<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
FILED BY THE REGISTRANT /X/ FILED BY A PARTY OTHER THAN THE REGISTRANT / /
- --------------------------------------------------------------------------------
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
BANK OF BOSTON CORPORATION
(Name of Registrant as Specified In Its Charter)
SAME
--------------------------------------
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act
Rule 0-11:*
4) Proposed maximum aggregate value of transaction:
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / 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 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
BANK OF BOSTON CORPORATION [EAGLE]
100 FEDERAL STREET - BOSTON - MASSACHUSETTS 02110
March 21, 1994
To our Common Stockholders:
We are pleased to invite you to attend the Annual Meeting of Stockholders of
Bank of Boston Corporation, which will be held on Thursday, April 28, 1994, at
10:30 a.m. in the Auditorium on the ground floor of The Federal Reserve Bank of
Boston, 600 Atlantic Avenue, Boston, Massachusetts.
The accompanying Notice of Annual Meeting of Stockholders and Proxy
Statement set forth the business to come before this year's meeting.
If you plan to attend the meeting, please bring a form of personal
identification with you and, if you are acting as proxy for another, please
bring written confirmation from the record owner that you are acting as proxy.
Whether or not you expect to attend the meeting, please sign and date the
enclosed form of proxy and return it promptly in the accompanying envelope to
ensure that your shares will be represented. If you attend the meeting, you may
withdraw any proxy previously given and vote your shares in person.
Cordially,
/s/ CHARLES K. GIFFORD /s/ IRA STEPANIAN
CHARLES K. GIFFORD IRA STEPANIAN
President and Chairman of the Board
Chief Operating Officer of Directors and
Chief Executive Officer
<PAGE> 3
[EAGLE]
BANK OF BOSTON CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 28, 1994
To Common Stockholders of
BANK OF BOSTON CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Bank of
Boston Corporation will be held in the Auditorium on the ground floor of The
Federal Reserve Bank of Boston at 600 Atlantic Avenue, Boston, Massachusetts, on
Thursday, April 28, 1994, at 10:30 a.m. (the "Meeting"), for the following
purposes, all as set forth in the attached Proxy Statement:
(1) To elect five Directors with terms expiring at the 1997 Annual
Meeting of Stockholders;
(2) To ratify the selection by the Board of Directors of Coopers &
Lybrand as the Corporation's independent auditors for 1994;
(3) To consider and act upon a Stockholder proposal described in the
accompanying Proxy Statement, if such proposal is presented to the Meeting;
and
(4) To transact such other business as may properly come before the
Meeting.
The Board of Directors has fixed the close of business on March 9, 1994 as
the record date for the Meeting.
It is important that your shares be represented at the Meeting regardless of
the number of shares you may hold. Please complete, sign and date the enclosed
form of proxy and return it promptly in the enclosed envelope which requires no
postage if mailed within the United States.
By Order of the Board of Directors,
/s/ GARY A. SPIESS
Boston, Massachusetts GARY A. SPIESS
March 21, 1994 Clerk
<PAGE> 4
BANK OF BOSTON CORPORATION [EAGLE]
100 FEDERAL STREET - BOSTON - MASSACHUSETTS 02110
PROXY STATEMENT
FOR THE
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 28, 1994
This Proxy Statement, with the accompanying proxy card, is being mailed to
Stockholders on March 21, 1994 and is furnished in connection with the
solicitation of proxies by the Board of Directors of Bank of Boston Corporation
(the "Corporation") to be used at the Annual Meeting of Stockholders to be held
on April 28, 1994 (and any adjournment thereof) (the "Meeting").
VOTING INFORMATION
Only holders of Common Stock, par value $2.25 per share, whose names
appeared of record at the close of business on March 9, 1994 will be entitled to
vote at the Meeting. On that date, 106,418,281 shares of Common Stock were
issued and outstanding. Each issued and outstanding share of Common Stock will
be entitled to one vote on each matter to be voted on at the Meeting and can be
voted only if the owner of record is present to vote or is represented by proxy.
If you sign, date and return the enclosed proxy in time for the Meeting and
do not subsequently revoke it, your shares will be voted in accordance with your
instructions as marked in the spaces provided for such purpose. If no
instructions are specified, your shares will be voted FOR the matters numbered
(1) and (2) on the proxy card and AGAINST the Stockholder proposal.
You may revoke your proxy at any time before it is exercised by returning to
the Corporation another properly signed proxy representing such shares and
bearing a later date or by otherwise delivering a written revocation to Gary A.
Spiess, Clerk of the Corporation. Mr. Spiess' mailing address is Bank of Boston
Corporation, P.O. Box 1864, 1-24-7, Boston, Massachusetts 02105. A Stockholder
attending the Meeting may vote in person even though he or she may have
previously filed a proxy.
1
<PAGE> 5
The holders of a majority in interest of all stock issued, outstanding and
entitled to vote are required to be present in person or be represented by proxy
at the Meeting in order to constitute a quorum for the transaction of business.
The election of nominees for Director will be decided by plurality vote. The
affirmative votes of the holders of at least a majority of the shares of the
Common Stock represented and entitled to be voted at the Meeting are required to
approve all other matters listed in the Notice of the Meeting.
Under Massachusetts law and the Corporation's By-Laws, abstentions and
broker non-votes will be treated as shares present or represented at the Meeting
for quorum purposes. On each proposal considered at the Meeting, abstentions
will have the effect of negative votes, while broker non-votes will be
disregarded (i.e., they will not be considered shares entitled to be voted on
the proposal).
ELECTION OF DIRECTORS
(PROXY ITEM 1)
Five Director nominees are standing for election at the Meeting for terms of
office that will expire at the 1997 Annual Meeting of Stockholders. All of the
nominees, except Mr. Van Faasen who was elected as a Director of the Corporation
effective January, 1994, were elected at the 1991 Annual Meeting of
Stockholders.
Each Director will continue in office until the Director's term expires and
until his or her successor is elected and qualified or until his or her earlier
death, resignation or removal.
Management has made inquiries and believes that each of the nominees will be
willing and able to serve if elected. If any of the nominees shall be unwilling
or unable to serve, discretionary authority is reserved to vote for a substitute
chosen by the Board of Directors, or the Board of Directors may reduce the
number of Directors.
Biographical information is set forth below with respect to the Director
nominees and the Directors whose terms of office expire in 1995 and 1996.
2
<PAGE> 6
<TABLE>
NOMINEES FOR ELECTION AS DIRECTORS
TERMS EXPIRE AT THE 1997 ANNUAL STOCKHOLDERS' MEETING
<S> <C>
*GARY L. COUNTRYMAN Chairman and Chief Executive Officer of Liberty Mutual Insurance
Age 54 Company. President of Liberty Mutual Insurance Company from 1981 to
Director since 1982 1992, Chief Executive Officer since 1987 and Chairman since 1991;
Director of The First National Bank of Boston (the "Bank") since 1982;
Director of Boston Edison Company, The Neiman-Marcus Group, Inc. and
Alliance of American Insurers.
J. DONALD MONAN President of Boston College, Chestnut Hill, Massachusetts. President
Age 69 of Boston College since 1972; Director of the Bank since 1976.
Director since 1976
*RICHARD A. SMITH Chairman of the Board of Harcourt General, Inc. (a diversified company
Age 69 engaged in international and domestic publishing, insurance, and
Director since 1973 executive outplacement) and The Neiman-Marcus Group, Inc. (retail
specialty stores); Chairman, President and Chief Executive Officer of
GC Companies Inc. (exhibition of motion pictures). Chairman and Chief
Executive Officer of Harcourt General, Inc. from 1985 to 1991 and
Chairman of the Board since 1991; Chairman and Chief Executive Officer
of The Neiman-Marcus Group, Inc. from 1987 to 1991 and Chairman of the
Board since 1991; Chairman, President and Chief Executive Officer of
GC Companies Inc. since December, 1993; Director of the Bank since
1973; Director of Liberty Mutual Insurance Company and Liberty Mutual
Fire Insurance Company.
*IRA STEPANIAN Chairman of the Board of Directors and Chief Executive Officer of the
Age 57 Corporation and of the Bank. President and Chief Executive Officer of
Director since 1981 the Corporation and the Bank from 1987 to 1989 and Chairman of the
Board of Directors and Chief Executive Officer of both since 1989;
Director of the Bank since 1981; Director of Liberty Mutual Insurance
Company, Liberty Mutual Fire Insurance Company and New England
Telephone and Telegraph Company.
WILLIAM C. VAN FAASEN President and Chief Executive Officer of Blue Cross and Blue Shield of
Age 45 Massachusetts, Inc. (non-profit health services company). Senior Vice
Director since January, 1994 President of Operational Services of Blue Cross and Blue Shield of
Michigan, Inc. from 1985 to 1990; Executive Vice President and Chief
Operating Officer of Blue Cross and Blue Shield of Massachusetts, Inc.
from 1990 to 1992 and President and Chief Executive Officer since
1992; Director of the Bank since January, 1994.
- ---------------
<FN>
* Member of the Executive Committee.
</TABLE>
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<PAGE> 7
<TABLE>
DIRECTORS CONTINUING IN OFFICE
TERMS EXPIRE AT THE 1995 ANNUAL STOCKHOLDERS' MEETING
<S> <C>
WILLIAM F. CONNELL Chairman and Chief Executive Officer of Connell Limited Partnership (a
Age 55 company primarily engaged in metals recycling and the manufacture of
Director since February, 1993 industrial products). Chairman and Chief Executive Officer of Connell
Limited Partnership since 1987; Director of the Bank since February,
1993; Director of Boston Edison Company, Arthur D. Little, Inc.,
Harcourt General, Inc. and North American Mortgage Company.
DONALD F. MCHENRY University Research Professor of Diplomacy and International
Age 57 Relations, Georgetown University, Washington, D.C. University Research
Director since 1981 Professor at Georgetown University since 1981 and President of The IRC
Group since 1983; Director of the Bank since 1981; Director of
American Telephone & Telegraph Company, Coca-Cola Company,
International Paper Company and SmithKline Beecham, PLC.
THOMAS B. WHEELER President and Chief Executive Officer of Massachusetts Mutual Life
Age 57 Insurance Company. President of Massachusetts Mutual Life Insurance
Director since 1989 Company since 1987 and Chief Executive Officer since 1988; Director of
the Bank since 1989; Director of Massachusetts Mutual Life Insurance
Company and Textron, Inc.
ALFRED M. ZEIEN Chairman of the Board and Chief Executive Officer of The Gillette
Age 64 Company (manufacturer of consumer products). Elected Vice Chairman of
Director since 1992 the Board of The Gillette Company in 1981 and President and Chief
Operating Officer and Chairman of the Board and Chief Executive
Officer in 1991; Director of the Bank since 1992; Director of Polaroid
Corporation, Raytheon Company, Repligen Corporation and Massachusetts
Mutual Life Insurance Company.
</TABLE>
4
<PAGE> 8
<TABLE>
DIRECTORS CONTINUING IN OFFICE
TERMS EXPIRE AT THE 1996 ANNUAL STOCKHOLDERS' MEETING
<S> <C>
*WAYNE A. BUDD Senior Partner, Goodwin, Procter & Hoar (law firm). Senior Partner,
Age 52 Budd, Wiley & Richlin from 1979 to 1989; United States Attorney,
Director since February, 1993 District of Massachusetts, from 1989 to 1992; Associate Attorney
General of the United States Department of Justice, from 1992 to
January, 1993; Senior Partner, Goodwin, Procter & Hoar since February,
1993; Director of the Bank since February, 1993.
ALICE F. EMERSON Senior Fellow, The Andrew W. Mellon Foundation; President Emerita of
Age 62 Wheaton College, Norton, Massachusetts. President of Wheaton College
Director since 1977 from 1975 to 1991; Senior Fellow, The Andrew W. Mellon Foundation
since 1991; Director of the Bank since 1977; Director of Eastman Kodak
Company, Champion International Corporation and AES Corporation.
*CHARLES K. GIFFORD President and Chief Operating Officer of the Corporation and of the
Age 51 Bank. Elected Vice Chairman of the Corporation and the Bank in 1987,
Director since 1987 President of both in 1989 and Chief Operating Officer of both in
April, 1993; Director of the Bank since 1987; Director of
Massachusetts Mutual Life Insurance Company and Boston Edison Company.
*PAUL C. O'BRIEN Chairman of the Board of New England Telephone and Telegraph Company.
Age 54 President and Chief Executive Officer of New England Telephone and
Director since 1988 Telegraph Company from 1988 to June, 1993 and Chairman of the Board
since June, 1993; Director of the Bank since 1988; Director of
Cambridge NeuroScience, Inc.
JOHN W. ROWE President and Chief Executive Officer of New England Electric System.
Age 48 President and Chief Executive Officer of Central Maine Power Company
Director since 1989 from 1984 to 1989; President and Chief Executive Officer of New
England Electric System since 1989; Director of the Bank since 1989;
Director of New England Electric System and UNUM Corporation.
- ---------------
<FN>
* Member of the Executive Committee
</TABLE>
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<PAGE> 9
<TABLE>
BENEFICIAL OWNERSHIP OF SECURITIES
The table below sets forth the beneficial ownership of the Corporation's
Common Stock by each current Director, by each Executive Officer whose name
appears in the "Summary Compensation" table below and by all current Directors
and Executive Officers of the Corporation as a group, as of February 25, 1994.
As of that date, current Directors and Executive Officers, in the aggregate,
beneficially owned 2.13% of the Corporation's issued and outstanding Common
Stock. In addition to its Common Stock, the Corporation also has outstanding
five series of nonvoting Preferred Stock. As of February 25, 1994, no current
Director or Executive Officer of the Corporation was the beneficial owner of any
shares of the Corporation's Preferred Stock.
<CAPTION>
SHARES OF COMMON STOCK BENEFICIALLY OWNED(1)
------------------------------------------------------------------------
SOLE SHARED SOLE VOTING TOTAL
VOTING AND VOTING AND BUT NO SHARES
NAME OF INDIVIDUAL OR INVESTMENT INVESTMENT INVESTMENT RIGHT TO BENEFICIALLY
IDENTITY OF GROUP POWER POWER POWER(2) ACQUIRE OWNED
--------------------- ---------- ---------- ----------- -------- ------------
<S> <C> <C> <C> <C> <C>
Wayne A. Budd........................... 425 200(3) 625
John J. Carey........................... 672 1,155(3) 1,827
William F. Connell...................... 25,425 8,540(4) 33,965
Gary L. Countryman...................... 1,406 1,406
Alice F. Emerson........................ 1,889 1,889
Charles K. Gifford...................... 21,398 400(3) 47,450 272,801(5) 342,049
Peter J. Manning........................ 3,522(6) 1,500(3) 20,200 62,025(5) 87,247
Donald F. McHenry....................... 3,465 3,465
J. Donald Monan......................... 419 419
Paul C. O'Brien......................... 2,846 2,846
Edward A. O'Neal........................ 28,000 64,500(5) 92,500
John W. Rowe............................ 656 656
William J. Shea......................... 2,000(7) 20,000 35,000(5) 57,000
Richard A. Smith........................ 2,669 2,669
Ira Stepanian........................... 113,151 10,000(3) 68,250 411,378(5) 602,779
William C. Van Faasen................... 200 200
Thomas B. Wheeler....................... 1,180 1,180
Alfred M. Zeien......................... 919 919
Charles A. Zraket....................... 10,719 10,719
Directors and Executive Officers as a
group................................. 251,383(8) 13,255 429,500 1,609,470 2,303,608
- ---------------
<FN>
(1) Determined in accordance with Rule 13d-3 under the Securities Exchange Act
of 1934 (the "Exchange Act"). Individuals may disclaim beneficial ownership
for other purposes. The number of shares of Common Stock beneficially owned
by each Director or named Executive Officer does not equal or exceed 1% of
the outstanding shares of Common Stock.
(2) Represents shares of restricted stock held for the individual under the
Corporation's 1991 Long-Term Stock Incentive Plan (the "Stock Incentive
Plan").
(3) The individual shares investment and voting power with his spouse or another
relative as to these shares.
(4) Represents shares which Mr. Connell has a right to acquire through the
conversion of the Corporation's 7 3/4% Convertible Subordinated Debentures
Due 2011 ("Debentures").
(5) Represents shares which the individual has a right to acquire on or before
April 26, 1994 through the exercise of stock options granted under the
Corporation's 1982 or 1986 Stock Option Plans or the Stock Incentive Plan.
(6) Represents shares held for Mr. Manning's benefit by the Bank as Trustee
under the Thrift Plan.
(7) Represents shares held by Mr. Shea's spouse.
(8) Includes 31,548 shares held for the benefit of 15 Executive Officers by the
Bank as Trustee under the Thrift Plan.
</TABLE>
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To the knowledge of the Corporation, no person or group owns beneficially
more than five percent (5%) of the Corporation's Common Stock, other than FMR
Corp. ("FMR") and Edward C. Johnson 3d, Chairman of FMR. As of December 31,
1993, FMR and Mr. Johnson beneficially owned 10,636,659 shares (9.96%) of the
Corporation's Common Stock. Fidelity Management & Research Company ("Fidelity"),
82 Devonshire Street, Boston, Massachusetts 02109, a wholly owned subsidiary of
FMR and a registered investment advisor, is the beneficial owner of 9,682,549 of
these shares as a result of acting as investment advisor to several registered
investment companies (the "Funds"). The shares beneficially owned by Fidelity
include 898,985 shares which may be acquired through the conversion of
Debentures. Mr. Johnson, FMR, through its control of Fidelity, and the Funds
each have sole power to dispose of all of the shares beneficially owned by
Fidelity, and voting power as to such shares resides with the Funds' Boards of
Trustees. Fidelity Management Trust Company ("FMTC"), 82 Devonshire Street,
Boston, Massachusetts 02109, a wholly owned subsidiary of FMR and a "bank" as
defined in the Exchange Act, is the beneficial owner of 954,110 of the total
shares beneficially owned by FMR and Mr. Johnson as a result of FMTC's serving
as investment manager of several institutional accounts. The shares beneficially
owned by FMTC include 57,644 shares which may be acquired through the conversion
of Debentures. FMR, through its control of Fidelity, has sole dispositive power
over all of the shares beneficially owned by FMTC, sole voting power with
respect to 563,810 of such shares and no voting power with respect to 390,300 of
such shares. The foregoing information is based upon the Schedule 13G, dated
February 11, 1994, filed by FMR and Mr. Johnson with the Securities and Exchange
Commission (the "SEC").
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Corporation's Executive
Officers and Directors, and any persons who own more than 10% of a registered
class of the Corporation's equity securities, to file reports of ownership and
changes in ownership of securities with the SEC and the New York Stock Exchange.
Executive Officers, Directors, and greater than 10% stockholders (of which, to
the Corporation's knowledge, there currently are none) are required by SEC
regulation to furnish the Corporation with copies of all Section 16(a) forms
they file.
Based solely on a review of the copies of such reports received by it or
written representations from certain reporting persons that no other reports
were required, the Corporation believes that, during 1993, all Section 16(a)
filing requirements applicable to its Executive Officers and Directors were
complied with, except that (i) one report was filed late by Mr. Gifford,
relating to four purchases by or on behalf of his children, (ii) one report was
filed late by Mr. Shea, relating to one purchase by his wife and (iii) one
report was filed late by Newton P.S. Merrill, a former Executive Officer of the
Corporation, relating to three purchases by his children.
1993 MEETINGS AND STANDARD FEE ARRANGEMENTS OF THE BOARD OF DIRECTORS AND
COMMITTEES
1993 Meetings -- During 1993, the Board of Directors of the Corporation held
13 meetings. The Board has an Audit Committee, a Community Investment Committee
and a Compensation and Nominating Committee, the members of which are appointed
each year following the Annual Meeting of Stockholders. The Board also has an
Executive Committee, the composition of which changes quarterly and which meets
monthly. Each member of the Executive, Audit and Community Investment Committees
of the Corporation is also a member of the corresponding committee of the Bank,
and each member of the Compensation and Nominating Committee of the Corporation,
when it is considering compensation matters, is also a member of the
Compensation Committee of the Bank. No member of the Audit Committee is an
employee of the Corporation or its subsidiaries. When the Compensation and
Nominating Committee considers compensation matters, none of its members is an
employee of the Corporation or its subsidiaries, and when it acts as a
nominating committee, its members include the Chairman of the Board of Directors
and Chief Executive Officer and the President and Chief Operating Officer of the
Corporation.
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<PAGE> 11
The functions of the Audit Committee include recommending the appointment of
the Corporation's independent accountants, overseeing the duties of the
Corporation's General Auditor and his or her staff and initiating and
supervising examinations of the financial statements or activities of the
Corporation. The committee also reviews the reports by bank regulatory
authorities of their examinations of the Corporation and its subsidiaries and
the reports of the General Auditor regarding his or her program of continuous
financial or operational audits of the Corporation and its subsidiaries. The
members of the Audit Committee are also members of the Audit Committee of the
Bank and customarily hold joint meetings of both committees. The Bank's
committee is also responsible for the annual trust audit of the fiduciary
activities of the Bank.
The Audit Committee of the Corporation held four meetings in 1993. As of
March 21, 1994, its members were Messrs. Zraket (Chairman), Budd, McHenry,
Wheeler and Zeien.
The responsibilities of the Compensation and Nominating Committee of the
Corporation include (i) approving salaries of top executives of several of the
Corporation's subsidiaries, (ii) discharging duties under various benefit and
incentive compensation plans for employees of subsidiaries and under deferred
compensation arrangements with Directors and (iii) recommending to the Board of
Directors candidates for appointment or election as Directors. The Bank's
Compensation Committee has similar compensation responsibilities, including
approving or recommending to its Board of Directors for approval salaries of
certain senior executives of the Bank.
In 1993, the Compensation and Nominating Committee held five meetings in its
capacity as a compensation committee and one meeting in its capacity as a
nominating committee. As of March 21, 1994, its members were Messrs. Countryman
(Chairman), Connell and Rowe and Fr. Monan and, when the committee acts in its
capacity as a nominating committee, its members include Messrs. Gifford and
Stepanian.
The Compensation and Nominating Committee will consider candidates for
appointment or election as Directors proposed by the Chairman of the Board of
Directors and Chief Executive Officer or the President and Chief Operating
Officer, by any other officer of the Corporation, or by any Director or
Stockholder. In addition, Stockholders who wish to directly nominate candidates
for the Board of Directors must provide the Corporation with a timely written
notice containing information about the candidate and the Stockholder making the
nomination as required by the Corporation's By-Laws. Any such Stockholder should
consult the By-Laws for the timing and other requirements of this notice.
Stockholders seeking to propose candidates to the Compensation and Nominating
Committee or to nominate candidates directly should submit such proposals or the
required notices in writing to Gary A. Spiess, Clerk, Bank of Boston
Corporation, P.O. Box 1864, 1-24-7, Boston, Massachusetts 02105.
The Community Investment Committee of the Corporation reviews and oversees
the policies of the Corporation's subsidiary banks relating to their
responsibilities under the Community Reinvestment Act of 1977 and any similar
federal or state laws or regulations. The members of the Community Investment
Committee are also members of the Community Investment Committee of the Bank and
customarily hold joint meetings of both committees.
The Community Investment Committee of the Corporation held four meetings in
1993. As of March 21, 1994, its members were Fr. Monan (Chairman), Messrs. Budd,
Carey, O'Brien and Wheeler and Ms. Emerson.
In 1993, each Director attended at least 75% of the total number of meetings
of the Board of Directors of the Corporation and the committees of the
Corporation's Board on which he or she served, except Mr. Smith who attended 66%
of such meetings.
Fee Arrangements -- Fees are paid only to Directors who are not officers of
the Corporation or the Bank. An annual cash retainer of $15,000 is paid to each
Director of the Corporation, along with a fee of $1,000 for attendance at each
meeting of the Board or a committee thereof. The Chairmen of the Corporation's
Audit, Compensation and Nominating and Community Investment Committees and the
Bank's Trust Committee receive annual retainers of $8,000, $5,000
8
<PAGE> 12
$3,000 and $3,000, respectively. All annual retainers are prorated if a position
is held for less than a year. The Directors do not receive additional fees or
retainers for service on the Bank's Board of Directors or on the Bank's Audit,
Compensation, Executive or Community Investment Committees (except that an
additional attendance fee will be paid when a Bank Board or committee meeting is
not held on the same day as the comparable Corporation Board or committee
meeting).
Under the Director Stock Award Plan approved by Stockholders at the 1993
Annual Stockholders' Meeting, each non-employee Director receives semi-annually
an award of Common Stock having an aggregate fair market value of $5,000 for
services rendered during the prior six-month period (or, in the case of the
initial award made on July 1, 1993, during the prior two-month period). Awards
are prorated in the case of any Director who was not a Director for all of the
preceding award period. On July 1, 1993, each individual who was a non-employee
Director at that time received an award of 202 shares of Common Stock under this
plan.
The outside Directors of the Corporation and the Bank may defer receipt of
their cash fees and retainers. Deferred amounts are generally paid to the
Director when the Director's term expires or to the Director's beneficiary in
the event of death. At the election of the Director, deferred accounts
periodically are adjusted to reflect changes in the performance of the
Corporation's Common Stock, are credited with interest at the Bank's IRA Money
Market Rate or, subject to certain restrictions, are credited at a rate of
interest equal to 130% of an average of the ten-year U.S. Treasury note rate.
The Corporation and the Bank have established trusts for the payment of deferred
Director fees, which will be funded at the discretion of the Board of Directors
or under circumstances constituting a change of control of the Corporation.
Each outside Director of the Corporation qualifies for a retirement benefit
from the Corporation after serving continuously for 60 months as a Director of
the Corporation or the Bank, unless he or she resigns in order to serve on the
board of an institution not affiliated with the Corporation. The annual
retirement benefit equals the annual Director cash retainer in effect at the
Director's retirement or earlier death. The payments continue for a period equal
to the length of the individual's service as a Director, and certain survivor
benefits are provided.
9
<PAGE> 13
COMPENSATION OF EXECUTIVE OFFICERS
COMPENSATION COMMITTEE REPORT
ON
EXECUTIVE COMPENSATION
The Compensation and Nominating Committee (acting in its capacity as the
Compensation Committee, referred to hereafter as the "Compensation Committee")
has prepared the following report for inclusion in this Proxy Statement.
Compensation Philosophy
This report reflects the Corporation's compensation philosophy as endorsed
by the Board of Directors and the Compensation Committee and resulting actions
taken by the Corporation and the Bank for 1993, as shown in the various tables
supporting this report. The Compensation Committee either approves or recommends
to the Board of Directors payment amounts and award levels for Executive
Officers of the Corporation and its affiliates. With regard to compensation
actions affecting Messrs. Stepanian or Gifford, all of the non-employee members
of the Board of Directors act as the approving body with respect to the
recommendations of the Compensation Committee.
Essentially, the Corporation has designed its executive compensation program
to:
-- Support a pay for performance policy that differentiates compensation
amounts based on a discretionary evaluation of performance results in
three basic areas, ranked in the following order of importance:
corporate, business unit and individual performance;
-- Motivate key executives to achieve strategic business initiatives and
reward them for their achievement;
-- Provide compensation opportunities which are comparable to those offered
by the Comparator Banks Group (as defined below), thus allowing the
Corporation to compete for and retain talented executives who are
critical to the Corporation's long-term success; and
-- Align the interests of executives with the long-term interests of
Stockholders through award opportunities that can result in the ownership
of Common Stock.
As an executive's level of responsibility increases, a greater portion of
potential total compensation is based on stock-and cash-based incentives and
less on salary and employee benefits, often causing greater variability in the
individual's absolute compensation level from year to year.
At present, executive compensation is composed of salary, annual incentive
opportunities, long-term incentive opportunities in the form of stock options
and restricted stock and benefits typically offered to executives by the
Comparator Banks Group. These key elements are designed to provide a
competitive, well-balanced total compensation program which is supportive of the
Corporation's strategies.
Each year, the Corporation participates in several compensation studies to
determine the competitiveness of its executive compensation program. The
comparator group used for this compensation analysis covers a cross-section of
large regional and money center banks ("the Comparator Banks Group"), including
those with a significant international presence. This group provides a relevant
competitive frame of reference covering the three strategic focal points of the
Corporation: domestic wholesale, retail and international. Specific banks were
selected on the basis of loan volume, international presence, business diversity
and complexity, competitive similarity, corporate strategy and asset size.
10
<PAGE> 14
The banks within the Comparator Banks Group are included in the Keefe,
Bruyette & Woods 50 Bank Index ("KBW 50") used in the Five-Year Stockholder
Return comparison which is found at the end of the discussion of compensation of
Executive Officers. The Compensation Committee believes that, while the KBW 50
provides a broader measure of investment performance in the banking industry,
the Comparator Banks Group used for compensation analysis represents the
Corporation's most direct competitors for executive talent.
The value of the total compensation program for achieving targeted
performance will be positioned within a range around the median of total
compensation provided by the Comparator Banks Group. The mix of elements is
designed to approximate the profile of the Comparator Banks Group for target
performance. Merit salary increases, annual bonuses and long-term incentives are
the variable pay elements used to differentiate performance above or below
expectations.
Base Salary
The purpose of base salary is to attract and retain key executives who are
critical to the Corporation's long-term success by providing a basic level of
income that recognizes the market value of the position as well as the
individual's performance and experience. Average salaries are targeted to be in
a range around the median of the Comparator Banks Group. Individual salary
adjustments are determined by considering the following factors: the
individual's personal contribution to business unit and corporate results, the
individual's actual salary level relative to the median for comparable positions
in the Comparator Banks Group and the Corporation's overall salary budget for
the year. While no specific weighting is determined, all of these factors are
important, with judgment exercised by the Compensation Committee in determining
individual salary adjustments. In setting salaries for 1993, the Compensation
Committee reviewed Comparator Banks Group data for 1992. According to this data,
salaries for 1993 were within the range targeted by the Compensation Committee.
Annual Discretionary Bonus
Bonuses are awarded under the Corporation's Performance Recognition
Opportunity Plan (the "Performance Plan"). The purpose of the Performance Plan
is to reward and motivate executives for the achievement of strategic business
initiatives in a given year in support of a pay for performance philosophy. This
philosophy differentiates compensation based on the Compensation Committee's
discretion in evaluating results in three basic areas, ranked in the following
order of importance: corporate, business unit and individual performance. Target
award opportunities for achieving expected performance are established for each
executive position. Targets are set within a range around the median annual
bonus payouts for comparable positions in the Comparator Banks Group. Actual
awards may be above or below market depending on performance. Performance is
measured primarily on results achieved against internal goals. The goals for
1993, which were not specifically weighted in terms of relative importance, are
described below under the heading "Chief Executive Officer Compensation for
1993." The Compensation Committee may also review other internal and external
criteria in determining bonus funding levels and individual awards. In setting
bonus awards for 1993, the Compensation Committee reviewed Comparator Banks
Group data for 1992. According to this data, bonuses for 1993 were within the
range targeted by the Compensation Committee.
Long-Term Stock Incentive
Stock options and restricted stock are awarded under the Corporation's 1991
Long-Term Stock Incentive Plan (the "Stock Incentive Plan"). The purpose of the
Stock Incentive Plan is to provide a focus on the achievement of future
long-term results by aligning the interest of the executive with the interests
of stockholders through the use of awards based on individual performance. Stock
options and restricted stock are also designed to help retain key executives.
Both the annual stock awards to Executive Officers and the aggregate annual
share usage under the plan are targeted to be within a range around the median
award levels and share usage of the Comparator Banks Group.
11
<PAGE> 15
In setting the level of stock awards in 1993, the Compensation Committee
reviewed Comparator Banks Group data for 1992. According to this data, stock
option and restricted stock awards made in 1993 were below the range targeted by
the Compensation Committee. This was due, in part, to the level of stock awards
made in 1991 and 1992 which, while within the range of stock awards made by the
Comparator Banks Group, was high relative to the Corporation's past practices in
order to provide an incentive to turn performance around and to retain highly
qualified executives during a difficult economic period. In determining stock
awards, the Compensation Committee first establishes the total number of shares
subject to an award and then allocates the total between stock options and
restricted stock. For awards made in 1993, the ratio of stock options to
restricted stock was set at 4:1, which reflected the prevailing practices of the
Comparator Banks Group as set forth in a survey provided by an independent
consulting firm.
In granting or recommending the grant of stock options and restricted stock
to Executive Officers, the Compensation Committee takes into account the
executive's level of responsibility and past contributions to the Corporation,
as well as the practices of the Comparator Banks Group as verified by external
surveys conducted annually. Past contributions are measured on an individual
basis by considering actual results achieved against established goals which are
linked to business unit and corporate business plans. Performance measures for
both individual business units and the Corporation as a whole include pretax
income, noninterest expense, the ratio of noninterest expense to total revenue
(the "operating ratio"), credit quality (which, for the Corporation, is based on
a measure of the Corporation's lower quality credit exposures compared to
capital) and progress against strategic initiatives (including, for stock awards
made in 1993, the reinstatement of the dividend on the Corporation's Common
Stock in 1992, upgrades in debt ratings assigned by rating agencies, significant
announced or completed bank acquisitions and improved standing with bank
regulators). While no specific weighting is determined, all performance measures
represent important factors, with judgment exercised by the Compensation
Committee in granting or recommending the grant of stock awards.
Chief Executive Officer Compensation for 1993
Effective April 5, 1993, the Board of Directors increased Mr. Stepanian's
annual salary from $725,000 to $785,000. This increase reflected the Board's
assessment of his performance over the prior fifteen-month period and recognized
the continued improvement in the Corporation's earnings performance, capital
ratios, credit quality and the operating ratio during this period. The
Compensation Committee also considered Comparator Banks Group market base salary
data provided by an independent consulting firm.
The Compensation Committee established goals for pretax income, noninterest
expense, the operating ratio and credit quality at the beginning of the year to
provide a basis for bonus awards to Mr. Stepanian and the other Executive
Officers. While no specific weighting is determined, all goals represent
important factors, with judgment exercised by the Compensation Committee in
conducting a thorough assessment of the 1993 results of the Corporation. All
goals were exceeded in 1993. Based on these results, Mr. Stepanian was awarded a
bonus of $800,000 for 1993 performance.
Mr. Stepanian was awarded 24,000 stock options and 6,000 shares of
restricted stock in 1993. These awards supported the Compensation Committee's
interest in linking Mr. Stepanian's compensation to the longer term performance
of the Corporation. These awards also recognized his leadership in continuing to
improve the Corporation's earnings, credit quality and capital strength during
1992.
12
<PAGE> 16
Deductibility of Executive Compensation under the Internal Revenue Code
Under the provisions of the Omnibus Budget Reconciliation Act of 1993,
beginning in 1994, a publicly held corporation may not deduct in any taxable
year compensation in excess of one million dollars paid to its chief executive
officer or its four other most highly compensated officers. However, proposed
Internal Revenue Service ("IRS") regulations and transition rules of Section
162(m) of the Internal Revenue Code (the "Code") specify certain conditions
which, if satisfied, will qualify compensation for deductibility even if it
exceeds one million dollars.
The Compensation Committee has reviewed the new tax provisions and has
conducted a preliminary assessment of their potential impact on the Corporation.
Based on this review, the Compensation Committee has concluded that, in view of
the applicability of the IRS' proposed transition rules to certain past and
future awards under the Corporation's incentive plans, the short-term impact of
these provisions on the Corporation will not be material. The Compensation
Committee therefore does not intend, at this time, to amend existing plans or
take any other actions in response to Section 162(m) of the Code. The
Compensation Committee plans to monitor the impact of Section 162(m) on an
annual basis in order to balance the benefits of favorable tax treatment for the
Corporation with a need to apply prudent judgment in carrying out the
Corporation's pay for performance executive compensation philosophy.
This report was submitted by the Compensation Committee, which consists of
the following non-employee Directors:
Gary L. Countryman, Chairman J. Donald Monan
William F. Connell John W. Rowe
13
<PAGE> 17
<TABLE>
EXECUTIVE COMPENSATION TABLES AND INFORMATION
The tables that appear below, along with the accompanying text and
footnotes, provide information on compensation and benefits for the named
Executive Officers, as determined by SEC requirements. 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 Corporation and the
price of the Common Stock. All year-end values shown in these tables for
outstanding stock options and restricted stock reflect a price of $23.00 per
share, which was the closing price of the Common Stock for December 31, 1993, as
reported in the "New York Stock Exchange Composite Transactions" 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
<CAPTION>
LONG-TERM COMPENSATION
-----------------------
ANNUAL COMPENSATION(1) AWARDS
----------------------------------- -----------------------
OTHER ANNUAL RESTRICTED SECURITIES ALL OTHER
NAME AND COMPENSATION STOCK UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR SALARY BONUS(2) (3) AWARDS(4) OPTIONS(#) (5)
------------------ ---- ------ -------- ------------ --------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
I. Stepanian.......... 1993 $768,846 $800,000 -- $153,000 24,000 shs. $ 50,265
Chairman/CEO 1992 696,955 600,000 -- 350,000 75,786(6) 43,980
1991 650,000 0 -- 198,906 71,250 --
C.K. Gifford.......... 1993 550,000 550,000 -- 107,100 16,800 35,801
President/COO 1992 517,948 455,000 -- 250,000 37,500 31,742
1991 450,000 0 -- 131,906 47,250 --
E.A. O'Neal........... 1993 400,000 300,000 $128,698 76,500 12,000 6,230
Vice Chairman 1992 153,601(7) 400,000(7) 320,145 354,375 (7) 70,000(7) 2,080
1991 -- -- -- -- -- --
W.J. Shea............. 1993 305,000(8) 400,000(8) -- 268,750 (8) 35,000(8) 2,989
Vice Chairman, CFO 1992 -- -- -- -- -- --
and Treasurer 1991 -- -- -- -- -- --
Peter J. Manning...... 1993 245,000 140,000 -- 45,900 7,200 10,165
Executive Director 1992 236,859 130,000 -- 68,000 13,600 9,667
1991 225,000 100,000 -- 83,750 30,000 --
- ---------------
<FN>
(1) Salary and bonus amounts include portions deferred under the Corporation's
Non-Qualified Deferred Compensation Plan for Executives (the "Deferral
Plan") and the Thrift Plan.
(2) Except as otherwise indicated, bonus amounts shown were awarded under the
Performance Plan for performance during the year indicated.
(3) During 1992 and 1993, none of the named Executive Officers, except for Mr.
O'Neal, received perquisites or other personal benefits in an amount
sufficient to require reporting under SEC rules. The amounts shown for Mr.
O'Neal include payments by the Bank of $124,698 in 1993 and $320,145 in 1992
in connection with his relocation upon being hired by the Bank. Information
for 1991 is not required to be disclosed.
(4) The values shown are based on the Common Stock closing price on the date of
each grant, rather than the year-end closing price.
14
As of December 31, 1993, each of the named Executive Officers held the
following number of restricted shares having the corresponding year-end
market values:
AS OF DECEMBER 31, 1993
---------------------------
TOTAL NUMBER
OF
RESTRICTED AGGREGATE
NAME SHARES HELD MARKET VALUE
---- ------------ ------------
I. Stepanian.................. 47,250 $1,086,750
C.K. Gifford.................. 32,450 746,350
E.A. O'Neal................... 18,000 414,000
W.J. Shea..................... 10,000 230,000
P.J. Manning.................. 15,200 349,600
These shares vest over a five-year period, with one-third of the shares
vesting on each of the third, fourth and fifth anniversaries of the grant
date, if the executive is then employed by an affiliate of the Corporation;
provided that the shares will vest immediately upon the executive's death,
retirement or disability. Half of the shares delivered to the executive on
each designated anniversary date will remain subject to certain
transferability restrictions until the earliest of ten years after the grant
date, the date on which the executive attains age 55 or the date of the
executive's death or disability. The Compensation Committee or the Board of
Directors may remove or modify restrictions on restricted stock at any time.
In addition, for awards made during 1993, restrictions would automatically
lapse upon a change of control of the Corporation. Dividends are paid on the
restricted stock reported in the table to the same extent as they are paid on
the Corporation's Common Stock generally.
(5) Includes matching employer contributions and credits under the Thrift Plan
and the Deferral Plan for the named Executive Officers as follows:
1993 -- Mr. Stepanian, $30,754; Mr. Gifford, $22,000; and Mr. Manning,
$9,800; and 1992 -- Mr. Stepanian, $27,878; Mr. Gifford, $20,718; and Mr.
Manning, $9,474. Also includes interest credited on previously earned salary
and bonuses deferred under the Deferral Plan or similar arrangements, to the
extent such credits were made at a rate that exceeded a rate determined by
SEC rules, as follows: 1993 -- Mr. Stepanian, $19,511; Mr. Gifford, $13,801;
Mr. O'Neal, $6,230; Mr. Shea, $2,989; and Mr. Manning, $366; and 1992 -- Mr.
Stepanian, $16,102; Mr. Gifford, $11,024; Mr. O'Neal, $2,080; and Mr.
Manning, $193. Information for 1991 is not required to be disclosed.
(6) Includes a "reload" option grant of 23,286 shares. See discussion below in
footnote 2 to the "Option Grants in 1993" table.
(7) Mr. O'Neal joined the Corporation in August of 1992. Prior to joining the
Corporation, Mr. O'Neal signed a written offer of employment providing for
(i) an initial annual salary of $400,000, (ii) a minimum bonus of $200,000
under the Performance Plan for 1992, (iii) awards of 70,000 stock options
and 15,000 shares of restricted stock upon the commencement of his
employment and (iv) a one-time credit of $200,000 to a deferred compensation
account in his name. Interest on the deferred amount will accrue at the rate
set forth in the Deferral Plan. The account balance is subject to forfeiture
if Mr. O'Neal's employment with the Bank terminates before he reaches age
55. In the event of such a termination, he would receive a separation
payment of $100,000. Mr. O'Neal's offer letter also contained a provision,
which expired at the end of 1993, under which he would have received a
payment equal to his annual base salary if he had resigned because of a
substantial reduction in job responsibilities or if the Bank had terminated
his employment (other than for cause). Mr. O'Neal's bonus for 1992, as shown
in the table, consists of the Performance Plan bonus and the deferred
compensation credit described in items (ii) and (iv) above.
(8) Mr. Shea joined the Corporation in January of 1993. Prior to joining the
Corporation, Mr. Shea signed a written offer of employment providing for (i)
an initial annual salary of $325,000, (ii) a hiring bonus of $125,000, (iii)
a minimum bonus of $125,000 under the Performance Plan for 1993 and (iv)
awards of 35,000 stock options and 10,000 shares of restricted stock upon
the commencement of his employment. This offer letter was approved by the
Compensation Committee in December of 1992. Mr. Shea's bonus for 1993, as
shown in the table, consists of the $125,000 hiring bonus plus a bonus of
$275,000 under the Performance Plan.
</TABLE>
15
<PAGE> 19
<TABLE>
STOCK-BASED COMPENSATION
The following table provides details regarding stock options granted to the
named Executive Officers in 1993 under the Stock Incentive Plan or the
Corporation's 1986 Stock Option 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 1993 to the named
Executive Officers. These gains are based on assumed rates of annual compound
stock price appreciation of 5% and 10% from the date the options were granted
over the full option term. To put this data into perspective, the resulting
stock prices for the grants expiring on February 25, 2003 would be $41.54 at a
5% rate of appreciation and $66.14 at a 10% rate of appreciation, and for the
grant expiring on January 19, 2003, $43.78 at a 5% rate of appreciation and
$69.71 at a 10% rate of appreciation.
OPTION GRANTS IN 1993
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL
------------------------------------------------------ REALIZABLE VALUE
% OF AT ASSUMED
TOTAL ANNUAL RATES OF
NUMBER OF OPTIONS STOCK PRICE
SECURITIES GRANTED APPRECIATION FOR
UNDERLYING TO EXERCISE OPTION TERM
OPTIONS GRANTED EMPLOYEES PRICE EXPIRATION ----------------
NAME (#)(1)(2) IN 1993 ($/SH.)(3) DATE(4) 5% 10%
- ---- --------------- --------- ---------- ---------- -- ---
<S> <C> <C> <C> <C> <C> <C>
I. Stepanian.................. 24,000 shs. 4.32% $ 25.50 2/25/03 $384,960 $ 975,360
C.K. Gifford.................. 16,800 3.02 25.50 2/25/03 269,472 682,752
E.A. O'Neal................... 12,000 2.16 25.50 2/25/03 192,480 487,680
W.J. Shea..................... 35,000 6.30 26.875 1/19/03 591,675 1,499,225
P.J. Manning.................. 7,200 1.30 25.50 2/25/03 115,488 292,608
- ---------------
<FN>
(1) Fifty percent of the stock options granted to Messrs. Stepanian, Gifford,
O'Neal and Manning are exercisable at the date of grant and the remaining
50% vest and become exercisable one year after the date of grant. The stock
options granted to Mr. Shea vest and become exercisable in four equal annual
installments beginning on the grant date. The Compensation Committee or the
Board of Directors may accelerate the exercisability of stock options, in
whole or in part, at any time. In addition, the exercisability of stock
options granted during 1993 would automatically accelerate upon a change of
control of the Corporation.
(2) The stock options granted to Messrs. Stepanian, Gifford, O'Neal and Manning
have a replenishment provision which provides for a "reload" option grant if
an optionee uses previously acquired shares of Common Stock to pay the
exercise price of a stock option. The reload option granted will equal the
number of whole shares tendered, and the new exercise price will be the
closing price of the Common Stock on the date the underlying stock option is
exercised. The new option will have the same expiration date as the original
option.
(3) The exercise price of all stock options may be no less than the closing
price of the Common Stock on the date of the grant.
(4) All stock options expire 10 years after the date of grant.
</TABLE>
None of the named Executive Officers exercised stock options during 1993.
The following table shows the number of shares underlying both "exercisable"
(i.e., vested) and "unexercisable" (i.e., unvested) stock options as of December
31, 1993. In addition, this table reports the values of "in-the-money" options,
which reflect the positive spread between the exercise price of any such
existing stock options and the year-end per share price of the Common Stock of
$23.00.
16
<PAGE> 20
<TABLE>
YEAR-END 1993 OPTION VALUES
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT YEAR-END(#) AT YEAR-END
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
I. Stepanian.......................................... 358,959 shs. 12,000 shs. $1,251,522 $ 0
C.K. Gifford.......................................... 248,992 8,400 1,191,588 0
E.A. O'Neal........................................... 41,000 41,000 0 0
W.J. Shea............................................. 8,750 26,250 0 0
P.J. Manning.......................................... 52,175 3,600 201,300 0
</TABLE>
<TABLE>
RETIREMENT BENEFITS
The following table shows the years of service and the estimated annual
retirement benefits payable at the Corporation's normal retirement age of 65 to
each of the named Executive Officers in the form of a single lifetime annuity
based on: current salary; average bonus awarded for the past five years (or, for
Messrs. O'Neal and Shea, estimated future bonuses); and an assumed future annual
interest rate of 7.5% on each individual's cash balance account:
<CAPTION>
PRIOR YEARS OF ESTIMATED ANNUAL
SERVICE AT AGE 65 RETIREMENT BENEFITS
----------------- -------------------
<S> <C> <C>
I. Stepanian........................................................... 38 $706,753
C.K. Gifford........................................................... 41 572,840
E.A. O'Neal............................................................ 17 144,430
W.J. Shea.............................................................. 20 139,353
P.J. Manning........................................................... 32 187,235
</TABLE>
The estimates shown reflect the current cash balance formula discussed
below, plus any accrued benefits (computed as a single lifetime annuity) under
the prior plan formula for service through December 31, 1988. For service
periods after December 31, 1988, credits are made annually to an individual's
account at a rate ranging from zero to 11% of the Executive Officer's salary and
bonus (as reported in the Summary Compensation Table), depending on the
individual's age and years of service. The maximum credit is made for an
individual with 20 to 34 years of service and no credit is made for an
individual with less than one year of service or 40 or more years of service. An
individual whose employment commences after age 40 receives an additional year
of service for each year by which his or her age at commencement exceeds 40. In
addition, interest ranging from a minimum of 5.5% to a maximum of 10% will be
credited annually on an individual's beginning-of-the-year account balance.
Subject to these minimum and maximum percentages, the interest credit percentage
will represent the average three-month Treasury Bill rate for the calendar year
plus 0.5%. These benefits are provided under a combination of the Bank's
tax-qualified retirement plan and supplemental plans. The supplemental plans
provide retirement income payments to cover benefits not payable under the tax-
qualified plan due to limitations imposed by tax law and the exclusion of bonus
awards from the basic retirement plan formula.
SUPPLEMENTAL DEATH BENEFITS
The Bank is providing for Messrs. Stepanian and Gifford supplemental
post-retirement death benefits of up to $1,000,000, increased for any tax
liability. These benefits are integrated with the term life insurance benefit
offered to all retired employees. In order to receive this full supplemental
benefit, an individual must have 10 years of service and retire after age 62;
the benefit is reduced to 90% if retirement occurs at age 61, and to 80% at age
60; if retirement occurs before age 60, there is no supplemental benefit.
17
<PAGE> 21
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Countryman, Connell, Rowe, Smith and Stephen J. Sweeney (who was a
Director until April 22, 1993) and Fr. Monan served as members of the
Compensation Committee during 1993. None of these individuals had any
transactions or relationships with the Corporation in 1993 requiring specific
disclosure under SEC rules. For a general description of the types of
transactions and relationships Directors and Executive Officers of the
Corporation and their associates may have had with the Corporation and/or its
affiliates during 1993, see "Indirect Interest of Directors and Executive
Officers in Certain Transactions" below.
During 1993, there were no "interlocking" or cross-board memberships that
are required to be disclosed under SEC rules, except for the following: Mr.
Stepanian was a director of Liberty Mutual Insurance Company (but not on Liberty
Mutual's compensation committee); Mr. Countryman, the Chairman and Chief
Executive Officer of Liberty Mutual, was the Chairman of the Corporation's
Compensation Committee. Mr. Countryman has been the Chairman of the Compensation
Committee for the past six years.
<TABLE>
FIVE-YEAR STOCKHOLDER RETURN COMPARISON
The following table compares the total return on the Corporation's Common
Stock over the last five years to the S&P 500 and the KBW 50. The KBW 50 is
comprised of 50 of the nation's largest banks, including all money-center and
most major regional banks. Total return values for these indices were calculated
based on cumulative total return values, assuming reinvestment of dividends.
COMPARISONS OF FIVE-YEAR TOTAL STOCKHOLDER RETURNS
<CAPTION>
MEASUREMENT PERIOD BANK OF BOSTON
(FISCAL YEAR COVERED) CORPORATION S & P 500 KBW 50
<S> <C> <C> <C>
1988 $100 $100 $100
1989 85 132 119
1990 31 128 85
1991 58 167 135
1992 129 179 172
1993 118 197 182
</TABLE>
18
<PAGE> 22
INDIRECT INTEREST OF DIRECTORS AND EXECUTIVE OFFICERS IN CERTAIN TRANSACTIONS
Some Directors and Executive Officers of the Corporation and their
associates were customers of and had transactions with or involving the Bank
and/or one or more of the Corporation's other subsidiaries in the ordinary
course of business during 1993. Additional transactions may be expected to take
place in the ordinary course of business in the future. Some of the
Corporation's Directors are directors, officers, trustees or principal security
holders of corporations or other organizations which were customers of, or had
transactions with, the Bank and/or one or more of the Corporation's other
affiliates in the ordinary course of business during 1993. In addition, Mr. Budd
is a Senior Partner at Goodwin, Procter & Hoar, a law firm which the Corporation
has retained from time to time in connection with various legal matters.
The outstanding loans and commitments to, and other financial transactions
with, Directors or Executive Officers of the Corporation or to or with persons
or business entities affiliated with Directors or Executive Officers of the
Corporation were made in the ordinary course of business 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 collection or present other unfavorable features. In
addition to banking and financial transactions, the Bank and other subsidiaries
of the Corporation, but not the Corporation itself, have had additional
transactions with, or have used products or services of, various organizations
of which Directors of the Corporation are directors or officers. The amounts
involved have in no case been material in relation to the business of the Bank
or other subsidiaries of the Corporation, and it is believed that they have not
been material in relation to the business of such other organizations. It is
expected that the Bank and other subsidiaries of the Corporation will continue
to have similar transactions with, and use products or services of, such
organizations in the future.
RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS
(PROXY ITEM 2)
The firm of Coopers & Lybrand has been selected by the Board of Directors,
subject to ratification by the Stockholders, to be the Corporation's independent
auditors for 1994. Coopers & Lybrand, independent certified public accountants,
has served as independent auditors of the Bank and its subsidiaries since 1969,
and of the Corporation since it commenced activity in 1971, and has wide
experience in bank accounting and auditing. Neither the firm nor any of its
partners has any direct or indirect financial interest in, or any connection
(other than as independent auditors) with, the Corporation or the Bank or any of
the Corporation's other subsidiaries. Representatives of Coopers & Lybrand are
expected to be present at the Meeting to respond to appropriate questions and
will have the opportunity to make a statement if they so desire.
The consolidated financial statements of the Corporation for the year ended
December 31, 1993 have been audited and reported upon by Coopers & Lybrand. In
connection with its independent audit function during 1993, Coopers & Lybrand
also reviewed certain filings with the SEC, audited the financial statements of
certain subsidiaries and affiliates and issued reports in specific areas. In
addition, Coopers & Lybrand performed certain non-audit services including
consultations with the Corporation and its subsidiaries regarding systems,
policies, procedures, internal controls, potential acquisitions, reviews of
certain tax returns, provision of income tax services to certain officers of the
Corporation and expatriate employees and assistance in other operational
projects. All of the professional services provided by Coopers & Lybrand during
1993 were furnished at customary rates and terms. Should the selection of
Coopers & Lybrand as independent auditors of the Corporation not be ratified by
the Stockholders, the Board of Directors will reconsider the matter.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL TO RATIFY
THE SELECTION OF THE FIRM OF COOPERS & LYBRAND AS INDEPENDENT AUDITORS TO
EXAMINE THE CORPORATION'S FINANCIAL STATEMENTS FOR THE CURRENT FISCAL YEAR.
19
<PAGE> 23
STOCKHOLDER PROPOSAL
(PROXY ITEM 3)
Evelyn Y. Davis, Watergate Office Building, 2600 Virginia Ave. N.W., Suite
215, Washington, D.C. 20037, who holds of record 300 shares of the Corporation's
Common Stock, has informed the Corporation that she intends to introduce the
following proposal for action at the Meeting:
RESOLVED: That the stockholders recommend that the Board of Directors
take the necessary steps to change the Annual Meeting date to the fourth
Thursday of March.
The statement submitted in support of this Stockholder Proposal is as follows:
Recently the Annual Meetings were held on a date where another major
corporation met. Until a few years ago, the Company has met on a date where
more independent non-employee shareholders could meet.
The many problems the Company faces makes maximum attendance by outside
independent stockholders especially desirable.
During 1993 Bank of Boston met on one of the busiest annual meeting dates of
the year.
If you AGREE, please mark your proxy FOR this resolution.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS STOCKHOLDER PROPOSAL.
The Corporation's By-Laws currently provide that the Annual Meeting of
Stockholders is to be held on a date determined each year by the Board of
Directors. The flexibility provided by the By-Laws allows the Board to take into
consideration all relevant factors in setting the meeting date. One of the
factors that affects the meeting date is the time required to prepare the Proxy
Statement, particularly in light of the SEC's recently expanded executive
compensation disclosure requirements. In addition, the April Annual Meeting
dates selected by the Board for 1993 and 1994 have enabled the Corporation to
include in the Proxy Statement the most current bonus compensation information.
If the Corporation were to adopt the Annual Meeting date set forth in the
proposal, this information would not be available in time for inclusion in the
Proxy Statement. The Corporation also would be forced to incur increased costs
related to the accelerated preparation, printing and distribution of the Proxy
Statement.
The Corporation encourages all Stockholders to attend the Meeting in person
if possible but recognizes that, due to the large number of Stockholders
involved, any date selected may be convenient for some Stockholders and present
a conflict for others. The Board of Directors believes that it is in the best
interest of the Corporation and its Stockholders to retain the flexibility
provided in the By-Laws and not be limited to the Annual Meeting date specified
in the proposal.
FOR THE FOREGOING REASONS, THE BOARD OF DIRECTORS OF THE CORPORATION
RECOMMENDS A VOTE AGAINST THIS STOCKHOLDER PROPOSAL.
SUBMISSION OF STOCKHOLDER PROPOSALS FOR 1995 ANNUAL MEETING
Stockholders who wish to submit proposals pursuant to Rule 14a-8 under the
Exchange Act at the 1995 Annual Meeting of Stockholders will be required to
deliver the proposals to the Corporation on or prior to November 21, 1994. The
Corporation's By-Laws also contain certain provisions which impose additional
requirements upon the submission of Stockholder nominations for Director and
other Stockholder proposals. Please forward any such proposals or the required
notices to Gary A. Spiess, Clerk, Bank of Boston Corporation, P.O. Box 1864,
1-24-7, Boston, Massachusetts 02105.
20
<PAGE> 24
OTHER MATTERS
The Board of Directors knows of no business which will be presented for
consideration at the Meeting other than those items set forth in this Proxy
Statement. The enclosed proxy confers upon each person entitled to vote the
shares represented thereby discretionary authority to vote such shares with
respect to any other matter which may be properly presented for action at the
Meeting.
BY-LAWS OF THE CORPORATION
Since last year's Annual Meeting of Stockholders, there have been two
amendments to the By-Laws of the Corporation by the Board of Directors. The
By-Laws were amended on April 22, 1993 to revise the description of the office
of President to provide that the President has the duties of Chief Operating
Officer. In connection with certain organizational and management changes
implemented by the Corporation, the By-Laws were amended on October 28, 1993 to
revise the description of the office of Vice Chairman and the responsibilities
of such office.
A copy of the amended By-Laws of the Corporation may be obtained without
charge by a Stockholder upon written request addressed to the Clerk of the
Corporation at the address set forth above and copies of the amended By-Laws
will be made available at the Meeting.
EXPENSES OF SOLICITATION
The Corporation will bear the cost of preparing, assembling and mailing the
Notice, Proxy Statement and form of proxy for the Meeting. Solicitation of
proxies will be primarily through the use of the mails, but employees of the
Bank may solicit proxies, by personal interview, by telephone or by other means
of communication, without additional compensation therefor. The Corporation 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, proxy material for transmittal to such beneficial owners and
reimburse such record holders for their reasonable expenses in so doing.
ANNUAL REPORT
A copy of the Corporation's Annual Report to Stockholders for the year ended
December 31, 1993, which includes financial statements, has been previously
mailed to all Stockholders. The Annual Report is not to be regarded as proxy
soliciting material.
10-K REPORT
A copy of the Corporation's Annual Report to the SEC on Form 10-K for the
year ended December 31, 1993 will be made available at the Meeting and may be
obtained without charge by any Stockholder upon written request addressed to
Cynthia Grossman, External Affairs, The First National Bank of Boston, P.O. Box
1987, 1-28-5, Boston, Massachusetts 02105.
By Order of the Board of Directors,
/s/ GARY A. SPIESS
GARY A. SPIESS
Clerk
Dated: March 21, 1994
21
<PAGE> 25
INDEX TO PROXY STATEMENT
Page
Voting Information............. 1
Election of Directors.......... 2
Ratification of the Selection of
Independent Auditors......... 19
Stockholder Proposal........... 20
Submission of Stockholder Pro-
posals for 1995 Annual Meeting 20
Other Matters.................. 21
By-Laws of the Corporation..... 21
Expenses of Solicitation....... 21
Annual Report.................. 21
10-K Report.................... 21
[EAGLE]
BANK OF BOSTON
CORPORATION
NOTICE OF
ANNUAL MEETING
OF STOCKHOLDERS
AND
PROXY STATEMENT
Time:
Thursday, April 28, 1994
10:30 A.M.
Place:
600 Atlantic Avenue
Boston, Massachusetts
(Auditorium of
The Federal Reserve Bank of Boston)
PLEASE SIGN AND RETURN YOUR PROXY PROMPTLY
<PAGE> 26
PROXY
BANK OF BOSTON CORPORATION
The undersigned, revoking previous proxies relating to these shares,
hereby acknowledges receipt of the Notice and Proxy Statement dated March 21,
1994 in connection with the Annual Meeting to be held at 10:30 a.m. on April
28, 1994 in the Auditorium of The Federal Reserve Bank of Boston, and hereby
appoints Allen G. Barry, Helene R. Cahners-Kaplan and Frank L. Farwell, and
each of them (with full power to act alone), the attorneys and proxies of the
undersigned, with power of substitution to each, to vote all shares of the
Common Stock of BANK OF BOSTON CORPORATION registered in the name provided
herein which the undersigned is entitled to vote at the 1994 Annual Meeting of
Stockholders, and at any adjournment or adjournments thereof, with all the
powers the undersigned would have if personally present. Without limiting the
general authorization hereby given, said proxies are, and each of them is,
instructed to vote or act as follows on the proposals set forth in said Proxy
Statement.
THIS PROXY WILL BE VOTED AS SPECIFIED OR, IF NO CHOICE IS SPECIFIED, FOR THE
ELECTION OF THE NOMINEES NAMED, FOR ITEM 2, AGAINST ITEM 3, AND AS PROXIES DEEM
ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
.------------------.
| SEE REVERSE SIDE |
`------------------'
/ X / Please mark votes as in this example.
<TABLE>
THIS PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS OF BANK OF BOSTON CORPORATION.
<S> <C>
__________________________________________________________________
The Board of Directors recommends a vote FOR Proposals 1 and 2.
__________________________________________________________________
1. Election of five Directors for three-year terms (or if any
nominee is not available for election, such substitute as the Board ____________________________________
of Directors may designate): The Board of Directors recommends a
vote AGAINST Proposal 3.
NOMINEES: Countryman, Monan, Smith ____________________________________
Stepanian, Van Faasen FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
FOR WITHHELD 2. Selection of Inde- / / / / / / 3. Stockholder Proposal / / / / / /
all / / from all / / pendent Auditors. regarding Annual
nominees nominees Meeting date.
For except vote withheld from the
following nominee(s):
/ /________________________________
MARK HERE / /
FOR ADDRESS
CHANGE AND
NOTE CHANGE
AT LEFT
</TABLE>
Please sign exactly as name appears Signature:________________Date:_______
hereon. Joint owners should each Signature:________________Date:_______
sign. When signing as attorney, exe-
cutor, administrator, trustee or
guardian, please give full title as such.
