NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
ON MAY 8, 1996
J.P. Morgan & Co. Incorporated
60 Wall Street, New York, NY 10260-0060
JPMORGAN The Annual Meeting of Stockholders of J.P. Morgan &
Co. Incorporated ("Morgan") will be held in Morgan
Hall West, 46th Floor, 60 Wall Street, New York, New
York, on Wednesday, May 8, 1996 at 11:00 a.m., for
the following purposes:
(1) To elect fourteen Directors to hold office until
the next annual meeting of stockholders and until
their respective successors shall have been elected
and qualified;
(2) To consider and vote upon a proposal to approve
the designation of the independent accounting firm of
Price Waterhouse LLP to perform certain auditing
functions for Morgan and its consolidated
subsidiaries for the year 1996;
(3) To consider and vote upon a stockholder-proposed
resolution set forth under "Stockholder Proposal
Relating to Political Non-Partisanship" in the Proxy
Statement;
(4) To consider and vote upon a stockholder-proposed
resolution set forth under "Stockholder Proposal
Relating to Cumulative Voting" in the Proxy
Statement;
(5) To consider and vote upon a stockholder-proposed
resolution set forth under "Stockholder Proposal
Relating to Structural Adjustment" in the Proxy
Statement; and
(6) To act upon such other matters as may properly
come before such meeting or any adjournment thereof.
Stockholders of record at the close of business on
March 15, 1996 will be entitled to vote at the
meeting and at any adjournment thereof.
Dated: March 25, 1996 Rachel F. Robbins
Secretary
YOU ARE REQUESTED TO FILL IN, SIGN, DATE AND RETURN
THE PROXY SUBMITTED HEREWITH IN THE RETURN ENVELOPE
PROVIDED FOR YOUR USE. THE GIVING OF SUCH PROXY WILL
NOT AFFECT YOUR RIGHT TO REVOKE SUCH PROXY OR TO VOTE
IN PERSON SHOULD YOU LATER DECIDE TO ATTEND THE
MEETING.
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PROXY STATEMENT
This statement is furnished in connection with the
solicitation of proxies by the Board of Directors of
J.P. Morgan & Co. Incorporated ("Morgan") to be used
in voting at the Annual Meeting of Stockholders of
Morgan to be held on May 8, 1996 and at any
adjournment thereof.
Stockholders whose names appeared of record on the
books of Morgan at the close of business on March 15,
1996 will be entitled to vote at the meeting and at
any adjournment thereof. On the record date for the
meeting there were 187,448,928 shares of Common Stock
of Morgan outstanding and entitled to vote. Each
share of Common Stock is entitled to one vote. Proxy
material is being mailed to stockholders of record
commencing March 25, 1996.
1 ELECTION OF DIRECTORS
Fourteen Directors of Morgan are to be elected at the
annual meeting to serve until the next annual meeting
of stockholders and until their respective successors
shall have been elected and qualified. Unless
authority to vote for one or more Directors is
withheld, it is intended that shares represented by
Proxies in the accompanying form will be voted for
the election of the persons listed below or, if any
such person shall unexpectedly become unable or
unwilling to accept nomination or election, for the
election of such other person as the Board of
Directors may recommend in his or her place. All of
the persons listed below are Directors of Morgan now
in office and are nominees for re-election. All
nominees are currently Directors of Morgan Guaranty
Trust Company of New York (the "Bank").
The name, age, principal occupation, business
directorships and significant affiliations of an
educational, charitable or civic nature of each
nominee, are set forth below.
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------------------------------------------------------
DOUGLAS A. WARNER III Director since 1990. Age 49.
Chairman of the Board of Morgan and the Bank (since
January 1995) and President of Morgan and the Bank
(since January 1990). Member of the Executive
Committees of Morgan and the Bank (Chairman since
[photo] January 1995). Director of Anheuser-Busch Companies,
Inc. and General Electric Company. Member of The
Bankers Roundtable, The Business Council and The
Business Roundtable. Trustee of Pierpont Morgan
Library and Cold Spring Harbor Laboratory. Member of
Board of Managers and Board of Overseers of Memorial
Sloan-Kettering Cancer Center. Member of Board of
Counselors of Bechtel Group, Inc.
------------------------------------------------------
RILEY P. BECHTEL Director since 1995. Age 44.
Chairman (since January 1996), Chief Executive Officer
(since June 1990) and Director (since August 1987) of
Bechtel Group, Inc. (engineering and construction).
Member of the Audit Committee of Morgan and the
[photo] Examining Committee of the Bank. Trustee of Thacher
School. Member of American Society of Corporate
Executives, The Business Council, The Business
Roundtable, and The California Business Roundtable.
Member of Advisory Council of Stanford University
Graduate School of Business and Dean's Advisory
Council of Stanford University School of Law.
------------------------------------------------------
MARTIN FELDSTEIN Director since 1993. Age 56.
President and Chief Executive Officer of National
Bureau of Economic Research, Inc. (private, non-profit
research organization) and Professor of Economics at
Harvard University (since 1969). Member of the Audit
[photo] Committee of Morgan and the Examining Committee and
the Committee on Employment Policies and Benefits of
the Bank. Director of TRW Inc. and American
International Group, Inc. Member of Council on Foreign
Relations, The Trilateral Commission, American Academy
of Arts and Sciences and American Philosophical
Society.
2
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------------------------------------------------------
HANNA H. GRAY Director since 1976. Age 65.
President Emeritus and Harry Pratt Judson
Distinguished Service Professor of History of The
University of Chicago (since July 1993). Dr. Gray was
President of The University of Chicago from July 1978
to July 1993. Chairman of the Committee on Trust
[photo] Matters and member of the Committee on Director
Nominations and Board Affairs of Morgan. Director of
Ameritech Corp., Atlantic Richfield Company and
Cummins Engine Co., Inc. Trustee of Andrew W. Mellon
Foundation, Bryn Mawr College and Howard Hughes
Medical Institute. Member of Council on Foreign
Relations, American Academy of Arts and Sciences and
American Philosophical Society. Regent of The
Smithsonian Institution.
------------------------------------------------------
JAMES R. HOUGHTON(1) Director since 1982. Age 59.
Chairman and Chief Executive Officer (since April
1983) and Director of Corning Incorporated. Chairman
of the Committee on Management Development and
Executive Compensation of Morgan. Member of the
[photo] Executive Committees of Morgan and the Bank. Director
of Dow Corning Corporation, Exxon Corporation and
Metropolitan Life Insurance Company. Trustee of
Corning Incorporated Foundation, Corning Museum of
Glass, Metropolitan Museum of Art and Pierpont Morgan
Library. Member of the Harvard Corporation.
1.Mr. Houghton has advised Morgan that effective
April 25, 1996 he will retire as Chairman and Chief
Executive Officer of Corning Incorporated. He will
continue as a member of the Board of Directors of
Corning Incorporated.
------------------------------------------------------
JAMES L. KETELSEN Director since 1977. Age 65.
Retired Chairman and Chief Executive Officer of
Tenneco Inc. (diversified industrial). Mr. Ketelsen
was Chairman of the Board of Tenneco Inc. from July
1978 to May 1992 and Chief Executive Officer from July
[photo] 1978 to January 1992. Chairman of the Audit Committee
and member of the Committee on Trust Matters of Morgan
and Chairman of the Examining Committee of the Bank.
Director of GTE Corporation and Sara Lee Corporation.
Trustee of Northwestern University.
------------------------------------------------------
WILLIAM S. LEE Director since 1985. Age 66.
Chairman Emeritus of Duke Power Company (public
utility). Mr. Lee was Chairman, President and Chief
Executive Officer of Duke Power Company from April
1982 to April 1994. Chairman of the Committee on
[photo] Director Nominations and Board Affairs and member of
the Committee on Management Development and Executive
Compensation of Morgan. Director of Texas Instruments
Inc., Knight-Ridder Inc. and Liberty Corporation.
Trustee of Queens College, Charlotte, N.C.
3
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ROBERTO G. MENDOZA Director since 1990. Age 50.
Vice Chairman of the Board of Morgan and the Bank
[photo] (since January 1990) and member of the Executive
Committees of Morgan and the Bank. Director of ACE
Limited, Consorcio de Alimentos Fabril-Pacifico, S.A.
and Mid Ocean Reinsurance Company Ltd.
- --------------------------------------------------------------------------------
MICHAEL E. PATTERSON Director since 1995. Age 54.
Vice Chairman of the Board of Morgan and the Bank
(since December 1995). Mr. Patterson was Chief
Administrative Officer of Morgan and the Bank from
[photo] November 1994 to December 1995 and Executive Vice
President and General Counsel of Morgan and the Bank
from March 1987 to November 1994. Director of
Euroclear Clearance System S.C. and Euroclear
Clearance System Public Limited Company. Trustee of
Columbia University.
- --------------------------------------------------------------------------------
LEE R. RAYMOND Director since 1987. Age 57.
Chairman of the Board and Chief Executive Officer
(since April 1993) and Director of Exxon Corporation.
Mr. Raymond was President of Exxon Corporation from
January 1987 to April 1993. Member of the Committee on
Management Development and Executive Compensation of
Morgan. Chairman of American Petroleum Institute.
[photo] Director of New American Schools Development
Corporation and United Negro College Fund. Trustee of
Southern Methodist University and Wisconsin Alumni
Research Foundation. Member of The Business Council,
The Business Roundtable, Council on Foreign Relations,
Emergency Committee for American Trade, National
Petroleum Council, The Trilateral Commission and The
University of Wisconsin Foundation.
- --------------------------------------------------------------------------------
RICHARD D. SIMMONS Director since 1990. Age 61.
President and Director of International Herald Tribune
(since April 1989). Mr. Simmons was President of The
Washington Post Company from September 1981 to May
1991. Member of the Committee on Trust Matters of
Morgan and Chairman of the Committee on Employment
[photo] Policies and Benefits of the Bank. Director of Union
Pacific Corporation, The Washington Post Company and
Yankee Publishing, Inc. Member of General Electric
Investment Corporation Equity Advisory Board and
council member of White Burkett Miller Center of
Public Affairs at The University of Virginia. Member
of the Board of Trustees of The Phillips Collection.
4
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KURT F. VIERMETZ Director since 1990. Age 56.
Vice Chairman of the Board of Morgan and the Bank
(since January 1990) and member of the Executive
Committees of Morgan and the Bank. Mr. Viermetz was
Treasurer of the Bank from March 1986 to February
1990. Member of Supervisory Board of Hoechst AG.
Chairman of the Board of Munich American Reinsurance
Company and Munich Management Corporation. Member of
[photo] International Advisory Board of Metro Holding AG,
Zug/Switzerland. Director of New York Philharmonic
Society. Trustee of The Johns Hopkins University's
American Institute for Contemporary German Studies.
Member of Board of the American Council on Germany,
New York. Member of Advisory Council of the Center for
German and European Studies at Georgetown University.
Chairman of New York Stock Exchange International
Capital Markets Advisory Committee.
------------------------------------------------------
DENNIS WEATHERSTONE Director since 1979. Age 65.
Mr. Weatherstone was Chairman of the Board of Morgan
and the Bank from January 1990 to January 1995 and
Chairman of the Executive Committees of Morgan from
February 1991 to January 1995 and the Bank from
January 1991 to January 1995. Member of the Executive
Committees of Morgan and the Bank. Member of
International Council. Director of General Motors
[photo] Corporation and Merck & Co., Inc. Director of L'Air
Liquide. Director of Institute for International
Economics. Independent member of Board of Banking
Supervision of the Bank of England. Immediate past
president of International Monetary Conference.
Graduate member of The Business Council. Trustee of
Alfred P. Sloan Foundation. Member of Economic Club of
New York. President and Trustee of The Royal College
of Surgeons Foundation, New York.
------------------------------------------------------
DOUGLAS C. YEARLEY Director since 1993. Age 60.
Chairman of the Board and Chief Executive Officer
(since May 1989), President (since November 1991) and
Director of Phelps Dodge Corporation. Mr. Yearley was
President of Phelps Dodge Industries from 1988 until
1990 and Executive Vice President of Phelps Dodge
Corporation from 1987 until 1989. Member of the Audit
Committee and the Committee on Director Nominations
[photo] and Board Affairs of Morgan and the Examining
Committee of the Bank. Director of USX Corporation and
Lockheed Martin Corporation. Chairman of International
Copper Association. Vice Chairman of American Mining
Congress. Director of Copper Development Association
and National Mining Association. Member of Policy
Committee of The Business Roundtable and The Business
Council. Trustee of Phoenix Art Museum.
------------------------------------------------------
Included among the Committees of the Board of
Directors of Morgan are an Audit Committee, the
members of which are Messrs. Ketelsen (Chairman),
Bechtel, Feldstein and Yearley, a Committee on
Management Development and Executive Compensation, the
members of which are Messrs. Houghton (Chairman), Lee
and Raymond, a Committee on Director Nominations and
Board Affairs, the members of which are Mr. Lee
(Chairman), Dr. Gray and Mr. Yearley, and a Committee
on Trust Matters, the members of which are Dr. Gray
(Chairman) and Messrs. Ketelsen and Simmons.
5
<PAGE>
The Audit Committee, which met five times during 1995,
is responsible for overseeing the financial reporting
process and the effectiveness of internal controls of
Morgan and its consolidated subsidiaries, including
the Bank, and for recommending to the Board of
Directors of Morgan the designation for each year of
independent accountants to examine the financial
statements of Morgan and its consolidated
subsidiaries.
The Committee on Management Development and Executive
Compensation, which met six times during 1995, is
responsible for (1) consultation with senior
management of Morgan and the Bank and reporting to the
appropriate Board regarding development of qualified
replacements to succeed key executives of Morgan and
the Bank; (2) reviewing and approving all awards and
options granted under Morgan's incentive and stock
plans except that awards and options granted to
employees who are also Directors are approved by a
committee composed of all non-employee Directors; (3)
administration (or supervising the administration) of
such plans; and (4) review of policies of Morgan and
certain of its subsidiaries, including the Bank, with
respect to officers' compensation.
The Committee on Director Nominations and Board
Affairs, which met three times during 1995, is
responsible for making recommendations to the Board of
Directors with respect to the qualifications and
nominations of Directors, Directors' functions,
committees, compensation and retirement and other
matters affecting Directors. In determining its
recommendations to Morgan's Board, the Committee on
Director Nominations and Board Affairs will consider
nominees recommended by stockholders. Such stockholder
recommendations should be made in writing, addressed
to the Committee, attention of the Secretary of J.P.
Morgan & Co. Incorporated, 60 Wall Street, New York,
New York 10260-0060.
The Committee on Trust Matters, which met twice during
1995, is responsible for reviewing the general conduct
of the business of the departments and affiliates of
Morgan and the Bank engaged in investing and
administering assets held for others in trust and
investment management accounts.
Included among the Committees of the Board of
Directors of the Bank are an Examining Committee, the
members of which are Messrs. Ketelsen (Chairman),
Bechtel, Feldstein and Yearley, and a Committee on
Employment Policies and Benefits, the members of which
are Messrs. Simmons (Chairman) and Feldstein.
The Examining Committee, which met five times during
1995, is responsible for examinations of the Bank in
accordance with New York banking law.
The Committee on Employment Policies and Benefits,
which met twice in 1995, is responsible for reviewing
the Bank's Retirement, Profit Sharing, and Long-Term
Disability Plans, Morgan's overseas benefit plans,
non-officer salary and other benefits and employee
relations and affirmative action programs.
During 1995 there were nine meetings of the Board of
Directors of Morgan. Each Director of Morgan attended
75% or more of the aggregate number of meetings held
during 1995 of the Morgan Board of Directors and the
Morgan committees of which such Director was a member.
6
<PAGE>
STOCK The following table includes as of March 15, 1996,
OWNERSHIP OF all Morgan stock-based holdings of each Director,
MANAGEMENT each executive officer named in the Summary
Compensation Table appearing on page 13, and all
Directors and executive officers as a group, based
upon information obtained from such persons. A list
of current executive officers of Morgan is attached
as Exhibit A hereto. Each individual beneficially
owns less than 1% of Morgan Common Stock. Each person
has sole investment and voting power with respect to
the shares set forth under the "Stock" column unless
otherwise noted:
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NAME OF INDIVIDUAL OR GROUP STOCK(1) TOTAL (2)
- --------------------------------------------------------------------------------
Douglas A. Warner III 365,454(3) 696,713
Roberto G. Mendoza 323,273 596,231
Michael E. Patterson 215,605(4) 397,925
Kurt F. Viermetz 442,215 695,520
Rodney B. Wagner 198,566 391,559
Riley P. Bechtel -- --
Martin Feldstein 1,000 1,710
Hanna H. Gray 800 1,761
James R. Houghton 1,000 1,961
James L. Ketelsen 7,800 8,761
William S. Lee 1,000 6,524
Lee R. Raymond 500 7,547
Richard D. Simmons 1,000 1,961
Dennis Weatherstone 656,288(5) 980,014
Douglas C. Yearley 1,000 1,830
All Directors and Executive Officers as a Group 2,669,830(6) 4,674,737
- --------------------------------------------------------------------------------
(1) Includes shares of Morgan Common Stock
beneficially owned, directly or indirectly. The column
also includes the following shares of Common Stock
which the individual(s) had the right to acquire
within 60 days of March 15, 1996 through the exercise
of options: Mr. Warner--322,723 shares; Mr.
Mendoza--202,500 shares; Mr. Patterson--210,888
shares; Mr. Viermetz--328,046 shares; Mr.
Wagner--176,763 shares; Mr. Weatherstone--506,501
shares; all directors and executive officers as a
group--2,186,193
(2) Includes total stock-based holdings, including
securities included in the "Stock" column (as
described in footnote 1), plus non-voting interests,
including restricted stock, deferred compensation
accounted for as units of Morgan Common Stock, stock
options that will not become exercisable within 60
days, awards of share credits under the Director Stock
Plan (1992) described on page 8 and directors' fees
deferred as units of Morgan Common Stock under the
Deferred Compensation Plan for Directors' Fees
described on page 8.
(3) Includes 6,000 shares owned by his spouse and 240
shares held in custodial accounts for his children.
Mr. Warner disclaims beneficial ownership of such
shares.
(4) Includes 4,717 shares held in trust for family
members. Mr. Patterson disclaims beneficial ownership
of all but 1,600 of such shares.
(5) Includes 159 shares owned by his son. Mr.
Weatherstone disclaims beneficial ownership of such
shares.
(6) As a group, beneficially owns 1.42% of Morgan
Common Stock.
7
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DIRECTORS AND EXECUTIVE OFFICERS
DIRECTOR Each Director who is not an officer of Morgan or the
COMPENSATION Bank receives an annual retainer of $30,000 and a
single meeting attendance fee of $1,200 for meetings
of the Boards of Morgan and the Bank. Such Directors
also receive annual retainers for service on
committees of the Boards in amounts of $20,000 for the
Chairmen and $12,500 for the members of the Audit
Committee and the Committee on Management Development
and Executive Compensation and $10,000 for the
Chairmen and $7,500 for the members of the other
committees. The members of the Audit Committee also
serve on the Bank's Examining Committee but receive no
additional retainer for such service. In addition,
Directors are entitled to reimbursement for travel
expenses for meetings of the Boards and committees
thereof.
Under a Director Stock Plan (1992), as amended,
Directors who are not officers of Morgan or the Bank
receive annually an award of share credits for 400
shares of Morgan Common Stock for their service during
the preceding year, which award is pro rated in the
case of any Director who was not a Director for all of
the preceding year. After termination of service as a
Director, all awards are paid in shares of stock to
the Director, or, in the case of death, to the
Director's designated beneficiary or estate. Such
payment includes additional shares credited annually
with respect to the dividends that would have been
paid during the year had the share credits been issued
as shares of stock.
Directors who are not officers of Morgan or the Bank
may defer compensation for services rendered as Board
members or as members of Board committees pursuant to
the Deferred Compensation Plan for Directors' Fees
adopted by the Boards of Morgan and the Bank in 1973
and last amended in 1991. The Plan permits Directors
to make separate deferral elections with respect to
their annual retainer and their meeting fees.
Participating Directors may elect under the Plan to
direct Morgan or the Bank to credit deferred amounts
to (i) a Deferred Cash Account, (ii) a Deferred Stock
Value Account or (iii) a combination of both. The Plan
provides that amounts deferred to the Deferred Cash
Account are credited with interest equivalents.
Amounts deferred to the Deferred Stock Value Account
are treated as "Units Based on Stock Value" and are
credited with dividend equivalents. Participating
Directors are entitled to receive cash distribution of
the balance in their accounts in full or in annual
installments (not to exceed 15 years) after
termination of service as a Director.
Retired Directors are eligible to serve as members of
the Bank's Directors Advisory Council. Members of the
Council receive an annual retainer of $30,000.
8
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COMPENSATION COMMITTEE REPORT ON EXECUTIVE
COMPENSATION
ROLE OF THE The Committee on Management Development and Executive
COMMITTEE Compensation, composed entirely of independent
AND THE BOARD outside directors ("Outside Directors"), is
responsible for determining and administering
Morgan's executive compensation policies for its
senior management within guidelines and plans approved
by the Board of Directors. The Committee's
recommendations regarding officers who are Directors
are subject to the approval of the full board of
Outside Directors (with officer directors not
participating).
COMPENSATION Morgan's executive compensation program is designed
PHILOSOPHY to attract, reward and retain highly qualified
executives and to encourage the achievement of
business objectives and superior corporate
performance. The program seeks:
o To foster a performance-oriented environment, where
variable compensation is based upon corporate
performance as measured by achievement of short-term
and long-term objectives, taking into account
economic conditions and competitive compensation
levels.
o To enhance management's focus on maximizing
long-term stockholder value through a strong
emphasis on stock-based compensation.
o To increase the variable portion of total
compensation (both cash and stock) as an
individual's level of responsibility increases. This
further aligns the interests of senior management
and stockholders.
o To promote a cohesive, team-oriented ethic among
members of senior management in order to maintain
the competitive advantage of efficiently integrating
diverse global business capabilities.
COMPONENTS OF Total compensation for Morgan's senior management is
EXECUTIVE composed of base salary, profit sharing, annual
COMPENSATION incentive compensation (of which a substantial
PROGRAM portion is awarded in the form of restricted stock)
and stock option awards.
BASE SALARY Base salaries for Morgan's senior management are
determined by evaluating the responsibilities
associated with the position held and an individual's
overall level of experience. However, in keeping with
Morgan's emphasis on variable rather than fixed
compensation, base salaries represent a relatively low
percentage of total compensation for these
individuals.
PROFIT SHARING Full-time employees, including members of senior
management, generally are eligible for a firm-wide
profit sharing program, under which individuals
receive an annual award equal to a percentage of base
salary. The percentage is determined annually by the
Board of Directors, based on its assessment of
Morgan's overall performance for the year (and applies
only to the first $100,000 of base salary per
individual).
INCENTIVE In keeping with its philosophy of increasing the
COMPENSATION portion of total compensation that depends upon
individual and Morgan performance as an officer's
level of responsibility increases, Morgan's executive
compensation program is heavily weighted toward
incentive compensation.
9
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To establish and maintain a common focus and shared
goals among Morgan's senior management, an incentive
compensation pool for a small number of senior
officers is determined at year end by the Committee,
based on its assessment of Morgan's performance as
measured by various quantitative and qualitative
factors. The Committee believes that, in accordance
with its exercise of sound business judgment, this
determination is inherently subjective and must
include a review of all relevant information, with no
predetermined weight given to any of the factors
considered. The primary quantitative factors reviewed
by the Committee include such performance measures as
net income (after provision for dividends payable to
stockholders) and return on average common
stockholders' equity, both as absolute measures and
relative to previous years. Significant qualitative
factors evaluated by the Committee include Morgan's
performance in relation to industry performance,
progress toward achievement of Morgan's short-term
and long-term business goals, the quality of Morgan's
earnings, and the overall business and economic
environment. In making its determination, the
Committee also reviews competitive compensation
levels.
Each participant in the annual incentive compensation
pool is allocated a fixed share in the pool, as
determined by the Committee at the commencement of
each calendar year, taking into account each
participant's level of management responsibility and
contribution. Actual incentive compensation awards
generated by the pool may be adjusted up or down
under special circumstances, to reflect individual or
business unit performance. As discussed further
below, a substantial portion of these awards is
granted in the form of restricted stock.
STOCK-BASED The Committee believes that stock ownership enhances
COMPENSATION individuals' focus on maximizing long-term
AND STOCK stockholder value. As such, senior officers are
OWNERSHIP strongly encouraged to develop significant equity
positions in Morgan. As discussed below, Morgan's
executive compensation programs are designed to
facilitate stock ownership and to ensure that, as an
individual's level of responsibility increases,
financial rewards depend significantly on Morgan's
overall performance.
RESTRICTED STOCK Each year, a substantial proportion of incentive
compensation is awarded in the form of restricted
stock, issued at fair market value on the date of
grant and subject to five-year vesting. Since the
value of restricted stock awards will ultimately
depend on the market value of Morgan Common Stock,
the Committee believes these awards will serve as a
continual incentive to preserve and increase
stockholder value.
For 1995, members of senior management received 45%
(50% in the case of the Chairman) of their total
incentive compensation awards in the form of
restricted stock. This percentage is the same as in
1994 for most senior officers, evidencing the
Committee's continued commitment to fostering
significant senior management stock ownership.
STOCK OPTIONS Morgan's executive compensation program also utilizes
stock option awards, which are intended to provide
additional incentive to increase stockholder value.
All such awards are granted with an exercise price at
or above 100% of the fair market value of Morgan
stock on the date of grant and become exercisable
over three years. Because Morgan stock option awards
provide value only in the event of share price
appreciation, the Committee believes stock options
represent an important component of a well-balanced
incentive program. Because individual award levels
are based upon a subjective evaluation of each
individual's overall past and expected future
contribution, no specific formula is used to
determine option awards for any employee.
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<PAGE>
CORPORATE The Committee believes that Morgan continues to meet
PERFORMANCE the challenges of a rapidly evolving global business
AND CEO environment and continues to enhance its standing as
COMPENSATION a leading global financial intermediary. Net income
during 1995 was $1.296 billion, 7% higher than the
$1.215 billion earned in 1994. Morgan's return on
average common stockholders' equity was 13.6% for
1995 as compared with 12.9% for 1994.
Mr. Warner has served as Chairman and Chief Executive
Officer since January 1995, and as President since
January 1990. During this time, he has made key
contributions to Morgan's evolution from a premier
commercial bank to a leading global provider of
complex financial services. He has focused the firm
on achieving a growing share of clients' financial
business and on increasing productivity. Overall, his
initiatives have enhanced Morgan's ability to excel
in serving clients and in making full use of its
broad spectrum of capabilities in an increasingly
competitive global environment.
As Chairman and Chief Executive Officer, Mr. Warner
was allocated the largest share in the incentive
compensation pool for senior officers for 1995. In
addition, he was awarded the highest percentage of
annual incentive compensation in the form of
restricted stock -- 50% for 1995.
Mr. Warner's total annual compensation for 1995 was
$4,216,167 including the portion awarded as
restricted stock (which had a grant date value of
$1,808,700 and is included under long-term awards in
the Summary Compensation Table). This represents a
13.6% increase in his total annual compensation from
1994 levels, in the context of a 7% increase in
earnings. This increase reflects Mr. Warner's
significantly expanded responsibilities as well as
stronger corporate performance for 1995. Mr. Warner
was also awarded options to purchase 75,000 shares of
Morgan Common Stock.
TAX DEDUCTIBILITY Section 162(m) of the Internal Revenue Code limits
OF EXECUTIVE the tax deductibility of compensation in excess of $1
COMPENSATION million paid to certain members of senior management,
unless the payments are made under plans which
satisfy the technical requirements of the statute
(and regulations). While the Committee currently
intends to pursue a strategy of maximizing
deductibility of senior management compensation, as
evidenced by its adoption of the 1995 Executive
Officer Performance Plan and 1995 Stock Incentive
Plan (both of which meet the requirements of Section
162(m) and were approved by stockholders during
1995), it also believes it is important to maintain
the flexibility to take actions it considers to be in
the best interests of Morgan and its stockholders,
which may be based on considerations in addition to
Section 162(m). All compensation awarded to
individuals subject to Section 162(m) in respect of
1995 should be deductible by Morgan.
The Committee on Management Development and Executive
Compensation
James R. Houghton, Chairman
William S. Lee
Lee R. Raymond
11
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STOCK The following graphs show changes over the past five-
PERFORMANCE and ten-year periods in the value of $100 invested
GRAPHS in: (1) Morgan's Common Stock; (2) the Standard &
Poor's 500 Index; (3) Standard & Poor's Financial
Index and (4) companies which comprised the Dow Jones
Industrial Average as of December 31, 1995 (of which
Morgan is one).
J.P. MORGAN COMPARISONS OF FIVE YEAR TOTAL STOCKHOLDER RETURN
[The following table represents a chart in the printed piece]
J.P. Morgan S&P 500 S&P FINANCIAL DJ Industrial
----------- ------- ------------- -------------
1990 100 100 100 100
1991 160.3 130.3 150.6 124.2
1992 159.4 140.3 185.6 133.4
1993 174.2 154.3 206.1 156
1994 147.6 156.4 199 163.9
1995 220.2 215 306.2 224.2
J.P. MORGAN COMPARISONS OF TEN YEAR TOTAL STOCKHOLDER RETURN
[The following table represents a chart in the printed piece]
J.P. Morgan S&P 500 S&P FINANCIAL DJ Industrial
----------- ------- ------------- -------------
1985 100 100 100 100
1986 132.6 118.6 108 127.1
1987 120.4 124.8 89.9 134.1
1988 120.9 145.3 106.2 155.7
1989 158.9 191.3 140.8 205.8
1990 168.4 185.3 110.7 204.7
1991 270 241.5 166.6 254.2
1992 268.4 259.9 205.5 273
1993 293.3 286 228.1 319.2
1994 248.5 289.8 220.2 335.4
1995 370.7 398.4 338.9 459
The year-end values of each investment shown in the
preceding graphs are based on share price
appreciation plus dividends, with the dividends
reinvested as of the last business day of the month
during which such dividends were ex-dividend. The
calculations exclude trading commissions and taxes.
Total stockholder returns from each investment,
whether measured in dollars or percentages, can be
calculated from the year-end investment values shown
beneath each graph.
12
<PAGE>
SUMMARY The following table sets forth, for the years ending
COMPENSATION December 31, 1995, 1994, and 1993, the annual and
TABLE long-term compensation paid or accrued for those
years by Morgan, to the Chief Executive Officer and
the four most highly compensated executive officers
of Morgan.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG-TERM COMPENSATION
--------------------------------------------- ------------------------
AWARDS
------------------------
SECURITIES
RESTRICTED UNDERLYING
OTHER ANNUAL STOCK STOCK ALL OTHER
NAME AND SALARY COMPENSATION AWARD OPTIONS COMPENSATION
PRINCIPAL POSITION YEAR ($) BONUS ($)(1) ($)(2) ($)(3)(4) (# SHARES) ($) (5)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Douglas A. Warner III 1995 $591,667 $1,815,800 $ 0 $1,808,700 75,000 $ 27,110
Chairman 1994 500,000 1,449,600 0 1,763,200 90,000 22,056
1993 500,000 2,130,400 0 3,180,600 60,000 23,094
Roberto G. Mendoza 1995 425,000 1,678,300 0 1,367,400 40,000 14,234
Vice Chairman 1994 425,000 1,353,400 0 1,645,700 75,000 15,703
1993 425,000 1,986,400 0 2,964,600 55,000 17,704
Michael E. Patterson 1995 371,250 1,162,000 0 945,000 40,000 7,000
Vice Chairman 1994 330,000 947,400 0 769,400 60,000 7,000
1993 330,000 1,423,000 0 1,413,000 25,000 10,000
Kurt F. Viermetz 1995 425,000 1,678,300 0 1,367,400 40,000 7,000
Vice Chairman 1994 425,000 1,353,400 0 1,645,700 75,000 7,000
1993 425,000 1,986,400 0 2,964,600 55,000 10,000
Rodney B. Wagner 1995 375,000 1,399,700 0 1,139,500 0 7,000
Vice Chairman 1994 375,000 1,129,000 0 1,371,400 60,000 7,000
1993 356,346 1,421,200 20,422 2,116,800 35,000 10,000
- --------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes the cash portion of awards under the
Bank's profit sharing program.
(2) Mr. Wagner deferred a portion of his 1993 annual
bonus into Morgan Common Stock equivalents, an amount
representing the difference between the fair market
value of Morgan Common Stock and the conversion price
for such deferrals on the date such deferral was
credited to his account. Note that annual bonus
deferral elections are made substantially prior to
the time when the conversion price is determinable.
Furthermore, the conversion price for stock-based
deferrals is determined based upon a predetermined
formula and could be either higher or lower than the
fair market value of Morgan Common Stock on the
actual date such deferrals are credited.
(3) The amounts reported in this column represent the
fair market value of restricted stock units awarded
at 100% of the fair market value of Morgan Common
Stock on the grant date (1995 -- $75.625, 1994 --
$60.50 and 1993 -- $71.00) without diminution in
value attributable to the restrictions on such stock.
Annual dividend equivalents are converted into
additional share credits in accordance with the
provisions of the plan(s) under which they were
granted. Restricted Stock awards generally become
vested five years after the date of grant thereof or,
in the case of retirement or death, become vested at
the rate of 20% per year. The Committee on Management
Development and Executive Compensation may accelerate
vesting of Restricted Stock in its sole discretion.
(4) The named officers had non-vested Restricted
Stock award balances outstanding as of January 15,
1996 of 161,326 shares ($12,835,810), 146,271 shares
($11,654,626), 72,620 shares ($5,769,988), 146,271
shares ($11,654,626) and 93,240 shares (7,412,820)
for Messrs. Warner, Mendoza, Patterson, Viermetz and
Wagner respectively. Dollar values are based on (i)
the closing price of Morgan Common Stock on December
29, 1995 ($80.25) for shares which were outstanding
on such date and (ii) the average of the high and low
prices of Morgan Common Stock on January 15, 1996
($75.625) for shares awarded as of such date.
13
<PAGE>
(5) Includes (i) contributions to the Bank's deferred
profit sharing plan of $7,000, $7,000, and $10,000
for 1995, 1994 and 1993, respectively, for Messrs.
Warner, Mendoza, Patterson, Viermetz and Wagner and
(ii) interest exceeding 120% of the applicable
federal rate deemed to have accrued on deferrals
under Morgan's incentive compensation plans (based on
termination and distribution at the earliest date
permissible under the plans although no such interest
will be accrued assuming employment until normal
retirement age) of $20,110, $15,056, and $13,094 for
Mr. Warner and $7,234, $8,703, and $7,704 for Mr.
Mendoza for 1995, 1994 and 1993, respectively.
STOCK OPTIONS
The following tables show, as to the Chief Executive
Officer and the four most highly compensated
executive officers of Morgan, information relating to
stock options awarded by Morgan. The first table
shows, along with certain additional information,
hypothetical realizable values of stock options
granted in respect of the last fiscal year, at
assumed rates of cumulative stock price appreciation
over the ten year life of such options. These assumed
rates of appreciation are set by the proxy rules of
the Securities and Exchange Commission (the "SEC")
and are not intended to forecast appreciation of the
price of Morgan Common Stock. These hypothetical
values have not been discounted to reflect their
present value. The second table shows certain
information relating to stock options exercised
during the previous fiscal year and stock options
outstanding as of December 31, 1995 or awarded in
respect of the 1995 fiscal year. Morgan does not
grant any Stock Appreciation Rights.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION FOR
INDIVIDUAL GRANTS(1) OPTION TERM
- ----------------------------------------------------------------------------------------------------
% OF TOTAL
NUMBER OPTIONS 5%($) 10%($)
OF SHARES GRANTED TO (ASSUMING (ASSUMING
UNDERLYING EMPLOYEES EXERCISE OR 1/13/06 1/13/06
OPTIONS IN FISCAL BASE PRICE EXPIRATION SHARE PRICE SHARE PRICE
NAME GRANTED(2) YEAR ($/SH) DATE OF $123.185) OF $196.152)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Douglas A. Warner III ... 75,000 1.27% $75.625 1/13/06 $3,567,000 $9,039,525
Roberto G. Mendoza ...... 40,000 0.68 75.625 1/13/06 1,902,400 4,821,080
Michael E. Patterson .... 40,000 0.68 75.625 1/13/06 1,902,400 4,821,080
Kurt F. Viermetz ........ 40,000 0.68 75.625 1/13/06 1,902,400 4,821,080
Rodney B. Wagner ........ 0 0.00 75.625 1/13/06 0 0
- ----------------------------------------------------------------------------------------------------
</TABLE>
(1) Information provided in this table includes
options granted on January 15, 1996 in respect of
services performed during the 1995 fiscal year.
(2) Options vest as to one-third of the shares
subject thereto on the first, second and third
anniversaries of the grant date.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
AGGREGATE OPTION EXERCISES UNEXERCISED OPTIONS AT FY-END(1)
-------------------------- ------------------------------------------------
SHARES VALUE OF SECURITIES UNDERLYING
ACQUIRED NUMBER (#) IN-THE-MONEY OPTIONS ($)
------------------------------------------------
ON EXERCISE VALUE UNEXER- UNEXER-
NAME (#) REALIZED($) EXERCISABLE CISABLE(1) EXERCISABLE CISABLE(1)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Douglas A. Warner III ... 41,847 $1,496,728 274,820 195,000 $7,042,798 $2,017,500
Roberto G. Mendoza ...... 124,378 3,663,339 137,500 142,500 2,060,781 1,703,594
Michael E. Patterson .... 0 0 168,388 112,500 5,094,397 1,277,969
Kurt F. Viermetz ........ 10,000 233,120 263,046 142,500 6,762,287 1,703,594
Rodney B. Wagner ........ 32,343 1,190,360 129,263 77,500 3,671,054 1,322,656
- -------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes options granted on January 15, 1996 in
respect of the 1995 fiscal year, valued at grant date
since not outstanding at 1995 fiscal year end.
14
<PAGE>
RETIREMENT Pursuant to the Bank's Retirement Plan for United
BENEFITS States employees and, in certain cases, the Bank's
Benefit Equalization Plan, annual benefits are
payable upon retirement to employees of Morgan and
the Bank and participating subsidiaries. The amounts
shown in the following table are those currently
payable under the Retirement Plan (and, where
applicable, the Bank's Benefit Equalization Plan)
upon retirement in January 1996 at age 65 of a
participating employee who has elected to receive his
or her pension under a straight-life annuity option.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
HIGHEST AVERAGE ANNUAL SALARY OVER ESTIMATED ANNUAL RETIREMENT BENEFITS (1) FOR
THREE CONSECUTIVE YEARS OF SERVICE REPRESENTATIVE YEARS OF CREDITED SERVICE
- ----------------------------------------------------------------------------------------
15 YEARS 20 YEARS 25 YEARS 30 YEARS
- ----------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
$ 50,000 ............................. $ 13,035 $ 17,380 $ 21,725 $ 26,070
100,000 ............................. 27,285 36,380 45,475 54,570
150,000 ............................. 41,535 55,380 69,225 83,070
200,000 ............................. 53,932 72,545 91,158 109,771
300,000 ............................. 78,632 106,745 134,858 162,971
500,000 ............................. 128,032 175,145 222,258 269,371
- ----------------------------------------------------------------------------------------
<FN>
---------
(1) The Employee Retirement Income Security Act of
1974, as amended ("ERISA"), limits the amount of
annual benefits which may be payable under a Federal
income tax qualified plan, such as the Bank's
Retirement Plan. As permitted by ERISA, the Bank's
Benefit Equalization Plan provides for the payment
(out of the general funds of the Bank) of
supplemental pension benefits to participants in the
Bank's Retirement Plan to the extent such
participants' benefits under the Retirement Plan are
reduced by reason of the ERISA limitations. The
extent of any reduction will vary in individual cases
according to circumstances existing at the time
retirement benefit payments commence.
---------
</FN>
</TABLE>
The Bank's Retirement Plan for United States
employees provides retirement benefits for eligible
employees (regular employees with six months
continuous service who have attained age 21). Annual
benefits payable upon retirement are computed under a
formula which is based on the employee's average
annual salary for the three highest-paid consecutive
years within the final ten years prior to termination
of employment. Effective February 1, 1993 there is a
$150,000 limit on all future annual salary amounts
used in determining retirement benefits under the
Retirement Plan, the Benefit Equalization Plan and
the International Pension Plan described below. The
current annual remuneration covered by the Retirement
Plan, taking into account the amendments described
above, is $150,000 for all of the individuals named
in the Summary Compensation Table on page 13 and the
credited years of service for such individuals are as
follows: Mr. Warner, 27 years; Mr. Mendoza, 27 years;
Mr. Patterson, 8 years; Mr. Viermetz, 11 years and
Mr. Wagner, 36 years. Including benefits accrued
prior to the February 1, 1993 effective date of the
amendments, the estimated annual benefits for the
individuals named in the Summary Compensation Table,
assuming retirement at age 65, are as follows: Mr.
Warner $217,686; Mr. Mendoza $199,549; Mr. Patterson
$71,059; Mr. Viermetz $89,205 and Mr. Wagner
$143,848. As part of an agreement with Mr. Patterson,
he will receive an additional seven years of credited
service which will provide a supplemental retirement
benefit of $42,960 paid from the Benefit Equalization
Plan. Mr. Viermetz has 20 years credited service
under the Bank's Pension Plan for Employees in
Germany and under that plan is entitled to receive a
retirement benefit in the annual amount of DM 87,230
upon retirement at or after age 65.
Morgan's International Pension Plan, of which Mr.
Viermetz is a member by virtue of prior overseas
service, provides additional retirement benefits to
certain
15
<PAGE>
employees assigned outside their home countries,
based on the employee's average annual salary for the
three highest-paid consecutive years within the final
ten years of credited service preceding retirement.
The International Pension Plan benefit is paid in a
lump sum and is determined by multiplying such
average salary by the employee's years of credited
service and a lump sum accrual rate factor based on
the employee's age and deducting an amount equal to
the total of all other retirement benefits payable
under other Morgan plans and government sponsored
pension benefits worldwide. As of December 31, 1995
Mr. Viermetz would have been entitled to receive a
lump sum retirement benefit of approximately $1.9
million under the International Pension Plan.
-----------------------------------------------------
TRANSACTIONS Some of Morgan's Directors and executive officers and
WITH DIRECTORS their associates, including affiliates, and
AND OFFICERS organizations of which some of Morgan's Directors are
officers or trustees, have had transactions in the
ordinary course of business with Morgan and
subsidiaries of Morgan, including the Bank. Such
transactions have included borrowings (all of which
were on substantially the same terms, including
interest rates, and collateral, if any, 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 factors), deposits, purchases of
commercial paper issued by Morgan or one of its
subsidiaries, purchases of government, municipal and
certain other securities, and investment banking,
financial advisory, and other financial services and
market transactions.
In the ordinary course of business Morgan and its
subsidiaries, including the Bank, use the products or
services of a number of organizations with which
Directors of Morgan are affiliated as officers,
including Corning Incorporated and Exxon Corporation.
It is expected that Morgan and the Bank will in the
future have transactions with organizations with
which Directors of Morgan are affiliated as officers
or directors.
2 APPROVAL OF INDEPENDENT ACCOUNTANTS
For the year 1996 the Board of Directors of Morgan
has designated the firm of Price Waterhouse LLP to
examine the financial statements of Morgan and its
consolidated subsidiaries, including the Bank, and to
assist the Examining Committee of the Bank in making
its Directors' examination in accordance with
applicable laws and regulations. This designation is
in accordance with the recommendation of the Audit
Committee of Morgan. The Board of Directors is
submitting the designation to the stockholders for
approval. Price Waterhouse LLP served as Morgan's
principal independent accounting firm for the year
1995. Total audit fees to independent accounting
firms in 1995 amounted to approximately $12.3
million.
Representatives of Price Waterhouse LLP are expected
to be present at the annual meeting with the
opportunity to make a statement if they desire to do
so and to be available to respond to appropriate
questions.
The affirmative vote of a majority of the shares of
Common Stock of Morgan represented and voting at the
annual meeting is required for approval of the
foregoing proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
FOREGOING PROPOSAL.
16
<PAGE>
3 STOCKHOLDER PROPOSAL RELATING TO POLITICAL NON-
PARTISANSHIP
Mrs. Evelyn Y. Davis, Watergate Office Building, 2600
Virginia Avenue, N.W., Suite 215, Washington, D.C.
20037, who owns 50 shares of Common Stock of Morgan,
has indicated that she will introduce the following
resolution at the meeting:
"RESOLVED: That the stockholders of J.P. Morgan
assembled in Annual Meeting in person and by
proxy, hereby recommend that the Corporation
affirm its political non-partisanship. To this
end the following practices are to be avoided:
"(a) The handing of contribution cards of
a single political party to an employee
by a supervisor.
"(b) Requesting an employee to send a
political contribution to an individual
in the Corporation for a subsequent
delivery as part of a group of
contributions to a political party or
fund raising committee.
"(c) Requesting an employee to issue
personal checks blank as to payee for
subsequent forwarding to a political
party, committee or candidate.
"(d) Using supervisory meetings to
announce that contribution cards of one
party are available and that anyone
desiring cards of a different party will
be supplied one on request to his
supervisor.
"(e) Placing a preponderance of
contribution cards of one party at mail
station locations."
In support of the foregoing resolution, the proponent
states:
"The Corporation must deal with a great number
of governmental units, commissions and
agencies. It should maintain scrupulous
political neutrality to avoid embarrassing
entanglements detrimental to its business.
Above all, it must avoid the appearance of
coercion in encouraging its employees to make
political contributions against their personal
inclinations. The Troy (Ohio) News has
condemned partisan solicitation for political
purposes by managers in a local company (not
J.P. Morgan).
"Last year the owners of 2,231 proxies
representing approximately 6.1% of shares
voting, voted FOR this proposal.
"If you AGREE, please mark your proxy FOR this
resolution."
The affirmative vote of a majority of the shares of
Common Stock of Morgan represented and voting at the
annual meeting is required for approval of the
foregoing proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE
ABOVE PROPOSAL.
An identical resolution was presented in 1995, 1989,
1988 and 1987 and was rejected in 1995 by 93.96% of
the votes cast.
It has always been Morgan's policy not to coerce or
pressure employees to support any political party or
candidate. Adoption of the foregoing proposal,
however, could be interpreted as inhibiting Morgan in
the expression of its views on governmental policies
and actions, legislative and regulatory developments,
and other matters bearing on Morgan's business or on
which comment by Morgan or its employees is otherwise
appropriate and in the best interests of Morgan and
its stockholders. The detailed restrictions in the
proposal could be
17
<PAGE>
interpreted as precluding Morgan from continuing to
implement its policy of encouraging its employees, on
a voluntary basis and in compliance with applicable
laws, to participate in the political process and to
support the political parties and candidates of their
choice.
Federal and state laws limit corporate involvement in
political campaigns and define the scope of
permissible corporate participation in political
affairs. Like many other major corporations, Morgan
maintains a political action committee which is
administered in strict compliance with federal and
state laws. The committee follows procedures to
assure that contributions from employees are entirely
voluntary. Adoption of the foregoing proposal could,
in management's opinion, unduly restrict Morgan in
properly and lawfully fulfilling its obligations as a
corporate citizen.
4 STOCKHOLDER PROPOSAL RELATING TO CUMULATIVE VOTING
Mr. John J. Gilbert, 29 East 64th Street, New York,
New York 10021-7043, who owns 320 shares of Common
Stock of Morgan, and Mrs. Margaret R. Gilbert, 29
East 64th Street, New York, New York 10021-7043, who,
together with Mr. John J. Gilbert, acts for 1,000
shares as co-trustee under a will, have indicated
that they will introduce the following resolution at
the meeting:
"RESOLVED: That the stockholders of J.P. Morgan
& Co. Inc. assembled in annual meeting in
person and by proxy, hereby request the Board
of Directors to take the steps necessary to
provide for cumulative voting in the election
of directors, which means each stockholder
shall be entitled to as many votes as shall
equal the number of shares he or she owns
multiplied by the number of directors to be
elected, and he or she may cast all of such
votes for a single candidate, or any two or
more of them as he or she may see fit."
In support of the foregoing resolution, the
proponents state:
"Continued very strong support along the lines
we suggest were shown at the last annual
meeting when 24%, 2,586 owners of 32,822,251
shares, were cast in favor of this proposal.
The vote against included 3,299 unmarked
proxies.
"A California law provides that all state
pension holdings and state college funds,
invested in shares must be voted in favor of
cumulative voting proposals, showing increasing
recognition of the importance of this
democratic means of electing directors.
"The National Bank Act provides for cumulative
voting. In many cases companies get around it
by forming holding companies without cumulative
voting. Banking authorities have the right to
question the capability of directors to be on
banking boards. In many cases authorities come
in after and say the director or directors were
not qualified. We were delighted to see the SEC
has finally taken action to prevent bad
directors from being on boards of public
companies. The SEC should have hearings to
prevent such persons becoming directors before
they have investors.
"We think cumulative voting is the answer to
find new directors for various committees. Some
recommendations have been made to carry out the
CERES 10 points. The 11th should be, in our
opinion, having cumulative voting and ending
staggered boards. When Alaska became a state it
took
18
<PAGE>
away cumulative voting over our objections. The
Valdez oil spill might have been prevented if
environmental directors were elected through
cumulative voting. The huge derivative losses
might have also been prevented with cumulative
voting.
"Many successful corporations have cumulative
voting. Example, Pennzoil defeated Texaco in
that famous case. Ingersoll-Rand also having
cumulative voting won two awards. FORTUNE
magazine ranked it second in its industry as
`America's Most Admired Corporations' and the
WALL STREET TRANSCRIPT noted `on almost any
criteria used to evaluate management,
Ingersoll-Rand excels.' In 1994 and 1995 they
raised their dividend.
"Lockheed-Martin, as well as VWR Corporation
now have a provision that if anyone has 40% of
the shares cumulative voting applies, it
applies at the latter company.
"In 1995 American Premier adopted cumulative
voting. Allegheny Power System tried to take
away cumulative voting, as well as put in a
stagger system, and stockholders defeated it,
showing stockholders are interested in their
rights.
"If you agree, please mark your proxy for this
resolution; otherwise it will automatically be
cast against it, unless you have marked to
abstain."
The affirmative vote of a majority of the shares of
Common Stock of Morgan represented and voting at the
annual meeting is required for approval of the
foregoing proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE
ABOVE PROPOSAL.
Cumulative voting permits relatively small groups of
stockholders to elect directors to represent their
particular interests or points of view. The Board of
Directors believes there should never be any question
as to whether each Director is acting for the benefit
of all of the stockholders rather than as a
representative of any special group. For this reason,
the Board of Directors believes that the institution
of cumulative voting in the election of Directors
would be contrary to the best interests of Morgan's
stockholders as a whole.
5 STOCKHOLDER PROPOSAL RELATING TO STRUCTURAL
ADJUSTMENT
Congregation of the Sisters of Charity of the
Incarnate Word, P.O. Box 230969, 6510 Lawndale,
Houston, Texas 77223-0969, which owns 5,500 shares of
Common Stock of Morgan, Society of Oblate Fathers for
Missions Among the Poor, 8818 Cameron Street, Silver
Spring, Maryland 20910-4113, which owns 1,400 shares
of Common Stock of Morgan, Maryknoll Fathers and
Brothers, P.O. Box 306, Maryknoll, New York
10545-0306, which owns 1,000 shares of Common Stock
of Morgan, School Sisters of Notre Dame Cooperative
Investment Fund, 3753 West Pine Boulevard, St. Louis,
Missouri 63108-3305, which owns 54 shares of Common
Stock of Morgan, Sisters of the Humility of Mary,
1515 Eastern Avenue, Morgantown, West Virginia 26505,
which owns 25 shares of Common Stock of Morgan,
Adrian Dominican Sisters, 9740 McKinney, Detroit,
Michigan 48224, which owns 34,424 shares of Common
Stock of Morgan, Mercy Consolidated Assets Management
Program, 20 Washington Square North, New York, New
York 10011, which owns 100 shares of Common Stock of
Morgan, and Sisters of St. Dominic of Caldwell, N.J.,
1 Ryerson
19
<PAGE>
Avenue, Caldwell, New Jersey 07006, which owns 100
shares of Common Stock of Morgan, have indicated that
they will introduce the following resolution at the
meeting:
"RESOLVED: Shareholders request our bank
prepare a report stating its official position
on structural adjustment programs and analyzing
those programs' impact where the bank has
outstanding loans, including debtor countries'
o Ability to repay our bank's loan
o Present and future labor forces
o Natural resources
o Social and political stability
o Potential for sustainable, democratic
development.
"This report should be prepared at a reasonable
cost and excluding confidential information."
In support of the foregoing resolution, the
proponents state:
"Our bank has outstanding loans in many
developing countries currently undergoing
austerity and structural adjustment programs
strongly urged by the International Monetary
Fund and World Bank. These programs aim to
stabilize heavily indebted economies, and
enable countries to service their debts.
"However, we believe that while these policies
press debtor nations to pay interest, they
often erode those countries' human and natural
resources, increase their domestic inequalities
and international dependency, and undermine
their long-term capacity to repay their actual
debts.
"Structural adjustment programs typically
include:
o Export promotion strategies including
removal of import tariffs, reducing
local industries' ability to compete
against foreign companies, and
deregulation, which often increases
destructive exploitation of human and
natural resources,
o Cuts in spending for health, education
and housing,
o Wage controls and reduction of
subsidies for basic products which
shrink workers' real incomes,
o Restricted domestic credit and higher
interest rates, limiting
entrepreneurial possibilities for small
producers (especially women),
o Higher taxes which fall
disproportionately on poor and working
people,
o Wholesale privatization of state-owned
enterprises, which reduce government
assets available to finance future
infrastructural and social development
and repay debts.
"We believe adjustment programs have
contributed heavily to the following
circumstances:
"BRAZIL: Real minimum wages dropped 40% during
the 1980's, as the percentage of Brazilians in
poverty rose from 24% to 39%. Today more than
one in five confronts hunger daily.
20
<PAGE>
"NICARAGUA: Unemployment totals 60%, while
teachers, nurses and policemen earn less than
the official subsistence level. Cuts in
spending for health and sanitation fuel cholera
and malaria epidemics, and the reemergence of
diseases previously eradicated by national
programs. Hunger and starvation cause more
deaths than ever in Nicaragua's history.
Privatization measures provoked massive
strikes, while other adjustment policies
sparked armed rebellions.
"PERU: Infant mortality has risen to 60 deaths
per 1000 live births nationally, and 260/1000
in southern regions. Primary school enrollment
has dropped 11%, as fewer families can afford
the fees. Programs to cushion the adjustment
programs' impact since 1990 have been grossly
underfunded and underspent.
"PHILIPPINES: Half the population (and 75% of
rural dwellers) are un- or underemployed.
Starvation has doubled since 1985. Tight money
policies have resulted in usurious interest
rates (up to 400%) for small farmers. Poverty
and unemployment drive landless poor to migrate
seeking food and work -- devastating forests,
soil and fisheries. Debt servicing absorbs 40%
of the national budget and 31% of export
earnings, limiting resources available for
development.
"We believe these issues warrant our bank's
attention since they affect its creditors,
customers and potential markets."
The affirmative vote of a majority of the shares of
Common Stock of Morgan represented and voting at the
annual meeting is required for approval of the
foregoing proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE
ABOVE PROPOSAL.
No one can dismiss the human hardships cited by the
proponents. However, many developing countries have
longstanding, deep-rooted structural problems for
which there are no simple solutions. The programs
encouraged by the International Monetary Fund and
World Bank are meant to focus on long-term
development and strengthen national infrastructures.
Investment in the health and education of their
people by the countries involved is also important to
a development strategy that leads to sustained
economic growth and benefits all levels of society.
In our view, preparation of the recommended report
would not shed new light on the important economic
and social issues raised by the proposal and would
not be in the interests of Morgan or its
stockholders.
6 OTHER MATTERS
The Board of Directors of Morgan does not know of any
matters which may be presented at the meeting other
than those specifically set forth in the Notice of
Annual Meeting. If other matters come before the
meeting or any adjournment thereof, the persons named
in the accompanying form of proxy and acting
thereunder will vote in accordance with their best
judgment with respect to such matters.
Section 16(a) of the 1934 Act requires Morgan's
executive officers, Directors and persons who own
more than ten percent of a registered class of
Morgan's equity securities ("Reporting Persons") to
file reports of ownership and changes in ownership on
Forms 3, 4 and 5 with the SEC and the New York Stock
Exchange (the "NYSE"). These Reporting Persons are
required by SEC
21
<PAGE>
regulation to furnish Morgan with copies of all Forms
3, 4 and 5 that they file with the SEC and NYSE.
Based solely on Morgan's review of the copies of the
Forms it has received and written representations
from certain Reporting Persons, Morgan believes that
all of its Reporting Persons complied with all filing
requirements applicable to them with respect to
transactions during fiscal year 1995.
The expense of the Board of Directors' proxy
solicitation will be borne by Morgan. In addition to
the use of the mails, proxies may be solicited by
personal interview or by telephone. Banks, brokerage
houses and other institutions, nominees and
fiduciaries will be requested to forward the
soliciting material to beneficial owners and to
obtain authorization for the execution of proxies;
and, if they in turn so request, Morgan will
reimburse such banks, brokerage houses and other
institutions, nominees and fiduciaries for their
expenses in forwarding such material. Directors,
officers and regular employees of Morgan or the Bank
may also solicit proxies without additional
remuneration therefor. Morrow & Co., Inc., New York,
New York, has been retained to aid in the
solicitation of proxies for a fee of $8,500 plus
out-of-pocket expenses.
Stockholders are urged to sign the accompanying form
of proxy, solicited on behalf of the Board of
Directors of Morgan, and return it at once in the
envelope provided for that purpose. Proxies will be
voted in accordance with the stockholders'
directions. If no directions are given, proxies will
be voted for the election of the nominees for
Directors set forth in this Proxy Statement, for the
approval of the independent accountants recommended
by the Board of Directors, and against the
stockholder-proposed resolutions relating to
political non-partisanship, cumulative voting and
structural adjustment. The proxy does not affect the
right to vote in person at the meeting and may be
revoked at any time before it is voted. A stockholder
who wishes to give a proxy to someone other than the
proxies designated by the Board of Directors may
strike out the names appearing on the enclosed form
of proxy, insert the name of some other person, sign
the form and transmit it to that person for use at
the meeting. A plurality of the votes of the shares
of Common Stock represented at the annual meeting in
person or by proxy is required for the election of
Directors. Accordingly, abstentions and broker
non-votes will not affect the outcome of elections.
The affirmative vote of the majority of the shares of
Common Stock represented at the annual meeting in
person or by proxy and entitled to vote is required
for all other matters. Abstentions for such items
will be counted as voting in respect of such item and
therefore will have the effect of a negative vote.
However, proxies returned by brokers as "non-votes"
for any item as to which brokers may not vote without
instructions from the beneficial owners will not be
counted as voting in respect of such item.
Proxies, ballots and voting tabulations identifying
stockholders are secret and will not be available to
anyone, except as actually necessary to meet legal
requirements.
-----------------------------------------------------
22
<PAGE>
STOCKHOLDER Proposals of stockholders intended to be presented at
PROPOSALS the 1997 annual meeting of stockholders of Morgan
must be received by Morgan not later than November
27, 1996 in order to be included in the proxy
statement and form of proxy relating to such annual
meeting.
Dated: March 25, 1996 Rachel F. Robbins
Secretary
23
<PAGE>
EXHIBIT A
EXECUTIVE OFFICERS OF MORGAN
The following individuals are the current executive officers of Morgan. The
Chairman of the Board, President, Chairman of the Executive Committee, and Vice
Chairmen of the Board of Morgan are elected annually by the Board of Directors
to serve until the next annual election of officers and until their respective
successors have been elected and have qualified. All other executive officers
are elected annually and hold office at the pleasure of the Board of Directors.
- --------------------------------------------------------------------------------
NAME AGE POSITION
- --------------------------------------------------------------------------------
Douglas A. Warner III ........... 49 ........ Chairman of the Board and
President of Morgan and the Bank.
See "Election of Directors" on
page 2.
Roberto G. Mendoza .............. 50 ........ Vice Chairman of the Board of
Morgan and the Bank. See
"Election of Directors" on page
4.
Michael E. Patterson ............ 54 ........ Vice Chairman of the Board of
Morgan and the Bank. See
"Election of Directors" on page
4.
Kurt F. Viermetz ................ 56 ........ Vice Chairman of the Board of
Morgan and the Bank. See
"Election of Directors" on page
5.
John A. Mayer Jr. ............... 56 ........ Chief Financial Officer of Morgan
and the Bank since June 1995;
Managing Director of Morgan from
January 1990 and of the Bank from
February 1989 to June 1995.
Rachel F. Robbins ............... 45 ........ General Counsel and Secretary of
Morgan since February 1996;
Managing Director of Morgan and
of J.P. Morgan Securities Inc.
since January 1988; General
Counsel and Secretary of J.P.
Morgan Securities Inc. since
January 1986; Deputy General
Counsel of Morgan from July 1992
to February 1996.
David H. Sidwell ................ 42 ........ Managing Director and Controller
of Morgan and the Bank since
December 1994; Senior Vice
President and Controller of
Morgan and the Bank from April
1994 to December 1994; Senior
Vice President of the Bank from
February 1989 to April 1994.
Stephen G. Thieke ............... 49 ........ Managing Director and Head of
Corporate Risk Management of
Morgan since March 1996;
Chairman, Market Risk Committee
of Morgan since June 1993 and
Chairman of the Board of J.P.
Morgan Securities Inc. since
November 1993 and from April 1991
to October 1992; Managing
Director of Morgan from March
1991 to June 1993; President of
J.P. Morgan Securities Inc. from
October 1990 to November 1993;
Vice Chairman of the Board of
J.P. Morgan Securities Inc. from
February 1990 to April 1991 and
from October 1992 to November
1993.
- --------------------------------------------------------------------------------
A-1
<PAGE>
P
R
O
X
Y
J.P. MORGAN & CO. INCORPORATED
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
FOR ANNUAL MEETING OF STOCKHOLDERS, MAY 8, 1996
The undersigned hereby constitutes and appoints E. Deane Leonard, Edward F.
Murphy and Rachel F. Robbins, and each of them, the true and lawful agents and
proxies of the undersigned with full power of substitution in each, to represent
the undersigned at the Annual Meeting of Stockholders of J.P. MORGAN & CO.
INCORPORATED to be held in Morgan Hall West, 46th floor, 60 Wall Street, New
York, New York, on Wednesday, May 8, 1996, at 11 a.m., and at any adjournment of
said meeting, and to vote, as directed on the reverse side of this card, on all
specified matters coming before said meeting, and in their discretion, upon such
other matters not specified as may come before said meeting.
Election of Directors, Nominees:
Douglas A. Warner III, Riley P. Bechtel, Martin Feldstein, Hanna H. Gray, James
R. Houghton, James L. Ketelsen, William S. Lee, Roberto G. Mendoza, Michael E.
Patterson, Lee R. Raymond, Richard D. Simmons, Kurt F. Viermetz, Dennis
Weatherstone and Douglas C. Yearley.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, SEE
REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE
WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT VOTE YOUR
SHARES UNLESS YOU SIGN AND RETURN THIS CARD TO J.P. MORGAN & CO. INCORPORATED,
C/O FIRST CHICAGO TRUST COMPANY, P.O. BOX 8212, EDISON, NJ 08818-9079.
|---------------|
| SEE REVERSE |
| SIDE |
|---------------|
<PAGE>
0123
[X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE "FOR" ITEMS 1 AND 2.
THIS PROXY WILL BE VOTED "FOR" ITEMS 1 AND 2 IF NO CHOICE IS SPECIFIED.
1. Election of FOR WITHHELD
Directors. [ ] [ ]
(see reverse)
For, except vote withheld from the following nominee(s):
- --------------------------------------------------------
2. Approval of indepen- FOR AGAINST ABSTAIN
dent accountants. [ ] [ ] [ ]
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE "AGAINST" ITEMS 3-5.
THIS PROXY WILL BE VOTED "AGAINST" ITEMS 3-5 IF NO CHOICE IS SPECIFIED.
3. Stockholder proposal FOR AGAINST ABSTAIN
relating to political [ ] [ ] [ ]
non-partisanship.
4. Stockholder proposal FOR AGAINST ABSTAIN
relating to cumulative [ ] [ ] [ ]
voting.
5. Stockholder proposal FOR AGAINST ABSTAIN
relating to structural [ ] [ ] [ ]
adjustment.
SIGNATURTE(S) DATE
--------------------------------------------- -------------------
The signer hereby revokes all proxies heretofore given by the signer to vote at
said meeting or any adjournments thereof.
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.
+ FOLD AND DETACH HERE +
J.P. MORGAN & CO. INCORPORATED
Annual Meeting
of
Stockholders
Wednesday, May 8, 1996
11:00 a.m.
J.P. Morgan & Co. Incorporated
Morgan Hall West
60 Wall Street
New York, N.Y. 10260-0060
IMPORTANT NOTICE
----------------
IT IS IMPORTANT THAT YOU VOTE, SIGN AND
RETURN THE ABOVE PROXY AS SOON AS POSSIBLE.
