<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
NORTHERN TRUST CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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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:
-------------------------------------------------------------------------
[_] 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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[LOGO OF NORTHERN TRUST APPEARS]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
April 20, 1999
The annual meeting of stockholders of Northern Trust Corporation will be
held on Tuesday, April 20, 1999, at 10:30 a.m., Chicago time, at the office of
the Corporation, northwest corner of LaSalle and Monroe Streets, Chicago.
The purposes of the meeting are to:
. Elect fourteen directors to hold office until the next annual meeting
of stockholders and until their successors shall have been elected and
qualified;
. Approve the Northern Trust Corporation Management Performance Plan;
and
. Transact any other business that may properly come before the meeting.
You may vote if you are a stockholder of record at 5 p.m., Chicago time, on
March 1, 1999.
ROSE A. ELLIS
Secretary
March 15, 1999
IMPORTANT--PLEASE MAIL YOUR PROXY PROMPTLY
In order that there may be proper representation
at the meeting, we urge you to sign and return
the enclosed proxy in the envelope provided. You
may nevertheless vote in person if you do attend
the meeting.
<PAGE>
NORTHERN TRUST CORPORATION
50 South LaSalle Street
Chicago, Illinois 60675
March 15, 1999
PROXY STATEMENT
INTRODUCTION
Our 1999 annual meeting of stockholders will be held on Tuesday, April 20,
1999 at 10:30 a.m., Chicago time, at the office of the Corporation located on
the northwest corner of LaSalle and Monroe Streets in Chicago. We invite you
to attend the annual meeting and vote your shares directly. However, you do
not need to attend the annual meeting to vote your shares. Instead, you may
simply sign, date and return the enclosed proxy card in the postage-paid
envelope provided.
The Corporation's Board of Directors is soliciting your proxy to encourage
your participation in the voting at the annual meeting and to obtain your
support on each proposal to be presented. This proxy statement provides you
with information about each proposal and other matters that you may find
useful in voting your shares. On March 15, 1999, we began mailing this proxy
statement and the enclosed proxy card to all stockholders entitled to vote at
the annual meeting. We are also sending with this proxy statement the
Corporation's 1998 annual report to stockholders, which includes our financial
statements.
VOTING
Who May Vote
Record holders of the Corporation's common stock at the close of business on
March 1, 1999 may vote at the annual meeting. On that date, the Corporation
had 111,403,286 shares outstanding. The shares of common stock held in the
Corporation's treasury will not be voted.
You are entitled to one vote for each share of common stock that you owned of
record at the close of business on March 1, 1999. The enclosed proxy card
indicates the number of shares you are entitled to vote at the annual meeting.
You may vote cumulatively in the election of directors, a process described
below under "Election of Directors."
How to Vote
You may vote your shares in either of two ways:
In Person--You may come to the annual meeting and vote your shares in person
by obtaining and submitting a ballot which will be provided at the meeting.
By Proxy--You may vote your shares by signing, dating and returning the
enclosed proxy card. If you properly complete your proxy card and return it to
us in time to vote, the proxy holders named on the card will vote your shares
in accordance with your instructions at the meeting. If you do not specify on
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your proxy card how you want to vote your shares, the proxy holders will vote
your shares as recommended by the Board:
.FOR the election of all fourteen nominees for director; and
.FOR the Northern Trust Corporation Management Performance Plan.
You may revoke your proxy at any time before it is voted at the annual meeting
by sending a written notice of revocation to the Secretary of the Corporation,
submitting another proxy with a later date or by voting in person at the
annual meeting.
Quorum and Vote Required for Approval
A quorum of stockholders is necessary to hold a valid meeting. A quorum will
exist if a majority of the shares of common stock is present in person or by
proxy at the annual meeting. Abstentions will be counted as present for
establishing a quorum. Since the only items scheduled for consideration at the
annual meeting are items for which brokers have the authority to vote, it is
not anticipated that there will be any broker non-votes. Inspectors of
election appointed for the annual meeting will tabulate all votes cast in
person or by proxy at the annual meeting.
Election of Directors. Fourteen directors will be elected at the annual
meeting by a plurality of all the votes cast (i.e., the fourteen nominees for
directors who receive the most votes will be elected). Abstentions will not be
taken into account in determining the election of directors.
Approval of the Management Performance Plan. Approval of this proposal
requires the affirmative vote of a majority of the shares present in person or
by proxy at the annual meeting and entitled to vote. Abstentions will have the
effect of negative votes.
Solicitation of Proxies
The Corporation will pay all costs of soliciting proxies. In addition to
solicitation by mail, officers and employees of the Corporation may solicit
proxies by telephone or facsimile or in person. The Corporation also has
retained Kissel-Blake, a division of Shareholder Communications Corporation,
to assist with the solicitation of proxies at a cost of approximately $12,500,
plus reasonable out-of-pocket expenses.
ELECTION OF DIRECTORS
Fourteen directors will be elected at this year's annual meeting. Each nominee
is currently serving as a director of the Corporation and of its principal
subsidiary, The Northern Trust Company (the "Bank"), and has consented to
serve for a new term. Detailed information with respect to each nominee is set
forth on pages three through six.
Each nominee elected as a director will serve until the next annual meeting
and until his or her successor has been elected and qualified. If any nominee
is unable to serve as a director at the time of the annual meeting, your proxy
may be voted for the election of another nominee proposed by the Board or
the Board may reduce the number of directors to be elected at the annual
meeting.
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The enclosed proxy card provides instructions on how to vote "FOR" all
nominees or to "WITHHOLD AUTHORITY" to vote for all or one or more nominees.
You have cumulative voting rights in the election of directors, meaning that
your total number of votes equals the number of your shares of common stock
multiplied by fourteen, the number of directors to be elected. You may
allocate these cumulative votes equally among the nominees or otherwise as you
specify on the enclosed proxy card. Unless you choose a different allocation
and so mark on your proxy card, it is expected that the proxy holders will
allocate cumulative votes equally among all nominees for whom authority to
vote has not been withheld. However, the proxy holders will have the
discretion to allocate cumulative votes differently among those for whom
authority to vote has not been withheld, so as to elect all or as many
nominees as possible depending on the circumstances at the annual meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FORTHE ELECTION OF
EACH NOMINEE.
INFORMATION ABOUT THE NOMINEES FOR DIRECTOR
The following information about the nominees for election to the Board of
Directors of the Corporation at the 1999 annual meeting of stockholders is as
of January 4, 1999.
DUANE L. BURNHAM, Director Since 1997, Age 56
Chairman, Abbott Laboratories since 1990, and Chief
Executive Officer from that date through December, 1998
(Global diversified health care products and services
company).
Mr. Burnham is a director of Abbott Laboratories and Sara
Lee Corporation.
[PHOTO OF DUANE BURNHAM]
DOLORES E. CROSS, Director Since 1994, Age 61
President-elect, Morris Brown College, since October,
1998, and President effective June, 1999 (Educational
institution); GE Fund Distinguished Professor, The
Graduate School and University Center, The City University
of New York, since July, 1998 (Educational institution);
President, GE Fund from October, 1997 to June, 1998
(Corporate foundation with education, arts and public
policy programs); President, Chicago State University from
1990 to September, 1997 (Educational institution).
[PHOTO OF DOLORES CROSS]
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SUSAN CROWN, Director Since 1997, Age 40
Vice President, Henry Crown and Company since 1984
(Company with diversified manufacturing operations, real
estate and securities).
[PHOTO OF SUSAN CROWN]
Ms. Crown is a director of Baxter International Inc. and
Illinois Tool Works Inc. and a trustee of Yale University
and Rush-Presbyterian-St. Luke's Medical Center in
Chicago.
ROBERT S. HAMADA, Director Since 1988, Age 61
Dean and Edward Eagle Brown Distinguished Service
Professor of Finance, Graduate School of Business,
University of Chicago since July, 1993, and member of the
Faculty since 1966 (Educational institution).
[PHOTO OF ROBERT HAMADA]
Mr. Hamada is a director of A. M. Castle & Co. and the
Chicago Board of Trade.
BARRY G. HASTINGS, Director Since 1994, Age 51
President since October, 1995 and Chief Operating Officer
since June, 1995 of the Corporation and the Bank and Vice
Chairman from January, 1994 to June, 1995.
[PHOTO OF BARRY HASTINGS]
ROBERT A. HELMAN, Director Since 1986, Age 64
Partner, Mayer, Brown & Platt since 1967 (Law firm).
[PHOTO OF ROBERT HELMAN]
Mr. Helman is a director of Zenith Electronics
Corporation, Dreyer's Grand Ice Cream, Inc. and Brambles
USA, Inc. and a Governor of the Chicago Stock Exchange.
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ARTHUR L. KELLY, Director Since 1988, Age 61
Managing Partner, KEL Enterprises L.P. since 1982 (Holding
and investment partnership).
[PHOTO OF ARTHUR KELLY]
Mr. Kelly is a director of Bayerische Motoren Werke (BMW)
A.G., Deere & Company, Nalco Chemical Company, Snap-on
Incorporated and Thyssen Industrie A.G.
FREDERICK A. KREHBIEL, Director Since 1988, Age 57
Chairman since November, 1993, and Chief Executive Officer
since July, 1988, Molex Incorporated (Manufacturer of
electrical/electronic interconnecting products and
systems).
[PHOTO OF FREDERICK KREHBIEL]
Mr. Krehbiel is a director of Molex Incorporated, Tellabs,
Inc., Nalco Chemical Company and DeVry Inc.
WILLIAM G. MITCHELL, Director Since 1975, Age 67
Retired Vice Chairman, Centel Corporation since 1987
(Telecommunications company).
[PHOTO OF WILLIAM MITCHELL]
Mr. Mitchell is a director of Peoples Energy Corporation
and The Sherwin-Williams Co.
EDWARD J. MOONEY, Director Since 1996, Age 57
Chairman since July, 1994, Chief Executive Officer since
April, 1994, and President since 1990, Nalco Chemical
Company, Chief Operating Officer from 1992 to 1994
(Manufacturer of specialized service chemicals).
[PHOTO OF EDWARD MOONEY]
Mr. Mooney is a director of Nalco Chemical Company, FMC
Corporation and Morton International, Inc.
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WILLIAM A. OSBORN, Director Since 1994, Age 51
Chairman since October, 1995 and Chief Executive Officer
since June, 1995 of the Corporation and the Bank,
President from January, 1994 to October, 1995 and Chief
Operating Officer from January, 1994 to June, 1995.
[PHOTO OF WILLIAM OSBORN]
HAROLD B. SMITH, Director Since 1974, Age 65
Chairman of the Executive Committee, Illinois Tool Works
Inc. since 1982 (Manufacturer and marketer of engineered
components and industrial systems and consumables).
[PHOTO OF HAROLD SMITH]
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.
WILLIAM D. SMITHBURG, Director Since 1981, Age 60
Retired Chairman, President and Chief Executive Officer,
The Quaker Oats Company since October, 1997 and, from 1981
until that date, Chief Executive Officer (Worldwide
manufacturer and marketer of beverages and grain-based
products).
[PHOTO OF WILLIAM SMITHBURG]
Mr. Smithburg is a director of Abbott Laboratories,
Corning Incorporated and Prime Capital Corp.
BIDE L. THOMAS, Director Since 1984, Age 63
Retired President, Commonwealth Edison Company since
December, 1992 (Company engaged in production,
distribution and sale of electric energy).
[PHOTO OF BIDE THOMAS]
Mr. Thomas is a director of R. R. Donnelley & Sons Company
and MYR Group Inc.
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INFORMATION ABOUT THE BOARD AND COMMITTEES
Committees
Audit Committee
Members: Directors Kelly (Chairman), Burnham, Hamada, Mitchell and
Thomas
Number of Meetings in 1998: Four
Functions:
.Oversees internal controls, audit procedures and compliance
program
.Reviews the results of regulatory examinations
.Reviews matters having a material effect upon the Corporation's
financial operations
.Recommends independent public accountants and oversees their
activities
Compensation and Benefits Committee
Members: Directors Smithburg (Chairman), Burnham, Kelly, Mooney, Smith
and Thomas
Number of Meetings in 1998: Five
Functions:
.Reviews compensation policy and executive compensation levels
.Recommends benefit and incentive plans, programs and payments
.Has administrative authority for certain benefit and incentive
plans and programs
.Oversees management development and succession planning
Corporate Governance Committee
Members: Directors Krehbiel (Chairman), Burnham, Cross, Smith and
Smithburg
Number of Meetings in 1998: One
Functions:
.Recommends candidates for nomination to the Board
.Recommends structure and membership of Board committees
.Considers candidates for the Board recommended by stockholders
This committee will consider a candidate for director proposed by a
stockholder. The Corporation's By-laws provide that stockholders may
make director nominations only if they give timely written notice,
directed to the attention of the Secretary, not less than 90 days and
not more than 120 days before the month and day that the Corporation
held the prior year's annual meeting. The notice must contain the
information required by the By-laws.
Other Committees
The Corporation's Board of Directors has three other standing committees.
The Business Strategy Committee reviews the policies, strategies and
performance of the various business units of the Corporation. The Business
Risk Committee reviews the risks inherent in extending credit, managing
assets and liabilities, and providing fiduciary services and other related
matters. The Executive Committee meets as required and may exercise the powers
of the Board in the management of the business and affairs of the Corporation
when the Board is not in session, subject to limitations imposed by law and
the By-laws of the Corporation.
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Board and Committee Meetings
The Board of Directors held seven regular meetings during 1998. All
persons who were directors during 1998 attended at least 75% of these meetings
and meetings of committees on which they served.
Director Compensation
Non-employee directors receive the following fees for their service on
the Board:
<TABLE>
<S> <C>
Annual Retainer..................................... $35,000
For Each Committee Meeting Attended................. $ 1,000
</TABLE>
The Chairman of each committee other than the Executive Committee
receives an additional annual retainer of $5,000. All non-employee directors
are also eligible to receive a per diem fee of $1,000 when required to perform
specific services on behalf of the Corporation. No payments were made for such
services in 1998. Each non-employee director also received or will receive a
grant of 500 shares of common stock on the date of each annual meeting of
stockholders in the years 1997, 1998 and 1999 under the Northern Trust
Corporation 1997 Stock Plan for Non-Employee Directors (the "1997 Director
Stock Plan").
Directors may elect to defer payment of their cash compensation and stock
grants until termination of their services as directors under the terms of the
1997 Deferred Compensation Plan for Non-Employee Directors. Under that Plan,
amounts deferred are paid into a stock unit account and converted into stock
units representing shares of common stock. The value of each stock unit is
based upon the market price of the stock at the end of the calendar quarter
for which the cash compensation would have been paid. Deferred stock is
converted into units on a share-for-share basis. Dividend equivalents on the
stock units are paid quarterly to a cash account and accrue interest at an
interest rate determined from time to time by the Compensation and Benefits
Committee. Cash compensation deferrals in stock unit and cash accounts will be
paid out in cash in a lump sum or in up to ten annual installments at the
election of the director. Stock units representing deferred stock under the
1997 Director Stock Plan will be distributed only in stock.
Directors who are also employees receive no compensation for serving on
the Board or its committees other than their normal salary.
ADDITIONAL INFORMATION ABOUT MANAGEMENT AND THE BOARD
Services Provided by the Corporation to Directors and Executive Officers
Directors and executive officers of the Corporation, as well as members
of their immediate families and their associates, were clients of and had
transactions with the Corporation and its subsidiaries in the ordinary course
of business during 1998. These transactions included loans; purchases, sales
and placements of investment securities and other financial instruments;
fiduciary transactions; deposits; and other purchase, sale and finance
transactions. Similar transactions may occur in the ordinary course of
business in the future. All loans were made on a non-preferential basis and
did not involve more than the normal risk of collectibility or present other
unfavorable features. Transactions
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in 1998 involving services provided by the Corporation to its directors and
executive officers did not result in payments or fees that were material to
the gross revenues of the Corporation.
Other Business Relationships
In the ordinary course of business, the Corporation uses the products and
services of organizations of which the Corporation's directors are directors
or executive officers. Transactions in 1998 involving the purchase of products
and services did not result in payments that were material to the gross
revenues of the organization with which a director was associated. Mr. Helman,
a director of the Corporation, is a partner in the law firm of Mayer, Brown &
Platt, which renders legal services to the Corporation and its subsidiaries.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's directors and executive officers, and beneficial holders of more
than 10% of the Corporation's stock, to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes in ownership of
any securities of the Corporation. Copies of these reports must also be
provided to the Corporation.
To the Corporation's knowledge, based solely on review of the copies of
the reports provided to the Corporation and written representations that no
other reports were required, all the Corporation's directors, executive
officers and beneficial holders of more than 10% of the Corporation's stock
made on a timely basis all filings required during 1998.
Compensation and Benefits Committee Interlocks and Insider Participation
None of the members of the Compensation and Benefits Committee is or ever
was an officer or employee of the Corporation or any of its subsidiaries.
Members of the committee, as well as members of their immediate families and
their associates, may have loans and other transactions with the
Corporation and its subsidiaries. All loans were made on a non-preferential
basis and did not involve more than the normal risk of collectibility or
present other unfavorable terms.
Sheila A. Penrose, President--Corporate and Institutional Services of the
Corporation, is a director of Nalco Chemical Company, whose Chairman, Chief
Executive Officer and President, Edward J. Mooney, is a director of the
Corporation and a member of the Compensation and Benefits Committee.
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SECURITY OWNERSHIP OF MANAGEMENT
The following table shows the beneficial ownership of the Corporation's 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.
<TABLE>
<CAPTION>
Common Stock(1) Owned
as of January 4, 1999
--------------------------------
Name No. of Shares Percent of Class
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<S> <C> <C>
Duane L. Burnham.......................... 1,000(2) *
Dolores E. Cross.......................... 1,600(2) *
Susan Crown............................... 4,500 *
Robert S. Hamada.......................... 5,200 *
Barry G. Hastings......................... 464,516(3) *
Robert A. Helman.......................... 3,600(2) *
Arthur L. Kelly........................... 31,100(2) *
Frederick A. Krehbiel..................... 11,800 *
William G. Mitchell....................... 8,200 *
Edward J. Mooney.......................... 1,900 *
William A. Osborn......................... 469,818(3) *
Sheila A. Penrose......................... 148,323(3)(4) *
Harold B. Smith........................... 7,082,403(5) 6.36%
William D. Smithburg...................... 3,600(2) *
Mark Stevens.............................. 211,126(3) *
Bide L. Thomas............................ 4,200(2) *
Stephen B. Timbers........................ 45,000(3) *
All directors and executive officers as a
group.................................... 9,765,159(3)(4) 8.77%
</TABLE>
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*Less than one percent of the outstanding common stock.
(1) The information contained in this table was furnished to the
Corporation by the individuals named in the table and reflects the
Securities and Exchange Commission's definition of beneficial ownership.
Except as noted below, the nature of beneficial ownership for shares
shown in this table is sole voting and/or investment power (including
shares as to which spouses and minor children of the individuals covered
by this table have such power).
(2) In addition to owning shares as set forth in this table, the
following non-employee directors hold stock units under the 1997
Deferred Compensation Plan for Non-Employee Directors, which includes
amounts deferred under certain prior deferred compensation plans: Mr.
Burnham, 2,178 stock units; Dr. Cross, 3,378 stock units; Mr. Helman,
2,204 stock units; Mr. Kelly, 1,000 stock units; Mr. Smithburg, 21,143
stock units; and Mr. Thomas, 7,526 stock units.
(3) Includes shares issuable pursuant to stock options exercisable
within 60 days after January 4, 1999, as follows: Mr. Hastings, 216,450
shares; Mr. Osborn, 224,970 shares; Ms. Penrose, 79,664 shares; Mr.
Stevens, 120,694 shares; Mr. Timbers, 25,000 shares; and all directors
and executive officers as a group, 1,238,656 shares.
(4) Includes 6,799 shares owned by a charitable foundation over which
Ms. Penrose shares voting and investment power.
(5) See note 2 on page 11.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table includes information concerning common stock ownership of
stockholders who were the beneficial owners of more than 5% of the outstanding
shares of the Corporation's common stock on January 4, 1999.
<TABLE>
<CAPTION>
Common Stock(1)
Held as of
Name and Address January 4, 1999
- -----------------------------------------------------------------------------------------
No. of Percent
Shares of Class
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Harold B. Smith................................................. 7,082,403(2) 6.36%
3600 West Lake Avenue, Glenview, Illinois 60025-5811
U.S. Trust Corporation.......................................... 7,122,561(3) 6.40%
114 West 47th Street, New York, New York 10036
- -----------------------------------------------------------------------------------------
</TABLE>
(1) The information contained in this table was 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 of the holdings shown in this table is set forth in notes 2 and 3
below.
(2) Harold B. Smith serves as co-fiduciary and shares voting and investment
power with various family members and the Bank with respect to 4,418,716
shares or 3.97% of the outstanding common stock. As co-trustee with the Bank
and two individuals he shares voting and investment power for 2,582,028
shares or 2.32% of the outstanding common stock. With respect to 61,707
shares or .06% of the outstanding common stock, he serves as co-fiduciary and
shares voting and investment power with other family members. Mr. Smith also
has sole voting and investment power over 9,152 shares or .01% of the
outstanding common stock held in a trust, and shared voting and investment
power over 10,800 shares or .01% of the outstanding common stock as co-
trustee of four additional trusts.
(3) U.S. Trust Corporation holds 7,122,561 shares or 6.40% of the
outstanding common stock, including 6,919,223 shares or 6.21% of the
outstanding common stock held by U.S. Trust Company, N.A., a wholly owned
subsidiary of U.S. Trust Corporation, in its capacity as Trustee of the
Northern Trust Employee Stock Ownership Plan ("ESOP"). U.S. Trust Company,
N.A. has no voting and investment power with respect to the 5,569,027 ESOP
shares allocated to participant accounts and has shared voting and investment
power with respect to the 1,350,196 unallocated ESOP shares. Participants in
the ESOP are entitled to direct the Trustee as to the voting of shares
allocated to their accounts under the ESOP. Unallocated shares and allocated
shares for which no direction is received (together, "Undirected Shares")
will be voted by the Trustee in the same proportion that the allocated shares
were voted, unless inconsistent with the Trustee's fiduciary responsibility.
Under the ESOP, participants are "named fiduciaries" to the extent of their
authority to direct the voting of shares allocated to their accounts and
their proportionate share of Undirected Shares.
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 14,452,413 shares or 12.99% 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 holds a beneficial interest
in excess of 5%. The Bank and its affiliates have sole voting power with
respect to 4,010,154 shares or 3.60% of the outstanding common stock, and they
share voting power with respect to 9,316,068 shares or 8.37% of the outstanding
common stock. They have sole
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investment power with respect to 2,569,859 shares or 2.31% of the outstanding
common stock, and they share investment power with respect to 9,639,484 shares
or 8.66% of the outstanding common stock.
In addition, the Bank, as Trustee of The Northern Trust Company Thrift-
Incentive Plan, holds in the Northern Trust Common Stock Fund of that Plan
3,815,887 shares or 3.43% 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 4,767 Northern Trust Common
Stock Fund participants who are employees of the Corporation or its
subsidiaries.
EXECUTIVE COMPENSATION
COMPENSATION AND BENEFITS COMMITTEE REPORT
The Compensation and Benefits Committee (the "Committee"), which is comprised
entirely of non-employee directors, is responsible for overseeing the
Corporation's executive compensation program. Each year the Committee reviews
the components of the Corporation's executive compensation program, comparing
compensation levels to a peer group of financial services organizations that
represent the Corporation's competition for executive talent. The
organizations selected for comparison 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 all 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 executive officers named in the
Summary Compensation Table. For other executives the Committee reviews overall
compensation policies and payment levels. The Committee considers
recommendations from the Corporation's Human Resources Department which
works closely with outside consultants. In reviewing the compensation of
executives other than the Chief Executive Officer, the Committee takes the
Chief Executive Officer's counsel and recommendations into account.
The Committee also reviews the share ownership levels of executives,
evaluating their current and potential holdings of the Corporation's common
stock. Based upon its 1998 review the Committee believes that formal ownership
requirements for executive officers are not necessary since these officers
have existing equity holdings that are significant as a multiple of base
salaries.
The Corporation's executive compensation program is designed to compensate
executives at market competitive levels and to ensure the retention of
executive talent. It links short-term and longer-term financial rewards to the
Corporation's success by making a significant portion of the executives'
rewards variable and dependent on corporate or business unit performance. The
Committee believes that rewards to executives should increase if performance
goals are achieved and correspondingly should decrease if goals are not
achieved. The Corporation's executive compensation program places emphasis on
equity incentives in order to closely align the executives' interests with
those of the stockholders. The program is designed to reflect these
compensation principles and has the following components: base salary,
annual incentive cash award, performance shares and stock options. The
Corporation also has made specific awards of restricted stock from time to
time.
12
<PAGE>
Base Salaries
The Committee generally determines base salaries and any adjustments to base
salaries by evaluating the responsibilities of the current position and the
individual's experience, performance, career progress and potential
development. A review is also made of the competitive marketplace for
executive talent, including a comparison to base salaries for comparable
positions at other financial services companies, to ensure that this component
of compensation is competitive.
Adjustments in 1998 to the base salaries of the executive officers named in
the Summary Compensation Table, including Mr. Osborn, reflect the factors
referred to above. An important factor in the 1998 adjustments and salary
level determination was the Committee's analysis of salary levels for
comparable positions in peer group organizations. The Committee targeted the
base salaries of these executive officers at approximately the median of
salaries for similar positions in most of the companies used for comparison
purposes, which required a significant adjustment for a number of individuals
including Mr. Osborn. The base salary increase for Mr. Osborn, to $800,000
effective April 1, 1998, also reflected continued strong individual and
corporate performance.
Annual Incentive Cash Awards
During 1998 the executive officers named in the Summary Compensation Table
were eligible for annual incentive cash awards under the provisions of the
1998 Management Performance Plan. The Plan established a maximum award funding
opportunity for each Plan participant, expressed as a percentage of the
Corporation's 1998 consolidated net income. The maximum award funding
opportunity for the Chairman and Chief Executive Officer was 0.6% of
consolidated net income. For the President and Chief Operating Officer it was
0.4%, and for each of the other Plan participants it was 0.3%. Following
completion of the fiscal year the Committee determined each participant's
maximum award funding opportunity on the basis of the Corporation's 1998
consolidated net income, and approved the awards that are shown in the bonus
column of the Summary Compensation Table. In determining the actual awards,
the Committee used its discretion, as it had anticipated, to make awards below
the maximum award funding opportunity. An individual participant's award was
based on an evaluation of the executive's performance and contribution to the
Corporation's record financial and operating achievements. The Committee moved
to this methodology in 1998 in order to gain a year of experience with it, in
the expectation that it would recommend to stockholders for their approval a
similar plan for 1999 and subsequent years that would allow the Corporation to
deduct all of the annual cash incentive payments to the Chief Executive
Officer and the four other most highly compensated executive officers. See
"Deductibility" below.
Mr. Osborn's 1998 cash incentive award was determined by the Committee in
accordance with the Plan provisions noted above. In determining the award the
Committee acknowledged Mr. Osborn's leadership and contributions during 1998,
a year in which the Corporation exceeded its minimum goal for increasing
earnings per share, exceeded its target range for return-on-equity and
achieved a record productivity ratio.
Performance Shares
Performance share awards to executive officers have been determined generally
on an annual basis under the performance share provisions of the Amended 1992
Incentive Stock Plan (the "1992 Plan"). For each year's award, the Committee's
practice has been to set a three-year performance period followed
13
<PAGE>
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, has
established corporate return-on-equity performance goals for the period and
performance share target awards for the participants. Awards made in 1998 for
the 1998-2000 performance period provide for the crediting of a percentage of
the target shares ranging from 50%, if a minimum return-on-equity
performance goal is met, to 100% if a higher goal is met for that performance
period. Individual performance share target awards are based on multiple-of-
salary guidelines and competitive compensation data. The Committee also
considers the number of performance shares and stock options previously
granted to the individual. The 1998 awards for executive officers named in the
Summary Compensation Table are shown in the table captioned "Long-Term
Incentive Plans--Awards in Last Fiscal Year." If the executive leaves the
Corporation prior to the completion of the performance period for reasons
other than death, disability or retirement (in which cases the award amounts
are prorated if the performance goals are subsequently achieved), the
performance shares are forfeited.
Following the completion of each three-year performance period, the Committee
determines the extent to which performance goals for that performance period
have been achieved and authorizes the crediting of the appropriate number of
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 vesting period plus interest at an assumed rate on those
dividends. If the executive leaves the Corporation prior to this distribution
date for reasons other than death, disability or retirement, the performance
shares and related cash balance are forfeited. In cases of death, disability
or retirement during the three-year vesting period, the performance shares and
related cash balance become distributable.
In February, 1998 the Committee applied the factors described above to set the
performance share target award for the 1998-2000 performance period for Mr.
Osborn. Mr. Osborn's target share award represents approximately 7.4% of the
total of 296,000 performance shares awarded in 1998 for the 1998-2000
performance period.
Stock Options
The Committee generally determines stock option grants to executive officers
on an annual basis under the provisions of the 1992 Plan. 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 expire ten years after the date of
the grant. This approach is designed to motivate the executive to contribute
to the creation of stockholder value over the long term.
In approving individual awards, the Committee considers multiple-of-salary
guidelines, incorporating both a current and projected option value to the
recipient, and competitive compensation data. Awards are made within the
context of providing an appropriate mix of cash and equity incentives and also
take into consideration individual performance factors. The Committee also
considers the number of performance shares and stock options previously
granted to the individual. The grants to executive officers named in the
Summary Compensation Table are shown in the table captioned "Option Grants in
Last Fiscal Year."
In September, 1998, the Committee applied the factors described above in the
option grant made to Mr. Osborn. His grant represents approximately 5.6 % of
the total options to purchase 1,336,150 shares that were granted in 1998. Mr.
Osborn currently holds options to purchase a total of 374,970 shares.
14
<PAGE>
Restricted Stock Award
In February, 1998 the Committee approved a restricted stock award of 20,000
shares for Mr. Timbers. This award was made as part of the compensation
package provided to Mr. Timbers upon his hiring as President--Northern Trust
Global Investments, and is designed to provide an incentive for him to remain
with the Corporation. The shares will vest and be distributed, together with
dividends paid on the shares and interest at an assumed rate on those
dividends, over a period ending in January, 2004.
Deductibility
Section 162(m) of the Internal Revenue Code (the "Code") provides that
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 in the
Code for "performance based compensation" or otherwise exempt from the
provisions of Section 162(m), will not be deductible by a corporation for
federal income tax purposes. In 1998 Section 162(m) affected only the cash
compensation above $1,000,000 for those individuals whose cash compensation
exceeded that amount, as shown in the Summary Compensation Table, and a
portion of the January 3, 1994 stock award for Mr. Osborn for which
restrictions began to lapse on December 15, 1998. All other compensation paid
in 1998 to the named executive officers was deductible.
Based on its experience with the 1998 Management Performance Plan, the
Committee has determined that it can implement an annual cash incentive
program that both meets the Committee's objectives for this form of
compensation and also qualifies the compensation as "performance based"
under Section 162(m). The proposed Northern Trust Corporation Management
Performance Plan, described in "Approval of the Northern Trust Corporation
Management Performance Plan" below, is similar to the program used in 1998. It
is designed to ensure that annual incentive cash awards made for 1999 and
thereafter will qualify as performance based compensation under Section
162(m).
* * * * *
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 1998 the five executive
officers named in the Summary Compensation Table received over half of their
compensation in the aggregate (consisting of the dollar amounts shown in the
Table and the 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
Duane L. Burnham
Arthur L. Kelly
Edward J. Mooney
Harold B. Smith
Bide L. Thomas
15
<PAGE>
Summary Compensation Table
The following table sets forth compensation information for the years 1996
through 1998 with respect to the Corporation's Chief Executive Officer and
the four other most highly compensated executive officers during 1998.
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
------------------- --------------------------------
Awards Payouts
(Securities (Long-
Restricted Underlying Term All Other
Name and Stock Options Incentive Compensation
Principal Position Year Salary Bonus Awards(2) Granted) Plan)(3) (4)
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
William A.
Osborn 1998 $757,500 $1,200,000 75,000 $856,825 $134,218
Chairman and 1997 $622,500 $1,000,000 75,000 $665,388 $102,913
Chief
Executive
Officer 1996 $600,000 $ 400,000 60,000 $697,567 $ 66,352
Barry G.
Hastings 1998 $575,000 $ 750,000 50,000 $856,825 $101,882
President and 1997 $493,750 $ 625,000 50,000 $665,388 $ 81,628
Chief 1996 $475,000 $ 300,000 44,000 $697,567 $ 52,529
Operating
Officer
Mark Stevens 1998 $443,750 $ 500,000 35,000 $428,413 $ 78,626
President--
Personal 1997 $368,750 $ 375,000 $1,132,500 30,000 $332,694 $ 60,963
Financial
Services 1996 $347,000 $ 250,000 26,000 $261,587 $ 93,374
Sheila A.
Penrose 1998 $418,750 $ 400,000 30,000 $357,011 $ 74,196
President--
Corporate 1997 $345,000 $ 350,000 $1,132,500 30,000 $110,898 $ 57,036
And 1996 $322,500 $ 200,000 26,000 $ 0 $ 35,664
Institutional
Services
Stephen B.
Timbers(1) 1998 $362,340 $ 500,000 $1,477,500 55,000 $ 0
President--
Northern
Trust Global
Investments
</TABLE>
16
<PAGE>
Following are footnotes to the table on the preceding page:
(1)Mr. Timbers joined the Corporation on February 23, 1998.
(2)The market value of Mr. Timbers' restricted stock award is based on a
price of $73.875 per share, the mean of the high and low sale prices of the
common stock on February 23, 1998, the date of grant, as reported by The
Nasdaq Stock Market. The restrictions on Mr. Timbers' stock award lapse
beginning December 15, 2001, and the stock becomes fully vested and
distributed over a period ending in January, 2004, subject to earlier vesting
upon termination of his employment in certain circumstances. The total number
of outstanding restricted stock awards for the named executive officers and
their aggregate market value as of December 31, 1998 were: Mr. Osborn, 37,500
shares valued at $3,276,562; Mr. Hastings, 50,000 shares valued at
$4,368,750; Mr. Stevens, 20,000 shares valued at $1,747,500; Mr. Timbers,
20,000 shares valued at $1,747,500; and Ms. Penrose, 20,000 shares valued at
$1,747,500. These values are based on a price of $87.375 per share, the mean
of the high and low sale prices of the common stock on December 31, 1998 as
reported by The Nasdaq Stock Market. The restrictions on the stock awards to
Mr. Osborn and Mr. Hastings, granted on January 3, 1994, lapse beginning
December 15, 1998 for Mr. Osborn and January 15, 1999 for Mr. Hastings. These
stock awards become fully vested and distributed over a period ending in
January, 2003. The restrictions on the stock awards to Mr. Stevens and Ms.
Penrose, granted on September 16, 1997, lapse beginning December 15, 2001 and
the stock becomes fully vested and distributed over a period ending January
15, 2004. All stock awards are subject to earlier vesting in the event of a
change in control of the Corporation, as defined in the 1992 Plan, or earlier
prorated vesting upon a participant's death, normal retirement or disability,
or as otherwise determined by the Compensation and Benefits Committee.
Dividends are paid on restricted stock awards, adjusted by an interest
factor, and distributed in cash to participants in accordance with the
vesting schedules described above.
(3)The values of the amounts shown were determined by multiplying the total
number of shares earned and distributed by the mean of the high and low sale
prices of the common stock on the dates of distribution as reported by The
Nasdaq Stock Market and adding dividend equivalents and an interest factor.
(4)The "All Other Compensation" category reflects contributions on behalf of
the named executive officers to the Thrift-Incentive Plan and the
Supplemental Thrift-Incentive Plan (collectively, "TIP") and allocations on
behalf of the named executive officers under The Northern Trust Employee
Stock Ownership Plan and the Supplemental Employee Stock Ownership Plan
(collectively, "ESOP"), all of which are defined contribution plans. For the
following executive officers, the 1998 TIP and ESOP amounts (in that order)
were: Mr. Osborn, $30,300 and $103,918; Mr. Hastings, $23,000 and $78,882;
Mr. Stevens, $17,750 and $60,876; and Ms. Penrose, $16,750 and $57,446. Mr.
Timbers was not eligible to receive the employer matching contribution or
share allocation from either plan during 1998. In the event of a change in
control of the Corporation, participants become fully vested in all benefits
payable under the ESOP and all benefits payable under the TIP that are in
excess of applicable Internal Revenue Code limits.
17
<PAGE>
Option Grants in Last Fiscal Year
The following table sets forth certain information with respect to the
stock options granted during 1998 to the executive officers named in the
Summary Compensation Table. Using 0%, 5% and 10% in assumed rates of stock
price appreciation (compounded annually) for the option term of ten years,
the table also shows the potential realizable pre-tax 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
Individual Grants for Option Term of 10 years(2)
----------------------------------------------------------------------
Percent of
Number of Total
Securities Options
Underlying Granted to
Options Employees Exercise Expiration
Name Granted(1) in 1998 Price Date 0% 5% 10%
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
William
A.
Osborn 75,000 5.6% $69.1875 9/15/08 0 $ 3,263,374 $ 8,270,029
Barry G.
Hastings 50,000 3.7% $69.1875 9/15/08 0 $ 2,175,582 $ 5,513,353
Mark
Stevens 35,000 2.6% $69.1875 9/15/08 0 $ 1,522,908 $ 3,859,347
Sheila
A.
Penrose 30,000 2.3% $69.1875 9/15/08 0 $ 1,305,349 $ 3,308,012
Stephen
B.
Timbers 30,000 2.3% $69.1875 9/15/08 0 $ 1,305,349 $ 3,308,012
25,000 1.9% $ 73.875 2/23/08 0 $ 1,161,490 $ 2,943,443
</TABLE>
- --------------------------------------------------------------------------------
(1) Options to Messrs. Osborn, Hastings, Stevens, Timbers and Ms. Penrose
were granted on September 15, 1998 and first become exercisable September 15,
2000. Mr. Timbers was also granted an option for 25,000 shares at the start
of his employment with the Corporation on February 23, 1998. This
option first became exercisable on August 23, 1998 and continues to be
exercisable for 90 days following termination of his employment in certain
circumstances. In the event of a change in control of the Corporation, as
defined in the 1992 Plan, all outstanding stock options become fully vested
and exercisable.
(2) No gain to the optionees is possible without an increase in the stock
price, which will benefit all stockholders commensurately. The pre-tax gain
to all stockholders after ten years, using as a base the $69.666 weighted
average mean of the high and low sale prices of common stock as reported by
The Nasdaq Stock Market on the respective option grant dates would be $0 for
0% appreciation, approximately $5 billion for 5% appreciation and
approximately $12 billion for 10% appreciation.
18
<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 1998, the actual as well as annualized pre-
tax value realized, the number of shares for which options were
outstanding and the pre-tax value of those options as of year-end.
<TABLE>
<CAPTION>
Shares Annualized Number of Securities
Acquired Value Value Since Underlying Unexercised Value of Unexercised
on Realized Grant Options at Fiscal in-the-Money Options
Name Exercise (1) Date(2) Year-End(3) at Fiscal Year-End(3)(4)
- ---------------------------------------------------------------------------------------------------------
Exercisable Unexercisable Exercisable Unexercisable
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
William A. Osborn 5,030 $ 196,799 $ 39,774 224,970 150,000 $14,597,286 $3,670,313
Barry G. Hastings 0 $ 0 $ 0 216,450 100,000 $14,390,042 $2,446,875
Mark Stevens 16,306 $ 976,561 $140,962 120,694 65,000 $ 7,914,497 $1,559,063
Sheila A. Penrose 24,336 $1,439,141 $245,635 79,664 60,000 $ 4,950,098 $1,468,125
Stephen B. Timbers 0 $ 0 $ 0 25,000 30,000 $ 337,500 $ 545,625
</TABLE>
- --------------------------------------------------------------------------------
(1) Calculated on a pre-tax basis using the spread between the option
exercise price and the mean of the high and low sale prices of the common
stock on the date of exercise as reported by The Nasdaq Stock Market.
(2) Amount of pre-tax value realized annualized over period between the date
of grant and the date of exercise.
(3) Amounts represent options granted since 1990 to Mr. Stevens; since 1989
to Messrs. Osborn and Hastings; since 1992 to Ms. Penrose; and since 1998 to
Mr. Timbers.
(4) Calculated on a pre-tax basis using the spread between the option
exercise price and $87.375, which was the mean of the high and low sale
prices of the common stock on December 31, 1998 as reported by The Nasdaq
Stock Market.
Employment Security Agreements
Messrs. Osborn, Hastings, Stevens and Timbers and Ms. Penrose are parties
to employment security agreements that provide lump sum cash payments
equivalent to three years' salary and bonus (and payment of a pro-rata
bonus for the year of termination, as well as continuation of medical,
dental, life insurance and similar benefits for three years) upon the
termination of employment either by the Corporation without good cause or
by the executive with good reason, as defined in the agreements,
within two years after a change in control of the Corporation, as defined
in the agreements. The agreements also provide that the Corporation will
reimburse the executives for any excise tax imposed on payments under the
agreements as well as taxes imposed on such reimbursement amounts.
19
<PAGE>
Long-Term Incentive Plans--Awards in Last Fiscal Year
The following table sets forth the Performance Share target awards made under
the 1992 Plan to the named executive officers during 1998 for the 1998-2000
performance period for Messrs. Osborn, Hastings, Stevens, and Ms. Penrose and
for the 1996-1998, 1997-1999, and the 1998-2000 performance periods for Mr.
Timbers.
<TABLE>
<CAPTION>
Number of Performance or
Shares, Units Other Period
or Other Unit Maturation
Name Rights(1) or Payout(2)
- -----------------------------------------------------------------------------------------
<S> <C> <C>
William A. Osborn 22,000 shares 6 years
Barry G. Hastings 16,000 shares 6 years
Mark Stevens 14,000 shares 6 years
Sheila A. Penrose 14,000 shares 6 years
Stephen B. Timbers 14,000 shares 6 years
10,000 shares 5 years
5,500 shares 4 years
</TABLE>
- -------------------------------------------------------------------------
(1) Awarded by the Compensation and Benefits Committee with
established return-on-equity goals for the relevant performance period
or periods. Mr. Timbers received an award for each of the performance
periods then in progress upon commencement of his employment: 14,000
shares for 1998-2000, 10,000 shares for 1997-1999, and 5,500 for 1996-
1998.
(2) Shares are subject to the achievement of corporate performance
goals over a three-year performance period and a subsequent three-year
vesting period. A percentage of the target shares, ranging from 50% if
the minimum goal is met to 100% if the higher goal is met, will be
credited and then distributed once the vesting restrictions are
satisfied. No shares will be distributed if the minimum performance
goal is not met. In the event of a change in control of the
Corporation, as defined in the 1992 Plan, all shares credited to
participants' accounts and related cash balances become immediately
distributable to participants; target award shares for performance
periods in progress will be credited on a pro-rata basis of actual
full months elapsed to the number of full months in the performance
period and become distributable to participants. Upon termination of
his employment in certain circumstances, Mr. Timbers will receive all
shares credited to his accounts and related cash balances and a pro-
rata portion (based on the number of actual full months elapsed to the
number of full months in the performance period) of target award
shares for performance periods then in progress if the performance
goals for those periods are subsequently achieved. See "--Compensation
and Benefits Committee Report--Performance Shares," above for a
further description of the terms of the 1992 Plan.
20
<PAGE>
Pension Plan Tables
The table below sets forth the estimated annual benefits payable upon
retirement at age 65 under the Bank's Pension Plan (including amounts payable
under the Bank's Supplemental Pension Plan) to persons in the remuneration and
service classifications specified, using the formula in place prior to the
Plan amendments described below.
<TABLE>
<CAPTION>
Pension Benefit
- -------------------------------------------------------------------------------
Years of Service at Retirement
Average Compensation --------------------------------------------------------------
In 5 Highest Years 10 15 20 25 30 35
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 500,000 $ 120,000 $180,000 $ 240,000 $ 265,000 $ 290,000 $ 315,000
750,000 180,000 270,000 360,000 397,500 435,000 472,500
1,000,000 240,000 360,000 480,000 530,000 580,000 630,000
1,250,000 300,000 450,000 600,000 662,500 725,000 787,500
1,500,000 360,000 540,000 720,000 795,000 870,000 945,000
1,750,000 420,000 630,000 840,000 927,500 1,015,000 1,102,500
2,000,000 480,000 720,000 960,000 1,060,000 1,160,000 1,260,000
2,250,000 540,000 810,000 1,080,000 1,192,500 1,305,000 1,417,500
2,500,000 600,000 900,000 1,200,000 1,325,000 1,450,000 1,575,000
2,750,000 660,000 990,000 1,320,000 1,457,500 1,595,000 1,732,500
</TABLE>
Compensation covered by the Pension Plan includes salaries, before tax
deposits made by a participant to the TIP, shift differential pay, overtime
pay and awards under the Management or Annual Performance Plan (or predecessor
plans), as applicable. The average covered compensation for the highest five
consecutive years is used in the pension calculation.
The above pension benefits, 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 ("Social Security Covered Compensation
Offset"), which varies by year of birth, for each year of service up to 35
years. For participants hired after 1988 the percentage is .50%. In the event
of a change in control of the Corporation, as defined in the Supplemental
Pension Plan, participants become fully vested in all benefits payable under
the Supplemental Pension Plan.
The Bank's Pension Plan and Supplemental Pension Plan were amended to change
the formula used to calculate retirement benefits beginning January 1, 1996.
The new formula will generally result in lower retirement benefits, due
principally to a change to a uniform accrual rate (1.8% per year of credited
21
<PAGE>
service), a cap on credited service (at 35 years), adoption of a uniform
Social Security Covered Compensation Offset (.50%) and the elimination of
special subsidies applicable to surviving spouse benefits and early retirement
benefits. However, all participants employed on December 31, 1995 will
continue accruing benefits under the prior formula, as set forth in the
Pension Plan table above, through December 31, 2000. At termination or
retirement they will be entitled to receive the greater of the minimum benefit
accrued through December 31, 2000 (or termination date if earlier) under the
prior formula or the benefit calculated under the new formula. All
participants employed after December 31, 1995 will accrue benefits under the
new formula as set forth in the Pension Plan table below. The pension benefits
presented below are shown as if paid in the form of a straight life annuity
and will be reduced by .50% of the average Social Security taxable wage base
for the individual for each year of service up to 35 years.
<TABLE>
<CAPTION>
Pension Benefit (New Formula)
- -------------------------------------------------------------------------------
Years of Service at Retirement
Average Compensation ------------------------------------------------------------
In 5 Highest Years 10 15 20 25 30 35
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 500,000 $ 90,000 $135,000 $180,000 $ 225,000 $ 270,000 $ 315,000
750,000 135,000 202,500 270,000 337,500 405,000 472,500
1,000,000 180,000 270,000 360,000 450,000 540,000 630,000
1,250,000 225,000 337,500 450,000 562,500 675,000 787,500
1,500,000 270,000 405,000 540,000 675,000 810,000 945,000
1,750,000 315,000 472,500 630,000 787,500 945,000 1,102,500
2,000,000 360,000 540,000 720,000 900,000 1,080,000 1,260,000
2,250,000 405,000 607,500 810,000 1,012,500 1,215,000 1,417,500
2,500,000 450,000 675,000 900,000 1,125,000 1,350,000 1,575,000
2,750,000 495,000 742,500 990,000 1,237,500 1,485,000 1,732,500
</TABLE>
Credited years of service under the Bank's Pension Plan for the executive
officers named in the Summary Compensation Table are as follows: William A.
Osborn--28 years, Barry G. Hastings--24 years, Mark Stevens--19 years, Sheila
A. Penrose--21 years, and Stephen B. Timbers--0 years. In addition to pension
benefits, retiree health benefits are available to these individuals upon
retirement if the length of service and other eligibility requirements
described in the Retiree Medical Care Plan have been met. Mr. Timbers is also
entitled to $10,000 a year for three years to purchase medical insurance
coverage upon termination of his employment in certain circumstances.
22
<PAGE>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG NORTHERN TRUST CORPORATION COMMON STOCK, S&P 500 INDEX AND
KEEFE, BRUYETTE & WOODS (KBW) 50 BANK INDEX
Total Return Assumes $100 Invested on
January 1, 1994 with Reinvestment of Dividends
Five-Year Cumulative Total Return
<TABLE>
<CAPTION>
Northern Trust S&P 500 KBW 50 Bank
<S> <C> <C> <C>
1993 100 100 100
1994 90 101 95
1995 148 139 152
1996 196 171 215
1997 383 228 314
1998 485 294 340
</TABLE>
For the five-year period ended December 31, 1998, the Corporation's total
return to stockholders was 385% compared with 194% for the S&P 500 Index and
240% for the KBW 50 Bank Index. During the same period, the Corporation's
common stock market capitalization increased $7,599,000,000 or 360% from
$2,111,400,000 to $9,710,400,000, reflecting both an increase in the stock
price and a greater number of shares outstanding. The Corporation's net income
increased in 1998 for the eleventh consecutive year and increased 111% over
the last five years, from $167.9 million in 1993 to $353.9 million in 1998. In
terms of total return to stockholders for the fiscal year ended December 31,
1998, the Corporation ranked eleventh out of the fifty banking institutions
comprising the KBW 50 Bank Index.
23
<PAGE>
APPROVAL OF THE NORTHERN TRUST CORPORATION
MANAGEMENT PERFORMANCE PLAN
The Corporation's Board of Directors has unanimously adopted, on the
recommendation of the Compensation and Benefits Committee (the "Committee")
and subject to stockholder approval, the Northern Trust Corporation Management
Performance Plan (the "Plan"). A copy of the Plan is set forth as Exhibit A to
this proxy statement. Stockholders are encouraged to review the Plan
carefully. The following summary is qualified in its entirety by reference to
the full text of the Plan.
The principal purpose of the Plan is to promote the achievement of superior
financial and operating performance of the Corporation and its subsidiaries
through the awarding of annual cash incentive payments to certain key senior
officers of the Corporation. Stockholders are being asked to approve the Plan
to ensure that compensation paid under the Plan will qualify as "performance
based" compensation under Section 162(m) of the Code and thus be fully
deductible by the Corporation for federal income tax purposes. As described
above under "Executive Compensation--Compensation and Benefits Committee
Report," Section 162(m) and the regulations adopted thereunder generally
preclude a publicly traded company from taking a tax deduction for
compensation in excess of $1 million paid to the company's chief executive
officer or any of the company's four next highest paid executive officers,
subject to several exceptions, including an exception for "performance based"
compensation that meets the following requirements: (a) the compensation must
be payable solely on account of the attainment of one or more pre-established
performance goals, (b) the performance goals must be established by a
compensation committee comprised solely of two or more outside directors, (c)
the "material terms of the performance goals" must be disclosed to and
approved by stockholders before any compensation is paid, and (d) the
compensation committee must certify in writing that the performance goals have
been satisfied before any compensation is paid. Stockholder approval of the
Plan will constitute approval of the "material terms of the performance goals"
under the Plan within the meaning of the regulations adopted under Section
162(m). If the Plan is approved by stockholders, it will be effective
beginning with fiscal year 1999 and will remain in effect thereafter until
terminated by the Board. If the Plan is not approved by stockholders, no
compensation will be paid under the Plan.
The Plan will be administered by the Committee. The Committee is authorized to
select Plan participants and determine final award amounts to be paid to
participants for each fiscal year in which the Plan is in effect. The
Committee is authorized, subject to the express provisions of the Plan, to
interpret the Plan and establish such rules and regulations and make such
determinations as it deems necessary or advisable for the proper
administration of the Plan. All determinations made by the Committee will be
binding and conclusive on all participants in the Plan.
The participants in the Plan in any given fiscal year will be determined by
the Committee, in its sole discretion, within the first 90 days of such fiscal
year. The Committee's determinations may vary from year to year and may
include any key officer of the Corporation at or above the level of an
executive vice president. It is expected that the Chairman and Chief Executive
Officer of the Corporation and the four other executive officers who received
the highest annual compensation during the prior fiscal year will participate
in the Plan. For fiscal year 1999, the Committee has determined that eight of
the 10 eligible key senior officers of the Corporation will participate in the
Plan.
The performance objective under the Plan upon which awards, if any, will be
based is the Corporation's consolidated net income for a given fiscal year.
The Plan establishes a maximum award funding opportunity for each category of
Plan participants, expressed as a percentage of the
24
<PAGE>
Corporation's consolidated net income for the applicable fiscal year: the
Chairman and Chief Executive Officer--0.6%; the President and Chief Operating
Officer--0.4%; and each other Plan participant--0.3%. Within the first 90 days
following completion of a fiscal year, the Committee will determine each
participant's maximum award funding opportunity solely on the basis of the
Corporation's consolidated net income for that fiscal year, and then approve
each participant's actual award for that fiscal year. In approving actual
awards, the Committee has the discretion to limit or reduce a participant's
award below the maximum award funding opportunity based on individual and
corporate performance factors. The Committee expects to exercise that
discretion and so does not anticipate that the maximum award funding
opportunity will be paid to any participant. The Plan prohibits the Committee
from increasing an award above the maximum award funding opportunity.
Awards, if any, payable under the Plan for fiscal year 1999 and future fiscal
years cannot presently be determined because they will depend on the
Corporation's consolidated net income performance in those years and any
exercise of discretion by the Committee to limit or reduce a
participant's award. For fiscal year 1998, the Corporation had in effect a
plan substantially similar to the Plan in all material respects, including the
payment of awards based on the Corporation's consolidated net income, as
described above under "Executive Compensation--Compensation and Benefits
Committee Report." As a result, the awards received by the named executive
officers under the 1998 plan, as set forth opposite their names in the bonus
column of the Summary Compensation Table on page 16, would have been the
awards received under the Plan if the Plan had been in effect for fiscal
year 1998.
The Board of Directors may at any time amend or terminate the Plan without the
consent of participants (except with respect to outstanding awards), and
without the approval of the stockholders of the Corporation.
Approval of the Plan requires the affirmative vote of the holders of a
majority of the shares of the common stock present in person or represented by
proxy and entitled to vote at the annual meeting.
THE BOARD OF DIRECTORS OF NORTHERN TRUST CORPORATION UNANIMOUSLY RECOMMENDS
THAT YOU VOTE FOR APPROVAL OF THE NORTHERN TRUST CORPORATION MANAGEMENT
PERFORMANCE PLAN.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP served as the Corporation's independent public accountants
during 1998. 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 1999, the Board of Directors has
authorized the engagement of Arthur Andersen LLP as its auditors.
Representatives of Arthur Andersen LLP will be present at the annual meeting.
They will have an opportunity to make a statement if they wish and will be
available to respond to appropriate questions raised by stockholders at the
meeting.
25
<PAGE>
OTHER BUSINESS
The Board of Directors knows of no business which will be presented at the 1999
annual meeting other than that described above. The Corporation's By-laws
provide that stockholders may bring matters before an annual meeting only if
they give timely written notice of the matter to be brought not less than
90 days and not more than 120 days before the month and day that the
Corporation held the prior year's annual meeting. The notice must be directed
to the attention of the Secretary and contain the information required by the
By-laws. No such notice with respect to the 1999 annual meeting was received
during the relevant period, December 22, 1998 through January 21, 1999.
However, if any matter properly comes before the annual meeting, the proxy
holders will vote the shares represented by the proxies in accordance with
their best judgment.
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Any stockholder proposals for the 2000 annual meeting must be received by the
Corporation, directed to the attention of the Secretary, no later than November
16, 1999 in order to be eligible for inclusion in the Corporation's proxy
statement and form of proxy for that meeting. The proposal must comply in all
respects with the rules and regulations of the Securities and Exchange
Commission and the By-laws of the Corporation.
Also, under the Corporation's By-laws, other proposals that are not included in
the proxy statement will be considered timely and may be eligible for
presentation at that meeting if they are received by the Corporation in the
form of a written notice, directed to the attention of the Secretary, not
earlier than December 22, 1999 and not later than January 21, 2000. The notice
must contain the information required by the By-laws.
By order of the Board of Directors,
Rose A. Ellis
Secretary
Chicago, Illinois
March 15, 1999
26
<PAGE>
Exhibit A
NORTHERN TRUST CORPORATION
MANAGEMENT PERFORMANCE PLAN
I.Purposes of Plan
The purposes of the Northern Trust Corporation Management Performance
Plan (the "Plan") are to (i) promote the achievement of superior
financial and operating performance of Northern Trust Corporation and
its subsidiaries (the "Corporation"), and to further the objective of
delivering unrivaled service quality to clients through the awarding of
annual cash incentives to participants in the Plan ("Participants"),
(ii) reward Participants who make significant contributions to the
Corporation's success, enabling them to share in this success, (iii)
provide the Corporation a means to attract, motivate and retain certain
key senior officers and (iv) qualify any compensation paid under the
Plan for tax deductibility under Section 162(m) of the Internal Revenue
Code of 1986, as amended, to the extent deemed appropriate by the
Compensation and Benefits Committee (the "Committee") of the Board of
Directors (the "Board") of the Corporation.
II.Administration
The Plan shall be administered by the Committee. The Committee shall
have authority for selecting Participants and determining final award
amounts to be paid to Participants. Subject to the express provisions of
the Plan, the Committee shall be authorized to interpret the Plan and to
establish, amend and rescind any rules and regulations relating to the
Plan and to make all other determinations deemed necessary or advisable
for the proper administration of the Plan. The determinations of the
Committee in the proper administration of the Plan shall be conclusive
and binding.
III.Term
The Plan shall be effective as of January 1, 1999 (the "Effective
Date"), subject to approval by the Corporation's shareholders at the
1999 annual meeting of Stockholders. The Plan shall remain in effect
until terminated by the Board.
IV.Eligibility and Participation
Eligibility to participate in the Plan shall be limited to any key
officer of the Corporation at or above the level of an executive vice
president. Participants in the Plan shall be selected annually by the
Committee from those key senior officers eligible to participate in the
Plan.
V.Performance Objective
The Plan's performance objective (the "Performance Objective") shall be
established with reference to the Corporation's consolidated net income
as determined in accordance with generally accepted accounting
principles.
A-1
<PAGE>
VI.Maximum Award Funding Opportunity
The maximum award funding opportunity in any fiscal year (the "Funding
Opportunity") for the Chairman and Chief Executive Officer, if a
Participant for such fiscal year, shall be 0.6% of the Corporation's
consolidated net income for that fiscal year. The Funding Opportunity
for the President and Chief Operating Officer, if a Participant for such
fiscal year, shall be 0.4% of the Corporation's consolidated net income
for that fiscal year. The Funding Opportunity for any other Participant
shall be 0.3% of the Corporation's consolidated net income for that
fiscal year.
VII. Award Determination
As soon as practicable (but in no event later than 90 days) following
completion of a fiscal year, the Committee shall (i) determine each
Participant's Funding Opportunity for that fiscal year solely on the
basis of the Performance Objective and (ii) approve each Participant's
actual award for that fiscal year on a discretionary basis as provided
below. The Committee shall have the right to limit or reduce a
Participant's actual award in any fiscal year below the Funding
Opportunity in its sole discretion based on an assessment of individual
contribution, performance relative to performance expectations,
competitive levels of compensation and corporate performance, but it
shall not increase a Participant's award in any fiscal year above the
Funding Opportunity.
VIII. Payment of Awards
Awards for a fiscal year will be paid in cash (or deferred at the
election of a Participant as provided in Section IX (b) below) as soon
as practicable following the Committee's determination of awards for
that fiscal year.
IX. Other Provisions
The following miscellaneous provisions are applicable to the Plan:
(a) Awards paid under the provisions of the Plan are considered
pensionable earnings when paid.
(b) Awards under the Plan may be deferred into the Northern Trust
Corporation Deferred Compensation Plan. Deferred amounts will be
considered pensionable earnings under the provisions of the
Supplemental Pension Plan.
(c) Termination of employment of a Participant during the Plan year,
either voluntarily, or involuntarily with cause for reasons other
than death, disability, or retirement, shall result in immediate
exclusion from the Plan.
(d) Except in the event of the death of a Participant, the rights and
interests of a Participant under the Plan shall not be assigned,
encumbered, or transferred.
(e) Each Participant shall designate a beneficiary (the "Designated
Beneficiary") to receive the award, if any, allocated to a
Participant, in the event of such Participant's death. If no
Designated Beneficiary survives the Participant, it shall be the
surviving spouse of the Participant or, if there is no surviving
spouse, it shall be the Participant's estate.
A-2
<PAGE>
(f) No employee or other person shall have any claim or right to be
granted an award under the Plan. Neither the Plan, nor any action
taken thereunder, shall be construed as giving the Participant or
other person any right to be retained in the employ of the
Corporation.
(g) The Corporation shall have the right to deduct from all payments
made under the Plan any taxes required by law to be withheld with
respect to such payment.
(h) All questions pertaining to the validity, construction and
administration of the Plan and any award hereunder shall be
determined in conformity with the laws of the State of Illinois.
(i) The Board, in its sole discretion, may modify or amend any or all
of the Plan at any time and, without notice, may suspend or
terminate the Plan entirely. However, no such modification or
amendment may, without the consent of the Participant, reduce the
right of a Participant to a payment or distribution to which the
Participant is entitled by reason of an outstanding award.
(j) All obligations of the Corporation under the Plan with respect to
awards granted hereunder shall be binding on any successor to the
Corporation, whether the existence of such successor is the result
of a direct or indirect purchase, merger, consolidation, or
otherwise, of all or substantially all of the business or assets of
the Corporation.
A-3
<PAGE>
[LOGO FOR RECYCLED PAPER]
Printed on Recycled paper.
<PAGE>
PROXY CARD PROXY CARD
NORTHERN TRUST CORPORATION
PROXY FOR ANNUAL MEETING 1999
Proxy Solicited by the Board of Directors
The undersigned hereby appoints Frederick A. Krehbiel, William G. Mitchell
and William D. Smithburg, or any of them, with the power of substitution,
attorneys and proxies for the undersigned to vote at the annual meeting of
stockholders of Northern Trust Corporation on April 20, 1999, or any
adjournment of such meeting, all shares of Common Stock which the undersigned
is entitled to vote on the Proposals more fully described in the Proxy
Statement for the meeting, in the manner specified, and on any other business
properly coming before the meeting.
You are encouraged to specify your choice on each Proposal
by marking the appropriate space (SEE REVERSE SIDE), but you need not mark any
space if you wish to vote in accordance with the recommendations of the Board
of Directors. The above proxies cannot vote your shares unless you sign, date
and return this card.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH PROPOSAL.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE>
NORTHERN TRUST CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [x]
1. Election of 14 Directors. Nominees: Duane L. Burnham, Dolores E. Cross, Su-
san Crown, Robert S. Hamada, Barry G. Hastings, Robert A. Helman, Arthur L.
Kelly, Frederick A. Krehbiel, William G. Mitchell, Edward J. Mooney, William
A. Osborn, Harold B. Smith, William D. Smithburg, Bide L. Thomas
For All [_] Witheld All [_] For All Except As Noted [_]
-----------------------------------------------------------------------------
(Except nominee(s) written above.)
2. Approval of the Northern Trust Corporation Management Performance Plan
For [_] Against [_] Abstain [_]
In their sole discretion, the Proxies are authorized to vote as they shall
determine on such other matters as may properly come before the meeting.
This proxy when properly executed will be voted in the manner directed here-
in. If no direction is made, this proxy will be voted FOR the election of all
nominees for Director, cumulatively for some if the above proxies shall so de-
termine at their sole discretion, and FOR Proposal 2.
Dated _________________, 1999
Signature(s) ________________________
-------------------------------------
Please sign exactly as name appears
hereon. Joint owners should each sign.
When signing as an attorney, executor,
administrator, trustee or guardian,
please give full title as such. If a
corporation or partnership, sign in
name of entity by authorized person.
* Please detach here *
[N0RTHERN TRUST CORPORATION LOGO]
<PAGE>
PROXY CARD PROXY CARD
NORTHERN TRUST CORPORATION
PROXY FOR ANNUAL MEETING 1999
Voting Direction Solicited by the Trustee of the Northern Trust Employee
Stock Ownership Plan
The undersigned hereby directs U.S. Trust Company, N.A., Trustee of the
Northern Trust Employee Stock Ownership Plan ("ESOP"), to vote at the annual
meeting of stockholders of Northern Trust Corporation on April 20, 1999, or any
adjournment of such meeting, all shares of Common Stock that have been
allocated to the account of the undersigned on the Proposals more fully
described in the Proxy Statement for the meeting, in the manner specified, and
on any other business properly coming before the meeting.
You are encouraged to specify your choice on each Proposal
by marking the appropriate space. SEE REVERSE SIDE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH PROPOSAL.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
NOTICE TO PARTICIPANTS IN THE NORTHERN TRUST EMPLOYEE STOCK OWNERSHIP PLAN
Dear Plan Participant:
Enclosed with this notice is a Proxy Statement of the Northern
Trust Corporation (the "Corporation"), describing the annual
meeting of stockholders to be held on April 20, 1999. The annual
meeting of stockholders will be for the purpose of electing
fourteen directors and the approval of the Northern Trust
Corporation Management Performance Plan. Directors and officers
of the Corporation will be present at the annual meeting to
respond to any questions that the stockholders may have
regarding the business to be transacted. The Proxy Statement has
been prepared by the Board of Directors of the Corporation, in
connection with the business to be transacted at the annual
meeting.
Directions to the Trustee
Only U.S. Trust Company, N.A., as trustee (the "Trustee") of
the Northern Trust Employee Stock Ownership Plan (the "ESOP"),
can vote the shares of the Corporation stock ("Shares") held by
the ESOP. However, under the terms of the ESOP, you, as a
participant in the ESOP, are entitled to instruct the Trustee
how the Shares allocated to your account under the ESOP are to
be voted. Unallocated Shares and allocated Shares for which no
direction is received (together, "Undirected Shares") will be
voted by the Trustee in the same proportion that the allocated
Shares were voted, unless inconsistent with the Trustee's
fiduciary responsibility. Thus, through your instructions, you
will be exercising power and control as a named fiduciary of the
ESOP not only over the Shares allocated to your account, but
also with respect to the Undirected Shares.
Enclosed with this notice is a confidential voting instruction
card which is provided to you for the purpose of instructing the
Trustee how to vote the Shares concerning the election of
directors and the approval of the Northern Trust Corporation
Management Performance Plan, which are described in the enclosed
Proxy Statement. Your interest in these matters is very
important. Please take the time to complete the instruction card
and return it in the enclosed envelope provided to you. The
Trustee will vote your Shares in accordance with the
instructions you provide on the voting instruction card received
by the Trustee on or before April 16, 1999, unless the Trustee
determines such instructions are contrary to the requirements of
the Employee Retirement Income Security Act of 1974, as amended
("ERISA").
Confidentiality and Instructions
How you vote will not be revealed, directly or indirectly, to
any officer, to any other employee, or any director of the
Corporation or to anyone else, except as otherwise required by
law. You should, therefore, feel completely free to instruct the
Trustee to vote Shares in the manner you think best.
Voting Deadline
Because of the time required to tabulate voting instructions
from participants before the annual meeting, the Trustee must
establish a cut-off date for receiving your instruction card.
The cut-off date established by the Trustee is 5:00 P.M. Eastern
Time April 16, 1999. The Trustee cannot insure that instruction
cards received after the cut-off date will be tabulated.
Therefore, it is important that you act promptly and return your
instruction card on or before April 16, 1999, in the envelope
provided for your convenience. If the Trustee does not receive
timely instructions from you, the Trustee will vote your Shares
in proportion to the voting instructions received from all ESOP
participants.
If you are a direct stockholder of Northern Trust Corporation,
you will receive under separate cover, proxy solicitation
materials, including a proxy card. This card CANNOT be used to
direct the voting of Shares held by the ESOP.
Further Information
If you have questions regarding the information provided to
you, you may contact the Trustee at the following toll-free
number between 11:00 A.M. and 7:00 P.M. Eastern Time, Monday
through Friday at 1-800-535-3093.
Your ability to instruct the Trustee how to vote your ESOP
Shares is an important part of your rights as an ESOP
participant. Please consider the enclosed material carefully and
then furnish your voting instructions promptly.
March 15, 1999
U.S. Trust Company, N.A.
as Trustee of the
NORTHERN TRUST
EMPLOYEE STOCK OWNERSHIP PLAN
<PAGE>
NORTHERN TRUST CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [x]
1. Election of 14 Directors. Nominees: Duane L. Burnham, Dolores E. Cross, Su-
san Crown, Robert S. Hamada, Barry G. Hastings, Robert A. Helman, Arthur L.
Kelly, Frederick A. Krehbiel, William G. Mitchell, Edward J. Mooney, William
A. Osborn, Harold B. Smith, William D. Smithburg, Bide L. Thomas
For All [_] Witheld All [_] For All Except As Noted ]_]
-----------------------------------------------------------------------------
(Except nominee(s) written above.)
2. Approval of the Northern Trust Corporation Management Performance Plan
For [_] Against [_] Abstain [_]
In its sole discretion, the Trustee is authorized to vote as it shall deter-
mine on such other matters as may properly come before the meeting.
Listed on this card is the number of shares of Common Stock allocated to your
account. You may direct the Trustee of the ESOP to vote all such shares at the
annual meeting. Please express your choice on each Proposal, date and sign be-
low, and mail this card in the envelope provided.
Unallocated shares and allocated shares for which no direction is received
(together, Undirected Shares) will be voted by the Trustee in the same propor-
tion that the allocated shares are voted, unless inconsistent with the Trust-
ee's fiduciary responsibility. Under the ESOP, Participants are "named fiducia-
ries" to the extent of their authority to direct the voting of shares allocated
to their accounts and their proportionate share of Undirected Shares.
Dated _______________________,1999
Signature(s) ________________________________
---------------------------------------------
Direction to U.S. Trust Company, N.A., as
Trustee of the Northern Trust Em-ployee Stock
Ownership Plan, to vote all shares for which I
am entitled to give voting direction.
Please sign exactly as name appears hereon. When
signing as an attorney, executor, administrator,
trustee or guardian, please give full title as
such.
* Please detach here *
[NORTHERN TRUST CORPORATION LOGO}
<PAGE>
PROXY CARD PROXY CARD
NORTHERN TRUST CORPORATION
PROXY FOR ANNUAL MEETING 1999
Voting Direction Solicited by the Trustee of the Thrift-Incentive Plan
The undersigned hereby directs The Northern Trust Company, Trustee of the
Thrift-Incentive Plan, to vote at the annual meeting of stockholders of
Northern Trust Corporation on April 20, 1999, or any adjournment of such
meeting, all shares of Common Stock for which the undersigned is entitled to
give voting direction on the Proposals more fully described in the Proxy
Statement for the meeting, in the manner specified, and on any other business
properly coming before the meeting.
You are encouraged to specify your choice on each Proposal
by marking the appropriate space. SEE REVERSE SIDE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH PROPOSAL.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE>
NORTHERN TRUST CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
1. Election of 14 Directors. Nominees: Duane L. Burnham, Dolores E. Cross,
Susan Crown, Robert S. Hamada, Barry G. Hastings, Robert A. Helman, Arthur
L. Kelly, Frederick A. Krehbiel, William G. Mitchell, Edward J. Mooney,
William A. Osborn, Harold B. Smith, William D. Smithburg, Bide L. Thomas
For All [_] Withheld All [_] For All Except As Noted [_]
-----------------------------------------------------------------------------
(Except nominee(s) written above.)
2. Approval of the Northern Trust Corporation Management Performance Plan
For [_] Against [_] Abstain [_]
In its sole discretion, the Trustee is authorized to vote as it shall deter-
mine on such other matters as may properly come before the meeting.
Listed on this card is the number of shares of Common Stock which you are en-
titled to vote. You may direct the Trustee of the Thrift-Incentive Plan to vote
all of the shares for which you are entitled to direct the voting at the annual
meeting. Please express your choice on each Proposal, date and sign below, and
mail this card in the envelope provided.
Dated ________________,1999
Signature(s) _____________________________
------------------------------------------
Direction to The Northern Trust Company, as
Trustee of the Thrift-Incentive Plan, to
vote my share participation.
Please sign exactly as name appears hereon.
When signing as an attorney, executor,
administrator, trustee or guardian, please
give full title as such.
* Please detach here *
[NORTHERN TRUST CORPORATION LOGO]
