WHEN CHEMICAL BANK AND Chase Manhattan Bank combine, 12,000 jobs will be axed. But the banks' directors can't complain. Outside board members from both banks will have spots. Result: The new bank will have 36 directors, becoming the second largest board in Corporate America, according to a review of proxies by the Directorship research group. Securities firm Bear Stearns (37) will remain No.1.

Officials haven't yet figured out what to pay directors of what will be the nation's largest bank (assets: $297 billion). Bank analysts expect the pay package to use each bank's best features: Chemical's salary is higher ($40,000 yearly, vs. $25,000), and Chase has the richer annual stock award (500 shares, vs. 200). Why such a big board? "It will be a larger institution," says a Chemical spokesman, "and we will need them."

Not all agree. "This is unwieldy," says Alyssa Machold, deputy director of the Council of Institutional Investors. "It's hard to imagine them coming to quick decisions." Wall Street analysts say combining the boards was easiest politically. Banks tend to have large boards. By the Investor Responsibility Research Center's estimate, big companies' average board size is 12; for banks, 17. Citicorp, for now the largest bank, has 17. By 1997, Chase-Chemical plans to shrink its board size to 28 through retirements.

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