SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to
Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/X/ Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
FLEET FINANCIAL GROUP, INC.
(Name of Registrant as Specified in its Charter)
FLEET FINANCIAL GROUP, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item
22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(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>
[FLEET FINANCIAL GROUP LOGO]
One Federal Street
Boston, Massachusetts 02211
March 12, 1996
Dear Stockholder:
We are pleased to invite you to attend the 1996 Annual Meeting of
Stockholders of Fleet Financial Group, Inc. ("Fleet"), which will be held on
Wednesday, April 17, 1996, at 11:00 a.m. at the World Trade Center Boston, 164
Northern Avenue, Boston, Massachusetts.
The accompanying Notice of Annual Meeting of Stockholders and Proxy
Statement contain the matters to be considered and acted upon. You are urged to
read these materials carefully.
Matters scheduled for consideration at the Annual Meeting are the election
of directors, the amendment and restatement of Fleet's 1992 Stock Option and
Restricted Stock Plan, and the ratification of the selection of independent
auditors for 1996. In addition, one stockholder proposal will be acted upon if
properly presented at the Annual Meeting.
We hope you will be able to attend the meeting, but if you cannot do so, it
is important that your shares be represented. ACCORDINGLY, WE URGE YOU TO MARK,
SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY. You may, of course, withdraw
your proxy if you attend the meeting and choose to vote in person.
Very truly yours,
/s/ JOEL B. ALVORD /s/ TERRENCE MURRAY
JOEL B. ALVORD TERRENCE MURRAY
Chairman
President and Chief Executive Officer
<PAGE>
FLEET FINANCIAL GROUP, INC.
One Federal Street
Boston, Massachusetts 02211
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 17, 1996
The Annual Meeting of Stockholders (the "Annual Meeting") of Fleet Financial
Group, Inc., a Rhode Island corporation ("Fleet"), will be held on Wednesday,
April 17, 1996, at 11:00 a.m. at the World Trade Center Boston, 164 Northern
Avenue, Boston, Massachusetts for the purpose of considering and voting upon:
1. The election of seven directors for three year terms; the election of
two directors for two year terms; and the election of one director for a one
year term.
2. The approval of the Amended and Restated 1992 Stock Option and
Restricted Stock Plan.
3. The ratification of the selection of KPMG Peat Marwick LLP as
independent auditors for Fleet for 1996.
4. The transaction of such other business as may properly be brought
before the Annual Meeting, or any adjournments or postponements thereof,
including consideration of the stockholder proposal set forth in the
accompanying Proxy Statement, if such proposal is properly presented at the
meeting.
The record date for determining stockholders entitled to notice of, and to
vote at, the Annual Meeting is the close of business on March 4, 1996. Fleet's
transfer books will not be closed.
By Order of the Board of Directors,
/s/ WILLIAM C. MUTTERPERL
WILLIAM C. MUTTERPERL
Secretary
Boston, Massachusetts
March 12, 1996
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE
REQUESTED TO COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED
ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU ATTEND
THE ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU HAVE
PREVIOUSLY RETURNED YOUR PROXY CARD.
<PAGE>
FLEET FINANCIAL GROUP, INC.
One Federal Street
Boston, Massachusetts 02211
TELEPHONE 617-292-2000
-------------------
ANNUAL MEETING OF STOCKHOLDERS
To be Held April 17, 1996
-------------------
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by and
on behalf of the Board of Directors (the "Fleet Board") of Fleet Financial
Group, Inc. ("Fleet" or the "Corporation") of proxies for the Annual Meeting of
Stockholders to be held on Wednesday, April 17, 1996, and any adjournments
thereof. The approximate date on which this Proxy Statement and the enclosed
form of proxy are first being sent to stockholders is March 12, 1996. The proxy
will be voted at the Annual Meeting in accordance with the instructions
indicated on the proxy by the stockholder or, if no instructions are indicated,
all shares represented by valid proxies received pursuant to this solicitation
(and not revoked before they are voted) will be voted FOR Proposal Nos. 1, 2 and
3 and AGAINST the stockholder proposal.
Only holders of record at the close of business on March 4, 1996 ("Record
Date") of the Corporation's Common Stock, $.01 par value ("Common Stock"), will
be entitled to notice of, and to vote at, the Annual Meeting and any
adjournments or postponements thereof. At the Record Date, there were
outstanding 262,443,757 shares of Common Stock. Each share of Common Stock is
entitled to one vote on each matter to be voted on at the Annual Meeting. The
presence, in person or by proxy, of a majority of the aggregate number of shares
of Common Stock outstanding and entitled to vote on the Record Date is necessary
to constitute a quorum at the Annual Meeting. Abstentions and broker non-votes
will be counted as present at the Annual Meeting for purposes of determining
whether a quorum is present for the transaction of business.
Management knows of no matters to be brought before the Annual Meeting other
than those referred to herein. If any other business should properly come before
the Annual Meeting, the persons named in the proxy will vote in accordance with
their best judgment.
VOTING PROCEDURES
Under Rhode Island law, if a quorum is present, the affirmative vote of a
majority of the shares of Common Stock represented at the Annual Meeting and
entitled to vote on the subject matter is required to approve an action, unless
a greater vote is required by law or a corporation's articles of incorporation
or by-laws. Fleet's Restated Articles of Incorporation and By-laws do not vary
this requirement with regard to any matter to be brought before the Annual
Meeting.
With regard to the election of directors, votes may be cast in favor or
against. Abstentions may not be specified with respect to the election of
directors. Abstentions may be specified with respect to the amendment and
restatement of the 1992 Stock Option and Restricted Stock Plan (the "1992
Plan"), the ratification of the selection of independent auditors and the
stockholder proposal, and will have the same legal effect as a vote against such
proposals.
Under the rules of the New York Stock Exchange ("Stock Exchange"), a broker
non-vote generally occurs when beneficial owners have not provided their brokers
with voting instructions with respect to matters deemed "non-routine" by the
Stock Exchange. The election of directors, the amendment and restatement of the
1992 Plan and the ratification of the selection of auditors are considered
routine matters. Accordingly, brokers have the authority to vote on such
proposals when they have not received instructions from beneficial owners. The
stockholder proposal, if presented at the Annual Meeting, is considered a
"non-routine" matter and brokers will be prohibited from voting shares
<PAGE>
held for beneficial owners on such proposal, without specific instructions from
such beneficial owners. Accordingly, broker non-votes will not affect the vote
on the stockholder proposal.
A stockholder of record may revoke a proxy by filing an instrument of
revocation with William C. Mutterperl, Secretary of Fleet (One Federal Street,
Boston, Massachusetts 02211), by filing a duly executed proxy bearing a later
date, or by appearing at the Annual Meeting in person, notifying the Secretary,
and voting by ballot at the Annual Meeting. Any stockholder of record attending
the Annual Meeting may vote in person whether or not a proxy has been previously
given, but the mere presence (without notifying the Secretary) of a stockholder
at the Annual Meeting will not constitute revocation of a previously given
proxy. In addition, stockholders whose shares of Common Stock are not registered
in their own name will need additional documentation from the record holder of
such shares to vote personally at the Annual Meeting.
PRINCIPAL STOCKHOLDERS
The following table contains information as to the only persons known to the
Corporation to be beneficial owners of more than five percent of the outstanding
Common Stock as of the Record Date. Beneficial ownership of Common Stock has
been determined for this purpose in accordance with Rule 13d-3 of the Securities
and Exchange Commission ("Commission"), under which a person is deemed to be the
beneficial owner of securities if he or she has or shares voting power or
investment power in respect of such securities or has the right to acquire
beneficial ownership within 60 days.
<TABLE><CAPTION>
Amount and Nature Percent of
Name and Address of Beneficial Owner of Beneficial Ownership Class
- -------------------------------------------------------------- ----------------------- ----------
<S> <C> <C>
KKR Associates(1)............................................. 26,385,890(1) 9.81%(1)
9 West 57th Street
New York, NY 10019
FMR Corp.(2).................................................. 24,790,444(2) 9.45%(2)
82 Devonshire Street
Boston, MA 02109
The Capital Group Companies, Inc. (3)......................... 14,914,420(3) 5.68%(3)
333 South Hope Street
Los Angeles, CA 90071
</TABLE>
- ------------
(1) 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 an amended and restated Schedule 13D with the Commission on January 3,
1996, stating that it, together with the Partnerships, beneficially owned
19,885,890 shares of Common Stock and rights to purchase 6,500,000 shares of
Common Stock (the "Rights") as of December 31, 1995. The total number of
shares of Common Stock represented by such Common Stock and Rights is
26,385,890 shares (after giving effect to the exercise of the Rights). KKR
Associates is a New York limited partnership consisting of Henry R. Kravis,
George R. Roberts, Robert I. MacDonnell, Paul E. Raether, Michael W.
Michelson, Saul A. Fox, James H. Greene, Jr., Michael T. Tokarz, Perry
Golkin, Clifton S. Robbins, Scott M. Stuart and Edward A. Gilhuly 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, Raether, Tokarz, Golkin,
Robbins and Stuart have an address of 9 West 57th Street, New York, New York
10019. Messrs. Roberts, MacDonnell, Michelson, Fox, Greene and Gilhuly have
an address of 2800 Sand Hill Road, Suite 200, Menlo Park, California 94025.
KKR Associates has sole voting and investment power for the Partnerships.
(2) FMR Corp. ("FMR") filed a Schedule 13G with the Commission dated February
14, 1996 stating that FMR is a beneficial owner of 24,790,444 shares of
Common Stock as a result of various of its subsidiaries and affiliates
providing investment advisory and management services, and has sole voting
power with respect to 1,059,489 of the shares, shared voting power with
respect to 25,960 of the shares, sole dispositive power with respect to
24,761,485 of the shares, and shared dispositive power with respect to
25,960 of the shares.
(3) The Capital Group Companies, Inc. ("The Capital Group") filed a Schedule 13G
with the Commission dated February 9, 1996 stating that The Capital Group is
a beneficial owner of 14,914,420 shares of Common Stock as a result of its
subsidiaries and affiliates providing investment advisory and management
services, and has sole voting power with respect to 2,916,670 of the shares
and sole dispositive power with respect to 14,914,420 of such shares.
2
<PAGE>
ELECTION OF DIRECTORS
As of the date hereof, the Fleet Board consists of 20 persons. The Fleet
Board is divided into three classes, with each class serving staggered terms of
three years, so that generally only one class is elected in any one year. Seven
directors are to be elected at the Annual Meeting to serve until the 1999 Annual
Meeting and until their respective successors are elected and have qualified.
Such nominees are Paul J. Choquette, Jr., Bernard M. Fox, Robert M. Kavner,
Thomas D. O'Connor, Michael B. Picotte, John S. Scott and Paul R. Tregurtha. In
addition, in connection with the merger ("Shawmut Merger") of Shawmut National
Corporation ("Shawmut") with Fleet, three of the directors elected to serve for
terms expiring in 1997 and 1998, respectively, filled vacancies on the Fleet
Board resulting from increases in the size of their respective classes. Under
Rhode Island law, such directors must stand for re-election at the Annual
Meeting. Accordingly, Robert J. Matura is nominated for election at the Annual
Meeting to serve until the 1997 Annual Meeting, and Stillman B. Brown and Lois
D. Rice are nominated for election at the Annual Meeting to serve until the 1998
Annual Meeting, in each case until their respective successors are elected and
have qualified. Directors are elected by the affirmative vote of a majority of
Common Stock, present in person or represented by proxy, and entitled to vote
thereon at the Annual Meeting when a quorum is present.
Each of the nominees for director is presently a director of Fleet. Each has
consented to being named a nominee in this Proxy Statement and has agreed to
serve as a director if elected at the Annual Meeting. In the event that any
nominee is unable to serve, the persons named in the proxy have discretion to
vote for other persons if such other persons are designated by the Fleet Board.
The Fleet Board has no reason to believe that any of the nominees will be
unavailable for election.
THE FLEET BOARD RECOMMENDS A VOTE "FOR" ALL NOMINEES
FOR ELECTION AS DIRECTORS.
Nominees for Director
<TABLE><CAPTION>
Nominee, Age and Principal Occupation and
Committee Membership Other Information
- ---------------------- ------------------------
<C> <S>
Terms Expiring in 1999
President, Gilbane Building Company
[Director Photo] A graduate of Brown University and Harvard Law School, Mr. Choquette
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
Paul J. Choquette, Jr. in 1982. Mr. Choquette is Chairman of the Board of Directors of
57 Gilbane Properties, Inc., a real estate development and management
Executive Committee; company, a director of Carlisle Corporation and The Rhode Island
Risk Foundation and a trustee of Eastern Utilities Associates. He is also a
Management Committee trustee emeritus of Brown University, a director of the National
Conference of Christians and Jews, a member of the President's Council
of Providence College and an immediate past President and member of
Narragansett Council, Boy Scouts of America.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Nominee, Age and Principal Occupation and
Committee Membership Other Information
- ---------------------- ------------------------
<C> <S>
Terms Expiring in 1999
Chairman, President and Chief Executive Officer, Northeast Utilities
[Director Photo] Mr. Fox has served as Chairman, President, Chief Executive Officer and
a trustee of Northeast Utilities System since August 1995. From July
1993 to July 1995, he served as President and CEO. Prior to that, he
served as President and Chief Operating Officer and Financial Officer.
He is a director of The Dexter Corporation (specialties materials),
CIGNA Corporation, The Connecticut Business and Industry Association,
Bernard M. Fox the Institute of Nuclear Power Operations, Edison Electric Institute,
53 Mount Holyoke College, the Institute of Living and Hartford Hospital.
Risk Management In addition, Mr. Fox is a fellow and founder of the American
Committee Leadership Forum. Mr. Fox became a director of Fleet in 1995 in
connection with the Shawmut Merger, having served as a Shawmut
director since 1993. Mr. Fox also served as a director of Fleet
National Bank of Connecticut (the former Shawmut Connecticut banking
subsidiary) ("FNB-CT") from 1988 to 1994, and Fleet National Bank of
Massachusetts (the former Shawmut Massachusetts banking subsidiary)
("FNB-MA") from 1992 to 1994.
Managing Director, Kavner & Associates
[Director Photo] Mr. Kavner, elected to the Fleet Board in 1986, began Kavner &
Associates in August 1995, which provides consulting services to the
communications and media industries. For the previous 12 months, Mr.
Kavner was an executive with Creative Artists Agency, Inc. From 1984
to 1994, Mr. Kavner held various positions at American Telephone and
Robert M. Kavner Telegraph ("AT&T"), including Senior Vice President and Chief
52 Financial Officer since 1984. He became a member of AT&T's Executive
Risk Management Committee in 1989, and in 1993 was named Chief Executive Officer of
Committee 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
Ascent Entertainment, Inc., Earthlink, Inc. and City Search, Inc.
Chairman and Chief Executive Officer, Mohawk Paper Mills, Inc.
[Director Photo] Elected a director of Norstar Bancorp Inc. ("Norstar") in 1984, Mr.
O'Connor joined the Fleet Board in 1988. He has been Chairman and
Chief Executive Officer of Mohawk Paper Mills, Inc., a paper
Thomas D. O'Connor manufacturer, since 1971. A Yale University graduate, he is a trustee
65 of Siena College and Marvelwood School, a board member and past
Human Resources and Chairman of the Albany Medical Center, and a director of the Institute
Planning Committee 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.
</TABLE>
4
<PAGE>
<TABLE><CAPTION>
Nominee, Age and Principal Occupation and
Committee Membership Other Information
- ---------------------- ------------------------
<C> <S>
Terms Expiring in 1999
Managing General Partner and Chief Executive Officer, The Picotte
Companies
[Director Photo] Mr. Picotte, elected to the Fleet Board in 1989, 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. A graduate of
Villanova University and the OPM Program of the Harvard University
Michael B. Picotte Graduate School of Business, Mr. Picotte serves on the board of
48 directors of various educational and public service organizations,
Vice Chairman, Risk including The Center for Economic Growth and the Albany Institute of
Management Committee; History and Art and is a Board member and past Chairman of St. Peter's
Executive Committee 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 (PBS) and the College of St. Rose.
Retired Chairman, Richardson-Vicks Inc.
[Director Photo] Mr. Scott, 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
John S. Scott director of Richardson-Vicks Inc. from 1975 to 1987, and had been
69 associated with that company and predecessor companies since 1950. A
Human Resources graduate of Brown University, Mr. Scott is a director of Fleet Bank,
and Planning Committee Fleet Bank of New York, N.A. (the former Shawmut New York banking
subsidiary), Perkin-Elmer Corporation, The Stanley Works, and Creative
Products Resource, Inc., and a director emeritus and former Chairman
of Cambridge Biotech Corporation ("Cambridge Biotech").
Chairman and Chief Executive Officer, Mormac Marine Group, Inc.;
Chairman, Moran Transportation Company
[Director Photo] Mr. Tregurtha joined Mormac Marine Group (marine shipping) in 1988 and
Moran Transportation (tug/barge shipping) in July 1994. Prior to that,
he had served as Chairman, President and Chief Executive Officer of
Moore McCormack Resources, Inc. (construction materials and oil and
gas exploration). He is a director of Mormac Marine Group, a director
Paul R. Tregurtha and Vice Chairman of Interlake Holding Company and Lakes Shipping
60 Company, Inc. (marine shipping) and a director of Brown & Sharpe
Executive Committee; Manufacturing Company and FPL Group, Inc. (Florida utilities). Mr.
Human Resources and Tregurtha is a trustee of Teachers Insurance and Annuity Association
Planning Committee of America and Cornell University. Mr. Tregurtha became a director of
Fleet in 1995, having served as a Shawmut director since 1987. Mr.
Tregurtha also served as a director of FNB-CT from 1979 to 1988.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Nominee, Age and Principal Occupation and
Committee Membership Other Information
- ---------------------- ------------------------
<C> <S>
Terms Expiring in 1998
President, Harcott Corporation
[Director Photo] Before joining Harcott Corporation (formerly Harcott Associates), Mr.
Brown was Executive Vice President, Chief Financial Officer and a
Stillman B. Brown director of United Technologies Corporation, where he served in a
62 variety of executive positions from 1978 to 1986. He is a director of
Chairman, Risk The Stanley Works, and former Chairman of the Board of Regents of the
Management University of Hartford. Mr. Brown became a director of Fleet in 1995,
Committee; Executive having served as a Shawmut director since 1987. Mr. Brown also served
Committee as a director of FNB-CT from 1979 to 1988.
Guest Scholar, The Brookings Institution
[Director Photo] Mrs. Rice joined The Brookings Institution in 1991. From 1981 to 1991
she was a director and Senior Vice President of Government Affairs at
Lois D. Rice Control Data Corporation. She is a director of International
63 Multifoods, McGraw Hill Companies, The Hartford Steam Boiler
Audit Committee Inspection and Insurance Company, Unum Corp. (insurance company), the
Center for Naval Analysis and the Public Agenda Foundation. Mrs. Rice
is a trustee of The Urban Institute and The Harry Frank Guggenheim
Foundation, and is a member of the President's Foreign Intelligence
Advisory Board. Elected a director of Shawmut in 1992, Mrs. Rice
joined the Fleet Board in 1995 in connection with the Shawmut Merger.
Term Expiring in 1997
Chairman and Chief Executive Officer, Robert J. Matura Associates and
Treefort Fellows
[Director Photo] Mr. Matura has held his present position since June 1992. From July
1988 to May 1992 he served as Chairman, President and Chief Executive
Officer of The William Carter Company (manufacturer of infants' and
Robert J. Matura childrens' apparel). From July 1986 through June 1988 he served, pro
62 bono, as Chief Executive Officer and Chancellor of Sacred Heart
Vice Chairman, University. From March 1976 to June 1986 Mr. Matura was Chief
Audit Committee Executive Officer and Chairman of the Board of Warnaco, Inc. (an
international diversified apparel company). He is a director, investor
and consultant at Unisa, Inc. (women's shoe manufacturer) and a
director of EMI and Ed Mitchell's, Inc. (clothing retailer). Mr.
Matura is Chairman of the executive committee of the Board of Trustees
and a trustee of Sacred Heart University and a regent of St. Peter's
College. Elected to the Fleet Board in 1995 in connection with the
Shawmut Merger, Mr. Matura served as a director of Shawmut and FNB-MA
since 1992 and FNB-CT since 1984.
</TABLE>
6
<PAGE>
Directors Continuing in Office
<TABLE>
<CAPTION>
Director, Age and Principal Occupation and
Committee Membership Other Information
- ---------------------- ------------------------
<C> <S>
Terms Expiring in 1997
President and Chief Executive Officer, William Barnet & Son, Inc.
[Director Photo] Mr. Barnet became a director of Fleet in 1988, having served as a
Norstar director since 1984. He has been President and Chief Executive
William Barnet, III Officer of William Barnet & Son, Inc., a synthetic fiber processing
53 company, since 1976, and is a graduate of Dartmouth College and its
Executive Committee; Amos Tuck School of Business Administration. Mr. Barnet serves on the
Risk Management boards of numerous civic and business entities, including the Palmetto
Committee Business Forum, the South Carolina Textile Manufacturers Association,
Spartanburg County Foundation and Converse College. Mr. Barnet also is
a director of Spartan Mills.
Chairman and Chief Executive Officer, The Collins Group, Inc.
[Director Photo] Mr. Collins is Chairman and Chief Executive Officer of The Collins
Group, Inc. Previously, Mr. Collins was President and Chief Executive
Officer of Quebecor Printing, (USA) Corp. Mr. Collins joined Quebecor
Printing, (USA) Corp in 1990. From 1986 to 1990 he served as President
and Chief Executive Officer of Quebecor America, Inc. (printing). Mr.
Collins is an advisory board member of Pell Rudman Venture Partners
(investments), a board member of the National Association of Printers
John T. Collins and Lithographers, Vice Chairman of the board of trustees of Bentley
49 College, and a trustee of Beth Israel Hospital and the Massachusetts
Executive Committee; Chapter of the Leukemia Society of America. Mr. Collins is also on the
Human Resources and advisory council of Junior Achievement of Northern New England. A
Planning Committee director of Shawmut since 1992, Mr. Collins was elected to the Fleet
Board in 1995 in connection with the Shawmut Merger. In addition, Mr.
Collins has served as a director of FNB-CT and FNB-MA since 1992 and
1987, respectively. In 1995, Mr. Collins was elected to serve as a
director of each of Fleet Bank of Massachusetts, National Association
("Fleet Bank-MA"); Fleet Bank, National Association ("Fleet Bank-CT");
and Fleet National Bank ("Fleet Bank-RI"). Mr. Collins serves on the
Executive Committee and Risk Management Committee for each of the five
Fleet banking subsidiaries referred to above.
Chairman, Kendell Holdings Inc.
[Director Photo] Chairman since 1985 of Kendell Holdings Inc., a personal holding
company, Mr. Kennedy was Chief Executive Officer and Publisher of the
Hudson (N.Y.) Register-Star, a daily newspaper, from 1956 to 1985.
Elected a director of Norstar in 1982, he joined Fleet's Board in
Raymond C. Kennedy 1988. Mr. Kennedy is a graduate of Georgetown University. He is past
67 President of the New York State Publishers Association, a former
Audit Committee 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.
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Director, Age and Principal Occupation and
Committee Membership Other Information
- ---------------------- ------------------------
Terms Expiring in 1997
<C> <S>
President and Chief Executive Officer, Fleet Financial Group, Inc.
[Director Photo] Mr. Murray joined Fleet Bank-RI in 1962 upon his graduation from
Harvard University. He became President of Fleet in 1978 and Chairman
and Chief Executive Officer in 1982. On January 1, 1988, Mr. Murray
became President and Chief Operating Officer of Fleet and on September
20, 1988, he became Chairman, President and Chief Executive Officer of
Terrence Murray Fleet. In 1995 in connection with the Shawmut Merger, Mr. Murray
56 became President and Chief Executive Officer. He has been a director
Chairman, Executive since 1976. Mr. Murray is a director of A.T. Cross Company, Allmerica
Committee Financial Corporation and The Stop & Shop Companies, Inc. ("Stop &
Shop"). He also serves as a trustee of Brown University and Rhode
Island School of Design.
President, Massachusetts General Hospital Corporation and Partners
Health Care System; Professor of Medicine, Harvard Medical School
[Director Photo] Dr. Thier has held his present position since May 1994. Prior to that,
he served as President of Brandeis University from 1991 to 1994. From
Samuel O. Thier 1985 to 1991, Dr. Thier was President of the Institute of Medicine,
58 National Academy of Sciences. He is a director of Merck & Company and
Audit Committee a trustee of Brandeis University, Johns Hopkins University and the
Museum of Science (Boston). Elected a Fleet director in 1995, Dr.
Thier served as a Shawmut director since 1994.
Terms Expiring in 1998
Chairman, Fleet Financial Group, Inc.
[Director Photo] Mr. Alvord began his 33 year banking career in 1963 with Hartford
National Bank. He became an officer in 1965 and in 1978 was elected
President and a director of both the bank and its parent holding
company, Hartford National Corporation ("Hartford National"). In 1986
Joel B. Alvord he was elected Chief Executive Officer and continued in that capacity
57 through the merger of Hartford National and Shawmut Corporation into
Executive Committee Shawmut in 1988. With the Shawmut Merger in November 1995, Mr. Alvord
was named Chairman of Fleet. He has been active and has held
leadership positions in numerous community, civic and industry
organizations. Currently, he is a director of The Hartford Steam
Boiler Inspection and Insurance Company and Jobs for Massachusetts. He
also serves as a director of the Wadsworth Atheneum, The Wang Center
for the Performing Arts and the Harvard Eating Disorders Center. He is
a member of the Museum of Fine Arts, Massachusetts Business Roundtable
and the Boston Symphony Orchestra. Mr. Alvord graduated from Dartmouth
College and received an MBA from the Amos Tuck School of Business
Administration in 1961.
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Director, Age and Principal Occupation and
Committee Membership Other Information
- ---------------------- ------------------------
<C> <S>
Terms Expiring in 1998
Chairman, A.T. Cross Company
[Director Photo] Mr. Boss, a graduate of the University of Rhode Island, joined A.T.
Cross Company, a manufacturer of writing instruments, in 1958, became
President in 1971 and was elected Chairman and Chief Executive Officer
Bradford R. Boss in 1979. In April 1993 Mr. Boss became Chairman of A.T. Cross Company.
62 A former member of the Board of Governors of the American Stock
Human Resources and Exchange and a director of Bausch & Lomb, Inc., Mr. Boss also has
Planning Committee served as President and Chairman of the Writing Instrument
Manufacturers Association. He was elected to the Fleet Board in 1976.
Chairman and Chief Executive Officer, Textron Inc.
[Director Photo] Elected to the Fleet Board in 1991, Mr. Hardymon joined Textron Inc.,
a diversified manufacturing company, in December 1989 as President and
Chief Operating Officer, at which time he was named to the Textron
James F. Hardymon Board of Directors. In 1992, he was elected Chief Executive Officer
61 and, in 1993, was elected Chairman. From 1987 to 1989, Mr. Hardymon
Chairman, Human was President and Chief Operating Officer of Emerson Electric Co. Mr.
Resources Hardymon received his Bachelor's and Master's degrees in civil
and Planning engineering from the University of Kentucky. Mr. Hardymon has been a
Committee; Trustee of the University of Kentucky since 1991, and a director of
Executive Committee the Paul Revere Corporation since 1993.
Private Investor
[Director Photo]
A graduate of Harvard University, Mr. Milot has been a director of
Arthur C. Milot Fleet since 1976. He was President of Brewster Lumber Company, a
63 supplier of building materials and household appliances, from 1969 to
Executive Committee; 1986. Mr. Milot also served as a director of Fleet Bank-CT and Fleet
Audit Committee Bank-MA from 1994 to 1995, and Fleet Bank-RI from 1969 to 1995.
Chairman, Riedman Corporation
[Director Photo] Mr. Riedman, named a director of Norstar in 1985, 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 became a director of Fleet
John R. Riedman in 1988. Mr. Riedman serves as a director and past Chairman of the
67 Rochester Museum and Science Center, Treasurer and past Chairman of
Chairman, Audit the Rochester Chamber of Commerce and Chairman of the Monroe County
Committee 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.
</TABLE>
9
<PAGE>
CERTAIN INFORMATION REGARDING THE BOARD OF DIRECTORS
AND COMMITTEES THEREOF
Meetings and Committees
During the year ended December 31, 1995, the Fleet Board met ten times.
During 1995, committees of the Board met as follows: the Executive Committee met
twice, the Audit Committee met four times, the Human Resources and Planning
Committee met four times, and the Risk Management Committee met five times. In
1995, a majority of the directors (15) attended 100 percent of the aggregate of
the meetings of the Fleet Board and its committees on which they served, and all
Fleet Board members attended more than 75 percent of such meetings, except for
Dr. Thier who attended one of the two Fleet Board meetings held in 1995
following his election as a director. No meetings of the Audit Committee (the
only committee on which Dr. Thier serves) were held in 1995 following the
Shawmut Merger.
The Executive Committee generally has the power to exercise the power of the
full Fleet Board during intervals between meetings of the Fleet Board. The Audit
Committee oversees the scope of Fleet's internal auditing, the independence of
the outside auditors, the adequacy of Fleet's system of internal accounting
controls and procedures and the adequacy of management's action with respect to
recommendations thereon by Fleet's auditors. The Audit Committee is also
responsible for oversight of Fleet's regulatory compliance. The Human Resources
and Planning Committee is responsible for human resources policies and systems,
compensation and benefit plans (including management bonuses and equity-based
awards), officer appointments, succession planning and other matters. The Human
Resources and Planning Committee also annually reviews and makes recommendations
to the Fleet Board for the adoption of a strategic plan, reviews management's
plans for integrating acquired entities and monitors implementation, and reviews
significant organizational changes and restructurings. The Risk Management
Committee is responsible for certain corporate risk areas including loan review,
credit administration and asset and liability management.
The Fleet Board has no nominating committee, as the Fleet Board as a whole
studies the qualifications and recommends to the stockholders the election of
directors of Fleet. A stockholder may nominate a person for election as a
director by complying with Section 3.15 of the Fleet By-laws, which provides
that advance notice of a nomination must be delivered to Fleet, which notice
must contain the name and certain information concerning the nominee and the
stockholders who support the nominee's election. A copy of such By-law provision
may be obtained upon written request directed to the Secretary of Fleet.
Compensation of Directors
Members of the Fleet Board receive an annual retainer which, as of December
20, 1995, was increased from $25,000 to $40,000, 25% of which is subject to
mandatory deferral into a phantom stock account maintained pursuant to deferred
compensation agreements between Fleet and its non-employee directors. Effective
December 20, 1995, directors also are paid an attendance fee of $1,500 for each
Fleet Board meeting attended and $1,000 for each telephonic meeting. Committee
members receive $1,000 per committee meeting attended and $750 for each
telephonic meeting. All committee chairmen are paid an additional retainer of
$5,000 per year. Fees are not paid to directors employed by Fleet.
As noted above, a non-employee director is required to defer at least 25%
(currently, $10,000) of his or her annual retainer into a phantom stock account.
All or a portion of a director's remaining annual retainer and meeting fees is
eligible for deferral, at the director's election, into the phantom stock
account or a fixed rate account, or a combination thereof. Both the phantom
stock account and the fixed rate account are maintained for bookkeeping purposes
only. The phantom stock account does not represent actual shares of Common
Stock. The value of a director's phantom stock account will increase (or
decrease) based on the appreciation (or depreciation) of Common Stock (including
the payment of dividends). The rate of return on a director's fixed rate account
is determined by reference to Fleet's Savings Plan Fixed Rate Fund, plus 2%. For
1995, the rate applicable to the fixed rate account was 8.75%. Generally,
payments from a director's deferred compensation account may not be made until
termination of service as a director, and then only in cash. The right to
receive future payments under Fleet's deferred compensation arrangements with
its non-employee directors is an unsecured claim against the general assets of
the Corporation.
10
<PAGE>
In connection with Fleet's acquisition of Norstar in 1988, Fleet assumed the
Supplemental Compensation Plan for former Norstar directors, which 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
($200,000), 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 R. Riedman and Thomas D. O'Connor were
each previously Norstar directors.
Fleet also maintains a retirement plan ("Retirement Plan") for all of its
directors who are not former Norstar directors (the "Qualified Directors").
Under the Retirement Plan, each Qualified Director (who is not also a Fleet
employee) is entitled to participate after he or she has served on the Fleet
Board for at least five years. The Retirement Plan provides that each Qualified
Director is credited with $20,000 for each year of service up to a maximum of 10
years or $200,000. Generally, 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. For purposes of the Retirement Plan, each Qualified Director
who was previously a Shawmut director is credited with his or her years of
service on the Shawmut Board of Directors ("Shawmut Board"), or any subsidiary
or predecessor.
In connection with the Shawmut Merger, Fleet assumed the Shawmut 1989
Non-Employee Directors' Restricted Stock Plan (the "Directors' Stock Plan"),
which was previously approved by the Shawmut stockholders for non-employee
members of the Shawmut Board. In assuming the Directors' Stock Plan, the Fleet
Board has prohibited any future awards under the plan. The terms of the
Directors' Stock Plan will continue to apply to any outstanding shares of Fleet
restricted stock held by former Shawmut directors continuing on the Fleet Board.
In connection with the Shawmut Merger, Fleet succeeded to Shawmut's
obligations under an irrevocable trust agreement which holds life insurance
policies on the lives of the members of the former Shawmut Board, including the
former Shawmut directors continuing on the Fleet Board, and cash sufficient to
cover future premium costs. The policies fund the Shawmut Charitable Giving
Program which was established in 1995 to provide support to charitable
institutions and to attract and retain qualified directors. Each director is
permitted to recommend up to three tax-exempt charities to receive
contributions. Upon each director's death, annual contributions will be made for
a period of ten years to the tax-exempt charity or charities recommended by such
director; the amount of such annual contribution, in the aggregate, will be
$100,000. Directors derive no financial benefit from the program. The current
Fleet directors participating in the program are Joel B. Alvord, Stillman B.
Brown, John T. Collins, Bernard M. Fox, Robert J. Matura, Lois D. Rice, Samuel
O. Thier and Paul R. Tregurtha.
11
<PAGE>
BENEFICIAL OWNERSHIP BY DIRECTORS AND
EXECUTIVE OFFICERS OF EQUITY SECURITIES OF THE CORPORATION
The following table shows the number of shares of Common Stock and the
percent of outstanding Common Stock beneficially owned as of the Record Date by
the current directors, the Named Executive Officers (as defined under
"Compensation of Executive Officers"), Mr. Overstrom and all directors and
executive officers as a group.
No director or executive officer of the Corporation beneficially owns any
equity security of the Corporation other than Common Stock, except John T.
Collins, Robert J. Matura and Lois D. Rice. Directors Collins and Rice own
10,000 and 1,000 depositary shares, respectively, of the Corporation's 9.35%
Cumulative Preferred Stock; and Directors Matura and Rice own 1,000 and 124
depositary shares, respectively, of the Corporation's 9.30% Cumulative Preferred
Stock.
<TABLE><CAPTION>
Name of Individual Amount and Nature Percent
or Identity of of Beneficial of
Group Ownership(1)(2)(3) Class(4)
- -------------------------------------------------------------------- ------------------ --------
<S> <C> <C>
Joel B. Alvord...................................................... 481,690 .18%
William Barnet, III................................................. 10,117 *
Bradford R. Boss.................................................... 14,476 *
Stillman B. Brown................................................... 20,011 *
Paul J. Choquette, Jr............................................... 8,156 *
John T. Collins..................................................... 35,062 .01%
Bernard M. Fox...................................................... 4,507 *
James F. Hardymon................................................... 3,446 *
Robert M. Kavner.................................................... 3,240 *
Raymond C. Kennedy.................................................. 20,564 *
Robert J. Matura.................................................... 9,115 *
Arthur C. Milot..................................................... 239,610 .09%
Terrence Murray..................................................... 446,481 .17%
Thomas D. O'Connor.................................................. 25,808 *
Michael B. Picotte.................................................. 30,243 .01%
Lois D. Rice........................................................ 3,865 *
John R. Riedman..................................................... 363,222 .14%
John S. Scott....................................................... 12,582 *
Samuel O. Thier..................................................... 252 *
Paul R. Tregurtha................................................... 23,597 *
Robert J. Higgins................................................... 204,753 .08%
Gunnar S. Overstrom, Jr............................................. 341,899 .13%
H. Jay Sarles....................................................... 272,468 .10%
Michael R. Zucchini................................................. 165,761 .06%
Eugene M. McQuade................................................... 63,384 .02%
All directors and executive officers as a group (32 persons)........ 3,164,883 1.20%
</TABLE>
- ------------
(1) Amounts shown include 312,375, 213,500, 115,000, 202,522, 131,000, 115,200,
42,200 and 265,151 shares, respectively, that may be acquired by Messrs.
Alvord, Murray, Higgins, Overstrom, Sarles, Zucchini and McQuade, and all
other directors and executive officers as a group, within 60 days of the
Record Date pursuant to employee stock options.
(2) Amounts shown include 26,279, 15,347, 25,475, 17,776, 3,468, 1,172, and
3,864 shares, respectively, allocated to the accounts of Messrs. Alvord,
Higgins, Overstrom, Sarles, Zucchini and McQuade, and all other executive
officers as a group, in the Common Stock funds held in trust under the Fleet
Savings Plan and the Fleet Thrift Plan (formerly, the Shawmut Thrift Plan).
Mr. Murray transferred the balance of his account in the Fleet Savings Plan
Common Stock fund (40,846 shares) to an individual retirement account prior
to the Record Date. Such shares are reflected in the table for Mr. Murray.
(3) Amount shown for Mr. Overstrom includes 2,765 shares held in the names of
his wife and children.
(4) For purposes of this calculation, the number of shares of 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 on or prior to May 3, 1996.
* Less than .01%
12
<PAGE>
HUMAN RESOURCES AND PLANNING COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
Overview. The Human Resources and Planning Committee is composed entirely of 6
independent non-employee members of the Fleet Board who initiate all
compensation actions for the Chief Executive Officer ("CEO") and review and
approve the compensation for all executive officers.
Fleet's executive compensation program is designed to attract and retain
high quality and experienced executives who are motivated to enhance shareholder
value. In 1995, the Committee's compensation decisions with respect to the CEO
and the 4 other most highly compensated executive officers as defined in the
Summary Compensation Table (the "Named Executive Officers") continued to be
driven by Fleet's strategy to place considerable emphasis on variable
compensation, in the form of performance-based bonuses and equity awards, in
order to link the Named Executive Officers' pay closely with the interests of
Fleet's shareholders. Seventy to seventy-five percent (70%-75%) of the total
compensation opportunity for the Named Executive Officers (and a significant
portion for other senior executive officers) is in at-risk annual bonus and
equity-based components. Fleet's goal is to ensure a pay-for-performance linkage
and to produce total pay for the Named Executive Officers at the median of the
compensation paid to executives in comparable positions for comparable
performance at the 25 largest (as determined by asset size) domestic banks (the
"Peer Group"). This is the group used for the Stock Performance Graph. Fleet
reviews a variety of survey sources reflecting current pay practices at large
financial institutions with respect to all executive officers.
The exact amounts paid to each of the executive officers in the form of base
salary, short- and long-term incentive awards, are discretionary based on the
Committee's assessment of certain quantitative and qualitative factors. In 1995,
the Committee considered primarily: (1) Fleet's performance in 1995, as measured
by Return on Equity ("ROE"), Net Income and Return on Assets ("ROA") (with
allowances for the effects of the Shawmut Merger and certain other key strategic
decisions); (2) the Shawmut Merger and the effective implementation of
consolidation plans; (3) the successful negotiations resulting in an agreement
to purchase National Westminster Bancorp; and (4) overall performance as it
related to Fleet's financial goals and strategic objectives, including the
strengthening of Fleet's capital structure through the repurchase of the Fleet
Mortgage Group minority interest, the exchange of the ownership interest with
KKR, and strong loan growth. The Committee also considered the level of
compensation being paid to the named executive officers in the Peer Group at
comparable performance levels. The Committee has retained the discretion to
assign relative weights to these factors as it deems appropriate and, in 1995
(as in past years), no relative weights were assigned. The CEO makes
recommendations to the Committee for the Named Executive Officers, other than
the CEO, as well as certain other executives, which the Committee approved.
The Committee reviews information contained in Peer Group proxy statements
and the results of a variety of surveys and studies regarding actual and
anticipated compensation trends to determine competitive ranges of Peer Group
compensation. The Committee believes that 1995 salaries for Fleet's Named
Executive Officers remain above the median of base salaries. Bonus awards paid
to the Named Executive Officers and equity-based awards granted were at
approximately the median of bonus and long-term awards, respectively, awarded to
the named executive officers in the Peer Group for the prior year.
It is Fleet's policy to seek maximum tax deductibility of compensation costs
related to its Named Executive Officers to the extent permitted under Section
162(m) of the Internal Revenue Code and consistent with the achievement of the
above stated objectives.
Executive Compensation Program. Fleet's executive compensation program consists
of three primary components:
Base Salary. The base salary of each executive officer (including the CEO)
is set at an amount within an established salary range that reflects the
executive's position, duties and level of responsibility. The salary ranges
consist of minimum and maximum levels distributed around an average of base
salaries paid to executives who hold substantially similar positions within the
Peer Group. The base salary level for certain executives is reviewed every 18
months and may be adjusted based on position within the salary range, individual
performance and/or change in duties or level of responsibility.
13
<PAGE>
Annual Incentive. Fleet's executive bonus plans support the compensation
objective of paying for performance that increases shareholder value by
providing for bonuses under the plans only if Fleet achieves specified target
levels of ROE and Net Income.
(1) NEO Bonus Plan. The Named Executive Officer Bonus Plan permits the
Committee to award bonuses to the Named Executive Officers only if certain
performance goals related to Net Income and ROE are achieved for a particular
year. On the basis of Fleet's performance in 1995 (excluding the effects of the
Shawmut Merger and other extraordinary charges, as required by the Plan), the
maximum bonus awards allowed under the plan to the CEO and to each of the other
Named Executive Officers were $1,911,250 and $955,625, respectively. The
Committee retains the discretion to decrease (but not increase) such bonus award
amounts.
(2) Management Bonus Plan. Fleet's executive officers (except for the Named
Executive Officers) and certain other employees are eligible to participate in
the Management Bonus Plan, which provides for a bonus pool that is based on
Fleet's performance in achieving pre-established target levels of ROE (50% of
the bonus pool) and Net Income (20% of the bonus pool). The remaining 30% of the
bonus pool is discretionary. The bonus ranges are intended to result in actual
bonus payments that are at the median of bonuses paid to executives in
comparable positions for comparable performance within the Peer Group.
Long-Term Incentive. Long-term incentive awards which include qualified and
non-qualified stock options, stock appreciation rights and restricted stock
awards, act as a retention tool and link the executive officers' opportunity for
financial reward with that of the shareholders, and ensure that short-term
performance is adequately balanced with the achievement of longer-range
objectives which are in the best interests of the shareholders. The Committee's
decisions are made without regard to the amount or terms of options and
restricted stock already held by the executive officers, either individually or
as a group.
Stock options are awarded at the fair market value on the date of the grant,
so that gains for the executive officers are comparable to those of a
shareholder purchasing a share of Common Stock on the same date. Generally,
options vest in 20% annual increments, beginning on the first anniversary of the
date of grant, and expire in not more than 10 years. Option awards are intended
to be at the median of option awards granted to executives in comparable
positions within the Peer Group. The Committee, in approving recommended stock
option awards, consulted with outside advisors and Fleet's Human Resources
staff. The Committee did not award any stock appreciation rights in 1995 and
approved the cancellation of all outstanding SARs previously granted to Fleet's
executive officers. The cancellation was effective as of December 31, 1995.
CEO Compensation
In 1995, Fleet's most highly compensated Named Executive Officer was
Terrence Murray, President and Chief Executive Officer. The Committee reviewed
Mr. Murray's performance and determined that he met or exceeded all of his 1995
objectives. The Committee also discussed 1996 business objectives for Mr.
Murray.
Mr. Murray's compensation for 1995 includes a base salary at the same level
as in 1994 and a bonus in the amount of $1,900,000. The Committee exercised its
judgment in determining the amount of Mr. Murray's award and took into account
the quantitative and qualitative factors cited in this report, with particular
emphasis on the consolidation of Shawmut into Fleet, the merger agreement with
NatWest and the Corporation's overall financial performance in 1995. Mr. Murray
was not present during any Committee or Board discussions concerning his
compensation. The Committee's decision was endorsed unanimously by the Fleet
Board.
Mr. Murray was granted options to purchase 150,000 shares of Common Stock,
effective on the Shawmut Merger closing date of November 30, 1995. The
Committee's decision with respect to this award followed the same principles as
those described for executive officers generally.
The Committee believes that Mr. Murray's total compensation package for 1995
will remain slightly above the median of total compensation awarded to chief
executive officers within the Peer Group based on information regarding
compensation trends in the Peer Group, which has been obtained via surveys,
outside consultants and historical data.
14
<PAGE>
Submitted by members of the Human Resources and Planning Committee.
Prior to November 30, 1995 November 30, 1995
John S. Scott (Chairman) James F. Hardymon (Chairman)
Bradford R. Boss Bradford R. Boss
James F. Hardymon John T. Collins
Arthur C. Milot Thomas D. O'Conner
Thomas D. O'Connor John S. Scott
Paul R. Tregurtha
STOCK PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total stockholder
return on the Common Stock (assuming $100 was invested on December 31, 1990, and
all dividends were reinvested) against the cumulative total return of the S&P
Composite-500 Stock Index, the Keefe, Bruyette & Woods ("KBW") Eastern Region
Bank Index and the top 25 (based on asset size) domestic banks (the "Peer
Group"), excluding Fleet, for the five fiscal years ended December 31, 1995. The
financial institutions which comprise the Peer Group are Citicorp, BankAmerica
Corporation, NationsBank Corporation, J.P. Morgan & Co. Incorporated, Chemical
Banking Corporation, First Union Corporation, First Chicago NBD Corporation, The
Chase Manhattan Corporation, Bankers Trust New York Corporation, Bank One
Corporation, PNC Bank Corp., Norwest Corporation, Key Corp., First Interstate
Bancorp, The Bank of New York Company, Inc., Wells Fargo & Company, Bank of
Boston Corporation, SunTrust Banks, Inc., Wachovia Corporation, Republic New
York Corporation, Barnett Banks, Inc., Mellon Bank Corporation, National City
Corporation, and Comerica Incorporated. The returns of each of these
corporations have been weighted according to their market capitalization at the
beginning of each year presented. National City Corporation and Comerica
Incorporated now are included within the Peer Group (based on asset size).
Neither NBD Bancorp, Inc. nor First Fidelity Corporation are included in the
Peer Group, having merged with entities included above.
[Stock Performance Graph]
- --------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995
- --------------------------------------------------------------------------------
Fleet Financial $100 $235 $318 $334 $338 $445
S&P 500 100 130 140 155 156 211
KBW Eastern 100 178 245 252 236 392
Peer Group 100 165 215 235 224 356
- --------------------------------------------------------------------------------
15
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
Executive Compensation.
The following table shows, for the fiscal years ended December 31, 1995,
1994 and 1993, the compensation of the Chief Executive Officer and the four
other most highly compensated executive officers of Fleet, as determined by the
compensation paid by Fleet during 1995 (Messrs. Higgins, Sarles, Zucchini and
McQuade; together with Mr. Murray, the "Named Executive Officers"). In addition,
as supplemental information, the table shows the amount paid by Shawmut (prior
to the Shawmut Merger) and Fleet (after the Shawmut Merger) to Messrs. Alvord
and Overstrom during 1995.
Summary Compensation Table
<TABLE><CAPTION>
Annual Compensation Long-Term Compensation
------------------------- --------------------------------------------
Awards Payouts
-------------------------- ----------
Other Restricted Securities
Name and Annual Stock Underlying LTIP All Other
Principal Salary Bonus Compensation Award(s) Options/SARs Payouts Compensation
Position Year ($) ($) ($)(2) ($)(3)(4) (#)(5) (#) ($)(9)(10)
- ----------------- ---- --------- ----------- ------------ ------------ ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Terrence Murray...... 1995 $992,200 $1,900,000 -- -- 150,000 -- $154,909
President and 1994 993,936(1) 1,400,000 -- $ 1,160,156 100,000 -- 86,967
Chief Executive 1993 902,000 990,000 -- -- 90,000 -- 67,622
Officer
Joel B. Alvord....... 1995 893,000 1,710,000 $1,430,588 -- 250,986(6) $2,335,800(8) 6,750
Chairman
Robert J. Higgins.... 1995 524,999 725,000 -- -- 60,000 -- 74,791
Vice Chairman 1994 524,999 600,000 75,276 556,875 45,000 -- 40,632
1993 505,769 350,000 -- -- 40,000 -- 37,946
Gunnar S.
Overstrom, Jr........ 1995 525,000 725,000 1,192,385 -- 126,915(7) 1,241,117(8) 6,264
Vice Chairman
H. Jay Sarles........ 1995 524,999 725,000 -- -- 60,000 -- 91,851
Vice Chairman 1994 524,999 550,000 -- 556,875 45,000 -- 55,135
1993 512,692 350,000 -- 40,000 -- 43,343
Michael R. Zucchini.. 1995 524,999 725,000 -- -- 60,000 -- 63,275
Vice Chairman 1994 524,999 600,000 -- 556,875 45,000 -- 38,867
1993 510,769 350,000 -- 40,000 -- 30,503
Eugene M. McQuade.... 1995 374,999 575,000 -- -- 50,000 -- 41,836
Executive Vice 1994 358,654 500,000 -- 556,875 45,000 -- 23,585
President and 1993 330,769 300,000 -- 35,000 -- 20,451
Chief Financial
Officer
</TABLE>
- ------------
(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 in each instance aggregated less than $50,000, except for Mr.
Higgins, and are omitted from the table as permitted by Commission
regulations. The amount reported for Mr. Higgins includes a relocation
expense and moving allowance in 1994 aggregating $60,157. $1,397,913 and
$1,168,377, respectively, of the amounts reported for Messrs. Alvord and
Overstrom represent payments or reimbursements of tax liabilities imputed
to the executive officers in connection with Shawmut's funding of certain
non-qualified retirement and insurance plans. Funding was required under
the plans' change in control provisions as a result of the Shawmut Merger,
and included the purchase of guaranteed annuity contracts and fully paid
executive life insurance for benefits earned by the executive officers
under the plans, but did not include any cash payments to the executive
officers.
(3) In September 1994, Fleet awarded performance-based restricted stock to each
of the Named Executive Officers under the 1992 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 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 Plan, based on a December 31, 1995 closing market price of
the Common Stock of $40.75, are: Mr. Murray, 31,250 and $1,273,438; and
each of Messrs. Higgins, Sarles, Zucchini and McQuade, 15,000 and $611,250.
Dividends will be paid on the shares of performance-based restricted stock
if, and to the extent, dividends are paid on Common Stock generally. If a
change in 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 Messrs.
Murray and Zucchini under Fleet's Amended and Restated 1988 Stock Option
and Restricted Stock Plan (the "1988 Plan"). In accordance with the terms
of the awards, the restrictions on
(Footnotes continued on following page)
16
<PAGE>
(Footnotes continued from preceding page)
fifty percent of the stock lapsed as of January 1, 1995 as a result of the
performance of the Common Stock during 1994. The number and year-end value
of the remaining fifty percent of the restricted stock shares awarded in
1991 under the 1988 Plan, based on a December 31, 1995 closing market price
of the Common Stock of $40.75 per share, are: Mr. Murray, 25,000 and
$1,018,750; and Mr. Zucchini, 12,500 and $509,375. 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 Plan. Mr. McQuade, who did not join Fleet until January
1992, was not awarded any restricted stock in 1992. The awards provide that
the restrictions will lapse on January 1, 1998 if the executive remains in
the continuous employ of Fleet. The number and year-end value of the shares
of restricted stock awarded in 1992 under the 1992 Plan, based on a
December 31, 1995 closing market price of the Common Stock of $40.75 per
share, are: Mr. Higgins, 15,000 and $611,250; and Mr. Sarles, 20,000 and
$815,000. Dividends will be paid on the shares of restricted stock if, and
to the extent, dividends are paid on Common Stock generally. If a change in
control were to occur, the restricted stock would immediately vest in full.
(5) SARs granted in tandem with stock options awarded prior to 1994 to the
Named Executive Officers were cancelled as of December 31, 1995. Stock
options granted in 1994 and 1995 under the 1992 Plan did not include tandem
SARs. Stock options granted by Shawmut to Messrs. Alvord and Overstrom in
1995 prior to the Shawmut Merger did not include tandem SARs.
(6) Includes 115,986 options granted by Shawmut prior to the Shawmut Merger.
This number has been adjusted to reflect the conversion ("Conversion") of
each share of Shawmut common stock into .8922 shares of Common Stock.
(7) Includes 66,915 options granted by Shawmut prior to the Shawmut Merger.
This number has been adjusted to reflect the Conversion.
(8) Represents payment of the performance equity awards granted under the
Shawmut performance equity plan in 1995 and 1994, inclusive of dividend
equivalent units accrued from the date of grant. Under the terms of the
original grant, the maturation of performance equity share units and
dividend equivalent units was contingent upon corporate performance. See
"Long-Term Incentive Plan--Awards in Last Fiscal Year." Under the plan, all
restrictions on outstanding performance equity share units lapsed upon a
change in control of Shawmut which occurred when the holders of Shawmut
common stock approved the Shawmut Merger.
(9) 1995 amounts for the Named Executive Officers represent: (a) contributions
by Fleet under Fleet's Savings Plan or amounts accrued under Fleet's
Executive Supplemental Plan: Mr. Murray, $59,540; Mr. Higgins, $31,512; Mr.
Sarles, $31,512; Mr. Zucchini, $31,512; and Mr. McQuade, $22,501; (b) term
life insurance premiums paid by Fleet on behalf of each of the following
executive officers (the executives have the option of applying these
payments to whole life policies): Mr. Murray, $25,718; Mr. Higgins, $8,007;
Mr. Sarles, $8,007; Mr. Zucchini, $7,333; and Mr. McQuade, $3,996; (c) an
interest-free loan in the amount of $100,000 provided to Mr. Sarles in 1992
which provided a benefit of $289 to Mr. Sarles in 1995 based on the
applicable federal rate in effect on the date of issuance of such loan; and
(d) preferential earnings on deferred compensation: Mr. Murray, $69,651;
Mr. Higgins, $35,272; Mr. Sarles, $52,043; Mr. Zucchini, $24,430; and Mr.
McQuade, $15,339. Mr. Sarles repaid his loan on January 13, 1995 (see
"Other Information Relating to Directors, Nominees and Executive Officers--
Indebtedness and Other Transactions").
(10) 1995 amounts for Messrs. Alvord and Overstrom represent (a) Shawmut
matching contributions to employees' thrift plan: Mr. Alvord, $5,400; and
Mr. Overstrom, $5,400; and (b) aggregate insurance premiums (executive
group life and split-dollar life policies): Mr. Alvord, $1,350; and Mr.
Overstrom $864.
17
<PAGE>
Option/SAR Grants in Last Fiscal Year
The following table contains information concerning the grant of stock
options made during the fiscal year ended December 31, 1995 to the Named
Executive Officers and Messrs. Alvord and Overstrom.
<TABLE><CAPTION>
Individual Grants
------------------------------------------------------------ Potential Realizable
Percent Value
Number of of Total at Assumed Annual Rates
Securities Options/SARs of Stock Price
Underlying Granted to Appreciation
Options/SARs Employees Exercise or for Option Term(5)
Granted in Fiscal Base Price Expiration -----------------------
NAME (#) Year(3)(4) ($/sh) Date AT 5% ($) AT 10% ($)
- ----------------------- ------------ ------------ ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Terrence Murray........ 150,000(1) 2.45% $ 41.38 11/29/05 $3,904,474 $9,893,224
Joel B. Alvord......... 135,000(1) 2.20% 41.38 11/29/05 3,514,026 8,903,902
115,986(2) 7.55% 23.40(2) 2/09/05 1,707,270 4,325,910
Robert J. Higgins...... 60,000(1) 0.98% 41.38 11/29/05 1,561,789 3,957,290
Gunnar S. Overstrom, Jr. 60,000(1) 0.98% 41.38 11/29/05 1,561,789 3,957,290
66,915(2) 4.36% 23.40(2) 2/09/05 984,963 2,495,718
H. Jay Sarles.......... 60,000(1) 0.98% 41.38 11/29/05 1,561,789 3,957,290
Michael R. Zucchini.... 60,000(1) 0.98% 41.38 11/29/05 1,561,789 3,957,290
Eugene M. McQuade...... 50,000(1) 0.82% 41.38 11/29/05 1,301,491 3,297,741
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Increase in market value of the Common
Stock for all stockholders at assumed
annual rates of stock price appreciation 5% (to $67/share) 10% (to $107/share)
(as used in the table above for the November ----------------- -------------------
30, 1995 grants) from $41.38 per share, over $ 6.8 billion $17.2 billion
the ten-year period, based on 262 million
shares outstanding on December 31, 1995.
</TABLE>
- --------------------------------------------------------------------------------
(1) Options granted on November 30, 1995 under the 1992 Plan. No SARs were
awarded in connection with such grants. The options first become exercisable
in annual 20 percent installments, beginning one year from the date of
grant, so long as employment with Fleet continues. If a change in control
were to occur, the options would become immediately exercisable in full.
(2) Options granted by Shawmut on February 9, 1995 under the Shawmut employee
stock option and restricted stock award plans ("Shawmut Option Plans") at an
exercise price equal to the fair market value of Shawmut common stock on
that date ($23.40) (number of options and exercise price adjusted to reflect
the Conversion). No SARs were awarded in connection with such grants. Under
the terms of the original grants, the ten year options first would have
become exercisable in annual one-third installments, beginning one year from
the date of grant. The options became fully exercisable upon the change in
control of Shawmut which occurred when the holders of Shawmut common stock
approved the Shawmut Merger.
(3) The percentages for the November 30, 1995 grants are based on a total of
6,133,518 options granted in 1995 as follows: (a) 3,537,550 options granted
to Fleet employees in 1995 under the 1992 Plan; (b) 2,259,849 options and
SARs granted to former Shawmut employees in connection with Fleet's
assumption of the Shawmut Option Plans (including 312,375 and 202,522
options, respectively, granted to each of Messrs. Alvord and Overstrom at
exercise prices ranging from $22.70 to $26.76) (number of options and
exercise prices adjusted to reflect the Conversion). The 312,375 and 202,522
options granted to Messrs. Alvord and Overstrom include the 115,986 and
66,915 options, respectively, reported in the table for such executive
officers; (c) 231,382 options granted to former employees of NBB Bancorp.
Inc. ("NBB") in connection with the merger of NBB into Fleet; and (d)
104,737 options granted to employees of Fleet Mortgage Group, Inc. ("FMG")
in connection with Fleet's repurchase of FMG's publicly-held shares.
(4) The percentages for the February 9, 1995 grants are based on a total of
1,534,696 options and SARs granted by Shawmut to Shawmut employees in 1995
under the Shawmut Option Plans (number of options and SARS adjusted to
reflect the Conversion).
(5) 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
percent annual growth rate for Mr. Murray's grant results in a stock price
of $67.40 per share and a 10 percent rate results in a stock price of
$107.33 per share. These potential values are listed in order to comply with
Commission regulations, and Fleet cannot predict whether these values can be
achieved. Actual gains, if any, on stock option exercises are dependent on
the future performance of the Common Stock.
18
<PAGE>
Aggregated Option/SAR Exercises In Last Fiscal Year And
FY-End Option/SAR Values
The following table sets forth information with respect to the Named
Executive Officers and Messrs. Alvord and Overstrom concerning the exercise of
options during the fiscal year ended December 31, 1995 and unexercised options
held as of the end of the 1995 fiscal year.
<TABLE><CAPTION>
Number of Securities Value of Unexercised
Options/SARs at at
Value FY-End(#)(2) FY-End($)(3)(4)(5)
Shares Acquired Realized ------------------------------- ----------------------------
Name on Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
---- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Terrence Murray......... -- -- 291,000 314,000 $ 4,912,600 $ 1,188,100
Joel B. Alvord.......... 65,130(1) $648,049(1) 312,375 135,000 5,331,170 --
Robert J. Higgins....... 12,000 233,550 115,000 133,000 1,937,725 525,690
Gunnar S. Overstrom, Jr. 50,854(1) 516,984(1) 202,522 60,000 3,434,887 --
H. Jay Sarles........... 5,602 92,223 131,000 133,000 2,203,715 525,690
Michael R. Zucchini..... -- -- 115,200 133,000 1,702,227 525,690
Eugene M. McQuade....... -- -- 39,200 117,800 373,232 477,288
</TABLE>
- ------------
(1) Includes options and SARs exercised prior to the Shawmut Merger (adjusted to
reflect the Conversion).
(2) Neither the Named Executive Officers nor Messrs. Alvord and Overstrom holds
any tandem SARs. Any SARs previously granted to the Named Executive Officers
were cancelled as of December 31, 1995.
(3) Value based on the fair market value of the Common Stock on December 31,
1995 ($41.25) minus the exercise price. Fair market value is deemed to be
the average of the high and low market prices of the Common Stock on the
Stock Exchange.
(4) The following unexercisable options for each of the Named Executive Officers
and Messrs. Alvord and Overstrom are at exercise prices above the fair
market value of the Common Stock on December 31, 1995 ($41.25): Mr. Murray,
150,000; Mr. Alvord, 135,000; Mr. Higgins, 60,000; Mr. Overstrom, 60,000;
Mr. Sarles, 60,000; Mr. Zucchini, 60,000; and Mr. McQuade, 50,000.
(5) The value of unexercised in-the-money stock options at December 31, 1995 is
presented pursuant to Commission regulations. The actual amount, if any,
realized upon exercise of stock options will depend upon the excess, if any,
of the fair market value of the Common Stock over the exercise price at the
time the stock option is exercised. There is no assurance that the values of
unexercised in-the-money options reflected in this table will be realized.
Long-Term Incentive Plan-Awards In Last Fiscal Year(1)
The following table sets forth information with respect to long-term
incentive awards granted by Shawmut to Messrs. Alvord and Overstrom during 1995
and is presented for informational purposes only.
<TABLE><CAPTION>
Estimated Future Payments
Under
Non-Stock Price-Based
Plans(2)(3)
Number of Performance or ------------------------------
Share Units Other Period Until Threshold Target Maximum
Name (2)(#) Maturation or Payment (#) (#) (#)
- ------------------------------------- ----------- ----------------------- --------- ------ -------
<S> <C> <C> <C> <C> <C>
Joel B. Alvord....................... 21,412 12/31/97 0 21,412 21,412
Gunnar S. Overstrom, Jr.............. 12,713 12/31/97 0 12,713 12,713
</TABLE>
- ------------
(1) The Shawmut performance equity plan was adopted by Shawmut during 1993 to
provide significant and fully competitive long-term reward opportunities for
key senior management of Shawmut. Target performance equity share units were
intended to be earned if pre-determined strategic business goals were
achieved
(2) Under the 1995-1997 cycle, the executive officers received awards of target
performance equity share units based on individual performance as determined
by the Shawmut human resources committee. The number of share units has been
adjusted to reflect the Conversion.
(3) Under the plan all restrictions on outstanding performance equity share
units (including the performance equity share units granted in 1995) plus
dividend equivalent units lapsed upon a change in control of Shawmut which
occurred when the holders of Shawmut common stock approved the Shawmut
Merger.
19
<PAGE>
Pension Plans
Fleet Plan. 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.
Fleet Pension Plan Table
Final
Average 15 Years 20 Years 25 Years 30 Years
Salary Service(1) Service(1) Service(1) Service(1)
- ---------- ---------- ---------- ---------- ----------
$ 300,000 $ 76,682 $ 102,242 $ 127,803 $ 153,364
400,000 102,932 137,242 171,553 205,864
500,000 129,182 172,242 215,303 258,364
600,000 155,432 207,242 259,053 310,864
700,000 181,682 242,242 302,803 363,364
800,000 207,932 277,242 346,553 415,864
900,000 234,182 312,242 390,303 468,364
1,000,000 260,432 347,242 434,053 520,864
1,100,000 286,682 382,242 477,803 573,364
1,200,000 312,932 417,242 521,553 625,864
1,300,000 339,182 452,242 565,303 678,364
1,400,000 365,432 487,242 609,053 730,864
1,500,000 391,682 522,242 652,803 783,364
1,600,000 417,932 557,242 696,553 835,864
1,700,000 444,182 592,242 740,303 888,364
- ------------
(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 Code which limit the annual benefits payable from
qualified plans to any individual. The years of service accrued and Final
Average Salary (as defined below) for purposes of the Pension Plan as of
December 31, 1995 for the Named Executive Officers were: Mr. Murray, 33
years and $921,519; Mr. Higgins, 24 years and $479,999; Mr. Sarles, 28 years
and $495,408; Mr. Zucchini, 8 years and $484,100; and Mr. McQuade, 4 years
and $329,808.
The Pension Plan covers employees of Fleet and various Fleet subsidiaries,
including the Named Executive Officers. Former Shawmut employees, including
Messrs. Alvord and Overstrom, are covered by Shawmut's defined benefit plans.
See "Shawmut Plan". 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 percent 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
percent multiplied by the amount by which the Final Average Salary exceeds the
Integration Level. For 1996, the Integration Level will equal $27,576 (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 Fleet Pension Plan Table 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.
20
<PAGE>
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 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, 1995 for Messrs.
Murray, Higgins, Sarles, Zucchini and McQuade was $1,399,519, $669,999,
$675,408, $674,100 and $529,808, respectively.
Shawmut Plan. The following table shows the estimated pension benefits
commencing at age 65 that would be payable to participants under Shawmut's
defined benefit plans pursuant to which benefits are determined by final
compensation and years of service ("Shawmut retirement plans"). Messrs. Alvord
and Overstrom are participants in the Shawmut retirement plans, as assumed by
Fleet in connection with the Shawmut Merger.
Shawmut Pension Plan Table
Final 15 Years 20 Years 25 Years 30 Years 35 Years
Compensation Service Service Service Service Service
- ------------- -------- -------- -------- ---------- ----------
$ 700,000 $210,000 $280,000 $350,000 $ 420,000 $ 420,000
800,000 240,000 320,000 400,000 480,000 480,000
900,000 270,000 360,000 450,000 540,000 540,000
1,000,000 300,000 400,000 500,000 600,000 600,000
1,100,000 330,000 440,000 550,000 660,000 660,000
1,200,000 360,000 480,000 600,000 720,000 720,000
1,300,000 390,000 520,000 650,000 780,000 780,000
1,400,000 420,000 560,000 700,000 840,000 840,000
1,500,000 450,000 600,000 750,000 900,000 900,000
1,600,000 480,000 640,000 800,000 960,000 960,000
1,700,000 510,000 680,000 850,000 1,020,000 1,020,000
Compensation for purposes of the Shawmut Pension Plan Table means the final
year's salary and the average of the short-term incentive awards for the five
highest calendar years after 1984 (see Summary Compensation Table for salary of
Messrs. Alvord and Overstrom). The amounts set forth in the table are offset by
social security benefits and assume payment in the form of a 50 percent joint
and survivor annuity, but do not reflect the reduction for tax payments
discussed below. As of December 31, 1995, remuneration covered by the Shawmut
retirement plans and years of credited service as defined therein are as follows
for Messrs. Alvord and Overstrom: $1,407,000 and 35 years; and $872,000 and 25
years, respectively.
Prior to the Shawmut Merger, Shawmut maintained the Shawmut split-dollar
life insurance plan which, in addition to supplemental insurance benefits,
provided a choice of postretirement death benefits or supplemental retirement
income. The formula by which any retirement benefits for Messrs. Alvord and
Overstrom were determined under the split-dollar life insurance plan was 6
percent and 4 percent, respectively, of cumulative base salary for all years of
participation in the plan. This plan ceased as of the Shawmut Merger closing on
November 30, 1995.
The Shawmut retirement plans included a tax-qualified pension plan and a
supplemental, nonqualified pension plan. In connection with the Shawmut Merger,
Shawmut funded the supplemental plan and the split-dollar life insurance plan
discussed above through contributions to an irrevocable trust. Such
contributions were required under the plans' change in control provisions, and
constituted taxable
21
<PAGE>
income to the participants at the time their benefits vested. Accruals under the
Shawmut supplemental nonqualified plan ceased for Mr. Overstrom on the closing
of the Shawmut Merger.
Severance Agreements and Employment Contracts
Severance Agreements. Severance agreements are in effect between Fleet and
17 key executives of the Corporation and its subsidiaries, including each of the
Named Executive Officers and Messrs. Alvord and Overstrom. The agreements are
intended to encourage such employees to continue to carry on their duties in the
event of a change in control of Fleet. Under the terms of these agreements, if
termination of an executive's employment occurs within the two-year period
following a change in control of Fleet and such termination is by Fleet (or its
successor) other than for cause (as defined in the agreement) or by the
executive for good reason (as defined in the agreement), each executive, other
than Messrs. Alvord and Overstrom, will be entitled to receive, among other
things, (i) the executive's accrued salary, (ii) a pro rata portion of such
executive's highest annual bonus, and (iii) an amount equal to the sum of annual
base salary and highest annual bonus multiplied by three (or two, in the case of
five executives). Under the severance agreements of Messrs. Alvord and
Overstrom, the executive will be entitled to receive, among other things, (i) an
amount equal to the sum of annual base salary and any amount awarded under
Fleet's short-term incentive plan for the year preceding the year of termination
multiplied by three or the number of years remaining to the executive's 65th
birthday, whichever is shorter, and (ii) a pro rata portion of such executive's
outstanding long-term incentive award. These agreements confer no benefits prior
to a change in control. In the event that any payments received by the
executives in connection with a change in control are subject to the excise tax
imposed upon certain change in control payments under federal tax laws, the
agreements provide for an additional payment sufficient to restore the executive
to the same after-tax position the executive would have been in if the excise
tax had not been imposed.
Alvord and Overstrom Employment Agreements. In connection with the Shawmut
Merger, Messrs. Alvord and Overstrom entered into employment agreements with
Fleet.
Mr. Alvord's employment agreement contains the following terms and
conditions: (i) a three-year term (ending on Mr. Alvord's 60th birthday); (ii)
annual salary, annual and long-term bonuses and equity-based compensation awards
in an amount not less than 90% of the amount paid or awarded to the Chief
Executive Officer of Fleet; and (iii) participation in all employee benefit
arrangements available to other similarly situated executive officers of Fleet
(only to the extent that the benefits provided thereunder do not duplicate
benefits received by Mr. Alvord under certain continued Shawmut insurance,
retirement and long-term disability plans). Mr. Alvord's employment agreement
also provides that Fleet will sponsor Mr. Alvord's election and re-election to
the Fleet Board during the term of the agreement and until Mr. Alvord's
attainment of age 65 and that following Mr. Alvord's 60th birthday and until his
65th birthday, Mr. Alvord will serve as Chairman of the Executive Committee of
the Fleet Board or in such other capacity as Fleet and Mr. Alvord shall agree.
Mr. Overstrom's employment agreement provides for: (i) an initial term of
two years, subject to extension for an additional one-year period on each
successive anniversary of the effective date unless Fleet gives notice of
nonrenewal at least 60 days prior to such anniversary; (ii) annual salary and
annual and long-term bonuses equal to those of the other vice chairmen of Fleet;
and (iii) participation in all employee benefit arrangements available to other
similarly situated executive officers of Fleet (only to the extent that the
benefits provided thereunder do not duplicate benefits received by Mr. Overstrom
under certain continued Shawmut plans). Mr. Overstrom's employment agreement
also entitles him to receive amounts equal to the excess of the highest base
salary and annual bonus earned by any executive officer of Fleet (other than the
Chairman or Chief Executive Officer) during 1995 over the base salary and annual
bonus earned by Mr. Overstrom during 1995 with Shawmut.
Pursuant to the employment agreements of Messrs. Alvord and Overstrom,
except as described in the following sentence, in the event that the executive's
employment is terminated by Fleet or by the executive for any reason other than
death, cause (as defined therein) or disability (as defined therein),
22
<PAGE>
then the executive will be entitled to receive, among other things, an amount
equal to the product of (A) the sum of (i) the executive's base salary then in
effect (or if greater, immediately prior to the Shawmut Merger closing) and (ii)
the highest annual and long-term bonuses awarded to and earned by the executive
during the three fiscal years prior to termination, and (B), with respect to Mr.
Alvord, the number of years and fractional parts thereof remaining in the term
of the agreement, and with respect to Mr. Overstrom, the number three. Each
executive will also be entitled to coverage or credited service, as applicable,
under Fleet's employee benefit plans (or certain continued Shawmut insurance and
retirement plans). Pursuant to the severance agreements of Messrs. Alvord and
Overstrom, any benefits payable to the executive upon the termination of his
employment subsequent to a change in control of Fleet will be paid pursuant to
such severance agreement, and no amounts will be payable in such circumstance
pursuant to the executive's employment agreement. In the event that any payments
received by the executive in connection with the employment agreement are
subject to the excise tax imposed under federal tax laws, the employment
agreement provides for an additional payment sufficient to restore the executive
to the same after-tax position he would have been in if the excise tax had not
been imposed.
OTHER INFORMATION RELATING TO DIRECTORS,
NOMINEES AND EXECUTIVE OFFICERS
Indebtedness and Other Transactions
The banking subsidiaries of Fleet have had transactions in the ordinary
course of business, including borrowings, with certain directors and executive
officers 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 Bank-RI until its repayment on January 13, 1995.
The benefit to Mr. Sarles as a result of the interest-free aspect of this loan
was $289 in 1995.
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, 1995 of
approximately $671,712 (the highest amount outstanding since January 1, 1995
having been $684,054), 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 Bank-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 Bank-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
23
<PAGE>
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 Letter of Credit on December 1, 1994. The Letter
of Credit was drawn on December 1, 1994 in the amount of $3,883,538 and the
borrower's obligation was converted to a demand note with a per annum interest
rate equal to two percent above Fleet Bank-RI's prime rate of interest (the
highest amount outstanding under the demand note since January 1, 1995 being
$3,495,362). Fleet Bank-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 which were purchased by Fleet
Bank-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 Bank-RI was unable to demonstrate full
collectibility of the bonds and thus placed the bonds on non-performing status.
In February 1995, Fleet Bank-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 Bank-RI. Fleet Bank-RI also collected
approximately $400,000 on Gilbane's partial guarantee (which amount represented
Gilbane's full legal obligation under the guarantee) and Fleet Bank-RI received
approximately $305,000 from the bond trustee. In addition, Fleet Bank-RI applied
approximately $256,000 of interest paid to reduce the principal amount
outstanding on the bonds. Fleet Bank-RI recognized approximately a $761,000
principal loss on this transaction. Prior to such transactions, the highest
principal amount on the bonds during 1995 was $1,737,966.
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 the Fleet Center in Providence, Rhode Island
("Providence Fleet Center"), and to rehabilitate an adjacent structure. One of
the partnerships has constructed a parking garage on land it is leasing from
Fleet Bank-RI. Fleet and Gilbane have 46.55% and 36.75% partnership interests,
respectively, in the partnership that developed the Providence Fleet Center. 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 Providence Fleet
Center and the Arcade garage. As of December 31, 1995, the amount remaining
unpaid under the loan was $52,425,328 (the highest amount outstanding since
January 1, 1995 having been $53,039,147). 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 Bank-RI have leased space in the building for a total annual rental of
approximately $796,560.
John S. Scott is a director emeritus 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 ruled against Fleet Credit. Fleet Credit
has filed an appeal and intends to contest such ruling vigorously.
A company of which John R. Riedman, a director of Fleet, is an executive
officer leases office space to a subsidiary of Fleet. In 1995, the gross rental
proceeds from such lease were $127,500. The company
24
<PAGE>
also leases space to a second subsidiary of Fleet. The gross rental proceeds
from this lease were $385,000 in 1995. Both leases contain escalation clauses
for services.
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 1995, the
agency received from Fleet commissions and fees of approximately $148,500. Fleet
believes that such commissions and fees are at rates customary in the industry.
In addition, the insurance agency leases space from a Fleet subsidiary. The
gross rental payments for this lease were $74,300 in 1995. Finally, a Fleet
subsidiary provides certain non-credit banking services at customary rates to
the insurance agency's employee benefit plans.
One of Fleet's subsidiaries leases office space for one dollar per annum and
shared expenses from Delta Properties. Michael B. Picotte, a director of Fleet,
is a 50% partner in Delta Properties. The lease expires in December 2004.
KKR, which beneficially owns more than five percent of the Common Stock,
beneficially owns in excess of ten percent of the common stock of Stop & Shop,
and Mr. Murray currently serves as a Stop & Shop director. Two subsidiaries of
Fleet are currently participants in a syndicated bank credit agreement and a
working capital facility with Stop & Shop pursuant to which the subsidiaries
received approximately $91,156 in fees in 1995. In 1995 automatic teller
machines of a Fleet subsidiary were located in a number of Stop & Shop's store
and office locations. The subsidiary paid fees to Stop & Shop of approximately
$46,350 during 1995 as a result of this activity. A Fleet subsidiary provides a
lease financing facility to a Stop & Shop affiliate for which the Fleet
subsidiary received approximately $33,639 in fees in 1995. In addition, Fleet's
subsidiaries provide certain non-credit banking services (such as bank
depositary services) to Stop & Shop and its subsidiaries.
KKR also beneficially owns in excess of ten percent of the common stock of
American Re Corporation ("American Re"). Mr. Zucchini serves on the American Re
Board of Directors. It is anticipated that in 1996 Fleet subsidiaries will
provide certain non-credit banking services at customary rates to American Re.
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.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of 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 Commission. Insiders are required by Commission regulations
to furnish Fleet with copies of all Section 16(a) reports they file. Based
solely on a review of the copies of such reports furnished to Fleet, Fleet
believes that during 1995 all Section 16(a) filing requirements applicable to
its Insiders were complied with.
25
<PAGE>
APPROVAL OF THE AMENDED AND RESTATED
1992 STOCK OPTION AND RESTRICTED STOCK PLAN
Background
As noted in the Human Resources and Planning Committee Report on Executive
Compensation, equity-based incentive compensation is a central component of
Fleet's overall compensation system. The Fleet Board believes that such
compensation plays a critical role in attracting and retaining high quality and
experienced executives and employees who are key to Fleet's success. Most
recently, the compensation program has been supported through the 1992 Plan,
which was previously approved by the Fleet Board and the stockholders in 1994.
Given the importance of equity-based incentive compensation to the Corporation's
compensation arrangements, and in view of the Shawmut Merger and the proposed
NatWest acquisition, which have significantly increased the number of potential
grant recipients, the Fleet Board believes that it is appropriate at this time
to propose for stockholder approval the amendment and restatement of the 1992
Plan (the "1996 Amendment"). The 1996 Amendment would increase the number of
shares issuable under the plan, allow for stock option and restricted stock
awards to non-employee directors (but only to the extent that such awards are in
lieu of cash compensation), identify certain business criteria against which
performance-based restricted stock is awarded under the plan, add an explicit
prohibition against repricing of stock options, and effect certain other
amendments intended to increase the plan's flexibility as an equity-based
compensation arrangement. If the 1996 Amendment is not adopted, the 1992 Plan as
in effect prior to such amendment and restatement will remain in effect, except
that the Corporation will cease awarding performance-based restricted stock.
The following description is qualified in its entirety by reference to the
terms of the 1992 Plan as it is proposed to be amended, a copy of which is
attached hereto as Appendix A.
Proposed Amendments
Increase in Authorized Shares. Of the 10,500,000 shares of Common Stock that
have been authorized for issuance or award under the 1992 Plan as stock options
or restricted stock, 2,078,565 shares remain available as of December 31, 1995.
In view of the substantial decrease in the number of shares available for the
1992 Plan's purposes, the Fleet Board proposes to increase the number of shares
of Common Stock issuable under the Plan by 13,000,000 to 23,500,000 (an increase
of approximately 4.9 percent of the Common Stock shares outstanding as of the
Record Date). If such increase is approved, approximately 15,000,000 shares of
Common Stock would be available for future grants under the plan (13,000,000
newly authorized shares, plus approximately 2,000,000 of the 10,500,000 shares
previously authorized). The maximum number of shares issuable under the 1992
Plan on the exercise of incentive stock options shall be 15,000,000. In
addition, the 1996 Amendment provides that any shares of Common Stock delivered
to or withheld by the Corporation to pay the exercise price of any stock option
or to satisfy the tax withholding consequences of an option exercise or the
grant or vesting of a restricted stock award shall again be available for
purposes of the 1992 Plan.
Non-employee Directors. If approved, the 1996 Amendment would permit the
award of stock options and restricted stock to non-employee directors solely in
lieu of some or all of the cash compensation such directors would otherwise
receive for their services as directors. Any restricted stock awarded to
non-employee directors would vest at the earlier of (i) the director's
retirement at or after the retirement age specified in the Corporation's By-laws
(currently, age 68), (ii) the director's death or total and permanent
disability, or (iii) the director's resignation with the consent of the Fleet
Board.
Restricted Stock. Except for the proposed restricted stock awards to
non-employee directors and consistent with Fleet's policy of seeking maximum tax
deductibility of compensation costs, only performance-based restricted stock may
be awarded under the 1992 Plan. Such awards are intended to qualify as
performance-based compensation for purposes of the regulations under Section
162(m) of the Code which limit the deductibility of compensation in excess of $1
million unless certain requirements are met. In awarding such restricted stock,
the Human Resources and Planning Committee will select performance goals based
on one or more of the following criteria: (i) earnings or earnings per share,
26
<PAGE>
(ii) return on equity, (iii) return on assets, (iv) revenues, (v) expenses, (vi)
one or more operating ratios, (vii) stock price, (viii) stockholder return, (ix)
market share, (x) charge-offs, (xi) credit quality, (xii) reductions in
non-performing assets, (xiii) customer satisfaction measures, and (xiv)
accomplishment of mergers, acquisitions, dispositions, or other similar
extraordinary business combinations. The performance goals selected in any case
need not be applicable across the Corporation, but may be particular to an
individual's function or business unit.
Prohibition Against Repricing of Stock Options. In 1994, the stockholders
approved an amendment to the 1992 Plan which eliminated the Human Resources and
Planning Committee's discretion to cancel an existing option and thereafter
regrant the option at the same option price as the previously existing option or
at a lower option price at less than fair market value on the date of regrant.
The 1996 Amendment provides an express prohibition on the Committee's ability to
reprice stock option awarded under the Plan by amending any existing option to
reduce the exercise price of such option or by granting a replacement option for
the purpose of reducing the exercise price of such option.
Option Price. The 1996 Amendment continues to provide that the option
exercise price shall not be less than the fair market value on the date of
grant, subject to the following two new narrow exceptions: (i) in connection
with an amendment of an option which does not reduce the exercise price of the
option but which may be treated for tax or other technical purposes (including
for Section 16 purposes of the Exchange Act) as a new grant of the stock option,
the exercise price of such amended option may be less than the then fair market
value of the shares of Common Stock subject to such option so long as such
exercise price is equal to or greater than the exercise price of the original
option, and (ii) in connection with an acquisition, consolidation, merger or
other extraordinary transaction, options may be granted at less than the then
fair market value in order to replace options previously granted by one or more
parties to such transaction (or their affiliates) so long as the aggregate
spread on such replacement options for any recipient of such options is equal to
or less than the aggregate spread on the options being replaced.
Administration. The 1996 Amendment provides that the 1992 Plan shall be
administered by one or more committees (the "Committee") appointed by the Board
of Directors. While it is intended that the Human Resources and Planning
Committee will continue to administer the 1992 Plan to the extent required by,
and consistent with, Rule 16b-3 of the Exchange Act and Section 162(m) of the
Code, the 1996 Amendment will permit additional committees to make awards under
the plan. Given the significant increase in the number of potential recipients
under the plan, the Fleet Board believes this change is appropriate in order to
avoid the need for action by the Human Resources and Planning Committee with
respect to every individual grant.
Termination of Service. In order to provide greater administrative
flexibility, the 1996 Amendment allows the Committee discretion to determine for
each stock option award the extent to which the holder thereof (or his legal
representative) shall have the right to exercise the option following
termination of service, and permits the Committee to make distinctions based on
the reasons for the termination of service and any other relevant factors.
Similarly, under the 1996 Amendment, the Committee has discretion to determine
the extent to which the restrictions on any restricted stock award will lapse
upon termination of the holder's service due to death, disability, retirement or
for any other reason.
Accelerated Vesting. For similar reasons, if adopted, the 1996 Amendment
would permit the Committee to accelerate the time at which all or any part of
any outstanding stock option may be exercised.
Amendments. If the 1996 Amendment is approved, the 1992 Plan will provide
that the Committee may alter, amend or suspend the plan at any time or alter and
amend all awards granted thereunder; provided that no amendment of the plan may
adversely affect the right of a recipient of an award without such person's
consent. Further, no material amendment of the 1992 Plan may, without
stockholder approval thereof, become effective if such approval is required for
purposes of Rule 16b-3 under the Exchange Act.
27
<PAGE>
Effect of 1996 Amendment. The 1996 Amendment provides that, unless the
Committee otherwise determines, any amendment to the 1992 Plan effected by the
1996 Amendment shall not apply to any option outstanding on the date stockholder
approval is obtained if the holder of such option is subject to Section 16(a) of
the Exchange Act and the effect of such application would be to cause the option
to be deemed to have been regranted for purposes of Rule 16b-3 under the
Exchange Act.
Under the 1996 Amendment, the following limitations previously approved by
the stockholders at the 1994 Annual Meeting of Stockholders remain in full force
and effect:
(a) The total number of shares of restricted stock that may be awarded
under the 1992 Plan on a cumulative basis shall not exceed one percent of
the outstanding shares of Common Stock of the Corporation as of the date of
any such award. Based on the outstanding shares of Common Stock as of the
Record Date, one percent would equal approximately 2.6 million shares.
(b) In any fiscal year, the aggregate number of shares of Common Stock
as to which restricted stock awards may be granted to any one participant
shall not exceed 100,000.
(c) In any fiscal year, the aggregate number of shares of Common Stock
as to which stock options may be granted to any one participant shall not
exceed 325,000.
(d) In any fiscal year, the aggregate number of shares of Common Stock
as to which stock appreciation rights may be granted to any one participant
shall not exceed 325,000.
Stockholder Approval of the 1996 Amendment
The approval of the 1996 Amendment requires the affirmative of a majority of
Common Stock, present in person or represented by proxy, and entitled to vote
thereon at the Annual Meeting when a quorum is present.
As of the Record Date, the fair market value of the Common Stock was $41.19.
THE FLEET BOARD RECOMMENDS A VOTE "FOR" THIS PROPOSAL, WHICH IS IDENTIFIED
AS PROPOSAL 2 ON THE ENCLOSED PROXY CARD.
RATIFICATION OF THE SELECTION OF FLEET'S INDEPENDENT AUDITORS
The ratification of the selection of KPMG Peat Marwick LLP to serve as
independent auditors of Fleet for the current fiscal year ending December 31,
1996, will be submitted to the Annual Meeting. Representatives of KPMG Peat
Marwick LLP will be present at the Annual Meeting, will have the opportunity to
make a statement if they so desire and will be available to answer appropriate
questions.
The firm of KPMG Peat Marwick LLP has advised Fleet that neither it nor any
of its members has any direct financial interest in Fleet as a promoter,
underwriter, voting trustee, director, officer or employee. All professional
services rendered by KPMG Peat Marwick LLP during the year ended December 31,
1995 were furnished at customary rates.
The ratification of the selection of independent auditors requires the
affirmative vote of a majority of Common Stock, present in person or represented
by proxy, and entitled to vote thereon at the Annual Meeting when a quorum is
present.
THE FLEET BOARD RECOMMENDS A VOTE "FOR" THIS PROPOSAL, WHICH IS IDENTIFIED
AS PROPOSAL 3 ON THE ENCLOSED PROXY CARD.
28
<PAGE>
STOCKHOLDER PROPOSAL
The Corporation has been advised that a stockholder (the "Proponent"1)
intends to introduce the following resolution (the "Stockholder Proposal") at
the Annual Meeting for the reasons given:
Whereas the dividend is the first casualty in any economic downturn and the
stockholder is the first casualty and the last to benefit from an upturn, be it
Resolved: That when a dividend is cut, it is recommended that no salaries
will be increased or any stock options allowed until the dividend is restored to
its original amount before the cut.
The bullet must be large enough to enable the executives and employees as
well as the stockholders to get their teeth on it.
Board Recommendation
The Board strongly OPPOSES the Stockholder Proposal and recommends a vote
AGAINST it.
Fleet believes that approval and implementation of the Stockholder Proposal
is inadvisable and would be damaging to Fleet's ability to attract and retain
talented and committed executives and employees. Fleet's current compensation
practices include competitive salary and bonus opportunities designed to attract
highly qualified and experienced individuals to manage and work for Fleet. Fleet
also offers stock-based forms of compensation such as stock options which
provide Fleet with a valuable tool for linking management and shareholder
interests, thereby encouraging maximization of shareholder value. If
implemented, the Stockholder Proposal would eliminate Fleet's discretion in
matters of employee compensation and significantly reduce Fleet's ability to
compete with other financial services companies in attracting and retaining
executive officers, senior managers and other employees.
Although Fleet opposes the implementation of a rigid, inflexible
compensation rule, it recognizes that stockholders should not bear the sole cost
of adverse developments concerning Fleet's business. During difficult times,
Fleet has demonstrated its willingness to take actions that have impacted
directly on its officers and employees. For example, when Fleet reported a loss
in 1990 and cut its Common Stock dividend, Fleet also eliminated 1990 bonuses
for senior management, reduced merit increases in employees' salaries, delayed
salary reviews for officers, reduced corporate contributions to employee savings
plans, and reduced annual retainer fees for the Fleet Board. In other words,
Fleet's directors, officers and employees have been forced to "bite the bullet"
together with its stockholders. Fleet's decision to take the foregoing actions
was the product of careful consideration of complex compensation issues. Fleet
was able to respond in a thoughtful and decisive manner during the 1990 economic
downturn because it was not constrained by any flat prohibition like the one
suggested by the Proponent. Had such a proposal limiting Fleet's discretion been
implemented in 1990, it could have compromised Fleet's ability to attract and
retain talented individuals at precisely the time when the efforts of such
executives and employees were most critical to Fleet.
The Fleet Board notes that it recently increased Fleet's common stock
dividend for the sixth time in three years to $1.72 per share. Such increases
reflect Fleet's commitment to its stockholders that they should be among the
first to share in Fleet's improved earnings. For approval, the Stockholder
Proposal must receive the affirmative vote of a majority of Common Stock,
present in person or represented by proxy, and entitled to vote thereon at the
Annual Meeting when a quorum is present. Unless otherwise indicated, the persons
named in the proxy will vote all proxies AGAINST the Stockholder Proposal.
THE FLEET BOARD RECOMMENDS A VOTE "AGAINST" THIS PROPOSAL, WHICH IS
IDENTIFIED AS PROPOSAL 4 ON THE ENCLOSED PROXY CARD
- ------------
(1) The name and address of the Proponent and the number of shares of Common
Stock held by the Proponent will be furnished by Fleet to any person, orally
or in writing as requested, promptly upon the receipt of any oral or written
request therefor directed to the Secretary of the Corporation.
29
<PAGE>
SUBMISSION OF STOCKHOLDER PROPOSALS
Any stockholder who wishes to submit a proposal for presentation to the 1997
Annual Meeting of Stockholders must submit the proposal to Fleet Financial
Group, Inc., One Federal Street, Boston, Massachusetts 02211, Attention:
Secretary and General Counsel, not later than November 8, 1996 for inclusion, if
appropriate, in Fleet's Proxy Statement and the form of proxy relating to the
1997 Annual Meeting.
FINANCIAL STATEMENTS
The financial statements of the Corporation are contained in the 1996 Annual
Report to Stockholders, which has been provided to the stockholders concurrently
herewith. Such report and the financial statements contained therein are not to
be considered as a part of this soliciting material.
OTHER BUSINESS
Fleet management knows of no matters to be brought before the meeting other
than those referred to, but if any other business should properly come before
the meeting, the persons named in the proxy intend to vote in accordance with
their best judgment.
MISCELLANEOUS
The cost of solicitation of proxies, including the cost of reimbursing
brokerage houses and other custodians, nominees or fiduciaries for forwarding
proxies and Proxy Statements to their principals, will be borne by Fleet.
Solicitations may be made in person or by telephone or telegraph by officers or
regular employees of Fleet, who will not receive additional compensation
therefor. In addition, Fleet has retained Georgeson & Co., New York, N.Y., to
aid in the solicitation of proxies. The charges of such firm, estimated at
$15,000 excluding expenses, will be paid by Fleet.
Submitted by order of the Board of Directors,
WILLIAM C. MUTTERPERL
Secretary
Boston, Massachusetts
March 12, 1996
30
<PAGE>
APPENDIX A
FLEET FINANCIAL GROUP, INC.
AMENDED AND RESTATED 1992 STOCK OPTION AND RESTRICTED STOCK PLAN
1. Purpose
This Amended and Restated 1992 Stock Option and Restricted Stock Plan (the
"Plan") constitutes an amendment and restatement of the 1992 Stock Option and
Restricted Stock Plan which was adopted by the Board of Directors of Fleet
Financial Group, Inc. (the "Corporation") on January 15, 1992, and approved by
the stockholders of the Corporation on April 15, 1992, further amended on
February 16, 1994 and approved by the stockholders on April 20, 1994 (the "1994
Amendment"), and further amended on February 21, 1996 and approved by the
stockholders on April 17, 1996 (the "1996 Amendment"). The purpose of this Plan
is to advance the interests of the Corporation by enhancing the ability of the
Corporation and its subsidiaries to attract and retain officers, employees and
non-employee directors to the Corporation, to reward such individuals for their
contributions and to encourage them to take into account the long-term interests
of the Corporation through interests in the Corporation's Common Stock, $.01 par
value per share (the "Stock"). Any officer, director or employee selected to
receive an award under the Plan is referred to as a "participant".
The Plan provides for the grant of options to acquire Stock ("Options"),
which may be incentive options ("ISOs") within the meaning of the Internal
Revenue Code of 1986, as amended (the "Code"), and awards of Stock subject to
certain restrictions ("Restricted Stock"). Under the Plan, Restricted Stock
consists exclusively of (i) Stock subject to performance-based restrictions
intended to comply with the provisions of Section 162(m) of the Code
("Performance-Based Restricted Stock") and (ii) Stock awarded to non-employee
directors in lieu of some or all of the cash compensation such directors would
otherwise receive for their service as directors ("Non-employee Director
Restricted Stock"). Grants of Options and awards of Restricted Stock are
referred to herein as "Awards". The grant of an Option may also involve the
grant of stock appreciation rights as described in Section 6.
2. Administration
The Plan shall be administered, construed and interpreted by the Board of
Directors or by one or more committees appointed by the Board of Directors of
the Corporation (any such committee being hereafter referred to as the
"Committee"). The Committee shall have discretionary authority, not inconsistent
with the express provisions of the Plan, (a) to make Awards to such participants
as the Committee may select; (b) to determine the time or times when Awards
shall be granted and the number of shares of Stock subject to each Award; (c) to
determine which Options are, and which Options are not, intended to be ISOs; (d)
to determine the terms and conditions of each Award; (e) to prescribe the form
or forms of any instruments evidencing Awards and any other instruments required
under the Plan and to change such forms from time to time; (f) to adopt, amend,
and rescind rules and regulations for the administration of the Plan; and (g) to
interpret the Plan and to decide any questions and settle all controversies and
disputes that may arise in connection with the Plan. Such determinations of the
Committee shall be conclusive and shall bind all parties.
No member of the Board of Directors or the Committee shall be liable for any
action or determination made in good faith, and the members shall be entitled to
indemnification and reimbursement in the manner provided in the Corporation's
By-laws.
As used in the Plan, the "fair market value" of Stock as of any date shall
be the mean of the high and low sale prices of the shares of Stock on the
principal exchange on which the Stock is traded on such date or as the Committee
may otherwise determine.
A-1
<PAGE>
3. Eligibility
Persons eligible to receive Awards under the Plan shall be those key
employees and officers, who, in the opinion of the Committee, are in a position
to make a significant contribution to the success of the Corporation and its
subsidiaries. No person who beneficially owns five percent or more of the
outstanding Stock of the Corporation shall be eligible to participate in the
Plan, to exercise an Option previously granted to him or her or to take full
possession of Restricted Stock previously issued to him or her. A "subsidiary"
of the Corporation shall mean a corporation, whether domestic or foreign, in
which the Corporation shall own, directly or indirectly, a majority of the
capital shares entitled to vote at the annual meeting thereof. Non-employee
directors shall be eligible to receive Awards under the Plan in lieu of some or
all of the cash compensation they would otherwise receive for their service as
directors, to the extent that their eligibility for such Awards would not
disqualify them as disinterested persons for purposes of Rule 16b-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
4. Stock Subject to Awards
The Stock subject to Awards under the Plan shall be either authorized but
unissued shares or treasury shares. Subject to adjustment in accordance with the
provisions of Paragraph 5(g) and 7(e) hereof, the total number of shares (the
"Eligible Shares") of such Stock shall be 10,500,000 shares (the number of
shares authorized under the Plan prior to adoption of the 1996 Amendment) plus
an additional 13,000,000 shares. Subject to like adjustment, the total amount of
Stock as to which Options may be granted or Stock Awards may be issued to any
one person participating under the Plan shall not exceed in the aggregate that
number of shares equal to ten percent of the total amount of outstanding Stock
of the Corporation. Subject to like adjustment, the maximum number of shares
issuable upon the exercise of Options that are ISOs shall be 15,000,000.
In the event that any outstanding Option or Restricted Stock Award under the
Plan for any reason expires, is forfeited or is terminated prior to the end of
the period during which Awards may be made under the Plan, the shares of Stock
allocable to the unexercised portion of such Option or the portion of such
Restricted Stock Award that has terminated or been forfeited may again be
subject to award under the Plan. Shares of Stock delivered to the Corporation to
pay the exercise price of any Option or to satisfy the tax withholding
consequences of an Option exercise or the grant or vesting of Restricted Stock
shall again be subject to award under the Plan.
5. Terms and Conditions Applicable to all Options Granted Under the Plan
Options granted pursuant to the Plan shall be evidenced by agreements in
such form as the Committee shall, from time to time, approve, which agreements
shall in substance include and comply with and be subject to the following terms
and conditions:
a. Medium and Time of Payment
The exercise price of an Option shall be payable either (i) in United States
dollars in cash or by check, bank draft or money order payable to the order of
the Corporation, (ii) through the delivery of shares of Stock owned by the
optionee with a fair market value equal to the option price or (iii) by a
combination of (i) and (ii). Fair market value of Stock so delivered shall be
determined on the date of exercise. Unless the Committee otherwise determines,
an optionee may engage in a successive exchange (or series of exchanges) in
which Stock such optionee is entitled to receive upon exercise of an Option may
be simultaneously utilized as payment for the exercise of an additional Option
or Options.
To the extent permitted by applicable law, the Committee may permit payment
of the Option exercise price through arrangements with a brokerage firm under
which such firm, on behalf of the optionee, will pay the exercise price to the
Corporation and the Corporation will promptly deliver to such firm the number of
shares of Stock subject to the Option so that the firm may sell such shares, or
a portion thereof, for the account of the optionee. In addition, the Committee
may permit payment of the
A-2
<PAGE>
Option exercise price by delivery of an unconditional and irrevocable
undertaking by a broker to deliver promptly to the Corporation sufficient funds
to pay the exercise price as soon as the shares subject to the Option, or a
portion thereof, are sold on behalf of the optionee.
b. Numbers of shares
The Option shall state the total number of shares to which it pertains. No
Option may be exercised in part for fewer than ten shares. Subject to adjustment
as provided in Section 5(g), in any fiscal year of the Corporation, the
aggregate number of shares of Stock of the Corporation as to which Options may
be granted to any one participant shall not exceed 325,000.
c. Option Price
The exercise price of an Option shall be not less than the fair market value
of the shares of Stock covered by the Option on the date of grant except that
(i) in connection with an amendment of an Option which does not reduce the
exercise price of the Option but which, in the opinion of the Committee, is or
may be treated for tax or other technical purposes (including, in particular,
for purposes of Section 16 of the Exchange Act) as a new grant of the Option,
the exercise price of such amended Option may be less than the then fair market
value of the shares of Stock subject to such Option so long as such exercise
price is equal to or greater than the exercise price of the original Option, and
(ii) in connection with an acquisition, consolidation, merger or other
extraordinary transaction, Options may be granted at less than the then fair
market value in order to replace Options previously granted by one or more
parties to such transaction (or their affiliates) so long as the aggregate
spread on such replacement Options for any recipient of such Options is equal to
or less than the aggregate spread on the Options being replaced.
d. Expiration of Options
Each Option granted under the Plan shall expire on a date determined by the
Committee which date may not be more than ten years from the date the Option is
granted.
e. Date of Exercise
The Committee may, in its discretion, provide that an Option may not be
exercised in whole or in part for any period or periods of time specified by the
Committee. Except as may be so provided, any Option may be exercised in whole at
any time, or in part from time to time, during its term. In the case of an
Option not immediately exercisable in full, the Committee may at any time
accelerate the time at which all or any part of the Option may be exercised.
f. Termination of Service
The Committee shall, subject to the provisions of Section 5(d), determine
for each Award of an Option the extent to which the participant (or his legal
representative) shall have the right to exercise the Option following
termination of such participant's service to the Corporation or any subsidiary.
Such provisions may reflect distinctions based on the reasons for the
termination of service and any other relevant factors that the Committee may
determine.
g. Adjustments on Changes in Stock
The aggregate number of shares of Stock as to which Options may be granted
under the Plan, the aggregate number of shares of Stock as to which Options may
be granted to any one such participant, the number of shares of Stock covered by
each outstanding Option, and the exercise price per share of each outstanding
Option, shall be proportionately adjusted by the Committee for any increase or
decrease in the number of issued shares of Stock resulting from subdivisions or
consolidation of shares or other capital adjustments, the payment of a Stock
dividend or any other increase or decrease in such shares effected without
receipt of consideration by the Corporation; provided, however, that no such
adjustment shall be made unless and until the aggregate effect of all such
increases and decreases accruing after the effective date of the 1996 Amendment
shall have increased or decreased the number
A-3
<PAGE>
of issued shares of Stock by five percent or more; and provided further, that
any factional shares resulting from any such adjustment shall be eliminated. Any
such determination by the Committee shall be conclusive.
h. Assignability
Except as permitted by the Committee, Options shall be nontransferable
except by the laws of descent and distribution or pursuant to a qualified
domestic relations order. So long as nontransferability of an Option shall be
required to exempt the grant of an Option from the provisions of Section 16(b)
of the Exchange Act, no Option that the Committee intends to grant in a
transaction exempted from such Section may be assigned or transferred except by
will or by the laws of descent and distribution. So long as nontransferability
of ISOs is a requirement of the Code, unless the Committee specifies otherwise,
no Option granted as an ISO may be assigned or transferred except by will, by
the laws of descent and distribution or pursuant to a qualified domestic
relations order.
i. Rights as a Stockholder
An optionee shall have no rights as a stockholder with respect to shares
covered by an Option until the date the shares are issued and only after such
shares are fully paid. No adjustment will be made for dividends or other rights
the record date for which is prior to the date of such issuance.
j. Tax Withholding
The Committee shall have the right to require that the participant
exercising the Option remit to the Corporation an amount sufficient to satisfy
any federal, state, or local withholding tax requirements (or make other
arrangements satisfactory to the Committee with regard to such taxes) prior to
the delivery of any Stock pursuant to the exercise of the Option. If permitted
by the Committee, either at the time of the grant of the Option or in connection
with its exercise, the participant may elect, at such time and in such manner as
the Committee may prescribe, to satisfy such withholding obligation by (i)
delivering Stock having a fair market value equal to such withholding
obligation, or (ii) requesting that the Corporation withhold from the shares of
Stock to be delivered upon the exercise a number of shares of Stock having a
fair market value equal to such withholding obligation.
In the case of an ISO, the Committee may require as a condition of exercise
that the participant exercising the Option agree to inform the Corporation
promptly of any disposition (within the meaning of section 424(c) of the Code
and the regulations thereunder) of Stock received upon exercise.
k. Change in Control
Notwithstanding the provisions of any Option that provide for its exercise
in installments, such Option shall become immediately exercisable in the event
of a change in control or offer to effect a change in control. For purposes of
this Paragraph 5(k), a "change in control" shall mean either of the following
events; (a) the acquisition of the beneficial ownership (as that term is defined
in Rule 13d-3 under the Exchange Act) of 20 percent or more of the voting
securities of the Corporation by purchase, merger, consolidation or otherwise by
any person or by persons acting as a group within the meaning of Section 13(d)
of the Exchange Act; provided, however, a change in control shall not be deemed
to have occurred if the acquisition of such securities is by one or more
employee benefit plans of the Corporation or (b) in any two-year period,
individuals who at the beginning of such period constitute the Board of
Directors of the Corporation cease for any reason, to constitute at least a
majority of the Board of Directors of the Corporation at, or at any time prior
to the conclusion of, such two-year period. The term "person" refers to an
individual or a corporation, partnership, trust, association, joint venture,
pool, syndicate, sole proprietorship, unincorporated organization or any other
form of entity not specifically listed herein. The decision as to whether a
change in control or offer to effect a change in control has occurred shall be
made by a majority of the Continuing Directors (as defined in the Restated
Articles of Incorporation as in effect on February 21, 1996) and shall be
conclusive and binding.
A-4
<PAGE>
Notwithstanding Paragraph 8 of the Plan, this provision shall not be amended
or revoked in any manner without the affirmative vote of 80% of the Board of
Directors and a majority of the Continuing Directors (as defined above).
l. Additional Restrictions and Conditions
The Committee may impose such other restrictions and conditions (in addition
to those required by the provisions of this Plan) on any Award of Options
hereunder and may waive any such additional restrictions and conditions, so long
as (i) any such additional restrictions and conditions are consistent with the
terms of this Plan and (ii) such waiver does not waive any restriction or
condition required by the provisions of this Plan.
m. Repricing
The Committee shall not, without further approval of the stockholders of the
Corporation, (i) authorize the amendment of any outstanding Option to reduce the
exercise price of such Option or (ii) grant a replacement Option upon the
surrender and cancellation of a previously granted Option for the purpose of
reducing the exercise price of such Option. Nothing contained in this section
shall affect the Committee's right to make the adjustments permitted under
Section 5(g).
6. Stock Appreciation Rights
At the discretion of the Committee, a participant who has been granted an
Option may also be granted the right to require the Corporation to purchase all
or a portion of such Option for cancellation (a "stock appreciation right"). To
the extent that the participant exercises this right, the Corporation shall pay
him in cash and/or Stock the excess of the fair market value of each share of
Stock covered by the Option (or a portion thereof purchased), determined on the
date the election is made, over the exercise price of the Option. The election
shall be made by delivering written notice thereof to the Committee. Shares
subject to the Option so purchased shall not again be available for purposes of
the Plan. Subject to adjustment as provided in Section 5(g), in any fiscal year
of the Corporation, the aggregate number of shares of Stock as to which stock
appreciation rights may be granted to any one person participating under the
Plan shall not exceed 325,000.
7. Terms and Conditions Applicable to Restricted Stock Awards
Awards of Restricted Stock may be Performance-Based Restricted Stock, as
described in Section 7(i), or Non-employee Director Restricted Stock, as
described in Section 7(j). The provisions of Sections 7(a) through 7(h) are
applicable to all shares of Restricted Stock.
a. Number of Shares
The total number of shares of Restricted Stock that may be awarded under the
Plan on a cumulative basis shall not exceed one percent of the Stock of the
Corporation outstanding at the date of any such Award. In any fiscal year of the
Corporation, the aggregate number of shares of Stock as to which Restricted
Stock Awards may be granted to any one person participating under the Plan shall
not exceed 100,000.
Each Restricted Stock Award under the Plan shall be evidenced by a stock
certificate of the Corporation, registered in the name of the participant,
accompanied by an agreement in such form as the Committee shall prescribe from
time to time. The Restricted Stock Awards shall comply with the following terms
and conditions and with such other terms and conditions not inconsistent with
the terms of this Plan as the Committee, in its discretion, shall establish.
b. Stock Legends; Prohibition on Disposition
Certificates for shares of Restricted Stock shall bear an appropriate legend
referring to the restrictions to which they are subject, and any attempt to
dispose of any such shares of Stock in
A-5
<PAGE>
contravention of such restrictions shall be null and void and without effect.
The certificates representing shares of Restricted Stock shall be held by the
Corporation until the restrictions are satisfied.
c. Termination of Service
The Committee shall determine the extent to which the restrictions on any
Restricted Stock Award shall lapse upon the termination of the participant's
service to the Corporation and its subsidiaries, due to death, disability,
retirement or for any other reason. If the restrictions on all or any portion of
a Restricted Stock Award shall not lapse, the participant, or in the event of
his death, his personal representative, shall forthwith deliver to the Secretary
of the Corporation such instruments of transfer, if any, as may reasonably be
required to transfer the shares back to the Corporation.
d. Change in Control
Upon the occurrence of a change in control or an offer to effect a change in
control of the Corporation, as determined in Paragraph 5(k) of this Plan, all
restrictions then outstanding with respect to shares of Restricted Stock shall
automatically expire and be of no further force and effect and all certificates
representing such shares of Stock shall be delivered to the participant.
e. Adjustment for Changes in Stock
The Committee shall proportionately adjust the aggregate number of shares of
Stock as to which Restricted Stock Awards may be granted to participants under
the Plan and the aggregate number of shares of Stock as to which Restricted
Stock Awards may be granted to any one such person for any increase or decrease
in the number of issued shares of Stock resulting from the subdivision or
consolidation of shares or other capital adjustments, the payment of a stock
dividend, or any other increase or decrease in such shares without the payment
of consideration; provided, however, that no such adjustment shall be made
unless and until the aggregate effect of all such increases and decreases
accruing after the effective date of the 1996 Amendment shall have increased or
decreased the number of issued shares of Stock of the Corporation by five
percent or more; and provided, further, that any fractional shares resulting
from any such adjustment shall be eliminated. Any such determination by the
Committee shall be conclusive. Shares of Stock issued with respect to any
outstanding Awards as a result of any of the foregoing events shall be subject
to the same restrictions.
f. Effect of Attempted Transfer
No benefit payable or interest in any Restricted Stock Award shall be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge and any such attempted action shall be void and no
such interest in any Restricted Stock Award shall be in any manner liable for or
subject to debts, contracts, liabilities, engagements or torts of any
participant or his beneficiary. If any participant or beneficiary shall become
bankrupt or shall attempt to anticipate, alienate, sell, transfer, assign,
pledge, encumber or charge any benefit payable under or interest in any
Restricted Stock Award, then the Committee, in its discretion, may hold or apply
such benefit or interest or any part thereof to or for the benefit of such
participant or his beneficiary, his spouse, children, blood relatives or other
dependents, or any of them, in any such manner and such proportions as the
Committee may consider proper.
g. Payment of Taxes
The Corporation shall have the right to deduct from any Restricted Stock
Award or other payment hereunder any amount that federal, state, local or
foreign tax law requires to be withheld with respect to such Award or payment or
to require that the participant, prior to or simultaneously with the Corporation
incurring any obligation to withhold any such amount, pay such amount to the
Corporation in cash or, at the option of the Corporation, shares of Stock (which
shall be valued at the fair market value on the date of payment). There is no
obligation under the Plan that any participant be advised of the existence of
the tax or the amount required to be withheld. Without limiting the generality
of the foregoing, in any case where it is determined that tax is required to be
withheld in connection with the
A-6
<PAGE>
issuance, transfer or delivery of shares of Stock under this Plan, the
Corporation may, pursuant to such rules as the Committee may establish, reduce
the number of shares so issued, transferred or delivered by such number of
shares as the Corporation may deem appropriate in its sole discretion to comply
with such withholding. Notwithstanding any other provision of this Plan, the
Committee may impose such conditions on the payment of any withholding
obligations as may be required to satisfy applicable regulatory requirements,
including without limitation, those under the Exchange Act.
h. Rights as a Stockholder
A participant shall have the right to receive dividends on shares of Stock
subject to the Restricted Stock Award during the applicable Restricted Period,
to vote the Stock subject to the award and to enjoy all other stockholder
rights, except that the employee shall not be entitled to delivery of the stock
certificate until the applicable Restricted Period shall have lapsed (if at
all).
i. Performance-Based Restricted Stock
Awards of Performance-Based Restricted Stock are intended to qualify as
performance-based for the purposes of Section 162(m) of the Code. The Committee
shall provide that shares of Stock issued to a participant in connection with an
Award of Performance-Based Restricted Stock may not be sold, assigned,
transferred, pledged, hypothecated or otherwise disposed of, except by will or
the laws of descent and distribution, for such period as the Committee shall
determine, beginning on the date on which the Award is granted (the "Restricted
Period") and that the Restricted Period applicable to such Restricted Stock
shall lapse (if at all) only if certain preestablished objectives are attained.
Performance goals may be based on any of the following criteria: (i) earnings or
earnings per share, (ii) return on equity, (iii) return on assets, (iv)
revenues, (v) expenses, (vi) one or more operating ratios, (vii) stock price,
(viii) stockholder return, (ix) market share, (x) charge-offs, (xi) credit
quality, (xii) reductions in non-performing assets, (xiii) customer satisfaction
measures and (xiv) the accomplishment of mergers, acquisitions, dispositions or
similar extraordinary business transactions. The Committee shall establish one
or more objective performance goals for each such Award of Restricted Stock on
the date of grant. The performance goals selected in any case need not be
applicable across the Corporation, but may be particular to an individual's
function or business unit. The Committee shall determine whether such
performance goals are attained and such determination shall be final and
conclusive. In the event that the performance goals are not met, the Restricted
Stock shall be forfeited and transferred to, and reacquired by, the Corporation
at no cost to the Corporation.
The Committee may impose such other restrictions and conditions (in addition
to the performance-based restrictions described above) on any Award of shares of
Performance-Based Restricted Stock as the Committee deems appropriate and may
waive any such additional restrictions and conditions, so long as such waiver
does not waive any restriction described in the previous paragraph. Nothing
herein shall limit the Committee's ability to reduce the amount payable under an
Award upon the attainment of the performance goal(s), provided, however, that
the Committee shall have no right under any circumstance to increase the amount
payable under, or waive compliance with, any applicable performance goal(s).
j. Non-employee Director Restricted Stock
Awards of Non-employee Director Restricted Stock shall be made exclusively
to directors of the Corporation who are not employees of the Corporation or any
of its subsidiaries. The Committee shall provide that shares issued in
connection with an Award of Non-employee Director Restricted Stock may not be
sold, assigned, transferred, pledged, hypothecated or otherwise disposed of,
except by will or the laws of descent and distribution, until the earlier of (i)
the director's retirement as a director of the Corporation at or after the
retirement age specified in the Corporation's By-laws, (ii) the director's death
or total and permanent disability or (iii) the director's resignation from the
Board of Directors of the Corporation with the consent of such Board. Shares of
Non-employee Director Restricted Stock may be awarded only in lieu of cash
compensation that would otherwise have been payable to the
A-7
<PAGE>
director receiving such Award and such cash compensation shall be reduced by the
fair market value of the shares of Stock so awarded on the date of such Award.
The Committee may impose such other restrictions and conditions (in addition
to the restrictions described above) on any Award of shares of Non-employee
Director Restricted Stock as the Committee deems appropriate and may waive any
such additional restrictions and conditions applicable to such shares so long as
such waiver does not waive any restriction described in the preceding paragraph.
8. Amendment; Applicability to Outstanding Options
The Committee may alter, amend or suspend the Plan at any time or alter and
amend Awards granted hereunder; provided, however, that no such amendment may,
without the consent of any participant to whom an Option shall theretofore have
been granted or to whom a Restricted Stock Award shall theretofore have been
issued, adversely affect the right of such participant under such Award. Unless
the Committee otherwise determines, any amendment to this Plan effected by the
1996 Amendment shall not apply to any Option outstanding on the date of
stockholder approval of the 1996 Amendment held by a participant subject to
Section 16(a) of the Exchange Act if the effect of such application would be to
cause the Option to be deemed to have been regranted for purposes of Rule 16b-3
under the Exchange Act, and provided, further, that no material amendment of the
Plan may, without stockholder approval thereof, become effective if such
approval is required for purposes of Rule 16b-3 under the Exchange Act.
9. Termination
Options and Restricted Stock Awards may be granted pursuant to the Plan from
time to time within a period of ten years from January 15, 1992. The Board of
Directors may terminate the Plan at any time, and no Options shall be granted
nor Restricted Stock awarded thereafter. Such termination shall not affect the
validity of any Award then outstanding.
10. Legality of Grant
The granting of any Award under this Plan and the issuance or transfer of
Options and shares of Stock pursuant hereto are subject to all applicable
federal and state laws, rules and regulations and to such approvals by any
regulatory or government agency (including, without limitation, no-action
positions of the Securities and Exchange Commission) which may, in the opinion
of counsel for the Corporation, be necessary or advisable in connection
therewith. Without limiting the generality of the foregoing, no Awards may be
granted under this Plan and no Options or shares shall be issued by the
Corporation, nor cash payments made by the Corporation pursuant to or in
connection with any such Award unless and until in any such case all legal
requirements applicable to the issuance or payment have, in the opinion of
counsel for the Corporation, been complied with. In connection with any Option
or Stock issuance or transfer, the person acquiring the shares or the Option
shall, if requested by the Corporation, give assurance satisfactory to counsel
to the Corporation with respect to such matters as the Corporation may deem
desirable to assure compliance with all applicable legal requirements.
11. Effective Date
The 1996 Amendment shall become effective upon the adoption thereof by the
affirmative vote of a majority of Stock, present in person or represented by
proxy, and entitled to vote thereon at the 1996 Annual Meeting of Stockholders
when a quorum is present.
A-8
<PAGE>
Appendix B
FLEET FINANCIAL GROUP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints John T. Collins, James F. Hardymon and
Raymond C. Kennedy, or any one or more of them, attorneys with full power of
substitution to each for and in the name of the undersigned, with all powers the
undersigned would possess if personally present to vote the Common Stock of the
undersigned in Fleet Financial Group, Inc. ("Fleet") at the Annual Meeting of
its stockholders to be held April 17, 1996 or any adjournment or postponement
thereof.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU INSTRUCT THE PROXIES TO VOTE FOR
ALL OF THE NOMINEES LISTED BELOW.
1. ELECTION OF DIRECTORS:
FOR all nominees listed below (except
marked to the contrary below) / / AGAINST all nominees listed below / /
NOMINEES:
Three-year terms: Paul J. Choquette, Jr., Bernard M. Fox, Robert M. Kavner,
Thomas D. O'Connor, Michael B. Picotte, John S. Scott and Paul
R. Tregurtha;
Two-year terms: Stillman B. Brown and Lois D. Rice; and
One-year term: Robert J. Matura
(INSTRUCTION: TO VOTE AGAINST ANY INDIVIDUAL NOMINEE, WRITE THAT NOMINEE'S NAME
IN THE SPACE PROVIDED BELOW.)
- --------------------------------------------------------------------------------
2. To approve the Amended and Restated 1992 Stock Option and Restricted Stock
Plan, as described in the accompanying Proxy Statement.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU INSTRUCT THE PROXIES TO VOTE FOR
PROPOSAL NO. 2.
/ / FOR / / AGAINST / / ABSTAIN
3. To ratify the selection of KPMG Peat Marwick LLP as independent auditors
of Fleet for the fiscal year ending December 31, 1996.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU INSTRUCT THE PROXIES TO VOTE FOR
PROPOSAL NO. 3.
/ / FOR / / AGAINST / / ABSTAIN
4. To approve the stockholder proposal, as described in the accompanying
Proxy Statement.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU INSTRUCT THE PROXIES TO VOTE
AGAINST PROPOSAL NO. 4.
/ / FOR / / AGAINST / / ABSTAIN
5. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment or
postponement thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSAL NOS. 1, 2 AND 3, AND AGAINST PROPOSAL NO. 4.
(continued on reverse side)
<PAGE>
Please sign exactly as name appears below. When shares Dated:,_________ 1996
are held in more than one name, including joint
tenants, each party should sign. When signing as _____________________
attorney, executor, administrator, trustee or guardian, Signature
please give full title as such.
_____________________
Signature, if held
jointly
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
