DEF 14A
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y45106def14a.txt
DEF 14A
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SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
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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 sec. 240.14a-11(c) or sec. 240.14a-12
J.P. Morgan Chase & Co.
...............................................................................
(Name of Registrant as Specified in Its Charter)
...............................................................................
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
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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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NOTICE OF 2001 ANNUAL MEETING
OF STOCKHOLDERS AND PROXY STATEMENT
MEETING DATE:
MAY 15, 2001
-----------------------------------------------------------
J.P. Morgan Chase & Co.
270 Park Avenue
New York, New York 10017-2070
[JP MORGAN CHASE LOGO]
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J.P. MORGAN CHASE & CO.
270 PARK AVENUE
NEW YORK, NEW YORK 10017-2070
March 30, 2001
Dear Fellow Stockholder:
We are pleased to invite you to the annual meeting of
stockholders, to be held on May 15, 2001, at One Chase
Manhattan Plaza, New York, New York. On December 31, 2000,
J.P. Morgan & Co. Incorporated (heritage Morgan) merged
with and into The Chase Manhattan Corporation, which
changed its name to J.P. Morgan Chase & Co. (JPMorgan
Chase). Our trading symbol is JPM. This will be the first
annual meeting of stockholders of the combined company.
All holders of record of JPMorgan Chase common stock as of
March 16, 2001, are entitled to vote at this annual
meeting, including holders of certificates representing
shares of heritage Morgan common stock who have not yet
tendered those certificates for exchange.
As we have done in the past, in addition to considering
the matters described in the proxy statement, we will
review major developments since our last stockholders'
meeting.
We hope that you will attend the meeting in person, but
even if you are planning to come, we strongly encourage
you to designate the proxies named on the enclosed proxy
card to vote your shares. This will ensure that your
common stock is represented at the meeting. The proxy
statement explains more about proxy voting. Please read it
carefully. We look forward to your participation.
Douglas A. Warner III William B. Harrison, Jr.
Chairman of the Board President and Chief Executive Officer
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
----------------------------------------------------------
Date: Tuesday, May 15, 2001
Time: 10:00 a.m.
Place: Auditorium
One Chase Manhattan Plaza
New York, New York
Matters to be voted on:
- Election of directors
- Ratification of appointment of PricewaterhouseCoopers LLP
as our independent accountant for 2001
- Approval of Employee Stock Purchase Plan
- Stockholder proposals included in the attached proxy
statement, if they are introduced at the meeting
- Any other matters that may properly be brought before the
meeting
By order of the Board of Directors
Anthony J. Horan
Secretary
March 30, 2001
PLEASE VOTE PROMPTLY
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PROXY STATEMENT TABLE OF CONTENTS
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GENERAL INFORMATION ABOUT THE MEETING....................................... 1
PROPOSAL 1: ELECTION OF DIRECTORS....................................... 3
Information about the nominees.............................. 4
About the Board and its committees.......................... 8
Director compensation....................................... 9
Security ownership of management............................ 9
Compensation committee report on executive compensation..... 10
Executive compensation tables............................... 13
I. Summary compensation table............................... 13
II. Stock option grant tables............................... 14
III. Aggregated option exercises in 2000 and
year-end option values................................... 15
IV. Long-term incentive awards.............................. 15
Comparison of five-year cumulative total return............. 16
Retirement benefits......................................... 17
Termination arrangements.................................... 19
Additional information about our directors and
executive officers.......................................... 19
Audit Committee report...................................... 20
PROPOSAL 2: APPOINTMENT OF INDEPENDENT ACCOUNTANT....................... 21
PROPOSAL 3: APPROVAL OF EMPLOYEE STOCK PURCHASE PLAN.................... 21
PROPOSALS 4-6: STOCKHOLDER PROPOSALS....................................... 24
STOCKHOLDER PROPOSALS AND NOMINATIONS FOR THE 2002 ANNUAL MEETING........... 27
EXHIBIT A: AUDIT COMMITTEE CHARTER..................................... 28
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PROXY STATEMENT
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The merger of The Chase Manhattan Corporation (heritage
Chase) and J.P. Morgan & Co. Incorporated (heritage
Morgan) was effective on December 31, 2000 (the Merger).
Heritage Chase changed its name to J.P. Morgan Chase & Co.
on the date of the Merger. To the extent appropriate,
information contained in this proxy statement includes
certain information about the two pre-merger entities as
well as The Chase Manhattan Bank and Morgan Guaranty Trust
Company of New York, banking subsidiaries of J.P. Morgan
Chase & Co. (the Banks).
Your vote is very important. For this reason, the Board of
Directors is requesting that you allow your common stock
to be represented at the annual meeting by the proxies
named on the enclosed proxy card. This proxy statement is
being sent to you in connection with this request and has
been prepared for the Board by our management. We, our,
JPMorgan Chase, and the Firm refer to J.P. Morgan Chase &
Co. The proxy statement is being sent to our stockholders
on or about March 30, 2001.
GENERAL INFORMATION ABOUT THE MEETING
----------------------------------------------------------
WHO CAN VOTE You are entitled to vote your JPMorgan Chase common stock
if our records showed that you held your shares as of
March 16, 2001. At the close of business on that date, a
total of 1,982,943,058 shares of common stock were
outstanding and entitled to vote. Heritage Morgan
stockholders are entitled to vote the number of whole
shares of JPMorgan Chase common stock into which your
heritage Morgan common stock was converted pursuant to the
terms of the Merger even if you have not yet exchanged
your common stock certificates. Each share of JPMorgan
Chase common stock has one vote. The enclosed proxy card
shows the number of shares that you are entitled to vote.
Your individual vote is confidential and will not be
disclosed to persons other than those recording the vote.
VOTING YOUR PROXY If your common stock is held by a broker, bank, or other
nominee, you will receive instructions from them that you
must follow in order to have your shares voted.
If you hold your shares in your own name as a holder of
record, you may instruct the proxies how to vote your
common stock by using the toll free telephone number or
the Internet voting site listed on the proxy card or by
signing, dating, and mailing the proxy card in the postage
paid envelope that we have provided to you. Of course, you
can always come to the meeting and vote your shares in
person. Specific instructions for using the telephone and
Internet voting systems are on the proxy card. Whichever
of these methods you select to transmit your instructions,
the proxies will vote your shares in accordance with those
instructions. If you sign and return a proxy card without
giving specific voting instructions, your shares will be
voted as recommended by our Board of Directors.
MATTERS TO BE
PRESENTED We are not now aware of any matters to be presented other
than those described in this proxy statement. If any
matters not described in the proxy statement are properly
presented at the meeting, the proxies will use their own
judgment to determine how to vote your shares. If the
meeting is adjourned, the proxies can vote your common
stock on the new meeting date as well, unless you have
revoked your proxy instructions.
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REVOKING YOUR PROXY To revoke your proxy instructions if you are a holder of
record, you must advise the Secretary in writing before
the proxies vote your common stock at the meeting, deliver
later proxy instructions, or attend the meeting and vote
your shares in person. Unless you decide to attend the
meeting and vote your shares in person after you have
submitted voting instructions to the proxies, we recommend
you revoke or amend your prior instructions in the same
way you initially gave them--that is, by telephone,
Internet, or in writing. This will help to ensure that
your shares are voted the way you have finally determined
you wish them to be voted.
HOW VOTES ARE COUNTED The annual meeting will be held if a majority of the
outstanding common stock entitled to vote is represented
at the meeting. If you have returned valid proxy
instructions or attend the meeting in person, your common
stock will be counted for the purpose of determining
whether there is a quorum, even if you wish to abstain
from voting on some or all matters introduced at the
meeting. If you hold your common stock through a nominee,
generally the nominee may vote the common stock that it
holds for you only in accordance with your instructions.
Brokers who are members of the National Association of
Securities Dealers, Inc. may not vote shares held by them
in nominee name unless they are permitted to do so under
the rules of any national securities exchange to which
they belong. Under New York Stock Exchange rules, a member
broker that has transmitted proxy soliciting materials to
a beneficial owner may vote on matters that the exchange
has determined to be routine if the beneficial owner has
not provided the broker with voting instructions within 10
days of the meeting. If a nominee cannot vote on a
particular matter because it is not routine, there is a
"broker non-vote" on that matter. Broker non-votes count
for quorum purposes, but we do not count either
abstentions or broker non-votes as votes for or against
any proposal.
COST OF THIS PROXY
SOLICITATION We will pay the cost of this proxy solicitation. In
addition to soliciting proxies by mail, we expect that a
number of our employees will solicit stockholders for the
same type of proxy, personally and by telephone. None of
these employees will receive any additional or special
compensation for doing this. We have retained Mellon
Investor Services LLC to assist in the solicitation of
proxies for a fee of $25,000 plus reasonable out-of-pocket
costs and expenses. We will, on request, reimburse
brokers, banks, and other nominees for their expenses in
sending proxy materials to their customers who are
beneficial owners and obtaining their voting instructions.
ATTENDING THE ANNUAL
MEETING If you are a holder of record and plan to attend the
annual meeting, please indicate this when you vote. The
lower portion of the proxy card is your admission ticket.
IF YOU ARE A BENEFICIAL OWNER OF COMMON STOCK HELD BY A
BROKER, BANK, OR OTHER NOMINEE, YOU WILL NEED PROOF OF
OWNERSHIP TO BE ADMITTED TO THE MEETING. A recent
brokerage statement or a letter from a bank or broker are
examples of proof of ownership. If you want to vote your
common stock held in nominee name in person, you must get
a written proxy in your name from the broker, bank, or
other nominee that holds your shares.
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PROPOSAL 1: ELECTION OF DIRECTORS
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Our entire Board of Directors, consisting of 15 members,
is to be elected at this annual meeting to hold office
until the next annual meeting and the election of their
successors.
VOTE REQUIRED Directors must be elected by a plurality of the votes cast
at the meeting. This means that the nominees receiving the
greatest number of votes will be elected. Votes withheld
for any director will not be counted.
Although we know of no reason why any of the nominees
would not be able to serve, if any nominee is unavailable
for election, the proxies would vote your common stock to
approve the election of any substitute nominee proposed by
the Board of Directors. The Board may also choose to
reduce the number of directors to be elected, as permitted
by our By-laws.
GENERAL INFORMATION
ABOUT
THE NOMINEES All of the nominees are currently directors. Each has
agreed to be named in this proxy statement and to serve if
elected. Each of the nominees was a director of either
heritage Chase or heritage Morgan in 2000 and attended at
least 75% of the meetings of the Board and committees on
which they served in that year.
Unless stated otherwise, all of the nominees have been
continuously employed by their present employers for more
than five years. All are actively involved in community
and charitable affairs. The age indicated in each
nominee's biography is as of May 15, 2001, and all other
biographical information is as of the date of this proxy
statement.
In 1991, Manufacturers Hanover Corporation merged into
Chemical Banking Corporation. In 1996, The Chase Manhattan
Corporation merged into Chemical Banking Corporation,
which changed its name to The Chase Manhattan Corporation.
As indicated on page 1 of this proxy statement, on
December 31, 2000, J.P. Morgan & Co. Incorporated merged
into The Chase Manhattan Corporation, which changed its
name to J.P. Morgan Chase & Co. In the following
biographies, any of these merged companies is referred to
as a predecessor institution of the Firm.
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INFORMATION ABOUT THE NOMINEES
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[BECHERER PHOTO]
HANS W. BECHERER (AGE 66)
Retired Chairman and Chief Executive Officer of Deere &
Company (equipment manufacturer). Mr. Becherer is also a
director of Honeywell International Inc. and
Schering-Plough Corporation. He has been a director of
the Firm or a predecessor institution since 1998.
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[BECHTEL PHOTO]
RILEY P. BECHTEL (AGE 49)
Chairman and Chief Executive Officer of Bechtel Group,
Inc. (engineering and construction). Mr. Bechtel is also
a director of Fremont Group, L.L.C., Fremont Investors,
Inc., and Sequoia Ventures Inc. He has been a director
of the Firm or a predecessor institution since 1995.
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[BENNACK JR. PHOTO]
FRANK A. BENNACK JR. (AGE 68)
President, Chief Executive Officer, and director of The
Hearst Corporation (publishing, broadcasting, and
media). Mr. Bennack is also a director of American Home
Products Corporation, Hearst-Argyle Television, Inc.,
and Polo Ralph Lauren Corporation. He has been a
director of the Firm or a predecessor institution since
1981.
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[BOSSIDY PHOTO]
LAWRENCE A. BOSSIDY (AGE 66)
Retired Chairman of the Board of Honeywell International
Inc. (diversified manufacturing). Mr. Bossidy is also a
director of Atlas Commerce, Inc., Merck & Co., Inc., and
RightFreight.com. He has been a director of the Firm or
a predecessor institution since 1998.
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[BURNS PHOTO]
M. ANTHONY BURNS (AGE 58)
Chairman of Ryder System, Inc. (logistics and
transportation solutions). Mr. Burns is also a director
of The Black & Decker Corporation, J.C. Penney Company,
Inc., and Pfizer Inc. He has been a director of the Firm
or a predecessor institution since 1990.
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[FULLER PHOTO]
H. LAURANCE FULLER (AGE 62)
Retired Co-Chairman of BP Amoco p.l.c. (oil, gas, and
chemical). Mr. Fuller is also a director of Abbott
Laboratories, Motorola, Inc., and Security Capital
Group, Inc. He has been a director of the Firm or a
predecessor institution since 1985.
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[FUTTER PHOTO]
ELLEN V. FUTTER (AGE 51)
President and Trustee of the American Museum of Natural
History. Ms. Futter is also a director of American
International Group, Inc., Bristol-Myers Squibb Company,
Consolidated Edison, Inc., and a Trustee of Consolidated
Edison Company of New York, Inc. She has been a director
of the Firm or a predecessor institution since 1997.
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[GRAY PHOTO]
WILLIAM H. GRAY III (AGE 59)
President and Chief Executive Officer of The College
Fund/UNCF (educational assistance). Mr. Gray was a
member of the United States House of Representatives
from 1979 to 1991. He is also a director of Dell
Computer Corporation, Electronic Data Systems
Corporation, MBIA Inc., Pfizer Inc., The Prudential
Insurance Company of America, Rockwell International
Corporation, Viacom, and Visteon Corporation. He has
been a director of the Firm or a predecessor institution
since 1992.
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[HARRISON PHOTO]
WILLIAM B. HARRISON, JR. (AGE 57)
President and Chief Executive Officer. Prior to the
Merger, he was Chairman and Chief Executive Officer. He
was President and Chief Executive Officer from June to
December 1999, prior to which he was Vice Chairman of
the Board. He has been a director of the Firm or a
predecessor institution since 1991. Mr. Harrison is also
a director of Merck & Co., Inc.
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[KAPLAN PHOTO]
HELENE L. KAPLAN (AGE 67)
Of Counsel to the firm of Skadden, Arps, Slate, Meagher
& Flom LLP (law firm). Mrs. Kaplan is also a director of
Exxon Mobil Corporation, The May Department Stores
Company, Metropolitan Life Insurance Company, and
Verizon Communications, Inc. She has been a director of
the Firm or a predecessor institution since 1987.
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[RAYMOND PHOTO]
LEE R. RAYMOND (AGE 62)
Chairman of the Board and Chief Executive Officer of
Exxon Mobil Corporation (oil and gas). Mr. Raymond has
been a director of the Firm or a predecessor institution
since 1987.
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[STAFFORD PHOTO]
JOHN R. STAFFORD (AGE 63)
Chairman and Chief Executive Officer of American Home
Products Corporation (pharmaceutical). Mr. Stafford is
also a director of Deere & Company, Honeywell
International Inc., and Verizon Communications, Inc. He
has been a director of the Firm or a predecessor
institution since 1982.
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[WARD PHOTO]
LLOYD D. WARD (AGE 52)
Chairman and Chief Executive Officer of iMotors (on-line
retailer) since January 2001. Mr. Ward was Chairman of
the Board and Chief Executive Officer of Maytag
Corporation from 1999 to November 2000; President and
Chief Operating Officer from 1998 to 1999; Executive
Vice President and President of Maytag Appliances from
1996 to 1998. Mr. Ward is also a Director of General
Motors Corporation. He has been a director of the Firm
or a predecessor institution since 1999.
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[WARNER III PHOTO]
DOUGLAS A. WARNER III (AGE 54)
Chairman of the Board as of December 31, 2000. Prior to
the Merger, he was Chairman of the Board and Chief
Executive Officer of heritage Morgan. He has been a
director of the Firm or a predecessor institution since
1990. Mr. Warner is also a director of Anheuser-Busch
Companies, Inc. and General Electric Company.
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[WHITMAN PHOTO]
MARINA v.N. WHITMAN (AGE 66)
Professor of Business Administration and Public Policy
at the University of Michigan. Prior to her appointment
at the University of Michigan in 1992, Dr. Whitman was
Vice President and Group Executive of General Motors
Corporation. She is also a director of Alcoa Inc., The
Procter & Gamble Company, and Unocal Corp. Dr. Whitman
has been a director of the Firm or a predecessor
institution since 1973.
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ABOUT THE BOARD AND ITS COMMITTEES
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THE BOARD JPMorgan Chase is governed by a Board of Directors and
various committees of the Board that meet throughout the
year. Directors discharge their responsibilities
throughout the year at Board and committee meetings and
also through considerable telephone contact and other
communications with the Chairman, the Chief Executive
Officer, and others regarding matters of concern and
interest to the Firm. During 2000, there were 13 meetings
of the Board.
COMMITTEES OF THE BOARD
The Board has five principal committees. The following
describes for each committee its current membership, the
number of meetings held during 2000, and its function. All
members of these committees are non-employee directors.
AUDIT COMMITTEE HANS W. BECHERER, FRANK A. BENNACK JR., M. ANTHONY BURNS
(CHAIRMAN), LLOYD D. WARD
This committee met seven times in 2000. It reviews and
discusses reports and other communications concerning
management's responsibilities to:
- safeguard the assets and income of the Firm
- provide for reliable and timely financial information
and statements
- maintain compliance with the Firm's ethical
standards, policies, plans, and procedures, as well
as applicable laws and regulations
COMPENSATION AND
MANAGEMENT DEVELOPMENT
COMMITTEE RILEY P. BECHTEL, WILLIAM H. GRAY III, LEE R. RAYMOND,
JOHN R. STAFFORD (CHAIRMAN)
This committee met eight times in 2000. The committee:
- determines compensation and benefit policies and
procedures
- approves senior officer compensation
- advises the Board on the development of, and
succession for, key executives
GOVERNANCE COMMITTEE FRANK A. BENNACK JR., LAWRENCE A. BOSSIDY, ELLEN V.
FUTTER, HELENE L. KAPLAN, LEE R. RAYMOND (CHAIRMAN), JOHN
R. STAFFORD
This committee met once in 2000. The committee:
- considers nominees for election to the Board,
including any written recommendation by a stockholder
that is mailed to the attention of the Secretary
- reviews duties and composition of Board committees
- counsels the Board on other Board governance matters
PUBLIC POLICY COMMITTEE
HANS W. BECHERER, RILEY P. BECHTEL, M. ANTHONY BURNS, H.
LAURANCE FULLER, WILLIAM H. GRAY III (CHAIRMAN), LLOYD D.
WARD, MARINA v.N. WHITMAN
This committee met four times in 2000. The committee:
- reviews our charitable and community-oriented
activities, including strategy with respect to
charitable contributions and projects undertaken to
improve the communities we serve
- reviews our community reinvestment activities
RISK POLICY COMMITTEE LAWRENCE A. BOSSIDY, H. LAURANCE FULLER, ELLEN V. FUTTER,
HELENE L. KAPLAN (CHAIRMAN), MARINA v.N. WHITMAN
This committee met six times in 2000. The committee:
- acts in a general advisory capacity to management in
respect of activities that give rise to credit risk
and market risk
- is to be fully apprised of these risks and how they
are created and managed
- reviews a general risk management mandate to govern
these activities
- re-evaluates regularly our risk exposure, risk
tolerance, and the established mandate
- reviews and, as appropriate, approves policies to
control risk exposure
- reviews the fiduciary and investment advisory
activities of our subsidiaries
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DIRECTOR COMPENSATION
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Directors who are officers of the Firm do not receive any
fees for their services as directors. Each non-employee
director receives an annual retainer of $25,000. Each of
the Chairmen of the Audit Committee, the Compensation and
Management Development Committee, and the Risk Policy
Committee receives an additional fee of $16,000 per year,
and each other member of these committees receives an
additional fee of $8,000 per year. Each of the Chairmen of
the Governance Committee and the Public Policy Committee
receives an additional fee of $10,000 per year, and each
other member of these committees receives an additional
fee of $5,000 per year. Each non-employee director
receives $1,250 for each meeting of the Board of Directors
and each Board committee meeting attended. Non-employee
directors also receive an annual grant of $70,000 worth of
common stock.
Mr. Warner, Mr. Harrison, Mr. Bennack, Mr. Bossidy, Ms.
Futter, Mr. Gray, and Mrs. Kaplan are directors of each of
the Banks. Each non-employee director receives $1,250 for
each meeting of the Board of Directors of the Banks
attended; however, only one fee is paid for attendance at
meetings that serve both the Firm and the Banks.
Non-employee directors may elect to be included in a group
term life insurance policy and a business travel accident
insurance policy. During 2000, the Firm paid average
premiums for these coverages of approximately $1,273 per
director. A director may elect to participate in the
Firm's medical insurance coverage, with the cost of the
coverage paid by the director.
Directors may invest in a pool of investments that become
available to the Firm primarily through the activities of
JPMorgan Partners.
DEFERRED COMPENSATION
ARRANGEMENTS FOR
NON-EMPLOYEE
DIRECTORS Each year non-employee directors may elect to defer all or
part of their cash compensation and/or all of their common
stock compensation. A director's right to receive future
payments under any deferred compensation arrangement is an
unsecured claim against JPMorgan Chase's general assets.
Cash amounts may be deferred into various investment
equivalents, including a common stock equivalent, and will
be paid and distributed in cash when the director retires
from the Board. Stock compensation may be deferred only as
common stock and is distributable only in common stock
when the director retires from the Board. Deferred cash
compensation may be relinquished for benefits under a
split-dollar life insurance program.
SECURITY OWNERSHIP OF MANAGEMENT
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The following table shows the number of shares of common
stock and common stock equivalents beneficially owned as
of March 1, 2001, by each nominee for director, the
executive officers named in the summary compensation
table, and all nominees and executive officers as a group.
Unless otherwise indicated, each of the named individuals
and each member of the group has sole voting power and
sole investment power with respect to the shares shown.
The number of shares beneficially owned, as that term is
defined by Rule 13d-3 under the Securities Exchange Act of
1934, by all nominees and executive officers as a group
totals less than 1.0% of the outstanding common stock as
of March 1, 2001. No nominee or executive officer
beneficially owns any JPMorgan Chase preferred stock.
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SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
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NAME OF INDIVIDUAL COMMON STOCK
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Hans W. Becherer............................................ 10,768(1)(2)
Riley P. Bechtel............................................ 11,532(1)(2)
Frank A. Bennack Jr. ....................................... 29,455(2)
Lawrence A. Bossidy......................................... 22,858(1)
M. Anthony Burns............................................ 20,804(1)(2)
Ramon de Oliveira........................................... 391,342(3)
H. Laurance Fuller.......................................... 45,222(1)(2)
Ellen V. Futter............................................. 7,120(1)
William H. Gray III......................................... 19,220(1)(2)
William B. Harrison, Jr. ................................... 2,728,403(1)(3)(4)(5)
Helene L. Kaplan............................................ 31,259(1)(2)
Donald H. Layton............................................ 1,588,167(1)(3)
Lee R. Raymond.............................................. 54,506(1)(2)
Marc J. Shapiro............................................. 1,720,290(1)(3)
John R. Stafford............................................ 40,988(1)(2)(5)
Lloyd D. Ward............................................... 4,950(1)
Douglas A. Warner III....................................... 3,970,873(3)(5)
Marina v.N. Whitman......................................... 25,769(2)(5)
All nominees and executive officers as a group (27
persons).................................................. 14,777,919
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1 The amounts reported include shares of common stock,
receipt of which has been deferred under deferred
compensation plan arrangements, as follows: Mr.
Becherer: 4,105 shares; Mr. Bechtel: 8,757 shares; Mr.
Bossidy: 4,358 shares; Mr. Burns: 6,233 shares; Mr.
Fuller: 15,423 shares; Ms. Futter: 5,270 shares; Mr.
Gray: 11,286 shares; Mr. Harrison: 97,946 shares; Mrs.
Kaplan: 5,522 shares; Mr. Layton: 60,150 shares; Mr.
Raymond: 13,348 shares; Mr. Shapiro: 305,379 shares; Mr.
Stafford: 9,223 shares; Mr. Ward: 1,250 shares; and all
nominees and executive officers as a group: 740,514
shares.
2 The amounts reported include the number of units of
common stock equivalents held by certain directors under
deferred compensation arrangements entitling those
directors, upon termination of service, to receive a
cash payment for each unit equal to the fair market
value at that time of a share of common stock as
follows: Mr. Becherer: 2,103 units; Mr. Bechtel: 925
units; Mr. Bennack: 14,037 units; Mr. Burns: 7,409
units; Mr. Fuller: 17,949 units; Mr. Gray: 7,934 units;
Mrs. Kaplan: 14,037 units; Mr. Raymond: 39,308 units;
Mr. Stafford: 24,493 units; Dr. Whitman: 12,115 units;
and all nominees as a group: 140,310 units.
3 The amounts reported include shares of common stock that
may be acquired within 60 days of March 1, 2001, through
the exercise of stock options as follows: Mr. Harrison:
2,039,512 shares; Mr. Layton: 1,184,708 shares; Mr.
Shapiro: 1,163,912 shares; Mr. Warner: 2,361,910 shares;
and all nominees and executive officers as a group:
8,674,047 shares. The amounts reported also include
shares of common stock that may be received at the end
of a restricted period and/or when common stock price
targets are met pursuant to forfeitable awards of
restricted stock and/or restricted stock units as
follows: Mr. Harrison: 341,176 shares; Mr. de Oliveira;
364,332 shares; Mr. Layton: 255,000 shares; Mr. Shapiro:
228,577 shares; Mr. Warner: 231,971 shares; and all
nominees and executive officers as a group: 2,290,596
shares.
4 The amounts reported include common stock allocated to
accounts under a Section 401(k) plan as follows: Mr.
Harrison: 17,589 shares; and all executive officers as a
group: 23,479 shares.
5 The amounts reported include shares for which beneficial
ownership is disclaimed as follows: Mr. Harrison: 30,249
shares; Mr. Stafford: 900 shares; Mr. Warner: 23,088
shares; Dr. Whitman: 1,554 shares; and all nominees and
executive officers as a group: 58,139 shares.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
----------------------------------------------------------
COMPENSATION POLICIES The Compensation and Management Development Committee,
which consists solely of non-employee directors,
administers the compensation and benefit programs of the
Firm and its subsidiaries and determines the compensation
of executive officers. The committee's recommendations
regarding officer directors are subject to ratification by
the Board of Directors. Because of the merger of The Chase
Manhattan Corporation and J.P. Morgan & Co. Incorporated
on December 31, 2000, this report also discusses, where
appropriate, compensation paid for 2000 under heritage
Morgan compensation programs for executive officers of
heritage Morgan.
JPMorgan Chase's compensation programs are designed to
attract, retain, and motivate top quality, effective
executives and professionals. Our compensation policy for
executive officers emphasizes performance-based pay over
fixed salary and uses stock-based awards based on the
performance of our stock to further align the interests of
executive officers with our stockholders. JPMorgan Chase
seeks to provide compensation levels that are competitive
with those provided by the appropriate peer groups of
financial institutions in each of the markets and
businesses in which we compete. During 2000, the committee
received reports from independent consultants to ensure
that the program, in the committee's judgment, remains
competitive and able to meet its objectives.
10
16
Peer groups will differ for different businesses and, in
general, each peer group will consist of comparable
financial institutions and other competitors that compete
in the same markets and seek to sell similar groups of
financial services and products. Appropriate peer groups
will change over time. These peer groups do not correspond
to the large list of institutions that make up the indices
shown on page 16 of the proxy statement.
RELATIONSHIP OF
CORPORATE
PERFORMANCE
TO COMPENSATION Compensation paid to the Firm's executive officers for
2000 consisted primarily of salary, bonuses, and awards of
stock options and restricted stock awarded under the
Firm's 2000 Key Executive Performance Plan and the 1996
Long-Term Incentive Plan, as amended. Awards to heritage
Morgan officers were made under the heritage Morgan 1995
Executive Officer Performance Plan and the heritage Morgan
1995 Stock Incentive Plan. The payment of bonuses and the
awards of stock options and restricted stock are directly
related to corporate and individual performance and, where
relevant, business unit performance. In addition,
executive officers were awarded options under a special
program, the Growth Performance Incentive Program, to
provide participants incentive to achieve outstanding
operating financial results for JPMorgan Chase for 2001
and 2002.
CASH COMPENSATION An executive officer's cash compensation is made up of
base salary and an annual performance bonus. For each
executive, the committee reviews salaries paid to
similarly situated executives in the relevant competitor
peer group. A particular executive's actual salary will be
set based on this competitive review and the executive's
performance and level of experience and JPMorgan Chase's
emphasis on performance-based rather than salary-based
compensation.
Annual performance bonuses are awarded based on the
executive's success in achieving corporate, business unit,
and individual performance goals. In setting these awards,
the committee takes account of market data and trends in
the appropriate peer groups.
Quantitative performance goals may vary from year to year
and have included such factors as earnings per share
growth, revenue growth, return on common equity,
shareholder value added, income before income tax expense,
credit quality, and management indicators. Qualitative
measures include the committee's assessment of the
executive's success in (1) defining and executing our
long-term strategic vision; (2) achieving market
leadership positions in key businesses; (3) developing
leaders who can meet the growing demands of the
marketplace; and (4) implementing our diversity efforts at
all levels of the organization. For 2001, the executive's
effectiveness in executing the Merger -- refining and
implementing business strategies; building the culture;
integrating the organization; creating new organizations;
and retaining key talent -- will also be evaluated.
A portion of each annual performance bonus in excess of a
certain amount is mandatorily deferred. The mandatorily
deferred amount will be paid out over a several year
period or upon retirement and is subject to certain
forfeiture provisions upon termination of employment.
STOCK-BASED
COMPENSATION JPMorgan Chase believes that the grant of significant
annual stock-based awards further links the interests of
senior management and our stockholders. The committee sets
targeted ranges for stock-based awards for each executive
based upon the award practices of the relevant peer group.
Actual awards reflect the committee's assessment of the
individual's current and potential contribution to
JPMorgan Chase's success.
In January 2001, the committee granted heritage Chase
executive officers stock options that become exercisable
over four years and expire on January 18, 2011, and
performance accelerated restricted stock units. Half of
the units will vest after five years of continued
employment. Twenty-five percent of the units will vest
only if the price of JPMorgan Chase's common stock
averages $75 for a ten consecutive trading day period
before January 25, 2006. Twenty-five percent of the units
will vest only if the price of JPMorgan Chase's common
stock averages $85 for a ten consecutive trading day
period before January 25, 2006. All awards vest in case of
death or disability or retirement, except that after
retirement, awards related to a target price will vest
only if the target price is met. The committee approved
grants of stock options and performance accelerated
restricted stock units with similar terms in
11
17
January 2000. The awards to heritage Morgan officers in
January 2001 consisted of restricted stock units which
were vested at grant, but subject to a three-year
nontransferable period, and options which become
exercisable over three years and expire on January 18,
2011.
Final compensation data for JPMorgan Chase's competitive
peer groups for calendar year 2000 is not yet available.
The committee estimates that total compensation amounts
for executive officers (base salary, annual bonus, and
stock-based awards) will place JPMorgan Chase in
approximately the 75th percentile of compensation levels
of applicable peer groups.
DEDUCTIBILITY OF
EXECUTIVE
COMPENSATION In May 1999, our stockholders approved the Key Executive
Performance Plan (2000 KEPP), a plan designed to allow
JPMorgan Chase a tax deduction for incentive compensation
payments to the Chief Executive Officer and the other four
most highly paid executive officers. Absent the 2000 KEPP,
such incentive compensation payments would not be
deductible to the extent such amounts for any such officer
in any year exceeded $1 million. In administering this
plan, the committee will promote its policy of maximizing
corporate tax deductions, wherever feasible.
Under the 2000 KEPP, each participant is allocated a
percentage of a bonus pool at the beginning of the
performance year (subject to reduction by the committee
and a separate individual participant limit).
COMPENSATION ACTIONS
FOR
MR. HARRISON In January 2001, the committee, as ratified by the Board
of Directors, awarded Mr. Harrison under the 2000 KEPP a
2000 performance bonus of $5,281,250 (a portion of which
was mandatorily deferred) and 14,033 restricted stock
units that vest after three years. The committee also
awarded Mr. Harrison stock-based awards of 433,425
nonqualified stock options that become exercisable over
four years and 93,714 performance accelerated restricted
stock units that vest as described above. These awards
reflect the achievement of the following 2000 operating
results -- earnings: $5.93 billion; return on average
common stockholders' equity: 16.1%; fully diluted earnings
per share: $2.96; revenues: $32.79 billion; and
shareholder value added: $1.66 billion. In addition to Mr.
Harrison's continuing efforts in leadership development
and diversity, the committee also noted, among others,
these key achievements: (1) the successful integration of
H&Q; (2) the Beacon acquisition that strengthened our
domestic M&A practice; (3) the Flemings acquisition that
enhanced our investment banking and asset management
capabilities in Europe and Asia; (4) key leadership
positions in derivatives, foreign exchange, M&A, asset
management, private banking, and global custody; and (5)
the continued profitability of a diverse portfolio of
strong U.S. consumer businesses.
In January 2000, the committee awarded Mr. Harrison a 1999
performance bonus of $5,281,250 (a portion of which was
mandatorily deferred); 14,606 restricted stock units that
vest after three years; 448,050 nonqualified stock options
that become exercisable over four years and 96,845
performance accelerated restricted stock units.
Under the special Growth Performance Incentive Program,
the committee awarded Mr. Harrison 1,464,272 nonqualified
stock options. Fifty percent of these options will become
exercisable in January 2003 if the committee determines
that Cumulative Fully Diluted Cash Operating Earnings per
Share excluding JPMorgan Partners and extraordinary events
(Cumulative EPS) of $8.50 is achieved for 2001 and 2002.
An additional fifty percent of these options will become
exercisable in January 2003 if Cumulative EPS of $9.00 is
achieved for 2001 and 2002. These goals compare to
Cumulative EPS over the past two years of $6.04. If the
committee determines that these performance goals are not
achieved, then these options will become exercisable
January 18, 2007.
Dated as of March 20, 2001
Compensation and Management Development Committee
John R. Stafford (Chairman)
Riley P. Bechtel
William H. Gray III
Lee R. Raymond
12
18
EXECUTIVE COMPENSATION TABLES
----------------------------------------------------------
All compensation information reported in the following
tables was paid or awarded pursuant to either heritage
Chase or heritage Morgan compensation and benefit programs
in effect at the time of the Merger. All stock-based
awards have been adjusted for Mr. Harrison, Mr. Layton,
and Mr. Shapiro to reflect the 3-for-2 stock split
effective May 17, 2000, and for Mr. Warner and Mr. de
Oliveira to reflect the 3.7 Merger conversion rate.
Restricted stock, option, and long-term incentive plan
(LTIP) awards granted in January are now being reported as
compensation for the prior fiscal year. Because heritage
Chase's prior practice was to report these January grants
as compensation for the year of grant, the 1999 and 1998
restricted stock and option columns of the summary
compensation table have been restated for Mr. Harrison,
Mr. Layton, and Mr. Shapiro, and we have included tables
for option grants and LTIP awards made in January 2001 and
January 2000.
I. SUMMARY COMPENSATION TABLE
----------------------------------------------------------
ANNUAL COMPENSATION (1)
------------------------
NAME AND
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($)
-------------------------------------------------------------
Douglas A. Warner III 2000 $ 700,000 $13,700,000
Chairman of the Board 1999 700,000 4,600,000
1998 700,000 1,175,000
William B. Harrison, Jr. 2000 1,000,000 5,281,250
President and Chief 1999 930,769 5,281,250
Executive Officer 1998 769,231 5,072,917
Ramon de Oliveira 2000 400,000 8,600,000
Investment Management and
Private Banking
Donald H. Layton 2000 500,000 9,656,250
Investment Bank 1999 500,000 7,031,250
Marc J. Shapiro 2000 675,000 3,531,250
Finance, Risk Management, 1999 675,000 1,781,250
and Administration 1998 628,846 1,168,750
LONG-TERM COMPENSATION AWARDS
--------------------------------------
AWARDS PAYOUTS
------------------------- ----------
SECURITIES
RESTRICTED UNDERLYING LTIP ALL OTHER
NAME AND STOCK AWARD OPTIONS PAYOUTS COMPENSATION
PRINCIPAL POSITION ($) (2) GRANTED (#) ($) (3) ($) (4)
----------------------------- -----------------------------------------------------
Douglas A. Warner III $3,840,000 1,683,783 $9,696,667 $ 0
Chairman of the Board 4,600,000 555,000 0 0
1,175,000 462,500 0 0
William B. Harrison, Jr. 3,118,766 1,897,697 0 952,500
President and Chief 3,101,781 1,348,050 0 46,539
Executive Officer 2,182,796 330,000 1,117,032 38,462
Ramon de Oliveira 2,400,000 905,937 6,358,667 0
Investment Management and
Private Banking
Donald H. Layton 3,093,758 878,564 0 926,205
Investment Bank 2,268,769 237,741 0 625,000
Marc J. Shapiro 2,468,763 1,014,741 0 1,933,406
Finance, Risk Management, 1,712,128 263,649 0 964,468
and Administration 1,190,753 180,000 744,688 1,064,931
----------------------------------------------------------
1 Includes amounts paid or deferred during each year.
2 All awards of restricted stock units are valued as of
the date of grant. Awards for 2000 to Mr. Warner and Mr.
de Oliveira were vested at, but are not transferable for
three years from, the date of grant. Dividend
equivalents are payable on all restricted stock units.
The number and aggregate market value of all restricted
stock units held as of December 31, 2000 (including
forfeitable awards and awards of restricted stock units
made on January 18, 2001, relating to the 2000
performance bonus) were as follows: Mr. Warner: 231,971
units ($10,540,182); Mr. Harrison: 378,727 units
($17,208,408); Mr. de Oliveira: 361,719 units
($16,435,607); Mr. Layton: 286,821 units ($13,032,429);
and Mr. Shapiro: 246,943 units ($11,220,472).
3 The 2000 LTIP payouts for Mr. Warner and Mr. de Oliveira
represent awards earned under heritage Morgan's 1998
Performance Plan. The 1998 LTIP payouts for Mr. Harrison
and Mr. Shapiro represent the market value of common
stock distributed when Long-Term Incentive Plan
restricted stock units vested.
4 Includes employer contributions to 401(k) plans. Certain
executive officers and other employees may invest on an
after-tax basis in a pool of investments that become
available to JPMorgan Chase primarily through the
activities of JPMorgan Partners. Participating employees
purchase an interest in a limited partnership, the
general partner of which is a JPMorgan Chase subsidiary.
JPMorgan Chase makes a preferred equity capital
contribution to the partnership in an amount equal to
three times the amounts invested by the employee
participants and is entitled to receive a fixed annual
return specified under the terms of the limited
partnership agreement. Upon distribution of partnership
assets, JPMorgan Chase is entitled to a priority in the
return of its preferred equity contribution, plus the
fixed annual return, before distribution of any
remaining assets to the employee participants based on
their capital contributions. JPMorgan Chase made
preferred equity contributions to that partnership for
the year 2000 in the amount of $900,000 for each of Mr.
Harrison, Mr. Layton, and Mr. Shapiro, and for the year
1999 in the amount of $600,000 for Mr. Layton. Amounts
for Mr. Shapiro include allowances and reimbursements
related to his relocation to New York ($707,258 in 2000,
$673,300 in 1999, and $722,651 in 1998) and tax
reimbursements related to such payments ($291,191 in
2000, $257,418 in 1999, and $310,837 in 1998).
13
19
II. STOCK OPTION GRANT TABLES
----------------------------------------------------------
OPTION GRANTS -- JANUARY 2001(1)
---------------------------------------------- PERCENT OF
TOTAL OPTIONS EXERCISE OR
OPTIONS GRANTED TO BASE PRICE EXPIRATION
NAME GRANTED EMPLOYEES ($/SHARE) DATE
--------------------------------------------------------------------------------------------
Douglas A. Warner III 512,365(2) 0.44% $51.22 01/18/2011
1,171,418(3) 1.00 51.22 01/18/2011
William B. Harrison, Jr. 433,425(2) 0.37 51.22 01/18/2011
1,464,272(3) 1.25 51.22 01/18/2011
Ramon de Oliveira 320,228(2) 0.27 51.22 01/18/2011
585,709(3) 0.50 51.22 01/18/2011
Donald H. Layton 292,855(2) 0.25 51.22 01/18/2011
585,709(3) 0.50 51.22 01/18/2011
Marc J. Shapiro 429,032(2) 0.37 51.22 01/18/2011
585,709(3) 0.50 51.22 01/18/2011
OPTION GRANTS -- JANUARY 2001(1)
-----------------------------------
GRANT DATE
PRESENT
NAME VALUE
----------------------------------- -----------
Douglas A. Warner III $ 9,796,419
22,397,512
William B. Harrison, Jr. 8,287,086
27,996,881
Ramon de Oliveira 6,122,759
11,198,756
Donald H. Layton 5,599,388
11,198,756
Marc J. Shapiro 8,203,092
11,198,756
----------------------------------------------------------
1 All grants were nonqualified stock options, granted in
January 2001.
2 Option grants in 2001 to Mr. Harrison, Mr. Layton, and
Mr. Shapiro are exercisable in four equal annual
installments beginning on January 18, 2002; option
grants in 2001 to Mr. Warner and Mr. de Oliveira are
exercisable in three equal annual installments beginning
on January 18, 2002.
3 Special option grants under the Growth Performance
Incentive Program, as described in the compensation
committee report on pages 11 and 12 of this proxy
statement.
OPTION GRANTS -- JANUARY 2000(1)
------------------------------------------------------------------
PERCENT OF
TOTAL OPTIONS
OPTIONS GRANTED TO
NAME GRANTED (2) EMPLOYEES
------------------------------------------------------------------
William B. Harrison, Jr. 448,050 0.95%
Donald H. Layton 237,741 0.51
Marc J. Shapiro 263,649 0.56
OPTION GRANTS -- JANUARY 2000(1)
------------------------------------ ---------------------------------------
EXERCISE OR GRANT DATE
BASE PRICE EXPIRATION PRESENT
NAME ($/SHARE) DATE VALUE
------------------------------------ ---------------------------------------
William B. Harrison, Jr. $49.2113 01/19/2010 $9,870,543
Donald H. Layton 49.2113 01/19/2010 5,237,434
Marc J. Shapiro 49.2113 01/19/2010 5,808,187
----------------------------------------------------------
1 All grants were nonqualified stock options, granted in
January 2000.
2 Options grants in 2000 are exercisable in four equal
annual installments beginning on January 19, 2001.
For the option grants disclosed in the above tables,
present values on the grant dates were determined by using
the Black-Scholes option pricing model modified to take
dividends into account. The values set forth in the tables
should not be viewed in any way as a forecast of the
performance of our common stock, which will be influenced
by future events and unknown factors. The model as applied
used the applicable grant dates and the exercise prices
shown in the tables, and the fair market value of common
stock on the respective grant dates, which was in each
case the same as the exercise price. The model assumed (i)
a risk-free rate of return that was the implied rate on
10-year U.S. Treasury zero coupon bonds on the grant date;
(ii) stock price volatility; (iii) a constant dividend
yield that was based on the historical common stock
dividend as of the grant date; and (iv) the exercise of
all options on the final day of their 10-year terms. No
discount from the theoretical value was taken to reflect
the waiting period prior to vesting, the limited
transferability of the options, and the likelihood of the
options being exercised in advance of the final day of
their terms. The specific assumptions used to value the
option grants shown in the tables above were:
----------------------------------------------------------
DATE OF GRANT STOCK PRICE RISK-FREE RATE DIVIDEND YIELD VOLATILITY
-----------------------------------------------------------------------------------------
01/18/2001 $51.22 5.18% 2.50% 33%
01/19/2000 49.2113 6.77 2.22 36
-----------------------------------------------------------------------------------------
14
20
III. AGGREGATED OPTION EXERCISES IN 2000 AND YEAR-END
OPTION VALUES
----------------------------------------------------------
AGGREGATED OPTION EXERCISES
--------------------------------------------
SHARES ACQUIRED
NAME ON EXERCISE (#) VALUE REALIZED ($) (1)
------------------------------------------------------------------
Douglas A. Warner III 213,608 $4,548,647
William B. Harrison,
Jr. 31,500 1,387,970
Ramon de Oliveira 0 0
Donald H. Layton 0 0
Marc J. Shapiro 31,500 1,464,095
------------------------------------------------------------------
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS (2)
-------------------------- --------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
--------------------- -------------------------------------------------------
Douglas A. Warner III 2,361,910 1,100,000 $43,037,254 $18,959,625
William B. Harrison,
Jr. 1,762,500 1,580,550 38,993,354 1,672,143
Ramon de Oliveira 795,500 740,000 8,435,761 16,623,750
Donald H. Layton 1,035,273 462,741 27,240,953 912,078
Marc J. Shapiro 1,068,000 488,649 28,678,557 912,078
------------------------------------------------------------------
1 Where applicable, amounts indicated include values that
would have been realized on exercise but were deferred
into common stock units.
2 Value based on $45.4375, the closing price per share of
common stock on December 29, 2000.
IV. LONG-TERM INCENTIVE AWARDS
----------------------------------------------------------
All of the awards reported in the following tables will be
forfeited if applicable target prices are not met within
the time specified.
JANUARY 2001 AWARDS
----------------------------------------------------------
NUMBER PERFORMANCE PERIOD
NAME OF SHARES (#) (1) UNTIL MATURATION OR PAYOUT
-----------------------------------------------------------------------------------
William B. Harrison, Jr. 46,857 See footnote 2
Donald H. Layton 34,166
Marc J. Shapiro 39,047
-----------------------------------------------------------------------------------
PAYOUT IN SHARES IF AVERAGE
PRICE OF COMMON STOCK FOR 10
CONSECUTIVE BUSINESS DAYS IS
-----------------------------
$75 $85
-----------------------------
23,429 23,428
17,083 17,083
19,524 19,523
-----------------------------------------------------------------------------------
1 These restricted stock units were granted on January 18,
2001, at a stock price of $51.22 per share and will be
forfeited if the applicable target prices are not met on
or before January 25, 2006.
2 The restricted stock units will vest when the relevant
target prices are reached, but in no event earlier than
January 25, 2002, for units having a $75 target price and
no earlier than January 25, 2004, for those units having
a target price of $85.
----------------------------------------------------------
JANUARY 2000 AWARDS
----------------------------------------------------------
NUMBER PERFORMANCE PERIOD
NAME OF SHARES (#) (1) UNTIL MATURATION OR PAYOUT
------------------------------------------------------------------------------
William B. Harrison, Jr. 48,420 See footnote 2
Donald H. Layton 26,415
Marc J. Shapiro 30,480
------------------------------------------------------------------------------
PAYOUT IN SHARES IF AVERAGE
PRICE OF COMMON STOCK FOR 10
CONSECUTIVE BUSINESS DAYS IS
-----------------------------
NAME $73.33 $83.33
----------------------------- -----------------------------
William B. Harrison, Jr. 24,210 24,210
Donald H. Layton 13,208 13,207
Marc J. Shapiro 15,240 15,240
------------------------------------------------------------------------------
1 These restricted stock units were granted on January 19,
2000, at a stock price of $49.2113 per share and will be
forfeited if the applicable target prices are not met on
or before January 25, 2005.
2 The restricted stock units will vest when the relevant
target prices are reached, but in no event earlier than
January 25, 2001, for units having a $73.33 target price
and no earlier than January 25, 2003, for those units
having a target price of $83.33.
15
21
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
----------------------------------------------------------
Below is a line graph that compares the yearly percentage
change in the cumulative total stockholder return of our
common stock to the cumulative total return of the S&P 500
Index and the S&P Financial Index for each of the five
years in the period commencing December 31, 1995 and
ending December 31, 2000. The results are based on an
assumed $100 invested on December 31, 1995 and
reinvestment of dividends.
COMPARISONS OF FIVE-YEAR TOTAL STOCKHOLDER RETURN
----------------------------------------------------------
JPMORGAN CHASE S&P 500 S&P FINANCIAL
-------------- ------- -------------
1995 100.00 100.00 100.00
1996 156.77 122.96 135.18
1997 196.65 163.99 200.20
1998 260.70 210.86 223.08
1999 290.91 255.23 231.93
2000 261.76 231.99 292.42
16
22
RETIREMENT BENEFITS
----------------------------------------------------------
As of the date of this proxy statement, the retirement
plans of heritage Chase and heritage Morgan have not been
consolidated. They are expected to be merged as of January
1, 2002. Until the benefit plans are combined, employees
remain covered by the plans in which they participated at
the time of the Merger.
HERITAGE CHASE
----------------------------------------------------------
RETIREMENT PLAN Eligible U.S. employees (generally salaried employees) of
those heritage Chase subsidiaries that have elected to
participate in the heritage Chase Retirement Plan earn
benefits under the plan if they have been employed for at
least one year and have attained age 21. Benefits
generally become vested after five years of service. On a
monthly basis, a bookkeeping account in a participant's
name is credited with an amount equal to a percentage of
the participant's base salary, depending on years of
credited service, as follows:
----------------------------------------------------------
% OF
YEARS OF CREDITED SERVICE SALARY
-------------------------------------------------------------------------------------
less than
4 ............................................................ 4
4-6 ............................................................ 5
7-10 ............................................................ 6
11-15 ............................................................ 8
16-20 ............................................................ 10
21-25 ............................................................ 12
26 or more ............................................................ 14
-------------------------------------------------------------------------------------
These accounts also receive interest credits based on
average U.S. Treasury Bill rates for the previous year
plus 1%. In addition, certain annuity benefits earned by
participants under prior plans of heritage Chase were
converted to additional credit balances under the heritage
Chase Retirement Plan as of January 1, 1997. When a
participant terminates employment, the amount credited to
the participant's account is converted into an annuity or
paid to the participant in a lump sum.
SUPPLEMENTAL RETIREMENT
BENEFITS Supplemental retirement benefits are provided to the
heritage Chase executive officers and certain other
participants under various nonqualified, unfunded plans.
Unfunded benefits are provided to certain employees,
including each heritage Chase executive officer, whose
benefits under the heritage Chase Retirement Plan are
limited by type of compensation or amount under applicable
federal tax laws and regulations. Designated employees may
also receive an unfunded annual benefit at retirement
equal to a percentage of final average base pay
compensation multiplied by years of service reduced by the
amount of all benefits received under the heritage Chase
Retirement Plan and other nonqualified, unfunded
arrangements. Heritage Chase also provides a fixed
retirement benefit per year of service to certain
designated persons.
ESTIMATE OF RETIREMENT
BENEFITS The following table shows the estimated annual retirement
benefits, including supplemental retirement benefits under
the plans applicable to the named executive officer, that
would be payable to the officer listed if he were to
retire at age 65 at his 2000 base salary and payments were
made in the form of a 50% joint and surviving spouse
annuity, which is the normal form of payment for married
employees.
17
23
ESTIMATED AGE 65 RETIREMENT BENEFITS(1)
----------------------------------------------------------
ESTIMATED ANNUAL
NAME RETIREMENT BENEFIT
--------------------------------------------------------------------------------
William B. Harrison, Jr. ................................... $1,102,240
Donald H. Layton............................................ 806,001
Marc J. Shapiro............................................. 989,877
--------------------------------------------------------------------------------
1 Amounts include (i) interest credits for cash balances
projected to be 7.1% per year on annual salary credits
and 8.9% per year on prior service balances, if any, and
(ii) accrued benefits as of December 31, 2000, under
retirement plans then applicable to the named executive
officer. Benefits are not subject to any deduction for
social security payments.
HERITAGE MORGAN
----------------------------------------------------------
RETIREMENT PLAN Eligible U.S. employees (generally salaried employees) of
those heritage Morgan subsidiaries that participate in the
heritage Morgan Retirement Plan earn benefits under the
plan if they have been employed for at least six months
and have attained age 21. Through December 31, 1998,
retirement benefits were accrued under a traditional
defined benefit plan. Effective January 1, 1999, this plan
was converted to a cash balance formula and accrued
benefits under the prior formula were converted to
individual cash balance accounts based on the present
value of the accrued benefits as of the date of the
conversion.
Under the cash balance formula, each participant has an
account, for record-keeping purposes only, to which
credits are allocated each month based on 5% of each
participant's monthly base salary up to a maximum of
$12,500. In addition, all balances in the accounts of
participants receive interest credits. The interest rate
for a particular year is based on the average of the
monthly 30-year U.S. Treasury bond yields for the previous
year.
At retirement or termination of employment, an amount
equal to the then vested balance is payable to the
participant in the form of an immediate or deferred lump
sum or equivalent monthly annuity benefit for the entire
benefit under the heritage Morgan Retirement Plan.
To recognize the transition to the cash balance formula,
all participants of the plan who were earning benefits
under the prior formula as of December 31, 1998, are
eligible for a minimum benefit. This minimum benefit is
calculated using the prior, traditional final average pay
defined benefit formula using pay and credited service
through termination or December 31, 2003, if earlier.
After December 31, 2003, the accrued benefit under the
prior formula will be frozen and will represent a minimum
plan benefit. At retirement or termination, this minimum
benefit is payable in the same form as the cash balance
benefit.
SUPPLEMENTAL
RETIREMENT
BENEFITS Additional retirement benefits are provided to Mr. de
Oliveira and certain other heritage Morgan employees
assigned to positions outside their home countries. The
benefit is paid in a lump sum. As of December 31, 2000,
Mr. de Oliveira would have been entitled to receive a lump
sum payment of approximately $202,348.
ESTIMATE OF
RETIREMENT
BENEFITS The following table shows the estimated annual benefits
that would be payable to the executive officer listed if
he were to retire at age 65, subject to the plan's maximum
recognized base salary of $150,000 until that time, and
payments were made in the form of a 50% joint and
surviving spouse annuity, which is the normal form of
payment for married employees.
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ESTIMATED AGE 65 RETIREMENT BENEFITS(1)
----------------------------------------------------------
ESTIMATED ANNUAL
NAME RETIREMENT BENEFIT
---------------------------------------------------------------------------------------------
Douglas A. Warner III ............................................................ $436,819
Ramon de Oliveira(2) ............................................................ 49,171
---------------------------------------------------------------------------------------------
1 Amounts include interest credits at the actual rates for
all years through 2000 and 5.80% for all years following.
Benefits are not subject to any deduction for social
security payments.
2 Amount projected based on a single life annuity. Amount
does not include benefits payable by virtue of overseas
service.
TERMINATION ARRANGEMENTS
----------------------------------------------------------
Certain executive officers of JPMorgan Chase, including
Mr. Harrison, Mr. Layton, and Mr. Shapiro, are parties to
agreements that provide severance benefits if the
officer's employment is terminated by the employer without
"cause" or by the officer for "good reason" (each as
defined in the officer's agreement) during the term of the
agreement. The agreements generally expire on December 22,
2002. "Good reason" includes a substantial diminution in
the overall importance of the officer's role, balancing
any increase or decrease in the officer's responsibilities
against any increase or decrease in the relative sizes of
the businesses, activities, or functions for which the
officer has responsibility. Under the agreements, in the
event of termination by the employer without cause or by
the officer for good reason, an officer would be entitled
(a) to receive, in substantially equal payments over the
course of 24 months or, at the officer's election, in a
lump sum, an amount equal to the sum of two times (three
times in the case of Mr. Harrison) (i) such officer's
annual base salary and (ii) an amount equal to the average
percentage annual bonus paid or payable over the preceding
three years (expressed as a percentage of annual base
salary) and (b) subject to certain conditions, to continue
to participate in life, accident, and health insurance
plans for a 24 month period following the officer's
termination. If the officer had been employed by JPMorgan
Chase for five consecutive years prior to termination of
employment, such officer would also be entitled to
coverage under retiree medical and life insurance
programs. In addition, upon such termination, each officer
would be entitled to full vesting of stock options and
restricted stock units, except that performance-based
restrictions on restricted stock or other stock-based
awards would continue. The officer would continue to be
eligible for performance-based awards, which would become
payable at the end of the applicable performance period,
if and to the extent the relevant performance goals were
achieved.
ADDITIONAL INFORMATION ABOUT OUR DIRECTORS AND EXECUTIVE
OFFICERS
----------------------------------------------------------
SECTION 16(a)
BENEFICIAL
OWNERSHIP
REPORTING
COMPLIANCE Our directors and executive officers file reports with the
Securities and Exchange Commission and the New York Stock
Exchange indicating the number of shares of any class of
our equity securities they owned when they became a
director or executive officer and, after that, any changes
in their ownership of our equity securities. They must
also provide us with copies of these reports. These
reports are required by Section 16(a) of the Securities
Exchange Act of 1934. We have reviewed the copies of the
reports that we have received and written representations
from the individuals required to file the reports. Based
on this review, we believe that each of our executive
officers and directors has complied with applicable
reporting requirements for transactions in our securities
during 2000.
EXTENSIONS OF CREDIT
TO
DIRECTORS
AND OFFICERS In the ordinary course of business, our subsidiaries have
made loans and extended credit, and expect in the future
to make loans and extend credit, to our directors,
officers, and their associates, including corporations of
which these individuals may be a director, officer, or
both. None of these loans is preferential or
nonperforming.
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25
DIRECTOR AND OFFICER
TRANSACTIONS AND OTHER
BUSINESS
RELATIONSHIPS In the ordinary course of business, we use the products or
services of a number of organizations of which our
directors are officers or directors, and in the future we
expect to have similar transactions with those
organizations. Mrs. Kaplan is Of Counsel to a law firm
that has provided and is expected during 2001 to provide
certain legal services to us from time to time.
COMPENSATION AND
MANAGEMENT DEVELOPMENT
COMMITTEE INTERLOCKS
AND
INSIDER
PARTICIPATION No member of the Compensation and Management Development
Committee is or ever was a JPMorgan Chase officer or
employee. No member of the committee is, or was during
2000, an executive officer of another company whose board
of directors has a comparable committee on which one of
JPMorgan Chase's executive officers serves.
AUDIT COMMITTEE REPORT
----------------------------------------------------------
The Audit Committee of the JPMorgan Chase Board of
Directors (the Committee) is composed of four non-employee
directors and operates under a written charter adopted by
the Board of Directors (Exhibit A). The Board of Directors
has determined that each Committee member is independent
in accordance with the listing standards of the New York
Stock Exchange.
Management is responsible for the Firm's internal controls
and the financial reporting process. The external auditors
are responsible for performing an independent audit of the
Firm's consolidated financial statements in accordance
with generally accepted auditing standards and to issue a
report thereon. The Committee's responsibility is to
monitor and oversee these processes.
In this context, the Committee has met and held
discussions with management and the external auditors.
Management represented to the Committee that the Firm's
consolidated financial statements were prepared in
accordance with generally accepted accounting principles,
and the Committee has reviewed and discussed the
consolidated financial statements with management and the
external auditors. The Committee discussed with the
external auditors matters required to be discussed by
Statement on Auditing Standards No. 61 (Communication with
Audit Committees).
The Firm's external auditors also provided to the
Committee the written disclosures required by Independence
Standards Board Standard No. 1 (Independence Discussions
with Audit Committees), and the Committee discussed with
the external auditors that firm's independence.
Based on the Committee's discussion with management and
the external auditors and the Committee's review of the
representation of management and the report of the
external auditors to the Committee, the Committee
recommended to the Board of Directors, and the Board has
approved, that the audited consolidated financial
statements be included in the Firm's Annual Report on Form
10-K for the year ended December 31, 2000, for filing with
the Securities and Exchange Commission. The Committee and
the Board also have approved, subject to stockholder
ratification, the selection of the Firm's external
auditors.
Audit Committee
M. Anthony Burns (Chairman)
Hans W. Becherer
Frank A. Bennack Jr.
Lloyd D. Ward
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26
PROPOSAL 2: APPOINTMENT OF INDEPENDENT ACCOUNTANT
----------------------------------------------------------
The Board of Directors has appointed
PricewaterhouseCoopers LLP (PwC), 1177 Avenue of the
Americas, New York, New York 10036, as independent
accountant to audit the financial statements of JPMorgan
Chase and its subsidiaries for the year ending December
31, 2001. A resolution will be presented to the meeting to
ratify their appointment.
AUDIT FEES
----------------------------------------------------------
The core fee in respect of the audit of the financial
statements for the year ended December 31, 2000, and the
reviews of the financial information included in the
Firm's Forms 10-Q for the period, was $21.3 million.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION
FEES
----------------------------------------------------------
The fees billed by PwC in respect of such services for
2000 were $11.1 million.
ALL OTHER FEES
----------------------------------------------------------
The aggregate fees billed by PwC in respect of other
professional services provided to the Firm in 2000 were
$73.1 million. These included services related to third
party trusts, Securities and Exchange Commission filings,
controls reviews, regulatory and accounting advice, tax
advisory, attestation and non-financial information
systems consulting engagements.
The Audit Committee has considered whether the provision
of non-core audit services to the Firm by PwC is
compatible with the maintenance of PwC's independence.
A member of PwC will be present at the meeting, will have
the opportunity to make a statement, and will be available
to respond to appropriate questions by stockholders. The
affirmative vote of a majority of the total number of
shares of common stock represented at the annual meeting
and entitled to vote is needed to ratify the appointment.
If the stockholders do not ratify the appointment of PwC,
the selection of the independent accountant will be
reconsidered by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE
FOR RATIFICATION OF THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP.
PROPOSAL 3: APPROVAL OF EMPLOYEE STOCK PURCHASE PLAN
----------------------------------------------------------
Our Board of Directors has approved a broad-based Employee
Stock Purchase Plan (Plan). If approved at the annual
meeting, the Plan would replace the current Employee Stock
Purchase Plan initially approved in 1983, and will become
effective January 1, 2002.
Under the Plan, eligible employees may purchase our common
stock through payroll deductions. It is intended to be a
plan described in Section 423 of the Code.
The following description of the Plan is a summary. A
complete copy of this Plan was filed with the Securities
and Exchange Commission at the same time as the proxy
statement. This summary is qualified in its entirety by
reference to that filing.
SUMMARY OF THE PLAN
----------------------------------------------------------
SHARES AVAILABLE We may sell to eligible employees pursuant to offers made
under the Plan up to 30 million shares of our common
stock, subject to adjustments for stock dividends, splits,
and other events that affect the number of outstanding
shares of our common stock. The common stock offered under
the Plan may be shares that have been authorized but not
issued or that have been previously issued and reacquired
by us, or both.
ADMINISTRATION A committee of the Board of Directors administers the Plan
and has the right and authority to:
- interpret the Plan;
- establish, amend, and rescind any rules and
regulations relating to the Plan;
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27
- determine the terms and provisions of any offers made
under the Plan;
- determine the subsidiaries whose employees will be
eligible to participate;
- make all other determinations necessary or advisable
for the administration of the Plan; and
- in any manner and to any extent correct any defect,
supply any omission, or reconcile any inconsistency
in the Plan or any offer made under the Plan.
The committee can delegate the above authority.
ELIGIBILITY The offers to purchase shares under the Plan will be made
to eligible employees of JPMorgan Chase and designated
subsidiaries. For these purposes, with respect to all
offers, the committee may designate the subsidiaries whose
employees are eligible to participate. A subsidiary would
include an entity in which we own directly or indirectly
50 percent or more of the outstanding stock.
MAXIMUM PURCHASE Each year the committee shall establish the amount of a
participant's compensation that may be used to purchase
stock during a calendar year. In no event may the amount
of stock purchased by a participant in a calendar year
exceed $25,000 measured as of the date of the offer.
OFFERS The committee will provide to each eligible employee an
offer to purchase shares of our common stock from us,
which offer will be outstanding for a specific period of
time. The offer will provide the number of shares of our
common stock to be purchased. If the eligible employee
accepts the offer, we will, during the offering period,
withhold from the employee's pay the amount designated by
such individual. These withheld amounts will be credited
to a Plan account in the name of the employee, and this
account may bear interest, at a rate determined by the
committee. The amount in the Plan account may be used by
the employee to purchase our common stock.
TYPES OF OFFERING An eligible employee may purchase shares of our common
stock, depending on the terms of the offer, for a fixed
price or a variable price, or both. In a fixed price
offering, the purchase price of a share of our common
stock will be at least 85% of its fair market value on the
date of the offer. In a variable price offering, the
purchase price per share will be at least 85% of its fair
market value on the date of purchase.
The committee will establish the types of offers
(including offers which combine fixed and variable
pricing) and the periods that the offers will be
outstanding. However, by law, a fixed price offer and a
variable price offer may not exceed 27 months and five
years, respectively.
PURCHASE OF SHARES At the end of the offering period, if the fair market
value of a share of our common stock is equal to or
greater than the purchase price specified in the offer,
the shares covered by the offer will be purchased
automatically by the employee to the extent of the amount
in the employee's Plan account. However, the employee may
elect not to purchase any shares or to purchase fewer
shares than could be acquired with the amount held in the
employee's Plan account. Any balance in the employee's
Plan account after purchase of the shares will be paid to
the employee. If an employee does not purchase any shares,
all funds in the employee's Plan account will be paid to
the employee with interest, if applicable.
The committee may permit an employee to purchase all or
part of the shares before the end of the offering period
under such terms and conditions as it may specify.
TERMINATION OF OFFER Any employee may terminate the offer before the end of the
offering period and receive a cash refund of any remaining
funds in the employee's Plan account, including accrued
interest if any.
TERMINATION OF
EMPLOYMENT The terms and conditions of an offer will govern the
effects of an employee's retirement, death, disability,
leave of absence, or any other termination of employment
during the offering period.
AMENDMENTS The committee may amend, suspend, or discontinue the Plan
or amend outstanding offers made under the Plan as long as
such action is not prohibited by Section 423 of the Code.
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28
FEDERAL INCOME TAX CONSEQUENCES
----------------------------------------------------------
The following is a brief summary of the significant United
States federal income tax consequences of transactions
under the Plan. The summary does not describe state,
local, or foreign tax consequences.
The Plan is intended to be an "employee stock purchase
plan" satisfying the requirements of Section 423 of the
Code. The Plan is not qualified under section 401(a) of
the Code and is not subject to the provisions of the
Employee Retirement Income Security Act of 1974.
Any interest earned on amounts deposited to an employee's
Plan account will represent taxable income to the
employee.
An eligible employee will not recognize taxable income on
the grant of an offer. An employee who purchases shares of
stock pursuant to an offer will not recognize income on
the receipt of the shares. The tax basis of the shares
purchased will be the price at which they are purchased.
The employee's holding period for a share will begin on
the date the employee purchases the shares.
If the shares purchased under the Plan are held for more
than (i) one year after the date of purchase, and (ii) two
years after the date of the offer, the employee will
recognize taxable ordinary income at the time of any sale,
exchange, or gift. The amount of such ordinary income will
be equal to the lesser of (i) the excess of the fair
market value of the shares on the date of the offer over
the purchase price, or (ii) the excess of the fair market
value of the shares at the time of their disposition over
their purchase price.
Any additional gain recognized on the disposition will be
taxed as long-term capital gain.
If the holding periods set forth above are not satisfied,
the employee will recognize ordinary income at the time of
disposition (which includes a gift) of the shares. The
amount will equal the excess of the fair market value of
the shares of stock at the date of purchase over the
purchase price. This amount is considered income in the
year of disposition. Any additional gain or loss
recognized by the employee on the disposition will be
short-term or long-term capital gain or loss, depending on
the employee's holding period.
We will not receive a tax deduction when shares of stock
are purchased under the Plan and held for the requisite
period described above. However, when shares of stock
purchased under the Plan are disposed of prior to the one
and two year periods described above, the participant's
employer is generally entitled to a tax deduction at that
time and in the amount of the compensation income
recognized by the participant.
VOTE REQUIRED The affirmative vote of a majority of the total number of
shares of common stock represented at the annual meeting
and entitled to vote is needed to approve the Plan. If the
Plan is not approved, the current employee stock purchase
plan will remain in effect.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE
FOR THE PROPOSAL TO APPROVE THE EMPLOYEE STOCK PURCHASE
PLAN.
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29
PROPOSALS 4-6: STOCKHOLDER PROPOSALS
----------------------------------------------------------
If a majority of the shares of common stock entitled to
vote at the meeting are voted in favor of any of the
following proposals, then the proposals will be approved.
PROPOSAL 4
----------------------------------------------------------
Mrs. Evelyn Y. Davis, Watergate Office Building, 2600
Virginia Avenue, N.W., Suite 215, Washington, D.C. 20037,
the holder of record of 1,566 shares of common stock, has
advised us that she plans to introduce the following
resolution:
"RESOLVED: That the shareholders recommend that the Board
take the necessary steps that Chase Manhattan specifically
identify by name and corporate title in all future proxy
statements those executive officers, not otherwise so
identified, who are contractually entitled to receive in
excess of $250,000 annually as a base salary, together
with whatever other additional compensation bonuses and
other cash payments were due them.
"REASONS: In support of such proposed Resolution it is
clear that the shareholders have a right to
comprehensively evaluate the management in the manner in
which the Corporation is being operated and its resources
utilized. At present only a few of the most senior
executive officers are so identified, and not the many
other senior executive officers who should contribute to
the ultimate success of the Corporation. Through such
additional identification the shareholders will then be
provided an opportunity to better evaluate the soundness
and efficacy of the overall management.
"If you AGREE, please mark your proxy FOR this
resolution."
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE
AGAINST THIS PROPOSAL FOR THE FOLLOWING REASONS:
The Board of Directors believes that the adoption of this
proposal would be harmful to the Firm by providing
competitors with detailed information not otherwise
available to them that they might use in seeking to
attract talented employees from us. Our competitors do not
make this information available and the risk associated
with this proposal is not counterbalanced by any
meaningful additional information to our stockholders. We
disclose in our proxy statement detailed information
regarding the compensation of our most highly compensated
executive officers, including the terms and conditions of
any contractual agreements and our compensation policies.
In addition, overall salaries and the cost of employee
benefits are components of noninterest expense that are
disclosed on a line by line basis in our financial
reports. Our proxy statement and financial disclosures
follow the rules of the Securities and Exchange
Commission, rules that we believe provide stockholders
with sufficient information with respect to executive
compensation matters without the competitive risks
associated with this proposal. Accordingly, the Board
recommends a vote against this proposal.
PROPOSAL 5
----------------------------------------------------------
Mr. Richard A. Dee, 115 East 89th Street, New York, New
York 10128, the holder of 813 shares of common stock, has
advised us that he intends to introduce the following
resolution:
"Stockholders of publicly-owned corporations do not
'elect' directors. Directors are 'selected' by incumbent
directors and managements -- stockholders merely 'ratify'
or approve director selections much as they ratify
selections of auditors.
"The term 'Election of Directors' is misused in corporate
proxy materials to refer to the process by which directors
are empowered. The term is inappropriate -- and it is
misleading. With no choice of candidates, there is no
election.
"Approval of this Corporate Governance proposal will
provide Chase Manhattan stockholders with a choice of
director candidates -- an opportunity to vote for those
whose qualifications and views they favor. And approval
will provide stockholders with 'duly elected'
representatives.
24
30
"In a democracy, those who govern are duly elected by
those whom they represent -- and they are accountable to
those who elect them. Continuing in public office requires
satisfying constituents, not just nominators. Corporate
directors, who often must divide their time between many
boards, take office unopposed.
"It is hereby requested that the Board of Directors adopt
promptly a resolution requiring the Governance Committee
to nominate two candidates for each directorship to be
filled by voting of stockholders at annual meetings. In
addition to customary personal background information,
Proxy Statements shall include a statement by each
candidate as to why he or she believes they should be
elected.
"As long as incumbents are permitted to select and to
propose only the number of so-called "candidates" as there
are directorships to be filled -- and as long as it is
impossible, realistically, for stockholders to utilize
successfully what is supposed to be their right to
nominate and elect directors -- there will be no practical
means for stockholders to bring about director
turnover -- until this or a similar proposal is adopted.
Turnover reduces the possibility of inbreeding and
provides sources of new ideas, viewpoints, and approaches.
"The 'pool' from which corporate directors are selected
must be expanded from the current preponderance of
chairmen and CEO's to include younger executives,
including many more women, whose backgrounds qualify them
well to oversee a company business and to represent
shareholder interests properly.
"Although Delaware law provides for director nominees to
be selected by incumbents, approval of this proposal will
enable Chase Manhattan stockholders to replace any or all
directors if they become dissatisfied with them -- or with
the results of corporate policies and/or performance. Not
a happy prospect even for those able to nominate their
possible successors!
"The benefits that will accrue to Chase Manhattan
stockholders by having Directors that have been
democratically-elected, and who are willing to have their
respective qualifications reviewed and considered
carefully by stockholders, far outweigh any arguments
raised by those accustomed to being 'selected.'
"Please vote FOR this proposal."
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE
AGAINST THIS PROPOSAL FOR THE FOLLOWING REASONS:
The Board of Directors believes in the importance of a
sound process for the nomination of directors and believes
that the current process serves stockholders well. Under
current procedures, the Governance Committee of the Board,
which consists solely of non-employee directors, considers
all proposed nominees for director, including sitting
directors and nominees for which a stockholder has
submitted a written recommendation. Any JPMorgan Chase
stockholder may submit a written recommendation for
consideration by the Governance Committee as noted on page
8 of this proxy statement. In addition, any stockholder
who complies with the advance notice provisions of our
By-laws described on page 27 of this proxy statement may
nominate a director at the annual meeting of stockholders.
Also, any stockholder may write in the name of a candidate
on the stockholder's proxy card or vote for some directors
and withhold votes from others. Finally, any stockholder
may propose an alternate slate of directors as long as the
stockholder complies with the special rules of the
Securities and Exchange Commission relating to election
contests.
In addition to the current procedures, the proposal would
require the Governance Committee to nominate two
candidates for each directorship and to include a
statement by each as to why he or she should be elected.
The Board of Directors believes that these proposed
procedures would politicize the director election process
and are inappropriate for a business organization. The
current procedures reflect the Board's responsibilities
for its own self-evaluation in terms of size, composition,
and performance, and for recommending candidates to
stockholders. The Board weighs renomination of incumbent
directors and candidates for vacancies or new Board
positions against its desired composition, and in light of
the circumstances of the company. In the absence of
special circumstances, changes to Board membership
25
31
should be incremental so that there is a balance between
renewal and experience. The Board believes that the
nomination of two candidates for each Board vacancy would
be inconsistent with this objective and would discourage
qualified candidates from standing for election.
Accordingly, the Board recommends a vote against this
proposal.
PROPOSAL 6
----------------------------------------------------------
The Sisters of Charity of St. Elizabeth, P.O. Box 476,
Convent Station, New Jersey 07961-0476, the holders of
1,000 shares of common stock, have advised us that they
intend to introduce the following resolution, which is
co-sponsored by Sisters of Charity of the Incarnate Word;
Sisters of Charity, of Mount St. Joseph; American Friends
Service Committee; Mercy Consolidated Asset Management
Program, Maryknoll Fathers and Brothers; Walden Asset
Management; and General Board of Global Ministries of the
United Methodist Church, each of whom is the beneficial
owner of at least 100 shares of common stock:
"Shareholder resolution on international financial
stabilization
"WHEREAS the stability of the international financial
system is crucial to the profitability of our corporation
not only through its direct exposure but also indirectly
through the loss of markets. Markets have been lost
because of the financial turmoil arising from the Mexican,
Asian and Russian crises of the past five years. The
effects of these crises have fallen heavily upon the
developing consumer markets, i.e. the middle class and
poor segments of those societies, through the loss of jobs
and higher prices for essential goods.
"WHEREAS the Independent Task Force sponsored by the
Council on Foreign Relations has produced a report
Safeguarding Prosperity in a Global Financial System, (The
Report). This report's recommendation: "Capital
Flows-Avoiding too Much of a Good Thing" stated the
problem of private capital flows as: "The challenge,
therefore, is to find ways to moderate the boom-bust cycle
in private capital flows and to tilt the composition of
such flows toward longer term, less crisis-prone
components...'
- The Report goes on to say: "The IMF should
therefore advise those emerging economies with
fragile domestic financial sector to impose
Chile-type holding--period taxes on short-term
inflows until their ability to intermediate such
flows is stronger."
- With regard to the instability arising from highly
leveraged institutions (HLI), such as hedge funds,
C. Fred Bergsten et al recommend in a dissenting
view in The Report: "A sensible first step is the
imposition of higher risk weights for bank loans to
offshore financial centers that do not meet
international financial standards, (offshore centers
are) the locus of most HLI activity."
- Direct exposure to HLIs is also a problem, and many
Money Center banks had to help bail out Long-Term
Capital Management, an HLI, during the Russian
Crisis to protect their exposure.
- Bergsten, Volker, et al in a dissenting view in the
Report also urged target zones for the G-3
currencies as being central to moderating these
instabilities. We believe that short-term
fluctuations of rates on large money flows drive
currency exchange rates from the levels that would
be dictated by basic economic factors and thereby
contribute to the instability. Therefore we believe
that something like a tax on international
transactions (Tobin tax) should be considered by all
OECD member countries.
"We believe that the corporation has an important role to
play in promoting international financial stability and
thereby promoting its own long-term profitability.
"BE IT RESOLVED that the Board of Directors develop a
publicly stated policy for the Corporation to restrain the
corporation's short-term lending and exposure of other
financial instruments to emerging market countries,
especially the inter-bank market, to highly leveraged
institutions and to poorly regulated banking centers, if
need be by establishing the corporation's own internal
capital requirements at higher levels than required by
regulators, and to promote and support such measures by
the IMF, Bank for International Settlements and other such
coordinating bodies."
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THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE
AGAINST THIS PROPOSAL FOR THE FOLLOWING REASONS:
We provide lending and other services to clients and
counterparties based on our assessments of the
creditworthiness of such parties and subject to a variety
of controls, including country risk limits that we review
periodically and that we judge to be appropriate.
Notwithstanding broad classifications, the circumstances
of individual countries and individual borrowers vary
greatly. Loans are considered on a case by case, country
by country basis. We believe that this approach has served
stockholders well and should be continued. We also
continue to review and provide input and support, as we
deem appropriate, to proposals by governmental and non-
governmental bodies addressing international economic
matters. Accordingly, the Board recommends a vote against
this proposal.
STOCKHOLDER PROPOSALS AND NOMINATIONS FOR THE 2002 ANNUAL
MEETING
----------------------------------------------------------
PROXY STATEMENT
PROPOSALS Under the rules of the Securities and Exchange Commission,
proposals that stockholders seek to have included in the
proxy statement for our next annual meeting of
stockholders must be received by the Secretary of JPMorgan
Chase not later than November 30, 2001.
OTHER PROPOSALS AND
NOMINATIONS Our By-laws govern the submission of nominations for
director or other business proposals that a stockholder
wishes to have considered at a meeting of stockholders,
but which are not included in JPMorgan Chase's proxy
statement for that meeting. Under our By-laws, nominations
for director or other business proposals to be addressed
at our next annual meeting may be made by a stockholder
entitled to vote who has delivered a notice to the
Secretary of JPMorgan Chase no later than the close of
business on February 15, 2002, and not earlier than
January 16, 2002. The notice must contain the information
required by the By-laws.
These advance notice provisions are in addition to, and
separate from, the requirements that a stockholder must
meet in order to have a proposal included in the proxy
statement under the rules of the Securities and Exchange
Commission.
A proxy granted by a stockholder will give discretionary
authority to the proxies to vote on any matters introduced
pursuant to the above advance notice By-law provisions,
subject to applicable rules of the Securities and Exchange
Commission.
Copies of our By-laws may be obtained from the Secretary.
Anthony J. Horan
Secretary
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EXHIBIT A
----------------------------------------------------------
AUDIT COMMITTEE CHARTER
----------------------------------------------------------
MISSION On behalf of the Board of Directors, review and discuss
reports and other communications concerning management's
responsibilities to assure that there is in place an
effective system of controls reasonably designed to:
- safeguard the assets and income of the Firm
- provide for reliable and timely financial information
and statements
- maintain compliance with the Firm's ethical standards,
policies, plans, and procedures, and with laws and
regulations
MEMBERSHIP The Board, by resolution adopted by a majority of the
entire Board, shall appoint an Audit Committee composed of
not fewer than three of its members, each of whom shall
have no relationship to the Firm that may interfere with
the exercise of his or her independence as a committee
member from management and the Firm.
Each member of the Audit Committee shall be financially
literate, or become financially literate within a
reasonable period of time after appointment to the Audit
Committee. At least one member of the Audit Committee
shall have accounting or related financial management
expertise.
Determinations of financial literacy and financial
accounting or related financial management expertise shall
be made by the Board of Directors as the Board interprets
such qualifications in its business judgment. Where a
director may have a business relationship with the Firm,
the Board of Directors may determine in its business
judgment that the relationship would not interfere with
the director's exercise of independent judgment.
RELATIONSHIP TO
INTERNAL AND
EXTERNAL AUDITORS The external auditor for the Firm is ultimately
accountable to the Board of Directors and Audit Committee
of the Firm. The Audit Committee and the Board of
Directors have the ultimate authority and responsibility
to select, evaluate, and, where appropriate, replace the
external auditor, subject to stockholder ratification of
the selection, if such ratification is required or sought.
Accordingly, the Audit Committee shall recommend to the
Board of Directors the engagement of the external auditor,
based on review and discussion by the Audit Committee as
to the overall plan of audit, adequacy of scope,
coordination with the General Auditor, reasonableness of
fees, quality of prior performance, composition of the
audit team, results of the external auditor's last peer
review, the status of significant litigation problems that
may affect them, and the amount of non-audit services
provided by them. The Audit Committee shall advise the
Board of Directors when any change in the company engaged
as the principal external auditor seems necessary, and
shall review any significant disagreements that arise
between management and the external auditor.
The external auditor shall submit on a periodic basis to
the Audit Committee a formal written statement delineating
all relationships between the external auditor and the
Firm. The Audit Committee is responsible for actively
engaging in a dialogue with the external auditor with
respect to any disclosed relationships or services that
may impact the objectivity and independence of the
external auditor and for recommending that the Board of
Directors take appropriate action in response to the
external auditor's report to satisfy itself of the
external auditor's independence.
The Audit Committee shall review and approve management's
conclusion that any proposed performance of significant
non-audit services by the principal external auditor would
not affect the independence of such auditor in the
performance of its audit services.
The Audit Committee shall review and concur in the
appointment, replacement, reassignment, or dismissal of
the General Auditor.
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OTHER
RESPONSIBILITIES In carrying out its responsibilities, the Audit Committee
believes its policies and procedures should remain
flexible in order to best react to changing circumstances.
Subject to this, in carrying out its responsibilities, the
Audit Committee shall:
1. Review and approve the General Auditor's proposed
annual audit plan and financial budget. Receive
periodic communications from the General Auditor on
the completion status of the annual audit plan, as
well as a summary of significant changes made to such
plan.
2. Receive periodic communications and presentations from
the General Auditor on the adequacy of management's
systems of control, including computerized information
system controls and security, in the Firm and its
subsidiaries; significant audit findings identified;
and initiation and status of significant special
investigations.
3. Receive periodic presentations from the General
Auditor on the review, and related results, of each
Executive Committee member's expense account and
perquisites, including their use of corporate assets.
4. Receive, periodically, presentations from management
on the accounting, income tax, and reporting policies,
and significant accounting estimates (including
related tax reserves) which provide for reliable
financial statements and other financial or
informational reports. Also receive from management,
periodically, presentations on significant operating
and control issues in internal audit reports,
management letters, and regulatory authorities'
examination reports. Initiate such other inquiries
into the affairs of the Firm as it deems necessary.
5. Review with management the program established that
provides for compliance with laws and regulations;
review significant legal cases outstanding against the
Firm or its subsidiaries.
6. Review the program established by management that
monitors compliance with the Firm's code of conduct
for employees.
7. Review internal accounting control reports (management
letters) submitted by the external auditor which
relate to the Firm. Review summaries of significant
issues in management letters addressed to subsidiaries
of the Firm.
8. Receive, when needed, presentations from management
and the external auditor on the identification and
resolution status of material weaknesses and
reportable conditions in the internal control
environment, including computerized information system
controls and security, if any.
9. Review, periodically, with management and the external
auditor the audit conclusions regarding significant
accounting estimates (including tax reserves).
10. Review regulatory authorities' significant examination
reports pertaining to the Firm, its subsidiaries and
associated companies.
11. Meet, periodically, with the General Auditor, the
external auditor, and management in separate private
sessions to discuss any matters that the Audit
Committee or these groups believe should be discussed.
Also, meet periodically in separate executive
sessions.
12. Retain counsel, when deemed necessary, without prior
permission from the Firm's Board of Directors or
management.
13. Fulfill the requirements of Sections 122 and 123 of
the New York State Banking Law with respect to
conducting an annual Directors' Examination. Report
thereon to the Board of Directors and the
Superintendent of Banks of the State of New York.
Utilize assistance, as deemed necessary by the Audit
Committee, to discharge these statutory duties.
14. Review summaries of significant issues in reports of
Directors' Examinations, or other similar
examinations, of the subsidiaries of the Firm.
15. Receive communications and presentations from
management summarizing the Suspicious Activity Reports
filed by bank subsidiaries with the appropriate
regulatory and law enforcement agencies.
16. Review management reports issued by the Firm in
accordance with the Federal Deposit Insurance
Corporation Act of 1991 and the external auditor's
corresponding attestation and agreed-upon procedures
reports.
17. Review the financial statements contained in the
Annual Report to Stockholders, including the opinion
of the external auditor. Review reports received from
the external auditor on its limited quarterly reviews
of financial statements.
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18. Review, annually, the Audit Committee's charter and
update it as necessary. Also, annually review and
compare the activities of the committee against the
charter responsibilities.
19. Maintain minutes and other relevant documentation of
all meetings held.
20. Report, periodically, to the Board of Directors on the
foregoing matters.
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36
Copyright 2001 J.P. Morgan Chase & Co.
All rights reserved. (LOGO)
37
2002 EMPLOYEE STOCK PURCHASE PLAN
OF J.P. MORGAN CHASE & CO.
EFFECTIVE JANUARY 1, 2002
1. PURPOSE
The purposes of the 2002 Employee Stock Purchase Plan of J.P. Morgan Chase & Co.
are (i) to serve as an employment incentive and (ii) to encourage stock
ownership by Eligible Employees to align their long-term financial interests
with those of the Company's stockholders. It is the intention of the Company to
have the Plan qualify as an "employee stock purchase plan" under Section 423 of
the Code. The provisions of the Plan, accordingly, shall be construed so that
participation in the Plan will be consistent with the requirements of that
Section of the Code.
2. EFFECTIVE DATE AND DURATION OF PLAN
The Plan will become effective January 1, 2002, subject to approval by the
stockholders of the Company. The Plan shall have an indefinite duration.
3. DEFINITIONS
3.1 "Offer" means an offer by the Company, the form of which has been approved
by the Committee, pursuant to which Eligible Employees may purchase Common Stock
under the Plan.
3.2 "Board" means the Board of Directors of the Company.
3.3 "Closing Date" means the last day of the stated term of an Offer as
established by the Committee.
3.4 "Code" means the Internal Revenue Code of 1986, as amended, including any
rules and regulations promulgated thereunder and any successor thereto.
3.5 "Committee" means the Compensation and Management Development Committee of
the Board or such other committee of the Board, as the Board may specify.
3.6 "Common Stock" means the Common Stock of the Company.
3.7 "Company" means J.P. Morgan Chase & Co., a Delaware corporation.
3.8 "Compensation" means, unless the Committee determines otherwise, base salary
plus any shift differential, or for Eligible Employees in certain sales
positions that are paid in part or exclusively on a draw and commission basis,
"Compensation" as determined by the Committee from time to time. "Compensation"
does not include any incentive or other awards, bonus payments, overtime
payments, or similar distributions or contributions to any employee benefit plan
of the Company or any Designated Subsidiary.
3.9 "Designated Subsidiary" means, with respect to any Offer, a Subsidiary that
has been designated by the Committee resulting in the Employees of such
Designated Subsidiary being eligible to participate with respect to such Offer.
38
3.10 "Eligible Employees" means those Employees who have been designated by the
Committee, in its discretion, in accordance with the provisions of Section 423
of the Code and Section 4 as being eligible to participate in the Plan.
3.11 "Employee" means an individual who is an employee of the Company or a
Designated Subsidiary as of the date or dates determined by the Committee.
3.12 "Fair Market Value" as of any given date means, for each share of Common
Stock, the average of high and low sale prices of the Common Stock as reported
on the New York Stock Exchange (the "NYSE") composite tape on the applicable
date, or, if there are no such sale prices of Common Stock reported on the NYSE
composite tape on such date, then the average price of the Common Stock on the
last previous day on which high and low sale prices are reported on the NYSE
composite tape; provided that notwithstanding the foregoing, the Committee can
select such other method of establishing "Fair Market Value" as it deems
reasonable and appropriate.
3.13 "Plan" means the 2002 Employee Stock Purchase Plan of J.P. Morgan Chase &
Co., as amended from time to time.
3.14 "Subsidiary" means any corporation (other than the Company) in an unbroken
chain of corporations including the Company provided that, on the date of an
Offer hereunder, each of the corporations (other than the last corporation in
the unbroken chain) owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.
3.15 "1934 ACT" means the Securities Exchange Act of 1934, as amended, including
the rules and regulations promulgated thereunder and any successor thereto.
4. ADMINISTRATION
The Committee shall have full and exclusive power to administer and interpret
the Plan. The Committee may determine, from time to time, that the Company shall
make Offers to Eligible Employees and the form of acceptance of such Offers. The
Committee's authority includes, but is not limited to the authority to, from
time to time, subject to the express provisions of the Plan and Section 423 of
the Code:
(a) determine whether Offers shall be made under Section 8(a) or 8(b) of
the Plan or combination thereof;
(b) determine which Employees of a Designated Subsidiary shall be Eligible
Employees and which Subsidiaries shall be Designated Subsidiaries and in
making such determination may exclude:
- Employees who have employed less than 2 years by a Designated
Subsidiary;
- Employees whose customary employment is 20 hours or less per
week;
- Employees whose customary employment is for not more than 5
months in any calendar year; and
- Employees who are highly compensated employees within the
meaning of Section 414(q) of the Code.
(c) prescribe and modify the form and provisions of the Offers and the
method of delivery and acceptance;
(d) decide questions that may arise with respect to the interpretation,
construction or application of the Plan or any Offer;
(e) amend, suspend or terminate the Plan, in accordance with the
provisions of Section 20;
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(f) adopt and amend such administrative rules, regulations, procedures and
guidelines governing the Plan and the Offers as it may deem necessary in
its discretion;
(g) establish all other terms, conditions, restrictions and limitations
applicable to Offers, including but not limited to those relating to an
Eligible Employee's retirement, death, disability, leave of absence or any
other termination of employment; and
(h) establish the terms, conditions, limitations and restrictions that
will apply to Eligible Employees working outside of the United States, to
the extent necessary to comply with local laws, rules, regulations and
policies.
The Committee shall have the power to correct any defect, supply any omission or
clarify any inconsistency in the Plan and/or in any Offer and to take such
actions and make such administrative determinations that the Committee deems
appropriate in its discretion. Any decision of the Committee in the
administration of the Plan, as described herein, shall be final, binding and
conclusive on all parties concerned, including the Company, its stockholders,
subsidiaries and all Employees.
The Committee may at any time delegate its responsibilities regarding the
administration of the Plan to another committee or to one or more officers of
the Company. Such delegations need not be in writing.
No member of the Committee shall be personally liable for any action or
determination made with respect to the Plan, except for his or her own willful
misconduct.
5. ELIGIBILITY
(a) Only Eligible Employees may be granted an Offer under the Plan.
(b) No Eligible Employee may accept an Offer (nor may an Offer be made) if such
Eligible Employee, immediately after the Offer is accepted, owns stock having
five percent (5%) or more of the total combined voting power or value of all
classes of stock of the Company or any Subsidiary. For this purpose, the rules
of Section 424(d) of the Code shall apply in determining the stock ownership of
an Eligible Employee. For these purposes, stock that may be purchased by an
Eligible Employee under an outstanding Offer shall be treated as owned by the
Eligible Employee.
6. COMMON STOCK
(a) The stock subject to purchase pursuant to Offers shall be shares of Common
Stock that have been authorized but unissued, or have been previously issued and
reacquired by the Company, or both. Subject to adjustment in accordance with the
provisions of Section 16, the aggregate number of shares of Common Stock that
may be purchased by Eligible Employees pursuant to Offers under the Plan shall
not exceed 30 million shares.
(b) In the event that any Offer expires or is terminated for any reason, any
shares of Common Stock that were the subject of such Offer but were not
purchased may be subject to another Offer under this Plan.
7. NUMBER OF SHARES AN ELIGIBLE EMPLOYEE MAY PURCHASE
(a) The Committee may offer to Eligible Employees an option to purchase up to a
certain number of shares of Common Stock as shall have an aggregate purchase
price not in excess of (i) a specified percentage (not to exceed 100%) of each
Eligible Employee's Compensation or (ii) an aggregate purchase price expressed
in U.S. dollars, in each case, as determined by the Committee and subject to the
provisions of Section 423 of the Code.
40
(b) No Eligible Employee may purchase shares of Common Stock pursuant to any
Offer or Offers, including those made under any other qualified employee stock
purchase plan of the Company and/or its Subsidiaries, that would permit such
Eligible Employee to purchase shares of Common Stock with an aggregate Fair
Market Value in excess of twenty-five thousand dollars ($25,000) (determined at
the date of grant designated in the Offer) for each calendar year in which any
such Offer with such Eligible Employee is outstanding at any time. Any Offer
that causes such total to exceed such limit shall be null and void to the extent
of such excess.
8. OFFERS TO PURCHASE COMMON STOCK
Offers to purchase Common Stock may be made on terms and conditions established
by the Committee, subject to the limitations set forth in either Section (a) or
(b) below:
(a) Fixed Price Offerings. The purchase price for a share of Common Stock shall
be no less than eighty-five percent (85%) of the Fair Market Value of a share of
Common Stock on the date of the Offer, and each such Offer shall have a stated
term, as established by the Committee, not to exceed twenty-seven (27) months.
(b) Variable Price Offerings. The purchase price for a share of Common Stock
shall be no less than eighty-five percent (85%) of the Fair Market Value of a
share of Common Stock on the date of purchase, and each Offer shall have a
stated term, as established by the Committee, not to exceed five (5) years.
The foregoing shall not preclude an Offer that includes both Section (a) and (b)
above, subject to the twenty-seven month limitation.
9. ELECTION TO PARTICIPATE
An Eligible Employee's acceptance of an offer to purchase shares of Common Stock
shall be evidenced as specified by the Committee, including by authorizing
payroll deductions.
10. PAYROLL DEDUCTIONS
(a) By authorizing payroll deductions by a date specified by the Committee, an
Eligible Employee will have accepted the terms and conditions of the Offer and
will have authorized the Company or the Designated Subsidiary, to deduct per pay
period, as specified by the Eligible Employee, an amount not more than nor less
than the minimum set forth in an Offer from his or her Compensation commencing
on the date indicated in such Offer. Such amount shall be credited to a Plan
account. Subject to rules and administrative guidelines as the Committee may
establish from time to time, an Eligible Employee may decrease the amount of his
or her payroll deductions during the Offering Period.
(b) The Committee may specify that the funds in the Eligible Employee's Plan
account be credited with interest.
11. PAYMENT OF PURCHASE PRICE
Shares of Common Stock purchased under the Plan shall be paid for with the
amount held in the Plan account on behalf of the Eligible Employee, including
accrued interest (if any). If specified by the Committee in the Offer, an
Eligible Employee may (i) provide additional funds, if necessary, to purchase
the full number of shares of Common Stock specified by the Offer or (ii) use
shares of Common Stock
41
owned by the Eligible Employee for at least six (6) months to purchase the full
number of shares of Common Stock specified by the Offer.
12. DATE OF PURCHASE
Each Offer shall provide that the shares of Common Stock to be purchased
thereunder will be purchased on the Closing Date provided for in the Offer. If
the Committee so determines, Offers also may permit the Eligible Employee to
purchase shares of Common Stock thereunder at such earlier dates and on such
terms and conditions as may be determined by the Committee.
13. EMPLOYEE'S PURCHASE DIRECTIONS
(a) On the Closing Date, each Eligible Employee will purchase shares of Common
Stock, and the amount held in the Plan account on behalf of the Eligible
Employee, including any accrued interest, shall be applied to the purchase price
without further authorization, but only if the Fair Market Value on the Closing
Date is equal to or higher than the purchase price. If the Fair Market Value on
the Closing Date is lower than the purchase price, the amount held in the Plan
account on behalf of the Eligible Employee, including any accrued interest,
will, as the Committee may specify, be returned to such Eligible Employee or
shall be retained to be used in connection with a new Offer.
(b) An Eligible Employee may purchase fewer than all of the shares covered by an
Offer in the manner specified by the Committee.
14. TERMINATION OF OFFER
An Eligible Employee may, at any time on or before the Closing Date, terminate
an Offer in its entirety in a manner specified by the Committee. Upon such
termination, the Company shall cause the amount held on behalf of such Eligible
Employee in the Plan account, including any accrued interest, to be paid to such
Eligible Employee and further payroll deductions shall cease within a reasonable
period thereafter.
15. TERMINATION OF EMPLOYMENT
The Committee shall determine the terms, conditions, restrictions and
limitations applicable to an Offer in the event of an Eligible Employee's
retirement, death, disability, leave of absence or any other termination of
employment.
16. RECAPITALIZATION
The aggregate number, kind and class of shares of Common Stock that may be
purchased by Eligible Employees pursuant to Offers, the number, kind and class
of shares covered by each Offer, and the purchase price per share as established
in accordance with each such Offer all may be equitably adjusted, as determined
by the Committee, due to any changes in the Common Stock resulting from any
stock split, combination or exchange of equity securities, merger,
consolidation, re-capitalization, reorganization, divestiture or other
distribution (other than ordinary cash dividends) of assets to stockholders, any
other subdivision or consolidation of shares or other capital adjustment, or the
payment of a stock dividend or other increase or decrease in such shares.
17. ASSIGNABILITY
No Offer may be assigned or transferred except by will or by the laws of descent
and distribution.
42
18. RIGHTS AS A STOCKHOLDER
An Eligible Employee shall have no rights as a stockholder with respect to
shares of Common Stock covered by an Offer until the date the Eligible Employee
becomes the holder of record of such shares. No adjustment will be made for
dividends or other rights for which the record date is prior to such date of
purchase.
19. COMPLIANCE WITH SECTION 423 OF THE CODE
All Offers entered into and all transactions that occur under this Plan are
intended to comply with all applicable requirements of Section 423 of the Code,
and, with respect to persons subject to Section 16 of the 1934 Act, with the
conditions of Rule 16b-3 of the 1934 Act. To the extent any provision of the
Plan or any Offer fails to so comply, such provision shall be deemed invalid and
shall be omitted from the Offers to the extent permitted by law and deemed
advisable by counsel, and remaining terms of the Plan and such Offers shall not
be affected thereby. If Section 423 of the Code is subsequently amended in any
way that would alter the benefits generally available under a Section 423 plan,
then the Committee may amend this Plan to conform to such amendment to the Code.
20. AMENDMENT AND TERMINATION
The Committee may from time to time amend, suspend, or terminate the Plan in
whole or in part or amend any and all Offers granted under the Plan to the
extent permitted by law and provided such action is not prohibited by Section
423 of the Code. However, no such action of the Committee may be taken without
the approval of the Board and/or the stockholders, if Board and/or stockholder
approval would be required under then applicable law.
21. TAX WITHHOLDING
Any amounts to be paid or shares to be delivered to any Eligible Employee under
the Plan shall be reduced by any sums required by law to be withheld by the
Company for payment of taxes, unless the Committee specifies another method of
satisfying such taxes.
22. GOVERNING LAW
The Plan and all Offers shall be construed in accordance with and governed by
the laws of the State of New York.
23. EMPLOYMENT AT WILL
This document is neither a contract nor a guarantee of continued employment for
any definite period of time. An Employee's employment is always on an at-will
basis.
43
Please mark
your votes as [X]
indicated in
this example
THE BOARD OF DIRECTORS RECOMMENDS VOTES FOR ITEMS 1, 2 AND 3
WITHHOLD
FOR
Item 1 - ELECTION OF DIRECTORS FOR ALL
[ ] [ ]
Item 2- APPOINTMENT OF FOR AGAINST ABSTAIN
INDEPENDENT [ ] [ ] [ ]
ACCOUNTANT
Item 3- APPROVAL OF EMPLOYEE [ ] [ ] [ ]
STOCK PURCHASE PLAN
Nominees:
01 Hans W. Becherer
02 Riley P. Bechtel
03 Frank A. Bennack Jr.
04 Lawrence A. Bossidy
05 M. Anthony Burns
06 H. Laurance Fuller
07 Ellen V. Futter
08 William H. Gray III
09 William B. Harrison Jr.
10 Helene L. Kaplan
11 Lee R. Raymond
12 John R. Stafford
13 Lloyd D. Ward
14 Douglas A. Warner III
15 Marina v.N. Whitman
WITHHELD FOR. (Write nominees name(s) in the space provided below).
-------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS VOTES AGAINST
ITEMS 4 THROUGH 6
Item 4 - STOCKHOLDER FOR AGAINST ABSTAIN
PROPOSAL- [ ] [ ] [ ]
COMPENSATION
DISCLOSURE
Item 5 - STOCKHOLDER
PROPOSAL- DIRECTOR [ ] [ ] [ ]
NOMINATION
PROCEDURES
Item 6 - STOCKHOLDER
PROPOSAL- [ ] [ ] [ ]
INTERNATIONAL
FINANCIAL
STABILIZATION
CONSENT TO ELECTRONIC DELIVERY
By checking the box to the right, I consent to future access of the Annual
Reports, Proxy Statements, prospectuses and other stockholder communications
electronically on-line. I understand that unless I request otherwise or revoke
my consent, J.P. Morgan Chase will tell me when any communications are on-line
and how to access them. I understand that costs associated with the use of the
Internet will be my responsibility. To revoke my consent, I can contact J.P.
Morgan Chase transfer agent Mellon Investor Services at 1-800-758-4651. [ ]
WILL ATTEND MEETING (Please check box if you plan to attend) [ ]
SIGNATURES DATE
-------------------------------------- ------------------
NOTE: Please sign your name as it appears above. When signing as attorney,
executor, administrator, trustee, guardian or officer of a corporation,
please give full title as such.
-------------------------------------------------------------------------------
FOLD AND DETACH HERE
IF YOU WISH TO VOTE BY INTERNET OR TELEPHONE, PLEASE FOLLOW THE INSTRUCTIONS
BELOW.
HAVE YOUR PROXY CARD IN HAND.
TO VOTE BY INTERNET: GO TO http://www.eproxy.com/jpm
TO VOTE BY PHONE:
- On a touch tone telephone call Toll-Free 1-800-840-1208 - 24 hours
a day-7 days a week.
- Enter your eleven-digit personal identification number which is
indicated in the box located in the lower right corner of this
instruction form.
Option 1: To vote as the Board of Directors recommends on all proposals Press 1.
If you wish to vote on each proposal separately, Press 0.
WHEN YOU PRESS 1, YOUR VOTE WILL BE CONFIRMED AND CAST AS YOU DIRECTED. END OF
CALL
Option 2: If you selected 0 to vote on each proposal separately, you will hear
the following instructions.
Proposal 1: To VOTE FOR ALL nominees, press 1;
To WITHHOLD FOR ALL nominees, press 9;
To WITHHOLD FOR AN INDIVIDUAL nominee, press 0, enter the two
digit number that appears next to the name of the nominee for
whom you DO NOT wish to vote.
Once you have completed voting for Directors, press 0.
Proposal 2: You may make your selection at any time.
To vote FOR, press 1;
To vote AGAINST, press 9;
To ABSTAIN, press 0
The instructions are the same for all remaining proposals.
YOUR VOTE WILL BE REPEATED AND YOU WILL HAVE AN OPPORTUNITY TO CONFIRM IT.
- You will be asked if you plan to attend the meeting. When prompted,
please respond.
IF YOU VOTE BY INTERNET OR TELEPHONE, THERE IS NO NEED TO MAIL BACK YOUR PROXY
CARD.
THANK YOU FOR VOTING
44
PROXY
J.P. MORGAN CHASE & CO.
THIS PROXY IS SOLICITED FROM YOU BY THE BOARD OF DIRECTORS FOR USE AT THE
ANNUAL MEETING OF STOCKHOLDERS OF J.P. MORGAN CHASE & CO. ON MAY 15, 2001.
You, the undersigned stockholder, appoint each of Dina Dublon, John J.
Farrell and Frederick W. Hill your attorney-in-fact and proxy, with full power
of substitution, to vote on your behalf shares of J.P. Morgan Chase Common Stock
that you would be entitled to vote at the 2001 Annual Meeting, and any
adjournment of the Meeting, with all powers that you would have if you were
personally present at the Meeting. THE SHARES REPRESENTED BY THIS PROXY WILL BE
VOTED AS INSTRUCTED BY YOU AND IN THE DISCRETION OF THE PROXIES ON ALL OTHER
MATTERS. IF NOT OTHERWISE SPECIFIED, SHARES WILL BE VOTED IN ACCORDANCE WITH THE
RECOMMENDATIONS OF THE BOARD OF DIRECTORS.
PARTICIPANTS IN HERITAGE CHASE 401(k) PLAN:If you have an interest in J.P.
Morgan Chase common stock through the heritage Chase 401(k) savings plan, your
proportionate interest as of the record date is shown on this card and your vote
will provide voting instructions to the trustee of the Plan. If no instructions
are given, the trustee will vote the shares pursuant to the terms of the plan.
PARTICIPANTS IN HERITAGE MORGAN 401(k) PLAN:If you beneficially own shares of
J.P. Morgan Chase common stock through the heritage Morgan 401(k) plan, your
shares as of the record date are shown on the reverse side of this proxy card.
Completion of this proxy card will provide voting instructions to the trustee of
the plan. The trustee may only vote the shares in accordance with your
instructions. If you do not provide instructions, your shares will not be voted.
VOTING METHODS. If you wish to vote by mailing this proxy, please sign your
name exactly as it appears on this proxy and mark, date and return it in the
enclosed envelope. If you wish to vote by Internet or telephone, please follow
the instructions below.
-------------------------------------------------------------------------------
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT!
YOU CAN VOTE IN ONE OF THREE WAYS:
[JP MORGAN CHASE LOGO]
ADMISSION TICKET
J.P. MORGAN CHASE & CO.
2001 Annual Meeting of Stockholders
Tuesday, May 15, 2001
10:00 AM at
One Chase Manhattan Plaza
New York, New York
1. Vote by Internet at our Internet Address: http://www.eproxy.com/jpm
If you wish to access future stockholder communications on-line instead of
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OR
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OR
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PLEASE VOTE
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