STAR BANC
CORPORATION
425 Walnut Street
Cincinnati, Ohio 45202
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 11, 1995
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
Taft Ballroom on the third floor of the Westin Hotel, Fifth and
Walnut Streets, Cincinnati, Ohio, on Tuesday, April 11, 1995 at
11:00 a.m. for the purpose of considering and acting upon the
following:
1. To elect six directors for three-year terms ending in 1998.
2. To approve the Star Banc Corporation Executive Bonus Plan.
3. To amend Article Fourth of the Articles of Incorporation of
the Corporation to increase the number of authorized shares of
common stock, $5.00 par value, from 50,000,000 to 100,000,000.
4. To vote on the shareholder proposal recommended by
Carpenters Local 319 Pension Trust, Roanoke, Virginia.
5. To vote on the shareholder proposal recommended by the
Operating Engineers Construction Industry and Miscellaneous
Pension Fund, Pittsburgh, Pennsylvania.
6. To transact any other business that may properly come before
the Annual Meeting and any adjournment thereof.
Shareholders who are of record at the close of business on
February 28, 1995, are entitled to vote at the meeting.
Shareholders are cordially invited to attend the meeting. If
you wish to attend the meeting but your shares are held in the
name of a broker, trust, bank or other nominee, please bring
with you a proxy or letter from the broker, trustee, bank or
nominee confirming your beneficial ownership of the shares.
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
Thomas J. Lakin
Executive Vice President,
General Counsel and Secretary
Cincinnati, Ohio
March 13, 1995
YOUR VOTE IS IMPORTANT. PLEASE EXECUTE AND RETURN THE ENCLOSED
PROXY PROMPTLY WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE
MEETING.
<PAGE>2
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 11, 1995. 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 13, 1995.
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, 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, 1995, there were
29,823,920 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, 1995 (the "Record Date") are entitled
to vote at the meeting.
The following table sets forth, as of December 31, 1994, 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.
<TABLE>
<CAPTION>
Name of Shares Beneficially
Beneficial Owner Address Owned Percent of Class
<S> <C> <C> <C>
Western Southern Life 400 Broadway 2,545,405 8.53%
Insurance Co. Cincinnati, Ohio 45202
Star Bank, N.A. (1) 425 Walnut Street 1,584,747 5.32%
Trust Division Cincinnati, Ohio 45201
</TABLE>
(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 1,208,438 shares, or 4.05% of
class. 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, 1994,
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.
<TABLE>
<CAPTION>
Shares Shares Held Pursuant to
Beneficially Deferred Compensation Percentage
Name Owned(1) Plan(4) of Ownership
<S> <C> <C> <C>
James R. Bridgeland, Jr. 3,416 15,744 0.06%
Laurance L. Browning 7,000 - 0.02%
Victoria B. Buyniski 3,037 196 0.01%
Joseph A. Campanella 57,744(2)(3) - 0.19%
Samuel M. Cassidy 153,278(2) 11,416 0.55%
Raymond R. Clark 783 1,917 0.01%
V. Anderson Coombe 54,868 22,647 0.26%
John C. Dannemiller 300 2,309 0.01%
Richard K. Davis 16,666(2) - 0.06%
Jerry A. Grundhofer 108,557(2)(3) 5,740 0.38%
J.P. Hayden, Jr. 329,726(5) - 1.10%
Roger L. Howe 50,080 - 0.17%
Thomas J. Klinedinst, Jr. 14,688 - 0.05%
Charles S. Mechem, Jr. 1,320 - 0.00%
Daniel J. Meyer 400 3,715 0.01%
David M. Moffett 16,748(2)(3) - 0.06%
O'dell M. Owens, M.D. 500 2,320 0.01%
Thomas E. Petry 800 14,259 0.05%
William C. Portman 13,086 17,167 0.10%
Oliver W. Waddell 248,037 - 0.83%
Bradley L. Warnemunde 1,100 5,046 0.02%
Total 1,082,134 102,476 3.97%
</TABLE>
(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.
(2) Includes shares which may be purchased upon exercise of
presently exercisable options or options exercisable in 60 days
in the following amounts: Mr. Campanella, 49,768 shares; Mr.
Cassidy, 57,500 shares; Mr. Davis, 16,666 shares; Mr.
Grundhofer, 100,000 shares and Mr. Moffett, 16,666 shares.
<PAGE>3
(3) Includes the following shares which are held for the
individual's account in the Corporation's Thrift Savings 401(k)
Plan: Mr. Campanella, 2,960 shares; Mr. Grundhofer, 457 shares
and Mr. Moffett, 82 shares.
(4) 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.
(5) Includes shares which are owned by companies for which Mr.
Hayden serves as Chairman, CEO and director in the following
amounts: The Midland Company, 109,381 shares; American Family
Home Insurance Company, 100,000 shares; and American Modern Home
Insurance Company, 64,000 shares.
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 nine 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 1997) 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 1995 Annual Meeting, six directors in Class III are to
be elected to hold office until the 1998 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. Prior to
his retirement December 31, 1994, Mr. Cassidy was an Executive
Vice President of the Corporation, a position he held since
1985. He has been a Director of Star Bank, N.A., the
Corporation's lead subsidiary, since 1980 and was 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. and The Ohio National Life
Insurance Company.
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.
<PAGE>4
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, 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 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
CINergy, Wm. Powell Co., Union Central Life Insurance Company
and Insilco Corporation.
CLASS II DIRECTORS
(Terms 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. Ms. Buyniski is also a Director of
Health Alliance and Ohio National Life Insurance Company.
JERRY A. GRUNDHOFER: born 1944, Director since 1993. Mr.
Grundhofer is Chairman, President and CEO of the Corporation,
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
(Nominees for Terms to Expire in 1998)
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.
<PAGE>5
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. Mr. Waddell is also a Director of CINergy, Ohio National
Life Insurance Company, Chiquita Brands International, Inc. and
is a member of the Board of Trustees of Christ Hospital.
DAVID B. O'MALEY: born 1946, Director since 1995. Mr. O'Maley
is the Chairman, President and Chief Executive Officer of Ohio
National Life Insurance Company, a position he has held since
1994. From 1993 to 1994, he was President and Chief Operating
Officer and from 1992 to 1993, he was Executive Vice President
and Chief Marketing Officer of Ohio National Life Insurance
Company. Prior to that he was Chief Marketing Officer of Life
of Virginia. Mr. O'Maley is also Chairman of the 1996 United
Way Campaign, a member of the Finance Committee of Good
Samaritan Hospital, a member of the Board of Trustees of the
Cincinnati Chamber of Commerce and a Director of the Ohio
Association Life Companies.
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.
PROPOSAL FOR APPROVAL OF PERFORMANCE-BASED ANNUAL
INCENTIVE CRITERIA UNDER THE EXECUTIVE BONUS PLAN TO
PRESERVE STAR'S TAX DEDUCTION FOR PLAN AWARDS
CURRENT PLAN The Executive Bonus Plan is an annual award plan
designed to provide incentive to certain senior officers of Star
Banc Corporation and its affiliates (including the Named
Executives herein) based upon such officers' contributions to
Star's performance and profitability from year to year. The
plan provides incentive awards only if Star's fully diluted
earnings per share (EPS) and/or return on average assets (ROA)
reach specified thresholds established by the Compensation
Committee of the Board and approved by the Board of Directors at
the beginning of each plan year.
A participant's maximum award opportunity is determined by the
Corporation's EPS and ROA performance for the plan year. A
specified percentage of this award opportunity may also be
contingent upon achievement of specified credit quality
criteria, and performance against individual objectives set at
the beginning of the plan year. For 1995, the opportunity for a
bonus award for participants will range from 14% to 125% of base
salary depending on the individual's position, and the amount by
which actual EPS and ROA exceeded the thresholds. The
participants must be actively employed in good standing on the
bonus payout date to be eligible to receive an award, except in
the event of retirement, death, or disability during the plan
year. Awards are paid in cash, except that 25% of the award for
specified senior executives is paid in shares of Star Banc
Corporation common stock. All awards are subject to review and
approval of the Compensation Committee.
<PAGE>6
For 1994, the EPS target for payout under the plan was $3.65
(compared to 1993 actual of $3.30), and actual EPS performance
was $3.86. The ROA target was 1.35% (compared to 1993 actual of
1.33%), and actual ROA performance was 1.41%. Awards were made
to 62 senior officer participants, with the awards made to Named
Executives shown in the Summary Compensation Table on page 11 in
the column captioned "Bonus".
BACKGROUND FOR PROPOSAL Tax legislation enacted in 1993
provides a limit of $1 million per year on the tax deductibility
of compensation paid to the chief executive officer and each of
the next four highest paid executive officers unless such
compensation is "performance-based," in which case it can be
deducted without limit. This exclusion from the limit for
performance-based bonus plans is contingent upon shareholder
approval of such plans. The purpose of this proposal, then, is
to preserve Star's tax deduction for awards made under its
existing Executive Bonus Plan.
Should this proposal not be approved by shareholders, the
Executive Bonus Plan under which the performance-based annual
incentive awards are paid would remain in effect under Board
authority. The Board would retain authority to develop and
implement means of compensating executive officers, including
the chief executive officer and the next four highest paid
executive officers, for performance.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS APPROVAL OF THE
PERFORMANCE-BASED ANNUAL EXECUTIVE BONUS PLAN.
PROPOSAL TO AMEND ARTICLE FOURTH OF THE ARTICLES
OF INCORPORATION OF THE CORPORATION TO INCREASE THE
NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
The purpose of increasing the number of authorized shares of
common stock is to provide additional shares which could be
issued for corporate purposes without further stockholder
approval unless required by applicable law or by the New York
Stock Exchange or any exchange on which the Corporation's shares
are traded. Such purposes could include the payment of stock
dividends, subdivision of outstanding shares through stock
splits and effecting future acquisitions of other businesses or
meeting requirements for working capital or capital expenditures
through issuance of additional shares. At present, no such
transactions are planned by the Corporation.
To the extent that any additional shares may be issued on other
than a pro rata basis to current shareholders, the present
ownership position of current shareholders may be diluted.
Holders of shares of common stock have no rights of appraisal
or similar rights of dissenting shareholders with respect to the
proposed increase in the number of authorized shares of common
stock.
The Corporation's Board of Directors submits the following
resolution for consideration by the Corporation's shareholders.
The Board deems approval of this resolution advisable and
recommends that shareholders vote in favor of its adoption. The
affirmative vote of the holders of a majority of the outstanding
shares of common stock entitled to vote at the meeting will be
required for adoption.
RESOLVED: That Article Fourth, Paragraph A., of the Articles
of Incorporation of the Corporation as presently in effect be
and is hereby amended and restated as follows:
FOURTH: A. The total number of shares of stock which the
Corporation shall have authority to issue is One Hundred One
Million (101,000,000), of which One Million (1,000,000) shares
shall be shares of preferred stock without par value
(hereinafter sometimes referred to as "Preferred Stock") and One
Hundred Million (100,000,000) shares shall be shares of common
stock of the par value of Five Dollars ($5.00) per share
(hereinafter sometimes referred to as "Common Stock").
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS APPROVAL OF THE
AMENDMENT TO THE ARTICLES OF INCORPORATION.
<PAGE>7
SHAREHOLDER PROPOSALS
The Corporation has received two proposals from shareholders as
set forth below. Star Banc Corporation disclaims any
responsibility for the content of each proposal and statement of
support, which are presented as received from the shareholders.
Under the Corporation's Articles of Incorporation, the
affirmative vote of the holders of a majority of the outstanding
voting shares is necessary to adopt each proposal.
Consequently, an abstention, or a broker non-vote, has the
effect of a negative vote.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
AGAINST BOTH OF THESE PROPOSALS.
SHAREHOLDER PROPOSAL NO. 1
Carpenters Local 319 Pension Trust, Roanoke, Virginia, has
indicated that it is the beneficial holder of 300 shares of the
Corporation's common stock and has given notice of its intention
to present the following proposal for action at the Annual
Meeting.
RESOLVED: That the shareholders of Star Banc Corporation
("Company") urge the Board of Directors to redeem the Preferred
Stock Purchase Rights carried with the common stock unless a
majority of voting shares approve of these rights at a meeting
of shareholders held as soon as is practical.
SHAREHOLDER'S SUPPORTING STATEMENT
Our Company's Preferred Stock Purchase Rights plan, commonly
referred to as a "poison pill," is an extremely powerful
anti-takeover device that was unilaterally adopted by Star
Banc's board of directors. We believe anti-takeover defenses
like poison pills reduce shareholder value over the long-run by
(1) entrenching management, thus reducing the ability of
shareholders to replace management in the event of poor
performance; and (2) reducing the probability that someone will
make a bid for the shares at above market value.
While our Company's preferred stock purchase rights plan is
written in complicated legal jargon, it can be explained quite
simply. Absent a poison pill, a bidder for our Company would
make an offer to all shareholders to buy their holdings at a
fixed price above the market value. Shareholders have the
option to either accept the offer and tender their shares or
reject the offer if they believe the premium offered is
insufficient compensation. With a poison pill in place, a
bidder must receive the blessing of the board of directors prior
to making an offer to shareholders. Absent that blessing, the
board of directors can declare the bidder an "adverse person"
and trigger the poison pill.
Once triggered, the poison pill allows all shareholders, EXCEPT
THE BIDDER, to buy shares of Company common stock at half the
current market price. This will dilute the value of the bidders
shareholdings by about 50%. This threat of dilution poses such
a risk to a bidder, that they are forced to negotiate a takeover
with the board of directors.
The argument that a board of directors needs a poison pill in
order to negotiate a better offer from bidders or prevent
so-called "abusive takeover practices" is deceptive. In 1986,
the Chief Economist of the U.S. Securities and Exchange
Commission issued a study entitled THE EFFECTS OF POISON PILLS
ON THE WEALTH OF TARGET SHAREHOLDERS that concluded "Overall,
the evidence presented here is consistent with the view that
poison pills are not in the best interest of shareholders."
We strongly believe that it is the shareholders (who are the
owners of the Company), not the directors and managers (who
merely act as agents for the owners), who should have the right
to decide what is or is not a fair price for their
shareholdings. Our Company's poison pill takes this decision
away from shareholders by forcing bidders to negotiate with the
board.
<PAGE>8
MANAGEMENT'S RESPONSE
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE AGAINST
THIS RESOLUTION FOR THE FOLLOWING REASONS:
The Board believes that the Preferred Stock Purchase Rights
Plan (the "Rights Plan") is a sound and reasonable means of
protecting against unfair takeover practices and is both
appropriately within its discretion and an essential exercise of
its fiduciary obligations to all shareholders.
The Rights Plan does not preclude a prospective bidder from
making an offer for the Corporation. It is not intended to, and
would not, prevent a change in control which the Board, in the
exercise of its fiduciary duties, found to be in the best
interest of the Corporation and its shareholders.
The Rights Plan is designed to encourage any prospective
bidders for the Corporation to negotiate with the Corporation's
Board. The Board believes that its ability to negotiate
effectively with a potential acquirer on behalf of all
shareholders is significantly greater than that of the
shareholders individually. A bidder who chooses to bypass the
Board is pursuing its own interests and is not concerned with
the interests of the other shareholders. In this regard, it is
important to remember that hostile acquirers are interested in
buying a company as cheaply as they can. Without the Rights
Plan, the Corporation could find itself negotiating with the
acquirer from a defensive posture rather than from its strongest
bargaining position. While a bidder may make an offer for the
Corporation's stock which is in excess of the stock's current
market price, without such negotiations the premium offered may
not reflect the long-term value of the Corporation.
The Board strongly disagrees with the view that rights plans
deter legitimate acquisition proposals from being made or
depress the price of the stock of corporations adopting them.
The Performance Graph on page 13 of this Proxy Statement clearly
demonstrates this Corporation's strong performance in increasing
shareholder value.
Moreover, studies by Georgeson & Co., a leading investor
communications firm, have concluded that "(rights plans) do not
prevent takeovers nor do they diminish the value of a company's
stock." These studies also indicated that "companies with
(rights plans) receive premiums 69% higher in takeover contests
than companies without (rights plans)."
The Corporation's Board of Directors specifically examined its
fiduciary responsibilities under Ohio law when it adopted the
Rights Plan in 1989. Under Ohio law the Board is responsible
for managing and directing the Corporation's business and
affairs. The Board believes that the adoption of the Rights
Plan was a valid exercise of that responsibility and that its
recommendation to vote against this proposal is also consistent
with its fiduciary duties.
The Rights Plan was unanimously adopted by the Board of
Directors, 17 of 20 of whom were outside directors. Ohio law
expressly authorizes directors to adopt plans such as the Rights
Plan without shareholder approval and allocates to the directors
the responsibilities, which cannot be delegated to the
shareholders, to select the time frame for the achievement of
corporate goals and to approve any business combination or
similar transaction that results in a change in control of the
Corporation. The Board of Directors believes that the Rights
Plan simply gives it the necessary tool to enable it to
discharge this responsibility to achieve a result that is in the
best interests of the Corporation and its shareholders.
The Board may, pursuant to the terms of the Rights Plan, redeem
the rights to permit an acquisition that it believes to be in
the best interests of the Corporation and its shareholders.
Redemption of the rights now would strip shareholders of the
protection offered by the Rights Plan and, ultimately, could
reduce the Corporation's long-term value for its shareholders.
Please note that adoption of this proposal would not, in
itself, redeem the rights, but would simply amount to a request
that the rights be redeemed unless approved by a majority of
voting shares at a subsequent shareholders' meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE AGAINST
THIS SHAREHOLDER PROPOSAL.
<PAGE>9
SHAREHOLDER PROPOSAL NO. 2
Operating Engineers Construction Industry and Miscellaneous
Pension Fund, Pittsburgh, Pennsylvania, has indicated that it is
the beneficial holder of 4,500 shares of the Corporation's
common stock and has given notice of its intention to present
the following proposal for action at the Annual Meeting.
BE IT RESOLVED: That the stockholders of Star Banc Corporation
(or "Company") urge that the Board of Directors take the
necessary steps, in compliance with Ohio state law, to
declassify the Board of Directors for the purpose of director
elections. The Board declassification shall be done in a manner
that does not affect the unexpired terms of directors previously
elected.
SHAREHOLDER'S SUPPORTING STATEMENT
The Board of Directors of the Company is divided into three
classes serving staggered three-year terms. It is our belief
that the classification of the Board of Directors is not in the
best interests of the Company and its shareholders. The
elimination of the staggered board would require each director
to stand for election annually. This procedure would allow
shareholders an opportunity to annually register their views on
the performance of the board collectively and each director
individually. Concerns that the annual election of all
directors would leave the Company without experienced board
members in the event that all incumbents are voted out is
unfounded. If the owners should choose to replace the entire
board, it would be obvious that the incumbent directors'
contributions were not valued.
It is our belief that a company's corporate governance
procedures and practices, and the level of management
accountability they impose, are related to the financial
performance of the company. While the Company's current
performance may be deemed to be adequate, we believe sound
corporate governance practices, such as the annual election of
all directors, will impose the level of management
accountability necessary to help ensure that a good performance
record is attainable over the long-term. Regardless of whether
a shareholder believes the current Board or management team is
performing satisfactorily or not, we believe it is clearly in
the best interest of the Company and its shareholders that a
process be in place which allows shareholders to take definitive
action as owners if they believe the Board is failing to realize
the full potential of the Company's assets.
A classified board of directors protects the incumbency of the
Board of Directors and current management which in turn limits
accountability to stockholders. In addition to a classified
Board, we believe the Company has the following measures in
place which further protect incumbency and limit accountability
to shareholders: no confidential or secret ballot proxy voting,
change-in-control or golden parachute severance agreements for
selected senior management and a poison pill ("shareholder
rights") anti-takeover plan. We believe that allowing
shareholders to annually register their views on the performance
of the Board and each Director is one of the best methods to
ensure that our Company will be managed in the best interest of
shareholders. We urge your support for this proposal.
MANAGEMENT'S RESPONSE
The Board of Directors unanimously recommends a vote AGAINST
this resolution for the following reasons:
The Corporation has had a staggered board since first
authorized by the shareholders in 1983, and it has worked well.
In 1988, shareholders against authorized the use of a classified
board by approving a change in the state of incorporation
through merger of the Delaware corporation into a new Ohio
corporation, whose Articles of Incorporation provided for its
directors to be divided into three classes.
The Board believes that the success of the Corporation in
producing long term shareholder value, as reflected in dividend
growth and capital appreciation, requires long term and
strategic planning, capital commitments and careful and
consistent application of financial and other resources. In the
opinion of the Corporation's Board, a classified Board of
Directors facilitates continuity and stability of leadership and
policy by assuring that experienced personnel familiar with the
Corporation and its business will be on the Board of Directors
at all times. The classified Board of Directors
<PAGE>10
is also intended to prevent precipitous changes in the composition of
the Corporation's Board and serves to moderate corresponding
precipitous changes in the Corporation's policies, business
strategies and operations. Board classification is intended to
encourage any person seeking to acquire control of the
Corporations to initiate such an action through arm's length
negotiations with management and the Board of Directors, who are
in a position to negotiate a transaction which is in the best
interests of the Corporation and fair to all of the
Corporation's shareholders.
Election of directors by classes is a common practice that has
been adopted by many public companies. It is specifically
authorized by laws of many states, including the State of Ohio,
as well as by the rules of the New York Stock Exchange.
The Corporation's Board of Directors currently consists of 18
members, 15 of whom are not current or former employees of the
Corporation or any of its banking subsidiaries.
The Board of Directors recently established a Governance
Committee consisting entirely of outside directors charged,
among other things, with the responsibility to periodically
assess and evaluate the performance of the Chairman of the
Board, the Chief Executive Officer and individual directors.
These evaluations will be used, in part, to determine whether
the Committee shall recommend that directors be nominated for
reelection. The Board of Directors believe that these practices
and procedures are further evidence of their commitment to sound
corporate governance.
Please note that adoption of this proposal would not, in
itself, "declassify" the Board of Directors, but would simply
amount to a request that the Board take the "necessary steps" to
accomplish such results.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE AGAINST
THIS SHAREHOLDER PROPOSAL.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of Star Banc Corporation is composed
entirely of independent outside directors and is responsible for
setting corporate compensation policy.
Base salaries of all executives except Mr. Grundhofer were
determined by the Compensation Committee using senior
management's recommendations. Salaries were decided based on
individual performance, and industry standards as determined in
the Hewitt Associates Compensation Survey and information from
regional bank holding companies.
The Corporation's policy for bonus compensation is as defined
in the Executive Bonus Plan. Please see the discussion and the
Executive Bonus Plan included in this Proxy Statement for
additional information. The purpose of the Executive Bonus Plan
is to reward the achievement of Corporate financial objectives
established in advance by the Compensation Committee. The
performance measures for determining plan awards include fully
diluted earnings per share (EPS), return on average assets
(ROA), credit quality and individual performance against
objectives. The plan provides awards, however, only if the
Corporation's EPS and ROA reach specified thresholds established
by the Compensation Committee and approved by the Board of
Directors at the beginning of each plan year. The opportunity
for a bonus award for the Named Executives in 1994 ranged from
20% to 125% of base salary depending on the individual's
position, and the amount by which actual EPS and ROA exceeded
the thresholds set. The initial threshold for a bonus award was
$3.40 EPS and 1.25% ROA, which would have resulted in record net
income for the Corporation. Actual EPS was $3.86 and actual ROA
was 1.41%. Bonuses were paid in cash only for all but 11
executives (who comprised the Management Committee of the
Corporation), whose bonuses were paid 75% in cash and 25% in the
Corporation's common stock.
The purpose of the Corporation's Stock Incentive Plan is to
incent long-term growth in the Corporation's shareholder value.
Stock options are granted pursuant to the plan, using guidelines
which include corporate performance, individual responsibilities
and performance, and competitive indices including the Hewitt
Associates Compensation Survey and information from regional
bank holding companies. 1994 options are subject to a vesting
schedule with full vesting four years from the date of grant.
<PAGE>11
Mr. Grundhofer's compensation was determined by the
Compensation Committee and approved by the Board. His current
annual base salary of $600,000 was established under the terms
of his employment agreement with the Corporation, and is
consistent with industry standards as determined from the Hewitt
Associates Compensation Survey. His bonus was based on the same
criteria as that described previously. He was granted 60,000
options on June 14, 1994 exercisable pursuant to a 4-year
vesting schedule at a grant price of $38.00; and 60,000 options
on December 13, 1994 exercisable pursuant to a 4 year vesting
schedule at a grant price of $33.875.
The goal of the Corporation's compensation program is to
attract, motivate, reward and retain the management talent
required to achieve corporate objectives and increase
shareholder value.
Compensation Committee of
Star Banc Corporation Board of Directors
Laurance L. Browning, Jr. J.P. Hayden, Jr. Roger L. Howe
Daniel J. Meyer Thomas E. Petry William C. Portman
The following tables list information as to compensation
received for services by the Chief Executive Officer and the
next four highest compensated executive officers of the
Corporation in all capacities to the Corporation and its
subsidiaries during the year ended December 31, 1994.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long Term
Annual Compensation Compensation All Other
Name and Salary Bonus Other Options Compensation
Principal Position Year ($)(1) ($)(2) ($) (#) ($)
<S> <C> <C> <C> <C> <C> <C>
Jerry A. Grundhofer 1994 575,192 718,990 113,674(3) 120,000 11,319(6)
Chairman, President, Chief 1993 304,615 190,743 170,271 200,000 1,980
Executive Officer and 1992(11) - - - - -
Director of the Corporation
and Chairman of
Star Bank, N.A.
Samuel M. Cassidy 1994 310,000 316,200 - - 41,640(7)
Executive Vice President 1993 300,385 150,282 - 7,500 10,110
and Director of the 1992 300,769 120,154 - 31,200 8,728
Corporation and President
and Chief Executive Officer
of Star Bank, N.A.
Richard K. Davis 1994 225,000 229,500 105,359(4) 20,000 832(8)
Executive Vice President 1993(12) - - - - -
of the Corporation 1994(13) - - - - -
David M. Moffett 1994 225,000 229,500 76,650(5) 20,000 2,668(9)
Executive Vice President 1993(12) - - - - -
and Chief Financial Officer 1992(13) - - - - -
of the Corporation
Joseph A. Campanella 1994 220,000 224,400 - 10,000 7,432(10)
Executive Vice President 1993 220,000 110,207 - 18,000 7,392
of the Corporation 1992 197,616 78,585 - 23,400 5,894
</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 a tax gross-up of $36,121 for taxable fringe
benefits.
(4) Includes $100,066 in relocation expenses.
<PAGE>12
(5) Includes a tax gross-up of $25,419 for taxable fringe
benefits and $35,015 in club initiation and membership fees.
(6) Includes $9,240 Corporate contribution to the Star Banc
Corporation Thrift Savings 401(k) Plan and $2,079 split dollar
life insurance premium. Split dollar insurance premiums are
based on the cost of equivalent group term coverage.
(7) Includes $9,240 Corporate contribution to the Star Banc
Corporation Thrift Savings 401(k) Plan and $1,134 split dollar
life insurance premium. Split dollar insurance premiums are
based on the cost of equivalent group term coverage. Includes
$31,266 of a one-time nonqualified pension payment.
(8) Includes $832 split dollar life insurance premium. Split
dollar insurance premiums are based on the cost of equivalent
group term coverage.
(9) Includes $1,817 Corporate contribution to the Star Banc
Corporation Thrift Savings 401(k) Plan and $851 split dollar
life insurance premium. Split dollar insurance premiums are
based on the cost of equivalent group term coverage.
(10) Includes $6,600 Corporate contribution to the Star Banc
Corporation Thrift Savings 401(k) Plan and $832 split dollar
life insurance premium. Split dollar insurance premiums are
based on the cost of equivalent group term coverage.
(11) Mr. Grundhofer was not employed by the Corporation in 1992.
(12) Mr. Davis and Mr. Moffett were not listed in the Summary
Compensation Table in 1993.
(13) Mr. Davis and Mr. Moffett were not employed by the
Corporation in 1992.
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
(a) (b) (c) (d) (e) (f)(1)
% of Total Options
Individual Grants Options Granted to Employees Exercise or Expiration Grant date
Name Granted (#) in Fiscal Year base price ($) Date present value ($)
<S> <C> <C> <C> <C> <C>
Jerry A. Grundhofer 60,000 13.10 $38.00 06/11/04 $447,300
60,000 13.10 $33.875 12/10/04 $298,920
TOTAL 120,000 26.20 $746,220
Samuel M. Cassidy - - - - -
Richard K. Davis 20,000 4.40 $33.875 12/10/04 $99,640
David M. Moffett 20,000 4.40 $33.875 12/10/04 $99,640
Joseph A. Campanella 10,000 2.20 $33.875 12/10/04 $49,820
</TABLE>
(1) Grant date option values calculated through use of the
"Black Scholes" option pricing model. Values are calculated
assuming risk free rates of return of 7.3% and 7.8%, dividend
growth rate of 9.7% annually, volatility rates of 16.8% and
19.8% and quarterly reinvestment of dividends. No adjustments
have been made for nontransferability or risk of forfeiture.<PAGE>
<TABLE>
AGGREGATED OPTIONS EXERCISED IN LAST FISCAL YEAR
AND YEAR END OPTION VALUE
<CAPTION>
(a) (b) (c) (d) (e)
Number of Value of unexercised
unexercised in the money options
Shares acquired Value realized options 12/31/94 (#) 12/31/94 ($)
Name on exercise (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable
<S> <C> <C> <C> <C>
Jerry A. Grundhofer - - 100,000 / 220,000 0 / $150,000
Samuel M. Cassidy - - 57,500 / 0 $296,188 / 0
Richard K. Davis - - 16,666 / 53,334 $35,415 / $120,835
David M. Moffett - - 16,666 / 53,334 $31,249 / $112,501
Joseph A. Campanella - - 49,768 / 23,501 $359,465 / $46,939
</TABLE>
<PAGE>13
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, 1994 with the cumulative total return on the
Keefe, Bruyette & Woods, Inc., 50 Bank Stock Index and the
Standard & Poor's 500 Stock Index. The comparison assumes $100
was invested on January 1, 1990 in the Corporation's Common
Stock and in each of the foregoing indices and assumes
reinvestment of dividends.
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
Star Banc Corp $100.00 $80.35 $125.32 $186.34 $186.99 $201.63
KBW 50 Index $100.00 71.81 113.67 144.84 152.86 145.06
S&P 500 $100.00 96.89 126.41 136.04 149.82 151.77
</TABLE>
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 salary 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 1995 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.
<TABLE>
<CAPTION>
YEARS OF SERVICE
CURRENT
ANNUAL
EARNINGS 10 15 20 25 30 35
<S> <C> <C> <C> <C> <C> <C>
125,000 15,697 23,546 31,395 39,243 47,092 54,941
150,000 19,107 28,660 38,213 47,767 57,320 66,873
175,000 22,516* 33,774* 45,032* 56,291* 67,549* 78,807*
200,000 25,926* 38,889* 51,851* 64,814* 77,777* 90,740*
225,000 29,335* 44,003* 58,670* 73,338* 88,006* 102,673*
250,000 32,745* 49,117* 65,489* 81,861* 98,234* 114,606*
300,000 39,564* 59,345* 79,127* 98,909* 118,691* 138,472*
400,000 53,201* 79,802* 106,403* 133,003* 159,604* 186,204*
450,000 60,020* 90,030* 120,041* 150,051* 180,061* 210,071*
500,000 66,839* 100,259* 133,678* 167,098* 200,517* 233,937*
550,000 73,658* 110,487* 147,317* 184,146* 220,975* 257,804*
600,000 80,477* 120,716* 160,954* 201,193* 241,431* 281,670*
700,000 94,115* 141,172* 188,230* 235,287* 282,345* 329,402*
800,000 107,753* 161,629* 215,506* 269,382* 323,258* 377,135*
900,000 121,391* 182,086* 242,781* 303,477* 364,172* 424,867*
1,000,000 135,029* 202,543* 270,057* 337,571* 405,086* 472,600*
1,100,000 148,666* 223,000* 297,333* 371,666* 445,999* 520,332*
1,200,000 162,304* 243,456* 324,608* 405,761* 486,913* 568,065*
1,300,000 175,942* 263,913* 351,884* 439,855* 527,826* 615,797*
1,400,000 189,580* 284,370* 379,160* 473,950* 568,740* 663,530*
1,500,000 203,218* 304,827* 406,436* 508,044* 609,653* 711,262*
</TABLE>
<PAGE>14
* The above benefits do not reflect the $150,000
compensation limit or the $111,189 annual benefit limit which
apply under Federal law.
The benefits in the shaded area do not reflect the $150,000
compensation limit or the $111,189 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 "Current Annual
Earnings" shown above.
For purposes of computing benefits under this Plan, on December
31, 1994, Mr. Grundhofer had 1 year of credited service;
Mr.Cassidy, 36; Mr. Campanella, 7; Mr. Davis, 1; and Mr.
Moffett, 1.
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 vested supplemental
retirements 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 receive benefits equal
to those which would have been payable in the absence of
legislated limits on compensation and benefits. Participants
eligible for the second level of augmented combined benefits
under the qualified, non-qualified and certain other prior
employer plans as a percentage of final average compensation
(base plus bonus) include Messrs. Grundhofer, Cassidy,
Campanella, Davis, Moffett and certain other executive officers.
Eligibility for such augmented benefits is determined by the
Compensation Committee of the Board of Directors based on
individual performances and level of responsibility. The 1995
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.
<TABLE>
<CAPTION>
YEARS OF SERVICE
CURRENT
ANNUAL
EARNINGS 10 15 20 25 30 35
<S> <C> <C> <C> <C> <C> <C>
125,000 52,492 44,643 36,794 28,946 21,097 13,248
150,000 62,720 53,167 43,614 34,060 24,507 14,954
175,000 72,949 61,691 50,433 39,174 27,916 16,658
200,000 83,177 70,214 57,252 44,289 31,326 18,363
225,000 93,406 78,738 64,071 49,403 34,735 20,068
250,000 103,633 87,261 70,889 54,517 38,144 21,722
300,000 124,090 104,309 84,527 64,745 44,963 25,182
400,000 165,004 138,403 111,802 85,202 58,601 32,001
450,000 185,461 155,451 125,440 95,430 65,420 35,410
500,000 205,917 172,497 139,078 105,658 72,239 38,819
550,000 226,375 189,546 152,716 115,887 79,058 42,229
600,000 246,831 206,592 166,354 126,115 85,877 45,638
700,000 287,745 240,688 193,630 146,573 99,515 52,458
800,000 328,658 274,782 220,905 167,029 113,153 59,276
900,000 369,572 308,877 248,182 187,486 126,791 66,096
1,000,000 410,485 342,971 275,457 207,943 140,428 72,914
1,100,000 451,399 377,065 302,732 228,399 154,066 79,733
1,200,000 492,313 411,161 330,009 248,856 167,704 86,552
1,300,000 533,226 445,255 357,284 269,313 181,342 93,371
1,400,000 574,140 479,350 384,560 289,770 194,980 100,190
1,500,000 615,053 513,444 411,835 310,227 208,618 107,009
</TABLE>
Employment Agreements. The Corporation has entered into
employment agreements with severance benefits with Messrs.
Grundhofer, Davis, Moffett and Campanella 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
<PAGE>15
a lump sum benefit to the officer, including a gross-up for federal income
tax purposes if necessary pursuant to Section 280G of the
Internal Revenue Code, 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. Change in Control is defined in the document and
includes certain mergers, sales of assets or tender offers.
Among other things, Mr. Grundhofer's agreement provides for
severance benefits of three times salary and bonus in the event
of a qualified termination during his Employment Period (either
before or following a Change in Control), and full vesting under
the Non-Qualified Retirement Plan in the event of a qualified
termination following a Change in Control. In addition, Mr.
Grundhofer's agreement provides for the granting of past
employer service credit for vesting purposes under the
Non-Qualified Retirement Plan upon three years of service.
Messrs. Davis, Moffett and Campanella have agreements which
provide for lump sum benefits of three times salary and bonus in
the event of a qualified termination following a Change in
Control during the officer's protected period.
Retention Agreements. The Corporation has entered into
retention agreements with Messrs. Davis, Moffett and Campanella.
The agreements are designed to enable the Corporation to
maintain, reward and encourage continuity and excellence in
senior management. The agreements provide for a lump sum
payment in the event that the executive remains in good standing
in his position with the Corporation for a specified period of
time. The agreements provide, respectively, for payments of
$350,000 to Mr. Davis, $350,000 to Mr. Moffett, and $200,000 to
Mr. Campanella if each executive is actively employed with the
Corporation on January 1, 2000.
COMPENSATION OF DIRECTORS
In 1994, 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 seven meetings in 1994.
The Board of Directors has an Executive Committee, an Audit
Committee, a Compensation Committee and a Governance Committee.
The Executive Committee held ten meetings in 1994. 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 1994 and reviewed
the work of Arthur Andersen LLP, the Corporation's outside
independent auditor for 1994. The Committee reviews
recommendations on various matters made by Arthur Andersen LLP
and action taken by management and the Corporation's internal
auditor to implement these recommendations. The Committee also
considers the proposals of Arthur Andersen LLP 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, and Hayden.
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
Compensa-
<PAGE>16
tion Committee held five meetings in 1994. The current
members of the Compensation Committee are Messrs. Browning,
Hayden, Howe, Meyer, Petry, and Portman.
The Governance Committee held one meeting in 1994. The
Committee was created to administer the affairs of the Board of
Directors, to evaluate current directors, and to nominate new
directors. The current members of the Governance Committee are
Messrs. Bridgeland, Browning, Dannemiller, Hayden and Portman.
Shareholders who wish to suggest director nominees should
contact the Committee by mail at the Corporate Headquarters.
All Directors except Mr. Hayden and Mr. Mechem attended at
least 75% of the aggregate of the number of regular and special
meetings of the Board of Directors held during 1994 and all
committees of the Board on which the director served during the
1994 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 9, 1995. 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 1994. 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. O'Maley, a Director of the Corporation, is Chairman,
President and Chief Executive Officer of Ohio National Life
Insurance Company, which provides life insurance for the
Corporation's employees.
INDEPENDENT AUDITORS
The Board of Directors appointed Arthur Andersen LLP as
independent auditors of the Corporation and its subsidiaries for
the year 1994. The Corporation anticipates that Arthur Andersen
LLP will be appointed independent auditors for 1995 at the
regular meeting of the Board of Directors to be held in April.
Representatives of Arthur Andersen LLP 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.
<PAGE>17
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
Thomas J. Lakin
Executive Vice President,
General Counsel and Secretary
Cincinnati, Ohio
March 13, 1994
YOU MAY REQUEST A COPY OF THE FORM lO-K ANNUAL REPORT FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION (LESS EXHIBITS) BY
CALLING (513) 632-4008 OR WRITING TO DAVID M. MOFFETT, EXECUTIVE
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER, STAR BANC
CORPORATION, 425 WALNUT STREET, CINCINNATI, OHIO 45201.
<APPENDIX> Proxy Card
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 Thomas
J. Lakin 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: Westin
Hotel, Taft Ballroom, 3rd Floor, Fifth and Vine Streets,
Cincinnati, Ohio, on Tuesday, April 11, 1995, 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
Management Recommends a Vote FOR Issue 1
1. Election of Directors for a Three-Year Term Ending in 1998
John C. Dannemiller For Against Roger L. Howe For Against
Thomas J. Klinedinst, Jr. For Against William C. Portman For Against
Oliver W. Waddell For Against David B. O'Maley For Against
Management Recommends a Vote FOR Issue 2
2. To approve the Star Banc Corporation Executive Bonus Plan to
pay incentives to senior officers only in the event that
specified performance thresholds are met.
For Against Abstain
Management Recommends a Vote FOR Issue 3
3. To amend Article Fourth of the Articles of Incorporation of
the Corporation to increase the number of authorized shares of
common stock from fifty million (50,000,000) shares to one
hundred million (100,000,000) shares.
For Against Abstain
Management Recommends a Vote AGAINST Issue 4
4. To adopt the shareholder proposal to urge the Board of
Directors to redeem the Preferred Stock Purchase Rights carried
with the common stock unless a majority of voting shares approve
of these rights at a meeting of shareholders held as soon as is
practical.
For Against
Management Recommends a Vote AGAINST Issue 5
5. To adopt the shareholder proposal to urge the Board of
Directors to take the necessary steps, in compliance with Ohio
state law, to declassify the Board of Directors for the purpose
of director elections. The Board declassification shall be done
in a manner that does not affect the unexpired terms of
directors previously elected.
For Against
6. At their discretion, the proxies are authorized to vote upon
such other business as may properly come before the meeting.
This proxy when properly executed will be voted in the manner directed
herein by the shareholder. If no direction is made, this proxy will be
voted in accordance with management's recommendations.
Please sign exactly as name appears. When shares are held by joint
tenants, both should sign. When signing as attorney, executor,
administrator, trustee, or guardian, please give full title as such. If
a corporation, please sign in full corporate name by President or other
authorized officer. If a parternship, please sign in partnership name
by authorized person.
NAME DATE NAME DATE
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