<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
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] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
Notes:
<PAGE>
[MERCANTILE LOGO APPEARS HERE]
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 15, 1999
DEAR SHAREHOLDER:
You are cordially invited to attend our Annual Meeting of
Shareholders, which will be held at 10:00 a.m., Central
Daylight Time, on Wednesday, April 21, 1999.
The meeting will be held at the West Des Moines Marriott,
1250 74th Street, West Des Moines, Iowa. A special card
admitting you to the meeting is attached to the proxy.
Please detach and present it at the door when you arrive. If
your shares are currently held in the name of your broker,
bank or other nominee and you wish to attend the meeting,
please provide proof of ownership to obtain an admission
ticket (e.g., a letter from your broker, bank or other
nominee indicating that you are the beneficial owner of MBI
stock as of February 26, 1999, the record date). Please mail
the request and proof of ownership to Mercantile
Bancorporation Inc., Attn: Investor Relations, P. O. Box
524, Tram 06-6, St. Louis, Missouri 63166.
The Notice of Annual Meeting, proxy statement and proxy
card which accompany this letter outline the matters on
which action will 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 if you would complete and deliver your
proxy as promptly as convenient. This year we are pleased to
be able to offer you the option of delivering your proxy by
telephone or by Internet transmission in addition to the
traditional method of completing, signing and mailing a
proxy card. Further information about delivering your proxy
via telephone or the Internet can be found in the proxy
statement, and on the enclosed proxy card. If you do attend
the meeting, you may revoke your proxy and vote your shares
in person.
Our Annual Report for 1998 accompanies these proxy
materials.
Thank you for your continued support.
Sincerely,
/s/ T H Jacobsen
<PAGE>
[MERCANTILE LOGO APPEARS HERE]
Notice: Mercantile
Annual Meeting Bancorporation
of Shareholders Inc.
April 21, 1999
The Annual Meeting of Shareholders of Mercantile
Bancorporation Inc. will be held at the West Des Moines
Marriott, 1250 74th Street, West Des Moines, Iowa, on
Wednesday, April 21, 1999, at 10:00 a.m., Central Daylight
Time, for the following purposes:
1. To elect four directors in Class II for terms of three
years expiring in 2002.
2. 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
February 26, 1999, are entitled to notice of and to vote at the
meeting.
THOMAS H. JACOBSEN
Chairman of the Board,
President
and Chief Executive
Officer
March 15, 1999
1
<PAGE>
[MERCANTILE LOGO APPEARS HERE]
Proxy Statement Mercantile 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 Wednesday, April 21, 1999, 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 proxy, and thereby
superceding the earlier proxy, or by written notice of revocation delivered 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 that are properly submitted and
received in time for the vote will be voted.
Mercantile will bear the entire cost of soliciting proxies in the enclosed
form. In addition to solicitation by mail, 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 also has retained Morrow & Co. to assist in the
solicitation of proxies on its behalf for a fee of approximately $7,500 plus
expenses.
Only shareholders of record at the close of business on February 26, 1999
(the "Record Date"), are entitled to notice of and to vote at the Annual
Meeting. On that date there were 157,625,883 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. 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 four, 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. Proxies properly received via telephone, the Internet or by mail will
be voted equally for all nominees as listed on the proxy form, 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. If you wish to distribute your
votes in any other manner you must indicate your directions on the face of the
card and return it in the envelope provided.
2
<PAGE>
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
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:
<TABLE>
<CAPTION>
Percent of Class
of Common
Name and Address of Beneficial Amount and Nature of Beneficial Stock, $0.01 Par
Owner Ownership Value/1/
------------------------------ ------------------------------------- ----------------
<C> <S> <C> <C>
Mercantile Trust Company National Sole Voting Power....... 8,926,592
Association/2/ Shared Voting Power..... 925,171
("Mercantile Trust" or "MTCNA") Sole Investment Power... 9,275,599
P.O. Box 387 Shared Investment Power. 2,176,294
St. Louis, Missouri 63166 Total................. 12,634,538 8%
</TABLE>
- -----
/1/Based upon 157,625,883 shares outstanding at February 26, 1999.
/2/Includes shares beneficially owned as of February 26, 1999, by Mercantile
Trust Company National Association ("Mercantile Trust") and certain other
affiliates of Mercantile. Mercantile has been advised that the shares held
as sole fiduciary by Mercantile Trust 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. Mercantile Trust and such affiliates
will also recommend to all co-trustees and co-executors that they vote in a
similar manner.
ITEM 1. ELECTION OF DIRECTORS
One of the purposes of the Annual Meeting is to elect four directors in
Class II to serve for terms of three years expiring in 2002. 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 four nominees receiving the
highest number of votes in the Class II election will be elected as Class II
directors. Each of the nominees for election as directors in Class II 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.
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 Annual
Meeting are set forth below. Each of the directors 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 2002
Dr. Henry Givens, 68--Director beginning in 1998; President of Harris-Stowe
State College, educational institution; Director of Laclede Gas Company.
William A. Hall, 53--Director beginning in 1993; Assistant to the Chairman,
Hallmark Cards, Inc., manufacturer of greeting cards and related products.
Cinda A. Hallman, 54--Director beginning in 1999; Senior Vice President of
The DuPont Company, a science and technology-based company serving worldwide
markets in food, nutrition, healthcare, agriculture, fashion and apparel, home
and construction, electronics and transportation.
Craig D. Schnuck, 51--Director beginning in 1991; Chairman, Chief Executive
Officer and Director of Schnuck Markets, Inc., retail supermarket chain;
Director of General American Life Insurance Company.
3
<PAGE>
CLASS I--TO CONTINUE IN OFFICE UNTIL 2001
Harry M. Cornell, Jr., 70--Director beginning in 1991; Chairman, Chief
Executive Officer and Director of Leggett & Platt, Inc., a major manufacturer
of engineered products serving markets for residential and commercial
furnishings, aluminum products, industrial materials and other specialized
products.
Frank Lyon, Jr., 57--Director beginning in 1995; private investor. Mr. Lyon
served as Chairman of Mercantile Bank of Arkansas and its predecessor holding
company, TCBankshares Inc., for more than five years prior to May 1995.
Harvey Saligman, 60--Director beginning in 1982; General Partner of Cynwyd
Investments, real estate investment company; Director of Ameren Corporation.
In addition to serving as the General Partner, Mr. Saligman served as Managing
Partner of Cynwyd Investments for more than five years prior to August 1996.
John A. Wright, 56--Director beginning in 1986; President and Chief
Executive Officer of Woodridge Resources Corporation, natural resources
investment firm, since January 1997. Mr. Wright served as President and Chief
Executive Officer of Big River Mineral Corp. for more than five years prior to
January 1997.
CLASS III--TO CONTINUE IN OFFICE UNTIL 2000
Richard E. Beumer, 61--Director beginning in 1997; Vice Chairman, Jacobs
Engineering Group, Inc., a design, construction and scientific services firm;
Director of Aid Association for Lutherans and Laclede Gas Company.
Thomas H. Jacobsen, 59--Director beginning in 1989; Chairman of the Board,
President and Chief Executive Officer of Mercantile; Director of Trans World
Airlines, Inc.
Alvin J. Siteman, 71--Director beginning in 1997; President and Director,
Flash Oil Corporation and The Site Oil Company of Missouri, petroleum product
distributors and, since April 1997, Chairman of Mercantile Bank National
Association--St. Louis.
Patrick T. Stokes, 56--Director beginning in 1992; President of Anheuser-
Busch, Inc., brewer of beer and other malt beverages.
BOARD OF DIRECTORS AND COMMITTEES
During 1998 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.
The standing committees of the Board of Directors in 1998 included the
Audit Committee, the Business Policy Committee, the Compensation and
Management Development Committee, the Executive Committee and the Nominating
and Board Affairs Committee.
The members of the Audit Committee are Messrs. John A. Wright, Chairman,
Richard E. Beumer and William A. Hall. The Audit Committee met two times in
1998. 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 Business Policy Committee are Messrs. Patrick T. Stokes,
Chairman, Cinda Hallman/1/, Robert W. Murray/2/, Craig D. Schnuck, and Alvin
J. Siteman. The Business Policy Committee met three times in 1998. The
Business Policy Committee, among other things, reviews bank and non-bank
service and product offerings and regulatory agency-imposed or other legally
required credit and noncredit-related policies, guidelines and procedures.
The members of the Compensation and Management Development Committee are
Messrs. Harry M. Cornell, Jr., Chairman, Frank Lyon, Jr. and Harvey Saligman.
The Compensation and Management Development Committee,
4
<PAGE>
which met four times in 1998, reviews and approves the salaries of executive
officers of the Corporation and Mercantile Bank, as well as selected other
senior officers of the Corporation and its affiliates, and authorizes all
other forms of executive compensation. The Compensation and Management
Development Committee administers Mercantile's executive incentive plans.
The members of the Executive Committee are Messrs. Thomas H. Jacobsen,
Chairman, Harry M. Cornell, Jr., Craig D. Schnuck, Patrick T. Stokes, and John
A. Wright. 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 five times in 1998.
The members of the Nominating and Board Affairs Committee, which proposes
nominees for election to the Board of Directors, are Messrs. Craig D. Schnuck,
Chairman, Harry M. Cornell, Jr. and Thomas H. Jacobsen. 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 three times in 1998.
- -----
/1/Ms. Hallman was elected to the Board of Directors of the Corporation
effective as of January 20, 1999.
/2/Mr. Murray will be retiring from the Board of Directors of the Corporation
effective as of the date of the Annual Meeting of Shareholders.
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 $1,000
for attendance at each meeting of its standing committees.
Pursuant to the Mercantile Bancorporation Inc. Amended and Restated Stock
Incentive Plan for Non-Employee Directors (the "Director Plan"), each director
not otherwise employed by Mercantile and its subsidiaries receives, at the
time of the Annual Meeting, as additional consideration for services rendered
or to be rendered to the Corporation, (a) an option to acquire 1,000 shares of
Mercantile's Common Stock with an exercise price equal to the "Fair Market
Value" of Mercantile's Common Stock (as defined in the Director Plan) at the
time of the award ("Stock Options"), and (b) stock units ("Stock Units"), each
of which is the equivalent of one share of Mercantile's Common Stock, equal in
amount to 250, or, if less, the number obtained by dividing Twenty Thousand
Dollars by the Fair Market Value of Mercantile's Common Stock at the time of
the award. The Stock Options first become exercisable six months after the
date of the grant (or earlier in the event of a change in control of
Mercantile) and remain exercisable over a term of ten years from the date of
grant or, if earlier, over a term of three years following termination of
service as a director. Stock Units are credited to accounts (each a "Stock
Unit Account") established by Mercantile for the benefit of each non-employee
director. Quarterly awards of Stock Units are also made at the time dividends
are payable in respect of Mercantile's Common Stock. The amount of such
quarterly awards equals (x) 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 (y) the Fair Market Value of a share of Mercantile's
Common Stock on that date. During 1998, non-employee directors received a
total of 10,000 Stock Options and 3,509 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 in the event of a change in control of Mercantile) the receipt of all
or a portion of the retainer and/or fees which such director is entitled to
receive in cash. 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 and, thereafter, will
be treated as Stock Units in all respects.
5
<PAGE>
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 in the event of a change in control of
Mercantile). In lieu of fractional shares of Mercantile's Common Stock, each
director who otherwise would be entitled to receive fractional shares 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.
BENEFICIAL OWNERSHIP OF STOCK BY MANAGEMENT
The following information is furnished as of February 26, 1999, 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:
<TABLE>
<CAPTION>
Name of Beneficial Owner Beneficially Owned/1/ Stock Units/2/
- ------------------------ --------------------- --------------
<S> <C> <C>
Richard E. Beumer...................... 23,361/3/ 353
Harry M. Cornell, Jr................... 5,649/4/ 5,255
Dr. Henry Givens, Jr................... 1,200/5/ 345
William A. Hall........................ 9,157/4/ 2,164
Cinda A. Hallman....................... 0 99
Thomas H. Jacobsen..................... 1,132,588/6/ 13,900
Frank Lyon, Jr......................... 6,764,823/7/ 3,387
Robert W. Murray....................... 132,641/8/ 2,063
Harvey Saligman........................ 9,605/9/ 5,321
Craig D. Schnuck....................... 8,875/10/ 1,397
Alvin J. Siteman....................... 3,362,433/11/ 3,125
Patrick T. Stokes...................... 3,625/4/ 3,992
John A. Wright......................... 4,674/12/ 4,217
W. Randolph Adams...................... 168,214/13/ 2,978
John Q. Arnold......................... 160,695/13/ 2,264
John P. Dubinsky....................... 440,731/13/,/14/ 692
John W. McClure........................ 217,602/13/,/15/ 9,777
Directors and executive officers as a
group (22 persons).................... 12,773,491/16/ 67,989
</TABLE>
- -----
/1/Based on 157,625,883 shares outstanding as of February 26, 1999, director
Frank Lyon, Jr. indirectly beneficially owned 4.29% of the outstanding
Common Stock and director Alvin J. Siteman beneficially owned 2.13% of the
outstanding Common Stock. No other director or executive officer
beneficially owned in excess of 1% of the outstanding Common Stock. All
directors and executive officers as a group beneficially owned 7.86% of the
outstanding Common Stock and outstanding options exercisable within 60 days
of the Record Date. Unless otherwise noted, each individual named has sole
voting and investment power with respect to all shares listed as
beneficially owned.
/2/Includes Stock Units held in deferred compensation accounts and, where
applicable, in supplemental retirement plan accounts. Stock Units are
convertible into an equal number of shares of Mercantile's Common Stock.
/3/Mr. Beumer holds 16,379 shares included above jointly with his wife. Mr.
Beumer has shared voting and investment power with respect to these shares.
The total set forth in the table above also includes 6,682 shares which are
subject to stock options that are presently exercisable or that will be
exercisable within 60 days of the Record Date.
/4/Includes 2,500 shares subject to stock options that are presently
exercisable.
/5/Includes 1,000 shares subject to stock options that are presently
exercisable.
/6/Mr. Jacobsen holds 299,850 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. The total set forth in the table above also includes 668,422 shares
subject to stock options held by Mr. Jacobsen that are either presently
exercisable or are exercisable within 60 days of the Record Date.
6
<PAGE>
/7/The total set forth in the table above includes 2,500 shares which are
subject to stock options that are presently exercisable. The rest of the
shares included in the total are held in two limited partnerships. The
limited partner and sole shareholder of the corporate general partner of
each such limited partnership are trusts of which Mr. Lyon is the trustee
and beneficiary.
/8/Includes 51,996 shares held by Mr. Murray's wife. Mr. Murray has no voting
or investment power with respect to these shares. Also includes 24,547
shares subject to stock options held by Mr. Murray that are presently
exercisable or which are exercisable within 60 days of the record date.
/9/Mr. Saligman has disclaimed beneficial ownership of 724 shares included
above which are owned by his wife and 2,726 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. The total set forth
in the table above also includes 2,500 shares subject to stock options that
are presently exercisable.
/10/Mr. Schnuck holds 3,375 of the shares included above jointly with his
wife. Mr. Schnuck has shared voting and investment power with respect to
these shares. The total set forth in the table above also includes 2,500
shares subject to stock options that are presently exercisable.
/11/Mr. Siteman disclaims beneficial ownership of 243,445 shares included
above, 114,240 shares of which are held in his wife's revocable trust, and
129,205 shares of which are held in various trusts of which Mr. Siteman or
affiliates are trustees. A total of 604,507 shares included above are held
by affiliated corporations; Mr. Siteman has sole voting and investment
power with respect to these shares.
/12/Mr. Wright holds 2,160 of the shares included above jointly with his wife.
Mr. Wright has shared voting and investment power with respect to these
shares. The total set forth in the table above also includes 2,500 shares
subject to stock options that are presently exercisable.
/13/As of February 26, 1999, Messrs. Adams, Arnold, Dubinsky and McClure, held
37,500; 47,500; 25,000 and 40,000 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 95,077; 93,450; 124,948 and 138,000
shares subject to stock options held by Messrs. Adams, Arnold, Dubinsky and
McClure, respectively, that are either presently exercisable or which are
exercisable within 60 days of the Record Date.
/14/Mr. Dubinsky disclaims beneficial ownership of 29,041 shares included
above, 1,141 shares of which are held by his wife, 2,196 shares of which
are held by his children, and 25,704 shares of which are held as Trustee of
family trusts.
/15/Mr. McClure holds 6,936 shares included above jointly with his wife. He
has shared voting and investment power with respect to these shares. In
addition, this total includes 415 shares held by his wife over which he has
no voting or investment power.
/16/As of February 26, 1999, all directors and executive officers as a group
held 523,475 shares 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 total set forth in the table also includes 1,461,453 shares subject to
stock options held by all directors and executive officers as a group,
which options are either presently exercisable or which are exercisable
within 60 days of the Record Date.
COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE
REPORT TO SHAREHOLDERS REGARDING EXECUTIVE COMPENSATION
Overall Policy
The design of Mercantile's executive compensation program links the
compensation of its executives directly to achievement of specific corporate
and/or business unit performance goals and returns to shareholders. 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. While the strongest
competitors for executive talent are believed to be regional bank holding
companies with assets of greater than $30 billion located throughout the
United States, competitor companies for certain executive positions may be
non-banking companies.
7
<PAGE>
During 1998, the Compensation and Management Development Committee (the
"Committee") conducted a comprehensive review of Mercantile's executive
compensation program. This review included an assessment of the market
competitiveness of base salaries, annual cash incentives and long-term equity-
based compensation of its executives and a relative comparison of corporate
performance and total return to shareholders to the bank holding companies
included in the Keefe, Bruyette & Woods 50 Index (the "KBW 50 Index"), which
consists of 50 of the larger United States bank holding 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 approves the design of compensation policies for approximately 565 other
officers, who are 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.
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. While the elements of compensation 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. The Committee's policies with respect
to each element of executive compensation are discussed 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 and retention of comparable executive officers. Since there is a
positive correlation between the asset size of banking institutions and the
salaries of senior management officers, Mercantile targets base salary levels
for senior management officers by comparison to average salaries paid for
comparable positions with banks included in the KBW 50 Index on an asset-size
adjusted basis, including expected growth.
Individual salary adjustments for senior management officers are determined
annually by evaluating the performance of each officer and the performance of
the business unit for which he/she is responsible (e.g. annual and long-term
net income, expense-to-assets ratio, return on assets and earnings per share
goals) during the preceding year and, when applicable, taking into account new
responsibilities assigned to the officer during the year. For 1998, senior
management officers excluding Mr. Jacobsen received average base salary
increases of 10.4% over their prior base salary levels.
The assets of Mercantile grew by 67% during the two-year period ended
December 31, 1997. The base salary paid to Mr. Jacobsen in 1998 was increased
by 16.8% over 1997 to ensure a base salary which is competitive with the other
banks of similar or greater asset size in the KBW 50 Index. The increase is
also reflective of Mercantile's success and Mr. Jacobsen's leadership in
achieving its financial goals for 1997, and the Committee's assessment of Mr.
Jacobsen's individual performance.
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 1998,
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 earnings per share goals set by the Committee during
the first quarter of
8
<PAGE>
1998. Additionally, each officer was given specific objectives with respect to
Corporate business unit and individual performance, including, but not limited
to, earnings growth, asset quality and productivity improvement. Incentive
awards reflect the degree to which 1998 objectives were met.
Mr. Jacobsen participates in Mercantile's Amended and Restated Executive
Incentive Compensation Plan, which was approved by the shareholders at the
1997 Annual Meeting of Shareholders. For 1998, Mr. Jacobsen's target and
stretch incentive opportunities were based on the Corporation's objectives for
earnings per share, adjusted for one-time pre-assimilation dilution effects,
gains on divestitures, and one time charges for acquisitions and
restructuring. The adjustments equalled, in the aggregate, approximately $76.7
million on an after-tax basis. As so adjusted, earnings per share in 1998 of
$2.90 met targeted performance objectives and exceeded 1997 results.
Stock-Based Incentives
Under Mercantile's Amended and Restated Stock Incentive Plan, approved by
the shareholders at the 1997 Annual Meeting of Shareholders, 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, 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 units 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 or five years beginning one year following the date of grant. The
stock option grants in 1998 for Mr. Jacobsen and other senior management
officers were three-year front loaded grants. These options will vest over a
six-year period. Options granted under the current and certain prior stock
incentive plans of the Corporation are eligible for reload grants. A reload is
a new stock option granted, on a one-for-one basis, when currently-owned
shares of Common Stock are tendered to fund stock option exercises. Reload
options have an exercise price equal to the market price of the Common Stock
on the date of grant, vest one year from such date and have a term equal to
the remaining life of the option to which they relate. Restricted performance
units and/or restricted stock are generally awarded to a senior management
officer in recognition of his or her value to the Corporation and as a means
to ensure his or her continued service. Restricted performance units typically
vest over a period of at least three years, while 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.
In 1998, Mr. Jacobsen was awarded options to purchase 240,000 shares with
an exercise price of $53.0625 per share. This grant, which covered 1999
through 2001, as indicated above, is competitive with the long-term incentive
practices of the KBW 50 banks at the 75th percentile. Mr. Jacobsen was awarded
150,000 shares of restricted stock but received no restricted performance unit
awards in 1998.
Executive Stock Ownership Guidelines
In 1994, Mercantile adopted stock ownership guidelines for senior
management officers. Officers as of January 1, 1994, had 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 118,125; 29,700;
and 16,200 shares, respectively. All senior management officers met or
exceeded the ownership guidelines.
9
<PAGE>
Deductibility of Executive Officer Compensation
The Committee's policy with respect to the tax deductibility of executive
compensation in excess of $1 million is to structure benefit plans in such a
manner that permits the deductibility of such compensation under Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code") when
Mercantile can do so without material change to its overall compensation
program.
THE COMPENSATION AND MANAGEMENT
DEVELOPMENT COMMITTEE
HARRY M. CORNELL, JR.
(CHAIRMAN)
FRANK LYON, JR. HARVEY SALIGMAN
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the compensation of the named executive
officers for each of the last three years:
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
--------------------------------- -----------------------------
Other Restricted Securities All Other
Annual Stock Underlying Pay- Compen-
Name & Principal Salary Bonus Compensation/1/ Awards/2/ Options outs/3/ sation/4/
Position Year ($) ($) ($) ($) (#) ($) ($)
---------------- ---- ------ ----- --------------- ---------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Thomas H. Jacobsen 1998 850,000 1,016,016 471,573 7,771,875 240,000 0 115,500
Chairman of the Board, 1997 728,000 863,226 79,092 0 240,000 0 121,592
President and Chief 1996 633,000 554,318 79,126 0 0 568,506 121,700
Executive Officer
W. Randolph Adams 1998 372,400 289,058 34,628 777,188 75,000 0 53,887
Senior Executive Vice 1997 354,700 289,081 17,645 0 90,401 0 39,976
President and Chief 1996 337,800 87,828 21,265 0 0 184,795 47,880
Administrative Officer
John Q. Arnold 1998 400,000 353,903 28,697 1,295,313 90,000 0 56,612
Vice Chairman, Private 1997 312,000 240,714 23,107 0 75,000 0 42,061
Banking & Investments 1996 249,600 120,998 16,027 0 0 142,141 37,640
John P. Dubinsky 1998 450,000 299,723 29,487 1,295,313 111,000 0 63,214
Chairman, President and 1997(5) 212,500 233,750 19,371 0 0 0 39,907
Chief Executive 1996 NA NA NA NA NA NA NA
Officer--Mercantile
Bank
John W. McClure 1998 400,000 353,903 29,081 1,295,313 90,000 0 47,718
Vice Chairman and Chief 1997 371,600 230,226 21,144 0 75,000 0 52,300
Financial Officer 1996 337,800 211,455 18,629 0 0 184,795 47,392
</TABLE>
10
<PAGE>
- -----
/1/Perquisites and other personal benefits for Mr. Jacobsen are included in
the other annual compensation column but were less than established itemized
reporting thresholds in 1998, except for non-recurring club fees in the
amount of $158,000 paid on behalf of Mr. Jacobsen.
/2/Restricted stock awarded to Mr. Jacobsen vests 50% on October 1, 2003, and
50% on October 1, 2004. Restricted stock awarded to Messrs. Adams, Arnold,
Dubinsky and McClure vests 50% on each of the fourth and fifth anniversary
dates of the grant. As of December 31,1998, Messrs. Jacobsen, Adams, Arnold,
Dubinsky and McClure held an aggregate of 299,850; 37,500; 47,500; 25,000
and 40,000 shares of restricted stock, respectively (including the
restricted stock awards referred to in the table), having an aggregate value
on such date of $13,830,581; $1,729,688; $2,190,938; $1,153,125 and
$1,845,000, respectively. Holders of shares of restricted stock will receive
dividends on such shares during the period of restriction.
/3/No Restricted Performance Unit payouts were made in 1998.
/4/Included in the totals set forth in this column in respect of Messrs.
Jacobsen, Adams, Arnold, Dubinsky and McClure are the profit sharing and/or
matching contributions of $74,527; $29,936; $29,954; $30,807 and $28,569,
for their respective accounts under Mercantile's Horizon Savings and
Incentive Plan, Supplemental Savings Plan and Stock Purchase Plan, and
premiums of $40,973; $23,951; $26,658; $32,407 and $19,149 paid by
Mercantile on non-split dollar life insurance policies for such officers,
respectively, under Mercantile's Management Life Insurance Plan.
/5/Mr. Dubinsky became an employee of the Corporation on April 25, 1997. All
compensation amounts for 1997 reflect compensation paid to Mr. Dubinsky
after that date.
Option Grants in Last Fiscal Year
The following table sets forth information concerning stock option grants
made in the fiscal year ended December 31, 1998, to the individuals named in
the Summary Compensation Table:
<TABLE>
<CAPTION>
Individual Grants
------------------------------------------------
Number of Percent of
Securities Total Grant
Underlying Options/SARs Date
Options/SARs Granted Exercise or Present
Granted/1/ Employees in Base Price Expiration Value/2/
Name (#) Fiscal Year ($/Sh) Date ($)
- ---- ------------ ------------ ----------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Thomas H. Jacobsen.. 240,000 15.22 53.0625 07/20/08 3,524,712
W. Randolph Adams... 75,000 4.76 53.0625 07/20/08 1,101,473
John Q. Arnold...... 90,000 5.71 53.0625 07/20/08 1,321,767
John P. Dubinsky.... 111,000 7.04 53.0625 07/20/08 1,630,179
John W. McClure..... 90,000 5.71 53.0625 07/20/08 1,321,767
</TABLE>
- -----
/1/The exercise price may be paid in cash or by such other method permitted by
the Committee, including (a) tendering (either actually or by attestation)
shares of Mercantile's Common Stock already owned having a fair market value
equal to the cash exercise price of the option being exercised, (b)
surrendering another Mercantile stock award having a fair market value on
the date of exercise equal to the cash exercise price of the option being
exercised, or (c) any combination of the foregoing. Options generally
terminate on the earlier of: ten years after grant; immediately on
involuntary termination of employment for cause or voluntary termination of
employment without written consent of Mercantile; twelve months after
termination of employment for disability; eighteen months after termination
by reason of death; thirty-six months after termination by reason of
retirement; or three months after termination for any other reason. Upon a
change in control of Mercantile, all options become fully exercisable.
/2/Option values are based upon the Black-Scholes option pricing model. Such
model assumes: (a) an option term of 10 years; (b) an average risk-free rate
of 5.36%; (c) a time weighted volatility of .2952, calculated using daily
stock prices for the 7 calendar years prior to the grant date; (d) a time
weighted dividend yield of 2.69%, also based on the seven-year quarterly
data prior to the grant; and (e) an expected option life of 1.55 years from
the vesting date.
11
<PAGE>
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, 1998, and options remaining unexercised at
December 31, 1998, by the individuals named in the Summary Compensation Table:
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Value Options/SARs at Fiscal In-The-Money Options/SARs
Shares Acquired Realized Year-End (#) at Fiscal Year-End/1/ ($)
Name on Exercise (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable
- ---- --------------- ---------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Thomas H. Jacobsen...... 42,052 $1,857,588 588,022/496,800 15,634,465/3,736,891
W. Randolph Adams....... 0 0 69,952/155,250 1,191,735/1,167,779
John Q. Arnold.......... 0 0 71,025/164,850 1,650,901/1,035,704
John P. Dubinsky........ 0 0 124,948/111,000 2,442,216/0
John W. McClure......... 7,875 403,375 112,875/170,250 2,723,231/1,167,779
</TABLE>
- -----
/1/Based on a price per share of $46.125, being the closing price on the New
York Stock Exchange on December 31, 1998 (1998 fiscal year end) as reported
in The Wall Street Journal.
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. Dubinsky. The agreements
pertaining to Messrs. Jacobsen and Dubinsky provide that if the named
officer's employment is terminated prior to the end of the term of such
officer's agreement by such officer for specified reasons or by Mercantile for
any reason other than death, disability or cause, Mercantile will be
obligated, among other things, to pay the then-current base salary and bonus
of such officer and all benefits for the remaining term of the agreement or,
in the case of
Mr. Dubinsky, an amount equivalent to approximately nineteen months' base
salary and bonus, except that in the case of termination of Mr. Jacobsen's
employment by Mercantile as a result of certain specified non-performance
events, Mr. Jacobsen will receive an amount equivalent to his then-current
base salary and bonus for a period of three years or the remaining term of the
employment agreement (October 31, 2004), whichever is less.
Each of the officers named in the Summary Compensation Table and certain
other senior management officers are protected by substantively similar
contractual provisions from a decrease in compensation, benefits, title or
duties following 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 or responsibilities of such officer or if such
officer's employment is terminated for any reason other than for "cause" (as
defined in the respective agreements) 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 (or an amount equal to approximately 3.6 times current
base salary and annual bonus in the case of Mr. Dubinsky in the event the
effective date of any change in control occurs prior to April 25, 1999, or, in
the case of Mr. Jacobsen, a lump-sum payment equal to his annual base salary
and bonus for the remaining term of the employment agreement or for two years,
whichever is greater), 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 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
During 1998, Mercantile began computing future pension benefits using a
"cash balance" accumulation formula. A cash balance formula accumulates
pension benefits in a bookkeeping account in an employee's name. The actuarial
present value of all pension benefits that had been earned by each employee
prior to 1998 served as the opening account balance. Set forth below is a
discussion of Mercantile's qualified and non-qualified plans.
12
<PAGE>
Mercantile Bancorporation Inc. Retirement Plan (the "Retirement Plan"). All
employees earn pension benefits under Mercantile's qualified Retirement Plan.
Pension benefits become 100% vested after the completion of five years of
vesting service, as defined by the plan. Prior to completion of the vesting
requirement, employees have no right to a pension benefit. Vested employees
are eligible to receive a pension benefit at the later of age 45 or the date
employment ends. The pension may be received as a single lump-sum or as a
lifetime annuity.
At the end of each calendar year, a bookkeeping account in an employee's
name is credited with an amount equal to a percentage of the employee's
compensation received during the calendar year. The percentage of compensation
is based upon age, as follows:
<TABLE>
<CAPTION>
Percentage
Age at Beginning of
of Calendar Year Compensation
---------------- ------------
<S> <C>
Less than 30.................... 2.0%
30-34........................... 2.5%
35-39........................... 3.0%
40-44........................... 3.5%
45-49........................... 4.5%
50-54........................... 6.0%
55 and Over..................... 7.0%
</TABLE>
These accounts also receive an "interest credit" based on average 10-year
U.S. Treasury Bill rates for the previous September (minimum of 5.50%).
Pension benefits are not subject to reductions for Social Security benefits.
Mercantile Bancorporation Inc. Supplemental Retirement Plan (the
"Supplemental Plan"). Non-qualified Supplemental Plan pension benefits
computed under the same formula as the Retirement Plan are provided to all
employees whose benefits under the Retirement Plan are limited under
applicable Federal tax laws and regulations.
Mark Twain Bancshares, Inc. Executive Benefit Plan (the "Mark Twain
Supplemental Plan"). Certain executive officers of the former Mark Twain
Bancshares, Inc. were provided non-qualified pension benefits for service
prior to July 1, 1997. No additional benefits have been earned or will be
earned after June 30, 1997.
Estimated Annual Retirement Benefits Payable to Certain Executive Officers.
The following table shows the estimated total annual retirement benefit,
including both the qualified and non-qualified plans in which each such
executive officer participates, which would be payable to each executive
officer listed if he were to retire at age 65.
<TABLE>
<CAPTION>
Year of Estimated
Name 65th Birthday Annual Benefit/1/
---- ------------- -----------------
<S> <C> <C>
Thomas H. Jacobsen...................... 2004 $801,293
W. Randolph Adams....................... 2009 $136,941
John Q. Arnold.......................... 2009 $120,677
John P. Dubinsky........................ 2008 $303,718
John W. McClure......................... 2011 $363,285
</TABLE>
- -----
/1/Amounts are projected assuming compensation remains level and all future
interest crediting rates are 5.50%. Compensation, for pension plan
purposes, is generally equal to the sum of the "Salary" and "Bonus" columns
of the Summary Compensation Table.
13
<PAGE>
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:
GRAPH OF MERCANTILE BANCORPORATION, INC
<TABLE>
<CAPTION>
Period Ending
-----------------------------------------------------
Index 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
- ----- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Mercantile Bancorporation
Inc..................... 100.00 107.36 163.07 188.40 346.99 266.94
S&P 500.................. 100.00 101.32 139.39 171.26 228.42 293.69
KBW 50................... 100.00 94.90 152.00 215.01 314.32 340.34
</TABLE>
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 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.
Frank Lyon, Jr., a director of Mercantile, indirectly owns FLB, Inc., an
Arkansas corporation that leases office facilities to a subsidiary bank of
Mercantile. In 1998, aggregate lease payments of $230,378 were paid to FLB,
Inc. by the Bank.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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, 1998, all Section 16(a) filing requirements applicable
to Reporting Persons were timely met.
14
<PAGE>
INDEPENDENT AUDITORS
The firm of KPMG LLP has been selected as Mercantile's independent auditor
for 1999. Such firm was also Mercantile's independent auditor for 1998. A
representative of KPMG LLP 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 2000 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 14, 1999, in order to be
considered for inclusion in Mercantile's proxy statement and form of proxy for
the 2000 Annual Meeting.
In addition, the By-Laws of Mercantile provide that shareholder proposals,
including nominations of directors, which do not appear in the proxy statement
may be considered at a meeting of shareholders only if they involve a matter
proper for shareholder action and written notice of the proposal is received
by the Secretary of Mercantile not less than 60 and not more than 90 days
prior to the anniversary of the preceding year's annual meeting. Pursuant to
the By-Laws of Mercantile, then, to be considered at the 2000 Annual Meeting
of Shareholders, written notice of a proposal must be received by Mercantile
no later than February 20, 2000. Any such written notice of a shareholder
proposal by a shareholder to the Secretary of Mercantile must include (a) a
brief description of the business desired to be brought before the Annual
Meeting and the reasons for conducting such business at the Annual meeting,
(b) the name and address, as they appear on Mercantile's books, of the
shareholder proposing such business and the beneficial owner, if any, on whose
behalf the proposal is made, (c) the class and number of shares of Mercantile
which are owned beneficially and of record by the shareholder and such
beneficial owner, (d) any material interest of the shareholder and such
beneficial owner in such business and (e) in the case of nominations of
directors, such other information regarding the nominee as may be required to
be disclosed in the Proxy Statement, and the written consent of the proposed
nominee to serve as director, if elected.
DISCRETIONARY AUTHORITY
The Board does not intend to present any business at the Annual Meeting
other than those matters set forth in the accompanying Notice of Annual
Meeting and, as of February 22, 1999 (the 60th day prior to last year's Annual
Meeting date), no matters were proposed by any shareholder for consideration
at this Annual Meeting. If any other matter should properly come before the
Annual 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 interests of Mercantile.
VOTING VIA TELEPHONE OR INTERNET
If you are a registered shareholder, there are three ways to vote your
proxy this year:
. By telephone--call 1-888-514-4508 and follow the instructions on the
enclosed proxy card.
. By Internet--access the proxy form at www.harrisbank.com/wproxy. Follow
the instructions for Internet voting found there and on the enclosed
proxy card.
. By Mail--sign, date and mail the enclosed proxy card using the return
envelope provided.
These procedures require that, in order to be effective, your telephone or
Internet proxy instructions must be received before 12:01 A.M., April 20,
1999, to allow for processing the results.
The telephone and Internet voting procedures used by Mercantile's transfer
agent, Harris Trust and Savings Bank, are designed to properly authenticate
shareholders' identities, and to accurately record and count their proxies. If
you vote via the Internet, please be advised that there may be costs involved,
including possibly access charges from Internet access providers and telephone
companies. These costs will be borne by the shareholder.
15
<PAGE>
If your shares are registered in the name of a brokerage, bank or other
nominee, you may not be able to use telephone and Internet voting procedures.
Please refer to the voting materials you receive, or contact your broker, bank
or other nominee, to determine your options.
Please note that if you wish to cumulate your votes for the election of
directors you may need to use a written proxy card to do so (see page 3 of this
Proxy Statement).
March 15, 1999
A copy of the 1998 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.
16
<PAGE>
MERCANTILE BANCORPORATION INC.
Proxy for Annual Meeting of Shareholders--April 21, 1999
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
PROXY
The undersigned hereby appoint(s) T. H. JACOBSEN, J.W. McCLURE 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 at the West Des Moines Marriott, 1250
74th Street, West Des Moines, Iowa, on Wednesday, April 21, 1999, 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 four Class II directors to hold office for terms of three years
expiring in 2002 or until their successors have been fully elected and
qualified.
Nominees: DR. HENRY GIVENS, WILLIAM A. HALL, CINDA A. HALLMAN, CRAIG D.
SCHNUCK
2. In their discretion, upon any other business, including adjournments of the
meeting, which may properly come before the meeting.
THIS PROXY, WHEN PROPERLY SUBMITTED, WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, ALL PROPERLY SUBMITTED
PROXIES WILL BE VOTED "FOR" THE ELECTION OF ALL NOMINEES AND THE PROPOSALS
LISTED.
IMPORTANT: THIS CARD MUST BE DATED AND SIGNED ON THE REVERSE SIDE AND RETURNED
PRIOR TO THE MEETING TO BE EFFECTIVE.
- --------------------------------------------------------------------------------
MERCANTILE BANCORPORATION INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [_]
[ ]
1. Election of Class II Directors--(see reverse) For Withhold For all
For, except vote withheld from the following All All Except
nominee(s): [_] [_] [_]
01-Dr. Henry Givens 02-William A. Hall
03-Cinda A. Hallman 04-Craig D. Schnuck
---------------------------------------------
For Against Abstain
2. In their discretion, upon any other business All All
which may properly come before the meeting. [_] [_] [_]
3. Check here if you will attend the meeting. [_]
4. Check here if address
change is noted. [_]
---------------------------------
---------------------------------
Dated: 1999
------------------------------
Signature(s)
------------------------------------------------------
------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
