<PAGE>
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 Section 240.14a-11(c) or Section 240.14a-12
FIRST CHICAGO NBD CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 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):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[LETTERHEAD OF FIRST CHICAGO NBD CORPORATION]
April 5, 1996
To Our Stockholders:
We are pleased to invite you to attend the Annual Meeting of
Stockholders of First Chicago NBD Corporation, which will be held at 9:30
a.m., Chicago time, Friday, May 10, 1996, at the First Chicago Center
located in the Plaza area adjacent to The First National Bank of Chicago.
Please use the Dearborn Street entrance to the Bank Building.
Matters scheduled for consideration at this Meeting are the election of
six Class I directors, approval of the Corporation's Director Stock Plan,
approval of the Corporation's Stock Performance Plan including the
performance goals for such plan, approval of the Corporation's Employee
Stock Purchase and Savings Plan, approval of the Corporation's Senior
Management Annual Incentive Plan including the performance goals for such
plan, and ratification of the appointment of Arthur Andersen LLP as
independent auditors for the Corporation for 1996. The Meeting will also
provide an opportunity to review with you the business and affairs of the
Corporation and its subsidiaries during 1995 and give you a chance to meet
your directors.
Whether you plan to attend or not, please date, sign and return the
proxy card in the accompanying envelope. Your vote is important no matter
how many shares you own. If you do attend the Meeting and desire to vote
in person, you may do so even though you have previously sent in a proxy.
The First Chicago Center offers special access for people in wheelchairs
and headsets for the hearing-impaired. Stockholders who wish to arrange
for either of these services are invited to call (312) 732-3150 by
Wednesday, May 8, 1996.
We look forward to seeing you at the Meeting.
Sincerely,
Richard L. Thomas Verne G. Istock
Chairman President and
Chief Executive Officer
<PAGE>
[LETTERHEAD OF FIRST CHICAGO NBD CORPORATION]
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
MAY 10, 1996
To Our Stockholders:
The Annual Meeting of Stockholders of First Chicago NBD Corporation
will be held on Friday, May 10, 1996, at 9:30 a.m., Chicago time, at
the First Chicago Center, One First National Plaza, Chicago, Illinois,
for the purpose of considering and voting upon:
1. The election of six Class I directors for a term of three years;
2. The approval of the Corporation's Director Stock Plan;
3. The approval of the Corporation's Stock Performance Plan
including the performance goals for such plan;
4. The approval of the Corporation's Employee Stock Purchase and
Savings Plan;
5. The approval of the Corporation's Senior Management Annual
Incentive Plan including the performance goals for such plan;
6. The ratification of the appointment of Arthur Andersen LLP as
independent auditors for the Corporation for 1996; and
7. Such other business as may properly come before the Meeting or
any adjournments thereof.
The record date for determining stockholders entitled to notice of,
and to vote at, the Meeting is the close of business March 20, 1996.
By order of the Board of Directors,
Sherman I. Goldberg
Secretary
April 5, 1996
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED FORM
OF PROXY IN THE ENVELOPE PROVIDED FOR THAT PURPOSE.
<PAGE>
[LETTERHEAD OF FIRST CHICAGO NBD CORPORATION]
PROXY STATEMENT
FOR
ANNUAL MEETING TO BE HELD MAY 10, 1996
This proxy statement is furnished in connection with the solicitation on
behalf of the Board of Directors of First Chicago NBD Corporation (the
"Corporation") of proxies for use at the Annual Meeting of Stockholders (the
"Annual Meeting") of the Corporation to be held at 9:30 a.m., Chicago time, on
Friday, May 10, 1996, and at any adjournments thereof.
The Corporation was formed as a result of the merger (the "Merger") of First
Chicago Corporation ("First Chicago") with and into NBD Bancorp, Inc. ("NBD")
pursuant to an Agreement and Plan of Merger between First Chicago and NBD
dated July 11, 1995, as amended (the "Merger Agreement"). The Merger became
effective on December 1, 1995 (the "Effective Time"). The Annual Meeting will
be the first annual meeting of stockholders following the Merger.
The Board of Directors has fixed the close of business on March 20, 1996, as
the record date for determining stockholders entitled to notice of, and to
vote at, the Annual Meeting. On the record date, the Corporation had
outstanding and entitled to vote 315,984,682 shares of Common Stock (exclusive
of 2,570,053 shares of treasury stock, which will not be voted). Each share
of Common Stock entitles the holder to one vote. The presence, in person or by
proxy, of the holders of a majority of the shares of Common Stock entitled to
vote at the Annual Meeting shall constitute a quorum.
Directors will be elected by a plurality of the votes cast at the Annual
Meeting; therefore, the six nominees who receive the largest number of votes
cast will be elected as directors. Shares represented by proxies marked to
withhold authority to vote with respect to any nominee will be counted for
purposes of establishing a quorum, but will have no effect on the election of
that nominee. An affirmative vote of a majority of the shares present in
person or by proxy and entitled to vote at the Annual Meeting is required for
approval of the other matters presented. Shares represented by proxies which
are marked "abstain" on such matters will be counted as shares present for
purposes of determining the presence of a quorum; such shares will also be
treated as shares present and entitled to vote, which will have the same
effect as a vote against such matters. Proxies relating to "street name"
shares which are not voted by brokers on one or more but less than all matters
will be treated as shares present for purposes of determining the presence of
a quorum, but will not be treated as shares represented at the Annual Meeting
as to such matter or matters.
The proxy statement, form of proxy and the Corporation's Annual Report for
1995 were mailed to each stockholder at such holder's address of record,
commencing on or about April 5, 1996.
The principal executive offices of the Corporation are located at One First
National Plaza, Chicago, Illinois 60670.
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
entire Board at twenty. At the Annual Meeting, six Class I directors are
proposed to be elected to hold office until the annual meeting of stockholders
in 1999 and until their successors are elected and have qualified. Each of the
nominees listed below is presently serving as a director of the Corporation.
It is intended that shares represented by proxies solicited on behalf of the
Board of Directors will be voted for the nominees listed below. In the event
that any nominee is unable or declines to serve, an event which is not
anticipated, proxies may be voted at the Annual Meeting for another person in
place of such nominee, or the number of directors constituting the full Board
may be reduced.
<PAGE>
The name, principal occupation, period of service as a director, certain
biographical information and Board committee memberships of each nominee and of
each of the Class II and Class III directors whose terms will continue after
the Annual Meeting are set forth below.
NAME, PRINCIPAL AGE, BUSINESS BOARD
OCCUPATION AND EXPERIENCE, COMMITTEE
PERIOD OF SERVICE DIRECTORSHIPS AND MEMBERSHIPS
AS A DIRECTOR OTHER INFORMATION ----------
----------------------
- -------------------
CLASS I DIRECTOR NOMINEES--TERM TO EXPIRE 1999
Maureen A. Fay, Dr. Fay, 61, was named President Member of the
O.P. President of the University of Detroit Employee and
University of Mercy in 1990, after serving as Public
Detroit Mercy President of Mercy College of Responsibility
(education) Detroit from 1983 through 1990. Committee and the
Director since Dr. Fay is a director of the Organization,
1985 Detroit Economic Growth Compensation and
Corporation, Greater Detroit Area Nominating
Health Council, Inc., Greater Committee.
Detroit Interfaith Round Table,
the Economic Club of Detroit, the
United Way for Southeastern
Michigan, Michigan's Children and
the Michigan Sports Hall of Fame.
Dr. Fay also is a trustee of the
Archdiocese of Detroit Endowment
Foundation and New Detroit, Inc.,
and serves on the Board of the
Association of Catholic Colleges
and Universities, as President of
the Detroit Area Catholic Higher
Education Consortium, as
commissioner of the North Central
Association of Colleges and
Schools Commission on Higher
Education, on the board of
governors of the Renaissance Club
and as a member of the National
Bipartisan Commission on
Independent Higher Education in
the United States.
Charles T. Fisher Mr. Fisher, 66, joined NBD Bank Member of the
III Retired (Michigan) in 1958, was elected Employee and
Chairman & an executive vice president and Public
President NBD director in 1969, and President Responsibility
Bancorp, Inc. in 1971. Following the formation Committee and the
Director since of NBD in 1972, Mr. Fisher was Risk Management
1972 elected President and a director Committee.
of NBD, and Chairman and Chief
Executive Officer in 1982. Mr.
Fisher retired from NBD at the
end of 1993. Mr. Fisher is a
director of Hughes Electronics
Corporation, AMR Corporation,
American Airlines, Inc., and
General Motors Corporation. He
also serves as Chairman of the
Mackinac Bridge Authority, a
director of the Economic Alliance
of Michigan and the Economic Club
of Detroit, a director and
President of the United Way for
Southeastern Michigan and as a
trustee of the Citizens Research
Council of Michigan. He is also a
member of the Advisory Council of
the Metropolitan Affairs
Corporation of Detroit and
Southeast Michigan and of the
Finance Council for the
Archdiocese of Detroit.
2
<PAGE>
NAME, PRINCIPAL
OCCUPATION AND AGE, BUSINESS BOARD
PERIOD OF SERVICE EXPERIENCE, COMMITTEE
AS A DIRECTOR DIRECTORSHIPS AND MEMBERSHIPS
- ------------------- OTHER INFORMATION
---------------------- ----------
William T. Mr. McCormick, 51, joined CMS Chairperson of the
McCormick, Jr. Energy Corp. in 1985 and is Risk Management
Chairman & Chief Chairman of its principal Committee; Member
Executive Officer subsidiary, Consumers Power of the Executive
CMS Energy Corp. Company. In addition to CMS Committee.
(diversified Energy Corp., Mr. McCormick is a
energy company director of Rockwell
with interests in International Corporation,
oil and gas Schlumberger Limited, the
exploration, gas American Gas Association, the
transmission and Edison Electric Institute and the
storage, National Petroleum Council. Mr.
cogeneration and McCormick serves as a member of
independent power the boards of directors of
generation and Detroit Renaissance, the Detroit
gas and electric Symphony Orchestra Hall, Michigan
utilities) Opera Theater, St. John Hospital,
Director since the McGregor Fund and the United
1985 Way Community Services.
Mr. O'Connor, 59, joined Chairperson of the
James J. O'Connor Commonwealth Edison Company (the Organization,
Chairman & Chief principal subsidiary of Unicom Compensation and
Executive Officer Corporation), in 1963, was Nominating
Unicom Corporation elected President in 1977 and Committee; Member
(production, became Chairman and Chief of the Executive
distribution and Executive Officer in 1980. In Committee.
sale of electric addition, he became Chairman and
energy) Chief Executive Officer of Unicom
Director since Corporation (the holding company)
1995 when that company was formed in
Director of First 1994. Mr. O'Connor is a director
Chicago from 1987 of Unicom Corporation,
to the Merger Commonwealth Edison Company,
American National Can Company,
Corning Incorporated, Scotsman
Industries, Inc., Tribune
Company, UAL Corporation and the
Chicago Urban League. Mr.
O'Connor is also a trustee of the
Field Museum of Natural History,
the Lyric Opera of Chicago,
Northwestern University, The
Orchestral Association and the
Museum of Science and Industry.
Patrick G. Ryan
Chairman, Mr. Ryan, 58, has been President Member of the Risk
President & Chief and Chief Executive Officer of Management
Executive Officer Aon Corporation since 1982 and Committee.
Aon Corporation (a Chairman of the Board of
broad-based Directors since 1990. Mr. Ryan is
insurance holding a director of Aon Corporation, a
company) trustee of the Field Museum of
Director since Natural History and Rush-
1995 Presbyterian- St. Luke's Medical
Director of First Center, and the Chairman of the
Chicago from 1983 Board of Trustees of Northwestern
to the Merger University. Mr. Ryan is also a
member and past President of the
Economic Club of Chicago.
3
<PAGE>
NAME, PRINCIPAL
OCCUPATION AND AGE, BUSINESS BOARD
PERIOD OF SERVICE EXPERIENCE, COMMITTEE
AS A DIRECTOR DIRECTORSHIPS AND MEMBERSHIPS
- ------------------- OTHER INFORMATION
---------------------- ----------
David J. Vitale Mr. Vitale, 49, joined The First Member of the
Vice Chairman of National Bank of Chicago ("FNBC") Executive
the Board of the in 1968, and was elected Vice Committee.
Corporation Chairman of the Board of First
Director since Chicago and FNBC in 1993.
1995 Director of Effective with the Merger, Mr.
First Chicago from Vitale became a director and Vice
1992 to the Merger Chairman of the Corporation and
President of FNBC. Mr. Vitale is
Vice Chairman of the Board of
Directors of the Student Loan
Marketing Association, a director
of Leadership Greater Chicago,
trustee of the Museum of Science
and Industry and a trustee and
Treasurer of The Art Institute of
Chicago. Mr. Vitale is also
Chairman of the Board of Managers
of the YMCA of Metropolitan
Chicago and Chairman of the Board
of Trustees of Glenwood School
for Boys.
CLASS II DIRECTORS--TERM EXPIRES 1997
John H. Bryan Mr. Bryan, 59, has been Chairman Member of the Risk
Chairman of the of the Board and Chief Executive Management
Board & Chief Officer of Sara Lee Corporation Committee.
Executive Officer since 1976. In addition to Sara
Sara Lee Lee Corporation, Mr. Bryan is a
Corporation director of Amoco Corporation and
(global General Motors Corporation. Mr.
manufacturer and Bryan is also the past Chairman
marketer of brand and a member of the board of
name products) directors of the Grocery
Director since Manufacturers of America, Inc.,
1995 Director of Chairman of the Chicago Council
First Chicago from on Foreign Relations, Vice
1982 to the Merger Chairman of the Board of Trustees
of The Art Institute of Chicago,
and a trustee of The University
of Chicago. Mr. Bryan also is
Chairman of Catalyst, Vice
Chairman of the Business Council,
a trustee of the Committee for
Economic Development, a member of
the Trustees' Council of the
National Gallery of Art and a
director and past National
Chairman of the Business
Committee for the Arts.
Siegfried Mr. Buschmann, 58, joined The Member of the
Buschmann Chairman Budd Company, a subsidiary of Audit Committee.
of the Board & Thyssen AG, in 1982. He was
Chief Executive elected Vice Chairman and Chief
Officer Financial Officer in 1986 and
The Budd Company Chairman of the Board and Chief
(producer of Executive Officer in 1989. Mr.
automotive parts Buschmann also serves as
and assemblies President of Thyssen Holding
and plastic Corporation. In addition to The
products) Budd Company, Mr. Buschmann is a
Director since director of Milford Fabricating
1991 Company and Waupaca Foundry Inc.,
and is a trustee of the Citizens
Research Council of Michigan and
the Manufacturers Alliance for
Productivity and
4
<PAGE>
NAME, PRINCIPAL
OCCUPATION AND AGE, BUSINESS BOARD
PERIOD OF SERVICE EXPERIENCE, COMMITTEE
AS A DIRECTOR DIRECTORSHIPS AND MEMBERSHIPS
- ------------------- OTHER INFORMATION
---------------------- ----------
Innovation. Mr. Buschmann also
serves on the Board of Overseers
of The Amos Tuck School of
Business Administration,
Dartmouth College, and the
Advisory Board of Hospice of
Southeastern Michigan. He is also
a member of United Community
Services, the Economic Club of
Detroit, Detroit Renaissance and
The Economic Alliance for
Michigan.
Donald V. Fites Mr. Fites, 62, joined Caterpillar Member of the
Chairman of the Inc. in 1956, was elected Audit Committee.
Board & Chief President and Chief Operating
Executive Officer Officer in 1989 and Chairman of
Caterpillar Inc. the Board and Chief Executive
(manufacturer of Officer in 1990. In addition to
a wide range of Caterpillar Inc., Mr. Fites is a
construction, director of Georgia-Pacific
mining, and Corporation, Mobil Corporation,
agricultural Keep America Beautiful and
machinery and Valparaiso University. Mr. Fites
engines) is Chairman of the U.S.-Japan
Director since Business Council and Vice
1995 Director of Chairman of the Salvation Army
First Chicago from National Advisory Board. Mr.
1993 to the Merger Fites is the former Chairman and
a director of both the Equipment
Manufacturers Institute and the
National Foreign Trade Council.
He is also a member of The
Business Council, the Advisory
Committee for Trade Policy and
Negotiations, the Competitiveness
Policy Council, the Business
Roundtable Policy Committee, the
Society of Automotive Engineers,
the Agricultural Roundtable, and
the Illinois Coalition. He also
serves as a trustee of the Farm
Foundation, Knox College and The
Methodist Medical Center of
Illinois.
Verne G. Istock
President and Mr. Istock, 55, joined NBD Bank Member of the
Chief Executive (Michigan) in 1963, and was Executive
Officer of the elected Vice Chairman of NBD and Committee.
Corporation NBD Bank (Michigan) in 1985 and
Director since Chairman and Chief Executive
1985 Officer in 1994. Effective with
the Merger, Mr. Istock was named
President and Chief Executive
Officer of the Corporation and a
director and Chief Executive
Officer of FNBC. He is also a
director of Grand Trunk
Corporation, Kelly Services,
Inc., R.L. Polk & Co., Detroit
Renaissance, Inc., United Way
Community Services, Citizens
Research Council, Michigan First,
Inc. and the Economic Club of
Detroit. Mr. Istock is also a
member of The Bankers Roundtable,
the International Monetary
Conference and the University of
Michigan Corporate Advisory
Council.
5
<PAGE>
NAME, PRINCIPAL
OCCUPATION AND AGE, BUSINESS BOARD
PERIOD OF SERVICE EXPERIENCE, COMMITTEE
AS A DIRECTOR DIRECTORSHIPS AND MEMBERSHIPS
- ------------------- OTHER INFORMATION
---------------------- ----------
Scott P. Marks, Mr. Marks, 50, joined FNBC in Member of the
Jr. Vice Chairman 1983 and was named Chairman of Executive
of the Board of FCC National Bank, a subsidiary Committee.
the Corporation of the Corporation engaged
Director since primarily in the issuance of
1995 credit cards, in 1987, and
executive vice president of First
Chicago in 1990. Effective with
the Merger, Mr. Marks was named a
director and Vice Chairman of the
Corporation and FNBC. Mr. Marks
is a director of VISA U.S.A.,
Inc., VISA International, Inc.,
and the WBEZ Alliance, Inc.,
Chicago's public radio station.
Mr. Marks also is a trustee of
the Field Museum of Natural
History, serves on the Marketing
and Audience Development
Committee of The Art Institute of
Chicago and as chairman of its
Membership Subcommittee and is
also a member of the Advisory
Council for DePaul University
College of Commerce, the Economic
Club of Chicago and the Chicago
Committee of the Chicago Council
on Foreign Relations.
Thomas E. Reilly, Mr. Reilly, 56, joined Reilly Chairperson of the
Jr. Chairman of Industries, Inc. in 1963, was Audit Committee;
the Board elected President in 1981 and Member of the
Reilly Industries, Chairman and Chief Executive Executive
Inc. (synthetic Officer in 1990. In addition to Committee.
chemical Reilly Industries, Inc., Mr.
manufacturer, Reilly is a director of the
coal tar refiner Chemical Manufacturers
and natural Association, Lilly Industries,
resources firm) Inc., American United Life
Director since Insurance Company and Herff Jones
1995 Company. Mr. Reilly also serves
as a director of Methodist Health
Group, as Vice Chairman of
Community Leaders Allied for
Superior Schools (CLASS), as a
member of the Board of Trustees
of Butler University and as a
trustee of the Park Tudor Trust.
Adele Simmons
President The John Ms. Simmons, 54, was elected Chairperson of the
D. and Catherine President of The John D. and Employee and
T. MacArthur Catherine T. MacArthur Foundation Public
Foundation in May 1989. She served as Responsibility
(philanthropic President of Hampshire College, Committee; Member
foundation) Amherst, Massachusetts, from 1977 of the
Director since to 1989. Ms. Simmons is a Organization,
1995 Director of director of Marsh & McLennan Compensation and
First Chicago from Companies, Inc. and is a board Nominating
1990 to the Merger member of the Union of Concerned Committee and the
Scientists and Synergos. Executive
Committee.
6
<PAGE>
NAME, PRINCIPAL
OCCUPATION AND AGE, BUSINESS BOARD
PERIOD OF SERVICE EXPERIENCE, COMMITTEE
AS A DIRECTOR DIRECTORSHIPS AND MEMBERSHIPS
- ------------------- OTHER INFORMATION
---------------------- ----------
CLASS III DIRECTORS--TERM EXPIRES 1998
Terence E. Mr. Adderley, 62, joined Kelly Member of the Risk
Adderley President Services, Inc. in 1958, was Management
and Chief elected a director in 1962, Committee.
Executive Officer executive vice president in 1965
Kelly Services, and President in 1967. In
Inc. (worldwide addition to Kelly Services, Inc.,
provider of Mr. Adderley is a director of The
temporary Detroit Edison Company, DTE
staffing, Energy Company, Detroit
business services Renaissance, Inc., Detroit
and assisted Renaissance Foundation, the
living services) Economic Club of Detroit, United
Director since Way for Southeastern Michigan and
1985 the Business Roundtable of
Oakland County, Michigan. Mr.
Adderley also is a governor of
the Cranbrook Institute of
Science and a trustee of the
Detroit Symphony Orchestra Hall.
James K. Baker
Vice Chairman of Mr. Baker, 64, joined Arvin Member of the
the Board Industries, Inc. in 1955, was Employee and
Arvin Industries, elected executive vice president Public
Inc. and a director in 1968, President Responsibility
(international and Chief Executive Officer in Committee and the
supplier of 1981 and Chairman in 1986. In Organization,
original addition to Arvin Industries Compensation and
equipment and Inc., Mr. Baker is a director of Nominating
replacement parts Amcast Industrial Corporation, Committee.
for the CINergy Corp., The GEON Company,
automobile Rekab-Baker & Associates and
industry) Tokheim Corp. Mr. Baker also
Director since serves as Chairman of the
1992 International Policy Committee of
the U.S. Chamber of Commerce, the
Center for International Private
Enterprise and the Center for
Philanthropy and as Vice Chairman
of the New American Schools
Development Corporation. He is
also a director of the United
States Council for International
Business, the Institute for
Global Ethics, the Foundation for
Independent Higher Education and
the Independent Colleges of
Indiana Foundation. Mr. Baker is
the former Chairman of the Board
of Trustees of DePauw University
and the U.S. Chamber of Commerce.
James S. Crown Mr. Crown, 41, has been a General Member of the
General Partner Partner of Henry Crown and Employee and
Henry Crown and Company (Not Incorporated) since Public
Company (Not 1985. From 1983 to 1985, Mr. Responsibility
Incorporated) Crown served as a Vice President Committee and the
(diversified of Salomon Brothers Inc. He is a Organization,
investments) director of General Dynamics Compensation and
Director since Corporation. He is also a trustee Nominating
1995 Director of of The University of Chicago, the Committee.
First Chicago from Museum of Science and Industry,
1991 to the Merger The Orchestral Association and
the Jewish Federation of
Metropolitan Chicago.
7
<PAGE>
NAME, PRINCIPAL
OCCUPATION AND AGE, BUSINESS BOARD
PERIOD OF SERVICE EXPERIENCE, COMMITTEE
AS A DIRECTOR DIRECTORSHIPS AND MEMBERSHIPS
- ------------------- OTHER INFORMATION
---------------------- ----------
Thomas H. Jeffs II Mr. Jeffs, 57, joined NBD Bank Member of the
Vice Chairman of (Michigan) in 1962 and was Executive
the Board of the elected Vice Chairman and a Committee.
Corporation director of NBD and NBD Bank
Director since (Michigan) in 1985, and President
1985 and Chief Operating Officer in
1994. Effective with the Merger,
Mr. Jeffs was named a director
and Vice Chairman of the
Corporation and FNBC. Mr. Jeffs
is the President and Chief
Operating Officer of NBD Bank
(Michigan). He is also a director
of MCN Corporation and the
Economic Club of Detroit. Mr.
Jeffs is a member of The Bankers
Roundtable, Vice Chairman and a
member of the Executive Committee
of the Detroit Symphony Orchestra
Hall, Vice Chairman of the
Greater Detroit Chamber of
Commerce and a trustee of New
Detroit, Inc. and The Detroit
Institute of Arts Founders
Society.
Richard A. Mr. Manoogian, 59, joined Masco Member of the
Manoogian Chairman Corporation in 1958, was elected Organization,
& Chief Executive a vice president and a director Compensation and
Officer in 1964, President in 1968 and Nominating
Masco Corporation Chairman and Chief Executive Committee.
(diversified Officer in 1985. In addition, Mr.
manufacturer) Manoogian serves as the Chairman,
Director since Chief Executive Officer and a
1978 director of MascoTech, Inc., and
Chairman and director of TriMas
Corporation. Mr. Manoogian is
also a director of Detroit
Renaissance and The American
Business Conference and a trustee
of the Archives of American Art
(Smithsonian Institute), The
Detroit Institute of Arts, the
Fine Arts Committee of the State
Department and Henry Ford
Hospital.
Earl L. Neal
Principal Earl L. Mr. Neal, 67, has been an Member of the
Neal & Associates attorney with Earl L. Neal & Audit Committee
(law firm) Associates since 1955. Mr. Neal and the Employee
Director since is a director of Peoples Energy and Public
1995 Corporation, Chicago Title and Responsibility
Director of First Trust Company, Chicago Title Committee.
Chicago from 1988 Insurance Company and Lincoln
to the Merger National Corporation. He is a
member of the Board of Directors
of the University of Illinois
Foundation and was formerly
President of the Board of
Trustees of the University of
Illinois, President of the
Chicago Metropolitan Housing
Development Authority and
Commissioner of the Chicago
Housing Authority. He currently
serves as Chairman of the Urban
Health Program of the University
of Illinois at Chicago, Chairman
of the Chicago-Gary Regional
Airport Authority, Chairman of
the Teacher's Academy for
Mathematics and Science in
Chicago, and is a member of the
8
<PAGE>
NAME, PRINCIPAL
OCCUPATION AND AGE, BUSINESS BOARD
PERIOD OF SERVICE EXPERIENCE, COMMITTEE
AS A DIRECTOR DIRECTORSHIPS AND MEMBERSHIPS
- ------------------- OTHER INFORMATION
---------------------- ----------
Civic Committee of the Commercial
Club of Chicago, the Chicago
Central Area Committee and the
Economic Club of Chicago. He
currently serves as a fellow of
the International Academy of
Trial Lawyers and a member of the
American College of Trial
Lawyers.
Richard L. Thomas Mr. Thomas, 65, joined FNBC in Chairperson of the
Chairman of the 1958, was elected a director of Executive
Board of the First Chicago and FNBC in 1973 Committee.
Corporation and Chairman of the Board of
Director since First Chicago and FNBC in 1992.
1995 Director of Mr. Thomas also served as
First Chicago from President of First Chicago from
1973 to the Merger 1974 to 1993, and of FNBC from
1975 to 1993. Effective with the
Merger, Mr. Thomas became
Chairman of the Corporation. Mr.
Thomas is a director of CNA
Financial Corporation and Sara
Lee Corporation and a trustee of
Northwestern University, Kenyon
College and Rush-Presbyterian-St.
Luke's Medical Center. He is also
the former Chairman and a life
trustee of The Orchestral
Association, President of the
Commercial Club of Chicago, past
President and a member of The
Bankers Roundtable and the
Economic Club of Chicago.
9
<PAGE>
COMMITTEES OF THE BOARD OF DIRECTORS
It is the primary responsibility of the Board of Directors of the Corporation
to oversee the management of the business of the Corporation and its
subsidiaries. To assist in carrying out its responsibilities, the Board of
Directors has established five standing committees which are described below.
AUDIT COMMITTEE
The members of the Audit Committee of the Corporation are Siegfried
Buschmann, Donald V. Fites, Earl L. Neal and Thomas E. Reilly, Jr., who serves
as Chairperson. The Audit Committee, which met one time in 1995 after the
Merger, is the successor to First Chicago's Audit Committee, which met five
times in 1995 before the Merger, and NBD's Audit Committee, which met six times
in 1995 before the Merger.
Included among the functions performed by the Audit Committee are (i)
appointment of the Corporation's independent auditors subject to ratification
by the stockholders; (ii) review of the plan and results of the independent
auditors' auditing engagement; (iii) approval of the professional services
provided by the independent auditors and related fees and consideration of the
possible effect the performance and fees would have on the independence of the
auditors; (iv) review of the plan and findings with respect to the internal
audit, credit process review and market risk oversight functions; (v) review of
the representations of management and the findings of the independent auditors
and the internal auditors as to the adequacy of the Corporation's system of
internal accounting controls in order to obtain reasonable assurance that the
Corporation's annual and quarterly financial reports are prepared in accordance
with generally accepted accounting principles and are free from material fraud
or error; (vi) review of the representations of management and the findings of
the independent auditors and internal auditors regarding compliance by
subsidiary banks with laws and regulations designated by bank regulatory
agencies as essential for safety and soundness; (vii) review of the expenses of
the inside directors; (viii) approval of the selection and discharge of the
Corporation's General Auditor; and (ix) review of reports of examinations by
regulatory agencies relating to the Corporation and its subsidiaries.
EMPLOYEE AND PUBLIC RESPONSIBILITY COMMITTEE
The members of the Employee and Public Responsibility Committee are James K.
Baker, James S. Crown, Maureen A. Fay, Charles T. Fisher III, Earl L. Neal and
Adele Simmons, who serves as Chairperson. The Employee and Public
Responsibility Committee, which did not meet in 1995 after the Merger, is the
successor to First Chicago's Employee and Public Responsibility Committee,
which met two times in 1995 before the Merger, and NBD's Public Policy
Committee, which met four times in 1995 before the Merger. The Employee and
Public Responsibility Committee has responsibility and authority for matters
relating to the Corporation's and its subsidiaries' charitable contributions;
diversity, affirmative action, leadership development and equal employment
opportunity policies and procedures; practices in handling customer inquiries
and complaints; compliance with the Community Reinvestment Act, fair lending
laws and applicable consumer-related laws; neighborhood and social initiatives;
and current and emerging public policy issues.
EXECUTIVE COMMITTEE
The members of the Executive Committee of the Corporation are Verne G.
Istock, Thomas H. Jeffs II, Scott P. Marks, Jr., William T. McCormick, Jr.,
James J. O'Connor, Thomas E. Reilly, Jr., Adele Simmons, David J. Vitale and
Richard L. Thomas, who serves as Chairperson. The Executive Committee, which
did not meet in 1995 after the Merger, is the successor to First Chicago's
Executive Committee, which met one time in 1995 before the Merger. The
Executive Committee exercises all the powers of the Board of Directors in the
management of the business and affairs of the Corporation while the Board of
Directors is not in session.
RISK MANAGEMENT COMMITTEE
The members of the Risk Management Committee of the Corporation are Terence
E. Adderley, John H. Bryan, Charles T. Fisher III, Patrick G. Ryan and William
T. McCormick, Jr., who serves as Chairperson. The Risk Management Committee,
which met one time in 1995 after the Merger, is the successor to First
Chicago's Finance Committee, which met three times in 1995 before the Merger.
The Risk Management Committee has responsibility and authority for reviewing,
advising on, approving where appropriate and providing guidance with respect to
risk management, financial securities transactions and capital actions, and
financial planning and performance.
10
<PAGE>
ORGANIZATION, COMPENSATION AND NOMINATING COMMITTEE
Committee Interlocks and Insider Participation
The Organization, Compensation and Nominating Committee, which met one time
in 1995 after the Merger, is the successor to First Chicago's Organization,
Compensation and Nominating Committee, which met six times in 1995 before the
Merger, and NBD's Compensation Committee and Nominating Committee, which met
three times and four times, respectively, in 1995 before the Merger. The
members of the Organization, Compensation and Nominating Committee of the
Corporation are James K. Baker, James S. Crown, Maureen A. Fay, Richard A.
Manoogian, Adele Simmons and James J. O'Connor, who serves as Chairperson.
Prior to the Merger, the members of First Chicago's Organization, Compensation
and Nominating Committee were James S. Crown, Donald P. Jacobs, Earl L. Neal,
Patrick G. Ryan and James J. O'Connor, who served as Chairperson. Also prior to
the Merger, the members of NBD's Compensation Committee were Terence E.
Adderley, Donald H. Barden, John A. Lobbia, William T. McCormick and Richard A.
Manoogian, who served as Chairperson, and the members of its Nominating
Committee were James K. Baker, Bernard B. Butcher, Maureen A. Fay, Joseph L.
Hudson, Jr., Ormand J. Wade and Irving Rose, who served as Chairperson.
All of the members of the Organization, Compensation and Nominating
Committee, or their associates, were customers of, or had transactions with,
the Corporation or the Corporation's banking or other subsidiaries in the
ordinary course of business during 1995. Additional transactions may be
expected to take place in the future. All outstanding loans to the directors
and their associates, commitments and sales, purchases and placements of
investment securities and other financial instruments included in such
transactions were made in the ordinary course of business, on substantially the
same terms, including interest rates and collateral, where applicable, 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. All other transactions described below were entered into
in the ordinary course of business and on substantially the same terms as those
prevailing at the time for comparable transactions with other persons.
During 1995, Unicom Corporation paid approximately $2,103,569 to a subsidiary
of the Corporation for rent and incidental services pursuant to leases for
office and garage space. James J. O'Connor, Chairman and Chief Executive
Officer of Unicom Corporation, is a director of the Corporation.
Subsidiaries of Aon Corporation received brokerage commissions and fees in
1995 of approximately $1,172,423 for obtaining certain insurance for the
Corporation and its subsidiaries. In addition, during 1995, a subsidiary of Aon
Corporation paid approximately $1,128,401 to subsidiaries of the Corporation
for rent and incidental services and expenses pursuant to a lease of space on
the subsidiaries' premises used in connection with the marketing of annuity
products. Certain subsidiaries of the Corporation also received net commissions
of approximately $215,177 from subsidiaries of Aon Corporation in connection
with the sale of insurance products. Patrick G. Ryan, Chairman, President and
Chief Executive Officer of Aon Corporation, is a director of the Corporation.
Committee Responsibilities and Authorities
Included among the functions related to human resources management and
compensation performed by the Organization, Compensation and Nominating
Committee are (i) ensuring the effectiveness of senior management and
appropriate management continuity; (ii) ensuring the reasonableness and
appropriateness of senior management compensation arrangements and levels;
(iii) overseeing senior management officer titling; (iv) reviewing the
succession plan for the office of Chairman; (v) reviewing plans to be followed
should the Chairman or the Chief Executive Officer be absent or disabled; (vi)
monitoring the overall soundness and effectiveness of the Corporation's
compensation and benefit programs at all levels; and (vii) providing advice and
counsel regarding the Corporation's human resources strategy and key human
resources practices and issues.
Regarding formal authorities for compensation matters, the Corporation's
Board of Directors approves, upon recommendation of the Committee, (i) the
adoption and amendment of stock-based incentive plans (subject to stockholder
approval where required); (ii) the adoption and amendment of all significant
compensation plans (subject to stockholder approval where required); and (iii)
all compensation actions, including employment and separation arrangements, for
officers at or above the level of vice chairman.
11
<PAGE>
The Committee has been delegated authority by the Board of Directors to
approve (i) the terms and conditions of stock-based grants; (ii) the total
number of available shares to be used each year in stock-based plans; (iii)
funding for senior management annual incentive awards; (iv) all salaries or
annual incentive awards of $200,000 or more, except awards for vice chairmen
and above; and (v) all compensation actions, including employment and
separation arrangements, for executive vice presidents.
Additionally, the Committee is responsible for (i) proposing new directors;
(ii) reviewing the performance of the Board; (iii) providing counsel regarding
the organization of the Board of Directors and its committee structure,
committee charters, and membership; and (iii) overseeing director compensation
arrangements.
The Organization, Compensation and Nominating Committee will consider
candidates for nominees for election as directors of the Corporation submitted
by stockholders. Any stockholder who wishes to have the Committee consider a
candidate should submit the name of the candidate, along with any biographical
or other relevant information the stockholder wishes the Committee to consider,
to the Secretary of the Corporation at the address appearing on the first page
of this proxy statement.
DIRECTOR MEETING ATTENDANCE AND FEE ARRANGEMENTS
The Board of Directors of the Corporation held one meeting in 1995 after the
Merger. First Chicago's Board of Directors and NBD's Board of Directors each
met eleven times in 1995 before the Merger. Each incumbent director attended
75% or more of the total number of meetings held during 1995 by the Board of
Directors of (prior to the Merger) First Chicago or NBD and (after the Merger)
the Corporation or Committees thereof on which the director served.
ANNUAL RETAINER
The Corporation: Effective as of December 1, 1995, each non-officer director
of the Corporation receives an annual cash retainer of $50,000. In addition,
subject to stockholder approval of the Director Stock Plan, each non-officer
director will receive an annual grant of shares of the Corporation's Common
Stock equal in value to one-half of the director's annual cash retainer. The
Chairperson of each Committee receives an additional annual cash retainer of
$5,000. William T. McCormick, James J. O'Connor, Thomas E. Reilly and Adele
Simmons are the current Committee Chairpersons receiving the additional annual
cash retainer. No additional fees are paid to directors for attending Board or
Committee meetings. Non-officer directors may elect each year to have their
annual cash retainer paid in any combination of the following: (i) cash paid on
a quarterly basis; (ii) deferral of payment into the Corporation's Plan for
Deferring the Payment of Directors' Fees (the "Director Deferral Plan"), which
offers several investment options; and, subject to stockholder approval of the
Director Stock Plan, (iii) an outright grant of shares of the Corporation's
Common Stock; (iv) stock options, with three options issued for every share of
Common Stock that could be granted; and (v) stock units under the Director
Stock Plan. For more information regarding the Director Stock Plan, see pages
31 through 34 of this proxy statement.
First Chicago: In 1995, each non-officer director of First Chicago received
an annual cash retainer of $50,000, $25,000 for service as a director of First
Chicago and $25,000 for service as a director of The First National Bank of
Chicago ("FNBC"). The Chairperson of each Committee received an additional
annual cash retainer of $5,000, $2,500 for service as a Chairperson of a First
Chicago Committee and $2,500 for service as a Chairperson of an FNBC Committee.
In 1995, John H. Bryan, Donald V. Fites, James J. O'Connor and Adele Simmons
were the First Chicago Chairpersons receiving the additional annual cash
retainer. In addition, each non-officer director received 200 shares of First
Chicago common stock (equivalent to 362 shares of the Corporation's Common
Stock) annually. The aggregate fair market value of the 200 shares of First
Chicago common stock received by each non-officer director in 1995 was $10,900,
based on a market value of $54.50 per share of First Chicago common stock. No
additional fees were paid to directors for attending Board or Committee
meetings. Non-officer directors were allowed to elect to receive their annual
retainer in cash or have the retainer applied toward the purchase of shares of
First Chicago common stock. Such payments and purchases were made on a
quarterly basis. Officers of First Chicago and its subsidiaries did not receive
an annual retainer, meeting fees, shares of common stock or other compensation
for service as directors of First Chicago or FNBC or for service on Committees
of the Board.
12
<PAGE>
First Chicago directors were allowed to elect to defer cash compensation
earned as directors pursuant to the Deferred Compensation Plans of First
Chicago and FNBC. Under these plans, an amount representing the cash portion of
the annual retainer a director would otherwise be entitled to receive was
credited to a cash account that was maintained for bookkeeping purposes only.
Each quarter, a determination was made as to the number of full shares of First
Chicago common stock that could be purchased with the amount credited to the
director's cash account. The number of phantom shares was then credited to the
director's phantom stock account. The phantom stock account did not represent
actual shares, but was maintained for bookkeeping purposes only.
Subject to stockholder approval of the Director Stock Plan, directors of the
Corporation who had been participants in First Chicago's and FNBC's Deferred
Compensation Plans were given the opportunity to convert all of the phantom
shares accrued to them under the Deferred Compensation Plans into stock units
under the Corporation's Director Stock Plan.
NBD: Each non-officer director of NBD received an annual retainer of $21,000
plus $1,200 for each meeting of the Board of Directors attended and $1,000 for
each Committee meeting attended. Non-officer directors who served as
Chairpersons of Board Committees and non-officer directors who served as
members of Board Committees received additional annual fees of $5,000 and
$2,500, respectively. In 1995, John W. Day, Maureen A. Fay, Richard A.
Manoogian and Irving Rose were the NBD directors receiving the additional
annual retainer for their service as Committee Chairpersons. Non-officer
directors were allowed to elect to defer all or a portion of their retainer
through the Director Deferral Plan. 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. In
addition, non-officer directors received annually that number of shares of NBD
common stock which had 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. Officers of NBD and its
subsidiaries did not receive an annual retainer, meeting fees, shares of common
stock or other forms of compensation for service as directors of NBD or for
service on Committees of the Board.
Subject to stockholder approval of the Director Stock Plan, directors of the
Corporation who participated in the Director Deferral Plan prior to the Merger
were given a one-time opportunity to convert all or a portion of their account
balances in the plan (representing deferred fees and accrued investment return
thereon) into stock units under the Corporation's Director Stock Plan.
DIRECTOR RETIREMENT PLANS
Prior to the Merger, First Chicago and NBD had established separate
retirement compensation plans for the benefit of their non-officer directors.
The Board of Directors of the Corporation terminated both the First Chicago and
NBD director retirement plans effective as of January 31, 1996. The present
value of the retirement benefits accrued under both programs was determined as
of the time of the termination of the plans, and the amounts were credited, at
the director's election, to the Director Deferral Plan or, subject to
stockholder approval of the Director Stock Plan, to stock units under the
Director Stock Plan.
First Chicago: Non-officer directors of First Chicago who served in such
capacity for at least twenty quarters or left the Board prior to the completion
of such period due to death or disability were eligible to receive retirement
income benefits under First Chicago's Director Retirement Income Plan. The
retirement income benefit was equal to one-half the annual cash retainer
payable to a non-officer director at the time the retiring director retired
from the Board. The benefit was provided for the number of quarters served up
to a maximum of forty quarters. Retiring directors were permitted to elect to
receive this benefit in quarterly installments or in a lump sum based on the
discounted present value of the benefit payments over time.
NBD: Non-officer directors of NBD who served on the Board of Directors for at
least five years and who had not earned an accrued benefit under any retirement
plan sponsored by NBD or any of its subsidiaries were eligible for benefits
under NBD's Retirement Plan for Non-employee Directors. Benefits became payable
upon attaining age 65 or upon retirement from NBD's Board, whichever occurred
later. Eligible directors were entitled to receive an annual benefit equal to
the annual retainer fee in effect for service on the Board at the time of the
director's retirement (excluding meeting fees and retainers for service on
Committees), for the lesser of life or a period of ten years.
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<PAGE>
CONVERSION OF FIRST CHICAGO
COMMON STOCK SHARE EQUIVALENTS
Pursuant to the Merger Agreement, each outstanding share of First Chicago
common stock was converted into the right to receive 1.81 shares of the
Corporation's Common Stock (the "Exchange Rate") at the time of the Merger. For
consistency of presentation, all references in this Proxy Statement to shares
of First Chicago common stock prior to the Merger reflect the 1.81 Exchange
Rate, unless otherwise noted. Since each share of NBD common stock outstanding
prior to the Merger equals one share of the Corporation's Common Stock, all
references to shares of NBD common stock prior to the Merger reflect the
original number of shares.
BENEFICIAL OWNERSHIP OF THE CORPORATION'S COMMON STOCK
Generally, under the rules of the Securities and Exchange Commission (the
"Commission"), a person is deemed to be the beneficial owner of a security with
respect to which such person, through any contract, arrangement, understanding,
relationship or otherwise, has or shares voting power (which includes power to
vote, or direct the voting of, such security) or investment power (which
includes power to dispose of, or direct the disposition of, such security). In
addition, a person is deemed to be the beneficial owner of a security if he or
she has the right to acquire such voting power or investment power over the
security within sixty days, for example, through the exercise of a stock
option.
The following table shows the beneficial ownership of the Corporation's
Common Stock as of December 31, 1995 by (i) each person that is the beneficial
owner of more than five percent of such outstanding class of shares, (ii) each
director, (iii) each executive officer named in the Summary Compensation Table
on page 23, and (iv) all directors and executive officers as a group.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
OWNERSHIP OF CLASS
AS OF (IF 1%
DECEMBER 31, OR
NAME 1995 GREATER)
- ---- ------------ --------
<S> <C> <C>
First Chicago NBD
Corporation......... 20,976,577(a) 6.61%
Terence E. Adderley.. 9,333 --
James K. Baker....... 6,080 --
John H. Bryan........ 6,697 --
Siegfried Buschmann.. 1,234 --
James S. Crown....... 5,525,704(b) 1.75
Maureen A. Fay....... 1,571 --
Charles T. Fisher
III................. 338,702(c) --
Donald V. Fites...... 3,660 --
Verne G. Istock...... 212,182(d)(e) --
Thomas H. Jeffs II... 162,524(d) --
</TABLE>
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
OWNERSHIP OF CLASS
AS OF (IF 1%
DECEMBER 31, OR
NAME 1995 GREATER)
- ---- ------------ --------
<S> <C> <C>
Richard A.
Manoogian......... 7,984 -- %
Scott P. Marks,
Jr................ 283,186(d) --
William T. McCor-
mick, Jr.......... 11,234 --
Earl L. Neal, Esq.. 5,792 --
James J. O'Connor.. 5,186 --
Thomas E. Reilly,
Jr................ 129,469(f) --
Patrick G. Ryan.... 46,954(g) --
Adele Simmons...... 5,430 --
Richard L. Thomas.. 1,386,932(d)(h) --
David J. Vitale.... 470,385(d) --
All Directors and
Executive Officers
as a Group
(i)(j)............ 11,212,707(d) 3.56
</TABLE>
- -------
(a) Various bank subsidiaries of the Corporation were deemed beneficial owners
of portions of the referenced number of shares based upon their sole or
shared voting or investment power over the shares. The bank subsidiaries
hold the shares solely in a fiduciary or custodial capacity under numerous
trust relationships, none of which represents more than five percent of the
Corporation's outstanding shares. These banking subsidiaries have sole
voting power over 9,719,658 shares, shared voting power over 113,610
shares, sole investment authority over 13,386,466 shares and shared
investment authority over 6,373,836 shares. The Corporation disclaims
beneficial ownership of the shares which may be deemed to be beneficially
owned by its bank subsidiaries.
(b) The number of shares of Common Stock shown as beneficially owned by James
S. Crown includes 2,815,102 shares owned by The Crown Fund, of which he is
a partner; 409,431 shares owned by Henry Crown and Company (Not
Incorporated), of which Mr. Crown is a partner; 426,002 shares owned by
Areljay, L.P., of which a trust of which Mr. Crown is a beneficiary is a
limited partner; 482,321 shares owned by Arie and Ida Crown Memorial, of
which Mr. Crown is a director; and 936,926 shares owned by Pines Trailer
Limited Partnership, of which a corporation of which Mr. Crown is a
shareholder and a partnership of which Mr.
14
<PAGE>
Crown is a partner are partners. Also included are 238,812 shares
beneficially owned by trusts of which Mr. Crown is a beneficiary and 169,715
shares beneficially owned by trusts of which Mr. Crown is a co-trustee. Mr.
Crown's wife owns beneficially 2,707 shares, and trusts of which Mr. Crown's
children are beneficiaries own beneficially 8,044 shares. Mr. Crown
disclaims beneficial ownership of the shares held by the various persons and
entities described above.
(c) This figure includes 127,559 shares subject to options held by Mr. Fisher
which were exercisable as of March 1, 1996; 45,039 shares held in a trust
of which Mr. Fisher is co-trustee; and 39,331 shares, of which Mr. Fisher
disclaims beneficial ownership, held in trust for Mr. Fisher's spouse.
(d) As set forth in the following table, for Messrs. Thomas, Istock, Jeffs,
Marks and Vitale and all directors and executive officers as a group, the
share amounts include any shares subject to options held by such persons
which were exercisable as of March 1, 1996, and also include any shares
held pursuant to First Chicago's and NBD's respective 401(k) plans as of
December 31, 1995, which will be subject to the voting direction of such
persons at the Annual Meeting:
<TABLE>
<CAPTION>
ALL DIRECTORS
AND EXECUTIVE
RICHARD L. VERNE G. THOMAS H. SCOTT P. DAVID J. OFFICERS AS
THOMAS ISTOCK JEFFS II MARKS, JR. VITALE A GROUP
---------- -------- --------- ---------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
Shares Subject to Op-
tions Exercisable as
of March 1, 1996 .... 803,381 31,850 0 118,499 246,920 2,224,503
Shares Held pursuant
to 401(k) Plans...... 26,329 0 0 196 10,485 95,292
</TABLE>
(e) This figure includes 810 shares, of which Mr. Istock disclaims beneficial
ownership, held by Mr. Istock's spouse.
(f) This figure includes 119,408 shares held in trusts of which Mr. Reilly is
co-trustee; 596 shares held by Mr. Reilly's spouse; and 1,294 shares, of
which Mr. Reilly disclaims beneficial ownership, held by Mr. Reilly's
spouse as custodian for an adult child.
(g) This figure includes 3,011 shares of Common Stock owned by a corporation
the majority of the shares of which are owned by Mr. Ryan.
(h) This figure includes 3,800 shares which are held by a limited partnership
in which Mr. Thomas and his wife are general and limited partners, and 397
shares held by various trusts for which Mr. Thomas serves as trustee.
(i) For purposes of this table, the term "executive officers" includes all
persons who were executive officers of the Corporation on December 31,
1995.
(j) In addition to shares described in other footnotes to this table, this
figure includes 218,892 shares held by executive officers in a fiduciary
capacity for another person or held by or for the benefit of family members
of executive officers; beneficial ownership with respect to 39,884 of these
shares is disclaimed by the respective executive officers.
ORGANIZATION, COMPENSATION AND NOMINATING COMMITTEE REPORT ON EXECUTIVE
COMPENSATION
The following is the report of the Organization, Compensation and Nominating
Committee of the Corporation for 1995 on executive compensation. The Committee
had responsibility for the Corporation's executive compensation program as of
the Merger. Subsequent to the Merger, the Committee did not have an opportunity
in 1995 to establish compensation policies, address peer group composition,
finalize executive compensation program design or make any specific
compensation decisions. The Committee will address these matters and implement
new executive compensation programs for the Corporation during 1996. To this
end, the Senior Management Annual Incentive Plan and the Stock Performance Plan
are being submitted in this Proxy Statement for stockholder approval at the
1996 Annual Meeting. Both plans are designed to qualify annual incentive and
stock-based incentive awards as "performance-based" in order to help ensure the
deductibility of compensation under tax legislation enacted in 1993.
The sections of the report describing 1995 executive compensation for First
Chicago and NBD executives are based on the decisions of each organization's
predecessor committee.
15
<PAGE>
FIRST CHICAGO CORPORATION
Compensation Philosophy
First Chicago had an executive compensation philosophy which encompassed: (1)
guiding principles; (2) the utilization of peer institutions for purposes of
compensation management; (3) the role and purpose of each compensation element;
and (4) policy statements describing decision-making relative to base salaries,
annual incentives and long-term incentives.
Certain of the guiding principles were:
. Compensation should play a prominent role in attracting, motivating and
encouraging a career commitment on the part of key employees.
. Compensation programs should reinforce the execution of business
strategies, the achievement of key financial and operating objectives and
ultimately the enhancement of stockholder value.
. Compensation opportunities and the mix of compensation program elements
should be structured in the context of the pay practices of competing
institutions.
. Performance contributions in a given year, achievements over a sustained
period and expectations regarding future contributions should be the
primary determinants of individual compensation actions.
. Judgment and discretion should be an integral part of assessing First
Chicago's performance as well as individual contributions.
. First Chicago's performance should be viewed in the context of statutory
and regulatory requirements, as well as First Chicago's key
constituencies, including stockholders, customers and employees.
. Funding for annual incentives should be guided in part by performance
relative to the peer group assuming at or above threshold performance in
relation to the profit plan--target payout for average relative
performance, above target payout levels for superior performance in
relation to the peer group, lower payout for below average relative
performance.
. Long-term incentive award guidelines should be established each year that
directly reflected performance for the year in relation to the peer
group--median award opportunities for average relative performance,
increased opportunities for superior performance relative to the peer
group, reduced opportunities for below average relative performance.
. Stock ownership should be encouraged to foster an ownership mentality on
the part of employees at all levels.
Peer Institutions
A group of peer bank holding companies was used as a benchmark for
competitive pay levels and compensation practices for First Chicago's senior
officers. The selection of firms for inclusion in the peer group reflected
several factors including institutional performance, business mix, size and
geographic considerations. The specific positioning of First Chicago's total
compensation opportunities in relation to the peer group was dependent on
relative performance and other considerations including business plan
requirements.
First Chicago conducted and participated in surveys to identify executive
compensation practices and levels within the financial services industry, as
well as those specifically within the executive officer peer group. Information
contained in peer proxies and other sources of competitive data were analyzed
and reviewed by the Committee periodically to ensure an understanding of
competitive compensation trends and the appropriateness of executive officer
compensation positioning.
The 1995 review indicated that:
. Salaries for executive officers for 1994 reported in the 1995 proxy statement
were below the median of the peer institutions.
. Incentive awards based on results for 1994 were generally below the median of
the peer group for 1994.
. The stock awards made in 1994 were above the median of the peers' 1994 stock
awards. (1993 awards were below 1993 peer awards.)
16
<PAGE>
Description of the Executive Compensation Program
Each element of the executive compensation program--base salaries, annual
incentives, and long-term incentives--had a specific role with respect to
supporting the concept of pay for performance and was designed to reinforce
specific job and organizational requirements.
Base Salary: Base salary represented compensation for discharging job
responsibilities and reflected the executive officer's performance over time.
Peer salaries for comparable positions were used as reference points in setting
salary opportunities for executive officers. The overall goal was to
approximate the median salaries paid by the peer group.
Individual salary adjustments took into account First Chicago's salary
increase guidelines for 1995 and individual performance contributions for the
past year, as well as sustained performance contributions over a number of
years and significant changes in responsibilities, if any. The assessment of
individual performance contributions was subjective and did not specifically
reflect First Chicago's performance. Salary increase guidelines were based on
anticipated salary trends among the peer group and the requirements of the
business plan for 1995.
Annual Incentives: Annual incentives served as the primary compensation
vehicle to recognize and reward accomplishments in a given year. Peer incentive
awards were utilized as reference points to establish a target pool of funds
for executive officers and certain other members of senior management
(approximately 75 people in the aggregate), assuming business plan goals were
achieved.
At First Chicago's 1995 Annual Meeting, stockholders approved the Senior
Management Annual Incentive Plan to help ensure the tax deductibility of annual
incentive awards for executive officers. For 1995, annual incentive funding was
based on earnings per share ("EPS") versus plan with EPS automatically adjusted
to reflect the impact of extraordinary charges, losses from discontinued
operations, restatements and accounting changes and other unplanned special
charges. The First Chicago Organization, Compensation and Nominating Committee
was permitted to then judgmentally reduce the adjusted EPS results and the
related funding. For 1995, there were no automatic increases in results and no
reduction in resulting funding applied. First Chicago EPS results for 1995 were
above plan as was annual incentive funding. Individual awards for executive
officers from the available funding pool were based on a subjective assessment
of individual contributions for the year and were not subject to specific
criteria. The maximum individual award under the Senior Management Annual
Incentive Plan was limited to 200% of base salary.
Long-Term Incentives:
First Chicago utilized long-term incentives primarily to provide an earnings
opportunity based on First Chicago's success as measured by its common stock
performance, and thus link the interests of employees with those of
stockholders. Additionally, long-term incentives served to establish an
ownership perspective and encouraged the retention of key managers and
professionals.
Stock option awards were granted in January of 1995. Each option was granted
at an exercise price based on the market price of a share of First Chicago's
common stock on the date of grant. The January option grants have a ten-year
term, with one-third of the total grant becoming exercisable after one, two and
three years. Exercise of an option grant is subject to continued employment.
The number of option shares granted to individual executive officers in 1995
was based on a subjective appraisal of past and expected future contributions
in relation to the First Chicago stock award guidelines for the year. Also
considered were the number of stock options outstanding and prior restricted
share awards in determining individual stock option awards. The assessment of
individual performance was not subject to specific quantitative criteria. The
stock award guidelines were structured to reflect the estimated average value
of peer group long-term incentive compensation opportunities and certain
assumptions including the future price appreciation of shares of First Chicago
common stock. Prior performance was not utilized as a factor with respect to
the establishment of the stock award guidelines in 1995. The actual amount to
be realized from the stock option awards is dependent on future stock price
appreciation.
17
<PAGE>
In June of 1994, each of the executive officers (other than the Chairman) was
granted a performance restricted stock award. The performance restricted stock
awards are grants of dividend-bearing shares of First Chicago common stock
which were subject to restrictions including the attainment of certain
corporate performance criteria for each of the years 1995, 1996 and 1997 (the
"performance periods") and the executive officer's continued employment during
a period following the three performance periods. Although the shares may be
voted and are entitled to reinvested dividends during the restricted period,
the shares may not be disposed of by the executive officer until the
restrictions lapse.
The terms of the performance restricted stock awards provide that for each
performance period, each executive officer will earn a percentage of one-third
of the total shares awarded, plus reinvested dividends. The percentage of
shares earned for 1995 was based on the First Chicago total stockholder return
ranking for the performance period in relation to the total stockholder return
of the 50 banks represented by the Keefe, Bruyette & Woods, Inc. KBW 50 Index.
Total stockholder return is defined as the price appreciation of First Chicago
common stock plus dividend payments during the applicable performance period.
The percentage to be applied ranges from 0% to 150%. Awards, if any, earned for
each performance period will be paid out in three annual installments
commencing the year immediately following the performance period, contingent
upon the executive officer's continued employment at the time of each payment.
In 1994, the First Chicago Board of Directors approved the use of restorative
stock options, so named because upon exercise of an outstanding stock option a
new option is granted which "restores" the original option's upside earnings
opportunity. Restorative stock options are automatically granted when: (1) an
outstanding stock option is exercised by exchanging shares of the Corporation's
Common Stock owned for at least six months to pay both the exercise price and
the related tax withholding obligations; and (2) the market price of the
Corporation's Common Stock is at least 25% higher than the exercise price of
the outstanding stock option.
The number of restorative stock options granted is equal to the number of
shares of the Corporation's Common Stock exchanged. All outstanding vested
stock option grants are eligible for restorative stock options. Restorative
stock options are granted with an exercise price based on the market price of
the Corporation's Common Stock on the date of grant, become exercisable six
months after the date of the grant and have a term which is equal to that
remaining on the original option. The use of restorative stock option grants
was consistent with the importance the Corporation has placed on employee
ownership of its Common Stock and is intended to encourage earlier exercise of
outstanding stock option grants and subsequent retention of stock.
Stock Ownership Guidelines
Consistent with the importance placed on long-term incentives, First Chicago
had adopted stock ownership guidelines for all senior officers, including
executive officers. The goals set forth in the guidelines, which became
effective January 1, 1993, and which were amended in May 1994 to establish
specific stock ownership guidelines for the positions of President and Vice
Chairman, were expected to be achieved over a five year period after attaining
the organizational level associated with a specific ownership target.
Compensation of Richard L. Thomas
During 1995, Mr. Thomas' annual salary rate was increased from $800,000 to
$835,000. The size of the salary increase was consistent with the salary
increases for other First Chicago employees at all levels. Mr. Thomas' actual
salary-related earnings for 1995 as presented in the Summary Compensation Table
are $822,414. The difference between Mr. Thomas' actual salary-related earnings
for 1995 and his annual salary rate is due to the timing of his salary increase
during the year.
Consistent with First Chicago results for 1995, which were significantly
above plan, and a subjective evaluation of Mr. Thomas' performance (including
his contribution to the successful merger of First Chicago and NBD) an annual
incentive of $1,670,000 was awarded to Mr. Thomas for 1995.
In 1995, Mr. Thomas was granted 100,000 stock options and 4,500 restricted
shares (which as a result of the Merger converted into an option to purchase
181,000 shares of the Corporation's Common Stock and 8,145 restricted shares).
The number of shares granted was based on the Organization, Compensation and
Nominating Committee's subjective appraisal of Mr. Thomas' past performance and
his expected future contribution to First Chicago in relation to stock award
guidelines established for the year.
18
<PAGE>
NBD BANCORP, INC.
NBD's executive compensation program was designed to enable NBD to attract,
motivate and retain top quality executive officers by providing a fully
competitive and comprehensive compensation package. It
provided for competitive base salaries that reflected individual performance as
well as annual variable incentive awards payable in cash for the achievement of
preestablished financial performance goals. In addition, long-term, stock-based
incentive awards were 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
Compensation Committee reviewed the percentage relationship between an
individual's base salary, annual incentive award and the value of long-term
incentive awards, and strived to balance short and long-term incentive
objectives and to employ prudent judgment in establishing performance criteria
and in determining actual incentive payments. The philosophy was to encourage
retention after vesting or exercise dates of stock issued as compensation, net
of shares withheld for taxes.
Annual Compensation
Annual cash compensation for executive officers consisted of base salaries
and variable incentive awards earned under NBD's Executive Incentive Plan
("EIP").
Base salaries for executive officers were set at levels that were 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
annual and long-term incentive awards were substantially the same as the
institutions comprising the Salomon Brothers Regional and Superregional Bank
Composite Index and the Salomon Brothers 50 Bank Index. Base salaries provided
a foundation for determining pay at risk in the annual and long-term incentive
awards. The Compensation Committee reviewed individually the increases
recommended for senior officers and decided the salary increases for them after
assessing NBD's performance relative to the peer banking institutions and peer
bank compensation information.
Annual incentive awards for the executive officers paid from the EIP were
based on the achievement of NBD's return on equity ("ROE") goals. Each year the
Compensation Committee established a corporate ROE target for the EIP and also
established a scale for measuring corporate ROE against that of peer banking
institutions. Individual executive officers were assigned target awards
expressed as a percent of salary. Target awards were payable if NBD's ROE goal
was met, after excluding any special items approved by the Compensation
Committee, and if individual performance was deemed to meet NBD's high
standards. No awards were payable if NBD's ROE failed to meet a threshold level
established by the Compensation Committee. Maximum awards were normally set at
160% of target.
Long-Term Compensation
The long-term incentive compensation for executive officers consisted of
stock-based awards made under NBD's Performance Incentive Plan ("PIP").
Typically, two types of awards to executive officers were awarded under PIP:
performance shares and stock options. Performance shares were directly related
to corporate performance. Stock option awards were directly related to
increases in stock price. These combined to form a balanced approach to long-
term compensation. Long-term incentive awards were issued in the form of stock
to increase the level of the executive officers' stock ownership. The
Compensation Committee believed that such officers should have sufficient
holdings of NBD's common stock so that their decisions appropriately foster
growth in the value of NBD.
Performance shares were awarded annually by the Compensation Committee to
NBD's more senior officers using guidelines expressed as a percent of salary. A
performance share was one share of NBD's common stock, contingently granted and
earned by the achievement of certain financial performance goals for NBD.
During the performance period, the shares were 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 Compensation
Committee, all shares are forfeited.
19
<PAGE>
Stock options were the second type of stock-based award issued to executive
officers under PIP. Stock options were first granted to senior officers in
1988, and the Compensation Committee had a practice of issuing additional
grants every other year since 1988 using guidelines expressed as a percent of
salary. In making stock option grants, the Compensation Committee also
considered the number of stock options previously granted to executive officers.
These grants provided 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 had a ten-year
maximum term. The Compensation Committee also decided in 1991 to include a
restorative option provision for some grants to encourage early exercise of
stock options and further increase actual ownership to provide greater linkage
to stockholder interests. A restorative 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
restorative 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 restorative option may be exercised six
months after the date of its grant and not later than the date of expiration of
the original stock option to which the restorative option is related, and the
exercise price may not be less than 100% of the fair market value of the common
stock on the date the restorative option is granted.
Restricted shares were awarded annually by the Compensation Committee and
have generally been made to less senior officers who would not have received
performance share awards. These were 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 year duration.
Compensation of Verne G. Istock
Mr. Istock was elected President and Chief Executive Officer of the
Corporation as of December 1, 1995. From January 1994 until the date of the
Merger, Mr. Istock served as Chairman and Chief Executive Officer of NBD.
During 1995, Mr. Istock's annual base salary rate was increased from $725,000
to $750,000. The adjustment was consistent with NBD's overall salary increases
for 1995 for employees at all levels and reflected two factors: (1) Mr.
Istock's performance for 1994 and (2) the Compensation Committee's desire to
position Mr. Istock's base salary rate at a level comparable to that of the
chief executive officers of NBD's peer banking institutions. Mr. Istock's
actual salary-related earnings for 1995 as presented in the Summary
Compensation Table are $746,154. The difference between Mr. Istock's actual
salary-related earnings for 1995 and his annual salary rate is due primarily to
the timing of his salary increase during the year.
Consistent with NBD's overall performance including achievement of its 1994
ROE target, and the Compensation Committee's assessment of Mr. Istock's
achievements during 1994, Mr. Istock received an annual incentive award of
$435,000.
For 1995, the Compensation Committee recommended and NBD's Board of Directors
approved an annual incentive award of $550,000. The Committee determined that
Mr. Istock's award should recognize the successful completion of the Merger and
NBD's financial performance relative to its 1995 ROE target.
Under NBD's PIP, two types of awards to executive officers were generally
provided: performance shares and stock options. Performance share awards were
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.
In 1994, Mr. Istock was granted 15,800 performance shares and 60,000 stock
options. In addition, 25,000 restricted shares were granted to recognize his
election as Chairman and Chief Executive Officer of NBD and to assure
management continuity and a smooth leadership transition.
In 1995, Mr. Istock was granted 17,000 performance shares. No stock options
were granted in 1995 given NBD's practice of providing option grants every
other year. Since NBD met the ROE goal for the four years ending December 31,
1995, Mr. Istock received the performance shares related to that period without
restriction. The value of these shares was $372,600, as shown in the Summary
Compensation Table in the column titled "LTIP Payouts".
20
<PAGE>
COMPENSATION DEDUCTIBILITY
The Internal Revenue Code limits the allowable deductions for federal income
tax purposes of compensation paid by a publicly-held corporation. The limit,
which applies to a corporation's chief executive officer and its other four
most highly compensated executive officers employed at year end, is $1 million
per executive per year subject to certain preestablished objective performance-
based exceptions. In 1995, the policy of both First Chicago and NBD was to
ensure the maximum tax deductibility of executive officer compensation. All
compensation paid for 1995 to the Corporation's Chief Executive Officer and the
other four most highly compensated executive officers employed by the
Corporation at the end of 1995 was deductible.
Respectfully submitted,
The Organization, Compensation and
Nominating Committee
James J. O'Connor, Chair
James K. Baker
James S. Crown
Maureen A. Fay, O.P.
Richard A. Manoogian
Adele Simmons
21
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total return on the common stock
of First Chicago ("First Chicago/FCN") and NBD ("NBD/FCN") with the Standard &
Poor's 500 Index (the "S&P 500 Index"), the KBW 50 Index published by Keefe,
Bruyette & Woods, Inc. (the "KBW 50 Index"), the Salomon Brothers 50 Bank Index
(the "Salomon 50-Bank Index") and the Salomon Brothers Regional and
Superregional Bank Composite Index (the "Salomon Regional Index"). The S&P 500
Index is a broad based market index, and both the KBW 50 Index and the Salomon
50-Bank Index include a cross-section of major banking institutions; each of
these indices includes the Corporation's Common Stock. The Salomon Regional
Bank Index, which had included NBD's common stock prior to the Merger,
represents a cross-section of regional and super-regional banks, but excludes
money center banks. The values in the graph show the relative performance of a
$100 investment made on December 31, 1990, in First Chicago common stock, NBD
common stock, the S&P 500 Index, the KBW 50 Index, the Salomon 50-Bank Index
and the Salomon Regional Index, with reinvestment of dividends.
Comparison of Five Year Cumulative Total Return(/1/)
Among First Chicago, NBD, S&P 500 Index, KBW 50 Index, Salomon 50-Bank
Index and Salomon Regional Index.(/2/)
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
First Chicago/FCN 100 164 257 311 357 551
NBD/FCN 100 140 159 150 143 215
S&P 500 100 130 140 154 156 215
KBW 50 100 158 202 213 202 324
Salomon 50-Bank 100 160 213 231 222 338
Salomon Regional 100 174 223 232 223 343
</TABLE>
- -------
(1) Assumes $100 invested at December 31, 1990, with reinvested dividends.
(2) At December 31 in each year.
22
<PAGE>
In the future, the Corporation will compare the cumulative total return of
its Common Stock to the KBW 50 Index. Prior to the Merger, First Chicago had
compared the cumulative total return of its common stock with the KBW 50 Index,
and NBD had compared the cumulative total return of its common stock with the
Salomon 50-Bank Index and the Salomon Regional Index. The Corporation has
selected the KBW 50 Index for future comparisons instead of the Salomon 50-Bank
Index or the Salomon Regional Index for the following reasons: (i) in light of
the Corporation's asset size and other characteristics, the banks included in
the KBW 50 Index are more comparable to the Corporation than are the banks in
the Salomon Regional Index; (ii) in recent years, the KBW 50 Index has been
comprised of a more stable group of banks, while the composition of the other
indices has experienced more change due to mergers; and (iii) the KBW 50 Index
is a total return index which assumes dividend reinvestment, while the Salomon
Regional Index and the Salomon 50-Bank Index reflect stock price appreciation
without dividend reinvestment, necessitating additional calculations in order
to determine cumulative total return.
COMPENSATION OF EXECUTIVE OFFICERS
EXECUTIVE OFFICER COMPENSATION TABLE
The following table sets forth the compensation paid, earned or awarded for
the years indicated therein, to the Corporation's chief executive officer and
its other four most highly compensated executive officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-----------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
--------------------------- -------------------------- --------
OTHER ALL
ANNUAL RESTRICTED SECURITIES OTHER
COMPEN- STOCK UNDERLYING COMPEN-
NAME AND PRINCIPAL SALARY SATION AWARDS OPTIONS/SARS LTIP SATION
POSITION YEAR ($) BONUS ($) ($)(1) ($)(2)(3) (#)(4) PAYOUTS ($)(5)
- -------------------------- ---- -------- ---------- ------- ---------- ------------ -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Richard L. Thomas ........ 1995 $822,414 $1,670,000 $10,421 $ 213,725 440,377 $ 0 $1,176,047
Chairman of the Board 1994 785,057 975,000 9,343 0 596,167 0 23,927
1993 719,157 1,300,000 10,689 0 108,600 0 21,825
Verne G. Istock........... 1995 746,154 550,000 65,934 0 60,468 372,600(6) 6,000
President and Chief 1994 724,135 435,000 51,698 690,625 71,060 349,650 5,942
Executive Officer 1993 500,001 300,000 40,274 0 33,770 277,552 6,803
Thomas H. Jeffs II........ 1995 652,500 400,000 55,556 0 54,123 356,400(6) 6,000
Vice Chairman of the Board 1994 649,423 350,000 46,816 690,625 62,997 341,845 5,942
1993 500,001 300,000 40,274 0 20,342 277,552 6,803
Scott P. Marks, Jr........ 1995 317,988 525,000 6,397 0 127,158 0 9,915
Vice Chairman of the Board 1994 295,659 525,000 6,495 931,875 74,571 0 9,245
1993 269,923 450,000 6,244 218,938(7) 25,340 0 8,348
David J. Vitale........... 1995 419,349 750,000 6,495 0 169,867 0 12,955
Vice Chairman of the Board 1994 396,437 450,000 6,495 1,065,000 133,055 0 12,268
1993 345,594 650,000 6,712 0 47,060 0 10,618
</TABLE>
- -------
(1) All amounts included in this column for Messrs. Istock and Jeffs represent
cash dividends on performance shares granted by NBD which are earned at the
same rate, prior to the Merger, as dividends on NBD's common stock, and
after the Merger, as dividends on the Corporation's Common Stock.
(2) In 1995, First Chicago awarded Mr. Thomas 8,145 restricted shares of the
Corporation's Common Stock. The restrictions lapsed on 2,715 of these
shares one year from the date of grant, and the restrictions on the
remaining 5,430 shares lapsed approximately fifteen months after the grant
date. Dividends on these shares were payable in cash.
In 1994, NBD awarded each of Messrs. Istock and Jeffs 25,000 restricted
shares of the Corporation's Common Stock. These restricted share awards vest
in three equal installments at the end of 1996, 1997 and 1998. Dividends on
these shares are payable in cash.
In 1994, First Chicago awarded Messrs. Marks and Vitale performance
restricted stock awards of dividend-bearing shares of the Corporation's
Common Stock. As originally structured, unrestricted ownership of
23
<PAGE>
these shares would be earned upon the attainment of certain corporate
performance criteria during each of the years 1995, 1996 and 1997 (each, a
"performance period"). For each performance period, the executive officer
would earn a stated percentage of one-third of the number of shares granted,
plus reinvested dividends. The determination of the percentage, which would
range from 0% to 150%, was to be based upon the relative ranking of First
Chicago's total stockholder return for the applicable performance period as
compared with the total stockholder return of the 50 banks comprising the
KBW 50 Index. Total stockholder return would be measured by the stock price
appreciation of First Chicago's common stock plus dividend payout during the
applicable performance period. Awards, if any, earned for each performance
period would be paid in three annual installments commencing the year
immediately following the performance period, with one-third of the earned
award being paid in the first installment, one-half of the remaining award
being paid in the second installment, and the remainder of the award being
paid in the final installment. The payment of each installment would be
contingent upon the executive officer's continued employment at the time of
such payment. A total of 67,875 performance restricted shares were granted
in 1994 to the executive officers named in the Summary Compensation Table.
For the 1995 performance period, 125% of the first one-third of the
performance restricted shares granted (plus reinvested dividends accrued
thereon) were earned. These shares will be paid in three annual installments
in 1996, 1997 and 1998, contingent upon the executive officer's continued
employment. Dividends on the earned shares will be paid in cash.
Following the Merger, in February of 1996, the remaining two-thirds of the
performance restricted shares originally granted by First Chicago in 1994,
plus reinvested dividends previously accrued thereon, were converted into
performance shares which may be earned upon the attainment of certain
performance criteria during three new calendar year-based performance
periods: 1996, 1996-1997 and 1996-1998. For each new performance period, the
executive officer will earn a stated percentage of one-third of the number
of performance restricted shares remaining from the original grant. The
determination of the percentage of the shares earned, which may range from
0% to 150%, will be based upon the Corporation's ROE relative to the ROE of
peer banking institutions selected by the Organization, Compensation and
Nominating Committee for each year in the new performance period averaged
for the number of years in the performance period. All earned shares will be
paid immediately after completion of the new performance period. Dividends
on the performance shares will be paid in cash.
(3) The dollar values shown in the Restricted Stock Awards column are based
upon the market price of the common stock of the corporation (First Chicago
or NBD) that granted the award on the date the restricted shares were
granted. Dividends on the performance restricted shares granted by First
Chicago in 1994 were reinvested in common stock of First Chicago, prior to
the Merger, and of the Corporation, subsequent to the Merger; effective
April 1, 1996, dividends on these shares will be payable in cash. Dividends
on all other restricted shares are payable in cash.
At December 31, 1995, the aggregate number of restricted shares of the
Corporation's Common Stock held by the executive officers named in the
Summary Compensation Table and the value of these shares, based upon the
$39.50 per share closing price of the Corporation's Common Stock on December
29, 1995, were as follows:
<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES VALUE
---------------- --------- ----------
<S> <C> <C>
Richard L. Thomas............................. 53,191.27 $2,101,055
Verne G. Istock............................... 25,000.00 987,500
Thomas H. Jeffs II............................ 25,000.00 987,500
Scott P. Marks, Jr............................ 71,768.76 2,834,866
David J. Vitale............................... 72,291.34 2,855,508
</TABLE>
(4) First Chicago Stock Option Awards
The amounts included in this column for Messrs. Thomas, Marks and Vitale
include new stock options and restorative stock options granted under First
Chicago's Stock Incentive Plan (the "First Chicago SIP"). First Chicago
granted new stock options in 1995 for 181,000, 47,965, and 72,400 shares to
Messrs. Thomas, Marks and Vitale, respectively. First Chicago granted new
stock options in 1994 for 387,340, 41,178 and 66,518 shares to Messrs.
Thomas, Marks and Vitale, respectively. All other First Chicago stock option
grants for 1995 and 1994 were restorative stock options. All First Chicago
stock options granted in 1993 were new grants. For a description of
restorative stock options under the First Chicago SIP, see the Organization,
Compensation and Nominating Committee Report on Executive Compensation
contained herein and footnote (2) to the "Options/SAR Grants in Last Fiscal
Year" table below.
24
<PAGE>
NBD Stock Option Awards
The amounts included in this column for Messrs. Istock and Jeffs include new
stock options and restorative stock options granted under NBD's Performance
Incentive Plan (the "NBD PIP"). All NBD stock options granted in 1995 and
1993 were restorative options. NBD granted new stock options in 1994 of
60,000 and 50,000 shares of the Corporation's Common Stock to Messrs. Istock
and Jeffs, respectively. All other NBD stock option grants for 1994 were
restorative options. For a description of restorative options under the NBD
PIP, see the Organization, Compensation and Nominating Committee Report on
Executive Compensation contained herein and footnote (3) to the "Options/SAR
Grants in Last Fiscal Year" table below.
(5) The amounts included in this column for Messrs. Marks and Vitale represent
matching contributions to the First Chicago 401(k) and supplemental 401(k)
plans. For Mr. Thomas, the 1995 amount includes $25,047 of such matching
contributions and $1,151,000 to be paid in 1996 in connection with his
retirement. See "Retirement of Mr. Thomas" below. The amounts included in
this column for 1995 for Messrs. Istock and Jeffs represent matching
contributions to NBD's 401(k) plan.
(6) Amounts reflect the $40.50 per share market value of the Corporation's
Common Stock on March 8, 1996, the date on which the Organization,
Nominating and Compensation Committee certified attainment of the
performance criteria on which the awards were based.
(7) Includes 6,335 restricted shares which vested one year from the date of
grant.
OPTION GRANTS TABLE
The following table provides information on stock options granted in 1995 to
the executive officers named in the Summary Compensation Table. In 1995, First
Chicago granted both new and restorative stock options to Messrs. Thomas, Marks
and Vitale; NBD granted only restorative options to Messrs. Istock and Jeffs.
All options granted by First Chicago and NBD in 1995 were non-qualified stock
options, and no stock appreciation rights ("SARs") were granted in 1995.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------------
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO
OPTIONS/ EMPLOYEES IN EXERCISE OR GRANT DATE PRESENT
SARS GRANTED (#) FISCAL YEAR BASE PRICE EXPIRATION VALUE ($)
NAME (1)(2)(3) (4) ($/SH) DATE (5)
- ------------- ----------------- ------------------ ------------ ---------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Richard L. Thomas....... 181,000 4.36% $25.79 01/13/05 $1,214,510
45,029 1.08 32.21 02/09/00 271,975
54,633 1.32 32.21 02/08/01 358,939
102,251 2.46 32.21 02/14/02 715,757
57,464 1.38 32.21 01/08/03 419,487
Verne G. Istock......... 9,286 0.22 33.81 06/28/00 59,245
11,363 0.27 33.81 06/14/02 83,177
11,201 0.27 33.81 06/19/04 88,712
9,928 0.24 39.75 06/28/00 78,332
4,479 0.12 39.75 06/14/02 41,252
14,211 0.34 39.75 03/13/98 77,024
Thomas H. Jeffs II...... 17,529 0.42 39.75 06/28/00 138,304
15,585 0.38 39.75 06/14/02 143,538
13,069 0.31 39.75 03/13/98 70,834
7,940 0.20 39.75 06/19/04 80,353
Scott P. Marks, Jr...... 47,965 1.16 25.79 01/13/05 297,383
18,804 0.45 29.93 02/09/00 117,149
23,664 0.57 29.93 02/14/02 168,014
4,476 0.11 29.93 02/10/99 25,110
8,969 0.22 37.70 02/10/99 59,106
12,538 0.30 37.70 01/08/03 116,729
10,742 0.26 37.70 01/14/04 104,305
David J. Vitale......... 72,400 1.74 25.79 01/13/05 448,880
22,397 0.54 31.83 02/09/00 133,710
19,505 0.47 31.83 02/08/01 126,197
32,097 0.77 31.83 02/14/02 220,506
23,468 0.57 31.83 01/08/03 167,796
</TABLE>
25
<PAGE>
- -------
(1) The first line of the "Options/SARs Granted" column for Messrs. Thomas,
Marks and Vitale denotes new grants made by First Chicago in 1995; all
other grants by First Chicago in 1995 are restorative options. Except for
Mr. Thomas' grants, one third of each new option grant by First Chicago
becomes exercisable on the first, second and third anniversaries of the
grant date, which was January 13, 1995. One third of Mr. Thomas' grant of
181,000 options became exercisable on January 13, 1996, and the remaining
two-thirds became exercisable on April 1, 1996. Restorative stock options
are exercisable six months from the grant date. See footnote (2) to this
table for a further explanation of restorative stock options.
(2) In 1994, First Chicago, pursuant to the First Chicago SIP, instituted the
grant of restorative options which "restore" a stock option's upside
earnings potential through the grant of a replacement option upon exercise
of the original option. Restorative options under the First Chicago SIP
are automatically granted when: (a) an outstanding stock option is
exercised by an employee exchanging Common Stock owned by the employee for
at least six months to pay both the exercise price and the related tax
withholding obligations; and (b) the market price of the Common Stock is
at least 25% higher than the exercise price of the outstanding stock
option. The number of restorative options granted is equal to the number
of shares of Common Stock exchanged by the employee. All outstanding
vested stock options are eligible for restorative stock options. A
restorative stock option will not be granted upon the exercise of a
restorative stock option. Restorative stock options are granted with an
exercise price based on the market price of the Common Stock on the date
of the grant, become exercisable six months after the date of the grant
and have a term which is equal to that remaining on the original option.
(3) In 1991, NBD, pursuant to the NBD PIP, instituted the grant of restorative
options. A restorative option allows a participant in the NBD PIP who
exercises a stock option prior to retirement, and who pays all or a part
of the exercise price of a stock option with shares of Common Stock held
by the participant for at least six months, to receive a restorative
option to purchase the number of shares of Common Stock equal to the
number of whole shares used by the participant in payment of the exercise
price of the original stock option. Restorative options become exercisable
six months after the date of grant. The expiration date of a restorative
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 the Corporation's Common Stock on the date the restorative option
is granted.
(4) The percentages shown in the table are based on total options granted by
First Chicago and NBD in 1995 (both new and restorative options) on
4,150,742 shares of the Corporation's Common Stock.
(5) The grant date present values shown in the table are determined using the
Black-Sholes option pricing model. Except with respect to the new options
awarded Mr. Thomas in 1995, the assumptions used in calculating the Black-
Sholes present value of $6.20 per option for new option grants were as
follows:
(a) Volatility: 23.31%--based on 10 years of daily stock prices from January
14, 1985, through January 13, 1995;
(b) Risk-Free Rate of Return: 7.70%--estimated 10 year zero coupon treasury
yield;
(c) Dividend Yield: 4.63%--dividend at the time of grant divided by the stock
price at the time of grant;
(d) Option Duration (time of exercise and vesting): 1/3 of option assumed to
commence one year from grant date with a nine year term, 1/3 to commence
two years from grant date with an eight year term and 1/3 to commence
three years from grant date with a seven year term, all discounted back to
grant date using applicable zero coupon treasury rates.
The calculation with respect to Mr. Thomas' grant of 181,000 options,
having a present value of $6.71 per option, assumes the volatility, risk-
free rate of return and dividend yield set forth above, and an option
duration whereby 1/3 of the option is assumed to commence one year from the
grant date with a nine year term, and 2/3 to commence 15 months from the
grant date with a term of approximately 8.75 years.
The calculations with respect to all restorative options assume: (a)
volatility based on 10 years of daily stock prices prior to the grant date;
(b) a risk-free rate of return equal to the estimated 10 year zero coupon
treasury yield on the grant date; (c) a dividend yield equal to the
dividend on the grant date divided by the stock price on such date; and (d)
the restorative option vesting six months after the grant date and having a
term equal to the remaining term of the original option. The specific
assumptions used for the calculation of the grant date present values for
the restorative options granted to the named executive officers are as
follows:
26
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF DATE RISK-FREE DIVIDEND
OPTIONS GRANTED GRANTED VOLATILITY RATE OF RETURN YIELD
--------------- -------- ---------- -------------- --------
<S> <C> <C> <C> <C> <C>
Richard L. Thomas....... 259,377 5/18/95 23.16% 6.64% 3.98%
Verne G. Istock......... 31,850 7/21/95 23.20 6.61 3.98
28,618 10/19/95 23.08 6.01 3.33
Thomas H. Jeffs II...... 54,123 10/19/95 23.08 6.01 3.33
Scott P. Marks, Jr...... 46,944 4/26/95 23.22 7.08 4.16
32,249 10/27/95 23.16 6.10 3.45
David J. Vitale......... 97,467 5/30/95 23.16 6.33 3.99
</TABLE>
No adjustments were made in calculating the grant date present value of an
option to account for potential forfeiture or the non-transferable nature
of the option.
The actual value of the options will depend on the market value of the
Common Stock on the dates the options are exercised. No realization of
value from the options is possible without an increase in the price of the
Common Stock, which would benefit all stockholders.
1995 OPTION EXERCISES AND YEAR-END OPTION VALUE TABLE
The following table provides information on options exercised in 1995 by the
executive officers named in the Summary Compensation Table, the number of
unexercised options each of them held at December 31, 1995, and the value of
the unexercised in-the-money options each of them held as of that date. No SARs
were outstanding at any time during 1995.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION /SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
ACQUIRED OPTIONS/SARS IN-THE-MONEY OPTIONS/SARS
ON VALUE AT FY-END (#) AT FY-END ($) (1)
EXERCISE REALIZED ------------------------- -------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard
L.
Thomas. 378,566 $5,859,001 577,735 475,428 $6,149,869 $6,909,405
Verne
G.
Istock. 70,580 372,456 0 93,850 0 702,147
Thomas
H.
Jeffs
II.... 71,089 674,393 0 54,000 0 457,500
Scott
P.
Marks,
Jr.... 105,733 1,569,936 80,338 116,113 894,399 1,328,888
David
J.
Vitale. 133,488 2,049,495 184,927 132,433 1,936,820 2,022,372
</TABLE>
- -------
(1) The values shown in the table are based on the $39.50 per share closing
price of the Corporation's Common Stock on December 29, 1995, less the
exercise price of the options.
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR TABLE
The following table provides information on performance share awards made by
NBD in 1995 under the NBD PIP to Messrs. Istock and Jeffs. Messrs. Thomas,
Marks and Vitale did not participate in this plan in 1995.
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE
PERFORMANCE PERFORMANCE SHARE
OR OTHER PAYOUTS UNDER NON-STOCK
NUMBER OF PERIOD PRICE-BASED PLANS
PERFORMANCE UNTIL ------------------------
SHARES(1) MATURATION THRESHOLD TARGET MAXIMUM
NAME (#) OR PAYOUT (#) (#) (#)
----------------- ----------- ----------- --------- ------ -------
<S> <C> <C> <C> <C> <C>
Verne G. Istock............ 17,000 1995-1998 0 17,000 17,000
Thomas H. Jeffs II......... 13,000 1995-1998 0 13,000 13,000
</TABLE>
- -------
(1) Each performance share awarded in 1995 consisted of one share of the
Corporation'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 period 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 "Organization, Compensation and
Nominating Committee Report on Executive Compensation--NBD BANCORP, INC.--
Long-Term Compensation."
27
<PAGE>
In February 1996, all outstanding performance shares previously awarded by
NBD ("existing performance shares") were modified. For each existing
performance share grant, the shares earned for the portion of the performance
period completed at the end of 1995 were calculated, and these earned shares
were converted to restricted shares paying cash dividends with restrictions
lapsing at the end of the original performance period if the executive officer
remains employed by the Corporation on that date. With respect to the remainder
of each performance share grant, the performance criteria were revised so that
the executive officer will earn a percentage of the performance shares, which
may range from 0% to 150% of the shares granted, based upon the Corporation's
ROE relative to the ROE of peer banking institutions selected by the
Organization, Compensation and Nominating Committee for each year in the
performance period averaged for the number of years in the performance period.
PENSION PLANS
Prior to the Merger, First Chicago and NBD had established separate pension
plans for the benefit of their respective employees. Each of these plans
continues to be in effect and is described below.
First Chicago
In general, salaried employees of designated First Chicago subsidiaries are
eligible to participate in the First Chicago Pension Plan upon both attaining
age 21 and completing one year of service. A participant is 100% vested after
completing five years of vesting service. Generally, an employee who has
completed 15 years of vesting service may elect, upon adequate notice, early
retirement after attaining age 55. With certain exceptions, upon reaching age
65 or after completing five years of vesting service, if later, each
participant is entitled to receive annual retirement income (in monthly
installments) for life equal to the average of the highest annual rates of base
salary paid to the participant in each of the participant's last five years of
employment, multiplied by a percentage (which may not exceed 70%) computed by
multiplying the number of years of credited service under the Pension Plan by
2%. There is no reduction for federal Social Security in pension benefits for
participants who retired after 1988.
First Chicago's Supplemental Pension Plan was adopted to permit the payment
of supplemental benefits to employees whose annual benefits upon retirement
under the Pension Plan would exceed those permitted by the Internal Revenue
Code of 1986, as amended (the "Code"). The Supplemental Pension Plan provides
that if at any time the amount of the annual retirement benefit which would
otherwise be payable under the Pension Plan to a person who has completed five
or more years of vesting service is or becomes limited by reason of compliance
with the Code, such person shall be entitled to receive under the Supplemental
Pension Plan a supplemental benefit equal to the difference between the benefit
such person receives under the Pension Plan and the benefit such person would
have received if such limitation had not been included. The benefit is payable
from the general assets of the Corporation.
First Chicago's Executive Retirement Plan provides certain senior officers
with an additional retirement benefit payable from the general assets of the
Corporation. The benefit payable under the Executive Retirement Plan is equal
to the incremental benefit that would be provided under the Pension Plan and
the Supplemental Pension Plan if an amount equal to the average of the
participant's five largest annual bonus awards (with a maximum limit per year
of 50% of base salary) were added to the participant's base salary for purposes
of calculating the retirement benefits payable under the Pension Plan and
Supplemental Pension Plan.
The following table illustrates the estimated annual benefits payable upon
retirement for specified average compensation rates and years of credited
service classifications assuming retirement at age 65. The amounts shown in the
table include amounts payable pursuant to the Supplemental Pension Plan and the
Executive Retirement Plan.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL RETIREMENT BENEFITS WITH
INDICATED YEARS OF CREDITED SERVICE
COVERED --------------------------------------------
COMPENSATION 15 20 25 30 35
------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 200,000................. $ 60,000 $ 80,000 $100,000 $120,000 $140,000
400,000................. 120,000 160,000 200,000 240,000 280,000
600,000................. 180,000 240,000 300,000 360,000 420,000
800,000................. 240,000 320,000 400,000 480,000 560,000
1,000,000................. 300,000 400,000 500,000 600,000 700,000
1,200,000................. 360,000 480,000 600,000 720,000 840,000
1,400,000................. 420,000 560,000 700,000 840,000 980,000
</TABLE>
28
<PAGE>
The years of credited service and covered compensation under the Pension Plan
(including the Supplemental Pension Plan) and Executive Retirement Plan as of
January 1, 1996, for the covered executive officers named in the Summary
Compensation Table are as follows:
<TABLE>
<CAPTION>
RICHARD L. SCOTT P. DAVID J.
THOMAS MARKS, JR. VITALE
---------- ---------- --------
<S> <C> <C> <C>
Years of Credited Service..................... 35 11 28
Covered Compensation(1)....................... $1,081,500 $418,050 $537,000
</TABLE>
- -------
(1) These amounts represent the average aggregate covered compensation under
the Pension Plan (including the Supplemental Pension Plan) and Executive
Retirement Plan for the past five years.
NBD
NBD's 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 1996 is $120,000. In addition, federal law limits the amount of
covered compensation for purposes of calculating pension benefits. As of
January 1, 1996, 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.
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, 1996, for an employee then age 65.
<TABLE>
<CAPTION>
COMPENSATION
(5 YEAR AVERAGE YEARS OF SERVICE
PRECEDING -----------------------------------------------------
RETIREMENT) 15 20 25 30 35 40
--------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$ 250,000.............. $ 60,000 $ 80,000 $100,000 $120,000 $140,000 $160,000
500,000.............. 120,000 160,000 200,000 240,000 280,000 320,000
750,000.............. 180,000 240,000 300,000 360,000 420,000 480,000
1,000,000.............. 240,000 320,000 400,000 480,000 560,000 640,000
1,250,000.............. 300,000 400,000 500,000 600,000 700,000 800,000
1,500,000.............. 360,000 480,000 600,000 720,000 840,000 960,000
</TABLE>
The years of credited service and covered compensation under the Employees'
Retirement Plan (including the Pension Restoration/Supplemental Plan) as of
January 1, 1996, for the covered executive officers named in the Summary
Compensation Table are as follows:
<TABLE>
<CAPTION>
VERNE G. ISTOCK THOMAS H. JEFFS II
--------------- ------------------
<S> <C> <C>
Years of Credited Service.............. 32 33
Covered Compensation(1)................ $893,492 $929,775
</TABLE>
- -------
(1) These amounts represent the covered compensation under the Employees'
Retirement Plan (including the Pension Restoration/Supplemental Plan).
29
<PAGE>
RETIREMENT OF MR. THOMAS
Mr. Thomas will retire as Chairman of the Board of the Corporation on May 10,
1996, at which time Mr. Istock will become Chairman. In connection with Mr.
Thomas's retirement, First Chicago's Board of Directors authorized a $151,000
cash payment for Mr. Thomas's lifetime of service, which was paid in January
1996. In addition, the Corporation will provide office space and secretarial
support to Mr. Thomas for his lifetime, and, while he serves as a director of
the Corporation, a car and driver, business travel and entertainment expense
reimbursement up to $50,000 per year, and continuation of his residential
security system. Upon his retirement, Mr. Thomas will receive a special service
recognition award of $1,000,000.
EMPLOYMENT AND CHANGE OF CONTROL AGREEMENTS
Employment Agreements. Employment agreements are in effect between the
Corporation and certain key executives (including Messrs. Thomas, Istock,
Jeffs, Marks and Vitale). Each of these employment agreements (the "Employment
Agreements") provides that in the event an employee who is party to an
Employment Agreement (a "Covered Executive") is terminated during the two-year
period following the Effective Time of the Merger other than due to death,
disability or for cause (as defined in the Employment Agreements) or if such
Covered Executive terminates his employment for Good Reason (defined in the
Employment Agreements to include a material diminution of duties and
responsibilities or benefits), the Covered Executive will receive a severance
payment consisting of: (a) the Covered Executive's base salary through the date
of termination, (b) a proportionate bonus based upon the average bonus paid to
the Covered Executive with respect to the three fiscal years prior to the
Effective Time (the "Average Bonus"), (c) two and one-half times the sum of the
Covered Executive's base salary and the Average Bonus, and (d) unpaid deferred
compensation and vacation pay. The Covered Executive will also be entitled to a
payment equal to the actuarial value of the additional service credit under the
Corporation's qualified and supplemental retirement plans the Covered Executive
would have received had the Covered Executive remained employed for 30 months
after the date of termination, which amount will be payable pursuant to the
terms of the supplemental retirement plans. The factors that provide the basis
for calculating the severance payments and additional service credit payments
vary over time, and consequently can only be determined as of the specific date
upon which any such payments accrue. If payments had been made at the Effective
Time, the total of such severance payments and additional service credit
payments to each of Messrs. Thomas, Istock, Jeffs, Marks and Vitale would have
been $6,850,500, $3,859,300, $3,387,800, $2,702,500 and $3,264,500,
respectively. A Covered Executive whose employment is not terminated in the
manner described in this paragraph will not be entitled to receive any
severance or additional service credit payments under the Employment
Agreements. In addition to such severance payments and additional service
credit payments, the Covered Executive is entitled to continued employee
welfare benefits for 30 months after his date of termination. The Corporation
will also provide the Covered Executive with outplacement services, secretarial
support, office space and a company car (if provided prior to the termination
of employment) for one year following such termination. In addition, the
Employment Agreements provide that in the event a Covered Executive becomes
entitled to receive a severance payment, additional service credit payment and
other severance benefits and such severance payment and benefits are subject to
an excise tax, the Covered Executive will become entitled to receive an
additional payment in an amount such that after the payment of all income and
excise taxes, the Covered Executive will be in the same after-tax position as
if no excise tax has been imposed (the severance payments and benefits
described in this paragraph, collectively, the "Severance Benefits").
Change of Control Agreements. Change of control severance agreements are in
effect between the Corporation and certain key executives (including Messrs.
Thomas, Istock, Jeffs, Marks and Vitale). These executive change of control
agreements (the "Change of Control Agreements") were effective as of July 11,
1995, the date of the Merger Agreement, have been general obligations of the
Corporation since the Effective Time, and provide, generally, that if, within
three years subsequent to a change of control of the Corporation (a "Change of
Control"), or the 30-day period which begins one year after the Change of
Control, the executive's employment is terminated (other than for cause, or for
other limited reasons specified in the Change of Control Agreements), or if the
executive terminates employment for Good Reason (defined in the Change of
Control Agreements to include a diminution of duties and responsibilities or
benefits), the executive will be entitled to receive the Severance Benefits
described above. The Merger did not constitute a change of control for purposes
of the Change of Control Agreements.
30
<PAGE>
In the case of First Chicago, the Change of Control Agreements amended the
change of control employment agreements previously in effect between First
Chicago and key executives of First Chicago. In the case of NBD, the Change of
Control Agreements replaced the change of control separation agreements
previously in effect between NBD and certain key executives of NBD. The
original change of control agreements with such executives provided benefits
substantially similar to the Severance Benefits as described above but did not
provide for any additional payments to an executive upon the imposition of an
excise tax.
STOCKHOLDER APPROVAL OF DIRECTOR STOCK PLAN
Introduction. At the Annual Meeting, there will be submitted a proposal to
approve the Director Stock Plan of the Corporation (the "Director Stock Plan"
or the "Plan"). The Board of Directors approved the Director Stock Plan on
February 9, 1996, subject to stockholder approval. If stockholder approval is
obtained, the Director Stock Plan will be effective as of January 2, 1996.
The Board of Directors believes that the ownership of Common Stock by
directors supports the maximization of long-term stockholder value by aligning
the interests of the directors with those of stockholders. The Director Stock
Plan is designed to facilitate the ownership of Common Stock by non-employee
directors by providing for the grant of shares of Common Stock, stock options
or stock units, or any combination thereof, to outside directors of the
Corporation.
The Director Stock Plan will also permit the rollover into the Plan of all or
a portion of the value of the accrued benefits of the directors of the
Corporation and FNBC under the respective director retirement plans of NBD and
First Chicago. Certain directors may also elect to be awarded stock units under
the Plan as a full or partial payment of amounts accrued to such directors in
connection with director compensation deferral arrangements of First Chicago,
FNBC and NBD.
The description of the Director Stock Plan set forth below is a summary, does
not purport to be complete and is qualified in its entirety by reference to the
provisions of the Director Stock Plan, a copy of which is attached hereto as
Appendix A.
Purpose. The Director Stock Plan is intended to promote the long-term growth
of the Corporation by increasing the proprietary interest of non-employee
directors in the Corporation and to attract and retain highly qualified and
capable directors.
Participants. Only non-employee directors of the Corporation are eligible to
participate in the Director Stock Plan. The Board of Directors may also approve
the participation of non-employee directors of subsidiaries or affiliates of
the Corporation. Currently, 19 non-employee directors of the Corporation and
FNBC are eligible to participate in the Director Stock Plan.
Administration. The Director Stock Plan will be administered by the
Organization, Compensation and Nominating Committee of the Board of Directors
(the "Committee"). The Committee will have full power and authority to
interpret and construe the Plan and adopt such rules and regulations as it
shall deem necessary and advisable. The Committee may designate persons other
than Committee members to carry out its responsibilities and may delegate
administrative duties under the Plan to one or more agents as it deems
necessary or advisable.
Shares Authorized. The aggregate number of shares of Common Stock which may
be issued upon the award of shares and stock units and the exercise of options
shall not exceed 1,000,000 shares, subject to adjustment in the event of stock
splits, stock dividends or changes in corporate structure affecting the Common
Stock. To the extent shares subject to an outstanding option are not issued or
delivered by reason of the expiration, termination, cancellation or forfeiture
of such option or by reason of the delivery of shares to pay all or a portion
of the exercise price of such option, then such shares again will be available
for award or grant under the Plan.
Grants and Awards
Annual Grants. As of each annual meeting of stockholders of the Corporation,
each non-employee director will receive a grant of a number of shares of Common
Stock equal in value to one-half of the annual cash retainer paid to such
director (which number will be pro-rated if the director is first elected or
begins to serve
31
<PAGE>
as a non-employee director on a date other than the date of the annual meeting
of stockholders of the Corporation). For 1996 only, such grant will be made as
of August 1, 1996. The number of shares granted will be the number of whole
shares equal to (i) one-half of the annual cash retainer (without taking into
consideration any Chairperson retainer) divided by (ii) the fair market value
per share of Common Stock on the stock award date.
Elective Grants. In addition, as of each annual meeting of stockholders of
the Corporation (except in 1996, as of August 1, 1996), each non-employee
director may elect to receive shares of Common Stock, stock options, or stock
units, or a combination thereof, in lieu of all or a portion of such director's
annual cash retainer. The number of shares which may be awarded to a director
upon such director's election to receive shares of Common Stock in lieu of all
or a portion of the annual cash retainer will be the number of whole shares
equal to (i) the portion of the annual retainer for which the director has made
such an election, divided by (ii) the fair market value per share of Common
Stock on the stock award date.
The number of shares of Common Stock subject to an option grant under the
Plan will be the number of whole shares equal to the product of three times the
number of shares of Common Stock the director could have received had such
director elected to receive shares in lieu of all or a portion of such
director's annual cash retainer. The purchase price per share under each option
will be 100% of the fair market value per share of Common Stock on the option
grant date. Options granted under the Director Stock Plan vest immediately, but
are not exercisable until six months from the date of grant. Options may be
exercised until the tenth anniversary of the date of grant. Options may be
exercised either by the payment of cash in the amount of the aggregate option
price or by surrendering (or attesting to ownership of) shares of Common Stock
owned by the director for at least six months prior to the date the option is
exercised, or a combination of both having a combined value equal to the
aggregate option price of the shares subject to the option or portion of the
option being exercised. Any option or portion thereof that is not exercised on
or before the tenth anniversary of the date of grant shall expire.
The number of stock units which may be awarded to a director upon such
director's election to receive stock units in lieu of all or a portion of the
annual cash retainer will be the number of stock units equal to (i) the portion
of the annual cash retainer for which the director has made such an election,
divided by (ii) the fair market value per share of Common Stock on the stock
unit award date. Each stock unit (or fraction thereof) entitles the director to
receive one share of Common Stock on a distribution date selected by such
director pursuant to rules established by the Committee (the "Distribution
Date"). A director who has been awarded stock units shall be credited while
such stock units remain outstanding with additional stock units equal to (1)
the product of (i) the dividend per share of Common Stock declared after the
stock units are awarded, and (ii) the number of stock units awarded to the
director, divided by (2) the fair market value of a share on the date the
dividend is paid. The additional stock units credited to a director will be
issued as shares to the director at the same time and in the same manner as the
underlying stock units from which they were generated are issued as shares. On
the Distribution Date, the shares underlying the stock units will be issued and
transferred to the director, whereupon the director will become a stockholder
of the Corporation with respect to the shares and shall be entitled to vote
such shares. In the event of a director's death prior to the issuance of the
shares attributable to stock units, shares attributable to such director's
stock units will become immediately distributable to such director's executor,
administrator, beneficiary or similar person.
For purposes of the Director Stock Plan, "fair market value" means the
average of the highest and lowest quoted selling prices on the New York Stock
Exchange Composite Transactions Tape on the relevant date or, if there were no
such sales on such date, on the next preceding date on which such selling
prices were recorded.
Options and stock units granted under the Director Stock Plan will not be
transferable by a participant other than by court order, will or the laws of
descent and distribution, unless such transferability is permitted under Rule
16b-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and will be exercisable during the participant's lifetime only by the
participant or the participant's guardian, legal representative or similar
person.
Rollover Awards. As of January 31, 1996, the Board of Directors terminated
the director retirement plans of NBD and First Chicago. Current directors of
the Corporation and FNBC were permitted to elect to receive stock units as of
August 1, 1996, for all or part of the value of their accrued retirement
benefit, subject to stockholder approval of the Plan. The number of stock units
which will be awarded to a director upon such
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director's election to receive stock units in lieu of all or a portion of the
accrued retirement benefit will be the number of stock units equal to (i) the
portion of the benefit amount for which the director has made such an election,
divided by (ii) the fair market value per share of Common Stock on August 1,
1996.
In addition, certain directors of the Corporation and FNBC who had been
participants in the director deferred compensation plans of First Chicago, FNBC
and NBD were permitted to elect as of August 1, 1996 to convert amounts
accruing to them under such deferral plans into stock units. Directors of the
Corporation or FNBC who elected will have all of the phantom shares of Common
Stock credited to them under the First Chicago and FNBC compensation deferral
plans converted into stock units on a one-for-one basis. Directors of the
Corporation and FNBC who elected will have all or a portion of the amount
accruing to them under the NBD compensation deferral plan converted into the
number of stock units equal to the (i) the amount of the accrued benefit to be
so converted, divided by (ii) the fair market value per share of Common Stock
on August 1, 1996.
The stock units so awarded due either to a director's election relating to
the accrued retirement plan benefit or the conversion of amounts accruing under
the respective deferred compensation plans will have the same terms and
features as discussed above under "Elective Grants".
Change of Control. Upon the occurrence of a "change of control" of the
Corporation as defined in the Director Stock Plan, any and all outstanding
options granted under the Plan become immediately exercisable and all stock
units become distributable in shares of Common Stock.
Amendment. The Board of Directors may amend or terminate the Director Stock
Plan at any time, but the terms of any option or stock unit granted under the
Plan may not be adversely modified without the participant's consent. In
addition, the Board of Directors may not amend the Director Stock Plan more
than once every six months to change the number of shares subject to an option,
the exercise price of an option, the grant date of an option, or the
termination provisions relating to an option, other than to comply with changes
in the Code, the Employee Retirement Income Security Act of 1974, as amended,
or the rules and regulations promulgated thereunder.
Federal Income Tax Consideration. The following discussion summarizes the
federal income tax consequences to participants who may receive awards under
the Plan; the discussion is based upon interpretations of the Code in effect as
of January 1, 1996, and the regulations promulgated thereunder as of such date.
The grant of an option under the Director Stock Plan will not result in
income for the participant or in a deduction for the Corporation. The exercise
of an option will generally result in income for the participant and a
deduction for the Corporation, in each case measured by the difference between
the exercise price and the fair market value of the shares at the time of
exercise.
The receipt of shares of Common Stock under the Director Stock Plan will
generally result in income for the participant and a deduction for the
Corporation, based on the fair market value of the shares on the date awarded.
The grant of a stock unit under the Plan will not result in income for the
participant or in a deduction for the Corporation. At the Distribution Date,
the receipt of shares of Common Stock will generally result in income for the
participant and a deduction for the Corporation, in each case based on the fair
market value of the shares on the Distribution Date.
Miscellaneous. The closing price per share of Common Stock on March 21, 1996,
as recorded on the New York Stock Exchange Composite Transactions Tape, was $40
1/8.
New Plan Benefits. The only participants in the Director Stock Plan are the
non-employee directors of the Corporation and FNBC. Annual grants of shares of
Common Stock under the Plan will be made to participants on August 1, 1996.
Assuming a price of $40.00 per share of Common Stock on such date, 9,375 shares
of Common Stock will be awarded to the directors of the Corporation and 2,500
shares will be awarded to all other participants in the Plan in connection with
the annual grant of shares.
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In addition, assuming a price of $40.00 per share of Common Stock on such
date, 2,213 shares of Common Stock, 7,428 stock options and 3,813 stock units
will be awarded to the directors of the Corporation in connection with elective
grants. Other participants in the Plan will receive 1,875 stock options and
3,125 stock units on such date in connection with elective grants.
It is also anticipated that 19,931 and 1,628 stock units will be awarded on
August 1, 1996 to the directors of the Corporation and all other participants
in the Plan, respectively, due to retirement plan accrued benefit elections. It
is expected that the conversion of amounts accrued under the respective
director deferred compensation plans of First Chicago, FNBC and NBD will result
in the issuance of 102,752 and 56,574 stock units to the Corporation's
directors and other participants in the Plan, respectively.
As the exact number of shares of Common Stock, stock options and stock units
to be awarded on August 1, 1996, will be dependent upon the price of the Common
Stock on such date, the award amounts above are estimates based on a stock
price assumption which may not be reflective of the stock price on such grant
date.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE DIRECTOR STOCK
PLAN.
STOCKHOLDER APPROVAL OF STOCK PERFORMANCE PLAN
Introduction. At the Annual Meeting, there will be submitted a proposal to
approve the Stock Performance Plan of the Corporation (the "Performance Plan"
or the "Plan"). The Board of Directors adopted the Performance Plan on February
9, 1996, subject to stockholder approval. The Performance Plan is intended to
replace the prior stock-based incentive plans of NBD and First Chicago, the NBD
PIP and the First Chicago SIP, and is structured to comply with Internal
Revenue Service requirements to help ensure the tax deductibility of certain
executives' compensation. If stockholder approval is obtained, the Performance
Plan will be effective as of January 1, 1996. Stockholder approval of the
Performance Plan will also constitute approval of the material terms of the
performance goals for the award of performance shares to be granted under the
Plan as discussed below.
The following description of the Performance Plan sets forth the material
terms of the Plan; however, it is a summary. It does not purport to be complete
and is qualified in its entirety by reference to the provisions of the
Performance Plan, a copy of which is attached to this proxy statement as
Appendix B.
Purpose. The Performance Plan is intended to provide incentives and rewards
for employees of the Corporation and its subsidiaries (i) to support the
execution of the Corporation's business and human resource strategies and the
achievement of its goals and (ii) to associate the interests of employees with
those of the Corporation's stockholders.
Participants. All of the approximately 36,000 employees (including officers
and directors who are employees) of the Corporation and its subsidiaries will
be eligible to participate in the Performance Plan. In addition, certain former
employees who have consulting arrangements with the Corporation or its
subsidiaries may be selected to participate if it is determined that any such
individual has a significant responsibility for the success and future growth
and profitability of the Corporation.
Authorization. The Performance Plan provides that in any year the total
number of shares of Common Stock as to which awards may be granted may not
exceed 2% of the Corporation's outstanding shares of Common Stock as reported
in the Corporation's Annual Report on Form 10-K for the year ending immediately
prior to such year, subject to the adjustments described below; however, no
more than 10,000,000 shares in the aggregate for all years may be subject to
incentive stock options. Also available for award in any year in addition to
the 2% limit described in the previous sentence are (i) any unused portion of
the limit set forth above for any year, (ii) any shares of Common Stock
previously subject to award which are forfeited, terminated, surrendered, paid
in cash or expire unexercised, (iii) the excess amount of variable awards which
become fixed at less than their maximum limitations, and (iv) shares of Common
Stock that are used to pay the purchase price or any withholding taxes
associated therewith upon the exercise of an option, to the extent such shares
result in the grant of a restorative option; provided, however, that the total
number of shares of Common Stock available for awards under the Performance
Plan in any year may not exceed 5% of the outstanding Common Stock as reported
in the Corporation's Annual Report on Form 10-K for the year ending immediately
prior to
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such year. The grant of a performance or restricted share or unit award shall
be deemed to be a grant equal to the maximum number of shares which may be
issued under the award. Where the value of the award is variable on the date it
is granted, the value shall be deemed to be the maximum limitation of the
award. Awards payable solely in cash will not reduce the number of shares
available for award under the Plan.
For 1996, approximately 6.3 million shares of Common Stock will be available
for grant under the Performance Plan. See "1996 Awards under the Plan" below
for a description of the awards proposed to be made under the Performance Plan
in 1996 contingent upon stockholder approval of the Plan. In addition, upon
stockholder approval of the Plan, all restorative options automatically awarded
upon the exercise of outstanding stock options under the terms of the First
Chicago SIP or the NBD PIP, respectively, will be granted thereafter under the
Performance Plan. The terms of the restorative options to be granted under the
Plan will remain the same as under the applicable prior plan. For a description
of the terms of such restorative options, see footnotes (2) and (3) to the
"Option/SAR Grants in Last Fiscal Year" table on page 25 of this proxy
statement. As described on page 28 of this proxy statement, in February 1996,
all outstanding performance shares previously awarded by NBD were modified.
Such performance shares, as so modified, will be awarded under the Performance
Plan, contingent upon stockholder approval of the Plan.
The shares of Common Stock subject to awards under the Performance Plan may
be either authorized but unissued shares or treasury shares. A participant in
the Performance Plan is permitted to receive multiple grants of stock-based
awards. The terms and provisions of a type of award with respect to any
recipient need not be the same with respect to any other recipient of such
award. The Performance Plan provides that during any five-year period a
participant may not be granted (i) stock options and stock appreciation rights
with respect to more than 2 million shares of Common Stock and (ii) more than
700,000 performance shares.
Administration. The Board of Directors of the Corporation has delegated the
administration of the Performance Plan to the Organization, Compensation and
Nominating Committee (the "Committee"). The Board of Directors, or the
Committee to the extent determined by the Board, will make determinations with
respect to the participation of employees in the Plan and, except as otherwise
required by law or the Plan, the grant terms of awards including vesting
schedules, price, length of relevant performance, restriction or option period,
dividend rights, rights to dividend equivalents, post-retirement and
termination rights, payment alternatives, and such other terms and conditions
as the Board or the Committee deems appropriate. The Committee may designate
other persons to carry out its responsibilities under such conditions and
limitations as it may set, other than its authority with regard to awards
granted to employees who are executive officers or directors of the
Corporation. Committee members are not eligible to participate in the Plan.
The Committee will determine the disposition of an award in the event of the
retirement, disability, death or other termination of a participant's
employment. Prior to a change of control, the Committee may cancel any award
for reasonable cause and may provide for the conditions and circumstances under
which awards will be forfeited.
Awards. The following types of awards and other Common Stock-based awards may
be granted under the Performance Plan on a stand alone, combination or tandem
basis:
Stock Options. Stock Options may be granted in the form of incentive
stock options within the meaning of Section 422 of the Code or stock
options not meeting such Code definition ("nonqualified stock options").
The exercise period for any stock option will be determined by the
Committee at the time of grant which may provide that options may be
exercisable in installments. The exercise price per share of Common Stock
of any option may not be less than the fair market value of a share of
Common Stock on the date of grant. The exercise price is payable, at the
Committee's discretion, in cash, in shares of already owned Common Stock or
in any combination of cash and shares. Each stock option may be exercised
in whole, at any time, or in part, from time to time, after the grant
becomes exercisable. Stock option awards may also provide for a restorative
feature which "restores" the stock option's upside earnings potential
through the automatic grant of a replacement option upon exercise of the
original option (or a previously granted replacement option) using shares
of Common Stock owned for at least six months to pay the exercise price.
Stock Appreciation Rights. Stock appreciation rights ("SARs") may be
granted independently of any stock option or in tandem with all or any part
of a stock option granted under the Plan, upon such terms and conditions as
the Committee may determine. Upon exercise, an SAR entitles a participant
to receive
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<PAGE>
the excess of the fair market value of a share of Common Stock on the date
the SAR is exercised over the grant price of the SAR or the price at which
the related option to purchase such share was exercisable, as applicable.
The Committee will determine whether an SAR will be settled in cash, Common
Stock or a combination of cash and Common Stock. Upon exercise of an SAR
granted in conjunction with a stock option, the option or the portion
thereof to which the SAR relates will be surrendered.
Restricted Shares. Restricted shares are shares of Common Stock that may
not be sold or otherwise disposed of during a restricted period after
grant, the duration of which will be determined by the Committee. The
Committee may provide for the lapse of such restrictions in installments.
Restricted shares may be voted by the recipient who is also entitled to
receive dividends thereon unless the Committee otherwise determines.
Dividends may be payable in cash or in additional restricted shares. A
recipient of a grant of restricted shares will generally earn unrestricted
ownership thereof only if the individual is continuously employed by the
Corporation or a subsidiary during the entire restricted period.
Performance Shares. Performance shares are shares of Common Stock which
are contingently granted to an individual and which are earned by
achievement of performance goals established for the award by the
Committee. During the applicable performance period determined by the
Committee for an award, the shares may be voted by the recipient who is
also entitled to receive dividends thereon unless the Committee determines
otherwise. At the end of the applicable performance period, if the
applicable performance criteria are met, the shares are earned by the
recipients and become unrestricted immediately or in installments as
determined by the Committee. In addition, the Committee may provide that a
certain percentage (which may be greater than 100%) of the number of shares
originally awarded may be earned by a recipient upon the attainment of the
performance goals. Dividends on performance shares may be payable in cash
or in additional performance shares. See "Performance Goals and Maximum
Awards" below for a description of the current performance goals for
performance share awards.
Stock Units. Stock units are fixed or variable share or dollar
denominated units which are valued, at the Committee's discretion, in whole
or in part by reference to, or otherwise based on, the fair market value of
the Corporation's Common Stock. The Committee will determine the terms and
conditions applicable to stock units, including any applicable
restrictions, conditions or contingencies, which may be related to
individual, corporate or other categories of performance. A stock unit may
be payable in Common Stock, cash or a combination of both. An employee who
receives a stock unit may be given rights to dividend equivalents on such
stock units, payable in cash, stock, or additional stock units, subject to
any conditions the Committee may impose.
Other Stock-based Awards. The Committee may grant other types of awards
of Common Stock or awards based in whole or in part by reference to Common
Stock ("Other Stock-based Awards"). Such Other Stock-based Awards include,
without limitation, restricted share units, performance share units,
unrestricted stock grants (to other than executive officers) and dividend
or dividend equivalent rights. The Committee will determine the time at
which grants of such Other Stock-based Awards are to be made, the size of
such awards and all other conditions of such awards, including any
restrictions, deferral period or performance requirements. The recipient
will have the right to receive currently or on a deferred basis as
determined by the Committee, interest or dividends, or interest or dividend
equivalents. Common Stock issued on a bonus basis pursuant to Other Stock-
based Awards may be issued for no cash consideration to nonexecutive
officers of the Corporation.
Except to the extent permitted by Rule 16b-3 of the Securities Exchange Act
of 1934, the Code and the specific terms of any award, no award will be
assignable or transferable except by will, the laws of descent and distribution
or pursuant to a qualified domestic relations order, and during the lifetime of
a participant, an award under the Plan may only be exercised by such
participant or such participant's guardian, legal representative or assignee
pursuant to a qualified domestic relations order.
Adjustments. In the event there is a change in the capital structure of the
Corporation as a result of any stock dividend or split, recapitalization,
merger, consolidation or spin-off or other similar corporate change, the
Committee may make an adjustment in the number of shares of Common Stock
available for issuance, the number of shares covered by any outstanding award
and the price per share thereof. In the event there is a change of control (as
defined in the Performance Plan) of the Corporation, (i) the time period for
exercising or realizing awards will be accelerated, all restrictions will lapse
and all performance standards will be deemed to have been attained, (ii) with
respect to stock options, during the 60-day period following a change of
control, a
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<PAGE>
participant may elect to receive, in lieu of shares of Common Stock, cash equal
to the excess of the fair market value of the shares of Common Stock over the
price at which the option was exercisable, (iii) performance shares or
performance units will be paid entirely in cash, and (iv) all awards become
noncancellable. In the event a participant's employment terminates following a
change of control, stock options held by the participant may be exercised until
the earlier of three months after the termination date or the normal expiration
date of the stock options.
Grants to Executive Officers. Grants of awards to executive officers, as
defined under the rules of the Commission, will require that (i) no award
providing for an exercise, a vesting period, a restriction period or the
attainment of performance standards will permit unrestricted ownership of the
Common Stock by the participant for at least six months from the date of grant
and (ii) Common Stock acquired pursuant to the Stock Performance Plan (other
than Common Stock acquired as a result of the granting of a "derivative
security") may not be sold for at least six months after acquisition.
Amendments and Termination. The Board of Directors may at any time amend,
suspend or discontinue the Performance Plan and, prior to a change of control,
alter or amend any awards granted thereunder to the extent permitted by law.
Any such action by the Board of Directors may be taken without the approval of
the stockholders of the Corporation to the extent that such approvals are not
required by applicable law or regulation. There is no set termination date for
the Performance Plan.
Federal Income Tax Considerations. The following discussion summarizes the
federal income tax consequences to participants who may receive grants of
awards under the Performance Plan. The discussion is based upon interpretations
of the Code in effect as of January 1, 1996, and the regulations promulgated
thereunder as of such date.
Nonqualified Stock Options. For federal income tax purposes, no income is
recognized by a participant upon the grant of a nonqualified stock option
under the Performance Plan. Upon the exercise of an option, however,
compensation taxable as ordinary income will be realized by the participant
in an amount equal to the excess of the fair market value of a share of
Common Stock on the date of such exercise over the exercise price. A
subsequent sale or exchange of such shares will result in gain or loss
measured by the difference between (i) the exercise price, increased by any
compensation reported upon the participant's exercise of the option, and
(ii) the amount realized on such sale or exchange. Such gain or loss will
be capital in nature if the shares were held as a capital asset and will be
long-term if such shares were held for more than one year.
The Corporation is entitled to a deduction for compensation paid to a
participant at the same time and in the same amount as the participant is
considered to have realized compensation by reason of the exercise of an
option.
Incentive Stock Options. No taxable income is realized by the participant
upon the grant or exercise of an incentive stock option. If shares of
Common Stock are issued to a participant pursuant to the exercise of an
incentive stock option granted under the Performance Plan, and if no
disqualifying disposition of such shares is made by such participant within
two years after the date of grant or within one year after the transfer of
such shares to such participant, then (a) upon sale of such shares, any
amount realized in excess of the option price will be taxed to such
participant as a long-term capital gain and any loss sustained will be a
long-term capital loss, and (b) no deduction will be allowed to the
Corporation for Federal income tax purposes. Upon exercise of an incentive
stock option, the participant may be subject to alternative minimum tax on
certain items of tax preference.
If shares of Common Stock acquired upon the exercise of an incentive
stock option are disposed of prior to the expiration of the two-years-from-
grant/one-year-from-transfer holding period, generally (a) the participant
will realize ordinary income in the year of disposition in an amount equal
to the excess (if any) of the fair market value of the shares at exercise
(or, if less, the amount realized on the disposition of the shares) over
the option price thereof, and (b) the Corporation will be entitled to
deduct such amount. Any further gain or loss realized will be taxed as
short-term or long-term capital gain or loss, as the case may be, and will
not result in any deduction by the Corporation.
If an incentive stock option is exercised at a time when it no longer
qualifies as an incentive stock option, the option is treated as a
nonqualified stock option.
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Stock Appreciation Rights. No taxable income is recognized by a
participant upon the grant of an SAR under the Performance Plan. Upon the
exercise of an SAR, however, compensation taxable as ordinary income will
be realized by the participant in an amount equal to the cash received upon
exercise, plus the fair market value on the date of exercise of any shares
of Common Stock received upon exercise. Shares of Common Stock received on
the exercise of an SAR will be eligible for capital gain treatment, with
the capital gain holding period commencing on the date of exercise of the
SAR.
The Corporation is entitled to a deduction for compensation paid to a
participant at the same time and in the same amount as the participant is
considered to have realized compensation by reason of the exercise of the
SAR.
Restricted and Performance Shares. A recipient of restricted shares or
performance shares generally will be subject to tax at ordinary income
rates on the fair market value of the Common Stock at the time the
restricted shares or performance shares are no longer subject to
forfeiture. However, a recipient who so elects under Section 83(b) of the
Code within 30 days of the date of the grant will have ordinary taxable
income on the date of the grant equal to the fair market value of the
restricted shares or performance shares as if the restricted shares were
unrestricted or the performance shares were earned and could be sold
immediately. If the shares subject to such election are forfeited, the
recipient will not be entitled to any deduction, refund or loss for tax
purposes with respect to the forfeited shares. Upon sale of the restricted
shares or performance shares after the forfeiture period has expired, the
holding period to determine whether the recipient has long-term or short-
term capital gain or loss begins when the restriction period expires.
However, if the recipient timely elects to be taxed as of the date of the
grant, the holding period commences on the date of the grant and the tax
basis will be equal to the fair market value of the shares on the date of
the grant as if the shares were then unrestricted and could be sold
immediately.
Stock Units. A recipient of stock units will generally be subject to tax
at ordinary income rates on the fair market value of any Common Stock
issued pursuant to such an award, and the Corporation will generally be
entitled to a deduction equal to the amount of the ordinary income realized
by the recipient. The fair market value of any Common Stock received will
generally be included in income (and a corresponding deduction will
generally be available to the Corporation) at the time of receipt. The
capital gain or loss holding period for any Common Stock distributed under
an award will begin when the recipient recognizes ordinary income in
respect of that distribution.
Other Stock-based Awards. The federal income tax consequences of Other
Stock-based Awards will depend on how such awards are structured.
Generally, the Corporation will be entitled to a deduction with respect to
such awards only to the extent that the recipient realizes compensation
income in connection with such awards. It is anticipated that Other Stock-
based Awards will usually result in compensation income to the recipient in
some amount. However, some forms of Other Stock-based Awards may not result
in any compensation income to the recipient or any income tax deduction for
the Corporation.
Miscellaneous. The closing price per share of Common Stock on March 21, 1996,
as recorded on the New York Stock Exchange Composite Transactions Tape, was $40
1/8.
1996 Awards under the Plan. The Committee on March 8, 1996, made certain
awards of stock options, restricted shares and performance shares under the
Performance Plan, contingent upon stockholder approval of the Performance Plan.
Performance shares were awarded to a group selected from among the more senior
officers of the Corporation and its subsidiaries. These awards are tied to the
achievement of certain financial performance goals for the Corporation which
are discussed below. Restricted shares were awarded to those officers
designated by the Committee excluding those senior officers eligible to receive
performance shares. Stock options were awarded to both groups of officers.
Nonqualified stock options were awarded to approximately 1,950 employees. The
number of options awarded to all employees and to all executive officers of the
Corporation as a group totaled 2,521,975 and 365,500, respectively. Messrs.
Istock, Jeffs, Marks and Vitale were awarded 100,000, 36,000, 36,000, and
36,000 stock options, respectively. The exercise price per share of Common
Stock of each option is $40.50. One-third of the options granted an individual
will become exercisable on the first, second and third anniversaries of the
grant date; the options will expire on the tenth anniversary of the grant date.
The stock options will be exercisable for up to five years following the
retirement, death or disability of the grantee; the options will be forfeited
should the grantee terminate employment with the Corporation or a subsidiary
for any other reason.
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The stock options awarded also have a restorative feature which provides for
the automatic grant of a replacement option upon exercise of a stock option
award. Restorative options will be automatically granted when an outstanding
option (including an outstanding restorative option) is exercised by an
employee exchanging Common Stock owned by the employee for at least six months
to pay the exercise price. The number of restorative options granted will be
equal to the number of shares of Common Stock exchanged by the employee to pay
the exercise price. Only one restorative option may be awarded for each option
in any twelve-month period. Restorative stock options will be granted with an
exercise price based on the market price of the Common Stock on the date of the
grant and will have a term which is equal to that remaining on the original
option award.
The Committee also awarded in aggregate 536,425 restricted shares to
approximately 1,850 employees. No executive officer of the Corporation was
awarded restricted shares. The restricted shares will become unrestricted and
be fully vested four years from the date of grant. During the restricted
period, individuals will be entitled to vote the restricted shares and receive
cash dividends thereon.
The Committee awarded 304,233 performance shares to 116 individuals,
including 121,833 performance shares to all executive officers as a group.
Messrs. Istock, Jeffs, Marks and Vitale were awarded 33,333, 12,000, 12,000 and
12,000 performance shares, respectively. The awards provide for a four-year
performance period commencing January 1, 1996. At the end of such period, the
performance shares awarded will be earned by an individual in a stated
percentage of the award which will range from 0% to 150% of the original share
award, which percentage will be determined based on the Corporation's ROE as
compared with the ROE of peer banking institutions selected by the Committee
for each year averaged for the four years in the performance period. During the
performance period, dividends on the performance shares will be payable in cash
to the award recipient.
Performance Goals and Maximum Awards. In 1993, the Code was amended to add a
new Section 162(m) which disallows federal income tax deductions for certain
compensation in excess of $1,000,000 per year paid to each of the Corporation's
Chief Executive Officer and its other four most highly compensated executive
officers (collectively, the "Covered Employees"). Under Section 162(m),
compensation that qualifies as "other performance-based compensation" is not
subject to the $1,000,000 limit. One of the conditions necessary to qualify
certain incentive awards as "other performance-based compensation" is that the
material terms of the performance goals under which the award is made must be
disclosed to, and approved by, the stockholders of the Corporation before the
incentive compensation is paid.
For those types of awards under the Performance Plan which require
performance criteria to meet the definition of "other performance-based
compensation" the Committee has determined that the performance criteria will
be based on one or more of the following corporate performance factors: (i)
earnings per share, (ii) return on average equity or (iii) return on average
assets. These performance criteria may be measured in absolute terms or
measured against, or in relationship to, other companies comparably, similarly
or otherwise situated and may be based on, or adjusted for, other objective
goals, events, or occurrences established by the Committee for a performance
period, including earnings, earnings growth, revenues, expenses, stock price,
market share, charge-offs, loan loss reserves, reductions in nonperforming
assets, return on assets, return on equity, return on investment, regulatory
compliance, satisfactory internal or external audits, improvements in financial
ratings, achievement of balance sheet or income statement objectives,
extraordinary charges, losses from discontinued operations, restatements and
accounting changes and other unplanned special charges such as restructuring
expenses, acquisition expenses including goodwill, unplanned stock offerings
and strategic loan loss provisions. The performance criteria will be measured
over such performance period as the Committee shall determine for any award.
Awards will be earned out or paid out only upon the determination by the
Committee that the performance criteria for the performance period have been
achieved. The performance criteria related to an award must be established by
the Committee prior to the completion of 25% of the performance period or such
earlier date as may be required by Section 162(m) of the Code. In no event will
the aggregate maximum awards granted to a participant who is a Covered Employee
exceed more than 700,000 performance shares in any five-year period.
At the end of each performance period for an award, the Committee will
determine the extent to which the performance criteria established for the
performance period have been achieved and determine the pay out of the
performance award. The Committee may, in its sole discretion, reduce or
eliminate the payout of any award to the extent permitted under the Performance
Plan and applicable law.
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Subject to stockholder approval of the Performance Plan, the following awards
for 1996 were made under the Plan on March 8, 1996.
NEW PLAN BENEFITS
STOCK PERFORMANCE PLAN
<TABLE>
<CAPTION>
NUMBER OF UNITS
--------------------------------
PERFORMANCE STOCK RESTRICTED DOLLAR
NAME(1) SHARES OPTIONS SHARES VALUES(2)
------- ----------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Richard L. Thomas(3)......... 0 0 0 $ 0
Verne G. Istock.............. 33,333 1,341,653
100,000 938,000
0 0
Thomas H. Jeffs II........... 12,000 483,000
36,000 337,680
0 0
Scott P. Marks, Jr........... 12,000 483,000
36,000 337,680
0 0
David J. Vitale.............. 12,000 483,000
36,000 337,680
0 0
Executive Officer Group...... 121,833 4,903,778
365,500 3,428,390
0 0
Non-Executive Officer
Employee Group............... 182,400 7,341,600
2,156,475 20,227,736
536,425 21,591,106
</TABLE>
- -------
(1) The position of each of the named individuals is set forth in the Summary
Compensation Table on page 23 of this proxy statement.
(2) With respect to performance shares and restricted shares, the dollar value
is based upon the closing price of the Corporation's Common Stock on the
date of grant, March 8, 1996. With respect to stock options, the dollar
value reflects the contingent grant date present value of the stock options
using the Black-Sholes option pricing model and represents a present value
of $9.38 per option grant. The assumptions used in calculating this value
were as follows:
Volatility: 23.35%--based on 10 years of daily stock prices from
January 1, 1986 through January 1, 1996;
Risk-Free Rate of Return: 6.49%--estimated 10 year zero coupon
treasury yield;
Dividend Yield: 3.58%--dividend at the time of grant divided by
the stock price at time of grant;
Option Duration (time of exercise and vesting): 1/3 of option
assumed to commence one year from grant date with a nine year
term, 1/3 to commence two years from grant date with an eight year
term, and 1/3 to commence three years from grant date with a seven
year term, all discounted back to grant date and using applicable
zero coupon treasury rates.
(3) Mr. Thomas will be retiring in May 1996 and will not be a participant in
the Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE STOCK
PERFORMANCE PLAN INCLUDING THE PERFORMANCE GOALS FOR SUCH PLAN.
STOCKHOLDER APPROVAL OF EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN
Introduction. At the Annual Meeting, there will be submitted a proposal to
approve the Corporation's Employee Stock Purchase and Savings Plan (the "Stock
Purchase Plan" or the "Plan"). The Plan gives eligible employees the right to
accumulate funds over an offering period of not more than 26 months and, with
such
40
<PAGE>
funds, purchase shares of Common Stock. The Stock Purchase Plan is intended to
replace a similar plan which First Chicago established in 1980. The Board of
Directors adopted the Stock Purchase Plan on February 9, 1996, subject to
stockholder approval. If stockholder approval is obtained, it is anticipated
that the first offering to eligible employees under the Stock Purchase Plan
will be made in August 1996.
The description of the Stock Purchase Plan set forth below is a summary, does
not purport to be complete and is qualified in its entirety by reference to the
provisions of the Stock Purchase Plan, a copy of which is attached to this
proxy statement as Appendix C.
Purpose. The Stock Purchase Plan is designed to encourage greater stock
ownership among employees thereby enhancing employee commitment to the
Corporation and providing employees an opportunity to share in the
Corporation's success.
Participants. All employees (including officers and directors who are
employees) of the Corporation and certain subsidiaries who have been employed
by the Corporation or such subsidiaries for at least one month as of the first
day of an enrollment period and who are scheduled to work a minimum of 20 hours
per week and five months per year will be eligible to participate in the Stock
Purchase Plan. Approximately 36,000 employees currently would be eligible to
participate in the next offering under the Stock Purchase Plan.
Shares Authorized. The Stock Purchase Plan will be authorized to issue up to
15,000,000 shares of Common Stock, subject to certain stock adjustments in the
event of stock splits, stock dividends or changes in corporate structure
affecting the Common Stock. If employees elect to purchase more shares of
Common Stock in any offering than are available at that time under the Stock
Purchase Plan, the Corporation may reduce pro rata the number of shares each
employee may purchase so that the total number of shares purchased does not
exceed the amount of shares available.
Administration. The Stock Purchase Plan provides that a committee designated
by the Board will administer the Plan. The Board has currently designated the
Organization, Compensation and Nominating Committee (the "Committee") to
administer the Plan. The Committee will, in its sole discretion, determine from
time to time when the Corporation will make an offering under the Stock
Purchase Plan. The Committee also will act as the administrator of the Plan and
make administrative and procedural decisions regarding the Stock Purchase Plan,
will adopt rules and regulations concerning the operation of the Plan and will
decide questions of construction and interpretation regarding the Plan and an
employee's participation therein. The Committee may employ such other persons
and delegate to them such powers, rights and duties as the Committee may
consider necessary to properly carry out the administration of the Plan.
Operation of Plan. Employees will be able to enroll in the Stock Purchase
Plan during the first enrollment period for each offering after they become
eligible. Each participating employee will authorize payroll deductions and
will become entitled to purchase shares of Common Stock on such dates during
and/or at the end of the offering period as determined by the Committee. A
participating employee will be entitled to purchase up to such number of shares
as the employee's accumulated payroll deductions, plus interest, may permit,
provided that the aggregate purchase price (including accrued interest) may not
exceed the lesser of $50,000 or 20% of such employee's compensation (as defined
by the Committee and consistent with the Code). The purchase price of the
shares of Common Stock will be determined by the Committee prior to the
commencement of such offering, provided that the price may not be less than 85%
of the lesser of the fair market value per share of the Common Stock on the
first day of the enrollment period or on the purchase date for the offering.
The Committee may also limit for any offering period the number of shares which
may be purchased by an employee.
Payroll deductions will be deposited into a participant's purchase savings
account at the banking subsidiaries of the Corporation designated by the
Committee and will earn interest at such rate as determined by the Committee.
Unless otherwise directed by an employee, the funds credited to an employee's
account on a purchase date (which may occur periodically during the offering
period or only at the end of the offering period) are applied to the purchase
of shares of Common Stock, and any excess over the purchase price is paid to
the employee. However, if the fair market value of a share of Common Stock on
the last day of the offering period is less than the purchase price under the
Stock Purchase Plan, all funds on deposit in the employee's account will be
paid to the employee and the employee's account will be closed.
The Board has the authority under the Stock Purchase Plan to permit all
employees to apply the funds on deposit in their purchase savings accounts
toward the purchase of shares of Common Stock prior to the stated purchase date
or dates.
41
<PAGE>
The Committee may permit an employee participating in the Stock Purchase Plan
to increase the amount of the employee's payroll deduction at any time during
the offering period. In addition, an employee may reduce participation,
discontinue and restart participation, withdraw the funds credited to the
employee's savings account or voluntarily terminate participation in the Stock
Purchase Plan. Should an employee terminate participation in the Stock Purchase
Plan entirely, the accumulated payroll deductions, plus interest earned, will
be returned to such employee. If an employee terminates employment, other than
by retirement, disability or death, the employee's right to purchase the stock
immediately terminates. An employee's participation rights in the Stock
Purchase Plan and the related purchase savings account are not assignable or
transferable except by will or the laws of descent and distribution. An
employee has no rights as a stockholder with respect to the shares the employee
is eligible to purchase until the shares are so issued.
Change of Control. The Stock Purchase Plan provides that in the event of a
change of control of the Corporation, the end of the offering period will be
accelerated to the date of the change of control, and each participant in the
Plan will have the right to elect to purchase up to such number of shares as
the employee's accumulated payroll deductions plus interest may permit or to be
paid in cash all of the employee's accumulated payroll deductions plus
interest.
Amendment. The Board, at its discretion, may alter, amend, suspend or
discontinue the Stock Purchase Plan at any time prior to a change of control or
alter or amend any and all terms of participation in an offering made
thereunder. However, if applicable laws require stockholder approval, then such
amendment will be subject to the requisite stockholder approval.
Prior Offerings Under the First Chicago Plan. From 1980 through the date
hereof, First Chicago made ten separate stock offerings to employees under its
employee stock purchase plan. The final offering under this plan to First
Chicago employees commenced in 1994 and will continue through September 30,
1996, at which time a participating employee will be entitled to apply such
employee's accumulated savings, plus interest, to the purchase of Common Stock
at a purchase price equal to 95% of the closing price of First Chicago Common
Stock as reported on the New York Stock Exchange Composite Transactions Tape
(as adjusted for the Exchange Rate) on the first day of such employee's
enrollment period. Approximately 7,000 employees are participating in the 1994
offering and will be entitled to purchase in aggregate a total of approximately
1,858,000 shares of Common Stock. Purchase prices for this offering range from
$24.53 to $36.34 per share of Common Stock. It is anticipated that Messrs.
Thomas and Vitale will be entitled to purchase 1,595 and 1,886 shares,
respectively. Mr. Marks is not currently a participant in the plan. All
executive officers as a group are expected to be entitled to purchase 11,767
shares in aggregate.
Federal Income Tax considerations. The Stock Purchase Plan is not qualified
under Section 401 of the Code, but is a qualified employee stock purchase plan
under Section 423 of the Code. An employee pays no tax when the employee
enrolls in the Plan, when the employee purchases shares of Common Stock
pursuant to the Plan or when the employee receives shares of Common Stock.
Interest on the purchase savings account will be taxable in the year earned.
An employee will have a taxable gain or loss when any shares of Common Stock
purchased through the Plan are sold. If an employee sells the stock within two
years of the commencement of the employee's enrollment period or within one
year of the actual purchase of the shares (each, a "disqualifying
disposition"), then the difference between the purchase price and market value
of the shares on the purchase date will be taxed as ordinary income. Any
difference between the market value of the shares on the purchase date and the
sale price will be capital gains or losses for income tax purposes. The
Corporation will be entitled to a deduction from income in an amount equal to
the ordinary income reported by the employee arising from a disqualifying
disposition.
If an employee sells the stock after the holding period described above, then
the difference between the market price on the enrollment date and the actual
purchase price will be taxed as ordinary income (to the extent of gain) and the
balance of the employee's gain, if any, will be capital gain.
Miscellaneous. The closing price per share of Common Stock on March 21, 1996,
as recorded on the New York Stock Exchange Composite Transactions Tape, was $40
1/8.
42
<PAGE>
NEW PLAN BENEFITS
EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN
<TABLE>
<CAPTION>
NAME(1) NUMBER OF UNITS(2)
------- ------------------
<S> <C>
Richard L. Thomas(3)................................... 0
Verne G. Istock........................................ 1,315
Thomas H. Jeffs II..................................... 1,315
Scott P. Marks, Jr..................................... 1,315
David J. Vitale........................................ 1,315
Executive Officer Group................................ 22,748
Non-Executive Officer Employee Group................... (4)
</TABLE>
- -------
(1) The position of each of the named individuals is set forth in the Summary
Compensation Table on page 23 of this proxy statement.
(2) These share amounts are provided for purposes of illustration only and
assume that each of the named individuals, other than Mr. Thomas, and each
of the individuals comprising the Corporation's Executive Officer Group
elects to participate in the Plan to the maximum amount permissible for
such individual. The table also assumes that the purchase price per share
of Common Stock under the Plan is $38.00, which price is intended to
reflect a purchase discount of 5% from an assumed fair market value of
$40.00 per share of Common Stock. The actual level of participation by an
individual will be at such individual's election at the time of an offering
under the Plan and pursuant to any changes to such election as permitted
under the terms of the applicable offering. The purchase price for such
offering will be determined by the Committee within the limitations of the
Plan and the Code as discussed above under "Operation of Plan".
(3) Mr. Thomas is retiring in May 1996 and will not be a participant in the
Plan.
(4) This amount is not reasonably determinable since the level of participation
by employees is solely at the election of such employees. The Corporation
is not able to estimate a rate of participation for employees based on
historical participation under the prior First Chicago plan, since as a
result of the Merger, the eligible participant group under the Plan is
substantially different than under the First Chicago plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE EMPLOYEE STOCK
PURCHASE AND SAVINGS PLAN.
STOCKHOLDER APPROVAL OF SENIOR MANAGEMENT ANNUAL INCENTIVE PLAN
Introduction. At the Annual Meeting, there will be submitted a proposal to
approve the Corporation's Senior Management Annual Incentive Plan (the "Plan"),
an employee incentive bonus plan which replaces the senior management annual
incentive programs of First Chicago and NBD. The Plan has been structured to
comply with Internal Revenue Service requirements to help ensure the tax
deductibility of certain executives' compensation. The Organization,
Compensation and Nominating Committee of the Board of Directors adopted the
Plan on February 9, 1996, subject to stockholder approval. If stockholder
approval is obtained, the Plan will be effective as of January 1, 1996.
Approval of the Plan will also constitute approval of the material terms of the
performance goals under the Plan as described herein.
Section 162(m) of the Code disallows federal income tax deductions for
certain compensation in excess of $1 million per year paid to each of the
Corporation's chief executive officer and its four other most highly
compensated executive officers (collectively, "Covered Employees").
Compensation that qualifies as "other performance-based compensation" is not
subject to the $1,000,000 limit. One of the conditions necessary to qualify an
incentive bonus as "other performance-based compensation" is that the material
terms of the plan under which the bonus is awarded must be disclosed to and
approved by the stockholders of the Corporation before the bonus is paid.
The following description of the Plan sets forth the material terms of the
Plan; however, it is a summary. It does not purport to be complete and is
qualified in its entirety by reference to the provisions of the Plan, a copy of
which is attached to this proxy statement as Appendix D.
43
<PAGE>
Purpose. The Plan is designed to (i) assist the Corporation in attracting,
retaining and motivating senior management employees, (ii) associate such
employees' interests with those of the Corporation's stockholders, and (iii)
qualify compensation paid pursuant to the Plan to Covered Employees as "other
performance-based compensation" within the meaning of Section 162(m) of the
Code or any successor provision.
Participants. The Plan permits the payment of incentive bonuses to employees
of the Corporation who are considered to be members of the Corporation's senior
management and are designated by the Organization, Compensation and Nominating
Committee of the Board or such other committee as may be appointed by the Board
in the future (the "Committee"). Participation in the prior incentive bonus
programs of both First Chicago and NBD historically has been limited to
executive officers and certain other members of senior management
(approximately 275 individuals in aggregate). It is expected that payments
under the Plan would be similarly limited, but there is no requirement to that
effect. Employees who are designated as eligible to receive incentive payments
under the Plan are referred to as "Participants".
Administration. The Plan is administered by the Committee which, in its sole
discretion, determines the terms of all incentive payments, including, without
limitation, the Participants to whom, and the time or times at which, payments
are made, the amount of a Participant's payment, the Incentive Period (as
defined below), the actual dollar amount and timing of the payments (which
payments may, without limitation, be made during or after an Incentive Period
on a deferred basis or in installments). The Committee may, in its discretion,
authorize the Chief Executive Officer of the Corporation to administer the Plan
on its behalf with respect to matters relating to Participants below the level
of executive vice president of the Corporation. Members of the Committee are
not eligible to participate in the Plan.
Incentive Payments and Performance Goals. The Plan provides that for a
specified period of time, generally a calendar year (an "Incentive Period"),
the Committee will determine and establish in writing (i) one or more corporate
performance goals (the "Performance Goals") and (ii) the performance/payout
schedule detailing the total dollar amount which may be made available for
payout to all Participants as incentive payments based upon the relative level
of attainment of the Performance Goals. Incentive payments will be made only
upon the determination by the Committee that the Corporation has achieved the
Performance Goals for such Incentive Period. The Performance Goals related to,
and the total dollar amount of incentive payments for, an Incentive Period must
be established by the Committee prior to the completion of 25% of the Incentive
Period or such earlier date as may be required by Section 162(m) of the Code.
The Plan authorizes the Committee to determine one or more Performance Goals
for an Incentive Period which must be based on (i) earnings per share, (ii)
return on average equity or (iii) return on average assets. Performance Goals
may be absolute in their terms or measured against or in relationship to other
companies comparably, similarly or otherwise situated and may be based on or
adjusted for any other objective goals, events, or occurrences established by
the Committee for an Incentive Period, including earnings, earnings growth,
revenues, expenses, stock price, market share, charge-offs, loan loss reserves,
reductions in non-performing assets, return on assets, return on equity, return
on investment, regulatory compliance, satisfactory internal or external audits,
improvement of financial ratings, achievement of balance sheet or income
statement objectives, extraordinary charges, losses from discontinued
operations, restatements and accounting changes and other unplanned special
charges such as restructuring expenses, acquisition expenses including
goodwill, unplanned stock offerings and strategic loan loss provisions. Such
Performance Goals may be particular to a line of business, subsidiary or other
unit or may be based on the performance of the Corporation generally.
In no event may the maximum incentive payment for an Incentive Period for a
Participant who is a Covered Employee exceed $4,000,000. If so determined by
the Committee, the maximum incentive payment (or, in its sole discretion, any
lesser amount) may be awarded to a Participant if the minimum Performance Goals
established by the Committee are attained.
Payments. After the end of each Incentive Period, the Committee: determines
the total dollar amount available for incentive payments pursuant to the
performance/payout schedule established for such period, which amount will be
based upon the extent to which the Performance Goals established by the
Committee for such Incentive Period have been achieved; determines, in its sole
discretion, the share, if any, of available dollars to be paid to each
Participant (however, in the case of executive officers at or above the level
of Vice Chairman, the Board shall have authority to approve the share to the
extent permitted under Section 162(m) of the Code
44
<PAGE>
and underlying regulations); and authorizes the payment of such amount to the
Participant. The Committee may, in its sole discretion, reduce the size of or
eliminate the total amount available for payment for an incentive period. In
exercising its discretion to determine each Participant's incentive payment,
the Committee may determine a target funding pool which will fund based upon
the relative attainment of the Performance Goals and from which the
Participants' incentive payments will be paid.
Amendment or Termination. The Board may amend, modify or terminate the Plan
in any respect at any time without the consent of Participants. Any such action
may be taken without the approval of the Corporation's stockholders, but only
to the extent that such stockholder approval is not required by applicable law
or regulation, including Section 162(m) of the Code. Unless sooner terminated
by the Board, to the extent necessary to ensure that payments made to Covered
Employees may be deductible thereunder, the Plan will terminate as of the date
of the first meeting of the Corporation's stockholders occurring during the
year 2001, unless the term of the Plan is extended and reapproved at such
stockholders' meeting. Termination of the Plan will not affect any incentive
payments due and outstanding on the date of termination, and such payments will
continue to be subject to the terms of the Plan notwithstanding its
termination.
Change of Control. In the event of a change of control of the Corporation,
the Incentive Period will be deemed to have concluded on the date of the change
of control and the amount available for payout to Participants will fund on a
pro rata basis (based on the number of days in such Incentive Period elapsed
through the date of the change of control) assuming the Corporation had
attained Performance Goals at a level generating funding at 200% of the target
funding for the Incentive Period. The Committee, in its sole discretion, will
determine the share of available dollars payable to each Participant, provided
that in all events the entire amount of funds available as calculated pursuant
to the preceding sentence will be paid to Participants subject to the maximum
payment limitations for Covered Employees.
Maximum Incentive Payments for 1996. Set forth in the table below is
information relating to the maximum incentive payments established by the
Committee which may be made to the named Participants for the Incentive Period
beginning January 1, 1996, and ending December 31, 1996 (the "1996 Incentive
Period"). This maximum amount is a limitation and does not represent a target
payment for the Participant. Incentive payments for the 1996 Incentive Period
will be based upon the relative level of attainment of the Performance Goals
established by the Committee. For 1996, the Committee established Performance
Goals based on (i) the Corporation's earnings per share for 1996, on an
absolute dollar basis, as adjusted for extraordinary charges, accounting
changes and other unplanned special charges as provided for by the Committee
and (ii) the Corporation's ROE for the year in relation to the ROE for the year
of peer banking institutions. In addition, the Committee has also set threshold
levels of performance for both Performance Goals which, if not met, will result
in no incentive payments under the Plan. The actual amount payable to any
Participant as an incentive payment for the 1996 Incentive Period will be
determined by the Committee but in no event will exceed the maximum amounts set
forth below.
NEW PLAN BENEFITS
SENIOR MANAGEMENT ANNUAL INCENTIVE PLAN
<TABLE>
<CAPTION>
DOLLAR VALUE ($)
NAME(1) MAXIMUM AWARD(2)
------- ----------------
<S> <C>
Richard L. Thomas(3).................................. $ 0
Verne G. Istock....................................... 2,400,000
Thomas H. Jeffs II.................................... 1,000,000
Scott P. Marks, Jr.................................... 1,000,000
David J. Vitale....................................... 1,000,000
Executive Officer Group............................... 12,150,000
Non-Executive Officer Employee Group.................. 11,453,700(4)
</TABLE>
- -------
(1) The position of each of the named individuals is set forth in the Summary
Compensation Table on page 23 of this proxy statement.
(2) These amounts reflect the Committee's determination of the maximum awards
for 1996 and are provided for purposes of illustration only, as required by
the rules of the Commission and regulations promulgated under the Code.
45
<PAGE>
(3) Mr. Thomas is retiring in May 1996 and will not be a participant in the
Plan.
(4) The maximum aggregate award payable under the Plan to the non-executive
officer Participants for the 1996 Incentive Period currently is not
determinable. This amount represents the actual aggregate bonus payments
made for 1995 to the non-executive officers participating in the prior
senior management annual incentive programs of First Chicago and NBD. If
the Plan had been in effect for 1995 and Performance Goals similar to
those for the 1996 Incentive Period had been employed for 1995, and the
Merger occurred at the beginning of 1995, the aggregate incentive payments
which would have been made to the non-executive officers as a group would
not have varied materially from this amount. Non-executive officers may
also participate in incentive programs specific to their business unit or
subsidiary.
The Plan will be cancelled unless approved by the Corporation's
stockholders. If the stockholders of the Corporation do not approve the Plan,
the Board might nonetheless decide to continue the Corporation's annual
incentive program based on a determination that doing so is in the best
interest of the Corporation. In such event, however, payments made to Covered
Employees may not be deductible for federal income tax purposes under Section
162(m) of the Code.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE SENIOR
MANAGEMENT ANNUAL INCENTIVE PLAN INCLUDING THE PERFORMANCE GOALS FOR SUCH
PLAN.
TRANSACTIONS WITH DIRECTORS, EXECUTIVE OFFICERS, STOCKHOLDERS AND ASSOCIATES
Directors and executive officers of the Corporation and their associates,
were customers of, or had transactions with, the Corporation or the
Corporation's banking or other subsidiaries in the ordinary course of business
during 1995. Additional transactions may be expected to take place in the
future. All outstanding loans to directors and executive officers and their
associates, commitments and sales, purchases and placements of investment
securities and other financial instruments included in such transactions, were
made in the ordinary course of business, on substantially the same terms,
including interest rates and collateral, where applicable, as those prevailing
at the time for comparable transactions with other persons, and do not involve
more than normal risk of collectibility or present other unfavorable features.
During 1995, subsidiaries of the Corporation paid approximately $1,219,587 to
Kelly Services, Inc. for the provision of temporary employment services.
Terence E. Adderley, President and Chief Executive Officer of Kelly Services,
Inc., is a director of the Corporation. These transactions and all other
transactions described on page 11 of this proxy statement were entered into in
the ordinary course of business and on substantially the same terms as those
prevailing at the time for comparable transactions with other persons.
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors recommends that the stockholders ratify the
appointment by the Audit Committee of the Board of Directors of Arthur
Andersen LLP as independent auditors for the Corporation for the year 1996.
In anticipation of the Merger, it was recognized that certain efficiencies
and cost savings would be gained from the immediate selection of the
independent accountant who would be responsible for the audit of the financial
statements of the combined companies. To effect this result, on September 18,
1995, the Board of Directors of NBD authorized NBD to change its certified
public accountants from Deloitte & Touche LLP to Arthur Andersen LLP, which
had served as the independent public accountants for First Chicago since First
Chicago commenced operations in 1969. The change was effective immediately,
and Arthur Andersen LLP audited the Corporation's consolidated financial
statements included in the Corporation's report on Form 10-K for the year
ended December 31, 1995.
The Deloitte & Touche LLP audit reports on the consolidated financial
statements of NBD for the years ended December 31, 1993 and 1994,
respectively, did not contain an adverse opinion or disclaimer of opinion nor
were they qualified or modified as to uncertainty, audit scope or accounting
principles. During the two fiscal years ended December 31, 1994, and the
interim period preceding the change of independent accountants, there were no
disagreements between NBD and Deloitte & Touche LLP on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedures, which disagreements, if not resolved
46
<PAGE>
to the satisfaction of Deloitte & Touche LLP, would have caused it to make
reference to the subject matter of the disagreement in connection with its
report. Further, Deloitte & Touche LLP did not advise NBD of any reportable
events during the aforementioned time period.
Representatives of Arthur Andersen LLP will be present at the Annual Meeting
and will have an opportunity to make a statement if they desire to do so. They
will also be available to respond to appropriate questions presented at the
Annual Meeting.
In the event the appointment of Arthur Andersen LLP is not ratified by the
affirmative vote of a majority of the shares of Common Stock represented at the
Annual Meeting, the appointment of independent auditors will be reconsidered by
the Audit Committee of the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT
OF AUDITORS.
SUBMISSION OF STOCKHOLDER PROPOSALS
Any proposal that a holder of Common Stock intends to present at next year's
Annual Meeting of Stockholders must be received by the Corporation, at the
address appearing on the first page of this proxy statement, no later than
December 6, 1996, in order to be included in the proxy statement and form of
proxy relating to that meeting.
OTHER MATTERS
As of the date of this proxy statement, the Board of Directors of the
Corporation does not know of any matters to be presented at the Annual Meeting
other than those specifically set forth in the Notice of Annual Meeting of
Stockholders. If other proper matters, however, should come before the Annual
Meeting or any adjournment thereof, the persons named in the enclosed proxy
intend to vote the shares represented by them in accordance with their best
judgment in respect to any such matters.
MISCELLANEOUS
The cost of soliciting proxies will be borne by the Corporation. The
solicitation will be primarily by mail. In addition to the use of the mail,
some of the officers, directors and regular employees of the Corporation and
its subsidiaries may solicit proxies by telephone, telegram or personal
interview without additional remuneration therefor. The Corporation intends to
reimburse banks, brokerage houses and other institutions, custodians, nominees
and fiduciaries for reasonable expenses in forwarding proxy material to their
principals.
Stockholders are urged to sign and date the enclosed proxy and return it as
promptly as possible in the envelope enclosed for that purpose. Properly
executed proxies will be voted in accordance with stockholders' directions. If
no directions are given, proxies will be voted for the election of directors
and, with respect to each other matter scheduled for consideration at the
Annual Meeting, in accordance with the recommendations of the Board of
Directors as set forth in this proxy statement. The proxy does not affect the
right to vote in person at the Annual Meeting and may be revoked by written
notice given to the Secretary of the Corporation at any time before it is voted
or by the proper execution and timely submission of a later-dated proxy.
By order of the Board of
Directors,
April 5, 1996 Sherman I. Goldberg
Secretary
47
<PAGE>
APPENDIX A
FIRST CHICAGO NBD CORPORATION
DIRECTOR STOCK PLAN
1. PURPOSE OF THE PLAN
The purpose of the First Chicago NBD Corporation Director Stock Plan is to
promote the long-term growth of First Chicago NBD Corporation by increasing the
proprietary interest of non-employee directors in First Chicago NBD Corporation
and to attract and retain highly qualified and capable directors.
2. DEFINITIONS
Unless the context clearly indicates otherwise, the following terms shall
have the following meanings:
(a) "Annual Retainer" means the annual cash retainer fee payable during
the Plan Year by the Corporation or any subsidiary or affiliate of the
Corporation to a Director for services as a Director of the Corporation or
any subsidiary or affiliate. To the extent a Director is also entitled to
an additional retainer as a result of being the chairperson of a committee
of the Board, Annual Retainer will also include such additional annual cash
retainer.
(b) "Award" means an award granted to a Director under the Plan in the
form of Options, Shares, or Stock Units or any combination thereof.
(c) "Award Grant Date" means the date upon which an Award is granted to
the Director.
(d) "Award Summary" means a written summary setting forth the terms and
conditions of each Award made under this Plan.
(e) "Board" means the Board of Directors of First Chicago NBD
Corporation.
(f) "Change of Control" means a change of control as defined in the First
Chicago NBD Corporation Stock Performance Plan or any successor thereto.
(g) "Committee" means the Organization, Compensation and Nominating
Committee of the Board or such other Committee of the Board as may be
designated by the Board from time to time to administer the Plan.
(h) "Corporation" means First Chicago NBD Corporation, a Delaware
Corporation.
(i) "Director" means a director of the Corporation who is not an employee
of the Corporation or any subsidiary of the Corporation. Director shall
also include a director of any subsidiary or affiliate of the Corporation
who is not an employee of the Corporation or a subsidiary or affiliate of
the Corporation provided that the Board has approved adoption of the Plan
by the subsidiary or affiliate.
(j) "Fair Market Value" means the average of the highest and the lowest
quoted selling prices on the New York Stock Exchange Composite Transactions
Tape on the relevant valuation date or, if there were no sales on the
valuation date, on the next preceding date on which such selling prices
were recorded.
(k) "Option" means an option to purchase Shares awarded under Section 9
which does not meet the requirements of Section 422 of the Internal Revenue
Code of 1986, as amended, or any successor law.
(l) "Optionee" means a Director of the Corporation to whom an Option has
been granted or, in the event of such Director's death prior to the
expiration of an Option, such Director's executor, administrator,
beneficiary or similar person.
(m) "Plan" means the First Chicago NBD Corporation Director Stock Plan,
as amended and restated from time to time.
(n) "Plan Year" means the twelve month period from April 1 to March 31.
(o) "Share" means a share of common stock, $1.00 par value per share, of
the Corporation.
(p) "Stock Unit" means the right to receive a Share on a date elected by
the Director pursuant to rules established by the Committee along with such
dividend or dividend equivalent rights as may be permitted hereunder.
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3. ELIGIBILITY
Directors shall be eligible to participate in the Plan in accordance with
Sections 7, 8 and 9.
4. PLAN ADMINISTRATION
(a) Administrator of Plan. The Plan shall be administered by the Committee.
(b) Authority of Committee. The Committee shall have full power and authority
to (i) interpret and construe the Plan and Award Summaries and adopt such rules
as it shall deem necessary and advisable to implement and administer the Plan
and (ii) designate persons other than members of the Committee to carry out its
responsibilities, subject to such limitations, restrictions and conditions as
it may prescribe, such determinations to be made in accordance with the
Committee's best business judgment as to the best interests of the Corporation
and its stockholders and in accordance with the purposes of the Plan. The
Committee may delegate administrative duties under the Plan to one or more
agents as it shall deem necessary or advisable.
(c) Determinations of Committee. A majority of the Committee shall constitute
a quorum at any meeting of the Committee, and all determinations of the
Committee shall be made by a majority of its members. Any determination of the
Committee under the Plan may be made without notice or a meeting of the
Committee by a written consent signed by all members of the Committee.
(d) Effect of Committee Determinations. No member of the Committee or the
Board shall be personally liable for any action or determination made in good
faith with respect to the Plan or any Award or to any settlement of any dispute
between a Director and the Corporation. Any decision made or action taken by
the Committee or the Board with respect to an Award or the administration or
interpretation of the Plan shall be conclusive and binding upon all persons.
5. SHARES SUBJECT TO THE PLAN
Subject to adjustments as provided in Section 14, the aggregate number of
Shares which may be issued pursuant to Awards shall not exceed 1,000,000
Shares. To the extent that Shares subject to an outstanding Option are not
issued or delivered by reason of the expiration, termination, cancellation or
forfeiture of such Option or by reason of the delivery of Shares to pay all or
a portion of the exercise price of such Option, then such Shares shall again be
available for issuance under the Plan.
6. AWARDS UNDER THE PLAN
Awards in the form of Shares shall be granted to Directors in accordance with
Section 7. Awards in the form of Options, Shares or Stock Units, or a
combination thereof, may be granted to Directors in accordance with Section 8.
Awards in the form of Stock Units may be granted to Directors in accordance
with Section 9. Each Award granted under Section 8 and Section 9 shall be
evidenced by an Award Summary. Delivery of an Award Summary shall constitute an
agreement, subject to Section 3 and Section 11, between the Corporation and the
Director as to the terms and conditions of the Award.
7. ANNUAL STOCK RETAINER
Each Director shall be granted Shares, subject to the following terms and
conditions:
(a) Time of Grant. Each Director shall be granted, as of the date of each
annual meeting of stockholders of the Corporation (except in 1996, as of
August 1, 1996) the Director's annual stock retainer. In the case of a
Director who is appointed to the Board on a date during the Plan Year which
follows the date of an annual meeting of stockholders, the Director shall
be granted, as of the date such Director is first appointed to the Board,
the Director's annual stock retainer, as prorated in the manner described
below.
(b) Number of Shares. The number of Shares granted pursuant to this
Section shall be the number of whole Shares equal to (i) one-half of the
Annual Retainer (without taking into consideration any chairperson
retainer) divided by (ii) the Fair Market Value per Share on the Award
Grant Date (increased to the next
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whole share in case of any fractional share). In the case of a Director who
is appointed to the Board on a date during the Plan Year which follows the
date of an annual meeting of stockholders, the number of Shares granted
pursuant to this Section for such Director shall be calculated in the
manner described in the previous sentence, except that (i) the Fair Market
Value per Share shall be determined as of the date the Director is
appointed to the Board, and (ii) the number of Shares granted shall be
prorated based upon the number of calendar months during which such
Director will serve on the Board prior to the beginning of the next Plan
Year. (Any part of a calendar month will count as a whole month for
purposes of these calculations.)
8. ELECTIVE OPTIONS, SHARES AND STOCK UNITS
Each Director shall be granted Options, Shares or Stock Units, or a
combination thereof, subject to the following terms and conditions:
(a) Time of Grant. As of the date of each annual meeting of stockholders
of the Corporation (except in 1996, as of August 1, 1996), an Award, shall
be granted to each Director who, at least six months prior thereto, files
with the Committee or its designee a written election to receive such
Award, or a combination thereof, in lieu of all or a portion of such
Director's Annual Retainer. Each Director's election shall remain in effect
and be applicable with respect to subsequent years' Annual Retainers unless
the Director files a revised election pursuant to the first sentence of
this Section 8(a). In the event a Director does not file a written election
in accordance with the first sentence by reason of becoming a Director
after the date which is six months prior to the annual meeting of
stockholders of the Corporation in any year, an Award, shall be granted to
such Director pursuant to rules established by the Committee on the first
day (the "Effective Date") which is six months after the date such Director
files with the Committee or its designee a written election to receive such
Award, in lieu of all or a portion of such Director's Annual Retainer;
provided, however, that such election may apply only to the portion of such
Director's Annual Retainer multiplied by a fraction, the numerator of which
is the number of months from and including the Effective Date to and
including the end of such Plan Year and the denominator of which is 12. An
election pursuant to the first sentence of this Section 8(a) may be revoked
or changed only on or prior to the date which is six months prior to the
annual meeting of stockholders of the Corporation. An election pursuant to
the third sentence of this Section 8(a) shall be irrevocable with respect
to the Director's Annual Retainer paid during the Director's first Plan
Year.
(b) Number of Shares. The number of Shares granted pursuant to Section
8(a) shall be the number of whole Shares (increased to the next highest
whole Share in case of any fractional Share) equal to (i) the portion of
the Annual Retainer which the Director has elected pursuant to Section 8(a)
to be payable in Shares, divided by (ii) the Fair Market Value per Share on
the Award Grant Date.
(c) Number and Purchase Price of Options. The number of Shares subject to
an Option granted pursuant to Section 8(a) shall be the number of Shares
equal to the product of three (3) times the number of Shares the Director
would have received had the Director elected to receive Shares under
Section 8(b) rather than Options under this Section 8(c). The purchase
price per Share under each Option granted shall be 100% of the Fair Market
Value per Share on the Award Grant Date.
(d) Exercise of Options. Each Option shall be fully exercisable on and
after that date which is six months after the Award Grant Date and, subject
to Section 11, shall not be exercisable prior to such date. An Option may
be exercised until the date which is ten years after the Award Grant Date
of such Option. An Option, or portion thereof, may be exercised in whole or
in part only with respect to whole Shares.
Shares shall be issued to the Optionee pursuant to the exercise of an
Option only upon receipt by the Corporation from the Optionee of payment in
full either in cash or by submitting acceptable proof to the Committee of
the ownership of Shares which have been owned by the Optionee for at least
six months prior to the date of exercise of the Option, or a combination of
cash and Shares, in an amount or having a combined value equal to the
aggregate purchase price for the Shares subject to the Option or portion
thereof being exercised. The Shares issued to an Optionee for the portion
of any Option exercised by submitting proof of acceptable ownership of
Shares shall not exceed the number of Shares issuable as a result of such
exercise (determined as though payment in full therefor were being made in
cash) less the number of Shares for which proof of ownership is submitted.
The value of owned Shares for which proof
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of ownership is submitted in full or partial payment for the Shares
purchased upon the exercise of an Option shall be equal to the aggregate
Fair Market Value of such owned Shares on the date of the exercise of such
Option.
(e) Number of Stock Units. The number of Stock Units granted pursuant to
Section 8(a) shall be the number of Stock Units equal to (i) the portion of
the Annual Retainer which the Director has elected pursuant to Section 8(a)
to be payable in Stock Units, divided by (ii) the Fair Market Value per
Share on the Award Grant Date. A Director who has been awarded Stock Units
shall be credited while such Stock Units remain outstanding with additional
Stock Units equal to (1) the product of (i) the cash dividend per Share
declared after the Stock Units are awarded and (ii) the number of Stock
Units credited to the Director divided by (2) the Fair Market Value of a
Share on the date the dividend is paid. Such additional Stock Units shall
be issued as Shares at the same time and in the same manner as the
underlying Stock Units to which they are attributable.
(f) Distribution of Stock Units. Upon the date elected by the Director,
the Director will receive one Share for each Stock Unit including any
fraction thereof. In the event of a Director's death prior to the issuance
of Shares attributable to Stock Units, Shares attributable to such
Director's Stock Units shall become immediately distributable to such
Director's executor, administrator, beneficiary or similar person.
9. AWARD OF STOCK UNITS BASED UPON VALUE OF TERMINATED DIRECTOR RETIREMENT PLAN
BENEFITS AND PRIOR DIRECTOR DEFERRALS
(a) Terminated Retirement Plan Benefits. Pursuant to rules established by the
Committee, a Director who participated in either the NBD Bancorp, Inc. Non-
Employee Director Retirement Plan or the First Chicago Corporation Director
Retirement Income Plan ("Retirement Plans"), both of which were terminated
effective January 31, 1996, may elect pursuant to a six-month irrevocable
election to receive all or a portion of the Director's benefit under the
Retirement Plans in Stock Units payable in Shares upon the such Director's
retirement from the Board. The number of Stock Units awarded pursuant to this
Section 9(a) shall be determined consistent with Section 8(e).
(b) Prior Director Deferrals of NBD Bancorp, Inc. Directors. Pursuant to
rules established by the Committee, a Director who deferred annual retainers
under the NBD Bancorp, Inc. Plan for Deferring the Payment of Directors' Fees
may elect pursuant to a six-month irrevocable election to receive all or a
portion of the Director's benefits under such plan in Stock Units payable in
Shares pursuant to the election filed by the Director under such plan. The
number of Stock Units awarded pursuant to this Section 9(b) shall be determined
consistent with Section 8(e).
(c) Prior Director Deferrals of First Chicago Corporation Directors. Pursuant
to rules established by the Committee, each Director who deferred annual
retainers under the First Chicago Corporation Compensation Agreement and The
First National Bank of Chicago Compensation Agreement ("Agreements") may elect
pursuant to a six-month irrevocable election to have the value of the deferred
retainers under the Agreements as of a date determined by the Committee awarded
in Stock Units payable in Shares at the time elected by such Directors under
the Agreements. The number of Stock Units awarded pursuant to this Section 9(c)
shall be determined consistent with Section 8(e).
10. ISSUANCE OF SHARES
Upon an Award of Shares to a Director pursuant to this Plan, the Shares shall
be credited to a book entry account in the name of the Director at a trust
company designated by the Committee, whereupon the Director shall become a
stockholder of the Corporation with respect to such Shares and shall be
entitled to vote the Shares.
11. NON-TRANSFERABILITY OF OPTIONS AND STOCK UNITS
All Options and Stock Units granted under the Plan shall not be transferable
by a Director during his or her lifetime and may not be assigned, exchanged,
pledged, transferred or otherwise encumbered or disposed of except by court
order, will or by the laws of descent and distribution. Notwithstanding the
foregoing, in the event Options may be transferable in accordance with the
provisions of Rule 16b-3 under the Securities Exchange Act of 1934, as amended,
then each Option shall be transferable to the extent set forth under the
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terms of each Award, as determined by the Committee. In the event that any
Option is thereafter transferred as permitted by the preceding sentence, the
permitted transferee thereof shall be deemed the Optionee hereunder. Options
shall be exercisable during the Optionee's lifetime only by the Optionee or by
the Optionee's guardian, legal representative or similar person.
12. CHANGE OF CONTROL
Upon the occurrence of a Change of Control, any and all outstanding Options
shall become immediately exercisable and all Stock Units shall become
distributable in Shares.
13. AMENDMENT AND TERMINATION
The Board may amend the Plan from time to time or terminate the Plan at any
time; provided, however, than no action authorized by this Section shall
adversely change the terms and conditions of an outstanding Option or Stock
Unit without the Optionee's consent and, subject to Section 14, the number of
Shares subject to an Option granted under Section 8, the purchase price
therefor, the date of grant of any such Option and the termination provisions
relating to such Option, and shall not be amended more than once every six
months, other than to comply with changes in the Internal Revenue Code of 1986,
as amended, or any successor law, or the Employee Retirement Income Security
Act of 1974, as amended, or any successor law, or the rules and regulations
thereunder.
14. RECAPITALIZATION
The aggregate number of shares of Common Stock as to which Awards may be
granted to Directors, the number of shares thereof covered by each outstanding
Award, and the price per share thereof in each such Award, shall all be
proportionately adjusted for any increase or decrease in the number of issued
Shares resulting from a subdivision or consolidation of Shares or other capital
adjustment, or the payment of a stock dividend or other increase or decrease in
such Shares, effected without receipt of consideration by the Corporation, or
other change in corporate or capital structure; provided, however, that any
fractional Shares resulting from any such adjustment shall be eliminated. The
Committee may also make the foregoing changes and any other changes, including
changes in the classes of securities available, to the extent it is deemed
necessary or desirable to preserve the intended benefits of the Plan for the
Corporation and the Directors in the event of any other reorganization,
recapitalization, merger, consolidation, spin-off, extraordinary dividend or
other distribution or similar transaction.
15. GOVERNING LAW
To the extent that federal laws do not otherwise control, the Plan shall be
construed in accordance with and governed by the law of the State of Delaware.
16. SAVINGS CLAUSE
This Plan is intended to comply in all aspects with applicable law and
regulation, including, Section 16 of the Securities Exchange Act of 1934 and
Rule 16b-3 of the Securities and Exchange Commission. In case any one or more
of the provisions of this Plan shall be held invalid, illegal or unenforceable
in any respect under applicable law and regulation (including Rule 16b-3), the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby and the invalid, illegal or
unenforceable provision shall be deemed null and void; however, to the extent
permissible by law, any provision which could be deemed null and void shall
first be construed, interpreted or revised retroactively to permit this Plan to
be construed in compliance with all applicable laws (including Rule 16b-3) so
as to foster the intent of this Plan.
17. EFFECTIVE DATE AND TERM
The effective date of this Plan is January 2, 1996, subject to its approval
by the stockholders of the Corporation at the annual meeting to be held on May
10, 1996, or any adjournment thereof. The Plan shall remain in effect until
terminated by the Board.
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APPENDIX B
FIRST CHICAGO NBD CORPORATION
STOCK PERFORMANCE PLAN
1. PURPOSE
The purpose of the First Chicago NBD Corporation Stock Performance Plan is to
provide incentives and rewards for Employees of the Corporation and its
Subsidiaries (i) to support the execution of the Corporation's business and
human resource strategies and the achievement of its goals and (ii) to
associate the interests of Employees with those of the Corporation's
stockholders.
2. DEFINITIONS
(a) "Award" includes, without limitation, stock options (including incentive
stock options under Section 422 of the Code), stock appreciation rights,
performance share or unit awards, dividend or equivalent rights, stock awards,
restricted share or unit awards, or other awards that are valued in whole or in
part by reference to, or are otherwise based on, the Corporation's Common Stock
("other Common Stock-based Awards"), all on a stand alone, combination or
tandem basis, as described in or granted under this Plan.
(b) "Award Summary" means a written summary setting forth the terms and
conditions of each Award made under this Plan.
(c) "Board" means the Board of Directors of the Corporation, excluding any
member who is an officer or Employee of the Corporation or who otherwise would
not be considered a disinterested person within the meaning of Rule 16b-3 of
the Securities and Exchange Commission.
(d) "Code" means the Internal Revenue Code of 1986, as amended from time to
time.
(e) "Committee" means the Organization, Compensation and Nominating Committee
of the Board or such other committee of the Board as may be designated by the
Board from time to time to administer this Plan.
(f) "Common Stock" means the Common Stock, par value $1.00 per share, of the
Corporation.
(g) "Corporation" means First Chicago NBD Corporation, a Delaware
corporation.
(h) "Employee" means an employee of First Chicago NBD Corporation or a
Subsidiary.
(i) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(j) "Fair Market Value" means the average of the highest and the lowest
quoted selling prices on the New York Stock Exchange Composite Transactions
Tape on the relevant valuation date or, if there were no sales on the valuation
date, on the next preceding date on which such selling prices were recorded;
provided, however, that the Committee may modify the definition of Fair Market
Value with respect to any particular Award.
(k) "Participant" means an Employee who has been granted an Award under the
Plan.
(l) "Plan" means this First Chicago NBD Corporation Stock Performance Plan.
(m) "Plan Year" means a twelve-month period beginning with January 1 of each
year.
(n) "Subsidiary" means any corporation or other entity, whether domestic or
foreign, in which the Corporation has or obtains, directly or indirectly, a
proprietary interest of at least 50% by reason of stock ownership or otherwise.
3. ELIGIBILITY
Any Employee selected by the Committee is eligible to receive an Award. In
addition, the Committee may select those former Employees who have a consulting
arrangement with the Corporation or a Subsidiary whom
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the Committee determines have a significant responsibility for the success and
future growth and profitability of the Corporation.
4. PLAN ADMINISTRATION
(a) Except as otherwise determined by the Board, the Plan shall be
administered by the Committee. The Board, or the Committee to the extent
determined by the Board, shall periodically make determinations with respect to
the participation of Employees in the Plan and, except as otherwise required by
law or this Plan, the grant terms of Awards including vesting schedules, price,
length of relevant performance, restriction or option period, dividend rights,
post-retirement and termination rights, payment alternatives such as cash,
stock, contingent awards or other means of payment consistent with the purposes
of this Plan, and such other terms and conditions as the Board or the Committee
deems appropriate.
(b) The Committee shall have authority to interpret and construe the
provisions of the Plan and the Award Summaries and make determinations pursuant
to any Plan provision or Award Summary which shall be final and binding on all
persons. No member of the Committee shall be liable for any action or
determination made in good faith, and the members shall be entitled to
indemnification and reimbursement in the manner provided in the Corporation's
Certificate of Incorporation, as it may be amended from time to time.
(c) The Committee may designate persons other than its members to carry out
its responsibilities under such conditions or limitations as it may set, other
than its authority with regard to Awards granted to Employees who are officers
or directors of the Corporation for purposes of Section 16 of the Exchange Act.
(d) The Committee shall have the authority at any time prior to a Change of
Control (as defined in Section 12(b)) to cancel Awards for reasonable cause and
to provide for the conditions and circumstances under which Awards shall be
forfeited.
5. STOCK SUBJECT TO THE PROVISIONS OF THIS PLAN
(a) The stock subject to the provisions of this Plan shall be shares of
authorized but unissued Common Stock and shares of Common Stock held as
treasury stock. Subject to adjustment in accordance with the provisions of
Section 10, and subject to Section 5(b) below, the total number of shares of
Common Stock available for grants of Awards in any Plan Year shall not exceed
2% of the outstanding Common Stock as reported in the Corporation's Annual
Report on Form 10-K for the fiscal year ending immediately prior to such Plan
Year.
(b) There shall be available for Awards under the Plan in any Plan Year, in
addition to shares available for grant under paragraph (a) of this Section 5,
all of the following: (i) any unused portion of the limit set forth in
paragraph (a) of this Section 5 for any prior Plan Year; (ii) shares
represented by Awards which are cancelled, forfeited, surrendered, terminated,
paid in cash or expire unexercised; (iii) the excess amount of variable Awards
which become fixed at less than their maximum limitations; (iv) any shares of
Common Stock that are used to pay the purchase price or any withholding taxes
associated therewith upon the exercise of an option, to the extent such shares
result in the grant of a replacement option; provided, however, that the total
number of shares of Common Stock which may be available for Awards under the
Plan in any Plan Year may not exceed 5% of the outstanding Common Stock as
reported in the Corporation's Annual Report on Form 10-K for the fiscal year
ending immediately prior to the applicable Plan Year.
(c) The exercise of an option or stock appreciation right granted in tandem
therewith will reduce proportionately the amount of shares subject to the
tandem stock appreciation right or option. In addition, any shares ceasing to
be subject to the related option or right because of such reduction shall not
increase the number of shares of Common Stock available for future Awards
granted under the Plan. The grant of a performance or restricted share unit
Award shall be deemed to be equal to the maximum number of shares which may be
issued under the Award. Where the value of an Award is variable on the date it
is granted, the value shall be deemed to be the maximum limitation of the
Award. Awards payable solely in cash will not reduce the number of shares
available for Awards granted under the Plan.
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6. AWARDS UNDER THIS PLAN
As the Board or Committee may determine, the following types of Awards and
other Common Stock-based Awards may be granted under this Plan on a stand
alone, combination or tandem basis:
(a) Stock Option. A right to buy a specified number of shares of Common
Stock at a fixed exercise price during a specified time, all as the
Committee may determine; provided that the exercise price of any option
shall not be less than 100% of the Fair Market Value of the Common Stock on
the date of grant of such Award; provided further that no more than
2,000,000 stock options and stock appreciation rights in the aggregate
(except that a stock option issued in tandem with a stock appreciation
right shall be counted as one stock option for purposes of this maximum)
may be granted to any Employee during any five-year period.
(b) Incentive Stock Option. An Award in the form of a stock option which
shall comply with the requirements of Section 422 of the Code or any
successor Section of the Code as it may be amended from time to time.
Subject to adjustment in accordance with the provisions of Section 10, the
aggregate number of shares which may be subject to incentive stock option
Awards under this Plan shall not exceed 10,000,000 shares, subject in any
Plan Year to the limitations of Section 5 of this Plan.
(c) Stock Appreciation Right. A right to receive the excess of the Fair
Market Value of a share of Common Stock on the date the stock appreciation
right is exercised over the Fair Market Value of a share of Common Stock on
the date the stock appreciation right was granted; provided that no more
than 2,000,000 stock options and stock appreciation rights in the aggregate
(except that a stock appreciation right issued in tandem with a stock
option shall be counted as one stock option for purposes of this maximum)
may be granted to any Participant during any five-year period.
(d) Restricted And Performance Shares. A transfer of Common Stock to a
Participant, subject to such restrictions on transfer or other incidents of
ownership, or subject to specified performance standards, for such periods
of time as the Committee may determine; provided that no more than 700,000
performance shares (determined based upon the maximum number of shares of
Common Stock that may be earned) may be granted to any Employee during any
five-year period.
(e) Restricted And Performance Share Unit. A fixed or variable share or
dollar denominated unit subject to such conditions of vesting, performance
and time of payment as the Committee may determine, which are valued at the
Committee's discretion in whole or in part by reference to, or otherwise
based on, the Fair Market Value of Common Stock and which may be paid in
Common Stock, cash or a combination of both.
(f) Dividend Or Equivalent Right. A right to receive dividends or their
equivalent in value in Common Stock, cash or in a combination of both with
respect to any new or previously existing Award.
(g) Stock Award. An unrestricted transfer of ownership of Common Stock
which may only be made to Employees other than Employees who are officers
or directors of the Corporation for purposes of Section 16 of the Exchange
Act.
(h) Other Stock-Based Awards. Other Common Stock-based Awards which are
related to or serve a similar function to those Awards set forth in this
Section 6.
No Common Stock shall be issued pursuant to any Award unless consideration at
least equal to the par value thereof has been received by the Corporation in
the form of cash, services rendered or property.
The Committee may from time to time, establish performance criteria with
respect to an Award. The performance criteria or standards may be based upon
(i) earnings per share, (ii) return on average assets or (iii) return on
average equity. Performance standards shall be determined by the Committee in
its sole discretion and may be absolute in their terms or measured against or
in relationship to other companies comparably, similarly or otherwise situated
and may be based on or adjusted for any other objective goals, events, or
occurrences established by the Committee, including earnings, earnings growth,
revenues, expenses, stock price, market share, charge-offs, loan loss reserves,
reductions in non-performing assets, return on assets, return on equity or
return on investment, regulatory compliance, satisfactory internal or external
audits, improvement of financial ratings, achievement of balance sheet or
income statement objectives, extraordinary charges, losses from discontinued
operations, restatements and accounting changes and other unplanned special
charges such as restructuring expenses, acquisition expenses including
goodwill, unplanned stock
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offerings and strategic loan loss provisions. Such performance standards may be
particular to a line of business, subsidiary or other unit or may be based on
the performance of the Corporation generally.
7. AWARD SUMMARIES
Each Award under the Plan shall be evidenced by an Award Summary. Delivery of
an Award Summary to each Participant shall constitute an agreement, subject to
Section 4(d) and Section 9 hereof, between the Corporation and the Participant
as to the terms and conditions of the Award.
8. OTHER TERMS AND CONDITIONS
(a) Assignability. Except to the extent permitted by Rule 16b-3 under the
Exchange Act, or Section 422 of the Code, and as otherwise provided in the
Award Summary, no Award shall be assignable or transferable except by will, by
the laws of descent and distribution or pursuant to a qualified domestic
relations order as defined by the Code, and during the lifetime of a
Participant, the Award shall be exercisable only by such Participant or such
Participant's guardian, legal representative or assignee pursuant to a
qualified domestic relations order. In the event that any Award is thereafter
transferred as permitted by the preceding sentence, the permitted transferee
thereof shall be deemed the Award recipient hereunder. Stock options, incentive
stock options and stock appreciation rights shall be exercisable during the
transferee's lifetime only by the Award recipient or by the Award recipient's
guardian, legal representative or similar person.
(b) Termination Of Employment. The Committee shall determine the disposition
of the grant of each Award in the event of the retirement, disability, death or
other termination of a Participant's employment.
(c) Rights As A Stockholder. A Participant shall have no rights as a
stockholder with respect to shares covered by an Award until the date the
Participant or his nominee, guardian or legal representative is the holder of
record. No adjustment will be made for dividends or other rights for which the
record date is prior to such date.
(d) No Obligation To Exercise. The grant of an Award shall impose no
obligation upon the Participant to exercise the Award.
(e) Payments By Participants. The Committee may determine that Awards for
which a payment is due from a Participant may be payable: (i) in U.S. dollars
by personal check, bank draft or money order payable to the order of the
Corporation, by money transfers or direct account debits; (ii) through the
delivery or deemed delivery based on attestation to the ownership of shares of
Common Stock with a Fair Market Value equal to the total payment due from the
Participant; (iii) by a combination of the methods described in (i) and (ii)
above; or (iv) by such other methods as the Committee may deem appropriate.
(f) Withholding. Except as otherwise provided by the Committee, (i) the
deduction of withholding and any other taxes required by law will be made from
all amounts paid in cash and (ii) in the case of payments of Awards in shares
of Common Stock, the Participant shall be required to pay the amount of any
taxes required to be withheld prior to receipt of such stock, or alternatively,
a number of shares the Fair Market Value of which equals the amount required to
be withheld may be deducted from the payment. The Committee may provide for
shares of Common Stock to be withheld for tax withholding purposes in excess of
the required minimum amount but not in excess of a Participant's maximum
marginal tax rate.
(g) Restrictions On Sale and Exercise. With respect to Employees who are
officers and directors for purposes of Section 16 of the Exchange Act, and if
required to comply with rules promulgated thereunder, (i) no Award providing
for exercise, a vesting period, a restriction period or the attainment of
performance standards shall permit unrestricted ownership of Common Stock by
the Participant for at least six months from the date of grant, and (ii) Common
Stock acquired pursuant to this Plan (other than Common Stock acquired as a
result of the granting of a "derivative security") may not be sold for at least
six months after acquisition.
9. AMENDMENTS
The Board may alter, amend, suspend or discontinue the Plan or at any time
prior to a Change of Control (as defined in Section 12(b)) alter or amend any
or all Award Summaries granted under the Plan to the extent
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permitted by law. Any such action of the Board may be taken without the
approval of the Corporation's stockholders, but only to the extent that such
stockholder approval is not required by applicable law or regulation, including
specifically Rule 16b-3 of the Securities and Exchange Commission.
10. RECAPITALIZATION
The aggregate number of shares of Common Stock as to which Awards may be
granted to Participants, the number of shares thereof covered by each
outstanding Award, and the price per share thereof in each such Award, shall
all be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from a subdivision or consolidation of
shares or other capital adjustment, or the payment of a stock dividend or other
increase or decrease in such shares, effected without receipt of consideration
by the Corporation, or other change in corporate or capital structure;
provided, however, that any fractional shares resulting from any such
adjustment shall be eliminated. The Committee may also make the foregoing
changes and any other changes, including changes in the classes of securities
available, to the extent it is deemed necessary or desirable to preserve the
intended benefits of the Plan for the Corporation and the Participants in the
event of any other reorganization, recapitalization, merger, consolidation,
spinoff, extraordinary dividend or other distribution or similar transaction.
11. NO RIGHT TO EMPLOYMENT
No person shall have any claim or right to be granted an Award, and the grant
of an Award shall not be construed as giving a Participant the right to be
retained in the employ of the Corporation or a Subsidiary. Further, the
Corporation and each Subsidiary expressly reserve the right at any time to
dismiss a Participant free from any liability, or any claim under the Plan,
except as provided herein or in any Award Summary issued hereunder.
12. CHANGE OF CONTROL
(a) Notwithstanding anything contained in this Plan or any Award Summary to
the contrary, in the event of a Change of Control, as defined below, the
following shall occur with respect to any and all Awards outstanding as of such
Change of Control:
(i) automatic maximization of performance standards, lapse of all
restrictions and acceleration of any time periods relating to the exercise,
realization or vesting of such Awards so that such Awards may be
immediately exercised, realized or vested in full on or before the relevant
date fixed in the Award Summary;
(ii) performance shares or performance units shall be paid entirely in
cash;
(iii) upon exercise of a stock option or an incentive stock option
(collectively an "Option") during the 60-day period from and after the date
of a Change of Control, the Participant exercising the Option may in lieu
of the receipt of Common Stock upon the exercise of the Option, elect by
written notice to the Corporation to receive an amount in cash equal to the
excess of the aggregate Value (as defined below) of the shares of Common
Stock covered by the Option or portion thereof surrendered determined on
the date the Option is exercised, over the aggregate exercise price of the
Option (such excess is referred to herein as the "Aggregate Spread");
provided, however, and notwithstanding any other provision of the Plan, if
the end of such 60-day period from and after the date of a Change of
Control is within six months of the date of grant of an Option held by a
Participant who is an officer or director of the Corporation (within the
meaning of Section 16(b) of the Exchange Act), such Option shall be
cancelled in exchange for a cash payment to the Participant equal to the
Aggregate Spread on the day which is six months and one day after the date
of grant of such Option. As used in this Section 12(a)(iii) the term
"Value" means the higher of (i) the highest Fair Market Value during the
60-day period from and after the date of a Change of Control and (ii) if
the Change of Control is the result of a transaction or series of
transactions described in paragraphs (I) or (III) of the definition of
Change of Control set forth in Section 12(b), the highest price per share
of the Common Stock paid in such transaction or series of transactions
(which in the case of paragraph (I) shall be the highest price per share of
the Common Stock as reflected in a Schedule 13D by the person having made
the acquisition);
(iv) if a Participant's employment terminates for any reason other than
retirement or death following a Change of Control, any Options held by the
Participant may be exercised by the Participant until the
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earlier of three months after such termination of employment or the
expiration date of such Options; and
(v) all Awards become noncancellable.
(b) A "Change of Control" of the Corporation shall be deemed to have occurred
upon the happening of any of the following events:
(I) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person")
of beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of 20% or more of either (A) the then outstanding shares
of common stock of the Corporation (the "Outstanding Corporation Common
Stock") or (B) the combined voting power of the then outstanding voting
securities of the Corporation entitled to vote generally in the election of
directors (the "Outstanding Corporation Voting Securities"), provided,
however, that for purposes of this subsection (I), the following
acquisitions shall not constitute a Change of Control: (A) any acquisition
directly from the Corporation, (B) any acquisition by the Corporation, (C)
any acquisition by any employee benefit plan (or related trust) sponsored
or maintained by the Corporation or any corporation controlled by the
Corporation or (D) any acquisition by any corporation pursuant to a
transaction which complies with clauses (A), (B) and (C) of subsection
(III) of this Section 12(b); or
(II) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority
of the Board, provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by
the Corporation's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or on behalf of
a Person other than the Board; or
(III) Consummation of a reorganization, merger or consolidation or sale
or other disposition of all or substantially all of the assets of the
Corporation (a "Business Combination"), in each case, unless, following
such Business Combination, (A) all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the
Outstanding Corporation Common Stock and Outstanding Corporation Voting
Securities immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 50% of, respectively, the then
outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation resulting
from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Corporation or
all or substantially all of the Corporation's assets either directly or
through one or more subsidiaries) in substantially the same proportions as
their ownership, immediately prior to such Business Combination of the
Outstanding Corporation Common Stock and Outstanding Corporation Voting
Securities, as the case may be, (B) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit plan (or
related trust) of the Corporation or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly, 20% or
more of, the corporation resulting from such Business Combination or the
combined voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to the
Business Combination and (C) at least a majority of the members of the
board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or
(IV) Approval by the shareholders of the Corporation of a complete
liquidation or dissolution of the Corporation.
13. GOVERNING LAW
To the extent that federal laws do not otherwise control, the Plan shall be
construed in accordance with and governed by the law of the State of Delaware.
14. SUPPLEMENTAL PLANS
The Board shall have the authority to adopt plans, supplemental to this Plan,
covering Employees residing outside the United States, including but not
limited to the United Kingdom.
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15. SAVINGS CLAUSE
This Plan is intended to comply in all aspects with applicable law and
regulation, including, with respect to those Employees who are officers or
directors for purposes of Section 16 of the Exchange Act, Rule 16b-3 of the
Securities and Exchange Commission. In case any one or more of the provisions
of this Plan shall be held invalid, illegal or unenforceable in any respect
under applicable law and regulation (including Rule 16b-3), the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby and the invalid, illegal or unenforceable
provision shall be deemed null and void; however, to the extent permissible by
law, any provision which could be deemed null and void shall first be
construed, interpreted or revised retroactively to permit this Plan to be
construed in compliance with all applicable laws (including Rule 16b-3) so as
to foster the intent of this Plan.
16. EFFECTIVE DATE AND TERM
The effective date of this Plan is January 1, 1996, subject to its approval
by the stockholders of the Corporation at the annual meeting to be held on May
10, 1996, or any adjournment thereof. The Plan shall remain in effect until
terminated by the Board.
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APPENDIX C
FIRST CHICAGO NBD CORPORATION
EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN
1. PURPOSE
The purpose of the First Chicago NBD Corporation Employee Stock Purchase and
Savings Plan is to encourage employee stock ownership, thereby enhancing
employee commitment to First Chicago NBD Corporation ("Corporation") and
providing an opportunity to share in the Corporation's success.
2. DEFINITIONS
(a) "Bank" means any banking subsidiary or subsidiaries of the Corporation
designated by the Committee with respect to any offering.
b) "Board" means the Board of Directors of the Corporation.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Committee" means the Organization, Compensation and Nominating Committee
of the Board or any other committee designated by the Board to administer this
Plan. The Committee shall not include any person who is an employee of the
Corporation or who otherwise would not be considered a disinterested person
within the meaning of Rule 16b-3 of the Securities and Exchange Commission.
(e) "Common Stock" means the common stock of the Corporation, par value $1
per share.
(f) "Compensation" means compensation as defined by the Committee in
accordance with Section 423 of the Code and applicable regulations, including
total compensation or base compensation for any pay period during, or at the
beginning of, an Offering Period.
(g) "Corporation" means First Chicago NBD Corporation, a Delaware
Corporation.
(h) "Fair Market Value" means the closing price as recorded by the New York
Stock Exchange Composite Transactions Tape on the relevant valuation date or if
no closing price has been recorded on such date, on the next preceding day on
which such a closing price was recorded; provided, however, the Committee may
specify some other definition of Fair Market Value that complies with the
applicable requirements of the Code.
(i) "Maximum Share Limit" means 15,000,000 shares of Common Stock.
(j) "Offering Period" means the term of any offering under the Plan as
determined by the Committee which shall be at least 6 months in duration, but
no more than 26 months in duration.
(k) "Participating Corporation" means any subsidiary or affiliate corporation
of the Corporation designated by the Committee if on the first date of the
Offering Period, the Corporation or a subsidiary or affiliate of the
Corporation, individually or collectively, owns 50% or more of the total
combined voting power of all classes of stock of such corporation.
(l) "Plan" means this First Chicago NBD Corporation Employee Stock Purchase
and Savings Plan.
(m) "Purchase Date" means the last day of an Offering Period or any other day
or days the Committee may prescribe under Paragraph 8(d)(ii).
(n) "Purchase Savings Account" means an account opened by a participating
employee pursuant to directions set forth in writing on a form prescribed by
the Committee.
The masculine pronoun wherever used herein is deemed to include the feminine,
and the singular shall be deemed to include the plural whenever the context
requires.
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3. ADMINISTRATION
The Plan shall be administered by the Committee.
The Committee may employ such agents, attorneys, accountants or any other
persons and delegate to them such powers, rights and duties as the Committee
may consider necessary to properly carry out the administration of the Plan.
The interpretation and construction by the Committee of any provisions of the
Plan and the terms and conditions of an offering including employee
participation thereunder and any determination by the Committee pursuant to any
provision of the Plan shall be final and conclusive. The Committee may adopt
such rules and regulations as it deems appropriate to assist in administering
and enforcing the Plan.
4. OFFERINGS UNDER THE PLAN
The Committee shall determine whether the Corporation shall make an offering
to all of the then eligible employees, provided, however, that it shall be
under no obligation to do so. In the event of an offering under the Plan, an
offering prospectus, or such other document as may then be required under
applicable law, shall be prepared which outlines the specific terms and
conditions of such offering.
5. ELIGIBILITY
All employees of the Corporation or of any Participating Corporation shall be
eligible to participate in an offering under the Plan except (i) any employee
who normally works less than 20 hours a week, (ii) any employee who normally
works less than five months a year, (iii) any employee who, on the first date
of the applicable Offering Period (or, such later date as may otherwise be
required in order to comply with Section 423 of the Code), has not been
employed by the Corporation or a Participating Corporation for at least one
month immediately prior thereto and (iv) any employee who is a highly
compensated employee (as defined in Section 414(q) of the Code) who the
Committee determines should not participate; provided, however, the Committee
may permit employees who are otherwise ineligible to participate in an offering
in a manner consistent with the requirements of the Code. Notwithstanding the
previous sentence, under any offering the Committee may permit employees not
otherwise eligible to participate on the first date of the applicable Offering
Period but who later satisfy the eligibility requirements of this paragraph to
participate as of a subsequent date determined by the Committee. In the case of
an employee of a Participating Corporation who became employed as a result of
the acquisition by the Corporation or a Participating Corporation of all or
part of the assets or stock of such employee's previous employer, the
employee's employment date will be considered to be the date he was employed by
his previous employer, unless otherwise determined by the Committee.
6. STOCK
The stock offered hereunder shall be shares of Common Stock either authorized
but unissued or issued and held in treasury. Subject to adjustment in
accordance with the provisions of Paragraph 8(g), the total number of shares of
Common Stock which may be offered shall not exceed the Maximum Share Limit. If
at any time participating employees elect to purchase more than the Maximum
Share Limit, then the number of shares of Common Stock which may be purchased
by each participating employee shall be reduced pro rata.
In the event that an employee's participation under the Plan for any reason
ends or is terminated and the shares which are subject to purchase are not
purchased, such unpurchased shares of Common Stock shall again be available for
offering under the Plan.
7. NUMBER OF SHARES WHICH AN EMPLOYEE MAY PURCHASE
The Corporation may grant to each participating employee, on a
nondiscriminatory basis, an option to purchase such number of shares of Common
Stock with respect to a given offering as shall have an aggregate purchase
price not in excess of the lesser of (i) 20 percent of such employee's
Compensation, plus the amount of interest paid on such employee's Purchase
Savings Account as provided in Paragraph 8(c) or (ii) $50,000 or (iii) such
lesser amount as the Committee may determine.
Alternatively, the Corporation may grant to each participating employee, on a
nondiscriminatory basis, an option to purchase a fixed or maximum number of
shares of Common Stock provided that the aggregate purchase price must comply
with the limitations set forth in the preceding sentence.
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Notwithstanding the foregoing provisions of this Plan, no employee may
participate in an offering under the Plan (i) if such participation would
permit the employee to purchase shares of Common Stock under all the employee
stock purchase plans of the Corporation and any Participating Corporation
qualified under Section 423 of the Code at a rate which exceeds $25,000 in fair
market value of such shares (determined on the first date of the Offering
Period or, if later, the date the option is granted) for each calendar year in
which such employee participates in the Plan, or (ii) if such employee,
immediately after his participation commences, owns stock possessing 5% or more
of the total combined voting power or value of all classes of stock of the
Corporation or any Participating Corporation. For such purpose, the rules of
Section 424(d) of the Code, as amended, shall apply in determining the stock
ownership of an employee, and stock which the employee may purchase pursuant to
his participation in the Plan and under all other plans or options of the
Corporation or any Participating Corporation shall be treated as stock owned by
the employee.
8. TERMS AND CONDITIONS OF PARTICIPATION IN AN OFFERING UNDER THE PLAN
An eligible employee's participation in an offering under this Plan shall
comply with and be subject to the following:
(a) Purchase Price. The purchase price per share of Common Stock shall be
determined by the Committee; provided, however, the purchase price may not
be lower than the lesser of 85 percent of the Fair Market Value of the
shares of Common Stock on the first date of the Offering Period or 85
percent of the Fair Market Value of the shares of Common Stock on the
Purchase Date.
(b) Purchase Savings Account. A participating employee shall authorize
the withholding from his Compensation, throughout the Offering Period, of a
dollar amount or percent of Compensation per pay period, the maximum of
which is subject to the limits of Paragraph 7 or other lesser limitations
set by the Committee. Withheld amounts will be deposited in the employee's
Purchase Savings Account. The employee shall not be entitled to make any
other deposits to his Purchase Savings Account, unless the Committee so
determines, and then, only to the extent permitted by the Committee and
subject to the applicable limitations contained in Paragraph 7 hereof.
The employee may, at times and in the manner permitted by the Committee,
elect to change the amounts to be withheld from his Compensation for
deposit in his Purchase Savings Account for periods after such election has
been received and approved by the Corporation provided such election
complies with the limitations set forth in Paragraph 7.
The employee may withdraw funds accumulated in his Purchase Savings
Account at any time, except as the Committee may otherwise provide. The
Bank reserves the right, as a condition of any Purchase Savings Account, to
demand and receive thirty days' notice, in writing, as a condition of the
withdrawal of any sum or sums whenever such requirement may be deemed
advisable by the Bank, in its discretion.
(c) Interest Payable on the Purchase Savings Account. The Bank shall pay
interest on Purchase Savings Accounts on the same basis as then paid with
respect to the Bank's customers' regular statement savings accounts, or on
such other basis as the Committee from time to time deems appropriate.
However, accrued interest, if any, for any partial interest period between
the last normal interest posting date and the Purchase Date shall be paid
on the Purchase Date.
(d) Purchase of Shares
(i) Purchase Directions. Subject to earlier purchase pursuant to
Paragraph 8(d)(ii), 8(f) and 8(h) hereof, each employee shall specify on
or before the Purchase Date whether he desires to purchase all, a
portion or none of the shares of Common Stock which he is entitled to
purchase as a result of his participation in the offering. Except as set
forth in the next paragraph, if the employee fails to deliver the
notification referred to in this paragraph, such failure shall be deemed
an election by the employee to exercise his right to purchase on the
Purchase Date all of the shares of Common Stock which he is entitled to
purchase.
On the Purchase Date, the Bank shall cause the funds, including
interest, if any, then on deposit in the employee's Purchase Savings
Account to be applied to the purchase price of the shares of Common
Stock the employee elected to purchase. Any funds remaining in the
Purchase Savings Account after such purchase will be paid to the
employee and the Purchase Savings Account will be closed. However,
except as may otherwise be provided by the Committee under Paragraph
8(d)(ii), if
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the Fair Market Value of one share of Common Stock on the Purchase Date
is less than the purchase price for one share of Common Stock, the
Corporation shall cause the funds, including interest, if any, then on
deposit in his Purchase Savings Account to be paid to the employee and
the Purchase Savings Account to be closed.
(ii) The Committee may determine that the Corporation shall make an
offering which shall have more than one Purchase Date and, in such case,
the Committee shall establish the dates (each a "Purchase Date") on
which purchases of shares of Common Stock can or will be made by
participating employees during an Offering Period. The Committee shall
set the terms, conditions and other procedures necessary for the proper
administration of such Offering.
(e) Termination of Participation by Employee. An employee who
participates in an offering may at any time on or before the expiration of
the Offering Period terminate participation by written notice of such
termination on a form prescribed by the Committee and delivered to the
Corporation. As soon as practicable thereafter, all funds, including
interest, if any, then on deposit in his Purchase Savings Account will be
paid to the employee and his Purchase Savings Account will be closed.
(f) Termination of Employment. In the event that a participating
employee's employment with the Corporation and/or a Participating
Corporation terminates during the term of an Offering Period, his
participation under the Plan shall terminate immediately and within a
reasonable time thereafter all funds, including interest, if any, then on
deposit in his Purchase Savings Account will be paid to the employee.
However, if any termination of employment is for reasons of total and
permanent disability or normal or early retirement or Rule of 65, all as
defined by the Committee with respect to each offering, the employee shall
have the right within three months from the date of his retirement or
disability (unless the Offering Period shall first expire in which event
such right may be exercised only on or prior to such expiration) to elect
to purchase all or fewer than all of the shares of Common Stock which he is
entitled to purchase or to receive the proceeds of his Purchase Savings
Account in cash.
If the employee dies while in the employment of the Corporation or a
Participating Corporation during the term of an offering in which he is
participating, his estate, personal representative, or beneficiary shall
have the right, at any time within 12 months from the date of his death
(unless the expiration of the Offering Period shall first occur in which
event such right may be exercised only on or prior to such expiration), to
elect to purchase all or fewer than all of the shares of Common Stock which
the deceased employee would have otherwise been entitled to purchase or to
receive the cash on deposit in the deceased employee's Purchase Savings
Account.
(g) Recapitalization. The aggregate number of shares of Common Stock
which may be offered under the Plan, the number of shares of Common Stock
which each employee is entitled to purchase as a result of his
participation in an offering and the purchase price per share for each such
offering shall all be proportionately adjusted for any increase or decrease
in the number of issued shares of Common Stock resulting from a subdivision
or consolidation of shares or other capital adjustment, or the payment of a
stock dividend, or other increase or decrease in such shares of Common
Stock, effected without receipt of consideration by the Corporation;
provided, however, that any fractional shares of Common Stock resulting
from any such adjustment shall be eliminated.
Subject to any required action by stockholders, if the Corporation shall
be the surviving or resulting corporation in any merger or consolidation,
excluding for this purpose a merger or consolidation which, or the approval
of which by the stockholders of the Corporation, constitutes a Change of
Control (and, thus, the consequences of which are otherwise provided for in
Paragraph 8(h) hereof), any employee's rights to purchase stock pursuant to
participation in an offering hereunder shall pertain to and apply to the
shares of stock to which a holder of the number of shares of Common Stock
subject to such rights would have been entitled; but a dissolution or
liquidation of the Corporation or a merger or consolidation in which the
Corporation is not the surviving or resulting corporation, excluding for
this purpose a merger or consolidation which, or the approval of which by
the stockholders of the Corporation, constitutes a Change of Control (and,
thus, the consequences of which are otherwise provided for in Paragraph
8(h) hereof), shall cause all participation in any offering made under the
Plan which is then in effect to terminate, except that the surviving or
resulting corporation may, in its absolute and uncontrolled discretion,
tender an offer to purchase its shares on terms and conditions both as to
the number of shares and otherwise, which will substantially preserve the
rights and benefits of employees participating in an offering then in
effect under the Plan.
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In the event of a change in Common Stock which is limited to a change in
the designation thereof to "Capital Stock" or other similar designation, or
to a change in par value thereof, or from par value to no par value,
without increase in the number of issued shares, the shares resulting from
any such change shall be deemed to be Common Stock within the meaning of
the Plan.
(h) Change of Control. Anything in the Plan to the contrary
notwithstanding, the date on which a "Change of Control" (as defined in the
First Chicago NBD Stock Performance Plan or any successor thereto) occurs
shall be considered to be a Purchase Date with respect to all Offering
Periods under the Plan and each employee who is a participant in the Plan
shall thereupon have the right to purchase all or fewer than all of the
shares of Common Stock which he is entitled to purchase as a result of his
participation in the offering with the funds, including interest, if any,
then on deposit in his Purchase Savings Account or to be promptly paid in
cash all funds, plus accrued interest through the date of payment, on
deposit in his Purchase Savings Account.
(i) Assignability. No Purchase Savings Account, or option to purchase
shares of Common Stock hereunder shall be assignable, by pledge or
otherwise, or transferable except by will or by the laws of descent and
distribution; and no right of any employee to purchase stock pursuant to an
offering made hereunder shall be subject to any obligation or liability of
such employee or have a lien imposed upon it. During the lifetime of an
employee, the shares of Common Stock which he is entitled to purchase under
the Plan may be purchased only by the employee.
(j) Restrictions on Transferability. If, at the time of the purchase of
shares of Common Stock under the Plan, in the opinion of counsel for the
Corporation, it is necessary or desirable, in order to comply with any
applicable laws or regulations relating to the purchase or sale of
securities, that the employee purchasing such shares shall agree not to
purchase or dispose of such shares otherwise than in compliance with the
Securities Act of 1933 or the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder, the employee will,
upon the request of the Corporation, execute and deliver to the Corporation
an agreement to such effect.
(k) Rights as Stockholder. An employee who is a participant hereunder
shall have no rights as a stockholder with respect to shares of Common
Stock which he is entitled to purchase under the Plan until the date of the
issuance of the shares of Common Stock to the employee.
(l) Miscellaneous
(i) The Board may modify the terms and conditions of participation
hereunder to comply with local laws and regulations in order to permit
eligible employees employed outside the United States to receive the
benefits under the Plan.
(ii) The terms and conditions of participation under the Plan may
include such other provisions as the Board shall deem advisable,
including without limitation, provisions which may require participants
to notify the Corporation promptly in writing if such participant
disposes of stock acquired hereunder prior to the expiration of
applicable holding periods under Section 423 of the Code.
(iii) This document covers the terms and conditions of participation
under the Plan for offerings commencing on or after January 1, 1996.
9. CONFORMANCE WITH TAX AND SECURITIES LAWS
The Plan and all offerings under the Plan are intended to comply in all
aspects with Section 423 of the Code (or its successor section) and Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended from time to
time. Should any of the terms of the Plan or offerings be found not to be in
conformity with the terms of Section 423 or Rule 16b-3, such terms shall be
invalid and shall be omitted from the Plan or the offering but the remaining
terms of the Plan shall not be affected. However, to the extent permitted by
law, any, provisions which could be deemed invalid and omitted shall first be
construed, interpreted or revised retroactively to permit this Plan to be
construed in compliance with all applicable laws (including Rule 16b-3) so as
to foster the intent of this Plan.
10. AMENDMENTS
The Board may alter, amend, suspend or discontinue the Plan or, at any time
prior to a Change of Control (as defined in Paragraph 8(h)), alter or amend any
and all terms of participation in an offering made thereunder.
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<PAGE>
However, if applicable securities, tax or other laws or rules or regulations
promulgated thereunder require stockholder approval, then such amendment shall
be subject to the requisite stockholder approval.
11. APPLICATION OF FUNDS
The proceeds received by the Corporation from the sale of Common Stock under
the Plan, except as otherwise provided herein, will be used for general
corporate purposes.
12. NO OBLIGATION TO PURCHASE SHARES
Participation under the Plan shall impose no obligation upon the employee to
purchase any shares of Common Stock which are the subject of his participation.
13. WITHHOLDING
Any amounts to be paid or shares of Common Stock to be delivered by the
Corporation under the Plan shall be reduced to the extent permitted or required
under applicable law by any sums required to be withheld by the Corporation or
any Participating Corporation.
14. GOVERNING LAW
This Plan and the terms and conditions of participation in the Plan, shall be
construed in accordance with and governed by the laws of the State of Delaware
except where such laws may be superseded by federal law.
15. REGULATORY AUTHORITIES
Each and every obligation and undertaking of the Corporation hereunder is
subject to the proviso that if at any time the Board determines that the
listing, registration or qualification of the shares covered hereby or by an
option issued hereunder upon any securities exchange or under any state or
federal law, or the consent or approval of any governmental agency or
regulatory body, is necessary or desirable as a condition to or in connection
with the grant or exercise of any option hereunder, such grant or exercise
shall be deemed to be without effect hereunder until such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Board.
16. DESIGNATION OF BENEFICIARY
Each employee may designate any person or entity as such employee's
beneficiary who shall, in the event of employee's death, receive shares of
Common Stock under the Plan or the funds in the employee's Purchase Savings
Account. Each designation of a beneficiary by an employee will revoke all
previous designations under the Plan made by that employee and will be
effective only when filed in writing with the Board or the Committee during the
employee's lifetime. If any employee fails to designate a beneficiary in the
manner provided above, or if the beneficiary designated by an employee dies
before the employee or before issuance of all shares of Common Stock due to the
employee under the Plan is completed, the Board or the Committee shall
distribute the employee's shares to the legal representative or representatives
of the estate of the later to die of the employee or the employee's designated
beneficiary.
17. LITIGATION BY EMPLOYEES OR OTHER PERSONS
To the extent permitted by law, if a legal action begun against the
Corporation, a Participating Corporation or any employee or director thereof,
or the Committee or any member thereof, by or on behalf of any person results
adversely to that person, or if a legal action arises because of conflicting
claims to shares of Common Stock due an employee or beneficiary, the cost to
the Corporation, a Participating Corporation or employee or director thereof,
or the Committee or any member thereof, of defending the action will be charged
to the extent possible to the shares of Common Stock or sums, if any, that were
involved in the action or were payable to, or on account of, the employee or
beneficiary concerned.
C-6
<PAGE>
18. INDEMNIFICATION
Any person who is or was a director, officer, or employee of the Corporation
or a Participating Corporation and each member of the Committee shall be
indemnified and saved harmless by the Corporation to the extent legally
permissible from and against any and all liability or claim of liability to
which such person may be subjected by reason of any act done or omitted to be
done in good faith with respect to the administration of the Plan, including
all expenses reasonably incurred in his defense in the event that the
Corporation fails to provide such defense.
19. RIGHTS TO EMPLOYMENT
Participation under the Plan shall not confer upon any employee any right
with respect to continued employment by the Corporation or a Participating
Corporation.
20. EXPENSES
All expenses of administering the Plan shall be borne by the Corporation.
21. FACILITY OF PAYMENT
Whenever the Committee considers that an employee or a beneficiary entitled
to shares of Common Stock or proceeds under the Plan is under a legal
disability or is incapacitated in any way so as to be unable to manage his or
her financial affairs, the Committee may direct that such shares of Common
Stock or proceeds be issued directly to such employee or beneficiary, to the
legal guardian or conservator of such employee or beneficiary, to a relative of
such employee or beneficiary to be expended by such relative for the benefit of
such employee or beneficiary, to a custodian for such beneficiary under a
Uniform Transfers or Gifts to Minors Act or comparable statute of any state, or
expended for the benefit of such employee or beneficiary, as the Committee
considers advisable.
C-7
<PAGE>
APPENDIX D
FIRST CHICAGO NBD CORPORATION
SENIOR MANAGEMENT ANNUAL INCENTIVE PLAN
1. PURPOSE
The First Chicago NBD Corporation Senior Management Annual Incentive Plan is
designed to (i) assist First Chicago NBD Corporation in attracting, retaining
and motivating senior management employees, (ii) associate Participant's
interests with those of the Corporation's stockholders and (iii) qualify annual
incentive compensation paid to Participants who are "covered employees" as
"other performance-based compensation" within the meaning of Section 162(m) of
the Code or a successor provision.
2. DEFINITIONS
Terms not otherwise defined herein shall have the following meanings:
(a) "Board" means the Board of Directors of First Chicago NBD
Corporation.
(b) "Change of Control" means a change of control as defined in the First
Chicago NBD Corporation Stock Performance Plan or any successor thereto.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Committee" means the committee appointed by the Board to administer
the Plan as provided herein. Unless otherwise determined by the Board, the
Organization, Compensation and Nominating Committee of the Board shall be
the Committee.
(e) "Corporation" means First Chicago NBD Corporation and its successors
and assigns and any corporation which shall acquire substantially all of
its assets. In addition, Corporation shall include any corporation or other
entity, whether domestic or foreign, in which the Corporation has or
obtains, directly or indirectly, a proprietary interest of at least 50% by
reason of stock ownership or otherwise.
(f) "Incentive Payment" means a payment under this Plan made in cash to a
Participant, subject to Section 4 hereof.
(g) "Incentive Period" means the calendar year, except to the extent the
Committee determines otherwise.
(h) "Participant" means an employee of the Corporation who is a member of
senior management and is designated by the Committee as eligible to receive
an Incentive Payment under the Plan for an Incentive Period.
(i) "Performance Goals" mean (i) earnings per share, (ii) return on
average equity, (iii) return on average assets, or (iv) any other objective
performance goals as may be established by the Committee for an Incentive
Period. Performance Goals may be absolute in their terms or measured
against or in relationship to other companies comparably, similarly or
otherwise situated and may be based on or adjusted for any other objective
goals, events, or occurrences established by the Committee for an Incentive
Period, including earnings, earnings growth, revenues, expenses, stock
price, market share, charge-offs, loan loss reserves, reductions in non-
performing assets, return on assets, return on equity or return on
investment, regulatory compliance, satisfactory internal or external
audits, improvement of financial ratings, achievement of balance sheet or
income statement objectives, extraordinary charges, losses from
discontinued operations, restatements and accounting changes and other
unplanned special charges such as restructuring expenses, acquisition
expenses including goodwill, unplanned stock offerings and strategic loan
loss provisions. Such Performance Goals may be particular to a line of
business, subsidiary or other unit or may be based on the performance of
the Corporation generally. Such Performance Goals may cover such period as
may be specified by the Committee.
(j) "Plan" means the First Chicago NBD Corporation Senior Management
Annual Incentive Plan.
D-1
<PAGE>
3. ADMINISTRATION
(a) The Plan shall be administered by the Committee. The Committee shall have
authority to determine the terms of all Incentive Payments hereunder,
including, without limitation, the Participants to whom, and the time or times
at which, payments are made, the amount of a Participant's Incentive Payments,
the Incentive Period to which each Incentive Payment shall relate, the actual
dollar amount to be paid, and when the Incentive Payments shall be made (which
payments may, without limitation, be made during or after an Incentive Period,
on a deferred basis or in installments).
(b) Subject to the express provisions of the Plan, the Committee shall have
authority to interpret the Plan, to prescribe, amend and rescind rules and
regulations relating to it and to make all other determinations deemed
necessary or advisable for the administration of the Plan. The determinations
of the Committee pursuant to its authority under the Plan shall be conclusive
and binding.
(c) The Committee may, in its discretion, authorize the Chief Executive
Officer of the Corporation to act on its behalf, except with respect to matters
relating to such Chief Executive Officer or any executive vice president or
above of the Corporation.
4. DETERMINATION OF PERFORMANCE GOALS AND INCENTIVE PAYMENTS
(a) Prior to the completion of 25% of the Incentive Period or such earlier
date as required under Section 162(m) of the Code, the Committee shall, in its
sole discretion, for each such Incentive Period determine and establish in
writing the following:
(i) The Performance Goals applicable to the Incentive Period; and
(ii) The performance/payout schedule detailing the total amount which may
be available for payout to all Participants as Incentive Payments based
upon the relative level of attainment of the Performance Goals.
(b) After the end of each Incentive Period, the Committee shall:
(i) Certify in writing, prior to the unconditional payment of any
Incentive Payment, whether the Performance Goals for the Incentive Period
were satisfied and to what extent they were satisfied;
(ii) Determine the total amount available for Incentive Payments pursuant
to the performance/payout schedule established in Section 4(a)(ii) above,
which amount shall be based upon the extent to which the Performance Goals
established by the Committee for the Incentive Period have been achieved;
(iii) In its sole discretion, reduce the size of or eliminate the total
amount available for payment for an Incentive Period; and
(iv) In its sole discretion, determine the share, if any, of the
available amount to be paid to each Participant as that Participant's
Incentive Payment and authorize payment of such amount; except, however, in
the case of a Participant who is at or above the level of vice chairman of
First Chicago NBD Corporation, the Board shall approve (but only to the
extent permitted under Section 162(m) of the Code and underlying
regulations) the Committee's determination of such Participant's share
before the Committee may authorize payment.
(v) Anything in this Plan to the contrary notwithstanding, if the minimum
Performance Goals established by the Committee for the Incentive Period
under Section 4(a)(i) are attained and certified by the Committee in
accordance with Section 4(b)(i), the Committee may award the maximum amount
(or in its sole discretion any lesser amount) set forth in Section 4(f) as
a Participant's Incentive Payment for the Incentive Period.
(c) The Committee may authorize a conditional payment of a Participant's
Incentive Payment prior to the end of an Incentive Period based upon the
Committee's good faith determination of the projected size of (i) the total
amount which will become available for payout as Incentive Payments for the
Incentive Period pursuant to Section 4(b)(ii) above, and (ii) a Participant's
Incentive Payment.
D-2
<PAGE>
(d) Unless otherwise determined by the Committee or required by applicable
law, no payment pursuant to this Plan shall be made to a Participant unless the
Participant is employed by the Corporation as of the date of payment.
(e) Incentive Payments shall be subject to applicable federal, state and
local withholding taxes and other applicable withholding in accordance with the
Corporation's payroll practices as from time-to-time in effect.
(f) The Incentive Payment for any Incentive Period for each Participant who
is a "covered employee" under Section 162(m) of the Code and/or a member of the
senior management committee (as designated by the Chief Executive Officer of
the Corporation) shall in no event exceed $4,000,000.
5. TRANSFERABILITY
Incentive Payments shall not be subject to the claims of creditors and may
not be assigned, alienated, transferred or encumbered in any way by a
Participant prior to the payment thereof.
6. TERMINATION OR AMENDMENT
The Board may amend, modify or terminate the Plan in any respect at any time
without the consent of Participants. Any such action of the Board may be taken
without the approval of the Corporation's stockholders, but only to the extent
that such stockholder approval is not required by applicable law or regulation,
including specifically Section 162(m) of the Code.
7. CHANGE OF CONTROL
Notwithstanding anything contained in this Plan, in the event of a Change of
Control, the following provisions shall be applicable:
(a) The Incentive Period will be deemed to have concluded on the date of
the Change of Control and the total amount available pursuant to Section
4(b) will fund on a pro-rata basis (based upon the number of days in such
Incentive Period elapsed through the date of Change of Control) assuming
the Corporation had attained Performance Goals at a level generating
funding at 200% of target funding; and
(b) The Committee in its sole discretion will determine the share of the
available amount payable to each Participant as that Participant's
Incentive Payment (provided that in all events the entire available amount
as calculated pursuant to Section 7(a) shall be paid to Participants as
Incentive Payments) and payments shall be made to each Participant as soon
thereafter as is practicable.
8. SAVINGS CLAUSE
This Plan is intended to comply in all aspects with applicable law and
regulation, including, with respect to those Participants who are "covered
employees," Section 162(m) of the Code. In case any one or more of the
provisions of this Plan shall be held invalid, illegal or unenforceable in any
respect under applicable law and regulation, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby and the invalid, illegal or unenforceable provision shall be
deemed null and void; however, to the extent permissible by law, any provision
which could be deemed null and void shall first be construed, interpreted or
revised retroactively to permit this Plan to be construed in compliance with
all applicable laws (including Code Section 162(m)), so as to foster the intent
of this Plan.
9. CONFER NO OTHER RIGHTS
The establishment of the Plan shall not confer upon any Participant any legal
or equitable right against the Corporation, except as expressly provided in the
Plan.
D-3
<PAGE>
10. NO RIGHT TO EMPLOYMENT
The Plan, an Incentive Payment, or the designation of an employee as a
Participant for an Incentive Period do not constitute an inducement or
consideration for the employment of any Participant, nor is the Plan or any
Incentive Payment a contract between the Corporation and any Participant.
Participation in the Plan shall not give a Participant any right to be retained
in the employ of the Corporation.
11. OTHER PLANS
Nothing contained in this Plan shall prevent the Board or Committee from
adopting other or additional compensation arrangements, subject to stockholder
approval if such approval is required, and such arrangements may benefit
Participants and may be either generally applicable or applicable only in
specific cases.
12. GOVERNING LAW
The Plan shall be governed, construed and administered in accordance with the
laws of the State of Delaware except where such laws may be superseded by
federal law.
13. EFFECTIVE DATE; TERM OF THE PLAN
The Plan shall be effective as of January 1, 1996 subject to its approval by
the stockholders of the Corporation at the annual meeting of stockholders to be
held May 10, 1996, or any adjournment thereof. Unless sooner terminated by the
Board pursuant to Section 6, to the extent necessary to ensure that Incentive
Payments made to "covered employees" as defined under Section 162(m) of the
Code may be deductible for federal income tax purposes, the Plan shall
terminate as of the date of the first meeting of the Corporation's stockholders
occurring during the year 2001, unless the term of the Plan is extended and
reapproved at such stockholders' meeting. No additional Incentive Payments may
be paid after termination of the Plan. Termination of the Plan shall not affect
any Incentive Payments due and outstanding on the date of termination and such
Incentive Payments shall continue to be subject to the terms of the Plan
notwithstanding its termination.
D-4
<PAGE>
- --------------------------------------------------------------------------------
+++++++++++++++++
+ P R O X Y +
+++++++++++++++++
FIRST CHICAGO NBD CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS, MAY 10, 1996
The undersigned hereby appoints Philip S. Jones and Timothy P. Moen, and
each of them, as proxies, with full power of substitution, to represent the
undersigned and to vote all shares of stock of First Chicago NBD Corporation
that the undersigned is entitled to vote at the Annual Meeting of Stockholders
of the Corporation to be held on May 10, 1996, and any adjournments thereof,
upon all matters that may properly come before the Meeting. This proxy when
properly executed will be voted in the manner directed herein by the undersigned
stockholder. If no direction is made, this proxy will be voted FOR the election
of directors, FOR approval of the Director Stock Plan, FOR approval of the Stock
Performance Plan including the performance goals for such plan, FOR approval of
the Employee Stock Purchase and Savings Plan, FOR approval of the Senior
Management Annual Incentive Plan including the performance goals for such plan,
and FOR the ratification of the appointment of auditors.
This card also provides instructions for any shares in the Corporation's
dividend reinvestment and stock purchase plan.
Your vote for the election of the Class I Directors may be indicated on the
other side. The nominees are -- Fay, Fisher, McCormick, O'Connor, Ryan and
Vitale.
Please date and sign on the reverse side and return promptly in the
enclosed business reply envelope.
If you do not sign and return a proxy, or attend the meeting and vote
by ballot, your shares cannot be voted.
--------------
| SEE REVERSE |
| SIDE |
--------------
- --------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
IMPORTANT: PLEASE VOTE AND SIGN YOUR
PROXY AND RETURN IT IN THE ENVELOPE PROVIDED
FIRST CHICAGO NBD CORPORATION
Annual Meeting of Stockholders
May 10, 1996
9:30 A.M. (Chicago time)
First Chicago Center
One First National Plaza
Chicago, Illinois
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
[X] Please mark your 6777
votes as in this
example.
This proxy when properly executed will be voted in the manner directed herein.
If no direction is made, this proxy will be voted FOR the election of directors
and FOR proposals 2, 3, 4, 5 and 6.
- --------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR proposals 2, 3, 4, 5 and 6.
- --------------------------------------------------------------------------------
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of [_] [_] 2. Approval of the [_] [_] [_]
Directors. Director Stock Plan.
(see reverse)
3. Approval of the Stock [_] [_] [_]
Except vote withheld from the Performance Plan
following nominee(s): including the
performance goals for
- -------------------------------- such plan.
FOR AGAINST ABSTAIN
4. Approval of the Employee [_] [_] [_]
Stock Purchase and
Savings Plan.
5. Approval of the Senior [_] [_] [_]
Management Annual
Incentive Plan including
the performance goals for
such plan.
6. Ratification of the [_] [_] [_]
appointment of Auditors.
The signer hereby revokes all proxies heretofore given by the signer to vote at
said meeting or any adjournments thereof.
Please sign exactly as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
- -----------------------------------------------------------
- -----------------------------------------------------------
SIGNATURE(S) DATE
- --------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
The mission of First Chicago NBD Corporation is to be a world-class financial
services company distinguished by strong customer relationships, quality
products and excellent service.
Dividend Direct Deposit
First Chicago NBD offers common stockholders the convenience of having
dividends electronically deposited without charge into their checking, savings
or money market account at most U.S. financial institutions. To obtain an
enrollment card, contact First Chicago Trust Company of New York at
(800) 446-2617.
Dividend Reinvestment and Stock Purchase Plan
Stockholders can increase their ownership in the Corporation without brokerage
commissions or service fees through the Dividend Reinvestment and Stock Purchase
Plan. For a prospectus and an enrollment card, contact First Chicago Trust
Company of New York at (800) 446-2617.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
FIRST CHICAGO NBD CORPORATION
INSTRUCTIONS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS, MAY 10, 1996
To: The First National Bank of Chicago, Trustee for the Savings Incentive Plan.
The undersigned hereby instructs the Trustee to vote, in person or by
proxy, the shares of Common Stock held by it and credited to my account in the
Plan at the Annual Meeting of Stockholders of the Corporation to be held on May
10, 1996, and any adjournment thereof, upon all matters that may properly come
before the Meeting. This instructions when properly executed will be voted in
the manner directed herein by the undersigned Plan participant. If no direction
is made, these instructions will be voted FOR the election of directors, FOR
approval of the Director Stock Plan, FOR approval of the Stock Performance Plan
including the performance goals for such plan, FOR approval of the Employee
Stock Purchase and Savings Plan, FOR approval of the Senior Management Annual
Incentive Plan including the performance goals for such plan, and FOR the
ratification of the appointment of auditors.
Your instructions for the election of the Class I Directors may be
indicated on the other side. The nominees are -- Fay, Fisher, McCormick,
O'Connor, Ryan and Vitale.
Please date and sign on the reverse side and return promptly in the
enclosed business reply envelope by May 6, 1996. The Trustee will vote stock for
which it has not received timely voting instructions proportionately in the
same manner as the Trustee votes the stock for which it has received such
instructions.
--------------
| SEE REVERSE |
| SIDE |
--------------
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
[X] Please mark your 8867
votes as in this
example.
These instructions, when properly executed, will be voted in the manner
directed herein. If no direction is made, these instructions will be voted FOR
the election of directors and FOR proposals 2, 3, 4, 5 and 6.
- --------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR proposals 2, 3, 4, 5 and 6.
- --------------------------------------------------------------------------------
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of [_] [_] 2. Approval of the [_] [_] [_]
Directors. Director Stock Plan.
(see reverse)
3. Approval of the Stock [_] [_] [_]
Except vote withheld from the Performance Plan
following nominee(s): including the
performance goals for
- -------------------------------- such plan.
FOR AGAINST ABSTAIN
4. Approval of the Employee [_] [_] [_]
Stock Purchase and
Savings Plan.
5. Approval of the Senior [_] [_] [_]
Management Annual
Incentive Plan including
the performance goals for
such plan.
6. Ratification of the [_] [_] [_]
appointment of Auditors.
The signer hereby revokes all instructions heretofore given by the signer to
vote at said meeting or any adjournments thereof.
Please sign exactly as name appears hereon.
- -----------------------------------------------------------
- -----------------------------------------------------------
SIGNATURE(S) DATE
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
FIRST CHICAGO NBD CORPORATION
INSTRUCTIONS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS, MAY 10, 1996
To: NBD Bank, Trustee for the Employee's Savings and Investment Plan.
The undersigned hereby instructs the Trustee to vote, in person or by
proxy, the shares of Common Stock held by it and credited to my account in the
Plan at the Annual Meeting of Stockholders of the Corporation to be held on May
10, 1996, and any adjournment thereof, upon all matters that may properly come
before the Meeting. These instructions when properly executed will be voted in
the manner directed herein by the undersigned Plan participant. If no direction
is made, the Trustee shall exercise voting rights with respect to shares
credited to the participant's account in the Trustee's discretion solely in the
interest of the participant and his or her beneficiaries.
Your instructions for the election of the Class I Directors may be
indicated on the other side. The nominees are -- Fay, Fisher, McCormick,
O'Connor, Ryan and Vitale.
Please date and sign on the reverse side and return promptly in the
enclosed business reply envelope by May 6, 1996.
--------------
| SEE REVERSE |
| SIDE |
--------------
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
[X] Please mark your 7501
votes as in this
example.
These instructions, when properly executed, will be voted in the manner directed
herein.
- --------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR proposals 2, 3, 4, 5 and 6.
- --------------------------------------------------------------------------------
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of [_] [_] 2. Approval of the [_] [_] [_]
Directors. Director Stock Plan.
(see reverse)
3. Approval of the Stock [_] [_] [_]
Except vote withheld from the Performance Plan
following nominee(s): including the
performance goals for
- -------------------------------- such plan.
FOR AGAINST ABSTAIN
4. Approval of the Employee [_] [_] [_]
Stock Purchase and
Savings Plan.
5. Approval of the Senior [_] [_] [_]
Management Annual
Incentive Plan including
the performance goals for
such plan.
6. Ratification of the [_] [_] [_]
appointment of Auditors.
SIGNATURE DATE
-------------------------------- ------------
The signer hereby revokes all instructions heretofore given by the signer to
vote at said meeting or any adjournments thereof. Please sign exactly as
name appears hereon.
- --------------------------------------------------------------------------------
<PAGE>
Exhibit 16
[LETTERHEAD OF DELOITTE & TOUCHE]
March 26, 1996
Securities and Exchange Commission
Mail Stop 9-5
450 5th Street, N.W.
Washington, D.C. 20549
Dear Sirs/Madams:
We have read and agree with the comments in the third paragraph in the section
titled "Ratification of Appointment of Auditors" included in First Chicago NBD
Corporation's Proxy Statement for the 1996 Annual Meeting of Stockholders.
We have no basis to agree or disagree with other statements of the registrant
contained therein.
Yours truly,
/s/ Deloitte & Touche
