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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:
[X] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Norwest Corporation
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(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):
[_] 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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
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[LETTERHEAD OF NORWEST CORPORATION APPEARS HERE]
March 18, 1998
Dear Stockholder:
The annual meeting of stockholders will be held on Tuesday, April 28, 1998,
at 10:00 a.m., Minneapolis time, in the Lutheran Brotherhood Auditorium, 625
Fourth Avenue South, Minneapolis, Minnesota. The Notice of the Meeting and
Proxy Statement appear in the pages that follow.
At the annual meeting, you will be asked to elect directors (Item 1) and to
vote on proposals to amend Norwest Corporation's Restated Certificate of
Incorporation to increase the number of shares of authorized common stock (Item
2), to approve the amended and restated Performance-Based Compensation Policy
(Item 3), to approve an increase in the number of shares that may be awarded
under the Long-Term Incentive Compensation Plan (Item 4), and to ratify the
appointment of auditors for the year 1998 (Item 5). We describe these proposals
in detail in the Proxy Statement.
You will also be asked to vote on a stockholder proposal relating to
cumulative voting. This proposal is presented in the Proxy Statement as Item 6,
along with the reasons the Board of Directors opposes this proposal.
The Board of Directors recommends that you vote FOR the election of the
directors named in the Proxy Statement, FOR Items 2, 3, 4 and 5 and AGAINST
Item 6.
Sincerely,
/S/ Richard M. Kovacevich
RICHARD M. KOVACEVICH
Chairman and Chief Executive Officer
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Please sign and date the enclosed proxy and return it promptly in the enclosed
envelope if you do not expect to be present to vote your stock in person. If
you later decide to vote in person at the meeting, or for any other reason wish
to revoke your proxy, you may revoke it at any time before it is voted.
----------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
Notice of Annual Meeting of Stockholders
Outstanding Shares................................................... 1
Voting............................................................... 2
Item 1. Election of Directors........................................ 3
The Board of Directors and Committees................................ 8
Director Compensation.............................................. 9
Norwest Common Stock Owned by Directors and Executive Officers....... 11
Executive Officers................................................... 13
Executive Compensation (How Norwest Pays Its Executive Officers)..... 15
Report of the Human Resources Committee on Executive Compensation.. 15
Performance Graph.................................................. 20
Compensation Tables and Information................................ 21
Other Information About Directors and Executive Officers............. 26
Item 2. Proposal to Increase Norwest's Authorized Common Stock....... 27
Item 3. Proposal to Approve the Performance-Based Compensation Poli-
cy.................................................................. 29
Item 4. Proposal to Amend the Long-Term Incentive Compensation Plan.. 32
Item 5. Appointment of Auditors...................................... 35
Item 6. Stockholder Proposal Relating to Cumulative Voting........... 36
Deadline for Submitting Stockholder Proposals........................ 37
Annual Reports....................................................... 37
</TABLE>
<PAGE>
NORWEST CORPORATION
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 28, 1998
---------------------
To the Holders of
Common Stock of Norwest Corporation:
The annual meeting of stockholders of Norwest Corporation, a Delaware
corporation ("Norwest"), will be held in the Lutheran Brotherhood Auditorium,
625 Fourth Avenue South, Minneapolis, Minnesota, on Tuesday, April 28, 1998,
at 10:00 a.m., Minneapolis time. The purpose of the meeting is to:
1. Elect directors.
2. Vote on a proposal to amend Norwest's Restated Certificate of
Incorporation to increase the authorized shares of common stock from
1,000,000,000 to 2,000,000,000 shares.
3. Vote on a proposal to approve the amended and restated Performance-Based
Compensation Policy.
4. Vote on a proposal to increase the number of shares of common stock that
may be awarded under the Long-Term Incentive Compensation Plan by
37,000,000.
5. Vote on a proposal to ratify the appointment by the Board of Directors
of KPMG Peat Marwick LLP to audit the books of Norwest and subsidiaries
for the year ending December 31, 1998.
6. Vote on a stockholder proposal asking the Board of Directors to provide
for cumulative voting for directors if a stockholder or group of
stockholders holds 30% or more of Norwest's common stock.
The Board recommends that stockholders vote against the stockholder proposal
listed as Item 6 in this Notice.
Norwest and its stockholders may also transact any other business that may
properly be presented at the annual meeting.
Only holders of common stock at the close of business on March 10, 1998 may
vote at the annual meeting or at any adjournment. A list of stockholders of
record who may vote at the annual meeting or any adjournment will be available
during business hours for any stockholder of Norwest to examine for any
purpose relevant to the meeting. The list will be available for at least ten
days before the meeting at the office of the Secretary of Norwest, Norwest
Center, Sixth and Marquette, Minneapolis, Minnesota 55479-1026.
By Order of the Board of Directors,
/s/ Laurel A. Holschuh
LAUREL A. HOLSCHUH
Secretary
March 18, 1998
<PAGE>
NORWEST CORPORATION
NORWEST CENTER
SIXTH AND MARQUETTE
MINNEAPOLIS, MINNESOTA 55479
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PROXY STATEMENT
---------------------
The Board of Directors of Norwest Corporation ("Norwest") is soliciting
proxies from its stockholders to be used at the annual meeting on Tuesday,
April 28, 1998. This Proxy Statement and the form of proxy are being mailed to
stockholders beginning March 18, 1998.
Shares of common stock may be represented at the annual meeting by
stockholders in person or by proxy. If shares of common stock are represented
by proxy, the shares will be voted as the stockholder instructs in the proxy.
Except as discussed under the heading "VOTING" below, if a stockholder does
not give any voting instructions in the proxy, the shares will be voted: FOR
the election of the directors named in this Proxy Statement (Item 1), FOR the
proposed amendment to Norwest's Restated Certificate of Incorporation to
increase the number of authorized shares of common stock (Item 2), FOR the
amended and restated Performance-Based Compensation Policy (Item 3), FOR the
amendment to the Long-Term Incentive Compensation Plan to increase the number
of shares of common stock that may be awarded under the plan (Item 4), and FOR
the ratification of the appointment of the auditors for 1998 (Item 5), and
AGAINST the stockholder proposal relating to cumulative voting (Item 6). A
stockholder may revoke a proxy at any time before it is voted.
Norwest will solicit proxies generally by mail. Officers or employees of
Norwest or its subsidiaries may also solicit proxies from some stockholders,
either in person, by telephone, or by special letter. Norwest will pay all
costs for soliciting proxies. Norwest also will arrange with brokerage houses
and other custodians, nominees, and fiduciaries to send proxy materials to
their customers and clients, and will reimburse them for their expenses.
Norwest has hired Georgeson & Company Inc., New York, New York, to help
Norwest solicit proxies for a fee of $15,000 plus out-of-pocket expenses.
As far as the Board of Directors and Norwest's management know, stockholders
at the meeting will vote on only the matters described in this Proxy
Statement. However, if any other matters properly come before the meeting, the
persons named in the enclosed proxy will vote stockholders' proxies on these
matters, as they consider appropriate.
OUTSTANDING SHARES
On March 10, 1998, the record date for stockholders who may vote at the
meeting, there were shares of common stock outstanding. Each outstanding
share is entitled to one vote.
The following table lists each person, including any group, known to Norwest
to beneficially own more than 5% of its common stock on December 31, 1997. As
defined by the Securities and Exchange Commission, a person is the beneficial
owner of securities if he or she has or shares voting power or investment
power for such securities or has the right to obtain beneficial ownership
within 60 days.
1
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<TABLE>
<CAPTION>
AT DECEMBER 31, 1997
---------------------------------
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP COMMON STOCK
------------------- -------------------- ------------
<S> <C> <C>
Certain subsidiary banks, including Norwest 69,197,735(1) 9.1%
Bank Minnesota, N.A., of Norwest
Corporation, Norwest Center, Sixth and
Marquette, Minneapolis, Minnesota 55479
</TABLE>
- ---------------------
(1) With respect to 26,109,432 of these shares, these subsidiaries had in
total: sole voting power over 25,472,661 shares, shared voting power over
636,771 shares, and no voting power over the remaining 789,349 shares;
sole investment power over 15,991,188 shares, shared investment power over
3,528,602 shares, and no investment power over the remaining 7,381,991
shares.
The amount shown also includes 42,298,954 shares held in the Master Savings
Trust for participants in Norwest's Savings Investment Plan. Participants
have the right to direct the voting of the shares held in trust based on
the ratio of the value of each participant's account in Norwest stock funds
to the total value of the funds on the record date for the stockholders'
meeting. Shares held in trust on the record date will be voted pro rata by
Norwest Bank Minnesota, N.A., as trustee of the trust, based on the
instructions of all plan participants who give instructions.
The shares listed in this table are held in a fiduciary or representative
capacity. Norwest and the subsidiaries named in the table do not have any
beneficial interest in these shares.
VOTING
VOTE REQUIRED
To Elect Directors. Under Delaware law, directors are elected by a plurality
of the votes of the shares present in person or represented by proxy at the
meeting. Only shares voted for a nominee will be counted. Shares present at
the meeting that are not voted for a nominee or shares present by proxy where
the stockholder has withheld authority to vote for a nominee will not count
toward a nominee's plurality.
To Amend the Restated Certificate of Incorporation and to Approve Other
Matters. Under Delaware law, the proposed amendment to Norwest's Restated
Certificate of Incorporation (the "Restated Certificate") to increase the
number of shares of authorized common stock (Item 2) requires the favorable
vote of a majority of all outstanding shares of common stock. Delaware law
requires the favorable vote of the majority of shares present in person or
represented by proxy at the meeting to approve the amended and restated
Performance-Based Compensation Policy (Item 3), the amendment to the Long-Term
Incentive Compensation Plan (Item 4), and the stockholder proposal relating to
cumulative voting (Item 6).
How the Vote Is Counted. Shares that abstain from voting on a particular
matter are considered present at the meeting for purposes of determining a
quorum, but are treated as having voted against the matter at the meeting.
Shares for which a broker has not received voting instructions from the
beneficial owner on a proposal on which the broker cannot vote in its
discretion under applicable exchange rules (a "broker non-vote"), are not
counted for quorum or voting purposes with respect to any proposal to which
the broker non-vote relates. Broker non-votes have the practical effect of
reducing the number of affirmative votes required to achieve a majority for
such proposal because they reduce the total number of shares from which the
majority vote is calculated. Under New York Stock Exchange rules, a member
broker may not vote in its discretion on the stockholder proposal being
presented at the 1998 annual meeting unless the broker has received
instructions on how to vote on this proposal from the beneficial owners of the
shares represented by the broker's proxy.
CONFIDENTIAL VOTING POLICY
It is Norwest's policy that all stockholder meeting proxies, ballots, and
voting records that identify the particular vote of a stockholder are
confidential. The vote of any stockholder will not be disclosed to any third
2
<PAGE>
party before the final vote count at the annual stockholders' meeting except
(i) to meet legal requirements; (ii) to assert claims for or defend claims
against Norwest; (iii) to allow the inspectors of election to certify the
results of the stockholder vote; (iv) if a proxy solicitation in opposition to
Norwest or the Board of Directors takes place; or (v) to respond to
stockholders who have written comments on proxy cards or if a stockholder has
requested disclosure. Inspectors of election and those who count stockholder
votes may not be employees of Norwest. They may be employees of an affiliated
Norwest bank if they have been instructed to comply with this policy.
ITEM 1. ELECTION OF DIRECTORS
The Board of Directors currently consists of 15 persons. The Board has set
13 directors as the number to be elected at the annual meeting and has
nominated the individuals named below. All nominees have informed Norwest that
they are willing to serve as directors. If any nominee is no longer a
candidate for director at the annual meeting, the persons named in the
enclosed proxy will vote for the rest of the nominees and may vote for a
substitute nominee in their discretion. All nominees are currently directors
of Norwest and have been previously elected by the stockholders. Directors are
elected to hold office until the next annual election and until their
successors are properly elected and qualified. Pierson M. Grieve and Charles
M. Harper are retiring as directors at the 1998 annual meeting. No information
is given in the Proxy Statement about Mr. Grieve and Mr. Harper, except
information about the Norwest common stock each beneficially owns.
Information about the 13 nominees can be found on pages and , and also on
pages , , , and . The number of shares of common stock of Norwest each
nominee beneficially owned on February 28, 1998, is listed on pages through
. All director nominees have served in the capacities shown below for more
than five years unless otherwise stated.
(PICTURE) LESLIE S. BILLER, 50 Director since 1997
President and Chief Operating Officer, and Director Norwest
Corporation Minneapolis, Minnesota
Over the last five years, Mr. Biller served as Executive Vice
President (South Central Community Banking) until January 31,
1997, when he assumed his present position.
Mr. Biller also serves as a director of Ecolab Inc., VISA
USA, VISA International, Jewish Vocational Services in the
Twin Cities, International Data Response Corporation, and the
Minnesota Orchestra; as Chairman of Twin Cities RISE!; and as
a trustee of the Minnesota Mutual Life Insurance Company and
the University of Nevada (Reno) Foundation.
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<PAGE>
(PICTURE) J.A. BLANCHARD III, 55 Director since 1996
Chairman, President and Chief Executive Officer, and Director
Deluxe Corporation (Supplier of Paper and Electronic Payment,
Payment Protection, Direct Marketing and Related Services
to the Financial and Retail Industry) Shoreview, Minnesota
Mr. Blanchard served as Chairman and Chief Executive Officer
of Harbridge Merchant Services, a national credit card
processing company, from April 1991 until May 1993. In
January 1994, he became an Executive Vice President of
General Instrument Corporation, a supplier of systems and
equipment to the cable and satellite television industry, and
served in that capacity until May 1995, when he assumed his
present position.
Mr. Blanchard also serves as a director of Saville Systems,
Inc. and the Minnesota Opera Company; and as a member of the
Business Advisory Council and the Board of Overseers of the
Carlson School of Management at the University of Minnesota.
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(PICTURE) DAVID A. CHRISTENSEN, 62 Director since 1977
President and Chief Executive Officer, and Director
Raven Industries, Inc. (Diversified Manufacturer of Plastics,
Electronics, and Special-Fabric Products) Sioux Falls, South
Dakota
Mr. Christensen also serves as a director of Northern States
Power Company and as Co-Chair of the Development Council of
Forward Sioux Falls.
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(PICTURE) WILLIAM A. HODDER, 66 Director since 1971
Retired Chairman and Chief Executive Officer, and Retired
Director
Donaldson Company, Inc. (Manufacturer of Filtration and
Emission Control Products) Minneapolis, Minnesota
Over the last five years, Mr. Hodder served as Chairman,
President and Chief Executive Officer. Effective August 1,
1994, he became Chairman and Chief Executive Officer until
his retirement on August 5, 1996.
Mr. Hodder also serves as a director of Cowles Media Company,
Musicland Stores Corporation, ReliaStar Financial Corp.,
SUPERVALU INC., and Tennant Company; and as a member of the
Board of Overseers of the Carlson School of Management at the
University of Minnesota and the University of Nebraska
Foundation.
4
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(PICTURE) LLOYD P. JOHNSON, 67 Director since 1985
Retired Chairman and Director Norwest Corporation
Minneapolis, Minnesota
Over the last five years, Mr. Johnson served as Chairman of
the Board and Chief Executive Officer. Effective January 1,
1993, he became Chairman of the Board until his retirement on
May 1, 1995.
Mr. Johnson also serves as a director of Valmont Industries,
Inc.
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(PICTURE) REATHA CLARK KING, 59 Director since 1986
President and Executive Director General Mills Foundation
(Charitable Foundation for General Mills, Inc.) Minneapolis,
Minnesota
Dr. King is also a Vice President of General Mills, Inc. with
responsibility for its citizenship programs. Dr. King also
serves as a director of H.B. Fuller Company and Exxon
Corporation; as a trustee of the Minnesota Mutual Life
Insurance Company and the University of Chicago; and as a
member of the Board of the Council on Foundations, the Board
of the Minnesota Medical Foundation, and the Board of
Managers of the Ministers and Missionaries Benefit Board of
the American Baptist Churches, New York City.
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(PICTURE) RICHARD M. KOVACEVICH, 54 Director since 1986
Chairman and Chief Executive Officer, and Director Norwest
Corporation Minneapolis, Minnesota
Over the last five years, Mr. Kovacevich served as President
and Chief Operating Officer until January 1, 1993, when he
became President and Chief Executive Officer. Effective May
1, 1995, he was also named as Chairman. Mr. Kovacevich served
in the capacity of Chairman, President and Chief Executive
Officer until January 31, 1997, when he assumed his present
position.
Mr. Kovacevich also serves as a director of Dayton Hudson
Corporation, ReliaStar Financial Corp., Northern States Power
Company, and PETsMART, Inc.; as a director and Vice President
of the Bankers Roundtable and the Walker Art Center; as a
director and member of the Executive Committee of the
Minnesota Business Partnership, Inc.; as Vice Chairman of the
Board of The Greater Minneapolis Metropolitan Housing
Corporation, United Way of Minneapolis Area, and the American
Bankers Council.
5
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(PICTURE) RICHARD S. LEVITT, 67 Director since 1982
Chairman of the Board and Director Nellis Corporation
(Private Capital Management) Minneapolis, Minnesota
Mr. Levitt also serves as a director of Meredith Corporation,
the Northwest Area Foundation, the University of Iowa Law
School Foundation, the University of Iowa Foundation, and
Norwest Bank Iowa, N.A., a subsidiary of Norwest.
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(PICTURE) RICHARD D. MCCORMICK, 57 Director since 1983
Chairman, President and Chief Executive Officer, and
Director
U S WEST, Inc. (Communications) Englewood, Colorado
Mr. McCormick also serves as a director of UAL (United
Airlines) Corporation. In addition he is Chairman of the
Board of Trustees of Creighton University and the United
States Council for International Business.
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(PICTURE) CYNTHIA H. MILLIGAN, 51 Director since 1992
President and Chief Executive Officer Cynthia Milligan &
Associates (Consulting Firm to Financial Institutions)
Lincoln, Nebraska
Over the last five years, in addition to her present
position, Ms. Milligan has served as Adjunct Professor of Law
(Banking) at the University of Nebraska College of Law.
Ms. Milligan also serves as a director of Gallup Inc.; as
Vice Chairman and director of Bryan Memorial Hospital
Foundation; as President and director of Samaritan Counseling
Center Foundation; as a member of the Board of Trustees,
College of Business Administration, University of Nebraska;
as a Commissioner for the Commission on Institutions of
Higher Education of the North Central Association of Colleges
and Schools; and as a trustee of the Nebraska Council on
Economic Education.
6
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(PICTURE) BENJAMIN F. MONTOYA, 62 Director since 1996
President and Chief Executive Officer, and Director Public
Service Company of New Mexico (Public Utilities) Albuquerque,
New Mexico
Over the last five years, Mr. Montoya served as Senior Vice
President and General Manager of Pacific Gas & Electric
Company until August 1, 1993, when he assumed his present
position. In December 1989, Mr. Montoya completed a 31-year
career with the United States Navy, retiring as Chief of the
Civil Engineer Corps with the rank of Rear Admiral. He was
appointed by the President of the United States to the 1995
Military Base Closure Commission and to the U.S. Naval
Academy Board of Visitors. He has been recently appointed to
the Board of the National Park Foundation by the Secretary of
the Interior.
Mr. Montoya also serves as a member of the Board of the
Albuquerque Community Foundation, the Governor's Business
Executives for Education, the University of New Mexico School
of Engineering, and the New Mexico State University Business
(Advisory Councils).
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(PICTURE) IAN M. ROLLAND, 64 Director since 1993
Chairman and Chief Executive Officer, and Director
Lincoln National Corporation (Insurance) Fort Wayne, Indiana
Over the last five years, Mr. Rolland served as Chairman and
Chief Executive Officer of Lincoln National Corporation and
Lincoln National Life Insurance Company until May 17, 1994,
when he assumed his present position.
Mr. Rolland also serves as a director of Tokheim Corporation
and NIPSCO Industries, Inc.
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(PICTURE) MICHAEL W. WRIGHT, 59 Director since 1991
Chairman, President and Chief Executive Officer, and
Director
SUPERVALU INC. (Food Distribution and Retailing) Minneapolis,
Minnesota
Mr. Wright also serves as a director of Cargill,
Incorporated, Musicland Stores Corporation, and Honeywell,
Inc.; as Chairman of the Board of the Food Marketing
Institute; as a member of the Board of the Food Distributors
International, the International Grocers Association, and The
Food Business Forum; as a member of the Executive Committee
of the Minnesota Business Partnership, Inc.; and a member of
the Board of Overseers of the Carlson School of Management at
the University of Minnesota; and as a trustee of St. Thomas
Academy.
7
<PAGE>
THE BOARD OF DIRECTORS AND COMMITTEES
MEETINGS
Norwest's Board of Directors held six regular meetings during 1997. The
Board has established committees, including committees with audit,
compensation, and nominating responsibilities, that also met during 1997.
Director attendance at these meetings averaged 95% during 1997. Each director
attended 75% or more of the total number of Board and committee meetings on
which he or she served.
COMMITTEES
AUDIT AND EXAMINATION COMMITTEE
Members: Richard S. Levitt (Chair) Cynthia H. Milligan
David A. Christensen Benjamin F. Montoya
Reatha Clark King
Purpose: Recommends to the Board of Directors the indepen-
dent auditors to audit Norwest's books and records.
Reviews (1) the scope and results of the audit en-
gagement with the independent auditors, (2) the
scope, frequency, and results of internal audits
and examinations, (3) the adequacy of Norwest's
system of internal accounting controls, (4) bonding
and insurance coverage, and (5) examination reports
of Norwest.
Number of Meetings in 1997: Three
BOARD AFFAIRS COMMITTEE
Members: William A. Hodder (Chair) Pierson M. Grieve
David A. Christensen Richard S. Levitt
Purpose: Provides advice and assistance relating to corpo-
rate governance, the organization and function of
the Board and its committees, selection of members
for the Board and appointments to its committees,
and director compensation.
Reviews and makes recommendations on matters relat-
ing to the effectiveness of the Board, including
the Board schedule, its agenda, and information
provided to the Board.
The Committee Chair also determines the agenda for,
and presides at executive sessions of the Board at
which management directors are not present, and co-
ordinates the Chief Executive Officer evaluation
process for the Board.
As part of its nominating responsibilities, the
Board Affairs Committee will consider qualified
nominees recommended by a stockholder of Norwest if
the recommendation is made in writing to the Secre-
tary of Norwest no later than the December 31 be-
fore the annual meeting. Any recommendation must
include sufficient information to enable the Com-
mittee to evaluate the qualifications of the pro-
posed nominee.
Number of Meetings in 1997: Two
8
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CREDIT COMMITTEE
Members: David A. Christensen (Chair) Reatha Clark King
J.A. Blanchard III Richard S. Levitt
Lloyd P. Johnson Michael W. Wright
Purpose: Reviews credit policies and examination reports,
trends in domestic and international loans
outstanding, and the adequacy of the allowance for
credit losses.
Number of Meetings in 1997: Three
FINANCE COMMITTEE
Members: Richard D. McCormick (Chair) Cynthia H. Milligan
J.A. Blanchard III Benjamin F. Montoya
Charles M. Harper Ian M. Rolland
Lloyd P. Johnson
Purpose: Reviews and makes recommendations to the Board
regarding Norwest's annual and long-term financial
plans, including proposed debt and equity issues
and dividends.
Reviews policies regarding capital structure and
investment portfolio composition.
Number of Meetings in 1997: Three
HUMAN RESOURCES COMMITTEE
Members: Michael W. Wright (Chair) William A. Hodder
Pierson M. Grieve Richard D. McCormick
Charles M. Harper Ian M. Rolland
Purpose: Approves compensation arrangements for senior
management.
Recommends adoption of benefit and compensation
plans to the Board and approves awards under these
plans.
Number of Meetings in 1997: Three
DIRECTOR COMPENSATION
Annual Compensation. Norwest has a policy that 50% of the annual retainer
for non-employee directors be paid in common stock. Norwest also has set
common stock ownership targets for directors. These targets require directors
to own common stock having a value equal to five times the annual cash
retainer. Directors have five years to meet their ownership targets. In 1997,
Norwest paid each non-employee director a cash retainer of $24,000 plus $1,000
for each Board or committee meeting attended. The Chairs of the Audit and
Examination, Board Affairs, Credit, Finance, and Human Resources Committees
were paid an additional fee of $5,000. Beginning January 1, 1998, the annual
cash retainer for directors was set at $30,000 plus $1,500 for each Board or
committee meeting attended. On February 1, 1998, as payment for services in
1997, Norwest awarded each non-employee director 824 shares of Norwest's
common stock. Each share award had a total fair market value based on the
$30,000 annual cash retainer in effect on January 1, 1998 and was made under
the Directors' Formula Stock Award Plan described below under "Directors'
Formula Plan."
9
<PAGE>
Directors may defer all or part of their compensation under the terms of the
Directors' Stock Deferral Plan and the Deferred Compensation Plan for Non-
Employee Directors (the "Directors' Deferred Compensation Plan"). The plans
are described below under "Directors' Deferral Plans."
Directors' Formula Plan. The Directors' Formula Plan pays non-employee
directors for their services in shares of Norwest's common stock.
Under this plan, a non-employee director who serves during a year, and who
is a director of Norwest on December 31 of that year (an "Eligible Non-
Employee Director"), will receive on February 1 of the following year (the
"Award Date"), as payment for services in the prior year, an award of shares
of common stock of Norwest (the "Award"). The Award will be that number of
whole shares of common stock having a total fair market value on the Award
Date equal to the amount of the annual cash retainer in effect on the January
1 immediately before the Award Date.
The Directors' Formula Plan allows each Eligible Non-Employee Director to
defer all or a portion of his or her Award in the form of shares of common
stock. Each year, participants in the Directors' Formula Plan may elect the
percentage of the Award to be deferred, the year in which the deferred amount
will be paid, and a lump sum or installment payment option. The number of
deferred shares is credited to a Deferred Stock Account for each participating
director. When dividends are paid on Norwest's common stock, the director's
Deferred Stock Account is credited with additional shares computed using the
average of the high and low market prices of a share of common stock on the
dividend payment date. Directors Blanchard, King, Levitt, McCormick, and
Wright deferred all the shares they were awarded for 1997 using these
provisions.
Directors' Deferral Plans. Under the Directors' Stock Deferral Plan and
Directors' Deferred Compensation Plan, a participating director can defer all
or part of the annual retainer and meeting fees that are paid in cash. This
deferral may be in shares of Norwest's common stock under the Directors' Stock
Deferral Plan or in cash under the Directors' Deferred Compensation Plan.
Directors who participate in the Directors' Stock Deferral Plan each year
decide the percentage of cash fees they want to defer in shares, the year in
which the deferred amount will be paid, and the form of distribution. Deferred
amounts are credited to a "Deferred Stock Account" for each director
participating in the plan. A participating director may elect distribution of
his or her Deferred Stock Account in a lump sum either in cash, whole shares
of Norwest's common stock, or a combination of both. Alternatively, the
director may elect to receive the distribution in up to ten annual cash
installments. If the director elects annual cash installments, the unpaid
portion of these installments earns interest monthly at an annual interest
rate based on the secondary market yield on 3-month U.S. Treasury bills.
Deferred compensation and its earnings are included in the taxable income of a
participant, and will be deducted by Norwest when distributed.
Under the Directors' Deferred Compensation Plan, directors may defer, in
cash, all or part of their retainer and meeting fees. Deferred amounts are
credited to an unfunded account for the director (a "Deferred Cash Account").
Deferred Cash Accounts earn interest monthly at an annual interest rate based
on the secondary market yield of 3-month U.S. Treasury bills. Until January 1,
1993, the Directors' Deferred Compensation Plan also permitted participating
directors to defer cash amounts in the form of shares of Norwest's common
stock to a phantom stock account established for the participant (a "Phantom
Stock Account"). Although directors may not make any more deferrals to Phantom
Stock Accounts, the value of the Phantom Stock Accounts continues to be
adjusted to reflect credits in the form of additional phantom shares when
dividends are paid on Norwest's common stock. All distributions from either a
director's Deferred Cash Account or Phantom Stock Account will be made in
cash. The director may receive deferred cash in a lump sum or in up to ten
annual installments after his or her service as a director ends. Any
distributions from a Phantom Stock Account will be based upon the value of
Norwest's common stock at the time of distribution.
Directors' Retirement Plan. All non-employee directors of Norwest with five
or more years of service on the Board of Directors of Norwest or of any of its
subsidiaries participate in the Directors' Retirement Plan.
10
<PAGE>
Under this plan, a non-employee director who retires or otherwise ceases to
serve as a director will receive a retirement benefit equal to the annual cash
retainer in effect on the director's last day of service on the Board times
the number of full years up to ten that the director served as a non-employee
director. The retirement benefit is payable in annual installments equal to
the number of full years that the participant served as a non-employee
director of Norwest, or such greater number as the participant elects, up to a
maximum of ten years in either case. A participating director may defer
retirement benefits and, if deferred, these benefits will earn interest
monthly at an interest rate based on the secondary market yield on 3-month
U.S. Treasury bills. A participant may forfeit benefits under the plan if he
or she serves as a management official of another depository organization
after retirement. The non-employee director participants in the plan, and the
number of years of service credited as of January 1, 1998 to each
participant's account for purposes of determining the retirement benefit
payable were: Directors Christensen, Hodder, Levitt, McCormick, and King, 10
years; Director Wright, 6 years; and Director Milligan, 5 years.
Directors' Fees Paid by Bank Subsidiaries to Certain Directors. Directors of
Norwest also served as directors or community (advisory) directors of Norwest
bank subsidiaries as follows: David A. Christensen received $11,000 for
serving as a director of Norwest Bank South Dakota, N.A.; Richard S. Levitt
received $18,400 for serving as a director of Norwest Bank Iowa, N.A.; Cynthia
H. Milligan received $14,050 for serving as a director of Norwest Bank
Nebraska, N.A.; Benjamin F. Montoya received $1,500 for serving as a community
director of Norwest Bank New Mexico, N.A.; and Ian M. Rolland received $9,650
for serving as a director of Norwest Bank Indiana, N.A. Each bank subsidiary
sets the amount of the compensation to be paid to its directors and community
directors.
NORWEST COMMON STOCK
OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
The table below shows the shares of common stock beneficially owned and
common stock share equivalents held on February 28, 1998, by current
directors, executive officers named in the Summary Compensation Table on page
of this Proxy Statement, and all directors and executive officers as a
group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF OWNERSHIP(1)
-----------------------------------------------
SHARES OF COMMON STOCK SHARE
NAME COMMON STOCK(2) EQUIVALENTS(3)(4) TOTAL
- ---- --------------- ------------------ ----------
<S> <C> <C> <C>
Les Biller.................. 1,191,505(5) 176,541 1,368,046
J.A. Blanchard III.......... 2,068 2,964 5,032
David A. Christensen........ 20,222 54,386 74,608
Pierson M. Grieve........... 45,492 47,110 92,602
Charles M. Harper........... 9,212 30,965 40,177
William A. Hodder........... 20,622 49,431 70,053
Lloyd P. Johnson............ 1,759,310(6) -- 1,759,310
Reatha Clark King........... 17,144 628 17,772
Richard M. Kovacevich....... 2,605,034(7) 92,706 2,697,740
Richard S. Levitt........... 81,438 35,483 116,921
Richard D. McCormick........ 11,491 11,814 23,305
Cynthia H. Milligan......... 3,945 3,401 7,346
Benjamin F. Montoya......... 294 4,401 4,695
Kenneth R. Murray........... 1,244,214(8) 121,237 1,365,451
Ian M. Rolland.............. 12,474 9,709 22,183
Daniel A. Saklad............ 1,084,443(9) 33,293 1,117,736
John T. Thornton............ 853,706(10) 66,495 920,201
Michael W. Wright........... 6,496 20,524 27,020
All directors and executive
officers as a group
(30 individuals)........... 13,305,135 947,899 14,253,034(11)
</TABLE>
11
<PAGE>
- ---------------------
(1) Each individual owns less than 1% of Norwest's outstanding shares of
common stock. All directors and executive officers as a group own %.
Except as may otherwise be stated in the footnotes below, each director
and executive officer has sole voting power for all shares of common
stock shown opposite his or her name in the above table.
(2) Amounts include shares of common stock allocated to the accounts of
executive officers, a director who was a former executive officer, and
all directors and executive officers as a group who participate in
Norwest's Savings Investment Plan. Under the plan, a participant can
direct the voting of the shares held in trust based on the ratio of the
value of the participant's account in Norwest stock funds to the total
value of such funds on the record date for the stockholders' meeting.
Shares held in trust on the record date are voted by the trustee of the
trust pro rata based on the instructions of participants.
(3) Amounts include common stock share equivalents credited as of December
31, 1997 to the accounts of executive officers, a director who is a
former executive officer, and all directors and executive officers as a
group under Norwest's Supplemental Savings Investment Plan, Executive
Incentive Compensation Plan, Employees' Stock Deferral Plan, Employees'
Deferred Compensation Plan, Elective Deferred Compensation Plan for
Mortgage Banking Executives, Norwest Mortgage Banking Incentive
Compensation and Deferral Plan, and Performance Deferral Award Plan for
Mortgage Banking Executives. Norwest has deposited shares in trust to
satisfy part of its obligations under these plans.
(4) Amounts include common stock share equivalents credited as of February
28, 1998 to Deferred Stock Accounts for non-employee directors under the
Directors' Stock Deferral Plan and the Directors' Formula Stock Award
Plan and to Phantom Stock Accounts under the Deferred Compensation Plan
for Non-Employee Directors.
(5) Mr. Biller is a director and one of the executive officers listed in the
Summary Compensation Table on page of this Proxy Statement. In addition
to the shares allocated to his account under the plan described in
footnote (2) above, the amount shown includes 134,682 shares held by his
spouse, 723,264 shares which he has the right to acquire through the
exercise of stock options currently or within 60 days after February 28,
1998, 32,000 shares of restricted stock, and 7,564 shares subject to
restrictions on transfer of ownership.
(6) The amount shown includes 305,332 shares held in a trust of which Mr.
Johnson is a beneficiary, 760,572 shares which he has the right to
acquire through the exercise of stock options currently or within 60 days
after February 28, 1998, and 210,904 shares held in a revocable trust for
which he is settlor and trustee.
(7) Mr. Kovacevich is one of the executive officers listed in the Summary
Compensation Table on page of this Proxy Statement. In addition to the
shares allocated to Mr. Kovacevich's account under the plan described in
footnote (2) above, the amount shown includes 11,058 shares held by Mr.
Kovacevich's spouse, 26,300 shares held in revocable trusts for his
daughters and son for which he is co-trustee, 1,442,368 shares which he
has the right to acquire through the exercise of stock options currently
or within 60 days after February 28, 1998, 129,980 shares of restricted
stock, and 12,456 shares subject to restrictions on transfer of
ownership.
(8) Mr. Murray is one of the executive officers listed in the Summary
Compensation Table on page of this Proxy Statement. In addition to the
shares allocated to Mr. Murray's account under the plan described in
footnote (2) above, the amount shown includes 740 shares held by Mr.
Murray's spouse, 324 shares held in an IRA by his brother over which Mr.
Murray has power of attorney and in which he has an indirect beneficial
interest, 118,380 shares held in a trust of which Mr. Murray is a
beneficiary, 598,650 shares which he has the right to acquire through the
exercise of stock options currently or within 60 days after February 28,
1998, 12,000 shares of restricted stock, 7,564 shares subject to
restrictions on transfer of ownership, and 83,802 shares held in a
revocable trust for which he is settlor.
(9) Mr. Saklad is one of the executive officers listed in the Summary
Compensation Table on page of this Proxy Statement. In addition to the
shares allocated to his account under the plan described in footnote (2)
above, the amount shown includes 38,674 shares held in a trust of which
Mr. Saklad is a beneficiary,
12
<PAGE>
631,848 shares which he has the right to acquire through the exercise of
stock options currently or within 60 days after February 28, 1998, 12,000
shares of restricted stock, 7,564 shares subject to restrictions on
transfer of ownership, and 370,543 shares held in a revocable trust for
which he is settlor and trustee.
(10) Mr. Thornton is one of the executive officers listed in the Summary
Compensation Table on page of this Proxy Statement. In addition to the
shares allocated to his account under the plan described in footnote (2)
above, the amount shown includes 38,900 shares held by Mr. Thornton's
spouse, 1,960 shares held by his daughter in which he may be deemed to
have a beneficial interest, 526,938 shares which Mr. Thornton has the
right to acquire through the exercise of stock options currently or
within 60 days after February 28, 1998, and 20,800 shares of restricted
stock.
(11) In addition to the shares of common stock and common stock share
equivalents held in the aggregate by the directors and executive officers
named in the above table, the amount shown in the table under the heading
"Shares of Common Stock" includes 1,091,066 shares of common stock held
by 12 executive officers (including spouses and children of executive
officers); 75,440 shares of restricted stock held by five executive
officers; 7,564 shares subject to restrictions on transfer of ownership
held by an executive officer; 105,448 shares held in a trust of which an
executive officer is a beneficiary; 2,867,502 shares subject to stock
options exercisable currently or within 60 days after February 28, 1998
held by 12 executive officers and the spouse of an executive officer who
is an employee of a subsidiary of Norwest; and 189,005 shares allocable
as of December 31, 1997 under the Savings Investment Plan to the accounts
of 12 executive officers and the spouse of an executive officer who is an
employee of a subsidiary of Norwest. The amount shown in the table under
the heading "Common Stock Share Equivalents" includes the following share
equivalents credited as of December 31, 1997: 106,365 share equivalents
credited to the accounts of 12 executive officers and the spouse of an
executive officer who is an employee of a subsidiary of Norwest under the
Supplemental Savings Investment Plan; 1,107 share equivalents credited to
the account of an executive officer under the Executive Incentive
Compensation Plan; 4,933 share equivalents credited to the account of an
executive officer under the Employees' Stock Deferral Plan; 28,594 share
equivalents credited to the accounts of three executive officers under
the Employees' Deferred Compensation Plan; 12,662 share equivalents
credited to the account of an executive officer under the Elective
Deferred Compensation Plan for Mortgage Banking Executives; 15,625 share
equivalents credited to the account of an executive officer under the
Norwest Mortgage Banking Incentive Compensation and Deferral Plan; and
17,525 share equivalents credited to the account of an executive officer
under the Performance Deferral Award Plan for Mortgage Banking
Executives.
EXECUTIVE OFFICERS
The names of current executive officers of Norwest, as well as their ages,
positions with Norwest, and a brief description of their business experience
during the past five years, is presented below. Executive officers are elected
annually by the Board of Directors.
Richard M. Kovacevich, 54, Chairman and Chief Executive Officer, and a
director. Mr. Kovacevich has been with Norwest for 12 years. More information
about Mr. Kovacevich appears on page .
Les Biller, 50, President and Chief Operating Officer, and a director. Mr.
Biller has been with Norwest for ten years. More information about Mr. Biller
appears on page.
James R. Campbell, 55, Executive Vice President (North Central Banking). Mr.
Campbell was Executive Vice President (Corporate Banking) until February 23,
1993, when he became Executive Vice President (Twin Cities Banking). On
January 23, 1996, he became Executive Vice President (Commercial Banking
Services Specialized Lending and Nebraska) until August 19, 1997, when he
assumed his current position. Mr. Campbell is also Chairman, President and
Chief Executive Officer of Norwest Bank Minnesota, N.A. He has been with
Norwest for 33 years.
13
<PAGE>
C. Webb Edwards, 50, Executive Vice President and Chief Technology Officer.
Mr. Edwards was Executive Vice President and General Manager of Information
Services for First Interstate Bancorp, a bank holding company with its
principal offices in Los Angeles, California, from January 1990 until May 2,
1995, when he assumed his current position.
Thomas E. Emerson, 47, Executive Vice President, Chief Auditor, and Chief
Examiner. Mr. Emerson was Vice President and Audit Director of Norwest Audit
Services, Inc. until April 26, 1994, when he was elected Senior Vice
President, Chief Auditor, and Chief Examiner. On January 23, 1996, he assumed
his current position. He has been with Norwest for 11 years.
John E. Ganoe, 53, Executive Vice President (Corporate Development). Mr.
Ganoe served as Senior Vice President (Strategic Planning and Acquisitions)
until January 23, 1996, when he assumed his current position. He has been with
Norwest for 15 years.
Michael A. Graf, 59, Senior Vice President and Controller. Mr. Graf has held
his current position since February 1988. He has been with Norwest for ten
years.
Cynthia J. Gray, 51, Senior Vice President (Marketing). Ms. Gray served as
Vice President (Marketing) from February 24, 1992 until December 4, 1995, when
she was appointed Senior Vice President. Ms. Gray was named to the management
committee and designated an executive officer of Norwest on February 24, 1997.
She has been with Norwest for six years.
Stephen W. Hansen, 56, Executive Vice President (Human Resources). Mr.
Hansen served as Senior Vice President (Human Resources) until January 23,
1996, when he assumed his current position. He has been with Norwest for ten
years.
Laurel A. Holschuh, 47, Senior Vice President, Assistant General Counsel,
and Secretary. Ms. Holschuh served as Vice President, Assistant General
Counsel, and Secretary until April 27, 1993, when she assumed her current
position. She has been with Norwest for 18 years.
Kenneth R. Murray, 59, Executive Vice President (Southwestern Banking) and
Head of Credit Policy. Mr. Murray served as Executive Vice President
(Southwestern Community Banking) until August 19, 1997, when he assumed his
current position. He has been with Norwest for 15 years.
Mark C. Oman, 43, Executive Vice President (Diversified Financial Group).
Mr. Oman served as President and Chief Executive Officer of Norwest Mortgage,
Inc. from August 1989 until February 11, 1997, when he assumed his current
position. Mr. Oman also serves as Chairman and Chief Executive Officer of
Norwest Mortgage. He has been with Norwest for 19 years.
Daniel A. Saklad, 55, Executive Vice President (Western Banking). Mr. Saklad
served as Executive Vice President (North Central Community Banking) until
August 19, 1997, when he assumed his current position. He has been with
Norwest for ten years.
Stanley S. Stroup, 54, Executive Vice President and General Counsel. Mr.
Stroup served as Senior Vice President and General Counsel until February 23,
1993, when he assumed his current position. He has been with Norwest for 14
years.
John T. Thornton, 60, Executive Vice President and Chief Financial Officer.
Mr. Thornton has held his current position since October 1987. He has been
with Norwest for 14 years.
Charles D. White, 53, Senior Vice President and Treasurer. Mr. White served
as Senior Vice President of Norwest Bank Minnesota, N.A., and Banking Group
Treasurer until July 27, 1993, when he assumed his current position. He has
been with Norwest for 16 years.
14
<PAGE>
EXECUTIVE COMPENSATION
(HOW NORWEST PAYS ITS EXECUTIVE OFFICERS)
REPORT OF THE HUMAN RESOURCES COMMITTEE ON EXECUTIVE COMPENSATION
Each year, the Board's Human Resources Committee (the "Committee") decides
what compensation (including awards under compensation plans) will be paid to
Norwest's Chief Executive Officer and other executive officers, including the
executive officers named in the Summary Compensation Table (page ). This
report discusses the Committee's objectives and the procedures used to
determine 1997 compensation for the Chief Executive Officer and the four other
executive officers listed in the Summary Compensation Table.
OBJECTIVES
The Committee's compensation policies have two goals: first, to help Norwest
compete with the largest banking institutions and other large corporations in
the United States in attracting and retaining highly-qualified individuals as
executive officers, and second, to pay executive officers based on their
contributions to Norwest's performance. In 1994, the Committee adopted its
"Performance-Based Compensation Policy for Covered Executive Officers" (the
"Performance-Based Compensation Policy" or the "Policy") in response to
Section 162(m) of the Internal Revenue Code. This law places limits on tax
deductions for annual compensation expense in excess of $1,000,000 to certain
highly-paid executive officers. These deduction limits do not apply if the
amount of the executive officer's compensation is subject to a maximum and
requires achievement of pre-established business performance goals.
Stockholders must approve both the maximum compensation amount and the
business criteria on which the performance goals are based. The Performance-
Based Compensation Policy, which contains these business criteria and the
maximum compensation amount, was approved by stockholders at the 1994 annual
meeting. Stockholders are being asked to vote at the 1998 annual meeting on an
amended and restated Performance-Based Compensation Policy (Item 3) discussed
on pages through .
The Committee based 1997 annual incentive compensation for the executive
officers named in the Summary Compensation Table, including the Chief
Executive Officer, on each executive officer's achieving one or more pre-
established performance goals, subject to the maximum compensation amount in
the Policy. The Policy and the procedures used by the Committee to make
incentive compensation awards are discussed in greater detail in this report
under the heading "Executive Officer Compensation--Annual Compensation."
EXECUTIVE OFFICER COMPENSATION
Compensation for the executive officers named in the Summary Compensation
Table has two components: annual compensation (base salary and an incentive
compensation award under the Policy) and long-term compensation. As described
in more detail below, the Committee sets base salary ranges for executive
officers using available compensation data for the prior fiscal year from a
comparison group of banking organizations. The Committee also decides annual
incentive compensation (which can be paid in cash or in shares of stock,
including restricted stock) for the executive officers named in the Summary
Compensation Table under the Policy and long-term compensation in the form of
stock options under Norwest's Long-Term Incentive Compensation Plan (the
"LTICP"). The following discussion applies generally to the 1997 annual
salary, incentive compensation, and long-term compensation for Mr. Kovacevich
as Chief Executive Officer of Norwest. A more complete description of Mr.
Kovacevich's 1997 compensation based on Norwest's 1997 performance can be
found under the heading "Chief Executive Officer" below.
Annual Compensation. To establish base salaries and determine final annual
incentive compensation awards under the Performance-Based Compensation Policy,
the Committee considered available competitive compensation data from a
comparison group (the "Comparison Group"). The Comparison Group is selected
15
<PAGE>
from banking organizations included in the "Peer Group Index" used in the
performance graph that appears in the Proxy Statement for the 1997 annual
meeting of stockholders./1/
Mr. Kovacevich, as Norwest's Chief Executive Officer, recommends the
individual base salaries for all other executive officers. The Committee
approves these base salaries and sets Mr. Kovacevich's base salary. Salaries
are reviewed each year and adjusted periodically, typically at intervals of 12
months or more. The Committee adjusts salaries after considering the
relationship of the executive officer's current salary to the base salary
range for the position and after its subjective evaluation of the executive
officer's overall performance. Base salaries paid in 1997 to executive
officers named in the Summary Compensation Table were near the median of
estimated base salaries paid by the Comparison Group banks.
The Performance-Based Compensation Policy governs annual incentive
compensation for a "covered executive officer." The Policy defines a "covered
executive officer" as an individual who, on the last day of a taxable year, is
the Chief Executive Officer of Norwest or is acting in such capacity or is
among the four highest paid executive officers (other than the Chief Executive
Officer) of Norwest determined based on the executive compensation disclosure
rules of the Securities Exchange Act of 1934. Each person named in the Summary
Compensation Table is a covered executive officer under the Policy.
Under the Performance-Based Compensation Policy, payment of an incentive
compensation award to a covered executive officer depends upon his achieving
one or more performance goals. The Committee establishes these goals in
writing at the beginning of each "Performance Period." The Committee has the
discretion under the Policy to reduce the incentive compensation award to a
covered executive officer from the maximum award permitted by the Policy, even
though the officer may have met the performance goals. In exercising this
discretion, the Committee reviews available competitive market data from the
prior fiscal year and reasonable estimates of incentive compensation to be
paid by the Comparison Group banking organizations to their executive officers
for the most recently completed fiscal year. To set the Chief Executive
Officer's incentive compensation award, the Committee also considers the
quality of Norwest's earnings based on the factors discussed below under the
heading "Chief Executive Officer." For covered executive officers other than
the Chief Executive Officer, the Committee also reviews the Chief Executive
Officer's recommendations.
- ---------------------
/1/ The Comparison Group, for purposes of 1997 compensation, consisted of the
following 31 banking organizations: BancOne Corporation, BankAmerica
Corporation, BankBoston Corporation, Bank of New York, Chase Manhattan
Corporation, Citicorp, Comerica, Inc., CoreStates Financial Corporation,
Crestar Financial Corporation, Fifth Third Bancorp, First Chicago-NBD
Corporation, First of America, First Union Corporation, Fleet Financial
Group, Inc., Huntington Bancshares, KeyCorp, Mellon Bank Corporation,
National City Corporation, NationsBank, Northern Trust Corporation, Norwest
Corporation, PNC Bank Corporation, Republic New York Corporation, State
Street Boston Corporation, Southern National Corporation, SouthTrust
Corporation, Summit Bancorp, SunTrust Banks, Inc., U.S. Bancorp, Wachovia
Corporation, and Wells Fargo & Co. The "Peer Group Index," for purposes of
the performance graph included in Norwest's annual proxy statement, is
defined as the 35 largest publicly-traded banking organizations (ranked
based on their total assets on December 31 of the immediately preceding
fiscal year). Information on total assets is obtained from year-end
financial results published by these organizations. (See page for a listing
of the banking organizations constituting the 1998 Peer Group Index for
purposes of the performance graph.) Although most of the banks in the
Comparison Group are also included in the 1998 Peer Group Index, the two
groups are not identical. The differences reflect, in part, changes in the
composition of the Peer Group Index due to mergers occurring or announced in
1997, including the mergers of Barnett Bank with NationsBank and U.S.
Bancorp with First Bank System under the name "U.S. Bancorp," and the fact
that 1997 salary and incentive compensation decisions are made before the
1998 Peer Group Index can be determined. They also reflect the Committee's
decision in 1994 to eliminate J.P. Morgan & Co. and Bankers Trust
Corporation of New York from the Comparison Group for future incentive
compensation purposes, because the business mix of such banks is not, in the
Committee's judgment, comparable to the businesses of Norwest.
16
<PAGE>
For the Performance Period commencing January 1 and ending December 31,
1997, the Committee established alternative performance goals for each covered
executive officer, including Mr. Kovacevich as Chief Executive Officer, based
on Norwest's "Earnings Per Share" and "Return on Common Equity." For each
covered executive officer other than Mr. Kovacevich, the Committee also
established an additional performance goal based on the "Business Unit Net
Earnings" of the business unit managed by the covered executive officer. The
business criteria on which the performance goals were based are defined in the
Policy.
As stated in the Performance-Based Compensation Policy, the maximum amount
of an incentive compensation award payable for any Performance Period to any
covered executive officer who has met one or more of his or her pre-
established performance goals may not be greater than four-tenths of one
percent (0.4%) of Norwest's Net Income/2/ for the Performance Period. Based on
Norwest's 1997 Net Income of $1.351 billion, the maximum incentive
compensation award payable under the Policy would have been $5,404,000 (0.4%
of $1.351 billion). The Committee is proposing to amend the Policy to increase
the maximum incentive compensation award to not more than eight-tenths of one
percent (0.8%) of Norwest's Net Income. (See Item 3 in this Proxy Statement
for a discussion of this amendment.)
For the 1997 Performance Period, each covered executive officer, including
Mr. Kovacevich, met his performance goals. Based on the Committee's
certification that each performance goal established by the Committee was met,
its review of projected 1997 executive officer incentive compensation data
from the Comparison Group, and recommendations of the Chief Executive Officer,
the Committee awarded to each executive officer named in the Summary
Compensation Table an incentive award under the Performance-Based Compensation
Policy. Each incentive award consists of cash in the amount shown for 1997 in
column (d) and for Mr. Kovacevich and John T. Thornton, shares of restricted
stock having the market value shown for 1997 in column (f) of the Summary
Compensation Table. No covered executive officer, including the Chief
Executive Officer, received the maximum incentive compensation award under the
Policy.
Long-Term Compensation. Long-term compensation is provided in the form of
stock options granted under the LTICP. The purpose of long-term compensation
is to increase management ownership of stock and to provide an incentive to
executive officers to improve the long-term performance of Norwest. Stock
options granted by the Committee to covered executive officers under the LTICP
are considered performance-based compensation under Section 162(m) of the
Code, and are not subject to the Policy. Each executive officer is assigned
stock ownership goals to be met by specified dates. Executive officers achieve
these goals primarily by exercising stock options and retaining a substantial
portion of the stock acquired. Once the basic ownership level is met, the goal
continues to increase each time an executive officer exercises a stock option
or a restricted stock grant vests. All executive officers named in the Summary
Compensation Table have exceeded their ownership goals.
In determining original option grants, the Committee considers the number of
shares of common stock owned by the executive officer compared to the
executive officer's ownership goal, and the stock option grant practices of
the Comparison Group at the time of grant. It is the Committee's practice to
make original grants of stock options every three years. The most recent
original stock option grants occurred in 1997. If the executive officer does
not meet his or her stock ownership goal, the number of stock options granted
by the Committee to the executive officer in the future will be less than
banks in the Comparison Group would grant to their executive officers with
comparable positions. The Committee also encourages executive officers to
achieve their stock ownership goals by including in original option grants the
right to acquire an Accelerated Ownership Non-
- ---------------------
/2/For purposes of the Policy, the term "Net Income" means Norwest's net income
as reported in Norwest's consolidated financial statements for the
applicable Performance Period, adjusted to eliminate the effect of
(1) restatements of prior periods' financial results relating to an
acquisition accounted for as a pooling of interests; (2) losses resulting
from discontinued operations; (3) extraordinary gains or losses; (4) the
cumulative effect of changes in generally accepted accounting principles;
and (5) any other unusual, non-recurring gain or loss which is separately
identified and quantified in Norwest's financial statements.
17
<PAGE>
Qualified Stock Option (an "AO"). If the optionee exercises the original
option by delivering shares of previously owned common stock to pay for the
option shares, the optionee is granted an AO. Under the terms of the AO, the
optionee can purchase the same number of whole shares of stock, at their fair
market value on the date of the AO grant, as were used to pay the purchase
price of the shares acquired upon exercise of the original option and related
taxes. AO grants are exercisable at any time over the remaining term
applicable to the original option. Such grants allow the exercise of the
original option early in its term while preserving the executive officer's
opportunity for future appreciation in the shares delivered to exercise the
original option. The Committee believes that the AO feature in original option
grants encourages executive officers to acquire and retain Norwest stock.
All of the executive officers named in the Summary Compensation Table
received original option grants in 1997. They also received AO grants in 1997
because they exercised original stock options granted prior to 1997 that had
the AO feature. The 1997 original option and AO grants to these executive
officers appear in the table headed "Option/SAR Grants in Last Fiscal Year"
(page ).
Other Compensation. Executive officers also receive various perquisites and
supplemental retirement benefits of a type and value comparable to those made
available to executive officers of Comparison Group banking organizations.
They also receive retirement and medical benefits generally available to
Norwest's employees.
Chief Executive Officer. The Committee decided Mr. Kovacevich's 1997 salary
as shown in the Summary Compensation Table based on the salary procedures
described above for covered executive officers. With respect to Mr.
Kovacevich's incentive award under the Performance-Based Compensation Policy,
the Committee certified that Mr. Kovacevich had exceeded his performance goals
based on Norwest's 1997 Earnings Per Share and Return on Common Equity. As a
result, the Committee concluded that Mr. Kovacevich was eligible to receive
the maximum amount for an incentive compensation award under the Policy,
subject to reduction of the amount of such award in the Committee's
discretion. In exercising its discretion, the Committee evaluated the quality
of Norwest's earnings based on its review of the following factors: earnings
growth, return on realized common equity, return on total assets, common
equity as a percentage of total assets, non-performing assets and loan loss
reserves, respectively, as a percentage of total assets, the 12-month, 5-year,
and 10-year rates of return to stockholders (including stock price
appreciation and dividends), the ratio of Norwest's common stock market price
to its book value, and the ratio of Norwest's total non-interest expense to
its total revenue. To evaluate Norwest's overall performance for purposes of
determining Mr. Kovacevich's incentive award under the Policy, the Committee
also compared Norwest's performance to that of banking organizations included
in the Comparison Group using these same factors. The Committee ultimately
exercised its discretion to set Mr. Kovacevich's 1997 incentive award based on
(a) its subjective evaluation of Norwest's overall performance and the quality
of its earnings compared to the performance of the Comparison Group using the
factors described above, and (b) the aggregate compensation paid by Comparison
Group banking organizations to their chief executive officers.
Based on Mr. Kovacevich's achievement of his performance goals, and the
Committee's exercise of its discretion under the Performance-Based
Compensation Policy, the Committee awarded incentive compensation for 1997 to
Mr. Kovacevich under the Policy of $3,932,313, of which $2,300,000 was paid in
cash and $1,632,313 was paid in the form of 41,000 shares of restricted stock
(valued based on a closing market price of $39.8125 on February 23, 1998, the
date of the award). The shares of restricted stock paid to Mr. Kovacevich are
subject to certain vesting requirements. These shares will be forfeited unless
Mr. Kovacevich remains employed by Norwest or an affiliate until the
restrictions terminate. This forfeiture provision does not apply if Mr.
Kovacevich's employment with Norwest ends because of his death, disability,
retirement, or a change in control of Norwest. Until the restrictions on these
shares end, Mr. Kovacevich is entitled to vote and receive dividends on the
restricted shares but may not sell or otherwise transfer them. The
restrictions on the restricted stock grant included in Mr. Kovacevich's 1997
incentive compensation award end in 2001 as to 30% of the shares, in 2002 as
to an additional 30% of the shares, and in 2003 with respect to the remainder
of the shares.
18
<PAGE>
That portion of Mr. Kovacevich's incentive compensation award under the
Performance-Based Compensation Policy made in the form of restricted shares is
governed by the provisions (other than the provisions dealing with computation
of the award) of the LTICP.
Members of the Committee:
Michael W. Wright, Chair
Pierson M. Grieve
Charles M. Harper
William A. Hodder
Richard D. McCormick
Ian M. Rolland
19
<PAGE>
PERFORMANCE GRAPH
The Performance Graph shown below compares the cumulative total stockholder
return on Norwest's common stock for the last five fiscal years with the
cumulative total return on the S&P 500 Index and a peer group stock
performance index defined as follows: the 35 largest publicly-traded banking
organizations (ranked based on their total assets as of December 31 of the
fiscal year immediately preceding the date of the annual meeting) (the "Peer
Group Index"). Norwest obtains information on total assets from year-end
financial results published by these organizations.* The cumulative total
stockholder return computations set forth in the Performance Graph assume the
investment of $100 in Norwest common stock, the S&P 500 Index and the Peer
Group Index on December 31, 1992, and reinvestment of all dividends.
The 35 publicly-traded banking organizations in the Peer Group Index are:
Chase Manhattan Corporation, Citicorp, NationsBank Corporation, J.P. Morgan &
Co., BankAmerica Corporation, First Union Corporation, Bankers Trust
Corporation of New York, BancOne Corporation, First Chicago NBD Corporation,
Wells Fargo & Co., Norwest Corporation, Fleet Financial Group, Inc., PNC Bank
Corporation, KeyCorp, U.S. Bancorp, BankBoston Corporation, Wacovia
Corporation, Bank of New York Co., SunTrust Banks, Inc., Republic New York
Corporation, National City Corporation, CoreStates Financial Corporation,
Mellon Bank Corporation, State Street Corporation, Comerica Inc., SouthTrust
Corporation, UnionBanCal Corp., Summit Bancorp, Mercantile Bancorp., BB&T
Corporation, Huntington Bancshares, Northern Trust Corporation, Crestar
Financial Corporation, Regions Financial Corporation, and Fifth Third Bancorp.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG NORWEST CORPORATION, S&P 500 AND PEER GROUP
[MAC CHART]
------------------------------------------------------
12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
- -----------------------------------------------------------------------------
NORWEST CORPORATION $100.0 $116.0 $114.6 $166.9 $226.2 $411.6
- -------------------------------------------------------------------------------
S&P 500 $100.0 $110.1 $111.5 $153.4 $188.6 $251.5
- -------------------------------------------------------------------------------
PEER GROUP $100.0 $107.2 $102.0 $159.1 $223.8 $328.5
- -------------------------------------------------------------------------------
Note: Assumes an initial investment of $100 on December 31, 1992. Total return
includes reinvestment of dividends.
- ---------------------
* For Performance Graph purposes in previous proxy statements, Norwest
identified the 35 largest publicly-traded banking organizations by asset
size from the banks listed in the Salomon 50 Bank Index published by Salomon
Brothers in the first February issue of "Bank Stock Weekly" of the year in
which the annual meeting was held. Because of the merger of Salomon Brothers
with Smith Barney Incorporated, "Bank Stock Weekly" is no longer published.
Norwest relied on 1997 financial results published by publicly-traded
banking organizations in January 1998 to identify the 35 largest banking
organizations (based on total assets on December 31) for the Peer Group
Index used in the 1998 Performance Graph.
20
<PAGE>
COMPENSATION TABLES AND INFORMATION
The table below shows the cash and non-cash compensation earned or awarded
for the last three years to the Chief Executive Officer and the four next
highest paid executive officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------------- ---------------------------------
NAME AND PRINCIPAL OTHER ANNUAL RESTRICTED STOCK OPTIONS/ ALL OTHER
POSITION YEAR SALARY ($) BONUS ($)(1) COMPENSATION ($)(2) AWARD(S) ($)(3)(4)(5) SARS (#)(5) COMPENSATION ($)(6)
- ------------------ ---- ---------- ------------ ------------------- --------------------- ----------- -------------------
(A) (B) (C) (D) (E) (F) (G) (I)
<S> <C> <C> <C> <C> <C> <C> <C>
Richard M.
Kovacevich 1997 $900,000 $ 2,300,000 $86,111 $ 1,632,313 1,720,844 $186,000
Chairman and
Chief 1996 900,000 2,200,000 39,290 814,000 588,706 185,220
Executive Officer 1995 820,000 2,187,000 26,341 763,875 0 178,500
Les Biller 1997 510,833 1,860,000 162,545 0 890,478 93,425
President and
Chief 1996 465,000 1,046,250 31,293 508,750 229,982 90,675
Operating Officer 1995 455,000 1,046,250 24,982 0 0 81,600
Kenneth R. Murray 1997 460,000 1,242,000 21,149 0 672,434 89,700
Executive Vice 1996 451,667 1,035,000 26,677 0 0 86,500
President 1995 440,000 990,000 19,934 0 0 79,560
Daniel A. Saklad 1997 445,000 1,201,500 26,426 0 490,884 86,775
Executive Vice 1996 431,667 1,001,250 34,258 0 227,262 83,275
President 1995 425,000 956,250 27,416 0 0 76,950
John T. Thornton 1997 382,500 1,066,500 28,502 147,306 432,708 74,250
Chief Financial 1996 368,750 855,000 38,956 0 87,250 71,400
Officer 1995 365,000 821,250 25,619 109,125 92,686 60,318
</TABLE>
- ---------------------
(1) The amounts shown for 1997 in column (d) represent that part of the 1997
incentive compensation awards paid in cash under the Performance-Based
Compensation Policy. This policy is discussed above in the Report of the
Human Resources Committee on Executive Compensation.
(2) With respect to column (e), the amounts shown include (i) for the years
1995-1997, reimbursements to each named executive officer for the payment
of taxes on perquisites, and (ii) for 1997 for Richard M. Kovacevich and
Les Biller, perquisites and other personal benefits totaling more than
$50,000. The total amount of these perquisites and personal benefits (and
the amount and type of each perquisite or personal benefit that was
greater than 25% of the total received) is: Mr. Kovacevich, $58,081
(includes $29,678 for executive life insurance); Mr. Biller, $86,649
(includes $51,701 for club dues and fees). The other named executive
officers also received certain perquisites and personal benefits for the
years 1995-1997, none of which had a total value greater than $50,000.
(3) Restricted stock awards in column (f) are valued as of the dates of their
respective grants, based on the closing market price of Norwest's common
stock on such dates. The dollars shown as a restricted stock award for
1997 to the named executive officers represent the following shares of
Norwest common stock: Richard M. Kovacevich, 41,000 shares; and John T.
Thornton, 3,700 shares. These shares are that part of their respective
1997 incentive compensation awards paid in restricted stock under the
policy referred to in footnote (1) above. These shares were valued as of
February 23, 1998, the date the restricted stock awards were made, based
on a closing market price of Norwest's common stock of $39.8125 per share.
(4) The total number of shares of restricted stock held on December 31, 1997
by each person named and their market value, based on a closing market
price for Norwest's common stock of $38.75 per share on that date, were as
follows: Richard M. Kovacevich, 113,400 shares, $4,394,250; Les Biller,
32,000 shares, $1,240,000; Kenneth R. Murray, 12,000 shares, $465,000;
Daniel A. Saklad, 12,000 shares, $465,000; John T. Thornton, 20,800
shares, $806,000. Dividends are paid on shares of restricted stock on the
same dates and at the same rate as those paid to all holders of Norwest's
common stock. All the restricted stock awards vest over a period of five
years, beginning in the third year after the date of the original award.
21
<PAGE>
(5) The number of shares of restricted stock shown in footnote (4) and the
number of option shares shown in column (g) have been adjusted to reflect
Norwest's 2-for-1 stock split in the form of a 100% common stock dividend
distributed on October 10, 1997.
(6) The amount shown in column (i) for each named executive officer is the
total of Norwest's contributions to the Savings Investment Plan ("SIP"), a
401(k) plan in which all employees are eligible to participate, and
contributions to Norwest's Supplemental Savings Investment Plan, a non-
qualified supplemental executive retirement plan ("Supplemental SIP"). For
the year ended December 31, 1997, Norwest's contribution to SIP for each
of the named executive officers was $9,500 (the maximum allowable
contribution under SIP). Norwest's contribution to Supplemental SIP for
the year ended December 31, 1997, for these officers was as follows: Mr.
Kovacevich, $176,500; Mr. Biller, $83,925; Mr. Murray, $80,200; Mr.
Saklad, $77,275; and Mr. Thornton, $64,750.
OPTION GRANTS AND EXERCISES
These tables summarize for 1997 under Norwest's Long-Term Incentive
Compensation Plan option grants to and option exercises by the executive
officers named in the Summary Compensation Table, and the value of the options
held by them at December 31, 1997. All information about the number, exercise
price, and the value of options shown in the following tables has been
adjusted to reflect the 2-for-1 split of Norwest common stock in the form of a
100% stock dividend distributed on October 10, 1997.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
- --------------------------------------------------------------------------------- ---------------------------
PERCENT OF TOTAL
OPTIONS/SARS
OPTIONS/ GRANTED TO EXERCISE OR
SARS EMPLOYEES BASE PRICE EXPIRATION
NAME GRANTED (#)(1)(2) IN FISCAL YEAR(3) ($/SH) DATE 5% ($) 10% ($)
---- ----------------- ----------------- ----------- ---------- ------------- -------------
(A) (B) (C) (D) (E) (F) (G)
<S> <C> <C> <C> <C> <C> <C>
Richard M. Kovacevich 1,480,000 3.1% 30.8750 7/22/07 $ 28,737,340 $ 72,826,062
240,844 * 31.1407 7/26/04 3,051,863 7,111,610
Les Biller 800,000 1.7% 30.8750 7/22/07 15,533,697 39,365,439
90,478 * 31.5782 7/26/04 1,160,991 2,704,798
Kenneth R. Murray 400,000 * 30.8750 7/22/07 7,766,849 19,682,719
272,434 * 31.2188 7/26/04 3,444,831 8,021,360
Daniel A. Saklad 400,000 * 30.8750 7/22/07 7,766,849 19,682,719
90,884 * 31.1407 7/26/04 1,151,640 2,683,611
John T. Thornton 360,000 * 30.8750 7/22/07 6,990,164 17,714,447
72,708 * 31.1407 7/26/04 921,322 2,146,912
</TABLE>
- ---------------------
* Represents less than 1.0% of all stock options granted to employees in
1997.
(1) The options listed in the first line opposite each executive officer's
name are 1997 original option grants. The options listed in the second
line opposite each executive officer's name are immediately exercisable
"accelerated ownership" options ("AOs") granted as the result of each
officer's exercise of stock options in 1997. The general terms of AOs are
described in the Report of the Human Resources Committee on Executive
Compensation.
(2) The dollar amounts under columns (f) and (g) are based on assumed 5% and
10% annual rates of appreciation set by the Securities and Exchange
Commission (the "Commission"). Based on these 5% and 10% assumed rates and
a per share closing stock price of $38.75 for Norwest's common stock on
December 31, 1997, the potential realizable value to the holders of all
issued and outstanding shares on that date
22
<PAGE>
(758,619,464 shares), if such shares were held for an assumed 9.01 year
period (a period equal to the remaining terms of the option grants shown
above), would be approximately $16.2 billion (based on the 5% rate) and
approximately $40.0 billion (based on the 10% rate). The potential total
realizable value over the option term of the options included in the above
table and the potential realizable values to stockholders on an aggregate
basis over the assumed holding period are computed using the assumed rates
set by the Commission. These values should not be viewed as, and are not
intended to be, a forecast of possible future appreciation, if any, in
Norwest's stock price.
(3) Includes options granted to selected employees under the Long-Term
Incentive Compensation Plan and options granted to all employees of
Norwest and its subsidiaries under the Best Practices PartnerShares(R)
Plan. Participants in the Long-Term Incentive Compensation Plan are not
eligible for option grants under the PartnerShares Plan.
AGGREGATED OPTION/SAR EXERCISES IN
LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED IN-THE-
OPTIONS/SARS MONEY OPTIONS/SARS
AT FISCAL YEAR END (#) AT FISCAL YEAR END
SHARES (IN SHARES) (IN DOLLARS)
ACQUIRED ON VALUE REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) ($) UNEXERCISABLE (*) UNEXERCISABLE
---- ------------ -------------- ---------------------- -----------------------
(A) (B) (C) (D) (E)
<S> <C> <C> <C> <C>
Richard M. Kovacevich 353,334 $6,509,084 1,442,368/1,480,000 $29,118,469/$11,655,000
Les Biller 208,368 4,006,198 723,264/800,000 16,722,788/6,300,000
Kenneth R. Murray 400,000 7,400,000 598,650/400,000 11,753,569/3,150,000
Daniel A. Saklad 182,750 3,337,259 631,848/400,000 14,152,298/3,150,000
John T. Thornton 189,372 3,320,885 526,938/360,000 12,085,460/2,835,000
</TABLE>
- --------------------
* Column (d) lists the total options held (stated as shares exercisable and
unexercisable) by the named executive officers on December 31, 1997. On that
date, these executive officers also beneficially held an aggregate of
3,564,775 shares of Norwest's common stock. As a consequence, each executive
officer shares with all stockholders the risk of future changes in the
market value of Norwest's common stock, which will depend upon, among other
factors, Norwest's future performance and the executive officer's
contribution to that performance.
PENSION PLANS
Norwest's Pension Plan (the "Pension Plan") is a defined benefit plan
qualified under the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") and the Internal Revenue Code ("Code"). The Plan covers all
employees of Norwest and participating subsidiaries who are age 21 or older
and have worked at least 1,000 hours during a period specified in the Pension
Plan. Employees do not contribute to the Pension Plan and the contributions by
Norwest and its subsidiaries are not allocated to the accounts of the
individual participants. Benefits under the Pension Plan are determined by
age, years of service, and compensation. A participant becomes vested after
completing five years of Vesting Service or having attained the age of 65.
The monthly benefit at regular retirement age is a life annuity equal to
1.1% of final average monthly earnings up to the Integration Level and 1.6% of
final average monthly earnings above the Integration Level for each year of
credited service. The Pension Plan does not take into account more than 35
years of credited service. Under the Pension Plan, the "Integration Level" for
any year is $1,400 times the Social Security Wage Base for the Current Year
divided by $48,000. The Integration Level (stated as an amount per month) is
$1,995 for participants retiring in 1998. For participants retiring in years
after 1998, the Integration Level is indexed to increase at the same rate as
the Social Security Wage Base.
A participant's final average earnings are the highest average monthly
compensation paid during any 36 consecutive months within the last 120 months
of employment. Beginning January 1, 1997, compensation for
23
<PAGE>
purposes of this calculation means generally all compensation paid to a
participant during the year which is reportable on Form W-2, plus salary
reduction amounts made under Section 401(k) and Section 125 of the Code.
Compensation for this purpose, however, excludes certain expense
reimbursements, contributions to any non-qualified deferred compensation plan
maintained by Norwest, perquisites, severance pay, gross-ups, payments in lieu
of vacation, and stock option or equity-like gains. Also beginning January 1,
1997, the Pension Plan provides that incentive compensation amounts will be
included in compensation for Pension Plan purposes in the year received rather
than the year earned, subject to a three-year transition period.
Compensation under the Pension Plan for a plan year is limited by Code
Section 401. The Section 401 limit for the 1998 plan year is $160,000. In
addition, Section 415 of the Code places certain limitations on the amount of
the annual pension that can be paid to a participant from a tax-qualified
pension plan. The annual limit currently in effect is $130,000, but depending
on when a participant retires, the annual benefit may be greater than that
amount.
As permitted by ERISA and the Code, the Board of Directors has adopted a
Supplemental Pension Plan. Norwest will pay participants amounts that would be
payable under the Pension Plan except for limitations in the Code.
Compensation under the Supplemental Pension Plan means the participant's basic
compensation, as well as amounts earned or received under designated incentive
compensation plans of Norwest, whether or not that compensation is deferred
under any non-qualified deferred compensation plan maintained by Norwest or
deferred under Section 401(k) or Section 125 of the Code. The Supplemental
Pension Plan was amended effective January 1, 1997 to provide that incentive
compensation amounts would be included in compensation for plan purposes in
the year received, rather than the year earned, subject to a three-year
transitional rule similar to the transition rule that applies to the Pension
Plan. Also beginning January 1, 1997, any incentive compensation amount paid
after December 31, 1996 may be prorated in the year paid to determine average
monthly compensation under the Supplemental Pension Plan if the participant
was not a qualified employee for the entire plan year.
The table below shows the estimated total annual average retirement benefits
payable under the Pension Plan and the Supplemental Pension Plan for
individuals with various combinations of annualized final average compensation
and years of credited service. These estimated benefits do not take into
account any Internal Revenue Code limits on retirement benefits. The annual
amounts shown below, as estimated and when paid, are not reduced by the amount
of Social Security benefits.
<TABLE>
<CAPTION>
YEARS OF SERVICE AT RETIREMENT
FINAL AVERAGE -------------------------------------------------------------
COMPENSATION 10 15 20 25 30 35
- ------------- -------- -------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
$ 250,000 $ 38,803 $ 58,205 $ 77,606 $ 97,008 $ 116,409 $ 135,811
500,000 78,803 118,205 157,606 197,008 236,409 275,811
750,000 118,803 178,205 237,606 297,008 356,409 415,811
1,000,000 158,803 238,205 317,606 397,008 476,409 555,811
1,250,000 198,803 298,205 397,606 497,008 596,409 695,811
1,500,000 238,803 358,205 477,606 597,008 716,409 835,811
1,750,000 278,803 418,205 557,606 697,008 836,409 975,811
2,000,000 318,803 478,205 637,606 797,008 956,409 1,115,811
2,250,000 358,803 538,205 717,606 897,008 1,076,409 1,255,811
2,500,000 398,803 598,205 797,606 997,008 1,196,409 1,395,811
2,750,000 438,803 658,205 877,606 1,097,008 1,316,409 1,535,811
3,000,000 478,803 718,205 957,606 1,197,008 1,436,409 1,675,811
3,250,000 518,803 778,205 1,037,606 1,297,008 1,556,409 1,815,811
3,500,000 558,803 838,205 1,117,606 1,397,008 1,676,409 1,955,811
3,750,000 598,803 898,205 1,197,606 1,497,008 1,796,409 2,095,811
4,000,000 638,803 958,205 1,277,606 1,597,008 1,916,409 2,235,811
</TABLE>
24
<PAGE>
For the executive officers named in the Summary Compensation Table, the
compensation recognized under the Pension Plan and Supplemental Pension Plan
for 1997 is the amount shown in the table for the year 1997 as "Salary"
(column (c)) and, under the transition rules described above, as "Bonus"
(column (d)). As of December 31, 1997, their individual credited service was
as follows: Mr. Kovacevich, 11 years, 10 months; Mr. Biller, 10 years, 4
months; Mr. Murray, 15 years; Mr. Saklad, 10 years, 5 months; Mr. Thornton, 13
years, 8 months.
Lloyd P. Johnson, a nominee for re-election as a director, retired as the
Chairman of the Board and a Norwest employee in 1995. Under an agreement made
with Norwest before his retirement, Mr. Johnson receives retirement payments
equal to the difference between the amount he receives under Norwest's Pension
Plan and the amount he would have been entitled to receive under a pension
plan of Norwest he selected that was in effect while he was an active
employee. Under this agreement, Mr. Johnson receives an additional annual
retirement benefit of $47,290, payable with his regular annual retirement
benefit of $220,552 under Norwest's Pension Plan and Supplemental Pension
Plan.
LONG-TERM DISABILITY PLANS
The executive officers named in the Summary Compensation Table can
participate in Norwest's Long-Term Disability Plan, which is available to all
employees of Norwest. This plan covers compensation of up to $500,000 in
salary and payments made under designated incentive compensation plans. The
plan provides a monthly benefit to an employee scheduled to work 20 or more
hours per week who has elected to participate in the plan and who becomes
totally disabled for more than 22 weeks. The monthly benefit equals 65% of the
participant's average basic monthly compensation, up to a monthly benefit
(based on a maximum annual compensation of $500,000) of $27,083. Norwest's
Supplemental Long-Term Disability Plan extends similar disability coverage for
the base salary earned by Richard M. Kovacevich in excess of $500,000. The
monthly benefit payable under either plan may be offset by other sources of
income.
SEVERANCE AGREEMENTS
Norwest has severance agreements with certain executive officers of Norwest,
including the five executive officers named in the Summary Compensation Table.
These agreements are intended to encourage the officers to continue to carry
out their duties if there is a change of control of Norwest. Under the terms
of these agreements, the officers may receive certain payments if their
employment is terminated or if their job duties or compensation and benefits
are substantially reduced within three years following a change of control of
Norwest. The maximum payments are two times the sum of: (i) the officer's base
salary rate, (ii) the value of perquisites provided by Norwest, and (iii) the
officer's highest potential incentive compensation award or, in the case of
Mr. Kovacevich, an amount equal to the two-year average of his incentive
compensation awards. The agreements also continue certain medical, dental and
life insurance benefits for up to two years after termination. If payments
received by any such officer as a result of a change of control result in an
excise tax liability for such officer, Norwest also will pay to the officer an
additional amount equal to the excise tax plus a gross-up for additional
income taxes, interest, and penalties related to the excise tax. If a change
of control and termination of employment had occurred on February 28, 1998,
the approximate amounts payable under these severance agreements to the
executive officers named in the Summary Compensation Table would be: Mr.
Kovacevich, $6,466,200; Mr. Biller, $4,911,300; Mr. Murray, $3,869,400; Mr.
Saklad, $3,733,100; and Mr. Thornton, $3,334,800.
Norwest has a plan that provides severance pay to employees who are
discharged under certain circumstances. The amount of severance pay is based
on years of service, job level, and the severance option the employee chooses.
If Mr. Kovacevich had been discharged on January 1, 1998, the maximum payable
under this policy would have been his base salary for 24 months, plus life and
health insurance benefits for 18 months. For executive officers named in the
Summary Compensation Table, the maximum payable under this policy would have
been their base salary plus benefits for the following periods: Mr. Biller, 16
months; Mr. Murray, 18 months; Mr. Saklad, 16 months; and Mr. Thornton,
months. Mr. Kovacevich also can receive benefits of a minimum payment of 12
months' salary (less the amount of any other severance payments to which he
may be
25
<PAGE>
entitled under any severance plan of Norwest then in effect), a pro rata
portion of his incentive compensation, and certain life and health insurance
benefits. The benefits are payable if his employment is terminated by Norwest
for a reason other than cause or if his job duties are substantially reduced
and he resigns within 90 days thereafter.
OTHER INFORMATION ABOUT DIRECTORS
AND EXECUTIVE OFFICERS
LOANS
During the past year some directors (including the directors discussed below
under "Compensation Committee Interlocks and Insider Participation"),
executive officers, one or more members of their immediate families, and one
or more of their associates had banking transactions, including loans, in the
ordinary course of business with Norwest bank subsidiaries. In addition,
Norwest Investment Services, Inc., a broker-dealer subsidiary, made margin
loans in the ordinary course of business to some executive officers. All loans
were made on substantially the same terms, including interest rates and
collateral, as those available at the time for similar transactions with other
persons. The loans did not involve more than the normal risk of collection or
have other unfavorable features.
Three non-employee directors and five executive officers of Norwest
(including an executive officer named in the Summary Compensation Table), as
well as several members of the immediate families of certain non-employee
directors and executive officers, also obtained mortgage loans from Norwest
Mortgage, Inc. ("NMI"), a subsidiary of Norwest. Based on its policy for loans
to Norwest's directors and employees, NMI waived an origination fee equal to
one percent of the loan amount for each loan to a director or executive
officer. Information about loans to these directors and the executive officer
listed in the Summary Compensation Table, as well as to the members of their
immediate families, is shown in the table below:
<TABLE>
<CAPTION>
HIGHEST OUTSTANDING OUTSTANDING
NAME AND LOAN BALANCE LOAN BALANCE ON
PRINCIPAL POSITION SINCE 1/1/97 12/31/97 ANNUAL INTEREST RATE
------------------ ------------------- --------------- --------------------
<S> <C> <C> <C>
Benjamin F. Montoya $ 385,942 $385,942 8.3750% (fixed)
Director
Richard D. McCormick 628,840 628,480 6.3750% (adjustable)
Director
Megan A. Tobler and 109,000 109,000 7.2500% (fixed)
Michael S. Tobler*
Michael W. Wright 1,000,000 973,001 7.8750% (fixed)
Director
Les Biller 479,962 473,529 7.1250% (adjustable)
President and Chief Op-
erating Officer
and Director
</TABLE>
- ---------------------
* Daughter and son-in-law of Richard D. McCormick.
Five other executive officers and the son of one executive officer were also
indebted to NMI in the total amount of $1,622,732 for mortgage loans with
fixed and adjustable interest rates ranging from 7.1250% to 8.25% per annum.
Of the mortgage loans discussed above, five have been sold by NMI in the
secondary real estate mortgage market and one has been sold to a Norwest
subsidiary.
26
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Each year the Human Resources Committee (the "Committee") determines the
compensation to be paid to Norwest's Chief Executive Officer and other
executive officers, including the executive officers named in the Summary
Compensation Table. The members of the Committee for 1997 were Michael W.
Wright (Chair), Pierson M. Grieve, Charles M. Harper, William A. Hodder,
Richard D. McCormick, Ian M. Rolland, and Michael W. Wright. During 1997,
Pierson M. Grieve, Richard D. McCormick, and Michael W. Wright had banking
transactions, including loans, in the ordinary course of business with one or
more of the Norwest bank subsidiaries. All loans were made on substantially
the same terms, including interest rates and collateral, as those prevailing
at the time for comparable transactions with other persons. These loans did
not involve more than the normal risk of collection or present other
unfavorable features. Mr. McCormick, a member of his immediate family, and Mr.
Wright also had mortgage loans with Norwest Mortgage, Inc. Information about
these loans appears immediately above under "Loans".
CERTAIN TRANSACTIONS WITH DIRECTORS
Richard S. Levitt. Norwest Financial Maryland, Inc. ("NFM"), a wholly-owned
subsidiary of Norwest Financial, Inc. ("NFI") and an indirect wholly-owned
subsidiary of Norwest, leases office space for a term of five years from MB
Limited Partnership ("MB"), and also leases additional office space for a term
of five years from AF Limited Partnership ("AF"). The general partner of both
MB and AF is NC Associates Corporation, a Maryland corporation ("NC
Associates"). All of the outstanding voting stock of NC Associates is owned by
the two adult sons of Richard S. Levitt, a nominee for re-election as a
director. Mr. Levitt's sons are also officers of NC Associates. In addition,
the sole limited partners of MB and AF are trusts, the beneficiaries of which
are descendants of Mr. Levitt. Mr. Levitt is also the Chairman and sole
shareholder of a recently formed Iowa corporation known as Nellis Corporation
("Nellis"). Nellis provides property management services to MB and AF and is
compensated for its services solely by the partnerships.
NFM's existing lease with MB provides for a total fixed rent over the lease
term of $139,245, plus estimated operating expenses of approximately $6,600
annually. NFM's lease with AF provides for a total fixed rent over the lease
term of approximately $118,770, plus estimated operating expenses of $4,300
annually. Both leases are guaranteed by NFI. In the opinion of the management
of NFM and NFI and the management of Norwest, the terms of the leases are fair
and reasonable with respect to NFM and NFI.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 and related regulations
require Norwest's directors, executive officers, and anyone holding more than
10% of Norwest's common stock to report their initial ownership of common
stock ("reporting persons") and any changes in that ownership to the
Securities and Exchange Commission and the New York Stock Exchange. Norwest is
required to disclose in this Proxy Statement the failure of any reporting
person to file these reports when due. All reporting persons of Norwest
satisfied these filing requirements, except Benjamin F. Montoya and Lloyd P.
Johnson, directors of Norwest. Mr. Montoya failed to file when due four Form
4s to report four purchases of common stock made during 1997 under a stock in
lieu of fees program available to directors of Norwest bank subsidiaries. Mr.
Johnson failed to file when due a Form 5 to report a charitable gift made in
1997. Mr. Montoya and Mr. Johnson ultimately reported these transactions on
Form 4 and Form 5, respectively. In making these disclosures, Norwest has
relied on written representations of each reporting person and copies of the
reports filed with the Commission.
ITEM 2. PROPOSAL TO INCREASE
NORWEST'S AUTHORIZED COMMON STOCK
Norwest is authorized to issue 1,000,000,000 shares of common stock, par
value $1 2/3 per share. Norwest's Board of Directors recommends that Norwest's
stockholders approve an amendment (the "Amendment") to Norwest's Restated
Certificate of Incorporation (the "Restated Certificate") that would increase
the authorized shares of Norwest's common stock from 1,000,000,000 shares to
2,000,000,000 shares. The number of authorized shares of preferred stock and
preference stock will remain at 5,000,000 and 4,000,000 shares,
27
<PAGE>
respectively. If the amendment is approved by Norwest's stockholders, the
first sentence of ARTICLE FOURTH of Norwest's Restated Certificate will read
as follows:
FOURTH: The total number of shares of all classes of stock which the
corporation shall have authority to issue is Two Billion Nine Million
(2,009,000,000) shares, consisting of Five Million (5,000,000) shares
of Preferred Stock without par value, Four Million (4,000,000) shares
of Preference Stock without par value, and Two Billion (2,000,000,000)
shares of Common Stock of the par value of $1 2/3 per share.
On December 31, 1997, Norwest had 758,619,464 outstanding shares of common
stock, and approximately 140,298,612 shares reserved for issuance to provide
for conversion of outstanding convertible securities, dividend reinvestment,
stock deferrals under deferred compensation plans, stock options, and stock
purchases under employee benefit plans. The purpose of the proposed increase
is to provide more shares for general corporate purposes, including stock
dividends and splits, raising additional capital, stock issuances under
stockholder and employee stock plans, and possible future acquisitions.
Stockholders approved an amendment to Norwest's Restated Certificate at the
1997 annual meeting to increase Norwest's authorized common stock to
1,000,000,000 shares. Since that increase was approved, Norwest approved and
distributed to stockholders in October 1997 a 2-for-1 split of its common
stock in the form of a 100% common stock dividend. Norwest's officers also
from time to time discuss with other financial institutions the possible
acquisition of such institutions in exchange for shares of Norwest's common
stock. There are no present plans, understandings, or agreements, however, for
issuing a material number of additional shares of common stock from the
currently authorized shares of common stock or the additional shares of stock
proposed to be authorized under the Amendment, although acquisitions have been
and may, in the future, be made by an exchange of stock. The Board of
Directors believes that an increase in the total number of shares of
authorized common stock will help Norwest to meet its future needs, and give
it greater flexibility in responding quickly to advantageous business
opportunities. The proposed increase will also provide additional shares for
corporate purposes generally.
Norwest's issuance of shares of common stock, including the additional
shares that will be authorized if the proposed Amendment is adopted, may
dilute the equity ownership position of current holders of common stock and
may be made without stockholder approval, unless otherwise required by
applicable laws or stock exchange regulations. Under existing New York Stock
Exchange regulations, and except as stated below, approval of a majority of
the holders of common stock would be required for any transaction or series of
related transactions that would result in the original issuance of additional
shares (or securities convertible into shares of common stock) (i) if the
number of shares of common stock to be issued is 20% or more of the voting
power outstanding before the issuance; (ii) if the number of shares of common
stock to be issued is 20% or more of the number of shares outstanding before
the issuance; or (iii) if the issuance would result in a change in control of
Norwest. This stockholder approval requirement does not apply to any public
offering for cash or to any bona fide private financing involving a sale of
common stock for cash at a purchase price or conversion or exercise price at
least as great as both the book and market value of Norwest's common stock.
The additional authorized but unissued shares of Norwest's common stock that
would become available if the Amendment is approved could be used (alone or
with Norwest's Rights Plan described below) to make a change in control of
Norwest more difficult and expensive. Under certain circumstances, such shares
could be used to create impediments to or frustrate persons seeking to cause a
takeover or to gain control of Norwest. Such shares could be sold to
purchasers who might side with the Board in opposing a takeover bid that the
Board determines not to be in the best interests of its stockholders. The
Amendment might also have the effect of discouraging an attempt by another
person or entity, through the acquisition of a substantial number of shares of
Norwest's common stock, to acquire control of Norwest with a view to
consummating a merger, sale of all or part of Norwest's assets, or a similar
transaction, since the issuance of new shares could be used to dilute the
stock ownership of such person or entity.
28
<PAGE>
Norwest also has in effect a plan (the "Rights Plan") that would give each
holder of Norwest's common stock a dividend of one preferred share purchase
right (a "Right"). This Right entitles the recipient, upon exercise, to
purchase one eight-hundredth of a share of Norwest's Series A Junior
Participating Preferred Stock ("Junior Preferred Stock"). The terms of the
Rights are triggered upon the acquisition of or an offer by a person or group
to acquire, 25% or more of Norwest's common stock. The Rights also entitle the
holders (other than the person or group holding the triggering percentage) to
certain favorable common stock purchase rights, among other rights, as well as
the right to receive Junior Preferred Stock having "supervoting" rights and
extraordinary rights to certain dividends and distributions upon liquidation.
The Rights are designed to protect the interests of Norwest and its
stockholders against coercive takeover tactics by encouraging potential
acquirors to negotiate with the Board of Directors acting on behalf of all
stockholders. The Rights Plan may also, but is not intended to, deter
potential acquirors. Approval of the Amendment, when considered with the
Rights Plan, also may deter takeover proposals. A potential acquiror might
ultimately decide not to pursue an acquisition of Norwest if the acquiror's
ownership of common stock could be diluted by the issuance of additional
common shares authorized by the Amendment and shares of Junior Preferred Stock
under the Rights.
ACTION BY STOCKHOLDERS
The Board of Directors believes that the approval of the Amendment is in the
best interests of the stockholders of Norwest. Approval requires a vote in
favor of the Amendment by the holders of a majority of Norwest's outstanding
shares of common stock.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE PROPOSAL TO
AMEND NORWEST'S RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE
AUTHORIZED SHARES OF COMMON STOCK. THIS PROPOSAL IS IDENTIFIED AS ITEM 2 ON
THE ENCLOSED PROXY CARD.
ITEM 3. PROPOSAL TO APPROVE THE
PERFORMANCE-BASED COMPENSATION POLICY
In 1994, Norwest's stockholders approved the "Performance-Based Compensation
Policy for Covered Executive Officers" (the "1994 Policy") in accordance with
Section 162(m) and related regulations of the Internal Revenue Code (the
"Code") described below (the "Section 162(m) Rules"). The Board's Human
Resources Committee (the "Committee") has amended and restated the 1994 Policy
to increase the "maximum incentive award" that may be paid to executive
officers, and to modify two business criteria used to set performance goals.
Stockholders must approve the amended and restated Policy for it to take
effect.
A copy of the amended and restated Policy is included at the end of this
Proxy Statement as Exhibit A. The discussion that follows is a summary only.
In order to distinguish the amended and restated Policy from the 1994 Policy
in this discussion, the amended and restated Policy is referred to as the
"1998 Policy." Stockholders are urged to read the complete text of the 1998
Policy.
SECTION 162(M) AND PERFORMANCE-BASED COMPENSATION
Under the Section 162(m) Rules, a company may not deduct compensation over
$1,000,000 paid to its chief executive officer and its four other most highly
compensated executive officers unless the compensation is "performance-based."
Compensation is "performance-based" if it meets these tests: (1) it will be
paid only if the executive officer meets one or more objective performance
goals; (2) the performance goals must be in writing and be set by a
compensation committee whose members include at least two outside directors;
(3) the compensation committee must set the performance goals before the
executive officer performs the services and before it can be known whether or
not the executive officer will meet these goals; (4) the company must disclose
to, and stockholders must approve the material terms of the performance goals
before the compensation is paid; and (5) the compensation committee must
certify that the executive officer has met the performance goals. Performance
goals can be based on one or more business criteria that apply to an
individual, a business unit or
29
<PAGE>
the company as a whole. If a company's stockholders have approved the
employees eligible to receive compensation, the maximum amount of
compensation, and the business criteria on which performance goals are set,
then test 4 is met. Because the 1998 Policy identifies "covered executive
officers" as the employees eligible to be compensated under the Policy, fixes
the maximum amount that can be paid to a covered executive officer as
compensation under the Policy, and spells out the business criteria used to
set performance goal targets, the 1998 Policy contains the material terms of
the performance goals.
WHY STOCKHOLDER APPROVAL IS BEING REQUESTED
Under the terms of the 1994 Policy, the Committee may at any time terminate,
suspend, amend or modify the 1994 Policy without stockholder approval unless,
in the opinion of Norwest's counsel, stockholder approval of any amendment
would be required under the Section 162(m) Rules. Under the Section 162(m)
Rules, any change by the compensation committee in the material terms of the
performance goals requires stockholder approval. The Committee has approved
amendments to the 1994 Policy to increase the maximum compensation amount that
can be awarded from four-tenths of 1% (0.4%) of Norwest's "Net Income"
(defined below) to eight-tenths of 1% (0.8%) of Net Income. In addition, the
Committee has approved modifications to the definitions of "Earnings Per
Share" and "Return on Common Equity," two of the business criteria on which
performance goals may be based. Norwest's counsel has advised the Committee
that, in its opinion, these are changes in the material terms of the
performance goals requiring stockholder approval under the Section 162(m)
Rules and the terms of the 1994 Policy. Except for these amendments, the 1998
Policy is substantially the same as the 1994 Policy.
HOW THE 1998 POLICY WORKS
The 1998 Policy applies to each "covered executive officer" of Norwest. A
covered executive officer is a person who, on the last day of a taxable year,
is either Norwest's Chief Executive Officer (or someone acting in that
capacity) or one of the four other highest-paid executive officers (other than
the Chief Executive Officer. Each executive officer listed in the Summary
Compensation Table above would be a covered executive officer under the 1998
Policy assuming no change in his position or compensation as of the last day
of 1998.
A covered executive officer will receive an incentive compensation award
only if he or she has met one or more performance goals for each Performance
Period. The 1998 Policy defines a Performance Period as a calendar year
beginning January 1 and ending December 31. The Committee must set performance
goals (which can be in the form of alternative goals) in writing for each
Performance Period no later than 90 days after it starts.
The Committee may set performance goals using any one or more business
criteria stated in the 1998 Policy. The business criteria are defined below.
The text of the amendments is shown in brackets ("[ ]").
Earnings Per Share means Norwest's [diluted] earnings per share as
reported in Norwest's consolidated financial statements for each applicable
Performance Period adjusted as described below for Net Income.
Business Unit Net Earnings means the net earnings of the Norwest business
unit managed by a covered executive officer, determined under generally
accepted accounting principles, adjusted in accordance with Norwest's
management accounting practices and conventions in effect at the beginning
of the Performance Period, and further adjusted as described below for Net
Income.
Return on [Realized] Common Equity means Norwest's Net Income on an
annualized basis less dividends accrued on outstanding preferred stock,
divided by Norwest's average total common equity, [excluding average
accumulated comprehensive income as reported in the Corporation's
consolidated financial statements] for the Performance Period.
30
<PAGE>
The amendment to define "Earnings Per Share" as "diluted" earnings per share
reflects changes in generally accepted accounting principles to take into
account the effect of potential common shares, including both vested and
unvested outstanding stock options, in a company's calculation of its earnings
per share. The modification of the business criteria to "Return on Realized
Common Equity" eliminates the effect of adjustments to common equity required
by existing and anticipated generally accepted accounting principles based on
certain items of income that have not yet been received or "realized" by a
company. The amendment reflects the Committee's belief that a business
criterion based on return on common equity and used to set a performance goal
should measure the actual return.
Incentive compensation awards to covered executive officers who meet their
performance goals may be paid in cash or stock, including shares of restricted
stock, subject to a maximum amount. The Committee has also amended the 1994
Policy to increase the maximum amount of an incentive compensation award that
may be paid for any Performance Period to any covered executive officer from
four-tenths of one percent (0.4%) to eight-tenths of one percent (0.8%) of
Norwest's Net Income for the Performance Period. Under both the 1994 and 1998
Policies, the term "Net Income" means Norwest's net income as reported in
Norwest's consolidated financial statements for the Performance Period,
adjusted to eliminate the effect of (1) restatements of prior periods'
financial results relating to an acquisition accounted for as a pooling of
interests; (2) losses resulting from discontinued operations; (3)
extraordinary gains or losses; (4) the cumulative effect of changes in
generally accepted accounting principles; and (5) any other unusual, non-
recurring gain or loss which is separately identified and quantified in
Norwest's financial statements.
In approving this increase, the Committee reviewed incentive compensation
data from the Comparison Group banking organizations listed on page . Based
on its review, the Committee concluded that this increase was necessary in
order for Norwest to compete effectively with other banking organizations in
attracting and retaining highly talented individuals as executive officers. If
the 1998 Policy had been in effect for 1997, based on Norwest's 1997 Net
Income of $1.351 billion, the maximum incentive compensation award payable
under the 1998 Policy would have been $10,808,000 (0.8% of $1.351 billion).
Under the 1998 Policy, the Committee has the discretion to reduce the
incentive compensation award to a covered executive officer even if he or she
has met the performance goal. The Committee will continue to review
competitive market data and other factors in exercising its discretion to
reduce awards under the 1998 Policy and will consider management
recommendations for all covered executive officers except the Chief Executive
Officer.
The 1998 Policy is effective as of January 1, 1998 if approved by
stockholders. If stockholders do not approve the 1998 Policy, no incentive
compensation awards to covered executive officers will be paid under the 1998
Policy. However, the Committee will continue to award incentive compensation
to covered executive officers under the terms of the 1994 Policy approved by
stockholders. If the 1998 Policy is approved by stockholders, the Committee
may at any time terminate, suspend, amend or modify the 1998 Policy.
Stockholder approval still will be required for any future amendment or
modification to the 1998 Policy that, in the opinion of counsel, would be
required by the Section 162(m) Rules.
The incentive awards that would be payable under the 1998 Policy to the
executive officers named in the Summary Compensation Table (assuming such
persons will continue to be covered executive officers) cannot be determined
because payment of future awards would be contingent upon each covered
executive officer meeting the pre-established performance goals. The maximum
amount of these awards would depend on Norwest's Net Income for the applicable
Performance Period. The actual incentive award may also reflect exercise of
the Committee's discretion to reduce the award.
STOCKHOLDER APPROVAL
Approval of the 1998 Policy requires a vote in favor of the 1998 Policy by
the holders of a majority of the shares of Norwest's common stock.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE PROPOSAL TO
APPROVE THE 1998 POLICY. THIS PROPOSAL IS IDENTIFIED AS ITEM 3 ON THE ENCLOSED
PROXY CARD.
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<PAGE>
ITEM 4. PROPOSAL TO AMEND THE
LONG-TERM INCENTIVE COMPENSATION PLAN
The Board of Directors has approved an amendment (the "Plan Amendment") to
Norwest's Long-Term Incentive Compensation Plan (the "Plan") to increase the
maximum number of shares of common stock that may be awarded under the Plan by
an additional 37,000,000 shares. In order for the Plan Amendment to take
effect, stockholders must approve it at the 1998 annual meeting.
The Board believes that the Plan is an important way to attract, retain and
motivate key employees, and that it is appropriate to increase the number of
shares available for awards under the Plan. Approval of the proposed Plan
Amendment will ensure that enough shares are available under the Plan to
encourage stock ownership by executive officers and key employees and to help
Norwest attract and retain individuals who will contribute to Norwest's
success.
A copy of the Plan Amendment is included at the end of this Proxy Statement
as Exhibit B. All information about (1) shares available for grant before
giving effect to the Plan Amendment, (2) shares subject to outstanding awards,
and (3) the maximum award for stock options and stock appreciation rights
under the Plan, has been adjusted to reflect Norwest's 2-for-1 split of its
outstanding common stock, in the form of a 100% stock dividend paid on October
10, 1997.
THE PLAN
Key employees (including executive officers and directors who are employees)
of Norwest and its subsidiaries selected by the Human Resources Committee (the
"Committee") are eligible to become participants in the Plan. Key employees
selected by the Committee may receive awards in the form of stock options,
stock appreciation rights, restricted stock, performance shares, performance
units or stock. As of December 31, 1997, a total of 1,487 persons participated
in the Plan. No employee may be granted stock options or stock appreciation
rights covering more than 7,000,000 shares in any calendar year.
Stock options may be granted as non-qualified stock options or incentive
stock options, and must be granted at a price no lower than the fair market
value of the stock on the day of grant. Fair market value on any day is the
average of the high and low prices of a share of common stock reported on the
New York Stock Exchange for that day. Stock options may be exercised during a
period of time fixed by the Committee, except that no stock option may be
exercised more than ten years after the day it is granted. At the discretion
of the Committee, the purchase price for stock acquired by exercising an
option may be paid for in cash, by delivering other shares of Norwest's common
stock, or a combination of both.
Stock options granted under the Plan may include the right to a grant of an
Accelerated Ownership Non-Qualified Stock Option ("AO"). When an option with
an AO right is exercised, the participant receives an AO grant to purchase the
number of shares of common stock equal to the sum of the number of whole
shares used by the participant to pay the purchase price. If shares are
withheld by Norwest to pay the participant's withholding taxes, the AO grant
will also include a number of shares equal to the number of shares withheld.
The exercise price of the AO is the fair market value of Norwest common stock
on the date of the AO grant. An AO expires on the same date as the option to
which the AO relates, and may be exercised at any time between its grant date
and its expiration date. AOs are intended to encourage participants to
exercise options early in their terms by granting the participant an AO for
the balance of the original option's term, thus allowing the participant to
preserve the opportunity for future appreciation in the original option's
value.
A stock appreciation right granted under the Plan entitles a participant to
receive a payment, in cash or common stock or a combination of both, in an
amount equal to the difference between the fair market value of the stock at
the time of exercise and the fair market value as of the date of grant. Stock
appreciation rights may be exercised during a period of time fixed by the
Committee not to exceed ten years after the grant date.
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<PAGE>
A grant of restricted stock consists of a specified number of shares of
common stock which are subject to restrictions on transfer, conditions of
forfeiture, and any other terms and conditions for periods determined by the
Committee. Under the terms of each grant, and except in the case of a
participant's death, disability or retirement or a change of control of
Norwest, a participant forfeits the right to receive the shares if he or she
is not continuously employed by Norwest or an affiliate until the restrictions
end. Prior to the termination of the restrictions, a participant may vote and
receive dividends on the restricted stock but may not sell or otherwise
transfer the shares. The Committee may also make awards of common stock
without restrictions.
A grant of performance shares or performance units entitles a participant to
receive cash, common stock (which may be restricted stock), or a combination
of both, based on the degree of achievement of pre-established performance
targets over a performance cycle determined by the Committee between two and
five years. The Committee may set maximum and minimum performance targets
relating to corporate, group, unit or individual performance in terms of
earnings, growth in earnings, ratios of earnings to equity or assets, or any
other measures or standards. The Committee also sets the maximum amount of a
participant's award, stated in shares of common stock in the case of
performance shares and in dollars in the case of performance units. If a
participant achieves the maximum performance target, he or she is entitled to
the maximum amount of the award, although the Committee may set an upper limit
on any amount payable in performance shares. For performance that falls below
the maximum but exceeds the minimum performance target, the Committee may pay
a portion of the award.
The Committee has the discretion to determine the period of time during
which options or stock appreciation rights may be exercised after a
participant's death, permanent disability, or retirement. The Committee may
not, in such circumstances, extend the exercise period beyond the original
expiration date of the option or right. The Board of Directors may modify,
suspend or terminate the Plan but may not, without the prior approval of the
stockholders of Norwest, make any change to the Plan that increases the total
amount of common stock which may be awarded (except to reflect changes in
capitalization), changes the class of employees eligible to participate,
withdraws the administration from the Committee or permits any person, while a
member of the Committee, to be eligible to participate.
On December 31, 1997, 42,432,953 shares were covered by options (including
AOs) granted under the Plan, at option prices ranging from $3.77 to $38.53 per
share and with expiration dates ranging from April 26, 1998 to November 25,
2007, and 265,640 shares were subject to restricted stock awards granted under
the Plan that vest in full on dates ranging from February 2, 1998 to February
24, 2002. On February 27, 1998 (the last trading day of the month), the
closing market price of a share of Norwest's common stock was $ . Other than
stock options and restricted stock awards, no stock appreciation rights or
other types of awards are outstanding under the Plan.
Options (other than AOs) generally become exercisable in three annual
installments beginning one year after the date of the option grant. All AOs
are exercisable upon grant.
Information about options granted in 1997 under the Plan to the Chief
Executive Officer and the four other most highly compensated executive
officers can be found in the table under the heading "Options/SAR Grants in
Last Fiscal Year" on page of this Proxy Statement. In 1997, options
(including AOs) totaling 7,359,900 shares were granted to current executive
officers as a group under the Plan, and options (including AOs) totaling
25,231,462 shares were granted under the Plan to all employees (excluding
executive officers) as a group.
No information can be provided with respect to awards that may be made in
the future under the Plan, as amended by the Plan Amendment. Such awards are
within the discretion of the Committee. The Committee has not decided future
awards or who might receive them.
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<PAGE>
THE PLAN AMENDMENT
Increase in Available Shares. If stockholders approve the Plan Amendment at
the 1998 annual meeting, the maximum number of shares that may be issued under
the Plan (in addition to shares subject to awards as of April 28, 1998) would
be increased to a number not greater than the sum of (i) the number of shares
of common stock available for, but not yet subject to, an award under the Plan
as of April 28, 1998, plus (ii) 37,000,000 shares. As of February 28, 1998,
awards (including options and restricted stock awards) covering shares
were outstanding and shares were available for grant under the Plan.
Either authorized but unissued shares or treasury shares of common stock may
be issued in connection with awards under the Plan. In addition, the following
shares can also be re-used for a new award: (1) any shares subject to an award
which are forfeited or not issued because the terms and conditions of the
award are not met, (2) any shares used to pay all or part of an option
exercise price, (3) any shares subject to awards paid in cash, and (4) any
shares relating to exercised stock appreciation rights.
If the Plan Amendment is approved, the estimated maximum number of shares of
common stock that would be available for award under the 1998 Plan, in
addition to shares reserved for issuance under outstanding awards, would total
approximately shares. This number represents shares available for, but not
yet subject to, an award as of the date of the annual meeting ( shares,
assuming no awards are made under the Plan between February 28, 1998 and that
date), and the additional 37,000,000 shares authorized by the Plan Amendment.
Certain Federal Income Tax Consequences. The following discussion summarizes
the federal income tax consequences, in the opinion of counsel for the
Corporation, to participants who receive options under the Plan. This summary
is based upon the provisions, regulations, and interpretations of the Code in
effect as of January 1, 1998.
Non-Qualified Stock Options. A participant who is granted a non-qualified
stock option will not have income and the Corporation will not be allowed a
deduction at the time the option is granted. Except as discussed below under
"Participants Subject to Section 16 of the Act," when a participant exercises
a non-qualified stock option, the difference between the option price and any
higher market value of the stock on the date of exercise will be ordinary
income to the participant and will be allowed as a deduction for federal
income tax purposes to Norwest or its subsidiary. The capital gain holding
period of the shares acquired will begin one day after the date the stock
option or stock appreciation right is exercised. When a participant disposes
of shares acquired by the exercise of the option, any amount received that is
more than the fair market value of the shares on the exercise date will be
treated as short-term or long-term capital gain, depending upon the holding
period of the shares. If the amount received is less than the market value of
the shares on the exercise date, the loss will be treated as short-term or
long-term capital loss, depending upon the holding period of the shares.
Incentive Stock Options. A participant who is granted an incentive stock
option also will not have income and Norwest will not be allowed a deduction
at the time the option is granted. When a participant exercises an incentive
stock option while employed by Norwest or its subsidiary or within the three-
month period (one-year period, in the case of disability) after his or her
employment ends, the participant will not recognize any ordinary income at
that time. However, any excess of the fair market value of the shares acquired
by such exercise over the option price will be an item of tax preference for
purposes of any federal alternative minimum tax applicable to individuals. If
the shares acquired upon exercise are not disposed of more than two years
after the date of grant and one year after the date of transfer of the shares
to the participant (statutory holding periods), any sale proceeds that are
more than the total option price of these shares will be long-term capital
gain. Except in the event of death, if the shares are disposed of prior to the
expiration of the statutory holding periods (a "Disqualifying Disposition"),
generally, the amount by which the fair market value of the shares at the time
of exercise is more than the total option price will be ordinary income at the
time of such Disqualifying Disposition. If a Disqualifying Disposition occurs,
Norwest will be entitled to a federal tax deduction for a similar amount.
34
<PAGE>
Payment of Option Price in Shares. If a participant pays the exercise price
of a non-qualified or incentive stock option with previously-owned shares of
Norwest's common stock and the transaction is not a Disqualifying Disposition,
the shares received equal to the number of shares surrendered are treated as
having been received in a tax-free exchange. The shares received in excess of
the number surrendered will not be taxable if an incentive stock option is
being exercised, but will be taxable as ordinary income to the extent of their
fair market value if a non-qualified option is being exercised. The
participant does not recognize income and Norwest receives no deduction as a
result of the tax-free portion of the exchange transaction. If the use of
previously-acquired incentive stock option shares to pay the exercise price of
another incentive stock option constitutes a Disqualifying Disposition, the
tax results are as described under the heading "Incentive Stock Options."
Stock Appreciation Rights. A participant who receives stock appreciation
rights will not recognize income and Norwest will not be allowed a deduction
at the time such stock appreciation rights are granted. Except as discussed
below under the heading "Participants Subject to Section 16 of the Act," when
a participant exercises stock appreciation rights, the amount of cash and the
fair market value of the shares of common stock of Norwest received will be
ordinary income to the participant and will be allowed as a deduction for
federal income tax purposes to Norwest or its subsidiary.
RECOMMENDATION; VOTE REQUIRED
Approval of the Plan Amendment requires a vote in favor of the Plan
Amendment by the holders of a majority of Norwest's outstanding shares of
common stock.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE PROPOSAL TO
AMEND THE LONG-TERM INCENTIVE COMPENSATION PLAN. THIS PROPOSAL IS IDENTIFIED
AS ITEM 4 ON THE ENCLOSED PROXY CARD.
ITEM 5. APPOINTMENT OF AUDITORS
Stockholders will also vote at the annual meeting to ratify the appointment
by the Board of Directors of KPMG Peat Marwick LLP, independent certified
public accountants, as auditors of Norwest and its subsidiaries for the year
ending December 31, 1998. KPMG Peat Marwick LLP or its predecessors have
examined books and records of Norwest each year since 1931.
Representatives of KPMG Peat Marwick LLP are expected to be present at the
annual meeting of stockholders to answer appropriate questions and to make a
statement if they wish.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE PROPOSAL TO
RATIFY THE APPOINTMENT OF AUDITORS. THIS PROPOSAL IS IDENTIFIED AS ITEM 5 ON
THE ENCLOSED PROXY CARD.
35
<PAGE>
ITEM 6. STOCKHOLDER PROPOSAL RELATING TO
CUMULATIVE VOTING
Mr. Gerald R. Armstrong, 910 Fifteenth Street, No. 754, Denver, Colorado
80202-2924, who held 18,104 shares of common stock on November 17, 1997,
intends to submit a resolution to stockholders for approval at the 1998 annual
meeting. Mr. Armstrong's resolution and supporting statement are printed
below.
RESOLUTION
That the shareholders assembled in this annual meeting, request the Board of
Directors to promptly take those steps necessary to allow cumulative voting in
the elections of directors in future annual meetings of shareholders, to the
extent that cumulative voting shall be mandatory at any time the corporation
is aware that a stockholder, or group of associated stockholders, is the owner
of voting stock representing thirty (30%) or more of the outstanding shares on
the record date for the meeting.
(For clarification, cumulative voting allows each shareholder to cast votes
in the election of Directors equal to the number of shares held by the
stockholder multiplied by the number of Directors to be elected and cast all
of the accumulated votes for a single nominee or to distribute votes among any
one or more of the nominees. In the 1997 annual meeting of shareholders,
78,015,001 shares were voted in favor of "cumulative voting.")
STATEMENT
Our chairman is elected a Director of Northern States Power Company which
has cumulative voting. Does he represent a "special interest" he fears at
Norwest?
The statutes of Minnesota and the National Bank Act require cumulative
voting. Norwest escapes this by incorporating as a bank-holding company in
Delaware.
Many acquisitions of Norwest--United Banks of Colorado and Goldenbanks of
Colorado, for example--had cumulative voting. The proponent believes these
shareholders were not compensated for losing their rights.
The use of cumulative voting in 1996 at Professional Bancorp allowed
shareholders owning significant shares to elect nominees and former directors,
because of their ownership, to elect their representatives.
In view of the large number of shares being allocated to management and
employees, it is essential that voting rights be proportionate. It appears
that fewer acquisitions are being made by holding companies as the market
prices of shares have increased significantly denying shareholders meaningful
premiums. The proponent believes that enhanced voting rights could attract
shareholders seeking the best offer.
Many successful corporations have cumulative voting. Ingersoll-Rand, for
example, has consistently increased its dividend greater than Norwest.
WestAmerica Bancorporation has a growth rate greater than Norwest.
Lockheed-Martin, VWR, and others, now have provisions that if any entity
acquires certain percentages of shares, cumulative voting applies to all
shareholders.
IF YOU AGREE, PLEASE MARK YOUR PROXY "FOR."
POSITION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE AGAINST THIS
PROPOSAL, WHICH IS IDENTIFIED AS ITEM 6 ON THE ENCLOSED PROXY CARD, FOR THE
FOLLOWING REASONS:
Under Norwest's Restated Certificate of Incorporation and By-Laws, each
stockholder may cast one vote per share owned in favor of, or may withhold his
or her votes from, each director-nominee at the annual meeting.
36
<PAGE>
A director is elected by receiving the votes of a plurality of the shares
represented at the meeting. Under the cumulative voting proposal advocated by
Mr. Armstrong, when Norwest becomes aware that a stockholder or a group of
stockholders owns 30% of the outstanding common stock, each stockholder would
then be entitled to a number of votes equal to the number of shares owned by
the stockholder multiplied by the number of director-nominees. These votes
could be divided among the nominees for director or they could all be cast for
a single nominee.
Mr. Armstrong also presented a cumulative voting proposal at the 1997 annual
meeting. Norwest stockholders holding 193,135,298 shares, or approximately 68%
of the shares of outstanding common stock present and voting at the 1997
meeting on this proposal, voted against the cumulative voting proposal. The
stockholder's current cumulative voting proposal differs from the proposal
submitted by him last year by requiring cumulative voting only when a single
stockholder, or group of affiliated stockholders, holds at least 30% of
Norwest's outstanding common stock.
Cumulative voting operates to permit a small faction of the stockholders to
elect a director or directors to the board to represent the faction's point of
view. Cumulative voting will facilitate the election of "special interest"
directors to Norwest's Board of Directors. This is particularly true when
cumulative voting is triggered only when a specified percentage of voting
stock is held by a single stockholder, or group of related stockholders, who
will then be able to elect a board member to represent their interests. The
Board of Directors believes that a board composed of factions focused on the
special interests of one or more groups will function less effectively than a
board whose members are elected by and consider themselves representatives of
all stockholders.
The perspective of every director should be the interest of all
stockholders. Accordingly, the Board of Directors recommends that stockholders
vote AGAINST this proposal.
DEADLINE FOR SUBMITTING STOCKHOLDER PROPOSALS
Proposals from stockholders to be presented at the 1999 annual meeting must
be received by the Secretary of Norwest, at Norwest Center, Sixth and
Marquette, Minneapolis, Minnesota 55479-1026, no later than November 18, 1998.
ANNUAL REPORTS
Norwest's 1997 Annual Report, including financial statements, has been sent
to stockholders. NORWEST WILL SEND A COPY OF NORWEST'S ANNUAL REPORT ON FORM
10-K FOR 1997, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES, FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION WITHOUT CHARGE TO ANY STOCKHOLDER WHO
REQUESTS A FORM 10-K IN WRITING. A stockholder may also request copies of any
exhibit to the Form 10-K. Norwest will charge a fee to cover expenses to
prepare and send any exhibits. Please send requests to: Corporate Secretary,
Norwest Corporation, Norwest Center, Sixth and Marquette, Minneapolis,
Minnesota 55479-1026.
By Order of the Board of Directors,
/s/ Laurel A. Holschuh
LAUREL A. HOLSCHUH
Secretary
March 18, 1998
37
<PAGE>
EXHIBIT A
NORWEST CORPORATION
PERFORMANCE-BASED COMPENSATION POLICY
(AS AMENDED AND RESTATED EFFECTIVE AS OF JANUARY 1, 1998)
1. Purpose. The purpose of the "Norwest Corporation Performance-Based
Compensation Policy" (the "Policy") is to establish one or more performance
goals for payment of incentive compensation other than stock options and the
maximum amount of such incentive compensation that may be paid to certain
executive officers. It is the intention of the Human Resources Committee (the
"Committee") of the Board of Directors of the Corporation that incentive
compensation awarded to each Covered Executive Officer (as defined below) be
deductible by the Corporation for federal income tax purposes in accordance
with Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), any regulations promulgated thereunder, and ruling or advisory
opinions published by the Internal Revenue Service related thereto (the
"Regulations").
2. Covered Executive Officers. This Policy shall apply to any individual (a
"Covered Executive Officer") who, on the last day of a taxable year is (a) the
chief executive officer of the Corporation or is acting in such capacity, or
(b) is among the four highest compensated executive officers (other than the
chief executive officer) of the Corporation. Whether an individual is the
chief executive officer or among the four highest compensated executive
officers shall be determined pursuant to the executive compensation disclosure
rules under the Securities Exchange Act of 1934.
3. Incentive Compensation Award/Establishment of Performance Goals. An
incentive compensation award to a Covered Executive Officer may be paid in the
form of cash, stock, or restricted stock, or any combination thereof. Payment
of an incentive compensation award to a Covered Executive Officer will be
contingent upon the attainment of the performance goal or goals for the
Performance Period established for such Covered Executive Officer by the
Committee as provided herein. The Committee shall retain the discretion to
reduce the incentive compensation award payable to a Covered Executive
Officer, notwithstanding attainment of any performance goal.
The Committee shall establish in writing one or more performance goals to be
attained (which performance goals may be stated as alternative performance
goals) for a Performance Period for each Covered Executive Officer on or
before the latest date permitted under Section 162(m) of the Code or the
Regulations. Performance goals may be based on any one or more of the
following business criteria (as defined in paragraph 4 below) as the Committee
may select:
.Earnings Per Share
.Business Unit Net Earnings
.Return on Realized Common Equity.
The maximum amount of an incentive compensation award for any Performance
Period to any Covered Executive Officer shall be a dollar amount not to exceed
eight-tenths of one percent (0.8%) of the Corporation's Net Income (as defined
below).
4. Definitions. For purposes of this Policy and for determining whether a
particular performance goal is attained, the following terms shall have the
meanings given them below:
(a) The term "Business Unit Net Earnings" shall mean the net earnings of
the business unit of the Corporation managed by a Covered Executive
Officer, as determined in accordance with generally accepted accounting
principles, adjusted in accordance with the Corporation's management
accounting practices and conventions in effect at the beginning of the
Performance Period, and as further adjusted in the same manner as provided
below for Net Income.
A-1
<PAGE>
(b) The term "Earnings Per Share" shall mean the Corporation's diluted
earnings per share as reported in the Corporation's consolidated financial
statements for the Performance Period, adjusted in the same manner as
provided below for Net Income.
(c) The term "Net Income" shall mean the Corporation's net income for the
applicable Performance Period as reported in the Corporation's consolidated
financial statements, adjusted to eliminate the effect of (1) restatements
of prior periods' financial results relating to an acquisition accounted
for as a pooling of interests; (2) losses resulting from discontinued
operations; (3) extraordinary gains or losses; (4) the cumulative effect of
changes in generally accepted accounting principles; and (5) any other
unusual, non-recurring gain or loss which is separately identified and
quantified in the Corporation's financial statements.
(d) The term "Performance Period" shall mean a calendar year, commencing
January 1 and ending December 31.
(e) The term "Return on Realized Common Equity" shall mean the Net Income
of the Corporation on an annualized basis less dividends accrued on
outstanding preferred stock, divided by the Corporation's average total
common equity excluding average accumulated comprehensive income as
reported in the Corporation's consolidated financial statements for the
Performance Period.
5. Applicability of Certain Provisions of the Long-Term Incentive
Compensation Plan and the Employees' Deferred Compensation Plan to Incentive
Compensation Awards. An incentive compensation award paid in stock or
restricted stock pursuant to this Policy shall be governed by the provisions
(other than provisions with respect to the computation of such award) of the
Corporation's Long-Term Incentive Compensation Plan. Deferral of an incentive
compensation award paid in cash under this Policy shall be made pursuant to
the provisions of the Corporation's Employees' Deferred Compensation Plan.
6. Effective Date; Amendment and Termination. This Policy shall be effective
as of January 1, 1998; provided, however, that no incentive compensation award
shall be paid pursuant to this Policy, unless this Policy has been approved by
the stockholders of the Corporation. The Committee may at any time terminate,
suspend, amend or modify this Policy except that stockholder approval shall be
required for any amendment or modification to this Policy that, in the opinion
of counsel, would be required by Section 162(m) of the Code or the
Regulations.
A-2
<PAGE>
EXHIBIT B
PROPOSED AMENDMENT TO
LONG-TERM INCENTIVE COMPENSATION PLAN
The proposed language to be added to Section 4 of the Long-Term Incentive
Compensation Plan is under lined and the language to be deleted in enclosed in
brackets.
4. Shares Available Under the Plan; Limitation on Awards. The maximum number
of Shares that may be issued under this Plan on and after April 28, 1998 (in
addition to Shares which prior to April 28, 1998 [April 23, 1996] were subject
to Awards) shall not exceed the sum of (i) the number of Shares available for,
but not yet subject to, an Award as of April 28, 1998 [April 23, 1996], plus
(ii) 37,000,000 [35,000,000] Shares. These Shares may consist, in whole or in
part, of authorized but unissued Stock or treasury Stock not reserved for any
other purpose. Any Shares subject to the terms and conditions of an Award
under this Plan which are forfeited or not issued because the terms and
conditions of the Award are not met or for which payment is not made in Stock
and any Shares which are used for full or partial payment of the purchase
price of Shares with respect to which an Option is exercised may again be used
for an Award under the Plan. No Employee may be awarded in any calendar year
Options or Stock Appreciation Rights covering an aggregate of more than
7,000,000 Shares.
B-1
<PAGE>
[LOGO OF NORWEST CORPORATION APPEARS HERE]
NC54228MSC97
<PAGE>
(See Reverse For Instructions on How to Vote by Telephone)
NORWEST CORPORATION
Sixth and Marquette, Minneapolis, Minnesota 55479 PROXY
- --------------------------------------------------------------------------------
This proxy is solicited by the Board of Directors for use at the Annual Meeting
on Tuesday, April 28, 1998.
The shares of common stock of Norwest Corporation ("Norwest") which are entitled
to vote on March 10, 1998 will be voted as you specify on this card.
If no choice is specified, this proxy will be voted "FOR" Items 2 through 5, and
"AGAINST" Item 6.
By signing this proxy, you revoke all prior proxies and appoint Stanley S.
Stroup, and John T. Thornton, and each of them, with full power of substitution,
to vote your shares as specified on this card and on any other business which
may properly come before the Annual Meeting or any adjournment thereof.
The Board of Directors recommends a vote "FOR" Items 1, 2, 3, 4 and 5.
<TABLE>
<S> <C> <C> <C> <C>
Item 1. Election of directors: 01 Leslie S. Biller 05 Lloyd P. Johnson 10 Cynthia H. Milligan [_] Vote FOR all
02 J.A. Blanchard III 06 Reatha Clark King 11 Benjamin F. Montoya nominees
03 David A. Christensen 07 Richard M. Kovacevich 12 Ian M. Rolland [_] Vote WITHHELD
04 William A. Hodder 08 Richard S. Levitt 13 Michael W. Wright from all
09 Richard D. McCormick nominees
</TABLE>
(Instructions: To withhold authority to vote for any indicated nominee, write
----------------------------
the number(s) in the box provided to the right.)
----------------------------
<TABLE>
<S> <C>
Item 2. Approve an amendment to Norwest's Restated Certificate of Incorporation [_] For [_] Against [_] Abstain
increasing the authorized shares of common stock to 2,000,000,000.
Item 3. Approve the Performance-Based Compensation Policy. [_] For [_] Against [_] Abstain
Item 4. Approve an increase in the shares available for awards under [_] For [_] Against [_] Abstain
the Long-Term Incentive Compensation Plan.
Item 5. Ratify KPMG Peat Marwick LLP as auditors. [_] For [_] Against [_] Abstain
The Board of Directors recommends a vote "AGAINST" Item 6.
Item 6. Approve stockholder proposal relating to cumulative voting. [_] For [_] Against [_] Abstain
</TABLE>
Address change? Mark box [_] I plan to attend the meeting [_]
Indicate changes below:
Date
----------------------------------------------
----------------------------------------------------
----------------------------------------------------
Signature(s) in Box
Please sign exactly as your name(s) appear(s) hereon.
If held in joint tenancy, all persons must sign.
Trustees, administrators, etc., should include title
and authority. Corporations should provide full name
of corporation and title of authorized officer
signing the proxy.
<PAGE>
----------------
VOTE BY TELEPHONE COMPANY #
Call Toll Free on a Touch-Tone Telephone CONTROL #
1-800-240-6326 ----------------
- --------------------------------------------------------------------------------
Your telephone vote authorizes the named proxies to vote your shares in the same
manner as if you had marked, signed and returned your proxy card. The deadline
for telephone voting is noon (ET) on April 27, 1998.
1. Using a touch-tone telephone, dial 1-800-240-6326. You may dial this toll
free number at your convenience 7 days/week, 24 hours/day.
2. When prompted, enter the 3-digit Company Number located in the box on the
upper right hand corner of the proxy card.
3. When prompted, enter your 7-digit numeric Control Number that follows the
Company Number.
OPTION #1: To vote on ALL items as the Norwest Corporation Board of
Directors recommends: Press "1" When asked, please confirm your
vote by pressing "1" - THANK YOU FOR VOTING.
OPTION #2: If you choose to vote on each item separately: Press "0" You
will hear these instructions:
Item 1: To vote FOR all nominees, press "1"; to WITHHOLD FOR
------
ALL nominees, press "9"; to WITHHOLD FOR AN INDIVIDUAL nominee,
press "0" and listen to the instructions.
Item 2: To vote FOR, press "1"; AGAINST, press "9"; ABSTAIN,
------
press "0"
The instructions are the same for all remaining items.
When asked, please confirm your vote by pressing "1" -- THANK YOU FOR VOTING
IF YOU VOTE BY TELEPHONE, DO NOT MAIL BACK YOUR PROXY
<PAGE>
(See Reverse For Instructions on How to Vote By Telephone)
NORWEST CORPORATION SAVINGS INVESTMENT PLAN
NORWEST CORPORATION INVEST NORWEST INSTRUCTION CARD AND PROXY
- --------------------------------------------------------------------------------
This proxy card is solicited by the Board of Directors of Norwest Corporation
("Norwest") for use at the Annual Meeting of Stockholders on April 28, 1998 from
persons who participate in either (1) the Savings Investment Plan ("SIP"), or
(2) Invest Norwest , or (3) both SIP and Invest Norwest.
By signing this instruction card and proxy: (a) if you participate in SIP, you
revoke any prior instructions, and you hereby instruct Norwest Bank Minnesota,
N.A., as Trustee of the Norwest Corporation Master Savings Trust (the "Trust")
to exercise the voting rights relating to any shares of Norwest common stock
held by and allocable to the your SIP account as of March 10, 1998 at the Annual
Meeting or any adjournment as you specify on this proxy card, and also on any
other business that may properly come before such meeting or at any adjournment;
and (b) if you participate in Invest Norwest, you revoke any prior proxies and
appoint Stanley S. Stroup and John T. Thornton, and each of them, with full
power of substitution, as proxies to vote any shares of Norwest common stock
held for your Invest Norwest account as of March 10, 1998 at the Annual Meeting
as you specify on this card and on any other business which may properly come
before such meeting or at any adjournment.
If you do not specify a choice, this proxy will be voted "FOR" Items 2 through
5, and "AGAINST" Item 6.
SIP Participants: This instruction card and proxy must be returned to Norwest
- ----------------
Bank Minnesota, National Association, Trustee, by April 23, 1998, if your
instructions are to be honored. The Trustee will tabulate the instructions from
all participants received by the deadline and will determine the ratio of votes
for and against each item. The Trustee will then vote all shares held in the
Trust according to these ratios.
The Board of Directors recommends a vote "FOR" Items 1, 2, 3, 4 and 5.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Item 1. Election of 01 Leslie S. Biller 05 Lloyd P. Johnson 10 Cynthia H. Milligan [_] Vote FOR all
directors: 02 J.A. Blanchard III 06 Reatha Clark King 11 Benjamin F. Montoya nominees
03 David A. Christensen 07 Richard M. Kovacevich 12 Ian M. Rolland
04 William A. Hodder 08 Richard S. Levitt 13 Michael W. Wright [_] Vote WITHHELD
09 Richard D. McCormick from all nominees
</TABLE>
(Instructions: To withhold authority to vote for any indicated nominee, write
the number(s) in the box provided to the right.) ----------------------------
- ------------------------------------------------ ----------------------------
<TABLE>
<S> <C> <C> <C>
Item 2. Approve an amendment to [_] For [_] Against [_] Abstain
Norwest's Restated Certificate of
Incorporation increasing the
authorized shares of common stock
to 2,000,000,000.
Item 3. Approve the [_] For [_] Against [_] Abstain
Performance-Based Compensation
Policy.
Item 4. Approve an increase in the [_] For [_] Against [_] Abstain
shares available for awards under
the Long-Term Incentive
Compensation Plan.
Item 5. Ratify KPMG Peat Marwick [_] For [_] Against [_] Abstain
LLP as auditors.
The Board of Directors recommends a vote "AGAINST" Item 6.
Item 6. Approve stockholder [_] For [_] Against [_] Abstain
proposal relating to cumulative
voting.
</TABLE>
Date
---------------------------------------
---------------------------------------
---------------------------------------
Signature(s) in Box
Please sign exactly as your name(s)
appear(s) hereon. If held in joint
tenancy, all persons must sign.
Trustees, administrators, etc., should
include title and authority.
Corporations should provide full name
of corporation and title of authorized
officer signing the proxy.
<PAGE>
--------------------
VOTE BY TELEPHONE COMPANY #
Call Toll Free on a Touch-Tone Telephone CONTROL #
1-800-240-6326 --------------------
- --------------------------------------------------------------------------------
Your telephone vote authorizes the named proxies to vote your shares in the same
manner as if you had marked, signed and returned your proxy card. The deadline
for telephone voting is noon (ET) on April 27, 1998.
1. Using a touch-tone telephone, dial 1-800-240-6326. You may dial this toll
free number at your convenience 7 days/week, 24 hours/day.
2. When prompted, enter the 3-digit Company Number located in the box on the
upper right hand corner of the proxy card.
3. When prompted, enter your 7-digit numeric Control Number that follows the
Company Number.
OPTION #1: To vote on ALL items as the Norwest Corporation Board of
Directors recommends: Press "1" When asked, please confirm your
vote by pressing "1" -- THANK YOU FOR VOTING.
OPTION #2: If you choose to vote on each item separately: Press "0" You
will hear these instructions:
Item 1: To vote FOR all nominees, press "1"; to WITHHOLD FOR
------
ALL nominees, press "9"; to WITHHOLD FOR AN INDIVIDUAL
nominee, press "0" and listen to the instructions.
Item 2: To vote FOR, press "1"; AGAINST, press "9"; ABSTAIN,
------
press "0"
The instructions are the same for all remaining items.
When asked, please confirm your vote by pressing "1" -- THANK YOU FOR VOTING
IF YOU VOTE BY TELEPHONE, DO NOT MAIL BACK YOUR PROXY
