SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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Check the appropriate box:
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[ ] Soliciting material pursuant to Rule 14a-11(c) or
Rule 14a-12
OLD KENT FINANCIAL CORPORATION
_________________________________________________________________
(Name of Registrant as Specified in Its Charter)
OLD KENT FINANCIAL CORPORATION
_________________________________________________________________
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
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or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
______________________________________________________________________
(2) Aggregate number of securities to which transactions applies:
______________________________________________________________________
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pursuant to Exchange Act Rule 0-11.
______________________________________________________________________
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[ ] 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
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OLD KENT FINANCIAL CORPORATION
One Vandenberg Center
Grand Rapids, Michigan 49503
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The annual meeting of shareholders of Old Kent Financial
Corporation will be held in the Gillett Auditorium at the main office of
Old Kent Bank and Trust Company, One Vandenberg Center, Grand Rapids,
Michigan, on Monday, April 18, 1994, at 10 a.m. local time to consider and
vote upon election of directors and such other business as may properly
come before the meeting.
Shareholders of record at the close of business on February 18,
1994, are entitled to notice of and to vote at the meeting or any
adjournment of the meeting.
March 1, 1994 By Order of the Board of Directors,
Martin J. Allen, Jr.
Secretary
It is important that your shares be represented at the meeting.
Even if you expect to attend the meeting,
PLEASE SIGN AND RETURN YOUR PROXY PROMPTLY.
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
OLD KENT FINANCIAL CORPORATION
April 18, 1994
This Proxy Statement and the enclosed proxy are being furnished
to holders of Common Stock, $1 par value, of Old Kent Financial Corporation
("Old Kent" or the "Corporation") on and after March 1, 1994, in connection
with the solicitation of proxies by the Old Kent board of directors for use
at the annual meeting of Old Kent shareholders to be held on April 18,
1994, and at any adjournment of that meeting. The annual meeting will be
held in the Gillett Auditorium at the main office of Old Kent Bank and
Trust Company, One Vandenberg Center, Grand Rapids, Michigan, 49503, at 10
a.m. local time.
The purpose of the annual meeting is to consider and vote upon
election of directors. If a proxy in the form distributed by Old Kent is
properly executed and returned to Old Kent, the shares represented by that
proxy will be voted at the annual meeting of Old Kent shareholders and at
any adjournment of that meeting. Where a shareholder specifies a choice,
the proxy will be voted as specified. If no choice is specified, the
shares represented by the proxy will be voted for the election of all
nominees named in this Proxy Statement and in accordance with the judgment
of the persons named as proxies with respect to any other matter that may
properly come before the meeting.
A proxy may be revoked at any time prior to its exercise by
written notice delivered to the Secretary of the Corporation or by
attending and voting at the annual meeting.
Solicitation of proxies will be made initially by mail. Old Kent
directors, officers and employees may also solicit proxies in person or by
telephone without additional compensation. Proxies may be solicited by
nominees and other fiduciaries who may mail materials to or otherwise
communicate with the beneficial owners of shares held by them. Old Kent
has engaged Corporate Investor Communications, Inc. at an estimated cost of
$5,500 to assist in solicitation of proxies from brokers and other nominee
shareholders. All expenses of solicitation of proxies will be paid by Old
Kent.
Election of Directors
The board of directors proposes that the following four nominees
be elected as directors for terms expiring at the annual meeting to be held
in the years indicated below:
<TABLE>
<CAPTION>
Nominee Term Expiring in
<S> <C> <C>
Earl D. Holton 1997
Michael J. Jandernoa 1997
Jerry K. Myers 1997
B. P. Sherwood, III 1997
</TABLE>
A vote of the shareholders holding a plurality of the shares voting is
required to elect directors. For the purpose of counting votes on this
proposal, abstentions, broker non-votes and other shares not voted will not
be counted as shares voted, and the number of shares of which a plurality
is required will be reduced by the number of shares not voted.
The proposed nominees are willing to be elected and to serve. In
the event that any nominee is unable to serve or is otherwise unavailable
for election, which is not contemplated, the incumbent Old Kent board of
directors may or may not select a substitute nominee. If a substitute
nominee is selected, all proxies will be voted for the person so selected.
If a substitute nominee is not selected, all proxies will be voted for the
election of the remaining nominees. Proxies will not be voted for a
greater number of persons than the number of nominees named.
YOUR BOARD OF DIRECTORS RECOMMENDS A
VOTE FOR ELECTION OF ALL NOMINEES AS DIRECTORS
Voting Securities
Holders of record of Common Stock at the close of business on
February 18, 1994, will be entitled to vote at the annual meeting of
shareholders on April 18, 1994, and any adjournment of that meeting. As of
February 18, 1994, there were 39,479,129 shares of Common Stock issued and
outstanding. Each share of Common Stock is entitled to one vote on each
matter presented for shareholder action.
The following table sets forth information concerning the number
of shares of Common Stock held as of December 31, 1993, by the only
shareholder who is known to Old Kent management to have been the beneficial
owner of more than 5% of the outstanding shares of any class of stock as of
that date:
-2-
<TABLE>
<CAPTION>
Amount and Nature of Beneficial Ownership(1)
Sole Voting Shared Voting Total
Name and Address of Beneficial and Dispositive or Dispositive Beneficial Percent
Owner of Common Stock Power Power(2) Ownership of Class
<S> <C> <C> <C> <C>
Old Kent Bank and Trust Company
One Vandenberg Center
Grand Rapids, Michigan 49503 (3) 988,593 2,430,180 3,418,773 8.42%
</TABLE>
The following table shows certain information concerning the
number of shares of Common Stock held as of December 31, 1993, by each of
Old Kent's directors and nominees for director, each of the named executive
officers and all of Old Kent's directors and executive officers as a group:
<TABLE>
<CAPTION>
Amount and Nature of Beneficial Ownership(1)
Sole Voting Shared Voting Total
and Dispositive or Dispositive Beneficial Percent
Power Power(2) Ownership of Class
Name of
Beneficial Owner
<S> <C> <C> <C> <C>
J. M. Bissell 6,605 -- 6,605 *
J. D. Boyles 30,692 1,125 31,817 *
J. C. Canepa 334,446(4) 600 335,046(4) *
E. D. Holton 2,915 4,658 7,573 *
M. J. Jandernoa 4,995 -- 4,995 *
J. P. Keller 5,544 -- 5,544 *
J. K. Myers 2,322 -- 2,322 *
W. U. Parfet 2,683 -- 2,683 *
P. A. Pierre 951 -- 951 *
R. L. Sadler 45,053(4) 102,927 147,980(4) *
P. F. Secchia 56,334 100 56,434 *
B. P. Sherwood, III 81,185(4) 165 81,350(4) *
M. L. Thornton 2,000 -- 2,000 *
D. J. Wagner 64,789(4) 23,283 88,072(4) *
T. D. Wisnom 102,111(4) 1,386 103,497(4) *
All directors and executive
officers as a group 1,107,344(4) 174,058 1,281,402(4) 3.15%
_______________________
<FN>
* Less than 1%
-3-
(1) The numbers of shares stated are based on information furnished by
each person listed and include shares personally owned of record by
that person and shares which under applicable regulations are deemed
to be otherwise beneficially owned by that person. Under these
regulations, a beneficial owner of a security includes any person who,
directly or indirectly, through any contract, arrangement, understanding,
relationship or otherwise has or shares voting power or dispositive
power with respect to the security. Voting power includes the power
to vote or to direct the voting of the security. Dispositive power
includes the power to dispose or to direct the disposition of the security.
A person will also be considered the beneficial owner of a security if
the person has a right to acquire beneficial ownership of the security
within 60 days. These numbers do not include shares held in various
fiduciary capacities through the trust department of Old Kent Bank and
Trust Company and Old Kent Bank, each an Old Kent subsidiary. Old
Kent and the directors and officers of Old Kent, Old Kent Bank and
Trust Company and Old Kent Bank disclaim beneficial ownership of
shares held by the banks in fiduciary capacities.
(2) These numbers include shares over which the listed person is legally
entitled to share voting or dispositive power by reason of joint
ownership, trust, or other contract or property right, and shares held
by spouses and children over whom the listed person may have
substantial influence by reason of relationship. Shares held in
fiduciary capacities by bank subsidiaries of the Corporation are not
included unless otherwise indicated. The directors and officers of
the Corporation may, by reason of their positions, be in a position to
influence the voting or disposition of shares held in trust by bank
subsidiaries to some degree, but disclaim beneficial ownership of
these shares.
(3) These numbers consist of shares held in various fiduciary capacities
through the trust department of Old Kent Bank and Trust Company, an
Old Kent subsidiary. Old Kent Bank and Trust Company also holds in
various fiduciary capacities through its trust department a total of
1,195,238 shares over which it does not have or share voting or
dispositive power. Old Kent Bank, another subsidiary of Old Kent,
also held a total of 163,916 shares in various fiduciary capacities
through its trust department. Old Kent and the directors and officers
of Old Kent, Old Kent Bank and Trust Company and Old Kent Bank
disclaim beneficial ownership of these shares.
(4) These numbers include shares that may be acquired through the exercise
of stock options. All stock options may be exercised within 60 days.
These numbers also include shares credited to the officer's account
under the Deferred Stock Compensation Plan. Under that plan, each
officer is unconditionally entitled to receive stock at the end of a
deferral period, but has no present voting or dispositive power over
those shares. The number of shares subject to stock options and the
number of shares credited under the Deferred Stock Compensation Plan
for each listed person are shown below:
-4-
<CAPTION>
Stock Deferred
Options Stock
<S> <C> <C>
Mr. Canepa 22,615 42,940
Mr. Sadler 15,265 16,715
Mr. Sherwood 9,672 18,420
Mr. Wagner 37,802 16,434
Mr. Wisnom 32,736 12,888
All directors and executive
officers as a group 257,866 107,397
</TABLE>
Board of Directors
The Old Kent board of directors presently consists of fourteen
persons, four of whom are standing for election.
The board of directors is divided into three classes which are as
nearly equal in number as possible. Each class of directors has a term of
office of 3 years, with the term of office of one class expiring at the
annual meeting of shareholders in each successive year.
Biographical information concerning nominees for election to the
board of directors at the annual meeting and existing directors whose terms
of office will continue is presented below. Except as otherwise indicated,
all directors and nominees have had the same principal employment for over
5 years.
Terms Expiring in 1994
Earl D. Holton (age 60) has been a director since 1985. He is
President of Meijer, Inc., a food and general merchandise retailer. Mr.
Holton is also a director of CMS Energy Corporation.
Michael J. Jandernoa (age 43) was appointed to the board of
directors in 1993. He is Chairman of the Board and Chief Executive
Officer, and a director, of Perrigo Company, a manufacturer and marketer of
store brand health and personal care products. Prior to 1991, he was
President and Chief Executive Officer of Perrigo Company.
Jerry K. Myers (age 53) has been a director since 1991. He is
President and Chief Executive Officer of Steelcase Inc., a manufacturer of
office systems. Previously, he was Executive Vice President and General
Manager of the Automotive Sector of TRW, Inc., a manufacturer of automotive
parts, and space and defense information systems, from 1987 until 1990.
Mr. Myers is also a director of Autocam Corporation.
-5-
B. P. Sherwood, III (age 58) is Vice Chairman of the Board and
Treasurer of Old Kent. He has been a director since 1985 and an officer
since 1983. Previously, he was Executive Vice President of Old Kent from
1985 until 1989.
Terms Expiring in 1995
John D. Boyles (age 59) has been a director since 1985. He is an
attorney with the firm of Verspoor, Waalkes, Lalley & Slotsema, P. C.
John P. Keller (age 54) has been a director since 1988. He is
President of Keller Group, Inc., a diversified manufacturing company. Mr.
Keller is also a director of A.M. Castle Co.
Robert L. Sadler (age 58) is Vice Chairman of the Board of Old
Kent and is Chairman of the Board of Old Kent Bank (Illinois). He has been
a director of Old Kent since 1976 and an officer since 1972. Previously,
he was Executive Vice President of Old Kent from 1972 until 1989 and a
director and officer of Old Kent Bank and Trust Company.
David J. Wagner (age 40) is President of Old Kent. He has been a
director of Old Kent since 1992. He was Executive Vice President of Old
Kent from 1991 until March 1, 1994, has been President and a director of
Old Kent Bank and Trust Company since 1986, and has been Chief Executive
Officer of Old Kent Bank and Trust Company since 1989. Prior to that, he
served Old Kent in various other executive capacities. Mr. Wagner is also
a director of Autocam Corporation.
Terms expiring in 1996
John M. Bissell (age 63) has been a director of Old Kent since
1972 and was previously a director of Old Kent Bank and Trust Company from
1971. He is Chairman and Chief Executive Officer of BISSELL Inc., a
manufacturer of homecare, healthcare and graphics products. Mr. Bissell is
also a director of Coastal Corporation.
John C. Canepa (age 63) is Chairman of the Board and Chief
Executive Officer of Old Kent and Chairman of the Board of Old Kent Bank
and Trust Company. He has been a director and officer of Old Kent since
1972. He has been Chairman of the Board of Old Kent since 1988 and a
director and officer of Old Kent Bank and Trust Company since 1972. On
March 1, 1994, he relinquished the title of President of Old Kent and in
1989 he relinquished the office of Chief Executive Officer of Old Kent Bank
and Trust Company. Mr. Canepa is also a director of ThornApple Valley,
Inc.
William U. Parfet (age 47) has been a director since 1987. He is
President and Chief Executive Officer of Richard-Allan Medical Industries,
Inc., a developer, manufacturer and marketer of surgical instruments and
-6-
medical supplies. He was previously Vice Chairman of The Upjohn Company
during 1993 and President of The Upjohn Company from 1991 until 1993.
Prior to 1991, he served The Upjohn Company in other executive capacities.
Mr. Parfet is also a director of The Upjohn Company, CMS Energy
Corporation, Stryker Corp. and Universal Foods.
Percy A. Pierre (age 55) has been a director since 1992. He is
Vice President for Research and Graduate Studies and Professor of
Electrical Engineering at Michigan State University. Previously, he was
President of Prairie View A&M University from 1983 until 1989. Dr. Pierre
is also a director of CMS Energy Corporation.
Peter F. Secchia (age 56) has been a director since 1993. He is
Chairman of the Board and a director of Universal Forest Products, Inc., a
manufacturer and distributor of building supplies. From 1989 until 1993,
he was United States Ambassador to Italy. Prior to 1989, he was Chairman
of the Board and Chief Executive Officer of The Universal Companies, Inc.
The Old Kent board of directors has four standing committees:
Executive Committee. The Executive Committee may exercise all
powers and authority of the board of directors in the management of the
business and affairs of Old Kent, except to the extent that delegation is
prohibited by law. Messrs. Bissell, Canepa, Holton, Keller, Sadler and
Sherwood presently serve on this committee. The Executive Committee did
not meet during 1993.
Audit Committee. The duty of the Audit Committee is to cause
suitable examinations of the financial records and operations of Old Kent
and its subsidiaries to be made by the internal auditor of Old Kent through
a program of continuous internal audits, to recommend to the board of
directors the employment of independent certified public accountants to
audit the financial statements of Old Kent and its subsidiaries and make
such additional examinations as the committee deems advisable, to review
reports of examination of Old Kent and its subsidiaries received from
regulatory authorities, and to report to the board of directors at least
once each calendar year the results of examinations made and such
conclusions and recommendations as the committee deems appropriate.
Messrs. Boyles, Keller and Secchia, Dr. Pierre and Ms. Thornton serve on
this committee. The Audit Committee met four times during 1993.
Personnel Committee. The Personnel Committee administers Old
Kent's various officer and employee compensation, benefit and retirement
plans. This committee also reviews key personnel policies and programs,
including individual salaries of executive officers, and submits
recommendations to the board of directors. Directors who are also
employees of Old Kent or its subsidiaries and who may participate in the
plans which this committee administers may not serve on this committee.
Messrs. Bissell, Holton, Myers and Parfet are presently members of this
committee. The Personnel Committee met three times during 1993.
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Committee on Directors. The Committee on Directors proposes and
considers suggestions as to candidates for the board of directors, reviews
and recommends to the board modifications to the directors' retirement
policy and proposes to the board a slate of directors for submission to the
shareholders at each annual meeting. Messrs. Boyles and Holton and Ms.
Thornton presently serve on this committee. The Committee on Directors met
one time during 1993. The Committee on Directors will consider candidates
suggested by shareholders for nomination by the board of directors. A
shareholder wishing to make a suggestion should submit that suggestion in
writing to Mr. John C. Canepa, Chairman of the Board.
A shareholder of record of shares of a class entitled to vote at
any annual meeting of shareholders or at any special meeting of shareholders
called for election of directors (an "Election Meeting") may make a nomination
at the Election Meeting if, and only if, that shareholder has first delivered,
not less than 120 days prior to the date of the Election Meeting in the case
of an annual meeting, and not more than 7 days following the date of notice
of the Election Meeting in the case of a special meeting, a notice to the
Secretary of the Corporation setting forth with respect to each proposed
nominee: the name, age, business address and residence address of the
nominee; the principal occupation or employment of the nominee; the number
of shares of capital stock of the Corporation that are beneficially owned
by the nominee; a statement that the nominee is willing to be nominated
and to serve; and such other information concerning the nominee as would
be required under the rules of the Securities and Exchange Commission to
be included in a proxy statement soliciting proxies for the election of the
nominee.
During 1993, the Old Kent board of directors held 7 meetings.
All incumbent directors attended at least 75% of the aggregate number of
meetings of the board of directors and meetings of committees on which they
served during the year, except for Mr. Jandernoa who attended two of the
three meetings held during the period he has served as a director.
Personnel Committee Report on Executive Compensation
The Personnel Committee of Old Kent's board of directors reviews
the Corporation's key personnel policies and programs, including individual
salaries of executive officers, and submits recommendations to the board of
directors. Directors who are also employees of Old Kent or its subsidiaries
do not serve on this committee.
The Corporation has engaged a nationally recognized compensation
consulting firm to assist the Personnel Committee and the board of
directors to formulate compensation policies and determine appropriate
compensation levels. This firm reports directly to the Personnel
Committee.
Superior financial performance is Old Kent's primary business
objective. Long-term relative total return to shareholders is considered
-8-
by Old Kent to be the primary measure of financial performance. Old Kent
focuses on maintaining and improving its return on equity as a means to
achieve the highest possible relative total return to shareholders.
For compensation purposes, Old Kent compares itself to a peer
group of companies which is selected annually at the beginning of the year
based on the recommendations of its consulting firm and may change from
year to year. The peer group selected for 1993 included 16 regional bank
holding companies with assets in the $7 billion to $21 billion range, with
emphasis placed on midwest regional bank holding companies. Old Kent's
return on equity has consistently exceeded that of the peer group. For the
year ended December 31, 1993, Old Kent's return on equity was 16.65%
compared to a median return on equity of 16.11% for other members of the
peer group. Old Kent's return on equity was the seventh highest of the 16
companies in its peer group.
The Personnel Committee has broad discretionary authority to
determine and recommend compensation and benefits. The Personnel Committee
intends base cash compensation and benefits to be competitive. Base
compensation is considered to be competitive if it is at or near the 50th
percentile. To attract and retain management talent, the Personnel
Committee generally seeks to provide base compensation and benefits at or
near the 50th percentile of the peer group, although the Personnel
Committee may approve higher or lower compensation or benefits if it
considers deviation from the norm to be appropriate.
The Corporation also provides short- and long-term incentive
compensation programs to encourage superior performance. It is the
Corporation's policy that above average compensation will be paid for above
average performance.
Annual incentive bonuses are intended to reward executives for
achieving specific goals, to motivate executives to work more effectively,
and to focus executives' attention on specific areas of major importance.
Annual incentive bonuses may be paid, in cash, based on performance against
specific corporate, business unit and individual criteria. Corporate
performance is measured entirely by return on equity. Business unit
performance is measured against specific criteria which vary widely from
unit to unit. These criteria are recommended by senior management and
approved by the Personnel Committee at the beginning of each year, and may
include factors such as net income growth, loan quality improvement,
achieving increases in operating efficiency, and completion of specified
strategic actions. Individual performance criteria are tailored to an
individual's job description and relate to achieving specified goals in
that position. Individual performance criteria are determined at the
beginning of each year in a dialogue between the individual and a senior
officer, and generally involve highly specific individual goals and tasks
that vary widely from individual to individual.
The Chief Executive Officer's annual incentive bonus is based
entirely on corporate performance. The annual incentive bonuses of other
-9-
senior executive officers are based on allocations of corporate, business
unit, and individual performance components which vary from individual to
individual based on position and function. The annual incentive bonuses of
other executive officers named in this Proxy Statement are based on
corporate performance (50-75%), business unit performance (25% if
applicable), and individual performance (25%).
Each executive officer is assigned a target bonus amount at the
beginning of each year. At the end of each year, a bonus may be awarded to
each executive officer in an amount which is equal to, greater than, or
less than the target bonus based on a discretionary assessment of
performance against the criteria previously specified for that officer.
Under the Corporation's present policies, no executive officer may be paid
a bonus which is greater than 150% of his or her target bonus, and no
incentive bonuses will be paid if the Corporation's return on equity is
below the 25th percentile of the Corporation's peer group.
Long-term incentives are provided to reward executives for
achieving the long-term goal of increasing shareholder value and to protect
against too much emphasis on short-term results. All of the Corporation's
long-term incentive programs involve stock options or stock awards. Stock
ownership by senior executives is considered to be very important. Through
use of stock as a basis for compensation, executives' long-term incentives
are tied to shareholder value. It is the Corporation's practice to grant
deferred stock compensation awards and stock option grants to senior
officers annually at levels determined with reference to fixed percentages
of base salary. The Chief Executive Officer generally has received an
award of deferred stock having a value equal to 45% of his base salary and
a grant of stock options having an aggregate exercise price equal to 60% of
his base salary. Other executive officers named in this Proxy Statement
generally have received awards of deferred stock having values of up to 40%
of their base salaries and grants of stock options having aggregate
exercise prices of up to 50% of their base salaries. All stock options are
granted at prices equal to the fair market value of the subject stock at
the date of grant. The Personnel Committee considers the level of such
awards annually and generally seeks to maintain awards at consistent levels
relative to cash compensation from year to year, although it retains
discretion to alter those levels in any particular year.
Mr. Canepa's base salary for 1993 was fixed at a level which was
intended to approximate the 50th percentile of base compensation paid to
chief executive officers by other bank holding companies in Old Kent's peer
group.
Mr. Canepa's annual incentive bonus is based entirely on
corporate performance. For this purpose, corporate performance is
determined with reference to a comparison of the Corporation's return on
equity to that of Old Kent's peer group. The bonus paid to Mr. Canepa for
1993 was 125% of his target bonus, reflecting the fact that the Corporation's
return on equity exceeded the median return on equity of the peer group.
-10-
Mr. Canepa's long-term incentive compensation included an award
under the Deferred Stock Compensation Plan and a grant of stock options.
His award under the Deferred Stock Compensation Plan was set at a level
equal in value to 45% of his annual salary. The stock options granted to
Mr. Canepa permit him to purchase shares which had an aggregate market
value equal to 60% of his annual salary on the date of grant. These
levels, which are consistent with the Corporation's established practice,
were recommended by the Personnel Committee in its discretion after
considering corporate performance, measured by return on equity, in the
preceding year and the levels of such awards made to Mr. Canepa in prior
years.
In 1993, Congress amended the federal Internal Revenue Code to
add Section 162(m). This new section provides that publicly held
corporations may not deduct compensation paid to certain executive officers
in excess of $1 million annually, with certain exemptions. Old Kent has
examined its executive compensation policies in light of Section 162(m) and
the regulations that have currently been proposed by the Internal Revenue
Service to implement that section. If the Internal Revenue Service adopts
regulations under Section 162(m) substantially as they have been proposed,
it is not expected that any portion of the Corporation's deduction for
employee remuneration will be disallowed in 1994 or in future years by
reason of awards granted in 1994. The Personnel Committee intends to
review the Corporation's executive compensation policies at a later date,
when final regulations have been adopted, and to propose appropriate
modifications to the Corporation's executive compensation plans and program
with a view toward implementing the Corporation's compensation policy in a
manner that avoids or minimizes any disallowance of tax deductions under
Section 162(m).
During 1993, all recommendations of the Personnel Committee were
unanimously approved by the board of directors without modification.
Respectfully submitted,
John M. Bissell, Chairman
Earl D. Holton
Jerry K. Myers
William U. Parfet
-11-
Stock Performance
The following graph compares the cumulative total shareholder
return on Old Kent Common Stock to the Standard & Poor's 500 Stock Index
and the KBW 50 Index. The Standard & Poor's 500 Stock Index is a broad
equity market index published by Standard & Poor's. The KBW 50 Index is a
market capitalization weighted bank stock index published by Keefe,
Bruyette & Woods, Inc., an investment banking firm which specializes in the
banking industry. The KBW 50 Index is composed of 50 money center and
regional bank holding companies, including 8 of the 16 regional bank
holding companies in the peer group used by Old Kent for compensation
purposes (see the Personnel Committee Report above). The Standard & Poor's
500 Stock Index and the KBW 50 Index both assume dividend reinvestment.
Cumulative total return is measured by dividing the sum of the cumulative
amount of dividends for the measurement period, assuming dividend
reinvestment, and the difference between the share price at the end and the
beginning of the measurement period by the share price at the beginning of
the measurement period.
[STOCK PERFORMANCE GRAPH - Five Year Total Return]
-12-
The dollar values for total shareholder return plotted in the
graph above are shown in the table below:
<TABLE>
<CAPTION>
OKEN KBW 50 S&P 500
<S> <C> <C> <C> <C>
1988 $100.0 $100.0 $100.0
1989 124.3 118.9 131.6
1990 108.1 85.4 127.5
1991 168.5 135.2 166.3
1992 255.0 172.2 178.9
1993 232.3 181.8 196.9
</TABLE>
Compensation of Executive Officers and Directors
Old Kent's compensation and benefit programs for its senior
executive officers include the following components:
Salary. Old Kent's objective is to provide base pay at levels
which are competitive with its peer group of bank holding
companies.
Bonus. All executive officers are participants in an annual
incentive plan. Under that plan, the Personnel Committee and
senior management establish a target award and a set of
performance factors, which may include various elements of
corporate, business unit and individual performance for each
executive officer. A bonus may be paid in cash at the end of the
year based on an assessment of performance against the designated
factors.
Long-term Incentives. To provide senior executive officers with
long-term incentives, it is the practice of the Corporation to
grant stock options and share awards under the Corporation's
Deferred Stock Compensation Plan. Annual awards are determined
by the Personnel Committee based on a percentage of each
officer's base compensation and a discretionary evaluation of
performance. All stock options are granted at prices equal to
the fair market value of the subject stock at the date of grant.
The purposes of these long-term incentives are to reward
executives for achieving longer-term strategic goals, to retain
executives, to protect against too much emphasis on short-term
-13-
results, to provide a means for capital accumulation and to
promote stock ownership.
Retirement Benefits. Old Kent provides all eligible employees
retirement benefits under the qualified Old Kent Retirement
Income Plan. In addition, employees are offered an opportunity
to save for retirement, with savings supplemented by the
Corporation, under the qualified Old Kent Thrift Plan.
Supplemental, nonqualified programs are provided for executive
officers. The objective of these programs is to provide
retirement benefits and savings opportunities for executives in
proportion to compensation without the constraints imposed by law
on qualified plans.
Perquisites. Old Kent's practice is to maintain a conservative
level of perquisites and personal benefits. The dollar value of
perquisites and personal benefits provided to executive officers
does not exceed the lesser of either $50,000 or 10% of each
executive officer's respective annual salary and bonus.
Old Kent's various compensation and benefit programs, and the levels of
compensation and benefits provided under those programs, are described in
more detail below.
The following table shows certain information concerning the
compensation of each of Old Kent's five most highly compensated executive
officers for services rendered during each of the three years in the period
ended December 31, 1993:
-14-
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation Long Term
Compensation
Awards
Name and Restricted Shares All Other
Principal Stock Underlying Compensation(4)
Position(1) Year Salary(2) Bonus(2) Awards(3) Options (#)
<S> <C> <C> <C> <C> <C> <C>
John C. Canepa 1993 $570,000 $356,250 $253,474 10,690 $18,084
Chairman of the Board, 1992 530,000 397,500 240,786 11,925 17,946
President and Chief Execu- 1991 480,000 256,800 266,353 17,280
tive Officer of Old Kent and
Chairman of the Board of Old
Kent Bank and Trust Company
B. P. Sherwood, III 1993 295,000 165,938 116,696 4,610 9,826
Vice Chairman of the Board 1992 270,006 173,137 109,026 5,063 9,205
and Treasurer 1991 245,000 120,175 115,493 7,350
Robert L. Sadler 1993 257,000 144,563 101,674 4,015 8,647
Vice Chairman of the Board 1992 240,000 273,500 96,912 4,500 8,182
of Old Kent and Chairman of 1991 225,000 93,680 107,757 6,750
the Board and Chief
Executive Officer of
Old Kent Bank (Illinois)
David J. Wagner 1993 275,000 160,875 108,790 4,295 9,175
President and Chief Execu- 1992 240,000 163,900 96,912 4,500 8,182
tive Officer of Old Kent 1991 212,000 84,135 102,728 6,360
Bank and Trust Company and
Executive Vice President of
Old Kent
Thomas D. Wisnom 1993 198,000 109,148 78,272 3,095 6,633
Executive Vice President 1992 182,000 108,518 73,492 3,413 6,205
1991 168,000 63,065 85,708 5,040
<FN>
(1) Capacities indicated are with Old Kent unless otherwise stated.
Capacities indicated are those in which a majority of compensation was
paid if capacities changed during the year.
-15-
(2) Includes compensation deferred under the Old Kent Thrift Plan, the Old
Kent Executive Thrift Plan and the Old Kent Deferred Compensation
Plan.
(3) All reported awards were under the Deferred Stock Compensation Plan.
These awards vest at the date of grant. Participants in this plan
also accrue earnings equal to dividends which would have been paid on
shares deferred. The named individuals also hold shares awarded under
the Restricted Stock Plan in years prior to 1990. Dividends are paid
to holders of restricted stock. The numbers of shares held by each
named individual which were subject to restriction under these plans
and the aggregate value of those shares as of December 31, 1993, are:
Aggregate
Restricted Stock Deferred Stock Value
<S> <C> <C> <C>
Mr. Canepa 10,350 42,940 $1,592,039
Mr. Sherwood 3,750 18,420 662,329
Mr. Sadler 3,563 16,715 605,805
Mr. Wagner 3,300 16,435 589,583
Mr. Wisnom 2,813 12,888 469,067
(4) All other compensation includes: (a) Corporation matching contributions
under the Old Kent Thrift Plan; (b) Corporation matching contributions
under the Old Kent Executive Thrift Plan; and (c) amounts paid by the
Corporation for term life insurance. The amounts included for each
such factor are:
Executive Life
Thrift Plan Thrift Plan Insurance
<S> <C> <C> <C>
Mr. Canepa $1,686 $15,414 $984
Mr. Sherwood 1,686 7,163 977
Mr. Sadler 2,698 5,012 937
Mr. Wagner 1,851 6,399 925
Mr. Wisnom 1,686 4,254 693
</TABLE>
It is the Corporation's practice to award stock options annually
to key policy-making members of management. Stock options have been an
important component of the Corporation's executive compensation program for
many years. Stock options are believed to help align the interests of
senior management with the interests of shareholders by promoting stock
ownership by senior executive officers and by rewarding them for appreciation
in the price of the Corporation's Common Stock. Stock options which were
granted, exercised or outstanding during 1993 were granted under various
stock option plans. All of the Corporation's stock option plans have been
approved by the Corporation's shareholders.
Stock options entitle an executive to buy shares of Old Kent
Common Stock during a specified time period at a specified price. Subject
-16-
to restrictions imposed by the plans, the Personnel Committee in its
discretion determines who will be granted options, how many shares will be
the subject of options, and the form of consideration that may be paid upon
the exercise of an option. Although plan documents authorize stock
appreciation rights, no stock appreciation rights were outstanding at the
date of this Proxy Statement.
The following tables set forth information concerning stock
options granted to and exercised by the specified individuals during the
last fiscal year:
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
% of
Total Potential Realizable Value at
Number Options Assumed Annual Rates of
of Shares Granted to Stock Price Appreciation
Underlying Employees Exercise for Option Term
Options In Fiscal Price Expiration
Name Granted (1) Year ($/Share) Date 0% 5% 10%
<S> <C> <C> <C> <C> <C> <C> <C>
John C. Canepa 10,690 8.0% $31.63 6/21/03 0 $212,624 $538,883
B. P. Sherwood, III 4,610 3.5 31.63 6/21/03 0 91,692 232,390
Robert L. Sadler 4,015 3.0 31.63 6/21/03 0 79,858 202,396
David J. Wagner 4,295 3.2 31.63 6/21/03 0 85,428 216,511
Thomas D. Wisnom 3,095 2.3 31.63 6/21/03 0 61,560 156,019
<FN>
(1) The per share exercise price of each option is equal to the market
value of Common Stock on the date each option is granted. All
outstanding options were granted for a term of 10 years. Options
terminate, subject to certain limited exercise provisions, in the
event of death, retirement or other termination of employment. All
options are currently exercisable. All options permit the option
price to be paid by delivery of cash or other shares of Common Stock
owned by the option holder, including shares acquired through the
exercise of options.
</TABLE>
-17-
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND YEAR END OPTION VALUES
<CAPTION>
Number of
Shares Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
Number of Year End Year End
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (1) Realized Unexercisable Unexercisable
<S> <C> <C> <C> <C>
John C. Canepa -- -- 22,615/0 $35,238/0
Robert L. Sadler 11,113 $392,963 15,265/0 90,619/0
B. P. Sherwood, III 7,350 131,969 9,672/0 14,960/0
David J. Wagner -- -- 37,802/0 393,404/0
Thomas D. Wisnom 8,000 202,200 32,736/0 408,630/0
____________________
<FN>
(1) The number of shares shown is the gross number of shares covered by
options exercised. Officers may deliver other shares owned in payment
of the option price, resulting in a smaller net increase in their
share holdings.
</TABLE>
All officers and employees of Old Kent who satisfy eligibility
requirements are participants in the Old Kent Retirement Income Plan, a
qualified defined benefit plan. The Internal Revenue Code limits the
maximum annual pension from a qualified plan. The executive officers named
above and certain other management employees also participate in the Old
Kent Executive Retirement Income Plan, a nonqualified retirement plan.
Participants in the Executive Retirement Income Plan will receive
supplemental retirement benefits equal to the difference between the
benefits to which they are entitled under the Old Kent Retirement Income
Plan and the benefits to which they would have been entitled under that
plan as in effect on December 31, 1988, if those benefits were based on
compensation including compensation deferred by the executive and if the
annual limits on compensation and benefits and other applicable limits
specified in the Internal Revenue Code did not apply.
The following table illustrates the combined benefit levels of
the Old Kent Retirement Income Plan and the Old Kent Executive Retirement
Income Plan for Old Kent's executive officers if they retire at age 65 at
the annual levels of average remuneration and years of service indicated:
-18-
<TABLE>
PENSION PLAN TABLE
<CAPTION>
Average Years of Benefit Service
Remuneration, Age 65 10 15 20 25 or more
<S> <C> <C> <C> <C>
$100,000 $ 24,000 $ 36,000 $ 48,000 $ 60,000
300,000 72,000 108,000 144,000 180,000
500,000 120,000 180,000 240,000 300,000
700,000 168,000 252,000 336,000 420,000
900,000 216,000 324,000 432,000 540,000
1,100,000 264,000 396,000 528,000 660,000
1,300,000 312,000 468,000 624,000 780,000
</TABLE>
The benefits shown in the table above will be reduced by 50% of
primary social security payments. The annual compensation shown in the
Summary Compensation Table above is representative of the most recent
calendar year compensation used in calculating average remuneration for the
Old Kent Retirement Income Plan and the Old Kent Executive Retirement
Income Plan. As of December 31, 1993, Mr. Sherwood, Mr. Sadler and Mr.
Wisnom had 25 credited years of service (the maximum) under those plans,
Mr. Canepa had 23 and Mr. Wagner had 16.
Executive Severance Agreements
Old Kent has entered into executive severance agreements with the
executive officers named above. These agreements provide severance
benefits if the officer's employment is terminated within 36 months after a
change in control or within 12 months before a change in control if the
Corporation terminates his employment in contemplation of a change in
control and to avoid the agreement. Severance benefits will not be payable
if the Corporation terminates the employment for cause, if employment
terminates due to the executive officer's death or disability, or if the
executive officer resigns without good reason. An executive officer may
resign with "good reason" after a change in control and retain benefits if
the Corporation reduces the officer's salary or bonus, assigns duties
inconsistent with the officer's prior position, or shifts the officer's job
location more than 50 miles. Executive severance agreements are for self-
renewing terms of 3 years unless the Corporation takes action to stop
further extensions. The agreement is automatically extended for a 3-year
term from the date of a change in control. These executive severance
agreements provide a severance benefit of a lump-sum payment equal to 3
years' salary and bonus, and continuation of health, life and disability
insurance coverage for 3 years. Severance benefits are capped to avoid tax
penalties.
-19-
Compensation of Directors
Each director of Old Kent who is not compensated as an officer is
paid an annual retainer of $15,000 and a fee of $800 for each meeting of
the board of directors attended. Directors who serve on committees
appointed by the board of directors are paid $800 for each committee
meeting attended, and each committee chairman who is not compensated as an
officer is paid an additional retainer of $2,000 per year. Directors are
reimbursed for travel expenses for meetings attended. Each director of Old
Kent or any of its subsidiary banks may participate in the Old Kent
Directors' Deferred Compensation Plan, a nonqualified deferred compensation
program. This plan permits deferral of all or any portion of current
directors' fees. Amounts deferred are credited with earnings as if the
amounts had been invested as directed by plan participants from time to
time among three funds substantially identical to three of the four funds
available in the Old Kent Thrift Plan. The amount accumulated by a
director in the Old Kent Directors' Deferred Compensation Plan is paid upon
the expiration of the director's term in a lump-sum or annual installments
over a period of up to 10 years.
Certain Relationships and Related Transactions
Directors and officers of Old Kent and their associates were
customers of and had transactions with subsidiaries of Old Kent in the
ordinary course of business between January 1, 1993, and March 1, 1994.
All loans and commitments included in such transactions were made on
substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with other persons
and did not involve more than the normal risk of collectibility or present
other unfavorable features.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires Old
Kent's directors and officers to file reports of ownership and changes in
ownership of shares of Common Stock with the Securities and Exchange
Commission. Directors and officers are required by Securities and Exchange
Commission regulations to furnish the Corporation with copies of all
Section 16(a) reports they file. Based on its review of the copies of such
reports received by it, or written representations from certain reporting
persons that no Forms 5 were required for those persons, Old Kent believes
that, from January 1 through December 31, 1993, its directors and officers
complied with all applicable filing requirements, with one exception. One
Form 4 report prepared by the Corporation for Leigh Sherman, a Senior Vice
President of the Corporation, failed to report one of two transactions
which occurred during the month for which the report was filed. This
oversight was subsequently corrected by amendment.
-20-
Independent Certified Public Accountants
The board of directors has selected Arthur Andersen & Co. as Old
Kent's principal accountant for 1994. Representatives of Arthur Andersen &
Co. will be present at the annual meeting, will have an opportunity to make
a statement, and will be available to respond to appropriate questions.
Proposals of Shareholders
Proposals of shareholders intended to be presented at the annual
meeting scheduled to be held on April 17, 1995, must be received by the
Corporation by November 1, 1994, to be considered for inclusion in its
proxy statement and form of proxy relating to that meeting. Proposals of
shareholders should be made in accordance with Securities and Exchange
Commission Rule 14a-8.
-21-
[FRONT]
OLD KENT FINANCIAL CORPORATION
P R O X Y One Vandenberg Center, Grand Rapids, Michigan 49503
Annual Meeting of Shareholders - April 18, 1994
The undersigned shareholder appoints John C. Canepa, B. P.
Sherwood, III, Martin J. Allen, Jr., or any of them, each with the power to
appoint his substitute, attorneys and proxies to represent the shareholder
and to vote and act with respect to all shares that the shareholder would
be entitled to vote on all matters which come before the annual meeting of
shareholders of Old Kent Financial Corporation referred to above or any
adjournment of that meeting.
This proxy is solicited on behalf of the Board of Directors. If
this proxy is properly executed, the shares represented by this proxy will
be voted as specified. If no specification is made, the shares will be
voted for election of all nominees named on this proxy as directors. The
shares represented by this proxy will be voted in the discretion of the
proxies on any other matters which may come before the meeting.
[Space for sticker] Please sign exactly as your name appears on
this proxy. If signing for estates, trusts
or corporations, title or capacity should be
stated. If shares are held jointly, each
holder should sign.
Signature x__________________________________
Signature x__________________________________
Date __________________________________, 1994
[Space reserved for coding]
-1-
[BACK]
1. Election of Directors.
[ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY to
below (except as indi- vote for all nominees
cated below) listed below
Earl D. Holton Jerry K. Myers Your Board of Directors
Michael J. Jandernoa B. P. Sherwood, III recommends that you vote
FOR all nominees
(Instruction: To withhold authority for any individual nominee, write that
nominee's name in the space provided below.)
IMPORTANT! - PLEASE DATE AND SIGN THE OTHER SIDE
