<PAGE> 1
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
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
UST Corp.
(Name of Registrant as Specified In Its Charter)
UST Corp.
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $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 transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / 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 registration 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:
- --------------------------------------------------------------------------------
<PAGE> 2
[UST LOGO]
UST CORP.
40 COURT STREET
BOSTON, MASSACHUSETTS
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 21, 1996
Notice is hereby given that the Annual Meeting of Stockholders of UST Corp.
(the "Company") will be held at 40 Court Street, Boston, Massachusetts, on
Tuesday, the 21st day of May, 1996 at 10:00 o'clock in the forenoon for the
following purposes:
1. To elect eight Directors of the Company, each of whom will serve for a
three-year term;
2. To ratify and approve the 1996 Directors' Stock Option Plan; and
3. To transact any other business which may properly come before the
meeting, or any adjournment thereof.
The close of business on March 29, 1996 has been fixed as the record date
for determination of stockholders entitled to notice of, and to vote at, the
Annual Meeting of Stockholders. The books for the transfer of stock will not be
closed. This Notice and Proxy Statement will first be mailed to stockholders on
or about April 19, 1996.
If you do not expect to be present personally at the Annual Meeting of
Stockholders, please sign, date and return the enclosed Proxy in the enclosed
addressed envelope.
By order of the Board of Directors
/s/ Eric R. Fischer
-------------------
Eric R. Fischer, Clerk
April 19, 1996
<PAGE> 3
[UST LOGO]
UST CORP.
40 COURT STREET
BOSTON, MASSACHUSETTS
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 21, 1996
April 19, 1996
This Proxy Statement is furnished in connection with the solicitation of
Proxies to be used at the Annual Meeting of Stockholders of UST Corp. (the
"Company") to be held on May 21, 1996, and at any adjournments thereof, for the
purposes set forth in the foregoing Notice of Annual Meeting.
The close of business on March 29, 1996 has been fixed as the record date
for the determination of stockholders entitled to notice of, and to vote at, the
Annual Meeting, and at any adjournment thereof.
The financial statements for the Company for the fiscal year ended December
31, 1995, together with corresponding figures for the previous fiscal year, are
contained in the Annual Report to UST Corp. Stockholders for the year ended
December 31, 1995 (the "Annual Report"), which includes within it the Company's
Annual Report to the Securities and Exchange Commission ("SEC") on Form 10-K for
the year ended December 31, 1995 (the "10-K Report"). A copy of the Company's
Annual Report has been previously mailed or mailed simultaneously herewith to
all Stockholders.
Proxies in the form enclosed are solicited by the Board of Directors of the
Company. Any stockholder giving a Proxy in the enclosed form has the power to
revoke it at any time before it is exercised. A stockholder's right to revoke
his Proxy is not limited by, or subject to, compliance with any specified formal
procedure. He may revoke his Proxy by attending the meeting and voting in
person. Proxies in such form, if received in time for voting and not revoked,
will be voted at the Annual Meeting in accordance with the directions of the
stockholders. Where a choice is not so specified, the shares represented by a
properly executed Proxy will be voted: (i) "for" the election of the eight
nominees for Director positions listed therein; and (ii) "for" the ratification
and approval of the 1996 Directors' Stock Option Plan. The enclosed Proxy
confers discretionary authority on Neal F. Finnegan, Eric R. Fischer and James
K. Hunt (or their substitutes) acting singly to act on any other business which
may properly come before the meeting. The Board of Directors does not know of
any matters which will be brought before the meeting other than those
specifically set forth in the Notice of Annual Meeting. Should another matter,
however, properly come before the meeting, it is intended that the persons named
in the enclosed form of Proxy, or their substitutes acting thereunder, will vote
on such matter in accordance with their best judgment.
The Company will bear all expenses in connection with the solicitation of
Proxies, including the preparing, assembling and mailing of the Proxy Statement.
Solicitation will be initially by mail, but employees and Directors of the
Company as well as representatives of Morrow & Co., professional proxy
solicitors, may solicit Proxies by personal interview, by telephone, by
facsimile or by telecopy. Employees and Directors of the Company will not
receive additional compensation for such efforts, and Morrow & Co. is expected
to receive approximately $4,000, plus out-of-pocket expenses, for such
solicitation. The Company will also provide persons, firms, banks and
corporations holding shares in their names, or in the names of their nominees,
which in either case are beneficially owned by others, with proxy material for
transmittal to such beneficial owners and reimburse such record holders for
their reasonable expenses in so doing. Confidential voting procedures will not
be used in connection with the Annual Meeting, except that votes cast by
employees of the Company and/or its subsidiaries shall be held confidential.
<PAGE> 4
As of March 29, 1996, the Company had outstanding 17,927,813 shares of
common stock, $0.625 par value per share ("Common Stock"), each entitled to one
vote. A majority, or 8,963,907 of such shares, constitutes a quorum for the
Annual Meeting. There are no outstanding shares of Preferred Stock of the
Company.
PERSONS TO BE NOMINATED BY MANAGEMENT
FOR ELECTION AS DIRECTORS
(NOTICE ITEM 1)
Section 50A of Chapter 156B of the Massachusetts General Laws provides for
a Board of Directors of such number as is fixed by the Directors, divided into
three classes as nearly equal in number as possible, serving staggered
three-year terms. The Board of Directors has fixed the number of Directors at
twenty-four (24). The Board of Directors, following the recommendation of the
Nominating Committee, has recommended the following eight nominees (all of whom
are currently Directors) to fill the eight positions, each of whom, if elected,
will hold office for a three-year term until the 1999 annual meeting of
stockholders and until his/her successor is chosen and qualified. Unless
otherwise specified, Proxies will be voted in favor of the eight nominees'
election as Directors. Pursuant to the By-Laws of the Company, Directors will be
elected by a plurality of the votes cast at the Meeting. Thus, shares for which
authority to vote for one or more nominees is withheld will have no effect on
the election of those one or more individuals.
<TABLE>
<CAPTION>
POSITIONS (IN ADDITION TO DIRECTOR OF THE
DIRECTOR OF COMPANY), COMMITTEE MEMBERSHIPS AND
THE OFFICES WITH THE COMPANY AND ITS
NAME (AGE) COMPANY SINCE SUBSIDIARIES
- ---------- ------------- -----------------------------------------
<S> <C> <C>
Edward Guzovsky (69)............... 1995 Member, Audit Committee; Director, USTrust
Brian W. Hotarek (49).............. 1994 Member, Asset Quality and Nominating
Committees; Director, USTrust
Vikki L. Pryor (42)................ 1995 Vice Chairman, Audit Committee; Member,
Community Reinvestment Committee;
Director, USTrust
Gerald M. Ridge (67)............... 1982 Member, Asset Quality, Executive,
Nominating and Steering Committees; Vice
Chairman and Director, USTrust
William Schwartz (62).............. 1981 Vice Chairman of the Board of Directors of
the Company; Chairman, Steering Committee;
Member, Executive Committee; Director,
USTrust
Edward J. Sullivan (75)............ 1995 Member, Asset Quality Committee; Director,
USTrust
Michael J. Verrochi, Jr. (56)...... 1974 Chairman, Nominating Committee; Member,
Executive and Steering Committees;
Director, USTrust
Gordon M. Weiner (72).............. 1995 Member, Community Reinvestment Committee;
Director, USTrust
</TABLE>
Mr. Guzovsky is a Director of Wolf Construction Company in Norwood,
Massachusetts and Chairman of JWP New England. Mr. Hotarek has been Senior Vice
President, Real Estate and Development for the Stop & Shop Supermarket Company
since 1990. Ms. Pryor is Senior Vice President, Operations and Systems for Blue
Cross Blue Shield of Massachusetts in Boston, Massachusetts. Prior to joining
Blue Cross Blue Shield in 1993, Ms. Pryor served as Director of Credit Insurance
Products and Operations for the Sears, Discover, and Sears Mortgage Corporation
Division of Allstate Life Insurance Company. Mr. Ridge is a Vice Chairman of
USTrust and President of Blue Hill Cemetery and G. M. Ridge Corporation. Mr.
Schwartz is Vice President/ Academic Affairs (Chief Academic Officer) of Yeshiva
University in New York City. He also serves as Vice Chairman of the Board of
Directors of the Company. Mr. Schwartz is of counsel to the New York City law
firm of Cadwalader, Wickersham & Taft. Mr. Schwartz is also a Director of
Viacom, Inc., Viacom International, Inc., (diversified media, publishing and
entertainment holding companies) and of W.C.I. Steel, Inc. (steel manufacturer).
Mr. Sullivan has been the Clerk of Courts for Middlesex County, Massachusetts
since 1959. Mr. Sullivan also owns an insurance agency and a trucking and snow
removal business all based in
2
<PAGE> 5
Cambridge, Massachusetts. Mr. Verrochi serves as Executive Vice President of
Browning-Ferris Industries, Inc. (waste management); Director of American
Ref-Fuel, Inc. (refuse to energy); President and Director of Monadnock Mountain
Spring Water Inc., Abita Water Co. and EVC Corp. (producers of bottled water);
Director, Vice President and Treasurer of VRT Corp. (real estate development and
construction); Director of Marshfield Insurance Co., Inc.; Director of Universal
Construction Inc.; and as a trustee of several real estate trusts. Mr. Weiner
has his own practice as an attorney-at-law in Gloucester, Massachusetts and
prior to 1991 was a partner with the law firm of Cahill, Weiner & Conant in
Gloucester, Massachusetts.
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's Executive Officers and Directors to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Executive Officers and Directors are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms they file. Based solely upon its
review of the copies of such forms and certain certifications received by it,
the Company believes that, during 1995, all such filing requirements applicable
to its Executive Officers and Directors were complied with by such individuals.
There are currently twenty-one Directors of the Company and three vacancies
on the Board. Walter A. Guleserian who served as a member of the Board of
Directors of the Company since 1985 died in late March, 1996. His term as
Director of the Company would have expired in 1997. Mr. Guleserian's death
created the third vacancy on the Board.
<TABLE>
The following table sets forth certain information about those Directors of
the Company whose terms of office do not expire at the Annual Meeting and who
consequently are not nominees for re-election at the Annual Meeting.
<CAPTION>
POSITIONS (IN ADDITION TO DIRECTOR
DIRECTOR OF OF THE COMPANY), COMMITTEE
THE MEMBERSHIPS AND OFFICES WITH THE TERM OF OFFICE
NAME (AGE) COMPANY SINCE COMPANY AND ITS SUBSIDIARIES WILL EXPIRE
---------- ------------- ---------------------------------- --------------
<S> <C> <C> <C>
Robert M. Coard (68)............. 1995 Member, Community Reinvestment 1997
Committee; Director, USTrust
Domenic Colasacco (47)........... 1990 Executive Vice President of the 1997
Company; Chairman and President
of United States Trust Company;
Member, Community Reinvestment
Committee
Robert L. Culver (47)............ 1993 Chairman, Audit Committee; Member, 1998
Compensation, Executive and
Steering Committees; Director,
USTrust
Alan K. DerKazarian (62)......... 1995 Member, Nominating Committee; 1997
Director, USTrust
Donald C. Dolben (59)............ 1995 Member, Asset Quality and 1997
Compensation Committees;
Director, USTrust
Neal F. Finnegan (58)............ 1993 President and Chief Executive 1998
Officer of the Company and
Chairman, President and Chief
Executive Officer of USTrust;
Chairman of the Executive
Committee of United States Trust
Company; Member, Executive,
Nominating and Steering
Committees
Wallace M. Haselton (74)......... 1971 Chairman, Compensation Committee; 1998
Member, Executive and Steering
Committees; Director, USTrust
Francis X. Messina (66).......... 1988 Member, Compensation Committee; 1997
Director, USTrust
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
POSITIONS (IN ADDITION TO DIRECTOR
DIRECTOR OF OF THE COMPANY), COMMITTEE
THE MEMBERSHIPS AND OFFICES WITH THE TERM OF OFFICE
NAME (AGE) COMPANY SINCE COMPANY AND ITS SUBSIDIARIES WILL EXPIRE
---------- ------------- ---------------------------------- --------------
<S> <C> <C> <C>
Sydney L. Miller (66)............ 1995 Chairman, Community Reinvestment 1998
Committee; Member, Audit,
Executive and Steering
Committees; Director, USTrust
and United States Trust Company
Samuel B. Sheldon (76)........... 1969 Member, Audit, Executive and 1997
Steering Committees; Director,
USTrust
Barbara C. Sidell (62)........... 1995 Member, Asset Quality Committee; 1998
Director, USTrust and United
States Trust Company
James V. Sidell (65)............. 1967 Chairman, Executive Committee; 1997
Director, USTrust and United
States Trust Company
Paul D. Slater (61).............. 1980 Chairman, Asset Quality Committee; 1998
Vice Chairman, Compensation
Committee; Member, Executive and
Steering Committees; Director,
USTrust
</TABLE>
Mr. Coard is President and Chief Executive Officer of Action for Boston
Community Development, Inc. Mr. Colasacco is Executive Vice President of the
Company and Chairman and President of United States Trust Company. Mr. Culver is
Senior Vice President and Treasurer of Northeastern University in Boston,
Massachusetts. Prior to 1991, Mr. Culver was a partner in the accounting firm of
Coopers & Lybrand. Dr. DerKazarian is a practicing Periodontist. Dr. DerKazarian
also serves as Vice President of Dental Management Inc. and Dental Services P.C.
Mr. Dolben is a Realtor and serves as Chairman of The Dolben Company, Inc.,
President of William H. Dolben & Sons, Inc. and President of Dolben Equities,
Inc. Mr. Finnegan is President and Chief Executive Officer of UST Corp. Mr.
Finnegan is also Chairman, President and Chief Executive Officer of USTrust and
Chairman of the Executive Committee of United States Trust Company. Prior to
joining the Company, Mr. Finnegan served as Executive Vice President in charge
of Private Banking at Bankers Trust Company, New York, New York. During the
period from 1986 to 1988, he was President and Chief Operating Officer of the
Bowery Savings Bank, based in New York City. From 1983 to 1986, Mr. Finnegan was
Vice Chairman of Shawmut Corporation. Mr. Finnegan serves as Vice Chairman of
the Board of Trustees of Northeastern University. Mr. Haselton, a retired
banker, was formerly Chairman of the Board of Key Bancshares of Maine, Inc., a
bank holding company. Mr. Messina serves as President of Wildwood Estates of
Braintree, Inc. (real estate development, management and leasing) and as
President of F.X. Messina Construction Corp. (general contracting and
construction). Mr. Miller is President of Harry Miller Co., Inc. and W.E. Palmer
Company (manufacturers of industrial canvas products) and serves as a trustee of
Northeastern University and several real estate trusts and charitable
organizations. Mr. Sheldon is a retired businessman who, before his retirement,
served as President of Mark Fore Industries, a division of Beatrice Foods
Company. Ms. Sidell is an attorney who has served as a Director of various
subsidiaries of the Company since 1969. Mr. Sidell is Director and President of
Pomme Frite, Inc. in Cambridge, Massachusetts. Prior to April 1, 1993, Mr.
Sidell was President and Chief Executive Officer of the Company. See "Certain
Transactions and Indebtedness" below for additional information concerning Mr.
Sidell. Mr. Slater is a private investor who previously served as the Chairman
and Chief Executive Officer of The Slater Company, a real estate and finance
firm based in Boston, Massachusetts. Mr. Slater now serves as President of
Naples Downtown Corp. in Naples, Florida.
Except as indicated above, each Director has been employed during the past
five years in his/her respective positions.
In case any person or persons named herein for election as a Director is or
are not available for election at the Annual Meeting, Proxies in the
accompanying form may be voted for a substitute nominee or nominees, as well as
(in the absence of contrary instructions) for the balance of those named herein.
The Board of Directors has no reason to believe that any of the nominees for
election as Directors will be unavailable.
4
<PAGE> 7
OTHER INFORMATION ABOUT THE BOARD AND ITS COMMITTEES
The Company's Board of Directors has an Audit Committee, Steering
Committee, Compensation Committee, Nominating Committee, Community Reinvestment
Committee, Executive Committee and Asset Quality Committee. Members of each
committee consist of Directors of the Company except that the Audit Committee
and Community Reinvestment Committee also include Directors of banking
subsidiaries of the Company.
The Audit Committee reviews examinations of the Company and its
subsidiaries that are conducted by regulatory agencies, reviews the results of
audits of the Company and its subsidiaries by internal audit staff and
independent auditors, and monitors implementation of recommendations with
respect to internal controls and compliance that may be made from time to time.
It also reviews risks related to litigation against the Company and the
activities and reports of the internal Loan Review Department of the Company and
its subsidiaries. There were eight meetings of the Audit Committee during 1995.
Mr. Culver serves as Chairman and Ms. Pryor serves as Vice Chairman of the
Committee. Messrs. Guzovsky, Miller, David Engelson (Director of UST
Bank/Connecticut), and Arthur Gillis (Director of United States Trust Company)
also currently serve on the Audit Committee. Mr. Sheldon served as a member of
the Committee throughout 1995, but ceased to be a member in March, 1996.
The Steering Committee is a newly constituted Committee which replaced the
Oversight Committee in September of 1995 after the Company and its banking
subsidiaries were released from its agreements and orders with banking
regulatory agencies. The Steering Committee is authorized to act on behalf of
the Board and to exercise all of the powers of the full Board of Directors when
the Board is not in session, except as limited by Massachusetts law. The
Committee met two times in 1995. The current members of the Steering Committee
are Messrs. Schwartz (Chairman), Culver, Finnegan, Haselton, Miller, Ridge,
Sheldon, Slater and Verrochi.
The Compensation Committee has five members. Mr. Haselton serves as
Chairman and Mr. Slater serves as Vice Chairman of the Committee. Messrs.
Culver, Dolben and Messina also currently serve on the Committee. The Committee
considers and, when appropriate, makes determinations or recommendations to the
Board regarding employee and Director compensation (including employee and
Director stock compensation) matters. The Committee met nine times in 1995.
The Nominating Committee recommends candidates to fill vacancies on the
Boards of Directors of the Company and its subsidiaries, as well as a slate of
Directors of the Company for election by stockholders at the Annual Meeting. Its
activities also include evaluation of the size and composition of the Boards of
Directors of the Company and its subsidiaries. There was one meeting of the
Nominating Committee during 1995. Messrs. Verrochi (Chairman), DerKazarian,
Finnegan, Hotarek and Ridge currently serve on the Nominating Committee. Mr.
Guleserian also served on the Committee throughout 1995 and in 1996 until his
death in March.
The Nominating Committee considers candidates for Director of the Company
recommended by stockholders of the Company. Stockholders desiring to suggest
candidates for the 1997 Annual Meeting should advise Eric R. Fischer, Executive
Vice President, General Counsel and Clerk of the Company in writing at 40 Court
Street, Boston, MA 02108 on or before December 26, 1996 and include sufficient
biographical material to permit an appropriate evaluation. The Nominating
Committee is currently in the early stages of evaluating the qualifications of
several individuals who have been suggested by current Directors as potential
nominees to fill the three vacancies on the Board.
In 1990, the Company established a Community Reinvestment Committee whose
current members are Messrs. Miller (Chairman), Coard, Colasacco, Weiner, Paul
Ambrose (Director of UST Bank/Connecticut), Arthur Snyder (Director of United
States Trust Company), and Ms. Pryor. Walter E. Huskins, Jr., a Director and
Acting President of UST Bank/Connecticut also attends these meetings on behalf
of UST Bank/Connecticut. Representatives of UST Bank/Connecticut report
periodically to the Committee. The Committee held two meetings in 1995. The
Community Reinvestment Committee reviews the Company's activities to ascertain
whether the Company's banking subsidiaries are taking appropriate actions to
assess and
5
<PAGE> 8
to help to meet the credit-related needs of the local communities served by the
Company's banking subsidiaries.
The current members of the Company's Executive Committee are Messrs. Sidell
(Chairman), Culver, Finnegan, Haselton, Miller, Ridge, Schwartz, Sheldon, Slater
and Verrochi. The Executive Committee is authorized to act in an advisory
capacity to management and the Board with respect to marketing, customer
relations, promotional issues and certain credit-related matters. The Executive
Committee held no meetings in 1995 and is scheduled to be dissolved on June 30,
1996.
In 1993, the Board established an Asset Quality Committee to oversee
management's efforts to reduce the level of the Company's non-performing assets.
The Committee met eleven times in 1995. It is chaired by Mr. Slater and its
members include Messrs. Dolben, Hotarek, Ridge and Sullivan, and Ms. Sidell.
During 1995, there were twelve meetings of the Board of Directors of the
Company. No Director attended fewer than 75% of the aggregate number of meetings
of the Board of Directors and of the committees of the Board of Directors on
which he served.
DIRECTORS' FEES AND OTHER COMPENSATION
<TABLE>
Directors of the Company who are not otherwise full time Officers or
employees of the Company or any of its subsidiaries are paid a fee of $250 for
each meeting of the Company's Board they attend, plus an annual stipend which in
1995 was $15,000. In addition, in 1995, Directors (other than full-time
employees of the Company) received the following additional committee fees:
<S> <C>
(i) Steering Committee.......... $250 per meeting (except Chairman who receives
$500 per meeting)
(ii) Nominating Committee........ $500 per meeting
(iii) Audit Committee............. $250 per meeting (except Chairman who receives
$500 per meeting and $500 per diem for work
on committee matters when a meeting is not
held)
(iv) Compensation Committee...... $250 per meeting (except Chairman who receives
$500 per meeting and $500 per diem for work
on committee matters when a meeting is not
held)
(v) Asset Quality Committee..... $250 per meeting (except Chairman who receives
$500 per meeting)
(vi) CRA Committee............... $250 per meeting (except Chairman who receives
$500 per meeting)
(vii) Executive Committee......... $250 per meeting (except Chairman who receives
$500 per meeting)
(viii) Oversight Committee......... $1,000 per month (through September 19, 1995)
</TABLE>
Instead of receiving a retainer or meeting fees, in 1995 Mr. Ridge received
$55,000 for services performed in his capacity as Vice Chairman of USTrust.
At the Annual Meeting of Stockholders in 1995, the 1995 Directors' Stock
Option Plan was approved by the Company's stockholders. Pursuant to that Plan,
outside Directors of the Company and USTrust received options to acquire shares
at the market price ($12.875) on the date of the meeting, May 16, 1995. Options
were granted as follows: individuals who were Directors of both the Company and
USTrust received 7,500 options; individuals who were Directors of the Company
only received 5,100 options; individuals who were honorary Directors of the
Company only received 4,500 options; and individuals who were Directors of
USTrust only received 3,000 options. These options become exercisable as
follows: one-third when the per-share fair market value of the Stock reaches a
level at least three dollars higher than on the date of grant ($15.875);
one-third when the per-share fair market value of the Stock reaches a level at
least six dollars higher than on the date of grant ($18.875); and one-third when
the per-share fair market value of the shares reaches a level at least nine
dollars higher than on the date of grant ($21.875). In any event, the options
are fully exercisable three years from the date of grant or May 16, 1998. In
addition to the foregoing, in February 1996, the Board of Directors approved the
1996 Directors' Stock Option Plan for which stockholder
6
<PAGE> 9
ratification and approval is sought at this meeting (see Notice Item No. 2).
This Plan would grant outside Directors of the Company 5,000 immediately
exercisable options at the market price on the date of the Annual Meeting of
Stockholders, May 21, 1996.
The Company also maintains a deferred compensation program which covers
Directors of the Company and Directors of any subsidiary of the Company whose
Board of Directors elects to participate. Under this program, Directors may
elect to defer all or any portion of their Directors' meeting fees and annual
stipend. Each participant is treated as a general, unsecured creditor of the
Company and has the right to receipt of his other deferred compensation upon
termination of Director status. Payments of the deferred amounts are made either
in cash or shares of Common Stock of the Company at the discretion of the
Company's management.
COMPENSATION OF EXECUTIVE OFFICERS
The tables that appear below, together with the accompanying text and
footnotes, provide information on compensation and benefits for the named
Executive Officers, as determined by requirements of the Securities and Exchange
Commission. Except for the information regarding individual stock option
exercises, all the data regarding values for stock options and grants of
Restricted Stock are hypothetical in terms of the amounts that an individual may
or may not receive because such amounts are contingent on continued employment
with the Company and the price of the Common Stock. All 1995 year-end values
shown in these tables for outstanding stock options and restricted shares
reflect a $14.50 price, which was the closing price of the Common Stock for
December 29, 1995, as reported in the Nasdaq section of the Eastern Edition of
The Wall Street Journal.
<TABLE>
The following table displays compensation information for the past three
fiscal years for each of the named Executive Officers:
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG TERM
COMPENSATION
-------------------------
AWARDS
-------------------------
RESTRICTED SECURITIES
ANNUAL COMPENSATION STOCK UNDERLYING ALL OTHER
-------------------------- AWARD(S) OPTIONS/ COMPENSATION
YEAR SALARY $ BONUS $ ($)(A) SARS(#) ($)(B)
---- -------- -------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Neal F. Finnegan,(C)............ 1995 $314,851 $150,000 $ 604,688(C) 150,000(C) $3,669
President and Chief Executive 1994 $314,748 -- $ 50,002(C) 200,000 $1,607
Officer of the Company 1993 $264,808 $ 40,000 $ 517,500 150,000 $2,250
Domenic Colasacco,(D)........... 1995 $236,735 $575,000 -- -- $3,669
Executive Vice President/Trust 1994 $238,254 $575,000 -- -- $1,607
and Investment Management 1993 $236,092 $579,287 -- -- $2,247
of the Company; Chairman
and President, United States
Trust Company
Robert T. McAlear,(E)........... 1995 $212,460 $ 40,000 -- -- $3,669
Executive Vice President/ 1994 $212,450 -- $ 92,250 30,300 $1,607
Controlled Loans and Credit 1993 $211,916 -- -- -- $1,837
of the Company
Walter E. Huskins, Jr.,(F)...... 1995 $213,060 $ 15,000 -- -- $3,669
Executive Vice President/ 1994 $213,050 -- $ 123,000 76,000 $1,607
Administration of the Company 1993 $ 86,515 -- -- -- --
Kathie S. Stevens(G)............ 1995 $202,551 $ 15,000 -- -- $3,669
Executive Vice President 1994 $202,611 -- $ 20,500 63,000 $1,607
and Senior Lending Officer 1993 $200,327 $ 15,000 -- -- $1,900
of the Company
<FN>
- ---------------
(A) The 1994 values reflect a Common Stock closing price of $10.25 on November
29, 1994, the date the awards to Ms. Stevens and Messrs. McAlear and Huskins
were made. With respect to Mr. Finnegan's 1994 and 1995 award see footnote C
below. The 1993 values reflect a Common Stock closing price of $8.625 on
April 20, 1993, the date the award to Mr. Finnegan was made. As of December
31, 1995 each
</TABLE>
7
<PAGE> 10
of the named Executive Officers held the following number of shares of
Restricted Stock having the corresponding year-end market value:
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1995
---------------------------
TOTAL
NUMBER AGGREGATE
OF RESTRICTED MARKET
NAME SHARES HELD VALUE
---- ------------- ---------
<S> <C> <C>
Neal F. Finnegan..................................... 65,000 $ 942,500
Domenic Colasacco.................................... 0 0
Robert T. McAlear.................................... 3,000 $ 43,500
Walter E. Huskins, Jr................................ 4,000 $ 58,000
Kathie S. Stevens.................................... 666 $ 9,657
</TABLE>
These shares are forfeitable to the Company and subject to restrictions on
transfer. Upon grant the recipient has full voting and dividend rights with
respect to all shares granted. Other than the January 1995 grant to Mr.
Finnegan described in footnote C below, the shares of Restricted Stock vest
over periods which vary from two to five years, subject to acceleration in
the event of a "change of control" of the Company. The grants to Messrs.
McAlear, Huskins, and Ms. Stevens vest over periods of approximately two
years and two months. The grant to Mr. Finnegan of 5,195 shares shown in the
Summary Compensation Table for 1994 and described in footnote C below is not
reflected on the table above and vested in approximately 60 days. The other
grants to Mr. Finnegan vest over three years.
(B) The amounts reported for 1995 for each of the named Executive Officers
consist of (i) allocations under the Company's Employee Stock Ownership Plan
to Messrs. Finnegan, Colasacco, McAlear and Huskins and Ms. Stevens of
$1,728 and (ii) allocations under the Company's Employee Savings Plan to
Messrs. Finnegan, Colasacco, McAlear and Huskins and Ms. Stevens of $1,941.
(C) The Company entered into an Employment Agreement with Mr. Finnegan effective
November 21, 1995 and ending January 4, 1999, and thereafter continuing to
run year-to-year unless terminated in writing by either party upon 60-day
notice. Pursuant to this Agreement, Mr. Finnegan receives a base salary of
$360,000 and received stock compensation described herein. The $604,688
Restricted Stock award to Mr. Finnegan was calculated at $13.4375 per share,
the fair market value on the date of grant, while the 150,000 options were
granted at $13.4375 per share, also the fair market value on the date of
grant. See "Employment Agreements." Mr. Finnegan previously had a three year
Employment Agreement with the Company, dated as of April 1, 1993, pursuant
to which Mr. Finnegan received a base salary of $300,000 and received
stock-based compensation described herein. The $50,002 Restricted Stock
award to Mr. Finnegan reported for 1994 was paid in early 1995, but was
intended to compensate him for his performance in 1994. The award was based
on a price per share of common stock of $9.625 per share which reflects the
closing price of the Company's common stock on December 20, 1994.
(D) Through June 30, 1994, Mr. Colasacco had an incentive arrangement pursuant
to which he received a percentage of pre-tax income, as defined, of the
Asset Management Division of United States Trust Company. As of January 1,
1995, the Company and USTC, entered into a two and one-half year Employment
Agreement with Mr. Colasacco which is described under "Employment
Agreements." Although the Employment Agreement was entered into as of
January 1, 1995, the revised revenue sharing arrangement was effective as of
July 1, 1994.
(E) Mr. McAlear entered into a two-year Employment Agreement with the Company
dated February 1, 1996 and thereafter continuing to run year-to-year unless
terminated in writing by either party upon 60-day notice. See "Employment
Agreements." Throughout 1995, Mr. McAlear was employed under a prior
Employment Agreement with the Company and USTrust dated July 11, 1990 which
is now superseded by the new agreement.
(F) Mr. Huskins entered into a restated and amended two-year Employment
Agreement with the Company dated February 1, 1996 and thereafter continuing
to run year-to-year unless terminated in writing by either party upon 60-day
notice. See "Employment Agreements." Throughout 1995, Mr. Huskins was
employed under a two-year Employment Agreement with the Company dated
October 24, 1994.
8
<PAGE> 11
(G) Ms. Stevens entered into a two-year Employment Agreement with the Company
dated February 1, 1996 and thereafter continuing to run year-to-year unless
terminated in writing by either party upon 60-day notice. See "Employment
Agreements." Prior to this Agreement, Ms. Stevens did not have an Employment
Agreement with the Company or its subsidiaries.
STOCK-BASED COMPENSATION
The Stock Compensation Plan originally adopted in 1992, as amended to date,
provides for granting of Incentive Stock Options, Nonqualified Stock Options and
Restricted Stock Awards or a combination of the foregoing as a means through
which the Company may attract and retain highly qualified Officers and attract
and encourage able persons to enter into and remain in its employ. The Plan is
designed to encourage key employees of the Company and its subsidiaries to
acquire and maintain stock ownership, thereby strengthening their commitment to
the welfare of the Company and promoting the identity of interests between
shareholders and key employees.
<TABLE>
The following table provides details regarding stock options granted to the
named Executive Officers in 1995 under the Stock Compensation Plan. In addition,
in accordance with SEC rules, this table shows hypothetical gains on a pre-tax
basis or "option spreads" that would exist for the respective options granted in
1995 for the named Executive Officers. These gains are based on assumed rates of
annual compound stock price appreciation of 0%, 5% and 10% from the date the
options were granted over the full option term.
OPTION GRANTS IN 1995
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------------- POTENTIAL REALIZABLE VALUE
% OF AT ASSUMED ANNUAL RATES
NUMBER OF TOTAL OF STOCK PRICE
SECURITIES OPTIONS MARKET APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE VALUE ON OPTION TERM(C)
OPTIONS EMPLOYEES PRICE GRANT DATE EXPIRATION --------------------------
GRANTED (#) IN 1995 ($/SH.) ($/SH.)(B) DATE 0% 5% 10%
----------- ---------- -------- ---------- ---------- --- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Neal F. Finnegan....... 150,000(A) 91.41% $13.4375 $13.4375 01/21/01 $ 0 $577,942 $1,282,680
Domenic Colasacco...... 0 -- -- -- -- -- -- --
Robert T. McAlear...... 0 -- -- -- -- -- -- --
Walter E. Huskins,
Jr. ................. 0 -- -- -- -- -- -- --
Kathie S. Stevens...... 0 -- -- -- -- -- -- --
<FN>
- ---------------
(A) Options vest over three years, that is, 50,000 shares on each of January 2,
1996, January 2, 1997 and January 2, 1998.
(B) Closing price of Common Stock of the Company on the date of grant.
(C) Realizable value represents the difference between the assumed stock price
at the expiration date and the exercise price.
</TABLE>
The following table shows stock option exercises by the named Executive
Officers during 1995, including the aggregate value realized upon exercise.
"Value realized upon exercise" represents the excess of the closing price of the
Common Stock on the date of exercise over the exercise price. In addition, this
table includes the number of shares remaining unexercised underlying both
"exercisable" (i.e., vested) and "unexercisable" (i.e., unvested) stock options
as of December 31, 1995. Also reported are the values of "in-the-money" options,
which represent the positive spread between the exercise price of any such
existing stock options and the year-end price of the Common Stock of $14.50.
9
<PAGE> 12
<TABLE>
AGGREGATED OPTION EXERCISES IN 1995 AND
YEAR-END 1995 OPTION VALUES
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED,
UNDERLYING UNEXERCISED IN-THE-MONEY, OPTIONS
SHARES OPTIONS AT FISCAL YEAR END AT FISCAL YEAR END
ACQUIRED VALUE ---------------------------- ----------------------------
ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Neal F. Finnegan........ 65,000 $434,375 285,000 150,000 $1,482,500 $159,375
Domenic Colasacco....... -- $ -- 3,360 840 $ 28,320 $ 7,080
Robert T. McAlear....... -- $ -- 46,050 -- $ 27,667 $ 0
Walter E. Huskins,
Jr.................... -- $ -- 76,000 -- $ 361,000 $ 0
Kathie S. Stevens....... -- $ -- 79,500 5,050 $ 423,000 $ 32,350
</TABLE>
<TABLE>
RETIREMENT BENEFITS
The following table presents the years of service to the Company and the
1995 remuneration covered by the Company's Pension Plan and Supplemental
Retirement Benefit Plan for the five Executive Officers with regard to whom
information is provided in the Executive Compensation Table.
<CAPTION>
CURRENT COVERED
YEARS OF SERVICE REMUNERATION
---------------- ------------
<S> <C> <C>
Neal F. Finnegan......................................... 3 $300,675
Domenic Colasacco........................................ 22 $225,375
Walter E. Huskins, Jr. .................................. 2 $200,000
Robert T. McAlear........................................ 5 $203,900
Kathie S. Stevens........................................ 10 $191,500
</TABLE>
<TABLE>
The following table reflects annual single life annuity retirement benefits
payable (before deduction for Social Security benefits) to persons in specified
"final average" base salary and years of service classifications.
<CAPTION>
YEARS OF SERVICE
-------------------------------------
BASE SALARY 15 20 25 AND OVER
----------- --------- --------- -----------
<S> <C> <C> <C>
$100,000........................................... $ 30,000 $ 40,000 $ 50,000
125,000........................................... 37,500 50,000 62,500
150,000........................................... 45,000 60,000 75,000
175,000........................................... 52,500 70,000 87,500
200,000........................................... 60,000 80,000 100,000
225,000........................................... 67,500 90,000 112,500
250,000........................................... 75,000 100,000 125,000
300,000........................................... 90,000 120,000 150,000
400,000........................................... 120,000 160,000 200,000
450,000........................................... 135,000 180,000 225,000
</TABLE>
To the extent that benefits cannot be provided under the Pension Plan or
certain other retirement plans of the Company because of the limitations imposed
by Sections 415 and 401(a)(17) of the Internal Revenue Code on the amount of
such benefits payable, any balance of benefits otherwise payable under such
plans will be provided by the Company to eligible Officers pursuant to a
Supplemental Retirement Benefits Plan adopted by the Board of Directors. As of
December 31, 1995, all individuals named in the Summary Compensation Table were
covered by the Supplemental Retirement Benefits Plan.
COMPENSATION COMMITTEE REPORT
COMPENSATION PHILOSOPHY
This Report reflects the Company's compensation philosophy and resulting
actions taken by the Company for 1995, as shown in the various compensation
tables above. The Compensation Committee either approves or recommends to the
Board of Directors payment amounts and award levels for Executive Officers
10
<PAGE> 13
of the Company and its affiliates. Directors who were also Executive Officers
did not participate in votes concerning their own remuneration or plans under
which they were eligible to receive any benefits.
Compensation of Executive Officers of the Company has been designed
generally to (i) compensate Officers based upon corporate, business unit and
individual performance; (ii) motivate key senior Officers to achieve strategic
business initiatives and reward them for their achievement; (iii) provide salary
arrangements which are comparable to those of the Company's competitors, as
described below under "Salary;" and (iv) align the interests of executives with
the long-term interests of stockholders through award opportunities that can
result in the ownership of Common Stock. The Committee does not at present,
however, have any specific target level of Common Stock ownership.
Generally, (except as noted below with respect to the key executives of
USTC's Asset Management Division) as an executive's level of responsibility
increases, a greater portion of potential total compensation tends to be based
upon performance incentives and less on salary and employee benefits, often
causing greater variability in the individual's absolute compensation level from
year to year. Generally, the higher one rises in the organization, the greater
the mix of compensation shifts to reliance on the Common Stock through stock-
based awards. Specific compensation and award levels, however, are not
determined by any specific formulas, but rather by the Compensation Committee,
using its discretion and considering subjective criteria. Mr. Colasacco and the
other key executives of USTC's Asset Management Division are compensated
primarily through a cash-based, revenue sharing arrangement which is generally
based upon gross revenues earned by the Division. See "Employment Agreements"
below with respect to Mr. Colasacco's Employment Agreement.
At present, executive compensation generally is comprised of salary, cash
bonuses (in years in which the Company has, in the discretion of the
Compensation Committee, satisfactory net earnings or the individual executive
has made an unusual and meaningful contribution to the Company but without
applying any specific formula), cash incentive compensation payments, long-term
incentive opportunities in the form of stock options and restricted stock.
Over the three years since Mr. Finnegan joined the Company in April, 1993,
he has selected a senior management team composed of newly-hired and previously
employed members of the Executive Policy Committee to direct the activities of
the Company. See "Executive Officers of the Company" below for a full listing of
the current Executive Policy Committee members' names, principal
responsibilities and backgrounds. The Compensation Committee has granted
substantial stock compensation to Mr. Finnegan and the other members of the
Executive Policy Committee of the Company in order to align more closely the
economic interests of these Officers with those of the Company's stockholders.
GENERAL BACKGROUND
As indicated in the Five-Year Stockholder Return comparison, which is found
at the end of the discussion of Compensation of Executive Officers, the
five-year performance (including reinvestment of dividends) of the Company's
Common Stock has lagged behind the Keefe, Bruyette & Woods ("KBW") New England
Bank Index. The performance of the Company's Common Stock has also lagged behind
the Standard & Poor's 500 Index during the past five years except for 1995 when
the Company's performance was approximately equal to the performance of the
Standard & Poor's 500 Index.
The following is a discussion of the Compensation Committee's bases for Mr.
Finnegan's compensation reported for 1995, and its general policies with respect
to the other Executive Officers named in the Summary Compensation Table. Mr.
Finnegan served as Chief Executive Officer throughout 1995.
SALARY
The Company entered into a new Employment Agreement with Mr. Finnegan as of
November 21, 1995. The Employment Agreement increased Mr. Finnegan's base salary
from $300,000 to $360,000. Based upon salary surveys of approximately 35
similarly-sized regional and national bank holding companies provided to the
Compensation Committee, and advice provided by the Company's independent
employee benefit and
11
<PAGE> 14
compensation consultants, this base salary was and continues to be at a level
consistent with the base salaries of Chief Executive Officers of the banks and
bank holding companies surveyed.
With respect to the compensation of the other Executive Officers named in
the Summary Compensation Table, the Compensation Committee, in addition to other
criteria, utilizes industry salary surveys referred to in the preceding
paragraph in order to determine the range of base salaries for various
positions. As a general rule, the Committee has aimed to set Executive Officer
salaries in the 75th percentile of salaries for comparable positions in this
group.
BONUS AWARD
Mr. Finnegan received a $150,000 cash bonus in late 1995 to reflect his
performance during 1995 (and which is reflected in the Summary Compensation
Table), based upon a subjective determination of the Compensation Committee,
considering in particular Mr. Finnegan's success in substantially improving the
earnings of the Company, reducing the nonperforming assets of the Company in
1995, completing assembly of a new senior management team, and the fact that all
regulatory orders and agreements previously imposed on the Company and its
subsidiary banks were removed in 1995. Mr. Finnegan also received a 5,195 share
Restricted Common Stock bonus in early 1995 to reflect his performance in 1994.
No profit-sharing grant under the UST Corp. Employee Savings Plan (other than
the distribution of forfeitures) was made to any employee by the Board of
Directors in 1995.
1995 STOCK AWARDS
The Company's Stock Compensation Plan, approved by stockholders in 1992,
permits the granting of several different types of stock-based awards. The
Company's 1989 Restricted Stock Bonus Award Program permits the granting of
awards of restricted stock. Prior to 1995, stock options were granted to certain
Executive Officers and key employees under the 1992 Stock Compensation Plan and
all awards of restricted stock were made under the 1989 Restricted Stock Bonus
Award Program. Mr. Finnegan was granted an aggregate of 150,000 options
exercisable within five years and 60 days to acquire Common Stock and 60,000
shares of Restricted Common Stock during 1993. In January 1994, the Company also
granted Mr. Finnegan options for 200,000 shares of Common Stock. In 1995, the
Company granted Mr. Finnegan an additional 5,195 shares of Restricted Common
Stock under the 1989 Bonus Award Program and a $150,000 cash bonus (see "Bonus
Award," above). Also in 1995, Mr. Finnegan was granted an aggregate of 150,000
options to acquire Common Stock and 45,000 shares of Restricted Common Stock
under the 1992 Stock Compensation Plan. Other than these bonus awards granted in
1995, the compensation awarded to Mr. Finnegan was negotiated by the Company in
connection with Mr. Finnegan's assumption of his duties as President and Chief
Executive Officer of the Company and his entry into his November 1995 Employment
Agreement with the Company. See "Employment Agreements."
LIMITATION ON DEDUCTIBILITY OF EXECUTIVE COMPENSATION
The Internal Revenue Code was amended in 1993 to disallow deductions on
annual compensation in excess of $1,000,000 for certain executives of public
companies, beginning in 1994. The Compensation Committee accordingly amended the
Stock Compensation Plan, imposing a per-employee limit on annual grants, which
was approved by the Company's Stockholders at the 1994 Annual Meeting. The
Compensation Committee has caused all of the Company's employee benefit plans to
be reviewed with respect to this matter and it appears that the short-term
impact of this law on the Company is not likely to be material. The Compensation
Committee is monitoring the impact of this law on an annual basis, taking into
consideration both the benefits of favorable tax treatment for the Company, and
the necessity for the Compensation Committee to have the discretion to take
appropriate steps to further its executive compensation philosophy and honor
existing contractual obligations.
12
<PAGE> 15
This Report was submitted by the Compensation Committee which is comprised
of the following Directors, none of whom are full-time employees of the Company
or any of its subsidiaries:
Wallace M. Haselton, Chairman
Paul D. Slater, Vice Chairman
Robert L. Culver
Donald C. Dolben
Francis X. Messina
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1995, the following persons served for a portion or all of the year
on the Compensation Committee: Robert L. Culver, Donald C. Dolben, Wallace M.
Haselton, Francis X. Messina, and Paul D. Slater.
Officers and Directors of the Company, and their associates, are customers
of the Company and its subsidiaries and, as such, may have obtained loans and
loan commitments in excess of $60,000. All such loans and loan commitments
outstanding since the beginning of the last fiscal year, other than as noted
below, were made in the ordinary course of business by the Company's banking
subsidiaries and 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 the normal risk of collectability or
present other unfavorable terms.
The members of the Compensation Committee, and their respective associates,
may have had an interest in certain transactions involving the Company or its
subsidiaries during 1995. In addition to loan transactions and other customer
transactions, during the past fiscal year the Company and its subsidiaries have
used products or services of, and have had other transactions with, various
organizations with which Officers and Directors of the Company are affiliated.
The amounts involved have in no case been material in relation to the business
of the Company and its subsidiaries and it is believed that they have not been
material in relation to the business of such other organizations or to the
individuals concerned. It is expected that in the future the Company and its
subsidiaries will continue to have transactions similar to those described in
this paragraph.
At December 31, 1995, loans to Director Messina or to his affiliated
companies in the amount of approximately $6 million out of a total of
approximately $16.3 million were characterized as Substandard, in the Company's
internal risk rating profile. Under the Company's definition, Substandard Assets
are characterized by the distinct possibility that some loss will be sustained
if the credit deficiencies are not corrected. However, the Substandard
classification does not necessarily imply ultimate loss for each individual
asset so classified. Total loans to Mr. Messina and his related interests, at
their highest point in 1995, aggregated approximately $17.3 million. The amount
outstanding as of March 31, 1996 was approximately $16 million. All loans to
Director Messina are variable rate loans. Interest rates on these loans are
USTrust's base rate plus 1%.
FIVE-YEAR STOCKHOLDER RETURN COMPARISON
The following table compares the total return on the Company's Common Stock
over the last five years to the Keefe, Bruyette & Woods ("KBW") New England Bank
Index and the Standard & Poor's 500 Index ("S&P 500"). The KBW New England Bank
Index is comprised of approximately 18 commercial and savings banks located
within the five New England states and ranging in asset size from approximately
$400 million to $3 billion. The Company has decided to include comparisons to
this index, which only first became available in 1994, because it provides a
closer comparison to the Company as it is entirely an index of smaller New
England banks and bank holding companies with similar geographical, size and
market characteristics. Most banks that use the KBW New England Bank Index also
compare themselves to the S&P 500. Total return values for these indices were
calculated based on cumulative total return values, assuming reinvestment of
dividends.
13
<PAGE> 16
<TABLE>
COMPARISON OF FIVE-YEAR CUMULATIVE RETURN
Among UST Corp., Standard & Poor's 500 Index
and KBW New England Bank Index
Fiscal Year Ending December 31
[PASTE UP CHART]
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
UST Corp. $100.00 $102.17 $141.17 $157.89 $152.32 $216.22
-----------------------------------------------------------------------
Standard & Poor's 500 Index $100.00 $130.34 $140.25 $154.33 $156.42 $214.61
-----------------------------------------------------------------------
KBW New England Bank Index $100.00 $175.57 $308.34 $411.65 $414.42 $646.81
- -------------------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE> 17
EMPLOYMENT AGREEMENTS
Mr. Finnegan, President and Chief Executive Officer of the Company, has an
Employment Agreement with the Company dated as of November 21, 1995. The
Employment Agreement was effective November 21, 1995 and ends on January 4, 1999
and provides that Mr. Finnegan will serve as President and Chief Executive
Officer of the Company. Mr. Finnegan is paid a base salary of $360,000 per
annum, is eligible for discretionary bonuses and is entitled to fringe benefits
made available to other senior executives. Mr. Finnegan has received under the
Employment Agreement, as amended, 45,000 shares of Restricted Common Stock which
vest over a three-year period and an aggregate of 150,000 options to acquire the
Company's Common stock at the exercise prices shown in the tables above. In
addition, Mr. Finnegan received under his prior Employment Agreement, as
amended, 60,000 shares of Restricted Common Stock of which 40,000 shares have
vested and 20,000 shares will vest on April 20, 1996, and an aggregate of
350,000 options to acquire the Company's Common Stock. Mr. Finnegan has agreed
to a non-competition provision in the Agreement. In the event of a
Change-in-Control of the Company during the term of the Employment Agreement,
Mr. Finnegan may elect (i) to terminate this Agreement and receive a payment
equal to 2.99 times his "base amount" as defined under Section 280G(b)(3) of the
Internal Revenue Code or, (ii) should his termination be involuntary, to receive
the same payment and certain other entitlements. Should Mr. Finnegan have any
unvested shares of Restricted Stock or stock options at the time of a
Change-in-Control, vesting of all such shares shall be accelerated and he will
have the right if other employees can have their options or Restricted Stock
cashed out, to likewise cash out on the same basis and at the same time as such
other employees.
Mr. Colasacco, Executive Vice President of the Company and Chairman and
President of USTC, has entered into an Employment Agreement with USTC and joined
in by the Company, dated as of January 1, 1995. The Employment Agreement has a
two and one-half year original term and (unless terminated by Mr. Colasacco by
giving the Company and USTC six months prior notice) successive six month
renewal terms thereafter. In the event, however, that a Triggering Event or
change in ownership of USTC or the Company (as defined in the Employment
Agreement) occurs during the original term or a renewal term, a new,
approximately three-year term will be triggered and Mr. Colasacco will receive
in exchange for an extension of his employment period and the related
non-competition agreement, the portion allocated to him of a Formula Payment, as
defined in the Employment Agreement, based upon USTC's Asset Management
Division's revenues during the year preceding the Triggering Event. Mr.
Colasacco's current base salary is $225,375 per annum. Under the Employment
Agreement, the key managers of the Asset Management Division of USTC, currently
five in number, will receive an aggregate share of the Division's revenues and
will determine as a group the share of revenues allocated to individual
managers, including Mr. Colasacco. The key manager group, subject to generation
of adequate revenues, is also empowered to change Mr. Colasacco's base annual
salary.
Mr. McAlear, Executive Vice President/Controlled Loans and Credit of the
Company and Vice Chairman of USTrust, entered into a two-year Employment
Agreement with the Company, dated February 1, 1996, which thereafter continues
to run year-to-year unless terminated in writing by either party upon 60-day
notice. Under the terms of the Employment Agreement, Mr. McAlear is paid a base
salary of $203,900 per annum subject to discretionary increases, is eligible for
discretionary bonuses and is entitled to fringe benefits available to senior
executives. Since joining the Company in 1990, Mr. McAlear has also received an
aggregate of 9,000 shares of Restricted Common Stock and aggregate options to
purchase 71,050 shares of the Company's Common Stock at an average purchase
price of $10.3640 per share. Under the terms of the Employment Agreement, Mr.
McAlear has also agreed to certain non-solicitation and confidentiality
provisions. In addition, under the Employment Agreement, in the event there is a
change-of-control of the Company (as defined in the Employment Agreement) and
Mr. McAlear is not offered continued employment in a similar position with the
successor entity, Mr. McAlear will be entitled to a severance payment equal to
two times his then current annual base salary for the then most recent year.
Mr. Huskins, Executive Vice President/Administration of the Company,
entered into a restated and amended two-year Employment Agreement with the
Company, dated February 1, 1996, which thereafter continues to run year-to-year
unless terminated in writing by either party upon 60-day notice. Under the terms
of the Employment Agreement, Mr. Huskins is paid a base salary of $200,000 per
annum, is eligible for
15
<PAGE> 18
discretionary bonuses and is entitled to fringe benefits available to senior
executives. Since joining the Company in 1993, Mr. Huskins has also received an
aggregate of 12,000 shares of Restricted Common Stock and aggregate options to
purchase 86,000 shares of the Company's Common Stock at an average purchase
price of $10.2224 per share. Under the terms of the Employment Agreement, Mr.
Huskins has also agreed to certain non-solicitation and confidentiality
provisions. In addition, under the Employment Agreement, in the event there is a
change-of-control of the Company (as defined in the Employment Agreement) and
Mr. Huskins is not offered continued employment in a similar position with the
successor entity, Mr. Huskins will be entitled to a severance payment equal to
two times his then current annual base salary for the then most recent year.
Ms. Stevens, Executive Vice President and Senior Lending Officer of the
Company and Vice Chairman of USTrust, entered into a two-year Employment
Agreement with the Company, dated February 1, 1996, which thereafter continues
to run year-to-year unless terminated in writing by either party upon 60-day
notice. Under the terms of the Employment Agreement, Ms. Stevens is paid a base
salary of $191,500 per annum, is eligible for discretionary bonuses and is
entitled to fringe benefits available to senior executives. Since joining the
Company in 1985, Ms. Stevens has also received an aggregate of 12,000 shares of
Restricted Common Stock and aggregate options to purchase 89,550 shares of the
Company's Common Stock at an average purchase price of $9.3767 per share. Under
the terms of the Employment Agreement, Ms. Stevens has also agreed to certain
non-solicitation and confidentiality provisions. In addition, under the
Employment Agreement, in the event there is a change-of-control of the Company
(as defined in the Employment Agreement) and Ms. Stevens is not offered
continued employment in a similar position with the successor entity, Ms.
Stevens will be entitled to a severance payment equal to two times her then
current annual base salary for the then most recent year.
CERTAIN TRANSACTIONS AND INDEBTEDNESS
As described above under "Compensation Committee Interlocks and Insider
Participation," the Company and its subsidiaries had certain lending and other
transactions and relationships with Directors, Officers and 5% stockholders of
the Company, and their associates, during 1995.
The Company and James V. Sidell, a current Director and former President
and Chief Executive Officer of the Company, entered into a three year Transition
Agreement in 1993 at the time of Mr. Sidell's retirement as an Officer of the
Company. The consulting period called for by the Transition Agreement terminates
on June 30, 1996. The Company and Mr. Sidell disagree as to the interpretation
of certain provisions of the Transition Agreement. In general such matters
involve: (i) whether Mr. Sidell's obligations not-to-compete with and not to
disparage the reputation of the Company terminate on June 30, 1996; (ii) whether
an insurance premium and country club fees and assessments billed during the
first half of 1996 but related to all of 1996 (in the aggregate amount of less
than $47,000) should be fully reimbursed or 50% reimbursed by the Company; and
(iii) certain other ancillary issues. On April 9, 1996 Mr. Sidell, through his
legal counsel, made a formal demand on the Company under Section 11 of Chapter
93A of the Massachusetts General Laws seeking the amounts referred to in (ii)
above, multiple damages, reasonable attorneys' fees and costs related to this
matter. The Company will evaluate this claim with its legal counsel and respond
to Mr. Sidell in a timely manner.
APPROVAL OF 1996 STOCK OPTION PLAN
FOR DIRECTORS
(NOTICE ITEM 2)
The Company's 1996 Stock Option Plan for Directors (the "1996 Director
Option Plan") was adopted by the Board of Directors of the Company on February
20, 1996. This Plan is in addition to the 1995 Stock Option Plan for Directors
approved by stockholders on May 16, 1995 and described previously under the
caption "Directors' Fees and Other Compensation." The 1996 Director Option Plan
is designed to advance the Company's interest by enhancing its ability to
attract and retain non-employee Directors and to align the interest of those
Directors more closely with stockholders. Stockholders of the Company are being
requested
16
<PAGE> 19
to approve the 1996 Director Option Plan at the Annual Meeting. The following
summary of the 1996 Director Option Plan is qualified in its entirety by the
full text of the 1996 Director Option Plan that appears as Exhibit A attached to
this Proxy Statement.
Pursuant to the 1996 Director Option Plan, each individual who is a
Director as of May 21, 1996 or thereafter becomes a Director (other than an
emeritus or honorary Director) of the Company and who is not an employee of the
Company or any of its subsidiaries (an "eligible Director") will automatically
receive an option grant. For currently serving eligible Directors the grant will
be made on the date of the 1996 Annual Meeting. Individuals elected to serve as
eligible Directors in the future will receive a grant at the annual meeting of
shareholders at which they are elected or, in the case of any eligible Director
elected by the board, at the annual meeting of shareholders immediately
following such election if he/she is still then serving as an eligible Director.
The number of shares subject to each grant will be 5,000, subject to adjustment
for stock splits and similar events. The following Directors are currently the
only eligible Directors: Robert M. Coard, Robert L. Culver, Alan K. DerKazarian,
Donald C. Dolben, Edward Guzovsky, Wallace M. Haselton, Brian W. Hotarek,
Francis X. Messina, Sydney L. Miller, Vikki L. Pryor, Gerald M. Ridge, William
Schwartz, Samuel B. Sheldon, Barbara C. Sidell, James V. Sidell, Paul D. Slater,
Edward J. Sullivan, Michael J. Verrochi and Gordon M. Weiner.
The exercise price of each option will be the fair market value of the
Stock on the date of grant. The fair market value of a share of Stock on any
date shall be the average of the high and low prices of the Stock on the Nasdaq
on such date, or if the Stock did not trade on such date, on the next preceding
day on which trades were made. The exercise price may be paid in cash or check
acceptable to the Company, by tendering shares of Stock, by delivering an
undertaking by a broker to deliver promptly sufficient funds to pay the exercise
price, or by any combination of the foregoing. Each option will be
non-transferable except upon death, will expire ten (10) years after the date of
grant and will be exercisable immediately upon grant. Options granted under the
1996 Director Option Plan, to the extent not already exercised or expired, will
remain exercisable for a period of one year following retirement at or after age
65 or on account of permanent disability, three months following other
termination of the individual's status as an eligible Director, and one year
following death. In no event, however, will any option granted under the 1996
Director Option Plan remain exercisable beyond the tenth anniversary of the date
of grant. Upon a merger in which the Company is not the surviving corporation or
that results in the acquisition of all of the Company's stock or a sale of all
or substantially all of the Company's assets, or a dissolution or liquidation of
the Company, all options will terminate upon the consummation of the
transaction. A total of 150,000 shares of Stock has been reserved for issuance
under the 1996 Director Option Plan, subject to adjustment for stock splits and
similar events.
FEDERAL INCOME TAX EFFECTS
For federal income tax purposes, options under the 1996 Director Option
Plan are treated as nonstatutory options, not as "incentive stock options." An
eligible Director will not have taxable income at time of grant but will realize
income (and the Company will in general be entitled to claim a deduction) in
connection with the exercise of the option. In general, the income and deduction
associated with exercise will be taken into account at time of exercise and will
equal the excess of the fair market value of the Stock at that time over the
exercise price. However, in the case of an eligible Director who exercises an
option within six months of the date of grant, the income associated with
exercise will be realized and measured six months after the date of grant unless
the Director makes an election to recognize such income immediately, and the
availability of a deduction will be similarly deferred. If a Director who has
exercised an option under the 1996 Director Option Plan later sells shares
acquired upon exercise, any gain or loss recognized in the sale will be a
capital gain or loss (long-term or short-term depending on how long the shares
have been held) for which the Company will not be entitled to a deduction.
RECOMMENDATION OF YOUR BOARD OF DIRECTORS "FOR" THIS PROPOSAL
The Board of Directors believes that the adoption of the 1996 Director
Option Plan will promote the interests of the Company and the stockholders and
help the Company and its subsidiaries to attract and retain qualified
non-employee Directors. Accordingly, the Board of Directors has approved the
adoption of the 1996
17
<PAGE> 20
Director Option Plan and recommends that the stockholders vote "FOR" the
proposal to adopt the 1996 Director Option Plan. Proxies solicited by the Board
of Directors will be so voted unless stockholders specify otherwise.
To approve the 1996 Director Option Plan, the vote of holders of a majority
of the shares present or represented and entitled to vote on the proposal at the
meeting is required. An abstention will have the effect of a vote against the
proposal, while a broker non-vote (i.e., shares held by brokers or nominees as
to which (i) instructions have not been received from the beneficial owners and
(ii) the broker or nominee does not have the discretionary authority to vote on
a particular matter) will have no effect on the outcome.
EXECUTIVE OFFICERS OF THE COMPANY
EXECUTIVE POLICY COMMITTEE
In 1987, the Board of Directors of the Company created an Executive Policy
Committee which is the primary management forum of the Company for all strategic
and policy decisions. All decisions of the Executive Policy Committee are
subject to the review and approval of the Board of Directors of the Company. The
Executive Policy Committee has been directed by the Board of Directors to make
recommendations to the Board concerning adoption of policies, strategies and
programs concerning the following, among other matters: (a) acquisitions and
dispositions of corporate entities, assets and/or investments; (b) the issuance
of equity and/or debt; (c) engaging in new business activities; (d) the hiring,
termination, training and motivation of senior management; (e) the development
of marketing programs concerning financial services; (f) improvements to
operations, service delivery and implementation of procedures for cost control;
(g) improvements to the financial reporting and financial control systems; (h)
improvements to the business information systems; and (i) improvements
concerning risk management and legal and regulatory compliance programs. As of
April 15, 1996, there were 11 members of the Executive Policy Committee. The
members of the Committee are identified and the background of each Committee
member is set forth below under "Executive Officers."
<TABLE>
EXECUTIVE OFFICERS
The names and ages of the Executive Officers of the Company and each
Executive Officer's position with the Company and its subsidiaries are listed
below. Each such Executive Officer is elected annually by the Directors of the
Company (or the Directors of the applicable subsidiary of the Company) and
serves until his or her successor is duly chosen and qualified or until his or
her earlier death, removal or disqualification.
<CAPTION>
POSITIONS AND OFFICES WITH THE COMPANY
(AND/OR WHERE APPROPRIATE, POSITION WITH ONE
NAME (AGE) OF THE COMPANY'S SUBSIDIARIES)
---------- --------------------------------------------
<S> <C>
*Neal F. Finnegan (58)............... President, Chief Executive Officer and Director of the
Company and Chairman, President and Chief Executive
Officer of USTrust
*Domenic Colasacco (47).............. Executive Vice President/Trust and Investment
Management and Director of the Company and Chairman
and President of USTC
*James K. Hunt (52).................. Executive Vice President, Chief Financial Officer and
Treasurer of the Company and Chief Financial Officer
and Executive Vice President of USTrust; Treasurer
of UST Leasing Corporation
*Eric R. Fischer (50)................ Executive Vice President, General Counsel and Clerk of
the Company and Executive Vice President, General
Counsel and Secretary of USTrust and USTC; Clerk of
UST Capital Corp. and UST Leasing Corporation
*Kathie S. Stevens (45).............. Executive Vice President and Senior Lending Officer of
the Company; Vice Chairman and Senior Lending Officer
of USTrust; President of UST Capital Corp.
</TABLE>
18
<PAGE> 21
<TABLE>
<CAPTION>
POSITIONS AND OFFICES WITH THE COMPANY
(AND/OR WHERE APPROPRIATE, POSITION WITH ONE
NAME (AGE) OF THE COMPANY'S SUBSIDIARIES)
---------- --------------------------------------------
<S> <C>
*Katharine C. Armstrong (51)......... Executive Vice President/Commercial Lending of the
Company and USTrust
*Robert T. McAlear (53).............. Executive Vice President/Controlled Loans and Credit
of the Company and Vice Chairman of USTrust
*Suzanne Moot (46)................... Executive Vice President/Marketing and Retail Banking
of the Company and USTrust
*Walter E. Huskins, Jr. (56)......... Executive Vice President/Administration of the Company
and USTrust; Acting President of UST Bank/Connecticut
and President of UST Leasing Corporation
*Linda J. Lerner (51)................ Senior Vice President/Human Resources of the Company,
USTrust and USTC
*Kenneth L. Sullivan (59)............ Senior Vice President/Operations of the Company and
Senior Vice President of USTrust
George T. Clarke (49)................ Senior Vice President and Controller of the Company
and USTrust; Treasurer of UST Capital Corp.
<FN>
- ---------------
* Member, Executive Policy Committee
</TABLE>
The following sets forth the principal occupation during the past five
years of each of the Executive Officers of the Company.
Mr. Finnegan has served as President and Chief Executive Officer of the
Company since 1993. During the prior five years, Mr. Finnegan was Executive Vice
President in charge of Private Banking at Bankers Trust Company, New York, New
York. From 1986 to 1988, Mr. Finnegan was President and Chief Operating Officer
of Bowery Savings Bank in New York City. From 1982 to 1986 he was Vice Chairman
of Shawmut Corporation in Boston. Mr. Finnegan also serves as Vice Chairman of
the Board of Trustees of Northeastern University. Mr. Finnegan is also Chairman,
President and Chief Executive Officer of USTrust and a Director and Chairman of
the Executive Committee of USTC.
Mr. Colasacco was elected Executive Vice President and a Director of the
Company in 1990. In 1993, he was also elected Chairman of the Board and
President of USTC. Prior to that time, he served as an Executive Vice President
of USTC. He also directs the trust and investment management activities of the
Company and its subsidiaries. Mr. Colasacco has been an Officer of the Company
or of one of its subsidiaries since 1974.
Mr. Hunt was elected Executive Vice President, Treasurer and Chief
Financial Officer of the Company in 1994. Prior to joining the Company, Mr. Hunt
served as Executive Vice President at Peoples Bancorp of Worcester, Inc.,
Worcester, Massachusetts, from 1987 through mid-1994. He also serves as
Executive Vice President and Chief Financial Officer of USTrust and as Treasurer
of UST Leasing Corporation and various other nonbanking subsidiaries.
Mr. Fischer was elected Executive Vice President, General Counsel and Clerk
of the Company in 1992. Prior to 1992, he served as Senior Vice President,
General Counsel and Assistant Clerk of the Company. Before joining the Company
in 1986, he served as Assistant General Counsel of Bank of Boston Corporation
and its principal subsidiary, The First National Bank of Boston. Mr. Fischer is,
and has been since 1984, a member of the faculty of the Morin Center for Banking
and Financial Law Studies of Boston University School of Law. He also serves as
Executive Vice President, General Counsel and Secretary of USTC and USTrust,
Assistant Secretary of UST Bank/Connecticut, and Clerk of UST Capital Corp., UST
Leasing Corporation and various other nonbanking subsidiaries.
Ms. Stevens who has served as Executive Vice President and Senior Lending
Officer of the Company since 1993 was also elected to the positions of Vice
Chairman of USTrust and Chairman of the Senior Credit Committee of the Company
and USTrust in 1995. Ms. Stevens has been a senior Officer in the Commercial
Lending function since she joined the Company in 1985. Ms. Stevens also serves
as President of UST Capital Corp.
19
<PAGE> 22
Ms. Armstrong was named Executive Vice President/Commercial Lending of the
Company and USTrust in 1995. In that capacity she oversees the commercial
lending, asset-based lending and commercial real estate lending functions of the
Company. From 1993 to 1995 Ms. Armstrong served as Senior Vice President/Credit
Administration of the Company. Ms. Armstrong joined the Company in 1985 and
served in various credit administration functions from 1985 until she assumed
her position as Executive Vice President/Commercial Lending in 1995.
Mr. McAlear was elected Executive Vice President/Controlled Loans and
Credit of the Company in 1994. He has served as Vice Chairman of USTrust since
he joined the Company in 1990. His primary responsibilities involve the
supervision of the controlled loan, owned real estate and credit administration
functions of USTrust and the Company. Prior to 1990, Mr. McAlear served as an
Executive Vice President in the lending area of the Bank of New England.
Ms. Moot joined the Company in 1995 and serves as Executive Vice
President/Marketing and Retail Banking of the Company and USTrust. Prior to
joining the Company, Ms. Moot served as a consultant to more than two dozen
commercial and savings bank clients between 1988 and 1995 and served as Vice
President of Commercial Marketing at Shawmut Bank, Boston, MA from 1985 to 1988.
Mr. Huskins was elected Executive Vice President/Administration of the
Company in August 1993. Mr. Huskins is also responsible for the leasing
activities of the Company. Prior to joining the Company, Mr. Huskins served as
President, Sterling Protection Company, Watertown, MA (security systems) from
1990 to 1993 and as Vice Chairman of Chancellor Corporation, Boston, MA
(leasing) from 1977 to 1989. Mr. Huskins also serves as a Director and Acting
President of UST Bank/Connecticut and as Chairman of the Board and President of
UST Leasing Corporation.
Ms. Lerner has served as Senior Vice President of the Company since she
joined the Company in 1988. She directs the Human Resources activities of the
Company. Prior to her joining the Company, Ms. Lerner served in a similar
capacity for the Provident Institution for Savings in Boston.
Mr. Sullivan has served as Senior Vice President/Operations of the Company
since 1994. He also serves as Senior Vice President of USTrust. In those
capacities, he has responsibility for the data processing and information
systems of the Company as well as for its operations activities. Prior to 1988,
Mr. Sullivan served as Executive Vice President of Operations with BayBanks
Systems, Inc. in Waltham, Massachusetts. Prior to 1995, he also served as
President of UST Data Services Corp. which as of December 31, 1995 was dissolved
and became a division of USTrust.
Mr. Clarke was elected Senior Vice President and Controller of the Company
in 1994 and of USTrust in 1996. Prior to 1994 he served as Vice President and
Controller of the Company since 1988. Before joining the Company, Mr. Clarke
served as Deputy Comptroller of The First National Bank of Boston. Mr. Clarke is
also Treasurer of UST Capital Corp.
There are no arrangements or understandings between any Executive Officer
and any other person pursuant to which he or she was selected as an Executive
Officer.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon the recommendation of the Audit Committee, has
selected the firm of Arthur Andersen LLP, independent public accountants, as
auditors of the Company for 1996. The Company has been advised by such firm that
neither it nor any member or associate of such firm has any relationship with
the Company or with any of its affiliates other than as independent accountants
and auditors. Arthur Andersen LLP have served as the Company's independent
auditors since its organization in 1967.
Representatives of Arthur Andersen LLP will be present at the Annual
Meeting, will have an opportunity to make any statement they may desire to make,
and will be available to answer appropriate questions from stockholders.
20
<PAGE> 23
ACTION TO BE TAKEN -- OTHER BUSINESS
(NOTICE ITEM 3)
As of the date of this Proxy Statement, the Board of Directors does not
intend to present to the meeting any business other than the three specific
items listed in the notice, and it has not been informed of any business
intended to be presented by others. Should any other matters, however, properly
come before the meeting, the persons named in the enclosed Proxy will take
action, and vote Proxies, in accordance with their judgment on such matters.
Action may be taken on the business to be transacted at the meeting on the
date specified in the notice of meeting or on any date or dates to which such
meeting may be adjourned.
SECURITY OWNERSHIP OF MANAGEMENT
As of March 18, 1996, there were, to the knowledge of the Company, no
stockholders who beneficially owned more than five percent of the Company's
Common Stock.
<TABLE>
The following table shows the number of shares and percentage of the
Company's Common Stock beneficially owned or owned through the Company's
Deferred Compensation Plan by each Director and nominee for Director, each
Executive Officer named in the Summary Compensation Table above and by all
Directors and Officers of the Company as a group, as of March 18, 1996. There
are no voting rights, however, associated with units owned under the Deferred
Compensation Plan since shares cannot be sold until the individual terminates
his/her relationship with the Company, retires or dies:
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL DEFERRED
NAME OWNERSHIP(1) PLAN (2) TOTAL PERCENT OF CLASS
- ---- ----------------- -------- ----- ----------------
<S> <C> <C> <C> <C>
Robert M. Coard....................... 248 -- 248 *
Domenic Colasacco..................... 42,245(3) -- 42,245 *
Robert L. Culver...................... 165 -- 165 *
Alan K. DerKazarian................... 10,521 -- 10,521 *
Donald C. Dolben...................... 1,050(4) -- 1,050 *
Neal F. Finnegan...................... 508,364(5) -- 508,364 2.84%
Edward Guzovsky....................... 23,077(6) 3,232 26,309 *
Wallace M. Haselton................... 81,676 7,148 88,824 *
Brian W. Hotarek...................... 325(7) 1,415 1,740 *
Walter E. Huskins, Jr................. 98,242(8) -- 98,242 *
Robert T. McAlear..................... 81,181(9) -- 81,181 *
Francis X. Messina.................... 408,592(10) 21,126 429,718 2.40%
Sydney L. Miller...................... 120,081(11) 3,223 123,304 *
Vikki L. Pryor........................ 97(12) -- 97 *
Gerald M. Ridge....................... 44,267(13) -- 44,267 *
William Schwartz...................... 6,750(14) 32,143 38,893 *
Samuel B. Sheldon..................... 10,000(15) 18,315 28,315 *
Barbara C. Sidell..................... 547,215(16) -- 547,215 3.06%
James V. Sidell....................... 498,056(17) -- 498,056 2.78%
Paul D. Slater........................ 120,377(18) 15,994 136,371 *
Kathie S. Stevens..................... 87,813(19) -- 87,813 *
Edward J. Sullivan.................... 11,234(20) -- 11,234 *
Michael J. Verrochi................... 182,555(21) 1,293 183,848 1.03%
Gordon M. Weiner...................... 119(22) -- 119 *
ALL DIRECTORS AND OFFICERS AS A GROUP
(30 persons)........................ 3,228,116(23) 103,889 3,332,005 18.61%
<FN>
- ---------------
* Less than 1%.
</TABLE>
21
<PAGE> 24
(1) Information as to the interests of the respective Executive Officers,
Directors and nominees has been furnished in part by them. As of March 18,
1996, all such shares are held of record unless otherwise indicated. The
inclusion of information concerning shares held by or for their spouses,
children or by trusts or corporations in which they have an interest does
not constitute an admission by such persons of beneficial ownership
thereof. Unless otherwise indicated, all persons have sole voting and
dispositive power as to all shares they are shown as owning.
(2) Units representing share equivalents held in deferred compensation accounts
as of December 31, 1995. There are no voting rights, however, associated
with units owned under the Deferred Compensation Plan since shares cannot
be sold until the individual terminates his/her relationship with the
Company, retires or dies:
(3) Includes 5,444 shares beneficially owned by Mr. Colasacco's wife and 500
shares owned by each of his three daughters of the Company's Common Stock
as to which Mr. Colasacco disclaims any beneficial interest. The number of
shares reported includes 4,200 shares which Mr. Colasacco has the present
right to acquire through the exercise of stock options and 8,271 shares
held for Mr. Colasacco's benefit under the Company's Employee Stock
Ownership Plan.
(4) Mr. Dolben's wife beneficially owns an additional 1,604 shares to which Mr.
Dolben disclaims any beneficial interest.
(5) Includes 65,000 shares of Common Stock which remain subject to forfeiture
as Restricted Stock pursuant to the Company's Stock Compensation Plan and
an aggregate of 335,000 shares which Mr. Finnegan has the present right to
acquire through the exercise of stock options. Also includes 435 shares
held for Mr. Finnegan's benefit under the Company's Employee Stock
Ownership Plan.
(6) Includes 22,293 shares held in Mr. Guzovsky's wife's name.
(7) Includes 25 shares held by an investment club of which Mr. Hotarek is a
member.
(8) Includes an aggregate of 86,000 shares which Mr. Huskins has the present
right to acquire through the exercise of stock options, 4,000 shares which
remain subject to forfeiture as Restricted Stock pursuant to the Company's
Stock Compensation Plan, and 242 shares held for Mr. Huskins's benefit
under the Company's Employee Stock Ownership Plan.
(9) Includes an aggregate of 71,050 shares which Mr. McAlear has the present
right to acquire through the exercise of stock options, 3,000 shares which
remain subject to forfeiture as Restricted Stock pursuant to the Company's
Stock Compensation Plan, and 926 shares held for Mr. McAlear's benefit
under the Company's Employee Stock Ownership Plan.
(10) See discussion covering "Compensation Committee Interlocks and Insider
Participation" above.
(11) Includes 50,762 shares beneficially owned by Mr. Miller's wife and 1,023
shares owned by each of his three children in trust. Does not include an
aggregate of 148,033 shares held by Mr. Miller's adult children, sister and
sister-in-law as to which Mr. Miller disclaims beneficial ownership.
(12) Ms. Pryor acquired 97 shares of the Company's Common Stock after March 18,
1995, but prior to joining the Board of Directors.
(13) Includes 3,242 shares owned by Gerald M. Ridge Corp. of which Mr. Ridge is
President.
(14) All 6,750 shares are held jointly with Mr. Schwartz's wife.
(15) Does not include an aggregate of 14,277 shares held by Mr. Sheldon's two
sons, who are adults, and as to which shares Mr. Sheldon disclaims any
beneficial interest. Does not include an aggregate of 5,250 shares held in
trusts for the benefit of his four grandchildren.
(16) Includes 523 shares held jointly with former spouse, James V. Sidell.
(17) Includes 498,056 shares held directly. Does not include any shares of
Common Stock beneficially owned by Mr. Sidell's former spouse, Barbara C.
Sidell, as to which Mr. Sidell disclaims any beneficial ownership. Also
does not include 34,814 shares owned by the daughters and grandchildren of
James V. Sidell and Barbara C. Sidell, as to which shares Mr. Sidell
disclaims any beneficial ownership. Furthermore, does not include an
aggregate of 4,500 shares of Common Stock held by Mr. Sidell's wife
22
<PAGE> 25
Louisa Kasdon-Sidell and Mr. Sidell's stepchildren, both of whom are
minors, as to all of which Mr. Sidell disclaims any beneficial ownership.
(18) Does not include 74,369 shares owned by Mr. Slater's sister as to which
shares Mr. Slater disclaims beneficial ownership. The number of shares
reported are held by Mr. Slater and his wife as tenants by the entirety.
(19) Includes an aggregate of 63,750 shares which Ms. Stevens has the present
right to acquire through the exercise of stock options, 667 shares of
Common Stock which remain subject to forfeiture as Restricted Stock
pursuant to the Company's Stock Compensation Plan and 1,596 shares held for
Ms. Stevens's benefit under the Company's Employee Stock Ownership Plan.
(20) Includes 9,327 shares held jointly with Mr. Sullivan's spouse and 506
shares held in Mr. Sullivan's spouse's IRA.
(21) Includes 36,611 shares held of record, 81,200 shares held by an affiliated
realty trust and 69,993 shares held by a corporation of which Mr. Verrochi
is President.
(22) Does not include 1,050 shares owned by Mr. Weiner's wife of which he
disclaims beneficial ownership.
(23) The amount includes 803,975 shares of Common Stock subject to exercisable
outstanding stock options and also includes 16,982 shares held by the
Company's subsidiary, United States Trust Company, as trustee under the
Company's Employee Stock Ownership Plan and allocated to such Directors and
Officers. The total number of shares held in the Company's Employee Stock
Ownership Plan and allocated to all employees with United States Trust
Company as record owner is 339,071.
STOCKHOLDER PROPOSALS
Any stockholder of the Company may present a proposal for consideration at
future meetings of the stockholders of the Company. Any proposal for
consideration at next year's meeting of stockholders must be received by the
Company at its principal executive offices, 40 Court Street, Boston,
Massachusetts 02108, Attention: Eric R. Fischer, Executive Vice President,
General Counsel and Clerk, no later than December 26, 1996, except that if the
next year's annual meeting date is changed by more than 30 calendar days from
the regularly scheduled date, May 20, 1997, the Company must receive such a
proposal within a reasonable time before the Board of Directors makes its proxy
solicitation.
23
<PAGE> 26
ADDITIONAL FINANCIAL INFORMATION
ANNUAL REPORT
A copy of the Company's Annual Report to Stockholders for the year ended
December 31, 1995, which includes financial statements, has been previously
mailed or mailed simultaneously herewith to all Stockholders. The Annual Report
is not to be regarded as proxy soliciting material.
10-K REPORT
A copy of the Company's Annual Report to the SEC on Form 10-K for the year
ended December 31, 1995 also has been previously mailed or mailed simultaneously
herewith to all Stockholders as part of the Company's Annual Report to
Stockholders.
By Order of the Board of Directors
/S/ Eric R. Fischer
-------------------
ERIC R. FISCHER
Clerk
Dated: April 19, 1996
Boston, Massachusetts
24
<PAGE> 27
EXHIBIT A
UST CORP.
1996 STOCK OPTION PLAN FOR DIRECTORS
1. PURPOSE
The purpose of this 1996 Stock Option Plan for Directors (the "Plan") is to
advance the interests of UST Corp. (the "Company") by enhancing the ability of
the Company to attract and retain non-employee Directors who are in a position
to make significant contributions to the success of the Company and to reward
Directors for such contributions through ownership of shares of the Company's
common stock (the "Stock").
2. ADMINISTRATION
The Plan shall be administered by a committee (the "Committee") of the
Board of Directors (the "Board") of the Company designated by the Board for that
purpose. The Committee shall have authority, not inconsistent with the express
provisions of the Plan, (a) to issue options granted in accordance with the
formula set forth in this Plan to such Directors as are eligible to receive
options; (b) to prescribe the form or forms of instruments evidencing options
and any other instruments required under the Plan and to change such forms from
time to time; (c) to adopt, amend and rescind rules and regulations for the
administration of the Plan; and (d) to interpret the Plan and to decide any
questions and settle all controversies and disputes that may arise in connection
with the Plan. Such determinations of the Committee shall be conclusive and
shall bind all parties. Transactions under this plan are intended to comply with
all applicable conditions of Rule 16b-3 or its successors under Section 16 of
the Securities Exchange Act of 1934 (the "Exchange Act"). To the extent any
provision of the Plan or action by the Committee fails to so comply, it shall be
deemed null and void, to the extent permitted by law and deemed advisable by the
Committee.
3. EFFECTIVE DATE AND TERM OF PLAN
The Plan shall become effective on the date on which the Plan is approved
by the stockholders of the Company following adoption by the Board. No option
shall be granted under the Plan after the completion of ten years from the date
on which the Plan was adopted by the Board, but options previously granted may
extend beyond that date.
4. SHARES SUBJECT TO THE PLAN
(a) Number of Shares. Subject to adjustment as provided in Section 4(c),
the aggregate number of shares of Stock that may be delivered upon the exercise
of options granted under the Plan shall be 150,000. If any option granted under
the Plan terminates without having been exercised in full, the number of shares
of Stock as to which such option was not exercised shall be available for future
grants within the limits set forth in this Section 4(a).
(b) Shares to be Delivered. Shares delivered under the Plan shall be
authorized but unissued Stock or previously issued Stock acquired by the Company
and held in treasury. No fractional shares of Stock shall be delivered under the
Plan.
(c) Changes in Stock. Appropriate adjustments shall be made in the maximum
number of shares of Stock subject to the Plan to give effect to any stock
dividends, stock splits, stock combinations, recapitalizations and other similar
changes in the capital structure of the Company. Appropriate adjustments shall
be made in the number, kind and price of shares of Stock covered by any
outstanding option hereunder to give effect to any stock dividends, stock
splits, stock combinations, recapitalizations and similar changes in the capital
structure of the Company, or a merger, dissolution, or reorganization of the
Company, after the date the option is granted, so that the holder of the option
is treated in a manner equivalent to that of holders of the underlying Stock.
A-1
<PAGE> 28
5. ELIGIBILITY FOR OPTIONS
Directors eligible to receive option grants under the Plan ("Eligible
Directors") shall be those Directors (not including emeritus or honorary
Directors) of the Company who are not employees of the Company or of any
subsidiary of the Company.
6. TERMS AND CONDITIONS OF OPTIONS
(a) Number of Options. On the date of the annual meeting of stockholders
at which this Plan is approved by stockholders each individual then an Eligible
Director shall be awarded an option to purchase 5,000 shares of Stock.
Thereafter, on the date of each subsequent annual meeting, there shall be
awarded to each individual, if any, first elected at such meeting to serve as an
Eligible Director and to each other Eligible Director (if any) first elected to
office by the Board since the last annual meeting and still serving as an
Eligible Director, an option to purchase 5,000 shares of Stock.
(b) Exercise Price. The exercise price of each option shall be 100% of the
fair market value per share of the Stock on the date the option is granted. In
no event, however, shall the option price be less, in the case of an original
issue of authorized stock, than par value per share. For purposes of this
paragraph, the fair market value of a share of Stock on any date shall be the
average of the high and low prices of the Stock on the Nasdaq National System on
such date, or if the Stock did not trade on such date, on the next preceding day
on which trades were made.
(c) Duration of Options. The latest date on which an option may be
exercised (the "Final Exercise Date") shall be the tenth (10th) anniversary of
the date the option was granted.
(d) Exercise of Options.
(1) Each option shall be immediately exercisable in full. An option
granted under the Plan may be exercised in whole or in part, but no
fractional shares shall be delivered pursuant to the exercise of an option.
(2) Any exercise of an option shall be in writing, signed by the
proper person and delivered or mailed to the Company, to the attention of
the Company's General Counsel, accompanied by (i) any documentation
required by the Committee and (ii) payment in full for the number of shares
for which the option is exercised.
(3) The Committee shall withhold from the number of shares otherwise
issuable to the individual upon exercise a number of shares with a fair
market value equal to any federal, state, or local withholding tax
requirements due upon the exercise of the option, or shall make other
arrangements (including requiring payment by the individual exercising the
option) for the payment of any such withholding taxes.
(4) If an option is exercised by the executor or administrator of a
deceased Director, or by the person or persons to whom the option has been
transferred by the Director's will or the applicable laws of descent and
distribution, the Company shall be under no obligation to deliver Stock
pursuant to such exercise until the Company is satisfied as to the
authority of the person or persons exercising the option.
(e) Payment for and Delivery of Stock. Stock purchased under the Plan
shall be paid for in one or a combination of the following forms of payment: (i)
by cash or by check (acceptable to the Company in accordance with guidelines
established for this purpose), bank draft or money order payable to the order of
the Company, (ii) by delivery of shares of Stock (which, in the case of shares
of Stock acquired from the Company, have been outstanding for at least six
months) having a fair market value on the last business day preceding the date
of exercise equal to the purchase price, or (iii) by delivery of a properly
executed exercise notice together with irrevocable instructions to the option
holder's broker to deliver promptly to the Company the amount required to pay
the exercise price.
An option holder shall not have the rights of a stockholder with regard to
awards under the Plan except as to Stock actually received by him or her under
the Plan.
A-2
<PAGE> 29
The Company shall not be obligated to deliver any shares of Stock (A)
until, in the opinion of the Company's counsel, all applicable federal and state
laws and regulations have been complied with, and (B) if the outstanding Stock
is at the time listed on any stock exchange, until the shares to be delivered
have been listed or authorized to be listed on such exchange upon official
notice of issuance, and (C) until all other legal matters in connection with the
issuance and delivery of such shares have been approved by the Company's
counsel. If the sale of Stock has not been registered under the Securities Act
of 1933, as amended, the Company may require, as a condition to exercise of the
option, such representations or agreements as counsel for the Company may
consider appropriate to avoid violation of such Act and may require that the
certificates evidencing such Stock bear an appropriate legend restricting
transfer.
(f) Nontransferability of Options. No option may be transferred other than
by will or by the laws of descent and distribution, and during an Eligible
Director's lifetime an option may be exercised only by him or her.
(g) Retirement; Disability. If an Eligible Director retires as a Director
of the Company and its subsidiaries (i) at or after 65, or (ii) by reason of
permanent disability whenever occurring, all options held by the retired or
disabled Eligible Director under the Plan shall remain exercisable for one year
from retirement (subject to paragraph (i) below) or for the remainder of their
original ten-year option term if less, and then shall terminate to the extent
not previously exercised.
(h) Other Termination. If an Eligible Director ceases to be an Eligible
Director for any reason other than retirement under (g) above or death,
regardless of whether such individual continues to be an honorary or emeritus
Director of the Company, all options held by the Director under the Plan shall
continue to be exercisable for a period of three months (subject to paragraph
(i) below) or for the remainder of their original ten-year term if less, and
then shall terminate to the extent not previously exercised.
(i) Death. If an Eligible Director's service as a Director of the Company
and its subsidiaries terminates by reason of death, or dies at any time while
holding exercisable options hereunder, all options held by the Eligible Director
under the Plan may be exercised by his or her executor or administrator, or by
the person or persons to whom the option is transferred by will or the
applicable laws of descent and distribution, at any time within one year after
the Director's death or during the remainder of the original ten-year option
term if less. After completion of that one-year (or shorter) period, such
options shall terminate to the extent not previously exercised.
(j) Mergers, etc. In the event of a consolidation or merger in which the
Company is not the surviving corporation or which results in the acquisition of
substantially all the Company's outstanding Stock by a single person or entity
or by a group of persons and/or entities acting in concert, or in the event of a
sale or transfer of substantially all of the Company's assets or a dissolution
or liquidation of the Company, all options hereunder will terminate upon the
consummation of such consolidation, merger, or other transaction.
7. EFFECT, DISCONTINUANCE, CANCELLATION, AMENDMENT, TERMINATION AND
EFFECTIVENESS
Neither adoption of the Plan nor the grant of options to a Director shall
affect the Company's right to grant to such Director options that are not
subject to the Plan (including options granted pursuant to the Company's 1995
Stock Option Plan for Directors), to issue to such Directors Stock as a bonus or
otherwise, or to adopt other plans or arrangements under which Stock may be
issued to Directors.
The Committee may at any time terminate the Plan as to any further grants
of options. The Committee may at any time or times amend the Plan for any
purpose which may at the time by permitted by law; provided, that except to the
extent expressly required or permitted by the Plan, no such amendment will,
without the approval of the stockholders of the Company, effectuate a change for
which stockholder approval is required in order for the Plan to continue to
qualify under Rule 16b-3 promulgated under Section 16 of the Exchange Act.
A-3
<PAGE> 30
[UST LOGO]
<PAGE> 31
UST CORP.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF UST CORP.
The undersigned stockholder of UST Corp., a Massachusetts corporation (the
"Company"), hereby constitutes and appoints Neal F. Finnegan, Eric R. Fischer
and James K. Hunt, and each of them, his Attorneys and Proxies (with full power
of substitution in each), and hereby authorizes them to represent the
undersigned and to vote, as designated on the reverse, all the shares of Common
Stock of the Company held of record by the undersigned on March 29, 1996 at the
Annual Meeting of Stockholders of the Company, to be held on Tuesday, May 21,
1996, and at any adjournments thereof.
THE PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED HOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1 AND 2.
- --------------------------------------------------------------------------------
PLEASE VOTE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
Please sign this Proxy exactly as your name appears on the books of the
Company. Joint owners should sign personally. Trustees and other fiduciaries
should indicate the capacity in which they sign, and where more than one name
appears, a majority must sign. If a corporation, this signature should be that
of an authorized officer who should state his or her title.
- -------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- ------------------------------------- -----------------------------------
- ------------------------------------- -----------------------------------
- ------------------------------------- -----------------------------------
<PAGE> 32
/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
With- For All
For hold Except
1.) Election of Directors. / / / / / /
Edward Guzovsky, Brian W. Hotarek, Vikki L. Pryor,
Gerald M. Ridge, William Schwartz, Edward J. Sullivan,
Michael J. Verrochi, Jr. and Gordon M. Weiner
NOTE: If you do not wish your shares voted "FOR" a particular
Nominee, mark the "For All Except" box and strike a line through
that particular Nominee's name. Your shares will be voted for the
remaining Nominees.
RECORD DATE SHARES:
----------------------------
Please be sure to sign and date this Proxy. Date
- --------------------------------------------------------------------------------
- ------Shareholder sign here----------------------Co-owner sign here------------
For Against Abstain
2.) Authorizing the Proxies to vote in / / / / / /
favor of the 1996 Stock Option
Plan for UST Corp. Directors.
Authorizing the Proxies in their discretion to consider and act upon
such other matters as may properly come before the meeting.
Mark box at right if comments or address change have / /
been noted on the reverse side of the card.
DETACH CARD
UST CORP.
Dear Shareholder,
Please take note of the important information enclosed with this Proxy Ballot.
There are a number of issues related to the management and operation of your
Company that require your immediate attention. These are discussed in detail in
the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to
vote your shares.
Please mark the boxes on the proxy card to indicate how your shares shall be
voted. Then sign the card, detach it and return your proxy vote in the enclosed
postage paid envelope.
Your vote must be received prior to the Annual Meeting of Shareholders, May 21,
1996.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
UST Corp.
