<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
U.S. TRUST CORPORATION
(Name of Registrant as Specified in Its Charter)
U.S. TRUST CORPORATION
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registrations statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
- ---------------
1Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 2
U.S. TRUST CORPORATION
114 WEST 47TH STREET, NEW YORK, NEW YORK 10036
(212) 852-1000
NOTICE OF
ANNUAL MEETING
OF SHAREHOLDERS
APRIL 26, 1994
The Annual Meeting of Shareholders of U.S. Trust Corporation
(the "Corporation") will be held on Tuesday, April 26, 1994 at
10 A.M., New York time, at the office of United States Trust
Company of New York (the "Trust Company"), 114 West 47th Street,
New York, New York, in the Auditorium on the first floor, for
the following purposes:
1 To elect nine directors, seven to hold office for a term of
three years, one to hold office for a term of two years, one to
hold office for a term of one year, and, in each case, until
their successors have been elected and qualified;
2 To consider and act upon a proposal to ratify the appointment
of Coopers & Lybrand as independent auditors for the Corporation
and its consolidated subsidiaries for the year 1994;
3 To consider and act upon a proposal to approve the assumption
by the Corporation of certain employee benefit plans of the
Trust Company;
4 To consider and act upon a proposal to amend the 1989 Stock
Compensation Plan;
5 To consider and act upon a proposal to amend the 1988
Long-Term Plan and the Long-Term Plan;
6 To consider and act upon a proposal to approve the amended
Board Members' Deferred Compensation Plan; and
7 To consider and act upon such other matters as may properly
come before the meeting or any adjournment thereof.
Only shareholders of record at the close of business on March 8,
1994 are entitled to notice of and to vote at the meeting and at
any adjournment thereof.
Dated: March 11, 1994
Carol A. Strickland
Secretary
SHAREHOLDERS ARE REQUESTED TO MARK,
SIGN, DATE AND RETURN THE PROXY
SUBMITTED HEREWITH IN THE RETURN
ENVELOPE PROVIDED. THE GIVING OF
SUCH PROXY WILL NOT AFFECT A
SHAREHOLDER'S RIGHT TO REVOKE SUCH
PROXY OR TO VOTE IN PERSON SHOULD
THE SHAREHOLDER LATER DECIDE TO
ATTEND THE MEETING.
<PAGE> 3
U.S. TRUST CORPORATION
Proxy
Statement
GENERAL INFORMATION
This proxy statement is furnished in connection with the solicitation of proxies
by the Board of Directors of U.S. Trust Corporation (the "Corporation") to be
used at the Annual Meeting of Shareholders (the "Meeting") of the Corporation
and at any adjournment thereof. The Meeting will be held on April 26, 1994, at
the time and place and for the purposes set forth in the accompanying Notice of
Annual Meeting of Shareholders. Shares represented by properly executed proxies,
if such proxies are received in time for the Meeting and are not revoked, will
be voted at the Meeting in accordance with the instructions thereon, or if no
instructions are given, such shares will be voted as follows: for the election
of directors, for the ratification of the appointment of the Corporation's
independent auditors, for the assumption by the Corporation of certain employee
benefit plans, for the amendments to the 1989 Stock Compensation Plan, for the
amendments to the Predecessor Performance Plans, for the approval of the amended
Board Members' Deferred Compensation Plan, and in the discretion of the proxies
on any other matters to come before the Meeting. A proxy may be revoked by a
shareholder at any time prior to the time the shares are actually voted. Proxies
may be revoked either by written notice to the Corporation, by submission of a
subsequent proxy or by voting in person at the Meeting.
The approximate date on which this proxy statement and the accompanying form of
proxy are being sent to shareholders is March 11, 1994. This proxy statement is
accompanied by the Corporation's 1993 Annual Report to Shareholders.
The Board of Directors has fixed the close of business on March 8, 1994 as the
record date for the determination of shareholders entitled to notice of and to
vote at the Meeting. On the record date, there were 9,373,930 Common Shares of
the Corporation outstanding and entitled to be voted at the Meeting.
PRINCIPAL SHAREHOLDERS
The following table contains information concerning (i) those persons known to
management of the Corporation to be the beneficial owners of more than 5% of the
Corporation's outstanding Common Shares, and (ii) the beneficial ownership of
the Corporation's outstanding Common
1
<PAGE> 4
Shares by United States Trust Company of New York (a wholly-owned subsidiary of
the Corporation) and its affiliates as of the close of business on February 28,
1994:
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT
TITLE OF CLASS OF BENEFICIAL OWNER OWNERSHIP OF CLASS
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
Common Shares Employees' 401(k) Plan and ESOP 1,304,606 shares (in a 13.89
(par value of United States Trust Company fiduciary capacity)(1)
$1 per share) of New York and Affiliated
Companies
114 West 47th Street
New York, New York 10036
GeoCapital Corporation 637,450 shares 6.79
767 Fifth Avenue (with sole dispositive
New York, New York 10153 power)(2)
United States Trust Company 307,722 shares (in 3.28
of New York and Affiliated fiduciary and agency
Companies capacities)(3)
114 West 47th Street
New York, New York 10036
- ------------------------------------------------------------------------------------------------
</TABLE>
(1) These shares consist of 959,232 shares allocated to the individual accounts
of participants in the Employees' 401(k) Plan and ESOP (the "Plan"), who have
voting and dispositive power over such shares, and 345,374 shares which have not
been allocated to participant accounts, as to which shares United States Trust
Company of New York (the "Trust Company"), as Trustee of the Plan, may be deemed
to have voting and dispositive power.
(2) Information herein with respect to GeoCapital Corporation ("GCC") has been
obtained from GCC's filings with the Securities and Exchange Commission pursuant
to Section 13(g) of the Securities Exchange Act of 1934 by GCC, a registered
investment advisor, and Barry K. Fingerhut and Irwin Lieber, by reason of their
ownership interest in GCC. Such filing further discloses that the shares were
acquired in the ordinary course of business and were not acquired for the
purpose of and do not have the effect of changing or influencing the control of
the Corporation and were not acquired in connection with or as a participant in
any transaction having such purpose or effect.
(3) The Trust Company and its affiliates, including the Corporation (together
"U.S. Trust"), have sole voting power as to 16,171 of such shares, shared voting
power as to 42,002 of such shares, sole dispositive power as to 164,742 of such
shares and shared dispositive power as to 142,980 of such shares. The 345,374
shares held in the Plan which have not been allocated to participant accounts as
described in footnote 1, and as to which U.S. Trust may have sole voting and
dispositive power, are not included. As a matter of policy, U.S. Trust votes
shares held in an agency capacity only as directed by its customers, and where
it holds shares as a co-fiduciary, votes such shares as directed by the other
co-fiduciaries. Shares held by U.S. Trust as sole fiduciary are not voted unless
specific voting instructions are given by a donor or beneficiary pursuant to the
governing trust instrument.
Other than as set forth above, management of the Corporation is aware of no
person who, on the record date, was the beneficial owner of more than 5% of the
Corporation's outstanding Common Shares. The total number of the Corporation's
Common Shares beneficially owned by all directors
2
<PAGE> 5
and executive officers of the Corporation as a group amounted to 836,374 shares
(approximately 7.97% of the Corporation's outstanding Common Shares) as of
February 28, 1994.*
VOTES REQUIRED
Each of the Corporation's Common Shares is entitled to one vote upon each matter
to come before the Meeting. The election of directors is by a plurality of the
votes cast. Ratification of the appointment of the Corporation's independent
auditors requires the affirmative vote of a majority of the votes cast. The
assumption by the Corporation of certain employee benefit plans of the Trust
Company, the amendments to the 1989 Stock Compensation Plan and Predecessor
Performance Plans and the approval of the amended Board Members' Deferred
Compensation Plan each require the affirmative vote of a majority of the
outstanding shares (abstentions will thus be the equivalent of negative votes on
these proposals.)
I ELECTION OF DIRECTORS
Nine directors of the Corporation are to be elected at the Meeting, seven to
serve until the annual meeting of shareholders in 1997, one to serve until the
annual meeting of shareholders in 1996, one to serve until the annual meeting of
shareholders in 1995, and, in each case, to serve until their successors have
been elected and qualified.
The Corporation anticipates that the nominees named herein will be available for
election, but if any nominee should be unable to serve, shares represented by
proxies will be voted for an additional nominee to be designated by the Board of
Directors unless the Board reduces the number of directors. All of the nominees
are now directors of the Corporation and, with the exception of Dr. Baum and Ms.
Wooden, previously were elected by the shareholders. All directors of the
Corporation are trustees of the Trust Company and serve parallel terms on both
Boards.
The following table contains information as to the nominees for election as
directors of the Corporation and as to directors who will continue in office,
including name, age, principal occupation, selected biographical information,
all other positions and offices, if any, held by each of them with the
Corporation and the Trust Company, and, under the heading "Number of Shares
Owned," the number of Common Shares of the Corporation beneficially owned by
each of them as of February 28, 1994 (in each case, other than Mr. Munn, such
number represented less than 1% of the Corporation's outstanding Common Shares).
The table also shows the year since which each nominee and each continuing
director has been continuously a director of the Corporation or, in the case of
directors who have been directors of the Corporation continuously since the
acquisition by the Corporation of the outstanding Capital Stock of the Trust
Company, a trustee of the Trust Company:
- ---------------
* Includes shares subject to stock options exercisable within 60 days of
February 28, 1994, and shares attributable to deferred awards under the 1989
Stock Compensation Plan and Predecessor Performance Plans.
3
<PAGE> 6
Nominees
<TABLE>
<CAPTION>
FIRST NUMBER OF
PRINCIPAL OCCUPATION AND BECAME SHARES
NAME (AGE) BUSINESS EXPERIENCE DIRECTOR OWNED(1)(2)
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
TERM EXPIRES IN 1997
Peter O. Crisp (61) General Partner of Venrock 1992 700
Associates (venture capital
limited partnership)
Mr. Crisp has been general partner of Venrock Associates since 1969. He is also a director
of Apple Computer, Inc., American Superconductor Corporation, Evans & Sutherland Computer
Corp., Long Island Lighting Company, Inc., Thermedics Inc., Thermo Electron Corp., Thermo
Power Corporation and ThermoTrex Corp. Mr. Crisp serves as a member of the Board of Managers
of Memorial Sloan-Kettering Cancer Center, Memorial Hospital for Cancer and Allied Diseases
and Sloan-Kettering Institute for Cancer Research. He is a trustee of North Shore University
Hospital and of the Teagle Foundation.
Daniel P. Davison (69) Retired Chairman of the Board 1979 48,095 (3)
of the Corporation and the
Trust Company
Mr. Davison was chairman of the board of Christie, Manson & Woods International, Inc. from
February 1990 to January 1, 1994. He served as president of the Corporation and the Trust
Company from the spring of 1979 until June 1, 1986, as chief executive officer from January
1, 1981 through January 1990 and as chairman of the board from February 1, 1982 until his
retirement in February 1990. Prior to joining U.S. Trust, he was associated with Morgan
Guaranty Trust Company for 23 years, serving as corporate secretary, general manager of its
London office and, in his final position, as executive vice president in charge of the
National Bank Division. Mr. Davison is also a director of The Atlantic Companies, Burlington
Northern, Inc., Christies International, plc and Prime Property Inc. He is a trustee and
treasurer of the Winston Churchill Foundation of the United States, Ltd. and of the Florence
Gould Foundation. Mr. Davison is also vice chairman of The Nature Conservancy and trustee of
The Cooper Union for the Advancement of Science and Art.
Antonia M. Grumbach (50) Partner in Patterson, 1991 1,300
Belknap, Webb & Tyler (law
firm)
Ms. Grumbach joined the law firm of Patterson, Belknap, Webb & Tyler in 1971 and became a
partner of the firm in 1979. She is currently serving as managing partner of the firm. She
is vice chairman of the board of trustees of Teachers College, Columbia University, and a
trustee of Milton Academy, the Sister Fund and the William T. Grant Foundation. Ms. Grumbach
also serves as a director of The Henfield Foundation and served as an initial member of the
Board of Advisors of the New York University program on philanthropy and the law.
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
FIRST NUMBER OF
PRINCIPAL OCCUPATION AND BECAME SHARES
NAME (AGE) BUSINESS EXPERIENCE DIRECTOR OWNED(1)(2)
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
Frederic C. Hamilton (66) Chairman of the Board, 1972 30,825
President and Chief Executive
Officer of Hamilton Oil
Company, Inc. (international
petroleum company)
Mr. Hamilton serves as chairman of the board, president and chief executive officer of
Hamilton Oil Company, Inc., chairman of the board of BHP Petroleum, and chairman of the
board of Tejas Gas Corporation. He is also a director of the American Petroleum Institute
and a member of the National Petroleum Council. Mr. Hamilton is chairman of the Denver Art
Museum Foundation and a trustee of the Denver Art Museum, the Boys' Club Foundation and the
Boy Scouts of America Denver Area Council.
Peter L. Malkin (60) Chairman of Wien, Malkin & 1992 1,200
Bettex (law firm)
Mr. Malkin joined the predecessor law firm of Wien, Malkin & Bettex in 1958 and became a
partner in the firm in 1962. He is also chairman of W & M Properties, Inc. and is a
general partner in the ownership of several New York City buildings, including the Empire
State Building, the Graybar Building, the Lincoln Building, 1185 Avenue of the Americas, and
One Penn Plaza. Mr. Malkin is founding chairman of the Grand Central Partnership and of the
34th Street Partnership, a director of the New York City Chamber of Commerce & Industry, a
member of the New York City Partnership, a member of the Board of Overseers of Harvard
College and a director and member of the Executive Committee of Lincoln Center for the
Performing Arts.
Jeffrey S. Maurer (46) President of the Corporation 1989 20,277(3)(4)(5)
and the Trust Company
Mr. Maurer joined the Trust Company in 1970 and was made manager of the Asset Management and
Private Banking Group in 1988. He was elected senior vice president in November 1980,
executive vice president in May 1986 and president effective February 1990. Mr. Maurer is a
trustee of Alfred University, a director and treasurer of The Children's Health Fund, a
director of The Hebrew Home for the Aged, a member of the Advisory Board of The Salvation
Army of Greater New York and chairman of the Commerce and Industry Division of the Greater
New York Israel Bond Campaign.
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
FIRST NUMBER OF
PRINCIPAL OCCUPATION AND BECAME SHARES
NAME (AGE) BUSINESS EXPERIENCE DIRECTOR OWNED(1)(2)
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
Richard F. Tucker (67) Retired Vice Chairman of the 1983 3,325
Board of Mobil Corporation
(petroleum and chemicals)
Mr. Tucker joined Mobil Corporation in 1961 and retired as vice chairman in May 1991. He was
a director of Mobil from 1971, and president and chief operating officer of Mobil Oil
Corporation from 1986 until his retirement. Mr. Tucker is also a director of The
Perkin-Elmer Corporation. He is trustee emeritus of Cornell University and a life member of
the Board of Overseers of Cornell Medical College. He is also a trustee of the Aldrich
Museum of Contemporary Art, The Teagle Foundation and the Norwalk Hospital. Mr. Tucker is a
member of the National Academy of Engineering, The Council on Foreign Relations, Inc. and
the Woods Hole Oceanographic Institution.
TERM EXPIRES IN 1996
Eleanor Baum (54) Dean of Engineering at The 1994 300
Cooper Union for the
Advancement of Science & Art
Dr. Baum became dean of engineering at Cooper Union in 1987. Prior to that, she was dean of
Pratt Institute in Brooklyn and worked as an engineer at Sperry Rand Corp. and General
Instrument Corp. Dr. Baum is also a director of Allegheny Power Systems. She is on the board
of trustees of the Accreditation Board for Engineering & Technology, is a commissioner of
the Engineering Workforce Commission and is executive director of the Cooper Union Research
Foundation.
TERM EXPIRES IN 1995
Ruth A. Wooden (47) President & Chief Executive 1994 200
Officer of The Advertising
Council, Inc. (not-for-profit
public service advertising)
Ms. Wooden became president and chief executive officer of The Advertising Council in August
1987. Prior to that, she was with NW Ayer, Inc. for eleven years. Ms. Wooden serves as a
trustee of The Edna McConnell Clark Foundation and of St. Luke's Roosevelt Hospital Center.
She is vice chair of CARE, USA, director of the National Elementary School Center and an
advisor to the Columbia Health Sciences Advisory Council and the Columbia University School
of Public Health Advisory Council.
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
FIRST NUMBER OF
PRINCIPAL OCCUPATION AND BECAME SHARES
NAME (AGE) BUSINESS EXPERIENCE DIRECTOR OWNED(1)(2)
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
Directors Continuing In Office
TERM EXPIRES IN 1996
Philippe de Montebello (57) Director of the Metropolitan 1983 800
Museum of Art
Mr. de Montebello has been associated with the Metropolitan Museum of Art since 1963,
serving as associate curator for European paintings from 1963 to 1969, vice director for
curatorial and educational affairs from 1974 to 1977 and as director since 1978. In the
interim of his duties at the Metropolitan, Mr. de Montebello served as director of the
Museum of Fine Arts in Houston from 1969 to 1974. He is a member of the Advisory Board of
the Skowhegan School of Painting and Sculpture and the Columbia University Advisory
Council-Departments of Art History and Archaeology. Mr. de Montebello is a trustee of the
New York University Institute of Fine Arts and the American Federation of Arts.
Edwin D. Etherington (69) President Emeritus of 1969* 8,150
Wesleyan University
Mr. Etherington was president and chief executive officer of the American Stock Exchange
from 1962 to 1966 and president of Wesleyan University from 1966 to 1970. Earlier, after
practicing law in Washington D.C. and New York City, he was vice president of the New York
Stock Exchange and, subsequently, a general partner of Pershing & Co. Mr. Etherington was
president (1971) and chairman (1972) of the National Center for Voluntary Action and for two
years was chairman of the National Advertising Review Board. He is a director of Automatic
Data Processing, Inc. and a trustee of The Schumann Foundation. He also serves as honorary
chairman of the Lymes' Youth Service Bureau.
Donald M. Roberts (58) Vice Chairman of the Board 1986 31,917(3)(4)(5)
and Treasurer of the
Corporation and the Trust
Company
Mr. Roberts was elected treasurer in January 1989 and vice chairman effective February 1,
1990. He is head of the Trust Company's Institutional Services Group. Prior to joining
U.S. Trust in 1979, he was associated with Citibank for 22 years serving as senior vice
president from 1974 to 1979. Mr. Roberts is also a director of York International
Corporation, Burlington Resources, Inc. and the New York Road Runners Club, Inc. He is
president of the Board of Trustees of St. Bernard's School, a trustee of the YWCA of New
York City and a member of The Bridge Fund Advisory Board.
</TABLE>
- ---------------
* Mr. Etherington resigned as a director of the Corporation and trustee of the
Trust Company for health reasons on March 1, 1986. He was re-elected to both
Boards on September 27, 1988.
hffl
7
<PAGE> 10
<TABLE>
<CAPTION>
FIRST NUMBER OF
PRINCIPAL OCCUPATION AND BECAME SHARES
NAME (AGE) BUSINESS EXPERIENCE DIRECTOR OWNED(1)(2)
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
John Hoyt Stookey (64) Chairman of Quantum Chemical 1989 800
Corporation (petrochemicals
and propane)
Mr. Stookey served as president of Quantum Chemical from 1975 to 1993 when Quantum was
acquired by Hanson Industries, Inc. He continues as chairman of the board of Quantum, a
position he has held since 1986. As Chairman of Quantum, Mr. Stookey served from 1989 to
1993 as an executive officer of Petrolane Incorporated, Petrolane Finance Corp. and QJV
Corp., affiliates of Quantum, which companies were reorganized on July 15, 1993 under the
U.S. Bankruptcy Code. Prior to joining Quantum, Mr. Stookey was president of Wallace Clark
Incorporated from 1969 to 1975 and served as the U.S. Representative to both private and
public banks in Mexico. He is also a director of AMAX Inc. and Chesapeake Corporation. Mr.
Stookey is the founder and president of The Berkshire Choral Institute, trustee of the
Glimmerglass Opera and trustee emeritus of the Boston Symphony Orchestra. He is a member of
the New York Academy of Science.
Robert N. Wilson (53) Vice Chairman of the Board of 1991 950
Johnson & Johnson (health
care products)
Mr. Wilson joined Johnson & Johnson in 1964. He was appointed to the Executive Committee in
1983 and was elected to the board of directors in 1986. Mr. Wilson has been vice chairman
of the board of directors of Johnson & Johnson since 1989. He is a member of the Board of
Directors of the Pharmaceutical Manufacturers Association, of the Alliance for Aging
Research and The Georgetown College Foundation, Inc. He also serves as a trustee of the
Museum of American Folk Art and is a member of the Trilateral Commission.
Frederick S. Wonham (62) Vice Chairman of the Board of 1986 30,404(3)(4)(5)
the Corporation and the Trust
Company
Mr. Wonham joined the Trust Company in 1979 as a senior vice president, and was head of the
Personal Asset Management Division until 1982, when he was elected executive vice
president and appointed manager of the Planning, Administration and Computer Services Group.
He was elected vice chairman effective February 1990 and is head of the Funds Services
Group. Between 1974 and 1978, Mr. Wonham was associated with White Weld and Co.,
Incorporated serving as president and chief operating officer from 1975 through 1978.
Earlier, he was associated with G.H. Walker & Co., Incorporated for 19 years, serving as
president and chief executive officer from 1971 to 1974. Mr. Wonham is a trustee of the
Provident Loan Society.
TERM EXPIRES IN 1995
Samuel C. Butler (64) Partner in Cravath, Swaine & 1972 7,562(6)
Moore (law firm)
Mr. Butler joined the law firm of Cravath, Swaine & Moore in 1956 and was elected a partner
of the firm in 1960. He is also a director of Ashland Oil, Inc., Millipore Corporation and
GEICO Corporation. Mr. Butler is a trustee of the New York Public Library and of the Culver
Educational Foundation.
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
FIRST NUMBER OF
PRINCIPAL OCCUPATION AND BECAME SHARES
NAME (AGE) BUSINESS EXPERIENCE DIRECTOR OWNED(1)(2)
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
Paul W. Douglas (67) Retired Chairman of the Board 1978 1,837
of The Pittston Company (coal
mining, transportation and
security services)
Mr. Douglas retired as chairman of the board and chief executive officer of The Pittston
Company in September 1991. Prior to joining Pittston in January 1984, he had been associated
with Freeport-McMoRan Inc. following the merger of Freeport Minerals Company and McMoRan
Oil and Gas Company in April 1981. Formerly, he was director of the internal finance section
of the ECA Mission to France. Mr. Douglas is also a director of Holmes Protection Group,
Inc., MacMillan Bloedel Limited of Vancouver, B.C., New York Life Insurance Company, Phelps
Dodge Corporation and Philip Morris Companies, Inc. He is a member of The Council on Foreign
Relations, Inc. and a trustee of The International Center for the Disabled and of St.
Luke's-Roosevelt Hospital.
Orson D. Munn (69) Chairman and Director of 1982 160,200(7)
Munn, Bernhard & Associates,
Inc. (investment advisory
firm)
Mr. Munn was senior vice president and chief investment officer of Madison Fund, Inc. from
May 1981 through February 1983 and was president of Orson Munn, Inc. from February 1983
until the organization of Munn, Bernhard & Associates, Inc. in November 1990. Previously, he
was president of Piedmont Advisory Corporation and, upon its merger in 1980 with Lexington
Management Corporation, performed the duties of vice chairman and chief investment officer.
Earlier, Mr. Munn was associated with Wood Walker & Co. for 20 years, serving as chief
executive officer of the company from 1972 to 1974. Mr. Munn is a trustee of the Waterfowl
Research Foundation and is a former member of the Financial Advisory Committee of the Garden
Club of America, a former trustee of the Village of Southampton and a former director of
numerous charities.
H. Marshall Schwarz (57) Chairman of the Board and 1977 29,625(4)(5)
Chief Executive Officer of
the Corporation and the Trust
Company
Mr. Schwarz joined the Trust Company in 1967 after a seven-year association with Morgan
Stanley & Co. In 1972, he was elected a senior vice president and head of the Banking
Division. He was elected executive vice president and chief operating officer of the Trust
Company's Bank Group in 1977 and chief operating officer of the Asset Management Group in
1979. Mr Schwarz served as president of the Corporation and the Trust Company from June 1986
through January 1990 and became chairman and chief executive officer effective February 1,
1990. He is also a director of Atlantic Mutual Companies and Bowne & Co., Inc. Mr. Schwarz
is chairman of the board of the American Red Cross in Greater New York and a director of the
United Way of New York City. He is a trustee of Teachers College-Columbia University, Milton
Academy, the Camille and Henry Dreyfus Foundation, Inc. and The Boys' Club of New York.
</TABLE>
9
<PAGE> 12
<TABLE>
<CAPTION>
FIRST NUMBER OF
PRINCIPAL OCCUPATION AND BECAME SHARES
NAME (AGE) BUSINESS EXPERIENCE DIRECTOR OWNED(1)(2)
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
Philip L. Smith (60) Chairman of the Board and 1987 800
Director of the Golden Cat
Corporation (manufacturer of
cat litter and related
products)
Mr. Smith has been chairman of the board and director of the Golden Cat Corporation since
November 1990. He was chairman of the board, president and chief executive officer of The
Pillsbury Company from August 1988 through January 1989. Formerly, he had been associated
with General Foods Corporation for over 20 years, serving in his final position as chairman
of General Foods and director of Philip Morris Companies, Inc. Mr. Smith is also a director
of Whirlpool Corporation and Ecolab Corporation.
Frederick B. Taylor (52) Vice Chairman of the Board 1989 28,457(3)(4)(5)(8)
and Chief Investment Officer
of the Corporation and the
Trust Company
Mr. Taylor joined the Trust Company in 1966. In 1980, he was elected a senior vice president
and, in 1986, he was elected an executive vice president of the Corporation and chairman,
Investment Policy of the Trust Company. Mr. Taylor was elected vice chairman and chief
investment officer effective February 1990. He is a member of the New York Society of
Security Analysts and the Association for Investment Management and Research. Mr. Taylor
serves on the board of counselors of White Plains Hospital and on the senior advisory board
of the New York Chapter of the Arthritis Foundation.
Carroll L. Wainwright, Jr. (68) Consulting Partner in 1981 3,600(3)
Milbank, Tweed, Hadley &
McCloy (law firm)
Mr. Wainwright joined the law firm of Milbank, Tweed, Hadley & McCloy in 1952. After serving
as assistant counsel to the Governor of New York from 1959 through 1960, he returned to
the firm, becoming a partner in 1963, a senior partner in 1986 and consulting partner in
1991. Mr. Wainwright is a trustee of the American Museum of Natural History, trustee and
vice chairman of The Cooper Union for the Advancement of Science and Art and trustee and
former president of The Boys' Club of New York. He is also an adjunct professor at
Washington and Lee University Law School, a trustee of the Edward John Noble Foundation, and
member of the Distribution Committee of The New York Community Trust.
- --------------------------------------------------------------------------------------------
</TABLE>
(1) Share ownership involves sole voting and dispositive power unless otherwise
indicated.
(2) Does not include shares subject to non-employee director stock options
exercisable within 60 days of February 28, 1994 as follows: Messrs. Crisp and
Malkin each 1,650 shares, Mr. Munn 2,000 shares, Mr. Wilson 4,650 shares and
5,000 shares by each of the other non-employee directors (as defined in the
plan) other than Dr. Baum, Mr. Etherington and Ms. Wooden. See "Directors'
Compensation."
(3) Includes 3,155 shares owned by Mr. Roberts' daughter, 2,250 shares owned by
Mr. Wonham's children, 300 shares owned by Mr. Wainwright's wife, 10,254 shares
owned by Mr. Davison's wife,
10
2,500 shares owned by Mr. Maurer's wife, 621 shares held in trust by Mr.
Maurer's wife for their children and 3,989 shares owned by Mr. Taylor's wife,
with respect to which the director in each case disclaims beneficial ownership.
11
<PAGE> 13
(4) Does not include shares subject to employee stock options exercisable within
60 days of February 28, 1994 as follows: Mr. Schwarz 57,500 shares, Mr. Maurer
35,000 shares, Mr. Taylor 27,500 shares, Mr. Roberts 25,900 shares and Mr.
Wonham 18,500 shares.
(5) Does not include shares attributable to deferred awards under the 1989 Stock
Compensation Plan and Predecessor Performance Plans as follows: Mr. Schwarz
71,661 shares, Mr. Maurer 23,117 shares, Mr. Roberts 52,470 shares, Mr. Taylor
6,451 shares and Mr. Wonham 38,501 shares. See "Compensation of Executive
Officers."
(6) Includes 1,250 shares held in a trust of which Mr. Butler is trustee and
5,703 shares held in a trust in which he has a beneficial interest.
(7) Represents approximately 1.71% of the Corporation's outstanding Common
Shares as of February 28, 1994. Includes 2,700 shares held in a trust of which
Mr. Munn is trustee and 149,700 shares held by Munn, Bernhard & Associates, Inc.
for clients of the firm (over which the firm has both voting and dispositive
power), with respect to which Mr. Munn disclaims beneficial ownership.
(8) Includes 270 shares held in a trust of which Mr. Taylor is sole trustee and
in which he has a beneficial interest.
REPORTS OF BENEFICIAL OWNERSHIP
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act") and
rules of the Securities and Exchange Commission (the "Commission") thereunder
require the Corporation's directors and officers to file with the Commission
reports of their beneficial ownership and changes in beneficial ownership of the
Corporation's Common Shares. Personnel of the Corporation generally prepare
these reports for the directors and officers on the basis of information
furnished by them to such personnel. Based on such information and written
representations by the directors and officers that certain reports were not
required, the Corporation believes that all reports required by Section 16(a) of
the Exchange Act and the rules of the Commission thereunder to be filed by its
directors and officers during 1993 were timely filed.
DIRECTORS' AND TRUSTEES' COMMITTEES;
BOARD AND COMMITTEE MEETINGS
The Board of Directors of the Corporation and the Board of Trustees of the Trust
Company (the "Board of Trustees") each has, among others, a standing Executive
Committee, a standing Audit Committee (in the case of the Trust Company, known
as the Examining & Audit Committee) and a standing Compensation and Benefits
Committee. The Executive Committees of the Board of Directors and of the Board
of Trustees are composed of Mr. Schwarz (the Committee Chairman) and six other
Board members, all of whom are appointed annually. The Executive Committees have
the power to act for their respective Boards when such Boards are not in session
and each Executive Committee also serves as a nominating committee. The
Executive Committees will consider nominees for director and trustee recommended
by shareholders who submit the names of recommended nominees and supporting
reasons for such recommendations in writing to the Secretary of the Corporation
or the Trust Company. In addition to Mr. Schwarz, the members of both Executive
Committees are currently Messrs. Butler, Davison, Douglas, Etherington, Maurer
and Wainwright.
The Audit Committee of the Board of Directors of the Corporation and the
Examining and Audit Committee of the Board of Trustees (together, "the Audit
Committee") provide the Boards with an independent review of the Corporation's
and the Trust Company's accounting policies, the adequacy of financial controls
and the reliability of financial information reported to the public. The Audit
Committee also conducts examinations of the affairs of the Corporation and the
Trust
11
<PAGE> 14
Company as required by law or as directed by the Boards, supervises the
activities of the internal Auditor and reviews the services provided by the
independent auditors. (See "Ratification of Appointment of Independent Auditors"
for the names of the members of the Audit Committee, who are appointed
annually.)
The Compensation and Benefits Committees of the Board of Directors and the Board
of Trustees (together, the "Compensation Committee") determine compensation and
benefits for officer-trustees, review salary and benefits changes for other
senior officers and review employee benefit plans under the Employee Retirement
Income Security Act of 1974 and other employee benefit plans. (See "Compensation
Committee Interlocks and Insider Participation" below for the names of the
members of the Compensation Committee, who are appointed annually.)
During 1993, the Executive Committees of the Board of Directors and Board of
Trustees met two times, the Compensation Committee met three times and the Audit
Committee met seven times.
Both the Board of Trustees and the Board of Directors held ten meetings in 1993.
Other than Mr. Hamilton, no member of the Board of the Corporation or of the
Trust Company attended in 1993 fewer than 75% of the aggregate of (1) the total
number of meetings of the Boards held during the period for which he or she has
been a director or trustee and (2) the total number of meetings held by all
committees on which he or she served.
DIRECTORS' COMPENSATION
Each director of the Corporation who is not also an officer of the Corporation
or of the Trust Company receives a retainer fee of $15,000 per year and an
attendance fee of $1,000 for each meeting attended of the Board of Directors of
the Corporation, of the Board of Trustees, of the Executive Committee of each
Board and of the committees of the Board of Trustees other than those mentioned
below. If the Boards or the Executive Committees of the Corporation and the
Trust Company meet on the same day, only one fee is paid to a director-trustee
for attendance at both meetings. Under the Stock Plan for Non-Officer Directors,
each director of the Corporation who is not also an officer of the Corporation
or of the Trust Company receives 100 Common Shares of U.S. Trust Corporation
each February as an additional part of his or her annual retainer fee.
The Chairman of the Audit Committee receives an annual retainer of $12,500 and
each member of such Committee receives an annual retainer of $10,000. The
Chairman of the Compensation Committee receives an annual retainer of $10,000
and each member of such Committee receives an annual retainer of $7,000. All
directors and trustees are reimbursed for travel and other out-of-pocket
expenses incurred by them in attending board or committee meetings.
Directors who are not also officers of the Corporation or of the Trust Company
may defer cash compensation (including meeting attendance fees) for services
rendered as directors of the Corporation or trustees of the Trust Company or as
members of any Board committee. Interest equivalents are credited to an unfunded
directors' deferred compensation account on the last business day of each
calendar quarter at the prime rate of the Trust Company then in effect. (See
"Approval of Amended Board Deferred Plan" below for a description of the amended
and restated Deferred Compensation Plan for Board Members of United States Trust
Company of New York and Affiliated Companies under which, effective January 1,
1994, eligible directors would have the same investment options for the
crediting of earnings on their deferred compensation as would be available under
certain executive compensation plans as proposed to be amended.)
Directors who are not officers of the Corporation or of the Trust Company who
retire from the Board at age 72 with 10 or more years of Board service are paid
an annual retirement benefit for life equal to the annual retainer as a Board
member received in his or her last full year of Board membership. Directors with
less than 10 years of service who retire at age 72 and directors with 15
12
<PAGE> 15
or more years of service who retire prior to age 72 are paid the same annual
benefit for the lesser of the number of years he or she served on the Board or
for life.
Under the Stock Option Plan for Non-Employee Directors of U.S. Trust Corporation
(the "Directors Plan"), a maximum of 125,000 Common Shares of the Corporation
are reserved for grants of options to members of the Board of Directors who are
not full-time employees of the Corporation, the Trust Company or any of their
affiliated companies, who have not been such full-time employees for the
previous two years and who have never been members of the Board of Directors
while being employed full-time by the Corporation, the Trust Company or any of
their affiliated companies (the "Non-Employee Directors"). Each person who
either was a Non-Employee Director at the time of the adoption of the Directors
Plan in April 1989 or who subsequently became a Non-Employee Director has been
granted an option to purchase 5,000 Common Shares. Each person who hereafter
becomes a Non-Employee Director will be granted an option, effective on the date
of becoming a Non-Employee Director, to purchase 5,000 Common Shares, subject to
reduction in the event of an insufficiency of available shares under the
Directors Plan.
Options granted under the Directors Plan are granted for a period of ten years.
The exercise price per share is the fair market value, as defined in the
Directors Plan, of a Common Share on the date of grant. Each option becomes
exercisable in three equal, cumulative installments on each of the first three
anniversary dates of the date the option was granted. Except in the event of a
"change in control" of the Corporation, as defined in the Directors Plan, full
payment of the exercise price for shares subject to an option must be made in
cash at the time of exercise.
In the event of a change in control of the Corporation, all options under the
Directors Plan will be accelerated and become fully exercisable, and optionees
will be permitted to pay the exercise price in cash, or in Common Shares of the
Corporation valued at their then fair market value, or a combination of cash and
Common Shares. In addition, all options that were granted at least six months
prior to the date of such change in control will be cancelled in return for a
cash payment equal to the excess of the aggregate Determined Value (as defined
in the Directors Plan) of the Common Shares subject to the option over the
aggregate option exercise price of such Common Shares. The Board of Directors
may direct that any of the foregoing change in control provisions not become
effective by adopting a resolution to such effect prior to the date of a change
in control (or not later than 45 days thereafter in certain circumstances).
COMPENSATION OF EXECUTIVE OFFICERS
Compensation Committee Interlocks and Insider Participation
During 1993, the following non-employee directors served as members of the
Compensation Committee: Mr. Philip L. Smith (the Committee Chairman), Mr. Samuel
C. Butler, Mr. Peter O. Crisp, Ms. Antonia M. Grumbach, Mr. Frederic C. Hamilton
and Mr. Richard F. Tucker. The law firm of Cravath, Swaine & Moore, of which Mr.
Butler is a partner, and the law firm of Patterson, Belknap, Webb & Tyler, of
which Ms. Grumbach is a partner, performed legal services for the Corporation or
the Trust Company in 1993. Mr. Butler and Ms. Grumbach resigned as members of
the Compensation Committee in September 1993.
Report on Executive Compensation
The Compensation Committee is responsible for the administration of U.S. Trust's
executive compensation program, with oversight review by the Board of Directors
and Board of Trustees. The Compensation Committee determines salary, bonus,
stock options, restricted stock, performance share units and other benefits for
senior officers of U.S. Trust, in each case (other than the Chief Executive
Officer) upon the recommendation of the Chief Executive Officer.
13
<PAGE> 16
COMPENSATION STRATEGY AND PROGRAM. U.S. Trust is committed to attracting,
motivating and encouraging long-term employment of high-caliber,
service-oriented individuals. The Compensation Committee expects and seeks
excellence in performance and uses the compensation program as a means to
reward superior achievement. The Compensation Committee manages compensation to
support the long-term interests of U.S. Trust and its shareholders by adhering
to the following basic strategic principles:
o Compensation at all levels will be competitive with comparable
organizations and will reward employees on the basis of their performance
and contribution to U.S. Trust.
o U.S. Trust's benefits package will be competitive and designed to
encourage a career commitment to U.S. Trust.
o Total incentive compensation paid will be based on overall corporate
performance; individual and unit performance will determine the
allocation of the total among selected participants.
o As an employee moves up at U.S. Trust, a larger proportion of his or her
total compensation will be incentive compensation which will be
influenced in large part by the market value of U.S. Trust Common Shares.
Incentive compensation at the executive officer level may exceed by
several times the executive's base salary, while for the great majority
of employees, incentive compensation is unlikely to exceed their base
salary. One-half or more of each executive officer's incentive
compensation is likely to be earned based on the value of U.S. Trust
Common Shares.
o U.S. Trust encourages employee ownership of U.S. Trust Common Shares and
has therefore established an ESOP and other stock-based incentive
compensation plans. The Compensation Committee believes that the
performance of U.S. Trust is best when employees think like owners.
Acceptance of U.S. Trust's ownership philosophy is a requirement for
advancement to senior management positions; senior management will be
expected over time to build and maintain significant ownership positions
in U.S. Trust Common Shares.
Salaries are administered to provide a level of base compensation that is
competitive with that available at other high caliber institutions. Annual
salary increases generally reflect improved individual performance, increased
responsibilities and changes in the competitive marketplace. These factors
involve subjective judgments made by the Compensation Committee and are not
weighted. For competitive comparisons, the Committee considers companies in the
peer group used for the performance graph below as well as other financial
organizations in the New York metropolitan area. This competitive information is
reviewed by the Compensation Committee after salaries have been preliminarily
determined merely to assure that salaries are not "out of line."
Annual incentive compensation is paid under the 1990 Annual Incentive Plan (the
"Annual Plan") based on the attainment of annual corporate and personal
performance objectives established at the beginning of each year. As to
corporate performance, the aggregate incentive compensation pool is determined
by the Compensation Committee on the basis of the Corporation's absolute return
on equity (ROE) and ROE ranking in relation to other banking organizations
included in the peer group referred to above. In 1993, U.S. Trust placed in the
top quartile in ROE ranking and exceeded its absolute ROE target for the year.
The Compensation Committee selected ROE as the performance measure because the
Committee believes that the effective use of shareholder capital is the
principal test of management performance, and that a high ROE has a positive
influence on the market value of the Corporation's Common Shares. Individual
awards are based on the Compensation Committee's assessment of personal
achievement of objectives by members of management, such as attainment of
long-term goals for their business units, client satisfaction, new business
development and results achieved in relation to budget. Arithmetic criteria are
not used in determining cash compensation.
14
<PAGE> 17
Long-term incentive compensation at U.S. Trust is generally granted in three
forms: stock options, restricted stock and performance share units. The grants
are designed to align a significant portion of executive compensation with
shareholder interests. Stock awards to executive officers are generally in the
form of performance share units and stock options, which carry an exercise price
equal to the fair market value of the Common Shares at the time of grant. The
size of each executive officer's stock option award is not based on arithmetic
criteria but rather is based on the Compensation Committee's assessment of the
individual's potential long-term contribution to U.S. Trust's results, taking
into account the number of options and shares currently held by that individual.
Executive officers generally are strongly encouraged to hold shares obtained
through the exercise of stock options consistent with U.S. Trust's commitment to
substantial stock ownership by its executives.
Performance share units, which are phantom shares of U.S. Trust Corporation
stock, are granted annually under the 1989 Stock Compensation Plan and earned
over a three-year performance cycle from 0% to 100% based on achievement of
earnings and ROE goals (both in absolute terms and in relation to other banking
organizations). The value of awards to executives is based on the number of
performance share units earned and the value per share of U.S. Trust's Common
Shares during the last month of the performance cycle. Dividend equivalents are
paid and reinvested in additional performance share units during the performance
cycle. The number of performance share units initially granted is based on a
guideline percentage of salary, divided by the stock price at the time of grant.
CEO COMPENSATION FOR 1993. The salary paid in 1993 to H. Marshall Schwarz,
Chairman and Chief Executive Officer ("CEO"), was $517,308. Mr. Schwarz's salary
reflects the Compensation Committee's review of competitive and internal
compensation levels, as well as its belief that executive compensation should be
influenced by both short and long-term operating results and should reflect both
short and long-term incentives rather than salary alone.
Cash awards were paid under the Annual Plan to Mr. Schwarz and other executive
officers. Amounts reflect the fact that U.S. Trust exceeded its ROE goal and
placed in the top quartile in a ranking of the peer group of banking companies
on relative ROE in 1993. Subjective assessments by the Compensation Committee of
individual performance were considered in the determination of specific
individual awards.
The performance share earn out for the 1991-93 cycle was 100% of the initial
grant amount reflecting 100% achievement of goals for absolute EPS growth,
relative ROE and absolute ROE performance against peers.
In summary, the Compensation Committee believes it has a comprehensive and
competitive executive compensation program with an appropriate balance between
salary and short and long-term incentives and with an emphasis on stock-based
compensation.
Respectfully submitted,
Philip L. Smith, Chairman
Peter O. Crisp
Frederic C. Hamilton
Richard F. Tucker
15
<PAGE> 18
The following table sets forth the compensation paid or accrued during 1993,
1992 and 1991 to the CEO and the four other most highly compensated executive
officers (during 1993) for services rendered in all capacities to the
Corporation and to the Trust Company and their affiliates.
Summary Compensation Table
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL ------------------------------
COMPENSATION
------------------------- AWARDS PAYOUTS
OTHER -------------------- ---------
ANNUAL RESTRICTED STOCK LONG-TERM ALL OTHER
COMPEN- STOCK OPTION INCENTIVE COMPEN-
NAME AND PRINCIPAL SALARY BONUS SATION AWARDS AWARDS PAYOUTS SATION(1)
POSITION YEAR ($) ($) ($) ($) (#) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
H.M. Schwarz 1993 517,308 304,135 0 0 10,000 545,015 89,641
Chairman, CEO 1992 485,192 305,740 0 0 0 221,688 28,451
1991 464,846 297,109 0 0 0 112,921 30,374
J.S. Maurer 1993 381,538 205,923 0 0 6,000 370,669 61,175
President 1992 359,423 212,029 0 0 15,000 150,617 20,737
1991 344,885 209,307 0 0 0 76,222 22,332
F.B. Taylor 1993 351,539 187,423 0 0 5,000 307,670 48,860
Vice Chairman, 1992 329,423 183,529 0 0 12,000 126,057 18,527
Chief Investment 1991 314,904 181,106 0 0 0 73,203 20,112
Officer
D.M. Roberts 1993 327,769 153,612 0 0 5,000 302,785 455,892
Vice Chairman, 1992 316,923 159,154 0 0 0 126,057 44,726
Treasurer 1991 309,923 156,405 0 0 0 77,716 35,707
F.S. Wonham 1993 327,769 153,612 0 0 5,000 302,785 162,723
Vice Chairman 1992 316,923 159,154 0 0 0 126,057 25,462
1991 309,923 156,405 0 0 0 76,222 24,293
- -----------------------------------------------------------------------------------------------
</TABLE>
(1) See following table for identification and amounts of components.
16
<PAGE> 19
The following table lists for each of the named executives the payments that
comprise the "All Other Compensation" amounts found in the Summary Compensation
Table.
All Other Compensation
<TABLE>
<CAPTION>
SPECIAL
ADJUSTMENT
EMPLOYER BENEFIT EARNINGS ON TO DEFERRED
CONTRIBUTION EQUALIZATION DEFERRED AWARD
TO ESOP(1) UNITS(2) AWARDS(3) BALANCES(4) TOTAL
NAME YEAR ($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
H.M. Schwarz 1993 11,792 14,073 2,668 61,108 89,641
J.S. Maurer 1993 11,792 7,285 1,761 40,337 61,175
F.B. Taylor 1993 11,792 5,785 1,309 29,974 48,860
D.M. Roberts 1993 11,792 4,596 18,387 421,117 455,892
F.S. Wonham 1993 11,792 4,596 6,122 140,213 162,723
- ----------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents the amount of the employer contribution made to the ESOP portion
of the 401(k) Plan and ESOP on behalf of each of the named executive officers
for the year indicated.
(2) Represents the amount of the employer contribution, otherwise required under
the ESOP portion of the 401(k) Plan and ESOP, that could not be made to the Plan
on behalf of the named executive officers for the years indicated due to certain
limitations imposed under the Internal Revenue Code of 1986 (the "Code
Limitations"). Under the 1989 Stock Compensation Plan (the "Stock Plan"), each
executive officer was credited with "benefit equalization units" having an
aggregate market value (determined as of the last business day of the applicable
year) equal to the dollar amount (shown in the column above) that could not be
contributed to the 401(k) Plan and ESOP on the officer's behalf for each of the
years indicated due to the Code Limitations. Under the terms of the Stock Plan,
each such officer will receive, upon termination of employment, one Common Share
of the Corporation for each benefit equalization unit so credited and for each
additional benefit equalization unit that is credited to the officer's plan
account in respect of dividend equivalents on all previously credited benefit
equalization units.
(3) Represents that portion of the interest accrued on certain previously
deferred incentive plan cash awards which is "above market" interest as defined
in the rules of the Securities and Exchange Commission.
(4) Represents a special adjustment made as of January 1, 1993 to the deferred
award balances of all active employees who had been participants in two
incentive award plans maintained in prior years. Prior to 1993, interest on
deferred awards was credited at a rate equal to the Corporation's ROE. In
December 1992, as a result of the Corporation's ROE reaching 19% (as compared
with an ROE rate of only 11.1% in 1980 when these plans were established) and
with even higher ROE rates possible for future years, management concluded that
the cost of continuing to credit interest at the full ROE rate would be
prohibitive. Accordingly, the plans were amended effective as of January 1, 1993
to reduce the interest crediting rate to 50% of the Corporation's annual ROE,
subject to a minimum rate of 5% (or the full ROE rate if less than 5%) and a
maximum rate of 15%. In order to lessen the effect of this reduction on
participants, the plans were also amended to provide for a one-time 50% increase
in the balances of the deferred awards at December 31, 1992. Management believes
that the net effect of the reduction in crediting rate and the increase in
account balances will be to achieve substantial long-term savings in the costs
associated with these plans.
17
<PAGE> 20
STOCK OPTIONS. The following table sets forth certain information concerning
options granted during 1993 to the executive officers named in the Summary
Compensation Table, including potential gains that these officers would realize
under two stock price growth-rate assumptions compounded annually. Under the 5%
growth-rate assumption, the indicated values would be realized if the stock
price reached $87.76 per share at the end of the option term (10 years from
grant). Correspondingly, under the 10% growth-rate assumption, the indicated
values would be realized if the stock price reached $139.75 per share.
Option Grants in 1993
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------- POTENTIAL REALIZABLE
NUMBER OF % OF TOTAL EXERCISE VALUE
SECURITIES OPTIONS PRICE PER AT ASSUMED ANNUAL
UNDERLYING GRANTED TO SHARE RATES OF STOCK PRICE
OPTIONS EMPLOYEES (MARKET APPRECIATION FOR
GRANTED(2) IN PRICE AT OPTION TERM(1)
(# OF FISCAL DATE OF EXPIRATION --------------------
NAME SHARES) YEAR GRANT)($) DATE 5% ($) 10% ($)
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
H.M. Schwarz 10,000 5.6% 53.88 01/26/03 338,800 858,700
J.S. Maurer 6,000 3.3% 53.88 01/26/03 203,280 515,220
F.B. Taylor 5,000 2.8% 53.88 01/26/03 169,400 429,350
D.M. Roberts 5,000 2.8% 53.88 01/26/03 169,400 429,350
F.S. Wonham 5,000 2.8% 53.88 01/26/03 169,400 429,350
- ----------------------------------------------------------------------------------------------------
</TABLE>
(1) Annual growth-rate assumptions are prescribed by rules of the Securities and
Exchange Commission and do not reflect actual or projected price appreciation of
U.S. Trust Corporation Common Shares. The actual average annual price
appreciation of U.S. Trust Common Shares over the last ten years was 13.67%.
(2) Options become exercisable in four equal, cumulative installments in each of
the first through fourth anniversary dates of the date of grant (January 26,
1993).
The following table discloses the aggregated stock option exercises for each of
the named executive officers in the last fiscal year. It also shows the number
of vested and unvested unexercised options and the value of vested and unvested
unexercised in-the-money options.
Aggregated Option Exercises in 1993 and Year-End Option Values
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES YEAR-END(#) YEAR-END($)(2)
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE(#) REALIZED($)(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
H.M. Schwarz -- -- 57,500/25,500 1,023,125/305,938
J.S. Maurer -- -- 35,000/28,000 643,438/307,188
F.B. Taylor 1,000 30,250 27,500/22,500 500,155/235,969
D.M. Roberts 1,500 48,915 25,900/13,500 522,060/167,344
F.S. Wonham -- -- 18,500/13,500 329,530/167,344
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Aggregate market value on the date(s) of exercise less aggregate exercise
price.
(2) Total value of unexercised options is based on the difference between
aggregate market value of U.S. Trust Corporation Common Shares at $52.50 per
share, the closing price on December 31, 1993, and aggregate exercise price.
18
<PAGE> 21
PERFORMANCE SHARE UNITS. The Stock Plan permits the Compensation Committee to
make grants of performance share units. In recognition of the longer-term nature
of many policy decisions, performance share units are earned over a period of
three years (a "Performance Cycle") to the extent that pre-established
performance goals for the Corporation are met. Such performance goals are
currently comprised of a formula based on compound growth in the Corporation's
earnings per share and the Corporation's return on equity, both in absolute
terms and in relation to other banks and bank holding companies included in the
peer group used for the performance graph below.
In granting awards of performance share units, the Compensation Committee first
allocates a dollar amount to each participant based on a percentage of the
participant's base salary at the commencement of the Performance Cycle (the
percentage used for the CEO is higher than those used for other executive
officers). Such dollar amount is then converted into performance share units by
dividing such amount by the Average Market Value of one Common Share during the
month preceding the month in which the Performance Cycle begins. ("Average
Market Value" is the daily mean between the high and low prices of a Common
Share as quoted on the NASDAQ National Market System.) Additional performance
share units are credited to a participant to reflect all dividends on the Common
Shares with record dates occurring during the Performance Cycle. The amount
payable to a participant at the end of a Performance Cycle is equal to the
number of performance share units earned in accordance with the attainment of
performance goals for that Performance Cycle, multiplied by the Average Market
Value of one Common Share during the month in which the Performance Cycle ends.
The Summary Compensation Table, under the column heading "Long-Term
Compensation -- Payouts -- Long-Term Incentive Payouts," shows the dollar value
of awards earned by the named executive officers for the three Performance
Cycles which ended at the end of 1991, 1992 and 1993.
Earned awards are paid as soon as practicable after the end of the Performance
Cycle unless a participant previously has elected in writing to defer the
receipt of all or part of an earned award. Awards which are not deferred are
paid in a combination of cash and Common Shares determined by the Compensation
Committee in its sole discretion, provided that not less than one-half of the
value of any non-deferred payment may consist of Common Shares. At the election
of the participant, deferred awards are either (i) converted into "phantom share
units," which will thereafter fluctuate in value according to changes in the
market value of the Common Shares, or (ii) credited with interest compounded
quarterly, at such rate as the Compensation Committee shall select. (See
"Approval of Amendments to the Stock Plan -- Proposed Amendments -- Investment
Options for Deferred Performance Awards" below for a description of a proposed
amendment to the Stock Plan under which, effective January 1, 1994, participants
may elect to have their deferred awards credited with earnings on the basis of
the performance of certain investment accounts, rather than interest at the
Trust Company's prime rate. See also "Executive Deferred Compensation Plan"
below.) The Stock Plan provides, however, that at least 50% of the value of a
participant's deferred awards must be converted into phantom share units, and
100% of such value will be converted into phantom share units if the participant
shall have failed to file an election within the time prescribed by the Stock
Plan (not later than 60 days prior to the end of the Performance Cycle).
The number of phantom share units into which deferred awards are converted is
equal to the dollar amount of the portion of the deferred award to be converted,
divided by the Average Market Value of one Common Share during the month in
which the Performance Cycle ends. Additional phantom share units are issued in
payment of dividend equivalents on phantom share units already issued.
19
<PAGE> 22
Payments with respect to deferred awards are made in ten annual installments
commencing on the last day of February of the year following the year in which
the participant retires or otherwise terminates employment. Such payments will
consist of Common Shares (to the extent the participant elected to defer awards
in the form of phantom share units) and cash (to the extent the participant
elected to defer awards in the form of investment accounts).
Long-Term Incentive Awards Granted In 1993
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS OF PERFORMANCE SHARE
NUMBER OF PERFORMANCE UNITS
PERFORMANCE PERIOD UNTIL -----------------------------------------------
NAME SHARE UNITS(#) PAYOUT THRESHOLD(#)(1) TARGET(#)(2) MAXIMUM(#)(2)
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
H.M. Schwarz 6,136 3 years 1,023 6,136 6,136
J.S. Maurer 4,162 3 years 694 4,162 4,162
F.B. Taylor 3,477 3 years 561 3,477 3,477
D.M. Roberts 3,293 3 years 549 3,293 3,293
F.S. Wonham 3,293 3 years 549 3,293 3,293
- -----------------------------------------------------------------------------------------------
</TABLE>
(1) Assumes minimum number of performance share units earned in each performance
goal for 1993-95 performance cycle.
(2) Assumes all specified performance targets are reached.
20
<PAGE> 23
PERFORMANCE GRAPH. The graph below compares the annual change in the cumulative
total return on U.S. Trust Common Shares with the annual change in the
cumulative total returns of the Standard & Poor's Composite -- 500 Stock Index
and a group of U.S. Trust peer companies. The peer companies are banking
organizations selected on the basis of their similarity to U.S. Trust in having
a high percentage of revenues from fees generated by personal trust business and
other fee-based services. The peer group consists of The Bank of New York
Company, Inc., Bankers Trust New York Corporation, Boatmen's Bancshares, Inc.,
Comerica Incorporated, CoreStates Financial Corp, Fleet/Norstar Financial Group,
Mellon Bank Corporation, Mercantile Bancorporation Inc., Mercantile Bankshares
Corporation, J.P. Morgan & Co., Incorporated, NBD Bancorp, Inc., Northern Trust
Corporation, PNC Financial Corp, Society Corporation, State Street Boston
Corporation, Sun Trust Banks, Inc. and Wilmington Trust Company.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG U.S. TRUST, S&P 500 AND BANK PEER GROUP**
[GRAPH]
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) U.S. TRUST S&P 500 PEER GROUP
<S> <C> <C> <C>
1988 100.0 100.0 100.0
1989 101.6 131.6 121.1
1990 89.2 127.5 106.6
1991 129.3 166.2 181.2
1992 153.6 178.8 218.2
1993 168.9 196.7 225.3
</TABLE>
* Assumes that the value of the investment in U.S. Trust Common Shares, the S&P
500 index and the peer group was $100 on December 31, 1988, and that all
dividends were reinvested.
** The return of each member of the peer group has been weighted according to
its respective stock market capitalization.
RETIREMENT BENEFITS. Each of the executive officers named in the Summary
Compensation Table is a participant in The Employees' Retirement Plan of United
States Trust Company of New York and Affiliated Companies (the "Retirement
Plan"). The Retirement Plan is a defined benefit pension plan which is tax
qualified under Section 401(a) of the Internal Revenue Code. The Retirement Plan
provides for payment of a pension in an annual amount equal to a specified
percentage (based on the length of a participant's credited service up to a
maximum of 35 years) of the participant's average base salary for his highest
five consecutive years of base salary during the last ten plan years prior to
retirement or other termination of employment, reduced by a portion of the
participant's annual Social Security benefit. The table below shows the
estimated annual pension payable under the Retirement Plan's benefit formula
upon retirement at age 65 to persons in specified remuneration and
years-of-service classifications who have elected to receive their pensions
under a
21
<PAGE> 24
straight life annuity option. The amounts shown do not reflect reductions which
would be made to offset Social Security benefits.
<TABLE>
<CAPTION>
HIGHEST CONSECUTIVE
FIVE-YEAR ESTIMATED ANNUAL PENSION FOR REPRESENTATIVE
AVERAGE BASE SALARY YEARS OF CREDITED SERVICE
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------
15 25 35 OR MORE
- --------------------------------------------------------------------------------------------
$300,000 $101,250 $150,000 $180,000
350,000 118,125 175,000 210,000
400,000 135,000 200,000 240,000
450,000 151,875 225,000 270,000
500,000 168,750 250,000 300,000
550,000 185,625 275,000 330,000
600,000 202,500 300,000 360,000
- --------------------------------------------------------------------------------------------
</TABLE>
The table below sets forth the number of years of credited service and the
average base salary, in each case as of the end of 1993, that would be taken
into account in determining the pension payable under the Retirement Plan's
benefit formula to each of the executive officers named in the Summary
Compensation Table.
<TABLE>
<CAPTION>
AVERAGE
YEARS BASE
NAME OF SERVICE SALARY
<S> <C> <C>
- ---------------------------------------------------------------------------------------------
H.M. Schwarz 26.9 $457,000
J.S. Maurer 23 340,000
F.B. Taylor 27.6 315,000
D.M. Roberts 14 305,800
F.S. Wonham 14.5 303,200
- ---------------------------------------------------------------------------------------------
</TABLE>
The amount of compensation taken into account in determining each executive
officer's pension under the Retirement Plan's formula, as shown in the third
column of the table above, represents the average of the rates of base salary in
effect for such officer as of the last day of each of the years 1989 through
1993. In the case of each such officer, the base salary amounts so taken into
account for the years 1991, 1992 and 1993 differ from the amounts shown in the
"Salary" column of the Summary Compensation Table for these years, in that the
latter amounts represent the base salary actually earned by the officer during
each such year, rather than the rate of base salary in effect for the officer at
the end of that year.
The pension amounts otherwise payable from the Retirement Plan are subject to
reduction to the extent necessary to comply with the applicable Code
Limitations. However, in the case of each executive officer named in the Summary
Compensation Table, any pension amount otherwise payable under the Retirement
Plan's benefit formula that cannot be paid to such officer from the Retirement
Plan because of the Code Limitations will be paid to the officer under the Trust
Company's Benefit Equalization Plan or under a supplemental pension agreement
the Trust Company has entered into with each such officer. In addition, the
supplemental pension agreements of Mr. Wonham and Mr. Roberts provide, in
effect, that if such officer retires on or after his normal retirement date (age
65) with less than 25 years of credited service, he will receive a supplemental
pension from the Trust Company in such amount as may be necessary for the total
pension amount payable to him under the Retirement Plan, the Benefit
Equalization Plan, any retirement plan maintained by any previous employer and
under his supplemental pension agreement with the Trust Company, to be at least
equal to the pension amount that would have been payable to him under the
Retirement Plan (without regard to the Code Limitations) if he had had 25 years
of credited service at the time of his retirement.
22
<PAGE> 25
CHANGE IN CONTROL PROVISIONS. Various compensation and benefit plans under
which the executive officers named in the Summary Compensation Table are covered
contain provisions pursuant to which payment of the benefits provided under the
plan would be accelerated in the event of a "change in control" of the
Corporation (as defined in the Stock Plan), unless the Board of Trustees
otherwise determines prior to the date of the change in control (or not later
than 45 days thereafter in certain circumstances). As defined in the Stock Plan,
a "change in control" means that any of the following events has occurred: (i)
20% or more of the Common Shares have been acquired by any person (as defined by
Section 3(a)(9) of the Securities Exchange Act of 1934) other than directly from
the Corporation; (ii) there has been a merger or equivalent combination after
which 49% or more of the voting stock of the surviving corporation is held by
persons other than former shareholders of the Corporation; or (iii) 20% or more
of the directors elected by shareholders to the Board of Directors of the
Corporation are persons who were not nominated by management in the most recent
proxy statement of the Corporation.
Specifically, upon such a change in control (a) the restrictions applicable to
all restricted stock previously awarded under the Stock Plan would lapse, and a
cash payment would be made for each share of restricted stock equal to the
Determined Value (as defined in the Stock Plan) of a Common Share of the
Corporation; (b) each stock option granted under the Stock Plan at least six
months prior to the change in control would be cancelled in return for a cash
payment equal to the excess of the Determined Value of the Common Shares subject
to the option over the aggregate purchase price of such Common Shares under the
terms of the option; (c) all other stock options outstanding under the Stock
Plan would become immediately and fully exercisable; (d) all performance share
units awarded under the Stock Plan for the performance cycle in which the change
in control occurs would be deemed to have been earned in full, and a cash
payment would be made for each such performance share unit in an amount equal to
the Determined Value of a Common Share of the Corporation; (e) all previously
deferred awards of performance share units under the Stock Plan would become
immediately payable in the form of a cash payment in an amount equal to the sum
of the Interest Portion (as defined in the Stock Plan) of such awards and the
Determined Value of the number of Common Shares of the Corporation corresponding
to the number of units included in the Phantom Share Unit Portion (as defined in
the Stock Plan) of such awards; (f) all benefit equalization units granted under
the Stock Plan would become immediately payable in the form of a cash payment in
an amount equal to the Determined Value of the number of Common Shares of the
Corporation corresponding to the number of benefit equalization units credited
to the participant; (g) all awards under the Annual Plan for the year in which
the change in control occurs would be deemed to have been earned in full, and
would be immediately payable in the form of a cash payment; and (h) all
previously-deferred awards under the predecessor to the Annual Plan and under
the Trust Company's Long-Term Performance Plans would become immediately payable
in the form of a cash payment, and in the case of deferred awards under the
Long-Term Performance Plans, the cash payment would be equal to the sum of the
Interest Portion (as defined in the Long-Term Performance Plans) of such awards
and the Determined Value of the number of Common Shares of the Corporation
corresponding to the number of units included in the Phantom Share Unit Portion
(as defined in the Long-Term Performance Plans) of such awards.
The Retirement Plan provides that if that plan is terminated within four years
after the occurrence of a change in control, any surplus funding in the plan
would be applied (subject to the Code Limitations and other tax qualification
requirements applicable to the Plan) to provide pro rata increases in the
accrued pension benefits of all qualified participants in the Plan, including
the executive officers named in the Summary Compensation Table.
The supplemental pension agreements between the Trust Company and each of the
executive officers named in the Summary Compensation Table provide that in the
event of the involuntary termination of the officer's employment following a
change in control, the officer would receive
23
<PAGE> 26
from the Trust Company an immediate lump sum cash payment equal to the actuarial
present value of the supplemental pension that would have been payable to the
officer under the agreement at his normal retirement date if he had remained
employed with the Trust Company until that date, at the same rate of annual
compensation in effect for the officer immediately prior to such termination of
his employment.
In addition, under the 1990 Change in Control and Severance Policy (the "1990
Policy"), each of the executive officers named in the Summary Compensation Table
would be entitled to receive severance benefits in the event of the officer's
involuntary termination of employment within two years following a change in
control. In such event, each such officer would be entitled to receive a cash
payment in an amount equal to the sum of (a) two times the officer's then
current annual base salary, (b) the average of the highest three of the previous
five years' awards to such officer under the Annual Plan and predecessor plan
and (c) 26 times the officer's then current weekly base salary.
BENEFIT PROTECTION TRUSTS. The Board of Trustees has approved the establishment
of an Executives' Benefits Protection Trust and an Employees' Benefits
Protection Trust. In the event of a "change in control" of the Corporation (as
defined), the trust funds would be used to satisfy the obligations of the Trust
Company under the Benefit Equalization Plan, the officers' supplemental
retirement benefits agreements, the 1990 Policy, the Annual Plan and its
predecessor plan, and the Stock Plan and its predecessor plans.
DIRECTORS, TRUSTEES AND OFFICERS LIABILITY INSURANCE
Pursuant to Section 726(d) of the New York Business Corporation Law and Section
7024(d) of the New York Banking Law, the Corporation and the Trust Company
hereby report that on June 10, 1993, policies of directors and officers
liability insurance in the aggregate amount of $50,000,000 were obtained for a
one-year term with National Union Fire Insurance Company of Pittsburgh, Federal
Insurance Company and Aetna Casualty & Surety Company at a total cost of
$388,650 covering all directors, trustees and officers of the Corporation and
the Trust Company and affiliated companies serving at any time during the term
of the policies.
TRANSACTIONS WITH DIRECTORS AND EXECUTIVE OFFICERS
Some of the Corporation's directors are customers of the Trust Company and some
of the directors are officers of corporations or members of partnerships which
are customers of the Trust Company. As such customers, they have had
transactions in the ordinary course of business with the Trust Company,
including borrowings, all of which were on substantially the same terms,
including interest rates and collateral, 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 features. In the ordinary
course of business, the Trust Company uses the products or services of a number
of organizations with which directors of the Corporation are affiliated as
officers or partners. It is expected that the Trust Company and the Corporation
will in the future have transactions with organizations with which directors of
the Corporation are affiliated as officers or partners. The law firm of Cravath,
Swaine & Moore, of which Mr. Samuel C. Butler is a partner, the law firm of
Patterson, Belknap, Webb & Tyler, of which Ms. Antonia M. Grumbach is a partner,
and the law firm of Wien, Malkin & Bettex, of which Mr. Peter L. Malkin is a
partner, performed legal services for the Corporation or the Trust Company in
1993.
II RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Subject to shareholder approval, the Board of Directors of the Corporation and
the Board of Trustees of the Trust Company have appointed Coopers & Lybrand,
certified public accountants, as
24
<PAGE> 27
independent auditors for the year 1993. Coopers & Lybrand have served as
independent auditors for the Trust Company for many years and have served as
independent auditors for the Corporation since its inception in 1977. In their
capacity as independent auditors for the year 1993, Coopers & Lybrand performed
the following services: audited the consolidated financial statements of the
Corporation and the statement of condition of the Trust Company and of certain
of the subsidiaries of the Corporation and the Trust Company, the separate
financial statements of the Trust Company's employee benefit plans as required
by the Employee Retirement Income Security Act of 1974 and the separate monthly
financial statements of the Pooled Pension and Profit Sharing Trust Funds and
Discretionary Trust Funds administered by the Trust Company; conducted limited
reviews of the quarterly financial information that is reported to shareholders;
and conducted special internal accounting control reviews of assets held or
managed by the Trust Company for others.
The members of the Audit Committee are currently Messrs. Etherington (the
Committee Chairman), de Montebello, Douglas, Stookey and Wilson.
Representatives of Coopers & Lybrand will be present at the Meeting with the
opportunity to make a statement if they wish to do so. They also will be
available to respond to appropriate questions.
If the appointment of Coopers & Lybrand is not approved by the shareholders, the
appointment of independent auditors will be reconsidered by the Board of
Directors of the Corporation and the Board of Trustees of the Trust Company.
III ASSUMPTION BY THE CORPORATION OF CERTAIN BENEFIT PLANS OF THE TRUST COMPANY
In October 1993, the Board of Directors of the Corporation and the Board of
Trustees of the Trust Company resolved that, effective January 1, 1994, the
Corporation would adopt as its own each of the following benefit plans of the
Trust Company, and would assume and become solely responsible for all
liabilities and obligations of the Trust Company under each of such plans,
including all liabilities with respect to the payment of benefits which had
accrued but remained unpaid under each such plan as at December 31, 1993:
<TABLE>
<CAPTION>
ACCRUED AND UNPAID
LIABILITIES
(OR DEFERRED CHARGES) AT
DECEMBER 31, 1993
------------------------
<S> <C>
1989 Stock Compensation Plan of United States Trust Company of New York
and Affiliated Companies (the "Stock Plan").......................... $(1,383,493.71)
1988 Long-Term Performance Plan (the "1988 Long-Term Plan") and
Long-Term Performance Plan (the "Long-Term Plan") of United States
Trust Company of New York and Affiliated Companies................... 15,065,587.66
Deferred Compensation Plan for Board Members of United States Trust
Company of New York and Affiliated Companies (the "Board Deferred
Plan")............................................................... 1,468,916.37
Annual Incentive Plan of United States Trust Company of New York and
Affiliated Companies................................................. 8,223,666.95
Benefit Equalization Plan of United States Trust Company of New York
and Affiliated Companies............................................. 3,080,773.59
Supplemental Pension Agreements between United States Trust Company of
New York and certain of its officers and an employee................. 1,256,783.68
Trustees and Directors Retirement Plan of United States Trust Company
of New York and Affiliated Companies................................. 1,157,467.59
-------------------
Total........................................................ $28,869,702.13
</TABLE>
25
<PAGE> 28
The adoption of these plans, and assumption of the liabilities thereunder, by
the Corporation do not in any way affect the substantive terms of the plans,
including those relating to participant eligibility and the nature and value of
accrued or future benefits. The principal purpose of such adoption and
assumption is to recognize that a larger proportion of the participants in these
plans than was previously the case are employees of the Corporation and its
subsidiaries other than the Trust Company, so that the Corporation should bear
the financial responsibility for the plans. In addition, in most cases, the
performance of the Corporation and all of its subsidiaries is the measure for
the granting of awards. An effect of the assumption of the plans by the
Corporation will be an improvement in the net income and, therefore, regulatory
capital of the Trust Company on a stand-alone basis. There will be no effect on
the Corporation's consolidated financial statements.
Board approval of the assumption by the Corporation of the Stock Plan, the 1988
Long-Term Plan, the Long-Term Plan and the Board Deferred Plan was conditioned
upon obtaining shareholder approval because the benefits under these plans
include the award of Common Shares or can be valued by reference to the market
performance over time of the Common Shares. Shareholder approval will exempt the
receipt of such Common Shares or stock-based awards by directors and certain
officers of the Corporation from Section 16(b) of the Securities Exchange Act of
1934.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE ADOPTION BY
THE CORPORATION, EFFECTIVE JANUARY 1, 1994, OF THE 1989 STOCK COMPENSATION PLAN,
THE 1988 LONG-TERM PERFORMANCE PLAN, THE LONG-TERM PERFORMANCE PLAN AND THE
DEFERRED COMPENSATION PLAN FOR BOARD MEMBERS, AND THE ASSUMPTION BY THE
CORPORATION, EFFECTIVE AS OF SUCH DATE, OF ALL LIABILITIES AND OBLIGATIONS OF
THE TRUST COMPANY UNDER SUCH PLANS AS AT DECEMBER 31, 1993. FOR FURTHER
INFORMATION REGARDING EACH OF THESE PLANS, SEE PROPOSALS IV, V AND VI BELOW.
IV APPROVAL OF AMENDMENTS TO THE STOCK PLAN
The Stock Plan is a stock-based incentive compensation plan under which the
Corporation may grant stock options, restricted stock and other stock-based
awards to officers and key employees of the Corporation and its subsidiaries.
The Board of Directors believes that the Stock Plan is an important element of
the Corporation's executive compensation program because stock-based incentive
compensation ties employee compensation directly to stock value and thus aligns
the interests of the Corporation's employees with those of its shareholders.
Additionally, the Stock Plan gives the Corporation flexibility to implement
stock-based compensation strategies to attract and retain individuals who are
important to the Corporation's long-term success.
The Board of Directors has approved, effective January 1, 1994, subject to the
approval of the shareholders, certain amendments to the Stock Plan. Set forth
below are a description of these proposed amendments and a general summary of
the terms of the Stock Plan. Such description and summary are qualified in their
entirety by reference to the text of the proposed amended Stock Plan, which is
attached to this proxy statement as Appendix A.
Proposed Amendments
INVESTMENT OPTIONS FOR DEFERRED PERFORMANCE AWARDS. Section 4 of the Stock Plan
provides for the grant of performance share units which are earned to the extent
that pre-established performance goals for the Corporation are met over a
designated period of time (a "Performance Cycle"). Earned awards are paid as
soon as practicable after the end of the Performance Cycle unless a participant
previously shall have elected in writing to defer the receipt of all or part of
an earned award. Currently, a participant may elect to have his or her deferred
awards either (i) converted into "phantom share units," which thereafter
fluctuate in value according to changes in the market value of the Common
Shares, or (ii) allocated to an individual account (an "Interest Account")
26
<PAGE> 29
which is credited with interest, compounded quarterly, at such rate as the
Compensation Committee shall select (such rate is currently the Trust Company's
prime rate).
Under the Stock Plan as proposed to be amended, participants whose employment
did not terminate prior to January 1, 1994, will be given the option to choose
from among a number of rates of return for purposes of determining the amounts
to be credited to their respective Interest Accounts. Initially, there will be
six rates of return available -- the Trust Company's prime rate and rates of
return which will match the rates of return on the following five investment
funds presently available for the investment of employees' accounts under the
Trust Company's 401(k) Plan and ESOP (the "401(k) Plan"):
<TABLE>
<CAPTION>
FUND TYPE OF INVESTMENT
- ------------------------------------- --------------------------------------------------
<S> <C>
Common Stock Fund -- Common stocks and similar equity securities.
Fixed Income Fund -- Securities and other property, except common
stocks and similar equity securities, considered
to offer dependable income yields.
Money Market Fund -- Primarily short-term instruments of high quality.
U.S. Government Short/Intermediate -- Short and intermediate term (3-year average)
Term Fund U.S. Treasury and federally-backed agency
securities.
International Fund -- Equity securities of the major free world
economies.
</TABLE>
The Trust Company's prime rate and each of the above-listed funds are defined as
the "Earnings Crediting Options." A plan participant will be able to allocate
any part or all of the balance in his or her Interest Account to each of the
Earnings Crediting Options and will be able to change such allocation on a
monthly basis.
As of the last day of each month, each part of the balance of a participant's
Interest Account for which a separate Earnings Crediting Option is in effect
shall be credited with an amount (which may be positive or negative) determined
by multiplying such part of the balance by a percentage corresponding to the
"Applicable Rate of Return" for such month under such Earnings Crediting Option.
The "Applicable Rate of Return" for any month under any Earnings Crediting
Option means (i) in the case of an Earnings Crediting Option that is a 401(k)
Plan fund, the percentage by which the value of such fund, as determined by the
401(k) Plan's trustee as of the last business day of such month, exceeds, or is
less than, the value of such fund as determined by the 401(k) Plan's trustee as
of the last business day of the immediately preceding month, and (ii) in the
case of any other Earnings Crediting Option, the rate of return applicable for
such month as determined by the Compensation Committee in its sole discretion.
The Compensation Committee may at any time, in its sole discretion, determine
(i) that the Trust Company's prime rate or any 401(k) Plan fund shall cease to
constitute an Earnings Crediting Option for purposes of the Stock Plan, (ii)
that any investment fund that is added to the 401(k) Plan at any time after
January 1, 1994, shall not constitute an Earnings Crediting Option for purposes
of the Stock Plan, or (iii) that any other hypothetical investment fund or index
or referenced rate of return shall constitute an Earnings Crediting Option for
purposes of the Stock Plan. Participants will be notified in writing at least 45
days in advance of any such change in the Earnings Crediting Options.
This proposed amendment to the Stock Plan is subject to shareholder approval, as
well as shareholder approval of Proposal III herein.
For information regarding the funding and protection of Earnings Crediting
Options, see "Funding and Protection of Plan Benefits" below.
27
<PAGE> 30
EXERCISE OF STOCK OPTIONS AFTER RETIREMENT. Section 2.2(E) of the Stock Plan
currently provides that if an optionee's employment shall terminate for any
reason other than death or disability, all right to exercise his or her options
shall terminate on the expiration dates specified in such options or the date
three months after the date of termination of the optionee's employment,
whichever date is earlier, except that if such termination is by reason of
retirement, the Compensation Committee may in its sole discretion extend such
three-month period to the date twelve months after the date of termination. It
is proposed that this provision be amended to provide that if an optionee's
employment shall terminate by reason of retirement, all such optionee's stock
options will expire on the earlier of their specified expiration dates or the
date three months (in the case of incentive stock options) or fifteen months (in
the case of nonqualified options) after the date of termination of employment,
without action by the Compensation Committee. Under the Internal Revenue Code of
1986 (the "Code"), incentive stock options must be exercised no later than three
months after termination of employment by reason of retirement in order to be
treated as incentive stock options for income tax purposes. The change will
allow retirees greater flexibility in the timing of the exercise of nonqualified
stock options granted to them during their active service with U.S. Trust.
STOCK OPTION AWARD LIMITATION. The Stock Plan presently contains no limit on
the total number of Common Shares with respect to which stock options may be
granted to any one person. It is proposed that Section 2.1 of the Stock Plan be
amended to provide that the total number of Common Shares with respect to which
options may be granted to any person during any calendar year shall not exceed
250,000 Common Shares. The purpose of this amendment is to enable options
granted under the Stock Plan to be treated as "performance-based compensation"
for purposes of section 162(m) of the Code. As enacted in 1993, section 162(m)
limits to $1 million the amount that can be deducted by a publicly-held
corporation with respect to the annual compensation it pays to its chief
executive officer and to its four other highest paid executive officers.
However, under section 162(m), compensation that is performance-based is not
taken into account for purposes of the deduction limit. Under proposed federal
income tax regulations issued under section 162(m), one of the requirements that
must be met in order for options granted under the Stock Plan to qualify for the
performance-based exception to the deduction limit is that the Stock Plan
include a limit on the maximum number of options that may be granted to any
individual participant during a specified period. Management believes that it is
desirable for options granted under the Stock Plan to qualify for the
performance-based exception.
Summary Description of the Stock Plan
The following is a brief description of the existing Stock Plan with reference
where appropriate to the proposed amendments described in this proxy statement.
GENERAL. The Stock Plan provides for the award of Common Shares by means of
restricted stock, stock options and performance share units to senior officers
of the Corporation, the Trust Company and their subsidiaries. In addition, the
Stock Plan provides for the grant of benefit equalization units to certain
participants in the 401(k) Plan in order to provide such participants with the
full benefits to which they would have been entitled under the 401(k) Plan
benefit formula but for certain limitations imposed by the Code.
The Stock Plan currently authorizes the issuance of a maximum of 1,300,000
Common Shares plus the Common Shares previously authorized but not utilized or
reserved for issuance under various predecessor plans. As of February 28, 1994,
there were an aggregate of 325,506 Common Shares available for future awards
under the Stock Plan. The Common Shares to be distributed under the Stock Plan
may be shares held in the Corporation's treasury, authorized but previously
unissued shares or shares purchased by the Corporation on the open market.
28
<PAGE> 31
Officers of the Corporation, the Trust Company and their subsidiaries at or
above the rank of Vice President are eligible to be granted stock options and
other awards under the Stock Plan. In addition, benefit equalization units are
automatically credited to certain participants in the 401(k) Plan, as described
below under the caption "Benefit Equalization Units." The Compensation Committee
selects the officers who will be granted awards and determines the nature,
extent and timing of awards, performance goals and performance measurement
periods and any conditions to be attached to awards. Currently, there are
approximately 450 persons who are eligible to be granted awards under the Stock
Plan, including all five of the Named Executive Officers.
RESTRICTED STOCK. A recipient of restricted Common Shares is prohibited from
selling, pledging or otherwise disposing of such shares within a period
determined by the Compensation Committee (typically three years for all
restricted stock awards). Restricted shares are held in the participant's name
in a book entry account. During the restricted period, the participant has all
of the rights of a shareholder of the Corporation with respect to his or her
restricted shares, including voting and dividend rights. Subject to satisfaction
of any tax withholding obligation and the participant's compliance with such
other conditions as may be imposed by the Compensation Committee, certificates
evidencing the shares are delivered to the participant free of restrictions at
the conclusion of the restricted period. In the event of the termination of
employment of a participant for any reason, all shares then subject to
restrictions are forfeited unless the Compensation Committee otherwise
determines.
STOCK OPTIONS. The Stock Plan provides for the award of options to purchase
Common Shares. The maximum term of all options granted under the Stock Plan is
ten years from the date of grant, and the per share exercise price of any option
may not be less than the fair market value of a Common Share on the date of
grant of the option, as determined by the Compensation Committee. The
Compensation Committee may require that an option under the Stock Plan be
exercised in installments; each presently outstanding option under the Stock
Plan became or becomes exercisable in four substantially equal, cumulative
installments over a four-year period, subject to the discretion of the
Compensation Committee to accelerate an option in whole or in part upon an
optionee's termination of employment by reason of death, permanent disability or
retirement. Payment of the option exercise price may be made in cash or in other
consideration approved by the Compensation Committee, including Common Shares
valued at their fair market value at the time of exercise.
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<PAGE> 32
The following table sets forth information with respect to options currently
outstanding under the Stock Plan. On February 28, 1994, the closing price of a
Common Share on the NASDAQ National Market System was $50.75.
<TABLE>
<CAPTION>
NUMBER OF SHARES
OPTIONEE OR GROUP UNDER OPTION
-------------------------------------------------------------------- ----------------
<S> <C>
H.M. SCHWARZ........................................................ 40,000
Chairman and CEO
J.S. MAURER......................................................... 46,000
President
F.B. TAYLOR......................................................... 32,000
Vice Chairman and Chief Investment Officer
D.M. ROBERTS........................................................ 20,000
Vice Chairman and Treasurer
F.S. WONHAM......................................................... 20,000
Vice Chairman
All executive officers as a group................................... 158,000
(5 persons)
All other employees, including officers other than executive 637,731
officers
</TABLE>
Options granted under the Stock Plan are either incentive stock options meeting
the requirements set forth in Section 422 of the Code ("ISOs") or options which
do not qualify as ISOs ("nonqualified options"). For federal income tax
purposes, assuming that the shares acquired by the holder of an ISO are not
disposed of within two years from the date the option was granted or one year
from the date the option was exercised, the Corporation receives no deduction
either upon the grant or the exercise of an ISO or upon a subsequent sale of the
shares by the optionee. The optionee realizes no income for regular federal
income tax purposes either at the time of the grant or the time of exercise of
the ISO. Instead, the optionee realizes income or loss only upon his or her
subsequent sale of the option shares, and the optionee's income, in the amount
of any excess of the sale price over the option exercise price, will be taxed as
long-term capital gain.
If, however, the shares are disposed of within either of the two-and one-year
periods mentioned above (a "disqualifying disposition"), the excess, if any, of
the fair market value of the shares on the date of exercise over the option
exercise price will be treated as ordinary income to the optionee in the year of
the disqualifying disposition. In addition, if a disqualifying disposition is
for more than the fair market value of the shares on the date of exercise, the
excess of the amount realized over the fair market value will be treated as a
short-term or long-term capital gain realized by the optionee, depending upon
the length of time the shares are held. If a disqualifying disposition is for
less than the fair market value of such shares on the date of exercise, the
amount treated as ordinary income realized by the optionee will be limited to
the excess of the amount realized over the option exercise price, and if the
disqualifying disposition is for less than the option exercise price, the
optionee will realize no ordinary income, but rather a short-term or long-term
capital loss, depending upon the length of time the shares are held, equal to
the difference between the option exercise price and the amount realized. The
Corporation may be entitled, in the year of a disqualifying disposition, to a
deduction equal to the amount that the optionee must treat as ordinary income.
The optionee of a nonqualified option does not realize any taxable income upon
the grant of the option. Upon exercise of a nonqualified option, the optionee
realizes ordinary income in an amount generally measured by the excess, if any,
of the fair market value of the shares on the date of exercise over the option
exercise price. The Corporation will be entitled to a deduction in the same
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<PAGE> 33
amount as the ordinary income realized by the optionee. Upon the sale of such
shares, the optionee will realize short-term or long-term capital gain or loss,
depending upon the length of time the shares are held. Such gain or loss will be
measured by the difference between the sale price of the shares and the market
price of the shares on the date of exercise.
An option under the Stock Plan will not be exercisable unless the optionee has
remained in the employ of the Corporation, the Trust Company or a participating
subsidiary for such period after the date of grant of the option as may be
determined by the Compensation Committee. If the optionee's employment shall
terminate (except by reason of death or disability), the option will be
exercisable, to the extent the optionee was entitled to exercise the option on
the date of such termination, until the earlier of (i) three months after the
date of termination of employment and (ii) the expiration date specified in the
option. This three-month period is extended to twelve months if the optionee's
employment shall terminate by reason of disability, is extended to two years
after death if the optionee's employment shall terminate by reason of death or
if the optionee dies within one year of retiring as a result of a disability,
and may, in the Compensation Committee's sole discretion, be extended to twelve
months if the optionee ceases to be an employee by reason of retirement. As
described above under the caption "Proposed Amendments -- Exercise of Stock
Options after Retirement," the shareholders are being asked to approve an
amendment to the Stock Plan which would change the option exercise period, in
the event of the optionee's termination of employment by reason of retirement,
to the earlier of the expiration date specified in the option and the date three
months (in the case of an ISO) or fifteen months (in the case of a nonqualified
option) after the date of termination of employment. The Compensation Committee
would not have the discretion to extend the option exercise period.
PERFORMANCE SHARE UNITS. See "Compensation of Executive Officers --
Performances Share Units" above for a general description of Performance Share
Units.
As described above under the caption "Proposed Amendments -- Investment Options
for Deferred Performance Awards," shareholders are being asked to approve an
amendment to the Stock Plan which would permit a participant to elect one or
more of a number of rates of return for the participant's Interest Account, and
to change such election on a monthly basis. Approximately 14 participants in the
Stock Plan, including all five of the Named Executive Officers, currently have
deferred awards to their credit under the Stock Plan.
BENEFIT EQUALIZATION UNITS. Under the Stock Plan, awards of benefit
equalization units are credited to certain participants in the 401(k) Plan to
compensate them for reductions of the ESOP contributions made to the 401(k) Plan
on behalf of such participants, which reductions are imposed by the Code as a
condition for qualifying the ESOP portion of the 401(k) Plan for certain tax
benefits. All participants in the 401(k) Plan whose ESOP contributions
thereunder are reduced because of such Code limitations automatically receive
benefit equalization units under the Stock Plan.
The number of benefit equalization units credited to a participant is equal to
(a) the amount of the ESOP contribution for a 401(k) Plan year which would have
been made to the Plan on the participant's behalf under the formula set forth in
the 401(k) Plan in the absence of the Code limitations, less (b) the amount of
the ESOP contribution for such Plan year actually made on the participant's
behalf, taking into account the Code limitations, divided by (c) the Average
Market Value of a Common Share on the last business day of the relevant 401(k)
Plan year. In addition, benefit equalization units earn Common Share dividend
equivalents which are converted into additional benefit equalization units on
the basis of the Average Market Value of a Common Share on a dividend payment
date.
A participant's interest in benefit equalization units is fully vested at all
times and not subject to forfeiture. As soon as practicable after the
termination of a participant's employment, the participant will receive a number
of Common Shares equal to the whole number of benefit
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<PAGE> 34
equalization units then credited to the participant's account (fractional units
are settled in cash). Apart from the right to dividend equivalents, benefit
equalization units do not entitle the holder to any of the rights of a holder of
Common Shares.
CHANGE IN CONTROL PROVISIONS. See "Compensation of Executive Officers -- Change
in Control Provisions" above.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE PROPOSED
AMENDMENTS TO THE 1989 STOCK COMPENSATION PLAN.
V APPROVAL OF AMENDMENTS TO THE PREDECESSOR PERFORMANCE PLANS
The provisions of the 1988 Long-Term Plan and the Long-Term Plan (collectively,
"the Predecessor Performance Plans") are substantially the same as the
performance share unit feature of the Stock Plan as described above, which
superseded the Predecessor Performance Plans, except that certain Interest
Accounts under the Long-Term Plan are credited with interest, compounded
annually, equal to one-half of the Corporation's rate of return on shareholders'
equity, rather than at the Trust Company's prime rate, compounded quarterly. No
Performance Cycles remain in progress under the Predecessor Performance Plans;
however, deferred awards remain outstanding in the form of Interest Accounts and
phantom share units for the benefit of 8 employees of the Corporation and its
subsidiaries, including all five of the Named Executive Officers except Mr.
Taylor.
The Board of Directors has approved, effective January 1, 1994, subject to
shareholder approval, amendments to the Predecessor Performance Plans which are
substantially the same as those described above for the Stock Plan, to give
participants the option to choose from among alternative Earnings Crediting
Options for purposes of determining the amounts to be credited to their Interest
Accounts. Initially, there will be six rates of return available -- the Trust
Company's prime rate and the rates of return on the five investment funds under
the 401(k) Plan enumerated above under the caption "IV Approval of Amendments to
the Stock Plan -- Proposed Amendments -- Investment Options for Deferred
Performance Awards." However, the Earnings Crediting Options will not be
available for amounts in Interest Accounts under the Long-Term Plan which are
earning interest equal to one-half of the Corporation's rate of return on
shareholders' equity. The proposed amendments to the Predecessor Performance
Plans are also subject to shareholder approval of Proposal III herein.
For information regarding the funding and protection of Earnings Crediting
Options, see "Funding and Protection of Plan Benefits" below.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE PROPOSED
AMENDMENTS TO THE 1988 LONG-TERM PERFORMANCE PLAN AND THE LONG-TERM PERFORMANCE
PLAN.
VI APPROVAL OF AMENDED BOARD DEFERRED PLAN
The Board Deferred Plan permits "Eligible Board Members" (Board members who are
not also officers of the Corporation, the Trust Company and other subsidiaries
of the Corporation) to elect to defer their receipt of the cash compensation
payable to them as retainer fees and meeting attendance fees for their services
as Board members or members of any Board committees ("Eligible Compensation").
There are currently 17 Eligible Board Members, six of whom are currently
participating in the Board Deferred Plan. Compensation deferred under the Board
Deferred Plan is credited with interest, compounded quarterly, at a rate
determined from time to time by the committee of directors which administers the
Plan, who are chosen by the Board of
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<PAGE> 35
Directors from among those directors who are ineligible to participate in the
Plan. Such rate is currently the Trust Company's prime rate.
The Board of Directors has approved, effective January 1, 1994, subject to the
approval of the shareholders, an amended and restated Board Deferred Plan under
which Eligible Board Members would have the same investment options for the
crediting of earnings on their deferred compensation as would be available for
earnings on deferred performance awards earned under the Stock Plan and the
Predecessor Performance Plans (as proposed to be amended as described above).
Thus, a participant in the Board Deferred Plan would be able to elect to
allocate his or her deferred compensation between phantom share units and an
Interest Account. The phantom share units under the Board Deferred Plan would be
identical to those under the Stock Plan and Predecessor Performance Plans; for
example, they would accrue Common Share dividend equivalents in the form of
additional phantom share units and would be settled by the issuance of Common
Shares on the basis of one Common Share for each phantom share unit.
Participants in the Board Deferred Plan would be able to choose from among the
same Earnings Crediting Options for their Interest Accounts as are available for
Interest Accounts under the Stock Plan and Predecessor Performance Plans as
proposed to be amended, i.e., the Trust Company's prime rate and the rates of
return on the five investment funds under the 401(k) Plan enumerated above under
the caption "IV Approval of Amendments to the Stock Plan -- Proposed Amendments
- -- Investment Options for Deferred Performance Awards." A participant's account
balance under the Board Deferred Plan at January 1, 1994, would be allocated
between phantom share units and the Interest Account in any proportion elected
by the participant prior to December 31, 1993. Subsequent compensation deferred
under the Board Deferred Plan must be allocated in the same manner as deferred
performance awards under the Stock Plan and Predecessor Performance Plans, i.e.,
at least 50% of the value of deferred amounts must be converted into phantom
share units.
The Board Deferred Plan was not previously submitted to shareholders for their
approval because the benefits thereunder were not payable in Common Shares or
valued by reference to the market performance over time of the Common Shares.
Shareholder approval of the amended Board Deferred Plan will exempt the receipt
by directors of phantom share units and Common Shares thereunder from Section
16(b) of the Securities Exchange Act of 1934.
The Board of Directors believes that the greater investment flexibility which
would be provided under the Board Deferred Plan as amended will aid the
Corporation in attracting and retaining non-employee board members of
exceptional ability. In addition, the stock-based features of the Board Deferred
Plan, as amended, will further align the interests of non-employee board members
with those of the Corporation's shareholders and is consistent with the general
trend toward offering stock or stock-based compensation to non-employee
directors.
Set forth below is a general summary of the terms of the Board Deferred Plan as
proposed to be amended. Such summary is qualified in its entirety by reference
to the text of the proposed amended Board Deferred Plan, which is attached to
this proxy statement as Appendix B.
DEFERRAL ELECTIONS. With respect to each year beginning in 1994, an Eligible
Board Member may elect in writing to have payment of any part or all of his or
her Eligible Compensation for such year deferred under the terms of the Board
Deferred Plan. In the election form, the Eligible Board Member (i) specifies, by
a percentage in an even multiple of 5%, the portion of his or her Eligible
Compensation to be deferred ("Deferred Amounts"), and (ii) specifies, by
percentages in even multiples of 5%, the portion of the Deferred Amounts to be
converted into phantom share units and the portion to be allocated to his or her
Interest Account under the Board Deferred Plan. At least 50% of an Eligible
Board Member's Deferred Amounts for each year beginning in 1994 must be
converted into phantom share units. Any deferral election made by an Eligible
Board Member with respect to his or her Eligible Compensation, and any election
made as to the allocation of the Deferred Amounts between phantom share units
and the Interest Account, shall be irrevocable.
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<PAGE> 36
Each participant in the Board Deferred Plan prior to 1994 was given the right
under the amended Plan to elect to have his or her account balance under the
Plan at December 31, 1993 (the participant's "Existing Balance") allocated
between phantom share units and the participant's Interest Account in such
percentages (in even multiples of 5%) as the participant specified in writing
prior to December 31, 1993.
A participant's interest in his or her phantom share units and Interest Account
shall be fully vested and nonforfeitable at all times.
PHANTOM SHARE UNITS. The number of phantom share units into which any Deferred
Amount is to be converted shall be determined by dividing the dollar value of
such Deferred Amount by the Average Market Value of one Common Share on the
conversion date or, if such conversion date is not a business day, on the
business day next preceding such conversion date. Phantom share units earn
Common Share dividend equivalents which are converted into additional phantom
share units on the basis of the Average Market Value of a Common Share on a
dividend payment date.
In the event of any change in the Common Shares by reason of any stock dividend,
recapitalization, merger, or any similar change affecting the Common Shares, the
number and kind of shares represented by phantom share units will be
appropriately adjusted consistent with such change in such manner as the Plan
Committee, in its sole discretion, may deem equitable to prevent substantial
dilution or enlargement of the rights granted to, or available for, the
participants under the Board Deferred Plan.
CREDITING OF EARNINGS. As of the last day of each month, each part of the
balance of a participant's Interest Account for which a separate Earnings
Crediting Option is in effect shall be credited with an amount (which may be
positive or negative) determined by multiplying such part of the balance by a
percentage corresponding to the "Applicable Rate of Return" for such month under
such Earnings Crediting Option. The "Applicable Rate of Return" for any month
under any Earnings Crediting Option shall mean (i) in the case of an Earnings
Crediting Option that is a 401(k) Plan fund, the percentage by which the value
of such fund, as determined by the 401(k) Plan's trustee as of the last business
day of such month, exceeds, or is less than, the value of such fund as
determined by the 401(k) Plan's trustee as of the last business day of the
immediately preceding month, and (ii) in the case of any other Earnings
Crediting Option, the rate of return applicable for such month, as determined by
the Plan Committee in its sole discretion.
The Plan Committee may at any time, in its sole discretion, determine (i) that
the Trust Company's prime rate or any 401(k) Plan fund shall cease to constitute
an Earnings Crediting Option for purposes of the Board Deferred Plan, (ii) that
any investment fund that is added to the 401(k) Plan at any time after January
1, 1994, shall not constitute an Earnings Crediting Option for purposes of the
Plan, or (iii) that any other hypothetical investment fund or index or
referenced rate of return shall constitute an Earnings Crediting Option for
purposes of the Plan. Participants will be notified in writing at least 45 days
in advance of any such change in the Earnings Crediting Options.
Whenever a participant first elects to have his or her Deferred Amounts
allocated to an Interest Account, the participant shall specify, by percentages
in even multiples of 5%, the respective parts of the balance of his or her
Interest Account which are to be credited with earnings under each of the
Earnings Crediting Options designated by the participant. The Earnings Crediting
Options selected in such initial election will remain in effect (and will apply
to all additional amounts allocated to the Interest Account pursuant to any
deferral elections made by the participant with respect to any subsequent years)
until the participant changes his or her election.
A participant's account will continue to be credited with earnings until all
payments have been made which are required to be made with respect to the
Interest Account, as described below under "-- Payment of Account Balances." For
this purpose, any payments made with respect to a
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<PAGE> 37
participant's Interest Account will be deemed to have been made pro rata from
the respective parts of the balance of the Interest Account that are subject to
separate Earnings Crediting Options.
PAYMENT OF ACCOUNT BALANCES. Balances held for a participant's account under
the Board Deferred Plan will become payable upon the participant's ceasing to be
a member of any Board for any reason. Payment with respect to a participant's
account will be made in ten annual installments commencing on the first business
day of February of the year following the year in which the participant ceases
to be a member of any Board. Payments with respect to a participant's Interest
Account will be made in cash, and payments with respect to a participant's
phantom share units will consist of one Common Share for each whole phantom
share unit. Fractional phantom share units will be settled in cash on the basis
of the Average Market Value of a Common Share on the business day immediately
preceding the date on which such installment payment is to be made.
Any installment payments remaining to be made to a participant at the date of
his or her death will be made to the participant's designated beneficiary in a
single payment of cash and Common Shares as soon as practicable after the date
of death. Payment with respect to any part or all of a participant's account may
be made to the participant or the participant's beneficiary in advance of the
above-mentioned ten-year installment schedule if the Plan Committee, in its sole
discretion, determines that such advance payment is necessary to help the
participant or the beneficiary meet an "unforeseeable emergency" within the
meaning of the federal Income Tax Regulations.
RIGHTS OF PARTICIPANTS. A participant in the Board Deferred Plan will have the
status of a general unsecured creditor of the Corporation with respect to his or
her right to receive any payment under the Plan. A participant's rights to
payments under the Board Deferred Plan are not subject to assignment in any
manner.
ADMINISTRATION. The Board Deferred Plan is administered by a Committee composed
of at least three Board members who are appointed by the Board of Directors from
among Board members who are not Eligible Board Members (i.e., three Board
members who are officers of the Corporation or the Trust Company). If at any
time there are fewer than three such Board members, additional members of the
Committee shall be appointed from among those Board members who have never
participated in the Plan or, in the absence of any such Board members, from
among the senior officers of the Corporation or any of its affiliated companies.
No member of the Committee shall be personally liable by reason of any contract
or other instrument executed by such member or on his or her behalf in his or
her capacity as a member of the Committee nor for any mistake of judgment made
in good faith. The Corporation shall indemnify and hold harmless each member of
the Committee against any cost or expense (including counsel fees) or liability
arising out of any act or omission to act in connection with the Board Deferred
Plan unless such cost, expense or liability arises out of such member's own
fraud or bad faith.
AMENDMENT OR TERMINATION. The Board of Directors of the Corporation may, with
prospective or retroactive effect, amend, suspend or terminate the Board
Deferred Plan at any time, provided that no amendment of the Board Deferred Plan
shall deprive any participant of any rights to receive payment of any amounts
due him or her under the terms of the Plan as in effect prior to such amendment
without his or her written consent. Any amendment that the Board of Directors
would be permitted to make may also be made by the Plan Committee where
appropriate to facilitate the administration of the Board Deferred Plan or to
comply with applicable law or any applicable rules and regulations of governing
authorities, provided that the cost of the Plan to the Corporation is not
materially increased by such amendment.
For information regarding the funding and protection of Earnings Crediting
Options, see "Funding and Protection of Plan Benefits" below.
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<PAGE> 38
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE APPROVAL OF
THE PROPOSED AMENDED BOARD MEMBERS' DEFERRED COMPENSATION PLAN OF U.S. TRUST
CORPORATION.
EXECUTIVE DEFERRED COMPENSATION PLAN
The Board of Directors has approved, effective January 1, 1994, an Executive
Deferred Compensation Plan (the "Executive Deferred Plan"). All officers of the
Corporation, the Trust Company and their subsidiaries at or above the rank of
Vice President whose total annual compensation (as defined in the Plan) exceeds
$150,000 are eligible to participate in the Executive Deferred Plan. Currently,
approximately 100 persons are eligible to participate in the Executive Deferred
Plan, including the five Named Executive Officers.
With respect to each year beginning in 1994, a participant in the Executive
Deferred Plan may elect to defer his or her receipt of all or any part (in
multiples of 5%) of his or her "Eligible Compensation" for such year. Eligible
Compensation for any year is defined as a certain portion of a participant's
award payable during such year under the Corporation's 1990 Annual Incentive
Plan, certain commissions payable to the participant during such year, and any
bonus or incentive payment earned during such year by the participant pursuant
to any employment agreement between the participant and the Corporation or any
subsidiary. Participants in the Executive Deferred Plan are able to choose rates
of return for their deferred amounts from among any or all of the same rates of
return described above under the caption "IV Approval of Amendments to the Stock
Plan -- Proposed Amendments -- Investment Options for Deferred Performance
Awards."
Deferred amounts under the Executive Deferred Plan become payable upon a
participant's termination of employment, or upon a "change in control" of the
Corporation as defined above under the caption "Compensation of Executive
Officers -- Change in Control Provisions." Payment of deferred amounts generally
will be made in a single cash lump sum. However, if employment was terminated by
reason of retirement or death and the employee has so elected, payment will be
made in ten annual cash installments.
The Executive Deferred Plan is not being submitted to shareholders for their
approval because the benefits thereunder are not payable in Common Shares or
valued by reference to the market performance over time of the Common Shares.
FUNDING AND PROTECTION OF PLAN BENEFITS
As discussed above under Proposals IV, V and VI, it is proposed that the Stock
Plan, the Predecessor Performance Plans and the Board Deferred Plan be amended
so as to give participants therein the option of choosing from among additional
rates of return for earnings on their deferred compensation held in Interest
Accounts, which rates would match the rates of return on certain of the
investment funds available for the investment of employees' accounts under the
401(k) Plan. However, amounts held in Interest Accounts, as well as amounts
under the Executive Deferred Plan, would not actually be invested by the
Corporation in the 401(k) Plan investment funds. All the above-mentioned Plans
(collectively, the "Deferred Benefit Plans") are intended to be unfunded plans
for tax purposes, and participants thereunder have the status of general
unsecured creditors of the Corporation with respect to their rights to receive
any benefits.
If Proposals III, IV, V and VI are approved by the shareholders, management
intends that the Corporation's obligations with respect to amounts in Interest
Accounts earning 401(k) Plan rates of return under the Deferred Benefit Plans
would be funded through a variable life insurance policy under which the
Corporation's premium payments (in amounts equal to all Interest Account
allocations earning 401(k) Plan rates of return) would be invested in funds
maintained under the policy which would generally correspond in their investment
objectives to the five 401(k) Plan
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<PAGE> 39
investment funds used to determine rates of return for the Interest Accounts.
Management estimates that the Corporation's after-tax rate of return on the
insurance policy will approximate the after-tax cost to the Corporation of the
Interest Account portions of the Deferred Benefit Plans which earn 401(k) Plan
rates of return.
The insurance policy would have the following additional features: (i) the
return on investment of premiums would not be currently taxable to the
Corporation; (ii) death benefit proceeds payable to the Corporation would not be
subject to federal or state income tax; and (iii) the policy would permit
surrender by the Corporation at any time for its then cash surrender value.
Participants in the Deferred Benefit Plans would have no ownership interest in
or rights with respect to the policy.
It is intended that a benefits protection trust would be established by the
Corporation to which would be contributed the above-mentioned life insurance
policy and other assets. Although contributions to such trust would be made in
the discretion of management, the trust itself, and contributions once made
thereto, would be irrevocable, except that the insurance policy and all other
assets held in the trust would remain subject to the claims of the Corporation's
creditors in the event of its insolvency or bankruptcy. In the event of a
"change in control" of the Corporation (as defined above under the caption
"Compensation of Executive Officers -- Change in Control Provisions"), the
insurance policy and other trust assets would be used to satisfy the obligations
of the Corporation under the Deferred Benefit Plans.
VII MISCELLANEOUS
OTHER MATTERS
The management of the Corporation does not know of any matters to be presented
at the Meeting other than those specifically set forth in the Notice of Annual
Meeting of Shareholders. If any other matters properly 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.
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the 1995 Annual Meeting of
Shareholders must be received by the Corporation for possible inclusion in the
proxy statement and form of proxy relating to the 1995 meeting by November 11,
1994.
COST OF SOLICITATION
The expense of soliciting proxies will be borne by the Corporation. In addition
to the use of the mails, proxies may be solicited by personal interview, by
telephone, by facsimile or by telegraph. It is anticipated that banks, brokerage
firms and other institutions, nominees and fiduciaries will be requested to
forward the soliciting material to beneficial owners and to obtain
authorizations for the execution of proxies; and, if they in turn so request,
the Corporation will reimburse such banks, brokerage firms and other
institutions, nominees and fiduciaries for their expenses in forwarding such
material. Officers and regular employees of the Corporation and the Trust
Company also may solicit proxies without additional remuneration therefor. The
Corporation has retained Morrow & Co., Inc., New York, New York, to aid in the
solicitation of proxies for an estimated fee of $5,500.
Dated: March 11, 1994
Carol A. Strickland
Secretary
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<PAGE> 40
APPENDIX A
1989 STOCK COMPENSATION PLAN
OF U.S. TRUST CORPORATION
AS AMENDED, RESTATED AND RENAMED
EFFECTIVE AS OF JANUARY 1, 1994
SECTION 1. INTRODUCTION
1.1 PURPOSE
The purpose of the 1989 Stock Compensation Plan of U.S. Trust Corporation
(the "Plan") is to advance and promote the interests of U.S. Trust Corporation
and its Affiliated Companies by encouraging and enabling their senior level
employees to acquire common shares of U.S. Trust Corporation and by providing
for monetary payments to such employees based in part on the value of such
shares. In addition, the Plan will provide benefits to Members of the 401(k)
Plan (as hereinafter defined) whose allocations under the 401(k) Plan are
reduced as a result of the operation of the limitations imposed under sections
401(a)(17) and 415 of the Internal Revenue Code of 1986, as amended.
Accordingly, the Plan is intended as a further means not only of attracting and
retaining outstanding management but also of promoting a close identity of
interest between management and U.S. Trust Corporation's shareholders.
The Plan, as hereinafter set forth, represents a continuation of the 1989
Stock Compensation Plan of United States Trust Company of New York and
Affiliated Companies, as amended, restated and renamed effective as of January
1, 1994 to reflect (a) the adoption of the Plan by U.S. Trust Corporation as its
own Plan and the Corporation's assumption of, and becoming solely responsible
for, all liabilities and obligations of United States Trust Company of New York
under the Plan, and (b) changes in certain other provisions of the Plan.
The amendments described in clause (a) of the preceding paragraph, and the
amendments to Sections 2.1(ii), 2.2(E)(4), and 4.7, as reflected in this
Restatement, are subject to approval by shareholders of the Corporation at its
annual meeting scheduled to be held on April 26, 1994.
1.2 DEFINITIONS
As used herein, the following terms shall have the following meanings:
"AFFILIATED COMPANIES" shall mean United States Trust Company of New York,
and each other direct or indirect subsidiary of the Corporation.
"AVERAGE MARKET VALUE" shall mean, with respect to one Common Share as of
any date or with respect to any period, the mean between the per-share high and
low prices for the Corporation's Common Shares on such date, or on each day
during such period, as quoted on the NASDAQ National Market System, or, if the
Corporation's Common Shares are not traded on such system, on such other
securities market or securities exchange on which such shares are traded as the
Committee shall determine.
"AWARD" shall mean the grant of any Option, Performance Share Unit,
Restricted Common Share or Benefit Equalization Unit, or any combination
thereof, by the Committee to a Participant.
"BENEFICIARY" shall mean the person or persons designated by a Participant
in accordance with Section 6.9 to exercise any Option or to receive any amount,
or any Common Shares, payable under the Plan upon the Participant's death.
"BENEFIT EQUALIZATION UNIT," "PERFORMANCE SHARE UNIT" and "PHANTOM SHARE
UNIT" shall mean a unit of measurement equivalent to one Common Share, with none
of the attendant rights of a shareholder of such share, including, without
limitation, the right to vote such share and the right to receive dividends
thereon, except to the extent otherwise specifically provided herein.
"BOARD OF DIRECTORS" shall mean the Board of Directors of the Corporation.
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"CHANGE IN CONTROL" shall mean that any of the following events has
occurred:
(i) 20% or more of the Common Shares has been acquired by any person (as
defined by Section 3(a)(9) of the Securities Exchange Act of 1934)
other than directly from the Corporation;
(ii) there has been a merger or equivalent combination after which 49% or
more of the voting shares of the surviving corporation is held by
persons other than former shareholders of the Corporation; or
(iii) 20% or more of the directors elected by shareholders to the Board of
Directors are persons who were not nominated by management in the most
recent proxy statement of the Corporation;
provided, however, that notwithstanding anything in the Plan to the contrary, no
Change in Control shall be deemed to have occurred, and no rights arising upon a
Change in Control as provided in Sections 2.2(E)(6), 2.2(J), 3.7, 4.11 and 5.6
shall exist, to the extent that the Board of Directors so directs by resolution
adopted prior to the Change in Control, or not later than 45 days after the
Change in Control if the percentage of Common Shares acquired or directors
elected under clause (i) or (iii) of the foregoing definition of Change in
Control shall be at least 20% but less than 25%. Any resolution of the Board of
Directors adopted in accordance with the provisions of this definition directing
that a Change in Control shall be deemed not to have occurred for purposes of
this Plan and that Sections 2.2(E)(6), 2.2(J), 3.7, 4.11 and 5.6, or any of such
Sections shall not become effective, may be rescinded or countermanded at any
time with or without retroactive effect.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
"COMMITTEE" shall mean the Compensation and Benefits Committee of the Board
of Directors.
"COMMON SHARES" shall mean the common shares ($1.00 par value) of the
Corporation.
"CORPORATION" shall mean U.S. Trust Corporation.
"DETERMINED VALUE" shall mean the higher of (i) the highest bid price per
Common Share during the twelve months immediately preceding the date of a Change
in Control, or (ii) the highest price per Common Share actually paid in
connection with any Change in Control (including, without limitation, prices
paid in any subsequent merger or combination with any entity that acquires
control of the Corporation).
"DIVIDEND PAYMENT DATE" shall mean the date on which the Corporation pays a
dividend on its Common Shares.
"ESOP CONTRIBUTION" shall mean, (i) for any Plan Year (as defined in the
401(k) Plan) beginning on or after January 1, 1992, the ESOP Contribution to be
made on behalf of a Participant under the provisions of the 401(k) Plan in
effect for such Plan Year and (ii) for any Plan Year (as defined in the 401(k)
Plan) ending prior to January 1, 1992, the 50 percent portion of the
Profit-Sharing Amount (as defined in the 401(k) Plan in effect for such year)
that was to be contributed to or for the benefit of a Participant for such year
and that was not subject to the Participant's election to receive such amount in
cash.
"401(K) PLAN" shall mean (i) for any period beginning on or after January
1, 1992, the 401(k) Plan and ESOP of United States Trust Company of New York and
Affiliated Companies and (ii) for any period ending prior to January 1, 1992,
the Employees' Profit-Sharing Plan of United States Trust Company of New York
and Affiliated Companies.
"INCENTIVE STOCK OPTION" shall mean an option to purchase Common Shares
that qualifies as an incentive stock option within the meaning of section 422A
of the Code.
"KEY EMPLOYEE" shall mean any officer of the Corporation or any of its
Affiliated Companies at or above the rank of Vice President.
"MEMBER" shall mean any person included in the membership of the 401(k)
Plan.
"NONQUALIFIED STOCK OPTION" shall mean an option to purchase Common Shares
that does not qualify as an Incentive Stock Option.
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"OPTION" shall mean an Incentive Stock Option or a Nonqualified Stock
Option.
"PARTICIPANT" shall mean any Key Employee who is selected to participate in
the Plan in the manner described in Section 1.4. Any other employee of the
Corporation or any of its Affiliated Companies who is a Member of the 401(k)
Plan shall also be treated as a "Participant" for purposes of Section 5 of this
Plan if, for any Plan Year (as defined in the 401(k) Plan), the ESOP
Contribution otherwise to be made on behalf of such Participant, or to be
allocated to the Participant's account under the 401(k) Plan, for such Plan Year
is reduced as a result of the Statutory Limitations.
"PERFORMANCE CYCLE" shall mean the period of time, designated by the
Committee, during which performance is measured for the purpose of determining
whether an Award of Performance Share Units with respect to such period has been
earned.
"PERFORMANCE GOALS" shall mean, with respect to any Performance Cycle, the
performance objectives selected by the Committee to apply for the purpose of
determining whether, and to what extent, Awards of Performance Share Units will
be earned for such Performance Cycle.
"PRIOR PLAN" shall mean the 1989 Stock Compensation Plan of United States
Trust Company of New York and Affiliated Companies, as in effect from time to
time prior to January 1, 1994.
"RESTRICTED COMMON SHARES" shall mean Common Shares which are subject to
the Restrictions set forth in Section 3, and any new, additional or different
securities a Participant may become entitled to receive with respect to such
shares by virtue of a stock split or stock dividend or any other change in
corporate or capital structure of the Corporation.
"RESTRICTED PERIOD" shall mean the period of time during which Restricted
Common Shares are subject to Restrictions as set forth in Section 3.
"RESTRICTIONS" shall mean the restrictions on Restricted Common Shares
determined in accordance with Section 3.
"STATUTORY LIMITATIONS" shall mean, with respect to any Plan Year (as
defined in the 401(k) Plan), the limitations imposed under sections 401(a)(17)
and 415 of the Code with respect to the amount of compensation that may be taken
into account in calculating contributions on behalf of any Member, and the
amount of contributions that may be allocated to a Member's account, under the
401(k) Plan for such year.
1.3 ADMINISTRATION
The Plan shall be administered by the Committee. In no event shall a member
of the Committee be eligible for an Award under the Plan. A majority of the
members of the Committee shall constitute a quorum. The Committee may act at a
meeting, including a telephone meeting, by action of a majority of the members
present, or without a meeting by unanimous written consent. In addition to the
responsibilities and powers assigned to the Committee elsewhere in the Plan, the
Committee shall have the authority to:
(i) select the Participants;
(ii) grant Options, Restricted Common Shares, Performance Share Units and
Benefit Equalization Units to Participants in such combination and in
such amounts as it shall determine, subject to the terms and conditions
of the Plan;
(iii) determine the nature of the Restrictions and the duration of the
Restricted Period applicable to each Award of Restricted Common Shares
in accordance with Section 3;
(iv) determine the duration of each Performance Cycle;
(v) establish the Performance Goals for each Performance Cycle;
(vi) determine the maximum percentage of compensation with respect to
which an Award of Performance Share Units may be made to each
Participant, and the actual amount earned by each Participant with
respect to such Awards;
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(vii) determine whether an Option that is granted to a Participant shall
constitute a Nonqualified Stock Option or an Incentive Stock Option,
the number of Common Shares to be covered by each such Option and the
time or times when and the manner in which each Option shall be
exercisable;
(viii) amend any Incentive Stock Option with the consent of the Participant
so as to make it a Nonqualified Stock Option;
(ix) determine the amount of each Participant's ESOP Contribution for any
Plan Year (as defined in the 401(k) Plan) which could not be
contributed on the Participant's behalf, or allocated to the
Participant's account under the 401(k) Plan, because of the Statutory
Limitations;
(x) treat all or any portion of any period during which a Participant is
on military leave or on an approved leave of absence as a period of
employment, for purposes of accrual of his rights with respect to any
Award; and
(xi) establish from time to time guidelines or regulations for the
administration of the Plan, interpret the Plan, cause appropriate
records to be established, and make all determinations and take all
other actions considered necessary or advisable for the administration
of the Plan.
All decisions, actions or interpretations of the Committee under the Plan
shall be final, conclusive and binding upon all parties.
1.4 PARTICIPATION
Except for purposes of Section 5, Participants in the Plan shall be limited
to those Key Employees who have received written notification from the
Committee, or from a person designated by the Committee, that they have been
selected to participate in the Plan; and no employee shall at any time have the
right to be selected as a Participant. No Participant shall have the right, by
virtue of having been granted an Award, to be granted any additional Award at
any future date.
1.5 MAXIMUM NUMBER OF SHARES OF COMMON STOCK AVAILABLE FOR AWARDS
Notwithstanding any other provision of the Plan, the number of Common
Shares that may be distributed to Participants during the term of the Plan shall
be limited to one million three hundred thousand (1,300,000) Common Shares plus
the Common Shares, if any, remaining unused from the Common Shares previously
approved by the shareholders for awards and options under the 1981 Incentive
Stock Option Plan, 1981 Stock Option Plan, 1986 Stock Option Plan, Restricted
Stock Plan, Long-Term Performance Plan and 1988 Long-Term Performance Plan. In
the event (i) any Option granted under the Plan shall terminate or expire or
(ii) Awards of Performance Share Units or Restricted Common Shares shall be
forfeited, the number of Common Shares no longer subject to such Option or no
longer payable under such Award, and the number of Restricted Common Shares that
are forfeited, shall thereupon be released and shall thereafter be available for
new Awards under the Plan. In the event of a cancellation of an Option as
provided in Paragraph J of Section 2.2, the number of Common Shares as to which
such Option was canceled shall not again become available for use under the
Plan. The number of Common Shares represented by Benefit Equalization Units paid
for in cash lump sums pursuant to Section 5.6 shall not again become available
for use under the Plan. Furthermore, in determining the number of Common Shares
available for Awards under the Plan, only the number of Common Shares paid in
satisfaction of Awards of Performance Share Units in accordance with Section
4.3, and Phantom Share Units in accordance with Section 4.9, shall be considered
to have been used with respect to such Awards; provided, however, that the
number of Common Shares represented by Performance Share Units and Phantom Share
Units paid for in cash lump sums pursuant to Section 4.11 shall not again become
available for use under the Plan. The limitation provided under this Section 1.5
shall be subject to adjustment as provided in Section 6.1. The Common Shares
distributed under the Plan may be authorized and unissued shares, shares held in
the treasury of the Corporation, or shares purchased on the open market by the
Corporation (as such time or times and in such manner as it may determine);
provided, however, that Restricted Common Shares shall be distributed from
shares held in the treasury of the
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Corporation. The Corporation shall be under no obligation to acquire Common
Shares for distribution to Participants before payment in Common Shares is due.
SECTION 2. STOCK OPTIONS
2.1 AWARDS OF OPTIONS
Subject to the provisions of the Plan, the Committee shall determine and
designate from time to time those Participants to whom Incentive Stock Options,
or Nonqualified Stock Options, or both, are to be granted and the number of
Common Shares to be optioned to each Participant; provided, however, that (i)
the aggregate fair market value (determined at the time the Option is granted)
of the Common Shares with respect to which Incentive Stock Options are
exercisable for the first time by any Participant during any calendar year
(under all incentive stock option plans of the Participant's employer
corporation and its parent and subsidiary corporations) shall not
exceed $100,000; and (ii) the total number of Common Shares with respect to
which Options may be granted to any Participant during any calendar year
beginning on or after January 1, 1994, shall not exceed 250,000 Common Shares.
2.2 TERMS AND CONDITIONS OF OPTIONS
Each Option granted under the Plan shall be evidenced by an agreement, in a
form approved by the Committee (the "Option Agreement"). The Option Agreement
shall contain the following terms and conditions, and such other terms and
conditions as the Committee may deem appropriate:
(A) OPTION PERIOD. Each Option Agreement shall specify the period for
which the Option thereunder is granted (which in no event shall exceed ten
years from the date of grant) and shall provide that the Option shall
expire at the end of such period. The Committee may extend such period;
provided, however, that in the case of any Option that the Committee
previously determined to constitute an Incentive Stock Option, such
extension shall not in any way disqualify the Option as an Incentive Stock
Option. In no case shall such period, including any such extensions, exceed
(i) ten years from the date of grant, or (ii) in the case of Incentive
Stock Options granted to a Participant who, at the time the Incentive Stock
Option is granted, owns shares possessing more than 10 percent of the total
combined voting power of all classes of shares of his or her employer
corporation or of its parent or subsidiary corporation (a "Ten Percent
Shareholder"), five years from the date of grant.
(B) PURCHASE PRICE. The purchase price per Common Share shall be
determined by the Committee at the time any Option is granted, and shall be
not less than (i) the fair market value, or (ii) in the case of Incentive
Stock Options granted to a Ten Percent Shareholder, 110 percent of the fair
market value (but in no event less than the par value), of a Common Share
on the date the Option is granted, as determined by the Committee.
(C) EXERCISE OF OPTION. Except as otherwise provided under the Plan,
no part of any Option may be exercised until the Participant shall have
remained in the employ of the Corporation or any of its Affiliated
Companies for such period after the date on which the Option is granted as
the Committee may specify in the Option Agreement, and the Option Agreement
may provide for exercisability in installments.
(D) PAYMENT OF PURCHASE PRICE UPON EXERCISE. Each Option Agreement
shall provide that the purchase price of the Common Shares as to which an
Option shall be exercised shall be paid to the Corporation at the time of
exercise either in cash or in such other consideration as the Committee
deems appropriate, including, but not limited to, Common Shares already
owned by the Participant having a total fair market value, as determined by
the Committee, equal to the purchase price, or a combination of cash and
Common Shares having a total fair market value, as so determined, equal to
the purchase price. The Committee in its sole discretion may also provide
that the purchase price may be paid by delivering a properly executed
exercise notice in a form approved by the Committee together with
irrevocable
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instructions to a broker to promptly deliver to the Corporation the amount
of the applicable sale or loan proceeds to pay the purchase price.
(E) EXERCISE IN THE EVENT OF TERMINATION OF EMPLOYMENT OR CHANGE IN
CONTROL. In the event a Participant's employment with the Corporation and
its Affiliated Companies should terminate, or if a Change in Control should
occur, Options granted to the Participant may be exercised in accordance
with the following provisions:
(1) If a Participant's employment terminates as a result of death,
permanent disability or retirement, the Committee may, in its sole
discretion, accelerate in whole or in part any or all Options which the
Participant was not then entitled to exercise and the Participant (or,
in the case of the Participant's death, the Participant's Beneficiary)
shall have the right to exercise all Options so accelerated on the date
of such termination.
(2) If a Participant dies (i) while an employee or (ii) within
twelve months after termination of employment because of permanent
disability, the Participant's Options may be exercised, to the extent
that the Participant was entitled to exercise such Options on the date
of his or her death or termination of employment, by the Participant's
Beneficiary at any time, or from time to time, but not later than the
expiration date specified in paragraph (A) of this Section 2.2 or two
years after the Participant's death, whichever date is earlier.
(3) If a Participant's employment terminates as a result of
permanent disability, the Participant may exercise his or her Options,
to the extent that the Participant was entitled to do so at the date of
the termination of his or her employment, at any time, or from time to
time, but not later than the expiration date specified in paragraph (A)
of this Section 2.2 or twelve months after such termination of the
Participant's employment, whichever date is earlier.
(4) If a Participant's employment terminates as a result of his or
her retirement, the Participant may exercise his or her Options to the
extent the Participant was entitled to do so at the date of the
termination of his or her employment, at any time, or from time to time,
but not later than the earlier of (x) the expiration date specified in
paragraph (A) of this Section 2.2, or (y) three months (or, in the case
of any Nonqualified Stock Options, 15 months) after such termination of
the Participant's employment.
(5) If a Participant's employment terminates for any reason other
than death, permanent disability or retirement as described in (2), (3)
or (4) of this paragraph (E), all right to exercise his or her Options
shall terminate at the expiration date specified in paragraph (A) of
this Section 2.2 or three months after termination of employment,
whichever date is earlier.
(6) Notwithstanding any other provision herein to the contrary
(but subject to the proviso contained in the definition of "Change in
Control" in Section 1.2), upon the occurrence of a Change in Control,
the right to exercise all Options granted under the Plan which a
Participant would not otherwise have been entitled to exercise at such
time shall be accelerated, and the Participant shall thereupon have the
right to exercise all such Options immediately.
(F) TRANSFERABILITY OF OPTIONS. Any Option granted to a Participant
under the Plan shall be nontransferable and may be exercised during the
Participant's lifetime only by the Participant.
(G) INVESTMENT REPRESENTATION. Each Option Agreement may provide
that, upon demand by the Committee for such a representation, the
Participant (or, in the case of the Participant's death, the Participant's
Beneficiary) shall deliver to the Committee, at the time of any exercise of
an Option or portion thereof, a written representation that the shares to
be acquired upon such exercise are to be acquired for investment and not
for resale or with a view to the distribution thereof. Upon such demand,
delivery of such representation prior to the delivery of any Common Shares
issued upon exercise of an Option and prior to the expiration of the option
period shall be a condition precedent to the right of the Participant (or
the Participant's Beneficiary) to purchase any Common Shares. In the event
certificates are delivered under the Plan for any Common Shares with
respect to which such an investment
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representation has been obtained, the Committee may cause a legend or
legends to be placed on such certificates to make appropriate reference to
such representation and to restrict transfer in the absence of compliance
with applicable federal or state securities laws.
(H) PARTICIPANTS TO HAVE NO RIGHTS AS SHAREHOLDERS. A Participant
shall not have any rights as a shareholder with respect to any Common
Shares that are subject to any Option granted to the Participant, prior to
the date as of which such shares are issued to the Participant pursuant to
his or her exercise of such Option.
(I) OTHER OPTION PROVISIONS. Each Option Agreement shall also contain
the applicable terms and conditions set forth in Sections 6.1 and 6.6 and
may contain such other provisions as the Committee may, from time to time,
determine. Without limiting the foregoing, the Committee may require a
Participant to agree, as a condition to receiving an Option under the Plan,
that part or all of any Options previously granted to such Participant
under the Plan (or any predecessor plan) be terminated.
(J) CANCELLATION OF OPTIONS UPON A CHANGE IN CONTROL. Upon the
occurrence of a Change in Control, all Options that were granted under the
Plan at least six months prior to the date of such Change in Control shall
be cancelled. In the event of any such cancellation, the Corporation's
obligation in respect of each such Option shall be discharged by payment to
the Participant of a single cash lump sum (reduced by any taxes withheld
pursuant to Section 6.8) in an amount equal to the excess, if any, of the
Determined Value of the Common Shares subject to the Option or portion
thereof so cancelled over the aggregate purchase price of such shares as
set forth in the applicable Option Agreement. All such amounts shall be
payable as soon as practicable following the Change in Control.
(K) SEQUENTIAL EXERCISE OF OPTIONS NOT REQUIRED. Options granted
under the Plan may be exercised in any order, regardless of the date of
grant or the existence of any other outstanding Option.
SECTION 3. RESTRICTED COMMON SHARES
3.1 AWARDS OF RESTRICTED COMMON SHARES
Restricted Common Shares awarded under this Plan shall be subject to such
Restrictions as may be imposed with respect to such Shares by the Committee
pursuant to Section 3.2. Any Restrictions so imposed shall be binding on the
Corporation and on the Participants and their Beneficiaries.
3.2 RESTRICTIONS AND RESTRICTED PERIOD
At the time each Award of Restricted Common Shares is granted, the
Committee shall establish a period within which Restricted Common Shares awarded
to the Participants may not be sold, assigned, transferred, made subject to
gift, or otherwise disposed of, mortgaged, pledged or otherwise encumbered. The
Committee may impose such other Restrictions on any Restricted Common Shares as
it may determine in its discretion.
3.3 RIGHTS AS SHAREHOLDERS
Except for the Restrictions described in Section 3.2, and subject to the
forfeiture provisions described in Section 3.5, each Participant shall have,
with respect to any Restricted Common Shares awarded to the Participant, all
rights of a holder of Common Shares including the right to receive all dividends
or other distributions made or paid in respect of such shares and the right to
vote such shares at regular or special meetings of the shareholders of the
Corporation.
3.4 DELIVERY OF SHARES
Restricted Common Shares awarded to a Participant under the Plan shall be
held in the Participant's name in a book entry account maintained by the
Corporation. At the conclusion of the Restricted Period imposed with respect to
any Restricted Common Shares awarded to a Participant, or upon the prior
approval of the Committee as provided in Section 3.5, and subject to the
satisfaction of the applicable tax withholding
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requirements provided in Section 6.8, certificates representing such Restricted
Common Shares will be delivered to the Participant or, if the Participant has
died, to the Participant's Beneficiary, free of the restrictions imposed
pursuant to Section 3.2.
3.5 TERMINATION OF EMPLOYMENT
In the event of the termination of employment of any Participant, all
Restricted Common Shares awarded to the Participant under the Plan which are
then still subject to Restrictions will be forfeited by the Participant and
become the property of the Corporation. However, the Committee may, if the
Committee in its sole discretion determines that the circumstances warrant such
action, approve the delivery to the Participant of all or any part of the
Restricted Common Shares which would otherwise be forfeited pursuant to this
Section, upon such conditions as it shall determine.
3.6 SECTION 83(b) ELECTIONS
A Participant who files an election under section 83(b) of the Code to
include the fair market value of any Restricted Common Shares in gross income
while they are still subject to Restrictions shall promptly furnish the
Corporation with a copy of such election together with the amount of any
federal, state, local or other taxes required to be withheld to enable the
Corporation or any of its Affiliated Companies to claim an income tax deduction
with respect to such election.
3.7 CHANGE IN CONTROL
Upon the occurrence of a Change in Control, all Restricted Periods shall
end, the Restrictions applicable to all previously granted Awards of Restricted
Common Shares shall lapse and in lieu of delivery of such shares to the
Participants free from such Restrictions as provided in Section 3.4, the
Corporation's obligation in respect of such shares shall be discharged by
payment to each of the applicable Participants of a single cash lump sum. The
amount of such cash lump sum shall be determined by multiplying the number of
Restricted Common Shares held in the Participant's name by the Determined Value
of one Common Share. The single cash lump sum amount so determined, reduced by
any taxes withheld pursuant to Section 6.8, shall be paid to the Participant as
soon as practicable following the Change in Control.
SECTION 4. PERFORMANCE SHARE UNITS
4.1 AWARDS OF PERFORMANCE SHARE UNITS
Awards of Performance Share Units will be earned on the basis of corporate
performance measured against preestablished Performance Goals which will be
determined by the Committee for each Performance Cycle. The Committee shall have
the authority to adjust Performance Goals, or performance measurement standards
for any Performance Cycle as it deems equitable in recognition of (i)
extraordinary or nonrecurring events experienced by the Corporation during the
Performance Cycle, or by any other corporation whose performance is relevant to
the determination of the amount of any Award thereunder, (ii) changes in
applicable accounting rules or principles or changes in the Corporation's or in
any other such corporation's methods of accounting during the Performance Cycle,
(iii) the occurrence of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, merger, consolidation, rights offering, or any
other change in the capital structure of the Corporation, or of any other such
corporation, or (iv) such other events, changes, occurrences, conditions or
circumstances as it determines warrant such adjustment.
The Committee shall determine the amount allocated to each Participant as a
percentage of his or her annual rate of base salary at the commencement of, or
average annual base salary during the Performance Cycle, either individually or
by categories of Participants, provided that the Committee may, in its sole
discretion, also apply such percentage to other current or deferred compensation
and determine the Performance Cycle for which such deferred compensation shall
be counted. In the case of a Participant whose participation commenced after the
beginning of a Performance Cycle, the Committee shall determine the amount
allocated to such Participant as a percentage of his or her annual base salary
or average annual base
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salary on such date or during such other period as the Committee shall determine
prior to the date such participation commenced.
The amount allocated to each Participant or class of Participants shall
then be converted into and expressed in Performance Share Units by dividing the
dollar value of the amount so allocated by the Average Market Value of one
Common Share during the month preceding the month in which the Performance Cycle
begins or, in the case of an officer who becomes a Participant in a Performance
Cycle after it has begun, during the calendar month selected by the Committee on
or prior to the date such participation commenced.
A Participant's Award shall be increased by additional Performance Share
Units to reflect all dividends on the Common Shares with record date occurring
during the Performance Cycle relating to that Award. The amount of any such
additional Performance Share Units shall be determined by (i) multiplying the
dividend per share paid on the Common Shares by the number of Performance Share
Units then comprising such Participant's Award, and then (ii) dividing such
amount by the Average Market Value of one Common Share on the Dividend Payment
Date for such dividend.
The Committee shall also determine the percentage of each Participant's
Award which is to be based on absolute and relative growth in earnings per share
or rate of return on shareholder's equity of the Corporation, or other
measurement of corporate performance, either individually or by categories of
Participants.
4.2 AMOUNT OF PAYMENT
The amount payable to a Participant with respect to an Award of Performance
Share Units earned under the Plan shall be equal to (i) the number of
Performance Share Units to which such Participant shall have become entitled by
reason of the level of attainment of Performance Goals, multiplied by (ii) the
Average Market Value of one Common Share during the month in which the
Performance Cycle ends.
4.3 PAYMENT OF NON-DEFERRED AWARDS
The portion of an amount payable on account of an Award of Performance
Share Units which is not deferred pursuant to the Participant's election under
Section 4.4 shall be paid as soon as practicable after the end of the
Performance Cycle for which such Award was earned. Payment shall be made in the
form of a cash payment and/or in Common Shares, in such proportions as the
Committee shall determine in its sole discretion; provided, however, that not
more than one-half of the value of the payment shall consist of Common Shares.
The number of Common Shares to be included in such payment shall be determined
by dividing (i) the portion of the amount that is to be paid in such shares by
(ii) the Average Market Value of one Common Share during the month in which the
Performance Cycle ends.
4.4 DEFERRAL ELECTIONS
A Participant may elect to defer payment of any part or all of an Award of
Performance Share Units earned for any Performance Cycle. Any such election
shall be made in accordance with the following rules:
(a) A deferral election shall be made in writing, on a form provided
by the Committee for such purpose.
(b) In the election form, the Participant shall specify, by percentage
(which must be an even multiple of 5%), the portion of his or her Award the
Participant wishes to defer hereunder (the portion of an Award deferred
pursuant to the Participant's election is hereinafter referred to as the
Participant's "Deferred Amount").
(c) A Participant's election to defer an Award, or any part thereof,
for any Performance Cycle shall be filed with the Committee by no later
than the last day of the month which is two-thirds of the way through such
Performance Cycle unless the Committee specifies an earlier filing date.
(d) Any deferral election made by a Participant with respect to an
Award for any Performance Cycle shall be irrevocable.
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4.5 SEPARATE ACCOUNTS
For each Participant who elects to defer any part of any Award of
Performance Share Units, there shall be established on the books and records of
the Corporation, for bookkeeping purposes only, an account ("Account"), to
reflect the Participant's interest in his or her Deferred Amounts. The Account
so established for each Participant shall be maintained in accordance with the
following provisions:
(a) The Account established for each Participant shall consist of two
sub-accounts referred to herein, respectively, as the "Interest Portion"
and the "PSU Portion".
(b) The Interest Portion and the PSU Portion of each Participant's
Account shall be credited, respectively, with amounts equal to the portions
of the Participant's Deferred Amount for each Performance Cycle that the
Participant has elected under Section 4.6 to have allocated to such
Portions. Such amounts shall be so credited as of the first day of the
calendar month following the month in which the applicable Performance
Cycle ended.
(c) As of the date as of which any amount is credited to the PSU
Portion of a Participant's Account pursuant to paragraph (b), such amount
shall be converted into (and after such conversion shall be reflected in
such Portion as) a number of Phantom Share Units ("PSU's"). The number of
PSU's into which any amount is to be so converted shall be determined by
dividing (i) the dollar value of such amount by (ii) the Average Market
Value of one Common Share during the month in which the applicable
Performance Cycle ended.
(d) The Interest Portion and the PSU Portion of a Participant's
Account shall also include, on January 1, 1994, all interest, and all
additional Phantom Share Units, credited to such Portions for periods ended
prior to January 1, 1994 in accordance with the provisions of Sections 4.7
and 4.9 of the Prior Plan.
(e) From time to time after December 31, 1993, the Interest Portion
and the PSU Portion of a Participant's Account shall be adjusted to reflect
all interest or Earnings (as defined in Section 4.7), and all additional
PSU's, to be credited to such Portions pursuant to Sections 4.7 and 4.8,
and all payments made with respect to such Portions pursuant to Section
4.9.
(f) A Participant's interest in his or her Account shall be fully
vested and nonforfeitable at all times.
4.6 ELECTION AS TO ALLOCATION BETWEEN INTEREST PORTION AND PSU PORTION
A Participant who elects to defer any part of an Award of Performance Share
Units for any Performance Cycle may make an election under this Section 4.6 as
to the allocation of the Participant's Deferred Amount with respect to such
Award between the Interest Portion, and the PSU Portion, of the Participant's
Account. Any such election shall be made in accordance with the following rules:
(a) Such election shall be made in writing, on a form provided by the
Committee for such purpose.
(b) In the election form, the Participant shall specify, by percentage
(which must be an even multiple of 5%), the portions of the Participant's
Deferred Amount that he or she wishes to have allocated, respectively, to
the Interest Portion and to the PSU Portion of the Participant's Account.
At least 50% of the Participant's Deferred Amount with respect to an Award
for any Performance Cycle must be allocated to the PSU portion of the
Participant's Account.
(c) A Participant's election as to the allocation of his or her
Deferred Amount with respect to the Participant's Award for any Performance
Cycle shall be filed with the Committee by no later than 60 days prior to
the close of such Performance Cycle, or within such other period ending
prior to the close of such Performance Cycle as the Committee may require
or permit. Notwithstanding the foregoing, in the case of any Participant
who is an officer of the Corporation subject to Section 16 of the
Securities Exchange Act of 1934, an election as to the allocation of the
Participant's Deferred Amount with respect
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to an Award for any Performance Cycle ending on or after December 31, 1994
shall be filed with the Committee at least six months prior to the close of
such Performance Cycle.
(d) If a Participant fails to file, within the time provided in (c)
above, an election as to the allocation of his or her Deferred Amount with
respect to an Award for any Performance Cycle, the Participant shall be
deemed to have made an election hereunder to have the entire portion of
such Deferred Amount allocated to the PSU Portion of the Participant's
Account.
(e) Any election made, or deemed to have been made, under this Section
4.6 as to the allocation of the Participant's Deferred Amount with respect
to an Award for any Performance Cycle shall be irrevocable.
4.7 CREDITS TO INTEREST PORTION
In the case of any Participant whose employment with the Corporation and
its Affiliated Companies terminated prior to January 1, 1994, interest shall
continue to be credited to the Interest Portion of such Participant's Account in
accordance with the provisions of Section 4.7 of the Prior Plan for all periods
ending after December 31, 1993, until payment with respect to the Interest
Portion of such Participant's Account has been made in full. In the case of each
other Participant, the Interest Portion of the Participant's Account shall be
credited with Earnings for periods ending after December 31, 1993, in accordance
with the following provisions:
(a) As of the last day of each calendar month, each part of the
balance of the Interest Portion of a Participant's Account for which a
separate Earnings Crediting Option (as hereinafter defined) is in effect
pursuant to the Participant's election under this Section 4.7 shall be
credited with an amount determined by multiplying such part of the balance
by a percentage corresponding to the Applicable Rate of Return (as
hereinafter defined) for such month under such Earnings Crediting Option.
The amount so credited (which may be positive or negative depending on
whether the Applicable Rate of Return for the month is positive or
negative) is referred to herein as "Earnings".
(b) For purposes of this Section 4.7, the term "Earnings Crediting
Option" shall mean, initially, (i) the Prime Rate, and (ii) any investment
fund maintained under the 401(k) Plan other than the ESOP Stock Fund or the
U.S.T. Corp. Stock Fund; and the term "Prime Rate" shall mean, with respect
to any calendar month, the prime rate as quoted by United States Trust
Company of New York on the last business day of such month. Any investment
fund described in clause (ii) of the preceding sentence is referred to
herein as a "401(k) Plan Fund".
Notwithstanding the foregoing, the Committee may at any time, in its
sole discretion, determine (x) that the Prime Rate or any 401(k) Plan Fund
shall cease to constitute an Earnings Crediting Option for purposes of this
Section 4.7, (y) that any investment fund that is added to the 401(k) Plan
at any time after January 1, 1994 shall not constitute an Earnings
Crediting Option for purposes of the Plan, or (z) that any other
hypothetical investment fund or index or referenced rate of return shall
constitute an Earnings Crediting Option for purposes of the Plan.
Participants shall be notified in writing, at least 45 days in advance, of
any such change in the Plan's Earnings Crediting Options.
(c) The "Applicable Rate of Return" for any month, under any Earnings
Crediting Option, shall mean (i) in the case of an Earnings Crediting
Option that is a 401(k) Plan Fund, the percentage by which the value of
such Fund, as determined by the 401(k) Plan's Trustee as of the Valuation
Date (as defined in the 401(k) Plan) for such month, exceeds, or is less
than, the value of such Fund, as determined by the 401(k) Plan's Trustee as
of the Valuation Date for the immediately preceding month; and (ii) in the
case of any other Earnings Crediting Option, the rate of return applicable
for such month, as determined by the Committee in its sole discretion.
(d) A Participant may make elections with respect to the Earnings
Crediting Options that are to apply with respect to the Interest Portion of
his or her Account, in accordance with the following rules:
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(i) a Participant may elect to have any part or all of the balance
of the Interest Portion credited with Earnings under any Earnings
Crediting Option available under the Plan at the time of his or her
election.
(ii) each Participant shall make an initial election as to the
Earnings Crediting Options that are to apply with respect to the
Interest Portion at the time the Participant first elects under Section
4.6 to have any part of the Participant's Deferred Amount with respect
to an Award for any Performance Cycle ended on or after December 31,
1993, allocated to the Interest Portion of his or her Account. Such
election shall be made in the election form in which the Participant
makes his or her election under Section 4.6 to have such part of the
Participant's Deferred Amount with respect to the Participant's Award
for such Performance Cycle, allocated to the Interest Portion. In such
election form, the Participant shall specify, by percentages (which must
be even multiples of 5%) the respective parts of the balance of the
Interest Portion of his or her Account that are to be credited with
Earnings under each of the Earnings Crediting Options designated by the
Participant in such form. In the case of a Participant with a balance to
his credit in the Interest Portion of his Account as of December 31,
1993 (the Participant's "Existing Balance"), the Participant shall make
the specification referred to in the preceding sentence separately for
(A) the Participant's Existing Balance and (B) the portion of the
Participant's Deferred Amount to be allocated to the Interest Portion
with respect to the Award earned by the Participant for the Performance
Cycle ended on December 31, 1993.
(iii) The Earnings Crediting Options selected in the initial
election made by the Participant under clause (ii) above shall remain in
effect (and shall apply to all Deferred Amounts allocated to the
Interest Portion under Section 4.6 with respect to Awards earned by the
Participant for any subsequent Performance Cycles) until the Participant
changes his or her election in accordance with clause (iv) below.
(iv) A Participant may change the Earnings Crediting Options that
are to apply with respect to the Interest Portion of his or her Account
by making a new election hereunder. Such new election shall be made in
writing, on a form which is provided by the Committee for this purpose
and which the Participant files with the Committee. In such form, the
Participant shall specify, in the same manner as described in clause
(ii) above, the respective parts of the balance of the Interest Portion
that are to be credited with Earnings under each of the Earnings
Crediting Options designated by the Participant in such form. The
Participant's new election shall become effective as of the first day of
the calendar month following the date on which such election is filed
with the Committee, provided that it is so filed at least 15 days prior
to such first day. The Earnings Crediting Options selected by the
Participant in such new election shall remain in effect until the
Participant again changes his election with respect to the Interest
Portion of his or her Account in accordance with this clause (iv).
(e) The Interest Portion of a Participant's Account shall continue to
be credited with Earnings in accordance with the provisions of this Section
4.7 until all payments required to be made with respect to the Interest
Portion under Section 4.9 have been made. For this purpose, any payments
made under Section 4.9 with respect to the Interest Portion of the
Participant's Account will be deemed to have been made pro rata from the
respective parts of the balance of the Interest Portion that are subject to
separate Earnings Crediting Options.
4.8 CREDITS TO PSU PORTION
As of each Dividend Payment Date, the PSU Portion of each Participant's
Account shall be credited with additional PSU's the number of which shall be
determined by first (i) multiplying the number of PSU's standing to the
Participant's credit in the PSU Portion of the Participant's Account on the date
such dividend was declared by the per-share dollar amount of the dividend so
paid, and then (ii) dividing the resulting amount by the Average Market Value of
one Common Share on the Dividend Payment Date.
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4.9 PAYMENT OF DEFERRED AWARDS
In the case of any Participant described in the first sentence of Section
4.7, any amounts remaining to be paid with respect to such Participant's Account
as of January 1, 1994 shall be paid in accordance with the provisions of
Sections 4.10 and 4.11 of the Prior Plan. In the case of each other Participant,
payment with respect to the Participant's Account shall be made in accordance
with the following provisions:
(a) The balances of the Interest Portion and the PSU Portion of a
Participant's Account shall become payable upon the Participant's
termination of employment with the Corporation and its Affiliated Companies
for any reason. For this purpose, a Participant who ceases active
employment by reason of disability but who becomes entitled to receive
benefit payments under the long-term disability plan maintained by the
Corporation or any of its Affiliated Companies shall be treated as
continuing to be employed with the Corporation and its Affiliated Companies
during all periods for which he or she continues to receive benefit
payments under such plan.
(b) Payment with respect to the Interest Portion and the PSU Portion
of a Participant's Account shall be made in the form of a series of 10
annual installments. The first such installment payment shall be made on
the last business day of February of the calendar year following the year
in which the Participant's employment with the Corporation and its
Affiliated Companies terminates, and the remaining installment payments
shall be made on the last business day of February of each succeeding year.
(c) Each installment payment to be made with respect to the Interest
Portion of a Participant's Account shall be made in cash, in an amount
determined by dividing (i) the balance of the Interest Portion determined
as of the last day of the calendar year preceding the year in which such
payment is to be made, by (ii) the number of installment payments remaining
to be made. The last such installment payment shall include Earnings
credited to the Interest Portion for the month preceding the month in which
such payment is made.
(d) Each installment payment to be made with respect to the PSU
Portion of a Participant's Account shall be made partly in Common Shares,
and partly in cash. The number of shares to be included in each such
installment payment shall be equal to the number of whole PSU's included in
the quotient resulting from dividing (i) the total number of PSU's included
in the balance of the PSU Portion of the Participant's Account as of the
last day of the calendar year preceding the year in which such payment is
to be made, by (ii) the number of installment payments remaining to be
made; and the amount of cash to be included in each such installment
payment shall be determined by multiplying (iii) the fractional part of a
PSU included in the aforementioned quotient by (iv) the Average Market
Value of one Common Share on the business day immediately preceding the
date on which such installment payment is to be made. The last such
installment payment shall include a number of Common Shares equal to the
whole number of any additional PSU's that are credited to the PSU Portion
of the Participant's Account under Section 4.8 during the month preceding
the month in which such payment is made, together with cash (in an amount
determined in the same manner as described in clause (iv) of the preceding
sentence) for any fractional part of a PSU that is so credited.
(e) If a Participant should die before receiving all payments required
to be made hereunder with respect to the Participant's Account, any
payments remaining to be made at the date of the Participant's death shall
be made to the Participant's Beneficiary in the same form, at the same
times and in the same amounts, as such payments would have been made to the
Participant (i) if he or she had not died, and (ii) if the Participant died
while still employed, if the Participant's employment had otherwise
terminated on the date of his or her death.
(f) Notwithstanding any other provision in this Section 4.9 to the
contrary, payment with respect to any part or all of the Participant's
Account balances may be made to the Participant or, if the Participant has
died, to the Participant's Beneficiary, on any date earlier than the date
on which such payment is to be made pursuant to such other provisions of
this Section 4.9 if (i) the Participant, or his or her Beneficiary,
requests such early payment and (ii) the Committee, in its sole discretion,
determines that
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such early payment is necessary to help the Participant, or his or her
Beneficiary, meet an "unforeseeable emergency" within the meaning of
Section 1.457-2(h)(4) of the federal Income Tax Regulations. The amount
that may be so paid may not exceed the amount necessary to meet such
emergency.
4.10 PARTIAL AWARDS
A Key Employee who is a participant for less than a full Performance Cycle,
whether by reason of commencement or termination of employment or otherwise,
shall receive such portion of an Award of Performance Share Units, if any, for
that Performance Cycle as the Committee shall determine in its sole discretion.
4.11 CHANGE IN CONTROL
In the event of a Change in Control, the provisions of this Section 4.11
shall apply notwithstanding any other provision herein to the contrary (but
subject to the proviso contained in the definition of "Change in Control" in
Section 1.2). Upon the occurrence of a Change in Control, all incomplete
Performance Cycles in effect on the date the Change in Control occurs shall end
on such date, and the Performance Goals with respect to each such Performance
Cycle shall be deemed to have been attained to the full and maximum extent. The
Committee shall (i) cause to be paid to each Participant full Awards with
respect to Performance Goals for each such Performance Cycle, and (ii) cause all
previously deferred Awards to be settled in full. All Awards of Performance
Share Units which are deemed to have been earned to the full and maximum extent
upon the occurrence of a Change in Control shall be payable in single cash lump
sums, in amounts determined by multiplying the number of Performance Share Units
corresponding to such full Awards by the Determined Value of one Common Share.
All settlements of previously deferred Awards shall be payable in single cash
lump sums. The amount so payable with respect to each Participant's previously
deferred Awards shall be equal to the sum of (a) the aggregate amount of the
balance of the Interest Portion of the Participant's Account, plus (b) an amount
determined by multiplying the aggregate number of Phantom Share Units then
included in the balance of the PSU Portion of the Participant's Account by the
Determined Value of one Common Share. All amounts payable to Participants
pursuant to this Section 4.11, reduced by any taxes withheld pursuant to Section
6.8, shall be paid to such Participants as soon as practicable following the
Change in Control.
SECTION 5. BENEFIT EQUALIZATION UNITS
5.1 AWARDS OF BENEFIT EQUALIZATION UNITS
For each Plan Year (as defined in the 401(k) Plan) for which any portion of
the ESOP Contribution that otherwise would have been made to the 401(k) Plan on
behalf of a Participant cannot be made, or cannot be allocated (or cannot result
in the allocation of ESOP Stock) to the Participant's account under the 401(k)
Plan, because of the Statutory Limitations, an Award of Benefit Equalization
Units shall be made to the Participant under this Plan.
The number of Benefit Equalization Units to be so awarded for any such year
shall be determined by
(a) ascertaining the amount of the ESOP Contribution for such year
that would have been made on the Participant's behalf and that would have
been allocated (or that would have resulted in the allocation of ESOP
Stock) to the Participant's account under the 401(k) Plan in the absence of
the Statutory Limitations;
(b) subtracting from the amount determined in clause (a), the amount
of the ESOP Contribution for such year that was made on the Participant's
behalf and that was allocated (or that resulted in the allocation of ESOP
Stock) to the Participant's account under the 401(k) Plan; and
(c) dividing the amount determined under clause (b) by the Average
Market Value of one Common Share on the last business day of such year.
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5.2 VESTING
All Benefit Equalization Units credited to a Participant under the Plan
shall be nonforfeitable at all times.
5.3 SEPARATE ACCOUNTS
The Committee shall cause a separate account to be maintained for each
Participant who has been credited with Benefit Equalization Units under the
Plan. Each Participant's account shall be credited from time to time with the
number of Benefit Equalization Units determined by the Committee.
5.4 DIVIDEND EQUIVALENTS
As of each Dividend Payment Date, each Participant's account shall be
credited with additional Benefit Equalization Units the number of which shall be
determined by first (i) multiplying the number of Benefit Equalization Units
standing to the Participant's credit on the date such dividend was declared by
the per-share dollar amount of the dividend so paid, and then (ii) dividing the
resulting amount by the Average Market Value of one Common Share on the Dividend
Payment Date.
5.5 PAYMENT OF BENEFIT EQUALIZATION UNITS
Payment with respect to a Participant's Benefit Equalization Units shall be
made as soon as practicable after the termination of a Participant's employment
with the Corporation and its Affiliated Companies, for any reason. Payment shall
be made in the form of (a) a number of Common Shares equal to the number of
whole Benefit Equalization Units included in the balance of the Participant's
Account as of the last day of the month preceding the month in which such
payment is made, and (b) a cash payment in an amount determined by multiplying
(i) the fractional part of the Benefit Equalization Unit included in such
balance as of such last day, by (ii) the Average Market Value of one Common
Share on the business day immediately preceding the date on which such payment
is made.
5.6 CHANGE IN CONTROL
Notwithstanding any other provision herein to the contrary (but subject to
the proviso contained in the definition of "Change in Control" in Section 1.2),
payment with respect to a Participant's Benefit Equalization Units shall be made
in accordance with the provisions of this Section 5.6 in the event of a Change
in Control. Upon the occurrence of a Change in Control, all Benefit Equalization
Units shall become payable to the applicable Participants in single cash lump
sums. The amount so payable to each Participant shall be determined by
multiplying the number of Benefit Equalization Units to the Participant's credit
by the Determined Value of one Common Share. Amounts payable to Participants
pursuant to this Section 5.6, reduced by taxes withheld pursuant to Section 6.8,
shall be paid to the Participants as soon as practicable following the Change in
Control.
SECTION 6. GENERAL PROVISIONS
6.1 CERTAIN ADJUSTMENTS TO PLAN SHARES
In the event of any change in the Common Shares by reason of any stock
dividend, recapitalization, reorganization, merger, consolidation, split-up,
combination or exchange of shares, or any rights offering to purchase Common
Shares at a price substantially below fair market value, or any similar change
affecting the Common Shares, the number and kind of shares available for Awards
under the Plan, the number and kind of shares represented by Performance Share
Units, Phantom Share Units or Benefit Equalization Units and the number and kind
of shares subject to Restrictions or subject to Options in outstanding Option
Agreements and the purchase price per share thereof shall be appropriately
adjusted consistent with such change in such manner as the Committee, in its
sole discretion, may deem equitable to prevent substantial dilution or
enlargement of the rights granted to, or available for, the Participants
hereunder. Any adjustment of an Incentive Stock Option pursuant to this Section
shall be made only to the extent not constituting a
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"modification" within the meaning of Section 425(h)(3) of the Code, unless the
holder of such Option shall agree otherwise. The Committee shall give notice to
each Participant of any adjustment made pursuant to this Section and, upon such
notice, such adjustment shall be effective and binding for all purposes of the
Plan.
6.2 SUCCESSOR CORPORATION
The obligations of the Corporation under the Plan shall be binding upon any
successor corporation or organization resulting from the merger, consolidation
or other reorganization of the Corporation, or upon any successor corporation or
organization succeeding to substantially all of the assets and business of the
Corporation. The Corporation agrees that it will make appropriate provision for
the preservation of Participants' rights under the Plan in any agreement or plan
which it may enter into or adopt to effect any such merger, consolidation,
reorganization or transfer of assets.
6.3 NON-ALIENATION OF BENEFITS
A Participant's rights to payments under the Plan shall not be subject in
any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment, or garnishment by creditors of the Participant or his
or her Beneficiary.
6.4 GENERAL CREDITOR STATUS
Participants shall have no right, title, or interest whatsoever in or to
any investments which the Corporation may make to aid it in meeting its
obligations under the Plan. Nothing contained in the Plan, and no action taken
pursuant to its provisions, shall create or be construed to create a trust of
any kind, or a fiduciary relationship between the Corporation and any
Participant, Beneficiary, or any other person. To the extent that any person
acquires a right to receive payments from the Corporation under the Plan, such
right shall be no greater than the right of a general unsecured creditor of the
Corporation. The Plan shall constitute a mere promise by the Corporation to make
payments in the future of the benefits provided for herein. It is intended that
the arrangements reflected in this Plan be treated as unfunded for tax purposes,
as well as for purposes of Title I of ERISA. All payments to be made hereunder
shall be paid from the general funds of the Corporation and no special or
separate fund shall be established and no segregation of assets shall be made to
assure payment of such amounts except as expressly set forth in the Plan. In its
sole discretion, the Corporation may authorize the creation of trusts or other
arrangements to meet the obligations created under the Plan to deliver Common
Shares or pay cash; provided, however, that, unless the Committee otherwise
determines with the consent of the affected Participant, the existence of such
trusts or other arrangements shall be consistent with the "unfunded" status of
the Plan.
6.5 NO RIGHT TO CONTINUED EMPLOYMENT UNDER THE PLAN
Neither the Plan nor any action taken thereunder shall be construed as
giving any employee any right to be retained in the employ of the Corporation or
any of its Affiliated Companies.
6.6 AWARDS NOT TREATED AS COMPENSATION UNDER BENEFIT PLANS
No Award shall be considered as compensation under any employee benefit
plan of the Corporation or any of its Affiliated Companies, except as
specifically provided in any such plan or as otherwise determined by the Board
of Directors.
6.7 LISTING AND QUALIFICATION OF COMMON SHARES
The Corporation, in its discretion, may postpone the issuance, delivery,
distribution or release of Common Shares upon any exercise of an Option or
pursuant to an Award of Restricted Stock, Performance Share Units or Benefit
Equalization Units until completion of such stock exchange listing or other
qualification of such shares under any state or federal law, rule or regulation
as the Corporation may consider appropriate, and may require any Participant or
Beneficiary to make such representations and furnish such information as it may
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consider appropriate in connection with the issuance or delivery of the shares
in compliance with applicable laws, rules and regulations.
6.8 TAXES
The Corporation or any of its Affiliated Companies may make such provisions
and take such steps as it may deem necessary or appropriate for the withholding
of all federal, state and local taxes required by law to be withheld with
respect to Awards granted pursuant to the Plan including, but not limited to (i)
deducting the amount so required to be withheld from any other amount then or
thereafter payable to a Participant or Beneficiary, (ii) reducing the amount of
any Award of Performance Share Units otherwise required to be deferred pursuant
to a Participant's election under Section 4.4, by the amount so required to be
withheld with respect to such deferred amount, and/or (iii) requiring a
Participant or Beneficiary to pay to the Corporation or any of its Affiliated
Companies the amount so required to be withheld as a condition of the issuance,
delivery, distribution or release of any Common Shares.
6.9 DESIGNATION AND CHANGE OF BENEFICIARY
Each Participant shall file with the Committee a written designation of one
or more persons as the Beneficiary who shall be entitled to exercise any Options
or to receive any amount, or any Common Shares, payable under the Plan upon his
or her death. A Participant may, from time to time, revoke or change his or her
Beneficiary designation without the consent of any previously designated
Beneficiary by filing a new designation with the Committee. The last such
designation received by the Committee shall be controlling; provided, however,
that no designation, or change or revocation thereof, shall be effective unless
received by the Committee prior to the Participant's death, and in no event
shall it be effective as of a date prior to such receipt. If at the date of a
Participant's death, there is no designation of a Beneficiary in effect for the
Participant pursuant to the provisions of this Section 6.9, or if no Beneficiary
designated by the Participant in accordance with the provisions hereof survives
to exercise any Options that become exercisable, or to receive any amount or
Common Shares that becomes payable, under the Plan by reason of the
Participant's death, the Participant's estate shall be treated as the
Participant's Beneficiary for purposes of the Plan.
6.10 PAYMENTS TO PERSONS OTHER THAN PARTICIPANT
If the Committee shall find that any Participant or Beneficiary to whom any
amount, or any Common Shares, is payable under the Plan is unable to care for
his or her affairs because of illness, accident or legal incapacity, then if the
Committee so directs, such amount, or such Common Shares, may be paid to such
Participant's or Beneficiary's spouse, child or other relative, an institution
maintaining or having custody of such person, or any other person deemed by the
Committee to be a proper recipient on behalf of such Participant or Beneficiary,
unless a prior claim therefor has been made by a duly appointed legal
representative of the Participant or Beneficiary. Any payment made under this
Section 6.9 shall be a complete discharge of the liability of the Corporation
with respect to such payment.
6.11 NO LIABILITY OF COMMITTEE MEMBERS
No member of the Committee shall be personally liable by reason of any
contract or other instrument executed by such member or on his or her behalf in
his or her capacity as a member of the Committee nor for any mistake of judgment
made in good faith, and the Corporation shall indemnify and hold harmless each
member of the Committee, and each employee, officer, director or trustee of the
Corporation or any of its Affiliated Companies to whom any duty or power
relating to the administration or interpretation of the Plan may be allocated or
delegated, against any cost or expense (including counsel fees) or liability
(including any sum paid in settlement of a claim with the approval of the Board
of Directors) arising out of any act or omission to act in connection with the
Plan unless arising out of such person's own fraud or bad faith.
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6.12 AMENDMENT OR TERMINATION
Except as to matters that in the opinion of the Corporation's legal counsel
require shareholder approval, any provision of the Plan may be modified as to a
Participant by an individual agreement approved by the Board of Directors. The
Board of Directors may, with prospective or retroactive effect, amend, suspend
or terminate the Plan or any portion thereof at any time; provided, however,
that (i) no amendment that would materially increase the cost of the Plan to the
Corporation may be made by the Board of Directors without the approval of the
shareholders of the Corporation and (ii) no amendment, suspension or termination
of the Plan shall deprive any Participant of any rights to Awards previously
made under the Plan without his or her written consent. Any amendment that the
Board of Directors would be permitted to make pursuant to the preceding sentence
may also be made by the Committee where appropriate to facilitate the
administration of the Plan or to comply with applicable law or any applicable
rules and regulations of government authorities. Subject to earlier termination
pursuant to the provisions of this Section, and unless the shareholders of the
Corporation shall have approved an extension of the Plan beyond such date, no
further Awards shall be made under the Plan after the expiration of 10 years
from the effective date of the Plan specified in Section 6.14.
6.13 GOVERNING LAW
The Plan shall be governed by and construed in accordance with the laws of
the State of New York, without reference to the principles of conflicts of law
thereof.
6.14 EFFECTIVE DATE
The Plan, as initially adopted and approved by the holders of a majority of
the Common Shares outstanding and entitled to vote at the annual meeting of the
Corporation's shareholders in 1989, is effective as of December 13, 1988.
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APPENDIX B
BOARD MEMBERS' DEFERRED COMPENSATION PLAN
OF U.S. TRUST CORPORATION
AS AMENDED, RESTATED AND RENAMED EFFECTIVE AS OF
JANUARY 1, 1994
------------------------
1. PURPOSE
The purpose of the Plan is to provide Eligible Board Members of U.S. Trust
Corporation and its Affiliated Companies with an opportunity to defer payment of
certain portions of their compensation, at their election, in accordance with
the provisions hereof.
The Plan, as hereinafter set forth, represents a continuation of the
Deferred Compensation Plan for Board Members of United States Trust Company of
New York and Affiliated Companies, as amended, restated and renamed effective as
of January 1, 1994 to reflect (a) the adoption of the Plan by U.S. Trust
Corporation as its own Plan and the Corporation's assumption of, and becoming
solely responsible for, all liabilities and obligations of United States Trust
Company of New York under the Plan, and (b) changes in certain other provisions
of the Plan.
2. DEFINITIONS
As used herein, the following terms shall have the following meanings:
"ACCOUNT" shall mean the Account established for a Participant pursuant to
Section 5.
"AFFILIATED COMPANIES" shall mean United States Trust Company of New York,
and each other direct or indirect subsidiary of the Corporation.
"BENEFICIARY" shall mean the person or persons designated by a Participant
in accordance with Section 10 to receive any amount, or any common shares of the
Corporation, payable under the Plan by reason of his or her death. "Board" shall
mean (i) the Board of Directors, (ii) the Board of Trustees of United States
Trust Company of New York, or (iii) the Board of Directors of any other direct
or indirect subsidiary of the Corporation, the members of which board have been
designated by the Board of Directors as being eligible for participation in this
Plan.
"BOARD OF DIRECTORS" shall mean the Board of Directors of the Corporation.
"BUSINESS DAY" shall mean any day on which common shares of the Corporation
are traded on the NASDAQ National Market System or, if common shares of the
Corporation are not traded on such system, on such other securities market or
securities exchange on which such shares are traded as the Committee shall have
designated under Section 6(b).
"COMMITTEE" shall mean the persons appointed by the Board of Directors to
administer the Plan in accordance with Section 13.
"CORPORATION" shall mean U.S. Trust Corporation.
"ELIGIBLE BOARD MEMBER" shall mean any individual who is a member of any
Board and who is entitled to receive compensation for services rendered in such
capacity.
"ELIGIBLE COMPENSATION" shall mean, with respect to any Eligible Board
Member for any Plan Year, all fees payable to such Board Member during such year
for attendance at meetings of any Board or committees thereof, and all fees
payable to such Board Member during such year by way of retainer for service as
a member or chairman of any Board or committees thereof regardless of the number
of meetings attended ("Retainer Fees"). Notwithstanding the foregoing, the term
"Eligible Compensation" shall not include (i) any compensation payable to an
Eligible Board Member in a form other than cash, or (ii) any Retainer Fee
payable to any Eligible Board Member in 1994 for services rendered during the
last calendar quarter of
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1993. Clause (ii) of the preceding sentence shall not apply to any Retainer Fee
so payable to any Eligible Board Member who had elected to defer such fee
pursuant to an election made prior to October 1, 1993 under Section 4 of the
Prior Plan.
"PARTICIPANT" shall mean any Eligible Board Member who has made an election
under Section 3 (or under Section 4 of the Prior Plan) to defer any portion of
his or her Eligible Compensation for any Plan Year.
"PHANTOM SHARE UNIT" or "PSU" shall mean a unit of measurement equivalent
to one common share of the Corporation, with none of the attendant rights of a
holder of such share, including, without limitation, the right to vote such
share and the right to receive dividends thereon, except to the extent otherwise
specifically provided herein.
"PLAN" shall mean the Board Members' Deferred Compensation Plan of U.S.
Trust Corporation, as set forth herein and as amended from time to time.
"PLAN YEAR" shall mean the calendar year.
"PRIOR PLAN" shall mean the Deferred Compensation Plan for Board Members of
United States Trust Company of New York and Affiliated Companies, as in effect
from time to time prior to January 1, 1994.
3. DEFERRAL ELECTIONS
With respect to each Plan Year beginning on or after January 1, 1994, an
Eligible Board Member may elect to have payment of any part or all of his or her
Eligible Compensation for such year deferred, and to have payment of such
portion made under the terms of this Plan. Any such election shall be made in
accordance with the following rules:
(a) A deferral election shall be made in writing, on a form provided
by the Committee for such purpose.
(b) In the election form, the Eligible Board Member (i) shall specify,
by percentage (which must be an even multiple of 5%), the portion of his or
her Eligible Compensation the Eligible Board Member wishes to defer
hereunder (the amounts so deferred are hereinafter referred to as the
Eligible Board Member's "Deferred Amounts"), and (ii) shall specify, by
percentage (which must be an even multiple of 5%), the portions of the
Eligible Board Member's Deferred Amounts that he or she wishes to have
allocated, respectively, to the PSU Portion and to the Interest Portion of
the Account established for the Eligible Board Member pursuant to Section
5. At least 50% of the Eligible Board Member's Deferred Amounts for each
Plan Year must be allocated to the PSU Portion of such Account.
(c) An Eligible Board Member's election to defer Eligible Compensation
for any Plan Year shall be filed with the Committee (i) by no later than
December 31, 1993, in the case of an election to defer Eligible
Compensation for the Plan Year beginning on January 1, 1994; or (ii) in the
case of an election to defer Eligible Compensation for any Plan Year
beginning on or after January 1, 1995, by no later than June 30 of the
preceding Plan Year.
(d) Notwithstanding the provisions of paragraph (b) above, a newly
elected Eligible Board Member may make an initial deferral election
hereunder with respect to Eligible Compensation for the Plan Year in which
he or she is first elected to serve as a member of any Board and, if so
elected after June 30 of such year, for the next following Plan Year, by
filing his or her election form with the Committee by no later than 30 days
after the date on which he or she commences to serve as a member of such
Board. Any deferral election so made shall be effective only with respect
to Eligible Compensation earned for services performed after the date on
which the Eligible Board Member's initial deferral election has been filed
with the Committee.
(e) Any deferral election made by an Eligible Board Member with
respect to his or her Eligible Compensation for a Plan Year, and any
election made hereunder as to the allocation of the Deferred
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Amounts for such year to the PSU Portion and the Interest Portion of his or
her Account, shall be irrevocable.
4. ELECTION AS TO EXISTING BALANCE
Each Participant who had elected to defer any compensation under the terms
of the Prior Plan shall have the right to elect to have the balance to the
Participant's credit under the Prior Plan at December 31, 1993 (the
Participant's "Existing Balance") allocated to the PSU Portion and to the
Interest Portion of the Participant's Account in such percentages (which must be
even multiples of 5%) as specified by the Participant in such election.
The Participant's election with respect to the allocation of his Existing
Balance shall be made in writing, on a form provided by the Committee for such
purpose, and shall be filed by the Participant with the Committee by no later
than December 31, 1993. If a Participant fails to make such election by such
date, the Participant shall be deemed to have made an election hereunder to have
his or her Existing Balance allocated entirely to the Interest Portion of his or
her Account, and shall be deemed to have made an initial election under Section
7(f)(ii) to have the entire balance of the Interest Portion credited with the
Earnings under the Earnings Crediting Option specified in Section 7(d)(i),
subject, however, to the Participant's right to change such deemed initial
election in accordance with Section 7(f)(iv).
5. ACCOUNTS
For each Participant, there shall be established on the books and records
of the Corporation, for bookkeeping purposes only, an Account, to reflect the
Participant's interest under the Plan. The Account so established for each
Participant shall be maintained in accordance with the following provisions:
(a) The Account established for each Participant shall consist of two
sub-accounts referred to herein, respectively, as the "PSU Portion" and the
"Interest Portion".
(b) The PSU Portion and the Interest Portion of each Participant's
Account shall be credited, respectively, with amounts equal to the portions
of the Participant's Deferred Amounts for each Plan Year that the
Participant has elected under Section 3 to have allocated to such Portions.
Such amounts shall be so credited as of the first day of the calendar month
following the month in which the amounts in question would have been paid
to the Participant had the Participant not elected under Section 3 to have
payment of such amounts deferred under this Plan.
(c) As of January 1, 1994, the PSU Portion and the Interest Portion of
a Participant's Account shall be credited, respectively, with amounts equal
to the portions of the Participant's Existing Balance that are to be
allocated to such Portions pursuant to the Participant's election, or
deemed election, under Section 4.
(d) The PSU Portion and the Interest Portion of a Participant's
Account shall be adjusted to reflect all additional PSU's, interest and
Earnings (as defined in paragraph (c) of Section 7) to be credited to such
Portions pursuant to Section 7, and all payments made with respect to such
Portions pursuant to Section 9.
(e) A Participant's interest in his or her Account shall be fully
vested and nonforfeitable at all times.
6. CONVERSION TO PSU'S
Amounts credited to the PSU Portion of a Participant's Account pursuant to
paragraph (b) or (c) of Section 5 (and any interest credited thereon pursuant to
paragraph (b) of Section 7) shall be converted into (and after such conversion
shall be reflected in such Portion as) a number of Phantom Share Units
("PSU's"). The conversion shall be made in accordance with the following rules.
(a) Amounts so credited shall be converted as of the following dates
(the date for the conversion of each such amount is hereinafter referred to
as the "Conversion Date"):
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(i) In the case of any amount so credited with respect to any part
of a Participant's Existing Balance (and any interest credited thereon
under paragraph (b) of Section 7), the Conversion Date shall be July 1,
1994.
(ii) In the case of any amount so credited with respect to a
Participant's Deferred Amounts for any Plan Year beginning on or after
January 1, 1995, the Conversion Date shall be the same date as the date
as of which such amount is so credited.
(iii) In the case of any amount so credited with respect to a
Participant's Deferred Amounts for the Plan Year beginning on January 1,
1994, the Conversion Date shall be the later of (A) the date as of which
such amount is so credited, or (B) July 1, 1994.
(iv) Notwithstanding the provisions of clauses (ii) and (iii), in
the case of any amount so credited with respect to a newly elected
Eligible Board Member's Deferred Amounts for the Plan Year in which he
or she is first elected to serve as a Member of any Board and, if so
elected after June 30 of such year, for the Next Following Plan Year,
the Conversion Date shall be the later of (A) the date as of which such
amount is so credited, or (B) the first day of the month following the
expiration of six months from the date on which the Eligible Member's
initial deferral election was filed with the Committee pursuant to
Section 3(d).
(b) The number of PSU's into which any amount credited to the PSU
Portion of a Participant's Account (and any interest credited thereon under
paragraph (b) of Section 7) is to be converted shall be determined by
dividing (i) the dollar value of such amount by (ii) the Average Market
Value of one common share of the Corporation on the Conversion Date for
such amount or, if such Conversion Date is not a Business Day, on the
Business Day next preceding such Conversion Date. For this purpose, the
"Average Market Value" of one common share of the Corporation on any
Business Day shall mean the mean between the per-share high and low prices
for the Corporation's common shares during such day, as quoted on the
NASDAQ National Market System, or, if the Corporation's common shares are
not traded on such system, on such other securities market or securities
exchange on which such shares are traded as the Committee shall determine.
7. CREDITING OF EARNINGS
Until payment with respect to a Participant's Account has been made in full
in accordance with Section 9, the PSU Portion of a Participant's Account shall
be credited with additional PSU's or interest, and the Interest Portion of the
Participant's Account shall be credited with Earnings, in accordance with the
following provisions:
(a) As of each date on which the Corporation pays a dividend on its
common shares ("Dividend Payment Date") the PSU Portion of each
Participant's Account shall be credited with additional PSU's the number of
which shall be determined by first (i) multiplying the number of PSU's
standing to the Participant's credit on the date such dividend was declared
by the per-share dollar amount of the dividend so paid, and then (ii)
dividing the resulting amount by the Average Market Value (determined as
provided in paragraph (b) of Section 6) of one common share of the
Corporation on the Dividend Payment Date.
(b) If, as of the last day of any calendar month, any part of the
balance of the PSU Portion of a Participant's Account has not yet been
converted into PSU's in accordance with Section 6, such part of the balance
shall be credited, as of such last day, with interest computed at the Prime
Rate (as hereinafter defined).
(c) As of the last day of each calendar month, each part of the
balance of the Interest Portion of a Participant's Account for which a
separate Earnings Crediting Option (as hereinafter defined) is in effect
pursuant to the Participant's election shall be credited with an amount
determined by multiplying such part of the balance by a percentage
corresponding to the Applicable Rate of Return (as hereinafter defined) for
such month under such Earnings Crediting Option. The amount so credited
(which may be
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positive or negative depending on whether the Applicable Rate of Return for
the month is positive or negative) is referred to herein as "Earnings".
(d) For purposes of this Section 7, the term "Earnings Crediting
Option" shall mean, initially, (i) the Prime Rate, and (ii) any investment
fund maintained under the 401(k) Plan and ESOP of United States Trust
Company of New York and Affiliated Companies (the "401(k) Plan") other than
the ESOP Stock Fund or the U.S.T. Corp. Stock Fund; and the term "Prime
Rate" shall mean, with respect to any calendar month, the prime rate as
quoted by United States Trust Company of New York on the last Business Day
of such month. Any investment fund described in clause (ii) of the
preceding sentence is referred to herein as a "401(k) Plan Fund".
Notwithstanding the foregoing, the Committee may at any time, in its
sole discretion, determine (x) that the Prime Rate or any 401(k) Plan Fund
shall cease to constitute an Earnings Crediting Option for purposes of the
Plan, (y) that any investment fund that is added to the 401(k) Plan at any
time after January 1, 1994 shall not constitute an Earnings Crediting
Option for purposes of the Plan, or (y) that any other hypothetical
investment fund or index or referenced rate of return shall constitute an
Earnings Crediting Option for purposes of the Plan. Participants shall be
notified in writing, at least 45 days in advance, of any such change in the
Plan's Earnings Crediting Options.
(e) The "Applicable Rate of Return" for any month, under any Earnings
Crediting Option, shall mean (i) in the case of an Earnings Crediting
Option that is a 401(k) Plan Fund, the percentage by which the value of
such Fund, as determined by the 401(k) Plan's Trustee as of the Valuation
Date (as defined in the 401(k) Plan) for such month, exceeds, or is less
than, the value of such Fund, as determined by the 401(k) Plan's Trustee as
of the Valuation Date for the immediately preceding month; and (ii) in the
case of any other Earnings Crediting Option, the rate of return applicable
for such month, as determined by the Committee in its sole discretion.
(f) A Participant may make elections with respect to the Earnings
Crediting Options that are to apply with respect to the Interest Portion of
his or her Account, in accordance with the following rules:
(i) a Participant may elect to have any part or all of the balance
of the Interest Portion credited with Earnings under any Earnings
Crediting Option available under the Plan at the time of his or her
election.
(ii) each Participant shall make an initial election as to the
Earnings Crediting Options that are to apply with respect to the
Interest Portion at the time the Participant first elects under Section
3 or 4 to have any part of the Participant's Deferred Amounts for any
Plan Year, or any part of the Participant's Existing Balance, allocated
to the Interest Portion of his or her Account. Such election shall be
made in the election form in which the Participant makes his or her
election under Section 3 or 4 to have such part of the Participant's
Deferred Amounts for such Plan Year, or such part of the Participant's
Existing Balance, allocated to the Interest Portion. In such election
form, the Participant shall specify, by percentages (which must be even
multiples of 5%) the respective parts of the balance of the Interest
Portion of his or her Account that are to be credited with Earnings
under each of the Earnings Crediting Options designated by the
Participant in such form.
(iii) The Earnings Crediting Options selected in the initial
election made by the Participant under clause (ii) above shall remain in
effect (and shall apply to all additional amounts allocated to the
Interest Portion pursuant to any deferral elections made by the
Participant under Section 3 with respect to any subsequent Plan Years)
until the Participant changes his or her election in accordance with
clause (iv) below.
(iv) A Participant may change the Earnings Crediting Options that
are to apply with respect to the Interest Portion of his or her Account
by making a new election hereunder. Such new election shall be made in
writing, on a form which is provided by the Committee for this purpose
and which the Participant files with the Committee. In such form, the
Participant shall specify, in the same manner as described in clause
(ii) above, the respective parts of the balance of the Interest Portion
that are to be credited with Earnings under each of the Earnings
Crediting Options designated by the
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Participant in such form. The Participant's new election shall become
effective as of the first day of the calendar month following the date
on which such election is filed with the Committee, provided that it is
so filed at least 15 days prior to such first day. The Earnings
Crediting Options selected by the Participant in such new election shall
remain in effect until the Participant again changes his election with
respect to the Interest Portion of his or her Account in accordance with
this clause (iv).
(g) The Interest Portion of a Participant's Account shall continue to
be credited with Earnings in accordance with the provisions of this Section
7 until all payments required to be made with respect to the Interest
Portion under Section 9 have been made. For this purpose, any payments made
under Section 9 with respect to the Interest Portion of the Participant's
Account will be deemed to have been made pro rata from the respective parts
of the balance of the Interest Portion that are subject to separate
Earnings Crediting Options.
8. ADJUSTMENT OF PSU'S
In the event of any change in the Corporation's common shares by reason of
any stock dividend, recapitalization, reorganization, merger, consolidation,
split-up, combination or exchange of shares, or any rights offering to purchase
such shares at a price substantially below fair market value, or any similar
change affecting the Corporation's common shares, the number and kind of shares
represented by Phantom Share Units shall be appropriately adjusted consistent
with such change in such manner as the Committee, in its sole discretion, may
deem equitable to prevent substantial dilution or enlargement of the rights
granted to, or available for, the Participants hereunder. The Committee shall
give notice to each Participant of any adjustment made pursuant to this Section
8 and, upon such notice, such adjustment shall be effective and binding for all
purposes of the Plan.
9. PAYMENT OF ACCOUNT BALANCES
Payment with respect to a Participant's Account shall be made in accordance
with the following provisions:
(a) The balances of the PSU Portion and the Interest Portion of a
Participant's Account shall become payable upon the Participant's ceasing
to be a member of any Board, for any reason.
(b) Except as otherwise provided in paragraph (e) below, payment with
respect to the PSU Portion and the Interest Portion of a Participant's
Account shall be made in the form of a series of 10 annual installments.
The first such installment payment shall be made on the last Business Day
of February of the Plan Year following the year in which the Participant
ceases to be a member of any Board, and the remaining installment payments
shall be made on the last Business Day of February of each succeeding Plan
Year.
(c) Each installment payment to be made with respect to the Interest
Portion of a Participant's Account shall be made in cash, in an amount
determined by dividing (i) the balance of the Interest Portion determined
as of the last day of the Plan Year preceding the year in which such
payment is to be made, by (ii) the number of installment payments remaining
to be made. The last such installment payment shall include Earnings
credited to the Interest Portion for the month preceding the month in which
such payment is made.
(d) Each installment payment to be made with respect to the PSU
Portion of a Participant's Account shall be made partly in common shares of
the Corporation, and partly in cash. The number of shares to be included in
each such installment payment shall be equal to the number of whole PSU's
included in the quotient resulting from dividing (i) the total number of
PSU's included in the balance of the PSU Portion of the Participant's
Account as of the last day of the Plan Year preceding the year in which
such payment is to be made, by (ii) the number of installment payments
remaining to be made; and the amount of cash to be included in each such
installment payment shall be determined by multiplying (iii) the fractional
part of a PSU included in the aforementioned quotient by
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(iv) the Average Market Value (determined as provided in paragraph (b) of
Section 6) of one common share of the Corporation on the Business Day
immediately preceding the date on which such installment payment is to be
made. The last such installment payment shall include a number of common
shares of the Corporation equal to the whole number of any additional PSU's
that are credited to the PSU Portion of the Participant's Account under
Section 7(a) during the month preceding the month in which such payment is
made, together with cash (in an amount determined in the same manner as
described in clause (iv) of the preceding sentence) for any fractional part
of a PSU that is so credited.
(e) If a Participant should die before receiving all payments required
to be made hereunder with respect to the Participant's Account, any
payments remaining to be made at the date of the Participant's death shall
be made to the Participant's Beneficiary as follows:
(i) Payment with resect to the Interest Portion of the
Participant's Account shall be made in the form of a single lump-sum
cash payment, in an amount equal to the balance of the Interest Portion
determined as of the last day of the month preceding the month in which
such payment is made.
(ii) Payment with respect to the PSU Portion of the Participant's
Account shall be made in the form of (a) a number of common shares of
the Corporation equal to the number of whole PSU's included in the
balance of the PSU Portion as of the last day of the month preceding the
month in which such payment is made, and (b) a cash payment in an amount
determined by multiplying (x) the fractional part of a PSU included in
such balance as of such last day, by (y) the Average Market Value
(determined as provided in paragraph (b) of Section 6) of one common
share of the Corporation on the Business Day immediately preceding the
date on which such payment is made.
(iii) The payments to be made hereunder to the Participant's
Beneficiary shall be made as soon as practicable after the date of the
Participant's death.
(f) Notwithstanding any other provision in this Section 9 to the
contrary, payment with respect to any part or all of the Participant's
Account balances may be made to the Participant on any date earlier than
the date on which such payment is to be made pursuant to such other
provisions of this Section 9 if (i) the Participant requests such early
payment and (ii) the Committee, in its sole discretion, determines that
such early payment is necessary to help the Participant meet an
"unforeseeable emergency" within the meaning of Section 1.457-2(h)(4) of
the federal Income Tax Regulations. The amount that may be so paid may not
exceed the amount necessary to meet such emergency.
(g) There shall be deducted from the amount of any payment otherwise
required to be made under the Plan all Federal, state and local taxes
required by law to be withheld with respect to such payment.
10. DESIGNATION AND CHANGE OF BENEFICIARY
Each Participant shall file with the Committee a written designation of one
or more persons as the Beneficiary who shall be entitled to receive any amount,
or any common shares of the Corporation, payable under the Plan by reason of his
or her death. A Participant may, from time to time, revoke or change his or her
Beneficiary designation without the consent of any previously designated
Beneficiary by filing a new designation with the Committee. The last such
designation received by the Committee shall be controlling; provided, however,
that no designation, or change or revocation thereof, shall be effective unless
received by the Committee prior to the Participant's death, and in no event
shall it be effective as of a date prior to such receipt. If at the date of a
Participant's death, there is no designation of a Beneficiary in effect for the
Participant pursuant to the provisions of this Section 10, or if no Beneficiary
designated by the Participant in accordance with the provisions hereof survives
to receive any amount payable under the Plan by reason of the Participant's
death, the Participant's estate shall be treated as the Participant's
Beneficiary for purposes of the Plan.
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11. PAYMENTS TO PERSONS OTHER THAN PARTICIPANTS
If the Committee shall find that any Participant or Beneficiary to whom any
amount, or any common shares of the Corporation, is payable under the Plan is
unable to care for his or her affairs because of illness, accident or legal
incapacity, then, if the Committee so directs, such amount, or such common
shares, may be paid to such Participant's or Beneficiary's spouse, child or
other relative, an institution maintaining or having custody of such person, or
any person deemed by the Committee to be a proper recipient on behalf of such
Participant or Beneficiary, unless a prior claim therefor has been made by a
duly appointed legal representative of the Participant or Beneficiary.
Any payment made under this Section 11 shall be a complete discharge of the
liability of the Corporation with respect to such payment.
12. RIGHTS OF PARTICIPANTS
A Participant's rights and interests under the Plan shall be subject to the
following provisions:
(a) A Participant shall have the status of a general unsecured
creditor of the Corporation with respect to his or her right to receive any
payment under the Plan. The Plan shall constitute a mere promise by the
Corporation to make payments in the future of the benefits provided for
herein. It is intended that the arrangements reflected in this Plan be
treated as unfunded for tax purposes.
(b) The Corporation may, but shall not be required to, purchase a life
insurance policy or policies, to assist it in funding any of its payment
obligations under the Plan. If any policy is so purchased, it shall, at all
times, remain subject to the claims of the Corporation's creditors. No
Participant or Beneficiary shall have any interest in, or rights with
respect to, such policy.
(c) A Participant's rights to payments under the Plan shall not be
subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment, or garnishment by creditors of
the Participant or his or her Beneficiary.
13. ADMINISTRATION
The Plan shall be administered by a Committee composed of at least three
Board members who shall be appointed by the Board of Directors from among Board
members who are not Eligible Board Members. If at any time there are less than
three such Board members, additional members of the Committee shall be appointed
from among those Board members who have never participated in the Plan or, in
the absence of any such Board members, from among any senior officers of the
Corporation or any of its Affiliated Companies.
All decisions, actions or interpretations of the Committee under the Plan
shall be final, conclusive and binding upon all parties.
No member of the Committee shall be personally liable by reason of any
contract or other instrument executed by such member or on his or her behalf in
his or her capacity as a member of the Committee nor for any mistake of judgment
made in good faith, and the Corporation shall indemnify and hold harmless each
member of the Committee, and each employee, officer, director or trustee of the
Corporation or any of its Affiliated Companies to whom any duty or power
relating to the administration or interpretation of the Plan may be delegated,
against any cost or expense (including counsel fees) or liability (including any
sum paid in settlement of a claim with the approval of the Board of Directors)
arising out of any act or omission to act in connection with the Plan unless
arising out of such person's own fraud or bad faith.
14. AMENDMENT OR TERMINATION
The Board of Directors may, with prospective or retroactive effect, amend,
suspend or terminate the Plan or any portion thereof at any time; provided,
however, that no amendment of the Plan shall deprive any Participant of any
rights to receive payment of any amounts due him or her under the terms of the
Plan as in effect prior to such amendment without his or her written consent.
B-8
<PAGE> 66
Any amendment that the Board of Directors would be permitted to make
pursuant to the preceding paragraph may also be made by the Committee where
appropriate to facilitate the administration of the Plan or to comply with
applicable law or any applicable rules and regulations of governing authorities
provided that the cost of the Plan to the Corporation is not materially
increased by such amendment.
15. SUCCESSOR CORPORATION
The obligations of the Corporation under the Plan shall be binding upon any
successor corporation or organization resulting from the merger, consolidation
or other reorganization of the Corporation, or upon any successor corporation or
organization succeeding to substantially all of the assets and business of the
Corporation. The Corporation agrees that it will make appropriate provision for
the preservation of Participants' rights under the Plan in any agreement or plan
which it may enter into or adopt to effect any such merger, consolidation,
reorganization or transfer of assets.
16. GOVERNING LAW
The provisions of the Plan shall be governed by and construed in accordance
with the laws of the State of New York.
B-9
<PAGE> 67
U.S. TRUST U.S. TRUST CORPORATION
PROXY
<TABLE>
<S> <C>
PROXY SOLICITED BY BOARD OF DIRECTORS FOR ANNUAL MEETING OF SHAREHOLDERS
UNITED STATES TRUST COMPANY OF NEW YORK, 114 WEST 47TH STREET, NEW YORK, NEW YORK
TUESDAY, APRIL 26, 1994, 10:00 A.M. NEW YORK TIME
</TABLE>
The undersigned appoints WILLIAM M. THROOP, JR. and ROBERT W. FREIMAN, or
either of them, each with power of substitution, to attend the Annual Meeting
of Shareholders of U.S. Trust Corporation and to vote the Common Shares the
undersigned would be entitled to vote if personally present upon the nominees
for Director (Peter O. Crisp, Daniel P. Davison, Antonia M. Grumbach, Frederic
C. Hamilton, Peter L. Malkin, Jeffrey S. Maurer, Richard F. Tucker, Eleanor
Baum, Ruth A. Wooden), upon the other matters shown on the reverse side, which
are described in the Proxy Statement, and upon all other matters which may
come before the 1994 Annual Meeting of Shareholders of the U.S. Trust
Corporation, or any adjournment thereof.
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. YOUR SHARES CANNOT BE
VOTED UNLESS YOU SIGN AND RETURN THIS PROXY.
(SEE REVERSE SIDE)
[X] PLEASE MARK YOUR
VOTE WITH AN X.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1-7
This proxy will be voted "FOR" Items if 1-2 no choice is specified.
<TABLE>
<CAPTION>
FOR WITHHELD FOR AGAINST ABSTAIN
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1. Election of [ ] [ ] 2. Ratify selection of [ ] [ ] [ ]
Directors Independent Accountants
</TABLE>
For, except vote withheld from the following nominee(s) named on the reverse
side:
- --------------------------------------------------------------------------------
This proxy will be voted "FOR"
Items 3-6 if no choice is specified.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C> <C>
3. Assumption by the Corporation [ ] [ ] [ ]
of certain employee benefit
plans of the Trust Company
4. Amendment to the 1989 Stock [ ] [ ] [ ]
Compensation Plan
5. Amendments to the 1988 [ ] [ ] [ ]
Long-Term Plan and Long-
Term Plan
6. Approval of the amended Board [ ] [ ] [ ]
Members' Deferred Compensa-
tion Plan
7. On any other matters which
properly come before the meeting
</TABLE>
- --------------------------------------------------------------------------------
SIGNATURE(S) DATE
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
NOTE: Please sign exactly as your names appear hereon. Please add your title
if you are signing as Attorney, Administrator, Executor, Guardian, Trustee or in
any other representative capacity.
<PAGE> 68
U.S. TRUST U.S. TRUST CORPORATION
ESOP VOTING INSTRUCTION
<TABLE>
<S> <C>
PROXY SOLICITED BY BOARD OF DIRECTORS FOR ANNUAL MEETING OF SHAREHOLDERS
UNITED STATES TRUST COMPANY OF NEW YORK, 114 WEST 47TH STREET, NEW YORK, NEW YORK
TUESDAY, APRIL 26, 1994, 10:00 A.M. NEW YORK TIME
</TABLE>
The undersigned, a Member of the Employees' 401 (k) Plan & ESOP of United States
Trust Company of New York and Affiliated Companies (the "Plan"), hereby
instructs United States Trust Company of New York as Trustee of the Plan to
vote, either in person or by proxy, the number of Common Shares of the
Corporation allocated to my account in the ESOP Stock Fund which I am entitled
to vote in accordance with the terms of the Plan upon the nominees for Director
(Peter O. Crisp, Daniel P. Davison, Antonia M. Grumbach, Frederic C. Hamilton,
Peter L. Malkin, Jeffrey S. Maurer, Richard F. Tucker, Eleanor Baum, Ruth A.
Wooden), upon the other matters shown on the reverse side, which are described
in the Proxy Statement, and upon all other matters which may come before the
1994 Annual Meeting of Shareholders of the U.S. Trust Corporation, or any
adjournment thereof.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES
(SEE REVERSE SIDE).
(SEE REVERSE SIDE)
[X] PLEASE MARK YOUR
VOTE WITH AN X.
<TABLE>
<CAPTION>
FOR WITHHELD FOR AGAINST ABSTAIN
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1. Election of [ ] [ ] 2. Ratify selection of [ ] [ ] [ ]
Directors Independent Accountants
</TABLE>
For, except vote withheld from the following nominee(s) named on the reverse
side:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C> <C>
3. Assumption by the Corporation [ ] [ ] [ ]
of certain employee benefit
plans of the Trust Company
4. Amendment to the 1989 Stock [ ] [ ] [ ]
Compensation Plan
5. Amendments to the 1988 [ ] [ ] [ ]
Long-Term Plan and Long-
Term Plan
6. Approval of the amended Board [ ] [ ] [ ]
Members' Deferred Compensa-
tion Plan
In the Discretion of the
Trustee or its Proxies
7. On any other matters which
properly come before the meeting
</TABLE>
- --------------------------------------------------------------------------------
SIGNATURE(S) DATE
PLEASE MARK, SIGN, DATE AND RETURN THIS INSTRUCTION CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.
<PAGE> 69
U.S. TRUST U.S. TRUST CORPORATION
STOCK FUND VOTING INSTRUCTION
<TABLE>
<S> <C>
PROXY SOLICITED BY BOARD OF DIRECTORS FOR ANNUAL MEETING OF SHAREHOLDERS
UNITED STATES TRUST COMPANY OF NEW YORK, 114 WEST 47TH STREET, NEW YORK, NEW YORK
TUESDAY, APRIL 26, 1994, 10:00 A.M. NEW YORK TIME
</TABLE>
The undersigned, a Member of the Employees' 401 (k) Plan & ESOP of United States
Trust Company of New York and Affiliated Companies (the "Plan"), hereby
instructs United States Trust Company of New York as Trustee of the Plan to
vote, either in person or by proxy, the number of Common Shares of the
Corporation represented by my interest in the Stock Fund in accordance with the
terms of the Plan upon the nominees for Director (Peter O. Crisp, Daniel P.
Davison, Antonia M. Grumbach, Frederic C. Hamilton, Peter L. Malkin, Jeffrey S.
Maurer, Richard F. Tucker, Eleanor Baum, Ruth A. Wooden), upon the other matters
shown on the reverse side, which are described in the Proxy Statement, and upon
all other matters which may come before the 1994 Annual Meeting of Shareholders
of the U.S. Trust Corporation, or any adjournment thereof.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES
(SEE REVERSE SIDE).
(SEE REVERSE SIDE)
[X] PLEASE MARK YOUR
VOTE WITH AN X.
<TABLE>
<CAPTION>
FOR WITHHELD FOR AGAINST ABSTAIN
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1. Election of [ ] [ ] 2. Ratify selection of [ ] [ ] [ ]
Directors Independent Accountants
</TABLE>
For, except vote withheld from the following nominee(s) named on the reverse
side:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C> <C>
3. Assumption by the Corporation [ ] [ ] [ ]
of certain employee benefit
plans of the Trust Company
4. Amendment to the 1989 Stock [ ] [ ] [ ]
Compensation Plan
5. Amendments to the 1988 [ ] [ ] [ ]
Long-Term Plan and Long-
Term Plan
6. Approval of the amended Board [ ] [ ] [ ]
Members' Deferred Compensa-
tion Plan
In the Discretion of the
Trustee or its Proxies
7. On any other matters which
properly come before the meeting
</TABLE>
- --------------------------------------------------------------------------------
SIGNATURE(S) DATE
PLEASE MARK, SIGN, DATE AND RETURN THIS INSTRUCTION CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.
