<PAGE> 1
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
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
MERCANTILE BANCORPORATION INC.
(Name of Registrant as Specified in Its Charter)
THE BOARD OF DIRECTORS
OF MERCANTILE BANCORPORATION INC.
(Name of Persons Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2)*
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
[ ] 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: N/A
2) Aggregate number of securities to which transaction applies: N/A
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: N/A
4) Proposed maximum aggregate value of transaction: N/A
[ ] 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: N/A
2) Form, Schedule or Registration Statement No.: N/A
3) Filing Party: N/A
4) Date Filed: N/A
- -----
*$125 filing fee paid upon previous filing of Preliminary Proxy Statement
<PAGE> 2
Mercantile P.O. Box 524 MERCANTILE
Bancorporation St. Louis, MO 63166-0524
Inc.
THOMAS H. JACOBSEN
Chairman of the Board, President
and Chief Executive Officer
March 22, 1994
DEAR SHAREHOLDER:
Our Annual Meeting of Shareholders will be held at 10:00 a.m. on
Thursday, April 28, 1994 in the Regency Ballroom of the Hyatt Regency
St. Louis at Union Station, 20th and Market Streets, One St. Louis
Station, St. Louis, Missouri. The Notice of Annual Meeting, proxy
statement and proxy card which accompany this letter outline fully
matters on which action is expected to be taken at the meeting,
including the election of directors, the amendment of the Restated
Articles to increase the authorized number of shares of common stock,
and the approval of certain benefit programs. The Board of Directors
requests that you vote in favor of each of the nominees for director
and each of the proposals set forth in the Notice of Annual Meeting.
We cordially invite you to attend our Annual Meeting of Shareholders.
Whether or not you contemplate attending the meeting, however, we would
appreciate your dating, signing and mailing the enclosed proxy card as
promptly as possible in the return envelope enclosed for your
convenience. If you attend the meeting, you may revoke your proxy and
vote your shares in person.
Our Annual Report for 1993 has been mailed to you under separate
cover.
Sincerely,
T. H. JACOBSEN
<PAGE> 3
Notice: Mercantile MERCANTILE
Annual Meeting Bancorporation
of Shareholders Inc.
April 28, 1994
The Annual Meeting of Shareholders of Mercantile Bancorporation Inc.
will be held in the Regency Ballroom of the Hyatt Regency St. Louis at
Union Station, 20th and Market Streets, One St. Louis Station,
St. Louis, Missouri, on Thursday, April 28, 1994 at 10:00 a.m., for the
following purposes:
1. To elect six directors in Class III for terms of three years
expiring in 1997.
2. To consider and act upon an amendment to the Restated Articles of
Incorporation of the Corporation to increase the authorized number
of shares of Common Stock, $5.00 par value per share, from
70,000,000 to 100,000,000 shares.
3. To consider and act upon the adoption of the Mercantile
Bancorporation Inc. 1994 Stock Incentive Plan.
4. To consider and act upon a proposal to qualify restricted
performance unit grants under the Mercantile Bancorporation Inc.
1994 Stock Incentive Plan as "performance-based."
5. To consider and act upon the adoption of the Mercantile
Bancorporation Inc. 1994 Executive Incentive Compensation Plan.
6. To consider and act upon the adoption of the Mercantile
Bancorporation Inc. Voluntary Deferred Compensation Plan.
7. To consider and act upon the adoption of the Mercantile
Bancorporation Inc. 1994 Stock Incentive Plan for Non-Employee
Directors.
8. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only shareholders of record at the close of business on March 10,
1994 are entitled to notice of and to vote at the meeting.
THOMAS H. JACOBSEN
Chairman of the Board, President
and Chief Executive Officer
March 22, 1994
3
<PAGE> 4
Proxy Mercantile MERCANTILE
Statement Bancorporation
Inc.
This proxy statement and the form of proxy are furnished, commencing
on March 22, 1994, in connection with the solicitation of proxies by
the Board of Directors of Mercantile Bancorporation Inc. ("Mercantile"
or the "Corporation") to be voted at the Annual Meeting of Shareholders
to be held on Thursday, April 28, 1994, on the matters set forth in the
accompanying Notice of Annual Meeting. Any shareholder giving a proxy
may revoke it at any time prior to its being voted. Revocation may be
made effective by giving a later dated proxy or written notice to the
Secretary or to the voting inspectors for the Annual Meeting of
Shareholders, at any time prior to the time the proxy is voted. Unless
so revoked, all shares represented by proxies in the enclosed form that
are properly executed and received in time for the vote will be voted.
Mercantile will bear the entire cost of soliciting proxies in the
enclosed form. Solicitation will be by mail, and directors and officers
of Mercantile and its subsidiaries may solicit proxies personally, by
telephone or other means, but such persons will not be specially
compensated for such services. Mercantile has retained Morrow & Co.,
Inc. to assist in the solicitation of proxies on its behalf for a fee
of approximately $10,000 plus expenses.
Only shareholders of record at the close of business on March 10,
1994 are entitled to notice of and to vote at the meeting. On that date
there were 28,670,845 shares of Mercantile's Common Stock outstanding,
with each share being entitled to one vote. For purposes of this proxy
statement and the Annual Meeting, the number of shares of Mercantile's
Common Stock will not reflect the three-for-two stock split to be paid
in the form of a dividend on April 11, 1994 to shareholders of record
on March 10, 1994. Numbers of shares of Mercantile's Common Stock as
set forth in the plans attached as Appendices B and E to this statement
reflect the stock split, as such plans will be adopted after the
payment date. The election inspectors will treat abstentions as shares
that are present and voting for purposes of determining the presence of
a quorum and the approval of any matter submitted to the shareholders
for a vote. If a broker indicates on the proxy that it does not have
discretionary authority as to certain shares to vote on a particular
matter, those shares will not be considered as present and voting with
respect to that matter.
Cumulative voting, as required by Mercantile's By-laws, is applicable
to all elections of directors. In the election of directors, a
shareholder is entitled to cast as many votes as shall equal the number
of shares of Common Stock of Mercantile owned multiplied by six, the
number of directors to be elected at this Annual Meeting. A shareholder
may cast all votes for a single candidate or may distribute them among
two or more candidates as the shareholder may decide. Each duly
executed proxy in the form enclosed will be voted for all nominees as
listed on such proxy, unless otherwise directed in the proxy. If a
shareholder gives a proxy in the form enclosed but withholds authority
to vote for one or more of the nominees listed on the proxy, the number
of votes represented by such shareholder's proxy shall be divided
equally, to the extent practicable without creating fractional votes,
among the remaining nominees.
4
<PAGE> 5
<TABLE>
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table sets forth the name and address of each
beneficial owner of more than five percent of Mercantile's Common Stock
known to Mercantile, showing the amount and nature of such beneficial
ownership and percent of class:
<CAPTION>
PERCENT OF
CLASS OF
COMMON
NAME AND ADDRESS AMOUNT AND NATURE STOCK, $5.00 PAR
OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP VALUE(1)
------------------- ----------------------- ----------------
<C> <S> <C>
Mercantile Bank of St. Louis Sole Voting Power..........................1,800,057
National Association(2) Shared Voting Power..........................239,796
("Mercantile Bank") Sole Investment Power........................660,127
P.O. Box 387 Shared Investment Power......................746,882
St. Louis, Missouri 63166 Total....................................2,195,853 7.7%
(F)
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(1) Based upon 28,670,845 shares outstanding at March 10, 1994.
(2) Includes shares beneficially owned as of March 10, 1994 by
Mercantile Bank and certain other affiliates of Mercantile.
Mercantile has been advised that the shares held as sole fiduciary
by Mercantile Bank and such affiliates will be voted at the Annual
Meeting for each of the persons nominated by the Board of Directors
for election as a director and for each of the proposals described
herein. Mercantile Bank and such affiliates will also recommend to
all co-trustees and co-executors that they vote in a similar
manner.
</TABLE>
ITEM 1. ELECTION OF DIRECTORS
One of the purposes of the meeting is to elect six directors in Class
III to serve for terms of three years expiring in 1997. The persons
named in the enclosed form of proxy intend to vote all duly executed
proxies received "FOR" the election to the Board of Directors of each
of the nominees, except as otherwise directed in any proxy. The six
nominees receiving the highest number of votes will be elected as
directors. All nominees are currently directors of Mercantile.
In the event any nominee declines or is unable to serve, it is
intended that the proxies for the election of such nominee will be
voted for a successor nominee designated by the Board of Directors. The
Board of Directors has no reason to believe that any nominee will
decline or be unable to serve if elected.
The name, age, principal occupation or position and other
directorships with respect to the nominees and the other directors
whose terms of office as directors will continue after the meeting is
set forth below. Each of the directors or nominees has held the
currently listed position or another executive position with the same
employer for more than five years except as set forth beside his name
below.
CLASS III-TO BE ELECTED FOR A TERM OF THREE YEARS EXPIRING IN 1997
HARRY M. CORNELL, JR., 65-Director beginning in 1991; Chairman and
Chief Executive Officer of Leggett & Platt, Inc., manufacturer of
components used primarily in the furniture and bedding industry;
Director of Leggett & Platt, Inc. and Ennis Business Forms, Inc.
BERNARD A. EDISON, 66-Director beginning in 1971; Director Emeritus
of Edison Brothers Stores, Inc., retail specialty stores; Director of
Anheuser-Busch Companies, Inc., General American Life Insurance Company
and Reinsurance Group of America, Inc.
THOMAS H. JACOBSEN, 54-Director beginning in 1989; Chairman of the
Board, President and Chief Executive Officer of Mercantile; Director of
Union Electric Company and Student Loan Marketing Association.
CRAIG D. SCHNUCK, 45-Director beginning in 1991; Chairman and Chief
Executive Officer of Schnuck Markets, Inc., retail supermarket chain,
since 1991; Director of Schnuck Markets, Inc., Edison Brothers Stores,
Inc., and General American Life Insurance Company. Mr. Schnuck served
as President and Chief Executive Officer of Schnuck Markets, Inc. from
1989 through 1991.
ROBERT W. STALEY, 59-Director beginning in 1987; Vice Chairman of
Emerson Electric Co., manufacturer of electrical and electronic
equipment; Director of Emerson Electric Co., Edison Brothers Stores,
Inc., and ACE Limited.
5
<PAGE> 6
ROBERT L. STARK, 60-Director beginning in 1993; Dean of University of
Kansas Regents Center, educational institution, since September 1993;
Director of Packer Plastics Inc., Redman Industries, Inc. and Century
Products Co. Mr. Stark served as Executive Vice President of Hallmark
Cards, Inc. for more than five years prior to May 1993.
CLASS I-TO CONTINUE IN OFFICE UNTIL 1995
THOMAS A. HAYS, 61-Director beginning in 1984; Deputy Chairman of The
May Department Stores Company, retail stores, since June 1993; Director
of The May Department Stores Company and Union Electric Company. Mr.
Hays served as President of The May Department Stores Company for more
than five years prior to June 1993.
JAMES B. MALLOY, 66-Director beginning in 1987; Chairman and Chief
Executive Officer of Smurfit Packaging Corporation, paper packaging
manufacturer, since February 1994; Director of Jefferson Smurfit Group
plc. Mr. Malloy served as President and Chief Executive Officer of
Jefferson Smurfit Corporation for more than five years prior to
February 1994.
HARVEY SALIGMAN, 55-Director beginning in 1982; Managing Partner of
Cynwyd Investments, real estate investment company, since June 1990;
Director of Union Electric Company and The Jewish Hospital of
St. Louis. Mr. Saligman served as Chairman of the Board and Chief
Executive Officer of Interco Incorporated and in other capacities at
that company for more than five years prior to June 1990.
PATRICK T. STOKES, 51-Director beginning in 1992; President of
Anheuser-Busch, Inc., brewer of beer and other malt beverages, since
March 1990. Mr. Stokes served as President and Chief Executive Officer
of Eagle Snacks, Inc., Campbell Taggart, Inc., and other affiliates of
Anheuser-Busch, Inc. for more than five years prior to March 1990.
FRANCIS A. STROBLE, 63-Director beginning in 1986; Senior Vice
President and Chief Financial Officer of Monsanto Company, manufacturer
of chemicals; Director of Johnstown America Industries, Inc.
JOSEPH G. WERNER, 66-Director beginning in 1993; President of Werner
Investments, investment company. Mr. Werner has served as Director of
Mercantile Bank since 1986.
JOHN A. WRIGHT, 51-Director beginning in 1986; President and Chief
Executive Officer of Big River Minerals Corp., natural resources
investment firm.
CLASS II-TO CONTINUE IN OFFICE UNTIL 1996
RICHARD P. CONERLY, 69-Director beginning in 1975; Chairman of Orion
Capital Inc., management company; Director of The Kellwood Company,
LaBarge, Inc., and Orion Capital Inc.
EARL K. DILLE, 66-Director beginning in 1979; retired President of
Union Electric Company, public utility company; Director of Union
Electric Company, Stony Creek, Inc., and Bethesda General Hospital &
Homes. Mr. Dille served as President of Union Electric Company from
June 1988 to May 1992.
J. CLIFF EASON, 46-Director beginning in 1993; President, Network
Services of Southwestern Bell Telephone Company, communications
industry company. Director of Reinsurance Group of America, Inc. and
Southwestern Bell Telephone Company. Mr. Eason served as President of
Southwestern Bell Telephone of the Midwest from July 1992 to July 1993,
as President and Chief Executive Officer of Metromedia Paging Services,
Inc. from May 1991 to June 1992, and for more than five years prior
thereto, in various capacities with other affiliates of Southwestern
Bell Corporation.
WILLIAM A. HALL, 48-Director beginning in 1993; Assistant to the
Chairman, Hallmark Cards, Inc., manufacturer of greeting cards and
related products; Director of Payless Cashways, Inc. and AgriStar, Inc.
WILLIAM G. HECKMAN, 68-Director beginning in 1979; former Chairman
and Chief Executive Officer of Arch Mineral Corporation, a coal mining
company; Director of Arch Mineral Corporation.
CHARLES H. PRICE II, 63-Director beginning in 1992; Chairman of the
Board of Mercantile Bank of Kansas City since May 1992; Director of The
New York Times Co., Texaco, Inc., Sprint, Inc., Hanson plc and British
Airways plc. Mr. Price served as United States Ambassador to the United
Kingdom of Great Britain and Northern Ireland from 1983 to 1989 and as
Chairman of the Board, President and Chief Executive Officer of
Ameribanc, Inc. from October 1989 until April 1992.
6
<PAGE> 7
BOARD OF DIRECTORS AND COMMITTEES
During 1993 there were six meetings of the Board of Directors. All of
the directors attended not less than 75% of the aggregate number of
meetings of the Board of Directors and of the committees on which they
served during the year except Mr. Stark, who attended two of three such
meetings since his election to the Board in May 1993.
The standing committees of the Board of Directors include the Audit
Committee, the Community Relations Committee, the Compensation and
Management Development Committee, the Credit Policy Committee, the
Executive Committee and the Nominating and Board Affairs Committee.
The members of the Audit Committee are Messrs. Richard P. Conerly,
Chairman, J. Cliff Eason, William A. Hall, Patrick T. Stokes, Francis
A. Stroble and John A. Wright. The Audit Committee met four times in
1993. The duties of the Audit Committee include meeting with the
independent auditors, management, internal auditors and credit review
personnel periodically to review the work of each and ensure that each
is properly discharging its responsibilities.
The members of the Compensation and Management Development Committee
are Messrs. Bernard A. Edison, Chairman, Harry M. Cornell, Jr., Thomas
A. Hays, James B. Malloy and Harvey Saligman. The Compensation and
Management Development Committee, which met three times in 1993,
reviews and approves the salaries of executive officers of the
Corporation and Mercantile Bank, as well as selected subsidiary chief
executive officers, and authorizes all other forms of executive
compensation. The Compensation and Management Development Committee
administers Mercantile's executive incentive plans.
The members of the Community Relations Committee are Messrs. Earl K.
Dille, Chairman, Craig D. Schnuck and Joseph G. Werner. The Community
Relations Committee met three times in 1993. The Community Relations
Committee reviews the implementation and administration of all programs
and initiatives intended to meet the credit needs of the communities
served by the Corporation's banking subsidiaries and acts to ensure
compliance by such subsidiaries with the Community Reinvestment Act and
all rules and regulations promulgated pursuant thereto.
The members of the Credit Policy Committee are Messrs. William G.
Heckman, Chairman, Earl K. Dille, James B. Malloy, Charles H. Price II,
Robert W. Staley and Robert L. Stark. The Credit Policy Committee was
established in July 1993 and met one time since such date in 1993. The
Credit Policy Committee reviews the Corporation's position on credit
and credit-related issues and the policies and guidelines formulated
and developed by the Corporation to manage credit risk levels
consistent with such position and with all applicable laws, rules and
regulations.
The members of the Executive Committee are Messrs. Thomas H.
Jacobsen, Chairman, Richard P. Conerly, Earl K. Dille, Bernard A.
Edison, Thomas A. Hays and William G. Heckman. The Executive Committee
may exercise all powers of the Board of Directors which may lawfully be
delegated when the Board of Directors is not in session. The Executive
Committee met six times in 1993.
The members of the Nominating and Board Affairs Committee, which
proposes nominees for election to the Board of Directors, are Messrs.
Thomas A. Hays, Chairman, Thomas H. Jacobsen and Harry M. Cornell, Jr.
The Nominating and Board Affairs Committee will consider written
recommendations of shareholders with regard to potential nominees.
Shareholder recommendations must contain certain information regarding
the potential nominee and comply with certain requirements for
presentation as set forth in Mercantile's By-laws. The Nominating and
Board Affairs Committee met four times in 1993.
DIRECTORS' FEES
Directors who are not officers of Mercantile or any of its
subsidiaries are paid an annual retainer, which, through September 1993
was $14,000, and $500 for attendance at each meeting of the Board of
Directors and its standing committees. Effective October 1, 1993, the
annual retainer and attendance fees for meetings of the Board of
Directors were increased to $15,000 ($17,000 for Committee Chairman)
and $1,000, respectively, with attendance fees for each committee
meeting remaining at $500.
7
<PAGE> 8
Pursuant to the Deferred Compensation Plan for Directors currently in
effect, a director of Mercantile can elect to defer, until after the
termination of services as director, the receipt of all or a portion of
the director's fees to which such person is entitled. Deferred fees are
payable in a single sum or in annual installments, at the option of the
director; provided, however, that all deferred amounts are to be paid
out not later than the end of the tenth calendar year after the
termination of the director's service on the Board. Until paid, such
fees bear interest at a varying monthly rate equal to the rate of
interest offered by Mercantile Bank on a long-term certificate of
deposit on the first business day of each month. The Mercantile
Bancorporation Inc. 1994 Stock Incentive Plan for Non-Employee
Directors is proposed for approval by the shareholders at this Annual
Meeting. If approved by the shareholders, this plan will supersede the
current Deferred Compensation Plan for Mercantile Directors. Reference
is made to Item 7, commencing on page 24 hereof, for a further
description of the Mercantile Bancorporation Inc. 1994 Stock Incentive
Plan for Non-Employee Directors.
Pursuant to the Retirement Plan for Directors, Mercantile provides
retirement benefits to non-employee directors who retire from the Board
after attaining 60 years of age and completing five years of service on
the Board of Directors. Benefits are generally paid monthly during such
director's life in the amount of 1/12 of the annual directors'
retainer, for the number of months equalling the number of months such
director served on the Board. Directors who were serving on July 1,
1989 and who remain on the Board until the age of 70 will receive
monthly benefits during their lifetimes following retirement without
regard to the number of years served.
BENEFICIAL OWNERSHIP OF STOCK BY MANAGEMENT
The following information is furnished as of March 10, 1994 to
indicate beneficial ownership by each director and by each executive
officer named in the Summary Compensation Table, individually, and all
directors and executive officers as a group, of shares of Mercantile's
Common Stock. Section 16(a) of the Securities Exchange Act of 1934
requires Mercantile's directors and executive officers ("Reporting
Persons") to file with the Securities and Exchange Commission initial
reports of ownership and reports of changes in ownership of Common
Stock and other equity securities of Mercantile. To Mercantile's
knowledge, based solely on its review of the copies of such reports
furnished to Mercantile and written representations by such directors
and executive officers that no other reports were required, during the
year ended December 31, 1993 all Section 16(a) filing requirements
applicable to Reporting Persons were timely met.
<TABLE>
<CAPTION>
AMOUNT BENEFICIALLY
NAME OF BENEFICIAL OWNER OWNED(1)
------------------------ -------------------
<S> <C>
Richard P. Conerly....................................................... 5,905(2)
Harry M. Cornell, Jr. ................................................... 1,250
Earl K. Dille............................................................ 1,500(3)
J. Cliff Eason........................................................... 500
Bernard A. Edison........................................................ 5,000
William A. Hall.......................................................... 2,959
Thomas A. Hays........................................................... 3,800(4)
William G. Heckman....................................................... 21,012(5)
Thomas H. Jacobsen....................................................... 191,415(6)
James B. Malloy.......................................................... 500
Charles H. Price......................................................... 221,493(7)
Harvey Saligman.......................................................... 2,659(8)
Craig D. Schnuck......................................................... 1,500(9)
Robert W. Staley......................................................... 1,000(10)
Robert L. Stark.......................................................... 1,545(11)
Patrick T. Stokes........................................................ 500
Francis A. Stroble....................................................... 827(12)
Joseph G. Werner......................................................... 17,834(13)
John A. Wright........................................................... 833(14)
W. Randolph Adams........................................................ 15,053(15)
8
<PAGE> 9
<CAPTION>
AMOUNT BENEFICIALLY
NAME OF BENEFICIAL OWNER OWNED(1)
------------------------ -------------------
Ralph W. Babb, Jr........................................................ 38,684(15)
Richard C. King.......................................................... 113,274(15)(16)
John W. McClure.......................................................... 30,395(15)
Directors and executive officers as a group (31 persons)................. 980,121(15)
(F)
- -----
(1) Based on 28,670,845 shares outstanding as of March 10, 1994 no
director or executive officer beneficially owned in excess of one
percent of the outstanding Common Stock and all directors and
executive officers as a group beneficially owned 3.4% of the
outstanding Common Stock and outstanding options and convertible
notes exercisable within 60 days of March 10, 1994. Unless
otherwise noted, each individual named has sole voting and
investment power with respect to all shares listed as beneficially
owned.
(2) Mr. Conerly holds 5,455 shares included above jointly with his
wife. Mr. Conerly has shared voting and investment power with
respect to these shares.
(3) All listed shares are held in the Martha V. Dille Trust, of which
Martha V. Dille and Earl K. Dille are trustees. Mr. Dille has
shared voting and investment power with respect to these shares.
(4) Mr. Hays holds all shares included above in a revocable trust of
which Mr. Hays is grantor, trustee and beneficiary.
(5) Mr. Heckman holds 20,000 shares included above in two trusts of
which Mr. Heckman is trustee and beneficiary. Mr. Heckman
disclaims beneficial ownership of the remaining 1,012 shares
included above, which are held in trusts of which he is a
co-trustee. Mr. Heckman has shared voting and investment powers
with respect to said 1,012 shares.
(6) As of March 10, 1994, Mr. Jacobsen held 29,900 shares included
above that are restricted shares subject to forfeiture by and
reversion back to Mercantile in the event that Mr. Jacobsen
terminates his employment with Mercantile during specified time
periods. Mr. Jacobsen holds 28,400 shares included above in a
trust of which Mr. Jacobsen is trustee. The total set forth in the
table above also includes 130,250 shares subject to stock options
held by Mr. Jacobsen that are either presently exercisable or
which are exercisable within 60 days of March 10, 1994.
(7) Mr. Price has disclaimed beneficial ownership of 78,324 shares
included above which are held in a trust of which Mr. Price is
co-trustee and income beneficiary. Mr. Price has shared voting and
investment power with respect to these shares. Mr. Price disclaims
beneficial ownership of 734 shares included above which are held
by his son. Mr. Price has no voting or investment power with
respect to these shares. Mr. Price disclaims beneficial ownership
of 100 shares included above which he holds as custodian for his
granddaughter. The total set forth above also includes 10,010
shares subject to stock options held by Mr. Price that are either
presently exercisable or which are exercisable within 60 days of
March 10, 1994, and 6,697 shares which are subject to conversion
rights under certain convertible subordinated capital notes which
are held by Mr. Price and by his son. Mr. Price disclaims
beneficial ownership with regard to 1,603 of such shares which are
subject to conversion rights.
(8) Mr. Saligman has disclaimed beneficial ownership of 278 shares
included above which are owned by his wife and 756 shares included
above which are owned by his wife as custodian for three children.
Mr. Saligman has no voting or investment power with respect to
these shares.
(9) Mr. Schnuck holds all of the shares included above jointly with
his wife. Mr. Schnuck has shared voting and investment power with
respect to these shares.
(10) Mr. Staley holds all of the shares included above in a revocable
trust of which Mr. Staley is grantor, trustee and beneficiary.
(11) Mr. Stark holds all of the shares included above in a revocable
trust of which Mr. Stark is grantor, trustee and beneficiary.
(12) Mr. Stroble holds 617 shares included above jointly with his wife.
Mr. Stroble has shared voting and investment power with respect to
these shares. An additional 200 shares included above are held in
his wife's revocable trust. Mr. Stroble has no investment or
voting power with regard to these shares and disclaims beneficial
ownership of same.
(13) Mr. Werner disclaims beneficial ownership of 11,164 shares
included above which are held by the Joseph L. Werner Residuary
Trust B f/b/o Clair Henriques. Mr. Werner is a co-trustee, but not
a beneficiary, of the trust.
(14) Mr. Wright holds all shares included above jointly with his wife.
Mr. Wright has shared voting and investment power with respect to
these shares.
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<PAGE> 10
(15) As of March 10, 1994, Messrs. Adams, Babb, McClure and all
directors and executive officers as a group held 7,000, 7,425,
6,450 and 80,450 shares, respectively, included above that are
restricted shares subject to forfeiture by and reversion back to
Mercantile in the event that the executive officer terminates his
employment with Mercantile during specified time periods. The
totals set forth in the table above also include 6,250, 17,250,
2,500, 16,000 and 321,030 shares subject to stock options held by
Messrs. Adams, Babb, King, McClure, and all directors and
executive officers as a group, respectively, that are either
presently exercisable or which are exercisable within 60 days of
March 10, 1994.
(16) Mr. King disclaims beneficial ownership of a total of 39,334
shares included above, 5,474 of which are held by his wife, 10,987
of which are held by a family trust, 11,437 of which are held by
his wife as custodian for his daughter, and 11,436 of which are
held in an irrevocable trust for the benefit of his son.
</TABLE>
COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE
REPORT TO SHAREHOLDERS REGARDING EXECUTIVE COMPENSATION
OVERALL POLICY
Mercantile's executive compensation program is designed to be closely
linked to corporate performance and returns to shareholders. To this
end, Mercantile has developed an overall compensation strategy and
specific compensation plans that tie a significant portion of executive
compensation to Mercantile's success in meeting specified performance
goals. The overall objectives in this strategy are to attract and
retain the best possible executive talent, to motivate these executives
to achieve the goals contained in Mercantile's business strategy, to
link executive and shareholder interests through equity-based plans,
and to provide a compensation package that recognizes and rewards
individual contributions, including job performance, as well as overall
business results.
Each year the Compensation and Management Development Committee (the
"Committee") conducts a full review of Mercantile's executive
compensation program. This review includes a comprehensive assessment
of the effectiveness of Mercantile's compensation program and a
comparison provided by independent consultants of Mercantile's
executive compensation, corporate performance and total return to
shareholders to a peer group of financial services companies that
represent Mercantile's most direct competitors for executive talent.
While the strongest competitors for executive talent are believed to be
regional bank holding companies with assets of greater than $7 billion
located primarily in the midwestern and southern United States,
competitor companies for certain executive positions may be non-banking
companies or may be located outside of the primary geographic
recruitment area. The bank holding companies included in the Keefe,
Bruyette and Woods 50 Index (the "KBW 50 Index"), which consists of 50
of the larger United States bank holding companies, and which
Mercantile has utilized for a comparison of total cumulative return to
shareholders included in this proxy statement, are not all necessarily
considered to be the competitors in the recruitment of executive
officers or for other executive compensation actions taken in 1993.
The Committee determines the compensation of all of the executive
officers who serve on Mercantile's Management Executive Committee,
including the named executive officers whose compensation is detailed
in this proxy statement. The Committee also sets compensation policies
for approximately 147 other officers, comprising the next most highly
compensated officers of Mercantile and its subsidiaries. In reviewing
the individual performance of the executives whose compensation is
detailed in this proxy statement (other than Mr. Jacobsen), the
Committee takes into account the views of Mr. Jacobsen.
The key elements of Mercantile's executive compensation program
consist of base salary, annual performance-based cash incentives, and
stock-based incentives such as stock options and restricted stock. The
Committee's policies with respect to each of these elements are
discussed below. In addition, while the elements of compensation
described below are considered separately, the Committee's policies
take into account the total compensation package of each executive
officer, including pension benefits, supplemental retirement benefits,
insurance and other benefits, along with the programs described below.
BASE SALARIES
Base salaries for executive officers who serve on Mercantile's
Management Executive Committee are initially determined by evaluating
the responsibilities of the position held and the skills, knowledge,
and experience of the individual, and by referring to the competitive
marketplace for executive talent, including a
10
<PAGE> 11
comparison to base salaries for comparable positions at other companies
deemed to be competitors of Mercantile in the hiring of comparable
executive officers. Base salaries for 1993 for such officers were
targeted at the median of peer regional bank holding companies. The
Committee determined that base salaries for executive officers will
generally be reviewed on an asset-size adjusted basis beginning 1994.
Analysis of comparisons provided by independent consultants indicated
that executive officers' base salaries are currently at the median base
salary levels of peers.
Salary adjustments in respect of such executive officers are
determined annually by evaluating the competitive marketplace and the
performance of Mercantile and of such executive officer during the
preceding year and, when applicable, taking into account new
responsibilities assigned to the executive officer during the year. In
the case of those executive officers with responsibility for a
particular business unit, such unit's financial results are also
considered. For 1993, executive officers received minimal base salary
increases of up to 3% over their respective 1992 base salaries.
The base salary granted to Mr. Jacobsen in 1993 is thought by the
Committee to be competitive in the external marketplace and reflective
of Mercantile's success in meeting its financial goals in 1992 and the
assessment by the Committee of Mr. Jacobsen's individual performance.
For 1993, Mr. Jacobsen was granted an increase of 3% over his 1992 base
salary.
ANNUAL INCENTIVES
Each of Mercantile's executive officers are eligible for an annual
cash incentive award. This cash award is designed to provide an
incentive for the participating executive officers to achieve annual
performance goals which are based on individual, business unit and
corporate measures. For 1993, the target opportunities for the
executive officers were based upon the 75th percentile of incentive
opportunities at peer regional bank holding companies. Performance
objectives for the funding of the annual incentive target opportunities
were based on achievement of net income and return on asset goals set
by the Committee at the beginning of 1993. The Corporation met both
goals. Additionally, each executive officer was given specific
objectives with respect to the Corporation, business unit and
individual performance, including, but not limited to, asset growth,
asset quality, deposit growth, and productivity improvement. The named
executives met their objectives in 1993. Mr. Jacobsen also participates
in the annual incentive program. For 1993, Mr. Jacobsen's incentive
target was based on individual performance and on the Corporation's
achievement of strategic objectives for net income, return on assets
and productivity improvement which were met. The Committee determined
that target incentive opportunities for the executive officers for 1994
would be established at the median as a percent of salary for the KBW
50 Index companies. Reference is made to Item 5 commencing on page 21
hereof for further description of the proposed Mercantile
Bancorporation Inc. 1994 Executive Incentive Compensation Plan.
STOCK-BASED INCENTIVES
Under Mercantile's 1987 Stock Option Plan and the 1991 Employee
Incentive Plan, stock options and restricted stock may be granted to
Mercantile's executive officers. The Committee sets guidelines for the
size of stock option and restricted stock awards based on the
responsibilities of the position held, the skills, knowledge and
experience of the executive officer, the competitive compensation data
from the peer group and the Corporation's financial performance. The
Committee also established a target grant level at the 75th percentile
of high-performing bank holding companies for 1993, believing that it
would provide the incentive necessary to continue the momentum of
improvement in shareholder value.
Stock options and restricted stock awards are designed to align the
interests of executives with those of the shareholders. Stock options
are granted with an exercise price equal to the market price of the
Common Stock on the date of grant and vest over four years beginning
one year following the date of grant. Restricted stock awards also
typically vest over a period of at least five years beginning three
years following the date of grant. This approach is designed to focus
the executives on the creation of shareholder value over the long term
since the full benefit of the compensation package cannot be realized
unless stock price appreciation occurs over a number of years.
11
<PAGE> 12
The Committee determined that beginning in 1994, stock-based, long-
term incentives would be based on 75th percentile practices of the KBW
50, and that annual awards would be a combination of stock options and
restricted performance units. Reference is made to Item 4 commencing on
page 20 hereof for a further description of grants under the proposed
Mercantile Bancorporation Inc. 1994 Stock Incentive Plan.
In 1993, Mr. Jacobsen received options to purchase 100,000 shares
with an exercise price of $48.75 per share. This represents, in part, a
competitive grant level compared to annual grants by the peer group
companies, in accordance with the target grant levels established by
the Committee, and also serves to recognize achievement of financial
goals and improvement in overall corporate performance in 1992.
Specifically, the Committee felt that special recognition was
appropriate for the successful turnaround of the Corporation
considering the scope of the challenge. The accomplishment was
especially noteworthy given the total return to shareholders over the
turnaround period.
DEDUCTIBILITY OF EXECUTIVE OFFICER COMPENSATION
The Committee's policy with respect to the tax deductibility of
executive compensation above $1 million is to structure benefit plans
in such a manner that permits the deductibility of such compensation
under Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code") when Mercantile can do so without material change to its
overall compensation program.
THE COMPENSATION AND MANAGEMENT
DEVELOPMENT COMMITTEE
BERNARD A. EDISON
(CHAIRMAN)
HARRY M. CORNELL, JR. THOMAS A. HAYS
JAMES B. MALLOY HARVEY SALIGMAN
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the compensation of the named
executive officers for each of the last three years:
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
-------------------------------------------------------------------------
OTHER RESTRICTED SECURITIES ALL OTHER
ANNUAL STOCK UNDERLYING COMPEN-
SALARY BONUS COMPENSATION AWARDS(1) OPTIONS SATION(2)
NAME & PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($)
- ------------------------- ---- ------ ----- ------------ ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Thomas H. Jacobsen 1993 $525,300 $392,662 $32,869 0 100,000 $92,828
Chairman, President and 1992 510,000 331,500 31,856 0 20,500 44,618
Chief Executive Officer 1991 485,000 315,250 $996,000 0
Ralph W. Babb, Jr.(3) 1993 229,300 141,593 4,782 0 25,000 31,750
Vice Chairman 1992 222,600 122,430 3,468 0 5,000 18,383
1991 212,000 84,800 297,000 0
Richard C. King(4) 1993 250,000 115,000 3,362 0 10,000 40,771
President and Chief 1992 N/A N/A N/A N/A N/A N/A
Executive Officer, 1991 N/A N/A N/A N/A
Mercantile Bank of
Kansas City
John W. McClure 1993 206,000 106,605 5,402 0 20,000 28,030
Executive Vice President - 1992 200,000 110,000 3,845 0 5,000 15,728
Community Banking 1991 190,550 60,400 258,000 0
W. Randolph Adams(3) 1993 194,500 109,406 5,317 0 20,000 26,360
Executive Vice President and 1992 189,000 91,000 4,396 276,500 0 16,695
Chief Financial Officer 1991 165,000 66,600 0 5,000
12
<PAGE> 13
(F)
- -----
(1) Restricted stock vests at the rate of 25% of total shares after
three years from the date of issuance, an additional 25% after four
years from the date of issuance and the balance of the shares after
five years from the date of issuance. As of December 31, 1993,
Messrs. Jacobsen, Babb, McClure and Adams held an aggregate of
38,200, 9,900, 8,600 and 7,000 shares of restricted stock,
respectively (including the restricted stock awards referred to in
the table), having an aggregate value on such date of $1,723,775,
$446,738, $388,075, and $315,875 respectively. Holders of shares of
restricted stock will receive dividends on such shares during the
period of restriction.
(2) Included in the totals set forth in this column in respect of
Messrs. Jacobsen, Babb, King, McClure, and Adams are the profit
sharing and/or matching contributions of $60,129, $25,398, $30,124,
$20,727 and $18,735 for their respective accounts under
Mercantile's Savings and Incentive Plan, Supplemental Savings Plan
and Stock Purchase Plan, and premiums of $32,699, $6,352, $10,647,
$7,303 and $7,625 paid by Mercantile on life insurance policies for
such officers, respectively, under Mercantile's Management Life
Insurance Plan.
(3) The foregoing reflects principal position as of February 1, 1994,
in respect of each of Mr. Babb and Mr. Adams.
(4) Mr. King's employment with Mercantile commenced on January 4, 1993.
</TABLE>
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
The following tables sets forth information concerning stock option
grants made in the fiscal year ended December 31, 1993 to the
individuals named in the Summary Compensation Table:
<CAPTION>
GRANT DATE
INDIVIDUAL GRANTS VALUE VALUE
--------------------------------------------------------------------- ----------------
NUMBER OF
SECURITIES PERCENT OF
UNDERLYING TOTAL OPTIONS GRANT DATE
OPTIONS GRANTED EXERCISE OR PRESENT
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION VALUE(2)
NAME (1)(#) FISCAL YEAR ($/SH) DATE ($)
--- ---------- ------------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Thomas H. Jacobsen................. 100,000 25.98% $48.75 1/20/03 $ 921,004
Ralph W. Babb, Jr.................. 25,000 6.50 48.75 1/20/03 230,251
Richard C. King.................... 10,000 2.60 48.75 1/20/03 92,100
John W. McClure.................... 20,000 5.20 48.75 1/20/03 184,201
W. Randolph Adams.................. 20,000 5.20 48.75 1/20/03 184,201
All Optionees...................... 384,850 100.00 48.80(3) Various 3,568,415
(F)
- -----
(1) The exercise price may be paid in cash or by shares of Mercantile's
Common Stock already owned or to be issued pursuant to the
exercise, valued at fair market value on the date of exercise, or a
combination of cash and Mercantile's Common Stock. Options
generally terminate on the earlier of: ten years after grant;
immediately on termination of employment for reasons other than
retirement, disability or death; three months after termination of
employment for retirement; or twelve months after termination for
death or disability. On a change of control of Mercantile, as
described under "Employment Arrangements" herein, all options
become fully exercisable and include optional SARs for six months
and one week following the change of control.
(2) Option values are based upon the Black-Scholes option pricing
model. Such model assumes: (a) an option term of 10 years; (b) an
expected risk-free rate of 6.5%; (c) a volatility of 0.2549,
calculated using stock prices for the five years (20 quarters)
prior to the grant date; (d) a dividend yield of 5.19%, also based
on the five-year quarterly data prior to the grant; and (e) a
cumulative vesting restrictions discount of 7.7% (3% for each year
the options remain unvested).
(3) Weighted Average.
</TABLE>
13
<PAGE> 14
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION VALUES
The following table sets forth information concerning option
exercises in the fiscal year ended December 31, 1993, and options
remaining unexercised at December 31, 1993, by the individuals named in
the Summary Compensation Table.
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
SECURITIES UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS AT OPTIONS AT FISCAL
FISCAL YEAR-END(#) YEAR-END(1) ($)
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE ($) VALUE REALIZED ($) UNEXERCISABLE UNEXERCISABLE
---- --------------- ------------------ ---------------------- --------------------
<S> <C> <C> <C> <C>
Thomas H. Jacobsen................. N/A N/A 80,125/ $1,421,953/
135,375 458,984
Ralph W. Babb, Jr.................. N/A N/A 8,500/ 168,500/
30,000 45,313
Richard C. King.................... N/A N/A -0-/ -0-/
10,000 -0-
John W. McClure.................... N/A N/A 8,500/ 168,500/
25,000 45,313
W. Randolph Adams.................. 2,500 65,625 -0-/ -0-/
22,500 47,188
(F)
- -----
(1) Based on a price per share of $45.125, being the last closing sale
before the 1993 fiscal year end.
</TABLE>
EMPLOYMENT ARRANGEMENTS
All executive officers named in the Summary Compensation Table (other
than Mr. King), and certain other executive officers are parties to
individual employment agreements with Mercantile. These agreements
define each such executive officer's employment arrangement with
Mercantile prior to a change of control of Mercantile. Terms of such
employment agreements for all affected executive officers other than
Mr. Jacobsen expire on June 30, 1995. The agreements further provide
that if the employment of the executive officer is terminated prior to
the end of the term of the agreement by the executive officer for good
reason or by Mercantile for any reason other than death, disability or
cause, Mercantile will be obligated to continue the then-current base
salary of the executive officer and all benefits for the remaining term
of the agreement.
Each of the executive officers named in the Summary Compensation
Table and certain other executive officers are also protected by
substantively similar contractual provisions from a decrease in
compensation, benefits, title or duties for a period of three years
after a change of control of Mercantile. Under such provisions, the
executive officer will be entitled to receive an amount equal to the
executive officer's then-current annual base salary and annual bonus in
the event that the executive officer remains employed with Mercantile
through the first anniversary of the change of control. Such agreements
additionally provide that if there is a decrease in compensation and
responsibilities of the executive officer or if the executive officer's
employment is terminated for any reason other than good cause or if the
officer resigns for good reason (or in the case of Mr. Jacobsen, if Mr.
Jacobsen resigns for any reason within 13 months) after a change of
control, Mercantile will be obligated to pay a lump-sum amount equal to
twice the executive officer's then-current annual base salary and
annual bonus, plus the value of certain other retirement benefits and
other payments foregone due to the termination, and to continue all
employee benefits through the remaining term of the agreement. If it is
determined that any payments made to an executive officer pursuant to
this agreement would subject the executive officer to an excise tax
pursuant to Section 4999 of the Code, Mercantile will also be obligated
to pay to the executive officer an additional amount sufficient to put
the executive officer in the same after-tax position as he would have
been in had no excise tax been imposed on such payment.
RETIREMENT PLANS
The following table shows the estimated annual pension benefit
payable to a covered participant at normal retirement age (65) under
Mercantile's qualified Retirement Plan and Trust (the "Retirement
Plan") as
14
<PAGE> 15
well as Mercantile's nonqualified Supplemental Retirement Plan (the
"Supplemental Plan"). The Supplemental Plan provides benefits to
certain participants that would otherwise be denied them by reason of
certain Code limitations on Retirement Plan benefits.
<TABLE>
PENSION PLAN TABLE
<CAPTION>
YEARS OF SERVICE(1)(2)
FINAL AVERAGE -------------------------------------------------------------------------------------------------
SALARY 10 15 20 25 30
- ------------- -- -- -- -- --
<S> <C> <C> <C> <C> <C>
$ 150,000...................... $ 24,103 $ 36,154 $ 48,206 $ 60,257 $ 72,308
350,000...................... 57,603 86,404 115,206 144,007 172,808
550,000...................... 91,103 136,654 182,206 227,757 273,308
750,000...................... 124,603 186,904 249,206 311,507 373,808
950,000...................... 158,103 237,154 316,206 395,257 474,308
1,150,000...................... 191,603 287,404 383,206 479,007 574,808
(F)
- -----
(1) The credited years of service for the five individuals listed in
the Summary Compensation Table have been determined to be 10 for
Mr. Jacobsen, 14 for Mr. Babb, 1 for Mr. King, 21 for Mr. McClure,
and 2 for Mr. Adams.
(2) The maximum amount payable under the Retirement Plan is limited by
the Code to $118,800 annually, subject to cost of living increases
after 1994, certain transition rules applicable to benefits accrued
before July 1, 1982, and reduction by reason of contributions under
tax-qualified defined contribution plans maintained by Mercantile.
To the extent benefits under the Retirement Plan are limited by the
Code, they will be paid under the Supplemental Plan.
</TABLE>
Under these plans, eligible employees receive annual retirement
benefits based upon the highest "Annual Average Salary" received for
any period of 60 consecutive months preceding the date of termination
of employment (the "Final Average Salary"). "Annual Average Salary" is
defined as all compensation received by a participant for personal
services performed for Mercantile or a subsidiary as an employee (other
than compensation pursuant to stock-based plans, which is specifically
excluded by the terms of the Retirement Plan and the Supplemental
Plan). The compensation covered by the definition of "Average Annual
Salary" for each of the five individuals named in the Summary
Compensation Table is equal to the sum of the "Salary" and "Bonus"
columns of the Summary Compensation Table with respect to each
individual. The table above presents annual retirement benefits payable
as a single life annuity under both plans combined.
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
The officers and directors of Mercantile are at present, as in the
past, customers of one or more of Mercantile's subsidiary banks and
have had and expect to have transactions with such banks in the
ordinary course of business. In addition, certain of the officers and
directors of Mercantile are at present, as in the past, also officers,
directors or principal shareholders of corporations which are customers
of such banks and which have had and expect to have transactions with
such banks in the ordinary course of business. All such transactions
were made in the ordinary course of business, were made on
substantially the same terms, including interest rates and collateral,
as those prevailing at the time for comparable transactions with other
persons, and did not involve more than normal risk of collectibility or
present other unfavorable or unusual features.
15
<PAGE> 16
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG MERCANTILE, S&P 500 AND KBW 50 INDICES
The following graph compares cumulative five-year shareholder returns
(including reinvestment of dividends) on an indexed basis with the S&P
500 Stock Index and the Keefe, Bruyette & Woods 50 Index, which is
composed of 50 of the nation's larger banking companies, including all
money-center and most major regional banks.
[ COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG MERCANTILE, S&P 500 AND KBW 50 INDICES GRAPH ]
<TABLE>
<CAPTION>
1988 1989 1990 1991 1992 1993
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Mercantile $100.0 $107.4 $92.3 $172.7 $228.8 $220.5
S&P 500 100.0 131.6 127.5 166.2 178.8 196.7
KBW 50 100.0 118.9 85.4 135.2 172.2 181.8
</TABLE>
ITEM 2. PROPOSAL TO AMEND THE ARTICLES OF INCORPORATION
TO INCREASE THE AUTHORIZED NUMBER OF SHARES OF COMMON STOCK
The Board of Directors has recently approved a proposal to amend
Article 3 of the Restated Articles of Incorporation, as amended (the
"Restated Articles"), to increase the number of shares of Common Stock,
$5.00 par value, authorized thereunder from 70,000,000 to 100,000,000,
and has directed that the proposal be submitted to the vote of the
shareholders at the Annual Meeting. Mercantile also has a class of
Preferred Stock, no par value, authorized pursuant to Article 3 of its
Restated Articles. No change to the number of shares of Preferred Stock
presently authorized is being made pursuant to this proposed amendment.
On March 10, 1994, the record date for the Annual Meeting, 28,670,845
shares of Mercantile's Common Stock were issued and outstanding. In
addition, approximately 1,983,210 shares of Common Stock will be
required to satisfy Mercantile's potential obligations under its stock-
based benefit plans and convertible debt instruments. The payment of
the stock split on April 11, 1994 will require the issuance and
reservation of approximately 15,327,027 additional shares. Accordingly,
Mercantile would have approximately 24,018,918 authorized shares of its
Common Stock that were not issued, reserved or designated for issuance
as described above.
The Board of Directors of Mercantile believes that it is in the best
interests of Mercantile and its shareholders to increase the number of
authorized but unissued shares of its Common Stock. The increase will
provide a reserve of shares available for issuance upon authorization
of the Board for any general corporate purpose (including, without
limitation, stock dividends and/or split-ups) without the necessity of
soliciting further shareholder approval.
16
<PAGE> 17
Except as set forth in this proxy statement, Mercantile has no
understandings, arrangements or agreements currently contemplated that
would require the issuance of additional shares of Common Stock. The
authorized shares will, however, be used from time to time in
connection with future acquisitions, capital raising, stock-based
employee benefit plans and other stock requirements of Mercantile. The
additional shares of Common Stock for which authorization is sought
herein would be identical to the shares of Common Stock now authorized
under the Restated Articles. The amendment to increase the number of
authorized shares will not affect the legal rights of the holders of
the existing shares of Common Stock.
Adoption of the proposed amendment could render more difficult any
attempted takeover of Mercantile that is opposed by Mercantile's Board
of Directors. The Board of Directors may issue, without further action
or approval of the shareholders, additional shares of Common Stock to
the public, thereby increasing the number of shares that would have to
be acquired to effect a change of control of Mercantile.
Mercantile's Restated Articles and By-laws also contain certain
provisions which: (i) classify the Board of Directors into three
classes and stagger the terms of office of such classes over three
years; (ii) require the affirmative vote of the holders of at least 75%
of the voting power of all of the outstanding shares entitled to vote
in the election of directors to remove a director without cause; (iii)
require the affirmative vote of the holders of at least 75% of the
voting power of the outstanding shares of Mercantile's capital stock to
approve certain "business combinations" with "interested parties"
unless at least two-thirds of the Board of Directors first approves
such transactions; and (iv) require the affirmative vote of the holders
of at least 75% of the voting power of the outstanding shares of
Mercantile's capital stock for the amendment, alteration, change or
repeal of any of the above provisions unless at least two-thirds of the
Board of Directors first approves such action. Such provisions may have
the effect of making a change of control of Mercantile more difficult.
In addition, Mercantile's By-laws contain certain provisions that
could make it more difficult for shareholders to propose nominees for
election as directors or to bring other matters before annual meetings
of the shareholders. The By-laws provide that shareholders seeking to
propose nominees or to bring other matters before an annual meeting
must meet certain designated procedural requirements, including
specifying certain information regarding the nominee or the matter to
be presented in a notice delivered to Mercantile not less than 30 nor
more than 60 days prior to the date of the meeting. These provisions
may be deemed to have a deterrent effect on potential takeover bids.
The Restated Articles also provide for the issuance of up to
5,000,000 shares of Preferred Stock, none of which have been issued to
date. The Board of Directors is authorized, without further shareholder
action or approval, to set such rights and conditions of the Preferred
Stock as it deems appropriate, including dividend rates, redemption
features, liquidation rights, conversion rights, voting rights and such
other preferences, qualifications, limitations, restrictions and
special rights. The issuance of Preferred Stock with certain terms and
conditions under certain circumstances may render a change of control
of Mercantile more difficult.
The Board of Directors of Mercantile has created a series of
Preferred Stock, designated as Series A Junior Participating Preferred
Stock (the "Series A Preferred Stock"), in conjunction with its
adoption of a preferred share purchase rights plan (the "Rights Plan").
Currently, one preferred share purchase right (the "Right") trades with
each share of Common Stock. Such Right will not be exercisable and will
continue to trade in tandem with the Common Stock until the tenth day
after the public announcement that a person or group of related persons
has acquired, or has commenced a tender offer to acquire, beneficial
ownership of 20% or more of Mercantile's outstanding Common Stock. Upon
the Right becoming exercisable, each Right will entitle the holder
thereof to purchase one one-hundredth of a share of Series A Preferred
Stock at a price of $100. In the event that a person or group acquires
beneficial ownership of 20% or more of Mercantile's Common Stock, each
Right (other than the Rights held by the acquiring person or its
affiliates) will allow the holder thereof to purchase the number of
shares of Mercantile's Common Stock having a market value equal to
twice the purchase price set forth in the Right. If Mercantile or a
majority of its assets or earning power is acquired, each Right (other
than those held by the acquiring person or its affiliates) will entitle
the holder to purchase the number of shares of Common Stock of the
surviving or acquiring entity having a market value equal to twice the
purchase price set forth in the Right.
The Rights Plan is designed to encourage potential acquirors to
negotiate with the Board of Directors of Mercantile prior to attempting
a takeover of Mercantile. While the Rights Plan is not intended to be a
bar to unsolicited acquisition proposals for Mercantile, the effect may
be to deter certain unsolicited takeover bids.
17
<PAGE> 18
The complete text of the proposed amendment to the Restated Articles
is set forth in Appendix A to this Proxy Statement.
Adoption of the proposed amendment to Article 3 of Mercantile's
Restated Articles will require the affirmative vote of the holders of a
majority of the outstanding shares of Common Stock of Mercantile. The
Board of Directors recommends a vote "FOR" the proposed amendment to
Article 3 of the Restated Articles.
ITEM 3. PROPOSAL TO ADOPT MERCANTILE BANCORPORATION INC.
1994 STOCK INCENTIVE PLAN
The Board of Directors has adopted, subject to approval by the
shareholders of Mercantile, the Mercantile Bancorporation Inc. 1994
Stock Incentive Plan (the "Plan"), which provides for the granting of
stock options and other stock-based awards. The Plan is in addition to
the existing 1987 Stock Option and 1991 Employee Incentive Plans
(collectively, "Prior Plans") which will remain in place until the
grants outstanding thereunder are exercised and/or forfeited or until
such plans expire, although no further grants will be made thereunder.
The total number of shares of Mercantile Common Stock issuable under
the Plan is not to exceed 1,500,000 shares (on a pre-split basis), plus
(a) any shares issued pursuant to awards made under the Plan which are
forfeited in accordance with Plan provisions, (b) any shares provided
for under any Prior Plan which are either not issued or are returned to
Mercantile due to cancellation, grant expiration or forfeiture in
accordance with the provisions of any such Prior Plan, and (c) any
shares which have been exchanged in full or partial payment in
connection with the exercise of any award under the Plan or any Prior
Plan. The shares issuable under the Plan, as aforesaid, shall be
subject to adjustment in the event of any change in the outstanding
shares of such stock by reason of a stock dividend, stock split,
recapitalization, merger, consolidation or other similar changes
generally affecting shareholders of Mercantile.
The Board of Directors believes that the Plan will advance the
interests of Mercantile and its shareholders by providing additional
incentives and motivation toward superior performance and by enabling
Mercantile and its subsidiaries to attract and retain the services of
key employees upon whose judgment, talents and special effort the
successful conduct of its operations is largely dependent. The vote
required to approve the Plan is a majority of the shares of
Mercantile's Common Stock present, in person or by proxy, and voting at
the Annual Meeting.
The Plan is administered by the Compensation and Management
Development Committee of the Board of Directors (the "Committee"),
consisting of three or more non-employee directors of Mercantile.
Members of the Committee are not eligible to be awarded stock options,
stock appreciation rights or stock grants under the Plan. The
Committee, by majority action thereof, is authorized in its sole
discretion to determine the individuals to whom the awards will be
granted, the type and amount of such awards and the terms thereof, as
well as to interpret the Plan, to prescribe, amend and rescind rules
and regulations relating to the Plan, to provide for conditions and
assurances deemed necessary or advisable to protect the interests of
Mercantile, and to make all other determinations necessary or advisable
for the administration of the Plan to the extent not contrary to the
express provisions of the Plan.
The Committee, subject to adoption of the Plan by the shareholders of
Mercantile, has approved the following Stock Option and Stock Grant
awards (on a pre-split basis) to each of the executive officers: Stock
Options for 72,000 shares and restricted performance units for 8,000
shares for Mr. Jacobsen; Stock Options for 22,500 shares and restricted
performance units for 2,600 shares for Mr. Babb; Stock Options for
16,500 shares and restricted performance units for 2,000 shares for Mr.
King; Stock Options for 22,500 shares and restricted performance units
for 2,600 shares for Mr. McClure; Stock Options for 22,500 shares and
restricted performance units for 2,600 shares for Mr. Adams; Stock
Options for 237,300 shares and restricted performance units for 27,400
shares for all executive officers as a group and Stock Options for
461,830 shares and restricted performance units for 27,400 shares for
all employees as a group. The subject restricted performance units are
stock-based grants, the performance criteria for which are described in
Item 4, commencing on page 20 hereof.
The complete text of the Plan is set forth in Appendix B to this
Proxy Statement. The following summary of certain provisions of the
Plan is qualified in its entirety by reference to the full Plan.
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DESCRIPTION OF PLAN
Any current employee of Mercantile and its subsidiaries will be
eligible to receive (a) stock options ("Stock Options") which may or
may not qualify as incentive stock options within the meaning of
Section 422 of the Code, (b) stock appreciation rights ("SARs") and/or
(c) stock-based grants for Mercantile Common Stock ("Stock Grant").
Stock Options. Stock Options granted under the Plan shall entitle the
holder thereof to purchase Mercantile's Common Stock at the "Base
Price" established therefore by the Committee, which price shall not be
less than the "Fair Market Value" (as defined in the Plan) of
Mercantile's Common Stock at the time of grant. The Stock Option may be
exercised at any time during the term of the option as determined by
the Committee at the time of the grant.
There is no maximum or minimum number of shares for which a Stock
Option may be granted; provided, however, for any employee, the
aggregate Fair Market Value of Common Stock subject to qualifying
incentive stock options that are exercisable for the first time in any
calendar year may not exceed the limits established therefore from time
to time under Section 422 of the Code; and, provided further, that in
no event shall the maximum number of shares which may be awarded in the
form of Stock Options or SARs to any one individual exceed 225,000
shares (on a pre-split basis).
SARs. A SAR gives to the holder thereof a right to receive, at the
time of surrender, Mercantile's Common Stock equal in value to the
difference between the Fair Market Value of such stock at the date of
surrender of the SAR and the "Base Price" established by the Committee
therefore at the time of grant, subject to any limitation imposed by
the Committee on appreciation. The "Base Price" shall not be less than
the Fair Market Value of Mercantile's Common Stock on the date of the
grant of the SAR. A SAR may be granted either independent of, or in
conjunction with, any Stock Option. If granted in conjunction with a
Stock Option, at the discretion of the Committee, a SAR may either be
surrendered (a) in lieu of the exercise of such Stock Option, (b) in
conjunction with the exercise of such Stock Option, or (c) upon
expiration of such Stock Option and SAR and shall be awarded in such
number and under such terms and conditions as are determined
appropriate by the Committee. In no event shall the maximum number of
shares which may be awarded in the form of SARs or Stock Options to any
individual exceed 225,000 shares (on a pre-split basis).
Stock Grants. The Committee may issue shares or units equivalent in
value to shares of Mercantile's Common Stock to designated employees in
such amounts and under such terms and conditions, including vesting and
payout, as the Committee shall determine appropriate at the time of the
award, including, without limitations, achievement of specific business
objectives and other measurements of individual, business unit or
organization performance. The total number of shares of Mercantile's
Common Stock available for Stock Grants is 320,000 shares (on a pre-
split basis), unless such grants were awarded as the payment form for
grants or rights under any other employee or compensation plan of
Mercantile.
In the event of any "Change in Control" (as defined in the Plan) all
awards outstanding under the Plan become immediately and fully
exercisable or payable in accordance with Plan provisions. Also in the
event of a Change in Control or in the event of the liquidation or
reorganization of Mercantile, the Committee is authorized to provide
for such adjustments and/or settlement arrangements as the Committee
determines appropriate, whether at the time of award or a subsequent
date.
The Plan is to remain in effect until (a) all Common Stock reserved
under the Plan shall have been purchased or acquired, (b) the date the
Board terminates the Plan, or (c) April 27, 2004, whichever shall first
occur. The Board, by majority action thereof, at any time may
terminate, and from time to time may amend or modify the Plan;
provided, however, that no such action of the Board may, without the
approval of the shareholders of Mercantile: (a) increase the total
amount of shares which may be issued under the Plan: (b) cause the Plan
not to comply with either Rule 16b-3 under the Securities Exchange Act
of 1934, as amended, or Section 162(m) of the Code. No amendment,
modification or termination of the Plan shall in any manner adversely
affect any award theretofore granted under the Plan, without the
consent of the participant affected thereby.
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<PAGE> 20
FEDERAL INCOME TAX CONSEQUENCES
No income will be realized by a participating officer or employee on
the grant of an incentive stock option or an option which is not an
incentive stock option ("non-qualified option"), or the grant of a SAR.
No income will be realized by a participant, officer or employee upon
the award of a Stock Grant if the Stock Grant is subject to conditions
which constitute a substantial risk of forfeiture within the meaning of
Section 83 of the Code. Mercantile will not be entitled to a deduction
at the time a Stock Option or SAR is granted, or at the time of award
of a Stock Grant which is subject to a substantial risk of forfeiture.
If a holder exercises an incentive stock option and does not dispose of
the shares acquired within two years from the date of the grant, or
within one year from the date of exercise of the Stock Option, no
income will be realized by the holder at the time of exercise.
Mercantile will not be entitled to a deduction by reason of the
exercise.
If a holder disposes of the shares acquired pursuant to an incentive
stock option within two years from the date of grant of the option or
within one year from the date of exercise of the option, the holder
will realize ordinary income at the time of disposition which will
equal the excess, if any, of the lesser of (a) the amount realized on
the disposition, or (b) the fair market value of the shares on the date
of exercise, over the holder's basis in the shares. Mercantile
generally will be entitled to a deduction in an amount equal to such
income in the year of the disqualifying disposition.
Upon the exercise of a non-qualified option, the excess, if any, of
the fair market value of the stock on the date of exercise over the
purchase price is ordinary income to the holder as of the date of
exercise. Mercantile generally will be entitled to a deduction equal to
such excess amount in the year of exercise.
A holder will realize income as a result of the surrender of a SAR at
the time the stock is issued or the cash is paid. The amount of income
realized will be equal to the fair market value of shares issued on the
date of surrender of the SAR, plus the amount of cash, if any,
received. Mercantile will be entitled to a deduction equal to the
income realized in the year in which the SAR is surrendered for
payment.
The holder of a Stock Grant which is not subject to Committee-imposed
restrictions which constitute a substantial risk of forfeiture will
realize income at the time the Stock Grant is awarded. Subject to a
voluntary election by the holder under Section 83(b) of the Code, a
holder will realize income as a result of the award of Stock Grants
subject to Committee-imposed restrictions which constitute a
substantial risk of forfeiture at the time the restrictions expire on
such shares. An election in these cases pursuant to Section 83(b) of
the Code would have the effect of causing the holder to realize income
in the year in which such award was granted. The amount of income
realized will equal the fair market value of the Shares or share
equivalent at the time that any restrictions lapse or otherwise cease
to constitute a substantial risk of forfeiture (or on the date of award
of the Stock Grant, in the event of a Section 83(b) election or the
award of a Stock Grant which is not subject to a substantial risk of
forfeiture) over the purchase price, if any, of such shares. Mercantile
generally will be entitled to a deduction equal to the income realized
in the year in which the holder is required to report such income.
The Board of Directors recommends a vote "FOR" the adoption of the
Mercantile Bancorporation Inc. 1994 Stock Incentive Plan.
ITEM 4. PROPOSAL TO QUALIFY RESTRICTED PERFORMANCE
UNIT GRANTS UNDER MERCANTILE BANCORPORATION INC.
1994 STOCK INCENTIVE PLAN AS "PERFORMANCE-BASED"
The Board of Directors has adopted, subject to approval by the
shareholders of Mercantile, a structure for grants of restricted
performance units under the Mercantile Bancorporation Inc. 1994 Stock
Incentive Plan in order to qualify such grants as "performance-based"
under federal tax legislation enacted in 1993.
Pursuant to the Plan, if approved by the shareholders of Mercantile,
the Compensation and Management Development Committee of the Board of
Directors granted restricted performance units to selected senior
Mercantile officers. Grants of restricted performance units entitle the
recipient to receive one share of Mercantile's Common Stock for each
unit based upon Mercantile's performance over a multi-year period as
compared to preestablished financial objectives. Approval of the
performance-based structure adopted by the
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Board of Directors is necessary if the restricted performance units for
1994 and subsequent years are to be fully tax deductible to Mercantile
under the Code when paid. The vote required to approve such structure
is a majority of the shares of Mercantile's Common Stock present, in
person or by proxy, and voting at the Annual Meeting.
The structure adopted by the Committee in respect of such restricted
performance unit grants is as follows:
. Grants will be made periodically as determined by the Committee;
. Performance will be measured over a 3-year performance period,
which may overlap with performance periods related to grants in
subsequent years;
. Grants made in 1994 will be earned based upon Mercantile's
earnings per share growth over the performance period. During the
term of the Plan, the Committee may also determine grants to be
earned based upon return on assets, net income, overhead ratio,
expense to assets ratio, total shareholder return, or net
interest rate margin, individually or in combination;
. The Committee shall exclude such extraordinary and non-recurring
items as its auditors may deem appropriate in determining the
aforementioned financial measures for these purposes;
. The number of restricted performance units earned as a percent of
the individual executive's total grant shall be determined solely
by a pre-established schedule or target level;
. No individual may be granted, subject to earnout, more than
12,000 restricted performance units (on a pre-split basis) in any
year under the structure proposed;
. Previously made grants will be null and void in the event the
Plan is not approved by shareholders; and
. This structure will remain in force and effect until amended by
the Committee and approved by the shareholders.
The Board of Directors recommends a vote "FOR" the adoption of the
restricted performance unit grant structure for grants of restricted
performance units under the Mercantile Bancorporation Inc. 1994 Stock
Incentive Plan.
ITEM 5. PROPOSAL TO ADOPT MERCANTILE BANCORPORATION INC.
1994 EXECUTIVE INCENTIVE COMPENSATION PLAN
The Board of Directors has adopted, subject to approval by the
shareholders of Mercantile, the Mercantile Bancorporation Inc. 1994
Executive Incentive Compensation Plan (the "Executive Incentive Plan")
to provide selected senior Mercantile officers with annual bonus
opportunities based upon preestablished performance objectives. The
Executive Incentive Plan will be administered by the Compensation and
Management Development Committee.
The Executive Incentive Plan is designed to qualify such bonus
opportunities as "performance-based" under federal tax legislation
enacted in 1993. Approval by the shareholders of this Executive
Incentive Plan is necessary if the bonus opportunity awards for 1994
and subsequent years are to be fully tax deductible to Mercantile under
the Code when paid. The vote required to approve the Executive
Incentive Plan is a majority of the shares of Mercantile's Common Stock
present, in person or by proxy, and voting at the Annual Meeting.
All senior officers of Mercantile, including, without limitation, the
Chief Executive Officer and other key executives of Mercantile, are
eligible to participate in the Executive Incentive Plan. The Committee,
by majority action thereof, is authorized in its sole discretion to
determine the senior officers who are to participate in the Executive
Incentive Plan and the amount and terms of any and all awards made
thereunder. The Committee is also authorized to interpret the Executive
Incentive Plan, to prescribe, amend and rescind rules and regulations
relating to the Executive Incentive Plan, to provide for conditions and
assurances deemed necessary or advisable to protect the interests of
Mercantile, and to make all other determinations necessary or advisable
for the administration of the Executive Incentive Plan to the extent
not contrary to the express provisions thereof.
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The complete text of the Executive Incentive Plan is set forth in
Appendix C to this Proxy Statement. The following summary of certain
provisions of the Executive Incentive Plan is qualified in its entirety
by reference to the full Executive Incentive Plan.
DESCRIPTION OF EXECUTIVE INCENTIVE PLAN
The Executive Incentive Plan provides for the creation of an
aggregate bonus pool for annual incentive opportunities based on
Mercantile's performance for the applicable year versus preestablished
objectives. Under the Executive Incentive Plan, the performance basis
for the determination of the bonus pool is both Mercantile's net income
and return on assets for the applicable year. During the term of the
Executive Incentive Plan, the Committee may also determine the bonus
pool based upon the Corporation's earnings per share growth, overhead
ratio, expense to assets ratio, total shareholder return or net
interest rate margin, individually or in combination.
Each participating employee is assigned a target bonus award at the
start of each year. Target awards are expressed as a percent of base
salary, as of the start of the applicable performance year. The highest
level of target award currently assigned is 75% of base salary. Actual
individual awards, subject to adjustment as described below, are
determined based upon a participant's performance as compared to
preestablished individual objectives. The aggregate of the individual
awards determined in this manner cannot exceed the aggregate bonus pool
developed as previously described. To the extent the available bonus
pool is not allocated, excess amounts may not be carried over for
allocation in a subsequent year.
The Executive Incentive Plan also provides for additional bonus
opportunity based upon the attainment of stretch objectives which are
preestablished with a high degree of difficulty of attainment. The
Committee determines the objectives from among those criteria cited
previously and has selected for the applicable year two productivity
measures. The productivity objectives established under the Executive
Incentive Plan are reductions in Mercantile's overhead ratio and its
expense to asset ratio. Depending upon Mercantile's actual productivity
increases, as measured against these two ratios, a participant's bonus
award and the bonus pool referred to above can be increased by up to an
additional 25%; thus, providing a maximum incentive opportunity of
93.75% of beginning of year base salary.
As described above, individual awards are a function of base salary
and achieved performance. Pursuant to the Executive Incentive Plan, no
one participant can receive more than 93.75% of beginning of year base
salary in any year under the Plan.
The Executive Incentive Plan will remain in effect until (a) the date
the Board terminates the plan, or (b) April 27, 1999, whichever shall
first occur. The Board, by majority action thereof, at any time may
terminate and from time to time may make further amendments or
modifications to the Executive Incentive Plan; provided, however, that
no such action of the Board may, without the approval of the
shareholders of Mercantile, cause the Executive Incentive Plan not to
comply with either Rule 16b-3 under the Securities Exchange Act of
1934, as amended, or Section 162(m) of the Code. No amendment,
modification or termination of the Executive Incentive Plan shall in
any manner adversely affect any award theretofore granted under the
plan, without the consent of the participant effected thereby.
The Board of Directors recommends a vote "FOR" the adoption of the
Mercantile Bancorporation Inc. 1994 Executive Incentive Compensation
Plan.
ITEM 6. PROPOSAL TO ADOPT MERCANTILE BANCORPORATION INC.
VOLUNTARY DEFERRED COMPENSATION PLAN
The Board of Directors has adopted, subject to approval by the
shareholders of Mercantile, the Mercantile Bancorporation Inc.
Voluntary Deferred Compensation Plan (the "Deferred Compensation Plan")
to provide a means by which key employees may defer, at their election,
all or a portion of their compensation for services rendered or to be
rendered to Mercantile.
The Board of Directors believes that the Deferred Compensation Plan
will advance the interests of Mercantile and its shareholders by
enabling the Corporation to attract and retain the services of key
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employees. The vote required to approve the Deferred Compensation Plan
is a majority of the shares of Mercantile's Common Stock present, in
person or by proxy, and voting at the Annual Meeting.
The complete text of the Deferred Compensation Plan is set forth in
Appendix D to this Proxy Statement. The following summary of certain
provisions of the Deferred Compensation Plan is qualified in its
entirety by reference to the full Deferred Compensation Plan.
DESCRIPTION OF THE DEFERRED COMPENSATION PLAN
Under the terms of the Deferred Compensation Plan, a qualifying
employee of Mercantile can defer the receipt of all or a portion of the
compensation to which such employee is or will be entitled until the
first to occur of any of the following events: "Change in Control" (as
defined in the Deferred Compensation Plan), death or disability of the
employee, termination of services as an employee or the date initially
elected by the employee for the distribution thereof. Cash compensation
amounts so deferred will be maintained, at the option of the electing
employee, as either cash balances, with the value thereof being
measured against changes in an investment index designated under the
provisions of the Deferred Compensation Plan, or as units, each of
which is the equivalent of one share of Mercantile Common Stock ("Stock
Units") in an account established by Mercantile for such employee's
benefit ("Deferred Compensation Account"). Deferred amounts to be
maintained as Stock Units will be credited to the Deferred Compensation
Account of such employee on a Fair Market Value-equivalent basis (as
defined in the Deferred Compensation Plan). That portion of the
Deferred Compensation Account of a participating employee consisting of
cash balances will be credited with the amount of any accretion in
value thereof based upon the applicable investment index. That portion
of the Deferred Compensation Account of a participating employee
consisting of Stock Units will be increased, quarterly, at the time
dividends are payable in respect of Mercantile's Common Stock, by Stock
Units equal to (a) the product of the per-share dividend then payable
with respect to Mercantile's Common Stock, multiplied by the number of
Stock Units previously credited to such account of the employee,
divided by (b) the Fair Market Value of Mercantile's Common Stock on
such date.
The total number of Stock Units in an employee's Deferred
Compensation Account and funds, if any, credited to such employee's
account shall be distributed to the employee in the form of
Mercantile's Common Stock in an equivalent amount and, as applicable,
in cash following the expiration of the Deferral Period. In lieu of
fractional shares of Mercantile's Common Stock, each employee entitled
to receive payments in respect of Stock Units will receive cash in an
amount determined by multiplying the fractional share interest to which
such employee would otherwise be entitled by the then Fair Market Value
thereof.
Stock Units credited under the Deferred Compensation Plan shall be
subject to adjustment in the event of any change in the outstanding
shares of Mercantile's Common Stock by reason of a stock dividend,
stock split, recapitalization, merger, consolidation or other similar
changes generally affecting shareholders of Mercantile or in the event
of any Change in Control.
The Board at any time may amend, suspend or terminate the Deferred
Compensation Plan at such time or times it deems such advisable,
provided that no amendment, suspension or termination shall alter or
impair any amounts then deferred by any employee without the consent of
the employee affected thereby.
FEDERAL INCOME TAX CONSEQUENCES
No income will be realized by an employee at the time amounts are
deferred, whether those amounts are recorded as cash balances or as
Stock Units nor will the employee realize income when deferred amounts
are credited with additional amounts representing interest, earnings or
dividend equivalents. Mercantile will not be entitled to a deduction at
the time amounts are deferred and credited to the account of an
employee.
Upon receipt of a distribution of stock from the Stock Unit
subaccount under the Deferred Compensation Plan, the employee will
realize income equal to the Fair Market Value of such stock at the date
of distribution. A distribution of cash, either with respect to a
fractional unit in the Stock Unit subaccount or with respect to a
balance recorded in cash, will also be treated as realized income by
the employee at the time of receipt. Mercantile will be entitled to a
deduction equal to the amounts includible in income by the employee in
the year stock and/or cash are distributed.
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ITEM 7. PROPOSAL TO ADOPT MERCANTILE BANCORPORATION INC.
1994 STOCK INCENTIVE PLAN FOR NON-EMPLOYEE DIRECTORS
The Board of Directors has adopted, subject to approval by the
shareholders of Mercantile, the Mercantile Bancorporation Inc. 1994
Stock Incentive Plan for Non-Employee Directors (the "Director Plan"),
which provides for the granting of stock-based awards to directors of
Mercantile Bancorporation Inc. who are not employees of Mercantile or
its subsidiaries ("Non-Employee Directors"). The Director Plan is
intended to provide Non-Employee Directors with an incentive and a
means by which they may increase their personal interest in the
continued success of the Corporation. The Director Plan further
provides a means by which Non-Employee Directors may defer, at their
election, all or a portion of their retainer and/or meeting fees.
The Board of Directors believes that the Director Plan will advance
the interests of Mercantile and its shareholders by providing such
incentives and enabling the Corporation and the subsidiaries to attract
and retain the services of well-qualified individuals to serve as Non-
Employee Directors. The vote required to approve the Director Plan is a
majority of the shares of Mercantile's Common Stock present, in person
or by proxy, and voting at the Annual Meeting.
The complete text of the Director Plan is set forth in Appendix E to
this Proxy Statement. The following summary of certain provisions of
the Director Plan is qualified in its entirety by reference to the full
Director Plan.
DESCRIPTION OF PLAN
Under the terms of the Director Plan, each Non-Employee Director will
receive units ("Stock Units"), each of which is the equivalent of one
share of Mercantile's Common Stock as, or as an adjunct to, their
annual retainer for services rendered or to be rendered as directors.
Stock Units will be awarded annually at the time of the annual meeting
of the Mercantile's shareholders ("Annual Awards") and quarterly, at
the time dividends are payable in respect of Mercantile's Common Stock
("Quarterly Awards") and credited to accounts ("Stock Unit Accounts")
established by Mercantile for the benefit of each Non-Employee
Director. Annual Awards to each Non-Employee Director will be limited
to the lesser of (a) the number of Stock Units determined by dividing
Ten Thousand Dollars ($10,000.00) by the "Fair Market Value" (as
defined in the Director Plan) at the time of the award, or (b) one
hundred (100) (on a pre-split basis). Quarterly Awards to each Non-
Employee Director will be in amounts equal to (a) a product of the per-
share dividend payable with respect to Mercantile's Common Stock on the
date of the award, multiplied by the number of Stock Units previously
credited to the account of such Non-Employee Directors account, divided
by (b) the "Fair Market Value" of a share of Mercantile's Common Stock
on that date.
In addition, pursuant to the Director Plan, a Non-Employee Director
can elect to defer until after the termination of services as a
director (or earlier Change in Control) the receipt of all or a portion
of the retainer and/or meeting fees to which such director is entitled.
Amounts so deferred will be credited, at the option of the electing
Non-Employee Director, to either (a) an interest-bearing cash account
established by Mercantile for the benefit of such Non-Employee Director
("Cash Account") which will be adjusted for gains or losses based upon
an index selected by the Non-Employee Directors, or (b) to such
director's Stock Unit Account. Deferred cash amounts credited to Stock
Unit Accounts will be contemporaneously converted to Stock Units on a
Fair Market Value-equivalent basis.
The total number of Stock Units in a Non-Employee Director's Stock
Unit Account and funds, if any, credited to such director's Cash
Account shall be distributed to the Non-Employee Director in the form
of Mercantile's Common Stock in an equivalent amount and, as
applicable, in cash following the termination of service of such Non-
Employee Director (or earlier Change in Control); provided, however,
that no distribution shall be made in respect of Annual Awards earlier
than twelve months following the date of such grant. In lieu of
fractional shares of Mercantile's Common Stock, each Non-Employee
Director entitled to receive payments in respect of Stock Units will
receive cash in an amount determined by multiplying the fractional
share interest to which such director would otherwise be entitled by
the then Fair Market Value thereof.
Stock Units credited under the Director Plan shall be subject to
adjustment in the event of any change in the outstanding shares of
Mercantile's Common Stock by reason of a stock dividend, stock split,
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<PAGE> 25
recapitalization, merger, consolidation or other similar changes
affecting generally shareholders of Mercantile or in the event of any
"Change in Control" (as defined in the Director Plan).
The Director Plan is to remain in place until terminated by the Board
of Directors. The Board at any time may amend or modify the Plan,
provided that no amendment may be made to the formulae for determining
the amount and timing of Stock Unit grants more often than once every
six months. No amendment, modification or termination of the Director
Plan shall in any manner adversely affect any award theretofore granted
under the Director Plan, without the consent of the participant
affected thereby.
FEDERAL INCOME TAX CONSEQUENCES
No income will be realized by a Non-Employee Director at the time
Stock Units are credited to the Stock Unit Account, whether by reason
of an Annual Award or the Non-Employee Director's election to defer
receipt of the retainer and/or meeting fees; nor will the Non-Employee
Director realize income when the deferred retainer and/or meeting fees
are credited to the Cash Account; nor will any income be realized by
the Non-Employee Director when dividend equivalents or earnings credits
are added to the Stock Unit Account or Cash Account, respectively.
Mercantile will not be entitled to a deduction at the time amounts are
credited to the Stock Unit Accounts or Cash Accounts.
Upon receipt of a distribution of stock from the Stock Unit Account,
the Non-Employee Director will realize income equal to the Fair Market
Value of such stock at the date of distribution. A distribution of
cash, either from the Cash Account or with respect to a fractional unit
in the Stock Unit Account, will also be treated as realized income by
the Non-Employee Director at the time of receipt. Mercantile will be
entitled to a deduction equal to the amounts includible in income by
the Non-Employee Director in the year the stock and/or cash are
distributed.
The Board of Directors recommends a vote "FOR" the adoption of the
Mercantile Bancorporation Inc. 1994 Stock Incentive Plan for Non-
Employee Directors.
INDEPENDENT AUDITORS
The firm of KPMG Peat Marwick has been selected as Mercantile's
independent auditors for 1994. They were also Mercantile's independent
auditors for 1993. A representative of KPMG Peat Marwick is expected to
be present at the Annual Meeting of Shareholders. The representative
shall have an opportunity to make a statement, if such representative
desires to do so, and will be available to respond to appropriate
questions.
SHAREHOLDER PROPOSALS
All proposals of shareholders, including nominations of directors,
intended to be presented at the 1995 Annual Meeting of Shareholders
must be received in writing by the Corporate Secretary at Mercantile
Bancorporation Inc., P.O. Box 524, St. Louis, Missouri 63166-0524, by
November 22, 1994, in order to be considered for inclusion in
Mercantile's Proxy Statement and proxy for the 1995 meeting.
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DISCRETIONARY AUTHORITY
The Board of Directors does not intend to present at the Annual
Meeting of Shareholders any business other than that referred to in the
accompanying Notice of Annual Meeting. It was not aware, as of a
reasonable time before this solicitation of proxies, of any other
matters which may properly be presented for action at the meeting. If
any other matters should properly come before the meeting, the persons
named in the enclosed form of proxy will have discretionary authority
to vote the proxies in accordance with their best judgment in the
interest of Mercantile.
March 22, 1994
- ------------------------------------------------------------------------
! A COPY OF THE 1993 ANNUAL REPORT ON FORM 10-K FILED WITH THE !
! SECURITIES AND EXCHANGE COMMISSION BY MERCANTILE MAY BE OBTAINED BY !
! ANY SHAREHOLDER, WITHOUT CHARGE, UPON WRITTEN REQUEST TO JON W. !
! BILSTROM, GENERAL COUNSEL AND SECRETARY, MERCANTILE BANCORPORATION !
! INC., P.O. BOX 524, ST. LOUIS, MISSOURI 63166-0524. !
- ------------------------------------------------------------------------
26
<PAGE> 27
APPENDIX A
RESOLUTION TO AMEND RESTATED ARTICLES OF INCORPORATION
OF
MERCANTILE BANCORPORATION INC.
The following amendment to the Restated Articles of Incorporation, as
amended, of Mercantile Bancorporation Inc. (the "Company") shall be put
to a vote of the shareholders of the Company at the Annual Meeting of
Shareholders to be held April 28, 1994.
RESOLVED, that Article 2 of the Restated Articles of Incorporation of
the Company shall be amended to increase the aggregate number of shares
of Common Stock, $5.00 par value per share, of the Company authorized
for issuance from 70,000,000 to 100,000,000 shares.
<PAGE> 28
APPENDIX B
MERCANTILE BANCORPORATION INC.
1994 STOCK INCENTIVE PLAN
1. PURPOSE
The purpose of the Mercantile Bancorporation Inc. (the "Company")
1994 Stock Incentive Plan (the "Plan") is to advance the interest of
the Company and its shareholders by encouraging the success of the
Company by providing for the acquisition of an equity interest by key
employees, by providing additional incentives and motivation toward
superior Company performance, and by enabling the Company to attract
and retain the services of key employees upon whose judgment, talents,
and special effort the successful conduct of its operations is largely
dependent.
2. TERM
The Plan shall be effective as of April 28, 1994, and shall remain in
effect until the earlier of ten (10) years from the effective date or
termination of the plan by the Board of Directors of the Company (the
"Board"). The Plan shall be subject to approval by the shareholders of
the Company, but if that approval has not been obtained before April
29, 1995, the Plan shall be void, and any awards issued thereunder
shall be void. If the Plan is terminated by the Board, no awards may be
issued after the effective date of such termination, but, subject to
the preceding sentence, previously issued awards shall remain
outstanding in accordance with their applicable terms and conditions
and the terms and conditions of the Plan.
3. PLAN ADMINISTRATION
The Plan shall be administered by a committee (the "Committee") of
and appointed by the Board consisting of three or more non-employee
Directors each of whom is both (1) qualified to administer this Plan as
contemplated by Rule 16b-3 under the Securities Exchange Act of 1934,
as amended (the "Act"), and (2) considered to be an "outside director"
as contemplated by Section 162(m) of the Internal Revenue Code of 1986,
as amended (the "Code"). The Committee shall have full and exclusive
power to interpret the Plan and to adopt such rules, regulations, forms
and guidelines for carrying out the Plan as it may deem necessary or
proper, all of which power shall be executed in the best interests of
the Company and in keeping with the objectives of the Plan. This power
includes, but is not limited to, selecting award recipients,
establishing all award terms and conditions and adopting modifications,
amendments, forms and procedures, including subplans and the like, as
may be necessary to comply with provisions of any applicable regulatory
rulings. The Committee may delegate part or all of its administrative
authority hereunder to one or more of it members, as the members by
unanimous consent deem appropriate.
4. ELIGIBILITY
Any employee of the Company shall be eligible to receive one or more
awards under the Plan. "Employee" shall also include any former
employee of the Company eligible to receive an assumed or replacement
award as contemplated in Sections 5 and 6, and for purposes of this
Section 4 "Company" includes any entity that is directly or indirectly
controlled by the Company or any entity in which the Company has a
significant equity interest, as determined by the Committee.
5. SHARES OF COMMON STOCK SUBJECT TO THE PLAN
(a) Subject to Section 6, the maximum aggregate number of shares of
Common Stock of the Company ("Shares") which may be issued to
participants under the Plan shall not exceed two million two hundred
fifty thousand (2,250,000), plus any Shares which are forfeited or
tendered pursuant to either or both of the following plans of the
Company which previously have received shareholder approval ("Prior
Plans"): the Mercantile Bancorporation Inc. 1987 Stock Option Plan and
the Mercantile Bancorporation Inc. 1991 Employee Incentive Plan. Of
these shares, no more than two million two hundred fifty thousand
(2,250,000)
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shall be issued to Participants pursuant to incentive stock options. In
addition, the amount of shares representing forfeited or tendered
shares shall not be available for awards to persons subject to Section
16 of the Act, to the extent necessary to comply with Rule 16b-3 under
the Act. For purposes of this Section 5, the following shall apply: (i)
"Forfeited" shares means any Shares issued pursuant to awards made
under a Plan which are forfeited to the Company pursuant to award terms
and conditions, including any Shares covered by grants made under any
Prior Plan which are returned to the Company because of the
cancellation, expiration or forfeiture of a grant made under the Prior
Plan, as well as any shares which, at the expiration of the particular
plan pursuant to its terms, remain unallocated to awards previously
made under the plan; and (ii) "Tendered" shares means any Shares which
have been exchanged, either actually or by attestation, by a person as
full or partial payment made to the Company on or after the effective
date of a Plan in connection with any award under the Plan.
(b) Except as provided in Section 7, in no event shall more than four
hundred eighty thousand (480,000) Shares (plus the number of shares of
Restricted Stock authorized under the Mercantile Bancorporation 1991
Employee Incentive Plan which either have not been awarded under that
plan or have been awarded but subsequently forfeited pursuant to their
terms) be issued in connection with the award of stock pursuant to
Section 6(c), unless such stock was awarded as the payment form for
grants or rights under any other employee or compensation plan of the
Company. Additionally, the maximum number of Shares which may be
awarded in the form of stock options or SARs to any one individual
under the Plan shall be limited to three hundred thirty seven thousand
five hundred (337,500) Shares.
(c) In instances where a stock appreciation right ("SAR") or other
award is settled in cash or a form other than Shares, the Shares that
would have been issued had there been no cash or other settlement shall
nevertheless be deemed issued and shall no longer be available for
issuance under the Plan. However, the payment of cash dividends and
dividend equivalents in conjunction with outstanding awards shall not
be counted against the Shares available for issuance, except to the
extent required to comply with Rule 16b-3 under the Act. Any Shares
that are issued by the Company, and any awards that are granted by, or
become obligations of, the Company, through the assumption by the
Company or an affiliate of, or in substitution for, outstanding awards
previously granted by an acquired company shall not be counted against
the Shares available for issuance under the Plan.
(d) Any Shares issued under the Plan may consist in whole or in part
of authorized and unissued Shares or of treasury Shares, and no
fractional Shares shall be issued under the Plan. Cash may be paid in
lieu of any fractional Shares in settlement of awards under the Plan.
6. AWARDS
The Committee shall determine the type or types of award(s) to be
made to each participant. Awards may be granted singly, in combination
or in tandem. Awards also may be made in combination or in tandem with,
in replacement of or substitution for, as alternatives to, or as the
payment form for grants or rights under any other employee or
compensation plan of the Company, including the plan of any acquired
entity. The types of awards that may be granted under the Plan are:
(a) Stock Options-A grant of a right to purchase a specified number
of Shares during a specified period as determined by the Committee. The
purchase price per share for each stock option shall be not less than
100% of Fair Market Value on the date of grant, except that, in the
case of a stock option granted retroactively in tandem with or as a
substitution for another award, the exercise or designated price may be
no lower than the Fair Market Value of a share on the date such other
award was granted. A stock option may be in the form of an ISO which,
in addition to being subject to applicable terms, conditions and
limitations established by the Committee, complies with Section 422 of
the Code. 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 such other method permitted by the Committee, including (i)
tendering (either actually or by attestation) Shares; (ii) surrendering
a stock award valued at Fair Market Value on the date of surrender;
(iii) authorizing a third party to sell the Shares (or a sufficient
portion thereof) acquired upon exercise of a stock option and assigning
the delivery to the Company of a sufficient amount of the sale proceeds
to pay for all the Shares acquired through such
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exercise; or (iv) any combination of the above. Options shall not be
exercisable for a period of at least six months following the date of
grant.
(b) SARs-A right to receive a payment in cash and/or Shares, equal to
the excess of the Fair Market Value of a specified number of Shares on
the date the SAR is exercised over the Fair Market Value on the date
the SAR was granted as set forth in the applicable award agreement,
except that, in the case of a SAR granted retroactively in tandem with
or as a substitution for another award, the exercise or designated
price may be no lower than the Fair Market Value of a share on the date
such other award was granted. SARs shall not be exercisable for at
least six months following the date of grant.
(c) Stock Awards-An award made or denominated in Shares or units
equivalent in value to Shares. All or part of any stock award may be
subject to conditions and restrictions established by the Committee,
and set forth in the award agreement, which may include, but are not
limited to, continuous service with the Company, achievement of
specific business objectives and other measurements of individual,
business unit or Company performance. Stock received pursuant to any
such award shall not be transferable for at least six months following
the date of grant.
7. ADJUSTMENTS AND REORGANIZATIONS
(a) In the event of any stock dividend, stock split, combination or
exchange of Shares, merger, consolidation, spin-off, recapitalization
or other distribution (other than normal cash dividends) of Company
assets to stockholders, or any other change affecting Shares or the
price of Shares, such proportionate adjustments, if any, as the
Committee in its discretion may deem appropriate to reflect such change
shall be made with respect to (i) the aggregate number of Shares that
may be issued under the Plan; (ii) each outstanding award made under
the Plan; and (iii) the exercise price per share for any outstanding
stock options, SARs or similar awards under the Plan.
(b) Notwithstanding any other provision of this Plan and any terms of
an agreement under which the Committee has granted an Award under this
Plan, upon a Change in Control, outstanding Awards shall become
immediately and fully exercisable or payable according to the following
terms:
(i) Any outstanding and unexercised Option shall become immediately
and fully exercisable, and shall remain exercisable until it would
otherwise expire by reason of lapse of time.
(ii) During the six month and seven day period from and after a
Change in Control (the "Exercise Period"), unless the Committee shall
determine otherwise at the time of grant, a Participant shall have
the right, in lieu of the payment of the Base Price of the shares of
Stock being purchased under the Option and by giving notice to the
Committee, to elect (within the Exercise Period) in lieu of exercise
thereof, provided that if such Option is held by an officer or
director of the Company (within the meaning of Section 16 of the
Exchange Act) more than six (6) months from the grant thereof, to
surrender all or part of the Option to the Company and to receive in
cash, within 30 days of such notice, an amount equal to the amount by
which the Change in Control Price per share of Stock on the date of
such election shall exceed the Base Price per share of Stock under
the Option multiplied by the number of shares of Stock granted under
the Option as to which the right granted under this subsection
7(b)(ii) shall have been exercised. Change in Control Price shall
mean the higher of (A) (i) for any period during which the Stock
shall not be listed for trading on a national securities exchange,
but when prices for the Stock shall be reported by the National
Market System of the National Association of Securities Dealers
Automated Quotation System ("NASDAQ"), the highest price per share as
quoted by National Market System of NASDAQ, (ii) for any period
during which the Stock shall not be listed for trading on a national
securities exchange or its price reported by the National Market
System of NASDAQ, but when prices for the Stock shall be reported by
NASDAQ, the highest average of the high bid and low asked prices as
reported by the NASDAQ, (iii) for any period during which the Stock
shall be listed for trading on a national securities exchange, the
highest closing price per share of Stock on such exchange as of the
close of such trading day or (iv) the highest market price per share
of Stock as determined by a nationally recognized investment banking
firm selected by the Board of Directors in the event neither (i),
(ii) or (iii) above shall be applicable, in each case during the
60-day period prior to and ending on the date of the Change in
Control and (B) if the Change in Control is the result of a
transaction or series of transactions described in
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subsections 16 (a) or (c), the highest price per share of the Stock
paid in such transaction or series of transactions (which in the case
of subsection 16 (a) shall be the highest price per share of the
Stock as reflected in a Schedule 13D by the person having made the
acquisition); provided, however, that with respect to any Incentive
Stock Option, the Change in Control Price shall not exceed the market
price of a share of Stock (to the extent required pursuant to Section
422 of the Internal Revenue Code of 1986, as amended) on the date of
surrender thereof.
(iii) Any outstanding and unexercised Stock Appreciation Rights
(other than such rights which arise pursuant to subsection (b)(ii),
above) shall become exercisable as follows:
(A) Any SAR which may be surrendered in lieu of exercising a
stock option or in conjunction with the exercise of a stock option
may continue to be so surrendered in accordance with its terms.
(B) Any SAR which may be surrendered upon the lapse of a stock
option shall be deemed to have been surrendered if and when the
Participant advises the Committee in writing of an election to have
stock options with respect to which the SAR was granted treated as
having lapsed.
(C) Any SAR which may be surrendered independent of any stock
option shall be exercisable immediately, without regard to
limitations imposed upon such surrender which are related to the
passage of time.
(iv) The Committee shall provide in the Award agreement for the
treatment to be accorded any Shares awarded pursuant to subsection
6(c) which Award has not expired or been forfeited before the
occurrence of a Change in Control.
8. FAIR MARKET VALUE
Fair Market Value for all purposes under the Plan shall mean the
closing price of a Share as reported daily on the New York Stock
Exchange Composite Tape and published in The Wall Street Journal or
similar readily available public source for the date in question. If no
sale of Shares was made on such date, the closing price of a Share as
reported for the next preceding day on which a sale of Shares was made
shall be used.
9. DIVIDENDS AND DIVIDEND EQUIVALENTS
The Committee may provide that any awards under the Plan earn
dividends or dividend equivalents. Such dividends or dividend
equivalents may be paid currently or may be credited to a participant's
account. Any crediting of dividends or dividend equivalents may be
subject to such restrictions and conditions as the Committee may
establish, including reinvestment in additional Shares or share
equivalents.
10. DEFERRALS AND SETTLEMENTS
Payment of awards may be in the form of cash, Shares, other awards or
combinations thereof as the Committee shall determine, and with such
restrictions as it may impose. The Committee also may require or permit
participants to elect to defer the issuance of Shares or the settlement
of awards in cash under such rules and procedures as it may establish
under the Plan. It also may provide that deferred settlements include
the payment or crediting of interest on the deferred amounts, or the
payment or crediting of dividend equivalents where the deferral amounts
are denominated in Shares.
11. AWARD AGREEMENTS
Awards under the Plan shall be evidenced by agreements that set forth
the terms, conditions and limitations for each award which may include
the term of an award (except that in no event shall the term of any ISO
exceed a period of ten years from the date of its grant), the
provisions applicable in the event the participant's employment
terminates, and the Committee's authority to unilaterally or
bilaterally amend, modify, suspend, cancel or rescind any award. The
Committee may, but need not, require the execution of any such
agreement, in which case acceptance of the award by the respective
participant shall constitute agreement to the terms of the award.
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12. PLAN AMENDMENT
The Plan may be amended only by a disinterested majority of the Board
of Directors as it deems necessary or appropriate to better achieve the
purpose of the Plan, except that no such amendment which would increase
the number of Shares available for issuance in accordance with Sections
5 and 6 or otherwise cause the Plan not to comply with either Rule
16b-3, or any successor rule, under the Act or Section 162(m) of the
Code shall be effective without the approval of the Company's
shareholders.
13. TAX WITHHOLDING
The Company shall have the right to deduct from any settlement of an
award made under the Plan, including the delivery or vesting of Shares,
a sufficient amount to cover withholding of any federal, state or local
taxes required by law, or to take such other action as may be necessary
to satisfy any such withholding obligations. The Committee may permit
Shares to be used to satisfy required tax withholding and such Shares
shall be valued at the Fair Market Value as of the settlement date of
the applicable award. Any election by a person subject to Section 16 of
the Act to have Shares withheld from the payment of an award hereunder
to satisfy tax withholding obligations shall be made either no less
than six months prior to the effectiveness of such election or during
the third to twelfth business day following release by the Company of
its quarterly or annual earnings, as contemplated by Rule 16b-3.
14. OTHER COMPANY BENEFIT AND COMPENSATION PROGRAMS
Unless otherwise specifically determined by the Committee,
settlements of awards received by participants under the Plan shall not
be deemed a part of a participant's regular, recurring compensation for
purposes of calculating payments from or benefits under any Company
benefit plan, severance program or severance pay law of any country.
Further, the Company may adopt other compensation programs, plans or
arrangements as it deems appropriate or necessary.
15. FUTURE RIGHTS
No person shall have any claim or rights to be granted an award under
the Plan, and no participant shall have any rights under the Plan to be
retained in the employ of the Company.
16. CHANGE IN CONTROL
For purposes of this Plan, Change in Control shall mean:
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Act (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Act) of 20% or more of either (i) the then outstanding shares
of common stock of the Company (the "Outstanding Company Common Stock")
or (ii) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"); provided,
however, that the following acquisitions shall not constitute a Change
in Control: (A) any acquisition directly from the Company (excluding an
acquisition by virtue of the exercise of a conversion privilege), (B)
any acquisition by the Company, (C) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company
or any of its affiliated companies or (D) any acquisition by any
corporation pursuant to a reorganization, merger or consolidation, if,
following such reorganization, merger or consolidation, the conditions
described in clauses (i), (ii) and (iii) of subsection (c) , below, are
satisfied; or
(b) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming
a director subsequent to the date hereof whose election, or nomination
for election by the Company's shareholders, was approved by a vote of
at least a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of
either an actual or threatened election contest (as such terms are used
in Rule 14a-11 of Regulation 14A promulgated under the Act) or other
actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board; or
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(c) Approval by the shareholders of the Company of a reorganization,
merger or consolidation, in each case, unless, following such
reorganization, merger or consolidation, (i) all or substantially all
of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such reorganization,
merger or consolidation beneficially own, directly or indirectly, more
than 50% of, respectively, the then outstanding shares of common stock
and the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such reorganization, merger
or consolidation in substantially the same proportions as their
ownership, immediately prior to such reorganization, merger or
consolidation of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, as the case may be, (ii) no Person
(excluding the Company and any employee benefit plan (or related trust)
of the Company or of the corporation resulting from such
reorganization, merger or consolidation and any Person beneficially
owning, immediately prior to such reorganization, merger or
consolidation, directly or indirectly, 20% or more of the Outstanding
Company Common Stock or Outstanding Voting Securities, as the case may
be) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the
corporation resulting from such reorganization, merger or consolidation
or the combined voting power of the then outstanding voting securities
of such corporation and (iii) at least a majority of the members of the
board of directors of the corporation resulting from such
reorganization, merger or consolidation were members of the Incumbent
Board at the time of the execution of the initial agreement providing
for such reorganization, merger or consolidation; or
(d) Approval by the shareholders of the Company of (i) a complete
liquidation or dissolution of the Company or (ii) the sale or other
disposition of all or substantially all of the assets of the Company,
other than to a corporation, with respect to which, following such sale
or other disposition, (A) more than 80% of, respectively, the then
outstanding shares of common stock of such corporation and the combined
voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is
then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to
such sale or other disposition in substantially the same proportion as
their ownership, immediately prior to such sale or other disposition,
of the Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (B) no Person (excluding the Company
and any employee benefit plan (or related trust) of the Company or of
such corporation and any Person beneficially owning, immediately prior
to such sale or other disposition, 20% or more of the Outstanding
Company Common Stock or Outstanding Company Voting Securities, as the
case may be) then beneficially owns, directly or indirectly, 20% or
more of, respectively, the then outstanding shares of common stock of
such corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in the
election of directors and (C) at least a majority of the members of the
board of directors of such corporation were members of the Incumbent
Board at the time of the execution of the initial agreement or action
of the Board providing for such sale or other disposition of assets of
the Company.
17. MISCELLANEOUS
(a) Unfunded Plan: Unless otherwise determined by the Committee, the
Plan shall be unfunded and shall not create (or be construed to create)
a trust or a separate fund or funds. The Plan shall not establish any
fiduciary relationship between the Company and any Participant or other
person. To the extent any person holds any rights under the Plan, such
rights (unless otherwise determined by the Committee) shall be no
greater than the rights of an unsecured general creditor of the
Company.
(b) Assignment; Encumbrances: The right to receive an award, and the
right to receive payment with respect to any award under this Plan are
not assignable or transferable and shall not be subject to any
encumbrances, liens, pledges or charges of the participant or to claims
of the participant's creditors. Any attempt to assign, transfer,
hypothecate or attach any rights with respect to or derived from any
award, or any rights with respect to or derived from an award, shall be
null and void and of no force and effect whatsoever.
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(c) Successors and Assigns: The Plan shall be binding on all
successors and assigns of a participant, including, without limitation,
the estate of such participant and the executor, administrator or
trustee of such estate, or any receiver or trustee in bankruptcy or
representative of the participant's creditors.
(d) Designation of Beneficiaries: A participant may designate in
writing a beneficiary or beneficiaries to receive any distribution
under the Plan which is made after the participant's death, provided,
however, that if at the time any such distribution is due, there is no
designation of a beneficiary in force or if any person (other than a
trustee or trustees) as to whom a beneficiary designation was in force
at the time of the participant's death shall have died before the
payment became due and the participant has failed to provide in such
beneficiary designation for any person or persons to take in lieu of
such deceased person, the person or persons entitled to receive such
distribution (or part thereof, as the case may be) shall be the
participant's executor or administrator.
(e) Governing Law: The validity, construction and effect of the Plan
and any actions taken or relating to the Plan, shall be determined in
accordance with the laws of the State of Missouri and applicable
federal law.
(f) Rights as a Shareholder: A participant shall have no rights as a
shareholder with respect to an award until the participant actually
becomes a holder of record of Shares distributed with respect thereto.
(g) Notices: All notices or other communications made or given
pursuant to this Plan shall be in writing and shall be sufficiently
made or given if hand delivered, or if mailed by certified mail,
addressed to the participant at the address contained in the records of
the Company or to the Company at its principal office, as applicable.
MERCANTILE BANCORPORATION INC.
By....................................
Title.................................
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APPENDIX C
MERCANTILE BANCORPORATION INC.
1994 EXECUTIVE INCENTIVE COMPENSATION PLAN
SECTION 1. ESTABLISHMENT AND PURPOSE
1.1. Establishment of the Plan. Mercantile Bancorporation Inc. (the
"Company") hereby establishes the 1994 Executive Incentive Compensation
Plan as herein set forth (herein referred to as the "Plan").
1.2. Purpose. The purpose of the Plan is to enable the Company to
attract and retain selected senior officers and to motivate superior
levels of performance by providing such officers with annual bonus
opportunities based upon preestablished performance objectives. The
plan is designed to qualify such bonus opportunities as "performance-
based" under federal tax laws.
1.3. Effective Date. The effective date of the Plan is January 1,
1994, subject to approval of the material terms of the Plan by the
Company's shareholders. The Plan will remain in effect until terminated
by the Board or December 31, 1999, whichever shall first occur.
SECTION 2. DEFINITIONS
2.1. Definitions. Whenever used herein, the following terms will have
the meanings set forth below, unless otherwise expressly provided. When
the defined meaning is intended, the term is capitalized.
(a) "Board" means the Board of Directors of the Company.
(b) "Base Salary" means the regular base salary, exclusive of any
bonuses, incentive pay, special awards, or other compensation earned by
or awarded to a Participant, and exclusive of any awards under this
Plan.
(c) "Cause" means: (l) substantial nonperformance of duties which
continues after the Company advises the Participant of such
nonperformance, or failure to substantially meet stated performance
standards, goals or objectives (other than as a result of incapacity
due to a physical or mental condition), or any other breach of any
Employment Agreement between the Employer and the Participant; (2) the
Participant's commission of an act constituting a criminal offense
involving moral turpitude, dishonesty or breach of trust; or (3) the
Employer's right to discontinue the Participant's employment in the
Participant's then current position in order to comply with applicable
laws and regulations or satisfy the official orders, recommendations,
and/or requirements of any regulatory agency, body, or official having
jurisdiction over the Employer.
(d) "Committee" means the Compensation and Management Development
Committee of the Board, or another committee appointed by the Board to
serve as the administrator for the Plan, which committee at all times
consists of persons who are "outside directors" as that term is defined
in the regulations promulgated under Section 162(m) of the Internal
Revenue Code of 1986, as amended.
(e) "Company" means Mercantile Bancorporation Inc., a Missouri
corporation.
(f) "Chief Executive" means the Chief Executive Officer of the
Company.
(g) "Disability" means a condition by reason of which (l) a
Participant's Base Salary payments have been discontinued by his
Employer, and (2) he is on leave of absence because of sickness or
other disability, and (3) he is receiving monthly payments under the
Group Long-Term Disability Plan.
(h) "Employee" means a regular, active, full-time salaried employee
of the Employer who is in a position meeting the defined eligibility
criteria for participation in the Plan.
(i) "Employer" means the Company and any entity that is a subsidiary
or affiliate of the Company.
(j) "Final Award" means the award earned by each Participant at the
end of the Plan Year.
(k) "Participant" means an officer or other key Employee who is
approved by the Committee for participation in the Plan.
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(l) "Performance Objectives" means the performance criteria and the
achievement goals established by the Committee for a Plan Year.
(m) "Plan Year" means the Company's fiscal year commencing January l
and ending December 31.
(n) "Retirement" means cessation of active services or of the actual
performance of regular duties by a Participant, other than a disabled
Participant, and retirement from the employ of all Employers.
(o) "Target Incentive Award" means the potential award to be earned
by a Participant for a Plan Year. Such Target Incentive Award will be a
percentage, calculated in dollars, of a Participant's actual Base
Salary in effect as of the first day of each Plan Year.
(p) "Target Incentive Award Pool" means the sum of all individual
Target Incentive Awards.
2.2. Gender and Number. Except when otherwise indicated by the
context, any masculine terminology used herein also will include the
feminine, and the definition of any term in the singular may include
the plural.
2.3. Severability. In the event any provision of the Plan shall be
held illegal or invalid for any reason, the illegality or invalidity
will not affect the remaining parts of the Plan, and the Plan will be
construed and enforced as if the illegal or invalid provision had not
been included.
SECTION 3. ELIGIBILITY AND PARTICIPATION
3.1. Eligibility. Eligibility for participation in the Plan will be
limited to the Chief Executive, those who report directly to the Chief
Executive and other key Employees who, by the nature and scope of their
positions, are materially responsible for the management, growth, and
success of the Company.
3.2. Participation. Participation in the Plan will be determined
annually by the Committee. Employees approved for participation will be
notified of their selection as soon after approval as practicable.
3.3. Termination of Approval. The Committee may withdraw approval for
a Participant's participation at any time. In the event of such
withdrawal, the Employee concerned will cease to be a Participant as of
the date of such withdrawal. The Employee will be notified of such
withdrawal as soon as practicable following the Committee's action. A
Participant who is withdrawn from participation under this Section will
not receive any award for the Plan Year, except and to the extent that
the Committee decides otherwise in its sole discretion.
3.4. No Automatic Right to Participate. No Participant or other
Employee will at any time have a right to be selected for participation
in the Plan for any Plan Year, despite having been selected for
participation in a previous Plan Year.
SECTION 4. DETERMINATION OF PERFORMANCE CRITERIA
4.1. Company Performance Criteria. The Committee will establish,
prior to the beginning of each Plan Year, a planned level of Company
performance at which 100% of the Target Incentive Award Pool will be
made available for allocation to the Participants. The performance
basis for the Target Incentive Award Pool shall be determined based
upon any one or more of the following financial measures of the
Company: (i) net income; (ii) return on assets; (iii) earnings per
share growth over the performance period; (iv) overhead ratio; (v)
expense to assets ratio; (vi) total shareholder return; and/or (vii)
net interest rate margin. The Committee may also provide for additional
opportunities based upon the attainment of various productivity
objectives, including, without limitation, reductions in the Company's
overhead ratio and expense to asset ratio.
4.2. Participant Performance Criteria. Prior to the beginning of each
Plan Year (or prior to any other later date allowable under Section
162(m)), the Committee will establish and approve, as to the Chief
Executive and as to all other Participants, Performance Objectives for
the Chief Executive and for each of the other Participants,
respectively.
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SECTION 5. FINAL AWARD DETERMINATION
5.1. Target Incentive Awards. Prior to the beginning of each Plan
Year (or prior to any other later date allowable under Section 162(m)),
the Committee, as to the Chief Executive and as to all other
Participants, will establish and approve Target Incentive Award levels
for the Chief Executive and for each of the other Participants,
respectively, based upon the attainment of the established Performance
Objectives by each such Participant. The established Target Incentive
Award levels will vary in relation to the Participant's duties and
responsibilities, provided that no Participant can receive more than
93.75% of beginning year Base Salary in any year under the Plan.
5.2. Target Incentive Pool Development. During each Plan Year, the
Company will accrue a Target Incentive Award Pool equal to the sum of
the Target Incentive Awards for all Plan Participants.
5.3. Company Performance Measurement. At the end of each Plan Year,
the Committee will determine the Company's performance relative to
established Performance Objectives.
5.4. Individual Award Determination. A Participant's Final Award will
be determined solely on the basis of the Participant's performance
relative to the attainment of the established Performance Objectives,
but no award to an individual Participant may exceed one hundred
twenty-five percent (125%) of the Participant's Target Incentive Award
for the Plan Year.
5.5. Payment of Awards. A Participant's Final Award will be paid in
cash as soon as is practicable following the end of the Plan Year;
provided, however, that the Committee may, in its sole discretion and
without consultation with a Participant, and on terms and conditions
determined by it to be necessary or appropriate, pay before the end of
the Plan Year all or any portion of the Final Award earned by all or
any number of Participants during such Plan Year if the Committee
establishes reasonable procedures to assure the repayment of any
amounts paid to a Participant in excess of his or her actual Final
Award immediately after the determination of such actual Final Award.
Such accelerated payment of the Final Award shall be based on the
estimated financial performance of the Company for such Plan Year
relative to established Performance Objectives and shall be awarded in
accordance with Section 5.4 of the Plan. An additional payment, if any,
reflecting the difference between the amount of the Participant's
actual Final Award and the amount of the accelerated payment shall be
paid to the Participant following the release of the Company's audited
financial statements pertaining to that Plan Year. In addition, the
Committee may elect to delay the payment of all or a portion of a
Participant's Final Award until such time as the amount payable would
be deductible to the Company as contemplated by Section 162(m) of the
Internal Revenue Code of 1986, as amended.
SECTION 6. TERMINATION OF EMPLOYMENT
6.1. Termination of Employment Due to Death, Disability, or
Retirement. If a Participant's employment ends because of death,
Disability, or Retirement, the Final Award, as determined under Section
5.5, will be adjusted to reflect participation prior to termination.
The Final Award thus determined will be paid as soon as practicable
following the release of the Company's audited financial statements
pertaining to that Plan Year.
6.2. Termination of Employment for Other Reasons. In the event a
Participant's employment ends for any reason other than death,
Disability, or Retirement, all of the Participant's rights to a Final
Award for the Plan Year then in progress will be forfeited. However,
except when employment ends for Cause, the Committee, in its sole
discretion, may approve an award for the portion of the Plan Year that
the Participant was employed by the Employer.
SECTION 7. RIGHTS OF PARTICIPANTS
7.1. Employment. Nothing in this Plan will interfere with or limit in
any way the right of the Employer to terminate a Participant's
employment at any time, nor confer upon any Participant any right to
continue in the employ of an Employer.
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7.2. Nontransferability. No right or interest of any Participant in
this Plan will be assignable or transferable or subject to any lien or
encumbrance, whether directly or indirectly, by operation of law or
otherwise, including without limitation execution, levy, garnishment,
attachment, pledge, and bankruptcy.
7.3 No Funding. Nothing contained in this Plan and no action taken
hereunder will create or be construed to create a trust of any kind, or
a fiduciary relationship between the Company and any Participant or
beneficiary or any other person. Amounts due under this Plan at any
time and from time to time will be paid from the general funds of the
Company. To the extent that any person acquires a right to receive
payments hereunder, such right shall be that of an unsecured general
creditor of the Company.
7.4 No Rights Prior to Award Approval. No Participant will have any
right to payment of a Final Award unless and until it has been
determined and approved under Section 5.5.
SECTION 8. ADMINISTRATION
8.1. Administration. This Plan will be administered by the Committee
according to any rules that it may establish from time to time that are
not inconsistent with the provisions of the Plan.
8.2. Expenses of the Plan. The expenses of administering the Plan
will be borne by the Company.
SECTION 9. REQUIREMENTS OF LAW
9.1. Governing Law. The Plan will be construed in accordance with and
governed by the laws of the State of Missouri.
9.2. Withholding Taxes. The Company has the right to deduct from all
payments under this Plan any Federal, State, or local taxes required by
law to be withheld with respect to such payments.
SECTION 10. AMENDMENT AND TERMINATION
10.1. Amendment and Termination. The Committee, in its sole and
absolute discretion may modify or amend any or all of the provisions of
this Plan at any time and from time to time, without notice, and may
suspend or terminate it entirely. However, no such modification,
amendment, suspension, or termination, may, without the consent of the
Participant (or his beneficiary in the case of the death of the
Participant), reduce the right of a Participant (or his beneficiary as
the case may be) to a payment or distribution hereunder to which he is
entitled by reason of an award as approved by the Committee under
Section 5.5.
SECTION 11. BENEFICIARY DESIGNATION
11.1. Beneficiary Designation. Each Participant under the Plan, may,
from time to time, name any beneficiary or beneficiaries (who may be
named contingently or successively) to whom any benefit under the Plan
is to be paid in case of his death before he receives any or all of
such benefit. Each designation will revoke all prior designations by
the same Participant, will be in a form prescribed by the Committee,
and will be effective only when filed by the Participant in writing
with the Committee during his lifetime. In the absence of any such
designation, benefits remaining unpaid at the Participant's death will
be paid to the Participant's estate.
MERCANTILE BANCORPORATION INC.
By ...................................
Title ................................
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APPENDIX D
MERCANTILE BANCORPORATION INC.
VOLUNTARY DEFERRED COMPENSATION PLAN
1. PURPOSE
The purpose of the Mercantile Bancorporation Inc. (the "Company")
Voluntary Deferred Compensation Plan (the "Plan") is to provide key
employees with an opportunity to defer compensation to be earned by
them from the Company or any Affiliated Company in accordance with the
terms and conditions set forth herein.
2. EFFECTIVE DATE
The Plan shall be effective as of June 1, 1994.
3. PLAN ADMINISTRATION
The Plan shall be administered by a committee (the "Committee") of
and appointed by the Board of Directors of the Company consisting of
three or more non-employee Directors, each of whom is considered to be
an "outside director" as contemplated by Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code") and a "disinterested"
director as contemplated by Rule 16b-3 ("Rule 16b-3") under Section 16
of the Securities Exchange Act of 1934, as amended ("Section 16"), or
any successor provisions. The Committee shall have full and exclusive
power to interpret the Plan and to adopt such rules, regulations and
guidelines for carrying out the Plan as it may deem necessary or
proper, all of which power shall be executed in the best interests of
the Company and in keeping with the objectives of the Plan. This power
includes, but is not limited to, selecting compensation eligible for
deferral, selecting eligible Participants, establishing all deferral
terms and conditions and adopting modifications, amendments, forms and
procedures, as may be necessary to comply with provisions of any
applicable regulatory rulings.
4. ELIGIBILITY
The Committee shall have the authority to select among the management
or highly compensated employees of the Company or any Affiliated
Company those employees who shall be eligible to participate in the
Plan (the "Participant" or "Participants"). "Affiliated Company" means
any entity that is directly or indirectly controlled by the Company or
any entity in which the Company has a significant equity interest, as
determined by the Committee.
5. ELECTION TO DEFER
(a) For the calendar year 1994, a Participant may make an election
before May 30, 1994, to defer the receipt of part or all of his
compensation (including bonuses or other incentive compensation) to be
received after June 1, 1994, for services performed in 1994. Elections
with respect to compensation for calendar years after 1994 are
described below.
(b) For each calendar year beginning after 1994, a Participant may
make an election to defer the receipt of all or part of his
compensation. The compensation to be received after 1994 to which a
deferral election may relate is a specified portion of such
Participant's compensation (including bonuses or other incentive
compensation) for services to be rendered to the Company or any
Affiliated Company by such Participant for such calendar year or a
subsequent calendar year or years.
(c) An election to defer base compensation must be made by November
30 of the calendar year preceding the year in which the services will
be performed for which the compensation will be earned.
(d) An election to defer compensation other than base compensation
and other than compensation described in subparagraph (e), below, must
be made by December 31 of the calendar year preceding the year in which
the services will be performed for which the compensation will be
earned.
(e) To defer compensation which is to be paid under a program which
is measured by performance and under which the first payment cannot be
made for at least 25 months after the first month in which services are
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performed to which the payment relates, an election must be made at
least 25 months before the first month in which such compensation may
be paid.
(f) Notwithstanding the foregoing, elections made by persons subject
to Section 16 ("Reporting Persons") shall be made no less than six
months prior to the effective date of any transaction involving Shares
pursuant to such election.
(g) The period of deferral shall be of such number of years or until
the occurrence of such event (e.g., retirement, disability, Change in
Control) as the Participant shall elect. All elections shall be
irrevocable. The period of time between the first crediting to the
Participant's Deferred Compensation Account and the final payment
hereunder shall be known as the "Deferral Period."
6. ESTABLISHMENT OF DEFERRED COMPENSATION ACCOUNT
At the time of the Participant's initial election to defer pursuant
to Section 5, the Company shall establish an account (a "Deferred
Compensation Account") for such Participant, which Deferred
Compensation Account shall be credited with Participant's deferred
amounts and earnings thereon. The Deferred Compensation Account shall
consist of a cash subaccount and a stock unit subaccount. Deferred
amounts shall be credited to the cash subaccount or to the stock unit
subaccount, as elected by the Participant. Elections made by Reporting
Persons shall be made no less than six months prior to the effective
date of any transaction pursuant to such election, and shall be
irrevocable except upon subsequent irrevocable election that takes
effect no less than six months after the date of such election, to the
extent required by Rule 16b-3. (For the election made for 1994 by a
Reporting Person who elects to have an amount credited to the stock
unit subaccount, amounts deferred shall be credited to the cash
subaccount until December 1, 1994, where they shall receive additions
as provided for in Section 7, and the portion of the cash subaccount
attributable thereto shall be removed from the cash subaccount as of
December 1, 1994, and shall be credited to the stock unit subaccount.)
Each stock unit ("Stock Unit") shall be equivalent to one share of
Common Stock of the Company ("Share"). Deferred amounts, if they are
credited to the stock unit subaccount, shall be maintained as Stock
Units. The balance of the Deferred Compensation Account as of any date
is the aggregate of the cash subaccount and the stock subaccount within
such Deferred Compensation Account as of such date. The balance of each
cash subaccount shall be expressed in United States dollars. The
balance of each stock unit subaccount shall be expressed in the number
of Shares deemed credited to such subaccount, with fractional Shares
calculated to three decimal places.
As of the last business day of each month thereafter (or as of a
dividend payment date, if applicable), the deferred amounts and any
additions thereto as provided for in Section 7, shall be credited to
the Participant's Deferred Compensation Account. The number of Stock
Units credited to the stock unit subaccount shall be equal to the
quotient of the deferred amount divided by the Fair Market Value, as
defined herein, on such date.
7. ADDITIONS TO DEFERRED COMPENSATION ACCOUNT
(a) Each Participant shall, at the time of making an election to
defer the receipt of compensation under the Plan, (i) elect the portion
of such Participant's Deferred Compensation Account which shall be
credited to the cash subaccount and to the stock unit subaccount, and
(ii) select from a list of investment vehicles prescribed by the
Committee the particular vehicle to be used as the measure of changes
in the value ("Index") of amounts credited to the cash subaccount.
Adjustment of the cash subaccount shall be made as of the dates
prescribed in Section 6. The Participant's deferral amounts for a month
shall be credited to a Participant's Deferred Compensation Account as
of the first day of the next succeeding month following the date such
deferral amounts would have been paid absent the election to defer such
amounts. The Committee shall establish procedures with respect to the
election by a Participant to select the Index, and to change the Index,
applicable to the cash subaccount, and may provide procedures which
permit different Indexes to apply to separate parts of a subaccount.
A Participant may elect to change the portion of such Participant's
Deferred Compensation Account which is credited to the cash subaccount
and to the stock unit subaccount for any subsequent calendar year, or
from time to time as permitted by the Committee, by completing such
form as may be prescribed by the Committee for such purpose, and
returning the same in accordance with the procedures established by the
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Committee, provided that elections made by Reporting Persons shall be
made no less than six months prior to the effective date of any
transaction involving Shares pursuant to such election, and shall be
irrevocable except upon subsequent irrevocable election that takes
effect no less than six months after the date of such election, to the
extent required by Rule 16b-3.
(b) Such deferral amounts shall be credited to a stock unit
subaccount as of the date such deferral amounts would have been paid to
the Participant absent the election to defer such amounts, and
thereupon converted to Stock Units at the Fair Market Value of a Share
as of such date. Stock Units shall be credited with an amount equal to
the dividends as and when paid on the Shares and contemporaneously and
on the same terms deemed to be reinvested in additional Stock Units.
8. PAYMENT OF DEFERRED COMPENSATION ACCOUNT
(a) Except as otherwise provided in subsections (d), (e) and (f)
below, the Participant's Deferred Compensation Account shall be paid or
commence to be paid to the Participant, as soon as practicable, after
the earliest to occur of the following:
(i) the Participant's death;
(ii) the Participant's retirement pursuant to the terms of the
current retirement policy of the Company, or termination from
employment with the Company and all Affiliated Companies for any
other reason other than death or retirement;
(iii) the commencement date selected by the Participant at the time
of the initial election to defer such amount; or
(iv) a Change in Control of the Company.
(b) The Participant may elect to receive payment of the Deferred
Compensation Account either (i) in a lump sum, or (ii) in such number
(not to exceed 120) of approximately equal monthly installments as the
Participant shall elect. Such election shall be made at the time of the
initial election to defer such amount. Any such election by a Reporting
Person shall be irrevocable except upon subsequent irrevocable election
that takes effect no less than six months after the date of such
election, to the extent required by Rule 16b-3. In the absence of an
election by the Participant, the Committee shall determine the manner
of payment.
(c) The Participant's Deferred Compensation Account shall be paid out
in the following manner:
(i) amounts credited to the cash subaccount shall be paid, net of
withholding tax obligations, in cash; and
(ii) amounts credited to the stock unit subaccount shall be paid,
net of withholding tax obligations, in Shares, except that fractional
Shares shall be paid out in cash. Such Shares shall be paid from the
available Shares under the Company's 1991 Employee Incentive Plan,
1994 Stock Incentive Plan, or any other shareholder-approved stock
plan maintained by the Company, or open market purchases, as
determined by the Committee. In the absence of such a shareholder-
approved plan, the Committee may unilaterally decide the form of
payment or delay the timing of payment in consideration of Securities
and Exchange Commission and other regulatory implications.
(d) The Committee shall have the unilateral right to delay the timing
of any payment under the Plan in the event such payment would not be
tax deductible to the Company as a result of the effects of Code
Section 162(m), or any successor section. In the event of such delay in
payment, payment shall be made at the first time when such payment
would be tax deductible to the Company, but no later than three years
following the Participant's termination of employment with the Company.
(e) Anything contained in this Section to the contrary
notwithstanding, in the event, a Participant, or after the
Participant's death, such Participant's beneficiary, incurs a severe
financial hardship occasioned by accident, illness, disability or other
emergency beyond the control of the Participant or, if applicable, the
Participant's beneficiary, the Committee, in its sole discretion and
upon written application of such Participant or beneficiary, may direct
immediate payment of all or a portion of the then current value of such
Participant's Deferred Compensation Account; provided that such payment
shall in no event exceed the
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amount necessary to alleviate such financial hardship. A Participant
receiving such payment shall not be entitled to make further deferrals
under the Plan for a period of six months following such payment, and
any deferral election in effect at the time of a hardship withdrawal
shall be suspended for six months.
(f) In the event a Participant's employment with the Company and all
Affiliated Companies ends by reason of a Good Cause Event (or for a
reason which becomes a Good Cause Event as defined in subsection
(h)(iii), below) which the Committee determines involves, or may
involve, a loss to the Company or an Affiliated Company, no payment
shall be made under this Plan, notwithstanding anything contained in
subsection (a)(iii), above, until the fact and the amount, if any, of
such loss have been determined to the satisfaction of the Committee,
and then payments shall be made hereunder only to the extent that the
amounts payable exceed the amount, if any, of the loss to the Company
and all Affiliated Companies which has not been restored by the
Participant from other sources. Pending the determination by the
Committee of the fact and the amount, if any, of any such loss, the
Company and all Affiliated Companies shall have a lien upon any amounts
due to the Participant under this Plan.
(g) The term "Change in Control" shall mean:
(i) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 20% or more of either (A) the then
outstanding Shares of common stock of the Company (the "Outstanding
Company Common Stock") or (B) the combined voting power of the then
outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company
Voting Securities"); provided, however, that the following
acquisitions shall not constitute a Change of Control: (A) any
acquisition directly from the Company (excluding an acquisition by
virtue of the exercise of a conversion privilege), (B) any
acquisition by the Company, (C) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the
Company or any of its affiliated companies or (D) any acquisition by
any corporation pursuant to a reorganization, merger or
consolidation, if, following such reorganization, merger or
consolidation, the conditions described in clauses (A), (B), and (C)
of subsection (iii) are satisfied; or
(ii) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual
becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company's shareholders, was approved
by a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any
such individual whose initial assumption of office occurs as a result
of either an actual or threatened election contest (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act) or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
(iii) Approval by the shareholders of the Company of a
reorganization, merger or consolidation, in each case, unless,
following such reorganization, merger or consolidation, (A) all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to
such reorganization, merger or consolidation beneficially own,
directly or indirectly, more than 50% of, respectively, the then
outstanding Shares of common stock and the combined voting power of
the then outstanding voting securities entitled to vote generally in
the election of directors, as the case may be, of the corporation
resulting from such reorganization, merger or consolidation in
substantially the same proportions as their ownership, immediately
prior to such reorganization, merger or consolidation of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (B) no Person (excluding the Company
and any employee benefit plan (or related trust) of the Company or of
the corporation resulting from such reorganization, merger or
consolidation and any Person beneficially owning, immediately prior
to such reorganization, merger or consolidation, directly or
indirectly, 20% or more of the Outstanding Company Common Stock or
Outstanding Voting Securities, as the case may be) beneficially owns,
directly or indirectly, 20% or more of, respectively, the then
outstanding Shares of common stock of the corporation resulting from
reorganization, merger or consolidation or the combined
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voting power of the then outstanding voting securities of such
corporation and (C) at least a majority of the members of the board
of directors of the corporation resulting from such reorganization,
merger or consolidation were members of the Incumbent Board at the
time of the execution of the initial agreement providing for such
reorganization, merger or consolidation; or
(iv) Approval by the shareholders of the Company of (A) a complete
liquidation or dissolution of the Company or (B) the sale or other
disposition of all or substantially all of the assets of the Company,
other than to a corporation, with respect to which following such
sale or other disposition, (I) more than 50% of, respectively, the
then outstanding Shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities of
such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by all
or substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to
such sale or other disposition in substantially the same proportion
as their ownership, immediately prior to such sale or other
disposition, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, as the case may be, (II) no Person
(excluding the Company and any employee benefit plan (or related
trust) of the Company or of such corporation and any Person
beneficially owning, immediately prior to such sale or other
disposition, 20% or more of the Outstanding Company Common Stock or
Outstanding Company Voting Securities, as the case may be) then
beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding Shares of common stock of such
corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in
the election of directors and (III) at least a majority of the
members of the board of directors of such corporation were members of
the Incumbent Board at the time of the execution of the initial
agreement or action of the Board providing for such sale or other
disposition of assets of the Company.
(h) The term "Good Cause Event" shall mean:
(i) an act or acts of personal dishonesty done by the Participant
and intended to result in substantial personal enrichment of the
Participant at the expense of the Company or an Affiliated Company,
(ii) repeated violations by the Participant of the Participant's
obligations under any employment agreement which are demonstrably
willful and deliberate on the Participant's part and which are not
remedied in a reasonable period of time after receipt of written
notice from the Company or an Affiliated Company, or
(iii) the conviction of the Participant of a felony involving moral
turpitude.
The determination of whether or not a Good Cause Event has occurred
shall be made by the Committee in its sole and absolute discretion.
9. PARTICIPANT REPORTS
The Committee shall make appropriate reports to the Participant
concerning the status of such Participant's Deferred Compensation
Account.
10. TRANSFERABILITY OF INTEREST
The right to receive a payment under this Plan is not assignable or
transferable and shall not be subject to any encumbrances, liens,
pledges or charges of the Participant or to claims of such
Participant's creditors. Any attempt to assign, transfer, hypothecate
or attach any rights with respect to or derived from any payment shall
be null and void and of no force and effect whatsoever.
11. DESIGNATION OF BENEFICIARIES
A Participant may designate in writing a beneficiary or beneficiaries
to receive any distribution under the Plan which is made after the
Participant's death, provided, however, that if at the time any such
distribution is due, there is no designation of a beneficiary in force
or if any person (other than a trustee or trustees) as to whom a
beneficiary designation was in force at the time of the Participant's
death shall have died before the
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payment became due and the Participant has failed to provide in such
beneficiary designation for any person or persons to take in lieu of
such deceased person, the person or persons entitled to receive such
distribution (or part thereof, as the case may be) shall be the
Participant's executor or administrator.
12. AMENDMENT, SUSPENSION AND TERMINATION
The Plan may be amended only by a disinterested majority of the Board
of Directors as it deems necessary or appropriate to better achieve the
purpose of the Plan, except that no such amendment which would
otherwise cause the Plan not to comply with either Rule 16b-3, or any
successor rule, under the Act or Section 162(m) of the Code shall be
effective without the approval of the Company's shareholders.
13. FAIR MARKET VALUE
Fair Market Value of a Share or Stock Unit for all purposes under the
Plan shall mean the closing price of a Share as reported daily on the
New York Stock Exchange Composite Tape and published in the Wall Street
Journal or similar readily available public source for the date in
question. If no sales of Shares were made on such date, the closing
price of a Share as reported for the next preceding day on which sales
of Shares were made shall be used.
14. ADJUSTMENTS AND REORGANIZATIONS
In the event of any stock dividend, stock split, combination or
exchange of Shares, merger, consolidation, spin-off, recapitalization
or other distribution (other than normal cash dividends) of Company
assets to stockholders, or any other change affecting Shares or the
price of Shares, such proportionate adjustments, if any, as the
Committee in its discretion may deem appropriate to reflect such change
shall be made with respect to each Stock Unit held in the stock unit
subaccount. The adjustment described in the preceding sentence shall be
calculated to three decimal places.
15. TAX WITHHOLDING
The Company shall have the right to deduct from any payment made
under the Plan, including the delivery of Shares, a sufficient amount
to cover withholding of any federal, state or local taxes required by
law, or to take such other action as may be necessary to satisfy any
such withholding obligations. The Committee may permit Shares to be
used to satisfy required tax withholding and such Shares shall be
valued at the Fair Market Value as of the settlement date of the
applicable Award. Any election by a Reporting Person to have Shares
withheld from the payment made hereunder to satisfy withholding
obligations shall be made either (a) no less than six months prior to
the effectiveness of such election, or (b) during the third to twelfth
business day following the release by the Company of its quarterly or
annual earnings, as contemplated by Rule 16b-3.
16. UNFUNDED PLAN
During the Deferral Period, all Deferred Compensation Accounts shall
be considered as general assets of the Company for use as it deems
necessary or appropriate, and will be subject to the claims of the
Company's creditors.
Unless otherwise determined by the Committee, the Plan shall be
unfunded and shall not create (or be construed to create) a trust or a
separate fund or funds. The Plan shall not establish any fiduciary
relationship between the Company and any Participant or other person.
To the extent any person holds any rights under the Plan, such rights
(unless otherwise determined by the Committee) shall be no greater than
the rights of an unsecured general creditor of the Company.
17. OTHER EMPLOYEE BENEFITS
Any compensation deferred and any benefits paid under this Plan shall
not be included in creditable compensation in computing benefits under
any employee benefit plans of the Company, except to the extent
expressly provided for thereunder.
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18. NO RIGHT TO EMPLOYMENT
Nothing contained herein shall be construed as conferring upon any
Participant the right to continue in the employ of the Company or any
Affiliated Company.
19. CLAIMS FOR BENEFITS
A Participant or beneficiary may claim any benefit to which he or she
is entitled under this Plan by a written notice to the Committee. If a
claim is denied, it must be denied within a reasonable period of time,
and be contained in a written notice stating the following:
(a) The specific reason for the denial.
(b) Specific reference to the Plan provision on which the denial is
based.
(c) Description of additional information necessary for the claimant
to present the claim, if any, and an explanation of why such material
is necessary.
(d) An explanation of the Plan's claims review procedure.
The claimant will have sixty (60) days to request a review of the
denial by the Committee, which will provide a full and fair review. The
request for review must be in writing delivered to the Committee. The
claimant may review pertinent documents, and he may submit issues and
comments in writing. The decision by the Committee with respect to the
review must be given within sixty (60) days after receipt of the
request, unless special circumstances require an extension (such as for
a hearing). In no event shall the decision be delayed beyond one
hundred and twenty (120) days after receipt of the request for review.
The decision shall be written in a manner calculated to be understood
by the claimant, and it shall include specific reasons and refer to
specific Plan provisions as to its effect.
20. GOVERNING LAW
The validity, construction and effect of the Plan and any actions
taken or relating to the Plan shall be determined in accordance with
the laws of the State of Missouri and applicable federal law.
21. SUCCESSORS AND ASSIGNS
The Plan shall be binding on all successors and assigns of a
Participant, including, without limitation, the estate of such
Participant and the executor, administrator or trustee of such estate,
or any receiver or trustee in bankruptcy or representative of the
Participant's creditors.
22. RIGHT AS A SHAREHOLDER
Except as may otherwise be provided by the Committee, a Participant
shall have no rights as a shareholder with regard to a Stock Unit until
he or she becomes the actual holder of record of a Share.
MERCANTILE BANCORPORATION INC.
By ...................................
Title ................................
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<PAGE> 46
APPENDIX E
MERCANTILE BANCORPORATION INC.
1994 STOCK INCENTIVE PLAN FOR NON-EMPLOYEE DIRECTORS
1. PURPOSE
The purposes of the Mercantile Bancorporation Inc. (the "Company")
1994 Stock Incentive Plan for Non-Employee Directors (the "Plan") are
to provide members of the Board of Directors of the Company (the
"Board") who are not employees of the Company or any of its affiliates
or subsidiaries ("Non-Employee Directors") with a larger equity
interest in the Company in order to attract and retain well-qualified
individuals to serve as Non-Employee Directors and to enhance the
identity of interests between Non-Employee Directors and the
shareholders of the Company. The purposes of the Plan are to be
accomplished through the grant of units ("Stock Units") equivalent to
shares of the Company's common stock ("Shares") as part of their annual
retainer for services as Non-Employee Directors, and to allow Non-
Employee Directors to elect to defer receipt of all or a portion of
their retainer, committee chair, and/or meeting fees.
2. TERM
The Plan shall be effective as of April 28, 1994, and shall remain in
effect until terminated by the Board. The Plan shall be subject to
approval by the shareholders of the Company, but if that approval has
not been obtained before April 29, 1995, the Plan shall be void, and
any Stock Units issued thereunder shall be void. If the Plan is
terminated by the Board, no Stock Units may be issued after the
effective date of such termination, but, subject to the preceding
sentence, previously issued Stock Units shall remain outstanding in
accordance with their applicable terms and conditions and the terms and
conditions of the Plan.
3. ELIGIBILITY AND PARTICIPATION
Only Non-Employee Directors shall be eligible to participate in the
Plan, and participation in the Plan with respect to awards pursuant to
Section 4 of the Plan is mandatory for all Non-Employee Directors.
4. ANNUAL AWARDS
(a) On April 28, 1994, and as of the date of each subsequent annual
meeting of the Company's shareholders (the "Grant Date"), the Company
shall award to each person who is a Non-Employee Director immediately
following such meeting on such Grant Date, in consideration of services
to be rendered as a Non-Employee Director, a number of Stock Units
equal to the lesser of (i) One Hundred Fifty (150) or (ii) the number
of Stock Units determined by dividing Ten Thousand Dollars ($10,000) by
the Fair Market Value of a Share on the Grant Date. Such calculation
shall be carried to three decimal places.
(b) Stock Unit Accounts: The Stock Units awarded pursuant to Section
4(a) shall be credited as of the Grant Date to a bookkeeping reserve
account maintained by the Company ("Stock Unit Account").
5. DEFERRAL OF RETAINERS AND/OR FEES
(a) Deferral Elections: Commencing on the effective date of the Plan,
payment of all or part of any retainer and/or fees payable to a Non-
Employee Director for membership on the board, for meetings of the
Board or Board committees, or for extraordinary services, may be
deferred by election of the Non-Employee Director. Each such election
must be made by June 30 of the calendar year before the calendar year
for which the retainer and/or fees will be paid and will be irrevocable
for the affected calendar year. An election may be changed or revoked
for a future calendar year by submitting an appropriate form by June 30
of the preceding calendar year, but unless changed or revoked an
election shall remain in effect for subsequent calendar years.
(b) Crediting Deferral Amounts to Accounts: Amounts deferred pursuant
to Section 5(a) shall be credited at the Non-Employee Director's
election, which election shall be made concurrently with the election
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pursuant to Section 5(a) hereof and which shall be irrevocable for the
affected calendar year, as of the date of the deferral, to (i) the Non-
Employee Director's Stock Unit Account or (ii) a bookkeeping reserve
account maintained by the Company as a cash account which will receive
earnings credits as provided herein ("Cash Account"). If deferral to
the Stock Unit Account is elected, the number of Stock Units credited
to the Stock Unit Account shall equal the deferred cash amount divided
by the Fair Market Value of a Share on the date on which such cash
amount would have been paid but for the deferral election pursuant to
Section 5(a). Such calculation shall be carried to three decimal
places. If deferral to the Cash Account is elected, an amount equal to
the deferred cash amount shall be credited to such Cash Account as of
the first day of the next succeeding month following the date such cash
amount would have been paid but for the deferral election pursuant to
Section 5(a).
(c) Selecting Earnings Credit Measure for Accounts: Each Non-Employee
Director shall, at the time of his election to defer all or part of any
retainer and/or fees, select from the list of investment vehicles in
use at the time under the Mercantile Bancorporation Inc. Voluntary
Deferred Compensation Plan to serve as the measure of Earnings Credits
to be used to adjust the value of the Cash Account as provided herein
("Index"). The Non-Employee Director may change the Index applicable to
any portion of the Cash Account by making an election to that effect at
the same time as a deferral election is made pursuant to (a), above.
6. ADDITIONS TO DEFERRED ACCOUNTS
(a) Dividend Equivalent Payments: As of each dividend payment date
with respect to Shares, there shall be credited to each Non-Employee
Director's Stock Unit Account an additional number of Stock Units equal
to (i) the per-share dividend payable with respect to a Share on such
date multiplied by (ii) the number of Stock Units held in the Stock
Unit Account as of the close of business on the first business day
prior to such dividend payment date and, if the dividend is payable in
cash or property other than Shares, divided by (iii) the Fair Market
Value of a Share on such business day. For purposes of this Section 6,
"dividend" shall include all dividends, whether normal or special, and
whether payable in cash, Shares or other property. The calculation of
additional Stock Units shall be carried to three decimal places.
(b) Earnings Credits: As of the last business day of each calendar
month, each Non-Employee Director's Cash Account shall be adjusted by
an amount calculated under the Index selected by the Non-Employee
Director, to reflect the increase or decrease which would have occurred
in such Cash Account if it had been invested in the assets measured by
the Index.
7. VESTING OF ACCOUNT
All amounts, whether in Stock Units credited to a Non-Employee
Director's Stock Unit Account or deferred cash credited to a Non-
Employee Director's Cash Account, pursuant to this Plan shall be at all
times fully vested and nonforfeitable.
8. PAYMENT OF ACCOUNTS
(a) Stock Unit Accounts: Upon the earlier of a Change in Control or
termination of service as a Non-Employee Director for any reason, the
total number of whole Stock Units in the Non-Employee Director's Stock
Unit Account shall be paid to the Non-Employee Director in an equal
number of whole Shares. The Company shall issue and deliver to the Non-
Employee Director a stock certificate for payment of Stock Units as
soon as practicable following the date on which the Stock Units, or any
portion thereof, become payable. Any fractional Stock Unit shall be
paid in cash based upon the Fair Market Value of a Share on the date
payment is made.
(b) Cash Accounts: Upon the earlier of a Change in Control or
termination of service as a Non-Employee Director for any reason, the
balance in the Non-Employee Director's Cash Account shall be paid to
the Non-Employee Director in cash as soon as practicable after such
termination.
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<PAGE> 48
(c) Form of Distribution: Distributions will be made from the Account
or Accounts of a Non-Employee Director in whichever of the following
methods the Non-Employee Director elects at the time of his deferral
election:
(i) A single sum.
(ii) Approximately equal monthly installments over a period not to
exceed 10 years as the Non-Employee Director shall elect.
The Non-Employee Director shall elect the form of distribution for a
particular year's deferral, and may elect a different form for
different years. An election of a form of distribution for a
particular year may not be changed after the beginning of the year to
which the election relates. If an Account is being distributed in
installments, the portion of the Account being held for future
distribution shall continue to receive Earnings Credits or Dividend
Equivalent Payments, as applicable. If an election of installment
payments is made with respect to a Stock Unit Account, the number of
Shares to be distributed as part of an individual installment may be
rounded up or down to the nearest whole Share in order to avoid a
fractional share until the final installment.
(d) The term "Change in Control" shall mean:
(i) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 20% or more of either (A) the then
outstanding Shares of common stock of the Company (the "Outstanding
Company Common Stock") or (B) the combined voting power of the then
outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company
Voting Securities"); provided, however, that the following
acquisitions shall not constitute a Change of Control: (A) any
acquisition directly from the Company (excluding an acquisition by
virtue of the exercise of a conversion privilege), (B) any
acquisition by the Company, (C) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the
Company or any of its affiliated companies or (D) any acquisition by
any corporation pursuant to a reorganization, merger or
consolidation, if, following such reorganization, merger or
consolidation, the conditions described in clauses (A), (B), and (C)
of subsection (iii) are satisfied; or
(ii) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual
becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company's shareholders, was approved
by a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any
such individual whose initial assumption of office occurs as a result
of either an actual or threatened election contest (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act) or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
(iii) Approval by the shareholders of the Company of a
reorganization, merger or consolidation, in each case, unless,
following such reorganization, merger or consolidation, (A) all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to
such reorganization, merger or consolidation beneficially own,
directly or indirectly, more than 50% of, respectively, the then
outstanding Shares of common stock and the combined voting power of
the then outstanding voting securities entitled to vote generally in
the election of directors, as the case may be, of the corporation
resulting from such reorganization, merger or consolidation in
substantially the same proportions as their ownership, immediately
prior to such reorganization, merger or consolidation of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (B) no Person (excluding the Company
and any employee benefit plan (or related trust) of the Company or of
the corporation resulting from such reorganization, merger or
consolidation and any Person beneficially owning, immediately prior
to such reorganization, merger or consolidation, directly or
indirectly, 20% or more of the Outstanding Company Common Stock or
Outstanding Voting Securities, as the case may be)
E-3
<PAGE> 49
beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding Shares of common stock of the
corporation resulting from reorganization, merger or consolidation or
the combined voting power of the then outstanding voting securities
of such corporation and (C) at least a majority of the members of the
board of directors of the corporation resulting from such
reorganization, merger or consolidation were members of the Incumbent
Board at the time of the execution of the initial agreement providing
for such reorganization, merger or consolidation; or
(iv) Approval by the shareholders of the Company of (A) a complete
liquidation or dissolution of the Company or (B) the sale or other
disposition of all or substantially all of the assets of the Company,
other than to a corporation, with respect to which following such
sale or other disposition, (I) more than 50% of, respectively, the
then outstanding Shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities of
such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by all
or substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to
such sale or other disposition in substantially the same proportion
as their ownership, immediately prior to such sale or other
disposition, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, as the case may be, (II) no Person
(excluding the Company and any employee benefit plan (or related
trust) of the Company or of such corporation and any Person
beneficially owning, immediately prior to such sale or other
disposition, 20% or more of the Outstanding Company Common Stock or
Outstanding Company Voting Securities, as the case may be) then
beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding Shares of common stock of such
corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in
the election of directors and (III) at least a majority of the
members of the board of directors of such corporation were members of
the Incumbent Board at the time of the execution of the initial
agreement or action of the Board providing for such sale or other
disposition of assets of the Company.
9. SHARES SUBJECT TO THE PLAN
The aggregate number of Shares that may be subject to issuance under
the Plan shall not exceed 225,000, subject to adjustment as provided in
Section 10 of this Plan.
10. ADJUSTMENTS AND REORGANIZATION
In the event of any stock dividend, stock split, combination or
exchange of Shares, merger, consolidation, spin-off, recapitalization
or other distribution (other than normal cash dividends) of Company
assets to stockholders, or any other change affecting Shares or the
price of Shares, such proportionate adjustments, if any, as the Board
in its discretion may deem appropriate to reflect such change shall be
made with respect to (a) the aggregate number of Shares that may be
issued under the Plan, (b) the size of the awards made pursuant to
Section 4(a), and (c) each Stock Unit held in the Stock Unit Accounts.
Any adjustments described in the preceding sentence shall be carried to
three decimal places.
11. FAIR MARKET VALUE
Fair Market Value for all purposes under the Plan shall mean the
closing price of a Share as reported daily on the New York Stock
Exchange Composite Tape and published in The Wall Street Journal or
similar readily available public source for the date in question. If no
sale of Shares was made on such date, the closing price of a Share as
reported for the next preceding day on which a sale of Shares was made
shall be used.
12. TERMINATION OR AMENDMENT OF PLAN
(a) In General: The Board may at any time terminate, suspend or amend
this Plan. However, except as otherwise determined by the Board, no
amendment of the Plan shall become effective without the approval of
the stockholders of the Company to the extent stockholder approval is
required in order to comply with Rule 16b-3 under the Securities
Exchange Act of 1934, as amended.
E-4
<PAGE> 50
(b) Amendment No More Than Once in 6 Months: Those provisions of this
Plan which set forth the amounts and formula for determining the
amounts and timing of Stock Unit grants may not be amended effective as
of a date which is less than six (6) months after the effective date of
a prior amendment of such provisions.
(c) Written Consents: No amendment may adversely affect the right of
any Non-Employee Director to have dividend equivalents credited to a
Stock Unit Account or Earnings Credits added to or subtracted from a
Cash Account, or to receive any shares or cash pursuant to the payout
of such accounts, unless such Non-Employee Director consents in writing
to such amendment.
13. GOVERNMENT REGULATIONS
(a) The obligations of the Company to issue any Stock granted under
this Plan shall be subject to all applicable laws, rules and
regulations and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Board.
(b) Subject to the provisions of Section 12, the Board may make such
changes in the design and administration of this Plan as may be
necessary or appropriate to comply with the rules and regulations of
any governmental authority.
14. MISCELLANEOUS
(a) Unfunded Plan: Nothing contained in this Plan and no action taken
pursuant to the provisions hereof shall create or be construed to
create a trust of any kind, or a fiduciary relationship between the
Company and a Non-Employee Director, the Non-Employee Director's
designate or any other person. The Plan shall be unfunded with respect
to the Company's obligation to pay any amounts due with respect to
Stock Unit Accounts or Cash Accounts, and a Non-Employee Director's
rights to receive any payment with respect to any Stock Unit Account or
Cash Account shall be not greater than the rights of an unsecured
general creditor of the Company.
(b) Assignment; Encumbrances: The right to have amounts credited to a
Stock Unit Account or to a Cash Account, and the right to receive
payment with respect to such Stock Unit Account or Cash Account under
this Plan are not assignable or transferable and shall not be subject
to any encumbrances, liens, pledges or charges of the Non-Employee
Director or to claims of the Non-Employee Director's creditors. Any
attempt to assign, transfer, hypothecate or attach any rights with
respect to or derived from any Stock Unit, or any rights with respect
to or derived from a Cash Account, shall be null and void and of no
force and effect whatsoever.
(c) Designation of Beneficiaries: A Non-Employee Director may
designate in writing a beneficiary or beneficiaries to receive any
distribution under the Plan which is made after the Non-Employee
Director's death, provided, however, that if at the time any such
distribution is due, there is no designation of a beneficiary in force
or if any person (other than a trustee or trustees) as to whom a
beneficiary designation was in force at the time of Director's death
shall have died before the payment became due and the Non-Employee
Director has failed to provide in such beneficiary designation for any
person or persons to take in lieu of such deceased person, the person
or persons entitled to receive such distribution (or part thereof, as
the case may be) shall be the Non-Employee Director's executor or
administrator.
(d) Relationship of Non-Employee Director: A Non-Employee Director's
relationship with the Company is not in fact and is not intended to be
an employee-employer relationship, and nothing in this Plan shall be
construed to create such a relationship.
(e) Administration: The Board shall have the right to administer this
Plan, including the adoption of rules or the preparation of forms to be
used in its operation, and to interpret and apply the provisions hereof
as well as any rules which it may adopt. The Board may delegate its
administrative authority hereunder to one or more individuals or to a
committee, as the Board deems appropriate.
(f) Governing Law: The validity, construction and effect of the Plan
and any actions taken or relating to the Plan, shall be determined in
accordance with the laws of the State of Missouri and applicable
federal law.
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<PAGE> 51
(g) Rights as a Shareholder: A Non-Employee Director shall have no
rights as a shareholder with respect to a Stock Unit until the Non-
Employee Director actually becomes a holder of record of Shares
distributed with respect thereto.
(h) Notices: All notices or other communications made or given
pursuant to this Plan shall be in writing and shall be sufficiently
made or given if hand delivered, or if mailed by certified mail,
addressed to the Non-Employee Director at the address contained in the
records of the Company or to the Company at its principal office, as
applicable.
MERCANTILE BANCORPORATION INC.
By ...................................
Title ................................
E-6
<PAGE> 52
MERCANTILE BANCORPORATION INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
April 28, 1994
The undersigned hereby appoints T.H. JACOBSEN, R.W. BABB, JR.
and J.W. BILSTROM, and each of them, with or without the others, proxies,
with full power of substitution to vote as designated below, all shares of
stock of Mercantile Bancorporation Inc. (the "Corporation") that the
undersigned signatory is entitled to vote at the Annual Meeting of
Shareholders of the Corporation to be held in the Regency Ballroom of the
Hyatt Regency St. Louis at Union Station, 20th and Market Streets,
One St. Louis Station, St. Louis, Missouri, on Thursday, April 28, 1994,
at 10:00 A.M., and all adjournments thereof, all in accordance with and
as more fully described in the Notice and accompanying Proxy Statement
for such meeting, receipt of which is hereby acknowledged.
1. Election of Directors
Election of six Class III directors (change of address)
to hold office for terms of three ____________________________
years expiring in 1997 or until ____________________________
their successors shall have been ____________________________
duly elected and qualified.
NOMINEES: HARRY M. CORNELL, JR., If you have written in the
BERNARD A. EDISON, THOMAS H. above spaces, please mark the
JACOBSEN, CRAIG D. SCHNUCK, corresponding box on the
ROBERT W. STALEY AND ROBERT L. reverse side of this card.
STARK
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE,THIS
PROXY WILL BE VOTED "FOR" THE ELECTION OF ALL NOMINEES LISTED AND "FOR"
ALL OF THE PROPOSALS LISTED ON THE REVERSE SIDE. THE PROXIES CANNOT VOTE
YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SEE REVERSE SIDE
<PAGE> 53
1. Election of Directors (see reverse)
/ / FOR / / WITHHELD
For, except vote withheld from the following nominee(s):
___________________________________________________________________________
2. Increase in authorized number of shares of Common Stock
/ / FOR / / AGAINST / / ABSTAIN
3. Adopt 1994 Stock Incentive Plan
/ / FOR / / AGAINST / / ABSTAIN
4. Qualify restricted performance unit grants as "performance-based"
/ / FOR / / AGAINST / / ABSTAIN
5. Adopt 1994 Executive Incentive Compensation Plan
/ / FOR / / AGAINST / / ABSTAIN
6. Adopt Voluntary Deferred Compensation Plan
/ / FOR / / AGAINST / / ABSTAIN
7. Adopt 1994 Stock Incentive Plan for Non-Employee Directors
/ / FOR / / AGAINST / / ABSTAIN
8. In their discretion, upon any other business which may properly come
before the meeting
Change of address: / /
SIGNATURE(S):____________________________ DATE:_____________________________
SIGNATURE(S):____________________________ DATE:_____________________________
NOTE: Please sign exactly as name appears
hereon. Joint owners should each sign.
When signing as attorney, executor,
administrator, trustee or guardian, please
give full title as such.
<PAGE> 54
APPENDIX
Page 16 of the printed Proxy Statement contains a Comparison of Five-Year
Cumulative Total Return Graph. The information in this graph is contained in
the table immediately following the graph and the complete graph has been filed
under cover of Form SE.
