<PAGE> 1
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
/ / Definitive Proxy Statement Rule 14a-6(e)(2))
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Mercantile Bancorporation Inc.
---------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
---------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(j)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $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:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: (Set forth the amount on which
the filing fee is calculated and state how it was determined.)
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
<PAGE> 2
PRELIMINARY COPY
----------------
Mercantile P.O. Box 524
Bancorporation St. Louis, MO 63166-0524
Inc.
THOMAS H. JACOBSEN
Chairman of the Board, President
and Chief Executive Officer
March --, 1996
DEAR SHAREHOLDER:
You are cordially invited to attend our Annual Meeting of
Shareholders, which will be held at 10:00 am on Thursday, April
25, 1996.
The meeting will be in Salon I of the Ritz - Carlton Hotel,
#1 Carondelet Plaza, Clayton, Missouri 63105. A special card
admitting you to the meeting is attached to the proxy. Please
detach and present it at the door when you arrive.
The Notice of Annual Meeting, proxy statement, and proxy
card which accompany this letter outline the matters on which
action is expected to be taken at this meeting. The Board of
Directors respectfully requests that you vote in favor of each
such matter.
Whether or not you are able to attend the meeting, we would
appreciate your dating, signing and mailing the enclosed proxy
card as promptly as convenient in the return envelope that is
enclosed. If you do attend the meeting, you may revoke your
proxy and vote your shares in person.
Our Annual Report for 1995 has been mailed to you under
separate cover.
Thank you for your continued support.
Sincerely,
<PAGE> 3
Notice: Mercantile
Annual Meeting Bancorporation
of Shareholders Inc.
April 25, 1996
The Annual Meeting of Shareholders of Mercantile
Bancorporation Inc. will be held in Salon I of the Ritz -
Carlton Hotel, #1 Carondelet Plaza, Clayton, Missouri 63105, on
Thursday, April 25, 1996, at 10:00 am, for the following
purposes:
1. To elect three directors in Class II for terms of three
years expiring in 1999.
2. To elect one director in Class I for a term of two
years expiring in 1998.
3. To elect one director in Class III for a term of one
year expiring in 1997.
4. 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 100,000,000 to
200,000,000 shares.
5. 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 11, 1996, are entitled to notice of and to vote at the meeting.
THOMAS H. JACOBSEN
Chairman of the Board, President
and Chief Executive Officer
March --, 1996
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<PAGE> 4
Proxy Mercantile
Statement Bancorporation
Inc.
This proxy statement and the form of proxy are furnished 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 25, 1996, 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 election
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. to assist in the solicitation of
proxies on its behalf for a fee of approximately $5,500 plus
expenses.
Only shareholders of record at the close of business on
March 11, 1996, are entitled to notice of and to vote at the
meeting. On that date there were -------------- shares of
Mercantile's Common Stock outstanding, with each share being
entitled to one vote. 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
Class II directors, this means that a shareholder is entitled to
cast as many votes as shall equal the number of shares of Common
Stock of Mercantile owned multiplied by three, the number of
directors in Class II 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 equally 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. Since only one director will be
elected in each of Class I and Class III at this Annual Meeting,
cumulative voting will not be possible in such elections.
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<PAGE> 5
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
<TABLE>
The following table sets forth the name and address of each
beneficial owner of five percent or more 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 <F1>
------------------- ----------------------- ----------------
<S> <C> <C>
Mercantile Bank of St. Louis Sole Voting Power...............------------
National Association<F2> Shared Voting Power.............------------
("Mercantile Bank" or "MBSL") Sole Investment Power...........------------
P.O. Box 387 Shared Investment Power.........------------
St. Louis, Missouri 63166 Total...........................------------ -----%
Mr. Frank Lyon, Jr.<F3> Sole Voting Power............... 4,553,262
One Riverfront Place Shared Voting Power............. 0
Suite 400 Sole Investment Power........... 4,553,262
North Little Rock, Arkansas 72114 Shared Investment Power......... 0
Total........................... 4,553,262 -----%
<FN>
<F1> Based upon ---------- shares outstanding at March 11, 1996
<F2> Includes shares beneficially owned as of March 11, 1996, by
Mercantile Bank of St. Louis National Association ("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
the proposal to amend the Restated Articles of Incorporation of the
Corporation described herein. Mercantile Bank and such affiliates will
also recommend to all co-trustees and co-executors that they vote in a
similar manner.
<F3> Based upon information contained in a Schedule 13G dated
February 8, 1996, as amended, and filed with the Securities and Exchange
Commission, Frank Lyon, Jr. is the indirect beneficial owner of such
shares, which are held of record by the Lyon 72/95 Limited Partnership
(1,801,903 shares) and the Lyon 87/95 Limited Partnership (2,751,359
shares).
</TABLE>
ITEM 1. ELECTION OF DIRECTORS
One of the purposes of the meeting is to elect three directors in
Class II to serve for terms of three years expiring in 1999, one
director in Class I to serve for a term of two years expiring in 1998
and one director in Class III to serve for a term of one year expiring
in 1997. The persons named on 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 three nominees receiving the highest number of votes in the
Class II election will be elected as Class II directors and the nominees
receiving the highest number of votes in the Class I and Class III
elections will be elected as Class I and Class III directors,
respectively. Except for William A. Hall, none of the nominees for
election as directors in Class II are currently directors of Mercantile.
Each of the nominees for election in Class I and Class III is currently
a director 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.
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<PAGE> 6
The name, age as of the date of the Annual Meeting, 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 are 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 or her name.
CLASS II - TO BE ELECTED FOR A TERM OF THREE YEARS
EXPIRING IN 1999
WILLIAM A. HALL, 50 - Director beginning in 1993; Assistant to
the Chairman, Hallmark Cards, Inc., manufacturer of greeting cards
and related products; Director of Payless Cashways, Inc.
EDWARD A. MUELLER, 48 - Nominee for Director; President, and Chief
Executive Officer and Director of Southwestern Bell Telephone
Company since July 1995. Mr. Mueller served for more than five
years prior thereto in various capacities with other affiliates of
SBC Communications, Inc.
ROBERT W. MURRAY, 61 - Nominee for Director; Chairman of the Board
of Hawkeye Bank, Des Moines, Iowa, an affiliate of Mercantile,
since January 1996. Mr. Murray served as Chairman and Chief
Executive Officer of Hawkeye Bancorporation from April 1991 to
January 1996, and in various other capacities with Hawkeye
Bancorporation prior thereto.
CLASS I - TO BE ELECTED FOR A TERM OF TWO YEARS
EXPIRING IN 1998
ROBERT L. STARK, 63 - Director beginning in 1993; Dean of
University of Kansas Regents Center, educational institution, since
September 1993; Director of Packer Plastics Inc. and Century
Products Co. Mr. Stark served as Executive Vice President of
Hallmark Cards, Inc. from January 1986 to May 1993.
CLASS III - TO BE ELECTED FOR A TERM OF ONE YEAR
EXPIRING IN 1997
PATRICK T. STOKES, 53 - Director beginning in 1992; President of
Anheuser-Busch, Inc., brewer of beer and other malt beverages.
CLASS I - TO CONTINUE IN OFFICE UNTIL 1998
THOMAS A. HAYS, 63 - Director beginning in 1984; Deputy Chairman
and Director of The May Department Stores Company, retail stores;
Director of Union Electric Company.
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<PAGE> 7
FRANK LYON, JR., 54 - Director beginning in 1995; Chairman of
Mercantile Bank of Central Arkansas since May 1995. Mr. Lyon
served as Chairman of the Board of TCBankshares Inc. for more than
five years prior to May 1995.
HARVEY SALIGMAN, 57 - Director beginning in 1982; Managing Partner
of Cynwyd Investments, real estate investment company; Director of
Union Electric Company.
JOHN A. WRIGHT, 53 - Director beginning in 1986; President and
Chief Executive Officer of Big River Minerals Corp., natural
resources investment firm.
CLASS III - TO CONTINUE IN OFFICE UNTIL 1997
HARRY M. CORNELL, JR., 67 - Director beginning in 1991; Chairman,
and Chief Executive Officer and Director of Leggett & Platt, Inc.,
manufacturer of components used primarily in the furniture and
bedding industry; Director of Ennis Business Forms, Inc.
THOMAS H. JACOBSEN, 56 - Director beginning in 1989; Chairman of
the Board, President and Chief Executive Officer of Mercantile;
Director of Union Electric Company, Student Loan Marketing
Association and Trans World Airlines, Inc.
CRAIG D. SCHNUCK, 47 - Director beginning in 1991; Chairman, Chief
Executive Officer and Director of Schnuck Markets, Inc., retail
supermarket chain; Director of Edison Brothers Stores, Inc.
BOARD OF DIRECTORS AND COMMITTEES
During 1995 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. Price<F1> and Mr. Stokes.
The standing committees of the Board of Directors in 1995 included
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<F2>, Chairman, William A. Hall, Patrick T. Stokes, Francis A.
Stroble<F1> and John A. Wright. The Audit Committee met four times in
1995. 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 Community Relations Committee are Messrs. Earl
K. Dille<F1>, Chairman, and Craig D. Schnuck. The Community Relations
Committee met two times in 1995. 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.
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<PAGE> 8
The members of the Compensation and Management Development
Committee are Messrs. Harry M. Cornell, Jr., Chairman, Thomas A. Hays,
and Harvey Saligman<F3>. The Compensation and Management Development
Committee, which met five times in 1995, 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 Credit Policy Committee are Messrs. Earl K.
Dille<F1>, Charles H. Price II<F1>, and Robert L. Stark. The Credit
Policy Committee met three times in 1995. 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, Harry M. Cornell, Jr., Earl K. Dille and Thomas A.
Hays. 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 four times in 1995.
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 one time in 1995.
[FN]
<F1> Messrs. Dille, Price and Stroble will resign from the Board of
Directors of the Corporation effective as of the date of the Annual
Meeting of Shareholders. Each is expected to serve the Board in an
advisory capacity thereafter.
<F2> Mr. Conerly, having attained age 70 years, will retire from the
Corporation's Board of Directors effective as of the date of the Annual
Meeting of Shareholders.
<F3> Bernard A. Edison, prior to his resignation from the Board in
October, 1995, was Chairman of the Compensation and Management
Development Committee. He was succeeded as Chairman by Mr. Cornell.
Mr. Edison continues to serve the Board in an advisory capacity. Mr.
Edison participated in the 1995 compensation decisions but the actual
report of the Compensation and Management Development Committee was
prepared after his resignation.
DIRECTORS' FEES
Directors who are not officers of Mercantile or any of its
subsidiaries are paid an annual retainer of $15,000 ($17,000 for
Committee Chairmen), as well as $1,000 for attendance at each meeting of
the Board of Directors and $500 for attendance at meetings of its
standing committees.
Pursuant to the Mercantile Bancorporation Inc. 1994 Stock Incentive
Plan for Non-Employee Directors (the "Director Plan"), each director not
otherwise employed by Mercantile and its subsidiaries receives stock
units ("Stock Units"), each of which is the equivalent of one share of
Mercantile's Common Stock, as additional consideration for services
rendered or to be rendered to the Corporation. Stock Units are awarded
annually at the time of the annual meeting of Mercantile's shareholders
("Annual Awards"), and quarterly at the time dividends are payable in
respect of Mercantile's Common Stock ("Quarterly Awards"). Stock Units
so awarded are credited to accounts (each a "Stock Unit Account")
established by Mercantile for the benefit of each non-employee director.
Annual Awards are 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" of Mercantile's Common Stock (as defined in the Director
Plan) at the time of the award, or (b) one hundred fifty (150).
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<PAGE> 9
Quarterly Awards of Stock Units will be equal to (a) the 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 a director's Stock Unit Account, divided by (b)
the "Fair Market Value" of a share of Mercantile's Common Stock on that
date. During 1995, non-employee directors received a total of 3,164.123
Stock Units in Annual and Quarterly Awards.
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 of Mercantile) the receipt of all or a
portion of the retainer and/or fees to which such director is entitled.
Amounts so deferred will be credited, at the option of the electing
director, to either (a) an interest-bearing cash account established by
Mercantile for the benefit of such director (each a "Cash Account")
which will be adjusted for gains or losses based upon an investment
index selected by such director, or (b) such director's Stock Unit
Account. Deferred cash amounts credited to a Stock Unit Account 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 director in the form of an equivalent number
of shares of Mercantile's Common Stock and in cash, respectively,
following the termination of service of such director (or earlier change
in control of Mercantile). In lieu of fractional shares of
Mercantile's Common Stock, each 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.
Effective as of March 1, 1996, the Retirement Plan for Directors of
Mercantile was terminated and all accrued benefits thereunder as of such
date were either distributed or credited to deferred compensation accounts
maintained by the Directors under the Director Plan.
BENEFICIAL OWNERSHIP OF STOCK BY MANAGEMENT
The following information is furnished as of March 11, 1996, to
indicate beneficial ownership of shares of Mercantile's Common Stock by
each director, by each nominee for director and by each executive
officer named in the Summary Compensation Table, individually, and all
directors, nominees and executive officers as a group. 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, nominees and executive officers that no other reports were
required, during the year ended December 31, 1995, all Section 16(a)
filing requirements applicable to Reporting Persons were timely met.
<TABLE>
<CAPTION>
NAME OF BENEFICIAL OWNER AMOUNT BENEFICIALLY OWNED <F1>
------------------------ ------------------------------
<S> <C>
Harry M. Cornell, Jr. ------
William A. Hall ------<F2>
Thomas A. Hays ------<F3>
Thomas H. Jacobsen ------<F4>
Frank Lyon, Jr. ------<F5>
Edward A. Mueller ------
Robert W. Murray ------
Harvey Saligman ------<F6>
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<PAGE> 10
Craig D. Schnuck ------<F7>
Robert L. Stark ------<F8>
Patrick T. Stokes ------
John A. Wright ------<F9>
W. Randolph Adams ------<F10>
Michael J. Gorman ------<F10><F11>
Richard C. King ------<F10><F12>
John W. McClure ------
Directors, nominees and executive officers
as a group (-- persons) ------
<FN>
<F1> Based on ---------- shares outstanding as of March 11, 1996,
director Frank Lyon, Jr. indirectly beneficially owned ---- percent of
the outstanding Common Stock. No other director or executive officer
beneficially owned in excess of one percent of the outstanding Common
Stock. All directors and executive officers as a group beneficially
owned ---% of the outstanding Common Stock and outstanding options
exercisable within 60 days of March 11, 1996. Unless otherwise noted,
each individual named has sole voting and investment power with respect
to all shares listed as beneficially owned.
<F2> Mr. Hall holds all of the shares included above in the William
Austin Hall Revocable Trust.
<F3> Mr. Hays holds all of the shares included above in a revocable
trust of which Mr. Hays is grantor, trustee and beneficiary.
<F4> Mr. Jacobsen holds ------ shares included above that are restricted
shares subject to forfeiture and reversion back to Mercantile in the event
that Mr. Jacobsen terminates his employment with Mercantile during
specified time periods. Mr. Jacobsen holds ------- shares included above
in a trust of which Mr. Jacobsen is trustee. The total set forth in the
table above also includes ------- shares subject to stock options held by
Mr. Jacobsen that are either presently exercisable or which are
exercisable within 60 days of March 11, 1996.
<F5> Mr. Lyon holds all of the shares included above in two limited
partnerships, the limited partner and sole shareholder of the corporate
general partner of each being revocable trusts of which Mr. Lyon is the
grantor, trustee, and beneficiary.
<F6> Mr. Saligman has disclaimed beneficial ownership of --- shares
included above which are owned by his wife and ----- 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.
<F7> 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.
<F8> Mr. Stark holds all of the shares included above in a revocable
trust of which Mr. Stark is grantor, trustee and beneficiary.
<F9> Mr. Wright holds all of the 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> 11
<F10> As of March 11, 1996, Messrs. Adams, Gorman, King and McClure, and
all directors, nominees and executive officers as a group held 25,250,
0, 15,000, 20,000 and 278,525 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 33,000, 109,149, 16,200, 49,500
and 666,970 shares subject to stock options held by Messrs. Adams,
Gorman, King and McClure, and all directors, nominees and executive
officers as a group, respectively, that are either presently exercisable
or which are exercisable within 60 days of March 11, 1996.
<F11> As of March 11, 1996, Mr. Gorman held ------ of the shares
included above jointly with his wife. Mr. Gorman shares voting and
investment power with respect to these shares. In addition, ------ of
the shares included above are held by his wife. Mr. Gorman has no
investment or voting power with respect to these shares. Mr. Gorman
disclaims beneficial ownership of --- shares included above which are
held by his daughter. Mr. Gorman has no investment or voting power with
respect to his daughter's shares.
<F12> Mr. King disclaims beneficial ownership of a total of ------
shares, ------ of which are held by a family trust, ------ of which are
held by his wife as custodian for his daughter, and ------ 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 closely linked to
corporate performance and returns to shareholders. To this end,
Mercantile employs an overall compensation strategy and specific
compensation plans that tie 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 review of Mercantile's executive
compensation program. This review includes a comprehensive assessment of
the effectiveness of Mercantile's compensation program and a comparison
of Mercantile's executive compensation, corporate performance and total
return to shareholders to 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 also utilized for the comparison of total cumulative
return to shareholders included in this proxy statement. While the
strongest competitors for executive talent are believed to be regional
bank holding companies with assets of greater than $15 billion located
throughout the United States, competitor companies for certain executive
positions may be non-banking companies.
The Committee determines the compensation of all of the executive
officers who report to Mr. Jacobsen and serve on Mercantile's Management
Executive Committee ("senior management officers") including the named
executive officers whose compensation is detailed in this proxy
statement. The Committee also sets compensation policies for
approximately 260 other officers, comprising the next most highly
compensated officers of Mercantile and its subsidiaries. In reviewing
the individual performance of the officers whose compensation is
detailed in this proxy statement (other than Mr. Jacobsen), the
Committee takes into account the views of Mr. Jacobsen.
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<PAGE> 12
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, restricted performance
units 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 senior management officer, including pension benefits, supplemental
retirement benefits, insurance and other benefits, along with the
programs described below.
BASE SALARIES
Base salaries for senior management officers 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 comparison of base salaries for comparable positions at other
companies deemed to be competitors of Mercantile in the hiring of
comparable executive officers. There is a positive correlation between
the asset size of banking institutions and the salaries of senior
management officers; therefore, base salaries for 1995 for such officers
were targeted by comparison to average salaries paid for comparable
positions with banks included in the KBW 50 on an asset-size adjusted
basis.
Salary adjustments in respect of senior management officers are
determined annually by evaluating the competitive marketplace and the
performance of Mercantile and of such officers during the preceding year
and, when applicable, taking into account new responsibilities assigned
to the officer during the year. Each such senior management officer's
performance is, additionally, evaluated on the basis of achieving
specified financial goals, such as annual and long-term net income,
overhead, expense-to-assets ratio, return on asset and return on equity
goals. While these objective criteria are considered in the final
recommendation of the Committee, subjective evaluations are also
considered. No single criteria predominates in this process. Generally
for 1995, senior management officers received base salary increases of
up to 5% over their prior base salary levels. Four senior management
officers had assumed significant, additional responsibilities in 1995
and received increases of up to 30% over their prior base salary levels.
The base salary paid to Mr. Jacobsen in 1995 is thought by the
Committee to be competitive in the external marketplace on an asset-size
adjusted basis and reflective of Mercantile's success in meeting its
financial goals in 1994, and the assessment by the Committee of Mr.
Jacobsen's individual performance. Mr. Jacobsen's 1995 base salary was
increased by 5% over 1994.
ANNUAL INCENTIVES
Each senior management officer is eligible for an annual cash
incentive award. This cash award is designed to provide an incentive for
the participating senior management officers to achieve annual
performance goals which are based on individual, business unit and
corporate measures. For 1995, the target opportunities for such
officers, expressed as a percent of base salary, were based upon the
median of incentive opportunities for similar positions at the companies
included in the KBW 50 Index. 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 during the
first quarter of 1995. The Corporation met both goals. Additionally,
each 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 officers substantially met their
objectives in 1995. Mr. Jacobsen participates in the 1994 Executive
Incentive Compensation Plan which was approved by the shareholders at
the 1994 Annual Meeting of Shareholders. For 1995, Mr. Jacobsen's
incentive target was based on the Corporation's achievement
- 11 -
<PAGE> 13
of strategic objectives for net income, return on assets and productivity
improvement, which objectives were met.
STOCK-BASED INCENTIVES
Under Mercantile's 1994 Stock Incentive Plan, stock options,
restricted performance units and restricted stock may be granted to
senior management officers. The Committee sets guidelines for the size
of stock option, restricted performance unit and restricted stock awards
based on the responsibilities of the position held, the skills,
knowledge and experience of the senior management officer, the
competitive compensation data from the peer group and the Corporation's
financial performance. Stock-based, long-term incentives are targeted to
the 75th percentile practices of the companies included in the KBW 50
index. While such stock-based incentives primarily reflect competitive
practices, past incentive awards are also considered.
Stock options, restricted performance unit awards and restricted
stock are designed to align the interests of senior management officers
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 generally vest over four years beginning one year following
the date of grant. Restricted performance units granted in 1995 will
fully or partially vest based upon achievement of Mercantile's three-
year earnings per share growth target. Restricted stock is generally
awarded to a senior management officer in recognition of their value to
the Corporation and as a means to ensure their continued service.
Restricted stock awards typically vest over a period of at least five
years. 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. Restricted stock awards granted in 1995
vest over periods of up to six years.
In 1995, Mr. Jacobsen was awarded 12,000 restricted performance
units and 75,000 shares of restricted stock.
EXECUTIVE STOCK OWNERSHIP GUIDELINES
In 1994 Mercantile adopted stock ownership guidelines for senior
management officers. Such officials as of January 1, 1994, have until
December 31, 1998, to acquire the specified number of shares of
Mercantile's Common Stock. Those who become senior management officers
after that date have five years thereafter to acquire the specified
number of shares. The guidelines for Mr. Jacobsen and line and staff
senior management officers are 78,750, 19,800 and 10,800 shares
respectively.
DEDUCTIBILITY OF EXECUTIVE OFFICER COMPENSATION
The Committee's policy with respect to the tax deductibility of
executive compensation in excess of $1 million is to structure benefit
plans in such a manner that permits the deductibility of such
compensation under Section 162(m) of the Internal Revenue Code of 1986,
as amended (the "Code") when Mercantile can do so without material
change to its overall compensation program.
THE COMPENSATION AND MANAGEMENT
DEVELOPMENT COMMITTEE
HARRY M. CORNELL, JR.
(CHAIRMAN)
THOMAS A. HAYS
HARVEY SALIGMAN
- 12 -
<PAGE> 14
COMPENSATION OF EXECUTIVE OFFICERS
<TABLE>
The following table sets forth the compensation of the named
executive officers for each of the last three years:
SUMMARY COMPENSATION TABLE
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG TERM COMPENSATION
- ------------------------------------------------------------------------------------------------------------------
OTHER RESTRICTED SECURITIES ALL OTHER
ANNUAL STOCK UNDERLYING COMPEN-
SALARY BONUS COMPENSATION AWARDS <F1> OPTIONS SATION <F2>
NAME & PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Thomas H. Jacobsen 1995 $573,600 $516,240 $68,835 $2,737,500 0 $118,330
Chairman, President and 1994 546,300 477,944 46,099 0 108,000 83,530
Chief Executive Officer 1993 525,300 392,662 32,869 0 150,000 92,828
W. Randolph Adams 1995 $268,763 $147,819 $13,024 $ 855,000 0 $40,356
Chairman and Chief Executive 1994 230,000 145,348 6,840 0 33,750 26,983
Officer, MBSL and 1993 194,500 109,406 5,317 0 30,000 26,360
Mercantile Trust Company N.A.
Michael J. Gorman<F3> 1995 $250,000 $144,000 $ 726 $ 0 0 $27,634
Chief Retail Banking Strategist 1994 250,000 139,980 N/A 240,013 0 13,255
and Chairman of the 1993 N/A N/A N/A N/A N/A N/A
Executive Committee, MBSL
Richard C. King<F4> 1995 $273,000 $163,800 $ 8,294 $ 641,250 0 $44,579
President and Chief 1994 260,000 136,481 7,476 0 24,750 33,925
Executive Officer, 1993 250,000 115,000 3,362 0 15,000 40,771
Mercantile Bank of
Kansas City
John W. McClure 1995 $268,763 $161,257 $14,778 $ 855,000 0 $37,663
Group President, 1994 230,000 134,148 5,879 0 33,750 25,052
Community Banking 1993 206,000 106,605 5,402 0 30,000 28,030
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
<F1> Restricted stock awarded to Messrs. Jacobsen and Adams vests at the rate
of 25% of total shares each year, commencing three years from the date of
issuance. Restricted stock awarded to Messrs. King and McClure vests at the
rate of 25% of total shares each year, commencing two years from the date
of issuance. Restricted stock awarded to Mr. Gorman vested on January 31,
1996. As of December 31, 1995, Messrs. Jacobsen, Adams, Gorman, King and
McClure held an aggregate of 99,900, 27,875, 6,465, 15,000, and 26,450
shares of restricted stock, respectively (including the restricted stock
awards referred to in the table), having an aggregate value on such date of
$4,595,400, $1,282,250, $297,390, $690,000, and $1,216,700 respectively.
Holders of shares of restricted stock will receive dividends on such shares
during the period of restriction.
<F2> Included in the totals set forth in this column in respect of Messrs.
Jacobsen, Adams, Gorman, King and McClure are the profit sharing and/or
matching contributions of $77,357, $29,214, $27,634, $31,849 and $28,432
for their respective accounts under Mercantile's Horizon savings and
incentive plan, Supplemental Savings Plan and Stock Purchase Plan, and
premiums of $40,973, $11,142, $0, $12,730 and $9,231 paid by Mercantile on
non-split dollar life insurance policies for such officers, respectively,
under Mercantile's Management Life Insurance Plan.
- 13 -
<PAGE> 15
<F3> Mr. Gorman's employment with Mercantile commenced on February 1, 1994.
Mr. Gorman retired from the Company and Mercantile Bank effective January
31, 1996.
<F4> Mr. King's employment with Mercantile commenced on January 4, 1993.
</TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
None of the individuals named in the Summary Compensation Table
received stock option grants in the fiscal year ended December 31, 1995.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth information concerning option exercises
in the fiscal year ended December 31, 1995, and options remaining
unexercised at December 31, 1995, by the individuals named in the Summary
Compensation Table.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT FISCAL
FISCAL YEAR-END(#) YEAR-END <F1> ($)
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE # VALUE REALIZED ($) UNEXERCISABLE UNEXERCISABLE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas H. Jacobsen 0 0 240,562/ $5,499,806/
190,688 2,621,698
W. Randolph Adams 0 0 18,750/ 309,375/
48,750 658,125
Michael J. Gorman 41,500 1,336,703 109,149/ 4,418,972/
0 0
Richard C. King 0 0 7,500/ 101,250/
32,250 435,375
John W. McClure 0 0 33,375/ 701,750/
50,625 695,000
<FN>
- -----------------
<F1> Based on a price per share of $46.00, being the last closing sale
before the 1995 fiscal year-end.
</TABLE>
- 14 -
<PAGE> 16
LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR
The following table sets forth information concerning stock-based
awards granted to the individuals named in the Summary Compensation Table
in 1995 under the Mercantile 1994 Stock Incentive Plan.
<TABLE>
<CAPTION>
Estimated Future Payouts under
Non-Stock Price-Based Plans
-------------------------------
Number of Performance
Shares, or Other
Units or Period Until
Other Maturation or Minimum Maximum
Rights (#)<F1> Payout (#) (#)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas H. Jacobsen 12,000 1/95 - 12/97 4,800 12,000
W. Randolph Adams 3,900 1/95 - 12/97 1,560 3,900
Michael J. Gorman 0 N/A N/A N/A
Richard C. King 3,900 1/95 - 12/97 1,560 3,900
John W. McClure 3,900 1/95 - 12/97 1,560 3,900
<FN>
<F1> The named individuals were granted Restricted Performance Units
under the terms of the Mercantile 1994 Stock Incentive Plan. Such
Restricted Performance Units are convertible into an equal number of shares
of Mercantile's Common Stock upon the achievement of specified earnings per
share growth targets. The executives will vest in 40% of the units if
stated minimum performance is achieved with incremental increases in the
percentage of units vested up to 100% or the maximum amount of the grant in
the event that the stated maximum performance is achieved. Failure to
achieve the minimum performance target will result in forfeiture of the
award. In the event of a change in control of Mercantile, as that term is
defined in the 1994 Stock Incentive Plan, Restricted Performance Units are
convertible into shares of Mercantile's Common Stock in proportion to the
time elapsed between the beginning of the performance period to the change
in control date as related to the entire performance period; the remainder
would be converted into restricted stock on which restrictions would lapse
on the date the performance period is scheduled to end.
</TABLE>
EMPLOYMENT ARRANGEMENTS
None of the senior management officers of Mercantile, including those
named in the Summary Compensation Tables, are parties to any employment
agreements with the Corporation, except Mr. Jacobsen and Mr. Gorman. The
agreements pertaining to Mr. Jacobsen and Mr. Gorman provide that if the
named officer's employment is terminated prior to the end of the term of
his agreement by such 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 such officer and all benefits
for the remaining term of the agreement.
Each of the officers named in the Summary Compensation Table (other
than Mr. Gorman) and certain other senior management officers are
protected by substantively similar contractual provisions from a decrease
in compensation, benefits, title or duties for a period of three years
after a change in control of Mercantile. Under such provisions, each such
officer will be entitled to receive an amount equal to such officer's then-
current annual base salary and annual bonus in the event that such officer
remains employed with Mercantile through the first anniversary of the
change in control. Such agreements additionally provide that if there is a
decrease in compensation and responsibilities of such officer or if such
officer's employment is terminated for any reason other than good cause or
if such 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 in
control, Mercantile will be obligated to pay a lump-sum amount equal to
twice such officer's then-current annual base salary and annual bonus, plus
the value of certain other retirement benefits and
- 15 -
<PAGE> 17
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 officer pursuant to this agreement would subject
such officer to an excise tax pursuant to Section 4999 of the Code,
Mercantile will also be obligated to pay to such officer an additional amount
sufficient to put the 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 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>
Final Average
Salary Years of Service<F1><F2>
- ------------- ------------------------
10 15 20 25 30
-- -- -- -- --
<S> <C> <C> <C> <C> <C>
$ 300,000 $ 49,009 $ 73,514 $ 98,018 $ 122,523 $ 147,027
500,000 82,509 123,764 165,018 206,273 247,527
700,000 116,009 174,014 232,018 290,023 348,027
900,000 149,509 224,264 299,018 373,773 448,527
1,100,000 183,009 274,514 366,018 457,523 549,027
1,300,000 216,509 324,764 433,018 541,273 649,527
<FN>
- -------------------
<F1> The credited years of service for the five individuals listed in
the Summary Compensation Table have been determined to be 14 for Mr.
Jacobsen, 4 for Mr. Adams, 2 for Mr. Gorman, 3 for Mr. King, and 23 for Mr.
McClure.
<F2> The maximum amount payable under the Retirement Plan is limited by
the Code to $120,000 annually, subject to cost of living increases after
1995, 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 "Average Annual Salary" received for any
period of 60 consecutive months preceding the date of termination of
employment (the "Final Average Annual Salary"). "Average Annual 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 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. Such
retirement benefits are not subject to reductions for social security
benefits or other offset amounts.
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 executive officers or
principal shareholders of corporations which are customers of such banks
and which have had and expect
- 16 -
<PAGE> 18
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.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG MERCANTILE, S&P 500 AND KBW 50 INDICES
The following graph compares quarterly 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.
<TABLE>
COMPARISON OF FIVE-YEAR
CUMULATIVE TOTAL RETURN AMONG MERCANTILE,
S&P 500 AND KBW 50 INDEX
[GRAPH]
<CAPTION>
1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
MERCANTILE $100.0 $187.1 $248.0 $239.0 $256.6 $389.6
S&P 500 $100.0 $130.3 $140.3 $154.3 $156.4 $215.0
KBW 50 INDEX $100.0 $163.8 $215.9 $234.0 $223.4 $354.6
</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 100,000,000 to 200,000,000, 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 11, 1996, the record date for the Annual Meeting, --------
shares of Mercantile's Common Stock were issued and outstanding.
Approximately 325,843 shares of Mercantile Common Stock will be issued
upon consummation of the pending acquisition by Mercantile of Peoples
State Bank, a Kansas state bank. Consummation of the acquisition is
expected to occur, subject to receipt of all necessary regulatory and
shareholder approvals, later this year. In addition, approximately ------
shares of Common Stock will be required to satisfy Mercantile's potential
obligations under its stock-based benefit plans. Accordingly, without the
proposed amendment, Mercantile has approximately ------- authorized shares
of its Common Stock that were not issued, reserved or designated for
issuance as disclosed above.
- 17 -
<PAGE> 19
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 sole authorization
of the Board for any general corporate purpose.
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, stock dividends or split-ups, 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 proposed amendment could
result in increasing the number of shares that would have to be acquired by
a party seeking to obtain control of Mercantile, but would not otherwise
affect the legal rights of the shareholders of the outstanding shares of
Common Stock.
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.
In addition, Mercantile's 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.
The Restated Articles also provide for the issuance of up to 5,000,000
shares of Preferred Stock, none of which are outstanding as of the date
hereof. The Board of Directors is authorized 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 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, like the other
provisions of Mercantile's Restated Articles and By-Laws, described above,
could affect the ability of a party to obtain control of Mercantile.
The complete text of the proposed amendment to the Restated Articles
is set forth in Appendix A to this Proxy Statement.
- 18 -
<PAGE> 20
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.
INDEPENDENT AUDITORS
The firm of KPMG Peat Marwick has been selected as Mercantile's
independent auditors for 1996. They were also Mercantile's independent
auditors for 1995. 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 1997 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 -----,
1996, in order to be considered for inclusion in Mercantile's Proxy
Statement and proxy for the 1997 meeting.
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 -----, 1996
- -------------------------------------------------------------------------------
A COPY OF THE 1995 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.
- -------------------------------------------------------------------------------
- 19 -
<PAGE> 21
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 25, 1996.
RESOLVED, that Article 3 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 100,000,000 to 200,000,000.
- 20 -
<PAGE> 22
MERCANTILE BANCORPORATION INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
April 25, 1996
The undersigned hereby appoint(s) T.H. JACOBSEN, J.H.
BEIRISE and J.W. BILSTROM, and each of them, with or without the
others, proxies, with full power of substitution to vote on the
following matters as directed hereon and in their discretion upon
such other business as may properly come before the meeting, all
shares of stock of Mercantile Bancorporation Inc. (the
"Corporation") that the undersigned is entitled to vote at the
Annual Meeting of Shareholders of the Corporation to be held in
Salon I of the Ritz-Carlton Hotel, #1 Carondelet Plaza, Clayton,
Missouri, on Thursday, April 25, 1996, at 10:00 A.M., local time,
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 Class II Directors
Election of three Class II directors to hold office for terms
of three years expiring in 1999 or until their successors
shall have been duly elected and qualified.
NOMINEES: WILLIAM A. HALL, EDWARD A. MUELLER AND ROBERT W.
MURRAY
2. Election of Class I Director
Election of nominee ROBERT L. STARK as a Class I director to
hold office for a term of two years expiring in 1998 or
until his successor shall have been duly elected and
qualified.
3. Election of Class III Director
Election of nominee PATRICK T. STOKES as a Class III
director to hold office for a term of one year expiring in
1997 or until his successor shall have been duly elected and
qualified.
4. Amendment to Increase Authorized Shares
Adoption of an amendment to the Mercantile Bancorporation
Inc. Restated Articles of Incorporation to increase the
authorized number of shares of common stock from 100,000,000
to 200,000,000.
5. In their discretion, upon any other business which may
properly come before the meeting.
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. THE PROXIES CANNOT VOTE YOUR SHARES UNLESS
YOU SIGN AND RETURN THIS CARD.
SEE REVERSE SIDE
1
<PAGE> 23
1. Election of Class II Directors (see reverse)
/ / FOR / / WITHHELD
For, except vote withheld from the following nominee(s):
-----------------------------------------------------------------------
2. Election of Class I Director (see reverse)
/ / FOR / / WITHHELD
3. Election of Class III Director (see reverse)
/ / FOR / / WITHHELD
4. Amendment to Increase Authorized Shares (see reverse)
/ / FOR / / WITHHELD
5. In their discretion, upon any other business which may properly come
before the meeting
/ / FOR / / WITHHELD
(change of address)
----------------------------------------
----------------------------------------
----------------------------------------
If you have written in the above space, please mark the corresponding
box on this card.
6. / / Check here if address change is noted above
7. / / Check here if you will attend meeting
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.
2
<PAGE> 24
APPENDIX
The Comparison of Five-Year Cumulative Total Return graph which
appears on page 17 of the printed proxy, is being transmitted in
a format which can be processed by EDGAR.
