<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
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
KEYCORP
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
KEYCORP
(NAME OF PERSON(S) FILING PROXY STATEMENT)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
Not Applicable
(2) Aggregate number of securities to which transaction applies:
Not Applicable
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11:
Not Applicable
(4) Proposed maximum aggregate value of transaction:
Not Applicable
/ / 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:
Not Applicable
(2) Form, schedule or registration statement no.:
Not Applicable
(3) Filing party:
Not Applicable
(4) Date filed:
Not Applicable
<PAGE> 2
[KEYCORP LOGO]
127 PUBLIC SQUARE
CLEVELAND, OHIO 44114
April 5, 1995
DEAR SHAREHOLDER:
You are cordially invited to attend the 1995 Annual Meeting of Shareholders
of KeyCorp which will be held at Abravanel Hall, 123 West S. Temple, Salt Lake
City, Utah, on Thursday, May 18, 1995, at 10:30 a.m., local time.
All holders of record of KeyCorp Common Shares as of March 21, 1995, are
entitled to vote at the 1995 Annual Meeting, including holders of record of
KeyCorp Common Shares who have not tendered their certificates representing
shares of common stock of the former KeyCorp ("Old Key") for exchange as of that
date.
As described in the accompanying Notice and Proxy Statement, you will be
asked to elect seven directors for three-year terms expiring in 1998 and to
consider a proposal submitted by one of KeyCorp's shareholders.
The Annual Report for the year ended December 31, 1994, was mailed to all
shareholders of record as of March 21, 1995.
Your proxy card is enclosed. Please indicate your voting instructions and
sign, date, and mail this proxy card promptly in the return envelope.
Sincerely,
/s/ Victor J. Riley, Jr.
VICTOR J. RILEY, JR.
Chairman of the Board
and Chief Executive Officer
<PAGE> 3
[KEYCORP LOGO]
127 PUBLIC SQUARE
CLEVELAND, OHIO 44114
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 18, 1995
The 1995 Annual Meeting of Shareholders of KeyCorp will be held at
Abravanel Hall, 123 West S. Temple, Salt Lake City, Utah, on Thursday, May 18,
1995, at 10:30 a.m., local time, for the following purposes:
1. To elect seven directors to serve for terms expiring in 1998;
2. To consider and act upon a shareholder proposal; and
3. To transact such other business as may properly come before the
meeting or any postponement or adjournment thereof.
Only holders of KeyCorp Common Shares of record as of the close of business
on March 21, 1995, have the right to receive notice of and to vote at the Annual
Meeting and any postponement or adjournment thereof. Holders of record of
KeyCorp Common Shares who have not tendered their Old Key common stock
certificates for exchange as of that date are entitled to vote at the meeting.
By Order of the Board of Directors
/s/ Carter B. Chase
CARTER B. CHASE
Secretary
April 5, 1995
------------------------
We encourage all holders of Old Key common stock certificates to tender
their certificates for exchange if they have not already done so. Certificates
representing shares of common stock of Society Corporation ("Society") do not
need to be exchanged because, as a result of the March 1, 1994 merger of Old Key
and Society, those certificates are automatically treated as representing an
equal number of KeyCorp Common Shares.
------------------------
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, DATE, SIGN, AND MAIL THE ENCLOSED
PROXY CARD AT YOUR EARLIEST CONVENIENCE. PLEASE USE THE RETURN ENVELOPE ENCLOSED
WITH THE PROXY CARD FOR THAT PURPOSE.
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
NOTICE OF ANNUAL MEETING
PROXY STATEMENT....................................................................... 1
Election of Directors................................................................. 1
Nominees for Terms Expiring in 1998................................................. 2
Continuing Directors................................................................ 4
The Board of Directors and Its Committees............................................. 8
Shareholder Proposal.................................................................. 10
Executive Officers.................................................................... 13
Compensation of Executive Officers.................................................... 15
Employment, Severance, and
Change of Control Agreements........................................................ 21
Compensation and Organization Committee
and Executive Equity Compensation Committee
Joint Report on Executive Compensation.............................................. 29
Compensation Committee Interlocks and Insider Participation........................... 32
KeyCorp Stock Price Performance....................................................... 33
Share Ownership....................................................................... 34
Independent Auditors.................................................................. 35
1996 Shareholder Proposals............................................................ 35
General............................................................................... 35
</TABLE>
<PAGE> 5
[KeyCorp logo]
127 PUBLIC SQUARE
CLEVELAND, OHIO 44114
PROXY STATEMENT
This Proxy Statement is furnished commencing on or about April 5, 1995, in
connection with the solicitation on behalf of the Board of Directors of KeyCorp
of proxies to be voted at the 1995 Annual Meeting of Shareholders on May 18,
1995, and at all postponements and adjournments thereof. All holders of record
of KeyCorp Common Shares at the close of business on March 21, 1995, are
entitled to vote, including holders of record who have not tendered their
certificates representing shares of common stock of the former KeyCorp ("Old
Key") for exchange as of that date. Holders of record of KeyCorp Common Shares
who have not tendered their Old Key common stock certificates for exchange as of
March 21, 1995, are entitled to vote a number of shares equal to the number of
whole KeyCorp Common Shares into which such holders' shares of Old Key common
stock are exchangeable pursuant to the Agreement and Plan of Merger and the
related Supplemental Agreement to Agreement and Plan of Merger between Old Key
and Society Corporation ("Society"), each dated October 1, 1993, as amended
(together, the "Merger Agreement"). Holders of record of KeyCorp Common Shares
who have certificates representing shares of common stock of Society do not need
to exchange their shares because, under the Merger Agreement, those certificates
are automatically treated as representing an equal number of KeyCorp Common
Shares. On March 21, 1995, there were 243,027,707 KeyCorp Common Shares
outstanding and entitled to vote at the meeting, and each such share is entitled
to one vote on each matter to be considered. At the meeting, a majority of the
outstanding Common Shares shall constitute a quorum.
ELECTION OF DIRECTORS
In accordance with KeyCorp's Regulations, the Board of Directors of KeyCorp
(also sometimes referred to herein as the "Board") has established the size of
the Board at 22 members, divided into two classes of seven members each and one
class of eight members. The terms of these classes as of the 1995 Annual Meeting
will expire in 1996, 1997, and 1998, respectively. Seven nominees for directors
for terms expiring in 1998 are listed below. All properly executed and returned
proxy cards will be voted for these nominees unless contrary specifications are
properly made in writing directly on the proxy card in the space indicated for
that purpose, in which case the proxy will be voted in accordance with such
specification. The nominees, other than Mr. McGregor, are all current members of
the Board. Should any nominee become unable to accept nomination or election,
the proxy cards (unless a contrary specification is properly made on the proxy
card) will be voted for the election of such person, if any, as shall be
recommended by the Board, or for holding a vacancy to be filled by the Board at
a later date. The Board has no reason to believe that the persons listed as
nominees will be unable to serve. At the election of directors, the properly
nominated candidates receiving the greatest number of votes shall be elected.
1
<PAGE> 6
Pursuant to rules promulgated under the Securities Exchange Act of 1934,
the following information lists, as of February 17, 1995, as to nominees for
director and directors whose terms of office will continue after the 1995 Annual
Meeting, the principal occupation or employment, age, the year in which each
first became a director of KeyCorp, and directorships in registered investment
companies or companies having securities which are registered pursuant to, or
which are subject to certain provisions of, the Securities Exchange Act of 1934.
Also included is information regarding officer positions, trusteeships, or
directorships with charitable, political, or educational organizations where
applicable. Except as otherwise indicated, each nominee or continuing director
has had the same principal occupation or employment during the past five years.
NOMINEES FOR TERMS EXPIRING IN 1998
H. DOUGLAS BARCLAY
Partner, Hiscock & Barclay LLP (law firm). Age 62.
[Photo of KeyCorp director since 1994 (Old Key director since
Mr. Barclay] 1971). Director, Syracuse Supply Company and Eagle
Media, Inc.; Chairman of the Board of Trustees, Syracuse
University.
THOMAS A. COMMES
President and Chief Operating Officer, The
[Photo of Sherwin-Williams Company (paints and painting supplies).
Mr. Commes] Age 52. KeyCorp director since 1987. Director, The
Sherwin-Williams Company and Centerior Energy
Corporation.
STEPHEN R. HARDIS
Vice Chairman and Chief Financial and Administrative
[Photo of Officer, Eaton Corporation (diversified manufacturing
Mr. Hardis] company). Age 59. KeyCorp director since 1985. Director,
Eaton Corporation, First Union Real Estate Investments,
Nordson Corporation, and Progressive Corporation;
Trustee, University Circle, Inc., Musical Arts
Association, Playhouse Square Foundation, and Cleveland
Clinic Foundation.
2
<PAGE> 7
DOUGLAS J. MCGREGOR
President and Chief Operating Officer, M.A. Hanna
[Photo of Company (plastics and rubber manufacture and
Mr. McGregor] distribution). Age 54. Director, M.A. Hanna Company,
Vulcan Materials Company, and Society National Bank;
Chairman of the Board of Trustees, Cleveland Institute
of Music; Trustee, Playhouse Square Foundation and
Junior Achievement.
JOHN C. MORLEY
President and Chief Executive Officer, Reliance Electric
[Photo of Company (electro-mechanical automation and
Mr. Morley] telecommunications equipment). Age 63. KeyCorp director
since 1992. Director, Reliance Electric Company, AMP
Incorporated, and Ferro Corporation; Trustee, Case
Western Reserve University, Musical Arts Association,
Western Reserve Historical Society, University Hospitals
of Cleveland, and University Circle Incorporated;
Visiting Committee, University of Michigan Graduate
School of Business Administration.
PETER G. TEN EYCK, II
President, Indian Ladder Farms (commercial orchard). Age
[Photo of 56. KeyCorp director since 1994 (Old Key director since
Mr. Ten Eyck] 1979). Trustee, Cornell University.
NANCY B. VEEDER
President, Veeder Realty, Inc.; Partner, Veedergate
[Photo of Realty, L.P., doing business as Residence Inn by
Ms. Veeder] Marriott (hotel operation). Age 68. KeyCorp director
since 1994 (Old Key director since 1981). Member of
Board of Overseers, R.P.I. School of Management; Member
of President's Committee, Centenary College; Member of
Board of Directors, Albany Tourist and Convention
Bureau.
3
<PAGE> 8
CONTINUING DIRECTORS WHOSE TERMS EXPIRE IN 1996
ALBERT C. BERSTICKER
President since 1988, and Chief Executive Officer since
[Photo of 1991, Ferro Corporation (industrial specialty
Mr. Bersticker] chemicals). Age 60. KeyCorp director since 1991.
Director, Ferro Corporation, Brush Wellman Inc.,
Centerior Energy Corporation, and Oglebay Norton
Company.
KENNETH M. CURTIS
Principal, Curtis, Thaxter, Stevens, Broder & Micoleau,
[Photo of LLP, P.A. (law firm); previously, President, Maine
Mr. Curtis] Maritime Academy (ocean-oriented college). Age 63.
KeyCorp director since 1994 (Old Key director since
1993). Director, Bowater Incorporated; Trustee, Gulf of
Maine Aquarium Development Corporation; Member of Board
of Directors, Foundation for Educational Exchange
between the United States and Canada.
JOHN C. DIMMER
President, Firs Management Corporation (real estate and
[Photo of investment company). Age 66. KeyCorp director since 1994
Mr. Dimmer] (Old Key director since 1993).
CHARLES R. HOGAN
Co-Chairman of the Board, Puget Sound Marketing Co.,
[Photo of Inc. (supermarket chain operation); Co-Owner, C.R.H.
Mr. Hogan] Investments, Inc. (shopping center and real estate
development). Age 58. KeyCorp director since 1994 (Old
Key director since 1993).
4
<PAGE> 9
M. THOMAS MOORE
Chairman and Chief Executive Officer, Cleveland-Cliffs
[Photo of Inc (iron ore producer). Age 60. KeyCorp director since
Mr. Moore] 1992. Director, Cleveland-Cliffs Inc, Capitol American
Financial Corporation, and The LTV Corporation; Member
of Board of Directors, Greater Cleveland Growth
Association; Trustee, Health Cleveland, Inc.
RICHARD W. POGUE
Senior Advisor, Dix & Eaton (public relations);
[Photo of previously, Managing Partner, Jones, Day, Reavis & Pogue
Mr. Pogue] (law firm). Age 66. KeyCorp director since 1992.
Director, Continental Airlines, Inc., M.A. Hanna
Company, OHM Corporation, Redland PLC, and TRW Inc.;
Chairman of the Board of Trustees, University Hospitals
of Cleveland; Trustee, Kulas Foundation, Case Western
Reserve University, University Circle Incorporated, and
Rock and Roll Hall of Fame and Museum; Visiting
Committee, Case Western Reserve University School of
Medicine.
ROBERT A. SCHUMACHER
[Photo of Private Consultant. Age 72. KeyCorp director since 1994
Mr. Schumacher] (Old Key director since 1986).
DENNIS W. SULLIVAN
Executive Vice President, Parker-Hannifin Corporation
[Photo of (industrial and aerospace motion control components and
Mr. Sullivan] systems). Age 56. KeyCorp director since 1993. Director,
Parker-Hannifin Corporation and Ferro Corporation.
5
<PAGE> 10
CONTINUING DIRECTORS WHOSE TERMS EXPIRE IN 1997
WILLIAM G. BARES
President and Chief Operating Officer, The Lubrizol
[Photo of Corporation (chemicals for use in lubricants and fuels).
Mr. Bares] Age 53. KeyCorp director since 1987. Director, The
Lubrizol Corporation, Bearings, Inc., and Oglebay Norton
Company.
LUCIE J. FJELDSTAD
President, Tektronix, Inc. (multi-media company);
[Photo of previously, Private Consultant (1993-1994) and Vice
Ms. Fjeldstad] President, IBM (computer manufacturing) (1989-1993). Age
50. KeyCorp director since 1994 (Old Key director since
1991). Director, The Gap, Bolt, Beranek and Newman,
Inc., Entergy Corporation, and Recognition
International; Trustee, UCLA Foundation; Board of
Regents, Santa Clara University.
ROBERT W. GILLESPIE
President and Chief Operating Officer, KeyCorp. Age 50.
[Photo of KeyCorp director since 1982. Director, Society National
Mr. Gillespie] Bank; Trustee, Case Western Reserve University, Ohio
Wesleyan University, United Way, Cleveland Museum of
Art, Cleveland Initiative on Education, and Musical Arts
Association; Member of Board of Directors, Greater
Cleveland Growth Association; Chairman, Greater
Cleveland Roundtable.
HENRY S. HEMINGWAY
President, Town & Country Life Insurance Company
[Photo of (insurance). Age 41. KeyCorp director since 1994 (Old
Mr. Hemingway] Key director since 1987). Director, Key Bank of Utah;
Trustee, Utah Symphony and Westminister College.
6
<PAGE> 11
STEVEN A. MINTER
Executive Director and President, The Cleveland
[Photo of Foundation (philanthropic foundation). Age 56. KeyCorp
Mr. Minter] director since 1987. Director, Consolidated Natural Gas
Company, Goodyear Tire and Rubber Company, and
Rubbermaid, Inc.; Trustee, College of Wooster and
Cleveland Initiative on Education; Member of Board of
Directors, Greater Cleveland Roundtable.
VICTOR J. RILEY, JR.
Chairman of the Board and Chief Executive Officer,
[Photo of KeyCorp. Age 63. KeyCorp director since 1994 (Old Key
Mr. Riley] director since 1973). Chairman, Urban League of Greater
Cleveland, Pius XII Foundation; Honorary Member,
University at Albany Foundation.
RONALD B. STAFFORD
Partner, Stafford, Trombley, Purcell, Lahtinen, Owens &
[Photo of Curtin, P. C. (law firm); member of the New York State
Mr. Stafford] Senate. Age 59. KeyCorp director since 1994 (Old Key
director since 1983). Trustee, St. Lawrence University
and Paul Smith's College; Board of Visitors, Columbia
University School of Law.
Messrs. Barclay and Stafford, directors of KeyCorp, are members of law
firms that KeyCorp utilizes for legal services.
Some of KeyCorp's executive officers and directors were customers of one or
more of KeyCorp's subsidiary banks during 1994 and had transactions with such
banks in the ordinary course of business. In addition, some directors are
officers of, or have a relationship with, corporations or are members of
partnerships which were customers of such banks during 1994 and had transactions
with such banks in the ordinary course of business. All loans included in such
transactions were made on substantially the same terms, including rates and
collateral, as those prevailing at the time for comparable transactions with
other persons, and did not involve more than normal risks of collectibility or
present other unfavorable features. Similar transactions continue to be effected
during 1995.
7
<PAGE> 12
THE BOARD OF DIRECTORS AND ITS COMMITTEES*
Board of Directors. During the year ended December 31, 1994, there were
five meetings of KeyCorp's Board of Directors, including one meeting held by the
Board of Directors of Society prior to the March 1, 1994 merger of Old Key and
Society (the "Merger"). Each current member of KeyCorp's Board, other than
Messrs. Bares and Commes, attended at least 75% of the aggregate of the meetings
held by KeyCorp's Board of Directors and the meetings held by the committees of
the Board on which such member served. Mr. Bares was unable to attend several
scheduled Board and committee meetings because KeyCorp's meeting schedule was
changed as a result of the Merger.
KeyCorp's Board of Directors currently exercises certain of its powers
through its Audit, Community Responsibility, Compensation and Organization,
Executive, Executive Equity Compensation, and Nominating Committees.
Audit Committee. Messrs. Bares (Chair), Hemingway, Hogan, Moore, Pogue,
Stafford, Sullivan, and Ten Eyck are the current members of KeyCorp's Audit
Committee. The functions of this Committee include review of the adequacy of
internal administrative, operating, and accounting policies and controls, review
of the financial information provided to shareholders and the Securities and
Exchange Commission, recommendation of the appointment of KeyCorp's independent
auditors, review of the scope of the services and the estimated fees of the
independent auditors, review of the examinations of KeyCorp and its affiliates
conducted by federal and state regulatory authorities, review of the audit
committees of KeyCorp's subsidiaries, review of the audit plans of the internal
audit staff and of the independent auditors and the results and effectiveness of
their audits, and supervision and direction of any special projects or
investigations considered necessary. KeyCorp's Audit Committee met three times
in 1994.
Community Responsibility Committee. Messrs. Curtis, Dimmer, Leser, Minter,
Morley, and Ms. Veeder (Chair) are the current members of KeyCorp's Community
Responsibility Committee. The functions of this Committee include review of the
Community Reinvestment Act programs of KeyCorp and its bank subsidiaries,
KeyCorp's compliance program, and KeyCorp's compliance with applicable law and
regulation. KeyCorp's Community Responsibility Committee met four times in 1994.
Compensation and Organization Committee. Messrs. Barclay (Chair),
Bersticker, Commes, Ms. Fjeldstad, and Messrs. Hardis and Schumacher are the
current members of KeyCorp's Compensation and Organization Committee. The
functions of this Committee include review and approval of KeyCorp's salary
administration programs, determination of the compensation of senior management,
determination of participants and awards under executive compensation plans and
supplemental compensation plans except for equity compensation plans, approval
of (or amendments to) employee and officer retirement, compensation, and benefit
plans, review and recommendation of director compensation, review of
organization structure and staffing, and review of management structure,
development, and succession planning. KeyCorp's Compensation and Organization
Committee met six times in 1994.
Executive Committee. Messrs. Barclay, Bares, Curtis, Gillespie, Hardis,
Pogue, Riley (Chair), and Ms. Veeder are the current members of KeyCorp's
Executive Committee. Through December 31, 1998, under the Merger Agreement and
KeyCorp's Regulations, it is intended that Messrs. Riley and Gillespie will be
- ---------------
* Mr. Leser will not stand for re-election at the Annual Meeting. He is,
however, included in the description of KeyCorp's Board of Directors and its
committees because he will continue as a director of KeyCorp until the Annual
Meeting.
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<PAGE> 13
members of KeyCorp's Executive Committee as long as they are directors of
KeyCorp. The functions of the Executive Committee are to exercise the authority
of the Board of Directors, to the extent permitted by law, on any matter
requiring Board or Board committee action between Board or Board committee
meetings. KeyCorp's Executive Committee met two times in 1994.
Executive Equity Compensation Committee. Messrs. Bersticker, Commes, Ms.
Fjeldstad, and Messrs. Hardis (Chair) and Schumacher are the current members of
KeyCorp's Executive Equity Compensation Committee. The functions of this
Committee include approval of (or amendments to) KeyCorp's equity compensation
plans, determination of participants and awards under KeyCorp's equity
compensation plans, and the granting of stock options. KeyCorp's Executive
Equity Compensation Committee met five times in 1994.
Nominating Committee. Messrs. Barclay, Gillespie, Hardis, and Riley are the
current members of KeyCorp's Nominating Committee. Through December 31, 1998,
under the Merger Agreement and KeyCorp's Regulations, two of the four members of
the Nominating Committee will be individuals who were serving as directors of
Old Key prior to the Merger (one of whom will be Mr. Riley as long as he is a
director of KeyCorp), and the other members of the Nominating Committee will be
individuals who were serving as directors of Society prior to the Merger (one of
whom will be Mr. Gillespie as long as he is a director of KeyCorp).
The functions of the Nominating Committee include identifying and reviewing
the qualifications of prospective directors and recommending candidates for
election as directors. Through December 31, 1998, under KeyCorp's Regulations,
nominations for the election of directors by KeyCorp's Board of Directors may
only be made by the affirmative vote of three-quarters of the Board of Directors
and three-quarters of the Nominating Committee, except that there is an
alternative procedure in the event that the Nominating Committee is unable to
approve by the requisite vote a nomination for election of a particular director
or directors. The Nominating Committee will consider shareholder suggestions
concerning qualified candidates for election as directors that are forwarded to
such Committee. Any shareholder recommendation for a director nominee should
contain background information concerning the recommended nominee, including,
(a) the name, age, business, and residence address of such person; (b) the
principal occupation or employment of such person for the last five years; (c)
the class and number of shares of capital stock of KeyCorp that are beneficially
owned by such person; (d) all positions of such person as a director, officer,
partner, employee, or controlling shareholder of any corporation or other
business entity; (e) any prior position as a director, officer, or employee of a
depository institution or any company controlling a depository institution; and
(f) a statement of whether such individual would be willing to serve if
nominated or elected. Any shareholder recommendation should also include, as to
the shareholder giving the written notice, (a) a representation that the
shareholder is a holder of record of shares of KeyCorp entitled to vote at such
meeting and (b) a description of all arrangements or understandings between the
shareholder and such recommended person and any other person or persons (naming
such person or persons). KeyCorp's Nominating Committee did not meet in 1994,
but did meet on March 15, 1995, at which time Mr. McGregor was nominated for
election as director for a term expiring in 1998.
Director Compensation. Directors (other than directors who are officers of
KeyCorp or of any affiliate, which directors receive no director fees) receive
fees consisting of a $27,000 annual retainer, payable in quarterly installments,
and $1,500 for attendance at each Board or committee meeting. Outside directors
who
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serve as committee chairpersons receive additional compensation of $2,500 per
quarter. Under the KeyCorp Director Deferred Compensation Plan, directors are
given an opportunity to defer payment of director fees for future distribution.
Under the Directors' Stock Option Plan (the "Directors' Plan"), each of the
outside directors is automatically granted options to purchase 3,500 KeyCorp
Common Shares annually. All options granted under the Directors' Plan are
non-qualified stock options. Options generally expire ten years after grant. The
purchase price of the option shares is equal to their fair market value on the
date of grant and may be paid in cash or by the surrender of previously acquired
KeyCorp Common Shares. At December 31, 1994, 198,250 additional options could be
granted under the Directors' Plan. In the event that KeyCorp Common Shares are
changed into or exchanged for a different number or kind of securities, or in
the event of a stock split, then the number and exercise price of options and
the limits on the aggregate totals of shares available for grants under the
Directors' Plan will be proportionately amended.
SHAREHOLDER PROPOSAL
The following proposal (the "Proposal") was submitted for inclusion in this
Proxy Statement by Mr. Allen Wolff, 1553 S. Carpenter Road, Brunswick, Ohio
44212. Mr. Wolff currently owns 200 KeyCorp Common Shares.
In order to be adopted at the Annual Meeting, the Proposal would require
the affirmative vote of shareholders owning a majority of the outstanding
KeyCorp Common Shares represented at the Annual Meeting.
For the reasons set forth below, the Board of Directors recommends that
shareholders vote AGAINST the Proposal.
Shareholder Proposal and Supporting Statement. "Throughout
corporate America, many stockholder proposals have been introduced to
try to make some changes including the control of compensation to
directors and top management and to try to tie them in with profits
and dividends. Management opposes most of these proposals . . . Most
shareholder proposals fail because (1) the investors are not organized
and offer no alternatives, (2) management already controls a large
number of votes and then rewards itself with more shares to vote
against such proposals, and (3) we are not playing on a level field,
management gets to count unmarked proxies as voting in favor of their
position and can solicit proxies at the expense of the company. Some
companies even fail to make complete disclosures, hiding behind the
minimum rules of the S.E.C.
"I feel that many Boards of Directors have lost touch with the
investors and it seems that they are giving more and more rewards for
less and less success. In Junior High School, we learned that there
were three (3) parts to any business; CAPITAL, LABOR AND MANAGEMENT.
The Boards seem to have forgotten this lesson. The boards, in general,
are self-perpetuating groups seemingly intent on rewarding themselves
and members of management, at the expense of the investor.
"I am particularly dismayed at the statement on proxies that says
(in essence) 'Proxies signed, but not specifically marked, will be
voted as management has suggested.'
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<PAGE> 15
"Management says that stockholders clearly understand how their
votes will be counted if they don't put Xs in the boxes; yet many
shareholders don't understand THAT. They say that this process allows
the stockholder not to be burdened with making FOUR Xs. WOW! How many
shareholders even understand what they are being asked to vote on?
Many times proxies for shares held in street names DO NOT clearly
indicate this procedure.
"One need only review the results of voting on shareholder
proposals at the last two annual meetings of CHEMICAL to see how this
has been misused. Had unmarked ballots NOT been counted AGAINST
certain stockholder proposals, they would have passed.
"Last April at the annual meeting of First Union Real Estate
Trust, a company that also has reduced its dividends three times in
the last two years, there was a management proposal to increase
compensation '(because that's what we have to do to attract top
executives)'. The proposal passed by 69% (including the UNMARKED
proxies). An astute investor in the audience did some quick arithmetic
and pointed out that less than 50% of the shares voted were actually
voted for the proposal.
"When I go to the polls and figure there is no clear choice among
candidates and leave that space 'unmarked', it is not voted in favor
of the incumbent nor the incumbent's party; it is merely a non-vote.
"Presently, I have no animosity against the management of
KeyCorp, but I am dismayed that they use this very undemocratic method
to count proxies.
"Last year, a similar proposal was presented to five corporations
in Ohio. Although the proposal failed, it garnered an average of 25%
of the voted proxies (an unusually high number for a stockholder
proposal). Included in the votes against were the unmarked proxies.
Even though this proposal concerned the counting of unmarked proxies,
none of the companies involved would reveal the numbers to me (one
requested a payment of $10,000). If they didn't count them, how did
they know how many to count against the shareholder proposal? In
contrast, First Union Real Estate, Chemical Bank of New York and the
Rockefeller Properties (and others) do reveal the count of unmarked
proxies.
"Therefore, be it resolved that in future proxies of this
company, there will be no discretionary power of voting by the named
proxy-holder on any issue where no direction has been given, including
ANY ISSUE 'WHICH MAY PROPERLY COME UP AT THE MEETING'. Likewise, all
voting shall be reported in detail; e.g.: numbers of proxies and
shares voted FOR, number of proxies and shares voted AGAINST, numbers
ABSTAINED, and numbers of proxies and shares UNMARKED, but counted as
in favor of management's position."
Board of Directors Recommendation and Statement. The Board of Directors
recommends that shareholders vote AGAINST the Proposal for the following
reasons.
If adopted, the Proposal would mean that any proxy cards which are returned
without specific voting instructions would not be voted at meetings of
shareholders and, since many shareholders do not mark their proxy cards, would
become in effect votes against the proposal whether or not the shareholders
objected to the proposal. Authorizing management to vote unmarked proxy cards
provides KeyCorp shareholders with a convenient way to participate in
shareholders' meetings. KeyCorp understands that many institutional
11
<PAGE> 16
shareholders who sign a great many proxy cards for numerous companies in which
they have investments appreciate the convenience of voting as management
recommends without the necessity of marking each proposal box, a process which
is of little inconvenience for one proxy card but a burden when dealing with
many proxy cards.
In addition, the proposal assumes that many shareholders who sign and
return their proxy cards do not intend to cast any vote -- an assumption KeyCorp
cannot make. Rather, KeyCorp believes that every shareholder that returns a
properly signed proxy card does intend to cast a vote. The Board of Directors is
obligated to give effect to the votes of all shareholders who wish to
participate whether those shareholders choose to do so by marking the proxy card
or simply by returning the proxy card without specific voting instructions.
Since the Proxy Statement and proxy card clearly state in several places
that any unmarked proxies will be voted in accordance with the recommendations
of the Board of Directors and since a shareholder who is willing to take the
time to find and mark the boxes will probably observe that statement, it seems
unlikely that many shareholders would be confused or surprised by the procedure.
With approximately 47% of KeyCorp's shares held by institutional shareholders,
it is important for KeyCorp to make voting by those shareholders as convenient
as possible in order to have sufficient shares represented at its shareholder
meetings to have a quorum.
Vote Required. Approval of the Proposal will require the affirmative vote
of a majority of the shares represented at the Annual Meeting.
12
<PAGE> 17
EXECUTIVE OFFICERS
Executive officers of KeyCorp are principally responsible for making policy
for KeyCorp. Mr. Riley is the Chief Executive Officer of KeyCorp for a term
expiring December 31, 1995. Mr. Gillespie is the President of KeyCorp for a term
expiring December 31, 1998 and is the Chief Operating Officer of KeyCorp until
such date as Mr. Riley retires as Chief Executive Officer, which date shall be
no later than December 31, 1995, whereupon Mr. Gillespie will become Chief
Executive Officer. All other executive officers hold their respective office or
offices for such term as may be prescribed by the Board (generally, officers are
elected annually) and until such persons' successors have been chosen. Messrs.
Riley, Gillespie, Allen, and Noall and certain other executive officers have
employment agreements with KeyCorp. All other executive officers have severance
or change of control agreements with KeyCorp.
There are no family relationships among executive officers. All have been
employed in officer capacities with KeyCorp, Old Key, or their subsidiaries, for
at least the past five years.
Set forth below are the names and ages of the executive officers of KeyCorp
as of March 1, 1995, positions held and the year from which held, and, in
parentheses, the year they first became executive officers of either KeyCorp or
Old Key.
GARY R. ALLEN (46)
1994 to present: Senior Executive Vice President and Chief Banking Officer,
KeyCorp; 1993-1994: Executive Vice President and Chief Banking Officer, Old Key;
1991-1993: President and Chief Executive Officer, Key Bank of New York;
1988-1993: Chief Executive Officer, Key Bank of Western New York. (1993)
KEVIN M. BLAKELY (43)
1994 to present: Executive Vice President, KeyCorp; 1992-1994: Executive
Vice President, Credit Policy and Risk Management, Society National Bank;
1990-1992: Senior Vice President, Loan Review, Ameritrust Company, N.A. (1994)
MICHAEL A. BUTLER (36)
1994 to present: Executive Vice President, KeyCorp; 1993-1994: Executive
Vice President, Old Key; 1991-1993: Senior Vice President, Loan Review, Old Key;
1987-1991: Vice President, Old Key. (1993)
CARTER B. CHASE (59)
1994 to present: Executive Vice President, General Counsel, and Secretary,
KeyCorp; 1990-1994: Senior Vice President and Assistant General Counsel, Old
Key. (1990)
ROBERT W. GILLESPIE (50)
1994 to present: President and Chief Operating Officer, KeyCorp; 1988-1994:
Chairman of the Board, Chief Executive Officer, and President, Society
Corporation. (1981)
ALLEN J. GULA, JR. (40)
1994 to present: Executive Vice President, KeyCorp; 1992-1994: Executive
Vice President and Group Executive, Information Technology and Operations,
Society Corporation; 1990-1992: Senior Vice President, Society Corporation.
(1992)
13
<PAGE> 18
LEE IRVING (46)
1994 to present: Executive Vice President, Treasurer, and Chief Accounting
Officer, KeyCorp; 1986-1994: Senior Vice President and Treasurer, Old Key.
(1986)
HENRY L. MEYER III (45)
1994 to present: Senior Executive Vice President and Chief Banking Officer,
KeyCorp; 1991-1994: Vice Chairman of the Board and Chief Banking Officer,
Society Corporation; 1990-1991: Executive Vice President, Society Corporation;
1994 to present: Chairman of the Board and Chief Executive Officer, Society
National Bank; 1993-1994: President and Chief Executive Officer, Society
National Bank; 1990-1993: President and Chief Operating Officer, Society
National Bank. (1987)
ROGER NOALL (59)
1994 to present: Senior Executive Vice President and Chief Administrative
Officer, KeyCorp; 1987-1994: Vice Chairman of the Board and Chief Administrative
Officer, Society Corporation. (1985)
VICTOR J. RILEY, JR. (63)
1994 to present: Chairman of the Board and Chief Executive Officer,
KeyCorp; 1973-1994: Chairman of the Board, President, and Chief Executive
Officer, Old Key. (1973)
BRUCE E. TOFTE (51)
1994 to present: Executive Vice President, KeyCorp; 1987-1994: Executive
Vice President and Chief Control Officer, Old Key. (1987)
MARTIN J. WALKER (43)
1994 to present: Executive Vice President, KeyCorp; 1990-1994: Executive
Vice President and Treasurer, Society Corporation. (1990)
JAMES W. WERT (47)
1994 to present: Senior Executive Vice President and Chief Financial
Officer, KeyCorp; 1990-1994: Vice Chairman of the Board and Chief Financial
Officer, Society Corporation. (1976)
14
<PAGE> 19
COMPENSATION OF EXECUTIVE OFFICERS
Summary. The following table sets forth the compensation paid by KeyCorp
and its subsidiaries for each of the previous three years to the individual who
was KeyCorp's Chief Executive Officer during 1994 and each of the remaining five
highest paid executive officers of KeyCorp at December 31, 1994. Amounts set
forth in this table for Messrs. Riley and Allen for periods prior to the Merger
were paid by Old Key.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-------------------------------
AWARDS PAYOUTS
ANNUAL COMPENSATION ---------------- ----------
-------------------------------------- SECURITIES LONG-TERM
OTHER ANNUAL UNDERLYING INCENTIVE
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS/SARS(#) PAYOUTS
- ------------------------------- ---- -------- -------- ------------ ---------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Victor J. Riley, Jr. 1994 $784,936 $565,000(1) $320,920(4) 80,000 $ 0(8)
Chairman of the Board 1993 720,000 720,000(2) -- (5) 4,519(6) 2,259,000(8)
and Chief Executive Officer 1992 690,000 690,000(2) -- (5) 4,519(6) 1,967,400(8)
Robert W. Gillespie 1994 685,000 465,000(1) -- (5) 120,000 390,757(9)
President and Chief 1993 599,000 625,000(3) -- (5) 40,000 305,784(9)
Operating Officer 1992 553,250 531,000(3) -- (5) 160,000(7) 203,536(9)
Gary R. Allen 1994 425,927 230,000(1) 350,043(4) 70,585 0
Senior Executive Vice 1993 348,333 178,125(2) -- (5) 17,387(6) 0
President and Chief 1992 265,000 90,000(2) -- (5) 10,212(6) 0
Banking Officer
Henry L. Meyer III 1994 407,250 230,000(1) -- (5) 60,000 237,281(9)
Senior Executive Vice 1993 363,000 300,000(3) -- (5) 20,000 182,055(9)
President and Chief 1992 337,500 255,000(3) -- (5) 80,000(7) 109,700(9)
Banking Officer
Roger Noall 1994 407,250 230,000(1) -- (5) 60,000 237,281(9)
Senior Executive Vice 1993 363,000 300,000(3) -- (5) 20,000 182,055(9)
President and Chief 1992 337,500 255,000(3) -- (5) 80,000(7) 119,669(9)
Administrative Officer
James W. Wert 1994 407,250 230,000(1) -- (5) 60,000 237,281(9)
Senior Executive Vice 1993 363,000 300,000(3) -- (5) 20,000 182,055(9)
President and Chief 1992 337,500 255,000(3) -- (5) 80,000(7) 112,832(9)
Financial Officer
</TABLE>
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITION ALL OTHER
- ------------------------------- COMPENSATION
----------------
<S> <C><C>
Victor J. Riley, Jr. $ 82,306(10)
Chairman of the Board 38,926(11)
and Chief Executive Officer 49,378(12)
Robert W. Gillespie 108,094(13)
President and Chief 211,011(14)
Operating Officer 41,494(15)
Gary R. Allen 27,575(16)
Senior Executive Vice 16,217(17)
President and Chief 11,697(18)
Banking Officer
Henry L. Meyer III 59,115(19)
Senior Executive Vice 111,915(20)
President and Chief 25,312(21)
Banking Officer
Roger Noall 69,010(22)
Senior Executive Vice 117,379(23)
President and Chief 25,312(21)
Administrative Officer
James W. Wert 60,708(24)
Senior Executive Vice 112,780(25)
President and Chief 25,312(21)
Financial Officer
<FN>
- ---------------
(1) Amounts awarded under KeyCorp's Short Term Incentive Compensation Plan for
the fiscal year 1994, whether paid in cash or deferred.
(2) Amounts awarded under Old Key's Executive Incentive Compensation Plan for
the respective fiscal years, whether paid in cash or deferred.
(3) Amounts awarded under Society's Management Incentive Compensation Plan for
the respective fiscal years, whether paid in cash or deferred.
(4) Each perquisite or other personal benefit which exceeds 25% of the total
perquisites and other personal benefits received by Messrs. Riley and Allen
is as follows: Mr. Riley -- $116,250 (moving allowance), $106,950 (tax
gross-up on moving allowance); Mr. Allen -- $175,056 (moving allowance),
$161,052 (tax gross-up on moving allowance).
(5) Other annual compensation received in the respective fiscal years was in
the form of perquisites, the amount of which did not exceed reporting
thresholds.
(6) This number has been adjusted to reflect the conversion of each share of
Old Key common stock into 1.205 KeyCorp Common Shares.
(7) This information has been adjusted to reflect a two-for-one stock split
which was effected by Society through a 100% stock dividend, effective
March 22, 1993.
(8) Amounts awarded under Old Key's Performance Compensation Plan for the three
year cycles ending in such respective fiscal years, whether paid in cash or
deferred. The amount shown for 1993 is made up of $1,126,000 attributable
to 1993 and $1,133,000 attributable to 1994, both of which amounts were
paid in 1993.
15
<PAGE> 20
(9) Amounts awarded under the Society Long Term Incentive Compensation Plan (or
for KeyCorp under the KeyCorp Long Term Cash Incentive Compensation Plan
for the 1992-1994 compensation period) for the three year cycles ending in
such respective fiscal years, whether paid in cash or deferred.
(10) $6,750 (amounts contributed under the KeyCorp 401(k) Savings Plan); $33,900
(amounts contributed under KeyCorp's Supplemental Savings Plan); $3,800
(universal life insurance premiums); $37,856 (split-dollar life insurance
premiums).
(11) $8,994 (amounts contributed under the Old Key Profit Sharing Plus Plan);
$29,932 (split-dollar life insurance premiums).
(12) $4,364 (amounts contributed under the Old Key Profit Sharing Plus Plan);
$3,800 (universal life insurance premiums); $4,264 (group term life
insurance premiums); $36,950 (split-dollar life insurance premiums).
(13) $9,240 (amounts contributed under the KeyCorp 401(k) Savings Plan); $83,205
(amounts contributed under KeyCorp's Supplemental Savings Plan); $15,649
(universal life insurance premiums).
(14) $13,491 (amounts contributed under the Society Stock Purchase and Savings
Plan); $190,298 (amounts contributed under the Society Supplemental Savings
Plan); $7,222 (universal life insurance premiums).
(15) $10,910 (amounts contributed under the Society Stock Purchase and Savings
Plan); $30,584 (amounts contributed under the Society Supplemental Savings
Plan).
(16) $6,750 (amounts contributed under the KeyCorp 401(k) Savings Plan); $13,800
(amounts contributed under KeyCorp's Supplemental Savings Plan); $7,025
(split-dollar life insurance premiums).
(17) $8,994 (amounts contributed to the Old Key Profit Sharing Plus Plan);
$7,223 (split-dollar life insurance premiums).
(18) $4,364 (amounts contributed to the Old Key Profit Sharing Plus Plan);
$7,333 (split-dollar life insurance premiums).
(19) $9,240 (amounts contributed under the KeyCorp 401(k) Savings Plan); $43,232
(amounts contributed under KeyCorp's Supplemental Savings Plan); $6,643
(universal life insurance premiums).
(20) $13,491 (amounts contributed under the Society Stock Purchase and Savings
Plan); $95,358 (amounts contributed under Society's Supplemental Savings
Plan); $3,066 (universal life insurance premiums).
(21) $10,910 (amounts contributed under the Society Stock Purchase and Savings
Plan); $14,402 (amounts contributed under Society's Supplemental Savings
Plan).
(22) $9,240 (amounts contributed under the KeyCorp 401(k) Savings Plan); $43,232
(amounts contributed under KeyCorp's Supplemental Savings Plan); $16,538
(universal life insurance premiums).
(23) $13,491 (amounts contributed under the Society Stock Purchase and Savings
Plan); $96,255 (amounts contributed under Society's Supplemental Savings
Plan); $7,633 (universal life insurance premiums).
(24) $9,240 (amounts contributed under the KeyCorp 401(k) Savings Plan); $43,232
(amounts contributed to KeyCorp's Supplemental Savings Plan); $8,236
(universal life insurance premiums).
(25) $13,491 (amounts contributed under the Society Stock Purchase and Savings
Plan); $95,640 (amounts contributed under Society's Supplemental Savings
Plan); $3,649 (universal life insurance premiums).
</TABLE>
16
<PAGE> 21
<TABLE>
Option Grants. The following table provides information regarding grants of
stock options made during the year ended December 31, 1994, to each of the
executive officers named in the Summary Compensation Table.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
---------------------------------------------------------- VALUE AT ASSUMED ANNUAL
NUMBER OF % OF TOTAL RATES OF STOCK PRICE
SECURITIES OPTIONS EXERCISE APPRECIATION FOR TEN
UNDERLYING GRANTED TO OR BASE YEAR OPTION TERM
OPTIONS EMPLOYEES PRICE EXPIRATION ------------------------
NAME GRANTED(#) IN FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
- ------------------------------------ -------------- -------------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Victor J. Riley, Jr. 40,000(1) 3.7% $29.150(7) 1/3/04 733,291 1,858,304
40,000(2) 6.7% 29.150(7) 1/3/04 0(8) 1,858,304
Robert W. Gillespie 40,000(3) 2.1% 29.875(7) 1/2/04 751,529 1,904,522
40,000(4) 3.7% 29.875(7) 1/2/04 751,529 1,904,522
40,000(5) 6.7% 29.875(7) 1/2/04 0(8) 1,904,522
Gary R. Allen 20,000(1) 1.8% 29.150(7) 1/3/04 366,646 929,152
20,000(2) 3.3% 29.150(7) 1/3/04 0(8) 929,152
12,536(6) 4.9% 31.875(7) 12/31/96 -- --
18,049(6) 7.1% 25.000(7) 12/31/96 -- --
Henry L. Meyer III 20,000(3) 1.1% 29.875(7) 1/2/04 375,765 952,261
20,000(4) 1.8% 29.875(7) 1/2/04 375,765 952,261
20,000(5) 3.3% 29.875(7) 1/2/04 0(8) 952,261
Roger Noall 20,000(3) 1.1% 29.875(7) 1/2/04 375,765 952,261
20,000(4) 1.8% 29.875(7) 1/2/04 375,765 952,261
20,000(5) 3.3% 29.875(7) 1/2/04 0(8) 952,261
James W. Wert 20,000(3) 1.1% 29.875(7) 1/2/04 375,765 952,261
20,000(4) 1.8% 29.875(7) 1/2/04 375,765 952,261
20,000(5) 3.3% 29.875(7) 1/2/04 0(8) 952,261
<FN>
- ---------------
(1) These options were granted under the KeyCorp 1988 Stock Option Plan and will
become exercisable on January 3, 1997.
(2) These are Performance Options granted under the KeyCorp 1988 Stock Option
Plan with a specially designed vesting provision. The vesting provision has
been designed to provide an exceptional reward to the executives if, and
only if, other KeyCorp shareholders have been rewarded by performance of
KeyCorp's stock price -- in an absolute sense as well as compared with the
general performance of other equity investments. The Performance Options
vest if the market value of KeyCorp Common Shares equals or exceeds $58.30
per share for seven consecutive trading dates by January 3, 2002, or equals
or exceeds $69.96 per share for seven consecutive trading dates by January
2, 2004, and, after the above test has been met, the proportionate change in
the fair market value of KeyCorp Common Shares since January 3, 1994 is at
the close of business of any single trading date, equal to or in excess of
the proportionate increase in the Standard & Poor's 500 Stock Index since
January 3, 1994. These options also vest upon certain changes in control as
set forth in the option agreement. After the Merger, no options will be
granted under the 1988 Stock Option Plan except those granted pursuant to
KeyCorp's Career Equity Program.
(3) These options were granted under the Amended and Restated 1991 Equity
Compensation Plan and became exercisable on January 3, 1995.
(4) These options were granted under the Amended and Restated 1991 Equity
Compensation Plan and will become exercisable on January 3, 1997.
(5) These are Performance Options granted under the Amended and Restated 1991
Equity Compensation Plan with a specially designed vesting provision similar
to the vesting provision of the Performance Options granted to Messrs. Riley
and Allen under the KeyCorp 1988 Stock Option Plan. The Performance Options
vest if the market value of KeyCorp Common Shares equals or exceeds $59.75
per share for seven consecutive trading dates by January 3, 2002, or equals
or exceeds $71.70 per share for seven consecutive trading dates by January
2, 2004, and, after the above test has been met, the proportionate change in
the fair market value of KeyCorp Common Shares since January 3, 1994 is at
the close of business of any single trading date, equal to or in excess of
the proportionate increase in the Standard & Poor's 500 Stock Index since
January 3, 1994. These options also vest upon certain changes in control as
set forth in the option agreement.
</TABLE>
17
<PAGE> 22
(6) Options granted under KeyCorp's Career Equity Program (the "Program")
established prior to the Merger by Old Key. Participants are former senior
officers of Old Key who were selected for participation in the Program on
the basis of their responsibilities and potential for contribution to
enhanced shareholder value, recognizing the number of years remaining to
expected retirement (at least five years). After the participant makes a
personal investment, the Program generates semi-annual share acquisitions
through automatic stock option exercises that can lead to increased share
ownership on the part of the executives in the Program. The executives must
retain the shares for the five-year duration of the Program so that the
amounts ultimately realized by the executives are contingent on the
long-term market price of KeyCorp stock.
(7) The exercise price equals the market price of a KeyCorp Common Share on the
date of the option grant.
(8) No potential realizable value is shown for these options since they will
never vest at the 5% appreciation rate.
The options reported in the preceding table for Messrs. Riley and Allen
were granted on January 3, 1994, at an exercise price equal to the market price
of Old Key common stock on that date, which was $29.15 (adjusted to reflect the
conversion of each share of Old Key common stock into 1.205 KeyCorp Common
Shares). Based on this stock price, the market value of KeyCorp Common Shares at
the end of the ten year option period using 5% and 10% compounded annual returns
would be $47.48 and $75.61, respectively. The options reported in the preceding
table for Messrs. Gillespie, Meyer, Noall, and Wert were granted on January 3,
1994, at an exercise price equal to the market price of Society's Common Shares
on that date, which was $29.875. Based on this stock price, the market value of
KeyCorp Common Shares at the end of the ten year option period using 5% and 10%
compounded annual returns would be $48.66 and $77.49, respectively.
Option Exercises and Values. The following table provides information
regarding exercises of stock options during the year ended December 31, 1994, by
the executive officers named in the Summary Compensation Table, and the value of
such officers' unexercised stock options as of December 31, 1994.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/ OPTIONS/
SHARES SARS AT FY-END (#) SARS AT FY-END($)
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE (1)
- ------------------------------- --------------- ------------ ------------------- -------------------
<S> <C> <C> <C> <C>
Victor J. Riley, Jr. 12,050 231,458 473,620/ 3,349,122/
80,000 0
Robert W. Gillespie no exercise -- 256,000/ 1,502,998/
240,000 0
Gary R. Allen 39,731 251,975 128,976/ 195,854/
40,000 0
Henry L. Meyer III no exercise -- 181,242/ 1,269,570/
120,000 0
Roger Noall no exercise -- 40,000/ 0/
120,000 0
James W. Wert no exercise -- 115,000/ 524,188/
120,000 0
<FN>
- ---------------
(1) Based on a December 31, 1994 closing price for KeyCorp Common Shares which
equalled $25.00.
</TABLE>
18
<PAGE> 23
Long Term Incentive Compensation. During 1994, KeyCorp's Compensation and
Organization Committee selected participants in the KeyCorp Long Term Cash
Incentive Compensation Plan for the 1994-1996 three-year compensation period.
Messrs. Riley, Gillespie, Allen, Meyer, Noall, and Wert were included as
participants. The Committee has determined objective criteria by which KeyCorp's
financial performance should be judged and distributions under the Plan should
be made. These criteria were based on the Committee's judgment of a range of
return on common equity that would warrant satisfactory to excellent results for
KeyCorp for the compensation period. Based on KeyCorp's 1994 salary grade market
points (i.e., average salaries for executives in the marketplace in similar
positions) upon which payments under the Plan will be based (which may change by
the time the awards are actually determined), the officers in the Summary
Compensation Table would be eligible to receive the following payments for the
compensation periods indicated.
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS UNDER
NON-STOCK PRICE-BASED PLANS
PERFORMANCE -----------------------------------
NAME PERIOD THRESHOLD(1) TARGET MAXIMUM
- ------------------------------------------------ ----------- --------- -------- ----------
<S> <C> <C> <C> <C>
Victor J. Riley, Jr. 1994-1995(2) $ 41,700 $166,800 $ 385,725
1994-1995(3) 422,400 666,600 1,133,400
Robert W. Gillespie 1994-1996 51,375 205,500 475,219
Gary R. Allen 1994-1996 26,563 106,250 245,703
Henry L. Meyer III 1994-1996 26,563 106,250 245,703
Roger Noall 1994-1996 26,563 106,250 245,703
James W. Wert 1994-1996 26,563 106,250 245,703
<FN>
- ---------------
(1) If the threshold is not met, no payouts will be made.
(2) By the terms of his employment contract, Mr. Riley is scheduled to retire on
December 31, 1995. As a result, his award under the KeyCorp Long Term Cash
Incentive Compensation Plan will be based on the two year portion of the
compensation period during which Mr. Riley is an employee. The amounts
included in the table represent two-thirds of the amounts that would be
applicable if Mr. Riley were a participant in the plan for the full
1994-1996 compensation period.
(3) Mr. Riley is the only participant in the KeyCorp 1994-1995 Performance Unit
Plan for Mr. Riley. Under the terms of this plan, Mr. Riley can earn awards
at the levels reported in this table based on KeyCorp's return on average
total assets, return on average common equity, and efficiency ratio, all of
which are subject to a threshold level of asset quality, for the 1994-1995
period.
</TABLE>
These executives, with the exception of Mr. Riley and Mr. Allen, are also
participants in the KeyCorp Long Term Cash Incentive Compensation Plan for the
1993-1995 compensation period, which has a similar range of possible payouts.
19
<PAGE> 24
Retirement Plan. Substantially all officers and employees of KeyCorp and
participating subsidiaries are participants in the Retirement Plan for Employees
of KeyCorp and Subsidiaries and related supplemental and excess retirement
plans. The Retirement Plan provides a pension based upon years of participation
in the Retirement Plan and average annual compensation for the five highest
consecutive years during the last ten years of employment. The following table
sets forth the estimated maximum annual benefits payable under the Retirement
Plan to participants who attain the Social Security retirement age on December
31, 1994, and who elect to receive a straight lifetime annuity:
<TABLE>
<CAPTION>
ESTIMATED ANNUAL RETIREMENT BENEFITS
AVERAGE WITH INDICATED YEARS OF PARTICIPATION1
FINAL --------------------------------------------------------------------
COMPENSATION 15 20 25 30 35
- ------------ -------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$ 400,000 $220,000 $ 260,000 $ 300,000 $ 300,000 $ 300,000
450,000 247,500 292,500 337,500 337,500 337,500
500,000 275,000 325,000 375,000 375,000 375,000
550,000 302,500 357,500 412,500 412,500 412,500
600,000 330,000 390,000 450,000 450,000 450,000
650,000 357,500 422,500 487,500 487,500 487,500
700,000 385,000 455,000 525,000 525,000 525,000
750,000 412,500 487,500 562,500 562,500 562,500
800,000 440,000 520,000 600,000 600,000 600,000
850,000 467,500 552,500 637,500 637,500 637,500
900,000 495,000 585,000 675,000 675,000 675,000
950,000 522,500 617,500 712,500 712,500 712,500
1,000,000 550,000 650,000 750,000 750,000 750,000
1,100,000 605,000 715,000 825,000 825,000 825,000
1,200,000 660,000 780,000 900,000 900,000 900,000
1,300,000 715,000 845,000 975,000 975,000 975,000
1,400,000 770,000 910,000 1,050,000 1,050,000 1,050,000
1,500,000 825,000 975,000 1,125,000 1,125,000 1,125,000
1,600,000 880,000 1,040,000 1,200,000 1,200,000 1,200,000
1,700,000 935,000 1,105,000 1,275,000 1,275,000 1,275,000
1,800,000 990,000 1,170,000 1,350,000 1,350,000 1,350,000
1,900,000 1,045,000 1,235,000 1,425,000 1,425,000 1,425,000
2,000,000 1,100,000 1,300,000 1,500,000 1,500,000 1,500,000
2,200,000 1,210,000 1,430,000 1,650,000 1,650,000 1,650,000
2,400,000 1,320,000 1,560,000 1,800,000 1,800,000 1,800,000
2,600,000 1,430,000 1,690,000 1,950,000 1,950,000 1,950,000
2,800,000 1,540,000 1,820,000 2,100,000 2,100,000 2,100,000
3,000,000 1,650,000 1,960,000 2,250,000 2,250,000 2,250,000
<FN>
- ---------------
(1) This table reflects estimated annual retirement benefits under the formula
used with respect to KeyCorp employees who were employees of Old Key and its
subsidiaries. KeyCorp employees who were employees of Society and its
subsidiaries receive similar benefits based on similar compensation.
</TABLE>
All benefit amounts are subject to the annual pension limitations imposed
by the Internal Revenue Code for qualified plans; however, the extent of any
reduction will vary according to the limits existing at the time pension
payments commence. Any amounts under the Retirement Plan reduced by Internal
Revenue Code
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<PAGE> 25
limitations will be paid under an excess benefit retirement plan. The benefits
are not subject to any deduction for social security or any other offset.
Compensation for purposes of the Retirement Plan and the excess and
supplemental plans is total base pay and incentive compensation during a
calendar year, plus amounts deducted for the 401(k) and flexible benefits plans
during such year, but includes neither amounts attributable to stock options nor
appreciation rights nor receipt of non-cash remuneration that is included in the
participant's income for Federal income tax purposes. Compensation for purposes
of the Retirement Plan and excess and supplemental plans is substantially the
same as shown in the Summary Compensation Table after excluding stock options,
"all other compensation," and "other annual compensation." Normal retirement age
is 65. The Retirement Plan requires 5 years of service for vesting for the
former Old Key employees, including Messrs. Riley and Allen, and either 10 years
of service or the attainment of age 55 for former Society employees, including
Messrs. Gillespie, Meyer, Noall, and Wert. Messrs. Riley, Gillespie, Allen,
Meyer, Noall and Wert were credited under the Retirement Plan with 30, 26, 22,
22, 11 and 19 years of service, respectively, at year-end 1994.
EMPLOYMENT, SEVERANCE, AND CHANGE OF CONTROL AGREEMENTS
KeyCorp is a party to employment agreements, severance agreements, and
change of control agreements with certain of its executive officers.
Employment and Consulting Agreement With Mr. Riley. KeyCorp and Mr. Riley
are parties to an employment and consulting agreement pursuant to which Mr.
Riley is to be employed by KeyCorp as Chairman of the Board, Chairman of the
Executive Committee of the Board, and Chief Executive Officer through December
31, 1995 (the "Employment Period") and is to be retained by KeyCorp as an
independent contractor to serve as Chairman of the Board and Chairman of the
Executive Committee of the Board from January 1, 1996 through December 31, 1998
(the "Independent Contractor Period").
During the Employment Period, Mr. Riley's compensation is to include an
annual base salary of $825,000 and Mr. Riley is a participant, along with other
senior executives of KeyCorp, in KeyCorp's Short Term Incentive Compensation
Plan and, on a pro rata basis, KeyCorp's Long Term Cash Incentive Compensation
Plan. In addition, Mr. Riley is the only participant in the "KeyCorp 1994-1995
Performance Unit Plan for Mr. Riley" under the terms of which, depending on the
financial results of KeyCorp for the 1994-1995 period (return on average total
assets, return on average common equity, and efficiency ratio, all of which are
subject to a threshold level of asset quality), Mr. Riley can earn up to a
maximum of $1,133,400.
Following the Employment Period, Mr. Riley is entitled to a retirement
benefit determined under a Supplemental Retirement Benefit Plan for executives
of Old Key. If Mr. Riley dies during the Employment Period or while retired as
disabled under KeyCorp's pension plan and if he is survived by his wife, KeyCorp
will pay a special supplemental death benefit of $50,000 per year to Mr. Riley's
wife through the first to occur of her death or the 20th anniversary of Mr.
Riley's death.
During the Independent Contractor Period, Mr. Riley's duties will be to
preside at meetings of the Board and of the Executive Committee and at
shareholder meetings of KeyCorp and to perform such other duties as he may be
specifically requested to perform by the Board or by KeyCorp's Chief Executive
Officer that he, in his sole discretion, agrees to perform. During the
Independent Contractor Period, KeyCorp is to pay Mr. Riley base annual
compensation of $600,000 and such additional amount, if any, as the Compensation
and
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<PAGE> 26
Organization Committee may, in its sole discretion, authorize for payment to Mr.
Riley as incentive compensation.
If Mr. Riley's status as an employee or independent contractor is
terminated prior to the end of the Employment Period or the Independent
Contractor Period for any reason (except by KeyCorp for cause, or by Mr. Riley
during the Employment Period without the consent of the Board), KeyCorp is to
pay to Mr. Riley or his estate or designated beneficiary a lump sum equal to the
sum of all base compensation that would have been payable to Mr. Riley had he
continued to perform services through December 31, 1998, plus, if such
termination occurs during the Employment Period, all incentive compensation that
would have been earned if Mr. Riley had continued to be an employee through
December 31, 1995 and the financial performance of KeyCorp had been at actual
levels of performance up to the date of termination and at target levels (as
specified in each incentive compensation plan) thereafter. Under the agreement,
KeyCorp would have cause to terminate Mr. Riley's employment or independent
contractor status if Mr. Riley were convicted of a felony, if he continued to
engage in activities presenting material conflicts of interest after notice in
writing from the Board, or if a federal or state regulatory agency barred Mr.
Riley from service with KeyCorp.
Mr. Riley is entitled to an additional "gross up payment" if he is subject
to the excise tax on receipt of "excess parachute payments" as defined in
Section 280G of the Internal Revenue Code sufficient to put him in the same
position on an after tax basis as if the excise tax did not apply; to continuing
indemnification to the fullest extent permitted by Ohio law for actions against
him by reason of his being or having been a director or officer of KeyCorp or
any related entity; to payment of any legal fees incurred in enforcing his
rights under his employment and consulting agreement; and to ancillary benefits
incident to the performance of his duties under that agreement.
Employment Agreement With Mr. Gillespie. KeyCorp and Mr. Gillespie are
parties to an employment agreement, pursuant to which Mr. Gillespie is to be
employed by KeyCorp as President and Chief Operating Officer through December
31, 1995 and as President and Chief Executive Officer thereafter and through
December 31, 1998. Under the employment agreement, Mr. Gillespie is to be paid a
base salary of not less than $700,000 per year and is entitled to participate in
all KeyCorp executive incentive compensation plans including KeyCorp's short and
long term incentive compensation plans. The employment agreement provides for an
additional two years of compensation and benefits to Mr. Gillespie (through
December 31, 2000) if, in 1998, the employment agreement is not mutually
extended or a new employment agreement is not entered into and Mr. Gillespie
elects to terminate his employment and receive those benefits.
Under the employment agreement, Mr. Gillespie may terminate his employment
for good reason (and receive post-termination benefits) under certain
circumstances whether or not a change of control of KeyCorp occurs. Those
circumstances that will constitute good reason under the employment agreement
whether or not a change of control occurs include (a) demotion or removal of Mr.
Gillespie from his executive positions (i.e., President and Chief Operating
Officer during 1995 and President and Chief Executive Officer thereafter); (b) a
reduction in Mr. Gillespie's base salary or participation in benefit plans; (c)
a good faith determination by Mr. Gillespie that his responsibilities, duties,
and authority have been materially reduced from those contemplated by the
employment agreement; or (d) relocation of Mr. Gillespie's principal place of
employment outside the Cleveland metropolitan area. Those circumstances that
will constitute good reason under the employment agreement after a change of
control of KeyCorp occurs also include any reduction in Mr. Gillespie's
incentive compensation or a good faith determination by Mr. Gillespie that his
responsibilities
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<PAGE> 27
or duties have been materially reduced from their level before the change of
control or that he is unable to carry out the responsibilities of his positions
as a result of the change of control. Under the employment agreement, a change
of control will be deemed to have occurred (a) if any person acquires 25% or
more of the voting stock of KeyCorp; (b) if the composition of the Board of
Directors changes during any period of 24 consecutive calendar months so that a
majority of the individuals at the end of the period were neither on the Board
nor approved by a majority of the individuals who were on the Board at the
beginning of the period; (c) if KeyCorp merges with another corporation and
KeyCorp shareholders receive or retain in the merger less than 60 percent of the
outstanding voting securities of the surviving corporation; (d) if all or
substantially all of the assets of KeyCorp are sold or otherwise transferred; or
(e) if a plan of liquidation or dissolution of KeyCorp is adopted by its
shareholders.
Under the employment agreement, if Mr. Gillespie's employment with KeyCorp
is terminated before his 65th birthday for any reason other than voluntary
resignation by Mr. Gillespie (without good reason) before December 31, 1998 or
termination by KeyCorp for cause, and Mr. Gillespie (or his estate or designated
beneficiary) is entitled to receive retirement benefits under any KeyCorp
retirement plan after March 26, 1999 (Mr. Gillespie's 55th birthday), KeyCorp
will pay a supplemental retirement benefit in an amount sufficient to provide
Mr. Gillespie the same aggregate benefit that he would have received if he had
continued in the employ of KeyCorp through his 65th birthday (by eliminating any
reduction because he started receiving benefits before his 65th birthday and
giving him credit for additional years of service for the period after his
termination date and before his 65th birthday). Under the employment agreement,
KeyCorp will have "cause" to terminate Mr. Gillespie's employment before a
change of control if he commits a felony, acts dishonestly in a way that is
materially inimical to the best interests of KeyCorp, competes with KeyCorp, or
totally abandons his duties and responsibilities. KeyCorp will have "cause" to
terminate Mr. Gillespie's employment after a change of control if he is
convicted of a felony, acts dishonestly and feloniously in a way that is
materially inimical to the best interests of KeyCorp, or competes with KeyCorp.
If a change of control occurs while Mr. Gillespie is employed under the
employment agreement and an exercise by him of the right referred to in this
paragraph would not conflict with the treatment for accounting purposes of any
transaction entered into in connection with the change of control as a pooling
of interests, Mr. Gillespie will be entitled to surrender his rights in any
outstanding KeyCorp stock options (whether or not then exercisable) that have
been outstanding for at least six months, in return for a payment equal to the
spread on those options.
Under the employment agreement, Mr. Gillespie is entitled to continuing
indemnification to the fullest extent permitted by Ohio law for actions against
him by reason of his being or having been a director or officer of KeyCorp or
any related entity; to payment of certain legal fees incurred in enforcing his
rights under his employment agreement; to ancillary benefits incident to the
performance of his duties under that agreement; and to a special supplemental
death benefit if he dies while employed by KeyCorp and he is survived by his
wife. The special supplemental death benefit, if payable, would consist of
monthly installments to Mr. Gillespie's wife (or to her estate), through the
15th anniversary of Mr. Gillespie's death. Each monthly payment would be in an
amount that, when added to the monthly survivor benefits, if any, payable to Mr.
Gillespie's wife under all KeyCorp retirement plans, equals one third of the
monthly compensation (base salary and incentive compensation) that Mr. Gillespie
would have received during that month if he had been terminated by KeyCorp
without cause.
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<PAGE> 28
Regulations Provision Regarding Positions To Be Held by Messrs. Riley and
Gillespie. KeyCorp's Regulations, as amended effective as of March 1, 1994,
provide in part that neither Mr. Riley nor Mr. Gillespie may be removed by
action of the Board of Directors from any office held by either of them except
by the affirmative vote of three-quarters of the entire authorized Board of
Directors and that any such removal shall be without prejudice to the contract
rights of either of them.
Employment Agreement With Mr. Noall. KeyCorp and Mr. Noall are parties to
an employment agreement pursuant to which Mr. Noall is to be employed by KeyCorp
as its Chief Administrative Officer through the date of the 1996 Annual Meeting
of KeyCorp (the end of the "Scheduled Term") at a base salary of not less than
$369,000 per year. If Mr. Noall remains in the employ of KeyCorp through the end
of the Scheduled Term, his status as an employee of KeyCorp will thereafter be
continued for a three year "Supplemental Term" during which he will have such
duties and responsibilities as KeyCorp and he may mutually agree. During the
Supplemental Term KeyCorp will pay to Mr. Noall compensation at a rate equal to
the sum of his base salary (at the highest rate in effect during the Scheduled
Term) and his average annual incentive compensation (the average of his two
highest years of incentive compensation during the five year period from 1991
through 1995). If Mr. Noall dies after the Supplemental Term has begun, the
compensation that would otherwise have been payable to him during the
Supplemental Term is to be paid to his estate or to a beneficiary designated by
him.
The employment agreement provides that following any termination of Mr.
Noall's employment (other than a termination by KeyCorp for cause during the
Scheduled Term), KeyCorp will provide a supplemental retirement benefit to Mr.
Noall so that he will receive, in the aggregate, the amounts of retirement
benefits to which he would have been entitled under all KeyCorp retirement plans
if his employment with KeyCorp and its predecessors had commenced on June 20,
1973. In addition, if Mr. Noall remains in the employ of KeyCorp through the end
of the Supplemental Term as contemplated by the employment agreement, he will be
entitled to begin receiving retirement benefits immediately after the end of the
Supplemental Term (and ten months before his normal retirement date) without any
discount for early commencement of retirement benefits.
Under the employment agreement, if Mr. Noall's employment is terminated
before the end of the Scheduled Term by KeyCorp without cause or by Mr. Noall
for good reason, Mr. Noall will be entitled to receive post-termination
compensation and benefits through the end of the Supplemental Term. The post-
termination compensation and benefits would include compensation continuation
payments at a rate equal to the sum of Mr. Noall's base salary (at the highest
rate in effect during the Scheduled Term) and his average annual incentive
compensation (the average of his two highest years of incentive compensation
during his last five years of employment), continued medical and life insurance
benefits, continued coverage under all retirement and savings plans (or the cash
equivalent thereof), and continuing treatment as an employee for purposes of
outstanding stock options.
Under the employment agreement, "good reason" will include, in all events,
any demotion, reduction in base salary, exclusion from full participation in
benefit plans maintained for senior executives of KeyCorp generally, or
relocation of Mr. Noall's principal place of employment outside of the Cleveland
metropolitan area. After a change of control, "good reason" will also include
any reduction of incentive compensation, any reduction in Mr. Noall's
responsibilities, duties, or authority from that in effect before the change of
control, or
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<PAGE> 29
a good faith determination by Mr. Noall that he is unable to carry out the
responsibilities of his position as a result of the change of control.
Under the employment agreement, KeyCorp will have "cause" to terminate Mr.
Noall's employment before a change of control if he commits a felony, acts
dishonestly in a way that is materially inimical to the best interests of
KeyCorp, competes with KeyCorp, or totally abandons his duties and
responsibilities. KeyCorp will have "cause" to terminate Mr. Noall's employment
after a change of control if he is convicted of a felony, acts dishonestly and
feloniously in a way that is materially inimical to the best interests of
KeyCorp, or competes with KeyCorp. The definition of "change of control" in Mr.
Noall's employment agreement is the same as the definition of that term in Mr.
Gillespie's employment agreement.
If a change of control occurs while Mr. Noall is employed under the
employment agreement and an exercise by him of the right referred to in this
paragraph would not conflict with the treatment for accounting purposes of any
transaction entered into in connection with the change of control as a pooling
of interests, Mr. Noall will be entitled to surrender his rights in any
outstanding KeyCorp stock options (whether or not then exercisable) that have
been outstanding for at least six months, in return for a payment equal to the
spread on those options.
Amended Employment and Severance Agreements With Officers Who Were Officers
of Old Key. KeyCorp and four of its executive officers (other than Mr. Riley)
who were officers of Old Key, including Mr. Allen, are parties to preexisting
employment and severance agreements (each of which contained change of control
provisions) and amendments to those agreements that were agreed to in
anticipation of the Merger.
In general, as amended, each employment agreement provides for the
employment of the officer through a specified term of employment, the expiration
dates of which vary, depending upon the officer, from December 31, 1994 to June
30, 1998. The expiration date of Mr. Allen's employment agreement is June 30,
1998. If the officer's employment is terminated by Keycorp without cause at any
time before the end of the specified term, the officer will be entitled to
receive all payments and benefits (including retirement benefits) to which the
officer would have been entitled had he continued to perform services under the
employment agreement through the end of the specified term.
In general, as amended, each severance agreement provides that if the
officer's employment is terminated on or before March 1, 1996 (i.e., the second
anniversary of the Merger) by KeyCorp (other than for cause, disability, or
retirement) or by the officer for good reason, the officer is entitled to
receive prorated payments of base salary and incentive compensation through the
date of termination plus a lump sum payment equal to 299% of the officer's
annual base salary.
In general, under the amendments to these employment and severance
agreements an officer may become entitled to post-termination benefits if the
officer's employment is terminated before March 1, 1997 (i.e., the third
anniversary of the Merger) by KeyCorp (other than for cause, disability, or
retirement) or by the officer for good reason. If an officer's employment is
terminated before March 1, 1997, under circumstances entitling the officer to
post-termination benefits under the terms of the amendment, the officer will be
entitled to elect to receive (a) the benefits, if any, called for under the
officer's amended employment agreement or (b) the benefits, if any, called for
under the officer's amended severance agreement or (c) a lump sum payment equal
to 1/12 of the sum of the officer's base salary at the time of termination and
the officer's average annual incentive compensation for the years 1991, 1992,
and 1993, multiplied by the greater
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<PAGE> 30
of (i) 18 (i.e., 18 months of compensation) or (ii) the number of months between
the date of the termination and the third anniversary of the Merger. If the
officer elects to receive the lump sum payment, KeyCorp will also continue
medical and life insurance coverage to the officer for up to 18 months (or, if
longer, through the third anniversary of the Merger), but not beyond the date
the officer secures other employment.
For purposes of the amended employment and severance agreements and the
amendments thereto, "cause" includes a material breach of the amended employment
agreement by the officer, misconduct as an executive of KeyCorp, unreasonable
neglect or refusal to perform assigned duties, conviction of a crime involving
moral turpitude, adjudication as a bankrupt, failure to follow reasonable
instructions of superior executive officers, or imposition by a bank regulatory
agency of a final order of suspension or removal for improper conduct, and "good
reason" includes any reduction in the officer's base salary, any reduction in
the officer's job grade or failure to provide the officer the same opportunities
with respect to incentive compensation, stock option grants, and other benefits
as are provided to other employees with the same job grade, and any requirement
that the officer relocate as a condition of employment.
Amended Change of Control Agreements With Officers Who Were Officers of
Society. KeyCorp and four of its executive officers (other than Messrs.
Gillespie and Noall) who were officers of Society, including Messrs. Meyer and
Wert, are parties to preexisting change of control agreements that were both
activated by, and amended in anticipation of, the Merger. Under the amended
change of control agreements an officer will become entitled to receive payments
and benefits if the officer's employment with KeyCorp is terminated (a)
voluntarily by the officer during a three-month window period commencing on June
1, 1995 (i.e., 15 months after the date of the Merger) or (b) for any reason
before March 1, 1997 (i.e., the third anniversary of the Merger), other than
termination for cause, disability, or death or voluntary resignation by the
officer (outside the three-month window period) except that the officer will be
entitled to such payments and benefits if the officer resigns voluntarily after
the officer's base salary has been reduced or the principal place of the
officer's employment has been relocated. For purposes of the amended change of
control agreements, "cause" includes conviction of a felony, dishonesty in the
course of employment that constitutes a felony and is materially inimical to the
best interests of KeyCorp or a subsidiary, and competing with KeyCorp.
If an officer becomes entitled to benefits under an amended change of
control agreement by virtue of termination of employment on or before September
1, 1995 (i.e., during the first 18 months after the Merger), KeyCorp will
provide to the officer monthly compensation continuation payments (based on
salary at the highest rate in effect during the one year period ended on March
1, 1994 and average annual incentive compensation for the three highest of the
years 1989 through 1993, inclusive) for 24 months plus a lump-sum severance
payment equal to six of the monthly compensation continuation payments. In
addition, KeyCorp will continue to provide or arrange medical benefits,
long-term disability benefits, and group term life insurance benefits for 24
months and will continue the officer in all retirement and savings plans for the
24-month period unless impermissible under the plan or applicable law, in which
case KeyCorp will make an equivalent lump-sum cash payment. Certain of these
payments may be reduced if the officer accepts other full-time employment with
an unaffiliated employer during the 24-month period following termination of
employment. The payments would be payable after the death of the officer to his
surviving beneficiaries, to his estate, or to a trust.
If an officer becomes entitled to benefits under an amended change of
control agreement by virtue of termination of employment at any time during the
period from March 2, 1996 through March 1, 1997 (i.e.,
26
<PAGE> 31
during the 25th through 36th months after the Merger), those benefits would
include a lump sum severance payment equal to 150% of the sum of the officer's
annual base salary (at the level in effect at the time of the Merger) plus the
average of the incentive compensation awards payable to the officer for the
years 1991, 1992, and 1993 and continued medical and life insurance coverage for
up to 18 months after the termination (but not beyond the date the officer
became employed with another employer).
If an officer becomes entitled to benefits under an amended change of
control agreement by virtue of termination of employment at any time during the
period from September 2, 1995 through March 1, 1996 (i.e., during the 19th
through 24th months after the Merger), the officer would have the right to elect
to receive either the benefits in effect for termination of employment during
the first 18 months after the Merger or those in effect for termination of
employment during the 25th through 36th months after the Merger.
New Change of Control Agreements. KeyCorp has entered into new change of
control agreements with each of Messrs. Allen, Meyer, and Wert and six other
executive officers of KeyCorp (other than Messrs. Riley, Gillespie, and Noall)
which provide that if, at any time within three years after the occurrence of a
change of control, the officer's employment is terminated by KeyCorp (except for
cause) or the officer terminates employment because the officer's base salary is
reduced or relocation is made a condition of the officer's employment, KeyCorp
will pay to the officer a lump sum severance benefit equal to two and one half
years' compensation (base salary and average annual incentive compensation) and
will pay the cost of continuing health benefits until the earlier of the
expiration of the continuation period required by Federal law or the date the
officer secures other employment. Each new change of control agreement also
provides a three-month window period, commencing 15 months after the date of a
change of control, during which the officer may voluntarily resign and receive a
lump sum severance benefit equal to one year's compensation (base salary and
average annual incentive compensation). For purposes of these agreements, a
change in control will be deemed to have occurred (a) if KeyCorp is merged with
or into another corporation and, within 24 months after that transaction, fewer
than 40% of the members of the board of directors of the surviving corporation
are individuals who were members of KeyCorp's Board of Directors before the
transaction; (b) if KeyCorp is merged with or into another corporation and
KeyCorp shareholders receive or retain in the merger less than 40 percent of the
outstanding voting securities of the surviving corporation and, at any time
within 24 months after that transaction, individuals who were members of
KeyCorp's Board of Directors before the transaction constitute less than 51% of
the members of the board of directors of the surviving corporation; (c) if any
person announces an intention to engage in an election contest relating to the
election of directors of KeyCorp and, within 24 months thereafter, a majority of
the members of KeyCorp's Board of Directors are individuals who became members
of the Board of Directors after the last meeting of shareholders of KeyCorp held
before that intention was announced; and (d) if, in a transaction that either
was not approved by the Board of Directors of KeyCorp or was only so approved
after an unsolicited effort to take control of KeyCorp had been publicly
announced, (i) any person acquires 25% or more of the voting stock of KeyCorp;
(ii) KeyCorp merges with another corporation and KeyCorp shareholders receive or
retain in the merger less than 50 percent of the outstanding voting securities
of the surviving corporation; (iii) all or substantially all of the assets of
KeyCorp are sold or otherwise transferred; or (iv) a plan of liquidation or
dissolution of KeyCorp is adopted by its shareholders. For purposes of the new
change in control agreements, "cause" includes conviction of a felony,
dishonesty in the course of employment that constitutes a felony and is inimical
to the best interest of KeyCorp or a subsidiary, imposition by a bank regulatory
agency of a final order of suspension or removal, or competing with KeyCorp.
27
<PAGE> 32
Section 280G Limitation on Payments. Each of the employment, severance, and
change of control agreements described above to which KeyCorp is a party (other
than the employment agreement with Mr. Riley) provides, in effect, that if any
payments thereunder would otherwise be treated as "excess parachute payments"
under Section 280G of the Internal Revenue Code (and would therefore be
nondeductible by KeyCorp and subject to a 20% excise tax upon receipt by the
officer), the aggregate amount of those payments is to be reduced to the extent
necessary to avoid that treatment.
Mandatory Deferral of Certain Amounts. Each of the employment, severance,
and change of control agreements described above to which KeyCorp is a party
provides, in effect, that if any amount of compensation otherwise payable to the
officer as earned would not be deductible by KeyCorp by reason of the
disallowance rules of Section 162(m) of the Internal Revenue Code (which rules
generally disallow deductions for certain compensation paid to any of certain
"covered employees" of a publicly held corporation in excess of $1,000,000 per
year), but would be deductible if it were deferred until a later year, that
amount of compensation will be so deferred until the earlier of the first date
on which the compensation can be paid without disallowance of the deduction to
KeyCorp or April 15 of the year immediately following the year in which the
officer ceases to be a covered employee of KeyCorp. Upon payment of any such
deferred amounts of compensation, KeyCorp will pay to the officer an additional
amount equivalent to the interest that would have accrued on the deferred
compensation if interest had accrued thereon at a rate equal to the interest
rate applicable to deferrals made under incentive compensation plans generally
applicable to KeyCorp executives.
Grantor Trusts. KeyCorp maintains grantor trusts to fund its commitments to
executive officers or directors who were executive officers or directors of Old
Key prior to the Merger. These commitments were made under the survivor benefit,
supplemental retirement, deferred compensation, and severance plans or the
successor plans maintained by KeyCorp for executive officers of Old Key and
under the death benefit, retirement benefit, and deferred compensation plans or
the successor plans maintained by KeyCorp for directors of Old Key. The trust
agreements provide that if KeyCorp fails to make payments under any of those
benefit plans when those payments are due, the trustee is to make the payments
from the assets of the trust. KeyCorp has partially funded the trusts with life
insurance policies. As of March 1, 1995, the value of all assets in the grantor
trust for executives was approximately $66,429,081 and the value of all assets
in the grantor trust for directors was approximately $2,625,115.
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<PAGE> 33
COMPENSATION AND ORGANIZATION COMMITTEE AND
EXECUTIVE EQUITY COMPENSATION COMMITTEE
JOINT REPORT ON EXECUTIVE COMPENSATION
KeyCorp's Board of Directors has delegated to its Compensation and
Organization Committee ("C&O Committee") and its Executive Equity Compensation
Committee ("EEC Committee") responsibility for executive compensation. The EEC
Committee has responsibility for equity based compensation, and the C&O
Committee has responsibility for all other forms of executive compensation. The
C&O Committee and the EEC Committee are jointly referred to herein as the
"Compensation Committees."
In designing KeyCorp's executive compensation program, KeyCorp and the
Compensation Committees concluded that the program should:
- Operate as a primary motivator in driving executive decisions and
activities to enhance shareholder value.
- Pay total compensation that is commensurate with KeyCorp's performance as
compared with other comparable financial institutions.
- Promote a strong pay for performance culture by ensuring that highly
competitive compensation is conditioned on the attainment of challenging
objectives.
- Permit KeyCorp to attract, retain, and motivate the best available
executive talent.
- Encourage substantial share ownership by executives, thereby linking
management's commitment to KeyCorp's long term success.
The executive compensation program -- including the establishment of job
grades, salary ranges, and market points (the approximate average salary for
executives in similar jobs in the marketplace), and the assignment of senior
executives to job grades based upon their executive responsibilities -- was
designed and implemented with the aid of an independent outside executive
compensation consultant. That consultant affirmed that the program is reasonable
and appropriate for KeyCorp and is consistent with the above objectives.
Under the compensation program adopted by KeyCorp and the Compensation
Committees, executive positions are compensated (on a total compensation basis)
by comparison with comparable positions in peer bank holding companies. The
Compensation Committees each year identify the companies to be included in the
peer group of companies. The peer group includes bank holding companies that, in
the Compensation Committees' judgment, have similar characteristics to KeyCorp.
The 1994 peer group included bank holding companies with assets ranging from
approximately $30 to $170 billion as of the end of 1994. All of the companies in
the peer group were included in the KBW 50 Index (which is used in the stock
price performance graph on page 33 of this proxy statement).
Adjustments to an individual executive's salary are considered annually
using such comparisons and considering the executive's contribution to KeyCorp's
success and accomplishment of individual and unit goals. Incentive compensation
amounts are determined as described in more detail below.
The Compensation Committees have determined that KeyCorp will be better
able to attract and retain superior executive talent and motivate KeyCorp's
executives to achieve superior financial performance if a relatively large
portion of senior executive compensation is "at risk," i.e., subject to
incentive compensation plans. Thus, KeyCorp's compensation for senior executives
is designed in a manner whereby KeyCorp's senior
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<PAGE> 34
executives will receive less total compensation than that of senior executives
of peer companies in periods when KeyCorp's performance is poorer than
performance of peer companies and receive superior total compensation when
performance is superior to the performance of such companies.
Under KeyCorp's short term incentive compensation plan, after the close of
the year the C&O Committee establishes a percentage of target pool to be paid
out as short term incentive compensation (a range of 0% to 200% of target). The
target pool is the sum of individual incentive targets. Individual targets range
from 10% to 50% of the individual's market point. Individual payouts can range
from zero to the greater of (a) 200% or (b) 150% of the target pool percentage,
times the individual's incentive target. In evaluating corporate performance for
purposes of setting the percentage of target to be paid out, the C&O Committee
evaluates KeyCorp's performance as compared with KeyCorp's profit plan for the
year, and evaluates financial results (generally, return on average common
equity and return on average assets) as compared with companies in the peer
group. The C&O Committee also evaluates the consistency of such financial
performance over a number of years (generally three years) versus consistency of
performance by the companies in the peer group. In establishing the percentage
of target pool to be paid, the C&O Committee gives most weight to financial
results, but the C&O Committee also evaluates non-financial accomplishments of
KeyCorp and its senior executives during the year.
Earnings per share for 1994 were less than KeyCorp's profit plan for the
year, basically due to an interest rate environment that was less conducive to
favorable results than the environment anticipated at the time the profit plan
was adopted. For 1994, KeyCorp ranked in the first and second quartile of the
peer group in return on average common equity and return on average assets,
respectively, and, in the C&O Committee's judgment, has achieved consistency of
satisfactory financial performance over a number of years. The C&O Committee was
satisfied with the non-financial performance of KeyCorp and its senior
executives, and was especially pleased with the progress in integrating the
activities of KeyCorp's predecessor companies (which were merged on March 1,
1994 to form the current corporation). The C&O Committee determined that the
short term incentive compensation pool for 1994 would be 135% of target.
Individual awards were paid or credited in the first quarter of 1995 among
participants in the short term plan based upon individual and group
contributions to the financial and other results of KeyCorp for the year.
Under KeyCorp's long term incentive compensation plan, the C&O Committee
establishes objective criteria by which KeyCorp's financial performance should
be judged for each three year cycle. The criteria is based on the C&O
Committee's judgment of a return on average common equity that will warrant
satisfactory to excellent results for the three year period. For the three year
period ending December 31, 1996, the established criteria could result in a
payout that ranges from zero to 231.25% of target. The maximum amount for the
1994-1996 performance period will be earned if return on average common equity
for such three year period, after adjustments which the C&O Committee deems to
be appropriate, equals or exceeds 19%. An individual executive's target is
either 20%, 25%, or 30% of the executive's market point.
Under the criteria established for the three year period 1992-1994, the
payout could range from zero to 250% of target. KeyCorp's results for this three
year period resulted in a payout of 242% of target. The awards were paid or
credited to participating executives in either the last quarter of 1994 or the
first quarter of 1995.
The Compensation Committees believe that senior executives will be
motivated, and their financial interests will be aligned with those of common
shareholders, if stock options are awarded to senior executives. The EEC
Committee determines the stock option policies and makes the actual grant of
options. In general,
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<PAGE> 35
the number of options granted to an executive is based on the executive's job
grade. This approach to stock options, and the number of options for each job
grade, is part of KeyCorp's overall executive compensation program. While in
general options for a job grade and the vesting schedule for options is
consistent from year to year, the aggregate number and vesting terms may vary
depending on the EEC Committee's judgment of the best form of long term
motivation appropriate under the particular circumstances. The EEC Committee
does not feel it relevant and does not take into account options previously
awarded (whether still outstanding or not) to the executive.
In January of 1994, 1,421 executives of the predecessor companies to
KeyCorp were awarded options covering 3,579,000 KeyCorp Common Shares, adjusted
to reflect the conversion of each share of Old Key common stock into 1.205
KeyCorp Common Shares. In January of 1995, 537 executives of KeyCorp were
awarded options covering 1,827,000 KeyCorp Common Shares. In all instances the
option price was 100% of the market price of the stock at the time the option
was granted.
Salary adjustments for senior executives of KeyCorp, and short term and
long term incentive compensation payments to such executives, are based upon the
above methodology. In the case of executives with employment contracts, the same
methodology is applied subject to complying with salary minimums specified in
such contracts. In the case of executives other than Messrs. Riley and
Gillespie, the C&O Committee also solicits from Messrs. Riley and Gillespie an
evaluation of such executive's performance and a compensation recommendation,
which evaluation and recommendation are additional factors considered by the C&O
Committee, in its sole discretion, in applying the above methodology.
Internal Revenue Code Section 162(m), enacted in 1993, precludes a public
corporation from taking a deduction in 1994 or subsequent years for compensation
in excess of $1 million for its chief executive officer or any of its four other
highest paid executive officers. Certain performance-based compensation,
however, is specifically exempt from the deduction limit. Based on proposed
regulations, any compensation derived from the exercise of stock options under
employee stock option plans of KeyCorp is exempt from the limit on the corporate
tax deduction. KeyCorp's short term and long term incentive compensation plans
provide that the C&O Committee, in its sole discretion, shall have the authority
to require deferral of payment of all or a portion of awards under any such plan
if the Committee determines that KeyCorp would be denied a deduction for federal
income tax purposes for such award or the portion thereof.
As of January 1, 1995, the C&O Committee established Mr. Riley's salary at
$825,000 per annum. It was the C&O Committee's judgment, based upon comparison
with peer companies and taking into account Mr. Riley's performance, his
employment contract (which provided for a minimum salary of $800,000 for 1995),
and his position in KeyCorp's salary structure, that such salary was reasonable,
justified, and appropriate. Under the short term incentive compensation plan,
Mr. Riley's target for 1994 was $417,000 and his award could range from zero to
$1,251,000 (if the C&O Committee established a pool of 200% of target). The C&O
Committee determined that $565,000 was the appropriate short term incentive
compensation for Mr. Riley for 1994 which was 135% of his target. Mr. Riley is a
participant in the short term incentive compensation plan for 1995. He is also a
participant (on a pro rata basis for the period of time that he is chief
executive officer) in KeyCorp's long term incentive compensation plan for the
three year periods 1994-1996 and 1995-1997.
Incident to the March 1, 1994 merger of predecessor companies to KeyCorp,
Mr. Riley became party to an employment agreement with KeyCorp. (See pages 21-22
of this proxy statement for a summary of the current employment agreement with
Mr. Riley which superseded the employment agreement reached incident
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<PAGE> 36
to the Merger.) Under terms of the employment agreement reached incident to the
Merger, Mr. Riley, in addition to participating in KeyCorp's short term and long
term incentive compensation plans, was to be covered by a special long term
incentive compensation arrangement, the terms of which were to provide Mr. Riley
with incentive opportunities similar to those he had under a plan in force prior
to the Merger. With the aid of an independent outside executive compensation
consultant, the C&O Committee adopted such an arrangement which was agreed to by
Mr. Riley and which is now incorporated into his employment agreement. Under
this arrangement, financial criteria were established for the period January 1,
1994 through December 31, 1995 covering return on average common equity, return
on average total assets, and efficiency ratio, with threshold incentive
compensation awards totaling $442,400 (if return on average common equity is at
least 16%, return on average total assets is at least 1.0%, and the efficiency
ratio is less than 61%), and maximum awards totaling $1,333,400 (if return on
average common equity exceeds 18%, return on average total assets exceeds 1.3%,
and the efficiency ratio is less than 57%). If one or two, but not all three, of
the threshold objectives are met, a lower amount than $442,400 can be paid out.
The C&O Committee has the authority to make adjustments to reported financial
results to take into account unusual occurrences (including accounting changes)
prior to computing those ratios for purposes of this arrangement. In the opinion
of the C&O Committee and the independent outside executive compensation
consultant, the financial objectives under this special incentive compensation
arrangement are appropriate, i.e., if achieved, they will result in appropriate
levels of total compensation for Mr. Riley, and the arrangement fulfills the
obligations of Mr. Riley's employment agreement as it then existed.
Compensation and Organization Committee
Board of Directors
KeyCorp
H. Douglas Barclay (Chair)
Albert C. Bersticker
Thomas A. Commes
Lucie J. Fjeldstad
Stephen R. Hardis
Robert A. Schumacher
Executive Equity Compensation Committee
Board of Directors
KeyCorp
Albert C. Bersticker
Thomas A. Commes
Lucie J. Fjeldstad
Stephen R. Hardis (Chair)
Robert A. Schumacher
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Barclay, who served as Old Key's corporate secretary from its
organization in 1971 until 1989, is a partner in the law firm of Hiscock &
Barclay. Hiscock & Barclay performed legal services during each of the last two
fiscal years (receiving approximately $3.9 million in legal fees for services to
KeyCorp in 1994, in addition to fees from KeyCorp customers for work performed
by Hiscock & Barclay in connection with customer transactions such as loans) and
is performing services for KeyCorp in 1995. During 1995, Mr. Barclay has and
will continue to serve as chair of KeyCorp's Compensation and Organization
Committee, but no other member of that Committee or of the Executive Equity
Compensation Committee has an interlocking relationship with KeyCorp as defined
by the Securities and Exchange Commission.
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<PAGE> 37
KEYCORP STOCK PRICE PERFORMANCE
The following graph compares the stock price performance of KeyCorp's
Common Shares (assuming reinvestment of dividends) with that of the Standard &
Poor's 500 Index and the KBW 50 Index. The Standard & Poor's 500 Index is an
index of 500 stocks designed to measure the performance of the broad domestic
economy. The KBW 50 Index is an index of the stock of fifty banks of the United
States, including all money-center and most major regional banks. KeyCorp's
stock is included in the KBW 50 Index and in the Standard & Poor's 500 Index.
<TABLE>
KEYCORP STOCK PRICE PERFORMANCE GRAPH*
AVERAGE ANNUAL TOTAL RETURNS
KEYCORP 12.6%
KBW 50 7.7%
S&P 500 8.7%
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) KEYCORP KBW 50 S&P 500
<S> <C> <C> <C>
31-DEC-89 100 100 100
31-MAR-90 94 89 97
30-JUN-90 97 89 103
30-SEP-90 79 63 89
31-DEC-90 100 72 97
31-MAR-91 125 91 111
30-JUN-91 132 96 111
30-SEP-91 150 112 117
31-DEC-91 160 114 126
31-MAR-92 179 121 123
30-JUN-92 192 128 126
30-SEP-92 187 125 130
31-DEC-92 215 145 136
31-MAR-93 233 156 142
30-JUN-93 239 155 143
30-SEP-93 219 160 146
31-DEC-93 206 153 150
31-MAR-94 210 150 144
30-JUN-94 225 161 145
30-SEP-94 217 158 152
31-DEC-94 180 145 152
<FN>
* This stock price performance is not necessarily indicative of future
price performance. The stock price performance in the graph above for the
period prior to March 1, 1994 is for Society. Society changed its name to
KeyCorp pursuant to the Merger.
</TABLE>
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<PAGE> 38
SHARE OWNERSHIP
Five Percent Beneficial Ownership. KeyCorp has been advised that as of
February 17, 1995, the following shareholder appeared to own more than 5% of the
outstanding KeyCorp Common Shares:
<TABLE>
<CAPTION>
PERCENT OF
AMOUNT AND NATURE COMMON SHARES
NAME AND ADDRESS OF BENEFICIAL OWNERSHIP OUTSTANDING
- ---------------------------------------------------- ----------------------- -------------
<S> <C> <C>
Wellington Management Company....................... 12,184,542 5.03%
75 State Street
Boston, MA 02109
</TABLE>
Management Beneficial Ownership. The following table sets forth, as of
February 17, 1995, certain information with respect to KeyCorp Common Shares
beneficially owned by current directors of and nominees for director of KeyCorp,
the executive officers included in the Summary Compensation Table, and all
directors, nominees for director, and executive officers of KeyCorp as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNERSHIP(1) COMMON
----------------------- SHARES
NAME SHARES OPTIONS(2) OUTSTANDING
- --------------------------------------------------------- --------- --------- ------------
<S> <C> <C> <C>
Gary R. Allen............................................ 22,889 78,700 (3)
William G. Bares......................................... 2,400 3,500 (3)
H. Douglas Barclay....................................... 543,891 37,838 (3)
Albert C. Bersticker..................................... 2,000 3,500 (3)
Thomas A. Commes......................................... 10,000 3,500 (3)
Kenneth M. Curtis........................................ 1,205 3,500 (3)
John C. Dimmer........................................... 431,835 8,018 (3)
Lucie J. Fjeldstad....................................... 241 19,766 (3)
Robert W. Gillespie...................................... 158,480 326,000 (3)
Stephen R. Hardis........................................ 10,000 3,500 (3)
Henry S. Hemingway....................................... 330,579 12,536 (3)
Charles R. Hogan......................................... 151,053 8,018 (3)
Lawrence A. Leser........................................ 3,000 3,500 (3)
Douglas J. McGregor...................................... 1,734 0 (3)
Henry L. Meyer III....................................... 35,814 221,242 (3)
Steven A. Minter......................................... 1,679 3,500 (3)
M. Thomas Moore.......................................... 2,000 3,500 (3)
John C. Morley........................................... 3,640 3,500 (3)
Roger Noall.............................................. 219,917 80,000 (3)
Richard W. Pogue......................................... 17,000 3,500 (3)
Victor J. Riley, Jr...................................... 19,041 473,620 (3)
Robert A. Schumacher..................................... 12,476 37,838 (3)
Ronald B. Stafford....................................... 6,021 37,838 (3)
Dennis W. Sullivan....................................... 1,200 3,500 (3)
Peter G. Ten Eyck, II.................................... 7,093 33,320 (3)
Nancy B. Veeder.......................................... 51,429 8,018 (3)
James W. Wert............................................ 36,060 155,000 (3)
All directors and executive officers
as a group (33)........................................ 2,150,911 1,895,236 1.6%
- ---------------
<FN>
(1) With respect to KeyCorp Common Shares beneficially held by these individuals
or other executive officers under the KeyCorp 401(k) Savings Plan, the
shares included are as of December 31, 1994.
(2) Options vested as of April 18, 1995 are included herein.
(3) No director or executive officer beneficially owns more than 1% of the
outstanding KeyCorp Common Shares.
</TABLE>
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<PAGE> 39
INDEPENDENT AUDITORS
The Board of Directors of KeyCorp, acting upon the recommendation of its
Audit Committee, has appointed Ernst & Young LLP as its independent auditors to
examine the financial statements of KeyCorp and its subsidiaries for the year
1995. Ernst & Young LLP has conducted the annual audit of KeyCorp's financial
statements since 1959.
A representative of Ernst & Young LLP is expected to be present at the
meeting with an opportunity to make a statement if such representative desires
to do so and to respond to appropriate questions.
1996 SHAREHOLDER PROPOSALS
The deadline for shareholders to submit proposals to be considered for
inclusion in the Proxy Statement for next year's Annual Meeting of Shareholders
is December 6, 1995.
GENERAL
The Board of Directors knows of no other matters which will be presented at
the meeting. However, if other matters properly come before the meeting or any
adjournment, the person or persons voting the proxy cards will vote them in
accordance with their best judgment on such matters.
Shareholders may only nominate a person for election as a director of
KeyCorp at a meeting of shareholders if the nominating shareholder has strictly
complied with the applicable notice and procedural requirements set forth in
KeyCorp's Regulations, including, without limitation, timely providing to the
Secretary of KeyCorp the requisite notice of the proposed nominee(s) containing
all the information specified by the Regulations. KeyCorp will provide to any
shareholder, without charge, a copy of the applicable procedures governing
nomination of directors set forth in KeyCorp's Regulations upon request to the
Secretary of KeyCorp.
KeyCorp will bear the expense of preparing, printing, and mailing this
Proxy Statement. In addition to solicitation by mail, officers and regular
employees of KeyCorp and its subsidiaries may solicit the return of proxies.
KeyCorp has engaged the services of Morrow & Co., Inc. to assist in the
solicitation of proxies at an anticipated cost of $12,500 plus expenses. KeyCorp
will request brokers, banks, and other custodians, nominees, and fiduciaries to
send proxy material to beneficial owners and will, upon request, reimburse them
for their expense in so doing.
You are urged to complete, date, sign, and return your proxy card promptly
in order to make certain your shares are voted at the meeting. KeyCorp Common
Shares represented by properly executed proxy cards will be voted in accordance
with any specification made thereon and, if no specification is made, will be
voted for the election as directors of the nominees named herein and against all
shareholder proposals. Unless a broker's authority to vote on a particular
matter is limited, abstentions and broker non-votes are counted in determining
the votes present at a meeting. Consequently, an abstention or a broker non-vote
has the same effect as a vote against a proposal, as each abstention or broker
non-vote would be one less vote in favor of a proposal. You may revoke your
proxy by a later proxy received by, or by giving notice to, KeyCorp, or in open
meeting, without affecting any vote previously taken. However, your mere
presence at the meeting will not operate to revoke your proxy.
35
<PAGE> 40
<TABLE>
<S> <C>
[KEYCORP LOGO] PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF KEYCORP FOR THE ANNUAL MEETING ON MAY 18, 1995.
P The undersigned hereby constitutes and appoints Victor J.
Riley, Jr., Robert W. Gillespie, and Carter B. Chase, and each of
them, his/her true and lawful agents and proxies with full power of
R substitution in each to represent the undersigned at the Annual
Meeting of Shareholders of KeyCorp to be held on May 18, 1995, and at
any adjournments or postponements thereof, on all matters properly
O coming before said meeting.
1. Election of Directors: The nominees of the Board of Directors (Change of Address/Comments)
X to the class whose term of office will expire in 1998 are: _____________________________________________________
H. Douglas Barclay, Thomas A. Commes, Steven R. Hardis, _____________________________________________________
Douglas J. McGregor, John C. Morley, Peter G. Ten Eyck II, and _____________________________________________________
Y Nancy B. Veeder. _____________________________________________________
(If you have written in the above space, please
2. Proposal withdrawing management's discretion to vote unmarked mark the corresponding box on the reverse side of
proxy cards. this card.)
</TABLE>
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE
BOXES, SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO
VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. YOUR
SHARES CANNOT BE VOTED UNLESS YOU SIGN AND RETURN THIS CARD.
-------------
| SEE REVERSE |
| SIDE |
------------
<PAGE> 41
<TABLE>
<C> <S> <C>
X PLEASE MARK YOUR SHARES IN YOUR NAME REINVESTMENT SHARES
VOTES AS IN THIS
EXAMPLE.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of / / / / 2. Proposal withdrawing / / / / / /
Directors management's discretion
(see reverse) to vote unmarked proxy
cards.
For, except vote withheld from the
following nominee(s):
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSAL 2.
______________________________________________
</TABLE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF THE NOMINEES LISTED ON THE REVERSE, AND AGAINST
PROPOSAL 2.
------ Change of Address/Comments
| | on Reverse Side.
------
<TABLE>
<S> <C> <C>
In accordance with their judgment, the
proxies are authorized to vote upon any
other matters that may properly come
SIGNATURE(S)_________________________________________________ DATE ___________ before the meeting. The signer hereby
revokes all proxies heretofore given by
SIGNATURE(S) ________________________________________________ DATE ____________ the signer to vote at said meeting or any
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign. adjournments thereof.
When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
</TABLE>
