<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
NBD BANCORP, INC.
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(Name of Registrant as Specified in Its Charter)
[COMPANY NAME]
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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<PAGE> 2
NBD Bancorp, Inc.
611 Woodward Avenue
Detroit, Michigan 48226
April 7, 1995
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
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TO THE STOCKHOLDERS:
The Annual Meeting of Stockholders of NBD Bancorp, Inc. will be held on the
Staff Floor, Main Office of NBD Bank, corner of Woodward Avenue and Fort Street,
in the City of Detroit, Michigan at 10:00 a.m., Detroit time, on Monday, May 15,
1995 for the following purposes:
1. To elect Directors as set forth in the accompanying Proxy Statement;
2. To consider and act upon a proposal for approval of performance-based,
annual incentive criteria under the NBD Executive Incentive Plan to
preserve NBD's tax deduction for plan awards;
3. To consider and act upon a proposal for approval of performance-based,
long-term incentive criteria under the NBD Performance Incentive Plan to
preserve NBD's tax deduction for plan awards;
4. To consider and act upon ratification of the NBD Board's selection of
Deloitte & Touche LLP as NBD's independent auditors; and
5. To transact such other business as may properly come before the Annual
Meeting or any adjournments thereof.
Stockholders of record at the close of business on March 27, 1995 are
entitled to notice of and to vote at the Annual Meeting.
You are cordially invited to attend the Annual Meeting in person. However,
whether you plan to attend or not, we urge you to sign, date and return the
accompanying proxy promptly in the envelope provided (to which no postage need
be affixed if mailed in the United States) in order that as many shares as
possible may be represented at the Annual Meeting. If you will do so now, NBD
will save on follow-up expenses.
By order of the Board of Directors
[SIG]
DANIEL T. LIS
Senior Vice President and Secretary
<PAGE> 3
NBD Bancorp, Inc.
611 Woodward Avenue
Detroit, Michigan 48226
April 7, 1995
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PROXY STATEMENT
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GENERAL INFORMATION
This Proxy Statement is provided in connection with the solicitation of
proxies by the Board of Directors of NBD Bancorp, Inc. ("NBD") to be used at the
Annual Meeting of Stockholders of NBD to be held on Monday, May 15, 1995 at
10:00 a.m., Detroit time, and at any or all adjournments thereof. The principal
executive offices of NBD are located at 611 Woodward Avenue, Detroit, Michigan
48226. The approximate date on which this Proxy Statement and the enclosed form
of proxy are first being sent or given to stockholders is April 7, 1995.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its exercise. Unless the proxy is revoked, the
shares represented thereby will be voted at the Annual Meeting or any
adjournments thereof.
The entire cost of soliciting proxies will be borne by NBD. Proxies may be
solicited by mail, facsimile transmission or telegraph, or by agents, directors,
officers or other employees of NBD and its subsidiaries, in person or by
telephone. NBD has engaged D.F. King & Co., Inc. to assist in the solicitation
of proxies at a fee of $7,000, plus fees for special services, if requested, and
out-of-pocket expenses. NBD will also reimburse brokerage houses and other
custodians, nominees and fiduciaries for their out-of-pocket expenses for
forwarding soliciting material to the beneficial owners of NBD Common Stock.
It is NBD's policy to keep confidential all proxies, ballots and voting
tabulations that identify individual stockholders, except in the event of a
contested proxy solicitation or as may be necessary to meet legal requirements.
The independent inspectors of election, as well as all agents or employees of
NBD who are involved in the tabulation process, are advised of and instructed to
comply with this policy. The policy does not prohibit a stockholder from
voluntarily disclosing his or her own vote, nor does it interfere with voluntary
communications between NBD and its stockholders. Written comments on any proxy
card or separate attachment will be provided to NBD by the vote tabulator
without indication of the stockholder's vote.
At the close of business on March 27, 1995, the record date for the
determination of stockholders entitled to vote at the Annual Meeting, there were
outstanding (exclusive of treasury shares) and entitled to vote 157,630,172
shares of $1.00 par value Common Stock, each of which is entitled to one vote.
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the inspectors of election appointed for the meeting and will determine whether
a quorum is present. A majority of the outstanding shares entitled to vote will
constitute a quorum. The inspectors of election will treat abstentions and
broker non-votes as shares that are present and entitled to vote for purposes of
determining the presence of a quorum.
The nominees for the Board of Directors who receive a plurality of the
votes cast will be elected Directors. Stockholders who withhold authority to
vote for one or more nominees will cause their shares to be excluded from the
vote for those nominees but will not have the effect of voting "against" those
nominees.
Under Delaware law the approvals of the performance-based annual and
long-term incentive criteria proposals require the affirmative votes of a
majority of the shares present in person or by proxy and entitled to vote at the
Annual Meeting. Abstentions with regard to these proposals will have the effect
of a vote "against" the proposals. Broker non-votes on these proposals reflect
the withholding of the power to vote and thus are not shares "entitled to vote"
and will have no effect on the approval of these proposals.
1
<PAGE> 4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Under Section 13(d) of the Securities Exchange Act of 1934, a beneficial
owner of a security is any person who directly or indirectly has or shares
voting power or investment power over such security. A beneficial owner under
this definition need not enjoy the economic benefit of such security. Based on
Schedules 13G filed with the Securities and Exchange Commission (the "SEC"), the
following are believed by NBD to be the only beneficial owners of more than five
percent of the outstanding shares of NBD's Common Stock as of December 31, 1994:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT
THE BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
--------------------------------------------------- -------------------- --------
<S> <C> <C>
INVESCO, PLC....................................... 10,963,217(1) 7.0%
11 Devonshire Square
London, England
NBD Bancorp, Inc................................... 8,406,834(2) 5.2%
611 Woodward Avenue
Detroit, Michigan
</TABLE>
(1) Various INVESCO investment advisor affiliates and their holding companies
were deemed beneficial owners of the entire referenced amount based on their
shared voting and investment powers.
(2) Various NBD bank affiliates were deemed beneficial owners of portions of the
referenced amount based on their sole or shared voting and investment
powers. These shares were held in a fiduciary capacity under numerous trust
relationships, none of which represents more than five percent of NBD's
outstanding shares.
2
<PAGE> 5
1. ELECTION OF DIRECTORS
The Board of Directors is divided into three classes with each class
elected for a three-year term. At each annual meeting of stockholders, a class
of Directors will be elected to succeed the class of Directors whose term of
office expires at that annual meeting.
The Board of Directors has fixed the number of Directors constituting the
whole Board at twenty-one and has selected the seven nominees listed below who
were recommended by the Nominating Committee for election as Class III Directors
to a three-year term expiring in 1998.
It is the intention of the persons named in the enclosed form of proxy to
vote such proxies for the election of the nominees listed below. The proposed
nominees for election as Directors are willing to be elected and serve, but in
the event any nominee at the time of election is unable to serve or is otherwise
unavailable for election, the Board of Directors may select a substitute nominee
and in that event such shares will be voted for the person so selected. If a
substitute nominee is not so selected, such shares will be voted for the
election of the remaining nominees.
The nominees for the Board of Directors receiving a plurality of the votes
cast will be elected as Directors.
INFORMATION ABOUT DIRECTORS AND NOMINEES AS DIRECTORS
The following information is provided with respect to each of the nominees
for election at the Annual Meeting as Class III Directors as well as each of the
Class I and Class II Directors whose terms will continue after the Annual
Meeting.
CLASS III DIRECTOR NOMINEES -- TERM TO EXPIRE 1998
TERENCE E. ADDERLEY. Age 61. President and Chief Executive Officer, Kelly
Services, Inc. Director of Kelly Services, Inc. and The Detroit Edison Company.
NBD Director since 1985.
JAMES K. BAKER. Age 63. Chairman, Arvin Industries, Inc. Formerly Chairman
and Chief Executive Officer, 1986-1993. Director of Amcast Industrial
Corporation, Geon Company, CINergy Corp. and Tokheim Corp. NBD Director since
1992.
THOMAS H. JEFFS II. Age 56. President and Chief Operating Officer, NBD
Bancorp, Inc. and NBD Bank. Formerly Vice Chairman, 1985-1993. Director of MCN
Corporation. NBD Director since 1985.
JOHN E. LOBBIA. Age 53. Chairman and Chief Executive Officer, The Detroit
Edison Company. Formerly Chairman, President and Chief Executive Officer,
1990-1994; President and Chief Operating Officer, 1988-1990. NBD Director since
1988.
RICHARD A. MANOOGIAN. Age 58. Chairman and Chief Executive Officer, Masco
Corporation and MascoTech, Inc. and Chairman, TriMas Corporation. NBD Director
since 1978.
THOMAS E. REILLY, JR. Age 55. Chairman of the Board, Reilly Industries,
Inc. Director of Lilly Industries, Inc. NBD Director since February 1995.
PETER W. STROH. Age 67. Chairman and Chief Executive Officer, The Stroh
Companies, Inc. and Chairman, The Stroh Brewery Company. Formerly Chairman and
Chief Executive Officer, The Stroh Brewery Company, 1982-1994. Director of Masco
Corporation. NBD Director since 1973.
CLASS I DIRECTORS -- TERM EXPIRES 1996
DON H. BARDEN. Age 51. Chairman and President, Barden Companies, Inc.
Formerly Chairman and President, Barden Communications, Inc., 1981-1994. NBD
Director since 1993.
DR. MAUREEN A. FAY, O.P. Age 60. President, University of Detroit Mercy.
Formerly President, Mercy College of Detroit, 1983-1990. NBD Director since
1985.
3
<PAGE> 6
CHARLES T. FISHER III. Age 65. Retired Chairman and President, NBD Bancorp,
Inc. and NBD Bank, 1982-1993. Director of AMR Corporation, General Motors
Corporation and JANNOCK Limited (Toronto). NBD Director since 1972.
JOSEPH L. HUDSON, JR. Age 63. Chairman, Hudson-Webber Foundation. Formerly
President and Chief Executive Officer, The Detroit Medical Center, 1985-1990.
NBD Director since 1973.
WILLIAM T. MCCORMICK, JR. Age 50. Chairman and Chief Executive Officer, CMS
Energy Corporation and Chairman, Consumers Power Company. Director of Rockwell
International Corporation and Schlumberger Ltd. NBD Director since 1985.
IRVING ROSE. Age 69. Partner, Edward Rose & Sons. NBD Director since 1977.
ORMAND J. WADE. Age 56. Retired Vice Chairman, American Information
Technologies Corporation (Ameritech), 1989-1992. Director of Andrew Corp. and
Illinois Tool Works, Inc. NBD Director since 1987.
CLASS II DIRECTORS -- TERM EXPIRES 1997
SIEGFRIED BUSCHMANN. Age 57. Chairman and Chief Executive Officer, The Budd
Company. NBD Director since 1991.
BERNARD B. BUTCHER. Age 66. Retired Senior Consultant, The Dow Chemical
Company, 1990-1993. Formerly Vice President, 1984-1990 and Director, 1985-1993.
NBD Director since 1987.
JOHN W. DAY. Age 62. Retired Executive Vice President, Allied-Signal Inc.;
President, Allied-Signal International, Inc., 1989-1993. NBD Director since
1989.
ALFRED R. GLANCY III. Age 57. Chairman, President and Chief Executive
Officer, MCN Corporation and Chairman of Michigan Consolidated Gas Company.
Director of MLX Corp. NBD Director since 1991.
DENNIS J. GORMLEY. Age 55. Chairman, President and Chief Executive Officer,
Federal-Mogul Corporation. Formerly President and Chief Executive Officer,
1989-1990. Director of Cooper Tire & Rubber Company. NBD Director since 1994.
VERNE G. ISTOCK. Age 54. Chairman and Chief Executive Officer, NBD Bancorp,
Inc. and NBD Bank. Formerly Vice Chairman, 1985-1993. Director of Handleman
Company and Kelly Services, Inc. NBD Director since 1985.
ROBERT C. STEMPEL. Age 61. Retired Chairman and Chief Executive Officer,
General Motors Corporation, 1990-1992. Formerly President and Chief Operating
Officer, 1987-1990. NBD Director from 1989 to 1991 and since 1993.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth as of March 20, 1995 the number of shares of
NBD Common Stock beneficially owned by each Director nominee and each current
Director whose term will continue past the Annual Meeting, by
4
<PAGE> 7
the other non-Director executive officers named in the Summary Compensation
Table, and by all Directors, nominees and executive officers of NBD as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED(1)(2)
-------------------
<S> <C>
Directors and Nominees:
Terence E. Adderley.......................................... 9,000
James K. Baker............................................... 5,747
Don H. Barden................................................ 41,665
Siegfried Buschmann.......................................... 901
Bernard B. Butcher........................................... 11,806
John W. Day.................................................. 3,601
Dr. Maureen A. Fay, O.P. .................................... 1,238
Charles T. Fisher III........................................ 339,369
Alfred R. Glancy III......................................... 2,500
Dennis J. Gormley............................................ 406
Joseph L. Hudson, Jr. ....................................... 3,971
Verne G. Istock.............................................. 222,430
Thomas H. Jeffs II........................................... 202,430
John E. Lobbia............................................... 2,601
Richard A. Manoogian......................................... 7,651
William T. McCormick, Jr. ................................... 10,901
Thomas E. Reilly, Jr. ....................................... 129,136
Irving Rose.................................................. 208,201
Robert C. Stempel............................................ 1,056
Peter W. Stroh............................................... 2,588
Ormand J. Wade............................................... 2,326
Other Named Executives:
Louis Betanzos............................................... 81,702
Philip S. Jones.............................................. 68,047
Thomas M. Miller............................................. 236,533
Andrew J. Paine, Jr. ........................................ 178,321
Directors, nominees and executive officers as a group (33
persons including those above)............................. 2,647,162
</TABLE>
(1) The number of shares of NBD Common Stock owned by each such individual
represents less than .35% of the shares outstanding.
(2) Beneficial ownership of shares, as determined in accordance with applicable
SEC rules, includes shares as to which a person has or shares voting power
and/or investment power and shares as to which a person has a right to
acquire such power within sixty days. Accordingly, the number of shares
shown for certain Directors and/or executive officers includes the
following: (i) shares held by the trustee under NBD's 401(k) plan; (ii)
shares awarded pursuant to NBD's incentive plans, which shares are subject
to forfeiture as explained under "Compensation Committee Report on Executive
Compensation" herein; (iii) as to Charles T. Fisher III 113,559 shares, as
to Verne G. Istock 44,830 shares, as to Thomas H. Jeffs II 47,339 shares, as
to Louis Betanzos 23,431 shares, as to Philip S. Jones 16,396 shares, as to
Thomas M. Miller 3,240 shares, as to Andrew J. Paine, Jr. 34,099 shares and
as to the remaining executive officers as a group (8 persons) 97,719 shares
which such officers have options to acquire pursuant to NBD's incentive
plans; and (iv) as to Mr. Fisher 60,039 shares held in a trust of which Mr.
Fisher is co-trustee and as to Mr. Reilly 119,408 shares held in trusts of
which Mr. Reilly is co-trustee. The number of shares shown for all
Directors, nominees and executive officers as a group includes 214,492
shares which Directors, nominees and executive officers hold as trustees or
in other fiduciary capacities for another person. Of the number of shares of
NBD Common Stock reported in the foregoing table, beneficial ownership is
disclaimed as follows: 39,331 shares held in trust for Mr. Fisher's spouse;
810 shares held by Mr. Istock's spouse; 12,452 shares held by members of Mr.
Miller's family; 9,200 shares held by Mr. Paine's spouse; 1,294 shares held
by Mr. Reilly's spouse as custodian for an adult child and 21,144 shares
held by family members of, or in trust for family members of, other
executive officers.
5
<PAGE> 8
SECURITY OWNERSHIP REPORTING
Each Director and each executive officer of NBD who is subject to Section
16 of the Securities Exchange Act of 1934 (the "Act") is required by Section
16(a) of the Act to report to the SEC, by a specified date, his or her
transactions in NBD's securities. Based on corporate records and certifications
received from such persons, NBD timely filed all required reports on behalf of
its executive officers and Directors, except with respect to one Form 4
reporting a single purchase of 4,000 shares in December 1994 for Director Irving
Rose of which NBD had timely notice but did not act. A Form 4 reporting the
purchase was filed in January 1995.
MEETINGS AND COMMITTEES OF THE BOARD
In 1994 there were a total of twelve regularly scheduled meetings of the
Board of Directors. Each Director attended at least seventy-five percent of the
aggregate of the total number of meetings of the Board of Directors held in 1994
and the total number of meetings held by committees of the Board on which they
served during the periods that they served in 1994.
NBD has standing Audit, Compensation, Nominating and Public Policy
Committees of the Board of Directors.
The members of the Audit Committee, consisting of non-employee Directors,
are John W. Day, Chairperson, Siegfried Buschmann, Alfred R. Glancy III, John E.
Lobbia and Ormand J. Wade. The Audit Committee, which met nine times during
1994, appoints, subject to approval by the Board of Directors and ratification
by the stockholders, NBD's independent auditors and approves the program of
continuous internal audit and the scope of audit procedures. The Committee also
reviews the accounting principles, financial reporting practices and systems of
internal control adopted by management, the non-audit services performed by the
independent auditors and approves the fees paid to the independent auditors.
The members of the Compensation Committee, consisting of non-employee
Directors, are Richard A. Manoogian, Chairperson, Terence E. Adderley, John E.
Lobbia, William T. McCormick, Jr. and Peter W. Stroh. This Committee met three
times in 1994. The Compensation Committee approves an officers' salary merit
budget for the year, recommends to the Board of Directors changes in officer
salaries and other executive benefits and recommends changes in the appointments
of principal officers as necessary. The participants and awards under incentive
plans are determined by the Compensation Committee subject to approval by the
Board of Directors.
The Nominating Committee is composed of Irving Rose, Chairperson, Joseph L.
Hudson, Jr., Bernard B. Butcher, Dr. Maureen A. Fay, O.P., and Ormand J. Wade,
non-employee Directors, and Verne G. Istock, Chairman and Chief Executive
Officer of NBD. This Committee, which held three meetings in 1994, has been
delegated authority to review on a continuing basis and to make recommendations
as to size, composition and compensation of the Board of Directors, to recommend
nominees for election as Directors at the Annual Meeting of Stockholders, and to
recommend individuals to fill vacancies which may occur between annual meetings.
This Committee also administers the Retirement Plan for Non-Employee Directors
of NBD. The Committee will consider as potential nominees persons recommended by
stockholders. Recommendations should be submitted to the Nominating Committee in
care of Daniel T. Lis, Senior Vice President and Secretary, who serves as
secretary to the Committee. A recommendation should include a personal biography
of the suggested nominee, an indication of the background or experience that
qualifies such person for consideration, and a statement that such person has
agreed to serve if nominated and elected.
The members of the Public Policy Committee, consisting of non-employee
Directors, are Dr. Maureen A. Fay, O.P., Chairperson, James K. Baker, Don H.
Barden, Bernard B. Butcher, Robert C. Stempel and Peter W. Stroh. This
Committee, which met four times during 1994, serves as an advisor to the Board
of Directors and management concerning the adoption, implementation and
evaluation of policies and practices designed to maintain NBD's position as a
socially responsible citizen.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1994 the members of the Compensation Committee, consisting of
non-employee Directors, were Terence E. Adderley, John E. Lobbia, Richard A.
Manoogian, William T. McCormick, Jr. and Peter W. Stroh.
6
<PAGE> 9
Verne G. Istock, who is an NBD Director and executive officer, served during
1994 on the Board of Directors of Kelly Services, Inc., where Mr. Adderley is
President and Chief Executive Officer. Also during 1994, Thomas H. Jeffs II, who
is an NBD Director and executive officer, served on the Compensation Committee
of MCN Corporation, where NBD Director Alfred R. Glancy III is Chairman,
President and Chief Executive Officer.
The NBD Board of Directors passed a resolution in 1992 prohibiting an
employee-Director of NBD from serving on the compensation committee of an
unaffiliated corporation if an employee-director of the unaffiliated corporation
serves on the NBD Compensation Committee. Also, no director of NBD can serve on
the NBD Compensation Committee if he or she is an employee-director of an
unaffiliated corporation on whose compensation committee one or more
employee-Directors of NBD serve.
Each of the Compensation Committee members as well as the other Directors
and/or the executive officers of NBD, their associates and members of their
immediate families were customers of and had transactions, including loans and
commitments to lend, with subsidiaries of NBD in the ordinary course of business
during 1994. All such loans and commitments were made by the subsidiaries on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons and did
not involve more than normal risk of collectibility or present other unfavorable
features. Similar transactions may be expected to take place in the ordinary
course of business in the future.
DIRECTOR COMPENSATION
Employee-Directors receive no compensation for service as Directors.
Non-employee Directors receive an annual retainer of $18,000 plus $1,200 for
each meeting of the Board of Directors attended. They also receive $1,000 for
each committee meeting attended and reimbursement for travel and other expenses
related to attendance at Board and committee meetings. Non-employee Directors
who serve as chairpersons of Board committees and non-employee Directors who
serve as members of Board committees receive additional annual fees of $5,000
and $2,500, respectively. Non-employee Directors may elect to defer all or a
portion of their retainer and meeting fees. Deferred fees earn an amount
equivalent to interest at a rate equal to the ninety-day U.S. Treasury Bill rate
or the rate of return on one or more of the investment funds in NBD's 401(k)
plan. Beginning in 1993 after the stockholders' ratification of the Non-employee
Director Stock Award Plan, non-employee Directors receive annually that number
of shares of NBD Common Stock which has an aggregate fair market value on the
date of grant equal to fifty percent of the annual retainer then in effect,
exclusive of meeting fees or retainers for service on committees.
Certain non-employee Directors may be eligible for benefits under NBD's
Retirement Plan for Non-employee Directors. Eligibility is limited to
non-employee Directors who have not earned an accrued benefit under any
retirement plan sponsored by NBD or any of its subsidiaries and who have served
at least five years on the Board of Directors. Benefits become payable upon
attaining age 65 or upon retirement from the Board, whichever occurs later.
Eligibility may be advanced in the event of retirement due to illness or
disability. Eligible Directors are entitled to receive an annual benefit equal
to the annual retainer fee in effect for service on the Board at the time of
such Director's retirement (excluding meeting fees and retainers for service on
committees), for the lesser of life or a period of ten years.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
NBD's executive compensation program is administered by the Compensation
Committee of the Board of Directors composed entirely of the following
non-employee Directors: Richard A. Manoogian, Chairperson, Terence E. Adderley,
John E. Lobbia, William T. McCormick, Jr. and Peter W. Stroh. Each year the
Committee recommends to the Board of Directors an officers' salary merit budget
as well as changes in senior officers' salaries and other executive benefits.
The participants and awards under NBD's incentive plans are determined by the
Committee subject to approval by the Board of Directors.
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<PAGE> 10
COMPENSATION PHILOSOPHY
NBD's executive compensation program is designed to enable NBD to attract,
motivate and retain top quality executive officers by providing a fully
competitive and comprehensive compensation package. It provides for competitive
base salaries that reflect individual performance as well as annual variable
incentive awards payable in cash for the achievement of financial performance
goals established by the Committee. In addition, long-term, stock-based
incentive awards are granted to strengthen the mutuality of interest between the
executive officers and NBD's stockholders and to motivate and reward the
achievement of important long-term performance objectives of NBD. The Committee
reviews the percentage relationship between an individual's base salary, annual
incentive award and the value of long-term incentive awards, and strives to
balance short and long-term incentive objectives and to employ prudent judgment
in establishing performance criteria and in determining actual incentive
payments. The Committee's philosophy is to encourage retention after vesting or
exercise dates of stock issued as compensation, net of shares withheld for
taxes.
NBD's policy is to ensure the maximum tax deductibility of executive
officer compensation for the benefit of its stockholders. To this end, two
proposals approved at the 1994 Annual Meeting of Stockholders are being
resubmitted in this Proxy Statement for stockholder approval at the 1995 Annual
Meeting due to an intervening regulatory development. Both proposals are again
designed to qualify NBD's executive officer cash and stock-based incentive
awards as "performance-based" compensation under tax legislation enacted in
1993. In late 1994, the Internal Revenue Service amended its proposed
regulations implementing the 1993 tax legislation, adding a requirement that the
maximum dollar amount of any salary-based award be specifically disclosed to and
approved by stockholders. The proposals approved by NBD stockholders last year
contained a maximum award stated as a percentage of base salary. As a result,
NBD has provided a maximum dollar amount for any individual award made pursuant
to the following two proposals approved by stockholders last year: (1)
performance-based, annual incentive criteria to determine the relationship
between performance and the maximum amount payable each year individually and in
the aggregate to the chief executive officer and the next four highest-paid
executive officers (the "Covered Officers") under NBD's Executive Incentive Plan
("EIP"), and (2) performance-based, long-term incentive criteria to establish
performance measurement standards and maximum performance share distributions
for any of the Covered Officers under NBD's Performance Incentive Plan ("PIP").
Approval of these two proposals is necessary so that cash incentive awards
earned during the five-year period from 1995 through 1999 and performance shares
granted during that same period will be fully tax deductible when distributed.
The following is a discussion of the major elements of NBD's executive
compensation program along with a description of the decisions and actions taken
by the Committee with regard to 1994 compensation of Verne G. Istock as NBD's
Chairman and Chief Executive Officer.
ANNUAL COMPENSATION
Annual cash compensation for executive officers consists of base salaries
and variable incentive awards earned under NBD's Executive Incentive Plan
("EIP"). The Committee's view has been that NBD should not encourage excessive
risk by setting the target annual incentive awards too high in relation to base
salaries.
BASE SALARIES for executive officers are set at levels that are competitive
with peer regional banking institutions, using salary surveys as a guide, while
also recognizing individual performance. The peer banking institutions for this
purpose as well as for determining NBD's relative performance for purposes of
the annual and long-term incentive awards are substantially the same as the
institutions comprising the Salomon Brothers Indices included in NBD's
performance graph on page 11. The base salaries provide a foundation for
determining pay at risk in the annual and long-term incentive awards. The
Committee is responsible for recommending the annual merit salary increase
budget for all officers; for 1994 the budget was 4.5%. The Committee reviewed
individually the increases recommended for senior officers and decided the
salary increases for them after assessing primarily the relative corporate
return-on-equity performance of, supplemented by survey information from, the
peer banking institutions. As reported in last year's Proxy Statement, the
Committee determined in 1993 that the election of Mr. Istock to Chairman and
Chief Executive Officer effective January 1, 1994 warranted a significant
increase in his base salary for 1994 over 1993 in order to maintain the base
salary for the Corporation's chief
8
<PAGE> 11
executive officer at a level competitive with other major regional banking
institutions. The amount recommended by the Committee and approved by the Board
for Mr. Istock for 1994 represented a 45% increase over the base salary paid him
in 1993, and reflects the substantial increase in Mr. Istock's duties and
responsibilities.
ANNUAL INCENTIVE AWARDS for the executive officers paid from the EIP are
based on the achievement of NBD's return on equity ("ROE") goals. Each year the
Committee establishes a corporate ROE target for the EIP and also establishes a
scale for measuring the corporate ROE against that of peer banking institutions.
Individual executive officers are assigned target awards expressed as a percent
of salary. Target awards are payable if NBD's ROE goal is met, after excluding
any special items approved by the Committee, and if individual performance is
deemed to meet NBD's high standards. No awards are payable if NBD's ROE fails to
meet a threshold level established by the Committee. Maximum awards are normally
set at 160% of target and are payable for NBD ROE and individual performance at
or above a high standard. The EIP awards for Mr. Istock as NBD's Chairman and
Chief Executive Officer as well as for Thomas H. Jeffs II as NBD's President and
Chief Operating Officer are based completely on the achievement of the specified
ROE result. NBD exceeded its ROE target for 1994. The Committee determined that
Mr. Istock's 1994 EIP award should recognize NBD's achievement of its 1994 ROE
target and the Committee recommended and the Board approved a 1994 EIP award for
Mr. Istock of $435,000 (60% of base salary). Awards for other executive
officers, including the four other executive officers named in the accompanying
tables (collectively with Messrs. Istock and Jeffs, the "Named Executives"), are
based on NBD's ROE results combined with assessment of individual officer
performance.
LONG-TERM COMPENSATION
The long-term incentive compensation for executive officers consists of
stock-based awards made under NBD's Performance Incentive Plan ("PIP").
Typically two types of awards to executive officers are awarded under PIP:
performance shares and stock options. As reported in last year's Proxy
Statement, the Committee determined in 1993 that the election of Mr. Istock to
Chairman and Chief Executive Officer and Mr. Jeffs to President and Chief
Operating Officer warranted in 1994 a one-time award to each of them of an
additional form of long-term compensation available under PIP, retention shares.
Performance share awards are directly related to corporate performance. Stock
option awards are directly related to increases in stock price. These combine to
form a balanced approach to long-term compensation. Long-term incentive awards
are issued in the form of stock to increase the level of the executive officers'
stock ownership. The Committee believes that such officers should have
sufficient holdings of NBD's Common Stock so that their decisions will
appropriately foster growth in the value of NBD. Currently, Mr. Istock's
beneficial ownership of NBD's Common Stock is 9.6 times his base salary.
PERFORMANCE SHARES are awarded annually by the Committee to NBD's more
senior officers using guidelines expressed as a percent of salary. A performance
share is one share of NBD's Common Stock, contingently granted and earned by the
achievement of certain financial performance goals for NBD. Performance share
awards made to Mr. Istock and the other Named Executives during the period
covered by the Summary Compensation Table are based on achieving and sustaining
NBD's ROE performance equal to or better than the average for the peer banking
institutions over four-year performance periods. During the performance period,
the shares are issued and outstanding and the executive officer to whom the
award has been made has the right to vote the shares and to receive dividends
thereon. Restrictions on all or a portion of the shares are removed at the end
of the performance period if NBD's average four-year ROE meets or exceeds the
established ROE performance goal. If NBD's ROE falls below the minimum threshold
established by the Committee, all shares are forfeited. NBD exceeded the ROE
goal for the four years ended December 31, 1994, and Mr. Istock, along with the
other Named Executives, received the performance shares related to that period
without restriction. The value of these shares is shown in the Summary
Compensation Table in the column styled "LTIP Payouts". In addition, in
recognition of the elections in September, 1993, of Mr. Istock to Chairman and
Chief Executive Officer and Mr. Jeffs to President and Chief Operating Officer,
the Committee recommended and the Board approved in 1993 additional performance
share awards to them for prior periods of 3,100 and 1,850 shares, respectively,
effective January 3, 1994.
STOCK OPTIONS are the second type of stock-based award issued to executive
officers under PIP. Stock options were first granted to the senior officers in
1988, and the Committee has adopted a practice of issuing additional grants
every other year since 1988 using guidelines expressed as a percent of salary.
In making stock option
9
<PAGE> 12
grants, the Committee also considers the number and terms of stock options
previously granted to executive officers. These grants provide the right to
purchase shares of NBD's Common Stock at the fair market value on the date of
grant. Each stock option grant becomes exercisable in five equal annual
installments following grant and has a ten-year maximum term. The Committee also
decided in 1991 to include a restoration option provision in some grants to
encourage early exercise of stock options and further increase actual ownership
to provide greater linkage to stockholder interests. A restoration option allows
a participant who exercises the original stock option prior to the participant's
retirement, and who pays all or a part of the exercise price of the stock option
with shares of NBD's Common Stock held by the participant for at least six
months, to receive a restoration option to purchase the number of shares of
NBD's Common Stock equal to the number of whole shares used by the participant
in payment of the exercise price of the original stock option. A restoration
option may be exercised between the date of its grant and the date of expiration
of the original stock option to which the restoration option is related, and the
exercise price is not less than 100% of the fair market value of the Common
Stock on the date the restoration option is granted. Mr. Istock's 1994 stock
option grant was for 60,000 shares, in accordance with the Committee's grant
guidelines. The total of 71,060 stock option shares shown in the Summary
Compensation Table represent these 60,000 shares plus 11,060 restoration options
as detailed in the Stock Option Grant Table.
RETENTION SHARES are awarded annually by the Committee and have generally
been made to less senior officers who would not have received performance share
awards. These are awards of shares of NBD's Common Stock without corporate
performance requirements but with the requirement of continuing employment for
award periods generally of five years' duration. However, the Committee
determined in 1993, as reported in last year's Proxy Statement, that the
elections of Mr. Istock to Chairman and Chief Executive Officer and Mr. Jeffs to
President and Chief Operating Officer in September, 1993, warranted retention
share awards of 25,000 shares to each of them effective January 3, 1994 in order
to assure management continuity and a smooth leadership transition.
CONCLUSION
The Committee believes that NBD's well balanced executive compensation
program is an important factor in motivating senior officers as well as
fostering a focus on increasing the value of NBD's Common Stock.
Respectfully submitted.
COMPENSATION COMMITTEE
Richard A. Manoogian, Chairperson Terence E. Adderley John E. Lobbia
William T. McCormick, Jr. Peter W. Stroh
10
<PAGE> 13
PERFORMANCE GRAPH
The following graph compares the performance of NBD Common Stock to the S&P
500 Index as well as the Salomon Brothers Regional Bank Composite and 50 Bank
Indices, respectively, each of which includes NBD, for the five-year period
ending December 31, 1994. The graph assumes that the value of an investment in
NBD and each index was $100 at December 31, 1989 and that all dividends were
reinvested on a quarterly basis.
CUMULATIVE TOTAL RETURNS
FIVE YEARS ENDING DECEMBER 31, 1994
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) NBD 50 BANKS REGIONAL S&P 500
<S> <C> <C> <C> <C>
1989 100 100 100 100
1990 107 78 84 97
1991 150 125 146 126
1992 170 166 187 135
1993 160 180 195 149
1994 153 173 187 150
</TABLE>
The Salomon Brothers Regional and Superregional Bank Composite Index
("REGIONAL") currently consists of the following bank holding companies:
Wachovia Corporation, Banc One Corp., National City Corporation, Comerica
Incorporated, SunTrust Banks, Inc., PNC Bank Corp., First Bank System, Inc.,
CoreStates Financial Corp., NBD Bancorp, Inc., BankAmerica Corporation, First
Union Corporation, NationsBank Corporation, First Fidelity Bancorporation,
Norwest Corporation, Wells Fargo & Company, KeyCorp, First Interstate Bancorp,
Fleet Financial Group, Bank of Boston Corporation, Fifth Third Bancorp, Marshall
& Ilsley Corporation, Wilmington Trust Corporation, First Security Corporation,
Old Kent Financial Corporation, AmSouth Bancorporation, Boatmen's Bancshares,
Inc., Bank South Corporation, MidLantic Corporation, Crestar Financial
Corporation, U.S. Bancorp, Mercantile Bancorporation, Inc., First American
Corporation, West One Bancorp, Signet Banking Corporation, First Tennessee
National Corp., Mellon Bank Corporation, Bancorp Hawaii, Inc., First of America
Bank Corp., Barnett Banks, Inc., State Street Boston Corp., Huntington
Bancshares and Northern Trust Corporation. The Salomon Brothers Bank Index ("50
BANKS") includes the previously listed bank holding companies plus: Bank of New
York Company, J.P. Morgan & Co. Incorporated, Chemical Banking Corp., First
Chicago Corporation, Chase Manhattan Corporation, Republic New York Corporation,
Bankers Trust New York Corp. and Citicorp.
11
<PAGE> 14
EXECUTIVE OFFICER COMPENSATION
The following table sets forth the annual, long-term and other compensation
paid by NBD and its subsidiaries with respect to the years 1992, 1993 and 1994
to the chief executive officer during 1994 and each of the next five most highly
compensated executive officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION -------------------------------
------------------------------------ SECURITIES
OTHER RESTRICTED UNDERLYING
ANNUAL STOCK OPTION LTIP ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION(1) AWARDS(2) AWARDS(3) PAYOUTS COMPENSATION(4)
POSITION YEAR $ $ $ $ # $ $
- --------------------------- ----- ------- --------- --------------- --------- --------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Verne G. Istock 1994 724,135 435,000 51,698 690,625 71,060 349,650 5,942
Chairman and Chief 1993 500,001 300,000 40,274 0 33,770 277,552 6,803
Executive Officer 1992 487,462 325,000 41,413 0 43,429 406,902 6,634
Thomas H. Jeffs II 1994 649,423 350,000 46,816 690,625 62,997 341,845 5,942
President and Chief 1993 500,001 300,000 40,274 0 20,342 277,552 6,803
Operating Officer 1992 487,462 325,000 41,413 0 54,472 406,902 6,634
Thomas M. Miller(5) 1994 500,000 122,000 8,190 0 0 0 38,154
Retired 1993 519,231 250,000 5,670 0 8,100 0 44,870
Vice Chairman 1992 96,154 49,771 0 0 0 0 1,100
Andrew J. Paine, Jr.(5) 1994 379,963 160,000 6,660 0 20,000 0 12,375
Executive Vice 1993 383,847 160,000 2,430 0 6,000 0 16,870
President 1992 69,231 33,167 0 0 0 0 1,110
Louis Betanzos 1994 297,945 160,000 19,105 0 25,774 163,898 4,425
Executive Vice 1993 283,501 160,000 18,671 0 17,657 122,639 6,803
President 1992 279,831 170,000 19,061 0 30,545 177,272 6,634
Philip S. Jones 1994 264,951 140,000 17,163 0 24,310 140,484 5,942
Executive Vice 1993 252,001 125,000 15,710 0 12,086 90,366 6,745
President 1992 238,147 120,000 12,655 0 22,957 128,459 6,546
</TABLE>
(1) Represents dividends on performance shares which are earned at the same
rate as dividends on NBD's Common Stock.
(2) The values set forth in the column under the heading "Restricted stock
awards" are as of January 3, 1994, the date of grant of retention share
awards of 25,000 shares to each of Messrs. Istock and Jeffs. On December
31, 1994, the value of these 25,000 retention shares, which are the only
restricted stock awards held by Messrs. Istock and Jeffs, was $684,375.
These retention share awards vest in three equal installments at the end of
1996, 1997 and 1998. The aggregate number of shares and December 31, 1994
value of restricted stock issued in years prior to 1993 under the NBD
Indiana 1990 Stock Incentive Plan to Mr. Miller were 2,720 shares valued at
$74,460 and to Mr. Paine were 6,080 shares valued at $166,440. Dividends
are earned on restricted stock at the same rate as dividends on NBD's
Common Stock.
(3) Stock options were granted under the NBD Performance Incentive Plan every
other year starting in 1988. In 1991 the restoration option feature was
added to existing and future stock options. For Messrs. Istock, Jeffs,
Betanzos and Jones the 1993 options consist solely of restoration options
due to the exercise of prior stock options. The 1993 grants to Messrs.
Miller and Paine represent awards under the NBD Indiana 1990 Stock
Incentive Plan; the restoration option feature is not applicable to these
grants.
(4) The entire amounts for Messrs. Istock, Jeffs, Betanzos and Jones represent
NBD matching contributions to its 401(k) defined contribution plan; the
1994 amounts for Messrs. Miller and Paine represent NBD matching
contributions to a 401(k) defined contribution plan of $1,154 and $3,375
and NBD payments of split-dollar life insurance premiums of $37,000 and
$9,000 with respect to policies for the benefit of Messrs. Miller and
Paine, respectively.
(5) Amounts reported for 1992 represent compensation earned by Messrs. Miller
and Paine after the October 15, 1992 effective date of the acquisition of
their prior employer by NBD. Compensation amounts for periods prior to the
acquisition date are not reported in accordance with SEC rules.
12
<PAGE> 15
STOCK OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------------------------- VALUE AT ASSUMED RATES OF
NUMBER OF STOCK APPRECIATION FOR
SECURITIES PERCENT OF TOTAL OPTION TERM(3)
UNDERLYING OPTIONS OPTIONS GRANTED EXERCISE OR -----------------------------
GRANTED TO EMPLOYEES IN BASE PRICE EXPIRATION 0% 5% 10%
NAME #(1) FISCAL YEAR(2) $/SH DATE $ $ $
- ---------------------- ------------------ ---------------- ----------- ---------- --- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Verne G. Istock 60,000 31.5625 6-19-2004 0 1,190,763 3,017,509
Chairman and Chief *5,429 31.5625 6-28-2000 0 57,618 130,511
Executive Officer *5,631 31.5625 6-14-2002 0 83,598 199,687
------ --------- ---------
71,060 7% 1,331,979 3,347,707
Thomas H. Jeffs II 50,000 31.5625 6-19-2004 0 992,303 2,514,591
President and Chief *3,390 29.6875 3-13-1998 0 18,035 38,232
Operating Officer *9,607 29.6875 6-28-2000 0 90,945 204,543
------ --------- ---------
62,997 6% 1,101,283 2,757,366
Thomas M. Miller 0 -- -- -- -- -- --
Retired Vice
Chairman
Andrew J. Paine, Jr. 20,000 2% 31.5625 6-19-2004 0 396,921 1,005,836
Executive Vice
President
Louis Betanzos 20,000 31.5625 6-19-2004 0 396,921 1,005,836
Executive Vice *2,887 31.5625 6-28-2000 0 30,656 69,444
President *2,887 31.5625 6-14-2002 0 42,878 102,429
------ --------- ---------
25,774 3% 470,455 1,177,709
Philip S. Jones 20,000 31.5625 6-19-2004 0 396,921 1,005,836
Executive Vice *1,847 31.5625 6-28-2000 0 19,612 44,428
President *2,463 31.5625 6-14-2002 0 36,581 87,386
------ --------- ---------
24,310 3% 453,114 1,137,650
</TABLE>
* Restoration option granted equal in number to shares tendered to exercise
portions of prior options.
(1) These stock option grants were issued under the terms of the NBD
Performance Incentive Plan and include the restoration option provision.
Original stock option grants become exercisable in 20% increments over
five years; restoration options are exercisable after six months. The
expiration date of a restoration option is the expiration date of the
original stock option to which it relates, and the exercise price is not
less than 100% of the fair market value of NBD's Common Stock on the date
the restoration option is granted. These stock options include limited
stock appreciation rights which are only triggered in the event of a
change in control of NBD.
(2) During 1994 a total of 969,904 options were granted to employees (69,404
shares under restoration options).
(3) The dollar amounts under these columns are the result of calculations at 0%
and at the 5% and 10% rates set by the SEC and therefore are not intended
to forecast possible future appreciation, if any, in the market value of
NBD's Common Stock.
13
<PAGE> 16
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT FISCAL IN-THE-MONEY
SHARES YEAR-END OPTIONS AT FISCAL YEAR-END
ACQUIRED ON VALUE ------------------------------- -------------------------------
EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME # $ # # $ $
- ---- ------------ -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Verne G. Istock............ 13,750 84,877 33,770 98,810 0 42,174
Chairman and Chief
Executive Officer
Thomas H. Jeff II.......... 20,250 215,295 34,342 90,747 0 42,174
President and Chief
Operating Officer
Thomas M. Miller........... 0 0 1,620 6,480 0 0
Retired Vice Chairman
Andrew J. Paine, Jr........ 0 0 32,899 24,800 404,812 0
Executive Vice President
Louis Betanzos............. 7,200 44,993 17,657 40,174 0 22,493
Executive Vice President
Philip S. Jones............ 5,250 29,667 12,086 35,560 0 14,058
Executive Vice President
</TABLE>
LONG-TERM INCENTIVE PLAN -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PERFORMANCE
SHARE PAYOUTS UNDER NON-STOCK
NUMBER OF PERFORMANCE OR PRICE-BASED PLANS
PERFORMANCE OTHER PERIOD UNTIL ----------------------------------
SHARES(1) MATURATION OR THRESHOLD TARGET MAXIMUM
NAME # PAYOUT # # #
- ---- ----------- ------------------ --------- ------ -------
<S> <C> <C> <C> <C> <C>
Verne G. Istock................................. 15,800 1994 - 1997 0 15,800 15,800
Chairman and Chief 700 1994 - 1994 0 700 700
Executive Officer 700 1994 - 1995 0 700 700
1,700 1994 - 1996 0 1,700 1,700
Thomas H. Jeffs II.............................. 12,000 1994 - 1997 0 12,000 12,000
President and Chief 450 1994 - 1994 0 450 450
Operating Officer 300 1994 - 1995 0 300 300
1,100 1994 - 1996 0 1,100 1,100
Thomas M. Miller................................ 0 1994 - 1997 0 0 0
Retired Vice Chairman
Andrew J. Paine, Jr............................. 3,500 1994 - 1997 0 3,500 3,500
Executive Vice President
Louis Betanzos.................................. 3,500 1994 - 1997 0 3,500 3,500
Executive Vice President
Philip S. Jones................................. 3,500 1994 - 1997 0 3,500 3,500
Executive Vice President
</TABLE>
(1) A performance share is one share of NBD's Common Stock, contingently
granted and earned by achievement of certain return-on-equity goals for NBD
compared to other peer banking institutions. During the performance periods
indicated above, the shares are issued and outstanding and the executive
officer to whom the award has been made has the right to vote such shares
and to receive dividends thereon. For a more complete discussion, see
"COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION -- Long-Term
Compensation."
14
<PAGE> 17
EMPLOYEES' RETIREMENT PLAN
The Employees' Retirement Plan covers salaried employees of NBD and certain
affiliated companies. The plan provides for normal retirement benefits upon
retirement at age 65. The normal retirement age under the plan is tied generally
to the age at which a participant is entitled to receive unreduced Social
Security benefits. Accordingly, the age will increase beginning in 2004 and may
be subject to further change thereafter as a result of changes in applicable
Social Security rules. Optional retirement at reduced benefit levels is provided
for on or after attaining age 55 with at least five years of service.
Benefits under the plan are based on years of credited service in
accordance with the provisions of the plan and on average compensation for the
five highest of the final ten years preceding retirement. Compensation covered
by the plan is substantially identical to the annual compensation reported in
the Summary Compensation Table, except that severance pay, tuition
reimbursements, and items of imputed income due to employee life insurance,
automobile use and the like are not covered as compensation for plan purposes.
Benefits are integrated with federal Social Security benefits.
Federal law limits the annual benefits that can be paid from any funded
retirement plan that qualifies for federal tax exemption, and the amount for
calendar year 1995 is $120,000. In addition, federal law limits the amount of
covered compensation for purposes of calculating pension benefits. As of January
1, 1995, that maximum is $150,000. To the extent that annual benefits payable
from the Retirement Plan are so limited, benefits are provided under the
"Pension Restoration/Supplemental Plan for Certain Employees of NBD Bancorp,
Inc." so as to provide designated employees with the benefits to which they are,
except for such limitation, entitled. As of December 31, 1994 the number of
years of credited service for each of the Named Executives was as follows: Verne
G. Istock -- 31; Thomas H. Jeffs II -- 32; Thomas M. Miller -- 40; Andrew J.
Paine, Jr. -- 34; Louis Betanzos -- 30; and Philip S. Jones -- 27.
Annual pension amounts shown in the following table are straight life
annuities and are inclusive of amounts payable under the Pension
Restoration/Supplemental Plan, but do not reflect the offset of the applicable
portion of Social Security benefits determined under the law in effect as of
January 1, 1995 for an employee then age 65.
<TABLE>
<CAPTION>
COMPENSATION YEARS OF SERVICE
(5 YEAR AVERAGE ---------------------------------------------------------------------------------------------------
PRECEDING RETIREMENT) 15 20 25 30
- --------------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
$ 250,000 $ 60,000 $ 80,000 $ 100,000 $ 120,000
500,000 120,000 160,000 200,000 240,000
750,000 180,000 240,000 300,000 360,000
1,000,000 240,000 320,000 400,000 480,000
1,250,000 300,000 400,000 500,000 600,000
1,500,000 360,000 480,000 600,000 720,000
1,750,000 420,000 560,000 700,000 840,000
<CAPTION>
COMPENSATION YEARS OF SERVICE
(5 YEAR AVERAGE ---------------------------------------------
PRECEDING RETIREMENT) 35 40
- --------------------- ---------- -----------
<S> <C> <C>
$ 250,000 $ 140,000 $ 160,000
500,000 280,000 320,000
750,000 420,000 480,000
1,000,000 560,000 640,000
1,250,000 700,000 800,000
1,500,000 840,000 960,000
1,750,000 980,000 1,120,000
</TABLE>
SEVERANCE ARRANGEMENTS
NBD has adopted a severance pay plan that provides for the payment of
certain benefits in the event a covered employee is involuntarily terminated
other than for cause within a two-year period following a "change in control" of
NBD (as defined in the plan). The plan covers approximately 14,000 full-time
salaried employees who have completed 12 months of employment with NBD. In the
event of such involuntary termination of employment, covered employees will be
entitled to receive an amount equal to one week of compensation for each full
year of employment with NBD with a minimum of four weeks and a maximum of 26
weeks of compensation payable. Continuation of regular base salary payments and
health and life benefit coverages for certain periods of time as stated in the
plan (6 or 12 months guaranteed and 3, 6 or 12 additional months in the event
new employment has not been secured) is provided for officers based upon their
salary grades. In no event will an employee receive a benefit greater than two
years of compensation and benefit coverage.
15
<PAGE> 18
The severance pay plan does not cover certain of the Named Executives and
NBD has entered into separation agreements with these Named Executives. These
agreements provide that in the event of the officer's termination of employment
under certain circumstances following a "change in control" of NBD (as defined
in the agreements), the individual will be entitled to severance benefits. These
benefits include a payment of two times the officer's annual salary and the most
recent incentive payment in effect on the date of such termination, and further
provides for continuation of health and death benefits for a 36-month period
after termination and up to two years of credited service for purposes of
calculating the officer's retirement benefits. Each agreement provides for
annual extension at the discretion of the Board of Directors following an
initial term, and continues for two years following a change in control. The
circumstances under which severance benefits will be payable are a termination
by the officer for good reason or by NBD other than for cause at any time within
two years following a change in control.
One of the Named Executives is covered by a change-in-control agreement
which became effective with and was assumed in NBD's acquisition of his prior
employer. This agreement provides that in the event of the officer's termination
of employment under certain circumstances within three years of the acquisition,
the officer will be entitled to certain benefits. These benefits include a
payment of three times the average of such officer's compensation (including
salary and bonus) for the five tax years immediately preceding the acquisition.
In addition, NBD would be required to continue to provide certain life, health
and other welfare benefits to such terminated officer as well as to allow
participation and benefit accruals in NBD's retirement and 401(k) plans for a
period up to three years following termination. The circumstances under which
these benefits will be payable are a termination by the officer for good reason
or by NBD other than for cause at any time within the three-year period
following acquisition. No payments have been made to the Named Executive under
this agreement.
2. PROPOSAL FOR APPROVAL OF PERFORMANCE-BASED, ANNUAL INCENTIVE CRITERIA UNDER
THE NBD EXECUTIVE INCENTIVE PLAN TO PRESERVE NBD'S TAX DEDUCTION FOR PLAN AWARDS
BACKGROUND FOR PROPOSAL. Tax legislation enacted in 1993 provides a limit
of $1 million per year on the tax deductibility of compensation paid to the
chief executive officer and the next four highest paid executive officers unless
such compensation is "performance-based," in which case it can be deducted
without limit. Recently published Internal Revenue Service regulations clarified
the requirement that performance-based criteria tied to a percentage of base
salary, such as the criteria used by NBD, contain a maximum dollar amount that
could be paid annually to any such officer. The proposal approved by the NBD
stockholders at the 1994 Annual Meeting did not contain a maximum award stated
as a specific dollar amount. For this reason, this proposal is being resubmitted
to stockholders in its entirety, but with the maximum award stated as a specific
dollar amount.
CURRENT EIP. The Executive Incentive Plan ("EIP") is an annual cash award
plan designed to provide incentive to certain senior officers of NBD and its
affiliates based upon such officers' contributions to NBD's growth and
profitability from year to year. Awards pursuant to the EIP are made only to
those officers whose services have a substantial effect on the management,
growth, development and success of NBD, as determined by the Compensation
Committee subject to approval by the Board of Directors. No award is granted for
a fiscal year to any person who terminates employment during that year for any
reason other than death, total and permanent disability or retirement. For 1994
the Committee made awards under the EIP to 200 officers.
No award may be granted pursuant to the EIP with respect to any fiscal year
during which the per share cash dividend paid on NBD's Common Stock is less than
the per share cash dividend (adjusted for stock splits and stock dividends) paid
during the immediately preceding fiscal year. Further, awards under the EIP and
awards under the Corporation's Key Officer Incentive Plan when added together
for any fiscal year may not exceed an amount that would reduce the consolidated
Net Income of the Corporation to less than 8% of the Stockholders' Equity of the
Corporation at the beginning of such fiscal year. Finally, the aggregate of all
awards under the EIP with respect to any fiscal year may not exceed an amount
equal to 3% of the consolidated Net Income of the Corporation for that year,
excluding items of extraordinary gain or loss and the income tax effects
thereof.
16
<PAGE> 19
Awards under the EIP for the year ended December 31, 1994 to the Named
Executives are listed on the Summary Compensation Table on page 12 in the column
captioned "Bonus". Awards under the EIP to all executive officers as a group and
to all participating employees (excluding the executive officers) as a group for
the year ended December 31, 1994, were $1,950,000 and $7,007,400, respectively.
PERFORMANCE-BASED ANNUAL INCENTIVE CRITERIA. The proposed performance-based
annual incentive criteria under the EIP for the chief executive officer and the
next four highest paid executive officers (the "class of employees" covered)
will be based upon NBD's return on equity ("ROE") for the year in relation to an
ROE goal set by the Committee at the start of each year and a comparison of
NBD's ROE to average ROE at peer banking institutions (the "performance
measure").
TARGET AND MAXIMUM AWARD. Each participating officer is assigned a target
award at the start of each year, as a percent of base salary, which will be
payable if the ROE goal is achieved. The highest level of target award allowable
under the criteria is 65% of salary. Actual awards are a function of NBD's ROE
for the year in relation to its goal, adjusted by a factor for NBD's ROE in
comparison to peer financial institutions. If actual ROE is below the goal,
individual awards will be less than the target, down to an ROE threshold below
which no awards are earned. If actual ROE is above the goal, individual awards
will be more than the target, up to a maximum award of 100% of the salary stated
in NBD's proxy statement for that year, not to exceed $1.5 million (the "maximum
award"). The Committee retains the right in its discretion to reduce an
officer's award if it believes that individual performance does not warrant the
original award calculated in relation to ROE performance.
DEFINITIONS. For purposes of determining awards, "Return on Equity" is
calculated by dividing "Net Income" by "Shareholders' Equity" for the year. "Net
Income" is defined as consolidated net income as reported in NBD's audited
financial statements for the year, before securities transactions and before any
extraordinary, unusual or non-recurring items of gain or loss that are
identified and quantified separately in the audited financial statements, net of
tax effect, and after any preferred dividends. The Compensation Committee
retains the right in its discretion to reduce Net Income for purposes of
applying the performance-based annual incentive criteria if it believes that
such Net Income produces a level of payout above the level warranted by
management performance. It may not, however, increase Net Income or individual
awards above the level produced by the calculations. "Shareholders' Equity" is
NBD's total stockholders' equity on its consolidated balance sheet at the end of
the preceding year. ROE for 1994, according to this definition, was 16.86%.
TERM OF CRITERIA. The term of the performance-based annual incentive
criteria under the EIP, assuming approval by stockholders, will be five years,
1995 through 1999, unless sooner terminated or amended by the Board. Any
amendment that would materially change the "class of employees" covered, the
"performance measure," or the "maximum award" payable would be subject to
stockholder approval.
RELATIONSHIP TO EIP. If the proposal for the performance-based annual
incentive criteria is not approved by stockholders, the Executive Incentive Plan
under which the performance-based annual incentive awards are paid would remain
in effect under Board authority. The Board would retain authority to develop and
implement alternate means of compensating executive officers, including the
chief executive officer and the next four highest paid executive officers, for
performance.
REQUIRED VOTE. The affirmative vote of holders of a majority of NBD's
Common Stock present in person or by proxy and entitled to vote at the Annual
Meeting will be necessary to approve the performance-based, annual incentive
criteria.
THE BOARD OF DIRECTORS RECOMMENDS APPROVAL OF THE PERFORMANCE-BASED, ANNUAL
INCENTIVE CRITERIA.
3. PROPOSAL FOR APPROVAL OF PERFORMANCE-BASED, LONG-TERM
INCENTIVE CRITERIA UNDER THE NBD PERFORMANCE INCENTIVE PLAN
TO PRESERVE NBD'S TAX DEDUCTION FOR PLAN AWARDS
BACKGROUND FOR PROPOSAL. Tax legislation enacted in 1993 provides a limit
of $1 million per year on the tax deductibility of compensation paid to the
chief executive officer and the next four highest paid executive officers unless
such compensation is "performance-based," in which case it can be deducted
without limit.
17
<PAGE> 20
Recently published Internal Revenue Service regulations clarified the
requirement that performance-based criteria tied to a percentage of base salary,
such as the criteria used by NBD, contain a maximum dollar amount that could be
paid annually to any such officer. The proposal approved by the NBD stockholders
at the 1994 Annual Meeting did not contain a maximum award stated as a specific
dollar amount. For this reason, this proposal is being resubmitted to
stockholders in its entirety, but with the maximum award stated as a specific
dollar amount.
CURRENT PIP. The Performance Incentive Plan is designed to provide
incentive compensation based upon eligible officers' contributions to NBD's
long-term growth and profitability and to assist NBD in attracting and retaining
key officers and in motivating their activities to realize NBD's long-term
financial objectives.
Participation in PIP is limited to those officers designated each year by
the Committee, which is empowered to establish two groups of award recipients.
The first group is selected from among the more senior officers. The Committee
is authorized to award to this group performance shares and/or share units. A
performance share is one share of NBD's Common Stock, and a share unit is an
amount in cash equal to the market value of one share of NBD's Common Stock as
of the date of distribution of the award. Awards to the first group of officers
are tied to the achievement of certain financial performance goals for NBD
(which may include comparison to peer financial institutions) set by the
Committee over performance periods of at least one year and up to five years in
duration. During 1994 the Committee made performance share awards under PIP to
56 officers.
The second group of officers who may receive awards under PIP includes
officers designated by the Committee excluding (except by special Committee
action) those senior officers eligible as part of the first group. The second
group of officers may be awarded shares of NBD's Common Stock and/or share units
without corporate performance requirements, for award periods of not less than
twelve months from the date of award ("retention shares"). During 1994 the
Committee made retention share awards under PIP to 563 officers.
Awards of performance shares or share units are made at the beginning of a
performance or award period. During the performance or award period, the shares
are issued and outstanding and the person to whom the award has been made has
the right to vote such shares and to receive dividends thereon. During such
period amounts equal to dividends declared on one share of Common Stock are
payable to a participant who has been awarded a share unit. Distribution of
awards is made shortly after the last day of the applicable award or performance
period.
PIP also permits the grant of stock options and/or stock appreciation
rights to the same officer groups. Such grants may be in addition to awards made
to officers in the two groups described above. Grants may but are not required
to be made in the form of stock options that qualify as "incentive stock
options" within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended.
The term of each option is determined by the Committee, except that the
term of an incentive stock option will not exceed ten years from the date of
grant. No option is exercisable prior to the expiration of the first year of its
term. The Committee determines at the time of grant whether the option is
exercisable in full or in cumulative installments. Except in the event of
certain terminations of employment or death, no option may be exercised unless
the holder thereof is then an employee who has remained in the continuous employ
of the Corporation or any of its affiliates for one year from the date of its
grant. The option price set by the Committee is not less than 100% of the fair
market value of the Common Stock on the date the option is granted.
Under the terms of PIP, each year the number of shares of Common Stock of
the Corporation (including performance shares) and share units that may be
awarded and/or granted subject to option and/or appreciation rights shall not
exceed 5% of the aggregate outstanding shares of Common Stock of the Corporation
on January 1 of that year less the number of shares and share units awarded or
subject to options and/or appreciation rights granted during the immediately
preceding four calendar year period. Of this aggregate number, no more than
1,000,000 shares of Common Stock are available for the grant of incentive stock
options.
Performance shares awarded to the Named Executives during 1994 are detailed
in the table captioned "Long-Term Incentive Plans -- Awards in Last Fiscal Year"
on page 14. Retention shares awarded to the Named Executives during 1994 are
detailed in the table captioned "Summary Compensation Table" on page 12 under
the heading "Restricted Stock Awards." The number of performance shares and/or
retention shares awarded
18
<PAGE> 21
pursuant to PIP for the year ended December 31, 1994, to all executive officers
as a group and to all participating employees (excluding the executive officers)
as a group were 113,275 and 328,535, respectively.
Stock options with respect to NBD's Common Stock were awarded under PIP in
1988, 1990, 1992 and 1994. Such options awarded to the Named Executives during
1994 are detailed in the table captioned "Stock Option Grants In Last Fiscal
Year" on page 13. The number of options awarded during 1994 to all executive
officers as a group and to all employees (excluding the executive officers) as a
group were 315,105 and 654,799, respectively. The average per share exercise
price for each option is $31.52 per share. Option exercise prices are based on
the market price per share of NBD's Common Stock on the date of the option
grant.
PERFORMANCE-BASED LONG-TERM INCENTIVE CRITERIA. The proposed
performance-based long-term incentive criteria for the chief executive officer
and the next four highest paid executive officers (the "class of employees"
covered) will provide for annual grants of performance shares, starting in 1995,
that will be earned out 0-100% at the end of a four-year performance period
based on NBD's average return on equity ("ROE") in comparison to average ROE
during the period at peer banking institutions selected by the Committee (the
"performance measure").
TARGET AND MAXIMUM AWARDS. Each participating officer is assigned a target
award at the start of each performance period stated as a percent of salary. The
highest level of target award, currently assigned to the chief executive
officer, is 65% of salary. Under the proposed criteria, the Committee will be
able to grant a maximum target award of 100% of the salary stated in NBD's proxy
statement for the first year of the performance period, not to exceed $1.5
million. The percentage target award is multiplied by the participant's salary
and divided by the fair market value of a share of NBD's Common Stock at the
start of each performance period to determine a target number of performance
shares. Performance shares pay dividends(1) and have voting rights during the
performance period. If average ROE during the performance period is at or above
the goal, the target number of performance shares is earned. The target number
of shares is also the maximum number of shares (the "maximum award"). If ROE
performance is below the goal, individual awards are less than the target, down
to an ROE threshold below which all performance shares are forfeited.
DEFINITIONS. For purposes of determining awards, "Return on Equity" is
calculated by dividing "Net Income" by "Shareholders' Equity" for the year. "Net
Income" is defined as consolidated net income as reported in NBD's audited
financial statements for the year, before any extraordinary, unusual or
non-recurring items of gain or loss that are identified and quantified
separately in the audited financial statements, net of tax effect, and after any
preferred dividends. The Compensation Committee retains the right in its
discretion to reduce Net Income for purposes of applying the performance-based
long-term incentive criteria if it believes that such Net Income produces a
level of payout above the level warranted by management performance. It may not,
however, increase Net Income or individual awards above the level produced by
the calculations. "Shareholders' Equity" is NBD's average total stockholders'
equity on its consolidated balance sheet for the preceding year.
TERM OF CRITERIA. The term of the performance-based, long-term incentive
criteria under PIP, assuming approval by stockholders, will be five years, 1995
through 1999, unless sooner terminated or amended by the Board. Any amendment
that would materially change the "class of employees" covered, the "performance
measure," or the "maximum award" payable would be subject to stockholder
approval.
RELATIONSHIP TO PIP. If the proposal for the performance-based long-term
incentive criteria is not approved by stockholders, the Performance Incentive
Plan under which the performance-based long-term incentive grants are made would
remain in effect under Board authority. The Board would retain authority to
develop and implement alternate means of compensating executive officers,
including the chief executive officer and the next four highest paid executive
officers, for long-term performance.
REQUIRED VOTE. The affirmative vote of holders of a majority of NBD's
Common Stock present in person or by proxy and entitled to vote at the Annual
Meeting will be necessary to approve the performance-based, long-term incentive
criteria.
THE BOARD OF DIRECTORS RECOMMENDS APPROVAL OF THE PERFORMANCE-BASED,
LONG-TERM INCENTIVE CRITERIA.
- ---------------
(1) Note: cash dividends on performance shares will not be deductible to the
extent they, in combination with other non-exempted payment, exceed $1
million a year.
19
<PAGE> 22
4. SELECTION OF INDEPENDENT AUDITORS
The Board of Directors, upon the recommendation of its Audit Committee,
selected Deloitte & Touche LLP as NBD's principal independent auditors for the
year ending December 31, 1995, subject to ratification by the holders of a
majority of the votes cast. If the appointment is not ratified, the Board of
Directors will appoint another firm as NBD's independent auditors for the year
ending December 31, 1995.
Representatives of Deloitte & Touche LLP plan to attend the Annual Meeting
of Stockholders, will have the opportunity to make a statement if they desire to
do so, and will respond to appropriate questions by stockholders.
THE BOARD OF DIRECTORS RECOMMENDS RATIFICATION OF THE SELECTION OF THE
INDEPENDENT AUDITORS.
5. OTHER BUSINESS
The Board of Directors knows of no other business to be presented for vote
at the Annual Meeting. If any other business should be presented upon which a
vote properly may be taken, it is intended that shares represented by proxies in
the accompanying form will be voted with respect thereto in accordance with the
judgment of the person or persons voting such shares.
STOCKHOLDER PROPOSALS
Pursuant to applicable rules under the Securities Exchange Act of 1934,
proposals of stockholders intended to be presented at the 1996 Annual Meeting of
Stockholders must be received by Daniel T. Lis, Secretary of NBD, at the
principal executive offices of NBD on or before December 11, 1995.
By order of the Board of Directors
[SIG]
DANIEL T. LIS
Senior Vice President and Secretary
20
<PAGE> 23
[NBD LOGO]
[RECYCLE LOGO]
<PAGE> 24
<TABLE>
<S> <C>
/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
WITH- FOR ALL
FOR HOLD EXCEPT
The Board of Directors proposes and recommends a vote "For"
1.) Election of Directors / / / / / / Items 1-4.
FOR AGAINST ABSTAIN
TERENCE E. ADDERLEY RICHARD A. MANOOGIAN 2.) To consider and approve performance- / / / / / /
JAMES K. BAKER THOMAS E. REILLY, JR. based annual incentive criteria under
THOMAS H. JEFFS II PETER W. STROH the NBD Executive Incentive Plan.
JOHN E. LOBBIA
3.) To consider and approve performance- / / / / / /
If you do not wish to direct the voting of your shares based long-term incentive criteria
"For" a particular nominee, mark the "For All Except" under the NBD Performance Incentive
box and strike a line through the nominee's name. Plan.
Your shares will be voted for the remaining nominees.
4.) To consider and ratify the selection / / / / / /
RECORD DATE SHARES: of independent auditors.
5.) In their discretion, the Proxies are authorized to vote upon
such other business as may properly come before the Annual
Meeting.
Please be sure to sign and date this proxy. Date_______________ Mark box at right if comments or address change have / /
been noted on reverse side.
Participant sign here________________________________________
- ------------------------------------------------------------------------------------------------------------------------------------
DETACH CARD
[NBD LOGO] April 7, 1995
To The Owners of NBD Bancorp, Inc.
You are cordially invited to attend the Annual Meeting of Stockholders which will be held on Monday, May 15, 1995 at the Main Office
of NBD Bank, 611 Woodward Avenue, Detroit, Michigan, commencing at 10:00 a.m., Detroit time.
Please take note of the important information enclosed with this proxy ballot. At the Annual Meeting, you are being asked to elect
Directors, approve performance-based incentive criteria under NBD's annual and long-term incentive plans, and ratify the selection
of NBD's independent auditors. These matters are fully set forth in the accompanying Notice of Annual Meeting and Proxy Statement.
A combined copy of NBD's Annual Report and Form 10-K for the year 1994 has previously been provided to you.
Your vote counts. It is important that your shares are represented and voted at the Annual Meeting, whether or not you plan to
attend. Please mark the boxes on the above proxy card to indicate how your shares shall be voted. Then sign and date the card,
detach it and return your proxy vote in the enclosed postage paid envelope.
Your interest and participation in NBD's affairs are appreciated and we welcome your comments, which may be made on the reverse side
of the proxy.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
/s/
Chairman and Chief Executive Officer
- ------------------------------------------------------------------------------------------------------------------------------------
NBD BANCORP, INC.
I hereby appoint Monica M. Barbour and Richard J. McCullen, and each of them is hereby appointed, Proxy, with full power of
substitution, to vote at NBD's Annual Meeting of Stockholders on May 15, 1995 and any adjournments or postponements thereof,
on matters which may properly come before the Annual Meeting, in accordance with and as more fully described in the Notice
of Annual Meeting and the Proxy Statement, receipt of which is acknowledged.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THE PROXIES ARE AUTHORIZED TO VOTE MY SHARES IN ACCORDANCE
WITH THE DIRECTION ON THIS CARD. IF I HAVE NOT INDICATED A CHOICE ON THIS CARD, THE PROXIES MAY VOTE MY SHARES "FOR" THE
ELECTION OF DIRECTORS AND ALL PROPOSALS.
PLEASE VOTE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN ENCLOSED ENVELOPE.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
____________________________________________________ ____________________________________________________
____________________________________________________ ____________________________________________________
____________________________________________________ ____________________________________________________
</TABLE>
<PAGE> 25
<TABLE>
<S> <C>
/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
WITH- FOR ALL
FOR HOLD EXCEPT
The Board of Directors proposes and recommends a vote "For"
1.) Election of Directors / / / / / / Items 1-4.
FOR AGAINST ABSTAIN
TERENCE E. ADDERLEY RICHARD A. MANOOGIAN 2.) To consider and approve performance- / / / / / /
JAMES K. BAKER THOMAS E. REILLY, JR. based annual incentive criteria under
THOMAS H. JEFFS II PETER W. STROH the NBD Executive Incentive Plan.
JOHN E. LOBBIA
3.) To consider and approve performance- / / / / / /
If you do not wish to direct the voting of your shares based long-term incentive criteria
"For" a particular nominee, mark the "For All Except" under the NBD Performance Incentive
box and strike a line through the nominee's name. Plan.
Your shares will be voted for the remaining nominees.
4.) To consider and ratify the selection / / / / / /
RECORD DATE SHARES: of independent auditors.
5.) In their discretion, the Proxies are authorized to vote upon
such other business as may properly come before the Annual
Meeting.
Please be sure to sign and date this proxy. Date_______________ Mark box at right if comments or address change have / /
been noted on reverse side.
Stockholder sign here________________Co-owner sign here________
- ------------------------------------------------------------------------------------------------------------------------------------
DETACH CARD
[NBD LOGO] April 7, 1995
To The Owners of NBD Bancorp, Inc.
You are cordially invited to attend the Annual Meeting of Stockholders which will be held on Monday, May 15, 1995 at the Main Office
of NBD Bank, 611 Woodward Avenue, Detroit, Michigan, commencing at 10:00 a.m., Detroit time.
Please take note of the important information enclosed with this proxy ballot. At the Annual Meeting, you are being asked to elect
Directors, approve performance-based incentive criteria under NBD's annual and long-term incentive plans, and ratify the selection
of NBD's independent auditors. These matters are fully set forth in the accompanying Notice of Annual Meeting and Proxy Statement.
A combined copy of NBD's Annual Report and Form 10-K for the year 1994 has previously been provided to you.
Your vote counts. It is important that your shares are represented and voted at the Annual Meeting, whether or not you plan to
attend. Please mark the boxes on the above proxy card to indicate how your shares shall be voted. Then sign and date the card,
detach it and return your proxy vote in the enclosed postage paid envelope.
Your interest and participation in NBD's affairs are appreciated and we welcome your comments, which may be made on the reverse side
of the proxy.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
/s/
Chairman and Chief Executive Officer
- ------------------------------------------------------------------------------------------------------------------------------------
NBD BANCORP, INC.
I (we) hereby appoint Monica M. Barbour and Richard J. McCullen, and each of them is hereby appointed, Proxy, with full power of
substitution, to vote at NBD's Annual Meeting of Stockholders on May 15, 1995 and any adjournments or postponements thereof,
on matters which may properly come before the Annual Meeting, in accordance with and as more fully described in the Notice of
Annual Meeting and the Proxy Statement, receipt of which is acknowledged.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THE PROXIES ARE AUTHORIZED TO VOTE MY SHARES IN ACCORDANCE
WITH THE DIRECTION ON THIS CARD. IF I HAVE NOT INDICATED A CHOICE ON THIS CARD, THE PROXIES MAY VOTE MY SHARES "FOR" THE
ELECTION OF DIRECTORS AND ALL PROPOSALS.
PLEASE VOTE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN ENCLOSED ENVELOPE.
Please sign this proxy exactly as your name appears hereon. Joint owners should each sign. When signing as attorney, personal
representative, executor, administrator, trustee or guardian, please give full title as such. If a corporation, partnership or
similar entity, the signature should be that of an authorized officer, indicating capacity.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
____________________________________________________ ____________________________________________________
____________________________________________________ ____________________________________________________
____________________________________________________ ____________________________________________________
</TABLE>
<PAGE> 26
SUPPLEMENTAL DOCUMENTATION REQUIRED PURSUANT TO
SCHEDULE 14A ITEM 10 INSTRUCTION 3.
NBD BANCORP, INC.
EXECUTIVE INCENTIVE PLAN
(As Amended March 21, 1994)
Section 1 - Purpose
The NBD BANCORP, INC. EXECUTIVE INCENTIVE PLAN (hereinafter
called the "Plan") is a plan to provide incentive compensation to senior
officers and other key employees (hereinafter together called "officers" or
"senior officers") of NBD Bancorp, Inc. (hereinafter called the "Corporation")
and of its affiliated corporations (hereinafter, including the Corporation,
called "participating affiliates"), based upon such officers' individual
contributions to the overall growth and profitability of the Corporation from
year to year, for the purpose of assisting the Corporation in attracting and
retaining as officers individuals of superior ability and in motivating their
activities on behalf of the Corporation. For purposes of the Plan, affiliated
corporations shall include only those corporations a majority of the
outstanding voting capital stock of which is directly or indirectly owned or
controlled by the Corporation.
Section 2 - Effective Date
The Plan shall be effective as of January 1, 1983.
Section 3 - Administration
The Compensation Committee of the Board of Directors of the
Corporation (the "Committee"), the members of which shall be "disinterested
persons" under Rule 16b-3 of the Securities and Exchange Commission (or any
successor regulation issued under federal securities laws) and ineligible to
participate in the Plan, shall be responsible for the general operation and
administration of the Plan and shall have the authority to interpret the Plan
and to adopt administrative rules and regulations governing its operation. The
Committee may delegate the performance of administrative functions to the
Secretary of the Committee.
Section 4 - Participation
Participation in the Plan shall be limited to those officers
of the participating affiliates designated by the Committee from among the more
senior officers of the Corporation and its participating affiliates to
participate in the Plan for each fiscal year. For officers who are "covered
employees" under Section 162(m) of the Internal Revenue Code of 1986, as
amended, and related regulations, the Committee shall administer this Plan in
accordance with the provisions of Appendix A.
Section 5 - Incentive Compensation Awards
(a) The Committee shall determine the amount of each
incentive compensation award to be granted under the terms of the Plan for each
fiscal year and, upon the approval by the Board of Directors of the Corporation
of the individual awards, if any, for such fiscal year made to the executive
officers and of the total of all awards for such fiscal year made to all other
officers, the determination of the Committee as to each such award shall become
final.
(b) Each incentive compensation award shall be paid to a
participant in the Plan entitled thereto in
<PAGE> 27
cash. A participant may elect to defer the payment of any part or all of the
participant's incentive compensation award until a future date specified by the
participant. A participant's election to defer payment of the participant's
incentive compensation award shall be made in writing and delivered to the
Committee in such form and manner as is approved for that purpose by the
Committee. The Committee shall provide for the payment of interest on the
deferred portion of a participant's incentive compensation award at such rates
and at such times as it shall determine. If a participant dies while in the
employ of a participating affiliate but prior to receipt of the participant's
award, the award, if any, and the interest due thereon, if any, shall be paid
in cash to the participant's designated beneficiary, or, in the absence of a
beneficiary designation, to the participant's estate. Payment of all awards
shall be made, unless otherwise elected by the participant, as soon as
practicable following the close of the fiscal year for which they are granted.
(c) No incentive compensation award shall be granted for a
fiscal year to any participant in the Plan who terminates employment with a
participating affiliate during such fiscal year for any reason other than
death, total and permanent disability, or retirement at normal retirement age
or, with the consent of the participating affiliate with which he or she is
employed, at early retirement age under a retirement plan maintained by the
participating affiliate. For this purpose, a participant who transfers
employment between participating affiliates shall not be considered to have
terminated the participant's employment.
Section 6 - Limitations on Incentive Compensation Awards
(a) In no event shall any incentive compensation award be
granted hereunder with respect to any fiscal year during which the per share
cash dividend paid to its shareholders by the Corporation on its common capital
stock is less than the per share cash dividend so paid for the immediately
preceding fiscal year.
(b) The aggregate of all incentive compensation awards under
the Plan granted to participants in the Plan with respect to any fiscal year
shall not exceed an amount equal to three percent (3%) of the consolidated net
income of the Corporation for such year. "Consolidated Net Income" for
purposes of this subparagraph (b) for a fiscal year shall mean the consolidated
net income of the Corporation (excluding for purposes of this Plan items of
extraordinary gain or loss as determined by the Committee and the income tax
affects thereof).
(c) The aggregate of all incentive compensation awards under
the Plan and under the Key Officer Incentive Plan with respect to any fiscal
year shall not exceed an amount that would reduce the consolidated net income
of the Corporation for such year to less than eight percent (8%) of the
shareholders' equity of the Corporation as of the beginning of that fiscal year
as reported to its shareholders in its consolidated financial statements.
Section 7 - General
(a) Neither the establishment of the Plan nor any provisions
of the Plan or modifications thereof shall be held or construed as giving any
participant in the Plan the right to an award under the Plan or the right to be
retained in the service of any participating affiliate and each participating
affiliate expressly reserves its right to discharge any such participant
whenever the interests of such participating affiliate may so require.
(b) Notwithstanding any other provisions in the Plan, in the
event of a Change in Control (as hereinafter defined) all awards for the fiscal
year in which such Change in Control occurs shall become immediately
distributable to the participants entitled thereto. Distribution of all such
awards shall be made
- 2 -
<PAGE> 28
immediately prior to the date of the Change in Control. In addition, the
Corporation shall reimburse a participant for legal fees and expenses incurred
by such participant in successfully seeking to obtain or enforce any right to
the distribution of an award provided under this Section 7(b) and in the event
that it shall be determined that such participant is entitled to a distribution
hereunder, such participant shall also be entitled to interest thereon payable
to such participant in an amount equivalent to the prime rate of interest of
NBD Bank, N.A. from time to time during the period from the date such award
should have been distributed to the date of payment. For purposes of this
Plan, a Change in Control shall occur if (i) any "person" or "group" within the
meaning of Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act") becomes the "beneficial owner" as defined in
Rule 13d-3 under the Exchange Act of more than thirty percent (30%) of the then
outstanding voting securities of the Corporation otherwise than through a
transaction or transactions arranged by or consummated with the prior approval
of the Corporation's Board of Directors; or (ii) during any period of
twenty-four (24) consecutive months (not including any period prior to the
adoption of this Section 7(b)) Present Directors and/or New Directors cease for
any reason to constitute a majority of the Board. For purposes of subsection
(ii) of the preceding sentence, "Present Directors" shall mean individuals who
at the beginning of such consecutive twenty-four (24) month period were members
of the Corporation's Board and "New Directors" shall mean any director of the
Corporation whose election by the Corporation's Board or whose nomination for
election by the Corporation's shareholders was approved by a vote of at least
two-thirds of the Corporation's Directors then still in office who were Present
Directors or New Directors. Notwithstanding any other provisions of the Plan,
the provisions of this Section 7(b) may not be amended after the date a Change
in Control occurs without the written consent of a majority in number of
participants.
Section 8- Amendment, Suspension and Termination
The Board of Directors of the Corporation reserves the right
at any time to amend, suspend, or terminate the Plan.
- 3 -
<PAGE> 29
NBD BANCORP, INC.
EXECUTIVE INCENTIVE PLAN
Appendix A
The following provisions have been disclosed to and submitted
for approval to the stockholders of the Corporation at the Annual Meeting to be
held on May 15, 1995:
The performance-based annual incentive criteria for the chief
executive officer and the next four highest paid executive officers (the "class
of employees" covered) are based upon the Corporation's return on equity ("ROE")
for the year in relation to an ROE goal set by the Committee at the start of
each year and a comparison of NBD's ROE to average ROE at peer financial
institutions (the "performance measure").
TARGET AND MAXIMUM AWARD. Each participating officer is
assigned a target award at the start of each year, as a percent of base salary,
which will be payable if the ROE goal is achieved. The highest level of target
award allowable under the criteria is 65% of salary. Actual awards are a
function of NBD's ROE for the year in relation to its goal, adjusted by a
factor for NBD's ROE in comparison to peer financial institutions. If actual
ROE is below the goal, individual awards will be less than the target, down to
an ROE threshold below which no awards are earned. If actual ROE is above the
goal, individual awards will be more than the target, up to a maximum award of
100% of the salary stated in the Corporation's Proxy Statement for that year,
not to exceed $1.5 million (the "maximum award"). The Committee retains the
right in its discretion to reduce an officer's award if it believes that
individual performance does not warrant the original award calculated in
relation to ROE performance.
DEFINITIONS. For purposes of determining awards, "Return on
Equity" is calculated by dividing "Net Income" by "Shareholders' Equity" for
the year. "Net Income" is defined as consolidated net income as reported in
the Corporation's audited financial statements for the year, before securities
transactions and before any extraordinary, unusual or non-recurring items of
gain or loss that are identified and quantified separately in the audited
financial statements, net of tax effect, and after any preferred dividends.
The Committee retains the right in its discretion to reduce Net Income for
purposes of applying the performance-based annual incentive criteria if it
believes that such Net Income produces a level of payout above the level
warranted by management performance. It may not, however, increase Net Income
or individual awards above the level produced by the calculations.
"Shareholders' Equity" is the Corporation's total shareholders'
equity on its consolidated balance sheet at the end of the preceding year.
TERM OF CRITERIA. The term of the performance-based annual
incentive criteria is five years, 1995 through 1999, unless sooner terminated
or amended by the Board. Any amendment that would materially change the "class
of employees" covered, the "performance measure," or the "maximum award"
payable is subject to stockholder approval.
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NBD BANCORP, INC.
PERFORMANCE INCENTIVE PLAN
(As Amended March 21, 1994)
Section 1 - Purpose
The NBD BANCORP, INC. PERFORMANCE INCENTIVE PLAN (hereinafter called the
"Plan") is a plan to provide long term incentive compensation to certain
current and former key officers and employees of NBD Bancorp, Inc.
(hereinafter called the "Corporation") and of its affiliated entities
(hereinafter, including the Corporation, called "participating affiliates")
based upon such officers' and employees' individual contributions to the long
term growth and profitability of the Corporation, in order to encourage their
identity with shareholder concerns and their current and continuing interest in
the development and financial success of the Corporation. Because it is
expected that the efforts of the officers and employees selected for
participation in the Plan will have a significant impact on the results of the
Corporation's operations in future years, the Plan is intended to assist the
Corporation in attracting and retaining as officers and employees individuals
of superior ability and in motivating their activities on behalf of the
Corporation.
Section 2 - Definitions
(a) The term "affiliated entities" shall mean those corporations and
partnerships in which the Corporation owns directly or indirectly a significant
equity interest as defined under generally accepted accounting principles.
(b) The term "Code" shall mean the Internal Revenue Code of 1986, as the
same may be from time to time amended.
(c) The term "Committee" shall mean the Compensation Committee of the
Board of Directors of the Corporation, the members of which shall be
"disinterested persons" under Rule 16b-3 of the Securities and Exchange
Commission (or any successor regulation issued under federal securities laws)
and shall be ineligible to participate in the Plan.
(d) The term "company stock" shall mean shares of the common capital stock
of the Corporation available for award or awarded, or subject to options or
rights granted, under the Plan.
(e) The term "market value" shall mean for a share of company stock as of
any date the mean between the highest and lowest sale prices for the company
stock as reflected in the New York Stock Exchange Composite Transactions
Quotations for that date, or if there is no sale on such date, then on the next
preceding date on which a sale has occurred.
(f) The term "options" shall mean collectively the incentive stock options
and the non-qualified options available for grant or granted under Section 10
of the Plan.
(g) The term "optionee" means any person to whom an option or right has
been granted or who becomes a holder of an option or right under Section 10 of
the Plan.
(h) The term "performance share" shall mean one share of company stock
available for award or
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awarded under Section 8 of the Plan.
(i) The term "rights" shall mean the stock appreciation rights available
for grant or granted in connection with options under Section 10 of the Plan.
(j) The term "share unit" shall mean a unit available for award under the
Plan having a cash value upon distribution equal to the market value of one
share of company stock on the distribution date.
Section 3 - Effective Date and Duration
Subject to the approval of the Plan by the shareholders of the
Corporation, the Plan shall be generally effective as of January 1, 1988. The
Plan shall continue until it is terminated by the Board of Directors as
provided in Section 12.
Section 4 - Administration
The Committee shall be responsible for the general operation and
administration of the Plan and shall have the authority to interpret the Plan
and to adopt administrative rules and regulations governing its operation. The
Committee may delegate the performance of administrative functions to the
Secretary of the Committee.
Section 5 - Participation, Stock Awards and Option Grants
(a) Each year, the Committee shall designate as participants in the Plan
those officers and employees of the participating affiliates and those former
officers and employees who have a consulting arrangement with the Corporation
whom the Committee determines to have significant responsibility for the
success and future growth and profitability of the Corporation.
(b) Each year, the Committee may award shares of company stock,
performance shares, share units, and/or may grant stock options that qualify as
"incentive stock options" within the meaning of Section 422 of the Code or
stock options that do not qualify as incentive stock options and/or stock
appreciation rights for use in connection with options to each current and
former officer and employee whom it has designated as a participant for such
year. Upon the approval by the Board of Directors of the Corporation of the
individual awards and/or grants, if any, made to executive officers and of the
total of all awards and grants made to all other persons, the determination of
the Committee as to each such award and grant shall become final.
Section 6 - Shares Reserved Under the Plan
There is hereby reserved for award and/or grant under the Plan an
aggregate number of whole shares of company stock equal as nearly as possible
to, but not more than, 5% of the aggregate shares of company stock outstanding
on the first day of January of each year, less the number of shares and share
units awarded or subject to options granted under the Plan during the
immediately preceding four-calendar-year period that have not been forfeited.
Of such aggregate number, no more than 1,000,000 shares of company stock shall
be available for the grant of incentive stock options under the Plan. Shares
of company stock may be authorized but unissued shares, treasury shares, shares
acquired in the open market, or any combination of the foregoing, and if
acquired in the open market, shall be acquired by an agent independent of the
participating affiliates. Any shares of company stock (including performance
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shares), share units, or options that are forfeited pursuant to Sections 8(f)
or (g), 9(d) or (e), or 10(h) of the Plan and, to the extent permissible for
purposes of allowing the Plan to continue to be considered as described under
Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), any shares of company stock that are used for full or partial payment of
the purchase price of shares with respect to which an option is exercised
pursuant to Section 10 of the Plan may thereafter again be awarded or made
subject to grant under the Plan. In the event of any change in the outstanding
shares of the common capital stock of the Corporation by reason of a stock
dividend, stock split, recapitalization, merger, consolidation, combination or
exchange of shares, or other similar change, the Committee may make appropriate
adjustments in the aggregate number of shares of company stock (including
performance shares) and share units already awarded or made subject to options
granted or reserved for award or grant under the Plan, in the prices of options
granted, or provide for the substitution of other securities of the class
exchanged for common capital stock of the Corporation in any merger or
consolidation.
Section 7 - Shares Awarded and Options Granted Under the Plan
(a) Shares of company stock (including performance shares), share units,
options and/or rights awarded or granted to a participant may not be sold,
transferred, alienated or assigned (other than by will or the laws of descent
and distribution) during the award period, performance period and/or exercise
period established with respect to such shares, but nothing contained in this
sentence shall preclude the sale or other transfer of shares of company stock
obtained by the proper exercise of any option. During the lifetime of an
optionee, the option or right shall be exercisable only by the optionee
personally or by the optionee's legal representative.
(b) Subject to the vesting provisions of Sections 8(e) and 9(c), shares of
company stock awarded to a participant will become freely transferable by the
participant only at the end of the award period or performance period
established with respect to such shares.
(c) The vesting of awards of shares of company stock (including
performance shares) and/or share units in, and the exercise of options and/or
rights by, a participant under this Plan shall be subject to satisfaction of
the conditions precedent that the participant refrain from engaging in any
activity that, in the opinion of the Committee, is competitive with any
activity of the Corporation or any of the participating affiliates (except that
employment at the request of the Corporation with an entity in which the
Corporation has, directly or indirectly, a substantial ownership interest, or
other employment specifically approved by the Committee, shall not be
considered to be an activity that is competitive with any activity of the
Corporation or any of the participating affiliates) and from otherwise acting,
either prior to or after termination of employment, in any manner inimical or
in any way contrary to the best interests of the Corporation and that the
participant furnish to the Corporation such information with respect to the
satisfaction of the foregoing conditions precedent as the Committee shall
reasonably request. Any shares of company stock awarded or issued under the
Plan may be made subject to such other conditions or restrictions as the
Committee deems advisable, including without limitation, provisions to comply
with federal and state securities laws.
(d) Whenever shares of company stock are awarded to a participant, such
shares shall be outstanding, and stock certificates may be issued in the name
of the participant or a book entry may be made by the Corporation's stock
transfer agent for the account of the participant, which certificates and/or
account shall bear a legend stating that the shares are issued subject to the
restrictions set forth in the Plan. Any certificates actually issued for
shares of company stock awarded under the Plan shall be deposited for the
benefit of the participant with NBD Bank, N.A., as custodian until such time as
the shares are vested and transferable.
(e) A participant who is awarded shares of company stock under Section 8
or Section 9 of the Plan shall have full voting rights on such shares, whether
or not the shares are vested or transferable.
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(f) Shares of company stock awarded to a participant under Section 8 or
Section 9 of the Plan, whether or not vested or transferable, shall have full
dividend rights with respect to dividends declared after the award, with such
dividends being paid directly to the participant. If all or part of a dividend
is paid in the form of shares of common capital stock of the Corporation, such
shares shall be issued in the same manner, and subject to the same deposit
requirements, vesting provisions and transferability restrictions as the shares
of company stock that are the basis for the dividend. Like requirements,
provisions and restrictions shall be applicable to shares or securities issued
as a result of a merger, consolidation or similar event. A participant to whom
share units have been awarded may be given by the Committee the right to
receive during the performance or award period as additional compensation cash
in an amount equal to the product of (i) the per share dividend on company
stock that is declared after the award of share units and (ii) the number of
share units awarded to such participant, and in such case such sums shall be
payable directly to the participant at the same time as dividends on company
stock are paid.
Section 8 - Performance Awards and Periods
(a) Participants eligible to receive awards of performance shares and/or
share units under the Plan shall be selected by the Committee from among the
more senior officers of the Corporation and its participating affiliates. For
officers who are "covered employees" under Section 162(m) of the Internal
Revenue Code of 1986, as amended, and related regulations, the Committee shall
administer awards under this Section 8 of the Plan in accordance with the
provisions of Appendix A.
(b) Effective January 1, 1988, and each year thereafter, the Committee
shall establish a performance period of no less than one (1) year and no more
than five (5) years in duration for the award of performance shares, which
period shall begin on the first day of January of the first year of the period
and shall end on the last day of December of the final year of such period. At
the beginning of a performance period, the Committee shall make such award or
awards of performance shares or share units to each selected participant as it
determines. During a performance period the Committee may increase awards of
performance shares or share units to such selected participants whose increased
corporate responsibilities warrant, in the judgment of the Committee, such
increase and may make awards of performance shares or share units to such newly
selected participants whose corporate responsibilities warrant, in the judgment
of the Committee, such award.
(c) As of the beginning of each performance period, the Committee shall
establish one or more business performance goals for that period, and the
weight to be given to each such goal. In setting performance goals, the
Committee may take into account performance in comparison with such peer
financial institutions as may be selected by the Committee for that purpose.
The Committee may, from time to time thereafter, make appropriate adjustments
in performance goals to reflect major unforeseen transactions, events or
circumstances that alter or affect such goals.
(d) As soon as practicable after the end of each performance period, the
Committee shall determine the extent to which the performance goals for that
period were attained and shall make the distributions, if any, prescribed in
Section 8(h).
(e) If a participant has received an award pursuant to the provisions of
Section 8(b) of the Plan and is employed by the participating affiliates at the
end of a performance period and the Committee determines that the performance
goals for such performance period were fully met, the participant shall be
fully vested at the end of the performance period in the number of performance
shares or share units awarded to the participant for that performance period.
In the event that the Committee determines that the performance goals for such
performance period were only partially met or were unmet, then the Committee
will determine what portion of the performance share or share unit award, if
any, will be distributable for such performance period, and the balance of the
participant's performance share or share unit award, if any, shall be forfeited
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to the Corporation as of the last day of the performance period. In the event
that the Committee determines that the satisfaction of the performance goals
for such performance period so warrant, the Committee may for that performance
period make additional awards of performance shares or share units to such
selected participants as the Committee determines, which additional performance
shares and/or share units shall be fully vested and non-forfeitable.
(f) Unless the Committee provides otherwise, in the event that before the
end of a performance period a participant dies, becomes totally and permanently
disabled, or retires at normal retirement age, or with the consent of the
participating affiliate with which he or she is employed retires at early
retirement age under a retirement plan maintained by a participating affiliate,
the participant, or the participant's beneficiary or estate in the event of the
participant's death, will be vested as of the day on which such death,
disability or retirement occurs in the number of performance shares or share
units the participant would have received had the participant's employment with
the participating affiliate continued to the end of the performance period, but
proportionately reduced to reflect the shorter period of employment. The
balance of performance shares or share units awarded to the participant for
such performance period shall be forfeited to the Corporation as of the last
day of the performance period. In the event of the death of the participant
before the end of a performance period, the Committee may elect to advance the
distribution date.
(g) Unless the Committee provides otherwise, if a participant should
terminate employment with the participating affiliates before the end of a
performance period for a reason other than death, total and permanent
disability, or retirement, all performance shares or share units awarded to the
participant for which the applicable performance period has not ended shall
automatically be forfeited to the Corporation as of the date of termination of
employment.
(h) Except as otherwise provided for in Section 8(f), distribution of
vested performance shares shall be made as soon as practicable after the last
day of the applicable performance period in the form of full shares of company
stock, with fractional shares, if any, being distributed in cash, and
distribution of vested share units shall be made on the same date to the
participant entitled thereto in cash, or in shares of company stock if the
Committee shall so determine.
Section 9 - Restricted Awards and Periods
(a) Participants eligible to receive awards of company stock or share
units under this Section 9 shall be selected by the Committee from among the
officers and employees of the Corporation and its participating affiliates and
shall exclude, except by special Committee action, any of the more senior
officers selected for participation in the Plan under Section 8.
(b) Each year, the Committee shall establish one (1) or more award periods
for the shares of company stock to be awarded to those participants selected by
the Committee for such awards under this Section 9 during that year. At the
beginning of an award period, the Committee shall make such award or awards of
shares of company stock and/or share units to each selected participant as it
determines. Each award period must extend for at least twelve (12) months
after the date of the award.
(c) If a participant has received an award pursuant to the provisions of
Section 9(b) of the Plan and is employed by a participating affiliate at the
end of the award period, the participant shall be fully vested, at the end of
the award period, in the shares of company stock or share units awarded to the
participant for that award period.
(d) Unless the Committee provides otherwise, in the event that before the
end of an award period a participant dies, becomes totally and permanently
disabled, or retires at normal retirement age, or with the consent of the
participating affiliate with which he or she is employed retires at early
retirement age under
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a retirement plan maintained by a participating affiliate, the participant, or
the participant's beneficiary or estate in the event of the participant's
death, will be vested, as of the day on which such death, disability or
retirement occurs, in the number of shares of company stock or share units the
participant would have received had the participant's employment with the
participating affiliate continued to the end of the award period, but
proportionately reduced to reflect the shorter period of employment. The
balance of the shares of company stock or share units awarded to the
participant shall be forfeited to the Corporation as of the last day of the
award period. The Committee may provide in such cases for accelerated
distribution of awards made pursuant to the provisions of this Section 9.
(e) Unless the Committee provides otherwise, if a participant should
terminate employment with a participating affiliate before the end of an award
period for a reason other than death, total and permanent disability, or
retirement, all shares of company stock or share units awarded to the
participant for which the applicable award period has not ended shall
automatically be forfeited to the Corporation as of the date of his or her
termination of employment.
(f) Except as otherwise provided for in Section 9(d), distribution of
vested awards of company stock shall be made as soon as practicable after the
last day of the applicable award period in the form of full shares of company
stock, with fractional shares, if any, being awarded in cash, and distribution
of vested share units shall be made on the same date to the participant
entitled thereto in cash, or in shares of company stock if the Committee shall
so determine.
Section 10 - Grants of Options and Rights
(a) Participants eligible to receive grants of options and/or rights under
this Section 10 shall be selected by the Committee from among the officers and
employees of the Corporation and its participating affiliates and from former
officers and employees who have a consulting arrangement with the Corporation,
and may include officers selected for participation under Section 8 or officers
and employees selected for participation under Section 9 of the Plan. The
Committee may grant more than one option or right to any eligible current or
former officer or employe; but no more than five-tenths of one percent (0.5%)
of the average of the aggregate shares of company stock outstanding on the
first day of January of each of the preceding five years shall be granted
subject to option and/or right during each rolling five-year period to any
individual current or former officer or employee.
(b) The Committee shall determine the eligible participants to whom, and
the time or times at which, options and rights will be granted, the number of
shares to be subject to each option, the duration of each option or right, the
time or times within which the option or right may be exercised, the
cancellation of the option or right (with the consent of the holder thereof)
and the other conditions of the grant of the option or right. The provisions
and conditions of the grants of options and rights need not be the same with
respect to each optionee or with respect to each option or each right.
(c) Except as otherwise specifically provided herein, options granted
pursuant to the Plan shall be subject to the following terms and conditions:
(i) Option Price. At the time the Committee approves the grant, the
Committee shall determine the option price that shall be not less than one
hundred percent (100%) of the market value of the company stock on the date of
Committee approval of the grant.
(ii) Payment. The option price shall be paid in full at the time of
exercise. No shares shall be issued until full payment has been received
therefor. Payment may be in cash or, with the prior approval of and upon the
conditions established by the Committee, by delivery of shares of company stock
owned by the optionee; provided, however, that company stock acquired by the
optionee through the exercise of an
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incentive stock option may not be used for payment prior to the expiration of
the holding periods prescribed in Section 422(a)(1) of the Code. If payment is
made by the delivery of shares of company stock, the value of the shares on the
day they are delivered shall be the market value on such day.
(iii) Duration of Options. The duration of options shall be determined by
the Committee, but in no event shall the maximum duration of an incentive stock
option exceed ten (10) years from the date of its grant.
(iv) Restoration Options. The Committee may provide that an option
include the right to receive a restoration option. An option that provides for
the grant of a restoration option shall entitle the participant, upon exercise
of the option prior to retirement of the participant and payment of the option
price in shares of company stock that have been owned by the participant for
not less than six months prior to the date of exercise, to receive a
restoration option. In addition to any other terms and conditions the
Committee deems appropriate, the restoration option shall be subject to the
following terms: the number of shares shall not exceed the number of whole
shares delivered in payment of the original option, the date of grant will be
the date of the exercise of the original option, the exercise price shall not
be less than 100% of the market value of the company stock on the date of the
grant of the restoration option, the option may not be exercised for at least
six months after grant, the option term will not extend beyond the term of the
original option, and the restoration option shall be a non-qualified option.
(v) Other Terms and Conditions. Options may contain such other
provisions, not inconsistent with the provisions of the Plan, as the Committee
shall determine to be appropriate from time to time; provided, however, that no
option shall be exercisable in whole or in part for a period of twelve (12)
months from the date on which the option is granted. Options shall be
exercisable in full or in such cumulative installments as shall be determined
by the Committee on the grant of the option. If an option shall be exercisable
in installments, the Committee may, in its discretion, provide for other events
in which all installments shall become immediately exercisable if any
installment be presently exercisable.
(vi) Incentive Stock Options. The Committee, with respect to each grant
of an option to an optionee, shall determine whether such option shall be an
incentive stock option, and, upon determining that an option shall be an
incentive stock option, shall designate it as such in the written instrument
evidencing such option. If the written instrument evidencing an option does
not contain a designation that it is an incentive stock option, it shall
contain a designation that it is a non-qualified option.
The Committee may not grant a participant incentive stock options in the
aggregate that are first exercisable during any one calendar year with respect
to company stock the aggregate market value of which exceeds $100,000, taking
into account all stock option plans of the Corporation and any parent or
subsidiary entities.
(d) The Committee may grant a right to an optionee of any option granted
under the Plan with respect to some or all of the company stock covered by such
option. A right may be granted either at the time of grant of the option or at
any time thereafter during its term. Each right shall be exercisable only if
and to the extent that the related option is then exercisable; provided, no
right may be exercised until a date at least six (6) months subsequent to the
date of grant of the right. Upon the exercise of a right, the related option
will cease to be exercisable to the extent of the company stock with respect to
which such right is exercised, but shall be considered to have been exercised
to that extent for purposes of determining the number of shares available for
the grant of further awards and/or options pursuant to the Plan. Upon the
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<PAGE> 37
exercise or termination of an option, the right with respect to such option
shall terminate to the extent of the shares of company stock with respect to
which the option was exercised or terminated.
(e) For purposes of this Section 10, the word "increment" means with
respect to the exercise of any right associated with an option an amount equal
to the product computed by multiplying (i) the excess of (A) the market value
on the date such right is exercised over (B) the market value on the date the
related option was granted by (ii) the number of shares of company stock with
respect to which such right is being exercised.
(f) Subject to the approval of the Committee, an optionee upon the
exercise of a right may elect to receive either: (i) a number of shares of
company stock equal to the quotient computed by dividing the increment by the
market value on the date of exercise of the right, provided, however, that cash
will be paid in lieu of any fractional share and that the total number of
shares of company stock will not exceed the total number of shares subject to
the related option, or (ii) an amount in cash equal to the increment, or (iii)
a combination of cash in the amount specified by the optionee, and the number
of shares of company stock calculated as provided in clause (i) of this
Paragraph (f), after reducing the increment that was utilized by such cash
amount, plus cash in lieu of any fractional share.
(g) Notwithstanding the provisions of Paragraph (f) of this Section 10,
the Committee may require that a cash payment election may be made only in the
period beginning on the third business day following the date of release for
publication of the quarterly and annual summary statements of earnings of the
Corporation and ending on the twelfth business day following such date. Such
restriction will be imposed on an optionee if it is required under the
Securities Exchange Act of 1934.
(h) In the event that the employment of an optionee to whom an incentive
stock option has been granted under the Plan shall be terminated (except as set
forth below) such option may be exercised, to the extent that the option was
exercisable on the date of termination of employment, only until the earlier of
three (3) months after such termination or the original expiration date of the
option; provided, however, that any option held by an optionee whose employment
shall be terminated either (i) for cause or (ii) voluntarily by the optionee
and without the consent of the participating affiliate by which the optionee
was employed (which consent shall be assumed in the case of retirement at
normal retirement age but not in the case of early retirement) shall, to the
extent not theretofore exercised, forthwith terminate. If an optionee to whom
an incentive stock option has been granted under the Plan shall become disabled
while employed and such disability results in the termination of employment,
such option may be exercised, to the extent that the option was exercisable on
the date of termination of employment, by either the disabled optionee or such
optionee's legal representative, as the case may be, and the right to exercise
the option shall terminate upon the earlier of the expiration of twelve (12)
months from the date of such termination of employment or the original
expiration date of the option. If an optionee has been granted an option
exercisable in installments, then, notwithstanding the terms specifying the
installments in which the option shall be exercisable, upon the death or
disability of the optionee at any time subsequent to the expiration of the
first year of the term of the option, the option shall be exercisable within
the time period set forth above as to all shares of company stock remaining
subject to the option. For the purposes of this Section 10, the term "option"
shall include any right related to the option and the term "disabled" shall
have the meaning contained within Section 22(e)(3) of the Code.
(i) In the event that the employment of an optionee to whom an option
other than an incentive stock option has been granted under the Plan shall be
terminated (except as set forth below), such option may be exercised, to the
extent that the option was exercisable on the date of termination of
employment, only until the earlier of such date after termination as provided
by the Committee on the grant of the option or the original expiration date of
the option; provided, however, that any option held by an optionee whose
employment shall be terminated either (i) for cause or (ii) voluntarily by the
optionee and without the consent of the participating affiliate by which the
optionee was employed (which consent shall be assumed in the
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case of retirement at normal retirement age but not in the case of early
retirement) shall to the extent not theretofore exercised, forthwith terminate.
If an optionee to whom an option other than an incentive stock option has been
granted under the Plan shall become disabled while employed or within six (6)
months after the termination of such employment (other than termination for
cause or voluntarily by the optionee and without the consent of the
participating affiliate by which the optionee was employed), such option may be
exercised, to the extent that the option was exercisable on the date of
termination of employment, by either the disabled optionee or such optionee's
legal representative, as the case may be, and the right to exercise the option
shall terminate upon the earlier of such date following termination of
employment as provided by the Committee on the grant of the option or the
original expiration date of the option. If an optionee to whom an option other
than an incentive stock option has been granted under the Plan shall die while
employed or within six (6) months after the termination of such employment
(other than termination for cause or voluntarily by the optionee and without
the consent of the participating affiliate by which the optionee was employed),
such option may be exercised, to the extent that the option was exercisable on
the date of termination of employment, by either the executor, administrator or
personal representative of the optionee's estate or a transferee of the option
under Section 7(a) or a beneficiary designated under Section 11(b), as the case
may be, and the right to exercise the option shall terminate upon the earlier
of such date following termination of employment as provided by the Committee
on the grant of the option or the original expiration date of the option. If
an optionee has been granted an option exercisable in installments, then,
notwithstanding the terms specifying the installments in which the option shall
be exercisable, upon the disability or death of the optionee at any time
subsequent to the expiration of the first year of the term of the option, the
option shall be exercisable within the time periods set forth above as to all
shares of company stock remaining subject to the option.
(j) An optionee or a transferee of an option pursuant to Section 7(a)
shall have no rights as a shareholder with respect to any company stock the
subject of either an unexercised or exercised option or right until the
optionee or transferee shall have become the holder of record of such stock,
and no adjustments shall be made for dividends in cash or other property or
other distributions or rights in respect of such stock for which the record
date is prior to the date on which the optionee or transferee shall have in
fact become the holder of record of the company stock acquired pursuant to the
option or right.
Section 11 - General
(a) If, in connection with the payment of any award hereunder in shares of
company stock or the exercise of any option or right hereunder, it is necessary
or desirable, to comply with any law or regulation of any governmental
authority relating to the issuance or sale of securities, that the participant
receiving such shares shall agree that the participant will take the shares for
investment and not with any present intention to resell the same and that the
participant will dispose of such shares only in compliance with such laws and
regulations, the participant shall, upon the request of the Committee, execute
and deliver to the Committee an agreement to such effect satisfactory to the
Committee.
(b) If a participant dies prior to the receipt in full of any award under
the Plan to which the participant is entitled and/or prior to the exercise in
full of any option or right granted to the participant, the award or grant
shall be distributed to the participant's designated beneficiary or, in the
absence of a beneficiary designation, to the participant's estate. The
designation of a beneficiary shall be made in writing on a form prescribed by
and filed with the Secretary of the Committee.
(c) Neither the establishment of the Plan nor any provisions of the Plan
or modification thereof shall be held or construed as giving any participant
in the Plan the right to be retained in the service of any participating
affiliate and each participating affiliate expressly reserves its right to
discharge any such participant whenever the interests of such participating
affiliate may so require.
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(d) A forfeiture of shares of company stock (including performance shares)
pursuant to Sections 8(e), (f) or (g) or 9(d) or (e) of the Plan shall effect a
complete forfeiture of voting rights, dividend rights and all other rights
relating to the award or grant as of the date of forfeiture.
(e) Each distribution of company stock under this Plan shall be made
subject to such federal, state and local tax withholding requirements as apply
on the distribution date. For this purpose, the Committee may provide for the
withholding of shares of company stock or allow a participant to tender back to
the Corporation shares of company stock received in such distribution.
(f) Notwithstanding any other provisions in the Plan, in the event of a
Change in Control (as hereinafter defined) each participant shall be fully
vested in the number of shares of company stock (including performance shares)
or share units awarded to such participant for all award periods and/or
performance periods that, upon such event, have not yet ended, and all options
and rights then outstanding shall become immediately exercisable. Distribution
of all shares of company stock, and all cash with respect to which rights have
become vested, or due because of the exercise of options or rights, shall be
made as soon as practicable within sixty (60) days after the date of the Change
in Control, as if, in the case of awards under Section 8 and Section 9, the
applicable award period or periods and/or performance period or periods had
ended on such date. In addition, the Corporation shall reimburse a participant
for legal fees and expenses incurred by such participant in successfully
seeking to obtain or enforce any right to distribution under this Section 11(f)
and in the event that it shall be determined that such participant is entitled
to a cash distribution hereunder, such participant shall also be entitled to
interest thereon payable to such participant in an amount equivalent to the
prime rate of interest of NBD Bank, N.A., from time to time during the period
from the date such distribution should have been made to the date it is made.
For purposes of this Plan, a Change in Control shall occur if (i) any
"person" or "group" within the meaning of Section 13(d) and 14(d)(2) of the
Exchange Act becomes the "beneficial owner" as defined in Rule 13d-3 under the
Exchange Act of more than thirty percent (30%) of the then outstanding voting
securities of the Corporation otherwise than through a transaction or
transactions arranged by or consummated with the prior approval of the
Corporation's Board of Directors; or (ii) during any period of twenty-four (24)
consecutive months (not including any period prior to the adoption of this
Plan) Present Directors and/or New Directors cease for any reason to constitute
a majority of the Board. For purposes of subsection (ii) of the preceding
sentence, "Present Directors" shall mean individuals who at the beginning of
such consecutive twenty-four (24) month period were members of the
Corporation's Board and "New Directors" shall mean any director of the
Corporation whose election by the Corporation's Board or whose nomination for
election by the Corporation's shareholders was approved by a vote of at least
two- thirds of the Corporation's Directors then still in office who were
Present Directors or New Directors. Notwithstanding any other provisions of
the Plan, the provisions of this Section 11(f) may not be amended after the
date a Change in Control occurs without the written consent of a majority in
number of participants.
Section 12 - Amendment, Suspension and Termination
The Board of Directors of the Corporation reserves the right at any time
to amend, suspend, or terminate the Plan; provided, however, no such amendment,
suspension or termination shall adversely affect any award or grant then in
effect unless the prior approval of the participant so affected is obtained.
No amendment of the Plan shall, without approval of the shareholders of the
Corporation, (a) increase the aggregate number of shares of company stock
(including performance shares) that are reserved for award and/or grant under
the Plan (except as provided in Section 6), (b) change the group of eligible
employees under the Plan, (c) change the manner of determining the option price
or the amount payable upon exercise of a right, or (d) increase the maximum
duration of an option.
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<PAGE> 40
Section 13 - Governing Law
The Plan and all determinations made and action taken pursuant thereto
shall be governed by the laws of the State of Michigan and construed in
accordance therewith.
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<PAGE> 41
NBD BANCORP, INC.
PERFORMANCE INCENTIVE PLAN
Appendix A
The following provisions have been disclosed to and submitted for approval
to the stockholders of the Corporation at the Annual Meeting to be held on May
15, 1995:
The performance-based long-term incentive criteria for the chief executive
officer and the next four highest paid executive officers (the "class of
employees" covered) provides for annual grants of performance shares, starting
in 1995, that will be earned out 0-100% at the end of a four-year performance
period based on NBD's average return on equity ("ROE") in comparison to average
ROE during the period at peer financial institutions selected by the Committee
(the "performance measure").
TARGET AND MAXIMUM AWARDS. Each participating officer is assigned a
target award at the start of each performance period stated as a percent of
salary. Under the criteria, the Committee is able to grant a maximum target
award of 100% of the salary stated in the Corporation's Proxy Statement for the
first year of the performance period, not to exceed $1.5 million. The target
award is multiplied by the participant's salary and divided by the fair market
value of a share of the Corporation's Common Stock at the start of each
performance period to determine a target number of performance shares. If
average ROE during the performance period is at or above the goal, the target
number of performance shares will be earned. The target number of shares is
also the maximum number of shares (the "maximum award"). If ROE performance is
below the goal, individual awards will be less than the target, down to an ROE
threshold below which all performance shares will be forfeited.
DEFINITIONS. For purposes of determining awards, "Return on Equity" is
calculated by dividing "Net Income" by "Shareholders' Equity" for the year.
"Net Income" is defined as consolidated net income as reported in the
Corporation's audited financial statements for the year, before any
extraordinary, unusual or non-recurring items of gain or loss that are
identified and quantified separately in the audited financial statements, net
of tax effect, and after any preferred dividends. The Committee
retains the right in its discretion to reduce Net Income for purposes of the
performance-based long-term incentive criteria if it believes that such Net
Income produces a level of payout above the level warranted by management
performance. It may not, however, increase Net Income or individual awards
above the level produced by the calculations. "Shareholders' Equity" is the
Corporation's average total shareholders' equity on its consolidated balance
sheet for the preceding year.
TERM OF CRITERIA. The term of the performance-based long-term incentive
criteria is five years, 1995 through 1999, unless sooner terminated or amended
by the Board. Any amendment that would materially change the "class of
employees" covered, the "performance measure," or the "maximum award" payable
is subject to stockholder approval.
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