<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT [X] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
- --------------------------------------------------------------------------------
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
BankBoston Corporation
(Name of Registrant as Specified In Its Charter)
BankBoston Corporation
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
BANKBOSTON CORPORATION
Boston, Massachusetts 02110
[BankBoston LOGO]
BANKBOSTON CORPORATION
SUPPLEMENT TO PROXY STATEMENT FOR
1999 ANNUAL MEETING OF STOCKHOLDERS
To our Common Stockholders:
We are enclosing BankBoston Corporation's Notice of Annual Meeting and
Proxy Statement dated March 16, 1999. BankBoston's Annual Meeting is scheduled
for April 22, 1999.
In addition to the information provided in the Proxy Statement, we want to
inform you that BankBoston Corporation and Fleet Financial Group, Inc. have
entered into an agreement for the strategic combination, through merger, of
BankBoston and Fleet. Under the terms of the agreement, BankBoston's
stockholders will receive 1.1844 shares of Fleet common stock for each share of
BankBoston common stock they own. The transaction, which has been unanimously
approved by the Boards of Directors of both companies, is expected to close
during the fourth quarter of 1999 and is subject to regulatory and stockholder
approvals.
The combination with Fleet will NOT be voted on at the Annual Meeting, but
rather will be voted on at a special meeting of stockholders to be held later in
1999. Further information will be sent to you before that special meeting.
This information supplements and amends the enclosed Proxy Statement.
Cordially,
<TABLE>
<S> <C>
/s/ Charles K. Gifford /s/ Henrique de Campos Meirelles
Charles K. Gifford Henrique de Campos Meirelles
Chairman and Chief Executive Officer President and Chief Operating Officer
</TABLE>
<PAGE> 3
1999
BankBoston Corporation
Proxy Statement
Notice of 1999 Annual Meeting of Stockholders & Proxy Statement
[BANK BOSTON LOGO]
<PAGE> 4
[BankBoston LOGO]
100 FEDERAL STREET - BOSTON - MASSACHUSETTS 02110
March 16, 1999
To our Common Stockholders:
We are pleased to invite you to attend the Annual Meeting of Stockholders
(the "Meeting") of BankBoston Corporation (the "Corporation"), which will be
held on Thursday, April 22, 1999, at 10:30 a.m. in the Auditorium on the ground
floor of The Federal Reserve Bank of Boston, 600 Atlantic Avenue, Boston,
Massachusetts.
The accompanying Notice of Annual Meeting of Stockholders and Proxy
Statement set forth the business to come before this year's meeting.
If you plan to attend the meeting, please bring a form of personal
identification with you and, if you are acting as proxy for another, please
bring written confirmation from the record owner that you are acting as proxy.
Whether or not you expect to attend the meeting, please sign and date the
enclosed form of proxy and return it promptly in the accompanying envelope to
ensure that your shares will be represented. If you attend the meeting, you may
withdraw any proxy previously given and vote your shares in person.
Cordially,
/s/ Charles K. Gifford /s/ Henrique de Campos Meirelles
------------------------------------ --------------------------------
CHARLES K. GIFFORD HENRIQUE DE CAMPOS MEIRELLES
Chairman and Chief Executive Officer President and Chief Operating
Officer
<PAGE> 5
[BankBoston LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 22, 1999
TO COMMON STOCKHOLDERS OF
BANKBOSTON CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
BankBoston 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 22, 1999 at 10:30 a.m. for the following purposes, all as set
forth in the accompanying Proxy Statement:
(1) To elect five Directors with terms expiring at the 2002 Annual
Meeting of Stockholders, as described in the accompanying Proxy
Statement.
(2) To ratify the selection by the Board of Directors of
PricewaterhouseCoopers LLP as the Corporation's independent auditors for
1999.
(3) To consider and vote upon three Stockholder proposals described in
the accompanying Proxy Statement, if such proposals are presented to the
Meeting.
(4) To transact such other business as may properly come before the
Meeting.
The Board of Directors has fixed the close of business on March 11, 1999,
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 hold. Please complete, sign and date the enclosed
proxy card and return it promptly in the enclosed envelope which requires no
postage if mailed in the United States.
By Order of the Board of Directors,
/s/ Gary A. Spiess
------------------------------------
GARY A. SPIESS
Clerk
Boston, Massachusetts
March 16, 1999
<PAGE> 6
PROXY STATEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GENERAL INFORMATION ABOUT VOTING............................ 1
ELECTION OF DIRECTORS....................................... 3
Information about the Nominees...................... 3
Nominees for Election as Directors.................. 4
Directors Continuing in Office...................... 6
Information about the Board and Its Committees...... 10
Security Ownership of Directors and Executive
Officers............................................ 12
Security Ownership of Certain Beneficial Owners..... 12
Compliance with Section 16(a) of the Securities
Exchange Act........................................ 12
Compensation of Executive Officers.................. 14
Compensation Committee Report on Executive
Compensation........................................ 14
Executive Compensation Tables and Information....... 18
Summary Compensation Table...................... 18
Stock-Based Compensation........................ 20
Option Grants in 1998........................... 20
Aggregated Option Exercises in 1998 and Year-End
1998 Option Values.............................. 21
Long-Term Incentive Plans -- Awards in 1998..... 21
Retirement Benefits................................. 22
Supplemental Death Benefits......................... 22
Severance Agreements................................ 22
Compensation Committee Interlocks and Insider
Participation....................................... 23
Five-Year Stockholder Return Comparison............. 24
Interests of Directors and Executive Officers in
Certain Transactions................................ 24
RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS....... 26
STOCKHOLDER PROPOSALS....................................... 27
Stockholder Proposal A.............................. 27
Stockholder Proposal B.............................. 28
Stockholder Proposal C.............................. 29
SUBMISSION OF STOCKHOLDER PROPOSALS OR NOMINATIONS FOR THE
2000 ANNUAL MEETING....................................... 31
OTHER MATTERS............................................... 31
BY-LAWS OF THE CORPORATION.................................. 31
ANNUAL REPORT............................................... 31
10-K REPORT................................................. 31
</TABLE>
<PAGE> 7
[BankBoston LOGO]
PROXY STATEMENT
---------------------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 22, 1999
We are mailing this Proxy Statement, with the accompanying proxy card, to you on
March 16, 1999 in connection with the solicitation of proxies by the Board of
Directors of BankBoston Corporation for the 1999 Annual Meeting of Stockholders
and any adjournment of that meeting. The Meeting is scheduled to occur on April
22, 1999.
---------------------------------------------------------
GENERAL INFORMATION ABOUT VOTING
WHO CAN VOTE?
If you are a holder of our Common Stock, par value $1.00 per share, on our
records at the close of business on March 11, 1999 (the "Record Date" for the
Meeting) you are entitled to vote at the Meeting. On the Record Date, we had
296,508,437 shares of Common Stock 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.
HOW ARE VOTES COUNTED?
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 are treated in the same manner as shares
present or represented at the Meeting for purposes of determining the existence
of a quorum.
A plurality vote will decide proxy item 1. 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
proxy item 2 and the Stockholder proposals.
The total number of votes that are 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-votes
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. The broker will indicate this on the proxy card.) Under the rules
of the New York Stock Exchange (the "NYSE"), brokers who hold shares in street
name for customers are prohibited from giving a proxy to vote such shares with
respect to the consideration of the three stockholder proposals without specific
instructions from such customers.
1
<PAGE> 8
WHAT HAPPENS IF I VOTE BY PROXY?
If you sign, date and return the enclosed proxy card in time for the Meeting and
do not subsequently revoke it, your shares will be voted in accordance with your
instructions as marked on the proxy card. If you sign, date and return the proxy
card but do not specify how your shares are to be voted, then your shares will
be voted FOR the matters numbered (1) and (2) on the proxy card and AGAINST the
three Stockholder proposals.
CAN I REVOKE MY PROXY CARD INSTRUCTIONS?
You may revoke your proxy at any time before it is exercised by returning to us
another properly signed proxy card representing such shares and bearing a later
date or by delivering a written revocation letter to Gary A. Spiess, Clerk of
the Corporation. Mr. Spiess' mailing address is BankBoston Corporation,
P.O. Box 1864, MA BOS 01-25-01, Boston, Massachusetts 02105. If you attend the
Meeting, you may vote in person even though you have previously sent in a proxy
card and your vote at the meeting will supersede your vote submitted on your
proxy card.
WHAT DO I NEED TO DO IF I PLAN TO ATTEND THE ANNUAL MEETING?
If you are a holder of record of shares of our Common Stock and you plan to
attend the Annual Meeting, you need only bring a form of personal identification
with you in order to be admitted to the Meeting. If you are not a record holder
of shares but hold our Common Stock through a bank or broker, you will need
proof of ownership to be admitted to the Meeting. A recent brokerage statement
or letter from a bank or broker are examples of proof of ownership. If you hold
your shares through a broker or bank and want to vote in person at the Meeting,
you will need to contact the registered holder of your shares and obtain a proxy
card in your name from that registered holder.
WHO PAYS THE EXPENSES OF THIS SOLICITATION?
We bear the cost of preparing, assembling and mailing the Notice, Proxy
Statement and proxy card for the Meeting. We have retained D.F. King & Co., Inc.
to assist in the solicitation of proxies and we will compensate them in an
estimated amount of $4,500 plus reasonable out-of-pocket expenses. In addition
to such solicitation and solicitation by use of the mails, employees of our
principal subsidiary, BankBoston, N.A. (the "Bank") may solicit proxies, by
personal interview, by telephone or by other means of communication, without any
additional compensation. We will also provide persons, firms, banks and
corporations holding shares in their names, or in the names of their nominees,
which in either case are beneficially owned by others, with proxy materials for
transmittal to the beneficial owners and we will reimburse the record holders
for their reasonable expenses in transmitting those materials.
2
<PAGE> 9
ELECTION OF DIRECTORS
(Proxy Item 1)
INFORMATION ABOUT THE NOMINEES
Five Director nominees are standing for election at the Meeting for terms of
office that will expire at the 2002 Annual Meeting of Stockholders. Ms. Emerson,
Mr. Budd and Mr. Gifford were elected at the 1996 Annual Meeting of
Stockholders. Mr. Strehle was elected effective July, 1996 in connection with
the acquisition of BayBanks, Inc. Mr. Burnham is being proposed by the Board for
election at the Meeting.
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.
We have made inquiries and we believe that each of the nominees will be willing
and able to serve if elected. If any of the nominees is unwilling or unable to
serve, discretionary authority is reserved to vote for a substitute chosen by
the Board of Directors, or the Board may reduce the number of Directors.
The following information with respect to the Director nominees as well as the
Directors whose terms of office expire in 2000 and 2001 is set forth below:
name, age, the number of shares of the Corporation's Common Stock beneficially
owned as of March 1, 1999, the year in which the individual became a Director of
the Corporation, principal occupation, business or professional experience, the
standing committees of the Board on which the Director serves as a member, and
the names of other public companies for which the individual serves as a
director.
3
<PAGE> 10
NOMINEES FOR ELECTION AS DIRECTORS
TERMS EXPIRE AT THE 2002 ANNUAL STOCKHOLDERS' MEETING
[PHOTO OF WAYNE A. BUDD]
WAYNE A. BUDD
Age 57
Director since 1993
Shares: 10,992 (1)
GROUP PRESIDENT - BELL ATLANTIC -- NEW ENGLAND
- Associate Attorney General of the United States from
1992 to 1993
- Senior Partner, Goodwin, Procter & Hoar from 1993 to
1996
- Senior Vice President, Bell Atlantic (formerly NYNEX)
from 1996 to 1997, Group President - New England,
Bell Atlantic since 1997
- Director of the Bank since 1993
- Other Directorships: John Hancock Mutual Life
Insurance Co. and Tosco, Inc.
- Current Committees: Audit and Community Investment
(1) In addition to shares directly held, includes 4,000
shares which Mr. Budd has the right to acquire
within 60 days under the Director Stock Option
Plan, 987 shares deferred under the Director Stock
Award Plan, 2,278 shares deferred under the
Retirement Benefits Exchange Program and 1,735
shares which Mr. Budd owns jointly with his spouse.
[PHOTO OF ALICE F. EMERSON]
ALICE F. EMERSON
Age 67
Director since 1977
Shares: 18,827 (2)
SENIOR ADVISOR, 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 from
1991 to 1998
- Senior Advisor, The Andrew W. Mellon Foundation since
1998
- Director of the Bank since 1977
- Other Directorships: Eastman Kodak Company, Champion
International Corporation and AES Corporation
- Current Committees: Compensation and Trust (Chair)
(2) In addition to shares directly held, includes 4,000
shares which Ms. Emerson has the right to acquire
within 60 days under the Director Stock Option
Plan, 1,860 shares deferred under the Director
Stock Award Plan and 10,933 shares deferred under
the Retirement Benefits Exchange Program.
[PHOTO OF CHARLES K. GIFFORD]
CHARLES K. GIFFORD
Age 56
Director since 1987
Shares: 896,229 (3)
CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF THE CORPORATION
AND 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, Chief Executive Officer of the
Corporation and Chairman and Chief Executive Officer
of the Bank in 1996 and Chairman and Chief Executive
Officer of both in December 1997
- Director of the Bank since 1987
- Other Directorships: Massachusetts Mutual Life
Insurance Company and Boston
Edison Company
- Current Committees: Executive (Chair) and Board
Governance and Nominating
(3) In addition to shares directly held, includes
412,656 shares which Mr. Gifford has the right to
acquire within 60 days under the Corporation's
long-term incentive plans, 110,262 restricted
shares acquired under the long-term incentive plans
as to which Mr. Gifford has sole voting but no
investment authority, 829 shares held as custodian
for two of his children, 2,991 shares owned by one
of his children directly and 414 shares which he
owns jointly with one of his children.
4
<PAGE> 11
NOMINEES FOR ELECTION AS DIRECTORS
TERMS EXPIRE AT THE 2002 ANNUAL STOCKHOLDERS' MEETING (Cont'd)
[PHOTO OF GLENN P. STREHLE]
GLENN P. STREHLE
Age 62
Director since 1996
Shares: 20,221 (5)
TREASURER EMERITUS AND ADVISOR TO THE CHAIRMAN AND THE
PRESIDENT OF MASSACHUSETTS INSTITUTE OF TECHNOLOGY
- Treasurer of MIT from 1975 to 1998, Vice President
from 1986 to 1994 and Vice President for Finance and
Treasurer from 1994 to 1998
- Treasurer Emeritus and Advisor to the Chairman and
the President of MIT since 1998
- Director of BayBanks, Inc. from 1979 to 1996
- Director of the Bank since 1996
- Other Directorships: Liberty Mutual Insurance Company
and Property Capital Trust
- Current Committees: Compensation and Board Governance
and Nominating
(5) In addition to shares directly held, includes 4,000
shares which Mr. Strehle has the right to acquire
within 60 days under the Director Stock Option
Plan, 348 restricted shares acquired under the
Retirement Benefits Exchange Program as to which he
has voting but no investment authority and 1,231
shares deferred under the Director Stock Award
Plan.
[PHOTO OF DANIEL P. BURNHAM]
DANIEL P. BURNHAM
Age 52
Director Nominee
PRESIDENT AND CHIEF EXECUTIVE OFFICER OF RAYTHEON
COMPANY
- President of Allied Signal Aerospace and Executive
Vice President of AlliedSignal, Inc. from 1992 to
1997
- Vice Chairman of AlliedSignal, Inc. from 1997 to July
1998
- President and Chief Operating Officer of Raytheon
from July, 1998 to December 1998
- President and Chief Executive Officer of Raytheon
since December, 1998
- Other Directorships: Raytheon Company
5
<PAGE> 12
DIRECTORS CONTINUING IN OFFICE
TERMS EXPIRE AT THE 2000 ANNUAL STOCKHOLDERS' MEETING
[PHOTO OF GARY L. COUNTRYMAN]
GARY L. COUNTRYMAN
Age 59
Director since 1982
Shares: 18,779 (6)
CHAIRMAN OF LIBERTY MUTUAL INSURANCE COMPANY
- President of Liberty Mutual Insurance Company from
1981 to 1992, Chief Executive Officer from 1987 to
1998 and Chairman since 1991.
- Director of the Bank since 1982
- Other Directorships: Liberty Financial Companies,
Inc., Boston Edison Company, Harcourt General, Inc.,
BEC Energy and Unisource Worldwide, Inc.
- Current Committees: Executive and Compensation
(Chair)
(6) In addition to shares directly held, includes 4,000
shares which Mr. Countryman has the right to
acquire within 60 days under the Director Stock
Option Plan and 8,199 shares deferred under the
Retirement Benefits Exchange Program.
[PHOTO OF HENRIQUE DE CAMPOS]
HENRIQUE DE CAMPOS
MEIRELLES
Age 53
Director since 1996
Shares: 440,428 (7)
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 the Corporation and
the Bank in 1996
- Director of the Bank since 1996
- Other Directorships: Best Foods, Inc., Champion
International Corporation and
Raytheon Company
- Current Committees: Executive, Board Governance and
Nominating, and Trust
(7) In addition to shares directly held, includes
309,000 shares which Mr. Meirelles has the right to
acquire within 60 days under our long-term
incentive plans and 83,851 restricted shares
acquired under the long-term incentive plans as to
which he has sole voting but no investment
authority.
[PHOTO OF THOMAS R. PIPER]
THOMAS R. PIPER
Age 61
Director since 1996
Shares: 18,390 (8)
LAWRENCE E. FOURAKER PROFESSOR OF BUSINESS
ADMINISTRATION, HARVARD UNIVERSITY GRADUATE SCHOOL OF
BUSINESS ADMINISTRATION
- Faculty member at Harvard since 1970
- Director of BayBanks, Inc. from 1979 to 1996
- Director of the Bank since 1996
- Current Committees: Audit and Community Investment
(8) In addition to shares directly held, includes 4,000
shares which Mr. Piper has the right to acquire
within 60 days, under the Director Stock Option
Plan, 348 restricted shares acquired under the
Retirement Benefits Exchange Program as to which he
has sole voting but no investment authority and 446
shares deferred under the Director Stock Award
Plan.
6
<PAGE> 13
DIRECTORS CONTINUING IN OFFICE
TERMS EXPIRE AT THE 2000 ANNUAL STOCKHOLDERS' MEETING (cont'd)
[PHOTO FRANCENE S. RODGERS]
FRANCENE S. RODGERS
Age 52
Director since 1997
Shares: 5,828 (9)
CHIEF EXECUTIVE OFFICER AND TREASURER OF WORK/FAMILY
DIRECTIONS, INC.
(Service and consulting firm on employee commitment)
- Founder and Chief Executive Officer of Work/Family
Directions since 1983
- Trustee of Barnard College of Columbia University and
the National Academy of Human Resources
- Director of the Bank since 1997
- Current Committees: Audit and Community Investment
(9) In addition to shares directly held, includes 4,000
shares which Ms. Rodgers has the right to acquire
within 60 days under the Director Stock Option Plan
and 828 shares deferred under the Director Stock
Award Plan.
[PHOTO JOHN W. ROWE]
JOHN W. ROWE
Age 53
Director since 1989
Shares: 15,856 (10)
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER OF
UNICOM CORP. (Chicago based energy company) AND
COMMONWEALTH EDISON
- President and Chief Executive Officer of New England
Electric System from 1989 to February, 1998
- Chairman, President and Chief Executive Officer of
Unicom and Commonwealth Edison since March, 1998
- Director of the Bank since 1989
- Other Directorships: UNUM Corporation and Wisconsin
Central Transportation Company
- Current Committees: Board Governance and Nominating
and Community Investment
(10) In addition to shares directly held, includes
4,000 shares which Mr. Rowe has the right to
acquire within 60 days, under the Director Stock
Option Plan, 800 shares owned by his spouse, 2,402
shares deferred under the Director Stock Award
Plan and 4,237 shares deferred under the
Retirement Benefits Exchange Program.
[PHOTO OF WILLIAM C. VAN FAASEN]
WILLIAM C. VAN FAASEN
Age 50
Director since 1994
Shares: 10,384 (11)
PRESIDENT AND CHIEF EXECUTIVE OFFICER OF BLUE CROSS AND
BLUE SHIELD
OF MASSACHUSETTS, INC.
- 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
- Other Directorships: IMS Health Incorporated
- Current Committees: Board Governance and Nominating
and Community Investment
(11) In addition to shares directly held, includes
4,000 shares which Mr. Van Faasen has the right to
acquire within 60 days under the Director Stock
Option Plan, 541 shares deferred under the
Director Stock Award Plan and 1,777 shares
deferred under the Retirement Benefits Exchange
Program.
7
<PAGE> 14
DIRECTORS CONTINUING IN OFFICE
TERMS EXPIRE AT THE 2001 ANNUAL STOCKHOLDERS' MEETING
[PHOTO OF WILLIAM F. CONNELL]
WILLIAM F. CONNELL
Age 60
Director since 1993
Shares: 71,232 (12)
CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF CONNELL LIMITED
PARTNERSHIP (Metal recycling and the manufacture of
industrial products)
- Chairman and Chief Executive Officer of Connell
Limited Partnership since 1987
- Director of the Bank since 1993
- Other Directorships: Harcourt General, Inc. and
Liberty Financial Companies,
Inc.
- Current Committees: Executive, Compensation, and
Board Governance and Nominating
(12) In addition to shares directly held, includes
4,000 shares which Mr. Connell has the right to
acquire within 60 days under the Director Stock
Option Plan and 2,277 shares deferred under the
Retirement Benefits Exchange Program.
[PHOTO OF THOMAS J. MAY]
THOMAS J. MAY
Age 51
Director since 1994
Shares: 8,941 (13)
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER OF
BOSTON EDISON COMPANY
- President and Chief Operating Officer of Boston
Edison Company from 1993 to 1994, Chairman and Chief
Executive Officer since 1994 and President since 1995
- Director of the Bank since 1994
- Other Directorships: Liberty Mutual Insurance Co.
and RCN Corporation
- Current Committees: Audit and Board Governance and
Nominating
(13) In addition to shares directly held, includes
4,000 shares which Mr. May has the right to
acquire within 60 days under the Director Stock
Option Plan, 2,402 shares deferred under the
Director Stock Award Plan and 1,503 shares
deferred under the Retirement Benefits Exchange
Program.
[PHOTO DONALD F. MCHENRY]
DONALD F. MCHENRY
Age 62
Director since 1981
Shares: 24,191 (14)
UNIVERSITY RESEARCH PROFESSOR OF DIPLOMACY AND
INTERNATIONAL RELATIONS,
GEORGETOWN UNIVERSITY, WASHINGTON, D.C. AND PRESIDENT
OF THE IRC GROUP
- University Research Professor at Georgetown
University since 1981
- President of The IRC Group since 1983
- Director of the Bank since 1981
- Other Directorships: American Telephone & Telegraph
Company, Coca-Cola Company,
International Paper Company and
SmithKline Beecham, PLC.
- Current Committees: Executive, Audit (Chair) and
Trust
(14) In addition to shares directly held, includes
4,000 shares which Mr. McHenry has the right to
acquire within 60 days under the Director Stock
Option Plan, 2,402 shares deferred under the
Director Stock Award Plan and 8,610 shares
deferred under the Retirement Benefits Exchange
Program.
8
<PAGE> 15
DIRECTORS CONTINUING IN OFFICE
TERMS EXPIRE AT THE 2001 ANNUAL STOCKHOLDERS' MEETING (cont'd)
[PHOTO OF THOMAS B. WHEELER]
THOMAS B. WHEELER
Age 62
Director since 1989
Shares: 14,473 (15)
CHAIRMAN OF MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
- President of Massachusetts Mutual Life Insurance
Company from 1987 to 1996, Chief Executive Officer
from 1988 to 1998 and Chairman since 1996
- Director of the Bank since 1989
- Other Directorships: Textron, Inc.
- Current Committees: Community Investment (Chair) and
Compensation
(15) In addition to shares directly held, includes
4,000 shares which Mr. Wheeler has the right to
acquire within 60 days under the Director Stock
Option Plan, 2,402 shares deferred under the
Director Stock Award Plan and 4,419 shares
deferred under the Retirement Benefits Exchange
Program.
[PHOTO OF ALFRED M. ZEIEN]
ALFRED M. ZEIEN
Age 69
Director since 1992
Shares: 11,678 (16)
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER OF
THE GILLETTE COMPANY
- Chairman of the Board and Chief Executive Officer of
The Gillette Company since 1991
- Director of the Bank since 1992
- Other Directorships: Polaroid Corporation, Raytheon
Company and Massachusetts
Mutual Life Insurance Company
- Current Committees: Executive and Trust
(16) In addition to shares directly held, includes
4,000 shares which Mr. Zeien has the right to
acquire within 60 days under the Director Stock
Option Plan, and 2,786 restricted shares acquired
under the Retirement Benefits Exchange Program as
to which Mr. Zeien has sole voting but no
investment authority.
9
<PAGE> 16
INFORMATION ABOUT THE BOARD AND ITS COMMITTEES
General
During 1998, the Corporation's Board held 11 meetings. The Board has an
Executive Committee, an Audit Committee, a Compensation Committee, a Board
Governance and Nominating Committee, and a Community Investment 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, the members of which
are appointed each year following the Bank's Annual Meeting of Stockholders.
Executive Committee
The Executive Committee of the Corporation 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 5 meetings in 1998.
Audit Committee
The functions of the Audit Committee include recommending the appointment of the
Corporation's independent auditors, 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 Corporation's 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 6 meetings in 1998.
Compensation Committee
The responsibilities of the Compensation Committee of the Corporation include
approving, or recommending to the Board for its approval, the compensation 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
responsibilities, including approving, or recommending to its Board of Directors
for approval, the compensation of certain senior executives of the Bank. In
1998, the Compensation Committee held 5 meetings.
Board Governance and Nominating Committee
The Corporation's Board Governance and Nominating Committee is authorized to
establish 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 non-
employee 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. In 1998, the Board Governance and Nominating Committee held 6
meetings.
The Board Governance and Nominating Committee will consider candidates for
appointment or election as Directors proposed by the Chairman and Chief
Executive Officer or the President and Chief Operating Officer, by any other
officer of the Corporation, or by any Director or Stockholder. In addition,
Stockholders who wish to directly nominate candidates for the Corporation's
Board must provide the Corporation with a timely written notice containing
information about the candidate and the Stockholder making the nomination
10
<PAGE> 17
as required by the Corporation's By-Laws. Any such Stockholder should consult
the By-Laws and review the information set forth below under "Submission of
Stockholder Proposals or Nominations for the 2000 Annual Meeting" 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
"General Information about Voting."
Community Investment Committee
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 4 meetings in 1998.
Trust Committee
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 Committee held 4 meetings in 1998.
------------------
In 1998, each Director attended at least 75% of the total number of meetings of
our Board and the Committees on which he or she served, except for Mr. Zeien who
attended 69% of the total number of such meetings.
Fee Arrangements
We pay fees and retainers only to Directors who are not officers of the
Corporation or the Bank. An annual cash retainer of $17,500 is paid to each
non-employee 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 Committee 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, each non-employee Director receives awards
of Common Stock under the Corporation's Director Stock Award Plan. The Directors
receive these awards twice a year, on January 1 and on July 1, in each case, for
the preceding six-month period. On each of those dates, we calculate the number
of shares awarded to each Director by taking 70% of the annual cash retainer in
effect at the beginning of the applicable award period and dividing it by the
fair market value of our common stock at the end of the award 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.
Our non-employee Directors may defer receipt of their cash fees and retainers
pursuant to a deferral plan. 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 our 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. We have established trusts for the
payment of deferred Director
11
<PAGE> 18
fees, which will be funded at the discretion of the Board of Directors or under
circumstances constituting a change in control of the Corporation.
Prior to 1997, we made a retirement benefit available to each non-employee
Director that had served continuously for 60 months as a Director of the
Corporation or the Bank. We discontinued future accruals under this plan in
April 1997. We gave the Directors that had accrued retirement benefits as of
that date the choice to maintain their current benefit or to convert the accrued
amount to deferred or restricted shares of our Common Stock under our Retirement
Benefits Exchange Program . All of the Directors elected to convert their
accrued benefits to deferred or restricted shares. The restrictions on a
Director's shares will lapse when the Director leaves the Board after having
served continuously for 60 months, unless he or she resigns in order to serve on
the board of an unaffiliated institution.
To further align Director and Stockholder interests, the Corporation has adopted
a Director stock option plan that provides for an annual grant of 2,000 options
to each non-employee Director immediately following each Annual Stockholders'
Meeting. The option exercise price is equal to the closing price of the
Corporation's Common Stock on each grant date, and all options are fully vested
upon grant. Except under certain circumstances, these options may be exercised
at any time within ten years from the date of grant.
SECURITY OWNERSHIP OF DIRECTORS AND
EXECUTIVE OFFICERS
Shares owned by the Director nominees and the Directors whose terms of office
expire in 2000 and 2001, including Messrs. Gifford and Meirelles, are described
above under "Election of Directors." As of March 1, 1999, Ms. Swihart and
Messrs. Hogan and Warner beneficially owned 232,685, 264,262 and 357,125 shares,
respectively. Ms. Swihart's shares included 138,679 shares which she has the
right to acquire within 60 days under our long-term incentive plans and 50,160
restricted shares acquired under our long-term incentive plans as to which she
has sole voting but no investment authority. Mr. Hogan's shares include 119,530
shares which he has a right to acquire within 60 days under our long-term
incentive plans, 60,095 restricted shares acquired under our long-term incentive
plans as to which he has sole voting but no investment authority and 14,796
shares owned by his spouse. Mr. Warner's shares include 252,700 shares which he
has the right to acquire within 60 days under our long-term incentive plans, and
58,046 restricted shares acquired under our long-term incentive plans as to
which he has sole voting but no investment authority. As of March 1, 1999,
current Directors and Executive Officers, in the aggregate, beneficially owned
4,019,034 shares, representing 1.35% of the issued and outstanding shares of the
Corporation's Common Stock. 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.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS
As of December 31, 1998, to our knowledge there was one Stockholder of the
Corporation that held beneficial ownership of more than five percent (5%) of the
Corporation's Common Stock. Information on that stockholder is as follows:
<TABLE>
<CAPTION>
NAME (1)
& ADDRESS # OF SHARES %
- --------- ----------- ---
<S> <C> <C>
Oppenheimer Capital 27,622,329 9.4%
Oppenheimer Tower
World Financial Center
New York, New York 10281
</TABLE>
- ---------------
(1) Information is based upon the Schedule 13G, filed February 12, 1999 by
Oppenheimer Capital ("Oppenheimer") with the Securities and Exchange Commission
("SEC"). According to the Schedule 13G, Oppenheimer, in its capacity as
investment adviser, has shared voting and investment power with respect to such
shares.
COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT
Our Executive Officers and Directors, and any persons who own more than 10% of a
registered class of our equity securities, are required by Section 16(a) of the
12
<PAGE> 19
Securities Exchange Act of 1934 to file reports of ownership and changes in
ownership of our Stock with the SEC and the NYSE and to furnish us with copies
of all Section 16(a) forms they file.
Based solely on our review of copies of reports we have received, or written
representations from certain reporting persons, we believe that, during 1998,
our Executive Officers and Directors complied with all Section 16(a) filing
requirements applicable to them, except Mr. McHenry filed one report disclosing
the inadvertent omission from his Forms 5 for 1992 through 1996 of certain
exempt acquisitions of shares under our dividend reinvestment plan. The SEC
amended its rules in 1996 so that transactions such as these are no longer
reportable under Section 16(a).
13
<PAGE> 20
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. The report also describes
the resulting actions taken by the Corporation and the Bank for 1998, as shown
in the various tables supporting this report. The Compensation Committee either
approves directly, or makes a recommendation to the Board of Directors, with
respect to the payment amounts and award levels for Executive Officers of the
Corporation and its affiliates. 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 on compensation actions for any Executive Officer who is
also a director of the Corporation.
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 executives for their achievement;
-- Provide compensation opportunities that are comparable to those offered by
the Comparator Banks Group (described below), which allows 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.
Annually, the Corporation participates in several compensation studies to
determine the competitiveness of its executive compensation program. In 1998,
the comparator group used for this compensation analysis ("the Comparator Banks
Group") covered banking organizations that approximate the Corporation's overall
business mix and included large banking organizations with significant
international, corporate and investment banking business as well as large
regional banking organizations. This group provides a relevant competitive frame
of reference for executive positions.
The banks in the Comparator Banks Group are also in the Keefe, Bruyette & Woods
50 Bank Index (the "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
broad measure of investment performance in the banking industry, many of the
companies included in that index do not reflect the Corporation's business mix
or represent the Corporation's most direct competitors for executive talent. The
Comparator Banks Group is a better reference point for both purposes.
Currently, 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.
14
<PAGE> 21
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. In 1998, average salaries were targeted
to be within a range around the median of the Comparator Banks Group. 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 no
specific weighting is determined, all of these factors are important. In
approving salaries for 1998, the Compensation Committee reviewed Comparator
Banks Group data for 1997. The Committee believes that the salaries for 1998 are
consistent with competitive practice.
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 important business objectives 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: business unit, corporate, 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 1998
for return on equity, earnings per share growth, and credit quality. In
addition, the Compensation Committee established external goals for return on
equity, and earnings per share growth which are measured in comparison to the
Comparator Banks Group. The Compensation Committee may also review other
internal and external criteria, such as progress on key initiatives and
operating ratio in determining the Corporation's performance and individual
awards. In setting bonus awards for 1998, the Compensation Committee reviewed
Comparator Banks Group data regarding annual bonuses paid in 1998 for
performance in 1997. According to this data, bonuses for 1998 were in the range
targeted by the Compensation Committee. To further align the interests of
executives and shareholders, the Compensation Committee determined that the 1998
bonus award for certain Executive Officers would be payable as a combination of
cash and Time-Lapse Restricted Stock, with the stock component representing 25%
of the total award in excess of $300,000 for Ms. Swihart and Messrs. Gifford,
Meirelles, Hogan and Warner.
Long-Term Stock Incentive
Stock options and restricted stock were granted in 1998 under the Corporation's
1996 Long-Term Incentive Plan. The purpose of the 1996 Plan is to create and
enhance significant ownership of the Common Stock of the Corporation by key
officers and employees and 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. Consistent with the total
compensation strategy adopted by the Compensation Committee for 1998, stock
awards made to Executive Officers who were members of the Corporation's
Executive Management Group in 1998 were targeted to be in a range around the
median of stock awards to executives in comparable positions within the
Comparator Banks Group.
To further reinforce the Corporation's philosophy of promoting shareholder value
and earnings growth, the vesting of shares of restricted stock awarded in 1998
was dependent, in part, on the Corporation's stock price and earnings per share
performance. At the time these shares were awarded, the closing price of the
Corporation's Common Stock was $44.625. The vesting provisions require continued
employment and state that 75% of the shares will become free of all restrictions
after the Corporation's stock price reaches or exceeds $66 per share for two
consecutive trading days or the Corporation's cumulative earnings per share
equals or exceeds $4.14 for four consecutive calendar quarters
15
<PAGE> 22
(subject in each case, to a minimum two-year vesting period). The remaining 25%
of the shares will become free of all restrictions after the stock price reaches
or exceeds $72.50 per share for two consecutive trading days or the
Corporation's cumulative earnings per share equals or exceeds $4.52 for four
consecutive calendar quarters (subject in each case, to a minimum two-year
vesting period).
In granting or recommending the grant of stock awards to Executive Officers in
1998, 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
1998.
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. The guidelines vary by organizational level
and range from three to five times salary.
Chief Executive Officer Compensation for 1998
The Board of Directors increased Mr. Gifford's base salary by $50,000 in 1998 to
$850,000. 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 1998 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 1998 results of the Corporation. Performance in the aggregate fell short of
expectations. While the majority of the Corporation's businesses, including most
of the Corporate Bank units, and Brazil and Argentina, met or exceeded 1998
performance goals, the Corporation's domestic-based Emerging Markets and High
Yield trading units fell significantly short of expectations. These businesses
were impacted by the significant volatility in the global financial markets in
the last half of the year.
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 $1,900,000 for 1998 performance, of which $1,500,000 was
paid as cash and $400,000 paid in the form of 11,594 shares of Time-Lapse
Restricted Stock.
Mr. Gifford was also awarded 255,000 stock options and 45,000 shares of
Performance Restricted Stock in 1998. 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 regulations and transition rules of Section 162(m) of
the Internal Revenue Code of 1986, as amended, specify certain conditions which,
if satisfied, will permit the deductibility of compensation even if it exceeds
$1 million. The 1996 Long-Term Incentive Plan was designed to exempt stock
options, performance-based restricted
16
<PAGE> 23
stock and certain other awards from the deductibility limits of Section 162(m).
The Corporation believes that its other stock option and stock incentive plans
satisfy the conditions 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 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 18, 1999
17
<PAGE> 24
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, in accordance with the SEC'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 us and the price of our
Common Stock. All year-end values shown in these tables for outstanding stock
options and restricted stock reflect a price of $38.9375 per share, which was
the closing price of our Common Stock on December 31, 1998, as reported in the
"New York Stock Exchange Composite Transactions" section of the Eastern Edition
of The Wall Street Journal. The following table displays compensation
information for the past three fiscal years for the named Executive Officers.
All share amounts in the following tables reflect the effect of our June 22,
1998 two for one stock split.
SUMMARY COMPENSATION TABLE
<TABLE>
================================================================================================================================
LONG-TERM COMPENSATION
ANNUAL COMPENSATION(1) AWARDS PAYOUTS
------------------------------------ ---------------------------- ------------------------------
NAME AND OTHER ANNUAL RESTRICTED SECURITIES LONG-TERM ALL OTHER
PRINCIPAL COMPENSATION STOCK UNDERLYING INCENTIVE PLAN COMPENSATION
POSITION YEAR SALARY BONUS(2) (3) AWARDS(4) OPTIONS/(#) PAYOUTS(5) (6)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
C.K. Gifford 1998 $869,231 $1,900,000 $ -- --(7) 334,442 shs.(8) $ -- $188,954
Chairman & CEO 1997 800,000 2,500,000 -- --(7) 293,110(8) 271,181 67,350
1996 800,000 1,800,000 389,832 --(7) 262,066(8) 721,406 62,593
- --------------------------------------------------------------------------------------------------------------------------------
H.C. Meirelles 1998 661,539 1,500,000 447,495 --(7) 204,000 -- 173,562
President & COO 1997 600,000 2,000,000 471,773 --(7) 119,000 818,015 45,757
1996 330,122 1,600,000 199,496 --(7) 88,000 -- 226,258
- --------------------------------------------------------------------------------------------------------------------------------
P.F. Hogan 1998 401,923 1,200,000 -- --(7) 142,566(8) -- 95,352
Vice Chairman 1997 323,077 1,500,000 -- --(7) 82,778(8) 67,832 20,953
1996 250,000 350,000 -- --(7) 69,786(8) 180,319 17,579
- --------------------------------------------------------------------------------------------------------------------------------
B.H. Warner 1998 350,000 1,000,000 -- --(7) 85,000 -- 65,160
Vice Chairman 1997 285,192 1,250,000 -- --(7) 34,000 67,832 11,614
1996 245,000 300,000 -- --(7) 42,500 180,320 9,969
- --------------------------------------------------------------------------------------------------------------------------------
S.M. Swihart 1998 324,039 800,000 -- --(7) 112,544(8) -- 46,854
Vice Chairman, 1997 240,000 600,000 -- --(7) 34,000 67,832 13,672
CFO & Treasurer 1996 200,000 250,000 -- --(7) 64,662(8) 180,320 9,536
================================================================================================================================
</TABLE>
Footnotes to Summary Compensation Table.
(1) Salary and bonus amounts include portions deferred under our Non-Qualified
Deferred Compensation Plan for Executives (the "Deferral Plan") or pursuant
to our Thrift-Incentive 401(k) Plan (the "Thrift Plan").
(2) Bonus amounts shown were awarded for performance during the year indicated.
The bonus amounts for 1998 were payable in cash and Time-Lapse Restricted
Stock. In calculating the number of restricted shares to be awarded as the
non-cash portion of the bonus, the value of the non-cash portion of the
award was divided by the fair market value of the stock on February 9, 1999.
These awards of Time-Lapse Restricted Stock will vest in installments of
one-third on each of the first, second and third 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. The Compensation Committee may remove or modify the restrictions
on restricted stock at any time. In addition, the restrictions would
automatically lapse upon a change in 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. The 1998 Restricted Stock award
amounts for each of the named Executives Officers were as follows: Mr.
Gifford, 11,594 shares; Mr. Meirelles 8,695 shares; Mr. Hogan, 6,521 shares;
Mr. Warner, 5,072 shares; and Ms. Swihart, 3,623 shares.
18
<PAGE> 25
Footnotes to Summary Compensation Table (continued)
(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
SEC's rules. The amounts shown for Mr. Meirelles in 1997 and 1998 include
$471,773 and $447,495, respectively, related to his relocation from Brazil
to the United States, including temporary housing costs, the benefits of an
interest-free loan from the Corporation for the purchase and improvement of
his residence and the payment by the Corporation of certain expenses related
thereto. (See "Interests of Directors and Executive Officers in Certain
Transactions.") 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 our 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) As of December 31, 1998, each of the named Executive Officers held the
following number of restricted shares having the corresponding year-end
market values:
AS OF DECEMBER 31, 1998
<TABLE>
<Captiion>
================================================================================
TOTAL NUMBER OF RESTRICTED
NAME SHARES HELD AGGREGATE MARKET VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
C. K. Gifford 88,134 $3,431,718
- --------------------------------------------------------------------------------
H.C. Meirelles 60,734 2,364,830
- --------------------------------------------------------------------------------
P. F. Hogan 31,268 1,217,498
- --------------------------------------------------------------------------------
B. H. Warner 25,268 983,873
- --------------------------------------------------------------------------------
S. M. Swihart 24,734 963,080
================================================================================
</TABLE>
These shares represent the unvested portions of (i) restricted stock or
restricted stock units awarded in 1995 that vest following the passage of
time and (ii) performance restricted stock or performance restricted stock
units awarded in 1997 and 1998 that vest upon the attainment of certain
stock price or earnings per share targets and the passage of a certain time
period. 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
one of our affiliates, 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 Compensation Committee may remove or modify the restrictions on
Time Lapse or Performance Restricted Stock at any time. In addition, the
restrictions on both Time Lapse and Performance Restricted Stock would
automatically lapse upon a change in control of the Corporation. Dividends
are paid on Time-Lapse Restricted Stock to the same extent as they are paid
on our Common Stock generally. Dividends accrue on shares of Performance
Restricted Stock, but will not be paid to the Executive Officer unless the
shares vest.
(5) Represents the dollar value of vested shares of Performance Restricted
Stock, calculated by multiplying the closing price of our Common Stock on
the date the vesting occurred by the number of shares or units that vested
on that date.
(6) The 1998 amounts include matching employer contributions and credits under
the Thrift Plan and the Deferral Plan for the named Executive Officers, plus
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 SEC's rules:
<TABLE>
<CAPTION>
=============================================================================================
MATCHING EMPLOYER INTEREST CREDITED ON
CONTRIBUTIONS AND CREDITS PREVIOUSLY EARNED SALARY
NAME THRIFT PLAN DEFERRAL PLAN AND BONUSES
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
C. K. Gifford $ 0 $134,769 $54,082
- ---------------------------------------------------------------------------------------------
H. C. Meirelles 6,400 100,062 66,993
- ---------------------------------------------------------------------------------------------
P. F. Hogan 6,400 69,677 15,496
- ---------------------------------------------------------------------------------------------
B. H. Warner 6,400 57,600 1,157
- ---------------------------------------------------------------------------------------------
S. Swihart 6,400 30,562 8,192
=============================================================================================
</TABLE>
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 the United States. 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) Awards of Performance Restricted Stock for the past three fiscal years are
not reported as "Restricted Stock Awards" because of their performance-
based conditions on vesting. The 1998 awards are reported in the table below
under "Long-Term Incentive Plans -- Awards in 1998." The portion of those
awards that was not vested at year-end is included in the year-end
restricted stock holdings shown above in footnote 4.
(8) Includes "reload" option grants. See footnote 2 to the "Option Grants in
1998" table set forth below.
19
<PAGE> 26
STOCK-BASED COMPENSATION
The following table provides details regarding stock options granted to the
named Executive Officers in 1998 under the 1996 Long-Term Incentive Plan (the
"1996 Plan"), including "reload" option grants related to the exercise of stock
options previously granted under the 1991 Long-Term Stock Incentive Plan and the
1996 Plan (see footnote 2). In addition, in accordance with the SEC's rules,
this table shows hypothetical gains on a pre-tax basis, or "option spreads,"
that would exist for the respective options granted in 1998 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 22, 1998 (expiration date of
January 22, 2008) would be $72.69 at a 5% rate of appreciation and $115.75 at a
10% rate of appreciation.
OPTION GRANTS IN 1998
<TABLE>
<CAPTION>
==========================================================================================================================
POTENTIAL
REALIZABLE VALUE
AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF
SECURITIES OPTIONS STOCK PRICE
UNDERLYING GRANTED TO EXERCISE APPRECIATION FOR
OPTIONS GRANTED EMPLOYEES PRICE EXPIRATION OPTION TERM
NAME (#)(1)(2)(3) IN 1998 ($/SH.)(4) DATE(5) 5% 10%
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
C. K. Gifford 255,000 6.04% $ 44.625 1/22/08 $ 7,156,428 $ 18,135,793
33,540(6) .80 55.4375 1/25/06 853,362 2,031,059
45,902(6) 1.09 55.4375 1/23/07 1,352,488 3,309,102
- --------------------------------------------------------------------------------------------------------------------------
H.C. Meirelles 204,000 4.83 44.625 1/22/08 5,725,142 14,508,634
- --------------------------------------------------------------------------------------------------------------------------
P.F. Hogan 102,000 2.42 44.625 1/22/08 2,862,571 7,254,317
482(6) .01 50.3438 4/11/01 3,968 8,346
898(6) .02 50.3438 2/27/02 9,714 20,915
2,732(6) .07 50.3438 2/25/03 37,862 83,638
5,696(6) .14 50.3438 1/27/04 95,771 216,823
3,894(6) .09 50.3438 1/26/05 78,512 182,560
9,232(6) .22 50.3438 1/25/06 218,594 522,329
17,632(6) .42 50.3438 1/23/07 482,386 1,185,067
- --------------------------------------------------------------------------------------------------------------------------
B.H. Warner 85,000 2.01 44.625 1/22/08 2,385,476 6,045,264
- --------------------------------------------------------------------------------------------------------------------------
S.M. Swihart 85,000 2.01 44.625 1/22/08 2,385,476 6,045,264
1,712(6) .04 43.9375 4/11/01 12,868 27,117
1,820(6) .04 43.9375 2/27/02 17,817 38,454
1,856(6) .04 43.9375 2/25/03 23,128 51,225
5,914(6) .14 43.9375 1/27/04 89,054 202,207
5,664(6) .13 43.9375 1/26/05 101,951 237,791
10,578(6) .25 43.9375 1/25/06 257,276 634,137
==========================================================================================================================
</TABLE>
(1) In general, 50% 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 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 in 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 our
Common Stock to pay the exercise price of a stock option, then he or she is
granted an option ("reload") equal to the number of whole shares tendered,
and the new exercise price will be the closing price of our Common Stock on
the date the underlying stock option is exercised. The new option will have
the same vesting schedule and expiration date as the original option.
(3) These options are transferable to members of the Executive Officer's
immediate family or to certain entities established for the benefit of such
family members. No options have been transferred to date.
(4) 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.
(5) All stock options expire 10 years after the date of grant, except as
otherwise noted.
(6) "Reload" option grants. See footnote 2 above.
20
<PAGE> 27
AGGREGATED OPTION EXERCISES IN 1998 AND YEAR-END 1998 OPTION VALUES
The following table shows stock option exercises by the named Executive Officers
during 1998, including the aggregate value realized upon exercise. This
represents the excess of the fair market value over 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, 1998. 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 our Common Stock
of $38.9375.
<TABLE>
<CAPTION>
=============================================================================================================================
OPTIONS EXERCISED
DURING 1998 NUMBER OF SECURITIES UNDERLYING
------------------------- UNEXERCISED OPTIONS AT YEAR-END VALUE OF UNEXERCISED
SHARES (#) IN-THE-MONEY OPTIONS AT YEAR-END
ACQUIRED ON VALUE ---------------------------------- --------------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
C. K. Gifford 218,970 $6,384,452 277,680 shs 429,022 shs. $4,497,615 $301,537
- -----------------------------------------------------------------------------------------------------------------------------
H. C. Meirelles -- -- 147,500 263,500 1,174,938 245,437
- -----------------------------------------------------------------------------------------------------------------------------
P. F. Hogan 88,160 2,225,089 22,747 167,341 15,896 111,314
- -----------------------------------------------------------------------------------------------------------------------------
B. H. Warner -- -- 203,200 102,000 4,853,225 70,125
- -----------------------------------------------------------------------------------------------------------------------------
S. M. Swihart 60,726 1,457,629 65,407 121,061 935,882 70,126
=============================================================================================================================
</TABLE>
LONG-TERM INCENTIVE PLANS -- AWARDS IN 1998
The following table shows the number of shares of Performance Restricted Stock
awarded to each named Executive Officer in 1998 under the 1996 Plan, together
with the maximum performance period applicable to those awards:
[CAPTION]
<TABLE>
=============================================================================================================
STOCK & EPS
PERFORMANCE GOALS
MAXIMUM ------------------------------
PERFORMANCE INITIAL SUBSEQUENT
OR OTHER PERFORMANCE PERFORMANCE
NUMBER PERIOD UNTIL HURDLE HURDLE
OF SHARES MATURATION OR 75% 100% PRICE ON
NAME (#) PAYOUT VESTING VESTING DATE OF GRANT
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
C. K. Gifford 45,000 1/22/03 $66 or $72.50 or $44.625
EPS $4.14 EPS $4.52
- -------------------------------------------------------------------------------------------------------------
H. C. Meirelles 36,000 1/22/03 $66 or $72.50 or $44.625
EPS $4.14 EPS $4.52
- -------------------------------------------------------------------------------------------------------------
P. F. Hogan 18,000 1/22/03 $66 or $72.50 or $44.625
EPS $4.14 EPS $4.52
- -------------------------------------------------------------------------------------------------------------
B. H. Warner 15,000 1/22/03 $66 or $72.50 or $44.625
EPS $4.14 EPS $4.52
- -------------------------------------------------------------------------------------------------------------
S. M. Swihart 15,000 1/22/03 $66 or $72.50 or $44.625
EPS $4.14 EPS $4.52
=============================================================================================================
</TABLE>
(1) Vesting provisions for shares of Performance Restricted Stock require
continued employment and state that (i) if the price of our Common Stock
reaches or exceeds the initial performance hurdle of $66 per share for two
consecutive trading days on or before the designated date or our cumulative
earnings per share ("EPS") for four consecutive calendar quarters equals or
exceeds $4.14, 75% of the shares awarded will vest (subject to a minimum
two-year vesting period) and (ii) if our stock price reaches or exceeds the
subsequent performance hurdle of $72.50 per share for two consecutive
trading days on or before the designated date or our cumulative EPS for four
consecutive calendar quarters equals or exceeds $4.52, the remaining 25% of
the shares awarded will vest (subject to a minimum two-year vesting period).
In general, the Executive Officer's death, retirement or disability will not
affect his or her right to receive shares of Performance Restricted Stock
that subsequently vest. If the Executive Officer dies, retires or becomes
disabled after one or both price hurdles have been met but before the
minimum two-year vesting period has passed, a portion of the shares will be
delivered to the Executive Officer or his or her estate free of
restrictions. If the Executive Officer's employment terminates for any other
reason or if the price hurdles are not met prior to January 22, 2003 the
shares (as well as accrued dividends on those shares) will be forfeited.
21
<PAGE> 28
RETIREMENT BENEFITS
The following table shows the years of service and the estimated annual
retirement benefits payable at the retirement age of 65 to each of the named
Executive Officers. The benefits are payable in the form of a single lifetime
annuity based on: the Executive Officer's current salary, estimated future
bonuses, and an assumed future annual interest credit rate of 6.0% on each
individual's cash balance account, converted to an annuity at the rate of 7.0%:
<TABLE>
<CAPTION>
========================================================================
PRIOR YEARS OF SERVICE ESTIMATED ANNUAL
AT AGE 65 RETIREMENT BENEFITS
- ------------------------------------------------------------------------
<S> <C> <C>
C. K. Gifford 41 $936,681
- ------------------------------------------------------------------------
H. C. Meirelles 36 359,330
- ------------------------------------------------------------------------
P. F. Hogan 36 381,166
- ------------------------------------------------------------------------
B. H. Warner 41 513,817
- ------------------------------------------------------------------------
S. M. Swihart 40 460,930
========================================================================
</TABLE>
The estimates shown reflect the cash balance formula discussed below computed as
a single lifetime annuity. Credits are made annually to an individual's account
at a rate ranging from zero to 8.0% of the Executive Officer's salary and bonus
(as reported in the Summary Compensation Table), depending on the individual's
years of service. The maximum annual credit is made for an individual with over
20 years of service, and no credit is made for an individual with less than one
year of service. 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 prior 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 earned prior to
1997 from the basic retirement plan formula.
On January 1, 1997, accrued benefits earned under a prior plan formula were
converted to a lump sum amount and added to the individual's existing cash
balance account. This portion of the cash balance account will continue to grow
with increases in eligible compensation.
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 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. Gifford is the only active executive still
eligible to receive this benefit.
SEVERANCE AGREEMENTS
The named Executive Officers have severance agreements which address a
termination of employment that occurs within the three-year period following a
change in control of the Corporation. If that 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,
22
<PAGE> 29
among other things: (i) an amount equal to three times the sum of the Executive
Officer's annual salary and his or her highest annual bonus of 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. The agreements also provide for the
payment of benefits if termination occurs before a change in control but after
the announcement of a transaction that would result in a change in control.
These severance agreements are not employment agreements and provide no benefits
other than in the context of 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, each agreement provides for an additional payment to
the Executive Officer to restore him or her to the same after-tax position in
which he or she would have been had the excise tax not been imposed. However, we
are obligated to make this additional payment only if, as a result, the
Executive Officer's after-tax benefit will be at least 110% of the after-tax
benefit that he or she would have received if the original payment had been
reduced to an amount not subject to the excise tax.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Ms. Emerson and Messrs. Connell, Countryman, Strehle and Wheeler served as
members of the Compensation Committee during 1998. None of these individuals had
any transactions or relationships with the Corporation in 1998 requiring
specific disclosure under the SEC's rules. In 1999, we anticipate that Mr.
Connell will be a party to a proposed transaction in which one of our
subsidiaries has an interest. For a description of this proposed transaction,
see "Interests of Directors and Executive Officers in Certain Transactions."
For a description of the types of transactions or relationships Directors and
Executive Officers of the Corporation and their associates may have had with the
Corporation and/or its subsidiaries during 1998, see "Interests of Directors and
Executive Officers in Certain Transactions."
During 1998, there were no "interlocking" or cross-board memberships that are
required to be disclosed under the SEC's 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 of Mass. Mutual, was a Director and member of the
Corporation's Compensation Committee.
23
<PAGE> 30
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. We calculate the total return values for these indices based on
cumulative total return values, assuming reinvestment of dividends.
COMPARISON OF FIVE-YEAR TOTAL STOCKHOLDER RETURNS
<TABLE>
<CAPTION>
BKB KBW 50 S&P 500
--- ------ -------
<S> <C> <C> <C>
12/93 $100 $100 $100
12/94 $117 $ 95 $101
12/95 $215 $152 $139
12/96 $309 $215 $171
12/97 $462 $314 $229
12/98 $393 $340 $294
</TABLE>
INTERESTS OF DIRECTORS AND EXECUTIVE OFFICERS IN CERTAIN TRANSACTIONS
The Corporation entered into an agreement with Mr. Meirelles in 1997 related to
his relocation from Brazil. Under the terms of this agreement, the Corporation
agreed to loan Mr. Meirelles up to $3.7 million in connection with his purchase
and improvement of a residence in Massachusetts. At December 31, 1998, the
outstanding balance on this loan was approximately $2.6 million. The loan has a
maturity of 14 years and is interest free until such time as Mr. Meirelles
ceases to be a full time employee of the Corporation or until six months after
his death or permanent disability. If Mr. Meirelles' employment terminates,
other than for cause, more than three years from the date of the agreement or at
any time by reason of his death, disability or a change in control of the
Corporation, he must repay the loan within one year from that date. A
termination within three years from the date of the agreement, other than for
cause, death or disability or change
24
<PAGE> 31
in control, would obligate Mr. Meirelles to repay the loan within six months of
such date. The repayment amount due in each instance would be the lesser of (i)
the outstanding principal balance on the loan plus interest from the date of
termination or (ii) the fair market value of the property. If Mr. Meirelles'
employment is terminated for cause, the loan would become immediately due and
payable, and he would be required to pay the fair market value of the property
plus interest from the date of termination. Mr. Meirelles may also elect to
pre-pay the loan at any time during the course of his employment.
Under the terms of the agreement, Mr. Meirelles is responsible for all expenses
related to the property with respect to insurance, utilities and household
employees. We have agreed to pay all other expenses related to operating,
repairing and maintaining the property. We also provided certain furnishings for
the property, which Mr. Meirelles has the option to purchase at their appraised
value upon repayment of the loan. To the extent that the value of owning and
operating the house and providing the furnishings (and upon repayment, any
excess in the loan balance over the repayment amount) are required to be imputed
as income to Mr. Meirelles for federal and state tax purposes, we have agreed to
provide Mr. Meirelles with a tax protection payment and a gross-up of such
amount to cover applicable taxes.
One of our subsidiaries has announced a proposed joint venture with PGA Tour
Golf Course Properties ("PGA Properties") and one of our Directors, William
Connell, in connection with the creation of a New England golf course at an
estimated cost of $18 million. If the transaction is consummated, it is
anticipated that PGA Properties would own 50% of the facility, and our
subsidiary and Mr. Connell would each own approximately 25%. As part of this
transaction, we would be contributing certain property that was previously
acquired by a subsidiary of the Bank in 1991 in connection with a commercial
loan foreclosure. This property is part of a larger parcel of land that is
currently being held by us as a nonperforming asset, and the total parcel has an
appraised value of $5.2 million. The portion of the parcel that we will retain
is expected to have a resulting fair value equal to or exceeding the current
appraised value of the total parcel. The proposed transaction may also entail a
cash investment by each party. The proposed transaction is subject to final
agreement of the parties and is conditioned upon receipt of all necessary state
and local permits and approvals.
In addition to the foregoing transaction, some of our Directors and Executive
Officers and their associates were customers of and had transactions with or
involving the Bank and/or one or more of our other subsidiaries in the ordinary
course of business during 1998. We expect that additional transactions may take
place in the ordinary course of business in the future. Some of our 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 our other subsidiaries in the ordinary course of
business during 1998.
The outstanding loans and commitments to, and other financial transactions with,
any of our Directors or Executive Officers or to or with persons or business
entities affiliated with them were made by the Bank 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 our other subsidiaries, but not the Corporation
itself, have had additional transactions with, or have used products or services
of, various organizations of which our Directors are directors or officers. The
amounts involved have in no case been material in relation to the business of
the Bank or our other subsidiaries, and we believe that they have not been
material in relation to the business of such other organizations. We expect that
the Bank and our other subsidiaries will continue to have similar transactions
with, and use products or services of, these organizations in the future.
25
<PAGE> 32
RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS
(Proxy Item 2)
The firm of PricewaterhouseCoopers LLP ("PwC") has been selected by the Board of
Directors, subject to ratification by the Stockholders, to be the Corporation's
independent auditors for 1999. PwC (or Coopers & Lybrand L.L.P. prior to its
merger with Price Waterhouse LLP), 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 PwC 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, 1998 have been audited and reported upon by PwC. In connection with
its independent audit function during 1998, PwC also reviewed certain filings
with the SEC, audited the financial statements of certain of the Corporation's
subsidiaries, affiliates and benefit plans and issued reports in specific areas.
In addition, PwC and its affiliates performed certain non-audit services
including (i) consultations with the Corporation and its subsidiaries regarding
benefit plans, systems, policies and procedures, internal controls, and
potential mergers, acquisitions and divestitures; (ii) assistance with certain
internal audit functions; (iii) consultation on various income tax matters,
reviews of certain tax returns, and the provision of certain income tax services
to certain officers of the Corporation and expatriate employees; (iv) record
keeping and other services related to the benefit and compensation plans of the
Corporation and its subsidiaries; and (v) assistance with other accounting
matters and operational projects. All of the professional services provided by
PwC and its affiliates during 1998 were furnished at customary rates and terms.
Should the selection of PwC 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 PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT AUDITORS FOR
THE CORPORATION IN 1999.
26
<PAGE> 33
STOCKHOLDER PROPOSALS
STOCKHOLDER PROPOSAL A
(Proxy Item 3)
Mr. John Jennings Crapo, P.O. Box 400151, Cambridge, MA 02140-0002, who holds of
record 1,034 shares of the Corporation's Common Stock, has submitted the
following proposal for action at the Corporation's Annual Stockholders' Meeting:
Commencing in the year 2,000, annual meetings of shareholders of the
BankBoston Corporation (the "Registrant") shall meet February SIXTH.
Exceptions shall be when said SIXTH is a Sunday, Saturday or legal holiday
and the Board of Directors of the Registrant shall command that year the
said meeting shall be held on the Thursday immediately before that
particular February SIXTH.
The statement submitted in support of this Stockholder proposal is as follows:
Proposal received enough votes April 23, 1998 to justify presentation again.
CEO Mr. Gifford introduced proponent and seconded proposal. February 06,
1788 Delegates to the Convention which voted 187 "FOR", 168 "AGAINST"
ratification by Massachusetts of the United States Constitution met on what
is today's Bank/Boston Headquarters. February SIXTH is too the anniversary
of the Ascension of authority of King James, Second, and Queen Elizabeth,
Second. Proponent has wondered whom the delegates were who met at the church
to ratify/reject the US CONSTITUTION. At a prior site, it was Presbyterian.
Later on it was Unitarian-Universalist. The 1790 Census has over six hundred
and fifty household heads named BROWN, over seventy GIFFORD, and one column
and 3/4 household heads named PHILLIPS/PHILIPS. A distinguished person from
another State has declared "My constituency includes the sights of the
earliest homes, communities and governmental activities in the United
States. It is the site of many historic indices." The said Census lists only
one household of Saltonstalls in Massachusetts. "Nath'l" Saltonstall,
househead of eight whose distinguished nationally known lineal direct
descendant US Senator Leverett Saltonstall has declared: "My citizenship
constantly calls to my mind the courage, the sense of duty and the
participation they made." "They" whom descendant was referring to were the
Patriots who supported the American Revolution. During that descendant's
service as Governor of Massachusetts, Massachusetts ratified the first Ten
Amendments to the United States Constitution, proof that ratification of it
was insufficient. The neighborhood of Sir Richard's Landing, Cambridge,
Massachusetts is an area of heavy motor vehicular traffic, evidence that
being careful is not being too much a stickler. Numbering among the few
women enumerated in said census as househead are Sarah Gifford and "Miss"
Gifford. In 1790 Massachusetts population was 378,787. The population of
Rhode Island and Providence Plantations was 68,825 with 948 slaves.
Connecticut which is known as the "Constitution" State had a population of
237,946 with 21,324 slaves. There were three hundred and thirty-seven
household heads in 1790 named Davis in Massachusetts. Nationally known
Shareholder from Washington, DC, Stockholder Davis declared this proposal
was her idea first. There were lots and lots of people at the Stockholder
meeting on "Take Our Daughters To Work Day." Proponent doesn't know if they
all were stockholders, doesn't know if all who talked were shareholders.
Refreshments immediately prior the meeting were superior and museum pieces
show proponent thinks also were irrelevant.
THE CORPORATION'S BOARD RECOMMENDS A VOTE AGAINST STOCKHOLDER PROPOSAL A.
At previous Annual Meetings of the Stockholders, the Corporation's Stockholders
have rejected similar proposals from this same Stockholder. The Corporation's
By-Laws currently provide that the Annual Meeting of Stockholders is to be held
on a date determined each year by the Board of Directors. The flexibility
provided by the By-Laws allows the Board to take into consideration all relevant
factors in setting the meeting date, including the time required to prepare the
Proxy Statement and the Annual Report to Stockholders and associated filings
with the SEC. The April Annual
27
<PAGE> 34
Meeting dates selected by the Board since 1993 have given the Corporation
additional time to prepare these important communications, thereby helping to
ensure that Stockholders receive high quality materials containing the most
currently available information.
The Corporation encourages all Stockholders to attend the Annual Meeting in
person if possible but recognizes that, due to the large number of Stockholders
involved, any date selected may be convenient for some Stockholders and present
a conflict for others. The Board of Directors believes that it is in the best
interest of the Corporation and its Stockholders to retain the flexibility
provided in the By-Laws and not be limited to the Annual Meeting date specified
in the proposal.
FOR THE FOREGOING REASONS, THE CORPORATION'S BOARD RECOMMENDS A VOTE AGAINST
STOCKHOLDER PROPOSAL A.
STOCKHOLDER PROPOSAL B
(Proxy Item 4)
Mrs. Evelyn Y. Davis, Watergate Office Building, 2600 Virginia Ave., N.W., Suite
215, Washington, D.C. 20037, who holds of record 600 shares of the Corporation's
Common Stock, has submitted the following proposal for action at our Annual
Stockholders' Meeting:
RESOLVED: That the stockholders of BankBoston, 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.
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 (not BankBoston Corporation). And if the
Corporation did not engage in any of the above practices, to disclose this
to ALL shareholders in each quarterly report. Last year the owners of
5,368,989 shares, representing approximately 6% of shares voting, voted FOR
this proposal. If you AGREE, please mark your proxy FOR this proposal.
THE CORPORATION'S BOARD RECOMMENDS A VOTE AGAINST STOCKHOLDER PROPOSAL B.
The Corporation's stockholders rejected a similar proposal at its Annual Meeting
of Stockholders in 1996, 1997 and 1998. 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 and
is committed to compliance with those laws and regulations. The Corporation
encourages its employees to participate in civic and political activities. In
addition, as authorized by federal
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<PAGE> 35
and state law, the Corporation sponsors 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.
The Corporation believes that this proposal is unnecessary since the
Corporation's current policies, in conjunction with federal and state
regulations, adequately address the issues raised.
FOR THE FOREGOING REASONS, THE CORPORATION'S BOARD RECOMMENDS A VOTE AGAINST
STOCKHOLDER PROPOSAL B.
STOCKHOLDER PROPOSAL C
(Proxy Item 5)
Ms. Marta Drury, P.O. Box 3070, Half Moon Bay, California, 94019 and Ms.
Jennifer Ladd c/o United States Trust Company Boston, 40 Court Street, Boston,
Massachusetts 02108, who hold of record 660 and 220 shares, respectively, of our
Common Stock have submitted the following proposal for action at our Annual
Stockholders' Meeting:
WHEREAS, increases in CEO compensation continue to dwarf the compensation
increases enjoyed by employees. Between 1990 and 1997, CEO cash compensation
rose 86% and average total compensation (including stock options) rose 298%,
vastly exceeding a 22% increase in factory wages and S&P earnings growth of
110% (Business Week Survey of Executive Compensation; Bureau of Labor
Statistics);
WHEREAS, in 1997, the top 365 US CEOs earned on average 326 times the
average factory workers' pay, a dramatic rise from the 42 times reported in
1980;
WHEREAS, though US multinational corporations increasingly see themselves as
global companies, taking advantage of global labor markets, they continue to
pay their executives at levels far surpassing levels common in Europe, Asia
and Latin America.
WHEREAS, the total compensation of BankBoston's CEO in 1997 was $3.6
million. This represents 131 times the average US factory worker, and 3,368
times the minimum wage in Brazil ($1,080 per year), where BankBoston
operates as one of that country's largest financial institutions;
WHEREAS, over the period 1995 to 1997 BankBoston's top four officers with
continuous service saw their total compensation rise 57%, many times the
increase enjoyed by the average BankBoston employee;
WHEREAS, growing research on effective organizations stresses the importance
of empowering front-line workers, a goal undermined by compensation policies
that reward top executives at the expense of workers closest to the
customers and production;
WHEREAS, business leaders and thinkers ranging from J.P. Morgan to Peter
Drucker have argued against wide pay gaps within enterprises and called for
limits on executive pay based on multiples of worker compensation;
THEREFORE, BE IT RESOLVED, that shareholders urge the Board of Directors to
address the issue of runaway remuneration of CEOs and the widening gap
between highest and lowest paid workers by:
1) Establishing a cap on CEO compensation expressed as a multiple of pay of
the lowest paid worker at BankBoston;
2) Preparing a report for shareholders explaining the determinations used in
order to determine the appropriate cap.
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<PAGE> 36
The statement submitted in support of this Stockholder proposal is as follows:
BankBoston has demonstrated leadership in several areas of corporate social
responsibility, including community reinvestment, environmental stewardship
and broad-based distribution of stock options. We would like BankBoston to
provide similar leadership in controlling executive compensation costs by
restoring a link between the pay of leaders and those whom they lead. We
believe that the success of any enterprise stems from all employees working
together to serve customers well and create value for shareholders. All who
share in the creation of value should share equitably in the value created.
In asking BankBoston to establish a cap on executive compensation, we have
not sought to impose our own arbitrary cap on executive pay. Instead we have
asked our company to wrestle with the issue of the rising wage cap within
corporations. By imposing the financial discipline of a pay cap, we hope our
company can help reverse a long standing trend that is neither good for
business, nor society. Please vote YES.
THE CORPORATION'S BOARD RECOMMENDS A VOTE AGAINST STOCKHOLDER PROPOSAL C.
The Board believes that setting the compensation and incentives for the Chief
Executive Officer is one of its key responsibilities. In discharging this
responsibility, the Compensation Committee, which is made up solely of
independent Directors, makes recommendations to the Board, which are then
discussed and voted on by the independent Directors without management present.
The Compensation Committee report on pages 14 through 17 of this Proxy
Statement, explains the philosophy and methodology of the Corporation's
compensation program. As discussed in the report, the Corporation takes part in
several industry compensation studies each year to determine the competitiveness
of its executive compensation program. This provides the Board with market data
on a group of banking organizations with businesses similar to our own. The
Board believes that the program provides an effective system for determining
executive compensation that is reasonable and competitive with the other
financial institutions with which we compete for executive talent.
The proponents' proposal recommends that we establish an arbitrary cap on
executive compensation that is not based on job market, competition, or
individual or overall company performance. This limit would restrict the
Corporation's ability to attract and retain the experienced and dedicated
leaders necessary for its business. Such a cap would also remove from the Board
the flexibility to recognize significant accomplishments of an individual that
may be critical to ensuring the long-term success of the Corporation.
As discussed in the Compensation Committee's report, the Board believes that the
current system used by the Board and the Compensation Committee in determining
the Chief Executive Officer's compensation is appropriate and in the best
interest of Stockholders.
FOR THE FOREGOING REASONS, THE CORPORATION'S BOARD RECOMMENDS A VOTE AGAINST
STOCKHOLDER PROPOSAL C.
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<PAGE> 37
SUBMISSION OF STOCKHOLDER PROPOSALS OR NOMINATIONS FOR THE 2000 ANNUAL MEETING
All Stockholder proposals to be considered for inclusion in the Proxy Statement
for our 2000 Annual Meeting of Stockholders must be submitted in writing to the
Clerk of the Corporation, at the address set forth above under "General
Information about Voting," by November 17, 1999.
Additionally, under our advance notice By-Law provisions, director nominations
or any Stockholder proposals to be presented from the floor of the 2000 Annual
Meeting must be submitted by a Stockholder to the Clerk of the Corporation no
later than the close of business on February 7, 2000 and no earlier than
December 17, 1999. The notice must contain the information required by the
By-Laws. These advance notice provisions are separate from the requirements
which a Stockholder must meet in order to have a proposal included in the Proxy
Statement under the SEC's rules.
OTHER MATTERS
As noted above, the By-Laws set forth procedures for submitting other matters
for consideration at the Meeting. Other than those items set forth in this Proxy
Statement, we are not aware of any other business that may properly be presented
for consideration at the Meeting. By signing the enclosed proxy card you are
conferring the authority to vote upon the persons indicated on the card. This
authority includes discretionary authority to vote your shares in accordance
with the proxy holders' judgment with respect to all matters which properly come
before the Meeting in addition to the scheduled items of business. The Board of
Directors intends to instruct its proxy holders to vote in accordance with the
recommendations of the Board.
BY-LAWS OF THE CORPORATION
Since last year's Annual Meeting of Stockholders, there have been no amendments
to the By-Laws.
You may obtain a copy of the By-Laws, without charge, by making a written
request to the Clerk of the Corporation at the address set forth above under
"General Information about Voting." We will also have copies of the By-Laws
available at the Meeting.
ANNUAL REPORT
We have mailed to you previously a copy of our Annual Report to Stockholders for
the year ended December 31, 1998, which includes our financial statements. The
Annual Report is not to be regarded as proxy soliciting material.
10-K REPORT
We will make copies of our Annual Report to the SEC on Form 10-K for the year
ended December 31, 1998 available at the Annual Meeting. You may also obtain a
copy, without charge, by making a written request to Agnes Y. Brooks, External
Affairs, BankBoston Corporation, 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 16, 1999
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<PAGE> 38
[BankBoston LOGO]
NOTICE OF
ANNUAL MEETING
OF STOCKHOLDERS
AND
BANKBOSTON
CORPORATION
PROXY STATEMENT
Time:
Thursday, April 22, 1999
10:30 A.M.
Place:
600 Atlantic Avenue
Boston, Massachusetts
(Auditorium of
The Federal Reserve Bank of Boston)
PLEASE SIGN AND RETURN YOUR PROXY CARD PROMPTLY
<PAGE> 39
[BANKBOSTON LOGO]
BankBoston Corporation
100 Federal Street, Boston, MA 02110
<PAGE> 40
PROXY
BANKBOSTON CORPORATION
THIS PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS OF
BANKBOSTON CORPORATION
The undersigned, revoking previous proxies relating to these shares,
hereby acknowledges receipt of the Notice and Proxy Statement dated March
16, 1999 in connection with the Annual Meeting to be held at 10:30 a.m. on
P April 22, 1999 in the Auditorium of The Federal Reserve Bank of Boston,
and hereby appoints Helene Cahners-Kaplan, Frank L. Farwell, and J.
R Donald Monan, and each of them (with full power to act alone), the
attorneys and proxies of the undersigned, with power of substitution to
O each, to vote all shares of the Common Stock of BANKBOSTON CORPORATION
registered in the name provided herein which the undersigned is entitled to
X vote at the 1999 Annual Meeting of Stockholders, and at any adjournment or
adjournments thereof, with all the powers the undersigned would have if
Y 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 NOMINEES NAMED IN ITEM 1, FOR ITEM 2, AND AGAINST ITEMS
3, 4, AND 5, AND IN ACCORDANCE WITH THE PROXYHOLDERS' JUDGMENT WITH RESPECT
TO ANY OTHER MATTERS WHICH PROPERLY COME BEFORE THE MEETING.
SEE REVERSE SEE REVERSE
SIDE SIDE
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE> 41
|X| Please mark
votes as in
this example
<TABLE>
<CAPTION>
THIS PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS OF BANKBOSTON CORPORATION
- ------------------------------------------------------------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
- ------------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------
1. Election of five Directors for three-year terms (or if any nominee THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST
is not available for election, such substitute as the Board PROPOSALS 3, 4 AND 5.
of Directors may designate):
----------------------------------------------------------------
NOMINEES: Wayne A. Budd, Alice F. Emerson, Charles K.
Gifford, Glenn P. Strehle, and Daniel P. Burnham
<S> <C> <C> <C>
FOR 2. Stockholder Proposal A FOR AGAINST ABSTAIN
All ________ Withheld from regarding annual
nominees ___________________ all Nominees meeting date. ___ ___ ___
3. Stockholder Proposal B FOR AGAINST ABSTAIN
_____ __________________ regarding political
activities. ___ ___ ___
For, except vote withheld from the above nominee(s):
2. Selection of Independent FOR AGAINST ABSTAIN 4. Stockholder Proposal C FOR AGAINST ABSTAIN
Auditors. regarding executive
____ ____ _____ compensation. ___ ___ ___
______________________________________
- --------------------------------------------------------------------------
Mark Here for _______ Mark Here if you
Change and Plan to Attend
Note at Left the Meeting
Please sign exactly as name appears hereon. Joint owners
should each sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title
as such.
Signature:______________________________Date _____________
Signature:______________________________Date _____________
</TABLE>
