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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-K/A
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994 -- COMMISSION FILE NUMBER 1-6366
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
------------------------
FLEET FINANCIAL GROUP, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
RHODE ISLAND 05-0341324
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
50 KENNEDY PLAZA PROVIDENCE, RHODE ISLAND 02903
(Address of principal executive office) (Zip Code)
</TABLE>
(401) 278-5800
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
<CAPTION>
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
- --------------------------------------------- -------------------------------------------
<S> <C>
Common Stock, $1 Par Value New York Stock Exchange
Depositary Shares representing a one-fourth
interest in a share of Series III, 10.12%
Perpetual Preferred Stock, $1 Par Value New York Stock Exchange
Depositary Shares representing a one-fourth
interest in a share of Series IV, 9.375%
Perpetual Preferred Stock, $1 Par Value New York Stock Exchange
Preferred Share Purchase Rights New York Stock Exchange
Warrants to purchase Common Stock New York Stock Exchange
</TABLE>
------------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No .
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value on April 14, 1995 of the voting stock held by
nonaffiliates of the Registrant was $4.5 billion, which excludes $156 million
held by directors, executive officers, and banking subsidiaries of the
Registrant under trust agreements and other instruments.
The number of shares of common stock of the Registrant outstanding as of
April 14, 1995 was 141,247,621.
DOCUMENTS INCORPORATED BY REFERENCE
1. Pertinent extracts from Registrant's 1994 Annual Report to Shareholders
(Parts I and II).
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<PAGE> 2
FORM 10-K/A
FLEET FINANCIAL GROUP, INC.
FOR THE YEAR ENDED DECEMBER 31, 1994
TABLE OF CONTENTS
<TABLE>
<CAPTION>
DESCRIPTION PAGE NUMBER
----------- -----------
<S> <C> <C>
Part I. Item 3 -- Legal Proceedings....................................... 3
Part III. Item 10 -- Directors and Executive Officers of the Registrant...... 3
Item 11 -- Executive Compensation.................................. 7
Item 12 -- Security Ownership of Certain Beneficial Owners
and Management.......................................... 14
Item 13 -- Certain Relationships and Related Transactions.......... 16
</TABLE>
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The Registrant, Fleet Financial Group, Inc. ("Fleet" or the "Corporation")
hereby amends and restates the following items of its Annual Report on Form 10-K
previously filed.
PART I.
ITEM 3. LEGAL PROCEEDINGS
Shortly following the announcement on February 21, 1995 that Fleet and
Shawmut had executed an Agreement and Plan of Merger dated as of February 20,
1995 (the "Merger Agreement"), certain alleged stockholders of Shawmut filed
seven purported class action lawsuits in the Court of Chancery of the State of
Delaware in and for New Castle County (the "Court") against Shawmut, the members
of the Board of Directors of Shawmut (the "Shawmut Board") and Fleet. The
complaints all make similar allegations concerning the proposed merger of
Shawmut with and into Fleet (the "Merger"). The plaintiffs allege, among other
things, that the defendants have engaged in a plan and scheme to enrich
themselves at the expense of Shawmut's public stockholders; that the defendants
have failed to fully disclose the true value of Shawmut's assets and earnings
power and the future financial benefits which the defendants expect to derive
from the Merger; that the defendants have wrongfully failed and refused to seek
a purchase of Shawmut at the highest possible price and have sought to chill
potential offers for Shawmut; that the defendant members of the Shawmut Board
have breached the fiduciary duties owed by them to the plaintiffs and the
members of the purported class; and that defendant Fleet has induced and aided
and abetted breaches of fiduciary duty by the members of the Shawmut Board. The
plaintiffs seek, among other things, a declaration that the proposed transaction
is unfair, unjust and inequitable; an injunction preliminarily enjoining the
defendants from taking any steps necessary to accomplish or implement the
proposed Merger; and an order requiring the defendants to compensate plaintiffs
and the members of the class for all losses and damages suffered and to be
suffered by them as a result of the acts and transactions complained of in the
complaints. The plaintiffs also seek the award of the costs and disbursements of
the action, including reasonable attorneys', accountants' and experts' fees. The
defendants believe the allegations contained in the complaints are entirely
without merit and intend to contest them vigorously.
Information regarding legal proceedings of the Registrant is also
incorporated by reference herein from "Note 17. Commitments, Contingencies and
Other Disclosures" (pages 47-48) of the Registrant's 1994 Annual Report to
Shareholders attached as Exhibit 13 to Fleet's Annual Report on Form 10-K
previously filed.
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTORS
The Board of Directors of Fleet (the "Fleet Board") is divided into three
classes with each class serving staggered terms of three years, so that only one
class is elected in any one year. The names, committee membership, ages,
business experience during the past five years and term as director for all
nominees and directors continuing in office of Fleet as of April 14, 1995 are
set forth below.
Nominees for Director
Terms Expiring in 1998
Bradford R. Boss, age 62, joined A.T. Cross Company, a manufacturer of
writing instruments, in 1958, became President in 1971 and was elected Chairman
and Chief Executive Officer in 1979. In April 1993 Mr. Boss became Chairman of
A.T. Cross Company. A former member of the Board of Governors of the American
Stock Exchange and a director of Bausch & Lomb, Inc., Mr. Boss also has served
as President and Chairman of the Writing Instrument Manufacturers Association. A
graduate of the University of Rhode Island, he was elected to the Fleet Board in
1976, and is a member of the Executive and Human Resources and Planning
Committees of the Fleet Board.
James F. Hardymon, age 60, was elected to the Fleet Board in 1991. Mr.
Hardymon joined Textron Inc., a diversified manufacturing company, in November
1989 as President and Chief Operating Officer, at which
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time he was named to the Textron Board of Directors. In 1992, he was elected
Chief Executive Officer and, in 1993, was elected Chairman. From 1987 to 1989,
Mr. Hardymon was President and Chief Operating Officer of Emerson Electric Co.
Mr. Hardymon received his Bachelor's and Master's degrees in civil engineering
from the University of Kentucky. Mr. Hardymon has been a Trustee of the
University of Kentucky since 1991, and a director of the Paul Revere Corporation
since 1993. He serves on the Executive and Human Resources and Planning
Committees of the Fleet Board.
Arthur C. Milot, age 62, is a graduate of Harvard University and has been a
director of Fleet since 1976. He was President of Brewster Lumber Company, a
supplier of building materials and household appliances, from 1969 to 1986. Mr.
Milot also serves as a director of each of Fleet-CT, Fleet-MA and Fleet-RI. Mr.
Milot serves on the Executive and Human Resources and Planning Committees of the
Fleet Board.
John A. Reeves, age 69, has served as President of Mid-Continent Resources,
Inc., a coal mining company, since 1979, and as President of Pitkin Iron
Corporation, an iron mining company, since 1982. He became a director of Fleet
in 1988, having been a director of Norstar Bancorp Inc. ("Norstar") since 1972.
Mr. Reeves is a director of Mid-Continent Resources, Inc. and Pitkin Iron
Corporation. Mid-Continent Resources, Inc. filed for reorganization under
Chapter 11 of the Federal Bankruptcy Code in 1992. A plan under Chapter 11 was
approved in 1993. A graduate of the University of Utah, he serves as an emeritus
member of the Board of Trustees of the Colorado School of Mines and is a member
of the American Institute of Mining Engineers. Mr. Reeves serves on the Audit
Committee of the Fleet Board.
John R. Riedman, age 66, was President of Riedman Corporation, which is
engaged in the property and casualty insurance marketing and real estate
development businesses, for 25 years until he became Chairman in 1991. He was
named a director of Norstar in 1985 and became a director of Fleet in 1988. Mr.
Riedman serves as a director and past Chairman of the Rochester Museum and
Science Center, Treasurer and past Chairman of the Rochester Chamber of Commerce
and Chairman of the Monroe County Airport Advisory Committee. He is a trustee of
St. John Fisher College and of Genesee Hospital. He is a member of the National
Association of Surety Bond Producers and a member of the Nominating Committee of
the United Way of Rochester. Mr. Riedman serves on the Audit Committee of the
Fleet Board.
Directors Continuing in Office
Terms Expiring in 1996
Paul J. Choquette, age 56, has been President and director of Gilbane
Building Company, a building construction company, since 1981 after having
served as Executive Vice President since 1975. He was elected to the Fleet Board
in 1982. A graduate of Brown University and Harvard Law School, Mr. Choquette is
Chairman of the Board of Directors of Gilbane Properties, Inc., a real estate
development and management company, a director of Carlisle Corporation and The
Rhode Island Foundation, former Chairman of the New England Council, Inc. and a
trustee of Eastern Utilities Associates. He is also a trustee emeritus of Brown
University, a director of the National Conference of Christians and Jews and a
member of the President's Council of Providence College. He serves on the
Executive and Risk Management Committees of the Fleet Board.
Robert M. Kavner, age 51, elected to the Fleet Board in 1986, has been an
executive with Creative Artists Agency, Inc., a talent agency and advisory
service business in the entertainment industry, since July 1994. From 1984 until
1994, Mr. Kavner held various positions at American Telephone and Telegraph
("AT&T"), including Senior Vice President and Chief Financial Officer since
1984. He became a member of AT&T's Executive Committee in 1989, and in 1993 was
named Chief Executive Officer of the Multimedia Product and Services Group of
AT&T. He previously was a partner of Coopers & Lybrand, an international
accounting firm, for 10 years. A graduate of Adelphi University, Mr. Kavner is a
director of Duracell Corporation and the Joint Center for Political and Economic
Studies. He serves on the Risk Management Committee of the Fleet Board.
Thomas D. O'Connor, age 64, was elected a director of Norstar in 1984 and
joined the Fleet Board in 1988. He has been Chairman and President of Mohawk
Paper Mills, Inc., a paper manufacturer, since 1971. A Yale University graduate,
he is a trustee of Siena College and Marvelwood School, a board member and
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<PAGE> 5
past Chairman of the Albany Medical Center, and a director of the Institute of
Paper Science and Technology and the American Forest and Paper Association. Mr.
O'Connor is a former board member of St. Gregory's School for Boys and Emma
Willard School. He serves on the Executive and Human Resources and Planning
Committees of the Fleet Board.
Terms Expiring in 1996
Michael B. Picotte, age 47, is a Managing General Partner and Chief
Executive Officer of the real estate ownership and management entities
comprising the Picotte Companies, Albany, New York, having worked for such
entities since 1970. Elected to the Fleet Board in 1989, Mr. Picotte is a
graduate of Villanova University and the OPM Program of the Harvard University
Graduate School of Business, Mr. Picotte serves on the board of directors of
various educational and public service organizations, including The Center for
Economic Growth and the Albany Institute of History and Art. Mr. Picotte also is
the Chairman of St. Peter's Hospital. Mr. Picotte has served on the Governor's
Real Estate Advisory Board of the State of New York and has served as a trustee
of WMHT-TV (Public Broadcasting) and the College of St. Rose. He serves on the
Executive Committee and is Chairman of the Risk Management Committee of the
Fleet Board.
John S. Scott, age 68, elected to the Fleet Board in 1983, retired as
Chairman of Richardson-Vicks Inc. and as a director of The Procter & Gamble
Company in 1987. He was President and Chief Executive Officer of
Richardson-Vicks Inc., a diversified health care and consumer products company,
from 1975 until he was named Chairman in 1986. He was a director of
Richardson-Vicks Inc. from 1975 to 1987, and had been associated with that
company and predecessor companies since 1950. A graduate of Brown University,
Mr. Scott is a director of Fleet-NY, Perkin-Elmer Corporation, The Stanley
Works, Creative Products Resource, Inc., and Cambridge Biotech Corporation
("Cambridge Biotech"). Cambridge Biotech filed for reorganization under Chapter
11 of the Federal Bankruptcy Code in July 1994. Mr. Scott serves as Chairman of
the Human Resources and Planning Committee of the Fleet Board.
Terms Expiring in 1997
William Barnet III, age 52, became a director of Fleet in 1988, having
served as a Norstar director since 1984. He has been President of William Barnet
& Son, Inc., a synthetic fiber processing company, since 1976, and is a graduate
of Dartmouth College and its Amos Tuck School of Business Administration. Mr.
Barnet serves on the boards of numerous civic and business entities, including
the Palmetto Business Forum, the South Carolina Textile Manufacturers
Association, Spartanburg County Foundation and Converse College. Mr. Barnet also
is a director of Spartan Mills and of FMG. He serves as Chairman of the Audit
Committee of the Fleet Board.
Lafayette Keeney, age 68, was elected to the Fleet Board in 1986, and has
been a consultant since he retired as Chairman and Chief Executive Officer of
Sage-Allen & Co., Inc. in 1990. A graduate of Nichols College, Mr. Keeney also
is a director of Arthur A. Watson & Co., trustee of Suffield Academy and a
corporator of Hartford Hospital -- Saint Francis Hospital. He serves on the
Audit Committee of the Fleet Board.
Raymond C. Kennedy, age 66, was Chief Executive Officer and Publisher of
the Hudson (N.Y.) Register-Star, a daily newspaper, from 1956 to 1985, and has
served as Chairman since 1985 of Kendell Holdings, Inc., a personal holding
company. Elected a director of Norstar in 1982, he joined the Fleet Board in
1988. Mr. Kennedy is a graduate of Georgetown University. He is past President
of the New York State Publishers Association, a former member of the
Governmental Relations Committee of the American Newspaper Publishers
Association, a former director of Jackson Newspapers (New Haven, CT), former
Chairman of the Board of Trustees of Olana Historic Preservation Site, a trustee
and past Chairman of Siena College, a Board member and past Chairman of the
Columbia-Greene Community College Foundation and a trustee of Columbia-Greene
Memorial Hospital. He serves on the Audit and Executive Committees of the Fleet
Board.
Ruth R. McMullin, age 53, is a Management Fellow at the Yale School of
Management, having served as President and Chief Executive Officer of Harvard
Business School Publishing Corporation from 1991 to
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1994. Ms. McMullin was with John Wiley & Sons, Inc. from 1987 to 1991, where she
served as President and Chief Executive Officer from 1989 to 1990. Elected to
the Fleet Board in 1992, Ms. McMullin is a graduate of Connecticut College and
received her Master's Degree from the Yale School of Management. She serves on
the boards of directors of Bausch & Lomb, Inc., UNR Industries and Middlesex
Mutual Assurance Co. Ms. McMullin also is a director of the Yale University
Press, a past director of Connecticut Health Plan, a member of the Dean's
Advisory Board at the Yale School of Management, a member of the American
Repertory Theatre Advisory Board, and a member of the corporation of the
Deaconess Hospital. She serves on the Risk Management Committee of the Fleet
Board.
Terrence Murray, Chairman, President and Chief Executive Officer of Fleet,
has been a member of the Fleet Board since 1976 and serves as Chairman of the
Executive Committee. Additional information regarding Mr. Murray is set forth
below under "Executive Officers".
EXECUTIVE OFFICERS
The names, positions, ages and business experience during the past five
years of the executive officers of the Corporation as of April 14, 1995 are set
forth below. The term of office of each executive officer extends until the
annual meeting of the Board of Directors, and until a successor is chosen and
qualified or until they shall have resigned, retired, or have been removed.
<TABLE>
<CAPTION>
NAME POSITIONS WITH THE CORPORATION AGE
------- --------------------------------------------------- ----
<S> <C> <C>
Terrence Murray.................... Chairman, President & Chief Executive Officer 55
Robert J. Higgins.................. Vice Chairman 49
H. Jay Sarles...................... Vice Chairman 50
Michael R. Zucchini................ Vice Chairman 48
Eugene M. McQuade.................. Executive Vice President & Chief Financial Officer 46
John B. Robinson, Jr............... Executive Vice President 48
Peter C. Fitts..................... Senior Vice President 54
William C. Mutterperl.............. Senior Vice President, Secretary & General Counsel 48
Anne M. Slattery................... Senior Vice President 47
M. Anne Szostak.................... Senior Vice President 44
Brian T. Moynihan.................. Vice President 35
</TABLE>
Terrence Murray joined Fleet-RI in 1962. After serving in various
capacities for Fleet-RI and the Corporation, in April 1978, he was elected
President of the Corporation and Fleet-RI. He is a director of the Corporation,
Fleet-RI, Fleet-MA, Fleet-CT and FMG. He became Chairman of the Board of
Directors of the Corporation and Fleet-RI in May 1982. Mr. Murray has been a
director of Fleet since 1976, a director of Fleet-RI since 1977 and a director
of FMG since 1985. Upon the merger of Fleet and Norstar in January 1988, he
became President and Chief Operating Officer of Fleet. Mr. Murray was elected
Chairman and Chief Executive Officer of Fleet in September 1988.
Robert J. Higgins joined Fleet-RI in 1971 and was elected President in
February 1986. In March 1984, he was named a Vice President of the Corporation.
In 1989, he was named an Executive Vice President of the Corporation and Chief
Executive Officer of Fleet-RI. In 1991, Mr. Higgins was named President of
Fleet-CT. In March 1993, he was named a Vice Chairman of the Corporation.
H. Jay Sarles joined Fleet-RI in 1968. In 1980, he was appointed a Vice
President of the Corporation. Mr. Sarles was appointed Executive Vice President
of the Corporation in February of 1986. In 1991, Mr. Sarles became President and
Chief Executive Officer of Fleet Banking Group, Inc., the parent company of
Fleet-MA and Fleet-CT. In March 1993, he was named a Vice Chairman of the
Corporation.
Michael R. Zucchini joined the Corporation in August 1987 as Executive Vice
President and Chief Information Officer responsible for all data processing
activities of the Corporation and its subsidiaries. Since 1974, Mr. Zucchini had
served in various capacities for General RE Corp., Stamford, Connecticut and its
subsidiary, General RE Services Corp., which engages in data processing. In
March 1993, Mr. Zucchini was named a Vice Chairman of the Corporation. Mr.
Zucchini is a director of FMG and from June 1994 until November 1994, served as
interim Chairman and Chief Executive Officer of FMG.
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Eugene M. McQuade joined the Corporation in 1992 as Senior Vice
President-Finance. From 1980 to 1991, Mr. McQuade served in various capacities
with Manufacturers Hanover Corporation and Manufacturers Hanover Trust Company,
having served as its Executive Vice President and Controller from 1985 to 1991.
In March 1993, Mr. McQuade was named an Executive Vice President of the
Corporation and in July 1993 was elected as Chief Financial Officer. Mr. McQuade
is a director of FMG.
John B. Robinson, Jr., became an Executive Vice President of the
Corporation in 1988. Mr. Robinson had been associated with Norstar Bank since
1970 when he joined Hempstead Bank. He served in various capacities with Norstar
Bank and in 1987, he became President of Norstar Bank.
Peter C. Fitts joined the Corporation in May 1991 as Senior Vice
President-Credit Administration and is responsible for corporate-wide credit
administration. From 1965 to 1991, Mr. Fitts served in various capacities with
Citibank, N.A., having last served as a Senior Vice President and Head of Credit
Policy, North America, from 1985 to 1991.
William C. Mutterperl joined Fleet-RI in 1977. In June 1985, Mr. Mutterperl
was named Vice President, Secretary and General Counsel of the Corporation. In
1989, Mr. Mutterperl was named a Senior Vice President of the Corporation.
Anne M. Slattery joined the Corporation in January 1994 as Senior Vice
President and head of Consumer and Community Banking. From 1969 through 1993,
Ms. Slattery served in various capacities with Citicorp, having last served as a
managing director of U.S. Consumer Banking.
M. Anne Szostak joined Fleet-RI in 1973, where she was an executive vice
president from 1985 to 1988. In 1988 she was named Vice President of Human
Resources for the Corporation. In 1991 she was named Chairman, President and
Chief Executive Officer of Fleet Bank of Maine. In May 1994, Ms. Szostak was
named a Senior Vice President, Human Resources and Corporate Communications, of
the Corporation.
Brian T. Moynihan joined the Corporation in 1993 as Deputy General Counsel.
In March 1994, he was named Vice President of Strategic Planning for the
Corporation. From 1991 to 1993, Mr. Moynihan was a partner in the law firm of
Edwards & Angell, where he had been an associate since 1984.
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires Fleet's executive officers and directors, and persons
who own more than 10% of a registered class of Fleet's equity securities
("Insiders") to file reports of ownership and changes in ownership with the
Securities and Exchange Commission (the "Commission"). Insiders are required by
Commission regulations to furnish Fleet with copies of all Sections 16(a)
reports they file. Based solely on a review of the copies of such reports
furnished to Fleet, Fleet believes that during 1994 all Section 16(a) filing
requirements applicable to its Insiders were complied with, except that Mr.
Kavner inadvertently failed to disclose on a timely basis (one business day
late) his acquisition in January 1994 of 1,500 shares of Fleet common stock
("Fleet Common Stock").
ITEM 11. EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Murray serves on the Board of Directors of A.T. Cross Company, which
determines the compensation of senior executives of A.T. Cross Company. Mr.
Boss, Chairman of A.T. Cross Company, serves on Fleet's Human Resources and
Planning Committee. John Scott, who serves as Chairman of Fleet's Human
Resources and Planning Committee, is a director and former Chairman of Cambridge
Biotech. In July 1994, Fleet Credit Corporation, a subsidiary of Fleet ("Fleet
Credit"), made a $1,007,000 three month term loan to Cambridge Biotech which was
secured by certain pledged deposits and bore interest at a fixed rate of 9.33%
per annum. Shortly after such loan was made, Cambridge Biotech filed for
reorganization under Chapter 11 of the Federal Bankruptcy Code in July 1994. In
September 1994, the pledged deposits were applied to the outstanding balance, as
a result of which the loan was repaid in full. The creditors committee for
Cambridge Biotech, however, has challenged Fleet Credit's right to such pledged
deposits and a federal bankruptcy court recently ruled against Fleet Credit.
Fleet Credit has filed an appeal and intends to contest such ruling vigorously.
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COMPENSATION OF DIRECTORS AND OFFICERS
DIRECTORS' COMPENSATION. Members of the Fleet Board receive an annual
retainer of $25,000, which retainer Fleet believes is commensurate with the
retainers paid to directors of companies in Fleet's Peer Group, which is
comprised of the 25 largest (based on asset size) domestic financial
institutions. Directors also are paid an attendance fee of $1,500 for each Fleet
Board meeting attended. Committee members are paid $750 per committee meeting
attended, and all committee chairmen are paid an additional fee of $5,000 per
year. Fleet has a standard arrangement pursuant to which directors may elect to
defer all or part of their directors' fees. Fees are not paid to directors
employed by Fleet.
The Supplemental Compensation Plan for former Norstar directors, as assumed
by Fleet, provides that, under certain circumstances, Fleet will pay to, or in
respect of, each eligible director of Fleet who was previously a Norstar
director, upon death or termination of service as a director, 40 quarterly
payments of $5,000 each, commencing on the first day of the first calendar
quarter following the calendar quarter of death or termination of service as a
director. William Barnet, III, Raymond C. Kennedy, John A. Reeves, John R.
Riedman and Thomas D. O'Connor were each previously directors of Norstar.
In January 1994, the Fleet Board adopted a new retirement plan for all of
its directors who are not former Norstar directors (the "Qualified Directors").
Under the new plan, each Qualified Director (who is not also an employee of
Fleet) is entitled to participate after he or she has served on the Fleet Board
for at least five years. The plan provides that each Qualified Director is
credited with $20,000 for each year of service up to a maximum of 10 years. A
Qualified Director may not collect under the plan until he or she retires from
the Fleet Board, but in no event before his or her 65th birthday.
EXECUTIVE COMPENSATION. The following table shows, for the fiscal years
ending December 31, 1994, 1993 and 1992, the compensation of the Chief Executive
Officer and the four other most highly compensated executive officers of Fleet
(the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
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LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------------------- --------------------------
OTHER RESTRICTED SECURITIES
NAME AND ANNUAL STOCK UNDERLYING ALL OTHER
PRINCIPAL SALARY BONUS COMPENSATION AWARD(S) OPTIONS/SARS COMPENSATION
POSITION YEAR ($) ($) ($)(2) ($)(3)(4)(5) (#)(5)(6) ($)(7)
<S> <C> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------------
Terrence Murray 1994 $993,936(1) $1,400,000 -- $1,160,156 100,000 $ 86,967
Chairman, President and 1993 902,000 990,000 -- -- 90,000 67,622
Chief Executive Officer 1992 917,461 750,000 -- -- 75,000 55,126
Robert J. Higgins 1994 524,999 600,000 $ 75,276 556,875 45,000 40,632
Vice Chairman 1993 505,769 350,000 -- -- 40,000 37,946
1992 441,346 200,000 -- 468,750 32,500 26,893
H. Jay Sarles 1994 524,999 550,000 -- 556,875 45,000 55,135
Vice Chairman 1993 512,692 350,000 -- -- 40,000 43,343
1992 478,731 225,000 124,532 625,000 32,500 33,485
Michael R. Zucchini 1994 524,999 600,000 -- 556,875 45,000 38,867
Vice Chairman 1993 510,769 350,000 -- -- 40,000 30,503
1992 458,731 250,000 -- -- 32,500 19,832
Eugene M. McQuade 1994 358,654 500,000 -- 556,875 45,000 23,585
Executive Vice President 1993 330,769 300,000 -- -- 35,000 20,451
and Chief Financial Officer 1992 254,808 125,000 159,123 -- 27,000 2,088
</TABLE>
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(1) The discrepancy between Mr. Murray's approved base salary for 1994
($992,200) and the amount paid in 1994 ($993,936) is the result of Fleet's
payroll practice of paying employees on a bi-weekly basis.
(2) Perquisites and other personal benefits paid to each of the Named Executive
Officers (including tax preparation assistance) in each instance aggregated
less than $50,000, other than Messrs. Higgins, Sarles and McQuade and,
accordingly, are omitted from the table as permitted by Commission
regulations. In 1994, Mr. Higgins' perquisites and other personal benefits
included a relocation expense and moving allowance aggregating $60,157. In
1992, each of Messrs. Sarles and McQuade's perquisites and other
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personal benefits included a relocation expense and moving allowance
aggregating $106,119 and $156,746, respectively.
(3) In September 1994, Fleet awarded performance-based restricted stock to each
of the Named Executive Officers under the Fleet Amended and Restated 1992
Stock Option and Restricted Stock Plan (the "1992 Stock Plan"). In
accordance with the terms of the awards, the restrictions on transfer will
lapse, if at all, only if cumulative earnings per share growth, measured
over a three year period, exceeds a threshold target. To the extent
cumulative earnings per share growth exceeds the threshold, each Named
Executive Officer will vest in a percentage of the shares awarded, ranging
from 40% to 100%. The amount and year-end value of the performance-based
restricted stock awarded in 1994 under the 1992 Stock Plan, based on a
December 30, 1994 closing market price of Fleet Common Stock of $32.50, are:
Mr. Murray, 31,250 and $1,015,625; and each of Messrs. Higgins, Sarles,
Zucchini and McQuade, 15,000 and $487,500. Dividends will be paid on the
shares of performance-based restricted stock if, and to the extent, paid on
Fleet Common Stock generally. If a change of control were to occur, the
performance-based restricted stock would immediately vest in full.
(4) In December 1991, Fleet awarded shares of restricted stock to certain Named
Executive Officers under Fleet's Amended and Restated 1988 Stock Option and
Restricted Stock Plan (the "1988 Stock Plan"). In accordance with the terms
of the awards, the restrictions on fifty percent of the stock lapsed as of
January 1, 1995 as a result of the performance of Fleet Common Stock during
1994 when the Average Closing Price of Fleet Common Stock was or exceeded
$34 per share for four consecutive months. The Average Closing Price for
each of the four consecutive months was deemed to be or exceed $34 per share
when the average of the daily closing prices of Fleet Common Stock on the
New York Stock Exchange (the "Stock Exchange") for such month was or
exceeded $34 per share. The number and year-end value of the remaining fifty
percent of the restricted stock shares awarded to certain Named Executive
Officers in 1991 under the 1988 Stock Plan, based on a December 30, 1994
closing market price of Fleet Common Stock of $32.50 per share, are: Mr.
Murray, 25,000 and $812,500; and Mr. Zucchini, 12,500 and $406,250. Messrs.
Higgins and Sarles were not awarded any restricted stock in 1991. In
December 1992, Fleet awarded shares of restricted stock to Messrs. Higgins
and Sarles under the 1992 Stock Plan. Mr. McQuade, who did not join Fleet
until January 1992, was not awarded any restricted stock in 1992. The awards
to Messrs. Higgins and Sarles provide that the restrictions will lapse on
January 1, 1998 if the executive remains in the continuous employ of Fleet;
however, the restrictions on fifty percent of the stock will lapse as of
January 1, 1996 if, during 1995, the Average Closing Price of Fleet Common
Stock is or exceeds $47 per share for four consecutive months. The Average
Closing Price for a month shall be deemed to be or exceed $47 per share if
the average of the daily closing prices of Fleet Common Stock on the Stock
Exchange for such month is or exceeds $47 per share. The number and year-end
value of the shares of restricted stock awarded to certain Named Executive
Officers under the 1992 Stock Plan, based on a December 30, 1994 closing
market price of Fleet Common Stock of $32.50 per share, are: Mr. Higgins,
15,000 and $487,500; and Mr. Sarles, 20,000 and $650,000. Dividends will be
paid on the shares of restricted stock if, and to the extent, paid on Fleet
Common Stock generally. If a change of control were to occur, the restricted
stock would immediately vest in full.
(5) The Merger will not constitute a change of control for purposes of any
restricted stock awarded, or any stock options or stock appreciation rights
("SARs") granted, under the 1992 Stock Plan, or any predecessor plan.
(6) All stock options include tandem SARs, except for the stock options granted
in 1994.
(7) Amounts of All Other Compensation include the following: (i) contributions
by Fleet under Fleet's Savings Plan or amounts accrued under Fleet's
Executive Supplemental Plan for the Named Executive Officers: Mr. Murray,
$44,961; Mr. Higgins, $23,852; Mr. Sarles, $23,852; Mr. Zucchini, $23,852;
and Mr. McQuade, $16,205; (ii) term life insurance premiums paid by Fleet on
behalf of each of the Named Executive Officers in 1994 (the Named Executive
Officers have the option of applying these payments to whole life policies):
Mr. Murray, $21,040; Mr. Higgins, $4,957; Mr. Sarles, $5,908; Mr. Zucchini,
$5,683; and Mr. McQuade, $2,268; (iii) an interest free loan in the amount
of $100,000 provided to Mr. Sarles in 1992 which provided a benefit of
$6,089 to Mr. Sarles in 1994 based on the applicable federal rate in
9
<PAGE> 10
effect on the date of issuance of such loan; and (iv) preferential earnings
on deferred compensation: Mr. Murray, $20,966; Mr. Higgins, $11,823; Mr.
Sarles, $19,286; Mr. Zucchini, $9,332; and Mr. McQuade, $5,112. Mr. Sarles
repaid his loan on January 13, 1995; see Item 13, "Certain Relationships and
Other Related Transactions".
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table contains information concerning the grant of stock
options pursuant to the 1992 Stock Plan to the Named Executive Officers during
the fiscal year ending December 31, 1994.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
INDIVIDUAL GRANTS STOCK PRICE APPRECIATION
----------------------------------------------------- FOR OPTION TERM(3)
PERCENT ---------------------------
OF TOTAL
NUMBER OF OPTIONS/
SECURITIES SARS
UNDERLYING GRANTED TO EXERCISE
OPTIONS/SARS EMPLOYEES OR BASE
GRANTED(1) IN FISCAL PRICE EXPIRATION
NAME (#) YEAR(2) ($/SH) DATE AT 5% ($) AT 10% ($)
- ----
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------
Terrence Murray........... 100,000 4.85% $36.94 9/21/04 $2,323,687 $5,887,799
Robert J. Higgins......... 45,000 2.18% 36.94 9/21/04 1,045,659 2,649,510
H. Jay Sarles............. 45,000 2.18% 36.94 9/21/04 1,045,659 2,649,510
Michael R. Zucchini....... 45,000 2.18% 36.94 9/21/04 1,045,659 2,649,510
Eugene M. McQuade......... 45,000 2.18% 36.94 9/21/04 1,045,659 2,649,510
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in market value of Fleet Common Stock for all stockholders at 5% (TO $60/SHARE) 10% (TO $96/SHARE)
assumed annual rates of stock price appreciation (as used in the table ---------------- -----------------
above) from $36.94 per share, over the ten-year period, based on 135 $3.1 billion $7.9 billion
million shares outstanding on December 31, 1994.
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) All options granted to the Named Executive Officers were granted on
September 21, 1994 under the 1992 Stock Plan. No SARs were awarded in
connection with such grants. The options first become exercisable in 20%
installments commencing on September 21, 1995, so long as employment with
Fleet continues. If a change of control were to occur, the options would
become immediately exercisable in full. The Merger will not constitute a
change of control for purposes of the options granted in 1994 or for
purposes of any other stock options or SARs granted under the 1992 Stock
Plan or any predecessor plan.
(2) A total of 2,061,796 options were granted to employees in 1994, of which
1,921,200 were granted on the same material terms described in footnote (1)
above. With respect to substantially all of the remaining 139,500 options
granted in 1994, the material terms thereof differ to the extent that they
become fully exercisable commencing one year from the date of grant, so long
as employment with Fleet continues, and expire five years from the date of
grant. The percentages set forth in the above table are based on the total
2,061,796 options granted in 1994. The percent of the grant to each of the
Named Executive Officers based on the total 1,921,200 options granted in
1994 with the same material terms are: Mr. Murray, 5.21%; Mr. Higgins,
2.35%; Mr. Zucchini, 2.35%; Mr. Sarles, 2.35%; and Mr. McQuade, 2.35%.
(3) Potential Realizable Value is based on the assumed annual growth rates for
each of the grants shown over their ten-year option term. For example, a 5%
annual growth rate for Mr. Murray's grant results in a stock price of $60.18
per share and a 10% rate results in a stock price of $95.82 per share. These
potential values are listed in order to comply with Commission regulations,
and Fleet cannot predict whether these values can be achieved. Actual gains,
if any, on stock option exercises are dependent on the future performance of
Fleet Common Stock.
10
<PAGE> 11
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
The following table sets forth information with respect to the Named
Executive Officers concerning the exercise of options and/or SARs during the
fiscal year ending December 31, 1994 and unexercised options and SARs held as of
the end of the 1994 fiscal year.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
VALUE OPTIONS/SARS AT OPTIONS/SARS AT
SHARES ACQUIRED REALIZED FY-END(#)(1) FY-END($)(2)(3)
NAME ON EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
-------------- --------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
Terrence Murray.............. -- -- 225,000 230,000 $2,145,140 $456,710
Robert J. Higgins............ 9,708 $259,980 97,800 102,200 1,011,616 199,299
H. Jay Sarles................ -- -- 107,402 102,200 1,062,042 199,299
Michael R. Zucchini.......... 19,800 555,588 85,100 103,100 518,489 157,494
Eugene M. McQuade............ -- -- 17,800 89,200 49,776 74,664
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The following exercisable/unexercisable options for each of the Named
Executive Officers do not have tandem SARs: Mr. Murray, -0-/100,000; Mr.
Higgins, 5,602/45,000; Mr. Sarles, 5,602/45,000; Mr. Zucchini, -0-/45,000;
and Mr. McQuade, -0-/45,000.
(2) Value based on the fair market value of Fleet Common Stock on December 30,
1994 ($32.56) minus the exercise price. Fair market value is deemed to be
the average of the high and low market prices of Fleet Common Stock on the
Stock Exchange.
(3) The following exercisable/unexercisable options for each of the Named
Executive Officers are at exercise prices above the fair market value of
Fleet Common Stock on December 30, 1994 ($32.56): Mr. Murray,
18,000/172,000; Mr. Higgins, 8,000/77,000; Mr. Sarles, 8,000/77,000; Mr.
Zucchini, 8,000/77,000; and Mr. McQuade, 7,000/73,000.
11
<PAGE> 12
PENSION PLANS
The following table shows the estimated pension benefits payable to a
covered participant at normal retirement age under the Fleet Pension Plan (the
"Pension Plan"), a qualified defined benefit pension plan, based on Final
Average Salary (as defined below) and years of service with Fleet and its
subsidiaries.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
FINAL AVERAGE 15 YEARS 20 YEARS 25 YEARS 30 YEARS
SALARY SERVICE(1) SERVICE(1) SERVICE(1) SERVICE(1)
- ------------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C>
$ 100,000 $ 24,306 $ 32,408 $ 40,510 $ 48,612
200,000 50,556 67,408 84,260 101,112
300,000 76,806 102,408 128,010 153,612
400,000 103,056 137,408 171,760 206,112
500,000 129,306 172,408 215,510 258,612
600,000 155,556 207,408 259,260 311,112
700,000 181,806 242,408 303,010 363,612
800,000 208,056 277,408 346,760 416,112
900,000 234,306 312,408 390,510 468,612
1,000,000 260,556 347,408 434,260 521,112
1,100,000 286,806 382,408 478,010 573,612
1,200,000 313,056 417,408 521,760 626,112
1,300,000 339,306 452,408 565,510 678,612
</TABLE>
- ---------------
(1) The Pension Plan provides for accrual of benefits over 30 years of service,
with proportionate reduction for years of service less than 30 years. The
annual benefits shown in the above table are not reduced to reflect certain
limitations imposed by the Internal Revenue Code of 1986, as amended (the
"Code"), which limit the annual benefits payable from qualified plans to
any individual. The years of service accrued and Final Average Salary for
purposes of the Pension Plan as of December 31, 1994 for the Named
Executive Officers were: Mr. Murray, 32 years and $874,248; Mr. Higgins, 23
years and $439,999; Mr. Sarles, 27 years and $465,992; Mr. Zucchini, 7
years and $454,684; and Mr. McQuade, 3 years and $314,743.
The Pension Plan covers employees of Fleet and various Fleet subsidiaries,
including the Named Executive Officers. Normal retirement age under the Pension
Plan is 65, and benefits vest upon completion of five years of service. Benefits
shown in the table are computed as a single life annuity and are not subject to
any deduction for Social Security or other offset amounts. In general, the
normal benefit at age 65 is equal to 37.5% multiplied by the average annual base
salary during the 60 consecutive calendar months in the last 120 calendar months
of a participant's employment yielding the highest average annual salary (the
"Final Average Salary") up to the Integration Level (as defined below), plus
52.5% multiplied by the amount by which the Final Average Salary exceeds the
Integration Level. For 1995, the Integration Level will equal $25,920 (the
"Integration Level"). The Integration Level will increase each year based on
increases in the Social Security Taxable Wage Base (the maximum amount of wages
subject to Social Security Taxes). Final Average Salary for each of the Named
Executive Officers is calculated using annual base salary as reported in the
Summary Compensation Table.
The table above includes benefits under Fleet's Retirement Income Assurance
Plan (the "Assurance Plan") and Fleet's Supplemental Executive Retirement Plan
(the "SERP"), each of which is a nonqualified deferred compensation plan. The
Assurance Plan provides benefits that would otherwise be denied a participant by
reason of the limitations imposed by the Code on the Pension Plan. Under the
Assurance Plan, highly compensated employees affected by these limitations,
including the Named Executive Officers, will receive additional retirement
income payments from Fleet. Under the SERP, a participant is entitled to receive
additional retirement income payments from Fleet equal to the difference between
(a) the amount
12
<PAGE> 13
such participant would have been entitled to receive under the Pension Plan if
cash bonuses paid after January 1, 1994 (as reported in the Summary Compensation
Table for the Named Executive Officers) were included in the calculation of
Final Average Salary, and (b) the benefit payable to the participant under the
Pension Plan and the Assurance Plan. Each of the Named Executive Officers is a
participant in the SERP. For purposes of calculating total benefits payable
under the Pension Plan, the Assurance Plan and the SERP, the Final Average
Salary as of December 31, 1994 for Messrs. Murray, Higgins, Sarles, Zucchini and
McQuade was $1,054,248, $509,999, $535,992, $524,684 and $414,743, respectively.
CHANGE OF CONTROL CONTRACTS
Fleet is a party to change of control agreements with 10 key executives
(including each of the Named Executive Officers), which are intended to
encourage such employees to remain in the employ of Fleet. A change of control
is defined to include the acquisition, other than from Fleet, by any person or
group of beneficial ownership of 25 percent or more of Fleet's outstanding
stock, a change in the majority of the Fleet Board of Directors or, under
certain circumstances, approval of a reorganization, merger, consolidation or
sale of substantially all Fleet's assets by Fleet's stockholders (a "Change in
Control"). The agreements operate only upon a Change in Control. Absent such an
event, Fleet is under no obligation under the contracts to retain any employee
or to pay any specified level of compensation or benefits. In the event of a
Change in Control, the agreement provides that there will be no adverse change
in the executive's salary, bonus opportunity, benefits, duties, indemnification
and location of employment for a period of three years after the Change in
Control. If, during such period, the executive's employment is terminated by his
employer other than for cause or disability, or by the executive for good reason
(as defined in the agreement), the executive shall receive his accrued salary,
pro rata bonus and a lump sum severance payment equal to the product of his base
salary and highest annual bonus multiplied by a factor, ranging up to 2.99 to 1,
depending upon the length of time from the date of the Change in Control until
the date of termination of employment. Payments under the agreements will be
reduced to the extent necessary to avoid imposition of excise tax under the Code
and to assure the deductibility of payments by Fleet. The Merger will not
constitute a Change in Control for purposes of the agreements.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as to the only persons known to
the Fleet Board to be the beneficial owners of 5% or more of the outstanding
shares of Fleet Common Stock:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE PERCENT OF
BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP CLASS
---------------------------------------------- ----------------------- ----------
<S> <C> <C>
Shawmut National Corporation.................. 28,176,050(1) 16.6%(1)
One Federal Street
Boston, MA 02211
777 Main Street
Hartford, CT 06115
KKR Associates(2)............................. 22,533,994(2) 13.8%(2)
9 West 57th Street
New York, NY 10019
</TABLE>
- ---------------
(1) Based upon information contained in a Schedule 13D dated February 20, 1995
and filed under the Exchange Act by Shawmut. In connection with the
execution of the Merger Agreement, Fleet granted Shawmut an option (the
"Fleet Option") to purchase up to 28,171,050 shares (the "Fleet Option
Shares") of Fleet Common Stock upon the occurrence of certain events, none
of which has occurred as of the date hereof. Because the Fleet Option is not
currently exercisable, Shawmut has disclaimed beneficial ownership of the
Fleet Option Shares. Certain directors and executive officers of Shawmut
beneficially own and have sole voting and sole dispositive power with
respect to, in the aggregate, 5,000 shares of Fleet Common Stock. Such
28,176,050 shares represent 16.6% of the Fleet Common Stock outstanding as
of April 14, 1995 (after giving effect to the exercise of the Fleet Option).
13
<PAGE> 14
(2) KKR Associates, which was organized by Kohlberg, Kravis, Roberts & Co.
("KKR"), a private investment firm, as the general partner of each of
Whitehall Associates, L.P. and KKR Partners II, L.P. (the "Partnerships"),
filed a Schedule 13D with the Commission on July 22, 1991, stating that it,
together with the Partnerships, beneficially owned 1,415,000 shares of
Fleet's Dual Convertible Preferred Stock (100% of the series) and 6,500,000
rights to purchase Fleet Common Stock (the "DCP Rights"). The Dual
Convertible Preferred Stock is convertible into 16,033,994 shares of Fleet
Common Stock. The total number of shares of Fleet Common Stock represented
by the DCP Rights and the Dual Convertible Preferred Stock is 22,533,994
shares, or 13.8% of the Fleet Common Stock outstanding as of April 14, 1995
(after giving effect to the conversion into Fleet Common Stock of the Dual
Convertible Preferred Stock and the exercise of the DCP Rights). KKR
Associates is a Delaware limited partnership consisting of Henry R. Kravis,
George R. Roberts, Robert I. MacDonnell, Paul E. Rather, Michael W.
Michelson, Saul A. Fox, Michael T. Tokarz and James H. Greene, Jr. as
general partners, and certain past and present employees of KKR and
partnerships and trusts for the benefit of the families of the general
partners and employees of KKR and a former general partner of KKR, as
limited partners. KKR, KKR Associates, the Partnerships and Messrs. Kravis,
Rather and Tokarz have an address of 9 West 57th Street, New York, New York
10019. Messrs. Roberts, MacDonnell, Michelson, Fox and Greene have an
address of 101 California Street, San Francisco, California 94111. KKR
Associates has sole voting and investment power for the Partnerships.
Fleet knows of no other person who beneficially owned more than 5% of the
outstanding Fleet Common Stock as of April 14, 1995.
SECURITIES OF FLEET OWNED BY MANAGEMENT
The following table shows the number of shares of Fleet Common Stock and
the percent of outstanding Fleet Common Stock beneficially owned by directors,
nominees, the Named Executive Officers and all directors and executive officers
as a group, as of April 14, 1995. "Beneficial ownership" means, pursuant to
Commission regulations, the sole or shared power to vote, or to direct the
voting of, a security and/or investment power with respect to a security (i.e.,
the power to dispose of, or to direct the disposition of, a security) and/or the
right to acquire such ownership within sixty days.
<TABLE>
<CAPTION>
NAME OF INDIVIDUAL AMOUNT PERCENT
OR IDENTITY OF BENEFICIALLY OF
GROUP OWNED(1)(2) CLASS(1)(3)
------------------ ----------- -----------
<S> <C> <C>
William Barnet, III................................................. 8,807 *
Bradford R. Boss.................................................... 14,476 *
Paul J. Choquette, Jr............................................... 7,909 *
James F. Hardymon................................................... 3,339 *
Robert M. Kavner.................................................... 3,240 *
Lafayette Keeney.................................................... 2,708 *
Raymond C. Kennedy.................................................. 20,564 .01%
Ruth R. McMullin.................................................... 2,195 *
Arthur C. Milot..................................................... 239,610 .17%
Terrence Murray..................................................... 430,135 .30%
Thomas D. O'Connor.................................................. 25,808 .02%
Michael B. Picotte.................................................. 30,243 .02%
John A. Reeves...................................................... 77,117 .05%
John R. Riedman..................................................... 363,222 .26%
John S. Scott....................................................... 12,309 *
Robert J. Higgins................................................... 182,804 .13%
H. Jay Sarles....................................................... 219,534 .16%
Michael R. Zucchini................................................. 135,833 .10%
Eugene M. McQuade................................................... 41,836 .03%
All directors and executive officers as a group
(25 persons)...................................................... 2,063,330 1.45%
</TABLE>
14
<PAGE> 15
- ---------------
(1) Includes 225,000, 97,800, 107,402, 85,100, 20,800 and 195,000 shares,
respectively, that may be acquired by Mr. Murray, Mr. Higgins, Mr. Sarles,
Mr. Zucchini and Mr. McQuade, and all other directors and executive
officers as a group within sixty days of April 14, 1995 pursuant to
employee stock options.
(2) All of the Fleet directors, nominees and Named Executive Officers tendered
any and all of their publicly-held shares of FMG common stock in connection
with Fleet's repurchase of the publicly-held shares of FMG.
(3) For purposes of this calculation, the number of shares of Fleet Common Stock
deemed to be outstanding includes shares that may be issued to Fleet's
directors and executive officers upon conversion of other securities of
Fleet within sixty days of April 14, 1995.
* Less than .01%
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The banking subsidiaries of Fleet have had transactions in the ordinary
course of business, including borrowings, with certain directors of Fleet and
their associates, all of which were on substantially the same terms (including
the transactions described below other than the loan to Mr. Sarles), 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 collectibility or present other unfavorable features.
On January 16, 1992, Fleet made a $100,000 loan to Mr. Sarles to facilitate
his relocation, secured by a second mortgage on his residence. Mr. Sarles' loan
was interest-free until January 1, 1995 and thereafter bore interest at the
prime rate of interest of Fleet-RI until its repayment on January 13, 1995. The
benefit to Mr. Sarles in 1994 as a result of the interest-free aspects of this
loan was $6,089.
In 1972, subsidiaries of Fleet and Gilbane Building Company ("Gilbane"), a
building construction company of which Paul J. Choquette, Jr., a director of
Fleet, is President and a director, formed an equal partnership (the "Gilbane
Partnership") to develop an urban renewal project, including a shopping center
and residential units, in Narragansett, Rhode Island. The initial phase was an
apartment complex developed by a limited partnership of which the Gilbane
Partnership is the general partner and in which it has a 5 percent interest. The
second phase was a shopping center and condominium development. Fleet Real
Estate, Inc., a subsidiary of Fleet ("FRE"), made loans in connection with these
projects having an aggregate principal balance as of December 31, 1994 of
approximately $684,054 (the highest amount outstanding since January 1, 1994
having been $890,444), including loans aggregating $188,928 which are
non-performing and were originally made pursuant to the Gilbane Partnership's
commitment to fund certain contingencies relating to the apartment complex. FRE
has refinanced the current portion of the loans with a five-year term loan which
bears interest at a fixed rate of 9.76% per annum and matures on December 15,
1999. In addition, Fleet-RI leases space from the Partnership in the shopping
center for a branch bank at an annual cost of approximately $17,671.
In 1984, Fleet-RI issued a $4,136,000 letter of credit (the "Letter of
Credit") to enhance a series of tax-exempt bonds issued by the Rhode Island
Industrial Facilities Corporation ("RIIFC"). The proceeds of the bonds were
loaned to a limited partnership, the general partner of which is Gilbane
Properties, Inc. ("Gilbane Properties"), a wholly-owned subsidiary of Gilbane,
for the development of an office building in Middletown, Rhode Island. The
Letter of Credit was placed on non-performing status in the fourth quarter of
1992 as a result of insufficient collateral coverage, and a September 1994
appraisal showed a further significant diminution in value. In the fourth
quarter of 1994, a default occurred under the bonds due to the borrower's
inability either to pay off the bonds or obtain a substitute letter of credit
prior to the expiration of the Fleet-RI Letter of Credit on December 1, 1994.
The Letter of Credit was drawn on December 1, 1994 in the amount of $3,883,538
(the highest amount outstanding under the Letter of Credit since January 1,
1994), and the borrower's obligation was converted to a demand note with a per
annum interest rate equal to two percent above Fleet-RI's prime rate of
interest. As of December 31, 1994, the principal amount outstanding under the
note was $3,494,000. Fleet-RI placed the loan on non-accrual status and
foreclosed on the property in January 1995.
The Arcade Company, a limited partnership, the co-general partners of which
are Mr. Choquette and Gilbane Properties, received a non-recourse $2,150,000
loan from the proceeds of RIIFC tax-exempt bonds
15
<PAGE> 16
which were purchased by Fleet-RI. In 1991, in response to concerns raised by the
then most recent appraisal, Gilbane partially guaranteed the bonds. Gilbane's
guarantee plus the underlying value of the collateral were, in combination,
sufficient at that time to demonstrate full collectibility of such bonds. In the
first quarter of 1993, however, a new appraisal was completed on the property
which showed a further significant diminution in value. Despite the absence of
any payment default since the issuance of the bonds, Fleet-RI was unable to
demonstrate full collectibility of the bonds and thus placed the bonds on
non-performing status. The principal amount outstanding on the bonds at December
31, 1994 was $1,737,966 (the highest amount outstanding on the bonds since
January 1, 1994 having been $1,845,279). In February 1995, Fleet-RI agreed to
the Arcade Company's sale of the property to an unrelated third party for
$76,000, the net proceeds of which (approximately $13,000) were paid to
Fleet-RI. Fleet-RI also collected approximately $400,000 on Gilbane's partial
guarantee (which amount represented Gilbane's full legal obligation under the
guarantee) and Fleet-RI received approximately $305,000 from the bond trustee.
In addition, Fleet-RI applied approximately $256,000 of interest paid to reduce
the principal amount outstanding on the bonds. Fleet-RI recognized approximately
a $761,000 principal loss on this transaction.
A subsidiary of Fleet is a partner in several partnerships with certain
other parties, including subsidiaries of, and limited partnerships organized by,
Gilbane to construct and manage Fleet's headquarters building, and to
rehabilitate an adjacent structure. One of the partnerships has constructed a
parking garage on land it is leasing from Fleet-RI. Fleet and Gilbane have
46.55% and 36.75% partnership interests, respectively, in the partnership that
developed the new headquarters building. In 1992, FRE provided permanent
mortgage financing to three of such partnerships in the amount of $54,000,000,
secured by a first mortgage on the Fleet Center office complex and the Arcade
garage. As of December 31, 1994, the amount remaining unpaid under the loan was
$53,039,147 (the highest amount outstanding since January 1, 1994 having been
$53,562,998). The loan presently carries an interest rate of 8.5% per annum plus
a contingent interest feature that serves to enhance FRE's yield. The loan
closed and was fully funded on December 31, 1992. Fleet and Fleet-RI have leased
space in the Fleet Center for a total annual rental of approximately $2,591,784.
A company of which John R. Riedman, a director of Fleet, is an executive
officer leases office space to a subsidiary of Fleet. In 1994, the gross rental
proceeds from such lease were $127,500. The company also leases space to a
second subsidiary of Fleet. The gross rental proceeds from this lease were
$385,000 in 1994. Both leases contain escalation clauses for services.
In December 1994, Fleet acquired an aircraft from William Barnet & Son,
Inc., a company of which William Barnet, a director of Fleet, is President and a
100% stockholder, at a purchase price of $1,275,000. The purchase price was
determined by Fleet's controller based on appraisals furnished by two
independent consultants regarding the fair market value of the aircraft.
An insurance agency of which Mr. Riedman is an executive officer and
principal stockholder has assisted Fleet in obtaining coverage under various
insurance policies necessary for its business operations. During 1994, the
agency received from Fleet commissions and fees of approximately $150,000. Fleet
believes that such commissions and fees are at rates customary in the industry.
One of Fleet's subsidiaries leases office space for one dollar per annum
and shared expenses from Delta Properties. Michael Picotte, a director of Fleet,
is a 50% partner in Delta Properties. The lease expires in December 2004.
A subsidiary of Fleet is currently a participant in a syndicated bank
credit agreement and a working capital facility with The Stop & Shop Companies,
Inc. ("Stop & Shop"). Pursuant to such credit agreement and working capital
facility in 1994, the subsidiary received approximately $25,894, which amount
included commitment fees and a fee relating to the refinancing of the facility
in 1994. Automatic teller machines of a Fleet subsidiary are located in a number
of Stop & Shop's store and office locations. The subsidiary paid fees to Stop &
Shop of approximately $267,550 during 1994 as a result of this activity. A
subsidiary of Fleet provides investment services with respect to Stop & Shop's
pension master trust. Such subsidiary received fees for these services in 1994
of approximately $33,672. In addition, Fleet's subsidiaries provide certain
non-credit banking services (such as bank depositary services) to Stop & Shop
and its subsidiaries. KKR, which beneficially owns more than 5% of Fleet Common
Stock, beneficially owns in excess of 10% of the common stock of Stop & Shop.
Mr. Murray currently serves as a director of Stop & Shop. See also Item 11,
"Executive Compensation -- Compensation Committee Interlocks and Insider
Participation".
16
<PAGE> 17
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
FLEET FINANCIAL GROUP, INC.
(Registrant)
/s/ EUGENE M. MCQUADE
..................................
EUGENE M. MCQUADE
Executive Vice President and Chief
Financial Officer
Dated April 28, 1995
/s/ ROBERT C. LAMB, JR.
..................................
ROBERT C. LAMB, JR.
Chief Accounting Officer and
Controller
Dated April 28, 1995
17
