<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
UST CORP
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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 18, 1999
Notice is hereby given that the Annual Meeting of Stockholders of UST Corp.
(the "Company") will be held in the Auditorium located on the twelfth floor at
40 Court Street, Boston, Massachusetts, on Tuesday, the 18th day of May, 1999 at
9:00 o'clock in the morning for the following purposes:
1. To elect seven (7) Directors of the Company, each of whom will
serve for a three-year term, leaving one vacancy in the class of Directors
being elected in 1999, which may be filled later by the Board of Directors;
2. To approve, upon the recommendation of the Board of Directors, an
Amendment to the Company's By-Laws which would change the date of the
Annual Meeting of Stockholders to the third Tuesday in April; and
3. To transact any other business which may properly come before the
meeting, or any adjournments thereof.
The close of business on March 26, 1999 has been fixed as the record date
for determination of stockholders entitled to notice of, and to vote at, the
Annual Meeting of Stockholders and any adjournments thereof. 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 14, 1999.
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 14, 1999
<PAGE> 3
[UST Corp. Logo]
UST CORP.
40 COURT STREET
BOSTON, MASSACHUSETTS
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 18, 1999
April 14, 1999
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 18, 1999, and at any adjournments thereof, for the
purposes set forth in the foregoing Notice of Annual Meeting.
The close of business on March 26, 1999 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 adjournments thereof.
The financial statements for the Company for the fiscal year ended December
31, 1998, together with corresponding financial information for the previous
fiscal year, are contained in the Annual Report to UST Corp. Stockholders for
the year ended December 31, 1998 (the "Annual Report"), which includes the
Company's Annual Report to the Securities and Exchange Commission ("SEC") on
Form 10-K for the year ended December 31, 1998 (the "10-K Report"). A copy of
each of the Company's Annual Report and 10-K 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 seven (7) nominees for Director positions listed therein and "for" the
approval of the Amendment to the Company's By-Laws. 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 preparation, assembly 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 $5,500, plus out-of-pocket expenses, for such
solicitation. The Company will also provide persons, firms, banks and
corporations holding shares in their names, or in the names of their nominees,
which in either case are beneficially owned by others, with proxy material for
transmittal to such beneficial owners and reimburse such record holders for
their reasonable expenses in so doing. Confidential voting procedures will not
be used in connection with the Annual Meeting, except that votes cast by
employees of the Company and/or its subsidiaries shall be held confidential.
<PAGE> 4
As of March 8, 1999, the Company had outstanding 42,664,732 shares of
common stock, $0.625 par value per share ("Common Stock"), each entitled to one
vote. A majority, or 21,332,367 of such shares, constitutes a quorum for the
Annual Meeting. There are no outstanding shares of Preferred Stock of the
Company.
PERSONS TO BE NOMINATED BY MANAGEMENT
FOR ELECTION AS DIRECTORS
(NOTICE ITEM 1)
Section 50A of Chapter 156B of the Massachusetts General Laws provides for
a Board of Directors of such number as is fixed by the Directors, divided into
three classes as nearly equal in number as possible, serving staggered
three-year terms. The Board of Directors has fixed the number of Directors at
twenty-four (24). The Board of Directors 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 its Nominating Committee, has recommended the seven (7)
nominees listed in the chart below (all of whom are currently Directors) to fill
the seven (7) positions, each of whom, if elected, will hold office for a
three-year term until the 2002 Annual Meeting of Stockholders and until his or
her successor is chosen and qualified. In addition, this recommendation
contemplates that one position on the Board of Directors expiring in 1999 will
remain vacant and may be filled later by the Board of Directors. Unless
otherwise specified, Proxies will be voted in favor of the seven (7) 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.
On March 17, 1998, the Board of Directors, upon the recommendation of the
Nominating Committee, established a mandatory retirement age of seventy (70)
years for members of the Board of Directors. This mandatory retirement age
policy for the Board of Directors does not affect senior officers of the Company
or USTrust, its lead banking subsidiary, who serve on the Board of Directors of
the Company. Each Director who is currently 70 or more years of age will remain
a Director until his or her term of office expires, at which time he or she will
not be eligible to be nominated for re-election. Pursuant to the new policy,
Directors who are currently less than 70 years old and who are re-elected to the
Board will retire on the date of their 70th birthday if they attain age 70
during the course of their term. In accordance with the foregoing policy, three
Directors, Messrs. Jack E. Chappell, Edward J. Sullivan and Gordon M. Weiner are
retiring from the Board of the Company on May 18, 1999, the date of the Annual
Meeting and Sydney L. Miller will retire from the Board on the date of his 70th
birthday, December 8, 1999. Although Mr. Weiner will retire as a Director of the
Company on May 18, 1999, the Company expects to renominate Mr. Weiner as a
Director of the Company's subsidiary, United States Trust Company, to serve a
one year term. Shareholders of the Company are not voting on Mr. Weiner's
election as a Director of United States Trust Company.
2
<PAGE> 5
<TABLE>
<CAPTION>
DIRECTOR OF THE POSITIONS (IN ADDITION TO DIRECTOR OF THE
COMPANY COMPANY), COMMITTEE MEMBERSHIPS AND
NAME (AGE) SINCE OFFICES WITH THE COMPANY AND ITS SUBSIDIARIES
- ---------- --------------- ---------------------------------------------
<S> <C> <C>
Timothy J. Hansberry (55).............. 1998 Vice Chairman and Chief Operating Officer of
the Company, and President and Chief
Operating Officer of USTrust; Member,
Executive and Public Affairs Committees,
Director, USTrust
Brian W. Hotarek (52).................. 1994 Member, Asset Quality and Nominating
Committees
James E. McCobb, Jr. (56).............. 1998 Member, CRA Committee
Vikki L. Pryor (45).................... 1995 Vice Chairman, Audit Committee; Member, CRA
Committee; Director, USTrust
Gerald M. Ridge (70)................... 1982 Chairman, Public Affairs Committee; Member,
Executive, Asset Quality, and Nominating
Committees; Vice Chairman and Director,
USTrust
William Schwartz (66).................. 1981 Chairman of the Board of Directors of the
Company; Chairman, Executive Committee;
Michael J. Verrochi, Jr. (59).......... 1974 Chairman, Nominating Committee; Member,
Executive Committee
</TABLE>
Mr. Hansberry has been Vice Chairman and Chief Operating Officer of the
Company and President and Chief Operating Officer of USTrust since August, 1998.
From April, 1995 to August, 1998 he served as President and Chief Executive
Officer of Affiliated Community Bancorp, Inc., which was acquired by the Company
in 1998. From 1992 to 1995, Mr. Hansberry was President and Chief Executive
Officer of Lexington Savings Bank, which during 1995 became a subsidiary bank of
Affiliated Community Bancorp, Inc. Mr. Hotarek has been Executive Vice President
and Chief Financial Officer of The Stop & Shop Supermarket Company since 1997.
Prior to 1997, he served as Senior Vice President, Real Estate and Development
for The Stop & Shop Supermarket Company. Mr. McCobb is an independent investment
advisor. Prior to August, 1998, Mr. McCobb served as President and Chief
Executive Officer of The Federal Savings Bank and as a Director of that bank's
holding company, Affiliated Community Bancorp, Inc. Ms. Pryor has, since
January, 1999, served as President and Chief Executive Officer of New York
State's Savings Bank Life Insurance Fund. She served as a Senior Vice President
of Oxford Health Plans during 1998. Prior to that time, she served as Senior
Vice President, Customer Operations and Service for Blue Cross/Blue Shield of
Massachusetts in Boston, Massachusetts. Mr. Ridge is a Vice Chairman of USTrust
and President of Blue Hill Cemetery and G. M. Ridge Corporation (athletic club).
Mr. Schwartz is Chairman of the Board of Directors of the Company. Mr. Schwartz
serves as Counsel to the New York, New York law firm of Cadwalader, Wickersham &
Taft. Mr. Schwartz is also a Director of Viacom, Inc. and Viacom International,
Inc., (diversified media, publishing and entertainment holding companies) and
serves as a Member of the Advisory Council of W.C.I. Steel, Inc. (steel
manufacturer). From 1993 to mid-1998, Mr. Schwartz served as Vice President of
Academic Affairs of Yeshiva University, New York, New York. 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.
3
<PAGE> 6
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.
<TABLE>
<CAPTION>
DIRECTOR OF THE POSITIONS (IN ADDITION TO DIRECTOR OF THE COMPANY), TERM OF
COMPANY COMMITTEE MEMBERSHIPS AND OFFICES WITH THE OFFICE
NAME (AGE) SINCE COMPANY AND ITS SUBSIDIARIES WILL EXPIRE
- ---------- --------------- --------------------------------------------------- -----------
<S> <C> <C> <C>
Chester G. Atkins (51)............ 1997 Member, Audit Committee; Director, United States 2001
Trust Company
David E. Bradbury (52)............ 1997 Member, Executive and Asset Quality Committees 2000
Kendrick G. Bushnell (69)......... 1998 Member, Audit Committee 2001
Robert M. Coard (72).............. 1995 Member, CRA Committee and Public Affairs Committee 2000
Robert L. Culver (50)............. 1993 Chairman, Audit Committee and Member, Executive and 2001
Compensation Committees
Alan K. DerKazarian (65).......... 1995 Member, Nominating and Public Affairs Committees 2000
Donald C. Dolben (62)............. 1995 Chairman, Compensation Committee; Member, Asset 2000
Quality and Executive Committees; Director, USTrust
James F. Drew (59)................ 1998 Member, Nominating Committee 2001
Neal F. Finnegan (61)............. 1993 President and Chief Executive Officer of the 2001
Company and Chairman 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 S. Heald (52).............. 1998 Member, Nominating Committee 2000
Francis X. Messina (73)........... 1988 Member, Compensation and CRA Committees; Director, 2000
USTrust
Sydney L. Miller (69)............. 1995 Chairman, CRA Committee; Member, Executive and December 8,
Audit Committees 1999
Barbara C. Sidell (65)............ 1995 Member, Asset Quality Committee; Director, United 2001
States Trust Company
James V. Sidell (68).............. 1967 Member, Public Affairs Committee 2000
Paul D. Slater (64)............... 1980 Chairman, Asset Quality Committee; Vice Chairman, 2001
Compensation Committee; Member, Executive
Committee; Director, USTrust
G. Robert Tod (59)................ 1997 Member, Nominating Committee 2000
</TABLE>
Mr. Atkins is a Partner of ADS Ventures, Inc. of Concord, Massachusetts
(strategic marketing and related advisory services). Mr. Atkins is also a former
United States Congressman from the 5th Congressional District of Massachusetts.
Mr. Bradbury is the President of Walden Partners, Inc. (a private investment
company). Mr. Bradbury was formerly the Chairman of the Board, President, and
Chief Executive Officer of Walden Bancorp, Inc. which was acquired by the
Company in 1997. Mr. Bushnell is a management consultant who served as a
Director of Affiliated Community Bancorp, Inc. until it was acquired by the
Company in 1998 and as Chairman of the Board of Lexington Savings Bank, a
subsidiary bank of Affiliated Community Bancorp, Inc. Mr. Coard is President and
Chief Executive Officer of Action for Boston Community Development, Inc. Mr.
Culver has served as Executive Vice President and Chief Financial Officer of
Cabot Corporation (manufacturer of carbon black and other chemical products)
since March, 1997. Prior to that
4
<PAGE> 7
time, Mr. Culver served as Senior Vice President and Treasurer of Northeastern
University in Boston, Massachusetts. Dr. DerKazarian is a practicing
periodontist. Dr. DerKazarian also serves as Vice President of Dental Management
Systems Inc. and Dental Services P.C. of Cambridge, Massachusetts. Mr. Dolben is
a Realtor and serves as Chairman of The Dolben Company, Inc., and President of
William H. Dolben & Sons, Inc. Mr. Drew is President of Drew Management Company
and a consultant with the Massachusetts-based accounting firm of O'Connor &
Drew, P.C. Mr. Finnegan is President and Chief Executive Officer of UST Corp.
Mr. Finnegan is also Chairman 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. Mr. Finnegan
also serves as Chairman of the Board of Trustees of Northeastern University. Mr.
Heald is Corporate Vice President and Branch Manager of the Newton,
Massachusetts office of A.G. Edwards & Company (securities brokerage). Mr.
Messina serves as President of Wildwood Estates of Braintree, Inc. (real estate
development, management and leasing) and as President of F.X. Messina
Construction Corp. (general contracting and construction). Mr. Miller is
President of Harry Miller Co., Inc. and W.E. Palmer Company (manufacturers of
industrial canvas products) and serves as trustee for two real estate trusts.
Ms. Sidell is an attorney who has served as a Director of various subsidiaries
of the Company since 1969. Mr. Sidell is a private investor. From 1967 to April,
1993, Mr. Sidell served as President and Chief Executive Officer of the Company.
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. Tod is a private investor who serves as a Director
of SCI Systems, Inc. of Huntsville, Alabama (electronic equipment manufacturer),
and EG&G, Inc. of Wellesley, Massachusetts (scientific instruments
manufacturer). Prior to June, 1998 Mr. Tod served as President and Chief
Operating Officer of the CML Group, Inc. (a retailer of specialty items,
including Nordic Track products) located in Acton, Massachusetts. CML Group,
Inc. filed a voluntary petition for relief under Chapter 11 of the Federal
Bankruptcy Code in December, 1998.
Except as indicated above, each Director has been employed during the past
five years in his or her respective positions.
In case any person or persons named herein for election as a Director is or
are not available for election at the Annual Meeting, Proxies in the
accompanying form may be voted for a substitute nominee or nominees, as well as
(in the absence of contrary instructions) for the balance of those named herein.
Other than as noted in the following sentence, the Board of Directors has no
reason to believe that any of the nominees for election as Directors will be
unavailable. Pursuant to the retirement policy, Directors who are currently less
than 70 years old and who are re-elected to the Board will retire on the date of
their 70th birthday when they attain age 70 during the course of their term.
Accordingly, Mr. Sydney L. Miller who will attain age 70 during the course of
the term to which he was elected at the 1998 Annual Meeting of Stockholders,
will retire on the date of his 70th birthday, December 8, 1999.
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, Directors of USTrust and
Directors of United States Trust 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 once in
1998. The current members of the Executive Committee are Mr. Schwartz
(Chairman), Mr. Bradbury, Mr. Culver, Mr. Dolben, Mr. Finnegan, Mr. Hansberry,
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
5
<PAGE> 8
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 eleven
meetings of the Audit Committee during 1998. Mr. Culver serves as Chairman and
Ms. Pryor serves as Vice Chairman of the Committee. Mr. Atkins, Mr. Bushnell and
Mr. Miller also currently serve on the Audit Committee. During 1998, former
Directors of the Company Jack E. Chappell and Gordon M. Weiner, who are retiring
from the Board of the Company at this Annual Meeting, also served on the Audit
Committee.
The Compensation Committee has four members. Mr. Dolben serves as Chairman
and Mr. Slater serves as Vice Chairman of the Committee. Mr. Culver and Mr.
Messina also currently serve on the Committee. During 1998 former Director of
the Company Mr. Weiner, who is retiring from the Board of the Company at this
Annual Meeting, also served on the Compensation 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 five times in 1998.
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 1998. Mr. Verrochi (Chairman), Dr. DerKazarian, Mr.
Drew, Mr. Finnegan, Mr. Heald, 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 2000 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 November 30, 1999 and
include sufficient biographical material to permit an appropriate evaluation.
The Company's Community Reinvestment Committee's current members are Mr.
Miller (Chairman), Mr. Coard, Mr. Domenic Colasacco (Director of United States
Trust Company), Mr. John C. Doody (Director of USTrust), Mr. McCobb, Mr.
Messina, Ms. Pryor and Mr. Arthur F.F. Snyder (Director of United States Trust
Company). The Committee held no meetings in 1998. 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 meet
the credit-related needs of the local communities served by the Company's
banking subsidiaries.
The Board also has an Asset Quality Committee which oversees management's
efforts to keep the Company's non-performing assets at a low level. The
Committee met nine times in 1998. It is chaired by Mr. Slater and its members
include Mr. Bradbury, Mr. Dolben, Mr. Hotarek, Mr. Ridge, Ms. Sidell and
Patricia M. Flynn (a Director of USTrust). During 1998, Edward J. Sullivan who
is retiring from the Board of the Company at this Annual Meeting, served on the
Asset Quality Committee.
In 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 met once in
1998. It is chaired by Mr. Ridge and its members include Mr. Coard, Dr.
DerKazarian, Mr. Hansberry and Mr. Sidell. During 1998 Edward J. Sullivan, who
is retiring from the Board of the Company at this Meeting, served on the Public
Affairs Committee.
During 1998, there were twelve meetings of the Board of Directors of the
Company. No Director attended fewer than 75% of the aggregate number of meetings
of the Board of Directors and of the committees of the Board of Directors on
which he or she served.
6
<PAGE> 9
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 an annual stipend
which in 1998 was $15,000. Furthermore, a Director receives up to a maximum of
$6,000 annually in meeting fees. Meeting fees are reduced by the percentage of
meetings which the Director was eligible to attend, but did not attend. For
example, should a Director of the Company who is also a USTrust Director and is
eligible to attend 20 Board meetings (12 plus 8) miss 5 meetings of the 20, the
Director would receive $4,500 rather than the full $6,000 of meeting fees. On
the other hand, if the Director were a Director of the Company only, and
attended 8 of those 8 scheduled meetings the Director would receive a full
$6,000 in meeting fees. Furthermore, in 1998, Directors (other than full-time
employees of the Company) received the following additional committee fees:
<TABLE>
<S> <C> <C>
i) Executive Committee....................... $250 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) Community Reinvestment 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 1998 for his services as Chairman of the Board of
Directors. In 1998, 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 the Company's stockholders. Pursuant to that Plan,
outside Directors of the Company and USTrust received options to acquire shares
at the market price ($12.875) on the date of the meeting, May 16, 1995. Options
were granted as follows: individuals who were Directors of both the Company and
USTrust received 7,500 options; individuals who were 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 vested during 1997. 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 the 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 in
shares of Common Stock of the Company.
7
<PAGE> 10
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 defined in the rules and regulations of the Securities
and Exchange Commission (the "Named Executive Officers"). Except for the
information regarding individual stock option exercises, all the data regarding
values for stock options and grants of Restricted Common Stock are hypothetical
in terms of the amounts that an individual may or may not receive because such
amounts are contingent on continued employment by the individual with the
Company and are based on the price of the Common Stock as of the particular
reference date. All 1998 year-end values shown in these tables for outstanding
Common Stock options and restricted Common Stock ("Restricted Common Stock")
shares reflect a $23.5625 price, which was the closing price of the Common Stock
on December 31, 1998, 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:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
AWARDS
ANNUAL ------------------------
COMPENSATION RESTRICTED SECURITIES
---------------------------- STOCK UNDERLYING ALL OTHER
SALARY BONUS AWARD(S) OPTIONS/ COMPENSATION
YEAR $ $ ($)(A) SARS(#) ($)(B)
---- -------- -------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Neal F. Finnegan(C)........ 1998 $536,431 $520,000 $ -- -- $ 6,400
President and Chief
Executive 1997 $494,128 $380,000 $219,375 50,000 $11,659
Officer of the Company 1996 $374,358 $360,000 $ -- -- $ 5,049
Timothy J. Hansberry(D).... 1998 $296,531 $120,000 $352,500 30,000 $ 4,000
Vice Chairman and Chief 1997 $ -- --
Operating Officer of the 1996 $ -- --
Company
James K. Hunt(E)........... 1998 $261,897 $120,000 $287,344 15,000 $ 5,600
Executive Vice President 1997 $237,302 $ 80,000 $188,906 10,000 $ 6,859
and Chief Financial 1996 $211,476 $ 80,000 $ 66,300 37,500 $ 2,049
Officer of the Company
Robert T. McAlear(F)....... 1998 $241,669 $ 75,000 $ 74,063 10,000 $ 6,400
Executive Vice President/ 1997 $217,071 $ 40,000 $ -- 10,000 $11,659
Consumer Lending and 1996 $214,486 $ 65,000 $ -- 32,500 $ 5,049
Acquisition Integration
of the Company
Kathie S. Stevens(G)....... 1998 $210,492 $ 60,000 $ 74,063 10,000 $ 6,400
Executive Vice President/ 1997 $211,162 $ 30,000 $ -- 10,000 $11,659
Commercial Lending 1996 $202,579 $ 50,000 $ -- 12,500 $ 5,049
and Controlled Loans
of the Company
</TABLE>
8
<PAGE> 11
- ---------------
(A) As of December 31, 1998, each of the Named Executive Officers held the
following number of shares of Restricted Common Stock having the
corresponding year-end market value:
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1998
-----------------------
TOTAL
NUMBER AGGREGATE
OF RESTRICTED MARKET
NAME SHARES HELD VALUE
- ---- ------------- ---------
<S> <C> <C>
Neal F. Finnegan..................................... 25,800 $607,913
Timothy J. Hansberry................................. 15,000 $353,438
James K. Hunt........................................ 13,600 $320,450
Robert T. McAlear.................................... 2,000 $ 47,125
Kathie S. Stevens.................................... 2,000 $ 47,125
</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. The grants to Mr. Finnegan vest over periods
which vary from two to five years and are subject to acceleration in the
event of a "change of control" of the Company. The grant to Mr. Hansberry
vests over a period of two and one half years. The grants to Mr. Hunt vest
over periods which vary from two to two and one-half years. The grants to
Mr. McAlear and Ms. Stevens vest over a period of two years.
(B) The amounts reported for 1998 for each of the Named Executive Officers
consist of allocations under the Company's Employee Savings Plan as
indicated below:
<TABLE>
<CAPTION>
EMPLOYEE
NAME SAVINGS PLAN
- ---- ------------
<S> <C>
Neal F. Finnegan............................................ $6,400
Timothy J. Hansberry........................................ $4,000
James K. Hunt............................................... $5,600
Robert T. McAlear........................................... $6,400
Kathie S. Stevens........................................... $6,400
</TABLE>
As of December 31, 1997, the Company's Employee Stock Ownership Plan was
merged into the Company's Employee Savings Plan and accordingly, no
allocations under the Employee Stock Ownership Plan were made for 1998.
Amounts allocated to Mr. Hansberry for 1998 under the Lexington Savings
Bank Employee Stock Ownership Plan have not, as of the date hereof, been
determined by the Company's actuarial consultants.
(C) The Company entered into a restated and amended Employment Agreement with
Mr. Finnegan, effective January 1, 1999 and ending December 31, 2001, under
which Mr. Finnegan receives a base salary of $600,000, subject to
discretionary increases. In addition, on January 4, 1999, Mr. Finnegan was
granted a total of 360,000 fully vested stock options, with a per share
exercise price of $23.6875, the fair market value on January 4, 1999, and
10,000 shares of Restricted Common Stock which vest over a two year period.
See "Employment Agreements." Mr. Finnegan's base salary was $520,000 in
1998, $480,000 in 1997 and $360,000 in 1996.
(D) Mr. Hansberry became Vice Chairman and Chief Operating Officer of the
Company and President and Chief Operating Officer of USTrust in August,
1998, following the acquisition by the Company of Affiliated Community
Bancorp, Inc., the bank holding company for which Mr. Hansberry had served
as a Director and President and Chief Executive Officer. Cash compensation
paid to Mr. Hansberry for services rendered to Affiliated Community Bancorp,
Inc. in 1998 is included in the above table. Of the amounts reported for
1998, $204,171 of Mr. Hansberry's salary was paid by Affiliated Community
Bancorp, Inc. and the balance of each item was paid by the Company. Mr.
Hansberry entered into an Employment Agreement with the Company, effective
August 10, 1998 for an initial term ending on January 4, 2000, automatically
renewing for a first renewal term expiring on August 9, 2001, and thereafter
continuing to run year-to-year unless terminated in writing by either party
upon 60-days notice. See "Employment Agreements."
9
<PAGE> 12
(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-days notice. See "Employment
Agreements."
(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-days notice. See "Employment Agreements."
(G) Ms. Stevens 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-days notice. See "Employment Agreements."
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 Common Stock Awards or a combination of the foregoing as a means
through which the Company seeks to attract and retain highly qualified employees
and attract and encourage able persons to enter into and remain in the Company's
and its subsidiaries' employ. The Plan is designed to encourage key employees of
the Company and its subsidiaries to acquire and maintain stock ownership,
thereby strengthening their commitment to the welfare of the Company and
promoting the identity of interests between stockholders and key employees.
The following table provides details regarding stock options granted to the
Named Executive Officers in 1998 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
1998 for the Named Executive Officers. These gains are based on assumed rates of
annual compound stock price appreciation of 0%, 5% and 10% from the date the
options were granted over the full option term.
OPTION GRANTS IN 1998
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------
NUMBER OF % POTENTIAL REALIZABLE VALUE
SECURITIES OF TOTAL MARKET AT ASSUMED ANNUAL RATES
UNDERLYING OPTIONS VALUE ON OF STOCK PRICE APPRECIATION
OPTIONS GRANTED TO EXERCISE GRANT FOR OPTION TERM(C)
GRANTED EMPLOYEES PRICE DATE EXPIRATION ---------------------------
(#)(A) IN 1998 ($/SH.) ($/SH.)(B) DATE 0% 5% 10%
---------- ---------- -------- ---------- ---------- --- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Neal F. Finnegan........... -- -- -- -- -- -- -- --
Timothy J. Hansberry....... 30,000 11.93% $23.5000 $23.5000 8/10/08 -- $443,371 $1,123,588
James K. Hunt.............. 15,000 5.96% $24.6875 $24.6875 1/13/08 -- $232,888 $ 590,183
Robert T. McAlear.......... 10,000 3.98% $24.6875 $24.6875 1/13/08 -- $155,258 $ 393,455
Kathie S. Stevens.......... 10,000 3.98% $24.6875 $24.6875 1/13/08 -- $155,258 $ 393,455
</TABLE>
- ---------------
(A) The options set forth above vested immediately as of the date of the grant.
(B) Fair market value of Common Stock on the date of the grant.
(C) Realizable value represents the difference between the assumed stock price
at the expiration date and the exercise price.
10
<PAGE> 13
The following table shows stock option exercises by the Named Executive
Officers during 1998, 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, 1998. 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 $23.5625.
AGGREGATED OPTION EXERCISES IN 1998 AND
YEAR-END 1998 OPTION VALUES
<TABLE>
<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........... 80,800 $1,048,396 338,534 16,666 $3,952,861 $54,165
Timothy J. Hansberry....... -- -- 116,609 -- $1,244,917 --
James K. Hunt.............. -- -- 70,500 -- $ 517,148 --
Robert T. McAlear.......... -- -- 71,700 -- $ 607,075 --
Kathie S. Stevens.......... 15,000 $ 190,625 75,200 -- $ 756,981 --
</TABLE>
RETIREMENT BENEFITS
The following table presents the years of service to the Company (and, if
applicable, years of service rendered to a financial institution or other
business entity acquired by the Company) and the 1998 remuneration covered by
the Company's Pension Plan and Supplemental Retirement Benefit Plan for the five
Named Executive Officers with regard to whom information is provided in the
Executive Compensation Table.
<TABLE>
<CAPTION>
CURRENT COVERED
YEARS OF SERVICE REMUNERATION
---------------- ------------
<S> <C> <C>
Neal F. Finnegan........................... 6 $520,000
Timothy J. Hansberry....................... 6 $255,000
James K. Hunt.............................. 5 $250,000
Robert T. McAlear.......................... 8 $230,000
Kathie S. Stevens.......................... 13 $200,000
</TABLE>
11
<PAGE> 14
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.
<TABLE>
<CAPTION>
YEARS OF SERVICE
-----------------------------------
BASE SALARY 15 20 25 AND OVER
- ----------- -------- -------- -----------
<C> <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
500,000 ................................ 150,000 200,000 250,000
600,000 ................................ 180,000 240,000 300,000
</TABLE>
To the extent that benefits cannot be provided under the Pension Plan or
certain other retirement plans of the Company because of the limitations imposed
by Sections 415 and 401(a)(17) of the Internal Revenue Code on the amount of
such benefits payable, any balance of benefits otherwise payable under such
plans will be provided by the Company to eligible officers pursuant to a
Supplemental Retirement Benefit Plan adopted by the Board of Directors. As of
December 31, 1998, all individuals named in the Summary Compensation Table were
covered by the Supplemental Retirement Benefit Plan. In addition, all
individuals named in the Summary Compensation Table were covered by the Senior
Executive Plan which is a supplemental retirement plan that provides a maximum
benefit equal to 50% of five year average compensation. For purposes of this
plan, compensation includes salary, certain cash payments and certain Restricted
Stock bonus payments.
COMPENSATION COMMITTEE REPORT
COMPENSATION PHILOSOPHY
This Report reflects the Company's compensation philosophy and resulting
actions taken by the Company for 1998, as shown in the various compensation
tables above. The Compensation Committee either approves or recommends to the
Board of Directors salary and bonus amounts and stock 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 Executive Officers based upon corporate, business
unit and individual performance; (ii) motivate Executive 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 1998, executive compensation was composed of base salary, discretionary
annual incentive awards, long-term incentive opportunities in the form of stock
options and Restricted Common Stock, and benefits typically offered to
executives by the Company's peer group competitors. Generally, 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
12
<PAGE> 15
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 analyses conducted by Executive
Alliance, the Company's independent employee 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
such other scope criteria; (ii) 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; and (iii)
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 peer company data analyses used to
establish salary ranges are to be used to calibrate incentive earning potential.
Performance goals may be set at levels which approximate the 75th percentile of
total compensation; and the annualized value of long-term incentive targets
shall be 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 will be used to calibrate
long-term incentive earning potential. Performance goals may be set at levels
which approximate the 75th percentile of competitive total direct compensation
values.
The Compensation Committee has granted substantial stock compensation to
Mr. Finnegan and the other Named Executive Officers in order to align more
closely the economic interests of these officers with those of the Company's
stockholders.
GENERAL BACKGROUND
The Five-Year Stockholder Return comparison, which is found at the end of
the discussion of Compensation of Executive Officers, reflects the five-year
performance (including reinvestment of dividends) of the Company's Common Stock
as compared to the Keefe, Bruyette & Woods ("KBW") New England Bank Index and
the Standard & Poor's 500 Index.
The following is a discussion of the Compensation Committee's bases for Mr.
Finnegan's compensation reported for 1998, and its general policies with respect
to the other Named Executive Officers in the Summary Compensation Table. Mr.
Finnegan served as Chief Executive Officer throughout 1998.
SALARY
The Compensation Committee increased Mr. Finnegan's base salary from
$480,000 to $520,000 effective January 1, 1998. Based upon comparative analyses
of approximately 15 similarly-sized regional and national bank holding companies
provided to the Compensation Committee and advice provided by Executive Alliance
his base salary was increased to $600,000 effective January 1, 1999 to be
competitive with the base salaries of Chief Executive Officers of the banks and
bank holding companies analyzed. The increase is referenced in a restated and
amended three-year Employment Agreement with the Company effective January 1,
1999. (See "Employment Agreements".)
1998 CASH BONUS AWARDS
Mr. Finnegan received a $520,000 cash bonus in early 1999 to reflect his
performance during 1998 (which is reflected in the Summary Compensation Table),
based upon a determination of the Compensation Committee, considering the
financial performance of the Company as measured according to the Annual
Incentive Plan adopted by the Company in 1998. Under the matching contribution
feature of UST Corp.'s Employee Savings Plan, Mr. Finnegan also received an
aggregate contribution of $6,400 for 1998.
13
<PAGE> 16
1998 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 Common Stock Bonus Award Program permits the granting
of awards of Restricted Common Stock. 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. The options vested in 1997. As
part of an amendment and to reflect a one year extension of his employment
agreement in 1997, Mr. Finnegan also received a 10,800 share Restricted Common
Stock bonus in early 1997 which provides him with Restricted Common Stock for
the additional year of his contract on a basis consistent with the prior years
of his contract period. No options or Restricted Common Stock were granted to
Mr. Finnegan in 1998. On January 4, 1999, Mr. Finnegan was granted 360,000 fully
vested options to acquire the Company's Common Stock at an exercise price of
$23.6875 per share and 10,000 shares of Restricted Common Stock, which vests
over a two year period. (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 monitored the impact of this law over the past
several years and has taken 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. As a result
of the foregoing, the Compensation Committee recommended to, and the Board of
Directors approved the Company's new Annual Incentive Plan which addresses the
foregoing tax considerations. The stockholders approved the new Annual Incentive
Plan at the Annual Meeting held on May 19, 1998.
This Report was submitted by the Compensation Committee which is comprised
of the following Directors, none of whom is a full-time employee of the Company
or any of its subsidiaries:
Donald C. Dolben, Chairman
Paul D. Slater, Vice Chairman
Robert L. Culver
Francis X. Messina
Gordon M. Weiner
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1998, the following persons served for a portion or all of the year
on the Compensation Committee: Robert L. Culver, Donald C. Dolben, Francis X.
Messina, Paul D. Slater and Gordon M. Weiner.
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 1998. 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 New England states and ranging in asset size from approximately $520
million to $10 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 mid-sized 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.
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
[COMPARISON GRAPH]
<TABLE>
<CAPTION>
STANDARD AND POOR'S 500 KBW NEW ENGLAND BANK
UST CORP. INDEX INDEX
--------- ----------------------- --------------------
<S> <C> <C> <C>
'1993' 100.00 100.00 100.00
'1994' 96.47 101.36 100.67
'1995' 136.94 139.31 157.13
'1996' 198.16 171.21 217.03
'1997' 271.58 228.26 373.11
'1998' 235.83 293.36 344.79
</TABLE>
15
<PAGE> 18
EMPLOYMENT AGREEMENTS
Mr. Finnegan, President and Chief Executive Officer of the Company, entered
into a restated and amended three year Employment Agreement with the Company
effective January 1, 1999. Under the terms of the Agreement, Mr. Finnegan is
paid a base salary of $600,000 per annum, subject to discretionary increases, is
eligible for discretionary bonuses and is entitled to those fringe benefits made
available to other senior executives of the Company. Under the Agreement, Mr.
Finnegan received on January 4, 1999 an aggregate of 10,000 shares of Restricted
Common Stock which vest over a two year period and an aggregate of 360,000 fully
vested options to acquire the Company's Common Stock at the exercise price of
$23.6875 per share, the fair market value of the Common Stock on January 4,
1999. On the first and second anniversaries of the Agreement, Mr. Finnegan will
be granted 10,000 additional shares of Restricted Common Stock. The restrictions
on these shares will lapse over a two-year period from the date of the
respective grant. The Agreement also provides Mr. Finnegan with up to five
additional years of service under the Company's Senior Executive Plan. Mr.
Finnegan has agreed to non-competition and non-solicitation provisions in the
Agreement. In addition, in the event of his termination by the Company other
than for cause or by Mr. Finnegan for good reason (exclusive of a
change-in-control) he will receive an amount equal to the sum of: twenty-four
months base salary, two times his short term incentive compensation for the full
calendar year immediately preceding his termination; up to twenty-four months
continuation of healthcare benefits (or cash equivalent); full option
acceleration; and the lapse of restrictions on all Restricted Common Stock. In
the event of such termination following a change-in-control, Mr. Finnegan will
receive: thirty-six months base salary; three times his short term incentive
compensation for the full calendar year immediately preceding his termination;
up to thirty-six months continuation of healthcare benefits (or cash
equivalent); and the vesting of any Restricted Common Stock or stock options
will be in accordance with the Company's Stock Compensation Plan.
Notwithstanding the preceding, the total amounts payable to Mr. Finnegan
resulting from a change-in-control will be limited to the maximum amount that is
deductible by the Company under Section 280G of the Internal Revenue Code.
Mr. Hansberry, Vice Chairman and Chief Operating Officer of the Company and
President and Chief Operating Officer of USTrust, entered into an Employment
Agreement effective August 10, 1998 for an initial term ending on January 4,
2000, and thereafter automatically renewing for a first renewal term expiring on
August 9, 2001 (unless the Company at its option elects to extend the first
renewal term beyond August 9, 2001), and thereafter renewing annually unless
notice of non-renewal is given by either party at least 60 days prior to the
expiration of the first renewal term or any subsequent renewal term. Under the
terms of the Agreement, Mr. Hansberry is paid a base salary of $325,000 per
annum subject to discretionary increases, is eligible for bonuses under the
Company's Annual Incentive Plan for Executives, and is entitled to those fringe
benefits made available to other senior executives of the Company. Under the
Agreement, Mr. Hansberry has received an aggregate of 15,000 shares of
Restricted Common Stock which vest over a period ending on January 2, 2001 and
an aggregate of 30,000 fully vested options to acquire the Company's Common
Stock at the exercise price of $23.5000 per share, the fair market value of the
Common Stock on August 10, 1998. On January 8, 1999, Mr. Hansberry was granted
30,000 stock options at an exercise price of $23.375 per share, the fair market
value of the Common Stock on that date. Mr. Hansberry has agreed to
non-competition and non-solicitation provisions in the Agreement. In addition,
in the event of his termination by the Company other than for cause or by Mr.
Hansberry for good reason (exclusive of a change-in-control), he will receive
eighteen months base salary, any bonus awarded, but not yet paid, and up to
eighteen months continuation of healthcare benefits (or cash equivalent). In the
event of such termination following a change-in-control, Mr. Hansberry will
receive 2.99 times his "base amount" as defined in Section 280G(b)(3) of the
Internal Revenue Code, exclusive of his W-2 earnings resulting from the exercise
of stock options, any bonus awarded, but not yet paid, up to eighteen months
continuation of healthcare benefits (or cash equivalent), and the vesting of any
Restricted Common Stock or stock options will be in accordance with the
Company's Stock Compensation Plan. Notwithstanding the preceding, the total
amounts payable to Mr. Hansberry resulting from a change-in-control will be
limited to the maximum amount that is deductible by the Company under Section
280G of the Internal Revenue Code.
16
<PAGE> 19
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-days
notice. Under the terms of the Employment Agreement, Mr. Hunt is paid a base
salary of $250,000 per annum, is eligible for discretionary bonuses and is
entitled to fringe benefits made available to senior executives. Through
December 31, 1998, Mr. Hunt has also received an aggregate of 38,100 shares of
Restricted Common Stock and aggregate options to purchase 87,500 shares of the
Company's Common Stock at an average purchase price of $15.34 per share. On
January 8, 1999, Mr. Hunt was granted 30,000 stock options, priced at $23.375,
the fair market value of the Common Stock on that date. 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, as
amended on December 17, 1996, in the event there is a change-in-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.
In addition, in the event of his termination by the Company other than for cause
(exclusive of a change-of-control), or by Mr. Hunt for good reason, he will
receive twelve months base salary, an amount equal to the bonus which Mr. Hunt
earned for performance during the calendar year immediately preceding his date
of termination, and up to twelve months continuation of healthcare benefits (or
cash equivalent). In the event of such termination following a change-
in-control, Mr. Hunt will receive twenty-four months base salary, an amount
equal to the bonus which Mr. Hunt earned for performance during the prior
calendar year, and up to twenty-four months continuation of healthcare benefits
(or cash equivalent) and any then unvested Restricted Common Stock or stock
options will vest in accordance with the Company's Stock Compensation Plan.
Mr. McAlear, Executive Vice President/Consumer Lending and Acquisition
Integration of the Company and Vice Chairman of USTrust, entered into a two-year
Employment Agreement with the Company, dated February 1, 1996, which thereafter
continues year-to-year unless terminated in writing by either party upon 60-days
notice. Under the terms of the Employment Agreement, Mr. McAlear is paid a base
salary of $230,000 per annum subject to discretionary increases, is eligible for
discretionary bonuses and is entitled to fringe benefits made available to
senior executives. Through December 31, 1998, Mr. McAlear has also received an
aggregate of 12,000 shares of Restricted Common Stock and aggregate options to
purchase 98,550 shares of the Company's Common Stock at an average purchase
price of $13.17 per share. On January 8, 1999, Mr. McAlear was granted 10,500
stock options, priced at $23.375, the fair market value of the Common Stock on
that date. 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, as amended on December 17, 1996, in the event
there is a change-in-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. In addition,
in the event of his termination by the Company other than for cause (exclusive
of a change-of-control), or by Mr. McAlear for good reason, he will receive
twelve months base salary, an amount equal to the bonus which Mr. McAlear earned
for performance during the calendar year immediately preceding his date of
termination, and up to twelve months continuation of healthcare benefits (or
cash equivalent). In the event of such termination following a
change-in-control, Mr. McAlear will receive twenty-four months base salary, an
amount equal to the bonus which Mr. McAlear earned for performance during the
prior calendar year, and up to twenty-four months continuation of healthcare
benefits (or cash equivalent) and any then unvested Restricted Common Stock or
stock options will vest in accordance with the Company's Stock Compensation
Plan.
Ms. Stevens, Executive Vice President/Commercial Lending and Controlled
Loans of the Company and Vice Chairman of USTrust, entered into a two-year
Employment Agreement with the Company, dated February 1, 1996, which thereafter
continues year-to-year unless terminated in writing by either party upon 60-days
notice. Under the terms of the Employment Agreement, Ms. Stevens is paid a base
salary of $200,000 per annum subject to discretionary increases, is eligible for
discretionary bonuses and is entitled to fringe
17
<PAGE> 20
benefits made available to senior executives. Through December 31, 1998, Ms.
Stevens has also received an aggregate of 15,000 shares of Restricted Common
Stock and aggregate options to purchase 117,050 shares of the Company's Common
Stock at an average purchase price of $11.97 per share. On January 8, 1999, Ms.
Stevens was granted 10,500 stock options, priced at $23.375, the fair market
value of the Common Stock on that date. Under the terms of the Employment
Agreement, Ms. Stevens has also agreed to certain non-solicitation and
confidentiality provisions. In addition, under the Employment Agreement, as
amended on December 17, 1996, in the event there is a change-in-control of the
Company (as defined in the Employment Agreement) and Ms. Stevens is not offered
continued employment in a similar position with the successor entity, Ms.
Stevens will be entitled to a severance payment equal to two times the sum of
(i) her then current annual base salary for the then most recent year plus (ii)
an amount equal to the bonus which Ms. Stevens earned for performance during the
previous calendar year. In addition, in the event of her termination by the
Company other than for cause (exclusive of a change-of-control), or by Ms.
Stevens for good reason, she will receive twelve months base salary, an amount
equal to the bonus which Ms. Stevens earned for performance during the calendar
year immediately preceding her date of termination, and up to twelve months
continuation of healthcare benefits (or cash equivalent). In the event of such
termination following a change-in-control, Ms. Stevens will receive twenty-four
months base salary, an amount equal to the bonus which Ms. Stevens earned for
performance during the prior calendar year, and up to twenty-four months
continuation of healthcare benefits (or cash equivalent) and any then unvested
Restricted Common Stock or stock options will vest in accordance with the
Company's Stock Compensation Plan.
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 1998.
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 1999. 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 has 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.
TO APPROVE, UPON THE RECOMMENDATION OF THE BOARD,
AN AMENDMENT TO THE COMPANY'S BY-LAWS
(NOTICE ITEM 2)
In January, 1999 the Board of Directors of the Company voted unanimously to
recommend to the Company's stockholders that Article I, Section 1 of the
Company's By-Laws be amended to change the date of the Company's Annual Meeting
of Stockholders from the third Tuesday in May to the third Tuesday in April;
commencing in the Year 2000. Should this Proposal be approved at this Meeting,
the Annual Meeting of the Company's stockholders in the Year 2000 would be held
on April 18, 2000.
Although the Board of Directors characterizes the proposed Amendment to the
By-laws as a procedural matter, the Board considers the Amendment to the
Company's By-Laws as necessary and desirable for the following reasons:
(i) The Board believes that the earlier Annual Meeting date will
improve the efficiency and effectiveness of the Board in addressing
customary and other year-end Company business, such as the election of
officers and addressing matters involving the Company's subsidiaries, by
closely coordinating the timing of the Annual Meeting of Stockholders with
the Annual Meeting of the Board of Directors. Based on the current meeting
schedule, the Board now holds eight rather than twelve regular meetings
18
<PAGE> 21
during each year and is not scheduled to meet during the month of May.
Therefore, (if the Company continued to hold the Annual Meeting of
Stockholders in May) the Annual Meeting of the Board of Directors (always
held after the Annual Meeting of Stockholders) would not be held until
June, a full month after the Annual Meeting of Stockholders. By adopting
the new date, however, Annual Meetings of the Stockholders and Directors
may in fact be held on the same day.
(ii) The change in the Annual Meeting would also better coordinate the
Company's presentation to its stockholders with the completion and
publication of the Company's year-end financial statements and Securities
and Exchange Commission filings.
Should the Proposal be adopted by the Company's Stockholders, Article I,
Section I of the By-Laws of the Company would be amended to read in its entirety
as follows:
"1. ANNUAL MEETING. The annual meeting of stockholders shall be
held on the third Tuesday in April in each year (or if that be a legal
holiday in the place where the meeting is to be held, on the next
succeeding full business day) at 11:00 o'clock A.M. unless a different
hour is fixed by the Directors or the President and stated in the
notice of the meeting. The purposes for which the annual meeting is to
be held, in addition to those prescribed by law, by the Articles of
Organization or by these By-Laws, may be specified by the Directors or
the President. If no annual meeting is held in accordance with the
foregoing provisions, a special meeting may be held in lieu thereof,
and any action taken at such meeting shall have the same effect as if
taken at the annual meeting."
RECOMMENDATION OF YOUR BOARD OF DIRECTORS TO VOTE "FOR" THIS PROPOSAL
The Board of Directors believes that the adoption of the proposed Amendment
to the Company's By-Laws will promote the interests of the Company and its
stockholders. Proxies solicited by the Board of Directors will be voted in favor
of the Proposal unless stockholders specify otherwise.
To approve the Amendment to change the date of the Annual Meeting from the
third Tuesday in May to the third Tuesday in April, the vote of the holders of a
majority of the shares present or represented and entitled to vote on the
Proposal at the Annual Meeting is required. An abstention will have the effect
of a vote against the Proposal, while a broker non-vote (i.e., shares held by
brokers or nominees as to which (i) instructions have not been received from the
beneficial owners and (ii) the broker or nominee does not have the discretionary
authority to vote on a particular matter) will have no effect on the outcome.
ACTION TO BE TAKEN -- OTHER BUSINESS
(NOTICE ITEM 3)
As of the date of this Proxy Statement, the Board of Directors does not
intend to present at the Annual Meeting any business other than the two specific
items listed in the notice, and it has not been informed of any business
intended to be presented by others. Should any other matters, however, properly
come before the meeting, the persons named in the enclosed Proxy will take
action, and vote Proxies, in accordance with their judgment on such matters.
Action may be taken on the business to be transacted at the meeting on the
date specified in the Notice of Annual Meeting or on any date or dates to which
such meeting may be adjourned.
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<PAGE> 22
SECURITY OWNERSHIP OF MANAGEMENT
Other than Franklin Mutual Advisers, Inc., which reported beneficial
ownership as of December 31, 1998 of 6.1% of the Company's Common Stock, as of
March 1, 1999, the Company was unaware of any stockholder or related group of
stockholders which beneficially owned more than five percent of the Company's
Common Stock.
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 Named
Executive Officer in the Summary Compensation Table above and by all Directors
and Officers of the Company as a group, as of March 1, 1999. 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.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL DEFERRED PERCENT OF
NAME OWNERSHIP(1) PLAN(2) TOTAL CLASS
- ---- ------------ -------- ----- ----------
<S> <C> <C> <C> <C>
Chester G. Atkins................. 13,911(3) 13,911 *
David E. Bradbury................. 319,525(4) 319,525 *
Kendrick G. Bushnell.............. 15,598(5) 15,598 *
Jack E. Chappell.................. 44,062(6) 44,062 *
Robert M. Coard................... 8,263(7) 2,039 10,302 *
Robert L. Culver.................. 12,665(8) 12,665 *
Alan K. DerKazarian............... 21,982(9) 2,310 24,292 *
Donald C. Dolben.................. 9,050(10) 9,050 *
James F. Drew..................... 188,422(11) 188,422 *
Neal F. Finnegan.................. 909,328(12) 909,328 2.1313%
Timothy J. Hansberry.............. 173,416(13) 173,416 *
Edward S. Heald................... 9,693(14) 9,693 *
Brian W. Hotarek.................. 11,800(15) 4,732 16,532 *
James K. Hunt..................... 142,801(16) 142,801 *
Robert T. McAlear................. 115,576(17) 115,576 *
James E. McCobb................... 28,576(18) 28,576 *
Francis X. Messina................ 421,973(19) 25,400 447,373 1.0486%
Sydney L. Miller.................. 123,831(20) 5,352 129,183 *
Vikki L. Pryor.................... 5,097(21) 5,097 *
Gerald M. Ridge................... 37,839(22) 37,839 *
William Schwartz.................. 16,925(23) 41,146 58,071 *
Barbara C. Sidell................. 511,029(24) 511,029 1.1978%
James V. Sidell................... 325,566(25) 325,566 *
Paul D. Slater.................... 132,877(26) 16,798 149,675 *
Kathie S. Stevens................. 107,370(27) 107,370 *
Edward J. Sullivan................ 19,450(28) 19,450 *
G. Robert Tod..................... 7,475(29) 7,475 *
Michael J. Verrochi............... 195,054(30) 1,358 196,412 *
Gordon M. Weiner.................. 5,119(31) 5,119 *
ALL DIRECTORS AND OFFICERS AS A
GROUP (31 persons).............. 4,410,858(32) 99,135 4,509,993 10.5708%
</TABLE>
20
<PAGE> 23
- ---------------
* 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 1,
1999, 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) Denotes units representing share equivalents held in deferred compensation
accounts as of December 31, 1998. 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 8,800 shares which are fully vested, but not
yet exercised.
(4) Includes options to acquire 46,188 shares which are fully vested, but not
yet exercised.
(5) Includes options to acquire 14,978 shares which are fully vested, but not
yet exercised.
(6) Includes options to acquire 14,099 shares which are fully vested, but not
yet exercised.
(7) Includes options to acquire 8,000 shares which are fully vested, but not
yet exercised.
(8) Includes options to acquire 12,500 shares which are fully vested, but not
yet exercised.
(9) Includes options to acquire 8,000 shares which are fully vested, but not
yet exercised.
(10) Mr. Dolben's wife beneficially owns an additional 1,604 shares as to which
Mr. Dolben disclaims any beneficial interest. Includes options to acquire
5,000 shares which are fully vested, but not yet exercised.
(11) Includes options to acquire 1,900 shares which are fully vested, but not
yet exercised.
(12) Includes 6,667 shares of Common Stock which remain subject to forfeiture as
Restricted Common Stock pursuant to the Company's Stock Compensation Plan
and options to acquire an aggregate of 545,200 shares which are fully
vested, but not yet exercised. Also includes 797 shares held for Mr.
Finnegan's benefit under the Company's Employee Savings Plan.
(13) Includes options to acquire 10,000 shares of Common Stock which remain
subject to forfeiture as Restricted Common Stock pursuant to the Company's
Stock Compensation Plan and options to acquire an aggregate of 126,609
shares which are fully vested, but not yet exercised. Also includes an
aggregate of 882 shares held for Mr. Hansberry under the Employee Stock
Ownership Plan of Lexington Savings Bank, a subsidiary of Affiliated
Community Bancorp, Inc. which was acquired by the Company in August, 1998.
(14) Includes options to acquire 8,811 shares which are fully vested, but not
yet exercised.
(15) Includes options to acquire 11,500 shares which are fully vested, but not
yet exercised.
(16) Includes options to acquire 80,500 shares which are fully vested, but not
yet exercised, and 6,500 shares which remain subject to forfeiture as
Restricted Common Stock pursuant to the Company's Stock Compensation Plan.
Also includes 801 shares held by Mr. Hunt under the Company's Employee
Savings Plan.
(17) Includes options to acquire an aggregate of 75,200 shares which are fully
vested, but not yet exercised, and 1,321 shares held for Mr. McAlear's
benefit under the Company's Employee Savings Plan.
(18) Includes no options to acquire shares.
(19) Includes options to acquire 12,500 shares which are fully vested, but not
yet exercised.
(20) Includes 14,853 shares beneficially owned by Mr. Sydney L. 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. Sydney L. Miller's adult
children, sister and sister-in-law as to which Mr. Sydney L. Miller
disclaims beneficial ownership. Includes options to acquire 12,500 shares
which are fully vested, but not yet exercised.
(21) Includes options to acquire 5,000 shares which are fully vested, but not
yet exercised.
21
<PAGE> 24
(22) Includes 25,339 shares owned by Gerald M. Ridge Family Trust, Gerald M.
Ridge, Trustee G. M. Ridge Corp. of which Mr. Ridge is President. Includes
options to acquire 12,500 shares which are fully vested, but not yet
exercised.
(23) All 6,825 shares are held jointly with Mr. Schwartz's wife. Includes
options to acquire 10,100 shares which are fully vested, but not yet
exercised.
(24) Includes options to acquire 12,500 shares which are fully vested, but not
yet exercised. Does not include any shares of Common Stock beneficially
owned by Ms. Sidell's former spouse, James V. Sidell, as to which Ms.
Sidell disclaims any beneficial ownership. Also does not include 34,814
shares owned by the daughters and grandchildren of Barbara C. Sidell and
James V. Sidell, as to which shares Ms. Sidell disclaims any beneficial
ownership.
(25) Includes 313,066 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 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 12,500 shares which are fully vested, but not yet
exercised.
(26) 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 12,500 shares which are fully vested, but not
yet exercised.
(27) Includes options to acquire an aggregate of 78,700 shares which are fully
vested, but not yet exercised and 2,033 shares held for Ms. Stevens'
benefit under the Company's Employee Savings Plan.
(28) 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
8,000 shares which are fully vested, but not yet exercised.
(29) Includes options to acquire 5,000 shares which are fully vested, but not
yet exercised.
(30) 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 12,500 shares which are fully
vested, but not yet exercised.
(31) Does not include 1,050 shares owned by Mr. Weiner's wife of which he
disclaims beneficial ownership. Includes options to acquire 5,000 shares
which are fully vested, but not yet exercised
(32) The amount includes 1,166,585 shares of Common Stock subject to exercisable
outstanding stock options and also includes 8,138 shares held by the
Company's subsidiary, United States Trust Company, as trustee under the
Company's Employee Savings Plan and (with respect to Mr. Hansberry and John
G. Fallon, Executive Vice President of the Company, under the Lexington
Savings Bank Employee Stock Ownership Plan) and allocated to such Directors
and Officers. The total number of shares held in the Company's Employee
Savings Plan and allocated to all employees with United States Trust
Company as record owner is 305,327.
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 1998, all
such filing requirements applicable to its Executive Officers and Directors were
complied with by such individuals.
22
<PAGE> 25
STOCKHOLDER PROPOSALS
Any stockholder of the Company may present a proposal for consideration at
future meetings of the stockholders of the Company. Assuming that Notice Item 2
above is approved by the Company's stockholders at the Annual Meeting and the
new Annual Meeting date in April is adopted, 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, 1999, except that if the next year's annual meeting
date is changed by more than 30 calendar days from the date, April 18, 2000, on
which the Company proposes to hold next year's Annual Meeting of Stockholders,
the Company must receive such a proposal within a reasonable time before the
Board of Directors makes its proxy solicitation.
ADDITIONAL FINANCIAL INFORMATION
ANNUAL REPORT
A copy of the Company's Annual Report to Stockholders for the year ended
December 31, 1998, 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, 1998 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
[Eric R. Fischer's Signature]
Eric R. Fischer
Clerk
Dated: April 14, 1999
Boston, Massachusetts
23
<PAGE> 26
[UST Corp. Logo]
<PAGE> 27
<TABLE>
<S> <C>
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
- -----------------------------------------------------------
UST CORP.
- -----------------------------------------------------------
1. Election of Directors. FOR ALL WITH- FOR ALL
NOMINEES HELD EXCEPT
Mark box at right if an address change or comment has [ ] Timothy J. Hansberry Gerald M. Ridge
been noted on the reverse side of this card. Brian W. Hotarek William Schwartz [ ] [ ] [ ]
James E. McCobb, Jr. Michael J. Verrochi, Jr.
Vikki L. Pryor
ONE POSITION ON THE BOARD OF DIRECTORS EXPIRING IN 1999 WILL REMAIN
VACANT AND MAY BE FILLED LATER BY THE BOARD OF DIRECTORS.
CONTROL NUMBER:
RECORD DATE SHARE: NOTE: If you do not wish your shares voted "For" a particular
nominees, mark the "For All Except" box and strike a line through
the name(s) of the nominees(s). Your shares will be voted for the
remaining nominee(s).
FOR AGAINST ABSTAIN
2. Approval of Amendment to the Company's
By-Laws to change date of Annual Meeting of [ ] [ ] [ ]
Stockholders to third Tuesday in April.
------------
Please be sure to sign and date this Proxy. Date
- ----------------------------------------------------------- Authorizing the Proxies in their discretion to consider and act
upon such other matters as may properly come before the meeting.
- --Stockholder sign here -----------------Co-owner sign here
</TABLE>
DETACH CARD DETACH CARD
UST CORP.
Dear Stockholder,
Please take note of the important information enclosed with this Proxy. 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 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 18, 1999.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
UST Corp.
<PAGE> 28
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. Fisher and
James F. Hunt, and each of them, his or her Attorneys and Proxies (with full
power of substitution in each), and hereby authorizes them to represent the
undersigned and to vote, as designated on the reverse, all the shares of Common
Stock of the Company held of record by the undersigned on March 26, 1999 at the
Annual Meeting of Stockholders of the Company, to be held on Tuesday, May 18,
1999, 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
ELECTION OF THE SEVEN NOMINEES FOR DIRECTOR POSITIONS LISTED IN PROPOSAL 1 AND
FOR THE AMENDMENT TO THE COMPANY'S BY-LAWS DESCRIBED IN PROPOSAL 2.
- --------------------------------------------------------------------------------
PLEASE VOTE, DATE, AND SIGN ON REVERSE SIDE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Please sign this proxy exactly as your name(s) appear(s) 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, this signature should
be that of an authorized officer who should state his or her title.
- --------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE AND COMMENTS?
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