SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by 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 Under Rule 14a-12
J.P. Morgan & Co. Incorporated
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<PAGE>
Notice of Annual Meeting
of Stockholders
Wednesday, April 12, 2000
11:00 A.M.
==================================================
J.P. Morgan & Co. Incorporated
Morgan Hall West
46th Floor, 60 Wall Street
New York, New York
March 8, 2000
To our stockholders:
We are pleased to invite you to attend our 2000
annual meeting of stockholders to:
o Elect 15 directors,
o Approve the appointment of PricewaterhouseCoopers
LLP as independent accountants for 2000,
o Act on one stockholder proposal to be presented,
and
o Conduct other business properly brought before the
meeting.
Stockholders of record at the close of business on
February 25, 2000, may vote at the meeting.
Your vote is important. Whether or not you plan to
attend the meeting, please sign, date, and return
the enclosed proxy card in the envelope provided.
If you are a registered stockholder, you may also
vote by telephone or electronically through the
Internet. Instructions are included on your proxy
card. You may change your vote by sending in a
signed proxy card with a later date, a later
telephone or Internet vote, or by attending the
meeting and voting in person.
Rachel F. Robbins
Secretary
JP Morgan
<PAGE>
Proxy statement table of contents
==================================================
Information about the annual meeting and voting 1
Item 1: Election of directors ................. 2
Biographies of our Board nominees ..... 3
Committees of the Board of Morgan ..... 8
Committees of the Board of the Bank ... 9
Director compensation ................. 9
Our executive officers ................ 10
Stock ownership of management ......... 11
Stock ownership of certain beneficial
owners .............................. 12
Compensation committee report on
executive compensation .............. 12
Summary compensation table ............ 16
Stock options ......................... 17
Stock performance graphs .............. 18
Retirement benefits ................... 19
Transactions with directors and
officers ............................ 20
Item 2: Approval of PricewaterhouseCoopers LLP
as independent accountants ............ 21
Item 3: Stockholder proposal relating to
director share ownership .............. 21
Item 4: Other matters ......................... 22
Section 16(a) beneficial ownership
reporting compliance ................ 22
Proxy solicitation .................... 22
Stockholder proposals ................. 22
<PAGE>
Information about the annual meeting and voting
==================================================
The Board of Directors of J.P. Morgan & Co.
Incorporated (which we refer to in this proxy
statement as "Morgan") is soliciting your proxy to
vote at our 2000 annual meeting of stockholders
(or at any adjournment of the meeting). This proxy
statement summarizes the information you need to
know to vote at the meeting.
We began mailing this proxy statement and the
enclosed proxy card on or about March 8, 2000, to
all stockholders entitled to vote. Stockholders
who owned Morgan common stock, our only class of
voting stock, at the close of business on the
record date, February 25, 2000, are entitled to
vote. As of this record date, there were
164,265,059 shares of Morgan common stock
outstanding. We are also sending the Morgan 1999
Annual Report, which includes our financial
statements, along with this proxy statement.
Date, time, and place Date: Wednesday, April 12, 2000
of meeting Time: 11:00 a.m.
Place: Morgan Hall West, 46th Floor
60 Wall Street, New York, New York
Voting your proxy Each share of Morgan common stock that you own
entitles you to one vote. The proxy card indicates
the number of shares that you own.
Whether or not you plan to attend the annual
meeting, we urge you to complete, sign, and date
the enclosed proxy card and return it promptly in
the envelope provided. Returning the proxy card
will not affect your right to attend the meeting
and vote. If you are a registered stockholder, you
may also vote by telephone or electronically
through the Internet. Instructions are included on
your proxy card. If your shares are held in
"street name," you should contact your broker,
bank, or other nominee to determine whether you
will be able to vote by telephone or
electronically.
If you properly fill in your proxy card and send
it to us in time to vote, your "proxy" (one of the
individuals named on your proxy card) will vote
your shares as you have directed. If you sign the
proxy card but do not make specific choices, your
proxy will vote your shares as recommended by the
Board as follows:
o "FOR" the election of all 15 nominees for director
(as described on page 2),
o "FOR" the approval of PricewaterhouseCoopers LLP
as independent accountants for 2000 (as described
on page 21), and
o "AGAINST" the stockholder proposal to be presented
(as described on page 21).
If any other matter is presented at the meeting,
your proxy will vote in accordance with his or her
best judgment. At the time this proxy statement
went to press, we knew of no matters needing to be
acted on at the meeting except for those discussed
in this proxy statement.
Revoking your proxy o You may send in another signed proxy card with a
later date proxy or a later telephone or Internet
vote,
o You may notify our Secretary in writing before the
meeting that you have revoked your proxy, or
o You may vote in person at the meeting.
1
<PAGE>
Voting in person If you plan to attend the meeting and vote in
person, we will give you a ballot when you arrive.
However, if your shares are held in the name of
your broker, bank, or other nominee, you must
bring an account statement or letter from the
nominee indicating that you are the beneficial
owner of the shares on February 25, 2000, the
record date for voting.
Appointing your own If you want to give your proxy to someone other
proxy than the individuals named as proxies on the proxy
card, you may do so by crossing out the names of
those individuals and inserting the name of the
individual you are authorizing to vote. Either you
or that authorized individual must present the
proxy card at the meeting.
Quorum requirement A quorum is necessary to hold a valid meeting. A
majority of the shares entitled to vote in person
or by proxy at the meeting constitutes a quorum.
Abstentions and broker "non-votes" are counted as
present for establishing a quorum. A broker
non-vote occurs on an item when a broker is not
permitted to vote on that item absent instruction
from the beneficial owner of the shares and no
instruction is given.
Vote necessary to Item 1: Election of directors
approve proposals * Directors are elected by a plurality vote of
shares present at the meeting, meaning that the
director nominee with the most affirmative votes
for a particular slot is elected for that slot.
Only the number of votes "for" and "against"
affect the outcome. Abstentions have no effect on
the vote.
Item 2: Approval of independent accountants
* Approval requires the affirmative vote of a
majority of the shares present at the meeting in
person or by proxy. Abstentions are counted and
have the effect of a vote "against."
Item 3: Stockholder proposal
* Same as for Item 2.
--------------------------------------------------
* Under New York Stock Exchange rules, if your
broker holds your shares in its name, the broker
is permitted to vote your shares on Items 1 and 2
even if it does not receive voting instructions
from you. Your broker may not vote your shares on
Item 3 absent instructions from you. Without your
voting instructions, a broker non-vote will occur
on Item 3 but will have no effect on the vote.
Confidentiality of voting Proxies, ballots, and voting tabulations
identifying stockholders are kept confidential and
will not be available to anyone except as actually
necessary to meet legal requirements.
Item 1: Election of directors
--------------------------------------------------
Our Board of Directors has nominated 15 directors
for election at the annual meeting. Each nominee
is currently serving as one of our directors. If
you reelect them, they will hold office until the
next annual meeting or until their successors have
been elected.
Your proxy will vote for each of the nominees
unless you specifically withhold authority to vote
for a particular nominee.
2
<PAGE>
If any nominee is unable to serve, your proxy may
vote for another nominee proposed by the Board or
the Board may reduce the number of directors to be
elected.
All nominees are currently also directors of
Morgan Guaranty Trust Company of New York (which
we refer to in this proxy statement as the
"Bank").
Roberto G. Mendoza, who has served as Vice
Chairman and director of Morgan and the Bank since
1990, has announced his intention to retire as
Vice Chairman in April 2000. He will not stand for
reelection at the annual meeting.
Richard D. Simmons, who has served as a director
since 1990, will not stand for reelection at the
annual meeting.
Kurt F. Viermetz, who has served as a director
since 1990, will not stand for reelection at the
annual meeting.
During 1999 there were eight meetings of the Board
of Directors of Morgan. Each director attended at
least 75 percent of the meetings of the Board and
committees of which he or she was a member.
Biographies of our Board nominees
--------------------------------------------------
Douglas A. Warner III
Director since 1990, Age 53
[PHOTO OMITTED]
Chairman of the Boards of Morgan and the Bank
(since January 1995) and President of Morgan and
the Bank (since January 1990). Chairman of the
Executive Committees of Morgan and the Bank.
Director of Anheuser-Busch Companies, Inc.,
General Electric Company, and The New York
Clearing House Association. Member of the Board of
Counselors of Bechtel Group, Inc. Chairman of the
Board of Managers and the Board of Overseers of
Memorial Sloan-Kettering Cancer Center. Trustee of
Pierpont Morgan Library. Member of The Business
Roundtable and The Business Council.
--------------------------------------------------
Paul A. Allaire
Director since 1997, Age 61
[PHOTO OMITTED]
Chairman of the Board (since May 1991) and
Director of Xerox Corporation (office equipment).
Mr. Allaire was Chief Executive Officer of Xerox
Corporation from August 1990 to April 1999. Member
of the Audit Committee and the Committee on
Fiduciary Matters of Morgan and the Examining
Committee of the Bank. Director of Sara Lee
Corporation, SmithKline Beecham p.l.c., Lucent
Technologies, and priceline.com Incorporated.
Member of the Boards of Council on
Competitiveness, Council on Foreign Relations, New
York City Ballet, Ford Foundation, and Catalyst.
Member of The Business Council and National
Academy of Engineering. Trustee of Worcester
Polytechnic Institute and Carnegie-Mellon
University.
3
<PAGE>
--------------------------------------------------
Riley P. Bechtel
Director since 1995, Age 47
[PHOTO OMITTED]
Chairman (since January 1996), Chief Executive
Officer (since June 1990), and Director of Bechtel
Group, Inc. (engineering and construction). Member
of the Committee on Management Development and
Executive Compensation and the Committee on
Fiduciary Matters of Morgan. Director of Fremont
Group, L.L.C., Fremont Investors, Inc., and
Sequoia Ventures Inc. Member of American Society
of Corporate Executives, The Business Council, The
Business Roundtable, The Trilateral Commission,
The National Petroleum Council, The Conservation
Fund Corporate Council, and Indian School of
Business Governing Board. Member of Dean's
Advisory Council of Stanford University School of
Law. Director of Jason Foundation for Education.
--------------------------------------------------
Lawrence A. Bossidy
Director since 1998, Age 65
[PHOTO OMITTED]
Chairman of the Board (since December 1999) and
Director of Honeywell International Inc.
(diversified manufacturing). Mr. Bossidy was
Chairman of the Board (from January 1992 to
November 1999) and Chief Executive Officer and
Director (from July 1991 to November 1999) of
AlliedSignal Inc. Member of the Committee on Risk
Policies of Morgan and the Committee on Employment
Policies and Benefits of the Bank. Director of
Merck & Co., Inc., Champion International
Corporation, and Industry to Industry, Inc. Member
of The Business Council.
--------------------------------------------------
Martin Feldstein
Director since 1993, Age 60
[PHOTO OMITTED]
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).
Chairman of the Committee on Risk Policies of
Morgan and member of the Committee on Employment
Policies and Benefits of the Bank. Director of TRW
Inc., American International Group, Inc., and
Columbia-HCA, Inc. Member of Council on Foreign
Relations, The Trilateral Commission, American
Academy of Arts and Sciences, American
Philosophical Society, and Corporation of
Massachusetts General Hospital.
--------------------------------------------------
Ellen V. Futter
Director since 1997, Age 50
[PHOTO OMITTED]
President and Trustee of American Museum of
Natural History (since November 1993). Ms. Futter
served as President of Barnard College from May
1981 through September 1993. Member of the
Committee on Risk Policies of Morgan and the
Committee on Employment Policies and Benefits of
the Bank. Director of American International
Group, Inc., Bristol-Myers Squibb Company, and
Consolidated Edison, Inc. Member of Council on
Foreign Relations, American Academy of Arts and
Sciences, and Advisory Board of the Yale School of
Management. Director of New York City Partnership.
4
<PAGE>
--------------------------------------------------
Hanna H. Gray
Director since 1976, Age 69
[PHOTO OMITTED]
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 Fiduciary Matters and member of the Committee
on Director Nominations and Board Affairs of
Morgan. Director of Cummins Engine Co., Inc.
Trustee of Andrew W. Mellon Foundation, Harvard
University, 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.
--------------------------------------------------
Walter A. Gubert
Director since 1998, Age 52
[PHOTO OMITTED]
Vice Chairman of the Boards of Morgan and the Bank
(since March 1998) and member of the Executive
Committees of Morgan and the Bank. Mr. Gubert was
Managing Director of the Bank from September 1989
to February 1998, Chairman of the Bank's European
Management Committee from June 1993 to December
1997, and Senior Regional Executive for Europe
from March 1995 to December 1997.
--------------------------------------------------
James R. Houghton
Director since 1982, Age 63
[PHOTO OMITTED]
Chairman Emeritus of the Board of Corning
Incorporated. Mr. Houghton was Chairman of the
Board and Chief Executive Officer of Corning
Incorporated from April 1983 to April 1996.
Chairman of the Committee on Management
Development and Executive Compensation of Morgan.
Member of the Executive Committees of Morgan and
the Bank. Director of Corning Incorporated, Exxon
Mobil Corporation (formerly Exxon Corporation),
and Metropolitan Life Insurance Company. Trustee
of Metropolitan Museum of Art, Corning Museum of
Glass, and Pierpont Morgan Library. Member of The
Business Council and Harvard Corporation.
--------------------------------------------------
James L. Ketelsen
Director since 1977, Age 69
[PHOTO OMITTED]
Retired Chairman of the Board 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 1978 to January 1992.
Chairman of the Audit Committee and member of the
Committee on Fiduciary Matters of Morgan and
Chairman of the Examining Committee of the Bank.
Director of GTE Corporation and Sara Lee
Corporation. Trustee of Northwestern University.
5
<PAGE>
--------------------------------------------------
John A. Krol
Director since 1997, Age 63
[PHOTO OMITTED]
Retired Chairman of the Board of E.I. du Pont de
Nemours and Company (global chemical and energy).
Mr. Krol was Chairman of the Board from October
1997 to January 1999 and Chief Executive Officer
of DuPont from December 1995 to February 1998,
President from October 1995 to October 1997, and
Vice Chairman from March 1992 to October 1995.
Member of the Audit Committee and Committee on
Director Nominations and Board Affairs of Morgan
and the Examining Committee of the Bank. Director
of Mead Corporation, Armstrong World Industries,
Inc., and Milliken Corporation. Member of Board of
Trustees of Tufts University, University of
Delaware, and Graduate Engineering for Minorities
Consortium. Member of Advisory Board of Bechtel
Corporation and Teijin Limited. Member of The
Business Council. Trustee of Hagley Museum.
--------------------------------------------------
Michael E. Patterson
Director since 1995, Age 57
[PHOTO OMITTED]
Vice Chairman of the Boards of Morgan and the Bank
(since December 1995) and member of the Executive
Committees of Morgan and the Bank. Mr. Patterson
was Chief Administrative Officer of Morgan and the
Bank from 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.,
Euroclear Clearance System Public Limited Company,
The Clearing House Interbank Payments Company
L.L.C., Foreign Policy Association, and Trust for
Public Land. Trustee of Columbia University.
--------------------------------------------------
Lee R. Raymond
Director since 1987, Age 61
[PHOTO OMITTED]
Chairman of the Board and Chief Executive Officer
(since December 1999) and Director of Exxon Mobil
Corporation. Mr. Raymond was Chairman of the
Board, Chief Executive Officer, and Director of
Exxon Corporation from April 1993 to November 1999
and President from January 1987 to April 1993.
Chairman of the Committee on Director Nominations
and Board Affairs and member of the Committee on
Management Development and Executive Compensation
of Morgan. Director of American Petroleum
Institute and United Negro College Fund. Trustee
of Southern Methodist University and Wisconsin
Alumni Research Foundation. Member of National
Academy of Engineering, 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.
6
<PAGE>
--------------------------------------------------
Lloyd D. Ward
Director since 1999, Age 51
[PHOTO OMITTED]
Chairman of the Board and Chief Executive Officer
(since August 1999) and Director of Maytag
Corporation (home and commercial appliances). Mr.
Ward was President and Chief Operating Officer of
Maytag Corporation from February 1998 to August
1999, Executive Vice President and President of
Maytag Appliances (Maytag's major home appliances
division) from April 1996 to February 1998. Prior
to joining Maytag Corporation, Mr. Ward worked for
eight years at PepsiCo, Inc., where he held a
variety of executive positions. Member of the
Audit Committee of Morgan and the Examining
Committee of the Bank. Member of Executive
Leadership Council in Washington, D.C.
--------------------------------------------------
Douglas C. Yearley
Director since 1993, Age 64
[PHOTO OMITTED]
Chairman of the Board (since May 1989) and
Director of Phelps Dodge Corporation. Mr. Yearley
was Chief Executive Officer of Phelps Dodge
Corporation from May 1989 to December 1999. Member
of the Committee on Management Development and
Executive Compensation and the Committee on
Director Nominations and Board Affairs of Morgan.
Director of USX Corporation, Lockheed Martin
Corporation, and Southern Peru Copper Corporation.
Director of National Mining Association,
International Copper Association, and Center for
Compatible Economic Development. Member of Copper
Development Association and The Business Council.
Director of Phoenix Symphony.
7
<PAGE>
Committees of the Board of Morgan
==================================================
Audit Committee James L. Ketelsen (Chairman), Paul A. Allaire,
John A. Krol, Lloyd D. Ward
This committee, which met six times during 1999,
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 Morgan the
designation each year of independent accountants.
Committee on James R. Houghton (Chairman), Riley P. Bechtel,
Management Lee R. Raymond, Douglas C. Yearley
Development and
Executive This committee, which met six times during 1999,
Compensation is responsible for advising the Board, in
consultation with senior management, on the
development of key executives and recommending or
approving their compensation, including the
following: (1) evaluating, on a periodic basis,
the performance of senior officers and succession
planning for key executives, including the
Chairman, and making recommendations to the Board;
(2) supervising the administration of our
incentive and stock plans; (3) reviewing and
approving all awards and options granted under our
incentive and stock plans and making
recommendations to the Board with respect to
awards and options for certain members of senior
management; and (4) reviewing officer compensation
policies.
Committee on Martin Feldstein (Chairman), Lawrence A. Bossidy,
Risk Policies Ellen V. Futter
This committee, which met twice during 1999, is
responsible for overseeing: (1) the effectiveness
of Morgan's overall credit and market risk
management policies and practices, including
related capital and liquidity management; (2)
changes in policies and practices relating to the
management of credit and market risk; and (3)
reports on the nature and level of credit and
market risk exposures and related market
developments.
Committee on Lee R. Raymond (Chairman), Hanna H. Gray, John A.
Director Nomunations Krol, Douglas C. Yearley
and Board Affairs
This committee, which met three times during 1999,
is responsible for making recommendations to the
Board with respect to the qualifications and
nominations of directors, directors' functions,
committees, compensation and retirement, and other
matters affecting directors. In determining its
recommendations, this committee will consider
nominees recommended by stockholders. Stockholder
recommendations should be made in writing,
addressed to this committee, attention of the
Secretary of J.P. Morgan & Co. Incorporated, 60
Wall Street, New York, New York 10260-0060.
Committee on Hanna H. Gray (Chairman), Paul A. Allaire, Riley
Fiducidary Matters P. Bechtel, James L. Ketelsen, Richard D. Simmons
This committee, which met twice during 1999, 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.
8
<PAGE>
Committees of the Board of the Bank
==================================================
Examining Committee James L. Ketelsen (Chairman), Paul A. Allaire,
John A. Krol, Lloyd D. Ward
This committee, which met six times during 1999,
is responsible for examinations of the Bank in
accordance with New York State banking law.
Committee on Richard D. Simmons (Chairman), Lawrence A.
Employment Policies Bossidy, Martin Feldstein, Ellen V. Futter
and Benefits
This committee, which met twice during 1999, is
responsible for reviewing the Bank's Retirement,
Deferred Profit Sharing, and Long-Term Disability
Plans, employee benefit plans, employee relations
and affirmative action programs, and diversity
initiatives.
Director compensation
==================================================
We provide the following compensation to our
directors for their services as directors.
Annual fees o Each non-employee director receives an annual
retainer of $30,000 and an attendance fee of
$1,200 for each meeting of the Board of Morgan and
the Bank attended.
o We also pay our non-employee directors for serving
on committees of the Boards: an annual retainer of
$20,000 for the Chairman and $12,500 for the
members of the Audit Committee, the Committee on
Risk Policies, and the Committee on Management
Development and Executive Compensation, and
$10,000 for the Chairman 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 this service.
o We also reimburse directors for travel expenses to
meetings of the Boards and committees.
Director Stock Plan Under a Director Stock Plan (1992), as amended,
non-employee directors receive an annual award of
share credits for 500 shares of Morgan common
stock for their service during the preceding year.
This award is pro rated where a director did not
serve 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 their designated
beneficiary or estate. This award is credited
annually with dividend equivalents.
Deferred Compensation Under our Deferred Compensation Plan for
Plan for Directors' Fees Directors' Fees, non-employee directors may defer
their compensation for services as Board or
committee members. The plan permits directors to
make separate deferral elections as 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 a cash account, a stock account, or a
combination of both. The plan provides that
amounts deferred to the cash account are credited
annually with interest earned. Amounts deferred to
the stock account are credited annually with
dividend equivalents. Participating directors are
entitled to receive a cash distribution of the
balance in their accounts in full or in up to
fifteen annual installments after termination of
service as a director.
The Bank's Directors Retired non-employee directors are eligible to
Advisory Council serve as members of the Bank's Directors Advisory
Council. Members of the council receive an annual
retainer of $30,000.
9
<PAGE>
Our executive officers
==================================================
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.
Douglas A. Warner III Age 53
Chairman of the Boards and President of Morgan and
the Bank. See "Election of directors" on page 3.
Walter A. Gubert Age 52
Vice Chairman of the Boards of Morgan and the
Bank. See "Election of directors" on page 5.
Roberto G. Mendoza Age 54
Vice Chairman of the Boards of Morgan and the Bank
since January 1990. Mr. Mendoza has announced that
he will retire as Vice Chairman.
Michael E. Patterson Age 57
Vice Chairman of the Boards of Morgan and the
Bank. See "Election of directors" on page 6.
Peter D. Hancock Age 41
Chief Financial Officer of Morgan and the Bank
since June 1999 and Chairman of the Capital
Committee and the Risk Management Committee of
Morgan since January 1999; Vice Chairman of the
Board of Directors of J.P. Morgan Securities Inc.
from June 1996 to April 1999; member of the Board
of Directors of J.P. Morgan Securities Inc. from
May 1995 to April 1999; Managing Director of
Morgan from February 1999 to June 1999, of J.P.
Morgan Securities Inc. from April 1995 to June
1996, and of the Bank from January 1990 to April
1995.
Thomas B. Ketchum Age 49
Chief Administrative Officer of Morgan since
January 1998; member of the Board of Directors of
J.P. Morgan Securities Inc. since October 1995;
Managing Director of J.P. Morgan Securities Inc.
since July 1994; Managing Director of Morgan from
August 1992 to January 1998 and of the Bank from
November 1986 to July 1992.
Rachel F. Robbins Age 49
General Counsel and Secretary of Morgan since
February 1996 and Managing Director, General
Counsel, and Secretary of the Bank since March
1997; Managing Director of Morgan and of J.P.
Morgan Securities Inc. since January 1988; member
of the Board of Directors of J.P. Morgan
Securities Inc. since April 1986; 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 Age 46
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.
10
<PAGE>
Stock ownership of management
==================================================
The following table shows, as of February 25,
2000, the Morgan stock-based holdings of each
director, each executive officer named in the
Summary Compensation Table appearing on page 16,
and all directors and executive officers as a
group, based on information provided by these
individuals. Each individual beneficially owns
less than 1 percent of our common stock. Except as
described in the footnotes to the table, each
person has sole investment and voting power over
the shares shown in the "Stock" column of the
table.
---------------------------------------------------
Name of individual or group Stock(1) Total(2)
---------------------------------------------------
Douglas A. Warner III ...... 456,540(3) 1,397,210
Walter A. Gubert ........... 176,640(4) 785,646
Roberto G. Mendoza ......... 341,772 1,046,595
Michael E. Patterson ....... 236,849(5) 508,364
Peter D. Hancock ........... 72,710 598,792
Thomas B. Ketchum .......... 127,054(6) 639,439
Paul A. Allaire ............ 5,000 5,897
Riley P. Bechtel ........... 500 2,324
Lawrence A. Bossidy ........ 5,000 5,656
Martin Feldstein ........... 1,000 3,746
Ellen V. Futter ............ 500(7) 1,397
Hanna H. Gray .............. 800 3,833
James R. Houghton .......... 1,000 4,033
James L. Ketelsen .......... 7,800 10,833
John A. Krol ............... 2,000 4,383
Lee R. Raymond ............. 500 13,425
Richard D. Simmons ......... 1,000 4,033
Kurt F. Viermetz ........... 218,364 266,880
LIoyd D. Ward .............. 1,000 1,000
Douglas C. Yearley ......... 1,000(8) 3,883
All directors and executive
officers as a group ...... 1,817,263(9) 5,614,724
---------------------------------------------------
1 Includes shares of our common stock beneficially
owned, directly or indirectly. The number of
shares in the column also includes the following
shares of common stock which the individual(s) had
the right to acquire within 60 days of February
25, 2000, through the exercise of options: Mr.
Warner, 398,086 shares; Mr. Gubert, 171,000
shares; Mr. Mendoza, 260,000 shares; Mr.
Patterson, 223,695 shares; Mr. Hancock, 57,226
shares; Mr. Ketchum, 98,732 shares; Mr. Viermetz,
40,000 shares; all directors and executive
officers as a group, 1,400,072 shares.
2 Shows 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 common
stock, stock options that will not become
exercisable within 60 days of February 25, 2000,
awards of share credits under the Director Stock
Plan (1992) described on page 9, and directors'
fees deferred as units of common stock under the
Deferred Compensation Plan for Directors' Fees
described on page 9.
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 these shares.
4 Includes 5,377 shares owned jointly with his
spouse, with whom investment and voting power is
shared.
5 Includes 4,717 shares held in trust for family
members. Mr. Patterson disclaims beneficial
ownership of all but 1,600 of these shares.
6 Includes 575 shares held in trust for his
children. Mr. Ketchum disclaims beneficial
ownership of these shares.
7 Shares owned jointly with her spouse, with whom
investment and voting power is shared.
8 Shares held in trust for family members.
9 As a group, beneficially owns 1.11 percent of
Morgan's common stock.
11
<PAGE>
Stock ownership of certain beneficial owners
==================================================
We have been notified by Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("Merrill Lynch"),
World Financial Center, North Tower, 250 Vesey
Street, New York, New York 10281, that as of
December 31, 1999, they are the beneficial owners
(as defined by rules of the Securities and
Exchange Commission (SEC)) of 10,114,033 shares of
our common stock, representing 5.8% of our
outstanding shares. According to the Schedule 13G
filed by them with the SEC, these shares were
acquired in the ordinary course of business, were
not acquired for the purpose of, and do not have
the effect of, changing or influencing control
over us, and were not acquired in connection with
or as a party to any transaction having such
purpose or effect. In addition, Merrill Lynch
disclaims beneficial ownership of these shares.
Merrill Lynch, a broker-dealer and the sponsor of
various unit investment trusts which invest in
equity securities, including our stock, has shared
voting and investment power over these shares.
Compensation committee report on
executive compensation
==================================================
Role of the committee The Committee on Management Development and
and the Board Executive Compensation, composed entirely of
independent outside directors ("Outside
Directors"), is responsible for determining and
ensuring appropriate administration of 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 programs are
philosophy designed to attract, reward, and retain highly
qualified and effective executives and to
encourage the achievement of business objectives,
including superior corporate performance. The
programs seek:
o To foster a performance-oriented environment,
where variable compensation is based upon
corporate and business group as well as individual
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 "mix" 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 The compensation strategy for Morgan's senior
executive compensation management is composed of base salary, annual
strategy incentive compensation (of which a substantial
portion is awarded in the form of restricted
stock), stock option awards, and special long-term
performance awards.
12
<PAGE>
Base salary Base salaries for Morgan's senior management are
determined by evaluating the responsibilities
associated with the position held, an individual's
overall level of experience and competitive
practice. 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.
Incentive compensation In keeping with its philosophy of increasing, as
an officer's level of responsibility increases,
the portion of total compensation that depends
upon individual and Morgan performance, Morgan's
executive compensation program is heavily weighted
toward incentive compensation.
To establish and maintain a common focus and
shared goals among Morgan's most senior
management, incentive compensation for this group
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 primary quantitative factors reviewed
by the committee include such financial
performance measures as net income (after
provision for a threshold return to stockholders)
and return on average common stockholders'
equity, both as absolute measures and relative to
previous years. 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 and trends.
Each participant in this incentive compensation
arrangement is allocated a specified number of
shares out of a pool of shares managed by the
committee. The committee also determines the value
of each share based upon its qualitative and
quantitative assessment of Morgan's performance
and competitive compensation levels and trends.
Actual incentive compensation awards may be
further 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.
Performance plan In July 1998, the Board of Directors adopted the
awards 1998 Performance Plan of J.P. Morgan & Co.
Incorporated and Affiliated Companies (the "1998
Performance Plan"). The 1998 Performance Plan was
adopted in order to underscore the firm's
determined drive for superior performance. Awards
will be earned in January 2001 based on the
achievement of firm-wide performance goals
including significantly improved risk-adjusted
returns, earnings growth, and expense management.
Awards granted to senior management in 1998
provide for a potential payout to each recipient
of 1 to 2 times the recipient's average incentive
compensation for 1998-2000, provided the
performance targets are achieved.
Stock-based The committee believes that stock ownership
compensation and enhances individuals' focus on maximizing
stock ownership long-term stockholder value. Accordingly, senior
officers are strongly encouraged to develop
significant equity positions in Morgan. 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.
13
<PAGE>
Restricted stock Each year, a substantial proportion of incentive
compensation for senior management 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 an ongoing
incentive to preserve and increase stockholder
value.
For 1999, 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 has been
unchanged since 1995, evidencing the committee's
continued commitment to fostering significant
senior management stock ownership.
Stock options Morgan's executive compensation programs also
include stock option awards, which are intended to
provide additional incentive to increase
stockholder value. All 1999 stock option awards to
senior management were granted with an exercise
price equal to the fair market value of Morgan
stock on the date of grant and become exercisable
over five years on a pro rata basis. 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. Individual award levels are based upon a
subjective evaluation of each individual's overall
past and expected future contribution; therefore,
no specific formula is used to determine option
awards for any employee. Morgan has generally
granted stock option awards to members of senior
management in July of each year.
Corporate performance In 1999, net income increased to $2.055 billion,
and CEO compensation nearly double 1998 operating earnings before
non-recurring gains and special charges. Return on
equity for 1999 was 18.4%, compared with 8.6% for
the prior year. Revenues rose 31% on increased
client activity across the firm's businesses
globally. The firm achieved its target of reducing
core operating expenses before performance-driven
compensation by $400 million. All client-related
business activities produced strong results, led
by equities, credit markets, credit portfolio, and
asset management services. Revenues from equity
investments were up substantially, while
proprietary investing and trading revenues fell.
Morgan made excellent progress during 1999 on its
key strategic initiatives: growth of its
investment banking, equities, and asset management
capabilities and profits; further leveraging its
leadership in the markets businesses; strategic
transformation of its credit business; and
improvement in productivity. The firm
substantially cut the risk and capital
requirements of its credit and market activities.
As Chairman and Chief Executive Officer, Mr.
Warner has set a clear strategic course for the
company since assuming his current roles in 1995.
Under his leadership, Morgan achieved the
successful transformation of its core
capabilities, its top strategic goal. The firm has
decisively shifted the mix of business to
emphasize client-generated revenues and lessen the
firm's reliance on proprietary investing and
trading activities. In 1999, strong revenue growth
and improved expense management and capital
productivity combined to improve margins and
substantially increase the firm's return on
equity.
14
<PAGE>
Recognizing the strong growth in Morgan's 1999
earnings and significant progress on its strategic
priorities, Mr. Warner's total annual compensation
increased to $9,900,000, including a restricted
stock award with a grant date value of $4,600,000.
This compares with $3,050,000 in 1998, when his
compensation was reduced by 43.4% from 1997 levels
to reflect lower earnings that year. The annual
restricted stock award is included under long-term
compensation awards in the Summary Compensation
Table. Mr. Warner was allocated the largest number
of shares in the incentive compensation
arrangement for senior officers for 1999, and the
percentage of annual incentive compensation that
he received in the form of restricted stock -50% -
was the highest in the firm.
Mr. Warner was also awarded 150,000 stock options
with an exercise price equal to 100% of the fair
market value of Morgan stock on the grant date
(the material terms of which are described under
"Option grants in 1999"). In setting Mr. Warner's
compensation, the committee also takes into
account the compensation levels of chief
executive officers of Morgan's peer companies and
the compensation of other senior officers of
Morgan.
Tax deductibility of Section 162(m) of the Internal Revenue Code limits
executive compensation the tax deductibility of compensation in excess
of $1 million paid to certain members of senior
management, unless the payments are made under
plans which satisfy the technical requirements of
the statute (and regulations). While the committee
currently intends to pursue a strategy of
maximizing deductibility of senior management
compensation by making awards under the 1995
Executive Officer Performance Plan and 1995 Stock
Incentive Plan (both of which meet the
requirements of Section 162(m) and were approved
by stockholders during 1995), it also believes
that it is important to maintain the flexibility
to take actions it considers to be in the best
interest of Morgan and its stockholders, which may
be based on considerations in addition to Section
162(m).
The Committee on Management Development and
Executive Compensation
James R. Houghton, Chairman
Riley P. Bechtel
Lee R. Raymond
Douglas C. Yearley
15
<PAGE>
Summary compensation table
==================================================
The table below shows, for the years ending
December 31, 1999, 1998, and 1997, the annual and
long-term compensation that we paid or accrued for
those years to our Chief Executive Officer and
four most highly compensated executive officers.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Annual compensation Long-term compensation awards
------------------- -----------------------------
Securities
Restricted underlying All other
Name and stock award stock options compensation
principal position Year Salary ($) Bonus ($) ($) (1) (2) (# shares) ($) (3)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Douglas A Warner III 1999 $700,000 $4,600,000 $4,600,000 150,000 $16,151
Chairman 1998 700,000 1,175,000 1,175,000 125,000 18,721
1997 691,667 2,350,000 2,350,000 80,000 18,624
Walter A Gubert* 1999 450,000 4,125,000 3,375,000 100,000 32,300
Vice Chairman 1998 400,000 1,100,000 900,000 75,000 33,117
Roberto G Mendoza 1999 450,000 3,698,750 3,026,250 100,000 7,696
Vice Chairman 1998 450,000 1,100,000 900,000 75,000 9,034
1997 447,917 2,117,500 1,732,500 50,000 8,582
Peter D Hancock** 1999 400,000 3,300,000 2,700,000 90,000 224
Chief Financial Officer
Thomas B Ketchum* 1999 400,000 3,300,000 2,700,000 90,000 31,818
Chief Administrative 1998 400,000 962,500 787,500 60,000 28,056
Officer
- -----------------------------------------------------------------------------------------------------------
</TABLE>
* Not an executive officer of Morgan in 1997.
** Not an executive officer of Morgan prior to 1999.
1 The amounts reported in this column represent the
fair market value of restricted stock units
awarded at 100 percent of the fair market value of
our common stock on the grant date. This fair
market value was: $123.281 for 1999 awards,
$106.844 for 1998 awards, and $101.469 for 1997
awards. This value is not discounted for
restrictions on the stock units. Annual dividend
equivalents are paid in cash or are converted into
additional share credits in accordance with the
terms of the awards and the provisions of the plan
under which each award was granted. Restricted
stock awards generally become vested five years
after the date of grant or, in the case of death,
become immediately vested in full. Generally, a
committee composed of all non-employee directors
may accelerate vesting of restricted stock in its
sole discretion. Upon a Change in Control, as
defined in the 1995 Stock Incentive Plan (and the
predecessor plans), restricted stock awards will
become immediately vested (unless the committee
administering the plan determines otherwise).
2 The named officers had the following non-vested
restricted stock award balances, in aggregate,
outstanding as of January 19, 2000: Mr. Warner,
152,690 shares ($19,209,656); Mr. Gubert, 110,591
shares ($13,912,035); Mr. Mendoza, 109,028 shares
($13,723,622); Mr. Hancock, 117,087 shares
($14,752,959); and Mr. Ketchum, 98,007 shares
($12,336,891). Dollar values are based on (i) the
closing price of our common stock on December 31,
1999, ($126.625) for stock awards which were
outstanding on that date and (ii) the average of
the high and low prices of our common stock on
January 19, 2000, ($123.281) for stock awards
granted as of that date.
3 The amounts reported in this column represent
interest exceeding 120 percent of the applicable
federal rate deemed to have accrued on deferrals
under our incentive compensation plans (based on
termination and distribution at the earliest date
permissible under the plans although no such
interest will be accrued assuming employment until
normal retirement age).
16
<PAGE>
Stock options
==================================================
The following tables show information on stock
options that we have awarded to our Chief
Executive Officer and four most highly compensated
executive officers. The first table shows, along
with some additional information, the estimated
grant date present value of stock options granted
in 1999. These values are calculated pursuant to
the proxy rules of the SEC and are calculated
under the Black-Scholes model for pricing options.
The actual pretax gain realized upon the exercise
of stock options will depend upon the excess of
the market price of our common stock over the
exercise price per share of the stock option at
the time the option is exercised. The second table
shows select information relating to stock options
exercised during 1999 and stock options
outstanding as of December 31, 1999. We do not
grant any stock appreciation rights.
<TABLE>
<CAPTION>
Option grants in 1999
- -------------------------------------------------------------------------------------------------
Percent of total Exercise or Estimated grant
Options options granted base price Expiration date present
Name granted(#)(1) to employees ($/Sh) date value($)(2)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Douglas A. Warner III 150,000 2.43% $135.719 7/19/09 $6,660,360
Walter A. Gubert 100,000 1.62 135.719 7/19/09 4,440,240
Roberto G. Mendoza 100,000 1.62 135.719 7/19/09 4,440,240
Peter D. Hancock 90,000 1.46 135.719 7/19/09 3,996,216
Thomas B. Ketchum 90,000 1.46 135.719 7/19/09 3,996,216
- -------------------------------------------------------------------------------------------------
</TABLE>
1 Options vest as to one-fifth of the shares subject
thereto on the first, second, third, fourth, and
fifth anniversaries of the grant date. Upon a
Change in Control, as defined in the 1995 Stock
Incentive Plan, the options will become
immediately vested (unless the committee
determines otherwise).
2 Valued using the Black-Scholes option pricing
model. The assumptions used for the variables in
the model were: 26.11% volatility; a 10-year
risk-free rate of 5.7256%, compounded annually; a
3.3% dividend yield; and a 10-year option term.
<TABLE>
<CAPTION>
Aggregated option exercises in 1999 and year-end option values
- ------------------------------------------------------------------------------------------------------------------------
Aggregated option exercises Unexercised options at year-end
----------------------------------- -----------------------------------------------------------
Value of securities underlying
Number (#) in-the-money options ($)
Shares acquired --------------------------- --------------------------
Name on exercise(#) Value realized($) Exercisable Unexercisable Exercisable Unexercisable
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Douglas A. Warner III 0 $ 0 398,086 598,000 $20,955,318 $7,321,476
Walter A. Gubert 0 0 171,000 384,000 8,794,992 8,717,488
Roberto G. Mendoza 55,000 3,814,839 260,000 390,000 13,994,365 4,844,110
Peter D. Hancock 0 0 57,226 374,000 1,625,961 8,717,488
Thomas B. Ketchum 3,914 306,189 98,732 359,000 4,208,971 8,662,177
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
Stock performance graphs
==================================================
The following graphs show changes over the past
five- and 10-year periods in the value of $100
invested in: (1) our common stock; (2) 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, 1999
(of which Morgan is one).
[The following information was depicted as a line
graph in the printed material]
Comparisons of five-year total stockholder return
In dollars
--------------------------------------------------
1994 1995 1996 1997 1998 1999
J.P. Morgan
100.0 149.2 188.4 225.2 217.3 270.2
S&P 500
100.0 137.5 169.1 225.5 290.0 351.0
S&P Financial
100.0 154.1 208.2 308.3 343.5 357.1
DJ Industrial
100.0 136.9 176.5 220.5 260.6 331.6
[The following information was depicted as a line
graph in the printed material]
<TABLE>
<CAPTION>
Comparisons of 10-year total stockholder return
In dollars
- ---------------------------------------------------------------------------------------------------------------
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
J.P. Morgan
100.0 106.0 170.0 169.0 184.6 156.4 233.4 294.7 352.3 339.8 422.7
S&P 500
100.0 96.9 126.4 136.0 149.7 151.6 208.6 256.4 342.0 439.7 532.2
S&P Financial
100.0 78.6 118.3 146.0 162.2 156.4 240.9 325.6 482.2 537.3 558.6
DJ Industrial
100.0 99.5 123.6 132.7 155.3 163.1 223.3 287.8 359.5 424.8 540.6
</TABLE>
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.
18
<PAGE>
Retirement benefits
==================================================
The Bank maintains the Cash Balance Plan of Morgan
Guaranty Trust Company of New York (the
"Retirement Plan"), which provides benefits for
eligible U.S. employees (regular employees with
six months of continuous service who have attained
age 21) of Morgan and the Bank and participating
subsidiaries. Through December 31, 1998,
retirement benefits were accrued under a
traditional defined benefit plan. Effective
January 1, 1999, this plan was converted to a cash
balance formula and accrued benefits under the
prior formula were converted to individual cash
balance accounts based on the present value of the
accrued benefits as of the date of the conversion.
Under the cash balance formula, each participant
has an account, for record-keeping purposes only,
to which credits are allocated each month based on
5% of each participant's monthly base salary up
to a maximum of $12,500. In addition, all balances
in the accounts of participants earn a fixed rate
of interest which is credited monthly. The
interest rate for a particular year is based on
the average of the monthly 30-year U.S. Treasury
bond yields for the previous September, October,
and November. For 1999 the interest rate was 5.15%
and for 2000 the rate is 6.16%.
At retirement or termination of employment, an
amount equal to the then vested balance is
payable to the participant in the form of an
immediate or deferred lump sum or equivalent
monthly annuity benefit for the entire benefit
under the Retirement Plan.
To recognize the transition to the cash balance
formula, all participants of the Retirement Plan
who were earning benefits under the prior formula
as of December 31, 1998, are eligible for a
minimum benefit. This minimum benefit is
calculated using the prior, traditional final
average pay defined benefit formula using pay and
credited service through termination or December
31, 2003, if earlier. After December 31, 2003, the
accrued benefit under the prior formula is frozen
and continues to act as a minimum plan benefit. At
retirement or termination, this minimum benefit is
payable in the same form as the cash balance
benefit.
The Bank also maintains the Benefit Equalization
Plan, an unfunded, non-qualified deferred
compensation arrangement that provides for
benefits that are not payable under the Retirement
Plan because of maximum limitations imposed on
such plans by the Internal Revenue Code.
Estimate of The table below sets forth the estimated annual
retirement benefits benefit payable to each of the executives named
in the Summary Compensation Table as a single life
annuity at age 65 under the Retirement Plan and
the Benefit Equalization Plan. The projections
contained in the table are based on the following
assumptions: (1) employment until age 65 subject
to the Retirement Plan's maximum recognized base
salary of $150,000 until that time; (2) interest
credits at the actual rates for all years through
2000 and 6.16% for all years following; and (3)
the conversion to a single life annuity at age 65
based on an interest rate of 6.16% and the 1983
Group Annuity Mortality Table, which sets forth
generally accepted life expectancies. The
estimated benefits reflect any applicable minimum
benefits.
19
<PAGE>
Summary of estimated age 65 retirement benefits
(as an annual life annuity)
--------------------------------------------------
Estimated annual
Name retirement benefit
--------------------------------------------------
Douglas A. Warner III .......... $504,200
Walter A. Gubert ............... 72,612
Roberto G. Mendoza ............. 455,837
Peter D. Hancock ............... 69,546
Thomas B. Ketchum .............. 148,873
--------------------------------------------------
Morgan's International Cash Balance Plan, of which
Mr. Gubert and Mr. Hancock are members by virtue
of prior overseas services, provides additional
retirement benefits to certain employees assigned
outside their home countries. Prior to 1999, this
benefit was based on the employee's average annual
salary for the three highest-paid consecutive
years within the final 10 years of credited
service preceding retirement. Beginning in 1999,
the International Cash Balance Plan benefit was
converted to individual cash balance accounts to
which salary and interest credits are credited in
the same manner as for the Retirement Plan
described above. The International Cash Balance
Plan benefit is paid in a lump sum. As of December
31, 1999, Mr. Gubert and Mr. Hancock would have
been entitled to receive a lump sum retirement
benefit of approximately $823,399 and $100,965
respectively under the International Cash Balance
Plan.
Transactions with directors and officers
==================================================
In the ordinary course of our business we engage
in transactions with some of our directors and
executive officers and their associates, or with
organizations of which some of our directors are
officers or trustees. These transactions are on an
arm's length basis and cover a broad range of our
business activities, such as loans, deposits,
purchases of our commercial paper, purchases of
securities issued by others, and investment
banking, financial advisory, and other financial
services and market transactions.
In the ordinary course of our business, we use the
products or services of or have other transactions
with a number of organizations of which our
directors are officers, including Corning
Incorporated, E.I. du Pont de Nemours and Company,
Exxon Mobil Corporation, Honeywell International
Inc., Maytag Corporation, Phelps Dodge
Corporation, and Xerox Corporation.
Other than as described in this proxy statement,
no Morgan director or executive officer was
indebted to us during 1999 for any amount in
excess of $60,000.
Employees' securities Selected employees of Morgan, including executive
company officers, are offered the opportunity to become
limited partners of the Sixty Wall Street Fund,
L.P. (the "Fund"), an investment vehicle which
qualifies as an "employees' securities company"
for purposes of the Investment Company Act of
1940, as amended. The Fund invests in Morgan's
private equity investments alongside J.P. Morgan
Capital Corporation, a subsidiary thereof, or
certain private equity funds managed by J.P.
Morgan Investment Management Inc. In 1999, the
amounts invested by limited partners were
augmented by a combination of recourse and
nonrecourse loans from Morgan at an interest rate
of LIBOR + 150 basis points, each of which is to
be repaid to Morgan upon the realization of
proceeds from the applicable portfolio
investments.
20
<PAGE>
Amounts invested in the Fund by each of Morgan's
executive officers in 1999 are set forth below,
along with the amount of loans made to these
individuals during 1999 and the aggregate amount
of all loans and interest outstanding relating to
the individuals' aggregate 1999 investment in the
Fund:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
Loan principal
and interest
Amount invested in Loans issued in outstanding as of
Name 1999 1999 December 31, 1999
------------------------------------------------------------------------------
<S> <C> <C> <C>
Walter A. Gubert $250,000 $750,000 $771,130
Roberto G. Mendoza 100,000 300,000 308,452
Michael E. Patterson 50,000 150,000 154,226
Peter D. Hancock 100,000 300,000 308,452
Thomas B. Ketchum 200,000 600,000 616,904
Rachel F. Robbins 100,000 300,000 308,452
------------------------------------------------------------------------------
</TABLE>
Item 2: Approval of PricewaterhouseCoopers LLP as
independent accountants
==================================================
We are proposing to appoint PricewaterhouseCoopers
LLP ("PwC") as our independent accounting firm
for 2000 to examine the financial statements of
Morgan and its consolidated subsidiaries,
including the Bank, and to assist the Examining
Committee of the Bank in performing its directors'
examination as required by law. The Audit
Committee has recommended to the Board the
appointment of PwC.
We are submitting this selection to you for your
approval.
PwC served as our principal independent accounting
firm in 1999. Audit fees to PwC in 1999 totaled
approximately $9.7 million.
Representatives of PwC will be at the annual
meeting to answer your questions.
The Board of Directors recommends a vote FOR this
proposal.
Item 3: Stockholder proposal relating to director
share ownership
==================================================
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 Board of
Directors take the necessary steps to require all
members of the Board of Directors to own a minimum
of 1000 shares of voting stock in J.P. Morgan
starting next year."
In support of the foregoing resolution, the
proponent states:
"REASONS: Stock ownership by Directors makes them
partners with other shareholders.
"Certainly 1000 shares is a reasonable minimum
amount for ALL directors to own in view of the
director fees and perks they receive.
"Several directors according to the 1999 proxy
statement did NOT own at least 1000 shares
beneficially directly in their own name.
"If you AGREE, please mark your proxy FOR this
proposal."
The Board of Directors recommends a vote AGAINST
this proposal.
21
<PAGE>
Similar resolutions were presented in 1991 and
1990 and was rejected in 1991 by 96.86% of the
votes cast.
We believe that nominees for director should
continue to be recommended for election on the
basis of such qualities as ability, experience,
and soundness of judgment. The minimum share
ownership requirement that is suggested is
arbitrary and would limit excessively the number
of potential candidates.
We believe, therefore, that the imposition of a
minimum share ownership requirement serves no
useful purpose, but would unnecessarily restrict
director selection in the future.
Item 4: Other matters
==================================================
We do not know of any matters to be acted upon at
the meeting other than those discussed in this
proxy statement. If any other matter is presented,
the individuals named as proxies will vote on the
matter in his or her best judgment.
Section 16(a) Section 16(a) of the 1934 Act requires our
beneficial ownership executive officers and directors and any other
reporting compliance persons who own more than 10 percent of our common
stock ("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
(NYSE). These Reporting Persons are required by
SEC regulation to furnish us with copies of all
Forms 3, 4, and 5 that they file with the SEC and
NYSE.
Based solely on our review of copies of these
forms furnished to us and written representations
from Reporting Persons, we believe that all of our
Reporting Persons complied with these filing
requirements for transactions during fiscal year
1999, except that Rachel Robbins was late in
reporting a sale of common shares from her sons'
accounts and in reporting a charitable
contribution of common shares for the fiscal year
1997.
Proxy solicitation We are soliciting this proxy on behalf of our
Board of Directors and will bear the solicitation
expenses. We are making this solicitation by mail
but we may also solicit by telephone or in person.
We have hired Morrow & Co. for a fee of $13,500,
plus out-of-pocket expenses, to assist in the
solicitation. We will reimburse banks, brokerage
houses, and other institutions, nominees, and
fiduciaries, if they request, for their expenses
in forwarding proxy materials to beneficial
owners.
Stockholder proposals If you want to submit a proposal for possible
inclusion in our proxy statement for the 2001
annual meeting of stockholders, you must ensure
that your proposal is received by us on or before
November 10, 2000.
If you intend to present a proposal at our 2001
annual meeting and do not request timely inclusion
of the proposal in our proxy statement, then we
must receive notice of such proposal no later than
January 24, 2001. If we do not receive notice by
that date, no discussion of your proposal is
required to be included in our 2001 proxy
statement and we may use our discretionary
authority to vote on the proposal if you do
present it at our annual meeting.
March 8, 2000
Rachel F. Robbins
Secretary
22
<PAGE>
PROXY
J.P. Morgan & Co. Incorporated
Proxy solicited on behalf of the Board of Directors of the Company
for Annual Meeting of Stockholders, April 12, 2000
The undersigned hereby constitutes and appoints Francis J. Morison, Martha J.
Gallo 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, April 12, 2000, 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:
01. Douglas A. Warner III, 02. Paul A. Allaire, 03. Riley P. Bechtel, 04.
Lawrence A. Bossidy, 05. Martin Feldstein, 06. Ellen V. Futter, 07. Hanna H.
Gray, 08. Walter A. Gubert, 09. James R. Houghton, 10. James L. Ketelsen, 11.
John A. Krol, 12. Michael E. Patterson, 13. Lee R. Raymond, 14. Lloyd D. Ward
and 15. 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, a division of EquiServe, P.O. Box 8212, Edison,
N.J. 08818-9079.
-----------
SEE REVERSE
SIDE
-----------
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
You may also vote the shares held in this account by telephone or electronically
through the Internet 24 hours a day, 7 days a week. Voting by telephone or via
the Internet will eliminate the need to mail voted proxy card(s) representing
shares held in this account. Your telephone or Internet vote must be received by
12:00 a.m., Eastern Standard time, the day of the meeting, April 12, 2000. To
vote please follow the steps below:
o Have your proxy card and social security number available.
o Be ready to enter the PIN number indicated on the reverse side of the card
just below the perforation.
To vote using the telephone:
o Using a touch-tone telephone, dial 1-877-PRX-VOTE (1-877-779-8683) for
calls within the U.S. and Canada. If you are calling from another country,
dial 1-201-536-8073.
To vote using the Internet:
o Log on to the Internet and go to the website
http://www.eproxyvote.com/jpm.
o You may elect to receive next year's proxy materials electronically at the
website http://www.eproxyvote.com/jpm.
Both voting systems preserve the confidentiality of your vote and will confirm
your voting instructions with you. You may also change your selections on any or
all of the proposals to be voted.
YOUR VOTE IS IMPORTANT TO US. THANK YOU FOR VOTING.
<PAGE>
[X] Please mark your
votes as in this
example.
2685
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.
- --------------------------------------------------------------------------------
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of [ ] [ ] 2. Approval of [ ] [ ] [ ]
Directors. independent
(see reverse) accountants.
For, except vote withheld from the following nominee(s):
______________________________________________
- --------------------------------------------------------------------------------
The Board of Directors
recommends a vote "AGAINST"
Item 3.
- --------------------------------------------------------------------------------
This proxy will be voted "AGAINST" Item 3 if no choice is specified.
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
3. Stockholder proposal [ ] [ ] [ ]
relating to director share
ownership.
- --------------------------------------------------------------------------------
SIGNATURE (S)______________________________________________DATE_________________
The signer hereby revokes all proxies previously given by the signer to vote at
this meeting or any adjournment of the meeting.
NOTE: Please sign exactly as your name appears on this proxy card. 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, April 12, 2000
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.
