<PAGE> 1
CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY
PRELIMINARY COPY
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SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[X] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
NATIONAL CITY CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
- ----------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- ----------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
----------------------
(4) Proposed maximum aggregate value of transaction:
- ------------------------------------------
(5) Total fee paid:
- ------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, for the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
[National City Corporation Logo]
------------------
March , 1999
Dear Stockholder:
You are invited to attend the Annual Meeting of Stockholders of National
City Corporation ("National City"), which will be held at National City's
offices, 1900 East Ninth Street, Cleveland, Ohio 44114, on Monday, April 12,
1999, commencing at 10:00 a.m., Eastern Daylight Time.
The primary business of the meeting will be election of directors for the
coming year, approval of National City Corporation Management Incentive Plan for
Senior Officers, approval of an amendment to National City's charter increasing
the authorized common stock to 1,400,000,000 shares, approval of the selection
of Ernst & Young LLP as independent auditors for 1999, and transaction of such
other business as may properly come before the meeting.
The formal Notice of Annual Meeting and Proxy Statement containing further
information pertinent to the business of the meeting are set forth on the
following pages. Our Annual Report, including financial statements, for the year
1998 was delivered to you previously.
Your vote is important no matter how many shares you own. We hope you will
be able to attend the meeting in person, but, in any event, please sign and date
the enclosed proxy and return it in the accompanying envelope. If you wish to
communicate directly with National City, the mailing address of National City's
executive offices is: National City Corporation, 1900 East Ninth Street,
Cleveland, Ohio 44114.
Sincerely,
/s/ David A. Daberko
DAVID A. DABERKO
Chairman and Chief Executive Officer
<PAGE> 3
[National City Corporation Logo]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Stockholders of
NATIONAL CITY CORPORATION
The Annual Meeting of Stockholders of National City Corporation ("National
City") will be held at National City's offices, 1900 East Ninth Street,
Cleveland, Ohio 44114 on Monday, April 12, 1999, at 10:00 a.m., Eastern Daylight
Time, for the purpose of considering and voting upon the following matters:
1. The election of directors;
2. The approval of the National City Corporation Management Incentive
Plan for Senior Officers;
3. The approval of an amendment to the Corporation's Restated
Certificate of Incorporation to increase the authorized number of
shares of National City's common stock, par value $4.00 per share,
from 700,000,000 to 1,400,000,000;
4. The approval of the selection of independent auditors for 1999; and
5. The transaction of such other business as may properly come before
the meeting.
Stockholders of record on February 26, 1999, are entitled to receive notice
of and to vote at the meeting. A list of the stockholders will be available at
the meeting and for the 10 days preceding the meeting at National City's
offices, 1900 East Ninth Street, Cleveland, Ohio 44114.
All stockholders who are entitled to vote, even if they now plan to attend
the meeting, are requested to execute the enclosed proxy card and return it
without delay in the enclosed postage-paid envelope. You may revoke your proxy
at any time before it is voted by giving written notice to National City. If you
attend the meeting and vote in person, your vote will supersede your proxy.
Please mark, date, and sign the enclosed proxy and return it in the
accompanying envelope.
By Order of the Board of Directors
/s/ David L. Zoeller
DAVID L. ZOELLER
Secretary
March , 1999
<PAGE> 4
PROXY STATEMENT
MARCH , 1999
SOLICITATION AND REVOCABILITY OF PROXIES
This Proxy Statement is being furnished in connection with the solicitation
by the board of directors of National City Corporation ("National City") of the
accompanying proxy to be used at the Annual Meeting of Stockholders of National
City (the "Annual Meeting") and at any adjournment or adjournments thereof. The
Annual Meeting will be held on April 12, 1999, at the offices of National City,
1900 East Ninth Street, Cleveland, Ohio, commencing at 10:00 a.m., Eastern
Daylight Time. Shares represented by properly executed proxies, if such proxies
are received in time and not revoked, will be voted at such meeting in
accordance with any specifications thereon or, if no specifications are made,
will be voted as set forth therein. Any proxy may be revoked by the person
giving it at any time before it is exercised by receipt of a later dated proxy,
by such person appearing at the meeting and electing to vote in person, or
receipt of a written revocation by the Secretary of National City.
INFORMATION AS TO VOTING SECURITIES
The board of directors of National City has fixed the close of business on
February 26, 1999 as the record date for determination of stockholders entitled
to receive notice of and to vote at the Annual Meeting. Holders of National City
Common Stock, par value $4.00 per share ("National City Common") of record on
the record date are the only stockholders entitled to vote at the Annual
Meeting. On the record date, there were shares of National City
Common outstanding.
BOARD OF DIRECTORS AND ITS COMMITTEES
The board of directors of National City has responsibility for establishing
broad corporate policies and overall performance of National City. However, it
is not involved in the day to day operating details of National City's business.
Members of the board are kept informed of National City's business through
various documents and reports provided by the Chairman and other officers of
National City and by participating in board and board committee meetings. Each
director has access to all books, records and reports of National City, and
members of management are available at all times to answer any director's
questions.
In 1998, the board of directors of National City held six meetings. Average
attendance by directors at those meetings was 92% and, except for Ms. Austin and
Messrs. Brown and Weiss, all directors attended 75% or more of the meetings of
the board and the board committees they were scheduled to attend. Except for Mr.
W. Bruce Lunsford, all of the persons nominated and elected as directors of
National City at National City's 1998 Annual Meeting of Stockholders attended
that Annual Meeting.
The board of directors of National City has established several permanent
committees comprised of directors who are appointed to those committees
annually. The principal committees are the Audit Committee, the Compensation and
Organization Committee, the Executive Committee, the Investment Committee, the
Nominating Committee and the Public Policy Committee. Each of these committees
is described below. The members of each committee are identified in the
following pages and in the biographical material of the nominees for election of
directors.
The Audit Committee. The Audit Committee meets on the call of its chairman
and met four times during 1998. The Audit Committee is comprised of directors
who are independent of the management of National City and are free of any
relationship that would interfere with their exercise of independent judgment as
committee members. The responsibility for effective auditing of National City
and any subsidiary is carried out by the Audit Committee through the general
auditor and the independent auditors. The Audit Committee provides assistance to
the board of directors of National City in fulfilling its responsibility to
stockholders, potential stockholders, and the investment community relating to
corporate accounting and reporting practices of National City, effectiveness of
its internal control structure and its procedures for financial reporting and
compliance with designated laws and regulations. In so doing, the Audit
Committee maintains free and open communications among the directors, the
independent auditors, the general auditor and the management of National City.
The members of the Audit Committee are Messrs. Barfield, Broadhurst, Evans,
Greenwalt, Schuler and Weiss. Mr. Evans is chairman.
2
<PAGE> 5
The Compensation and Organization Committee. The Compensation and
Organization Committee (the "Compensation Committee") meets on the call of its
chairman and met six times during 1998. The Compensation and Organization
Committee considers matters relating to compensation policy and compensation of
senior officers of National City and its subsidiaries and makes recommendations
to the board of directors of National City on matters relating to succession and
organization of senior executive management. Under the terms of each of National
City's 1984 Stock Option Plan, as amended, 1989 Stock Option Plan, 1993 Stock
Option Plan and 1997 Stock Option Plan, (collectively the "Stock Option Plans"),
the Compensation Committee is authorized to grant stock option rights and stock
appreciation rights to officers and employees of National City and its
subsidiaries. The Compensation Committee also determines participants for the
Long-Term Incentive Compensation Plan, the Annual Corporate Performance
Incentive Plan and the Short-Term Incentive Plan, and establishes the peer group
for the Long-Term Incentive Compensation Plan and the Annual Incentive Plan. The
Compensation Committee also determines awards pursuant to the Short-Term
Incentive Plan. The Compensation Committee will perform similar functions under
the new Management Incentive Plan for Senior Officers, if that plan is approved
by stockholders. The Compensation Committee also determines those employees who
are eligible to receive awards of restricted stock under the National City
Corporation Amended and Second Restated 1991 Restricted Stock Plan (the "1991
Restricted Stock Plan") and the National City Corporation 1997 Restricted Stock
Plan ("the 1997 Restricted Stock Plan" and, together with the 1991 Restricted
Stock Plan, the "Restricted Stock Plans"). Messrs. Breen, Broadhurst, Brown,
Collins, Evans and Lemieux are members of the Compensation Committee. Mr. Breen
is chairman.
The Executive Committee. The Executive Committee meets on the call of its
chairman. The Executive Committee did not meet during 1998. The Executive
Committee is empowered to exercise all powers and perform all duties of the
board of directors of National City as permitted by applicable law when the
board is not in session. The members of the Executive Committee are Ms. Austin
and Messrs. Brandon, Breen, Brown, Collins, Daberko, Lemieux, Paul and Weiss.
Mr. Daberko is chairman.
The Investment Committee. The Investment Committee meets on the call of its
chairperson and met three times during 1998. The Investment Committee is
empowered to oversee investments and interest rate risk management. The members
of the Investment Committee are Mss. Austin and Healy and Messrs. Greenwalt,
Paul and Stitle. Ms. Austin is the chairperson.
The Nominating Committee. The Nominating Committee meets on the call of the
chairman of the board of directors and met once during 1998. The Committee
confers, advises and recommends with respect to nominations to fill vacancies on
the board of directors of National City. Stockholders may submit the name of a
possible nominee to the Chairman, and he will arrange for that person to be
given consideration by the Nominating Committee. Further, stockholders may make
nominations from the floor at the Annual Meeting. The members of the Nominating
Committee are Ms. Johnson and Messrs. Brandon, Breen, Daberko, Roemer, Stitle
and Weiss. Mr. Daberko is chairman.
The Public Policy Committee. The Public Policy Committee meets on the call
of its chairperson, and met twice during 1998. The Public Policy Committee has
responsibility to oversee the various policies and programs of National City as
they relate to its relationships with employees, regulatory agencies,
governments, charitable organizations and the general public. The members of the
Public Policy Committee are Mss. Healy and Johnson and Messrs. Barfield, Roemer,
Schuler and Stitle. Ms. Healy is chairperson.
COMPENSATION OF DIRECTORS
Members of the board of directors of National City who are not officers of
National City, or any of its subsidiaries, receive a yearly retainer, payable in
quarterly installments, and a fee for each meeting of the board of directors,
and of each committee thereof that they attend. The yearly retainer is $22,000*.
The fee for attendance at any board of directors meeting or any committee
meeting that is scheduled for a day other than a day on which there is scheduled
a meeting of the full board of directors is $2,000. The fee for attendance at
any
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* Each individual director who is not an officer of National City or any of its
subsidiaries and is a member of the board of directors of a subsidiary
receives compensation from the subsidiary for his or her responsibilities at
that subsidiary.
3
<PAGE> 6
committee meeting where such meeting is scheduled on the same day as a scheduled
meeting of the board of directors is $1,000. Each of the non-officer
chairpersons of committees of the board of directors receives an additional
annual retainer of $2,500 paid in quarterly installments. Under a plan for the
deferred payment of director's fees, a director may elect to have the payment of
fees deferred until later years. Pursuant to a May 23, 1996 agreement between
National City and William F. Roemer, National City has agreed to furnish Mr.
Roemer and his eligible dependents with medical and dental benefits until May 3,
1999, and to continue to pay its share of the annual premiums under Mr. Roemer's
split dollar life insurance contracts until the fifteenth anniversary of the
commencement of such contracts or Mr. Roemer's 65th birthday, whichever is
later, provided that Mr. Roemer pays his share of such premiums.
Each non-officer member of the board of directors on the date when the 1991
Restricted Stock Plan became effective was awarded 1,000 shares of National City
Common, subject to transfer restrictions under the 1991 Restricted Stock Plan.
Each individual who is first elected or appointed as a member of the board of
directors after the date on which the 1991 Restricted Stock Plan became
effective is awarded 1,000 shares of National City Common, subject to transfer
restrictions under either the 1991 Restricted Stock Plan or the 1997 Restricted
Stock Plan. Furthermore, each year in which an individual is re-elected or
re-appointed as a member of the board, such individual is awarded an additional
200 shares of National City Common, subject to transfer restrictions under
either the 1991 Restricted Stock Plan or the 1997 Restricted Stock Plan. The
restrictions on such shares of National City Common do not expire until the
earlier of the individual director's death, disability or the date that is nine
months after the date of the award.
The National City Board of Directors Long-Term Incentive Compensation Plan
credits each non-employee director with an annual award ranging from zero to a
maximum of $25,000. The actual award is based on National City's position, as of
December 31 of each year, in the peer group for the three-year plan cycle then
ending under the National City Long-Term Incentive Compensation Plan for Senior
Officers. The award is credited to a deferred compensation account for the
benefit of the non-employee director and is "invested" in phantom units of
National City Common. The award credited to the non-employee director accounts
for the three-year plan cycle ending December 31, 1998 was $21,250.
STOCKHOLDER ACTION
1. ELECTION OF DIRECTORS
Directors are elected to serve until the next Annual Meeting and until
their respective successors are duly elected and qualified. It is intended that
shares represented by the proxies, unless contrary instructions are given, will
be voted for the election of the nominees listed below as directors, whose
number is equal to the total authorized number of directors. Although management
does not expect that any nominee will be unavailable for election, in the event
that vacancies unexpectedly occur, the shares will be voted for substitute
nominees, if any.
The nineteen nominees for election to the board of directors of National
City are identified on pages 5 through 8. All of the nominees are presently
directors of National City, and all were elected at the last Annual Meeting with
the exceptions of Ms. Johnson and Messrs. Barfield, Brown, Greenwalt, and Tatar,
each of whom was appointed to the board during 1998, and Mr. Ormond, who was
appointed to the board during 1999. One of the incumbent directors, Mr. Joseph
H. Lemieux, will not continue as such after the Annual Meeting. The following
material contains biographical information concerning each of the nominees,
including their recent employment, positions with National City, other
directorships, age and the number of shares of National City Common beneficially
owned, all as of February 28, 1999. Unless otherwise indicated, the nominee has
sole voting and investment power with respect to National City's securities
shown to be owned by him. Options that are exercisable within 60 days of
February 28, 1999 are separately noted.
VOTE BY STOCKHOLDERS
The election of directors requires the plurality of the votes of the shares
present in person or represented by proxy at the Annual Meeting and entitled to
vote for the election of directors.
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<TABLE>
<S> <C>
SANDRA HARDEN AUSTIN, Management Consultant since 1998.
SANDRA HARDEN AUSTIN, President and Chief Executive Officer of Sedona Healthcare
PHOTO Group in 1998. Retired as President, Physician Services,
Caremark International, a provider of health care products
and services, from 1993 to 1996. Director of National City
since 1990; chairperson of the Investment Committee and
member of the Executive Committee. Age 51. Shares of
National City Common owned: 3,309.
JON E. BARFIELD, Chairman and Chief Executive Officer of
JON E. BARFIELD, PHOTO Bartech Inc., a provider of contract employment and related
staffing services, since 1995. President of Bartech, Inc.
from 1981 to 1995. Director of Tecumseh Products Company.
Director of National City since 1998; member of the Audit
and Public Policy Committees. Age 46. Shares of National
City Common owned: 7,611.
EDWARD B. BRANDON, Retired as Chairman of the Board of
EDWARD B. BRANDON, National City in 1995. Chairman of the Board and Chief
PHOTO Executive Officer of National City from 1987 to 1995.
Director of Premier Industrial Corp., RPM, Inc. and The
Standard Products Company. Director of National City since
1986; member of the Executive and Nominating Committees. Age
67. Shares of National City Common owned: 79,476; options
exercisable within 60 days: 90,000.
JOHN G. BREEN, Chairman of the Board and Chief Executive
JOHN G. BREEN, PHOTO Officer of The Sherwin-Williams Company, a manufacturer of
coatings, since 1980. Director of The Sherwin-Williams
Company, The Mead Corporation, Parker-Hannifin Corporation
and Goodyear Tire & Rubber Co. Director of National City
since 1979; chairman of the Compensation and Organization
Committee and member of the Executive and Nominating
Committees. Age 64. Shares of National City Common owned:
41,104.
JAMES S. BROADHURST, Chairman and Chief Executive Officer of
JAMES S. BROADHURST, Eat'n Park Restaurants, a chain of family restaurants, since
PHOTO 1984. Director of Sheetz, Inc. Director of National City
since 1996; member of the Audit and Compensation and
Organization Committees. Age 55. Shares of National City
Common owned: 4,300; options exercisable within 60 days:
6,000.
</TABLE>
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<TABLE>
<S> <C>
JOHN W. BROWN, Chairman, President and Chief Executive Officer of Stryker Corporation, a
JOHN W. BROWN, PHOTO manufacturer of surgical and medical products, since 1980. Chief Executive Officer of
Stryker Corporation from 1977 to 1980. Director of Stryker Corporation and Lunar
Corporation. Director of National City since 1998; member of the Compensation &
Organization and Executive Committees. Age 63. Shares of National City Common owned:
10,208.
DUANE E. COLLINS, President and Chief Executive Officer of Parker Hannifin Corporation, a
DUANE E. COLLINS, durable goods manufacturer, since 1993. Director of Parker Hannifin Corporation and The
PHOTO Sherwin-Williams Company. Director of National City since 1995; member of the Compensation
and Organization and Executive Committees. Age: 62. Shares of National City Common owned:
5,000.
DAVID A. DABERKO, Chairman of the Board and Chief Executive Officer of National City since
DAVID A. DABERKO, 1995. President and Chief Operating Officer of National City from 1993 to 1995. Director
PHOTO of National City since 1988; chairman of the Executive and Nominating Committees. Age 53.
Shares of National City Common owned: 209,100; options exercisable within 60 days:
350,551.
DANIEL E. EVANS, Chairman of the Board and Chief Executive Officer of Bob Evans Farms,
DANIEL E. EVANS, Inc., a restaurant and food products company, since 1971. Director of Bob Evans Farms,
PHOTO Inc. and The Sherwin-Williams Company. Director of National City since 1992; chairman of
the Audit Committee and member of the Compensation and Organization Committee. Age 62.
Shares of National City Common owned: 6,716.
CLIFFORD L. GREENWALT, Retired as Vice Chairman of Ameren Corporation, a utility holding
CLIFFORD L. company, and as President and Chief Executive Officer of Ameren CIPS, a subsidiary of
GREENWALT, PHOTO Ameren Corporation. President and Chief Executive Officer of CIPSCO Incorporated from 1990
to 1998. President and Chief Executive Officer of Central Illinois Public Service Company
from 1989 to 1998. Director of Ameren Corporation. Director of National City since 1998;
member of the Audit and Investment Committees. Age 65. Shares of National City Common
owned: 34,657.
</TABLE>
6
<PAGE> 9
<TABLE>
<S> <C>
BERNADINE P. HEALY, M.D., Professor of Medicine and Dean of
BERNADINE P. HEALY, Ohio State University College of Medicine since September
M.D., PHOTO 1995. Sr. Policy Advisor, The Cleveland Clinic Foundation
from 1994-1995. Past Director of the National Institutes of
Health from 1991 to 1993. Director of Medtronic Inc. and
Invacare Corporation. Director of National City since 1995
and previously a Director from 1989 to 1990; chairperson of
the Public Policy Committee and member of the Investment
Committee. Age 54. Shares of National City Common owned:
5,229.
DOROTHY A. JOHNSON, President and Chief Executive Officer of
DOROTHY A. JOHNSON, the Council of Michigan Foundations, an association of
PHOTO foundations and corporations making charitable
contributions, since 1975. Director of The Kellogg Company.
Director of National City since 1998; member of the
Nominating and Public Policy Committees. Age 58. Shares of
National City Common owned: 37,635; options exercisable
within 60 days: 5,217.
PAUL A. ORMOND, President and Chief Executive Officer, HCR
PAUL A. ORMOND, PHOTO Manor Care, Inc., a provider of long-term care, skilled
nursing, and rehabilitative services, since 1991. President
of Health Care and Retirement Corp. since 1986. Director of
Aeroquip-Vickers, Inc. Director of National City since 1999.
Age 49. Shares of National City Common owned: 6,000.
ROBERT A. PAUL, President and Chief Executive Officer of
ROBERT A. PAUL, PHOTO Ampco-Pittsburgh Corporation, a manufacturer of engineered
equipment and steel products, since 1994. President and
Chief Operating Officer from 1979-1994. Executive Vice
President and Director of the Louis Berkman Company.
Director of National City since 1996; member of the
Executive and Investment Committees. Age 61. Shares of
National City Common owned: 901,500.
WILLIAM F. ROEMER, Retired as Chairman of National City Bank
WILLIAM F. ROEMER, of Pennsylvania during 1998. Retired as Chairman of the
PHOTO Board and Chief Executive Officer of Integra Financial
Corporation, a diversified financial services corporation,
since 1996. Chairman and Chief Exective Officer of Integra
Financial Corporation from 1991 to 1996. Director of
National City since 1996; member of the Nominating and
Public Policy Committees. Age 65. Shares of National City
Common owned: 39,400; options exercisable within 60 days:
388,000.
</TABLE>
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<TABLE>
<S> <C>
MICHAEL A. SCHULER, Chairman of the Board, President and
PHOTO Chief Executive Officer of Zippo Manufacturing Company, a
manufacturer of lighters and metal products, since 1986.
Director of Zippo Manufacturing Company and W.R. Case & Sons
Cutlery Company. Director of National City since 1996;
member of the Audit and Public Policy Committees. Age 49.
Shares of National City common owned: 6,400; options
exercisable within 60 days: 2,600.
STEPHEN A. STITLE, Chairman of the Board of National City
STEPHEN A. STITLE, Bank of Indiana since 1996. Vice President, Corporate
PHOTO Affairs of Eli Lilly and Company, a pharmaceutical company,
from 1993 to 1995. Director of National City since 1992;
member of the Investment, Nominating and Public Policy
Committees. Age 51. Shares of National City Common owned:
45,470.
JEROME F. TATAR, Chairman, Chief Executive Officer and
JEROME F. TATAR, PHOTO President of The Mead Corporation since 1997. President and
Chief Operating Officer of The Mead Corporation from 1996 to
1997; Vice President and Operating Officer from 1994 to
1996; appointed Manager of Operations Research in 1994;
Operations Research Analyst from 1993 to 1994. Director of
The Mead Corporation. Director of National City since 1998.
Age 52. Shares of National City Common owned: 1,500.
MORRY WEISS, Chairman of the Board and Chief Executive
MORRY WEISS, PHOTO Officer of American Greetings Corporation, a greeting card
manufacturer, since 1993. Director of American Greetings
Corporation, Syratech Corporation and Artistic Greetings
Incorporated. Director of National City since 1992; member
of the Executive, Audit and Nominating Committees. Age 56.
Shares of National City Common owned: 7,000.
</TABLE>
THE BOARD OF DIRECTORS OF NATIONAL CITY RECOMMENDS A VOTE FOR THE SLATE OF
DIRECTORS.
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BENEFICIAL OWNERSHIP
As of December 31, 1998, National City had outstanding one class of equity
securities as defined in Rule 13d-1 of the General Rules and Regulations under
the Securities and Exchange Act of 1934 (the "Exchange Act"), National City
Common.
Beneficial ownership of National City Common, for purposes of the ownership
disclosures, has been determined in accordance with Rule 13d-3 of the General
Rules and Regulations under the Exchange Act, under which Rule a person is
deemed to be the beneficial owner of securities if he or she has or shares
voting power or investment power in respect of such securities or has the right
to acquire beneficial ownership within 60 days. Accordingly, the amounts shown
do not purport to represent beneficial ownership for any purpose other than as
set forth under such Rule. Further, beneficial ownership as determined in this
manner does not necessarily bear on the economic incidence of ownership of
National City Common.
As of December 31, 1998, to the knowledge of National City, no person or
firm, except as noted below, beneficially owned more than 5% of the then
outstanding National City Common. As of December 31, 1998, no individual
director, nominee or officer beneficially owned more than 5% of the then
outstanding National City Common. For purpose of this disclosure, the amount of
outstanding National City Common is the aggregate number of shares of National
City's Common actually outstanding on such date plus an amount equal to the
aggregate amount of National City's Common which could be issued upon the
exercise of stock options by such person or firm at that date. Beneficial
ownership of National City's Common includes, as of such date, those shares
which could have been acquired by the exercise of stock options and, for
purposes of this disclosure, those shares held for the benefit of such officers
in the National City Corporation Savings and Investment Trust.
As of December 31, 1998, to National City's knowledge, only National City
beneficially owned more than 5% of the outstanding National City Common. As of
December 31, 1998 National City owned 44,150,350 shares of National City's
Common which constituted 13.53% of the outstanding National City Common on that
date. These shares are held in various fiduciary capacities through National
City's wholly owned banking subsidiaries, primarily National City Bank, National
City Bank of Michigan/Illinois, National City Bank of Pennsylvania, National
City Bank of Kentucky and National City Bank of Indiana. Of the 30,846,230
shares of National City Common as to which National City, through its
subsidiaries, had, as of December 31, 1998, voting authority, it had sole voting
authority as to 30,279,039 of those shares and shared voting authority as to the
remainder. Of the 33,495,651 shares as to which National City, through its
subsidiaries, had, as of December 31, 1998, investment authority, it had sole
investment authority as to 26,984,224 of those shares, and shared investment
authority as to the remainder. Included in the aggregate number of shares held
as to which National City had, as of December 31, 1998, sole voting and
investment authority were 597,704 shares held under the National City
Non-Contributory Retirement Trust.
The following table sets forth the beneficial security ownership of all
stockholders known to National City to be the beneficial owner of more than five
percent of National City Common.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
<TABLE>
<CAPTION>
(2) (3)
NAME AMOUNT
(1) AND ADDRESS AND NATURE OF (4)
TITLE OF OF BENEFICIAL BENEFICIAL PERCENT
CLASS OWNER OWNERSHIP(1) OF CLASS
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<S> <C> <C> <C>
Common Stock National City 44,150,350 13.53%
Corporation
1900 East Ninth Street
Cleveland, OH 44114-3484
</TABLE>
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(1) No listed beneficial owner is known to have had, as of December 31, 1998 the
right to acquire beneficial ownership, as specified in Rule 13d-3(d)(1)
under the Exchange Act of any shares of National City Common.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under federal securities law, National City's directors, certain officers,
and persons holding more than 10% of any class of National City's equity
securities are required to report, within specified monthly and annual due
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<PAGE> 12
dates, their initial ownership in any class of National City's equity securities
and all subsequent acquisitions, dispositions or other transfers of interest in
such securities, if and to the extent reportable events occur that require
reporting by such due dates. National City is required to describe in this Proxy
Statement whether it has knowledge that any person required to file such a
report may have failed to do so in a timely manner. In this regard, to National
City's knowledge, based solely on the review of copies of reports furnished to
National City by its directors and executive officers pursuant to Rule 16a-3
promulgated pursuant to the Exchange Act, and on written representations that no
other reports were required during the period ending December 31, 1998, all of
National City's directors and officers satisfied such filing requirements in
full, except that Dorothy A. Johnson and Herbert R. Martens, Jr. made late
filings. Ms. Johnson filed one late report with respect to 15.4 shares that she
acquired through the National City Corporation Amended and Restated Dividend
Reinvestment and Stock Purchase Plan (the "Dividend Reinvestment Plan"). Mr.
Martens made one late report with respect to 612 shares of National City Common
that he received in exchange for shares of First of America Bank Corporation
("FOA") at the time of the merger of National City and FOA.
OWNERSHIP GUIDELINES
The board of directors of National City established stock ownership
guidelines for directors at its February 26, 1996 meeting. The guidelines
recommend that each director beneficially own 6,000 shares of National City
Common.
10
<PAGE> 13
The following table sets forth, as of February 28, 1999, the beneficial
security ownership (including shares with respect to which the following persons
have the right to acquire beneficial ownership within 60 days after such date)
of (a) each director and nominee of National City, (b) the chief executive
officer and the four other most highly compensated executive officers of
National City and (c) all directors and executive officers of National City as a
group, as of February 28, 1999:
- --------------------------------------------------------------------------------
BENEFICIAL SECURITY OWNERSHIP OF MANAGEMENT
<TABLE>
<CAPTION>
SHARE EQUIVALENT TOTAL SHARES &
TITLE OF AMOUNT OF SHARES PERCENT OF HELD IN DEFERRED SHARE EQUIVALENTS
CLASS NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED CLASS COMPENSATION PLANS BENEFICIALLY HELD
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Common Stock Sandra Harden Austin 3,309 * 6,556 9,865
Common Stock Jon E. Barfield 7,611 * 6,840 14,451
Common Stock Edward B. Brandon 169,476 * 516 169,992
Common Stock John G. Breen 41,104 * 516 41,620
Common Stock James S. Broadhurst 10,300 * 516 10,816
Common Stock John W. Brown 10,208 * 293 10,501
Common Stock Richard F. Chormann 908,544 * 58,779 967,323
Common Stock Duane E. Collins 5,000 * 4,274 9,274
Common Stock David A. Daberko 559,651 * 1,453 561,104
Common Stock Vincent A. DiGirolamo 256,569 * 2,865 259,434
Common Stock Daniel E. Evans 6,716 * 516 7,232
Common Stock Clifford L. Greenwalt 34,657 * 942 35,599
Common Stock Bernadine P. Healy, M.D. 5,229 * 516 5,745
Common Stock Dorothy A. Johnson 42,852 * 3,032 45,884
Common Stock Joseph H. Lemieux 3,631 * 16,976 20,607
Common Stock William E. MacDonald III 87,959 * 0 87,959
Common Stock Paul A. Ormond 6,000 * 0 6,000
Common Stock Robert A. Paul 901,500 * 9,023 910,523
Common Stock William F. Roemer 427,400 * 3,401 430,801
Common Stock Michael A. Schuler 9,000 * 516 9,516
Common Stock Robert G. Siefers 135,826 * 1,886 137,712
Common Stock Stephen A. Stitle 45,470 * 1,871 47,341
Common Stock Jerome F. Tatar 1,500 * 0 1,500
Common Stock Morry Weiss 7,000 * 2,089 9,089
Common Stock Directors and Executive Officers 1,150,851 % 151,837 1,302,688
of National City as a Group
</TABLE>
* The percent of National City Common beneficially owned is less than 1%.
2. PROPOSAL RESPECTING THE NATIONAL CITY CORPORATION MANAGEMENT INCENTIVE PLAN
FOR SENIOR OFFICERS.
At the Annual Meeting, the National City Corporation Management Incentive
Plan for Senior Officers (the "Plan") will be presented for approval by
stockholders. The Plan was adopted, effective January 1, 1999, by National
City's board of directors at its meeting of February 22, 1999, subject to the
approval of National City's stockholders. The purpose of the Plan is to maximize
National City's profitability and operating success by providing an incentive to
senior officers to achieve superior results. The plan is designed to promote
teamwork to achieve overall corporate success and to motivate individual
excellence.
The complete text of the Plan appears as Exhibit A to this Proxy Statement.
While the main features of the Plan are summarized below, such summaries are in
all respects subject to the complete text of the Plan set forth in Exhibit A.
The Plan will be administered by the Compensation and Organization
Committee (the "Committee") of the board of directors of National City.
Generally, the Plan authorizes two types of incentive compensation awards for
each calendar year (each such year is a "Plan Cycle"): these are "Individual
Awards", which may be awarded
11
<PAGE> 14
to a participant based upon the participant's individual contribution during the
Plan Cycle, and "Corporate Awards", which may be awarded to a participant based
upon National City's performance with respect to Key Financial Indices (as
defined below). A participant who is a Covered Executive (as defined below)
during a Plan Cycle may not, however, be paid an Individual Award for that Plan
Cycle.
The Omnibus Budget Reconciliation Act of 1993 added Section 162(m) to the
Internal Revenue Code of 1986, as amended, ("Code"). Section 162(m) generally
provides that certain compensation in excess of $1 million per year paid to a
publicly held company's chief executive officer and any of its four other
highest paid executive officers (each of the chief executive officer and the
four other highest paid officers a "Covered Executive") is not deductible by the
company beginning in the 1994 tax year unless the compensation qualifies for an
exception. Section 162(m) excludes from the deductibility limit performance
based compensation if certain procedural requirements, including stockholder
approval of the material terms of the performance plan, are satisfied. For a
number of years, National City has had in place the National City Corporation
Short-Term Incentive Compensation Plan for Senior Officers (the "Short-Term
Plan") and the National City Corporation Annual Corporate Performance Plan (the
"Annual Performance Plan"). Because the Short-Term Plan was put in place prior
to the enactment of Section 162(m), the procedural requirements of Section
162(m) have not been satisfied with respect to the Short-Term Plan. The Annual
Performance Plan was adopted and approved by stockholders in 1994. Awards under
the Annual Performance Plan qualify for exclusion from the Section 162(m)
limits.
The Plan has been designed to replace the Short-Term Plan and the Annual
Performance Plan and to qualify awards paid under the Plan for the exclusion
from the Section 162(m) limits. The Plan is being presented for stockholder
approval so as to meet the qualification requirements for the exclusion from the
Section 162(m) deductibility limits and thus to minimize the cost of providing
competitive compensation to National City's key employees. Should the
stockholders not approve the Plan, no awards will be made under the Plan. In
such case, however, the Committee may continue the Short-Term Plan and the
Annual Performance Plan or review other alternatives for the overall
compensation package being provided to National City's senior officers.
ELIGIBILITY AND PARTICIPATION
Eligibility for participation in the Plan will be limited to those officers
of National City and its subsidiaries who play a key role in the management,
growth and success of National City. Participation in the Plan by National
City's executive officers will be determined by the Compensation Committee prior
to the commencement of a Plan Cycle. Participation by other officers of National
City or its subsidiaries will be determined by National City's chief executive
officer.
PERFORMANCE MEASUREMENT
Individual Awards will be determined by comparing actual individual and
group achievements during a Plan Cycle to pre-established objectives for that
Plan Cycle. These objectives shall be broad in nature, may be quantitative or
qualitative, will typically be five in number and may include the achievement of
group or divisional goals as well as individual goals. Corporate Awards will be
determined by comparing National City's performance with Key Financial Indices.
The performance may be relative to pre-established goals, the performance of a
group of comparable corporations established by the Compensation Committee in
accordance with the Plan, or any other objective standard established by the
Compensation Committee. The Key Financial Indices that will be measured and
their weights will be chosen by the Compensation Committee. The Compensation
Committee may choose from the following indices (collectively, the "Key
Financial Indices"): return on common equity; return on assets; overhead ratio;
efficiency ratio; net interest margin; total annual return on common stock; and
earnings per share, all as determined in accordance with generally accepted
accounting principles. These are indices frequently used by financial
corporations to measure profitability and overall operating performance. If the
Compensation Committee determines that a change in the business operations,
corporate structure or capital structure of National City, or the manner in
which it conducts its business, or other events or circumstances render the Key
Financial Indices unsuitable, the Compensation Committee may in its discretion
modify the Key Financial Indices as appropriate and equitable.
12
<PAGE> 15
AWARDS
Generally, a participant's award for a given Plan Cycle will consist of two
components, an Individual Award and a Corporate Award, which, when added
together, comprise that participant's "Total Award". As noted above, however, a
participant who is a Covered Executive during a Plan Cycle will not be paid an
Individual Award for that Plan Cycle. For convenience, the amount of a
participant's Individual Award (if any) or Corporate Award may be expressed as a
percentage of the participant's base salary or some other criteria. The
Compensation Committee will establish in writing the maximum Individual Award
and Corporate Award for each participant not later than 90 days after
commencement of the Plan Cycle. The amount of the Individual Award (if any) and
the Corporate Award for a Plan Cycle will be calculated as of the December 31
for the year on which the Plan Cycle ends. The Compensation Committee may in its
discretion reduce the Corporate Award payable to any participant notwithstanding
the attainment of any performance goal. In no event may the Total Award to any
Covered Executive for a Plan Cycle exceed 1% of National City's earnings before
taxes and any one-time earnings, expenses or charges for that year. Amounts
awarded under the Plan may be in cash, unfunded future benefits, restricted
stock or a combination thereof. The unfunded benefits are not funded, but simply
remain contractual liabilities of National City and are subject to payment upon
the recipient's termination of employment with National City or its
subsidiaries.
TERMINATION OF EMPLOYMENT DUE TO NORMAL RETIREMENT, DISABILITY OR DEATH
In the event of termination of employment due to normal retirement,
disability or death, the participant shall be eligible to receive a prorated
award based on the length of time the participant was employed during the Plan
Cycle provided that the participant was a participant in the Plan for at least
three months of the Plan Cycle. Such awards will be paid within 90 days
following the end of the Plan Cycle.
OTHER TERMINATION OF EMPLOYMENT
In the event a participant's employment during a Plan Cycle is terminated
prior to vesting for any reason other than normal retirement, disability, or
death, the participant will not be entitled to any award.
DEFERRAL OF AWARDS
Prior to each Plan Cycle, the Compensation Committee will determine which
participants if any, shall be eligible to make deferral elections under the
Plan. The Compensation Committee will make the decision on each request whether
or not to defer any portion or all of the participant's award with respect to
each Plan Cycle. For each participant who defers compensation under the Plan, an
unfunded account will be established and maintained by National City in the name
of the participant. As of the date that cash awards are made, the amount of any
deferred awards will be credited to each participant's account and to the fund
or funds so selected by the participant. The funds are designed to reflect
investment yields of funds maintained in the National City Corporation Savings
and Investment Plan or in the equivalent of a savings account.
Unfunded future benefits shall be payable to the former officer as a
one-time payment or on an installment basis over a period of ten years
commencing on the retirement, death, or other termination of employment of the
participant.
RESTRICTED STOCK
Prior to the end of each Plan Cycle, the Compensation Committee will
determine which participants, if any, will be eligible to request payment of all
or a portion of their Total Award in the form of restricted stock granted under
the 1991 Restricted Stock Plan or the 1997 Restricted Stock Plan (those plans,
together the "Restricted Stock Plans"). Each participant who is therefore
eligible to elect to request payment of all or a portion of his or her Total
Award for such Plan Cycle in the form of restricted stock, will be given the
opportunity prior to the end of such Plan Cycle, to make such request. Covered
Executives, however, must elect restricted stock prior to the 90th day after the
commencement of each Plan Cycle. Such election and the percentage of Total Award
requested to be paid in the form of restricted stock will be irrevocable and
fixed with respect to such Participant and such Plan Cycle as of the end of such
Plan Cycle. Any awards of restricted stock will be made at the discretion of the
13
<PAGE> 16
Compensation Committee and will be subject to the terms, conditions and
restrictions contained in the Restricted Stock Plans and the award agreement
controlling each restricted stock award grant.
In the event that the Compensation Committee, in its discretion, decides to
pay any percentage of a participant's Total Award for a Plan Cycle in restricted
stock, then, and in each such case, the number of shares of restricted stock to
be granted to that participant shall be equal to a fraction (rounded to the
nearest share) the numerator of which shall be 115% of the percentage of such
Total Award to be paid in restricted stock and the denominator of which shall be
the closing price, on the last trading day of the January next following the end
of that Plan Cycle, of National City Common.
If the Restricted Stock Plans are terminated at any time and a new plan is
adopted which provides similar benefits or is intended to replace the Restricted
Stock Plans, then such new plan shall be utilized for making the restricted
stock grant. Should no restricted stock plan be available the amount of the
restricted stock payment will, at the sole discretion of National City, be made
in an alternative form which would not restrict receipt of shares of National
City Common beyond the period of time provided in the anticipated restricted
stock grant, or in cash.
FORFEITURES
In the event the Compensation Committee finds that an employee or former
employee who has an interest in the Plan has been discharged for reasonable
belief of fraud or has been convicted of a crime as a result of which it becomes
illegal for his employer to employ him or her, then any amounts held under this
Plan for the benefit of such employee or former employee or his or her
beneficiaries will be forfeited and no longer payable.
CHANGE IN CONTROL
In the event of a change in control, the Plan provides that National City
will pay to each participant a lump sum cash payment equal to the maximum award
which could be paid under the Plan to each Participant.
AMENDMENT AND DISCONTINUANCE
National City expects to continue the Plan indefinitely, but reserves the
right, by action of the Compensation Committee, to amend it from time to time,
or to discontinue it if such a change is deemed necessary or desirable except
that stockholder approval shall be required for any amendment or modification of
the Plan that, in the opinion of the National City's counsel, would be required
by Section 162(m) of the Code or any regulations promulgated thereunder.
However, if the Committee should amend or discontinue this Plan, National City
will remain obligated under the Plan with respect to (i) Total Awards made final
(and thus payable) by decision by the Committee prior to the date of such
amendment or discontinuance (ii) Total Awards and rights of any Participant or
beneficiary with respect to whom a vesting event has occurred, and (iii) with
respect to amounts deferred prior to the date of such amendment or
discontinuance.
FEDERAL TAX CONSEQUENCES
Awards under the Plan will result in taxable income to the participant upon
receipt of cash payment. If the awards are deferred, the participant will not
recognize taxable income for Code purposes until cash distributions are paid.
The amount of the taxable income to the participant under the Code will be the
amount of the deduction to which the National City is entitled.
14
<PAGE> 17
PLAN BENEFITS
It is not possible to determine future awards that will be received by
participants in the Plan.
PLAN BENEFITS
- --------------------------------------------------------------------------------
NATIONAL CITY CORPORATION
MANAGEMENT INCENTIVE PLAN
FOR SENIOR OFFICERS
<TABLE>
<CAPTION>
1998
DOLLAR
NAME AND POSITION VALUE ($)
- -----------------------------------------------------------------------------------------
<S> <C>
D. A. Daberko, Chairman of the Board and Chief Executive
Officer
V. A. DiGirolamo, Vice Chairman
R. G. Siefers, Vice Chairman and Chief Financial Officer
W. E. MacDonald III, Executive Vice President
R. F. Chormann, Vice Chairman
Executive Group
Non-Executive Director Group
Non-Executive Officer Employee Group
- -----------------------------------------------------------------------------------------
</TABLE>
VOTE BY STOCKHOLDERS
Approval of the National City Corporation Management Incentive Plan for
Senior Officers requires the favorable vote of the holders of shares
representing a majority of the shares that are present in person or represented
by proxy and entitled to vote at the Annual Meeting.
THE BOARD OF DIRECTORS OF NATIONAL CITY RECOMMENDS A VOTE FOR THIS
PROPOSAL.
3. PROPOSAL TO INCREASE THE TOTAL NUMBER OF SHARES OF NATIONAL CITY
CORPORATION'S AUTHORIZED CAPITAL STOCK FROM 705,000,000 TO 1,405,000,000.
APPROVAL OF INCREASE OF AUTHORIZED CAPITAL STOCK
Article Fourth of National City's Restated Certificate of Incorporation
presently authorizes the issuance of 705,000,000 shares of capital stock,
consisting of 700,000,000 shares of National City Common, and 5,000,000 shares
of National City Preferred Stock without par value ("Preferred Stock"). On
February 28, 1999, shares of National City Common were issued and
outstanding, shares of National City Common were reserved for
issuance in connection with employee stock options previously granted,
shares of National City Common were available for future grants
of employee stock options, shares of National City Common were
available for issuance pursuant to the Dividend Reinvestment Plan, and
shares of National City Common were available for issuance
pursuant to the Restricted Stock Plans. Consequently, authorized
shares National City Common remain available for future issuance.
On February 22, 1999, National City's board of directors adopted a
resolution approving a proposed amendment to National City's Restated
Certificate of Incorporation to increase the number of shares of capital stock
which National City is authorized to issue from 705,000,000 to 1,405,000,000.
The proposed amendment to National City's Restated Certificate of Incorporation
would increase the number of shares of National City Common which National City
is authorized to issue from 700,000,000 to 1,400,000,000 shares, leaving the
number of shares of Preferred Stock which National City is authorized to issue
at 5,000,000 shares. The resolution directed that the proposed amendment be
considered at the Annual Meeting.
The board of directors believes it is advisable to have additional shares
of National City Common available for future issuance in connection with
possible acquisitions, equity financing requirements, payments of stock
15
<PAGE> 18
dividends or other stock distributions, employee stock incentive programs,
dividend reinvestment programs, and other general corporate purposes. Except for
existing employee stock options, the Dividend Reinvestment Plan, the Stock
Option Plans and the Restricted Stock Plans, National City has no present plans,
arrangements or understandings which would require the issuance of any shares of
National City Common.
Except for the increase in the number of authorized shares of National City
Common, the proposed amendment does not amend any other provision of National
City's Restated Certificate of Incorporation. No stockholder of National City
has any preemptive rights and, if the proposed amendment is approved by the
stockholders, shares of National City Common and Preferred Stock may be issued
on such terms and conditions as the board of directors may determine without
first offering such shares to stockholders and without further authorization
from the stockholders, unless otherwise required by applicable law. National
City's Restated Certificate of Incorporation would continue to provide that the
board of directors is authorized, within the limitations and restrictions stated
in the Restated Certificate of Incorporation, at the time of issuance to fix the
preferences, voting rights, dividend rights, dividend rate, conversion rights,
if any, rights and terms of redemption, liquidation preferences, and other
rights and restrictions of the shares of Preferred Stock or any series thereof,
and to divide such shares into one or more series and fix the number of shares
constituting each series. The dividend and liquidation rights of the National
City Common will be subject to the rights of any preferred stock.
In the event that the Stockholders approve this proposal and there occurs
an event (such as an acquisition) by which National City Common is issued, the
possibility exists that either book value per share or earnings per share, or
both, could be diluted due to the larger number of shares outstanding. In
addition, there could be a dilution to the voting power of each share of
National City Common as additional shares are issued. Such events would require
the prior approval of the board of directors, and under certain circumstances,
the Stockholders. No such actions are planned at this time.
The approval of this proposal could be construed as having an anti-takeover
effect in that these authorized shares of National City Common could be
available to defend a possible third-party takeover attempt. Management is not
aware of any such attempt. In addition, it should be noted that National City
does not have in place any shareholder rights plans or similar arrangements that
would result in the automatic issuance of National City Common to thwart a
possible takeover attempt.
To effect the increase in the authorized number of shares of capital stock
of National City, it is proposed that the first paragraph of Article FOURTH of
the Restated Certificate of Incorporation of National City be amended to read in
its entirety as is provided in Exhibit B.
VOTE BY STOCKHOLDERS
Approval of the proposal to increase the number of authorized shares of
capital stock requires the favorable vote of the holders of shares representing
a majority of the shares that are present in person or represented by proxy and
entitled to vote at the Annual Meeting.
THE BOARD OF DIRECTORS OF NATIONAL CITY RECOMMENDS A VOTE FOR THIS
PROPOSAL.
4. SELECTION OF INDEPENDENT AUDITORS
The board of directors of National City believes it appropriate to submit
for action by the stockholders of National City the approval of the selection of
Ernst & Young LLP, independent auditors, as auditors for National City for the
year 1999. This firm and its predecessors have served as independent auditors
for National City since its inception in 1973. In the opinion of the board of
directors of National City, the reputation, qualifications and experience of the
firm make appropriate its reappointment for 1999. A representative of the firm
is expected to be present at the Annual Meeting with the opportunity to make a
statement if such representative desires to do so and is expected to be
available to respond to appropriate questions. The favorable vote of the holders
of shares representing a majority of the shares that are present in person or
represented by proxy and entitled to vote at the Annual Meeting is required to
approve the selection of Ernst & Young LLP as auditors for National City for the
year 1999.
THE BOARD OF DIRECTORS OF NATIONAL CITY RECOMMENDS A VOTE FOR THIS
PROPOSAL.
16
<PAGE> 19
REMUNERATION OF EXECUTIVE OFFICERS
AND TRANSACTIONS WITH MANAGEMENT -- NATIONAL CITY
EXECUTIVE COMPENSATION
(a) COMPENSATION. The following table sets forth, together with certain
other information, the compensation earned during the fiscal year ended December
31, 1998 by (i) David A. Daberko, the chief executive officer, and (ii) the four
other most highly compensated executive officers of National City and its
subsidiaries.
- --------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------------ ------------------------------------
AWARDS PAYOUTS
----------------------- ----------
RESTRICTED SECURITIES ALL
OTHER STOCK UNDERLYING OTHER
NAME AND PRINCIPAL BONUS ANNUAL AWARD(S) OPTIONS/ LTIP COMP
POSITION YEAR SALARY($) ($)(1) COMP($) ($)(2) SARS(#) PAYOUTS($) ($)(3)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------
D. A. Daberko.............. 1998 $ $ $ $ $ $
Chairman of the Board...... 1997
and Chief Executive 1996
Officer..................
V. A. DiGirolamo........... 1998
Vice Chairman.............. 1997
1996
R. G. Siefers.............. 1998
Vice Chairman.............. 1997
1996
W. E. MacDonald III........ 1998
Executive Vice President... 1997
1996
R. F. Chormann(4).......... 1998
Vice Chairman.............. 1997 -- -- -- -- -- -- --
1996 -- -- -- -- -- -- --
</TABLE>
- --------------------------------------------------------------------------------
(1) The Short-Term Plan and the Annual Incentive Plan awards include both cash
and deferred awards. Based on the National City objectives and their
weights, the payout under the Annual Corporate Performance Incentive Plan
for 1998 was 70% of the maximum. See footnote 4 to this table regarding R.
F. Chormann's payment.
(2) D. A. Daberko, V.A. DiGirolamo and W.E. MacDonald III elected to receive a
portion of their Short-Term Incentive Compensation Plan award in the form of
Restricted Stock. The value of the Restricted Stock granted to D.A. Daberko
as payment of his Short-Term Incentive Compensation Plan Award was
. The value of the Restricted Stock granted to V.A. DiGirolamo as
payment of his Short-Term Incentive Compensation Plan Award was .
The value of the Restricted Stock granted to W.E. MacDonald III as payment
of his Short-Term Incentive Compensation Plan Award was .
Each named executive officer holds the following amounts of Restricted Stock
in addition to the amounts included in the table above:
D.A. Daberko has shares of Restricted Stock having a value as of
12/31/98 of
R. F. Chormann has shares of Restricted Stock having a value as
of 12/31/98 of
V.A. DiGirolamo has shares of Restricted Stock having a value as
of 12/31/98 of
R.G. Siefers has shares of Restricted Stock having a value as of
12/31/98 of
W.E. MacDonald III has shares of Restricted Stock having a value
as of 12/31/98 of .
The named executive officers receive dividends on their Restricted Stock at
the same rate and frequency as all stockholders of National City.
(3) All Other Compensation includes the Executive Savings Plan and the Savings
and Investment Plan matching and profit-sharing components together with
premiums paid by National City in connection with split dollar insurance
contracts, but does not include retirement accruals as these are not
calculable. For the year 1998, each of the named executive officers were
credited with the following matching and profit-sharing amount under the
Savings and Investment Plan: D.A. Daberko, ; R.F. Chormann ; V.A.
DiGirolamo ;
17
<PAGE> 20
R.G. Siefers, ; W.E. MacDonald III, . The named executive
officers were credited with the following match and profit-sharing amount
under the Executive Savings Plan during the year 1998: D.A. Daberko,
; R.F. Chormann ; V.A. DiGirolamo, ; R.G. Siefers,
; W.E. MacDonald III, . All other compensation also includes
the following amounts equal to the full dollar value of the remainder of the
premiums paid by National City in connection with life insurance policies
issued pursuant to the Split Dollar Life Insurance Agreements between
National City and the following Named Executive Officers during 1998,
respectively, as applicable: D.A. Daberko, ; R.F. Chormann
; V.A. DiGirolamo, ; R.G. Siefers, ; W.E. MacDonald
III, . The premiums paid by National City in connection with the life
insurance policies issued pursuant to such Split Dollar Life Insurance
Agreements, set forth in the preceding sentence, generally will be recovered
in full by National City upon the cancellation or purchase by a named
executive officer of any such life insurance policy or the payment of any
death benefits under any such life insurance policy.
(4) The salary included in the table above represents amounts paid to Mr.
Chormann by National City from and after March 31, 1998. The amount in the
All Other Compensation column includes a one-time payment of paid
in connection with the merger of FOA and National City in addition to a
payment of paid at year end. Prior to March 31, 1998, while employed
by FOA, Mr. Chormann received salary of , an annual incentive
payment of and a long term incentive payment of . The
incentive payments, while customarily paid at year end, were made in
connection with the merger of FOA and National City.
- --------------------------------------------------------------------------------
(b) OPTIONS. The following table provides information on option grants in
fiscal year 1998 to the named executive officers.
- --------------------------------------------------------------------------------
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS EXERCISE
UNDERLYING GRANTED TO OR GRANT DATE
NAME OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION PRESENT VALUE
---- GRANTED (#) FISCAL YEAR (5) ($/SH) DATE ($) (6)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
D.A. Daberko..................... (1) % $
(2)
(3)
V.A. DiGirolamo.................. (1)
(2)
(2)
(3)
R.G. Siefers..................... (1)
(2)
(3)
W.E. MacDonald III............... (1)
(2)
(3)
R.F. Chormann.................... (1)
(3)
(4)
</TABLE>
- --------------------------------------------------------------------------------
(1) Options are incentive stock options. One half of each option grant becomes
exercisable one year after the date of the grant and the remainder becomes
exercisable on the second anniversary of the grant. A further restriction is
placed on the exercise of the options such that the maximum number of shares
of National City Common which become initially available for purchase under
all post-1986 incentive stock option grants from National City in any
calendar year shall be limited to that number of shares the aggregate
exercise price of which does not exceed $100,000. Rights to Additional
Options as defined under either the Amended and Restated National City
Corporation 1993 Stock Option Plan or the National City Corporation 1997
Stock
18
<PAGE> 21
Option Plan ("Additional Options") are attached to each incentive stock
option and Additional Options will be granted upon exercise, subject to
certain provisions, if the exercise price or the related tax obligation is
paid using shares of National City common owned by the optionee.
(2) Options are Additional Options. Additional Options are granted at the market
price of National City Common on the date of grant and become exercisable 6
months after the date of grant. They have a contractual term equal to the
remaining term of the original option.
(3) Options are non-qualified stock options. One half of each option becomes
exercisable one year after the date of the grant and the remainder becomes
exercisable on the second anniversary of the grant. Rights to Additional
Options are attached to each non-qualified stock option and Additional
Options will be granted upon exercise, subject to certain provisions, if the
exercise price or the related tax obligation is paid using shares of
National City Common owned by the optionee.
(4) Options are non-qualified stock options. One-third of the award becomes
exercisable annually beginning one year from the date of grant and all have
a contractual term of 10 years. Additional Option rights are attached to
each non-qualified stock option and Additional Options will be granted upon
exercise, subject to certain provisions, if the exercise price or the
related tax obligation is paid using shares of National City Common owned by
the optionee.
(5) National City granted options representing 4,762,723 shares to employees
during 1998.
(6) In accordance with Securities and Exchange Commission rules, the
Black-Scholes pricing model was used to estimate the grant date present
value. The values indicated were calculated using the following assumptions:
(i) an expected volatility of .208, (ii) an expected dividend yield of
3.00%, (iii) the risk-free interest rate at the date of grant based upon a
term equal to the expected life of the option (5.45%), (iv) an expected
option life equal to the anticipated period of time from date of grant to
exercise (3.9 years), and (v) no discounts for non-transferability or risk
of forfeiture. The estimated values have been included solely for purposes
of disclosure in accordance with the rules of the Securities and Exchange
Commission and represent theoretical values. The actual value, if any, an
executive may realize will depend upon the increase in the market price of
National City Common through the date of exercise. Such an increase would
benefit all stockholders.
- --------------------------------------------------------------------------------
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<PAGE> 22
The following table sets forth the stock options exercised by each of the
named executive officers during the calendar year 1998 and the December 31, 1998
value of all unexercised options held by the named executive officers.
- --------------------------------------------------------------------------------
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
AT 12/31/98 AT 12/31/98(2)
SHARES ------------- ---------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($)(1) UNEXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------
D.A. Daberko........ $ $
V.A. DiGirolamo.....
R.G. Siefers........
W.E. MacDonald III..
R. F. Chormann......
</TABLE>
- --------------------------------------------------------------------------------
(1) The "Value Realized" is equal to the difference between the option exercise
price and the fair market value of National City Common on the date of
exercise.
(2) The "Value of Unexercised In-The-Money Options/ SARs at 12/31/98" is equal
to the difference between the option/SAR exercise price and National City
Common's closing price on December 31, 1998 of $72.500.
- --------------------------------------------------------------------------------
The following table provides information on the awards of long-term
incentive plan participation during the calendar year 1998.
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERFORMANCE ESTIMATED FUTURE PAYOUTS UNDER
NUMBER OF OR OTHER NON-STOCK PRICE-BASED PLANS(3)
SHARES, UNITS PERIOD UNTIL ---------------------------------
OR OTHER MATURATION OR THRESHOLD TARGET MAXIMUM
NAME RIGHTS(#)(1) PAYOUT(2) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
D.A. Daberko........ N/A December 31, 2001 $ $ $
V.A. DiGirolamo..... N/A December 31, 2001
R.G. Siefers........ N/A December 31, 2001
W.E. MacDonald III.. N/A December 31, 2001
R. F. Chormann...... N/A December 31, 2001
</TABLE>
- --------------------------------------------------------------------------------
(1) The National City Long-Term Incentive Plan for Senior Officers ("LTIP")
grants cash awards based on a percentage of the individual's base pay. No
shares or other rights are granted.
(2) The LTIP is based on a three year cycle starting 1/1/99 and ending 12/31/01.
Messrs. Daberko, DiGirolamo, Siefers, and MacDonald were each awarded the
opportunity to participate in the next three year cycle. Payouts occur only
at the end of the cycle.
(3) The payout is based on National City's total return to its stockholders over
a three-year period as compared to the total return to stockholders of a
peer group of high performing banking companies. Payouts are made on a basis
of a percentage of the average base pay for the three-year period for each
participant.
- --------------------------------------------------------------------------------
The value of benefits paid or furnished by National City in 1998 to
executive officers, other than those included in the preceding table are less
than the amounts required to be disclosed pursuant to the Securities and
Exchange Act.
20
<PAGE> 23
REPORT OF COMPENSATION AND ORGANIZATION COMMITTEE
National City believes that its stockholders should be provided information
about executive compensation that is easily understood and consistent with the
Securities and Exchange Commission's proxy rules on executive compensation.
The information provided is intended to enable stockholders to fully
understand the performance-based compensation programs for executives. National
City welcomes stockholder comments or suggestions on whether the disclosure
objectives have been met. Please send any comments to the Secretary, National
City Corporation, 1900 East Ninth Street, Cleveland, Ohio 44114.
COMPENSATION PHILOSOPHY
National City is committed to aligning compensation strategies with overall
business objectives. The performance of National City's employees is key in
delivering the types of products and services that will enable National City to
be the premier diversified financial services company in the Midwest.
National City's compensation philosophy is built on four integral
components that form the basis of National City's FOCUS ON PERFORMANCE programs:
- Implement strategies that differentiate and focus on employee
performance;
- Tailor compensation programs to reflect unit and organizational
priorities;
- Compensate employees based on their contributions to the achievement of
National City's goals and objectives; and
- Provide and support opportunities for equity ownership.
National City will structure its compensation plans to reward individuals
based on their contributions to individual, unit, and corporate objectives.
Compensation strategies that support and are aligned with business objectives
will be pursued. National City's compensation philosophy recognizes the need for
diversification in pay practices. Variable pay opportunities provided through
incentive plans and performance bonus programs are important vehicles for
rewarding individual employee contributions. National City's FOCUS ON
PERFORMANCE programs are the foundation of achieving individual goals and
National City's financial objectives.
EXECUTIVE COMPENSATION PRINCIPLES
National City's compensation programs are designed to encourage and reward
performance. The executive compensation package is competitive and comparable to
those offered by National City's peer group. Because increasing net income is
critical to National City's success, compensation is focused on performance that
generates revenue directly through business lines and through increased
efficiency as a result of staff unit contributions. The attainment of National
City's goals and objectives maximize stockholder value and create enhanced
compensation opportunities for participating executives.
National City's executive compensation programs place a significant portion
of an executive's compensation at risk based upon performance. Rewards are based
on the attainment of both short-term and long-term strategic objectives.
Cash-based and equity-based instruments are used to align executive rewards with
the achievement of individual, unit, and corporate objectives.
National City believes that it is in the best interest of stockholders to
retain as much flexibility as possible, now and in the future, with respect to
the design and administration of the compensation plans that determine
cash-based and equity-based compensation for executive officers. National City
does, however, recognize the constraints imposed on this flexibility by Section
162(m) of the Code, which disallows a tax deduction for non-exempted
compensation in excess of $1,000,000 to key executives. National City's
compensation plans are currently structured to minimize the non-exempted
compensation in excess of the limitation for deduction by National City
established by Section 162(m). In the event that the limitation is exceeded, the
Committee determines whether the compensation in excess of the limitation will
be paid in cash or deferred until a later time.
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<PAGE> 24
COMMITMENT TO EMPLOYEE EQUITY OWNERSHIP
National City is committed to ensuring that stockholders and employee
owners share long-term interests. A focus on increasing employee equity
ownership strengthens the link between executive rewards and long-term corporate
performance. This focus is demonstrated by the stock ownership guidelines and
several programs which provide more opportunities for executives to increase
their level of equity ownership. For example, executives can receive part of
their short-term bonus in the form of restricted stock and the use of Additional
Options encourages employees to exercise their stock options earlier than they
would have otherwise and hold the shares arising from the exercise.
STOCK OWNERSHIP GUIDELINES
In 1996, National City adopted stock ownership guidelines for its
executives. Equity ownership is a vital component of National City's total
compensation strategy, which is based on corporate performance and stockholder
interests. Ownership guidelines were determined based on a multiple of the base
salary mid-range or market median and then converted to a fixed number of
shares. The multiple used to determine the chairman's guideline was 5.5. The
multiple used for the guideline of the other named executive officers was 3.5.
As chairman of FOA, Mr. Chormann's stock ownership guideline was 75,000 shares.
During 1998, no National City Common ownership guideline was established for Mr.
Chormann. The guidelines are applicable to all executives participating in the
National City Corporation Long-Term Incentive Compensation Plan for Senior
Officers and certain other executive officers of National City or its major
subsidiaries. Ownership guidelines are currently in place for 63 executives.
STOCK OWNERSHIP GUIDELINES FOR THE NAMED EXECUTIVES
<TABLE>
<S> <C>
David A. Daberko shares
Vincent A. DiGirolamo shares
Robert G. Siefers shares
William E. MacDonald III shares
Richard F. Chormann no guideline was established in 1998
</TABLE>
The executives have three years from the date the stock ownership guideline
was established or modified to meet the guideline. Both direct and indirect
forms of ownership are recognized in achieving the guidelines. Direct ownership
will be in the form of shares of National City Common owned. Indirect ownership
includes deferred compensation invested in phantom National City Common and
401(k) funds invested in the National City Corporation Common Stock Fund.
In addition to the stock ownership guidelines for employees, National City
has adopted stock ownership guidelines for its directors. Increased equity
ownership for directors strengthens the linkage to long-term stockholder
interests. The board of directors established stock ownership guidelines in
1996. The guidelines recommend that each director beneficially own 6,000 shares
of National City Common. Both direct and indirect National City equity ownership
will be considered as owned shares for the purpose of the guideline. Direct
ownership includes National City Common and Restricted Stock. Indirect ownership
includes deferred compensation invested in the form of phantom National City
Common.
EQUITY-BASED REWARDS
Stock options are an important component of total compensation and provide
a long-term incentive to participants to align performance with stockholder
interests. Each organizational unit is allocated a pool of options for
distribution based on its unit performance. Stock options are awarded to
employees based on their contribution to the performance of the unit. Broad
guidelines are used to award the stock options, with above target awards linked
to above average individual performance and long-term potential. The performance
measures used for the distribution of equity-based rewards vary by business
unit. Measures such as net income and credit quality are common for core banking
units while accomplishment of strategic initiatives and cost control are
examples of measures used in other units.
22
<PAGE> 25
The National City Corporation Amended and Restated 1993 Stock Option Plan
and the National City Corporation 1997 Stock Option Plan provide for one-time
additional stock option grants when the employee has used previously owned
National City Common to pay the exercise price of an original option grant (a
swap transaction). The Additional Option feature typically encourages an
employee to exercise the option grant earlier than if the feature were not
present, thereby increasing the employee's level of equity ownership. Each
Additional Option's termination date is the same as the termination date from
the option that originally had the Additional Option feature. Its option price
is the market price at the time of the exercise of the original option. An
Additional Option is NOT provided upon exercise of an Additional Option. This
program was implemented when the stock ownership guidelines were established and
supports National City's focus on increased equity ownership.
CASH-BASED REWARDS
National City believes that cash compensation should be driven by the
attainment of aggressive business goals. These goals are based on annual and
three-year plan cycles. Performance is assessed in terms of achievement of
internal business goals as well as to National City's performance compared to
its peer group. Above target cash compensation can only be attained by achieving
an above average ranking against the peer group and the attainment of the
aggressive business goals.
National City establishes a salary range for each executive officer by
evaluating each executive officers responsibilities. This process is then
validated through market comparisons with peer group companies. National City's
objective is to provide base compensation at market median and to provide total
cash compensation opportunities above the market median when there is above
average performance. Executive officers salaries vary within National City's
ranges based upon performance, experience, and long-term potential.
THE NATIONAL CITY CORPORATION ANNUAL CORPORATE PERFORMANCE INCENTIVE PLAN,
as amended January 1, 1996, rewards performance relative to a peer group
comprised of approximately 16 super-regional banks based on four factors,
calculated without giving effect to merger charges: growth in earnings per share
(33% weight), return on assets (17%), overhead ratio (17%), and return on equity
(33%). Awards are based on National City's performance throughout the year as
well as on the employee's individual award category. Awards are a percentage of
base pay and can range from 0% to 76.5% for the chief executive officer and 0%
to 60% for a vice chairman and other executive officers of National City or its
major subsidiaries. For 1998, National City ranked seventh in its peer group.
The award payment for 1998 was equal to 70% of the maximum award.
THE NATIONAL CITY CORPORATION SHORT-TERM INCENTIVE COMPENSATION PLAN FOR
SENIOR OFFICERS provides awards based on net income of the participant's line or
staff unit and the achievement of individual performance goals. Award pools are
funded based on unit performance. Individual awards are distributed within each
unit based on the funding level of the pool and the individual's contributions
toward the unit's performance. Awards are a percent of base pay and can range
from 0% to 53.5% for the chief executive officer and 0% to 48% for other
executive officers of National City or its major subsidiaries. A vice chairman's
award is comprised of two pieces. The first is an incentive award based on the
above-mentioned criteria and can range from 0% to 53.5%. The second is the
difference between the percent of salary of the chief executive officers Annual
Corporate Performance Incentive Plan award and the percent of salary of the vice
chairman's Annual Corporate Performance Incentive Plan award.
THE NATIONAL CITY CORPORATION MANAGEMENT INCENTIVE PLAN FOR SENIOR
OFFICERS, adopted effective January 1, 1999, focuses on both annual goals
achieved by individual participants and the annual operating results achieved by
National City. The plan, which is intended to replace the Short-Term Plan and
the Annual Incentive Plan, allows for the granting of two types of awards for
each calendar year: individual awards and corporate awards. Individual awards
may be granted to a participant based upon the participant's individual
contribution during the year. Individual awards are determined by comparing
actual individual and group achievements during a calendar year to established
objectives for that year. Neither the chief executive officer of National City
nor any of National City's other four most highly compensated officers for a
calendar year may be paid an individual award for that year. Corporate Awards,
which may be granted to any participant, are based upon National City's
performance with respect to key financial indices, the identity and relative
weight of which are determined by the Compensation Committee. The performance
may be relative to pre-established goals, the performance of a group
23
<PAGE> 26
of a peer group of comparable corporations established by the Compensation
Committee, or any other objective standard established by the Compensation
Committee. The Compensation Committee may in its discretion reduce the corporate
award payable to any participant notwithstanding the attainment of any
performance goal.
THE NATIONAL CITY CORPORATION LONG-TERM INCENTIVE COMPENSATION PLAN FOR
SENIOR OFFICERS is designed to maximize returns to stockholders by linking the
compensation of key executives to the overall profitability and success of
National City. Awards are based on National City's ranking in its peer group.
The ranking is determined by the increase in total stockholder return over a
three-year plan cycle. Awards are paid at the completion of each plan cycle and
can range from 0% to 100% for the chief executive officer, 0% to 80% for a vice
chairman, and 0% to 60% for participating executive officers of National City or
its major subsidiaries. The incentive award is computed based on the executive's
average annual salary during each plan cycle. National City ranked fourth in its
group in total return to stockholders for the 1996-1998 plan cycle. The payout
was equal to the target, 85% of the maximum award.
PEER GROUP BANKS
The peer group companies are selected by the Committee. Most are included
in the KBW 50 Total Return Index (the "KBW50"), and have as a group,
outperformed the KBW 50 over time. National City believes it is important that
the peer group it compares itself to consists of the better financial services
companies.
SUMMARY
National City's compensation programs serve to closely align an
individual's compensation with the impact of that individual's contributions on
the overall performance of National City. Both cash-based and equity-based
compensation is used to reward performance that is measured annually and over a
three-year period. Achievement of National City's business goals and performance
relative to its peer group is used as the measurement criteria. National City
will continue to build on programs that relate total compensation with National
City's success.
THE COMPENSATION AND ORGANIZATION COMMITTEE'S
REVIEW OF CHIEF EXECUTIVE OFFICER'S COMPENSATION
National City's executive compensation program is based on individual and
corporate performance and places a significant portion of the chief executive
officers compensation at risk if pre-established goals are not achieved. In
addition, the program rewards his long-term strategic management through
compensation vehicles which promote equity ownership and emphasize stockholder
return.
Mr. Daberko served as president and chief operating officer of National
City from 1993 until July of 1995, when he was named chief executive officer.
Mr. Daberko has been an employee of National City for 30 years. In 1998, Mr.
Daberko's total cash compensation was $ .
During 1998, Mr. Daberko's salary was increased to reflect his performance
and the relationship of his earning opportunities to that of other chief
executive officers in the peer group. His base salary at the end of 1998 was
$ .
Long-Term Plan awards are based solely on the change in total stockholder
return when compared to the change in total stockholder return of a selected
peer group for a three-year period. Based on National City's relative
performance during the 1996-1998 time period, Mr. Daberko's award was
$ .
Mr. Daberko's Short-Term Plan goals for 1998 were based on financial
performance measurements and on several other key strategic initiatives designed
to ensure the long-term success of National City. These goals relate to
earnings, credit quality, reorganizing to a functionalized organization,
assuring the smooth integration of FOA and Fort Wayne National Corporation
("FWNC"), and successful achievement of National City's 1998 key initiatives.
These initiatives included database marketing/data warehouse, asset management,
future product development and delivery, fee businesses, delivery channels,
deposit/funding/asset generation strategy, international, human resources,
non-personnel expense, and credit card. Mr. Daberko has elected to receive his
1998 bonus in the form of restricted stock ( shares), further linking
his compensation to the success of National City.
24
<PAGE> 27
The Annual Incentive Plan awards are determined by comparing National
City's performance against that of a selected peer group of financial
institutions based on return on equity, return on assets, growth in earnings per
share and the overhead ratio. Mr. Daberko's Annual Incentive Plan award was
$ .
Stock options are another key element of total compensation. Equity-based
compensation produces a long-term link between stockholder and the rewards
provided to key executive officers. Each year, the Compensation Committee
reviews competitive peer group data and individual performance to determine the
level of equity-based awards to be granted to key executives. National City
places significant value and importance on stock ownership by senior management.
Based on Mr. Daberko's performance, he received an option in 1998 to purchase
shares of National City Common with an exercise price of $67.875
per share (the market value of National City Common on the day of the grant).
Mr. Daberko's stock option grant was based on his performance relative to
National City's achievement of its goals. These goals were expressed in terms of
earnings, credit quality, and the successful completion of National City's 1998
critical initiatives previously mentioned. The option award was comparable to
option awards made to chief executive officers of the peer group. The Committee
does not consider the number of options held by Mr. Daberko in making this
award, except for ensuring the option plan's limits are not exceeded. In
addition, Mr. Daberko received Additional Options during 1998 by surrendering
previously owned shares of National City Common to exercise stock options with
the Additional Option feature. These Additional Options have an exercise price
equal to the market price at the time of the exercise of the original option.
In 1998, National City's diluted net income per common share, excluding
merger and restructuring expenses, increased by over 13% from 1997. The price
per share of National City Common rose to $72.50 from $65.75 and dividends were
increased to $1.88 per share from $1.67 per share. In addition, National City
successfully integrated two significant acquisitions, FOA and FWNC. The
performance based programs in which Mr. Daberko participates are designed to
provide levels of equity-based and cash-based rewards that are aligned with the
performance of National City. Mr. Daberko's compensation and the performance of
National City during 1998 demonstrate the existence of this alignment.
COMPENSATION AND ORGANIZATION COMMITTEE
John G. Breen, Chairman
James S. Broadhurst
John W. Brown
Duane E. Collins
Daniel E. Evans
Joseph H. Lemieux
25
<PAGE> 28
STOCKHOLDER RETURN PERFORMANCE
Set forth below is a line graph comparing the five-year cumulative total
return of National City Common, assuming reinvestment of dividends, with that of
the Standard & Poors 500 Index (the "S&P 500") and the KBW 50. The KBW 50 is a
market-capitalization-weighted bank stock index developed and published by
Keefe, Bruyette & Woods, Inc., a nationally recognized brokerage and investment
banking firm specializing in bank stocks. The index is made up of 50 of the
nation's largest banking companies and is used to compare stock market and total
return performance against an industry peer group.
5 YEAR TOTAL RETURN
12/93 - 12/98
NATIONAL CITY VS. KBW 50 AND S&P 500
GRAPH
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) NATIONAL CITY S&P 500 KBW 50
<S> <C> <C> <C>
1993 100.0 100.0 100.0
1994 110.4 101.3 94.7
1995 147.8 139.4 152.0
1996 208.4 171.4 215.0
1997 315.1 228.6 314.3
1998 357.5 293.9 340.3
</TABLE>
DESCRIPTION OF NATIONAL CITY'S COMPENSATION AND BENEFIT PLANS
SAVINGS PLAN. The National City Savings and Investment Plan (the "Savings
Plan") is a qualified salary reduction profit-sharing plan within the meaning of
Section 401(k) of the Code. Under the Savings Plan as amended, all eligible
employees (generally, an eligible employee is one who has completed one year of
continuous service, is 21 years of age or older and has completed 1,000 hours of
service) of National City and its adopting subsidiaries may participate in the
Savings Plan by directing their employers to make Before-Tax Contributions (as
defined in the Savings Plan) to the Savings Plan Trust (the "Trust") for their
accounts and to reduce their compensation by an equal amount. Subject to certain
exceptions, contributions may be directed in any whole percentage between 1% and
10% of the employee's base compensation and certain variable pay including
overtime pay, bonuses, commissions, incentive compensation and other forms of
special compensation paid in cash. The employers also make contributions to the
Trust ("Matching Employer Contributions") in an amount equal to the Matching
Employer Contribution percentage then in effect (the Matching Employer
Contribution percentage is currently an amount equal to 100% of the first 3% of
the employee's pay contributed as a Before-Tax Contribution, plus 50% of the
next 4% of the employee's pay similarly contributed as a Before-Tax
Contribution, with no further Matching Employer Contribution for any additional
pay contributed as a
26
<PAGE> 29
Before-Tax Contribution). Amounts contributed pursuant to the Savings Plan may
be invested in certain investment choices. Before-Tax Contributions and Matching
Employer Contributions are fully vested at all times.
Prior to 1998 the Savings Plan had a profit-sharing feature based upon
National City's profitability, as measured by the percentage return on common
equity ("ROE") from year to year. The profit-sharing contribution is in addition
to the regular Matching Employer Contributions described above. The additional
amount of this profit-sharing contribution in any year depends on National
City's ROE for that year and ranges, in five-cent increments from no additional
contribution, if a minimum ROE of 12% is not attained, to a maximum of 50 cents
for each $1.00 of an individual's Before-Tax Contributions for the year if
National City's ROE is equal to or greater than 18.5%. In 1997, National City's
ROE was 18.53%, which resulted in National City contributing 50 cents for each
$1.00 of an individual's Before-Tax Contribution as a profit-sharing
contribution for the year 1997.
Effective January 1, 1998, the profit-sharing contribution for any year,
commencing with 1998, is determined on the basis of the reported growth in
National City's earnings per share ("EPS") since the end of the immediately
preceding year. Under the Savings Plan, the amount of the profit sharing
contribution for any year, commencing in 1998, will range, in five cent
increments, from zero, if growth in National City's reported EPS since the end
of the immediately preceding year is less than 8%, to a maximum of 50 cents for
each $1.00 of an individual's Before-Tax Contributions for that year if growth
in National City's reported EPS since the end of the immediately preceding year
is equal to or greater than 14.01%. The profit-sharing contribution for each
year will be made during the immediately succeeding year. Any profit-sharing
contribution will be in addition to any Regular Matching Employer Contributions.
EXECUTIVE PLAN. Effective January 1, 1989, National City adopted the
National City Executive Savings Plan (the "Executive Plan"), in the form of a
non-qualified salary reduction profit-sharing plan, similar to the Savings Plan.
The Executive Plan is to supplement the Savings Plan with respect to employee
Before-Tax Contributions and the attendant Matching Employer Contributions which
by reason of an individual's annual compensation would not be otherwise allowed
because of the annual maximum limit of the Code or because of the application,
under the Code, of actual deferral percentage testing against prohibited
excessive deferrals by highly compensated employees. The Executive Plan is
substantially similar to the Savings Plan as to amounts of employee Before-Tax
Contributions and Matching Employer Contributions.
Participants in the Executive Plan are limited to those key officers of
National City or its subsidiaries who may be designated from time to time by the
Compensation Committee. The benefits of the Executive Plan are without regard to
any limitation imposed by the Code, or any other applicable law limiting the
amount payable under a qualified plan (such as the Savings Plan), and represent
unfunded general obligations of National City. Portions of such benefits are
subject to certain provisions for forfeiture as set forth in the Executive Plan.
Directors of National City or its subsidiaries who are not also employees
of National City or its subsidiaries are not eligible to participate in the
Savings Plan or the Executive Plan.
LONG-TERM PLAN. The National City Long-Term Incentive Compensation Plan
(the "Long-Term Plan") for Senior Officers focuses upon providing superior
returns to stockholders of National City and measures National City's total
return to its stockholders against the total returns to stockholders of a peer
group of high-performing banking companies. The measurement of total return
includes dividends paid plus changes in the market value of National City
Common. The measurement over a three-year period is intended to focus on the
long-term performance of National City linking senior management's compensation
to the total stockholder return during the period.
The Long-Term Plan is administered by the Compensation Committee. Each year
begins a new three-year cycle. The awards can range up to 100% of an individual
participant's average annual base salary during the cycle for the chief
executive officer of National City and up to a lesser percentage for other
senior executive officers selected to participate under the Long-Term Plan. The
amount of the award earned is dependent upon the total stockholder return during
the cycle in comparison with the total stockholder return of the peer group. The
peer group is established prior to the beginning of the cycle by the
Compensation Committee. Most of the banking companies in the peer group at this
time are included in the KBW 50 used in the performance chart appearing below
the caption "Stockholder Return Performance". National City believes it is
important that the peer group it
27
<PAGE> 30
compares itself to consists of the better-performing banking companies. No
awards under the Long-Term Plan were paid prior to the end of the first cycle,
December 31, 1990.
Amounts awarded under the Long-Term Plan may be in cash, in unfunded future
benefits or a combination thereof. With the exception of a cash award, awards
are not funded, but simply remain contractual liabilities of National City and
are subject to payment upon the recipient's termination of employment with
National City or its subsidiaries. Generally, these unfunded benefits, together
with earnings thereon, are payable to the former officer, his beneficiary, or
his estate as a one-time payment or on an installment basis over 10 years.
Unfunded future benefits awards are considered as invested in the funds
described in the Savings Plan or as directed by the recipient from time to time
in the equivalent of a savings account and are subject to the gains or losses on
those investments.
In the event of a change in control of National City, the Long-Term Plan
provides that all the performance cycles shall terminate. The Long-Term Plan
provides that if such change in control occurs, then each of the three-year
performance cycles then existing shall terminate as of the date of change in
control, National City's stockholder total return during each of the abbreviated
performance cycles shall be deemed to have reached that level at which the
participant in the Long-Term Plan would be entitled to be awarded his or her
maximum award, and the award for each cycle shall be apportioned based upon the
number of full months from the beginning of the performance cycle to the
premature cycle termination date divided by 36. In adopting this plan, it was
felt this termination was appropriate in that those individuals previously
charged with providing superior total returns to the stockholders of National
City would no longer be in the same position to guide the affairs of National
City as they were prior to the event constituting a change in control and,
furthermore, following such a change in control no further performance
comparisons could be made.
Directors of National City or its subsidiaries who are not also employees
of National City or its subsidiaries are not eligible to participate in the
Long-Term Plan.
SHORT-TERM COMPENSATION PLAN. The National City Short-Term Incentive
Compensation Plan for Senior Officers, as amended, focuses on the short-term
goals achieved by the individual participant. The plan is administered by the
Compensation Committee. Under this plan, awards can be granted to any senior
officer of National City, or to other officers of National City or its
subsidiaries as may be designated from time to time by the Compensation
Committee. Each participant in the Short-Term Plan is evaluated annually with
respect to performance on approved objectives. Awards are based on individual
results and can range from 0% to 53.5% of the recipient's base salary in effect
at the close of the year for which the evaluation is made. Awards under this
plan are paid or credited no later than the end of first quarter of the
following year.
Amounts awarded under the Short-Term Plan may be in cash, in unfunded
future benefits, in Restricted Stock (as hereinafter described under the caption
"Restricted Stock Plans") or in a combination thereof. With the exception of a
cash award, awards are not funded, but simply remain contractual liabilities of
National City and are subject to payment upon the recipient's termination of
employment with National City and its subsidiaries. Generally, these unfunded
benefits, together with earnings thereon, are payable to the former officer, his
beneficiary, or his estate as a one-time payment or on an installment basis over
10 years. Unfunded future benefits awards are considered as invested as directed
by the recipient from time to time, in funds described in the Savings Plan or in
the equivalent of a savings account and are subject to the gains or losses on
those investments.
In the event of a change in control, the Short-Term Plan provides that each
participant will be paid at the effective time of the change in control the
maximum benefit the participant is entitled to receive under the Short-Term
Plan.
Directors of National City or its subsidiaries who are not also employees
of National City or its subsidiaries are not eligible to participate in the
Short-Term Plan.
Subject to stockholder approval of the National City Corporation Management
Incentive Plan for Senior Officers, the Short-Term Plan will be terminated
effective January 1, 1999 and replaced by the National City Corporation
Management Incentive Plan for Senior Officers.
ANNUAL CORPORATE PERFORMANCE PLAN. The National City Annual Corporate
Performance Incentive Plan focuses on the annual operating results achieved by
National City. The plan is administered by the Compensation
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<PAGE> 31
Committee. Under this plan, awards can be granted to any senior officer of
National City, or to other officers of National City or its subsidiaries as may
be designated from time to time by the Committee. National City's financial
performance is currently measured in comparison with the financial performance
of other high-performing banking companies, weighted as follows: return on
equity (33%), return on assets (17%), overhead ratio (17%) and percentage change
in earnings per share (33%). Most of the companies in the peer group are
included in the KBW 50 used in the performance chart appearing under the caption
"Stockholder Return Performance". National City believes it important that the
peer group it compares itself to consists of the better performing banks. Awards
are based on the corporate results and can range from 0% to 76.5% of the
recipient's base salary in effect at the close of the year for which the
evaluation is made. Awards under this plan are paid or credited no later than
the end of first quarter of the following year.
Amounts awarded under the Annual Performance Plan may be in cash, in
unfunded future benefits, or in a combination thereof. With the exception of a
cash award, awards are not funded, but simply remain contractual liabilities of
National City and are subject to payment upon the recipient's termination of
employment with National City and its subsidiaries. Generally, these unfunded
benefits, together with earnings thereon, are payable to the former officer or
his beneficiary or his estate as a one-time payment or on an installment basis
over 10 years. Unfunded future benefits awards are considered as invested as
directed by the recipient from time to time, in funds described in the Savings
Plan or in the equivalent of a savings account, and are subject to the gains or
losses on those investments.
In the event of a change in control, the Annual Performance Plan provides
that each participant will be paid at the effective time of the change in
control the maximum benefit the participant is entitled to receive under the
Annual Performance Plan.
Directors of National City or its subsidiaries who are not also employees
of National City or its subsidiaries are not eligible to receive benefits.
Subject to stockholder approval of the National City Corporation Management
Incentive Plan for Senior Officers, the Annual Performance Plan will be
terminated effective January 1, 1999 and replaced by the National City
Corporation Management Incentive Plan for Senior Officers.
MANAGEMENT INCENTIVE PLAN FOR SENIOR OFFICERS. The National City
Corporation Management Incentive Plan for Senior Officers focuses on both annual
goals achieved by individual participants and the annual operating results
achieved by National City. Under this plan, each calendar year is a separate
"plan cycle". Participants who are senior officers of National City are selected
by the Compensation Committee prior to the commencement of each plan cycle. All
other participants for a plan cycle are selected by National City's chief
executive officer.
The Plan, which is administered by the Compensation Committee, allows for
the granting of two types of awards: Individual Awards and Corporate Awards.
Individual Awards may be granted to a participant based upon the participant's
individual contribution during the plan cycle. No participant who is, during a
plan cycle, the chief executive officer of National City or one of National
City's other four most highly compensated officers for that plan cycle may be
paid an Individual Award for that plan cycle. Individual Awards are determined
by comparing actual individual and group achievements during a plan cycle to
established objectives for that plan cycle.
Corporate Awards, which may be granted to any participant, are based upon
National City's performance with respect to key financial indices, the identity
and relative weight of which are determined by the Compensation Committee. The
performance may be relative to pre-established goals, the Compensation
Committee, or any other objective standard established by the Compensation
Committee. The key financial indices will consist of a variety of financial
ratios that are frequently used by financial corporations to measure
profitability and overall operating performance. The particular indices to be
used for a given plan cycle, and the relative weight to be given to each of the
indices, will be determined by the Compensation Committee. The Compensation
Committee may in its discretion reduce the corporate award payable to any
participant notwithstanding the attainment of any performance goal.
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<PAGE> 32
A participant's Individual Award, if any, and Corporate Award, comprise the
participant's Total Award for the plan cycle in question. For convenience, that
amount of a participant's Individual Award, if any, or Corporate Award may be
expressed as a percentage of the participant's base salary or some other
criteria.
Amounts awarded under the Plan may be in cash, in unfunded future benefits,
in Restricted Stock (as hereinafter described under the caption "Restricted
Stock Plans") or in a combination thereof. With the exception of a cash award,
awards are not funded, but simply remain contractual liabilities of National
City and are subject to payment upon the recipient's termination of employment
with National City and its subsidiaries. Generally, these unfunded benefits,
together with earnings thereon, are payable to the former officer or his
beneficiary or his or her estate as a one-time payment on an installment basis
over 10 years. Unfunded future benefits awards are considered as invested as
directed by the recipient from time to time, in funds described in the Savings
Plan or in the equivalent of a savings account, and are subject to the gains or
losses on those investments.
In the event of change in control, the Plan provides that each participant
will be paid at the effective time of the change in control the maximum benefit
the participant is entitled to receive under the Plan.
Directors of National City or its subsidiaries who are not also employees
of National City or its subsidiaries are not eligible to receive benefits.
STOCK OPTION PLANS. National City has in effect the 1984 Stock Option Plan,
as amended; the 1989 Stock Option Plan; the 1993 Stock Option Plan, as amended
and restated, and the 1997 Stock Option Plan. Each of the Stock Option Plans has
substantially similar provisions and generally provides for the granting of
options to purchase shares of National City Common, the options being either
non-qualified options or options that are intended to qualify as Incentive Stock
Options under Section 422 of the Code. The Stock Option Plans also provide for
the granting of appreciation rights, but only in tandem with stock options
previously granted or contemporaneously being granted. Under the Stock Option
Plans, no options may be granted at less than 100% of the market value of
National City Common on the date of the grant of the option. Stock option awards
are based on current individual performance. Previous awards are not considered
except for assuring the plan maximums are not exceeded.
Directors of National City or its subsidiaries who are not also employees
of National City or its subsidiaries are not eligible to receive options under
the Stock Option Plans.
RESTRICTED STOCK PLANS. National City has in effect the 1991 Restricted
Stock Plan and the 1997 Restricted Stock Plan. Each of the Restricted Stock
Plans has substantially similar provisions. The purpose of the Restricted Stock
Plans is to provide alternative means of compensation and to promote the
long-term profitability and success of National City by providing equity
interests and equity-based incentives in National City to key employees and
members of the Board of Directors of National City.
The Restricted Stock Plans are administered by the Compensation Committee.
Generally, the Restricted Stock Plans provide for the granting of shares of
National City Common ("Restricted Stock") to a recipient and restricting that
recipient's rights to transfer the shares for a specific period of time. During
that restricted period, those shares are subject to substantial risk of
forfeiture. To the extent the recipient forfeits his interest in the Restricted
Stock, he or she will have no rights in the Restricted Stock forfeited.
Restricted Stock has been granted to executive officers for two purposes
the first of which is to offset the liability of a portion of their Supplemental
Retirement Benefits with the restrictions being lifted at retirement. Grants are
based on the present value of accrued supplemental benefits. The second is to
deliver all or part of their awards under the Short-Term Plan or the Management
Incentive Plan. In this case restrictions lapse after one year.
Other employees, who do not receive stock option grants and who have been
identified by their managers as high potential employees, may be awarded
restricted stock grants. The restrictions on grants to high potential employees
lapse on the fourth anniversary of the grant.
The total amount of Restricted Stock that may be awarded under the 1991
Restricted Stock Plan, as amended, is 1,000,000 shares, of which no more than
150,000 shares may be awarded in the aggregate to any one individual. The total
amount of Restricted Stock that may be awarded under the 1997 Restricted Stock
Plan is
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<PAGE> 33
1,500,000 shares, of which no more than 225,000 shares may be awarded in the
aggregate to any one individual. Under the Restricted Stock Plans, awards of
Restricted Stock may be made to any regular employee of National City (including
employees who are members of the board of directors) or any of its subsidiaries
("Employee Awards") and to the directors of National City who are not employees
of National City or its subsidiaries ("Director Awards").
The Restricted Stock Plans contemplate that the Committee may award
Restricted Stock to the employees of National City and National City's
subsidiaries subject to the following restrictions: (a) all awards are to be
made subject to transfer restrictions which are set by the Committee; such
restrictions must last at least six months from the date of the award under the
1991 Restricted Stock Plan; and (b) all awards of Restricted Stock shall be
subject to the award agreement entered into between National City and the
employee receiving the award (such agreements may differ from employee to
employee and from award to award).
Other than directors who also are officers of National City, each
individual who was elected to the board of directors of National City on April
22, 1991, the date when the 1991 Restricted Stock Plan became effective, was
awarded 500 shares of Restricted Stock, and each individual who is first elected
or appointed to the board of directors will be, awarded 1000 (500 shares
adjusted for the July 1993 100% stock dividend) shares of Restricted Stock
subject to transfer restrictions. In addition, each year in which an individual
is reelected or reappointed as a director of National City, such individual is
to be awarded an additional 200 shares of Restricted Stock. The restrictions on
the Director Awards do not expire until the earlier of the individual director's
death, disability, or nine months after the date of the award.
Each of the Restricted Stock Plans provides that upon a change in control
of National City (as defined in the Restricted Stock Plan), all restrictions
thereunder will lapse and be of no further force or effect and that National
City shall cause all outstanding Restricted Stock held under the Restricted
Stock Plans to be exchanged for shares of National City Common free of any such
restrictions.
SEVERANCE AND EMPLOYMENT AGREEMENTS. National City recognizes that, as is
the case at most companies, the possibility of a change in control exists.
Accordingly, National City desires to assure itself of both present and future
continuity of management and wishes to ensure that its senior executive officers
and other key employees ("Executives") continue to remain in the employ of
National City by entering into severance pay agreements with certain Executives
of National City. The severance agreements were entered into upon the
recommendation of the Committee and the forms of the agreement were approved by
the board of directors at its December 19, 1994 meeting. The agreements become
immediately operative upon a change in control.
The severance agreements provide that upon termination of employment with
National City, a subsidiary, or a successor to National City within three years
following a change in control, unless the termination is because of death,
permanent disability, or cause, the Executive will be entitled to severance
compensation. The severance agreements also provide that following a change in
control, the Executive may terminate his own employment with National City or a
subsidiary with the right to severance compensation during the period commencing
with the occurrence of the change in control and continuing until the earliest
of (i) the third anniversary of the occurrence of the change in control, (ii)
death, or (iii) attainment of age sixty-five and upon the occurrence of one or
more certain additional events. For 17 Executives, the severance agreements also
provide that in the event of a change in control, the Executive may terminate
his employment with National City or any subsidiary for any reason during the
thirty-day period immediately following the first anniversary of the first
occurrence of a change in control without cause with the right to severance
compensation.
The severance compensation will be a lump sum payment in an amount equal to
three times the sum of (i) base pay at the highest rate in effect for any period
prior to the termination date plus (ii) incentive pay in an amount equal to not
less than the highest aggregate annual bonus, incentive, or other payments of
cash compensation made or to be made in regard to services rendered in any
calendar year during the three calendar years immediately preceding the year in
which the change in control occurs. For thirty-six months following the
termination, National City will arrange to provide the Executive with employee
benefits that are welfare benefits substantially similar to those which the
Executive was receiving or was entitled to receive immediately prior to the
termination date and such thirty-six month period will be considered service
with National City for the
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purpose of determining service credits and benefits due and payable under
National City's various retirement benefit plans.
National City has agreed to bear the expense of any and all legal fees
incurred by any Executive associated with the interpretation, enforcement, or
defense of his rights under the severance agreements.
National City has entered into an agreement to employ Mr. Chormann as vice
chairman of National City for a term of three years, which became effective as
of the March 31, 1998 (the "Effective Date"). The employment agreement provides
that Mr. Chormann's base salary and bonus will equal the greater of his 1997
base salary and bonus or % of the National City chief executive officer's base
salary and bonus. In addition, Mr. Chormann received, on the Effective Date, a
one-time payment in the amount of $ , which is the amount that Mr.
Chormann would have been entitled to receive pursuant to the Management
Continuity Agreement made November 26, 1996 between FOA and Mr. Chormann had he
been terminated by National City without cause immediately after the Effective
Date. Mr. Chormann was also issued, on the Effective Date, restricted
shares of National City Common, and options to acquire shares of
National City Common, all such shares and options to vest ratably over the
three-year term of the employment agreement. The employment agreement also
provides that upon termination of employment for any reason, Mr. Chormann will
receive an annual retirement benefit for his life of $ reduced by any
benefit payable pursuant to National City's and FOA's qualified retirement plans
and in lieu of any benefit payable under FOA's supplemental retirement plan or
any National City nonqualified retirement plan (the "Retirement Benefit"). If
Mr. Chormann dies and is survived by his current spouse, she shall be entitled
to an annual payment equal to of the Retirement Benefit. In the event both
Mr. Chormann and his current spouse die prior to the tenth anniversary of the
commencement of Retirement Benefit payments, then Retirement Benefits payments
shall continue to be made to Mr. Chormann's or his spouse's beneficiaries, as
the case may be, until such tenth anniversary. The employment agreement also
provides that to the extent not previously provided by FOA, National City shall
provide Mr. Chormann with a split-dollar life insurance arrangement providing
for a death benefit of $ . The employment agreement also provides that
Mr. Chormann shall receive other benefit plan coverage no less favorable than
those provided to National City's chief executive officer. In the event payments
to Mr. Chormann pursuant to the employment agreement result in Mr. Chormann
being subject to the excise tax applicable to excess parachute payments pursuant
to Section 280G of the Internal Revenue Code of 1986, the employment agreement
provides for an additional payment to Mr. Chormann in the amount necessary for
Mr. Chormann to retain the same amount that he would have retained had the
excise tax not applied, unless the total payments due under the employment
agreement do not exceed % of the greatest amount (the "Reduced Amount") that
could be paid such that the amount payable to Mr. Chormann would not give rise
to any excise tax, in which case, Mr. Chormann would be paid the reduced amount.
If, prior to the expiration of the employment agreement's term Mr. Chormann's
employment is terminated by National City without cause, or Mr. Chormann resigns
following a diminution in his position or responsibilities, the failure by
National City to pay agreed upon compensation, the requirement that Mr.
Chormann's office be based at a location more than 35 miles from Kalamazoo,
Michigan, the termination of employment other than as expressly provided by the
employment agreement or the failure to require a successor of National City to
honor the terms of the employment agreement, then Mr. Chormann shall, in
addition to the aforementioned Retirement Benefit (a) receive a lump sum payment
equal to the sum of any amounts accrued, but unpaid under the employment
agreement and the amounts that would have been paid for the remainder of the
employment agreement; (b) be entitled to lifetime medical benefits for himself
and his spouse on the same basis as provided to him immediately prior to his
termination of employment; (c) become vested in the restricted stock awards and
stock options provided for in the employment agreement; (d) be entitled to any
other benefits that he is otherwise entitled to as an employee of National City.
It has been estimated that, if Mr. Chormann's employment had terminated
immediately following the Effective Time other than for cause, death or
disability or by Mr. Chormann for one of the reasons enumerated above, the total
payment to Mr. Chormann pursuant to his employment agreement would have been
.
RETIREMENT PLANS. The National City Non-Contributory Retirement Plan (the
"Retirement Plan") is a qualified, non-contributory defined benefit plan, and
the pension trust is tax exempt under the Code. The Retirement Plan presently
covers all regular employees of National City and those subsidiaries of National
City that have adopted the Retirement Plan when such employees have completed
1,000 hours of service in a 12-month period (normally the first 12 months of
employment), provided they have attained age 21.
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Under the Retirement Plan formula in effect prior to January 1, 1999, upon
reaching the normal retirement age of 65, with five years of vesting service,
each participant in the Retirement Plan generally was entitled to receive
monthly for life a basic benefit (less certain deductions specified in the
Retirement Plan) based upon the participant's highest average annual Earnings
for any 60 consecutive months of active employment during the last 120 months
preceding retirement ("Final Average Earnings"). The annual basic benefit was
equal to the sum of (a) 1 1/4% times the employee's Final Average Earnings not
in excess of "Covered Compensation" plus (b) 1 3/4% times the employee's Final
Average Earnings in excess of "Covered Compensation," and such sum multiplied by
the number of years of benefit service, but not more than 35 years. "Covered
Compensation," which is computed pursuant to government regulations, generally
is based upon the average of the wage base covered by Social Security, upon the
employee's date of birth, and upon an assumed 35-year work experience.
Participant's Earnings was defined for purposes of the Retirement Plan formula
in effect prior to January 1, 1999 to mean generally the salary and wages paid
to such participant, excluding overtime, bonuses, commissions, and other similar
forms of remuneration. The Code places limits on the amount of annual benefits
which may be paid to any participant by the pension trust of the Retirement
Plan.
The Retirement Plan formula in effect prior to January 1, 1999 also
provides for optional early retirement at a reduced benefit at any time after a
participant attains age 55 with at least 10 years of benefit service. The amount
of the reduction of the benefit is determined by a formula dependent upon the
age at which the participant elects to begin to receive benefits. If a
participant has more than 20 years of vesting service, the participant may elect
to retire at 62 and start receiving unreduced pension benefits.
The benefit formula under the Retirement Plan was changed effective January
1, 1999 to a cash balance formula. Under the cash balance formula, participants
receive monthly pay credits to their cash balance accounts. The pay credits are
equal to a percentage (between 3% and 8%) of the participant's earnings,
depending upon the participant's age and years of service. Under the cash
balance formula, a participant's earnings is defined to mean generally all
non-deferred compensation paid to such participant including, overtime and
commissions. Participants also receive month interest credits to their cash
balance accounts. The rate at which interest is credited is based upon the
annual rate of 30-year U.S. Treasury securities for September of the preceding
year.
Generally upon reaching the normal retirement age of 65, with five years of
vesting service, each participant in the Retirement Plan is entitled to receive,
monthly for life, a basic benefit less certain deductions specified in the
Retirement Plan. This basic benefit is determined by converting the
participant's cash balance account to an equivalent monthly annuity amount.
A participant may retire at any time after age 55 with 10 or more years of
vesting service. The early retirement benefit is calculated in the same manner
as the retirement benefit and is based upon the value of the participant's cash
balance account at the date such early retirement benefit commences. Thus, the
value of a participant's cash balance account will be less where a participant
commences benefits prior to the normal retirement age.
Certain participants who were participants in the Retirement Plan prior to
January 1, 1999 or who were participants in another retirement plan which was
merged into the Retirement Plan may be entitled to certain additional or
transitional benefits as specified in the Retirement Plan.
The Code places limits on the amount of annual benefits which may be paid
to any participant by the pension trust of the Retirement Plan.
National City adopted a supplemental retirement plan ("Supplemental Plan")
to supplement the pension payments under the Retirement Plan for those certain
senior officers of National City and its subsidiaries who may be designated from
time to time by the Committee. Payments under the Supplemental Plan are paid
from the general revenues of National City and have no effect on the existing
pension trust fund.
The Supplemental Plan's purpose is to augment an individual's income from
Social Security and pension payments the individual is entitled to receive upon
retirement. The amount of the Supplemental Plan benefit for any covered
individual will be the amount of the individual's retirement benefit determined
under the Retirement Plan as in effect prior to January 1, 1999, but determined
(a) without regard to the limitations on such benefits contained in the Code,
and (b) by adding to the individual's highest average base compensation the
average of the amounts (if any) of the individual's five largest (not
necessarily consecutive) awards under the Short-Term Plan,
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Long-Term Plan and the Annual Performance Plan during the 10 calendar years
completed prior to retirement, less the sum of (i) amounts payable to the
individual under the Retirement Plan plus (ii) amounts payable to the individual
under any corporate program which is deemed to be another offset program to the
Supplemental Plan, as determined by the Committee. The amount of the
Supplemental Plan benefit may, in the discretion of such Committee, be paid to
the individual in a lump sum.
The Supplemental Plan also provides supplemental disability benefits and
supplemental surviving spouse benefits. All benefits under the Supplemental Plan
are computed on the basis of the individual's retirement at age 65 (or age 62 if
he has 20 years of vesting service), and if an individual otherwise entitled to
receive benefits under the Supplemental Plan retires prior to attaining said
age, Supplemental Plan benefits will be reduced in accordance with a formula
dependent upon the individual's age and years of service with National City at
the time such benefits commence, subject, however, to such reduction being
waived by that Committee.
In the event of a change in control of National City, the Supplemental Plan
provides for the vesting of all accrued benefits.
GRANTOR TRUST
A trust has been established to hold assets in the case of a change in
control for the payment of benefits for unfunded deferred compensation for
executives under the Short-Term Plan, the Long-Term Plan, the Supplemental Plan,
the Executive Plan, and the split dollar life insurance agreements.
- --------------------------------------------------------------------------------
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF BENEFIT SERVICE
AVERAGE BASE ---------------------------------------------------------------
COMPENSATION 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------
$ 25,000 $ 3,125 $ 4,687 $ 6,250 $ 7,812 $ 9,375 $ 10,937
50,000 7,194 10,790 14,387 17,984 21,581 25,178
100,000 15,944 23,915 31,887 39,859 47,831 55,803
200,000 33,444 50,165 66,887 83,609 100,331 117,053
400,000 68,444 102,665 136,887 171,109 205,331 239,553
600,000 103,444 155,165 206,887 258,609 310,331 362,053
800,000 138,444 207,665 276,887 346,109 415,331 484,553
1,000,000 173,444 260,165 346,887 433,609 520,331 607,053
1,200,000 208,444 312,665 416,887 521,109 625,331 729,553
- ----------------------------------------------------------------------------------
</TABLE>
Retirement benefits above the annual compensation limit are paid to those
officers who are participating through a nonqualified Supplemental Executive
Retirement Plan. The Social Security Taxable Wage Base (as defined in the
Supplemental Executive Retirement Plan) and the annual compensation limit taken
into account during any Plan Year are the Social Security Taxable Wage Base and
annual compensation limit in effect at the beginning of such Plan Year.
- --------------------------------------------------------------------------------
Assuming retirement at age 65 under the Retirement Plan, the number of
years of benefit service under the Supplemental Plan for the chief executive
officer of National City and three of the four executive officers named in the
Summary Compensation Table would be: David A. Daberko, years; Vincent A.
DiGirolamo, years; Robert G. Siefers, years, and William E. MacDonald III,
years. Pursuant to his employment agreement with National City, the terms and
conditions of which are described hereinafter under the caption "Employment
Contracts") Mr. Chormann will receive an annual retirement benefit for his life
of $ reduced by any benefit payable pursuant to the qualified
retirement plans of National City and FOA.
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STOCKHOLDER PROPOSALS
Holders of National City Common who wish to make a proposal to be included
in National City's Proxy Statement and Proxy for National City's 2000 Annual
Meeting of Stockholders which, unless changed, is scheduled to be held on April
, 2000, in Cleveland, Ohio, must cause such proposal to be received by
National City at its principal office not later than October , 1999. Each
proposal submitted should be accompanied by the name and address of the
stockholder submitting the proposal, the number of shares of National City
Common owned, and the dates those shares were acquired by the stockholder. If
the proponent is not a stockholder of record, proof of beneficial ownership
should also be submitted. The proponent should also state his or her intention
to appear at National City's 2000 Annual Meeting, either in person or by
representative, to present the proposal. The proxy rules of the Commission
govern the content and form of stockholder proposals and the minimum
stockholding requirement. All proposals must be a proper subject for action at
National City's 2000 Annual Meeting.
TRANSACTIONS WITH MANAGEMENT
Certain of National City's directors, executive officers and associates of
directors or executive officers were customers of or had various transactions
with National City and its subsidiaries in the ordinary course of business in
1998. These transactions cover a wide range of banking and trust services, both
personal and corporate. Without exception, all services were provided to the
directors, executive officers and their associates at market rates consistent
with published fee schedules. Similar additional transactions may be expected to
take place in the ordinary course of business in the future. Although various
laws and regulations governing National City and its subsidiaries allow National
City and its subsidiaries to make loans to a limited extent to its executive
officers, all loans and loan commitments and sales of commercial paper involving
executive officers, directors or their affiliates were made on substantially the
same terms, including interest rates and collateral, as those prevailing at that
time for comparable transactions with other persons and, did not involve more
than the normal risk of collectibility or other unfavorable features.
VOTING
A quorum is required for the transaction of business by stockholders at the
Annual Meeting. The election of directors requires the plurality of the votes of
the shares present in person or represented by proxy and entitled to vote on the
election of directors at the Annual Meeting. The approval of the National City
Corporation Management Incentive Plan for Senior Officers and the approval of
the selection of Ernst & Young LLP as independent auditors for 1999, require the
affirmative vote of the holders of a majority of the shares that are present in
person or represented by proxy and entitled to vote at the Annual Meeting. The
approval of the proposal to increase the total number of shares of National City
Corporation's authorized capital stock from 705,000,000 to 1,405,000,000
requires the favorable vote of the holders of shares representing a majority of
the issued and outstanding National City Common. Abstentions are counted for the
purposes of determining the number of shares which are present in person or
represented by proxy at the Annual Meeting. Consequently, an abstention has the
same effect as a vote against a proposal, as each abstention is one less vote in
favor of the proposal. Shares not voted on proxies returned by brokers are not
counted for the purposes of determining the number of shares present in person
or represented by proxy at the Annual Meeting and will have no impact on the
election of directors, the approval of the National City Corporation Management
Incentive Plan for Senior Officers, and the approval of the selection of
independent auditors. Shares not voted on proxies returned by brokers will have
the same effect as a vote against the proposal to increase the total number of
shares of National City's authorized capital stock from 705,000,000 to
1,405,000,000 since such shares are not voted in favor of the proposal and the
proposal requires an affirmative vote by a majority of the shares outstanding.
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GENERAL
The costs of solicitation of proxies will be borne by National City. In
addition to using the mails, proxies may be solicited by personal interview,
telephone, and wire; and it is anticipated that banks and brokerage houses, and
other institutions, nominees, or fiduciaries will be requested to forward their
proxy soliciting material to their principals and to obtain authorizations for
the executions of proxies. Officers and regular employees of National City or
its subsidiaries, acting on its behalf, may solicit proxies personally or by
telephone or wire. National City has retained Corporate Investor Communications,
Inc. ("CIC") to assist in such solicitation. The fee of CIC is estimated not to
exceed $8,500, plus reasonable out-of-pocket costs and expenses. National City
does not expect to pay any other compensation for the solicitation of proxies,
but may, upon request, pay the standard charges and expenses of banks, brokerage
houses, and other institutions, nominees, and fiduciaries for forwarding proxy
materials to and obtaining proxies from their principals. However, no such
payment will be made to any National City subsidiaries acting through their
nominees or acting as a fiduciary.
National City is not aware of any matters which may be presented for action
at the Annual Meeting other than the matters herein set forth. If any other
matters come before the Annual Meeting or any adjournment thereof, it is the
intention of the persons named in the enclosed proxy to vote the shares
represented thereby in accordance with their best judgment pursuant to the
discretionary authority granted in the proxy.
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EXHIBIT A
NATIONAL CITY CORPORATION
MANAGEMENT INCENTIVE PLAN
FOR SENIOR OFFICERS
EFFECTIVE JANUARY 1, 1999
ARTICLE 1. THE PLAN AND ITS PURPOSE
1.1 Adoption of Plan. This National City Corporation Management
Compensation Plan for Senior Officers is hereby adopted, effective January 1,
1999 (herein referred as the "Plan").
1.2 Effectiveness. This Plan is effective on and after January 1, 1999, to
provide for the operation of the Plan on and after such date and to govern the
treatment, on and after such date, of all deferrals made under this Plan, the
National City Corporation Annual Corporate Performance Plan, effective January
1, 1995 and the National City Corporation Short Term Incentive Compensation Plan
for Senior Officers as amended and restated effective January 1, 1998.
1.3 Purpose. The purpose of the Plan is to maximize the Corporation's
profitability and operating success by providing an incentive to officers to
achieve superior results. The Plan is designed to promote teamwork to achieve
overall corporate success and to motivate individual excellence.
1.4 Operation of the Plan. The Plan shall be administered by the
Compensation and Organization Committee of the Board of Directors of the
Corporation. The Plan operates on a calendar year basis and is subject to the
review, interpretation, and alteration by the Committee. The Plan is intended to
serve only as a guide to the Corporation in determining eligibility for and
amounts of incentive compensation to be awarded under the Plan. With respect to
any award made under the Plan, however, the Plan shall serve as a non-qualified
plan providing for and governing the treatment of deferred compensation at the
election of the Participant and/or the Committee, or as required by the Plan, as
provided herein.
ARTICLE 2. DEFINITIONS
2.1 Definitions. Whenever used herein, the following terms shall have the
meanings set forth below, unless otherwise expressly provided. When the defined
meaning is intended, the term is capitalized.
(a) "Base Salary" shall mean the annual salary as of the close of the
Plan Cycle, exclusive of any bonuses, incentive pay, special awards, or
stock options.
(b) "Board" shall mean the Board of Directors of the Corporation.
(c) "Change in Control" see Section 12.3.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(e) "Committee" shall mean the Compensation and Organization Committee
of the Board, or another committee appointed by the Board to serve as the
administering committee of the Plan.
(f) "Corporate Award" shall mean the payment earned by a Participant
based on the Corporation's results as set forth in Section 4.1(b).
(g) "Corporation" shall mean National City Corporation, a Delaware
corporation.
(h) "Covered Executive" shall mean any individual who, is, or is
determined by the Committee to be likely to become, a "covered employee"
within the meaning of Section 162(m) of the Code.
(i) "Disability" shall mean the inability, by reason of a medically
determinable physical or mental impairment, to engage in substantial and
gainful activity for a continuous period of 26 weeks or more as determined
by the Committee.
(j) "Early Retirement" shall mean retirement at or after age 55 with
at least ten years of service with the Employers prior to Normal
Retirement.
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(k) "Effective Date" see Section 12.4.
(l) "Eligible Employee" shall mean an Employee who is employed in a
position meeting the defined eligibility criteria for participation in the
Plan, as set forth in Article 3.
(m) "Employee" shall mean an individual employed by an Employer on a
regular active and full-time salaried basis.
(n) "Employer" shall mean the Corporation or any Subsidiaries.
(o) "Executive Officer" shall mean the chairman, chief executive
officer, president, vice chairman, executive vice president or a similar
officer of the Corporation, anyone designated by the Board as an executive
officer of the Corporation or a Covered Executive.
(p) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(q) "Funds" shall mean the Funds provided for in Section 9.3 hereof.
(r) "Individual Award" shall mean the payment earned by a Participant
based on an evaluation of the individual's achievements. As such, the
amount of any Individual Award under this Plan is determined by decision of
and in the discretion of the Corporation acting through the Committee as
hereinafter provided.
(s) "Implementation Date" see Section 12.5.
(t) "Key Financial Indices" shall mean those indices frequently used
by financial corporations to measure profitability and overall operating
performance. The indices shall be based on specific levels of or change in
one or more of the following: return on common equity; return on assets;
overhead ratio; efficiency ratio; net interest margin; total annual return
on common stock; earnings per share, as determined in accordance with
generally accepted accounting principles. If the Committee determines that
a change in the business, operations, corporate structure or capital
structure of the corporation, or the manner in which it conducts its
business, or other events or circumstances render the Key Financial Indices
unsuitable, the Committee may in its discretion modify such Key Financial
Indices, in whole or in part, as the Committee deems appropriate and
equitable, except in the case of a Covered Executive where such action
would result in the loss of the otherwise available exemption of the award
under Section 162(m) of the Code. In such case, the Committee shall not
make any modification of the Key Financial Indices.
(u) "Normal Retirement" shall mean leaving the employ of all Employers
at or after the age 62 with at least twenty years of continuous service
with the Employers or at or after the age 65 with at least five years of
continuous service with the Employers.
(v) "Parallel Funds" see Section 9.3(b)
(w) "Participant" shall mean an Eligible e Employee who is approved by
the Committee for participation in the Plan. Such approval shall be on a
Plan Cycle basis and shall be reviewed with respect to each new Plan Cycle.
(x) "Participation Portion" see Section 3.3.
(y) "Peer Group" shall mean a group of comparable corporations used to
measure relative performance. The Peer Group shall be established by the
Committee prior to March 31st of each Plan Cycle; thereafter, such Peer
Group for such Plan Cycle shall not be changed, provided however, that one
or more members of a Peer Group shall be dropped therefrom upon the
announcement of a definitive agreement to (i) acquire the Peer Group
member, (ii) the acquisition of sixty-five percent or more of the gross
assets of the Peer Group member or (iii) the merger of the Peer Group
member with another company(ies) where the Peer Group member's then current
board of directors will not constitute a majority of the board of the
surviving corporation.
(z) "Plan" see Section 1.1.
(aa) "Plan Cycle" shall mean a period of a calendar year.
(bb) "Restricted Stock Plans" see Section 10.1.
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(cc) "SIP" shall mean the National City Savings and Investment
Plan.
(dd) "Subsidiary" shall mean an entity in which the Corporation
directly or indirectly owns 50% of more of the voting equity securities.
(ee) "Total Award" shall mean the Individual Award plus the
Corporate Award.
(ff) "Vesting Event" shall mean the earliest to occur of the
following dates:
(1) the date any award is paid,
(2) the last date a benefit can be paid under the Plan,
(3) the Effective Date of a Change in Control,
(4) the date a Participant takes Normal Retirement,
(5) the date a Participant has a Disability, or
(6) the date of a Participant's death.
Each Participant and beneficiary with respect to whom a Vesting Event
has occurred shall be 100% vested in his benefits or Total Award earned or
accrued hereunder as of the date of said Vesting Event, subject to the
forfeiture provisions of Article 11.
(gg) "Voting Stock" shall mean the then outstanding securities of a
company entitled to vote generally in the election of directors.
2.2 Gender and Number. Except when otherwise indicated by the context, any
masculine terminology used herein also shall include the feminine, and the
definition of any term in the singular shall include the plural.
ARTICLE 3. ELIGIBILITY AND PARTICIPATION
3.1 Eligibility. Eligibility for participation in the Plan will be limited
to those officers of the Corporation and Subsidiaries who, by the nature and
scope of their position, play a key role in the management, growth and success
of the Corporation, as determined by the Committee.
3.2 Participation. Participation in the Plan for each Eligible Employee who
is an Executive Officer shall be determined by the Committee with respect to
each Plan Cycle prior to the commencement of the Plan Cycle, except as otherwise
provided herein. The Committee may base its approval upon the recommendation of
the chief executive officer of the Corporation. The chief executive officer
shall determine the participation of each Eligible Employee who is not An
Executive Officer. Each Eligible Employee approved for participation shall be
notified of the selection as soon after approval as is practicable and shall
become a Participant upon acceptance by him of such selection.
Participation for part of a Plan Cycle. In the event an Employee is an
Eligible Employee for only a portion of a Plan Cycle ("Participation Portion")
such Eligible Employee may, in the Committee's discretion, be a Participant for
such portion of the Plan Cycle but his Total Award will be based upon his Base
Salary at the end of such Participation Portion and such Total Award will
normally be prorated to reflect the number of months in the Participation
Portion of the Plan Cycle compared to the number of months in the total Plan
Cycle. A Covered Executive may not be made a Participant after the beginning of
a Plan Cycle.
3.4 Changes During a Plan Cycle. In the event a Participant is promoted or
demoted, the Committee may, in its discretion, (i) continue such Participant's
maximum Total Award as it was prior to such promotion or demotion, (ii) provide
the Participant from and after the promotion or demotion with a higher or lower
maximum Total Award, (iii) provide for a combination of (i) and (ii), or (iv)
after a demotion remove the Participant from further participation in the Plan.
(a) In the event of a Plan Cycle for which the Participant's
participation is thus split between two maximum Total Awards, the Total
Award for such Plan Cycle will normally be prorated to reflect the portions
of the Plan Cycle spent under each maximum Total Award and each part of the
Total Award will be based upon the Participant's Base Salary at the end of
the appropriate portions of the Plan Cycle.
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(b) The Committee may not increase a Covered Executive's maximum Total
Award during a Plan Cycle.
3.5 Portions of Plan Cycles-Setting of Individual
Objectives. Notwithstanding Sections 3.3 and 3.4, no portion of a Plan Cycle
with respect to a Participant shall be considered to be a separate portion of
participation for a Participant unless, prior thereto, individual achievement
objectives are set for such Participant for such portion of a Plan Cycle
pursuant to Article 4, or are waived by the Committee, in its discretion.
3.6 No Right to Participate. No Participant or Employee shall have a right
at any time to be selected for current or future participation in the Plan.
ARTICLE 4. PERFORMANCE MEASUREMENT
4.1 Performance Criteria. Performance, for purposes of this Plan, will be
measured in terms of the Participant's individual contribution and in terms of
the Corporation's performance.
(a) Individual Awards will be determined by comparing actual
individual and group achievements during the Plan Cycle to established
objectives for the Plan Cycle. Not later than 90 days after the
commencement of each Plan Cycle each Participant shall establish objectives
for the Plan Cycle. Such objectives shall be broad in nature, may be
quantitative or qualitative, will typically be five in number and may
include the achievement of group or divisional goals as well as individual
goals. The objectives for Participants other than the chief executive
officer of the Corporation shall be subject to the review, revision and
approval of their superiors and the objectives for the chief executive
officer shall be subject to the review, revision and approval of the
Committee.
(1) Individual Award Potential. The Committee shall establish in
writing the maximum Individual Awards for each Participant not later
than 90 days after the commencement of each Plan Cycle.
(2) Individual Award Calculation and Approval. An evaluation of the
individual performance for each Participant for each Plan Cycle will be
determined as of the December 31st on which the Plan Cycle ends by
applying the foregoing provisions of this Article 4 to the Participant's
Individual Contribution for such Plan Cycle. Based on the evaluation,
the chief executive officer of the Corporation shall recommend to the
Committee for approval an appropriate Total Award for each of the
Participants who is an Executive Officer. The chief executive officer
shall also determine the Total Award of all Participants other than
Executive Officers which shall be deemed approved by the Committee upon
(1) the completion by the chief executive officer of a list of such
Individual Awards, and (2) the Committee's approval of the aggregate
dollar amount of such Individual Awards. The chief executive officer
shall recommend to the Committee for approval the Individual Awards and
Total Awards for each of the Executive Officers.
(3) All such Individual Awards may, for convenience purposes, be
expressed as a percentage of Base Salary or some other criteria. Upon
the approval of the Committee the amounts of Individual Awards hereunder
for a Plan Cycle shall be final.
(4) No Individual Awards shall be paid to any Participant for a
Plan Cycle during which the Participant is a Covered Executive.
(b) Corporate Awards will be determined by comparing corporate
performance with respect to Key Financial Indices. The performance may be
relative to pre-established goals, that of the Peer Group or any other
objective standard established by the Committee. Not later than 90 days
after the commencement of each Plan Cycle, the Committee shall establish in
writing the Peer Group, if any, the Key Financial Indices, the weighting of
the Key Financial Indices chosen, and the levels of comparative performance
(the performance of goals may be stated as alternative goals) at which the
maximum Corporate Award will be provided under the Plan.
(1) Corporate Award Potential. The Committee shall establish in
writing the maximum Corporate Awards for each Participant not later than
90 days after the commencement of each Plan Cycle.
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(2) Corporate Award Calculation and Approval. The amount of the
Corporate Award for each Participant for each Plan Cycle will be
calculated as of the December 31st on which the Plan Cycle ends by
applying the provisions of this Section 4.1 to the Corporation's
performance for such Plan Cycle. Corporate Awards may, for convenience
purposes, be expressed as a percentage Base Salary or some other
criteria. Upon the close of the Plan Cycle the amounts of Corporate
Awards hereunder for such Plan Cycle shall be determined. The Committee
has the discretion to reduce the Corporate Award payable to any
Participant notwithstanding attainment of any performance goal.
Notwithstanding the occurrence of a Vesting Event, the Committee may
reduce or eliminate a Corporate Award to any or all Participants at any
time prior to the payment of the Total Award or an Implementation Date
of a Change in Control.
4.2 Limitation. Notwithstanding any provision of this Plan to the contrary,
no Total Award to any Covered Executive for any given Plan Cycle shall exceed
1.0% of the Corporation's earnings before taxes and any one time earnings,
expenses or charges.
ARTICLE 5. PAYMENT OF TOTAL AWARDS
5.1 Form and Timing of Payment of Total Awards. Within 90 days of the end
of the Plan Cycle, the Participant shall be entitled to receive a cash
payment(s) equal to the entire amount of the Participant's Total Award. Except
as otherwise provided for in Section 5.2, to receive a Total Award a Participant
must be an Employee on the date on which the Plan Cycle ends; provided, however,
the Committee or the Chief Executive Officer may reduce or terminate a
Participant's Total Award prior to any Vesting Event if such Participant fails
to continue to be an Employee.
5.2 Termination of Employment Due to Retirement, Disability or Death. In
the event a Participant's employment is terminated during a Plan Cycle by reason
of Normal Retirement, Disability or Death, the Participant shall be eligible to
receive a prorated Total Award based on individual contribution during the
Participant's participation in the Plan Cycle and the Corporation's performance
for the year, provided however, that the Participant must have been a
Participant in the Plan for at least three months of the Plan Cycle to be
eligible to receive any Total Award hereunder. Such Total Awards will be paid
within ninety (90) days following the end of the Plan Cycle. In the event of
death, the Total Award will be paid to the Participant's estate.
5.3 Termination of Employment Due to Early Retirement. The Committee may
elect, in its discretion, to pay a prorated Total Award to a Participant who
terminates employment by means of an Early Retirement prior to a Vesting Event;
in the absence of such favorable discretionary action by the Committee, no such
pro-rated Total Award shall be paid.
5.4 Other Terminations of Employment. In the event a Participant's
employment is terminated for any reason other than Normal Retirement during a
Plan Cycle prior to a Vesting Event, the Participant's participation in such
Plan Cycle shall end and the Participant shall not be entitled to any Total
Award for such Plan Cycle.
5.5 Request to Defer Payment; Deferred Payments. The Committee may
determine that one or more Participants should be eligible to elect to request
to have a portion or all of his Total Award for a Plan Cycle deferred and paid
out at a future date. Such request by an eligible Participant shall be
considered by the Committee. The Committee may determine that some, all, or none
of the Total Award, or parts thereof, shall be deferred, in its discretion.
Deferred amounts are subject to the provisions of Article 9.
5.6 Request to Receive Restricted Stock; Restricted Stock Payments. The
Committee may determine that one or more Participants should be eligible to
elect to request to have a portion or all of his Total Award for a Plan Cycle
paid in restricted stock. Such request by an eligible Participant shall be
considered by the Committee. The Committee may determine that some, all, or none
of the Total Awards, or parts thereof, shall be paid in restricted stock, in its
discretion. Restricted stock payments are subject to the provisions of Article
10.
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ARTICLE 6. RIGHTS OF PARTICIPANTS
6.1 Employment. Nothing in this Plan shall interfere with or limit in any
way the right of the Corporation to terminate a Participant's employment at any
time, nor confer upon any Participant any right to continue in the employ of the
Employer.
6.2 Restrictions on Assignments. The interest of a Participant or his
beneficiary under this Plan may not be sold, transferred, assigned, or
encumbered in any manner, either voluntarily or involuntarily, and any attempt
to so anticipate, alienate, sell, transfer, assign, pledge, encumber, or charge
the same shall be null and void; neither shall the benefits hereunder be liable
for or subject to the debts, contracts, liabilities, engagements, or torts of
any person to whom such benefits or funds are payable, nor shall they be subject
to garnishment, attachment, or other legal or equitable process, nor shall they
be an asset in bankruptcy.
ARTICLE 7. ADMINISTRATION
7.1 Administration. The Plan shall be administered by the Committee in
accordance with any administrative guidelines and any rules that may be
established from time to time by the Committee. The procedures, standards and
provisions of this Plan for determining eligibility for and amounts of Total
Awards are, except for Covered Employees, intended only as a guide and in
themselves confer no rights, duties or privileges upon Participants nor place
any obligation upon the Committee, the Board or the Corporation. Accordingly,
the Committee may, in making its determinations hereunder, deviate from such
procedures and standards in whatever manner that it, in its judgment, deems
appropriate so long as no Total Award shall exceed the Section 4.2 limitation.
(a) The Committee shall have full power and authority to interpret,
construe and administer the Plan and its interpretations and construction
hereof, and actions hereunder, including the timing, form, amount or
recipient of any payment to be made hereunder, and its decisions shall be
binding and conclusive on all persons for all purposes.
(b) The Committee may name assistants who may be, but need not be,
members of the Committee. Such assistants shall serve at the pleasure of
the Committee, and shall perform such functions as may be assigned by the
Committee.
(c) No member of the Committee or any assistant shall be liable to any
person for any action taken or omitted in connection with the
interpretation and administration of this Plan unless attributable to his
own willful misconduct or lack of good faith.
ARTICLE 8. REQUIREMENTS OF LAW
8.1 Laws Governing. This Plan shall be construed in accordance with and
governed by the laws of the State of Ohio.
8.2 Withholding Taxes. The Corporation shall have the right to deduct from
all payments under this Plan any federal or state taxes required by the law to
be withheld with respect to such payments.
8.3 Plan Binding on Corporation, Employees and Successors. This Plan shall
be binding upon and inure to the benefit of the Corporation, its successors and
assigns and each Participant and his beneficiaries, heirs, executors,
administrators and legal representatives.
ARTICLE 9. DEFERRAL OF TOTAL AWARDS
9.1 Election to Request Deferral of Total Award; Deferral Percentage. Prior
to each Plan Cycle, the Committee shall determine which Participants, if any,
shall be eligible to make deferral elections under this Plan. Each Participant
who is therefore eligible to elect to request deferral of a portion or all of
his Total Award for such Plan Cycle, shall be given the opportunity prior to
such Plan Cycle, to make such request. Such election and the percentage of Total
Award requested to be deferred shall be irrevocable and fixed with respect to
such Participant and such Plan Cycle from and after the December 31st of the
year prior to the Plan Cycle.
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(a) The request and determination of the portion of the Total Award to
be deferred shall be made in terms of 10% increments of the Total Award.
(b) Participants becoming Participants during a Plan Cycle shall, if
determined to be eligible to do so, make any such deferral request to defer
prior to the commencement of their participation and the same shall become
irrevocable and fixed as of the day prior to the commencement of their
participation.
(c) Promotion or demotion during a Plan Cycle shall not affect the
fixed and irrevocable nature of a deferral request made prior to such Plan
Cycle for such Plan Cycle.
9.2 Deferral of Total Awards; Committee's Decision. Notwithstanding any
request to defer none, a portion, or all of a Total Award hereunder submitted by
a Participant pursuant to Section 9.1 above, and not withstanding the
Committee's prior determination as to the eligibility of any Participant to
defer a portion or all of Total Award hereunder, the Committee shall make the
decision, in the case of each Participant, whether or not to defer any portion
or all of any Participant's Total Award with respect to any Plan Cycle. Such
decision shall be made in the discretion of the Committee, which extends to the
percentage of any Total Award to be deferred. The Committee's decision shall be
final and binding on all parties. Any amount to be deferred shall not be paid to
the Participant but shall be deferred as provided in this Article 9.
9.3 Accounts. An account shall be established and maintained by the
Corporation in the name of each Participant who has deferred compensation
hereunder. Such accounts shall remain a part of the general liabilities of the
Corporation and nothing in this Plan shall be deemed to create a trust or fund
of any kind or any fiduciary relationship. Each Account shall comprise a number
of sub-accounts equal to the number of investment options available, from time
to time, under the SIP plus a Savings Account Fund sub-account (such
sub-accounts jointly are herein called the "Funds").
(a) Amounts deferred to the Savings Account Fund shall be credited to
the Participant's Account in such Fund as of the date that other Total
Awards for such Plan Cycle are paid or would be paid, and interest shall be
credited on amounts in the Participant's Account in such Fund at the end of
each calendar quarter in amount equal to interest on the average credit
balance in such Account during such calendar quarter, at the highest
published rate being paid by National City Bank on savings or time deposits
of less than $100,000 on the last day of such quarter, regardless of
maturity.
(b) The Funds other than the Savings Account Fund (such Funds being
herein called "Parallel Funds") are designed to reflect investment funds
maintained in the SIP. Accordingly, each such Parallel Fund and each
Participant's Account therein shall be adjusted hereunder as of the end of
each month to reflect the income, gain or loss of the corresponding SIP
investment fund for such month, as calculated and published on a monthly
basis by the Trustee of the SIP. In the event the SIP no longer offers a
fund corresponding to one of the Parallel Funds, the amounts which would
have been deemed invested in such Parallel Fund except for this provision
shall be deemed to be invested in the Savings Account Fund.
9.4 Crediting to Accounts. As of the dates of payment of cash Total Awards
made under this Plan the amount of the Total Award to be deferred for each
Participant under this Section 9 shall be credited to such Participant's
Account, and shall correspondingly be credited to the Fund or Funds selected by
the Participant.
9.5 Selection of Funds. Each Participant (and each Beneficiary of a
deceased Participant) may select the Investment Fund or Funds he or she wishes
to be used hereunder for his account. The selection of Funds shall be made in
portions of the amount deferred equal to 5% of the total of such amount. In the
event no election is made by a Participant (or Beneficiary) his account shall be
deemed invested in and credited to the Savings Account Fund. Selection of Funds
by Participants shall be made in advance of the deferral or payment of the Total
Award; provided however, that in the event a Participant who has not requested a
deferral of any part of his Total Award nevertheless has a portion thereof
deferred by decision of the Committee, or otherwise, then in such event, such
Participant shall immediately be given an opportunity to determine appropriate
investments.
9.6 Changes of Investment Fund Selection. Each selection of a Fund
hereunder may be changed at the end of any month at the discretion of the
Participant (or beneficiary if the Participant is deceased).
9.7 Vesting of Deferred Amounts. Amounts of Total Awards made and deferred
under the Plan, and earnings and gains thereon, are always 100% vested.
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9.8 Manner of Distribution. Except as otherwise provided herein,
distributions hereunder shall take place over a period of ten years commencing
on the retirement, death or other termination of employment of the Participant.
The first distribution shall take place on the February 1 of the calendar year
following the calendar year in which such retirement, death or other termination
occurs. Succeeding payments shall be made on succeeding February 1sts.
(a) The amount to be distributed shall be determined by multiplying
(i) the dollar value of the Participant's entire interest hereunder on the
date of such installment, by (ii) a fraction, the numerator of which is
one, and the denominator of which is the number of distributions remaining
unpaid at such time, or by such other method as may be adopted by the
Committee.
(b) The balances of each Account and each Fund shall be appropriately
reduced to reflect the distribution payments made. Amounts held pending
distribution pursuant to this Section 9.8 shall continue to be credited
with appropriate income, gains and losses as herein otherwise provided and
shall be subject to investment changes as herein provided. Balances in more
than one Fund shall be reduced pro-rata to reflect distributions on a
pro-rata basis from each Fund.
9.9 Accelerated Payments; Revised Distributions. Notwithstanding the
foregoing or any Participant's request to receive a lump sum distribution, the
Committee, in its sole discretion, may determine that a Participant's interest
hereunder or any portion thereof shall be paid out in a lump sum. A Participant
may elect, not less than one year prior to the date of such Participant's
termination by reason of Early Retirement or Normal Retirement, to request that
amounts deferred be paid out in lump sum. Such election shall be irrevocable and
fixed with respect to such Participant from and after twelve months prior to the
retirement date of the Participant. The Committee's decision with respect to a
lump sum distribution shall be final and binding on all parties.
(a) In the event the Committee determines to make a lump sum
distribution, such lump sum distribution shall be paid on the next
succeeding February 1st based on the Participant's Account balances as of
the December 31st immediately preceding such lump sum distribution payment,
or at such other times as may be determined by the Committee.
(b) In the case of the first distribution after the death of a
Participant, the Committee may, in its discretion, provide for payment of a
portion or all of the distribution prior to the February 1 after such
death.
(c) Notwithstanding any other provision hereof, the Committee, in its
discretion, may provide that distributions may be made in a lesser number
of installments, but not less than 5.
9.10 Beneficiary Designations. Each Participant, and each Beneficiary of a
deceased Participant or Beneficiary hereunder, may designate, on a Beneficiary
Designation form supplied by the Committee, any person or persons to whom
payments are to be made if the Participant (or Beneficiary) dies before
receiving payment of all amounts due hereunder. A beneficiary designation will
be effective only after the signed Beneficiary Designation form is filed with an
officer of the Corporation designated by the Committee for such purpose while
the Participant (or Beneficiary) is alive, and will cancel all beneficiary
designations signed and filed earlier. If the Participant (or Beneficiary) fails
to designate a beneficiary as provided above, or if all designated beneficiaries
die before the Participant or before complete payment of all amounts due
hereunder, remaining unpaid distribution amounts shall be paid to the then
surviving spouse of the Participant, if any, or, if there be none, in one lump
sum to the estate of the last to die of the Participant or his designated
beneficiaries, if any. In the event a Participant (or a Beneficiary of a
deceased Participant) designates as a Beneficiary any so called "marital
deduction trust" or any so called "qualified income trust", the Participant (or
Beneficiary) may additionally indicate whether the dollar equivalent of the
current income, during the distribution of an interest hereunder, should be
distributed yearly to such Beneficiary. In the event of such an indication, such
income shall be distributed at least annually.
9.11 Participants Rights; Beneficiaries Rights. Except as otherwise
specifically provided, neither a Participant nor any of his Beneficiaries has
rights under this Plan. The payment of deferred compensation shall be a general,
unsecured obligation of the Corporation to be paid by the Corporation from its
own funds, and such payments shall not impose any obligation upon any trust fund
for any tax qualified plan, be paid from any such trust fund, or have any effect
whatsoever upon the SIP or the payment of benefits from the Trust Fund under the
SIP. No Participant or beneficiary shall have any title to or beneficial
ownership in any assets which the Corporation may earmark to pay benefits
hereunder.
A-8
<PAGE> 47
9.12 Nature of Deferred Compensation. The election of deferred compensation
under this Plan and any setting aside by the Corporation of amounts with which
to discharge its deferred obligations hereunder in a trust fund, an insurance
policy, or otherwise, shall not be deemed to create a right in any person;
equitable title to any funds so set aside in a trust, an insurance policy, or
otherwise shall remain in the Corporation, and any recipient of benefits
hereunder shall have no security or other interest in such trust, policies or
funds. Any and all funds so set aside in a trust, an insurance policy or
otherwise shall remain subject to the claims of the general creditors of the
Corporation, present and future. This provision shall not require the
Corporation to set aside any funds, but the Corporation may set aside such funds
if it chooses to do so. Any amount so set aside for this Plan shall be accounted
for separately and apart from any other plan of the Corporation. This Plan is
intended to constitute an unfunded plan of deferred compensation described in
Section 201(2) of the Employee Retirement Income Security Act of 1974.
9.13 Distributions in Cash. Notwithstanding any other provision of this
Plan, distributions under this Article 9 shall be made only in cash and shall be
subject to withholding of applicable taxes.
9.14 Nature of Deferred Compensation Plan. The provisions of the Plan
relating to deferred compensation are fixed and final unless and until amended,
revised or terminated as herein provided.
ARTICLE 10. RESTRICTED STOCK
10.1 Restricted Stock. The restricted stock referred to in this Plan shall
be restricted stock granted pursuant to the National City Corporation Amended
and Second Restated 1991 Restricted Stock Plan or the National City Corporation
1997 Restricted Stock Plan as such plans are amended from time to time
("Restricted Stock Plans"). Any awards of restricted stock will be made at the
discretion of the Compensation Committee and shall be subject to the terms,
conditions and restrictions contained in the Restricted Stock Plans and the
award agreement controlling each restricted stock award grant.
10.2 Election to Request Restricted Stock. Prior to the end of each Plan
Cycle, the Committee shall determine which Participants, if any, shall be
eligible to request payment of all or a portion of their Total Award in the form
of restricted stock. Each Participant who is therefore eligible to elect to
request payment of all or a portion of his Total Award for such Plan Cycle in
the form of restricted stock, shall be given the opportunity prior to the end of
such Plan Cycle, to make such request. Covered Executives, however, must elect
restricted stock prior to the 90th day after the commencement of each Plan
Cycle. Such election and the percentage of Total Award requested to be paid in
the form of restricted stock shall be irrevocable and fixed with respect to such
Participant and such Plan Cycle as of the end of such Plan Cycle. The request
and determination of the portion of the Total Award to be paid in the form of
restricted stock shall be made in terms of 10% increments of the Total Award.
10.3 Restricted Stock Awards; Committee's Decision. Notwithstanding any
request by a Participant pursuant to Section 10.1 above to receive none, a
portion or all of a Total Award in the form of restricted stock, and not
withstanding the Committee's prior determination as to the eligibility of any
Participant to elect to receive a part or all of their Total Award in the form
of restrict stock, the Committee shall make the decision, in the case of each
Participant, whether or not to pay any portion or all of any Participant's Total
Award with respect to any Plan Cycle. Such decision shall be made in the
discretion of the Committee, which extends to the percentage of any Total Award
to be paid in the form of restricted stock. The Committee's decision shall be
final and binding on all parties.
10.4 Determination of the Number of Shares of Restricted Stock. The number
of shares of restricted stock to be granted to a Participant shall be determined
as follows:
(a) The Committee shall determine the Participant's Total Award for
the applicable Plan Cycle in accordance with Article 4 of this Plan.
(b) The appropriate percentage of the Total Award to be paid in
restricted stock as determined in Section 10.3 shall be multiplied by the
Participant's Total Award for such Plan Cycle.
(c) The product from Section 10.4B shall be multiplied by 115%.
A-9
<PAGE> 48
(d) The product from Section 10.4C shall be divided by the closing
price, per share, of the shares of common stock of the Corporation on the
New York Stock Exchange on the last trading day of the month of January
following such Plan Cycle.
(e) The quotient determined in Section 10.4D above shall be rounded to
the nearest whole share. No fractional shares of restricted stock shall be
awarded.
10.5 Restrictions. It is currently anticipated that the restricted period,
with respect to the Restricted Stock Plan restrictions on all restricted stock
awarded hereunder shall fully expire, on the earliest of (i) the Participant's
death, (ii) the Participant's Disability, (iii) Effective Date of a Change in
Control or (iv) one year after the date of the restricted stock award.
10.6 Alternatives to the Restricted Stock Plans. If the Restricted Stock
Plans are terminated at any time and a new plan is adopted which provides
similar benefits or is intended to replace the Restricted Stock Plans, then such
new plan shall be utilized for making the restricted stock grant. Should no
restricted stock plan be available the amount of the restricted stock payment
will, at the sole discretion of the Corporation, be made in an alternative form
which would not restrict receipt of shares of the Corporation's common stock
beyond the period of time provided in the anticipated restricted stock grant, or
in cash.
ARTICLE 11. FORFEITURES
Notwithstanding any provision in this Plan to the contrary excepting only
the provisions of Article 12, in the event the Committee finds:
(a) that an Employee or former Employee who has an interest under this
Plan has been discharged by his Employer in the reasonable belief (and such
reasonable belief is the reason or one of the reasons for such discharge)
that the Employee or former Employee did engage in fraud against the
Employer or anyone else, or
(b) that an Employee or former Employee who has an interest under this
Plan has been convicted of a crime as a result of which it becomes illegal
for his Employer to employ him, then any amounts held under this Plan for
the benefit of such Employee or former Employee or his beneficiaries shall
be forfeited and no longer payable to such Employee or former Employee or
to any person claiming by or through such Employee or former Employee.
ARTICLE 12 CHANGE IN CONTROL
12.1 Treatment of Total Awards. In the event of a Change in Control, the
Corporation shall pay to each Participant who is participating in a Plan Cycle
on the Implementation Date of such Change in Control, a lump sum cash payment
equal to the amount hereinafter determined. Such payment shall be paid in cash
to the Participant within five business days after the Implementation Date of
the Change in Control and shall be payment in full to each Participant for the
Plan Cycle, and such Plan Cycle shall be deemed terminated by operation of this
Article 12. No further Plan Cycles shall commence thereafter under this Plan.
(a) Such cash payment shall be made without regard to any request to
defer made with respect to any such Plan Cycle (which shall be inoperative)
and without regard to any deferral action by the Committee.
(b) Amounts deferred under this Plan prior to the Implementation Date
(by request, as required, or as decided by the Committee) shall continue to
be payable from time to time under this Plan as deferred payments
hereunder.
12.2 Amount of Payment. The amount of the payment to be made as a
consequence of a Change in Control with respect to the Plan Cycle ending on the
Effective Date of the Change in Control, shall be equal to the maximum Total
Award which could be paid hereunder for the full Plan Cycle to each Participant
only pro-rated, however, to reflect late commencement of participation in a Plan
Cycle and/or promotions or maximum Total Award during a Plan Cycle, consistent
with Sections 3.4 and 3.5 of the Plan.
A-10
<PAGE> 49
12.3 Definition of Change in Control. "Change in Control" shall mean the
occurrence of any of the following events:
(a) The Corporation is merged, consolidated or reorganized into or
with another corporation or other legal person, and as a result of such
merger, consolidation or reorganization less than sixty-five percent of the
combined voting power of the then-outstanding securities of such
corporation or person immediately after such transaction are held in the
aggregate by the holders of Voting Stock of the Corporation immediately
prior to such transaction;
(b) The Corporation sells or otherwise transfers all or substantially
all of its assets to another corporation or other legal person, and as a
result of such sale or transfer less than sixty-five percent of the
combined voting power of the then-outstanding Voting Stock of such
corporation or person immediately after such sale or transfer is held in
the aggregate by the holders of Voting Stock of the Corporation immediately
prior to such sale or transfer;
(c) The Corporation files a report or proxy statement with the
Securities and Exchange Commission pursuant to the Exchange Act disclosing
in response to Form 8-K or Schedule 14A (or any successor schedule, form or
report or item therein) that a change in control of the Corporation has
occurred or will occur in the future pursuant to any then-existing contract
or transaction; or
(d) If, during any period of two consecutive years, individuals who at
the beginning of any such period constitute the Directors of the
Corporation cease for any reason to constitute at least a majority thereof;
provided, however, that for purposes of this clause (d) each Director who
is first elected, or first nominated for election by the Corporation's
stockholders, by a vote of at least two-thirds of the Directors of the
Corporation (or a committee thereof) then still in office who were
Directors of the Corporation at the beginning of any such period will be
deemed to have been a Director of the Corporation at the beginning of such
period.
(e) Notwithstanding the foregoing provisions of Sections 12.3(a),
12.3(b) or 12.3(c), in the case where the individuals who constitute the
Directors of the Corporation at the time a specific transaction described
in Sections 12.3(a), 12.3(b) or 12.3(c) is first presented or disclosed to
the Board will, by the terms of the definitive agreement for that
transaction, constitute at least a majority of the members of the board of
directors of the resulting corporation or person immediately following such
transaction, then, prior to the occurrence of any event that would
otherwise constitute a Change in Control under any of the foregoing
provisions of this Section 12.3, the Board may determine by majority vote
of the Board that the specific transaction does not constitute a Change in
Control under Sections 12.3(a), 12.3(b) or 12.3(c)
12.4 Effective Date of Change in Control. Notwithstanding the foregoing, in
the event a Change in Control ultimately results from discussions or
negotiations involving the Corporation or any of its officers or directors, the
"Effective Date" of such Change in Control shall be the date uninterrupted
discussions or negotiations commenced; otherwise, such Effective Date of a
Change in Control shall be the Implementation Date of such Change in Control.
12.5 Implementation Date of Change in Control. The "Implementation Date"
shall be the earliest to occur of the events specified in Section 12.3. As used
herein, the Implementation Date of a Change in Control shall be the last date of
the then current Plan Cycle.
12.6 Effect of Change in Control. In addition to other vesting under the
Plan, the opportunity of a Participant to participate until the current Plan
Cycle ends or is terminated is vested in such Participant in the event of a
Change in Control, as of the Effective Date of such Change in Control.
ARTICLE 13. MISCELLANEOUS
In the event of the liquidation of the Corporation the Committee may make
any provisions for holding, handling and distributing the amounts standing to
the credit of the Participants or beneficiaries hereunder which, in the
discretion of the Committee which in the discretion of the Committee, are
appropriate and equitable under all circumstances and which are consistent with
the spirit and purposes of these provisions.
A-11
<PAGE> 50
ARTICLE 14. AMENDMENT AND DISCONTINUANCE
The Corporation expects to continue this Plan indefinitely, but reserves
the right, by action of the Committee, to amend it from time to time, or to
discontinue it if such a change is deemed necessary or desirable except that
stockholder approval shall be required for any amendment or modification of this
Plan that, in the opinion of the Corporation's counsel, would be required by
Section 162(m) of the Internal Revenue Code of 1986, as amended, or any
regulations promulgated thereunder. However, if the Committee should amend or
discontinue this Plan, the Corporation shall remain obligated under the Plan
with respect to (1) Total Awards made final (and thus payable) by decision by
the Committee prior to the date of such amendment or discontinuance (2) Total
Awards and rights of any Participant or beneficiary with respect to whom a
Vesting Event has occurred, and (3) with respect to amounts deferred prior to
date of such amendment or discontinuance.
Executed this day of December, 1998 at Cleveland, Ohio.
NATIONAL CITY CORPORATION
By:
--------------------------------------
A-12
<PAGE> 51
EXHIBIT B
PROPOSED AMENDMENT TO NATIONAL CITY CORPORATION'S
RESTATED CERTIFICATE OF INCORPORATION
INCREASING THE NUMBER OF AUTHORIZED
SHARES OF COMMON STOCK
PROPOSAL 3
FOURTH: The Corporation is authorized to issue a total of one billion four
hundred five million (1,405,000,000) shares of all classes of stock. Of such
total number of authorized shares of stock, one billion four hundred million
(1,400,000,000) shares are Common Stock, par value $4.00 per share, and five
million (5,000,000) shares are Preferred Stock without par value.
B-1
<PAGE> 52
DETACH CARD
- --------------------------------------------------------------------------------
NATIONAL CITY CORPORATION LOGO
PROXY SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS FOR APRIL 12, 1999
ANNUAL MEETING
P The undersigned stockholder of National City Corporation hereby
R appoints Thomas A. Richlovsky and David L. Zoeller and each of
O them, with power of substitution, proxies for the undersigned
X to vote all the shares of Common Stock of National City which
Y the undersigned is entitled to vote at the Annual Meeting of
Stockholders of National City to be held on April 12, 1999 and
any adjournment thereof as follows and in their discretion to
vote and act upon such other business as may properly come
before the meeting. The board of directors recommends a vote
FOR the following:
1. THE ELECTION OF DIRECTORS
FOR all nominees listed below [ ] WITHHOLD AUTHORITY [ ]
(except as otherwise marked below) to vote for all
nominees listed below
S. H. Austin, J. E. Barfield, E. B. Brandon, J. G.
Breen, J. S. Broadhurst, John W. Brown, D. E. Collins,
D. A. Daberko, D. E. Evans, C. L. Greenwalt, B. P.
Healy, D. A. Johnson, P. A. Ormond, R. A. Paul, W. F.
Roemer, M. A. Schuler, S. A. Stitle, J. F. Tatar and M.
Weiss.
(Instructions: to withhold authority to vote for any
individual nominee, strike a line through that nominee's
name.)
2. APPROVE THE NATIONAL CITY CORPORATION MANAGEMENT INCENTIVE
PLAN FOR SENIOR OFFICERS
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. APPROVE THE INCREASE IN THE NUMBER OF SHARES OF AUTHORIZED
CAPITAL STOCK
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. APPROVE THE SELECTION OF ERNST & YOUNG LLP AS INDEPENDENT
AUDITORS
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Continued and to be signed, on the reverse side)
<PAGE> 53
DETACH CARD
- --------------------------------------------------------------------------------
Proxy No. (Continued from reverse side) Shares
UNLESS OTHERWISE INDICATED, THE PROXIES ARE INSTRUCTED TO VOTE
FOR THE ELECTION OF THE NOMINEES LISTED ON THE OPPOSITE SIDE OF
THIS CARD AS DIRECTORS, FOR THE APPROVAL OF THE NATIONAL CITY
CORPORATION MANAGEMENT INCENTIVE PLAN FOR SENIOR OFFICERS, FOR
THE APPROVAL OF THE INCREASE IN THE NUMBER OF SHARES OF
AUTHORIZED CAPITAL STOCK AND FOR THE SELECTION OF ERNST & YOUNG
LLP.
DATE: , 1999
---------------
--------------------------
--------------------------
(Sign here)
INSTRUCTIONS: Please sign
exactly as shown hereon.
When signing as a
fiduciary or on behalf of
a corporation, bank, trust
company, or other similar
entity, your title or
capacity should be shown.
PLEASE SIGN, DATE, AND RETURN YOUR PROXY PROMPTLY IN THE
ENCLOSED ENVELOPE TO STOCK TRANSFER DEPT., (NC),
NATIONAL CITY BANK, P.O. BOX 92301, CLEVELAND, OHIO 44193-0900.
<PAGE> 54
DETACH CARD
- --------------------------------------------------------------------------------
CONFIDENTIAL VOTING INSTRUCTIONS -- SIDE A
The undersigned, a Participant in the National City Savings and Investment
Plan No. 2, hereby instructs National City Bank, Trustee under the Plan, to vote
the shares subject to this Instruction at the 1999 Annual Meeting of
Stockholders of National City Corporation, and at any adjournment thereof, in
accordance with the instructions on this card, as follows:
1. THE ELECTION OF DIRECTORS
<TABLE>
<S> <C>
[ ] FOR all nominees listed below (except as otherwise [ ] WITHHOLD AUTHORITY
marked below) to vote for all nominees listed below
S. H. Austin, J. E. Barfield, E. B. Brandon, J. G. Breen, J. S. Broadhurst, J. W. Brown, D. E. Collins, D. A. Daberko,
D. E. Evans, C. L. Greenwalt, B. P. Healy, D. A. Johnson, P. A. Ormond, R. A. Paul, W. F. Roemer, M. A. Schuler,
S. A. Stitle, J. F. Tatar and M. Weiss.
</TABLE>
(Instructions: to withhold authority to vote for any individual nominee, strike
a line through that nominee's name.)
2. APPROVE THE NATIONAL CITY CORPORATION MANAGEMENT INCENTIVE PLAN FOR SENIOR
OFFICERS. [ ] FOR [ ] AGAINST [ ] ABSTAIN
3. APPROVE THE INCREASE IN THE NUMBER OF SHARES OF AUTHORIZED CAPITAL STOCK
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. APPROVE THE SELECTION OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS
[ ] FOR [ ] AGAINST [ ] ABSTAIN
UNLESS OTHERWISE INSTRUCTED ON THIS CARD, THE TRUSTEE WILL, UPON RECEIPT OF A
PROPERLY EXECUTED INSTRUCTION CARD, VOTE FOR THE ELECTION OF THE NOMINEES LISTED
ABOVE AS DIRECTORS, FOR THE APPROVAL OF THE NATIONAL CITY CORPORATION MANAGEMENT
INCENTIVE PLAN FOR SENIOR OFFICERS, FOR THE APPROVAL OF THE INCREASE IN THE
NUMBER OF SHARES OF AUTHORIZED CAPITAL STOCK AND FOR THE SELECTION OF ERNST &
YOUNG LLP. SEE ACCOMPANYING PARTICIPANT NOTICE FOR EXPLANATION OF THE
CONFIDENTIALITY, TIMING DEADLINES AND OTHER DETAILS CONCERNING THIS INSTRUCTION.
ALSO COMPLETE, DATE AND SIGN THE OTHER SIDE OF THIS CARD (SIDE B)
Dated , 1999
-----------------
----------------------------
(Signature of Participant)
Please sign exactly as your
name appears on reverse.
<PAGE> 55
DETACH CARD
- --------------------------------------------------------------------------------
CONFIDENTIAL VOTING INSTRUCTIONS -- SIDE B
The undersigned Participant, acting as a Named Fiduciary under the National
City Savings and Investment Plan No. 2, hereby instructs the Trustee under the
Plan to vote the shares subject to this Instruction at the 1999 Annual Meeting
of Stockholders of National City Corporation, and at any adjournment thereof, in
accordance with the instructions on this card, as follows:
1. THE ELECTION OF DIRECTORS
<TABLE>
<S> <C>
[ ] FOR all nominees listed below (except as otherwise [ ] WITHHOLD AUTHORITY
marked below) to vote for all nominees listed below
S. H. Austin, J. E. Barfield, E. B. Brandon, J. G. Breen, J. S. Broadhurst, J. W. Brown, D. E. Collins, D. A. Daberko,
D. E. Evans, C. L. Greenwalt, B. P. Healy, D. A. Johnson, P. A. Ormond, R. A. Paul, W. F. Roemer, M. A. Schuler,
S. A. Stitle, J. F. Tatar and M. Weiss.
</TABLE>
(Instructions: to withhold authority to vote for any individual nominee, strike
a line through that nominee's name.)
2. APPROVE THE NATIONAL CITY CORPORATION MANAGEMENT INCENTIVE PLAN FOR SENIOR
OFFICERS [ ] FOR [ ] AGAINST [ ] ABSTAIN
3. APPROVE THE INCREASE IN THE NUMBER OF SHARES OF AUTHORIZED CAPITAL STOCK
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. APPROVE THE SELECTION OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS
[ ] FOR [ ] AGAINST [ ] ABSTAIN
UNLESS OTHERWISE INSTRUCTED ON THIS CARD, THE TRUSTEE WILL, UPON RECEIPT OF A
PROPERLY EXECUTED INSTRUCTION CARD, VOTE FOR THE ELECTION OF THE NOMINEES LISTED
ABOVE AS DIRECTORS, FOR THE APPROVAL OF THE NATIONAL CITY CORPORATION MANAGEMENT
INCENTIVE PLAN FOR SENIOR OFFICERS, FOR THE APPROVAL OF THE INCREASE IN THE
NUMBER OF SHARES OF AUTHORIZED CAPITAL STOCK AND FOR THE SELECTION OF ERNST &
YOUNG LLP. SEE ACCOMPANYING PARTICIPANT NOTICE FOR EXPLANATION OF THE
CONFIDENTIALITY, TIMING DEADLINES AND OTHER DETAILS CONCERNING THIS INSTRUCTION.
ALSO COMPLETE, DATE AND SIGN THE OTHER SIDE OF THIS CARD (SIDE A)
Dated , 1999
-----------------
----------------------------
(Signature of Participant)
Please sign exactly as your
name appears on reverse.
PLEASE COMPLETE, SIGN, AND DATE BOTH SIDES OF THIS INSTRUCTION CARD AND RETURN
IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE OR TO STOCK TRANSFER DEPARTMENT
(NC), NATIONAL CITY BANK, TRUSTEE, P.O. BOX 92301, CLEVELAND, OHIO 44193-0900.
<PAGE> 56
DETACH CARD
- --------------------------------------------------------------------------------
CONFIDENTIAL VOTING INSTRUCTIONS -- SIDE A
The undersigned, a Participant in the National City Savings and Investment
Plan, hereby instructs National City Bank, Trustee under the Plan, to vote the
shares subject to this Instruction at the 1999 Annual Meeting of Stockholders of
National City Corporation, and at any adjournment thereof, in accordance with
the instructions on this card, as follows:
1. THE ELECTION OF DIRECTORS
<TABLE>
<S> <C>
[ ] FOR all nominees listed below (except as otherwise [ ] WITHHOLD AUTHORITY
marked below) to vote for all nominees listed below
S. H. Austin, J. E. Barfield, E. B. Brandon, J. G. Breen, J. S. Broadhurst, J. W. Brown, D. E. Collins, D. A. Daberko,
D. E. Evans, C. L. Greenwalt, B. P. Healy, D. A. Johnson, P. A. Ormond, R. A. Paul, W. F. Roemer, M. A. Schuler,
S. A. Stitle, J. F. Tatar and M. Weiss.
</TABLE>
(Instructions: to withhold authority to vote for any individual nominee, strike
a line through that nominee's name.)
2. APPROVE THE NATIONAL CITY CORPORATION MANAGEMENT INCENTIVE PLAN FOR SENIOR
OFFICERS [ ] FOR [ ] AGAINST [ ] ABSTAIN
3. APPROVE THE INCREASE IN THE NUMBER OF SHARES OF AUTHORIZED CAPITAL STOCK
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. APPROVE THE SELECTION OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS
[ ] FOR [ ] AGAINST [ ] ABSTAIN
UNLESS OTHERWISE INSTRUCTED ON THIS CARD, THE TRUSTEE WILL, UPON RECEIPT OF A
PROPERLY EXECUTED INSTRUCTION CARD, VOTE FOR THE ELECTION OF THE NOMINEES LISTED
ABOVE AS DIRECTORS, FOR THE APPROVAL OF THE NATIONAL CITY CORPORATION MANAGEMENT
INCENTIVE PLAN FOR SENIOR OFFICERS, FOR THE APPROVAL OF THE INCREASE IN THE
NUMBER OF SHARES OF AUTHORIZED CAPITAL STOCK AND FOR THE SELECTION OF ERNST &
YOUNG LLP. SEE ACCOMPANYING PARTICIPANT NOTICE FOR EXPLANATION OF THE
CONFIDENTIALITY, TIMING DEADLINES AND OTHER DETAILS CONCERNING THIS INSTRUCTION.
ALSO COMPLETE, DATE AND SIGN THE OTHER SIDE OF THIS CARD (SIDE B)
Dated , 1999
-----------------
----------------------------
(Signature of Participant)
Please sign exactly as your
name appears at the left.
<PAGE> 57
DETACH CARD
- --------------------------------------------------------------------------------
CONFIDENTIAL VOTING INSTRUCTIONS -- SIDE B
The undersigned Participant, acting as a Named Fiduciary under the National
City Savings and Investment Plan, hereby instructs the Trustees under the Plan
to vote the shares subject to this Instruction at the 1999 Annual Meeting of
Stockholders of National City Corporation, and at any adjournment thereof, in
accordance with the instructions on this card, as follows:
1. THE ELECTION OF DIRECTORS
<TABLE>
<S> <C>
[ ] FOR all nominees listed below (except as otherwise [ ] WITHHOLD AUTHORITY
marked below) to vote for all nominees listed below
S. H. Austin, J. E. Barfield, E. B. Brandon, J. G. Breen, J. S. Broadhurst, J. W. Brown, D. E. Collins, D. A. Daberko,
D. E. Evans, C. L. Greenwalt, B. P. Healy, D. A. Johnson, P. A. Ormond, R. A. Paul, W. F. Roemer, M. A. Schuler,
S. A. Stitle, J. F. Tatar and M. Weiss.
</TABLE>
(Instructions: to withhold authority to vote for any individual nominee, strike
a line through that nominee's name.)
2. APPROVE THE NATIONAL CITY CORPORATION MANAGEMENT INCENTIVE PLAN FOR SENIOR
OFFICERS [ ] FOR [ ] AGAINST [ ] ABSTAIN
3. APPROVE THE INCREASE IN THE NUMBER OF SHARES OF AUTHORIZED CAPITAL STOCK
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. APPROVE THE SELECTION OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS
[ ] FOR [ ] AGAINST [ ] ABSTAIN
UNLESS OTHERWISE INSTRUCTED ON THIS CARD, THE TRUSTEES WILL, UPON RECEIPT OF
A PROPERLY EXECUTED INSTRUCTION CARD, VOTE FOR THE ELECTION OF THE NOMINEES
LISTED ABOVE AS DIRECTORS, FOR THE APPROVAL OF THE NATIONAL CITY CORPORATION
MANAGEMENT INCENTIVE PLAN FOR SENIOR OFFICERS, FOR THE APPROVAL OF THE INCREASE
IN THE NUMBER OF SHARES OF AUTHORIZED CAPITAL STOCK AND FOR THE SELECTION OF
ERNST & YOUNG LLP. SEE ACCOMPANYING PARTICIPANT NOTICE FOR EXPLANATION OF THE
CONFIDENTIALITY, TIMING DEADLINES AND OTHER DETAILS CONCERNING THIS INSTRUCTION.
ALSO COMPLETE, DATE AND SIGN THE OTHER SIDE OF THIS CARD (SIDE A)
Dated , 1999
-----------------
----------------------------
(Signature of Participant)
Please sign exactly as your
name appears on reverse.
PLEASE COMPLETE, SIGN, AND DATE BOTH SIDES OF THIS INSTRUCTION CARD AND RETURN
IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE OR TO STOCK TRANSFER DEPARTMENT
(NC), NATIONAL CITY BANK, TRUSTEE, P.O. BOX 92301, CLEVELAND, OHIO 44193-0900.
