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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-2.
THE CHASE MANHATTAN CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-12.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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[CHASE LOGO]
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NOTICE OF 1998
ANNUAL MEETING
OF STOCKHOLDERS
AND PROXY
STATEMENT
Meeting Date: May 19, 1998
The Chase Manhattan Corporation
270 Park Avenue
New York, New York 10017-2070
Copyright 1998. The Chase Manhattan Corporation.
All Rights Reserved.
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[CHASE LOGO]
THE CHASE MANHATTAN CORPORATION
270 Park Avenue
New York, New York 10017-2070
March 31, 1998
Dear Stockholder:
I am pleased to invite you to the Annual Meeting of Stockholders to be held
on May 19, 1998, at The Chase Manhattan Bank's offices at One Chase Manhattan
Plaza in New York City. As we have done in the past, in addition to considering
the matters described in the Proxy Statement, we will review major developments
since our last stockholders' meeting.
We hope that you will attend the meeting in person, but even if you are
planning to come, we strongly encourage you to designate the proxies named on
the enclosed card to vote your shares. This will ensure that your common stock
will be represented at the meeting. The Proxy Statement explains more about
proxy voting. Please read it carefully. We look forward to your participation.
Sincerely,
/s/ Walter V. Shipley
Chairman and
Chief Executive Officer
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[CHASE LOGO]
THE CHASE MANHATTAN CORPORATION
270 Park Avenue
New York, New York 10017-2070
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
DATE: Tuesday, May 19, 1998
TIME: 10:00 a.m.
PLACE: Auditorium
The Chase Manhattan Bank
One Chase Manhattan Plaza
New York, New York
MATTERS TO BE VOTED ON:
- Election of seventeen directors
- Ratification of appointment of Price Waterhouse LLP as our independent
accountants for 1998
- Amendment to Certificate of Incorporation to increase authorized Common
Stock and to effect stock split
- Stockholder proposals that are in the attached Proxy Statement, if they
are introduced at the meeting
- Any other matters that may be properly brought before the meeting
By Order of the Board of Directors
ANTHONY J. HORAN
Secretary
March 31, 1998
PLEASE VOTE PROMPTLY
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PROXY STATEMENT
TABLE OF CONTENTS
PAGE
----
GENERAL INFORMATION ABOUT VOTING............................ 1
PROPOSAL 1: ELECTION OF DIRECTORS........................... 2
Information About the Nominees......................... 3
About the Board and its Committees..................... 8
Security Ownership of Directors and Executive
Officers.............................................. 9
Executive Compensation................................. 11
Compensation and Benefits Committee Report on Executive
Compensation.......................................... 11
Comparison of Five-Year Cumulative Total Return........ 13
Executive Compensation Tables.......................... 14
I. Summary Compensation Table....................... 14
II. Stock Option/SAR Grants Table -- 1997 Grants..... 15
III. Aggregated Stock Option/SAR Exercises in 1997
and Option/SAR Values as of Year-End 1997....... 15
Retirement Benefits and Termination Arrangements....... 16
Additional Information about Our Directors and
Executive Officers.................................... 17
PROPOSAL 2: APPOINTMENT OF INDEPENDENT ACCOUNTANTS.......... 18
PROPOSAL 3: APPROVAL OF AMENDMENT TO CERTIFICATE OF
INCORPORATION TO INCREASE AUTHORIZED COMMON
STOCK AND TO EFFECT STOCK SPLIT................. 18
STOCKHOLDER PROPOSALS....................................... 20
Proposal 4: Location of Annual Meeting................. 20
Proposal 5: Cumulative Voting.......................... 20
Proposal 6: Executive Compensation and Dividends....... 21
STOCKHOLDER PROPOSALS AND NOMINATIONS FOR THE 1999 ANNUAL
MEETING................................................... 23
APPENDIX.................................................... 24
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PROXY STATEMENT
Your vote is very important. For this reason, the Board of Directors is
requesting that you allow your Common Stock to be represented at the Annual
Meeting by the Proxies named in the enclosed Proxy Card. This Proxy Statement is
being sent to you in connection with this request and has been prepared for the
Board by our management. "We", "our", "Chase" and the "Corporation" refer to The
Chase Manhattan Corporation. The Proxy Statement is first being sent to our
stockholders on or about March 31, 1998.
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GENERAL INFORMATION ABOUT VOTING
WHO CAN VOTE. You are entitled to vote your Common Stock if our records
showed that you held your shares as of March 25, 1998. At the close of business
on that date, a total of 425,699,980 shares of Common Stock were outstanding and
entitled to vote. Each share of Common Stock has one vote. The enclosed Proxy
Card shows the number of shares which you are entitled to vote. Your individual
vote is confidential and will not be disclosed to third parties.
VOTING BY PROXIES. If your Common Stock is held by a broker, bank or other
nominee (i.e., in "street name"), you will receive instructions from it which
you must follow in order to have your shares voted. If you hold your shares in
your own name as a holder of record, you may instruct the Proxies how to vote
your Common Stock by using the toll-free telephone number or the Internet voting
site listed on the Proxy Card or by signing, dating and mailing the Proxy Card
in the postage-paid envelope that we have provided to you. Of course, you can
always come to the meeting and vote your shares in person. When you use the
telephone system or our Internet voting site, the system verifies that you are a
stockholder through the use of a unique Personal Identification Number assigned
to you. The procedure allows you to instruct the Proxies how to vote your shares
and to confirm that your instructions have been properly recorded. Specific
directions for using the telephone and Internet voting systems are on the Proxy
Card. Whichever of these methods you select to transmit your instructions, the
Proxies will vote your shares in accordance with those instructions. If you give
us a proxy without giving specific voting instructions, your shares will be
voted by the Proxies as recommended by our Board of Directors. We are not now
aware of any other matters to be presented at the Annual Meeting except for
those described in this Proxy Statement.
If any other matters not described in the Proxy Statement are properly
presented at the meeting, the Proxies will use their own judgment to determine
how to vote your shares. If the meeting is adjourned, your Common Stock may be
voted by the Proxies on the new meeting date as well, unless you have revoked
your proxy instructions.
HOW YOU MAY REVOKE YOUR PROXY INSTRUCTIONS. To revoke your proxy
instructions, you must advise the Secretary in writing before your Common Stock
has been voted by the Proxies at the meeting, deliver later proxy instructions,
or attend the meeting and vote your shares in person. Unless you decide to
attend the meeting and vote your shares in person after you have submitted
voting instructions, you should revoke or amend your prior instructions in the
same way you initially gave them -- that is, by telephone, by Internet or in
writing. This will help to ensure that your shares are voted the way you have
finally determined you wish them to be voted.
HOW VOTES ARE COUNTED. The Annual Meeting will be held if a majority of
the outstanding Common Stock entitled to vote is represented at the meeting. If
you have returned valid proxy instructions or attend the meeting in person, your
Common Stock will be counted for the purpose of determining whether there is a
quorum, even if you wish to abstain from voting on some or all matters
introduced at the meeting. If you hold your Common Stock through a broker, bank
or other nominee, generally the nominee may only vote the Common Stock which it
holds for you in accordance with your instructions. However, if it has not
received your instructions within ten days of the meeting, the nominee may vote
on matters which the New
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York Stock Exchange determines to be routine. If a nominee cannot vote on a
particular matter because it is not routine, there is a "broker non-vote" on
that matter. Broker non-votes count for quorum purposes, but we do not count
either abstentions or broker non-votes as votes for or against any proposal.
COST OF THIS PROXY SOLICITATION. We will pay the cost of this proxy
solicitation. In addition to soliciting proxies by mail, we expect that a number
of our employees will solicit stockholders for the same type of proxy,
personally and by telephone. None of these employees will receive any additional
or special compensation for doing this. We have retained ChaseMellon Shareholder
Services L.L.C. to assist in the solicitation of proxies for a fee of $18,000,
plus reasonable out-of-pocket costs and expenses. We will, upon request,
reimburse brokers, banks and other nominees for their expenses in sending proxy
material to their principals and obtaining their proxies.
ATTENDING THE ANNUAL MEETING. If you are a holder of record and you plan
to attend the Annual Meeting, please indicate this when you vote. The lower
portion of the Proxy Card is your admission ticket. If you are a beneficial
owner of Common Stock held by a bank or broker, you will need proof of ownership
to be admitted to the meeting. A recent brokerage statement or letter from a
bank or broker are examples of proof of ownership. If you want to vote in person
your Common Stock held in street name, you will have to get a proxy in your name
from the registered holder.
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PROPOSAL 1: ELECTION OF DIRECTORS
An entire Board of Directors, consisting of seventeen members, is to be
elected at the Annual Meeting to hold office until the next annual meeting and
the election of their successors.
VOTE REQUIRED. Directors must be elected by a plurality of the votes cast
at the meeting. This means that the nominees receiving the greatest number of
votes will be elected. Votes withheld for any Director will not be counted.
Although we know of no reason why any of the nominees would not be able to
serve, if any nominee is unavailable for election, the Proxies would vote your
Common Stock to approve the election of any substitute nominee proposed by the
Board of Directors. The Board may also choose to reduce the number of Directors
to be elected, as permitted by our By-laws.
GENERAL INFORMATION ABOUT THE NOMINEES. All of the nominees are currently
Directors. Each has agreed to be named in this Proxy Statement and to serve if
elected. Each of the nominees who was a Director in 1997 attended at least 75%
of the meetings of the Board and committees on which the nominee served in that
year.
In the following biographies and the remainder of the Proxy Statement,
Heritage Chase means the corporation which merged into the Corporation on March
31, 1996. MHC means Manufacturers Hanover Corporation, which merged into the
Corporation on December 31, 1991. Unless stated otherwise, all of the nominees
have been continuously employed by their present employers for more than five
years. All are actively involved in community and charitable affairs. The age
indicated in each nominee's biography is as of May 19, 1998.
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INFORMATION ABOUT THE NOMINEES
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HANS W. BECHERER (AGE 63)
[PHOTO]
Chairman of the Board and Chief Executive Officer of Deere &
Company since 1990. Mr. Becherer is also a Director of
AlliedSignal Inc. and Schering-Plough Corporation. Mr.
Becherer became a Director of the Corporation on January 20,
1998.
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FRANK A. BENNACK JR. (AGE 65)
[PHOTO]
President and Chief Executive Officer of The Hearst
Corporation. Mr. Bennack is a Director of The Hearst
Corporation, Hearst-Argyle Television, Inc., American Home
Products Corporation and Polo Ralph Lauren Corporation. He
had been a Director of MHC since 1981 and became a Director
of the Corporation in 1991.
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SUSAN V. BERRESFORD (AGE 55)
[PHOTO]
President of The Ford Foundation. Ms. Berresford had been a
Director of Heritage Chase since 1995 and became a Director
of the Corporation on March 31, 1996.
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M. ANTHONY BURNS (AGE 55)
[PHOTO]
Chairman of the Board, President and Chief Executive Officer
of Ryder System, Inc. Mr. Burns is also a Director of J.C.
Penney Company, Inc. and Pfizer Inc. He had been a Director
of Heritage Chase since 1990 and became a Director of the
Corporation on March 31, 1996.
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H. LAURANCE FULLER (AGE 59)
[PHOTO]
Chairman of the Board and Chief Executive Officer of Amoco
Corporation. Mr. Fuller is also a Director of Abbott
Laboratories, Motorola, Inc. and Security Capital Group,
Inc. He had been a Director of Heritage Chase since 1985 and
became a Director of the Corporation on March 31, 1996.
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MELVIN R. GOODES (AGE 63)
[PHOTO]
Chairman of the Board and Chief Executive Officer of
Warner-Lambert Company. Mr. Goodes is also a Director of
Ameritech Corporation and Unisys Corporation. He became a
Director of the Corporation in 1986.
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WILLIAM H. GRAY III (AGE 56)
[PHOTO]
President and Chief Executive Officer of The College
Fund/UNCF since 1991. Mr. Gray was a member of the United
States House of Representatives from 1979 to 1991. He is
also a Director of CBS Corp., Electronic Data Systems
Corporation, MBIA Inc., The Prudential Insurance Company of
America, Rockwell International Corporation, Union Pacific
Corporation and Warner-Lambert Company. He had been a
Director of Heritage Chase since 1992 and became a Director
of the Corporation on March 31, 1996.
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GEORGE V. GRUNE (AGE 68)
[PHOTO]
Chairman and Chief Executive Officer of The Reader's Digest
Association, Inc. Mr. Grune is also Chairman of the DeWitt
Wallace-Reader's Digest Fund, Inc. and the Lila
Wallace-Reader's Digest Fund, Inc. Mr. Grune had retired as
Chairman and Chief Executive Officer of The Reader's Digest
Association, Inc. in August 1994 and served as Chairman of
the Board until August 1995, and was reelected as Chairman
and Chief Executive Officer in August 1997. He is also a
Director of Avon Products, Inc., Bestfoods and Federated
Department Stores, Inc. Mr. Grune became a Director of the
Corporation in 1986.
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WILLIAM B. HARRISON JR. (AGE 54)
[PHOTO]
Vice Chairman of the Board and Director of the Corporation
since 1991. Mr. Harrison is also a Director of Dillard
Department Stores, Inc. and Freeport-McMoRan Copper & Gold
Inc.
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HAROLD S. HOOK (AGE 66)
[PHOTO]
Retired Chairman of the Board and Chief Executive Officer of
American General Corporation. Mr. Hook had served as both
Chairman and Chief Executive Officer of American General
Corporation from 1978 until October 1996 and retired as
Chairman in April 1997. Mr. Hook is also a Director of
Cooper Industries, Inc., Duke Energy Corporation and Sprint
Corporation. He became a Director of the Corporation in
1987.
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HELENE L. KAPLAN (AGE 64)
[PHOTO]
Of Counsel to the firm of Skadden, Arps, Slate, Meagher &
Flom LLP. Mrs. Kaplan is also a Director of Bell Atlantic
Corporation, The May Department Stores Company, Metropolitan
Life Insurance Company and Mobil Corporation. She became a
Director of the Corporation in 1987.
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THOMAS G. LABRECQUE (AGE 59)
[PHOTO]
President and Chief Operating Officer of the Corporation
since March 31, 1996, having served as Chairman of the Board
and Chief Executive Officer of Heritage Chase since 1990. He
had been a Director of Heritage Chase since 1980, and became
a Director of the Corporation on March 31, 1996. Mr.
Labrecque is also a Director of Pfizer Inc.
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HENRY B. SCHACHT (AGE 63)
[PHOTO]
Director and Senior Advisor of Lucent Technologies Inc. Mr.
Schacht had served as both Chairman and Chief Executive
Officer of Lucent Technologies Inc. from February 1996 until
October 1997, and retired as Chairman in February 1998. He
served as Chairman of the Board of Cummins Engine Company,
Inc. from 1977 to 1995 and as Chief Executive Officer from
1973 to 1994. Mr. Schacht is also a Director of Aluminum
Company of America, Cummins Engine Company and Johnson &
Johnson. He had been a Director of Heritage Chase since
1982, and became a Director of the Corporation on March 31,
1996.
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WALTER V. SHIPLEY (AGE 62)
[PHOTO]
Chairman of the Board and Chief Executive Officer of the
Corporation from 1983-1992 and 1994 to the present. Mr.
Shipley is also a Director of Bell Atlantic Corporation and
Champion International Corporation. He became a Director of
the Corporation in 1982.
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ANDREW C. SIGLER (AGE 66)
[PHOTO]
Retired as Chairman and Chief Executive Officer of Champion
International Corporation in October 1996. Mr. Sigler is a
Director of AlliedSignal Inc., Bristol-Myers Squibb Company
and General Electric Company, as well as a member of the
Board of Trustees for Dartmouth College. He became a
Director of the Corporation in 1979.
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JOHN R. STAFFORD (AGE 60)
[PHOTO]
Chairman, President and Chief Executive Officer of American
Home Products Corporation. Mr. Stafford is also a Director
of AlliedSignal Inc., Bell Atlantic Corporation and Deere &
Company. He had been a Director of MHC since 1982 and became
a Director of the Corporation in 1991.
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MARINA v.N. WHITMAN (AGE 63)
[PHOTO]
Professor of Business Administration and Public Policy,
University of Michigan. Prior to her appointment at the
University of Michigan in 1992, Dr. Whitman was Vice
President and Group Executive of General Motors Corporation.
She is also a Director of Aluminum Company of America,
Browning-Ferris Industries, Inc., The Procter & Gamble
Company and Unocal Corp. Dr. Whitman had been a Director of
MHC since 1973 and became a Director of the Corporation in
1991.
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ABOUT THE BOARD AND ITS COMMITTEES
THE BOARD. Chase is governed by a Board of Directors and various
committees of the Board which meet throughout the year. During 1997, there were
12 meetings of the Board. Directors discharge their responsibilities throughout
the year at Board and committee meetings, and also through considerable
telephone contact and other communications with the Chairman and others
regarding matters of concern and interest to Chase.
COMMITTEES OF THE BOARD. The Board has five principal committees. The
following chart describes for each committee the function, current membership
and number of meetings held during 1997.
AUDIT AND EXAMINING COMMITTEES -- 8 MEETINGS IN 1997
----------------------------------------------------
FUNCTIONS CURRENT MEMBERS
Review and discuss reports and other communications Hans W. Becherer
concerning management's responsibilities to: Frank A. Bennack Jr.
- - safeguard the assets and income of stockholders and Susan V. Berresford
customers M. Anthony Burns (Chairman)
- - provide for reliable and timely financial information George V. Grune (Vice Chairman)
and statements
- - maintain compliance with Chase's ethical standards,
policies, plans and procedures, as well as applicable
laws and regulations
COMPENSATION AND BENEFITS COMMITTEE -- 6 MEETINGS IN 1997
---------------------------------------------------------
FUNCTIONS CURRENT MEMBERS
- - Determine compensation and benefits policies and H. Laurance Fuller (Vice Chairman)
procedures Melvin R. Goodes
- - Approve senior officer compensation William H. Gray III
John R. Stafford (Chairman)
GOVERNANCE COMMITTEE -- 2 MEETINGS IN 1997
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FUNCTIONS CURRENT MEMBERS
- - Consider nominees for election to the Board, including Frank A. Bennack Jr.
any written recommendation by a stockholder which is M. Anthony Burns
mailed to the attention of the Secretary H. Laurance Fuller
- - Review duties and composition of Board committees Helene L. Kaplan
- - Counsel the Board on other Board governance matters Henry B. Schacht (Vice Chairman)
Andrew C. Sigler (Chairman)
John R. Stafford
PUBLIC POLICY AND TRUST COMMITTEE -- 3 MEETINGS IN 1997
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FUNCTIONS CURRENT MEMBERS
- - Review our charitable and community oriented activities, Hans W. Becherer
including strategy with respect to charitable Susan V. Berresford
contributions and projects undertaken to improve the Melvin R. Goodes
communities which we serve William H. Gray III (Chairman)
- - Review our community reinvestment activities Harold S. Hook
- - Review the trust, other fiduciary and investment Marina v.N. Whitman (Vice Chairman)
advisory activities of our subsidiaries
RISK POLICY COMMITTEE -- 7 MEETINGS IN 1997
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FUNCTIONS CURRENT MEMBERS
- - Act in a general advisory capacity to management in Harold S. Hook (Vice Chairman)
respect of activities that give rise to credit risk and Helene L. Kaplan (Chairman)
market risk Henry B. Schacht
- - Be fully apprised of these risks and how they are Andrew C. Sigler
created and managed Marina v.N. Whitman
- - Review and approve a general risk management mandate to
govern these activities
- - Re-evaluate regularly our risk exposure, risk tolerance
and the established mandate
- - Review and, as appropriate, approve policies to control
risk exposure
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DIRECTORS' COMPENSATION. Directors who are Chase officers do not receive
any fees for their services as Directors. Each non-employee Director receives an
annual retainer of $25,000. The Chairman of each of the Audit and Examining
Committees, the Compensation and Benefits Committee and the Risk Policy
Committee receives an additional fee of $16,000 per year and each other member
of these committees receives an additional fee of $8,000 per year. The Chairman
of each of the Governance Committee and the Public Policy and Trust Committee
receives an additional fee of $10,000 per year and each other member of these
committees receives an additional fee of $5,000 per year. Each non-employee
Director receives $1,250 for each meeting of the Board of Directors of the
Corporation and The Chase Manhattan Bank (the Bank) and each Board committee
meeting attended. Only one fee is paid for attendance at meetings that serve
both the Corporation and the Bank. Non-employee Directors also receive an annual
grant of 500 shares of Common Stock, which is subject to increase or decrease as
appropriate so that the value of the shares at the time of the grant will not be
less than $37,500 or more than $50,000.
Non-employee Directors are included in a group term life insurance policy and a
group accident insurance policy. During 1997, Chase paid average premiums for
these coverages of approximately $1,259 per Director. A Director may elect to
participate in Chase's medical insurance coverage, with the cost of the coverage
paid by the Director.
DEFERRED COMPENSATION ARRANGEMENTS FOR NON-EMPLOYEE DIRECTORS. Each year
non-employee Directors may elect to defer until they leave the Board (i) all or
a specified portion of their cash compensation, (ii) all of their Common Stock
compensation, or (iii) both. A Director's right to receive future payments under
any deferred compensation arrangement is an unsecured claim against Chase's
general assets. Cash amounts may be deferred into various investment
equivalents, including a Common Stock equivalent, and will be paid and
distributed in cash. Stock compensation may only be deferred as Common Stock and
is distributable only in Common Stock.
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SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table shows the number of shares of Common Stock and Common
Stock equivalents beneficially owned as of December 31, 1997 by each nominee for
Director, the executive officers named in the Summary Compensation Table and all
Directors and executive officers as a group. Unless otherwise indicated, each of
the named individuals and each member of the group has sole voting power and
sole investment power with respect to the shares shown. The number of shares
shown as beneficially owned by all Directors and executive officers totals less
than 1% of the outstanding Common Stock. No Director or executive officer
beneficially owns any Chase preferred stock.
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15
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
Amount and Nature of
Beneficial Ownership
Name of Individual (1)
- ------------------------------------ -----------------------
Hans W. Becherer 1,520
Frank A. Bennack Jr. 8,174
Susan V. Berresford 3,368
Donald L. Boudreau 243,191(2)
M. Anthony Burns 5,299
H. Laurance Fuller 13,286
Melvin R. Goodes 7,319
William H. Gray III 5,690
George V. Grune 10,866
William B. Harrison Jr. 492,506(2)(3)
Harold S. Hook 45,006(4)
Helene L. Kaplan 9,421
Thomas G. Labrecque 767,685(2)
Henry B. Schacht 9,465
Marc J. Shapiro 353,633(2)
Walter V. Shipley 978,344(2)(3)(5)
Andrew C. Sigler 8,714
John R. Stafford 10,209(5)
Marina v.N. Whitman 6,987
All Directors and executive officers
as a group (23 persons) 3,530,667
(1) The amounts reported include shares of Common Stock, receipt of which has
been deferred under deferred compensation plan arrangements as follows: Ms.
Berresford: 954 shares; Mr. Boudreau: 10,018 shares; Mr. Burns: 1,943
shares; Mr. Fuller: 3,529 shares; Mr. Gray: 2,239 shares; Mr. Grune: 365
shares; Mr. Harrison: 30,542 shares; Mr. Hook: 2,680 shares; Mrs. Kaplan:
442 shares; Mr. Labrecque: 56,250 shares; Mr. Schacht: 3,529 shares; Mr.
Shapiro: 40,166 shares; Mr. Shipley: 132,580 shares; Mr. Stafford: 1,596
shares; and all Directors and executive officers as a group: 367,349 shares.
The amounts reported also include the number of units of Common Stock
equivalents held by certain Directors under deferred compensation
arrangements entitling each such Director, upon termination of service, to
receive a cash payment for each unit equal to the fair market value at that
time of a share of Common Stock as follows: Mr. Bennack: 4,376 units; Ms.
Berresford: 2,310 units; Mr. Burns: 2,310 units; Mr. Fuller: 5,597 units;
Mr. Goodes: 3,777 units; Mr. Gray: 3,131 units; Mr. Grune: 7,265 units; Mr.
Hook: 24,072 units; Mrs. Kaplan: 5,079 units; Mr. Schacht: 5,728 units; Mr.
Sigler: 5,097 units; Mr. Stafford: 6,189 units; Dr. Whitman: 3,777 units;
and all Directors as a group: 78,708 units.
(2) The amounts reported include shares of Common Stock which could be acquired
on or before March 1, 1998, through the exercise of stock options and/or
stock appreciation rights (SARs) as follows: Mr. Boudreau: 189,969 shares;
Mr. Harrison: 394,833 shares; Mr. Labrecque: 521,893 shares; Mr. Shapiro:
284,500 shares; Mr. Shipley: 712,000 shares; and all Directors and executive
officers as a group: 2,529,414 shares. The amounts reported also include
shares of Common Stock which may be received at the end of a restricted
period as a result of awards of restricted stock and/or restricted stock
units as follows: Mr. Boudreau: 12,727 shares; Mr. Harrison: 5,979 shares;
Mr. Labrecque: 42,724 shares; Mr. Shapiro: 1,993 shares; Mr. Shipley: 9,070
shares; and all Directors and executive officers as a group: 86,415.
(3) The amounts reported include Common Stock allocated to accounts under a
Section 401(k) plan as follows: Mr. Harrison: 5,456 shares; Mr. Shipley:
26,908 shares; and all executive officers as a group: 32,428 shares.
(4) The amount reported includes beneficial ownership of 92 shares of Common
Stock owned through a controlled corporation.
(5) The amount reported includes 11,958 shares held by a trust of which Mr.
Shipley serves as a trustee and as to which he disclaims beneficial
ownership, and 300 shares held by Mr. Stafford's spouse as to which Mr.
Stafford disclaims beneficial ownership.
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16
EXECUTIVE COMPENSATION
COMPENSATION AND BENEFITS COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION POLICIES
The Compensation and Benefits Committee, which consists solely of
non-employee Directors, administers the executive compensation program of the
Corporation and its subsidiaries and determines the compensation of senior
management.
Chase's compensation program seeks to attract, retain and motivate top
quality professionals. Our compensation policy for executive officers emphasizes
performance-based pay over fixed salary and uses long-term incentives based on
the performance of Chase's stock to further align the interests of senior
management with Chase's stockholders. Chase seeks to provide compensation levels
that are competitive with those provided by the appropriate peer groups of
financial institutions in each of the markets and businesses in which Chase
competes. During 1997, the Committee again received reports and information from
independent consultants to ensure that the program, in the Committee's judgment,
remains competitive and able to meet its objectives.
Peer groups will differ for each of the businesses headed by executive
officers and, in general, will consist for each business of those comparable
financial institutions that compete in the same markets and seek to sell similar
types of financial services and products. Appropriate peer groups will change
over time and will consist of other U.S. bank holding companies and other
competitors. The peer group will not correspond to the list of institutions that
make up the bank indices shown on page 13 of the Proxy Statement.
CASH COMPENSATION. An executive officer's cash compensation is made up of
base salary and an annual performance bonus. For each executive, the Committee
reviews salaries paid to similarly situated executives in a peer group of other
U.S. bank holding companies and other competitors. A particular executive's
actual base salary will be set based on this competitive review and the
executive's performance, level of experience and Chase's emphasis on
performance-based, rather than salary-based, compensation. In general, base
salaries are not reviewed more often than every 24 months.
Annual performance bonuses are awarded based on the executive's success in
achieving corporate, business unit and individual performance goals. In setting
these awards, the Committee takes account of data and trends in the appropriate
peer groups.
Quantitative performance goals may vary from year to year, and may include
income before income tax expense, return on common equity, earnings per share
growth, loan charge-offs, the ratio of non-performing assets to total assets and
the efficiency ratio (the ratio of non-interest expense to the sum of net
interest income and non-interest revenue). Qualitative measures include the
Committee's assessment of the executive's success in the carrying out of the
Chase Vision and exemplifying the Chase Values. The 1997 awards gave primary
consideration to both Chase and the business unit's income before income tax
expense and efficiency ratios.
Each executive is required to defer a portion of each annual performance
bonus in excess of a certain amount. The mandatory deferred amount will be paid
out over a several year period or upon retirement and is subject to certain
forfeiture provisions upon termination of employment.
EQUITY-BASED COMPENSATION. Chase believes that the grant of significant
annual equity awards further links the interests of senior management and
Chase's stockholders. The Committee sets targeted ranges for equity-based awards
for each executive based upon the award practices of a peer group of U.S. bank
holding companies and other competitors. Actual awards reflect the Committee's
assessment of the individual's current and potential contribution to Chase's
success.
In January 1997, the Committee granted stock options to executive officers
which become exercisable over three years and expire on January 21, 2007 and
restricted stock or units which vest after three years. All awards vest in case
of death or disability or retirement.
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DEDUCTIBILITY OF EXECUTIVE COMPENSATION
In 1994, Chase stockholders approved the Key Executive Performance Program
(KEPP), a plan that allows Chase a tax deduction for incentive compensation
payments to the Chief Executive Officer and the other four most highly paid
executive officers. Absent KEPP, such incentive compensation payments would not
be deductible to the extent that such amounts for any such officer in any year
exceeded $1 million. In administering this plan, the Compensation Committee will
promote its policy of maximizing corporate tax deductions, wherever feasible.
Under the plan, the Committee sets an objective formula under which a bonus
pool amount will be created and allocates a percentage of this pool to each
participant. This calculation sets the amount of incentive compensation (that
is, annual performance bonus and stock awards other than options awarded under
the 1996 Long Term Incentive Plan) for each participant. There is a separate
limit that no participant may receive compensation greater than .002 of Chase's
income before income tax expense, extraordinary items and effects of accounting
changes in the calendar year plus one half of any amount unused from the prior
year. The Committee may, based on other factors, reduce any incentive awards
determined pursuant to this formula.
COMPENSATION ACTIONS IN 1997
Final compensation data for Chase's peer group companies for calendar year
1997 are not available. Chase estimates that total compensation amounts for
executive officers (base salary, annual bonus and equity-based awards) will
place Chase in approximately the 75th percentile of compensation levels of
applicable peer groups.
For 1997, the Committee, with the approval of the Board of Directors,
awarded Mr. Shipley, under KEPP, a performance bonus of $3,531,250 (a portion of
which was mandatorily deferred) and 4,426 restricted stock units which vest
after three years. In making this award, the Committee gave primary
consideration to financial results for 1997 and corporate positioning
objectives. Additionally, the Committee took into consideration the achievement
of the Corporation's 1997 operating goals, including goals related to asset
quality, leadership development and workforce diversity. The award reflects the
achievement of a 15% operating earnings per share growth, 19.5% return on
average common stockholders' equity, an efficiency ratio of 55% and a further
decline in non-performing assets. Mr. Shipley had been awarded $3.093 million
and 4,401 restricted stock units for 1996 and $2.131 million and 4,669
restricted stock units for 1995.
In January 1997, the Committee also awarded to Mr. Shipley 120,000
nonqualified stock options that vest over three years. In 1996, the Committee,
with the approval of the Board of Directors, awarded a special merger-related
bonus of $5 million under KEPP to Mr. Shipley, payable in three equal
installments in June 1996, September 1997 and December 1998.
Dated as of January 20, 1998
COMPENSATION AND BENEFITS COMMITTEE
H. Laurance Fuller (Vice Chairman)
Melvin R. Goodes
William H. Gray III
John R. Stafford (Chairman)
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COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN.
Below is a line graph which compares the yearly percentage change in the
cumulative total stockholder return of Chase's Common Stock against the
cumulative total return of the S&P 500 Index and the KBW 50 and KBW Money Center
Banks indices for each of the five years in the period commencing December 31,
1992 and ending December 31, 1997. Keefe, Bruyette & Woods, Inc. (KBW) is a
banking industry specialist. The results are based on an assumed $100 invested
on December 31, 1992 and reinvestment of dividends. For each index, total return
is based on market capitalization of its components.
Measurement Period KBW Money
(Fiscal Year Covered) Chase S&P 500 KBW 50 Center Banks
1992 100.00 100.00 100.00 100.00
1993 107.36 110.08 105.54 121.86
1994 100.40 111.53 100.16 120.39
1995 169.42 153.44 160.41 195.81
1996 265.59 188.67 226.92 289.50
1997 333.15 251.62 331.73 387.27
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EXECUTIVE COMPENSATION TABLES
I. SUMMARY COMPENSATION TABLE
Annual Compensation(2) Long-Term Compensation
----------------------------------- --------------------------------------
Awards Payouts
------------------------- ----------
Restricted Securities
Stock Underlying LTIP All Other
Special(3) Awards Options/SARs Payouts Compensation
Name and Principal Position Year Salary($) Bonus($) Bonus($) ($)(4) Granted(#) ($)(5) ($)(6)
- --------------------------- ---- --------- -------- ---------- ---------- ------------ ------- ------------
Walter V. Shipley 1997 $950,000 $3,531,250 $1,666,667 $ 468,750 120,000 $3,544,220 $ 47,500
Chairman and 1996 903,846 3,093,750 1,666,667 2,378,750 120,000 1,343,750 6,000
Chief Executive Officer 1995 850,000 2,131,250 0 1,215,000 120,000 1,267,500 6,000
Thomas G. Labrecque(1) 1997 900,000 3,093,750 1,666,667 406,250 100,000 3,101,190 45,000
President and 1996 888,024 2,656,250 1,666,667 2,069,688 104,000 0 39,466
Chief Operating Officer 1995 870,000 2,600,000 0 1,289,062 52,000 3,000,000 38,613
William B. Harrison Jr. 1997 675,000 3,968,750 666,667 531,250 85,000 2,215,137 33,750
Vice Chairman 1996 640,385 2,218,750 666,667 1,514,062 75,000 839,844 6,000
of the Board 1995 600,000 1,431,250 0 760,156 75,000 792,188 6,000
Donald L. Boudreau 1997 575,000 1,256,250 500,000 143,750 45,000 1,476,758 28,750
Vice Chairman National
Consumer Services
Marc J. Shapiro 1997 575,000 1,081,250 0 118,750 45,000 1,476,758 570,866
Vice Chairman Finance and
Risk Management
- ---------------
(1) Mr. Labrecque became an executive officer of the Corporation on March 31,
1996 (the Merger Date). Compensation paid or awarded to Mr. Labrecque by
Heritage Chase in 1995 is included for informational purposes. Information
provided for 1996 includes compensation paid or awarded to him by Heritage
Chase between January 1, 1996 and the Merger Date.
(2) Includes amounts paid or deferred during each year.
(3) Amounts shown include special merger-related bonuses awarded in 1996 as
follows: Mr. Shipley: $5,000,000; Mr. Labrecque: $5,000,000; Mr. Harrison:
$2,000,000; and Mr. Boudreau: $1,500,000. These special bonuses were made
payable in three equal installments in June 1996, September 1997 and
December 1998. The amounts shown in the column entitled "Special Bonus" are
the amounts paid in each year indicated.
(4) All awards of restricted stock units are or were subject to certain vesting
requirements, including continued employment, and are valued as of the date
of grant. Dividend equivalents are payable on all restricted stock units.
The number and aggregate market value of restricted stock and restricted
stock units as of December 31, 1997 plus awards of restricted stock units on
January 20, 1998 relating to the 1997 performance bonus were as follows: Mr.
Shipley: 13,496 units ($1,477,812); Mr. Labrecque: 46,560 units
($5,098,320); Mr. Harrison: 10,996 units ($1,204,062); Mr. Boudreau: 14,085
units ($1,542,308); and Mr. Shapiro: 3,115 units ($341,093). Certain 1996
awards of restricted stock units provided for vesting on July 16, 2001 or,
if earlier, whenever the Common Stock traded at the target price per share
for ten consecutive business days as follows: Mr. Shipley 30,000 shares; Mr.
Labrecque: 26,250 shares; and Mr. Harrison: 18,750 shares. These units have
vested. Certain 1995 awards of restricted stock units provided for vesting
on January 1, 2000 or, if earlier, whenever the Common Stock traded at the
target price per share for ten consecutive business days: Mr. Shipley:
20,000 shares and Mr. Harrison: 12,500 shares. These units have vested.
(5) The 1997 payments to all named executive officers represent payouts of Long
Term Incentive Plan restricted stock units granted in 1996 at a stock price
of $65.75 per share, the vesting of one half of which was contingent upon
the Common Stock trading for ten consecutive business days at $110 per share
and the vesting of the other half of which was contingent upon the Common
Stock trading at $120 per share for ten consecutive business days, in either
case by 2001. These targets were both met in 1997. The 1996 and 1995
payments to Messrs. Shipley and Harrison represent payouts, when the Common
Stock prices were met, of a portion of restricted stock units granted in
1994 and 1995, the vesting of which was contingent upon the Common Stock
price targets being reached by 1999 and 2000. The 1995 payment to Mr.
Labrecque was made pursuant to a Heritage Chase award which was contingent
upon certain stock price targets being met by 1996; the targets were met in
1995.
In all cases, payments reflected in this column would have been forfeited if
the stock price targets had not been met prior to the end of the vesting
periods.
(6) Principally includes employer contributions under Section 401(k) plans, and
for Mr. Shapiro includes $544,178 in allowances and reimbursements related
to his relocation to New York.
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II. STOCK OPTION/SAR GRANTS TABLE -- 1997 GRANTS
% of Total
# of Options/SARs
Securities Granted Exercise
Underlying to All or Base Grant Date
Options/SARs Employees Price Expiration Present
Name Granted(1) in 1997 ($/Share) Date Value(2)(3)
---- ------------ ------------ --------- ---------- -----------
Walter V. Shipley 120,000 .74 $92.3125 01/21/07 $3,840,000
Thomas G. Labrecque 100,000 .62 92.3125 01/21/07 3,200,000
William B. Harrison Jr. 85,000 .52 92.3125 01/21/07 2,720,000
Donald L. Boudreau 45,000 .28 92.3125 01/21/07 1,440,000
Marc J. Shapiro 45,000 .28 92.3125 01/21/07 1,440,000
- ---------------
(1) All nonqualified stock options; no SARs were granted to any employee during
1997. Options become exercisable in three equal annual installments
beginning on January 21, 1998.
(2) Present values on the grant dates were determined by using the Black-Scholes
option pricing model modified to take dividends into account. The model as
applied used the applicable grant dates and the exercise prices shown on the
table, and the fair market value of Common Stock on the respective grant
dates, which was in each case the same as the exercise price. The model
assumed (i) a risk-free rate of return of 6.54%, which was the implied rate
on 10-year U.S. Treasury zero coupon bonds on the grant date; (ii) a stock
price volatility of 23%; (iii) a constant dividend yield of 2.43%, which was
based on the historical Common Stock dividend as of the grant date; and (iv)
the exercise of all options on the final day of their 10-year terms. No
discount from the theoretical value was taken to reflect the waiting period
prior to vesting, the limited transferability of the options, and the
likelihood of the options being exercised in advance of the final day of
their terms.
(3) There is no assurance that the values actually realized upon the exercise of
these options will be at or near the present values shown in the table as of
the date of grant. The Black-Scholes option pricing model is a widely used
mathematical formula for estimating option values that incorporates various
assumptions that may not hold true over the 10-year life of these options.
For example, assumptions are required about the risk-free rate of return as
well as about the dividend yield on Common Stock and the volatility of the
Common Stock over the 10-year period. Also, the Black-Scholes model assumes
that an option holder can sell the option at any time at a fair price that
includes a premium for the remaining time value of the option. However, an
optionee can realize an option's value before maturity only by exercising
and thereby sacrificing the option's remaining time value. Although the
negative impact of this and other restrictions on the value of this type of
option is well recognized, there is no accepted method for adjusting the
theoretical option value for them. The values set forth in the table should
not be viewed in any way as a forecast of the performance of our Common
Stock, which will be influenced by future events and unknown factors.
- --------------------------------------------------------------------------------
III. AGGREGATED STOCK OPTION/SAR EXERCISES IN 1997 AND
OPTION/SAR VALUES AS OF YEAR-END 1997
Number of Securities
Underlying Unexercised Value of Unexercised
Shares Options/SARs In-the-Money Options/SARs
Acquired on Value as of December 31, 1997 as of December 31, 1997(2)
Exercise Realized --------------------------- ----------------------------
Name (#) ($)(1) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ---------- ----------- ------------- ------------ -------------
Walter V. Shipley 18,750 $1,124,415 632,000 240,000 $ 48,228,625 $8,705,000
Thomas G. Labrecque 51,999 2,428,452 488,560 100,000 38,347,761 1,718,750
William B. Harrison
Jr. 21,000 1,447,313 341,500 160,000 24,858,625 5,612,500
Donald L. Boudreau 18,720 1,168,681 174,969 45,000 13,387,758 773,438
Marc J. Shapiro 26,000 2,000,500 255,500 87,000 18,945,313 3,098,313
- ---------------
(1) Amounts indicated include those which would have been realized on exercise
but were deferred into Common Stock units. The majority of option exercises
were in connection with options expiring during 1997.
(2) Value based on $109.50 closing price per share of Common Stock on December
31, 1997.
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RETIREMENT BENEFITS AND TERMINATION ARRANGEMENTS
CHASE RETIREMENT PLAN. Most salaried employees of our subsidiary companies
which have adopted the Chase Retirement Plan earn benefits under the Plan if
they have been employed for at least one year. Benefits generally become vested
after five years of service. On a monthly basis, a bookkeeping account in a
participant's name is credited with an amount equal to a percentage of the
participant's base salary depending on years of credited service, as follows:
Years of Credited Service % of Salary
------------------------- -----------
less than 4 4
4-6 5
7-10 6
11-15 8
16-20 10
21-25 12
26 or more 14
These accounts also receive interest credits based on average U.S. Treasury
Bill rates for the previous year plus 1%. In addition, certain annuity benefits
earned by participants under prior plans of Heritage Chase, as of December 31,
1988, or the Corporation, as of December 31, 1996, were converted to additional
credit balances under the Chase Retirement Plan as of January 1, 1997. When a
participant terminates employment, the amount credited to the participant's
account is converted into an annuity or paid to the participant in a lump sum.
SUPPLEMENTAL RETIREMENT BENEFITS. Supplemental retirement benefits are
provided to all of the executive officers and certain other participants under
various unqualified, unfunded plans. Unfunded benefits are provided to certain
employees, including each executive officer, whose benefits under the Chase
Retirement Plan are limited by type of compensation or amount under applicable
Federal tax laws and regulations. Designated employees may also receive an
unfunded annual benefit at retirement equal to a percentage of final average
base pay multiplied by years of service reduced by the amount of all benefits
received under the Chase Retirement Plan and other nonqualified unfunded
arrangements. Chase also provides a fixed retirement benefit per year of service
to certain designated persons.
ESTIMATED ANNUAL RETIREMENT BENEFITS PAYABLE TO CERTAIN EXECUTIVE
OFFICERS. The following table shows the estimated annual retirement benefits,
including supplemental retirement benefits under the plans applicable to the
individuals, which would be payable to each executive officer listed if he were
to retire at age 65 at his 1997 base salary and payments were made in the form
of a joint and 50% surviving spouse annuity, which is the normal form of payment
for married employees.
Estimated Annual Retirement Benefits
Year of
Name 65th Birthday Estimated Annual Benefit
---- ------------- ------------------------
Walter V. Shipley 2000 $713,533(1)
Thomas G. Labrecque 2003 787,818(2)
William B. Harrison Jr. 2008 533,964(1)
Donald L. Boudreau 2005 506,329(2)
Marc J. Shapiro 2012 644,083(1)
- ---------------
(1) Amounts include (i) interest credits for cash balances projected to be 6.5%
per annum on annual salary credits and 8.1% per annum on prior service
balances, if any, and (ii) accrued benefits as of December 31, 1997 under
retirement plans then applicable to the named executive officer. Benefits
are not subject to any deduction for Social Security payments and assume no
future increases in base salary.
(2) Certain persons who were participating in the Heritage Chase retirement
plans and had met certain age and service requirements as of December 31,
1988, may elect to have retirement benefits for all of their years of
service up to their retirement calculated according to a final pay formula
which is determined by years of service less a part of the Social Security
benefit payable to the employee. This benefit is payable solely in the form
of an annuity, which is the amount shown in the table, and assumes no future
increases in base salary.
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TERMINATION ARRANGEMENTS. As part of Chase's efforts to foster the
continued employment of key management personnel, Chase renewed certain expiring
termination agreements with various members of senior management, including
Messrs. Boudreau and Shapiro. Under the general form of the agreement, Chase
will provide severance benefits upon a termination of employment, under
applicable conditions, in an amount equal to the product of two times (three
times in the case of Mr. Boudreau) the sum of the executive's (i) current annual
rate of salary, plus (ii) bonus based on an average bonus (expressed as a
percentage of salary multiplied by the current annual rate of salary of the
executive). In addition, the executive may elect to continue coverage under the
applicable welfare benefit plans. In the event of a termination qualifying an
executive for severance, the executive's outstanding stock options under Chase's
Long Term Incentive Plan would become vested and remain exercisable following
termination of employment. In addition, restricted stock or similar awards under
such Plan would vest, provided that if vesting of any options or restricted
stock awards is based on satisfaction of performance criteria, then such awards
will not vest until such criteria are satisfied. If the executive were to incur
federal excise tax in certain circumstances on any severance payment or benefit,
the executive would be entitled to an additional cash payment to put the
executive in the same position as if such excise tax were not applicable.
ADDITIONAL INFORMATION ABOUT OUR DIRECTORS AND EXECUTIVE OFFICERS
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE. Our Directors and
executive officers file reports with the Securities and Exchange Commission and
the New York Stock Exchange indicating the number of shares of any class of our
equity securities they owned when they became a Director or executive officer
and, after that, any changes in their ownership of our equity securities. Copies
of any of these reports must also be provided to us. These reports are required
by Section 16(a) of the Securities Exchange Act of 1934. We have reviewed the
copies of the reports which we have received and written representations from
the individuals required to file the reports. Based on this review, we believe
that each of our executive officers and Directors has complied with applicable
reporting requirements for transactions in our securities during 1997.
EXTENSIONS OF CREDIT TO DIRECTORS AND OFFICERS. Our subsidiaries have made
loans and extended credit, and expect in the future to make loans and extend
credit, in the ordinary course of business to our Directors, officers and their
associates, including corporations of which a Director is a director, officer or
both. None of these loans is preferential or nonperforming.
DIRECTOR AND OFFICER TRANSACTIONS AND OTHER BUSINESS RELATIONSHIPS. In the
ordinary course of business, we use the products or services of a number of
organizations of which Directors are officers or directors and in the future we
expect to have similar transactions with such organizations. Mrs. Kaplan is Of
Counsel to a law firm that provides legal services to us from time to time. We
believe that these transactions were on terms that were at least as favorable to
us as would have been available from other product or service providers.
COMPENSATION AND BENEFITS COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION. No member of the Compensation and Benefits Committee is or ever
was a Chase officer or employee. No member of the Committee is, or was during
1997, an executive officer of another company whose board of directors has a
comparable committee on which one of Chase's executive officers serves. Mr.
Shipley was a member of the Compensation and Nominations Committee of The
Reader's Digest Association, Inc. until his retirement as a Director of that
company in December 1997; Mr. Grune has served as the Chairman and Chief
Executive Officer of The Reader's Digest Association, Inc. since August 1997.
Mr. Grune is not a member of Chase's Compensation and Benefits Committee.
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PROPOSAL 2: APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed the firm of Price Waterhouse LLP, 1177
Avenue of the Americas, New York, New York 10036, as independent accountants to
examine the financial statements of the Corporation and its subsidiaries for the
year ending December 31, 1998, and to perform other appropriate accounting
services. A resolution will be presented to the meeting to ratify the
appointment. The affirmative vote of a majority of the number of votes entitled
to be cast by the Common Stock represented at the meeting is needed to ratify
the appointment. If the stockholders do not ratify the appointment of Price
Waterhouse LLP, the selection of independent accountants will be reconsidered by
the Board of Directors.
Price Waterhouse LLP has examined the financial statements of Chase since
1965. A member of Price Waterhouse LLP will be present at the meeting, will have
the opportunity to make a statement if he desires and will be available to
respond to appropriate questions by stockholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR RATIFICATION
OF THE APPOINTMENT OF PRICE WATERHOUSE LLP.
------------------------------------------------------------------------
PROPOSAL 3: APPROVAL OF AMENDMENT OF CERTIFICATE OF INCORPORATION TO INCREASE
AUTHORIZED COMMON STOCK AND TO EFFECT STOCK SPLIT
OVERVIEW; PURPOSES AND EFFECTS OF PROPOSAL. On March 17, 1998, the Board of
Directors approved a proposal to amend Chase's Certificate of Incorporation to
increase the number of authorized shares of Common Stock from 750,000,000 to
1,500,000,000 and to effect a 2-for-1 split of the Common Stock. The amendment
and stock split will not affect the par value of the Common Stock, which would
remain $1 per share, or the number of authorized shares of preferred stock,
which would remain 200,000,000. The proposal to effect the amendment and stock
split requires the approval of holders of a majority of the outstanding Common
Stock. Holders of preferred stock are not entitled to vote on the proposal. The
text of the proposed amendment is set forth in the Appendix to this Proxy
Statement.
The Board of Directors believes that the proposed 2-for-1 stock split is in
the best interests of Chase and its stockholders because it would place the
market price of the Common Stock in a range that may be more attractive to
investors, particularly individuals, and may result in a broader market for the
Common Stock. Shares issued in the stock split would have rights identical to
the currently outstanding Common Stock. The proposed increase in the authorized
Common Stock will not affect the ratio of authorized but unissued stock to
issued stock. As a result, Chase will maintain the same relative degree of
flexibility in meeting future stock needs.
There are no plans, agreements, commitments or understandings for the
issuance of the newly authorized shares at the present time, other than as
necessary to effect the stock split. The shares could be used for general
corporate purposes, including for future financings, acquisitions, stock
dividends or stock splits. Unless required by law, regulation or stock exchange
rule or believed advisable by the Board of Directors, no further stockholder
approval would be sought for the issuance of such shares. Holders of Common
Stock do not have preemptive rights to subscribe for additional securities that
may be issued by Chase, which means that current stockholders do not have a
prior right to purchase any new issue of Chase stock in order to maintain their
proportionate ownership interests.
On March 17, 1998, the Board of Directors also announced an increase in the
dividend payable on the Common Stock to $0.72 per share, from $0.62 per share,
effective for the dividend payable on April 30, 1998 to holders of record of the
Common Stock at the close of business on April 6, 1998. If the stock split is
approved, dividends payable on the Common Stock after May 1, 1998 will be
proportionately adjusted. As a result, if the Board of Directors declares a
dividend on the Common Stock in the 1998 second quarter and makes no further
changes in dividend policy, the dividend on the Common Stock would be $0.36 per
share. Future dividend policies will be determined by the Board of Directors in
light of the earnings and financial condition of Chase and its subsidiaries and
other factors, including applicable governmental regulations and policies.
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If adopted, we expect the amendment and the stock split would become
effective on May 20, 1998. This means that each holder of record of Common Stock
at the close of business on that date would become the record owner of one
additional share of Common Stock for each share of Common Stock then owned of
record by such holder.
IF THE PROPOSED AMENDMENT IS ADOPTED, PLEASE KEEP YOUR PRESENT STOCK
CERTIFICATES. THEY WILL REMAIN VALID FOR THE NUMBER OF SHARES SHOWN ON THEM.
PLEASE DO NOT DESTROY THEM AND DO NOT SEND THEM TO CHASE OR THE TRANSFER
AGENT. Chase currently expects that on or about June 12, 1998, certificates
representing the shares issued as a result of the stock split will be mailed to
all stockholders of record at the close of business on May 20, 1998. If you are
not a registered stockholder and instead hold your shares with a broker or bank
in street name, you do not have a certificate. Instead your account statement
will be adjusted to reflect the split.
If the stock split is effected, Chase will make appropriate adjustments to
the number of shares covered by, and, where applicable, the exercise prices of,
stock options and restricted stock awards outstanding or granted under its
stock-based benefit plans, in accordance with the provisions of those plans.
Shares covered by outstanding stock options or restricted stock awards would be
multiplied by two and the per share exercise prices of outstanding stock options
would be divided by two. In addition, for plans under which stock appreciation
rights, phantom stock units and similar stock-based awards are granted, the
number of rights or units covered would also be multiplied by two and, where
applicable, the per share exercise prices would be divided by two.
Because the stock split will effectively double the number of shares of
Common Stock representing a stockholder's investment in the Corporation,
stockholders may have to pay a higher brokerage commission to sell their
investment after the stock split. Stockholders may wish to consult their
respective brokers to ascertain the brokerage commission that would be charged
for selling the greater number of shares.
FEDERAL INCOME TAX CONSEQUENCES. Chase has been advised by tax counsel
that the proposed stock split would result in no gain or loss or realization of
taxable income to owners of Common Stock under existing United States federal
income tax laws. The cost basis for federal tax purposes of each new share and
each retained share of Common Stock would be equal to one-half of the cost basis
for tax purposes of the corresponding share immediately prior to the stock
split, and the holding period for the additional share issued pursuant to the
stock split would be deemed to be the same as the holding period for the
original share of Common Stock. The laws of jurisdictions other than the United
States may impose income taxes on the issuance of the additional shares, and
stockholders are urged to consult their tax advisors.
ACCOUNTING TREATMENT. If the stock split is effected, there will be no
change in Chase's total stockholders' equity. However, the Common Stock capital
account will be increased to reflect the $1 per share par value of the
additional shares issued and the capital surplus account will be reduced by a
like amount. The number of shares of Common Stock issued and outstanding and
held in the treasury would double.
LISTING. Chase will apply to list the additional shares issued in the
stock split on the New York Stock Exchange and the London Stock Exchange, the
stock exchanges on which the Common Stock is currently listed.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF
THE PROPOSAL TO AMEND THE CERTIFICATE OF INCORPORATION TO INCREASE THE
AUTHORIZED COMMON STOCK AND TO EFFECT THE STOCK SPLIT.
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STOCKHOLDER PROPOSALS
If a majority of the shares of Common Stock entitled to vote at the meeting
are voted in favor of any of the following proposals, then the proposal will be
approved.
PROPOSAL 4: LOCATION OF ANNUAL MEETING
Mrs. Evelyn Y. Davis, Watergate Office Building, 2600 Virginia Avenue,
N.W., Suite 215, Washington, D.C. 20037, the holder of record of 522 shares of
Common Stock, has advised the Corporation that she plans to introduce the
following resolution:
"RESOLVED: That the stockholders of The Chase Manhattan Corporation
recommend that the Board take the necessary steps to rotate the annual
meeting between major cities in the USA where Chase has branches/and or
representative offices. This could include major cities in New York, New
Jersey, Connecticut, as well as other states where a large concentration of
shares are being held (except for Texas, where Chase has met several times
already)."
The reasons given by the stockholder for such resolution are as follows:
"Chase has stockholders all over the country. Since the acquisitions of
Manufacturers Hanover and Chemical ownership has really spread out."
"Owners in other parts of the country are also entitled to meet management
and directors from time to time, NOT just in New York City and Dallas,
Texas."
"If you AGREE, please mark your proxy FOR this resolution."
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE AGAINST THIS
PROPOSAL FOR THE FOLLOWING REASONS:
Chase's By-laws provide that the Annual Meeting of stockholders shall be
held at such time and place as shall be fixed by the Board of Directors. The
Board's decisions with respect to the location of the Annual Meeting are based
on many considerations, including whether the Corporation has substantial
business operations or a large concentration of stockholders or customers in the
location in question. For example, in 1997, the Corporation held its Annual
Meeting in Texas, which is the location of Chase Bank of Texas, National
Association, a large and important subsidiary. This also provided the first
opportunity for the post-merger Board to hold meetings in Texas.
Because Chase's stockholders and customers are geographically diverse, it
is inevitable that any place selected for the Annual Meeting will be more
convenient for some stockholders. The By-law provision regarding the Annual
Meeting serves the best interests of Chase by giving the Board maximum
flexibility with respect to the location of the Annual Meeting. The Board
believes the proposed resolution would not be in the best interests of
stockholders and accordingly, recommends that stockholders vote against this
resolution.
PROPOSAL 5: CUMULATIVE VOTING
John J. Gilbert, who is the owner of 410 shares, and Margaret R. and John
J. Gilbert, as executors of the Estate of Lewis D. Gilbert for 306 shares, and
both representing an additional family interest of 451 shares, have advised the
Corporation that they plan to introduce the following resolution:
"RESOLVED: That the stockholders of The Chase Manhattan Corporation,
assembled in annual meeting in person and by proxy, hereby request the
Board of Directors to take steps necessary to provide for cumulative voting
in the election of directors, which means each stockholder shall be
entitled to as many votes as shall equal the number of shares he or she
owns multiplied by the number of directors to be elected, and he or she may
cast all of such votes for a single candidate, or any two or more of them
as he or she may see fit."
The reasons given by the stockholders for such resolution are as follows:
"Continued strong support along the lines we suggest were shown at the last
annual meeting when 32.73% of the votes cast, an increase over the previous
year, 5,539 owners of 104,190,738 shares, were cast in favor of this
proposal. The vote against included unmarked proxies."
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"California law still requires that unless stockholders have voted not to
have cumulative voting they will have it. Ohio has the same provision."
"The National Bank Act provides for cumulative voting. In many cases
companies get around it by forming holding companies without cumulative
voting. Banking authorities have the right to question the capability of
directors on banking boards. In many cases authorities come in after and
say the director or directors were not qualified. We were delighted to see
the SEC has finally taken action preventing bad directors from being on the
boards of public companies. The SEC should have hearings to prevent such
persons becoming directors before they harm investors."
"Many successful corporations have cumulative voting. Example, Pennzoil
defeated Texaco in that famous case. Texaco's recent problems might have
been prevented with cumulative voting getting directors on the board to
prevent such things. Ingersoll-Rand, also having cumulative voting won two
awards. FORTUNE magazine ranked it second in its industry as 'America's
Most Admired Corporations' and the WALL STREET TRANSCRIPT noted 'on almost
any criteria used to evaluate management, Ingersoll-Rand excels.' In 1994
and 1995 they raised their dividend."
"Lockheed-Martin as well as VWR Corporation, now have a provision that if
anyone has 40% or more of the shares cumulative voting applies; it does
apply at the latter company."
"In 1995 American Premier adopted cumulative voting. Alleghany Power System
tried to take away cumulative voting, as well as put in a stagger system of
electing directors, and stockholders defeated it, showing stockholders are
interested in their rights. Hewlett Packard, a very successful company,
also has cumulative voting."
"If you AGREE, please mark your proxy for this resolution; otherwise it is
automatically cast against it, unless you have marked to abstain."
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE AGAINST THIS
PROPOSAL FOR THE FOLLOWING REASONS:
Stockholders have rejected this or similar proposals each year they have
been presented since 1987 and the Board continues to believe it would not be in
the best interests of Chase or its stockholders to adopt this proposal.
Our Directors bring to Chase broad experience and proven competence in
their respective fields. Fourteen of Chase's seventeen Board nominees are
independent non-employee Directors and all are nominated by the Governance
Committee of the Board, which consists entirely of independent Directors. Each
Director is elected by a plurality of the votes cast at the Annual Meeting. In
1993, we eliminated the classification of the Board of Directors in the belief
that all Directors should be equally accountable at all times for the
Corporation's performance and that the will of the majority of stockholders
should not be impeded by a classified board.
In contrast to this approach, cumulative voting would permit the election
of a Director by relatively small groups of stockholders, and this is made more
likely in the absence of a classified Board. A Director elected by less than a
majority might regard himself or herself as representing only the special
interests of the particular group responsible for such Director's election. This
would introduce the possibility of factionalism and discord, hampering the
ability of the Board to work together and discouraging qualified individuals
from serving on the Board. There should not be a question as to whether a
Director is acting for the benefit of all stockholders or as the representative
of a special group.
The present system of electing Directors has enabled the Board to act for
the benefit of Chase and all Chase stockholders and should be retained.
Accordingly, the Board recommends a vote against this proposal.
PROPOSAL 6: EXECUTIVE COMPENSATION AND DIVIDENDS
Edward S. George, 89 Corning Hill, Glenmont, New York 12077, the beneficial
owner of 1,000 shares of Common Stock, has advised the
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Corporation that he intends to introduce the following resolution:
"Whereas the dividend is the first casualty in any economic downturn and
the stockholder is the first casualty and the last to benefit from an
upturn, be it"
"RESOLVED: That when a dividend is cut, it is recommended that no salaries
will be increased or any stock options allowed to executives or directors
until the dividend is restored to its original amount before the cut."
The reasons given by the stockholder for such resolution are as follows:
"The bullet must be large enough to enable the executives and directors as
well as the stockholders to get their teeth on it."
"The administration will maintain that the increases in salary and stock
options are necessary to attract and hold good people. This cliche belongs
with the one 'The check is in the mail', the New York State Legislature and
certain elected officials to justify an increase in their salaries, and
'I'm from the government and I'm here to help."
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE AGAINST THIS
PROPOSAL FOR THE FOLLOWING REASONS:
As described in the report of the Compensation and Benefits Committee, our
compensation policy for executive officers aligns the interests of senior
management with our stockholders by emphasizing performance-based pay and
long-term incentives that are linked to the performance of Chase stock. Such
compensation encourages executives to strive to increase stockholder value and
rewards them when it is achieved.
Historically, Chase has an outstanding record of consistent payment of
dividends. As noted above, the Board of Directors announced an increase in the
dividend payable on the Common Stock to $0.72 from $0.62 per share, effective
for the dividend payable on April 30, 1998 to holders of record at the close of
business on April 6, 1998. In the event future circumstances necessitated a
reduction in the dividend, because a significant portion of executive
compensation is stock based and executives are required to own Chase stock, any
such circumstances would undoubtedly have a substantial negative impact on Chase
executives.
The proposal would substitute an arbitrary standard linking salary and
stock options solely to dividends in place of executive compensation
determinations now made by and under the direction of the Board. The proposal
would not distinguish between executives regardless of their individual
contributions or indeed whether they had joined Chase before or after a dividend
reduction. The result would negatively impact our competitive posture by
imposing an artificial constraint on determinations pertaining to executive
compensation. Accordingly, the Board recommends a vote against this proposal.
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STOCKHOLDER PROPOSALS AND NOMINATIONS FOR THE 1999 ANNUAL MEETING
Stockholder proposals to be included in the Proxy Statement for our next
Annual Meeting of Stockholders must be received by the Secretary of Chase not
later than December 1, 1998.
Also, under our By-laws, nominations for director or other business
proposals to be addressed at the 1999 Annual Meeting may be made by a
stockholder entitled to vote who has delivered a notice to the Secretary of
Chase not later than the close of business on February 18, 1999 and not earlier
than January 19, 1999. The notice must contain the information required by the
By-laws. These advance notice provisions are in addition to, and separate from,
the requirements which a stockholder must meet in order to have a proposal
included in the Proxy Statement under the rules of the Securities and Exchange
Commission.
Copies of our By-laws may be obtained from the Secretary.
ANTHONY J. HORAN
SECRETARY
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APPENDIX
The first paragraph of Article FOURTH of the Corporation's Certificate of
Incorporation is proposed to be amended as follows:
"FOURTH. The total number of shares of all classes of capital stock
which the Corporation shall have authority to issue is ONE BILLION SEVEN
HUNDRED MILLION, of which TWO HUNDRED MILLION shares shall be shares of
preferred stock of the par value of $1 per share (hereinafter called
"Preferred Stock") and ONE BILLION FIVE HUNDRED MILLION shares shall be
shares of common stock of the par value of $1 per share (hereinafter called
"Common Stock"). Each share of Common Stock issued and outstanding or held
in the treasury of the Corporation immediately prior to the close of
business on such day when the amendment of this first paragraph of Article
FOURTH of the Certificate of Incorporation shall become effective shall be
subdivided and changed and converted into two fully paid and nonassessable
shares of Common Stock, par value $1 per share, of the Corporation, and at
the close of business on such date, each holder of record of Common Stock
shall, without further action, be and become the holder of one additional
share of Common Stock for each share of Common Stock held of record
immediately prior thereto."
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[RECYCABLE LOGO]
31
PROXY
THE CHASE MANHATTAN CORPORATION
THIS PROXY IS SOLICITED FROM YOU BY THE BOARD OF DIRECTORS FOR USE AT THE
ANNUAL MEETING OF STOCKHOLDERS OF THE CHASE MANHATTAN CORPORATION ON MAY 19,
1998.
You, the undersigned stockholder, appoint each of (Monsignor Charles W.
Swiger, John B. Wynne, and Stanley van den Heuvel) your attorney and proxy, with
full power of substitution, on your behalf and with all powers you would possess
if personally present, to vote all shares of Common Stock of The Chase Manhattan
Corporation that you would be entitled to vote at the above Annual Meeting and
any adjournment thereof. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS
INSTRUCTED BY YOU AND IN THE DISCRETION OF THE PROXIES ON ALL OTHER MATTERS. IF
NOT OTHERWISE SPECIFIED, SHARES WILL BE VOTED IN ACCORDANCE WITH THE
RECOMMENDATIONS OF THE DIRECTORS.
VOTING BY MAIL. If you wish to vote by mailing this proxy, please sign your
name exactly as it appears on this proxy and mark, date and return it in the
enclosed envelope. When signing as attorney, executor, administrator, trustee,
guardian or officer of a corporation, please give your full title as such.
VOTING BY INTERNET OR TELEPHONE. If you wish to vote by Internet or
telephone, please follow the instructions on the reverse side of the detachable
admission ticket below.
CHASE EMPLOYEES. If you are a current or former employee of Chase and have
an interest in Common Stock through the 401(k) Savings Plan, your proportionate
interest as of the latest available valuation date is shown on this card and
your vote will provide voting instructions to the Trustee of the Plan. If no
instructions are given, the Trustee will vote the shares pursuant to the terms
of the Savings Plan.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE.
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY
OR VOTE BY INTERNET OR TELEPHONE.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT!
YOU CAN VOTE IN ONE OF THREE WAYS:
1. Vote by Internet at our Internet Address:
http://CHASE.proxyvoting.com
[CHASE LOGO]
OR
ADMISSION TICKET
2. Call toll-free 1-800-840-1208 on a
THE CHASE MANHATTAN Touch-Tone telephone and follow the
CORPORATION instructions on the reverse side. There
1998 Annual Meeting is NO CHARGE to you for this call.
of Stockholders
OR
Tuesday, May 19, 1998
10:00 AM 3. Mark, sign and date your proxy card and
The Chase Manhattan Bank return it promptly in the enclosed
One Chase Manhattan Plaza envelope.
New York, New York
PLEASE VOTE
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Please mark
your votes as [ X ]|
indicated in
this example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3.
WITHHOLD
FOR FOR ALL
Item 1 -- ELECTION OF DIRECTORS [ ] [ ]
Nominees:
01 Hans W. Becherer 10 Harold S. Hook
02 Frank A. Bennack Jr. 11 Helene L. Kaplan
03 Susan V. Berresford 12 Thomas G. Labrecque
04 M. Anthony Burns 13 Henry B.Schacht
05 H. Laurance Fuller 14 Walter V. Shipley
06 Melvin R. Goodes 15 Andrew C. Sigler
07 William H. Gray III 16 John R. Stafford
08 George V. Grune 17 Marina v.N. Whitman
09 William B. Harrison Jr.
WITHHELD FOR: (Write nominee name(s) in the space provided below).
FOR AGAINST ABSTAIN
Item 2 -- APPOINTMENT OF
INDEPENDENT [ ] [ ] [ ]
ACCOUNTANTS
FOR AGAINST ABSTAIN
Item 3 -- INCREASE AUTHORIZED
COMMON STOCK and or [ ] [ ] [ ]
EFFECT STOCK SPLIT.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST ITEMS 4, 5 AND 6.
FOR AGAINST ABSTAIN
Item 4 -- STOCKHOLDER
PROPOSAL -- [ ] [ ] [ ]
LOCATION OF ANNUAL
MEETING
FOR AGAINST ABSTAIN
Item 5 -- STOCKHOLDER
PROPOSAL -- [ ] [ ] [ ]
CUMULATIVE VOTING
FOR AGAINST ABSTAIN
Item 6 -- STOCKHOLDER
PROPOSAL -- [ ] [ ] [ ]
EXECUTIVE
COMPENSATION AND
DIVIDENDS
YES NO
WILL ATTEND MEETING [ ] [ ]
IF YOU VOTE BY INTERNET OR TELEPHONE AS INSTRUCTED BELOW, THERE IS NO NEED TO
MAIL BACK YOUR PROXY.
Signature(s)______________________________________________________Date__________
NOTE: Please sign your name as it appears above. When signing as attorney,
executor, administrator, trustee, guardian or officer of a corporation, please
give full title as such. 2
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
- --------------------------------------------------------------------------------
IF YOU WISH TO VOTE BY INTERNET OR TELEPHONE, PLEASE FOLLOW THE INSTRUCTIONS
BELOW. 2
- --------------------------------------------------------------------------------
HAVE YOUR PROXY CARD IN HAND.
TO VOTE BY INTERNET: THE WEB ADDRESS IS http://CHASE.proxyvoting.com
TO VOTE BY PHONE:
- On a touch tone telephone call Toll-Free 1-800-840-1208 -- 24 hours
a day -- 7 days a week.
- Enter your eleven-digit personal identification number which is
indicated in the box located in the lower right corner of this
instruction form.
-------------------------------------------------------------------------
- -
Option 1: To vote as the Board of Directors recommends on all proposals,
Press 1. If you wish to vote on each proposal separately,
Press 0.
--------------------------------------------------------------------------
WHEN YOU PRESS 1, YOUR VOTE WILL BE CONFIRMED AND CAST AS YOU DIRECTED.
END OF CALL
--------------------------------------------------------------------------
Option 2: If you selected 0 to vote on each proposal separately, you will
hear the following instructions.
Proposal 1: To VOTE FOR ALL nominees, press 1;
To WITHHOLD FOR ALL nominees, press 9;
To WITHHOLD FOR AN INDIVIDUAL nominee, press 0, enter
the two digit number that appears next to the name
of the nominee for whom you DO NOT wish to vote
Once you have completed voting for Directors, press 0.
Proposal 2: You may make your selection at any time.
To vote FOR, press 1;
To vote AGAINST, press 9;
To ABSTAIN, press 0
The instructions are the same for all remaining proposals.
--------------------------------------------------------------------------
YOUR VOTE WILL BE REPEATED AND YOU WILL HAVE AN OPPORTUNITY TO CONFIRM IT.
- You will be asked if you plan to attend the meeting. When prompted,
please respond.
IF YOU VOTE BY INTERNET OR TELEPHONE, THERE IS NO NEED TO MAIL
BACK YOUR PROXY CARD.
THANK YOU FOR VOTING
