<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] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which 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.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
Notes:
<PAGE>
[LETTERHEAD OF FIRST CHICAGO NBD CORPORATION]
March 28, 1997
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., Eastern Standard Time, Friday, May 9, 1997, in the Auditorium
located on the 5th Floor of NBD Tower, One Indiana Square (corner of Ohio
and Pennsylvania Streets), Indianapolis, Indiana.
Matters scheduled for consideration at this Meeting are the election of
seven Class II directors and ratification of the appointment of Arthur
Andersen LLP as independent auditors for the Corporation for 1997. The
Meeting will also provide an opportunity to review with you the business
and affairs of the Corporation and its subsidiaries during 1996 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. Also available for the first time
this year is the opportunity to vote your shares by telephone or via the
Internet. Instructions are included with the proxy card. 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 submitted your proxy.
We look forward to seeing you at the Meeting.
Sincerely,
Verne G. Istock
Chairman, President and Chief
Executive Officer
<PAGE>
[LETTERHEAD OF FIRST CHICAGO NBD CORPORATION]
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
MAY 9, 1997
To Our Stockholders:
The Annual Meeting of Stockholders of First Chicago NBD Corporation
will be held on Friday, May 9, 1997, at 9:30 a.m., Eastern Standard
Time, in the Auditorium located on the 5th Floor of NBD Tower, One
Indiana Square (corner of Ohio and Pennsylvania Streets),
Indianapolis, Indiana, for the purpose of considering and voting upon:
1. The election of seven Class II directors for a term of three years;
2. The ratification of the appointment of Arthur Andersen LLP as independent
auditors for the Corporation for 1997; and
3. 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 12, 1997.
By order of the Board of Directors,
Sherman I. Goldberg
Secretary
March 28, 1997
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 9, 1997
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., Eastern Standard
Time, on Friday, May 9, 1997, and at any adjournments thereof.
The Board of Directors has fixed the close of business on March 12, 1997, 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 310,185,007 shares of Common Stock (exclusive
of 9,569,691 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 seven 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 ratification of the appointment of auditors. Shares
represented by proxies which are marked "abstain" on such matter 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 matter. Proxies
relating to "street name" shares which are not voted by brokers on all matters
presented 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 any matter not voted upon by the broker.
The proxy statement, form of proxy and the Corporation's Annual Report for
1996 were mailed to each stockholder commencing on or about March 31, 1997.
The principal executive offices of the Corporation are located at One First
National Plaza, Chicago, Illinois 60670.
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.
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, seven Class II directors are
proposed to be elected to hold office until the annual meeting of stockholders
in 2000 and until their successors are elected and have qualified.
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 current
director and nominee are provided below. The nominees for Class II directors
are John H. Bryan, Siegfried Buschmann, Verne G. Istock, Scott P. Marks, Jr.,
Andrew J. McKenna, Thomas E. Reilly, Jr., and Adele Simmons. Donald V. Fites,
who is currently a Class II director, is retiring from the Board and will not
stand for re-election. Each of the nominees, except Mr. McKenna, is presently
serving as a director of the Corporation. Mr. McKenna currently serves as a
director of The First National Bank of Chicago. In addition, Patrick G. Ryan
is planning to retire from the Board and resign from his position as a Class I
director effective May 9, 1997. In order to fill the vacancy created by Mr.
Ryan's resignation and to have the number of directors in each class be
substantially equal, the Board of Directors has appointed William G. Lowrie,
who currently serves as a director of The First National Bank of Chicago, to
serve as a Class I director effective May 9, 1997.
CLASS II DIRECTOR NOMINEES--TERM TO EXPIRE 2000
John H. Bryan
Mr. Bryan, 60, is Chairman of the Board and Chief Executive Officer of Sara
Lee Corporation, a manufacturer and marketer of brand name products, and has
held that position since 1976. In addition to Sara Lee Corporation, Mr. Bryan
is a director of Amoco Corporation and General Motors Corporation. Mr. Bryan
became a director of First Chicago in 1982 and has been a director of the
Corporation since December 1995. He is a member of the Risk Management
Committee.
Siegfried Buschmann
Mr. Buschmann, 59, is Chairman and Chief Executive Officer of The Budd
Company, a producer of automotive parts and assemblies and a subsidiary of
Thyssen AG, and has held that position since 1989. He also serves as President
of Thyssen Holding Corporation. He is a director of both The Budd Company and
Thyssen Holding Corporation. Mr. Buschmann has been a director of the
Corporation since 1991 and is a member of the Audit Committee.
Verne G. Istock
Mr. Istock, 56, is Chairman, President and Chief Executive Officer of the
Corporation. He was named Chairman in May 1996. He has served as President and
Chief Executive Officer since December 1995. Mr. Istock also serves as
Chairman, Chief Executive Officer and a director of The First National Bank of
Chicago and NBD Bank (Michigan). Mr. Istock, who joined NBD Bank (Michigan) in
1963, served as Vice Chairman of the Corporation and NBD Bank (Michigan) from
1985 to 1994, and served as Chairman and Chief Executive Officer of the
Corporation from 1994 until December 1995. Mr. Istock also is a director of
Kelly Services, Inc. He has been a director of the Corporation since 1985 and
is a member of the Executive Committee, of which he is Chairperson.
Scott P. Marks, Jr.
Mr. Marks, 51, has been Vice Chairman of the Board of the Corporation since
December 1995. Mr. Marks joined The First National Bank of Chicago in 1983,
was Chairman of FCC National Bank, a subsidiary of the Corporation engaged
primarily in the issuance of consumer credit cards, from 1987 until December
1996, and was named executive vice president of First Chicago in 1990. He is
also Vice Chairman and a director of The First National Bank of Chicago and a
director of VISA U.S.A., Inc. and VISA International, Inc. Mr. Marks has been
a director of the Corporation since December 1995 and is a member of the
Executive Committee.
Andrew J. McKenna
Mr. McKenna, 67, is the Chairman and Chief Executive Officer of Schwarz, a
printer, converter and distributor of packaging materials. He has held those
positions since 1964 and has also served as President. In addition to Schwarz,
Mr. McKenna is a director of Aon Corporation, Dean Foods Company, McDonald's
Corporation, Skyline Corporation and Tribune Company. Mr. McKenna has been a
director of The First National Bank of Chicago since 1993 and served as a
director of First Chicago from 1993 until the Merger.
2
<PAGE>
Thomas E. Reilly, Jr.
Mr. Reilly, 57, is Chairman and Chief Executive Officer of Reilly
Industries, Inc., a synthetic chemical manufacturer. He has held that position
since 1990, and prior to that time held other executive positions within the
company. In addition to Reilly Industries, Inc., Mr. Reilly is a director of
Lilly Industries, Inc. He has been a director of the Corporation since 1995
and serves on the Executive Committee and the Audit Committee, of which he is
Chairperson.
Adele Simmons
Ms. Simmons, 55, is President of The John D. and Catherine T. MacArthur
Foundation, a philanthropic foundation, and has held that position since 1989.
In addition, Ms. Simmons is a director of Marsh & McLennan Companies, Inc. Ms.
Simmons became a director of First Chicago in 1990 and has been a director of
the Corporation since December 1995. She serves on the Organization,
Compensation and Nominating Committee, the Executive Committee, and the
Employee and Public Responsibility Committee, of which she is Chairperson.
CLASS II DIRECTOR--TERM EXPIRES 1997
Donald V. Fites
Mr. Fites, 63, is Chairman of the Board and Chief Executive Officer of
Caterpillar Inc., a manufacturer of construction, mining and agricultural
machinery, and has held that position since 1990. He also is a director of
Georgia-Pacific Corporation and Mobil Corporation. Mr. Fites became a director
of First Chicago in 1993 and has been a director of the Corporation since
December 1995. He is a member of the Audit Committee.
CLASS III DIRECTORS--TERM EXPIRES 1998
Terence E. Adderley
Mr. Adderley, 63, is President and Chief Executive Officer of Kelly
Services, Inc., an international provider of staffing services, and has held
that position since 1967. In addition to Kelly Services, Inc., Mr. Adderley is
a director of The Detroit Edison Company and DTE Energy Company. He has been a
director of the Corporation since 1985 and serves on the Risk Management
Committee.
James K. Baker
Mr. Baker, 65, is Vice Chairman of Arvin Industries, Inc., a supplier of
parts for the automobile industry. He has held a number of executive positions
in the company, having been elected President and Chief Executive Officer in
1981 and Chairman in 1986. In addition to Arvin Industries, Inc., Mr. Baker is
a director of Amcast Industrial Corporation, CINergy Corp., The GEON Company
and Tokheim Corp. He has been a director of the Corporation since 1992 and is
a member of the Employee and Public Responsibility Committee and the
Organization, Compensation and Nominating Committee.
James S. Crown
Mr. Crown, 43, is a General Partner of Henry Crown and Company (Not
Incorporated), a diversified investment company, a position he has held since
1985. In addition, Mr. Crown is a director of General Dynamics Corporation.
Mr. Crown became a director of First Chicago in 1991 and has been a director
of the Corporation since December 1995. He is a member of the Employee and
Public Responsibility Committee and the Organization, Compensation and
Nominating Committee.
Thomas H. Jeffs II
Mr. Jeffs, 58, has been Vice Chairman of the Board of the Corporation since
1985. He has been President, Chief Operating Officer and a director of NBD
Bank (Michigan) since 1994. Prior to that time, Mr. Jeffs, who joined NBD Bank
(Michigan) in 1962, served in a number of executive positions in the
Corporation and its subsidiaries. Mr. Jeffs also is Vice Chairman and a
director of The First National Bank of Chicago. In addition, he is a director
of MCN Energy Group Inc. Mr. Jeffs has been a director of the Corporation
since 1985 and is a member of the Executive Committee.
3
<PAGE>
Richard A. Manoogian
Mr. Manoogian, 60, is Chairman and Chief Executive Officer of Masco
Corporation, a diversified manufacturer, a position he has held since 1985.
Prior to that time, he held a number of other executive positions within the
company. In addition, Mr. Manoogian serves as the Chairman, Chief Executive
Officer and a director of MascoTech, Inc., and Chairman and a director of
TriMas Corporation. He has been a director of the Corporation since 1978 and
is a member of the Organization, Compensation and Nominating Committee.
Earl L. Neal
Mr. Neal, 68, has been an attorney with Earl L. Neal & Associates, a law
firm, since 1955. Mr. Neal is a director of Peoples Energy Corporation,
Lincoln National Corporation, Chicago Title and Trust Company and Chicago
Title Insurance Company. Mr. Neal became a director of First Chicago in 1988
and has been a director of the Corporation since December 1995. He is a member
of the Audit Committee and the Employee and Public Responsibility Committee.
Richard L. Thomas
Mr. Thomas, 66, retired as Chairman of the Corporation in May 1996. Mr.
Thomas served as President of First Chicago from 1974 to 1993 and of The First
National Bank of Chicago from 1975 to 1993. In 1992, he was named Chairman of
First Chicago and The First National Bank of Chicago. Mr. Thomas is a director
of CNA Financial Corporation, IMC Global Inc., The PMI Group, Inc., The Sabre
Group Holdings, Inc., and Sara Lee Corporation. Mr. Thomas became a director
of First Chicago in 1973 and has been a director of the Corporation since
December 1995. He is a member of the Risk Management Committee.
CLASS I DIRECTORS--TERM EXPIRES 1999
Dr. Maureen A. Fay, O.P.
Dr. Fay, 62, is President of the University of Detroit Mercy. She has held
that position since 1990, and was President of its predecessor, Mercy College
of Detroit, from 1983 through 1990. Dr. Fay has been a director of the
Corporation since 1985, and serves on the Employee and Public Responsibility
Committee and the Organization, Compensation and Nominating Committee.
Charles T. Fisher III
Mr. Fisher, 67, retired as Chairman and President of NBD Bancorp, Inc. in
1993. Mr. Fisher had served as Chairman, President and Chief Executive Officer
since 1982, and he held a number of executive positions at NBD and NBD Bank
(Michigan) prior to that time. Mr. Fisher is a director of AMR Corporation,
American Airlines, Inc., General Motors Corporation and Hughes Electronics
Corporation. He has been a director of the Corporation since 1972 and serves
as a member of the Employee and Public Responsibility Committee and the Risk
Management Committee.
William T. McCormick, Jr.
Mr. McCormick, 52, is Chairman and Chief Executive Officer of CMS Energy
Corporation, a diversified energy company, a position he has held since 1988.
He is also Chairman of its principal subsidiary, Consumers Power Company. In
addition to CMS Energy Corporation and Consumers Power Company, Mr. McCormick
is a director of Rockwell International Corporation and Schlumberger Limited.
He has been a director of the Corporation since 1985 and is a member of the
Executive Committee and the Risk Management Committee, of which he is
Chairperson.
James J. O'Connor
Mr. O'Connor, 60, is Chairman and Chief Executive Officer of Unicom
Corporation, a producer, distributor and seller of electric energy. He has
held this position since Unicom Corporation was formed in 1994. In addition,
he has served as Chairman and Chief Executive Officer of Commonwealth Edison
Company, Unicom
4
<PAGE>
Corporation's principal subsidiary, since 1980 and served in other executive
positions prior to 1980. Mr. O'Connor is a director of Unicom Corporation,
Commonwealth Edison Company, Corning Incorporated, Tribune Company and UAL
Corporation. Mr. O'Connor became a director of First Chicago in 1987 and has
been a director of the Corporation since December 1995. He is a member of the
Executive Committee and the Organization, Compensation and Nominating
Committee, of which he is Chairperson.
Patrick G. Ryan
Mr. Ryan, 59, is Chairman, President and Chief Executive Officer of Aon
Corporation, a broad-based insurance holding company. He has been President
and Chief Executive Officer since 1982 and Chairman of the Board of Directors
since 1990. He also is a director of Aon Corporation. Mr. Ryan became a
director of First Chicago in 1983 and of the Corporation in December 1995. He
is a member of the Risk Management Committee.
David J. Vitale
Mr. Vitale, 50, has been Vice Chairman of the Board of the Corporation and
President of The First National Bank of Chicago since December 1995. Mr.
Vitale joined The First National Bank of Chicago in 1968, was named executive
vice president of First Chicago in 1986 and became Vice Chairman of the Board
of First Chicago in 1993. In addition, he is a director of The First National
Bank of Chicago. Mr. Vitale also is a director of the Student Loan Marketing
Association. Mr. Vitale became a director of First Chicago in 1992 and has
been a director of the Corporation since December 1995. He is a member of the
Executive Committee.
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 met five times in 1996.
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 of the
Corporation 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 met three times in 1996. 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.
5
<PAGE>
EXECUTIVE COMMITTEE
The members of the Executive Committee of the Corporation are 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 Verne G. Istock, who
serves as Chairperson. The Executive Committee met two times in 1996. 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, Richard L.
Thomas and William T. McCormick, Jr., who serves as Chairperson. The Risk
Management Committee met five times in 1996. 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.
ORGANIZATION, COMPENSATION AND NOMINATING COMMITTEE
Committee Interlocks and Insider Participation
The Organization, Compensation and Nominating Committee met six times in
1996. 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.
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 1996. 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.
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); (iii) all
compensation actions, including employment and separation arrangements, for
officers at or above the level of vice chairman; and (iv) all stock based
compensation for executive vice presidents.
The Board of Directors has delegated authority to the Committee 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; and (iv) all salaries or annual
incentive awards of $200,000 or more, except awards for vice chairmen and
above.
6
<PAGE>
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 (iv) 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 ten meetings in 1996. Each
director attended 75% or more of the total number of meetings held during 1996
by the Board of Directors of the Corporation or Committees thereof on which the
director served, except for Mr. Manoogian and Mr. Ryan, who attended 69% and
73% of the meetings, respectively.
Each non-officer director of the Corporation receives an annual cash retainer
of $50,000. In addition, each non-officer director receives 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 pursuant to the Corporation's Plan for Deferring the Payment of
Directors' Fees (the "Director Deferral Plan"); or (iii) pursuant to the
Director Stock Plan: (a) an outright grant of shares of the Corporation's
Common Stock; (b) stock options, with three options issued for every share of
Common Stock that could be granted; and (c) stock units. Amounts deferred into
the Director Deferral Plan earn a return equivalent to the rate of return on
one or more of the investment funds in the Corporation's Savings and Investment
Plan. Officers of the Corporation and its subsidiaries did not receive an
annual retainer, meeting fees, shares of Common Stock, or other compensation
for service as directors of the Corporation or on Committees of the Board.
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, 1996 by (i) each director, (ii) each nominee
for election, (iii) each executive officer named in the Summary Compensation
Table on page 14, and (iv) all directors and executive officers as a group.
7
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
OWNERSHIP OF CLASS
AS OF (IF 1%
DECEMBER 31, OR
NAME 1996 GREATER)
- ---- ------------ --------
<S> <C> <C>
Terence E. Adderley... 9,976 -- %
James K. Baker........ 6,723 --
John H. Bryan......... 7,340 --
Siegfried Buschmann... 1,877 --
James S. Crown........ 5,812,980(a) 1.85
Maureen A. Fay........ 2,214 --
Charles T. Fisher
III.................. 246,264(b) --
Donald V. Fites....... 4,436 --
Verne G. Istock....... 220,040(c)(d) --
Thomas H. Jeffs II.... 177,291(c) --
Richard A. Manoogian.. 8,627 --
Scott P. Marks, Jr.... 321,537(c) --
</TABLE>
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
OWNERSHIP OF CLASS
AS OF (IF 1%
DECEMBER 31, OR
NAME 1996 GREATER)
- ---- ------------ --------
<S> <C> <C>
William T. McCormick,
Jr.................. 11,877 -- %
Andrew J. McKenna.... 28,877(e) --
Earl L. Neal......... 6,435 --
James J. O'Connor.... 8,097(f) --
Andrew J. Paine, Jr.. 184,114(c) --
Thomas E. Reilly,
Jr.................. 132,233(g) --
Patrick G. Ryan...... 50,546(h) --
Adele Simmons........ 6,073 --
Richard L. Thomas.... 1,543,838(i) --
David J. Vitale...... 458,820(c) --
All Directors and Ex-
ecutive Officers as
a Group (j)(k)...... 10,669,259(c) 3.40
</TABLE>
- -------
(a) The number of shares of Common Stock shown as beneficially owned by James
S. Crown includes 3,855 shares subject to options held by Mr. Crown which
were exercisable as of March 1, 1997; 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; 707,385
shares owned by Areljay, L.P., of which a corporation, of which Mr. Crown
is a director, officer and shareholder, and a trust, of which Mr. Crown is
a beneficiary, are partners; 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. 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 spouse
owns beneficially 2,707 shares, and trusts of which Mr. Crown's children
are beneficiaries own beneficially 9,439 shares. Mr. Crown disclaims
beneficial ownership of the shares held by the various persons and
entities described above.
(b) This figure includes 42,000 shares subject to options held by Mr. Fisher
which were exercisable as of March 1, 1997; 33,039 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.
(c) As set forth in the following table, for Messrs. Istock, Jeffs, Marks,
Vitale and Paine and all directors and executive officers as a group, the
share amounts include any shares subject to options held by such persons
as of December 31, 1996 that were exercisable as of March 1, 1997, and
also include any shares held pursuant to the Corporation's Savings and
Investment Plan ("SIP") as of February 28, 1997, which will be subject to
the voting direction of such persons at the Annual Meeting:
<TABLE>
<CAPTION>
ALL DIRECTORS
ANDREW J. AND EXECUTIVE
VERNE G. THOMAS H. SCOTT P. DAVID J. PAINE, OFFICERS AS
ISTOCK JEFFS II MARKS, JR. VITALE JR. A GROUP
-------- --------- ---------- -------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
Shares Subject to Op-
tions Exercisable as
of March 1, 1997 .... 0 0 170,059 205,345 36,592 1,942,349
Shares Held pursuant
to SIP............... 0 0 198 10,599 14,778 49,826
</TABLE>
(d) This figure includes 1,410 shares, of which Mr. Istock disclaims
beneficial ownership, held by Mr. Istock's spouse.
(e) This figure includes 1,929 shares subject to options held by Mr. McKenna
which were exercisable as of March 1, 1997, and 9,840 shares, of which Mr.
McKenna disclaims beneficial ownership, owned by Mr. McKenna's spouse.
(f) This figure includes 1,272 shares subject to options held by Mr. O'Connor
which were exercisable as of March 1, 1997.
(g) This figure includes 2,121 shares subject to options held by Mr. Reilly
which were exercisable as of March 1, 1997; 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.
(h) This figure includes 3,117 shares of Common Stock owned by a corporation
the majority of the shares of which are owned by Mr. Ryan.
8
<PAGE>
(i) This figure includes 891,234 shares subject to options held by Mr. Thomas
which were exercisable as of March 1, 1997; 3,800 shares held by a limited
partnership in which Mr. Thomas and his spouse are general and limited
partners; 10,352 shares held in various trusts of which Mr. Thomas is
trustee; and 12,579 shares held by a family foundation of which Mr. Thomas
is a trustee.
(j) For purposes of this table, the term "executive officers" includes all
persons who were executive officers of the Corporation on December 31,
1996.
(k) In addition to shares described in other footnotes to this table, this
figure includes 5,500 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 5,400
of these shares is disclaimed by the respective executive officers.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange of 1934 requires each director,
officer and beneficial owner of more than ten percent of the Corporation's
Common Stock to file with the Commission an initial report of the person's
beneficial ownership of Common Stock and subsequent reports regarding changes
in such ownership. Each person who was a director, officer, or beneficial
owner of more than ten percent of the Corporation's Common Stock at any time
during 1996 filed, on a timely basis, all reports required during the year
pursuant to Section 16(a).
ORGANIZATION, COMPENSATION AND NOMINATING COMMITTEE REPORT ON EXECUTIVE
COMPENSATION
The Organization, Compensation and Nominating Committee has established a
compensation program designed to enable the Corporation to attract, motivate
and retain quality executive management talent necessary to lead the
Corporation, attain its business objectives and maximize stockholder value.
The compensation program approved by the Committee consists of three primary
components: base salary, annual cash bonuses and long-term, stock-based
incentives.
PERFORMANCE CRITERIA AND COMPETITIVE POSTURE
The Committee, for the purposes of assessing competitive trends as well as
setting performance goals and measuring relative performance, has identified a
"peer group" of banking organizations. For 1996, the peer group consisted of
banking organizations with assets in excess of $50 billion, excluding certain
institutions deemed to be in a unique and different business environment. The
Committee intends to review the peer group annually and make adjustments, as
necessary, to ensure that the Corporation's performance targets and
competitive posture are based on the most appropriate comparisons.
The Committee establishes base salaries and target awards for bonuses and
long-term incentives based on trends and practices within these peer
organizations as well as on information provided by third-party consultants
and special compensation surveys. Base salaries are targeted to reflect median
pay levels in similar organizations. Target awards for bonuses and long-term
incentives are set at or above competitive medians; however, actual awards are
contingent upon attainment of objective results measured against established
goals or performance relative to the peer group.
BASE SALARIES
Base salaries for executives, including the chief executive officer, reflect
competitive practices within peer organizations for positions with similar
roles or responsibilities. Increases to base salaries reflect individual
performance as well as changes in position or responsibility. The overall rate
of annual increase for executive officer salaries is intended to be consistent
with and reflect competitive trends in the industry. All base salary increases
for executive officers are reviewed and approved by the Committee.
ANNUAL BONUSES
The Senior Management Annual Incentive Plan ("the Bonus Plan") was approved
by stockholders at the Annual Meeting in May 1996. The Bonus Plan establishes
a planned bonus funding level ("bonus pool") based on the aggregate of target
cash incentive awards for all participants. The target awards are based on
competitive practices. For 1996, the actual funding of the bonus pool was
determined by objective performance results measured against two standards.
First, the Committee established an earnings per share ("EPS") goal and a
9
<PAGE>
minimum threshold EPS for the Corporation in 1996. For 1996, the minimum
threshold EPS was reached, and the bonus pool was adjusted based on the ratio
of actual EPS to goal, which resulted in a modest reduction in the size of the
bonus pool. Second, the Committee established a minimum threshold for return
on equity ("ROE") compared to the peer group, and, provided that the minimum
threshold relative ROE was achieved, the bonus pool was to be further adjusted
based on the Corporation's ROE compared to that of the peer group. For 1996,
the minimum threshold ROE was achieved, and, because ROE was at the median of
the peer group, no further adjustment was made to the size of the bonus pool.
Pursuant to the terms of the Bonus Plan, the Committee certified results
against performance objectives and the peer group and approved the final bonus
pool funding. Within the approved bonus pool, individual bonus awards
reflected the Committee's subjective assessment of the performance of the
executive relative to his or her specific financial goals and subjective
strategic or organizational objectives.
LONG-TERM INCENTIVES
The Stock Performance Plan ("the Stock Plan") was also approved by
stockholders at the Annual Meeting in May 1996. The Stock Plan is intended to
reward executives for business results and to associate their interests with
those of stockholders. Under the Stock Plan, the Committee provides long-term
incentive awards in the form of stock options, performance shares and
restricted shares. Target long-term award levels are based on competitive
practices within the peer group and the financial industry in general, with
different award levels established for each level of management. Typically,
higher level executives receive performance shares and options; less senior
managers and professionals receive restricted shares and options. Restricted
share awards are generally four-year awards subject only to continued
employment. During the restricted period, recipients receive cash dividends
and exercise voting rights on the restricted shares.
Performance shares are shares of the Corporation's Common Stock contingently
granted and earned by the achievement of certain financial goals. The
performance shares awarded in 1996 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
ranging from 0% to 150% of the original share award. The percentage earned
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 are payable in cash to the award
recipient, who is also entitled to vote such shares.
Stock options granted are non-qualified options with a ten year term. The
exercise price of the options is the fair market value of the Common Stock on
the date of grant. Options vest in three equal installments at the end of the
first, second and third years of the ten-year term. To encourage early
exercise of options and thus increase long-term ownership, the Committee
approved a restorative option feature enabling option recipients, upon
exercise of an option, to purchase shares by exchanging currently owned shares
of Common Stock and to receive a restorative option equal to the number of
shares used for the option purchase. The exercise price for restorative
options is the fair market value of the Common Stock on the date of the
restorative grant. Restorative options may be exercised six months from the
date of grant through the end of the original ten-year term. The opportunity
to receive a restorative option is limited to one restorative grant per year
attributable to any single, original stock option grant.
CONVERSION OF PERFORMANCE SHARES FROM PREDECESSOR PLANS
Prior to 1996, both First Chicago and NBD awarded performance shares to
selected executive officers. Both programs had established performance-based
standards and performance terms consistent with the requirements of Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Internal Revenue
Code") to assure deductibility for Federal income tax purposes of shares
earned by the five highest paid executive officers. In order to integrate and
transition all compensation programs of the Corporation, the Committee, in
February 1996, approved a conversion of all outstanding performance shares.
Under the conversion, all or a portion of the outstanding performance shares
were converted to new performance shares under the Stock Plan and became
subject to newly established performance criteria under the Stock Plan. Under
the conversion methodology, a portion of prior NBD performance share awards
were converted to restricted shares, based upon actual
10
<PAGE>
performance for the portion of the performance period completed as of December
31, 1995. These restricted shares are subject only to continued employment
through the end of the original performance period. As a result of the change
in previously established performance standards, these restricted shares
became non-deductible under Section 162(m).
For the first set of converted performance shares, which were to be based on
1996 performance, the determination of the number of shares earned, which
could range from 0% to 150% of the number of shares granted, was to be
computed by comparing the Corporation's ROE to the ROE of the peer group of
banks. Because the Corporation's 1996 ROE was at the median of the peer group,
100% of the performance shares were deemed to be earned for 1996 by the
Committee.
COMPENSATION OF VERNE G. ISTOCK
During 1996, Mr. Istock's annual base salary rate was increased from
$750,000 to $788,100. In April, Mr. Istock's salary was increased to $780,000
reflecting both his normal annual review as well as recognition of his earlier
election as Chairman and Chief Executive Officer and successful merger of
First Chicago and NBD. In September, Mr. Istock, as well as other executive
officers, received a one-time salary adjustment to compensate for the loss of
country club and luncheon club memberships pursuant to a change in the
Corporation's policy regarding reimbursement for such memberships. This
adjustment for Mr. Istock was $8,100, increasing his annual salary to
$788,100. The reported base salary earnings of $774,416 in the Summary
Compensation Table differ only due to the timing of the increases during the
year.
Under the Bonus Plan, Mr. Istock received an annual cash bonus, as reflected
in the Summary Compensation Table, of $1,000,000. This cash bonus award
reflects a subjective evaluation of Mr. Istock's performance, including
consideration of the Corporation's 1996 EPS and ROE, total stockholder return
in 1996 of approximately 40.7% (ranking number 17 on the KBW 50 Index
published by Keefe, Bruyette & Woods, Inc.), and other financial results that
were at or near target levels for the year, as well as attainment of various
organizational and non-financial objectives during the critical first year
following the Merger.
Under the Stock Plan, Mr. Istock received, in March 1996, 33,333 performance
shares and 100,000 non-qualified stock options. The performance shares provide
for a four-year performance period commencing January 1, 1996. The actual
number of performance shares earned will be based on the Corporation's
relative ROE compared to the peer group. The number of shares granted reflects
median award levels within the peer group as well as the Committee's
subjective assessment of Mr. Istock's past performance and expected future
contribution to the Corporation's success.
DEDUCTIBILITY
The Internal Revenue Code limits allowable Federal income tax deductions for
compensation paid by a publicly held corporation. Section 162(m) of the
Internal Revenue Code limits deductible compensation to $1 million for the
Corporation's chief executive officer and the four other most highly
compensated executive officers employed at year end. However, performance-
based compensation may be excluded from this limit provided, among other
things, that payment of performance-based compensation is made pursuant to a
plan approved by stockholders, is payable upon attainment of pre-determined,
objective goals and that the board committee approving such payments is made
up of "outside" directors as defined in Section 162(m).
The Committee believes that executive compensation should be reasonable and
competitive and that a substantial portion of total compensation should be
based upon the Corporation's performance. It has approved both annual cash and
long-term incentive compensation programs and developed target award
opportunities accordingly. The Committee will ordinarily seek to provide
performance-based compensation that allows for maximum deductibility under
Section 162(m) regulations. However, tax deductibility is only one of many
factors that must be considered in any final decision regarding executive
compensation. In order to best serve the Corporation and the interests of its
stockholders, the Committee may determine that payment of non-deductible
compensation is necessary to provide an appropriate award consistent with its
overall philosophy and the intent of the performance-based programs.
11
<PAGE>
STOCK OWNERSHIP GUIDELINES
Consistent with the importance of long-term, stock-based incentives and to
further ensure that the interests of its senior managers are in line with
those of stockholders, the Committee and Board of Directors established, in
1996, formal stock ownership guidelines for Senior Vice Presidents and higher
level officers. These guidelines assume that affected officers will meet or
exceed the guideline within five years of implementation or of attaining the
level associated with each guideline.
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
12
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total return on the Common Stock
of the Corporation with the Standard & Poor's 500 Index (the "S&P 500 Index")
and the KBW 50 Index published by Keefe, Bruyette & Woods, Inc. (the "KBW 50
Index"). The S&P 500 Index is a broad-based market index, and the KBW 50 Index
includes a cross-section of major banking institutions. Each of these indices
includes the Corporation's Common Stock. The values in the graph show the
relative performance of a $100 investment made on December 31, 1991, in the
Corporation's Common Stock, the S&P 500 Index and the KBW 50 Index.
Comparison of Five Year Cumulative Total Return(/1/)
Among the Corporation, S&P 500 Index and KBW 50 Index.(/2/)
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
Corporation 100 114 107 102 155 218
S&P 500 100 108 118 120 165 203
KBW 50 100 127 134 128 204 289
</TABLE>
- -------
(1) Assumes $100 invested at December 31, 1991, with reinvested dividends.
(2) At December 31 in each year.
13
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
EXECUTIVE OFFICER COMPENSATION TABLE
The following table sets forth the compensation paid, earned or awarded for
the years indicated therein, to the Corporation's chief executive officer and
its other four most highly compensated executive officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
----------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
---------------------------- ----------------------- ----------
OTHER ALL
ANNUAL RESTRICTED SECURITIES OTHER
COMPEN- STOCK UNDERLYING COMPEN-
NAME AND PRINCIPAL SALARY SATION AWARDS OPTIONS/SARS LTIP SATION
POSITION YEAR ($) BONUS ($) ($) ($)(1)(2) (#)(3) PAYOUTS(4) ($)(5)
- -------------------------- ---- -------- ---------- -------- ---------- ------------ ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Verne G. Istock........... 1996 $774,416 $1,000,000 $297,261(6) $ 691,431 185,206 $163,309 $6,000
Chairman of the Board, 1995 746,154 550,000 65,934 0 60,468 372,600 6,000
President
and Chief Executive Offi- 1994 724,135 435,000 51,698 690,625 71,060 349,650 5,942
cer
Thomas H. Jeffs II........ 1996 655,015 475,000 48,915 571,774 90,284 152,913 6,000
Vice Chairman of the Board 1995 652,500 400,000 55,556 0 54,123 356,400 6,000
1994 649,423 350,000 46,816 690,625 62,997 341,845 5,942
Scott P. Marks, Jr........ 1996 403,128 550,000 42,008 0 66,268 451,970 12,469
Vice Chairman of the Board 1995 317,988 525,000 6,397 0 127,158 0 9,915
1994 295,659 525,000 6,495 931,875 74,571 0 9,245
David J. Vitale........... 1996 481,580 650,000 45,521 0 96,701 516,520 14,822
Vice Chairman of the Board 1995 419,349 750,000 6,495 0 169,867 0 12,955
1994 396,437 450,000 6,495 1,065,000 133,055 0 12,268
Andrew J. Paine, Jr....... 1996 383,959 350,000 13,891 180,302 10,500 52,099 12,375
Executive Vice President 1995 381,463 185,000 12,540 0 0 0 12,375
1994 379,963 160,000 6,660 0 20,000 0 12,375
</TABLE>
- -------
(1) In February 1996, Messrs. Istock, Jeffs and Paine received restricted
shares of the Corporation's Common Stock in connection with the
modification of certain prior awards of performance shares originally
granted by NBD in 1993 through 1995. See footnote (3) to the "Long-Term
Incentive Plans--Awards in Last Fiscal Year" table below. Dividends on
these shares will be paid in cash. The following table sets forth the
number of restricted shares that will vest on December 31 in each of the
years indicated.
<TABLE>
<CAPTION>
NUMBER OF
RESTRICTED SHARES
VESTING ON
DECEMBER 31 TOTAL
----------------- SHARES
NAME 1996 1997 1998 AWARDED
---- ---- ----- ----- -------
<S> <C> <C> <C> <C>
Verne G. Istock................................. 6,698 7,900 3,188 17,786
Thomas H. Jeffs II.............................. 6,270 6,000 2,438 14,708
Andrew J. Paine, Jr. ........................... 2,138 1,750 750 4,638
</TABLE>
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 31,675 and 36,200 shares, respectively. As
originally structured, these awards consisted of dividend-bearing shares of
the Corporation's Common Stock, unrestricted ownership of which 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 could range from 0%
to 150%, was to be based upon the relative ranking of First Chicago's total
stockholder return
14
<PAGE>
for the applicable performance period as compared with the total
stockholder return of the 50 banks comprising the KBW 50 Index. Total
stockholder return was to 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 were
to 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 was to be contingent
upon the executive officer's continued employment at the time of such
payment. For the 1995 performance period, 125% of the first one-third of
the performance restricted shares granted (plus reinvested dividends
accrued thereon) were earned. Payment of these shares is being made in
three annual installments in 1996, 1997 and 1998, contingent upon the
executive officer's continued employment. Dividends on the earned shares
are paid in cash.
In February 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. See footnote (3) to the "Long-Term Incentive Plans--Awards in Last
Fiscal Year" table below.
(2) The dollar values shown are based upon the closing 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 have been payable in cash. Dividends on all
other restricted shares are payable in cash.
At December 31, 1996, 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
$53.75 per share closing price of the Corporation's Common Stock on
December 31, 1996, were as follows:
<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES VALUE
---------------- --------- ----------
<S> <C> <C>
Verne G. Istock............................... 27,755 $1,491,831
Thomas H. Jeffs II............................ 25,105 1,349,394
Scott P. Marks, Jr............................ 26,614 1,430,482
David J. Vitale............................... 26,379 1,417,879
Andrew J. Paine, Jr........................... 8,580 461,175
</TABLE>
(3) The amounts for 1996 include new stock options granted under the
Corporation's Stock Performance Plan as well as restorative stock options.
The Corporation granted new stock options in 1996 to Messrs. Istock,
Jeffs, Marks, Vitale and Paine for 100,000, 36,000, 36,000, 36,000 and
10,500 shares, respectively. All other stock options granted in 1996 were
restorative stock options. For a description of restorative stock options,
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.
The amounts for 1995 and 1994 for Messrs. Marks and Vitale were granted
under First Chicago's Stock Incentive Plan. First Chicago granted new stock
options in 1995 and 1994 for 47,965 and 41,178 shares to Mr. Marks and
72,400 and 66,518 shares to Mr. Vitale. All other First Chicago stock
option grants for 1995 and 1994 were restorative stock options.
The amounts for 1995 and 1994 for Messrs. Istock, Jeffs and Paine were
granted under NBD's Performance Incentive Plan. All NBD stock options
granted in 1995 were restorative options. NBD granted new stock options in
1994 of 60,000, 50,000 and 20,000 shares to Messrs. Istock, Jeffs and
Paine, respectively. All other NBD stock option grants for 1994 were
restorative options.
(4) The dollar values equal the market value of the Common Stock on the date
the payouts of performance share awards were certified.
(5) The amounts for Messrs. Marks and Vitale represent matching contributions
to the First Chicago 401(k) and supplemental 401(k) plans. The amounts for
Messrs. Istock and Jeffs represent matching contributions to NBD's 401(k)
plan. The amounts for Mr. Paine represent matching contributions to NBD's
401(k) plan in the amount of $3,375 in each year and payments of split-
dollar life insurance premiums of $9,000 in each year with respect to a
policy for the benefit of Mr. Paine.
(6) During 1996, the Corporation reimbursed Mr. Istock for moving expenses in
the amount of $98,642.
15
<PAGE>
OPTION GRANTS TABLE
The following table provides information on stock options granted in 1996 to
the executive officers named in the Summary Compensation Table. In 1996, the
Corporation granted both new and restorative stock options to Messrs. Istock,
Jeffs, Marks, Vitale and Paine. All options granted by the Corporation in 1996
were non-qualified stock options, and no stock appreciation rights ("SARs")
were granted in 1996.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO
OPTIONS/ EMPLOYEES IN EXERCISE OR GRANT DATE PRESENT
SARS GRANTED FISCAL YEAR BASE PRICE EXPIRATION VALUE ($)
NAME (#) (1)(2) (3) ($/SH) DATE (4)
- ----------------------- ------------------ ------------ ---------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Verne
G.
Istock. 100,000 2.18% $40.50 03/08/06 $1,017,300
8,331 0.18 37.69 06/28/00 49,778
10,194 0.22 37.69 06/14/02 69,480
10,050 0.22 37.69 06/19/04 74,120
11,426 0.25 49.44 03/13/98 56,736
14,334 0.31 49.44 06/28/00 121,177
15,549 0.34 49.44 06/14/02 162,748
15,322 0.33 49.44 06/19/04 183,446
Thomas
H.
Jeffs
II.... 36,000 0.79 40.50 03/08/06 366,228
10,548 0.23 49.25 03/13/98 51,418
14,148 0.31 49.25 06/28/00 117,799
16,771 0.37 49.25 06/14/02 172,686
12,817 0.28 49.25 06/19/04 150,973
Scott
P.
Marks,
Jr.... 36,000 0.79 40.50 03/08/06 366,228
6,287 0.14 37.44 01/08/03 43,826
10,777 0.24 37.44 01/14/04 78,149
13,204 0.29 37.44 01/13/05 98,609
David
J.
Vitale. 36,000 0.79 40.50 03/08/06 366,228
11,849 0.26 49.25 01/08/03 136,856
31,151 0.68 49.25 01/14/04 383,441
17,701 0.39 49.25 01/13/05 229,208
Andrew
J.
Paine,
Jr.... 10,500 0.23 40.50 03/08/06 106,817
</TABLE>
- -------
(1) The first line denotes new grants made by the Corporation in 1996; all
other grants by the Corporation in 1996 were restorative options. One
third of each new option grant becomes exercisable on the first, second
and third anniversaries of the grant date, which was March 8, 1996.
(2) Restorative Option Feature: The new stock options granted by the
Corporation in 1996 and the new stock options issued by either First
Chicago pursuant to its Stock Incentive Plan ("SIP") or by NBD pursuant to
its Performance Incentive Plan ("PIP") that were outstanding at the time
of the Merger include a restorative feature which provides for the
issuance of restorative options. The restorative feature allows a
participant who exercises a stock option during the participant's
employment, 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 stock option's exercise price. 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 Common Stock on the date
the restorative option is granted.
Under the restorative feature of stock options issued under First Chicago's
SIP, additional restorative options are granted with respect to shares
exchanged to pay tax withholding obligations related to the option
exercise; the market price of the Common Stock must be at least 25% higher
than the exercise price of the outstanding stock option at the time of
exercise of the new stock option; and a restorative stock option will not
be granted upon the exercise of a restorative stock option.
(3) The percentages shown are based on total options granted by the
Corporation in 1996 (both new and restorative options) on 4,584,857 shares
of Common Stock.
16
<PAGE>
(4) The grant date present values were determined using the Black-Scholes
option pricing model.
The assumptions used in calculating the Black-Scholes present value of
$10.17 per option for new option grants were as follows:
(a) Option Term (time of exercise and vesting): options assumed to commence
on grant date with a ten year term.
(b) Volatility: 19.97%--based on ten years of daily stock prices from March
9, 1986, through March 8, 1996;
(c) Risk-Free Rate of Return: 6.41%--estimated ten year zero coupon
treasury yield; and
(d) Dividend Yield: 3.56%--dividend at the time of grant divided by the
stock price at the time of grant.
The calculations with respect to all restorative options assume: (a) a
restorative option vests six months after the grant date and has a term
equal to the remaining term of the original option; (b) volatility is based
on daily stock prices over a period of years equal to the remaining term of
the grant and ending on the grant date; (c) a risk-free rate of return
equal to the zero coupon treasury yield curve for the remaining term of the
option granted at the grant date; and (d) a dividend yield equal to the
dividend on the grant date divided by the stock price on such date. 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:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
NUMBER OF DATE REMAINING RISK-FREE DIVIDEND
OPTIONS GRANTED GRANTED TERM VOLATILITY RATE OF RETURN YIELD
--------------- -------- --------- ---------- -------------- --------
<S> <C> <C> <C> <C> <C> <C>
Verne G. Istock......... 28,575 1/22/96 6.54 18.82% 5.43% 3.82%
56,631 10/22/96 4.84 17.57 6.29 2.91
Thomas H. Jeffs II...... 54,284 10/25/96 4.78 17.43 6.23 2.92
Scott P. Marks, Jr...... 30,268 1/29/96 8.19 18.61 5.57 3.85
David J. Vitale......... 60,701 10/25/96 7.31 19.30 6.38 2.92
Andrew J. Paine, Jr..... 0 -- -- -- -- --
</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.
1996 OPTION EXERCISES AND YEAR-END OPTION VALUE TABLE
The following table provides information on options exercised in 1996 by the
executive officers named in the Summary Compensation Table, the number of
unexercised options each of them held at December 31, 1996, 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 1996.
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>
Verne
G.
Istock. 108,043 $1,090,474 0 199,631 $ 0 $2,537,721
Thomas
H.
Jeffs
II.... 71,123 829,294 0 127,284 0 1,556,653
Scott
P.
Marks,
Jr.... 40,671 586,090 140,345 81,703 2,981,254 1,792,328
David
J.
Vitale. 86,125 2,237,907 159,039 167,141 3,779,218 2,780,189
Andrew
J.
Paine,
Jr.... 0 0 35,392 24,900 1,174,315 456,519
</TABLE>
- -------
(1) The values are based on the $53.75 per share closing price of the Common
Stock on December 31, 1996, less the exercise price of the options.
17
<PAGE>
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR TABLE
The following table provides information on performance share awards made by
the Corporation in 1996 under the Stock Performance Plan to the executive
officers named in the Summary Compensation Table.
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PERFORMANCE
SHARE PAYOUTS UNDER NON-STOCK
NUMBER OF PERFORMANCE OR PRICE-BASED PLANS
PERFORMANCE OTHER PERIOD UNTIL -------------------------------------
SHARES MATURATION OR THRESHOLD TARGET MAXIMUM
NAME (#) (1)(2) PAYOUT (3) (#) (#) (#)
---------------------- ------------------- --------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Verne
G.
Istock. 33,000 1996-1999 0 33,000 49,999
2,702 1996 0 2,702 4,053
7,900 1996-1997 0 7,900 11,850
13,812 1996-1998 0 13,812 20,718
Thomas
H.
Jeffs
II.... 12,000 1996-1999 0 12,000 18,000
2,530 1996 0 2,530 3,795
6,000 1996-1997 0 6,000 9,000
10,562 1996-1998 0 10,562 15,843
Scott
P.
Marks,
Jr.... 12,000 1996-1999 0 12,000 18,000
7,478 1996 0 7,478 11,217
7,478 1996-1997 0 7,478 11,217
7,478 1996-1998 0 7,478 11,217
David
J.
Vitale. 12,000 1996-1999 0 12,000 18,000
8,546 1996 0 8,546 12,819
8,546 1996-1997 0 8,546 12,819
8,546 1996-1998 0 8,546 12,819
Andrew
J.
Paine,
Jr.... 3,500 1996-1999 0 3,500 5,250
862 1996 0 862 1,293
1,750 1996-1997 0 1,750 2,625
3,250 1996-1998 0 3,250 4,875
</TABLE>
- -------
(1) The first line denotes new grants made by the Corporation in 1996. The
other grants resulted from the February 1996 modification of awards
previously made by either First Chicago or NBD to their executive
officers, as fully described in footnote (3) below.
(2) Each performance share awarded in 1996 consisted of one share of Common
Stock, contingently granted and earned by achievement of certain return-
on-equity goals for the Corporation compared to other peer banking
institutions. During the performance period, the shares are issued and
outstanding and the executive officer has the right to vote the shares and
to receive cash dividends.
(3) New Performance Shares: The new grants of performance shares in 1996
provide for a four-year performance period commencing January 1, 1996. At
the end of such period, the performance shares awarded will be earned 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
for each year averaged for the four years in the performance period.
Converted First Chicago Performance Restricted Shares: In February 1996,
outstanding 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 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 for each year in the new performance period
averaged for the numbers of years in the performance period.
Modified NBD Performance Shares: In February 1996, all outstanding
performance shares previously awarded by NBD 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
18
<PAGE>
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 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
continued to be in effect as described below through December 31, 1996.
First Chicago Pension Plan
In general, salaried employees of designated former First Chicago
subsidiaries were eligible during 1996 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%. For participants who retired after 1988,
there is no reduction in pension benefits for federal Social Security
benefits.
The First Chicago 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. 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 Internal
Revenue 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.
The First Chicago 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 on December 31, 1996.
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 10 15 20 25 30 35
------------ -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$ 200,000.............. $ 40,000 $ 60,000 $ 80,000 $100,000 $120,000 $140,000
400,000.............. 80,000 120,000 160,000 200,000 240,000 280,000
600,000.............. 120,000 180,000 240,000 300,000 360,000 420,000
800,000.............. 160,000 240,000 320,000 400,000 480,000 560,000
</TABLE>
19
<PAGE>
The years of credited service and covered compensation under the Pension
Plan (including the Supplemental Pension Plan) and Executive Retirement Plan
as of December 31, 1996, for the covered executive officers named in the
Summary Compensation Table are as follows:
<TABLE>
<CAPTION>
SCOTT P. DAVID J.
MARKS, JR. VITALE
---------- --------
<S> <C> <C>
Years of Credited Service................................ 12 29
Covered Compensation(1).................................. $472,050 $600,000
</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 Employees' Retirement Plan
In general, during 1996 NBD's Employees' Retirement Plan covered 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. 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.
The Internal Revenue Code limits the annual benefits that can be paid from
any funded retirement plan that qualifies for federal tax exemption. 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 for an employee retiring at age 65 on December 31, 1996, 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.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL RETIREMENT BENEFITS WITH
INDICATED YEARS OF CREDITED SERVICE
COVERED -----------------------------------------------------
COMPENSATION 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
December 31, 1996, for the covered executive officers named in the Summary
Compensation Table are as follows:
<TABLE>
<CAPTION>
VERNE G. ISTOCK THOMAS H. JEFFS II ANDREW J. PAINE, JR.
--------------- ------------------ --------------------
<S> <C> <C> <C>
Years of Credited
Service................ 33 34 36
Covered Compensation(1). $1,117,963 $1,010,841 $538,500
</TABLE>
- -------
(1) These amounts represent the covered compensation under the Employees'
Retirement Plan (including the Pension Restoration/Supplemental Plan).
20
<PAGE>
EMPLOYMENT AND CHANGE OF CONTROL AGREEMENTS
Employment Agreements. Employment agreements are in effect between the
Corporation and certain key executives (including Messrs. Istock, Jeffs,
Marks, Vitale and Paine). 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 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 calendar years prior to the date the
Covered Executive's employment terminates (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 that 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 December 31,
1996, the total of such severance payments and additional service credit
payments to each of Messrs. Istock, Jeffs, Marks, Vitale and Paine would have
been $3,902,872, $3,211,407, $2,934,900, $5,477,415 and $1,735,283,
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.
Istock, Jeffs, Marks, Vitale and Paine). 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 Merger, 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.
TRANSACTIONS WITH DIRECTORS, EXECUTIVE OFFICERS, STOCKHOLDERS AND ASSOCIATES
Directors, director nominees 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 1996. Additional transactions may be expected to take place in
the future. All outstanding loans to directors, director nominees 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. 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.
21
<PAGE>
During 1996, subsidiaries of the Corporation paid approximately $3,469,000
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.
Subsidiaries of Aon Corporation received brokerage commissions and fees in
1996 of approximately $677,000 for obtaining certain insurance for the
Corporation and its subsidiaries. In addition, during 1996, a subsidiary of
Aon Corporation paid approximately $268,000 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 $135,000 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.
During 1996, subsidiaries of the Corporation paid approximately $160,000 to
Group II Communications, Inc. for corporate promotional products and gift
program services. Andrew J. McKenna, a nominee for director of the
Corporation, is a director and shareholder of Group II Communications, Inc.
Also during 1996, subsidiaries of the Corporation paid approximately $196,000
to Schwarz for packaging supplies. Mr. McKenna is the Chairman and Chief
Executive Officer and a shareholder of Schwarz.
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 1997.
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 reports on Form 10-K for the years
ended December 31, 1995 and December 31, 1996.
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 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
November 28, 1997, in order to be included in the proxy statement and form of
proxy relating to that meeting.
22
<PAGE>
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. This year,
stockholders of record can also give proxies by calling a toll-free telephone
number or by using the Internet. The telephone and Internet voting procedures
are designed to authenticate stockholders' identities, to allow stockholders
to give their voting instructions and to confirm that stockholders'
instructions have been recorded properly. The Corporation has been advised by
counsel that the procedures that have been put in place are consistent with
the requirements of applicable law. Specific instructions for stockholders of
record who wish to use the telephone or Internet voting procedures are
included with the enclosed proxy card.
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 at any time prior to the voting at the meeting by submitting a later
dated proxy (including a proxy via telephone or the Internet) or by giving
written notice of such revocation to the Secretary of the Corporation.
By order of the Board of
Directors,
March 28, 1997 Sherman I. Goldberg
Secretary
23
<PAGE>
PROXY
FIRST CHICAGO NBD CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS, MAY 9, 1997
The undersigned hereby appoints John W. Ballantine and Susan S. Moody, 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 9, 1997, 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 and FOR the ratification of the appointment of auditors.
This card also provides voting instructions for any shares held in the
Corporation's dividend reinvestment and stock purchase plan.
Your vote for the election of the Class II Directors may be indicated on
the other side. The nominees are--(1) Bryan, (2) Buschmann, (3) Istock, (4)
Marks, (5) McKenna, (6) Reilly and (7) Simmons.
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]
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>
[X] Please mark your 6777
vote 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 proposal 2.
- --------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR proposal 2.
- --------------------------------------------------------------------------------
FOR WITHHOLD FOR AGAINST ABSTAIN
1. Election of [ ] [ ] 2. Ratification of the [ ] [ ] [ ]
Directors appointment of
(see reverse) Auditors.
Except vote withheld from the following nominee(s):
- ------------------------------------------------
- --------------------------------------------------------------------------------
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]
IMPORTANT: PLEASE VOTE AND SIGN YOUR
PROXY AND RETURN IT IN THE ENVELOPE PROVIDED
FIRST CHICAGO NBD CORPORATION
Annual Meeting of Stockholders
May 9, 1997
9:30 A.M. (Eastern Standard Time)
Auditorium, 5th Floor
NBD Tower
One Indiana Square
Indianapolis, Indiana
First Chicago NBD common stockholders can now vote their shares either over the
telephone or the Internet. This eliminates the need to return the proxy card.
To vote your shares over the telephone or the Internet you must have your proxy
card and SSN available. The series of numbers that appear on the top of your
proxy card must be used to access the system.
1. To vote over the telephone:
On a touch-tone telephone call 1-800-OK2-VOTE (1-800-652-8683)
24 hours a day, 7 days a week.
2. To vote over the Internet:
Log on to the Internet and go to the web site
http://www.vote-by-net.com
Your vote over the telephone or the Internet authorizes the named proxies in the
same manner as if you marked, signed, dated and returned your proxy card.
If you choose to vote your shares over the telephone or the Internet, there is
no need for you to mail back your proxy card.
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT 16
[LETTERHEAD OF DELOITTE & TOUCHE LLP]
March 18, 1997
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 1997 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 LLP
[LOGO OF DELOITTE TOUCHE TOHMATSU INTERNATIONAL]
