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 a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
NATIONAL CITY BANCORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on which the
filing fee is calculated and state how it was determined.)
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing party:
(4) Date filed:
<PAGE>
NATIONAL CITY BANCORPORATION
651 NICOLLET MALL
MINNEAPOLIS, MINNESOTA 55402-1611
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 22, 1998
------------------
TO THE STOCKHOLDERS OF NATIONAL CITY BANCORPORATION:
Please take notice that the Annual Meeting of Stockholders of National City
Bancorporation will be held, pursuant to due call by the Board of Directors of
the Company at Gaviidae Common, 651 Nicollet Mall, Fifth Floor, Minneapolis,
Minnesota, on Wednesday, April 22, 1998 at 10:00 A.M., or at any adjournment or
postponements thereof, for the purpose of considering and taking appropriate
action with respect to the following:
1. To approve an amendment to the Restated Articles of Incorporation to
increase the number of shares of common stock which the Company has
authority to issue from 20,000,000 to 40,000,000.
2. To approve an amendment to the Restated Articles of Incorporation to
increase the maximum number of directors on the Company's Board of
Directors from 15 to 16.
3. To elect eight persons to the Board of Directors for terms ending in 2000
and 2001.
4. To transact any other business as may properly come before the meeting or
any adjournments or postponements thereof.
Pursuant to due action of the Board of Directors, stockholders of record on
February 20, 1998, will be entitled to vote at the meeting or any adjournments
or postponements thereof.
A PROXY FOR THE MEETING IS ENCLOSED HEREWITH. YOU ARE REQUESTED TO FILL IN
AND SIGN THE PROXY, WHICH IS SOLICITED BY THE BOARD OF DIRECTORS, AND MAIL IT
PROMPTLY IN THE ENCLOSED ENVELOPE.
By Order of the Board of Directors
NATIONAL CITY BANCORPORATION
/s/ Thomas J. Freed
Thomas J. Freed,
SECRETARY
March 9, 1998
<PAGE>
PROXY STATEMENT
OF
NATIONAL CITY BANCORPORATION
651 NICOLLET MALL
MINNEAPOLIS, MINNESOTA 55402-1611
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ANNUAL MEETING OF STOCKHOLDERS TO BE HELD
APRIL 22, 1998
------------------
PROXIES AND VOTING
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of National City Bancorporation (the
"Company") to be used at the Annual Meeting of Stockholders of the Company to be
held Wednesday, April 22, 1998, at 10:00 a.m., at Gaviidae Common, 651 Nicollet
Mall, Fifth Floor, Minneapolis, Minnesota. The approximate date on which this
Proxy Statement and the accompanying proxy were first sent or given to
stockholders was March 9, 1998. Each stockholder who signs and returns a proxy
in the form enclosed with this Proxy Statement may revoke the same at any time
prior to its use by giving notice of such revocation to the Company in writing
or in open meeting. Unless so revoked, the shares represented by each such proxy
will be voted at the meeting and at any adjournments or postponements thereof.
Presence at the meeting of a stockholder who has signed a proxy does not alone
revoke that proxy. Only stockholders of record at the close of business on
February 20, 1998, will be entitled to vote at the meeting or any adjournments
or postponements thereof. It is the intention of the persons named as proxies in
the accompanying form of proxy, unless such authority is withheld, to vote in
favor of: (a) the proposal to amend the Company's Restated Articles of
Incorporation to increase the number of shares of common stock which the Company
has authority to issue from 20,000,000 to 40,000,000; (b) the proposal to amend
the Restated Articles of Incorporation to increase the authorized number of
directors on the Company's Board of Directors from 15 to 16; and (c) to vote for
the election of each nominee set forth below. Approval of each of the proposals
to amend the Company's Articles of Incorporation and the election of each of the
nominees as a director requires a majority of the voting power of the minimum
number of shares entitled to vote that would constitute a quorum for transaction
of business at the meeting. The abstention or failure to vote shares present at
the meeting and broker nonvotes do not have the effect of a vote "against"
either proposal to amend the Company's Restated Articles of Incorporation, or a
nominee for the Board of Directors.
<PAGE>
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The Company has outstanding only one class of voting securities, common
stock, $1.25 par value, of which 8,057,478 shares were outstanding as of the
close of business on the record date, February 20, 1998. Each share of common
stock is entitled to one vote.
The following table sets forth, as of February 20, 1998, all persons known
by the Company to be the owner, of record or beneficially, of more than five
percent of the issued and outstanding common stock of the Company, for each of
the executive officers named in the Summary Compensation Table and for all
executive officers and directors as a group. David L. Andreas and Lowell W.
Andreas are directors of the Company.
SHARES
NAME AND ADDRESS BENEFICIALLY PERCENT
OF BENEFICIAL OWNER OWNED OF CLASS
- ---------------------------------------------- ------------------ ---------
David L. Andreas 553,102(1) 6.86
P.O. Box E1919
Minneapolis, Minnesota 55480
Dorothy Inez Andreas 1,515,677(2) 18.81
P.O. Box 1470
Decatur, Illinois 62525
Dwayne O. Andreas 558,828(3) 6.94
Lowell W. Andreas 774,364(4) 9.61
P.O. Box 728
Mankato, Minnesota 56001
Thomas J. Freed 10,877(5) *
Robert L. Olson 14,575 *
All executive officers and 1,293,177 16.05
directors as a group (14 persons)
- ----------
* Less than one percent.
(1) Chairman of the Board and Chief Executive Officer of the Company. See
footnote (1) to the table under the heading "Election of Directors."
(2) Includes 27,130 shares held as sole or co-trustee of trusts for members of
Mrs. Andreas' family, in which Mrs. Andreas disclaims beneficial ownership.
Does not include 558,828 shares beneficially owned by spouse, Dwayne O.
Andreas, in which Mrs. Andreas disclaims beneficial ownership.
See footnote (3).
(3) Represents shares held as sole or co-trustee of trusts for members of Mr.
Andreas' family, in which Mr. Andreas disclaims beneficial ownership. Does
not include 1,515,677 shares beneficially owned by spouse, Dorothy Inez
Andreas, in which Mr. Andreas disclaims beneficial ownership. See footnote
(2).
(4) Included in the shares beneficially owned by Lowell W. Andreas are 453,719
shares reported as beneficially owned by David L. Andreas.
(5) Secretary and Chief Financial Officer of the Company and Senior Vice
President and Chief Financial Officer of National City Bank of Minneapolis.
<PAGE>
PROPOSAL NO. 1
AMENDMENT OF RESTATED ARTICLES OF INCORPORATION
TO INCREASE AUTHORIZED SHARES OF COMMON STOCK
FROM 20,000,000 SHARES TO 40,000,000 SHARES
The Board of Directors has approved, subject to the consent of the
Company's stockholders, a proposal to amend the Company's Restated Articles of
Incorporation to increase the number of shares of common stock which the Company
has authority to issue from 20,000,000 to 40,000,000.
As of February 20, 1998, there were 8,057,478 shares of common stock issued
and outstanding. This leaves a balance of 11,942,522 shares available for future
use. The Board of Directors believes that an increase in the number of shares of
common stock the Company has authority to issue would give the Company greater
flexibility in effecting transactions in the Company's capital by making
20,000,000 additional shares available for issuance by the Company, without
further action by its stockholders, in such transaction or transactions as the
Board of Directors may approve, whether in acquisitions, public or private
offers, as stock splits or dividends, financing or employee benefits or
otherwise, at such a time or times as the Board of Directors may approve. The
Company has no current plans, understandings or agreements regarding stock
dividends and splits, acquisitions, financings and employee benefits that would
cause the Company to issue any of the additional shares of common stock
authorized by this proposal.
The issuance of additional shares of common stock by the Company may have
an anti-takeover effect by making it more difficult to obtain stockholder
approval of various actions, such as a merger. The proposed increase in the
number of authorized shares of common stock could enable the Board of Directors
to render more difficult an attempt by another person or entity to obtain
control of the Company, although the Board of Directors has no present intention
of issuing additional shares for such purposes and has no present knowledge of
any such takeover efforts.
The authorization of additional shares of common stock pursuant to this
proposal will have no dilutive effect upon the proportionate voting power of the
present stockholders of the Company. However, to the extent that shares are
issued to persons other than the present stockholders, or are issued to the
present stockholders in share denominations disproportionate to their present
holdings, such issuance could have a substantial dilutive effect on present
stockholders. In addition, the issuance of additional shares of common stock
pursuant to this proposal in connection with an acquisition may have a dilutive
effect on earnings per share and book value per share, as well as a dilutive
effect on the voting power of existing stockholders. The Company would expect
that any such dilutive effect on earnings and/or book value per share would be
relatively short-term in duration. The Company has no current plans, proposals,
understandings or agreements for any acquisition.
All shares represented by proxies will be voted FOR the proposal to amend
the Company's Restated Articles of Incorporation to increase the number of
shares of common stock which the Company has authority to issue from 20,000,000
shares to 40,000,000 shares unless otherwise specified.
PROPOSAL NO. 2
AMENDMENT OF RESTATED ARTICLES OF INCORPORATION
TO INCREASE THE MAXIMUM NUMBER OF DIRECTORS
ON THE BOARD OF DIRECTORS FROM 15 TO 16
The Board of Directors has approved, subject to the consent of the
Company's stockholders, a proposal to amend the Company's Restated Articles of
Incorporation to increase the maximum number of directors on the Board of
Directors from 15 to 16.
The Board of Directors desires to increase the maximum number of directors
on the Company's Board from 15 to 16 in connection with its adoption of certain
principles of corporate
<PAGE>
governance (the "Principles"). The Board intends to utilize the Principles as
the elements of governance by which the Board will manage its affairs. An
integral component of the Principles is the extensive participation of outside
directors on various committees to be formed by the Board to oversee the Company
and its operations. In addition, adoption of the Principles by the Company
contemplates that the same individuals serving as directors on the Company's
board will also serve on the boards of directors of each of the Company's wholly
owned subsidiaries, National City Bank of Minneapolis and Diversified Business
Credit, Inc. The Board has determined that the initial implementation of the
Principles and the formation of each of the committees contemplated thereby will
require four additional directors, or a Board consisting of a total of 16
members. The Company's Restated Articles of Incorporation, as presently drafted,
limits the Board to 15 members. Accordingly, the Board of Directors has
concluded that the Restated Articles of Incorporation should be amended to
permit up to 16 directors.
All shares represented by proxies will be voted FOR the proposal to amend
the Company's Restated Articles of Incorporation to increase the maximum number
of directors on the Company's Board from 15 to 16 unless otherwise specified.
PROPOSAL NO. 3
ELECTION OF DIRECTORS
The Restated Articles of Incorporation of the Company provide for the
division of the Board of Directors into three classes, with the directors in
each class serving for a term of three years. In the event that the proposal to
amend the Company's Restated Articles of Incorporation to increase the maximum
number of directors from 15 to 16 is approved by the stockholders, eight
directors are to be elected at the 1998 Annual Meeting of Stockholders to serve
until the 2000 or 2001 Annual Meeting of Stockholders, or until their successors
are elected and qualified. If such proposal is not approved by the Company's
stockholders, only four directors are to be elected at the 1998 Annual Meeting
of Stockholders to serve until the 2001 Annual Meeting of Stockholders or until
their successors are elected and qualified. Management proposes for election to
the Board of Directors each of the nominees listed below. The listing is
segregated between nominees for the four directorships available under the
Company's existing Restated Articles of Incorporation and nominees for the four
additional directorships that will become available if the proposal to amend the
Company's Restated Articles of Incorporation is approved by the stockholders.
Mr. Boris and Ms. Guerrero-Anderson are nominees for terms expiring in the year
2001, and Ms. Bredeson and Mr. Goetz are being nominated for terms expiring in
2000.
<TABLE>
<CAPTION>
SHARES
PRINCIPAL OCCUPATION, BUSINESS BENEFICIALLY
EXPERIENCE DURING PAST FIVE YEARS AND DIRECTOR OWNED AS OF PERCENT
NAME AND AGE DIRECTORSHIPS IN PUBLIC COMPANIES SINCE DECEMBER 31, 1997 OF CLASS
- ------------------------ ------------------------------------------ ---------- ------------------- -----------
<S> <C> <C> <C> <C>
NOMINEES FOR EXISTING DIRECTORSHIPS
David L. Andreas (49) Chairman of the Board and Chief 1980 553,102(1) 6.86
Executive Officer of the Company since
November 1987. President and Chief Executive
Officer of National City Bank of Minneapolis
since September 1994. From 1991 through
September 1994, Mr. Andreas was Chairman of
the Board of National City Bank of
Minneapolis.
C. Bernard Jacobs (78) Retired as President and Chief Executive 1974 53,052(2) (3)
Officer of the Company and Chairman of
the Board of National City Bank of
Minneapolis in 1984. Mr. Jacobs is a
director of Dahlberg, Inc.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SHARES
PRINCIPAL OCCUPATION, BUSINESS BENEFICIALLY
EXPERIENCE DURING PAST FIVE YEARS AND DIRECTOR OWNED AS OF PERCENT
NAME AND AGE DIRECTORSHIPS IN PUBLIC COMPANIES SINCE DECEMBER 31, 1997 OF CLASS
- -------------------------- ---------------------------------------------- ------------ ------------------- ----------
<S> <C> <C> <C> <C>
Robert L. Olson (52) President, Chief Executive Officer and N/A 14,575 (3)
director of Diversified Business Credit,
Inc. since 1985, and director of
Commercial Finance Association and HV
Manufacturing Co.
Roger H. Scherer (61) Chairman of the Board of Scherer 1990 5,902 (3)
Brothers Lumber Co., former President
and Chief Executive Officer of Scherer
Brothers Lumber Co.
NOMINEES FOR ADDITIONAL DIRECTORSHIPS
Michael J. Boris (51) Private investor and consultant since N/A 133 (3)
August, 1997. From 1981 to 1997, Mr.
Boris served in various finance officer
positions with Medtronic, Inc. Mr. Boris
has served on the board of National City
Bank of Minneapolis since 1995.
Sharon N. Bredeson (56) President, Chief Executive Officer and N/A 220 (3)
director of Staff-Plus, Inc., and director of
National City Bank of Minneapolis
James B. Goetz, Sr. (61) President, Chief Executive Officer and N/A 763 (3)
director of Goetz Companies, director of
National City Bank of Minneapolis, and
Chairman of the Board of Directors of
Divine Savior Hospital & Nursing Home
in Portage, Wisconsin
Esperanza President, Chief Executive Officer and N/A 233 (3)
Guerrero-Anderson (53) director of Milestone Growth Fund, Inc.,
and director of National City Bank of
Minneapolis, Leann Chin, Inc. and Great
Lakes Higher Education Corporation
CONTINUING DIRECTORS
Terry L. Andreas (55) Chairman of the Board of the School for 1987** 250,710(4) 3.11
Field Studies, Beverly, Massachusetts
Marvin Borman (74) Partner in the law firm of Maslon 1980** 50,003(5) (3)
Edelman Borman & Brand, LLP,
Minneapolis, Minnesota, which rendered
legal services to the Company during the
past fiscal year.
Kenneth H. Dahlberg (80) Chairman of the Board of Dahlberg, Inc. 1980** 8,159 (3)
Thomas E. Holloran (68) Professor, Graduate School of Business, 1993** 1,055 (3)
University of St. Thomas. Mr. Holloran is
also a director of Medtronic, Inc., ADC
Telecommunications, MTS Systems
Corporation and Flexsteel Industries
Incorporated.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SHARES
PRINCIPAL OCCUPATION, BUSINESS BENEFICIALLY
EXPERIENCE DURING PAST FIVE YEARS AND DIRECTOR OWNED AS OF PERCENT
NAME AND AGE DIRECTORSHIPS IN PUBLIC COMPANIES SINCE DECEMBER 31, 1997 OF CLASS
- ----------------------------- ------------------------------------------ ---------- ------------------- ---------
<S> <C> <C> <C> <C>
Wendell R. Anderson (65) Of counsel to the law firm of Larkin, 1980* -- --
Hoffman, Daly & Lindgren Ltd.,
Minneapolis, Minnesota. Mr. Anderson is
a director of Fingerhut Corporation and
Turbo Technologies, Inc.
John H. Daniels, Jr. (50) Partner in the law firm of Willeke and 1982* 2,801 (3)
Daniels, Minneapolis, Minnesota
David C. Malmberg (55) Non-executive Chairman of the Board of 1994* 4,003 (3)
National City Bank of Minneapolis since
September 1994. Private investor and
consultant since May 1994. Prior to May
1994, Mr. Malmberg was Vice Chairman
of the Board of National Computer
Systems, Inc. ("NCS") and at various
times served as NCS' President and Chief
Operating Officer. Mr. Malmberg is also a
director of Advance Circuits, Inc., Three
Five Systems, Inc. and Pattern
Processing, Inc.
Walter E. Meadley, Jr. (65) Mr. Meadley retired as Vice Chairman of 1990* 20,293(6) (3)
the Board of National City Bank of
Minneapolis effective December 31, 1995.
Mr. Meadley was Vice Chairman since
September 1994. Prior thereto, Mr.
Meadley was President and Chief
Executive Officer of National City Bank
of Minneapolis.
</TABLE>
- ------------------
(1) Includes 81,277 shares held as co-trustee of trusts for members of David
Andreas' family and in which he disclaims beneficial ownership.
(2) Includes 713 shares owned by his spouse in which he disclaims beneficial
ownership.
(3) Represents less than one percent of the outstanding shares of the Company's
common stock.
(4) Includes 13,565 shares held as co-trustee of trust for a child in which she
disclaims beneficial ownership.
(5) Includes 32,825 shares owned by his spouse in which he disclaims beneficial
ownership.
(6) Includes 9,049 shares held for Mr. Meadley by the Company's Incentive
Savings Plan.
*Term as director expires in 1999.
**Term as director expires in 2000.
N/A Not applicable: the nominee has not previously served as a member of the
Company's Board of Directors.
Terry L. Andreas is David L. Andreas' first cousin.
The information contained in the foregoing footnotes is for explanatory
purposes only and none of the persons named therein is the beneficial owner of
shares designated as beneficially owned by or held in trust for any other
person, including family members.
All shares represented by proxies will be voted FOR the election of the
foregoing nominees unless otherwise specified; PROVIDED, HOWEVER, that if any
such nominee should withdraw or otherwise become unavailable for reasons not
presently known, such shares may be voted for another person in place of such
nominee in accordance with the best judgment of the persons named in the proxy.
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the cash and noncash compensation earned for
each of the last three fiscal years by the Chief Executive Officer of the
Company and each of the executive officers of the Company and its subsidiaries
whose salary and bonus earned in 1997 exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION ($)
NAME AND -------------------------------- ALL OTHER
PRINCIPAL POSITION YEAR SALARY(1) BONUS COMPENSATION(2)
- ---------------------------------------------- ------ ----------- --------- ----------------
<S> <C> <C> <C> <C>
David L. Andreas, 1997 256,000 78,285 22,396
Chairman of the Board and Chief 1996 250,000 76,200 21,246
Executive Officer of the Company 1995 195,000 47,518 47,518
and President and Chief Executive Officer
of National City Bank of Minneapolis
Thomas J. Freed, 1997 117,000 24,079 3,510
Secretary and Chief Financial Officer 1996 112,660 23,073 3,300
of the Company, and Senior Vice 1995 107,410 27,610 2,819
President and Chief Financial Officer
of National City Bank of Minneapolis
Robert L. Olson, 1997 280,000 558,179 4,750
President and Chief Executive Officer of *
Diversified Business Credit, Inc. *
</TABLE>
- ------------------
(1) The amounts shown as Salary include amounts deferred by the executive
officer into the Company's Incentive Savings Plan, which permits investment
of such amounts in the Company's Common Stock.
(2) Other compensation amounts for 1997 included $4,750 for Mr. Andreas, $4,750
for Mr. Olson, and $3,510 for Mr. Freed as Company matching contributions to
its Incentive Savings Plan; $17,646 and as the value of benefits for Mr.
Andreas, determined as prescribed by the Securities and Exchange Commission
for such valuations, under a "split-dollar" life insurance arrangement.
*Mr. Olson did not serve the Company in the capacity of an executive officer
prior to 1997.
EMPLOYMENT AGREEMENT
Mr. Olson is employed as the President and Chief Executive Officer of
Diversified Business Credit, Inc. pursuant to a non-cancelable employment
agreement (the "Agreement") which expires on December 31, 2000, subject to Mr.
Olson's option to renew the Agreement for an additional two year term. Under the
Agreement, Mr. Olson is entitled to a minimum annual salary of $280,000 and an
annual bonus equal to five percent of the "pre-tax profits" of Diversified
Business Credit, Inc. for the applicable fiscal year. The term "pre-tax profits"
is defined in the Agreement as income before income taxes determined in
accordance with generally acceptable accounting principles ("GAAP"), except that
in lieu of a provision for loan losses calculated under GAAP, earnings are
reduced by the aggregate amount of outstanding loan balances and accrued
interest receivable specifically identified for charge-off by the Board of
Directors of Diversified Business Credit, Inc. during the applicable fiscal
year.
PENSION PLAN
Effective January 1, 1995, the Company's Pension Plan was amended to
provide a new type of defined benefit, commonly known as a "cash balance"
formula. Under the new formula, pension benefits are based on an employee's
hypothetical account balance, rather than final average compensation and years
of service. As of January 1, 1995, each employee's benefits accrued under the
previous formula were converted to an amount equal to their actuarial present
value. That amount became the employee's hypothetical account balance.
That balance (if any) is increased after January 1, 1995, by hypothetical
annual allocations at the end of each subsequent year of Company service, equal
to a specified percentage of the
<PAGE>
employee's compensation. The annual allocation percentage is between 1.5 percent
and 6 percent, depending on the sum of the employee's age and Company service. A
similar percentage is allocated for any of the employee's compensation that
exceeds the taxable wage base for Social Security taxes. The hypothetical
account is also increased by hypothetical interest for each year until the
benefit is paid, at the greater of six percent annually or a variable index rate
based on certain U.S. Treasury securities. Generally, the "cash balance" benefit
is payable in a lump sum equal to the hypothetical account balance, or in the
form of a life annuity selected by the employee.
Under the Pension Plan's new formula, the estimated annual benefit payable
upon retirement at age 65 for Mr. Andreas, Mr. Freed and Mr. Olson is $92,236,
$67,069 and $54,750, respectively.
The Pension Plan also provides that certain employees will receive an
annual benefit under the old formula, if that amount is larger than their
benefits under the new formula. The employees eligible for this treatment are
those who have either attained age 55 and completed ten years of Company
service, or attained age 45 and completed twenty years of Company service as of
January 1, 1995. Mr. Freed qualifies for this treatment.
The following table shows the estimated annual benefits payable upon
retirement at age 65 to Mr. Freed, for various combinations of final average
salary and years of service under the Pension Plan's old formula.
QUALIFIED PENSION PLAN TABLE
ESTIMATED ANNUAL RETIREMENT BENEFIT
YEARS OF SERVICE
FINAL --------------------------------------------------------------
AVERAGE
SALARY 15 20 25 30 35
- ------------- ---------- ---------- ---------- ---------- ----------
$ 100,000 $27,143 $36,190 $45,238 $54,286 $59,286
130,000 36,143 48,190 60,238 72,286 78,786
160,000 45,143 60,190 75,238 90,286 98,286
For purposes of the old formula under the Company's Pension Plan, final
average salary is based on the "salary" and "bonus" amounts shown in the Summary
Compensation Table for the highest 5 consecutive years within the last ten
consecutive years which produce the highest average. However, beginning in 1994,
any of such combined "salary" and "bonus" amounts that exceed $150,000 in any
year is excluded from final average salary. The $150,000 limit will be adjusted
for inflation in $10,000 increments, to be added each time the cumulative
adjustment equals or exceeds $10,000. The table assumes the executive had
reached age 65 on January 1, 1997. Benefits under the old Pension Plan formula
are computed as an annuity for a single life, and are not subject to any
deduction for Social Security benefits or other offset amounts.
At December 31, 1997, Mr. Freed's amount of final average salary and number
of year's service was $129,148 and 29, respectively.
SALARY CONTINUATION PLAN
As a supplement to the Pension Plan, the Company has adopted a Salary
Continuation Plan pursuant to agreements with certain officers of the Company
and its subsidiaries. Under the Salary Continuation Plan, an officer will be
entitled to a stated annual benefit for a period of 15 years (i) upon retirement
from the Company after attaining age 65, or (ii) upon attaining age 65 if his or
her employment had been previously terminated due to disability. In the event
the executive dies after age 65, but before receiving the full 15 years of
annual benefits, the remaining payments shall be paid to his or her
beneficiaries.
From time to time, the Company may (but is not required to) amend the
stated benefit amount for each executive to provide a benefit up to 50 percent
of the current salary. However, the annual salary continuation benefit paid to
an executive, plus the annual pension payable to the executive
<PAGE>
under the Pension Plan, may not exceed 80 percent of his or her final average
salary as defined in the Pension Plan, without taking into account the $150,000
salary limit now applied to the Pension Plan.
If an executive's employment is terminated voluntarily, or involuntarily
for cause, prior to attaining age 65, no salary continuation benefits shall be
owing to the executive unless the executive is eligible for early retirement,
because he or she has attained age 55 and has been employed for at least ten
years. In this event the executive shall be paid a reduced annual benefit
beginning at age 65, or an earlier benefit that is reduced further and payable
upon termination. In the event the executive's employment is terminated as a
result of a "change in control" of the Company as defined in the plan, the
executive will be entitled to a reduced annual benefit pursuant to the early
retirement terms of the plan, notwithstanding that the executive is under age 55
or has not been employed by the Company for 10 years.
David L. Andreas, Thomas J. Freed and Robert L. Olson have entered into
Salary Continuation Plan agreements with the Company that currently provide
annual benefits at age 65 of $128,000, $58,500 and $140,000, respectively,
subject to the 80 percent maximum benefit limit. If the 80 percent limit were
applied at the end of 1997, the projected annual benefits of Mr. Andreas, Mr.
Freed and Mr. Olson at age 65 would be reduced to $128,000, $44,989 and
$140,000, respectively.
CHANGE IN CONTROL AGREEMENTS
In October 1995, certain officers of the Company and its subsidiaries,
including Mr. Freed (each, an "Officer"), entered into agreements with the
Company that provide for the payment of specified benefits if, within two years
after a "change in control," the Company or its successor terminates the
employment of the Officer other than for death, disability or "cause" (as
defined therein); or if the Officer elects to terminate his employment for "good
reason" (as defined therein). In general, these agreements provide that a
"change in control" will be deemed to have occurred if any person becomes the
beneficial owner of 30 percent or more of the combined voting power of the
outstanding securities of the Company or National City Bank of Minneapolis,
unless (a) the person owned at least 5 percent of that voting power on October
25, 1995, or (b) the Company is the surviving corporation in a merger and a
majority of the Company's Board of Directors remain in office after the merger.
The terms of Mr. Freed's agreement provide that he will receive an amount equal
to one and one-half times the sum of his base salary and the amount that he
would otherwise earn for the current fiscal year under any executive
compensation plan.
DIRECTORS FEES
If a Director of the Company or its subsidiaries is an employee of one of
them, the Director receives no added compensation or fees for service as a
Director. Each Director of the Company who is not such an employee receives a
$6,000 annual retainer plus $300 for each board or committee meeting attended.
In addition, each non-employee of the Company who is also a director of National
City Bank of Minneapolis receives a $5,000 annual retainer, plus $300 for each
board or committee meeting attended. David C. Malmberg also receives an
additional $25,000 annual retainer for service as Non-executive Chairman of the
Board of National City Bank of Minneapolis. Non-employee directors receive no
other forms of compensation from the Company for service as Directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Stock Option and Compensation Committee consists of Marvin
Borman, C. Bernard Jacobs and Roger H. Scherer. Mr. Borman is a partner in the
law firm of Maslon Edelman Borman & Brand, LLP, which rendered legal services to
the Company and its subsidiaries during the past fiscal year. Maslon Edelman
Borman & Brand is also a customer of National City Bank of Minneapolis. Mr.
Scherer is the Chairman of the Board of Scherer Brothers Lumber which is a
customer of National City Bank of Minneapolis. Mr. Scherer is also a customer of
National City Bank of Minneapolis. All loans to Maslon Edelman Borman & Brand,
Scherer Brothers Lumber and Mr. Scherer were made in the ordinary course of
business on substantially the same
<PAGE>
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with other persons and did not involve more than
normal risk of collectibility or present other unfavorable features.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Decisions on compensation of the Company's executives generally are made by
the three-member Stock Option and Compensation Committee (the "Compensation
Committee") of the Board. Each member of the Compensation Committee is a
non-employee director. All decisions by the Compensation Committee relating to
the compensation of the Company's executive officers are reviewed by the full
Board. Decisions on compensation of the executives of the Company's
subsidiaries, including Messrs. Andreas, Freed and Olson, are made by separate
committees comprised of members of the board of directors of such subsidiaries.
Set forth below is a report prepared by Messrs. Borman, Jacobs and Scherer in
their capacity as the Board's Compensation Committee addressing the Company's
compensation policies for 1997 as they affected the Company's executive
officers.
The Compensation Committee's executive compensation policies are designed
to provide competitive levels of compensation that integrate pay with the
Company's annual goals, reward corporate performance, recognize individual
initiative and achievements, and assist the Company in attracting and retaining
qualified executives. Targeted levels of executive compensation are set at
levels that the Compensation Committee believes to be consistent with others in
the Company's industry.
There are two elements in the Company's executive compensation program.
* Base salary compensation
* Annual incentive compensation
Base salary compensation is determined by the potential impact the
individual has on the Company, the skills and experiences required by the job,
and the performance and potential of the incumbent in the job.
Annual incentive compensation for executives of the Company's subsidiaries
is based primarily on net earnings, although other financial factors are also
considered.
To date, no executive officer of the Company has received compensation that
exceeds $1 million per year. Accordingly there should be no impact on the
statutory limitation on deductibility of certain amounts in excess of $1 million
per year paid or accrued as compensation.
For the year ended December 31, 1997, the Company experienced a strong
increase in net earnings and other financial factors. In setting executive
compensation for the Company's Chief Executive Officer, the Compensation
Committee focused primarily on net earnings, and also gave consideration to
growth in total assets and loans outstanding. During 1997, the Company's net
earnings increased from $12,686,000 to $14,964,000, or 17.96 percent, and basic
earnings per share increased from $1.56 to $1.85 or 18.6 percent. During the
same period, total assets increased 3.9 percent and loans net of allowance for
loan losses increased 11.6 percent. Mr. Andreas' total annual compensation
increased from $347,446 in 1996 to $356,681 in 1997, or 2.66 percent. Mr.
Olson's 1997 compensation was determined pursuant to the employment agreement
discussed above.
SUBMITTED BY THE COMPENSATION COMMITTEE
OF THE COMPANY'S BOARD OF DIRECTORS:
Marvin Borman C. Bernard Jacobs Roger H. Scherer
<PAGE>
COMPARATIVE STOCK PERFORMANCE GRAPH
The graph below compares the cumulative total stockholder return on
National City Bancorporation common stock over the last five fiscal years with
the cumulative total return on the NASDAQ U.S. Stock Market Index and the Nasdaq
Bank Stocks Index which includes approximately 600 institutions.
[PLOT POINTS GRAPH]
NATIONAL CITY NASDAQ NASDAQ BANK
BANCORPORATION US MARKET STOCKS
1992 100 100 100
1993 129 115 114
1994 137 112 114
1995 229 159 169
1996 245 195 223
1997 384 240 377
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
Certain officers and directors of the Company are at present, as in the
past, customers of the Company's subsidiaries and have obtained and expect to
obtain loans from these subsidiaries in the ordinary course of business. In
addition, some of the directors of the Company are at present, as in the past,
also officers, directors, principal stockholders or affiliated with businesses
that are customers of these subsidiaries and that have had and expect to obtain
loans from these subsidiaries in the ordinary course of business. All such loans
were made in the ordinary course of business on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons and did not involve more than normal
risk of collectibility or present other unfavorable features.
<PAGE>
PROPOSALS OF STOCKHOLDERS
All proposals of stockholders intended to be presented at the 1999 Annual
Meeting of Stockholders of the Company must be received by the Secretary of the
Company at its executive offices on or before November 7, 1998.
OTHER MATTERS
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors held five meetings during the last fiscal year.
Kenneth H. Dahlberg attended fewer than 75 percent of the total meetings of the
Board of Directors. The Company has an Audit Committee and a Stock Option and
Compensation Committee but does not have a Nominating Committee of the Board of
Directors.
The Company's Audit Committee, which consists of Messrs. Wendell R.
Anderson, Marvin Borman, John H. Daniels, Jr., Thomas E. Holloran and Roger H.
Scherer, met twice during the past fiscal year. The Audit Committee recommends
to the full Board the engagement of the independent accountants, reviews the
audit plan and results of the audit engagements, reviews the independence of the
auditors, and reviews the adequacy of the Company's system of internal
accounting controls.
The Company's Stock Option and Compensation Committee, which consists of
Marvin Borman, C. Bernard Jacobs and Roger H. Scherer, met once during the last
fiscal year. The Stock Option and Compensation Committee reviews the Company's
remuneration policies and practices, and makes recommendations to the Board in
connection with all compensation matters affecting the Company.
AUDITORS
Ernst & Young LLP has been the independent accountants for the Company
since October 1993, and is expected to be retained for the year ending December
31, 1998. A representative of Ernst & Young LLP is expected to attend this
year's Annual Meeting of Stockholders and have an opportunity to make a
statement and/or respond to appropriate questions from stockholders.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
and the NASDAQ National Market System. Officers, directors and greater than ten
percent stockholders are required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms they file. Based solely on review of the
copies of such forms furnished to the Company, or written representations that
no Forms 5 were required, the Company believes that during the fiscal year ended
December 31, 1997, all Section 16(a) filing requirements applicable to its
officers, directors and greater than ten-percent beneficial owners were complied
with.
SOLICITATION
The Company will bear the cost of preparing, assembling and mailing the
proxy, Proxy Statement, Annual Report and other material which may be sent to
the stockholders in connection with this solicitation. Solicitation other than
by mail may be made by officers or regular employees of the Company by personal
telephone solicitation, the cost of which is expected to be nominal. Stockholder
Communications Corporation has been retained by the Company to assist in
solicitation of proxies at a fee not to exceed $5,000 plus out-of-pocket
expenses. Brokerage houses and other custodians, nominees and fiduciaries may be
requested to forward the soliciting material to the beneficial owners of stock,
in which case they will be reimbursed by the Company for their expenses in doing
so.
<PAGE>
The Board of Directors does not intend to present to the meeting any other
matters not referred to above and does not presently know of any matters that
may be presented to the meeting by others. However, if other matters come before
the meeting, it is the intention of the persons named in the enclosed form of
proxy to vote the proxy in accordance with their best judgment.
By Order of the Board of Directors
NATIONAL CITY BANCORPORATION
/s/ Thomas J. Freed
Thomas J. Freed,
SECRETARY
<PAGE>
NATIONAL CITY BANCORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS -- APRIL 22, 1998
The undersigned, a stockholder of National City Bancorporation (the
"Company"), hereby appoints David L. Andreas and Thomas J. Freed, and each of
them as proxies, with full power of substitution, to vote on behalf of the
undersigned the number of shares which the undersigned is then entitled to vote,
at the Annual Meeting of the Stockholders of National City Bancorporation to be
held at Gaviidae Common, 651 Nicollet Mall, Fifth Floor, Minneapolis, Minnesota,
on Wednesday, April 22, 1998, at 10:00 A.M., and any adjournments or
postponements thereof, upon matters set forth below, with all the powers which
the undersigned would possess if personally present:
1. APPROVAL OF AMENDMENT TO RESTATED ARTICLES OF INCORPORATION TO INCREASE THE
NUMBER OF SHARES OF COMMON STOCK THE COMPANY IS AUTHORIZED TO ISSUE FROM
20,000,000 TO 40,000,000
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. APPROVAL OF AMENDMENT TO RESTATED ARTICLES OF INCORPORATION TO INCREASE THE
MAXIMUM NUMBER OF DIRECTORS ON THE COMPANY'S BOARD OF DIRECTORS FROM 15 TO
16.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. ELECTION OF [ ] FOR all nominees (except as marked [ ] WITHHOLD AUTHORITY
DIRECTORS: to the contrary below) to vote for all
nominees listed below
<TABLE>
<S> <C>
Nominees for existing directorships, each DAVID L. ANDREAS, C. BERNARD JACOBS, ROBERT L. OLSON AND
for a three-year term: ROGER H. SCHERER
Nominees for additional directorships, each MICHAEL J. BORIS AND ESPERANZA GUERRERO-ANDERSON
for a three-year term:
Nominees for additional directorships, each SHARON N. BREDESON AND JAMES B. GOETZ, SR.
for a two-year term:
</TABLE>
(INSTRUCTION: To withhold authority to vote for any individual nominee
write that nominee's name on the space provided below.)
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(Continued, and TO BE DATED AND SIGNED on the reverse side)
<PAGE>
(continued from other side)
4. Upon such other business as may properly come before the meeting and any
adjournments or postponements thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE PROPOSAL TO AMEND
THE COMPANY'S RESTATED ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK FROM 20,000,000 SHARES TO 40,000,000 SHARES
AND THE PROPOSAL TO AMEND THE COMPANY'S RESTATED ARTICLES OF INCORPORATION TO
INCREASE THE MAXIMUM NUMBER OF DIRECTORS ON THE COMPANY'S BOARD OF DIRECTORS
FROM 15 TO 16, AND FOR ALL THE NOMINEES TO THE BOARD OF DIRECTORS
The undersigned hereby revokes all previous proxies relating to the shares
covered hereby and acknowledges receipt of the Notice and Proxy Statement
relating to the Annual Meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. It will be
voted on the matters set forth on the reverse side of this form as directed by
the stockholder, but if no direction is made in the space provided, it will be
voted FOR the proposal to Amend the Company's Restated Articles of Incorporation
to increase the number of shares of common stock which the Company has authority
to issue from 20,000,000 shares to 40,000,000 shares, and for the proposal to
Amend the Restated Articles of Incorporation to increase the maximum number of
directors on the Company's Board of Directors from 15 to 16, and FOR all
nominees to the Board of Directors.
Dated , 1998
--------------------
---------------------------------
---------------------------------
(STOCKHOLDER MUST SIGN EXACTLY AS
THE NAME APPEARS AT LEFT. WHEN
SIGNED AS A CORPORATE OFFICER,
EXECUTOR, ADMINISTRATOR, TRUSTEE,
GUARDIAN, ETC., PLEASE GIVE FULL
TITLE AS SUCH. BOTH JOINT TENANTS
MUST SIGN.)
