Holders Back Chemical, NCNB Deals
Two megamergers announced this summer won the overwhelming support of shareholders Friday.
In New York, 98% of shareholders who cast ballots gave the go-ahead for a union between Chemical Banking Corp. and Manufacturers Hanover Corp.
The chairmen of both companies said they expect to complete the union by the end of the year. The merged company, which would use Chemical's name, would be the nation's third-largest bank, with $139.3 billion of assets.
97% Favor NationsBank
In North Carolina and Georgia, shareholders of NCNB Corp. and C&S/Sovran Corp. also strongly endorsed their companies' merger plans Friday. The vote was 97% in favor.
The merged company, to be known as NationsBank, would be the nation's fourth largest, with $119.4 billion in assets.
NCNB and C&S Sovran executives said they also expect a yearend closing.
Regulatory approvals are pending for both the New York and NationsBank deals.
Chemical's Expected Boost
Executives of the new Chemical reiterated that the merger would bring big savings in the face of an uncertain economy.
Chemical chairman Walter V. Shipley, who will be president of the combined company, estimated that the merger will boost pretax earnings by $750 million annually within three years, and could jump to $900 million a year, after that. He also acknowledged that shareholders would suffer an initial post-merger dilution of 25% in the value of their shares.
Chemical plans to issue $1.25 million of common stock early next year.
Mr. Shipley conceded that the merger will be no panacea for loan problems. It will shave the percentage of nonperforming loans and foreclosed property in Chemical's $6.6 billion commercial real estate portfolio a modest 1% to 22%, he said.
He also predicted that the banks' provisions to loan-loss reserves - which totaled $313 million in the third quarter - should continue at the same level throughout 1992.
Hanover chairman John F. McGillicuddy, speaking in the bank's jammed auditorium a few hours earlier, said he was more enthusiastic about the merger than when he announced it in July.
He and Mr. Shipley both responded to queries about payment plans put in place for senior executives. Mr. McGillicuddy, who will be chairman of the new Chemical, said about 150 officers with the title of senior vice president and above would get one year of pay, regardless of tenure.
He reiterated Hanover's plan to give all laid-off employees three weeks' pay for each year of service, up to a maximum of one year's salary.
Rights Give-Up Confirmed
Mr. Shipley confirmed a report in this paper that more than 400 Chemical officers have been asked to give up rights to immediate vesting in some stock and option plans. The vesting, which would have been effective as soon as shareholders approved the merger, allows officials to cash in on incentive plans that were set up as defenses against a hostile takeover.
"We expect to have very significant compliance with that request," Mr. Shipley said.
Separately, a Hanover executive told Reuters that about 300 jobs would be cut in Europe over the next three years. The number is higher than anticipated.
NationsBank Pay Challenged
Executives of C&S/Sovran also fielded some hostile questioning about executive pay during the banks' shareholder meeting in Atlanta. The Georgia bank has said that eight executives could receive at least $23.8 million in severance and retirement benefits if they leave within two years of the merger.
Mark A. Yatrofsky, who identified himself as both a C&S/Sovran employee and shareholder, suggested that the bank's top management resign and take the standard severance packaged offered to rank-and-file employees who are let go.
Bennett A. Brown, who will be chairman of NationsBank, said Mr. Yatrofsky's proposal could not be voted on since it was not part of the agenda.
Mr. Yatrofsky - an assistant vice president in the bank's information management unit in Virginia - said after the meeting that he objected to the manner in which bank employees were being laid off without regard to work performance. He conceded that he may have damaged his career prospects by speaking out Friday.
"I'm anticipating I'll be ready to count my pennies when I get back," he said.