8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  December 21, 2006

MARSHALL & ILSLEY CORPORATION

(Exact name of registrant as specified in its charter)

Wisconsin	1-15403	39-0968604
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

770 North Water Street Milwaukee, Wisconsin	53202
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code:  (414) 765-7801

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02.

Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.

On December 21, 2006, Marshall & Ilsley Corporation (the “Company”) announced that Dennis J. Kuester, 64, Chairman of the Board and Chief Executive Officer of the Company, will retire as Chief Executive Officer at the Company’s Annual Meeting of Shareholders in April 2007 and will be succeeded by Mark F. Furlong, 49, the Company’s President.  Mr. Kuester will continue to serve as Chairman of the Board after his retirement as Chief Executive Officer.

Mr. Furlong joined the Company in 2001 as its Chief Financial Officer.  He became President of M&I Marshall & Ilsley Bank in 2004, and President of the Company in 2005.  Prior to joining the Company, Mr. Furlong served as Executive Vice President and Chief Financial Officer for Old Kent Financial Corp., as First Vice President, Corporate Development/Commercial Banking, for H.F. Ahmanson & Co., and as an audit partner at Deloitte & Touche.

Transition and Consulting Agreement

On December 21, 2006, the Company entered into a Transition and Consulting Agreement (the “Transition and Consulting Agreement”) with Mr. Kuester relating to Mr. Kuester’s planned retirement as Chief Executive Officer on the date of the Company’s 2007 Annual Meeting of Shareholders.

Under the Transition and Consulting Agreement, Mr. Kuester will receive salary at his current rate and continue participation in other compensation and benefit programs until his retirement as an employee on January 1, 2008.  Upon his retirement, Mr. Kuester will also be fully vested in any outstanding restricted shares or restricted share units, which are not otherwise vested in accordance with their normal terms on such date.

The Transition and Consulting Agreement further provides that, beginning on January 2, 2008, Mr. Kuester will consult with the executive officers and the Board of Directors of the Company and its affiliates with respect to such matters as may be reasonably requested by the Company.  In addition to his duties as Chairman of the Board, Mr. Kuester will maintain continued involvement with area businesses on the Company’s behalf, including business development and retention, and participation in selected charitable organizations.  The Transition and Consulting Agreement will remain in effect for as long as Mr. Kuester continues to serve on the Board of Directors of the Company, unless it is sooner terminated by mutual written consent of the parties or by Mr. Kuester’s death or disability such that he is unable to perform his duties.

After January 1, 2008, Mr. Kuester will receive $20,833.33 per month for each full or partial month during which he serves as non-executive Chairman of the Board.  Also during this period, Mr. Kuester will receive reimbursement for all reasonable travel and other expenses incurred in the performance of his duties under the Transition and Consulting Agreement; continued access to the Company’s facilities and services, with secretarial services and office space sufficient for Mr. Kuester to perform his duties; a company car; access to Company aircraft, at Company expense, limited to direct business use or an annual maximum of 40 hours personal use, after which Mr. Kuester must reimburse the Company for the excess amount; club dues; and financial planning services.

As compensation for the consulting services to be provided by Mr. Kuester while he remains on the Company’s Board but is no longer Chairman of the Board, Mr. Kuester will receive the same benefits as described above, except that his personal use of Company aircraft will be subject to an annual maximum of $50,000 in value, and the maximum annual benefit provided by the Company on behalf of Mr. Kuester for his personal expenses will be limited to $100,000.  Mr. Kuester will be required to reimburse the Company for amounts in excess of these limits.

The foregoing description of the Transition and Consulting Agreement does not purport to be complete and is qualified in its entirety by the full text of the Transition and Consulting Agreement, a copy of which is attached hereto as Exhibit 10.1 and incorporated herein by reference.

2007 Base Salary Increase

On December 21, 2006, the Board of Directors of the Company, upon the recommendation of the Compensation and Human Resources Committee of the Board (the “Compensation Committee”), increased Mr. Furlong’s base salary from $600,000 to $750,000 per year, effective January 1, 2007.

Awards Under the LTIP and the Metavante Corporation Long-Term Incentive Plan for 2006

Also on December 21, 2006, the Board, upon the recommendation of the Compensation Committee, approved the following awards under the LTIP and the Metavante Corporation Long-Term Incentive Plan:

	Awards Granted December 2006 for the Performance Period Beginning January 2007
Name	Number of Shares, Units or Other Rights(1)	Targeted Cash Payment(2)	Performance or Other Period Until Maturation or Payout
Dennis J. Kuester	18,000	—	3 Years
Mark F. Furlong	15,000	—	3 Years
Frank F. Martire	—	$300,000	3 Years
Gregory A. Smith	5,000	—	3 Years
Thomas J. O’Neill	5,000	—	3 Years

(1)

Units awarded represent share equivalents of the Company’s common stock.  The performance period is the three years commencing on January 1, 2007 and ending on December 31, 2009 for awards granted in December 2006.  Additional units will be credited to each participant’s account when dividends are paid on shares of the Company’s common stock.  Vesting of units occurs at the end of the three-year period except in the case of the death or disability of the participant, termination of a participant’s employment due to retirement, or the occurrence of a “triggering event” (which relates to a change in control of the Company).  Upon the occurrence of a “triggering event,” units vest notwithstanding continued employment by the acquiring company.

(2)

Cash-based awards are made under the Metavante Corporation Long-Term Incentive Plan.  The performance period is the three years commencing on January 1, 2007 and ending on December 31, 2009.  The award vests at the end of the three-year period except in the case of death or disability, termination of employment due to retirement or the occurrence of a “triggering event” (which relates to a change of control of Metavante or the Company).  Upon the occurrence of a “triggering event,” the award vests notwithstanding continued employment by the Company.

Nonqualified Supplemental Retirement Benefit Plan

In addition, on December 21, 2006, the Compensation Committee approved an amendment to the nonqualified supplemental retirement benefit plan (the “Nonqualified Plan”) that provides Mr. Furlong with a supplemental retirement benefit.  The Nonqualified Plan, the terms of which were originally approved in December 2004, is intended to provide an annual retirement benefit such that the sum of the benefits from the Company’s contributions into its qualified and non-qualified defined contribution program, Social Security and the Nonqualified Plan equals 55% (amended from 45%) of the sum of Mr. Furlong’s highest average salary and annual short-term incentive compensation for any five of his last ten years of employment.  The benefits under the Nonqualified Plan will begin vesting at age 55, and will be fully vested at age 62.  If Mr. Furlong’s employment terminates prior to h is attaining age 55 other than by reason of death or disability or in connection with a change of control of the Company, he will receive no benefits under the Nonqualified Plan.  The total benefit under the Nonqualified Plan will be adjusted in the event of death or disability before age 62, and can be paid for life with a 120-month certain pay-out or on a joint and survivor basis at Mr. Furlong’s option.  The pay-out option elected may also affect the amount of the annual benefit.  In the event of a change of control before Mr. Furlong attains age 55, 44% of the benefits under the Nonqualified Plan will be vested, and an additional 4% of the benefits will vest for each subsequent year.  In the event of a change of control after Mr. Furlong attains age 55, the benefits under the Nonqualified Plan will be fully vested.

The foregoing description of the Nonqualified Plan does not purport to be complete and is qualified in its entirety by the full text of the letter agreement from the Company to Mr. Furlong containing the terms of the Nonqualified Plan, a copy of which is attached hereto as Exhibit 10.2 and incorporated herein by reference.

Item 8.01

Other Events.

On December 21, 2006, the Company issued a press release announcing Mr. Kuester’s planned retirement as Chief Executive Officer of the Company at the Company’s Annual Meeting of Shareholders in April 2007 and his succession by Mr. Furlong.  A copy of the press release is attached hereto as Exhibit 99.1 and incorporated herein by reference.

Item 9.01.

Financial Statements and Exhibits.

Exhibit No.	Description
10.1	Transition and Consulting Agreement between the Company and Dennis J. Kuester dated December 21, 2006
10.2	Letter Agreement from the Company to Mark F. Furlong dated December 21, 2006 Containing the Terms of the Supplemental Executive Retirement Benefit
99.1	Press Release dated December 21, 2006

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated:  December 22, 2006	MARSHALL & ILSLEY CORPORATION
	By: /s/ Randall J. Erickson
	Randall J. Erickson Senior Vice President, General Counsel and Secretary

EXHIBIT INDEX

Exhibit No.	Description
10.1	Transition and Consulting Agreement between the Company and Dennis J. Kuester dated December 21, 2006
10.2	Letter Agreement from the Company to Mark F. Furlong dated December 21, 2006 Containing the Terms of the Supplemental Executive Retirement Benefit
99.1	Press Release dated December 21, 2006

EX-10.1

Exhibit 10.1

TRANSITION AND CONSULTING AGREEMENT

THIS TRANSITION AND CONSULTING AGREEMENT is entered into and made effective this 21st day of December 2006 between MARSHALL & ILSLEY CORPORATION, a Wisconsin corporation, (“M&I”) and DENNIS J. KUESTER (“Executive”).

RECITALS

Executive has over 30 years of experience with M&I and/or its affiliates and is currently employed as Chief Executive Officer of M&I.  Executive possesses intimate knowledge of the business and affairs of M&I and its affiliates, and their respective policies, markets and financial and human resources.  

Executive will retire as Chief Executive Officer at the 2007 M&I Annual Meeting of Shareholders (“Annual Meeting Date”), and Executive will continue as an employee of M&I and Chairman of the Board until January 1, 2008, at which time he will retire as an employee of M&I.

M&I and Executive desire to set forth the terms of Executive’s employment for the period commencing on the Annual Meeting Date and ending on Executive’s retirement date of January 1, 2008.  Additionally, M&I desires to assure the continued services of Executive, in a consulting capacity, on its own behalf and/or on behalf of its affiliates following his retirement for the period provided in this Agreement.   Executive is willing to continue to provide certain services to M&I and/or its affiliates for such period, upon the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the parties agree as follows:

1.

Employment Transition Period.  For the period in which Executive will continue as an employee of M&I and Chairman of the Board following his retirement as Chief Executive Officer, Executive will receive salary at his current rate, and continue participation in other compensation and benefit programs, subject to approval by the Compensation and Human Resources Committee of the Board where required.  Upon his retirement as an employee on January 1, 2008, Executive will also be fully vested in any outstanding restricted shares or restricted share units, which are not otherwise vested in accordance with their normal terms on such date.

2.

Consulting.  Starting on January 2, 2008, Executive agrees to provide the services described in Section 4 hereof for the period stated in Section 3 hereof, subject to the other terms and conditions herein provided.

3.

Term.  The consulting term shall begin on January 2, 2008, and shall continue for as long as Executive continues to serve on the Board of Directors of M&I (the “Board”), unless this Agreement is sooner terminated by the mutual written consent of the parties hereto or by Executive’s death or disability such that he is unable to perform his duties hereunder (the “Term”).

4.

Duties.  During the Term, Executive shall devote his best efforts and such of his business time, attention, skill and efforts as are necessary to consult with the executive officers and Board of M&I and its affiliates with respect to such matters as may be reasonably requested by M&I at such times as are mutually convenient for Executive and M&I.  In addition to his duties as Chairman of M&I for the period in which he acts in that capacity, Executive shall also maintain continued involvement with area businesses on M&I’s behalf, including business development and retention, and participation in selected charitable organizations.

5.

Compensation During the Term and While Chairman of the Board.  As compensation for the services to be provided during the Term and while Executive is Chairman of the Board, Executive shall receive from M&I or its affiliates the benefits set forth below:

A.

Cash Compensation.  In lieu of any Board retainer fees, but in addition to the other Board compensation (board and committee meeting fees and equity awards) to which Executive is otherwise entitled as a non-employee member of the Board, M&I shall pay Executive $20,833.33 per month for each full or partial month during which he serves as Chairman of the Board.  Such amount will remain in effect for calendar year 2008 and thereafter will be subject to annual review by the Compensation and Human Resources Committee and the Board.  To the extent Executive serves on other subsidiary boards, Executive will receive compensation consistent with other non-employee directors.

B.

Reimbursement of Expenses.  M&I shall pay or reimburse Executive for all reasonable travel and other expenses incurred by Executive in the performance of his duties hereunder upon compliance with M&I’s expense reimbursement policy that applies to senior executives of M&I.  Upon Executive’s request, M&I shall provide the Executive continued access to M&I’s facilities and services, and at its expense, furnish Executive with secretarial services and office space sufficient for Executive to perform his duties hereunder, at a location mutually convenient for M&I and the Executive.  

C.

Company Car.  M&I shall provide Executive, at M&I’s expense, with a vehicle that is similar in quality to those provided by M&I to Executive while Executive was employed as Chief Executive Officer of M&I.

D.

Company Aircraft.  M&I shall provide Executive with access to M&I aircraft, at M&I expense, provided, however, that Executive’s unreimbursed use of the aircraft shall be limited to (i) direct M&I business use or (ii) personal use subject to an annual maximum of 40 hours.  Should Executive’s usage of M&I aircraft exceed the amount set forth in the prior sentence, Executive shall reimburse M&I for the excess, valued based on the net incremental cost of such usage as determined for securities law reporting purposes at such time.

E.

Club Dues.  M&I shall reimburse Executive for club dues for the same clubs for which M&I reimbursed him in 2007.

F.

Financial Planning Services.  M&I shall provide Executive, at M&I’s expense, with the same financial planning services that are available to senior executives of M&I.

6.

Compensation During the Term and While No Longer Chairman of the Board.  As compensation for the services to be provided during the Term and for such period of time, if any, while Executive remains on the Board, but is no longer Chairman of the Board, Executive shall receive from M&I or its affiliates the benefits set forth below:

A.

Cash Compensation.   Executive shall receive compensation for board service consistent with other non-employee directors.

B.

Reimbursement of Expenses.  M&I shall pay or reimburse Executive for all reasonable travel and other expenses incurred by Executive in the performance of his duties hereunder upon compliance with M&I’s expense reimbursement policy that applies to senior executives of M&I.  Upon Executive’s request, M&I shall provide the Executive continued access to M&I’s facilities and services, and at its expense, furnish Executive with secretarial services and office space sufficient for Executive to perform his duties hereunder, at a location mutually convenient for M&I and the Executive.  

C.

Company Car.  Subject to the limitation in paragraph G below, at M&I’s expense, M&I shall provide Executive with a vehicle that is similar in quality to those provided by M&I to Executive while Executive was employed as Chief Executive Officer of M&I.

D.

Company Aircraft.  Subject to the limitation in paragraph G below, at M&I’s expense, M&I shall provide Executive with access to M&I aircraft provided, however, that Executive’s unreimbursed use of the aircraft shall be limited to (i) direct M&I business use or (ii) personal use subject to an annual maximum of fifty thousand dollars ($50,000) in value.  Should Executive’s usage of M&I aircraft exceed the amount set forth in the prior sentence, Executive shall reimburse M&I for the excess, valued based on the net incremental cost of such usage as determined for securities law reporting purposes at such time.

E.

Club Dues.  Subject to the limitation in paragraph G below, M&I shall reimburse Executive for club dues for the same clubs for which M&I reimbursed him in 2007.

F.

Financial Planning Services.  Subject to the limitation in paragraph G, below, at M&I’s expense, M&I shall provide Executive with the same financial planning services that are available to senior executives of M&I.

G.

Maximum Annual Benefit.  The maximum annual benefit provided by M&I on behalf of Executive for his personal expenses (including those benefits enumerated in paragraphs C, D, E and F of this Section 6) shall be limited to One Hundred Thousand Dollars ($100,000) in value.  If the value of the benefits provided in any one year exceeds $100,000, Executive will promptly reimburse M&I for such excess.  The benefits provided under paragraphs C, D, E and F hereof, and any other benefits provided to Executive, shall be valued based on the methodology used to value these or similar benefits for securities law reporting purposes at such time.

7.

Confidentiality.  In exchange for the benefits provided to Executive in Sections 5 and 6, above, Executive agrees to be bound by the provisions of this Section 7.  The term “Company,” as used in this Section 7 includes all Affiliates of M&I.  “Affiliate” means any corporation, partnership, limited liability company or other business entity which, directly or indirectly through one or more intermediaries, is controlled by M&I.  The term “control” means the power, directly or indirectly, to vote 50% or more of the securities which have ordinary voting power in the election of directors (or individuals filling any analogous positions).

A.

Confidential Information.  During the Term, and for the two years subsequent to the Term, Executive shall not make any Unauthorized Disclosure.  For purposes of this Agreement, “Unauthorized Disclosure” shall mean Executive’s use or direct or indirect disclosure, without the consent of the Board of Directors of M&I, to any person, other than (i) use or disclosure required in order to perform his duties during the Term and (ii) use or disclosure that may be legally required (provided the provisions of paragraph B of Section 7 hereof are complied with), of any confidential information obtained by Executive, including, but not limited to, confidential information with respect to any of the Company’s customers, business plans, financial results and pricing, methods of operation, services and products (the “Confidential Info rmation”); provided, however, that Confidential Information shall not include any information which was or becomes generally available to the public other than as a result of a wrongful disclosure by Executive, or which the Company previously publicly discloses.  Nothing herein shall limit Executive’s confidentiality obligation as regards any information which is a trade secret as currently defined in the Wisconsin Uniform Trade Secrets Act, or any successor thereto, which Executive acknowledge may extend beyond the Term, and the two year period after the Term.

B.

Legally-Required Disclosure.  If Executive is requested or becomes legally required or compelled (by oral questions, interrogatories, requests for information or documents, subpoena, civil or criminal investigative demand, or similar process) or is required by a governmental body to make any disclosure that is prohibited or otherwise constrained by this Agreement, Executive will provide M&I with prompt written notice of such request so that it may seek an appropriate protective order or other appropriate remedy.  Subject to the foregoing, Executive may furnish that portion (and only that portion) of the Confidential Information that Executive is legally compelled or is otherwise required to disclose.

8.

Miscellaneous.

A.

Successors and Assigns.  This Agreement shall be binding upon and shall inure to the benefit of the Company, its successors and assigns.  The term “M&I” as used herein shall include such successors and assigns.  The term “successors and assigns” as used herein shall mean a corporation or other entity acquiring all or substantially all the assets and business of M&I (including this Agreement) whether by operation of law or otherwise.

B.

Amendment.  This Agreement may not be amended or modified except by written instrument executed by the Company and Executive.

C.

Change in Control Agreement.  Executive acknowledges that as a result of his retirement and change in status from employee to independent contractor of the Company, the Change in Control Agreement between Company and Executive dated as of August 12, 1999 shall terminate on his retirement from the Company on January 1, 2008.

D.

Governing Law.  This Agreement and the rights and obligations hereunder shall be governed by and construed in accordance with the laws of the State of Wisconsin, without giving effect to its principles of conflicts of laws.  

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

MARSHALL & ILSLEY CORPORATION

By:

/s/ Paul J. Renard                                     

Paul J. Renard, Senior Vice President

EXECUTIVE

/s/ Dennis J. Kuester                                         

Dennis J. Kuester

EX-10.2

Exhibit 10.2

December 21, 2006

Mr. Mark Furlong

Marshall & Ilsley Corporation

770 North Water Street

Milwaukee, Wisconsin  53202

Dear Mark,

The purpose of this letter is to set forth the terms of your supplemental executive retirement benefit (“SERP”).   This letter agreement formalizes the specific provisions of the original benefit which was approved by the Compensation and Human Resources Committee (the “Committee”) of the Board of Directors of Marshall & Ilsley Corporation (“M&I”) at its January 2005 meeting and also incorporates the increased benefit level which was approved by the Committee at its December 21, 2006 meeting, in consideration of the change in your responsibilities.

1.

Monthly Benefit.  Subject to Paragraphs 2, 3 and 4 hereof which deal with vesting, your monthly SERP (the “Monthly Benefit”) will equal one-twelfth (1/12) of 55% of Compensation, as hereafter defined, reduced by the sum of (a) the monthly amount which you would be entitled to receive from Social Security assuming you commenced taking benefits at age 65 and (b) the monthly annuitized value of M&I’s contributions to the qualified and nonqualified retirement plans (specifically, the employer match for the 401(k), the profit sharing contribution to the qualified and nonqualified plans (including the employer contributions to the executive deferred compensation plans), and contributions to any future employer-funded retirement plan), increased for earnings attributable thereto from the date of M&I’s contribution, as computed pursuant to Exhibit A hereto.  “Compensation” me ans the average of your base salary and short-term incentive (unreduced for any deferrals) for the five highest years in the last ten years of employment with M&I.

2.

Vesting of Monthly Benefit, In General.  Except as provided in Paragraphs 3 and 4 hereof, if your employment with M&I terminates prior to age 55, you will not be entitled to any Monthly Benefit under this agreement.  The Monthly Benefit begins vesting at age 55 and is fully vested at age 62.  If your employment with M&I terminates after age 55 but prior to age 62, there is a 4% reduction for each year prior to age 62 that your employment terminates.  For example, if your employment with M&I terminates when you are age 60, your Monthly Benefit would be reduced by 8%, except as provided in Paragraphs 3 and 4 hereof.

3.

Accelerated Vesting of Monthly Benefit for Death or Disability.  Notwithstanding anything to the contrary contained in Paragraph 2 hereof, in the event of your death or Disability, the vesting of the Monthly Benefit will be accelerated in accordance with the provisions of this Paragraph 3.  “Disability” means that you are disabled such that you qualify for disability benefits pursuant to M&I’s Long-Term Disability Income Plan.  The Monthly Benefit will be 40% vested if your death or Disability occurs prior to February 1, 2006.  On February 1, 2006 and on each February 1^st thereafter, the Monthly Benefit will become vested for an additional 4% such that it will be completely vested by February 1, 2020.  

4.

Accelerated Vesting of Monthly Benefit for Change in Control.  Notwithstanding anything to the contrary contained in Section 2 hereof, in the event of a Change in Control, the vesting of the SERP will be accelerated in accordance with the provisions of this Paragraph 4.  “Change in Control” has the same meaning as in M&I’s 2003 Executive Stock Option and Restricted Stock Plan. The SERP will be 40% vested if a Change in Control occurs prior to February 1, 2006.   On February 1, 2006 and on each February 1^st thereafter, the SERP will become vested for an additional 4%.  In all events, if a Change in Control occurs after you attain age 55, the SERP will be 100% vested.

5.

Time of Payment.  Payment of the Monthly Benefit will commence on the first day of the month after the month in which you attain, or would have attained (in the case of your death prior thereto), age 65.  Notwithstanding anything contained herein to the contrary, if you make an election prior to December 31, 2007, in the event of a Change in Control you will receive the Monthly Benefits in a lump sum, computed as provided herein, within 60 days after a Change in Control, but only if the Change in Control also constitutes a change in the ownership or effective control of M&I, or in the ownership of a substantial portion of the assets of M&I, within the meaning of Section 409A of the Code and the guidance promulgated thereunder.  The lump sum payment shall be determined (i) assuming that the Monthly Benefit would be distributed for your life beginning at age 65, with a 120-month certain payout, or, if your Monthly Benefit has already been determined because of death, retirement or other termination of employment, using the Monthly Benefit and method of distribution then in effect, (ii) using reasonable actuarial assumptions, as determined by M&I’s actuaries, and (iii) using a discount rate of 6 percent, compounded annually.  If you do not make a timely lump sum election, your Monthly Benefit will commence as otherwise provided herein.

6.

Manner of Payment.  The Monthly Benefit shall be paid to you for life, with a ten-year certain pay-out.  Alternatively, if you timely elect, prior to the commencement of payments and in the manner provided by the Compensation Committee, you may receive a joint and 50% survivor annuity in lieu of the Monthly Benefit in the form of a single life annuity with a 10-year certain pay-out.  The joint and 50% survivor annuity must be actuarially equivalent to the single life annuity with a 10-year certain pay-out, determined applying reasonable actuarial assumptions, as determined by M&I’s actuaries, within the meaning of Section 409A of the Code and the guidance promulgated thereunder.  For purposes hereof, the survivor must be your “Spouse,” which means the person to whom you are married when benefit payments hereunder commence.  If you and your Spouse are later d ivorced, she loses her status as the Spouse hereunder and is entitled to no benefits under this Paragraph 6.  All payments made in accordance with this Paragraph 6 shall cease upon the last to die of you and your Spouse if you have elected the joint and 50% survivor option.

7.

Beneficiaries.  If you do not elect a joint and 50% survivor annuity, after your death, the Monthly Benefit will be distributed to the person(s) you designate on the beneficiary designation for M&I’s qualified retirement plan, from time to time, if the ten-year certain pay-out period has not yet elapsed.  If there is more than one qualified retirement plan, the beneficiary designation for the plan with the biggest balance at your date of death shall govern this SERP.  Alternatively, you may file a separate beneficiary designation with M&I to govern the amounts payable after your death, if any, under this SERP.

8.

Withholding.  All Monthly Benefits paid to you or your beneficiaries shall be reduced by applicable income and employment tax withholding as required by law.  In the event of any dispute as to whether withholding is required or the amount thereof, the determination of M&I’s tax advisors shall be binding on M&I, you and your beneficiaries.

9.

No Guarantee of Employment.  Nothing in this letter shall be construed to give you any right to remain in the employ of M&I.

10.

No Requirement to Fund; Assignability.  Nothing herein shall be construed to require M&I to reserve, or otherwise set aside, funds for the payment of benefits hereunder.  Nothing contained herein shall create or be construed to create a trust of any kind.  To the extent that you or your beneficiaries have a right to receive payment from M&I hereunder, such right shall be no greater than the right of any unsecured general creditor of M&I.  Your interest hereunder, and that of your beneficiaries, is not assignable, nor is it subject to reduction for your debts or defaults or those of your beneficiaries, whether to M&I or others, other than withholding taxes.

11.

Administration. The SERP shall be administered by the Committee, which shall have full and exclusive power to interpret this letter and to adopt such rules, regulations and guidelines for carrying out the SERP as it may deem necessary or proper.  The Committee may delegate any of its administrative duties to any M&I employee.  Actions by the Committee hereunder shall be final and binding on M&I, you and your beneficiaries.

12.

Status of SERP Under ERISA.  The SERP is intended to be an unfunded plan maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees, as described in Section 201(2), Section 301(a)(3), Section 401(a)(1) and Section 4021(b)(6) of the Employee Retirement Income Security Act of 1974, as amended.  To comply with these provisions, there is a Claims Procedure attached hereto as Exhibit B.

13.

Amendment and Termination.  The Committee may amend or terminate the SERP at any time; provided, however, that the Committee or any successor thereto may not amend the SERP if a Change in Control occurs without your consent, or that of your beneficiaries if you are not then living.  In situations other than a Change in Control, amendment or termination may not result in a reduction in your benefits (or those of your beneficiaries) if payment of Monthly Benefits has already begun, nor may amendment or termination result in you or your beneficiaries receiving a benefit hereunder smaller than that to which you would have been entitled had you terminated employment on the day prior to the effective date of such amendment or termination, unless necessary to conform to any present or future Federal law or regulation.  M&I shall notify you of any amendment or termination of t he SERP within a reasonable period of time after the Committee’s action.

14.

Miscellaneous.  To the extent not preempted by the laws of the United States of America, the laws of the State of Wisconsin, without regard to their conflict of law provisions, shall be the controlling law in all matters relating to the SERP.

Very truly yours,

/s/ Paul Renard

Paul Renard, Senior Vice President

EXHIBIT A

Computation

The purpose of this Exhibit A is to set forth the methodology for computing (a) the age 65 monthly Social Security benefit and (b) the monthly annuitized value of M&I’s contributions to the qualified and nonqualified retirement plans, increased for earnings attributable thereto from the date of M&I’s contribution, as set forth in Paragraph 1 of the letter dated December 21, 2006 providing for a SERP for Mark Furlong (the “Letter”).

(a)

To determine the monthly amount for Social Security, the age 65 monthly Social Security benefit at the time of the Determination Date, defined below, will be increased by three percent per annum for the number of full years between termination of employment and when Mr. Furlong would reach age 65.

(b)

To determine the monthly annuitized value, the calculation will begin with the balance(s) in the employer contribution accounts(s) for Mr. Furlong in the Retirement Growth Plan (the qualified plan), and the balance(s) in the employer contribution account(s) in M&I’s executive deferred compensation plans for the month ending with or immediately prior to Mr. Furlong’s retirement date or date of death, but in no case later than the month prior to Mr. Furlong’s 65^th birthday (“the Determination Date”), and shall add in the remaining contributions to be made by M&I on Mr. Furlong’s behalf, if any, for the period ending on the earlier of Mr. Furlong’s retirement date, his date of death, or the last day of the month prior to Mr. Furlong’s 65^th birthday.  If Mr. Furlong retires prior to his 65^th birthday, the future value of these balances will be compute d as of the date on which payments will commence pursuant to Paragraph 5 of the Letter using the average of the Moody’s A Long-Term Corporate Bond Rate as determined under the deferred compensation plans for the five full calendar years ending on or prior to the Determination Date, but in no event greater than eight percent.  The balances will be annuitized on a single life basis using then current actuarial assumptions and the same interest rate determined in the prior sentence, in order to determine a monthly amount payable from the employer contributions to the qualified and nonqualified retirement plans.  If M&I subsequently adopts additional qualified or nonqualified retirement plans, the computation of the offset for the employer contribution accounts in those plans will also be governed by this Exhibit A.

EXHIBIT B

Claims Procedure

Pursuant to the letter dated December 21, 2006 providing for a SERP for Mark Furlong, he is entitled to make a request for any benefits to which he believes he may be entitled.  Any such request must be made in writing, and it should be made to M&I in care of the human resources department.

A request for benefits will be considered a claim, and it will be subject to a full and fair review.  If Mr. Furlong’s claim is wholly or partially denied, M&I shall furnish him or his beneficiary (the “Claimant”) or the Claimant’s authorized representative with a written or electronic notice of the denial within a reasonable period of time (generally, 90 days after M&I receives the claim or 180 days, if M&I determines that special circumstances require an extension of time for processing the claim and furnishes written notice of the extension to the Claimant or the Claimant’s authorized representative before the initial 90-day period ends), which sets forth, in an understandable manner, the following information:

a.

The specific reason(s) for the denial of the claim;

b.

Reference to the specific provisions of the Plan on which the denial is based;

c.

A description of any additional material or information necessary for the Claimant to perfect the claim and an explanation of why that material or information is necessary; and

d.

A description of the review procedures and the time limits applicable to those procedures, including a statement of the Claimant’s right to bring a civil action under ERISA Section 502(a) following a denial on review.

M&I’s written extension notice must indicate the special circumstances requiring an extension of time for processing the claim and the date by which M&I expects to render its decision on the claim.

The Claimant or the Claimant’s authorized representative may appeal M&I’s decision denying the claim within 60 days after the Claimant or the Claimant’s authorized representative receives the notice denying the claim.  The Claimant or the Claimant’s authorized representative may submit to M&I written comments, documents, records and other information relating to the claim.  The Claimant or the Claimant’s authorized representative shall be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claim.  M&I’s review of the claim and of its denial of the claim shall take into account all comments, documents, records and other information submitted by the Claimant or the Claimant’s authorized representative relating to the claim, without regard to whether these materials were submitted or considered during the initial decision on the claim.

M&I’s decision on the appeal of a denied claim shall be made within a reasonable period of time (generally 60 days after M&I receives the claim or 120 days if M&I determines that special circumstances require an extension of time for processing the claim and furnishes written notice of the extension to the Claimant or the Claimant’s authorized representative before the initial 60-day period ends indicating the special circumstances requiring extension of time and the date by which M&I expects to render its decision on the claim).  M&I will furnish the Claimant or the Claimant’s authorized representative with written or electronic notice of its decision on appeal.  In the case of a decision on appeal upholding M&I’s initial denial of the claim, M&I’s notice of its decision on appeal shall set forth, in an understandable manner , the following information:

a.

The specific reason(s) for the decision on appeal;

b.

Reference to the specific provisions in the Plan on which the decision on appeal is based;

c.

A statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claim for benefits; and

d.

A statement describing any voluntary appeal procedures (including voluntary arbitration or any other form of dispute resolution) offered and the Claimant’s right to obtain information sufficient to make an informed judgment about whether to submit a benefit dispute to the voluntary level of appeal, and a statement of the Claimant’s right to bring an action under ERISA Section 502(a).

EX-99.1

			Exhibit 99.1
	News Release		Marshall & Ilsley Corporation
			770 North Water Street
			Milwaukee, WI 53202
			414 765-7700 Main
			414 298-2921 Fax
			www.mibank.com
	For Release:	Immediately
	Contact:	Patty Cadorin Corporate Communications Director 414 765-7814

DENNIS J. KUESTER TO RETIRE AS CHIEF EXECUTIVE OFFICER OF MARSHALL & ILSLEY CORPORATION IN APRIL 2007

Mark F. Furlong to Succeed Kuester; Kuester Will Continue as Chairman of the Board

Milwaukee, Wis. – December 21, 2006 – Marshall & Ilsley Corporation (NYSE: MI) (M&I) today announced that Dennis J. Kuester, 64, will retire as chief executive officer at the Corporation’s Annual Meeting of Shareholders in April 2007 and will be succeeded by Mark F. Furlong, 49, the Corporation’s president. Kuester will continue to serve as chairman of the board.  The transition announced today is part of the Corporation’s succession plan for senior executives.

“I have had the honor of working with outstanding associates at M&I for over 30 years,” said Kuester, “and as I make this transition, I do so with a great deal of confidence in our strong management team.  Their expertise and experience will enable M&I to maintain its reputation as a top-tier financial services provider.”  Kuester continued, “I am very fortunate that this new phase of my life will enable me to spend more time with my family and a number of outside activities that have been important to me.”

Kuester joined Marshall & Ilsley Corporation in 1976 as vice president of M&I Data Services (now Metavante Corporation).  He became president of M&I Data Services in 1985, and chairman and chief executive officer in 1993. In 1987, he was elected president of Marshall & Ilsley Corporation; chief executive officer in 2002; and chairman in 2005.

Mark Furlong joined M&I in 2001 as chief financial officer.  He became president of M&I Marshall & Ilsley Bank in 2004, and president of Marshall & Ilsley Corporation in 2005.  Prior to joining M&I, Furlong’s experience in the financial services industry included serving as executive vice president and chief financial officer for Old Kent Financial Corp, as first vice president, Corporate Development/Commercial Banking, for H.F. Ahmanson & Co., and as an audit partner at Deloitte & Touche.

Marshall & Ilsley Corporation (NYSE: MI) is a diversified financial services corporation headquartered in Milwaukee, Wis., with $55.5 billion in assets. Founded in 1847, M&I Marshall & Ilsley Bank is the largest Wisconsin-based bank. M&I Bank has 195 offices throughout the state. In addition, M&I has 45 locations throughout Arizona; 17 offices in Kansas City and nearby communities; 17 offices on Florida’s west coast; 17 offices in metropolitan Minneapolis/St. Paul, and one in Duluth, Minn.; three offices in Tulsa, Okla.; and one office in Las Vegas, Nev. M&I’s Southwest Bank subsidiary has 15 offices in the greater St. Louis area. Metavante Corporation, a wholly owned subsidiary, provides a full array of technology products and services for the financial services industry. M&I also provides trust and investment management, equipment leasing, mortgage banking, asset-based lending, financial planning, investments, and insurance services from offices throughout the country and on the Internet (www.mibank.com or www.micorp.com). M&I’s customer-based approach, internal growth, and strategic acquisitions have made M&I a nationally recognized leader in the financial services industry.

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