<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
[X] Definitive Additional Materials (Proxy Card only)
[ ] Soliciting Material Pursuant to [Section]240.14a-11(c) or
[Section]240.14a-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] No fee required.
[ ] 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 CORP. LOGO]
UST CORP.
40 COURT STREET
BOSTON, MASSACHUSETTS
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 20, 1997
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 20th day of May, 1997 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; and
2. To transact any other business which may properly come before the
meeting, or any adjournment thereof.
The close of business on March 28, 1997 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 15, 1997.
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 15, 1997
<PAGE> 3
[UST CORP. LOGO]
UST CORP.
40 COURT STREET
BOSTON, MASSACHUSETTS
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 20, 1997
April 15, 1997
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 20, 1997, and at any adjournments thereof, for the
purposes set forth in the foregoing Notice of Annual Meeting.
The close of business on March 28, 1997 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, 1996, 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, 1996 (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, 1996 (the "10-K Report"). A copy of the Company's
Annual Report has been previously mailed or will be 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 or her Proxy is not limited by, or subject to, compliance with any specified
formal procedure. Each stockholder may revoke his or her 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 "for" the election
of the eight nominees for Director positions listed therein. 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 or matters 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.
As of March 28, 1997, the Company had outstanding 28,403,377 shares of
common stock, $0.625 par value per share ("Common Stock"), each entitled to one
vote. A majority, or 14,201,689 of such shares,
<PAGE> 4
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). Currently the Company has twenty-three (23) Directors who are
serving in such capacity and there remains one vacancy on the Board of Directors
which is in the class next to be elected in 1998. The Board of Directors has the
power to fill vacancies and to change the size of the Board at any time. 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 2000 Annual Meeting of Stockholders and
until his or 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 Annual 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>
David E. Bradbury (51)......... 1997 Member, Executive and Asset Quality
Committees; Director, USTrust
Robert M. Coard (69)........... 1995 Member, Community Reinvestment and Public
Affairs Committees; Director, USTrust
Domenic Colasacco (48)......... 1990 Executive Vice President of the Company;
Chairman and President of United States
Trust Company; Member, Community
Reinvestment Committee
Alan K. DerKazarian (63)....... 1995 Member, Nominating and Public Affairs
Committees; Director, USTrust
Donald C. Dolben (60).......... 1995 Member, Asset Quality and Compensation
Committees; Director, USTrust
Francis X. Messina (67)........ 1988 Member, Compensation and Community
Reinvestment Committees; Director,
USTrust
James V. Sidell (66)........... 1967 Member, Public Affairs Committee
G. Robert Tod (57)............. 1997 Member, Nominating Committee; Director,
USTrust
</TABLE>
Mr. Bradbury was formerly the Chairman of the Board, President, and Chief
Executive Officer of Walden Bancorp, Inc. which was acquired by the Company on
January 3, 1997. Mr. Coard is Executive Director of the Action for Boston
Community Development, Inc. Mr. Colasacco is Executive Vice President of the
Company and Chairman and President of United States Trust Company. Dr.
DerKazarian is a practicing periodontist. Dr. DerKazarian also serves as Vice
President of Dental Management Inc. and Dental Services P.C. of Cambridge,
Massachusetts. 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. 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. Sidell is Managing Director, Corporate Finance for Fector
Detwiler & Company, Inc. (investment banker/broker-dealer). Prior to April 1,
1993, Mr. Sidell was President and Chief Executive Officer of the Company. Mr.
Tod is the President, Chief Operating Officer and a Director of the CML Group,
Inc., (a retailer of specialty items, including Nordic Track products) located
in Acton, Massachusetts. He is also a
2
<PAGE> 5
Director of SCI Systems, Inc. of Huntsville, Alabama (electronic equipment
manufacturer), and EG&G, Inc. of Wellesley, Massachusetts (scientific
instruments manufacturer).
<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 OF THE
DIRECTOR OF COMPANY), COMMITTEE MEMBERSHIPS AND
THE OFFICES WITH THE COMPANY AND ITS
NAME (AGE) COMPANY SINCE SUBSIDIARIES
- - ------------------------------- ------------- -------------------------------------------
<S> <C> <C>
Chester G. Atkins (49)......... 1997 Member, Audit Committee; Director, USTrust
Robert L. Culver (48).......... 1993 Chairman, Audit Committee and Member,
Executive and Compensation Committees;
Director, USTrust
Neal F. Finnegan (59).......... 1993 President and Chief Executive 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 and Nominating Committees;
Director, USTrust and United States Trust
Company
Edward Guzovsky (70)........... 1995 Member, Audit Committee; Director, USTrust
Wallace M. Haselton (75)....... 1971 Chairman, Compensation Committee; Member,
Executive Committee; Director, USTrust
Brian W. Hotarek (50).......... 1994 Member, Asset Quality and Nominating
Committees; Director, USTrust
Sydney L. Miller (67).......... 1995 Chairman, Community Reinvestment Committee;
Member, Executive and Audit Committees;
Director, USTrust and United States Trust
Company
Vikki L. Pryor (43)............ 1995 Vice Chairman, Audit Committee; Member,
Community Reinvestment Committee;
Director, USTrust
Gerald M. Ridge (68)........... 1982 Chairman, Public Affairs Committee; Member
Executive, Asset Quality, and Nominating
Committees; Vice Chairman and Director,
USTrust
William Schwartz (63).......... 1981 Chairman of the Board of Directors of the
Company; Chairman, Executive Committee;
Director, USTrust
Barbara C. Sidell (63)......... 1995 Member, Asset Quality Committee; Director,
USTrust and United States Trust Company
Paul D. Slater (62)............ 1980 Chairman, Asset Quality Committee; Vice
Chairman, Compensation Committee; Member,
Executive Committee; Director, USTrust
Edward J. Sullivan (76)........ 1995 Member, Asset Quality and Public Affairs
Committees; Director, USTrust
Michael J. Verrochi, Jr. (57).. 1974 Chairman, Nominating Committee; Member,
Executive Committee; Director, USTrust
Gordon M. Weiner (73).......... 1995 Member, Audit and Community Reinvestment
Committees; Director, USTrust
</TABLE>
Mr. Atkins is a Partner in ADS Ventures, Inc. of Concord, Massachusetts
(strategic marketing and related advisory services). Mr. Atkins is also the
former United States Congressman from the 5th Congressional District of
Massachusetts. Mr. Culver is Executive Vice President and Chief Financial
Officer of Cabot Corporation (manufacturer of carbon black and related
products). From 1991 to March 1997, Mr. Culver served as 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.
3
<PAGE> 6
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 also serves as Vice Chairman of the Board
of Trustees of Northeastern University and, in May 1997, he is expected to be
nominated to serve as a Director of Fine Host Corporation (provider of contract
food services). Mr. Guzovsky is a Director of Wolf Construction Company in
Norwood, Massachusetts and Chairman of JWP New England. Mr. Guzovsky has been a
consulting electrical engineer whose office is located in Norwood,
Massachusetts. In 1993, he served as Chairman of JWP New England (electrical and
mechanical contractors). In 1992, Mr. Guzovsky was the principal of an
electrical engineering firm which was acquired by JWP New England. Mr. Haselton,
a retired banker, was formerly Chairman of the Board of Key Bancshares of Maine,
Inc., a bank holding company. Mr. Hotarek has been Executive Vice President and
Chief Financial Officer of the Stop & Shop Supermarket Company since March,
1997. Prior to March, 1997, he served as Senior Vice President, Real Estate and
Development for the Stop & Shop Supermarket Company. Mr. Miller is President of
Harry Miller Co., Inc. and W.E. Palmer Company (manufacturers of industrial
canvas products) and serves as trustee for two real estate trusts. Ms. Pryor is
Senior Vice President, Customer Operations and Service 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 (athletic club). Mr.
Schwartz is Vice President/Academic Affairs (Chief Academic Officer) of Yeshiva
University in New York City. He also serves as 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).
Ms. Sidell is an attorney who has served as a Director of various subsidiaries
of the Company since 1969. 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. 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 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 Attorney-at-Law in Gloucester, Massachusetts and prior
to 1991 was associated with the law firm of Cahill, Weiner & Conant in
Gloucester, Massachusetts.
Except as indicated above, each Director has been employed during the past
five years in his 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.
OTHER INFORMATION ABOUT THE BOARD AND ITS COMMITTEES
The Company's Board of Directors has an Executive Committee, Audit
Committee, Compensation Committee, Nominating Committee, Community Reinvestment
Committee, Asset Quality Committee and Public Affairs Committee. Members of each
committee consist of Directors of the Company except that the
4
<PAGE> 7
Audit Committee and Community Reinvestment Committee also include Directors of
banking subsidiaries of the Company.
The Executive 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 five times
in 1996. The current members of the Executive Committee are Mr. Schwartz
(Chairman), Mr. Bradbury, Mr. Culver, Mr. Finnegan, Mr. Haselton, Mr. Miller,
Mr. Ridge, Mr. Slater and Mr. Verrochi.
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 ten meetings of the Audit Committee during 1996.
Mr. Culver serves as Chairman and Ms. Pryor serves as Vice Chairman of the
Committee. Mr. Atkins, Mr. Guzovsky, Mr. Miller (a Director of United States
Trust Company) and Mr. Weiner also currently serve on the Audit Committee.
The Compensation Committee has five members. Mr. Haselton serves as
Chairman and Mr. Slater serves as Vice Chairman of the Committee. Mr. Culver,
Mr. Dolben and Mr. 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 eight times in 1996.
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 1996. Mr. Verrochi (Chairman), Mr. DerKazarian, Mr.
Finnegan, Mr. Hotarek, Mr. Ridge and Mr. Tod currently serve on the Nominating
Committee.
The Nominating Committee considers candidates for Director of the Company
recommended by Directors, officers and stockholders of the Company. Persons
desiring to suggest candidates for the 1998 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 16, 1997 and
include sufficient biographical material to permit an appropriate evaluation.
The Company's Community Reinvestment Committee's current members are Mr.
Miller (Chairman and a Director of United States Trust Company), Mr. Coard, Mr.
Colasacco, Mr. Walter E. Huskins, Jr., Mr. Messina, Ms. Pryor, Mr. Arthur F.F.
Snyder (Director of United States Trust Company) and Mr. Weiner. The Committee
held four meetings in 1996. The Community Reinvestment Committee reviews the
Company's activities to ascertain whether the Company's banking subsidiaries are
taking appropriate actions to assess and to help to meet the credit-related
needs of the local communities served by the Company's banking subsidiaries.
In 1993, the Board established an Asset Quality Committee to oversee
management's efforts to keep the Company's non-performing assets at a low level.
The Committee met eleven times in 1996. It is chaired by Mr. Slater and its
members include Mr. Dolben, Mr. Hotarek, Mr. Ridge, Ms. Sidell, and Mr.
Sullivan.
In late 1996, the Company organized a Public Affairs Committee which
reviews the public relations activities of the Company as well as positions, if
any, taken by the Company with regard to public policy issues. The Committee did
not meet in 1996, and held its first meeting in 1997. It is chaired by Mr. Ridge
and its members include Mr. Coard, Dr. DerKazarian and Mr. Sullivan.
During 1996, there were thirteen meetings of the Board of Directors of the
Company. Other than Mr. Robert Coard, no Director attended fewer than 75% of the
aggregate number of meetings of the Board of
5
<PAGE> 8
Directors and of the committees of the Board of Directors on which he or she
served. Mr. Coard attended 67% of the meetings which he was eligible to attend.
DIRECTORS' FEES AND OTHER COMPENSATION
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 and of the USTrust and United States Trust
Company Boards they attend, plus an annual stipend which in 1996 was $15,000. In
addition, in 1996, Directors (other than full-time employees of the Company)
received the following additional committee fees:
<TABLE>
<S> <C>
(i) Executive 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) Public Affairs Committee....... $250 per meeting (except Chairman who
receives $500 per meeting)
</TABLE>
Instead of receiving a retainer or meeting fees, Mr. Schwartz received a
stipend of $60,000 in 1996 for his services as Chairman of the Board of
Directors. In 1996, Mr. Ridge received a stipend of $55,000 for services
performed in his capacity as Vice Chairman of USTrust, also in lieu of a
retainer or meeting fees.
At the Annual Meeting of Stockholders in 1995, the 1995 Directors' Stock
Option Plan was approved by 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 solely Directors of the
Company received 5,100 options; individuals who were solely honorary Directors
of the Company received 4,500 options; and individuals who were solely Directors
of USTrust received 3,000 options. These options become exercisable as follows:
one-third vested when the per-share fair market value of the Common Stock
reached a level at least three dollars higher than on the date of grant
($15.875); one-third vested when the per-share fair market value of the Common
Stock reached a level at least six dollars higher than on the date of grant
($18.875); and the remaining one-third will vest should the per-share fair
market value of the Common Stock reaches a level at least nine dollars higher
than the price on the date of grant ($21.875). In any event, the remaining
options are fully exercisable three years from the date of grant or May 16,
1998. In addition to the foregoing, in May 1996, at the Annual Meeting of
Stockholders, the Company's stockholders approved the 1996 Directors' Stock
Option Plan which granted outside Directors of Company 5,000 immediately
exercisable options at $13.438, the market price on May 21, 1996, the date of
the Annual Meeting of Stockholders.
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
management.
6
<PAGE> 9
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 1996 year-end values
shown in these tables for outstanding stock options and restricted shares
reflect a $20.625 price, which was the closing price of the Common Stock for
December 31, 1996, as reported in the Nasdaq section of the Eastern Edition of
The Wall Street Journal.
The following table displays compensation information for the past three
fiscal years for each of the named Executive Officers:
<TABLE>
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)............ 1996 $374,358 $360,000 -- -- $5,049
President and Chief Executive 1995 $314,851 $150,000 $604,688(C) 150,000(C) $3,669
Officer of the Company 1994 $314,748 -- $ 50,002(C) 200,000 $1,607
Domenic Colasacco,(D)........... 1996 $236,769 $575,000 -- -- $5,049
Executive Vice President/Trust 1995 $236,735 $575,000 -- -- $3,669
and Investment Management 1994 $238,254 $575,000 -- -- $1,607
of the Company; Chairman and
President, United States Trust
Company
James K. Hunt,(E)............... 1996 $211,476 $ 80,000 $ 66,300 37,500 $2,049
Executive Vice President and 1995 $186,104 $ 25,000 -- -- $1,728
Chief Financial Officer 1994 $ 95,780 $ 25,000 $132,000 25,000 $ 966
of the Company
Robert T. McAlear,(F)........... 1996 $214,486 $ 65,000 -- 32,500 $5,049
Executive Vice President/ 1995 $212,460 $ 40,000 -- -- $3,669
Controlled Loans, Credit 1994 $212,450 -- $ 92,250 30,300 $1,607
and Acquisition Integration of
the Company
Walter E. Huskins, Jr.,(G)...... 1996 $213,090 $ 50,000 -- 17,500 $5,049
Executive Vice President/ 1995 $213,060 $ 15,000 -- -- $3,669
Administration of the Company 1994 $213,050 -- $123,000 76,000 $1,607
- - ---------------
(A) The 1994 values reflect a price of $10.25, the fair market value of the
Company's Common Stock at the close of trading on November 29, 1994, the
date the awards to Messrs. McAlear and Huskins were made, and a price of
$11.00, the fair market value of the Company's Common Stock at the close of
trading on October 24, 1994, the date the award to Mr. Hunt was made. With
respect to Mr. Finnegan's 1994 and 1995 awards see footnote C below. The
1996 awards to Mr. Hunt are valued as follows: 30,000 shares reflect a price
of $13.8125, the fair market value of the Company's Common Stock at the
close of trading on January 12, 1996, the date the award to Mr. Hunt was
made and 7,500 shares reflect a price of $14.8125, the fair market value of
the Company's Common Stock at the close of trading on July 16, 1996, the
date the award to Mr. Hunt was made. As of December 31, 1996 each of the
named Executive
</TABLE>
7
<PAGE> 10
<TABLE>
Officers held the following number of shares of Restricted Stock having the
corresponding year-end market value:
<CAPTION>
AS OF DECEMBER 31, 1996
-------------------------------
TOTAL NUMBER OF
RESTRICTED AGGREGATE
NAME SHARES HELD MARKET VALUE
---- --------------- ------------
<S> <C> <C>
Neal F. Finnegan....................... 45,000 $928,125
Domenic Colasacco...................... 0 0
James K. Hunt.......................... 3,200 $ 66,000
Robert T. McAlear...................... 0 0
Walter E. Huskins, Jr. ................ 0 0
</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.
Hunt, McAlear and Huskins vest or vested over a period of two years and six
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. As part
of the Amendment and to reflect the one year extension of his Employment
Agreement, Mr. Finnegan also received a 10,800 share Restricted Common
Stock bonus in early 1997 which provides him with Restricted Stock for the
additional year of his contract on a basis consistent with the prior years
of his contract period.
(B) The amounts reported for 1996 for each of the named Executive Officers
consist of allocations under the Company's Employee Stock Ownership Plan and
the Company's Employee Savings Plan as indicated below:
<TABLE>
<CAPTION>
EMPLOYEE STOCK EMPLOYEE
NAME OWNERSHIP PLAN SAVINGS PLAN
---- -------------- ------------
<S> <C> <C>
Neal F. Finnegan.................... $2,049 $3,000
Domenic Colasacco................... 2,049 3,000
James K. Hunt....................... 2,049 0
Robert T. McAlear................... 2,049 3,000
Walter E. Huskins, Jr. ............. 2,049 3,000
</TABLE>
(C) The Company entered into an Employment Agreement with Mr. Finnegan effective
November 21, 1995 and (after a one year extension agreed to by the Company
and Mr. Finnegan in 1996) ending January 4, 2000, 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
which, as of January 1, 1997, was increased from $360,000 to $480,000 and
received stock compensation described herein. The 1994 $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 which reflects the
closing price of the Company's Common Stock on December 20, 1994. The 1995
Restricted Stock award of $604,688 granted to Mr. Finnegan was calculated at
$13.4375 per share while the 150,000 options were granted at an exercise
price of $14.4375 per share. In addition, on January 2, 1997, Mr. Finnegan
was granted a total of 50,000 stock options, with a per share exercise price
of $20.3125, the fair market value at the close of trading on January 2,
1997, as reported by the Wall Street Journal (the "Exercise Price"). The
options vest as follows: (i) one third of the shares vested on January 2,
1997; (ii) one third of the shares will vest on the earlier of January 2,
1998 or the first trading day on which the closing price of UST Common Stock
shall have equaled or exceeded for ten consecutive trading days the Exercise
Price plus three dollars ($23.3125); and (iii) the last third on the earlier
of January 2, 1999 or the first trading day on which the closing price of
UST Common Stock shall have equaled or exceeded for ten consecutive trading
days the Exercise Price plus
8
<PAGE> 11
six dollars ($26.3125). As part of the Amendment to his Employment Agreement
and to reflect the one year extension of said Agreement, Mr. Finnegan was
granted a total of 10,800 shares of Restricted Stock which shall vest on
January 2, 1999, providing him with Restricted Stock for the additional year
of his contract on a basis consistent with the prior years of his contract
period. As this grant occurred on January 1, 1997, these shares are not
reflected on the Summary Compensation Table. See "Employment Agreements."
(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 an 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. Hunt entered into a restated and amended two-year Employment Agreement
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." In 1996, modest amendments were made to reflect changes in the
severance payment to which Mr. Hunt would be entitled upon termination. In
addition to base salary, Mr. Hunt shall be paid an amount equal to the bonus
earned for performance during the calendar year immediately preceding the
year in which termination occurs. Should the termination result from a
change-of-control of the Company (as defined in the Employment Agreement)
and Mr. Hunt is not offered continued employment in a similar position with
the successor entity, Mr. Hunt will be entitled to a severance payment equal
to two times his base salary plus two times the bonus which Mr. Hunt earned
for performance during the calendar year immediately preceding the year in
which termination occurs.
(F) Mr. McAlear entered into a two-year Employment Agreement 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." In
1996, modest amendments were made to reflect changes in the severance
payment to which Mr. McAlear would be entitled upon termination. In addition
to base salary, Mr. McAlear shall be paid an amount equal to the bonus
earned for performance during the calendar year immediately preceding the
year in which termination occurs. Should the termination result from 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 base salary plus two times the bonus which
Mr. McAlear earned for performance during the calendar year immediately
preceding the year in which termination occurs.
(G) Mr. Huskins entered into a restated and amended two-year Employment
Agreement 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." In 1996, modest amendments were made to
reflect changes in the severance payment to which Mr. Huskins would be
entitled upon termination. In addition to base salary, Mr. Huskins shall be
paid an amount equal to the bonus earned for performance during the calendar
year immediately preceding the year in which termination occurs. Should the
termination result from 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 base salary plus
two times the bonus which Mr. Huskins earned for performance during the
calendar year immediately preceding the year in which termination occurs.
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
9
<PAGE> 12
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.
The following table provides details regarding stock options granted to the
named Executive Officers in 1996 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
1996 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.
<TABLE>
OPTION GRANTS IN 1996
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------------------ VALUE
% OF AT ASSUMED ANNUAL RATES
NUMBER OF TOTAL OF STOCK PRICE
SECURITIES OPTIONS MARKET APPRECIATION
UNDERLYING GRANTED TO EXERCISE VALUE ON FOR OPTION TERM(C)
OPTIONS EMPLOYEES PRICE GRANT DATE EXPIRATION -----------------------
GRANTED (#)(A) IN 1996 ($/SH.) ($/SH.)(B) DATE 0% 5% 10%
-------------- ---------- -------- ---------- ---------- --- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Neal F. Finnegan(D)... -- -- -- -- -- -- -- --
Domenic Colasacco..... -- -- -- -- -- -- -- --
James K. Hunt......... 30,000 13.30% $13.8125 $13.8125 1/12/01 -- $114,484 $252,980
7,500 3.33% $14.8125 $14.8125 7/16/06 -- $ 69,866 $177,055
Robert T. McAlear..... 25,000 11.09% $13.8125 $13.8125 1/12/01 -- $ 95,403 $210,817
7,500 3.33% $14.8125 $14.8125 7/16/06 -- $ 69,866 $177,055
Walter E. Huskins,
Jr.................. 10,000 4.43% $13.8125 $13.8125 1/12/01 -- $ 38,161 $ 84,327
7,500 3.33% $14.8125 $14.8125 7/16/06 -- $ 69,866 $177.055
- - ---------------
(A) Options vested immediately as of the date of the grant.
(B) Average of the high and low trading prices of a share 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.
(D) On January 2, 1997, Mr. Finnegan was granted a total of 50,000 stock
options, priced at $20.3125, the fair market value at the close of trading
on January 2, 1997, as reported by the Wall Street Journal (the "Exercise
Price"). The options vest as follows: (i) one third of the shares vested on
January 2, 1997; (ii) one third of the shares will vest on the earlier of
January 2, 1998 or the first trading day on which the closing price of the
Company's Common Stock shall have equaled or exceeded for ten consecutive
trading days the Exercise Price plus three dollars ($23.3125); and (iii) the
last third on the earlier of January 2, 1999 or the first trading day on
which the closing price of the Company's Common Stock shall have equaled or
exceeded for ten consecutive trading days the Exercise Price plus six
dollars ($26.3125). These options are not reflected in the Option Grant
Table for 1996 but will be reflected in the Option Grant Table for 1997.
</TABLE>
10
<PAGE> 13
The following table shows stock option exercises by the named Executive
Officers during 1996, 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, 1996. 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 $20.625.
<TABLE>
AGGREGATED OPTION EXERCISES IN 1996 AND
YEAR-END 1996 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(A)..... 40,000 $452,500 345,000 50,000 $3,481,875 $359,375
Domenic Colasacco....... 4,200 $ 30,413 -- -- -- --
James K. Hunt........... -- -- 55,500 -- $ 443,719 --
Robert T. McAlear....... 15,750 $109,598 62,800 -- $ 543,419 --
Walter E. Huskins, Jr... -- -- 93,500 -- $ 938,219 --
- - ---------------
(A) Does not reflect the January 2, 1997 grant of options to acquire 50,000
shares of the Company's Common Stock which is described above.
</TABLE>
RETIREMENT BENEFITS
<TABLE>
The following table presents the years of service to the Company and the
1996 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......................... 4 $360,000
Domenic Colasacco........................ 23 $225,375
James K. Hunt............................ 3 $200,000
Robert T. McAlear........................ 6 $203,900
Walter E. Huskins, Jr. .................. 3 $200,000
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
11
<PAGE> 14
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, 1996, all individuals named in the Summary
Compensation Table were covered by the Supplemental Retirement Benefits Plan. In
addition, as of January 1, 1997, all individuals named in the Summary
Compensation Table except Mr. Colasacco were covered by the Executive Policy
Committee Plan. This plan is a supplemental retirement plan which provides a
maximum benefit equal to 50% of five year average compensation. For purposes of
this plan, compensation includes bonus.
COMPENSATION COMMITTEE REPORT
COMPENSATION PHILOSOPHY
This Report reflects the Company's compensation philosophy and resulting
actions taken by the Company for 1996, 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 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 (and in the aggregate at approximately the
60th percentile when compared to those of the Company's peer group 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.
In 1996, executive compensation was composed of base salary, discretionary
annual incentive awards, long-term incentive opportunities in the form of stock
options and restricted stock, and benefits typically offered to executives by
the Company's peer group competitors. 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 are determined by the Compensation Committee,
using its discretion and considering both objective and subjective criteria.
In 1996, the Compensation Committee adopted a written "UST Corp. Executive
Compensation Philosophy" (the "Compensation Philosophy"). The Compensation
Philosophy utilizes comparable peer company data surveys conducted by Watson
Wyatt Worldwide, the Company's independent employee benefit and compensation
consultants, and calls for procedures under which: (i) base salary shall be set
so that the targeted positioning is the 60th percentile for each position, based
on asset size or other criteria. Actual base salary for an individual relative
to the target pay shall be determined based on the individual's unique
background, experiences, personal skills and abilities as well as the business
challenges facing the Company which require the use of such attributes or
skills; (ii) annual incentive targets shall be set at levels which approximate
the 60th percentile of total compensation, so as to drive and reward consistent
improvement in performance. The same surveys and peer company data used to
establish salary ranges are to be used to calibrate incentive earning potential.
Annual performance targets are generally set at levels which range between the
60th and 75th percentile of total compensation; and (iii) the annualized value
of long-term incentive targets are set at levels which approximate the 60th
percentile of the competitive total compensation, so as to drive and reward
consistent improvement in performance and shareholder value. Peer company data
is used to calibrate long-term incentive earning potential. Long-term incentive
targets are generally set at levels which approximate the 75th percentile of
competitive total direct compensation values.
12
<PAGE> 15
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.
Over the four 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. Over most of the same period, the Company's Common Stock has
out-performed the Standard & Poor's 500 Index.
The following is a discussion of the Compensation Committee's bases for Mr.
Finnegan's compensation reported for 1996, 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 1996.
SALARY
The Employment Agreement between Mr. Finnegan and the Company dated as of
November 21, 1995 was amended as of January 2, 1997 (the "Amendment"). The
Amendment increased Mr. Finnegan's base salary from $360,000 to $480,000. Based
upon salary surveys of approximately 35 similarly-sized regional and national
bank holding companies provided to the Compensation Committee, and advice
provided by Watson Wyatt Worldwide, this base salary was and continues to be
competitive with the base salaries of Chief Executive Officers of the banks and
bank holding companies surveyed.
1996 CASH BONUS AWARDS
Mr. Finnegan received a $360,000 cash bonus in late 1996 to reflect his
performance during 1996 (which is reflected in the Summary Compensation Table),
based upon a subjective determination of the Compensation Committee, considering
in particular the excellent financial performance of the Company in 1996, the
increase in the share price of the Company's Common Stock and the significant
increase in the size of the assets. Under the matching contribution feature UST
Corp.'s Employee Savings Plan, Mr. Finnegan received an aggregate contribution
of $3,000 for 1996.
1996 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 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. 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. On January 2, 1997 Mr. Finnegan was
13
<PAGE> 16
granted a total of 50,000 stock options, priced at $20.3125, the fair market
value at the close of trading on January 2, 1997, as reported by the Wall Street
Journal (the "Exercise Price"). The options vest as follows: (i) one third of
the shares vested on January 2, 1997; (ii) one third of the shares will vest on
the earlier of January 2, 1998 or the first trading day on which the closing
price of the Common Stock shall have equaled or exceeded for ten consecutive
trading days the Exercise Price plus three dollars ($23.3125); and (iii) the
last third of the shares will vest on the earlier of January 2, 1999 or the
first trading day on which the closing price of the Common Stock shall have
equaled or exceeded for ten consecutive trading days the Exercise Price plus six
dollars ($26.3125). As part of the Amendment and to reflect the one year
extension of his employment agreement, Mr. Finnegan also received a 10,800 share
Restricted Common Stock bonus in early 1997 which provides him with Restricted
Stock for the additional year of his contract on a basis consistent with the
prior years of his contract period. Under the Company's Employee Stock Ownership
Plan, Mr. Finnegan received a contribution of $1,500 for 1996. 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.
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 1996, 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 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 1996. 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.
14
<PAGE> 17
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.
<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 C/R/C]
<CAPTION>
- - ------------------------------------------------------------------------------------
1991 1992 1993 1994 1995 1996
- - ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
UST Corp. $100.00 $138.18 $154.55 $149.09 $211.64 $306.25
----------------------------------------------------
Standard and Poor's 500 Index $100.00 $107.61 $118.39 $119.99 $164.92 $202.69
----------------------------------------------------
KBW New England Bank Index $100.00 $175.64 $234.48 $236.05 $368.43 $508.88
- - ------------------------------------------------------------------------------------
</TABLE>
15
<PAGE> 18
EMPLOYMENT AGREEMENTS
Mr. Finnegan joined the Company in 1993 as President and Chief Executive
Officer of the Company. He has an Employment Agreement with the Company dated as
of November 21, 1995 and amended on January 2, 1997. The Employment Agreement,
as amended, was effective November 21, 1995 and ends on January 4, 2000, and
provides that Mr. Finnegan will serve as President and Chief Executive Officer
of the Company. Mr. Finnegan is paid a base salary of $480,000 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, an aggregate of 55,800 shares of Restricted
Common Stock which vest over a three-year period and an aggregate of 200,000
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, all of which
have vested 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 (as defined in Mr. Finnegan's Employment
Agreement) 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 sue for
damages. 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
noncompetition 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, receive an aggregate share of the Division's revenues and
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. Hunt, Executive Vice President, Treasurer and Chief Financial Officer
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. Hunt is paid a base
salary of $200,000 per annum, is eligible for discretionary bonuses and is
entitled to fringe benefits available to senior executives. Through December 31,
1996, Mr. Hunt has also received an aggregate of 16,800 shares of Restricted
Common Stock and aggregate options to purchase 62,500 shares of the Company's
Common Stock at an average purchase price of $12.3075 per share. On January 2,
1997, Mr. Hunt was granted a total of 10,000 stock options, priced at $20.3125,
the fair market value at the close of trading on January 2, 1997. Under the
terms of the Employment Agreement, Mr. Hunt has also agreed to certain
non-solicitation and confidentiality provisions. In addition, under the
Employment Agreement, and as amended on December 17, 1996, in the event there is
a change-of-control of the Company (as defined in the Employment Agreement) and
Mr. Hunt is not offered continued employment in a similar position with the
successor entity, Mr. Hunt will be entitled to a severance payment equal to two
times the sum of (i) his then current annual base salary for the then most
recent year plus (ii) the bonus which Mr. Hunt earned for performance during the
previous calendar year.
Mr. McAlear, Executive Vice President/Controlled Loans and Credit of the
Company and Vice
16
<PAGE> 19
Chairman of USTrust, entered into a two-year Employment Agreement with the
Company, dated February 1, 1996, which thereafter continues 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. Through December 31,
1996, Mr. McAlear has also received an aggregate of 9,000 shares of Restricted
Common Stock and aggregate options to purchase 78,550 shares of the Company's
Common Stock at an average purchase price of $10.7887 per share. On January 2,
1997, Mr. McAlear was granted a total of 10,000 stock options, priced at
$20.3125, the fair market value at the close of trading on January 2, 1997.
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, and as amended on December 17, 1996, 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 the sum of (i) his then current annual base salary for the then most
recent year plus (ii) an amount equal to the bonus which Mr. McAlear earned for
performance during the previous calendar 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 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 discretionary bonuses and is entitled to fringe benefits
available to senior executives. Through December 31, 1996, Mr. Huskins has also
received an aggregate of 12,000 shares of Restricted Common Stock and aggregate
options to purchase 93,500 shares of the Company's Common Stock at an average
purchase price of $10.5906 per share. On January 2, 1997, Mr. Huskins was
granted a total of 10,000 stock options, priced at $20.3125, the fair market
value at the close of trading on January 2, 1997. 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, and
as amended on December 17, 1996, 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 (i) his
then current annual base salary for the then most recent year plus (ii) an
amount equal to the bonus which Mr. Huskins earned for performance during the
previous calendar 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 1996.
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
17
<PAGE> 20
programs. As of April 1, 1997, 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."
EXECUTIVE OFFICERS
<TABLE>
The names and ages of the executive officers of the Company and each
executive officer's position with the Company and its principal 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,
NAME (AGE) POSITION WITH ONE OF THE COMPANY'S SUBSIDIARIES)
- - --------- ----------------------------------------------------
<S> <C>
*Neal F. Finnegan (59)........... President, Chief Executive Officer and Director of the
Company and Chairman, President and Chief Executive
Officer of USTrust, The Braintree Savings Bank
("Braintree") and The Co-operative Bank of Concord
("Concord")
*Domenic Colasacco (48).......... Executive Vice President/Trust and Investment
Management and Director of the Company and Chairman
and President of USTC
*James K. Hunt (53).............. Executive Vice President, Chief Financial Officer and
Treasurer of the Company; Executive Vice President
and Chief Financial Officer of USTrust; Executive
Vice President, Chief Financial Officer and
Treasurer of Braintree and Concord and Treasurer of
UST Leasing Corporation
*Eric R. Fischer (51)............ Executive Vice President, General Counsel and Clerk of
the Company; Executive Vice President, General Counsel
and Secretary of USTrust, USTC, Braintree and
Concord and Clerk of UST Capital Corp. and UST
Leasing Corporation
*Kathie S. Stevens (46).......... Executive Vice President and Senior Lending Officer of
the Company; Vice Chairman and Senior Lending Officer
of USTrust and President of UST Capital Corp.
*Katharine C. Armstrong (52)..... Executive Vice President/Commercial Lending of the
Company, USTrust, Braintree and Concord
*Robert T. McAlear (54).......... Executive Vice President/Controlled Loans, Credit and
Acquisition Integration of the Company; Vice
Chairman of USTrust and Executive Vice President and
Chief Operating Officer of Braintree
*Suzanne Moot (47)............... Executive Vice President/Marketing and Retail Banking
of the Company and USTrust
*Walter E. Huskins, Jr. (57)..... Executive Vice President/Administration of the Company
and USTrust; Executive Vice President and Chief
Operating Officer of Concord and President of UST
Leasing Corporation
*Linda J. Lerner (52)............ Senior Vice President/Human Resources of the Company,
USTrust and USTC
*Kenneth L. Sullivan (60)........ Senior Vice President/Operations of the Company and
Senior Vice President of USTrust
George T. Clarke (50)............ Senior Vice President and Controller of the Company
and USTrust and Treasurer of UST Capital Corp.
- - ---------------
* 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.
18
<PAGE> 21
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, Braintree and Concord 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, Executive Vice
President, Chief Financial Officer and Treasurer of Braintree and Concord 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, USTrust,
Braintree and Concord 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 and Senior Lending Officer 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 is also President of UST Capital Corp.
Ms. Armstrong serves as Executive Vice President/Commercial Lending of the
Company, USTrust, Braintree and Concord. 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, as well as supervision of the integration
of banks and branches acquired by the Company. Prior to 1990, Mr. McAlear served
as an Executive Vice President in the lending area of the Bank of New England.
Mr. McAlear also serves as Executive Vice President and Chief Operating Officer
of Braintree.
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,
19
<PAGE> 22
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
Executive Vice President and Chief Operating Officer of Concord and 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, USTrust and USTC. 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 has served since 1988 and continues to serve 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. From 1988 to 1994 he served as Vice President
and Controller of the Company. 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 1997. 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 the Company's 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.
ACTION TO BE TAKEN -- OTHER BUSINESS
(NOTICE ITEM 2)
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 one specific item
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 28, 1997, the Company was aware of only one stockholder, the
Morgan Stanley Group, Inc., which beneficially owned more than five percent of
the Company's Common Stock. Morgan Stanley Group, Inc. filed a Report on
Schedule 13G with the Securities and Exchange Commission which indicated that,
as of December 31, 1996, it beneficially owned an aggregate of 8.32% of the
Company's Common Stock.
20
<PAGE> 23
<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 28, 1997. Units in
the Deferred Compensation Plan have no voting rights and the underlying shares
of the Company's Common Stock associated with such units may not be sold until
the individual holder retires from the Company or dies:
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL DEFERRED PERCENT OF
NAME OWNERSHIP(1) PLAN(2) TOTAL CLASS
- - ---- ----------------- -------- --------- ----------
<S> <C> <C> <C> <C>
Chester G. Atkins........................ 9,679(3) 9,679 *
David E. Bradbury........................ 369,639(4) 369,639 1.30%
Robert M. Coard.......................... 7,253(5) 1,407 8,660 *
Domenic Colasacco........................ 40,751(6) 40,751 *
Robert L. Culver......................... 10,165(7) 10,165 *
Alan K. DerKazarian...................... 17,703(8) 468 18,171 *
Donald C. Dolben......................... 8,050(9) 8,050 *
Neal F. Finnegan......................... 615,559(10) 615,559 2.17%
Edward Guzovsky.......................... 30,091(11) 3,269 33,360 *
Wallace M. Haselton...................... 91,676(12) 8,765 100,441 *
Brian W. Hotarek......................... 10,300(13) 2,791 13,091 *
James K. Hunt............................ 108,796(14) 108,796 *
Walter E. Huskins, Jr. .................. 115,746(15) 115,746 *
Robert T. McAlear........................ 91,192(16) 91,192 *
Francis X. Messina....................... 418,592(17) 22,673 441,265 1.47%
Sydney L. Miller......................... 124,831(18) 3,261 128,092 *
Vikki L. Pryor........................... 10,097(19) 10,097 *
Gerald M. Ridge.......................... 54,267(20) 54,267 *
William Schwartz......................... 15,150(21) 34,880 50,030 *
Barbara C. Sidell........................ 547,315(22) 547,315 1.93%
James V. Sidell.......................... 420,031(23) 420,031 1.48%
Paul D. Slater........................... 130,377(24) 16,180 146,557 *
Edward J. Sullivan....................... 18,450(25) 18,450 *
G. Robert Tod............................ 475 475 *
Michael J. Verrochi...................... 192,554(26) 1,308 193,862 *
Gordon M. Weiner......................... 7,119(27) 7,119 *
ALL DIRECTORS AND OFFICERS AS A GROUP (33
persons)............................... 3,927,936(28) 95,002 4,022,938 14.16%
- - ---------------
* Less than 1%.
(1) Information as to the interests of the respective Executive Officers,
Directors and nominees has been furnished in part by them. As of March 28,
1997, 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, 1996. Units in the Deferred Compensation Plan have no
voting rights and the underlying shares of the Company's Common Stock
associated with such units may not be sold until the individual holder
retires from the Company or dies.
(3) Includes options to acquire 3,800 shares which are fully vested, but not
yet exercised.
(4) Includes options to acquire 57,000 shares which are fully vested, but not
yet exercised.
(5) Includes options to acquire 7,000 shares which are fully vested, but not
yet exercised.
</TABLE>
21
<PAGE> 24
(6) Includes 4,466 shares beneficially owned by Mr. Colasacco's wife and 300
shares owned by each of his three daughters of the Company's Common Stock
as to which Mr. Colasacco disclaims any beneficial interest. Also includes
8,356 shares held for Mr. Colasacco's benefit under the Company's Employee
Stock Ownership Plan.
(7) Includes options to acquire 10,000 shares which are fully vested, but not
yet exercised.
(8) Includes options to acquire 7,000 shares which are fully vested, but not
yet exercised.
(9) Mr. Dolben's wife beneficially owns an additional 1,604 shares to which Mr.
Dolben disclaims any beneficial interest. Includes options to acquire 7,000
shares which are fully vested, but not yet exercised.
(10) Includes 40,800 shares of Common Stock which remain subject to forfeiture
as Restricted Stock pursuant to the Company's Stock Compensation Plan and
an aggregate of 411,666 shares which
Mr. Finnegan has the present right to acquire through the exercise of stock
options. Also includes 440 shares held for Mr. Finnegan's benefit under the
Company's Employee Stock Ownership Plan.
(11) Includes 22,293 shares held in Mr. Guzovsky's wife's name. Includes options
to acquire 7,000 shares which are fully vested, but not yet exercised.
(12) Includes options to acquire 10,000 shares which are fully vested, but not
yet exercised.
(13) Includes options to acquire 10,000 shares which are fully vested, but not
yet exercised.
(14) Includes options to acquire 65,500 shares which are fully vested, but not
yet exercised, and 9,400 shares which remain subject to forfeiture as
Restricted Stock pursuant to the Company's Stock Compensation Plan.
(15) Includes an aggregate of 103,500 shares which Mr. Huskins has the present
right to acquire through the exercise of stock options and 246 shares held
for Mr. Huskins's benefit under the Company's Employee Stock Ownership
Plan.
(16) Includes an aggregate of 72,800 shares which Mr. McAlear has the present
right to acquire through the exercise of stock options, and 937 shares held
for Mr. McAlear's benefit under the Company's Employee Stock Ownership
Plan.
(17) Includes options to acquire 10,000 shares which are fully vested, but not
yet exercised.
(18) 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.
Includes options to acquire 10,000 shares which are fully vested, but not
yet exercised.
(19) Includes options to acquire 10,000 shares which are fully vested, but not
yet exercised.
(20) Includes 3,242 shares owned by Gerald M. Ridge Corp. of which Mr. Ridge is
President. Includes options to acquire 10,000 shares which are fully
vested, but not yet exercised.
(21) All 6,750 shares are held jointly with Mr. Schwartz's wife. Includes
options to acquire 8,400 shares which are fully vested, but not yet
exercised.
(22) Includes options to acquire 10,000 shares which are fully vested, but not
yet exercised.
(23) Includes 410,031 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 5,963.125 shares of Common Stock held by Mr. Sidell's wife
Louisa Kasdon-Sidell and Mr. Sidell's stepchildren, one of whom is a minor,
as to all of which Mr. Sidell disclaims any beneficial ownership. Includes
options to acquire 10,000 shares which are fully vested, but not yet
exercised.
(24) 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.
Includes options to acquire 10,000 shares which are fully vested, but not
yet exercised.
22
<PAGE> 25
(25) Includes 9,521 shares held jointly with Mr. Sullivan's spouse and 506
shares held in Mr. Sullivan's spouse's IRA. Includes options to acquire
7,000 shares which are fully vested, but not yet exercised.
(26) Includes an aggregate of 164,074 shares held by Mr. Verrochi indirectly
through an affiliated realty trust and a corporation of which he is
President. Includes options to acquire 10,000 shares which are fully
vested, but not yet exercised.
(27) Does not include 1,050 shares owned by Mr. Weiner's wife of which he
disclaims beneficial ownership. Includes options to acquire 7,000 shares
which are fully vested, but not yet exercised
(28) The amount includes 1,211,106 shares of Common Stock subject to exercisable
outstanding stock options and also includes 17,867 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 322,087.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 from the
Directors and Executive Officers, the Company believes that, during 1996, all
such filing requirements applicable to its Executive Officers and Directors were
complied with by such individuals.
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 16, 1997, except that if the
next year's annual meeting date is changed by more than 30 calendar days from
the regularly scheduled date, May 19, 1998, 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, 1996, 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, 1996 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 15, 1997
Boston, Massachusetts
24
<PAGE> 27
[UST CORP. LOGO]
<PAGE> 28
UST Corp.
30 Court Street
Boston, MA 02108
617-726-7000 [UST CORP. LOGO]
April 15, 1997
Securities and Exchange Commission
Division of Corporate Finance
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
Re: UST Corp.
CIK: 0000316901
Definitive Filing of Proxy Materials
Commission File No. 0-9623
------------------------------------
Dear Sir or Madam:
On behalf of UST Corp. (the "Company"), and pursuant to Rule 14a-6 of
the Securities and Exchange Commission (the "Commission") promulgated under the
Securities Act of 1934, enclosed for filing in the EDGAR electronic format
pursuant to the requirements of Rule 101(a)(iii) of Regulation S-T is the
Company's definitive filing of its Proxy Statement, Notice of Annual Meeting
and Form of Proxy (the "Proxy Materials") for the 1997 Annual Meeting of
Stockholders of the Company. The Proxy Materials are expected to be
distributed, commencing April 15, 1997, to the holders of the Company's common
stock. As permitted under Rule 14a-6(a), because the only matter expected to be
considered at the meeting involves the election of Directors, no preliminary
Proxy Material has been filed with the Commission.
As noted above, other than the election of eight (8) Directors, the
Company knows of no matters which will be brought for consideration at the 1997
Annual Meeting of Stockholders. Changes in the Proxy Materials reflect
revisions to conform to changes in the facts and law.
Copies of the Company's 1996 Annual Report to the Commission on Form
10-K for the fiscal year ended December 31, 1996 (the "10-K Report") were
previously provided to the Commission in the EDGAR electronic format on March
27, 1997. Ten bound copies of the Company's Annual Report to Stockholders for
the year ended December 31, 1996 (the "Stockholders Report") which includes
within it the 10-K Report, were mailed to the Commission via Federal Express
overnight delivery on April 9, 1997. Distribution of the Proxy Material and the
Stockholders Report to all UST Corp. Stockholders will begin on April 15, 1997.
<PAGE> 29
Securities and Exchange Commission
April 15, 1997
Page 2
Please call the undersigned at (617) 726-7377 or my colleague, Gary N.
Sutton, Assistant Counsel at (617) 726-7322 should you have any questions with
respect to the enclosed or should you require additional information.
Very truly yours,
/s/ Eric R. Fischer
-------------------------------
Eric R. Fischer
Executive Vice President,
General Counsel and Clerk
Enclosures
cc: National Association of Securities Dealers, Inc.
NASDAQ Reports Section - 4th Fl.
1735 K Street, N.W.
Washington, D.C. 20006 (via regular mail)
Neal F. Finnegan, President and Chief Executive Officer
James K. Hunt, Executive Vice President, Treasurer and
Chief Financial Officer
George T. Clarke, Senior Vice President and Controller
Michael P. O'Brien, Esq., Bingham, Dana & Gould LLP
George E. Massaro, Arthur Andersen LLP
<PAGE> 30
<TABLE>
<S> <C>
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
----------------------- 1. Election of Directors. With- For All
UST CORP. For hold Except
----------------------- David E. Bradbury Donald C. Dolben [ ] [ ] [ ]
Robert M. Coard Francis X. Messina
Domenic Colasacco James V. Sidell
Alan K. DerKazarian G. Robert Tod
NOTE: If you do not wish your shares voted "For" a particular
nominee, mark the "For All Except" box and strike a line through
RECORD DATE SHARES: the nominee(s) name(s). Your shares will be voted for the
remaining nominee(s).
Authorizing the Proxies in their discretion to consider and act
upon such other matters as may properly come before the meeting.
------------
Please be certain to sign and date this Proxy. Date Mark box at right if an address change or comment has been [ ]
- - ------------------------------------------------------------- noted on the reverse side of this card.
- - -----Stockholder sign here-------------Co-owner sign here----
DETACH CARD DETACH CARD
</TABLE>
<PAGE> 31
UST CORP.
Dear Stockholder:
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 and approval. 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 box or boxes on this proxy card to indicate how your shares
will 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 Stockholders,
scheduled to be held on May 20, 1997.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
UST CORP.
<PAGE> 32
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<S> <C>
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 shares of Common Stock
of the Company held of record by the undersigned on March 28, 1997 at the Annual Meeting of Stockholders of the Company, to be held
on Tuesday, May 20, 1997, 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 PROPOSAL 1.
--------------------------------------------------------------------------------------
- - ---------------------- PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. -----------------------
--------------------------------------------------------------------------------------
Please sign exactly as your name appears on the books of the Company. Joint owners should each 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, the signature should be that of an authorized officer who should state his or her title.
- - ------------------------------------------------------------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- - -------------------------------------------------------- -------------------------------------------------------------------
- - -------------------------------------------------------- -------------------------------------------------------------------
- - -------------------------------------------------------- -------------------------------------------------------------------
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