STAR BANC
CORPORATION
425 Walnut Street
Cincinnati, Ohio 45202
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 12, 1994
TO THE SHAREHOLDERS OF STAR BANC CORPORATION
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Star Banc
Corporation ("Corporation") will be held at the headquarters of Star Bank, N.A.,
Fifth and Walnut Streets, Cincinnati, Ohio, on Tuesday, April 12, 1994 at 11:00
a.m. for the purpose of considering and acting upon the following:
1. The election of five directors for three-year terms ending in 1997.
2. Approval and adoption of an Amendment to and Restatement of the Corporation's
1991 Stock Incentive Plan, attached as Exhibit A to the Proxy Statement, under
which options to purchase shares of Common Stock, Restricted Shares and
Performance Awards may be granted to key employees of the Corporation and its
subsidiaries.
3. The transaction of any other business that may properly come before the
Annual Meeting and any adjournment thereof.
Only shareholders of record at the close of business on February 28, 1994,
shall be entitled to vote at the meeting.
We hope that you will be able to attend the meeting. Whether or not you plan
to attend the meeting, we urge you to complete, execute and return the enclosed
Proxy in the enclosed prepaid envelope, so that your shares may be represented
at the meeting. If you attend the meeting, you may, if you desire, revoke your
Proxy and vote in person.
By order of the Board of Directors
F. Kristen Koepcke
Vice President,
General Counsel and Secretary
Cincinnati, Ohio
March 10, 1994
YOUR VOTE IS IMPORTANT. PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY PROMPTLY
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING.
STAR BANC
CORPORATION
425 Walnut Street
Cincinnati, Ohio 45202
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of Star Banc Corporation
("Corporation") for use at the Annual Meeting of Shareholders to be held on
April 12, 1994. A Notice of Annual Meeting is attached hereto and a form of
proxy is enclosed. These proxy materials are first being mailed to shareholders
of the Corporation on or about March 10, 1994.
THE PROXY
The persons named as proxies were selected by the Board of Directors of the
Corporation.
When the proxies in the enclosed form are properly executed and returned, the
shares they represent will be voted at the meeting. Any shareholder giving a
proxy has the power to revoke or revise that proxy at any time before the
meeting by written notice to the Corporation's Secretary or by executing and
returning a later-dated proxy or by voting by ballot at the meeting.
The expense of the solicitation of proxies will be borne by the Corporation.
In addition to the solicitation of proxies by the use of the mails, solicitation
may be made by the directors, officers and regular employees of the Corporation
by telephone, telegraph or in person without additional compensation. Should
the Corporation, in order to solicit proxies, request the assistance of banks,
brokerage houses and other custodians, nominees or fiduciaries, such
organizations or individuals shall be reimbursed by the Corporation for their
reasonable expenses in forwarding soliciting material to their principals and
in obtaining authorization for the execution of proxies.
OUTSTANDING VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
At the close of business on February 28, 1994, there were 29,607,415
outstanding shares of the Corporation's common stock, par value $5.00 per share
("Common Stock"). Each share will be entitled to one vote upon each matter
submitted at the meeting. Only shareholders of record at the close of business
on February 28, 1994 (the "Record Date") shall be entitled to vote at the
meeting.
The following table sets forth, as of December 31, 1993, the holdings of the
only persons (including any "group" as that term is used in Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended) known by the Corporation to be
the beneficial owners of more than five percent (5%) of its outstanding Common
Stock.
Name of Shares Beneficially
Beneficial Owner Address Owned Percent of Class
Western Southern Life 400 Broadway 2,545,405 8.60%
Insurance Co. Cincinnati, Ohio 45202
Star Bank, N.A. (1) 425 Walnut Street 1,619,810 5.47%
Trust Division Cincinnati, Ohio 45201
(1) Star Bank, N.A., acting in its fiduciary capacity under numerous governing
instruments as sole fiduciary or co-fiduciary, has sole or shared voting and/or
investment decision authority over a total of 1,244,349 shares. Star Bank, N.A.
disclaims any beneficial interest in these shares held in its fiduciary
capacity.
As defined in Securities and Exchange Commission Rule 13d-3, "beneficial
ownership" means that a person has voting or investment decision power over
shares. It does not necessarily mean that the person enjoys any economic
benefit from those shares.
The following table sets forth, as of December 31, 1993, certain information
with regard to the beneficial ownership of the Corporation's Common Stock by
each director, named executive officer and nominee individually, as reported
to the Corporation by those persons.
Shares Shares Held Pursuant to
Beneficially Deferred Compensation
Name Owned (1) Plan(5)
James R. Bridgeland, Jr. 3,416 14,205
Laurance L. Browning 6,000 -0-
Victoria B. Buyniski 37 -0-
Joseph A. Campanella 52,227 (2)(3) -0-
Samuel M. Cassidy 155,192 (2)(3) 11,023
Raymond R. Clark 757 1,389
V. Anderson Coombe 54,868 20,973
John C. Dannemiller 300 1,582
Jerry A. Grundhofer 8,000 -0-
J.P. Hayden, Jr. 341,461 (4) -0-
Roger L. Howe 50,080 -0-
Thomas J. Klinedinst, Jr. 11,670 -0-
Thomas J. Lakin 34,378 (2)(3) 596
Charles S. Mechem, Jr. 1,320 -0-
Daniel J. Meyer 400 3,004
O'dell M. Owens, M.D. 500 1,431
Thomas E. Petry 800 12,487
William C. Portman 12,075 16,576
Oliver W. Waddell 248,623 (2)(3) -0-
Bradley L. Warnemunde 1,100 4,526
(1) Listed shares may also include shares held in the name of a person's spouse,
minor children, other relatives and trusts and estates as to which beneficial
ownership is disclaimed. The percentage of shares beneficially owned by each
person is less than one percent (1%) except as to Mr. Hayden for whom the
percentage is approximately 1.15%.
(2) Includes shares which may be purchased upon exercise of presently
exercisable options in the following amounts: Mr. Campanella, 45,269 shares;
Mr. Cassidy, 50,000 shares; Mr. Lakin, 30,276 shares and Mr. Waddell, 100,000
shares.
(3) Includes the following shares which are held for the individual's account
in the Corporation's Thrift Savings 401(k) Plan: Mr. Campanella, 2,500 shares;
Mr. Cassidy, 7,106 shares; Mr. Lakin, 3,961 shares and Mr. Waddell, 9,505
shares.
(4) Includes 3,181 shares of common stock representing 700 shares of preferred
stock convertible at the rate of 4.5454 shares of common for each share of
preferred and 270,200 shares of common stock which are owned or controlled by
corporations of which Mr. Hayden is a Director and Chief Executive Officer and
as to which beneficial ownership is disclaimed.
(5) Shares listed are those held pursuant to the Star Banc Corporation Deferred
Compensation Plan (the "Deferred Compensation Plan"); under the terms of the
trust in which they are held such shares are subject to creditors of the
Corporation and may not be voted until released to the individual participants.
As of December 31, 1993, all nominees, directors and executive officers of the
Corporation, as a group, beneficially owned 998,177 shares of the Corporation's
Common Stock, representing 3.37% of the shares outstanding on that date. This
number includes 23,492 shares held for the benefit of such individuals in the
Corporation's Thrift Savings 401(k) Plan and 230,945 shares which may be
purchased upon exercise of presently exercisable stock options, but does not
include 87,792 shares accrued pursuant to the Deferred Compensation Plan which
may not be voted.
ELECTION OF DIRECTORS
The Corporation's Articles of Incorporation provide that the number of
directors constituting the Board of Directors shall be not less than three nor
more than twenty-five as determined in accordance with the Code of Regulations
from time to time. The Board of Directors is divided into three classes:
Class I (terms expire in 1996), Class II (terms expire in 1994) and Class III
(terms expire in 1995). The Articles of Incorporation also provide that
nominees for each Class of the Board of Directors are to be elected to serve
for a term of three years. The Board of Directors currently consists of eighteen
members, with Class I containing seven directors, Class II containing five
directors and Class III containing six directors.
At the 1994 Annual Meeting, five directors in Class II are to be elected to
hold office until the 1997 Annual Meeting of Shareholders and until their
successors are duly elected and qualified. All of the nominees are current
directors. The persons named in the Proxy intend to vote for the election of
the nominees named below. If any nominee should become unable to serve, which
is not now contemplated, the proxies will be voted for such substitute nominee
as Management recommends.
Information concerning the nominees and continuing directors is set forth
below:
CLASS I DIRECTORS
(Terms Expire in 1996)
JAMES R. BRIDGELAND, JR.: born 1929, Director since 1975. Mr. Bridgeland has
been a partner in the law firm of Taft, Stettinius & Hollister, counsel to the
Corporation, for more than five years.
SAMUEL M. CASSIDY: born 1932, Director since 1991. Mr. Cassidy is an Executive
Vice President of the Corporation, a position he has held since 1985. He has
been a Director of Star Bank, N.A., the Corporation's main subsidiary bank,
since 1980 and has been that Bank's President since 1984 and its Chief Executive
Officer since 1988.
RAYMOND R. CLARK: born 1938, Director since 1988. Mr. Clark is an Executive
Vice President and a Director of Cincinnati Bell, Inc., a telecommunications
corporation. He is also President and Chief Executive Officer of Cincinnati
Bell Telephone Company, a wholly-owned subsidiary of Cincinnati Bell, Inc. He
has served Cincinnati Bell, Inc., or its subsidiaries in an executive capacity
for more than five years. Mr. Clark is also a Director of Xtek, Inc.
V. ANDERSON COOMBE: born 1926, Director since 1963. Mr. Coombe is Chairman
of the Board, Treasurer and a Director of Wm. Powell Co. and has served that
company in an executive capacity for more than five years. The Company is a
manufacturer of valves. He is also a Director of Eagle-Picher Industries, Inc.
and The Union Central Life Insurance Co.
CHARLES S. MECHEM, JR.: born 1930, Director since 1968. Mr. Mechem is
Commissioner of the Ladies Professional Golf Association. Mr. Mechem was
formerly Chairman and Chief Executive Officer of Great American Broadcasting
Company. Prior to his retirement, he had served Great American and its
predecessor, Taft Broadcasting Company, in an executive capacity for more than
five years. Mr. Mechem is Chairman of the Board of U.S. Shoe Corporation and
is a Director of The Mead Corporation, The Ohio National Life Insurance Company,
Eagle-Picher Industries, Inc., The J. M. Smucker Company and AGCO Corporation.
O'DELL M. OWENS, M.D.: born 1947, Director since 1991. Dr. Owens has been
Director of Reproductive Endocrinology and Infertility for the Christ Hospital
of Cincinnati since 1986. From 1982 to 1986, Dr. Owens was Assistant Professor
of Obstetrics and Gynecology, Director of the Division of Reproductive
Endocrinology and Infertility and Assistant Professor of Orthopedics at the
University of Cincinnati Medical Center.
THOMAS E. PETRY: born 1939, Director since 1987. Mr. Petry is Chairman,
President and Chief Executive Officer of Eagle-Picher Industries, Inc., which
he has served in an executive capacity for more than five years. The Company
is a diversified manufacturer of industrial products. A voluntary petition
under Chapter 11 of the Federal Bankruptcy Law was filed by Eagle-Picher
Industries, Inc. on January 7, 1991. Mr. Petry is also a Director of Cincinnati
Gas & Electric Company, Wm. Powell Co., Union Central Life Insurance Company
and Insilco Corporation.
CLASS II DIRECTORS
(Nominees for Terms to Expire in 1997)
LAURANCE L. BROWNING, JR.: born 1929, Director since 1970. Mr. Browning was
formerly Vice Chairman of Emerson Electric Co., a manufacturer of electrical
equipment and controls. Prior to his retirement, he served Emerson Electric
Co. in an executive capacity for more than five years. He is also a Director
of Emerson Electric Co.
VICTORIA B. BUYNISKI: born 1951, Director since 1991. Ms. Buyniski is founder,
President and Chief Executive Officer of United Medical Resources, Inc. and has
served that company in an executive capacity since 1983. The Company acts as
a third party administrator for self-funded medical, dental and other employee
benefit plans.
JERRY A. GRUNDHOFER: born 1944, Director since 1993. Mr. Grundhofer is
President and CEO of the Corporation, Chairman of the Corporation effective
January 1, 1994, and Chairman of Star Bank, N.A. Mr. Grundhofer is also a
Director of Arete Associates, Visa U.S.A., Inc., Visa International and the
Hennegan Company and is a Trustee of Children's Hospital Medical Center.
J. P. HAYDEN, JR.: born 1929, Director since 1973. Mr. Hayden is Chairman
of the Board, Chief Executive Officer and a Director of The Midland Company
and has served that company in an executive capacity for more than five years.
The Company is engaged in the finance, insurance, river transportation and
imprinted sportswear businesses.
DANIEL J. MEYER: born 1936, Director since 1988. Mr. Meyer is Chairman,
Chief Executive Officer and a Director of Cincinnati Milacron, Inc., a
manufacturer of factory automation equipment and systems, principally machine
tools and plastics processing machinery. He has served that company in an
executive capacity for more than five years. Mr. Meyer is also a Director of
E.W. Scripps Co. and Hubbell, Incorporated.
CLASS III DIRECTORS
(Terms Expire in 1995)
JOHN C. DANNEMILLER: born 1938, Director since 1990. Mr. Dannemiller is
Chairman, Chief Executive Officer and a Director of Bearings, Inc., a
distributor of bearings, power transmission products and related specialty
items. He was Executive Vice President of Bearings, Inc. from 1988 until 1990.
From 1985 until 1988 he was President of Leaseway Transportation Corp., a
diversified transportation company. Mr. Dannemiller is also a Director of
Lamson & Sessions Co.
ROGER L. HOWE: born 1935, Director since 1985. Mr. Howe is Chairman of the
Board of U.S. Precision Lens, Inc. and has served that company in an executive
capacity for more than five years. U.S. Precision Lens manufactures plastic
optical components used in both industrial and consumer products. Mr. Howe is
also a Director of Cintas Corporation, U.S. Shoe Corporation, Eagle-Picher
Industries, Inc. and Baldwin Piano and Organ Company.
THOMAS J. KLINEDINST, JR.: born 1942, Director since 1993. Mr. Klinedinst is
President and Chief Operating Officer of Thomas E. Wood, Inc., a general
insurance agency. He has served that company in an executive capacity for
more than five years. Mr. Klinedinst is also President and a Director of Ohio
Cap Insurance Company, Ltd.
WILLIAM C. PORTMAN: born 1922, Director since 1985. Mr. Portman is Chairman
of the Board of Portman Equipment Company which he has served in an executive
capacity for more than five years. Portman Equipment Company is a distributor
of material handling equipment to a wide variety of businesses.
OLIVER W. WADDELL: born 1930, Director since 1982. Prior to his retirement
December 31, 1993, Mr. Waddell was Chairman of the Board of the Corporation
and Vice Chairman of Star Bank, N.A. He served the Corporation in an executive
capacity for more than five years. Mr. Waddell is also a Director of Cincinnati
Gas and Electric Company and Ohio National Life Insurance Company.
BRADLEY L. WARNEMUNDE: born 1933, Director since 1988. Prior to his
retirement January 31, 1994, Mr. Warnemunde was Chairman and Chief Executive
Officer of Ohio National Life Insurance Company, an insurance underwriting
company which he served in an executive capacity for more than five years.
Certain of the nominees and continuing directors served as directors of The
First National Bank of Cincinnati (now known as Star Bank, N.A.,) prior to the
formation of the Corporation as a bank holding company in 1973 and as directors
of the Corporation's predecessor Delaware corporation since the dates shown.
PROPOSED AMENDMENT TO AND RESTATEMENT OF
THE 1991 STOCK INCENTIVE PLAN
The Board of Directors of the Corporation, at its meeting in December, 1993,
approved the Star Banc Corporation Amended and Restated 1991 Stock Incentive
Plan (the "Restated Plan"). The 1991 Stock Incentive Plan was originally
adopted by the shareholders of the Corporation at their meeting in April of
1991 for the purpose of advancing the interests of the Corporation by providing
material incentives for the continued services of key employees and by
attracting able personnel to employment with the Corporation and its
subsidiaries.
The purpose of the Restated Plan is to make available an additional 1.5 million
shares for Plan purposes. Currently the 1991 Stock Incentive Plan authorizes
the Corporation to issue options for 1.0 million shares, substantially all of
which have been granted. A total of 2.5 million shares will be authorized
under the Restated Plan for issuance if the Restated Plan is adopted.
In addition, options granted pursuant to the Restated Plan will qualify as
performance based compensation as defined in the Regulations applicable to
Internal Revenue Code Section 162(m). Section 162(m) of the Internal Revenue
Code provides that no deduction is allowed for applicable employee remuneration
paid by a publicly held corporation to a covered employee to the extent that
the remuneration paid to the employee exceeds $1 million for the taxable year.
Performance based compensation is excluded from the remuneration calculation
for Section 162 purposes. It is defined as any remuneration payable solely on
account of one or more performance goals, but only if the performance goals
are determined by an independent compensation committee; the material terms
of the performance based compensation are disclosed to and approved by
shareholders; and the compensation committee certifies that the goals are met
before payment is made. Compensation paid pursuant to the Restated Plan will
qualify as performance based compensation.
The Restated Plan continues to provide for the grant of options to purchase
shares of Common Stock, either incentive stock options or non-qualified options;
for the grant of shares of Common Stock which are subject to restriction on
transfer and to a right of repurchase by the Corporation; and for awards of
Common Stock or cash based upon performance of the Corporation. These provisions
were included in the 1991 Stock Incentive Plan before its Amendment and
Restatement. THE COMPLETE TEXT OF THE RESTATED PLAN IS ATTACHED TO THIS PROXY
STATEMENT AS EXHIBIT A. PLEASE REFER TO IT FOR FULL PARTICULARS.
The Restated Plan became effective as of the date it was adopted by the Board.
However, if it is not approved and adopted by vote of holders of a majority of
the outstanding shares of Common Stock of the Corporation, the Restated Plan
will have no force and effect. No options or restricted shares may be granted
under the Restated Plan subsequent to January 7, 2001. 196,250 options have
been granted under the Restated Plan subject to shareholder approval. No
restricted shares or performance awards have been granted under the Restated
Plan.
The Board of Directors may terminate the Restated Plan at any time but
unexercised options will continue in accordance with their terms and any
restricted shares shall continue to be subject to the terms of the Restated
Plan. Except as otherwise provided in any grant to an employee under the
Restated Plan, in the event the Corporation should consolidate with, merge
into, or transfer all of its assets to another corporation or corporations,
each option, restricted share or performance award shall, without regard to
any vesting schedule, restriction or performance target, become fully
exercisable or payable, as the case may be, immediately prior to such
consolidation, merger or transfer and the Restated Plan shall terminate
effective upon such consolidation, merger, or transfer.
The Restated Plan contains no maximum limitation as to the number of
participants. Regular full-time employees of the Corporation and its
subsidiaries who are key employees, including officers, whether or not directors
of the Corporation, shall be eligible to participate in the Plan. In 1993
99 key employees participated.
The proceeds of the sale of stock under the Restated Plan will constitute
general funds of the Corporation and may be used by it for any purpose.
Neither the grant nor the exercise of an option under the Restated Plan will
result under present accounting practices in any charge against the
Corporation's earnings. Any tax benefits accruing to the Corporation upon the
exercise by an employee of an option, or upon his subsequent disposition of
shares obtained by the option, will be reflected in the Corporation's capital
accounts and will therefore not impact the earnings of the Corporation.
Under present accounting practices the grant of restricted shares at prices
below fair market value will result in compensation expense to the Corporation.
The expense and related tax benefits will be recognized systematically in the
Corporation's financial statements over the applicable restricted periods.
The payment of stock or cash to participants as performance awards will also
result in compensation expense to the Corporation under present accounting
practices.
THE BOARD OF DIRECTORS INTENDS TO CAUSE THE FOLLOWING RESOLUTION TO BE
PRESENTED TO SHAREHOLDERS FOR ACTION AT THE ANNUAL MEETING:
RESOLVED, THAT THE AMENDED AND RESTATED STAR BANC CORPORATION 1991 STOCK
INCENTIVE PLAN BE, AND HEREBY IS, APPROVED AND ADOPTED BY THE SHAREHOLDERS OF
THE CORPORATION.
The affirmative vote of the holders of a majority of all outstanding shares
of Common Stock shall be sufficient for the approval and adoption of the
Amended and Restated 1991 Stock Incentive Plan. The Board of Directors
recommends a vote "FOR" approval and adoption of the Restated Plan.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of Star Banc Corporation is composed entirely of
independent outside directors and is responsible for setting compensation
policy.
Base salaries of all executives except Mr. Grundhofer were determined by the
Compensation Committee using senior management's recommendations. Salaries
were decided by considering individual performances and industry standards as
determined using the Hewitt Associates Compensation Survey and the Cole Survey
published by the Wyatt Company.
The Corporation's policy for compensation pursuant to the Executive Bonus
Plan is to reward the achievement of Corporate financial objectives established
in advance by the Compensation Committee. The performance criteria include
return on assets (ROA), earnings per share (EPS), and credit quality. ROA and
EPS each were used to determine between 40% and 50% of the bonus, respectively,
with credit quality determining from 0 to 20%. The opportunity for a bonus
award for the reporting executives ranged from 11% to 90% of pay depending on
individual position levels, credit quality and the amount actual ROA and EPS
exceeded the thresholds. The initial threshold for a bonus award was 1.20%
ROA and $3.00 EPS. Both thresholds were exceeded, with actual ROA of 1.33%
and EPS of $3.30. All bonuses were paid in cash.
Stock options are granted pursuant to a Stock Option Plan using guidelines
which include corporate performance, individual responsibilities and
performances and competitive indices, including the Hewitt Associates
Compensation Survey and information from Ohio bank holding companies and other
bank holding companies of similar size. During 1993 special consideration was
given to management transition with respect to option grants. Most individuals
who received options in 1993 received them subject to a vesting schedule with
full vesting four years from date of grant.
Mr. Grundhofer's compensation was determined by the Compensation Committee.
His annual base salary of $550,000 is consistent with industry standards as
determined from the Hewitt Associates Compensation Survey and the Cole Survey.
His bonus was based on the same criteria as that described previously. He
was granted 100,000 options exercisable in 1994 at a grant price of $36.75,
50,000 exercisable in 1995 at the grant price plus $7.00, and 50,000 exercisable
in 1996 at the grant price plus $14.00 as part of his incentive compensation.
The goal of the Corporation's compensation program is to attract, motivate,
reward and retain the management talent required to achieve corporate objectives
and increase shareholder value.
Compensation Committee of
Star Banc Corporation Board of Directors
Laurance L. Browning, Jr. Roger L. Howe Thomas E. Petry
J.P. Hayden, Jr. Daniel J.Meyer William C. Portman
Bradley L. Warnemunde
The following tables list information as to compensation received for services
by the Chief Executive Officer, the next four highest compensated executive
officers, and one former executive officer of the Corporation in all capacities
to the Corporation and its subsidiaries during the year ended December 31, 1993.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long Term
Annual Compensation Compensation All Other
Name and Salary Bonus Other Options Compensation
Principal Position Year ($)(1) ($)(2) ($) (#) ($)(4)(12)
<S> <C> <C> <C> <C> <C> <C>
Oliver W. Waddell 1993 527,692 330,428 - - 285,974(5)
Chairman and Director 1992 493,269 275,692 - 60,000 8,728
of the Corporation and Vice 1991 448,846 117,298 - 40,000 -
Chairman of Star Bank, N.A.
Jerry A. Grundhofer 1993 304,615 190,743 170,271(3) 200,000 1,980(6)
President and Chief 1992 - - - - -
Executive Officer and 1991 - - - - -
Director of the Corporation
and Chairman of Star Bank, N.A.
Samuel M. Cassidy 1993 300,385 150,282 - 7,500 10,110(7)
Executive Vice President and 1992 300,769 120,154 - 31,200 8,728
Director of the Corporation 1991 269,539 65,947 - 20,800 -
and President and Chief
Executive Officer of
Star Bank, N.A.
Joseph A. Campanella 1993 220,000 110,207 - 18,000 7,392(8)
Executive Vice President of 1992 197,616 78,585 - 23,400 5,894
the Corporation 1991 150,742 32,334 - 15,600 -
Thomas J. Lakin (9) 1993 171,827 53,078 - 12,000 5,794(10)
Senior Vice President 1992 - - - - -
of the Corporation 1991 - - - - -
Gary N. Kocher 1993 190,385 95,472 - - 776,809(11)
Former Executive Vice 1992 197,885 78,692 - 23,400 4,419
President of the Corporation 1991 142,019 65,917 - 22,375 -
</TABLE>
(1) Includes amounts deferred at the direction of the executive officer pursuant
to the Star Banc Corporation Thrift Savings 401(k) Plan and the Star Banc
Corporation Deferred Compensation Plan, as amended and restated through April
14, 1992.
(2) Reflects bonus earned during the fiscal year. In some instances all or a
portion of the bonus was paid during the next fiscal year.
(3) Includes $149,483 in relocation expenses.
(4) Pursuant to transition rules, reported for 1992 and 1993 only.
(5) Includes $275,000 retirement bonus paid December 31, 1993, $8,994
Corporation contribution to the Star Banc Corporation Thrift Savings 401(k)
Plan, and $1,980 split dollar life insurance premium.
(6) Split dollar life insurance premium.
(7) Includes $8,994 Corporation contribution to the Star Banc Corporation
Thrift Savings 401(k) Plan and $1,116 split dollar life insurance premium.
(8) Includes $6,600 Corporation contribution to the Star Banc Corporation
Thrift Savings 401(k) Plan and $792 split dollar life insurance premium.
(9) Reported for 1993 only.
(10) Includes $5,155 Corporation contribution to the Star Banc Corporation
Thrift Savings 401(k) Plan and $639 split dollar life insurance premium.
(11) Separated from service in October, 1993. Includes $767,024 severance
payment, $4,679 Corporate contribution to the Star Banc Corporation 401(k)
Plan, $4,314 distribution from the Nonqualified Retirement Plan, and $792
split dollar life insurance premium.
(12) 1992 amounts consist solely of contributions by the Corporation to the
Star Banc Corporation Thrift Savings 401(k) Plan.
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
(a) (b) (c) (d) (e) (f)(1)
% of Total Options
Individual Grants Options Granted to Employees Exercise or Expiration Grant date
Name Granted (#) in Fiscal Year base price ($) Date present value ($)
<S> <C> <C> <C> <C> <C>
Jerry A. Grundhofer 100,000 36.75 1,503,700
50,000 43.75 649,000
50,000 50.75 562,050
Total: 200,000 26.8 5/2003 2,714,750
Oliver W. Waddell - - - N/A -
Samuel M. Cassidy 7,500 (2) 1.0 34.75 12/2003 103,178
Joseph A. Campanella 18,000 (2) 2.4 34.75 12/2003 247,626
Thomas J. Lakin 12,000 (2) 1.6 34.75 12/2003 165,084
Gary N. Kocher - - - N/A -
</TABLE>
(1) Grant date option values calculated through use of the "Black Scholes"
option pricing model. Values are calculated assuming a risk free rate of
return of 5.8%, dividend growth rate of 6.3% annually and quarterly reinvestment
of dividends.
(2) Contingent upon shareholder approval of Amended and Restated 1991 Stock
Incentive Plan.
<TABLE>
AGGREGATED OPTIONS EXERCISED IN LAST FISCAL YEAR
AND YEAR END OPTION VALUE
<CAPTION>
(a) (b) (c) (d) (e)
Number of Value of unexercised
unexercised in the money options
Shares acquired Value realized options12/31/93 (#) 12/31/93 ($)
Name on exercise (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable
<S> <C> <C> <C> <C>
Jerry A. Grundhofer - - 0/200,000 0/0
Oliver W. Waddell 58,299 1,048,131 100,000/0 450,000/0
Samuel M. Cassidy 43,155 619,161 50,000/7,500(1) 215,250/1,875
Joseph A. Campanella - N/A 45,269/18,000(1) 289,909/4,500
Thomas J. Lakin - N/A 30,276/12,000(1) 338,312/3,000
Gary N. Kocher 45,775 243,663 0/0 0/0
</TABLE>
(1) Unexercisable grants are subject to shareholder approval of Amended and
Restated 1991 Stock Incentive Plan.
Stock Performance Chart. The following chart compares the yearly percentage
change in the cumulative total shareholder return on the Corporation's common
stock during the five years ended December 31, 1993 with the cumulative total
return on the Keefe, Bruyette & Woods, Inc., Bank Index and the Standard &
Poor's 500 Stock Index. The comparison assumes $100 was invested on January 1,
1989 in the Corporation's Common Stock and in each of the foregoing indices
and assumes reinvestment of dividends.
1988 1989 1990 1991 1992 1993
Star Banc Corp $100.00 $121.44 $97.58 $152.19 $226.30 $227.08
KBW 50 Index 100.00 118.91 85.40 135.17 172.23 181.77
S&P 500 100.00 131.68 127.58 166.46 179.14 197.28
Defined Benefit Pension Plan. Compensation in the form of payments from the
Corporation's non-contributory, defined benefit pension plan is not included
in the compensation tables above. Substantially all employees are eligible
to receive benefits from this pension plan, which are based upon average
base compensation during the five consecutive calendar years in which
compensation was the highest and upon the employee's years of service, with a
normal retirement age of 65 and five years of plan participation. The 1994
total of annual payments as a life annuity with 120 guaranteed payments
(exclusive of Social Security) from the pension plan may be individually
estimated using the following information.
YEARS OF SERVICE
ANNUAL
EARNINGS 10 15 20 25 30 35
$125,000 $15,847 $23,771 $31,695 $39,618 $47,542 $55,466
150,000 19,257 28,885 38,513 48,142 57,770 67,398
175,000 22,666* 33,999* 45,332* 56,666* 67,999* 79,332*
200,000 26,076* 39,114* 52,151* 65,189* 78,227* 91,265*
225,000 29,485* 44,228* 58,970* 73,713* 88,456* 103,198*
250,000 32,895* 49,342* 65,789* 82,236* 98,684* 115,131*
300,000 39,714* 59,570* 79,427* 99,284* 119,141* 138,997*
400,000 53,351* 80,027* 106,703* 133,378* 160,054* 186,729*
450,000 60,170* 90,255* 120,341* 150,426* 180,511* 210,596*
500,000 66,989* 100,484* 133,978* 167,473* 200,967* 234,462*
550,000 73,808* 110,712* 147,617* 184,521* 221,425* 258,329*
600,000 80,627* 120,941* 161,254* 201,568* 241,881* 282,195*
700,000 94,265* 141,397* 188,530* 234,662* 282,795* 329,927*
800,000 107,903* 161,854* 215,806* 269,757* 323,708* 377,660*
900,000 121,541* 182,311* 243,081* 303,852* 364,622* 425,392*
* The above benefits do not reflect the $150,000 compensation limit or the
$110,076 annual benefit limit which apply under Federal law. The actual
benefits payable from the qualified pension plan will take into account these
limits, and will be adjusted accordingly as the limits are adjusted each year.
Also, these benefits were estimated using a five year average of compensation
determined from the "Annual Earnings" shown above.
For purposes of computing benefits under this Plan, on December 31, 1993,
Mr.Waddell had 36 years of credited service; Mr.Cassidy, 35; Mr.Lakin, 27;
Mr. Campanella, 6; Mr. Kocher, 3; and Mr. Grundhofer, 0.
Non-Qualified Retirement Plan. Compensation in the form of payments from the
Corporation's non-contributory, non-qualified retirement plan to the extent
that it replaces income lost due to legislated limits on benefits and
compensation is included in the above table. The plan provides supplemental
benefit payments to certain officers of the Corporation so that participants
receive a combined pension benefit under the qualified and non-qualified plans
at one of two levels. Participants approved for the first level of benefits
equal to those which would have been payable in the absence of legislated
limits on compensation and benefits include Mr. Lakin and other affected
officers. Participants eligible for the second level of augmented combined
benefits under the qualified, non-qualified and certain prior employer plans
as a percentage of final average compensation (base plus bonus) include Messrs.
Waddell, Grundhofer, Cassidy, Campanella, and certain other executive officers.
Eligibility for such augmented benefits is determined by the Compensation
Committee of the Board of Directors based on nominations submitted by the
Chief Executive Officer (such nominations based on individual performances and
level of responsibility). The 1994 total of annual payments as a life annuity
with 120 guaranteed payments at the augmented level (less benefits replaced
due to the application of legislated limits) may be individually estimated
using the following table.
YEARS OF SERVICE
ANNUAL
EARNINGS 10 15 20 25 30 35
$125,000 $52,342 $44,418 $36,494 $28,571 $20,647 $12,723
150,000 62,570 52,942 43,314 33,685 24,057 14,429
175,000 72,799 61,466 50,133 38,799 27,466 16,133
200,000 83,027 69,989 56,952 43,914 30,876 17,838
225,000 93,256 78,513 63,771 49,028 34,285 19,543
250,000 103,483 87,036 70,589 54,142 37,694 21,247
300,000 123,940 104,084 84,227 64,370 44,513 24,657
400,000 164,854 138,178 111,502 84,827 58,151 31,476
450,000 185,311 155,226 125,140 95,055 64,970 34,885
500,000 205,767 172,272 138,778 105,283 71,789 38,294
550,000 226,225 189,321 152,416 115,512 78,608 41,704
600,000 246,681 206,367 166,054 125,740 85,427 45,113
700,000 287,595 240,463 193,330 146,198 99,065 51,933
800,000 328,508 274,557 220,605 166,654 112,703 58,751
900,000 369,422 308,652 247,882 187,111 126,341 65,571
Severance Agreements. The Corporation has entered into severance agreements
with Messrs. Grundhofer, Waddell, Cassidy, Campanella and Lakin and certain
other officers of the Corporation. The agreements are designed to enhance the
Corporation's ability to attract and retain high caliber senior management at
a time when mergers and acquisitions are common in the financial services
industry. In general, the agreements provide for the payment of a lump sum
benefit to the officer, plus the continuation of certain medical and insurance
benefits, in the event that the officer's employment is terminated involuntarily
by the Corporation, or voluntarily by the officer for good reason, following a
Change in Control of the Corporation during the officer's protected period.
Mr. Grundhofer's agreement provides for severance benefits of three times
salary and the greater of actual bonus or 75% of salary in the event of a
Change in Control, and immediate granting of 10 year past service credit under
a Non-Qualified Retirement Plan upon a Change in Control. Messrs. Cassidy and
Campanella have agreements which provide for lump sum benefits of three times
current compensation for a protected period of three years in the event of a
Change in Control and until May 12, 1994 for any termination other than for
cause. Mr. Lakin has an agreement which provides for a lump sum benefit of
two times current compensation for a protected period of two years in the
event of a Change in Control and until May 12, 1994 for any termination other
than for cause.
Mr. Waddell retired effective January 1, 1994 and received a lump sum
retirement bonus equal to one half of his final salary, or $275,000.
COMPENSATION OF DIRECTORS
In 1993, each director of the Corporation who was not an officer of the
Corporation or a subsidiary, received an annual retainer fee of $8,000 plus a
fee of $1,500 for each meeting of the Board of Directors attended and a fee of
$750 for each committee meeting attended.
CORPORATE GOVERNANCE INFORMATION
The Board of Directors held six meetings in 1993.
The Board of Directors has an Executive Committee, an Audit Committee, and a
Compensation Committee. The Board of Directors does not have a nominating
committee.
The Executive Committee held five meetings in 1993. The Committee has the
authority to exercise all powers of the Board of Directors between regularly
scheduled Board meetings. The current members of the Executive Committee are
Messrs. Bridgeland, Cassidy, Grundhofer, Hayden, Howe, Petry, Portman and
Waddell.
The Audit Committee held three meetings in 1993 and reviewed the work of
Arthur Andersen & Co., the Corporation's outside independent auditor for 1993.
The Committee reviews recommendations on various matters made by Arthur Andersen
& Co. and action taken by management and the Corporation's internal auditor to
implement these recommendations. The Committee also considers the proposals
of Arthur Andersen & Co. for the scope of the audit to be performed for the
Corporation and its subsidiaries and their proposed fees for this work. The
Committee recommends action to the Board of Directors of the Corporation in
connection with all the above matters. The current members of the Audit
Committee are Messrs. Clark, Coombe, Dannemiller, Hayden and Warnemunde.
The Compensation Committee sets policy for compensation, reviews the
recommendations of the Chief Executive Officer as to compensation for officers,
establishes the compensation of the Chief Executive Officer and approves
eligibility for benefits under the Corporation's non-qualified retirement plan.
It also administers the Corporation's Stock Incentive Plans. The Compensation
Committee held four meetings in 1993. The current members of the Compensation
Committee are Messrs. Browning, Hayden, Howe, Meyer, Petry, Portman and
Warnemunde.
All Directors attended at least 75% of the aggregate of the number of regular
and special meetings of the Board of Directors held during 1993 and all
committees of the Board on which the director served during the 1993 calendar
year.
DATE FOR SUBMISSION OF SHAREHOLDER PROPOSALS
Under Rule 14a-8 of the Securities Exchange Act of 1934, as amended, any
shareholder who wishes to include a proposal for shareholder action in next
year's Proxy Statement must submit such proposal to the Corporation (along
with other information called for in Rule 14a-8) no later than November 10,
1994. The Corporation will at the time of any such submission determine
whether or not the proposal is proper for inclusion in the Proxy Statement.
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
Some of the directors and executive officers of the Corporation, and the
companies with which they are associated, were customers of and had various
transactions with the Corporation's subsidiary banks in the ordinary course of
business during 1993. All loans, loan commitments and sales of notes included
in these 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 and did
not involve more than the normal risk of collectability or present other
unfavorable features.
Mr. Bridgeland, a Director of the Corporation, is a partner in the law firm
of Taft, Stettinius & Hollister, counsel to the Corporation.
Ms. Buyniski, a Director of the Corporation, is President and Chief Executive
Officer of United Medical Resources, Inc., which acts as third party
administrator for some of the medical plans offered by the Corporation and its
subsidiaries.
Mr. Klinedinst, a Director of the Corporation, is President and Chief Operating
Officer of Thomas E. Wood, Inc., which provides insurance brokerage services
to the Corporation.
Mr. Warnemunde, a Director of the Corporation, was Chairman and Chief Executive
Officer of Ohio National Life Insurance until his retirement on January 31,
1994. Ohio National provides life insurance as an employee benefit to employees
of the Corporation and its subsidiaries.
INDEPENDENT AUDITORS
The Board of Directors appointed Arthur Andersen & Co. as independent auditors
of the Corporation and its subsidiaries for the year 1993. The Corporation
anticipates that Arthur Andersen & Co. will be appointed independent auditors
for 1994 at the regular meeting of the Board of Directors to be held in April.
Representatives of Arthur Andersen & Co. will be present at the Annual Meeting
serving as inspectors of election. They will have an opportunity to make a
statement if they desire to do so, and they will also be available to respond
to questions raised at the meeting.
OTHER BUSINESS
The Board of Directors knows of no other matters to be presented at the Annual
Meeting. However, if any other matters do come before such meeting, or an
adjournment thereof, the Board of Directors intends that the holders of the
proxies will vote thereon in accordance with the recommendation of Management.
By order of the Board of Directors
F. Kristen Koepcke
Vice President,
General Counsel and Secretary
Cincinnati, Ohio
March 10, 1994
THE FORM lO-K ANNUAL REPORT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
IS INCLUDED (LESS EXHIBITS) IN THE CORPORATION'S ANNUAL REPORT FURNISHED WITH
THESE PROXY MATERIALS. TO OBTAIN AN ADDITIONAL COPY, CALL (513) 632-4008 OR
WRITE TO DAVID M. MOFFETT, EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL
OFFICER, STAR BANC CORPORATION, 425 WALNUT STREET, CINCINNATI, OHIO 45201.
STAR BANC CORPORATION Proxy
THIS PROXY IS SOLICITED BY MANAGEMENT ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Jerry A. Grundhofer and F. Kristen Koepcke or
either of them with full power of substitution, proxies of the undersigned to
vote at the Annual Meeting of Shareholders of Star Banc Corporation to be held
at the offices of Star Bank, N.A., Fifth and Walnut Street, Cincinnati, Ohio,
on Tuesday, April 12, 1994, at 11:00 a.m., and at any adjournment thereof, all
the shares of the Corporation the undersigned would be entitled to vote if
personally present, and hereby revokes any proxy previously given.
SHARES
Continued on reverse side
1. Election of Directors for a Three- LAURANCE L. BROWNING, JR., VICTORIA
Year Term Ending in 1997 B. BUYNISKI, JERRY A. GRUNDHOFER,
J.P. HAYDEN, JR. AND DANIEL J. MEYER
To vote for all To withhold authority To withhold authority to vote for
nominees to vote for one or more individual nominees,
check this box all nominees while voting for the remainder, write
check this box the nominees name in the space below.
[ ] [ ] _____________________________________
2. To approve the Amended and Restated This proxy when properly executed
Star Banc Corporation 1991 Stock will be voted in the manner directed
Incentive Plan herein by the shareholder. If no
For Against Abstain direction is made, this proxy will be
[ ] [ ] [ ] voted in favor of the nominee and
issue listed.
3. At their discretion, the proxies are Please sign exactly as name appears.
authorized to vote upon such other When shares are held by joint
business as may properly come before tenants, both should sign. When
the meeting. signing as attorney, executor,
adminstrator, 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.
_____________________________________
Name Date
_____________________________________
Name Date
EXHIBIT A
STAR BANC CORPORATION
AMENDED AND RESTATED
1991 STOCK INCENTIVE PLAN
1. Name and Purpose. This Plan shall be known as the Star Banc Corporation
1991 Stock Incentive Plan (the "Plan"). The purpose of the Plan is to advance
the interests of Star Banc Corporation (the "Corporation") by providing material
incentive for the continued services of key employees and by attracting able
personnel to employment with the Corporation and its Subsidiaries. The term
"Subsidiary" as used herein means a subsidiary corporation of the Corporation
as the term is defined in Section 424(f) of the Internal Revenue Code of 1986
(the "Code").
2. Administration. The Plan shall be administered by the Compensation Committee
(the "Committee") of the Board of Directors of the Corporation. The Committee
shall consist of at least two members of the Board of Directors, each of whom
is a "disinterested person" as defined in Rule 16b-3 promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of 1934
as such Rule may be amended from time to time or any successor rule thereto.
The Committee may establish, subject to the provisions of the Plan, such rules
and regulations as it deems necessary for the proper administration of the Plan,
and make such determinations and take such action in connection therewith, or
in relation to the Plan as it deems necessary or advisable, consistent with
the Plan.
3. Eligibility. Regular full-time employees of the Corporation and its
Subsidiaries who are key employees, including officers, whether or not directors
of the Corporation, shall be eligible to participate in the Plan. Such
employees are herein referred to as "Eligible Employees." Those directors who
are not regular employees of the Corporation or its Subsidiaries are not
eligible to participate in the Plan.
4. Shares Subject to the Plan.
(a) The shares to be issued and delivered by the Corporation under the Plan
are the Corporation's common shares, $5.00 par value, which may be either
authorized but unissued shares or treasury shares.
(b) The aggregate number of common shares of the Corporation which may be
issued under the Plan shall not exceed two million, five hundred thousand
(2,500,000) shares; subject, however, to the adjustment provided in Paragraph
12 in the event of stock splits, stock dividends, exchanges of shares or the
like occurring after the effect date of this Plan. No option may be granted
under this Plan, no Restricted Shares may be allocated under this Plan and no
Performance Awards payable in common stock can be paid under this Plan which
could cause such maximum limit to be exceeded.
(c) The maximum number of shares with respect to which options may be granted
to any individual during any one year period is 600,000.
(d) Common shares covered by an option which is no longer exercisable with
respect to such shares shall again be available for issuance in connection
with other options granted under this Plan. Common shares repurchased by the
Corporation as provided in Paragraph 11, in respect of which no benefits of
ownership have been received, shall again be available for issuance in
connection with other allocations of Restricted Shares under this Plan.
5. Grant of Options. The Committee may from time to time, in its discretion
and subject to the provisions of the Plan, grant options to any or all Eligible
Employees. Employees to whom options have been granted are herein referred to
as "Optionees". Each option shall be embodied in an "Option Agreement" signed
by the Optionee and the Corporation providing that the option shall be subject
to the provisions of this Plan and containing such other provisions as the
Committee may prescribe not inconsistent with the Plan.
6. Terms and Conditions of Option. All options granted under the Plan shall
contain such terms and conditions as the Committee from time to time determines,
subject to the foregoing and following limitations and requirements.
(a) Form of Option: Incentive Options and Non-Qualified Options may be granted
under this Plan. An "Incentive Option" shall mean an option granted under this
Plan which is designated to be an incentive stock option under the provisions
of Code Section 422; and any provisions elsewhere in this Plan or in any such
Incentive Option which would prevent such options from being an incentive stock
option may be deleted and/or voided retroactively to the date of the granting
of such option, by action of the Committee. A "Non-Qualified Option" shall
mean an option granted under this Plan which is not an incentive stock option
under the provisions of Code Section 422, and which is exercisable even though
there is outstanding an Incentive Option which was granted before the granting
of the Non-Qualified Option to the same Options. Such Non-Qualified Option
shall not be affected by any actions taken retroactively as provided above
with respect to Incentive Options.
(b) Option Price: The option price per share of an Incentive Option or
Non-Qualified Option shall not be less than 100% of the fair market value of
the Corporation's common shares on the date of the option is granted, as
determined by the Committee in a manner consistent with the requirements of
the Code for incentive stock options.
(c) Period within which Options May Be Exercised: The period of each option
shall be fixed by the Committee, but no Incentive Option may be exercised
prior to the expiration of one year after the date of granting the Incentive
Option, and no option, whether an Incentive Option or a Non-Qualified Option,
may be exercised after the expiration of ten years from the date the
option is granted.
(d) Termination of Option by Reason of Termination of Employment: Except as
otherwise provided by the Committee in any option or other agreement to which
an Optionee is party, if an Optionee's employment with the Corporation and its
Subsidiaries terminates, all options granted under this Plan to such Optionee
which are not exercisable on the date of such termination of employment shall
terminate immediately. Any remaining options shall terminate if not exercised
before the expiration of the following periods, or at such earlier time as may
be applicable under paragraph 6(c) above;
(i) if the option is a Non-Qualified Option, upon termination of employment,
if such termination was not a result of early or normal retirement (as
determined by the chief executive officer of the Corporation), death or if the
Optionee is disabled (as defined in Code Section 422(c)(6) [hereinafter
"Disability"] of the Optionee; or
(ii) if the option is an Incentive Option, three (3) months following such
termination of employment, is such termination was not a result of early or
normal retirement (as determined by the chief executive officer of the
Corporation), death or Disability of the Optionee; or
(iii) for all options, one (1) year following the date of early or normal
retirement (as determined by the chief executive officer of the Corporation),
death or commencement of Disability, if the Optionee was an employee of the
Corporation and/or any Subsidiary at the time of his death or the commencement
of Disability or for Non-Qualified Options at such later time as the Committee
deems appropriate.
(e) Non-transferability; Exceptions: Each option and all rights thereunder
shall be exercisable during the Optionee's lifetime only by him and shall be
non-assignable and non-transferable by the Optionee, except that a
Non-Qualified Option may be transferred pursuant to a "domestic relations
order" as defined in Section 414(p)(1)(B) of the Code. In the event of the
Optionee's death, such options and rights thereunder are transferable by his
will or by the laws of descent and distribution. In the event the death of
an Optionee occurs, the representative or representatives of his estate, or
the person or persons who acquired (by bequest or inheritance) the rights
to exercise his stock options granted under this Plan, may exercise any of
the unexercised options in whole or in part prior to the expiration of the
applicable exercise period, as specified in Paragraph 6(d) above.
(f) More than One Option Granted to an Optionee: More than one option, and
more than one form of option, may be granted to an Optionee under this Plan;
provided, however, that the aggregate fair market value (determined as of the
time the option is granted) of the shares for which Incentive Options are
exercisable for the first time by any Optionee during any calendar year
(under the Plan and all such plans of the Corporation and any parent or
subsidiary corporation) shall not exceed $100,000 or any other limit
established by the Code. A single option grant may include both an Incentive
Option and a Non-Qualified Option.
7. Method of Exercise of Options. An option granted under this Plan that is
eligible to be exercised may be exercised by written notice to the Committee,
signed by the Optionee, or by such other person as is entitled to exercise
such option. The notice of exercise shall state the number of shares in
respect of which the option is being exercised, and shall either be accompanied
by the payment of the full option price for such shares, or shall fix a date
(not more than then business days from the date of such notice) for the payment
of the full purchase price of the shares being purchased. All or any portion
of the payment may be made by the transfer of common shares of the Corporation
from the Optionee to the Corporation, or the Optionee may direct that a portion
of the shares to be issued upon exercise of the option be withheld by the
Corporation as payment, to the extent permitted by law. Such shares shall be
valued for this purpose at their fair market value on the date they are
transferred to, or withheld by, the Corporation as payment, determined in the
same manner as is provided in Paragraph 6(b) hereof. A certificate or
certificates for the common shares of the Corporation purchased through the
exercise of an option shall be issued in regular course after the exercise of
the option and payment therefor. During the option period no person entitled to
exercise any option granted under this Plan shall have any of the rights or
privileges of a shareholder with respect to any shares issuable upon exercise
of such option until certificates representing such shares shall have been
issued and delivered.
8. Allocation and Purchase of Restricted Shares.
(a) The Committee may from time to time, in its discretion and subject to the
provisions of the Plan, allocate common shares to any or all Eligible Employees.
Common shares allocated under this Paragraph 8 of the Plan are referred to
herein as "Restricted Shares." Employees to whom Restricted Shares have been
allocated are herein referred to as "Participants." Each Participant to whom
an allocation of Restricted Shares has been made shall have the right to
purchase such Restricted Shares as herein provided.
(b) The Committee shall advise each Participant to whom an allocation of
Restricted Shares has been made in writing of the terms of the offer, including
the number of shares which such person shall be entitled to purchase, the
purchase price per share, and any other terms, conditions and restrictions
relating thereto. The Participant shall have ten (10) days from the date
of the offer to accept such offer. The Committee may, in the exercise of its
discretion, extend the term of any offer. Subject to the express provisions
of the Plan, the Committee shall have the power to make such offer subject to
any terms and conditions it may establish and the offers made to different
persons, or to the same person at different times, may be subject to terms,
conditions and restrictions which differ from each other. Each allocation
shall be embodied in a "Restricted Share Agreement" signed by the Participant
and the Corporation providing that the Restricted Shares shall be subject to
the provisions of this Plan and containing such other provisions the
Committee may prescribe not inconsistent with the Plan.
(c) The purchase price of the shares offered under this Plan shall be any
lawful consideration established by the Committee in its discretion. If a
Participant elects to purchase Restricted Shares, he shall pay the purchase
price in full, at the principal office of the Corporation, prior to expiration
of the offer. Upon payment of the purchase price, certificates representing
the shares shall be issued to the Participant, which certificates shall bear an
appropriate legend reflecting that such shares are subject to the restrictions
contained in this Plan.
9. Restrictions Applicable to Restricted Shares. By purchasing the
Restricted Shares allocated to him under this Plan, the Participant agrees and
consents to the restrictions described in this Plan for a period determined by
the Committee at the time of such allocation, said period referred to herein
as the "Restricted Period." For the duration of the Restricted Period (unless
the restrictions earlier lapse or are removed by the Committee), Restricted
Shares issued under this Plan shall not be transferred, delivered, assigned,
sold, or disposed of in any manner, nor pledged or otherwise hypothecated.
On the last day of the Restricted Period, or upon the earlier lapse or
removal of restrictions, such Restricted Shares shall cease to be subject to
the restrictions under this Paragraph 9 of the Plan.
10. Termination of Employment During Restricted Period.
(a) If a Participant's employment with the Corporation and its Subsidiaries
terminates because of death, Disability, or retirement after attaining normal
retirement age under the provisions of any retirement plan of the Corporation
or any Subsidiary, the restrictions under Paragraph 9 of this Plan shall
automatically terminate as to that number of the Restricted Shares owned by
the Participant which is equal to the total number of such Restricted Shares
multiplied by a fraction, the numerator of which is the number of full months
which have elapsed from the date of allocation and the denominator of which
is the total number of months during the Restricted Period. The Participant
(or his estate, heirs, or legatees) shall be required to resell the remaining
Restricted Shares to the Corporation at a price per share equal to the original
purchase price paid by the Participant for such shares, unless the Committee
shall, in its discretion, waive the restrictions under Paragraph 9 as to any
part or all of such remaining Restricted Shares.
(b) If a Participant's employment with the Corporation and its Subsidiaries
terminates during the Restricted Period other than by reason of death,
Disability, or retirement after attaining normal retirement age under the
provisions of any retirement plan of the Corporation or its Subsidiaries, the
Participant shall be required to resell all of the Restricted Shares to the
Corporation at a price per share equal to the original purchase price paid by
the Participant for such shares, unless the Committee shall, in its discretion,
waive the restrictions under Paragraph 9 as to any part or all of the
Restricted Shares.
11. Resale of Restricted Shares. In the event a Participant is required to
resell Restricted Shares to the Corporation as the result of the termination
of the Participant's employment as described in Paragraph 10, the Corporation
by written notice to the Participant shall specify a date not less than five
nor more than ten days from the date of such notice to consummate the purchase
and sale of such Restricted Shares at the principal office of the Corporation.
The Participant shall deliver to the Corporation certificates representing
such Restricted Shares, duly endorsed and in proper form for transfer, and upon
the receipt of such share certificates, the Corporation shall deliver to the
Participant a check in the amount of the purchase price. If the Participant
fails to deliver the share certificates to the Corporation at the time
specified in such notice, the Corporation may deposit the purchase price with
the Treasurer of the Corporation, and thereafter the shares shall be deemed to
have been transferred to the Corporation and the Participant, despite his
failure to deliver the share certificates, shall have no further rights as a
stockholder of the Corporation. In such event, the Treasurer of the Corporation
shall continue to hold the purchase price for such shares and shall make
payment thereof, without interest, upon delivery of the share certificates to
the Corporation.
12. Performance Awards. The Committee may, from time to time, in its
discretion and subject to the provisions of the Plan, provide an incentive
opportunity ("Performance Awards") to any or all Eligible Employees based on
achievement by the Corporation for any calendar year or other period chosen
by the Committee. Each Performance Award shall be embodied in a "Performance
Award Agreement" signed by the Participant and the Corporation providing that
the Performance Award shall be subject to the provisions of this Plan and
ontaining such other provisions the Committee may prescribe not inconsistent
with the Plan. The Committee will determine, in its sole discretion, the
performance targets and whether Performance Awards should be payable in the
form of the Corporation's common stock or cash. If the Eligible Employee
requests, prior to the date on which payment of the Performance Award is to
be made, that such payment not be made until termination of employment by such
Eligible Employee, then the Committee shall consider and act upon such request
promptly. If no request is made by such Eligible Employee, the payment shall
be made in the time period chosen by the Committee.
13. Share Adjustments. In the event there is any change in the Corporation's
common shares resulting from stock splits, stock dividends, combinations or
exchange of shares, or other similar capital adjustments, equitable
proportionate adjustments shall be made by the Committee in (a) the number of
shares available for option and issuance under this Plan, (b) the number of
shares subject to options granted under this Plan, and (c) the option price
of optioned shares.
14. Merger, Consolidation, or Sale of Assets. Except as otherwise provided
in any Option Agreement, Restricted Share Agreement, Performance Award Agreement
or other agreement approved by the Committee to which an Eligible Employee is a
party, in the event the Corporation shall consolidate with, or merge into, or
transfer all or substantially all of its assets to another corporation or
corporations, each option, Restricted Share and Performance Award shall,
without regard to any vesting schedule, restriction or performance target,
automatically and immediately become fully exercisable or payable, as the case
may be, immediately prior to such consolidation, merger or transfer. The Plan
shall terminate effective upon such consolidation, merger or transfer, and any
option previously granted hereunder shall terminate. If practical, the
Corporation shall give each Optionee twenty (20) days prior notice of any
possible transaction which might terminate this Plan and the options previously
granted hereunder.
15. Amendment or Termination. The Board of Directors of the Corporation may
terminate this Plan at any time, and may amend the Plan at any time or from
time to time, without obtaining any approval of the Corporation's stockholders,
except that the Plan may not be amended (a) to increase the aggregate number
of shares issuable under the Plan (excepting proportionate adjustments made
under Paragraph 12 to give effect to stock splits, etc.); (b) to change the
option price of optioned stock (excepting proportionate adjustments made under
Paragraph 12); (c) to change the requirement that the option price per share
of common stock covered by an option granted under this plan not be less than
100% of the fair market value of the Corporation's common stock on the date
such option is granted; (d) to extend the time within which options may be
granted or the time without which a granted option may be exercised; or
(e) to change, without the consent of the Optionee (or his, or his estate's,
legal representative), any option previously granted to him under the plan.
If the Plan is terminated, any unexercised option shall continue to be
exercisable in accordance with its terms and the terms of this Plan, except as
provided in Paragraph 13 above, and any Restricted Shares shall continue to
be subject to the terms of this Plan for the duration of the Restricted Period.
16. Corporation Responsibility. All expenses of this Plan, including the cost
of maintaining records, shall be borne by the Corporation. The Corporation
shall have no responsibility or liability (other than under applicable
Securities Acts) for any act or thing done or left undone with respect to the
price, time, quantity, or other conditions and circumstances of the purchase
of shares under the terms of the Plan, so long as the Corporation acts in good
faith.
17. Implied Consent of Optionees and Participants. Every Optionee, by his
acceptance of an option under this Plan, and every Participant, by his
acceptance of an allocation of Restricted Shares under this Plan, and every
Eligible Employee, by his acceptance of a Performance Award under this Plan,
shall be deemed to have consented to be bound, on his own behalf and on behalf
of his heirs, assigns, and legal representatives, by all of the terms and
conditions of this Plan.
18. No Effect on Employment Status. The fact that an employee has been
granted an option, has been allocated Restricted Shares or awarded a
Performance Award under this Plan shall not limit or otherwise qualify the
right of his employer to terminate his employment at any time.
19. Tax Withholding. The Corporation shall be entitled to deduct from any
payment to be made by it under this Plan, or to otherwise require, prior to
the issuance or delivery of any shares or the payment of any cash to an
Eligible Employee, payment by the Eligible Employee of all applicable Federal,
state, local or other taxes required by law to be withheld. The committee may
permit, in accordance with any applicable administrative rules established by
it, an Eligible Employee to satisfy this withholding obligation by (i) directing
the withholding from any payment of common shares by the Corporation, or
(ii) delivering to the Corporation, common shares having a fair market value,
on the date of payment, equal to the amount of such taxes. Any fraction of a
share required to satisfy such tax obligation shall be disregarded and the
amount due shall be paid instead in cash by the Eligible Employee.
20. Compliance with Securities Laws. Options granted and shares issued by the
Corporation pursuant to this Plan shall be granted and issued only in full
compliance with all applicable securities laws, including laws, rules and
regulations of the Securities and Exchange Commission and applicable state
Blue Sky laws. With respect thereto, the Committee may impose such conditions
on transfer, restrictions and limitations as it may deem necessary and
appropriate to assure compliance with such applicable securities laws.
21. Duration and Termination of the Plan. The Plan became effective on January
8, 1991. No option shall be granted and no allocation of Restricted Shares
shall be made under the Plan subsequent to January 7, 2001.
