<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 Section 240.14a-11(c) or Section 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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE>
MARSHALL & ILSLEY CORPORATION
770 North Water Street
Milwaukee, Wisconsin 53202
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 27, 1999
To the Shareholders of Marshall & Ilsley Corporation:
The 1999 Annual Meeting of Shareholders of Marshall & Ilsley Corporation
will be held at the Milwaukee Athletic Club, 758 North Broadway, Grand
Ballroom, 4th Floor, Milwaukee, Wisconsin, on Tuesday, April 27, 1999 at 10:00
a.m., local time, for the following purposes:
(1) To elect seven Directors to serve until the 2002 Annual Meeting of
Shareholders and one Director to serve until the 2001 Annual Meeting of
Shareholders and until their successors are elected and qualified; and
(2) 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 26, 1999 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 10, 1999
<PAGE>
MARSHALL & ILSLEY CORPORATION
770 North Water Street
Milwaukee, Wisconsin 53202
March 10, 1999
Proxy Statement
The proxy you received 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 27, 1999 (the "Annual Meeting"). At
the Annual Meeting, the shareholders of the Company will elect seven Class III
Directors, each of whom will hold office until April 2002 and one Class II
Director who will hold office until April 2001, and with respect to each
Director, until his successor is elected and qualified.
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 Morrow & Co.,
Inc. to assist in the solicitation of proxies for a fee of approximately
$6,500. The Proxy Statement and the Proxy are being sent to the Company's
shareholders commencing on or about March 10, 1999. Shareholders who have
consented to electronic delivery of the Proxy Statement and the Company's
Annual Report on Form 10-K will receive those documents via posting on M&I's
web site: www.micorp.com/ereports.html.
Each shareholder of record at the close of business on February 26, 1999
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 26, 1999, the
Company had outstanding 105,381,472 shares of Common Stock and 685,314 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 proxy you received from M&I 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 BankBoston, N.A., as Trustee.
Under the provisions of the Reinvestment Plan, shares of Common Stock are
acquired and held in nominee name by BankBoston, N.A. 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, 1998, 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 III and a Class II
Director. 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 eight
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 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.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table lists as of February 26, 1999 information regarding the
beneficial ownership of shares of Common Stock by each director, each nominee
for director (Timothy E. Hoeksema, John S. Shiely and George E. Wardeberg),
each 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 and Nature of
of Beneficial Owner Beneficial Ownership(1) Percent of Class
------------------- ---------------------- ----------------
<S> <C> <C>
Marshall & Ilsley Trust Company 10,615,243(2) 10.07%
1000 North Water Street
Milwaukee, WI 53202
The Northwestern Mutual Life 8,665,374(3) 7.66%
Insurance Company
720 East Wisconsin Avenue
Milwaukee, WI 53202
Richard A. Abdoo 8,100(4) *
Oscar C. Boldt 98,961(5) *
J.P. Bolduc 10,000(6) *
T.M. Bolger 69,000(7) *
Wendell F. Bueche 22,800(8) *
Jon F. Chait 33,487(9) *
J.L. Delgadillo 66,004(10) *
Glenn A. Francke 200,283(6) *
G.H. Gunnlaugsson 297,442(11) *
Timothy E. Hoeksema 0 *
Burleigh E. Jacobs 45,000 *
Jack F. Kellner 511,702(12) *
James F. Kress 20,500(6) *
D.J. Kuester 478,628(13) *
Katharine C. Lyall 5,350(14) *
Edward L. Meyer, Jr. 33,306(15) *
Don R. O'Hare 23,806(9) *
San W. Orr, Jr. 430,152(16) *
P.M. Platten, III 302,534(17) *
J.A. Puelicher 401,156(18) *
Robert A. Schaefer 67,276(19) *
John S. Shiely 2,000 *
Stuart W. Tisdale 18,780(20) *
George E. Wardeberg 0(21) *
J.B. Wigdale 700,102(22) *
James O. Wright 16,000(23) *
Gus A. Zuehlke 151,895(24) *
</TABLE>
All current directors and executive officers of the Company (excluding
Timothy E. Hoeksema, John S. Shiely and George E. Wardeberg) as a group (31
persons) own 4,563,973 shares of Common Stock or 4.33% of the total Common
Stock outstanding. (25)
- --------
*less than 1%
(1) Except as indicated below, all shares shown in the table are owned with
sole voting and investment power.
(2) This information is based on Amendment No. 18 to Schedule 13-G dated
February 16, 1999. 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 1,460,603
shares (approximately 1.39%), shared voting power as to
2
<PAGE>
6,114,182 shares (approximately 5.80%), sole investment power as to
3,536,772 shares (approximately 3.36%), and shared investment power as to
7,078,471 shares (approximately 6.72%). 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 5,961,221 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. 10 to Schedule 13-G dated
February 9, 1998. The Northwestern Mutual Life Insurance Company ("NML")
holds 988,188 shares of Common Stock and 685,314 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 7,677,185 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 (the "Securities") at such prices as may be agreed upon by the
parties from time to time. 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 7,500 shares which could be acquired pursuant to the exercise of
stock options within sixty days of February 26, 1999.
(5) Includes 38,448 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
26, 1999.
(6) Includes 10,000 shares which could be acquired pursuant to the exercise
of stock options within sixty days of February 26, 1999.
(7) Includes 40 shares held by Mr. Bolger's family as to which he disclaims
beneficial ownership and 36,000 shares which could be acquired pursuant
to the exercise of stock options within sixty days of February 26, 1999.
(8) Includes 12,500 shares which could be acquired pursuant to the exercise
of stock options within sixty days of February 26, 1999.
(9) Includes 15,000 shares which could be acquired pursuant to the exercise
of stock options within sixty days of February 26, 1999.
(10) Includes 45,000 shares which could be acquired pursuant to the exercise
of stock options within sixty days of February 26, 1999.
(11) Includes 2,700 shares held by Mr. Gunnlaugsson's family as to which he
disclaims beneficial ownership and 163,750 shares which could be acquired
pursuant to the exercise of stock options within sixty days of February
26, 1999.
(12) Includes 504,200 shares held in the Kellner Family Limited Partnership as
to which he disclaims beneficial ownership and 7,500 shares which could
be acquired pursuant to the exercise of stock options within sixty days
of February 26, 1999.
(13) Includes 2,000 shares as to which Mr. Kuester exercises sole voting
power, and 296,000 shares which could be acquired pursuant to the
exercise of stock options within sixty days of February 26, 1999.
(14) Includes 5,000 shares which could be acquired pursuant to the exercise of
stock options within sixty days of February 26, 1999.
3
<PAGE>
(15) Includes 3,359 shares held by Mr. Meyer's family as to which he disclaims
beneficial ownership and 27,900 shares which could be acquired pursuant
to the exercise of stock options within sixty days of February 26, 1999.
(16) Includes 403,713 shares held by trusts for which Mr. Orr exercises shared
voting and investment power and as to which Mr. Orr disclaims beneficial
ownership, and 15,000 shares which could be acquired pursuant to the
exercise of stock options within sixty days of February 26, 1999.
(17) Includes 6,143 shares held by Mr. Platten's family as to which he
disclaims beneficial ownership, 181,406 shares as to which Mr. Platten
exercises sole voting power and 5,000 shares of which could be acquired
pursuant to the exercise of stock options within sixty days of February
26, 1999.
(18) Includes 53,556 shares as to which Mr. Puelicher exercises sole voting
power and 69,832 shares held by trust for which he exercises shared
voting and investment power and as to which he disclaims beneficial
ownership.
(19) Includes 2,500 shares which could be acquired pursuant to the exercise of
stock options within sixty days of February 26, 1999.
(20) Includes 180 shares held by Mr. Tisdale's family as to which he disclaims
beneficial ownership and 15,000 shares which could be acquired pursuant
to the exercise of stock options within sixty days of February 26, 1999.
(21) Mr. Wardeberg held approximately 2,970 shares in the Company's non-
employee director deferred compensation plan.
(22) Includes 11,678 shares held by Mr. Wigdale's family as to which he
disclaims beneficial ownership and 471,000 shares which could be acquired
pursuant to the exercise of stock options within sixty days of February
26, 1999.
(23) Includes 7,500 shares which could be acquired pursuant to the exercise of
stock options within sixty days of February 26, 1999, 1,000 shares held
by trust for which Mr. Wright exercises shared voting and investment
power and as to which he disclaims beneficial ownership and 500 shares
owned by Badger Meter Foundation as to which he disclaims beneficial
ownership.
(24) 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
26, 1999.
(25) Includes 3,200 shares of restricted stock as to which the holders
exercise sole voting power and 1,490,550 shares which could be acquired
pursuant to the exercise of stock options within sixty days of February
26, 1999.
In addition to the ownership of Company Common Stock described above, each
of Messrs. Boldt, Bolger, Bolduc, Bueche, Francke, Gunnlaugsson, Kellner,
Kuester, O'Hare, Orr, Puelicher, Wigdale, Wright and Zuehlke beneficially owns
one share of Series A Adjustable Rate Preferred Stock (the "Preferred Stock")
of each of 28 subsidiaries of the Company formed as real estate investment
trusts. Mr. Kuester's wife also owns one share of Preferred Stock of each
subsidiary. Mr. Kuester disclaims beneficial ownership of these shares. Each
such person owns less than 1% of the outstanding Preferred Stock of each
subsidiary. All directors and executive officers as a group hold 20 shares of
Preferred Stock of each subsidiary, representing 1.87% of Preferred Stock of
each subsidiary.
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 III Directors to serve until the Company's
2002 Annual Meeting of Shareholders and a Class II Director to serve until the
Company's 2001 Annual Meeting of Shareholders and until their successors are
elected and qualified. Each Class III Director's term expires at the 1999
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 I and Class II Directors.
4
<PAGE>
NOMINEES STANDING FOR ELECTION
<TABLE>
<CAPTION>
Principal Occupation
Name and Directorships
---- --------------------
Class III Directors (terms expiring April 2002)
<S> <C>
Oscar C. Boldt Chairman, The Boldt Group, Inc., subsidiaries in general contracting,
Age 74 development and related businesses. A Director since May 1994.
Timothy E. Hoeksema Chairman and Chief Executive Officer of Midwest Express Holdings,
Age 52 Inc., a holding company with a principal subsidiary in the passenger
jet airline business, since 1983. Also a director of The Marcus
Corporation.
Burleigh E. Jacobs Chairman of the Board and Director, Grede Foundries, Inc., a
Age 79 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 corrugated and
Age 69 packaging materials. A Director since 1986.
Robert A. Schaefer Retired; Former Director, Executive Vice President and Chief
Age 61 Operating Officer of Security Capital Corporation and Former
Director, President and Chief Operating Officer of Security Bank
S.S.B. A Director since December 1997.
John S. Shiely President, Chief Operating Officer and Director since 1994, Executive
Age 46 Vice President--Administration from 1991 to 1994, Briggs & Stratton
Corporation, a manufacturer of gasoline engines for outdoor power
equipment. Also a director of Consolidated Paper, Inc.
Gus A. Zuehlke Retired; Former Chairman, Valley Bancorporation until May 1994;
Age 77 Former Chairman, Valley Bank, Appleton, Wisconsin, until May 1994. A
Director since May 1994.
Class II Director (term expiring April 2001)
George E. Wardeberg Chairman and Chief Executive Officer since 1997, President and Chief
Age 63 Executive Officer from 1994 to 1997, WICOR, Inc., a holding company
with subsidiaries in energy services and pump manufacturing. Also a
director of Twin Disc, Inc.
CONTINUING DIRECTORS
<CAPTION>
Principal Occupation
Name and Directorships
---- --------------------
Class I Directors (terms expiring April 2000)
<S> <C>
Richard A. Abdoo Chairman of the Board, President and Chief Executive Officer,
Age 55 Wisconsin Energy Corporation, a holding company with subsidiaries in
utility and nonutility businesses, since May 1991. Chairman of the
Board and Chief Executive Officer of Wisconsin Electric Power Company
since June 1990. A director of Sundstrand Corporation, United
Wisconsin Services, Inc. and Universal Foods Corporation. A Director
since July 1994.
Wendell F. Bueche Retired; Chairman, August 1994 to July 1997, Chief Executive Officer,
Age 68 February 1993 to July 1997, President, February 1993 to August 1994,
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 Company
Age 54 since 1987; Vice President of M&I Marshall & Ilsley Bank since 1976.
A Director since February 1994.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Principal Occupation
Name and Directorships
---- --------------------
<S> <C>
Jack F. Kellner Retired; Chairman of the Board from July 1991 to September 1994,
Age 82 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.
Katharine C. Lyall President of the University of Wisconsin System since 1992. Also a
Age 57 director of Wisconsin Power & Light Co., Kemper National Insurance
Companies and the Carnegie Foundation for the Advancement of
Teaching. A Director since December 1997.
P.M. Platten, III Retired; Vice Chairman of the Board of the Company from May 1994 to
Age 59 May 1997; Former 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 to present,
Age 62 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 78 manufacturer of products using flow measurement technology serving
utility, industrial and commercial markets. A Director since 1960.
Class II Directors (terms expiring April 2001)
Jon F. Chait Independent Financial Consultant, July 1998 to present; Executive
Age 48 Vice President, Secretary and Director, August 1991 to July 1998,
Managing Director--International Operations, 1995 to July 1998, Chief
Financial Officer, August 1993 to 1995, Manpower Inc. and Executive
Vice President, September 1989 to July 1998, Manpower International
Inc., a provider of temporary employment services. A Director since
1990.
D.J. Kuester President of the Company since 1987; President and Director since
Age 57 January 1989, M&I Marshall & Ilsley Bank; Chairman of the Board and
Director, M&I Data Services. Also a director of Modine Manufacturing
Company. A Director since February 1994.
Edward L. Meyer, Jr. Chairman of the Board, Anamax Corporation, a processor of hides and
Age 61 manufacturer of tallow. A Director since May 1994.
Don R. O'Hare Retired; Consultant, September 1994 to April 1997, Chairman of the
Age 76 Board, September 1994 to October 1996, Chief Executive Officer, April
1979 to April 1997, and Director, Sundstrand Corporation, a
manufacturer of aerospace and industrial products. A Director since
1977.
San W. Orr, Jr. Attorney, Estates of A.P. Woodson & Family; Chairman of the Board and
Age 57 Director, Wausau-Mosinee Paper Corporation. Also a Director of MDU
Resources Group, Inc. A Director since July 1994.
J.A. Puelicher Retired; Chairman of the Board and Chief Executive Officer of the
Age 78 Company from April 1981 to December 1992. A Director since 1959.
Stuart W. Tisdale Retired; Chairman of the Board and Chief Executive Officer, August
Age 70 1992 to February 1994, President and Chief Executive Officer, April
1986 to August 1992, and Director, WICOR, Inc. A Director of Modine
Manufacturing Company. A Director since 1986.
</TABLE>
6
<PAGE>
The Board of Directors of the Company has standing Executive Compensation,
Audit, Retirement Investment, Nominating and Executive Committees. The Board
of Directors held six meetings in 1998. 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, the 1994 Long-Term Incentive Plan and the Annual
Executive Incentive Compensation 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 five meetings in 1998. 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 1998.
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 1998.
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 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 one meeting in 1998.
The Executive Committee has the authority to act on behalf of the full Board
of Directors in managing the business and affairs of the Company when the
Board of Directors is not in session. The members of the Executive Committee
are Messrs. Puelicher (Chairman), Jacobs, Kellner, Tisdale and Wigdale. The
Executive Committee held two meetings in 1998.
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,
1998, 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 approximately 10.7% of shareholders equity at
December 31, 1998.
From time to time, directors and officers of the Company and their
associates may sell shares of their Common Stock to the Company pursuant to
the Company's stock repurchase program. The purchase price for any such sales
is the prevailing market price at the time of such sale.
7
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation(1)
------------------------
Annual
Compensation Awards Payouts
------------------ -------------- --------
Securities LTIP
Name and Principal Underlying Payouts All Other
Position Year Salary($) Bonus($) Options/SARs(#) $ Compensation($)(2)
------------------ ---- --------- -------- -------------- -------- ------------------
<S> <C> <C> <C> <C> <C> <C>
J.B. Wigdale............ 1998 $700,000 $586,250 100,000 $738,825 $502,625
Chairman of the Board 1997 625,000 526,813 30,000 779,850 456,894
and Chief Executive
Officer 1996 580,000 370,000 30,000 0 487,679
D.J. Kuester............ 1998 600,000 506,490 50,000 640,315 279,334
President 1997 525,000 446,123 26,000 675,870 235,874
1996 500,000 278,259 26,000 0 258,856
G.H. Gunnlaugsson....... 1998 500,000 422,068 40,000 443,295 178,745
Executive Vice
President 1997 400,000 340,130 20,000 467,910 156,387
and Chief Financial
Officer 1996 345,000 272,643 18,000 0 156,383
J.L. Delgadillo......... 1998 320,000 250,000 20,000 197,020 51,052
Senior Vice President 1997 300,000 200,000 12,000 207,960 41,007
1996 270,000 140,000 8,000 0 43,292
T.M. Bolger............. 1998 230,000 170,000 20,000 0 35,836
Senior Vice President 1997 200,000 125,000 8,000 0 31,474
1996 160,000 115,000 4,000 0 22,742
</TABLE>
- --------
(1) As of December 31, 1998, Mr. Delgadillo had 3,000 shares of unreleased Key
Restricted Stock valued at $172,313. The value was arrived at using a
December 31, 1998 closing market price of $58.4375 per share less
consideration which is paid by the executive upon issuance of award.
Dividends are paid on restricted stock.
(2) Includes the following amounts paid by M&I under the Retirement Program
for 1998: J.B. Wigdale--$17,600; D.J. Kuester--$13,200; G.H.
Gunnlaugsson--$17,600; J.L. Delgadillo--$17,600 and T.M. Bolger--$17,600.
Includes the following amounts paid by M&I under a Split Dollar Life
Insurance Plan for the benefit of the executives for 1998: J.B. Wigdale--
$13,842; D.J. Kuester--$6,775 and G.H. Gunnlaugsson--$6,324. Includes the
following employer contributions under the Supplementary Retirement
Benefits Plan and the Executive Deferred Compensation Plan based on
compensation paid or deferred during 1998: J.B. Wigdale--$85,345; D.J.
Kuester--$75,002; G.H. Gunnlaugsson--$54,173; J.L. Delgadillo--$28,800 and
T.M. Bolger--$15,600. Includes the following above-market amounts accrued
by M&I on account balances under the Supplementary Retirement Benefits
Plan and the Executive Deferred Compensation Plan: J.B. Wigdale--$11,925;
D.J. Kuester--$15,784; G.H. Gunnlaugsson--$12,037; J.L. Delgadillo--$4,652
and T.M. Bolger--$2,636. Also includes the following amounts accrued by
M&I under the Non-Qualified Retirement Benefit Plan for 1998: J.B.
Wigdale--$373,913; D.J. Kuester--$168,573 and G.H. Gunnlaugsson--$88,611.
The following table provides information on options granted to the named
executive officers during 1998.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants
<TABLE>
<CAPTION>
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise or Grant Date
Options/SARs Employees in Base Price Expiration Present
Name Granted(#)(1) Fiscal Year ($/Sh)(2) Date Value($)(3)
- ---- ------------- ------------ ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
J.B. Wigdale............ 100,000 7.9% $51.8125 12/10/08 $1,320,380
D.J. Kuester............ 50,000 4.0 51.8125 12/10/08 660,190
G.H. Gunnlaugsson....... 40,000 3.2 51.8125 12/10/08 528,152
J.L. Delgadillo......... 20,000 1.6 51.8125 12/10/08 264,076
T.M. Bolger............. 20,000 1.6 51.8125 12/10/08 264,076
</TABLE>
8
<PAGE>
- --------
(1) Includes options transferable to the employees' immediate family or trusts
or partnerships for the benefit thereof. Options generally become
exercisable based on the following schedule: 50% after 12 months from the
date of grant, an additional 25% after 18 months from the date of grant
and the remaining 25% after 24 months from the date of grant; provided
that the options will become immediately exercisable upon a "Triggering
Event" (which relates to a change of control of the Company). Employees
who have attained age 55 and have at least ten years of service with the
Company or a subsidiary receive options which are fully vested on the date
of grant.
(2) All options have an exercise price equal to 100% of the fair market value
of the Company's Common Stock on the date of grant. The exercise price may
be paid in cash or by delivery of shares of the Company's Common Stock.
Upon exercise of an option, the holder may satisfy any tax obligations
either by having the Company withhold shares or by delivering shares such
holder already owns.
(3) The grant date present values were determined using the Black-Scholes
model with the following common assumptions: a six year expected period of
time to exercise; a risk-free rate of return of 4.53%; an expected
dividend yield of 1.70%; and a volatility factor of 22.01%.
The following table provides information on options exercised during 1998,
and options held at year end, by the named executive officers.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options/SARs at In-the-Money Options/SARs
Shares FY-End(#)(1) at FY-End($)(2)
Acquired on Value ------------------------- -------------------------
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
J.B. Wigdale............ 30,000 1,254,765 471,000 0 14,339,338 0
D.J. Kuester............ 20,000 783,223 336,000 0 10,573,610 0
G.H. Gunnlaugsson....... 45,000 2,077,673 163,750 50,000 5,893,577 279,375
J.L. Delgadillo......... 0 0 45,000 26,000 1,388,315 141,125
T.M. Bolger............. 15,000 689,625 36,000 24,000 1,168,378 138,250
</TABLE>
- --------
(1) Includes shares which were transferred to the employees' immediate family
or trusts or partnerships for the benefit thereof.
(2) For valuation purposes, a December 31, 1998 market price of $58.4375 was
used.
The following table provides information on long-term incentive plan awards
to the named executive officers with respect to 1998. Awards with respect to
1999 have not been included.
LONG-TERM INCENTIVE PLAN--AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Number of Shares, Units Performance or Other Period
Name 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......... 10,000 3 Years
J.L. Delgadillo........... 6,000 3 Years
T.M. Bolger............... 4,000 3 Years
</TABLE>
9
<PAGE>
- --------
(1) Units awarded represent share equivalents of the Company's Common Stock.
The performance period is the three years commencing on January 1, 1998
and ending on December 31, 2000. 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).
A payout multiple is applied to the Units awarded to a participant based
on the Company's performance in relation to two equally weighted
performance criteria, which represent (i) 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 (the "KBW 50 Index") and (ii) the Company's cumulative earnings
per share for the three-year period. The Company's performance in relation
to the performance criteria is calculated independently, thereby allowing
a participant to receive a payout under one of the criterion but not under
the other. The minimum payout multiple is zero for each criterion and the
maximum is 137.50%, resulting in a combined maximum of 275%. The resulting
payout multiple is applied to the Units awarded plus those credited in
lieu of dividends. If performance under either measure falls between two
payout multiple categories, the percentage earned will be determined by
linear interpolation. Before awards are paid, the Committee must certify
the extent to which the performance criteria have been met.
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.
The Marshall & Ilsley Corporation Executive Deferred Compensation Plan (the
"Deferred Compensation Plan") provides selected key employees of M&I,
including the named executive officers, with the ability to defer up to 80% of
base salary and 100% of bonus. 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 upon 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").
10
<PAGE>
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.
Participants have the same investment and pay-out elections as provided in the
Deferred Compensation Plan, described above, and amounts credited under the
SERP are 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
the named executive officers, 7 additional executive officers and 21 other
officers and employees of the Company and its subsidiaries (collectively, the
"Executives"). The Employment Agreements with the named executive officers
each have a term of three 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 the relevant 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 on the gross-up payment, shall be
equal to the payments then due.
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. Amounts deferred may be allocated to
one of two accounts as selected by the participating Director: (i) the Common
Stock account or (ii) a cash account, earning interest at a rate equal to that
earned on U.S. Treasury
11
<PAGE>
Bills with maturities of 13 weeks. Deferred amounts are payable in a lump sum
or in not less than two nor more than 10 annual installments, as elected by
the participating Director, or, if no such election is made, in five annual
installments. Messrs. Boldt, Bolduc, Bueche, Chait, Meyer, Schaefer and
Zuehlke elected to defer compensation under the plan during 1998. 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 subsidiaries of M&I may also elect
to defer compensation under the plan.
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. Under the terms of this plan, 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, the options will not be exercisable
more than 10 years after the date of grant, and the 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 extended and currently expires in 2002 (the
"Consulting/Retirement Agreement"). 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 for his life
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 also
reimburses Mr. Puelicher for all travel and other expenses incurred in the
performance of his duties and provides him with secretarial services and
office space for his life. 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 Bancorporation 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 Executive Compensation Committee (the "Committee") determines the
compensation policy for executive officers, makes awards and sets performance
criteria under the Company's incentive plans, and determines the salary levels
for executive officers. The 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 and the
relevant market relationship of the executive officer's compensation. 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 compensation
12
<PAGE>
package for senior executives has both objective (performance based) and
subjective elements. Awards under the Annual Executive Incentive Plan are
based on the achievement of specified performance criteria determined by the
Committee. 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 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.
1998 Compensation
Overview
With regard to 1998 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, and various peer group analyses
and other information which the Committee deemed relevant in the case of any
particular individual. The 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
KBW 50 Index which is the same peer group used in the performance graph. The
Committee also compared the Company's compensation levels and financial
performance to a more defined peer group of similarly sized bank holding
companies which is not identical to the KBW 50 Index. In reviewing this
information, the Committee took into account the Company's size and
performance relative to the companies in the peer groups. The Committee did
not, however, set the compensation for the Company's executive officers at a
specific level as compared to any 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.
Annual Executive Incentive Plan
The Annual Executive Incentive Plan provides for annual cash incentives
(bonuses) to the participants based upon one or more objective financial
performance criteria selected by the Committee. The Annual Executive Incentive
Plan rewards eligible senior executives with an incentive award based on a
percentage of each participant's base salary if the performance goals set by
the Committee are met for that year. The performance criteria for 1998 was
based upon reported earnings per share. In future years, the Committee may use
a performance criteria different than reported earnings per share or may
adjust performance to reflect extraordinary events. For example, if the
Company were to incur extraordinary charges in connection with an acquisition,
the performance may be adjusted to exclude such charges. The Company earned
$2.76 per share, representing a 13.6% increase over 1997. This exceeded the
targeted performance level established by the Committee for 1998, and resulted
in eligible executive officers receiving payouts ranging from 34% to 84% of
their respective 1998 base salaries.
Base Salary and Long-Term Incentive Compensation
In determining the base salaries for the Company's executive officers, the
Committee takes a long-term view of the executive's job performance, the
Company's financial performance, and the salaries paid in the marketplace to
executives with similar responsibilities. The Committee believed it was
appropriate in 1998 to
13
<PAGE>
increase base salaries for the Company's senior executive officers. The
Committee believes the adjusted base salaries are commensurate with the
Committee's evaluation of the information reviewed. Such compensation
decisions were based on all the factors, both objective and subjective,
considered by the Committee and generally no one specific criteria was applied
in making such decisions.
The Committee made long-term incentive awards in 1998 under the Company's
Executive Stock Option Plans and the 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 the 1998 long-term incentive awards levels, the Committee
compared the total compensation opportunities of each senior executive
officer, and the values of each compensation component, in relation to those
provided by peer companies for similar positions. Based upon this analysis and
other information reviewed, the Committee determined it was appropriate to
increase the annual level of the long-term awards, compared to those provided
in recent years. This was accomplished by increasing the number of stock
options awarded to the senior executive officers. The number of LTIP units
awarded to each individual were generally unchanged from the 1997 level,
absent a change in the overall responsibilities of the executive officer.
In determining the total number of options to be granted in 1998 to all
recipients, including the executive officers, the Committee reviewed the
annual option awards and cumulative options outstanding of the peer group
companies in relation to outstanding shares. Based upon this review, and
recognizing the Company's growth, the Committee determined it was appropriate
to increase the Company's overall option awards. In 1998, grants to employees
totaled 1,262,150 options, or approximately 1.2% of shares outstanding. The
Committee believes this award level more closely aligns with the peer group
companies.
Chief Executive Officer Compensation
In determining Mr. Wigdale's salary and long-term incentive awards, the
Committee's review concentrated on the prevailing market rates of compensation
for his position and the Company's current and prior year's financial
performance. The Committee considered the compensation of the chief executive
officers of the peer group companies, taking into account the Company's size
and performance relative to the companies in the peer groups, in order to
determine whether Mr. Wigdale is compensated on a basis which is reasonably
consistent. Mr. Wigdale received an Annual Executive Incentive Plan Award of
84% of his base salary, resulting from the Company's 1998 earnings per share
performance in relation to the goals established under the plan. It is the
Committee's conclusion that Mr. Wigdale's compensation is fair and
appropriate.
The Compensation Committee:
<TABLE>
<S> <C> <C> <C>
Mr. Jacobs, Chairman Mr. Kellner Mr. O'Hare Mr. Wright
</TABLE>
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 KBW 50 Index.
CUMULATIVE TOTAL RETURN
ASSUMES DIVIDENDS & CAPITAL GAINS REINVESTED
[PERFORMANCE CHART APPEARS HERE]
<TABLE>
<CAPTION>
12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
M&I....................... $100 $ 83 $116 $159 $290 $277
S&P 500................... 100 101 139 171 229 294
KBW 50.................... 100 95 152 215 314 340
</TABLE>
KBW=KEEFE, BRUYETTE & WOOD, INC. 50-BANK INDEX; S&P=STANDARD & POOR'S 500.
SUBMISSION OF SHAREHOLDER PROPOSALS
The 2000 Annual Meeting of Shareholders is scheduled for April 25, 2000. 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 2000 Annual Meeting of Shareholders and any other shareholder proposed
business to be brought before the 2000 Annual Meeting of Shareholders must be
submitted to the Company no later than January 27, 2000. Shareholder proposed
nominations and other shareholder proposed business must be made in 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
15
<PAGE>
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 2000 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 10, 1999. 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, 1999.
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 1998 all filing requirements were complied with,
except that one late report was filed with respect to one transaction for
Robert A. Schaefer relating to a distribution of shares from a retirement plan
that was terminated.
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
16
<PAGE>
- --------------------------------------------------------------------------------
Proxy Card
MARSHALL & ILSLEY CORPORATION
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned appoints J.B. Wigdale and D.J. Kuester, and each of them,
as proxies, each with the power to appoint his substitute, and 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 26, 1999 at the 1999 Annual Meeting of Shareholders of
Marshall & Ilsley Corporation to be held on April 27, 1999 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.
(Continued and to be signed on the reverse side.)
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Please mark boxes in blue or black ink.
1. ELECTION OF CLASS III AND CLASS II DIRECTORS:
FOR all nominees below to serve for the terms indicated below and until their
successors are elected and qualified (except as marked to the contrary
below). [_]
WITHHOLD AUTHORITY to vote for all nominees listed below. [_]
(To withhold authority to vote for any individual nominee, strike a line
through that nominee's name in the list below)
Class III (with terms expiring April 2002): Oscar C. Boldt, Timothy E.
Hoeksema, Burleigh E. Jacobs, James F. Kress, Robert A. Schaefer, John S.
Shiely and Gus A. Zuehlke; Class II (with a term expiring April 2001): George
E. Wardeberg.
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
Please sign exactly as your name appears below.
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.
Date:_________________________________, 1999
____________________________________________
(Signature of Shareholder)
Please mark, sign, date and ____________________________________________
return this Proxy Card (Signature of Shareholder - if held jointly)
promptly using the envelope
provided.
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