-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UK6qizSm7KoQHRT8XnoI3ftoVsWXkM37FMOR+jFuIm4ZRLFkmo//IO4ISoLUD1Et Ri5A8o8xeVN6XG72APurHg== 0000905729-96-000033.txt : 19960308 0000905729-96-000033.hdr.sgml : 19960308 ACCESSION NUMBER: 0000905729-96-000033 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960308 FILED AS OF DATE: 19960307 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHEMICAL FINANCIAL CORP CENTRAL INDEX KEY: 0000019612 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 382022454 STATE OF INCORPORATION: MI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 000-08185 FILM NUMBER: 96532367 BUSINESS ADDRESS: STREET 1: 333 E MAIN ST CITY: MIDLAND STATE: MI ZIP: 48640 BUSINESS PHONE: 5176313310 DEF 14A 1 MARCH 8, 1996 [CHEMICAL FINANCIAL CORPORATION LOGO] 333 EAST MAIN STREET MIDLAND, MICHIGAN 48640 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 15, 1996 TO THE HOLDERS OF COMMON STOCK: The annual meeting of shareholders of CHEMICAL FINANCIAL CORPORATION will be held on MONDAY, APRIL 15, 1996 at 2:00 p.m. (local time) at the Midland Center for the Arts, 1801 W. St. Andrews Drive, Midland, Michigan, at which meeting the shareholders will elect a board of six directors and transact any other business that may properly be brought before the meeting. You are invited to attend the meeting and, even though you execute and return the enclosed proxy, you may vote your stock in person if you are present at the meeting. The Board of Directors has fixed the close of business on February 16, 1996 as the record date for the determination of holders of Common Stock entitled to notice of and to vote at the meeting and any adjournment of the meeting. The following Proxy Statement and enclosed form of proxy are being furnished to holders of Chemical Common Stock on and after March 8, 1996. By Order of the Board of Directors /s/ Aloysius J. Oliver Aloysius J. Oliver Secretary It is important that your shares be represented at the meeting. Even if you expect to attend the meeting, PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY. PROXY STATEMENT ANNUAL MEETING OF SHAREHOLDERS CHEMICAL FINANCIAL CORPORATION APRIL 15, 1996 The enclosed proxy is being solicited by the Board of Directors of Chemical Financial Corporation ("Chemical" or the "Corporation"). This proxy statement and the enclosed proxy are being furnished to holders of Chemical Common Stock, $10 par value ("Common Stock"), on and after March 8, 1996, for use at the annual meeting of Chemical shareholders to be held on April 15, 1996 and any adjournment of that meeting. The annual meeting will be held at the Midland Center for the Arts, 1801 W. St. Andrews Drive, Midland, Michigan at 2:00 p.m. local time. Solicitation of proxies will be made initially by mail. Directors, officers and employees of Chemical and its subsidiaries may also solicit proxies in person, by telephone or by electronic communication 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 Common Stock held by them. All expenses of solicitation of proxies will be paid by Chemical. Shareholders of record of the Corporation's Common Stock at the close of business on February 16, 1996 will be entitled to notice of and to vote at the annual meeting of shareholders on April 15, 1996 and any adjournment of that meeting. As of February 16, 1996, there were 9,212,005 shares of Common Stock issued and outstanding. Representation of the holders of a majority of the shares of Common Stock outstanding at the record date is necessary to constitute a quorum at the annual meeting. Abstentions and broker non-votes are counted for purposes of determining the presence or absence of a quorum for the transaction of business. Each share of Common Stock is entitled to one vote on each matter presented for shareholder action. The shares represented by the enclosed proxy will be voted at the annual meeting and any adjournment of that meeting if the proxy is properly signed and returned to Chemical prior to the date of the meeting. A proxy may be revoked at any time prior to its exercise by written notice delivered to the Secretary of the Corporation or by attending and voting at the annual meeting. The shares represented by each proxy will be voted in accordance with the specifications of the shareholder. If the shareholder does not specify a choice, the shares represented by the proxy will be voted "FOR" the election of all nominees listed in this proxy statement as directors and in accordance with the judgment of the persons named as proxies on any other matter that may come before the meeting. -1- The 1995 Annual Report of the Corporation, including financial statements, is enclosed with this proxy statement. A COPY OF THE CORPORATION'S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION ON FORM 10-K FOR THE YEAR 1995, INCLUDING FINANCIAL STATEMENTS, WILL BE PROVIDED, WITHOUT CHARGE, TO ANY SHAREHOLDER UPON WRITTEN REQUEST. REQUESTS SHOULD BE MADE IN WRITING ADDRESSED TO ALOYSIUS J. OLIVER, SECRETARY, CHEMICAL FINANCIAL CORPORATION, 333 EAST MAIN STREET, MIDLAND, MICHIGAN 48640. ELECTION OF DIRECTORS The Board of Directors has nominated individuals listed below for re-election as directors of the Corporation to serve until the next annual meeting of shareholders or until their successors are elected and qualified. 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 Chemical 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 in this proxy statement. A plurality of the shares represented and voted at the meeting is required to elect directors. For the purpose of counting votes on the election of directors, abstentions, broker non-votes and other shares not voted will not be counted as shares voted, and the number of votes of which a plurality is required will be reduced by the number of shares not voted. Each nominee is currently a member of the Board of Directors. YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF ALL NOMINEES AS DIRECTORS Biographical information concerning each nominee for election to the Board of Directors is presented below. Unless otherwise indicated, each nominee has had the same principal occupation for more than five years. In this proxy statement, "Chemical Bank" means Chemical Bank and Trust Company in Midland, Michigan, the Corporation's principal banking subsidiary. NOMINEES FOR ELECTION TO SERVE UNTIL THE ANNUAL MEETING OF SHAREHOLDERS IN 1997 JAMES A. CURRIE, age 37, has been a director of the Corporation since August 1993 and is a member of the Audit and Compensation Committees. Mr. Currie is a certified teacher and, over the past five years, has served in this capacity in a number of school districts in the Lansing, Michigan -2- area, while also pursuing a Masters Degree in Special Education at Michigan State University, which he obtained in December 1994. Mr. Currie is currently teaching in the Holt, Michigan School District. Mr. Currie has served as a director and member of various committees of Chemical Bank since February 1992. MICHAEL L. DOW, age 61, has served as a director of the Corporation since April 1985 and is Chairman of the Audit and a member of the Pension and Compensation Committees. Mr. Dow is Chairman of the Board and owner of General Aviation, Inc. in Lansing, Michigan, a provider of aviation related services. Mr. Dow was elected to the Board of Directors of The Dow Chemical Company in January 1988. Mr. Dow has served as a director and member of various committees of Chemical Bank since February 1982. ALAN W. OTT, age 64, has served as Chairman of the Board since April 1994, Chief Executive Officer, President and a director of the Corporation since October 1973, and as Treasurer from May 1987 through April 1994. Mr. Ott is a member of the Pension Committee. Mr. Ott is also Chairman of the Board of Directors and Chief Executive Officer of Chemical Bank. Mr. Ott joined Chemical Bank as Cashier in 1962 and became a Vice President in 1964, President and Chief Executive Officer in 1972 and Chairman of the Board and Chief Executive Officer in 1986. He has served as a director of Chemical Bank since 1969. During the last five years, Mr. Ott has served as a director and member of various committees of Chemical Bank (also Chief Executive Officer and Chairman), Chemical Bank Michigan (also Chairman), Chemical Bank Huron (also Chairman), Chemical Bank West (also Chairman), Chemical Bank Montcalm (also Chairman), Chemical Bank North (also Chairman), Chemical Bank South, Chemical Bank Bay Area (also Chairman), Chemical Bank Central (also Chairman), Chemical Bank Key State and CFC Data Corp (also Treasurer), all of which are wholly-owned subsidiaries of the Corporation. Mr. Ott is a director of the Michigan Molecular Institute, a director of Midland County Economic Growth and Development Corporation and a trustee of Albion College. FRANK P. POPOFF, age 60, has served as a director of the Corporation since February 1989 and is a member of the Audit and Chairman of the Pension and Compensation Committees. Mr. Popoff is Chairman of the Board of Directors of The Dow Chemical Company in Midland, Michigan, a diversified manufacturer of chemicals and performance products, plastics, hydrocarbons and energy, and consumer specialty products. Mr. Popoff joined The Dow Chemical Company in 1959 and has served in senior positions in sales, marketing, operations and business management, including responsibilities for international areas of the company. Mr. Popoff was named President of Dow Europe in 1981, became a Vice President in 1984, Executive Vice President in 1985, President and Chief Executive Officer in 1987 and Chairman of the Board of Directors in December 1992. He was elected to the Board of Directors of The Dow Chemical Company in 1982. Mr. Popoff is also a director of American Express Company and US WEST, Inc. Mr. Popoff has served as a director and member of various committees of Chemical Bank since July 1985. -3- LAWRENCE A. REED, age 56, has served as a director of the Corporation since December 1986 and is a member of the Audit and Compensation Committees. Mr. Reed retired in 1992 after serving as President of Dow Corning Corporation, a diversified company specializing in the development, manufacture and marketing of silicones and related silicon based products. Mr. Reed joined Dow Corning in 1964 and served in various senior management positions including Vice President and Chief Financial Officer and President and Chief Executive Officer. Mr. Reed is also a director of CPI Engineering Services, Inc. Mr. Reed has served as a director and member of various committees of Chemical Bank since December 1981. WILLIAM S. STAVROPOULOS, age 56, has been a director of the Corporation since August 1993 and is a member of the Audit, Pension and Compensation Committees. Mr. Stavropoulos is President and Chief Executive Officer of The Dow Chemical Company, a diversified manufacturer of chemicals and performance products, plastics, hydrocarbons and energy, and consumer specialty products. Mr. Stavropoulos joined The Dow Chemical Company in 1967 and has served in various senior management positions. Mr. Stavropoulos was named President of Dow Latin America in 1984, Group Vice President in 1987, Vice President in 1990, President of Dow U.S.A. in 1990, Senior Vice President in 1991, President and Chief Operating Officer in 1993 and Chief Executive Officer in November 1995. He was elected to the Board of Directors of The Dow Chemical Company in 1990. Mr. Stavropoulos is also a director of Dow Corning Corporation. Mr. Stavropoulos has served as a director and member of various committees of Chemical Bank since April 1992. VOTING SECURITIES Listed below is the only shareholder of the Corporation known by management to have been the beneficial owner of five percent or more of the outstanding shares of Common Stock as of February 7, 1996:
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP NAME AND ADDRESS SOLE VOTING SHARED VOTING TOTAL OF BENEFICIAL AND DISPOSITIVE OR DISPOSITIVE BENEFICIAL PERCENT OF OWNER OF COMMON STOCK POWER POWER OWNERSHIP CLASS Chemical Bank and Trust Company Trust Department 333 E. Main Street Midland, MI 48640 653,156 267,425 920,581 9.68%
The following table sets forth information regarding beneficial ownership of Common Stock by each director and nominee for director, each named executive officer and all directors and executive officers as a group as of February 1, 1996: -4-
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP SOLE VOTING SHARED VOTING TOTAL NAME OF BENEFICIAL AND DISPOSITIVE OR DISPOSITIVE BENEFICIAL PERCENT OF OWNER OF COMMON STOCK POWER POWER OWNERSHIP CLASS J. A. Currie 68,587 400 68,987 M. L. Dow 54,988 48,610 103,598 1.09% B. M. Groom 14,982 8,995 23,977 A. J. Oliver 65,417 -- 65,417 A. W. Ott 69,023 265,595 334,618 3.52% F. P. Popoff 3,628 -- 3,628 L. A. Reed 2,235 9,936 12,171 W. S. Stavropoulos 2,783 208,754 211,537 2.22% All directors and executive officers as a group 298,393 342,945 641,001 6.74% __________________________ Less than 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, which under applicable regulations, are considered to be otherwise beneficially owned by that person. Under these regulations, 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 various fiduciary capacities, through the trust department of Chemical Bank, are not included unless otherwise indicated. The Corporation and the directors and officers of the Corporation and of Chemical Bank disclaim beneficial ownership of shares held by the trust department in fiduciary capacities. 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. Shares held in fiduciary capacities by the trust department of Chemical Bank are not included unless otherwise indicated. The directors and officers of the Corporation may, by reason of their positions, be in a position to influence the voting or disposition of shares held in trust by -5- Chemical Bank to some degree, but disclaim beneficial ownership of these shares. These numbers consist of certain shares held in various fiduciary capacities through the trust department of Chemical Bank. Although Chemical Bank has voting or dispositive powers with respect to these shares, it is the trust department's policy to transfer voting rights by proxy to the beneficiaries whenever possible. Chemical Bank also holds in various fiduciary capacities a total of 761,862 shares of Common Stock over which it does not have voting or dispositive power and which are not included in these numbers. Although Mr. Ott and Mr. Groom are members of Chemical Bank's Trust Investment Committee, they disclaim beneficial ownership of shares held by the trust department in a fiduciary capacity. The Corporation and the directors and officers of the Corporation and Chemical Bank also disclaim beneficial ownership of shares held by the trust department in a fiduciary capacity. These numbers include 43,752 shares owned by two trusts as of February 1, 1996, of which Mr. Dow is a trustee. Mr. Dow disclaims beneficial ownership of these shares. These numbers include shares that executive officers of the Corporation have the right to acquire through the exercise of stock options within 60 days from February 1, 1996 as follows: Mr. Groom - 10,648 shares; Mr. Oliver - 12,306 shares; and Mr. Ott - 10,953 shares. These numbers include 208,754 shares which the Rollin M. Gerstacker Foundation owns or is a beneficiary of, and 36,841 shares owned by the Elsa U. Pardee Foundation, as of February 1, 1996. Mr. Ott is a trustee and treasurer of both of these foundations. Mr. Ott has no beneficial interest in the shares owned by the foundations and disclaims beneficial ownership of these shares. These numbers include 208,754 shares which the Rollin M. Gerstacker Foundation owns or is a beneficiary of, as of February 1, 1996. Mr. Stavropoulos is a trustee of this foundation. Mr. Stavropoulos has no beneficial interest in the shares owned by the foundation and disclaims beneficial ownership of these shares. These numbers include 50,254 shares that the executive officers of the Corporation have the right to acquire presently or within 60 days from February 1, 1996, through the exercise of stock options granted by the Corporation.
-6- COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS The Corporation has a standing Audit, Pension and Compensation Committee of the Board of Directors. The Corporation does not have a nominating committee. The Audit Committee, composed of Mr. Dow, Chairman, and Messrs. Currie, Popoff, Reed and Stavropoulos, met two times during 1995. This committee recommends a firm of independent public accountants to be appointed by the Board; consults with the independent public accountants and the internal auditors with regard to the adequacy of internal controls and the quality of ongoing operations; reviews with the independent public accountants significant accounting matters and policies, the proposed plan of audit and the results of their audit; and submits a formal annual report to the Board of Directors covering the adequacy, effectiveness and efficiency of the internal systems of control and the quality of ongoing operations. The Pension Committee, composed of Mr. Popoff, Chairman, and Messrs. Dow, Ott and Stavropoulos, met once during 1995. This committee oversees the administration of the Corporation's employees' pension plan. The Compensation Committee, composed of Mr. Popoff, Chairman, and Messrs. Currie, Dow, Reed and Stavropoulos, met once during 1995. This committee reviews salaries, bonuses and other compensation of all officers of the Corporation, administers the Corporation's stock option plans and makes recommendations to the Board regarding the awards of stock options under these plans. The Board of Directors meets regularly each month for approximately two hours. There were a total of twelve regular meetings in 1995. There were no special meetings of the Board of Directors in 1995. All directors attended 75% or more of the aggregate of board and applicable committee meetings of which they were members during 1995. COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS The following table provides information concerning the compensation earned during each of the three years in the period ended December 31, 1995, by each of the Corporation's executive officers whose total annual salary and bonus for 1995 exceeded $100,000: -7- SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION ANNUAL COMPENSATION AWARDS PAYOUTS NUMBER OF NAME AND OTHER RESTRICTED SHARES PRINCIPAL ANNUAL STOCK UNDERLYING LTIP ALL OTHER POSITION YEAR SALARY BONUS COMPENSATION AWARDS OPTIONS PAYOUTS COMPENSATION Alan W. Ott 1995 $ 275,000 $ 70,150 $ 60 Chairman of the Board, 1994 260,000 70,150 60 Chief Executive 1993 250,000 65,150 15,750 60 Officer and President of the Corporation and Chairman of the Board and Chief Executive Officer of Chemical Bank Bruce M. Groom 1995 $ 90,300 $ 19,150 $ 815 Senior Vice President 1994 86,300 19,150 763 and Senior Trust Officer 1993 83,000 16,150 3,150 838 of Chemical Bank Aloysius J. Oliver 1995 $ 87,700 $ 20,150 $ 60 Executive Vice President 1994 84,200 20,150 1,500 60 and Secretary of the 1993 81,000 18,150 3,150 60 Corporation Dollar value of term life insurance premiums paid by the Corporation.
The following table provides information concerning options exercised during 1995 and unexercised options held as of December 31, 1995, by the listed individuals. AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SHARES VALUE OF UNEXERCISED SHARES ACQUIRED UNDERLYING UNEXERCISED IN-THE-MONEY ON OPTIONS AT FISCAL YEAR-END OPTIONS AT FISCAL YEAR-END NAME EXERCISE VALUE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE Alan W. Ott 15,013 $192,555 9,703 3,395 $241,126 $30,750 Bruce M. Groom 3,000 41,022 11,164 3,150 271,988 28,525 Aloysius J. Oliver 2,500 34,809 12,306 224,381 -8- The number of shares shown is the gross number of shares covered by options exercised. Officers may deliver other shares owned in payment of the option price and shares may be withheld for tax withholding purposes, resulting in a smaller net increase in their share holdings. The values reported are based on a fair market value of $38.50 per share, the closing bid price of Common Stock on the NASDAQ Stock Market on December 31, 1995.
STOCK OPTION PLANS. The Chemical Financial Corporation 1983 Stock Option Plan ("1983 Plan") and the 1987 Award and Stock Option Plan ("1987 Plan") provide for awards of nonqualified stock options, incentive stock options, stock appreciation rights, or a combination thereof. In addition, the 1987 Plan provides for awards of deferred stock. By its terms, the 1983 Plan expired on May 1, 1988. No further options have been granted under the 1983 Plan since that date. At the April 20, 1992 annual meeting of shareholders, the shareholders voted to increase the authorized shares issuable under the 1987 Plan by 100,000 shares. As of December 31, 1995, there were options outstanding to purchase 316,678 shares of the Corporation's Common Stock under the 1983 and 1987 Plans, and 97,472 shares available for future awards under the 1987 Plan. Key employees of the Corporation and its subsidiaries, as the Compensation Committee of the Board of Directors may select from time to time, are eligible to receive awards under the 1987 Plan. No employee of the Corporation may receive any awards under the 1987 Plan while the employee is a member of the Compensation Committee. In addition, no stock options, stock appreciation rights or deferred stock may be granted to any employee who owns, directly or indirectly, five percent or more of the Corporation's outstanding Common Stock. The plans provide that the option price of options awarded under the plans shall not be less than the fair market value of Common Stock on the date of grant, and that options under the 1983 Plan are exercisable after one year from the date of grant and expire ten years after the date of grant. Options and deferred stock granted under the 1987 Plan are first exercisable from one to five years from the date of grant, at the discretion of the Compensation Committee, and expire not later than ten years and one day after the date of grant. Options granted may be designated nonqualified stock options or incentive stock options. Options granted may include stock appreciation rights that entitle the recipient to receive a number of shares of Common Stock without payment to the Corporation, calculated by dividing the -9- difference between the option price and the market price of the total number of shares awarded under the option at the expiration date of the option, by the market price of a single share. The plans provide that payment for exercise of any option granted under the plans may be made in the form of shares of stock of the Corporation having a fair market value equal to the exercise price of the option at the time of exercise, or in cash. The plans also provide for the payment of the required tax withholding generated upon the exercise of a nonqualified stock option in the form of shares of stock of the Corporation having a fair market value equal to the amount of the required tax withholding at the time of exercise, upon prior approval and at the discretion of the Compensation Committee. PENSION PLAN. The Corporation and its subsidiaries make annual contributions to the Chemical Financial Corporation Employees' Pension Plan ("Pension Plan"), which is a defined benefit plan qualified under the Internal Revenue Code of 1986, as amended (the "Code"). The Corporation has the authority to terminate the Pension Plan at any time. Sections 401(a)(17) and 415 of the Code limit the annual benefits that may be paid from a tax-qualified retirement plan. As permitted by the Employee Retirement Income Security Act of 1974, the Corporation has established a supplemental pension plan that provides for the payment to certain executive officers of the Corporation, as determined by the Compensation Committee, benefits to which they would have been entitled, calculated under the provisions of the Pension Plan, as if the limits imposed by the Code did not apply. These benefits have been awarded to Mr. Ott. The following table shows the estimated combined annual pension benefits that would be payable under the Pension Plan and supplemental pension plan to salaried employees, including officers, at the various salary levels with the number of years of credited service under the Pension Plan listed in the table upon normal retirement in 1996. The "Average Remuneration" is the average annual base salary, excluding any bonus, for the five highest consecutive years during the ten years preceding the date of retirement. -10- PENSION PLAN TABLE
YEARS OF SERVICE AVERAGE REMUNERATION FOR 30 OR PENSION PLAN PURPOSES 10 YEARS 15 YEARS 20 YEARS 25 YEARS MORE YEARS $ 80,000 $ 14,152 $ 21,228 $ 28,304 $ 35,380 $ 42,456 100,000 17,952 26,928 35,904 44,880 53,856 125,000 22,702 34,053 45,404 56,755 68,106 150,000 27,452 41,178 54,904 68,630 82,356 175,000 32,202 48,303 64,404 80,505 96,606 200,000 36,952 55,428 73,904 92,380 110,856 225,000 41,702 62,553 83,404 104,255 125,106 250,000 46,452 69,678 92,904 116,130 139,356 275,000 51,202 76,803 102,404 128,005 153,606 300,000 55,952 83,928 111,904 139,880 167,856 325,000 60,702 91,053 121,404 151,755 182,106 350,000 65,452 98,178 130,904 163,630 196,356
The Pension Plan covers the annual base salary of all salaried employees as of January 1 of each year. Upon retirement at age 65, a retiree will receive an annual benefit of 1.52% of his or her average annual base salary for the five highest consecutive years during the ten years preceding his or her date of retirement, plus .38% of average annual pay in excess of covered compensation, multiplied by the retiree's number of years of credited service (subject to a maximum of 30 years). Benefits at retirement ages under 65 are also determined based upon length of service and pay, as adjusted in accordance with the Pension Plan. The Pension Plan provides for vesting of benefits after attaining five years of service, for disability and death benefits and for optional joint and survivor benefits for the employee and his or her spouse. The amount shown under the caption "Salary," excluding the amount shown under the caption "Bonus," in the Summary Compensation Table in this proxy statement is representative of the most recent calendar year compensation used in calculating average remuneration under the Pension Plan. As of December 31, 1995, Mr. Ott and Mr. Oliver each had 30 years of credited service (the maximum) under the Pension Plan and Mr. Groom had 10.7 years of credited service under the Pension Plan. The retirement benefits shown in the preceding Pension Plan Table are based on the assumption that an employee retires in 1996 at normal retirement age and will elect a benefit for his or her life with 120 monthly payments guaranteed. If the employee were to elect a benefit payable to a surviving spouse of 50% or more of the employees' retirement benefit or for the employees' life only, the retirement -11- benefit for the employee would be adjusted. The benefits listed in the Pension Plan Table are not subject to any deduction for Social Security or any other offset amount. DIRECTOR FEES. During 1995, the Corporation paid director fees of $600 per meeting attended and committee fees of $300 per meeting attended to all of its directors who were not regular salaried employees of the Corporation. Regular salaried employees of the Corporation or its subsidiaries do not receive fees for serving on, or attending meetings of, the Board of Directors of the Corporation or its subsidiaries or meetings of any of their committees. The Board of Directors has adopted the Chemical Financial Corporation Plan for Deferral of Directors' Fees. This plan is available to all directors of the Corporation and its subsidiaries who receive fees. Under the plan, directors must elect before December 31 of each year to defer either 50% or 100% of fees to be earned in the following year. These fees will be paid out in any number of calendar years from one to ten commencing during or following the year the director ceases to be a director or the year after the director attains age 70. During the deferral period, the plan provides that the Corporation shall accrue to the directors' credit interest on the accumulated amount of deferred fees at the rate paid by Chemical Bank on its short term investors account. COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION The Compensation Committee of the Corporation's Board of Directors reviews and determines the Corporation's compensation programs, including individual salaries of executive and senior officers. The Compensation Committee is composed of Messrs. Currie, Dow, Popoff, Reed and Stavropoulos. All members are non-employee directors of the Corporation. Under the supervision of the Compensation Committee, the Corporation has developed and implemented compensation plans which seek to align the financial interests of the Corporation's senior officers with those of its shareholders. The Corporation's executive compensation program is comprised of three primary components: base salary, annual cash incentive bonus opportunities and longer-term incentive opportunities in the form of stock option awards. To attract and retain officers with exceptional abilities and talent, annual base salaries are set to provide competitive levels of compensation recognizing individual performance and achievements. Annual cash incentive bonuses are used to reward senior officers for individual performance, accomplishments and achievement of annual business targets. A significant portion of potential career -12- compensation is linked to corporate performance through stock option awards. The Compensation Committee determines the annual base salary, incentive bonus and stock option awards for the Chief Executive Officer. Annual base salary, incentive bonus and stock option awards with respect to the Corporation's other senior officers are recommended by the Chief Executive Officer to, and ultimately determined by, the Compensation Committee. All other senior executives of the Corporation are eligible to participate in the same executive compensation plans that are available to the Chief Executive Officer. In evaluating the performance of and determining the annual base salary, incentive bonus and stock option awards for the Chief Executive Officer and other senior management, the Compensation Committee takes into account management's contribution to the long-term success of the Corporation. The Compensation Committee considers return to shareholders to be primary in measuring financial performance. The philosophy of the Corporation is to maximize long-term return to shareholders consistent with its commitments to maintain the safety and soundness of the institution and provide the highest possible level of service at a fair price to the customers and communities that it serves. The Compensation Committee has taken these subjective and qualitative factors into account, along with other quantitative measures of corporate performance, in establishing the annual salary, incentive bonus and stock option awards for the Chief Executive Officer and the Corporation's other senior management, giving at least equal weight to the subjective and qualitative factors and no particular weight to any given factor. The determination of the size of stock option awards is based upon a subjective analysis of each recipient's position within the organization, his or her individual performance and his or her growth potential within the organization. The number of stock option awards previously granted to a recipient is not a factor considered in the determination of the grant of a new stock option award. The Compensation Committee primarily considers five quantitative measures of corporate performance in establishing the compensation to be paid to the Chief Executive Officer and the Corporation's other senior management. These measures of performance are: (i) after-tax earnings per share and earnings per share growth; (ii) the level of net loan losses; (iii) capital position; (iv) targeted as compared to actual annual operating performance; and (v) the Corporation's annual performance and financial condition as compared to that of its Federal Reserve Bank peer group. These measures were considered by the Compensation Committee in determining each component of executive compensation, although no particular weight was given to any specific factor. -13- Mr. Ott's base salary for 1995 was established at the beginning of the year to provide a competitive level of compensation and took into account corporate performance through December 31, 1994. The Corporation's performance during 1994 exceeded both its targeted goals and that of its Federal Reserve Bank peer group. Mr. Ott's 1995 incentive bonus was established at the end of the year based upon performance during 1995 of the Corporation and Chemical Bank. The Corporation exceeded its targeted performance for 1995, achieving record operating earnings. In 1995, the Corporation's earnings per share increased 7.6% over 1994 earnings per share. Return on assets increased to 1.24% in 1995, compared to 1.14% in 1994. The Corporation recorded record earnings in 1995, even though the Corporation added $583,000 to the reserve for future possible loan losses, bringing the balance in the reserve to $15.7 million at December 31, 1995, or 2.12% of total loans and 604% of nonperforming loans. There were no stock options granted during 1995 to Messrs. Ott, Groom or Oliver. The Compensation Committee did not grant any stock options to executive or senior officers of the Corporation during the past fiscal year. In 1993, Congress amended the Code to add Section 162 (m). This section 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 has examined the Corporation's executive compensation policies in light of Section 162 (m) and the regulations that have been adopted to implement that section. It is not expected that any portion of the Corporation's deduction for employee remuneration will be disallowed in 1996 or in future years by reason of actions expected to be taken in 1996. During 1995, all recommendations of the Compensation Committee were unanimously approved by the Board of Directors without modification. Submitted by the Compensation Committee of the Board of Directors: Frank P. Popoff, Chairman James A. Currie Michael L. Dow Lawrence A. Reed William S. Stavropoulos FIVE-YEAR SHAREHOLDER RETURN COMPARISON The following line graph compares the Corporation's cumulative total shareholder return on its Common Stock over the last five years, assuming the reinvestment of dividends, to the Standard and Poor's -14- ("S&P") 500 Stock Index and the KBW 50 Index. Both of these indices are also based upon total return (including reinvestment of dividends) and are market-capitalization-weighted indices. The S&P 500 Stock Index is a broad equity market index published by Standard and Poor's. The KBW 50 Index is 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. The line graph assumes $100 was invested on December 31, 1990. [GRAPH] The dollar values for total shareholder return plotted in the graph above are shown in the table below:
CHEMICAL S&P FINANCIAL KBW 50 500 DECEMBER 31 CORPORATION INDEX INDEX 1990 $100.0 $100.0 $100.0 1991 115.0 158.3 130.5 1992 184.9 201.7 140.4 1993 219.5 212.8 154.6 1994 206.3 201.9 156.6 1995 321.0 323.5 215.5
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Directors, officers, principal shareholders and their associates were customers of, and had transactions (including loans and loan commitments) with, the Corporation's banking subsidiaries in the ordinary course of business during 1995. All such loans and commitments 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 a normal risk of collectibility or present other unfavorable features. Similar transactions may be expected to take place in the ordinary course of business in the future. None of these loan relationships presently in effect are in default as of the date of this proxy statement. -15- SECTION 16(A) REPORTING DELINQUENCIES Section 16(a) of the Securities Exchange Act of 1934 requires directors, officers and persons beneficially owning more than 10% of the Corporation's Common Stock to file reports of ownership and changes in ownership of shares of Common Stock with the Securities and Exchange Commission. Directors, officers and greater than 10% beneficial owners are required by the Securities and Exchange Commission regulations to furnish the Corporation with copies of all Section 16(a) reports they file. Based upon its review of copies of Section 16(a) reports provided to it, or written representations from certain reporting persons that no Form 5 reports were required, the Corporation believes that, from January 1 through December 31, 1995, all applicable filing requirements were satisfied, except for one Form 5. Mr. Currie timely filed a Form 5 report, however inadvertently omitted to report one transaction of a gift of the Corporation's shares to his minor son. Upon discovery, an amended Form 5 was immediately filed. DIVIDEND REINVESTMENT PROGRAM SHARES If a shareholder is enrolled in the Corporation's Dividend Reinvestment Program, the enclosed proxy card covers: (1) all shares of Common Stock owned directly by the shareholder at the record date, and (2) all shares of Common Stock held for the shareholder in the Dividend Reinvestment Program at that time. KeyCorp Shareholder Services, Inc., as the shareholder's agent under the Dividend Reinvestment Program, will vote any Common Stock held by it under the Program in accordance with the shareholder's written direction as indicated on the proxy card. All such shares will be voted the way the shareholder directs. If no specific instruction is given on a returned proxy, KeyCorp Shareholder Services, Inc. will vote as recommended by the Board of Directors. PROPOSALS FOR 1997 ANNUAL MEETING Proposals of shareholders intended to be presented at the 1997 annual meeting of shareholders of the Corporation must be made in accordance with Securities and Exchange Commission Rule 14a-8 and must be received by the Corporation by November 8, 1996, to be considered for inclusion in the proxy statement and form of proxy relating to that meeting. INDEPENDENT PUBLIC ACCOUNTANTS Ernst & Young LLP served as the independent public accountants for the Corporation for the year 1995 and, pursuant to the recommendation of the Audit Committee, the Board of Directors reappointed them for the year 1996. In accordance with prior practice, -16- representatives of Ernst & Young LLP are expected to be present at the annual meeting of shareholders, will have the opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions. OTHER MATTERS Management does not intend to present to the meeting any business other than the election of directors. If any matter not known to management at the time this proxy statement was being prepared should be presented for action at the meeting, the enclosed proxy will be voted in accordance with the judgment of the persons named as proxies with respect to that matter. By Order of the Board of Directors /s/ Aloysius J. Oliver Aloysius J. Oliver Secretary March 8, 1996 -17- PROXY NO. SHARES IN YOUR NAME REINVESTMENT SHARES [CHEMICAL FINANCIAL The undersigned hereby appoints Michael L. Dow, CORPORATION LOGO] Alan W. Ott and Frank P. Popoff, jointly and severally, proxies, with full power of substitution to vote all the shares of PROXY FOR capital stock of CHEMICAL FINANCIAL CORPORATION ANNUAL which the undersigned may be entitled to vote, MEETING including dividend reinvestment plan shares if APRIL 15, 1996 any, held on record by the undersigned on February 16, 1996, at the Annual Meeting of Shareholders of Chemical Financial Corporation to be held at the Midland Center for the Arts, 1801 W. St. Andrews, Midland, MI, on Monday, April 15, 1995, and at any adjournments thereof, such proxies being directed to vote as specified on the reverse side of this card or, if no specification is made, FOR the election of all nominees listed for directors and to vote in accordance with their discretion on such other matters that may properly come before the meeting. Please date this Proxy and sign exactly as your name or names appear on the card. If you are acting in a representative capacity as attorney, executor, administrator, trustee, or guardian, please sign name and title. Dated: _____________________, 1996 CONTINUED ON __________________________________ REVERSE SIDE Signature __________________________________ Signature [CHEMICAL FINANCIAL CORPORATION LOGO] THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE CORPORATION FOR THE ANNUAL MEETING - APRIL 15, 1996 To vote in accordance with the Board of Directors' recommendations, just sign the reverse side; no boxes need be checked. To withhold authority to vote or to otherwise vote differently, please indicate your specifications below. ______________________________________________________________________ [ ] FOR all nominees listed below [ ] AUTHORITY WITHHELD JAMES A. CURRIE ALAN W. OTT LAWRENCE A. REED MICHAEL L. DOW FRANK P. POPOFF WILLIAM S. STAVROPOULOS (INSTRUCTION: To withhold authority to vote for any individual nominee strike a line through the nominee's name in the list above) ______________________________________________________________________ Where a vote is not specified, the proxies will vote the shares represented by this proxy FOR the election of all nominees listed for directors, and will vote in accordance with their discretion on such other matters that may properly come before the meeting. ______________________________________________________________________ [ ] Please place a check here if you plan to attend the annual meeting. -----END PRIVACY-ENHANCED MESSAGE-----