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SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the
Commission Only (as Permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
OLD KENT FINANCIAL CORPORATION
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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OLD KENT LOGO
FINANCIAL CORPORATION
111 Lyon Street N.W.
Grand Rapids, Michigan 49503
Notice of Annual Meeting of Shareholders
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The annual meeting of shareholders of Old Kent Financial Corporation will be
held in the Ambassador Ballroom of the Amway Grand Plaza Hotel, 187 Monroe
Avenue N.W., Grand Rapids, Michigan, on Monday, April 20, 1998, at 10 a.m. local
time, to consider and vote upon: (i) election of directors; (ii) approval of an
amendment to the Restated Articles of Incorporation to increase the number of
authorized shares of Common Stock; and (iii) such other business as may properly
come before the meeting.
Shareholders of record at the close of business on February 20, 1998, are
entitled to notice of and to vote at the meeting or any adjournment of the
meeting. The following proxy statement and enclosed proxy are being furnished to
shareholders on and after March 4, 1998.
By Order of the Board of Directors,
/s/ MARY E. TUUK
Mary E. Tuuk
Secretary
March 4, 1998
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING.
EVEN IF YOU EXPECT TO ATTEND THE MEETING,
PLEASE SIGN AND RETURN YOUR PROXY PROMPTLY.
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PROXY STATEMENT
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ANNUAL MEETING OF SHAREHOLDERS
OLD KENT FINANCIAL CORPORATION
APRIL 20, 1998
This proxy statement and the enclosed proxy are being furnished to holders of
Common Stock, $1 par value, of Old Kent Financial Corporation ("Old Kent") on
and after March 4, 1998, in connection with the solicitation of proxies by the
Old Kent board of directors for use at the annual meeting of Old Kent
shareholders to be held on April 20, 1998, and at any adjournment of that
meeting. The annual meeting will be held in the Ambassador Ballroom of the Amway
Grand Plaza Hotel, 187 Monroe Avenue N.W., Grand Rapids, Michigan, 49503, at 10
a.m. local time.
The purpose of the annual meeting is to consider and vote upon: (i) election of
directors; (ii) approval of an amendment to the Restated Articles of
Incorporation to increase the number of authorized shares of Common Stock; and
(iii) such other business as may properly come before the meeting. If a proxy in
the form distributed by Old Kent is properly executed and returned to Old Kent,
the shares represented by that proxy will be voted at the annual meeting of Old
Kent shareholders and at any adjournment of that meeting. Where a shareholder
specifies a choice, the proxy will be voted as specified. If no choice is
specified, the shares represented by the proxy will be voted for the election of
all nominees named in this proxy statement, for approval of the amendment to Old
Kent's Restated Articles of Incorporation to increase the number of authorized
shares of Common Stock, and in accordance with the judgment of the persons named
as proxies with respect to any other matter that may come before the meeting.
A proxy may be revoked at any time prior to its exercise by written notice
delivered to the Secretary of Old Kent or by attending and voting at the annual
meeting.
Solicitation of proxies will be made initially by mail. Old Kent's directors,
officers and employees may also solicit proxies in person, by telephone, or by
facsimile without additional compensation. Proxies may be solicited by nominees
and other fiduciaries who may mail materials to or otherwise communicate with
the beneficial owners of shares held by them. Old Kent has engaged Corporate
Investor Communications, Inc. at an estimated cost of $5,500 to assist in
solicitation of proxies from brokers and other nominee shareholders. All
expenses of solicitation of proxies will be paid by Old Kent.
ELECTION OF DIRECTORS
The board of directors proposes that the following nominees be elected as
directors for terms expiring at the annual meeting to be held during the year
indicated below:
NOMINEE TERM EXPIRING IN
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John D. Boyles 2001
Richard M. DeVos, Jr. 2001
Kevin T. Kabat 2001
John P. Keller 2001
David J. Wagner 2001
Margaret Sellers Walker 2001
Robert H. Warrington 2000
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A plurality of the shares voting is required to elect directors. For the purpose
of counting votes on this proposal, abstentions, broker non-votes and other
shares not voted will not be counted as shares voted, and the number of shares
of which a plurality is required will be reduced by the number of shares not
voted.
The proposed nominees are willing to be elected and to serve. In the event that
any nominee is unable to serve or is otherwise unavailable for election, which
is not contemplated, the incumbent Old Kent board of directors may or may not
select a substitute nominee. If a substitute nominee is selected, all proxies
will be voted for the person so selected. If a substitute nominee is not
selected, all proxies will be voted for the election of the remaining nominees.
Proxies will not be voted for a greater number of persons than the number of
nominees named.
YOUR BOARD OF DIRECTORS RECOMMENDS A
VOTE FOR ELECTION OF ALL NOMINEES AS DIRECTORS
AMENDMENT TO THE RESTATED ARTICLES OF INCORPORATION
The board of directors proposes to amend Article III of Old Kent's Restated
Articles of Incorporation to increase Old Kent's authorized capital. The
proposed amendment would increase the number of authorized shares of Common
Stock, $1 par value ("Common Stock"), from 150 million shares to 300 million
shares. The board of directors believes that an increase in Old Kent's
authorized shares of Common Stock is in the best interests of Old Kent and its
shareholders.
As of December 31, 1997, Old Kent had 92,779,772 shares of Common Stock
outstanding, and 6,180,119 shares of Common Stock reserved for issuance under a
variety of existing authorizations. A total of 51,040,109 shares of authorized
Common Stock, representing 51.6% of issued and reserved shares and 34.0% of the
total number of authorized shares of Common Stock, remained unissued and
unreserved at December 31, 1997.
The board of directors believes that it is in the best interests of Old Kent and
its shareholders to have an adequate pool of authorized but unissued shares for
use in stock dividends, stock splits, acquisitions, employee compensation and
incentive programs, stock offerings and other corporate purposes. Old Kent has
an established history of regular annual stock dividends and occasional stock
splits. Most recently, Old Kent paid a two-for-one stock split on December 15,
1997. This stock split reduced Old Kent's pool of authorized but unissued and
unreserved shares of Common Stock to a considerable degree. Although the board
of directors has no present plans or expectations as to if and when further
stock splits would be declared, the present pool of authorized but unissued and
unreserved shares of Common Stock would be inadequate for it to declare another
comparable stock split in the future. Additional authorized shares are now
requested so that further stock dividends and stock splits could be declared and
paid, when, as and if declared by the board of directors in the future.
Additional shares of Common Stock could be authorized by the board of directors
and issued in a manner that could make it more difficult for another party to
acquire control of Old Kent. Old Kent management is not aware of any pending
proposal to acquire control of Old Kent as of the date of this proxy statement.
Growth through acquisition has been and continues to be an important element of
Old Kent's strategy. Old Kent also has an established history of acquiring other
bank holding companies, banks and other businesses in transactions in which Old
Kent Common Stock is issued as consideration. Old Kent management regularly
considers further business acquisitions. Old Kent management believes that it is
in the best interests of Old Kent and its shareholders to have an adequate pool
of authorized but unissued Common Stock available to be used as consideration in
future business acquisitions.
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The board of directors has no present plans with respect to issuing the
increased authorized shares of Common Stock if this proposal is approved. Except
in limited circumstances, no further shareholder authorization would be required
prior to the issuance of such shares by Old Kent.
All of the additional shares resulting from the increase would be Common Stock
of the same class, and with the same dividend, voting and liquidation rights, as
the shares of Common Stock presently outstanding. Shareholders have no
preemptive rights to acquire Common Stock issued by Old Kent. Issuance of
additional shares of Common Stock under some circumstances could dilute the
voting rights, equity and earnings per share of existing shareholders.
An affirmative vote of the shareholders holding a majority of all outstanding
shares is required to approve the proposed amendment to the Restated Articles of
Incorporation. For the purpose of counting votes on this proposal, abstentions,
broker non-votes and other shares not voted have the same effect as a vote
against the proposal.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR APPROVAL OF THIS PROPOSED AMENDMENT
VOTING SECURITIES
Holders of record of Old Kent Common Stock at the close of business on February
20, 1998, will be entitled to vote at the annual meeting of shareholders on
April 20, 1998, and any adjournment of that meeting. As of February 20, 1998,
there were 91,696,375 shares of Common Stock issued and outstanding. Each share
of Common Stock is entitled to one vote on each matter presented for shareholder
action.
The following table sets forth information concerning the number of shares of
Common Stock held as of December 31, 1997, by the only shareholder who is known
to Old Kent management to have been the beneficial owner of more than 5% of the
outstanding shares of Common Stock as of that date:
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP(1)
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SOLE VOTING SHARED VOTING TOTAL
AND DISPOSITIVE OR DISPOSITIVE BENEFICIAL PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER POWER POWER(2) OWNERSHIP OF CLASS
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Old Kent Bank
111 Lyon Street N.W.
Grand Rapids, Michigan 49503 (3) 2,746,836 6,742,963 9,489,799 10.2%
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Footnotes begin on page 4.
The following table shows certain information concerning the number of shares of
Common Stock held as of December 31, 1997, by each of Old Kent's directors and
nominees for director, each of the officers
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named in the Summary Compensation Table on page 15, and all of Old Kent's
directors and executive officers as a group:
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP(1)
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SOLE VOTING SHARED
AND VOTING OR TOTAL PERCENT
DISPOSITIVE DISPOSITIVE STOCK DEFERRED BENEFICIAL OF
NAME OF BENEFICIAL OWNER POWER POWER(2) OPTIONS(4) STOCK(5) OWNERSHIP CLASS
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R. L. Antonini -- 230 -- 3,594 3,824 *
J. M. Bissell 17,673 -- -- 5,472 23,145 *
J. D. Boyles 77,176 -- -- -- 77,176 *
W. P. Crawford -- 16,968 -- -- 16,968 *
R. M. DeVos, Jr. 16,658 -- -- -- 16,658 *
W. G. Gonzalez 793 -- -- 4,372 5,165 *
J. P. Hackett -- 858 -- -- 858 *
E. Hanka -- 3,721 -- 5,262 8,983 *
E. D. Holton 7,748 12,124 -- 29,946 49,818 *
R. L. Hooker 5,703 5,353 -- -- 11,056 *
M. J. Jandernoa 11,562 -- -- -- 11,562 *
K. T. Kabat(6) 35,102 8,456 45,792 -- 89,350 *
F. P. Keller 14,636 -- -- -- 14,636 *
J. P. Keller 12,834 -- -- -- 12,834 *
H. G. Meijer 440 16,646 -- 349 17,435 *
P. A. Pierre 2,426 2,330 -- -- 4,756 *
P. M. Quinn 1,831 -- -- -- 1,831 *
R. L. Sadler 24,999 246,538 39,726 41,711 352,974 *
M. J. Schlack 2,258 -- -- -- 2,258 *
P. F. Secchia 150,276 3,170 -- 8,643 162,089 *
B. P. Sherwood, III 124,772 380 -- 44,122 169,274 *
D. J. Wagner 83,272 20,322 213,904 64,591 382,089 *
M. Sellers Walker 100 -- -- -- 100 *
R. H. Warrington(6) 42,409 5,732 41,386 -- 89,527 *
All directors and executive
officers as a group 1,194,085 453,582 593,510 238,089 2,479,266 2.66%
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* Less than 1%
(1) The numbers of shares stated are based on information furnished by each
person listed and include shares personally owned of record by that person
and shares that are considered to be otherwise beneficially owned by that
person. A beneficial owner of a security includes any person who, directly
or indirectly, through any contract, arrangement, understanding,
relationship or otherwise has or shares voting power or dispositive power
with respect to the security. Voting power includes the power to vote or
direct the voting of the security. Dispositive power includes the power to
dispose or direct the disposition of the security. A person will also be
considered the beneficial owner of a security if the person has a right to
acquire beneficial ownership of the security within 60 days. Shares held in
fiduciary capacities by Old Kent Bank are not included in shares
beneficially owned by individuals unless otherwise indicated. The directors
and officers of Old Kent may, by reason of their positions, be in a position
to influence the voting or disposition of shares held in trust by Old Kent
Bank to some degree, but disclaim beneficial ownership of these shares. Old
Kent and Old Kent Bank disclaim beneficial ownership of shares held by Old
Kent Bank in fiduciary capacities.
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(2) These numbers include shares over which the listed person is legally
entitled to share voting or dispositive power by reason of joint ownership,
trust, or other contract or property right, and shares held by spouses and
children over whom the listed person may have substantial influence by
reason of relationship.
(3) These numbers consist of shares held in various fiduciary capacities through
the trust department of Old Kent Bank. Old Kent Bank also holds in various
fiduciary capacities through its trust department a total of 2,860,691
shares over which it does not have or share voting or dispositive power. Old
Kent, Old Kent Bank, and their respective directors and officers disclaim
beneficial ownership of these shares.
(4) These numbers include shares that may be acquired through the exercise of
stock options. All stock options shown may be exercised within 60 days.
(5) The numbers of shares shown in this column for officers represent shares
credited to the officer's account under the Deferred Stock Compensation
Plan. Under that plan, each officer is unconditionally entitled to receive
stock at the end of a deferral period, but has no present voting or
dispositive power over those shares. The numbers of shares shown in this
column for directors who are not officers represent shares credited to the
director's account under the Old Kent Directors' Deferred Compensation Plan.
Under that plan, the director is unconditionally entitled to receive stock
(or, at Old Kent's option, cash of equivalent value) upon termination of
board service, but has no present voting or dispositive power of those
shares.
(6) The numbers shown include shares of restricted stock granted under the
Restricted Stock Plan of 1987 or similar special arrangements. The indicated
officer has no present dispositive power over these shares and these shares
are subject to forfeiture upon termination of employment under certain
circumstances.
BOARD OF DIRECTORS
The Old Kent board of directors presently consists of 22 persons. The board of
directors is divided into 3 classes that are as nearly equal in number as
possible. Except as provided below, each director is a member of a class that
has a term of office of 3 years, with the term of office of one class expiring
at the annual meeting of shareholders in each successive year. Mr. Warrington is
nominated for election to a shorter term to fill a vacancy in the class of
directors with terms ending in 2000.
Biographical information concerning nominees for election to the board of
directors and existing directors whose terms of office will continue after the
annual meeting is presented below. Except as otherwise indicated, all directors
and nominees have had the same principal employment for over 5 years. Each Old
Kent director has also been a director of Old Kent Bank since 1997, unless
otherwise indicated.
NOMINEE FOR A TERM EXPIRING IN 2000
ROBERT H. WARRINGTON (age 50) is Vice Chairman of Old Kent and Chairman and
Chief Executive Officer of Old Kent Mortgage Services, Inc. and Old Kent
Mortgage Company. He has been a director of Old Kent and Old Kent Bank since
February 1, 1998. He was named Senior Executive Vice President of Old Kent in
1997. Previously, Mr. Warrington was President of Old Kent Mortgage Services,
Inc. and Old Kent Mortgage Company from 1993 to 1997, Executive Vice President
of Old Kent and Old Kent Bank from 1995 to 1997, and Senior Vice President of
Old Kent Bank from 1988 to 1993.
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NOMINEES FOR TERMS EXPIRING IN 2001
JOHN D. BOYLES (age 63) has been a director of Old Kent since 1985. He is an
attorney with the firm of Verspoor, Waalkes, Lalley, Slotsema & Talen, P.C.
RICHARD M. DEVOS, JR. (age 42) has been a director of Old Kent since 1994. He is
President of Amway Corporation, a direct selling company that manufactures and
markets home care, personal care and health and fitness products. He is also
owner and Chairman of the Board of The Windquest Group, a multi-company
management group, and, with his family, an owner of The Orlando Magic, a
National Basketball Association franchise. Mr. DeVos served as a director of Old
Kent Bank from 1987 until his appointment to the Old Kent board in 1994. He is
also the President and a director of Amway Asia Pacific Ltd. and Chairman and a
director of Amway Japan Limited.
KEVIN T. KABAT (age 41) is Vice Chairman of Old Kent and President of Old Kent
Bank. He has been a director of Old Kent since February 1, 1998 and a director
of Old Kent Bank since 1997. He was named Senior Executive Vice President of Old
Kent and Chief Operating Officer of Old Kent Bank in February 1997. Previously,
Mr. Kabat was Senior Vice President of Old Kent from 1990 until 1995 and
Executive Vice President of Old Kent from 1995 to 1997.
JOHN P. KELLER (age 58) has been a director of Old Kent since 1988. He is
President of Keller Group, Inc., a diversified manufacturer. Mr. Keller is also
a director of A.M. Castle, Co. and Castle Energy Corporation.
DAVID J. WAGNER (age 43) is Chairman of the Board, President and Chief Executive
Officer of Old Kent and Chairman of the Board and Chief Executive Officer of Old
Kent Bank. He has been a director of Old Kent since 1992. Mr. Wagner was
appointed by the board of directors to assume the position of President
effective March 1, 1994, the position of Chief Executive Officer effective March
1, 1995, and the position of Chairman of the Board effective November 1, 1995.
He was Executive Vice President of Old Kent from 1991 until 1994, President of
Old Kent Bank from 1986 until 1994, Chief Executive Officer of Old Kent Bank
from 1989 until 1995, and he has been a director of Old Kent Bank since 1986.
Previously, he served Old Kent in various other executive capacities. Mr. Wagner
is also a director of Autocam Corporation.
MARGARET SELLERS WALKER (age 62) has been a director of Old Kent since 1997. She
is a Professor of Public Administration at Grand Valley State University. From
1987 to 1993, Ms. Sellers Walker was Assistant City Manager of the City of Grand
Rapids, Michigan. Ms. Sellers Walker has been a director of Old Kent Bank since
1993.
CONTINUING DIRECTORS WITH TERMS EXPIRING IN 1999
RICHARD L. ANTONINI (age 55) has been a director of Old Kent since 1997. He is
the Chairman, President and Chief Executive Officer and a director of Foremost
Corporation of America, a specialty property and casualty insurer. Mr. Antonini
has been a director of Old Kent Bank since 1988.
WILLIAM G. GONZALEZ (age 57) has been a director of Old Kent since 1997. He is
Chief Health System Officer of Spectrum Health, an integrated regional
healthcare network providing health and medical services and managed care
options. Previously, Mr. Gonzalez was President and Chief Executive Officer of
Butterworth Health Corporation. Mr. Gonzalez has been a director of Old Kent
Bank since 1994.
HENDRIK G. MEIJER (age 46) has been a director of Old Kent since 1997. He is
Co-Chairman of Meijer, Inc., a food and general merchandise retailer. Mr. Meijer
has been a director of Old Kent Bank since 1989.
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PERCY A. PIERRE (age 59) has been a director of Old Kent since 1992. He is
Professor of Electrical Engineering at Michigan State University. He was
previously Vice President for Research and Graduate Studies at MSU until 1995.
Dr. Pierre is also a director of CMS Energy Corporation and Whitman Education
Group, Inc.
MARILYN J. SCHLACK (age 61) has been a director of Old Kent since 1997. She is
the President of Kalamazoo Valley Community College. Dr. Schlack has been a
director of Old Kent Bank since 1995.
PETER F. SECCHIA (age 60) has been a director of Old Kent since 1993. He is
Chairman of the Board and a director of Universal Forest Products, Inc., a
manufacturer and distributor of building supplies. From 1989 until 1993, he was
United States Ambassador to Italy. Mr. Secchia previously served as a director
of Old Kent Bank in 1988 and 1989.
CONTINUING DIRECTORS WITH TERMS EXPIRING IN 2000
WILLIAM P. CRAWFORD (age 54) has been a director of Old Kent since 1997. He is
President and Chief Executive Officer of Steelcase Design Partnership, a
manufacturer of office systems and subsidiary of Steelcase Inc. Mr. Crawford has
been a director of Old Kent Bank since 1988. Mr. Crawford is a director of
Steelcase Inc.
JAMES P. HACKETT (age 42) has been a director of Old Kent since 1995. Mr.
Hackett is President and Chief Executive Officer and a director of Steelcase
Inc., a manufacturer of office systems. He was Executive Vice President and
Chief Operating Officer of Steelcase U.S. from August 1994 until December 1994,
Executive Vice President of Steelcase Ventures from April 1994 until August
1994, and President of Turnstone Inc. (a Steelcase subsidiary) from August 1993
until April 1994. Previously, he served Steelcase in various other executive
capacities.
ERINA HANKA (age 55) has been a director of Old Kent since 1995. Ms. Hanka is
President of Suspa Inc., a manufacturer of gas cylinders for various
applications within the automotive, office furniture, and electronics
industries. Ms. Hanka also served as a director of Old Kent Bank from 1988 until
her election to the Old Kent board in 1995.
EARL D. HOLTON (age 64) has been a director of Old Kent since 1985. He is
President of Meijer, Inc., a food and general merchandise retailer. Mr. Holton
is also a director of CMS Energy Corporation.
MICHAEL J. JANDERNOA (age 47) has been a director of Old Kent since 1993. He is
Chairman of the Board and Chief Executive Officer and a director of Perrigo
Company, a manufacturer and marketer of store brand health and personal care
products. Mr. Jandernoa also served as a director of Old Kent Bank from 1987
until his appointment to the Old Kent board in 1993.
FRED P. KELLER (age 53) has been a director of Old Kent since 1997. He is
Chairman and Chief Executive Officer of Cascade Engineering, Inc., a
manufacturer of plastic injection molded automotive, seating and container
products. Mr. Keller has been a director of Old Kent Bank since 1987.
The Old Kent board of directors has four standing committees:
EXECUTIVE COMMITTEE. The Executive Committee may exercise all powers and
authority of the board of directors in the management of the business and
affairs of Old Kent, except to the extent that delegation is prohibited by
law. Messrs. Bissell, Holton, Kabat, J. Keller, Wagner, and Warrington
presently serve on this committee. The Executive Committee met 1 time
during 1997.
AUDIT COMMITTEE. The duties of the Audit Committee are to (i) cause
suitable examinations of the financial records and operations of Old Kent
and its subsidiaries to be made by the internal auditor of Old Kent through
a program of continuous audits, (ii) recommend to the board of directors
the employment of
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independent public accountants to audit the financial statements of Old
Kent and its subsidiaries and make such additional examinations as the
committee deems advisable, (iii) review reports of examination of Old Kent
and its subsidiaries received from regulatory authorities, and (iv) report
to the board of directors at least once each calendar year the results of
examinations made and such conclusions and recommendations as the committee
deems appropriate. Mr. Boyles, Mr. Antonini, Mr. Hackett, Dr. Schlack, and
Ms. Sellers Walker serve on this committee. The Audit Committee met 4 times
during 1997.
COMPENSATION COMMITTEE. The Compensation Committee administers Old Kent's
various officer and employee compensation, benefit and retirement plans.
This committee also reviews key personnel policies and programs, including
individual salaries of executive officers, and submits recommendations to
the board of directors. Directors who are also employees of Old Kent or its
subsidiaries and who may participate in the plans that this committee
administers may not serve on this committee. Messrs. Bissell, Holton,
Jandernoa and J. Keller are presently members of this committee. The
Compensation Committee met 3 times during 1997.
COMMITTEE ON DIRECTORS. The Committee on Directors proposes and considers
suggestions as to candidates for the board of directors, reviews director
attendance, reviews and recommends board policies and procedures, and
reviews and recommends to the board modifications to the directors'
compensation and retirement policy. Mr. Crawford, Mr. DeVos, Mr. Holton,
Mr. Jandernoa, Dr. Pierre and Mr. Wagner presently serve on this committee.
The Committee on Directors met 2 times during 1997. The Committee on
Directors will consider candidates suggested by shareholders for nomination
by the board of directors. A shareholder wishing to make a suggestion
should submit that suggestion in writing to Mr. David J. Wagner, Old Kent's
Chairman of the Board, President and Chief Executive Officer.
A shareholder of record of shares of a class entitled to vote at any annual
meeting of shareholders or at any special meeting of shareholders called for
election of directors (an "Election Meeting") may make a nomination at the
Election Meeting if, and only if, that shareholder has first delivered, not less
than 120 days prior to the date of the Election Meeting in the case of an annual
meeting, and not more than 7 days following the date of notice of the Election
Meeting in the case of a special meeting, a notice to the Secretary of Old Kent
setting forth with respect to each proposed nominee: (i) the name, age, business
address and residence address of the nominee; (ii) the principal occupation or
employment of the nominee; (iii) the number of shares of capital stock of Old
Kent that are beneficially owned by the nominee; (iv) a statement that the
nominee is willing to be nominated and to serve; and (v) such other information
concerning the nominee as would be required under the rules of the Securities
and Exchange Commission to be included in a proxy statement soliciting proxies
for the election of the nominee.
During 1997, the Old Kent board of directors held 7 meetings. All incumbent
directors attended at least 75% of the aggregate number of meetings of the board
of directors and meetings of committees on which they served during the year.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of Old Kent's board of directors reviews Old Kent's
key personnel policies and programs, including individual salaries of executive
officers, and submits recommendations to the board of directors. Directors who
are also employees of Old Kent or its subsidiaries do not serve on this
committee.
Old Kent has engaged a nationally recognized compensation consulting firm to
assist the Compensation Committee and the board of directors to formulate
compensation policies and determine appropriate compensation levels. This firm
reports directly to the Compensation Committee.
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Superior financial performance is Old Kent's primary business objective.
Long-term relative total return to shareholders is considered by Old Kent to be
the primary measure of financial performance. Old Kent focuses on maintaining
and improving its return on equity as a means of achieving the highest possible
relative total return to shareholders.
For compensation purposes, Old Kent compares itself to a peer group of companies
that is selected annually at the beginning of the year based on the
recommendations of its consulting firm and may change from year to year. The
peer group selected for 1997 included 30 bank holding companies with assets in
the $8 billion to $29 billion range as of December 31, 1997, with emphasis
placed on regional bank holding companies. Of these 30 companies, 22 are
included among the companies comprising the KBW 50 Index presented in the Stock
Performance table below. For comparison purposes, the companies with the highest
and lowest returns on equity are eliminated. Members of the group may also be
eliminated if, as a result of an acquisition or other extraordinary transaction,
they are no longer representative. For the year ended December 31, 1997, Old
Kent's return on equity was 17.55%, compared to a median return on equity of
16.54% for other members of the peer group. Old Kent's return on equity was the
7th highest of the 28 companies included in its peer group for comparison
purposes.
The Compensation Committee has broad discretionary authority to determine and
recommend compensation and benefits. The Compensation Committee intends base
cash compensation and benefits to be competitive. Base compensation is
considered to be competitive if it is at or near the 50th percentile. To attract
and retain management talent, the Compensation Committee generally seeks to
provide base compensation and benefits at or near the 50th percentile of the
peer group, although the Compensation Committee may approve higher or lower
compensation or benefits if it considers deviation from the norm to be
appropriate.
Old Kent also provides short- and long-term incentive compensation programs to
encourage superior performance. It is Old Kent's policy that above average
compensation will be paid for above average performance.
Annual bonuses under Old Kent's short-term incentive compensation program are
intended to reward executives for achieving specific goals, motivate executives
to work more effectively, and focus executives' attention on specific areas of
major importance. Annual incentive bonuses may be paid, in cash, based on
performance against specific corporate, business unit and individual criteria.
Corporate performance is measured entirely by return on equity. Business unit
performance is measured against specific criteria that vary from unit to unit.
These criteria are recommended by senior management and approved by the
Compensation Committee at the beginning of each year, and may include factors
such as net income growth, loan quality improvement, increases in operating
efficiency, and completion of specified strategic actions. Individual
performance criteria are tailored to an individual's job description and relate
to achieving specified goals in that position. Individual performance criteria
are determined at the beginning of each year in a dialogue between the
individual and an executive officer, and generally involve highly specific
individual goals and tasks that vary widely from individual to individual. The
Chief Executive Officer's annual incentive bonus is based entirely on corporate
performance. The annual incentive bonuses of other executive officers named in
this proxy statement are based on allocations of corporate, business unit and
individual performance components that vary from individual to individual based
on position and function.
Each executive officer is assigned a target bonus amount at the beginning of
each year. The amount of the target bonus is determined by the Compensation
Committee, in its discretion, based in part on recommendations of senior
management and consultation with Old Kent's compensation consultants. Target
bonuses in 1997 were equal to 60% of base compensation for the Chief Executive
Officer and
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50% of base compensation for all other executive officers named in this proxy
statement. At the end of each year, a bonus may be awarded to each executive
officer in an amount that is equal to, greater than, or less than the target
bonus based on an assessment of performance against the criteria previously
specified for that officer. This evaluation considers corporate performance and,
if applicable to an officer's specified performance criteria, a discretionary
assessment of business unit performance and individual performance. Under Old
Kent's present policies, no executive officer may be paid a bonus that is
greater than 150% of his or her target bonus.
In 1995, Old Kent adopted a one-time incentive performance plan in connection
with its reengineering program. That plan was intended to motivate the
participants in the reengineering program and reward team performance in
achieving the goals of reengineering. Eligibility for this plan was limited to
officers participating in Old Kent's 1995 annual short-term incentive plan. All
executive officers named in the Summary Compensation Table appearing in this
proxy statement are participants in the plan. Each participant is eligible to
receive a supplemental cash bonus based on his or her target award under the
1995 short-term annual incentive plan. Each participant was awarded a bonus for
1997 equal to 150% of his or her 1995 reengineering incentive plan target award
because Old Kent's return on equity was in the first quartile of its peer group
for 1997. No bonuses will be paid under this plan for years after 1997.
Long-term incentives are provided to reward executives for increasing
shareholder value and to counterbalance potential for overemphasis on short-term
results. All of Old Kent's long-term incentive programs involve stock options or
stock awards. Stock ownership by executive officers is considered to be very
important. Through use of stock as a medium for compensation, executives'
long-term incentives are tied to shareholder value.
It has been Old Kent's historical practice to grant deferred stock compensation
awards, restricted stock awards, and stock options to executive officers
annually at levels determined with reference to fixed percentages of base
salary. The Compensation Committee believes, however, that Old Kent's historical
practice has become more heavily weighted toward restricted stock and deferred
stock grants and less heavily weighted toward stock options than is the
prevailing practice among comparable U.S. corporations. The Compensation
Committee has approved a shift in compensation policy that will place greater
emphasis on a portfolio approach to equity-based compensation in the future. The
Compensation Committee intends to modify its historical practice so that
executive officers in general will receive and hold stock options and restricted
and deferred stock in the future in proportions that better reflect Old Kent's
increased emphasis on rewarding executive officers for corporate performance and
long-term enhancement of shareholder value.
In order to implement this shift in compensation policy, it is expected that
normal long-term performance awards in 1998 will consist entirely of
nonqualified stock options that vest over time. Old Kent will continue to
maintain its capacity to award restricted stock and deferred stock compensation,
but during a transitional period it is expected that such awards will be used
only for special purposes, such as hiring grants and special awards. The
Compensation Committee intends to review its compensation policies and the
results of those policies on a regular basis to maintain an appropriate mix of
stock-based compensation and to evaluate Old Kent's ongoing competitiveness in
the marketplace.
For Old Kent, 1997 was a year of management transition. In 1997, two of the
senior executive officers named in the Summary Compensation Table announced that
they would retire in 1998, and Old Kent has announced their successors. Stock
options and restricted stock awards to Old Kent's recently promoted senior
executive officers were determined by the Compensation Committee, with the
advice of its consulting firm, based on a judgmental analysis of peer group
practice, recognition of promotions, and the increased emphasis on
performance-based stock compensation. All stock options were granted at prices
equal to the fair market value of Common Stock at the date of grant. Stock
options awarded to
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the Chief Executive Officer and certain other continuing senior executive
officers vest in three equal annual installments. Stock options awarded to other
executive officers were fully vested at the date of grant.
Mr. Wagner's base salary for 1997 was fixed at a level that was intended to
approximate the 50th percentile of base compensation paid to chief executive
officers by other bank holding companies in Old Kent's peer group. An annual
incentive bonus was also paid for 1997 under the Executive Incentive Bonus Plan.
Under the Executive Incentive Bonus Plan, bonuses are based entirely on
corporate performance. Corporate performance is determined with reference to a
comparison of Old Kent's return on equity to that of Old Kent's peer group and
to predetermined target levels set by the Compensation Committee. The bonus paid
to Mr. Wagner for 1997 was 150% of his target bonus, reflecting the fact that
Old Kent had a return on equity that was in the top quartile of its peer group
in 1997.
Long-term incentive compensation awarded to Mr. Wagner in 1997 included an award
under the Deferred Stock Compensation Plan and a grant of stock options. His
award under the Deferred Stock Compensation Plan was set at a level equal in
value to 45% of his annual salary. The stock options granted permit him to
purchase 30,000 shares of Old Kent Common Stock (before adjustment for the stock
dividend and stock split paid in 1997) at market value as of the date of grant.
These stock options vest in three equal installments, on the date of grant and
the first and second anniversaries of the date of grant. These awards were
determined by the Compensation Committee in its discretion after considering
corporate performance, peer group practice, recommendations of compensation
consultants, and Old Kent's increased emphasis on performance-based stock
compensation.
Section 162(m) of the Internal Revenue Code provides that publicly held
corporations may not deduct compensation paid to certain executive officers in
excess of $1 million annually, with certain exemptions. The Compensation
Committee and the Board of Directors view Section 162(m) as a consideration but
not a constraint on compensation policy and may approve compensation that is not
tax deductible. Old Kent's Executive Stock Incentive Plan of 1997 and Executive
Incentive Bonus Plan, both of which were approved by shareholders, have been
designed to provide performance based compensation that is not subject to a loss
of deduction under Section 162(m). Old Kent had no compensation deduction
disallowed for 1997 under Section 162(m).
During 1997, all recommendations of the Compensation Committee were unanimously
approved by the board of directors without modification.
Respectfully submitted,
John M. Bissell, Chairman
Earl D. Holton
Michael J. Jandernoa
John P. Keller
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STOCK PERFORMANCE
The long and short run total return on an investment in Old Kent Common Stock
compares favorably with the long and short run total returns on both broad-based
stock market indices and indices comprised of bank holding companies. The
following graphs compare the performance of Old Kent Common Stock with the S&P
500 index and the KBW 50, an index comprised of fifty large bank holding
companies. The total return as shown on these graphs is measured using both
stock price appreciation and the effect of continuous reinvestment of dividends.
The first graph displays the December 31, 1997 value of an initial $100
investment in Old Kent Common Stock made one, five, and ten years prior to
December 31, 1997. This graph indicates that in each of these three time
periods, the total return on an investment in Old Kent Common Stock surpassed
that of the S&P 500, was similar to that of the KBW 50 in the five year measure,
exceeded the KBW 50 in 1997, and was 41% better than the KBW 50 for the past ten
year period.
ONE, FIVE AND TEN YEAR TOTAL RETURNS
[BAR CHART]
1 Year 5 Years 10 Years
Old Kent $178 $317 $1,001
KBW 50 $146 $332 $ 711
S&P 500 $133 $252 $ 525
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The following graph compares the cumulative total shareholder return on Old Kent
Common Stock to the Standard & Poor's 500 Stock Index and the KBW 50 Index over
a five year period, as required by Securities and Exchange Commission
regulations. The Standard & Poor's 500 Stock Index is a broad equity market
index published by Standard & Poor's. The KBW 50 Index is a market
capitalization weighted bank stock index published by Keefe, Bruyette & Woods,
Inc., an investment banking firm that specializes in the banking industry. The
KBW 50 Index is composed of 50 money center and regional bank holding companies,
including 22 of the 30 regional bank holding companies in the peer group used by
Old Kent for compensation purposes (see the Compensation Committee Report on
Executive Compensation above). The Standard & Poor's 500 Stock Index and the KBW
50 Index both assume dividend reinvestment. Cumulative total return is measured
by dividing the sum of the cumulative amount of dividends for the measurement
period, assuming dividend reinvestment, and the difference between the share
price at the end and the beginning of the measurement period by the share price
at the beginning of the measurement period.
STOCK PERFORMANCE
Five-Year Total Return
Measurement Period
(Fiscal Year Covered) OKEN KBW 50 S&P 500
1992 100.0 100.0 100.0
1993 91.1 105.5 110.1
1994 95.6 100.2 111.5
1995 141.3 160.4 153.5
1996 177.8 226.9 188.7
1997 317.3 331.7 251.6
The dollar values for total shareholder return plotted in the graph above are
shown in the table below:
OKEN KBW 50 S&P 500
- ---------------------------------------------------
1992 100.0 100.0 100.0
1993 91.1 105.5 110.1
1994 95.6 100.2 111.5
1995 141.3 160.4 153.5
1996 177.8 226.9 188.7
1997 317.3 331.7 251.6
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COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Old Kent's compensation and benefit programs for its executive officers include
the following components:
SALARY. Old Kent's objective is to provide base pay at levels that are
competitive with its peer group of bank holding companies.
BONUS. All executive officers are participants in an annual incentive plan.
Under that plan, the Compensation Committee and senior management establish
a target award and a set of performance factors, that may include various
elements of corporate, business unit and individual performance for each
executive officer. A bonus may be paid in cash at the end of the year based
on an assessment of performance against the designated factors.
LONG-TERM INCENTIVES. To provide executive officers with long-term
incentives, it is the practice of Old Kent to grant stock options, and it
has been the practice of Old Kent to award shares as deferred stock
compensation or restricted stock. All stock options are granted at prices
equal to the fair market value of the subject stock at the date of grant.
The purposes of these long-term incentives are to reward executives for
achieving longer-term strategic goals, to retain executives, to protect
against too much emphasis on short-term results, to provide a means for
capital accumulation, and to promote stock ownership.
RETIREMENT BENEFITS. Old Kent provides all eligible employees retirement
benefits under the qualified Old Kent Retirement Income Plan. In addition,
employees are offered an opportunity to save for retirement, with savings
supplemented by Old Kent, under the qualified Old Kent Thrift Plan.
Supplemental, nonqualified programs are provided for executive officers.
The objective of these programs is to provide retirement benefits and
savings opportunities for executives in proportion to compensation without
the constraints imposed by law on qualified plans.
PERQUISITES. Old Kent's practice is to maintain a conservative level of
perquisites and personal benefits. The dollar value of perquisites and
personal benefits provided to executive officers does not exceed the lesser
of either $50,000 or 10% of each executive officer's respective annual
salary and bonus.
Old Kent's various compensation and benefit programs, and the levels of
compensation and benefits provided under those programs, are described in more
detail below.
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The following table shows certain information concerning the compensation of
each of Old Kent's five most highly compensated executive officers (including
its Chief Executive Officer) in the year ended December 31, 1997, for services
rendered during each of the three years in the period then ended:
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION AWARDS
-----------------------
NUMBER OF
SECURITIES
ANNUAL COMPENSATION RESTRICTED UNDERLYING
NAME AND --------------------------- STOCK OPTIONS ALL OTHER
PRINCIPAL POSITION(1) YEAR SALARY(2) BONUS(2) AWARDS(3) (4) COMPENSATION(5)
- -----------------------------------------------------------------------------------------------------
David J. Wagner 1997 $650,000 $783,000 $313,950 63,000 $38,590
Chairman of the Board, 1996 600,000 575,700 277,095 20,890 27,169
President and Chief 1995 480,000 264,000 235,813 21,172 16,113
Executive Officer
of Old Kent
B.P. Sherwood, III 1997 385,000 390,315 165,506 7,632 22,435
Vice Chairman of the 1996 360,000 305,600 147,810 10,450 17,631
Board and Treasurer 1995 335,000 184,250 146,266 12,316 11,329
of Old Kent
Robert L. Sadler 1997 385,000 390,315 165,506 7,632 22,870
Vice Chairman of the 1996 360,000 298,175 147,810 10,450 17,757
Board of Old Kent 1995 335,000 188,437 146,266 12,316 11,386
and President and Chief
Executive Officer of
Old Kent Bank
Robert H. Warrington 1997 300,000 291,750 128,822 31,500 17,327
Senior Executive Vice 1996 247,000 201,360 101,400 7,164 12,745
President of Old Kent 1995 212,500 124,750 67,203 7,532 7,823
and Chairman and
Chief Executive Officer
of Old Kent Mortgage
Company
Kevin T. Kabat 1997 265,000 223,050 284,375 31,500 13,312
Senior Executive Vice 1996 200,000 129,340 82,095 5,808 9,279
President of Old Kent and 1995 170,000 72,875 171,875 6,248 6,008
Chief Operating Officer
of Old Kent Bank
- -------------------------
(1) Capacities indicated are with Old Kent unless otherwise stated. Capacities
indicated are those in which a majority of compensation was paid, and in the
case of Messrs. Kabat and Warrington, do not reflect the executive officer's
current position.
(2) Includes compensation deferred under the Old Kent Thrift Plan, the Old Kent
Executive Thrift Plan and the Old Kent Deferred Compensation Plan. Bonus
includes an annual incentive bonus and, for 1996 and 1997, a special
incentive bonus in connection with Old Kent's reengineering program.
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(3) Awards under the Deferred Stock Compensation Plan vest at the date of grant
but participants have no right to the shares until 5 years after the date of
grant. Participants in the Deferred Stock Compensation Plan also accrue
earnings equal to dividends that would have been paid on shares deferred.
Restricted stock awards vest after a number of years, not less than 4,
specified in the award, subject to acceleration in certain circumstances.
Officers who receive restricted stock awards are issued shares subject to
forfeiture and receive dividends on those shares. The numbers of shares held
or credited to the account of each named individual under these plans and
the aggregate value of those shares as of December 31, 1997, are:
AGGREGATE
DEFERRED STOCK RESTRICTED STOCK VALUE
- ---------------------------------------------------------------------------------------
Mr. Wagner 64,591 - $2,559,424
Mr. Sherwood 44,122 - 1,748,324
Mr. Sadler 41,711 - 1,652,809
Mr. Warrington - 38,546 1,527,385
Mr. Kabat - 31,894 1,263,800
(4) The number of shares shown is adjusted to reflect a 5% stock dividend and a
2-for-1 stock split.
(5) All other compensation includes (a) Old Kent's matching contributions under
the Old Kent Thrift Plan, (b) Old Kent's matching contributions under the
Old Kent Executive Thrift Plan, and (c) amounts paid by Old Kent for term
life insurance. The amounts included for each such factor are:
EXECUTIVE LIFE
THRIFT PLAN THRIFT PLAN INSURANCE
- -------------------------------------------------------------------------------------------
Mr. Wagner $1,781 $34,949 $1,860
Mr. Sherwood 1,781 18,917 1,737
Mr. Sadler 1,781 19,229 1,860
Mr. Warrington 1,781 14,278 1,268
Mr. Kabat 1,781 10,605 926
It is Old Kent's practice to award stock options annually to key policy-making
members of management. Stock options have been an important component of Old
Kent's executive compensation program for many years. Stock options are believed
to help align the interests of senior management with the interests of
shareholders by promoting stock ownership by executive officers and rewarding
them for appreciation in the price of Old Kent's Common Stock. Stock options
that were granted, exercised or outstanding during 1997 were granted under
various stock option plans. All of Old Kent's stock option plans have been
approved by Old Kent's shareholders.
Stock options entitle an executive to buy shares of Old Kent Common Stock during
a specified time period at a specified price. Subject to restrictions imposed by
the plans, the Compensation Committee in its discretion determines who will be
granted options, how many shares will be the subject of options, the form of
consideration that may be paid upon the exercise of an option, and the vesting
terms of options. Although plan documents authorize stock appreciation rights,
no stock appreciation rights were outstanding at the date of this proxy
statement.
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The following tables set forth information concerning stock options granted to
and exercised by the specified individuals during the last fiscal year:
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
-------------------------------------------------------
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES IN PRICE EXPIRATION GRANT DATE
NAME GRANTED(1) FISCAL YEAR (PER SHARE)(1) DATE PRESENT VALUE(2)
- ------------------------------------------------------------------------------------------------------
David J. Wagner 63,000 16.53% $27.171 6/16/2007 $393,435
B. P. Sherwood, III 7,632 2.00 27.083 6/16/2007 47,502
Robert L. Sadler 7,632 2.00 27.083 6/16/2007 47,502
Robert H. Warrington 31,500 8.27 27.171 6/16/2007 196,718
Kevin T. Kabat 31,500 8.27 27.171 6/16/2007 196,718
- -------------------------
(1) The per share exercise price of each option is equal to the market value of
Common Stock on the date each option is granted. All outstanding options
were granted for a term of 10 years. Options terminate, subject to certain
limited exercise provisions, in the event of death, retirement, or other
termination of employment. Options granted to Messrs. Wagner, Warrington and
Kabat in 1997 vest in three equal installments, on the date of grant and the
first and second anniversary of the date of grant. Options granted to
Messrs. Sherwood and Sadler were fully vested at the date of grant. All
options permit the option price to be paid by delivery of cash or other
shares of Common Stock owned by the option holder, including shares acquired
through the exercise of options. The number of shares underlying options and
the exercise prices have been adjusted to reflect a 5% stock dividend and a
2-for-1 stock split.
(2) Based on the Black-Scholes option pricing model expressed as a ratio 6.245
(6.224 in the case of Messrs. Sadler and Sherwood) x number of shares. The
actual value, if any, an option holder may realize will depend on the excess
of the stock price over the exercise price on the date the option is
exercised, so that there is no assurance the value realized by an option
holder will be at or near the value estimated by the Black-Scholes model.
The estimated values under that model are based on assumptions that include
(i) a stock price volatility of 20.0%, calculated using monthly stock prices
for the three years prior to the grant date, (ii) a risk free rate of return
of 6.24%, (iii) an expected average dividend yield of 2.5% (the dividend
yield at the date of the grant), and (iv) an expected average option holding
period of 5 years which approximates Old Kent's historical experience. No
adjustments were made for the non-transferability of the options or to
reflect any risk of forfeiture prior to vesting. The Securities and Exchange
Commission requires disclosure of the potential realizable value or present
value of option grants. Old Kent's use of the Black-Scholes model to
indicate the present value of each grant is not an endorsement of this
valuation method.
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AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND YEAR END OPTION VALUES
NUMBER OF
SHARES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
YEAR END YEAR END
NUMBER OF -------------- ------------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(1) REALIZED UNEXERCISABLE UNEXERCISABLE
- ----------------------------------------------------------------------------------------------------
David J. Wagner 27,392 $685,669 213,904/42,000 $5,154,447/523,068
Robert L. Sadler 35,336 746,447 39,726/0 863,393/0
B. P. Sherwood, III 18,082 186,914 0/0 0/0
Robert H. Warrington 0 0 41,386/21,000 899,246/261,534
Kevin T. Kabat 0 0 45,792/21,000 1,084,406/261,534
- -------------------------
(1) The number of shares shown is the gross number of shares covered by options
exercised, adjusted to reflect a 5% stock dividend and a 2-for-1 stock
split. Officers may deliver other shares owned or surrender shares
receivable in payment of the option price and withholding taxes, resulting
in a smaller net increase in their share holdings.
All officers and employees of Old Kent who satisfy eligibility requirements are
participants in the Old Kent Retirement Income Plan, a qualified defined benefit
plan. The Internal Revenue Code limits the maximum annual pension from a
qualified plan. The executive officers named above and certain other management
employees also participate in the Old Kent Executive Retirement Income Plan, a
nonqualified retirement plan. Participants in the Executive Retirement Income
Plan will receive supplemental retirement benefits equal to the difference
between the benefits to which they are entitled under the Old Kent Retirement
Income Plan and the benefits to which they would have been entitled under that
plan as in effect on December 31, 1988, if those benefits were based on
compensation, including compensation deferred by the executive, and if the
annual limits on compensation and benefits and other applicable limits specified
in the Code did not apply.
The following table illustrates the combined benefit levels of the Old Kent
Retirement Income Plan and the Old Kent Executive Retirement Income Plan for Old
Kent's executive officers if they retire at age 65 at the annual levels of
average remuneration and years of service indicated:
PENSION PLAN TABLE
YEARS OF BENEFIT SERVICE
AVERAGE -------------------------------------------
REMUNERATION, AGE 65 10 15 20 25 OR MORE
- -----------------------------------------------------------------------------
$ 100,000 $ 24,000 $ 36,000 $ 48,000 $ 60,000
300,000 72,000 108,000 144,000 180,000
500,000 120,000 180,000 240,000 300,000
700,000 168,000 252,000 336,000 420,000
900,000 216,000 324,000 432,000 540,000
1,100,000 264,000 396,000 528,000 660,000
1,300,000 312,000 468,000 624,000 780,000
The benefits shown in the table above will be reduced by 50% of primary social
security payments. Compensation shown in the Summary Compensation Table above
under the caption "Annual
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Compensation" is representative of the most recent calendar year compensation
used in calculating average remuneration for the Old Kent Retirement Income Plan
and the Old Kent Executive Retirement Income Plan. As of December 31, 1997, Mr.
Sherwood and Mr. Sadler each had 25 credited years of service (the maximum)
under those plans, Mr. Wagner had 20, Mr. Warrington had 9, and Mr. Kabat had
16.
EXECUTIVE SEVERANCE AGREEMENTS
Old Kent has entered into executive severance agreements with the executive
officers named in the Summary Compensation Table in this proxy statement. Each
agreement provides severance benefits to the executive officer if, within 24
months after or 6 months before a "change of control" of Old Kent, Old Kent
terminates the executive officer for reasons other than "cause," or the
executive officer terminates the employment for good reason or because the
successor company breaches the agreement. A "change of control" of Old Kent is
deemed to have occurred if (i) any person or entity acquires beneficial
ownership of 25% or more of the combined voting securities of Old Kent, (ii) the
board of directors is not comprised of a majority of directors who were
directors (or nominated to become directors) prior to the effective date of the
change of control, (iii) Old Kent merges or consolidates with or into another
entity where the voting securities of Old Kent fail to represent at least 60% of
the voting power of the surviving entity, (iv) Old Kent sells or otherwise
transfers assets or earning power totaling more than 50% of the assets or
earning power of Old Kent (on a consolidated basis), or (v) Old Kent is
completely liquidated or dissolved. An executive officer's termination of
employment is for "good reason" if Old Kent or its successor assigns him duties
materially inconsistent with his present duties, shifts his job location more
than 50 miles, or reduces his base salary or participation in short- and long-
term incentive, benefit and retirement plans. Each agreement has a 3-year term
and is self-renewing for additional 1-year terms unless Old Kent notifies the
executive officer of its termination of the agreement at least 6 months prior to
its expiration. The Agreements provide severance benefits of a lump-sum payment
equal to 3 years' salary and bonuses, plus health, deferred compensation, and
retirement benefits for the 3-year period.
COMPENSATION OF DIRECTORS
Each director of Old Kent who is not compensated as an officer is paid an annual
retainer of $17,000 and a fee of $1,000 for each meeting of the board of
directors attended. Directors who serve on committees appointed by the board of
directors are paid $1,000 for each committee meeting attended, and each
committee chairman who is not compensated as an officer is paid an additional
retainer of $4,000 per year. Directors are reimbursed for travel expenses for
meetings attended. Each director of Old Kent may participate in the Old Kent
Directors' Deferred Compensation Plan, a nonqualified deferred compensation
program. This plan permits deferral of all or any portion of current directors'
fees. Amounts deferred are credited with earnings as if the amounts had been
invested as directed by plan participants from time to time among five funds
substantially identical to the five funds available in the Old Kent Thrift Plan.
One of those five funds is an Old Kent Common Stock fund. The amount accumulated
by a director in the Old Kent Directors' Deferred Compensation Plan is paid upon
the expiration of the director's term in a lump-sum or annual installments over
a period of up to 10 years. As of April 1, 1998, half of each director's annual
retainer will be deferred and credited to the Old Kent Common Stock fund under
the Old Kent Directors' Deferred Compensation Plan.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Directors and officers of Old Kent and their associates were customers of and
had transactions with subsidiaries of Old Kent in the ordinary course of
business between January 1, 1997, and February 28, 1998. All loans and
commitments included in such transactions were made on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with other persons and did not involve more than the
normal risk of collectibility or present other unfavorable features.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Old Kent's
directors and officers to file reports of ownership and changes in ownership of
shares of Common Stock with the Securities and Exchange Commission. Directors
and officers are required by Securities and Exchange Commission regulations to
furnish Old Kent with copies of all Section 16(a) reports they file. Based on
its review of the copies of such reports received by it, or written
representations from certain reporting persons that no Forms 5 were required for
those persons, Old Kent believes that, from January 1 through December 31, 1997,
its directors and officers complied with all applicable filing requirements.
INDEPENDENT PUBLIC ACCOUNTANTS
The board of directors has selected Arthur Andersen LLP as Old Kent's principal
accountant for 1998. Representatives of Arthur Andersen LLP will be present at
the annual meeting, have an opportunity to make a statement, and be available to
respond to appropriate questions.
PROPOSALS OF SHAREHOLDERS
Proposals of shareholders intended to be presented at the annual meeting
scheduled to be held on April 19, 1999, must be received by Old Kent by November
4, 1998, to be considered for inclusion in its proxy statement and form of proxy
relating to that meeting. Proposals of shareholders should be made in accordance
with Securities and Exchange Commission Rule 14a-8.
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[FRONT]
OLD KENT FINANCIAL CORPORATION
PROXY 111 LYON STREET NW, GRAND RAPIDS, MICHIGAN 49503
ANNUAL MEETING OF SHAREHOLDERS - APRIL 20, 1998
The undersigned shareholder appoints David J. Wagner, William
L. Sanders, and Mary E. Tuuk, or any of them, each with the power to appoint
his or her substitute, attorneys and proxies to represent the shareholder and
to vote and act with respect to all shares that the shareholder would be
entitled to vote on all matters that come before the annual meeting of
shareholders of Old Kent Financial Corporation referred to above or any
adjournment of that meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
IF THIS PROXY IS PROPERLY EXECUTED, THE SHARES REPRESENTED BY THIS PROXY WILL
BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THE SHARES WILL BE VOTED
FOR ELECTION OF ALL NOMINEES NAMED ON THIS PROXY AS DIRECTORS AND FOR APPROVAL
OF THE PROPOSAL IDENTIFIED ON THIS PROXY. THE SHARES REPRESENTED BY THIS PROXY
WILL BE VOTED IN THE DISCRETION OF THE PROXIES ON ANY OTHER MATTERS THAT MAY
COME BEFORE THE MEETING.
Please sign exactly as your name
appears on this proxy. If signing for
estates, trusts, or corporations, title
or capacity should be stated. IF
SHARES ARE HELD JOINTLY, EACH HOLDER
SHOULD SIGN.
Signature X
-----------------------------
Signature X
-----------------------------
Date
------------------------, 1998
24
[BACK]
1. Election of Directors.
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to
(except as indicated below) vote for all nominees listed below
John D. Boyles David J. Wagner
Richard M. DeVos, Jr. Margaret Sellers Walker YOUR BOARD OF DIRECTORS
Kevin T. Kabat Robert H. Warrington RECOMMENDS THAT YOU VOTE FOR
John P. Keller ALL NOMINEES.
(Instruction: To withhold authority for any individual nominee, write that
nominee's name in the space provided below.)
2. Proposal to Approve an Amendment to the Restated Articles of
Incorporation to Increase the Number of Authorized Shares.
[ ] VOTE FOR YOUR BOARD OF DIRECTORS RECOMMENDS
[ ] VOTE AGAINST THAT YOU VOTE FOR THIS PROPOSAL.
[ ] ABSTAIN
IMPORTANT! - PLEASE DATE AND SIGN THE OTHER SIDE