<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/X/ Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
FLEET FINANCIAL GROUP, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[LOGO]
One Federal Street
Boston, Massachusetts 02110
March 3, 1997
Dear Stockholder:
I am pleased to invite you to the 1997 Annual Meeting of Stockholders of Fleet
Financial Group, Inc. ("Fleet"), which will be held on Wednesday, April 16,
1997, at 11:00 a.m. at the Sheraton Boston Hotel & Towers, 39 Dalton Street,
Boston, Massachusetts.
The accompanying Notice of Annual Meeting of Stockholders and proxy statement
contain the matters to be considered and acted upon. Please read these materials
carefully.
Matters scheduled for consideration at the Annual Meeting are the election of
directors and the ratification of the selection of independent auditors for
1997.
I hope you will be able to attend the meeting, but if you cannot do so, it is
important that your shares be represented and voted. ACCORDINGLY, I URGE YOU TO
MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE RETURN ENVELOPE
PROVIDED.
Very truly yours,
[LOGO]
TERRENCE MURRAY
CHAIRMAN, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
<PAGE>
FLEET FINANCIAL GROUP, INC.
ONE FEDERAL STREET
BOSTON, MASSACHUSETTS 02110
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 16, 1997
The Annual Meeting of Stockholders of Fleet Financial Group, Inc., a Rhode
Island corporation ("Fleet"), will be held on Wednesday, April 16, 1997, at
11:00 a.m. at the Sheraton Boston Hotel & Towers, 39 Dalton Street, Boston,
Massachusetts for the purpose of considering and voting upon:
1. The election of six directors for three-year terms.
2. The ratification of the selection of KPMG Peat Marwick LLP as independent
auditors for Fleet for 1997.
3. The transaction of such other business as may properly come before the
Annual Meeting.
The record date for determining stockholders entitled to notice of, and to vote
at, the Annual Meeting is the close of business on February 19, 1997. Fleet's
transfer books will not be closed.
By Order of the Board of Directors,
[LOGO]
WILLIAM C. MUTTERPERL
SECRETARY
Boston, Massachusetts
March 3, 1997
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, DATE, SIGN AND MAIL THE ENCLOSED PROXY
AT YOUR EARLIEST CONVENIENCE, USING THE RETURN ENVELOPE ENCLOSED WITH THE PROXY.
IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF
YOU HAVE PREVIOUSLY RETURNED YOUR PROXY.
<PAGE>
FLEET FINANCIAL GROUP, INC.
ONE FEDERAL STREET
BOSTON, MA 02110
TELEPHONE 617-292-2000
-------------------
1997 ANNUAL MEETING OF STOCKHOLDERS
-------------------
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors ("Fleet Board") of
Fleet Financial Group, Inc. ("Fleet" or the "Corporation") in connection with
the Annual Meeting of Stockholders to be held on April 16, 1997. This proxy
statement and the enclosed proxy are first being sent to stockholders on or
about March 3, 1997. The proxy will be voted at the Annual Meeting in accordance
with the instructions indicated on the proxy by the stockholder. 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 and 2.
The record date for determining stockholders entitled to vote at the Annual
Meeting is the close of business on February 19, 1997. On this date, there were
outstanding and entitled to vote 255,633,832 shares of Common Stock, each of
which 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 there is a quorum.
Management is not aware of any matter to be considered at the Annual Meeting
other than the election of six directors and the ratification of auditors. If
any other business should properly come before the Annual Meeting, the persons
named in the proxy will vote according to their best judgment.
VOTING PROCEDURES
The affirmative vote of a majority of the shares of Common Stock represented at
the Annual Meeting and entitled to vote is required to elect directors and to
ratify the selection of auditors. In voting for the election of directors,
stockholders may cast their votes in favor or against, but abstentions may not
be specified. Abstentions may be specified with respect to the ratification of
the selection of independent auditors. Unless a broker's authority to vote on a
particular matter is limited, broker non-votes are counted in determining the
votes present and entitled to vote at a meeting. Abstentions also are counted
for this purpose. Consequently, a broker non-vote or an abstention has the same
effect as a vote against a proposal, as each broker non-vote or abstention would
be one less vote in favor of a proposal. Since a broker's authority is not
limited with respect to Proposal Nos. 1 and 2, Fleet does not expect to receive
any broker non-votes with respect to the Annual Meeting.
A stockholder of record may revoke a proxy by delivering written notice of
revocation to William C. Mutterperl, Secretary of Fleet, at the address set
forth above, by filing a duly executed proxy bearing a later date, or by
attending 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 the shares
to vote in person at the Annual Meeting.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table lists all stockholders known by Fleet to own beneficially
more than 5% of the 261,992,124 shares of Common Stock outstanding as of
December 31, 1996:
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP CLASS
- ---------------------------------------------------------------------------- ---------------------- ------------
<S> <C> <C>
KKR Associates(1)........................................................... 26,385,890(1) 9.83%(1)
9 West 57th Street
New York, NY 10019
FMR Corp.(2)................................................................ 25,379,965(2) 9.69%(2)
82 Devonshire Street
Boston, MA 02109
The Capital Group Companies, Inc. (3)....................................... 18,677,960(3) 7.13%(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 Securities and Exchange
Commission ("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. For purposes of
calculating the percent of Common Stock beneficially owned, the number of
shares of Common Stock deemed to be outstanding includes 6,500,000 shares
that may be issued upon exercise of the Rights described above.
(2) FMR Corp. ("FMR") filed a Schedule 13G with the Commission dated February
14, 1997 stating that FMR is a beneficial owner of 25,379,965 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 772,441 of the shares, shared voting power with
respect to 25,514 of the shares, sole dispositive power with respect to
25,378,965 of the shares, and shared dispositive power with respect to
25,514 of the shares.
(3) The Capital Group Companies, Inc. ("The Capital Group") filed a Schedule 13G
with the Commission dated February 12, 1997 stating that The Capital Group
is a beneficial owner of 18,677,960 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 3,167,510 of the shares
and sole dispositive power with respect to 18,677,960 of such shares.
2
<PAGE>
ELECTION OF DIRECTORS
As of the date of this proxy statement, 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 only one class is elected in any one year. Six
directors are to be elected at the Annual Meeting to serve until the 2000 Annual
Meeting and until their successors are elected and have qualified. Such nominees
are William Barnet, III, John T. Collins, Raymond C. Kennedy, Robert J. Matura,
Terrence Murray and Samuel O. Thier, and proxies cannot be voted for a greater
number of persons than the number of nominees named. John S. Scott will retire
at the Annual Meeting and, under Rhode Island law, the Fleet Board may elect a
successor to fill Mr. Scott's unexpired term. Directors generally are elected by
the affirmative vote of a majority of Common Stock, present in person or
represented by proxy, and entitled to vote at the Annual Meeting when there is a
quorum.
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 the 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 2000
William Barnet, III PRESIDENT AND CHIEF EXECUTIVE OFFICER, WILLIAM BARNET & SON, INC.
54 Mr. Barnet has been President and Chief Executive Officer of William Barnet & Son,
Executive Committee; Inc., a synthetic fiber processing company, since 1976. He also serves on the boards of
Risk Management numerous civic and business entities, including the Palmetto Business Forum, the South
Committee; Employee Carolina Textile Manufacturers Association, Spartanburg County Foundation, Converse
Development and Public College and Spartan Mills. A graduate of Dartmouth College and its Amos Tuck School of
Policy Committee Business Administration, Mr. Barnet became a Fleet director in 1988, having served as a
director of Norstar Bancorp Inc. ("Norstar") since 1984.
John T. Collins CHAIRMAN AND CHIEF EXECUTIVE OFFICER, THE COLLINS GROUP, INC.
50 Mr. Collins is Chairman and Chief Executive Officer of The Collins Group, Inc.
Executive Committee; Previously, Mr. Collins was President and Chief Executive Officer of Quebecor Printing,
Human Resources and (USA) Corp. Mr. Collins joined Quebecor Printing, (USA) Corp in 1990. From 1986 to 1990
Planning Committee he served as President and Chief Executive Officer of Quebecor America, Inc. Mr.
Collins is an advisory board member of Pell Rudman Venture Partners, a board member of
the National Association of Printers and Lithographers, Vice Chairman of the board of
trustees of Bentley College, and a trustee of Beth Israel Deaconess Medical Center and
the Massachusetts Chapter of the Leukemia Society of America. Mr. Collins also is on
the advisory council of Junior Achievement of Northern New England. Elected to the
Fleet Board in 1995, Mr. Collins previously served as a Shawmut National Corporation
("Shawmut") director since 1992 and a director of two Shawmut banking subsidiaries
since 1992 and 1987, respectively. A director of Fleet National Bank ("FNB") since
1995, Mr. Collins also serves on the Executive Committee and Risk Management Committee
for the FNB Board of Directors.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
NOMINEE, AGE AND PRINCIPAL OCCUPATION AND
COMMITTEE MEMBERSHIP OTHER INFORMATION
- ------------------------
TERMS EXPIRING IN 2000
<C> <S>
Raymond C. Kennedy CHAIRMAN, KENDELL HOLDINGS INC.
68 Chairman since 1985 of Kendell Holdings Inc., a personal holding company, Mr. Kennedy
Audit Committee was Chief Executive Officer and Publisher of the Hudson (N.Y.) Register-Star, a daily
newspaper, from 1956 to 1985. He is past President of the New York State Publishers
Association, a former member of the Governmental Relations Committee of the American
Newspaper Publishers Association, a former director of Jackson Newspapers (New Haven,
CT), past 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. A Georgetown University graduate, Mr. Kennedy joined the Fleet Board in 1988,
having served as a Norstar director since 1982.
Robert J. Matura CHAIRMAN AND CHIEF EXECUTIVE OFFICER, ROBERT J. MATURA ASSOCIATES AND TREEFORT FELLOWS
63 Mr. Matura has held his present position since June 1992. From July 1988 to May 1992 he
Vice Chairman, served as Chairman, President and Chief Executive Officer of The William Carter
Audit Committee Company, a manufacturer of infants' and childrens' apparel. From July 1986 through June
1988 he served, pro bono, as Chief Executive Officer and Chancellor of Sacred Heart
University. From March 1976 to June 1986 Mr. Matura was Chief 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., a women's shoe manufacturer,
and a director of EMI and Ed Mitchell's, Inc., a 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 merger of Shawmut ("Shawmut Merger") with Fleet, Mr. Matura
served as a director of Shawmut since 1992. He also served on the boards of two Shawmut
banking subsidiaries from 1989 until 1995. Prior to Shawmut's merger with Hartford
National Corporation ("Hartford National"), Mr. Matura served as a Hartford National
director from 1984 until 1989.
Terrence Murray CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER, FLEET FINANCIAL GROUP, INC.
57 Mr. Murray joined FNB in 1962, became President of Fleet in 1978, and was named
Executive Committee Chairman, President and Chief Executive Officer in 1982. He has continued to serve in
that capacity, except in 1988 following the Norstar acquisition when he served as
President and Chief Operating Officer, and following the Shawmut Merger until December
1996, when Mr. Murray served as President and Chief Executive Officer. Mr. Murray is a
director of A.T. Cross Company, Allmerica Financial Corporation and CVS Corporation. He
also serves as a trustee of Brown University and Rhode Island School of Design, is a
director of the International Monetary Conference and is a member of the Board of
Overseers of the Museum of Fine Arts Boston. A graduate of Harvard University, Mr.
Murray has served on the Fleet Board since 1976.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
NOMINEE, AGE AND PRINCIPAL OCCUPATION AND
COMMITTEE MEMBERSHIP OTHER INFORMATION
- ------------------------
TERMS EXPIRING IN 2000
<C> <S>
Samuel O. Thier PRESIDENT, MASSACHUSETTS GENERAL HOSPITAL CORPORATION; CHIEF EXECUTIVE OFFICER,
59 PARTNERS HEALTH CARE SYSTEM; PROFESSOR OF MEDICINE, HARVARD MEDICAL SCHOOL
Audit Committee 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 1985 to 1991, Dr. Thier was
President of the Institute of Medicine, National Academy of Sciences. He is a director
of Merck & Company and WGBH-TV (Boston), and a trustee of Brandeis University, Cornell
University and the Boston Museum of Science. Elected a Fleet director in 1995, Dr.
Thier served as a Shawmut director since 1994.
</TABLE>
DIRECTORS CONTINUING IN OFFICE
<TABLE>
<CAPTION>
DIRECTOR, AGE AND PRINCIPAL OCCUPATION AND
COMMITTEE MEMBERSHIP OTHER INFORMATION
- ------------------------
<C> <S>
TERMS EXPIRING IN 1998
Joel B. Alvord RETIRED CHAIRMAN, FLEET FINANCIAL GROUP, INC.
58 Mr. Alvord began his 33 year banking career in 1963 with Hartford National Bank. He
Chairman, Executive became an officer in 1965 and in 1978 was elected President and a director of both the
Committee; Co-Chairman, bank and its parent holding company, Hartford National. In 1986 he was elected Chief
Employee Development Executive Officer and continued in that capacity through the merger of Hartford
and Public Policy National and Shawmut Corporation into Shawmut in 1988. With the Shawmut Merger in
Committee November 1995, Mr. Alvord was named Chairman of Fleet and served in that capacity until
his retirement in December 1996. 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 Cuno Incorporated. He
also serves as a director of The Wang Center for the Performing Arts and the Harvard
Eating Disorders Center. He is a member of the Board of Overseers of the Museum of Fine
Arts Boston, and a member of the Boston Symphony Orchestra. Mr. Alvord graduated from
Dartmouth College and received an MBA from the Amos Tuck School of Business
Administration in 1961. He has served as a Fleet director since 1995.
Bradford R. Boss CHAIRMAN, A.T. CROSS COMPANY
63 Mr. Boss joined A.T. Cross Company, a manufacturer of writing instruments, in 1958,
Human Resources and became President in 1971, was elected Chairman and Chief Executive Officer in 1979, and
Planning Committee became Chairman in April 1993. A former member of the Board of Governors of the
American Stock Exchange, he also has served as President and Chairman of the Writing
Instrument Manufacturers Association. Mr. Boss is a graduate of the University of Rhode
Island, and was elected to the Fleet Board in 1976.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR, AGE AND PRINCIPAL OCCUPATION AND
COMMITTEE MEMBERSHIP OTHER INFORMATION
- ------------------------
<C> <S>
TERMS EXPIRING IN 1998
Stillman B. Brown PRESIDENT, HARCOTT CORPORATION
63 President of Harcott Corporation since 1987, Mr. Brown previously was Executive Vice
Chairman, Risk President, Chief Financial Officer and a director of United Technologies Corporation,
Management Committee; where he served in a variety of executive positions from 1978 to 1986. He is a director
Executive Committee of The Stanley Works, and past Chairman of the Board of Regents of the University of
Hartford. Mr. Brown became a director of Fleet in 1995, having served as a Shawmut
director since 1987. Mr. Brown also served as a Shawmut banking subsidiary director
from 1979 to 1988.
James F. Hardymon CHAIRMAN AND CHIEF EXECUTIVE OFFICER, TEXTRON INC.
62 Mr. Hardymon joined Textron Inc., a diversified manufacturing company, in December 1989
Chairman, Human as President and Chief Operating Officer, at which time he was named to the Textron
Resources and Board of Directors. In 1992, he was elected Chief Executive Officer and, in 1993, was
Planning Committee; elected Chairman. He has been a trustee of the University of Kentucky since 1991, and a
Executive Committee director of the Paul Revere Corporation since 1993. Mr. Hardymon received his
Bachelor's and Master's degrees in civil engineering from the University of Kentucky,
and has served on the Fleet Board since 1991.
Arthur C. Milot PRIVATE INVESTOR
64 Mr. Milot was President of Brewster Lumber Company, a supplier of building materials
Executive Committee; and household appliances, from 1969 to 1986. He is a director of Benodet Insurance Co.,
Audit Committee Ltd. and Philan Insurance Co., Ltd., and served as a director of various Fleet banking
subsidiaries from 1969 to 1995. A Harvard University graduate, Mr. Milot has been a
Fleet director since 1976.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR, AGE AND PRINCIPAL OCCUPATION AND
COMMITTEE MEMBERSHIP OTHER INFORMATION
- ------------------------
<C> <S>
TERMS EXPIRING IN 1998
Lois D. Rice GUEST SCHOLAR, THE BROOKINGS INSTITUTION
64 Mrs. Rice joined The Brookings Institution in 1991. From 1981 to 1991 she was a
Co-Chairman, Employee director and Senior Vice President of Government Affairs at Control Data Corporation.
Development and Public Mrs. Rice is a director of International Multifoods, McGraw Hill Companies, The
Policy Committee; Audit Hartford Steam Boiler Inspection and Insurance Company, Unum Corp., the Center for
Committee Naval Analysis, the Public Agenda Foundation and The Harry Frank Guggenheim Foundation.
She also is a trustee of The Urban Institute, and 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.
John R. Riedman CHAIRMAN, RIEDMAN CORPORATION
68 Mr. Riedman was President of Riedman Corporation, which is engaged in the property and
Chairman, Audit casualty insurance marketing and real estate development businesses, for 25 years until
Committee he became Chairman in 1991. He also serves as Treasurer and past Chairman of the
Rochester Chamber of Commerce and Chairman of the Monroe County Airport Advisory
Committee. Mr. Riedman is a director of Rochester Public Radio (WXXI) and a trustee of
St. John Fisher College and of Genesee Hospital. He also is a member of the National
Association of Surety Bond Producers and the Nominating Committee of the United Way of
Rochester. A Norstar director since 1985, Mr. Riedman became a Fleet director in 1988.
TERMS EXPIRING IN 1999
Paul J. Choquette, Jr. PRESIDENT, GILBANE BUILDING COMPANY
58 Mr. Choquette has been President and director of Gilbane Building Company, a building
Executive Committee; construction company, since 1981 after having served as Executive Vice President since
Risk 1975. He also is Chairman of the Board of Directors of Gilbane Properties, Inc., a real
Management Committee estate development and management company, a director of Carlisle Corporation and The
Rhode Island Foundation and a trustee of Eastern Utilities Associates. Mr. Choquette
serves as a trustee emeritus of Brown University, a director of the National Conference
of Christians and Jews, a director of the President's Council of Providence College and
a past President and member of Narragansett Council, Boy Scouts of America. A graduate
of Brown University and Harvard Law School, Mr. Choquette was elected to the Fleet
Board in 1982.
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR, AGE AND PRINCIPAL OCCUPATION AND
COMMITTEE MEMBERSHIP OTHER INFORMATION
- ------------------------
<C> <S>
TERMS EXPIRING IN 1999
<CAPTION>
<C> <S>
Bernard M. Fox CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER, NORTHEAST UTILITIES
54 Mr. Fox has served as Chairman, President, Chief Executive Officer and a trustee of
Risk Management Northeast Utilities since August 1995. From July 1993 to July 1995, he served as
Committee President and CEO and, prior to that, served as President and Chief Operating and
Financial Officer. Mr. Fox is a director of The Dexter Corporation and CIGNA
Corporation, Chairman of the Connecticut Business and Industry Association, and a
director of the Institute of Nuclear Power Operations, Edison Electric Institute, Mount
Holyoke College and Hartford Hospital. In addition, he is a fellow and founder of the
American Leadership Forum. Mr. Fox became a Fleet director in 1995 in connection with
the Shawmut Merger, having served as a Shawmut director since 1993. Mr. Fox also served
as a director of two Shawmut banking subsidiaries from 1988 to 1994, and 1992 to 1994,
respectively.
Robert M. Kavner PRESIDENT AND CHIEF EXECUTIVE OFFICER, ON COMMAND CORP.
53 Mr. Kavner has served as President, Chief Executive Officer and a director of On
Risk Management Command Corp., a provider of in-room video services to the lodging industry, since
Committee September 1996. From July 1994 until August 1996, Mr. Kavner provided consulting
services to the communications and media industries first as an executive of Creative
Artists Agency, Inc. and then as Managing Director of Kavner & Associates. For ten
years prior to that, Mr. Kavner held various positions at American Telephone and
Telegraph ("AT&T"), including Senior Vice President and Chief Financial Officer since
1984. He became a member of AT&T's Executive Committee in 1989, and in 1993 was named
Chief Executive Officer of the Multimedia Product and Services Group of AT&T. He
previously was a partner of Coopers & Lybrand, an international accounting firm, for 10
years. Mr. Kavner is a director of Ascent Entertainment Inc., Tandem Computers, Inc.
and Earthlink Networks, Inc. Mr. Kavner was elected to the Fleet Board in 1986.
Thomas D. O'Connor CHAIRMAN AND CHIEF EXECUTIVE OFFICER, MOHAWK PAPER MILLS, INC.
66 Mr. O'Connor has been Chairman and Chief Executive Officer of Mohawk Paper Mills, Inc.,
Human Resources and a paper manufacturer, since 1971. He is a trustee of Siena College and a director of
Planning Committee the Institute of Paper Science and Technology. Mr. O'Connor is a former board member of
St. Gregory's School for Boys and Emma Willard School. A Yale University graduate, Mr.
O'Connor was elected a Norstar director in 1984, and joined the Fleet Board in 1988.
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR, AGE AND PRINCIPAL OCCUPATION AND
COMMITTEE MEMBERSHIP OTHER INFORMATION
- ------------------------
<C> <S>
TERMS EXPIRING IN 1999
<CAPTION>
<C> <S>
Michael B. Picotte MANAGING GENERAL PARTNER AND CHIEF EXECUTIVE OFFICER, THE PICOTTE COMPANIES
49 Mr. Picotte is a Managing General Partner and Chief Executive Officer of the real
Vice Chairman, Risk estate ownership and management entities comprising The Picotte Companies, Albany, New
Management Committee; York, having worked for these entities since 1970. He serves on the board of directors
Executive Committee of various educational and public service organizations, including The Center for
Economic Growth and the Albany Institute of History and Art and is a Board member and
past Chairman of St. Peter's Hospital. Mr. Picotte also has served on the Governor's
Real Estate Advisory Board of the State of New York and as a trustee of WMHT-TV (PBS)
and the College of St. Rose. He is a graduate of Villanova University and the OPM
Program of the Harvard University Graduate School of Business, and was elected to the
Fleet Board in 1989.
Paul R. Tregurtha CHAIRMAN AND CHIEF EXECUTIVE OFFICER, MORMAC MARINE GROUP, INC.; CHAIRMAN, MORAN
61 TRANSPORTATION COMPANY
Executive Committee; Mr. Tregurtha joined Mormac Marine Group, a marine shipping business, in 1988 and Moran
Human Resources and Transportation, a tug and barge shipping business, in July 1994. Prior to that, he
Planning Committee served as Chairman, President and Chief Executive Officer of Moore McCormack Resources,
Inc. He is a director of Mormac Marine Group, a director and Vice Chairman of Interlake
Holding Company and Lakes Shipping Company, Inc., and a director of Brown & Sharpe
Manufacturing Company and FPL Group, Inc. Mr. Tregurtha is a trustee of Teachers
Insurance and Annuity Association of America and a trustee emeritus of Cornell
University. He became a Fleet director in 1995, having served as a Shawmut director
since 1987. Mr. Tregurtha also served as a director of a Shawmut banking subsidiary
from 1979 to 1988.
</TABLE>
CERTAIN INFORMATION REGARDING THE BOARD OF DIRECTORS
MEETINGS AND COMMITTEES
During 1996, the Fleet Board met ten times, and committees of the Board met
as follows: the Executive Committee met once, the Audit Committee met five
times, the Employee Development and Public Policy Committee met twice, the Human
Resources and Planning Committee met three times, and the Risk Management
Committee met four times. In 1996, all Fleet Board members attended more than
75% of the aggregate of the meetings of the Fleet Board and its committees on
which they served, except for Stillman Brown who attended 73% of such meetings.
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,
9
<PAGE>
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
Employee Development and Public Policy Committee was formed in 1996 in
conjunction with Fleet's diversity initiative for the purpose of addressing
issues of employee relations and public policy. With representation from both
the Fleet Board and certain bank subsidiary boards, the Employee Development and
Public Policy Committee is responsible for reviewing management's policies,
practices and performance related to work force diversity, community affairs
activities, charitable contributions, compliance with the Community Reinvestment
Act and certain other related consumer laws and regulations, the Corporation's
Code of Ethics, and current and emerging public policy issues.
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
Fleet directors. 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 and 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 William C. Mutterperl, Secretary of Fleet, One Federal
Street, Boston, Massachusetts 02110.
COMPENSATION OF DIRECTORS
For their service on the Fleet Board, directors (other than Terrence Murray)
receive an annual retainer of $40,000, plus $1,500 for each Board meeting
attended and $1,000 for each telephonic meeting attended. Committee members
receive $1,000 per committee meeting attended and $750 for each telephonic
meeting attended, and each committee chairman is paid an additional $5,000 per
year. Fees are not paid to directors employed by Fleet.
Pursuant to the Directors Deferred Compensation Plan, each director must defer
at least 25% (currently, $10,000) of his or her annual retainer into a phantom
stock account. Directors may elect to defer all or a portion of their remaining
annual retainer and meeting fees into a phantom stock account or a fixed rate
account, or a combination of the two. 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, but the value of
a director's phantom stock account will increase (or decrease) based on any
appreciation (or depreciation) of Common Stock (including the payment of
dividends). For 1996, the rate of return on amounts deferred into fixed rate
accounts was 8%. 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 the Directors Deferred
Compensation Plan is an unsecured claim against the general assets of the
Corporation.
In connection with Fleet's 1988 acquisition of Norstar, Fleet assumed the
Supplemental Compensation Plan for former Norstar directors, which generally
provides that Fleet will pay to each eligible Fleet director 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 in the first quarter
following the 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 a Norstar director.
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.
10
<PAGE>
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.
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The table on page 12 shows as of December 31, 1996 the number of shares of
Common Stock and the percent of outstanding Common Stock beneficially owned by
(i) each of the current directors, (ii) each of the executive officers named in
the Summary Compensation Table, and (iii) all directors and executive officers
as a group.
No director or executive officer of the Corporation beneficially owns any equity
security of Fleet 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. In
addition, all non-employee directors receive phantom stock as part of their
total compensation for service on the Fleet Board. See "Certain Information
Regarding the Board of Directors--Compensation of Directors." Although phantom
stock does not represent actual shares, the value of a director's phantom stock
account balance is tied directly to the performance of the Common Stock. As of
December 31, 1996, the aggregate phantom stock account balance for all
non-employee directors as a group was $1,529,708 which, if convertible into
actual shares, would equal approximately 30,670 Common Stock shares (based on
the $49.875 closing price of the Common Stock on December 31, 1996).
11
<PAGE>
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS (CONTINUED)
<TABLE>
<CAPTION>
NAME OF INDIVIDUAL AMOUNT AND NATURE
OR IDENTITY OF OF BENEFICIAL PERCENT OF
GROUP OWNERSHIP(1)(2)(3) CLASS(4)
-------------------------- ------------------ -----------
<S> <C> <C>
Joel B. Alvord...................................................................... 128,765 .05%
William Barnet, III................................................................. 10,423 *
Bradford R. Boss.................................................................... 14,676 *
Stillman B. Brown................................................................... 20,011 *
Paul J. Choquette, Jr............................................................... 8,113 *
John T. Collins..................................................................... 40,062 .01%
Bernard M. Fox...................................................................... 4,595 *
James F. Hardymon................................................................... 3,551 *
Robert M. Kavner.................................................................... 3,240 *
Raymond C. Kennedy.................................................................. 20,564 *
Robert J. Matura.................................................................... 9,115 *
Arthur C. Milot..................................................................... 242,704 .09%
Terrence Murray..................................................................... 507,048 .19%
Thomas D. O'Connor.................................................................. 23,558 *
Michael B. Picotte.................................................................. 36,532 .01%
Lois D. Rice........................................................................ 3,741 *
John R. Riedman..................................................................... 363,222 .14%
John S. Scott....................................................................... 12,840 *
Samuel O. Thier..................................................................... 252 *
Paul R. Tregurtha................................................................... 12,891 *
Robert J. Higgins................................................................... 191,650 .07%
Gunnar S. Overstrom, Jr............................................................. 204,931 .08%
H. Jay Sarles....................................................................... 254,080 .10%
Eugene M. McQuade................................................................... 94,897 .04%
All directors and executive officers as a group (34 persons)........................ 2,669,978 1.02%
</TABLE>
- ------------------------
(1) Amounts shown include 27,000, 296,500, 80,000, 12,000, 80,000, 73,600, and
248,644 shares, respectively, that may be acquired by Messrs. Alvord,
Murray, Higgins, Overstrom, Sarles and McQuade, and all other directors and
executive officers as a group, pursuant to employee stock options on or
prior to March 1, 1997.
(2) Amounts shown include 16,632, 26,789, 10,111, 1,347, and 11,500 shares,
respectively, allocated to the accounts of Messrs. Higgins, Overstrom,
Sarles and McQuade, and all other executive officers as a group, in the
Common Stock fund held in trust under the Fleet Savings Plan.
(3) Amount shown for Mr. Overstrom includes 2,762 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 March 1, 1997.
* 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 programs are designed to be market competitive in
order to attract and retain high quality and experienced executives who are
motivated to enhance shareholder value. In 1996, the Committee's compensation
decisions with respect to the CEO and the 5 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-five to eighty
percent (75%-80%) 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 the executives in comparable
positions for comparable performance at the 15 largest (as determined by asset
size) domestic banks, excluding Fleet (the "Peer Group"). This is the group used
for the Stock Performance Graph. In addition, 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, and short- and long-term incentive awards, are discretionary (subject to
the terms of the applicable plans) based on the Committee's assessment of
certain quantitative and qualitative factors. In 1996, the Committee considered
primarily: (1) Fleet's performance in 1996, as measured by Return on Equity
("ROE"), Net Income and Return on Assets ("ROA"), each of which reflected
increases over 1995; (2) the effective implementation of consolidation plans,
and achievement of planned expense reductions, related to the Shawmut and
NatWest acquisitions; (3) the results of a balance sheet restructuring; (4)
progress toward the Corporation's diversity initiatives; and (5) overall
performance as it relates to Fleet's financial goals and strategic objectives.
The Committee also considered the level of compensation being paid to the named
executive officers in the Peer Group at comparable levels. In 1996, no relative
weights were assigned to these factors. The CEO makes recommendations to the
Committee for certain of the Named Executive Officers, other than the CEO, as
well as certain other executives, all of which were approved by the Committee
for 1996. The compensation of the retired Chairman was determined in accordance
with his employment agreement.
The Committee believes that 1996 salaries for Fleet's Named Executive Officers
remain above the median of base salaries. The bonus award paid and equity-based
awards granted to the CEO were slightly above the median of bonuses and at the
median of the long-term awards, respectively, awarded to the CEOs in the Peer
Group for the prior year. Bonus awards paid to the other Named Executive
Officers and equity-based awards granted were slightly above the median of bonus
awards and below the median of 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 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. Consistent with Fleet's strategy to continue to place considerable
emphasis on variable compensation, in the form of performance-based bonuses and
equity awards, certain executives, including the Named Executive Officers, were
ineligible for
13
<PAGE>
base salary increases in 1996. Any salary increases in 1996 were due to
increased responsibility or competitive market conditions.
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 targets
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 1996, the maximum bonus awards
allowed under the plan to the CEO and to each of the other Named Executive
Officers were $2,964,000 and $1,482,000, respectively. The Committee retains the
discretion to decrease (but not to increase) these 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. In 1996,
the target bonus award levels were increased to complement Fleet's strategy of
emphasizing variable pay and to ensure the on-going competitiveness of the bonus
plan.
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 the 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 the gains for the executive officers are comparable to those of a
shareholder purchasing a share of Common Stock on the same date. Beginning with
the 1996 award, generally, options vest in 33% increments, beginning on the
first anniversary of the date of grant, and expire in not more than 10 years.
Options are awarded consistent with the criteria described above and are
intended to be at the median of option awards granted to executives in
comparable positions within the Peer Group. In 1996, the target stock option
award levels were increased to complement Fleet's strategy of emphasizing
variable pay and to ensure the on-going competitiveness of the stock option
plan.
In February, 1996, the Committee awarded performance-based restricted stock
under the Amended and Restated 1992 Stock Option and Restricted Stock Plan (the
"1992 Plan") to the CEO and two other Named Executive Officers. The awards
provide that the restrictions will lapse if either cumulative earnings per share
growth or stock price appreciation, measured over a three-year period, exceeds a
threshold. To the extent cumulative earnings per share growth or stock price
appreciation exceeds the threshold, the executive officers will vest in a
percentage of the shares awarded, ranging from 50% to 100%. In addition,
restrictions will lapse sooner if during 1997 or 1998 the average closing price
of the Common Stock is or exceeds $57 per share for 90 consecutive calendar
days. These awards are designed to provide the executive officers with an
incentive opportunity linked both to corporate financial performance and
shareholder value.
CEO COMPENSATION
In 1996, Fleet's most highly compensated Named Executive Officer was Terrence
Murray, Chairman, President and Chief Executive Officer. The Committee reviewed
Mr. Murray's performance and determined that he met or exceeded all critical
objectives in 1996. The Committee also discussed 1997 business objectives for
Mr. Murray.
14
<PAGE>
Mr. Murray's compensation for 1996 includes a base salary at the same level as
in 1995 and a bonus in the amount of $2,100,000. 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 and NatWest into Fleet, the balance
sheet restructuring and the overall performance of Fleet in 1996, including
progress toward its diversity initiatives. Mr. Murray was not present during any
Committee or Board discussions concerning his compensation. The Committee's
decision was unanimously endorsed by the Fleet Board.
Mr. Murray was awarded 30,000 performance-based restricted stock shares (see
discussion above) and, on October 16, 1996, he was granted options to purchase
150,000 shares of Common Stock. The Committee's decisions with respect to these
awards followed the same principles as those described for executive officers
generally.
The Committee believes that Mr. Murray's total compensation package for 1996
will remain somewhat above the median of the 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.
SUBMITTED BY THE MEMBERS OF THE HUMAN RESOURCES AND PLANNING COMMITTEE.
<TABLE>
<S> <C>
James F. Hardymon (Chairman) Thomas D. O'Connor
Bradford R. Boss John S. Scott
John T. Collins Paul R. Tregurtha
</TABLE>
15
<PAGE>
STOCK PERFORMANCE GRAPH
The Stock Performance Graph compares the yearly percentage change in the
cumulative total shareholder return on the Common Stock against the cumulative
total return of the S&P 500 Stock Index, the Keefe, Bruyette & Woods ("KBW")
East Regional Bank Index, the top 15 (based on asset size) domestic banks,
excluding Fleet (the "Top 15 Banks Peer Group"), and the top 25 (based on asset
size) domestic banks, excluding Fleet (the "Top 25 Banks Peer Group"), for the
five-year period from December 31, 1991 through December 31, 1996. The graph
assumes that $100 was invested on December 31, 1991 in the Common Stock and the
indices, and that all dividends were reinvested. The financial institutions
which comprise the Top 25 Banks Peer Group are The Chase Manhattan Corporation,
Citicorp, BankAmerica Corporation, J.P. Morgan & Co. Incorporated, NationsBank
Corporation, First Union Corporation, First Chicago NBD Corporation, Bankers
Trust New York Corporation, Wells Fargo & Company, Banc One Corporation, Norwest
Corporation, PNC Bank Corp., KeyCorp, BankBoston Corporation, SunTrust Banks,
Inc., The Bank of New York Company, Inc., Republic New York Corporation,
National City Corporation, Wachovia Corporation, CoreStates Financial Corp,
Mellon Bank Corporation, Barnett Banks, Inc., First Bank System, Inc. and
Boatmen's Bancshares, Inc. The returns of each of these corporations have been
weighted according to their market capitalization at the beginning of each year
presented. CoreStates Financial Corp, First Bank System, Inc. and Boatmen's
Bancshares, Inc. now are included within the Top 25 Banks Peer Group (based on
asset size). Neither Chemical Banking Corporation nor First Interstate Bancorp
is included in the Top 25 Banks Peer Group, having merged with entities included
above. The Top 15 Banks Peer Group is included in this year's graph as a more
representative peer group for Fleet which is now the 11th largest bank holding
company. This peer group includes the first fourteen banks identified above (The
Chase Manhattan Corporation through BankBoston Corporation).
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
FLEET FINANCIAL S&P 500 TOP 15 BANKS PEER GROUP TOP 25 BANKS PEER GROUP KBW EAST REGIONAL INDEX
<S> <C> <C> <C> <C> <C>
1991 100 100 100 100 100
1992 135 108 131 131 138
1993 143 118 143 140 140
1994 143 120 132 134 130
1995 190 165 209 209 203
1996 241 203 298 298 275
</TABLE>
16
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
EXECUTIVE COMPENSATION
The following table shows, for the fiscal years ended December 31, 1996, 1995
and 1994, the compensation of the Chief Executive Officer and the four other
most highly compensated executive officers of Fleet during 1996 who were serving
as executive officers at year-end 1996. Joel Alvord, who retired as Fleet
Chairman on December 27, 1996, also is included in the table based on his 1996
compensation pursuant to Commission regulations. The persons named in the table
are referred to in this proxy statement as the "Named Executive Officers".
Amounts shown in the table for 1995 include amounts paid by Shawmut to Messrs.
Alvord and Overstrom prior to the Shawmut Merger.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
---------------------- -----------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
AWARDS PAYOUTS
---------------------------- -----------
<CAPTION>
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING LTIP
SALARY BONUS COMPENSATION AWARD(S) OPTIONS/SARS PAYOUTS
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)(1) ($)(2)(3)(4)(5) (#)(6) (#)
<S> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Terrence Murray................. 1996 $ 992,200 $ 2,100,000 $ 137,033 $ 1,196,250 150,000 $
Chairman, President 1995 992,200 1,900,000 -- -- 150,000 --
and Chief Executive Officer 1994 993,936 1,400,000 -- 1,160,156 100,000 --
Joel B. Alvord.................. 1996 893,000 1,890,000 257,208 1,076,625 135,000 --
Retired Chairman 1995 893,000 1,710,000 1,430,588 -- 250,986(7) 2,335,800(9)
Robert J. Higgins............... 1996 525,000 800,000 12,812 -- 60,000 --
Vice Chairman 1995 524,999 725,000 -- -- 60,000 --
1994 524,999 600,000 75,276 556,875 45,000 --
Gunnar S. Overstrom, Jr. ....... 1996 525,000 800,000 2,531 -- 60,000 --
Vice Chairman 1995 525,000 725,000 1,192,385 -- 126,915(8) 1,241,117(9)
H. Jay Sarles................... 1996 525,000 725,000 6,649 598,125 60,000 --
Vice Chairman 1995 524,999 725,000 -- -- 60,000 --
1994 524,999 550,000 -- 556,875 45,000
Eugene M. McQuade............... 1996 375,000 600,000 10,112 -- 50,000 --
Executive Vice President 1995 374,999 575,000 -- -- 50,000 --
and Chief Financial Officer 1994 358,654 500,000 -- 556,875 45,000 --
<CAPTION>
<S> <C>
ALL OTHER
COMPENSATION
NAME AND PRINCIPAL POSITION ($)(10)
<S> <C>
- --------------------------------
<S> <C>
Terrence Murray................. $ 197,110
Chairman, President 154,909
and Chief Executive Officer 86,967
Joel B. Alvord.................. 12,503,592
Retired Chairman 6,750
Robert J. Higgins............... 98,088
Vice Chairman 74,791
40,632
Gunnar S. Overstrom, Jr. ....... 57,483
Vice Chairman 6,264
H. Jay Sarles................... 114,974
Vice Chairman 91,851
55,135
Eugene M. McQuade............... 62,969
Executive Vice President 41,836
and Chief Financial Officer 23,585
</TABLE>
- --------------------------
(1) Perquisites and other personal benefits paid to each of the Named Executive
Officers in each instance aggregated less than $50,000, except as follows:
The amount reported for Mr. Murray in 1996 includes a relocation expense and
moving allowance aggregating $57,000, and a tax preparation and financial
planning expense of $24,000. The amount reported for Mr. Higgins in 1994
includes a relocation expense and moving allowance aggregating $60,157.
(2) The values shown in the table are based on the closing price of the Common
Stock on the date of each grant, rather than the December 31, 1996 closing
price. With respect to each of the restricted stock awards described in
footnotes (3) through (5): (a) the 1996 year-end value reported for each
award is based on the December 31, 1996 closing price of the Common Stock
($49.875); (b) dividends will paid on the awards if, and to the extent,
dividends are paid on Common Stock generally; and (c) if a change of control
of Fleet were to occur, the restricted stock awards would immediately vest
in full.
(3) In February 1996, Fleet awarded performance-based restricted stock to
Messrs. Murray, Alvord and Sarles under the 1992 Plan. The awards provide
that the transfer restrictions will lapse if either cumulative earnings per
share growth or stock price appreciation, measured over a three-year period,
exceeds a threshold target. To the extent cumulative earnings per share
growth or stock price appreciation exceeds the threshold, the executive
officers will vest in a percentage of the shares awarded, ranging from 50%
to 100%. In addition, restrictions will lapse sooner if during 1997 or 1998
the average closing price of the Common Stock is or exceeds $57 per share
for 90 consecutive calendar days. The amount and 1996 year-end value of the
performance-based restricted stock award in 1996 under the 1992 Plan are:
Mr. Murray, 30,000 and $1,496,250; Mr. Alvord, 27,000 and $1,346,625; and
Mr. Sarles, 15,000 and $748,125.
(FOOTNOTES CONTINUED ON FOLLOWING PAGE)
17
<PAGE>
(FOOTNOTES CONTINUED FROM PRECEDING PAGE)
(4) In September 1994, Fleet awarded performance-based restricted stock to
Messrs. Murray, Higgins, Sarles and McQuade under the 1992 Plan. The
restrictions on transfer will lapse 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, the
executive officers will vest in a percentage of the shares awarded, ranging
from 40% to 100%. The amount and 1996 year-end value of the
performance-based restricted stock awarded in 1994 under the 1992 Plan are:
Mr. Murray, 31,250 and $1,558,594; and each of Messrs. Higgins, Sarles and
McQuade, 15,000 and $748,125.
(5) 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 1996 year-end
value of the shares of restricted stock awarded in 1992 under the 1992 Plan
are: Mr. Higgins, 15,000 and $748,125; and Mr. Sarles, 20,000 and $997,500.
In December 1991, Fleet awarded shares of restricted stock to Mr. Murray
under Fleet's Amended and Restated 1988 Stock Option and Restricted Stock
Plan. The restrictions on 50% of the stock lapsed as of January 1, 1995 as a
result of the performance of the Common Stock during 1994. The number and
1996 year-end value of Mr. Murray's remaining 50% of the restricted shares
are: 25,000 and $1,246,875 (the restrictions on these shares lapsed as of
January 1, 1997).
(6) Neither the stock options granted to the Named Executive Officers under the
1992 Plan nor those granted by Shawmut to Messrs. Alvord and Overstrom in
1995 prior to the Shawmut Merger included tandem SARs.
(7) 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.
(8) Includes 66,915 options granted by Shawmut prior to the Shawmut Merger.
This number has been adjusted to reflect the Conversion.
(9) Represents payment of the performance equity awards granted under the
Shawmut performance equity plan in 1995 and 1994, including 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. 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.
(10) 1996 amounts for the Named Executive Officers include: (a) contributions by
Fleet under Fleet's Savings Plan or the Shawmut employees' thrift plan, and
any amounts accrued under Fleet's Executive Supplemental Plan: Mr. Murray,
$59,540; Mr. Alvord, $5,400; Mr. Higgins, $31,512; Mr. Overstrom, $5,400;
Mr. Sarles, $31,512; and Mr. McQuade, $22,486; (b) executive group term life
insurance premiums paid by Fleet on behalf of the following executive
officers: Mr. Murray, $28,147; Mr. Higgins, $8,770; Mr. Sarles, $8,770; and
Mr. McQuade, $4,370; (c) life insurance premium paid by Fleet on behalf of
Mr. Alvord, $290,665, (d) aggregate retirement payment to Mr. Alvord,
$12,103,188 (see "Severance Agreements and Employment Contracts"); and (e)
preferential earnings on deferred compensation: Mr. Murray, $109,423; Mr.
Alvord, $104,339; Mr. Higgins, $57,806; Mr. Overstrom, $52,083; Mr. Sarles,
$74,692; and Mr. McQuade, $36,113.
18
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table contains information concerning the grant of stock
options made during the fiscal year ended December 31, 1996 to the Named
Executive Officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------
PERCENT
NUMBER OF OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO
OPTIONS/SARS EMPLOYEES EXERCISE OR GRANT DATE
GRANTED IN FISCAL BASE PRICE EXPIRATION PRESENT VALUE
NAME (#)(1) YEAR(2) ($/SH) DATE ($)(3)
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
Terrence Murray.............................. 150,000 3.70 % $ 46.19 10/15/2006 $ 1,905,765
Joel B. Alvord............................... 135,000 3.34 % 46.19 10/15/2006 1,715,188
Robert J. Higgins............................ 60,000 1.48 % 46.19 10/15/2006 762,306
Gunnar S. Overstrom, Jr...................... 60,000 1.48 % 46.19 10/15/2006 762,306
H. Jay Sarles................................ 60,000 1.48 % 46.19 10/15/2006 762,306
Eugene M. McQuade............................ 50,000 1.24 % 46.19 10/15/2006 635,255
</TABLE>
- ------------------------
(1) Options granted on October 16, 1996 under the 1992 Plan. No SARs were
awarded with these grants. The options first become exercisable in annual
one-third installments, beginning one year from the date of grant, and have
a ten-year term. If a change of control were to occur, the options would
become immediately exercisable in full.
(2) The percentages in the table are based on a total of 4,043,965 options
granted in 1996 to Fleet employees, of which 3,614,425 were granted on the
same material terms described in footnote (1). The other options granted in
1996 differ in the following respects: (a) 201,200 options granted before
October 16, 1996 become exercisable in annual 20% installments beginning one
year from the grant date; and (b) 228,340 options granted on October 16,
1996 were part of a special grant, and provide for a five-year term and full
exercisability beginning one year from the grant date.
(3) The grant date present values shown in the table are determined using the
Black-Scholes option pricing model. The assumptions used in calculating the
Black-Scholes present value of approximately $12.71 per option for new
option grants were as follows: (a) a risk-free interest rate of 6.42% (based
on the yield on a U.S. Treasury security with a maturity approximating the
expected life of the options); (b) a dividend yield of 3.25% (approximates
the current yield on the Common Stock); (c) volatility of the Common Stock
of 25% (based on the daily Common Stock price for the 5 years prior to the
option grant); and (d) an average option term of seven years (representing
the average historical period of time from grant date to exercise).
The Black-Scholes option pricing model was developed for use in estimating
the fair value of traded options that have no vesting restrictions and are
fully transferable. In addition, option pricing models require the use of
highly subjective assumptions, including the expected stock price
volatility. Because Fleet's employee options have characteristics
significantly different from those of traded options, and because changes in
the subjective assumptions can materially affect the fair value estimates,
the Black-Scholes model does not necessarily provide a reliable single
measure of the fair value of Fleet's employee options. The amount realized
from an employee option ultimately depends on the market value of the Common
Stock on the date of exercise.
19
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION/SAR VALUES
The following table contains information for the Named Executive Officers
concerning the exercise of options during the fiscal year ended December 31,
1996 and unexercised options held as of the end of the 1996 fiscal year.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/SARS
OPTIONS/SARS AT AT
VALUE FY-END(#)(1) FY-END($)(2)(3)
SHARES ACQUIRED REALIZED -------------------------- ---------------------------
NAME ON EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Terrence Murray................... 77,500 $ 1,182,787 296,500 381,000 $ 6,847,231 $ 3,643,462
Joel B. Alvord.................... 312,375 6,229,248 27,000 243,000 254,677 1,642,747
Robert J. Higgins................. 70,500 2,290,796 80,000 157,500 1,378,080 1,539,088
Gunnar S. Overstrom, Jr. ......... 202,522 4,017,138 12,000 108,000 113,190 730,110
H. Jay Sarles..................... 86,500 2,662,384 80,000 157,500 1,378,080 1,539,088
Eugene M. McQuade................. 0 0 70,600 136,400 1,217,148 1,359,309
</TABLE>
- ------------------------
(1) The Named Executive Officers do not hold any SARs. Any SARs previously
granted to the Named Executive Officers were cancelled in 1995.
(2) Value based on the fair market value of the Common Stock on December 31,
1996 ($50.8125) minus the exercise price. Fair market value for purposes of
this table is the average of the high and low market prices of the Common
Stock on the New York Stock Exchange.
(3) The value of unexercised in-the-money stock options at December 31, 1996 is
presented to comply with Commission regulations. The actual amount realized
upon exercise of stock options (if any) will depend upon the excess 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 options reflected in this table will be realized.
PENSION PLANS
The benefit formula of the Fleet Pension Plan ("Pension Plan"), a qualified
defined benefit pension plan, was changed effective January 1, 1997. As
described below, most participants will earn benefits under a new cash balance
formula, while the traditional formula continues to apply to participants who
had attained age 50 with at least 15 years of vesting service as of December 31,
1996 (the "Grandfathered Group"). The following table shows the estimated total
pension benefits payable to covered participants under the traditional formula
of the Pension Plan.
FLEET PENSION PLAN TABLE
<TABLE>
<CAPTION>
FINAL
AVERAGE 15 YEARS 20 YEARS 25 YEARS 30 YEARS
SALARY SERVICE(1) SERVICE(1) SERVICE(1) SERVICE(1)
- ------------ ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
$ 300,000 $ 76,552 $ 102,070 $ 127,587 $ 153,104
400,000 102,802 137,070 171,337 205,604
500,000 129,052 172,070 215,087 258,104
600,000 155,302 207,070 258,837 310,604
700,000 181,552 242,070 302,587 363,104
800,000 207,802 277,070 346,337 415,604
900,000 234,052 312,070 390,087 468,104
</TABLE>
20
<PAGE>
FLEET PENSION PLAN TABLE
(CONTINUED)
<TABLE>
<CAPTION>
FINAL
AVERAGE 15 YEARS 20 YEARS 25 YEARS 30 YEARS
SALARY SERVICE(1) SERVICE(1) SERVICE(1) SERVICE(1)
- ------------ ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
1,000,000 260,302 347,070 433,837 520,604
1,100,000 286,552 382,070 477,587 573,104
1,200,000 312,802 417,070 521,337 625,604
1,300,000 339,052 452,070 565,087 678,104
1,400,000 365,302 487,070 608,837 730,604
1,500,000 391,552 522,070 652,587 783,104
1,600,000 417,802 557,070 696,337 835,604
1,700,000 444,052 592,070 740,087 888,104
1,800,000 470,302 627,070 783,837 940,604
1,900,000 496,552 662,070 827,587 993,104
2,000,000 522,802 697,070 871,337 1,045,604
</TABLE>
- ------------------------
(1) The Pension Plan provides for accrual over 30 years of service, with
proportionate reduction for less than 30 years. The annual benefits shown in
the table include those provided under the Retirement Income Assurance Plan
(the "Assurance Plan") to certain highly compensated employees, including
certain of the Named Executive Officers. The Assurance Plan provides
benefits that would otherwise be denied due to certain limitations imposed
on the Pension Plan by the Internal Revenue Code (the "Code"). Benefits
shown in the table are computed as a single life annuity and are not subject
to deduction for Social Security or other offset amounts. For purposes of
the Pension Plan and Assurance Plan, the years of service accrued and Final
Average Salary for certain of the Named Executive Officers as of December
31, 1996 were: Mr. Murray, 34 years (30 of which are counted for accruals)
and $959,559; Mr. Higgins, 25 years and $504,423; Mr. Sarles, 29 years and
$513,285, and Mr. McQuade, 5 years and $338,846. See "Shawmut Plans" below
for a discussion of Mr. Overstrom's and Mr. Alvord's accrual under the
Shawmut Plan as of December 31, 1996.
TRADITIONAL FORMULA UNDER THE PENSION PLAN. Messrs. Murray, Higgins, and Sarles
are members of the Grandfathered Group eligible to continue to earn benefits
under the Pension Plan's traditional formula. The Grandfathered Group also
includes qualifying former participants in the Shawmut Retirement Plan (the
"Shawmut Plan") and the NatWest Retirement Plan, which each merged into the
Pension Plan on September 1, 1996. Mr. Overstrom, who was a participant in the
Shawmut Plan, is eligible for the traditional formula as a member of the
Grandfathered Group.
Under the Pension Plan, normal retirement age is 65, and benefits vest upon
completion of five years of service. In general, the normal benefit at age 65 is
equal to 37.5% multiplied by the average annual base salary during the 60
consecutive calendar months in the last 120 calendar months of a participant's
employment yielding the highest average annual salary (the "Final Average
Salary") up to the Integration Level (as specified below), plus 52.5% multiplied
by the amount by which the Final Average Salary exceeds the Integration Level.
For 1997, the Integration Level will equal $29,304. The Integration Level will
increase each year based on the maximum amount of wages subject to Social
Security taxes. Final Average Salary for the Named Executive Officers is
calculated using the annual base salary as reported in the Summary Compensation
Table.
CASH BALANCE FORMULA UNDER THE PENSION PLAN. The Pension Plan's cash balance
formula provides a benefit for participants who are not in the Grandfathered
Group, including former participants in the Shawmut Bank of New York Cash
Balance Plan, which was merged into the Pension Plan on January 1, 1997. Under
the cash balance formula, pension benefits are earned based on amounts credited
to a hypothetical account balance. An opening cash balance account shall be
established for each covered
21
<PAGE>
participant, including Mr. McQuade, equal to the actuarial equivalent present
value of the participant's accrued benefit under the Pension Plan as of December
31, 1996. Under the terms of the Pension Plan, the lump sum or annuity benefits
provided under the cash balance formula may not be less than the benefit accrued
under the Pension Plan as of December 31, 1996.
All participants under the cash balance formula will have "interest credits" and
"pay credits" added periodically to their cash balance accounts. Interest
credits will be added quarterly and will be determined based on the average
annual yield on 1-year U.S. Treasury constant maturities for the calendar month
preceding each quarter. Pay credits will be equal to a percentage of
compensation. The pay credit percentage of compensation will be based on
"points"-- the sum of a participant's age and service. Pay credits will range
from 3% to 7 1/2% of compensation annually, plus an additional pay credit equal
to the pay credit percentage times the amount of compensation above the Social
Security wage base. In 1997, Mr. McQuade's pay credit percentage is 4.5%.
NON-QUALIFIED PLANS
The Assurance Plan is an "excess plan" that provides benefits that would
otherwise be denied a participant by reason of the limitations imposed by the
Code on the Pension Plan. Under the Assurance Plan, highly compensated employees
affected by these limitations, including certain of the Named Executive
Officers, will receive additional retirement income payments from Fleet. Under
the Supplemental Executive Retirement Plan ("SERP"), a participant covered under
the Pension Plan is entitled to receive additional retirement income payments
from Fleet equal to the difference between (a) the amount payable under the
Pension Plan if cash bonuses paid after January 1, 1994 (as reported in the
Summary Compensation Table for the Named Executive Officers) are included in the
calculation of the 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 (except Mr. Alvord) is a participant in the SERP. For
purposes of calculating the total benefits payable under the SERP, the Final
Average Salary as of December 31, 1996 for Messrs. Murray, Higgins, Overstrom,
Sarles, and McQuade was $1,817,559, $839,423, $846,000, $838,285 and $613,846,
respectively.
SHAWMUT PLANS
Messrs. Alvord and Overstrom have been participants under the Shawmut Plan,
pursuant to which benefits are determined by final average compensation and
years of service. The Shawmut formula continued to apply to Shawmut Plan
participants after the merger into the Pension Plan on September 1, 1996;
accruals under the Shawmut formula ceased effective December 31, 1996. Mr.
Alvord retired on December 27, 1996 and his Shawmut Plan benefit is based on his
service to that date.
Final average compensation for purposes of the Shawmut Plan means the average
annual salary during the highest 60 consecutive calendar months over the last
120 months of employment. In general, the normal benefit at age 65 is equal to
the sum of (i) 1% of the participant's final average compensation, plus (ii)
0.6% of the participant's final average compensation in excess of "Covered
Compensation" (as defined below), times (iii) the participant's total years of
service under the plan (up to a maximum of 35). "Covered Compensation" is the
average of the contribution and benefit base in effect under the Social Security
Act each year for the 35 years prior to the year in which the participant
terminates employment.
Mr. Alvord is credited with a Shawmut Plan annual benefit of $66,576 (as limited
by the Code), based on final average compensation of $747,192 (only a portion of
which is counted each year based on Code limitations) and 35 years of credited
service. Mr. Overstrom, with $510,785 of final average compensation and 21 years
of credited service as of December 31, 1996, had a total annual accrued benefit
under the Shawmut Plan and the Shawmut excess plan of $173,036. Mr. Alvord also
is entitled to additional retirement benefits pursuant to his employment
agreement. See "Severance Agreements and Employment Contracts".
22
<PAGE>
SEVERANCE AGREEMENTS AND EMPLOYMENT CONTRACTS
SEVERANCE AGREEMENTS. Severance agreements are in effect between Fleet and
20 key executives of the Corporation and its subsidiaries, including each of the
Named Executive Officers, except for Mr. Alvord whose severance agreement
terminated upon his retirement in 1996. 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 Mr. 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 Mr.
Overstrom's severance agreement (negotiated separately in connection with the
Shawmut Merger), he 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 Mr. Overstrom's 65th
birthday, whichever is shorter, and (ii) a pro rata portion of his outstanding
long-term incentive award awarded prior to the Shawmut Merger. 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 was employed by Fleet until his retirement on December 27, 1996
("Employment Period"). During his Employment Period, and in accordance with his
employment agreement, Mr. Alvord's compensation included an annual base salary,
annual bonus and equity-based awards equal to 90% of the amount paid or awarded
to the Chief Executive Officer of Fleet for the same period. These amounts are
reflected in the Summary Compensation Table. Mr. Alvord also was entitled under
his employment agreement to participate in all employee benefit arrangements
available to other similarly situated executive officers of Fleet (but only to
the extent that the benefits provided thereunder did not duplicate benefits
received by Mr. Alvord under certain continued Shawmut insurance, retirement and
long-term disability plans). In connection with his retirement from Fleet, Mr.
Alvord became entitled to receive, among other things; (i) his 1996 annual bonus
($1,890,000); (ii) an additional payment awarded by the Human Resources and
Planning Committee in recognition of Mr. Alvord's long-term valuable service to
Fleet ($1,500,000); (iii) a lump sum severance payment ($6,485,883) which was
equal to the product of (A) the sum of Mr. Alvord's 1996 base salary ($893,000),
his 1995 annual bonus ($1,710,000), and his highest long-term bonus award earned
under the Shawmut performance equity plan ($780,938), and (B) the number of
years and fractional parts thereof remaining in the term of his employment
agreement; and (iv) an additional payment of $4,117,305 to restore Mr. Alvord to
the same after-tax position he would have been in if no excise tax were imposed
on certain components of his retirement package. In addition, upon his
retirement Mr. Alvord became entitled to coverage or credited service, as
applicable, based on Fleet's employee benefit plans (or certain Shawmut
insurance and retirement plans), and an annual nonqualified retirement benefit
of approximately $1,500,000. Under his employment agreement, all of Mr. Alvord's
stock options and restricted stock awards will continue to vest and, in the case
of his stock options, be exercisable until Mr. Alvord is 65. Also, in accordance
with his employment agreement, Fleet will sponsor Mr. Alvord's election and
re-election to the Fleet Board until Mr. Alvord's attainment of age 65, 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.
23
<PAGE>
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 equal to those of
the other vice chairmen of Fleet; (iii) eligibility to receive annual and
long-term bonuses pursuant to the Fleet incentive plans applicable to the other
vice chairmen; 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 based on certain Shawmut plans).
Pursuant to Mr. Overstrom's employment agreement, except as described in the
following sentence, in the event that his employment is terminated for any
reason other than death, cause (as defined in the agreement) or disability (as
defined in the agreement), Mr. Overstrom will be entitled to receive, among
other things, an amount equal to the product of (A) the sum of (i) his 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 Mr. Overstrom during the three fiscal years prior to termination (or, if
greater, any year during the three years immediately prior to the Shawmut Merger
closing), and (B) the number three. Mr. Overstrom also will be entitled to
coverage or credited service, as applicable, based on Fleet's employee benefit
plans (or certain Shawmut insurance and retirement plans). Pursuant to Mr.
Overstrom's severance agreement, any benefits payable to him 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 Mr. Overstrom's employment agreement. In the event
that any payments received by Mr. Overstrom 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
him 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 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.
In 1972, subsidiaries of Fleet and Gilbane Building Company ("Gilbane"), a
building construction company of which Paul J. Choquette, Jr., a Fleet director,
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% interest. The second
phase was a shopping center and condominium development. Fleet Real Estate,
Inc., a Fleet subsidiary ("FRE"), made loans in connection with these projects
having an aggregate principal balance as of December 31, 1996 of approximately
$658,733 (the highest amount outstanding since January 1, 1996 having been
$671,712), 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,
FNB leases space from the Partnership in the shopping center for a branch bank
at an annual cost of approximately $18,708.
24
<PAGE>
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
FNB. 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, 1996, the amount remaining
unpaid under the loan was $51,811,594 (the highest amount outstanding since
January 1, 1996 having been $52,425,328). 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 FNB have leased space in the building for a total annual rental of
approximately $796,560.
One of Fleet's subsidiaries leases office space for one dollar per annum and
shared expenses from Delta Properties. Michael B. Picotte, a Fleet director, is
a 50% partner in Delta Properties. The lease expires in December 2004.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Murray serves on the Board of Directors of A.T. Cross Company and is
chairman of its compensation committee. Mr. Boss, Chairman of A.T. Cross
Company, serves on Fleet's Human Resources and Planning Committee. The five
other members of the Human Resources and Planning Committee are Messrs.
Hardymon, Collins, O'Connor, Scott and Tregurtha.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Fleet believes that during 1996 all Section 16(a) filing requirements
applicable to its directors and executive officers were complied with except as
follows: (i) Arthur Milot and a family trust for which he serves as co-trustee
each inadvertently failed to report on a timely basis the trust's holdings of
3,094 shares of Common Stock when the shares first became reportable in 1991,
but Mr. Milot reported the other 239,610 shares of Common Stock held by various
Milot family trusts on a Form 5 filed for 1992; (ii) Michael Picotte and a
family trust for which he served as trustee each inadvertently failed to report
on a timely basis the trust's holdings of 6,289 shares of Common Stock at the
time Mr. Picotte was named a successor trustee in November 1995; (iii) Thomas
O'Connor inadvertently failed to report on a timely basis his wife's sale of 700
shares in September 1996, which sale did not result in any short-swing profit to
Mr. O'Connor; and (iv) Robert Lamb (executive officer) inadvertently failed to
file on a timely basis a Form 3 reporting his holdings as of the date he became
an executive officer, and three reports reporting 9 transactions, 8 of which
were exempt transactions. None of these transactions resulted in any short-swing
profit to Mr. Lamb.
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,
1997, 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,
1996 were furnished at customary rates.
25
<PAGE>
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 there is a
quorum.
THE FLEET BOARD RECOMMENDS A VOTE "FOR" THIS PROPOSAL, WHICH IS IDENTIFIED AS
PROPOSAL 2 ON THE ENCLOSED PROXY
1998 STOCKHOLDER PROPOSALS
Proposals of stockholders for next year's proxy statement must be received by
November 3, 1997. Proposals should be mailed to William C. Mutterperl, Secretary
of Fleet, at One Federal Street, Boston, Massachusetts 02110.
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.
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 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 $17,500 excluding expenses, will be paid
by Fleet.
Submitted by order of the Board of
Directors,
WILLIAM C. MUTTERPERL
SECRETARY
Boston, Massachusetts
March 3, 1997
26
<PAGE>
APPENDIX A
FLEET FINANCIAL GROUP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Arthur C. Milot, Lois D. Rice and John R.
Riedman, 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 16, 1997 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.
<TABLE>
<S> <C> <C> <C>
1. ELECTION OF DIRECTORS: FOR all nominees listed below AGAINST all nominees listed below
(except marked to the contrary below) / / / /
</TABLE>
NOMINEES: William Barnet, III, John T. Collins, Raymond C. Kennedy, Robert J.
Matura, Terrence Murray and Samuel O. Thier.
(INSTRUCTION: TO VOTE AGAINST ANY INDIVIDUAL NOMINEE,
WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
- --------------------------------------------------------------------------------
2. To ratify the selection of KPMG Peat Marwick LLP as independent auditors of
Fleet for the fiscal year ending December 31, 1997.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU INSTRUCT THE PROXIES TO VOTE FOR
PROPOSAL NO. 2
/ / FOR / / AGAINST / / ABSTAIN
3. 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 AND 2.
(continued on reverse side)
<PAGE>
PLEASE SIGN, DATE AND RETURN THE PROXY PROMPTY USING THE ENCLOSED ENVELOPE.
<TABLE>
<S> <C>
Please sign exactly as name appears below. When shares are held in Dated , 1997
more than one name, including joint tenants, each party should sign.
When signing as attorney, executor, administrator, trustee or Signature
guardian, please give full title as such. Signature, if held jointly
</TABLE>
