<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
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/X/ 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)
--------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item
22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act
Rule 0-11 (Set forth the amount on which the filing fee is calculated and
state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
BANK OF BOSTON CORPORATION [LOGO]
100 FEDERAL STREET - BOSTON - MASSACHUSETTS 02110
March 20, 1995
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 27, 1995, 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,
[facsimile signature] [facsimile signature]
CHARLES K. GIFFORD IRA STEPANIAN
President and Chairman of the Board
Chief Operating Officer of Directors and
Chief Executive Officer
<PAGE> 3
[LOGO]
BANK OF BOSTON CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 27, 1995
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 27, 1995, 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 1998 Annual
Meeting of Stockholders;
(2) To ratify the selection by the Board of Directors of Coopers &
Lybrand L.L.P. as the Corporation's independent auditors for 1995;
(3) To approve amendments to the Bank of Boston Corporation Director
Stock Award Plan;
(4) To consider and act upon two Stockholder proposals described in the
accompanying Proxy Statement, if such proposals are presented to the
Meeting; and
(5) To transact such other business as may properly come before the
Meeting.
The Board of Directors has fixed the close of business on March 8, 1995 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,
[facsimile signature]
GARY A. SPIESS
Clerk
Boston, Massachusetts
March 20, 1995
<PAGE> 4
BANK OF BOSTON CORPORATION [LOGO]
100 FEDERAL STREET - BOSTON - MASSACHUSETTS 02110
PROXY STATEMENT
FOR THE
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 27, 1995
This Proxy Statement, with the accompanying proxy card, is being mailed to
Stockholders on March 20, 1995 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 27, 1995 (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 8, 1995 will be entitled to
vote at the Meeting. On that date, 107,692,963 shares of Common Stock were
issued and outstanding, exclusive of treasury shares. 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), (2) and (3) on the proxy card and AGAINST each of the two Stockholder
proposals.
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, MA BOS 01-24-07, 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 1998 Annual Meeting of Stockholders. All of the
nominees were elected at the 1992 Annual Meeting of Stockholders, except Mr.
Connell who was elected effective February, 1993 and Mr. May who was elected
effective July, 1994.
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 1996 and 1997.
2
<PAGE> 6
<TABLE>
NOMINEES FOR ELECTION AS DIRECTORS
TERMS EXPIRE AT THE 1998 ANNUAL STOCKHOLDERS' MEETING
<S> <C>
WILLIAM F. CONNELL Chairman and Chief Executive Officer of Connell Limited Partnership (a
Age 56 company primarily engaged in metals recycling and the manufacture of
Director since 1993 industrial products). Chairman and Chief Executive Officer of Connell
Limited Partnership since 1987; Director of the The First National
Bank of Boston (the "Bank") since 1993; Director of Boston Edison
Company, Arthur D. Little, Inc., Harcourt General, Inc. and North
American Mortgage Company.
THOMAS J. MAY Chairman and Chief Executive Officer of Boston Edison Company.
Age 47 Executive Vice President of Boston Edison Company from 1990 to 1993,
Director since July, 1994 President and Chief Operating Officer from 1993 to July, 1994 and
Chairman and Chief Executive Officer since July, 1994; Director of the
Bank since July, 1994; Director of New England Mutual Life Insurance
Company.
DONALD F. MCHENRY University Research Professor of Diplomacy and International
Age 58 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 58 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 65 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>
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<PAGE> 7
<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). United States
Age 53 Attorney, District of Massachusetts, from 1989 to 1992; Associate
Director since 1993 Attorney General of the United States from 1992 to 1993; Senior
Partner, Goodwin, Procter & Hoar, since 1993; Director of the Bank
since 1993.
ALICE F. EMERSON Senior Fellow, The Andrew W. Mellon Foundation; President Emerita of
Age 63 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 52 Bank. Elected President of the Corporation and the Bank in 1989 and
Director since 1987 Chief Operating Officer of both in 1993; Director of the Bank since
1987; Director of Massachusetts Mutual Life Insurance Company and
Boston Edison Company.
PAUL C. O'BRIEN President of The O'Brien Group, Inc. (a firm engaged in providing
Age 55 consulting services to companies in the areas of community relations
Director since 1988 and external affairs). President and Chief Executive Officer of New
England Telephone and Telegraph Company from 1988 to 1993 and Chairman
of the Board from 1993 to December, 1994; President of The O'Brien
Group, Inc. since January, 1995; Director of the Bank since 1988;
Director of Cambridge NeuroScience, Inc., First Pacific Networks Inc.
and Shiva Corporation.
JOHN W. ROWE President and Chief Executive Officer of New England Electric System.
Age 49 President and Chief Executive Officer of New England Electric System
Director since 1989 since 1989; Director of the Bank since 1989; Director of New England
Electric System and UNUM Corporation.
</TABLE>
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<PAGE> 8
<TABLE>
DIRECTORS CONTINUING IN OFFICE
TERMS EXPIRE AT THE 1997 ANNUAL STOCKHOLDERS' MEETING
<S> <C>
GARY L. COUNTRYMAN Chairman and Chief Executive Officer of Liberty Mutual Insurance
Age 55 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 Bank since 1982; Director of Boston Edison Company,
The Neiman-Marcus Group, Inc. and Alliance of American Insurers.
J. DONALD MONAN, S.J. President of Boston College, Chestnut Hill, Massachusetts. President
Age 70 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 70 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 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 58 Corporation and of the Bank. Chairman of the Board of Directors and
Director since 1981 Chief Executive Officer of the Corporation and the Bank 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 46 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.
</TABLE>
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<PAGE> 9
<TABLE>
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
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 24, 1995.
As of that date, current Directors and Executive Officers, in the aggregate,
beneficially owned 2.62% 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 24, 1995, 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........................... 845 200(3) 1,045
William F. Connell...................... 25,845 8,540(4) 34,385
Gary L. Countryman...................... 1,862 1,862
Alice F. Emerson........................ 2,285 2,285
Charles K. Gifford...................... 32,009(5) 414(3) 57,826 307,436(6) 397,685
Peter J. Manning........................ 3,245(7) 4,832(3) 19,668 73,875(6) 101,620
Thomas J. May........................... 493 493
Donald F. McHenry....................... 3,923 3,923
J. Donald Monan......................... 815 815
Paul C. O'Brien......................... 3,357 3,357
Edward A. O'Neal........................ 35,000 113,500(6) 148,500
John W. Rowe............................ 1,078 1,078
William J. Shea......................... 2,000(8) 27,000 75,250(6) 104,250
Richard A. Smith........................ 3,065 3,065
Ira Stepanian........................... 162,173(9) 10,000(3) 81,334 464,722(6) 718,229
William C. Van Faasen................... 604 604
Thomas B. Wheeler....................... 1,628 1,628
Alfred M. Zeien......................... 1,315 1,315
Directors and Executive Officers as a
group................................. 317,930(10) 15,446 514,008 2,020,741 2,868,125
<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 which are subject to forfeiture and/or transfer
restrictions under the terms of 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 upon conversion
of the Corporation's 7 3/4% Convertible Subordinated Debentures Due 2011
("Debentures"). The Debentures have been called for redemption. Holders of
Debentures have the option, on or before the redemption date of March 27,
1995, of redeeming their Debentures or converting them into shares of
Common Stock.
(5) Includes 543 shares held by Mr. Gifford as custodian for his children.
(6) Represents shares which the individual has a right to acquire on or before
April 25, 1995 through the exercise of stock options granted under the
Corporation's 1982 or 1986 Stock Option Plans or the Stock Incentive Plan.
(7) Represents shares held for Mr. Manning's benefit by the Bank as Trustee
under the Thrift Plan.
(8) Represents shares held by Mr. Shea's spouse.
(9) Includes 22,500 shares held by Mr. Stepanian's spouse.
(10) Includes 36,121 shares held for the benefit of 17 Executive Officers by the
Bank as Trustee under the Thrift Plan.
</TABLE>
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<TABLE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The table below sets forth, to the knowledge of the Corporation, the only
beneficial owners of more than five percent (5%) of the Corporation's Common
Stock as of December 31, 1994:
<CAPTION>
PERCENTAGE
OF
SHARES OF COMMON STOCK COMMON STOCK
OWNED AND TYPE OF BENEFICIALLY
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OWNED
------------------------------------ ---------------------- ------------
<S> <C> <C>
FMR Corp......................................... 7,562,405(1) 7.03%
82 Devonshire Street
Boston, Massachusetts 02109
Mellon Bank Corporation.......................... 5,978,431(2) 5.58
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
<FN>
- ---------------
(1) Information based upon the Schedule 13G, dated February 13, 1995, filed by
FMR Corp. ("FMR") with the Securities and Exchange Commission (the "SEC").
According to the Schedule 13G, FMR and its Chairman, Edward C. Johnson 3d,
each has sole investment power as to all of the above shares and FMR has
sole voting power with respect to 380,060 of such shares. Fidelity
Management & Research Company ("Fidelity"), a subsidiary of FMR,
beneficially owns 6,851,646 of the above shares as a result of acting as
investment advisor to several registered investment companies. The shares
beneficially owned by Fidelity include 301,199 shares which may be acquired
upon conversion of Debentures. Fidelity Management Trust Company ("FMTC"), a
subsidiary of FMR, beneficially owns 710,760 of the above shares as a result
of serving as investment manager of several institutional accounts. The
shares beneficially owned by FMTC include 57,644 shares which may be
acquired upon conversion of Debentures.
(2) Information based on the Schedule 13G, dated February 14, 1995, filed by
Mellon Bank Corporation ("Mellon") with the SEC. All of the above shares are
reported to be beneficially owned by Mellon or its subsidiaries in their
various fiduciary capacities. According to the Schedule 13G, Mellon has sole
investment power as to 4,790,550 of such shares, shared investment power as
to 1,187,881 of such shares, sole voting power as to 4,530,231 of such
shares and shared voting power as to 5,000 of such shares.
</TABLE>
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 all Section 16(a) filing
requirements applicable to its Executive Officers and Directors were complied
with during 1994.
1994 MEETINGS AND STANDARD FEE ARRANGEMENTS OF THE BOARD OF DIRECTORS AND
COMMITTEES
1994 Meetings -- During 1994, 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
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<PAGE> 11
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. In addition to the Bank committees noted above, the
Board of Directors of the Bank has a Trust Committee, the members of which are
appointed each year following the Bank's Annual Meeting of Stockholders.
The Executive Committee of the Corporation, during the interval between
Board meetings, may exercise all of the authority of the Board of Directors of
the Corporation, except those powers that are expressly reserved to the Board
under law or the Corporation's By-Laws. The members of the Executive Committee
are also members of the Executive Committee of the Bank and customarily hold
joint meetings of both committees.
The Executive Committee of the Corporation held 12 meetings in 1994. As of
March 20, 1995, its members were Messrs. Connell, Countryman, Gifford, May,
O'Brien, Smith, Stepanian and Zeien.
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. In
addition, the committee is responsible for reviewing matters associated with
internal control and the management of risk. 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 three meetings in 1994 (the
committee normally will hold four meetings a year, but was in the process of
adjusting its meeting schedule during 1994). As of March 20, 1995, its members
were Messrs. McHenry (Chairman), Budd, Van Faasen, 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 1994, the Compensation and Nominating Committee held six meetings in its
capacity as a compensation committee and one meeting in its capacity as a
nominating committee. As of March 20, 1995, 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
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<PAGE> 12
candidates directly should submit such proposals or the required notices in
writing to the Clerk of the Corporation, at the address set forth above under
"VOTING INFORMATION."
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
1994. As of March 20, 1995, its members were Messrs. Wheeler (Chairman), Budd,
O'Brien, Rowe and Van Faasen.
The functions of the Trust Committee of the Bank include reviewing and
approving all general policies pertaining to the exercise of fiduciary powers by
the Bank and overseeing the exercise of the Bank's fiduciary powers and
policies.
The Bank's Trust Committee held four meetings in 1994. As of March 20, 1995,
its members included certain officers of the Bank and the following Directors:
Ms. Emerson (Chair), Messrs. McHenry and Zeien and Fr. Monan.
In 1994, 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.
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 $1,200 for attendance at each
meeting of the Board and $1,000 for attendance at each Board committee meeting.
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 $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).
Non-employee 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 certain ten-year U.S. Treasury Note
rates. The Corporation and the Bank have established trusts for the payment of
deferred Director fees (and for payment of the Director retirement benefits
described below), which will be funded at the discretion of the Board of
Directors or under circumstances constituting a change of control of the
Corporation.
Under the Corporation's Director Stock Award Plan, 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. Awards are prorated in the case of any Director who was not a Director
for all of the preceding award period.
On December 22, 1994, the Board of Directors adopted amendments to the
Director Stock Award Plan, subject to stockholder approval, to increase the
semi-annual stock award payable to each non-employee Director to a number of
shares having a fair market value equal to 50% of the annual cash retainer in
effect at the beginning of the preceding award period, exclusive of meeting fees
and committee retainers. These amendments, which would be effective beginning
with stock awards payable on July 1, 1995, are being submitted to Stockholders
for approval under Proxy Item 3.
9
<PAGE> 13
Effective January 1, 1995, the Board of Directors also amended the Director
Stock Award Plan to allow each non-employee Director to elect annually to defer
receipt of his or her stock awards for the following calendar year. The number
of shares so deferred, together with dividend equivalents, will be credited to a
share deferral account established for the Director.
Each non-employee 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. Upon a change of control of the Corporation,
each non-employee Director will be fully vested in his or her retirement
benefit.
10
<PAGE> 14
COMPENSATION OF EXECUTIVE OFFICERS
COMPENSATION COMMITTEE REPORT
ON
EXECUTIVE COMPENSATION
The Compensation and Nominating Committee (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 1994, 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 performance
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 Corporation's three strategic
businesses: Personal, Corporate and Global Banking. Specific banks were selected
on the basis of loan volume, international presence, business diversity and
complexity, competitive similarity, corporate strategy and asset size.
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
11
<PAGE> 15
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 1994, the Compensation
Committee reviewed Comparator Banks Group data for 1993. According to this data,
salaries for 1994 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 target depending on performance. Performance is
measured primarily on results achieved against internal goals. The goals for
1994, which were not specifically weighted in terms of relative importance, are
described below under the heading "Chief Executive Officer Compensation for
1994." The Compensation Committee may also review other internal and external
criteria in determining bonus funding levels and individual awards. In setting
bonus awards for 1994, the Compensation Committee reviewed Comparator Banks
Group data regarding annual bonuses paid in 1994 for 1993 performance. According
to this data, bonuses for 1994 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 stock awards. 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.
12
<PAGE> 16
RESTRICTED STOCK. Prior to 1994 (and during 1994 with respect to officers
who were not members of the Corporate Working Committee described below), the
Compensation Committee awarded or recommended the award of shares of restricted
stock having forfeiture restrictions which generally lapse over a five-year
period. These shares vest in installments of one-third on each of the third,
fourth, and fifth anniversaries of the grant date if the officer is then
employed by an affiliate of the Corporation, subject to earlier vesting in the
event of the officer's death, retirement or disability or a change of control of
the Corporation.
In 1994, the Compensation Committee awarded or recommended the award of
shares of Performance Restricted Stock to the members of the Corporate Working
Committee, a group of Executive Officers consisting of the named Executive
Officers and other executives in charge of core businesses or corporate-wide
support areas. Intended as a one-time, supplemental award, these shares will
vest dependent on the Corporation's stock price performance. If the price of the
Corporation's Common Stock reaches $40 per share for two consecutive trading
days on or before January 26, 1998, 75% of the shares awarded will vest. The
remaining 25% of the shares awarded will vest if the Corporation's stock price
reaches $45 for two consecutive trading days on or before that date. Any
unvested shares would vest upon a change of control of the Corporation. The size
of each award was set as follows: (i) for each of the named Executive Officers
(other than Mr. Manning), a number of shares having a value, if vested,
approximately equal to the executive's base salary at the time of grant and (ii)
for Mr. Manning and the other members of the Corporate Working Committee, a
number of shares having a value, if vested, approximately equal to the average
base salary of those executives at the time of grant. The Performance Restricted
Stock is designed to provide members of the Corporate Working Committee with a
significant incentive to promote the growth of Stockholder value and to
encourage teamwork through a common goal that closely aligns their interests
with the interests of Stockholders.
STOCK OPTIONS. In setting the level of stock option grants in 1994, the
Compensation Committee reviewed Comparator Banks Group data on long-term
incentive grants made during 1993. According to this data, stock option grants
made in 1994 were within the range targeted by the Compensation Committee.
In granting or recommending the grant of stock options to Executive Officers
in 1994, the Compensation Committee took into account the executive's level of
responsibility and potential for enhancing, through stock price appreciation,
the long-term interests of Stockholders, as well as the practices of the
Comparator Banks Group as verified by external surveys conducted annually. The
Compensation Committee did not consider the amount of stock options or
restricted stock already held by Executive Officers when it determined
individual stock option grants for 1994.
Chief Executive Officer Compensation for 1994
Effective April 4, 1994, the Board of Directors increased Mr. Stepanian's
annual salary from $785,000 to $830,000. This increase reflected the Board's
assessment of his performance over the prior twelve-month period and recognized
the continued improvement in the Corporation's earnings performance, operating
ratio (the ratio of noninterest expense to total revenue), capital ratios and
credit quality (which, for the Corporation, is based on a measure of the
Corporation's lower quality exposures compared to capital) 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 operating 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 1994 results of the
Corporation. All goals were met or exceeded in 1994. The Compensation Committee
also considered Comparator Banks Group bonus data provided by an independent
consulting firm. Based on these factors, Mr. Stepanian was awarded a bonus of
$1,500,000 for 1994 performance.
13
<PAGE> 17
After an extensive review of actual bonuses awarded by the Comparator Banks
Group for 1993 performance, the Compensation Committee determined that the bonus
paid to Mr. Stepanian in March of 1994 was substantially below the competitive
practice of the Comparator Banks Group. To correct this competitive disparity,
which the Compensation Committee believes was unjustified in light of the
Corporation's strong performance during 1993, the Compensation Committee
recommended, and the Board of Directors approved, the payment of a supplemental
bonus of $300,000 to Mr. Stepanian for 1993 performance, bringing his total
bonus within the targeted range for that year.
Mr. Stepanian was also awarded 105,000 stock options and 21,000 shares of
Performance Restricted Stock in 1994. These long-term stock incentive awards
support the Compensation Committee's interest in linking Mr. Stepanian's
compensation to the longer term performance of the Corporation and are designed
to provide a strong incentive for a significant increase in Stockholder value.
Deductibility of Executive Compensation under the Internal Revenue Code
Under the provisions of the Omnibus Budget Reconciliation Act of 1993, 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. Proposed Internal Revenue Service
("IRS") regulations and transition rules of Section 162(m) of the Internal
Revenue Code (the "Code") do specify certain conditions which, if satisfied,
will qualify compensation for deductibility even if it exceeds one million
dollars.
The Compensation Committee has discussed these tax provisions and has
conducted an 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 Stock Incentive Plan, the short-term impact of these provisions
on the Corporation will not be material. The Compensation Committee also has
considered the impact of the proposed regulations on annual discretionary
bonuses awarded under the Performance Plan. The proposed regulations provide
that, in order to ensure deductibility of any bonus compensation that may bring
total compensation over the million dollar limit, a "formula type" bonus
approach must be used with only limited Compensation Committee discretion
permitted. The Compensation Committee believes that judgment and discretion are
critical to effective performance assessment as well as related bonus
determinations and has therefore decided not to adopt such a rigid formula-type
bonus plan at this time. The Compensation Committee will continue to monitor the
impact of Section 162(m) on an ongoing 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
14
<PAGE> 18
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 $25.875 per
share, which was the closing price of the Common Stock for December 30, 1994, as
reported in the "New York Stock Exchange Composite Transactions" section of the
Eastern Edition of The Wall Street Journal.
<TABLE>
The following table displays compensation information for the past three
fiscal years for each of the named Executive Officers:
SUMMARY COMPENSATION TABLE
<CAPTION>
ANNUAL COMPENSATION(1) LONG-TERM COMPENSATION
-------------------------------------- -----------------------
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.......... 1994 $817,884 $1,500,000 -- --(6) 105,000shs. $ 64,657
Chairman/CEO 1993 768,846 1,100,000(7) -- $153,000 24,000 50,265
1992 696,955 600,000 -- 350,000 75,786(8) 43,980
C.K. Gifford.......... 1994 604,807 1,000,000 -- --(6) 65,000 46,849
President/COO 1993 550,000 550,000 -- 107,100 16,800 35,801
1992 517,948 455,000 -- 250,000 37,500 31,742
E.A. O'Neal........... 1994 418,269 500,000 -- --(6) 35,000 11,006
Vice Chairman 1993 400,000 300,000 $128,698 76,500 12,000 6,230
1992 153,601(9) 400,000(9) 320,145 354,375(9) 70,000(9) 2,080
W.J. Shea............. 1994 350,576 500,000 -- --(6) 35,000 6,828
Vice Chairman, CFO 1993 305,000(10) 400,000(10) -- 268,750(10) 35,000(10) 2,989
and Treasurer 1992 -- -- -- -- -- --
P.J. Manning.......... 1994 245,000 210,000 -- --(6) 12,500 10,368
Executive Director 1993 245,000 140,000 -- 45,900 7,200 10,165
1992 236,859 130,000 -- 68,000 13,600 9,667
<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) 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.
(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.
</TABLE>
15
<PAGE> 19
<TABLE>
As of December 31, 1994, each of the named Executive Officers held the
following number of restricted shares having the corresponding year-end
market values:
<CAPTION>
AS OF DECEMBER 31, 1994
---------------------------
TOTAL NUMBER
OF
RESTRICTED AGGREGATE
NAME SHARES HELD MARKET VALUE
---- ------------ ------------
<S> <C> <C>
I. Stepanian..................................................................... 60,334 $1,561,142
C.K. Gifford..................................................................... 42,200 1,091,925
E.A. O'Neal...................................................................... 28,000 724,500
W.J. Shea........................................................................ 20,000 517,500
P.J. Manning..................................................................... 16,868 436,460
</TABLE>
Restricted shares awarded to the named Executive Officers prior to 1994
("Time-Lapse Restricted Stock") vest in installments of one-third 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, subject to earlier
vesting in the event of the executive's death, retirement or disability.
Restricted shares awarded to those individuals in 1994 ("Performance
Restricted Stock") vest dependent on the Corporation's stock price
performance. With respect to both Time Lapse and Performance Restricted
Stock, half of the shares delivered on each designated anniversary date (in
the case of the Time-Lapse Restricted Stock) or on each date after which the
designated stock prices are reached (in the case of the Performance
Restricted Stock) 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 the restrictions on restricted stock at any time. In
addition, the restrictions on both Time Lapse and Performance Restricted
Stock would automatically lapse upon a change of control of the Corporation.
Dividends are paid on Time-Lapse Restricted Stock to the same extent as they
are paid on the Corporation's Common Stock generally. Dividends accrue on
shares of Performance Restricted Stock, but will not be paid to the
executive unless the shares vest.
(5) Includes matching employer contributions and credits under the Thrift Plan
and the Deferral Plan for the named Executive Officers as follows:
1994 -- Mr. Stepanian, $32,715; Mr. Gifford, $24,192; Mr. O'Neal, $1,962;
and Mr. Manning, $9,800; 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: 1994 -- Mr. Stepanian,
$31,942; Mr. Gifford, $22,657; Mr. O'Neal, $9,044; Mr. Shea, $6,828; and
Mr. Manning, $568; 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.
(6) Awards of Performance Restricted Stock are not reported as "Restricted
Stock Awards" because of their performance-based conditions on vesting.
These awards are reported below in the "Long-Term Incentive Plans -- Awards
in 1994" table and are included in the year-end restricted stock holdings
shown above in footnote 4.
(7) Includes a supplemental bonus of $300,000 awarded in December, 1994 for
1993 performance.
(8) Includes a "reload" option grant of 23,286 shares. See discussion below in
footnote 2 to the "Option Grants in 1994" table.
(9) 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 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.
(10) 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. 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.
16
<PAGE> 20
STOCK-BASED COMPENSATION
The following table provides details regarding stock options granted to the
named Executive Officers in 1994 under the Stock Incentive 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 1994 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 would be $41.54 at a 5% rate of
appreciation and $66.14 at a 10% rate of appreciation.
<TABLE>
OPTION GRANTS IN 1994
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL
------------------------------------------------------ REALIZABLE VALUE
% OF AT ASSUMED
TOTAL ANNUAL RATES OF
NUMBER OF OPTIONS STOCK PRICE
SECURITIES GRANTED APPRECIATION FOR
UNDERLYING TO EXERCISE OPTION TERM
OPTIONS GRANTED EMPLOYEES PRICE EXPIRATION -----------------------
NAME (#)(1)(2) IN 1994 ($/SH.)(3) DATE(4) 5% 10%
- ----------------------------- --------------- --------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
I. Stepanian................. 105,000shs. 11.00% $25.50 1/27/04 $1,684,200 $4,267,200
C.K. Gifford................. 65,000 6.81 25.50 1/27/04 1,042,600 2,641,600
E.A. O'Neal.................. 35,000 3.67 25.50 1/27/04 561,400 1,422,400
W.J. Shea.................... 35,000 3.67 25.50 1/27/04 561,400 1,422,400
P.J. Manning................. 12,500 1.31 25.50 1/27/04 200,500 508,000
<FN>
- ---------------
(1) Fifty percent of these stock options are exercisable at the date of grant
and the remaining 50% vest and become exercisable one year after the date of
grant. 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 would automatically accelerate
upon a change of control of the Corporation.
(2) These stock options 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>
17
<PAGE> 21
The following table shows stock option exercises by the named Executive
Officers during 1994, including the aggregate value realized upon exercise. This
represents the net pre-tax gain in excess of the purchase price at time of
purchase. In addition, this table includes the number of shares underlying both
"exercisable" (i.e., vested) and "unexercisable" (i.e., unvested) stock options
as of December 31, 1994. Also reported are 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
$25.875.
<TABLE>
AGGREGATED OPTION EXERCISES IN 1994 AND YEAR-END 1994 OPTION VALUES
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT YEAR-END(#) AT YEAR-END
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
I. Stepanian.............. 12,081 $125,565 411,378shs. 52,500shs. $1,915,678 $19,688
C.K. Gifford.............. 17,091 181,592 272,801 32,500 1,592,211 12,188
E.A. O'Neal............... -- -- 82,000 35,000 129,188 45,938
W.J. Shea................. -- -- 35,000 35,000 6,563 6,563
P.J. Manning.............. -- -- 62,025 6,250 318,319 2,344
</TABLE>
<TABLE>
LONG-TERM INCENTIVE PLANS -- AWARDS IN 1994
The following table shows the number of shares of Performance Restricted
Stock awarded to each named Executive Officer in 1994 under the Stock Incentive
Plan, together with the performance period applicable to those awards:
<CAPTION>
PERFORMANCE OR
OTHER PERIOD
NUMBER OF UNTIL MATURATION
NAME SHARES(#) OR PAYOUT
- ---- ---------- ----------------
<S> <C> <C>
I. Stepanian............................................................ 21,000 January 26, 1998
C.K. Gifford............................................................ 15,000 January 26, 1998
E.A. O'Neal............................................................. 10,000 January 26, 1998
W.J. Shea............................................................... 10,000 January 26, 1998
P.J. Manning............................................................ 5,000 January 26, 1998
</TABLE>
Shares of Performance Restricted Stock vest as follows: (i) if the price of
the Corporation's Common Stock reaches $40 per share for two consecutive trading
days on or before the designated date, 75% of the shares awarded will vest and
(ii) if the Corporation's stock price reaches $45 for two consecutive trading
days on or before that date, the remaining 25% of the shares awarded will vest.
The executive's death, retirement or disability will not affect his ability to
receive shares of Performance Restricted Stock that subsequently vest. If the
executive's employment terminates for any other reason or if the stock price
performance objectives are not met during the performance period, any unvested
shares (as well as accrued dividends on those shares) will be forfeited. In
addition, the cessation of the executive's membership on the Corporate Working
Committee (or any successor group of senior executives) may result in the
forfeiture of his unvested shares.
18
<PAGE> 22
<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 $ 745,618
C.K. Gifford............................................................... 41 640,870
E.A. O'Neal................................................................ 17 159,682
W.J. Shea.................................................................. 20 161,333
P.J. Manning............................................................... 32 188,306
</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.
SEVERANCE AGREEMENTS
The named Executive Officers have severance agreements which provide that if
termination of employment occurs within the three-year period (two-year period
in the case of Mr. Manning) following a change of control of the Corporation and
such termination is by the Corporation for other than "cause" or by the
executives for "good reason," the executives will be entitled to receive, among
other things, (i) an amount equal to three times (two times in the case of Mr.
Manning) the sum of the executive's annual salary and his average annual bonus
for the three preceding years, (ii) an amount equal to the cost to the Bank to
provide life, disability, accident and health insurance benefits for three years
(two years in the case of Mr. Manning), and (iii) service credit accruing, for
three years (two years in the case of Mr. Manning), under the Bank's retirement
plan, the Thrift Plan and certain supplemental plans. These severance agreements
provide no benefits prior to a change in control. In the event any payments
received under these agreements are subjected to the excise tax imposed under
Section 4999 of the Code, such payments will be reduced to the maximum
19
<PAGE> 23
amount that could be paid without subjecting such payments to the excise tax
(unless the reduction would decrease the net after-tax payment to the
executive).
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Countryman, Connell, Rowe and Fr. Monan served as members of the
Compensation Committee during 1994. None of these individuals had any
transactions or relationships with the Corporation in 1994 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 1994, see "Indirect Interest of Directors and Executive
Officers in Certain Transactions" below.
During 1994, 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 seven years. In addition, Mr. Gifford was a member of the
Compensation Committee of Boston Edison Company; Mr. May, the Chairman and Chief
Executive Officer of Boston Edison, was a Director of the Corporation (but not
on the Corporation's Compensation Committee).
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.
<TABLE>
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>
12/89 $100.00 $100.00 $100.00
12/90 37.00 97.00 72.00
12/91 69.00 126.00 114.00
12/92 153.00 136.00 145.00
12/93 140.00 150.00 153.00
12/94 163.00 152.00 145.00
</TABLE>
20
<PAGE> 24
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 1994. 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 1994. 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 L.L.P. ("Coopers & Lybrand") has been selected
by the Board of Directors, subject to ratification by the Stockholders, to be
the Corporation's independent auditors for 1995. 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 significant 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, 1994 have been audited and reported upon by Coopers & Lybrand. In
connection with its independent audit function during 1994, 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
1994 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.
21
<PAGE> 25
APPROVAL OF AMENDMENTS TO DIRECTOR STOCK AWARD PLAN
(PROXY ITEM 3)
The Bank of Boston Corporation Director Stock Award Plan (the "Director
Plan" or the "Plan") was adopted by the Board of Directors effective May 1, 1993
and approved by Stockholders at the 1993 Annual Stockholders' Meeting. On
December 22, 1994, the Board of Directors approved amendments to the Director
Plan (the "Plan Amendments"), subject to stockholder approval, to increase the
semi-annual stock award payable to each non-employee Director from a number of
shares of Common Stock having an aggregate fair market value on each Award Date
(as defined below) of $5,000 to a number of shares having a value on each such
date equal to 50% of the annual cash retainer in effect at the beginning of the
preceding Award Period (as defined below), exclusive of meeting fees and
committee retainers. The Plan Amendments, if approved by Stockholders, would be
effective beginning with stock awards payable on July 1, 1995. The full text of
the Director Plan, as amended, is set forth in Exhibit A to this Proxy
Statement, and the following discussion is qualified in its entirety by
reference to text of the Plan.
BACKGROUND
The Director Plan is designed to increase the stock ownership of
non-employee Directors of the Corporation, who are not eligible to participate
in the Corporation's other stock-based benefit plans, and to promote their
proprietary interest in the Corporation. The Plan is also designed to attract
individuals with outstanding abilities to serve as non-employee Directors of the
Corporation. Approval of the Plan Amendments will enable the Corporation to
continue to align the interests of Directors with those of Stockholders of the
Corporation.
SHARES AVAILABLE FOR AWARDS UNDER THE PLAN
The maximum number of shares of Common Stock which may be issued under the
Director Plan is 100,000, subject to adjustment to reflect stock dividends,
stock splits or certain other transactions affecting the Common Stock. Shares of
Common Stock issued under the Plan may consist of authorized but unissued shares
or treasury shares. THE PLAN AMENDMENTS, IF APPROVED BY STOCKHOLDERS, WILL NOT
INCREASE THE NUMBER OF SHARES ISSUABLE UNDER THE PLAN.
ELIGIBILITY
All non-employee Directors automatically participate in the Director Plan on
a non-discretionary basis. The Corporation currently has 13 non-employee
Directors.
AWARDS UNDER THE PLAN
If the Plan Amendments are approved by Stockholders, each person who is a
non-employee Director of the Corporation on January 1 or July 1 of each year (an
"Award Date") will be entitled to receive, as compensation for services rendered
during the prior six-month period (the "Award Period"), a number of shares of
Common Stock having an aggregate fair market value on the Award Date equal to
50% of the non-employee Director's annual cash retainer in effect at the
beginning of that Award Period, exclusive of meeting fees and committee
retainers. For example, if the annual cash retainer in effect at the beginning
of an Award Period were $15,000 (the current retainer), the stock award for that
period would have a value on the Award Date of $7,500. Any non-employee Director
who serves during less than all of an Award Period will be entitled to receive a
prorated award based on the number of days during the period that he or she
serves as a non-employee Director. The Board of Directors retains the power to
establish and change Directors' fees. The shares awarded under the Director
Plan, as amended, will be in addition to, and not in lieu
22
<PAGE> 26
of, the non-employee Director's annual cash retainer, meeting fees or other
compensation payable as a result of his or her service on the Board of Directors
or any committee thereof.
<TABLE>
Had the Plan Amendments been in effect during 1994, the current non-employee
Directors as a group (excluding Mr. May, who became a Director in July, 1994)
would have received the aggregate award set forth in the following table:
DIRECTOR STOCK AWARD PLAN
<CAPTION>
DOLLAR NUMBER OF
NAME AND POSITION (1) VALUE SHARES(2)
--------------------- -------- ---------
<S> <C> <C>
Non-Employee Director Group......................................... $172,500 7,246
<FN>
- ---------------
(1) The table does not include any information regarding each of the five named
Executive Officers, all current Executive Officers as a group or all
employees who are not Executive Officers as a group, as none of these
individuals or groups is eligible to participate in the Plan.
(2) Based on Common Stock closing prices of $23.00 and $24.625, respectively, on
the last business days prior to January 1 and July 1, 1994. Mr. Van Faasen,
who became a Director in January, 1994, would not have received an award on
January 1, 1994, but would have received a full award on July 1, 1994.
</TABLE>
AMENDMENT, TERMINATION AND EFFECTIVE DATE
The Director Plan may be amended, suspended or terminated at any time by the
Board of Directors, except that certain provisions of the Plan relating to
awards may not be amended more than once every six months, other than to comport
with changes in the Internal Revenue Code, the Employee Retirement Income
Security Act or the rules thereunder. The Plan has no set termination date.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL TO APPROVE
THE ABOVE-DESCRIBED AMENDMENTS TO THE BANK OF BOSTON CORPORATION DIRECTOR STOCK
AWARD PLAN.
23
<PAGE> 27
STOCKHOLDER PROPOSAL A
(PROXY ITEM 4)
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 1994 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 STOCKHOLDER PROPOSAL A.
At the 1994 Annual Meeting of Stockholders, the Stockholders overwhelmingly
rejected this proposal. The Board of Directors continues to believe that
adoption of the above proposal would not serve the interests of the Corporation
or its Stockholders. 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,
including the time required to prepare the Proxy Statement and the Annual Report
to Stockholders. The April Annual Meeting dates selected by the Board since 1993
have given the Corporation additional time to prepare these important
communications, thereby helping to ensure that Stockholders receive high quality
materials containing the most currently available information.
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 STOCKHOLDER PROPOSAL A.
STOCKHOLDER PROPOSAL B
(PROXY ITEM 5)
John Jennings Crapo, Post Office Box 151, Cambridge, MA 02140-0002, who
holds of record 1,034 shares of the Corporation's Common Stock, has informed the
Corporation that he intends to present the following proposal for action at the
Meeting:
Immediately prior to the approbation by the Board of Directors ("our
Board") of the Bank of Boston Corporation ("our Corporation") of any merger
of our Corporation or subsidiary of it with another entity, part of a
subsidiary with another entity, in EACH instance our Directors are requested
to present to Stockholders of our Corporation as a Shareholder Proposal the
proposal to merge for shareholder ratification by stockholders of our
Corporation.
24
<PAGE> 28
Each proposal is requested to be presented to shareholders and their
proxy representatives at the stockholder meeting of our Corporation.
In no instance it is requested shall a merger of Bank of Boston
Corporation or subsidiary be effectuated without first our Corporation
receiving the assent of stockholders of our Corporation.
Each proposal it is requested shall contain a balanced presentation of
the arguments in Favor and Against said merger.
"Merger" for the purpose of this Proposal it is requested shall include
Friendly Takeover, purchase of Corporation individually, by a group or
another entity, Hostile Takeover or Hostile Bid, white knight overture but
shall not exclude identical or similar demeanor which is described by other
speech.
The statement submitted in support of this Stockholder Proposal is as
follows:
This proposal's adoption will enable stockholders to understand better
conduct of our Board, so our Corporation's Stockholders will be able to
decide whether a merger is in their best interests.
Voting in favor or Against or Abstaining Re: a merger may be done at a
Special Meeting of Stockholders of Our Corporation if our Directors do not
wish to wait until the Annual Meeting of Shareholders of our Corporation.
As of this submission, June 06, 1994, contained in Certified Mail Letter
Article #Z 277 497 313--at least it was Friday, June 03, 1994, the common
stock was about $28 a share. Today is a Monday. Monday, June 11, 1990, the
Common stock of our Corporation, closed at $14 1/2 per share. June 09, 1989
(a Friday) the common stock of our Corporation closed at $28 5/8. December
06, 1990 (a Thursday), the common stock closed at $8 1/4. Friday, January
18, 1991, the common stock of our Corporation closed at $4 1/4. The
proponent has had common stock of our Corporation back into the 1980's and
has been loyal to it by continuing to own the stock of our Corporation.
The proponent believes that the information which our Directors will
present to us in support of a merger will be of value to all stockholders
who are loyal to our Corporation, just as the proponent has been in helping
us to understand the recommendations of our Directors we approve each
merger.
Counsel to our Corporation in his October 17, 1994 letter to me,
concerning this Proposal, has stated it is advisable to change the format of
the Proposal to that of a Stockholder Request to comply with Securities and
Exchange Commission practices. This day October 18, 1994, Proponent follows
this advice that Proposal be changed to Stockholder Request status in all
thought, word, and intent.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST STOCKHOLDER PROPOSAL B.
The Board of Directors strongly believes that adoption of this proposal
would not serve the best interests of the Corporation or its Stockholders. The
proposal requests that the Corporation submit to the Stockholders for approval
every transaction that involves the merger of the Corporation, its subsidiaries
or any part of any subsidiary regardless of the transaction's size, strategic
importance or effect on the Stockholders. Under current law and applicable stock
exchange rules, merger or acquisition proposals are generally required to be
submitted to a company's stockholders when they involve significant transactions
such as the sale of the entire company or the distribution of a significant
portion of a company's stock or assets. In instances where transactions are less
significant, companies make merger and acquisition decisions based on the
business judgment of their management and boards of directors. The Board of
Directors believes that existing laws and rules adequately protect Stockholder
interests.
The Corporation has participated actively in merger and acquisition
activities over the past several years and has completed a number of
transactions which have increased Stockholder value. The Board of Directors
believes that this
25
<PAGE> 29
proposal would significantly limit the Corporation's ability to evaluate merger
and acquisition proposals in a timely manner and would place the Corporation at
a significant disadvantage in competing for acquisition opportunities. The Board
also believes that this proposal would provide no added benefit to the
Stockholders and would be expensive, burdensome and impractical given the size
of the Corporation and the complexity of its business.
FOR THE FOREGOING REASONS, THE BOARD OF DIRECTORS OF THE CORPORATION
RECOMMENDS A VOTE AGAINST STOCKHOLDER PROPOSAL B.
SUBMISSION OF STOCKHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
Stockholders who wish to submit proposals pursuant to Rule 14a-8 under the
Exchange Act at the 1996 Annual Meeting of Stockholders will be required to
deliver the proposals to the Corporation on or prior to November 21, 1995. 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 the Clerk of the Corporation, at the address set forth above under
"VOTING INFORMATION."
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 has been one
amendment to the By-Laws of the Corporation by the Board of Directors. The
By-Laws were amended on April 28, 1994 to revise the description of the
Corporation's Audit Committee to reflect the committee's responsibilities in
reviewing matters associated with internal control and the management of risk.
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 under "VOTING INFORMATION," 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, 1994, which includes financial statements, has been previously
mailed to all Stockholders. The Annual Report is not to be regarded as proxy
soliciting material.
26
<PAGE> 30
10-K REPORT
A copy of the Corporation's Annual Report to the SEC on Form 10-K for the
year ended December 31, 1994 will be made available at the Meeting and may be
obtained without charge by any Stockholder upon written request addressed to
Agnes Y. Brooks, External Affairs, The First National Bank of Boston, P.O. Box
1987, MA BOS 01-28-04, Boston, Massachusetts 02105.
By Order of the Board of Directors,
[facsimile signature]
GARY A. SPIESS
Clerk
Dated: March 20, 1995
27
<PAGE> 31
EXHIBIT A
BANK OF BOSTON CORPORATION
DIRECTOR STOCK AWARD PLAN
(AS AMENDED, EFFECTIVE JANUARY 1, 1995)
1. Purpose.
The Bank of Boston Corporation Director Stock Award Plan (the "Plan") has
been adopted to assist in attracting and retaining non-employee members of the
Corporation's Board of Directors and to promote identification of their
interests with those of stockholders of the Corporation.
2. Definitions.
As used herein, the following words or terms have the meanings set forth
below:
2.1 "Affiliate" means any business entity that is directly or indirectly
controlled by the Corporation or any entity in which the Corporation has a
significant equity interest, as determined by the Director of Human Resources.
2.2 "Annual Cash Retainer" means the annual cash retainer for Non-Employee
Directors, exclusive of meeting fees and committee retainers.
2.3 "Award" means the Shares awarded under the Plan.
2.4 "Award Date" means January 1 and July 1 of each year, commencing on July
1, 1993.
2.5 "Award Period" means a six-month period immediately preceding each Award
Date; provided, however, that the initial Award Period under the Plan shall
begin on May 1, 1993 and shall end on June 30, 1993.
2.6 "Board of Directors" means the Board of Directors of the Corporation.
2.7 "Common Stock" means the Common Stock, par value $2.25 per share, of the
Corporation.
2.8 "Corporation" means Bank of Boston Corporation, a corporation
established under the laws of the Commonwealth of Massachusetts.
2.9 "Director of Human Resources" means the Director of Human Resources of
the Corporation.
2.10 "Fair Market Value," in the case of a share of Common Stock on a
particular day, means the closing price of the Common Stock for that day as
reported in the "New York Stock Exchange Composite Transactions" section of the
Eastern Edition of The Wall Street Journal, or if no prices are quoted for that
day, for the last preceding day on which such prices of Common Stock are so
quoted. In the event "New York Stock Exchange Composite Transactions" cease to
be reported, the Director of Human Resources shall adopt some other appropriate
method for determining Fair Market Value.
2.11 "Full Award" means a number of Shares (rounded to the nearest whole
share) having an aggregate Fair Market Value on the last business day of the
immediately preceding Award Period equal to 50% of the Annual Cash Retainer in
effect at the beginning of such Award Period.
2.12 "Non-Employee Director" means as of any date a person who on such date
is a director of the Corporation and is not an employee of the Corporation or
any Affiliate. A director of the Corporation who is also an employee of the
Corporation or any Affiliate shall become eligible to participate in the Plan
upon termination of such employment.
A-1
<PAGE> 32
2.13 "Prorated Award" means a Full Award multiplied by a fraction, the
numerator of which is the number of days that a person served as a Non-Employee
Director during the immediately preceding Award Period and the denominator of
which is the total number of days in such Award Period.
2.14 "Shares" means shares of Common Stock.
3. Effective Date.
The Plan shall become effective on May 1, 1993, subject to the approval of
the Corporation's stockholders at the Corporation's 1993 Annual Meeting of
Stockholders.
4. Administration.
4.1 The Plan shall be administered by the Director of Human Resources.
Subject to the provisions set forth herein, the Director of Human Resources
shall have full authority to construe and interpret the terms of the Plan and to
make all determinations and take all other actions necessary or advisable for
the administration of the Plan, except that the persons entitled to receive
Awards and the dates and amounts of such Awards shall be determined as provided
in Article 7, and the Director of Human Resources shall have no discretion as to
such matters. The Director of Human Resources may delegate to one or more
officers of the Corporation or any Affiliate the authority to perform
administrative functions under the Plan.
4.2 Any determinations or actions made or taken by the Director of Human
Resources pursuant to this Article shall be binding and final.
5. Shares Available for Awards.
5.1 The maximum number of Shares that may be issued under the Plan shall be
100,000, subject to adjustment in accordance with the provisions of Section 5.2.
Shares issued under the Plan may consist in whole or in part of authorized but
unissued shares or treasury shares.
5.2 In the event of any change in the outstanding shares of Common Stock by
reason of a stock dividend or distribution, stock split, recapitalization,
combination or exchange of shares, or by reason of any merger, consolidation,
spinoff or other corporate reorganization in which the Corporation is the
surviving corporation, the number and kind of Shares awarded thereafter in each
grant under the Plan and the total number and kind of Shares that may be issued
under the Plan shall be equitably adjusted by the Board of Directors, whose
determination shall be binding and final.
6. Eligibility.
Awards shall be made only to Non-Employee Directors, as provided in Article
7.
7. Awards.
In consideration of past services rendered, on each Award Date, each person
who is then a Non-Employee Director shall, automatically and without necessity
of any action by the Director of Human Resources, be entitled to receive (i) a
Full Award, in the case of a person who was a Non-Employee Director during all
of the immediately preceding Award Period or (ii) a Prorated Award, in the case
of a person who was a Non-Employee Director for less than all of such Award
Period. Stock certificates representing Awards shall be delivered to
Non-Employee Directors as soon as practicable following each Award Date, unless
other arrangements are made with the Corporation by the Non-Employee Director.
In lieu of receiving Shares following each Award Date, each Non-Employee
Director may elect to defer the receipt of his or her Shares under the Plan in
accordance with Section 8 below. Awards hereunder shall be in
A-2
<PAGE> 33
addition to, and not in lieu of, the NonEmployee Director's Annual Cash
Retainer, meeting fees and other compensation payable to each Non-Employee
Director as a result of his or her service on the Board of Directors or any
committee thereof.
8. Deferral of Awards.
8.1 Election of Deferral. A Non-Employee Director may elect to defer all of
his or her Awards otherwise payable in or for a calendar year, subject to such
conditions as the Director of Human Resources may prescribe prior to the start
of such calendar year. A Non-Employee Director's election of deferral shall be
in the form prescribed by the Director of Human Resources and must be filed
prior to the first day of the calendar year for which the Awards are earned.
Each election shall be binding with respect to the Awards for such calendar year
and shall be irrevocable after January 1 of the calendar year to which it
applies. A new Non-Employee Director must make an election of deferral within 30
days of the date upon which he or she first becomes a director of the
Corporation. A new election of deferral must be filed for each calendar year.
8.2 Share Deferral Account. The Corporation shall maintain a Share Deferral
Account on behalf of each Non-Employee Director who files an election of
deferral pursuant to Section 8.1. On each Award Date, the Corporation shall
credit to such Account the number of Shares otherwise payable to the
Non-Employee Director as a Full or Prorated Award, if not deferred.
8.3 Dividend Credits. As of each date a dividend is paid on the Common
Stock, the Corporation shall credit to each Non-Employee Director's Share
Deferral Account the number of Shares (rounded to the nearest thousandth of a
share) determined by multiplying the total number of Shares credited to such
account as of the dividend record date by the per share dividend amount, and
then dividing the product by the Fair Market Value of a share of Common Stock on
the dividend payment date.
8.4 Form and Timing of Distribution. Upon a Non-Employee Director's ceasing
to be a director of the Corporation, credits to such Non-Employee Director's
Share Deferral Account shall be distributed to him or her in whole shares of
Common Stock (together with cash in lieu of a fractional share) as soon as
practicable following his or her retirement or termination as a director. If a
Non-Employee Director dies before receiving distribution of his or her Share
Deferral Account, distribution shall be made to such Non-Employee Director's
designated beneficiary or, in the absence of a designated beneficiary or if the
designated beneficiary does not survive the Non-Employee Director, distribution
shall be made to such Non-Employee Director's estate.
9. General Provisions.
9.1 Non-Assignability. No right to receive an Award hereunder shall be
transferable or assignable by a Plan participant other than by will or the laws
of descent and distribution.
9.2 No Right to Service. Participating in the Plan does not constitute a
guarantee or contract of service as a director.
9.3 Amendment and Termination. The Board of Directors may amend, suspend or
terminate the Plan or any portion thereof at any time; provided, however, that
the provisions of the Plan relating to the determination of persons entitled to
receive Awards pursuant to Article 7 and the dates and amounts of such Awards
shall not be amended more than once every six months, other than to comport with
changes in the Internal Revenue Code of 1986, as amended, the Employee
Retirement Income Security Act of 1974, as amended, or the rules thereunder.
9.4 Registration of Shares. Nothing in the Plan shall be construed to
require the Corporation to register under the Securities Act of 1933, as
amended, any Shares awarded under the Plan.
9.5 Governing Law. The provisions of the Plan shall be governed by and
interpreted in accordance with the laws of the Commonwealth of Massachusetts.
A-3
<PAGE> 34
INDEX TO PROXY STATEMENT
Page [LOGO]
Voting Information............. 1
Election of Directors.......... 2 BANK OF BOSTON
Ratification of the Selection CORPORATION
of Independent Auditors...... 21
Approval of Amendments to
Director Stock Award Plan.... 22
Stockholders Proposal A........ 24 NOTICE OF
Stockholder Proposal B......... 24 ANNUAL MEETING
Submission of Stockholder OF STOCKHOLDERS
Proposals for
1996 Annual Meeting.......... 26 AND
Other Matters.................. 26 PROXY STATEMENT
By-Laws of the Corporation..... 26
Expenses of Solicitation....... 26
Annual Report.................. 26
10-K Report.................... 27
Exhibit A...................... A-1 Time:
Thursday, April 27, 1995
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> 35
BANK OF BOSTON CORPORATION
P The undersigned, revoking previous proxies relating to these
R shares, hereby acknowledges receipt of the Notice and Proxy Statement
O dated March 20, 1995 in connection with the Annual Meeting to be held
X at 10:30 a.m. on April 27, 1995 in the Auditorium of The Federal
Y 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 1995 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 ITEMS 2 AND 3,
AGAINST ITEMS 4 AND 5, AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
SEE REVERSE
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
<TABLE>
<S> <C>
/X/ Please mark
votes as in
this example.
THIS PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS OF BANK OF
BOSTON CORPORATION.
- ----------------------------------------------------------------------------
The Board of Directors recommends a vote FOR Proposals 1, 2 and 3.
- ----------------------------------------------------------------------------
1. Election of five Directors for three-year terms (or if any ----------------------------------------------
nominee is not available for election, such substitute as the Board of The Board of Directors recommends a
Directors may designate): vote AGAINST Proposals 4 and 5.
Nominees: Connell, May, McHenry ----------------------------------------------
Wheeler, Zeien FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
FOR / / WITHHELD / / 2. Selection of Inde- / / / / / / 4. Stockholder Proposal / / / / / /
all from all pendent Auditors. A to change Annual
nominees nominees Meeting date.
For except vote withheld
from the following nominee(s):
/ / 3. Approval of amend- / / / / / / 5. Stockholder Proposal / / / / / /
------------------------ ments to Director B regarding Stock-
Stock Award Plan. holder approval of
- ---------------------------------------------------------------------------- merger transactions.
MARK HERE / /
FOR ADDRESS
CHANGE AND
NOTE CHANGE
AT LEFT
Please sign exactly as name appears hereon. Joint owners should
each sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such.
Signature: ____________________________ Date: _________________
Signature: ____________________________ Date: _________________
</TABLE>
