NORTHERN TRUST CORP, DEF 14A, 1994-03-15

NORTHERN TRUST CORP
DEF 14A, 1994-03-15
STATE COMMERCIAL BANKS

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<PAGE>

SCHEDULE 14A
(RULE 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIESEXCHANGE ACT OF 1934

Filed by the registrant [X]

Filed by a party other than the registrant [_]

Check the appropriate box:

[_] Preliminary proxy statement

[X] Definitive proxy statement

[_] Definitive additional materials

[_] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12

NORTHERN TRUST CORPORATION
(Name of Registrant as Specified In Its Charter)

NORTHERN TRUST CORPORATION
(Name of Person(s) Filing Proxy Statement)

Payment of filing fee (Check the appropriate box):

[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).

[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).

[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:

(4) Proposed maximum aggregate value of transaction:

[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or Schedule and the date of its filing.

(1) Amount previously paid:

(2) Form, schedule or registration statement no.:

(3) Filing party:

(4) Date filed:
<PAGE>

NORTHERN TRUST CORPORATION

NOTICE AND PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 19, 1994

The annual meeting of stockholders of Northern Trust Corporation will be held
on Tuesday, April 19, 1994, at 10:30 a.m., Chicago time, at the office of the
Corporation, northwest corner of La Salle and Monroe Streets, Chicago, for the
following purposes:

(1) to elect sixteen Directors to hold office until the next annual meeting
of stockholders and until their successors shall have been elected and
qualified; and

(2) to transact such other business as may properly come before the
meeting.

Only stockholders of record on the books of the Corporation at 5 p.m.,
Chicago time, on February 28, 1994, will be entitled to vote at the meeting.

PETER L. ROSSITER
Secretary

March 15, 1994

IMPORTANT--PLEASE MAIL YOUR PROXY PROMPTLY

IN ORDER THAT THERE MAY BE PROPER REPRESENTATION
AT THE MEETING, YOU ARE URGED TO SIGN AND RETURN
THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED. YOU
MAY NEVERTHELESS VOTE IN PERSON IF YOU DO ATTEND
THE MEETING.

<PAGE>

LOGO
50 SOUTH LA SALLE STREET
CHICAGO, ILLINOIS 60675
MARCH 15, 1994
PROXY STATEMENT

This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Northern Trust Corporation (the "Corporation") of proxies
for use at the annual meeting of stockholders of the Corporation to be held
April 19, 1994, at 10:30 a.m., Chicago time, at the office of the Corporation,
northwest corner of La Salle and Monroe Streets, Chicago. The Corporation is a
bank holding company whose principal subsidiary is The Northern Trust Company
(the "Bank").

Any stockholder giving a proxy will have the right to revoke it at any time
prior to the voting thereof. All shares represented by effective proxies will
be voted at the meeting, or at any adjournment thereof, in accordance with the
instructions reflected in the proxies. Absent any voting instructions to the
contrary, shares will be voted FOR the election of the sixteen nominees for
Director.

This Proxy Statement and the enclosed proxy, along with the Corporation's
1993 Annual Report, including financial statements, are being mailed on or
about March 15, 1994, to each stockholder of record as of February 28, 1994.

As of February 28, 1994, the record date for the annual meeting, the
Corporation had outstanding and entitled to vote 53,337,983 shares of common
stock, par value $1.66 2/3 per share (the "Common Stock"), exclusive of 488,278
shares held by the Corporation as treasury stock, which will not be voted.

Votes cast by proxy or in person at the annual meeting will be tabulated by
the inspectors of election appointed for the meeting and will determine whether
or not a quorum is present.

ELECTION OF DIRECTORS

Sixteen Directors are to be elected at the annual meeting of stockholders. It
is intended that, absent any voting instructions to the contrary, shares
represented by the enclosed proxy will be voted
for the election of all nominees listed below, who include 15 of the 16
Directors now in office. William A.
Pogue has decided not to stand for reelection as a Director of the Corporation
at the annual meeting, and Dolores E. Cross will stand for election to the seat
vacated by him. All Directors will be elected to serve until the next annual
meeting and until their successors shall have been elected and qualified. In
the event, however, that any such nominee shall be unable to serve, which is
not now contemplated, the proxy holders may or may not vote for a substitute
nominee.

The proxy provides instructions for voting for all Director nominees or for
withholding authority to vote for one or more Director nominees. Stockholders
have cumulative voting rights in the election of Directors. Accordingly, each
stockholder is entitled to as many votes as shall equal the number of his
shares of Common Stock multiplied by the number of Directors to be elected. It
is expected that the proxy holders will divide these cumulative votes equally
among all Director nominees for whom authority to vote has not been withheld,
unless the stockholder chooses to allocate his votes otherwise and so indicates
on the proxy. Notwithstanding the foregoing, the proxy holders reserve the
right, exercisable in their sole discretion, to vote proxies cumulatively so as
to elect all or as many as possible of such Director nominees depending upon
circumstances at the meeting. Whether or not any shares are voted cumulatively,
the sixteen persons receiving the highest number of votes cast will be elected
as Directors.

1
<PAGE>

INFORMATION ABOUT NOMINEES

The following information with respect to nominees for election to the Board
of Directors of the Corporation at the 1994 annual meeting of stockholders is
as of December 31, 1993.

Nominee, Age
and
Year Became
Director of Principal Occupation and Other Information
Bank -------------------------
or
Corporation

- -------------- CHAIRMAN OF THE BOARD since April, 1984, AND CHIEF
Photograph of EXECUTIVE OFFICER since December, 1982, NALCO
Mr. Clark CHEMICAL COMPANY (Manufacturer of specialized
service chemicals).
Mr. Clark is a director of Nalco Chemical Company,
USG Corporation, NICOR Inc., James River Corp. and
Bethlehem Steel Corp.
WORLEY H. CLARK
Age 61 1986

Photograph of PRESIDENT, CHICAGO STATE UNIVERSITY, since 1990;
Dr. Cross Associate Provost and Associate Vice President for
Academic Affairs, University of Minnesota, from
1988 to 1990 (Educational institutions).
Dr. Cross is a director of Shorebank Corporation
and the Student Loan Marketing Association.
DOLORES E. CROSS
Age 56

Photograph of CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF THE
Mr. Fox CORPORATION AND THE BANK since January, 1994,
Chairman, President and Chief Executive Officer
from April, 1990 to January, 1994, President and
Chief Executive Officer from December, 1989 to
April, 1990, President and Chief Operating Officer
from April, 1987 to December, 1989.
Mr. Fox is a director of USG Corporation and the
Federal Reserve Bank of Chicago and a Governor of
the Chicago Stock Exchange.
DAVID W. FOX
Age 62 1981

Photograph of DEAN AND EDWARD EAGLE BROWN DISTINGUISHED SERVICE
Mr. Hamada PROFESSOR OF FINANCE since July, 1993, Edward Eagle
Brown Professor of Finance from 1989 to July, 1993
and member of the Faculty since 1966, GRADUATE
SCHOOL OF BUSINESS, UNIVERSITY OF CHICAGO
(Educational institution).

Mr. Hamada is a director of A. M. Castle & Co. and
the Chicago Board of Trade.

ROBERT S. HAMADA
Age 56 1988

2
<PAGE>

Nominee, Age
and
Year Became
Director of Principal Occupation and Other Information
Bank ------------------------------------------

or Corporation
VICE CHAIRMAN OF THE CORPORATION AND THE BANK since
- --------------- January, 1994, Senior Executive Vice President from
Photograph of November, 1992 through December, 1993, and Executive Vice
Mr. Hastings President of the Bank from April, 1987 to November, 1992
and of the Corporation from April, 1990 to November,
1992. Mr. Hastings currently serves as head of the
Personal Financial Services Business Unit.

BARRY G. HASTINGS
Age 46 1994

Photograph of PARTNER, MAYER, BROWN & PLATT since January, 1967 (Law
Mr. Helman firm).

Mr. Helman is a director of The Horsham Corporation,
LaSalle Street Fund, Brambles USA, Inc. and Alberta
Natural Gas Company Ltd., and a Governor of the Chicago
Stock Exchange.
ROBERT A. HELMAN
Age 59 1986

Photograph of MANAGING PARTNER, KEL ENTERPRISES LTD. since 1982
Mr. Kelly (Holding and investment company).

Mr. Kelly is a director of Bayerische Motoren Werke (BMW)
A.G., Deere & Company, Nalco Chemical Company and Snap-on
Tools Corporation.

ARTHUR L. KELLY
Age 56 1988

Photograph of GENERAL DIRECTOR, LYRIC OPERA OF CHICAGO since January,
Miss Krainik 1981 (Opera company).

ARDIS KRAINIK
Age 64 1985

3
<PAGE>

Nominee, Age
and
Year Became
Director of Principal Occupation and Other Information
Bank ------------------------------------------

or Corporation

- --------------- CHAIRMAN since May, 1988, AND PRESIDENT AND CHIEF
EXECUTIVE OFFICER since July 1987, SANTA FE PACIFIC
Photograph of CORPORATION (Transportation and natural resources
Mr. Krebs company).

Mr. Krebs is a director of Santa Fe Pacific Corporation,
Phelps Dodge Corporation, Santa Fe Energy Resources,
Inc., Catellus Development Corporation and Santa Fe
Pacific Pipelines, Inc.
ROBERT D. KREBS
Age 51 1989

Photograph of CHAIRMAN since November, 1993, AND CHIEF EXECUTIVE OFFI-
Mr. Krehbiel CER since July, 1988, MOLEX INCORPORATED (Manufacturer of
electrical/electronic interconnecting products and sys-
tems).

Mr. Krehbiel is a director of Molex Incorporated,
Tellabs, Inc., A. M. Castle & Co. and Nalco Chemical
Company.
FREDERICK A. KREHBIEL
Age 52 1988

Photograph of RETIRED VICE CHAIRMAN, CENTEL CORPORATION since May, 1987
Mr. Mitchell (Telecommunications company).

Mr. Mitchell is a director of The Interlake Corporation,
Peoples Energy Corporation and The Sherwin-Williams Co.
WILLIAM G. MITCHELL
Age 62 1975

Photograph of PRESIDENT AND CHIEF OPERATING OFFICER OF THE CORPORATION
Mr. Osborn AND THE BANK since January, 1994, Senior Executive Vice
President from November, 1992 through December, 1993, and
Executive Vice President of the Bank from April, 1987 to
November, 1992 and of the Corporation from April, 1989 to
November, 1992.

WILLIAM A. OSBORN
Age 46 1994

4
<PAGE>

Nominee, Age
and
Year Became
Director of
Bank Principal Occupation and Other Information

or Corporation

- --------------- CHAIRMAN OF THE EXECUTIVE COMMITTEE, ILLINOIS TOOL WORKS
INC. since January, 1982 (Manufacturer and marketer of
Photograph of engineered components, and industrial systems and
Mr. Smith consumables).

Mr. Smith is a director of Illinois Tool Works Inc. and
W. W. Grainger, Inc. and is a trustee of The Northwestern
Mutual Life Insurance Company.
HAROLD B. SMITH
Age 60 1974

Photograph of CHAIRMAN AND CHIEF EXECUTIVE OFFICER, THE QUAKER OATS
Mr. Smithburg COMPANY since January, 1993. Chairman, President and
Chief Executive Officer from November, 1990 to December,
1992, Chairman and Chief Executive Officer from November,
1983 to November, 1990 (Diversified food manufacturer and
marketer).

Mr. Smithburg is a director of The Quaker Oats Company,
Abbott Laboratories, Corning Incorporated and Prime
Capital Corp.
WILLIAM D. SMITHBURG
Age 55 1981

Photograph of VICE CHAIRMAN OF THE CORPORATION AND THE BANK since
Mr. Sutfin January, 1994, Senior Executive Vice President from
November, 1992 through December, 1993, and Executive Vice
President from December, 1982 to November, 1992. Mr.
Sutfin currently serves as head of the Corporate
Financial Services Business Unit.

JOHN S. SUTFIN
Age 54 1994

Photograph at RETIRED PRESIDENT, COMMONWEALTH EDISON COMPANY since
Mr. Thomas December, 1992. President from September, 1987 to
December, 1992 (Company engaged in production,
distribution and sale of electric energy).

Mr. Thomas is a director of R. R. Donnelley & Sons Com-
BIDE L. THOMAS pany and L. E. Myers Company.
Age 58 1984

5
<PAGE>

SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN
BENEFICIAL OWNERS
SECURITY OWNERSHIP OF MANAGEMENT

The following table shows the beneficial ownership of the Common Stock for
each Director and Director nominee, each executive officer named in the Summary
Compensation Table elsewhere in this Proxy Statement and all Directors and
executive officers of the Corporation as a group. None of the persons listed
below owns any Preferred Stock of the Corporation.

<TABLE>
<CAPTION>
COMMON STOCK(/1/)
OWNED AS OF
DECEMBER 31, 1993
-----------------------
NO. OF PERCENT
NAME SHARES OF CLASS
- ---------------------------------------------------
<S> <C> <C>
Worley H. Clark......... 3,150 *
Dolores E. Cross........ -- --
David W. Fox............ 308,812(/2/) *
Robert S. Hamada........ 1,950 *
Barry G. Hastings....... 140,265(/2/) *
Robert A. Helman........ 1,650 *
Arthur L. Kelly......... 8,250 *
Ardis Krainik........... 1,650 *
Robert D. Krebs......... 1,650 *
Frederick A. Krehbiel... 9,250 *
William G. Mitchell..... 3,450 *
William A. Osborn....... 128,458(/2/) *
Perry R. Pero........... 142,115(/2/) *
William A. Pogue........ 2,550 *
Harold B. Smith......... 3,579,518(/3/) 6.72%
William D. Smithburg.... 1,650 *
John S. Sutfin.......... 108,387(/2/) *
Bide L. Thomas.......... 1,950 *
ALL DIRECTORS AND EXECU-
TIVE OFFICERS AS A
GROUP.................. 4,746,215(2) 8.91%
</TABLE>

- --------------------------------------------------------------------------------
* Less than one percent of the outstanding Common Stock.
(1) The information contained in this column is furnished to the
Corporation by the individuals named in the table and reflects the
Securities and Exchange Commission's definition of beneficial ownership.
The nature of beneficial ownership for shares shown in this column is
limited to sole voting and/or sole investment power, except as set forth
below. For all Directors but Messrs. Fox, Hastings, Osborn and Sutfin
includes shares granted under the Restricted Stock Plan for non-employee
Directors. See "Information About the Board and Committees--Compensation of
Directors," below.
(2) Includes shares issuable pursuant to stock options exercisable within
60 days after December 31, 1993, as follows: Mr. Fox, 145,500 shares; Mr.
Hastings, 65,684 shares; Mr. Osborn, 58,875 shares; Mr. Sutfin, 34,869
shares; Mr. Pero, 79,100 shares; and all Directors and executive officers as
a group, 552,628 shares.
(3) See footnote 3 on page 7.

6
<PAGE>

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following table shows Common Stock ownership of stockholders who were the
beneficial owners of more than 5% of the outstanding shares of the Common Stock
on December 31, 1993.

<TABLE>
<CAPTION>
COMMON STOCK(/1/)
OWNED AS OF
DECEMBER 31, 1993
-----------------------
NO. OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES OF CLASS
----------------------------------------------------- --------- --------
<S> <C> <C>
Robert C. McCormack.................................. 2,692,672(/2/) 5.05%
141 West Jackson Boulevard, Chicago, Illinois 60604
Harold B. Smith...................................... 3,579,518(/3/) 6.72%
3600 West Lake Avenue, Glenview, Illinois 60025-
5811
The Northern Trust Company, as Trustee of The North-
ern Trust
Company Thrift-Incentive Plan....................... 2,975,033(/4/) 5.58%
50 South La Salle Street, Chicago, Illinois 60675
NationsBank of Georgia, N.A., as Trustee of the
Northern Trust Employee Stock Ownership Plan........ 4,265,913(/5/) 8.01%
600 Peachtree St., N.E., Suite 700, Atlanta, Geor-
gia 30308
</TABLE>

- --------------------------------------------------------------------------------
(1) The information contained in this column is furnished to the
Corporation by the persons named in the table and reflects the Securities
and Exchange Commission's definition of beneficial ownership. The nature of
beneficial ownership for shares shown in this column is set forth in
footnotes 2 through 5 which follow.
(2) Robert C. McCormack has sole voting power as to 175,527 shares or .33%
of the outstanding Common Stock which are held in an irrevocable trust. As
co-trustee with the Bank and two individuals he shares voting and investment
powers for 1,291,614 shares or 2.42% of the outstanding Common Stock. As co-
trustee with the Bank and another individual he shares voting and investment
powers for 269,400 or .51% of the outstanding Common Stock. As co-trustee
with the Bank he shares voting and investment powers for 350,540 shares or
.66% of the outstanding Common Stock. With respect to 596,762 shares or
1.12%, he serves as co-fiduciary with the Bank and shares voting power and
has sole investment power. Also, members of his family hold 8,829 shares
deemed to be shared as to voting and investment powers and as to which he
disclaims any beneficial interest.
(3) Harold B. Smith serves as co-fiduciary and shares voting and
investment powers with various family members and the Bank with respect to
2,233,008 shares or 4.19% of the outstanding Common Stock. As co-trustee
with the Bank and two individuals he shares voting and investment powers for
1,291,614 shares or 2.42% of the outstanding Common Stock. With respect to
40,970 shares, he serves as co-fiduciary and shares voting and investment
powers with other family members. Also, 13,476 shares are held in a trust
over which he has sole voting and investment powers.
(4) The Bank, as Trustee of The Northern Trust Company Thrift-Incentive
Plan, holds in The Northern Trust Common Stock Fund of that Plan 2,975,033
shares or 5.58% of the outstanding Common Stock. The Bank has no voting or
investment power with respect to these shares since sole voting and
investment power for the shares is held by the 3,706 Northern Trust Common
Stock Fund participants who are employees of the Corporation or its
subsidiaries.
(5) NationsBank of Georgia, N.A., as Trustee of the Northern Trust
Employee Stock Ownership Plan holds 4,265,913 shares or 8.01% of the
outstanding Common Stock. Shares will be voted pursuant to direction of the
participants to the extent shares are allocated to their accounts.
Unallocated shares and shares for which no direction is received will be
voted by the Trustee in the same proportion that the allocated shares were
voted, unless inconsistent with the Trustee's fiduciary responsibility.

7
<PAGE>

The Bank and its affiliates individually act as sole or co-fiduciary with
respect to trusts and other fiduciary accounts which own, hold or control
through intermediaries in the aggregate 8,558,024 shares or 16.06% of the
outstanding Common Stock over which the Bank and its affiliates have, directly
or indirectly, sole or shared voting power and/or sole or shared investment
power. No single trust or other fiduciary account (except The Northern Trust
Company Thrift-Incentive Plan described in footnote 4 to the table above) holds
a beneficial interest in excess of 5%. The Bank and its affiliates have sole
voting power with respect to 1,766,669 shares or 3.32% of the outstanding
Common Stock, and they share voting power with respect to 5,826,171 shares or
10.93% of the outstanding Common Stock. They have sole investment power with
respect to 1,546,450 shares or 2.90% of the outstanding Common Stock, and they
share investment power with respect to 5,659,211 shares or 10.62% of the
outstanding Common Stock.

INFORMATION ABOUT THE BOARD AND COMMITTEES

COMMITTEES

The Corporation's Board of Directors presently has a Compensation and
Benefits Committee, an Audit Committee and a Nominating Committee.

Current members of the Compensation and Benefits Committee are William D.
Smithburg, Chairman, Worley H. Clark, Arthur L. Kelly, William A. Pogue, Harold
B. Smith and Bide L. Thomas. During 1993, the Committee met on eight occasions
to review and make recommendations to the full Board of Directors with respect
to the following matters: compensation policy, including executive compensation
policy and compensation levels for 1994, benefit plans and programs and
incentive plans and payments thereunder.

Current members of the Audit Committee are Robert A. Helman, Chairman, Worley
H. Clark, Robert D. Krebs, William G. Mitchell and William A. Pogue. During
1993, the Committee met on four occasions to review and make recommendations to
the full Board of Directors with respect to the following matters: examinations
by regulatory authorities, internal audit procedures, internal controls,
compliance with laws and regulations, engagement of independent public
accountants and matters having a material effect upon the Corporation's
financial operations. (See "Independent Public Accountants," below.)

Current members of the Nominating Committee are William A. Pogue, Chairman,
Robert D. Krebs, Frederick A. Krehbiel, Harold B. Smith and William D.
Smithburg. During 1993, the Committee met once to review and make
recommendations to the full Board of Directors with respect to the evaluation
of candidates for nomination to the Board of Directors and the structure and
membership of Board committees. The Committee will consider recommendations
from the stockholders of the Corporation, submitted in writing to the Secretary
of the Corporation, regarding potential nominees for election as Directors.

The Board of Directors held 13 meetings during 1993. All persons who were
Directors during 1993 attended at least 75% of these meetings and meetings of
Committees on which they serve.

Also, the Bank's Board of Directors has a Commercial Banking Committee and a
Trust and Financial Services Committee, which review the policies, strategies
and performance of these business units.

COMPENSATION OF DIRECTORS

Compensation of non-officer Directors of the Corporation and the Bank
consists of an annual retainer fee of ($20,000 for 1993 and $22,000 for 1994),
with the Chairmen of the Corporation's Audit, Compensation and Benefits, and
Nominating Committees and the Bank's Commercial Banking and Trust and Financial
Services Committees each receiving an additional annual retainer fee ($3,000
for 1993 and $4,000 for 1994). All non-officer Directors receive a fee for each
Board and Committee meeting attended ($850 in 1993 and $1,000 in 1994). Non-
officer directors are also eligible to receive a per diem fee of $1,000 when
required to perform specific services on behalf of the Corporation, although no
such fees were paid during 1993.

8
<PAGE>

Directors may elect to defer payment of the cash portion of their retainer or
their attendance fees which, if deferred, accrue earnings at an interest rate
determined from time to time by the Compensation and Benefits Committee. After
a Director ceases to be a Director of the Corporation and the Bank, the amount
accrued to his account is payable to him in a lump sum or in quarterly
installments according to a formula.

On August 20, 1991, the Corporation adopted a Restricted Stock Plan for non-
employee Directors. Under the Plan, on December 20, 1991, each non-employee
Director was granted 750 shares of Common Stock (as adjusted for a subsequent
stock split) which are distributable at the rate of 150 shares per year
commencing with December 20, 1991. The Director may vote and receive dividends
on all the shares granted but may not dispose of such shares until after the
shares have been distributed. If a Director ceases to serve as director, shares
granted but not yet distributed shall be forfeited. Newly elected non-employee
Directors participate in the Plan on the same terms, except that the number of
shares granted to each will equal 150 times the number of distribution dates
remaining.

MANAGEMENT TRANSACTIONS AND INDEBTEDNESS

Directors and officers of the Corporation and their associates were clients
of and had transactions with the Corporation and its subsidiaries in the
ordinary course of business during 1993. It is anticipated that similar
transactions may occur in the future. Such transactions in 1993 included
payments by the Corporation and its subsidiaries for materials and services
purchased and were not material relative to the gross revenues of either the
Corporation or the supplier. In addition, all loans and commitments to
officers, directors and their associates were made on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with other persons and did not involve more than
the normal risk of collectibility or present any unfavorable features. The law
firm of Mayer, Brown & Platt, of which Mr. Helman is a partner, is retained by
the Bank from time to time for legal services.

9
<PAGE>

EXECUTIVE COMPENSATION

COMPENSATION AND BENEFITS COMMITTEE REPORT

The Corporation strives to link executives' short-term and longer-term
financial rewards to the Corporation's performance and return to stockholders.
Accordingly, the Corporation's compensation program makes a significant portion
of the executives' rewards variable, dependent on performance relative to
corporate and individual goals set in advance. Rewards to executives should
increase when performance goals are achieved and surpassed and correspondingly
decrease if goals are not achieved. The Corporation's program relies
significantly on equity incentives in order to align the executives' interests
closely with those of the stockholders. The components of the Corporation's
executive compensation program are designed to reflect these reward principles
in each of the following: base salary, annual incentive cash award, performance
shares under a long-term incentive plan and stock options.

Each year the Committee conducts a comprehensive evaluation of the
Corporation's executive compensation programs, comparing them to a peer group
of financial service organizations that represent the Corporation's direct
competition for executive talent. The Committee considers recommendations from
the Corporation's Human Resources Department which works closely with outside
consultants. This annual compensation review also includes an evaluation of the
effectiveness of the Corporation's executive compensation programs in the
context of the compensation programs of other financial service organizations
to ensure that the Corporation will continue to attract and retain the most
qualified executives. The organizations selected for comparison purposes
generally have one or more of the following characteristics: superior financial
performance; lines of business similar to those of the Corporation; significant
operations in the Corporation's principal geographic areas; and size, either
overall or in particular lines of business, comparable to that of the
Corporation. The Keefe, Bruyette & Woods 50 Bank Index, which is used in the
Five Year Cumulative Total Return table presented elsewhere in this proxy
statement, includes most of the organizations in the peer group used for
compensation comparison purposes.

The Committee reviews and approves the compensation of the Corporation's most
highly compensated executives, including the executives whose compensation is
detailed in this Proxy Statement. For other executives the Committee reviews
overall compensation policies and payment levels. In reviewing the compensation
of executives other than David W. Fox, Chairman and Chief Executive Officer,
the Committee takes Mr. Fox's counsel and recommendations into account.

BASE SALARIES--Base salaries are determined by evaluating the
responsibilities of the position and the individual's experience, performance,
career progress and development. A review is also made of the competitive
marketplace for executive talent, including a comparison to base salaries for
comparable positions at other banking and financial services companies.

The Committee determines annual salary adjustments by evaluating the
performance of each executive officer, and also takes into account any changes
in the executive's responsibilities. With respect to the base salary set for
Mr. Fox in 1993, the Committee considered the base salaries of chief executive
officers of the peer group organizations previously described, the
Corporation's performance in 1992 and its assessment of Mr. Fox's individual
performance and leadership. In evaluating the Corporation's performance, the
Committee considered the Corporation's earnings, return on equity, return on
assets, total return to stockholders and financial condition. No precise
weighting was assigned to any of these factors, as the Committee believes the
Corporation's performance in each area has compared favorably with its peers.
The Committee also considered Mr. Fox's career service to the Corporation and
his contribution to the Corporation by service on its behalf in various
community and banking industry organizations. Mr. Fox's base salary was set at
an annual rate of $630,000 commencing April 1, 1993, an increase of $55,000 or
9.6% over the base salary established on April 1, 1992. The 1993 salary levels
of the other executive officers named in the Summary Compensation Table were
established in December, 1992, when they were promoted to the title of Senior
Executive Vice President. The Committee targeted the base salaries of these
executive officers and Mr. Fox between the median and the 75th percentile of
salaries for similar positions in most of the companies used for comparison
purposes.

ANNUAL INCENTIVE CASH AWARD--The Corporation's executive officers were in
1993 eligible for annual incentive cash awards under the provisions of the
Performance Incentive Plan. Cash awards

10
<PAGE>

under the Plan were made based upon the accomplishment of various corporate net
income objectives, business unit goals and individual financial and non-
financial objectives designed to improve the Corporation's earnings and
operations. For the executive officers listed in the Summary Compensation
Table, the award was tied to a corporate net income goal. The Committee
reviewed and recommended to the Board for approval at the beginning of the year
the corporate net income objectives and individual target awards based on
percentage of salary guidelines. Following the completion of the year the
Committee approved individual award payments based on a comparison of actual
achievements with the performance objectives. Awards were paid in cash.

Section 162(m) of the Internal Revenue Code provides that, commencing in
1994, compensation in excess of $1,000,000 per year paid to the chief executive
officer and the four other most highly compensated executive officers employed
at year-end, other than compensation meeting the technical definition of the
Code for "performance based compensation," will not be deductible by a
corporation for federal income tax purposes. The Corporation intends to provide
in any annual cash incentive award plan paying compensation to which Section
162(m) applies that any portion of an executive's incentive award which would
not be deductible by the Corporation after taking into account all other
compensation paid to the executive will be deferred and paid to the executive,
with interest, in the calendar year following retirement. With this provision,
the Committee believes that substantially all compensation paid to these
officers in 1994 will be deductible. The Committee will continue to review the
deductibility of compensation under Section 162(m) and any regulations adopted
under it, with the goal of assuring that substantially all compensation paid is
deductible by the Corporation.

Mr. Fox's Performance Incentive Plan award was determined on the basis of the
Corporation's overall achievement versus a previously determined net income
goal. Mr. Fox's 1993 award of $414,982 recognized that the Corporation's net
income exceeded the Plan's goal for that year.

LONG-TERM INCENTIVE PLAN--Performance shares typically are awarded to the
Corporation's executive officers annually under the long-term performance share
provisions of the 1992 Incentive Stock Plan (the "Plan"). For each year's
award, there is a three year performance period followed by a three year
vesting period. The three year performance period is intended to reflect a
longer term strategic business focus and the three year vesting period is
designed to encourage the executives to remain with the Corporation. The
Committee, at the beginning of the performance period, establishes return-on-
equity corporate performance goals for the period and performance share target
awards for the Plan's participants. Individual performance share target awards
are based on multiple-of-salary guidelines and competitive compensation data.
The Committee also considers the amount of long-term performance share awards
and stock options previously granted to the individual. Following the
completion of each three year performance period, the Committee determines
whether the return-on-equity goal for that performance period has been achieved
and authorizes the crediting of the performance shares to the participants'
accounts. Typically the shares are distributed to the participant on the third
anniversary following the date on which the shares were credited to the
participant's account, together with cash in an amount equal to the dividends
declared on that number of shares during the three year period plus interest at
an assumed rate on those dividends. If the executive leaves the Corporation
prior to this time for reasons other than death, disability or retirement, the
performance shares and imputed earnings are forfeited.

In February, 1993, the Committee applied the factors described above and set
for Mr. Fox a performance share target award of 13,000 shares for the 1993-1995
performance period. The award is subject to achieving the three year return-on-
equity goal and satisfaction of the ensuing three year service vesting
restriction. The Committee also approved the vesting and distribution to Mr.
Fox and other participants in December, 1993 of the shares earned for the 1988-
1990 performance period, based upon the Corporation's achievement of the goals
for this period.

STOCK OPTIONS--Stock option grants to executive officers are determined
generally annually under the provisions of the Plan. Individual stock option
awards are based on multiples of salary guidelines and competitive compensation
data. The Committee also considers the amount of long-term performance share
awards and stock options previously granted to the individual.

Option grants are designed to align the interests of executives with those of
the stockholders. Stock options are granted with an exercise price equal to the
market price of the Common Stock on the date of grant and may be exercised over
ten years. This approach is designed to motivate the executive to contribute to
the creation of stockholder value over the long term.

In September, 1993, the Committee applied the factors described above and
granted to Mr. Fox an option to purchase 37,500 shares with an exercise price
of $39.75. Mr. Fox now holds options to purchase a total of 183,000 shares.

11
<PAGE>

* * * * *

Through the programs described above, a significant portion of the
Corporation's executive compensation is linked directly to individual and
corporate performance and stock price appreciation. In 1993 the five executives
listed in the Summary Compensation table received over half of their
compensation (consisting of the dollar amounts shown in the table and value
realized on stock options exercised) in the form of performance-based variable
elements. The Committee intends to continue the policy of linking executive
compensation to corporate performance and returns to stockholders.

This report is submitted on behalf of the members of the Committee:

William D. Smithburg, Chairman
Worley H. Clark
Arthur L. Kelly
William A. Pogue
Harold B. Smith
Bide L. Thomas

SUMMARY COMPENSATION TABLE

The following table sets forth compensation information for the years 1991
through 1993 with respect to the Corporation's chief executive officer and the
four other executive officers who received the highest annual compensation
during 1993.

<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
--------------------------------- ------------------------------
AWARDS
(SECURITIES
NAME AND UNDERLYING PAYOUTS
PRINCIPAL POSITION AS OF TOTAL OF OPTIONS (LONG-TERM ALL OTHER
JANUARY 1, 1994 YEAR SALARY BONUS (1) SALARY & BONUS GRANTED) INCENTIVE PLAN)(2) COMPENSATION(3)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
David W. Fox 1993 $616,250 $414,982 $1,031,232 37,500 $631,901 $83,262
Chairman and 1992 $562,500 $408,038 $970,538 33,000 $353,268 $83,894
Chief Executive Officer 1991 $525,000 $370,000 $895,000 30,000 $0 $70,477
William A. Osborn 1993 $335,000 $190,884 $525,884 12,000 $379,141 $45,262
President and 1992 $287,500 $157,191 $444,691 10,500 $240,735 $42,879
Chief Operating Officer 1991 $265,000 $145,311 $410,311 7,500 $0 $35,574
Barry G. Hastings 1993 $345,000 $196,582 $541,582 12,000 $379,141 $46,613
Vice Chairman 1992 $298,750 $160,016 $458,766 10,500 $240,735 $44,558
1991 $280,000 $136,553 $416,553 7,500 $0 $37,588
John S. Sutfin 1993 $330,000 $188,034 $518,034 11,000 $379,141 $44,586
Vice Chairman 1992 $282,500 $134,117 $416,617 10,500 $240,735 $42,133
1991 $260,000 $127,852 $387,852 7,500 $0 $34,903
Perry R. Pero 1993 $315,000 $194,488 $509,488 10,000 $379,141 $42,560
Senior Executive 1992 $272,083 $134,191 $406,274 9,750 $214,524 $40,580
Vice President 1991 $250,000 $122,316 $372,316 7,500 $0 $33,561
</TABLE>

- --------------------------------------------------------------------------------
(1) Amounts awarded under the Performance Incentive Plan.
(2) For 1993, the amount represents the award for the 1988-1990
performance period, which would ordinarily have been payable in 1994. For
1992, the amount represents the awards for both the 1986-1988 performance
period (ordinarily payable in 1992) and the 1987-1989 performance period
(ordinarily payable in 1993). The Committee approved distribution of the
awards for the 1988-1990 and 1987-1989 performance periods just prior to the
beginning of the years in which they would otherwise have vested. (The award
for the 1986-1987 performance period, ordinarily payable in 1991, was
distributed at the end of 1990 pursuant to similar Committee approval.) The
respective values were determined by multiplying the total shares awarded by
the mean of the high and low sale prices of the Common Stock as reported by
NASDAQ on the dates of distribution and adding dividend equivalents and an
assumed interest factor.
(3) The "All Other Compensation" category is comprised of contributions on
behalf of the executive officers to the Thrift-Incentive Plan (TIP) and the
Northern Trust Employee Stock Ownership Plan (ESOP), both of which are
defined contribution plans. For each of the following executives, the 1993
TIP and ESOP contributions (in that order) were: Mr. Fox, $30,813 and
$52,449; Mr. Osborn, $16,750 and $28,512; Mr. Hastings, $17,250 and $29,363;
Mr. Sutfin, $16,500 and $28,086; and Mr. Pero, $15,750 and $26,810.

12
<PAGE>

EMPLOYMENT AGREEMENTS

The Corporation and Mr. Fox are parties to an employment agreement that
provides for employment commencing June 1, 1986, for a term of 3 years,
extended by an additional year automatically on June 1 of each year, unless
either party gives written notice of cancellation, in which event the agreement
terminates upon expiration of the balance of the term then in effect. The
agreement was automatically extended for an additional year on June 1, 1993. In
the event of termination of employment either by the Corporation without good
cause or by Mr. Fox with good reason, as defined in the agreement, the
Corporation is to pay a lump sum amount equal to the balance of the salary
remaining to be paid during the term of the agreement. Messrs. Osborn,
Hastings, Sutfin and Pero, along with other executives, are parties to
employment security agreements that provide lump sum cash payments equivalent
to two years' salary upon the termination of each such executive officer's
employment either by the Corporation without good cause or by the executive
with good reason, as defined in the agreements, within one year after a change
in control of the Corporation, as defined in the agreements.

OPTION GRANTS IN LAST FISCAL YEAR

The following table sets forth certain information with respect to the stock
options granted during the last fiscal year to the executive officers named in
the Summary Compensation Table. Using a range of 0% to 10% in assumed rates of
stock price appreciation (compounded annually) for the option term of ten
years, the table also shows the potential realizable value of the stock
options. These assumed rates are used for illustrative purposes only, and are
not intended to represent or predict future increases in the price of the
Corporation's Common Stock.

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE APPRECIATION
FOR OPTION TERM OF 10 YEARS
INDIVIDUAL GRANTS (2)
-------------------------------------------------------------------------
PERCENT
NUMBER OF OF TOTAL 5% ($64.75
SECURITIES OPTIONS STOCK 10% ($103.10
UNDERLYING GRANTED TO PRICE STOCK PRICE
OPTIONS EMPLOYEES EXERCISE EXPIRATION AFTER AFTER
NAME GRANTED (1) IN FISCAL YEAR PRICE DATE 0% 10 YEARS) 10 YEARS)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
David W.
Fox 37,500 6.8% $39.75 09/21/03 $ 0 $937,500 $2,375,625
William
A.
Osborn 12,000 2.2% $39.75 09/21/03 $ 0 $300,000 $760,200
Barry G.
Hastings 12,000 2.2% $39.75 09/21/03 $ 0 $300,000 $760,200
John S.
Sutfin 11,000 2.0% $39.75 09/21/03 $ 0 $275,000 $696,850
Perry R.
Pero 10,000 1.8% $39.75 09/21/03 $ 0 $250,000 $633,500
</TABLE>
- --------------------------------------------------------------------------------
(1) All options to the named executive officers were granted on September
21, 1993 and first become exercisable September 21, 1994.
(2) No gain to the optionees is possible without an increase in the stock
price, which will benefit all stockholders commensurately. The gain to all
stockholders, using as a base the $39.75 mean of the high and low sale
prices as reported by NASDAQ on September 21, 1993, would be $0 for 0%
appreciation, approximately $1.3 billion for 5% appreciation and
approximately $3.4 billion for 10% appreciation.

13
<PAGE>

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES

The following table sets forth the number of shares for which stock options
were exercised during 1993, the actual as well as annualized value realized,
the number of shares for which options were outstanding and the value of those
options as of year-end.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END(4)
ANNUALIZED ---------------------------- ----------------------------
SHARES ACQUIRED VALUE VALUE SINCE EXERCISABLE(3) UNEXERCISABLE EXERCISABLE(3) UNEXERCISABLE
NAME ON EXERCISE REALIZED(1) GRANT DATE(2)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
David W. Fox 16,407 $524,792 $ 78,621 145,500 37,500 $2,255,307 $4,688
William A. Osborn 6,927 $228,768 $ 28,222 58,875 12,000 $1,082,430 $1,500
Barry G. Hastings 20,590 $643,756 $ 86,088 65,684 12,000 $1,232,434 $1,500
John S. Sutfin 23,500 $736,777 $101,431 34,869 11,000 $ 492,498 $1,375
Perry R. Pero 13,000 $438,693 $ 55,886 79,100 10,000 $1,806,026 $1,250
</TABLE>
- --------------------------------------------------------------------------------
(1) Calculated using the spread between option exercise price and mean of
the high and low sale prices as reported by NASDAQ on the date of exercise,
plus the value of any fractional share paid in cash.
(2) Amount of value realized annualized over period between date of grant
and exercise.
(3) Amounts represent options granted since 1987 to Mr. Fox and since 1985
to other named executive officers.
(4) Value of unexercised options is determined by multiplying the number
of shares reported by the spread between the option exercise price at the
date of grant and $39.875, which is the mean of the high and low sale prices
of Common Stock as reported by NASDAQ on December 31, 1993.

LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR

The following table sets forth the long-term incentive plan target awards
made to the named executive officers during 1993.

<TABLE>
<CAPTION>
NUMBER OF PERFORMANCE OR
SHARES, UNITS OTHER PERIOD
OR OTHER UNTIL MATURATION
NAME RIGHTS(1) OR PAYOUT(2)
------------------------------------------
<S> <C> <C>
David W. Fox 13,000 shares 6 years
William A.
Osborn 8,000 shares 6 years
Barry G. Has-
tings 8,000 shares 6 years
John S. Sutfin 8,000 shares 6 years
Perry R. Pero 7,500 shares 6 years
</TABLE>

----------------------------------------------
(1) Awarded by the Compensation and
Benefits Committee with an established
return-on-equity goal for the 1993-1995
performance period.
(2) Shares are subject to performance
over a three-year performance period fol-
lowed by a three-year vesting restriction.
All shares awarded will be distributed if
the performance goals are met or exceeded
and the vesting restrictions are satisfied;
no shares will be distributed if the per-
formance goals are not met. See "Compensa-
tion and Benefits Committee Report--Long-
Term Incentive Plan," above, for a descrip-
tion of the terms of the plan.

14
<PAGE>

COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG NORTHERN TRUST CORPORATION COMMON STOCK, S&P 500 INDEX AND
KEEFE, BRUYETTE & WOODS 50 BANK INDEX

(TOTAL RETURN ASSUMES $100 INVESTED ON
JANUARY 1, 1989 WITH REINVESTMENT OF DIVIDENDS)

Pursuant to Items 304(d)(1) and 311(b) of Regulation S-T, a paper copy of the
performance graph has been submitted under cover of Form SE.

For the five year period ended December 31, 1993, the Corporation's total
return to stockholders was 197% compared to 97% for the S&P 500 Index and 82%
for the KBW 50 Bank Index. During the same period the Corporation's Common
Stock market capitalization increased $1,439,800,000 or 214% from $671,900,000
to $2,111,700,000 reflecting both an increase in the stock price and a greater
number of shares outstanding. The Corporation's net income increased in 1993
for the sixth consecutive year, from $109.3 million in 1988 to $167.9 million
in 1993, or an increase of 54% from 1988 to 1993.

15
<PAGE>

PENSION PLAN TABLE

The table below sets forth the estimated annual benefits payable upon
retirement under the Bank's Pension Plan (including amounts payable under the
Bank's Supplemental Pension Plan, where applicable) to persons in the
remuneration and service classifications specified.

<TABLE>
<CAPTION>
REMUNERATION YEARS OF SERVICE AT RETIREMENT
AVERAGE COMPENSATION -----------------------------------------------------
IN 5 HIGHEST YEARS 15 20 25 30 35 40
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 250,000.............. $ 90,000 $120,000 $132,500 $145,000 $157,500 $170,000
350,000.............. 126,000 168,000 185,500 203,000 220,500 238,000
450,000.............. 162,000 216,000 238,500 261,000 283,500 306,000
550,000.............. 198,000 264,000 291,500 319,000 346,500 374,000
650,000.............. 234,000 312,000 344,500 377,000 409,500 442,000
750,000.............. 270,000 360,000 397,500 435,000 472,500 510,000
850,000.............. 306,000 408,000 450,500 493,000 535,500 578,000
950,000.............. 342,000 456,000 503,500 551,000 598,500 646,000
1,050,000.............. 378,000 504,000 556,500 609,000 661,500 714,000
1,150,000.............. 414,000 552,000 609,500 667,000 724,500 782,000
1,250,000.............. 450,000 600,000 662,000 725,000 787,500 850,000
</TABLE>

Compensation covered by the Plan includes salaries, before tax deposits made
by a participant to the Thrift-Incentive Plan, shift differential pay, overtime
pay and awards under the Performance Incentive Plan as applicable. The average
covered compensation for the highest five consecutive years is used in the
pension calculation.

Credited years of service for individuals listed in the Summary Compensation
Table are as follows: David W. Fox-38 years, William A. Osborn-23 years, Barry
G. Hastings-19 years, John S. Sutfin-32 years, and Perry R. Pero-29 years.

The above pension payments, which are shown as if paid in the form of a
straight life annuity, will be reduced by .39% of the average Social Security
taxable wage base for the individual, which varies by year of birth, for each
year of service up to 35 years. For participants hired after 1988 the
percentage is .50%.

COMPENSATION AND BENEFITS COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

None of the members of the Compensation and Benefits Committee is an officer,
employee or former employee of the Corporation. Members of the Committee or
their associates may have loans or loan commitments from the Corporation or its
subsidiaries, but all such loans or commitments were made on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons and did not involve more
than the normal risk of collectibility or present any unfavorable features.

INDEPENDENT PUBLIC ACCOUNTANTS

Arthur Andersen & Co. were the Corporation's independent public accountants
during 1993. The appointment of auditors is approved annually by the Board of
Directors. The decision of the Board of Directors is based on the
recommendation of the Audit Committee. In making its recommendation, the Audit
Committee reviews both the audit scope and estimated fees for professional
services for the coming year. For the year 1994, the Board of Directors has
authorized the engagement of Arthur Andersen & Co. as its auditors.

Representatives of Arthur Andersen & Co. will be present at the annual
meeting of stockholders on April 19, 1994, and will be given an opportunity to
make any comments they wish and will be available to respond to any questions
raised at the meeting.

16
<PAGE>

STOCKHOLDERS' PROPOSALS

Any stockholder proposal intended to be presented at the annual meeting in
1995 must be received by the Corporation on or before November 15, 1994, for
inclusion in the Corporation's Proxy Statement and form of proxy relating to
that meeting.

GENERAL

The cost of soliciting proxies will be borne by the Corporation. In addition
to solicitation by mail, officers and regular employees of the Corporation,
without receiving additional compensation therefor, may solicit proxies by
telephone or telegraph or in person. Kissel-Blake Inc. has been retained to aid
in the solicitation of proxies for a fee of $10,500, plus out-of-pocket
expenses.

As of the date of this Proxy Statement, the Board of Directors knows of no
matters to be brought before the meeting other than the Election of Directors.
If, however, further business is presented by others, the proxy holders will
act in accordance with their best judgment.

By order of the Board of Directors.

PETER L. ROSSITER
Secretary

March 15, 1994

17
<PAGE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NORTHERN TRUST CORPORATION
PROXY FOR ANNUAL MEETING 1994
VOTING DIRECTION SOLICITED BY THE TRUSTEE OF THE THRIFT-INCENTIVE TRUST

The undersigned hereby directs The Northern Trust Company, Trustee of the
Thrift-Incentive Trust, to vote at the annual meeting of stockholders of
Northern Trust Corporation on April 19, 1994, or any adjournment of such
meeting, all shares of Common Stock for which the undersigned is entitled to
give voting direction on the following Proposal more fully described in the
proxy statement for the meeting in the manner specified and on any other
business properly coming before the meeting: