<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to 14a-11(c) or Rule 14a-12
FIRSTAR CAPITAL CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
---------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------------
(5) Total fee paid:
---------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
---------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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<PAGE> 2
[FIRSTAR LOGO] FIRSTAR CORPORATION
777 EAST WISCONSIN AVENUE
P.O. BOX 532
MILWAUKEE, WISCONSIN 53202
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 16, 1998
To the Holders of Common Stock of
Firstar Corporation:
The annual meeting of the shareholders of Firstar Corporation will be held
in the Miller Room, Miller Pavilion, 910 East Michigan Street, Milwaukee,
Wisconsin, on Thursday, the 16th day of April 1998, at two o'clock p.m. The
purposes of the meeting are:
1. To elect 6 directors to hold office until their successors are duly
elected and qualified.
2. To amend the 1988 Incentive Stock Plan for Key Employees as set forth in
the attached proxy statement.
3. To amend the Annual Executive Incentive Plan as set forth in the
attached proxy statement.
4. To transact any other business which may properly come before such
meeting or any adjournments thereof.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, IT IS IMPORTANT THAT YOU EXECUTE,
DATE AND RETURN PROMPTLY YOUR PROXY IN THE ENCLOSED POSTPAID ENVELOPE. YOU MAY
WITHDRAW YOUR PROXY AT ANY TIME PRIOR TO ITS BEING VOTED.
/s/ William J. Schulz
William J. Schulz
Senior Vice President
and Secretary
March 12, 1998
<PAGE> 3
FIRSTAR CORPORATION
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
APRIL 16, 1998
PERSONS MAKING THE SOLICITATION
This proxy statement and the accompanying proxy card are being mailed to
holders of common stock commencing on or about March 13, 1998 and are furnished
in connection with the solicitation of proxies by the Board of Directors of
Firstar Corporation (hereinafter referred to as "Firstar") at the expense of
Firstar through the mails for use at the annual meeting of shareholders to be
held April 16, 1998 at two o'clock p.m. in the Miller Room, Miller Pavilion, at
910 East Michigan Street, Milwaukee, Wisconsin 53202, or at any adjournments
thereof. Firstar has engaged the services of Georgeson & Co. of New York City to
assist in the solicitation of proxies at a fee of $8,000 plus certain expenses.
Employees of Firstar may also solicit proxies by telephone and in person at no
extra cost to Firstar. Properly signed and dated proxies received by the
Secretary of Firstar prior to or at the annual meeting will be voted as
instructed thereon or, in the absence of such instruction, "FOR" Items 1, 2 and
3 and in accordance with the best judgment of the persons named in the proxy on
any other matters which may properly come before the meeting. Any shareholder
giving a proxy has the power to revoke it at any time before it is actually
voted by delivery of a written notice of revocation to the Secretary of Firstar
at the above-indicated address. Unless so revoked, the shares represented by
each proxy will be voted at the meeting and at any adjournments thereof.
VOTING PROCEDURES/VOTES REQUIRED
A quorum consists of a majority of the shares entitled to vote represented
at the annual meeting in person or by proxy (including proxies reflecting
abstentions or broker non-votes). Broker non-votes are shares which are
represented at the meeting by proxy for which the record holder has not been
granted the authority to vote on one or more proposals. Once a share is
represented at the meeting it is deemed present for quorum purposes throughout
the meeting or any adjourned meeting unless a new record date is or must be set
for the adjourned meeting. The six nominees for director (Item 1) who receive
the largest number of votes cast "FOR" will be elected as directors if a quorum
is present. Shares represented at the meeting for which authority to vote for a
nominee for director is withheld and non-votes will not affect the determination
of the outcome of the election of directors. In order to be approved, the
proposal to amend the Firstar Corporation Incentive Stock Plan (Item 2) must
receive more votes "FOR" the proposal than "AGAINST" provided the total vote
cast represents a majority of all outstanding shares. The proposal to amend the
Firstar Corporation Annual Executive Incentive Plan (Item 3) must receive more
votes "FOR" the proposal than "AGAINST" in order to be approved. For purposes of
determining the vote regarding Items 2 and 3, abstentions or non-votes will not
affect the determination of whether the proposals are approved.
VOTING SECURITIES AND OWNERSHIP THEREOF
BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Holders of record of common stock of Firstar at the close of business on
February 27, 1998 (the "Record Date") will be entitled to one vote for each
share of common stock then held. There were 145,074,999 shares of Firstar's
common stock outstanding on the Record Date.
1
<PAGE> 4
The following table sets forth information as of December 31, 1997 as to
the "beneficial ownership" of the common stock of Firstar by all of the
directors named in the proxy statement, the five most highly compensated
executive officers of Firstar, and directors and all executive officers of
Firstar as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME BENEFICIAL OWNERSHIP(1) PERCENT OF CLASS(2)
---- ----------------------- -------------------
<S> <C> <C>
Michael E. Batten...................... 1,600
Chris M. Bauer(3)...................... 149,397
John A. Becker(3)...................... 494,518
Robert C. Buchanan..................... 1,400
George M. Chester, Jr.(4).............. 31,800
Roger H. Derusha....................... 63,200
Roger L. Fitzsimonds(3)................ 776,895
James L. Forbes........................ 2,000
Joe F. Hladky.......................... 11,264
C. Paul Johnson(3)(5).................. 1,595,105 1.1%
James H. Keyes(6)(10).................. 9,271
William H. Lacy(10).................... 2,393
Sheldon B. Lubar(7).................... 382,352
Kenneth P. Manning..................... 1,000
Daniel F. McKeithan, Jr.(8)............ 28,800
Robert O'Toole......................... 400
Steven R. Parish(3).................... 31,222
Judith D. Pyle......................... 4,000
Richard W. Schoenke(3)................. 133,215
William W. Wirtz(9).................... 2,970,240 2.1%
Aggregate for all directors and
executive officers as a group(3)..... 7,824,426 5.4%
</TABLE>
- ---------------
(1) Unless otherwise indicated, the beneficial owners exercise sole voting and
investment powers.
(2) Unless otherwise indicated, percentages are less than one percent.
Percentage ownership as of December 31, 1997.
(3) Includes shares which have been allocated to the individual as of December
31, 1997 under Firstar's Thrift and Sharing Plan and for which the
individuals have sole voting rights and investment power: Chris M.
Bauer - 17,453; John A. Becker - 38,134; Roger L. Fitzsimonds - 18,609;
Richard W. Schoenke - 3,335; and all directors and executive officers as a
group - 276,662. Also includes the right to acquire shares upon exercise of
options granted under Firstar stock option plans: Chris M. Bauer - 123,400;
John A. Becker - 362,000; Roger L. Fitzsimonds - 611,600; C. Paul
Johnson - 72,922; Steven R. Parish - 27,400; Richard W. Schoenke - 124,200;
and all directors and executive officers as a group - 1,968,490.
(4) Includes 30,200 shares for which voting and investment powers are shared.
(5) Includes 6,802 shares for which voting and investment powers are shared.
(6) Includes 1,117 shares for which voting and investment powers are shared.
(7) Includes 293,624 shares for which voting and investment powers are shared.
(8) Includes 800 shares for which voting and investment powers are shared.
(9) Includes 2,919,040 shares held by companies in which Mr. Wirtz is a
controlling shareholder and 36,800 shares in a pension trust.
(10) Includes equivalent shares of nonvoting stock held in the director's
account under the Firstar Directors' Deferred Compensation Plan: James H.
Keyes - 6,754; William H. Lacy - 1,793.
As of December 31, 1997, the following group was the beneficial owner of
more than 5% of Firstar's outstanding common stock:
Firstar, through subsidiaries which conduct various fiduciary
activities, held 14,856,392 shares, or 10.3% of Firstar's common stock in
estates, trusts and other fiduciary accounts. Sole voting power is
possessed with respect to 1,201,650 shares, while sole investment power is
retained for 11,716,392 shares. Shares held in the Firstar Corporation
Thrift and Sharing Plan are included as having sole investment power by
virtue of the ability of Firstar to amend the plan. Included in these
totals are 10,612,273 shares, or 7.3% of Firstar's common stock, held by
the Firstar Corporation Thrift and Sharing Plan.
2
<PAGE> 5
ELECTION OF DIRECTORS
The Articles of Incorporation of Firstar provide that the Board of
Directors of Firstar shall be divided into three classes as nearly equal in
number as possible, with the term of office of one class expiring each year.
Each class shall hold office for a term of three years. At the annual meeting,
six directors will be elected to a three-year term expiring in 2001.
It is the intention of the persons named in the proxy, unless otherwise
directed, to vote the proxies given them for the election of these nominees. All
those named as nominees are presently serving as directors and, except for
Messrs. Lacy and Manning, were elected by the shareholders. All of the nominees
have consented to being named in this proxy statement and to serve if elected,
and the Board of Directors has no reason to believe that any of the named
nominees will be unable to act. However, if any such nominee prior to election
becomes unable to serve or for good cause will not serve, the proxies will be
voted for such substitute nominee as may be selected by the Board of Directors
of Firstar or only for the remaining nominees. The names, ages and business
experience during the past 5 years (including principal occupations and
employment during that period) of the nominees, all principal positions and
offices with Firstar and Board committee memberships presently held by them, and
certain directorships held in other companies are set forth below. All directors
not named as members of the Executive Committee of the Board of Directors are
alternate members of that committee. None of the directors or executive officers
are related. With the exception of Messrs. Fitzsimonds and Becker, all of the
directors' business experience listed has been with organizations unaffiliated
with Firstar.
NOMINEES FOR TERMS EXPIRING IN 2001
- --------------------------------------------------------------------------------
ROGER H. DERUSHA
Chairman of the Board and Director of Marinette Marine Corporation,
Marinette, Wisconsin. Ship designers and builders.
He is 67 years of age and has been a director of Firstar since 1980.
He is also a director of L.E. Jones Company of Menominee, Michigan.
- --------------------------------------------------------------------------------
WILLIAM H. LACY
Chairman and Chief Executive Officer of Mortgage Guaranty Insurance
Corporation and Chief Executive Officer of MGIC Investment Corporation,
Milwaukee, Wisconsin. Secondary mortgage market activities.
He is 53 years of age and has been a director of Firstar since January
1998.
He is also a director of the Milwaukee Redevelopment Corp. and Columbia
Health Systems, Inc.
- --------------------------------------------------------------------------------
SHELDON B. LUBAR
Chairman of Lubar & Co., Milwaukee, Wisconsin. Investment and management
firm.
He is 68 years of age and has been a director of Firstar since 1986 and is
a member of the Executive, Committee on Directors, Audit -- Examining,
Compensation, and Interstate Banking and Acquisitions Committees of the Board of
Directors.
He is also a director of Christiana Companies, Inc., Massachusetts Mutual
Life Insurance Company, MGIC Investment Corporation, Ameritech Corporation, EVI,
Inc., Jefferies Group, Inc., and various private industrial companies.
3
<PAGE> 6
- --------------------------------------------------------------------------------
KENNETH P. MANNING
Chairman of the Board and Chief Executive Officer of Universal Foods
Corporation, Milwaukee, Wisconsin. Manufacturer and marketer of "high-tech"
value-added food products.
He is 55 years of age and has been a director of Firstar since 1997. He is
also a director of Firstar Trust Company.
He is also a director of Badger Meter, Inc.
- --------------------------------------------------------------------------------
DANIEL F. McKEITHAN, JR.
President and Chief Executive Officer of Tamarack Petroleum Company, Inc.,
Milwaukee, Wisconsin. Operator of producing oil and gas wells. Also, President
and Chief Executive Officer of Active Investor Management, Inc., Milwaukee,
Wisconsin. Manager of oil and gas wells; and president of AIM and Associates, an
accounting firm.
He is 62 years of age and has been a director of Firstar since 1977 and is
a member of the Audit-Examining, Executive, Committee on Directors, and
Interstate Banking and Acquisitions Committees of the Board of Directors.
He is also a director of Marcus Corporation and WICOR, Inc. and a Trustee
of Northwestern Mutual Life Insurance Company.
- --------------------------------------------------------------------------------
WILLIAM W. WIRTZ
President and a director of Wirtz Corporation, Chicago, Illinois.
Diversified operations and investments.
He is 68 years of age and has been a director of Firstar since 1980 and is
a member of the Audit-Examining Committee of the Board of Directors.
He is also a director of Consolidated Enterprises, Inc., Forman Realty
Corporation, American Mart Corporation, 333 Building Corporation, Chicago
Stadium Corporation, Chicago Blackhawk Hockey Team, Inc. and Alberto-Culver
Company.
CONTINUING DIRECTORS WHOSE TERMS EXPIRE IN 1999
- --------------------------------------------------------------------------------
MICHAEL E. BATTEN
Chairman, Chief Executive Officer and a director of Twin Disc,
Incorporated, Racine, Wisconsin. Manufacturer of power transmission equipment.
He is 57 years of age and has been a director of Firstar since 1984 and is
a member of the Executive, Audit-Examining, Committee on Directors, and
Interstate Banking and Acquisitions Committees of the Board of Directors. He is
also a director of Firstar Trust Company.
He is also a director of Universal Foods Corporation, Briggs & Stratton
Corporation and Simpson Industries.
- --------------------------------------------------------------------------------
ROBERT C. BUCHANAN
President, Chief Executive Officer and a director of Fox Valley
Corporation, Appleton, Wisconsin. Manufacturer and marketer of paper products.
He is 57 years of age and has been a director of Firstar since 1994 and is
a member of the Compensation Committee of the Board of Directors.
He is also a director of Ariens Company, W.H. Brady Company, Charter
Manufacturing Company, Kaukauna Cheese and American Forest & Paper Association
and a Trustee of Northwestern Mutual Life Insurance Company and Lawrence
University.
4
<PAGE> 7
- --------------------------------------------------------------------------------
JAMES L. FORBES
President, Chief Executive Officer and a director of Badger Meter, Inc.,
Milwaukee, Wisconsin. Marketer and manufacturer of flow measurement technology.
He is 65 years of age and has been a director of Firstar since 1993 and is
a member of the Executive, Compensation, Committee on Directors, Employee
Benefit, and Interstate Banking and Aquisitions Committees of the Board of
Directors. He is also a director of Firstar Trust Company.
He is also a director of Universal Foods Corporation, United Wisconsin
Services and Journal Communications, Inc.
- --------------------------------------------------------------------------------
C. PAUL JOHNSON
Former Chairman of the Board and Chief Executive Officer of First Colonial
Bankshares Corporation.
He is 66 years of age and has been a director of Firstar since 1995 and is
a member of the Audit-Examining Committee. He is also a director of Firstar Bank
Illinois.
- --------------------------------------------------------------------------------
JAMES H. KEYES
Chairman of the Board, President and Chief Executive Officer of Johnson
Controls, Inc., Milwaukee, Wisconsin. Manufacturer of seating systems, interior
systems and batteries for the automotive original equipment and replacement
markets. Servicer of nonresidential building market with control systems and
services, and integrated facility management.
He is 57 years of age and has been a director of Firstar since 1993 and is
a member of the Committee on Directors, Compensation, Employee Benefit,
Executive, and Interstate Banking and Acquisitions Committees of the Board of
Directors. He is also a director of Firstar Bank Milwaukee, N.A.
He is also a director of Pitney Bowes Corporation, Universal Foods
Corporation and LSI Logic.
CONTINUING DIRECTORS WHOSE TERMS EXPIRE IN 2000
- --------------------------------------------------------------------------------
JOHN A. BECKER
President and Chief Operating Officer of Firstar.
He is 55 years of age, has been a director of Firstar since 1989 and is a
member of the Executive Committee of the Board of Directors. He is also a
director of Firstar Bank Milwaukee, N.A., Firstar Trust Company, Firstar Bank
Iowa, N.A., Firstar Bank Illinois, Firstar Bank Wisconsin and Firstar Bank
Minnesota, N.A.
He is also a director of Giddings & Lewis Corporation, Inc. and a Trustee
of Marquette University.
- --------------------------------------------------------------------------------
GEORGE M. CHESTER, JR.
Partner of Covington & Burling, Washington, DC. Law firm.
He is 50 years of age and has been a director of Firstar since 1988.
- --------------------------------------------------------------------------------
ROGER L. FITZSIMONDS
Chairman of the Board and Chief Executive Officer of Firstar.
He is 59 years of age, has been a director of Firstar since 1988 and is a
member of the Executive Committee and Committee on Directors of the Board of
Directors. He is also a director of Firstar Bank Milwaukee, N.A. and Firstar
Trust Company.
5
<PAGE> 8
- --------------------------------------------------------------------------------
JOE F. HLADKY
President and Chief Executive Officer of the Gazette Company, Cedar Rapids,
Iowa. Independent media company.
He is 57 years of age and has been a director of Firstar since 1991 and is
a member of the Audit-Examining Committee of the Board of Directors. He is also
a director of Firstar Bank Iowa, N.A.
- --------------------------------------------------------------------------------
ROBERT J. O'TOOLE
Chairman and Chief Executive Officer of A.O. Smith Corporation, Milwaukee,
Wisconsin. Diversified manufacturing company.
He is 57 years of age and has been a director of Firstar since 1997. He is
also a director of Firstar Bank Milwaukee, N.A.
He is also a director of Briggs & Stratton Corporation and Protection
Mutual Insurance Company.
- --------------------------------------------------------------------------------
JUDITH D. PYLE
Vice Chairman, and director of The Pyle Group LLC, Madison, Wisconsin.
Investments.
She is 54 years of age and has been a director of Firstar since 1989 and is
a member of the Audit-Examining Committee of the Board of Directors.
She is also a director of WPL Holdings.
- --------------------------------------------------------------------------------
COMMITTEES OF THE BOARD OF DIRECTORS
Firstar has various committees including standing audit (Audit-Examining
Committee), nominating (Committee on Directors) and Compensation committees. The
names of members on February 27, 1998 and the functions performed by such named
committees are set forth below.
AUDIT-EXAMINING COMMITTEE
Members--Sheldon B. Lubar, Chairman
Michael E. Batten Daniel F. McKeithan, Jr.
Joe F. Hladky Judith D. Pyle
C. Paul Johnson William W. Wirtz
Functions performed--The Audit-Examining Committee's general
responsibilities include, but are not limited to, supervision and review of all
matters concerning audits of Firstar by its independent auditors and internal
corporate audit staff, review of all matters concerning examinations of Firstar
and its subsidiary banks and companies conducted by governmental supervisory
agencies and review of Firstar's Annual Report on Form 10-K and Annual Report to
Shareholders. There were three meetings held during 1997.
COMMITTEE ON DIRECTORS
Members--Sheldon B. Lubar, Chairman
Michael E. Batten James H. Keyes
Roger L. Fitzsimonds Daniel F. McKeithan, Jr.
James L. Forbes
Functions performed--The Committee on Directors has the general
responsibility of recommending policy as to the responsibilities, size and
committee structure of the Board of Directors. It also develops recommendations
as to the compensation, qualifications, tenure and selection of Board members,
scheduling and content of Board meetings, and directors' and officers' liability
protection. The committee considers
6
<PAGE> 9
director nominees recommended by shareholders. Any shareholder who wishes to
recommend an individual for nomination as a director of Firstar should write to
the Secretary of Firstar, no later than October 31 of the year preceding the
annual meeting of shareholders at which directors are to be elected, identifying
the individual recommended and setting forth any information which the
shareholder believes will be helpful to the Committee on Directors in evaluating
the qualifications of the recommended nominee. The Committee on Directors and,
ultimately, the Board of Directors, reserves the sole discretion to determine
the nominees named in management's proxy statement for election to the Board of
Directors. There were two meetings held during 1997.
COMPENSATION COMMITTEE
Members--James H. Keyes, Chairman
Robert C. Buchanan Sheldon B. Lubar
James L. Forbes
Functions performed--The Compensation Committee has the general
responsibility of recommending for the approval of the Board of Directors the
remuneration arrangements for the executive officers of Firstar and its
subsidiaries and any additions or modifications to the employee benefit plans
administered by Firstar for the benefit of the officers and employees of Firstar
and its subsidiaries. There were four meetings held during 1997.
The Board of Directors held five meetings during 1997. All directors, with
the exception of Mr. Derusha and Mr. Forbes, attended 75% or more of the
aggregate of (1) the total number of meetings of the Board of Directors and (2)
the total number of meetings held by all committees of the Board on which they
served (during the periods that they served). Mr. Derusha and Mr. Forbes
attended 60% and 73%, respectively, of the total meetings during 1997.
Following the election at the annual meeting, there will be seventeen
directors of Firstar Corporation. No person shall be eligible to be elected or
re-elected as a member of the Board of Directors if he or she reached the age of
seventy (70) years, and any director who reaches the age of seventy (70) years
shall resign from the Board of Directors as of the last day of the calendar
quarter in which such director's seventieth birthday falls. The Board of
Directors may authorize a change to the foregoing retirement provision.
DIRECTOR COMPENSATION
The directors of Firstar are compensated for all services as a director in
the following manner: An annual retainer fee of $18,000 is paid each director at
the rate of $4,500 per quarter. An annual retainer fee of $4,000 is paid to the
chairman of the Audit-Examining Committee at the rate of $1,000 per quarter. An
annual retainer fee of $2,500 is paid to the chairman of the Compensation
Committee at the rate of $625 per quarter. A $1,400 fee is paid for attendance
at each regularly scheduled or special meeting of the Board, a $1,400 fee is
paid for attendance at meetings of the Executive or Interstate Banking and
Acquisitions Committees, and a $800 fee is paid committee members for attendance
at regularly scheduled or special meetings of all other committees of the Board.
Directors of Firstar who are also directors of subsidiaries of Firstar also
receive fees from such subsidiaries for services as directors on their boards.
Firstar has a stock plan under which directors can receive shares of Firstar
common stock in lieu of cash fees. Firstar has a deferred compensation plan
under which directors may elect to defer either the receipt of such cash fees or
the receipt of common stock under the stock plan. Those directors who are
officers of Firstar or its subsidiary banks receive no fees from Firstar or the
subsidiary banks for services as directors.
7
<PAGE> 10
COMPENSATION OF EXECUTIVE OFFICERS
The following Summary Compensation Table presents data with respect to the
five most highly compensated executive officers for each of the years in the
three-year period ended December 31, 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------ --------------------------------------
LONG-TERM STOCK
INCENTIVE OPTION ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OTHER(1) PAYOUT AWARDS COMPENSATION(2)
- --------------------------- ---- ------ ----- -------- ---------- ------ ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Roger L. Fitzsimonds
Chairman of the Board... 1997 $668,100 $346,600 $1,124,400 83,600 $45,696
Chairman of the Board... 1996 642,600 163,500 596,200 172,600 33,000
Chairman of the Board... 1995 617,000 349,900 427,400 92,600 55,600
John A. Becker
President............... 1997 486,300 235,900 765,100 45,200 33,390
President............... 1996 469,800 111,300 405,700 83,400 24,100
President............... 1995 452,000 238,000 290,700 56,000 40,600
Chris M. Bauer
Senior Executive Vice
President............ 1997 315,000 143,900 432,200 17,200 21,544
Senior Executive Vice
President............ 1996 302,800 113,700 229,200 28,000 15,500
President, Firstar Bank
Milwaukee............ 1995 291,000 146,500 164,400 22,200 26,200
Richard W. Schoenke
Senior Executive Vice
President............ 1997 315,000 137,800 301,300 17,200 14,364
Senior Executive Vice
President............ 1996 268,100 115,600 159,900 28,000 9,200
President, Firstar Bank
Minnesota............ 1995 210,000 95,400 114,700 16,000 12,600
Steven R. Parish
Executive Vice
President............ 1997 263,400 153,800 17,200 12,010
Executive Vice
President............ 1996 155,100 93,300 45,300 4,200 6,646
Executive Vice
President, Firstar
Bank Madison......... 1995 114,900 72,280 6,000 6,892
</TABLE>
- ---------------
(1) Aggregate amount of other annual compensation does not exceed the lesser of
$50,000 or 10% of executive officer's salary and bonus with the exception of
Mr. Parish. Included in Mr. Parish's other compensation payment was a
relocation allowance of $45,300 in 1996.
(2) Amounts shown represent payments made under Firstar's Thrift and Sharing
Plan which consist of both contributions to the plan and cash payments made
to the executive officer to offset Internal Revenue Code limitations.
8
<PAGE> 11
The following table presents information about stock options granted during
1997 to the five named executive officers.
STOCK OPTIONS GRANTS IN 1997
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE EXPIRATION GRANT DATE
NAME OPTIONS EMPLOYEES PRICE DATE PRESENT VALUE(1)
---- ---------- ------------- -------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Roger L. Fitzsimonds.............. 83,600 4.5% $28.3125 2/16/07 $639,130
John A. Becker.................... 45,200 2.4 28.3125 2/16/07 345,558
Chris M. Bauer.................... 17,200 .9 28.3125 2/16/07 131,496
Richard W. Schoenke............... 17,200 .9 28.3125 2/16/07 131,496
Steven R. Parish.................. 17,200 .9 28.3125 2/16/07 131,496
</TABLE>
- ---------------
(1) Present value is determined as of the grant date, using the Black-Scholes
Model. This is a theoretical value for the stock options which was
constructed with the following underlying assumptions: a risk free rate of
return of 6.5%; a volatility factor of 22%; an expected dividend yield of
3.0%; and a 7 year expected period to time of exercise. The amount realized
from a stock option ultimately depends on the market value of the stock at a
future date.
The following table presents information concerning stock options exercised
during 1997. Also shown is information on unexercised stock options as of
December 31, 1997.
STOCK OPTIONS EXERCISED IN 1997 AND YEAR-END VALUES
<TABLE>
<CAPTION>
1997 TOTAL NUMBER OF TOTAL VALUE OF
---------------------- UNEXERCISED UNEXERCISED IN-THE-MONEY
SHARES OPTIONS HELD AT 12/31/97 OPTIONS HELD AT 12/31/97
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Roger L. Fitzsimonds.. 24,000 $699,468 382,067 229,533 $11,010,197 $4,571,604
John A. Becker........ 20,000 555,000 242,533 119,467 7,097,185 2,422,642
Chris M. Bauer........ 37,600 893,849 80,133 43,267 2,188,642 874,541
Richard W. Schoenke... 0 0 83,000 41,200 2,436,880 815,115
Steven R. Parish...... 0 0 5,400 22,000 146,413 363,275
</TABLE>
The following table presents information on Long-Term Incentive Awards
granted to the named executives during 1997. Estimated future payouts are
predicated upon the achievement of Firstar return on equity goals in relation to
peer group banking companies. The achievement of peer group median return on
equity will represent threshold; peer group 70th percentile will represent
target and peer group 90th percentile will represent maximum payout. The award
is designated in shares of stock. These performance shares are valued at the end
of the three year period based upon the market value of Firstar's common stock.
The participant is paid the value of the earned award one-half in shares of
Firstar's common stock and one-half in cash plus a dividend equivalent for the
performance period.
LONG-TERM INCENTIVE PLAN AWARDS IN 1997
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
TARGET PERFORMANCE UNDER NON-STOCK PRICE BASED PLANS
NUMBER OF PERIOD UNTIL ---------------------------------
NAME UNITS PAYOUT THRESHOLD TARGET MAXIMUM
---- --------- ------------ ---------- ------- --------
(NUMBER OF UNITS)
<S> <C> <C> <C> <C> <C>
Roger L. Fitzsimonds.................. 12,340 3 Years 6,170 12,340 18,510
John A. Becker........................ 8,400 3 Years 4,200 8,400 12,600
Chris M. Bauer........................ 4,742 3 Years 2,371 4,742 7,113
Richard W. Schoenke................... 4,742 3 Years 2,371 4,742 7,113
Steven R. Parish...................... 4,742 3 Years 2,371 4,742 7,113
</TABLE>
9
<PAGE> 12
The following table presents estimated annual benefits payable under
Firstar's pension plans based upon years of service.
<TABLE>
<CAPTION>
REMUNERATION 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35+ YEARS
- ------------ -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
$ 250,000 $ 64,290 $ 85,715 $107,145 $128,570 $150,000
500,000 128,580 171,430 214,290 257,140 300,000
750,000 192,870 257,145 321,435 385,710 450,000
1,000,000 257,160 342,860 428,580 514,280 600,000
1,250,000 321,450 428,575 535,725 642,850 750,000
1,500,000 385,740 514,290 642,870 771,420 900,000
</TABLE>
The remuneration covered by the plan includes salary and one-half of bonus
and long-term incentive cash payments. The final average compensation is based
on average compensation during the highest five consecutive years in the last
ten years prior to retirement. The annual benefit amounts listed in the table
are subject to a reduction equal to one-half of the Social Security benefit at
the time of retirement. The years of service of the named executives are as
follows: Mr. Fitzsimonds -- 33 years, Mr. Becker -- 30 years, Mr. Bauer -- 28
years, Mr. Schoenke -- 7 years and Mr. Parish -- 13 years.
Estimated annual benefits listed in the table are based on the terms of the
Pension Plan in effect as of December 31, 1997 and assume payment in the form of
a straight-life annuity beginning at age 65 without reduction for the election
of a joint and survivor annuity or for any limitation on maximum annual benefits
or compensation under the Internal Revenue Code. In the event that any such
reduction occurs, the named persons will receive benefits in the amount of such
reduction under certain supplemental retirement plans maintained by Firstar. Any
supplemental benefits are payable out of the general assets of Firstar.
EMPLOYMENT AGREEMENTS
Firstar has identical Key Executive Employment and Severance Agreements
with Messrs. Fitzsimonds, Becker, Bauer, Schoenke, Parish and others. The
agreements would come into effect upon a change in control of Firstar as defined
in the agreements. The employment period under each agreement is the earlier of
the third anniversary of the change in control or the executive's sixty-fifth
birthday. If, during the employment period, the executive officer's employment
is ended through (1) termination by Firstar without cause or (2) termination by
the executive officer for good reason based upon a breach of the agreement by
Firstar or a significant adverse change in the executive officer's
responsibilities, then a termination payment will be made to the executive. The
agreements provide that such payment will be equal to three times the sum of the
executive's annual salary plus an amount attributable to annual incentive
compensation equal to a target payment under such plans. If any portion of the
termination payment constitutes an excess parachute payment, as defined in the
Internal Revenue Code, and is subject to an excise tax, Firstar shall pay to the
executive the amount necessary to offset the excise tax and any applicable taxes
on this additional payment. Additional provisions assure the payment of other
accrued benefits regardless of the reason for termination. Upon a change in
control of Firstar, as defined in the plan, the executive is entitled to a lump
sum cash payment equivalent to the present value of the projected benefits under
certain supplemental retirement plans.
10
<PAGE> 13
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Overall Policy
Firstar's executive compensation objective is to closely link compensation
with corporate and individual performance in a manner which, through recognizing
the marketplace practices of other financial service companies, will retain and
attract executives who can lead Firstar to achieve the long-term goals of its
shareholders. Toward the end of achieving this objective, Firstar has an
executive compensation program which directly ties a significant portion of
total executive compensation to Firstar's financial performance in relation to
its peer group and to the appreciation in its stock price.
The Compensation Committee adopted the following statements of philosophy
which provided the foundation for Firstar's executive compensation program in
1997:
1. Pay-for-Performance--the total compensation program will have a strong
pay-for-performance relationship.
2. Total Compensation--over time, total compensation relative to peers will
be consistent with performance relative to peers; in any one year, the
pay-performance match may lead or lag the peer group.
3. Total Cash Compensation--total cash compensation (base salary plus
annual incentive compensation) will be established conservatively with
no incentives paid for less than median performance.
4. Base Salaries--base salary midpoints will be established consistent with
the median of the peer group; actual base salaries will reflect
performance and experience within a competitive range.
5. Emphasis on Short-Term and Long-Term--emphasis will be placed on both
short-term (annual) and long-term performance; strong performance must
be achieved by Firstar each year as well as over the long-term.
6. Emphasis on Financial Performance versus Shareholder Value--for
short-term performance, emphasis will be placed on rewarding financial
performance; however, shareholder value will be the measure of
performance over the long-term.
Each year the Compensation Committee carefully reviews each component of
the executive compensation program. This review includes an assessment of the
total compensation opportunities provided by Firstar's program in relation to
both the compensation being paid by peer banking companies and the financial
performance of those peers. The peer group used in 1997 by Firstar for
compensation purposes represents U.S. commercial banking companies ranging in
total asset size from $10 to $25 billion. This peer group is the same peer group
referred to in the performance graph at the bottom of page 16 which portrays
Firstar's performance as measured by return on equity. The performance graph at
the top of page 16 measures Firstar's total shareholder return against the S & P
500 Stock Index and the KBW Index, which is an industry index comprised of 50
companies representing all money center banks and most regional banks as
maintained by Keefe, Bruyette and Woods, Inc.
For a number of years, the Committee has engaged an independent consultant
(an international accounting firm with significant experience in executive
compensation matters) to review the executive compensation program and the
resultant compensation earned by the senior executives.
The 1997 consultant's overall report concluded:
- Overall, Firstar's target cash compensation (base salary plus annual
cash incentives) lags market levels.
- Firstar's target total compensation position (base salary plus annual
cash incentives plus long-term stock or cash incentives) is below
market levels.
11
<PAGE> 14
- Peer market data reflects higher annual and long-term incentive
awards.
- As a result, Firstar's total compensation practice does not offset the
conservative cash compensation philosophy.
The consultant's report also included the following recommendations:
- Consider an additional corporate incentive compensation performance
goal.
- Increase the target award levels under the annual and three-year
performance share plans for the top five executives.
- Increase the maximum award levels under the annual and three-year
performance share plans for the Chief Executive Officer and the Chief
Operating Officer.
- Consider permitting transferability of stock options and deferral of
stock option gains.
The Committee approved for future awards the increase of target award
levels under the annual and three-year performance share plans for the top five
executives, and the increase of maximum award levels for the chief executive
officer and chief operating officer. The Committee also approved the
transferability of stock options and deferral of stock option gains for the
senior executive group.
The principal components of Firstar's executive compensation program are
base salary, an annual incentive compensation plan, a three-year performance
share plan, and a stock option program. The Compensation Committee determines
these components individually for each of the 14 executives who comprised
Firstar's senior executive group in the first quarter of 1997, which is when
these components are annually established. This group includes the five
individuals whose compensation is analyzed in this proxy statement. In
determining the compensation of these executives, other than the chief executive
officer, the Committee is generally guided by the recommendations of the chief
executive officer. However, it does independently approve the remuneration of
all members of the senior executive group on an individual basis.
Base Salaries
A base salary grade and range has been established for the job of each
executive officer. Base salary grade midpoints are established consistent with
the median of the peer group and the internal evaluation of the responsibilities
of each position.
In accordance with its annual procedure, at its January 1997 meeting, the
Compensation Committee approved an overall percentage increase of base salaries
for the executive officer group based on the following:
1. The results of published compensation surveys for the executive base
salary increase projections for the financial services industry in
general (these surveys are broad based and not peer group specific).
2. The financial performance of Firstar for the preceding year both
absolutely and relatively vs. its peer group of companies as represented
by such measures of asset quality as net loan charge-offs, non-
performing assets and such measures of profitability as return on
equity, return on assets and efficiency ratio. The Committee noted that
Firstar's performance in 1997 was sound, non-performing assets continued
to be low, reserves were prudent, charge-offs were low, and
profitability was very good.
The overall base salary increase percentage approximated the median of the
salary surveys. Within this overall limit, the CEO recommended to the Committee
base salary adjustments for each executive (exclusive of the chief executive
officer) based upon his assessment of the executive's performance relative to
the executive's goals and objectives. The Committee noted that the overall
executive base salary increase percentage was identical to the base salary
increase percentage for non-executive employees.
12
<PAGE> 15
In administering the base salary of the chief executive officer in 1997,
the Committee considered Firstar's most recent annual absolute and relative
performance, his ongoing leadership, the expected positive impact of
restructuring, the relationship of his base salary to job grade midpoint and
industry salary surveys. As a result, the chief executive officer's base salary
was increased by 4.0% in 1997.
Annual Incentive Compensation Plan
Firstar's executive officers are eligible for an annual incentive award.
Performance objectives are established each year. These objectives are based on
Firstar's return on equity and the performance of the executive's own business
unit. For the 14 executives comprising the senior executive group in 1997, 25%
of the award, ranging up to 100% for the corporation's chief executive officer
and the corporation's chief operating officer, was tied directly to Firstar's
return on common equity in comparison to the $10-$25 billion peer group.
Firstar's annual incentive compensation is a target bonus plan where target
represents a percentage of the salary grade midpoint of the executive's job
grade. For the 14 executives comprising the senior executive group in 1997, this
target percentage ranged from 30% of the participant's salary grade midpoint up
to 50% of the salary grade midpoint for the chief executive officer's position.
The bonus earned was based on performance and ranged from a threshold of 50% of
target to a maximum of 150% of target. The Committee has determined that to earn
a threshold level of bonus on the corporate performance factor, which for the
chief executive officer and the chief operating officer is the only factor,
requires a return on common equity equal to the median of the peer group.
Performance below the median of the peer group would result in no bonus being
earned on this single corporate performance factor. To earn a target bonus,
performance at the 70th percentile is required. To earn a maximum bonus,
performance at the 90th percentile is required.
The performance measures other than Firstar's return on equity which
comprise a portion of the Annual Incentive Compensation Plan for those officers
below the level of the chief executive officer and the chief operating officer
are established specific to each executive's business function including, for
example, net income of the specific function managed by the executive, fee
income growth, net charge-offs and non-performing asset levels of the function,
expense management, specific project attainments, and other factors. Performance
was measured against these target goals to determine payments.
In 1997, Firstar achieved a return on equity of 18.41%. Based on the
formula used in the plan, the chief executive officer earned a 1997 bonus of
$346,600, which equaled 107% of target. Payments to the other executives for
this factor also equaled 107% of target.
Three-Year Performance Share Plan
Firstar's senior executive group is eligible to participate in a three-year
performance share plan. Under this plan, for the 14 executives comprising the
senior executive group, the target percentage ranges from 30% of the
participant's salary grade midpoint up to 50% of the salary grade midpoint for
the chief executive officer's job. In order for an executive to receive target
payout, Firstar must achieve a three-year return on common equity equal to the
70th percentile performance by its peer group. Threshold payout, which is equal
to 50% of target payout, requires a three-year return equal to the peer median
performance and maximum payout, which is equal to 150% of target payout,
requires a 90th percentile performance compared with peers. If Firstar achieves
less than median performance, all performance share awards are forfeited.
Further, if return on common equity of Firstar falls below 12% for the
three-year period, regardless of comparative peer performance, the Committee may
cancel all performance share awards. For purposes of computing plan performance,
Firstar's return on equity is adjusted to exclude the amount of any one-time
restructuring charges incurred as the result of the acquisition of companies or
any one-time gains realized as the result of the disposition of any lines of
business. In addition, the Committee determined that any one-time restructuring
charges incurred as the result of the Firstar Forward initiative would be
excluded from Firstar's return on equity for 1996.
13
<PAGE> 16
For awards made in 1995, 1996 and 1997, a Performance Account was
established for each participant. The Performance Account is designated in
shares of stock whereby the number of shares in each participant's account
represents a target percentage applicable to each participant's job grade, up to
50% for the chief executive officer, multiplied by the job grade midpoint and
divided by the fair market value of a share of stock on the last business day of
the preceding year. At the end of the three-year period, the number of shares of
stock actually earned and credited to the participant's account will be
determined based upon Firstar's performance compared with its peer group as
described in the second paragraph of this section. The target number of
performance shares that could be earned in the three-year period by the chief
executive officer and the other members of the senior executive group receiving
awards in 1995 are 22,836 and 95,854, respectively, and in 1996 are 15,874 and
72,720, respectively, and in 1997 are 12,340 and 47,218, respectively. The
performance shares are valued at the end of the performance period based upon
the market price of Firstar's common stock. The participant is paid the value of
the earned award one-half in shares of Firstar's common stock and one-half in
cash plus a cash amount equal to the dividends paid during the performance
period on a number of shares equal to the number of performance shares earned.
The performance period for the 1995 performance share plan ended on
December 31, 1997. Based on the formula used in the plan, the chief executive
officer earned a three-year bonus at the end of 1997 of $1,124,400, which
equaled 110% of target. Each of the other participants also received a payment
equal to 110% of target.
If the executive leaves Firstar for reasons other than retirement,
disability or death prior to the end of the three-year term of the awards, the
award is forfeited. A prorated payment is made in the event of retirement, death
or disability. The value of these awards is affected by both the relative
performance of Firstar vs. its peers over the three-year period as well as the
value of Firstar stock at the end of that period.
Stock Options
Stock options are designed to provide a direct long-term link between
executive compensation and shareholder interests. Options are granted with an
exercise price equal to the market value of the common stock on the date of the
grant. If the stock price does not increase, the option is worthless. The option
period is 10 years and one month from the date of grant.
Under Firstar's 1988 Incentive Stock Plan approved by shareholders, stock
options can be granted to officers and other key employees who, in the opinion
of the Compensation Committee, are in a position to contribute materially to
Firstar's continued growth, development and long-term financial success.
Accordingly, employees in salary grades 28 and above were awarded stock options
in 1997. The Committee utilizes a grant value formula to award shares under this
plan. The grant value, which represents the number of shares multiplied by the
exercise price, is a percentage of the midpoint of the participant's salary
grade. The 1997 grant values ranged from 40% of the participant's salary grade
midpoint up to 350% of the salary grade midpoint for the chief executive
officer's job.
The chief executive officer was awarded stock options for 83,600 shares in
1997. While Firstar employs a formula approach to the granting of stock options,
in the event of poor corporate performance, the Committee could elect not to
award options. In the judgment of the Committee, based upon the absolute and
relative performance of Firstar as discussed in the Base Salary section above,
Firstar's performance warranted granting of options in 1997.
14
<PAGE> 17
Deductibility of Executive Compensation
As noted in this report, Firstar has developed a comprehensive program
directly linking executive compensation to Firstar's financial performance in
order to retain and attract executives who can lead Firstar to achieve
shareholder goals. To the extent achieving these goals is consistent with
favorable tax treatment under Section 162(m) of the Internal Revenue Code, the
Compensation Committee is committed to making awards under the executive
compensation plans that will qualify for the performance-based tax expense
deduction.
Conclusions
The Compensation Committee believes that the programs described above,
driven by its statement of philosophy, provide a direct link between executive
compensation and Firstar's financial performance and resultant stock price
appreciation.
Compensation Committee Members:
James H. Keyes, Chairman
Robert C. Buchanan
James L. Forbes
Sheldon B. Lubar
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In addition to Messrs. Keyes, Buchanan, Forbes, and Lubar, Messrs. Guy A.
Osborn and Jerry M. Hiegel, former directors of Firstar who retired from the
Board of Directors in 1997, were the only persons who served on the Compensation
Committee of the Board of Directors of Firstar during 1997. None of the persons
who served on the Compensation Committee during 1997 was an officer or employee
of Firstar or any of its subsidiaries.
15
<PAGE> 18
PERFORMANCE GRAPHS
The following graph shows the cumulative return on a $100 investment in
Firstar common stock over a five year period. Also shown for comparison is the
performance of the KBW 50 Index and the S&P 500 Stock Index. The KBW 50 Index is
a banking industry comprised of 50 companies representing all money center banks
and most major regional banks as maintained by Keefe, Bruyette and Woods, Inc.
COMPARISON OF 5-YEAR CUMULATIVE RETURN
FIRSTAR, S&P 500 STOCK INDEX, & KBW 50 INDEX
(WITH DIVIDEND REINVESTMENT)
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) FIRSTAR S&P 500 KBW 50
<S> <C> <C> <C>
1992 100 100 100
1993 99.83 110 106
1994 91.31 112 100
1995 138.82 153 160
1996 188.22 189 227
1997 310.13 252 332
</TABLE>
The following graph depicts the return on common equity of Firstar as
compared to the median and top quartile performance of its peer group. The peer
group consists of all domestic bank holding companies ranging in size from
$10-$25 billion as obtained from Thomson BankWatch, Inc., a nationally
recognized banking industry consultant. This peer group measurement of return on
equity was used in the determination of bonus and long-term incentive plan
awards to executive officers as described in the previous section entitled Board
Compensation Committee Report on Executive Compensation.
COMPARISON OF RETURN ON COMMON EQUITY
<TABLE>
<CAPTION>
MEASUREMENT PERIOD PEER TOP
(FISCAL YEAR COVERED) FIRSTAR QUARTILE PEER MEDIAN
<S> <C> <C> <C>
1992(1) 17.4 16.6 14.2
1993(1) 18.6 18 15.8
1994(1) 17 17.1 15.9
1995(2) 16.9 16.6 14.9
1996(3) 15.9 17.2 15.9
1997 18.4 18.45 16.85
</TABLE>
- ---------------
(1) Firstar's data is not restated for pooling of interests acquisitions.
(2) Return on equity excludes certain expenses for purposes of executive
compensation calculations which increased the return on equity from 15.11%
to 16.86%.
(3) The long-term incentive plan award calculation was based upon a return on
equity of 18.01% which excludes certain expenses.
16
<PAGE> 19
ADDITIONAL INFORMATION ON MANAGEMENT
During the past year, all of the directors and officers and one or more of
their associates were customers of and had business transactions with one or
more bank subsidiaries of Firstar. All loans included in such transactions were
made in the ordinary course of business and on substantially the same terms,
including interest rates and collateral, as those prevailing at the same time
for comparable transactions with other persons, and did not involve more than
normal risk of collectability or present other unfavorable features. It is
expected that similar transactions will occur in the future.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act requires Firstar's executive
officers, directors and more than ten percent shareholders and certain trusts
affiliated with such persons ("Insiders") to file with the Securities and
Exchange Commission and Firstar reports of their beneficial ownership of Firstar
securities. Based upon written representations and copies of reports furnished
to Firstar by Insiders, all Section 16(a) reporting requirements applicable to
Insiders during 1997 were satisfied on a timely basis, except that Mr. C. Paul
Johnson, a director of Firstar, filed a late report covering the sale of 3,000
shares of Firstar common stock.
PROPOSAL TO AMEND THE FIRSTAR CORPORATION
1988 INCENTIVE STOCK PLAN FOR KEY EMPLOYEES
Summary of Proposal
In 1987, shareholders of Firstar approved the 1988 Incentive Stock Plan for
Key Employees. The original plan authorized a maximum number of shares of common
stock and stock appreciation rights of 2,000,000* which could be granted under
the plan. In 1990 and 1994, Firstar shareholders approved amendments to the plan
to authorize an additional 3,200,000* and 6,000,000* shares respectively of
common stock and stock appreciation rights. Since the inception of the plan, a
total of approximately 9,250,000 stock options and performance-based restricted
shares of Firstar common stock have been awarded under the plan. The Board of
Directors wishes to continue the plan and accordingly is seeking approval of
Firstar's shareholders to amend the plan to authorize an additional 7,000,000
shares of stock and stock appreciation rights and to effect certain other
changes to the plan summarized below. The Restated Articles of Incorporation of
Firstar authorize the issuance of 240,000,000 shares of common stock. There were
145,074,999 shares of Firstar common stock issued and outstanding as of February
27, 1998 and the market value of one share of common stock as of that date was
$41.81. A copy of the amended plan is set forth in Exhibit A and the following
summary discussion is qualified by reference to the plan.
The plan, which is administered by the Compensation Committee of the Board
of Directors, provides for the granting of annual awards to senior officers and
other key employees of Firstar and its subsidiaries of stock options, stock
appreciation rights and/or restricted stock. Presently, approximately 1,100
employees are eligible to participate in the plan. The selection of participants
is based upon the Compensation Committee's opinion that the participant is in a
position to contribute materially to Firstar's continued growth and development
and to its long-term financial success. Members of the Compensation Committee
are ineligible to participate in the plan. No awards may be made under the plan
after April 20, 2004.
Options entitle the holder to purchase shares of common stock for an amount
not less than market value of the stock at the date of grant. Each option will
have a life of not more than ten years and one month from date of grant. Under
the amended plan, The Compensation Committee may approve assignment of options.
In addition, the amended plan provides that the fourteen members of the senior
executive officer group may elect to defer stock option gains. Stock
appreciation rights may be granted in tandem with stock options or independently
of any options. Each right granted entitles the holder to receive cash and/or
shares of Firstar common stock pursuant to a formula based upon market
appreciation of the stock. In no event will the
- ---------------
* As adjusted to reflect stock splits
17
<PAGE> 20
appreciation under any right exceed the fair market value of one share of stock
at the date of grant. Furthermore, no participant in the plan may receive
options and stock appreciation rights in any five-year period for more than
500,000 shares of stock. The plan provides that upon a change in control of
Firstar, as defined in the plan, all options vest and all stock appreciation
rights mature, subject to a minimum holding period of six months in certain
cases.
The plan also provides for awards of restricted stock (which may not be
sold, transferred or pledged for a period of time as specified in the grant) and
performance-based shares. The total amount of common stock issued pursuant to
grants of restricted stock and performance based shares made after 1997 is
limited to 500,000 shares. The plan provides for a target number of performance
shares to be awarded to a participant equal to an applicable percentage, not
exceeding 50%, of the participant's salary range midpoint divided by the market
price of Firstar's common stock at the beginning of the performance period. For
awards in 1997 and before, the number of performance shares earned by a
participant is determined solely based upon Firstar's return on equity over a
three-year performance period compared with the return on equity achieved by its
peer group of $10-$25 billion banking companies. No shares can be earned if
performance is less than a threshold level of peer group performance and the
maximum number of shares earned can not exceed 150% of the target award. In
addition, if Firstar's return on equity is less than 12% for a performance
period, the Committee may cancel all awards for such period regardless of
performance compared with peers. The performance shares are valued at the end of
the performance period based upon the market price of Firstar's common stock and
the participant is paid the value of the earned award one-half in shares of
Firstar's common stock and one-half in cash plus a cash amount equal to the
dividends paid during the performance period on a number of shares of common
stock equal to the number of performance shares earned. The plan provides for
the termination of the period of restriction for restricted stock and the
performance period for performance shares in certain events including the
occurrence of a change in control and a pro-rata reduced payment of performance
shares based upon the shortened period.
The Board of Directors is seeking the approval of Firstar's shareholders to
amend the plan to add cumulative earnings per share as an additional performance
measure for the three-year performance period, establish threshold return on
equity at 40% peer group performance and target return on equity at 60% peer
group performance, increase the target award percentage of a participant's
salary grade midpoint to not exceed 60% and increase the maximum number of
performance shares that can be earned to 200% of the target award. At the
beginning of each year, the committee may establish additional or different
terms, goals, standards and objectives with respect to performance shares
including imposing a return on assets or other performance goal in addition to,
or in lieu of, a return on equity or earnings per share performance goals. The
Committee may provide for a different allocation between any performance goals
and the cash and stock components of the payment. The Board of Directors may
amend the plan provided, however, that no amendment shall be made without
shareholder approval if such action would increase the amount of stock issuable
under the plan or the maximum amount issuable to one participant, would
materially increase the cost of the plan or the benefits to participants, or
would change the class of persons eligible to participate in the plan.
Set forth in the table below is information regarding awards of options and
performance shares made during the first quarter of 1998. No other awards were
made under the plan in 1998.
<TABLE>
<CAPTION>
NUMBER OF TARGET NUMBER OF
NAME OPTIONS PERFORMANCE SHARES
- ---- --------- ------------------
<S> <C> <C>
Roger L. Fitzsimonds.................................... 60,300 9,435
John A. Becker.......................................... 32,600 6,539
Chris M. Bauer.......................................... 12,400 3,400
Richard W. Schoenke..................................... 12,400 3,400
Steven R. Parish........................................ 12,400 3,400
Senior executive officers as a group(14)................ 195,000 42,722
Other key employees as a group.......................... 1,178,500
</TABLE>
18
<PAGE> 21
The options issued in 1998 expire in ten years and one month from date of
grant and may be exercised for not less than $38.75 per share. Generally, upon
the exercise of an option, the amount of appreciation in the market value of the
stock over the exercise price is taxable to the participant as ordinary income
and Firstar is entitled to a tax expense deduction for such amount. In certain
other cases, the appreciated value of the underlying stock received upon
exercise of incentive options within the meaning of Section 422 of the Internal
Revenue Code may be taxable to the participant as a capital gain upon sale of
the stock and Firstar may not receive any tax expense deduction. Since inception
of the plan, Firstar has not awarded any incentive stock options within the
meaning of Section 422 of the Internal Revenue Code.
The 1998 performance share awards are subject to shareholder approval of
the amended plan. The maximum number of performance shares earned by any
participant under the 1998 awards is limited to 200% of the target award for the
chairman of the board. Subject to adjustment for variations in the market price
of Firstar's common stock on the award dates, the maximum for each following
year is five percent more than for the prior year. For 1998, the return on
equity threshold, target and maximum objectives are 40th percentile, 60th
percentile and 90th percentile performance as compared with peer group
performance; the cumulative earnings per share threshold, target and maximum
objectives are 5% ($6.62 per share), 10% ($7.28 per share) and 13% ($7.70 per
share).
The Board of Directors believes that the plan will advance the interests of
Firstar and promote continuity of management by encouraging and providing for
acquisition of an equity interest in the success of Firstar by key employees and
by enabling Firstar to attract and retain the services of key employees upon
whose interest, skills and special effort the successful conduct of its business
is largely dependent.
Recommendation
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDED 1988
INCENTIVE PLAN FOR KEY EMPLOYEES.
PROPOSAL TO AMEND THE FIRSTAR CORPORATION
ANNUAL EXECUTIVE INCENTIVE PLAN
Summary of Proposal
In 1994, Firstar's shareholders approved the Annual Executive Incentive
Plan. The plan is administered by the Compensation Committee of the Board of
Directors and provides for annual cash awards to approximately 50 senior level
officers of Firstar and its subsidiaries based on achievement of certain
previously established performance objectives. The Compensation Committee
selects participants for the plan who are in senior level positions and who will
contribute substantially to the success of Firstar. No member of the
Compensation Committee is eligible to participate in the plan.
At the start of each year a participant receives a target award under the
plan representing a percentage, ranging up to a maximum of 50%, of the salary
grade midpoint of the participant's job grade. The single corporate performance
factor applicable to Firstar's chairman of the board and president is Firstar's
return on equity compared with its peer group of $10-$25 billion banking
companies. To earn a bonus under this factor, Firstar must perform at a
threshold level of its performance compared with its peer group and a maximum
bonus requires a higher level of performance. The threshold, target and maximum
return on equity objectives have been median, 70th percentile and 90th
percentile performance as compared with peer group performance. Other
participants in the plan are assigned performance measures which may include the
same corporate return on equity objective described above as well as other
factors specific to the participant's business function. Examples of other
performance categories include net income and fee income growth for specific
business functions, net charge-offs and non-performing asset levels, expense
management and special projects. Performance at the end of the year is measured
against the target goals to determine payments which range from 50% of target to
150% of target. No payment is earned if performance is below the threshold goal
and if Firstar's return on equity does not exceed 12%, the Compensation
Committee may cancel all awards granted under the plan for that year regardless
of the participants' performances. The Board of Directors wishes to
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<PAGE> 22
continue the plan and accordingly is seeking shareholder approval to amend the
plan. A copy of the amended plan is set forth in Exhibit B and the following
summary discussion of the amendment is qualified by reference to the plan.
Under the amended plan, a participant receives a target award under the
plan representing a percentage, ranging up to a maximum of 60%, of the salary
grade midpoint of the participant's job grade. Two corporate performance factors
are applicable to Firstar's chairman of the board and president, return on
equity compared with Firstar's peer group and growth in earnings per share. To
earn a bonus under these factors, Firstar must perform at threshold levels. For
1998, the return on equity threshold, target and maximum objectives are 40th
percentile, 60th percentile and 90th percentile performance as compared with
peer group performance; the earnings per share threshold, target and maximum
objectives are 5% growth ($2.10 per share), 10% growth ($2.20 per share) and 13%
growth ($2.26 per share). The maximum payment amount for a participant is 200%
of target. The Compensation Committee may establish additional or different
terms, conditions, goals, standards and objectives with respect to the goals for
the chairman of the board and the president and may impose a return on assets or
other performance goal in addition to, or in lieu of, a return on equity or
earnings per share performance goals and may provide for a different allocation
between any performance goals.
Set forth in the table below is information regarding awards made under the
plan for 1998.
<TABLE>
<CAPTION>
NAME TARGET AWARD
- ---- ------------
<S> <C>
Roger L. Fitzsimonds........................................ $ 400,400
John A. Becker.............................................. 277,500
Chris M. Bauer.............................................. 144,300
Richard W. Schoenke......................................... 144,300
Steven R. Parish............................................ 144,300
Senior executive officers as a group(14).................... 1,813,000
Other officers as a group................................... 1,541,100
</TABLE>
The 1998 awards for the chairman of the board and president are subject to
shareholder approval of the plan. The maximum amount earned by any participant
under an award made in 1998 is limited to 200% of the target award for the
chairman of the board. The maximum for each following year is five percent more
than for the prior year.
The Board of Directors believes that the plan will promote continuity of
management and increase incentive and personal interest in the welfare of
Firstar by those who are primarily responsible for shaping and carrying out its
long-range plans and securing its continued growth and financial success.
Recommendation
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDED ANNUAL
EXECUTIVE INCENTIVE PLAN.
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<PAGE> 23
SHAREHOLDER PROPOSALS AND DISCUSSIONS
If any shareholder of Firstar wishes to submit a proposal to be included in
next year's proxy statement and acted upon at the annual meeting of Firstar to
be held in 1999, the proposal must be received by the Secretary of Firstar at
the principal executive offices of Firstar, 777 East Wisconsin Avenue,
Milwaukee, Wisconsin 53202, prior to the close of business on November 13, 1998.
Firstar's By-Laws establish advance notice procedures as to (1) business to be
brought before an annual meeting of shareholders other than by or at the
direction of the Board of Directors, (2) the nomination, other than by or at the
direction of the Board of Directors, of candidates for election as directors and
(3) the request to call a special meeting of shareholders. Any shareholder who
wishes to take such action should obtain a copy of these By-Laws and may do so
by written request addressed to the Secretary of Firstar at the principal
executive offices of Firstar.
SELECTION OF AUDITORS
The Board of Directors, upon recommendation of the Audit-Examining
Committee, has selected KPMG Peat Marwick, LLP as Firstar's independent auditors
for 1998. The firm has served Firstar as auditors during the previous year.
Representatives of KPMG Peat Marwick, LLP are expected to be present at the
shareholders' meeting with the opportunity to make statements if they so desire
and to be available to respond to appropriate questions raised orally at the
meeting.
GENERAL
Firstar management does not intend to present to the meeting any other
matters not referred to above and does not presently know of any matters that
may be presented to the meeting by others. However, if other matters come before
the meeting, it is the intention of the persons named in the enclosed form of
proxy to vote the proxy in accordance with their best judgment in the interest
of Firstar. The receipt of any report which may be submitted to the meeting is
not to constitute approval or disapproval of any matters referred to in such
report. Firstar's Form 10-K annual report, including financial statements for
the year ended December 31, 1997, has been provided with this notice of the 1998
annual meeting and proxy statement.
By order of the Board of Directors.
/s/ William J. Schulz
William J. Schulz
Senior Vice President and Secretary
March 12, 1998
TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT THE MEETING, PLEASE COMPLETE,
DATE, SIGN AND MAIL PROMPTLY THE ENCLOSED PROXY CARD FOR WHICH A RETURN ENVELOPE
IS PROVIDED.
21
<PAGE> 24
EXHIBIT A
FIRSTAR CORPORATION
1988 INCENTIVE STOCK PLAN FOR KEY EMPLOYEES
SECTION 1. ESTABLISHMENT, PURPOSE, AND EFFECTIVE DATE OF PLAN
1.1 Establishment. Firstar Corporation, a Wisconsin corporation, hereby
establishes the "1988 INCENTIVE STOCK PLAN" (the "Plan") for key employees. The
Plan permits the grant of Stock Options, Stock Appreciation Rights, and
Restricted Stock.
1.2 Purpose. The purpose of the Plan is to advance the interests of the
Corporation and its Subsidiaries and promote continuity of management by
encouraging and providing for the acquisition of an equity interest in the
success of the Corporation by key employees and by enabling the Corporation to
attract and retain the services of key employees upon whose judgment, interest,
skills, and special effort the successful conduct of its operations is largely
dependent.
1.3 Effective Date. The effective date of the Plan is January 1, 1988.
SECTION 2. DEFINITIONS; CONSTRUCTION
2.1 Definitions. Whenever used herein, the following terms shall have their
respective meanings set forth below:
(a) "Board" means the Board of Directors of the Corporation.
(b) A "Change of Control" shall be deemed to have occurred on the date
on which (i) securities of the Corporation representing 25% or more of the
combined voting power of the Corporation's then outstanding voting
securities are acquired pursuant to a tender offer or exchange offer; (ii)
the shareholders of the Corporation approve a merger or consolidation of
the Corporation with another corporation as a result of which less than 50%
of the outstanding voting securities of the surviving or resulting entity
are owned by the former shareholders of the Corporation (other than a
shareholder who is an "affiliate," as defined in the Securities Exchange
Act of 1934, of any party to such consolidation or merger); (iii) the
shareholders of the Corporation approve the sale of substantially all of
the Corporation's assets to a corporation which is not a wholly-owned
subsidiary of the Corporation; (iv) any "person," as used in Section
3(a)(9) of the Securities Exchange Act of 1934, becomes the beneficial
owner, directly or indirectly, of securities of the Corporation
representing 25% or more of the combined voting power of the Corporation's
then outstanding securities; or (v) during any period of two consecutive
years, individuals who, at the beginning of such period, constituted the
Board cease, for any reason, to constitute at least a majority thereof,
unless the election or nomination for election of each new director was
approved by a vote of at least two-thirds of the directors then still in
office who were directors at the beginning of the period; provided,
however, that no acquisition under clause (i) or beneficial ownership under
clause (iv) by a Participant, the Corporation, any employee benefit plan of
the Corporation or any person or entity organized, appointed or established
pursuant to the terms of any such benefit plan shall be deemed to
constitute a Change of Control event under this Section 2.l(b). For
purposes of this Plan, ownership of securities shall include ownership as
determined by applying the provisions of Rule 13d-3(a) of the Securities
Exchange Act of 1934 (as then in effect).
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Committee" means the Compensation Committee of the Board which
shall consist of three or more members of the Board who are not, and who
have not been at my time within one year prior to appointment to the
Committee, eligible to receive Stock under the Plan or any similar plan of
the Corporation. The preceding sentence shall not preclude any person who
is or has been so eligible from serving as a member of the Committee, but
such person shall not be entitled to vote on any matter relating to the
Plan.
(e) "Corporation" means Firstar Corporation, a Wisconsin corporation.
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(f) "Disability" shall have the same meaning assigned to such term in
the Firstar Corporation Long-Term Disability Insurance Plan.
(g) "Fair Market Value" means the last sale price of the Stock as
reported by the New York Stock Exchange on a particular date.
(h) "Option" means the right to purchase Stock at a stated price for a
specified period of time. For purposes of the Plan an Option may be either
(i) an "incentive stock option" within the meaning of Section 422 of the
Code or (ii) a "nonstatutory stock option."
(i) "Participant" means any individual designated by the Committee to
participate in the Plan.
(j) "Period of Restriction" means the period during which the transfer
of shares of Restricted Stock is restricted pursuant to Section 8 of the
Plan.
(k) "Restricted Stock" means Stock granted to a Participant pursuant
to Section 8 of the Plan.
(1) "Retirement" shall have the meaning assigned to such term in the
pension plan of the Corporation.
(m) "Securities" shall have the meaning assigned to such term in
SubSection 10.1 of the Plan.
(n) "Stock" means the Common Stock of the Corporation, par value of
$1.25 per share.
(o) "Stock Appreciation Right" means the right to receive a payment in
cash or a combination of cash and stock from the Corporation equal to the
excess of the Fair Market Value of a share of stock at the date of exercise
or maturity over a specified price fixed by the Committee, which shall not
be less than 100% of the Fair Market Value of the Stock on the date of
grant. In the case of a Stock Appreciation Right which is granted in
conjunction with an Option, the specified price shall be the Option
exercise price.
(p) "Subsidiary" means any present or future subsidiary of the
Corporation, as defined in Section 424(f) of the Code.
(q) "Tax Date" means the date on which Federal, state or local income
tax is determined as a result of the exercise of a nonstatutory stock
option as described in SubSection 6.1.
(r) "Act" means the Securities Exchange Act of 1934, as amended.
(s) "Peer Group" means the banking companies operating in the United
States having assets in the same range as the Corporation, as established
by Keefe, Bruyette and Woods, Inc., or other similar service, from time to
time.
(t) "Performance Account" means the account of a Participant
established and maintained pursuant to the provisions of Section 8A.
(u) "Performance Period" means a period of three consecutive calendar
years with respect to which a Performance Account is established.
(v) "Return on Equity" means, with respect to the Corporation or any
other member of the Peer Group, the ratio of its net income available to
common shareholders for a particular period to its average common
shareholders' equity during such period. If the Return on Equity is
required to be computed for a period exceeding one calendar year, the
Return on Equity shall first be computed separately for each complete
calendar year and any shorter period, and the arithmetic average
(time-weighted for partial periods) of such result shall be used.
(w) "Specified Percentage" means, with respect to a Participant, the
percentage determined by the Committee for the Participant, which shall in
no event exceed 60%.
(x) "Earnings per Share" means the net income of the Corporation per
share of Stock computed on a diluted basis in accordance with generally
accepted accounting principles.
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<PAGE> 26
2.2 Number. Except when otherwise indicated by the context, the singular
shall include the plural, and the plural shall include the singular.
SECTION 3. ELIGIBILITY AND PARTICIPATION
3.1 Eligibility and Participation. Participants in the Plan shall be
selected by the Committee from among those officers and other key employees of
the Corporation and its Subsidiaries who, in the opinion of the Committee, are
in a position to contribute materially to the Corporation's continued growth and
development and to its long-term financial success.
SECTION 4. STOCK AND STOCK APPRECIATION RIGHTS SUBJECT TO PLAN
4.1 Number. The total number of shares of Stock subject to issuance under
the Plan and Stock Appreciation Rights which may be granted pursuant to the Plan
may not exceed 18,200,000. The total number of shares of Stock subject to
issuance pursuant to Options and Stock Appreciation Rights granted under the
Plan in any five year period to any one person may not exceed 500,000. The
limitations set forth in this Subsection 4.1 are subject to adjustment upon
occurrence of any of the events indicated in Subsection 4.3. A Stock
Appreciation Right that is granted in connection with an Option pursuant to
Subsection 7.1 shall not be counted for purposes of applying the limitations of
this Subsection 4.1. The shares to be delivered under the Plan may consist, in
whole or in part, of authorized but unissued Stock or treasury Stock, not
reserved for any other purpose.
4.2 Unused Stock; Unexercised Rights. In the event any shares of Stock are
subject to an Option which, for any reason, expires or is terminated unexercised
as to such shares, or any shares of Stock, subject to a Restricted Stock grant
made under the Plan are reacquired by the Corporation pursuant to Subsection 8.9
or 8. 10 of the Plan, such shares again shall become available for issuance
under the Plan. In the event that any exercisable Stock Appreciation Rights
expire unexercised, such Rights shall again become available for issuance under
the Plan.
4.3 Adjustment in Capitalization. In the event that any change in the
outstanding shares of Stock (including an exchange of the Stock for stock or
other securities of another corporation) occurs after adoption of the Plan by
the Board by reason of a Stock dividend or split, recapitalization, merger,
consolidation, combination, exchange of shares or other similar corporate
change, the aggregate number of shares of Stock (or the stock or other
securities that had been issued in exchange for the shares of Stock) subject to
each outstanding Option, and its stated Option price, shall be appropriately
adjusted by the Committee, whose determination shall be conclusive; provided,
however, that fractional shares shall be rounded to the nearest whole share. In
such event, the Committee shall also make appropriate adjustments to the number
and type of Stock Appreciation Rights outstanding and the related grant values,
and shall have discretion to make appropriate adjustments in the number and type
of shares subject to Restricted Stock grants then outstanding under the Plan
pursuant to the terms of such grants or otherwise. In the event of any other
change in the Stock, the Committee shall in its sole discretion determine
whether such change equitably requires a change in the number or type of shares
subject to any outstanding Stock Option, Restricted Stock Grant, or Stock
Appreciation Right, and any such adjustment made by the Committee shall be
conclusive.
SECTION 5. DURATION OF PLAN
5.1 Duration of Plan. The Plan shall remain in effect, subject to the
Board's right to earlier terminate the Plan pursuant to Subsection 12.3 hereof,
until all Stock subject to it shall have been purchased or acquired pursuant to
the provisions hereof and all Stock Appreciation Rights shall have expired or
been exercised. Notwithstanding the foregoing, no Option, Stock Appreciation
Right or Restricted Stock may be granted under the Plan on or after April 21,
2004.
SECTION 6. STOCK OPTIONS
6.1 Grant of Options. Subject to the provisions of Sections 4 and 5,
Options may be granted to Participants at any time and from time to time as
shall be determined by the Committee. The Committee
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shall have complete discretion in determining the number of Options granted to
each Participant. The Committee also shall determine whether an Option is to be
an incentive stock option within the meaning of Section 422 of the Code or a
nonstatutory stock option. However, in no event shall the Fair Market Value
(determined at the date of grant) of Stock with respect to which incentive stock
options are exercisable for the first time by a Participant during any calendar
year exceed $100,000. Nor shall any incentive stock option be granted to any
person who owns, directly or indirectly, stock possessing more than 10% of the
total combined voting power of all classes of stock of the Corporation. Nothing
in this Section 6 of the Plan shall be deemed to prevent the grant of
nonstatutory stock options in excess of the maximum established by Section 422
of the Code.
6.2 Option Agreement. Each Option shall be evidenced by an Option agreement
that shall specify the type of Option granted, the Option price, the duration of
the Option, the number of shares of Stock to which the Option pertains and such
other provisions as the Committee shall determine.
6.3 Option Price. No Option granted pursuant to the Plan shall have an
Option price that is less than the Fair Market Value of the Stock on the date
the Option is granted.
6.4 Duration of Options. Each Option shall expire at such time as the
Committee shall determine at the time it is granted, provided, however, that no
Option that is an incentive stock option shall be exercisable later than the
tenth (10th) anniversary date of its grant, and no Option that is a nonstatutory
stock option shall be exercisable more than ten years and one month after the
date of its grant.
6.5 Exercise of Options. Subject to the provisions of Subsection 12.2,
Options granted under the Plan shall be exercisable at such times and be subject
to such restrictions and conditions as the Committee shall in each instance
approve, which need not be the same for all Participants; provided, however,
that Options granted to a Participant who is a director of the Corporation or an
officer of the Corporation or a Subsidiary subject to Section 16 of the Act,
shall not be exercisable until at least six months have elapsed from the date of
grant of such Options.
6.6 Payment. The Option price upon exercise of any Option shall be payable
to the Corporation in full either (i) in cash or its equivalent, or (ii) by
tendering shares of previously acquired Stock having a Fair Market Value at the
time of exercise equal to the total Option price, or (iii) by a combination of
(i) and (ii). The proceeds from such a payment shall be added to the general
funds of the Corporation and shall be used for general corporate purposes.
6.7 Restrictions on Stock Transferability. The Committee may impose such
restrictions on any shares of Stock acquired pursuant to the exercise of an
Option under the Plan as it may deem advisable, including, without limitation,
restrictions under applicable Federal securities law, under the requirements of
any stock exchange upon which such shares of Stock are then listed and under any
blue sky or state securities laws applicable to such shares.
6.8 Termination of Employment Due to Death, Disability or Retirement. In
the event the employment of a Participant is terminated by reason of death,
Disability or Retirement, the Committee may provide that any outstanding Options
(a) shall become immediately exercisable and (b) shall expire at any time not
later than the original expiration date of the Options. However, in the case of
incentive stock options, the favorable tax treatment prescribed under Section
422 of the Code shall not be available if such options are not exercised within
three months after such date of termination due to Retirement.
6.9 Termination of Employment Other than for Death, Disability or
Retirement. If the employment of the Participant shall terminate for any reason
other than death, Disability or Retirement, the rights under any then
outstanding Option granted pursuant to the Plan shall terminate upon the
expiration date of the Option or three months after such date of termination of
employment, whichever first occurs.
6.10 Nontransferability of Options. Options granted under the Plan may not
be sold, transferred, pledged, assigned or otherwise alienated or hypothecated
otherwise than by will or by the laws of descent and distribution, except that,
to the extent allowed by the Committee, a Participant may transfer any Option.
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SECTION 6A. DEFERRAL OF OPTION GAINS BY CERTAIN PARTICIPANTS
6A.1. Election to Defer. Any Participant who is a member of the Strategic
Planning Committee of the Corporation may elect to defer receipt of certain
shares of Stock to which such Participant would otherwise be entitled upon the
exercise of Options hereunder. Such an election must be made in writing and
delivered to the Secretary of the Corporation specifying the number of shares
and the award date(s) to which the election applies. It may be made at any time
while the individual is a member of the Strategic Planning Committee. Any such
election shall apply to the specified Options only if such Options are exercised
after the later of (i) the date which is six (6) months after the date the
election is received by Secretary of the Corporation, or (ii) January 1 of the
year which next follows the year in which such election was received by the
Secretary of the Corporation.
6A.2. Revocation of Election. An election under Subsection 6A.1 shall be
irrevocable except that it shall be automatically revoked if the Participant
ceases to be a member of the Corporation's Strategic Planning Committee, whether
by reason of Retirement, death, Disability or otherwise.
6A.3. Effect of Election. In order to exercise Options with respect to
which an election under Subsection 6A.1 is in effect, the Participant must
tender shares of previously acquired Stock as described in Subsection 6.6(ii).
Upon such exercise, the Corporation shall (i) deliver to the Participant a
number of shares of Stock having a fair market value as of the date of such
exercise equal in value to the aggregate Option price for the Options exercised
and (ii) credit the difference between the aggregate fair market value of the
shares of Stock with respect to which Options are exercised and the aggregate
Option price of such Options to an account ("Deferred Payment Account")
established in the name of the Participant.
6A.4. Deferred Payment Account/Units. All gains deferred pursuant to
Subsection 6A.3 shall be credited to the Participant's Deferred Payment Account
on the date on which the Participant exercises Options. The amount credited to a
Deferred Payment Account shall be divided into a number of "Units." Each unit
shall be equal to the Fair Market Value of a share of Stock.
On each dividend payment date applicable to Stock, each Deferred Payment
Account shall be credited with an amount of dollars equal to the dividend that
would have been paid on the number of Units in such Deferred Payment Account if
such Units were actually shares of Stock. Such dividend amount shall then be
converted into additional units by dividing the dividend amount by the Fair
Market Value of one share of Stock on the dividend payment date.
In the event of a stock split or stock dividend, the number of Units held
by each Deferred Payment Account shall be adjusted in the same manner as the
same number of shares of Stock would be adjusted. In the event of the
Corporation's merger with another corporation or conversion of its Stock into
other securities, the Deferred Payment Account shall be adjusted to reflect
Units in the new securities equivalent to those that would have been received by
a shareholder holding the number of shares of Stock that is equal to the number
of Units credited to the Deferred Payment Account. For all purposes thereafter,
whenever "Corporation" or "Stock" is used in the Plan, there shall be
substituted for such terms the name of the corporation whose shares or
securities were received by the Corporation's shareholders. The Board may make
such other appropriate adjustments in the Deferred Payment Account as may be
necessary to have the Deferred Payment Account reflect for Plan Participants the
economic value of being a Corporation shareholder.
6A.5. Nature of Account. The Deferred Payment Accounts shall be utilized
solely as a device for the measurement and determination of the amount of
deferred compensation payable under the Plan. The Deferred Payment Account shall
not constitute or be treated as a trust fund of any kind. All amounts at any
time credited to a Deferred Payment Account shall be and remain the sole
property of the Corporation, and no Participant shall have any ownership rights
of any kind with respect thereto. A Participant's rights are limited to the
right to receive payments as provided herein and a Participant's position with
respect thereto is that of a general unsecured creditor of the Corporation. The
Participant shall have no voting rights and no other incidents of ownership of
Stock by virtue of the balance in a Deferred Payment Account, except the right
to dividend-equivalent and other credits as set forth in Subsection 6A.4.
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<PAGE> 29
6A.6. Nonassignment. Neither a Participant nor his or her duly designated
beneficiary shall have any right to assign, transfer, pledge or otherwise convey
the right to receive any amount of compensation which may be due hereunder and
any such attempted assignment, transfer, pledge or other conveyance shall not be
recognized by the Corporation.
6A.7. Payments From Deferred Payment Accounts. A Participant, may elect and
(subject to approval of the Board) may change any such prior elections by giving
notice to the Secretary of the Corporation to have the balance in his or her
Deferred Payment Account paid in any one of the following ways:
(a) In a lump sum on January 31 of the first calendar year that begins
after the Participant ceases to serve as an employee of the Corporation or
on January 31 of any calendar year within ten years thereafter.
(b) In any number of substantially equal annual installments, up to
and including ten, commencing on January 31 of the first calendar year that
begins after the Participant ceases to serve as an employee of the
Corporation or commencing on January 31 of any calendar year within ten
years thereafter.
(c) In a lump sum upon the earlier of (i) a Change of Control of the
Corporation or (ii) on January 31 of the first calendar year that begins
after the Participant ceases to serve as an employee of the Corporation or
on January 31 of any calendar year within ten years thereafter.
(d) In any number of substantially equal consecutive annual
installments, up to and including ten, commencing on January 31 of the
first calendar year that begins after the Participant ceases to serve as an
employee of the Corporation, or commencing on January 31 of any calendar
year within ten years thereafter, provided, however, that upon a Change of
Control any amounts remaining in the Deferred Payment Account shall be paid
in a lump sum.
An election under this Subsection 6A.7 shall be effective as of the later
of (i) the date six months after the election is filed in writing with the
Secretary of the Corporation, or (ii) January 1 of the year that next follows
the year in which such election was filed in writing with the Secretary of the
Corporation.
Whenever a Participant becomes entitled to a distribution from a Deferred
Payment Account hereunder, the Units in the Deferred Payment Account shall be
converted one-for-one into shares of Stock and distributed to the Participant on
the dates elected hereunder for distribution of the Deferred Payment Account.
Cash shall be paid in lieu of fractional shares of Stock.
In the event that the Participant makes a payment election or revokes an
election under this Subsection 6A.7, and does not continue to be an employee of
the Corporation for the full calendar year immediately following the year in
which such election was filed, such election shall have no effect. In such
event, if the Participant had made an earlier effective payment election under
this Subsection 6A.7, the earlier election shall continue to govern the form of
payment of the balance in the Participant's Deferred Payment Account. If the
Participant did not make such an earlier payment election, he or she shall be
deemed to have made no payment election under this Subsection 6A.7. In the event
that the Participant makes no payment election under this Subsection 6A.7, the
balance in his or her Deferred Payment Account shall be paid in a lump sum on
January 31 of the first calendar year that begins after the Participant ceases
to be an employee of the Corporation.
In the event of the death of a Participant, the balance in his or her
Deferred Payment Account shall be paid in a lump sum to the Participant's
designated beneficiary (or to his or her estate in the absence of any
beneficiary designation) on January 31 of the first calendar year following the
date of death.
6A.8. Designation of Beneficiary. A Participant may designate the
beneficiary who is to receive all the funds in the Participant's Deferred
Payment Account which may remain unpaid at the Participant's death. Such
designation shall be made by filing a written designation with the Secretary of
the Corporation and may be changed from time to time by similar action. If no
such designation has been filed with the Secretary of the Corporation prior to
the Participant's death, any such balance shall be paid to the Participant's
estate.
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<PAGE> 30
SECTION 7. STOCK APPRECIATION RIGHTS
7.1 Grant of Stock Appreciation Rights. Subject to the provisions of
Sections 4 and 5, Stock Appreciation Rights may he granted to Participants. Each
grant of Stock Appreciation Rights shall be in writing. A Stock Appreciation
Right may relate to a specific Option granted under the Plan and may, in such
case, relate to all or part of the Option shares covered by the related Option,
or may be granted independently of any Option granted under the Plan.
7.2 Exercise or Maturity of Stock Appreciation Rights. Subject to the
provisions of Subsection 12.2, Stock Appreciation Rights shall be exercisable or
shall mature at such time or times, on the conditions and to the extent and in
the proportion, that any related Option is exercisable and may be exercised or
mature for all or part of the shares of Stock subject to the related Option. In
the ease of a Stock Appreciation Right that is granted independently of any
Option granted under the Plan, such Rights shall be exercisable or shall mature
at such time or times, on the conditions and to the extent and in the proportion
set forth in the grant. Notwithstanding the preceding sentence, a Stock
Appreciation Right granted under the Plan to a Participant who is a director of
the Corporation or an officer of the Corporation or a Subsidiary subject to
Section 16 of the Act, shall not be exercisable until at least six months have
elapsed from the date of grant of such Stock Appreciation Right.
7.3 Effect of Exercise. Upon exercise of any number of Stock Appreciation
Rights, the number of Option shares subject to any related Option shall be
reduced accordingly and such Option shares may not again be subjected to an
Option under this Plan. The exercise of any number of Options shall result in an
equivalent reduction in the number of Option shares covered by the related Stock
Appreciation Right and such shares may not again be subject to a Stock
Appreciation Right under this Plan; provided, however, that if a Stock
Appreciation Right was granted for less than all of the Option shares covered by
any related Option, any such reduction shall be made at such time as, and only
to the extent that, the number of shares exercised under the related Option
exceeds the number of Option shares not covered by the Stock Appreciation Right.
7.4 Payment of Stock Appreciation Right Amount. Upon exercise or maturity
of the Stock Appreciation Right, the holder shall be entitled to receive payment
of an amount (subject to Subsections 7.5 and 7.7 below) determined by
multiplying:
(a) The difference between the Fair Market Value of a share of Stock
at the date of exercise over the price fixed by the Committee at the date
of grant, by
(b) The number of shares with respect to which the Stock Appreciation
Right is exercised.
In the case of a Stock Appreciation Right which is granted in conjunction
with an incentive stock option, the amount determined under (a) above shall be
determined by using a price fixed by the Committee at the date of grant which
does not exceed the option price of any related incentive stock option. The
holder of a Stock Appreciation Right shall receive payment in cash or a
combination of cash or a combination of cash and Stock, the Fair Market Value of
which is to be determined as of the date of exercise or maturity of the Right,
all in accordance with the terms and conditions of the written grant of the
Right,
7.5 Limit on Appreciation. The amount per share which will be payable upon
exercise or maturity of a Stock Appreciation Right shall in no event exceed the
Fair Market Value of the Stock at the date of grant. At such time as the amount
so payable under the terms of a Stock Appreciation Right is first equal to or
greater than the limitation of the preceding sentence: (a) any Stock
Appreciation Right that has not become exercisable by the Participant shall be
immediately exercisable, and (b) any Stock Appreciation Right that has not
matured shall automatically mature and become payable. The preceding sentence
shall not limit or deny the right of a Participant to exercise any Option in
connection with which a Stock Appreciation Right has been granted.
7.6 Rule 16b-3 Requirements. Notwithstanding any other provision of the
Plan, the Committee may impose such conditions on exercise of a Stock
Appreciation Right (including, without limitation, the right of the Committee to
limit the time of exercise to specified periods) as may be required to satisfy
the requirements of Rule 16b-3 (or any successor rule), under the Securities
Exchange Act of 1934.
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7.7 Termination of Employment. The Committee may provide in its grant of
Stock Appreciation Rights that in the event the employment of a Participant is
terminated by reason of death, Disability, Retirement or any other reason, any
Rights outstanding shall terminate, and the grant shall set forth the manner and
extent of termination.
SECTION 8. RESTRICTED STOCK
8.1 Grant of Restricted Stock. Subject to the provisions of Sections 4 and
5, the Committee, at any time and from time to time, may grant shares of
Restricted Stock under the Plan to such Participants and in such amounts as it
shall determine. Each grant of Restricted Stock shall be in writing. The total
aggregate number of shares of Stock issued pursuant to grants made under
Sections 8 and 8A after 1997 may not exceed 500,000.
8.2 Transferability. Except as provided in Section 8 hereof, the shares of
Restricted Stock granted hereunder may not be sold, transferred, pledged,
assigned or otherwise alienated or hypothecated for such period of time as shall
be determined by the Committee and shall be specified in the Restricted Stock
grant, or upon earlier satisfaction of other conditions as specified by the
Committee in its sole discretion and set forth in the Restricted Stock grant.
8.3 Other Restrictions. The Committee may impose such other restrictions on
any shares of Restricted Stock granted pursuant to the Plan as it may deem
advisable including, without limitation, restrictions providing for partial
payment of awards in certain events and for forfeiture of some or all such
shares of Restricted Stock in the event performance objectives established by
the Committee are not met and restrictions under applicable Federal or state
securities laws. The certificates representing Restricted Stock may be legended
to give appropriate notice of such restrictions.
8.4 Certificate Legend. In addition to any legends placed on certificates
pursuant to Subsection 9.3 hereof, each certificate representing shares of
Restricted Stock granted pursuant to the Plan shall bear the following legend:
"The sale or other transfer of the shares of stock represented by this
certificate, whether voluntary, involuntary or by operation of law, is subject
to certain restrictions on transfer set forth in Firstar Corporation's 1988
Incentive Stock Plan, rules of administration adopted pursuant to such Plan and
a Restricted Stock grant dated . A copy of the Plan, such rules and
such Restricted Stock grant may be obtained from the Secretary of Firstar
Corporation."
8.5 Removal of Restrictions. Except as otherwise provided in Section 8
hereof, shares of Restricted Stock covered by each Restricted Stock grant made
under the Plan shall become freely transferable by the Participant after the
last day of the Period of Restriction; provided, however, that if a grant of
Restricted Stock sets forth any restrictions providing for forfeiture in the
event certain specified performance objectives are not met, shares of Restricted
Stock covered by such grant shall not become freely transferable until a
determination has been made whether such performance objectives have been met.
Once the shares are released from the restrictions, the Participant shall be
entitled to have the legend required by Subsection 8.4 removed from the
Participant's Stock certificate.
8.6 Voting Rights During the Period of Restriction, Participants holding
shares of Restricted Stock granted hereunder may exercise full voting rights
with respect to those shares.
8.7 Dividends and Other Distributions. During the Period of Restriction,
Participants holding shares of Restricted Stock granted hereunder shall be
entitled to receive all dividends and other distributions paid with respect to
those shares while they are so held; provided, however, that the Committee may
provide in any grant of shares of Restricted Stock that payment of dividends
thereon may be deferred until termination of the Period of Restriction and may
be made subject to the same restrictions regarding forfeiture as apply to such
shares of Restricted Stock. If any such dividends or distributions are paid in
shares of Stock, the shares shall be subject to the same restrictions on
transferability as the shares of Restricted Stock with respect to which they
were paid.
8.8 Termination of Employment Due to Retirement. The Committee may provide
in its Restricted Stock grant that in the event a Participant terminates his or
her employment with the Corporation because of
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<PAGE> 32
Retirement, any remaining Period of Restriction applicable to the Restricted
Stock pursuant to Subsection 8.2 hereof shall automatically terminate and,
except as otherwise provided in Subsection 8.3, the shares of Restricted Stock
shall thereby be free of restrictions and freely transferable. In the event the
Restricted Stock grant does not automatically terminate such restrictions and a
Participant terminates his or her employment with the Corporation because of
Retirement, the Committee may, in its sole discretion, waive the restrictions
remaining on any or all shares of Restricted Stock pursuant to Subsection 8.2
hereof and/or add such new restrictions to those shares of Restricted Stock as
it deems appropriate.
8.9 Termination of Employment Due to Death or Disability. The Committee may
provide in its Restricted Stock grant that in the event a Participant terminates
his or her employment with the Corporation because of death or Disability during
the Period of Restriction, the restrictions applicable to the shares of
Restricted Stock pursuant to Subsection 8.2 hereof shall terminate automatically
with respect to all of the shares or that number of shares (rounded to the
nearest whole number) equal to the total number of shares of Restricted Stock
granted to such Participant multiplied by the number of full months which have
elapsed since the date of grant divided by the maximum number of full months of
the Period of Restriction. All remaining shares shall be forfeited and returned
to the Corporation; provided, however, that the Committee may, in its sole
discretion, waive the restrictions remaining on any or all such remaining
shares.
8.10 Termination of Employment for Reasons Other than Death, Disability or
Retirement In the event that a Participant terminates his or her employment with
the Corporation for any reason other than those set forth in Subsections 8.8 and
8.9 hereof during the Period of Restriction, then any shares of Restricted Stock
still subject to restrictions at the date of such termination shall
automatically be forfeited and returned to the Corporation; provided, however,
that, in the event of an involuntary termination of the employment of a
Participant by the Corporation, the Committee may, in its sole discretion, waive
the automatic forfeiture of any or all such shares and/or may add such new
restrictions to such shares of Restricted Stock as it deems appropriate.
8.11 Nontransferability of Restricted Stock. No shares of Restricted Stock
granted under the Plan may be sold, transferred, pledged, assigned or otherwise
alienated or hypothecated, otherwise than by will or by the laws of descent and
distribution until the termination of the applicable Period of Restriction. All
rights with respect to Restricted Stock granted to a Participant under the Plan
shall be exercisable during the Participant's lifetime only by such Participant.
SECTION 8A. PERFORMANCE-BASED RESTRICTED STOCK
8A. I Grant of Performance-Based Restricted Stock. Subject to the
provisions of Subsection 8.1, the Committee, at any time and from time to time,
may grant awards of Restricted Stock subject to this Section 8A to such
Participants and in such amounts as it shall determine. Each such grant shall be
in writing and shall be subject to the terms and conditions of this Section 8A
and, to the extent not inconsistent therewith, the terms and conditions of
Section 8.
8A.2 Performance Account. A Performance Account shall be established on the
books of the Corporation for each Participant. The Performance Account shall be
designated in shares of Stock. For each Participant, the number of shares in his
or her Performance Account shall be (a) the product of the Specified Percentage
and the base salary midpoint of his or her salary grade, (b) divided by the Fair
Market Value of a share of Stock on the last business day preceding the
commencement of the Performance Period. The maximum number of shares credited to
any Participant's account for an award made in 1998 shall be computed as
provided in the preceding sentence wherein the product in clause (a) consists of
a Specified Percentage of 60% multiplied by the 1998 base salary midpoint of the
chief executive officer of the Corporation. The maximum number for each
following year shall be computed based upon a product which is five percent more
than for the prior year.
8A.3 No Credits to Account. Except as provided in Subsection 4.3, the
number of shares of Stock in each Participant's Performance Account shall not be
increased during the Performance Period for any reason, including the payment of
dividends or other distributions with respect to the Stock.
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<PAGE> 33
8A.4 Final Adjustment to Performance Account. (a) As soon as practicable
after the completion of the Performance Period for any award made prior to 1998,
the Committee shall certify the Return on Equity of the Corporation for the
Performance Period. The Committee shall also certify the comparison of the
Corporation's Return on Equity with the Return on Equity achieved by the other
members of the Peer Group. The number of shares in the Performance Account of
each Participant shall be multiplied by a percentage determined in accordance
with the following table, subject to the additional conditions and limitations
set forth in this Section 8A:
<TABLE>
<CAPTION>
PERCENTILE APPLICABLE
RANKING PERCENTAGE
---------- ----------
<S> <C>
Below 50th percentile...................... 0%
50th percentile (median)................... 50
70th percentile............................ 100
90th percentile............................ 150
</TABLE>
If the Corporation's performance is greater than the 50th percentile but less
than the 90th percentile, the applicable percentage shall be determined by
linear interpolation between the applicable points. In no event shall the
percentage exceed 150% for percentile rankings in excess of 90.
(b) As soon as practicable after the completion of the Performance Period
for any award made in 1998 or thereafter, the Committee shall certify (i) the
Return on Equity of the Corporation for the Performance Period and the
comparison of it with the Return on Equity achieved by the other members of the
Peer Group, and (ii) the compounded growth in Earnings per Share of the
Corporation for the Performance Period. The number of shares in the Performance
Account of each Participant shall be multiplied by a percentage equal to the sum
of (x) 75% of the applicable percentage determined in accordance with the
following table with respect to Return on Equity, plus (y) 25% of the applicable
percentage determined in accordance with the following table with respect to
compounded growth in Earnings per Share, subject to the additional conditions
and limitations set forth in this Section 8A:
<TABLE>
<CAPTION>
RETURN ON EQUITY PERFORMANCE EARNINGS PER SHARE PERFORMANCE
- --------------------------------------- ---------------------------------------
PERCENTILE APPLICABLE GROWTH APPLICABLE
RANKING PERCENTAGE AMOUNT PERCENTAGE
---------- ---------- ------ ----------
<S> <C> <C> <C>
Below 40%.................. 0% Below 5%................... 0%
40th percentile............ 50 5%......................... 50
60th percentile............ 100 10%........................ 100
90th percentile............ 200 13%........................ 200
</TABLE>
The applicable percentages shall be determined by linear interpolation between
the applicable points. In no event shall the percentage exceed 200% for Return
on Equity or Earnings per Share performance.
8A.5 Payment of Award. As soon as practicable after all of the
determinations required by Subsection 8A.4 have been made, each Participant
shall receive a cash payment equal to the product of the number of shares of
Stock credited to his or her Performance Account, as adjusted by Subsection
8A.4, and the aggregate dividends paid by the Corporation on a share of Stock
during the Performance Period. At the same time, the Corporation shall deliver
to each Participant with respect to his or her Performance Account (a) a
certificate for shares of Stock equal in number to 50% of the number of shares
of Stock credited to such account. as adjusted, and (b) a payment of cash equal
to the product of 50% of the number of shares of Stock credited to such account,
as adjusted, and the Fair Market Value of a share of Stock as of the last
business day in the Performance Period. The Corporation shall also pay to each
Participant cash in lieu of issuing fractional shares of Stock.
8A.6 Threshold Performance Requirement Notwithstanding the provisions of
Subsections 8A.4 and 8A.5, if the Return on Equity of the Corporation for a
Performance Period is less than 12% and the Committee shall have determined that
payments of awards under this Section 8A would not be in the best interest of
the Corporation, no Participant shall receive any payments, whether in cash or
Stock, with respect to his or her Performance Account for such Performance
Period.
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<PAGE> 34
8A.7 Status of Account. Until shares of Stock are issued and payments are
made to a Participant with respect to his or her Performance Account, the
Participant shall have no interest or rights in or to any specific assets or
property of the Corporation or any shares of Stock, and the Participant shall
have no right to vote any shares of Stock represented by the Performance
Account.
8A.8 Termination of Employment. In the event a Participant's employment is
terminated, the provisions of Subsections 8.8, 8.9 and 8.10 shall apply to
determine the extent (if any) to which the Participant (or his or her designated
beneficiary) shall be entitled to receive cash and shares of Stock that would
otherwise be payable pursuant to Subsection 8A.5. For purposes of making the
adjustments described in Subsection 8A.5 and applying them to the circumstances
described in the preceding sentence, a pro rata adjustment shall be made by the
Compensation Committee to the performance goals for the number of complete
fiscal years and/or quarters in the Performance Period preceding the effective
date of the termination of the Participants' employment.
8A.9 Other Terms. Subject to the maximum award limit specified in Section
8A.2, at the beginning of the Performance Period, the Committee may, in its sole
discretion, establish additional or different terms, conditions, goals,
standards and objectives with respect to the Performance Account of any or all
of the Participants. Without limiting the foregoing, the Committee may impose a
return on assets or other performance goal in addition to, or in lieu of, a
Return on Equity or Earnings per Share performance goals and may provide for a
different allocation between any performance goals and the cash and Stock
components of the payment with respect to the Performance Account.
8A.10 Change of Control. Upon the occurrence of a Change of Control, each
Performance Period shall terminate and each Participant shall receive a
distribution with respect to his or her Performance Account under Subsection
8A.5, subject to the conditions set forth therein and in this Subsection 8A.10.
The amount of the cash payable and the number of shares of Stock to be issued to
each Participant with respect to each Performance Period shall be the amount and
number determined in accordance with Subsection 8A.5 multiplied by a fraction,
the numerator of which is the number of full months which have elapsed since the
beginning of the Performance Period and the denominator of which is the number
of full months in the Performance Period (determined without regard to this
Subsection 8A.10). For purposes of making the adjustments described in
Subsection 9A.5 and applying them to the consequences of a Change of Control,
the Return on Equity of the Corporation and the Peer Group and the compounded
growth of the Corporation's Earnings per Share shall be computed for the number
of complete fiscal years and/or quarters in the Performance Period preceding the
occurrence of the Change of Control.
SECTION 9. BENEFICIARY DESIGNATION
9.1 Beneficiary Designation. Each Participant under the Plan may, from time
to time, name any beneficiary or beneficiaries (who may be named contingently or
successively) to whom any benefit under the Plan is to be paid in case of the
Participant's death before he or she receives any or all of such benefit. Each
designation will revoke all prior designations by the same Participant with
respect to the same benefit or award, shall be in a form prescribed by the
Committee and will be effective only when filed by the Participant in writing
with the Committee during his or her lifetime. In the absence of any such
designation, benefits remaining unpaid at the Participant's death shall be paid
to the estate of the Participant.
SECTION 10. ADDITIONAL TRANSFER RESTRICTIONS
10.1 Generally. In addition to the transfer restrictions provided in
Subsections 6.7. 8.2 and 8.3, no Participant or personal representative of a
deceased Participant who holds Stock acquired under the Plan, whether as
Restricted Stock or pursuant to the exercise or maturity of an Option or Stock
Appreciation Right, or any stock issued as a stock dividend thereon or any
securities issued in lieu thereof or in substitution or exchange thereof
(together referred to herein as "Securities") shall sell or otherwise dispose of
the Securities except as provided in this Section 10, without first offering the
Securities to the Corporation in writing for the consideration and under the
terms of payment to apply to the third-party transfer.
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<PAGE> 35
10.2 Response to Offer. Upon receipt by the Corporation of any such offer,
the Corporation shall have the right for a period of ten (10) days after such
receipt to either (a) purchase such Securities or place them with other
stockholders of the Corporation on the terms and at the price stated in such
offer, or (b) require that, unless such offer is withdrawn, the offeror sell the
Securities so offered on any national securities exchange upon which the
Securities are then being traded within a period of ten (10) days after being
advised by the Corporation in writing of such requirement.
If the Corporation shall fail to exercise such rights within ten (10) days
after its receipt of such offer of sale, the offeror may, within thirty (30)
days after the date of delivery of such offer to the Corporation, sell the
Securities to whomever will purchase them upon the same terms and price for
which they were offered to the Corporation, and after such sale such Securities
shall be free of the restrictions of this Section 10.
10.3 Legend on Certificates. Certificates for all Securities shall be
endorsed with a legend referring to the restrictions on transfer set forth in
this Section 10.
10.4 Exceptions. The provisions of this Section 10 shall not apply to a
gift or bequest of Securities, or disposition of the same pursuant to intestate
laws, provided, however, that any person who acquires any Securities by gift,
bequest or disposition pursuant to intestate laws shall be subject to the
provisions of this Section 10 to the same extent as though such person were a
Participant who acquired such Securities under the Plan.
10.5 Waiver. The provisions of this Section 10 may be waived in whole or in
part in any particular case or cases by the Committee or may be terminated at
any time by the Committee, whenever it may determine that no substantial benefit
to the Corporation is afforded by such provisions.
SECTION 11. RIGHTS OF EMPLOYEES
11.1 Employment. Nothing in the Plan shall interfere with or limit in any
way the right of the Corporation to terminate any Participant's employment at
any time nor confer upon any Participant any right to continue in the employ of
the Corporation.
SECTION 12. ADMINISTRATION; POWERS AND DUTIES OF THE COMMITTEE
12.1 Administration. The Committee shall be responsible for the
administration of the Plan. The Committee, by majority action thereof, is
authorized to interpret the Plan, to prescribe, amend, and rescind rules and
regulations relating to the Plan, to provide for conditions and assurances
deemed necessary or advisable to protect the interests of the Corporation, and
to make all other determinations necessary or advisable for the administration
of the Plan, but only to the extent not contrary to the express provisions of
the Plan. Determinations, interpretations, or other actions made or taken by the
Committee pursuant to the provisions of the Plan shall be final and binding and
conclusive for all purposes and upon all persons whomsoever.
12.2 Change of Control. Notwithstanding any other provision of this Plan,
upon the occurrence of a Change of Control all Options and Stock Appreciation
Rights then outstanding shall become immediately exercisable in full for the
remainder of their terms, all Stock Appreciation Rights then outstanding that
have not matured shall mature and all Periods of Restriction shall terminate;
provided, however, that Participants who are directors of the Corporation or
officers of the Corporation or a Subsidiary subject to Section 16 of the Act,
shall have the right to exercise their Options and Stock Appreciation Rights and
to receive Stock pursuant to awards of Restricted Stock only if at least six
months have elapsed from the date of grant of such Options, Stock Appreciation
Rights, and Restricted Stock awards, as the case may be. The preceding sentence
shall not apply to Restricted Stock awards subject to Section 8A, and the effect
of a Change of Control on such awards shall be determined exclusively by the
provisions of Subsection 8A.10.
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<PAGE> 36
12.3 Amendment, Modifications and Termination of Plan. The Board may at any
time terminate, and from time to time may amend or modify the Plan, provided,
however, that no such action of the Board, without approval of the shareholders,
may:
(a) Increase the total amount of Stock which may be issued or Stock
Appreciation Rights which may be granted under the Plan, except as provided
in Section 4 of the Plan.
(b) Increase the total number of shares of Stock that may be issued
pursuant to Options granted under the Plan and Stock Appreciation Rights
granted under the Plan to any one Participant, except as provided in
Subsections 4.1, 4.3 and 5.3 of the Plan.
(c) Change the provisions of the Plan regarding the Option price
except as permitted by SubSection 4.3.
(d) Materially increase the cost of the Plan or materially increase
the benefits to Participants.
(e) Extend the period during which Options, Stock Appreciation Rights
or Restricted Stock may be granted.
(f) Extend the maximum period after the date of grant during which
Options or Stock Appreciation Rights may be exercised or mature.
(g) Change the class of individuals eligible to receive Options,
Restricted Stock, or Stock Appreciation Rights.
No amendment, modification or termination of the Plan shall in any manner
adversely affect any Options, Stock Appreciation Rights or Restricted Stock,
theretofore granted under the Plan, without the consent of the Participant.
SECTION 13. TAX WITHHOLDING
13.1 Tax Withholding. Whenever shares of Stock are to be issued under the
Plan, the Corporation shall have the power to require the recipient of the Stock
to remit to the Corporation an amount sufficient to satisfy Federal, state and
local withholding tax requirements prior to issuance of the certificate for
shares of Stock.
13.2 Share Withholding. In the discretion of the Committee, the Option
Agreement may provide that a Participant exercising an Option may satisfy the
Corporation's withholding requirements by electing to have the Corporation
withhold shares of Stock otherwise issuable to the Participant, having a Fair
Market Value on the Tax Date in the amount required to be withheld. The election
shall be made in writing and shall be made according to such rules and in such
form as the Committee shall from time to time determine.
SECTION 14. REQUIREMENTS OF LAW
14.1 Requirements of Law. The granting of Options, Stock Appreciation
Rights or Restricted Stock, and the issuance of shares of Stock upon the
exercise of an Option shall be subject to all applicable laws, rules and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.
14.2 Governing Law. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of Wisconsin.
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<PAGE> 37
EXHIBIT B
FIRSTAR CORPORATION
ANNUAL EXECUTIVE INCENTIVE PLAN
SECTION 1. ESTABLISHMENT PURPOSE, AND EFFECTIVE DATE OF PLAN
1.1 Establishment. Firstar Corporation, a Wisconsin corporation, hereby
establishes the Annual Executive Incentive Plan (the "Plan") for key employees
of the Corporation and its Subsidiaries. The Plan provides for annual cash
awards to be made to Participants based upon the achievement of certain
previously established objectives.
1.2 Purpose. The purpose of the Plan is to attract and retain in the
employ of the Corporation and its Subsidiaries persons possessing outstanding
management skills and competence who will contribute substantially to the
success of the Corporation and to provide incentives to such persons to exert
their maximum efforts an behalf of the Corporation by rewarding them with
additional compensation when the Corporation has achieved significant financial
objectives as provided for in the Plan. The Board believes that the Plan will
promote continuity of management and increased personal interest in the welfare
of the Corporation by those who are primarily responsible for developing and
carrying out the long-range plans of the Corporation and securing its continued
growth and financial success.
1.3 Effective Date. The effective date of the Plan is January 1, 1988, and
the first Plan Year shall be the year ended December 31, 1998. The Plan shall
continue in effect from time to time until and unless terminated by the Board.
SECTION 2. DEFINITIONS; CONSTRUCTION
2.1 Definitions. Whenever used herein, the following terms shall have
their respective meanings set forth below:
(a) "Midpoint Salary" means the midpoint of the range of the lowest
and highest salary established by the Corporation for the Participant's
salary grade level, in effect at the beginning of the Plan Year.
(b) "Board" means the Board of Directors of the Corporation.
(c) A "Change of Control" shall be deemed to have occurred on the date
on which (i) securities of the Corporation representing 25% or more of the
combined voting power of the Corporation's then outstanding voting
securities are acquired pursuant to a tender offer or exchange offer; (ii)
the shareholders of the Corporation approve a merger or consolidation of
the Corporation with another corporation as a result of which less than 50%
of the outstanding voting securities of the surviving or resulting entity
are owned by the former shareholders of the Corporation (other than a
shareholder who is an "affiliate," as defined in the Securities Exchange
Act of 1934, of any party to such consolidation or merger); (iii) the
shareholders of the Corporation approve the sale of substantially all of
the Corporation's assets to a corporation which is not a wholly-owned
subsidiary of the Corporation; (iv) any "person," as used in Section
3(a)(9) of the Securities Exchange Act of 1934, becomes the beneficial
owner, directly or indirectly, of securities of the Corporation
representing 25% or more of the combined voting power of the Corporation's
then outstanding securities, the effect of which (as determined by the
Board) is to take over control or participate in the affairs of the
Corporation; or (v) during any period of two consecutive years, individuals
who, at the beginning of such period, constituted the Board cease, for any
reason, to constitute at least a majority thereof, unless the election or
nomination for election of each new director was approved by a vote of at
least two-thirds of the directors then still in office who were directors
at the beginning of the period. For purposes of this Plan, ownership of
securities shall include ownership as determined by applying the provisions
of Rule 13d-3(a) of the Securities Exchange Act of 1934 (as then in
effect).
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<PAGE> 38
(d) "Committee" means the Compensation Committee of the Board which
shall consist of three or more members of the Board who are not, and who
have not been at any time within one year prior to appointment to the
Committee, eligible to receive any benefits under the Plan or any similar
plan of the Corporation. The preceding sentence shall not preclude any
person who is or has been so eligible from serving as a member of the
Committee, but such person shall not be entitled to vote on any matter
relating to the Plan.
(e) "Corporation" means Firstar Corporation, a Wisconsin corporation.
(f) "Corporate Staff" means those Employees of the Corporation who are
engaged principally in activities relating to the overall operations and
management of the Corporation and its Subsidiaries as a whole.
(g) "Disability" shall have the same meaning assigned to such term in
the Firstar Corporation Long-Term Disability Insurance Plan.
(h) "Employee" means my person, including an officer or director, who
is employed on a permanent, full-time basis by, and receives a regular
salary from, the Corporation or any Subsidiary.
(I) "Operating Unit" means any Subsidiary or any division, branch,
department, office of the Corporation or any Subsidiary that is treated as
a separate profit center and that reports as such (directly or indirectly)
to management of the Corporation.
(j) "Participant" means any Employee who has been selected to
participate in the Plan.
(k) "Plan Year" means a fiscal year of the Corporation, except that a
Plan Year shall terminate on the day immediately preceding the day on which
a Change of Control occurs.
(l) "Retirement" shall have the meaning and definition set forth in
the pension plan of the Corporation.
(m) "Subsidiary" means any corporation in which the Corporation owns
(directly or indirectly) 50% or more of the outstanding stock entitled to
vote for directors.
(n) "Act" means the Securities Exchange Act of 1934, as amended.
(o) "Peer Group" means the banking companies operating in the United
States having assets in the same range as the Corporation, as established
by Keefe, Bruyette and Woods, Inc., or other similar service, from time to
time.
(p) "Return on Equity" means, with respect to the Corporation or any
other member of the Peer Group, the ratio of its net income available to
common shareholders for a particular period to its average common
shareholders' equity during such period.
(q) "Earnings per Share" means the net income of the Corporation per
share of common stock of the Corporation computed on a diluted basis in
accordance with generally accepted accounting principles.
2.2 Number. Except when otherwise indicated by the context, the singular
shall include the plural and the plural shall include the singular.
SECTION 3. ELIGIBILITY AND PARTICIPATION
3.1 Generally. In general, those Employees in compensation grades 34 and
above shall participate in the Plan.
3.2 Special Circumstances. Other Employees in addition to those described
in Subsection 3.1 may be approved by the Committee for participation in the Plan
(either on a continuing basis or yearly basis) if it finds that the inclusion of
such other Employees in the Plan is necessary or desirable to carry out the
purposes of the Plan. The Committee may in its discretion exclude one or more
Employees who are otherwise eligible from participation in the Plan.
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<PAGE> 39
3.3 Date of Eligibility. All awards for a Plan Year will be made at the
beginning of such Plan Year, in accordance with Sections 5 and 6, to Employees
who are then eligible to participate in the Plan. If an employee becomes
eligible to participate in the plan due to a promotion during a Plan Year, the
Committee may make a partial pro rata award to such employee based upon the
number of months remaining in the Plan Year.
SECTION 4. ADMINISTRATION; POWERS AND DUTIES OF THE COMMITTEE
4.1 Administration. The Committee shall he responsible for the
administration of the Plan. The Committee, by majority action, is authorized to
interpret the Plan, to prescribe, amend, and rescind rules and regulations
relating to the Plan, to provide for conditions and assurances deemed necessary
or advisable to protect the interests of the Corporation, and to make all other
determinations necessary or advisable for the administration of the Plan, but
only to the extent not contrary to the express provisions of the Plan. The
Committee may request the assistance of the Board in making any determination
under the Plan or in carrying out its duties hereunder. Determinations,
interpretations, or other actions made or taken by the Committee pursuant to the
provisions of the Plan shall be final and binding and conclusive for all
purposes and upon all persons whomsoever.
4.2 Amendment, Modification and Termination of Plan. The Board or the
Committee may at any time terminate, and from time to time may amend or modify
the Plan, except that no amendment by the Committee shall increase the amount of
an award payable to a Participant or class of Participants or allow a member of
the Committee to be a Participant, and except that no such termination shall be
effective with respect to the Plan Year in which it occurs.
SECTION 5. BASIS FOR AWARDS
5.1 Determination of Goals. (a) Awards to the chief executive officer and
the chief operating officer of the Corporation shall be based solely upon a goal
consisting of two components: (i) the Corporation's Return on Equity compared
with the Return on Equity achieved by other members of the Peer Group of which
the Corporation is a member, which shall comprise 75% of the total goal, and
(ii) the growth in Earnings per Share of the Corporation, which shall comprise
25% of the total goal. Such comparison of Return on Equity performance shall be
expressed in terms of a comparative ranking. Threshold performance shall require
40th percentile performance; Target performance shall require 60th percentile
performance; and Maximum performance shall require 90th percentile performance.
Threshold performance for the Earnings per Share component of the goal shall
require a 5% growth performance, Target performance shall require a 10% growth
performance and Maximum shall require a 13% growth performance.
(b) At the beginning of each Plan Year, the Committee shall establish the
criteria upon which awards to Participants other than the chief executive
officer and the chief operating officer of the Corporation shall be based. The
Committee may authorize the chief executive officer and the chief operating
officer to establish criteria specific to a participant's business area. Such
criteria may include earnings per share, return on equity, net earnings, return
on average assets, operating earnings, net interest margin, and any others that,
in the judgment of the Committee, properly reflect the contribution of the
Participant. Such criteria may also be applied to the Corporation as a whole or,
to the extent feasible, to the Operating Unit in which the Participant is
employed. These criteria should take into account the forecasts, budgets and
other plans of the Board and management of the Corporation. The Committee is
responsible for ensuring that these criteria meet the objectives of the
Corporation and its shareholders and are achievable through high levels of
management performance.
5.2 Revision of Goals. (a) Subject to the maximum award limitation set
forth in Subsection 6.3, at the beginning of each Plan Year the Committee may,
in its sole discretion, establish additional or different terms, conditions,
goals, standards and objectives with respect to the goals for the chief
executive officer and chief operating officer set forth in Subsection 5.1(a).
Without limiting the foregoing, the Committee may impose a return on assets or
other performance goal in addition to, or in lieu of, a Return on Equity or
Earnings per Share performance goals and may provide for a different allocation
between any performance goals.
B-3
<PAGE> 40
(b) Under normal business conditions, the criteria set forth in Subsection
5.1(b) shall not be altered or revised after they have been established for a
Plan Year and communicated to Participants. However, unusual conditions may
warrant a reexamination of such criteria, such as extraordinary gains or losses,
acquisitions or dispositions of significant Operating Units and other
nonrecurring events. Revision of criteria under this Subsection 5.2 shall be
subject to approval by the Committee.
SECTION 6. METHOD OF DETERMINING AWARDS
6.1 Allocation to Corporation, Operating Unit and Individual. A Participant
shall be assigned various criteria established pursuant to Subsection 5.1 with
respect to the Corporation as a whole, the Subsidiary, a regional group of
Subsidiaries as a whole, and/or the Operating Unit by which the Participant is
employed. The extent to which a Participant's criteria have been achieved shall
first be separately determined at each of the levels, and then in the aggregate
in accordance with a series of relative weights to be established in connection
with the establishment of performance goals for each Participant. In certain
cases the criteria set for the Operating Unit level may be comprised of more
than one element and may include criteria specific to the Participant's area of
responsibility, and the performance levels may be measured separately rather
than in the aggregate. The sum of the relative weights for each Participant
shall be 100%. It is anticipated that Employees who are Corporate Staff shall be
assigned performance criteria with respect (in whole or in part) to the
Corporation as a whole, and Employees of a Subsidiary or Operating Unit shall be
assigned performance criteria with respect (in part) to that Subsidiary or
Operating Unit. The preceding sentence is intended as a guide for the Committee
and not as a limitation upon its discretion. The Committee may, in its
discretion, vary the relative weights to be assigned to each of the levels at
which performance is measured, provided that any change shall take effect with
the Plan Year beginning after the date on which such change is approved by the
Committee.
6.2 Target Award. A Participant who has achieved exactly 100% of his or her
criteria ("Target Percentage") pursuant to the provisions of Subsection 6.1
shall be entitled to an award ("Target Award") equal to the following percentage
of such Participant's Midpoint Salary for the Plan Year:
<TABLE>
<CAPTION>
COMPENSATION PERCENTAGE OF
GRADE MIDPOINT SALARY
------------ ---------------
<S> <C>
47....................................................... 60%
45-46....................................................... 55%
41-44....................................................... 45%
38-40....................................................... 35%
37....................................................... 30%
34-36....................................................... 25%
</TABLE>
A Participant who has achieved at least the minimum percentage established
by the Committee (the "Threshold Percentage") and not more than the maximum
percentage established by the Committee ("Maximum Percentage") of his or her
criteria pursuant to the provisions of Subsection 6.1 shall be entitled to a
percentage of such Participant's Target Award based upon the following table:
<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE OF
CRITERIA ACHIEVED TARGET AWARD
----------------- -------------
<S> <C>
Threshold Percentage.......................... 50%
Target Percentage............................. 100%
Maximum Percentage............................ 150% (200% for CEO and COO)
</TABLE>
Where a percentage falls between any two points, the appropriate percentage
of Target Award shall he determined by linear interpolation between the
applicable points. No award shall be payable to a Participant who has not
achieved at least the Threshold Percentage of his or her criteria pursuant to
the provisions of Subsection 6.1, and no award in excess of 150% of the Target
Award shall be payable to a Participant who has achieved in excess of the
Maximum Percentage of his or her criteria.
B-4
<PAGE> 41
6.3 Limitation on Awards. The Committee may, in its discretion, impose any
limitations or conditions upon the receipt of awards that it deems necessary or
desirable in appropriate circumstances, which may be applied to one or more
Participants or to all of the Participants as a group; such limitations and
conditions may include, but need not be limited to, the attainment of a
threshold level of return on assets, return on equity, or earnings per share of
the Corporation. Such limitations and conditions shall be established and
communicated to Participants at the time the criteria established pursuant to
Section 5.1 is communicated to Participants, and may thereafter be revised only
in accordance with the principles set forth in Subsection 5.2. The maximum
amount of payment to any Participant for an award made under the Plan for 1998
shall not exceed 200% of the target award for the highest compensation grade set
forth in Section 6.2. The maximum for each following year shall be five percent
more than for the preceding year.
SECTION 7. PAYMENT OF AWARDS
Except as provided in Subsection 8.9, all awards made under the Plan shall
be paid to Participants if reasonably possible within 30 days after the date on
which consolidated financial statements of the Corporation for the Plan Year
have been prepared and the independent certified public accountants for the
Corporation have issued their report thereon.
SECTION 8. CHANGE IN EMPLOYMENT STATUS OR CONTROL
8.1 Generally. For purposes of this Plan, any changes in the employment
status of a Participant during a Plan Year, including but not limited to
termination of employment, transfers from Corporate Staff to an Operating Unit
or vice versa or between Operating Units, changes in compensation grades or
transfer between an eligible or ineligible position, shall be treated as having
occurred on the first day of the month following the month in which such change
or transfer occurs, unless such change or transfer occurs on the first day of
the month in which case the change or transfer shall be effective on the first
day of such month. Subject to the maximum award limitation set forth in Section
6.3, in the event that a Participant changes positions during a Plan Year, the
performance criteria may be modified or revised to reflect such new position or
level of responsibility and the Participant's award will be pro-rated based upon
the respective job grade midpoints and the period of time the Participant held
such positions during the Plan Year.
8.2 Reduced Award for Partial Year of Eligibility. If during a Plan Year a
Participant is assigned to a different position and thereby ceases to be
eligible to participate under the Plan, or if his or her eligibility is
terminated by action of the Committee during the Plan Year, he or she shall be
entitled to receive a partial Award for the portion of time during the Plan Year
that such Participant was eligible to participate.
8.3 Temporary Assignment. A Participant who is assigned to a position on an
"acting" or "temporary" basis shall not participate in the Plan for that
Position until the Participant shall be permanently assigned to such position.
If the prior position of the Participant qualified for participation in the
Plan, the Participant shall continue to participate for that position until the
"acting" or "temporary" basis of his or her assignment is resolved or until the
end of the Plan Year of such assignment, whichever occurs first.
8.4 Transfer Between Units. If a Participant is employed in an eligible
position during an entire Plan Year but by more than one Operating Unit, or is
employed by an Operating Unit in an eligible position for part of a Plan Year
and as an eligible member of the Corporate Staff for the remainder of such year,
then the award of such Participant for the Plan Year shall consist of a partial
award under Section 6 based upon the number of months the Participant was a
member of the Corporate Staff and one or more partial awards under Section 6
based upon the number of months the Participant was employed by each Operating
Unit in which the Participant was an Employee.
8.5 Temporary Absence. If a Participant is absent from work during a Plan
Year for 30 or more paid working days (exclusive of vacations and holidays), the
Participant's award for purposes of Section 6 of the Plan may, in the discretion
of the Committee, be reduced by the percentage obtained by dividing the total
number of paid working days so absent by the total number of working days in the
Plan Year or in the portion of the Plan Year when he or she was a Participant,
whichever is less.
B-5
<PAGE> 42
8.6 Termination Other Than for Cause. In the event a Participant's
employment is terminated by death, Retirement, Disability or in any other manner
except for cause as provided in Subsection 8.7, the Participant shall be
entitled to receive the full amount of any award for the preceding Plan Year not
yet paid. In addition, such Participant shall be entitled to a partial award for
the Plan Year in which such termination of employment occurs only in case of
termination due to death, Retirement, or Disability.
8.7 Termination for Cause. A Participant whose employment is terminated for
cause (as determined by the Committee) shall not be entitled to any award for
the Plan Year in which termination of employment occurs or for the preceding
Plan Year (except for amounts previously paid to him or her).
8.8 New Subsidiaries. If the Corporation shall acquire a new Subsidiary
which is an Operating Unit, the employees of such Subsidiary who were not
previously employed by the Corporation or any Subsidiary and who are eligible to
participate in the Plan shall commence participation with the Plan Year
immediately following the Plan Year in which such Subsidiary was acquired.
8.9 Partial Awards. If a Participant's employment is terminated during a
Plan Year in accordance with Subsection 8.6, the partial award shall be
determined as follows. Any partial award shall be based upon the number of full
calendar months the Participant was employed by the Corporation during the Plan
Year. The extent to which the Participant's performance criteria have been
achieved shall be determined in accordance with Subsection 6.1 as of the end of
the month preceding the month in which termination of employment occurs, unless
termination occurs on the last day of the month in which case it shall be
determined as of the end of such month of termination. The performance results
for such partial period shall then be annualized to determine whether the
Participant is entitled to an award in accordance with Subsection 6.2; provided,
however, that the percentage of Target Award, if any, that the Participant is
entitled to receive shall be reduced to the product obtained by multiplying such
amount by a fraction the numerator of which is the number of whole calendar
months in which the Participant was employed during the Plan Year and the
denominator of which is 12. The Corporation may rely on estimated financial
results and other relevant data to the extent necessary to determine achievement
of performance criteria for any partial award and absent manifest error such
determinations shall be binding. The payment of any partial award shall be made
no later than the date of the Participant's last day of employment.
8.10 Awards Payable Upon Change of Control. If a Plan Year is terminated
upon the occurrence of a Change of Control as provided in Subsection 2.1(k),
Participants shall be entitled to partial awards determined and payable in
accordance with Subsection 8.9 as if the Participants' employment had terminated
on the day on which the Change of Control occurred, and Subsection 8.9 shall be
applied for this purpose as if the Plan Year had been a period of 12 months.
8.11 Periodic Vesting of Awards. Notwithstanding the provisions of
Subsections 8.6 and 8.7 to the contrary, in the case of a Participant who has
entered into a Key Executive Employment and Severance Agreement with the
Corporation, such Participant shall be entitled to receive all awards for all
Plan Years ending before the date of the Participant's termination and a partial
award computed under Subsection 8.9 for the number of complete months in the
Plan Year during which the Participant was employed by the Corporation or a
Subsidiary.
SECTION 9. BENEFICIARY DESIGNATION
Each Participant under the Plan may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or successively) to
whom any benefit under the Plan is to be paid in case of his or her death before
he or she receives any or all of such benefit. Each designation will revoke all
prior designations by the same Participant, shall be in a form prescribed by the
Committee and will be effective only when filed by the Participant in writing
with the Committee during the Participant's lifetime. In the absence of any such
designation, benefits remaining unpaid at the Participant's death shall be paid
to the estate of the Participant.
B-6
<PAGE> 43
SECTION 10. RIGHTS OF EMPLOYMENT
10.1 Employment. Nothing in the Plan shall interfere with or limit in any
way the right of the Corporation to terminate any Participant's employment at
any time nor confer upon any Participant any right to continue in the employ of
the Corporation.
SECTION 11. STATUS OF PAYMENTS
No right, benefit or payment under this Plan shall be subject to
anticipation, sale, assignment, pledge, encumbrance or charge, and any attempt
to anticipate, sell, assign, pledge, encumber or charge the same shall be void.
No right, benefit or payment hereunder shall in any manner be liable for or
subject to the debts, contracts, liabilities or torts of the person entitled to
such benefits. If any Participant or beneficiary hereunder should become
bankrupt or attempt to anticipate, alienate, sell, assign, pledge, encumber or
charge any right, benefit or payment or any part thereof shall, in the sole
discretion of the Committee, cease; in such event, the Corporation may hold or
apply the same or any part thereof for the benefit of the Participant or the
beneficiary, spouse, children or other dependents of the Participant, in such
manner and in such proportion as the Committee deems proper.
SECTION 12. GOVERNING LAW
The Plan shall be construed in accordance with and governed by the laws of
the State of Wisconsin.
B-7
<PAGE> 44
FIRSTAR CORPORATION
777 East Wisconsin Avenue, Milwaukee, Wisconsin 53202
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
(SEE REVERSE SIDE)
DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED
FIRSTAR CORPORATION 1998 ANNUAL MEETING
<TABLE>
<S><C>
1. ELECTION OF DIRECTORS: 1 - ROGER H. DERUSHA 2 - WILLIAM H. LACY
(TERM EXPIRING IN THE YEAR 2001) 3 - SHELDON B. LUBAR 4 - KENNETH P. MANNING
5 - DANIEL F. MCKEITHAN, JR. 6 - WILLIAM W. WIRTZ
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY
listed to the left (except to vote for all nominees
as specified below). listed to the left.
__________________________
(Instructions: To withhold authority to vote for any indicated nominee, write the number(s) ---------> |_________________________|
of the nominee(s) in the box provided to the right.)
2. to amend the 1988 Incentive Stock Plan for Key Employees [ ] FOR [ ] AGAINST [ ] ABSTAIN
as set forth in the attached Proxy Statement.
3. To amend the Annual Executive Incentive Plan as set [ ] FOR [ ] AGAINST [ ] ABSTAIN
forth in the attached Proxy Statement.
4. With discretionary power upon any and all other business
that may properly come before the meeting and upon matters
incident to the conduct of the meeting.
Date NO. OF SHARES
--------------------------------
___________________________________________
Check appropriate box | |
indicate changes below: | |
Address Change? [ ] Name Change? [ ] |__________________________________________|
SIGNATURE(S) IN BOX
Please sign exactly as your name appears hereon,
giving your full title if signing as a attorney or
fiduciary. If shares are held jointly, each joint
owner should sign. If a corporation, please sign in
in full corporate name by duly authorized officer. If
a partnership, please sign in partnership name by
authorized person.
</TABLE>
<PAGE> 45
DIRECTORS FOR ANNUAL MEETING MAP:
[Map]
The O'Donnell Parking Structure is located on the NW corner of Michigan Street
and Lincoln Memorial Drive. Please enter from either street. You can also enter
on foot from the Wisconsin Avenue Level. The elevators are located at the west
end of the parking structure. Take the elevators up to the Miller Room.
FIRSTAR CORPORATION
777 East Wisconsin Avenue, Milwaukee, Wisconsin 53202
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Roger L. Fitzsimonds, John A. Becker and
William J. Schulz and each of them, proxies of the undersigned with power of
substitution to vote all stock of the undersigned at the annual meeting of the
shareholders of Firstar Corporation, to be held on April 16, 1998 at 2:00 P.M.,
and any adjournments thereof, as indicated below:
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO
DIRECTION INDICATED, WILL BE VOTED FOR NOMINEES FOR DIRECTOR NAMED IN ITEM 1
AND FOR THE PROPOSED PLAN AMENDMENTS SPECIFIED IN ITEMS 2 AND 3.
(SEE REVERSE SIDE TO VOTE)
