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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 Registrant[X]
Filed by a party other than the registrant[ ]
Check the appropriate box:
[ ]Preliminary proxy statement
[ ]Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X]Definitive Proxy Statement
[ ]Definitive Additional Materials
[ ]Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
MBNA Corporation
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X]No fee required.
[ ]Fee computed on table below per Exchange Act Rules 14a-6(i) (1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- -------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- -------------------------------------------------------------------------------
(3) Per unit price of other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ]Fee paid previously with preliminary materials.
[ ]Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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(1) Set forth the amount on which the filing fee is calculated and
state how it was determined.
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[MBNA LOGO]
MBNA CORPORATION
WILMINGTON, DELAWARE 19884
------------------------------
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
------------------------------
The 1998 Annual Meeting of the Stockholders of MBNA Corporation will be
held at the Corporation's international headquarters located at 1100 North
French Street, Wilmington, Delaware on April 21, 1998 at 11:00 a.m., for the
following purposes:
1. To elect seven directors to serve until the next annual meeting and
until their successors are elected and qualify;
2. To consider and act upon a proposal to amend the Charter to increase the
number of authorized shares of common stock;
3. To consider and act upon a proposal to amend the 1997 Long Term
Incentive Plan to increase the number of shares available under the
Plan; and
4. To transact whatever other business may properly be brought before the
meeting.
Only holders of record of the Corporation's common stock at the close of
business on February 27, 1998 are entitled to notice of and to vote at the
meeting.
Stockholders of record as of the record date will be admitted to the annual
meeting upon presentation of identification. Stockholders who own stock
beneficially through a bank, broker or otherwise, will be admitted to the annual
meeting upon presentation of identification and proof of ownership or a valid
proxy signed by the record holder. A recent brokerage statement or a letter from
a bank or broker are examples of proof of ownership.
John W. Scheflen
Secretary
March 20, 1998
PLEASE MARK, SIGN, DATE, AND RETURN PROMPTLY THE ENCLOSED PROXY IN THE ENCLOSED
ENVELOPE EVEN IF YOU PLAN TO ATTEND THE MEETING. IF YOU ATTEND THE MEETING AND
WISH TO VOTE IN PERSON, YOU MAY THEN WITHDRAW YOUR PROXY.
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MBNA CORPORATION
WILMINGTON, DELAWARE 19884
------------------------------
PROXY STATEMENT
------------------------------
MBNA Corporation (the "Corporation") is a bank holding company. It is the
parent of MBNA America Bank, N.A., a national bank (the "Bank").
This Proxy Statement is furnished in connection with the solicitation by
the Corporation of proxies to be voted at its Annual Meeting of Stockholders to
be held at 11:00 a.m. on April 21, 1998, at the Corporation's international
headquarters located at 1100 North French Street, Wilmington, Delaware and at
any adjournment thereof. This Proxy Statement was first mailed or given to
holders of the Corporation's common stock on March 20, 1998.
Solicitation of proxies may be made by mail, personal interview, telephone
and fax by directors, officers and employees of the Corporation. The Corporation
has retained Morrow & Co., Inc. to assist in the solicitation of proxies for a
fee of up to $5,000 plus reimbursement of expenses. Expenses for such
solicitation will be borne by the Corporation. Brokers and others will be
reimbursed for their reasonable expenses in forwarding the proxy material to
their customers who have beneficial interests in the common stock of the
Corporation registered in names of nominees.
Any proxy may be revoked by a stockholder at any time prior to its use by
execution of another proxy bearing a later date, by written notice to the
Secretary of the Corporation at the address set forth above or by oral or
written statement at the meeting. Shares represented by any proxy properly
executed and received prior to the meeting will be voted at the meeting in
accordance with the proxy or, if the proxy does not specify, in accordance with
the recommendation of the Board of Directors.
Only holders of record of the Corporation's common stock at the close of
business on February 27, 1998 are entitled to notice of and to vote at the
meeting. On the record date the Corporation had 501,187,500 shares of common
stock outstanding. Each share of common stock outstanding on the record date is
entitled to one vote. There is no provision for cumulative voting.
A quorum for the meeting requires the presence in person or by proxy of
stockholders entitled to cast a majority of the votes entitled to be cast at the
meeting. The election of directors requires a plurality of the votes cast at the
meeting. The approval of the amendment to the Charter requires the affirmative
vote of the holders of a majority of the votes entitled to be cast on the
matter. The approval of the amendment to the 1997 Long Term Incentive Plan
requires the affirmative vote of a majority of the votes cast at the meeting
(provided that at least 50% of the shares entitled to vote are voted).
Stockholders will vote at the meeting by ballot and votes cast at the
meeting in person or by proxy will be tallied by the Corporation's transfer
agent. Shares held by stockholders present at the meeting in person who do not
vote and ballots marked "abstain" or "withheld" will be counted as present at
the meeting for quorum purposes but will not be considered to be voted at the
meeting. "Broker non-votes" (i.e., shares represented by proxies, received from
a broker or nominee, indicating that the broker or nominee has not voted the
shares on a matter with respect to which the broker or nominee does not have
discretionary voting power) will be treated as abstentions -- present at the
meeting but not voted.
All common stock share numbers and prices included herein have been
adjusted to reflect the three-for-two split of the Corporation's common stock
effected as a dividend paid October 1, 1997 to stockholders of record on
September 15, 1997.
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SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of February 27, 1998, with
respect to beneficial ownership of shares of the Corporation's common stock by
each nominee for director, by each named executive officer, by all directors and
executive officers as a group, and by each person known to the Corporation to
own beneficially 5% or more of the common stock.
MANAGEMENT
PERCENT OF
NAME NUMBER OF SHARES OUTSTANDING
- ---- ---------------- -----------
Alfred Lerner(1)............................................ 69,239,488 13.7%
Wilmington, Delaware 19884
James H. Berick, Esq.(2).................................... 195,684 *
Charles M. Cawley(3)........................................ 3,391,578 *
Benjamin R. Civiletti, Esq.(4).............................. 133,585 *
John R. Cochran, III(5)..................................... 2,167,583 *
Bruce L. Hammonds(6)........................................ 1,579,715 *
M. Scot Kaufman(7).......................................... 1,323,701 *
Randolph D. Lerner, Esq.(8)................................. 182,185 *
Stuart L. Markowitz, M.D.(9)................................ 682,683 *
Michael Rosenthal, Ph.D.(10)................................ 184,509 *
All directors and executive officers as a group (11)........ 83,611,584 16.2%
INVESTMENT ADVISOR(12)
Alliance Capital Management L.P. and affiliates (13)........ 46,292,268 9.2%
1290 Avenue of the Americas
New York, New York 10104
- ------------------------------
* Less than 1% of the shares outstanding.
(1) Includes 951,985 restricted shares of which 115,108, 115,907, 131,706 and
155,764 shares were issued in full payment of Mr. Lerner's 1997, 1995, 1994
and 1993 bonuses at his request. See "Executive Compensation -- Summary
Compensation Table." Also includes 4,162,500 shares subject to options
exercisable within 60 days; does not include 750,000 shares subject to
options exercisable at later dates.
(2) Includes 182,184 shares subject to options exercisable within 60 days; does
not include 35,400 shares owned by Mr. Berick's wife and sons as to which
Mr. Berick disclaims beneficial ownership.
(3) Includes 674,940 restricted shares and 2,640,699 shares subject to options
exercisable within 60 days; does not include 972,750 shares subject to
options exercisable at later dates.
(4) Includes 131,560 shares subject to options exercisable within 60 days.
(5) Includes 324,699 restricted shares and 1,782,654 shares subject to options
exercisable within 60 days; does not include 937,125 shares subject to
options exercisable at later dates.
(6) Includes 335,699 restricted shares and 1,187,253 shares subject to options
exercisable within 60 days; does not include 937,125 shares subject to
options exercisable at later dates.
(7) Includes 225,298 restricted shares and 25,500 shares owned by Mr. Kaufman's
wife, 5,062 shares owned by his daughter, 5,062 shares owned by his son,
and 861,750 shares subject to options exercisable within 60 days; does not
include 780,750 shares subject to options exercisable at later dates.
(8) Includes 131,560 shares subject to options exercisable within 60 days.
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(9) Includes 482,950 shares owned by Dr. Markowitz' wife, 16,537 shares total
owned by his two daughters and 182,184 shares subject to options
exercisable within 60 days.
(10) Includes 178,434 shares subject to options exercisable within 60 days; does
not include 9,112 shares owned by Dr. Rosenthal's wife as to which Dr.
Rosenthal disclaims beneficial ownership.
(11) Reflects shares beneficially owned by the ten directors and officers named
and by ten other executive officers. Includes 3,433,445 restricted shares
and 14,675,859 shares subject to options exercisable within 60 days; does
not include 9,880,879 shares subject to options exercisable at later dates.
Includes 5,062 shares with shared voting and investment power.
(12) The beneficial owner in this category has provided a Schedule 13G to the
Corporation in which it certified that it acquired the shares of the
Corporation's common stock in the ordinary course of business and not for
the purpose of changing or influencing the control of the Corporation.
(13) According to their report on Schedule 13G, as of December 31, 1997,
Alliance Capital Management L.P. ("Alliance") and certain affiliates of
Alliance (together with their parent corporations The Equitable Companies
Incorporated, AXA, and certain AXA affiliates) were deemed to own in the
aggregate 91,408,909 shares, or 18.2%, of the Corporation's common stock
primarily held for investment advisory clients. Under the ownership
reporting rules of the Securities Exchange Act of 1934, an entity is deemed
to own shares if it has the power to vote or dispose of the shares even if
it has no economic interest in the shares. The table includes 46,292,268
shares which the reporting persons had sole power to vote. In addition,
according to the Schedule 13G, the reporting persons had no power to vote
23,465,744 shares, shared power to vote 21,650,897 shares, sole power to
dispose of 91,365,138 shares, and shared power to dispose of 43,771 shares.
With respect to the restricted shares, the holder has sole voting power and
no investment power. Unless otherwise indicated, all other shares are owned with
sole voting and investment powers. No director or executive officer of the
Corporation beneficially owns any shares of the Corporation's preferred stock.
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ELECTION OF DIRECTORS
The Board of Directors has proposed seven nominees for election as
directors to serve for the coming year and until their successors are elected
and qualify. All of the nominees are currently directors of the Corporation.
Shares represented by proxies will be voted for the election of the nominees
named below unless authority to do so is withheld. The Board does not intend to
select another nominee if any current nominee should be unable to serve. All of
the Corporation's directors also serve as directors of the Bank.
NAME AGE POSITION
- ------------------------------ --- --------------------------------------------------------
Alfred Lerner 64 Chairman and Chief Executive Officer of the Corporation
Charles M. Cawley 57 President of the Corporation; Chairman and Chief
Executive Officer of the Bank
James H. Berick, Esq. 64 Chairman, Berick, Pearlman & Mills Co., L.P.A.,
attorneys
Benjamin R. Civiletti, Esq. 62 Chairman, Venable, Baetjer and Howard, LLP, attorneys
Randolph D. Lerner, Esq. 36 Partner, Securities Advisors, L.P., investments
management
Stuart L. Markowitz, M.D. 50 Internist and Managing Partner, Drs. Markowitz,
Rosenberg, Stein & Associates, physicians
Michael Rosenthal, Ph.D. 60 Professor of English, Columbia University
Mr. Alfred Lerner has been Chief Executive Officer of MBNA Corporation and
Chairman of its Board of Directors since January 1991 and a director of the Bank
since December 1991. Mr. Lerner served as Chairman of the Board and Chief
Executive Officer of MNC Financial, Inc. ("MNC Financial") from September 1990
to July 1991 and as Chairman of the Board from July 1991 to October 1993. He
also served as Chairman of the Board of Equitable Bancorporation from July 1983
until it merged with MNC Financial in January 1990. He has been Chairman of The
Town and Country Trust since August 1993 and was Chief Executive Officer from
August 1993 to October 1997. He was Chairman of the Board of The Progressive
Corporation, an insurance holding company, from 1988 to April 1993. A graduate
of Columbia University and a member of its Board of Trustees, Mr. Lerner also is
president of the Cleveland Clinic Foundation and a member of its Board of
Trustees. He is also a trustee of Case Western Reserve University and a member
of the Board of Directors of the Marine Corps Law Enforcement Foundation.
Mr. Cawley has been President and a director of the Corporation and
Chairman and Chief Executive Officer of the Bank since January 1991. He was the
senior operating executive that formed the Bank in 1982. He has served as Chief
Executive Officer of the Bank since 1990, and as President since 1985. He has
been a director of the Bank since 1982. He serves on the boards of Georgetown
University, the University of Delaware, the Eisenhower Exchange Fellowships, and
the American Architectural Foundation. He is Chairman of the Board of the Grand
Opera House in Wilmington, Delaware.
Mr. Berick has been a director of the Corporation since January 1991 and a
director of the Bank since April 1991. He has been Chairman of Berick, Pearlman
& Mills Co., L.P.A. since July 1986. He is a director of A. Schulman, Inc. and
The Town and Country Trust. He was a director of Equitable Bancorporation from
1984 until January 1990, when it merged into MNC Financial, of Equitable Bank,
N.A. from 1984 until July 1990, when it merged into Maryland National Bank, and
of Maryland National Bank from July 1990 to January 1991.
Mr. Civiletti has been a director of the Corporation and the Bank since
April 1993. He served as Managing Partner of Venable, Baetjer and Howard, LLP,
from 1987 until 1993 and Chairman since 1993. He was Attorney General of the
United States from 1979 to 1981. He is Chairman of the Board
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of GBMC Healthcare, Inc., a director of Bethlehem Steel Corporation, Wackenhut
Corrections Corporation and the Wackenhut Corporation and a member of the Board
of Trustees of The Johns Hopkins University.
Mr. Randolph D. Lerner has been a director of the Corporation and the Bank
since April 1993. He is a partner in Securities Advisors, L.P., the successor to
R.D. Lerner Securities, Inc., which he has managed since September 1991. He is
Chairman of the Board of Trustees of the New York Academy of Art, and a member
of the Boards of Trustees of the Hospital for Special Surgery in New York City,
the Corcoran Gallery, and the New York Legal Assistance Group. He is a member of
the District of Columbia and New York Bar Associations and is Alfred Lerner's
son.
Dr. Markowitz has been a director of the Corporation and the Bank since
April 1991. He is an internist and Managing Partner of Drs. Markowitz,
Rosenberg, Stein & Associates, a private medical practice, and is Clinical
Professor at Case Western Reserve University, College of Medicine, where he has
taught since 1976. He is a member of the Medical Board and a volunteer physician
for The Jewish Children's Bureau in Cleveland.
Dr. Rosenthal has been a director of the Corporation and the Bank since
April 1991. He has taught at Columbia University since 1964, served as Associate
Dean responsible for academic administration from 1972 to 1989 and has been
Professor of English since 1989. He is a member of the Authors Guild.
Mr. Civiletti (Chairman) and Drs. Markowitz and Rosenthal serve as the
Audit Committee. Mr. Berick (Chairman), Mr. Civiletti, and Drs. Markowitz and
Rosenthal serve as the Compensation Committee, and Drs. Markowitz and Rosenthal
serve as the Stock Option Committee. The Audit Committee supervises the
Corporation's internal corporate auditors, approves the selection of independent
auditors, reviews the scope of services and reports of the independent auditors
and reviews financial reports with management and the independent auditors. The
Compensation Committee approves the compensation of the Corporation's senior
executives and administers the Senior Executive Performance Plan. The Stock
Option Committee administers the Corporation's 1991 and 1997 Long Term Incentive
Plans.
During 1997, the Board of Directors held seven meetings, the Audit
Committee held seven meetings, the Compensation Committee held four meetings and
the Stock Option Committee held five meetings. Each of the directors attended
all of the applicable board and committee meetings held during 1997.
The directors of the Corporation who are not officers each received $40,000
for their services in 1997, and $1,500 for each meeting of the Board of
Directors or committee attended. Directors who are not officers of the
Corporation may elect to defer their annual retainer and meeting fees pursuant
to the Corporation's deferred compensation plan.
During 1997, each director who is not an officer received an option for
25,312 shares of the Corporation's common stock pursuant to the Corporation's
1991 Long Term Incentive Plan. Under the 1991 Plan, each director who is not an
officer received an option for 25,312 shares of common stock, adjusted for
subsequent stock splits, upon election to the Board and on January 2 of each
year. Under the Corporation's 1997 Long Term Incentive Plan, each director who
is not an officer receives an option for 5,000 shares of common stock upon
election to the Board and on January 2 of each year beginning in 1998. The
exercise price of the options is the fair market value of the common stock on
the grant date. The options are exercisable immediately and have a term of ten
years but expire sooner if the holder ceases to be a director.
The election of directors requires a plurality of the votes cast at the
meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH NOMINEE FOR DIRECTOR.
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EXECUTIVE COMPENSATION
The following table sets forth information concerning compensation paid or
accrued to the Corporation's Chairman and Chief Executive Officer and the four
other most highly compensated executives of the Corporation for services to the
Corporation in 1995, 1996 and 1997.
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------ -----------------------
AWARDS
-----------------------
OTHER NUMBER OF
ANNUAL SECURITIES ALL OTHER
COMPEN- RESTRICTED UNDERLYING COMPEN-
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) SATION(2) STOCK(3) OPTIONS(4) SATION(5)
- ------------------------------------------- ---- ---------- ---------- ---------- ---------- ---------- ---------
Alfred Lerner 1997 $1,500,000 $3,000,000* $ 0 $1,563,750 750,000 $ 0
Chairman and Chief Executive Officer 1996 1,515,000 3,000,000 0 1,585,000 450,000 0
of the Corporation 1995 1,505,000 1,275,000* 0 1,633,500 337,500 0
Charles M. Cawley 1997 1,500,000 3,000,000 122,929 1,563,750 750,000 353,083
President of the Corporation; Chairman 1996 1,515,000 3,000,000 71,465 1,585,000 450,000 135,550
and Chief Executive Officer of the Bank 1995 1,505,000 1,275,000 109,592 1,633,500 337,500 224,508
John R. Cochran III 1997 1,000,000 2,000,000 33,009 1,042,500 450,000 158,766
Executive Vice President of the 1996 888,000 1,865,000 286,448 792,500 225,000 401,328
Corporation; Senior Vice Chairman and 1995 812,917 814,921 37,183 928,125 253,125 93,539
Chief Administrative Officer of the Bank
Bruce L. Hammonds 1997 1,000,000 2,000,000 25,546 1,042,500 450,000 171,612
Executive Vice President of the 1996 888,000 1,865,000 60,968 792,500 225,000 74,183
Corporation; Senior Vice Chairman and 1995 812,917 814,849 29,514 928,125 253,125 97,942
Chief Operating Officer of the Bank
M. Scot Kaufman 1997 871,145 1,800,000 34,168 781,875 450,000 168,857
Executive Vice President and Chief 1996 756,500 1,500,000 85,619 891,868 168,750 78,341
Financial Officer of the Corporation; 1995 664,538 663,000 42,011 631,125 168,750 96,614
Senior Vice Chairman and Chief Financial
Officer of the Bank
- ------------------------------
* Mr. Lerner's bonuses for 1995 and 1997 were paid in restricted shares of the
Corporation's common stock at his request. For Mr. Lerner, the "Bonus" column
for 1995 and 1997 includes the value (based on the market price on the date of
issuance) of restricted stock issued to him.
(1) Includes amounts deferred under the Corporation's deferred compensation
plan.
(2) For 1995, includes $41,084 for airplane use for Mr. Cawley. For 1997,
includes $45,578 for airplane use and $62,775 for personal services for Mr.
Cawley.
(3) The number of restricted shares held at December 31, 1997, including the
restricted shares issued to Mr. Lerner in payment of his 1995 and 1997
bonuses at his request, and the value of these shares calculated by
multiplying the number of shares held by the closing price of the common
stock on December 31, 1997, were: Mr. Lerner, 951,985 shares, $26,001,090;
Mr. Cawley, 674,940 shares, $18,434,299; Mr. Cochran, 324,699 shares,
$8,868,341; Mr. Hammonds, 335,699 shares, $9,168,779; and Mr. Kaufman,
225,298 shares, $6,153,452. Dividends are paid on restricted stock from the
grant date.
(4) The 1997 options are long term performance options which are exercisable in
three equal annual installments beginning January 1 of the year following
the year in which the Corporation achieves $1 billion in net income. The
options are exercisable sooner in the event of the recipient's death,
disability, retirement or a change in control of the Corporation. In
addition, to ensure that the Corporation is not required to charge earnings
for any increase in option value from grant date to exercise date, the
options are exercisable for one day only prior to expiration ten years from
grant.
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(5) Includes premiums paid by the Corporation in 1997 on term life insurance
(Mr. Cawley, $18,224; Mr. Cochran, $7,895; Mr. Hammonds, $8,635; and Mr.
Kaufman, $8,235); premiums paid by the Corporation in 1997 on split dollar
life insurance policies, ALL OF WHICH WILL BE REPAID TO THE CORPORATION NOT
LATER THAN THE DEATH OF THE EXECUTIVE (Mr. Cawley, $278,889; Mr. Cochran,
$113,457; Mr. Hammonds, $126,025; and Mr. Kaufman, $120,381); above-market
earnings on deferred compensation in 1997 (Mr. Cawley, $2,370; Mr. Cochran,
$3,814; Mr. Hammonds, $3,352; and Mr. Kaufman, $11,795); and contributions
made by the Corporation in 1997 to its deferred compensation plan (Mr.
Cawley, $53,600; Mr. Cochran, $33,600; Mr. Hammonds, $33,600; and Mr.
Kaufman, $28,446). Mr. Lerner did not receive any of these benefits at his
request.
1997 OPTION GRANTS
The following table sets forth information concerning stock option grants
to the named executive officers made in 1997.
INDIVIDUAL GRANTS
-------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES PRICE PER EXPIRATION GRANT DATE
NAME GRANTED(1) IN 1997 SHARE DATE PRESENT VALUE(2)
---- ---------- ---------- --------- ---------- ----------------
Alfred Lerner.................... 750,000 7.53% $19.75 4/20/07 $5,250,000
Charles M. Cawley................ 750,000 7.53% 19.75 4/20/07 5,250,000
John R. Cochran III.............. 450,000 4.52% 19.75 4/20/07 3,150,000
Bruce L. Hammonds................ 450,000 4.52% 19.75 4/20/07 3,150,000
M. Scot Kaufman.................. 450,000 4.52% 19.75 4/20/07 3,150,000
- ------------------------------
(1) These long term performance options are exercisable in three equal annual
installments beginning January 1 of the year following the year in which the
Corporation achieves $1 billion in net income. These options are also
exercisable in the event of death, disability, retirement or change in
control. In addition, to ensure that the Corporation is not required to
charge earnings for any increase in option value from grant date to exercise
date, the options are exercisable for one day only prior to expiration ten
years from grant. The Stock Option Committee retains authority to adjust the
net income objective for changes in federal or applicable state income
taxes.
(2) Amounts reflect the estimated present value of the grant as of the grant
date using the Black-Scholes option pricing model. The following assumptions
were used: (1) average expected life of 6.66 years; (2) expected volatility
or fluctuation of the Corporation's stock price of 30% each year calculated
based on historical fluctuations; (3) expected dividend yield for the
Corporation's stock of 2.11% calculated based on historical yield; and (4)
discount for present value based on an annual rate of return of 6.79%, which
was the approximate rate, at the time of grant of the options, for zero
coupon U.S. government securities with maturities equal to the expected
lives of the options. This estimate of value has been included solely for
purposes of disclosure in accordance with the rules of the Securities and
Exchange Commission. The actual value of the options will depend on the fair
market value of the Corporation's common stock on the dates the options are
exercised. No realization of value is possible without an increase in the
price of the Corporation's common stock, which would benefit all
stockholders.
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AGGREGATED OPTION EXERCISES IN 1997 AND OPTION VALUES AT DECEMBER 31, 1997
The following table sets forth information concerning stock options
exercised by the named executive officers during 1997 and the values at year end
1997 of unexercised options held by these executive officers.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT 12/31/97 OPTIONS AT 12/31/97(2)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ----------- ------------- ----------- -------------
Alfred Lerner......... 0 $ 0 4,162,500 750,000 $79,975,782 $ 5,671,875
Charles M. Cawley..... 1,227,051 20,896,849 3,284,199 972,750 62,886,035 10,183,234
John R. Cochran III... 103,455 2,049,717 1,825,357 937,125 37,758,543 11,729,602
Bruce L. Hammonds..... 178,499 3,033,924 1,187,253 937,125 23,588,036 11,729,602
M. Scot Kaufman....... 334,749 8,079,331 945,253 780,750 19,044,862 9,002,984
- ------------------------------
(1) Represents the difference between the fair market value of the shares of
common stock for which options were exercised in 1997 less the exercise
price of the options.
(2) Represents the difference between the fair market value of the option shares
(based on $27.3125 per share, the closing price of the common stock on the
New York Stock Exchange on December 31, 1997) and the exercise price of the
options.
RETIREMENT PLANS
The maximum annual retirement benefit permitted by law for a qualified
defined benefit pension plan for 1998 is $130,000. The limit is adjusted
periodically for inflation. The following table sets forth approximate annual
retirement benefits for retirement at age 65 which would be payable under the
Corporation's defined benefit pension plan if not limited by law. The table is
included in accordance with the rules of the Securities and Exchange Commission.
YEARS OF SERVICE
AVERAGE ANNUAL -------------------------------------------------
COMPENSATION 15 20 25 30 35
- -------------- ------- ------- ------- ------- ---------
$900,000 240,665* 320,887* 401,109* 481,331* 539,831*
1,000,000 267,665* 356,887* 446,109* 535,331* 600,331*
1,100,000 294,665* 392,887* 491,109* 589,331* 660,831*
1,200,000 321,665* 428,887* 536,109* 643,331* 721,331*
1,500,000 402,665* 536,887* 671,109* 805,331* 902,831*
1,600,000 429,665* 572,887* 716,109* 859,331* 963,331*
1,700,000 456,665* 608,887* 761,109* 913,331* 1,023,831*
1,800,000 483,665* 644,887* 806,109* 967,331* 1,084,331*
- ------------------------------
* The current maximum annual retirement benefit permitted by law is $130,000.
Credited years of service and current compensation covered by the pension
plan for the persons named in the Summary Compensation Table are as follows: Mr.
Lerner, 14 years and $1,500,000; Mr. Cawley, 24 years and $1,500,000; Mr.
Cochran, 23 years and $1,000,000; Mr. Hammonds, 18 years and $1,000,000; and Mr.
Kaufman, 25 years and $900,000. Past service to MNC Financial is included in
credited years of service.
Annual benefits at normal retirement are 1.3% of average annual
compensation times years of credited service up to 40 plus .5% of average annual
compensation in excess of covered compensation times years of credited service
up to 30. Average annual compensation is determined by averaging the 60
consecutive months of compensation out of the last 120 months which yield the
highest average. Compensation includes salary, but not bonuses, and may not
exceed $160,000 in 1998 for this purpose. Covered compensation is the 30-year
average of amounts with respect to which Social Security taxes
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must be paid. Benefits payable under the pension plan as set forth in the table
are not subject to deductions for Social Security and other offset amounts.
The executive officers named in the Summary Compensation Table (except for
Mr. Lerner at his request) participate in a supplemental retirement plan which
provides a retirement benefit equal to 80% of the participant's highest average
salary for any 12 month period during the 72 months preceding retirement.
Benefits are reduced by pension and Social Security benefits. The Plan also
provides for salary continuation in the event of the death or disability of the
participant. Salary is capped at $1,500,000 for purposes of determining
retirement benefits, but is not capped for disability or survivors' benefits.
Except for Mr. Cawley, participants named in the Summary Compensation Table must
remain employed until age 60 to receive a retirement benefit. Annual retirement
benefits at age 65 under this plan based on 1998 salaries, net of pension and
Social Security benefits, would be approximately: Mr. Cawley, $1,071,602; Mr.
Cochran, $661,219; Mr. Hammonds, $676,062; and Mr. Kaufman, $581,111. The
Corporation has obtained insurance on the lives of participants (other than Mr.
Lerner, who does not participate in the Plan at his request) in the Plan and
expects over time to recover from the proceeds of the insurance the cost of
benefits paid under the Plan and premiums for the insurance.
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following report is submitted by the Corporation's Compensation
Committee and Stock Option Committee. Each member of the Compensation Committee
and the Stock Option Committee is a non-employee director. The Compensation
Committee is comprised of Messrs. Berick and Civiletti and Drs. Markowitz and
Rosenthal. The Stock Option Committee is comprised of Drs. Markowitz and
Rosenthal.
The Corporation's compensation program provides annual cash compensation to
executive officers that recognizes short term company performance, and long term
compensation that encourages executive officers to focus on the future as well
as the present. The program is designed to reward current performance in proper
context with the long term health of the Corporation. Annual cash compensation
consists primarily of salary and bonus. Long term programs include stock
options, restricted shares and retirement programs.
ANNUAL COMPENSATION
The Compensation Committee determines annual salaries and bonuses for
senior executive officers. Salaries are based primarily on experience,
responsibilities and corporate and individual performance. Bonuses for the most
senior executive officers are based on corporate performance.
The Compensation Committee measures corporate performance primarily by
achievement of the objectives set forth in the Corporation's financial plan,
including goals for net income, managed loans, new accounts, managed credit
losses, customer retention and operating efficiencies. The Corporation exceeded
the net income goal and substantially achieved 1997 performance objectives. The
Compensation Committee also considers, but gives less weight to, the competitive
and economic environment in which these results are achieved and other factors,
such as superior Customer quality, results of regulatory examinations and the
total return on the Corporation's common stock compared to the Standard & Poor's
500 Stock and Financial Indices.
The 1997 bonuses paid to the Corporation's senior executive officers named
in the Summary Compensation Table were paid pursuant to the Corporation's Senior
Executive Performance Plan, which provided for payment of 1997 bonuses in an
amount equal to 200% of 1997 base salary if the Corporation achieved the 1997
net income objective established by the Compensation Committee. The Compensation
Committee retained authority to reduce or eliminate the bonuses notwithstanding
attainment of the net income objective. The Corporation's 1997 net income, as
certified by the Compensation Committee, exceeded the net income objective for
that year.
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The Compensation Committee also reviewed and considered salaries, bonuses
and certain long term compensation paid in 1996 to chief executive officers of
other publicly held companies that issue credit cards (the most recent data
available). Several of these companies, along with others, are included in the
Standard and Poor's Financial Index comparison in the Stock Performance Graph.
When the cash compensation paid to chief executive officers of these companies
is adjusted (based on limited available data) for significant differences in
business lines, size, earnings, corporate performance, compensation practices,
and other factors, the Compensation Committee believes that the compensation
paid to the Corporation's chief executive officer is appropriate. The
Compensation Committee also considered other benefits received by the senior
executive officers and the fact that Mr. Lerner generally did not participate in
these benefits.
Based on its review, the Compensation Committee approved 1998 salaries in
amounts it judged to be appropriate and payment of 1997 bonuses in the full
amount authorized for 1997 under the Senior Executive Performance Plan. The
Compensation Committee did not increase salaries for the senior executives.
Messrs. Lerner and Cawley received the same number of restricted shares and the
same bonus as in 1996 and their salaries have remained the same for three years.
Mr. Lerner's bonus was paid in restricted shares of the Corporation's common
stock at his request. Salaries for 1997 for senior executive officers were
approved by the Compensation Committee based on review of the Corporation's
performance for 1996 applying the same criteria. Salaries and bonuses for 1997
and salaries for 1998 for all other officers were determined by the senior
executive officers based on the same factors used by the Compensation Committee.
LONG TERM COMPENSATION
The Stock Option Committee grants stock options and restricted stock to
executive and other officers and key employees under the Corporation's 1997 Long
Term Incentive Plan.
During 1997, the Stock Option Committee granted restricted shares to senior
executive officers as additional compensation based on the Corporation's results
compared to the goals set forth in its financial plan and as incentive to remain
with the Corporation and for future performance. All restricted shares are
forfeited if the holder's employment terminates other than as a result of
retirement, death or disability, a change in control of the Corporation or as
otherwise determined by the Stock Option Committee. During 1997 the Stock Option
Committee approved a waiver of the restrictions on some restricted stock granted
in 1991 and 1993 to certain senior executives, including Messrs. Cochran,
Hammonds and Kaufman, to be used to make charitable gifts.
The Stock Option Committee granted stock options during 1997 under the
Corporation's 1997 Long Term Incentive Plan for a total of 9,962,000 shares to
approximately 130 officers, including the Corporation's most senior executive
officers. The stock options granted in 1997 to senior executives are primarily
long term performance options exercisable in installments after the Corporation
achieves net income of $1 billion. All options are exercisable sooner in the
event of death, disability or retirement or a change in control of the
Corporation. In addition, to ensure that the Corporation is not required to
charge earnings for any increase in option value from grant date to exercise
date, the long term performance options are exercisable for one day only prior
to expiration ten years from grant.
The options were granted based on the recipient's performance and
responsibilities with the Corporation. The Stock Option Committee considered the
aggregate options to be outstanding following the grants as a percentage of
total shares and options outstanding. The Stock Option Committee grants all
options with an exercise price equal to the fair market value of the common
stock on the grant date.
Senior executive officers (other than Mr. Lerner at his request)
participate in the Corporation's Supplemental Executive Retirement Plan and
split dollar life insurance program. These programs provide greater retirement
benefits for those participants who remain with the Corporation until at least
age 60 and provide for loss of benefits if a participant engages in competition
with the Corporation following termination of employment. Senior executive
officers, including Mr. Lerner,
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also participate in the Corporation's pension plan. Senior executive officers,
except Mr. Lerner at his request, also participate in the Corporation's 401(k),
deferred compensation and other broad-based benefit plans.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
The Compensation Committee considers the effect of limitations on
deductibility for federal income tax purposes of compensation in excess of
$1,000,000 paid in a given year to an executive officer named in the Summary
Compensation Table for that year. The Compensation Committee expects that
substantially all of the bonuses paid for 1997 pursuant to the Senior Executive
Performance Plan should be fully deductible. In addition, the Compensation
Committee expects that tax deductions related to exercise of stock options
granted by the Stock Option Committee pursuant to the 1997 Long Term Incentive
Plan will not be subject to limits on deductions. The Corporation does not incur
compensation expense for federal income tax purposes for restricted stock grants
until the restricted shares vest.
James H. Berick, Esq.
Benjamin R. Civiletti, Esq.
Stuart L. Markowitz, M.D.
Michael Rosenthal, Ph.D.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee and Stock Option Committee during
1997 are listed above. No member of the Compensation Committee has served as an
executive officer or employee of the Corporation or served during 1997 as an
executive officer of another entity of which any executive officer of the
Corporation was a director or member of the compensation committee.
Berick, Pearlman & Mills Co., L.P.A., of which Mr. Berick is chairman, and
Venable, Baetjer and Howard, LLP, of which Mr. Civiletti is chairman, are among
the law firms that provide legal services to the Corporation.
CERTAIN RELATIONSHIPS
The Corporation's directors and executive officers hold credit cards or
other lines of credit issued by the Bank on the same terms prevailing at the
time for those issued to other persons.
In July 1997 the Corporation sold a residential property formerly used by
the Bank as a conference center to Richard K. Struthers, an executive officer,
for $2,000,000, the fair market value of the property for a prompt sale as
determined by an independent appraiser less real estate commission.
During 1997 the Board of Directors approved the sale to Charles M. Cawley,
in separate transactions, of two automobiles. In one case Mr. Cawley paid
$108,925, an amount equal to the Corporation's cost, which exceeded market value
as determined by independent dealer valuations. In the other case, Mr. Cawley
paid $75,000, an amount equal to the highest of three dealer valuations.
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STOCK PERFORMANCE GRAPH
The following chart compares the total return on the Corporation's common
stock from December 31, 1992 through December 31, 1997 to the total return for
the same period of the Standard & Poor's 500 Stock Index and the Standard &
Poor's Financial Index. The graph assumes that the value of the investment in
the Corporation's common stock and each index was $100 at December 31, 1992 and
that all dividends were reinvested. While total return comparisons may be useful
to investors in gauging the performance of the Corporation's common stock, in
the opinion of the Corporation's management and Board of Directors, the total
return on the Corporation's common stock may not necessarily relate directly to
the performance of the Corporation's management and should be used only as one
of several important measures including, for example, customer satisfaction,
quality measures, future business development and net income.
[GRAPH]
At year end 1997, the total return on the Corporation's common stock from
December 31, 1992 was 529%, compared to the total return on the S&P Financial
Index of 231% and the S&P 500 Index of 152%. The average annual total return on
the Corporation's common stock for this period was 46%. The measurement points
used in the graph and set forth below are based on an initial investment of
$100.
DECEMBER 31, MBNA S&P FINANCIALS S&P 500
- ------------ ---- -------------- -------
1993 139 111 110
1994 151 107 112
1995 243 165 153
1996 420 223 189
1997 629 331 252
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CHARTER AMENDMENT TO INCREASE
THE NUMBER OF AUTHORIZED SHARES
The Board of Directors deems it advisable and recommends that the
shareholders approve an amendment to the Corporation's charter to increase the
number of authorized shares of common stock from 700 million to 1.5 billion. On
February 27, 1998, the Corporation had outstanding 501,187,500 shares of common
stock and 40,584,886 shares were reserved for issuance upon exercise of stock
options pursuant to the Corporation's 1991 and 1997 Long Term Incentive Plans
(the "Plans"). In addition, 5,395,419 shares of common stock had been authorized
for issuance pursuant to grants to be made under the 1997 Long Term Incentive
Plan.
The additional authorized shares will be available for general corporate
purposes, including for possible stock splits and dividends. The Corporation's
shareholders have no preemptive rights to acquire newly issued shares of common
stock. The issuance of additional shares, other than through a stock split,
stock dividend or other pro rata distribution to shareholders, would reduce
existing shareholders' voting power. In addition, depending on the consideration
received for the shares, the issuance of additional shares could affect the
earnings per share and book value per share of the existing shares of common
stock. Also, although the increase in the authorized shares is not intended as
an anti-takeover measure, the additional shares could be used by the Corporation
to make any attempt to gain control of the Corporation more difficult. Since the
Corporation's initial public offering in 1991, the Corporation has not issued
additional shares of common stock except in connection with stock splits (the
Corporation has split its common stock five times) and stock option and
restricted share awards under the Corporation's stock incentive plans. The
Corporation currently has no plans for issuance of additional shares of common
stock except upon exercise of stock options and is not aware of any proposals to
obtain control of the Corporation.
The affirmative vote of a majority of the votes entitled to be cast by
holders of shares of common stock is required to approve the proposed amendment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE CHARTER
AMENDMENT.
AMENDMENT TO THE 1997 LONG TERM INCENTIVE PLAN
The Corporation's 1997 Long Term Incentive Plan (the "Plan") authorizes
grants of stock options and restricted and unrestricted share awards to
officers, directors, key employees, consultants and advisors of the Corporation.
The Board of Directors has approved an amendment to the Plan which is being
submitted for approval by the Corporation's stockholders.
The Plan currently authorizes the issuance of 16,500,000 shares of the
Corporation's common stock pursuant to grants of options and share awards. At
February 27, 1998, grants for 11,104,581 shares had been made and 5,395,419
shares remained available for future grants under the Plan. The amendment to the
Plan would increase the number of shares of the Corporation's common stock which
may be issued pursuant to grants made under the Plan from 16,500,000 to
21,500,000. If the amendment is approved, shares subject to options outstanding
and available for grant under the Plan and the Corporation's 1991 Long Term
Incentive Plan will aggregate approximately 9.2% of the sum of the shares
outstanding and shares subject to options and available for grant. The maximum
number of shares with respect to which options may be granted to any one
participant in any year is 1,500,000 shares. The above limitations are subject
to adjustment for stock splits and similar events as provided in the Plan.
The Plan is administered by the Stock Option Committee (the "Committee"),
which has authority to select participants from among those eligible and to
determine the form and substance of awards and any conditions and restrictions
on them. All members of the Committee are outside directors.
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Officers, directors, key employees, consultants and advisors of the
Corporation are eligible to receive grants of stock options and share awards
under the Plan. Although over 1,000 officers, key employees, consultants and
advisors were eligible to participate during 1997, substantially all of the
awards under the Plan have been made to senior officers and the Committee
expects to continue that practice. Approximately 140 persons received grants of
options or share awards in 1997.
The Plan authorizes grants of incentive and nonqualified stock options. All
stock options have an exercise price that is not less than the fair market value
of the common stock on the date the option is granted. The closing price of the
common stock on the New York Stock Exchange on February 27, 1998 was $35.8125
per share. The Committee determines the terms and conditions of stock option
grants, including the period for exercise, the expiration date and any
conditions to exercise. The Committee's current policy is to provide that all
options vest in the event of death, disability or retirement of the participant
or a change in control. The Committee may amend or modify the terms of any
outstanding option grant but will not reprice options previously granted.
The Plan provides for a grant of options for 5,000 shares to each
non-employee director at the time the person becomes a director and an
additional grant of options for 5,000 shares to each person who is a
non-employee director on each January 2. The exercise price of these options is
the closing price of the common stock on the New York Stock Exchange on the
grant date. These options are exercisable immediately and expire on the earlier
of ten years from the grant date or 90 days after the grantee ceases to be a
non-employee director. The number of shares for grants to non-employee directors
under the Plan are not subject to adjustment for stock splits or similar events.
The Plan authorizes share awards either with or without restrictions. The
Committee determines the number of shares to be awarded and the restrictions, if
any, on the shares. The Committee's policy has been to issue restricted shares
at the time of award, with the participant having all rights of a stockholder,
including the rights to vote the shares and receive dividends. The Committee has
generally provided that restrictions lapse upon death, disability or retirement
of the participant or a change in control. Restricted shares are forfeited to
the Corporation if the participant's employment terminates prior to lapse of the
restrictions. The Committee may shorten the period of any restriction or waive
any restriction.
Under current federal income tax laws, a participant does not recognize
income upon receipt of a stock option. At the time of exercise of a nonqualified
option, a participant recognizes ordinary income in an amount equal to the
difference between the fair market value of the common stock on the exercise
date and the exercise price.
A participant does not recognize income upon exercise of an incentive stock
option. If the shares acquired upon exercise of an incentive stock option are
held at least two years from the grant date of the option and one year from the
exercise date, upon sale of the shares the participant will recognize long term
capital gain in an amount equal to the difference between the sale price and the
exercise price of the option. If the shares are sold sooner, the participant
generally recognizes ordinary income or loss on the date of sale in an amount
equal to the lesser of the difference between the sale price and the exercise
price and the difference between the fair market value of the shares on the
exercise date and the exercise price.
The Corporation generally is entitled to an income tax deduction, at the
time the participant recognizes ordinary income, in an amount equal to the
amount of ordinary income recognized by the participant. Section 162(m) of the
Internal Revenue Code, as amended in 1993, denies to a publicly held corporation
a deduction in determining its taxable income for covered compensation in excess
of $1,000,000 paid in any taxable year to its chief executive officer or certain
other officers whose compensation must be reported in its proxy statement. Tax
deductions related to exercise of stock options are not subject to this
limitation if, among other things, the stock options are granted pursuant to a
plan approved by stockholders. The Corporation believes that the Plan meets all
requirements of Section 162(m). Section 280G of the Internal Revenue Code denies
a deduction to a corporation for excess parachute payments made to an officer or
employee if contingent upon a change
14
17
in control. A portion of the deduction which the Corporation might otherwise
receive upon exercise of nonqualified stock options or vesting of restricted
shares if accelerated by a change in control may not be available in these
circumstances.
The Corporation may withhold, or require a participant to remit to the
Corporation, an amount sufficient to satisfy any federal, state and local
withholding tax requirements. The Committee has provided that a participant may
satisfy a tax withholding requirement by delivery of shares of Corporation
common stock owned by the participant, including shares the participant is
entitled to receive upon exercise of the option.
The Board of Directors may amend the Plan and any outstanding grants made
under the Plan without the approval of stockholders. The New York Stock Exchange
requires that an increase in the number of shares authorized for grant be
approved by stockholders. No further grants may be made under the Plan after
December 31, 2006.
The affirmative vote of a majority of the votes cast at the meeting
(provided that at least 50% of the shares entitled to vote are voted) is
required to approve the proposed amendment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO
THE 1997 LONG TERM INCENTIVE PLAN.
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18
INDEPENDENT AUDITORS
The Corporation has retained Ernst & Young LLP as its independent auditors
for 1998. Ernst & Young LLP has served as the independent auditors for the
Corporation since 1991.
Representatives of Ernst & Young LLP will attend the meeting and, while
they do not intend to make a statement, will respond to appropriate questions
directed to them.
STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Stockholder proposals to be included in the Corporation's proxy material
for the 1999 Annual Meeting of Stockholders must be received at the
Corporation's principal executive offices not later than November 20, 1998.
A Corporation Bylaw provides that no business, including a nomination for
election as a director, may be brought before an annual or special meeting of
stockholders by any stockholder unless the stockholder has given written notice
of the business to the Corporation's Secretary not later than 60 days prior to
the date of the meeting. If less than 70 days public notice of the date of the
meeting has been given, the stockholder notice must be received within 10 days
following notice or publication of the date of the meeting. The notice must
include certain information concerning the stockholder, the business the
stockholder proposes to bring before the meeting and, in the case of a
nomination for director, the nominee. A copy of the Bylaw may be obtained from
the Secretary of the Corporation at the address set forth in the accompanying
notice.
OTHER BUSINESS
As of the date of this Proxy Statement, the Corporation does not intend to
bring any other matter before the meeting requiring action of the stockholders,
nor does it have any information that any other matter will be brought before
the meeting. However, if any other matter requiring the vote of the stockholders
properly comes before the meeting, it is the intention of the persons named in
the enclosed form of proxy to vote the proxy in accordance with their best
judgment in the interest of the Corporation.
ANNUAL REPORT ON FORM 10-K
THE CORPORATION WILL PROVIDE WITHOUT CHARGE TO EACH PERSON SOLICITED FOR A
PROXY, ON THE WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF THE CORPORATION'S
ANNUAL REPORT ON FORM 10-K FOR ITS MOST RECENTLY COMPLETED FISCAL YEAR. REQUESTS
SHOULD BE DIRECTED TO JOHN W. SCHEFLEN, SECRETARY, AT THE ADDRESS SET FORTH ON
THE FIRST PAGE OF THIS PROXY STATEMENT.
March 20, 1998
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LOGO PRINTED ON RECYCLED PAPER
20
MBNA CORPORATION
1997 LONG TERM INCENTIVE PLAN
1. ESTABLISHMENT
MBNA Corporation (the "Corporation") hereby establishes the 1997 LONG
TERM INCENTIVE PLAN (the "Plan"). The Plan permits the grant of stock options
and restricted or unrestricted share awards for shares of the Corporation's
Common Stock ("Common Stock").
2. ADMINISTRATION
The Plan shall be administered by the Board of Directors of the
Corporation or a committee ("Committee") of the Board of Directors. All
references herein to "Committee" shall mean the Board of Directors if no
committee of the Board of Directors is appointed or otherwise authorized to act
on a particular matter. The Committee shall have all power and authority
necessary to administer the Plan, including but not limited to the power to
select persons to participate in the Plan, determine the terms of grants made
under the Plan, interpret the Plan and adopt such policies for carrying out the
Plan as it may deem appropriate. The decisions of the Committee on all matters
relating to the Plan shall be conclusive.
3. SHARES AVAILABLE FOR THE PLAN; LIMITATIONS
(a) Shares of Common Stock may be issued by the Corporation pursuant
to incentive or nonqualified stock options or restricted or unrestricted share
awards granted under the Plan.
(b) The number of shares of Common Stock with respect to which stock
option and share awards may be made pursuant to the Plan is 21,500,000. If any
grant under the Plan expires or terminates unexercised, becomes unexercisable
or is forfeited as to any shares, such unpurchased or forfeited shares shall
thereafter be available for further grants under the Plan.
(c) The maximum number of shares of Common Stock with respect to which
options may be granted pursuant to the Plan in any calendar year to any one
participant is 1,500,000.
(d) In the event of a reorganization, recapitalization, stock split,
stock dividend, combination of shares, merger, share exchange, consolidation,
substantial distribution of assets, or any other change in the corporate
structure or shares of the Corporation, the maximum numbers and total of shares
provided in Sections 3(b) and 3(c), but not Section 5(e), and the kinds of
shares under the Plan shall be appropriately adjusted.
21
4. PARTICIPATION
Participation in the Plan is limited to officers, directors, key
employees, consultants and advisors of the Corporation and its subsidiaries
selected by the Committee. Only officers and key employees of the Corporation
and its subsidiaries are eligible to receive incentive stock options
5. STOCK OPTIONS
(a) The Committee may from time to time grant to participants
non-qualified stock options or incentive stock options.
(b) The price per share payable upon the exercise of each option shall
not be less than 100% of the fair market value of a share of Common Stock on
the date the option is granted.
(c) The Committee shall determine all terms and conditions of options,
including but not limited to the period for exercise, the expiration date and
any conditions to exercise. The Committee may amend or modify the terms of any
outstanding option grant.
(d) Options may be exercised in any manner approved by the Committee.
If authorized by the Committee, a participant may deliver Common Stock,
including shares acquired upon exercise of the option, to pay the exercise
price or withholding taxes in connection with exercise of an option.
(e) Each person who becomes a nonemployee director of the Corporation
shall be granted an option to purchase 5,000 shares of Common Stock on the date
the person becomes a director and each person who is a nonemployee director on
January 2 of each year beginning in 1998 shall be granted an option to purchase
5,000 shares of Common Stock on that date or the next day the New York Stock
Exchange is open for trading. The exercise price shall be the closing price of
the Common Stock on the New York Stock Exchange on the grant date. All
non-employee director's options are exerciseable immediately following the
effective date of the grant, shall have a term of ten years, and shall expire
90 days after the grantee is no longer a director.
6. RESTRICTED AND UNRESTRICTED SHARE AWARDS
The Committee may from time to time award shares of Common Stock to
participants in such amounts and on such terms as it determines. Each award of
shares shall specify the restrictions, if any, on the shares. The Committee may
waive or modify any restriction.
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7. AMENDMENT AND TERMINATION OF THE PLAN
The Plan may be amended or terminated at any time by the Board of
Directors. The Board of Directors may condition any amendment of the Plan on
approval by the stockholders of the Corporation. No further grants may be made
under the Plan after December 31, 2006.
23
MBNA CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints James H. Berick, Charles M. Cawley and
Benjamin R. Civiletti, and each or any of them, as proxies, with full powers of
substitution, to represent and to vote all shares of the Common Stock of MBNA
Corporation which the undersigned is entitled to vote at the Annual Meeting of
Stockholders of the Corporation to be held on April 21, 1998 and at any
adjournment thereof. The undersigned acknowledges receipt of notice of the
meeting and the proxy statement.
1. ELECTION OF DIRECTORS
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
to vote for all
nominees listed
below
NOMINEES: Alfred Lerner, Charles M. Cawley, James H. Berick, Benjamin R.
Civiletti, Randolph D. Lerner, Stuart L. Markowitz, Michael Rosenthal
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
OUT THAT NOMINEE'S NAME.
2. AMENDMENT OF CHARTER TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON
STOCK
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. AMENDMENT OF 1997 LONG TERM INCENTIVE PLAN TO INCREASE THE NUMBER OR SHARES
AVAILABLE UNDER THE PLAN
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(continued on reverse side)
- --------------------------------------------------------------------------------
(continued from front)
4. TRANSACTION OF WHATEVER OTHER BUSINESS MAY PROPERLY BE BROUGHT BEFORE THE
MEETING.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2 AND 3.
Please sign exactly as name appears below. When shares are held jointly, any
co-owner may sign unless the Secretary of the Corporation has been given notice
to the contrary and has been furnished with a copy of the order or instrument
which so provides. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such. If a corporation, please sign in full
corporate name by President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
Dated: , 1998
----------------------
Signature:
------------------------
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Please mark, sign, date and return
this proxy card promptly in the
enclosed envelope.