of
Common Stock to eighty million so that Magna will not be restricted in its
ability to make acquisitions by means of the issuance of Common Stock or to
take advantage of favorable market conditions. Magna has no specific present
plans to issue any of the additional forty million shares of Common Stock.
It should be noted that any issuance of additional shares of Common Stock
could be disadvantageous to existing stockholders because such issuance might
serve to dilute their percentage interest in Magna. Holders of Common Stock do
not have preemptive rights to purchase any additional shares of Common Stock
which may be issued. Magna would not be required to obtain stockholder approval
to issue authorized but unissued shares of Common Stock, unless required to do
so by applicable law or the rules of any stock exchange on which Magna's shares
may be listed.
The authorized but unissued shares of Common Stock also could be used by
incumbent management to make more difficult, and thereby discourage, an attempt
to acquire control of Magna. For example, the shares could be privately placed
with purchasers who might support the Board of Directors in opposing a hostile
takeover bid. The issuance of the new shares also could be used to dilute the
stock ownership and voting power of a third party seeking to remove directors,
replace incumbent directors, accomplish certain business combinations or alter,
amend or repeal provisions of Magna's Certificate of Incorporation. To the
extent that it impedes any such attempts, the issuance of shares following the
Amendment may serve to perpetuate existing management.
The Amendment does not alter Magna's present ability to issue up to
1,000,000 shares of Preferred Stock with no par value per share, 49,500 shares
of Class B Voting Preferred Stock with a par value of $20.00 per share or
1,000,000 shares of Class C Non-Voting Preferred Stock with a par value of
$0.10 per share, each in such series and with such special rights (including
voting rights), preferences, restrictions, qualifications and limitations as
the Board of Directors may designate.
The affirmative vote of a majority of the outstanding shares of Voting
Stock is required for approval of the Amendment. If the Amendment is approved
by the stockholders of Magna, Magna intends to effect promptly the Amendment by
filing the Amendment with the State of Delaware.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSED INCREASE IN
THE AUTHORIZED COMMON STOCK OF MAGNA.
20
<PAGE> 24
SECURITY OWNERSHIP OF MANAGEMENT
The following information is furnished as of March __, 1997 to indicate
beneficial ownership by each current director, the executive officers named in
the Summary Compensation Table, individually, and all current directors and
executive officers as a group, of shares of Common Stock. No director or
executive officer beneficially owned any shares of the Class B Preferred Stock
on March __, 1997.
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK
BENEFICIALLY
NAME OF BENEFICIAL OWNER OWNED<F1><F2>
------------------------ ----------------
<S> <C>
G. Thomas Andes<F3>................................................................ 257,808
James A. Auffenberg, Jr.<F4>....................................................... 7,379
Ronald A. Buerges<F5>.............................................................. 25,208
Wayne T. Ewing<F6>................................................................. 17,180
Linda K. Fabel<F7>................................................................. 72,715
Donald P. Gallop<F8>............................................................... 31,094
Randall E. Ganim<F9>............................................................... 11,005
David D. Harris<F10>............................................................... 87,224
C. E. Heiligenstein<F11>........................................................... 238,300
John G. Helmkamp, Jr.<F12>......................................................... 303,872
Carl G. Hogan, Sr.<F13>............................................................ 33,067
Franklin A. Jacobs<F14>............................................................ 144,521
Wendell J. Kelley<F15>............................................................. 17,653
S. Lee Kling<F16>.................................................................. 247,301
Ralph F. Korte<F17>................................................................ 56,113
Robert E. McGlynn<F18>............................................................. 66,691
Robert M. Olson, Jr.<F19>.......................................................... 48,798
Erl A. Schmiesing<F20>............................................................. 34,786
Douglas K. Shull................................................................... 1,077
Frank R. Trulaske, III<F21>........................................................ 36,979
George T. Wilkins, Jr.<F22>........................................................ 178,668
All current directors and executive officers as a group
(23 persons)<F23>................................................................ 1,889,687
<FN>
- - --------
<F1> Except as otherwise noted, each director or executive officer has sole
voting and investment power over the shares listed beside his or her name.
<F2> No director or executive officer beneficially owned more than one percent
of the total outstanding shares of Common Stock on such date.
<F3> Includes 3,375 shares that Mr. Andes owns jointly with his spouse, 702
shares that are owned by Mr. Andes' spouse, as to which shares Mr. Andes
has shared voting and investment power, and 200 shares owned by Mr. Andes
as custodian. Also includes 98,285 shares subject to options exercisable
currently or within 60 days after March 12, 1997 and 37,500 shares of
restricted stock that could be issued to Mr. Andes if certain target
share prices for the Common Stock are attained within 60 days after
March 12, 1997.
<F4> Includes 1,000 shares owned by Mr. Auffenberg's spouse, as to which shares
Mr. Auffenberg has shared voting and investment power, 1,500 shares owned
by Mr. Auffenberg as custodian for his minor children and 1,172 shares
subject to options exercisable currently or within 60 days after March 12,
1997.
<F5> Includes 11,558 shares subject to options exercisable currently or within
60 days after March 12, 1997 and 10,000 shares of restricted stock that
could be issued to Mr. Buerges if certain target share prices for the
Common Stock are attained within 60 days after March 12, 1997.
<F6> Includes 1,020 shares that are owned by Mr. Ewing's spouse, as to which
shares Mr. Ewing has shared voting and investment power, and 4,098 shares
subject to options exercisable currently or within 60 days after March 12,
1997.
<F7> Includes 4,749 shares that Ms. Fabel owns jointly with her spouse, as to
which shares Ms. Fabel has shared voting and investment power. Also
includes 42,982 shares subject to options exercisable currently or within
60 days after March 12, 1997.
21
<PAGE> 25
<F8> Includes 4,688 shares held of record by the trustees of the testamentary
trust of Mr. Philip Gallop, of which Mr. Gallop is a co-trustee and has
shared voting and investment power, and 18,622 shares owned by Mr. Gallop's
spouse, as to which shares Mr. Gallop disclaims beneficial ownership. Also
includes 4,098 shares subject to options exercisable currently or within 60
days after March 12, 1997.
<F9> Includes five shares owned by Mr. Ganim as custodian for his son.
<F10> Includes 38,476 shares subject to options exercisable currently or within
60 days after March 12, 1997 and 8,000 shares of restricted stock which
would be issued to Mr. Harris if certain target share prices for the
Common Stock are attained within 60 days after March 12, 1997.
<F11> Includes 4,054 shares owned by Mr. Heiligenstein's spouse, as to which
shares Mr. Heiligenstein has shared voting and investment power, and 1,258
shares subject to options exercisable currently or within 60 days after
March 12, 1997.
<F12> Includes 282,141 shares that are subject to various trusts as to which
shares Mr. Helmkamp has either sole or shared voting and investment power
(Mr. Helmkamp disclaims beneficial ownership as to ___________ of such
shares), 14,804 shares owned by Mr. Helmkamp's spouse and 5,458 shares
subject to the Elizabeth Helmkamp Charitable Trust, as to which Mr.
Helmkamp disclaims beneficial ownership. Also includes 632 shares subject
to options exercisable currently or within 60 days after March 12, 1997.
<F13> Includes 4,098 shares subject to options exercisable currently or within
60 days after March 12, 1997.
<F14> Includes 4,098 shares subject to options exercisable currently or within
60 days after March 12, 1997.
<F15> Includes 279 shares that are owned by Mr. Kelley's spouse, as to which
shares Mr. Kelley disclaims beneficial ownership, and 4,098 shares subject
to options exercisable currently or within 60 days after March 12, 1997.
<F16> Includes 107 shares that are owned as custodian by Mr. Kling's spouse for
the benefit of their minor son, as to which shares Mr. Kling disclaims
beneficial ownership. Also includes 41,981 shares subject to options
exercisable currently or within 60 days after March 12, 1997.
<F17> Includes 3,765 shares subject to options exercisable currently or within
60 days after March 12, 1997.
<F18> Includes 4,471 shares that are owned by Mr. McGlynn's spouse, as to which
shares Mr. McGlynn disclaims beneficial ownership, and 1,256 shares
subject to options exercisable currently or within 60 days after March 12,
1997.
<F19> Includes 25,780 shares subject to options exercisable currently or within
60 days after March 12, 1997.
<F20> Includes 8,743 shares that Mr. Schmiesing owns jointly with his spouse.
Also includes 2,482 shares subject to options exercisable currently or
within 60 days after March 12, 1997.
<F21> Includes 14,550 shares that are subject to various trusts as to which
shares Mr. Trulaske has either sole or shared voting and investment power
and 1,172 shares subject to options exercisable currently or within 60
days after March 12, 1997.
<F22> Includes 1,214 shares that Dr. Wilkins owns jointly with his spouse, as to
which shares Dr. Wilkins has shared voting and investment power, and 3,765
shares subject to options exercisable currently or within 60 days after
March 12, 1997.
<F23> This amount represents ____% of the outstanding shares of Common Stock on
March ________, 1997. This amount includes 291,859 shares subject to
options exercisable currently or within 60 days after March 12, 1997, and
55,500 shares of restricted stock issuable if certain target prices for
the Common Stock are attained within 60 days after March 12, 1997.
</TABLE>
22
<PAGE> 26
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Magna's
directors and executive officers ("Reporting Persons") to file with the
Securities and Exchange Commission initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of Magna.
Magna has designated an officer who is available to Magna's Reporting Persons
to assist them in filing the required reports, and Magna circulates monthly
transaction reminders and other materials to promote compliance with Section
16(a). To Magna's knowledge, based solely on its review of the copies of such
reports furnished to Magna and written representations that no other reports
were required, all Section 16(a) filing requirements applicable to the
Reporting Persons were complied with during the year ended December 31, 1996.
INDEPENDENT PUBLIC ACCOUNTANTS
Ernst & Young LLP served as Magna's independent public accountants for 1996
and has been selected by the Board of Directors to continue in such capacity
during 1997. Representatives of Ernst & Young LLP are expected to be present at
the Annual Meeting to respond to appropriate questions from stockholders, and
such representatives will have the opportunity to make statements if they so
desire.
FUTURE STOCKHOLDER PROPOSALS
Under applicable regulations of the Securities and Exchange Commission, all
proposals of stockholders to be considered for inclusion in the proxy statement
for, and to be considered at, the 1998 Annual Meeting of Stockholders must be
received at the offices of Magna, c/o Secretary, One Magna Place, 1401 South
Brentwood Boulevard, St. Louis, Missouri 63144-1401 by not later than November
30, 1997. Magna's By-laws also prescribe certain time limitations and
procedures regarding prior written notice to Magna by stockholders, which
limitations and procedures must be complied with for proposals of stockholders
to be included in Magna's proxy statement for, and to be considered at, such
annual meeting. Any stockholder who wishes to make such a proposal should
request a copy of the applicable provisions of Magna's By-laws from the
Secretary of Magna.
ANNUAL REPORT
The Annual Report of Magna for the year ended December 31, 1996 has been
mailed simultaneously to the stockholders of Magna.
A COPY OF MAGNA'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER
31, 1996, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (EXCLUDING
EXHIBITS) MAY BE OBTAINED BY ANY STOCKHOLDER, WITHOUT CHARGE, UPON WRITTEN
REQUEST TO MR. GARY D. HEMMER, EXECUTIVE VICE PRESIDENT, ADMINISTRATION, MAGNA
GROUP, INC., ONE MAGNA PLACE, 1401 SOUTH BRENTWOOD BOULEVARD, ST. LOUIS,
MISSOURI 63144-1401.
OTHER BUSINESS
The Board of Directors, at the date hereof, is not aware of any business to
be presented at the Annual Meeting other than that referred to in the Notice of
Annual Meeting of Stockholders and discussed herein. If any other matter should
properly come before the Annual Meeting, the persons named on the enclosed form
of proxy will have discretionary authority to vote the shares of Voting Stock
represented by proxies in accordance with their discretion and judgment as to
the best interests of Magna.
/s/ G. THOMAS ANDES
G. THOMAS ANDES
Chairman of the Board and
Chief Executive Officer
March 31, 1997
23
<PAGE> 27
APPENDIX A
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
MAGNA GROUP, INC.
------------------------
PURSUANT TO SECTION 242 OF THE GENERAL CORPORATION LAW
OF THE STATE OF DELAWARE
Magna Group, Inc., a corporation organized and existing under and by virtue
of the General Corporation Law of the State of Delaware (the "Corporation"),
does hereby certify as follows:
FIRST: At a meeting of the Board of Directors of the Corporation duly
called and held on February 28, 1997, resolutions were duly adopted setting
forth a proposed amendment to the Certificate of Incorporation, as amended, of
the Corporation (the "Certificate of Incorporation"), declaring such
amendment to be advisable and directing that such amendment be submitted to the
stockholders of the Corporation for approval at the Annual Meeting of
Stockholders to be held on May 7, 1997. Such resolutions recommended that the
first paragraph of Article 4 of the Certificate of Incorporation be amended by
striking the existing first paragraph in its entirety and substituting in lieu
thereof the following:
"4. The total number of shares of stock which the Corporation
shall have the authority to issue is eighty million (80,000,000) shares
of Common Stock with a par value of Two Dollars ($2.00) per share; one
million (1,000,000) shares of Preferred Stock with no par value per
share; forty-nine thousand five hundred (49,500) shares of Class B
Voting Preferred Stock with a par value of Twenty Dollars ($20.00) per
share; and one million (1,000,000) shares of Class C Non-Voting
Preferred Stock with a par value of Ten Cents ($0.10) per share. For
purposes of this Article 4, the Preferred Stock, Class B Voting
Preferred Stock and Class C Non-Voting Preferred Stock are hereinafter
referred to as `Preferred Stock.' "
SECOND: At the Annual Meeting of Stockholders of the Corporation duly
called and held on May 7, 1997, the affirmative vote of a majority of the votes
permitted to be cast by the holders of the outstanding shares of the
Corporation's Common Stock, par value $2.00 per share, and the holders of the
outstanding shares of the Corporation's Class B Voting Preferred Stock, par
value $20.00 per share, voting as a single class, was obtained in favor of such
amendment with respect to Article 4.
THIRD: Said amendment was duly adopted in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, Magna Group, Inc. has caused this Certificate of
Amendment to be signed by G. Thomas Andes, its Chairman of the Board and Chief
Executive Officer, and attested by Carolyn B. Ryseff, its Secretary, this
_____ day of May, 1997.
MAGNA GROUP, INC.
By:_______________________
G. Thomas Andes, Chairman of the Board and
Chief Executive Officer
Attest:
_______________________________
Carolyn B. Ryseff, Secretary
A-1
<PAGE> 28
PROXY MAGNA GROUP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints G. Thomas Andes and Carolyn B. Ryseff, or
either of them in case the other is unable or unwilling to act, as Proxies,
each with the power to appoint his/her substitute, and hereby authorizes them
to represent and to vote, as designated below, all of the shares of voting
stock of Magna Group, Inc. held of record by the undersigned on March 12, 1997,
at the Annual Meeting of Stockholders to be held on May 7, 1997 or any
adjournments thereof.
1. ELECTION OF DIRECTORS:
/ / FOR all nominees listed below / / WITHHOLD AUTHORITY
(except as marked to the contrary (to vote for all nominees
below) listed below)
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE STRIKE A LINE THROUGH THE NOMINEE'S
NAME IN THE LIST BELOW. FAILURE TO FOLLOW THIS PROCEDURE
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE
WILL RESULT IN THE GRANTING OF AUTHORITY TO VOTE FOR
THE ELECTION OF SUCH NOMINEE.)
CLASS III (three-year term)
Wayne T. Ewing John G. Helmkamp, Jr. Franklin A. Jacobs
S. Lee Kling George T. Wilkins, Jr.
2. ADOPTION OF AN AMENDMENT TO ARTICLE 4 OF MAGNA GROUP, INC.'S CERTIFICATE OF
INCORPORATION:
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournments
thereof.
THIS PROXY, WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE THIS PROXY WILL BE
VOTED FOR PROPOSALS 1 AND 2.
DATED: _______________________, 1997
_______________________________________
Signature
_______________________________________
Signature, if held jointly
Please sign exactly as name appears on
this Proxy Card. When shares are held
by joint tenants, both should sign.
When signing as attorney-in-fact,
executor, administrator, personal
representative, 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.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
<PAGE> 29
APPENDIX
Page 19 of the printed proxy contains a Performance Graph.
The information contained in the graph is depicted in the table that
immediately follows the graph.
