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[KeyCorp Logo]
127 PUBLIC SQUARE
CLEVELAND, OHIO 44114
April 12, 2002
DEAR SHAREHOLDER:
You are cordially invited to attend the 2002 Annual Meeting of Shareholders
of KeyCorp which will be held at The Forum Conference Center, 1375 East Ninth
Street, Cleveland, Ohio, on Thursday, May 23, 2002, at 8:30 a.m., local time.
All holders of record of KeyCorp Common Shares as of March 26, 2002, are
entitled to vote at the 2002 Annual Meeting.
As described in the accompanying Notice and Proxy Statement, you will be
asked to elect five directors for three-year terms expiring in 2005, to consider
three proposals to amend KeyCorp's Regulations [to consider two proposals to
amend KeyCorp's Regulations, to consider a proposal submitted by a KeyCorp
shareholder,] and to ratify the appointment of Ernst & Young LLP as independent
auditors for 2002.
KeyCorp's Annual Report for the year ended December 31, 2001, is enclosed.
Your proxy card is enclosed. You can vote your shares by telephone, the
internet, or by mailing your signed proxy card in the return envelope. Specific
instructions for voting by telephone or the internet are attached to the proxy
card.
Sincerely,
/s/ Henry L. Meyer III
HENRY L. MEYER III
Chairman of the Board
[KeyCorp Logo]
127 PUBLIC SQUARE
CLEVELAND, OHIO 44114
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 23, 2002
The 2002 Annual Meeting of Shareholders of KeyCorp will be held at The
Forum Conference Center, 1375 East Ninth Street, Cleveland, Ohio, on Thursday,
May 23, 2002, at 8:30 a.m., local time, for the following purposes:
1. To elect five directors to serve for terms expiring in 2005;
2. To vote upon an amendment to KeyCorp's Regulations to reduce the
size of KeyCorp's Board of Directors to no fewer than 14 and no more than
17 directors;
3. To vote upon an amendment to KeyCorp's Regulations to permit
electronic communications and provide for other recent changes in Ohio
Corporation Law;
4. To vote upon an amendment to KeyCorp's Regulations to require the
annual election of all directors;
[4. To consider and act upon a shareholder proposal requesting
necessary steps to cause annual election of all directors;]
5. To ratify the appointment by the Board of Directors of Ernst &
Young LLP as independent auditors for KeyCorp for the fiscal year ending
December 31, 2002; and
6. To transact such other business as may properly come before the
meeting or any postponement or adjournment thereof.
Only holders of KeyCorp Common Shares of record as of the close of business
on March 26, 2002, have the right to receive notice of and to vote at the Annual
Meeting and any postponement or adjournment thereof.
By Order of the Board of Directors
/s/ Thomas C. Stevens
THOMAS C. STEVENS
Secretary
April 12, 2002
------------------------
YOUR VOTE IS IMPORTANT. YOU CAN VOTE YOUR SHARES BY TELEPHONE, THE
INTERNET, OR BY MAILING YOUR SIGNED PROXY CARD IN THE RETURN ENVELOPE ENCLOSED
WITH THE PROXY CARD FOR THAT PURPOSE. SPECIFIC INSTRUCTIONS FOR VOTING BY
TELEPHONE OR THE INTERNET ARE ATTACHED TO THE PROXY CARD.
TABLE OF CONTENTS
PAGE
----
NOTICE OF ANNUAL MEETING
PROXY STATEMENT............................................. 1
ISSUE ONE -- Election of Directors.......................... 1
Nominees for Terms Expiring in 2005....................... 2
Continuing Directors Whose Terms Expire in 2003........... 3
Continuing Directors Whose Terms Expire in 2004........... 5
The Board of Directors and Its Committees................. 7
Corporate Governance Practices............................ 9
ISSUE TWO -- Amendment to Regulations Concerning Size of the
Board of Directors........................................ 11
ISSUE THREE -- Amendment to Regulations Concerning
Electronic Communications................................. 12
ISSUE FOUR -- Amendment to Regulations Concerning Annual
Election of Directors..................................... 13
[ISSUE FOUR -- Shareholder Proposal Requesting Necessary
Steps to Cause Annual Election of All Directors].......... 14
ISSUE FIVE -- Independent Auditors.......................... 17
Executive Officers.......................................... 17
Compensation of Executive Officers.......................... 20
Section 16(a) Beneficial Ownership Reporting Compliance..... 23
Employment and Change of Control Agreements................. 23
Compensation and Organization Committee Report on Executive
Compensation.............................................. 28
Audit Matters............................................... 33
KeyCorp Stock Price Performance............................. 35
Share Ownership and Phantom Stock Units..................... 36
Shareholder Proposals for the Year 2003..................... 37
Householding Information.................................... 38
General..................................................... 38
Text of Amendment to Regulations Concerning Size of the
Board of Directors........................................ Appendix A
Text of Amendment to Regulations Concerning Electronic
Communications............................................ Appendix B
Text of Amendment to Regulations Concerning Annual Election
of all Directors.......................................... Appendix C
[KeyCorp Logo]
127 PUBLIC SQUARE
CLEVELAND, OHIO 44114
PROXY STATEMENT
This Proxy Statement is furnished commencing on or about April 12, 2002, in
connection with the solicitation on behalf of the Board of Directors of KeyCorp
of proxies to be voted at the 2002 Annual Meeting of Shareholders on May 23,
2002, and at all postponements and adjournments thereof. All holders of record
of KeyCorp Common Shares at the close of business on March 26, 2002, are
entitled to vote. On that date there were KeyCorp Common Shares
outstanding and entitled to vote at the meeting, and each such share is entitled
to one vote on each matter to be considered. At the meeting, a majority of the
outstanding KeyCorp Common Shares shall constitute a quorum.
ISSUE ONE
ELECTION OF DIRECTORS
Contingent upon the amendment of KeyCorp's Regulations pursuant to Issue
Two, the size of the Board of Directors of KeyCorp (also sometimes referred to
as the "Board") will be established at 16 members, divided into two classes of
five members and one class of six members. The terms of these classes as of the
2002 Annual Meeting will expire in 2003, 2004, and 2005, respectively. Five
nominees for directors for terms expiring in 2005 are listed below. All properly
appointed proxies will be voted for these nominees unless contrary
specifications are properly made, in which case the proxy will be voted or
withheld in accordance with such specifications. All nominees are current
members of the Board. Should any nominee become unable to accept nomination or
election, the proxies will be voted for the election of such person, if any, as
shall be recommended by the Board or for holding a vacancy to be filled by the
Board at a later date. The Board has no reason to believe that the persons
listed as nominees will be unable to serve. At the election of directors, the
properly nominated candidates receiving the greatest number of votes shall be
elected.
Pursuant to rules promulgated under the Securities Exchange Act of 1934
(the "Exchange Act"), the following information lists, as to nominees for
director and directors whose terms of office will continue after the 2002 Annual
Meeting, the principal occupation or employment, age, the year in which each
first became a director of KeyCorp, and directorships in registered investment
companies or companies having securities which are registered pursuant to, or
which are subject to certain provisions of, the Exchange Act. The information
provided is as of January 1, 2002. KeyCorp was formed as a result of the merger
on March 1, 1994 of the former KeyCorp, a New York corporation ("Old Key"), into
Society Corporation, an Ohio corporation ("Society"), whereupon Society changed
its name to KeyCorp. In the case of nominees or continuing directors who were
directors of Old Key, the year in which such individual became a director of Old
Key is
1
also included in the following information. Except as otherwise indicated, each
nominee or continuing director has had the same principal occupation or
employment during the past five years.
NOMINEES FOR TERMS EXPIRING IN 2005
EDWARD P. CAMPBELL
Since 1997, President and Chief Executive Officer,
[EDWARD P. CAMPBELL Nordson Corporation (capital equipment). Previously,
PHOTO] President and Chief Operating Officer (1996-1997),
Nordson Corporation. Age 52. KeyCorp director since
1999. Director, Nordson Corporation and OMNOVA
Solutions, Inc.
CHARLES R. HOGAN
President and Chief Executive Officer, Citation
[CHARLES R. HOGAN Management Group (real estate developments and asset
PHOTO] management for commercial and residential properties).
Age 64. KeyCorp director since 1994 (Old Key director
since 1993).
[UNKNOWN PHOTO]
2
BILL R. SANFORD
Chairman, SYMARK LLC (technology commercialization and
[BILL R. SANFORD PHOTO] business development) and Executive Founder and Retired
Chairman, President, and Chief Executive Officer,
STERIS Corporation (infection and contamination preven-
tion systems, products and services). Age 57. KeyCorp
director since 1999. Director, Wilson Greatbatch
Technologies, Inc.
DENNIS W. SULLIVAN
Executive Vice President, Parker Hannifin Corporation
[DENNIS W. SULLIVAN (industrial and aerospace motion control components and
PHOTO] systems). Age 63. KeyCorp director since 1993.
Director, Parker Hannifin Corporation and Ferro
Corporation.
CONTINUING DIRECTORS WHOSE TERMS EXPIRE IN 2003
WILLIAM G. BARES
Chairman, President and Chief Executive Officer, The
[WILLIAM G. BARES Lubrizol Corporation (high performance fluid
PHOTO] technologies company). Age 60. KeyCorp director since
1987. Director, The Lubrizol Corporation, Applied
Industrial Technologies, Inc., and Oglebay Norton
Company.
DR. CAROL A. CARTWRIGHT
President, Kent State University (state university).
[DR. CAROL A. Age 60. KeyCorp director since 1997. Director,
CARTWRIGHT PHOTO] FirstEnergy Corp. and PolyOne Corporation.
3
HENRY S. HEMINGWAY
President, Hemingway Enterprises, Inc. (holding
[HENRY S. HEMINGWAY company); President, Town & Country Life Insurance
PHOTO] Company, a subsidiary of Hemingway Enterprises, Inc.
Age 48. KeyCorp director since 1994 (Old Key director
since 1987).
STEVEN A. MINTER
President and Executive Director, The Cleveland
[STEVEN A. MINTER Foundation (philanthropic foundation). Age 63. KeyCorp
PHOTO] director since 1987. Director, Dominion Resources, Inc.
and Goodyear Tire and Rubber Company.
RONALD B. STAFFORD
Partner, Harris Beach LLP (law firm); Member of the New
[RONALD B. STAFFORD York State Senate since 1966. Age 66. KeyCorp director
PHOTO] since 1994 (Old Key director since 1983).
THOMAS C. STEVENS
Since 2001, Vice Chairman, Chief Administrative
[THOMAS C. STEVENS Officer, and Secretary, KeyCorp. Previously, Senior
PHOTO] Executive Vice President, General Counsel, and
Secretary (1997-2001), KeyCorp; Executive Vice
President, General Counsel, and Secretary (1996-1997),
KeyCorp. Age 52. KeyCorp director since 2001.
4
CONTINUING DIRECTORS WHOSE TERMS EXPIRE IN 2004
CECIL D. ANDRUS
Since 1995, Chairman, Andrus Center for Public
[CECIL D. ANDRUS PHOTO] Policy-Boise State University (non-profit educational
center). Previously, Governor, State of Idaho. Age 70.
KeyCorp director since 1996. Director, Albertson's,
Inc., Coeur d'Alene Mines Corp., and Rentrak
Corporation.
ALEXANDER M. CUTLER
Since 2000, Chairman and Chief Executive Officer, Eaton
[ALEXANDER M. CUTLER Corporation (diversified manufacturing company).
PHOTO] Previously, President and Chief Operating Officer,
Eaton Corporation. Age 50. KeyCorp director since 2000.
Director, Eaton Corporation and Axcelis Technologies
Inc.
DOUGLAS J. McGREGOR
Since 2000, President and Chief Operating Officer,
[DOUGLAS J. McGREGOR Burlington Industries, Inc. (textile company which
PHOTO] filed for reorganization in federal bankruptcy court in
November 2001) and, since 1998, Retired Chairman and
Chief Executive Officer, M.A. Hanna Company (specialty
chemicals). Previously, Principal (1998-2000), C.A.M.
Investments (financial investor); Chairman and Chief
Executive Officer (1997-1998), M.A. Hanna Company;
President and Chief Operating Officer, M.A. Hanna
Company. Age 60. KeyCorp director since 1995. Director,
Burlington Industries, Inc. and Vulcan Materials
Company.
HENRY L. MEYER III
Since 2001, Chairman, President, and Chief Executive
[HENRY L. MEYER III Officer, KeyCorp. Previously, President and Chief
PHOTO] Operating Officer (1997-2001), KeyCorp; Vice Chairman
of the Board and Chief Operating Officer (1996-1997),
KeyCorp. Age 52. KeyCorp director since 1996. Director,
Lincoln Electric Holdings, Inc.
5
PETER G. TEN EYCK, II
President, Indian Ladder Farms (commercial orchard).
[PETER G. TEN EYCK, II Age 63. KeyCorp director since 1994 (Old Key director
PHOTO] since 1979).
Mr. Stafford is a member of a law firm that KeyCorp utilizes for legal
services. One or more of KeyCorp's directors serve on boards or advisory boards
of KeyCorp subsidiaries or affiliates and receive standard fees for such
service. Some of KeyCorp's executive officers and directors were customers of
one or more of KeyCorp's subsidiary banks or other subsidiaries during 2001 and
had transactions with such banks or other subsidiaries in the ordinary course of
business. In addition, some of the directors are officers of, or have a
relationship with, corporations or are members of partnerships which were
customers of such banks or other subsidiaries during 2001 and had transactions
with such banks or other subsidiaries in the ordinary course of business. All
loans included in such transactions were made on substantially the same terms,
including rates and collateral, as those prevailing at the time for comparable
transactions with other persons, and did not involve more than normal risks of
collectibility or present other unfavorable features. Similar transactions
continue to be effected during 2002.
6
THE BOARD OF DIRECTORS AND ITS COMMITTEES*
Board of Directors. During the year ended December 31, 2001, there were six
meetings of KeyCorp's Board of Directors. Each continuing member of KeyCorp's
Board attended at least 75% of the aggregate of the meetings held by KeyCorp's
Board of Directors and the meetings held by the committees of the Board on which
such member served during 2001.
KeyCorp's Board of Directors currently exercises certain of its powers
through its Audit and Risk Review, Compensation and Organization, Executive and
Finance Committees.
Audit and Risk Review Committee. Dr. Cartwright and Messrs. Minter,
Sanford, Sullivan (Chair), and Ten Eyck are the current members of KeyCorp's
Audit and Risk Review Committee. The functions of this Committee generally
include matters such as oversight review of the financial information provided
to shareholders, recommendation of the appointment of KeyCorp's independent
auditors, review of services and fees of the independent auditors, oversight
review of the material examinations of KeyCorp and its affiliates conducted by
federal and state regulatory and supervisory authorities, service as the audit
and risk review committee of KeyCorp's banking subsidiaries, oversight review of
risk management matters, and supervision and direction of any special projects
or investigations considered necessary. KeyCorp's Audit and Risk Review
Committee met six times in 2001.
Compensation and Organization Committee. Messrs. Andrus, Bares (Chair),
Bersticker, Campbell, and Cutler are the current members of KeyCorp's
Compensation and Organization Committee. The functions of this Committee
generally include matters such as oversight of board and corporate governance
issues, review and approval of KeyCorp's salary administration programs,
determination of the compensation and terms of employment of senior management,
determination of participants and awards under executive incentive compensation
plans and supplemental compensation plans, approval of (or amendments to)
employee and officer retirement, compensation and benefit plans, review and
recommendation of director compensation plans, review of organization structure
and staffing, and review of management structure, development, and succession
planning. KeyCorp's Compensation and Organization Committee met seven times in
2001.
The Compensation and Organization Committee identifies and reviews the
qualifications of prospective directors and recommends to the Board candidates
for election as directors. Nominations for the election of directors by
KeyCorp's Board of Directors may only be made by the affirmative vote of a
majority of the directors then in office. The Committee will consider
shareholder suggestions concerning qualified candidates for election as
directors that are forwarded to such Committee. Any shareholder recommendation
for a director nominee should contain background information concerning the
recommended nominee, including, (a) the name, age, business, and residence
address of such person; (b) the principal occupation or employment of such
person for the last five years; (c) the class and number of shares of capital
stock of KeyCorp that are beneficially owned by such person; (d) all positions
of such person as a director, officer, partner, employee, or controlling
shareholder of any corporation or other business entity; (e) any prior position
as a director, officer, or employee of a depository institution or any company
controlling a depository institution; and (f) a statement of whether such
individual would be willing to serve if nominated or elected.
---------------
* Messrs. Bersticker and Curtis are retiring as directors at the 2002 Annual
Meeting. They are, however, included in the description of KeyCorp's current
Board of Directors and its committees.
7
Any shareholder recommendation should also include, as to the shareholder giving
the written notice, (a) a representation that the shareholder is a holder of
record of shares of KeyCorp entitled to vote at such meeting and (b) a
description of all arrangements or understandings between the shareholder and
such recommended person and any other person or persons (naming such person or
persons).
Executive Committee. Messrs. Bares, Curtis, McGregor, Meyer (Chair),
Sullivan, Stevens and Ten Eyck are the current members of KeyCorp's Executive
Committee. The functions of the Executive Committee are to exercise the
authority of the Board of Directors, to the extent permitted by law, on any
matter requiring Board or Board committee action between Board or Board
committee meetings. The Executive Committee met one time in 2001.
Finance Committee. Messrs. Curtis, Hemingway, Hogan, McGregor (Chair),
Stafford, and Stevens are the current members of KeyCorp's Finance Committee.
The functions of the Finance Committee generally include matters such as the
oversight review of KeyCorp's capital structure and capital management
strategies, the exercise of the authority of the Board of Directors in
connection with the authorization, sale and issuance by KeyCorp of debt and
equity securities, the making of recommendations to the Board of Directors with
respect to KeyCorp's dividend policy, the oversight review of KeyCorp's
asset/liability management policies and strategies, the oversight review of
compliance with regulatory capital requirements of KeyCorp and its bank
subsidiaries, and the oversight review of KeyCorp's capital expenditure process
and the Corporation's portfolio of "Corporate-Owned Life Insurance." The Finance
Committee met seven times in 2001.
Director Compensation. Directors (other than Messrs. Meyer and Stevens who
receive no director fees) receive fees consisting of a $27,000 annual retainer,
payable in quarterly installments, and $1,500 for attendance at each Board or
committee meeting. Outside directors who serve as committee chairpersons receive
additional compensation of $2,500 per quarter.
Under KeyCorp's Directors' Stock Option Plan (the "Directors' Plan"), each
of the non-employee directors is automatically granted, on an annual basis,
options to purchase KeyCorp Common Shares. The option awarded to each director
in 2001 covered 9,800 KeyCorp Common Shares. The annual option grant to each
director has a value (determined on a formula basis) on the grant date equal to
2.75 times the annual cash retainer payable to a director. Messrs. Meyer and
Stevens were not eligible to participate in the Directors' Plan during 2001
because they were employees of KeyCorp. All options granted under the Directors'
Plan are non-qualified stock options. Options generally expire ten years after
grant. The purchase price of the option shares is equal to their fair market
value on the date of grant and may be paid in cash or by the surrender of
previously acquired KeyCorp Common Shares.
Under the KeyCorp Director Deferred Compensation Plan, directors are given
the opportunity to defer payment of cash director fees for future distribution.
All such deferred payments are invested in either an interest bearing account
(at an interest rate equal to 1/2% higher than the effective annual yield of
the Moody's Average Corporate Bond Yield Index) or a KeyCorp Common Shares
account (in which the directors' deferred compensation is invested on a
bookkeeping basis in "phantom" KeyCorp Common Shares which are accrued quarterly
but cannot be voted or transferred during the deferral period). Distributions to
the directors
8
under the Director Deferred Compensation Plan in respect to the interest bearing
account are in the form of cash and under the Common Shares account are in the
form of KeyCorp Common Shares.
CORPORATE GOVERNANCE PRACTICES
The Board of Directors has established and follows a corporate governance
program and has assigned the Compensation and Organization Committee
responsibility for the program. Following are examples of KeyCorp's current
corporate governance practices.
I. BOARD OF DIRECTORS SELF ASSESSMENT
The Board conducts a biannual self-assessment process of the Board under
the auspices of the Compensation and Organization Committee through
self-assessment questionnaires to all Board members. The results of the director
self-assessment questionnaires are reviewed by the Board and changes in
KeyCorp's corporate governance process are based on the results of the Board's
review and analysis of the self-assessment questionnaires. Pursuant to the
self-assessment process, the Board reviews, among other matters, agenda items,
meeting presentations, advance distribution of agendas and materials for Board
meetings, interim communications to directors, and access to and communications
with senior management.
II. EXECUTIVE SESSIONS OF OUTSIDE DIRECTORS
The outside directors meet in executive session at least three times a year
without inside directors or executive management present.
III. BOARD COMPOSITION
The Board has adopted the guideline that not more than three directors will
be "inside" directors (i.e., directors who are at the time also officers of
KeyCorp) and that the retired Chairperson of KeyCorp should no longer serve on
the Board after he or she ceases to hold such office.
IV. DIRECTOR INDEPENDENCE
The Board has adopted a definition of "Independent Director" and determined
that at least two-thirds of KeyCorp's directors and all members of the Board
committees performing the audit, compensation, and nominating functions must
meet this definition. In addition to defining "Independent Director" and
adopting requirements based on this definition, the Board has capped at a low
level the maximum fees that a director or firm affiliated with a director
performing legal, consulting, or advisory services for KeyCorp may receive for
such services.
V. DIRECTOR RETIREMENT
The Board has adopted a retirement policy whereby an incumbent director is
not eligible to stand for election as a director upon reaching age 70. Under the
policy, a director is also requested to submit his or her resignation from the
Board to the Compensation and Organization Committee in its role as the
nominating committee in the event that the director retires from or otherwise
leaves his or her principal employment. The Compensation and Organization
Committee can choose to accept or reject the resignation.
9
VI. DIRECTOR RECRUITMENT
The Board has adopted a formal policy delineating director recruitment
guidelines to be followed by the Board in identifying and recruiting director
nominees for Board membership. The policy guidelines are designed to help insure
that KeyCorp is able to attract outstanding individuals as director nominees to
the Board.
VII. DIRECTOR COMPENSATION
The Board has determined that approximately 50% (in value) of the Board's
compensation should be equity compensation (presently in the form of stock
options) in order to more closely align the economic interests of directors and
shareholders. In addition, each year the Board reviews the cash component of its
compensation which is in the form of director fees. The Board has chosen not to
increase these fees since 1994.
VIII. FORMAL EVALUATION OF CHIEF EXECUTIVE OFFICER
The Compensation and Organization Committee conducts an annual evaluation
of the Chief Executive Officer which will be discussed with the Board as a whole
in executive session.
IX. SUCCESSION PLANNING/MANAGEMENT DEVELOPMENT
The Chief Executive Officer presents an annual report to the Compensation
and Organization Committee on succession planning and KeyCorp's program for
management development. The Compensation and Organization Committee in turn
reviews these discussions with the Board as a whole.
X. CORPORATE GOVERNANCE FEEDBACK
The Board encourages management to meet periodically with significant
investors to discuss KeyCorp's corporate governance practices. Management
reports the results of the meetings to the Compensation and Organization
Committee in order that the Board can more readily consider the views of
significant investors when the Board shapes its corporate governance practices.
XI. COMMITTEE STRUCTURE
The Board exercises certain of its powers through its Audit and Risk
Review, Compensation and Organization, Executive, and Finance Committees. Each
Committee has a Charter that defines the scope of its duties and
responsibilities. Each Committee reviews its Charter annually and recommends its
approval to the full Board which in turn approves the Charter. The Audit and
Risk Review and Compensation and Organization Committees are comprised of only
outside directors and the Executive and Finance Committees consist of both
inside and outside directors. Each Board member sits on at least one Committee.
The frequency, length and agendas of Committee meetings are determined by the
Committee Chair in consultation with Committee members and appropriate members
of senior management. The Committee Chair reports to the full Board on the
matters undertaken at each Committee meeting. The Audit and Risk Review and
Compensation and Organization Committees (which consist solely of outside
directors) meet in executive session for a portion of each Committee meeting.
10
ISSUE TWO
AMENDMENT TO REGULATIONS
CONCERNING SIZE OF THE BOARD OF DIRECTORS
Currently, the size of the Board of Directors is fixed at 17 members
divided into two classes of six members each and one class of five members.
Under the Regulations as presently in effect, the size of the Board of Directors
is required to be between 17 and 20 members. The shareholders are being asked to
amend the Regulations to reduce the potential size of the Board to between 14
and 17 members. The result of this amendment will be to reduce the maximum Board
size to 17 and the minimum Board size to 14.
The Board of Directors is recommending this amendment because it is of the
opinion that a smaller Board can operate more effectively and efficiently for
the benefit of KeyCorp's shareholders. The size of KeyCorp's Board has been
gradually reduced from 22 members in 1994 to the current 17 members and, if this
Amendment is adopted, will be further reduced to 16 members at the 2002 Annual
Meeting.
If this Amendment is adopted by the shareholders at the 2002 Annual
Meeting, the size of the Board of Directors will be fixed at 16 members, with
two classes having five members each and the third class having six members. The
Regulations will continue to provide that, if the Board of Directors or
shareholders change the number of directors, the three classes of the Board of
Directors will be divided into as equal a number of directors as possible unless
Issue Four requiring the annual election of all directors is adopted.
KeyCorp's Regulations will continue to provide that no reduction in the
size of the Board shall of itself shorten the term of any incumbent director. In
the event the shareholders increase the number of directors and fail to fill the
vacancy or vacancies created thereby, or in the event the Board of Directors
increases the number of directors and thereby creates a vacancy or vacancies,
the Board of Directors may fill such vacancy or vacancies for the respective
unexpired terms.
The text of the proposed amendment is set forth in Appendix A to this Proxy
Statement.
Vote Required. Pursuant to Article X of the Regulations, Article II,
Section 1 of the Regulations, which is the section of the Regulations
establishing the size of the Board of Directors, may be amended by the
affirmative vote of holders of shares entitled to exercise three-quarters of the
voting power on such proposal, unless such amendment is recommended by
two-thirds of the entire authorized Board of Directors, in which case the
requisite vote is a majority of the voting power of KeyCorp. Because at least
two-thirds of the entire authorized Board of Directors has recommended this
proposed amendment, the affirmative vote of the holders of KeyCorp Common Shares
entitling them to exercise a majority of the voting power of KeyCorp is required
to adopt this amendment to the Regulations.
THE BOARD OF DIRECTORS OF KEYCORP UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS VOTE FOR ADOPTION OF THIS AMENDMENT TO THE REGULATIONS.
11
ISSUE THREE
AMENDMENTS TO REGULATIONS
TO PERMIT ELECTRONIC COMMUNICATIONS AND PROVIDE FOR OTHER
RECENT CHANGES IN OHIO CORPORATION LAW
Shareholders are being asked to adopt amendments to KeyCorp's Regulations
resulting from recent changes in Ohio's General Corporation Law.
One of the principal revisions to Ohio law permits increased use of
communications equipment in meetings of shareholders and in providing notices.
Under the revised law, shareholder meetings need not be held at a physical
location. Instead, those meetings may be held in "cyberspace" through means of
communications equipment that permits shareholders or their proxies to
participate in the meeting and to vote on matters submitted to the shareholders.
The proposed amendments to the Regulations would permit communications equipment
to be used for shareholder meetings; however, the proposed amendments do not
extend quite as far as Ohio law permits in this area. KeyCorp presently intends
to continue to hold shareholder meetings at a physical location and may in the
future permit shareholders to join those meetings using communications equipment
in accordance with Ohio law. Consequently, the proposed amendments to the
Regulations, while still requiring that shareholder meetings be held at a
physical location, permit shareholder meetings to be held in part through the
use of communications equipment. In that way, shareholders would have the choice
of attending a shareholders meeting at a physical location or in cyberspace. The
proposed amendments resulting from these changes affect Sections 1 and 5 of
Article I of the Regulations and add a new Section 9 to that Article.
In addition to using communications equipment to facilitate shareholder
meetings, Ohio law modernizes the means through which corporations and their
shareholders may provide notices. In addition to personal delivery and mail,
notices may now be given via overnight delivery service or other means of
communications equipment authorized by a shareholder, which would include
facsimile or email if so authorized. The proposed amendments resulting from
these changes affect Section 4 of Article I.
Similarly, changes are proposed to the Regulations to permit meetings of
directors through the use of communications equipment to the extent permitted
under Ohio law. Currently, Ohio law permits directors' meetings to be conducted
using communications equipment that permits directors not physically present to
hear the proceedings. This would, for example, allow web-based or radio
wave-based transmissions in addition to standard telephone transmissions. The
recent changes in Ohio law also permit a director to receive notices of meetings
by means of email or other communications equipment to the extent authorized by
that director. The proposed amendments resulting from these changes affect
Sections 4, 5, 7, 8, 9 and 11 of Article II of the Regulations and Section 3 of
Article III of the Regulations.
In addition to amendments for the above reasons, other proposed amendments
incorporate by reference the use of proxies by KeyCorp's shareholders in
accordance with Ohio law and replace the title "Chairman" with the
gender-neutral "Chairperson." The proposed amendments resulting from these
changes affect Sections 1 through 4 of Article I of the Regulations, add a new
Section 6 to that Article, and affect Sections 6 and 10 of Article II of the
Regulations, Sections 1, 2 and 4 of Article IV of the Regulations, and Section 1
of Article VI of the Regulations.
12
The revised language of each Section of the Regulations affected by the
proposed amendments is set forth in Appendix B to this Proxy Statement other
than the language of Sections in which the only change is the substitution of
the word "Chairperson" for the word "Chairman." These Sections are Sections 2
and 3 of Article I, Sections 6 and 10 of Article II, Sections 1, 2, and 4 of
Article IV, and Section 1 of Article VI.
Vote Required. Pursuant to Article X of the Regulations, the Regulations
may be amended by the affirmative vote of holders of shares entitled to exercise
three-quarters of the voting power of KeyCorp, unless the amendment is
recommended by at least two-thirds of the entire authorized Board of Directors
in which case the requisite vote is a majority of the voting power of KeyCorp.
The proposed amendments to the Regulations are being recommended by at least
two-thirds of the entire authorized Board and therefore require the affirmative
vote of holders of shares entitled to exercise a majority of the voting power of
KeyCorp.
THE BOARD OF DIRECTORS OF KEYCORP UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS VOTE FOR ADOPTION OF THESE AMENDMENTS TO THE REGULATIONS.
ISSUE FOUR
AMENDMENT TO REGULATIONS
TO REQUIRE ANNUAL ELECTION OF ALL DIRECTORS
A shareholder proposal requesting the Board of Directors to take steps to
cause the annual election of directors has been presented to the KeyCorp
shareholders for the last six years. The proposal was defeated the first four
times it was submitted to the shareholders. However, on its fifth submission in
2000 the proposal received a favorable vote of 53% of the shares voting -- which
constituted approximately 39% of the outstanding shares. After that vote, the
Compensation and Organization Committee of the Board of Directors thoroughly
reviewed the proposal at three separate meetings of the Committee. The
Committee, comprised solely of outside directors, consulted with outside
advisors, evaluated the advantages and disadvantages of a staggered board, and
reviewed the responses of other public companies to such proposals. The
Committee ultimately recommended to the full Board of Directors that no action
be taken to declassify the Board and the Board of Directors agreed with the
recommendation.
Last year, the proposal was submitted for a sixth time to the shareholders
and again received a 53% favorable vote of the shares voting at the
meeting -- which again constituted approximately 39% of the outstanding shares.
The Compensation and Organization Committee carefully reviewed the proposal at
three separate meetings and discussed the proposal with outside corporate
governance consultants. The Committee again determined that it believes that a
classified board is in the best interests of KeyCorp and its shareholders.
However, both the Committee and the Board are mindful that a majority of
the shares voting on the non-binding shareholder proposal for the last two years
have voted in favor of the proposal. Consequently, the Board, acting upon the
Committee's recommendation, has determined to submit the proposal to a binding
vote of the shareholders in the form of an amendment to KeyCorp's Code of
Regulations requiring the annual election of all directors.
Even though the shareholders are now being afforded the opportunity to
amend the Regulations to require the annual election of directors, both the
Committee and the Board continue to believe strongly that a staggered board is
in the best interests of KeyCorp and its shareholders. For this reason, the
Board of Directors
13
is not recommending to the shareholders that KeyCorp's regulations be amended to
require the annual election of directors.
In the opinion of the Board of Directors, KeyCorp's ability to succeed in
producing long-term shareholder value requires long-term strategic planning,
capital commitments, and careful and consistent application of financial and
other resources. With a classified board, the majority of the directors at any
given time will have experience in and knowledge of the business and operations
of KeyCorp.
Election of directors by class is a common practice that has been adopted
by many companies and currently exists at 19 out of 26 major regional banks that
comprise the Standard & Poor's 500 Bank Index and in approximately 63 per cent
of the 500 companies comprising the 2001 Standard & Poor's Stock Price Index.
The staggered board is an effort to balance two very important concerns,
those being the need for shareholders to express their opinion about the Board's
performance each year and the need for KeyCorp's directors to focus on KeyCorp's
long-term success.
Under the proposed amendment, the annual election of directors would be
effective as of the KeyCorp 2003 Annual Meeting of Shareholders and would be
phased in over a three year period. Directors who had been previously elected
for three year terms ending in 2004 and 2005 would continue to serve out these
terms so that no director previously elected to a three year term would have his
or her term shortened. Consequently, under the proposed amendment, one class of
the directors would be elected to one year terms in 2003, two classes of the
directors would be elected to one year terms in 2004 and in 2005 all directors
would be elected to one year terms.
If the proposed amendment is adopted, references to and procedures based on
the existence of a classified board will be deleted from Article II, Sections 1,
11, and 12 of the Regulations. Section 1 of Article II will be further amended
to set forth the procedure to phase in the annual election of directors.
Vote Required. Pursuant to Article X of the Regulations, the Regulations
may be amended by the affirmative vote of holders of shares entitled to exercise
three-quarters of the voting power of KeyCorp, unless the amendment is
recommended by at least two-thirds of the entire authorized Board of Directors
in which case the requisite vote is a majority of the voting power of KeyCorp.
Because the Board of Directors is opposed to this amendment to annually elect
all directors of KeyCorp and the amendment is therefore not being recommended by
at least two-thirds of the entire authorized Board, the amendment must receive
the affirmative vote of holders of shares entitled to exercise three-quarters of
the voting power of KeyCorp.
THE BOARD OF DIRECTORS OF KEYCORP UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS VOTE AGAINST ADOPTION OF THIS AMENDMENT TO THE REGULATIONS.
[ISSUE FOUR
SHAREHOLDER PROPOSAL REQUESTING NECESSARY STEPS TO CAUSE
ANNUAL ELECTION OF ALL DIRECTORS
The following proposal was submitted for inclusion in this Proxy Statement
by Mr. Gerald R. Armstrong, 910 Fifteenth Street, #754, Denver, Colorado
80202-2984. Mr. Armstrong owns 20,080 KeyCorp Common Shares.
14
Shareholder Proposal. "Resolution: That the shareholders of KEYCORP
request its Board of Directors to take those steps necessary to eliminate
the classification of terms of its Board of Directors to require that all
Directors stand for election annually. The Board declassification shall be
completed in a manner that does not affect the unexpired terms of
previously elected Directors."
Supporting Statement. In the last two annual meetings, shareholders,
despite not having confidential voting procedures and management voting all
unmarked proxies, voted in FAVOR of this proposal.
The Board of Directors has neglected this mandate and violated the
wishes of its owners.
The proponent believes the election of directors is the strongest way
that shareholders influence the direction of any corporation. Currently,
KEYCORP's Board is divided into three classes with each class serving
staggered three year terms. Because of this structure, shareholders may
only vote on one-third of the Directors each year. This is not in the best
interests of shareholders because it reduces accountability and is an
unnecessary take-over defense.
Shareholders of Chase Manhattan received one-year terms for their
directors upon merging with Chemical Bank. Many other successful bank
holding companies have one year terms for their directors.
Occidental Petroleum, Ameritech, Time-Warner, Lockheed-Martin,
Campbell Soups, Atlantic Richfield, Westinghouse are among many
corporations replacing three year terms with annual elections for all
directors.
THE HOME DEPOT stated in its 2000 proxy statement supporting replacing
three year terms with one year terms for its directors:
"We believe that it is in the best interest of . . . . Stockholders to
eliminate the classified Board so that stockholders elect all directors
annually. The amendment . . . . will allow stockholders to review and
express their opinions on the performance of all directors each year.
Because there is no limit to the number of terms an individual may serve,
the continuity and stability of the Board's membership and our policies and
long-term strategic planning should not be affected."
These actions increased shareholder voting rights by 300% -- and, at
no cost to the shareholders.
The proponent believes the current system produces only a facade of
continuity which should be displaced; and accountability and performance be
substituted as the basis for re-election to our board of directors.
If you agree, please vote "FOR" this proposal. Your shares will be
automatically voted "against" if your proxy is unmarked.
Board of Directors Recommendation and Statement. A shareholder
proposal requesting the Board of Directors to take steps to cause the
annual election of directors has been presented to the KeyCorp shareholders
for the seventh year in a row. The proposal was defeated the first four
times it was submitted to the shareholders. However, on its fifth
submission in 2000 the proposal received a favorable vote of 53% of the
shares voting - which constituted approximately 39% of the outstanding
shares. After that vote, the Compensation and Organization Committee of the
Board of Directors thoroughly reviewed the proposal at three separate
meetings of the Committee. The Committee, comprised solely of outside
15
directors, consulted with outside advisors, evaluated the advantages and
disadvantages of a staggered board, and reviewed the responses of other
public companies to such proposals. The Committee ultimately recommended to
the full Board of Directors that no action be taken to declassify the Board
and the Board of Directors agreed with the recommendation.
Last year, the proposal was submitted for a sixth time to the
shareholders and again received a 53% favorable vote of the shares voting
at the meeting - which again constituted approximately 39% of the
outstanding shares. The Compensation and Organization Committee carefully
reviewed the proposal at three separate meetings and discussed the proposal
with outside corporate governance consultants. The Committee again
determined that it believes that a classified board is in the best
interests of KeyCorp and its shareholders and therefore recommended to the
full Board of Directors that no action be taken to declassify the Board and
the Board of Directors agreed with the recommendation.
The Board believes that KeyCorp's ability to succeed in producing
long-term shareholder value requires long-term strategic planning, capital
commitments, and careful and consistent application of financial and other
resources. With a classified board, the majority of the directors at any
given time will have experience in and knowledge of the business and
operations of KeyCorp.
Election of directors by class is a common practice that has been
adopted by many companies and currently exists at 19 out of 26 major
regional banks that comprise the Standard & Poor's 500 Bank Index and in
approximately 63 per cent of the 500 companies comprising the 2001 Standard
& Poor's Stock Price Index.
The staggered board is an effort to balance two very important
concerns, those being the need for shareholders to express their opinion
about the Board's performance each year and the need for KeyCorp's
directors to focus on KeyCorp's long-term success.
In the opinion of KeyCorp's Board, a classified board of directors
facilitates continuity and stability of leadership and policy by assuring
that experienced individuals familiar with the corporation and its business
will be on the board of directors at all times. A classified board of
directors is also intended to prevent precipitous changes in the
composition of the board and, thereby, serves to moderate corresponding
precipitous changes in the corporation's policies, business strategies, and
operations. A classified board protects shareholder interests from coercive
attempts from outsiders to gain control. As current newspaper headlines
demonstrate, no company, regardless of its size, is immune to a take-over
attempt. Board classification is intended to encourage any person seeking
to acquire control of KeyCorp to initiate such an action through
arm's-length negotiations with the Board of Directors so as to benefit
KeyCorp's shareholders.
This proposal requests the Board to take all steps necessary to cause
the annual election of all directors. One of those steps would be to amend
KeyCorp's Regulations. Under KeyCorp's Regulations, the provisions
providing for a classified Board may only be amended, repealed or altered
by the affirmative vote of the holders of shares entitling them to exercise
three-quarters of the voting power of KeyCorp on such proposal unless such
amendment, repeal, or alteration is recommended by two-thirds of the Board
of Directors, in which case the amendment, repeal, or alteration would
require the affirmative vote of the holders of shares entitling them to
exercise a majority of the voting power of KeyCorp on such proposal. If
this proposal is approved by the shareholders at this Annual Meeting and
the Board of
16
Directors were to determine to submit a repeal or amendment of the
provisions in KeyCorp's Regulations providing for a classified Board to the
shareholders for a vote at a future meeting, approval of the repeal or
amendment would require the affirmative vote of three-quarters of KeyCorp's
Common Shares unless two-thirds of the Board of Directors were to recommend
approval of such repeal or amendment. A vote in favor of this proposal is
an advisory recommendation to the Board of Directors.
Vote Required. Approval of this proposal will require the affirmative
vote of a majority of the KeyCorp Commons Shares represented in person or
by proxy at the Annual Meeting.
THE BOARD OF DIRECTORS OF KEYCORP UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS VOTE AGAINST THIS PROPOSAL.]
ISSUE FIVE
INDEPENDENT AUDITORS
The Board of Directors of KeyCorp, acting upon the recommendation of its
Audit and Risk Review Committee, has appointed Ernst & Young LLP ("Ernst &
Young") as its independent auditors to examine the financial statements of
KeyCorp and its subsidiaries for the year 2002. The Board of Directors
recommends ratification of the appointment of Ernst & Young. The favorable vote
of the holders of a majority of the KeyCorp Common Shares represented in person
or by proxy at the Annual Meeting will be required for such ratification.
A representative of Ernst & Young will be present at the meeting with an
opportunity to make a statement if such representative desires to do so and to
respond to appropriate questions.
Although shareholder approval of this appointment is not required by law or
binding on the Board, the Board believes that shareholders should be given the
opportunity to express their views. If the shareholders do not ratify the
appointment of Ernst & Young as KeyCorp's independent auditors, the Board will
consider this vote in determining whether or not to continue the engagement of
Ernst & Young.
EXECUTIVE OFFICERS
The executive officers of KeyCorp are principally responsible for making
policy for KeyCorp, subject to the supervision and direction of KeyCorp's Board
of Directors. All officers are subject to annual election at the annual
organizational meeting of the directors. Messrs. Clutterbuck and Meyer have
employment agreements with KeyCorp.
There are no family relationships among directors, nominees or executive
officers. Other than Mr. Clutterbuck, all have been employed in officer
capacities with KeyCorp or one of its subsidiaries for at least the past five
years.
Set forth below are the names and ages of the executive officers of KeyCorp
as of January 1, 2002, positions held by them during the past five years and the
year from which held, and, in parentheses, the year they first became executive
officers of either KeyCorp or Old Key.
17
JAMES S. BINGAY (58)
1999 to present: Senior Executive Vice President, KeyCorp; Previously,
Executive Vice President, KeyCorp. (1990)
ROBERT T. CLUTTERBUCK (51)
2001 to present: Senior Executive Vice President, KeyCorp; 2000 to present:
Chief Executive Officer, McDonald Investments Inc.; 2000-2001: Executive Vice
President, KeyCorp; 1998-2000: President, McDonald Investments Inc.; 1994-1998:
President, McDonald & Company Investments, Inc., (2000)
R. B. HEISLER, JR. (53)
1996 to present: Executive Vice President, KeyCorp. (1996)
THOMAS E. HELFRICH (51)
1995 to present: Executive Vice President, KeyCorp. (1995)
LEE G. IRVING (53)
1995 to present: Executive Vice President and Chief Accounting Officer,
KeyCorp. (1986)
JACK L. KOPNISKY (45)
2001 to present: Senior Executive Vice President, Consumer Banking,
KeyCorp; 2000-2001: Executive Vice President, KeyCorp; 1998-1999: President,
Retail Banking, KeyBank National Association; Previously, Chairman, Chief
Executive Officer, and President, Key Investments Inc. (subsidiary of KeyCorp).
(1999)
HENRY L. MEYER III (52)
2001 to present: Chairman, President, and Chief Executive Officer, KeyCorp;
1997-2001: President and Chief Operating Officer, KeyCorp; 1996-1997: Vice
Chairman of the Board and Chief Operating Officer, KeyCorp. (1987)
ROBERT G. RICKERT (41)
2001 to present: Executive Vice President, KeyCorp; 1998-2001: Executive
Vice President, KeyBank National Association; 1997-1998: Executive Vice
President, Key Services Corporation (subsidiary of KeyCorp); 1997: Senior Vice
President, Key Services Corporation; 1996-1997: Vice President, Key Services
Corporation. (2000)
K. BRENT SOMERS (53)
1996 to present: Senior Executive Vice President and Chief Financial
Officer, KeyCorp. (1996)
18
THOMAS C. STEVENS (52)
2001 to present: Vice Chairman, Chief Administrative Officer, and
Secretary; 1997-2001: Senior Executive Vice President, General Counsel and
Secretary, KeyCorp; 1996-1997: Executive Vice President, General Counsel and
Secretary, KeyCorp. (1996)
19
COMPENSATION OF EXECUTIVE OFFICERS
Summary. The following table sets forth the compensation paid by KeyCorp
and its subsidiaries for each of the previous three years to Henry L. Meyer III
(who began serving as KeyCorp's Chief Executive Officer on February 1, 2001 and
as Chairman on May 17, 2001) and each of the remaining four highest paid
executive officers of KeyCorp at December 31, 2001. The tables also set forth
the compensation paid by KeyCorp to Robert W. Gillespie who retired as Chairman
and Chief Executive Officer during 2001.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------------------ -------------------------------
AWARDS PAYOUTS
------------------- ---------
SECURITIES LONG-TERM
OTHER ANNUAL UNDERLYING INCENTIVE
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(4) OPTIONS/SARS(#) PAYOUTS
--------------------------- ---- ------ ----- --------------- --------------- ---------
Henry L. Meyer III 2001 $814,583 $ 0 -- 400,000 0
Chairman, President, and 2000 687,501 526,500 -- 200,000 0
Chief Executive Officer 1999 637,501 526,500 -- 160,000 296,992(5)
Thomas C. Stevens 2001 495,000 0 -- 150,000 0
Vice Chairman, Chief 2000 436,250 285,000 -- 50,000 0
Administrative Officer, and 1999 420,000 275,000 -- 50,000 177,562(5)
Secretary
Robert T. Clutterbuck 2001 243,750 1,289,583(3) -- 84,000 0
Senior Executive Vice 2000 175,000 1,425,000 -- 161,000 0
President 1999 175,000 1,325,000 -- 65,264 0
K. Brent Somers 2001 461,250 0 -- 150,000 0
Senior Executive Vice 2000 446,875 300,000 -- 50,000 0
President and Chief 1999 437,500 275,000 -- 50,000 188,642(5)
Financial Officer
James S. Bingay 2001 446,250 0 -- 150,000 0
Senior Executive 2000 432,500 225,000 -- 80,000 0
Vice President(1) 1999 372,917 425,000 -- 80,000 117,416(5)
Robert W. Gillespie 2001 373,911 0 -- 400,000 0
Retired Chairman 2000 990,000 1,012,500 -- 400,000 0
of the Board and 1999 990,000 1,012,500 -- 320,000 458,439(5)
Chief Executive Officer(2)
ALL OTHER
COMPENSATION
----------------
NAME AND PRINCIPAL POSITION
---------------------------
Henry L. Meyer III $ 48,875(6)
Chairman, President, and 98,485
Chief Executive Officer 112,818
Thomas C. Stevens 29,700(7)
Vice Chairman, Chief 58,946
Administrative Officer, and 69,111
Secretary
Robert T. Clutterbuck 519,971(8)
Senior Executive Vice 1,018,170
President 63,375
K. Brent Somers 27,675(9)
Senior Executive Vice 62,378
President and Chief 70,439
Financial Officer
James S. Bingay 26,775(10)
Senior Executive 52,906
Vice President(1) 74,003
Robert W. Gillespie 5,101,446(11)
Retired Chairman 181,265
of the Board and 207,624
Chief Executive Officer(2)
---------------
(1) Mr. Bingay retired as Senior Executive Vice President on March 31, 2002.
(2) Mr. Gillespie retired as Chief Executive Officer on February 1, 2001 and as
Chairman on May 17, 2001.
(3) Minimum annual bonus for 2001 pursuant to employment agreement between
KeyCorp and Mr. Clutterbuck described on pages - of the Proxy Statement.
(4) Other annual compensation received in the respective fiscal years was in
the form of perquisites, the amount of which did not exceed the lesser of
$50,000 or 10% of the total annual salary and bonus reported for the
executive.
(5) Amounts awarded under the KeyCorp Long Term Cash Incentive Compensation
Plan for the three year cycle ending in 1999, whether paid in cash or
deferred.
(6) $10,200 (amount contributed under the KeyCorp 401(k) Savings Plan); $38,675
(amount contributed under the KeyCorp Excess 401(k) Savings Plan).
(7) $10,200 (amount contributed under the KeyCorp 401(k) Savings Plan); $19,500
(amounts contributed under the KeyCorp Excess 401(k) Savings Plan and the
KeyCorp Deferred Compensation Plan).
20
(8) $10,200 (amount contributed under KeyCorp 401(k) Savings Plan); $69,771
(amount contributed under the KeyCorp Deferred Compensation Plan);
$440,000 (retention cash payment in connection with KeyCorp's acquisition
of McDonald Investments, Inc.).
(9) $10,200 (amount contributed under the KeyCorp 401(k) Savings Plan);
$17,475 (amount contributed under the KeyCorp Excess 401(k) Savings Plan).
(10) $10,200 (amount contributed under the KeyCorp 401(k) Savings Plan);
$16,575 (amount contributed under the KeyCorp Excess 401(k) Savings Plan).
(11) $10,200 (amount contributed under the KeyCorp 401(k) Savings Plan);
$12,235 (amount contributed under the KeyCorp Excess 401(k) Savings Plan);
$5,079,011 (compensation and benefits payable pursuant to employment
agreement, dated November 21, 1996).
Option Grants. The following table provides information regarding grants of
stock options made during the year ended December 31, 2001, to each of the
executive officers named in the Summary Compensation Table.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
------------------------------------------------------------- POTENTIAL REALIZABLE VALUE
NUMBER OF % OF TOTAL AT ASSUMED ANNUAL RATES
SECURITIES OPTIONS EXERCISE OF STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO OR BASE FOR TEN YEAR OPTION TERM
OPTIONS EMPLOYEES PRICE EXPIRATION ----------------------------
NAME GRANTED(#)(1) IN FISCAL YEAR ($/SH) DATE 5% 10%
---- ------------- -------------- -------- ---------- ----------- ------------
Henry L. Meyer III 400,000 5.5% $28.250 01/17/2011 $7,106,509 $18,009,290
Thomas C. Stevens 150,000 2.1% 28.250 01/17/2011 2,664,941 6,753,484
Robert T. Clutterbuck 75,000 1.0% 28.250 01/17/2011 1,332,470 3,376,742
9,000 0.1% 24.975 03/14/2011 141,360 358,233
K. Brent Somers 150,000 2.1% 28.250 01/17/2011 2,664,941 6,753,484
James S. Bingay 150,000 2.1% 28.250 01/17/2011 2,664,941 6,753,484
Robert W. Gillespie 400,000 5.5% 28.250 01/17/2011 7,106,509 18,009,290
---------------
(1) Incentive Stock Options in an amount equal to the maximum number of
Incentive Stock Options that can be granted under applicable provisions of
the Internal Revenue Code were granted, and remaining options granted were
non-qualified stock options.
Other than the 9,000 options granted to Mr. Clutterbuck on March 14, 2001,
the options reported in the preceding table were granted on January 17, 2001 at
an exercise price equal to the market price of KeyCorp Common Shares on that
date, which was $28.250. Based on this stock price, the market value of KeyCorp
Common Shares at the end of the ten year option period using 5% and 10%
compounded annual returns would be $46.016 and $73.273, respectively. The
options granted to Mr. Clutterbuck on March 14, 2001 were granted at an exercise
price of $24.975 which was also the market price of KeyCorp Common Shares on
that date. Based on this stock price, the market value of KeyCorp Common Shares
at the end of the ten year option period using 5% and 10% compounded annual
returns would be $40.682 and $64.779, respectively.
21
Option Exercises and Values. The following table provides information
regarding exercises of stock options during the year ended December 31, 2001, by
the executive officers named in the Summary Compensation Table, and the value of
such officers' unexercised stock options as of December 31, 2001.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/ IN-THE-MONEY OPTIONS/
SHARES SARS AT FY-END (#) SARS AT FY-END($)
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) REALIZED UNEXERCISABLE UNEXERCISABLE(1)
---- ------------ -------- ---------------------- ---------------------
Henry L. Meyer III 40,000 $ 516,900 686,168/563,832 $4,038,220/304,830
Thomas C. Stevens 0 0 137,834/202,166 246,118/104,332
Robert T. Clutterbuck 0 0 165,235/336,420 38,040/236,312
K. Brent Somers 0 0 197,834/202,166 658,918/104,332
James S. Bingay 0 0 294,501/245,499 2,225,568/104,332
Robert W. Gillespie 230,000 2,206,430 1,670,000/0 6,032,346/0
---------------
(1) Based on a December 31, 2001 mean between high and low prices for KeyCorp
Common Shares which equaled $24.38.
Long Term Incentive Compensation. Messrs. Meyer, Stevens, Somers, and
Bingay are participants in the Long Term Incentive Plan for the 1998-2001
compensation period. No payments were made under the Plan for this cycle and no
cycle began in 2001.
Pension Plans. Substantially all officers and employees of KeyCorp and its
participating subsidiaries participate in the KeyCorp Cash Balance Pension Plan
(the "Pension Plan"). The Pension Plan is a cash balance plan that provides a
quarterly benefit accrual on behalf of each participant based on the
participant's years of vesting service and Pension Plan compensation.
Additionally, participants who attained age 50 with 15 years of vesting service
as of December 31, 1994 are also entitled, under the terms of the Pension Plan,
to elect to receive either a grandfathered pension benefit or the cash balance
benefit. Mr. Gillespie is the only executive appearing in the Summary
Compensation Table on page , who was eligible under the Pension Plan to elect
to receive either a grandfathered pension benefit or cash balance Pension Plan
benefit.
In addition to the Pension Plan, KeyCorp also maintains the KeyCorp Excess
Cash Balance Pension Plan ("Excess Plan"). The Excess Plan credits Excess Plan
participants with the cash balance Pension Plan benefit that would have accrued
to the participant "but for" the compensation limits of Section 401(a)(17) and
benefit accrual limits of Section 415 of the Internal Revenue Code. Messrs.
Stevens, Clutterbuck, Somers, and Bingay participate in the Excess Plan.
Certain officers (including Messrs. Meyer and Gillespie) participate in the
KeyCorp Supplemental Retirement Plan ("Supplemental Retirement Plan"). The
Supplemental Retirement Plan provides Plan participants with a Plan benefit
which equals up to 63% of the participant's "final average compensation" when
combined with the participant's Pension Plan benefit and age 65 social security
benefit.
For purposes of the Supplemental Retirement Plan the term "final average
compensation" includes the participant's average annual compensation for the
highest five consecutive years during the participant's last
22
ten years of employment plus the highest five incentive compensation awards
granted to the participant during the ten year period preceding the
participant's retirement or termination date.
The following table sets forth the estimated maximum annual benefits
payable under the Pension Plan and related Excess Plan and Supplemental
Retirement Plan to participants who (1) have such benefits under the Pension
Plan and Excess Plan or Supplemental Retirement Plan, (2) attain Social Security
retirement age as of December 31, 2001, and (3) elect to receive a single life
annuity benefit payment. The benefits are not subject to any reduction for
social security or other offset.
PENSION PLAN TABLE
ESTIMATED ANNUAL RETIREMENT BENEFITS
WITH INDICATED YEARS OF PARTICIPATION
AVERAGE COVERED --------------------------------------------------------------
REMUNERATION 15 20 25 30 35
--------------- ---------- ---------- ---------- ---------- ----------
$ 400,000 $ 191,211 $ 211,211 $ 231,211 $ 241,211 $ 251,211
600,000 287,211 317,211 347,211 362,211 377,211
800,000 383,211 423,211 463,211 483,211 503,211
1,000,000 479,211 529,211 579,211 604,211 629,211
1,200,000 575,211 635,211 695,211 725,211 755,211
1,400,000 671,211 741,211 811,211 846,211 881,211
1,600,000 767,211 847,211 927,211 967,211 1,007,211
1,800,000 863,211 953,211 1,043,211 1,088,211 1,133,211
2,000,000 959,211 1,059,211 1,159,211 1,209,211 1,259,211
2,400,000 1,151,211 1,271,211 1,391,211 1,451,211 1,511,211
2,600,000 1,247,211 1,377,211 1,507,211 1,572,211 1,637,211
Compensation for purposes of computing benefits under the Pension Plan and
Excess Plan is total base pay and incentive compensation paid during a calendar
year, including amounts deducted for the 401(k) and flexible benefits plans
during such year, but does not include amounts attributable to stock options or
receipt of non-cash remuneration that is included in the participant's income
for Federal income tax purposes. Compensation for purposes of the Pension Plan
and excess and supplemental plans is substantially the same as shown in the
Summary Compensation Table after excluding stock options, "all other
compensation," and "other annual compensation." Normal retirement age is 65. The
Pension Plan requires 5 years of service for vesting. The Excess Plan requires 5
years of service and the attainment of age 55 for vesting purposes. The
Supplemental Retirement Plan requires 10 years of service and the attainment of
age 55 for vesting purposes. Messrs. Meyer and Gillespie were credited under the
supplemental plan with 28 and 32 years service, respectively, and Messrs.
Stevens, Clutterbuck, Somers, and Bingay were credited under the excess plan
with 5, 3, 5, and 12 years service, respectively.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
KeyCorp's directors and certain officers are required to report their
ownership and changes in ownership of KeyCorp Common Shares to the Securities
and Exchange Commission. The Commission has established
23
certain due dates for these reports. Mr. Stafford, a Director of KeyCorp, filed
a single report of a sale of KeyCorp Common Shares three days late. KeyCorp
knows of no other person who failed to timely file any such report during 2001.
EMPLOYMENT AND CHANGE OF CONTROL AGREEMENTS
KeyCorp is a party to employment agreements with Messrs. Meyer,
Clutterbuck, and Gillespie, and to change of control agreements with 30 of its
senior officers.
Employment Agreement with Mr. Meyer. KeyCorp and Mr. Meyer are parties to
an employment agreement pursuant to which Mr. Meyer is to be employed by KeyCorp
as its Chairman, President, and Chief Executive Officer for a constantly
renewing three year term at a base salary of not less than $950,000 per annum
effective February 1, 2002 plus full participation in all incentive and other
compensatory plans available generally to KeyCorp's executive officers. If Mr.
Meyer's employment is terminated by KeyCorp without cause, he is to be paid an
amount equal to three times the sum of his base salary and his average incentive
compensation in a lump sum within 30 days after the termination, and he is to be
provided the benefit of continuing participation in all KeyCorp retirement and
savings plans and continuing medical, disability, and group term life insurance
coverage, all through the third anniversary of the termination.
Under the employment agreement, Mr. Meyer may consider himself
constructively terminated if, at any time, his base salary is reduced other than
in connection with an across-the-board salary reduction applicable to all
executive officers of KeyCorp, he is excluded from full participation in any
incentive or other compensatory plan applicable to executive officers of KeyCorp
generally, he is demoted or removed from office, he is asked to resign when
KeyCorp does not have cause for terminating his employment, or his principal
place of employment is relocated outside of the Cleveland metropolitan area. In
addition, Mr. Meyer may consider himself constructively terminated if, after a
"change of control," as defined in the employment agreement, his base salary is
reduced (whether or not in connection with any reductions of other base
salaries), he is excluded from full participation in any incentive or other
compensatory plan in effect during the year before the change of control unless
a substitute plan providing similar benefits is made available, he is excluded
from full participation in any incentive or other compensatory plan that is
applicable to executive officers of the surviving entity generally, the annual
incentive compensation paid to him during the two year period immediately
following the change of control is less than his average annual incentive
compensation before the change of control, the equity compensation opportunities
provided to him during that same two year period are reduced from the equity
compensation opportunities provided to him before the change of control, he
determines in good faith that his position, duties, and responsibilities are
materially reduced from those in effect before the change of control, he
determines in good faith that as a result of the change of control, he is unable
to continue to carry out his responsibilities and duties as Chairman of the
Board and Chief Executive Officer, or the headquarters of the surviving entity
is outside of the Cleveland metropolitan region.
Under the employment agreement, KeyCorp will have "cause" to terminate Mr.
Meyer's employment before a change of control if he commits a felony, acts
dishonestly in a way that is materially inimical to the best interests of
KeyCorp, competes with KeyCorp, or abandons and consistently fails to attempt to
perform his duties or if a bank regulatory agency issues a final order requiring
KeyCorp to terminate or suspend his
24
employment. KeyCorp will have "cause" to terminate Mr. Meyer's employment after
a change of control if he is convicted of a felony, acts dishonestly and
feloniously in a way that is materially inimical to the best interests of
KeyCorp, or competes with KeyCorp or if a bank regulatory agency issues a final
order requiring KeyCorp to terminate or suspend his employment.
If any amount of compensation otherwise payable to Mr. Meyer as earned
would not be deductible by KeyCorp by reason of the disallowance rules of
Section 162(m) of the Internal Revenue Code but would be deductible if it were
deferred until a later year, that amount of compensation will be so deferred
until the earlier of the first date on which the compensation can be paid
without disallowance of the deduction to KeyCorp or April 15 of the year
immediately following the year in which Mr. Meyer ceases to be a covered
employee of KeyCorp. Upon payment of any such deferred amounts of compensation,
KeyCorp will pay to Mr. Meyer an additional amount for interest on the deferred
amounts.
Under the employment agreement, Mr. Meyer is entitled to continuing
indemnification to the fullest extent permitted by Ohio law for actions against
him by reason of his being or having been a director or officer of KeyCorp or
any related entity and to payment of certain legal fees incurred in enforcing
his rights under his employment agreement. The employment agreement also
provides that, upon any termination of Mr. Meyer's employment before he attains
age 55, other than a termination before he attains age 55 either by KeyCorp for
cause or by his own voluntary resignation, Mr. Meyer's rights in KeyCorp's
supplemental retirement plan will be fully vested.
Agreement with Mr. Clutterbuck. KeyCorp and Mr. Clutterbuck are parties to
an employment agreement extending until December 31, 2004, and pursuant to which
Mr. Clutterbuck serves as the Chairman and Chief Executive Officer of Key
Capital Partners and the Chief Executive Officer of McDonald Investments Inc.
Pursuant to the terms of the employment agreement, Mr. Clutterbuck received
as of the date of the employment agreement an annual salary of $200,000 in 2000
and no less than $200,000 in 2001 and each subsequent year during the term of
the agreement. The employment agreement provides that Mr. Clutterbuck receive an
annual bonus of no less that $1,300,000 for 2000 and that the sum of Mr.
Clutterbuck's annual salary and annual bonus will not be less than $1,533,333
for 2001 and each subsequent year during the term of the agreement. In addition,
Mr. Clutterbuck received a retention award in connection with KeyCorp's 1998
acquisition of McDonald & Company Investments, Inc. consisting of $2,200,000 in
cash payments and non-qualified stock options to acquire 241,055 KeyCorp Common
Shares. These retention payments and options become payable and exercisable over
a period of five years ending in 2003. The employment agreement entitles Mr.
Clutterbuck to participate in welfare and retirement benefit plans which are
generally no less favorable, in the aggregate, than the plans in which he was
entitled to participate before entering into the agreement.
The employment agreement further provides that, upon termination of Mr.
Clutterbuck's employment by KeyCorp other than for cause or by Mr. Clutterbuck
for good reason, he will be entitled to a lump-sum cash payment equal to the sum
of (i) his unpaid annual salary through the date of termination, (ii) a pro rata
annual bonus (based on his three year average annual bonus) for the portion of
the calendar year prior to the date of termination, (iii) any unpaid bonus for a
prior year, and (iv) an amount equal to the product of (a) the number of years
(including fractions) from the date of termination until the end of the term of
the
25
employment agreement and (b) the sum of his annual salary and the average annual
bonus. Further, upon termination of Mr. Clutterbuck's employment by KeyCorp
other than for cause or by Mr. Clutterbuck for good reason, Mr. Clutterbuck's
unpaid retention payments and unvested retention options will become fully
payable and exercisable, and Mr. Clutterbuck will be entitled to continuing
health and welfare benefits until the end of the agreement's term, retiree
medical benefits and vesting of all deferred compensation if termination occurs
before October 24, 2003. Under the employment agreement, "cause" generally will
exist if Mr. Clutterbuck commits a felony, continually and willfully fails
(after written notice) to perform substantially his duties with Key Capital
Partners, engages in gross misconduct which is materially and demonstrably
injurious to Key Capital Partners or KeyCorp, discloses confidential information
concerning or competes with KeyCorp, or engages in conduct that results in the
permanent loss of his professional license or disqualification from serving in
the capacities contemplated by the employment agreement. Mr. Clutterbuck
generally may terminate the employment agreement for "good reason" if KeyCorp
detrimentally alters or fails to comply with the terms of the employment
agreement as they relate to Mr. Clutterbuck's position, reporting, or
responsibilities, KeyCorp fails to comply with the compensation and benefit
arrangements set forth in the employment agreement, KeyCorp takes certain
actions that detrimentally affect the size of Key Capital Partners or the scope
of products and services provided by Key Capital Partners, Mr. Clutterbuck's
principal place of employment is relocated outside the Cleveland metropolitan
area, KeyCorp fails to obtain an assumption agreement reasonably satisfactory to
Mr. Clutterbuck from a successor to KeyCorp or purchaser of Mr. Clutterbuck's
line of business, or Mr. Clutterbuck's employment is terminated other than in
accordance with the employment agreement.
If any amount of compensation otherwise payable to Mr. Clutterbuck as
earned would not be deductible by KeyCorp by reason of the disallowance rules of
Section 162(m) of the Internal Revenue Code but would be deductible if it were
deferred until a later year, that amount of compensation will be deferred
pursuant to the terms of the KeyCorp Deferred Compensation Plan as in effect
from time to time. Under the KeyCorp Deferred Compensation Plan, a plan
participant is entitled to elect certain payment and investment options on a
bookkeeping basis.
Under the employment agreement, Mr. Clutterbuck is entitled to continuing
indemnification to the fullest extent permitted by Ohio law for actions against
him by reason of his being or having been a director or officer of KeyCorp or
any related entity and to payment of certain legal fees incurred in enforcing
his rights under his employment agreement.
Mr. Clutterbuck is also a party to a change of control agreement (as
described below) with KeyCorp. In the event Mr. Clutterbuck's employment is
terminated under circumstances giving rise on his part to receiving continuing
compensation, separation pay, or severance benefits under both his employment
agreement and the change of control agreement, Mr. Clutterbuck may elect which
agreement will apply, but not both.
Employment Agreement With Mr. Gillespie. KeyCorp and Mr. Gillespie are
parties to an employment agreement pursuant to which Mr. Gillespie served as
KeyCorp's Chief Executive Officer as well as its Chairman of the Board. The
employment agreement was entered into in 1996 and was derived from an employment
agreement entered into with Mr. Gillespie in connection with the Old Key merger
with Society in 1994. The employment agreement provides for two years of
compensation and benefits to Mr. Gillespie through May 31, 2003, for a
supplemental retirement benefit in an amount sufficient to provide Mr. Gillespie
26
the same aggregate benefit that he would have received if he had continued in
the employ of KeyCorp through his 65th birthday (by eliminating any reduction
because he started receiving benefits before his 65th birthday and giving him
credit for additional years of service for the period after his termination date
and before his 65th birthday), and for the continued provision of a furnished
office, amenities, and secretarial support, appropriate to his status as the
former Chairman of the Board and Chief Executive Officer, through May 31, 2007.
Under the employment agreement, Mr. Gillespie is entitled to continuing
indemnification to the fullest extent permitted by Ohio law for actions against
him by reason of his being or having been a director or officer of KeyCorp or
any related entity; to payment of certain legal fees incurred in enforcing his
rights under his employment agreement; and to ancillary benefits incident to the
performance of his duties under that agreement.
Change of Control Agreements. KeyCorp is a party to change of control
agreements with 30 of its senior officers (including Messrs. Stevens,
Clutterbuck, Somers, and Bingay) which provide in most cases that if, at any
time within two years after the occurrence of a change of control, the officer's
employment is terminated by KeyCorp (except for cause) or the officer terminates
employment because the officer's base salary, incentive compensation or stock
option opportunity is reduced or relocation is made a condition of the officer's
employment, KeyCorp will (a) pay to the officer a lump sum severance benefit
equal to three years' compensation (base salary and average incentive
compensation), (b) pay the cost of continuing health benefits until the earlier
of the expiration of the continuation period required by Federal law or the date
the officer secures other employment, and (c) assure continued participation in
all applicable KeyCorp retirement plans and savings plans for the period of
thirty-six months from the termination date. Each change of control agreement
also provides a three-month window period, commencing 15 months after the date
of a change of control, during which the officer may voluntarily resign and
receive a lump sum severance benefit equal to one and one half years'
compensation (base salary and average incentive compensation) if, at any time
before the executive's resignation, (a) the executive determines in good faith
that the executive's position, responsibilities, duties, or status with KeyCorp
are materially less than or reduced from those in effect before the change of
control or that the executive's reporting relationships with superior executive
officers have been materially changed from those in effect before the change of
control, or (b) the headquarters that was the executive's principal place of
employment before the change of control (whether KeyCorp's headquarters or a
regional headquarters) is relocated to a site outside of the greater
metropolitan area in which that headquarters was located before the change of
control. For purposes of the change in control agreements, "cause" includes
conviction of a felony, dishonesty in the course of employment that constitutes
a felony and is inimical to the best interest of KeyCorp or a subsidiary,
imposition by a bank regulatory agency of a final order of suspension or
removal, or competing with KeyCorp.
Section 280G Excise Tax on Payments. In general, the employment and change
of control agreements to which KeyCorp is a party provide for a tax gross-up if
any payment exceeds the Section 280G limits so that the officer will receive the
same after-tax payment as would have been the case if Section 280G did not
apply.
27
COMPENSATION AND ORGANIZATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
KeyCorp's Board of Directors has delegated to its Compensation and
Organization Committee (the "Committee") responsibility for executive
compensation.
BACKGROUND ON OVERALL PROGRAM
In designing KeyCorp's executive compensation program, KeyCorp and the
Committee concluded that the program should:
- Operate as a primary motivator in driving executive decisions and
activities to enhance shareholder value.
- Pay total compensation that is commensurate with KeyCorp's
performance as compared with other comparable financial
institutions.
- Promote a strong pay for performance culture by ensuring that highly
competitive compensation is conditioned upon the attainment of
challenging objectives.
- Permit KeyCorp to attract, retain, and motivate the best available
executive talent by providing competitive pay opportunities.
- Serve to retain high performing individuals by designing appropriate
retention devices and providing deferred compensation opportunities.
- Encourage substantial share ownership by executives.
The executive compensation program -- including the establishment of job
grades, salary ranges and market points (the approximate average salary for
executives in similar jobs in the marketplace), and the assignment of senior
executives to job grades based upon their responsibilities -- was designed and
implemented with the advice of an independent outside executive compensation
consultant. Jobs within KeyCorp are valued on the basis of market median total
compensation levels at peer companies rather than on the basis of internal job
relationships within KeyCorp.
Under the compensation program adopted by KeyCorp and the Committee, the
total value of KeyCorp's compensation for executives will be positioned at the
median total compensation at peer companies for the comparable position,
although the individual compensation elements (base salary, annual and long term
incentive compensation, and stock options) may vary from peer medians. The
Committee each year identifies the companies to be included in the peer group.
The 2001 peer group included 11 bank holding companies that, in the Committee's
judgment, have similar characteristics as KeyCorp. The 2001 peer group is
identified in the paragraph above the stock performance graph on page of
this Proxy Statement.
KeyCorp has also established stock ownership guidelines for its senior
executives which specify that KeyCorp's Chief Executive Officer should own
KeyCorp Common Shares with a value equal to at least five times the Chief
Executive Officer's annual salary, senior executives reporting directly to the
Chief Executive Officer (which includes Messrs. Stevens, Bingay, Clutterbuck and
Somers) should own KeyCorp Common Shares with a value equal to at least two
times their salary, and all other senior executives participating in
28
KeyCorp's long term incentive compensation plan should own KeyCorp Common Shares
with a value at least equal to their salary. Newly hired executives have a
reasonable period of time to achieve the level of ownership set forth in the
guidelines. For purposes of these guidelines, Common Shares include shares
actually owned by the executive as well as phantom shares owned under KeyCorp's
Excess 401(k) Savings Plan and deferred compensation plans. At December 31,
2001, the senior executives covered by KeyCorp's stock ownership guidelines
owned, in the aggregate, 223% of the KeyCorp Common Shares specified by the
guidelines.
The Committee on a regular periodic basis reviews each of the major
elements of the overall compensation program (i.e. salary, annual and long term
incentive compensation, and stock options) to determine whether that major
element is competitive in the marketplace and effective in incenting desired
performance behavior. In order to assist it with these periodic reviews, the
Committee generally retains an independent outside executive compensation
consultant.
2001 COMPENSATION
Adjustments to an individual executive's salary are considered annually
using competitive market comparisons and considering the executive's
contribution to KeyCorp's success and accomplishment of individual and unit
goals. The Committee has determined that KeyCorp will be better able to motivate
executives to achieve superior financial performance if a relatively large
portion of senior executive compensation is "at risk", i.e. subject to incentive
compensation plans. Consistent with this approach, annual salary adjustments in
2001 for senior executives as a group averaged approximately 4 percent excluding
promotional salary adjustments in connection with executives being assigned
expanded job responsibilities.
"At risk" incentive compensation is designed to provide KeyCorp's senior
executives with less total compensation than that of senior executives of peer
companies in periods when KeyCorp's performance is poorer than performance of
peer companies and to provide superior total compensation when performance is
superior to the performance of such companies. KeyCorp maintains both short term
incentive compensation plans focused primarily on annual operating performance
and long term incentive compensation plans aimed at consistent achievement of
financial objectives over a multi-year performance cycle.
Generally speaking, the senior corporate officers of KeyCorp (including
Messrs. Meyer, Stevens, Somers and Gillespie) participate in the annual
incentive compensation plan described in the next paragraph. There are also
various short term incentive compensation plans or arrangements for the
different lines of business within KeyCorp. The performance metrics for these
line of business plans are formulated based upon individual line of business
operating plans and objectives. In the case of senior line of business officers
(including Messrs. Bingay and Clutterbuck), their annual incentive compensation
is based upon a combination of the Corporation's overall performance (as
discussed in the next paragraph) and the performance of their respective line of
business.
Under KeyCorp's annual incentive compensation plan as in effect for 2001,
the Committee, at the beginning of the year, selects one or more financial
criteria or performance factors and, if more than one factor is selected,
assigns a weight to each factor. The factors are adjusted annually to incent
specific performance behavior designed to achieve the Corporation's operating
plan for the year. For 2001, the Committee selected two factors: core earnings
per share growth (with a 60% weighting) and return on equity (with a 40%
weighting). For each factor, threshold, target and maximum performance goals are
established. In establishing
29
the target the Committee considers KeyCorp's operating plan for the current
year, the outlook for the industry and the peer group, and the median
performance of the peer companies with respect to that factor during the
preceding 3 and 5 year periods. At the conclusion of the year, KeyCorp's actual
performance on each of the factors is determined with the threshold being 50%,
the target being 100%, and the maximum being 300%. If the threshold is not
achieved for a factor, zero is assigned to that factor. Based on all the
factors, a target pool percentage is mathematically established between 0% and
300%. The Committee has the discretion to increase or decrease by 30% the
mathematically determined percentage. In addition, the Committee has the
discretion to establish a target pool percentage at 25% (or such higher or lower
percentage as the Committee determines to be appropriate), notwithstanding that
KeyCorp has not met a minimal performance goal, if the Committee determines that
one or more lines of business have had a level of performance deserving of
incentive awards. Once the target pool percentage is established, it is
multiplied against a target pool. The target pool is determined by adding up for
each officer who is eligible to participate in the plan a specific percentage
(ranging from 15% to 125%) of the market point of the officer's job grade (for
example, if an officer is in job grade 86, 25% of such officer's salary market
point would be included in the target pool). Multiplying the target pool
percentage against the target pool establishes the actual pool of incentive
compensation available for distribution. Individual payouts are based on the
individual officer's performance and contribution to KeyCorp, taking into
account the performance and contribution of the group or line of business in
which the officer works. An officer may receive no incentive compensation in any
given year and the plan does not restrict the maximum incentive award that may
be paid to an individual participant so long as it is within the actual pool of
incentive compensation available for distribution for the year.
Utilizing the discretion authorized by the plan, the Committee set the
target pool percentage for 2001 at 25%. In the Committee's view, KeyCorp's 2001
performance was impacted by industry-wide trends including increased credit
costs and credit quality issues and depressed economic conditions, especially:
(i) for market-sensitive businesses such as equity capital markets, investment
banking, brokerage, and principal investing, and (ii) in the manufacturing
sector in the Midwest where a substantial portion of KeyCorp's banking franchise
is located. Furthermore, upon the succession of Mr. Meyer as Chairman in May
2001, the Board approved a series of actions to sharpen the strategic focus of
KeyCorp on relationship-based businesses and to exit low return or higher risk
non-relationship businesses (such as auto leasing and non-relationship
structured finance). As a result of these strategic actions, KeyCorp incurred a
large, non-recurring charge. Throughout 2001, KeyCorp was highly successful in
implementing its Perform, Excel, Grow (PEG) productivity initiative. Also,
certain lines of business, such as retail banking and commercial real estate,
had a strong year. On the whole, however, 2001 was a difficult year for KeyCorp,
largely because of the strategic actions taken in May and increased credit
costs, which resulted in a large charge in December 2001 to strengthen Key's
loan loss reserve. Consequently, in establishing a target pool percentage of
25%, the Committee determined that the senior leadership of KeyCorp should not
receive any annual incentive compensation for 2001 unless the particular
executive's line of business or responsibility had a strong year or pursuant to
contractual requirements. Of the most senior management group of KeyCorp (i.e.
direct reports to the Chief Executive Officer), none received incentive
compensation for 2001 other than a single executive pursuant to contract. In
addition, none of the most senior executives leading staff areas received any
2001 incentive compensation. Of the senior line of business leaders,
approximately 50% received no incentive compensation. Of those receiving
incentive compensation, it was based on line of business performance or
contractual requirements. With respect to the balance of the officers and
employees of KeyCorp, the Committee directed management to
30
differentiate so that the limited incentive compensation available for 2001
would be primarily directed to high-performing officers and employees whose
retention was critical.
KeyCorp has a long term incentive compensation plan under which the
Committee establishes objective criteria to judge KeyCorp's financial
performance over a four year cycle. A new four year cycle commences every other
year, which means that there is a payout under the plan every other year. No new
four year cycle commenced in 2001. For the four year cycle 1998-2001, the
objective criteria selected by the Committee were cumulative reported earnings
per share and average return on equity. Applying the objective criteria, there
was no payout for the 1998-2001 cycle.
The Committee believes that senior executives will be motivated, and their
financial interests will be aligned with those of common shareholders, if stock
options are awarded to senior executives. The Committee determines the stock
option policies and makes the actual grants of options. It is the Committee's
policy not to reprice options. The options awarded are non-qualified options
except that, for senior executives, the Committee grants incentive stock options
up to the maximum limit prescribed by the Internal Revenue Code, with any
balance of options awarded being non-qualified.
With respect to options granted on or after January 1, 2001, the Committee
adopted a policy that if an employee engages in "harmful activity" prior to or
within six months after termination of employment with KeyCorp, then any profits
realized upon the exercise of any covered option on or after one year prior to
termination of employment shall inure to the benefit of KeyCorp and all
unexercised covered options shall be forfeited. Harmful activity is broadly
defined to include wrongful use or disclosure of, or failure to return,
confidential information of KeyCorp, soliciting or doing a competing business
with a customer of KeyCorp, or soliciting or hiring any other employee of
KeyCorp.
In general, the number of options granted to an executive is based on the
executive's job grade. During 2000, the Committee, with the assistance of an
independent outside executive compensation consultant, reviewed market data as
to a competitive number of options to be awarded at each job grade level and the
Committee adjusted (either immediately or effective 2001) the target level of
options at each job grade level.
With respect to the Chairman and/or Chief Executive Officer (Messrs.
Gillespie and Meyer during different portions of 2001) and certain senior
executives reporting directly to them, the Committee has determined that options
covering a specific number of shares of KeyCorp should be granted based on the
job position. For other executives the Committee has established a threshold,
target, and maximum number of shares to be covered by options for each job
grade. Within these guidelines, the Committee bases grants of stock options on
management's recommendation and other factors the Committee deems relevant.
The aggregate number and vesting terms of options may vary depending on the
Committee's judgment of the best form of long term motivation appropriate under
the particular circumstances. Generally options granted in 2001 vest one-third
each year, resulting in full vesting after three years. In 2001, 1,514
executives of KeyCorp (including Messrs. Meyer, Stevens, Bingay, Clutterbuck,
Somers and Gillespie) were awarded options covering 5,656,666 KeyCorp Common
Shares.
Salary adjustments for senior executives of KeyCorp, the annual and long
term incentive compensation payments to such executives, and the grant of stock
options are based upon the above methodology. In the case of executives with
employment contracts, the same methodology is applied subject to compliance with
31
salary and bonus minimums specified in such contracts. In the case of executives
other than Mr. Meyer, the Committee also solicited from Mr. Meyer an evaluation
of such executive's performance and a compensation recommendation, which
evaluation and recommendation are additional factors considered by the
Committee, in its sole discretion, in applying the above methodology.
Internal Revenue Code Section 162(m) precludes a public corporation from
taking an income tax deduction for compensation in excess of $1 million for its
chief executive officer or any of its four other highest paid executive
officers. Certain performance-based compensation is exempted from the limit upon
deductibility. (For example, any compensation derived from the exercise of stock
options under employee stock option plans of KeyCorp is exempt from this limit).
KeyCorp's short term and long term incentive compensation plans provide that the
Committee, in its sole discretion, has the authority to require deferral of
payment of all or a portion of awards under any such plan if the Committee
determines that KeyCorp would be denied a deduction for federal income tax
purposes for such award or the portion thereof.
Messrs. Meyer and Gillespie each have an employment agreement with KeyCorp
(see pages of this Proxy Statement).
Mr. Meyer's salary was increased to $825,000, effective February 1, 2001,
upon his becoming Chief Executive Officer of KeyCorp. In setting Mr. Meyer's
salary the Committee reviewed market data and consulted with a compensation
expert. The decision was made to increase Mr. Meyer's base salary to market
median in steps over a two to three year period. Mr. Gillespie last received a
base salary increase effective April 1, 1998. Mr. Gillespie received no base
salary increase in 2001. As is the case of other senior executives, Messrs.
Meyer and Gillespie participated in 2001 in KeyCorp's Annual Incentive Plan. As
discussed above, the Committee determined that, in light of KeyCorp's 2001
financial performance, neither Mr. Meyer nor Mr. Gillespie would receive any
annual incentive compensation for 2001. Notwithstanding that Mr. Meyer received
no incentive compensation for 2001, the Committee was well satisfied with his
performance for 2001, including his leadership in sharpening KeyCorp's strategic
focus, his decisive action in addressing the need to strengthen the loan loss
reserve, his focus in implementing the PEG productivity initiative, and his
drive for improved financial performance.
Compensation and Organization Committee
Board of Directors
KeyCorp
Cecil D. Andrus
William G. Bares (Chair)
Albert C. Bersticker*
Edward P. Campbell
Alexander M. Cutler
---------------
* Mr. Bersticker is retiring as a director as of the Annual Meeting. He was,
however, a member of the Compensation and Organization Committee when it
submitted the Report on Executive Compensation.
32
AUDIT MATTERS
AUDIT FEES
Ernst & Young billed KeyCorp in the aggregate $1,625,000 for fees for
professional services rendered in connection with the audit of KeyCorp's annual
financial statements for the year ended December 31, 2001 and reviews of
financial statements included in KeyCorp's Forms 10-Q for 2001.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
Ernst & Young did not bill KeyCorp in 2001 for fees for professional
services in connection with financial information systems design and
implementation.
ALL OTHER FEES
Ernst & Young billed KeyCorp in the aggregate $7,695,000 for 2001 for fees
other than fees for audit services. Included in this amount are audit related
fees of $2,623,000 relating to KeyCorp registration statements under the
Securities Act of 1993, accounting consultations, comfort letters and consents
and separate audits of KeyCorp subsidiaries and benefit plans. The balance of
the fees relate to tax and actuarial services. No consulting fees were paid to
Ernst & Young in 2001.
AUDIT AND RISK REVIEW COMMITTEE INDEPENDENCE
The members of KeyCorp's Audit and Risk Review Committee are independent
(as independence is defined by the applicable provisions of the New York Stock
Exchange listing standards).
AUDIT AND RISK REVIEW COMMITTEE REPORT
The Audit and Risk Review Committee of the KeyCorp Board of Directors is
composed of five outside directors and operates under a written charter adopted
by the Board of Directors. The Committee annually recommends to the Board of
Directors, subject to shareholder ratification, the selection of KeyCorp's
independent auditors.
Management is responsible for KeyCorp's internal controls and financial
reporting process. Ernst & Young, KeyCorp's independent auditors, is responsible
for performing an independent audit of KeyCorp's consolidated financial
statements in accordance with generally accepted auditing standards and to issue
a report thereon. The Committee's responsibility is to provide oversight to
these processes.
In fulfilling its oversight responsibility, the Committee relies on the
accuracy of financial and other information, opinions, reports, and statements
provided to the Committee. Accordingly, the Committee's oversight does not
provide an independent basis to determine that management has maintained
appropriate accounting and financial reporting principles or appropriate
internal controls and procedures designed to assure compliance with accounting
standards and applicable laws and regulations. Nor does the Committee's
oversight assure that the audit of KeyCorp's financial statements has been
carried out in accordance with
33
generally accepted auditing standards or that the Audited Financial Statements
are presented in accordance with generally accepted accounting principles.
The Committee has reviewed and discussed the audited financial statements
of KeyCorp for the year ended December 31, 2001 ("Audited Financial Statements")
with KeyCorp's management. In addition, the Committee has discussed with Ernst &
Young the matters required by Statement on Auditing Standards No. 61
(Communication with Audit Committees).
The Committee has received the written disclosures and the letter from
Ernst & Young required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), and the Committee has
discussed with Ernst & Young its independence from KeyCorp. The Committee has
considered whether Ernst & Young's provision of non-audit services to KeyCorp is
compatible with maintaining Ernst & Young's independence.
Based on the foregoing review and discussions and relying thereon, the
Committee has recommended to KeyCorp's Board of Directors the inclusion of the
Audited Financial Statements in KeyCorp's Annual Report for the year ended
December 31, 2001 on Form 10-K, to be filed with the Securities and Exchange
Commission.
The Audit and Risk Review Committee
Board of Directors
KeyCorp
Dr. Carol A. Cartwright
Steven A. Minter
Bill R. Sanford
Dennis W. Sullivan (Chair)
Peter G. Ten Eyck, II
34
KEYCORP STOCK PRICE PERFORMANCE
The following graph compares the stock price performance of KeyCorp's
Common Shares (assuming reinvestment of dividends) with that of the Standard &
Poor's 500 Index and a peer group of eleven other major regional banks ("Peer
Group"). The Peer Group is established annually by the Compensation and
Organization Committee and consists of banks that the Committee determines to be
most comparable to KeyCorp in asset size, type of business and other
characteristics. The Compensation and Organization Committee may make
adjustments to the Peer Group to take into account changes occurring in the
industry or changes in a Peer Group member, such as a merger, acquisition, or a
similar event concerning a Peer Group member. The members of the Peer Group are
Bank One Corporation, BB&T Corporation, Comerica Incorporated, Fleet Financial
Group, Inc., Huntington Bancshares Incorporated, National City Corporation, PNC
Financial Services Group, Inc., SunTrust Banks, Inc., U.S. Bancorp, Wachovia
Corporation, and Wells Fargo & Company. The Peer Group changed in 2001 because
of the merger of First Union Corporation and Wachovia Corporation, the merger of
U.S. Bancorp and Firstar Corporation, and the addition of BB&T Corporation.
KEYCORP STOCK PERFORMANCE GRAPH* (1996-2001)
AVERAGE ANNUAL TOTAL RETURNS
KeyCorp 3%
Peer Group 9%
S&P 500 11%
KEYCORP PEER GROUP S&P 500
------- ---------- -------
12/31/96 100 100 100
97.29 104.34 102.68
6/30/97 112.39 122.06 120.61
128.88 139.25 129.64
12/31/97 144.33 152.3 133.37
155.21 172.32 151.98
6/30/98 147.13 165.25 157
120.26 144.43 141.38
12/31/98 134.25 174.24 171.44
128.19 165.02 179.99
6/30/99 136.89 172.86 192.67
110.93 141.16 180.64
12/31/99 96.04 133.6 207.52
83.83 137.86 212.28
6/30/00 78.85 120.79 206.64
114.88 147.94 204.64
12/31/00 128.63 161.01 188.62
119.9 157.65 166.28
6/30/01 122.54 158.6 175.99
114.82 150.35 150.05
12/31/01 117.25 153.06 166.22
* This stock price performance is not necessarily indicative of future price
performance.
35
SHARE OWNERSHIP AND PHANTOM STOCK UNITS
Five Percent Beneficial Ownership. KeyCorp has been advised that as of
December 31, 2001, the following shareholder appeared to own more than 5% of the
outstanding KeyCorp Common Shares:
AMOUNT AND NATURE PERCENT OF
OF BENEFICIAL COMMON SHARES
NAME AND ADDRESS OWNERSHIP OUTSTANDING
---------------- -------------------- -------------
AXA Financial*.............................................. 24,810,415 5.9%
Beneficial Ownership of Common Shares and Investment in Phantom Stock
Units. The following table lists current continuing directors of and nominees
for director of KeyCorp, the executive officers included in the Summary
Compensation Table, and all directors, nominees, and executive officers of
KeyCorp as a group. The table sets forth certain information with respect to (1)
the amount and nature of beneficial ownership of KeyCorp Common Shares, (2) the
number of phantom stock units, if any, and (3) total phantom stock units and
beneficial ownership of KeyCorp Common Shares for such current continuing
directors, nominees for director, and executive officers. The information
provided is as of January 1, 2002 or, in the case of , March
15, 2002, which is the date became a director of KeyCorp.
TOTAL PHANTOM
AMOUNT AND NATURE OF PERCENT OF PHANTOM STOCK UNITS AND
BENEFICIAL OWNERSHIP COMMON SHARES STOCK BENEFICIAL OWNERSHIP
NAME OF COMMON SHARES(3) OUTSTANDING(4) UNITS(5) OF COMMON SHARES
---- -------------------- -------------- -------- --------------------
Cecil D. Andrus.................... 51,600 -- -- 51,600
William G. Bares................... 68,400 -- 23,431 91,831
James S. Bingay(1)................. 387,242 -- 15,483 402,725
Edward P. Campbell................. 31,100 -- 4,050 35,150
Dr. Carol A. Cartwright............ 35,228 -- 1,964 37,192
Robert T. Clutterbuck(1)........... 499,182 -- 2,913 502,095
Alexander M. Cutler................ 23,800 -- 1,890 25,690
Robert W. Gillespie(1)............. 1,763,318 -- 95,616 1,858,934
Henry S. Hemingway(2).............. 204,880 -- -- 204,880
Charles R. Hogan................... 379,938 -- -- 379,938
Douglas J. McGregor................ 50,188 -- 10,233 60,421
Henry L. Meyer III(1).............. 1,055,662 -- 49,442 1,105,104
Steven A. Minter................... 66,158 -- 26,038 92,196
Bill R. Sanford.................... 31,800 -- -- 31,800
K. Brent Somers(1)................. 302,295 -- 17,706 320,001
Ronald B. Stafford................. 94,714 -- -- 94,714
Thomas C. Stevens(1)............... 248,012 -- 20,361 268,373
Dennis W. Sullivan................. 65,000 -- 57,375 122,375
Peter G. Ten Eyck, II.............. 85,736 -- -- 85,736
______________..................... --
--------- ------- ---------
All directors, nominees and
executive officers as a group
(26)............................. 6,461,887 -- 376,363 6,838,250
---------------
(*) The information set forth above is based on a joint filing with the
Securities and Exchange Commission on Schedule 13G by AXA Conseil Vie
Assurance Mutuelle, AXA Assurances I.A.R.D. Mutuelle, AXA Assurances Vie
Mutuelle, all located at 370, rue Saint Honore, 75001 Paris, France; AXA
Courtage Assurance Mutuelle, located at 26, rue Louis le Grand, 75002
Paris, France; AXA, located at 25, avenue Matignon, 75008 Paris, France;
and AXA Financial, Inc., located at 1290 Avenue of the Americas, New York,
New York 10104.
36
(1) With respect to KeyCorp Common Shares beneficially held by these individuals
or other executive officers under the KeyCorp 401(k) Savings Plan, the
shares included are as of December 31, 2001.
(2) Certain of these KeyCorp Common Shares are held in trusts over which Mr.
Hemingway, as a co-trustee, has shared power to vote and dispose of such
Common Shares.
(3) Includes options vested as of March 2, 2002. The directors, nominees, and
executive officers listed above hold vested options as follows: Mr. Andrus
48,600; Mr. Bares 62,600; Mr. Bingay 373,334; Mr. Campbell 29,100; Ms.
Cartwright 34,600; Mr. Clutterbuck 198,568; Mr. Cutler 21,800; Mr. Gillespie
1,670,000; Mr. Hemingway 71,636; Mr. Hogan 71,636; Mr. McGregor 48,600; Mr.
Meyer 883,334; Mr. Minter 62,600; Mr. Sanford 21,800; Mr. Somers 283,334;
Mr. Stafford 80,672; Mr. Stevens 223,334; Mr. Sullivan 62,600; Mr. Ten Eyck
80,672; ________________________; all directors, nominees, and executive
officers as a group 5,131,587.
(4) No director or executive officer beneficially owns more than 1% of the total
of outstanding KeyCorp Common Shares plus options vested as of March 2,
2002.
(5) Investments in phantom stock units by directors are made pursuant to the
KeyCorp Director Deferred Compensation Plan, whereby directors may defer
payment of all or a portion of their directors fees in a Common Shares
Account consisting of "phantom stock units." On a quarterly basis, the
Common Shares Account is credited with an additional number of phantom stock
units equal to the number of Common Shares that could be purchased at market
value with the sum of the director's deferred fees for the quarter, plus the
amount of quarterly dividends on the phantom stock units in the Common
Shares Account during the quarter as if such phantom stock units were Common
Shares. At the time of distribution from the Common Shares Account, an
actual Common Share is issued for each phantom stock unit that is in the
account.
Investments in phantom stock units by KeyCorp executive officers are made
pursuant to the KeyCorp Excess 401(k) Savings Plan (the "Excess 401(k)
Plan") and KeyCorp Deferred Compensation Plan (the "Deferred Plan"). Under
both of those Plans, contributions to a participant's phantom stock account
are treated as if they were invested in KeyCorp Common Shares. At the time
of distribution, an actual Common Share is issued for each phantom stock
unit that is in the account.
No Common Shares are issued in connection with the Director Deferred
Compensation Plan, the Excess 401(k) Plan or the Deferred Plan until the
time of distribution from the account (i.e. these are unfunded plans with
"phantom stock" units); accordingly, directors and executive officers
participating in these Plans do not have any voting rights or investment
power with respect to or on account of the phantom stock units until the
time of distribution from the account, whereupon actual Common Shares are
issued.
SHAREHOLDER PROPOSALS FOR THE YEAR 2003
The deadline for shareholders to submit proposals to be considered for
inclusion in the Proxy Statement for next year's Annual Meeting of Shareholders
is December 13, 2002. This deadline applies to proposals submitted for inclusion
in KeyCorp's Proxy Statement for the 2003 Annual Meeting under the provisions of
Rule 14a-8 of the Exchange Act.
In addition, proxies solicited by KeyCorp for the 2003 Annual Meeting will
confer discretionary authority on the proxy holders to vote the proxy on
proposals submitted by shareholders for consideration at the 2003 Annual Meeting
unless (a) the shareholder proposal has been given in writing to the Secretary
of KeyCorp, delivered to, or received at KeyCorp's principal executive offices
not less than 60 nor more than 90 days prior to the Annual Meeting (KeyCorp
intends to make a public disclosure of the date of the Annual Meeting at least
75 days prior to the Annual Meeting), (b) the shareholder submitting the
proposal has complied with the additional requirements set forth in Article I,
Section 7, of KeyCorp's Amended and Restated Regulations which require that any
shareholder who submits a proposal shall deliver, together with the proposal, a
brief written statement setting forth the reasons for the proposal, such
shareholder's name and record address, the number and class of all shares of
each class of stock of KeyCorp beneficially owned by the shareholder, and any
material interest the shareholder may have in the proposal and (c) the
shareholder has also complied with the further requirements regarding the
proposal under Rule 14a-4(c)(2)(i) through (iii) of the Exchange Act. The date
of the 2003 Annual Meeting of Shareholders has not yet been established by
KeyCorp's Board of Directors, but it is tentatively scheduled for May 22, 2003.
If that tentative date is, in fact, fixed by the
37
Board of Directors as the Annual Meeting date, a proposal under (a) above must
be received at KeyCorp's principal executive offices not later than March 24,
2003 and not earlier than February 21, 2003.
HOUSEHOLDING INFORMATION
Only one Annual Report and Proxy Statement is being delivered to multiple
shareholders sharing an address unless KeyCorp received contrary instructions
from one or more of the shareholders.
If a shareholder at a shared address to which a single copy of the Annual
Report and Proxy Statement was delivered wishes to receive a separate copy of
the Annual Report or Proxy Statement, he or she should contact KeyCorp's
transfer agent, Computershare Investor Services LLC ("Computershare"), by
telephoning 800-539-7216 or by writing to Computershare at 2 North LaSalle
Street, Chicago, Illinois 60602. The shareholder will be delivered a separate
copy of the Annual Report or Proxy Statement promptly upon request.
If shareholders at a shared address currently receiving multiple copies of
the Annual Report and Proxy Statement wish to receive only a single copy of
these documents, they should contact Computershare in the manner provided above.
GENERAL
The Board of Directors knows of no other matters which will be presented at
the meeting. However, if other matters properly come before the meeting or any
adjournment, the person or persons voting your shares pursuant to instructions
by proxy card, internet, or telephone will vote your shares in accordance with
their best judgment on such matters.
Certain rules promulgated by the Securities and Exchange Commission
governing proxy disclosure specify the circumstances under which KeyCorp is
required to include in its proxy statement a shareholder proposal, including the
requirement for timely submission of the proposal to KeyCorp by the shareholder.
If a shareholder desires to bring a proposal before the Annual Meeting of
Shareholders which has not been included in KeyCorp's proxy statement, the
shareholder must strictly comply with the applicable notice and procedural
requirements set forth in KeyCorp's Regulations. A copy of the Regulations is
available to any shareholder, without charge, upon request to the Secretary of
KeyCorp. Pursuant to KeyCorp's Regulations, a shareholder must notify KeyCorp
not less than 60 nor more than 90 days prior to the meeting of any business the
shareholder proposes to bring before the meeting for a shareholder vote. These
provisions of the Regulations govern proper submission of items to be put to a
shareholder vote and do not preclude discussion by any shareholder of any
business properly brought before the meeting.
Shareholders may only nominate a person for election as a director of
KeyCorp at a meeting of shareholders if the nominating shareholder has strictly
complied with the applicable notice and procedural requirements set forth in
KeyCorp's Regulations, including, without limitation, timely providing to the
Secretary of KeyCorp the requisite notice (not less than 60 nor more than 90
days prior to the meeting) of the proposed nominee(s) containing all the
information specified by the Regulations. KeyCorp will provide to any
shareholder, without charge, a copy of the applicable procedures governing
nomination of directors set forth in KeyCorp's Regulations upon request to the
Secretary of KeyCorp.
38
KeyCorp will bear the expense of preparing, printing, and mailing this
Proxy Statement. In addition to solicitation by mail, officers and regular
employees of KeyCorp and its subsidiaries may solicit the return of proxies.
KeyCorp has engaged the services of Georgeson & Company Inc. to assist in the
solicitation of proxies at an anticipated cost of $30,000 plus expenses. KeyCorp
will request brokers, banks, and other custodians, nominees, and fiduciaries to
send proxy material to beneficial owners and will, upon request, reimburse them
for their expense in so doing.
You are urged to vote your shares promptly by telephone, the internet, or
by mailing your signed proxy card in the enclosed envelope in order to make
certain your shares are voted at the meeting. KeyCorp Common Shares represented
by properly executed proxy cards, internet instructions, or telephone
instructions will be voted in accordance with any specification made. If no
specification is made on a properly executed proxy card or by the internet, the
proxies will vote for the election as directors of the nominees named herein
(Issue One of this Proxy Statement), for the amendment to KeyCorp's Regulations
to reduce the size of the Board and to permit electronic communications (Issues
Two and Three of this Proxy Statement), against the amendment to KeyCorp's
Regulations to require the annual election of all directors [against the
shareholder proposal] (Issue Four of this Proxy Statement), and in favor of
ratifying the appointment of Ernst & Young as independent auditors for the
fiscal year ending December 31, 2002 (Issue Five of this Proxy Statement).
Abstentions and broker non-votes are counted in determining the votes present at
a meeting and have the same effect as a vote against the proposal. [Abstentions
and, unless a broker's authority to vote on a particular matter is limited,
broker non-votes are counted in determining the votes present at the meeting. A
broker's authority to vote on Issue Four is limited but is not limited as to
Issues One, Two, Three, and Five. As to Issues Two, Three, and Five, a broker
non-vote has the same effect as a vote against the proposal and as to Issue Four
a broker non-vote is treated as not being present. As to Issues Two, Three,
Four, and Five, an abstention has the same effect as a vote against the
proposal.] Until the vote on a particular matter is actually taken at the
meeting, you may revoke a vote previously submitted (whether by proxy card,
internet or telephone) by submitting a subsequently dated vote (whether by proxy
card, internet or telephone) or by giving notice to KeyCorp or in open meeting;
provided such subsequent vote must in all cases be received prior to the vote on
the particular matter being taken at the meeting. Your mere presence at the
meeting will not operate to revoke your proxy card or any prior vote by the
internet or telephone. At the Annual Meeting, the order of business will be to
vote on Issues Two, Three, Four and Five and thereafter to vote for the election
of directors (Issue One) or such revised order as the Chairman of the meeting
may establish.
39
APPENDIX A
PROPOSED AMENDMENT TO KEYCORP REGULATIONS PURSUANT TO ISSUE TWO
The proposed amendment will amend the first sentence of the second
paragraph of Article II, Section 1 of KeyCorp's Regulations, to read as follows:
As of the conclusion of the 2002 annual meeting of shareholders of the
Corporation, the Board of Directors shall consist of 16 members, divided
into three classes as follows: one class of six directors whose term will
expire at the 2003 annual meeting of shareholders, and two classes of five
directors whose terms will expire at the 2004 and 2005 annual meetings of
shareholders, respectively. The Board of Directors or the shareholders may
from time to time fix or change the size of the Board of Directors to a
total number of no fewer than 14 and no more than 17 directors (the size of
the Board as from time to time so established being herein referred to as
the "entire authorized Board");
NOTE: If KeyCorp's shareholders approve the amendment of KeyCorp's
Regulations as proposed under Issue Four to require the annual election of all
directors, Article II, Section 1 will include language phasing in the annual
election of directors over a three year period commencing in 2003. Directors who
had previously been elected for three year terms would continue to serve out
these terms so that no director previously elected to a three year term would
have his or her term shortened. See Appendix C to this Proxy Statement.
A-1
APPENDIX B
PROPOSED AMENDMENTS TO KEYCORP REGULATIONS PURSUANT TO ISSUE THREE
The proposed amendment will amend the Sections of KeyCorp's Regulations as
set forth below. The amendment will also substitute the word "Chairperson" for
"Chairman" in Sections 2 and 3 of Article I, Sections 6 and 10 of Article II,
Sections 1, 2, and 4 of Article IV, and Section 1 of Article VI.
ARTICLE I
SHAREHOLDERS
SECTION 1. PLACE OF MEETING. All meetings of the shareholders of the
Corporation shall be held at the office of the Corporation or at such other
places, within or without the State of Ohio, and/or in by part means of
communications equipment in the manner provided for in Section 7 of this Article
I, as may from time to time be determined by the Board of Directors, the
Chairperson of the Board, or the President and specified in the notice of such
meeting.
SECTION 4. NOTICE OF MEETINGS.
(a) Written notice of each meeting of the shareholders, whether annual or
special, shall be given, either by personal delivery, mail, overnight delivery
service, or any other means of communication authorized by the shareholder to
whom the notice is given, not less than seven nor more than 60 days before the
date of the meeting to every shareholder of record entitled to notice of the
meeting, by or at the direction of the Chairperson of the Board, the President
or the Secretary or any other person or persons required or permitted by these
Regulations to give such notice. Each such notice shall state (i) the date and
hour, (ii) the place of the meeting, (iii) the means, if any, other than by
physical presence, by which shareholders can be present and vote at the meeting
through the use of communications equipment, and (iv) the purpose or purposes
for which the meeting is called.
(b) If mailed or sent by overnight delivery service, such notice shall be
deemed given when deposited in the United States mail or with the overnight
delivery service, as the case may be, postage or other shipping charged prepaid,
and directed to the shareholder at such shareholder's address as it appears on
the records of the Corporation. If sent by another means of communication
authorized by the shareholder, such notice shall be deemed to be given when sent
to the address furnished by the shareholder for those transmissions.
(c) Notice of adjournment of a meeting of shareholders need not be given if
the time and place to which it is adjourned, and the means, if any, other than
by physical presence, by which shareholders can be present and vote at the
meeting through the use of communications equipment are fixed and announced at
the meeting.
(d) Any authorization by a shareholder to send notices given pursuant to
these Regulations by any means other than in person or by mail or overnight
delivery service is revocable by written notice to the Corporation either by
personal delivery or by mail, overnight delivery service, or any other means of
communication authorized by the Corporation. If sent by another means of
communication authorized by the Corporation, the notice shall be sent to the
address furnished by the Corporation for those transmissions. Any
B-1
authorization by a shareholder to send notices given pursuant to these
Regulations by any means other than in person or by mail or overnight delivery
service will be deemed to have been revoked by the shareholder if (i) the
Corporation has attempted to make delivery of two consecutive notices in
accordance with that authorization, and (ii) the Secretary or an Assistant
Secretary of the Corporation, or other person responsible for giving of notice,
has received notice that, or otherwise believes that, delivery has not occurred.
However, an inadvertent failure to treat the inability to deliver notice as a
revocation will not invalidate any meeting of shareholders or other action.
SECTION 5. QUORUM. Except as otherwise required by law or by the Articles of
Incorporation, the presence of holders of shares entitled to exercise not less
than a majority of the voting power of the Corporation at the meeting in person,
by proxy, or by the use of communications equipment shall constitute a quorum
for the transaction of business at any meeting of the shareholders; provided,
however, that no action required by law, the Articles of Incorporation, or these
Regulations to be authorized or taken by the holders of a designated proportion
of the shares of any particular class or of each class of the Corporation may be
authorized or taken by a lesser proportion.
SECTION 6. PROXIES. Proxies may be used in conformity with Ohio law.
SECTION 9. PARTICIPATION IN MEETING BY MEANS OF COMMUNICATIONS EQUIPMENT. The
Board of Directors may authorize shareholders and proxyholders who are not
physically present at a meeting of shareholders to participate by use of
communications equipment that permits the shareholder or proxyholder the
opportunity to participate in the meeting and to vote on matters submitted to
the shareholders, including an opportunity to read or hear the proceedings of
the meeting and to speak or otherwise participate in the proceedings
contemporaneously with those physically present. Any shareholder using
communications equipment will be deemed present in person at the meeting. The
Board of Directors may adopt guidelines and procedures for the use of
communications equipment in connection with a meeting of shareholders to permit
the Corporation to verify that a person is a shareholder or proxyholder and to
maintain a record of any vote or other action.
ARTICLE II
BOARD OF DIRECTORS
SECTION 4. PLACE OF MEETING. The Board of Directors may hold its meetings at
such place or places, if any, within or without the State of Ohio as the Board
may from time to time determine or as shall be specified or fixed in the
respective notice or waivers of notices thereof.
SECTION 5. REGULAR MEETINGS. Regular meetings of the Board of Directors shall
be held at such places, if any, and times as the Board shall from time to time
determine.
SECTION 7. NOTICE OF MEETINGS.
(a) Notice of regular meetings of the Board of Directors or of any
adjourned meeting thereof need not be given.
(b) Notice of each special meeting of the Board shall be given to each
director personally or by telephone, not later than the day before the meeting
is to be held, or sent by telegraph, telex, facsimile, or other means of
communication authorized by such director for this purpose, at least 2 days
before the day on
B-2
which the meeting is to be held. Notice need not be given to any director who
shall, either before or after the meeting, submit a waiver of such notice,
signed or otherwise authenticated by such director, or who shall attend such
meeting without protesting prior to or at its commencement, the lack of notice
to such director. Every notice shall state the time, place, if any, and means by
which directors may participate in the meeting through the use of communications
equipment, but need not state the purpose of the meeting.
SECTION 8. PARTICIPATION IN MEETING BY MEANS OF COMMUNICATIONS EQUIPMENT. Any
one or more members of the Board of Directors or any committee thereof may
participate in any meeting of the Board or of any such committee through the use
of communications equipment to the extent allowed by Ohio law.
SECTION 9. ACTION WITHOUT MEETING. Any action required or permitted to be taken
at any meeting of the Board of Directors or any committee thereof may be
authorized or taken without a meeting with the affirmative vote or approval of,
and in a writing or writings signed by, all the directors or all the committee
members, which writing or writings shall be filed with or entered upon the
records of the Corporation. A telegram, cablegram, electronic mail, or an
electronic or other transmission capable of authentication that appears to have
been sent by a director or committee member is a signed writing for purposes of
this Section 9. The date on which that telegram, cablegram, electronic mail, or
an electronic or other transmission is sent is the date on which the writing
shall be deemed to have been signed.
SECTION 11. REMOVAL OF DIRECTORS*.
(a) The Board of Directors may remove any director and thereby create a
vacancy on the Board: (i) if by order of court the director has been found to be
of unsound mind or if the director is adjudicated a bankrupt or (ii) if within
60 days from the date of such director's election the director does not qualify
by accepting (either in writing or by any other means of communication
authorized by the Corporation) the election to such office or by acting at a
meeting of directors.
(b) All the directors, or all of the directors of a particular class, or
any individual director, may be only removed from office by the affirmative vote
of the holders of shares entitling them to exercise three-quarters of the voting
power of the Corporation entitled to elect directors in place of those to be
removed. In case of any such removal, a new director nominated in accordance
with Section 2 of this Article II may be elected at the same meeting for the
unexpired term of each director removed. Failure to elect a director to fill the
unexpired term of any director removed shall be deemed to create a vacancy on
the Board.
ARTICLE III
EXECUTIVE AND OTHER COMMITTEES
SECTION 3. PROCEDURE, MEETINGS, AND QUORUM.
(a) Regular meetings of the Executive Committee or any other committee of
the Board of Directors, of which no notice shall be necessary, may be held at
such times and places, if any, as may be fixed by a majority of the members
thereof. Special meetings of the Executive Committee or any other committee of
the Board shall be called at the request of the Chairperson of the Board or the
President or the Chairperson of any committee. Notice of each special meeting of
the Executive Committee or any other committee of the Board shall be given in
the same manner required for notices of special meetings of the Board of
Directors as
B-3
provided in Section 6 of Article II. Any special meeting of the Executive
Committee or any other committee of the Board shall be a legal meeting without
any notice thereof having been given, if all the members thereof shall be
present thereat. Notice of any adjourned meeting of any committee of the Board
need not be given. The Executive Committee or any other committee of the Board
may adopt such rules and regulations not inconsistent with the provisions of
law, the Articles of Incorporation of the Corporation, or these Regulations for
the conduct of its meetings as the Executive Committee or any other committee of
the Board may deem proper.
(b) A majority of the members of the Executive Committee or any other
committee of the Board shall constitute a quorum for the transaction of business
at any meeting, and the vote of a majority of the members thereof present at any
meeting at which a quorum is present shall be the act of such committee. The
Executive Committee or any other committee of the Board of Directors shall keep
written minutes of its proceedings and shall report on such proceedings to the
Board.
*NOTE: If KeyCorp's shareholders approve the amendment of KeyCorp's
regulations as proposed under Issue Four to require the annual election of all
directors, Article II, Section 11, as well as Sections 1 and 12, will be amended
to delete references to and procedures based on the existence of a classified
board and Section 1 will be amended to phase in the amendment. See Appendix C to
this Proxy Statement.
B-4
APPENDIX C
PROPOSED AMENDMENT TO KEYCORP REGULATIONS PURSUANT TO ISSUE FOUR
The proposed amendment will amend Section 1 of Article II of KeyCorp's
Regulations to read as set forth below. The amendment will also amend Sections
11 and 12 of Article II to delete references to and procedures based on the
existence of a classified Board of Directors.
SECTION 1. NUMBER AND TERM OF OFFICE. As of the conclusion of the 2002 annual
meeting of shareholders of the Corporation, the Board of Directors shall consist
of 17 members. At the 2003 annual meeting of shareholders of the Corporation,
the successors of the directors whose terms expire at that meeting shall be
elected for a term expiring at the 2004 annual meeting of shareholders (which
number of directors shall be approximately one-third of the total number of
directors of the Corporation); at the 2004 annual meeting of shareholders, the
successors of the directors whose terms expire at that meeting shall be elected
for a term expiring at the 2005 annual meeting (which number of directors shall
be approximately two-thirds of the total number of directors of the
Corporation), and at each annual meeting of shareholders thereafter all
directors shall be elected for terms expiring at the next annual meeting of
shareholders. The Board of Directors or the shareholders may from time to time
fix or change the size of the Board of Directors to a total number of no fewer
than 17 directors and no more than 20 directors (the size of the Board as from
time to time so established being herein referred to as the "entire authorized
Board"). The Board of Directors may, subject to the limitation contained in the
immediately preceding sentence regarding the number of directors, fix or change
the number of directors by the affirmative vote of a majority of the entire
authorized Board. The shareholders may, subject to the limitation contained in
the third sentence of this paragraph regarding the number of directors, fix or
change the number of directors at a meeting of the shareholders called for the
purpose of electing directors (i) by the affirmative vote of the holders of
shares entitling them to exercise three-quarters of the voting power of the
Corporation represented at the meeting and entitled to elect directors or (ii)
if the proposed change in the number of directors is recommended by a majority
of the entire authorized Board of Directors, by the affirmative vote of the
holders of shares entitling them to exercise a majority of the voting power of
the Corporation represented at the meeting and entitled to elect directors. No
reduction in the number of directors shall of itself have the effect of
shortening the term of any incumbent director. In the event that the Board of
Directors increases the number of directors, it may fill the vacancy or
vacancies created by the increase in the number of directors for the respective
unexpired terms in accordance with the provisions of Section 12 of this Article
II. In the event the shareholders increase the number of directors and fail to
fill the vacancy or vacancies created thereby, the Board of Directors may fill
such vacancy or vacancies for the respective unexpired terms in accordance with
the provisions of Section 12 of this Article II.
The number of directors may not be fixed or changed by the shareholders or
directors, except (i) by amending these regulations in accordance with the
provisions of Article X of these Regulations, (ii) pursuant to an agreement of
merger or consolidation approved by two-thirds of the members of the entire
authorized Board of Directors and adopted by the shareholders at a meeting held
for such purpose by the affirmative vote of the holders of shares entitling them
to exercise a majority of the voting power of the Corporation on such proposal,
or (iii) as provided in the immediately preceding paragraph of this Section 1 or
in the next following paragraph.
C-1
The foregoing provisions of this Section 1 are subject to the automatic
increase by two in the authorized number of directors and the right of the
holders of any class or series of preferred stock of the Corporation to elect
two directors of the Corporation during any time when dividends payable on such
shares are in arrears, all as set forth in the Articles of Incorporation and/or
the express terms of the preferred stock of the Corporation.
NOTE: If KeyCorp's shareholders approve the amendment of KeyCorp's Code of
Regulations as proposed under Issue Two, Article II, Section 1 will be amended
to reflect that the size of the Board of Directors will consist of 16 members as
of the conclusion of the 2002 annual meeting of shareholders and may be reduced
by the Board of Directors or shareholders to a minimum size of 14 members and a
maximum size of 17 members. See Appendix A to this Proxy Statement.
C-2
[KEYCORP LOGO]
CONTROL NUMBER +
000000 0000000000 0 0000
000000000.000 ext
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[ ] Mark this box with an X if you have made changes to your name or 000000000.000 ext
address details below. 000000000.000 ext
000000000.000 ext
MR A SAMPLE 000000000.000 ext
DESIGNATION (IF ANY) 000000000.000 ext
ADD 1
ADD 2 Holder Account Number
ADD 3
ADD 4 C 1234567890 JNT
ADD 5
ADD 6
Use a BLACK pen. Print in
CAPITAL letters inside the grey A B C 1 2 3 X
areas as shown in this example.
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Annual Meeting Proxy Card
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A Election of Directors PLEASE REFER TO THE REVERSE SIDE FOR INTERNET AND TELEPHONE VOTING INSTRUCTIONS.
The Board of Directors Recommends a Vote FOR the listed nominees.
FOR WITHHOLD FOR WITHHOLD FOR WITHHOLD
01 - Edward P. Campbell [ ] [ ] 03 - Bill R. Sanford [ ] [ ] 05 - [ ] [ ]
----------------
02 - Charles R. Hogan [ ] [ ] 04 - Dennis W. Sullivan [ ] [ ]
B Issues
The Board of Directors recommends a vote FOR Issues 2, 3, and 5 and AGAINST Issue 4.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
2. Amendment to Regulations [ ] [ ] [ ] 4. Amendment to Regulations to [ ] [ ] [ ]
to reduce size of Board of require annual election of all
Directors. directors.
3. Amendment to Regulations [ ] [ ] [ ] [4. Shareholder proposal requesting [ ] [ ] [ ]
to permit electronic necessary steps to cause annual
communications. election of all directors.]
5. Ratification of the appointment of [ ] [ ] [ ]
independent auditors.
C AUTHORIZED SIGNATURES - SIGN HERE - THIS SECTION MUST BE COMPLETED FOR YOUR INSTRUCTIONS TO BE EXECUTED.
Please sign exactly as name appears hereon. Joint owners should each sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such.
This proxy when properly executed will be voted in the manner directed herein by the undersigned shareholder. If no
direction is made, this proxy will be voted FOR the election of the listed nominees, FORIssues 2, 3 and 5 and
AGAINST Issue 4.
In accordance with their judgment, the proxies are authorized to vote upon any other matters that may properly come
before the meeting. The signer hereby transfers all power heretofore given by the signer to vote at said meeting
or any adjournment thereof.
Signature 1 Signature 2 Date (dd/mm/yyyy)
/ /
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A438 1 U P X 007I0D +
[KEYCORP LOGO]
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PROXY
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PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
KEYCORP FOR THE ANNUAL MEETING ON MAY 23, 2002
The undersigned hereby constitutes and appoints Henry L. Meyer III, John H.
Mancuso, and Thomas C. Stevens, and each of them, his/her true and lawful
agents and proxies with full power of substitution in each to represent the
undersigned at the Annual Meeting of Shareholders of KeyCorp to be held on May
23, 2002, and at any adjournments or postponements thereof, on all matters
properly coming before said meeting.
1. Election of Directors: The nominees of the Board of Directors to the class
whose term of office will expire 2005 are: Edward P. Campbell, Charles R.
Hogan, Bill R. Sanford, Dennis W. Sullivan and [Insert Name Here].
2. Amendment to Regulations to reduce size of Board of Directors.
3. Amendment to Regulations to permit electronic communications.
4. Amendment to Regulations to require annual election of all directors.
[4. Shareholder proposal requesting necessary steps to cause annual election of
all directors.]
5. Proposal to ratify the appointment of Ernst & Young LLP as independent
auditors for the fiscal year ending December 31, 2002.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, SEE
REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE
WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS.
-------------------
SEE REVERSE SIDE
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INTERNET AND TELEPHONE VOTING INSTRUCTIONS
NOW YOU CAN VOTE YOUR SHARES BY TELEPHONE OR INTERNET
QUICK-EASY-IMMEDIATE-AVAILABLE 24 HOURS A DAY-7 DAYS A WEEK
----------------------------------- --------------------------------------
[Graphic] TO VOTE BY PHONE [Graphic] TO VOTE BY INTERNET
(WITHIN U.S. AND CANADA)
----------------------------------- --------------------------------------
- Call toll free 1-888-776-5858 in the - Go to the following web site:
United states or Canada any time on a www.computershare.com/us/proxy
touch-tone telephone. There in NO
CHARGE to you for this call. - Enter the information requested on
your computer screen, including
your 6-digit Control Number located
- Enter the 6-digit Control Number on the reverse side.
located on the reverse side.
- Follow the simple instructions on
Option #1: To vote as the Board of the screen.
Directors recommends on ALL
Proposals; Press 1.
Option #2: If you choose to vote on
each proposal separately,
press 0 and follow the
simple recorded instructions.
IF YOU VOTE BY TELEPHONE OR THE INTERNET,
DO NOT MAIL BACK THE PROXY CARD.
THAN YOU FOR VOTING 00711E