NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
                           ON MAY 14, 1997

                           J.P. Morgan & Co. Incorporated
                           60 Wall Street, New York, NY 10260-0060


                           
             JPMorgan      The Annual Meeting of  Stockholders  of J.P. Morgan &
                           Co.  Incorporated  ("Morgan")  will be held in Morgan
                           Hall West, 46th Floor, 60 Wall Street,  New York, New
                           York, on Wednesday,  May 14, 1997 at 11:00 a.m.,  for
                           the following purposes:

                           (1) To elect fourteen  Directors to hold office until
                           the next  annual  meeting of  stockholders  and until
                           their  respective  successors shall have been elected
                           and qualified;

                           (2) To  consider  and vote upon a proposal to approve
                           the designation of the independent accounting firm of
                           Price  Waterhouse  LLP to  perform  certain  auditing
                           functions    for   Morgan   and   its    consolidated
                           subsidiaries for the year 1997;

                           (3) To consider and vote upon a  stockholder-proposed
                           resolution  set  forth  under  "Stockholder  Proposal
                           Relating   to   Cumulative   Voting"   in  the  Proxy
                           Statement;

                           (4) To consider and vote upon a  stockholder-proposed
                           resolution  set  forth  under  "Stockholder  Proposal
                           Relating  to  Director  Term  Limits"  in  the  Proxy
                           Statement; and

                           (5) To act upon such other matters as may properly 
                           come before such meeting or any adjournment thereof.



                           Stockholders  of record at the close of  business  on
                           March  14,  1997  will  be  entitled  to  vote at the
                           meeting and at any adjournment thereof.




                           Dated: March 24, 1997               Rachel F. Robbins
                                                               Secretary











                           YOU ARE  REQUESTED TO FILL IN, SIGN,  DATE AND RETURN
                           THE PROXY  SUBMITTED  HEREWITH IN THE RETURN ENVELOPE
                           PROVIDED  FOR YOUR USE. THE GIVING OF SUCH PROXY WILL
                           NOT AFFECT YOUR RIGHT TO REVOKE SUCH PROXY OR TO VOTE
                           IN  PERSON  SHOULD  YOU LATER  DECIDE  TO ATTEND  THE
                           MEETING.

<PAGE>


                           PROXY STATEMENT
                           This  statement is furnished in  connection  with the
                           solicitation  of proxies by the Board of Directors of
                           J.P. Morgan & Co. Incorporated  ("Morgan") to be used
                           in voting at the Annual  Meeting of  Stockholders  of
                           Morgan  to be  held  on  May  14,  1997  and  at  any
                           adjournment thereof.

                           Stockholders  whose  names  appeared of record on the
                           books of Morgan at the close of business on March 14,
                           1997 will be  entitled  to vote at the meeting and at
                           any adjournment  thereof.  On the record date for the
                           meeting there were 181,998,937 shares of Common Stock
                           of Morgan  outstanding  and  entitled  to vote.  Each
                           share of Common Stock is entitled to one vote.  Proxy
                           material is being  mailed to  stockholders  of record
                           commencing March 24, 1997.


                      1    ELECTION OF DIRECTORS
                           Fourteen Directors of Morgan are to be elected at the
                           annual meeting to serve until the next annual meeting
                           of stockholders and until their respective successors
                           shall  have  been  elected  and   qualified.   Unless
                           authority  to  vote  for  one or  more  Directors  is
                           withheld,  it is intended that shares  represented by
                           Proxies  in the  accompanying  form will be voted for
                           the  election of the persons  listed below or, if any
                           such  person  shall  unexpectedly  become  unable  or
                           unwilling to accept  nomination or election,  for the
                           election  of  such  other  person  as  the  Board  of
                           Directors may  recommend in his or her place.  All of
                           the persons  listed below are Directors of Morgan now
                           in  office  and are  nominees  for  re-election.  All
                           nominees are currently  Directors of Morgan  Guaranty
                           Trust Company of New York (the "Bank").

                           The  name,  age,   principal   occupation,   business
                           directorships  and  significant  affiliations  of  an
                           educational,  charitable  or  civic  nature  of  each
                           nominee, are set forth below.




<PAGE>

-------------------------------------------------------------------------------

DOUGLAS A. WARNER III Director since 1990. Age 50.
[PHOTO]
Chairman of the Board of Morgan and the Bank (since  January 1995) and President
of Morgan and the Bank (since January 1990). Member of the Executive  Committees
of Morgan and the Bank (Chairman since January 1995). Director of Anheuser-Busch
Companies,  Inc. and General Electric Company.  Member of The Bankers Roundtable
and The Business Roundtable.  Vice Chairman of The Business Council.  Trustee of
Pierpont  Morgan  Library and Cold Spring  Harbor  Laboratory.  Vice Chairman of
Board of Managers  and Board of  Overseers  of Memorial  Sloan-Kettering  Cancer
Center. Member of Board of Counselors of Bechtel Group, Inc.




--------------------------------------------------------------------------------

RILEY P. BECHTEL  Director  since 1995. Age 45.
[PHOTO]
Chairman  (since January 1996),  Chief  Executive  Officer (since June 1990) and
Director  (since  August  1987)  of  Bechtel  Group,   Inc.   (engineering   and
construction).  Member of the Committee on Management  Development and Executive
Compensation of Morgan. Trustee of Thacher School. Member of American Society of
Corporate  Executives,  The Business  Council,  The Business  Roundtable and The
Trilateral  Commission.  Member  of  Advisory  Council  of  Stanford  University
Graduate School of Business and Dean's Advisory  Council of Stanford  University
School of Law. Director of Jason Foundation for Education.



--------------------------------------------------------------------------------

MARTIN  FELDSTEIN  Director  since 1993.  Age 57.  
[PHOTO]
President and Chief Executive  Officer of National Bureau of Economic  Research,
Inc. (private,  non-profit research  organization) and Professor of Economics at
Harvard University (since 1969). Member of the Audit Committee of Morgan and the
Examining Committee and the Committee on Employment Policies and Benefits of the
Bank.  Director of TRW Inc. and American  International  Group,  Inc.  Member of
Council on Foreign  Relations,  The Trilateral  Commission,  American Academy of
Arts  and  Sciences,   American   Philosophical   Society  and   Corporation  of
Massachusetts General Hospital.




--------------------------------------------------------------------------------

HANNA H. GRAY Director since 1976. Age 66. 
[PHOTO]
President  Emeritus and Harry Pratt Judson  Distinguished  Service  Professor of
History of The University of Chicago  (since July 1993).  Dr. Gray was President
of The  University  of  Chicago  from July 1978 to July  1993.  Chairman  of the
Committee on Trust Matters and member of the  Committee on Director  Nominations
and Board Affairs of Morgan.  Director of Ameritech  Corp.,  Atlantic  Richfield
Company and Cummins  Engine Co.,  Inc.  Trustee of Andrew W. Mellon  Foundation,
Bryn Mawr  College and Howard  Hughes  Medical  Institute.  Member of Council on
Foreign   Relations,   American  Academy  of  Arts  and  Sciences  and  American
Philosophical Society. Regent of The Smithsonian Institution.


                                       2
<PAGE>


--------------------------------------------------------------------------------

JAMES R. HOUGHTON  Director since 1982. Age 60. 
[PHOTO]
Retired Chairman of the Board of Corning Incorporated. Mr. Houghton was Chairman
and Chief  Executive  Officer of Corning  Incorporated  from April 1983 to April
1996.  Chairman  of  the  Committee  on  Management  Development  and  Executive
Compensation  of Morgan.  Member of the  Executive  Committees of Morgan and the
Bank. Director of Corning Incorporated,  Exxon Corporation and Metropolitan Life
Insurance Company. Trustee of Corning Incorporated Foundation, Corning Museum of
Glass,  Metropolitan  Museum of Art and Pierpont Morgan  Library.  Member of the
Harvard Corporation.




--------------------------------------------------------------------------------

JAMES L. KETELSEN  Director  since 1977. Age 66.
[PHOTO]
Retired  Chairman  and Chief  Executive  Officer  of Tenneco  Inc.  (diversified
industrial).  Mr.  Ketelsen was Chairman of the Board of Tenneco Inc.  from July
1978 to May 1992 and Chief  Executive  Officer  from July 1978 to January  1992.
Chairman of the Audit  Committee and member of the Committee on Trust Matters of
Morgan and  Chairman of the  Examining  Committee  of the Bank.  Director of GTE
Corporation and Sara Lee Corporation. Trustee of Northwestern University.




--------------------------------------------------------------------------------

JOHN A. KROL Director since 1997. Age 60.
[PHOTO]
Chief Executive  Officer (since December 1995),  President  (since October 1995)
and  Director  of E.I.  du Pont de Nemours  and  Company  (global  chemical  and
energy). Mr. Krol was Vice Chairman of DuPont from March 1992 until October 1995
and Senior Vice  President of DuPont Fibers from 1990 until 1992.  Member of the
Audit Committee of Morgan and the Examining  Committee of the Bank.  Director of
Mead Corporation, National Association of Manufacturers, Delaware Art Museum and
Wilmington 2000. Member of the Board of Trustees of Tufts University, University
of Delaware and Corporate Liaison Board of American Chemical Society.  Member of
The Business Roundtable,  The Business Council, Executive Committees of Delaware
Business  Roundtable and  Business/Public  Education Council.  Trustee of Hagley
Museum and U.S. Council for International Business.




--------------------------------------------------------------------------------

ROBERTO G. MENDOZA  Director  since 1990.  Age 51.
[PHOTO]
Vice  Chairman  of the Board of Morgan  and the Bank  (since  January  1990) and
member of the Executive Committees of Morgan and the Bank. Director of Consorcio
de  Alimentos  Fabril-Pacifico,  S.A.,  Mid Ocean  Reinsurance  Company Ltd. and
Travelers/Aetna Property Casualty Corp.





                                       3
<PAGE>


--------------------------------------------------------------------------------

MICHAEL E. PATTERSON  Director since 1995. Age 55.
[PHOTO]
Vice  Chairman  of the Board of Morgan and the Bank  (since  December  1995) and
member of the  Executive  Committees of Morgan and the Bank.  Mr.  Patterson was
Chief  Administrative  Officer  of  Morgan  and the Bank from  November  1994 to
December 1995 and Executive Vice President and General Counsel of Morgan and the
Bank from March 1987 to November 1994.  Director of Euroclear  Clearance  System
S.C. and Euroclear Clearance System Public Limited Company.  Trustee of Columbia
University.



--------------------------------------------------------------------------------

LEE R. RAYMOND  Director since 1987.  Age 58.
[PHOTO]
Chairman  of the  Board and  Chief  Executive  Officer  (since  April  1993) and
Director of Exxon  Corporation.  Mr. Raymond was President of Exxon  Corporation
from  January  1987  to  April  1993.  Chairman  of the  Committee  on  Director
Nominations  and  Board  Affairs  and  member  of the  Committee  on  Management
Development and Executive Compensation of Morgan. Chairman of American Petroleum
Institute.  Director of United Negro College Fund. Trustee of Southern Methodist
University  and Wisconsin  Alumni  Research  Foundation.  Member of The Business
Council,  The  Business  Roundtable,  Council  on Foreign  Relations,  Emergency
Committee  for  American  Trade,  National  Petroleum  Council,  The  Trilateral
Commission and The University of Wisconsin Foundation.



--------------------------------------------------------------------------------

RICHARD D. SIMMONS Director since 1990. Age 62.
[PHOTO]
Retired  President  of The  Washington  Post  Company and  International  Herald
Tribune.  Mr. Simmons was President of  International  Herald Tribune from April
1989 to April 1996 and President of The  Washington  Post Company from September
1981 to May 1991.  Member  of the  Committee  on Trust  Matters  of  Morgan  and
Chairman of the  Committee  on  Employment  Policies  and  Benefits of the Bank.
Director of Union Pacific  Corporation,  The Washington  Post Company and Yankee
Publishing,  Inc.  Member of  General  Electric  Investment  Corporation  Equity
Advisory  Board and  council  member of White  Burkett  Miller  Center of Public
Affairs at The University of Virginia.



--------------------------------------------------------------------------------

KURT F.  VIERMETZ(1)  Director since 1990. Age 57.
[PHOTO]
Vice  Chairman  of the Board of Morgan  and the Bank  (since  January  1990) and
member of the  Executive  Committees  of Morgan and the Bank.  Mr.  Viermetz was
Treasurer of the Bank from March 1986 to February  1990.  Member of  Supervisory
Board of  Hoechst  AG and VEBA AG.  Chairman  of the  Board of  Munich  American
Reinsurance Company and Munich Management  Corporation.  Member of International
Advisory Board of Metro Holding AG, Zug/Switzerland.  Chairman of New York Stock
Exchange  International  Capital Markets Advisory  Committee.  Member of Federal
Reserve  Bank of New York  International  Capital  Markets  Advisory  Committee.
Director  of  New  York  Philharmonic  Society.  Trustee  of The  Johns  Hopkins
University's American Institute for Contemporary German Studies. Member of Board
of the American Council on Germany, New York.


1. Mr. Viermetz plans to retire later this year as Vice Chairman of Morgan,  but
   will continue as a member of its Board of Directors.




                                       4
<PAGE>


--------------------------------------------------------------------------------

DENNIS  WEATHERSTONE  Director since 1979. Age 66.
[PHOTO]
Mr.  Weatherstone  was Chairman of the Board of Morgan and the Bank from January
1990 to January 1995 and  Chairman of the  Executive  Committees  of Morgan from
February  1991 to January 1995 and the Bank from  January 1991 to January  1995.
Member of the  Executive  Committees of Morgan and the Bank and the Committee on
Employment  Policies and Benefits of the Bank. Member of International  Council.
Director of General Motors  Corporation and Merck & Co., Inc.  Director of L'Air
Liquide.  Director of Institute for International Economics.  Independent member
of Board of Banking  Supervision of the Bank of England.  Graduate member of The
Business Council. Trustee of Alfred P. Sloan Foundation. Member of Economic Club
of New York.  President and Trustee of The Royal College of Surgeons Foundation,
New York.



--------------------------------------------------------------------------------

DOUGLAS C. YEARLEY  Director since 1993. Age 61.
[PHOTO]
Chairman of the Board and Chief  Executive  Officer (since May 1989),  President
(since November 1991) and Director of Phelps Dodge Corporation.  Mr. Yearley was
President of Phelps Dodge  Industries  from 1988 until 1990 and  Executive  Vice
President of Phelps Dodge  Corporation from 1987 until 1989. Member of the Audit
Committee and the Committee on Director  Nominations and Board Affairs of Morgan
and the  Examining  Committee  of the  Bank.  Director  of USX  Corporation  and
Lockheed Martin  Corporation.  Chairman of International  Copper Association and
National Mining Association. Vice Chairman of American Mining Congress. Director
of Copper  Development  Association.  Member of Policy Committee of The Business
Roundtable and The Business Council.  Director of Phoenix  Symphony.  Trustee of
Phoenix Art Museum.



--------------------------------------------------------------------------------

Included  among the  Committees of the Board of Directors of Morgan are an Audit
Committee, the members of which are Messrs. Ketelsen (Chairman), Feldstein, Krol
and Yearley, a Committee on Management  Development and Executive  Compensation,
the members of which are Messrs.  Houghton  (Chairman),  Bechtel and Raymond,  a
Committee on Director  Nominations  and Board Affairs,  the members of which are
Mr.  Raymond  (Chairman),  Dr. Gray and Mr.  Yearley,  and a Committee  on Trust
Matters,  the members of which are Dr. Gray (Chairman) and Messrs.  Ketelsen and
Simmons.

The Audit  Committee,  which met seven times during  1996,  is  responsible  for
overseeing the financial  reporting  process and the  effectiveness  of internal
controls of Morgan and its  consolidated  subsidiaries,  including the Bank, and
for  recommending  to the Board of Directors of Morgan the  designation for each
year of independent  accountants  to examine the financial  statements of Morgan
and its consolidated subsidiaries.

The Committee on Management  Development and Executive  Compensation,  which met
five  times  during  1996,  is  responsible  for (1)  consultation  with  senior
management  of  Morgan  and the  Bank and  reporting  to the  appropriate  Board
regarding  development  of qualified  replacements  to succeed key executives of
Morgan and the Bank; (2) reviewing and approving all awards and options  granted
under Morgan's  incentive and stock plans except that awards and 



                                       5
<PAGE>


options  granted to employees who are also Directors are approved by a committee
composed of all non-employee  Directors;  (3) administration (or supervising the
administration)  of such plans; and (4) review of policies of Morgan and certain
of its subsidiaries, including the Bank, with respect to officers' compensation.

The Committee on Director  Nominations and Board Affairs,  which met three times
during 1996, is responsible for making recommendations to the Board of Directors
with respect to the  qualifications  and  nominations  of Directors,  Directors'
functions,  committees,  compensation and retirement and other matters affecting
Directors.  In determining its  recommendations to Morgan's Board, the Committee
on Director  Nominations and Board Affairs will consider nominees recommended by
stockholders.  Such  stockholder  recommendations  should  be made  in  writing,
addressed  to the  Committee,  attention of the  Secretary of J.P.  Morgan & Co.
Incorporated, 60 Wall Street, New York, New York 10260-0060.

The Committee on Trust Matters,  which met twice during 1996, is responsible for
reviewing the general  conduct of the business of the departments and affiliates
of Morgan and the Bank engaged in investing  and  administering  assets held for
others in trust and investment management accounts.

Included  among  the  Committees  of the Board of  Directors  of the Bank are an
Examining  Committee,  the  members of which are  Messrs.  Ketelsen  (Chairman),
Feldstein,  Krol  and  Yearley,  and a  Committee  on  Employment  Policies  and
Benefits,  the members of which are Messrs.  Simmons  (Chairman),  Feldstein and
Weatherstone. 

The Examining  Committee,  which met seven times during 1996, is responsible for
examinations of the Bank in accordance with New York State banking law.

The Committee on Employment  Policies and Benefits,  which met twice in 1996, is
responsible for reviewing the Bank's Retirement,  Profit Sharing,  and Long-Term
Disability Plans, Morgan's overseas benefit plans,  non-officer salary and other
benefits and employee relations and affirmative action programs.

During 1996 there were ten meetings of the Board of  Directors  of Morgan.  Each
Director of Morgan attended 75% or more of the aggregate number of meetings held
during 1996 of the Morgan Board of Directors and the Morgan  committees of which
such Director was a member.



                                       6
<PAGE>

STOCK
OWNERSHIP OF
MANAGEMENT
                           The  following  table  includes as of March 14, 1997,
                           all Morgan  stock-based  holdings  of each  Director,
                           each   executive   officer   named  in  the   Summary
                           Compensation  Table  appearing  on page  14,  and all
                           Directors  and executive  officers as a group,  based
                           upon information  obtained from such persons.  A list
                           of current  executive  officers of Morgan is attached
                           as  Exhibit A hereto.  Each  individual  beneficially
                           owns less than 1% of Morgan Common Stock. Each person
                           has sole  investment and voting power with respect to
                           the shares set forth under the "Stock"  column unless
                           otherwise noted:





--------------------------------------------------------------------------------
NAME OF INDIVIDUAL OR GROUP                             STOCK(1)     TOTAL(2)
--------------------------------------------------------------------------------


Douglas A. Warner III ..............................   435,369(3)  1,056,354
Roberto G. Mendoza .................................   334,325       823,121
Kurt F. Viermetz ...................................   367,552       587,425
Michael E. Patterson ...............................   258,939(4)    412,605
John A. Mayer Jr ...................................   199,007       336,016
Riley P. Bechtel ...................................       500           809
Martin Feldstein ...................................     1,000         2,149
Hanna H. Gray ......................................       800         2,210
James R. Houghton ..................................     1,000         2,410
James L. Ketelsen ..................................     7,800         9,210
John A. Krol .......................................       500           500
Lee R. Raymond .....................................       500         9,236
Richard D. Simmons .................................     1,000         2,410
Dennis Weatherstone ................................   729,614(5)    931,805
Douglas C. Yearley .................................     1,000(6)      2,274
All Directors and Executive Officers as a Group .... 2,660,506(7)  4,711,432
--------------------------------------------------------------------------------

(1) Includes  shares of Morgan  Common  Stock  beneficially  owned,  directly or
indirectly.  The column also includes the following shares of Common Stock which
the  individual(s)  had the right to  acquire  within 60 days of March 14,  1997
through the exercise of options:  Mr. Warner -- 392,723  shares;  Mr. Mendoza --
253,334 shares; Mr. Viermetz -- 253,334 shares; Mr. Patterson -- 254,222 shares;
Mr. Mayer -- 185,254;  Mr.  Weatherstone  -- 551,501  shares;  all directors and
executive officers as a group -- 2,203,141.

(2) Includes total stock-based  holdings,  including  securities included in the
"Stock"  column  (as  described  in  footnote  1),  plus  non-voting  interests,
including  restricted  stock,  deferred  compensation  accounted for as units of
Morgan Common Stock,  stock options that will not become  exercisable  within 60
days,  awards of share credits under the Director Stock Plan (1992) described on
page 8 and  directors'  fees  deferred as units of Morgan Common Stock under the
Deferred Compensation Plan for Directors' Fees described on page 8.

(3)  Includes  6,000 shares owned by his spouse and 240 shares held in custodial
accounts for his children.  Mr. Warner  disclaims  beneficial  ownership of such
shares.

(4)  Includes  4,717  shares  held in trust for family  members.  Mr.  Patterson
disclaims beneficial ownership of all but 1,600 of such shares.

(5) Includes 161 shares owned by his son. Mr. Weatherstone  disclaims beneficial
ownership of such shares.

(6) Includes 1,000 shares held in trust for family members.

(7) As a group, beneficially owns 1.46% of Morgan Common Stock.







                                       7
<PAGE>


                           DIRECTORS AND EXECUTIVE OFFICERS
DIRECTOR
COMPENSATION

                           Each  Director who is not an officer of Morgan or the
                           Bank  receives  an annual  retainer  of $30,000 and a
                           single meeting  attendance fee of $1,200 for meetings
                           of the Boards of Morgan and the Bank.  Such Directors
                           also  receive   annual   retainers   for  service  on
                           committees  of the Boards in  amounts of $20,000  for
                           the Chairmen and $12,500 for the members of the Audit
                           Committee and the Committee on Management Development
                           and  Executive   Compensation  and  $10,000  for  the
                           Chairmen  and  $7,500  for the  members  of the other
                           committees.  The members of the Audit  Committee also
                           serve on the Bank's  Examining  Committee but receive
                           no additional retainer for such service. In addition,
                           Directors  are entitled to  reimbursement  for travel
                           expenses  for  meetings of the Boards and  committees
                           thereof.

                           Under a  Director  Stock  Plan  (1992),  as  amended,
                           Directors  who are not officers of Morgan or the Bank
                           receive  annually  an award of share  credits for 400
                           shares of  Morgan  Common  Stock  for  their  service
                           during the preceding  year,  which award is pro rated
                           in the case of any  Director  who was not a  Director
                           for all of the preceding year.  After  termination of
                           service as a Director,  all awards are paid in shares
                           of stock to the  Director,  or, in the case of death,
                           to the Director's  designated  beneficiary or estate.
                           Such  payment  includes  additional  shares  credited
                           annually  with  respect to the  dividends  that would
                           have been paid during the year had the share  credits
                           been issued as shares of stock.

                           Directors  who are not officers of Morgan or the Bank
                           may defer compensation for services rendered as Board
                           members or as members of Board committees pursuant to
                           the Deferred  Compensation  Plan for Directors'  Fees
                           adopted  by the Boards of Morgan and the Bank in 1973
                           and last amended in 1991. The Plan permits  Directors
                           to make separate  deferral  elections with respect to
                           their  annual   retainer  and  their   meeting  fees.
                           Participating  Directors  may elect under the Plan to
                           direct Morgan or the Bank to credit deferred  amounts
                           to (i) a Deferred Cash Account, (ii) a Deferred Stock
                           Value  Account or (iii) a  combination  of both.  The
                           Plan provides  that amounts  deferred to the Deferred
                           Cash Account are credited with interest  equivalents.
                           Amounts  deferred to the Deferred Stock Value Account
                           are treated as "Units  Based on Stock  Value" and are
                           credited  with  dividend  equivalents.  Participating
                           Directors  are entitled to receive cash  distribution
                           of the balance in their accounts in full or in annual
                           installments   (not  to  exceed   15   years)   after
                           termination of service as a Director.

                           Retired Directors are eligible to serve as members of
                           the Bank's Directors Advisory Council. Members of the
                           Council receive an annual retainer of $30,000.



                                       8
<PAGE>



             COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
ROLE OF THE
COMMITTEE
AND THE BOARD
                           The Committee on Management Development and Executive
                           Compensation,   composed   entirely  of   independent
                           outside   directors   ("Outside    Directors"),    is
                           responsible   for   determining   and   administering
                           Morgan's  executive  compensation  policies  for  its
                           senior   management   within   guidelines  and  plans
                           approved  by the Board of  Directors.  William S. Lee
                           was a member  of the  Committee  until  his  death in
                           July,  1996.  Riley P. Bechtel became a member of the
                           Committee   in   January,   1997.   The   Committee's
                           recommendations  regarding officers who are Directors
                           are  subject  to the  approval  of the full  board of
                           Outside   Directors   (with  officer   directors  not
                           participating).

COMPENSATION
PHILOSOPHY
                           Morgan's executive  compensation  program is designed
                           to  attract,  reward,  and  retain  highly  qualified
                           executives  and  to  encourage  the   achievement  of
                           business  objectives,  including  superior  corporate
                           performance. The program seeks:

                           o   To  foster  a  performance-oriented  environment,
                               where   variable   compensation   is  based  upon
                               corporate   and   business   group   as  well  as
                               individual performance as measured by achievement
                               of short-term  and long-term  objectives,  taking
                               into account economic  conditions and competitive
                               compensation levels.

                           o   To  enhance   management's  focus  on  maximizing
                               long-term  stockholder  value  through  a  strong
                               emphasis on stock-based compensation.

                           o   To  increase  the   variable   portion  of  total
                               compensation   (both   cash  and   stock)  as  an
                               individual's  level of responsibility  increases.
                               This  further  aligns  the  interests  of  senior
                               management and stockholders.

                           o   To promote a cohesive,  team-oriented ethic among
                               members of senior management in order to maintain
                               the   competitive    advantage   of   efficiently
                               integrating diverse global business capabilities.

COMPONENTS OF
EXECUTIVE
COMPENSATION
PROGRAM
                           Total  compensation for Morgan's senior management is
                           composed  of  base  salary,  profit  sharing,  annual
                           incentive   compensation   (of  which  a  substantial
                           portion is awarded in the form of  restricted  stock)
                           and stock option awards.


BASE SALARY
                           Base  salaries for  Morgan's  senior  management  are
                           determined   by   evaluating   the   responsibilities
                           associated with the position held and an individual's
                           overall level of experience. However, in keeping with
                           Morgan's  emphasis  on  variable  rather  than  fixed
                           compensation,  base  salaries  represent a relatively
                           low  percentage  of  total   compensation  for  these
                           individuals.

PROFIT SHARING
                           Members  of  senior  management  generally  have been
                           eligible  for a  firm-wide  profit  sharing  program,
                           under  which  full-time  employees  receive an annual
                           award  equal  to a  percentage  of base  salary.  The
                           percentage,  which applies only to the first $100,000
                           of base  salary for each  individual,  is  determined
                           annually  by the  Board  of  Directors,  based on its
                           assessment of Morgan's  overall  performance  for the
                           year.  Beginning with the 1997  performance  year, in
                           order to consolidate  variable pay into the incentive
                           compensation  program,  managing directors of Morgan,
                           including members of senior  management,  and certain
                           other  officers  of Morgan will no longer be eligible
                           for the profit sharing program.
INCENTIVE
COMPENSATION
                           In keeping with its philosophy of  increasing,  as an
                           officer's  level  of  responsibility  increases,  the
                           portion  of  total  compensation  that  depends  upon
                           individual and Morgan performance, Morgan's executive
                           compensation   program  is  heavily  weighted  toward
                           incentive compensation.

                                       9
<PAGE>

                           To  establish  and maintain a common focus and shared
                           goals among Morgan's senior management,  an incentive
                           compensation  pool  for  a  small  number  of  senior
                           officers is determined at year end by the  Committee,
                           based on its  assessment of Morgan's  performance  as
                           measured  by  various  quantitative  and  qualitative
                           factors. The primary quantitative factors reviewed by
                           the  Committee  include  such  financial  performance
                           measures as net income (after provision for dividends
                           payable to stockholders) and return on average common
                           stockholders'  equity,  both as absolute measures and
                           relative  to  previous  years.   Qualitative  factors
                           evaluated   by   the   Committee   include   Morgan's
                           performance  in  relation  to  industry  performance,
                           progress  toward  achievement of Morgan's  short-term
                           and long-term business goals, the quality of Morgan's
                           earnings,  and  the  overall  business  and  economic
                           environment.   In  making  its   determination,   the
                           Committee  also  reviews   competitive   compensation
                           levels.

                           Each participant in the annual incentive compensation
                           pool is allocated a share in the pool,  as determined
                           by  the   Committee,   taking   into   account   each
                           participant's level of management  responsibility and
                           contribution.  Actual incentive  compensation  awards
                           generated  by the  pool  may be  adjusted  up or down
                           under special circumstances, to reflect individual or
                           business  unit  performance.   As  discussed  further
                           below,  a  substantial  portion  of these  awards  is
                           granted in the form of restricted stock.
STOCK-BASED
COMPENSATION
AND STOCK
OWNERSHIP
                           The Committee  believes that stock ownership enhances
                           individuals'    focus   on    maximizing    long-term
                           stockholder value.  Accordingly,  senior officers are
                           strongly  encouraged  to develop  significant  equity
                           positions in Morgan.  Morgan's executive compensation
                           programs are designed to facilitate  stock  ownership
                           and to  ensure  that,  as an  individual's  level  of
                           responsibility  increases,  financial  rewards depend
                           significantly on Morgan's overall performance.

RESTRICTED STOCK
                           Each year,  a  substantial  proportion  of  incentive
                           compensation for senior  management is awarded in the
                           form of restricted stock, issued at fair market value
                           on  the  date  of  grant  and  subject  to  five-year
                           vesting.  Since the value of restricted  stock awards
                           will ultimately  depend on the market value of Morgan
                           Common  Stock,  the Committee  believes  these awards
                           will serve as an ongoing  incentive  to preserve  and
                           increase stockholder value.

                           For 1996,  members of senior management  received 45%
                           (50% in the  case of the  Chairman)  of  their  total
                           incentive   compensation   awards   in  the  form  of
                           restricted  stock.  This percentage is the same as in
                           1995, evidencing the Committee's continued commitment
                           to  fostering  significant  senior  management  stock
                           ownership.

STOCK OPTIONS

                           Morgan's executive compensation program also includes
                           stock  option  awards,  which are intended to provide
                           additional  incentive to increase  stockholder value.
                           All such awards are granted with an exercise price at
                           or above  100% of the  fair  market  value of  Morgan
                           stock  on the  date of  grant  and  generally  become
                           exercisable  over three years.  Because  Morgan stock
                           option  awards  provide  value  only in the  event of
                           share  price  appreciation,  the  Committee  believes
                           stock options  represent an important  component of a
                           well-balanced  incentive  program.  Individual  award
                           levels are based upon a subjective evaluation of each
                           individual's   overall  past  and   expected   future
                           contribution;  therefore, no specific formula is used
                           to determine  option awards for any employee.  Morgan
                           has generally  granted stock option awards to members
                           of  senior   management  in  January  of  each  year.
                           Beginning in 1997,  most stock option  awards will be
                           granted  in  mid-year.  As a result,  other  than the
                           special  long-term  award granted to Mr.  Warner,  as
                           described  below,  and  a  special   long-term  award
                           granted to Mr.



                                       10
<PAGE>

                           Mendoza (the  material  terms of which are  described
                           under  "Option  Grants in Last Fiscal  Year"),  stock
                           option   awards   will  not  be   granted  to  senior
                           management until mid-1997.  
CORPORATE 
PERFORMANCE 
AND CEO  
COMPENSATION  

                           The Committee  believes that J.P. Morgan continues to
                           enhance its  position as a leading  global  financial
                           intermediary   and   meet   the   challenges   of  an
                           increasingly  competitive  environment.   Net  income
                           increased  21% in 1996 to $1.574  billion from $1.296
                           billion in 1995. Results were strong across the range
                           of the firm's  diversified  global  activities,  with
                           notable  growth in the  volume of  business  done for
                           clients. Return on equity rose to 14.9% from 13.6% in
                           the prior year.

                           In his second  year as Chairman  and Chief  Executive
                           Officer of Morgan,  Mr.  Warner  continued his strong
                           leadership  of the firm.  Since  assuming his current
                           roles  in  January  1995,  and  in  his  capacity  as
                           President  beginning in January 1990,  Mr. Warner has
                           guided the company to expand client relationships, in
                           order  to  reap   greater   value   from  the  firm's
                           investment  in its range of  sophisticated  financial
                           capabilities, to strengthen its core competencies and
                           to continue careful management of costs and risks.

                           In   recognition   of   his   excellent    individual
                           performance  and the strong  results of the firm, Mr.
                           Warner's  total  annual  compensation  for  1996  was
                           increased 39.0% to $5,858,500, including a restricted
                           stock  award with a grant  date value of  $2,625,000.
                           This total does not include a special long-term award
                           of  restricted  stock  with a  grant  date  value  of
                           $2,937,813, which is discussed below. Both the annual
                           and  special  restricted  stock  awards are  included
                           under  long-term  awards in the Summary  Compensation
                           Table.  Mr. Warner was allocated the largest share in
                           the incentive  compensation  pool for senior officers
                           for 1996,  and the  percentage  of  annual  incentive
                           compensation   that  he   received  in  the  form  of
                           restricted  stock--50%--was  the highest in the firm.
                           In setting Mr. Warner's  compensation,  the Committee
                           also takes into  account the  compensation  levels of
                           chief  executive  officers of Morgan's peer companies
                           and the  compensation  of other  senior  officers  of
                           Morgan.

                           With  the  approval  of the  full  board  of  Outside
                           Directors, the Committee granted Mr. Warner a special
                           long-term  award  of  stock  options  and  restricted
                           stock,   with   several   objectives:   to  link  his
                           compensation  over  time  more  significantly  to the
                           performance  of the firm,  through an interest in the
                           performance  of Morgan's  stock that is comparable to
                           those of chief  executives at peer companies,  and to
                           provide a strong incentive for Mr. Warner to continue
                           to  commit  his  outstanding   leadership  skills  to
                           Morgan.

                           The  special  stock  option  grant  was  for  300,000
                           restricted  share  credits with an exercise  price of
                           $104.92  per share.  This stock  option  award may be
                           exercised  for  restricted  share  credits  during  a
                           4-year period  commencing on the sixth anniversary of
                           the grant date, and such share credits,  except for a
                           distribution of sufficient shares to pay the exercise
                           price,  will generally vest on the tenth  anniversary
                           of the grant date (with pro rata  vesting  upon death
                           or  disability  prior to such  date),  subject to Mr.
                           Warner's   continued   employment  with  Morgan.  The
                           special   restricted   stock  grant  was  for  35,000
                           restricted share credits which will generally vest on
                           the 10th anniversary of the grant date (with pro rata
                           vesting upon death or disability prior to such date),
                           subject to Mr.  Warner's  continued  employment  with
                           Morgan.

                                       11
<PAGE>

TAX DEDUCTIBILITY 
OF EXECUTIVE 
COMPENSATION

                           Section  162(m) of the  Internal  Revenue Code limits
                           the tax deductibility of compensation in excess of $1
                           million paid to certain members of senior management,
                           unless  the  payments  are  made  under  plans  which
                           satisfy  the  technical  requirements  of the statute
                           (and  regulations).  While  the  Committee  currently
                           intends   to   pursue  a   strategy   of   maximizing
                           deductibility  of senior  management  compensation by
                           making  awards  under  the  1995  Executive   Officer
                           Performance  Plan and 1995 Stock Incentive Plan (both
                           of which meet the  requirements of Section 162(m) and
                           were approved by  stockholders  during 1995), it also
                           believes it is important to maintain the  flexibility
                           to  take  actions  it  considers  to be in  the  best
                           interest of Morgan and its stockholders, which may be
                           based  on   considerations  in  addition  to  Section
                           162(m).

                           The Committee on Management Development and Executive
                           Compensation

                           James R. Houghton, Chairman
                           Riley P. Bechtel
                           Lee R. Raymond







                                       12

<PAGE>

STOCK
PERFORMANCE
GRAPHS

The  following  graphs show changes over the past five- and ten-year  periods in
the value of $100  invested in: (1) Morgan's  Common  Stock;  (2) the Standard &
Poor's 500 Index;  (3) Standard & Poor's Financial Index and (4) companies which
comprised  the Dow Jones  Industrial  Average as of December  31, 1996 (of which
Morgan is one).



J.P. MORGAN COMPARISONS OF FIVE YEAR TOTAL STOCKHOLDER RETURN

[The following table represents a chart in the printed piece.]


                      1991       1992      1993       1994      1995      1996
--------------------------------------------------------------------------------
J.P. Morgan           100.0       99.4     108.6       92.0     137.3     173.4
S&P 500               100.0      107.6     118.4      120.0     165.0     202.7
S&P Financial         100.0      123.3     136.9      132.2     203.4     274.7
DJ Industrial         100.0      107.4     125.6      132.0     180.6     232.6




J.P. MORGAN COMPARISONS OF TEN YEAR TOTAL STOCKHOLDER RETURN

[The following table represents a chart in the printed piece.]

<TABLE>
<CAPTION>
 
                      1986    1987    1988    1989    1990    1991    1992   1993   1994   1995   1996
<S>                   <C>      <C>     <C>    <C>     <C>     <C>    <C>    <C>    <C>    <C>    <C>  
J.P. Morgan           100.0    90.8    91.1   119.8   127.0   203.6  202.4  221.1  187.3  279.5  353.0
S&P 500               100.0   105.2   122.5   161.2   156.2   203.6  219.1  241.1  244.3  335.8  412.8
S&P Financial         100.0    83.2    98.3   130.4   102.5   154.3  190.2  211.2  203.9  313.7  423.8
DJ Industrial         100.0   105.5   122.5   161.9   161.0   200.0  214.8  251.2  263.9  361.1  465.2

</TABLE>
The year-end values of each investment  shown in the preceding  graphs are based
on share price appreciation plus dividends,  with the dividends reinvested as of
the last business day of the month during which such dividends were ex-dividend.
The  calculations  exclude  trading  commissions  and taxes.  Total  stockholder
returns from each investment, whether measured in dollars or percentages, can be
calculated from the year-end investment values shown beneath each graph.


                                       13

<PAGE>


SUMMARY
COMPENSATION
TABLE

The following table sets forth,  for the years ending  December 31, 1996,  1995,
and 1994, the annual and long-term  compensation paid or accrued for those years
by Morgan to the Chief  Executive  Officer and the four most highly  compensated
executive officers of Morgan.

<TABLE>
===============================================================================================================

<CAPTION>
                              ANNUAL COMPENSATION                   LONG-TERM COMPENSATION
                  ------------------------------------------        ----------------------
                                                                    AWARDS
                                                                    ----------------------
                                                                                 SECURITIES
                                                                    RESTRICTED   UNDERLYING
                                                       OTHER ANNUAL STOCK        STOCK            ALL OTHER
 NAME AND                       SALARY                 COMPENSATION AWARD        OPTIONS          COMPENSATION
 PRINCIPAL POSITION       YEAR  ($)       BONUS ($)(1) ($)(2)       ($)(3)(4)    (# SHARES)(5)    ($)(6)
---------------------------------------------------------------------------------------------------------------
<S>                       <C>   <C>       <C>          <C>          <C>          <C>              <C>    
 Douglas A. Warner III    1996  $600,000  $2,633,500   $       0    $5,562,813   300,000          $30,651
 Chairman                 1995   591,667   1,815,800           0     1,808,700    75,000           27,110
                          1994   500,000   1,449,600           0     1,763,200    90,000           22,056

 Roberto G. Mendoza       1996   425,000   2,208,500     351,253     3,772,531   200,000           18,496
 Vice Chairman            1995   425,000   1,678,300           0     1,367,400    40,000           14,234
                          1994   425,000   1,353,400           0     1,645,700    75,000           15,703

 Kurt F. Viermetz         1996   425,000   2,208,500           0     1,800,000         0            8,500
 Vice Chairman            1995   425,000   1,678,300           0     1,367,400    40,000            7,000
                          1994   425,000   1,353,400           0     1,645,700    75,000            7,000

 Michael E. Patterson     1996   397,917   1,851,000           0     1,507,500         0           10,673
 Vice Chairman            1995   371,250   1,162,000           0       945,000    40,000            7,000
                          1994   330,000     947,400           0       769,400    60,000            7,000

 John A. Mayer Jr.        1996   327,500   1,576,000           0     1,282,500         0           54,712
 Chief Financial Officer  1995   300,000   1,200,800           0       976,700    30,000           46,513
                          1994   300,000   1,143,300           0       929,700    50,000           39,086
---------------------------------------------------------------------------------------------------------------
</TABLE>


(1) Includes the cash portion of awards under the Bank's profit sharing program.

(2) Mr.  Mendoza  deferred  his 1996  annual  bonus  into  Morgan  Common  Stock
equivalents;  the amount  reported  in this  column  represents  the  difference
between the fair market value of Morgan  Common Stock and the  conversion  price
for such  deferrals on the date such deferral was credited to his account.  Note
that annual bonus deferral  elections are made  substantially  prior to the time
when the conversion price is determinable. Furthermore, the conversion price for
stock-based deferrals is determined based upon a predetermined formula and could
be either  higher or lower than the fair market value of Morgan  Common Stock on
the actual date such deferrals are credited.

(3) The  amounts  reported  in this column  represent  the fair market  value of
restricted stock units awarded at 100% of the fair market value of Morgan Common
Stock on the grant date ((Special awards  (described  below) - $83.9375) 1996 --
$103.438,  1995 --  $75.625  and 1994 --  $60.50)  without  diminution  in value
attributable to the restrictions on such stock. Annual dividend  equivalents are
paid in cash or are converted into  additional  share credits in accordance with
the terms of the awards and the  provisions of the plan(s) under which they were
granted.  Except for the special long-term awards granted to Messrs.  Warner and
Mendoza,  Restricted  Stock awards  generally become vested five years after the
date of grant  thereof or, in the case of death,  become  immediately  vested in
full.  The amounts  reported in this column for 1996 include  special  long-term
awards  granted to Messrs.  Warner and  Mendoza of 35,000 and 23,500  restricted
stock  units  respectively.  The  value of these  special  long-term  awards  as
reported  in this  column for Messrs.  Warner and  Mendoza  are  $2,937,813  and
$1,972,531 respectively.  The special long-term awards granted to Messrs. Warner
and Mendoza will generally vest 10 years after the grant thereof,  with pro rata
vesting  upon death or  disability  prior to such date.  Generally,  a committee
composed of all  non-employee  Directors  may  accelerate  vesting of Restricted
Stock in its sole discretion.

(4)  The  named  officers  had  non-vested   Restricted   Stock  award  balances
outstanding  as of January 15,  1997 of 197,555  shares  ($19,433,812),  165,899
shares ($16,297,001),  142,399 shares ($14,002,814),  77,470 shares ($7,647,690)
and 85,516 shares ($8,420,571) for Messrs. Warner, Mendoza, Viermetz,  Patterson
and Mayer  respectively.  Dollar  values are based on (i) the  closing  price of
Morgan  Common  Stock on  December  31,  1996  ($97.625)  for shares  which were
outstanding  on such  date and (ii) the  average  of the high and low  prices of
Morgan Common Stock on January 15, 1997 ($103.438) for shares awarded as of such
date.

(5) The amounts  reported in this column for 1996  represent  special  long-term
awards  granted to Messrs.  Warner and Mendoza of 300,000  and  200,000  options


                                       14


<PAGE>

respectively  (see "Option  Grants in Last Fiscal Year" for a description of the
material terms of these special long-term awards). Beginning in 1997, most stock
option awards will be granted in the middle of each calendar year, instead of in
January. As a result, other than the special long-term awards granted to Messrs.
Warner and Mendoza, stock option awards will not be granted to senior management
until mid-1997.
                          
(6) Includes (i)  contributions  to the Bank's  deferred  profit sharing plan of
$8,500,  $7,000, and $7,000 for 1996, 1995 and 1994,  respectively,  for Messrs.
Warner, Mendoza, Viermetz, Patterson, and Mayer and (ii) interest exceeding 120%
of the  applicable  federal  rate  deemed to have  accrued  on  deferrals  under
Morgan's incentive  compensation plans (based on termination and distribution at
the earliest date permissible  under the plans although no such interest will be
accrued assuming employment until normal retirement age) of $22,151, $20,110 and
$15,056 for Mr. Warner for 1996, 1995 and 1994, respectively; $9,996, $7,234 and
$8,703 for Mr.  Mendoza for 1996,  1995 and 1994,  respectively;  $2,173 for Mr.
Patterson  for 1996;  and  $46,212,  $39,513 and $32,086 for Mr. Mayer for 1996,
1995 and 1994, respectively.


                                       15

<PAGE>

STOCK OPTIONS

The following  tables show,  for the Chief  Executive  Officer and the four most
highly compensated  executive officers of Morgan,  information relating to stock
options awarded by Morgan.  The first table shows, along with certain additional
information,  the estimated grant date present value of stock options granted in
respect of the last fiscal  year.  These values are  calculated  pursuant to the
proxy  rules of the  Securities  and  Exchange  Commission  (the  "SEC") and are
calculated under the Black-Scholes model for pricing options. The actual pre-tax
gain,  if any,  realized upon the exercise of stock options will depend upon the
excess,  if any, of the market  price of Morgan  Common  Stock over the exercise
price per share of the stock option at the time such stock option is  exercised.
The second table shows certain  information  relating to stock options exercised
during the previous fiscal year and stock options outstanding as of December 31,
1996 or awarded in respect of the 1996  fiscal  year.  Morgan does not grant any
Stock Appreciation Rights.


<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
=======================================================================================

Individual Grants
---------------------------------------------------------------------------------------
<CAPTION>

                                           % OF
                                           TOTAL                                  ESTIMATED
                                           OPTIONS   EXERCISE OR                 GRANT DATE
                               OPTIONS   GRANTED TO  BASE PRICE   EXPIRATION       PRESENT
NAME                          GRANTED(#) EMPLOYEES   (2)($/SH)       DATE          VALUE (3)
--------------------------------------------------------------------------------------------
<S>                           <C>         <C>        <C>           <C>            <C>        
Douglas A. Warner III........ 300,000(1)  46.47%     $104.92       10/14/06       $4,401,000 
Roberto G. Mendoza........... 200,000(1)  30.98       104.92       10/14/06        2,934,000 
Kurt F. Viermetz.............       0      0.00          N/A            N/A              N/A 
Michael E. Patterson.........       0      0.00          N/A            N/A              N/A 
John A. Mayer Jr.............       0      0.00          N/A            N/A              N/A 
--------------------------------------------------------------------------------------------
</TABLE>
(1) Special long-term awards of options granted at 125% fair market value on the
grant date,  October 14, 1996.  The special  long-term  awards of options may be
converted by the optionee to  restricted  share  credits  during a 4-year period
commencing  on the sixth  anniversary  of the grant  date  and,  except  for the
distribution of sufficient  shares to pay the exercise price,  generally vest on
the tenth  anniversary of the grant date,  subject to the  optionee's  continued
employment with Morgan.

(2) Beginning in 1997, most stock option awards will be granted in the middle of
each calendar year, instead of in January.  As a result,  other than the special
long-term awards granted to Messrs. Warner and Mendoza, stock option awards will
not be granted to senior  management  until  mid-1997.  Assuming a total of 5.15
million options are granted by mid-1997, the special long-term awards to Messrs.
Warner and  Mendoza  would  represent  5.83% and 3.88%,  respectively,  of total
employee option grants.


(3) Valued using the  Black-Scholes  option pricing model.  The assumptions used
for the variables in the model were: 18.5% volatility;  a 10-year risk-free rate
of 6.76%,  compounded  annually;  a 3.86% dividend  yield;  and a 10-year option
term.


<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES 
---------------------------------------------------------------------------------------------------------------

<CAPTION>

                             AGGREGATE OPTION EXERCISES UNEXERCISED OPTIONS AT FY-END
                             -------------------------- -----------------------------
                                                                                 VALUE OF SECURITIES UNDERLYING
                             SHARES                     NUMBER (#)               IN-THE-MONEY OPTIONS ($)
                             ACQUIRED                   -------------------------------------------------------
                             ON EXERCISE  VALUE                        UNEXER-                 UNEXER-
NAME                         (#)          REALIZED ($)  EXERCISABLE    CISABLE   EXERCISABLE   CISABLE
---------------------------------------------------------------------------------------------------------------
<S>                          <C>          <C>           <C>            <C>       <C>           <C>       
Douglas A. Warner III......  27,097       $1,224,432    322,723        420,000   $13,023,937   $3,455,625
Roberto G. Mendoza.........       0                0    202,500        277,500     6,845,000    2,359,375
Kurt F. Viermetz........... 125,546        5,442,409    202,500         77,500     6,845,000    2,359,375
Michael E. Patterson.......       0                0    210,888         70,000     9,756,571    2,072,500
John A. Mayer Jr...........  15,784          649,281    167,607         55,000     6,897,399    1,650,000
---------------------------------------------------------------------------------------------------------------
</TABLE>

                                       16

<PAGE>

RETIREMENT
BENEFITS

Pursuant  to the Bank's  Retirement  Plan for United  States  employees  and, in
certain cases, the Bank's Benefit Equalization Plan, annual benefits are payable
upon  retirement  to  employees  of  Morgan  and  the  Bank  and   participating
subsidiaries.  The  amounts  shown in the  following  table are those  currently
payable under the Retirement  Plan (and,  where  applicable,  the Bank's Benefit
Equalization  Plan) upon retirement in January 1997 at age 65 of a participating
employee  who has elected to receive his or her  pension  under a  straight-life
annuity option.

================================================================================
HIGHEST AVERAGE ANNUAL SALARY OVER  ESTIMATED ANNUAL RETIREMENT BENEFITS (1) FOR
THREE CONSECUTIVE YEARS OF SERVICE  REPRESENTATIVE YEARS OF CREDITED SERVICE
--------------------------------------------------------------------------------
                                    15 Years    20 Years    25 Years    30 Years
--------------------------------------------------------------------------------
$ 50,000 .......................     $12,900     $17,200     $21,500    $25,800
 100,000 .......................      27,150      36,200      45,250     54,300
 150,000 .......................      41,400      55,200      69,000     82,800
 200,000 .......................      51,890      70,457      89,025    107,593
 300,000 .......................      72,789     100,857     128,925    156,993
 500,000 .......................     114,589     161,657     208,722    255,793
--------------------------------------------------------------------------------

(1) The Employee  Retirement Income Security Act of 1974, as amended  ("ERISA"),
limits the amount of annual benefits which may be payable under a Federal income
tax qualified plan, such as the Bank's  Retirement  Plan. As permitted by ERISA,
the Bank's  Benefit  Equalization  Plan  provides  for the  payment  (out of the
general funds of the Bank) of supplemental  pension  benefits to participants in
the Bank's Retirement Plan to the extent such  participants'  benefits under the
Retirement  Plan are reduced by reason of the ERISA  limitations.  The extent of
any reduction will vary in individual cases according to circumstances  existing
at the time retirement benefit payments commence.

The Bank's  Retirement  Plan for United  States  employees  provides  retirement
benefits for eligible  employees  (regular  employees with six months continuous
service who have attained age 21). Annual  benefits  payable upon retirement are
computed under a formula which is based on the employee's  average annual salary
for the three highest-paid consecutive years within the final ten years prior to
termination  of  employment.  Since  February  1, 1993 there has been a $150,000
limit  on all  future  annual  salary  amounts  used in  determining  retirement
benefits  under the  Retirement  Plan,  the  Benefit  Equalization  Plan and the
International  Pension Plan described  below.  The current  annual  remuneration
covered by the Retirement  Plan,  taking into account the  amendments  described
above, is $150,000 for all of the individuals named in the Summary  Compensation
Table on page 14 and the credited years of service for such  individuals  are as
follows:  Mr. Warner, 28 years; Mr. Mendoza,  28 years; Mr. Viermetz,  12 years;
Mr.  Patterson,  9 years;  and Mr. Mayer, 30 years.  Including  benefits accrued
prior to the February 1, 1993  effective date of the  amendments,  the estimated
annual benefits for the  individuals  named in the Summary  Compensation  Table,
assuming retirement at age 65, are as follows: Mr. Warner $217,632;  Mr. Mendoza
$199,549; Mr. Viermetz $89,205; Mr. Patterson $71,059 and Mr. Mayer $155,311. As
part of an agreement  with Mr.  Patterson,  he will receive an additional  seven
years of credited service which will provide a supplemental  retirement  benefit
of $42,960 paid from the Benefit  Equalization  Plan. Mr.  Viermetz has 20 years
credited  service  under the Bank's  Pension  Plan for  Employees in Germany and
under that plan is entitled to receive a retirement benefit in the annual amount
of DM 87,230 upon retirement at or after age 65.

Morgan's International Pension Plan, of which Mr. Viermetz is a member by virtue
of prior overseas service,  provides  additional  retirement benefits to certain
employees assigned outside their home countries, based on the employee's average


                                       17

<PAGE>

annual salary for the three highest-paid  consecutive years within the final ten
years of credited service preceding  retirement.  The International Pension Plan
benefit is paid in a lump sum and is  determined  by  multiplying  such  average
salary by the employee's  years of credited  service and a lump sum accrual rate
factor based on the employee's age and deducting an amount equal to the total of
all other  retirement  benefits  payable under other Morgan plans and government
sponsored pension benefits worldwide. As of December 31, 1996 Mr. Viermetz would
have been  entitled to receive a lump sum  retirement  benefit of  approximately
$1.9 million under the International Pension Plan.

--------------------------------------------------------------------------------

TRANSACTIONS
WITH DIRECTORS
AND OFFICERS

Some  of  Morgan's  Directors  and  executive  officers  and  their  associates,
including affiliates,  and organizations of which some of Morgan's Directors are
officers or trustees,  have had  transactions in the ordinary course of business
with Morgan and  subsidiaries of Morgan,  including the Bank. Such  transactions
have included  borrowings  (all of which were on  substantially  the same terms,
including  interest rates,  and collateral,  if any, as those  prevailing at the
time for  comparable  transactions  with other  persons and did not involve more
than  normal  risk of  collectibility  or present  other  unfavorable  factors),
deposits,  purchases  of  commercial  paper  issued  by  Morgan  or  one  of its
subsidiaries,  purchases of government,  municipal and certain other securities,
and investment  banking,  financial  advisory,  and other financial services and
market transactions.

In the ordinary  course of business Morgan and its  subsidiaries,  including the
Bank,  use the  products  or services  of a number of  organizations  with which
Directors of Morgan are affiliated as officers,  including Corning  Incorporated
and Exxon  Corporation.  It is  expected  that  Morgan  and the Bank will in the
future have transactions with  organizations  with which Directors of Morgan are
affiliated as officers or directors.


2 APPROVAL OF INDEPENDENT ACCOUNTANTS

  For the year 1997 the Board of Directors of Morgan has  designated the firm of
  Price  Waterhouse  LLP to examine the  financial  statements of Morgan and its
  consolidated  subsidiaries,  including  the Bank,  and to assist the Examining
  Committee of the Bank in making its Directors'  examination in accordance with
  applicable laws and  regulations.  This  designation is in accordance with the
  recommendation  of the Audit  Committee  of Morgan.  The Board of Directors is
  submitting the designation to the stockholders for approval.  Price Waterhouse
  LLP served as  Morgan's  principal  independent  accounting  firm for the year
  1996.  Total audit fees to  independent  accounting  firms in 1996 amounted to
  approximately $11.7 million.
                          
  Representatives  of Price  Waterhouse  LLP are  expected  to be present at the
  annual  meeting with the  opportunity to make a statement if they desire to do
  so and to be available to respond to appropriate  questions.

  The  affirmative  vote of a majority  of the shares of Common  Stock of Morgan
  represented  and voting at the annual  meeting is required for approval of the
  foregoing proposal.
  
  THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOREGOING PROPOSAL.


                                       18

<PAGE>

3 STOCKHOLDER PROPOSAL RELATING TO CUMULATIVE VOTING

  Mr. John J. Gilbert,  29 East 64th Street, New York, New York 10021-7043,  who
  owns  320  shares  of  Common  Stock of  Morgan,  has  indicated  that he will
  introduce  the  following  resolution  at the  meeting:

     "RESOLVED:  That the stockholders of J.P. Morgan & Co., Inc.,  assembled in
     annual  meeting  in  person  and by  proxy,  hereby  request  the  Board of
     Directors to take the steps  necessary to provide for cumulative  voting in
     the election of directors,  which means each stockholder  shall be entitled
     to as many  votes  as shall  equal  the  number  of  shares  he or she owns
     multiplied by the number of directors to be elected, and he or she may cast
     all of such votes for a single candidate,  or any two or more of them as he
     or she may see fit."

  In support of the foregoing resolution, the proponent states:

     "Continued very strong support along the lines we suggest were shown at the
     last annual meeting when 25.56%,  an increase over the previous year, 2,360
     owners of 37,447,670 shares, were cast in favor of this proposal.  The vote
     against included 2,957 unmarked proxies.

     "A  California  law  provides  that all state  pension  holdings  and state
     college  funds,  invested  in shares  must be voted in favor of  cumulative
     voting proposals,  showing increasing recognition of the importance of this
     democratic means of electing directors.

     "The  National  Bank Act  provides  for  cumulative  voting.  In many cases
     companies get around it by forming  holding  companies  without  cumulative
     voting.  Banking  authorities  have the right to question the capability of
     directors to be on banking boards.  In many cases authorities come in after
     and say the director or directors were not qualified.  We were delighted to
     see the SEC has finally taken action to prevent bad directors from being on
     boards of public  companies.  The SEC should have  hearings to prevent such
     persons becoming directors before they harm investors.

     "We think cumulative voting is the answer to find new directors for various
     committees.  Some  recommendations have been made to carry out the CERES 10
     points.  The 11th should be, in our opinion,  having  cumulative voting and
     ending staggered boards. When Alaska became a state it took away cumulative
     voting over our objections.  The Valdez oil spill might have been prevented
     if environmental directors were elected through cumulative voting. The huge
     derivative losses might have also been prevented with cumulative voting.
                                
     "Many successful  corporations have cumulative  voting.  Example,  Pennzoil
     defeated Texaco in that famous case.  Ingersoll-Rand also having cumulative
     voting won two awards. FORTUNE magazine ranked it second in its industry as
     `America's Most Admired  Corporations' and the WALL STREET TRANSCRIPT noted
     `on  almost  any  criteria  used  to  evaluate  management,  Ingersoll-Rand
     excels.' In 1994 and 1995 they raised their dividend.
                                 
     "Lockheed-Martin,  as well as VWR Corporation, now have a provision that if
     anyone has 40% or more of the shares cumulative voting applies,  it applies
     at the latter company.

                                       19


<PAGE>
                                 
     "In 1995 American Premier adopted cumulative voting. Alleghany Power System
     tried to take away cumulative  voting,  as well as put in a stagger system,
     and stockholders  defeated it, showing stockholders are interested in their
     rights.

     "If you agree, please mark your proxy for this resolution;  otherwise it is
     automatically cast against it, unless you have marked to abstain."
                          
   The  affirmative  vote of a majority of the shares of Common  Stock of Morgan
   represented  and voting at the annual meeting is required for approval of the
   foregoing proposal.

   THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE ABOVE PROPOSAL.

   Cumulative  voting permits  relatively  small groups of stockholders to elect
   directors  to represent  their  particular  interests or points of view.  The
   Board of Directors  believes there should never be any question as to whether
   each  Director  is acting for the benefit of all of the  stockholders  rather
   than as a representative of any special group. For this reason,  the Board of
   Directors  believes that the institution of cumulative voting in the election
   of Directors would be contrary to the best interests of Morgan's stockholders
   as a whole.


 4 STOCKHOLDER PROPOSAL RELATING TO DIRECTOR TERM LIMITS

   Mrs. Evelyn Y. Davis, Watergate Office Building,  2600 Virginia Avenue, N.W.,
   Suite 215,  Washington,  D.C.  20037,  who owns 50 shares of Common  Stock of
   Morgan, has indicated that she will introduce the following resolution at the
   meeting:
  
     "RESOLVED:  That the  stockholders of J.P. Morgan  recommend that the Board
     take the necessary  steps so that future outside  directors shall not serve
     for more than six years."

In  support  of the  foregoing  resolution,  the  proponent  states:
   
     "REASONS:  The President of the U.S.A. has a term limit, so do Governors of
     many states.

     "Newer directors may bring in fresh outlooks and different  approaches with
     benefits to all shareholders.

     "No director  should be able to feel that his or her  directorship is until
     retirement.

     "If you AGREE, please mark your proxy FOR this resolution."

   The  affirmative  vote of a majority of the shares of Common  Stock of Morgan
   represented  and voting at the annual meeting is required for approval of the
   foregoing proposal.
 
   THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE ABOVE PROPOSAL.

   The Board of Directors believes that the familiarity with Morgan's operations
   acquired  over a  substantial  period of service as a director  enhances  the
   individual's  ability to  contribute  to the  deliberations  of the Board and
   provides  a  continuity  to  those   deliberations  which  is  beneficial  to
   stockholders.


                                       20

<PAGE>

5 OTHER MATTERS

   The Board of  Directors  of Morgan does not know of any matters  which may be
   presented  at the  meeting  other  than those  specifically  set forth in the
   Notice of Annual  Meeting.  If other  matters  come before the meeting or any
   adjournment  thereof, the persons named in the accompanying form of proxy and
   acting  thereunder  will vote in  accordance  with their best  judgment  with
   respect to such matters.


   SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

   Section 16(a) of the 1934 Act requires Morgan's executive officers, Directors
   and persons who own more than ten percent of a  registered  class of Morgan's
   equity  securities  ("Reporting  Persons") to file  reports of ownership  and
   changes in  ownership on Forms 3, 4 and 5 with the SEC and the New York Stock
   Exchange (the "NYSE"). These Reporting Persons are required by SEC regulation
   to furnish Morgan with copies of all Forms 3, 4 and 5 that they file with the
   SEC and NYSE.

   Based  solely on Morgan's  review of the copies of the Forms it has  received
   and written  representations from certain Reporting Persons,  Morgan believes
   that all of its  Reporting  Persons  complied  with all  filing  requirements
   applicable  to them with  respect to  transactions  during  fiscal year 1996.
   Dennis  Weatherstone  made a late filing in 1996 reporting a contribution  of
   shares to a charitable organization for the fiscal year 1995.

   The expense of the Board of Directors'  proxy  solicitation  will be borne by
   Morgan.  In addition to the use of the mails,  proxies  may be  solicited  by
   personal  interview  or by  telephone.  Banks,  brokerage  houses  and  other
   institutions,  nominees  and  fiduciaries  will be  requested  to forward the
   soliciting material to beneficial owners and to obtain  authorization for the
   execution of proxies; and, if they in turn so request,  Morgan will reimburse
   such banks, brokerage houses and other institutions, nominees and fiduciaries
   for their  expenses in  forwarding  such  material.  Directors,  officers and
   regular  employees  of Morgan or the Bank may also  solicit  proxies  without
   additional remuneration therefor. Morrow & Co., Inc., New York, New York, has
   been retained to aid in the  solicitation of proxies for a fee of $8,500 plus
   out-of-pocket expenses.
                           
   Stockholders are urged to sign the accompanying  form of proxy,  solicited on
   behalf of the Board of  Directors  of  Morgan,  and  return it at once in the
   envelope provided for that purpose.  Proxies will be voted in accordance with
   the  stockholders'  directions.  If no directions are given,  proxies will be
   voted for the election of the nominees for  Directors set forth in this Proxy
   Statement, for the approval of the independent accountants recommended by the
   Board of Directors, and against the stockholder-proposed resolutions relating
   to cumulative voting and director term limits.  The proxy does not affect the
   right to vote in person at the  meeting and may be revoked at any time before
   it is voted.  A stockholder  who wishes to give a proxy to someone other than
   the proxies  designated  by the Board of  Directors  may strike out the names
   appearing  on the  enclosed  form of  proxy,  insert  the name of some  other
   person,  sign the form and transmit it to that person for use at the meeting.
   A plurality  of the votes of the shares of Common  Stock  represented  at the
   annual  meeting  in  person  or by  proxy is  required  for the  election  of
   Directors. Accordingly,  abstentions and broker non-votes will not affect the



                                       21

<PAGE>

   outcome of elections.  The affirmative  vote of the majority of the shares of
   Common  Stock  represented  at the  annual  meeting in person or by proxy and
   entitled  to vote is required  for all other  matters.  Abstentions  for such
   items will be counted  as voting in respect of such item and  therefore  will
   have the effect of a negative vote.  However,  proxies returned by brokers as
   "non-votes"   for  any  item  as  to  which  brokers  may  not  vote  without
   instructions  from the  beneficial  owners  will not be  counted as voting in
   respect of such item.

   Proxies,  ballots and voting tabulations identifying  stockholders are secret
   and will not be  available  to anyone,  except as actually  necessary to meet
   legal requirements.

--------------------------------------------------------------------------------

STOCKHOLDER
PROPOSALS

Proposals of stockholders intended to be presented at the 1998 annual meeting
of  stockholders of Morgan must be received by Morgan not later than November
25,  1997 in order to be included  in the proxy  statement  and form of proxy
relating to such annual meeting.



Dated: March 24, 1997                       Rachel F. Robbins
                                            Secretary


                                       22

<PAGE>



                                                                      EXHIBIT A


EXECUTIVE OFFICERS OF MORGAN

The following  individuals  are the current  executive  officers of Morgan.  The
Chairman of the Board, President,  Chairman of the Executive Committee, and Vice
Chairmen of the Board of Morgan are elected  annually by the Board of  Directors
to serve until the next annual  election of officers and until their  respective
successors  have been elected and have qualified.  All other executive  officers
are elected annually and hold office at the pleasure of the Board of Directors.

<TABLE>
===================================================================================================================================

<CAPTION>
NAME                             AGE       POSITION
-----------------------------------------------------------------------------------------------------------------------------------

<S>                            <C>         <C>                                                                          
Douglas A. Warner III...........50.........Chairman of the Board and President of Morgan and the  Bank. See "Election
                                           of Directors" on page 2.

Roberto G. Mendoza..............51.........Vice Chairman of the Board of Morgan and the Bank. See "Election of Directors" on page 3.

Michael E. Patterson............55.........Vice Chairman of the Board of Morgan and the Bank. See "Election of Directors" on page 4.

Kurt F. Viermetz................57.........Vice Chairman of the Board of Morgan and the Bank. See "Election of Directors" on page 4.

John A. Mayer Jr................57.........Chief Financial Officer of Morgan and the Bank since June 1995; Managing 
                                           Director of Morgan from January 1990 and of the Bank from February
                                           1989 to June 1995.

Rachel F. Robbins...............46.........General Counsel and Secretary of Morgan since February 1996 and Managing Director,
                                           General Counsel and Secretary of the Bank since March 1997; Managing Director of Morgan
                                           and of J.P. Morgan Securities Inc. since January 1988; General Counsel and Secretary of
                                           J.P. Morgan Securities Inc. since January 1986; Deputy General Counsel of Morgan from
                                           July 1992 to February 1996.

David H. Sidwell................43.........Managing Director and Controller of Morgan and the Bank since December 1994; Senior
                                           Vice President and Controller of Morgan and the Bank from April 1994 to December 1994;
                                           Senior Vice President of the Bank from February 1989 to April 1994.

Stephen G. Thieke...............50.........Managing Director and Head of Corporate Risk Management of Morgan since March 1996;
                                           Chairman, Market Risk Committee of Morgan since June 1993 and Chairman of the Board of
                                           J.P. Morgan Securities Inc. since November 1993 and from April 1991 to October 1992;
                                           Managing Director of Morgan from March 1991 to June 1993; President of J.P. Morgan
                                           Securities Inc. from October 1990 to November 1993; Vice Chairman of the Board of J.P.
                                           Morgan Securities Inc. from February 1990 to April 1991 and from October 1992 to
                                           November 1993.
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>



                                      A-1


<PAGE>


                                     [LOGO]
                           Printed on recycled paper.


<PAGE>

P
R
O
X
Y


J.P. MORGAN & CO. INCORPORATED
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
FOR ANNUAL MEETING OF STOCKHOLDERS, MAY 14, 1997

The  undersigned  hereby  constitutes  and appoints E. Deane Leonard,  Edward F.
Murphy and Rachel F. Robbins,  and each of them,  the true and lawful agents and
proxies of the undersigned with full power of substitution in each, to represent
the  undersigned  at the Annual  Meeting of  Stockholders  of J.P.  MORGAN & CO.
INCORPORATED  to be held in Morgan Hall West,  46th floor,  60 Wall Street,  New
York, New York, on Wednesday,  May 14, 1997, at 11 a.m., and at any  adjournment
of said  meeting,  and to vote, as directed on the reverse side of this card, on
all specified matters coming before said meeting, and in their discretion,  upon
such other matters not specified as may come before said meeting.

Election of Directors, Nominees:

Douglas A. Warner III, Riley P. Bechtel, Martin Feldstein,  Hanna H. Gray, James
R. Houghton,  James L. Ketelsen,  John A. Krol,  Roberto G. Mendoza,  Michael E.
Patterson,  Lee R.  Raymond,  Richard  D.  Simmons,  Kurt  F.  Viermetz,  Dennis
Weatherstone and Douglas C. Yearley.

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.  THE  PROXIES  CANNOT  VOTE YOUR
SHARES UNLESS YOU SIGN AND RETURN THIS CARD TO J.P.  MORGAN & CO.  INCORPORATED,
C/O FIRST CHICAGO TRUST COMPANY, P.O. BOX 8212, EDISON, NJ 08818-9079.


                                                             ------------------
                                                                 SEE REVERSE
                                                                     SIDE
                                                             ------------------

<PAGE>

/  X  /   PLEASE MARK YOUR                                           0123
          VOTES AS IN THIS
          EXAMPLE.


THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1 AND 2.
================================================================================
THIS PROXY WILL BE VOTED "FOR" ITEMS 1 AND 2 IF NO CHOICE IS SPECIFIED.
--------------------------------------------------------------------------------

1. Election of
   Directors.
   (see reverse)

For, except vote withheld from the following nominee(s):

--------------------------------------------------------

/ / FOR     / / WITHHELD




2. Approval of independent accountants.

/ / FOR      / / AGAINST      / / ABSTAIN

================================================================================





THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" ITEMS 3 AND 4.

================================================================================
THIS PROXY WILL BE VOTED "AGAINST" ITEMS 3 AND 4 IF NO CHOICE IS SPECIFIED.
--------------------------------------------------------------------------------

3. Stockholder proposal relating to cumulative voting.

/ / FOR      / / AGAINST      / / ABSTAIN



4. Stockholder proposal relating to director term limits.

/ / FOR      / / AGAINST     / / ABSTAIN

================================================================================






SIGNATURE(S) ______________________________________________  DATE ______________
The signer hereby revokes all proxies  heretofore given by the signer to vote at
said  meeting or any  adjournments  thereof.  
NOTE: 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.


--------------------------------------------------------------------------------
                            ^ FOLD AND DETACH HERE ^








                         J.P. Morgan & Co. Incorporated

                                 Annual Meeting
                                       of
                                  Stockholders

                             Wednesday, May 14, 1997
                                   11:00 a.m.

                         J.P. Morgan & Co. Incorporated
                                Morgan Hall West
                                 60 Wall Street
                            New York, N.Y. 10260-0060


                                IMPORTANT NOTICE
                           --------------------------
                     IT IS IMPORTANT THAT YOU VOTE, SIGN AND
                   RETURN THE ABOVE PROXY AS SOON AS POSSIBLE.