<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:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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<PAGE> 2
BANK OF BOSTON CORPORATION
100 FEDERAL STREET - BOSTON - MASSACHUSETTS 02110 BankBoston [Logo]
March 17, 1997
To our Common Stockholders:
We are pleased to invite you to attend the Annual Meeting of Stockholders
(the "Meeting") of Bank of Boston Corporation (the "Corporation"), which will be
held on Thursday, April 24, 1997, at 10:30 a.m. in the Auditorium on the ground
floor of The Federal Reserve Bank of Boston, 600 Atlantic Avenue, Boston,
Massachusetts.
The accompanying Notice of Annual Meeting of Stockholders and Proxy
Statement set forth the business to come before this year's meeting.
If you plan to attend the meeting, please bring a form of personal
identification with you and, if you are acting as proxy for another, please
bring written confirmation from the record owner that you are acting as proxy.
Whether or not you expect to attend the meeting, please sign and date the
enclosed form of proxy and return it promptly in the accompanying envelope to
ensure that your shares will be represented. If you attend the meeting, you may
withdraw any proxy previously given and vote your shares in person.
Cordially,
/s/ William M. Crozier, Jr. /s/ Charles K. Gifford
WILLIAM M. CROZIER, JR. CHARLES K. GIFFORD
Chairman Chief Executive Officer
<PAGE> 3
BankBoston [Logo]
BANK OF BOSTON CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 24, 1997
To Common Stockholders of
BANK OF BOSTON CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Bank of
Boston Corporation (the "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 24, 1997 at 10:30 a.m. (the "Meeting"),
for the following purposes, all as set forth in the accompanying Proxy
Statement:
(1) To elect six Directors with terms expiring at the 2000 Annual
Meeting of Stockholders, as described in the accompanying Proxy Statement.
(2) To ratify the selection by the Board of Directors of Coopers &
Lybrand L.L.P. as the Corporation's independent auditors for 1997.
(3) To authorize the amendment of the Corporation's Restated Articles of
Organization to change the name of the Corporation to "BankBoston
Corporation".
(4) To approve the Corporation's 1997 Employee Stock Purchase Plan.
(5) To consider and vote upon two Stockholder proposals described in the
accompanying Proxy Statement, if such proposals are presented to the
Meeting.
(6) To transact such other business as may properly come before the
Meeting.
The Board of Directors has fixed the close of business on March 11, 1997, as
the record date for the Meeting.
It is important that your shares be represented at the Meeting regardless of
the number of shares you may hold. Please complete, sign and date the enclosed
form of proxy and return it promptly in the enclosed envelope which requires no
postage if mailed within the United States.
By Order of the Board of Directors,
/s/ Gary A. Spiess
-----------------------
GARY A. SPIESS
Clerk
Boston, Massachusetts
March 17, 1997
<PAGE> 4
BankBoston [Logo]
BANK OF BOSTON CORPORATION
PROXY STATEMENT
---------------------------
ANNUAL MEETING OF STOCKHOLDERS
---------------------------
TO BE HELD APRIL 24, 1997
This Proxy Statement, with the accompanying proxy card, is being mailed to
Stockholders on or about March 17, 1997 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 24, 1997 (and any adjournment thereof) (the "Meeting").
VOTING INFORMATION
Only holders of Common Stock, par value $1.50 per share, whose names
appeared of record at the close of business on March 11, 1997 will be entitled
to vote at the Meeting. On that date, , 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), (3) and (4) 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 01-25-01, Boston, Massachusetts 02105. A
Stockholder attending the Meeting may vote in person even though he or she may
have previously filed a proxy.
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The holders of a majority in interest of all stock issued, outstanding and
entitled to vote are required to be present in person or represented by proxy at
the Meeting in order to constitute a quorum for the transaction of business.
Abstentions and broker non-votes will be treated as shares present or
represented at the Meeting for quorum purposes. A plurality vote will decide
proposal (1) and the affirmative votes of the holders of at least a majority of
the shares of the Common Stock present in person, or represented by proxy, and
entitled to vote at the Meeting are required to decide proposals (2), (3) and
(4) and each of the two Stockholder proposals.
The total number of votes cast "for" a proposal will determine whether the
proposal is adopted. Abstentions are counted in determining the total number of
votes cast. While not counted as votes "for" or "against" a proposal,
abstentions have the same effect as votes against a proposal. Broker non-vote
are not counted in determining the number of votes cast. (A "broker non-vote"
occurs when a registered broker holding a customer's shares in the name of the
broker has not received voting instructions on a matter from the customer and is
barred by stock exchange rules from exercising discretionary authority to vote
on the matter, which the broker indicates on the proxy.)
ELECTION OF DIRECTORS
(PROXY ITEM 1)
Six Director nominees are standing for election at the Meeting for terms of
office that will expire at the 2000 Annual Meeting of Stockholders. Messrs.
Countryman and Van Faasen, were elected at the 1994 Annual Meeting of
Stockholders and Messrs. Meirelles and Piper, were elected effective July, 1996.
Mr. Rowe, was elected at the 1996 Annual Meeting of Stockholders to the class of
Directors whose terms expire in 1999. Mr. Rowe subsequently resigned from that
class and was appointed to the class of Directors whose terms expire at the
Meeting in order to facilitate an even distribution of Directors among the
classes following the addition of the former BayBanks, Inc. ("BayBanks")
Directors to the Corporation's Board of Directors (the "Board"). Ms. Rodgers is
being proposed by the Board for election at the Meeting of Stockholders.
Each Director will continue in office until the Director's term expires and
until his or her successor is elected and qualified or until his or her earlier
death, resignation or removal.
Management has made inquiries and believes that each of the nominees will be
willing and able to serve if elected. If any of the nominees shall be unwilling
or unable to serve, discretionary authority is reserved to vote for a substitute
chosen by the Corporation's Board, or the Corporation's Board 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 1998 and 1999.
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NOMINEES FOR ELECTION AS DIRECTORS
TERMS EXPIRE AT THE 2000 ANNUAL STOCKHOLDERS' MEETING
<TABLE>
<S> <C>
[PHOTO] Chairman and Chief Executive Officer of Liberty Mutual Insurance
Company. President of Liberty Mutual Insurance Company from 1981 to
1992, Chief Executive Officer since 1987 and Chairman since 1991;
Director of The First National Bank of Boston (the "Bank") since
1982; Director of Boston Edison Company, The Neiman-Marcus Group,
Inc., Alliance of American Insurers and Harcourt General, Inc.
Current Committees:
Compensation (Chairman) Executive
GARY L. COUNTRYMAN
Age 57
Director since 1982
[PHOTO] President and Chief Operating Officer of the Corporation and the
Bank. Served as General Manager of Brazil for the Bank from 1984 to
1994, elected Regional Manager of Brazil for the Corporation and the
Bank in 1994, and President and Chief Operating Officer of both in
July, 1996. Director of the Bank since July, 1996.
Current Committees:
Executive
HENRIQUE DE CAMPOS MEIRELLES
Age 51
Director since July, 1996
[PHOTO] Lawrence E. Fouraker Professor of Business Administration, Harvard
University Graduate School of Business Administration. Faculty member
at Harvard since 1970; Director of BayBanks from 1979 to July, 1996;
Director of the Bank since July, 1996.
Current Committees:
Audit Community Investment
THOMAS R. PIPER
Age 59
Director since July, 1996
</TABLE>
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NOMINEES FOR ELECTION AS DIRECTORS
TERMS EXPIRE AT THE 2000 ANNUAL STOCKHOLDERS' MEETING (CONT'D)
<TABLE>
<S> <C>
[PHOTO] President and Chief Executive Officer of New England Electric System.
President and Chief Executive Officer of New England Electric System
since 1989; Director of the Bank since 1989; Director of New England
Electric System and UNUM Corporation.
Current Committees:
Board Governance & Nominating (Chairman) Executive
JOHN W. ROWE
Age 51
Director since 1989
[PHOTO] President and Chief Executive Officer of Blue Cross and Blue Shield
of Massachusetts, Inc. (non-profit health services company).
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 1994.
Current Committees:
Board Governance & Nominating
Community Investment Trust Audit
WILLIAM C. VAN FAASEN
Age 48
Director since 1994
[PHOTO] Chief Executive Officer of WFD, Inc. (formerly Work/Family
Directions) (consulting firm on work and family issues). Founder and
Chief Executive Officer of Work/Family Directions since 1983; Trustee
of Barnard College of Columbia University, Trustee and Fellow of the
Foundation of the National Academy of Human Resources, and Director
of the Stone Center at Wellesley College.
FRAN S. RODGERS
Age 50
</TABLE>
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DIRECTORS CONTINUING IN OFFICE
TERMS EXPIRE AT THE 1998 ANNUAL STOCKHOLDERS' MEETING
<TABLE>
<S> <C>
[PHOTO] Chairman and President, Property Capital Associates, Inc. (real estate
investment and consulting firm), Managing Trustee, Property Capital
Trust, and Chairman of the Board and Chief Executive Officer,
Americana Hotels and Realty Corporation. Chairman and President,
Property Capital Associates, Inc. since 1971; Managing Trustee of
Property Capital Trust since 1969; Chairman and Chief Executive
Officer, Americana Hotels and Realty Corporation since 1986; Director
of BayBanks from 1980 to July, 1996; Director of the Bank since July,
1996.
Current Committees:
Audit Trust
JOHN A. CERVIERI JR.
Age 66
Director since July, 1996
[PHOTO] Chairman and Chief Executive Officer of Connell Limited Partnership
(metals recycling and the manufacture of industrial products).
Chairman and Chief Executive Officer of Connell Limited Partnership
since 1987; Director of the Bank since 1993; Director of Boston Edison
Company, Arthur D. Little, Inc., Harcourt General, Inc., North
American Mortgage Company and LCI International, Inc.
Current Committees:
Board Governance & Nominating Compensation
Executive
WILLIAM F. CONNELL
Age 58
Director since 1993
[PHOTO] Chairman, President and Chief Executive Officer of Boston Edison
Company. Executive Vice President of Boston Edison Company from 1990
to 1993, President and Chief Operating Officer from 1993 to 1994,
Chairman and Chief Executive Officer since 1994 and President since
1995; Director of the Bank since 1994; Director of New England Mutual
Life Insurance Company.
Current Committees:
Audit Board Governance & Nominating Trust Audit
THOMAS J. MAY
Age 49
Director since 1994
</TABLE>
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DIRECTORS CONTINUING IN OFFICE
TERMS EXPIRE AT THE 1998 ANNUAL STOCKHOLDERS' MEETING (CONT'D)
<TABLE>
<S> <C>
[PHOTO] University Research Professor of Diplomacy and International
Relations, Georgetown University, Washington, D.C. University Research
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.
Current Committees:
Audit (Chairman) Trust
DONALD F. MCHENRY
Age 60
Director since 1981
[PHOTO] Chairman and Chief Executive Officer of Massachusetts Mutual Life
Insurance Company. President of Massachusetts Mutual Life Insurance
Company from 1987 to March, 1996, Chief Executive Officer since 1988
and Chairman since March, 1996; Director of the Bank since 1989;
Director of Massachusetts Mutual Life Insurance Company and Textron
Inc.
Current Committees:
Compensation Community Investment (Chairman)
THOMAS B. WHEELER
Age 60
Director since 1989
[PHOTO] Chairman of the Board and Chief Executive Officer of The Gillette
Company (manufacturer of consumer products). Chairman of the Board and
Chief Executive Officer of the Gillette Company since 1991; Director
of the Bank since 1992; Director of Polaroid Corporation, Raytheon
Company, and Massachusetts Mutual Life Insurance Company.
Current Committees:
Executive Trust
ALFRED M. ZEIEN
Age 67
Director since 1992
</TABLE>
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DIRECTORS CONTINUING IN OFFICE
TERMS EXPIRE AT THE 1999 ANNUAL STOCKHOLDERS' MEETING
<TABLE>
<S> <C>
[PHOTO] Senior Vice President, NYNEX. United States Attorney, District of
Massachusetts, from 1989 to 1992; Associate Attorney General of the
United States from 1992 to 1993; Senior Partner, Goodwin, Procter &
Hoar from 1993 to April 1996; Senior Vice President, NYNEX since April
1996; Director of the Bank since 1993.
Current Committees:
Audit Community Investment Trust Audit (Chairman)
WAYNE A. BUDD
Age 55
Director since 1993
[PHOTO] Chairman of the Board of the Corporation and Senior Chairman of the
Bank. Served as Chairman of the Board and Chief Executive Officer of
BayBanks from 1974 to July, 1996; Elected Chairman of the Board of the
Corporation and Senior Chairman of the Bank in July, 1996. Director of
the Bank since July, 1996.
Current Committees:
Board Governance & Nominating Executive
WILLIAM M. CROZIER, JR.
Age 64
Director since July, 1996
[PHOTO] Senior Fellow, The Andrew W. Mellon Foundation; President Emerita of
Wheaton College, Norton, Massachusetts. President of Wheaton College
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.
Current Committees:
Compensation Trust (Chairman)
ALICE F. EMERSON
Age 65
Director since 1977
</TABLE>
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DIRECTORS CONTINUING IN OFFICE
TERMS EXPIRE AT THE 1999 ANNUAL STOCKHOLDERS' MEETING (CONT'D)
<TABLE>
<S> <C>
[PHOTO] Chief Executive Officer of the Corporation and Chairman and Chief
Executive Officer of the Bank. Elected President of the Corporation
and the Bank in 1989, Chief Operating Officer of both in 1993,
Chairman, President and Chief Executive Officer of both in 1995 and
Chief Executive Officer of the Corporation and Chairman and Chief
Executive Officer of the Bank in July, 1996. Director of the Bank
since 1987; Director of Massachusetts Mutual Life Insurance Company
and Boston Edison Company.
Current Committees:
Board Governance & Nominating Executive (Chairman)
CHARLES K. GIFFORD
Age 53
Director since 1987
[PHOTO] President of The O'Brien Group, Inc. (consulting services in community
relations and external affairs) and Chairman of the Board of ViewTech,
Inc. President and Chief Executive Officer of New England Telephone
and Telegraph Company from 1988 to 1993 and Chairman of the Board from
1993 to 1994; President of The O'Brien Group, Inc. since 1995;
Chairman of the Board of ViewTech, Inc. since January, 1997. Director
of the Bank since 1988; Director of Cambridge NeuroScience, Inc.,
First Pacific Networks Inc., Shiva Corporation, The Registry, Inc. and
ViewTech, Inc.
Current Committees:
Audit Community Investment
PAUL C. O'BRIEN
Age 57
Director since 1988
[PHOTO] Vice President for Finance and Treasurer of Massachusetts Institute of
Technology. Treasurer of MIT since 1975, Vice President since 1986 and
Vice President for Finance and Treasurer since 1994; Director of
BayBanks from 1979 to July, 1996; Director of the Bank since July,
1996; Director of SofTech, Inc. and Liberty Mutual Insurance Company;
Trustee of Property Capital Trust.
Current Committees:
Board Governance & Nominating Compensation
GLENN P. STREHLE
Age 60
Director since July, 1996
</TABLE>
8
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1996 MEETINGS AND STANDARD FEE ARRANGEMENTS OF THE CORPORATION'S BOARD AND
COMMITTEES
1996 Meetings -- During 1996, the Corporation's Board held eleven meetings.
The Board has an Audit Committee, a Community Investment Committee, a
Compensation Committee, a Board Governance and Nominating Committee, and an
Executive Committee. Each member of the Executive, Audit, Compensation and
Community Investment Committees of the Corporation is also a member of the
corresponding committee of the Bank. No member of the Audit or Compensation
Committees is an employee of the Corporation or its subsidiaries. In addition to
the Bank committees noted above, the Board of Directors of the Bank has a Trust
Committee and a Trust Audit 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 the
Corporation's Board meetings, may exercise all of the authority of the
Corporation's Board, 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 nine meetings in 1996.
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 Audit Committee of the Corporation held six
meetings in 1996.
The responsibilities of the Compensation Committee of the Corporation
include approving salaries of top executives of several of the Corporation's
subsidiaries, and discharging duties under various benefit and incentive
compensation plans for employees of subsidiaries. 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 1996, the Compensation Committee held six meetings.
The Corporation established a Board Governance and Nominating Committee in
July, 1996. The Committee is authorized to issue guidelines for Board
composition and Director qualifications, review and recommend Director nominees,
consider Director retirement, resignation and re-election issues, review
Committee assignments, evaluate compensation of nonemployee Directors, assess
the effectiveness of the Board and its Committees, and act as an additional
forum for dialogue between management and the Board of Directors. Since its
inception, the Board Governance and Nominating Committee has held three
meetings.
The Board Governance and Nominating Committee will consider candidates for
appointment or election as Directors proposed by the Chairman, the 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 Corporation's
Board 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 Board Governance and Nominating Committee
or to nominate 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."
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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 1996.
The functions of the Trust Committee of the Bank include reviewing and
approving 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 Audit committee is responsible for the annual trust audit of
the fiduciary activities of the Bank. The Bank's Trust Committee held four
meetings in 1996 and the Trust Audit Committee held one meeting in 1996.
In 1996, each Director attended at least 75% of the total number of meetings
of the Corporation's Board and the committees of the Corporation's Board on
which he or she served.
Fee Arrangements -- Fees and retainers are paid only to Directors who are
not officers of the Corporation or the Bank. An annual cash retainer of $17,500
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
Board Governance and Nominating Committees receive annual retainers of $8,000,
$5,000 and $4,000, respectively. The Chairmen of the Corporation's Community
Investment Committee and the Bank's Trust and Trust Audit Committees each
receive an annual retainer of $3,000. 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).
In addition to the fees noted above, under the Corporation's Director Stock
Award Plan, each non-employee Director receives on January 1 and July 1 of each
year an award of the Corporation's Common Stock having a fair market value equal
to 50% of the annual cash retainer in effect at the beginning of the preceding
six-month period, exclusive of meeting fees and committee retainers, for
services rendered during that period. Awards are prorated in the case of any
Director who was not a Director for all of the preceding award period. Directors
may elect annually to defer receipt of their stock awards under the Director
Stock Award Plan 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.
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 the payment of 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.
Prior to 1997, each non-employee Director of the Corporation qualified 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 resigned in order
to serve on the board of an institution not affiliated with the Corporation. The
annual retirement benefit equaled the annual Director cash retainer in effect at
the Director's retirement or earlier death. The payments continued for a period
equal to the length of the individual's service as a Director, and certain
survivor benefits were provided. Upon a change of control of the Corporation,
each non-employee Director would be fully vested in his or her retirement
benefit. Future accruals under this plan will be discontinued as of April 1,
1997. Current Directors will be
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given the choice to maintain their current benefit or to convert the benefit to
restricted or deferred shares of the Corporation's Common Stock. The
restrictions on the shares will lapse upon the Director's termination from the
Board. To further align Director and Stockholder interests, the Corporation has
adopted a stock option plan, which will commence in April, 1997, that provides
for an annual grant of 1,000 options to each non-employee Director.
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 current 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 March 1,
1997. As of that date, current Directors and Executive Officers, in the
aggregate, beneficially owned % of the issued and outstanding shares of the
Corporation Common Stock. In addition to the Corporation Common Stock, the
Corporation also has outstanding five series of nonvoting Preferred Stock. As of
March 1, 1997, no current Director or Executive Officer of the Corporation was
the beneficial owner of any shares of the Corporation's Preferred Stock.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK BENEFICIALLY OWNED(1)
----------------------------------------------------------------------
SOLE SHARED SOLE VOTING TOTAL
VOTING AND VOTING AND BUT NO RIGHT SHARES
NAME OF INDIVIDUAL OR INVESTMENT INVESTMENT INVESTMENT TO BENEFICIALLY
IDENTITY OF GROUP POWER POWER POWER(2) ACQUIRE(3) OWNED
- ------------------------------------------ ---------- ---------- ----------- ------- ------------
<S> <C> <C> <C> <C> <C>
Wayne A. Budd............................. 201(4)
John A. Cervieri Jr....................... (5)
William F. Connell........................
Gary L. Countryman........................
William M. Crozier, Jr.................... 64,419(6) 4,620(4) -0- 50,480 119,519
Alice F. Emerson.......................... (7)
Charles K. Gifford........................ 115,930(8) 207(4) 53,112 226,833 396,082
Paul F. Hogan............................. 22,520(9) -0- 10,058 39,884 72,462
Thomas J. May............................. (7)
Donald F. McHenry......................... (7)(10)
Henrique de Campos Meirelles.............. 13,834 -0- 15,128 -0- 28,962
Paul C. O'Brien...........................
Thomas R. Piper...........................
Fran S. Rodgers...........................
John W. Rowe.............................. (7)(11)
William J. Shea........................... 35,462(12) -0- 25,418 35,482 96,362
Richard A. Smith..........................
Glenn P. Strehle..........................
William C. Van Faasen..................... (13)
Thomas B. Wheeler......................... (7)
Alfred M. Zeien...........................
Directors and Executive Officers as a
group................................... (14)
</TABLE>
- ---------------
(1) Determined in accordance with Rule 13d-3 under the Exchange Act.
Individuals may disclaim beneficial ownership for other purposes. The
number of shares of the Corporation's Common Stock beneficially owned by
each Director or named Executive Officer does not equal or exceed 1% of the
outstanding shares of the Corporation's 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 "1991 Plan").
(3) Represents shares which the individual has a right to acquire within 60
days after March 1, 1997 through the exercise of stock options granted
under the Corporation's stock option or stock incentive plans.
(4) The individual shares investment and voting power with his spouse or
another relative as to these shares.
11
<PAGE> 15
(5) Includes 2,200 shares held as trustee of a trust for the benefit of
himself.
(6) Includes 2,917 shares held for Mr. Crozier's benefit by the Bank as Trustee
under the Bank's Thrift-Incentive Plan (the "Thrift Plan"). Does not
include 43,861 shares owned by Mr. Crozier's spouse and 1,496 shares held
by Mr. Crozier's spouse as trustee of a trust for the benefit of immediate
family members, as to which shares Mr. Crozier disclaims beneficial
ownership.
(7) Includes shares deferred under the terms of the Corporation's
Director Stock Award Plan.
(8) Includes 414 shares held by Mr. Gifford as custodian for two of his
children and an additional 770 shares owned directly by one of his
children.
(9) Includes 2,110 shares held for Mr. Hogan's benefit by the Bank as Trustee
under the Thrift Plan.
(10) Includes shares held in a retirement plan for Mr. McHenry's benefit.
(11) Includes 400 shares owned by Mr. Rowe's spouse.
(12) Includes 2,000 shares held by Mr. Shea's spouse.
(13) Includes 200 shares held in an Individual Retirement Account.
(14) Includes shares held for the benefit of Executive Officers by the
Bank as Trustee under the Thrift Plan.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of December 31, 1996, to the Corporation's knowledge there were no
Stockholders of the Corporation that held beneficial ownership of more than five
percent (5%) of the Corporation's Common Stock.
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 Commission and the NYSE. Executive
Officers, Directors, and greater than 10% Stockholders are required by
Commission 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, Directors and 10%
Stockholders were complied with during 1996.
COMPENSATION OF EXECUTIVE OFFICERS
COMPENSATION COMMITTEE REPORT
ON
EXECUTIVE COMPENSATION
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 1996, 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 any Executive Officer who is also a Director of the
Corporation, 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.
12
<PAGE> 16
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: corporate, business unit and individual performance;
-- Motivate key executives to achieve strategic business initiatives and
reward them for their achievement;
-- Provide compensation opportunities that 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.
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 major business lines:
Corporate Banking, Regional Consumer and Small Business, Latin America, Global
Asset Management and Other Global.
The banks within the Comparator Banks Group are included in the Keefe,
Bruyette & Woods 50 Bank Index ("KBW 50") used in the Five-Year Stockholder
Return comparison which is found at the end of the discussion of compensation of
Executive Officers. The Compensation Committee believes that, while the KBW 50
provides a broader measure of investment performance in the banking industry,
the Comparator Banks Group used for compensation analysis represents the
Corporation's most direct competitors for executive talent.
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.
The total compensation strategy adopted by the Compensation Committee in
1996 directed a shift in the mix of elements for Executive Officers to place
more emphasis on long-term stock awards while slowing the rate of base salary
growth. This direction supports the Corporation's philosophy of placing a
greater portion of the total compensation of key executives in the form of
variable, performance-based incentives and less in the form of fixed base salary
and benefits to better align the executives' interests with Stockholder
interests.
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. Consistent with the
strategy to place less emphasis on base salary, individual salary adjustments in
1996 were limited to those Executive Officers with salaries significantly below
the median salaries paid by the Comparator Banks Group. For those individuals,
salary adjustments were based on 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
13
<PAGE> 17
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 1996, the Compensation Committee
reviewed Comparator Banks Group data for 1995. According to this data, salaries
for 1996 were within the range targeted by the Compensation Committee.
Annual 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: corporate, business unit
and individual performance. Target awards for achieving expected performance are
established for each executive's 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 and
external goals. The Compensation Committee established internal goals for 1996
for operating income, noninterest expense, the operating ratio (the ratio of
noninterest expense to total revenue), return on equity, earnings per share,
cost savings from the integration of acquired banks, and credit quality (which
for the Corporation is based on a measure of the Corporation's lower quality
exposures compared to capital). In addition, the Compensation Committee
established external goals for earnings per share growth and return on equity
which are measured in comparison to the Comparator Banks Group. These goals were
not specifically weighted in terms of relative importance. The Compensation
Committee may also review other internal and external criteria in determining
bonus funding levels and individual awards. In setting bonus awards for 1996,
the Compensation Committee reviewed Comparator Banks Group data regarding annual
bonuses paid in 1996 for performance in 1995. According to this data, bonuses
for 1996 were in the upper portion of the range targeted by the Compensation
Committee due to performance that in aggregate exceeded expectations.
Long-Term Stock Incentive
Stock options and restricted stock were granted in 1996 under the 1991 Plan.
Beginning in 1997, stock options, restricted stock and other long-term incentive
awards will be granted under the Corporation's 1996 Long-Term Incentive Plan,
which was approved by Stockholders at the 1996 Annual Stockholders' meeting.
The purpose of the 1991 Plan was to provide a focus on the achievement of
future long-term results by aligning the interests of executives with the
interests of Stockholders through the use of stock awards. In 1996, the
aggregate share usage under the 1991 Plan was targeted to be within a range
around the median share usage of the Comparator Banks Group. Consistent with the
total compensation strategy adopted by the Compensation Committee, stock awards
made to Executive Officers in 1996 were targeted to be at the seventy-fifth
percentile of stock awards to executives in comparable positions within the
Comparator Banks Group. Based on the Compensation Committee's review of
Comparator Banks Group data on long-term incentive grants made during 1995, both
the aggregate share usage under the plan and the stock awards to Executive
Officers in 1996 were at or near the targeted levels.
To reinforce the Corporation's philosophy of promoting shareholder value,
the vesting of shares of restricted stock awarded in 1996 was dependent on the
Corporation's stock price performance. At the time these shares were awarded,
the closing price of the Corporation's Common Stock was $43.75. When the closing
price of the Common Stock exceeded $60 per share for two consecutive trading
days in October, 1996, 75% of the shares vested. The remaining 25%
14
<PAGE> 18
of the shares vested when the Corporation's stock price closed at or above $70
for two consecutive trading days in January, 1997.
In granting or recommending the grant of stock awards to Executive Officers
in 1996, 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 annual external surveys. The Compensation
Committee did not consider the amount of stock options or restricted stock
already held by Executive Officers when it granted individual stock awards in
1996.
Stock Ownership Guidelines
Stock ownership guidelines apply to the Executive Officers named in the
Summary Compensation Table and certain other executives in charge of core
businesses or corporate-wide support areas. The stock ownership guidelines
represent minimum levels of ownership of the Corporation's Common Stock and are
expected to be achieved over a five-year period. Guidelines vary by
organizational level and range from three to five times salary.
Chief Executive Officer Compensation for 1996
The Board of Directors did not increase Mr. Gifford's base salary during
1996. This action supported the philosophy of placing more emphasis on long-term
incentives and less on base salary. In reviewing Mr. Gifford's salary, the
Compensation Committee considered market base salary data for the Comparator
Banks Group provided by an independent consulting firm.
The Compensation Committee established goals for 1996 which are identified
above under the heading "Annual Bonus." These goals, as well as the development
and execution of strategy, provided a basis for the bonus award to Mr. Gifford.
In terms of relative importance, equal weight was placed on performance versus
internal goals, external financial comparisons and the development and execution
of strategy. All of these criteria represented important factors, with judgment
exercised by the Compensation Committee in conducting a thorough assessment of
the 1996 results of the Corporation. Performance in aggregate exceeded
expectations. The Compensation Committee also considered Comparator Banks Group
bonus data provided by an independent consulting firm. Based on these factors,
Mr. Gifford was awarded a bonus of $1,800,000 for 1996 performance.
Mr. Gifford was also awarded 85,000 stock options and 15,000 shares of
Performance Restricted Stock in 1996. These long-term stock incentive awards
support the Compensation Committee's objective of aligning executive and
Stockholder interests by linking Mr. Gifford's compensation to the longer term
performance of the Corporation, consistent with the practices of the Comparator
Banks Group.
Deductibility of Executive Compensation under the Internal Revenue Code
Under the provisions of the Omnibus Budget Reconciliation Act of 1993 (the
"Act"), a publicly held corporation may not deduct in any taxable year
compensation in excess of $1 million paid to its Chief Executive Officer or its
four other most highly compensated officers, subject to a number of exceptions.
Internal Revenue Service ("IRS") regulations and transition rules of Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code") specify
certain conditions which, if satisfied, will permit the deductibility of
compensation even if it exceeds $1 million. The 1996 Long-Term Incentive Plan,
approved by Stockholders at the 1996 meeting is designed to exempt stock
options,
15
<PAGE> 19
stock appreciation rights and certain other awards from the deductibility limits
of Section 162(m). The Corporation believes that its other stock option and
stock incentive plans are in conformity with the provisions of Section 162(m).
The tax impact of any compensation arrangement is a factor taken into
consideration by the Committee in determining the actual cost of a compensation
award. As part of its compensation philosophy, the Committee works to balance
the effectiveness of a compensation award with the materiality of any possible
tax deduction. From time to time the Committee has determined, and may in the
future determine, that it is appropriate to authorize a compensation award that
is not fully deductible if the cost of the compensation award is outweighed by
the goals of the Corporation's overall market and performance-based compensation
philosophy and the best interests of the Corporation's stockholders.
This report was submitted by the Compensation Committee, which consists of
the following non-employee Directors:
Gary L. Countryman, Chairman Alice F. Emerson Thomas B. Wheeler
William F. Connell Glenn P. Strehle
February 24, 1997
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 the Commission's 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 Corporation's Common Stock. All year-end values shown in
these tables for outstanding stock options and restricted stock reflect a price
of $64.25 per share, which was the closing price of the Corporation's Common
Stock on December 31, 1996, as reported in the "New York Stock Exchange
Composite Transactions" section of the Eastern Edition of The Wall Street
Journal.
16
<PAGE> 20
The following table displays compensation information for the past three
fiscal years for each of the named Executive Officers. In addition, as
supplemental information, the table shows the amount paid by BayBanks (prior to
the Corporation's acquisition of BayBanks) and by the Corporation (after the
BayBanks acquisition) to Mr. Crozier during 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION(1) LONG-TERM COMPENSATION
------------------------------------ --------------------------------------------
AWARDS PAYOUTS
-------------------------------------------- ------------
OTHER ANNUAL RESTRICTED SECURITIES LONG-TERM ALL OTHER
NAME AND COMPENSATION STOCK UNDERLYING INCENTIVE PLAN COMPENSATION
PRINCIPAL POSITION(7) YEAR SALARY BONUS(2) (3) AWARDS(4) OPTIONS/SARS(#) PAYOUTS(5) (6)
- ----------------------- ---- -------- ---------- ------------ --------- --------------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
C.K. Gifford........... 1996 $800,000 $1,800,000 $389,832 -- (8) 131,033 shs.(9) $721,406 $ 62,593
CEO 1995 707,884 1,500,000 -- $372,125 106,757 645,469 32,230
1994 604,807 1,000,000 -- -- (8) 65,000 -- 46,849
W.M. Crozier, Jr....... 1996 728,526 1,350,000 -- -- -- -- --
Chairman
H.C. Meirelles......... 1996 330,122 1,600,000 199,496 -- (8) 44,000 -- 226,258
President & COO 1995 285,609 1,300,000 153,066 80,500 11,200 211,856 --
1994 242,692 750,000 147,221 -- (8) -- -- --
W.J. Shea.............. 1996 436,538 575,000 -- -- (8) 54,695(9) 360,703 40,618
Vice Chairman, 1995 389,230 625,000 -- 200,375 28,000 430,313 8,671
CFO and Treasurer 1994 350,576 500,000 -- -- (8) 35,000 -- 6,828
P.F. Hogan............. 1996 250,000 350,000 -- -- (8) 34,893(9) 180,319 17,579
Vice Chairman 1995 244,615 250,000 -- 91,600 15,248(9) 215,156 10,967
1994 221,923 175,000 -- -- (8) 15,000 -- 14,741
</TABLE>
- ---------------
(1) Salary and bonus amounts include portions deferred under the Corporation's
Non-Qualified Deferred Compensation Plan for Executives (the "Deferral
Plan") or pursuant to Section 401(k) of the Code.
(2) Bonus amounts shown were awarded under the Performance Plan for performance
during the year indicated.
(3) During the years covered by the table, none of the named Executive Officers,
except for Messrs. Gifford and Meirelles, received perquisites or other
personal benefits in an amount sufficient to require reporting under the
Commission's rules. The 1996 amounts shown for Messrs. Gifford and Meirelles
include the following tax offset payments in connection with the exercise of
certain stock options under the Corporation's 1986 Stock Option Plan: Mr.
Gifford, $389,832; and Mr. Meirelles, $6,977. The 1996 amount shown for Mr.
Meirelles also includes $54,000 representing compensation attributable to
Mr. Meirelles as a result of a rent-free lease of a residence to him by the
Corporation while he resided in Brazil.
(4) The values shown for the 1995 grant are based on the closing price of the
Corporation's Common Stock on the date of grant, rather than the year-end
closing price.
17
<PAGE> 21
As of December 31, 1996, each of the named Executive Officers held the
following number of restricted shares having the corresponding year-end
market values:
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1996
---------------------------
TOTAL NUMBER
OF
RESTRICTED AGGREGATE
NAME SHARES HELD MARKET VALUE
--------------------------------------------------------------------------------- ------------ ------------
<S> <C> <C>
C.K. Gifford..................................................................... 23,718 $1,523,881
W.M. Crozier, Jr................................................................. -- --
H.C. Meirelles................................................................... 14,401 745,364
W.J. Shea........................................................................ 15,542 998,573
P.F. Hogan....................................................................... 5,672 364,426
</TABLE>
These shares represent the unvested portions of (i) restricted shares or
restricted share units that vest following the passage of time ("Time Lapse
Restricted Stock") awarded in 1992, 1993 and 1995 and (ii) restricted shares
or restricted share units that vest upon the attainment of certain stock
price performance targets ("Performance Restricted Stock") awarded in 1996.
The Time Lapse Restricted Stock has vested or will vest in installments of
one-third on each of the third, fourth and fifth anniversaries of the grant
date if the Executive Officer is then employed by an affiliate of the
Corporation, subject to earlier vesting in the event of death, retirement or
disability. Following vesting, certain of these shares remain subject to
transferability restrictions for up to 10 years after the grant date. The
Performance Restricted Stock awarded in 1996 to the named Executive
Officers, other than Mr. Meirelles, vested as follows: 75% of the shares
(which are not shown in the table above) vested in October, 1996 when the
first stock price target was attained, and the remaining 25% of the shares
(which are shown in the table above because they were restricted at
year-end) vested in January, 1997 when the second stock price target was
attained. The Performance Restricted Stock awarded in 1996 to Mr. Meirelles
has vested or will vest as follows: 75% of the shares (which are shown in
the table above because they were restricted at year-end) vested in January,
1997 when his first stock price target was attained, and the remaining 25%
of the shares (which are also shown in the table above) will vest if his
second stock price target is attained. See "Long-Term Incentive Plans --
Awards in 1996" below. 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) Represents the dollar value of vested shares of Performance Restricted
Stock, calculated by multiplying the closing price of the Corporation's
Common Stock on the date the vesting occurred by the number of shares or
units that vested on that date.
(6) The 1996 amounts include matching employer contributions and credits under
the Thrift Plan and the Deferral Plan for the named Executive Officers as
follows: Mr. Gifford, $32,000; Mr. Shea, $15,308; and Mr. Hogan, $10,000.
The 1996 amounts also include 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
the Commission's rules, as follows: Mr. Gifford, $30,593; Mr. Meirelles,
$1,258; Mr. Shea, $25,310; and Mr. Hogan, $7,579. The 1996 amount shown for
Mr. Meirelles also includes a one-time accrual of $225,000 to a deferred
compensation account in his name, stemming from his relocation from Brazil
to Boston. This amount will accrue interest at the rate set forth in the
Deferral Plan, and will be paid to Mr. Meirelles following retirement or
other termination of employment in accordance with the provisions of that
Plan.
(7) Mr. Gifford served as Chairman and Chief Executive Officer of the
Corporation and the Bank until July 29, 1996, the date on which he became
Chief Executive Officer of the Corporation and Chairman and Chief Executive
Officer of the Bank. Mr. Crozier became Chairman of the Board of the
Corporation and Senior Chairman of the Bank as of July 29, 1996. Mr.
Meirelles served as Regional Manager, Brazil until July 25, 1996, the date
on which he was elected President and Chief Operating Officer of the
Corporation and the Bank. Mr. Hogan served as Executive Vice President of
the Corporation and the Bank until September 27, 1996, the date on which he
became Vice Chairman of both. Mr. Shea served as Vice Chairman, Chief
Financial Officer and Treasurer of the Corporation and the Bank throughout
1996.
(8) Awards of Performance Restricted Stock in 1994 and 1996 are not reported as
"Restricted Stock Awards" because of their performance-based conditions on
vesting. The 1996 awards are reported below in the "Long-Term Incentive Plan
-- Awards in 1996" table and the portion of those awards that were not
vested at year-end are included in the year-end restricted stock holdings
shown above in footnote 4. The 1994 Performance Restricted Stock awards have
all vested and have been released to the named Executive Officers (certain
of these shares remain subject to transferability restrictions for up to 10
years after the grant date).
18
<PAGE> 22
(9) Includes "reload" option grants. See footnote 2 to the "Option Grants in
1996" table.
STOCK-BASED COMPENSATION
The following table provides details regarding stock options granted to the
named Executive Officers in 1996 under the 1991 Plan, including "reload" option
grants related to the exercise of stock options previously granted under the
1991 Plan (see footnote 2). In addition, in accordance with the Commission's
rules, this table shows hypothetical gains on a pre-tax basis, or "option
spreads," that would exist for the respective options granted in 1996 to the
named Executive Officers. These gains are based on assumed rates of annual
compound stock price appreciation of 5% and 10% from the date the options were
granted over the full option term. To put this data into perspective, the
resulting stock prices for the options granted on January 25, 1996 (expiration
date of January 25, 2006) would be $71.26 at a 5% rate of appreciation and
$113.48 at a 10% rate of appreciation.
OPTION GRANTS IN 1996
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
INDIVIDUAL GRANTS AT ASSUMED
------------------------------------------------------ ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM
OPTIONS GRANTED EMPLOYEES PRICE EXPIRATION -----------------------------
NAME (1)(2) IN 1996 ($/SH.)(3) DATE(4) 5% 10%
- ------------------------- --------------- --------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
C.K. Gifford............. 85,000shs. 6.51% $43.75 1/25/06 $2,338,702 $5,926,730
3,809(5) .29 46.00 4/11/01 47,679 105,213
7,608(5) .58 46.00 2/27/02 114,862 259,521
2,258(5) .17 46.00 1/27/04 47,610 113,292
32,358(5) 2.48 46.00 1/26/05 790,509 1,933,846
W.M. Crozier, Jr......... -- -- -- -- -- --
H.C. Meirelles........... 44,000 3.37 56.75 9/26/06 1,570,350 3,979,575
W.J. Shea................ 42,500 3.26 43.75 1/25/06 1,169,351 2,963,365
12,195(5) .93 46.00 1/27/04 257,133 611,869
P.F. Hogan............... 21,250 1.63 43.75 1/25/06 584,675 1,481,682
462(5) .04 46.875 2/27/02 7,123 16,098
3,916(5) .30 46.875 2/25/03 72,504 168,269
8,160(5) .63 46.875 1/27/04 175,623 418,022
1,105(5) .08 46.875 1/26/05 27,551 67,417
</TABLE>
- ---------------
(1) Fifty percent of these stock options are exercisable one-year from the date
of grant and the remaining 50% vest and become exercisable two years 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 the
Corporation's 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 Corporation's 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, except as
otherwise noted.
(5) "Reload" option grants. See footnote 2 above.
19
<PAGE> 23
The following table shows stock option or stock appreciation right ("SAR")
exercises by the named Executive Officers during 1996, 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, 1996. 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 $64.25.
AGGREGATED OPTION/SAR EXERCISES IN 1996 AND YEAR-END 1996 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES/SARS OPTIONS AT YEAR-END AT YEAR-END
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------- ----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
C.K. Gifford................. 129,151 $3,227,383 184,333shs. 108,017shs. $6,279,713 $ 2,162,560
W.M. Crozier, Jr............. 132,279(1) 5,808,789(1) 245,046 -- 9,961,005 --
H.C. Meirelles............... 18,400 486,700 -- 44,000 -- 330,000
W.J. Shea.................... 22,000 451,000 82,097 48,598 2,920,645 982,538
P.F. Hogan................... 25,093 536,663 29,259 28,072 968,092 554,157
</TABLE>
- ---------------
(1) Includes options exercised before and after the Corporation's acquisition of
BayBanks (adjusted to reflect the conversion).
LONG-TERM INCENTIVE PLANS -- AWARDS IN 1996
The following table shows the number of shares of Performance Restricted
Stock awarded to each Named Executive Officer in 1996 under the 1991 Plan,
together with the maximum performance period applicable to those awards:
<TABLE>
<CAPTION>
MAXIMUM STOCK PERFORMANCE
PERFORMANCE OR GOAL
OTHER PERIOD -----------------
NUMBER OF UNTIL MATURATION 75% 100% PRICE ON DATE
NAME SHARES OR PAYOUT VESTING VESTING OF GRANT
- --------------------------------------------- --------- ------------------- ------- ------- -------------
<S> <C> <C> <C> <C> <C>
C.K. Gifford................................. 15,000 January 25, 2000 $60 $70 $ 43.75
W.M. Crozier, Jr............................. -- -- -- -- --
H.C. Meirelles............................... 11,000 September 26, 2000 70 80 56.75
W.J. Shea.................................... 7,500 January 25, 2000 60 70 43.75
P.F. Hogan................................... 3,750 January 25, 2000 60 70 43.75
</TABLE>
Shares of Performance Restricted Stock have vested or will vest as follows:
(i) if the price of the Corporation's Common Stock reaches or exceeds the first
vesting target 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 or exceeds the second vesting target for two consecutive trading
days on or before that date, the remaining 25% of the shares awarded will vest.
The Executive Officer's death, retirement or disability will not affect his
right to receive shares of Performance Restricted Stock that subsequently vest.
If the Executive Officer'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. As of March 1, 1997, all of the Performance Restricted Stock reported
above, other than 25% of Mr. Meirelles' award, was vested and awarded to the
named Executive Officers.
20
<PAGE> 24
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, estimated future bonuses, and an assumed future annual
interest rate of 7.0% on each individual's cash balance account:
<TABLE>
<CAPTION>
PRIOR YEARS OF ESTIMATED ANNUAL
SERVICE AT AGE 65 RETIREMENT BENEFITS
----------------- -------------------
<S> <C> <C>
C.K. Gifford.................................................................. 41 $862,556
W.M. Crozier, Jr. ............................................................ 34 564,700(1)
H. C. Meirelles............................................................... 14 286,594
W.J. Shea..................................................................... 20 224,048
P.F. Hogan.................................................................... 36 256,860
</TABLE>
- ---------------
(1) The retirement benefit for Mr. Crozier, as provided in his employment
agreement, will be calculated under the BayBanks Retirement Plan formula.
The amount shown in the table has been estimated as of age 65, although the
agreement provides for service through year-end 1998, and reflects the
minimum salary and incentive compensation guaranteed under the agreement.
The estimates shown (other than for Mr. Crozier) reflect the cash balance
formula as in effect during 1996, plus any accrued benefits, computed as a
single lifetime annuity, under the prior plan formula for service through
December 31, 1988. For service periods from January, 1989 through 1996, credits
were 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 annual credit was made for an individual with 20 - 34 years of service
and no credit was made for an individual with less than one year of service or
40 or more years of service. An individual whose employment commenced after age
40 received an additional year of service for each year by which his age at
commencement exceeded 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.
Effective January 1, 1997, the cash balance retirement plan was amended to
change the cash balance credit structure. Future credits made to individual's
accounts will be at a rate ranging from 4.5% to 8% of salary and bonus. Annual
credits will continue to be made each year, even after reaching 40 years of
service.
SUPPLEMENTAL DEATH BENEFITS
Under an executive life insurance plan adopted by the Bank in 1982, certain
of its then senior executives were provided with supplemental post-retirement
death benefits. As a result of tax law changes, the plan was revised in 1986 to
discontinue this benefit. Executives who were active participants in the plan at
the time of its discontinuance became eligible for a replacement benefit under a
new program. Under the replacement program, the Bank provides post-retirement
death benefits of up to $1,000,000, increased for any tax liability. In order to
receive this full supplemental benefit, the executive 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. Mr. Grifford is the only active executive
still eligible to receive this benefit.
21
<PAGE> 25
EMPLOYMENT AND SEVERANCE AGREEMENTS
In connection with its acquisition of BayBanks, Inc., the Corporation
entered into an employment agreement with Mr. Crozier. Pursuant to this
agreement, which extends through December 31, 1998, Mr. Crozier will receive (i)
a base salary at least equal to the rate payable to the Chief Executive Officer
of the Corporation and (ii) an annual incentive award at least equal to the
greater of 65% of his annual base salary or 75% of the annual incentive award
payable to the Corporation's Chief Executive Officer. He also will be entitled
to participate in all other incentive, savings and retirement plans and welfare
and fringe benefit plans and to receive all perquisites provided to other peer
executives of the Corporation. His agreement also provides for continued
participation in the BayBanks Supplemental Executive Retirement Plan ("BayBanks
SERP"), as in effect on July 29, 1996.
Mr. Crozier's agreement also provides that, if his employment is terminated
by the Corporation other than for cause or by Mr. Crozier for good reason (as
defined in his agreement), he will be entitled to receive, among other things,
an amount equal to the sum of annual base salary and the maximum annual
incentive award for which he is eligible, multiplied by the number of years and
the fraction of the year remaining from the date of termination to the end of
the employment period under the agreement. Mr. Crozier also will be entitled to
service credit under the BayBanks SERP through December 31, 1998; and the
continuation of health, medical and life insurance benefits at least through
December 31, 1998. In the event any payments received under this agreement are
subjected to the excise tax imposed under Section 4999 of the Code, the
employment agreement provides for an additional payment to Mr. Crozier
sufficient to restore him to the same after-tax position in which he would have
been had the excise tax not been imposed. However, the additional payment will
be made only if, as a result, Mr. Crozier's after-tax benefit will be equal to
at least 110% of the after-tax benefit that he would have received if the
original payment had been reduced to an amount not subject to the excise tax.
The named Executive Officers (excluding Mr. Crozier) have severance
agreements which provide that if termination of employment occurs within the
three-year period following a change of control of the Corporation and such
termination is by the Corporation for other than "cause" or by the Executive
Officer for "good reason," the Executive Officer will be entitled to receive,
among other things, (i) an amount equal to three times the sum of the Executive
Officer'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, and (iii) service credit
accruing for three years 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 increased to the extent it provides benefits of at
least 10% additional net after-tax payment. Otherwise payments will be reduced
to the maximum 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 Officer).
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Ms. Emerson and Messrs. Countryman, Connell, Strehle and Wheeler served as
members of the Compensation Committee during 1996. None of these individuals had
any transactions or relationships with the Corporation in 1996 requiring
specific disclosure under the Commission's 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 subsidiaries during 1996, see "Indirect Interest of Directors and Executive
Officers in Certain
22
<PAGE> 26
Transactions." During 1996, there were no "interlocking" or cross-board
memberships that are required to be disclosed under the Commission rules, except
for the following:
-- Mr. Gifford was a Director of Massachusetts Mutual Life Insurance
Company ("Mass Mutual") (but not a member of Mass Mutual's compensation
committee); Mr. Wheeler, Chairman and Chief Executive Officer of Mass
Mutual, was a Director and member of the Corporation's Compensation
Committee.
-- Mr. Gifford was a member of the Compensation Committee of Boston Edison
Company ("Boston Edison"); Mr. May, Chairman, President and Chief
Executive Officer of Boston Edison, was a Director of the Corporation
(but not a member of the Corporation's Compensation Committee).
-- Helen G. Drinan, an Executive Vice President of the Corporation, was a
Director and member of the Compensation Committee of Blue Cross and Blue
Shield of Massachusetts, Inc. ("Blue Cross"); Mr. Van Faasen, the
President and Chief Executive Officer of Blue Cross, was a Director of
the Corporation (but not a member of the Corporation's Compensation
Committee).
23
<PAGE> 27
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 KBW 50 and the S&P 500. The KBW 50 is
comprised of 50 of the nation's largest banks, including all money-center and
most major regional banks. Total return values for these indices were calculated
based on cumulative total return values, assuming reinvestment of dividends.
COMPARISONS OF FIVE-YEAR TOTAL STOCKHOLDER RETURNS
<TABLE>
<CAPTION>
MEASUREMENT PERIOD BANK OF BOSTON
(FISCAL YEAR COVERED) CORPORATION KBW 50 S&P 500
<S> <C> <C> <C>
12/91 100.00 100.00 100.00
12/92 223.00 127.00 108.00
12/93 204.00 134.00 118.00
12/94 238.00 128.00 120.00
12/95 440.00 204.00 165.00
12/96 630.00 289.00 203.00
</TABLE>
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 1996. 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 that were customers of, or had
transactions with, the Bank and/or one or more of the Corporation's other
subsidiaries in the ordinary course of business during 1996.
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
24
<PAGE> 28
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 Corporation's Board, subject to ratification by the Stockholders, to be
the Corporation's independent auditors for 1997. 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, 1996 have been audited and reported upon by Coopers & Lybrand. In
connection with its independent audit function during 1996, Coopers & Lybrand
also reviewed certain filings with the Commission, 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 (i) consultations with the Corporation and its subsidiaries regarding
systems; policies and procedures; internal controls; potential mergers,
acquisitions and divestitures; (ii) reviews of certain tax returns; (iii)
provision of certain income tax services to certain officers of the Corporation
and expatriate employees, and (iv) assistance with other accounting matters and
operational projects. All of the professional services provided by Coopers &
Lybrand during 1996 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 Corporation's Board will reconsider the
matter.
THE CORPORATION'S BOARD RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF THE
SELECTION OF THE FIRM OF COOPERS & LYBRAND AS INDEPENDENT AUDITORS FOR THE
CORPORATION IN 1997.
AUTHORIZATION TO CHANGE THE NAME OF THE CORPORATION
(PROXY ITEM 3)
The Board of Directors of the Corporation has recommended that the
Stockholders authorize an amendment to the Corporation's Restated Articles of
Organization to change the name of the Corporation to "BankBoston Corporation."
The new name is intended to provide a new identity for the combined Bank of
Boston and BayBanks organization that builds on the strengths of the two
organizations. Following Stockholder approval of the change of the Corporation's
name, management of the Corporation intends to change the common designations of
its subsidiaries and to make the "BankBoston" name a single brand for the
advertising and marketing of all branches, products and operations around the
world. These changes are intended to strengthen public identification of the
Corporation with its subsidiaries and enhance public awareness of the
Corporation as a united organization. The proposed name change of the
Corporation will not affect Stockholders' rights and will not necessitate any
exchange of outstanding stock certificates.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE AMENDMENT OF THE
CORPORATION'S RESTATED ARTICLES OF ORGANIZATION TO PROVIDE FOR THE CHANGE OF THE
NAME OF THE CORPORATION TO BANKBOSTON CORPORATION.
25
<PAGE> 29
APPROVAL OF THE CORPORATION'S 1997 EMPLOYEE STOCK PURCHASE PLAN
(PROXY ITEM 4)
The Corporation's Board of Directors has approved the 1997 Employee Stock
Purchase Plan (the "Plan") subject to approval by Stockholders at the Meeting.
The Plan provides employees of the Corporation and certain subsidiaries of the
Corporation (together, the "Participating Companies") with the opportunity to
purchase shares of the Corporation's Common Stock. The full text of the Plan is
set forth in Exhibit A to this Proxy Statement and the following discussion is
qualified in its entirety by the text of the Plan.
PURPOSE
The purpose of the Plan is to encourage ownership of the Corporation's
Common Stock by employees of the Participating Companies by providing eligible
employees with the opportunity to purchase such stock. The Plan is intended to
qualify as an Employee Stock Purchase Plan under Section 423 of the Code, but
also provides for offerings that do not qualify under Section 423. The Plan is
intended to benefit Stockholders by increasing interest on the part of
participating employees in the success of the Corporation.
ADMINISTRATION
The Plan will be administered by the Retirement Committee, as appointed from
time to time by the Board of Directors of the Corporation, or by any other
committee appointed by the Corporation's Board to administer the Plan (the
"Committee").
The Committee will determine, for any Option Period, which of the
Corporation's subsidiaries are Participating Companies eligible to participate
in the Plan for that Option Period. The Committee also will have full authority
to interpret the terms of the Plan and options granted under the Plan, to adopt,
amend and rescind rules and guidelines for the administration of the Plan, and
to decide all questions and settle all controversies and disputes that may arise
in connection with the Plan. The Committee also may delegate to other persons
its administrative duties and responsibilities or may appoint agents for the
effective performance of its duties.
ELIGIBILITY
All employees of the Participating Companies (other than employees who are
executive officers of the Corporation and are also members of the Corporation's
Board) will be eligible to participate in the Plan, except as hereinafter
discussed. For an offering intended to qualify under Section 423 of the Code,
the Committee in its sole discretion may exclude any of the following: (a)
employees who have been employed less than two years, (b) employees whose
customary employment is 20 hours or less per week, (c) employees whose customary
employment is for not more than five months in any calendar year, and (d) highly
compensated employees (within the meaning of Section 414(q) of the Code). In the
case of an offering under the Plan not intended to qualify under Section 423 of
the Code, the Committee may exclude any class of employees that it may specify.
SHARES SUBJECT TO THE PLAN
The Plan provides that the total number of shares available for grants of
options shall not exceed 3,000,000 shares. Shares issued under the Plan may
consist in whole or in part of authorized but unissued shares, shares held as
treasury stock, or previously issued shares reacquired by the Corporation,
including shares purchased on the open market.
26
<PAGE> 30
OPTION PERIODS
The Plan provides for a series of Option Periods. The length of each Option
Period will be specified by the Committee but may not exceed 27 months. Option
Periods need not be of the same length and may run successively or concurrently.
TERMS OF OPTIONS; TERMINATION
At the beginning of each Option Period, each eligible employee will be
granted an option to purchase up to a fixed number of shares of Common Stock as
determined by the Committee. For each Option Period the Committee may determine
a maximum amount (and/or maximum percentage) of a participant's eligible
compensation that may be applied to the purchase of Common Stock.
No option will be granted to any person who immediately thereafter would
own, directly or indirectly, stock possessing five percent or more of the total
combined voting power or value of all classes of stock of the Corporation or any
of its subsidiary corporations. Furthermore, the right to purchase stock under
the Plan (or any other employee stock purchase plan within the meaning of
Section 423 of the Code that the Corporation or any of its parent or subsidiary
corporations may establish) may not accrue at a rate that exceeds $25,000 (or
such lesser amount determined by the Committee from time to time) in fair market
value of such stock (determined at the time such option is granted) for any
calendar year in which such option is outstanding, regardless of whether the
offering in which such option is granted in intended to qualify under Section
423 of the Code.
The option price will be a specified percentage (not less than 85 percent)
of the fair market value of the Common Stock on the day the option is exercised.
This percentage will be determined by the Committee prior to the commencement of
the Option Period. Payment for shares by participating employees shall be made
solely from amounts collected from participants. The Committee may set forth
procedures under which participants may cease future contributions without
terminating their options.
Unless previously terminated, options will be exercised automatically on the
last day of each Option Period. An option will terminate if an employee ceases
to be an employee unless the Committee provides otherwise. Options are not
assignable or transferable.
AMENDMENT AND TERMINATION
The Board of Directors may terminate the Plan at any time. In addition, the
Compensation Committee of the Board of Directors may alter, amend or suspend the
Plan; provided, however, that without the approval of the Stockholders, no
modification or amendment may: (i) increase the available number of shares
unless necessary for reasons described in the following paragraph, or (ii) make
any other change which in the judgment of the Board or the Compensation
Committee requires Stockholder approval under applicable law or regulation.
ADJUSTMENTS TO SHARES
If any change is made in the Common Stock (through merger, consolidation,
reorganization, recapitalization, stock dividend, split-up, combination of
shares, exchange of shares, change in corporate structure or otherwise),
appropriate adjustments shall be made to the maximum number of shares subject to
the Plan and to the number of shares and price per share of Common Stock subject
to outstanding options. In the case of options intended to qualify under Section
423 of the Code, adjustments to options would be made only to the extent
consistent with continued qualification of such options.
27
<PAGE> 31
CHANGE IN CONTROL
If there is a change in control of the Corporation (as defined in the Plan),
the options would become immediately exercisable, and participants would have
the choice of exercising the options within the time provided by the Committee
or canceling their options and having the amounts collected for the purchase of
Common Stock returned to them.
TAX CONSEQUENCES
The following is a summary of the principal federal income tax consequences
associated with grants of options under the Plan. The summary is not intended to
describe all potential federal income tax consequences associated with the Plan,
nor does it describe foreign, state or local tax consequences associated with
the Plan, or the tax consequences associated with grants to employees outside
the United States.
Offerings under the Plan may or may not qualify under Section 423 of the
Code, as determined by the Committee from time to time. In the case of a
qualified offering, no taxable income results to the employee at the time of the
grant of the option or upon its exercise. If the employee does not dispose of
the purchased shares within two years of the date of the option grant, or within
one year of the date the shares are transferred to him or her, and the purchase
price was not less than 100 percent of the fair market value of the Common Stock
at the date of grant, any profit or loss recognized upon a subsequent
disposition will be long-term capital gain or loss. If the shares are held for
the prescribed holding period and the purchase price was less than 100 percent
of the fair market value of the Common Stock at the date of grant, then upon a
later disposition or in the event of the death of a participant while he or she
is holding the shares, the lesser of (i) the excess of the fair market value of
the shares at the time of disposition or death over the purchase price or (ii)
the excess of the fair market value of the shares at the time the option was
granted over the option price (determined as if the option were exercised on the
date of grant) will be treated as ordinary income. Any remaining profit
recognized in connection with the disposition would be treated as long-term
capital gain and any loss recognized in connection with the disposition would be
treated as a long-term capital loss. In this case, the Corporation will not be
entitled to deduct from its taxable income the amount treated as ordinary income
to the employee. If the shares are disposed of by the participant before the end
of the prescribed holding period (a "disqualifying disposition"), the
participant must report as ordinary income, and the Corporation may deduct from
its taxable income, the excess of the fair market value of the Common Stock on
the date of exercise over the option price, and the balance of any recognized
gain or loss will be a capital gain or loss to the employee, short-term or
long-term depending on how long the shares have been held.
In the case of options offered under circumstances that would disqualify the
offering under Section 423 of the Code, the employee would recognize the
difference between the option exercise price and the fair market value of the
Common Stock at the time of exercise as ordinary income in the year of exercise,
and, in such case, the Corporation would have available a corresponding
deduction from its taxable income.
PAYMENT OF WITHHOLDING TAXES
The Committee will provide for withholding in connection with or following
the exercise of options as necessary to comply with applicable law.
THE CORPORATION'S BOARD RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE
CORPORATION'S 1997 EMPLOYEE STOCK PURCHASE PLAN.
28
<PAGE> 32
STOCKHOLDER PROPOSAL A
(PROXY ITEM 5)
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 Corporation's Annual Stockholders' Meeting:
RESOLVED: That the stockholders of the Corporation, assembled in Annual
Meeting in person and by proxy, hereby recommend that the Corporation affirm its
political non-partisanship. To this end the following practices are to be
avoided:
(a) The handing of contribution cards of a single political party to an
employee by a supervisor.
(b) Requesting an employee to send a political contribution to an individual
in the Corporation for a subsequent delivery as part of a group of
contributions to a political party or fund raising committee.
(c) Requesting an employee to issue personal checks blank as to payee for
subsequent forwarding to a political party, committee or candidate.
(d) Using supervisory meetings to announce that contribution cards of one
party are available and that anyone desiring cards of a different party
will be supplied one on request to his supervisor.
(e) Placing a preponderance of contribution cards of one party at mail
station locations.
And if the Company did not engage in any of the foregoing to disclose this
to ALL shareholders in each quarterly report.
The statement submitted in support of this Stockholder Proposal is as
follows:
The Corporation must deal with a great number of governmental units,
commissions and agencies. It should maintain scrupulous political neutrality to
avoid embarrassing entanglements detrimental to its business. Above all, it must
avoid the appearance of coercion in encouraging its employees to make political
contributions against their personal inclinations. The Troy (Ohio) News has
condemned partisan solicitation for political purposes by managers in a local
company (non Bank of Boston). Last year the owners of 4,861,964 shares,
representing approximately 6.4% of shares voting, voted for my similar
resolution.
If you agree, please mark your proxy FOR this resolution.
THE CORPORATION'S BOARD RECOMMENDS A VOTE AGAINST STOCKHOLDER PROPOSAL A.
At the 1996 Annual Meeting of Stockholders, the Corporation's Stockholders
rejected this proposal. The Corporation continues to believe that the adoption
of this proposal would not serve the best interests of the Corporation or its
Stockholders.
The Corporation is required to comply with numerous federal and state laws
and regulations governing political activity. The Corporation encourages its
employees to participate in civic and political activities. In addition, as
authorized by federal law, the Corporation sponsors several employee-funded
political action committees. Through these committees, employees may make
voluntary contributions that support candidates and public officials with
particular views on proposed legislation and on other issues affecting the
financial services industry or the communities served by the Corporation and its
subsidiaries. The Corporation, consistent with its legal obligations and its
internal policies, follows procedures to ensure that contributions from
employees are entirely voluntary.
29
<PAGE> 33
The Corporation strongly believes that its policies, in conjunction with
federal and state regulations, adequately address the issues raised by this
proposal.
FOR THE FOREGOING REASONS, THE CORPORATION'S BOARD RECOMMENDS A VOTE AGAINST
STOCKHOLDER PROPOSAL A.
STOCKHOLDER PROPOSAL B
(PROXY ITEM 6)
Steven S. Feinberg, 412 Beacon Street, Apartment #7, Boston, MA 02115, who
holds of record 2,500 shares of the Corporation Common Stock, has informed the
Corporation that he intends to introduce the following proposal for action at
the Annual Meeting.
RESOLVED: That the stockholders recommend that the Board of Directors approve
and authorize,
1) The payment of the current and future ANNUAL RETAINER FEE to directors,
who are not employees of the Corporation, or any of its subsidiaries in
COMMON SHARES of the Corporation, valued as of the ex-date of the latest
quarterly declaration.
2) The payment of the current and future ANNUAL RETAINER FEE to directors,
who are now employees of the Corporation, and those who may become
employees in the future, in COMMON SHARES as well; and these shares shall
be held by the CORPORATION until they leave the BOARD.
3) Fees for attendance at meetings of the BOARD, or any committees will
continue to be paid in cash.
SOURCES:
Chrysler Corp., Item #3, 1996 Stockholder meeting
Colgate Palmolive Corp., Appendix A, Effective 1/1/97
Pacific Telesis Corp., 1996 Annual meeting
NYNEX Corp., 1996 Annual meeting
The TRAVELERS CO., Forbes Magazine 1/1/96
THE CORPORATION'S BOARD RECOMMENDS A VOTE AGAINST STOCKHOLDER PROPOSAL B.
The Corporation believes its current mix of cash and noncash elements in its
compensation package for non-employee Directors is appropriate and necessary to
attract high caliber Directors. As reported in more detail elsewhere in this
proxy statement, the Corporation currently pays 50% of its non-employee
Directors' annual retainer in the form of shares of its common stock pursuant to
the Director Stock Award Plan. Officers of the Corporation who serve as
Directors do not receive any fees for their service on the Board of the
Corporation or its subsidiaries.
The Corporation recognizes the importance of aligning the interests of its
Directors with those of its Stockholders. In furtherance of this goal, the Board
of Directors recently approved revisions to the Corporation's retirement plan
for its non-employee Directors. These revisions discontinue any future cash
accruals under the plan. Currently serving non-employee Directors have been
permitted to either retain the benefit accrued to date (payable on retirement)
or to convert it to restricted shares of the Corporation's stock (where the
restrictions will lapse upon termination from the Board). In addition, the
Corporation adopted a stock option plan in February, 1997 which provides for an
annual grant of 1,000 options to each Director.
The quality of the Corporation's Directors is an important factor in its
overall success. The Corporation believes that a competitive compensation
package is necessary in order to attract and retain talented and experienced
Directors. The Corporation regularly surveys compensation provided to Directors
by its peer bank holding companies and other large
30
<PAGE> 34
corporations. The Corporation believes that a combination of cash and stock
compensation is consistent with that provided by the surveyed companies, allows
it to draw Directors from a broad range of fields and facilitates the payment by
Directors of the tax obligations related to stock compensation. The Corporation
strongly believes that the compensation received by the Corporation's
non-employee Directors allows it to remain competitive in attracting desirable
candidates and achieves the purpose of aligning Directors' interests with those
of the Corporation's Stockholders.
FOR THE FOREGOING REASONS, THE CORPORATION'S BOARD RECOMMENDS A VOTE AGAINST
STOCKHOLDER PROPOSAL B.
SUBMISSION OF STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Stockholders who wish to submit proposals pursuant to Rule 14a-8 under the
Exchange Act at the 1998 Annual Meeting of Stockholders will be required to
deliver the proposals to the Corporation on or prior to November 17, 1997. The
Corporation's By-Laws also contain certain provisions that 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.
OTHER MATTERS
The Corporation's Board knows of no business that 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 that may be properly presented for action at the
Meeting.
BY-LAWS OF THE CORPORATION
Since last year's Annual Meeting of Stockholders, there have been two
amendments to the By-Laws of the Corporation. The By-Laws were amended on July
25, 1996 to reflect the establishment of the Corporation's Board Governance and
Nominating Committee, the updated responsibilities of certain other committees,
and the changes in the offices of the Chairman, the Chief Executive Officer and
the President and Chief Operating Officer, which resulted from the Corporation's
acquisition of BayBanks and the election of Mr. Meirelles as President and Chief
Operating Officer. In connection with certain organizational and management
changes implemented by the Corporation, the By-Laws were amended on October 24,
1996 to add the office of Executive Vice President and incorporate the
responsibilities of such office.
A copy of the amended By-Laws of the Corporation may be obtained without
charge by a Stockholder upon written request addressed to the Clerk of the
Corporation at the address set forth above 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.
31
<PAGE> 35
ANNUAL REPORT
A copy of the Corporation's Annual Report to Stockholders for the year ended
December 31, 1996, which includes financial statements, has been previously
mailed to all Stockholders. The Annual Report is not to be regarded as proxy
soliciting material.
10-K REPORT
A copy of the Corporation's Annual Report to the Commission on Form 10-K for
the year ended December 31, 1996 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,
/s/ Gary A. Spiess
----------------------
GARY A. SPIESS
Clerk
Dated: March 17, 1997
32
<PAGE> 36
EXHIBIT A
1997 EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE
The Corporation's 1997 Employee Stock Purchase Plan (the "Plan") is intended
to encourage eligible employees of the Corporation and such other subsidiaries
of the Corporation as the Committee shall from time to time designate to
participate in the ownership of the Corporation's Common Stock. It is intended
that the Plan shall qualify as an "employee stock purchase plan," as defined in
Section 423 of the Code, but shall permit offerings that do not qualify under
Section 423.
2. DEFINITIONS
As used herein, the following words or terms have the meanings set forth
below:
(a) "Beneficial Owner" shall have the meaning defined in Rule 13d-3
under the Exchange Act.
(b) "Board" means the Board of Directors of the Corporation.
(c) A "Change in Control" shall be deemed to have occurred if the
conditions set forth in any one of the following paragraphs shall have been
satisfied:
(i) There is an acquisition of control of the Corporation as defined
in Section 2(a)(2) of the Bank Holding Company Act of 1956, or any
similar successor provision, as in effect at the time of the acquisition;
or
(ii) Continuing Directors constitute two-thirds ( 2/3) or less of the
membership of the Board, whether as the result of a proxy contest or for
any other reason or reasons; or
(iii) Any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Corporation representing twenty-five
percent (25%) or more of the combined voting power of the Corporation's
then outstanding voting securities; or
(iv) There is a change in control of the Corporation of a nature that
would be required to be reported in response to item 1(a) of Current
Report on Form 8-K or item 6(e) of Schedule 14A of Regulation 14A or any
similar item, schedule or form under the Exchange Act, as in effect at
the time of the change, whether or not the Corporation is then subject to
such reporting requirement, including without limitation any merger or
consolidation of the Corporation with any other corporation, other than
(A) a merger or consolidation which would result in the voting securities
of the Corporation outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving or parent entity) forty-five percent
(45%) or more of the combined voting power of the voting securities
(entitled to vote generally for the election of directors) of the
Corporation or such surviving or parent entity outstanding immediately
after such merger or consolidation and which would result in those
persons who are Continuing Directors immediately prior to such merger or
consolidation constituting more than two-thirds ( 2/3) of the membership
of the Board or the board of such surviving or parent entity immediately
after, or subsequently at any time as contemplated by or as a result of,
such merger or consolidation or (B) a merger or consolidation effected to
implement a recapitalization of the Corporation (or similar transaction)
in which no Person acquired twenty-five percent (25%) or more of the
combined voting power of the Corporation's then outstanding securities;
or
A-1
<PAGE> 37
(v) The stockholders of the Corporation approve a plan of complete
liquidation of the Corporation or an agreement for the sale or
disposition by the Corporation of all or substantially all of the
Corporation's assets (or any transaction having a similar effect).
(d) "Code" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor statute.
(e) "Committee" means the Retirement Committee as appointed from time to
time by the Board, or any other committee appointed by the Board to
administer the Plan.
(f) "Common Stock" or "Stock" means the Common Stock, par value $1.50
per share, of the Corporation.
(g) "Compensation" shall mean compensation that is taken into account
for purposes of contributions under the Corporation's Thrift-Incentive
401(k) Plan or such other definition of compensation as the Committee may
determine from time to time.
(h) "Continuing Director" means any director (a) who has continuously
been a member of the Board since not later than the date of a Potential
Change in Control or (b) who is a successor of a director described in
clause (a), if such successor (and any intervening successor) shall have
been recommended or elected to succeed a Continuing Director by a majority
of the then Continuing Directors.
(i) "Corporation" means Bank of Boston Corporation, a corporation
established under the laws of the Commonwealth of Massachusetts.
(j) "Employee" shall mean any individual employed by one or more of the
Participating Companies.
(k) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute.
(l) "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 "NYSE-Composite Transactions" section of the Eastern Edition
of The Wall Street Journal, or if no such price is quoted for that day, for
the last preceding day on which such price is so quoted. In the event
"NYSE-Composite Transactions" cease to be reported, the Committee shall
adopt some other appropriate method for determining Fair Market Value.
(m) "Option Period" shall be the period determined in accordance with
Section 5 of the Plan.
(n) "Participating Company" means the Corporation and each other company
that is selected by the Committee in its sole discretion to participate in
each Option Period, provided that each Participating Company other than the
Corporation shall qualify on the first day of the Option Period as a "parent
corporation" or "subsidiary corporation," as defined in Sections 424(e) and
(f) of the Code, with respect to the Corporation.
(o) "Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof;
however, a Person shall not include (a) the Corporation or any of its
subsidiaries, (b) a trustee or other fiduciary holding securities under an
employee benefit plan of the Corporation or any of its subsidiaries, (c) an
underwriter temporarily holding securities pursuant to a registered offering
of such securities in accordance with an agreement with the Corporation, or
(d) a corporation owned, directly or indirectly, by the stockholders of the
Corporation in substantially the same proportions as their ownership of
stock of the Corporation.
(p) "Potential Change in Control" shall be deemed to have occurred if
the conditions set forth in any one of the following paragraphs shall have
been satisfied:
(i) the Corporation enters into an agreement, the consummation of
which would result in a Change in Control;
A-2
<PAGE> 38
(ii) the Corporation or any Person publicly announces an intention to
take or to consider taking actions which, if consummated, would
constitute a Change in Control;
(iii) any Person becomes the Beneficial Owner, directly or
indirectly, of securities of the Corporation representing fifteen percent
(15%) or more of the combined voting power of the Corporation's then
outstanding securities (entitled to vote generally for the election of
directors); or
(iv) the Board adopts a resolution to the effect that, for purposes
of this Agreement, a Potential Change in Control has occurred.
3. ADMINISTRATION
The Committee shall have full authority to administer the Plan. Among other
things, the Committee may, in its sole discretion but subject to the express
provisions of the Plan, from time to time or with respect to any Option Period:
(a) determine the form and provisions of any enrollment agreements and
related materials;
(b) determine Participating Companies;
(c) decide questions which may arise with respect to the interpretation,
construction or application of the Plan or enrollment or other materials
associated with the Plan;
(d) determine, amend and rescind rules, regulations, and procedures
relating to the Plan; and
(e) delegate to another person or persons the Committee's administrative
duties or responsibilities under the Plan.
Notwithstanding the foregoing, the Committee may appoint such agents, who
need not be members of the Committee, as it may deem necessary for the effective
performance of its administrative duties, and may delegate to such agents such
administrative powers and duties, as the Committee may deem expedient or
appropriate. All decisions of the Committee and any such agents made pursuant to
the authority granted herein or delegated by the Committee will be final and
binding on all parties.
4. EFFECTIVE DATE AND TERM OF PLAN
(a) The Plan shall be effective as of the date it is approved by the
Corporation's stockholders.
(b) The Plan shall terminate at such time as the Committee shall designate,
but in no event shall the Plan continue beyond the date on which all shares
available for issuance under the Plan have been issued.
5. OPTION PERIODS
The Plan shall have one or more Option Periods, as determined by the
Committee. Each Option Period shall run for a period specified by the Committee
and shall not exceed 27 months. Option Periods need not be of the same length
and may run successively or concurrently. The Committee shall determine in
advance of each Option Period whether the options granted for such Option Period
are intended to qualify under Section 423 of the Code.
6. ELIGIBILITY AND PARTICIPATION
Each Employee (other than employees who are executive officers of the
Corporation and are also members of the Corporation's Board) shall be eligible
to participate in the Plan during an Option Period except that (i) for offerings
intending to qualify under Section 423 of the Code, the Committee in its sole
discretion may exclude one or more Employees (a) who have been employed less
than two years (b) whose customary employment is 20 hours or less per
A-3
<PAGE> 39
week, (c) whose customary employment is for not more than five months in any
calendar year, or (d) who are highly compensated employees (within the meaning
of Code section 414(q)), and (ii) for offerings not intended to qualify under
Section 423 of the Code, the Committee may exclude any class of Employees as the
Committee in its sole discretion may specify. In order to become a participant
with respect to an Option Period, an eligible Employee must execute such
documents or take such actions as the Committee may specify in accordance with
any rules relating to such participation that the Committee may specify. No one
who is not an Employee of the Participating Companies is eligible to participate
in the Plan.
7. SHARES AVAILABLE FOR ISSUANCE UNDER THE PLAN
Subject to adjustment in accordance with the provisions of Section 9, the
total number of shares available for grants of options shall not exceed
3,000,000 shares. Shares issued under the Plan may consist in whole or in part
of authorized but unissued shares, shares held as treasury stock or previously
issued shares reacquired by the Corporation, including shares purchased on the
open market.
8. OPTIONS
Options shall be granted in such form as the Committee may from time to time
approve, and shall conform to the following terms and conditions:
(a) Option Price. The option price shall be a specified percentage (not
less than 85 percent) of the Fair Market Value of the Corporation's Common
Stock on the day the option is exercised, as determined by the Committee
prior to the commencement of an Option Period.
(b) Payment. Payment for Common Stock to be purchased under the Plan
shall be solely from amounts collected from participants in such manner and
at such time as the Committee shall decide. The Committee may determine, for
any Option Period, a maximum amount (and/or a maximum percentage) of
Compensation that may be applied to the purchase of Common Stock under the
Plan for such Option Period.
(c) Grants of Options. On the first day of any Option Period, a
participant shall be granted an option to purchase up to a fixed number of
shares of Common Stock determined by the Committee for such Option Period.
If the total number of shares of Common Stock for which options are to be
granted on any date in accordance with the terms of the Plan exceed the
number of shares then remaining available under the Plan (after deduction of
all shares for which options have been exercised or are then outstanding),
the Committee shall make a pro rata allocation of the shares remaining
available in as near as uniform a manner as shall be practicable and as it
shall deem equitable. The Committee shall give written notice of such
allocation to each participant affected thereby. In the case of a grant
intended to qualify under Section 423 of the Code, all Employees granted
such options will have the same rights and privileges within the meaning of,
and subject to the provisions of, Section 423(b)(5) of the Code.
(d) Termination of Employment. Unless otherwise provided by the
Committee, if, prior to the end of an Option Period, a participant ceases to
be employed by a Participating Company for any reason, including death or
retirement, the participant's option shall terminate, and any amounts
collected from the participant, shall be paid to the participant or the
participant's personal representative as soon as practicable.
(e) Termination of Options. A participant may, during an Option Period,
terminate his or her option, by giving notice in such manner and at such
time as the Committee may specify, whereupon any amounts collected from the
participant shall be paid to the participant and no further amounts will be
collected during the Option Period. An option may not be terminated
hereunder after the closing date of the Option Period.
A-4
<PAGE> 40
(f) Exercise of Options. Except as otherwise provided in Section 9 or
15, each option shall be exercised automatically on the last day of the
Option Period to the extent amounts have been collected in a participant's
account unless the option has been previously terminated pursuant to Section
7(d) or 7(e). Any balance remaining in the participant's account after the
last day of the Option Period and after application of the preceding
sentence (subject to the limitations set forth herein or in the applicable
option award) shall be paid to the participant within a reasonable amount of
time. To the extent any option is not exercised at the end of the Option
Period, it shall terminate.
(g) Assignability. Options under the Plan may not be assigned or
transferred by the participant other than by will or the laws of descent and
distribution and shall be exercised during the participant's lifetime only
by the participant.
(h) No Rights as a Stockholder. A participant shall have no rights as a
stockholder with respect to shares covered by any option granted under the
Plan until he or she becomes a holder of shares subject to an option. No
adjustments will be made for dividends or other rights for which the record
date is prior to the date of exercise.
(i) Accrual Limitations. No option that is granted under the Plan shall
permit the rights of a participant to purchase stock under this Plan and all
"employee stock purchase plans" (as defined in Section 423 of the Code) of
the Corporation or its "subsidiary corporations" (as defined in Section
424(f) of the Code) to accrue at a rate which exceeds $25,000 (or such
lesser amount determined by the Committee from time to time) of Fair Market
Value of such stock (determined at the time such option is granted) for each
calendar year in which such option is outstanding at any time.
(j) Ownership Limitations. No option shall be granted to an employee
if, immediately after the grant, the employee would own (within the meaning
of Section 424(d) of the Code), or hold outstanding options to purchase
stock possessing 5 percent or more of the total combined voting power or
value of all classes of stock of the Corporation or any of its subsidiary
corporations.
(k) Other Provisions. Options may contain any terms, not inconsistent
with the Plan, as the Committee deems advisable.
9. CHANGES IN STOCK; ADJUSTMENT OF OPTIONS
In the event of a stock dividend, stock split or other change in corporate
structure or capitalization affecting the Common Stock or any other transaction
(including, without limitation, an extraordinary cash dividend) which, in the
determination of the Committee, affects the Common Stock such that an adjustment
is required in order to preserve the benefits or potential benefits intended to
be made available under the Plan, then the Committee shall equitably adjust any
or all of (a) the number and kind of shares in respect of which options may be
granted under the Plan, (b) the number and kind of shares subject to outstanding
options, and (c) the option price of any outstanding options, provided that the
number of shares subject to any option shall always be a whole number. In the
event of any merger, consolidation, dissolution or liquidation of the
Corporation, the Committee, in its sole discretion, may, as to any outstanding
options, make such substitution or adjustment in the aggregate number of shares
reserved for issuance under the Plan and in the number of shares subject to, and
the option price of, such options as it may determine, make outstanding options
fully exerciseable, or amend or terminate such options upon such terms and
conditions as it shall provide (which, in the case of the termination of any
option, shall require payment or other consideration which the Committee deems
equitable in the circumstances). In the case of an option intended to qualify
under Section 423 of the
A-5
<PAGE> 41
Code, adjustments shall be made under this Section only to the extent consistent
with continued qualification of the option pursuant to Section 424 of the Code.
10. AMENDMENT OF OPTIONS
To the extent not inconsistent with the Plan or applicable law, the
Committee may amend, modify, terminate or waive any condition or provision of
any outstanding option. A participant's consent to any such action shall be
required unless the Committee determines that the action, taking into account
any related action, would not materially and adversely affect the participant.
11. AMENDMENTS TO PLAN
The Board of Directors of the Corporation may terminate the Plan at any
time. The Compensation Committee of the Board may from time to time alter,
amend, or suspend the Plan to any extent and in any manner that it may deem
advisable; provided, however, that no such action may, without the approval of
stockholders of the Corporation, (i) increase the number of shares subject to
the Plan (unless necessary to effect the adjustments required under Section 9),
(ii) make any other change with respect to which the Board or Compensation
Committee of the Board determines that stockholder approval is required by
applicable law or for regulatory compliance purposes. The Committee may make
nonmaterial amendments to the Plan.
12. NO RIGHT TO EMPLOYMENT
The grant of an option under the Plan shall not be construed as giving any
participant the right to continued employment. The Participating Companies
expressly reserve the right at any time to terminate the employment of a
participant free from any liability or claim under the Plan, except as may be
expressly provided in the applicable option. Except as specifically provided by
the Committee in any particular case, the loss of existing or potential profit
in an option granted under the Plan shall not constitute an element of damages
in the event of termination of employment of a participant, even if termination
is in violation of an obligation of a Participating Company, by contract or
otherwise.
13. REGULATORY APPROVALS
The implementation of the Plan, the granting of any option under the Plan,
and the issuance of Common Stock upon the exercise of any such option shall be
subject to the Corporation's procurement of all approvals and permits required
by regulatory authorities having jurisdiction over the Plan, the options granted
under it or the Common Stock issued pursuant to it.
14. WITHHOLDING
The Committee is hereby authorized to make such provision as it deems
necessary for the withholding of taxes, if any, in connection with the exercise
of options or the disposition of shares acquired pursuant to exercise.
15. CHANGE IN CONTROL
Upon the occurrence of a Change of Control of the Corporation, any and all
options granted under the Plan shall become immediately exerciseable and each
participant shall have the choice of exercising his or her option within the
time provided by the Committee or having the amounts collected for the purchase
of the Common Stock refunded to him or her.
16. GOVERNING LAW
The provisions of the Plan shall be governed by and interpreted in
accordance with the laws of the Commonwealth of Massachusetts.
A-6
<PAGE> 42
<TABLE>
INDEX TO PROXY STATEMENT
<CAPTION>
Page
<S> <C>
Voting Information............. 1
Election of Directors.......... 2
1996 Meetings and Standard Fee
Arrangements of the
Corporation's Board and
Committees................... 9
Security Ownership of Directors
and Executive Officers....... 11
Security Ownership of Certain
Beneficial Owners............ 12
Compliance with Section 16(a)
of the Exchange Act.......... 12
Compensation of Executive
Officers..................... 12
Five-Year Stockholder Return
Comparison................... 24
Indirect Interest of Directors
and Executive Officers in
Certain Transactions......... 24
Ratification of the Selection
of Independent Auditors...... 25
Authorization to Change the
Name of the Corporation...... 25
Approval of the Corporation's
1997 Employee Stock Purchase
Plan......................... 26
Stockholder Proposals.......... 29
Submission of Stockholder
Proposals for 1998 Annual
Meeting...................... 31
Other Matters.................. 31
By-Laws of the Corporation..... 31
Expenses of Solicitation....... 31
Annual Report.................. 32
10-K Report.................... 32
EXHIBIT A -- Bank of Boston
Corporation 1997 Employee
Stock Purchase Plan.......... A-1
</TABLE>
BankBoston [Logo]
BANK OF BOSTON
CORPORATION
NOTICE OF
ANNUAL MEETING
OF STOCKHOLDERS
AND
PROXY STATEMENT
Time:
Thursday, April 24, 1997
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> 43
PROXY BANK OF BOSTON CORPORATION PROXY
The undersigned, revoking previous proxies relating to these shares, hereby
acknowledges receipt of the Notice and Proxy Statement dated March 17, 1997 in
connection with the Annual Meeting to be held at 10:30 a.m. on April 24, 1997 in
the Auditorium of The Federal Reserve Bank of Boston, and hereby appoints Helen
R. Cahners-Kaplan, Frank L. Farwell, and Charles A. Zraket, 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 1997 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 EACH OF THE NOMINEES NAMED IN ITEM 1, FOR ITEMS 2, 3 AND 4,
AGAINST ITEMS 5 AND 6, AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
---------------
SEE REVERSE
SIDE
---------------
<PAGE> 44
/ 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, 3 AND 4.
---
- -------------------------------------------------------------------------------
1. Election of six Directors for three-year terms (or if any nominee is not
available for election, such substitute as the Board of Directors may
designate):
NOMINEES: Countryman, Meirelles, Piper, Rodgers, Rowe, Van Faasen
FOR all nominees / /
For, except vote withheld from the following nominee(s):
/ /____________________________________________
WITHHELD from all nominees / /
- -------------------------------------------------------------------------------
2. Selection of Independent Auditors FOR AGAINST ABSTAIN
/ / / / / /
- -------------------------------------------------------------------------------
3. Approval of amendment to Restated FOR AGAINST ABSTAIN
Articles of Organization Changing / / / / / /
the Corporation's name to
"BankBoston Corporation."
- -------------------------------------------------------------------------------
4. Approval of the Corporation's 1997 FOR AGAINST ABSTAIN
Employee Stock Purchase Plan. / / / / / /
- -------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSALS 5 AND 6.
-------
- -------------------------------------------------------------------------------
5. Stockholder Proposal A regarding FOR AGAINST ABSTAIN
political activities. / / / / / /
- -------------------------------------------------------------------------------
6. Stockholder Proposal B regarding FOR AGAINST ABSTAIN
Director compensation. / / / / / /
- -------------------------------------------------------------------------------
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 ______________________
