<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934 (Amendment No. ___)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] 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 (S)240.14a-11(c) or (S)240.14a-12
Marshall & Ilsley 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)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
MARSHALL & ILSLEY CORPORATION
770 NORTH WATER STREET
MILWAUKEE, WISCONSIN 53202
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 22, 1997
To the Shareholders of Marshall & Ilsley Corporation:
The 1997 Annual Meeting of Shareholders of Marshall & Ilsley Corporation
will be held at the M&I Marshall & Ilsley Bank, 770 North Water Street,
Milwaukee, Wisconsin, on Tuesday, April 22, 1997 at 10:00 a.m., local time,
for the following purposes:
(1) To elect seven Directors to serve until the 2000 Annual Meeting of
Shareholders and until their successors are elected and qualified;
(2) To approve the Marshall & Ilsley Corporation 1997 Executive Stock
Option and Restricted Stock Plan;
(3) To approve the Marshall & Ilsley Corporation Annual Executive Incentive
Compensation Plan; and
(4) To transact such other business as may properly come before the Annual
Meeting, all in accordance with the accompanying Proxy Statement.
Shareholders of record at the close of business on February 28, 1997 are
entitled to notice of and to vote at the Annual Meeting.
HOLDERS OF A MAJORITY OF THE OUTSTANDING SHARES MUST BE PRESENT IN PERSON OR
BY PROXY IN ORDER FOR THE MEETING TO BE HELD. THEREFORE, SHAREHOLDERS ARE
URGED TO DATE, SIGN AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE
WHETHER OR NOT THEY EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON. IF YOU
ATTEND THE MEETING AND WISH TO VOTE YOUR SHARES PERSONALLY, YOU MAY DO SO BY
REVOKING YOUR PROXY AT ANY TIME PRIOR TO THE VOTING THEREOF.
M. A. HATFIELD, Secretary
March 7, 1997
<PAGE>
MARSHALL & ILSLEY CORPORATION
770 NORTH WATER STREET
MILWAUKEE, WISCONSIN 53202
MARCH 7, 1997
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of Marshall &
Ilsley Corporation (the "Company" or "M&I") for use at the Annual Meeting of
Shareholders to be held on Tuesday, April 22, 1997 (the "Annual Meeting"). At
the Annual Meeting, the shareholders of the Company will elect seven Class I
Directors, each of whom will hold office until April 2000, and with respect to
each Director, until his successor is elected and qualified. The Company's
shareholders also will be asked to approve the Company's 1997 Executive Stock
Option and Restricted Stock Plan (the "1997 Stock Option Plan") and the
Company's Annual Executive Incentive Compensation Plan (the "Incentive Plan").
The expense of printing and mailing proxy materials, including expenses
involved in forwarding materials to beneficial owners of common stock held in
the name of another person, will be borne by the Company. No solicitation
other than by mail is contemplated, except that officers or employees of the
Company or its subsidiaries may solicit the return of proxies from certain
shareholders by telephone. In addition, the Company has retained Georgeson &
Company Inc. to assist in the solicitation of proxies for a fee of
approximately $6,500. The Proxy Statement and the accompanying Proxy are being
sent to the Company's shareholders commencing on March 7, 1997.
Each shareholder of record at the close of business on February 28, 1997
will be entitled to one vote for each share of common stock registered in such
shareholder's name. The Company has two classes of capital stock outstanding:
its $1.00 par value common stock (the "Common Stock") and its non-voting
Series A preferred stock (the "Preferred Stock"). As of February 28, 1997, the
Company had outstanding 88,921,199 shares of Common Stock and 517,129 shares
of Preferred Stock. The presence, in person or by proxy, of the holders of a
majority of the shares of the Common Stock outstanding on the record date is
required for a quorum with respect to the matters on which action is to be
taken at the Annual Meeting.
Any shareholder executing and delivering the enclosed proxy may revoke the
same at any time prior to the voting thereof by written notice of revocation
given to the Secretary of the Company.
The Company has instituted the Dividend Reinvestment and Cash Investment
Plan (the "Reinvestment Plan") administered by The First National Bank of
Boston, as Trustee. Under the provisions of the Reinvestment Plan, shares of
Common Stock are acquired and held in nominee name by The First National Bank
of Boston for participating shareholders. Shares so held have been separately
designated on the proxy card pertaining to each participant and will be voted
at the Annual Meeting in the same manner in which the participant votes those
shares registered in his or her own name either by proxy or in person.
The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1996, is included with this Proxy Statement.
UNLESS OTHERWISE DIRECTED, ALL PROXIES WILL BE VOTED FOR THE ELECTION OF
EACH OF THE INDIVIDUALS NOMINATED TO SERVE AS A CLASS I DIRECTOR AND FOR
APPROVAL OF THE 1997 STOCK OPTION PLAN AND FOR APPROVAL OF THE INCENTIVE PLAN.
ABSTENTIONS AND BROKER NON-VOTES (I.E., PROXIES FROM BROKERS OR NOMINEES
INDICATING THAT SUCH PERSONS HAVE NOT RECEIVED INSTRUCTIONS FROM THE
BENEFICIAL OWNERS TO VOTE SHARES AS TO A MATTER WITH RESPECT TO WHICH THE
BROKERS OR NOMINEES DO NOT HAVE DISCRETIONARY POWER TO VOTE) WILL BE TREATED
AS PRESENT FOR PURPOSES OF DETERMINING A QUORUM. DIRECTORS ARE ELECTED BY A
PLURALITY OF THE VOTES CAST BY HOLDERS OF THE COMPANY'S COMMON STOCK ENTITLED
TO VOTE AT A MEETING AT WHICH A QUORUM IS PRESENT. IN OTHER WORDS, THE SEVEN
DIRECTORS WHO RECEIVE THE LARGEST NUMBER OF VOTES WILL BE ELECTED AS
DIRECTORS. ANY SHARES NOT VOTED, WHETHER BY WITHHELD AUTHORITY, BROKER NON-
VOTE OR OTHERWISE, WILL HAVE
<PAGE>
NO EFFECT IN THE ELECTION OF DIRECTORS EXCEPT TO THE EXTENT THAT THE FAILURE
TO VOTE FOR AN INDIVIDUAL RESULTS IN ANOTHER INDIVIDUAL RECEIVING A LARGER
NUMBER OF VOTES. ANY VOTES ATTEMPTED TO BE CAST "AGAINST" A CANDIDATE ARE NOT
GIVEN LEGAL EFFECT AND ARE NOT COUNTED AS VOTES CAST IN AN ELECTION OF
DIRECTORS. THE AFFIRMATIVE VOTE OF A MAJORITY OF THE SHARES PRESENT OR
REPRESENTED AND ENTITLED TO VOTE IS REQUIRED TO APPROVE THE 1997 STOCK OPTION
PLAN AND THE INCENTIVE PLAN. ABSTENTIONS WILL HAVE THE EFFECT OF VOTES AGAINST
THE PROPOSAL TO APPROVE THE 1997 STOCK OPTION PLAN AND THE INCENTIVE PLAN AND
BROKER NON-VOTES WILL NOT BE COUNTED AS SHARES ENTITLED TO VOTE ON THE
PROPOSALS.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table lists as of February 28, 1997 information regarding the
beneficial ownership of shares of Common Stock by each director and named
executive officer of the Company, each person believed by the Company to be a
beneficial owner of more than 5% of Common Stock and all directors and
executive officers of the Company as a group:
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT OF NATURE OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) PERCENT OF CLASS
------------------- ----------------------- ----------------
<S> <C> <C>
Marshall & Ilsley Trust 10,602,035(2) 11.92%(2)
Company
1000 North Water Street
Milwaukee, WI 53202
The Northwestern Mutual Life 8,665,374(3) 8.97%
Insurance Company
720 East Wisconsin Avenue
Milwaukee, WI 53202
Richard A. Abdoo 5,600(4) *
Oscar C. Boldt 95,161(5) *
J.P. Bolduc 10,000(6) *
Wendell F. Bueche 15,500(4) *
Jon F. Chait 55,987(7) *
J.L. Delgadillo 48,004(8) *
Glenn A. Francke 200,283(6) *
G.H. Gunnlaugsson 282,337(9) *
Burleigh E. Jacobs 48,500(6) *
Jack F. Kellner 495,702 *
James F. Kress 20,500(6) *
D.J. Kuester 435,420(10) *
Edward L. Meyer, Jr. 23,696(11) *
Don R. O'Hare 11,100(7) *
San W. Orr, Jr. 254,337(12) *
P. M. Platten, III 406,427(13) *
J.A. Puelicher 483,156(14) *
Stuart W. Tisdale 11,280(7) *
J.B. Wigdale 644,510(15) *
James O. Wright 11,220(16) *
Gus A. Zuehlke 151,560(17) *
</TABLE>
All directors and executive officers of the Company as a group (26 persons,
including the above) own 4,140,344 shares of Common Stock or 4.66% of the
total Common Stock outstanding.(18)
- --------
*less than 1%
(1) Except as indicated below, all shares shown in the table are owned with
sole voting and investment power.
2
<PAGE>
(2) This information is based on Amendment No. 16 to Schedule 13-G dated
February 14, 1997. All such shares are owned by Marshall & Ilsley Trust
Company (the "Trust Company") as trustee or in other fiduciary
capacities. The Trust Company has no economic interest in such shares. Of
these shares, the Trust Company has sole voting power as to 689,802
shares (less than 1%) shared voting power as to 5,706,616 shares
(approximately 6.4%), sole investment power as to 3,912,695 shares
(approximately 4.4%), and shared investment power as to 6,693,055 shares
(approximately 7.5%). The amount and percentage of shares beneficially
owned, and the amount of shares as to which the Trust Company has shared
voting or investment power, include 5,594,537 shares held by the Trust
Company as to which it disclaims beneficial ownership. The Company owns
all of the issued and outstanding capital stock of the Trust Company.
(3) This information is based on Amendment No. 9 to Schedule 13-G dated
February 4, 1997. Of the shares held, 1,922,115 shares of Common Stock
may be acquired upon conversion of the Company's 8 1/2% Convertible
Subordinated Notes Due 1997 (the "Notes") held by The Northwestern Mutual
Life Insurance Company ("NML"). NML also holds 988,188 shares of Common
Stock and 517,129 shares of Preferred Stock. NML has sole voting and
investment power as to all such shares, subject to the terms and
conditions of a certain Investment Agreement (the "Investment Agreement")
between the Company and NML dated August 30, 1985. NML may exchange
shares of Common Stock, regardless of how they were acquired, for shares
of Preferred Stock. The Preferred Stock is non-voting and convertible
into 5,755,071 shares of Common Stock at the same ratio that the Common
Stock was exchanged for the Preferred Stock. The Investment Agreement
provides for the purchase by NML of up to 24.9%, on a fully diluted
basis, of the Common Stock. Purchases may take the form of Common Stock,
Preferred Stock, notes or other securities of the Company (together with
the Notes, the "Securities") at such prices as may be agreed upon by the
parties from time to time. Pursuant to the Investment Agreement, on
December 31, 1985, NML purchased $50 million in principal amount of the
Notes. On May 26, 1994, NML surrendered $16,363,000 in principal amount
of the Notes in exchange for 1,870,057 shares of Common Stock which were
exchanged for 163,630 shares of Preferred Stock. On April 1, 1996, NML
surrendered $16,818,500 principal amount of the Notes in exchange for
1,922,114 shares of Common Stock which were exchanged for 168,185 shares
of Preferred Stock. The Notes are callable by the Company at par. The
Investment Agreement restricts in certain respects NML's right to
transfer, acquire and vote any Securities. Under certain conditions, NML
may require the Company to repurchase its stock at not less than
prescribed prices after a "Change-in-Control" or upon the occurrence of a
"Business Combination" (as such terms are defined in the Investment
Agreement). For further information concerning the Investment Agreement,
the Notes and the Preferred Stock, reference is hereby made to the
Company's Current Reports on Form 8-K dated May 20, 1985, August 30, 1985
and January 2, 1986.
(4) Includes 5,000 shares which could be acquired pursuant to the exercise of
stock options within sixty days of February 28, 1997.
(5) Includes 32,854 shares held by Mr. Boldt's family as to which he
disclaims beneficial ownership and 22,900 shares which could be acquired
pursuant to the exercise of stock options within sixty days of February
28, 1997.
(6) Includes 10,000 shares which could be acquired pursuant to the exercise
of stock options within sixty days of February 28, 1997.
(7) Includes 7,500 shares which could be acquired pursuant to the exercise of
stock options within sixty days of February 28, 1997.
(8) Includes 27,000 shares which could be acquired pursuant to the exercise
of stock options within sixty days of February 28, 1997.
(9) Includes 2,700 shares held by Mr. Gunnlaugsson's family as to which he
disclaims beneficial ownership and 178,000 shares which could be acquired
pursuant to the exercise of stock options within sixty days of February
28, 1997.
(10) Includes 5,400 shares as to which Mr. Kuester exercises sole voting
power, and 271,000 shares which could be acquired pursuant to the
exercise of stock options within sixty days of February 28, 1997.
3
<PAGE>
(11) Includes 1,315 shares held by Mr. Meyer's family as to which he disclaims
beneficial ownership and 20,400 shares which could be acquired pursuant
to the exercise of stock options within sixty days of February 28, 1997.
(12) Includes 235,398 shares held by trusts for which Mr. Orr exercises shared
voting and investment power and as to which Mr. Orr disclaims beneficial
ownership, and 7,500 shares which could be acquired pursuant to the
exercise of stock options within sixty days of February 28, 1997.
(13) Includes 5,443 shares held by Mr. Platten's family as to which he
disclaims beneficial ownership, 189,409 shares as to which Mr. Platten
exercises sole voting power and 100,000 shares which could be acquired
pursuant to the exercise of stock options within sixty days of February
28, 1997.
(14) Includes 113,556 shares as to which Mr. Puelicher exercises sole voting
power.
(15) Includes 11,550 shares held by Mr. Wigdale's family as to which he
disclaims beneficial ownership and 326,000 shares which could be acquired
pursuant to the exercise of stock options within sixty days of February
28, 1997.
(16) Includes 5,000 shares which could be acquired pursuant to the exercise of
stock options within sixty days of February 28, 1997 and 500 shares owned
by Badger Meter Foundation as to which Mr. Wright disclaims beneficial
ownership.
(17) Includes 11,771 shares held by Mr. Zuehlke's family as to which he
disclaims beneficial ownership, 45,819 shares as to which Mr. Zuehlke
exercises sole voting power, and 10,000 shares which could be acquired
pursuant to the exercise of stock options within sixty days of February
28, 1997.
(18) Includes 40,700 shares of restricted stock as to which the holders
exercise sole voting power and 1,243,500 shares which could be acquired
pursuant to the exercise of stock options within sixty days of February
28, 1997.
ELECTION OF DIRECTORS
The Company's Restated Articles of Incorporation provide that the Company's
Directors are divided into three classes, designated Class I, Class II and
Class III, with staggered terms of three years each. At the Annual Meeting,
shareholders will elect seven Class I Directors to serve until the Company's
2000 Annual Meeting of Shareholders and until their successors are elected and
qualified. Each Class I Director's term expires at the 1997 Annual Meeting.
The following table sets forth certain information with regard to each of the
nominees for election as a Director as well as each of the Company's
continuing Class II and Class III Directors.
NOMINEES STANDING FOR ELECTION
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AND DIRECTORSHIPS
---- --------------------
Class I Directors (terms expiring in April 1997)
<C> <S>
Richard A. Abdoo Chairman of the Board, President and Chief Executive
Age 53 Officer, Wisconsin Energy Corporation, a holding company
with subsidiaries in utility and nonutility businesses. A
director of Sundstrand Corporation and United Wisconsin
Services, Inc. A Director since July 1994.
Wendell F. Bueche Chairman since August 1994, President, February 1993 to
Age 66 August 1994, Chief Executive Officer and Director, February
1993 to present, IMC Global, Inc. Also a director of WICOR,
Inc. A Director since 1983.
G.H. Gunnlaugsson Executive Vice President and Chief Financial Officer of the
Age 52 Company since 1987; Vice President of M&I Marshall & Ilsley
Bank since 1976; Director, M&I Data Services. A Director
since February 1994.
Jack F. Kellner Retired; Chairman of the Board from July 1991 to September
Age 80 1994, President, Chief Executive Officer and Director until
July 1991, Western Industries, Inc., a manufacturer of
metal stampings and sheet metal fabrication. A Director
since 1976.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AND DIRECTORSHIPS
---- --------------------
Class I Directors (terms expiring in April 1997)
<C> <S>
P. M. Platten, III Vice Chairman of the Board of the Company since May 1994;
Age 57 President and Chief Executive Officer, January 1989 to
May 1994, Valley Bancorporation. A Director since May
1994.
J.B. Wigdale Chairman of the Board of the Company from December 1992
Age 60 to present, Chief Executive Officer of the Company from
October 1992 to present, Vice Chairman of the Board of
the Company from December 1988 to December 1992;
Chairman of the Board, January 1989 to present, Chief
Executive Officer, September 1987 to present, of M&I
Marshall & Ilsley Bank. A Director since 1988.
James O. Wright Chairman of the Board and Director, Badger Meter, Inc., a
Age 76 manufacturer of products using flow measurement
technology serving utility, industrial and commercial
markets. A Director since 1960.
CONTINUING DIRECTORS
<CAPTION>
PRINCIPAL OCCUPATION
NAME AND DIRECTORSHIPS
---- --------------------
Class II Directors (terms expiring April 1998)
<C> <S>
Jon F. Chait Executive Vice President, Secretary and Director, August
Age 46 1991 to present, Managing Director--International
Operations, 1995 to present, Chief Financial Officer,
August 1993 to 1995, Manpower Inc. and Executive Vice
President, September 1989 to present, Manpower
International Inc., a provider of temporary employment
services. A Director since 1990.
D.J. Kuester President of the Company since 1987; President and
Age 55 Director since January, 1989, M&I Marshall & Ilsley
Bank; Chairman of the Board, Chief Executive Officer and
Director, M&I Data Services. Also a director of Modine
Manufacturing Company. A Director since February 1994.
Edward L. Meyer, Jr. President, Anamax Corporation, a processor of hides and
Age 59 manufacturer of tallow. A Director since May 1994.
Don R. O'Hare Chairman of Board, September 1994 to present, Chief
Age 74 Executive Officer, September 1994 to October 1995,
Chairman of the Board, January 1989 to August 1991, and
Director, Sundstrand Corporation, a manufacturer of
aerospace and industrial products; consultant to
Sundstrand Corporation, August 1991 to September 1994.
Also a director of Sauer, Inc. A Director since 1977.
San W. Orr, Jr. Attorney, Estates of A.P. Woodson & Family; Chairman of
Age 55 the Board and Director, Mosinee Paper Corporation and
Wausau Paper Mills Company. Also a Director of MDU
Resources Group, Inc. A Director since July 1994.
J.A. Puelicher Retired; Chairman of the Board and Chief Executive
Age 76 Officer of the Company from April 1981 to December 1992.
Also a director of Sundstrand Corporation. A Director
since 1959.
Stuart W. Tisdale Retired; Chairman of the Board and Chief Executive
Age 68 Officer, August 1992 to February 1994, President and
Chief Executive Officer, April 1986 to August 1992, and
Director, WICOR, Inc. A Director of Modine Manufacturing
Company and Twin Disc, Inc. A Director since 1986.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AND DIRECTORSHIPS
---- --------------------
Class III Directors (terms expiring April 1999)
<C> <S>
Oscar C. Boldt Chairman, The Boldt Group, Inc., subsidiaries in general
Age 72 contracting, development and related businesses. A
Director since May 1994.
J.P. Bolduc Chairman and Chief Executive Officer of JPB Enterprises,
Age 57 Inc., a diversified holding company with interests in the
food, beverage, real estate, retail and manufacturing
industries, since March 1995. Director from 1986 through
March 1995, President and Chief Executive Officer, January
1993 to March 1995, President and Chief Operating Officer,
August 1990 to January 1993, W.R. Grace & Co. Also a
director of Sundstrand Corporation, Newmont Mining
Corporation, Brothers Gourmet Coffees, Inc. and Unisys
Corporation. A Director since 1987.
Glenn A. Francke Retired; Chairman of the Board, 1971 through January 1987,
Age 75 M&I Northern Bank, a subsidiary of the Company. A Director
since 1960.
Burleigh E. Jacobs Chairman of the Board and Director, Grede Foundries, Inc.,
Age 77 a manufacturer of grey and ductile iron, steel, and
alloyed castings. A Director since 1967.
James F. Kress Chairman, Green Bay Packaging, Inc., a manufacturer of
Age 67 corrugated and packaging materials. A Director since 1986.
Gus A. Zuehlke Chairman, Valley Bancorporation until May 1994; Chairman,
Age 75 Valley Bank, Appleton, Wisconsin, until May 1994. A
Director since May 1994.
</TABLE>
The Board of Directors of the Company has standing Executive Compensation,
Audit, Retirement Investment and Nominating Committees. The Board of Directors
held seven meetings in 1996. Each Director attended at least 75% of the
meetings of the Board and Board Committees on which the director served.
The Executive Compensation Committee is responsible for administering
compensation levels for certain senior officers of the Company and its
subsidiaries, including all executive officers of the Company, and for
administering the Company's nonqualified compensation plans, including the
Executive Stock Option Plans and the 1994 Long-Term Incentive Plan. The
members of the Executive Compensation Committee are Messrs. Jacobs (Chairman),
Kellner, O'Hare and Wright, none of whom are employees of the Company or any
of its subsidiaries. The Executive Compensation Committee held two meetings in
1996. Salaries for other employees of the Company and its subsidiaries are
determined by the management of the respective subsidiaries and are reviewed
by the compensation committee of the Board of Directors of the subsidiary
involved.
The Audit Committee has responsibility for nominating the Company's
independent auditors for approval by the Board of Directors, reviewing the
scope, results and costs of the audit with the Company's independent auditors
and reviewing the financial statements of the Company and the audit function
to ensure full compliance with requirements of regulatory agencies and full
disclosure of necessary information to the shareholders of the Company. The
members of the Audit Committee, all of whom are non-employee directors, are
Messrs. Kellner (Chairman), O'Hare and Wright. The Audit Committee held two
meetings in 1996.
The Retirement Investment Committee is responsible, in relation to funding
policy, for reviewing the activities of and decisions made by the trustees of,
and the investment managers for, the Company's Retirement Growth Plan and
Incentive Savings Plan. The members of the Retirement Investment Committee,
none of whom are employees of the Company, are Messrs. O'Hare (Chairman),
Chait and Tisdale. The Committee held three meetings in 1996.
The Nominating Committee is responsible for recommending to the Board
nominees to stand for election as directors and to fill any vacancies which
may occur from time to time. In addition, the Nominating Committee is
responsible for considering any nominations for director submitted by
shareholders and for reviewing the size
6
<PAGE>
and composition of the Board and the criteria for selecting nominees to the
Board. Current employees of the Company are not eligible to serve on the
Nominating Committee. The members of the Nominating Committee are Messrs.
Tisdale (Chairman), Puelicher, Chait and Boldt. The Nominating Committee has
not established procedures for shareholders to recommend nominees for director
beyond those contained in the Company's By-laws. The Nominating Committee held
no meetings in 1996.
LOANS AND OTHER TRANSACTIONS WITH THE COMPANY
Customers of the bank subsidiaries of the Company include nominees,
directors and officers of the Company and their associates. Since January 1,
1996, such persons and firms have been indebted to the Company's bank
subsidiaries for loans made in the ordinary course of business. All such loans
were made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
others and did not involve more than the normal risk of collectibility or
present other unfavorable features. Loans to directors and executive officers,
including their related interests, by the Company and its significant
subsidiaries represented 11.3% of shareholders equity at December 31, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
-------------------- ----------------------------
RESTRICTED SECURITIES
STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) AWARDS($)(1) OPTIONS/SARS(#) COMPENSATION($)(2)
- --------------------------- ---- ---------- --------- ------------ --------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
J.B. Wigdale............. 1996 $ 580,000 $ 370,000 0 30,000 $487,679
Chairman of the Board 1995 550,000 275,000 0 30,000 243,324
and Chief Executive
Officer 1994 550,000 225,000 0 56,000 194,812
D.J. Kuester............. 1996 500,000 278,259 0 26,000 258,856
President 1995 475,000 217,920 0 26,000 167,957
1994 475,000 177,601 0 48,000 133,521
G.H. Gunnlaugsson........ 1996 345,000 272,643 0 18,000 156,383
Executive Vice President 1995 325,000 207,370 0 18,000 100,761
and Chief Financial
Officer 1994 325,000 177,136 0 34,000 76,594
P.M. Platten, III(3)..... 1996 354,167 114,600 0 0 56,713
Vice Chairman of the
Board 1995 475,000 215,000 0 0 51,413
1994 277,083 102,100 0 100,000 22,166
J.L. Delgadillo.......... 1996 270,000 140,000 0 8,000 43,292
Senior Vice President 1995 250,000 130,000 0 8,000 35,963
1994 220,000 120,000 91,250 14,000 20,600
</TABLE>
- --------
(1) As of December 31, 1996, the following individuals have unreleased Key
Restricted Stock: Mr. Wigdale, 12,000 shares valued at $411,504; Mr.
Kuester, 9,000 shares valued at $308,628; Mr. Gunnlaugsson, 6,000 shares
valued at $205,752; and Mr. Delgadillo, 5,900 shares valued at $198,988.
Values were arrived at using a December 31, 1996 closing market price of
$34.625 per share less consideration which is paid by the executive upon
issuance of award. Dividends are paid on restricted stock.
(2) Includes $4,500 for each individual paid by M&I under a 401(k) Thrift Plan
for 1996. Includes $12,000 for each individual paid by M&I under the
Retirement Growth Plan for 1996. Includes the following amounts paid by
M&I under a Split Dollar Life Insurance Plan for the benefit of the
executives for 1996: J.B. Wigdale--$13,842; D.J. Kuester--$7,506; G.H.
Gunnlaugsson--$6,999; P.M. Platten--$0; and J.L. Delgadillo--$0. Includes
the following amounts earned on compensation paid in 1996 by M&I under the
Supplementary Retirement Benefits Plan: J.B. Wigdale--$56,400; D.J.
Kuester--$45,200;
7
<PAGE>
G.H. Gunnlaugsson--$32,000; P.M. Platten--$33,533; and J.L. Delgadillo--
$20,000. Includes the following above-market amounts accrued by M&I on
account balances under the Supplementary Retirement Benefits Plan (such
amounts were calculated on a basis consistent with the provisions of the
Plan, which provided for indexing the earnings rate to the Max Cap Fund of
the M&I Retirement Growth Plan, but not less than 6%): J.B. Wigdale--
$60,695; D.J. Kuester--$41,440; G.H. Gunnlaugsson--$22,781; P.M. Platten--
$6,680; and J.L. Delgadillo--$6,792. Also includes the following amounts
accrued by M&I under the Nonqualified Supplemental Retirement Plan for
1996: J.B. Wigdale--$340,242; D.J. Kuester--$148,210; G.H. Gunnlaugsson--
$78,103; P.M. Platten--$0; and J.L. Delgadillo--$0.
(3) M&I employee as of June 1, 1994. Salary and bonus paid in 1994 were
prorated amounts of $475,000 and $175,000, respectively. In 1996, Mr.
Platten advised the Company of his intention to retire effective May 31,
1997. He also requested his current duties be reduced effective June 1,
1996 in order to devote a portion of his time to other business and
personal interests. His compensation was adjusted accordingly for that
portion of the year.
The following table provides information on options granted to the named
executive officers during 1996.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR GRANT DATE
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION PRESENT
NAME GRANTED (#)(1) FISCAL YEAR ($/SH)(2) DATE VALUE ($)(3)
---- -------------- ------------ ----------- ---------- ------------
<S> <C> <C> <C> <C> <C>
J.B. Wigdale............ 30,000 3.8% $31.875 12/12/06 $246,030
D.J. Kuester............ 26,000 3.3 31.875 12/12/06 213,226
G.H. Gunnlaugsson....... 18,000 2.3 31.875 12/12/06 147,618
P.M. Platten, III....... -- -- -- -- --
J.L. Delgadillo......... 8,000 1.0 31.875 12/12/06 65,608
</TABLE>
- --------
(1) Options generally become exercisable based on the following schedule: 50%
after 12 months from the date of grant, an additional 25% after 18 months
from the date of grant and the remaining 25% after 24 months from the date
of grant; provided that the options will become immediately exercisable
upon a "Triggering Event" (which relates to a change of control of the
Company). Employees who have attained age 55 and have at least ten years
of service with the Company or a subsidiary on the date of grant receive
options which vest fully in six months.
(2) All options have an exercise price equal to 100% of the fair market of the
Company's Common Stock on the date of grant. The exercise price may be
paid in cash or by delivery of shares of the Company's Common Stock. Upon
exercise of an option, the holder may satisfy any tax obligations either
by having the Company withhold shares or by delivering shares such holder
already owns.
(3) The grant date present values were determined using the Black-Scholes
model with the following common assumptions: a six year expected period of
time to exercise; a risk-free rate of return of 6.30%; an expected
dividend yield of 2.25%; and a volatility factor of 19.30%.
8
<PAGE>
The following table provides information on options exercised during 1996,
and options held at year end, by the named executive officers.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/SARS
OPTIONS/SARS AT FY-END(#) AT FY-END($)(1)
------------------------- -------------------------
SHARES
ACQUIRED ON VALUE
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
J.B. Wigdale............ 30,000 $555,390 326,000 45,000 6,060,828 209,062
D.J. Kuester............ 30,000 549,990 271,000 39,000 5,055,448 181,187
G.H. Gunnlaugsson....... 30,000 531,690 178,000 27,000 3,188,203 125,438
P.M. Platten, III....... 0 0 100,000 0 1,287,500 0
J.L. Delgadillo......... 0 0 27,000 12,000 395,253 55,750
</TABLE>
- --------
(1)For valuation purposes, a December 31, 1996 market price of $34.625 was
used.
The following table provides information on long-term incentive plan awards
to the named executive officers with respect to 1996. Awards with respect to
1997 have not been included.
LONG-TERM INCENTIVE PLANS-AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF SHARES, PERFORMANCE OR OTHER PERIOD
NAME UNITS OR OTHER RIGHTS UNTIL MATURATION OR PAYOUT(1)
---- --------------------- -----------------------------
<S> <C> <C>
J.B. Wigdale............. 15,000 3 Years
D.J. Kuester............. 13,000 3 Years
G.H. Gunnlaugsson........ 9,000 3 Years
P.M. Platten, III........ 0 --
J.L. Delgadillo.......... 4,000 3 Years
</TABLE>
- --------
(1) The initial performance period is the three years commencing on January 1,
1996 and ending on December 31, 1998. Additional Units will be credited to
each participant's account when dividends are paid on shares of the
Company's Common Stock. Vesting of Units occurs at the end of the three-
year period with the exception of the death or disability of the
participant, termination of a participant's employment or the occurrence
of a "Triggering Event" (which relates to a change in control of the
Company). The value of the award at the end of the three-year period is
dependent on the total return of the Company's Common Stock for the three-
year period when compared with the total return for those stocks composing
the Keefe, Bruyette, & Woods, 50 Bank Index in accordance with the
following table:
<TABLE>
<CAPTION>
% OF INITIAL AWARD
KBW 50 INDEX AND ACCUMULATED DIVIDEND
PERCENTILE RANK UNITS EARNED
--------------- ------------------------
<S> <C>
95th Percentile and above........................ 275%
90th Percentile.................................. 225%
75th Percentile.................................. 185%
50th Percentile.................................. 100%
25th Percentile.................................. 25%
Below 25th Percentile............................ 0%
</TABLE>
If the total return on the Common Stock falls between two categories (for
example, between the 50th and 75th percentiles), the percentage earned will be
determined by linear interpolation (in this example, between 100% and 185%).
9
<PAGE>
RETIREMENT PLANS
The Marshall & Ilsley Corporation Nonqualified Retirement Benefit Plan (the
"Nonqualified Plan") provides five of the executive officers of M&I with a
monthly supplemental retirement benefit. The original purpose of the
Nonqualified Plan was to provide a benefit such that the sum of benefits from
the Retirement Growth Plan, Social Security, the Supplementary Retirement
Benefits Plan and the Nonqualified Plan would equal 60% of each participant's
average salary and bonus for his last five years of employment. The monthly
benefit under the Nonqualified Plan, starting in most instances when an
individual reaches age 65, is fixed based on various actuarial and interest
rate assumptions. The monthly benefits are $24,167, $23,167 and $14,958 for
Messrs. Wigdale, Kuester and Gunnlaugsson, respectively, and a total of $8,459
for two other executive officers. The benefit will be adjusted in the event of
death before age 62 or early retirement and can be paid for life with a 120-
month certain payout or on a joint and survivor basis at the option of the
participant. The pay-out option elected will also affect the amount of the
annual benefit. If a participant leaves the employ of the Company prior to age
55, he will receive no benefits under the Nonqualified Plan. In the event of a
Change in Control of the Company (as defined in the Nonqualified Plan), each
participant will receive the full monthly benefit set forth above regardless
of his age when the Change in Control occurs and whether he remains in the
employ of M&I until age 55. A participant has the option, in certain
circumstances, to elect to receive the present value of the benefits to which
he is entitled under the Nonqualified Plan upon a Change in Control regardless
of his age at that point.
In December of 1996, the Board adopted the Marshall & Ilsley Corporation
Executive Deferred Compensation Plan (the "Deferred Compensation Plan") which
provides selected key employees of M&I, including Messrs. Wigdale, Kuester,
Gunnlaugsson and Delgadillo, with the ability to defer up to 80% of base
salary and 100% of bonus. The Deferred Compensation Plan is effective for
compensation earned in 1997 and thereafter. Those employees electing to
participate have two investment options for amounts deferred: a fixed rate
option equal to the Moody's A Long-Term Corporate Bond Rate for the month of
September of the previous year and an equity option equal to the total return
of the S&P 500 Index. The percentage allocated to any investment option may
not be less than 10% and elections may be changed semi-annually. Amounts
deferred are distributable upon termination of employment at the election of
the participant. Choices range from a lump sum distribution on termination of
employment to a pay-out over 15 years if a participant's employment terminates
on or after age 55, other than because of death or disability, with at least
ten years of service. Amounts deferred and investment returns thereon are held
in the Marshall & Ilsley Corporation Deferred Compensation Trust II of which
Marshall & Ilsley Trust Company is the trustee (the "Trust").
M&I's Supplementary Retirement Benefits Plan (the "SERP") is a nonqualified
benefit plan which covers employees whose compensation exceeds the statutory
limits on compensation which can be taken into account for purposes of
crediting contributions to M&I's Retirement Growth Plan, including all of the
executive officers named in the Summary Compensation Table. The amount, which
would have been allocated to such participant's account absent the statutory
limitations, is credited to an account which vests after an employee has five
years of vesting service as defined in M&I's Retirement Growth Plan. This
account was credited with interest at a rate of 6% per annum until September
1, 1995, at which point the rate was adjusted by the Executive Compensation
Committee to the greater of 6% or the percentage rate of return earned by the
Max Cap Fund of the M&I Retirement Growth Plan. Starting on January 1, 1997,
participants have the same investment and pay-out elections as provided in the
Deferred Compensation Plan, described above, and amounts credited under the
SERP will be held in the Trust.
EMPLOYMENT AGREEMENTS AND RELATED MATTERS
In order to assure management continuity and stability, M&I has entered into
substantially similar Employment Agreements (the "Employment Agreements") with
Messrs. Wigdale, Kuester, Gunnlaugsson, Platten and Delgadillo, five
additional executive officers and 22 other officers and employees of the
Company and its subsidiaries (collectively, the "Executives"). The Employment
Agreements with Messrs. Wigdale,
10
<PAGE>
Kuester, Gunnlaugsson, and Platten each have a term of three years, and the
Employment Agreement with Mr. Delgadillo has a term of two years. The
Employment Agreements with the other Executives have terms of two or three
years.
The Employment Agreements guarantee the Executives specific payments and
benefits upon a termination of employment as a result of a change of control
of M&I. If a change of control occurs, the contract becomes effective and
continues for a two- or three-year employment term. The employment term renews
on a daily basis until M&I gives notice to terminate the daily renewal.
The Employment Agreements provide for specified benefits after a change of
control if the Executive voluntarily terminates for "good reason" or is
involuntarily terminated other than for "cause" (as defined in the Employment
Agreements). In addition, in the case of some Employment Agreements, at the
end of six months after a change of control, the Executive may terminate
employment for any reason and is entitled to receive full benefits. Upon a
termination, the Executive is entitled to (a) a lump sum payment equal to two
or three times (depending on whether the contract is a two- or three-year
contract) the sum of the Executive's current base salary plus the higher of
the Executive's bonus for the last year or the Executive's average bonus for
the past three years, (b) a proportionate amount of any unpaid bonus deemed
earned for the year of termination, (c) a lump sum payment equal to the
retirement benefits lost as a result of not having been employed for the
remaining contract term, (d) health and other benefits for the remaining
contract term, and (e) payments for certain other fringe benefits. In the
event of a termination of employment as a result of his death, the Executive's
beneficiary is entitled to six months of base salary. No additional benefits
are guaranteed under the contract upon an Executive's disability or
termination by M&I for cause.
The Employment Agreements provide that upon a change of control most
restrictions limiting the exercise, transferability or other incidents of
ownership of any outstanding award, restricted stock, options, stock
appreciation rights, or other property rights of M&I granted to the Executive
shall lapse, and such awards shall become fully vested, except in certain
circumstances. Some of the Employment Agreements also provide for "gross-up"
payments in the event payments to an Executive under the Employment Agreement
are subject to Section 4999 of the Internal Revenue Code of 1986, as amended
(the "Code"), (the "Excise Tax") or any similar federal, state or local tax
which may be imposed, in an amount such that the net amount retained by the
Executive, after deduction of any Excise Tax on the payments and any federal,
state and local income tax and Excise Tax upon the gross-up payment, shall be
equal to the payments then due.
Upon consummation of the merger of Valley Bancorporation ("Valley") into M&I
on May 31, 1994, M&I became the successor to certain continuing obligations of
Valley to Mr. Platten arising from the settlement of his employment contract
with Valley. In 1996, Mr. Platten received $16,984 as the cash equivalent of
certain benefits and perquisites he would have received under his employment
contract with Valley. On March 1, 1997, Mr. Platten received his final payment
for these items in the amount of $4,246. In addition, pursuant to the
settlement of Mr. Platten's employment agreement with Valley, beginning on
July 1, 1997 he will receive an enhanced supplemental pension benefit for the
remainder of his life in the amount of $17,903 per month until age 65 and
$8,259 per month thereafter. If Mr. Platten's wife survives him, she will
receive 50% of such benefits for the remainder of her life. In addition, to
the extent any of the foregoing benefits are subject to excise taxes under
Section 4999 of the Code, Mr. Platten will receive a gross-up payment such
that he will be in the same after-tax economic position as if no excise tax
were imposed. Mr. Platten is also eligible to receive retirement benefits
under the Valley Pension Plan and the Valley Excess Benefits Plan.
NON-EMPLOYEE DIRECTOR COMPENSATION
Directors of M&I who are not employees are paid a retainer fee of $12,000
per year. In addition, non-employee directors receive a fee of $1,500 for each
Board meeting which they attend and $500 for each Committee meeting which they
attend. M&I has established a deferred compensation plan for its Directors.
Under such plan, all or part of the fees received by a Director may be
deferred at the election of the Director.
11
<PAGE>
Amounts deferred are credited with an earnings factor based on the Director's
allocation among 13-week U.S. Treasury Bills or the Common Stock. Deferred
amounts are payable in not less than 36 nor more than 180 monthly
installments, as elected by the participating Director, unless the Board
elects to distribute amounts over a shorter period. Messrs. Boldt, Bolduc,
Chait, Meyer, Orr and Zuehlke elected to defer compensation under the plan
during 1996. Directors of M&I who are also Directors of subsidiaries of M&I
receive compensation from such subsidiaries in varying amounts based on the
Director compensation schedule of such subsidiaries.
Directors of M&I who are not employees of M&I or its subsidiaries
("Participants") also participate in the 1995 Directors Stock Option Plan. On
the date of each Annual Meeting of Shareholders, each Participant elected or
re-elected as a director at such Annual Meeting receives an option for that
number of shares of Common Stock equal to the multiple of 2,500 and the number
of years in the term to which such Participant has been elected. In addition,
a Participant who is appointed to fill a vacancy on the Board of Directors, or
a director who becomes a Participant because such director ceases to be
employed by the Company or its subsidiaries, will receive, on the date of the
next Annual Meeting, an option for that number of shares of Common Stock equal
to a multiple of 2,500 and the number of years remaining in such Participant's
term as a director of the Company. Each option granted to a Participant
provides that the option price per share will not be less than 100% of the
fair market value of the shares on the date the option is granted, that such
options will not be exercisable more than 10 years after the date of grant,
and that such options will terminate no later than three years after the
Participant ceases to be a director of the Company for any reason. Such
options may be exercised at any time after they are granted. The exercise
price of an option may, at the Participant's election, be paid in cash or
previously owned shares of Common Stock or a combination thereof.
Mr. Puelicher and M&I entered into a Consulting Agreement and Supplemental
Retirement Plan in 1986, which was amended in 1992 (the "Consulting/Retirement
Agreement"). The Consulting/Retirement Agreement went into effect in January
1993 and provides for Mr. Puelicher to serve as a consultant to M&I for five
years. As compensation for his commitment to provide consulting services, Mr.
Puelicher receives a retirement benefit of $25,000 per month for his life,
and, if Mr. Puelicher predeceases his wife, his wife will receive $12,500 per
month for her life. Mr. Puelicher also receives a supplemental retirement
benefit of $58,333 per month under his Supplemental Retirement Plan dated
December 10, 1992. In addition, M&I pays an annual insurance premium for Mr.
Puelicher of $112,470 until the earlier of (i) Mr. Puelicher's death, (ii) 19
years from the date of the policy's issue, or (iii) such time as the policy is
paid up. M&I will also reimburse Mr. Puelicher for all travel and other
expenses incurred in the performance of his duties and will provide him with
secretarial services and office space. Mr. Puelicher will continue to
participate in M&I's group health insurance (or equivalent plan) while
receiving retirement benefits under the Consulting/Retirement Agreement. M&I
may terminate the Consulting/Retirement Agreement for "cause" (as defined in
the Consulting/Retirement Agreement). The Consulting/Retirement Agreement
provides that Mr. Puelicher may not compete with M&I and must maintain the
confidentiality of certain information regarding M&I, its business and
customers.
In connection with the merger with Valley on May 31, 1994, M&I agreed to
provide Mr. Zuehlke with a $100,000 annual consulting fee for the remainder of
his life. Mr. Zuehlke also receives a car, office space and membership in a
professional organization.
EXECUTIVE COMPENSATION COMMITTEE REPORT
GENERAL POLICY
The Compensation Committee determines the compensation of the Company's
executive officers and submits such determination to the Board of Directors
for ratification. The Compensation Committee bases its compensation decisions
primarily on its overall assessment of the executive's contribution to the
profitability of the Company on both a long-term and short-term basis. The
Committee reviews the executive's performance in light of both the historical
financial performance of the Company and the Committee's assessment of the
executive's role in ensuring the future financial success of the Company. In
this respect, the Committee seeks to reward leadership, innovation, and
entrepreneurship. The Committee generally has not mechanically applied any
12
<PAGE>
specific goals or criteria in making its decisions, and such decisions have
been based in large part on the Committee's subjective assessment of the
executive's performance. For certain executive officers, the financial
performance of the business unit or division for which that executive has
responsibility may receive a proportionately larger consideration by the
Committee in determining that executive's compensation. The Committee reviews
the compensation plans for executives from time to time in order to determine
whether such plans are consistent with the Company's objectives and financial
performance.
The Committee is aware of the limitations imposed by Section 162(m) of the
Internal Revenue Code of 1986, as amended, on the deductibility of
compensation paid to certain senior executives to the extent it exceeds $1
million per executive. The Committee currently intends to recommend
compensation amounts and plans which will meet the requirements for
deductibility.
1996 COMPENSATION
Overview
With regard to 1996 compensation decisions, the Committee reviewed the
Company's financial performance on both a long-term and short-term basis, the
overall performance of each executive officer, the information provided by the
Company's professional compensation consultants, other internally prepared
peer group analyses and various other information which the Compensation
Committee deemed relevant in the case of any particular individual. The
externally and internally prepared peer group analyses provided the Committee
with information on the market relationship of compensation paid to the
Company's executive officers. The analyses included information on the
companies in the Keefe, Bruyette & Woods 50 Bank Index which is the same peer
group used in the performance graph. The Committee reviewed this information
for comparison purposes, taking into account the Company's size and
performance relative to the companies in the peer group. The Committee did
not, however, set the compensation for the Company's executive officers at a
specific level as compared to the peer group. The Committee's compensation
determinations generally reflect competitive factors and performance. In the
case of any particular individual, circumstances unique to such individual
such as increased responsibilities or extraordinary effort may also be
reflected. In assessing the Company's performance, the Committee considered,
among other things, the profitability of the Company as a whole on both a
long-term and short-term basis (including net income, earnings per share,
return on average shareholders' equity and return on average assets).
The Committee's decisions with respect to compensation generally reflect all
of the factors considered, including objective factors and the Committee's
subjective assessment of the executive's performance, with no specific
criteria applied to any one component of compensation such as salary or bonus.
Base Salary and Bonus
In determining total cash compensation (salary and bonus), the Committee
takes a long-term view of both the executive's job performance and the
Company's financial performance. The Committee believes it was appropriate in
1996 to increase total cash compensation and to make long-term incentive
awards (stock options and LTIP units) to the Company's senior executive
officers. The Committee believes the size of the increases (for cash
compensation) and the amount of the awards (for long-term incentives) were
commensurate with the Committee's overall evaluation of the senior executives'
performance both for 1996 and on a long-term basis. Such increases and awards
were based on all the factors, both objective and subjective, considered by
the Committee and generally no one specific criteria was applied to determine
the size or amount thereof.
A portion of Mr. Platten's compensation for 1996 was approved in connection
with the Company's merger with Valley Bancorporation, and the remainder
reflects the change in Mr. Platten's duties which occurred during 1996. In
1996, Mr. Platten advised the Company of his intention to retire effective May
31, 1997. He also requested his current duties be reduced effective June 1,
1996 in order to devote a portion of his time to other business and personal
interests. His compensation was adjusted accordingly for that portion of the
year.
13
<PAGE>
Long-Term Incentive Compensation
The Committee made awards in 1996 under the 1993 Executive Stock Option Plan
("Stock Option Plan") and the 1994 Long-Term Incentive Plan ("LTIP"). The
purpose of these awards is to furnish long-term incentives to executive
officers to build shareholder value and to motivate and retain the personnel
critical to the Company's success. It is the intention of the Committee to
continue to emphasize long-term incentives in the compensation provided to the
Company's executive officers. In arriving at 1996 award levels, the Committee
gave consideration to the officer's relative position, responsibilities and
performance. Each executive who received an award received two stock options
for each performance unit granted. In determining the size of the awards, the
Committee considered information provided by professional compensation
consultants on stock option and long-term incentive plan awards by companies
in a representative peer group (which group is not identical to the Keefe,
Bruyette & Woods 50 Bank Index). However, the Committee did not base the size
of the awards at any specific level in comparison to the peer group, nor did
the Committee base the awards on any specific element of the Company's
performance.
Chief Executive Officer Compensation
In determining Mr. Wigdale's compensation, the Committee's review
concentrated on the Company's current and prior year's financial performance,
and the prevailing market rates of compensation for his position. The
Company's net income for 1996 was $212,982,000, representing a 10.18% increase
over 1995, and fully-diluted earnings per share increased 11.58%, to $2.12.
The 1996 return on average assets was 1.56% and the return on average equity
was 16.63%, compared to 1.52% and 16.41% respectively for 1995. The 1996
financial information excludes the charges associated with the write-off of
research and development costs in connection with the acquisition of EastPoint
Technology, Inc., and the special SAIF deposit assessments.
Various market data was analyzed by the Committee in order to determine
whether Mr. Wigdale is compensated on a basis which is reasonably consistent.
It is the Committee's conclusion that Mr. Wigdale's compensation is fair and
appropriate.
THE COMPENSATION COMMITTEE:
Mr. Jacobs, Chairman Mr. Kellner Mr. O'Hare Mr. Wright
14
<PAGE>
PERFORMANCE GRAPH
The following graph shows the cumulative total stockholder return on the
Company's Common Stock over the last five fiscal years compared to the returns
of the Standard & Poor's 500 Stock Index and the Keefe, Bruyette, & Woods, 50
Bank Index.
CUMULATIVE TOTAL RETURN
-----------------------
ASSUMES DIVIDENDS & CAPITAL GAINS REINVESTED
<TABLE>
[GRAPH APPEARS HERE]
<CAPTION>
Measurement Period S&P
(Fiscal Year Covered) M&I 500 INDEX KBW
- ------------------- ---------- --------- ----------
<S> <C> <C> <C>
Measurement Pt-
12/31/91 $100 $100 $100
FYE 12/31/92 $118 $108 $127
FYE 12/31/93 $135 $118 $134
FYE 12/31/94 $112 $120 $128
FYE 12/31/95 $157 $165 $204
FYE 12/31/96 $215 $203 $289
</TABLE>
15
<PAGE>
1997 EXECUTIVE STOCK OPTION AND RESTRICTED STOCK PLAN
The complete text of the 1997 Executive Stock Option and Restricted Stock
Plan is set forth in Appendix A. The following summary of the material
features of the 1997 Executive Stock Option and Restricted Stock Plan does not
purport to be complete and is qualified in its entirety by reference to
Appendix A.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE 1997 STOCK
OPTION PLAN.
The Board of Directors adopted the 1997 Executive Stock Option and
Restricted Stock Plan (the "1997 Stock Option Plan") to provide officers and
other key employees of the Company and its subsidiaries with additional
incentives by increasing their proprietary interest in the Company. The
aggregate number of shares of Common Stock subject to the 1997 Stock Option
Plan is 5,000,000 shares, of which a maximum of 1,000,000 may be granted as
incentive stock options. In addition, no one person may receive options over
more than 1,000,000 shares during the term of the 1997 Stock Option Plan.
The 1997 Stock Option Plan permits the Company to grant non-qualified stock
options ("Non-qualified Options"), incentive stock options ("ISOs"), as
defined in Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), and restricted shares of Common Stock ("Restricted Shares") to
officers and other key employees of the Company (individually, an "Award" and
collectively, "Awards"). The holder of an Award is referred to herein as a
"Participant." No Award may be granted under the 1997 Stock Option Plan after
February 12, 2007.
In the event of any changes in the capital structure of the Company, the
Compensation Committee must make equitable adjustments to outstanding Awards
so that the net value of the Award is not changed. Any unvested Awards will
vest upon the occurrence of a Change in Control of the Company (as defined in
the 1997 Stock Option Plan).
The 1997 Stock Option Plan is intended to qualify for favorable treatment
under Section 16 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") pursuant to Rule 16b-3 and is designed to qualify for
treatment as "performance-based compensation" under Section 162(m) of the Code
("Section 162(m)") as regards the options. The 1997 Stock Option Plan will be
administered by the Compensation Committee, which is comprised of at least two
directors, all of whom are "disinterested" within the meaning of Rule 16b-3
and "outside directors" within the meaning of Section 162(m).
The exercise price for Non-qualified Options granted under the 1997 Stock
Option Plan may be no less than 100% of the fair market value of the Common
Stock on the date of grant of the option. The exercise price for ISOs granted
under the 1997 Stock Option Plan may be no less than 100% of the fair market
value of the Common Stock on the date of grant (or 110% in the case of ISOs
granted to Participants owning more than 10% of the Common Stock). Options
will be exercisable during the period specified in each option agreement and
will generally be exercisable in installments pursuant to a vesting schedule
to be designated by the Compensation Committee. No option will remain
exercisable later than ten years after the date of grant (or five years from
the date of grant in the case of ISOs granted to holders of more than 10% of
the Common Stock).
Restricted Shares may also be granted under the 1997 Stock Option Plan. An
award of Restricted Shares involves the immediate transfer by the Company to a
Participant of ownership of a specific number of shares of Common Stock in
consideration of the performance of services and such other consideration as
the Compensation Committee may designate. Restricted Shares must be subject to
a "substantial risk of forfeiture" for a period to be determined by the
Compensation Committee. In order to enforce these forfeiture provisions, the
transferability of Restricted Shares will be prohibited or restricted in a
manner and to the extent prescribed by the Compensation Committee for the
period during which the forfeiture provisions are to continue.
In the event of termination of employment other than as a result of death,
disability or Retirement (as defined in the 1997 Stock Option Plan), a
Participant will generally have 90 days after termination to exercise
16
<PAGE>
options which were vested on the date of termination. The Compensation
Committee has discretion to provide the period for which, and the extent to
which, options remain exercisable in the event of termination of employment
resulting from death, disability or Retirement. Restricted Shares are
generally forfeited upon termination of employment for any reason.
Counsel for the Company has advised that the federal income tax consequences
of Non-qualified Options, ISOs and Restricted Shares granted under the 1997
Stock Option Plan are generally as follows:
Non-qualified Options. The grant of a Non-qualified Option will have no
federal income tax consequences to the Company or to a Participant. A
Participant will recognize taxable ordinary income at the time of exercise of
the option in an amount equal to the excess of the fair market value of the
shares acquired at the time of exercise over the option price, and the Company
will ordinarily be entitled to a deduction for such amount.
The holder of shares acquired upon exercise of a Non-qualified Option will,
upon a subsequent disposition of such shares, generally recognize a short-term
or long-term capital gain or loss, depending upon the holding period of the
shares, equal to the difference between the amount realized on the sale and
the basis in such shares (the sum of the option price and the amount taxed as
ordinary income at the time of exercise).
ISOs. Neither the grant nor exercise of an ISO will generally have any
federal income tax consequences for a Participant. The amount by which the
fair market value of the shares acquired upon the exercise of any ISO exceeds
the option price as of the date of exercise, however, is an item of "tax
preference" for purposes of computing the alternative minimum tax on
individuals. If a Participant has held the shares acquired on the exercise of
an ISO for at least two years from the date of the grant of the option and at
least one year from the date of exercise, the Participant will recognize
taxable long-term capital gain or loss upon a subsequent disposition of the
shares. In such circumstances, no deduction would be allowed to the Company
for federal income tax purposes in connection with the grant or exercise of
the option or the transfer of shares acquired upon such exercise.
If, however, the Participant disposes of his or her shares within the
holding periods described above, (i) the Participant will recognize ordinary
income in an amount equal to the difference between the fair market value of
such shares on the date of exercise and the option price, provided that, if
the disposition is a sale or exchange with respect to which a loss (if
sustained) would be recognized by the Participant and the amount realized from
such sale or exchange is less than the fair market value on the exercise date,
then the ordinary income will be limited to the excess of the amount realized
upon the sale or exchange of the shares over the option price; (ii) the
Company will be entitled to a deduction for such year in the amount of the
ordinary income so recognized; and (iii) the Participant will recognize
capital gain or loss, as the case may be, in an amount equal to the difference
between the amount realized upon such sale or exchange of the shares and the
sum of the option price plus the amount of ordinary income, if any, recognized
upon such disposition.
Restricted Shares. The grant of Restricted Shares is not a taxable event to
a Participant, absent an election under Section 83(b) of the Code. If no
election is made, the Participant will recognize income, taxable for income
tax purposes at ordinary rates, upon the lapse of the restrictions governing
the shares. The amount of the income will equal the fair market value of the
shares when the restrictions lapse. If the Participant makes a Section 83(b)
election within 30 days of the date of grant, he or she will be deemed to have
received ordinary income at the time of the grant of the Restricted Shares
equal to their fair market value at the date of grant less any amount paid by
the Participant for the shares, determined without regard to the restrictions
imposed thereon. If the Restricted Shares are subsequently forfeited after a
Section 83(b) election and before the restrictions lapse, the Participant is
not entitled to claim the loss for income tax purposes.
The Company or a subsidiary will be entitled to a deduction for income tax
purposes when the Participant recognizes ordinary income, either as a result
of a Section 83(b) election or because of the lapse of the restrictions. The
amount of the deduction will equal the amount of ordinary income recognized by
the Participant.
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ANNUAL EXECUTIVE INCENTIVE COMPENSATION PLAN
The complete text of the Annual Executive Incentive Compensation Plan is set
forth in Appendix B. The following summary of the material features of the
Annual Executive Incentive Compensation Plan does not purport to be complete
and is qualified in its entirety by reference to Appendix B.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE ANNUAL
EXECUTIVE INCENTIVE COMPENSATION PLAN.
The Board of Directors has approved the Annual Executive Incentive
Compensation Plan (the "Incentive Plan") for 1997 and subsequent years unless
and until terminated by the Compensation Committee. The Incentive Plan will
replace the Company's prior approach for determining the annual incentives
(bonuses) of the Company's Chairman, President and Chief Financial Officer and
any other officers who may be designated as eligible to participate in the
Incentive Plan. The Incentive Plan rewards eligible senior executives with an
incentive award if the performance goals set by the Compensation Committee
pursuant to the terms of the Incentive Plan are met. The Incentive Plan, as
adopted, is subject to approval by the Company's shareholders and will only
take effect if such approval is obtained. The Incentive Plan is intended to
meet the requirements of Section 162(m) of the Internal Revenue Code, and the
regulations thereunder, so that compensation received will be performance-
based compensation excludable from the $1 million limitation on deductible
compensation.
The Incentive Plan is an annual incentive plan in which the Company's
Chairman, President and Chief Financial Officer will participate. Other
participants may be designated by senior management, for whom the incentive
percentages may be set at or below the percentages for the three executive
officers who are indicated above. The Incentive Plan establishes a correlation
between the annual incentives awarded to the participants and the Company's
financial performance. Each year, the Compensation Committee will fix, during
the first ninety days of a Performance Year, the performance criteria and
goals to be achieved before any award will be payable. The performance
criteria among which the Compensation Committee may select are Earnings per
Share, Earnings, Return on Average Equity or Return on Average Assets, to be
used singularly or in combination, as the Compensation Committee determines,
to measure the performance of the Company. The performance criteria and the
percentage of base salary awarded for achieving the goals set by the
Compensation Committee may vary from year to year.
If and to the extent the performance criteria set by the Compensation
Committee are achieved, all or a portion of the award will be paid, based on a
percentage of each participant's base salary earned for the performance
period. For example, if the targeted performance level is achieved for 1997,
the Chairman will receive an award of 65% of base salary. If the performance
achieved for 1997 is less than threshold, the Chairman will not receive an
award. If the maximum performance level is achieved, the Chairman will receive
an award equal to 110% of base salary. If the performance falls between the
performance goals established by the Compensation Committee, the Incentive
Plan provides that the award will be determined by interpolation. In
succeeding Performance Years, the awards may be larger or smaller depending
upon a variety of factors, such as the extent to which performance targets are
attained, the base salary for that Performance Year, and the individual award
percentages, but in no event will a participant receive an award in any year
that exceeds $1,000,000. The Compensation Committee retains full discretion to
reduce or eliminate any award which may be earned by a participant under the
Incentive Plan. Any amounts to be received by participants under the Incentive
Plan are not yet determinable.
SUBMISSION OF SHAREHOLDER PROPOSALS
The 1998 Annual Meeting of Shareholders is scheduled for April 28, 1998. In
accordance with the Company's By-Laws, nominations, other than by or at the
direction of the Board of Directors, of candidates for election as directors
at the 1998 Annual Meeting of Shareholders and any other shareholder proposed
business to be brought before the 1998 Annual Meeting of Shareholders must be
submitted to the Company not later than January 22, 1998. Shareholder proposed
nominations and other shareholder proposed business must be made in
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accordance with the Company's By-Laws which provide, among other things, that
shareholder proposed nominations must be accompanied by certain information
concerning the nominee and the shareholder submitting the nomination, and that
shareholder proposed business must be accompanied by certain information
concerning the proposal and the shareholder submitting the proposal. To be
considered for inclusion in the proxy statement solicited by the Board of
Directors, shareholder proposals for consideration at the 1998 Annual Meeting
of Shareholders of the Company must be received by the Company at its
principal executive offices, 770 North Water Street, Milwaukee, Wisconsin
53202 on or before November 7, 1997. Proposals should be directed to Mr. M.A.
Hatfield, Senior Vice President and Secretary. To avoid disputes as to the
date of receipt, it is suggested that any shareholder proposal be submitted by
certified mail, return receipt requested.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Arthur Andersen LLP as the Company's
independent auditors for the fiscal year ending December 31, 1997.
Representatives of Arthur Andersen LLP will be present at the Annual Meeting
to make any statement they may desire and to respond to questions from
shareholders.
PENDING LEGAL PROCEEDINGS
No director or named executive officer is an adverse party or has an
interest adverse to the Company or any of its subsidiaries in any material
pending legal proceeding.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934 requires the
Company's directors and officers to file reports with the Securities and
Exchange Commission disclosing their ownership, and changes in their
ownership, of stock in the Company. Copies of these reports must also be
furnished to the Company. Based solely on a review of these copies, the
Company believes that during 1996 all filing requirements were complied with,
except that the following officers and/or directors of the Company filed one
report late in connection with two transactions involving stock option grants
that were not yet exercisable: J.B. Wigdale, G.H. Gunnlaugsson, M.A. Hatfield,
D.J. Kuester (one transaction), J.L. Delgadillo, D.R. Jones, P.R. Justiliano,
D.W. Layden, Jr., G.D. Strelow and J.L. Roberts.
OTHER MATTERS
Although management is not aware of any other matters that may come before
the meeting, if any such matters should be presented, the persons named in the
accompanying proxy intend to vote such proxy in accordance with their best
judgment.
By Order of the Board of Directors,
M.A. Hatfield,
Senior Vice President and Secretary
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APPENDIX A
MARSHALL & ILSLEY CORPORATION
1997 EXECUTIVE STOCK OPTION AND RESTRICTED STOCK PLAN
1. Objectives. The Marshall & Ilsley Corporation 1997 Executive Stock Option
and Restricted Stock Plan is designed to attract and retain certain selected
officers and key employees whose skills and talents are important to the
Company's operations, and reward them for making major contributions to the
success of the Company. These objectives are accomplished by making awards
under the Plan, thereby providing Participants with a proprietary interest in
the growth and performance of the Company.
2. Definitions.
(a) "Award" shall mean the grant of any form of stock option or stock
award to a Plan Participant pursuant to such terms, conditions and
limitations as the Board or Committee may establish in order to fulfill the
objectives of the Plan.
(b) "Award Agreement" shall mean an agreement between the Company and a
Participant that sets forth the terms, conditions and limitations
applicable to an Award.
(c) "Board" shall mean the Board of Directors of Marshall & Ilsley
Corporation.
(d) "Cause" shall mean the discharge of an employee on account of fraud
or embezzlement against the Company or serious and willful acts of
misconduct which, in the reasonable judgment of the Committee, are
detrimental to the business of the Company.
(e) "Change in Control" shall mean any of the following: (a) the
commencement by any person or group of persons, other than the Company, of
a tender or exchange offer for twenty-five percent (25%) or more of the
outstanding shares of the common stock of the Company; (b) the acceptance
by the Board of Directors of the Company of, or the public recommendation
by the Board that the stockholders of the Company accept, an offer from any
person or group of persons, other than the Company or a Subsidiary, to
acquire twenty-five percent (25%) or more of either the outstanding shares
of the common stock of the Company or the consolidated assets of the
Company; (c) the acquisition, by any person or group of persons, of the
beneficial ownership or the right to acquire beneficial ownership of
twenty-five percent (25%) or more of the outstanding shares of the common
stock of the Company (the term "group" and "beneficial ownership" as used
in this paragraph having the meanings assigned thereto in Section 13(d) of
the 1934 Act and the regulations promulgated thereunder); or (d) the
Company (or any subsidiary or subsidiaries in the aggregate representing at
least 25% of the consolidated assets of the Company), shall have entered
into an agreement with any person, or any person shall have filed a draft
or final application or notice with the Board of Governors of the Federal
Reserve System or the Office of the Comptroller of the Currency or any
other federal or state regulatory agency for approval, to (i) merge or
consolidate with, or enter into any similar transaction with, the Company
or such subsidiary, in which the Company or subsidiary is not the survivor
(ii) purchase, lease or otherwise acquire all or substantially all of the
assets of the Company or such subsidiary or (iii) purchase or otherwise
acquire (including by way of merger, consolidation, share exchange or any
similar transaction) or otherwise hold or own, securities representing
twenty-five percent (25%) or more of the voting power of the Company or
such subsidiary.
(f) "Common Stock" or "stock" shall mean the authorized and issued or
unissued $1.00 par value common stock of the Company.
(g) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(h) "Committee" shall mean the Executive Compensation Committee of the
Board of Directors of Marshall & Ilsley Corporation. The Committee shall be
comprised of at least two non-employee directors all of whom are
"disinterested" within the meaning of Rule 16b-3 promulgated under the
Securities Exchange Act of 1934 and "outside directors" within the meaning
of Section 162(m) of the Code.
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(i) "Company" shall mean Marshall & Ilsley Corporation and its
subsidiaries including subsidiaries of subsidiaries and partnerships and
other business ventures in which Marshall & Ilsley Corporation has a
significant equity interest, as determined in the sole discretion of the
Committee.
(j) "Fair Market Value" shall mean the closing sale price of Common Stock
on the NASDAQ National Market System as reported in the Midwest Edition of
the Wall Street Journal for the date of grant provided that, if no sales of
Common Stock were made on said exchange on that date, "Fair Market Value"
shall mean the closing sale price of Common Stock as reported for the most
recent preceding day on which sales of Common Stock were made on said
exchange, or, failing any such sales, such other market price as the Board
or the Committee may determine in conformity with pertinent law and
regulations of the Treasury Department.
(k) "Participant" shall mean an employee of the Company to whom an Award
has been made under the Plan.
(l) "Plan" shall mean the Marshall & Ilsley Corporation 1997 Executive
Stock Option and Restricted Stock Plan.
(m) "Retirement" shall mean the termination of a Participant's employment
on or after age 65.
3. Eligibility. Employees of the Company eligible for an Award under the
Plan are those who hold positions of responsibility and whose performance, in
the judgment of the Board, the Committee or the management of the Company, can
have a significant effect on the success of the Company.
4. Common Stock Available for Awards. The number of shares that may be
issued under the Plan for Awards granted wholly or partly in stock during the
term of the Plan is 5,000,000, subject to adjustment as provided in Section 14
hereof, provided that not more than 1,000,000 shares may be subject to
incentive stock options. The Company shall take whatever actions are necessary
to file required documents with the U.S. Securities and Exchange Commission
and any other appropriate governmental authorities and stock exchanges to make
shares of Common Stock available for issuance pursuant to Awards. Common Stock
related to Awards that are forfeited, terminated or expire unexercised, shall
immediately become available for Awards. No employee shall be eligible to
receive Awards aggregating more than 1,000,000 shares of Common Stock reserved
under the Plan during the term of the Plan, subject to adjustment as provided
in Section 14 hereof.
5. Administration. The Plan shall be administered by the Committee, which
shall have full and exclusive power to interpret the Plan, to determine which
employees are Plan Participants, to grant waivers of Award restrictions, and
to adopt such rules, regulations and guidelines for carrying out the Plan as
it may deem necessary or proper, all of which powers shall be executed in the
best interests of the Company and in keeping with the objectives of the Plan.
6. Delegation of Authority. The Committee may delegate to the chief
executive officer and to other senior officers of the Company its duties under
the Plan pursuant to such conditions or limitations as the Committee may
establish.
7. Awards. The Committee shall determine the type or types of Award(s) to be
made to each Participant and shall set forth in the related Award Agreement
the terms, conditions and limitations applicable to each Award including any
vesting requirements. The type of Awards available under the Plan are those
listed in this Section 7. In all events, upon the occurrence of a Change in
Control, all Awards will become fully vested and immediately exercisable.
(a) Stock Option. A grant of a right to purchase a specified number of
shares of Common Stock the purchase price of which shall be not less than
100% of Fair Market Value on the date of grant, as determined by the
Committee. A stock option may be in the form of a nonqualified stock option
or an incentive stock option ("ISO"). An ISO, in addition to being subject
to applicable terms, conditions and limitations established by the
Committee, complies with Section 422 of the Code which, among other
limitations, provides that the aggregate Fair Market Value (determined at
the time the option is granted) of Common
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Stock for which ISOs are exercisable for the first time by a Participant
during any calendar year shall not exceed $100,000; that ISOs shall be
priced at not less than 100% of the Fair Market Value on the date of the
grant (110% in the case of a Participant who is a 10% shareholder of the
Company within the meaning of Section 422 of the Code); and that ISOs shall
be exercisable for a period of not more than ten years (five years in the
case of a Participant who is a 10% shareholder of the Company).
(b) Restricted Stock Award. An Award of stock for such consideration as
the Committee may specify may contain transferability or forfeiture
provisions including a requirement of future services and such other
restrictions and conditions as may be established by the Committee and set
forth in the Award Agreement.
8. Deferred Payment of Awards. The Committee may permit selected
Participants to elect to defer payments of some or all types of Awards in
accordance with procedures established by the Committee which are intended to
permit such deferrals to comply with applicable requirements of the Code
including, at the choice of Participants, the capability to make further
deferrals for payment after retirement. Dividends or dividend equivalent
rights may be extended to and made part of any Award denominated in stock or
units of stock, subject to such terms, conditions and restrictions as the
Committee may establish. The Committee may also establish rules and procedures
for the crediting of dividend equivalents for deferred payments denominated in
stock or units of stock.
9. Stock Option Exercise. The price at which shares of Common Stock may be
purchased under a Stock Option shall be paid in full at the time of the
exercise in cash or by means of tendering Common Stock, either directly or by
attestation, valued at Fair Market Value on the date of exercise, or any
combination thereof.
10. Tax Withholding. The Company shall have the right to deduct applicable
taxes from any Award payment and withhold, at the time of delivery or vesting
of shares under the Plan, an appropriate number of shares for payment of taxes
required by law or to take such other action as may be necessary in the
opinion of the Company to satisfy all obligations for withholding of such
taxes. The Company may defer making delivery with respect to Common Stock
obtained pursuant to an Award hereunder until arrangements satisfactory to it
have been made with respect to any such withholding obligation. If Common
Stock is used to satisfy tax withholding, such stock shall be valued based on
the Fair Market Value when the tax withholding is required to be made.
11. Amendment, Modification, Suspension or Discontinuance of the Plan. The
Board may terminate the Plan or make such modifications or amendments thereto
as it shall deem advisable in order to conform to any law or regulation
applicable thereto; provided, however, that the Board may not, unless
otherwise permitted under applicable law, without further approval of the
shareholders of the Company, adopt any amendment to the Plan which would cause
the Plan to no longer comply with Section 162(m) of the Code, or any successor
provision or other regulatory requirements. No such termination, modification
or amendment of the Plan may, without the consent of a Participant, adversely
affect the rights of such Participant under an outstanding Award then held by
the Participant.
12. Termination of Employment. If the employment of a Participant
terminates, other than pursuant to paragraphs (a) through (c) of this Section
12, all unexercised, deferred and unpaid Awards shall terminate 90 days after
such termination of employment or service, unless the Award Agreement provides
otherwise, and during such 90-day period shall be exercisable only to the
extent provided in the Award Agreement. Notwithstanding the foregoing, if a
Participant's employment is terminated for Cause, to the extent the Award is
not effectively exercised or has not vested prior to such termination, it
shall lapse or be forfeited to the Company immediately upon termination. In
all events, an Award will not be exercisable after the end of its term as set
forth in the Award Agreement.
(a) Retirement. When a Participant's employment terminates as a result of
Retirement, or early retirement with the consent of the Committee, the
Committee (in the form of an Award Agreement or
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otherwise) may permit Awards to continue in effect beyond the date of
Retirement, or early retirement, and the exercisability and vesting of any
Award may be accelerated.
(b) Resignation in the Best Interests of the Company. When a Participant
resigns from the Company and, in the judgment of the chief executive
officer or other senior officer designated by the Committee, the
acceleration and/or continuation of outstanding Awards would be in the best
interests of the Company, the Committee may (i) authorize, where
appropriate, the acceleration and/or continuation of all or any part of
Awards granted prior to such termination and (ii) permit the exercise,
vesting and payment of such Awards for such period as may be set forth in
the applicable Award Agreement.
(c) Death or Disability of a Participant.
(i) In the event of a Participant's death, the Participant's estate
or beneficiaries shall have a period specified in the Award Agreement
within which to receive or exercise any outstanding Award held by the
Participant under such terms, and to the extent, as may be specified in
the applicable Award Agreement. Rights to any such outstanding Awards
shall pass by will or the laws of descent and distribution in the
following order: (a) to beneficiaries so designated by the Participant;
if none, then (b) to a legal representative of the Participant; if
none, then (c) to the persons entitled thereto as determined by a court
of competent jurisdiction. Subject to subparagraph (iii) below, Awards
so passing shall be exercised or paid out at such times and in such
manner as if the Participant were living.
(ii) In the event a Participant is deemed by the Company to be
disabled within the meaning of Section 22(e)(3) of the Code, the Award
shall be exercisable for the period, and to the extent, specified in
the Award Agreement. Awards and rights to any such Awards may be paid
to or exercised by the Participant, if legally competent, or a legally
designated guardian or representative if the Participant is legally
incompetent by virtue of such disability.
(iii) After the death or disability of a Participant, the Committee
may in its sole discretion at any time (1) terminate restrictions in
Award Agreements; (2) accelerate any or all installments and rights;
and (3) instruct the Company to pay the total of any accelerated
payments in a lump sum to the Participant, the Participant's estate,
beneficiaries or representative, notwithstanding that, in the absence
of such termination of restrictions or acceleration of payments, any or
all of the payments due under the Awards might ultimately have become
payable to other beneficiaries.
(iv) In the event of uncertainty as to interpretation of or
controversies concerning this paragraph (c) of Section 12, the
Committee's determinations shall be binding and conclusive.
(d) No Employment Rights. The Plan shall not confer upon any Participant
any right with respect to continuation of employment by the Company, nor
shall it interfere in any way with the right of the Company to terminate
any Participant's employment at any time.
13. Nonassignability. Except as provided in subsection (c) of Section 12 and
this Section 13, no Award or any other benefit under the Plan shall be
assignable or transferable, or payable to or exercisable by anyone other than
the Participant to whom it was granted. Notwithstanding the foregoing, the
Committee (in the form of an Award Agreement or otherwise) may permit Awards
to be transferred to members of the Participant's immediate family, to trusts
for the benefit of the Participant and/or such immediate family members, and
to partnerships or other entities in which the Participant and/or such
immediate family members own all the equity interests. For purposes of the
preceding sentence, "immediate family" shall mean a Participant's spouse,
issue and spouses of his issue.
14. Adjustments. In the event of any change in the outstanding Common Stock
of the Company by reason of a stock split, stock dividend, combination or
reclassification of shares, recapitalization, merger, or similar event, the
Committee may adjust proportionally (a) the number of shares of Common Stock
(i) reserved under the Plan, (ii) available for ISOs, (iii) for which Awards
may be granted to an individual Participant, and (iv) covered by outstanding
Awards denominated in stock, (b) the stock prices related to outstanding
Awards; and (c) the appropriate Fair Market Value and other price
determinations for such Awards. In the event of any other change affecting the
Common Stock or any distribution (other than normal cash dividends) to holders
of
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Common Stock, such adjustments as may be deemed equitable by the Committee,
including adjustments to avoid fractional shares, shall be made to give proper
effect to such event. In the event of a corporate merger, consolidation,
acquisition of property or stock, separation, reorganization or liquidation,
the Committee shall be authorized to issue or assume Stock Options, whether or
not in a transaction to which Section 424(a) of the Code applies, by means of
substitution of new Stock Options for previously issued Stock Options or an
assumption of previously issued Stock Options.
15. Notice. Any notice to the Company required by any of the provisions of
the Plan shall be addressed to the director of human resources or to the chief
executive officer of the Company in writing, and shall become effective when
it is received by the office of either of them.
16. Unfunded Plan. The Plan shall be unfunded. Although bookkeeping accounts
may be established with respect to Participants who are entitled to Common
Stock under the Plan, any such accounts shall be used merely as a bookkeeping
convenience. The Company shall not be required to segregate any Common Stock,
nor shall the Plan be construed as providing for such segregation, nor shall
the Company nor the Board nor the Committee be deemed to be a trustee of any
Common Stock to be granted under the Plan. Any liability of the Company to any
Participant with respect to a grant of Common Stock or rights thereto under
the Plan shall be based solely upon any contractual obligations that may be
created by the Plan and any Award Agreement; no such obligation of the Company
shall be deemed to be secured by any pledge or other encumbrance on any
property of the Company. Neither the Company nor the Board nor the Committee
shall be required to give any security or bond for the performance of any
obligation that may be created by the Plan.
17. Governing Law. The Plan and all determinations made and actions taken
pursuant hereto, to the extent not otherwise governed by the laws of the
United States, shall be governed by the laws of the State of Wisconsin and
construed accordingly.
18. Effective and Termination Dates. The effective date of the Plan is
February 13, 1997. The Plan shall terminate on February 12, 2007 subject to
earlier termination by the Board pursuant to Section 11, after which no Awards
may be made under the Plan, but any such termination shall not affect Awards
then outstanding or the authority of the Committee to continue to administer
the Plan.
19. Other Benefit and Compensation Programs. Payments and other benefits
received by a Participant pursuant to an Award shall not be deemed a part of
such Participant's regular, recurring compensation for purposes of the
termination or severance plans of the Company and shall not be included in,
nor have any effect on, the determination of benefits under any other employee
benefit plan, contract or similar arrangement, unless the Committee expressly
determines otherwise.
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APPENDIX B
MARSHALL & ILSLEY CORPORATION
ANNUAL EXECUTIVE INCENTIVE COMPENSATION PLAN
1. Purpose. The Executive Compensation Committee (the "Committee") adopted
on February 13, 1997 this Annual Executive Incentive Compensation Plan (the
"Plan"). The Plan is intended to establish a correlation between the annual
incentives awarded to the participants and the Corporation's financial
performance, thereby rewarding the participants with an incentive award if the
performance goals, as fixed by the Committee pursuant to the terms of the
Plan, are met. Subject to approval by the Marshall & Ilsley Corporation (the
"Corporation") shareholders, the Plan will be applicable to 1997 and
subsequent years unless and until terminated by the Committee. If shareholder
approval is not obtained, the Plan will not take effect. The Plan is intended
to meet the requirements of Section 162(m) of the Internal Revenue Code, and
the regulations thereunder, so that compensation received pursuant to the Plan
will be performance-based compensation excludable from the $1 million
limitation on deductible compensation.
2. Definitions. As used in the Plan, the following terms have the meanings
indicated:
(a) "Award Table" means a table similar in type to Exhibit A, with
changes necessary to adapt to the performance criteria selected by the
Committee for the Performance Year and to display other objective factors
necessary to determine the amount, if any, of the incentive award for the
Performance Year.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended from time
to time.
(d) "Committee" means the Executive Compensation Committee of the Board.
(e) "Company" means Marshall & Ilsley Corporation and its subsidiaries
including subsidiaries of subsidiaries and partnerships and other ventures
in which Marshall & Ilsley Corporation has a significant equity interest,
as determined in the sole discretion of the Committee.
(f) "Disability" means a condition that entitles the Participant to
disability payments under the terms of the Company's long-term disability
plan.
(g) "Earnings" means the after-tax consolidated net income of the Company
computed in accordance with generally accepted accounting principles and
adjusted to eliminate the following if the impact on net income is
material: (i) gain or loss attributable to the disposition of investment in
subsidiaries, and (ii) extraordinary and nonrecurring items of income or
loss.
(h) "Earnings per Share" means the portion of the Company's Earnings
allocable to each outstanding share of common stock during the accounting
period, based on the average number of shares outstanding, computed on a
fully-diluted basis in accordance with generally accepted accounting
principles.
(i) "Participant" means any employee of the Company designated to
participate in the Plan.
(j) "Performance Goal" means one or more of Earnings Per Share, Earnings,
Return on Average Equity, or Return on Average Assets, which may be used
singularly or in combination, as the Committee determines, to measure the
performance of the Company for the purpose of determining whether, and to
what extent, an award will be payable under the Plan for the Performance
Year.
(k) "Performance Year" means the Company's fiscal year. The initial
Performance Year is 1997.
(l) "Plan" means the Marshall & Ilsley Corporation Annual Executive
Incentive Compensation Plan.
(m) "Retirement" or "Retires" means the termination of employment of a
Participant on or after attaining age 65, or due to early retirement with
the consent of the Committee.
(n) "Return on Average Assets" or "ROAA" means Earnings for the
accounting period divided by total average assets.
B-1
<PAGE>
(o) "Return on Average Equity or "ROAE" means Earnings for the accounting
period divided by total average equity.
(p) "Salary" means base salary earned for each Performance Year
determined in accordance with principles employed for reporting salary to
the Corporation's shareholders in the annual Proxy Statement.
3. Participation. Participation in the Plan shall be limited to the Chief
Executive Officer, the President, the Chief Financial Officer and any other
Participants designated by senior management. A person who becomes a
Participant after the commencement of a Performance Year shall be eligible to
receive a pro rata award pursuant to Section 4, based on the number of full
months remaining in the Performance Year after he or she becomes a
Participant.
4. Determination of Awards.
(a) Before April 1, 1997, and thereafter, during the first ninety days of
each succeeding Performance Year, the Committee will complete and adopt an
Award Table substantially in the form attached as Exhibit A. The Award
Table will fix the objective components for determining whether an award
will be paid and, if so, the amount of the award. Awards are based on a
percentage of each Participant's Salary for the Performance Year, if and to
the extent the Performance Goal is achieved. If the performance falls
between the Performance Goals set forth in the Award Table, the amount of
the award will be determined by interpolation. Once fixed, the Performance
Goals and targets for a Performance Year may not be modified.
(b) Before any award may be paid for a Performance Year, the Committee
shall certify that the Performance Goals and other requirements of the Plan
have been satisfied for the Performance Year. No payments shall be made
unless and until the Committee makes this certification.
(c) Even though the Performance Goals have been met, (i) no award to a
Participant with respect to a Performance Year shall exceed $1,000,000, and
(ii) the Committee expressly reserves the right to reduce or eliminate
entirely any award if it determines it is in the best interests of the
Company to do so. Such determination shall be conclusive and binding.
5. Payment of Awards.
(a) If the Committee has made the certification required pursuant to
Section 4(b), subject to Section 4(c), awards shall be payable not later
than 60 days following the last day of the Performance Year for which they
are computed. Notwithstanding the foregoing, a Participant may defer
receipt of an award by filing a timely election pursuant to the Company's
1997 Executive Deferred Compensation Plan. All awards under the Plan are
subject to federal, state and local income and payroll tax withholding when
paid.
(b) A Participant shall receive no award for a year if the Participant's
employment with the Company terminates prior to the last day of the
Performance Year for any reason other than death, Disability, Retirement,
or a Change in Control as defined in the Company's 1997 Executive Stock
Option and Restricted Stock Plan. A Participant who terminates employment
for one of the reasons described in the preceding sentence shall be
eligible to receive a pro rata award, if an award is otherwise payable
pursuant to Section 4, based on the number of full months elapsed in the
Performance Year ending with the date the event occurred. A Participant
shall not forfeit an award if the participant's employment terminates after
the end of the applicable Performance Year, but prior to the distribution
of the award for such year.
(c) If a Participant dies and is subsequently entitled to receive an
award under the Plan, the award shall be paid to the Participant's estate.
6. Administration. The Plan shall be administered by the Committee. The
Committee may adopt rules and regulations for carrying out the Plan, and the
Committee may take such actions as it deems appropriate to ensure that the
Plan is administered in the best interests of the Company. The Committee has
the authority to construe and interpret the Plan, resolve any ambiguities, and
make determinations with respect to the eligibility for or amount of any
award. The interpretation, construction and administration of the Plan by the
Committee
B-2
<PAGE>
shall be final and conclusive. The Committee may consult with counsel, who may
be counsel to the Company, and shall not incur any liability for any action
taken in good faith in reliance upon the advice of counsel.
7. Rights. Participation in the Plan and the right to receive awards under
the Plan shall not give a Participant any proprietary interest in the Company
or any of its assets. A Participant shall for all purposes be a general
creditor of the Company. The interests of a Participant cannot be assigned,
anticipated, sold, encumbered or pledged and shall not be subject to the
claims of his creditors. Nothing in the Plan shall confer upon any Participant
the right to continue in the employ of the Company, or shall interfere with or
restrict in any way the right of the Company to discharge a Participant at any
time for any reason whatsoever, with or without cause.
8. Successors. The Plan shall be binding on the Participants and their
personal representatives. If the Company becomes a party to any merger,
consolidation, reorganization or other corporate transaction, the Plan shall
remain in full force and effect as an obligation of the Company or its
successor in interest.
9. Amendment and Termination. The Committee may amend or terminate the Plan
at any time as it deems appropriate; provided that to the extent required to
meet the requirements of Code Section 162(m) for performance-based
compensation, any amendment that makes a material change to the Plan must be
approved by the shareholders of the Corporation.
10. Interpretation. If any provision of the Plan would cause the Plan to
fail to meet the Code Section 162(m) requirements for performance-based
compensation, then that provision of the Plan shall be void and of no effect.
B-3
<PAGE>
EXHIBIT A
AWARD TABLE
PERFORMANCE YEAR 19
A<------(-)--------B--------(+)------>C
<TABLE>
<CAPTION>
THRESHOLD TARGET MAXIMUM
PERFORMANCE LEVEL PERFORMANCE LEVEL PERFORMANCE LEVEL
SPECIFIED: SPECIFIED: SPECIFIED:
TITLE % OF SALARY % OF SALARY % OF SALARY
- ----- ----------------- ----------------- -----------------
<S> <C> <C> <C>
Chairman................ -- % -- % -- %
President............... -- % -- % -- %
Chief Financial Offi-
cer.................... -- % -- % -- %
</TABLE>
During the first 90 days of each Performance Year, the Committee shall set
the Performance Goals using the following process.
AWARD DERIVATIONS
1. Specify performance criteria to be used as the Performance Goals for the
Performance Year (i.e., one or more of Earnings per Share, Earnings, Return
on Average Equity or Return on Average Assets, which may be used singularly
or in combination, as the Committee determines, to measure the performance
of the Company for the purpose of determining whether an award will be
payable under the Plan for the Performance Year).
2. Fix the target Performance Goal and percentage of salary. (B)
3. Fix the threshold Performance Goal below which no award is payable and
percentage of salary. (A)
4. Fix maximum Performance Goal which results in maximum permitted award and
percentage of salary. (C)
5. If the result achieved for the Performance Year is less or greater than the
goal specified in B, but greater than the goal specified in A, the
percentage award payable will be determined by interpolating, as provided
in the Plan, between A and B and B and C, as the case may be with C being
the maximum.
B-4
<PAGE>
THIS IS YOUR PROXY.
[LOGO OF MARSHALL & ILSLEY CORPORATION] YOUR VOTE IS IMPORTANT.
COMPANY HIGHLIGHTS DURING 1996
. Income before special charges for the twelve months ended December 31, 1996
was $213.0 million, versus $193.3 million last year. Fully-diluted earnings
per share were $2.12, versus $1.90 for the twelve months ended December 31,
1995. Primary earning per share were $2.16, compared to $1.96 a year ago.
. The $9.7 million of special charges, after taxes, consisted of the write-off
of $7.9 million of research and development costs associated with the
acquisition of EastPoint Technology, Inc., and $1.8 million in special SAIF
deposit assessments. Both charges were recorded in the third quarter.
. M&I Data Services entered into an exciting new market with the acquisition of
EastPoint Technology, Inc., a New Hampshire-based software development
company. This strategic acquisition positions M&I in the turnkey in-client-
server area. The combination of M&I Data Services' experience and reputation
and EastPoint's leading edge development technology form a strong strategic
alliance.
. Learn more about M&I's products and services through the company's Internet
address at: "http://www.micorp.com."
DETACH HERE MAIF
[X] Please mark
votes as in
this example.
Please mark boxes in blue or black ink.
1. Election of Class I Directors
Class I (with terms expiring April 2000):
Richard A. Abdoo, Wendell F. Bueche, G.H. Gunnlaugsson, Jack F.
Kellner, P.M. Platten, III, J.B. Wigdale and James O. Wright.
FOR WITHHELD
[_] [_]
[_] ______________________________________
For all nominees except as noted above
FOR AGAINST ABSTAIN
2. To approve the 1997 Executive [_] [_] [_]
Stock Option and Restricted Stock
Plan.
3. To approve the Annual Executive [_] [_] [_]
Incentive Compensation Plan.
4. In their discretion, the Proxies are authorized to vote upon
such other business as may properly come before the
meeting.
MARK HERE
FOR ADDRESS [_]
CHANGE AND
NOTE AT LEFT
Please mark, sign, date and return this Proxy Card promptly
using the envelop provided.
Please sign exactly as your name apprears at left. When shares are
held by joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized
person.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Signature:_______________________Date:________ Signature:_______________________ Date:________
</TABLE>
<PAGE>
PROXY
MARSHALL & ILSLEY CORPORATION
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints J.B. Wigdale and D.J. Kuester, and each of
them, as proxies, each with the power to appoint his substitute, and hereby
authorizes each of them to represent and to vote, as designated on the reverse
hereof, all of the shares of stock of Marshall & Ilsley corporation held of
record by the undersigned on February 28, 1997, at the 1997 Annual Meeting of
Shareholders of Marshall & Ilsley Corporation to be held on April 22, 1997 or at
any adjournment thereof.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this proxy will
be voted "FOR" the election of all nominees for directors, "FOR" the approval of
the 1997 Executive Stock Option and Restricted Stock Plan and "FOR" the approval
of the Annual Executive Incentive Compensation Plan.
(Continued and to be signed on the reverse side.) SEE REVERSE
SIDE
