<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
MBNA Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
[MBNA CORPORATION LOGO]
MBNA CORPORATION
WILMINGTON, DELAWARE 19884
------------------------------
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
------------------------------
The 1999 Annual Meeting of the Stockholders of MBNA Corporation will be
held at the Corporation's international headquarters located at 1100 North King
Street, Wilmington, Delaware on April 26, 1999 at 11:00 a.m., for the following
purposes:
1. To elect seven directors to serve until the next annual meeting and
until their successors are elected and qualify;
2. To consider and act upon a proposal to amend the 1997 Long Term
Incentive Plan to provide for additional shares for grants and to place
certain restrictions on grants made under the Plan;
3. To consider and act upon a stockholder proposal, opposed by the Board of
Directors, which is described in the accompanying proxy statement; and
4. To transact whatever other business may properly be brought before the
meeting.
Only holders of record of the Corporation's common stock at the close of
business on February 26, 1999 are entitled to notice of and to vote at the
meeting.
Stockholders of record as of the record date will be admitted to the Annual
Meeting upon presentation of identification. Stockholders who own stock
beneficially through a bank, broker or otherwise, will be admitted to the annual
meeting upon presentation of identification and proof of ownership or a valid
proxy signed by the record holder. A recent brokerage statement or a letter from
a bank or broker are examples of proof of ownership.
John W. Scheflen
Secretary
March 19, 1999
PLEASE MARK, SIGN, DATE, AND RETURN PROMPTLY THE ENCLOSED PROXY IN THE ENCLOSED
ENVELOPE EVEN IF YOU PLAN TO ATTEND THE MEETING. IF YOU ATTEND THE MEETING AND
WISH TO VOTE IN PERSON, YOU MAY THEN WITHDRAW YOUR PROXY.
<PAGE> 3
MBNA CORPORATION
WILMINGTON, DELAWARE 19884
------------------------------
PROXY STATEMENT
------------------------------
This Proxy Statement is furnished in connection with the solicitation by
MBNA Corporation (the "Corporation") of proxies to be voted at its Annual
Meeting of Stockholders to be held at 11:00 a.m. on April 26, 1999, at the
Corporation's international headquarters located at 1100 North King Street,
Wilmington, Delaware and at any adjournment thereof. This Proxy Statement was
first mailed or given to holders of the Corporation's common stock on March 19,
1999.
Solicitation of proxies may be made by mail, personal interview, telephone
and fax by directors, officers and employees of the Corporation. The Corporation
has retained Morrow & Co., Inc. to assist in the solicitation of proxies for a
fee of up to $7,500 plus reimbursement of expenses. Expenses for such
solicitation will be borne by the Corporation. Brokers and others will be
reimbursed for their reasonable expenses in forwarding the proxy material to
their customers who have beneficial interests in the common stock of the
Corporation registered in names of nominees.
Any proxy may be revoked by a stockholder at any time prior to its use by
execution of another proxy bearing a later date, by written notice to the
Secretary of the Corporation at the address set forth above or by oral or
written statement at the meeting. Shares represented by any proxy properly
executed and received prior to the meeting will be voted at the meeting in
accordance with the proxy or, if the proxy does not specify, in accordance with
the recommendation of the Board of Directors.
Only holders of record of the Corporation's common stock at the close of
business on February 26, 1999 are entitled to notice of and to vote at the
meeting. On the record date the Corporation had 801,781,250 shares of common
stock outstanding. Each share of common stock outstanding on the record date is
entitled to one vote. There is no provision for cumulative voting.
A quorum for the meeting requires the presence in person or by proxy of
stockholders entitled to cast a majority of the votes entitled to be cast at the
meeting. The election of directors requires a plurality of the votes cast at the
meeting. The approval of the amendment to the 1997 Long Term Incentive Plan
requires the affirmative vote of a majority of the votes cast at the meeting
(provided that at least 50% of the shares entitled to vote are voted). The
approval of the stockholder proposal requires the affirmative vote of a majority
of the votes cast at the meeting.
Stockholders will vote at the meeting by ballot and votes cast at the
meeting in person or by proxy will be tallied by the Corporation's transfer
agent. Shares held by stockholders present at the meeting in person who do not
vote and ballots marked "abstain" or "withheld" will be counted as present at
the meeting for quorum purposes, but will not be considered to be voted at the
meeting. "Broker non-votes" (i.e., shares represented by proxies, received from
a broker or nominee, indicating that the broker or nominee has not voted the
shares on a matter with respect to which the broker or nominee does not have
discretionary voting power) will be treated as abstentions -- present at the
meeting, but not voted.
All common stock share numbers and prices included herein have been
adjusted to reflect the three-for-two split of the Corporation's common stock
effected as a dividend paid October 1, 1998 to stockholders of record on
September 15, 1998.
1
<PAGE> 4
SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of February 26, 1999, with
respect to beneficial ownership of shares of the Corporation's common stock by
each nominee for director, by each named executive officer, by all directors and
executive officers as a group, and by each person known to the Corporation to
own beneficially 5% or more of the common stock.
MANAGEMENT
<TABLE>
<CAPTION>
PERCENT OF
NAME NUMBER OF SHARES OUTSTANDING
---- ---------------- -----------
<S> <C> <C>
Alfred Lerner(1)............................................ 104,660,902 13%
Wilmington, Delaware 19884
James H. Berick, Esq.(2).................................... 298,526 *
Charles M. Cawley(3)........................................ 3,575,369 *
Benjamin R. Civiletti, Esq.(4).............................. 205,377 *
John R. Cochran, III(5)..................................... 3,843,417 *
Bruce L. Hammonds(6)........................................ 2,815,756 *
M. Scot Kaufman(7).......................................... 2,271,520 *
Randolph D. Lerner, Esq.(8)................................. 278,277 *
Stuart L. Markowitz, M.D.(9)................................ 1,011,719 *
Michael Rosenthal, Ph.D.(10)................................ 281,763 *
All directors and executive officers as a group(11)......... 127,395,616 15%
INVESTMENT ADVISOR(12)
Alliance Capital Management L.P. and affiliates (13)........ 70,726,958 9%
1290 Avenue of the Americas
New York, New York 10104
</TABLE>
- ------------------------------
* Less than 1% of the shares outstanding.
(1) Includes 1,629,647 restricted shares of which 919,397 were issued in full
payment of Mr. Lerner's prior years' bonuses at his request. See "Executive
Compensation -- Summary Compensation Table." Also includes 6,843,750 shares
subject to options exercisable within 60 days; does not include 1,125,000
shares subject to options exercisable at later dates.
(2) Includes 278,276 shares subject to options exercisable within 60 days; does
not include 53,099 shares owned by Mr. Berick's wife and sons as to which
Mr. Berick disclaims beneficial ownership.
(3) Includes 922,410 restricted shares, 2,445,451 shares subject to options
exercisable within 60 days and 107,700 shares with shared voting and
investment power, which shares are held by a private foundation of which Mr.
Cawley is a trustee and president; does not include 1,216,127 shares subject
to options exercisable at later dates.
(4) Includes 202,340 shares subject to options exercisable within 60 days.
(5) Includes 532,048 restricted shares and 3,175,971 shares subject to options
exercisable within 60 days; does not include 1,100,250 shares subject to
options exercisable at later dates.
(6) Includes 548,548 restricted shares and 2,151,918 shares subject to options
exercisable within 60 days; does not include 1,100,250 shares subject to
options exercisable at later dates.
(7) Includes 376,947 restricted shares and 38,250 shares owned by Mr. Kaufman's
wife, 7,593 shares owned by his daughter, 7,593 shares owned by his son, and
1,594,438 shares subject to options exercisable within 60 days; does not
include 968,625 shares subject to options exercisable at later dates.
2
<PAGE> 5
(8) Includes 202,340 shares subject to options exercisable within 60 days.
(9) Includes 731,925 shares owned by Dr. Markowitz' wife and 278,276 shares
subject to options exercisable within 60 days.
(10) Includes 272,651 shares subject to options exercisable within 60 days; does
not include 13,668 shares owned by Dr. Rosenthal's wife as to which Dr.
Rosenthal disclaims beneficial ownership.
(11) Reflects shares beneficially owned by the ten directors and officers named
and by ten other executive officers. Includes 5,784,960 restricted shares
and 23,179,779 shares subject to options exercisable within 60 days; does
not include 14,393,437 shares subject to options exercisable at later
dates. Includes 115,292 shares with shared voting and investment power.
With respect to the restricted shares, the holder has sole voting power and
no investment power. Unless otherwise indicated, all other shares are owned
with sole voting and investment powers. No director or executive officer of
the Corporation beneficially owns any shares of the Corporation's preferred
stock.
(12) The beneficial owner in this category has provided a Schedule 13G to the
Corporation in which it certified that it acquired the shares of the
Corporation's common stock in the ordinary course of business and not for
the purpose of changing or influencing the control of the Corporation.
(13) According to their report on Schedule 13G, as of December 31, 1998,
Alliance Capital Management L.P. ("Alliance") and certain affiliates of
Alliance (together with their parent corporations The Equitable Companies
Incorporated, AXA, and certain AXA affiliates) were deemed to own in the
aggregate 141,567,837 shares, or 19%, including 2,281,825 shares with
respect to which they have the right to acquire beneficial ownership, of
the Corporation's common stock primarily held for investment advisory
clients. Under the ownership reporting rules of the Securities Exchange Act
of 1934, an entity is deemed to own shares if it has the power to vote or
dispose of the shares even if it has no economic interest in the shares.
The table includes 70,726,958 shares which the reporting persons had sole
power to vote. In addition, according to the Schedule 13G, the reporting
persons had no power to vote 33,707,922 shares, shared power to vote
37,132,957 shares, sole power to dispose of 141,497,334 shares, shared
power to dispose of 61,748 shares, and no power to dispose of 8,755 shares.
3
<PAGE> 6
ELECTION OF DIRECTORS
The Board of Directors has proposed seven nominees for election as
directors to serve for the coming year and until their successors are elected
and qualify. All of the nominees are currently directors of the Corporation.
Shares represented by proxies will be voted for the election of the nominees
named below unless authority to do so is withheld. The Board does not intend to
select another nominee if any current nominee should be unable to serve. All of
the Corporation's directors also serve as directors of MBNA America Bank, N.A.
(the "Bank"), the Corporation's principal subsidiary.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------ --- --------------------------------------------------------
<S> <C> <C>
Alfred Lerner 65 Chairman and Chief Executive Officer of the Corporation
Charles M. Cawley 58 President of the Corporation; Chairman and Chief
Executive Officer of the Bank
James H. Berick, Esq. 65 Chairman, Berick, Pearlman & Mills Co., L.P.A.,
attorneys
Benjamin R. Civiletti, Esq. 63 Chairman, Venable, Baetjer and Howard, LLP, attorneys
Randolph D. Lerner, Esq. 37 Partner, Securities Advisors, L.P., investments
management
Stuart L. Markowitz, M.D. 51 Internist and Managing Partner, Drs. Markowitz,
Rosenberg, Stein & Associates, physicians
Michael Rosenthal, Ph.D. 61 Professor of English, Columbia University
</TABLE>
Mr. Alfred Lerner has been Chief Executive Officer of MBNA Corporation and
Chairman of its Board of Directors since January 1991 and a director of the Bank
since December 1991. Mr. Lerner served as Chairman of the Board and Chief
Executive Officer of MNC Financial, Inc. ("MNC Financial") from September 1990
to July 1991 and as Chairman of the Board from July 1991 to October 1993. He
also served as Chairman of the Board of Equitable Bancorporation from July 1983
until it merged with MNC Financial in January 1990. He has been Chairman of The
Town and Country Trust since August 1993 and was Chief Executive Officer from
August 1993 to October 1997. He has been Chairman and owner of the Cleveland
Browns since October 1998. A graduate of Columbia University and Vice Chairman
of its Board of Trustees, Mr. Lerner also is President of the Cleveland Clinic
Foundation and a member of its Board of Trustees. He is also a trustee of Case
Western Reserve University and a member of the Board of Directors of the Marine
Corps Law Enforcement Foundation.
Mr. Cawley has been President and a director of the Corporation and
Chairman and Chief Executive Officer of the Bank since January 1991. He was the
senior operating executive that formed the Bank in 1982. He has served as Chief
Executive Officer of the Bank since 1990, and as President since 1985. He has
been a director of the Bank since 1982. He serves on the Boards of Georgetown
University, the University of Delaware, the Eisenhower Exchange Fellowships, the
American Architectural Foundation and the Marine Corps Law Enforcement
Foundation. He is Chairman of the Board of the Grand Opera House in Wilmington,
Delaware.
Mr. Berick has been a director of the Corporation since January 1991 and a
director of the Bank since April 1991. He has been Chairman of Berick, Pearlman
& Mills Co., L.P.A. since July 1986. He is a director of The Town and Country
Trust. He was a director of Equitable Bancorporation from 1984 until January
1990, when it merged into MNC Financial, of Equitable Bank, N.A. from 1984 to
July 1990, when it merged into Maryland National Bank, and of Maryland National
Bank from July 1990 to January 1991.
Mr. Civiletti has been a director of the Corporation and the Bank since
April 1993. He served as Managing Partner of Venable, Baetjer and Howard, LLP,
from 1987 to 1993 and Chairman since
4
<PAGE> 7
1993. He was Attorney General of the United States from 1979 to 1981. He is
Chairman of the Board of GBMC Healthcare, Inc., and a director of Bethlehem
Steel Corporation, Wackenhut Corrections Corporation and The Wackenhut
Corporation.
Mr. Randolph D. Lerner has been a director of the Corporation and the Bank
since April 1993. He is a partner in Securities Advisors, L.P., the successor to
R.D. Lerner Securities, Inc., which he has managed since September 1991. He is
Chairman of the Board of Trustees of the New York Academy of Art, and a member
of the Boards of Trustees of the Hospital for Special Surgery in New York City
and the New York Legal Assistance Group. He is a member of the District of
Columbia and New York Bar Associations and is Alfred Lerner's son.
Dr. Markowitz has been a director of the Corporation and the Bank since
April 1991. He is an internist and Managing Partner of Drs. Markowitz,
Rosenberg, Stein & Associates, a private medical practice, and is Clinical
Professor at Case Western Reserve University, College of Medicine, where he has
taught since 1976. He is a member of the Medical Board and a volunteer physician
for The Jewish Children's Bureau in Cleveland.
Dr. Rosenthal has been a director of the Corporation and the Bank since
April 1991. He has taught at Columbia University since 1964, served as Associate
Dean responsible for academic administration from 1972 to 1989 and has been
Professor of English since 1989. He is a member of the Authors Guild.
Mr. Civiletti (Chairman) and Drs. Markowitz and Rosenthal serve as the
Audit Committee. Mr. Berick (Chairman), Mr. Civiletti, and Drs. Markowitz and
Rosenthal serve as the Compensation Committee, and Drs. Markowitz and Rosenthal
serve as the Stock Option Committee. The Audit Committee supervises the
Corporation's internal corporate auditors, approves the selection of independent
auditors, reviews the scope of services and reports of the independent auditors
and reviews financial reports with management and the independent auditors. The
Compensation Committee approves the compensation of the Corporation's senior
executives and administers the Senior Executive Performance Plan. The Stock
Option Committee administers the Corporation's 1991 and 1997 Long Term Incentive
Plans.
During 1998, the Board of Directors held ten meetings, the Audit Committee
held five meetings, the Compensation Committee held one meeting and the Stock
Option Committee held one meeting. Each of the directors attended at least 75%
of the board and applicable committee meetings held during 1998.
The directors of the Corporation who are not officers each received $40,000
for their services in 1998, and $1,500 for each meeting of the Board of
Directors or committee attended. Directors who are not officers of the
Corporation may elect to defer their annual retainer and meeting fees pursuant
to the Corporation's deferred compensation plan.
During 1998, each director who is not an officer received an option for
5,000 shares of the Corporation's common stock pursuant to the Corporation's
1997 Long Term Incentive Plan. Under the 1997 Plan, each director who is not an
officer receives an option for 5,000 shares of common stock upon election to the
Board and on January 2 of each year thereafter. The exercise price of the
options is the fair market value of the common stock on the grant date. The
options are exercisable immediately and have a term of ten years but expire
sooner if the holder ceases to be a director.
The election of directors requires a plurality of the votes cast at the
meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH NOMINEE FOR DIRECTOR.
5
<PAGE> 8
EXECUTIVE COMPENSATION
The following table sets forth information concerning compensation paid or
accrued to the Corporation's Chairman and Chief Executive Officer and the four
other most highly compensated executives of the Corporation for services to the
Corporation in 1996, 1997 and 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------------- -----------------------
AWARDS
-----------------------
OTHER NUMBER OF
ANNUAL SECURITIES ALL OTHER
COMPEN- RESTRICTED UNDERLYING COMPEN-
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS SATION(1)(2) SHARES(3) OPTIONS SATION(4)
- --------------------------------------- ---- ---------- ---------- ------------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Alfred Lerner 1998 $1,500,000 $3,000,000* $ 0 $1,255,000 600,000 $ 0
Chairman and Chief Executive Officer 1997 1,500,000 3,000,000* 0 1,563,750 1,125,000 0
of the Corporation 1996 1,515,000 3,000,000 0 1,585,000 675,000 0
Charles M. Cawley 1998 1,500,000 3,000,000 344,122 1,255,000 600,000 352,703
President of the Corporation; 1997 1,500,000 3,000,000 122,929 1,563,750 1,125,000 353,083
Chairman and Chief Executive 1996 1,515,000 3,000,000 71,465 1,585,000 675,000 135,550
Officer of the Bank
John R. Cochran III 1998 1,000,000 2,000,000 143,055 1,255,000 375,000 158,012
Senior Executive Vice President of 1997 1,000,000 2,000,000 33,009 1,042,500 675,000 158,766
the Corporation; Executive Vice 1996 888,000 1,865,000 286,448 792,500 337,500 401,328
Chairman and Chief Marketing
Officer of the Bank
Bruce L. Hammonds 1998 1,000,000 2,000,000 153,847 1,255,000 375,000 170,847
Senior Executive Vice President of 1997 1,000,000 2,000,000 25,546 1,042,500 675,000 171,612
the Corporation; Executive Vice 1996 888,000 1,865,000 60,968 792,500 337,500 74,183
Chairman and Chief Operating Officer
of the Bank
M. Scot Kaufman 1998 900,000 1,800,000 180,790 1,255,000 300,000 170,134
Executive Vice President and Chief 1997 871,145 1,800,000 34,168 781,875 675,000 168,857
Financial Officer of the Corporation; 1996 756,500 1,500,000 85,619 891,868 253,125 78,341
Senior Vice Chairman and Chief
Financial Officer of the Bank
</TABLE>
- ------------------------------
* Mr. Lerner's bonuses for 1997 and 1998 were paid in restricted shares of the
Corporation's common stock, at his request. For Mr. Lerner, the "Bonus" column
for 1997 and 1998 includes the value (based on the market price on the date of
issuance) of restricted shares issued to him.
(1) For 1998, includes $144,415 for personal assistants for Mr. Cawley. For
1997, includes $45,578 for airplane use and $62,775 for a personal assistant
for Mr. Cawley.
(2) For 1998, includes a one-time $120,000 payment (in cash or combination of
cash and the value of an automobile transferred to the executive) to the
named and certain other senior executive officers in connection with the
termination of the Corporation's automobile program for all senior officers.
In prior years the Corporation provided an automobile for business and
personal use for senior executive officers.
(3) The number of restricted shares held at December 31, 1998, including the
restricted shares issued to Mr. Lerner in payment of his 1998 bonus at his
request, and the value of these shares calculated by multiplying the number
of shares held by the closing price of the common stock on December 31,
1998, were: Mr. Lerner, 1,629,647 shares, $40,435,616; Mr. Cawley, 922,410
shares, $22,887,298; Mr. Cochran, 532,048 shares, $13,201,441; Mr. Hammonds,
548,548 shares, $13,610,847; and Mr. Kaufman, 376,947 shares, $9,352,997.
Dividends are paid on restricted shares from the grant date.
6
<PAGE> 9
(4) Includes premiums paid by the Corporation in 1998 on term life insurance
(Mr. Cawley, $18,032; Mr. Cochran, $6,950; Mr. Hammonds, $7,730; and Mr.
Kaufman, $7,310); premiums paid by the Corporation in 1998 on split dollar
life insurance policies, ALL OF WHICH WILL BE REPAID TO THE CORPORATION NOT
LATER THAN THE DEATH OF THE EXECUTIVE (Mr. Cawley, $278,446; Mr. Cochran,
$113,237; Mr. Hammonds, $125,805; and Mr. Kaufman, $120,161); above-market
earnings on deferred compensation in 1998 (Mr. Cawley, $2,625; Mr. Cochran,
$4,225; Mr. Hammonds, $3,712; and Mr. Kaufman, $13,063); and contributions
made by the Corporation in 1998 to its deferred compensation plan (Mr.
Cawley, $53,600; Mr. Cochran, $33,600; Mr. Hammonds, $33,600; and Mr.
Kaufman, $29,600). Mr. Lerner did not receive any of these benefits, at his
request.
1998 OPTION GRANTS
The following table sets forth information concerning stock option grants
to the named executive officers made in 1998.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES PRICE PER EXPIRATION GRANT DATE
NAME GRANTED(1) IN 1998 SHARE DATE PRESENT VALUE(2)
---- ---------- ---------- --------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Alfred Lerner.................... 600,000 5.76% $22.33 6/30/08 $4,182,000
Charles M. Cawley................ 600,000 5.76% 22.33 6/30/08 4,182,000
John R. Cochran III.............. 375,000 3.60% 22.33 6/30/08 2,613,750
Bruce L. Hammonds................ 375,000 3.60% 22.33 6/30/08 2,613,750
M. Scot Kaufman.................. 300,000 2.88% 22.33 6/30/08 2,091,000
</TABLE>
- ------------------------------
(1) These options were exercisable upon grant.
(2) Amounts reflect the estimated present value of the grant as of the grant
date using the Black-Scholes option pricing model. The following assumptions
were used: (1) average expected life of 5 years; (2) expected volatility or
fluctuation of the Corporation's stock price of 30.5% each year calculated
based on historical fluctuations; (3) expected dividend yield for the
Corporation's stock of 1.59% calculated based on historical yield; and (4)
discount for present value based on an annual rate of return of 5.48%, which
was the approximate rate, at the time of grant of the options, for zero
coupon U.S. government securities with maturities equal to the expected
lives of the options. This estimate of value has been included solely for
purposes of disclosure in accordance with the rules of the Securities and
Exchange Commission. The actual value of the options will depend on the fair
market value of the Corporation's common stock on the dates the options are
exercised. No realization of value is possible without an increase in the
price of the Corporation's common stock, which would benefit all
stockholders.
7
<PAGE> 10
AGGREGATED OPTION EXERCISES IN 1998 AND OPTION VALUES AT DECEMBER 31, 1998
The following table sets forth information concerning stock options
exercised by the named executive officers during 1998 and the values at year end
1998 of unexercised options held by these executive officers.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT 12/31/98 OPTIONS AT 12/31/98(2)
ACQUIRED ON VALUE --------------------------- ----------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Alfred Lerner........ 0 $ 0 6,843,750 1,125,000 $122,698,048 $13,101,562
Charles M. Cawley.... 2,678,968 47,581,959 3,090,326 1,216,127 47,939,155 14,901,391
John R.
Cochran III......... 242,500 5,024,129 3,175,971 1,100,250 57,040,588 15,289,953
Bruce L. Hammonds.... 107,109 2,025,991 2,354,207 1,100,250 39,704,264 15,289,953
M. Scot Kaufman...... 175,541 3,473,978 1,744,838 968,625 29,173,041 12,961,508
</TABLE>
- ------------------------------
(1) Represents the difference between the fair market value of the shares of
common stock for which options were exercised in 1998 less the exercise
price of the options.
(2) Represents the difference between the fair market value of the option shares
(based on $24.8125 per share, the closing price of the common stock on the
New York Stock Exchange on December 31, 1998) and the exercise price of the
options.
RETIREMENT PLANS
The maximum annual retirement benefit permitted by law for a qualified
defined benefit pension plan for 1999 is $130,000. The limit is adjusted
periodically for inflation. The following table sets forth approximate annual
retirement benefits for retirement at age 65 which would be payable under the
Corporation's defined benefit pension plan if not limited by law. The table is
included in accordance with the rules of the Securities and Exchange Commission.
<TABLE>
<CAPTION>
YEARS OF SERVICE
AVERAGE ANNUAL --------------------------------------------------------
COMPENSATION 15 20 25 30 35
- -------------- -------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
1,000,000.. $267,521 $356,694 $445,868 $ 535,041 $ 600,041
1,100,000.. 294,521 392,694 490,868 589,041 660,541
1,200,000.. 321,521 428,694 535,868 643,041 721,041
1,300,000.. 348,521 464,694 580,868 697,041 781,541
1,400,000.. 375,521 500,694 625,868 751,041 842,041
1,500,000.. 402,521 536,694 670,868 805,041 902,541
2,000,000.. 537,521 716,694 895,868 1,075,041 1,205,041
</TABLE>
- ------------------------------
The current maximum annual retirement benefit permitted by law is $130,000.
Credited years of service and current compensation covered by the pension
plan for the persons named in the Summary Compensation Table are as follows: Mr.
Lerner, 15 years and $2,000,000; Mr. Cawley, 25 years and $2,000,000; Mr.
Cochran, 24 years and $1,250,000; Mr. Hammonds, 19 years and $1,250,000; and Mr.
Kaufman, 26 years and $1,000,000. Past service to MNC Financial is included in
credited years of service.
Annual benefits at normal retirement are 1.3% of average annual
compensation times years of credited service up to 40 plus .5% of average annual
compensation in excess of covered compensation times years of credited service
up to 30. Average annual compensation is determined by averaging the 60
consecutive months of compensation out of the last 120 months which yield the
highest average. Compensation includes salary, but not bonuses, and may not
exceed $160,000 in 1999 for this purpose. Covered compensation is the 30-year
average of amounts with respect to which Social Security taxes must be paid.
Benefits payable under the pension plan are not subject to deductions for Social
Security and other offset amounts.
8
<PAGE> 11
The executive officers named in the Summary Compensation Table (except for
Mr. Lerner who does not participate in the Plan at his request) participate in a
supplemental retirement plan which provides a retirement benefit equal to 80% of
the participant's highest average salary for any 12 month period during the 72
months preceding retirement. Benefits are reduced by pension and Social Security
benefits. The Plan also provides for salary continuation in the event of the
death or disability of the participant. Except for Mr. Cawley, participants
named in the Summary Compensation Table must remain employed until age 60 to
receive a retirement benefit. Annual retirement benefits at age 65 under the
Plan based on 1999 salaries, net of pension and Social Security benefits, would
be approximately: Mr. Cawley, $1,470,641; Mr. Cochran, $859,959; Mr. Hammonds,
$875,418; and Mr. Kaufman, $660,091. The Corporation has obtained insurance on
the lives of participants (other than Mr. Lerner, who does not participate in
the Plan at his request) in the Plan and expects over time to recover from the
proceeds of the insurance the cost of benefits paid under the Plan and premiums
for the insurance.
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following report is submitted by the Corporation's Compensation
Committee and Stock Option Committee. Each member of the Compensation Committee
and the Stock Option Committee is a non-employee director. The Compensation
Committee is comprised of Messrs. Berick and Civiletti and Drs. Markowitz and
Rosenthal. The Stock Option Committee is comprised of Drs. Markowitz and
Rosenthal.
The Corporation's compensation program provides annual cash compensation to
executive officers that recognizes short term company performance, and long term
compensation that encourages executive officers to focus on the future as well
as the present. The program is designed to reward current performance in proper
context with the long term health of the Corporation. Annual cash compensation
consists primarily of salary and bonus. Long term programs include stock
options, restricted shares and retirement programs.
ANNUAL COMPENSATION
The Compensation Committee determines annual salaries and bonuses for
senior executive officers. Salaries are based primarily on experience,
responsibilities and corporate and individual performance. Bonuses for the most
senior executive officers are based on corporate performance.
The Compensation Committee measures corporate performance primarily by
achievement of the objectives set forth in the Corporation's financial plan,
including goals for net income, managed loans, new accounts, managed credit
losses, customer retention and operating efficiency. The Corporation exceeded
the net income goal and substantially achieved all other 1998 performance
objectives. The Compensation Committee also considers, but gives less weight to,
the competitive and economic environment in which these results are achieved and
other factors, such as superior customer quality, results of regulatory
examinations and the total return on the Corporation's common stock compared to
the S&P 500 and S&P Financial Indices.
The 1998 bonuses paid to the Corporation's senior executive officers named
in the Summary Compensation Table were paid pursuant to the Corporation's Senior
Executive Performance Plan, which provided for payment of 1998 bonuses in an
amount equal to 200% of 1997 base salary if the Corporation achieved the 1998
net income objective established by the Compensation Committee. The Compensation
Committee retained authority to reduce or eliminate the bonuses notwithstanding
attainment of the net income objective. The Corporation's 1998 net income, as
certified by the Compensation Committee, exceeded the net income objective for
that year.
The Compensation Committee also reviewed and considered salaries, bonuses
and certain long term compensation paid in 1997 to chief executive officers of
other publicly held companies that issue credit cards (the most recent data
available). Several of these companies, along with others, are
9
<PAGE> 12
included in the S&P Financial Index comparison in the Stock Performance Graph.
When the cash compensation paid to chief executive officers of these companies
is adjusted (based on limited available data) for significant differences in
business lines, size, earnings, corporate performance, compensation practices,
and other factors, the Compensation Committee believes that the compensation
paid to the Corporation's Chief Executive Officer is appropriate. The
Compensation Committee also considered other benefits received by the senior
executive officers and the fact that Mr. Lerner generally did not participate in
these benefits.
Based on its review, the Compensation Committee approved 1999 salaries in
amounts it judged to be appropriate and payment of 1998 bonuses in the full
amount authorized for 1998 under the Senior Executive Performance Plan. The
Compensation Committee increased the annual salaries of Messrs. Lerner and
Cawley from $1,500,000 to $2,000,000, of Messrs. Cochran and Hammonds from
$1,000,000 to $1,250,000 and of Mr. Kaufman from $900,000 to $1,000,000. The
salaries for Messrs. Lerner and Cawley had been $1,500,000 for four years and
the salaries for Messrs. Cochran and Hammonds had been $1,000,000 for two years.
The increase was intended to strike a balance between salary and incentive
compensation. Maximum potential bonus amounts for 1999 under the Senior
Executive Performance Plan will remain the same as in 1998 and 1997.
Messrs. Lerner and Cawley received the same number of restricted shares and
the same bonus as in 1997 and 1996. Mr. Lerner's bonus was paid in restricted
shares of the Corporation's common stock at his request. Salaries for 1998 for
senior executive officers were approved by the Compensation Committee based on
review of the Corporation's performance for 1997 applying the same criteria.
Salaries and bonuses for 1998 and salaries for 1999 for all other officers were
determined by the senior executive officers based on the same factors used by
the Compensation Committee.
During 1998, the Compensation Committee approved special payments to senior
executive officers, in cash or combination of cash and the transfer of ownership
of an automobile, in connection with the termination of the Corporation's
automobile program for senior officers.
LONG TERM COMPENSATION
The Stock Option Committee grants stock options and restricted shares to
executive and other officers and key employees under the Corporation's 1997 Long
Term Incentive Plan.
During 1998, the Stock Option Committee granted restricted shares to senior
executive officers as additional compensation based on the Corporation's results
compared to the goals set forth in its financial plan and as incentive to remain
with the Corporation and for future performance. Restricted shares are forfeited
if the holder's employment terminates other than as a result of retirement,
death, disability, or a change in control of the Corporation, or as otherwise
determined by the Stock Option Committee. During 1998, the Stock Option
Committee approved a waiver of the restrictions on some restricted shares
granted in 1991 and 1993 to Messrs. Cawley, Cochran, Hammonds and Kaufman, to be
used to make charitable gifts.
The Stock Option Committee granted stock options during 1998 under the
Corporation's 1997 Long Term Incentive Plan for a total of 10,422,998 shares to
approximately 130 officers, including the Corporation's most senior executive
officers. The stock options granted in 1998 to the most senior executives were
exercisable upon grant. Most of the other stock options granted in 1998 are
exercisable in installments over a five-year period. The options were granted
based on the recipient's performance and responsibilities with the Corporation.
The Stock Option Committee considered the aggregate options to be outstanding
following the grants as a percentage of total shares and options outstanding.
The Stock Option Committee grants all options with an exercise price equal to
the fair market value of the common stock on the grant date.
Senior executive officers (except Mr. Lerner at his request) participate in
the Corporation's Supplemental Executive Retirement Plan and split dollar life
insurance program. These programs provide retirement benefits for those
participants who remain with the Corporation until retirement
10
<PAGE> 13
(generally at age 60) and provide for loss of benefits if a participant engages
in competition with the Corporation following termination of employment. Senior
executive officers, including Mr. Lerner, also participate in the Corporation's
pension plan. Senior executive officers, except Mr. Lerner at his request, also
participate in the Corporation's deferred compensation plan and its 401(k) plan
and other broad-based benefit plans.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
The Compensation Committee considers the effect of limitations on
deductibility for federal income tax purposes of compensation in excess of
$1,000,000 paid in a given year to an executive officer named in the Summary
Compensation Table for that year. The Compensation Committee expects that
substantially all of the bonuses paid for 1998 pursuant to the Senior Executive
Performance Plan should be fully deductible. In addition, the Compensation
Committee expects that tax deductions related to exercise of stock options
granted by the Stock Option Committee pursuant to the 1997 Long Term Incentive
Plan will not be subject to limits on deductions. The Corporation does not incur
compensation expense for federal income tax purposes for restricted stock grants
until the restricted shares vest.
James H. Berick, Esq.
Benjamin R. Civiletti, Esq.
Stuart L. Markowitz, M.D.
Michael Rosenthal, Ph.D.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee and Stock Option Committee during
1998 are listed above. No member of the Compensation Committee has served as an
executive officer or employee of the Corporation or served during 1998 as an
executive officer of another entity of which any executive officer of the
Corporation was a director or member of the compensation committee.
Berick, Pearlman & Mills Co., L.P.A., of which Mr. Berick is chairman, and
Venable, Baetjer and Howard, LLP, of which Mr. Civiletti is chairman, are among
the law firms that provide legal services to the Corporation.
CERTAIN RELATIONSHIPS
The Corporation's directors, executive officers, certain members of their
immediate families and certain affiliated companies hold credit cards or other
lines of credit issued by the Corporation on the same terms prevailing at the
time for those issued to other persons.
In July 1998 and February 1999 the Board of Directors approved the sale to
Mr. Cawley of artwork in the amount of $125,000 and $350,000 respectively, the
value determined by the artist.
In March 1999 the Board of Directors approved a ten-year marketing
agreement with the Cleveland Browns football team, of which Mr. Lerner is
Chairman and owner. The Corporation will pay the Cleveland Browns approximately
$3,000,000 per year for marketing rights. The Corporation believes that the
terms of its agreement with the Browns are fair to the Corporation.
11
<PAGE> 14
STOCK PERFORMANCE GRAPH
The following chart compares the total return on the Corporation's common
stock from December 31, 1993 through December 31, 1998 to the total return for
the same period of the S&P 500 and S&P Financial Indices. The graph assumes that
the value of the investment in the Corporation's common stock and each index was
$100 at December 31, 1993 and that all dividends were reinvested. While total
return comparisons may be useful to investors in gauging the performance of the
Corporation's common stock, in the opinion of the Corporation's management and
Board of Directors, the total return on the Corporation's common stock may not
necessarily relate directly to the performance of the Corporation's management
and should be used only as one of several important measures including, for
example, net income, managed credit losses, customer retention, future business
development and operating efficiencies.
[GRAPH]
At year end 1998, the total return on the Corporation's common stock from
December 31, 1993 was 521%, compared to the total return on the S&P Financial
Index of 231% and the S&P 500 Index of 194%. The average annual total return on
the Corporation's common stock for this period was 46%. The measurement points
used in the graph and set forth below are based on an initial investment of
$100.
<TABLE>
<CAPTION>
DECEMBER 31, MBNA S&P FINANCIALS S&P 500
- ------------ ---- -------------- -------
<S> <C> <C> <C>
1994 108 96 101
1995 175 148 139
1996 302 201 171
1997 451 297 229
1998 621 331 294
</TABLE>
12
<PAGE> 15
AMENDMENT TO THE 1997 LONG TERM INCENTIVE PLAN
The Corporation's 1997 Long Term Incentive Plan (the "Plan") authorizes
grants of stock options and restricted and unrestricted share awards to
officers, directors, key employees, consultants and advisors of the Corporation.
The Board of Directors has approved an amendment to the Plan which is being
submitted for approval by the Corporation's stockholders. The Board of Directors
recommends that stockholders vote for this amendment.
PROPOSED AMENDMENTS
The Plan currently authorizes the issuance of 32,250,000 shares of the
Corporation's common stock pursuant to grants of options and share awards. At
February 26, 1999, grants for 28,411,539 shares had been made and 4,828,986
shares remained available for future grants under the Plan.
On February 26, 1999, a total of 61,502,722 stock options and 7,180,662
restricted shares were outstanding, including grants made under an expired plan.
The stock options and restricted shares outstanding represented 8.0% of the
shares of common stock outstanding (including restricted shares) and shares of
common stock issuable upon exercise of outstanding stock options.
The amendment to the Plan would authorize grants of stock options and
restricted shares for an indefinite number of shares of common stock, so long as
immediately after the grants the sum of the number of outstanding stock options
and restricted shares does not exceed 10% of fully diluted shares outstanding.
Fully diluted shares outstanding, for this purpose, includes shares of common
stock issued and outstanding (including restricted shares) and outstanding stock
options. If the Corporation were to issue securities convertible into or
exercisable for common stock, the shares into which the securities may be
converted or for which the securities may be exercised would also be included in
fully diluted shares outstanding.
The amendment to the Plan would also limit to 2,000,000 the number of
restricted shares which may be granted in any calendar year, subject to
adjustment for stock splits and similar events as provided in the Plan. The
amendment would provide that the limitations on issuance of stock options and
restricted shares to 10% of fully diluted shares outstanding and on issuance of
restricted shares to not more than 2,000,000 shares annually do not apply to
restricted shares issued in lieu of payment of cash bonuses under the
Corporation's Senior Executive Performance Plan or other annual bonus plans. The
amendment would prohibit the issuance of unrestricted shares under the Plan. The
amendment would also limit to 10,000,000 the number of shares with respect to
which incentive stock options may be granted during the remaining term of the
Plan, subject to adjustment for stock splits and similar events as provided in
the Plan. The amendment would prohibit repricing of options previously granted.
The effect of the 10% limitation would be that at any point in time no
additional stock options or restricted share awards may be granted if the grant
would cause stock options and restricted shares outstanding immediately after
the grant to exceed 10% of fully diluted shares outstanding. Based on the number
of stock options and shares outstanding as of February 26, 1999, as of such date
approximately 20,800,000 stock options could be granted under the amendment,
assuming no restricted shares are issued. The issuance of additional shares of
common stock or securities convertible into or exercisable for common stock
would increase the number of shares outstanding for this purpose and therefore
would have the effect of increasing the number of additional options or
restricted shares which may be issued under the amendment to the Plan. Since its
initial public offering in 1991, the Corporation has followed a policy of
repurchasing a share of its common stock each time an additional share is issued
upon exercise of a stock option or grant of a restricted share award. It expects
to continue to follow this policy. Exercises of stock options and vesting of
restricted shares issued under the Plan and the prior plan would reduce the
number of outstanding stock options and restricted shares and therefore would
also have the effect of permitting issuance of additional options or restricted
shares under the amendment to the Plan. During 1997 and 1998, the Stock Option
Committee approved a waiver of restrictions on 350,861 restricted shares granted
prior to 1995 to be used to make charitable gifts.
13
<PAGE> 16
The Corporation has for many years limited the total of shares issuable
upon exercise of outstanding stock options and shares available for future
grants to 10% or less of fully diluted shares outstanding. That practice has
resulted in requests to stockholders for approval of additional shares for stock
options and restricted share awards at three of the past five annual meetings of
stockholders. The Board of Directors desires to avoid the need for repeated
requests to the stockholders for additional share authorizations while providing
sufficient long term stock-based incentives for management and maintaining its
policy of limiting dilution from stock option grants and restricted share
awards. The Board recommends the proposed amendment to accomplish these
objectives.
EXISTING PLAN PROVISIONS
The Plan is administered by the Stock Option Committee (the "Committee"),
which has authority to select participants from among those eligible and to
determine the form and substance of awards and any conditions and restrictions
on them. All members of the Committee are outside directors.
Officers, directors, key employees, consultants and advisors of the
Corporation are eligible to receive grants of stock options and restricted share
awards under the Plan. Although over 1,000 officers, key employees, consultants
and advisors were eligible to participate during 1998, substantially all of the
awards under the Plan have been made to senior officers and the Committee
expects to continue that practice. Approximately 130 persons received grants of
options or restricted share awards in 1998.
The Plan authorizes grants of incentive and nonqualified stock options. All
stock options have an exercise price that is not less than the fair market value
of the common stock on the date the option is granted. The closing price of the
common stock on the New York Stock Exchange on February 26, 1999 was $24.25 per
share. The Committee determines the terms and conditions of stock option grants,
including the period for exercise, the expiration date and any conditions to
exercise. The Committee's current policy is to provide that all options vest in
the event of death, disability or retirement of the participant or a change in
control. The Committee may amend or modify the terms of any outstanding option
grant but will not reprice options previously granted. The maximum number of
shares with respect to which options may be granted to any one participant in
any year is 2,250,000 shares, subject to adjustment for stock splits and similar
events as provided in the Plan.
The Plan provides for a grant of options for 5,000 shares to each
non-employee director at the time the person becomes a director and an
additional grant of options for 5,000 shares to each person who is a
non-employee director on each January 2. The exercise price of these options is
the closing price of the common stock on the New York Stock Exchange on the
grant date. These options are exercisable immediately and expire on the earlier
of ten years from the grant date or 90 days after the grantee ceases to be a
non-employee director. The number of shares for grants to non-employee directors
under the Plan is not subject to adjustment for stock splits or similar events.
As amended, the Plan would authorize share awards only with restrictions.
The Committee determines the number of shares to be awarded and the restrictions
on the shares. The Corporation issues restricted shares at the time of award,
with the participant having all rights of a stockholder, including the rights to
vote the shares and receive dividends. The Committee has generally provided that
restrictions lapse upon death, disability or retirement of the participant or a
change in control. Restricted shares are forfeited to the Corporation if the
participant's employment terminates prior to lapse of the restrictions. After a
restricted share is granted, the Committee may shorten the period of restriction
or waive the restriction.
FEDERAL TAX MATTERS
Under current federal income tax laws, a participant does not recognize
income upon receipt of a stock option. At the time of exercise of a nonqualified
option, a participant recognizes ordinary income
14
<PAGE> 17
in an amount equal to the difference between the fair market value of the common
stock on the exercise date and the exercise price.
A participant does not recognize income upon exercise of an incentive stock
option. If the shares acquired upon exercise of an incentive stock option are
held at least two years from the grant date of the option and one year from the
exercise date, upon sale of the shares the participant will recognize long term
capital gain in an amount equal to the difference between the sale price and the
exercise price of the option. If the shares are sold sooner, the participant
generally recognizes ordinary income or loss on the date of sale in an amount
equal to the lesser of the difference between the sale price and the exercise
price and the difference between the fair market value of the shares on the
exercise date and the exercise price.
The Corporation generally is entitled to an income tax deduction, at the
time the participant recognizes ordinary income, in an amount equal to the
amount of ordinary income recognized by the participant. Section 162(m) of the
Internal Revenue Code, as amended in 1993, denies to a publicly held corporation
a deduction in determining its taxable income for covered compensation in excess
of $1,000,000 paid in any taxable year to its chief executive officer or certain
other officers whose compensation must be reported in its proxy statement. Tax
deductions related to exercise of stock options are not subject to this
limitation if, among other things, the stock options are granted pursuant to a
plan approved by stockholders. The Corporation believes that the Plan, as
currently in effect and as proposed to be amended, meets all requirements of
Section 162(m). Section 280G of the Internal Revenue Code denies a deduction to
a corporation for excess parachute payments made to an officer or employee if
contingent upon a change in control. A portion of the deduction which the
Corporation might otherwise receive upon exercise of nonqualified stock options
or vesting of restricted shares if accelerated by a change in control may not be
available in these circumstances.
The Corporation may withhold, or require a participant to remit to the
Corporation, an amount sufficient to satisfy any federal, state and local tax
withholding requirements. The Committee has provided that a participant may
satisfy a tax withholding requirement by delivery of shares of Corporation
common stock owned by the participant, including shares the participant is
entitled to receive upon exercise of the option.
The Board of Directors may amend the Plan without the approval of
stockholders. The New York Stock Exchange requires that an increase in the
number of shares authorized for grant be approved by stockholders. No further
grants may be made under the Plan after December 31, 2006.
The affirmative vote of a majority of the votes cast at the meeting
(provided that at least 50% of the shares entitled to vote are voted) is
required to approve the proposed amendment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO
THE 1997 LONG TERM INCENTIVE PLAN.
STOCKHOLDER PROPOSAL
The Corporation has been advised that The Domestic and Foreign Missionary
Society of the Protestant Episcopal Church in the United States of America, 815
Second Avenue, New York, New York, 10017-4594, beneficial owner of 15,750 shares
of the Corporation's common stock, intends to introduce the following resolution
at the Annual Meeting:
"MBNA CORPORATION
DIVERSITY ON THE BOARD OF DIRECTORS
WHEREAS we believe that the Boards of many publicly-held corporations have
benefited from the perspectives brought by their many well-qualified board
members who are women or members of racial minority groups;
15
<PAGE> 18
WHEREAS MBNA Corporation currently has a distinguished Board of seven
persons, all of whom are white males;
WHEREAS the company's Board does not have a nominating committee composed
of independent directors;
WHEREAS according to a New York Times article (11/8/98), two members of
MBNA's compensation committee work for law firms that provide services to the
company, raising questions about their ability to render independent judgments
of executives' performance for remuneration purposes;
WHEREAS we believe that the Board should take every reasonable step to
ensure that women and persons from minority racial groups are in the pool from
which Board nominees are chosen; therefore be it
RESOLVED that the shareholders request the Board, in connection with its
search for suitable Board candidates, to make greater efforts to ensure that
women and persons from minority racial groups are among those it considers for
nomination to the Board.
SUPPORTING STATEMENT
The presence of women and minority group members on a corporate Board of
Directors is fortunately no longer a novelty. Surveys of companies in held [sic]
in the sponsor's (a major religious institution with an endowment of almost
$300,000,000) portfolio have revealed that the overwhelming majority of its
American portfolio companies have members who are women and/or minority group
members on their Boards, and many have more than one such Board member.
We believe that the judgments and perspectives that women and members of
minority groups bring to Board deliberations improve the quality of Board
decision making. We therefore urge the corporation to enlarge its search of
qualified Board members by casting a wider net. Please note that America's
largest insurance company, with $52 billion invested in stocks, has adopted
guidelines for its portfolio companies calling for Boards which are diverse in
terms of experience, sex, age, and race.
This proposal does not require, or even request, that women or members of
minority groups be appointed to the Board, but only that greater efforts be made
to ensure that such persons are included among those considered for nomination
to the Board. Neither does the resolution sponsor suggest that the company is
actively engaged in discrimination. Rather, we believe that intentional efforts
are needed to identify and recruit talented individuals who might not otherwise
be considered for nomination to the Board--and all too often, such people are
women and/or minority group members. Our concerns relate primarily to the
process by which candidates for Board membership are selected.
If you believe that it would be advantageous for our company to make
greater efforts towards the goal of a more diverse Board, please vote YES."
BOARD OF DIRECTORS' RESPONSE
In the selection of candidates for Board membership, the Board seeks to
select and recommend to the Corporation's stockholders the best qualified
persons based upon their individual talents, experience and abilities without
regard to race, religion, national origin or gender. The proposal is not in the
best interests of the Corporation or its stockholders, which interests are best
served by permitting the Board of Directors maximum flexibility to seek highly
qualified directors.
Five of the Corporation's seven directors have served as directors since
1991 and two have served since 1993. During the period since its initial public
offering in January 1991 the Corporation's average annual total return to
stockholders has been 48% compared to 22% for the S&P 500 Index and to 29% for
the S&P Financial Index. The Corporation has produced earnings increases
averaging 25%
16
<PAGE> 19
in the 32 quarters since it became a public company. The Board of Directors does
not believe that adoption of the proposal would demonstrably improve the
Corporation's performance.
The affirmative vote of a majority of the shares cast at the meeting is
required to approve the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
INDEPENDENT AUDITORS
The Corporation has retained Ernst & Young LLP as its independent auditors
for 1999. Ernst & Young LLP has served as the independent auditors for the
Corporation since 1991.
Representatives of Ernst & Young LLP will attend the meeting and, while
they do not intend to make a statement, will respond to appropriate questions
directed to them.
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Stockholder proposals to be included in the Corporation's proxy material
for the 2000 Annual Meeting of Stockholders must be received at the
Corporation's principal executive offices not later than November 20, 1999.
With respect to any other stockholder proposals, a Corporation Bylaw
provides that no business, including a nomination for election as a director,
may be brought before an annual or special meeting of stockholders by any
stockholder unless the stockholder has given written notice of the business to
the Corporation's Secretary not later than 60 days prior to the date of the
meeting. If less than 70 days public notice of the date of the meeting has been
given, the stockholder notice must be received within 10 days following notice
or publication of the date of the meeting. The notice must include certain
information concerning the stockholder, the business the stockholder proposes to
bring before the meeting and, in the case of a nomination for director, the
nominee. A copy of the Bylaw may be obtained from the Secretary of the
Corporation at the address set forth in the accompanying notice.
OTHER BUSINESS
As of the date of this Proxy Statement, the Corporation does not intend to
bring any other matter before the meeting requiring action of the stockholders,
nor does it have any information that any other matter will be brought before
the meeting. However, if any other matter requiring the vote of the stockholders
properly comes before the meeting, it is the intention of the persons named in
the enclosed form of proxy to vote the proxy in accordance with their best
judgment in the interest of the Corporation.
ANNUAL REPORT ON FORM 10-K
THE CORPORATION WILL PROVIDE WITHOUT CHARGE TO EACH PERSON SOLICITED FOR A
PROXY, ON THE WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF THE CORPORATION'S
ANNUAL REPORT ON FORM 10-K FOR ITS MOST RECENTLY COMPLETED FISCAL YEAR. REQUESTS
SHOULD BE DIRECTED TO JOHN W. SCHEFLEN, SECRETARY, AT THE ADDRESS SET FORTH ON
THE FIRST PAGE OF THIS PROXY STATEMENT.
March 19, 1999
17
<PAGE> 20
[LOGO] PRINTED ON RECYCLED PAPER
<PAGE> 21
MBNA CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints James H. Berick, Charles M. Cawley and
Benjamin R. Civiletti, and each or any of them, as proxies, with full powers of
substitution, to represent and to vote all shares of the Common Stock of MBNA
Corporation which the undersigned is entitled to vote at the Annual Meeting of
Stockholders of the Corporation to be held on April 26, 1999 and at any
adjournment thereof. The undersigned acknowledges receipt of notice of the
meeting and the proxy statement.
The Board of Directors recommends a vote FOR proposals 1 and 2.
1. ELECTION OF DIRECTORS
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
to vote for all nominees listed below
NOMINEES: Alfred Lerner, Charles M. Cawley, James H. Berick, Benjamin R.
Civiletti, Randolph D. Lerner, Stuart L. Markowitz, Michael Rosenthal
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
OUT THAT NOMINEE'S NAME.
2. AMENDMENT OF 1997 LONG TERM INCENTIVE PLAN TO PROVIDE FOR ADDITIONAL SHARES
FOR GRANT AND TO PLACE CERTAIN RESTRICTIONS ON GRANTS MADE UNDER THE PLAN
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(continued on reverse side)
-------------------------------------------------------------------------
(continued from front)
The Board of Directors recommends a vote AGAINST proposal 3.
3. STOCKHOLDER PROPOSAL
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. TRANSACTION OF WHATEVER OTHER BUSINESS MAY PROPERLY BE BROUGHT BEFORE THE
MEETING.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2 AND
AGAINST PROPOSAL 3.
Please sign exactly as name appears below. When shares are held jointly, any
co-owner may sign unless the Secretary of the Corporation has been given notice
to the contrary and has been furnished with a copy of the order or instrument
which so provides. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such. If a corporation, please sign in full
corporate name by President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
Dated:_______________________,1999
Signature:
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Please mark, sign, date and return
this proxy card promptly in the
enclosed envelope.
