<PAGE> 1
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 Rule 14a-11(c) or Rule 14a-12
OLD KENT FINANCIAL CORPORATION
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[ ] No Fee Required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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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 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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<PAGE> 2
OLD KENT LOGO
111 Lyon Street N.W.
Grand Rapids, Michigan 49503
Notice of Annual Meeting of Shareholders
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The annual meeting of shareholders of Old Kent Financial Corporation will be
held in the Pantlind Ballroom of the Amway Grand Plaza Hotel, 187 Monroe Avenue
N.W., Grand Rapids, Michigan, on Monday, April 21, 1997, at 10 a.m. local time,
to consider and vote upon: (i) election of directors; (ii) approval of the
Executive Incentive Bonus Plan; (iii) approval of the Executive Stock Incentive
Plan of 1997; and (iv) such other business as may properly come before the
meeting.
Shareholders of record at the close of business on February 21, 1997, are
entitled to notice of and to vote at the meeting or any adjournment of the
meeting. The following proxy statement and enclosed proxy are being furnished to
shareholders on and after March 1, 1997.
By Order of the Board of Directors,
/s/ Mary E. Tuuk
Mary E. Tuuk
Secretary
March 1, 1997
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.
<PAGE> 3
PROXY STATEMENT
- ---------------
ANNUAL MEETING OF SHAREHOLDERS
OLD KENT FINANCIAL CORPORATION
APRIL 21, 1997
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, 1997, 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 21, 1997, and at any adjournment of
that meeting. The annual meeting will be held in the Pantlind Ballroom of the
Amway Grand Plaza Hotel, 187 Monroe Avenue N.W., Grand Rapids, Michigan, 49503,
at 10 a.m. local time.
The purpose of the annual meeting is to consider and vote upon: (i) election of
directors; (ii) approval of the Executive Incentive Bonus Plan; and (iii)
approval of the Executive Stock Incentive Plan of 1997. 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, for approval of the Executive
Incentive Bonus Plan, for approval of the Executive Stock Incentive Plan of
1997, and in accordance with the judgment of the persons named as proxies with
respect to any other matter that may come before the meeting.
A proxy may be revoked at any time prior to its exercise by written notice
delivered to the Secretary of Old Kent or by attending and voting at the annual
meeting.
Solicitation of proxies will be made initially by mail. Old Kent's directors,
officers and employees may also solicit proxies in person, by telephone or by
facsimile 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 nominees be elected as
directors for terms expiring at the annual meeting to be held during the year
indicated for each respective column:
<TABLE>
<CAPTION>
1998 1999 2000
- --------------------------------------------------------------------
<S> <C> <C>
Robert L. Hooker Richard L. Antonini William P. Crawford
Patrick M. Quinn William G. Gonzalez James P. Hackett
Margaret Sellers Walker Hendrik G. Meijer Erina Hanka
Marilyn J. Schlack Earl D. Holton
Michael J. Jandernoa
Fred P. Keller
B. P. Sherwood, III
</TABLE>
1
<PAGE> 4
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
APPROVAL OF EXECUTIVE INCENTIVE BONUS PLAN
Old Kent has for many years paid annual incentive bonuses to its executive
officers pursuant to an annual incentive plan. Under that plan, the Personnel
Committee and senior management establish a target award and a set of
performance factors for each officer. A bonus may be paid in cash at the end of
the year based on an assessment of performance against the designated factors.
The chief executive officer's annual incentive bonus under this plan has
traditionally been based entirely on corporate performance. The annual incentive
bonuses of other senior executive officers are based on allocations of
corporate, business unit and individual performance components that vary from
individual to individual. In 1996, 50% or more of the annual incentive bonuses
of the executive officers named in the Summary Compensation Table in this Proxy
Statement (the "Named Officers") were based on corporate performance. For this
purpose, Old Kent's corporate performance is measured by its return on equity.
Section 162(m) of the Internal Revenue Code of 1986, as amended ("Section
162(m)" of the "Code"), which was adopted in 1993 and implemented in phases
through 1997, limits to $1,000,000 the annual income tax deduction that may be
claimed by a publicly held corporation for compensation paid to its chief
executive officer and to the four most highly paid compensated officers other
than the chief executive officer. Qualified "performance based" compensation is
exempt from the $1,000,000 limit and may be deducted even if other compensation
exceeds $1,000,000.
The proposed Executive Incentive Bonus Plan (the "Bonus Plan") is intended to
formalize Old Kent's existing bonus practice, to the extent that those bonuses
are based on corporate performance, to permit relevant bonuses to be tax
deductible under Section 162(m) while allowing, as nearly as practicable, the
continuation of Old Kent's preexisting practices with respect to payment of
incentive bonuses based on corporate performance. The Bonus Plan has been
unanimously approved, and is recommended, by the Personnel Committee and the
board of directors.
The Bonus Plan would permit the Personnel Committee to designate any officer or
any key management employee of Old Kent or any of its subsidiaries (an
undeterminable number of persons) as participants under the Bonus Plan. It is
the intention of the Personnel Committee that participation in the proposed
Bonus Plan in any year will be limited to those individuals who are expected to
receive compensation for that year that would not be tax deductible under
Section 162(m). Because Section 162(m), by its terms, limits its application to
a corporation's chief executive officer and four other most highly compensated
executive officers, it is not presently expected that more than five
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<PAGE> 5
officers will receive bonuses under the Bonus Plan in any year. Only one person
will be a participant in the plan in 1997.
Old Kent intends to continue its established practice of paying annual incentive
bonuses to officers under its existing annual incentive bonus plan, as that
program may be modified by the Personnel Committee and the board of directors
from time to time. Participants in the proposed Bonus Plan may also receive cash
bonuses from Old Kent under that or other bonus programs. The Bonus Plan
provides, however, that no payment under any other arrangement may be contingent
upon failure to obtain the criteria for payment of an incentive bonus under the
Bonus Plan.
The only person designated by the Personnel Committee for participation in the
Bonus Plan in 1997 is David J. Wagner, Chairman of the Board, President and
Chief Executive Officer of Old Kent. For 1997, Mr. Wagner's target bonus has
been set at 60 percent of his $650,000 salary. The amount of bonus he will
receive will depend on Old Kent's performance, as measured by its return on
equity for the year, and is not presently determinable. The bonus payable to Mr.
Wagner for 1997 may be as much as 150 percent of his target bonus, or as little
as nothing, depending on Old Kent's performance. If the Bonus Plan had been in
effect in 1996 and Mr. Wagner had been designated for participation in the Bonus
Plan at the same level, he would have received an annual bonus under the Bonus
Plan of $443,700, the same amount he did receive for 1996 under Old Kent's
existing annual incentive plan. Mr. Wagner also received for 1996, and is
eligible to receive in 1997, a separate bonus under a one-time incentive bonus
program in connection with Old Kent's reengineering program.
The following is a summary of the principal features of the Bonus Plan. This
summary is qualified in its entirety by reference to the terms of the Bonus Plan
set forth in Appendix A to this proxy statement.
For each participant each year, the Personnel Committee must specify: (i) a
target bonus; (ii) incentive bonus levels, expressed as a percent of the target
bonus, to be paid to the participant at specified levels of performance; and
(iii) the applicable absolute or relative measurement of performance, including
conditions and reduction factors, on which the ultimate amount of any incentive
bonus will be based. Incentive bonus levels may be expressed either as a range
of percentages of the target bonus that will be paid at specified levels of
performance or as a mathematical formula determining the percentage of the
target bonus payable at varying levels of performance.
Performance will be determined by reference to the return on equity of Old Kent.
The Personnel Committee will determine the annual performance goal based on any
one or any combination of: (i) the rank of Old Kent's return on equity among
members of a peer group, (ii) a formula relating the return on equity of Old
Kent to returns on equity of members of a peer group, or (iii) achievement by
Old Kent of specified levels of return on equity, attainment of which are
substantially uncertain when specified. The Personnel Committee will annually
select a peer group consisting of a number of bank holding companies and will
establish rules under which nonrepresentative members of the peer group may be
eliminated from consideration for a particular year.
Payment of an incentive bonus to a participant for a year under the Bonus Plan
is entirely contingent upon attainment of the performance goal established by
the Personnel Committee for the participant for the year. The maximum bonus for
any participant for a fiscal year may not exceed $1,000,000. The incentive bonus
payable to a participant for a year will be paid as soon as feasible following
final determination and certification by the Personnel Committee of the amount
payable for the year.
The term of the Bonus Plan is through the first meeting of shareholders held in
the year 2002, unless reapproved at the first meeting of shareholders in 2002 or
any earlier year. Thereafter, the Bonus Plan will terminate unless reapproved
not later than the first meeting of the shareholders in each fifth year
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<PAGE> 6
following the year of the prior reapproval. The board of directors may terminate
the Bonus Plan at any time.
The Bonus Plan may be amended by the board. An amendment to change the basis for
the annual performance goals from return on equity to any other business
criteria must be contingent on shareholder reapproval. An amendment adopted
after the first 90 days of a year may not directly or indirectly increase the
amount of any incentive bonus, or alter any element of the performance goal in a
manner that will increase any incentive bonus, payable with respect to that
year.
Mr. Wagner, and officers and key employees of Old Kent and its subsidiaries who
could be designated to participate in the Bonus Plan in the future, could be
considered to have an interest in the Bonus Plan. The Bonus Plan operates on a
calendar year basis. Selection as a participant for a year is limited to that
year and does not assure selection for any other year.
To qualify as performance-based compensation under sec.162(m), the material
terms of the Bonus Plan must be approved by the shareholders of Old Kent. No
compensation will be paid under the Bonus Plan unless the Bonus Plan is approved
by the shareholders. The affirmative vote of the holders of a majority of the
shares of Common Stock represented in person or by proxy and voting on this
proposal at the annual meeting is required to approve the Bonus Plan. For
purposes of counting votes on this proposal, abstentions, broker non-votes and
other shares not voted will not be counted as shares voted on the proposal, and
the number of shares of which a majority is required will be reduced by the
number of shares not voted.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
APPROVAL OF THE EXECUTIVE INCENTIVE BONUS PLAN.
EXECUTIVE STOCK INCENTIVE PLAN OF 1997
Stock options have been an important component to Old Kent's executive incentive
programs for many years. Stock options are used to provide long term incentives
for executives to achieve the long term goal of increasing shareholder value and
to protect against too much emphasis on short term results.
The Personnel Committee and the board of directors believe that stock options,
in the form historically granted by Old Kent, are inherently performance based
compensation, in that they depend entirely on growth in stock price for their
value. Old Kent's existing stock option plan, however, predates the effective
date of Section 162(m) and regulations adopted by the Internal Revenue Service
to interpret and implement that section. Any awards under the existing plan made
after Old Kent's 1997 annual meeting would not qualify as "performance based"
compensation under Section 162(m).
The Executive Stock Incentive Plan of 1997 (the "1997 Plan" or the "Plan"),
which has been unanimously approved, and is recommended, by the Personnel
Committee and the board of directors, would supplement Old Kent's existing stock
plan and would permit the Personnel Committee to grant stock options that are
expected to qualify as performance based compensation, exempt from possible loss
of tax deduction under Section 162(m).
Old Kent's existing Stock Option Incentive Plan of 1992 (the "1992 Plan") will
continue in effect. It is expected that options will continue to be granted
under the 1992 Plan until that authorization is exhausted or the 1992 Plan
expires. It is expected that options under the 1997 Plan will be awarded by the
Personnel Committee to individuals it determines are reasonably likely to be
subject to Section 162(m) limits during the term of the option awarded. However,
if and when the remaining authorization under the 1992 Plan is exhausted, it is
expected that options under the 1997 Plan will be awarded on a broader basis.
4
<PAGE> 7
A maximum of 1,000,000 shares of Common Stock would be available for Incentive
Awards under the Plan (subject to certain antidilution adjustments). Persons
eligible to receive Incentive Awards under the Plan (with certain limitations
discussed below) include corporate executive officers (15 persons as of December
31, 1996) and other corporate and subsidiary officers and key employees (an
indeterminate number of persons) of Old Kent and its subsidiaries. Additional
individuals may become executive officers, corporate or subsidiary officers, or
key employees in the future and could participate in the Plan. Information
concerning options granted under the 1992 Plan during 1996 appears later in this
proxy statement in a table captioned "Option Grants in Last Fiscal Year."
Although compensation policy is subject to change, it is presently expected that
combined grants under the 1997 Plan and the 1992 Plan in 1997 will be generally
consistent with grants in 1996. Because officers and key employees of Old Kent
and its subsidiaries may receive Incentive Awards under the Plan, they may be
considered to have an interest in the Plan. The Plan would not be qualified
under Section 401(a) of the Code, and would not be subject to the Employee
Retirement Income Security Act of 1974 ("ERISA").
The following is a summary of the principal features of the Plan. This summary
is qualified in its entirety by reference to the terms of the Plan set forth in
Appendix B to this proxy statement.
The Plan would be administered by the Personnel Committee or such other
committee as the board may designate for that purpose (the "Committee"). The
Committee would make determinations, subject to the terms of the Plan, as to the
persons to receive Incentive Awards, the amount of Incentive Awards to be
granted to each person (subject to the limit specified in the Plan), the time of
each grant, the terms and duration of each grant and all other determinations
necessary or advisable for administration of the Plan. No participant may be
granted, during any calendar year, Incentive Awards with respect to more than
10% of the total number of shares of Common Stock initially available for
Incentive Awards under the Plan, subject to certain antidilution adjustments.
The principal stock option features of the Plan provide that Old Kent may grant
to participants options to purchase shares of Common Stock at stated prices for
specified periods of time. Options may qualify as incentive stock options as
defined in Section 422 of the Code ("Incentive Stock Options") or not
("Nonqualified Stock Options") as determined by the Committee. The present
practice is to grant Nonqualified Stock Options. The Committee could award
options for any amount of consideration, or no consideration, as may be
determined by the Committee.
The Committee would set forth the terms of individual grants of stock options in
stock option agreements. The stock option agreements would contain such terms,
conditions and restrictions, consistent with the provisions of the Plan, as the
Committee determines to be appropriate. Stock option agreements may provide for
automatic regrants of options with respect to shares surrendered to Old Kent in
connection with the exercise of an outstanding stock option. The stock option
price per share would be determined by the Committee and would be a price equal
to or higher than the par value of Common Stock on the date of grant. The
exercise price of Incentive Stock Options must be at prices at least equal to
the market value on the date of grant. The present practice is to grant all
options at prices equal to the market value on the date of the grant. On
February 7, 1997, the closing price of Common Stock on The Nasdaq Stock Market
was $48.75 per share. When exercising all or a portion of a stock option, a
participant could pay with cash or, with the consent of the Committee, with
shares of Common Stock or other consideration. If shares of Common Stock are
used to pay the exercise price and the Committee consents, a participant could
use the value of shares received upon exercise for further exercises in a single
transaction, permitting a participant to fully exercise a large stock option
with a relatively small initial cash or stock payment. The Committee could also
authorize payment of all or a portion of the stock option price in the form of a
promissory note or installments on terms approved by the Committee.
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<PAGE> 8
Although the term of each stock option would be determined by the Committee, no
stock option would be exercisable under the Plan after the expiration of 10
years from the date it was granted. Stock options generally would be exercisable
for limited periods of time in the event a stock option holder dies, becomes
disabled or is terminated without cause. If a stock option holder is terminated
for cause, the stock option holder would forfeit all rights to exercise any
outstanding stock options. If a stock option holder retires after age 55 and
after completing 10 years of service, or as otherwise determined by the
Committee, the option holder could exercise options for the shorter of 3 years
or the remainder of the terms of the options, but only to the extent the
participant is entitled to exercise the options on the date of retirement. If a
stock option holder terminates employment due to consensual severance (as
defined in the Plan), the Committee may, in its discretion, permit the
participant to exercise options for a period of time not exceeding 3 years after
such termination. Incentive Stock Options granted to participants under the Plan
generally could not be transferred except by will or by the laws of descent and
distribution. Nonqualified Stock Options would be transferable unless transfer
is restricted by the terms of the grant.
For federal income tax purposes, a participant would not recognize income and
Old Kent would not receive a deduction at the time an Incentive Stock Option is
granted. A participant exercising an Incentive Stock Option would not recognize
income at the time of the exercise. The difference between the market value and
the exercise price would, however, be a tax preference item for purposes of
calculating alternative minimum tax. Upon sale of the stock, as long as the
participant held the stock for at least 1 year after the exercise of the stock
option and at least 2 years after the grant of the stock option, the
participant's basis would equal the exercise price, the participant would pay
tax on the difference between the sale proceeds and the exercise price as
capital gain, and Old Kent would receive no deduction for federal income tax
purposes. If, before the expiration of either of the above holding periods, the
participant sold shares acquired under an Incentive Stock Option, the tax
deferral would be lost, the participant would recognize compensation income
equal to the difference between the exercise price and the fair market value at
the time of exercise, but not more than the maximum amount that would not result
in a loss on the disposition, and Old Kent would receive a corresponding
deduction for federal income tax purposes. Additional gains, if any, recognized
by the participant would result in the recognition of short- or long-term
capital gain.
Under current federal income tax laws, a participant would not recognize any
income and Old Kent would not receive a deduction at the time a Nonqualified
Stock Option is granted. If a Nonqualified Stock Option is exercised, the
participant would recognize compensation income in the year of exercise equal to
the difference between the exercise price and the fair market value on the date
of exercise, and Old Kent would receive a corresponding deduction for federal
income tax purposes. The participant's tax basis in the shares acquired would be
increased by the amount of compensation income recognized. Sale of the stock
after exercise would result in recognition of short- or long-term capital gain
or loss.
Old Kent could withhold from any cash otherwise payable to a participant or
require a participant to remit to Old Kent an amount sufficient to satisfy
federal, state and local withholding taxes and employment-related tax
requirements. Tax withholding obligations may be satisfied by withholding Common
Stock to be received upon exercise of an option or by delivery to Old Kent of
previously owned shares of Common Stock.
In addition to stock options, the Committee could also grant stock appreciation
rights and tax benefit rights that would be subject to such terms and conditions
as the Committee determines. A stock appreciation right could relate to a
particular option and could be granted at the same time or after a related
option is granted. A stock appreciation right granted in tandem with a stock
option would permit a participant to receive, in exchange for the right to
exercise a related option, a payment from Old Kent in cash, stock or other
consideration equal to the difference between the market value of the shares at
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<PAGE> 9
the time of exercise of the stock appreciation right and the exercise price of
such option. A tax benefit right is a cash payment received by a participant
upon exercise of a stock option. The amount of the payment would not exceed the
amount determined by multiplying the ordinary income realized by the participant
(and deductible by Old Kent) upon exercise of a Nonqualified Stock Option, or
upon a disqualifying disposition of an Incentive Stock Option, by the maximum
federal income tax rate (including any surtax or similar charge or assessment)
for corporations plus the applicable state and local tax imposed on the exercise
of the stock option or disqualifying disposition. Unless the Committee provides
otherwise, the net amount of a tax benefit right, subject to withholding, could
be used to pay a portion of the stock option price.
The board of directors may terminate the Plan at any time and may from time to
time amend the Plan. No amendment may impair any outstanding Incentive Award
without the consent of the participant except according to the terms of the Plan
or Incentive Award. No termination, amendment or modification may become
effective with respect to any Incentive Award outstanding under the Plan without
the prior written consent of the participant holding the award unless the
amendment or modification operates to the benefit of the participant. Subject to
shareholder approval, the Plan would take effect on April 21, 1997, and, unless
previously terminated by the board of directors, no awards could be made under
the Plan after April 20, 2007.
The affirmative vote of the holders of a majority of the shares of Common Stock
present in person or by proxy and voting on this proposal is required to approve
the Plan. For purposes of counting votes on this proposal, abstentions, broker
non-votes and other shares not voted will not be counted as shares voted on the
proposal, and the number of shares of which a majority is required will be
reduced by the number of shares not voted. No Incentive Awards will be granted
under the Plan if it is not approved by the shareholders.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
APPROVAL OF THE EXECUTIVE STOCK INCENTIVE PLAN OF 1997
VOTING SECURITIES
Holders of record of Old Kent Common Stock at the close of business on February
21, 1997, will be entitled to vote at the annual meeting of shareholders on
April 21, 1997, and any adjournment of that meeting. As of February 21, 1997,
there were 45,644,664 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, 1996, 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 Common Stock as of that date:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP(1)
-----------------------------------------------
SOLE VOTING SHARED VOTING TOTAL
AND DISPOSITIVE OR DISPOSITIVE BENEFICIAL PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER POWER POWER(2) OWNERSHIP OF CLASS
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Old Kent Bank
111 Lyon Street, N.W.
Grand Rapids, Michigan 49503 (3) 1,936,217 1,599,092 3,535,309 7.9%
</TABLE>
- -------------------------
Footnotes begin on page 8.
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<PAGE> 10
The following table shows certain information concerning the number of shares of
Common Stock held as of December 31, 1996, by each of Old Kent's directors and
nominees for director, each of the Named 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
AND VOTING OR TOTAL PERCENT
DISPOSITIVE DISPOSITIVE STOCK DEFERRED BENEFICIAL OF
NAME OF BENEFICIAL OWNER POWER POWER(2) OPTIONS(4) STOCK(5) OWNERSHIP CLASS
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
R. L. Antonini - - - - - *
J. M. Bissell 8,227 - - 1,933 10,160 *
J. D. Boyles 36,751 - - - 36,751 *
W. P. Crawford 10,080 - - - 10,080 *
R. M. DeVos, Jr. 7,933 - - - 7,933 *
W. G. Gonzalez 100 - - - 100 *
J. P. Hackett - 409 - - 409 *
E. Hanka - 1,346 - 1,795 3,141 *
E. D. Holton 3,692 5,642 - 13,620 22,954 *
R. L. Hooker 2,677 2,465 - - 5,142 *
M. J. Jandernoa 5,506 - - - 5,506 *
F. P. Keller 6,724 - - - 6,724 *
J. P. Keller 6,112 - - - 6,112 *
H. G. Meijer 210 7,655 - - 7,865 *
W. U. Parfet 2,957 - - - 2,957 *
P. A. Pierre - 2,266 - - 2,266 *
P. M. Quinn 846 - - - 846 *
R. L. Sadler 11,615 121,403 32,111 20,782 185,911 *
M. J. Schlack 1,076 - - - 1,076 *
P. F. Secchia 68,001 1,504 - 3,520 73,025 *
B. P. Sherwood, III 55,266 181 4,977 22,434 82,858 *
D. J. Wagner 701 40,880 104,906 28,855 175,342 *
M. Sellers Walker - - - - - *
R. H. Warrington(6) 18,770 2,730 14,710 - 36,210 *
T. D. Wisnom 71,319 2,489 18,074 15,237 107,119 *
All directors and executive
officers as a group 479,406 237,091 328,811 108,176 1,153,483 2.52%
</TABLE>
- -------------------------
* Less than 1%
(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 that are considered to be otherwise beneficially owned by that
person. 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
direct the voting of the security. Dispositive power includes the power to
dispose or 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
departments of Old Kent Bank (Michigan) ("Old Kent Bank") or Old Kent Bank
(Illinois), each an Old Kent subsidiary. Old Kent, Old Kent Bank, Old Kent
Bank (Illinois) and their respective
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<PAGE> 11
directors and officers 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 Old Kent are not included unless otherwise indicated. The
directors and officers of Old Kent 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. Old Kent Bank also holds in various
fiduciary capacities through its trust department a total of 1,878,430
shares over which it does not have or share voting or dispositive power. Old
Kent Bank (Illinois), another subsidiary of Old Kent, also held a total of
121,984 shares in various fiduciary capacities through its trust department.
Old Kent, Old Kent Bank and Old Kent Bank (Illinois) and their respective
directors and officers 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.
(5) The numbers shown in this column for officers represent 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 numbers of shares shown in this column for directors who
are not officers represent shares credited to the director's account under
the Old Kent Directors' Deferred Compensation Plan. Under that plan, the
director is unconditionally entitled to receive stock (or, at Old Kent's
option, cash of equivalent value) upon termination of board service, but has
no present voting or dispositive power of those shares.
(6) Includes 18,389 shares of restricted stock. Mr. Warrington has sole or
shared voting power, but no present dispositive power, over these shares,
and these shares are subject to forfeiture upon termination of employment
under certain circumstances.
BOARD OF DIRECTORS
The Old Kent board of directors presently consists of 14 persons, 5 of whom are
standing for reelection. Recent changes in inter-state banking law will enable
Old Kent to consolidate its Michigan and Illinois banks into a single bank
during 1997. Old Kent's structure after the merger will essentially mirror that
of a one-bank holding company, allowing for increased operating efficiencies. To
this end, the board of directors proposes to consolidate the Old Kent board of
directors with that of its principle subsidiary, Old Kent Bank. The size of the
board of directors will be increased to 23 and certain Old Kent Bank directors
are nominated for election to the Old Kent board of directors at the annual
meeting.
The board of directors is divided into three classes that are as nearly equal in
number as possible. Except as provided below, each director is a member of a
class that 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 and existing directors whose terms of office will continue after the
annual meeting is presented below. Except as otherwise indicated, all directors
and nominees have had the same principal employment for over 5 years.
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<PAGE> 12
Nominees for Terms expiring in 1998
ROBERT L. HOOKER (age 66) is Vice Chairman and Chief Executive Officer of Mazda
Great Lakes, a wholesale distributor of Mazda vehicles and parts. Mr. Hooker has
been a director of Old Kent Bank since 1987. He is also a director of Autocam
Corporation.
PATRICK M. QUINN (age 62) is the Chief Executive Officer and a director of
Spartan Stores, Inc., a food wholesaler. Mr. Quinn has been a director of Old
Kent Bank since 1988.
MARGARET SELLERS WALKER (age 61) is a Professor of Public Administration at
Grand Valley State University. From 1987 to 1993, Ms. Walker was Assistant City
Manager of the City of Grand Rapids, Michigan. Ms. Walker has been a director of
Old Kent Bank since 1993.
Nominees for Terms expiring in 1999
RICHARD L. ANTONINI (age 54) is the Chairman, President and Chief Executive
Officer and a director of Foremost Corporation of America, an insurance company.
Mr. Antonini has been a director of Old Kent Bank since 1988.
WILLIAM G. GONZALEZ (age 56) is President and Chief Executive Officer of
Butterworth Health Corporation, an integrated regional healthcare network
providing health and medical services and managed care options. Mr. Gonzalez has
been a director of Old Kent Bank since 1994.
HENDRIK G. MEIJER (age 45) is Co-Chairman of Meijer, Inc., a food and general
merchandise retailer. Mr. Meijer has been a director of Old Kent Bank since
1989.
MARILYN J. SCHLACK (age 60) is the President of Kalamazoo Valley Community
College. Dr. Schlack has been a director of Old Kent Bank since 1995.
Nominees for Terms Expiring in 2000
WILLIAM P. CRAWFORD (age 53) is President and Chief Executive Officer of
Steelcase Design Partnership, a manufacturer of office systems, and subsidiary
of Steelcase Inc. Mr. Crawford has been a director of Old Kent Bank since 1988.
JAMES P. HACKETT (age 41) has been a director of Old Kent since 1995. Mr.
Hackett is President and Chief Executive Officer of Steelcase Inc., a
manufacturer of office systems. He was Executive Vice President and Chief
Operating Officer of Steelcase North America from August 1994 until December
1994, Executive Vice President of Steelcase Ventures from April 1994 until
August 1994, and President of Turnstone (a Steelcase subsidiary) from August
1993 until April 1994. Previously, he served Steelcase in various other
executive capacities.
ERINA HANKA (age 54) has been a director of Old Kent since 1995. Ms. Hanka is
President of Suspa Inc., a manufacturer of gas cylinders for various
applications within the automotive, office furniture, and electronics
industries. Ms. Hanka served as a director of Old Kent Bank from 1988 until her
election to the Old Kent board in 1995.
EARL D. HOLTON (age 63) has been a director of Old Kent 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 46) has been a director of Old Kent since 1993. He is
Chairman of the Board and Chief Executive Officer and a director, of Perrigo
Company, a manufacturer and marketer of store
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<PAGE> 13
brand health and personal care products. Mr. Jandernoa served as a director of
Old Kent Bank from 1987 until his appointment to the Old Kent board in 1993.
FRED P. KELLER (age 52) is Chairman and Chief Executive Officer of Cascade
Engineering, Inc., a manufacturer of plastic injection molded automotive,
seating and container products. Mr. Keller has been a director of Old Kent Bank
since 1987.
B. P. SHERWOOD, III (age 61) is Vice Chairman of the Board and Treasurer of Old
Kent. He is also Chairman of the Board of Old Kent Bank (Illinois) (since July
1, 1994). He has been an Old Kent director since 1985 and has served Old Kent in
various executive capacities since 1983.
Continuing Directors with Terms Expiring in 1998
JOHN D. BOYLES (age 62) has been a director of Old Kent since 1985. He is an
attorney with the firm of Verspoor, Waalkes, Lalley, Slotsema & Talen, P.C.
RICHARD M. DEVOS, JR. (age 41) has been a director of Old Kent since 1994. He is
President of Amway Corporation, a direct selling company which manufactures and
markets home care, personal care and health and fitness products. He is also
co-owner and Chairman of the Board of The Windquest Group, a multi-company
management group, and, with his family, an owner of The Orlando Magic, a
National Basketball Association franchise. Mr. DeVos served as a director of Old
Kent Bank from 1987 until his appointment to the Old Kent board in 1994. He is
also the President and a director of Amway Asia Pacific Ltd. and Chairman and a
director of Amway Japan Limited.
JOHN P. KELLER (age 57) has been a director of Old Kent since 1988. He is
President of Keller Group, Inc., a diversified manufacturer. Mr. Keller is also
a director of A.M. Castle, Co.
ROBERT L. SADLER (age 61) is Vice Chairman of the Board of Old Kent and
President and Chief Executive Officer of Old Kent Bank. Mr. Sadler was appointed
President of Old Kent Bank on July 1, 1994, and Chief Executive Officer of Old
Kent Bank on March 1, 1995. He has been a director of Old Kent since 1976 and
has served Old Kent in various executive capacities since 1972.
DAVID J. WAGNER (age 42) is Chairman of the Board, President and Chief Executive
Officer of Old Kent and Chairman of the Board of Old Kent Bank. Mr. Wagner was
appointed by the board of directors to assume the position of President
effective March 1, 1994, the position of Chief Executive Officer effective March
1, 1995, and the position of Chairman of the Board effective November 1, 1995.
He has been a director of Old Kent since 1992. He was Executive Vice President
of Old Kent from 1991 until 1994, President of Old Kent Bank from 1986 until
1994, Chief Executive Officer of Old Kent Bank from 1989 until 1995, and he has
been a director of Old Kent Bank since 1986. Previously, he served Old Kent in
various other executive capacities. Mr. Wagner is also a director of Autocam
Corporation.
Continuing Directors with Terms expiring in 1999
JOHN M. BISSELL (age 66) has been a director of Old Kent since 1972 and was
previously a director of Old Kent Bank from 1971. He is Chairman of the Board of
BISSELL Inc., a manufacturer of homecare, healthcare and graphics products. Mr.
Bissell is also a director of The Coastal Corporation.
WILLIAM U. PARFET (age 50) has been a director of Old Kent since 1987. He is
Co-Chairman of MPI Research, a research laboratory conducting risk assessment
toxicology studies. He was previously President and Chief Executive Officer of
Richard-Allan Medical Industries, Inc., a manufacturer of surgical instruments
and medical supplies. During 1993, he was Vice Chairman of The Upjohn
11
<PAGE> 14
Company, a manufacturer of pharmaceutical, chemical and agricultural products.
Mr. Parfet was President of The Upjohn Company from 1991 until 1993. Mr. Parfet
is also a director of Pharmacia & Upjohn, Inc., CMS Energy Corporation, Stryker
Corp. and Universal Foods Corp.
PERCY A. PIERRE (age 58) has been a director of Old Kent since 1992. He is
Professor of Electrical Engineering at Michigan State University. He was
previously Vice President for Research and Graduate Studies at MSU until 1995.
Dr. Pierre is also a director of CMS Energy Corporation and Whitman Education
Group, Inc.
PETER F. SECCHIA (age 59) has been a director of Old Kent 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. Mr. Secchia previously served as a director
of Old Kent Bank in 1988 and 1989.
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, Holton, Keller, Parfet, Sadler, Sherwood and Wagner
presently serve on this committee. The Executive Committee did not meet
during 1996.
AUDIT COMMITTEE. The duties of the Audit Committee are to (i) 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, (ii) 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, (iii) review
reports of examination of Old Kent and its subsidiaries received from
regulatory authorities, and (iv) 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. Mr.
Boyles, Mr. DeVos, Mr. Hackett, Ms. Hanka, Mr. Jandernoa, Dr. Pierre and
Mr. Secchia serve on this committee. The Audit Committee met 4 times during
1996.
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 that this committee
administers may not serve on this committee. Messrs. Bissell, Holton,
Keller and Parfet are presently members of this committee. The Personnel
Committee met 3 times during 1996.
COMMITTEE ON DIRECTORS. The Committee on Directors proposes and considers
suggestions as to candidates for the board of directors and reviews and
recommends to the board modifications to the directors' retirement policy.
Mr. Boyles, Mr. Holton, Mr. Jandernoa and Dr. Pierre presently serve on
this committee. The Committee on Directors met 2 times during 1996. 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. David J. Wagner,
Old Kent's Chairman of the Board, President and Chief Executive Officer.
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
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<PAGE> 15
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 Old Kent
setting forth with respect to each proposed nominee: (i) the name, age, business
address and residence address of the nominee; (ii) the principal occupation or
employment of the nominee; (iii) the number of shares of capital stock of Old
Kent that are beneficially owned by the nominee; (iv) a statement that the
nominee is willing to be nominated and to serve; and (v) 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 1996, 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. DeVos who attended 55% and Mr. Jandernoa who attended 69%.
PERSONNEL COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Personnel Committee of Old Kent's board of directors reviews Old Kent'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.
Old Kent 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 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 of achieving the highest possible
relative total return to shareholders.
For compensation purposes, Old Kent compares itself to a peer group of companies
that 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 1996 included 30 regional bank holding companies with
assets in the $7.4 billion to $23.6 billion range as of December 31, 1995, with
emphasis placed on regional bank holding companies. For comparison purposes, the
companies with the highest and lowest returns on equity are eliminated. The
Personnel Committee may eliminate or substitute members of the group if, as a
result of an acquisition or other extraordinary transaction, they are no longer
considered to be representative. Of these 30 companies, 20 are included among
the companies comprising the KBW 50 Index presented in the Stock Performance
Table below. For the year ended December 31, 1996, Old Kent's return on equity
was 15.86%, compared to a median return on equity of 15.64% for other members of
the peer group. Old Kent's return on equity was the 14th highest of the 28
companies included in its peer group for comparison purposes.
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.
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<PAGE> 16
Old Kent also provides short- and long-term incentive compensation programs to
encourage superior performance. It is Old Kent's policy that above average
compensation will be paid for above average performance.
Annual bonuses under Old Kent's short-term incentive compensation program are
intended to reward executives for achieving specific goals, motivate executives
to work more effectively, and 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 that 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 senior executive
officers are based on allocations of corporate, business unit and individual
performance components that 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. The amount of the target bonus is determined by the Personnel
Committee, in its discretion, based in part on consultation with Old Kent's
compensation consultants. Target bonuses in 1996 were equal to 60% of base
compensation for the Chief Executive Officer and 45% - 50% of base compensation
for all other continuing executive officers named in this proxy statement. At
the end of each year, a bonus may be awarded to each executive officer in an
amount that 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. This evaluation considers corporate performance and,
if applicable to an executive officer's specified performance criteria, business
unit performance and individual performance. Under Old Kent's present policies,
no executive officer may be paid a bonus that is greater than 150% of his or her
target bonus.
In 1995, Old Kent adopted a one-time incentive performance plan in connection
with its reengineering program. That plan was intended to motivate the
participants in the reengineering program and reward team performance in
achieving the goals of reengineering. Eligibility for this plan was limited to
officers participating in Old Kent's 1995 annual short-term incentive plan. All
continuing executive officers named in the Summary Compensation Table appearing
in this proxy statement are participants in the plan. Each participant will be
eligible to receive a supplemental cash bonus based on his or her target award
under the 1995 short-term annual incentive plan. Each participant was awarded a
bonus for 1996 equal to 50% of his or her 1995 target award because Old Kent's
return on equity was in the second quartile of its peer group for 1996. If Old
Kent's return on equity is in the second quartile of its peer group in 1997,
each participant would receive a bonus equal to 50% of his or her 1995 target
award. If return on equity in 1997 is in the top quartile, each participant
would receive 75% of his or her 1995 target award in 1998.
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<PAGE> 17
Long-term incentives are provided to reward executives for achieving the
long-term goal of increasing shareholder value and protect against too much
emphasis on short-term results. All of Old Kent'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 Old Kent'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 or restricted 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 Common 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. Wagner's base salary for 1996 was fixed at a level that 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. Wagner's annual incentive bonus for 1996 was based entirely on corporate
performance. For this purpose, corporate performance was determined with
reference to a comparison of Old Kent's return on equity to that of Old Kent's
peer group and to predetermined target levels set by the Personnel Committee.
The bonus paid to Mr. Wagner for 1996 was 123.25% of his target bonus.
Mr. Wagner'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. Wagner permit him to
purchase shares that had an aggregate market value equal to 60% of his annual
salary on the date of grant. These levels, which are consistent with Old Kent'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. Wagner's
predecessor in prior years.
Section 162(m) of the Code provides that publicly held corporations may not
deduct compensation paid to certain executive officers in excess of $1 million
annually, with certain exemptions. The Personnel Committee and the Board of
Directors view Section 162(m) as a consideration but not a constraint on
compensation policy under present circumstances, and may approve compensation
that is not tax deductible. The Executive Stock Incentive Plan of 1997 and the
Executive Incentive Bonus Plan proposed for approval in this proxy statement are
intended to provide elements of compensation that are exempt from Section 162(m)
limits.
During 1996, 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
John P. Keller
William U. Parfet
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<PAGE> 18
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 that specializes in the banking industry. The KBW 50 Index is composed of
50 money center and regional bank holding companies, including 20 of the 30
regional bank holding companies in the peer group used by Old Kent for
compensation purposes (see the Personnel Committee Report on Executive
Compensation 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
Five-Year Total Return
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) OKEN KBW 50 S&P 500
<S> <C> <C> <C>
1991 100.0 100.0 100.0
1992 151.4 127.4 107.6
1993 137.9 134.5 118.5
1994 144.7 127.6 120.0
1995 214.0 204.4 165.1
1996 269.2 289.1 203.1
</TABLE>
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>
1991 100.0 100.0 100.0
1992 151.4 127.4 107.6
1993 137.9 134.5 118.5
1994 144.7 127.6 120.0
1995 214.0 204.4 165.1
1996 269.2 289.1 203.1
</TABLE>
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<PAGE> 19
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Old Kent's compensation and benefit programs for its executive officers include
the following components:
SALARY. Old Kent's objective is to provide base pay at levels that 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 Old Kent to grant stock options and award
shares as deferred stock compensation or restricted stock. 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 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 Old Kent, 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.
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<PAGE> 20
The following table shows certain information concerning the compensation of
each of Old Kent's five most highly compensated executive officers (including
its Chief Executive Officer) in the year ended December 31, 1996, for services
rendered during each of the three years in the period then ended:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION AWARDS
-----------------------
NUMBER OF
SECURITIES
ANNUAL COMPENSATION RESTRICTED UNDERLYING
NAME AND --------------------------- STOCK OPTIONS ALL OTHER
PRINCIPAL POSITION(1) YEAR SALARY(2) BONUS(2) AWARDS(3) (4) COMPENSATION(5)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
David J. Wagner 1996 $600,000 $575,700 $277,095 9,948 $27,169
Chairman of the Board, 1995 480,000 264,000 235,813 10,082 16,113
President and Chief 1994 325,000 186,469 145,663 55,125 10,945
Executive Officer
B.P. Sherwood, III 1996 360,000 305,600 147,810 4,977 17,631
Vice Chairman of the 1995 335,000 184,250 146,266 5,865 11,329
Board and Treasurer 1994 315,000 177,188 125,507 5,109 10,613
Robert L. Sadler 1996 360,000 298,175 147,810 4,977 17,757
Vice Chairman of the 1995 335,000 188,437 146,266 5,865 11,386
Board of Old Kent 1994 274,000 151,045 109,247 5,109 9,359
and President and Chief
Executive Officer of Old
Kent Bank
Robert H. Warrington 1996 247,000 201,360 101,400 3,412 12,745
Senior Executive Vice 1995 212,500 124,750 67,203 3,587 7,823
President of Old Kent 1994 180,000 90,000 203,250 2,921 6,250
and President of Old Kent
Mortgage Company
Thomas D. Wisnom 1996 246,000 186,390 101,010 3,402 11,806
Executive Vice President, 1995 230,000 116,438 100,547 4,028 7,804
Community Bank 1994 214,000 120,380 85,365 3,472 7,269
Administration
</TABLE>
- -------------------------
(1) Capacities indicated are with Old Kent unless otherwise stated. Capacities
indicated are those in which a majority of compensation was paid.
(2) Includes compensation deferred under the Old Kent Thrift Plan, the Old Kent
Executive Thrift Plan and the Old Kent Deferred Compensation Plan. Bonus
includes an annual incentive bonus and a one-time incentive bonus in
connection with Old Kent's reengineering program.
(3) Awards under the Deferred Stock Compensation Plan vest at the date of grant
but participants have no right to the shares until 5 years after the date of
grant. Participants in the Deferred Stock Compensation Plan also accrue
earnings equal to dividends that would have been paid on shares deferred.
Restricted stock awards vest after a number of years, not less than 3,
specified in the award, subject to acceleration in certain circumstances.
Officers who receive restricted stock awards
18
<PAGE> 21
are issued shares subject to forfeiture and receive dividends on those
shares. The numbers of shares held or credited to the account of each named
individual under these plans and the aggregate value of those shares as of
December 31, 1996, are:
<TABLE>
<CAPTION>
AGGREGATE
DEFERRED STOCK RESTRICTED STOCK VALUE
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Mr. Wagner......................... 28,855 $1,377,826
Mr. Sherwood....................... 22,433 1,071,176
Mr. Sadler......................... 20,781 992,293
Mr. Warrington..................... 18,389 878,075
Mr. Wisnom......................... 15,236 727,519
</TABLE>
(4) The number of shares shown is adjusted to reflect a 5% stock dividend.
(5) All other compensation includes (a) Old Kent's matching contributions under
the Old Kent Thrift Plan, (b) Old Kent's matching contributions under the
Old Kent Executive Thrift Plan, and (c) amounts paid by Old Kent for term
life insurance. The amounts included for each such factor are:
<TABLE>
<CAPTION>
EXECUTIVE LIFE
THRIFT PLAN THRIFT PLAN INSURANCE
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Mr. Wagner.......................... $1,781 $24,070 $1,318
Mr. Sherwood........................ 1,781 14,532 1,318
Mr. Sadler.......................... 2,850 13,589 1,318
Mr. Warrington...................... 1,781 10,042 922
Mr. Wisnom.......................... 1,781 9,083 942
</TABLE>
It is Old Kent's practice to award stock options annually to key policy-making
members of management. Stock options have been an important component of Old
Kent'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 executive officers and rewarding
them for appreciation in the price of Old Kent's Common Stock. Stock options
that were granted, exercised or outstanding during 1996 were granted under
various stock option plans. All of Old Kent's stock option plans have been
approved by Old Kent'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 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.
19
<PAGE> 22
The following tables set forth information concerning stock options granted to
and exercised by the specified individuals during the last fiscal year:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------
PERCENT OF POTENTIAL REALIZABLE VALUE
NUMBER OF TOTAL AT ASSUMED ANNUAL RATES OF
SECURITIES OPTIONS STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM
OPTIONS EMPLOYEES IN PRICE EXPIRATION -----------------------------
NAME GRANTED(1) FISCAL YEAR (PER SHARE)(1) DATE 0% 5% 10%
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
David J. Wagner 9,948 6.79% $37.14 6/17/2006 0 $ 232,355 $ 588,837
B. P. Sherwood, III 4,977 3.40 37.14 6/17/2006 0 116,247 294,596
Robert L. Sadler 4,977 3.40 37.14 6/17/2006 0 116,247 294,596
Robert H. Warrington 3,412 2.33 37.14 6/17/2006 0 79,694 201,369
Thomas D. Wisnom 3,402 2.32 37.14 6/17/2006 0 79,460 201,961
Executive Group 49,367 33.71 37.14 6/17/2006 0 1,153,213 2,922,033
Non-Executive Officer
Employee Group 97,082 66.29 37.14 6/17/2006 0 2,267,836 5,746,284
</TABLE>
- -------------------------
(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. The number of shares underlying options and
the exercise prices have been adjusted to reflect a 5% stock dividend.
20
<PAGE> 23
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
YEAR END YEAR END
NUMBER OF ---------------- ----------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(1) REALIZED UNEXERCISABLE(2) UNEXERCISABLE(2)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
David J. Wagner 0 0 104,906 $2,056,965
Robert L. Sadler 0 0 32,111 659,962
B. P. Sherwood, III 21,371 $292,664 4,977 52,806
Robert H. Warrington 0 0 14,710 246,937
Thomas D. Wisnom 0 0 18,074 314,874
</TABLE>
- -------------------------
(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.
(2) All options are presently exercisable.
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 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 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:
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF BENEFIT SERVICE
AVERAGE -------------------------------------------
REMUNERATION, AGE 65 10 15 20 25 OR MORE
- -----------------------------------------------------------------------------
<C> <C> <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. Compensation shown in the Summary Compensation Table above
under the caption "Annual
21
<PAGE> 24
Compensation" 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, 1996, Mr.
Sherwood, Mr. Sadler and Mr. Wisnom each had 25 credited years of service (the
maximum) under those plans, Mr. Wagner had 20, and Mr. Warrington had 9.
EXECUTIVE SEVERANCE AGREEMENTS
Old Kent has entered into executive severance agreements with the executive
officers named in the Summary Compensation Table in this proxy statement. Each
agreement provides severance benefits to the executive officer if, within 24
months after or 6 months before a "change of control" of Old Kent, Old Kent
terminates the executive officer for reasons other than "cause," or the
executive officer terminates the employment for good reason or because the
successor company breaches the agreement. A "change of control" of Old Kent is
deemed to have occurred if (i) any person or entity acquires beneficial
ownership of 25% or more of the combined voting securities of Old Kent, (ii) the
board of directors is not comprised of a majority of directors who were
directors (or nominated to become directors) prior to the effective date of the
change of control, (iii) Old Kent merges or consolidates with or into another
entity where the voting securities of Old Kent fail to represent at least 60% of
the voting power of the surviving entity, (iv) Old Kent sells or otherwise
transfers assets or earning power totaling more than 50% of the assets or
earning power of Old Kent (on a consolidated basis), or (v) Old Kent is
completely liquidated or dissolved. An executive officer's termination of
employment is for "good reason" if Old Kent or its successor assigns him duties
materially inconsistent with his present duties, shifts his job location more
than 50 miles, or reduces his base salary or participation in short- and long-
term incentive, benefit and retirement plans. Each agreement has a 3-year term
and is self-renewing for additional 1-year terms unless Old Kent notifies the
executive officer of its termination of the agreement at least 6 months prior to
its expiration. The Agreements provide severance benefits of a lump-sum payment
equal to 3 years' salary and bonuses, plus health, deferred compensation, and
retirement benefits for the 3-year period.
COMPENSATION OF DIRECTORS
Each director of Old Kent who is not compensated as an officer is paid an annual
retainer of $17,000 and a fee of $1,000 for each meeting of the board of
directors attended. Directors who serve on committees appointed by the board of
directors are paid $1,000 for each committee meeting attended, and each
committee chairman who is not compensated as an officer is paid an additional
retainer of $4,000 per year. Directors are reimbursed for travel expenses for
meetings attended. Each director of Old Kent 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 five funds
substantially identical to the five funds available in the Old Kent Thrift Plan.
One of those five funds is an Old Kent Common Stock fund. 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.
22
<PAGE> 25
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, 1996, and February 28, 1997. 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.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 Old Kent with copies of all Section 16(a) reports they file. Except as
described below, 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, 1996, its directors and officers complied with all applicable
filing requirements. Mr. Canepa failed to file 5 reports involving 9
transactions during 1993, 1994 and 1995 and filed late 1 report involving 4
transactions exempt from Section 16(b). All of these transactions were dividend
reinvestment plan transactions. Ms. Hanka failed to include certain shares in
her initial holdings reported on Form 3 and failed to report 3 exempt dividend
reinvestment plan transactions involving those shares on her year-end Form 5
report. Mr. Sherwood filed late 1 report involving 1 exempt transaction. Each of
these inadvertent omissions was corrected and applicable reports or amendments
were filed promptly upon discovery.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The board of directors has selected Arthur Andersen LLP as Old Kent's principal
accountant for 1997. Representatives of Arthur Andersen LLP will be present at
the annual meeting, have an opportunity to make a statement and 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 20, 1998, must be received by Old Kent by November
1, 1997, 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.
23
<PAGE> 26
APPENDIX A
OLD KENT EXECUTIVE INCENTIVE BONUS PLAN
SECTION 1
Establishment of Plan; Purpose of Plan
1.1 Establishment of Plan. Old Kent Financial Corporation ("Company") hereby
establishes the OLD KENT EXECUTIVE INCENTIVE BONUS PLAN ("Plan") for its
corporate and Subsidiary officers and other key employees. The Plan provides for
the payment of annual bonuses based upon the financial performance of the
Company.
1.2 Purpose of Plan. The purpose of the Plan is to provide officers and key
management employees of the Company and its Subsidiaries with increased
incentives to make significant and extraordinary contributions to the long-term
performance and growth of the Company and its Subsidiaries, to join the
interests of officers and key employees with the interests of the Company's
shareholders through compensation goals based on financial performance, and to
attract and retain officers and key employees of exceptional abilities. Within
that context, the Plan is intended to provide performance-based compensation
under Section 162(m) of the Code and shall be interpreted and administered to
achieve that purpose.
1.3 Effective Date. The Plan is initially effective as of January 1, 1997.
Adoption of this Plan by the Board and payment of Incentive Bonuses for 1997
shall be contingent upon approval by the shareholders of the Company. In the
absence of such approval, this Plan shall be void.
SECTION 2
Definitions
The following terms have the stated definitions unless a different meaning is
plainly required by the context:
2.1 Act. "Act" means the Securities Exchange Act of 1934, as amended.
2.2 Beneficiary. "Beneficiary" means the individual, trust, or other entity
designated by the Participant to receive any amount payable with respect to the
Participant under the Plan after the Participant's death. A Participant may
designate or change a Beneficiary by filing a signed designation with the
Committee in a form approved by the Committee. A Participant's Will is not
effective for this purpose.
If a designation has not been completed properly and filed with the Committee or
is ineffective for any other reason, the Beneficiary shall be the Participant's
Surviving Spouse. If there is no effective designation and the Participant does
not have a Surviving Spouse, the remaining benefits, if any, shall be paid to
the Participant's estate.
2.3 Board. "Board" means the Board of Directors of the Company.
2.4 Cause. "Cause" means: (a) the Participant's willful and continued failure to
perform his or her duties with the Company after a written demand for
substantial performance is delivered to the Participant that specifically
identifies the manner in which the Company believes that the Participant
A-1
<PAGE> 27
has willfully failed to substantially perform his or her duties, and after the
Participant has failed to resume substantial performance of his or her duties on
a continuous basis within fourteen (14) calendar days of receiving such demand;
(b) the Participant's willfully engaging in conduct (other than conduct covered
in (a) above) which is demonstrably and materially injurious to the Company,
monetarily or otherwise; or (c) the Participant's having been convicted of a
felony. For purposes of this provision, no act, or failure to act, on the
Participant's part shall be deemed "willful" unless done, or omitted to be done,
by the Participant not in good faith and without reasonable belief that the
action or omission was in the best interests of the Company.
2.5 Code. "Code" means the Internal Revenue Code of 1986, as amended.
2.6 Committee. "Committee" means the Personnel Committee of the Board or such
other committee as the Board shall designate to administer the Plan. The
Committee shall consist of at least two members and all of its members shall be
"non-employee directors" as defined in Rule 16b-3 issued under the Act and
"outside directors" as defined in the regulations under Section 162(m) of the
Code.
2.7 Company. "Company" means Old Kent Financial Corporation, a Michigan
corporation, and its successors and assigns.
2.8 Fiscal Year. "Fiscal Year" means the calendar year, or such other financial
reporting and taxable year as a company may adopt.
2.9 Incentive Bonus. "Incentive Bonus" means an annual bonus awarded and paid to
a Participant for services to the Company during a Fiscal Year that is based
upon achievement of preestablished financial objectives by the Company.
2.10 Participant. "Participant" means an officer or key employee of the Company
or its Subsidiaries who is designated as a Participant for a Fiscal Year.
2.11 Peer Group. "Peer Group" means a group of bank holding companies selected
by the Committee as specified in Section 5.3.
2.12 Performance. "Performance" means the level of achievement by the Company of
the financial performance criteria based on ROE established by the Committee
pursuant to Section 5.2.
2.13 Return on Equity; ROE. "Return on Equity" and "ROE" means, for any Fiscal
Year, the amount determined by dividing (a) a company's net income for that
Fiscal Year by (b) that company's average total shareholders' equity during that
Fiscal Year. If any material accounting principle is not consistently applied,
either as to effective date or method of application, by members of the Peer
Group, the Committee in its discretion, may adjust the ROE of the Company or any
or all of the members of the Peer Group in order to provide consistent, or more
consistent, application.
2.14 Subsidiary. "Subsidiary" means any corporation or other entity of which 50%
or more of the outstanding voting stock or voting ownership interest is directly
or indirectly owned or controlled by the Company or by one or more Subsidiaries
of the Company.
2.15 Surviving Spouse. "Surviving Spouse" means the spouse of the Participant at
the time of the Participant's death who survives the Participant. If the
Participant and spouse die under circumstances which prevent ascertainment of
the order of their deaths, it shall be presumed for the Plan that the
Participant survived the spouse.
2.16 Target Bonus. "Target Bonus" means the bonus goal established by the
Committee for each Participant under Section 5.1(a).
A-2
<PAGE> 28
SECTION 3
Administration
3.1 Power and Authority. The Plan shall be administered by the Committee. The
Committee may delegate recordkeeping, calculation, payment and other ministerial
administrative functions to individuals designated by the Committee, who may be
employees of the Company. Except as limited herein, the Committee shall have all
of the express and implied powers and duties set forth herein and shall have
full authority and discretion to interpret the Plan and to make all other
determinations deemed necessary or advisable for the administration of the Plan.
Action may be taken by a written instrument signed by a majority of the members
of the Committee and any action so taken shall be effective as if it had been
taken at a meeting. The Committee may make such other rules for the conduct of
its business, and may adopt such other rules, policies, and forms for the
administration, interpretation and implementation of the Plan, as it deems
advisable. All determinations, interpretations and selections made by the
Committee regarding the Plan shall be final and conclusive.
3.2 Indemnification of Committee Members. Neither any member or former member of
the Committee nor any individual to whom authority is or has been delegated
shall be personally responsible or liable for any act or omission in connection
with the performance of powers or duties or the exercise of discretion or
judgment in the administration and implementation of the Plan. Each individual
who is or has been a member of the Committee, or delegated authority by the
Committee, shall be indemnified and held harmless by the Company from and
against any cost, liability, or expense imposed or incurred in connection with
any act or failure to act under the Plan. Each such individual shall be
justified in relying on information furnished in connection with the Plan's
administration by any appropriate person or persons.
SECTION 4
Eligibility
4.1 Participation. For each Fiscal Year, the Committee shall select the
corporate and Subsidiary officers and other key employees who shall be
Participants for the year. The Committee may limit the number of officers and
key employees who will be Participants for a Fiscal Year.
4.2 Continuing Participation. Selection as a Participant for a Fiscal Year by
the Committee is limited to that Fiscal Year. An eligible officer or key
employee will be a Participant for a Fiscal Year only if designated as a
Participant by the Committee for such Fiscal Year.
SECTION 5
Criteria
5.1 Selection of Criteria. The Committee shall preestablish performance goals
for each Participant in the manner and within the time limits specified in this
Section 5. For each Participant for each Fiscal Year, the Committee shall
specify:
(a) Target Bonus. A Target Bonus, expressed as a percentage of the
Participant's base salary or a specified dollar amount;
(b) Incentive Bonus. The Incentive Bonus levels, expressed as a percent of
the Target Bonus, that shall be paid to the Participant at specified levels
of Performance;
A-3
<PAGE> 29
(c) Performance Measurement. The applicable measurement of Performance
under Section 5.2; and
(d) Conditions on Incentive Bonus. Any specific conditions under which an
Incentive Bonus specified under (b) above may be reduced or forfeited (but
not increased).
The Incentive Bonus levels specified under (b) above may be expressed either as
(i) a matrix of percentages of the Target Bonus that will be paid at specified
levels of Performance, or (ii) a mathematical formula that determines the
percentage of the Target Bonus that will be paid at varying levels of
Performance.
5.2 Measurement of Performance. Performance shall be determined by reference to
the Company's Return on Equity. Performance of the Company may be measured by:
(a) Rank of ROE. The rank of the Company's Return on Equity among the
Returns on Equity of the members of the Peer Group (for example, without
limitation, Performance may be measured by reference to the percentile or
quartile of the Company's ROE within the Peer Group);
(b) Formula Relating to ROE. A formula which relates the Company's Return
on Equity to the Returns on Equity of the members of the Peer Group (for
example, without limitation, Performance may be measured by a formula that
determines Incentive Bonus levels by reference to a percentage of the
median of the Returns on Equity of the Peer Group);
(c) Specified Levels of ROE. Achievement by the Company of specified,
absolute levels of Return on Equity, provided that such levels are greater
than zero and substantially uncertain when specified (for example, without
limitation, a provision that an Incentive Bonus would be paid at a
specified level if the Company's ROE exceeds a specified level); or
(d) Combination. Any combination of (a), (b) and (c) above, applied
directly or in the alternative.
5.3 Designation of Peer Group. The Committee shall select a Peer Group. The Peer
Group shall consist of a number of specified bank holding companies selected by
the Committee in its discretion. The Committee may also establish criteria for
elimination of previously selected bank holding companies from the Peer Group
during the Fiscal Year by reason of specific circumstances, determined in
advance in the discretion of the Committee, which would cause a bank holding
company's Return on Equity not to be representative. (For example, without
limitation, the Committee may specify that bank holding companies with the
highest and lowest Returns on Equity will be eliminated, or companies that
experience extraordinary events such as mergers or acquisitions may be
eliminated.)
5.4 Incentive Bonus Conditioned on Performance. Payment of an Incentive Bonus to
a Participant for a Fiscal Year under this Plan shall be entirely contingent
upon the Performance established by the Committee pursuant to this Section 5,
the satisfaction of which is substantially uncertain when established by the
Committee for the Fiscal Year.
5.5 Time of Determination by Committee. All determinations to be made by the
Committee for a Fiscal Year pursuant to this Section 5 shall be made by the
Committee during the first 90 days of each Fiscal Year.
5.6 Objective Standards. An Incentive Bonus shall be based solely upon objective
criteria, consistent with this Section 5, from which an independent third party
with knowledge of the facts could determine whether the performance goal or
range of goals is met and from that determination could calculate the Incentive
Bonus to be paid. Although the Committee has authority to exercise reasonable
discretion to interpret this Plan and the criteria it shall specify pursuant to
this Section 5 of the Plan, it may not
A-4
<PAGE> 30
amend or waive such criteria after the 90th day of a Fiscal Year. The Committee
shall have no authority or discretion to increase any Incentive Bonus, or to
construct, modify or apply the measurement of Performance in a manner that will
directly or indirectly increase the Incentive Bonus, for any Participant for any
Fiscal Year above the amount determined by the applicable objective standards
established within the first 90 days of the Fiscal Year.
SECTION 6
Determination and Payment of Incentive Bonuses
6.1 Committee Certification. The Incentive Bonus for each eligible Participant
for a Fiscal Year shall be determined on the basis of the Target Bonus and
Performance criteria established by the Committee pursuant to Section 5 for the
Fiscal Year. The Committee shall determine, and shall certify in writing prior
to payment of any Incentive Bonus, that the Company Performance for the Fiscal
Year satisfied the criteria established by the Committee for the year. Approved
minutes of the Committee shall constitute sufficient written certification for
this purpose.
6.2 Partial Year Performance Adjustments. The Incentive Bonus otherwise payable
to a Participant for a Fiscal Year shall be adjusted as follows:
(a) Termination of Employment. In the event of termination of the
Participant's employment during the Fiscal Year, the full amount of the
Incentive Bonus for that year shall be paid unless the Participant's
employment was terminated for Cause or was voluntarily terminated by the
Participant without the prior approval and consent of the Committee. In the
event of termination of the Participant's employment under either of the
latter circumstances, the amount of the Incentive Bonus paid to the
Participant for the Fiscal Year shall be reduced by multiplying the amount
of the Incentive Bonus that would be payable for the entire Fiscal Year by
a fraction, the numerator of which is the total number of calendar months
in which the Participant performed the duties of his or her regular
employment, and the denominator of which is 12.
(b) Extraordinary Events. In the event of a merger, consolidation, sale,
exchange, reorganization, liquidation, recapitalization, dissolution, or
other extraordinary transaction with respect to the Company or a
substantial portion of the assets of the Company during a Fiscal Year which
is judged by the Committee to render the performance of the Company for the
remainder of the Fiscal Year insufficiently comparable to the Peer Group
for fair application of the performance goals for the year, the Committee
may determine that Incentive Bonuses for the Fiscal Year shall be based
solely upon attainment of the established criteria by the Company for the
portion of the Fiscal Year through the calendar quarter ending prior to the
occurrence of the extraordinary event.
6.3 Maximum Incentive Bonus. The Incentive Bonus for any Participant for a
Fiscal Year shall not, in any event, exceed $1,000,000.
6.4 Payment to Participant or Beneficiary. The Incentive Bonus of each
Participant shall be paid to the Participant, or the Beneficiary of any deceased
Participant, by the Company as soon as feasible following final determination
and certification by the Committee of the amount payable.
A-5
<PAGE> 31
SECTION 7
General Provisions
7.1 Benefits Not Guaranteed. Neither the establishment and maintenance of the
Plan nor participation in the Plan shall provide any guarantee or other
assurance that an Incentive Bonus will be payable under the Plan.
7.2 No Right to Participate. Nothing in this Plan shall be deemed or interpreted
to provide a Participant or any non-participating employee any contractual right
to participate in or receive benefits of the Plan. No designation of an employee
as a Participant for all or any part of a Fiscal Year shall create a right to an
Incentive Bonus under the Plan for any other Fiscal Year. There is no obligation
of uniformity of treatment of employees, eligible officers or Participants under
the Plan.
7.3 No Employment Right. Participation in this Plan shall not be construed as
constituting a commitment, guarantee, agreement, or understanding of any kind
that the Company or any Subsidiary will continue to employ any individual, and
this Plan shall not be construed or applied as an employment contract or
obligation. Nothing herein shall abridge or diminish the rights of the Company
or any Subsidiary to determine the terms and conditions of employment of any
Participant, officer, or other employee or to terminate the employment of any
Participant, officer, or other employee with or without reason at any time.
7.4 No Assignment or Transfer. Neither a Participant nor any Beneficiary or
other representative of a Participant shall have any right to assign, transfer,
attach, or hypothecate any amount or credit, potential payment, or right to
future payments of any amount or credit, or any other benefit provided under
this Plan. Payment of any amount due or to become due under this Plan shall not
be subject to the claims of creditors of the Participant or to execution by
attachment or garnishment or any other legal or equitable proceeding or process.
7.5 No Limit on Other Compensation Arrangements. Nothing contained in this Plan
shall prevent the Company or any Subsidiary from adopting or continuing in
effect other or additional compensation arrangements. A Participant may have
other targets under other plans of the Company. However, no payment under any
other plan or arrangement shall be contingent upon failure to attain the
criteria for payment of an Incentive Bonus under this Plan.
7.6 Withholding and Payroll Taxes. The Company shall deduct from any payment
made under this Plan all amounts required by federal, state, and local tax laws
to be withheld and shall subject any payments made under the Plan to all
applicable payroll taxes and assessments.
7.7 Incompetent Payee. If the Committee determines that an individual entitled
to a payment hereunder is incompetent, it may cause benefits to be paid to
another individual for the use or benefit of the Participant or Beneficiary at
the time or times otherwise payable hereunder, in total discharge of the Plan's
obligations to the Participant or Beneficiary.
7.8 Governing Law. The validity, construction, and effect of the Plan shall be
determined in accordance with the laws of the State of Michigan and applicable
federal law.
7.9 Severability. In the event any provision of the Plan shall be held illegal
or invalid for any reason, the remaining provisions of the Plan shall not be
affected, and the Plan shall be construed and enforced as if the illegal or
invalid provision had not been included.
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7.10 Construction. The singular includes the plural, and the plural includes the
singular, and terms connoting gender include both the masculine and feminine,
unless the context clearly indicates the contrary. Capitalized terms, except
those at the beginning of a sentence or part of a heading, have the meaning
defined in this Plan.
SECTION 8
Termination and Amendment
The Board may terminate the Plan at any time, or may from time to time amend the
Plan as it deems proper and in the best interests of the Company. No termination
or amendment may impair the validity of, or the obligation of the Company to
pay, any Incentive Bonus awarded for any Fiscal Year prior to the year in which
the termination or amendment is adopted or, if later, is effective. No amendment
adopted after the first 90 days of a Fiscal Year may directly or indirectly
increase the amount of any Incentive Bonus, or alter the objective criteria in a
manner which will increase any Incentive Bonus, for that Fiscal Year. Except as
otherwise provided in this Plan and the applicable objective criteria
established pursuant to this Plan for determining the amount of any Incentive
Bonus for a Fiscal Year, no Incentive Bonuses shall be payable for the Fiscal
Year in which the Plan is terminated, or, if later, in which the termination is
effective.
SECTION 9
Duration of the Plan
Subject to earlier termination by the Board, this Plan shall terminate without
action by the Board as of the date of the first meeting of the shareholders in
2002 unless reapproved by the shareholders at that meeting or any earlier
meeting. If reapproval occurs, the Plan will terminate as of the date of the
first meeting of the shareholders in the fifth year following reapproval and
each subsequent reapproval unless reapproved on or before the termination date.
If the Plan terminates under this provision due to lack of reapproval by the
shareholders, Incentive Bonuses shall not be paid for the Fiscal Year in which
the Plan terminates.
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APPENDIX B
OLD KENT FINANCIAL CORPORATION
EXECUTIVE STOCK INCENTIVE PLAN OF 1997
SECTION 1
Establishment of Plan; Purpose of Plan
1.1 Establishment of Plan. The Company hereby establishes the EXECUTIVE STOCK
INCENTIVE PLAN OF 1997 (the "Plan") for its corporate and Subsidiary officers
and other key employees. The Plan permits the grant and award of Stock Options,
Stock Appreciation Rights and Tax Benefit Rights.
1.2 Purpose of Plan. The purpose of the Plan is to provide officers and key
management employees of the Company and its Subsidiaries with an increased
incentive to make significant and extraordinary contributions to the long-term
performance and growth of the Company and its Subsidiaries, to join the
interests of officers and key employees with the interests of the Company's
shareholders through the opportunity for increased stock ownership and to
attract and retain officers and key employees of exceptional abilities. The Plan
is further intended to provide flexibility to the Company in structuring
long-term incentive compensation to best promote the foregoing objectives.
Within that context, the Plan is intended to provide performance-based
compensation under Section 162(m) of the Code and shall be interpreted,
administered and amended if necessary to achieve that purpose.
SECTION 2
Definitions
The following words have the following meanings unless a different meaning is
plainly required by the context:
2.1 "Act" means the Securities Exchange Act of 1934, as amended.
2.2 "Board" means the Board of Directors of the Company.
2.3 "Change in Control," unless otherwise defined in an Incentive Award
agreement, means an occurrence of a nature that would be required to be reported
in response to Item 6(e) of Schedule 14A of Regulation 14A issued under the Act.
Without limiting the inclusiveness of the definition in the preceding sentence,
a Change in Control of the Company shall be deemed to have occurred as of the
first day that any one or more of the following conditions is satisfied: (a) any
Person is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Act), directly or indirectly, of securities of the Company representing 25% or
more of the combined voting power of the Company's then outstanding securities;
(b) the failure at any time of the Continuing Directors to constitute at least a
majority of the Board; or (c) any of the following occur: (i) any merger or
consolidation of the Company, other than a merger or consolidation in which the
voting securities of the Company immediately prior to the merger or
consolidation continue to represent (either by remaining outstanding or being
converted into securities of the surviving entity) 60% or more of the combined
voting power of the Company or surviving entity immediately after the merger or
consolidation with another entity; (ii) any sale, exchange, lease, mortgage,
pledge, transfer or other disposition (in a single transaction or a series of
related transactions) of assets or earning power aggregating more than 50% of
the assets or earning
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power of the Company on a consolidated basis; (iii) any complete liquidation or
dissolution of the Company; (iv) any reorganization, reverse stock split or
recapitalization of the Company which would result in a Change in Control as
otherwise defined in this Plan; or (v) any transaction or series of related
transactions having, directly or indirectly, the same effect as any of the
foregoing.
2.4 "Code" means the Internal Revenue Code of 1986, as amended.
2.5 "Committee" means the Personnel Committee of the Board or such other
committee as the Board shall designate to administer the Plan. The Committee
shall consist of at least two members of the Board and all of its members shall
be "non-employee directors" as defined in Rule 16b-3 issued under the Act and
"outside directors" as defined in the regulations under Section 162(m) of the
Code.
2.6 "Common Stock" means the Common Stock of the Company, par value $1 per
share.
2.7 "Company" means Old Kent Financial Corporation, a Michigan corporation, and
its successors and assigns.
2.8 "Consensual Severance" means the voluntary termination of all employment by
the Participant with the Company or any of its Subsidiaries which the Committee
determines to be in the best interests of the Company.
2.9 "Continuing Directors" means the individuals who were either (a) first
elected or appointed as a director prior to August 1, 1996, or (b) subsequently
appointed as a director, if appointed or nominated by at least a majority of the
Continuing Directors in office at the time of the nomination or appointment, but
specifically excluding any individual whose initial assumption of office occurs
as a result of either an actual or threatened "election contest" (as the term is
used in Rule 14a-11 of Regulation 14A issued under the Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Board.
2.10 "Employee Benefit Plan" means any plan or program established by the
Company or a Subsidiary for the compensation or benefit of employees of the
Company or any of its Subsidiaries.
2.11 "Incentive Award" means the award or grant of a Stock Option, Stock
Appreciation Right or Tax Benefit Right to a Participant pursuant to the Plan.
2.12 "Market Value" shall equal the mean of the highest and lowest sales prices
of shares of Common Stock reported on The NASDAQ Stock Market (or any successor
exchange or system that is the primary stock exchange or system for trading of
Common Stock) on the date of grant, or if The Nasdaq Stock Market (or any such
successor) is closed on that date, the last preceding date on which The Nasdaq
Stock Market (or any such successor) was open for trading and on which shares of
Common Stock were traded.
2.13 "Participant" means a corporate officer or any key employee of the Company
or its Subsidiaries who is granted an Incentive Award under the Plan.
2.14 "Person" has the same meaning as set forth in Sections 13(d) and 14(d)(2)
of the Act.
2.15 "Retirement" means the voluntary termination of all employment by the
Participant after the Participant has attained 55 years of age and completed 10
years of service with the Company or any of its Subsidiaries or as otherwise may
be set forth in the Incentive Award agreement or other grant document with
respect to a Participant and a particular Incentive Award.
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2.16 "Stock Appreciation Right" means any right granted to a Participant
pursuant to Section 6 of the Plan.
2.17 "Stock Option" means the right to purchase Common Stock at a stated price
for a specified period of time. For purposes of the Plan, a Stock Option may be
either an incentive stock option within the meaning of Section 422(b) of the
Code or a nonqualified stock option.
2.18 "Subsidiary" means any corporation or other entity of which 50% or more of
the outstanding voting stock or voting ownership interest is directly or
indirectly owned or controlled by the Company or by one or more Subsidiaries of
the Company.
2.19 "Tax Benefit Right" means any right granted to a Participant pursuant to
Section 7 of the Plan.
SECTION 3
Administration
3.1 Power and Authority. The Committee shall administer the Plan. The Committee
may delegate record keeping, calculation, payment and other ministerial
administrative functions to individuals designated by the Committee, who may be
employees of the Company and its Subsidiaries. Except as limited in this Plan or
as may be necessary to assure that this Plan provides performance-based
compensation under Section 162(m) of the Code, the Committee shall have all of
the express and implied powers and duties set forth in this Plan, shall have
full power and authority to interpret the provisions of the Plan and Incentive
Awards granted under the Plan and shall have full power and authority to
supervise the administration of the Plan and Incentive Awards granted under the
Plan and to make all other determinations considered necessary or advisable for
the administration of the Plan. All determinations, interpretations and
selections made by the Committee regarding the Plan shall be final and
conclusive. The Committee shall hold its meetings at such times and places as it
deems advisable. Action may be taken by a written instrument signed by a
majority of the members of the Committee and any action so taken shall be fully
as effective as if it had been taken at a meeting duly called and held. The
Committee shall make such rules and regulations for the conduct of its business
as it deems advisable.
3.2 Grants or Awards to Participants. In accordance with and subject to the
provisions of the Plan, the Committee shall have the authority to determine all
provisions of Incentive Awards as the Committee may deem necessary or desirable
and as are consistent with the terms of the Plan, including, without limitation,
the following: (a) the persons who shall be selected as Participants; (b) the
nature and, subject to the limitation set forth in Section 4.2 of the Plan,
extent of the Incentive Awards to be made to each Participant (including the
number of shares of Common Stock to be subject to each Incentive Award, any
exercise price, the manner in which an Incentive Award will vest or become
exercisable and the form of payment for the Incentive Award); (c) the time or
times when Incentive Awards will be granted; (d) the duration of each Incentive
Award; and (e) the restrictions and other conditions to which payment or vesting
of Incentive Awards may be subject.
3.3 Amendments or Modifications of Awards. The Committee shall have the
authority to amend or modify the terms of any outstanding Incentive Award in any
manner, provided that the amended or modified terms are not prohibited by the
Plan as then in effect, including, without limitation, the authority to: (a)
modify the number of shares or other terms and conditions of an Incentive Award;
(b) extend the term of an Incentive Award; (c) accelerate the exercisability or
vesting or otherwise terminate any restrictions relating to an Incentive Award;
(d) accept the surrender of any outstanding Incentive
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Award; and (e) to the extent not previously exercised or vested, authorize the
grant of new Incentive Awards in substitution for surrendered Incentive Awards.
3.4 Indemnification of Committee Members. Neither any member or former member of
the Committee nor any individual to whom authority is or has been delegated
shall be personally responsible or liable for any act or omission in connection
with the performance of powers or duties or the exercise of discretion or
judgment in the administration and implementation of the Plan. Each person who
is or shall have been a member of the Committee shall be indemnified and held
harmless by the Company from and against any cost, liability or expense imposed
or incurred in connection with such person's or the Committee's taking or
failing to take any action under the Plan. Each such person shall be justified
in relying on information furnished in connection with the Plan's administration
by any appropriate person or persons.
SECTION 4
Shares Subject to the Plan
4.1 Number of Shares. Subject to adjustment as provided in Section 4.3 of the
Plan, a maximum of 1,000,000 shares of Common Stock shall be available for
Incentive Awards under the Plan. Such shares shall be authorized and may be
either unissued or treasury shares.
4.2 Limitation Upon Incentive Awards. No Participant shall be granted, during
any calendar year, Incentive Awards with respect to more than 10% of the total
number of shares of Common Stock available for Incentive Awards under the Plan
set forth in Section 4.1 of the Plan, subject to adjustment as provided in
Section 4.3 of the Plan. The purpose of this Section 4.2 is to ensure that the
Plan provides performance-based compensation under Section 162(m) of the Code
and this Section 4.2 shall be interpreted, administered and amended if necessary
to achieve that purpose.
4.3 Adjustments. If the number of shares of Common Stock outstanding changes by
reason of a stock dividend, stock split, recapitalization, merger,
consolidation, combination, exchange of shares or any other change in the
corporate structure or shares of the Company, the number and kind of securities
subject to and reserved under the Plan, together with applicable exercise
prices, shall be appropriately adjusted. No fractional shares shall be issued
pursuant to the Plan and any fractional shares resulting from adjustments shall
be eliminated from the respective Incentive Awards, with an appropriate cash
adjustment for the value of any Incentive Awards eliminated. If an Incentive
Award is canceled, surrendered, modified, exchanged for a substitute Incentive
Award or expires or terminates during the term of the Plan but prior to the
exercise or vesting of the Incentive Award in full, the shares subject to but
not delivered under such Incentive Award shall be available for other Incentive
Awards. If shares subject to and otherwise deliverable upon the exercise of an
Incentive Award are surrendered to the Company in connection with the exercise
of an Incentive Award, the surrendered shares subject to the Incentive Award
shall be available for other Incentive Awards.
SECTION 5
Stock Options
5.1 Grant. A Participant may be granted one or more Stock Options under the
Plan. The Committee, in its discretion, may provide in the initial grant of a
Stock Option for the subsequent automatic grant of additional Stock Options for
the number of shares that are subject to the initial Stock Option and
surrendered to the Company in connection with the exercise of the initial or any
subsequently granted
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Stock Option. Stock Options shall be subject to such terms and conditions,
consistent with the other provisions of the Plan, as may be determined by the
Committee in its sole discretion. In addition, the Committee may vary, among
Participants and among Stock Options granted to the same Participant, any and
all of the terms and conditions of the Stock Options granted under the Plan.
Subject to the limitation imposed by Section 4.2 of the Plan, the Committee
shall have complete discretion in determining the number of Stock Options
granted to each Participant. The Committee may designate whether or not a Stock
Option is to be considered an incentive stock option as defined in Section
422(b) of the Code.
5.2 Stock Option Agreements. Stock Options shall be evidenced by stock option
agreements containing such terms and conditions, consistent with the provisions
of the Plan, as the Committee shall from time to time determine. To the extent
not covered by the stock option agreement, the terms and conditions of this
Section 5 shall govern.
5.3 Stock Option Price. The per share Stock Option price shall be determined by
the Committee, but shall be a price that is equal to or higher than the par
value of the Company's Common Stock; provided, that the per share Stock Option
price for any shares designated as incentive stock options shall be equal to or
greater than 100% of the Market Value on the date of grant.
5.4 Medium and Time of Payment. The exercise price for each share purchased
pursuant to a Stock Option granted under the Plan shall be payable in cash or,
if the Committee consents, in shares of Common Stock (including Common Stock to
be received upon a simultaneous exercise) or other consideration substantially
equivalent to cash. The time and terms of payment may be amended with the
consent of a Participant before or after exercise of a Stock Option. The
Committee may from time to time authorize payment of all or a portion of the
Stock Option price in the form of a promissory note or other deferred payment
installments according to such terms as the Committee may approve. The Board may
restrict or suspend the power of the Committee to permit such loans and may
require that adequate security be provided.
5.5 Stock Options Granted to Ten Percent Shareholders. No Stock Option granted
to any Participant who at the time of such grant owns, together with stock
attributed to such Participant under Section 424(d) of the Code, more than 10%
of the total combined voting power of all classes of stock of the Company or any
of its Subsidiaries may be designated as an incentive stock option, unless such
Stock Option provides an exercise price equal to at least 110% of the Market
Value of the Common Stock and the exercise of the Stock Option after the
expiration of five years from the date of grant of the Stock Option is
prohibited by its terms.
5.6 Limits on Exercisability. Stock Options shall be exercisable for such
periods, not to exceed 10 years from the date of grant, as may be fixed by the
Committee. At the time of the exercise of a Stock Option, the holder of the
Stock Option, if requested by the Committee, must represent to the Company that
the shares are being acquired for investment and not with a view to the
distribution thereof. The Committee may in its discretion require a Participant
to continue the Participant's service with the Company and its Subsidiaries for
a certain length of time prior to a Stock Option becoming exercisable and may
eliminate such delayed vesting provisions.
5.7 Restrictions on Transferability.
(a) General. Unless the Committee otherwise consents (before or after the
option grant) or unless the stock option agreement or grant provides
otherwise; (i) no incentive stock options granted under the Plan may be
sold, exchanged, transferred, pledged, assigned or otherwise alienated or
hypothecated except by will or the laws of descent and distribution; and
(ii) all Stock Options that are not incentive stock options may be
transferred, provided, that as a condition to any
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such transfer the transferee must execute a written agreement permitting
the Company to withhold from the shares subject to the Stock Option a
number of shares having a market value at least equal to the amount of any
federal, state or local withholding or other taxes associated with or
resulting from the exercise of the Stock Option. All provisions of a Stock
Option which are determined with reference to the Participant, including
without limitation those which refer to the Participant's employment with
the Company or its Subsidiaries, shall continue to be determined with
reference to the Participant after any transfer of a Stock Option.
(b) Other Restrictions. The Committee may impose other restrictions on any
shares of Common Stock acquired pursuant to the exercise of a Stock Option
under the Plan as the Committee deems advisable, including, without
limitation, restrictions under applicable federal or state securities laws.
5.8 Termination of Employment.
(a) General. If a Participant is no longer employed by the Company or its
Subsidiary for any reason other than the Participant's Consensual
Severance, Retirement, death, disability or termination for cause, the
Participant may exercise his or her Stock Options in accordance with their
terms for a period of 3 months after such termination of employment unless
the terms of the applicable stock option agreement or grant provide
otherwise, but only to the extent the Participant was entitled to exercise
the Stock Options on the date of termination. For purposes of the Plan: (i)
a transfer of an employee from the Company to any Subsidiary; (ii) a leave
of absence, duly authorized in writing by the Company, for military service
or for any other purpose approved by the Company if the period of such
leave does not exceed 90 days; and (iii) a leave of absence in excess of 90
days, duly authorized in writing by the Company, provided the employee's
right to reemployment is guaranteed either by statute or contract, shall
not be deemed a termination of employment. For purposes of the Plan,
termination of employment shall be considered to occur on the date on which
the employee is no longer obligated to perform services for the Company or
any of its Subsidiaries and the employee's right to reemployment is not
guaranteed either by statute or contract, regardless of whether the
employee continues to receive compensation from the Company or any of its
Subsidiaries after such date.
(b) Consensual Severance. If a Participant ceases to be employed by the
Company or one of its Subsidiaries due to Consensual Severance, the
Committee may, in its sole discretion, permit the Participant to exercise
his or her Stock Options in accordance with their terms and to the extent
that the Participant was entitled to exercise the Stock Options on the date
of termination for a period of time after such termination of employment as
may be determined by the Committee, provided, that such period may not
extend beyond the earlier of 3 years after the date of termination or the
dates on which such Stock Options expire by their terms.
(c) Retirement. If a Participant ceases to be employed by the Company or
one of its Subsidiaries due to Retirement, the Participant may exercise his
or her Stock Options in accordance with their terms for a period of 3 years
after such termination of employment unless such Stock Options earlier
expire by their terms, but only to the extent that the Participant was
entitled to exercise the Stock Options on the date of termination.
(d) Disability. If a Participant ceases to be employed by the Company or
one of its Subsidiaries due to the Participant's disability, he or she may
exercise his or her Stock Options in accordance with their terms for 1 year
after he or she ceases to be employed unless such Stock Options earlier
expire by their terms, but only to the extent that the Participant was
entitled to exercise the Stock Options on the date of such termination.
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(e) Death. If a Participant dies either while an employee or otherwise
during a time when the Participant could have exercised a Stock Option, the
Stock Options issued to such Participant shall be exercisable in accordance
with their terms by the personal representative of such Participant or
other successor to the interest of the Participant for a period of 1 year
after such Participant's death to the extent that the Participant was
entitled to exercise the Stock Options on the date of death but not beyond
the original term of the Stock Options.
(f) Termination for Cause. If a Participant's employment is terminated for
cause, the Participant shall have no further right to exercise any Stock
Options previously granted him or her.
SECTION 6
Stock Appreciation Rights
6.1 Grant. A Participant may be granted one or more Stock Appreciation Rights
under the Plan and such Stock Appreciation Rights shall be subject to such terms
and conditions, consistent with the other provisions of the Plan, as shall be
determined by the Committee in its sole discretion. A Stock Appreciation Right
may relate to a particular Stock Option and may be granted simultaneously with
or subsequent to the Stock Option to which it relates. Stock Appreciation Rights
shall be subject to the same restrictions and conditions as Stock Options under
subsections 5.6, 5.7 and 5.8 of the Plan. To the extent granted in tandem with a
Stock Option, the exercise of a Stock Appreciation Right shall, in exchange for
the right to exercise a related Stock Option, entitle a Participant to an amount
equal to the appreciation in value of the shares covered by the related Stock
Option surrendered. Such appreciation in value shall be equal to the excess of
the Market Value of such shares at the time of the exercise of the Stock
Appreciation Right over the option price of such shares.
6.2 Exercise; Payment. To the extent granted in tandem with a Stock Option,
Stock Appreciation Rights may be exercised only when a related Stock Option
could be exercised and only when the Market Value of the stock subject to the
Stock Option exceeds the exercise price of the Stock Option. The Committee shall
have discretion to determine the form of payment made upon the exercise of a
Stock Appreciation Right, which may take the form of shares of Common Stock.
SECTION 7
Tax Benefit Rights
7.1 Grant. A Participant may be granted Tax Benefit Rights under the Plan to
encourage a Participant to exercise Stock Options and provide certain tax
benefits to the Company. A Tax Benefit Right entitles a Participant to receive
from the Company or a Subsidiary a cash payment not to exceed the amount
calculated by multiplying the ordinary income, if any, realized by the
Participant for federal tax purposes as a result of the exercise of a
nonqualified stock option, or the disqualifying disposition of shares acquired
under an incentive stock option, by the maximum federal income tax rate
(including any surtax or similar charge or assessment) for corporations, plus
the applicable state and local tax imposed on the exercise of the Stock Option
or the disqualifying disposition.
7.2 Restrictions. A Tax Benefit Right may be granted only with respect to a
stock option issued and outstanding or to be issued under the Plan or any other
plan of the Company or its Subsidiaries that has been approved by the
shareholders as of the date of the Plan and may be granted concurrently with or
after the grant of the stock option. Such rights with respect to outstanding
stock options shall be issued only with the consent of the Participant if the
effect would be to disqualify an incentive stock option,
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change the date of grant or the exercise price or otherwise impair the
Participant's existing stock options.
7.3 Terms and Conditions. The Committee shall determine the terms and conditions
of any Tax Benefit Rights granted and the Participants to whom such rights will
be granted with respect to stock options under the Plan or any other plan of the
Company. The Committee may amend, cancel, limit the term of or limit the amount
payable under a Tax Benefit Right at any time prior to the exercise of the
related Stock Option, unless otherwise provided under the terms of the Tax
Benefit Right. The net amount of a Tax Benefit Right, subject to withholding,
may be used to pay a portion of the Stock Option price, unless otherwise
provided by the Committee.
SECTION 8
Change in Control
Without in any way limiting the Committee's discretion, the Committee may
include in any Incentive Award provisions for acceleration of any vesting or
other similar requirements or for the elimination of any restrictions upon
Incentive Awards upon a Change in Control of the Company. The Committee may also
include provisions for Participants to receive cash in lieu of outstanding Stock
Options upon a Change in Control of the Company.
SECTION 9
General Provisions
9.1 No Rights to Awards. No Participant or other person shall have any claim to
be granted any Incentive Award under the Plan and there is no obligation of
uniformity of treatment of employees, Participants or holders or beneficiaries
of Incentive Awards under the Plan. The terms and conditions of Incentive Awards
of the same type and the determination of the Committee to grant a waiver or
modification of any Incentive Award and the terms and conditions thereof need
not be the same with respect to each Participant.
9.2 Withholding. The Company or a Subsidiary shall be entitled to (a) withhold
and deduct from future wages of a Participant (or from other amounts that may be
due and owing to a Participant from the Company or a Subsidiary), or make other
arrangements for the collection of, all amounts necessary to satisfy any and all
federal, state and local withholding and employment-related tax requirements
attributable to an Incentive Award or any action related to an Incentive Award,
including, without limitation, the grant, exercise or vesting of, or payment of
dividends with respect to, an Incentive Award or a disqualifying disposition of
Common Stock received upon exercise of an incentive stock option; or (b) require
a Participant promptly to remit the amount of such withholding to the Company
before taking any action with respect to an Incentive Award. Unless the
Committee determines otherwise, withholding may be satisfied by withholding
Common Stock to be received upon exercise or by delivery to the Company of
previously owned Common Stock. The Company may establish such rules and
procedures concerning timing of any withholding election as it deems
appropriate.
9.3 Compliance With Laws; Listing and Registration of Shares. All Incentive
Awards granted under the Plan (and all issuances of Common Stock or other
securities under the Plan) shall be subject to all applicable laws, rules and
regulations and to the requirement that if at any time the Committee shall
determine, in its discretion, that the listing, registration or qualification of
the shares covered thereby upon any securities exchange or under any state or
federal law, or the consent or approval of any
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governmental regulatory body, is necessary or desirable as a condition of, or in
connection with, the grant of such Incentive Award or the issue or purchase of
shares thereunder, such Incentive Award may not be exercised in whole or in
part, or the restrictions on such Incentive Award shall not lapse, unless and
until such listing, registration, qualification, consent or approval shall have
been effected or obtained free of any conditions not acceptable to the
Committee.
9.4 No Limit on Other Compensation Arrangements. Nothing contained in the Plan
shall prevent the Company or any Subsidiary from adopting or continuing in
effect other or additional compensation arrangements, including the grant of
stock options and other stock-based awards and such arrangements may be either
generally applicable or applicable only in specific cases.
9.5 No Right to Employment. The grant of an Incentive Award shall not be
construed as giving a Participant the right to be retained in the employ of the
Company or any Subsidiary. The Company or any Subsidiary may at any time dismiss
a Participant from employment, free from any liability or any claim under the
Plan, unless otherwise expressly provided in the Plan or in any written
agreement with a Participant.
9.6 Suspension of Rights under Incentive Awards. The Company, by written notice
to a Participant, may suspend a Participant's and any transferee's rights under
any Incentive Award for a period not to exceed 30 days while the termination for
cause of that Participant's employment with the Company and its Subsidiaries is
under consideration.
9.7 Governing Law. The validity, construction and effect of the Plan and any
rules and regulations relating to the Plan shall be determined in accordance
with the laws of the State of Michigan and applicable federal law.
9.8 Severability. In the event any provision of the Plan shall be held illegal
or invalid for any reason, the illegality or invalidity shall not affect the
remaining provisions of the Plan and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
SECTION 10
Termination and Amendment
The Board may terminate the Plan at any time, or may from time to time amend the
Plan as it deems proper and in the best interests of the Company, provided that
no such amendment may impair any outstanding Incentive Award without the consent
of the Participant, except according to the terms of the Plan or the Incentive
Award. No termination, amendment or modification of the Plan shall become
effective with respect to any Incentive Award previously granted under the Plan
without the prior written consent of the Participant holding such Incentive
Award unless such amendment or modification operates solely to the benefit of
the Participant.
SECTION 11
Effective Date and Duration of the Plan
This Plan shall take effect April 21, 1997, subject to approval by the
shareholders at the 1997 Annual Meeting of Shareholders or any adjournment
thereof or at a Special Meeting of Shareholders. No Incentive Award shall be
granted under the Plan after April 20, 2007.
B-9
<PAGE> 42
[FRONT]
OLD KENT FINANCIAL CORPORATION
PROXY 111 Lyon Street NW, Grand Rapids, Michigan 49503
ANNUAL MEETING OF SHAREHOLDERS - APRIL 21, 1997
The undersigned shareholder appoints David J. Wagner, B.P. Sherwood,
III, and Mary E. Tuuk, or any of them, each with the power to appoint his or her
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 that 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 AND FOR APPROVAL OF
EACH PROPOSAL IDENTIFIED ON THIS PROXY. THE SHARES REPRESENTED BY THIS PROXY
WILL BE VOTED IN THE DISCRETION OF THE PROXIES ON ANY OTHER MATTERS THAT MAY
COME BEFORE THE MEETING.
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_______________,1997
OLD KENT
FINANCIAL CORPORATION
Annual Shareholders' Meeting
This year's annual meeting of shareholders will be held at 10:00 a.m. on
Monday, April 21, 1997, in the Pantlind Ballroom at the Amway Grand Plaza Hotel
in Grand Rapids, Michigan.
A map and complimentary parking pass are included on the card at right.
Please remove this panel and the parking pass before mailing your completed
proxy in the postage-paid return envelope provided.
OLD KENT
Parking Pass
Please present this ticket to the attendant at either of the following lots:
- - Old Kent Bank Parking Lot
(adjacent to the bank, entrances on Monroe and Ottawa Avenues)
- - Amway Grand Plaza Hotel Valet Parking
(Pearl Street entrance)
Old Kent Financial Corporation
Annual Shareholders' Meeting
Monday, April 21, 1997
10:00 A.M.
Pantlind Ballroom
Amway Grand Plaza Hotel
187 Monroe Avenue NW
Grand Rapids, Michigan
Please see map on back.
<PAGE> 43
[BACK]
1. Election of Directors.
<TABLE>
<CAPTION>
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to
(except as indicated below) vote for all nominees listed below
<S> <C> <C> <C>
Richard L. Antonini
Michael J. Jandernoa
William P. Crawford
Fred P. Keller
William G. Gonzalez
Hendrik G. Meijer YOUR BOARD OF DIRECTORS
James P. Hackett
Patrick M. Quinn RECOMMENDS THAT YOU VOTE FOR
Erina Hanka
Marilyn J. Schlack ALL NOMINEES.
Earl D. Holton
B. P. Sherwood, III
Robert L. Hooker
Margaret Sellers Walker
</TABLE>
(Instruction: To withhold authority for any individual nominee, write that
nominee's name in the space provided below.)
<TABLE>
<CAPTION>
2. Proposal to Approve the Executive Incentive Bonus Plan.
<S> <C> <C> <C>
[ ] VOTE FOR YOUR BOARD OF DIRECTORS RECOMMENDS
[ ] VOTE AGAINST THAT YOU VOTE FOR THIS PROPOSAL.
[ ] ABSTAIN
</TABLE>
<TABLE>
<CAPTION>
3. Proposal to Approve the Executive Stock Incentive Plan of 1997.
<S> <C> <C> <C>
[ ] VOTE FOR YOUR BOARD OF DIRECTORS RECOMMENDS
[ ] VOTE AGAINST THAT YOU VOTE FOR THIS PROPOSAL.
[ ] ABSTAIN
</TABLE>
IMPORTANT! PLEASE DATE AND SIGN THE OTHER SIDE.
