<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:
- --------------------------------------------------------------------------------
- ---------------
(1)Set 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
May 23, 1995
The Annual Meeting of Shareholders of U.S. Trust Corporation
(the "Corporation") will be held on Tuesday, May 23, 1995 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 eight directors, to hold office for a term of three
years, 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 1995; and
3 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 April
10, 1995 are entitled to notice of and to vote at the meeting
and at any adjournment thereof.
Dated: April 17, 1995
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 May 23, 1995, 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, 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 April 17, 1995. The Corporation's 1994
Annual Report to Shareholders was mailed to shareholders on March 10, 1995 or
accompanies this proxy statement for any shareholder who became a shareholder
after February 1, 1995.
The Board of Directors has fixed the close of business on April 10, 1995 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 9,603,280 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 March 31,
1995:
<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 401(k) Plan and ESOP of United 1,366,386 shares (in a 14.23
(par value States Trust Company of New York fiduciary capacity)(1)
$1 per share) and Affiliated Companies
114 West 47th Street
New York, New York 10036
GeoCapital Corporation 640,050 shares 6.66
767 Fifth Avenue (with sole dispositive
New York, New York 10153 power)(2)
United States Trust Company 349,684 shares (in 3.64
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 1,090,087 shares allocated to the individual
accounts of participants in the 401(k) Plan and ESOP (the "Plan"), who have
voting and dispositive power over such shares, and 276,299 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 and 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 42,452 of such shares, sole dispositive power as to 190,012 of such
shares and shared dispositive power as to 159,672 of such shares. The 276,299
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 798,234 shares
(approximately 7.92% of the Corporation's outstanding Common Shares) as of March
31, 1995.*
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.
I ELECTION OF DIRECTORS
Eight directors of the Corporation are to be elected at the Meeting to serve
until the annual meeting of shareholders in 1998 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 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 March 31, 1995 (in each case, 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:
At a Special Meeting of the Shareholders of the Corporation held on March 22,
1995, the shareholders approved a reorganization of the Corporation (the
"Reorganization"). The Reorganization, which is expected to be effected on or
about July 1, 1995, subject to the satisfaction of certain conditions, will
entail (a) the transfer to a newly organized subsidiary of the Corporation, New
USTC Holdings Corporation ("New Holdings"), of all the businesses, assets and
liabilities of the Corporation other than those related to its securities
processing businesses and related back office operations, (b) the spin-off to
the Corporation's shareholders, on a share-for-share basis in a non-taxable
transaction, of all the shares of New Holdings, and (c) the merger of the
remaining Corporation (the "Merger") with and into The Chase Manhattan
Corporation ("Chase") and the conversion of the Corporation's outstanding Common
Shares (other than those owned by Chase, or by any subsidiary of the Corporation
(other than in a fiduciary, custodial or similar capacity), or by shareholders
of the Corporation who perfect their rights of dissent under New York law) into
shares of the common stock of Chase. As a result of the Reorganization, (i) the
Corporation will cease to exist, (ii) Chase will acquire the Corporation's
present securities processing businesses and related back office operations,
(iii) the shareholders of the Corporation,
- ---------------
* Includes shares subject to stock options exercisable within 60 days
of March 31, 1995, and shares attributable to deferred awards under the 1989
Stock Compensation Plan and Predecessor Performance Plans and Board Members'
Deferred Compensation Plan.
3
<PAGE> 6
through their equity interest in Chase, will retain an interest in such
businesses as well as acquire an interest in the businesses and assets of Chase,
and (iv) all the rest of the Corporation's current businesses (which include the
Corporation's asset management, private banking, special fiduciary and corporate
trust businesses) and related assets and liabilities will continue to be owned
by the shareholders of the Corporation through their equity interest in New
Holdings.
It is currently anticipated that if the Reorganization is effected, the
directors of New Holdings will be the persons named below as director nominees
and continuing directors of the Corporation, other than Donald M. Roberts and
Frederick S. Wonham, current executive officers and directors of the Corporation
who will retire as of, and will not continue to serve as directors following,
the Reorganization. The initial term of each director of New Holdings will
expire in the same year as the term shown for such director in the table below.
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 1998
Samuel C. Butler (65) Partner in Cravath, Swaine & 1972 7,876(3)(4)
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, Inc., Millipore Corporation and GEICO Corporation. Mr. Butler is a trustee of the New York Public Library and
of the Culver Educational Foundation.
Paul W. Douglas (68) Retired Chairman of the Board 1978 1,937 (3)
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, Philip Morris Companies, Inc. and South American Gold and Copper Co. He is a trustee of
The International Center for the Disabled and of St. Luke's-Roosevelt Hospital and of the Nature Conservancy of New York State.
</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>
- --------------------------------------------------------------------------------------------
Orson D. Munn (70) Chairman and Director of 1982 6,400(5)
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 (58) Chairman of the Board and 1977 49,125(6)(7)
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.
Philip L. Smith (61) Chairman of the Board and 1987 5,900
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.
</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>
- --------------------------------------------------------------------------------------------
Frederick B. Taylor (53) Vice Chairman of the Board 1989 46,457(6)(7)(8)(9)
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. (69) Consulting Partner in 1981 3,700(9)
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.
Ruth A. Wooden (48) President & Chief Executive 1994 300(3)
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 joining The Advertising
Council, she was employed 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 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 1997
Peter O. Crisp (62) General Partner of Venrock 1992 800(3)
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 (70) Retired Chairman of the Board 1979 48,195(9)
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 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 (51) Partner in Patterson, 1991 1,400
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 CUNY Graduate Center Foundation, the William T. Grant Foundation and The Henfield
Foundation. Ms. Grumbach also served as an initial member of the Board of Advisors of the New York University program on
philanthropy and the law.
</TABLE>
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>
- --------------------------------------------------------------------------------------------
Frederic C. Hamilton (67) Chairman of the Board, 1972 30,925
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 of the Denver Art Museum, and a trustee of the Boys' Club Foundation
and the Boy Scouts of America Denver Area Council.
Peter L. Malkin (61) Chairman of Wien, Malkin & 1992 1,300
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 (47) President of the Corporation 1989 22,574(6)(7)(9)
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 and was
designated chief operating officer in December of 1994. 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>
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>
- --------------------------------------------------------------------------------------------
Richard F. Tucker (68) Retired Vice Chairman of the 1983 3,425(3)
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 (55) Dean of Engineering at The 1994 400(3)
Cooper Union for the
Advancement of Science & Art
Eleanor Baum became dean of engineering at Cooper Union in 1987. Prior to that, she was dean
at Pratt Institute in Brooklyn and worked as an engineer in the aerospace industry. Dr.
Baum is also a director of Allegheny Power Systems and Avnet, Inc. She is president-elect of
the American Society for Engineering Education and serves on the Board of Governors of the
New York Academy of Sciences. She is trustee of the Accreditation Board for Engineering &
Technology, is a commissioner of the Engineering Workforce Commission, and an advisory board
member at Duke University, Rice University and the U.S. Merchant Marine Academy. She is
executive director of the Cooper Union Research Foundation and a fellow of the Institute of
Electrical & Electronic Engineers.
Philippe de Montebello (58) Director of the Metropolitan 1983 900
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.
</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>
- --------------------------------------------------------------------------------------------
Edwin D. Etherington (70) President Emeritus of 1969* 8,250
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 and of the Hobe Sound Child Care Center.
Donald M. Roberts (59) Vice Chairman of the Board 1986 35,377(6)(7)(9)
and Treasurer of the
Corporation and the Trust
Company
Mr. Roberts was elected treasurer of the Corporation 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, and a member of The
Bridge Fund Advisory Board.
John Hoyt Stookey (65) Chairman of Quantum Chemical 1989 10,900
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 Cypress AMAX Minerals Co., ACX Technologies
Inc. and Chesapeake Corporation. Mr. Stookey is the founder and president of The Berkshire
Choral Institute and of Landmark Volunteers, and trustee of the Glimmerglass Opera,
Berkshire School, The Clark Foundation and The Robert Sterling Clark Foundation.
</TABLE>
- ---------------
<TABLE>
<S> <C> <C> <C> <C>
* 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.
</TABLE>
10
<PAGE> 13
<TABLE>
<CAPTION>
FIRST NUMBER OF
PRINCIPAL OCCUPATION AND BECAME SHARES
NAME (AGE) BUSINESS EXPERIENCE DIRECTOR OWNED(1)(2)
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
Robert N. Wilson (54) Vice Chairman of the Board of 1991 4,050
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 Research and 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. He is a
director of The James Black Foundation in London, England.
Frederick S. Wonham (64) Vice Chairman of the Board of 1986 31,904(6)(7)(9)
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.
</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 March 31, 1995 as follows: Dr. Baum and Ms. Wooden
each 1,650 shares, Messrs. Crisp and Malkin each 3,350 shares, Mr. Munn 2,000
shares, Mr. Wilson 1,650 shares and 5,000 shares by each of the other
non-employee directors (as defined in the plan) other than Messrs. Etherington,
Smith and Stookey. See "Directors' Compensation."
(3) Does not include shares attributable to deferred awards under the Board
Members' Deferred Compensation Plan as follows: Dr. Baum 232 shares, Mr. Butler
8,670 shares, Mr. Crisp 1,232 shares, Mr. Douglas 5,709 shares, Mr. Tucker 309
shares, and Ms. Wooden 179 shares.
(4) 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.
(5) Includes 1,700 shares held in a trust of which Mr. Munn is trustee.
(6) Does not include shares subject to employee stock options exercisable within
60 days of March 31, 1995 as follows: Mr. Schwarz 56,750 shares, Mr. Maurer
53,450 shares, Mr. Taylor 25,750 shares, Mr. Roberts 31,750 shares and Mr.
Wonham 26,250 shares.
(7) Does not include shares attributable to deferred awards under the 1989 Stock
Compensation Plan and Predecessor Performance Plans as follows: Mr. Schwarz
78,086 shares, Mr. Maurer 29,008 shares, Mr. Roberts 55,186 shares, Mr. Taylor
10,864 shares and Mr. Wonham 44,064 shares. See "Compensation of Executive
Officers."
(8) Includes 270 shares held in a trust of which Mr. Taylor is sole trustee and
in which he has a beneficial interest.
11
<PAGE> 14
(9) Includes 10,254 shares owned by Mr. Davison's wife, 2,500 shares owned by
Mr. Maurer's wife, 638 shares held in trust by Mr. Maurer's wife for their
children, 3,215 shares owned by Mr. Roberts' daughter, 3,989 shares owned by Mr.
Taylor's wife, 300 shares owned by Mr. Wainwright's wife, and 2,250 shares owned
by Mr. Wonham's children, with respect to which the director in each case
disclaims beneficial ownership.
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 1994 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 seven 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,
Stookey 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 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 1994, the Executive Committees of the Board of Directors and Board of
Trustees met two times, the Compensation Committee met four times and the Audit
Committee met five times.
12
<PAGE> 15
Both the Board of Trustees and the Board of Directors held twelve meetings in
1994. No member of the Board of the Corporation or of the Trust Company attended
in 1994 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.
Under the Board Member's Deferred Compensation Plan of the Corporation (the
"Board Deferred Plan"), directors who are not also officers of the Corporation,
the Trust Company or other subsidiaries of the Corporation ("Eligible Board
Members") may elect to defer any or all of their cash compensation (including
meeting attendance fees) for services rendered as directors of the Corporation,
as trustees of the Trust Company or as members of any Board committee. An
Eligible Board Member (i) allocates his or her deferred compensation between an
interest account and a phantom share unit account (at least 50% of deferred
amounts must be allocated to phantom share units), and (ii) designates the
portion of his or her interest account which is to be credited with earnings
based on each of the rates of return available under the Board Deferred Plan.
Currently, there are six available rates of return: the Trust Company's prime
rate and the rates of return on five of the investment funds available under the
Trust Company's 401(k) Plan and ESOP. Deferred compensation is converted into
phantom share units by dividing the dollar amount of such compensation by the
market value of one Common Share at the time of conversion. Phantom share units
earn Common Share dividend equivalents which are converted into additional
phantom share units on the basis of the market value of a Common Share on the
relevant dividend payment date.
Payouts of amounts held for the account of an Eligible Board Member under the
Board Deferred Plan are made in ten annual installments commencing in the year
following the year in which the Eligible Board Member ceases to be a director of
the Corporation or a trustee of the Trust Company. Payouts of interest account
balances are made in cash, and payouts with respect to phantom share units
consist of one Common Share for each whole phantom share unit.
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 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.
13
<PAGE> 16
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 1994, the following non-employee directors served as members of the
Compensation Committee: Mr. Philip L. Smith (the Committee Chairman), Mr. Peter
O. Crisp, Mr. Frederic C. Hamilton, Mr. Richard F. Tucker, Mr. Robert N. Wilson
and Ms. Ruth A. Wooden. (See "Transactions with Directors and Executive
Officers" below.)
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.
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
14
<PAGE> 17
compensation to support the long-term interests of U.S. Trust and its
shareholders by adhering to the following basic strategic principles:
- 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.
- U.S. Trust's benefits package will be competitive and designed to
encourage a career commitment to U.S. Trust.
- 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.
- 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.
- 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. However, the Committee has not established
any specific minimum levels of required stock ownership for any of U.S.
Trust's executive officers.
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 particularly considers
companies in the peer group used for the performance graph below. In general,
salaries of U.S. Trust's CEO and the other executive officers named in the
Summary Compensation Table below rank at or somewhat below the median of
salaries paid to executives in comparable positions at the peer group companies.
However, the Compensation Committee has not adopted any policy requiring that
the salaries of these officers be set so as to achieve any specific relationship
to the levels of executive officer salaries at the peer group companies.
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. As to the corporate performance objectives for 1994, the
Compensation Committee determined that the size of the pool available for awards
would be a percentage, from 25% to 110%, of the potential award pool, depending
on the level of the Corporation's absolute return on equity (ROE) for 1994. The
Committee also determined that for this purpose, the Corporation's ROE for 1994
would be adjusted to eliminate the effect of the extraordinary charges to
earnings required to be recognized in connection with the transaction with
Chase. 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. The adjusted
ROE formula resulted in an award pool equal to 87.5% of the potential pool for
1994 awards. Individual Annual Plan awards were 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
15
<PAGE> 18
satisfaction, new business development and results achieved in relation to
budget. Arithmetic criteria are not used in determining the amount of individual
awards under the Annual Plan or the amount of base compensation payable to
senior officers.
Long-term incentive compensation for U.S. Trust's executive officers is normally
granted in the form of performance share units, and in the form of stock options
that provide for an exercise price equal to the fair market value of U.S. Trust
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. From 0 to
100% of the units so granted are earned over a three-year performance cycle
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. The guideline percentage used for this purpose
is 60% in the case of the CEO, and 50% or 55%, in the case of the other named
executive officers. The performance share earn out for the 1992-94 cycle was
100% of the initial grant amount reflecting 100% achievement of goals for
absolute growth in earnings per share, absolute ROE, and relative ROE
performance against peers. In measuring U.S. Trust's performance, the Committee
adjusted actual results to eliminate the effect of the extraordinary charges to
1994 earnings related to the transaction with Chase and the gain on the sale of
the Corporation's partnership interest in Financial Technologies International
L.P.
The Committee took no action during 1994 to establish a policy with respect to
the payment of compensation to U.S. Trust's executive officers of amounts that
qualify for tax deductibility under the $1 million limit on deductible
compensation under section 162(m) of the Internal Revenue Code. The Committee
deferred taking action, in part, because the compensation payable to Mr. Schwarz
and each of the other named executive officers for 1994 was not expected to
exceed (and in fact did not exceed) the amount deductible under section 162(m).
In addition, the Committee determined that as a result of U.S. Trust's
disposition of its securities processing businesses to Chase, a comprehensive
review would have to be made of all of U.S. Trust's executive compensation
arrangements to assess their appropriateness for New Holdings. The Committee
believed that it would be premature to establish a policy regarding section
162(m) before this review is completed.
At the time of the Chase transaction, all holders of stock options then
outstanding, including Mr. Schwarz and the other named executive officers, will
become entitled to receive payments to cash out their stock options. Also
Messrs. Roberts and Wonham, who will be retiring at the time of the transaction,
will receive separation benefits comparable to the severance payments that will
be made to those employees whose jobs are eliminated as a result of the
transaction. These payments are described on pages 23 and 24 of this proxy
statement. The Committee believes that payment of the foregoing amounts is
appropriate whether or not they are fully deductible under section 162(m), in
view of the special circumstances that will be present as a result of the
transaction with Chase, and the fact that in each case (other than severance
benefits) these payments will be made pursuant to plan provisions that antedate
the enactment of section 162(m).
16
<PAGE> 19
CEO COMPENSATION FOR 1994. The salary paid in 1994 to H. Marshall Schwarz,
Chairman and Chief Executive Officer ("CEO"), was $547,308. 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.
Mr. Schwarz also received an award for 1994 under the Annual Plan and earned a
performance share award for the 1992-94 cycle. The amounts of these awards to
Mr. Schwarz were determined in the manner indicated in the above descriptions of
these incentive compensation programs. In addition, he was granted a
nonqualified stock option for 15,000 Common Shares at an exercise price of
$51.25 per share, the market price of U.S. Trust Common Shares on January 25,
1994, the date of the grant.
In summary, the Compensation Committee believes it has a comprehensive and
competitive executive compensation program with an appropriate balance between
salary and short and long-term incentives and with an emphasis on stock-based
compensation. It intends to continue this emphasis in the future.
Respectfully submitted,
Philip L. Smith, Chairman
Peter O. Crisp
Frederic C. Hamilton
Richard F. Tucker
Robert N. Wilson
Ruth A. Wooden
17
<PAGE> 20
The following table sets forth the compensation paid or accrued during 1994,
1993 and 1992 to the CEO and the four other most highly compensated executive
officers (during 1994) for services rendered in all capacities to the
Corporation and to the Trust Company and their affiliates.
Summary Compensation Table
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL ------------------------------
COMPENSATION
------------------------- AWARDS PAYOUTS
OTHER -------------------- ---------
ANNUAL RESTRICTED STOCK LONG-TERM ALL OTHER
COMPEN- STOCK OPTION INCENTIVE COMPEN-
NAME AND PRINCIPAL SALARY BONUS SATION AWARDS AWARDS PAYOUTS SATION(1)
POSITION YEAR ($) ($) ($) ($) (#) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
H.M. Schwarz 1994 547,308 257,635 0 0 15,000 465,099 33,177
Chairman, CEO 1993 517,308 304,135 0 0 10,000 545,015 89,641
1992 485,192 305,740 0 0 0 221,688 28,451
J.S. Maurer 1994 401,539 169,923 0 0 10,000 316,316 23,913
President, COO 1993 381,538 205,923 0 0 6,000 370,669 61,175
1992 359,423 212,029 0 0 15,000 150,617 20,737
F.B. Taylor 1994 371,539 151,423 0 3,500 9,000 262,554 21,428
Vice Chairman, 1993 351,539 187,423 0 0 5,000 307,670 48,860
Chief Investment 1992 329,423 183,529 0 0 12,000 126,057 18,527
Officer
D.M. Roberts 1994 337,769 133,112 0 0 5,000 258,387 56,941
Vice Chairman, 1993 327,769 153,612 0 0 5,000 302,785 455,892
Treasurer 1992 316,923 159,154 0 0 0 126,057 44,726
F.S. Wonham 1994 337,769 133,112 0 0 5,000 258,387 30,224
Vice Chairman 1993 327,769 153,612 0 0 5,000 302,785 162,723
1992 316,923 159,154 0 0 0 126,057 25,462
- ------------------------------------------------------------------------------------------------------
</TABLE>
(1) See following table for identification and amounts of components.
The following table lists for each of the named executive officers the payments
that comprise the "All Other Compensation" amounts found in the Summary
Compensation Table.
All Other Compensation
<TABLE>
<CAPTION>
EMPLOYER SUPPLEMENTAL EARNINGS ON
CONTRIBUTION ESOP DEFERRED
TO ESOP(1) AMOUNT(2) AWARDS(3) TOTAL
NAME YEAR ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
H.M. Schwarz 1994 7,500 19,865 5,812 33,177
J.S. Maurer 1994 7,500 12,577 3,836 23,913
F.B. Taylor 1994 7,500 10,007 2,851 21,428
D.M. Roberts 1994 7,500 9,388 40,053 56,941
F.S. Wonham 1994 7,500 9,388 13,336 30,224
- --------------------------------------------------------------------------------------------------
</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.
18
<PAGE> 21
(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"). This amount is credited to the officer's account under the
Corporation's Executive Deferred Compensation Plan, and payment is deferred
until termination of the officer's employment. See "Compensation of Executive
Officers -- Executive Deferred Compensation Plan" below for a description of the
Executive Deferred Compensation Plan.
(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.
STOCK OPTIONS. The following table sets forth certain information concerning
options granted during 1994 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 $83.48 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 $132.93 per share.
Option Grants in 1994
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------- POTENTIAL REALIZABLE
NUMBER OF EXERCISE VALUE
SECURITIES % OF TOTAL PRICE PER AT ASSUMED ANNUAL
UNDERLYING OPTIONS SHARE RATES OF STOCK PRICE
OPTIONS GRANTED TO (MARKET APPRECIATION FOR
GRANTED EMPLOYEES PRICE AT OPTION TERM(1)
(# OF IN DATE OF EXPIRATION ---------------------
NAME SHARES) FISCAL YEAR GRANT)($) DATE(2) 5% ($) 10% ($)
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
H.M. Schwarz 15,000 7.7% 51.25 01/25/04 483,450 1,225,200
J.S. Maurer 10,000 5.1% 51.25 01/25/04 322,300 816,800
F.B. Taylor 9,000 4.6% 51.25 01/25/04 290,070 735,120
D.M. Roberts 5,000 2.6% 51.25 01/25/04 161,150 408,400
F.S. Wonham 5,000 2.6% 51.25 01/25/04 161,150 408,400
- --------------------------------------------------------------------------------------------------
</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 13.71%.
(2) Options become exercisable in four equal, cumulative installments in each of
the first through fourth anniversary dates of the date of grant (January 25,
1994). If the Reorganization is effected (see "Election of Directors" above),
(i) all the options in this table will become fully exercisable immediately
before the effective time of the Merger (the "Effective Time"), (ii) each such
option, to the extent it has not been exercised or cancelled prior to the
Effective Time, will be cancelled as of the Effective Time, and (iii) with
respect to each option so cancelled, the holder thereof will be entitled to
receive a lump-sum cash payment in an amount equal to the excess of the
aggregate Determined Value of the Common Shares subject to the option over the
aggregate exercise price of such Common Shares. See "Change in Control
Provisions" below.
19
<PAGE> 22
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 1994 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 5,500 176,875.00 58,500/35,000 1,585,050/594,025
J.S. Maurer 2,300 81,075.00 39,450/31,250 1,055,692/556,352
F.B. Taylor 2,550 89,887.50 30,950/25,500 814,850/432,637
D.M. Roberts 3,400 129,304.00 25,500/15,500 204,715/143,145
F.S. Wonham 1,500 48,000.00 20,000/15,500 235,402/156,457
- ----------------------------------------------------------------------------------------------------------
</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 $63.50 per
share, the closing price on December 30, 1994, and aggregate exercise price.
PERFORMANCE SHARE UNITS. The 1989 Stock Compensation Plan (the "Stock Plan")
provides for the grant of performance share units which are earned over a 3-year
"Performance Cycle" to the extent that pre-established performance goals for the
Corporation are met. Except for any portion of an earned award that an officer
has previously elected to defer, earned awards are paid as soon as practicable
after the close of the Performance Cycle. Awards that are not deferred are paid
in a combination of cash and the Corporation's Common Shares, as the
Compensation Committee determines, but at least 50% of a non-deferred award must
be paid in the Corporation's Common Shares. Deferred awards are either converted
to "phantom share units" ("PSUs") or credited to the "Interest Portion" of the
officer's account under the Stock Plan, as the officer may elect, but at least
50% of any deferred award must be converted to PSUs.
Earnings are credited to the Interest Portion of a deferred award at the Trust
Company's prime rate, or at a rate of return matching the rate of return on any
one or more of the investment funds available for investment of the 401(k)
portion of employees' accounts under the 401(k) Plan and ESOP other than the
U.S.T. Corp. Stock Fund, as the officer may select from time to time. The "PSU
Portion" of an officer's deferred award is credited, as of the date of each
dividend payment on the Corporation's Common Shares, with dividend equivalents
in the form of additional PSUs.
Payments with respect to deferred awards are made in 10 annual installments
commencing in the year following the officer's retirement or other termination
of employment. Payments with respect to the PSU Portion of a deferred award are
made in the form of the Corporation's Common Shares, and payments with respect
to the Interest Portion of a deferred award are made in cash.
Performance share units were also awarded to officers of the Corporation and the
Trust Company and their subsidiaries under two predecessor plans: the 1988
Long-Term Performance Plan of U.S. Trust Corporation and the Long-Term
Performance Plan of U.S. Trust Corporation (collectively, the "Predecessor
Performance Plans"). The provisions of the Predecessor Performance Plans are
substantially the same as those applicable to the performance share unit feature
of the Stock Plan. No Performance Cycles remain in progress under the
Predecessor Performance Plans. However, deferred awards remain outstanding under
these plans, in the form of PSUs and account balances that are credited with
interest under substantially the same provisions as described above in the case
of the "Interest Portion" of deferred awards under the Stock Plan.
20
<PAGE> 23
Each performance share unit and each PSU credited to an officer under the Stock
Plan and the Predecessor Performance Plans represents one Common Share of the
Corporation, but constitutes only a "phantom" share. It entitles the holder to
be credited with dividend equivalents and to receive one Common Share of the
Corporation for each such unit to the officer's credit when distributions are
made to the officer from the plan, but it does not otherwise entitle the officer
to any of the rights of a holder of the Common Shares.
Because of the special circumstances occurring during the three-year Performance
Cycles ending on December 31, 1995 and 1996 (the "1995 and 1996 Performance
Cycles") as a result of the Reorganization, the Board of Directors and the
Compensation Committee have approved a recommendation by management that if the
Reorganization is consummated, the performance goals established for the 1995
and 1996 Performance Cycles will be deemed to have been met in full, and all
performance share units awarded to each officer for each of the 1995 and 1996
Performance Cycles will be deemed to be fully earned and payable to the officer
if he or she remains in employment with New Holdings or its affiliates until the
end of such Performance Cycle or if he or she leaves such employment before the
end of such Performance Cycle as a result of retirement or termination due to
staff reductions associated with the Reorganization. The following table shows,
for each executive officer named in the Summary Compensation Table, the number
of performance share units awarded for the 1995 and 1996 Performance Cycles
(increased to reflect the issuance of additional performance share units as
payment for Common Share dividend equivalents credited to outstanding
performance share units) that will be deemed to be fully earned and payable to
the executive officer if the Reorganization is consummated:
<TABLE>
<CAPTION>
PERFORMANCE PERFORMANCE
SHARE SHARE
UNITS FOR UNITS FOR
NAME 1995 CYCLE 1996 CYCLE
--------------------------------------------- ------------- -------------
<S> <C> <C>
H. Marshall Schwarz.......................... 6,592 6,274
Jeffrey S. Maurer............................ 4,472 4,232
Frederick B. Taylor.......................... 3,736 3,551
Donald M. Roberts............................ 3,538 3,275
Frederick S. Wonham.......................... 3,538 3,275
</TABLE>
The following table sets forth certain information concerning long-term
incentive awards granted during 1994 to the executive officers named in the
Summary Compensation Table.
Long-Term Incentive Awards Granted In 1994
<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 6,042 3 years 3,021 6,042 6,042
J.S. Maurer 4,076 3 years 2,038 4,076 4,076
F.B. Taylor 3,420 3 years 1,710 3,420 3,420
D.M. Roberts 3,154 3 years 1,577 3,154 3,154
F.S. Wonham 3,154 3 years 1,577 3,154 3,154
- -----------------------------------------------------------------------------------------------
</TABLE>
(1) Assumes minimum number of performance share units earned in each performance
goal for 1994-96 performance cycle.
(2) Assumes all specified performance targets are reached.
21
<PAGE> 24
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 Financial Group Inc.,
Key Corp, Mellon Bank Corporation, Mercantile Bancorporation Inc., Mercantile
Bankshares Corporation, J.P. Morgan & Co., Incorporated, NBD Bancorp, Inc.,
Northern Trust Corporation, PNC Financial Corp, 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**
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) U.S. TRUST S&P 500 PEER GROUP
<S> <C> <C> <C>
1989 100.0 100.0 100.0
1990 87.9 96.9 88.1
1991 127.3 126.3 149.7
1992 151.2 135.9 180.2
1993 166.3 149.5 186.1
1994 209.2 151.5 169.5
</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, 1989, 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 straight life annuity option. The amounts shown do not reflect
reductions which would be made to offset Social Security benefits.
22
<PAGE> 25
<TABLE>
<CAPTION>
HIGHEST CONSECUTIVE ESTIMATED ANNUAL PENSION FOR
FIVE-YEAR REPRESENTATIVE
AVERAGE BASE SALARY YEARS OF CREDITED SERVICE
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------
<CAPTION>
15 20 25 30 35 OR MORE
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$300,000 $101,250 $135,000 $150,000 $165,000 $180,000
350,000 118,125 157,500 175,000 192,500 210,000
400,000 135,000 180,000 200,000 220,000 240,000
450,000 151,875 202,500 225,000 247,500 270,000
500,000 168,750 225,000 250,000 275,000 300,000
550,000 185,625 247,500 275,000 302,500 330,000
600,000 202,500 270,000 300,000 330,000 360,000
- ---------------------------------------------------------------------------------------------
</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 1994, 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 27.9 $496,000
J.S. Maurer 24 366,000
F.B. Taylor 28.6 337,000
D.M. Roberts 15 342,000
F.S. Wonham 15.5 342,000
- ---------------------------------------------------------------------------------------------
</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 1990 through
1994. In the case of each such officer, the base salary amounts so taken into
account for the years 1992, 1993 and 1994 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
which the Corporation has entered into with each such officer. In addition,
supplemental pension agreements for 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.
Messrs. Roberts and Wonham will be retiring effective as of the closing date of
the Reorgainzation. Upon such termination of their employment, they will each be
entitled to receive the following separation benefits: (a) an immediate lump-sum
cash severance payment, in an amount equal to
23
<PAGE> 26
$547,200 in the case of Mr. Roberts and $560,800 in the case of Mr. Wonham, and
(b)_payment of a supplemental pension in addition to the pension payable to
them under the Retirement Plan and Benefit Equalization Plan. The cash severance
payment to each of them will be the sum of one year's base salary ($342,000)
plus an amount ($205,200 in the case of Mr. Roberts and $218,900 in the case of
Mr. Wonham) equal to 4% of his present annual base salary for each of his years
of service with the Corporation (15 years in the case of Mr. Roberts and 16
years in the case of Mr. Wonham). The supplemental pension payable to each of
Messrs. Roberts and Wonham will be an amount equal to the excess of (x) the
additional pension that would be payable to him under the Retirement Plan's
benefit formula if he had completed 25 years of service, over (y) the additional
pension that would be payable to him if he were entitled to receive an
additional pension under the Retirement Plan in an amount that is actuarially
equivalent to the abovementioned service-based component of the cash severance
payment to be made to them ($205,200 in the case of Mr. Roberts and $218,900 in
the case of Mr. Wonham), after adjustment for taxes payable thereon. The
actuarial present values of the supplemental pensions payable to Messrs. Roberts
and Wonham are, respectively, $910,000 and $540,000.
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 previously
granted under the Stock Plan (a form of phantom share unit) 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 1990 Annual Incentive 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) the balance of each
participant's account under the Executive Deferred
24
<PAGE> 27
Compensation Plan and Annual Incentive Plan (the "AIP") would become immediately
payable in cash.
With respect to all options granted under the Corporation's option plans other
than incentive stock options granted before October 27, 1987, the Merger will be
treated as the occurrence of a "change in control" of the Corporation, as
defined in the option plans, with the following consequences:
(a) any option granted under the Stock Plan which is not fully exercisable
will be accelerated, so that the holder thereof will be entitled to
exercise such option immediately before the effective time of the Merger
(the "Effective Time") with respect to any or all of the Common Shares then
subject to the option;
(b) each option granted under the Stock Plan and predecessor option plans,
to the extent it has not expired or has not been exercised or cancelled
prior to the Effective Time, will be cancelled as of the Effective Time;
and
(c) with respect to each option so cancelled, the holders thereof will be
entitled to receive a lump-sum cash payment in an amount equal to the
excess of (i) the Determined Value (as defined below) of the Common Shares
subject to the option, over (ii) the aggregate exercise price for such
shares. The amount so payable with respect to each such option, less the
amount of taxes required to be withheld on such amount, will be paid to the
holder of such option at the Effective Time, or as soon thereafter as
practicable.
"Determined Value" of the Common Shares subject to any option means the product
of (i) the greater of (A) the highest bid price of a Common Share during the
12-month period ending on the day immediately preceding the closing date of the
Reorganization, and (B) the Transaction Value per Common Share, multiplied by
(ii) the number of Common Shares subject to such option. "Transaction Value" per
Common Share shall mean the sum of (x) the product of the number of shares of
Chase common stock into which each Common Share will be converted in the Merger,
multiplied by an amount equal to the 10-day average of the daily average of the
high and low prices for Chase common stock as reported for New York Stock
Exchange composite transactions on each of the 10 trading days immediately
preceding the last business day before the closing date of the Reorganization,
and (y) an amount equal to the 10-day average of the daily average of the high
bid and low asked prices for a Common Share of New Holdings in the
over-the-counter market as reported by the National Quotation Bureau
Incorporated on a "when-issued" basis on each of the 10 trading days immediately
preceding the closing date.
Set forth below is a table showing, for each executive officer named in the
Summary Compensation Table, the total number of shares subject to options
(exercisable and unexercisable) held by him as of December 31, 1994, for which
the officer may become entitled to receive a cash payment upon the Merger, the
range of exercise prices under such options, and the number of such option
shares that will not have become exercisable prior to, but may become
exercisable as a result of, the Merger:
<TABLE>
<CAPTION>
NO. OF OPTION
RANGE OF SHARES TO
TOTAL NO. OF EXERCISE PRICE BECOME EXERCISABLE
NAME OPTION SHARES PER SHARE ON MERGER
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
H. Marshall Schwarz 93,500 $27.75 - $53.88 21,250
Jeffrey S. Maurer 70,700 $27.75 - $53.88 17,250
Frederick B. Taylor 56,450 $27.75 - $53.88 15,250
Donald M. Roberts 41,000 $27.75 - $53.88 9,250
Frederick S. Wonham 35,500 $30.75 - $53.88 9,250
------------- --------
Total 297,150 $27.75 - $53.88 72,250
============== ==================
- ----------------------------------------------------------------------------------------------
</TABLE>
25
<PAGE> 28
The Merger also will constitute a "change in control" as defined in, and for
purposes of, the AIP. Accordingly, if the Merger is consummated, previously
accrued benefits under the AIP will become immediately payable at the Effective
Time, and each participant in the AIP will be entitled to receive an immediate
cash payment in an amount equal to his or her account balance under the plan.
The amounts of the account balances, as of such date, that will become so
payable in the case of the executive officers named in the Summary Compensation
Table (other than Mr. Schwarz, who has no account balance under the AIP) are as
follows:
<TABLE>
<S> <C>
Jeffrey S. Maurer $ 146,734.88
Frederick B. Taylor 109,038.24
Donald M. Roberts 1,168,285.29
Frederick S. Wonham 211,424.24
-------------
Total $1,635,482.65
=============
</TABLE>
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 Retirement Plan) to provide pro rata increases in
the accrued pension benefits of all qualified participants in the Retirement
Plan, including the executive officers named in the Summary Compensation Table.
The supplemental pension agreements with each of the executive officers named in
the Summary Compensation Table provide that in the event of the involuntary
termination of any such officer's employment following a change in control, such
officer would receive from the Corporation 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 Corporation until that date, at the rate of
annual compensation in effect for such 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 any such
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 such 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 1990 Annual Incentive Plan
and predecessor plan and (c) 25 times such officer's then current weekly base
salary.
BENEFIT PROTECTION TRUSTS. The Corporation has established the U.S. Trust
Corporation Benefits Protection Trust I and the U.S. Trust Corporation Benefits
Protection Trust II, and the Trust Company has established the United States
Trust Company of New York and Affiliated Companies Executives Benefits
Protection Trust, for the purposes of assisting the Corporation and the Trust
Company in meeting their obligations under certain of the benefit and
compensation plans maintained by them. The U.S. Trust Corporation Benefits
Protection Trust I also will cover benefits payable under the Board Deferred
Plan with respect to the "Interest Portion" of a board member's deferred amounts
under that plan.
Upon the occurrence of a change in control, the trust funds would be used to
make benefit payments to the officers and board members in accordance with the
provisions of the applicable plans and the trust agreements. However, at all
time prior to payment to the officers and board members, all assets held in the
trusts will remain subject to the claims of the Corporation's and the Trust
Company's respective creditors.
The trusts are intended to qualify as "grantor trusts" within the meaning of the
Code, with the consequence that the Corporation and the Trust Company will be
treated as owners of all of the
26
<PAGE> 29
assets and income of the trusts for federal income tax purposes. No
contributions have been made to the trusts as yet.
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, 1994, 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
$372,600 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,
the law firm of Wien, Malkin & Bettex, of which Mr. Peter L. Malkin is a
partner, and the law firm of Milbank, Tweed, Hadley & McCloy, of which Mr.
Carroll L. Wainwright, Jr. is a consulting partner, performed legal services for
the Corporation or the Trust Company in 1994.
IIRATIFICATION 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 independent auditors for the year 1995. 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 1994,
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, Smith, 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.
27
<PAGE> 30
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 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 1996 Annual Meeting of
Shareholders must be received by the Corporation for possible inclusion in the
proxy statement and form of proxy relating to the 1996 meeting by December 18,
1995.
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 $4,500.
Dated: April 17, 1995
Carol A. Strickland
Secretary
28
<PAGE> 31
U.S. TRUST U.S. TRUST CORPORATION
STOCK FUND VOTING INSTRUCTION
VOTING INSTRUCTION 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, MAY 23, 1995, 10:00 A.M. NEW YORK TIME
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 (Samuel C. Butler, Paul W.
Douglas, Orson D. Munn, H. Marshall Schwarz, Philip L. Smith, Frederick B.
Taylor, Carroll L. Wainwright, Jr., 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 1995 Annual Meeting of Shareholders
of U.S. Trust Corporation, or any adjournment thereof.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES
(SEE REVERSE SIDE).
/X/ Please mark your vote with an X.
1. Election of Directors FOR WITHHELD
/ / / /
2. Ratify selection ofIndependent Accountants
FOR AGAINST ABSTAIN
/ / / / / /
For, except vote withheld from the following nominees(s) named on the reverse
side:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SIGNATURE(S) PLEASE MARK, SIGN, DATE AND RETURN THIS INSTRUCTION CARD
PROMPTLY USING THE ENCLOSED ENVELOPE. DATE
<PAGE> 32
U.S. TRUST
U.S. TRUST CORPORATION
PROXY
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, MAY 23, 1995, 10:00 A.M. NEW YORK TIME
The undersigned appoints WILLIAM M. THROOP, JR. and EDWARD B. PENNFIELD, 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 (Samuel C. Butler, Paul W. Douglas, Orson D. Munn, H. Marshall
Schwarz, Philip L. Smith, Frederick B. Taylor, Carroll L. Wainwright, Jr.,
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 1995 Annual Meeting of Shareholders of 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 AND 2
This proxy will be voted FOR Items 1 and 2 if no choice is specified.
1. Election of FOR WITHHELD 2. Ratify selection of FOR AGAINST ABSTAIN
Directors / / / / Independent Accountants / / / / / /
For, except vote withheld from the following nominees(s)
named on the reverse side:
- --------------------------------------------------------
- ------------------------------------------------------------------------------
SIGNATURE(S) PLEASE MARK, SIGN, DATE DATE
AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
NOTE: Please sign exactly as your name or names appear hereon. Please add your
title if you are signing as Attorney, Administrator, Executor, Guardian,
Trustee or in any other representative capacity.
<PAGE> 33
U.S. TRUST U.S. TRUST CORPORATION
ESOP VOTING INSTRUCTION
VOTING INSTRUCTION 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, MAY 23, 1995, 10:00 A.M. NEW YORK TIME
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
(Samuel C. Butler, Paul W. Douglas, Orson D. Munn, H. Marshall Schwarz, Philip
L. Smith, Frederick B. Taylor, Carroll L. Wainwright, Jr., 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 1995
Annual Meeting of Shareholders of U.S. Trust Corporation, or any adjournment
thereof.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES
(SEE REVERSE SIDE).
/X/ Please mark your vote with an X.
1. Election of Directors FOR WITHHELD
/ / / /
2. Ratify selection of Independent Accountants
FOR AGAINST ABSTAIN
/ / / / / /
For, except vote withheld from the following nominees(s) named on the
reverse side:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SIGNATURE(S) PLEASE MARK, SIGN, DATE AND RETURN THIS INSTRUCTION CARD PROMPTLY
USING THE ENCLOSED ENVELOPE. DATE
