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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
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 o | |
Check the appropriate box: |
o Preliminary Proxy Statement | |
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
x Definitive Proxy Statement | |
o Definitive Additional Materials | |
o Soliciting Material Pursuant to §240.14a-12 |
Commerce Bancshares, Inc.
(Name of Registrant as Specified In Its Charter)
Commerce Bancshares, Inc.
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
x No fee required. | |
o Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. |
1) Title of each class of securities to which transaction applies: |
2) Aggregate number of securities to which transaction applies: |
3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
4) Proposed maximum aggregate value of transaction: |
5) Total fee paid: |
o Fee paid previously with preliminary materials. |
o Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
1) Amount Previously Paid: |
2) Form, Schedule or Registration Statement No.: |
3) Filing Party: |
4) Date Filed: |
SEC 1913 (02-02) | Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number. |
(1) To elect four directors to the 2008 Class for a term of three years; | |
(2) To approve the adoption of the 2005 Equity Incentive Plan; | |
(3) To ratify the selection of KPMG as the Company’s audit and accounting firm; and | |
(4) To transact such other business as may properly come before the meeting or any adjournment or postponement thereof. |
By Order of the Board of Directors | |
J. Daniel Stinnett,Secretary |
Number of | Percent | ||||||||
Name and Address of Beneficial Owner | Shares | of Class | |||||||
Giorgio Balzer | 8,474 | * | |||||||
Kansas City, Missouri | |||||||||
Kevin G. Barth | 33,684 | * | |||||||
Leawood, Kansas | 75,692 | (2) | |||||||
John R. Capps | 5,485 | * | |||||||
Creve Coeur, Missouri | |||||||||
W. Thomas Grant, II | 2,899 | * | |||||||
Shawnee Mission, Kansas | |||||||||
James B. Hebenstreit | 32,935 | * | |||||||
Kansas City, Missouri | 42,021 | (6) | |||||||
David W. Kemper | 1,032,392 | ||||||||
Ladue, Missouri | 117,554 | (1) | |||||||
234,649 | (2) | ||||||||
143,533 | (3) | ||||||||
856,057 | (4) | ||||||||
2,002,562 | (5) | 6.3 | |||||||
Jonathan M. Kemper | 60,143 | ||||||||
Kansas City, Missouri | 426,887 | (1) | |||||||
856,057 | (4) | ||||||||
292,953 | (2) | ||||||||
143,533 | (3) | ||||||||
940,746 | (5) | 3.9 | |||||||
Charles G. Kim | 25,505 | ||||||||
Clayton, Missouri | 105,222 | (2) | |||||||
Seth M. Leadbeater | 32,647 | * | |||||||
Clayton, Missouri | 126,537 | (2) | |||||||
Thomas A. McDonnell | 11,068 | * | |||||||
Kansas City, Missouri | |||||||||
Terry O. Meek | 29,517 | * | |||||||
Springfield, Missouri | |||||||||
Benjamin F. Rassieur, III | 6,782 | * | |||||||
St. Louis, Missouri | |||||||||
Andrew C. Taylor | 16,747 | * | |||||||
St. Louis, Missouri | |||||||||
Mary Ann Van Lokeren | 9,199 | * | |||||||
St. Peters, Missouri | |||||||||
Robert H. West | 16,903 | * | |||||||
Kansas City, Missouri | |||||||||
All 22 directors, nominees and executive officers as a group (including those listed above) | 6,858,417 | ||||||||
1,232,651 | (2) | 9.9 |
(1) | Shared voting power and investment power. |
(2) | Shares which could be acquired within 60 days by exercise of options. |
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(3) | Owned by a corporation for which Messrs. David W. Kemper and Jonathan M. Kemper serve as directors. Messrs. David W. Kemper and Jonathan M. Kemper disclaim beneficial ownership as to such shares. |
(4) | Mr. Jonathan M. Kemper has sole investment power, but shares voting power with Mr. David W. Kemper. |
(5) | Shared voting power. |
(6) | Owned by a corporation for which Mr. Hebenstreit serves as President. Mr. Hebenstreit disclaims beneficial ownership in these shares. |
* | Less than 1%. |
Name and Age | Periods Served as Director and Business Experience During Past 5 Years | |
2008 Class: | ||
John R. Capps, 54 | Elected a director in January, 2000. Mr. Capps has served as the President and Chief Executive Officer of Plaza Motor Company since 1981. Plaza Motor Company is a retail dealership for eight luxury automobile franchises. Mr. Capps is a director of Whitfield School (from 1995-present), St. Louis Priory School (from 1988-present), Muny Opera (from 1999-present), St. Louis Art Museum (from October, 2001-present) and Contemporary Art Museum (from January, 2003-present). He is Past Chairman of the Regional Business Council. He also served as a director of Commerce Bank, N.A., a subsidiary of the Company. | |
W. Thomas Grant, II, 54 | Elected a director in June, 1983. Mr. Grant is Chairman (since October, 1995), President and Chief Executive Officer of LabOne, Inc. LabOne, Inc. is a national laboratory services provider that performs insurance, clinical and substance abuse testing. |
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Name and Age | Periods Served as Director and Business Experience During Past 5 Years | |
James B. Hebenstreit, 59 | Elected a director in October, 1987. Mr. Hebenstreit has been President of Bartlett and Company since January, 1992. Bartlett and Company is engaged in grain merchandising and storage, flour and feed milling and cattle feeding. Mr. Hebenstreit is Chairman of the Company’s Committee on Governance/Directors. | |
David W. Kemper, 54 | Elected a director in February, 1982. Mr. Kemper is Chairman of the Board (since November, 1991), President and Chief Executive Officer of the Company and is Chairman of the Board, President, and Chief Executive Officer of Commerce Bank, N.A., a subsidiary of the Company. He is also a director of Ralcorp Holdings, Inc., and Tower Properties Company. Mr. David Kemper is the brother of Jonathan M. Kemper. | |
The following information is provided with respect to the directors who are continuing in office for the respective periods and until their successors are elected and qualified: | ||
2007 Class: | ||
Thomas A. McDonnell, 59 | Elected a director in April, 2001. Mr. McDonnell is the President and Chief Executive Officer of DST Systems, Inc. DST Systems is a provider of computer software solutions to the financial services and other industries. He has been employed by DST since 1969 and has served as President since January, 1973 (except for a 30-month period from October, 1984 to April, 1987). He is a director of DST Systems, Inc., Blue Valley Ban Corp, Euronet Worldwide, Inc., Garmin, LTD and Kansas City Southern (since March, 2003). | |
Benjamin F. Rassieur, III, 50 | Elected a director in August, 1997. Mr. Rassieur is President of Paulo Products Company. The company is engaged in commercial heat-treating, electroplating, and furnace brazing services. Mr. Rassieur has served as a director of Commerce Bank, N.A., a subsidiary of the Company. | |
Andrew C. Taylor, 57 | Elected a director in February, 1990. Mr. Taylor is Chairman and Chief Executive Officer of Enterprise Rent-A-Car Company (formerly Enterprise Leasing Co.) which is engaged in automobile leasing, rental and related services. He is also a director of Anheuser-Busch Companies. Mr. Taylor has served as a director of Commerce Bank, N.A., a subsidiary of the Company. Mr. Taylor is Chairman of the Company’s Compensation and Human Resources Committee. | |
Robert H. West, 66 | Elected a director in October, 1985. Mr. West retired as Chairman of the Board of Butler Manufacturing Company and from its board of directors on July 1, 1999. He is a director of Great Plains Energy, Inc. and Burlington Northern Santa Fe Corporation. Mr. West has also served as a director of Commerce Bank, N.A., a subsidiary of the Company. Mr. West is Chairman of the Company’s Audit Committee and designated as that Committee’s financial expert. |
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Name and Age | Periods Served as Director and Business Experience During Past 5 Years | |
2006 Class: | ||
Giorgio Balzer, 65 | Elected a director in December, 1990. From August of 1990 until May, 2003, Mr. Balzer served as Chairman and Chief Executive Officer of Business Men’s Assurance Company of America. From May, 2003 until December 31, 2004, he served as Chairman of the Board and Chief Executive Officer of Generali USA Life Reassurance Company. Since January 1, 2005, he has served as Chairman of the Board of Generali USA Life Reassurance Company. He is also U.S. Representative for Assicurazioni-Generali, S.p.A., U.S. Branch, an Italian insurance group, as well as Chairman of Worldwide Assistance Services, Inc., Washington, D.C. He is also a director of Transocean Holding Corp., a Generali financial company in the U.S. | |
Jonathan M. Kemper, 51 | Elected a director in January, 1997. Mr. Kemper is Vice Chairman of the Company and Vice Chairman of Commerce Bank, N.A., a subsidiary of the Company. He is a director of Tower Properties Company, Generali Life Reassurance Company (since September, 2003), Midwest Research Institute (since May, 2001) Chairman (since October, 2004 formerly Vice Chairman) of the National Trust for Historic Preservation Board of Trustees and a Trustee of the Kansas City Public Library. Mr. Jonathan Kemper is the brother of David W. Kemper. | |
Terry O. Meek, 61 | Elected a director in April, 1989. Mr. Meek is President of Meek Lumber Yard, Inc., which operates a chain of builders’ materials centers under the name Meeks Building Centers. He has served as a director of Commerce Bank, N.A., a subsidiary of the Company. | |
Mary Ann Van Lokeren, 57 | Elected a director in April, 1996. Ms. Van Lokeren is the Chief Executive Officer of Krey Distributing Company. Krey Distributing Company is the exclusive Anheuser Busch wholesaler for St. Charles and Lincoln counties in Missouri. She is also a director of Laclede Gas Company, Masco Corporation and D & K Healthcare Resources (since May, 2003). She has served as a director of Commerce Bank, N.A., a subsidiary of the Company. |
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• | Re-pricing is not permitted | |
• | No discounted awards permitted | |
• | No more than 20% of available shares may be used for restricted stock, or stock units, performance shares and stock-based awards | |
• | Administration by independent compensation committee | |
• | No anticipated changes from low historical awards experience | |
• | Restrictions on vesting |
Administration |
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Eligible Participants |
Shares Available For Awards |
Terms of Awards |
• Revenue | • Return on equity | |
• Earnings | • Efficiency ratio | |
• Pre-tax earnings and net profits | • Asset management | |
• Earnings per share | • Asset growth | |
• Stock price | • Asset quality | |
• Market share | • Budget achievement | |
• Costs |
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Prohibition on Repricing Awards |
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New Plan Benefits |
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Long Term Compensation | |||||||||||||||||||||||||||||||||
Awards | Payouts | ||||||||||||||||||||||||||||||||
Annual Compensation | |||||||||||||||||||||||||||||||||
(f) | (g) | ||||||||||||||||||||||||||||||||
(e) | Restricted | Securities | (h) | (i) | |||||||||||||||||||||||||||||
(c) | (d) | Other Annual | Stock | Underlying | LTIP | All Other | |||||||||||||||||||||||||||
(a) | (b) | Salary | Bonus | Compensation | Awards(2) | Options/SARs | Payouts | Compensation(1) | |||||||||||||||||||||||||
Name and Principal Position | Year | ($) | ($) | ($) | ($) | (#) | ($) | $ | |||||||||||||||||||||||||
David W. Kemper | 2004 | 726,040 | 558,600 | 0 | 165,967 | 89,250 | 0 | 325,578 | |||||||||||||||||||||||||
Chairman, President & | 2003 | 691,150 | 520,000 | 0 | 158,839 | 93,716 | 0 | 78,527 | |||||||||||||||||||||||||
CEO | 2002 | 658,200 | 496,000 | 0 | 115,521 | 98,397 | 0 | 78,720 | |||||||||||||||||||||||||
Commerce Bancshares, Inc. | |||||||||||||||||||||||||||||||||
Jonathan M. Kemper | 2004 | 376,094 | 200,000 | 0 | 57,445 | 37,800 | 0 | 7,392 | |||||||||||||||||||||||||
Vice Chairman | 2003 | 359,000 | 180,000 | 0 | 55,501 | 39,690 | 0 | 12,621 | |||||||||||||||||||||||||
Commerce Bancshares, Inc. | 2002 | 345,125 | 173,400 | 0 | 40,399 | 40,516 | 0 | 10,283 | |||||||||||||||||||||||||
Seth M. Leadbeater | 2004 | 289,375 | 140,000 | 0 | 292,545 | 18,900 | 0 | 7,211 | |||||||||||||||||||||||||
Vice Chairman | 2003 | 270,000 | 135,000 | 0 | 41,828 | 18,742 | 0 | 8,355 | |||||||||||||||||||||||||
Commerce Bancshares, Inc. | 2002 | 259,375 | 130,600 | 0 | 30,144 | 19,679 | 0 | 6,437 | |||||||||||||||||||||||||
Charles G. Kim | 2004 | 241,833 | 131,000 | 0 | 281,122 | 15,750 | 0 | 6,414 | |||||||||||||||||||||||||
Executive Vice President | 2003 | 224,750 | 112,700 | 0 | 34,469 | 16,537 | 0 | 7,024 | |||||||||||||||||||||||||
Commerce Bancshares, Inc. | 2002 | 214,375 | 107,700 | 0 | 24,943 | 16,785 | 0 | 4,486 | |||||||||||||||||||||||||
Kevin G. Barth | 2004 | 245,667 | 120,000 | 0 | 280,551 | 15,750 | 0 | 6,532 | |||||||||||||||||||||||||
Senior Vice President | 2003 | 226,875 | 111,000 | 0 | 34,739 | 15,435 | 0 | 9,493 | |||||||||||||||||||||||||
Commerce Bancshares, Inc. | 2002 | 214,005 | 108,500 | 0 | 24,943 | 13,891 | 0 | 7,529 |
(1) | All Other Compensation (i) mainly includes the total of the amounts allocated or contributed by the Company to the Company’s 401(k) Plan and the Commerce Executive Retirement Plan (“CERP”). |
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Also included are amounts assigned for the Group Term Insurance Plan of the Company. The CERP is a non- qualified plan established to provide benefits on compensation in excess of the allowable benefits of the Company’s Pension Plan. In 2004 for the Company’s 401(k) Plan, contributions made to the Plan were based on a maximum of 1.2% of salary in column (c). For 2004, those amounts for 401(k) and group term insurance, respectively are as follows: David W. Kemper — $6,150 and $1,242; Jonathan M. Kemper — $6,150 and $1,242; Seth M. Leadbeater — $6,150 and $1,061; Charles G. Kim — $6,038 and $376; and Kevin G. Barth — $6,150 and $382. In 2004, CERP allocations totaling $314,964 were made for the benefit of David W. Kemper and is included in column (i) above. No other named executive received any such allocations. The allocation made for David W. Kemper in 2004 was $245,054 greater than in the previous year as a result of the previously announced freeze in the Company’s Pension Plan effective December 31, 2004 which resulted in the acceleration of benefit obligations in the CERP. | |
(2) | As of December 31, 2004, the total number of shares and their market value (based on the closing market price at December 31, 2004) of restricted stock held by each of the named executive officers were as follows: |
# Share | Market Value at 12/31/04 | |||||||
David W. Kemper | 23,086 | $ | 1,158,917 | |||||
Jonathan M. Kemper | 8,078 | 405,516 | ||||||
Seth M. Leadbeater | 10,929 | 548,636 | ||||||
Charles G. Kim | 10,216 | 512,843 | ||||||
Kevin G. Barth | 9,412 | 472,482 |
Individual Grants | Potential Realizable | |||||||||||||||||||||||
Value at Assumed | ||||||||||||||||||||||||
(b) | Annual Rates of Stock | |||||||||||||||||||||||
Number of | (c) | Price Appreciation for | ||||||||||||||||||||||
Securities | % of Total | Option Term | ||||||||||||||||||||||
Underlying | Options/SARS | (d) | ||||||||||||||||||||||
Options/SARS | Granted to | Exercise or | (e) | (f) | (g) | |||||||||||||||||||
(a) | Granted | Employees in | Base Price | Expiration | 5% | 10% | ||||||||||||||||||
Name | (#) | Fiscal Year | ($/SH) | Date | ($) | ($) | ||||||||||||||||||
David W. Kemper | 89,250 | 18.61 | % | 47.5143 | 3/5/2014 | 2,666,922 | 6,758,504 | |||||||||||||||||
Jonathan M. Kemper | 37,800 | 7.88 | % | 47.5143 | 3/5/2014 | 1,129,520 | 2,862,425 | |||||||||||||||||
Seth M. Leadbeater | 18,900 | 3.94 | % | 47.5143 | 3/5/2014 | 564,760 | 1,431,213 | |||||||||||||||||
Charles G. Kim | 15,750 | 3.28 | % | 47.5143 | 3/5/2014 | 470,633 | 1,192,677 | |||||||||||||||||
Kevin G. Barth | 15,750 | 3.28 | % | 47.5143 | 3/5/2014 | 470,633 | 1,192,677 |
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(d) | (e) | |||||||||||||||
Number of Securities | Value of Unexercised | |||||||||||||||
(b) | Underlying Unexercised | In-the-Money | ||||||||||||||
Shares | (c) | Options/SARS at | Options/SARS at | |||||||||||||
Acquired | Value | FY-End | FY-End | |||||||||||||
(a) | on Exercise | Realized | (#) | ($) | ||||||||||||
Name | (#) | ($) | Exercisable/Unexercisable | Exercisable/Unexercisable | ||||||||||||
David W. Kemper | 246,152 | 4,410,353 | 234,649 | 3,452,317 | ||||||||||||
138,392 | 1,283,993 | |||||||||||||||
Jonathan M. Kemper | 32,091 | 1,149,946 | 292,953 | 6,709,134 | ||||||||||||
58,323 | 539,866 | |||||||||||||||
Seth M. Leadbeater | 26,176 | 802,442 | 126,537 | 2,592,076 | ||||||||||||
28,464 | 258,883 | |||||||||||||||
Charles G. Kim | 7,570 | 281,839 | 105,222 | 2,158,164 | ||||||||||||
24,276 | 224,606 | |||||||||||||||
Kevin G. Barth | 7,507 | 276,238 | 75,692 | 1,573,739 | ||||||||||||
23,001 | 205,720 |
(c) | ||||||||||||
Number of | ||||||||||||
Common Shares | ||||||||||||
Remaining Available | ||||||||||||
(a) | for Future Issuance | |||||||||||
Number of Common | (b) | Under Equity | ||||||||||
Shares to be Issued | Weighted Average | Compensation Plans | ||||||||||
upon Exercise of | Exercise Price of | (Excluding Shares | ||||||||||
Outstanding Options, | Outstanding Options, | Reflected in | ||||||||||
Warrants and Rights | Warrants and Rights | Column(a)) | ||||||||||
Plan category | ||||||||||||
Equity compensation plans approved by shareholders | 3,629,278 | (1) | $ | 31.92 | (2) | 2,571,600 | (3) | |||||
Equity compensation plans not approved by shareholders | — | — | — | |||||||||
Total | 3,629,278 | $ | 31.92 | 2,571,600 |
(1) | Includes an aggregate of 3,549,025 common shares issuable upon exercise of options granted under the option plans and 80,253 common shares allocated to participants’ accounts under the deferred compensation plan. |
(2) | Represents the weighted average exercise price of outstanding options under the option plans. |
(3) | Includes 1,988,239 common shares remaining available under the option plans, 322,305 common shares available under the restricted stock plan, 137,442 shares available under the directors stock purchase plan, and 123,614 shares under the deferred compensation plan. |
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1999 | 2000 | 2001 | 2002 | 2003 | 2004 | |||||||||||||||||||
Commerce CBSH | 100.00 | 134.14 | 131.38 | 141.16 | 188.34 | 206.45 | ||||||||||||||||||
NASDAQ Financial | 100.00 | 108.11 | 118.75 | 122.30 | 165.41 | 193.09 | ||||||||||||||||||
S&P 500 | 100.00 | 91.20 | 80.42 | 62.64 | 80.62 | 89.47 | ||||||||||||||||||
Assumes $100 invested 12/31/99 with dividends reinvested on a Total Return basis with Commerce (CBSH)compared to the above named indices. |
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• | Align the senior executives’ interests with the long-term interests of shareholders; | |
• | Provide total compensation programs that are competitive with bank holding companies in geographic proximity, comparable asset size and considered a direct competitor; | |
• | Provide reward systems that are credible and consistent with the core values of the Company; |
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• | Reward for results rather than on the basis of seniority, tenure, or other entitlement; and | |
• | Encourage retention of top performers to ensure the long-term success of the Company. |
(1) Base Pay. Base pay reflects the external market value of a particular role as well as the experiences and qualifications that an individual brings to the role. As they are for all officers of the Company base pay levels for senior executives are reviewed annually against national salary survey data and competitor data to determine whether a particular role is at an appropriate level. Base pay is generally targeted to the median of the base pay paid by companies included in the salary surveys that best compare to positions at the Company. Factors included in the comparison are relative size of companies, the financial performance, both currently and over a period of time, and the experience and responsibility of the individuals. In establishing base pay increases the Committee does not assign any weight to any particular factor. In addition, the Committee reviews individual performance ratings, being the result of reviews conducted by an officer’s superior. In the case of the Chief Executive Officer, the Committee meets to review performance against previously outlined objectives and after completing the review, assigns a rating and makes a base pay recommendation for full Board approval. | |
(2) Annual Cash Bonus. The annual cash bonus plan is a short-term incentive plan to reward the senior executives for achieving annual performance goals. In awarding bonus payments, factors considered by the Committee include: (i) the Company’s financial performance compared to the annual budget for categories such as earnings per share, efficiency ratio, and profitability of an individual’s market or division responsibility; (ii) the value created for shareholders in both the most recent year and over the latest five-year period as determined by market price of the Company stock compared to the NASDAQ financial indices; and (iii) the performance of individuals, to the extent measurable, in meeting annual goals and objectives as defined in their performance review. Performance of the Company in relation to competitors’ performance is considered but not weighted in the granting of a bonus. The Chief Executive Officer is also subject to the previous measurements. Bonuses earned as a percentage of base pay for the senior executives for 2004 performance ranged from 76% (in the case of the Chief Executive Officer) to 43.6%. | |
(3) Long-Term Incentive Program. Stock Options and Restricted Stock grants are awarded to provide senior executives with long-term incentives for profitable growth and to more closely align the Company’s senior executives with the interest of the Company’s shareholders. Retention and long-term reward are both factors considered in granting stock options and restricted stock. The Company has implemented targeted guidelines in determining option awards to senior executives. Targeted percents range from 25% to 600% of base pay depending on the salary grade of the individual senior executive. Targeted percents may be exceeded when a senior executive’s individual performance exceeds expectations. The Company also utilizes restricted stock to reward and retain key managers. The awarding of restricted stock is based on the three-year average performance of the Company. |
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Andrew C. Taylor | Giorgio Balzer | Mary Ann Van Lokeren | Terry O. Meek |
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Robert H. West | James B. Hebenstreit | Benjamin F. Rassieur, III | Thomas A. McDonnell | John R. Capps |
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Fees Paid to KPMG LLP |
2004 | 2003 | ||||||||
Audit fees | $ | 624,723 | $ | 402,790 | |||||
Audit related fees | 46,193 | 49,400 | |||||||
Tax fees | 237,860 | 1,229,417 | |||||||
All other fees | — | — | |||||||
Total | $ | 908,776 | $ | 1,681,607 |
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By Order of the Board of Directors | |
J. Daniel Stinnett | |
Secretary |
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A-1
A-2
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A-4
6.3.1 Nonqualified Stock Options. In the case of a Nonqualified Stock Option, the Exercise Price shall not be less than one hundred percent (100%) of the Fair Market Value of a Share on the Grant Date; provided, however, in no case shall the Exercise Price be less than the par value of such Share. | |
6.3.2 Incentive Stock Options. In the case of an Incentive Stock Option, the Exercise Price shall be not less than one hundred percent (100%) of the Fair Market Value of a Share on the Grant Date; or one hundred ten percent (110%) of the Fair Market Value of a Share if the Participant (together with persons whose stock ownership is attributed to the Participant pursuant to section 424(d) of the Code) owns on the Grant Date stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any of its Subsidiaries; provided, however, in no case shall the Exercise Price be less than the par value of such Share. | |
6.3.3 Substitute Options. Notwithstanding the provisions of Sections 6.3.1 and 6.3.2, in the event that the Company consummates a transaction described in section 424(a) of the Code, persons who become Participants on account of such transaction may be granted Options in substitution for options granted by such former employer or recipient of services. If such substitute Options are granted, the Committee, consistent with section 424(a) of the Code, may determine that such substitute Options shall have an exercise price less than one hundred (100%) of the Fair Market Value of the Shares on the Grant Date. |
6.4.1 Expiration Dates. Except as provided in Section 6.7.3 regarding Incentive Stock Options, each Option shall terminate upon the earliest to occur of the following events: |
(a) The date(s) for termination of the Option set forth in the Award Agreement; | |
(b) The date determined under Section 6.8 regarding Termination of Service; or | |
(c) The expiration of ten (10) years from the Grant Date. |
6.4.2 Committee Discretion. Subject to the limits of Section 6.4.1, the Committee shall provide in each Award Agreement when each Option expires and becomes unexercisable. |
A-5
6.7.1 Exercisability. The aggregate Fair Market Value (determined on the Grant Date(s)) of the Shares with respect to which Incentive Stock Options are exercisable for the first time by any Participant during any calendar year (under all plans of the Company and its Subsidiaries) shall not exceed $100,000. | |
6.7.2 Company and Subsidiaries Only. Incentive Stock Options may be granted only to Participants who are employees of the Company or a subsidiary corporation (within the meaning of section 424(f) of the Code) on the Grant Date. | |
6.7.3 Expiration. No Incentive Stock Option may be exercised after the expiration of ten (10) years from the Grant Date; provided, however, that if the Option is granted to an employee who, together with persons whose stock ownership is attributed to the employee pursuant to section 424(d) of the Code, owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any of its Subsidiaries, the Option may not be exercised after the expiration of five (5) years from the Grant Date. |
6.8.1 Termination for Cause. Unless otherwise specifically provided in the Award Agreement, an Option may not be exercised after a Participant’s Termination of Service by the Company or a Subsidiary for Cause. | |
6.8.2 Termination Due To Death. Unless otherwise specifically provided in the Award Agreement, an Option may not be exercised more than one (1) year after a Participant’s Termination of Service due to death, but in no event after the expiration of the term of the Option. | |
6.8.3 Termination Due to Disability. Unless otherwise specifically provided in the Award Agreement, an Incentive Stock Option may not be exercised more than one year from the date of Termination of Service due to Disability, and a Nonqualified Stock Option may not be exercised more than 36 months from the date of Termination of Service due to Disability, but in no event after the expiration of the term of the Option. | |
6.8.4 Termination Due to Retirement. Unless otherwise specifically provided in the Award Agreement, an Incentive Stock Option may not be exercised more than three months after a Termination of Service due to Retirement, and a Nonqualified Stock Option may not be exercised more than 36 months from the date of Termination of Service due to Retirement, but in no event after the expiration of the term of the Option. |
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6.8.5 Other Voluntary Terminations. Unless otherwise specifically provided in the Award Agreement, an Option may not be exercised after the date of Termination of Service due to voluntary termination other than for Retirement. | |
6.8.6 Termination For Other Reasons. Unless otherwise specifically provided in the Award Agreement, an Option may not be exercised more than three months after a Participant’s Termination of Service for any reason other than described in Section 6.8.1 through 6.8.5, but in no event after the expiration of the term of the Option. | |
6.8.7 Leave of Absence. The Committee may make such provision as it deems appropriate with respect to Participants on a leave of absence. |
7.4.1 General Restrictions. The Committee may set restrictions based upon (a) the achievement of specific Performance Goals, (b) other performance objectives (Company-wide, divisional or individual), (b) applicable Federal or state securities laws, (c) time-based restrictions, or (d) any other basis determined by the Committee. | |
7.4.2 Section 162(m) Performance Restrictions. For purposes of qualifying grants of Restricted Stock or Restricted Stock Units as “performance-based compensation” under Section 162(m) of the Code, the Committee, in its sole discretion, may set restrictions based upon the achievement of Performance Goals. The Performance Goals shall be set by the Committee on or before the latest date permissible to enable the Restricted Stock or Restricted Stock Units to qualify as “performance-based compensation” under section 162(m) of the Code. In granting Restricted Stock or Restricted Stock Units that are intended to qualify under section 162(m) of the Code, the Committee shall follow any |
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procedures determined by it in its sole discretion from time to time to be necessary, advisable or appropriate to ensure qualification of the Restricted Stock under section 162(m) of the Code. | |
7.4.3 Legend on Certificates. The Committee may legend the certificates representing Restricted Stock to give appropriate notice of such restrictions. For example, the Committee may determine that some or all certificates representing Shares of Restricted Stock shall bear the following legend: |
“THE SALE OR OTHER TRANSFER OF THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE, WHETHER VOLUNTARY, INVOLUNTARY, OR BY OPERATION OF LAW, IS SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AS SET FORTH IN THE COMMERCE BANCSHARES, INC. 2005 EQUITY INCENTIVE PLAN, AND IN A RESTRICTED STOCK AGREEMENT. A COPY OF THE PLAN AND SUCH RESTRICTED STOCK AGREEMENT MAY BE OBTAINED FROM THE SECRETARY OF THE COMPANY.” |
7.4.4 Retention of Certificates. To the extent deemed appropriate by the Committee, the Company may retain the certificates representing Shares of Restricted Stock in the Company’s possession until such time as all conditions and restrictions applicable to such Shares have been satisfied or lapse. |
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8.4.1 Expiration Dates. Each Stock Appreciation Right shall terminate upon the earliest to occur of the following events: |
(a) The date(s) for termination of the Stock Appreciation Right set forth in the Award Agreement; |
(b) The date determined under Section 8.7 regarding Termination of Service; or |
(c) The expiration of ten (10) years from the Grant Date. | |
8.4.2 Committee Discretion. Subject to the limits of Section 8.4.1, the Committee shall provide in each Award Agreement when each Stock Appreciation Right expires and becomes unexercisable. The Committee may not, after an Stock Appreciation Right is granted, extend the maximum term of the Stock Appreciation Right. |
(a) The difference between the Fair Market Value of a Share on the date of exercise over the Exercise Price; by | |
(b) The number of Shares with respect to which the Stock Appreciation Right is exercised. |
8.7.1 Termination for Cause. Unless otherwise specifically provided in the Award Agreement, a Stock Appreciation Right may not be exercised after a Participant’s Termination of Service by the Company or a Subsidiary for Cause. | |
8.7.2 Termination Due To Death, Disability, or Retirement. Unless otherwise specifically provided in the Award Agreement, a Stock Appreciation Right may not be exercised more than one (1) year after a Participant’s Termination of Service due to death or more than three (3) years after a Participant’s Termination of Service due to Disability or Retirement. |
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8.7.3 Other Voluntary Terminations. Unless otherwise specifically provided in the Award Agreement, a Stock Appreciation Right may not be exercised after a Participant’s voluntary Termination of Service for any reason other than Retirement. | |
8.7.4 Termination For Other Reasons. Unless otherwise specifically provided in the Award Agreement, an Stock Appreciation Right may not be exercised more than ninety (90) days after a Participant’s Termination of Service for any reason other than described in Section 8.7.1 through 8.7.3. |
9.3.1 General Performance Objectives. The Committee may set performance objectives based upon (a) the achievement of Company-wide, divisional or individual goals, (b) applicable Federal or state securities laws, or (c) any other basis determined by the Committee in its discretion. | |
9.3.2 Section 162(m) Performance Objectives. For purposes of qualifying grants of Performance Units or Performance Shares as “performance-based compensation” under section 162(m) of the Code, the Committee, in its sole discretion, may determine that the performance objectives applicable to Performance Units or Performance Shares, as the case may be, shall be based on the achievement of Performance Goals. The Performance Goals shall be set by the Committee on or before the latest date permissible to enable the Performance Units or Performance Shares, as the case may be, to qualify as “performance-based compensation” under section 162(m) of the Code. In granting Performance Units or Performance Shares which are intended to qualify under section 162(m) of the Code, the Committee shall follow any procedures determined by it from time to time to be necessary or appropriate in its sole |
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discretion to ensure qualification of the Performance Units or Performance Shares, as the case may be, under section 162(m) of the Code (e.g., in determining the Performance Goals). |
10.2.1 General Performance Objectives. The Committee may set performance objectives based upon (a) the achievement of Company-wide, divisional or individual goals, (b) applicable Federal or state securities laws, or (c) any other basis determined by the Committee in its discretion. |
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10.2.2 Section 162(m) Performance Objectives. For purposes of qualifying grants of Stock-Based Awards as “performance-based compensation” under section 162(m) of the Code, the Committee, in its sole discretion, may determine that the performance objectives applicable to Stock-Based Awards, as the case may be, shall be based on the achievement of Performance Goals. The Performance Goals shall be set by the Committee on or before the latest date permissible to enable the Stock-Based Awards to qualify as “performance-based compensation” under section 162(m) of the Code. In granting Stock-Based Awards which are intended to qualify under section 162(m) of the Code, the Committee shall follow any procedures determined by it from time to time to be necessary or appropriate in its sole discretion to ensure qualification of the Stock-Based Awards under section 162(m) of the Code (e.g., in determining the Performance Goals). |
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(a) any Person is or becomes the “beneficial owner” (within the meaning of Rule 13d-3 promulgated under Section 13 of the Securities Exchange Act of 1934 (the “Exchange Act”)), directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its affiliates other than in connection with the acquisition by the Company or its affiliates of a business) representing 20% or more of either the then outstanding shares of common stock of the Company or the combined voting power of the Company’s then outstanding securities; or | |
(b) the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on January 28, 2005, constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on January 28, 2005 or whose appointment, election or nomination for election was previously so approved; or |
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(c) there is consummated a merger or consolidation of the Company (or any direct or indirect subsidiary of the Company) with any other corporation, other than (i) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company, at least 80% of the combined voting power of the voting securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (ii) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the beneficial owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its subsidiaries other than in connection with the acquisition by the Company or its subsidiaries of a business) representing 20% or more of either the then outstanding shares of common stock of the Company or the combined voting power of the Company’s then outstanding securities; or | |
(d) the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated a sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity, at least 80% of the combined voting power of the voting securities of which are owned by Persons in substantially the same proportions as their ownership of the Company immediately prior to such sale. | |
For purposes of the above definition of Change in Control, “Person” shall have the meaning set forth in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its subsidiaries, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company. |
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Commerce Bancshares, Inc.
C/O EQUISERVE TRUST COMPANY N.A.
P.O. BOX 8694
EDISON, NJ 08818-8694
To our Shareholders: |
Commerce Bancshares, Inc. encourages you to vote your shares electronically this year either by telephone or via the Internet. This will eliminate the need to return your proxy card. The EquiServe Vote by Telephone and Vote by Internet systems can be accessed 24-hours a day, seven days a week until the day prior to the meeting. |
Additionally, you may choose to receive future Annual Meeting materials (annual report, proxy statement and proxy card) on-line. By choosing to receive materials on-line, you help support Commerce Bancshares, Inc. in its efforts to control printing and postage costs. |
If you choose the option of electronic delivery and voting on-line, you will receive an e-mail before all future annual or/special meetings of shareholders, notifying you of the website containing the Proxy Statement and other materials to be carefully reviewed before casting your vote. To enroll to receive future proxy materials on-line, please go to www.econsent.com/cbsh. |
Your vote is important. Please vote immediately.
Vote-by-Internet 1. Log on to the Internet and go to http://www.eproxyvote.com/cbsh |
OR
Vote-by-Telephone 1. Using a touch-tone phone call toll-free 1-877-PRX-VOTE (1-877-779-8683) |
DETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL
x | Please mark votes as in this example. | 1573 |
1. | Election of Directors |
FOR | AGAINST | ABSTAIN | ||||||||||||||||||||
Nominees: Class of 2008 (1) John R. Capps (2) W. Thomas Grant, II | 2. | Approve the adoption of the 2005 Equity Incentive Plan | o | o | o | |||||||||||||||||
FOR ALL NOMINEES | o | o | WITHHELD FROM ALL NOMINEES | (3) James B. Hebenstreit (4) David W. Kemper | 3. | Ratify KPMG LLP as audit and accounting firm | FOR o | AGAINST o | ABSTAIN o | |||||||||||||
o | For all nominees except as written above | |||||||||||||||||||||
Mark box at right if you plan to attend the Annual Meeting. (Marking this box does not affect your vote on this proxy.) | o | |||||||||||||||||||||
Mark box at right if an address change or comment has been noted on the reverse side of this card. | o | |||||||||||||||||||||
Please sign this proxy exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney, administrator, trustee or guardian, please give full title as such. The signer hereby revokes all proxies heretofore given by the signer to vote at said meeting or any adjournments thereof. |
Signature: | Date: | Signature: | Date: | |||||||||||
IMPORTANT: PLEASE VOTE BY SIGNING YOUR PROXY AND RETURNING IT IN THE
ENVELOPE PROVIDED OR TAKE ADVANTAGE OF INTERNET OR TELEPHONE VOTING
AS DESCRIBED ON THE REVERSE SIDE.
ANY SHAREHOLDER WHO IS RECEIVING MULTIPLE COPIES OF THE ANNUAL
REPORT AND ANY OTHER MAILINGS FROM COMMERCE BANCSHARES, INC. ARE
ENCOURAGED TO CALL EQUISERVE TRUST COMPANY NA, OUR TRANSFER AGENT, AT
1-800-317-4445 FOR ASSISTANCE IN CONSOLIDATING COMMON OWNERSHIP
POSITIONS. REDUCING MAILINGS WILL IMPROVE THE COMPANY’S OPERATING
EFFICIENCIES. HEARING IMPAIRED#: TDD: 1-800-952-9245.
DETACH HERE
COMMERCE BANCSHARES, INC.
Proxy Solicited on Behalf of the Board of Directors
P
R
O
X
Y
The undersigned hereby appoints Jonathan M. Kemper and David W. Kemper, or either of them, as agents and proxies with full power of substitution in each, to represent the undersigned at the annual meeting of shareholders to be held on April 20, 2005, or any adjournment or postponement thereof, on all matters coming before the meeting. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting and all other matters incident to the conduct of the meeting.
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 or you elect to vote your shares electronically by telephone or via the Internet.
PLEASE VOTE, DATE AND SIGN THIS PROXY ON THE OTHER SIDE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
HAS YOUR ADDRESS CHANGED? | DO YOU HAVE ANY COMMENTS? | |
If you have written in the above space, please mark the corresponding box on the reverse side of this card. |