<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:
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(5) Total fee paid:
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/ / 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 2, 1998
Dear Stockholder:
I am pleased to invite you to the 1998 Annual Meeting of Stockholders of Fleet
Financial Group, Inc. ("Fleet"), which will be held on Wednesday, April 15,
1998, at 11:00 a.m. at the World Trade Center Boston, 164 Northern Avenue,
Boston, Massachusetts.
The accompanying Notice of Annual Meeting of Stockholders and proxy statement
contain the matters to be considered and acted upon. 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
1998.
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,
/s/ Terrence Murray
TERRENCE MURRAY
CHAIRMAN AND
CHIEF EXECUTIVE OFFICER
<PAGE>
FLEET FINANCIAL GROUP, INC.
ONE FEDERAL STREET
BOSTON, MASSACHUSETTS 02110
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 15, 1998
The Annual Meeting of Stockholders of Fleet Financial Group, Inc., a Rhode
Island corporation ("Fleet"), will be held on Wednesday, April 15, 1998, at
11:00 a.m. at the World Trade Center Boston, 164 Northern Avenue, Boston,
Massachusetts for the purpose of considering and voting upon:
1. The election of eight directors for three-year terms and the election of one
director for a two-year term.
2. The ratification of the selection of KPMG Peat Marwick LLP as independent
auditors for Fleet for 1998.
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 18, 1998. Fleet's
transfer books will not be closed.
By Order of the Board of Directors,
/s/ William C. Mutterperl
WILLIAM C. MUTTERPERL
SECRETARY
Boston, Massachusetts
March 2, 1998
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 617-346-4000
-------------------
1998 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 15, 1998. This proxy
statement and the enclosed proxy are first being sent to stockholders on or
about March 2, 1998. 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 18, 1998. On this date, there were
outstanding and entitled to vote 283,836,463 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 those referred to in this proxy statement. 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 the Annual 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 beneficially own
more than 5% of the 261,316,685 shares of Common Stock outstanding as of
December 31, 1997:
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP CLASS
- ---------------------------------------------------------------------------- ---------------------- ------------
<S> <C> <C>
FMR Corp.(1)................................................................ 25,970,808(1) 9.94%(1)
82 Devonshire Street
Boston, MA 02109
KKR Associates(2)........................................................... 25,591,890(2) 9.56%(2)
9 West 57th Street
New York, NY 10019
</TABLE>
- ------------------------
(1) FMR Corp. ("FMR") beneficially owned 25,970,808 shares of Common Stock as of
December 31, 1997 as a result of various of its subsidiaries and affiliates
providing investment advisory and management services. FMR has sole voting
power with respect to 860,666 of the shares, shared voting power with
respect to 7,336 of the shares, sole dispositive power with respect to
25,962,072 of the shares, and shared dispositive power with respect to 7,336
of the shares. This information is based on a Schedule 13G filed by FMR with
the Securities and Exchange Commission ("Commission") dated February 14,
1998.
(2) KKR Associates, which was organized by Kohlberg Kravis Roberts & Co.
("KKR"), a private investment firm, as the general partner of each of
Whitehall Associates, L.P. and KKR Partners II, L.P. (the "Partnerships"),
beneficially owned, together with the Partnerships, 19,091,890 shares of
Common Stock and rights to purchase 6,500,000 shares of Common Stock (the
"Rights") as of December 31, 1997. The total number of shares of Common
Stock represented by such Common Stock and Rights is 25,591,890 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, 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 former general
partners 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, 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. This information is
derived from an amended Schedule 13D filed with the Commission on January
13, 1996, and other information furnished to Fleet. 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
<PAGE>
ELECTION OF DIRECTORS
As of the date of this proxy statement, the Fleet Board consists of 22 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. Eight
directors are to be elected at the Annual Meeting to serve until the 2001 Annual
Meeting and until their successors are elected and have qualified. Such nominees
are Joel B. Alvord, Bradford R. Boss, Stillman B. Brown, Kim B. Clark, James F.
Hardymon, Arthur C. Milot, Lois D. Rice and John R. Riedman. In addition, Marian
L. Heard is nominated for election at the Annual Meeting to serve until the 2000
Annual Meeting and until her successor is elected and has qualified. Rhode
Island law requires Directors Clark and Heard, each of whom was appointed to the
Fleet Board in February 1998, to stand for re-election at the Annual Meeting
because their appointments increased the size of the Fleet Board. 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 2001
PRESIDENT AND MANAGING PARTNER, SHAWMUT CAPITAL PARTNERS, INC.
[PHOTO] Mr. Alvord has been President and Managing Partner of Shawmut Capital Partners, Inc., a
Joel B. Alvord venture capital buy-out firm, since 1997. Previously, he held a number of executive
59 positions in predecessor banks of Fleet. He was elected President of Hartford National
Chairman, Executive Corporation ("Hartford National") in 1978 and its Chairman and Chief Executive Officer
Committee; Co-Chairman, in 1986. In 1988, he was elected Chief Executive Officer of Shawmut National
Employee Development Corporation ("Shawmut") and with the merger of Shawmut into Fleet ("Shawmut Merger") in
and Public Policy 1995, became the Chairman of Fleet. Currently, he is a director of HSB Group, Inc.,
Committee Cuno Incorporated and American Skiing Company. He also serves as a director of The Wang
Center for the Performing Arts, the Harvard Eating Disorders Center and the American
Repertory Theater. He is a member of the Board of Overseers of the Museum of Fine Arts
Boston and the Boston Symphony Orchestra. Mr. Alvord graduated from Dartmouth College
and received an MBA from the Amos Tuck School of Business Administration in 1961. He
has served as a Fleet director since 1995.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
NOMINEE, AGE AND PRINCIPAL OCCUPATION AND
COMMITTEE MEMBERSHIP OTHER INFORMATION
- ------------------------
<C> <S>
TERMS EXPIRING IN 2001
CHAIRMAN, A.T. CROSS COMPANY
[PHOTO] Mr. Boss joined A.T. Cross Company, a manufacturer of writing instruments, in 1958,
Bradford R. Boss became President in 1971, was elected Chairman and Chief Executive Officer in 1979, and
64 became Chairman in April 1993. A former member of the Board of Governors of the
Human Resources and American Stock Exchange, he also has served as President and Chairman of the Writing
Planning Committee Instrument Manufacturers Association. Mr. Boss is a graduate of the University of Rhode
Island, and was elected to the Fleet Board in 1976.
PRESIDENT, HARCOTT CORPORATION
[PHOTO] President of Harcott Corporation since 1987, Mr. Brown previously was Executive Vice
Stillman B. Brown President, Chief Financial Officer and a director of United Technologies Corporation,
64 where he served in a variety of executive positions from 1978 to 1986. He is a director
Chairman, Risk of The Stanley Works and past Chairman of the Board of Regents of the University of
Management Committee; Hartford. Mr. Brown became a director of Fleet in 1995, having served as a Shawmut
Executive Committee director since 1987. Mr. Brown also served as a Shawmut banking subsidiary director
from 1979 to 1988.
DEAN OF THE FACULTY, HARVARD BUSINESS SCHOOL
[PHOTO] Mr. Clark, the Harry E. Figgie, Jr. Professor of Business Administration, is Dean of
Kim B. Clark the Faculty at Harvard Business School. A member of the Harvard faculty since 1978,
48 Dean Clark's research has focused on the areas of technology, productivity, product
Audit Committee development and operations strategy in a variety of industries, including automobiles,
steel, semiconductors, computers and advanced ceramics. Dean Clark was elected to the
Fleet Board in February 1998.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
NOMINEE, AGE AND PRINCIPAL OCCUPATION AND
COMMITTEE MEMBERSHIP OTHER INFORMATION
- ------------------------
<C> <S>
TERMS EXPIRING IN 2001
CHAIRMAN AND CHIEF EXECUTIVE OFFICER, TEXTRON INC.
[PHOTO] Mr. Hardymon joined Textron Inc., a diversified manufacturing company, in December 1989
James F. Hardymon as President and Chief Operating Officer, at which time he was named to the Textron
63 Board of Directors. In 1992, he was elected Chief Executive Officer and, in 1993, was
Chairman, Human elected Chairman. He is a trustee of the University of Kentucky and a director of Air
Resources and Product & Chemicals, Inc. and Groupe Schneider. Mr. Hardymon received his Bachelor and
Planning Committee; Master's degrees in civil engineering from the University of Kentucky, and has served
Executive Committee on the Fleet Board since 1991.
PRIVATE INVESTOR
[PHOTO] Mr. Milot was President of Brewster Lumber Company, a supplier of building materials
Arthur C. Milot and household appliances, from 1969 to 1986. He is a director of Benodet Insurance Co.,
65 Ltd. and Philan Insurance Co., Ltd., and served as a director of various Fleet banking
Executive Committee; subsidiaries from 1969 to 1995. A Harvard University graduate, Mr. Milot has been a
Audit Committee Fleet director since 1976.
GUEST SCHOLAR, THE BROOKINGS INSTITUTION
[PHOTO] Mrs. Rice joined The Brookings Institution in 1991. From 1981 to 1991 she was a
Lois D. Rice director and Senior Vice President of Government Affairs at Control Data Corporation.
65 Mrs. Rice is a director of International Multifoods, McGraw Hill Companies, HSB Group,
Co-Chairman, Employee Inc. and Unum Corp. She also serves on the boards of the Center for Naval Analysis, the
Development and Public Public Agenda Foundation and The Harry Frank Guggenheim Foundation. She is a trustee of
Policy Committee; Audit The Urban Institute, and a member of the President's Foreign Intelligence Advisory
Committee Board. Elected a director of Shawmut in 1992, Mrs. Rice joined the Fleet Board in 1995
in connection with the Shawmut Merger.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
NOMINEE, AGE AND PRINCIPAL OCCUPATION AND
COMMITTEE MEMBERSHIP OTHER INFORMATION
- ------------------------
<C> <S>
TERMS EXPIRING IN 2001
CHAIRMAN, RIEDMAN CORPORATION
[PHOTO] Mr. Riedman was President of Riedman Corporation, which is engaged in the property and
John R. Riedman casualty insurance marketing and real estate development businesses, for 25 years until
69 he became Chairman in 1991. He also serves as Treasurer and past Chairman of the
Chairman, Audit Rochester Chamber of Commerce and Chairman of the Monroe County Airport Advisory
Committee 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. Mr. Riedman previously served as a director of Norstar Bancorp Inc.
("Norstar"), and joined the Fleet Board in 1988 in connection with the merger of
Norstar ("Norstar Merger") with Fleet.
TERM EXPIRING IN 2000
PRESIDENT AND CHIEF EXECUTIVE OFFICER, UNITED WAY OF MASSACHUSETTS BAY
[PHOTO] Ms. Heard has served as President and Chief Executive Officer of the United Way of
Marian L. Heard Massachusetts Bay and as Chief Executive Officer of the United Ways of New England
57 since 1992. For 17 years prior to that, she served in various leadership capacities at
Employee Development and the United Way of Eastern Fairfield County and served the last three as President and
Public Policy Committee Chief Executive Officer. Ms. Heard is a director of Blue Cross and Blue Shield of
Massachusetts, Inc., Liberty Mutual Insurance Company, and the New England Aquarium.
She is also a Council member of the Women's Cancers Program at the Dana-Farber
Institute, a member of the Board of Trustees of the Dana-Farber Cancer Institute and
the Board of Governors of Dana-Farber, Inc. Ms. Heard is a trustee of Fairfield
University, and was the founding President and Chief Executive Officer of the Points of
Light Foundation. In June 1995 she was elected Chairman of the Board of Directors of
the Points of Light Foundation, and served until completion of her second term in 1997.
A director of Fleet National Bank since 1992, Ms. Heard was elected to the Fleet Board
in February 1998.
</TABLE>
DIRECTORS CONTINUING IN OFFICE
<TABLE>
<CAPTION>
DIRECTOR, AGE AND PRINCIPAL OCCUPATION AND
COMMITTEE MEMBERSHIP OTHER INFORMATION
- ------------------------
<C> <S>
TERMS EXPIRING IN 1999
CHAIRMAN AND CHIEF EXECUTIVE OFFICER, GILBANE BUILDING COMPANY
[PHOTO] Mr. Choquette was elected Chairman and Chief Executive Officer of Gilbane Building
Paul J. Choquette, Jr. Company, a building construction company, in 1997, having served as President since
59 1981, and Executive Vice President since 1975. He has been a director of Gilbane
Executive Committee; Building Company since 1981, and is Chairman of the Board of Directors of Gilbane
Risk Properties, Inc., a real estate development and management company. Mr. Choquette also
Management Committee is a director of Carlisle Companies Incorporated, the Greater Providence Chamber of
Commerce, and the President's Council of Providence College. He is a trustee of Eastern
Utilities Associates, a trustee emeritus of Brown University, and President of the
Northeast Region of the Boy Scouts of America. A graduate of Brown University and
Harvard Law School, Mr. Choquette was elected to the Fleet Board in 1982.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR, AGE AND PRINCIPAL OCCUPATION AND
COMMITTEE MEMBERSHIP OTHER INFORMATION
- ------------------------
<C> <S>
TERMS EXPIRING IN 1999
<CAPTION>
<C> <S>
PRESIDENT AND CHIEF EXECUTIVE OFFICER, ON COMMAND CORP.
[PHOTO] Mr. Kavner has served as President, Chief Executive Officer and a director of
Robert M. Kavner On Command Corp., a provider of in-room video services to the lodging
54 industry, since September 1996. From July 1994 until August 1996, Mr. Kavner
Risk Management provided consulting services to the communications and media industries first
Committee as an executive of Creative Artists Agency, Inc. and then as Managing Director
of Kavner & Associates. For 10 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 Earthlink Networks, Inc., City Search, Inc. and Xing
Technologies, Inc. Mr. Kavner was elected to the Fleet Board in 1986.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER, MOHAWK PAPER MILLS, INC.
[PHOTO] Mr. O'Connor has been Chairman and Chief Executive Officer of Mohawk Paper
Thomas D. O'Connor Mills, Inc., a paper manufacturer, since 1971. He is a director of the
67 Institute of Paper Science and Technology, and a former board member of St.
Human Resources and Gregory's School for Boys and Emma Willard School. A Yale University graduate,
Planning Committee Mr. O'Connor was elected a Norstar director in 1984, and joined the Fleet
Board in 1988.
MANAGING GENERAL PARTNER AND CHIEF EXECUTIVE OFFICER, THE PICOTTE COMPANIES
[PHOTO] Mr. Picotte is a Managing General Partner and Chief Executive Officer of the
Michael B. Picotte real estate ownership and management entities comprising The Picotte Compa-
50 nies, Albany, New York, having worked for these entities since 1970. He serves
Vice Chairman, Risk on the boards of various educational and public service organizations,
Management Committee; including The Center for Economic Growth and the Albany Institute of History
Executive Committee and Art, and is a board member of Mercycare Corporation. He has served as
Chairman of St. Peter's Hospital, as well 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.
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR, AGE AND PRINCIPAL OCCUPATION AND
COMMITTEE MEMBERSHIP OTHER INFORMATION
- ----------------------
<C> <S>
TERMS EXPIRING IN 1999
<CAPTION>
<C> <S>
PRESIDENT AND CHIEF OPERATING OFFICER, QUICK & REILLY/FLEET SECURITIES, INC.
[PHOTO] Mr. Quick is President, Chief Operating Officer and a director of Quick & Reilly/ Fleet
Thomas C. Quick Securities, Inc., successor to The Quick & Reilly Group, Inc. ("Quick & Reilly"), a
43 Fleet subsidiary and holding company for four major financial services businesses. Mr.
Risk Management Quick has held this position since 1996. From 1985 to 1996, he was President of Quick &
Committee Reilly, Inc., a Quick & Reilly subsidiary and a national discount brokerage firm. Mr.
Quick serves as a trustee for the Securities Industry Foundation for Economic
Education. He is also a member of the Board of Trustees, the Investment Advisory Board
and the Endowment Committee for the St. Jude Children's Hospital. He is a trustee and
treasurer of both the National Corporate Theater Fund and the United World Colleges, a
trustee of the Alcoholism Council of New York, and a member of the Trustee Advisory
Council of Fairfield University. A graduate of Fairfield University, Mr. Quick joined
the Fleet Board in January 1998 in connection with the acquisition of Quick & Reilly.
VICE CHAIRMAN AND CHIEF OPERATING OFFICER, CVS CORPORATION; PRESIDENT AND CHIEF
[PHOTO] EXECUTIVE OFFICER, CVS PHARMACY INC.
Thomas M. Ryan Mr. Ryan has served as President and Chief Executive Officer of CVS Pharmacy Inc.
45 ("CVS") since January 1994. In December 1996, he also was appointed Vice Chairman and
Risk Management Chief Operating Officer, and a director, of CVS Corporation, the parent company of CVS.
Committee Mr. Ryan joined CVS in 1975 and has held a number of managerial and professional
positions in the company. In 1985, he was named Vice President of pharmacy operations
and in 1988 was appointed Senior Vice President. Two years later, Mr. Ryan was
appointed Executive Vice President of Stores for the organization. Mr. Ryan is a
director of Reebok International, Ltd. and Chairman of the Board of Directors of the
National Association of Chain Drug Stores. He serves on the Board of Trustees of the
University of Rhode Island. He is a member of the Rhode Island Public Expenditures
Council, the Rhode Island Philharmonic and the Sports Council of Rhode Island. He also
is a co-chair of the Rhode Island Economic Development Council. Mr. Ryan was elected to
the Fleet Board in 1997.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER, MORMAC MARINE GROUP, INC.; CHAIRMAN, MORAN
[PHOTO] TRANSPORTATION COMPANY
Paul R. Tregurtha Mr. Tregurtha joined Mormac Marine Group, a marine shipping business, in 1988 and Moran
62 Transportation, a tug and barge shipping business, in July 1994. Prior to that, he
Executive Committee; served as Chairman, President and Chief Executive Officer of Moore McCormack Resources,
Human Resources and Inc. He is a director of Mormac Marine Group, a director and Vice Chairman of Interlake
Planning Committee 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>
8
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR, AGE AND PRINCIPAL OCCUPATION AND
COMMITTEE MEMBERSHIP OTHER INFORMATION
- ------------------------
<C> <S>
TERMS EXPIRING IN 2000
PRESIDENT AND CHIEF EXECUTIVE OFFICER, WILLIAM BARNET & SON, INC.
[PHOTO] Mr. Barnet has been President and Chief Executive Officer of William Barnet & Son,
William Barnet, III Inc., a synthetic fiber processing company, since 1976. He also serves on the boards of
55 numerous civic and business entities, including the Palmetto Business Forum and Spartan
Executive Committee; Mills, is Chairman of the Spartanburg County Foundation, and Chairman of the Board of
Risk Management Com- Trustees of Converse College. A graduate of Dartmouth College and its Amos Tuck School
mittee; Employee of Business Administration, Mr. Barnet became a Fleet director in 1988, having served
Development and Public as a Norstar director since 1984.
Policy Committee
CHAIRMAN AND CHIEF EXECUTIVE OFFICER, THE COLLINS GROUP, INC.
[PHOTO] Mr. Collins is Chairman and Chief Executive Officer of The Collins Group, Inc.
John T. Collins Previously, Mr. Collins was President and Chief Executive Officer of Quebecor Printing,
51 (USA) Corp. Mr. Collins joined Quebecor Printing, (USA) Corp in 1990. From 1986 to 1990
Executive Committee; he served as President and Chief Executive Officer of Quebecor America, Inc. Mr.
Human Resources and Collins is an advisory board member of Pell Rudman Venture Partners, a board member of
Planning Committee the National Association of Printers and Lithographers and a director of Joan Fabrics,
Inc. He is Vice Chairman of the Board of Trustees of Bentley College and a trustee of
Beth Israel Deaconess Medical Center. Mr. Collins also is on the advisory council of
Junior Achievement of Northern New England. Since 1995, Mr. Collins has been a director
of Fleet National Bank and a member of its Risk Management Committee and Executive
Committee. Elected to the Fleet Board in 1995, Mr. Collins previously served as a
Shawmut director from 1992 until the Shawmut Merger. He also served as a director of
two Shawmut banking subsidiaries beginning in 1992 and 1987, respectively.
CHAIRMAN, KENDELL HOLDINGS INC.
[PHOTO] Chairman since 1985 of Kendell Holdings Inc., a personal holding company, Mr. Kennedy
Raymond C. Kennedy was Chief Executive Officer and Publisher of the Hudson (N.Y.) Register-Star, a daily
69 newspaper, from 1956 to 1985. He is past President of the New York State Publishers
Audit Committee 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.
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR, AGE AND PRINCIPAL OCCUPATION AND
COMMITTEE MEMBERSHIP OTHER INFORMATION
- ------------------------
<C> <S>
TERMS EXPIRING IN 2000
CHAIRMAN AND CHIEF EXECUTIVE OFFICER, ROBERT J. MATURA ASSOCIATES AND TREEFORT FELLOWS
[PHOTO] Mr. Matura has held his present position since June 1992. From July 1988 to May 1992,
Robert J. Matura he served as Chairman, President and Chief Executive Officer of The William Carter
64 Company, a manufacturer of infants' and childrens' apparel. From July 1986 through June
Vice Chairman, 1988 he served, pro bono, as Chief Executive Officer and Chancellor of Sacred Heart
Audit Committee 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. Mr. Matura served as a director of Shawmut from 1992 until the
Shawmut Merger, and on the boards of two Shawmut banking subsidiaries from 1989 until
1995. Prior to Shawmut's merger with Hartford National, Mr. Matura served as a Hartford
National director from 1984 until 1989. He was elected to the Fleet Board in 1995.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER, FLEET FINANCIAL GROUP, INC.
[PHOTO] Mr. Murray joined Fleet in 1962, became President in 1978, and was named Chairman,
Terrence Murray President and Chief Executive Officer in 1982. He continued to serve in that capacity,
58 except in 1988 following the Norstar acquisition when he served as President and Chief
Executive Committee Operating Officer, and following the Shawmut Merger until December 1996, when he served
as President and Chief Executive Officer. Mr. Murray became Chairman and Chief
Executive Officer in 1997. 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 as an honorary trustee of the Rhode Island School of Design. Mr. Murray
is a past director of the International Monetary Conference and 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.
PRESIDENT AND CHIEF EXECUTIVE OFFICER, PARTNERS HEALTH CARE SYSTEM, INC.;
[PHOTO] PROFESSOR OF MEDICINE, HARVARD MEDICAL SCHOOL
Samuel O. Thier Dr. Thier has been President and Chief Executive Officer of Partners Healthcare System,
60 Inc. since 1996, after having served as President since 1994. From 1994 to 1997 he also
Audit Committee served as President of Massachusetts General Hospital Corporation. 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, WGBH-TV (Boston) and the Commonwealth Fund, and a trustee
of Brandeis University, Cornell University and the Boston Museum of Science. Elected a
Shawmut director in 1994, Dr. Thier joined the Fleet Board in 1995 in connection with
the Shawmut Merger.
</TABLE>
10
<PAGE>
CERTAIN INFORMATION REGARDING THE BOARD OF DIRECTORS
MEETINGS AND COMMITTEES
During 1997, the Fleet Board met eight times and committees of the Board met
as follows: the Executive Committee met twice, the Audit Committee and the Human
Resources and Planning Committee each met five times, and the Risk Management
Committee and the Employee Development and Public Policy Committee each met four
times. In 1997, 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 Bradford R. Boss and Paul R. Tregurtha, who attended 71% and 73%,
respectively, 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 periodically reviews and makes
recommendations to the Fleet Board for the adoption of a strategic plan, reviews
management's plans for integrating acquired entities and monitors
implementation, and reviews significant organizational changes and
restructurings. The Risk Management Committee is responsible for certain
corporate risk areas, including loan review, credit administration and asset and
liability management. The Employee Development and Public Policy Committee was
formed in 1996 in conjunction with Fleet's diversity initiative. With
representation from 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 this By-law provision may be obtained by writing
to William C. Mutterperl, Secretary of Fleet, One Federal Street, Boston,
Massachusetts 02110. In accordance with the terms of Joel Alvord's 1995
employment agreement, Fleet will sponsor Mr. Alvord's election and re-election
to the Fleet Board until Mr. Alvord reaches 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.
COMPENSATION OF DIRECTORS
ANNUAL RETAINER AND MEETING FEES. For their service on the Fleet Board,
directors (other than Messrs. Murray and Quick) 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.
1997 DIRECTOR COMPENSATION PROGRAM. Under the 1997 director compensation
program, each director was required to defer at least 25% ($10,000) of his or
her annual retainer into a phantom stock account pursuant to the Directors
Deferred Compensation Plan. The plan allowed directors 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
11
<PAGE>
any appreciation (or depreciation) of Common Stock (including the payment of
dividends). For 1997, the rate of return on amounts deferred into fixed rate
accounts was 12%. 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 plan is an
unsecured claim against the general assets of the Corporation.
Fleet has maintained a retirement plan ("Retirement Plan") for all of its
nonemployee directors who are not former Norstar directors (the "Qualified
Directors"). Under the Retirement Plan, each Qualified Director is entitled to
participate after he or she has served on the Fleet Board for at least five
years. The Retirement Plan provides that Qualified Directors are 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 for years of service on the Shawmut Board of
Directors ("Shawmut Board"), or any subsidiary or predecessor board. Fleet also
maintains the Supplemental Compensation Plan for former Norstar directors, which
was assumed in connection with the Norstar Merger. The plan generally provides
that each eligible Fleet director who was previously a Norstar director will
receive 40 quarterly payments of $5,000 each ($200,000), commencing in the first
quarter following the quarter in which such director terminates service as a
director. William Barnet, III, Raymond C. Kennedy, John R. Riedman and Thomas D.
O'Connor are former Norstar directors.
NEW DIRECTOR COMPENSATION PROGRAM. Effective as of April 15, 1998, the Fleet
Board has adopted a new director compensation program which is intended to link
directors' pay more closely with the interests of shareholders by providing for
an annual award of stock units to each nonemployee director equal to 50% of the
annual retainer ($20,000). The stock units will be payable in shares of Common
Stock following termination of service as a director, and will replace any
future benefit accruals under the retirement plans, which will be terminated.
Directors may convert the present value of their accrued retirement benefit into
stock units based on the fair market value of Common Stock on April 15, 1998, or
they may elect to have their retirement benefit paid in accordance with the
terms of the applicable retirement plan. In addition, the new director
compensation program will require mandatory deferral of at least 25% of each
director's annual retainer into stock units, which will replace the phantom
stock. Directors also may defer all or a portion of their remaining annual
retainer and meeting fees into stock units, and may convert their phantom stock
account balances into stock units based on the fair market value of Common Stock
on April 15, 1998.
SHAWMUT PROGRAMS. In connection with the Shawmut Merger, Fleet assumed the
Shawmut 1989 Non-Employee Directors' Restricted Stock Plan ("Directors' Stock
Plan"), which was previously approved by the Shawmut stockholders for
nonemployee 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. Also 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 four 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 ($1
million over ten years). 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, Robert J. Matura, Lois D. Rice, Samuel O.
Thier and Paul R. Tregurtha.
12
<PAGE>
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The table below shows the number of shares of Common Stock and the percent
of outstanding Common Stock beneficially owned as of December 31, 1997 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 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
Director Rice owns 124 depositary shares of the Corporation's 9.30% Cumulative
Preferred Stock. In addition, until April 15, 1998 when the new director
compensation program becomes effective, all nonemployee 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, 1997, the aggregate phantom
stock account balance for all nonemployee directors as a group was $2,713,692
which, if convertible into actual shares, would equal approximately 36,123
Common Stock shares (based on the $75.125 closing price of Common Stock on
December 31, 1997).
<TABLE>
<CAPTION>
NAME OF INDIVIDUAL AMOUNT AND NATURE
OR IDENTITY OF OF BENEFICIAL PERCENT OF
GROUP OWNERSHIP(1)(2) CLASS(9)
-------------------------- ------------------ -----------
<S> <C> <C>
Joel B. Alvord...................................................................... 188,468 .07%
William Barnet, III................................................................. 10,739 *
Bradford R. Boss.................................................................... 31,676(3) *
Stillman B. Brown................................................................... 20,011 *
Paul J. Choquette, Jr............................................................... 8,469 *
Kim B. Clark........................................................................ 0 *
John T. Collins..................................................................... 40,062 .02%
James F. Hardymon................................................................... 3,658 *
Marian L. Heard..................................................................... 94 *
Robert M. Kavner.................................................................... 3,240 *
Raymond C. Kennedy.................................................................. 20,564 *
Robert J. Matura.................................................................... 9,115(4) *
Arthur C. Milot..................................................................... 239,704 .09%
Terrence Murray..................................................................... 556,078 .21%
Thomas D. O'Connor.................................................................. 23,558 *
Michael B. Picotte.................................................................. 30,243 .01%
Thomas C. Quick..................................................................... 3,900,649(5)(6) 1.49%
Lois D. Rice........................................................................ 3,741 *
John R. Riedman..................................................................... 363,222 .14%
Thomas M. Ryan...................................................................... 750(7) *
Samuel O. Thier..................................................................... 252 *
Paul R. Tregurtha................................................................... 12,891 *
Robert J. Higgins................................................................... 230,123 .09%
H. Jay Sarles....................................................................... 307,998 .12%
Gunnar S. Overstrom, Jr............................................................. 240,270(8) .09%
Michael R. Zucchini................................................................. 103,921 .04%
All directors and executive officers as a group (35 persons)........................ 6,903,714 2.63%
</TABLE>
- ------------------------
(1) Amounts shown include 99,000, 317,000, 86,700, 109,500, 135,500, 32,000,
12,000 and 353,409 shares, respectively, that may be acquired by Messrs.
Alvord, Murray, Quick, Higgins, Sarles, Overstrom and
13
<PAGE>
Zucchini, and all other directors and executive officers as a group,
pursuant to employee stock options on or prior to March 1, 1998.
(2) Amounts shown include 17,549, 10,334, 27,721, 3,666, and 9,943 shares,
respectively, allocated to the accounts of Messrs. Higgins, Sarles,
Overstrom and Zucchini, 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. Boss includes 200 shares held in his wife's name.
(4) Amount shown for Mr. Matura includes 5,174 shares held in his wife's name.
(5) Amount shown is the number of shares of Common Stock into which shares of
Quick & Reilly common stock beneficially owned by Mr. Quick as of December
31, 1997 were converted in connection with Fleet's acquisition of Quick &
Reilly. Such conversion occurred as of January 31, 1998.
(6) Amount shown includes 3,617,615 shares with respect to which Mr. Quick holds
sole or shared voting and investment power in his capacity as trustee or
general partner of certain trusts and a general partnership.
(7) Amount shown for Mr. Ryan includes 250 shares held in his wife's name.
(8) Amount shown for Mr. Overstrom includes 2,762 shares held in the names of
his wife and children.
(9) 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, 1998.
* Less than .01%
14
<PAGE>
HUMAN RESOURCES AND PLANNING COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
OVERVIEW. The Human Resources and Planning Committee is composed entirely of
five 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 1997, the Committee's compensation
decisions with respect to the CEO and the four other most highly compensated
executive officers identified 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 that link the Named Executive Officers' pay closely
with the interests of Fleet's shareholders. Eighty to ninety percent (80%-90%)
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 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 1997, the Committee considered
primarily: (1) Fleet's performance in 1997, as measured by Return on Equity
("ROE"), Net Income and Return on Assets ("ROA"), each of which reflected
increases over 1996; (2) the announced acquisitions of Columbia Management
Company, The Quick & Reilly Group, Inc., and Advanta's credit card business,
further diversifying Fleet's business portfolio; (3) the effective
implementation of consolidation plans, and achievement of planned expense
reductions, related to the NatWest acquisition; (4) continued 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
at comparable levels in the Peer Group. In 1997, 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 1997.
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 range that reflects the executive's
position, duties and level of responsibility. The salary ranges consist of
minimum and maximum levels distributed around a median 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 scheduled base salary increases in 1997. Any salary increases in
1997 were due to increased responsibility and/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.
15
<PAGE>
(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 1997, the maximum bonus awards
allowed under the plan to the CEO and to each of the other Named Executive
Officers were $3,713,550 and $1,856,775, respectively. The Committee retains the
discretion to decrease (but not to increase) these bonus 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 the bonuses paid to
executives in comparable positions for comparable performance within the Peer
Group. In 1997, 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 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 the grant, and expire in not more than 10
years. Options are intended to be at the median of option awards granted to
executives in comparable positions within the Peer Group. In 1997, 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 October 1997, the Committee awarded performance-based restricted stock under
the Amended and Restated 1992 Stock Option and Restricted Stock Plan ("1992
Plan") to seven executive officers, including the CEO and the other Named
Executive Officers. The awards provide that if either cumulative earnings per
share growth, average ROE or stock price appreciation, measured over a
three-year period, exceeds a threshold, the executive officers will vest in a
percentage of the shares awarded, ranging from 50% to 100%. In addition, a
portion of the restrictions will lapse sooner if, during the performance period,
the average closing price of the Common Stock is or exceeds $80 per share during
a consecutive 90-day calendar period; all restrictions will lapse sooner if,
during the performance period, the average closing price of the Common Stock is
or exceeds $90 per share during a consecutive 90-day calendar period. 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 1997, Fleet's most highly compensated Named Executive Officer was Terrence
Murray, Chairman and Chief Executive Officer. The Committee acknowledged and
approved Mr. Murray's performance and determined that he met or exceeded all
critical objectives in 1997. The Committee also discussed 1998 business
objectives for Mr. Murray.
Mr. Murray's compensation for 1997 included a base salary at the same level as
in effect since 1994 and a bonus in the amount of $2,800,000. 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 announced acquisitions of Columbia Management
Company, The Quick & Reilly Group, Inc. and Advanta's credit card business,
consolidation of NatWest into Fleet, and the overall performance of Fleet in
1997, including progress toward its diversity initiatives. Mr. Murray was not
16
<PAGE>
present during 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 15, 1997, he was granted options to purchase
175,000 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 1997,
including his base salary and annual and long-term incentive awards, but
excluding the potential value of the special award discussed below, will remain
somewhat above the median of the total compensation trends in the Peer Group,
which has been obtained via surveys, outside consultants and historical data.
The Committee approved a grant of 825,000 stock units to Mr. Murray as part of a
retention strategy and in recognition of his invaluable contributions to Fleet's
success in developing, implementing and managing the strategy of growth and
diversification that included the acquisitions of, among others, Norstar, Bank
of New England, Shawmut National Corporation, NatWest, Columbia Management
Company, The Quick & Reilly Group, Inc. and Advanta's credit card business. The
units were granted at the fair market value of the Common Stock on the date of
the award and will vest if Mr. Murray remains a Fleet employee until August 1,
2001. The units will function like stock options; however, any gain between the
grant price and the fair market value of the Common Stock at exercise will be
payable in cash. If Mr. Murray voluntarily terminates his employment prior to
August 1, 2001, he forfeits all rights to the award. The units will vest in full
upon a change of control or if Fleet terminates Mr. Murray's employment for
reasons other than cause prior to August 1, 2001.
The Committee believes that this grant will effectively retain Mr. Murray, and
provide him with a competitive, shareholder value-based long-term incentive
award.
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 Paul R. Tregurtha
John T. Collins
</TABLE>
17
<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, and the top 15 (based on asset size) domestic banks,
excluding Fleet (the "Peer Group"), for the five-year period from December 31,
1992 through December 31, 1997. The graph assumes that $100 was invested on
December 31, 1992 in the Common Stock and the indices, and that all dividends
were reinvested. Assuming that $100 was invested on December 31, 1996 in the
Common Stock and the indices, and that all dividends were reinvested, the total
shareholder return on the Common Stock was $155.05, as compared with the
cumulative total returns of the S&P 500 Stock Index, the KBW East Regional Bank
Index, and the Peer Group which were $133.37, $160.02 and $138.40, respectively.
The financial institutions which comprise the Peer Group are The Chase Manhattan
Corporation, Citicorp, NationsBank Corporation, J.P. Morgan & Co. Incorporated,
BankAmerica Corporation, First Union Corporation, Bankers Trust New York
Corporation, BancOne Corporation, First Chicago NBD Corporation, Wells Fargo &
Company, Norwest Corporation, PNC Bank Corporation, KeyCorp and U.S. Bancorp.
The returns of each of these corporations have been weighted according to their
market capitalization at the beginning of each year presented. U.S. Bancorp now
is included within the Peer Group, having merged with First Bank System, Inc.
BankBoston Corporation is no longer among the Peer Group (based on asset size).
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
FLEET FINANCIAL S&P 500 STOCK INDEX TOP 15 BANKS PEER GROUP KBW EAST REGIONAL INDEX
<S> <C> <C> <C> <C>
1992 100 100 100 100
1993 105.30 110.08 109.30 104.29
1994 106.31 111.53 102.03 92.58
1995 140.08 153.44 160.84 157.16
1996 178.13 188.52 228.98 215.56
1997 276.19 251.44 317.10 344.93
</TABLE>
18
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
EXECUTIVE COMPENSATION
The following table shows, for the fiscal years ended December 31, 1997, 1996
and 1995, the compensation of the Chief Executive Officer and the four other
most highly compensated executive officers of Fleet during 1997 who were serving
as executive officers at year-end 1997. 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 Mr. Overstrom
prior to the Shawmut Merger.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
LONG-TERM COMPENSATION
-------------------- ------------------------------------------
AWARDS PAYOUTS
--------------------------- ------------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING LTIP ALL OTHER
SALARY BONUS COMPENSATION AWARD(S) OPTIONS/SARS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)(1) ($)(2)(3)(4) (#)(5) ($) ($)(9)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Terrence Murray............... 1997 $992,200 $2,800,000 $ 29,484 $1,980,000 175,000 $ -- $242,615
Chairman and 825,000(6)
Chief Executive Officer 1996 992,200 2,100,000 137,033 1,196,250 150,000 -- 197,110
1995 992,200 1,900,000 -- -- 150,000 -- 154,909
Robert J. Higgins............. 1997 600,000 1,250,000 33,251 990,000 80,000 -- 151,281
President and Chief 1996 525,000 800,000 12,812 -- 60,000 -- 98,088
Operating Officer 1995 524,999 725,000 -- -- 60,000 74,791
H. Jay Sarles................. 1997 525,000 1,100,000 11,156 990,000 75,000 -- 166,684
Vice Chairman and Chief 1996 525,000 725,000 6,649 598,125 60,000 114,974
Administrative Officer 1995 524,999 725,000 -- -- 60,000 91,851
Gunnar S. Overstrom, Jr. ..... 1997 525,000 950,000 81,986 792,000 65,000 -- 199,343
Vice Chairman 1996 525,000 800,000 2,531 -- 60,000 -- 57,483
1995 525,000 725,000 1,192,385 -- 126,915(7) 1,241,117(8) 6,264
Michael R. Zucchini........... 1997 525,000 850,000 10,370 792,000 65,000 -- 126,824
Vice Chairman and Chief 1996 525,000 400,000 9,960 -- 60,000 -- 89,193
Technology Officer 1995 524,999 725,000 -- -- 60,000 -- 63,275
</TABLE>
- ------------------------
(1) Perquisites and other personal benefits paid to each of the Named Executive
Officers in each instance aggregated less than $50,000, except that the
amount reported for Mr. Murray for 1996 includes a relocation expense and
moving allowance aggregating $57,000, and a tax preparation and financial
planning expense of $24,000.
(2) The values shown in the table are based on the closing price of Common
Stock on the date of each grant, rather than the December 31, 1997 closing
price. With respect to each of the restricted stock awards described in
footnotes (3) and (4): (a) the 1997 year-end value reported for each award
is based on the December 31, 1997 closing price of Common Stock ($75.125);
(b) dividends will be 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 October 1997, Fleet awarded performance-based restricted stock to
Messrs. Murray, Higgins, Sarles, Overstrom and Zucchini under the Amended
and Restated 1992 Stock Option and Restricted Stock Plan ("1992 Plan"). The
awards provide that the transfer restrictions will lapse if either
cumulative earnings per share growth, stock price appreciation, or average
ROE, measured over a three-year period, exceeds certain thresholds. To the
extent any one of the targets is met or exceeded, the executive officers
will vest in a percentage of the shares awarded, ranging from 50% to 100%.
In addition, a portion of the restrictions will lapse sooner if during the
performance period the average closing price of the Common Stock is $80 per
share or higher during a consecutive 90-day calendar
(FOOTNOTES CONTINUED ON FOLLOWING PAGE)
19
<PAGE>
(FOOTNOTES CONTINUED FROM PRECEDING PAGE)
period commencing as of a date on which the closing price of the Common
Stock is $80 or higher. All restrictions will lapse if the average closing
price is $90 per share or higher for a consecutive 90-day calendar period
commencing as of a date on which the closing price of the Common Stock is
$90 or higher. The amount and 1997 year-end value of the performance-based
restricted stock awarded in 1997 under the 1992 Plan are: Mr. Murray, 30,000
and $2,253,750; each of Messrs. Higgins and Sarles, 15,000 and $1,126,875;
and each of Messrs. Overstrom and Zucchini, 12,000 and $901,500.
(4) In December 1992, Fleet awarded shares of restricted stock to Messrs.
Higgins and Sarles under the 1992 Plan. In accordance with the terms of the
awards, the restrictions lapsed as of January 1, 1998. The number and 1997
year-end value of the shares of restricted stock are: Mr. Higgins, 15,000
and $1,126,875; and Mr. Sarles, 20,000 and $1,502,500.
(5) Neither the stock options granted to the Named Executive Officers under the
1992 Plan nor those granted by Shawmut to Mr. Overstrom in 1995 prior to the
Shawmut Merger included tandem SARs.
(6) In December 1997, Fleet awarded 825,000 stock units to Mr. Murray. The
units were granted at the fair market value of the Common Stock on the award
date and will vest if Mr. Murray remains a Fleet employee on August 1, 2001,
and earlier under certain circumstances (including, without limitation, upon
a change of control of Fleet). The units represent the right to receive a
cash payment upon exercise in an amount per unit equal to any appreciation
in the value of the Common Stock between the grant date and the exercise
date.
(7) Amount includes 66,915 options granted by Shawmut prior to the Shawmut
Merger. This number has been adjusted to reflect the conversion of each
share of Shawmut common stock to .8922 shares of Common Stock.
(8) Amount 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 of control of Shawmut which occurred when the holders
of Shawmut common stock approved the Shawmut Merger.
(9) 1997 amounts for the Named Executive Officers include: (a) contributions by
Fleet under Fleet's Savings Plan, and any amounts accrued under Fleet's
Executive Supplemental Plan: Mr. Murray, $59,540; Mr. Higgins, $34,626; Mr.
Sarles, $31,512; Mr. Overstrom, $31,512; and Mr. Zucchini, $31,512; (b)
executive group term life insurance premiums paid by Fleet on behalf of the
following executive officers: Mr. Murray, $30,564; Mr. Higgins, $10,887; Mr.
Sarles, $9,526; and Mr. Zucchini, $6,770; and (c) preferential earnings on
deferred compensation: Mr. Murray, $152,511; Mr. Higgins, $105,768; Mr.
Sarles, $125,646; Mr. Overstrom, $167,831; and Mr. Zucchini, $88,542 (Mr.
Overstrom's amount includes preferential earnings on amounts deferred
pursuant to his employment agreement, as amended; See "Severance Agreements
and Employment Contracts").
20
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table contains information concerning the grant of stock options
and stock units made during the fiscal year ended December 31, 1997 to the Named
Executive Officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------
PERCENT
NUMBER OF OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO
OPTIONS/SARS EMPLOYEES EXERCISE OR GRANT DATE
GRANTED IN FISCAL BASE PRICE EXPIRATION PRESENT VALUE
NAME (#) YEAR(3) ($/SH) DATE ($)(4)
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
Terrence Murray...................... 175,000(1) 4.17% $ 65.81 10/14/2007 $ 3,192,000
825,000(2) 100.00% 74.03 (2) 13,224,750(5)
Robert J. Higgins.................... 80,000(1) 1.91% 65.81 10/14/2007 1,459,200
H. Jay Sarles........................ 75,000(1) 1.79% 65.81 10/14/2007 1,368,000
Gunnar S. Overstrom, Jr.............. 65,000(1) 1.55% 65.81 10/14/2007 1,185,600
Michael R. Zucchini.................. 65,000(1) 1.55% 65.81 10/14/2007 1,185,600
</TABLE>
- ------------------------
(1) Stock options granted on October 15, 1997 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 grant date, and have a
ten-year term. If a change of control of Fleet were to occur, the options
would become immediately exercisable in full. These options are transferable
to immediate family members and to trusts, partnerships, limited liability
companies and other entities for the benefit of immediate family members
("Permitted Transferees").
(2) Stock units granted on December 17, 1997. The units will vest in full if Mr.
Murray remains a Fleet employee on August 1, 2001, and earlier under certain
circumstances (including, without limitation, upon a change of control of
Fleet). The units represent the right to receive a cash payment upon
exercise in an amount per unit equal to any appreciation in the value of the
Common Stock between the grant date and the exercise date. The units are
transferable to Permitted Transferees, as defined in footnote (1) above, and
expire one year following the termination of Mr Murray's employment.
(3) The percentages in the table for the stock options granted in 1997 are based
on a total of 4,198,430 stock options granted in 1997 to Fleet employees,
all of which were granted on the same material terms described in footnote
(1), except that only options granted to executive officers are
transferable.
(4) The grant date present values shown in the table for the stock options are
determined using the Black-Scholes option pricing model. The assumptions
used in calculating the Black-Scholes present value of approximately $18.24
per option for new option grants were as follows: (a) a risk-free interest
rate of 6.05% (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 3.0% (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 six 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 stock 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 stock options. The amount
realized from an employee stock option ultimately depends on the market
value of the Common Stock on the date of exercise.
21
<PAGE>
(5) The grant date present value shown in the table for the stock units is
determined using the Black-Scholes pricing model. The assumptions used in
calculating the Black-Scholes present value of approximately $16.03 per unit
were as follows: (a) a risk-free interest rate of 5.78% (based on the yield
on a U.S. Treasury security with a maturity approximating the expected life
of the units); (b) a dividend yield of 3.0% (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 six years prior to the stock unit
grant); and (d) an assumed stock unit term of four years. Fleet has entered
into hedging transactions, at a net cash cost of $4.9 million, which are
designed to fix the cost of the stock unit grant payment through August 1,
2001 at this amount.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION/SAR VALUES
The following table contains information for the Named Executive Officers
concerning the exercise of options during the fiscal year ended December 31,
1997 and unexercised options held as of the end of the 1997 fiscal year.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/SARS AT
OPTIONS/SARS AT
VALUE FY-END(#)(1) FY-END($)(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.................. 112,500 $ 3,712,725 317,000 423,000 $ 12,314,925 $ 9,850,825
Robert J. Higgins................ 26,000 922,935 109,500 182,000 4,079,028 4,143,750
H. Jay Sarles.................... 0 0 135,500 177,000 5,292,838 4,097,175
Gunnar S. Overstrom, Jr. ........ 12,000 218,940 32,000 141,000 983,640 2,977,695
Michael R. Zucchini.............. 97,500 2,540,512 12,000 167,000 404,940 4,004,025
</TABLE>
- ------------------------
(1) None of the Named Executive Officers holds any stock options with tandem
SARs. Any tandem 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,
1997 ($75.125), minus the grant price.
(3) The value of unexercised in-the-money stock options at December 31, 1997 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 grant price at the time the
stock option is exercised. There is no assurance that the values of
unexercised stock options reflected in this table will be realized.
22
<PAGE>
PENSION PLANS
The following table shows the estimated annual pension benefits payable at
normal retirement to a participant in certain of the Corporation's qualified and
nonqualified defined benefit plans.
PENSION TABLE
<TABLE>
<CAPTION>
FINAL
AVERAGE 5 YEARS 10 YEARS 20 YEARS 25 YEARS 30 YEARS
SALARY SERVICE(1) SERVICE(1) SERVICE(1) SERVICE(1) SERVICE(1)
- ------------ ------------ ---------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
$ 700,000 $ 68,901 $ 137,802 $ 275,604 $ 344,505 $ 413,406
900,000 88,901 177,802 355,604 444,505 533,406
1,100,000 108,901 217,802 435,604 544,505 653,406
1,300,000 128,901 257,802 515,604 644,505 773,406
1,500,000 148,901 297,802 595,604 744,505 893,406
1,700,000 168,901 337,802 675,604 844,505 1,013,406
1,900,000 188,901 377,802 755,604 944,505 1,133,406
2,100,000 208,901 417,802 835,604 1,044,505 1,253,406
2,300,000 228,901 457,802 915,604 1,144,505 1,373,406
2,500,000 248,901 497,802 995,604 1,244,505 1,493,406
2,700,000 268,901 537,802 1,075,604 1,344,505 1,613,406
2,900,000 288,901 577,802 1,155,604 1,444,505 1,733,406
</TABLE>
- ------------------------
(1) The table sets forth the combined benefits as of December 31, 1997 payable
under the Fleet Financial Group, Inc. Pension Plan, the Fleet Financial
Group, Inc. Retirement Income Assurance Plan, and the Fleet Financial Group,
Inc. Supplemental Executive Retirement Plan (collectively, the "Pension
Plan"). Messrs. Murray, Higgins, Sarles, Overstrom and Zucchini each
participate in these three plans.
A participant's "Final Average Salary" means the average annual salary during
the 60 consecutive calendar months in the last 120 calendar months of a
participant's employment in which the sum of the participant's salary, plus
bonuses paid after 1993, was the highest. The "salary" and "bonus" used to
determine a participant's Final Average Salary are the same as the "Salary" and
"Bonus" reported in the Summary Compensation Table.
The table describes the annual benefit payable as a single life annuity
beginning at age 65. The benefits shown in the table are not subject to any
deduction for Social Security or other offset amounts. In general, the annual
benefit at age 65 is calculated as the sum of 1.25% of Final Average Salary up
to the Integration Level (as specified below) and 2% of Final Average Salary in
excess of the Integration Level, for each year of service up to 30. For 1997,
the Integration Level equalled $29,304. The Integration Level will increase in
future years based on the maximum amount of wages subject to Social Security
taxes.
The years of service and Final Average Salary as of December 31, 1997 of the
Named Executive Officers were: Mr. Murray, 35 years (30 of which are counted
under the Pension Plan) and $2,252,507; Mr. Higgins, 27 years and $1,026,539;
Mr. Sarles, 30 years and $992,538; Mr. Overstrom, 2 years (1.5 of which are
counted under the Pension Plan) and $824,000; and Mr. Zucchini, 10 years and
$937,154.
The table does not include a total annual pension benefit of $810,000 earned by
Mr. Overstrom under the Shawmut National Corporation Executive Supplemental
Retirement Plan (the "Shawmut SERP") and his amended employment agreement with
Fleet, which benefit is expressed as a 50% joint and survivor annuity payable
beginning at age 62. Mr. Overstrom's benefit is based on final average
compensation of $1,445,000 and 28.5 years of service (including eight additional
years credited pursuant to his employment agreement, five of which were credited
as a result of prior action by the Hartford National Board of Directors).
23
<PAGE>
Mr. Zucchini's years of service for purposes of the Pension Plan do not include
an additional five years of service that would be credited in 1998, and an
additional five years of service that would be credited in 2003, based on Mr.
Zucchini's continuous employment with Fleet to the years 1998 and 2003,
respectively.
SEVERANCE AGREEMENTS AND EMPLOYMENT CONTRACTS
SEVERANCE AGREEMENTS. Severance agreements are in effect between Fleet and
each of the Named Executive Officers. The agreements are intended to encourage
the executives to continue to carry on their duties in the event of a change of
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 of
control of Fleet and such termination is by Fleet (or its successor) other than
for cause or by the executive for good reason (each 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.
Under Mr. Overstrom's severance agreement (negotiated separately in connection
with the Shawmut Merger), as amended in 1997 and subject to the provisions of
his amended employment agreement described below, 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. The severance agreements confer no benefits prior to a
change of control. In the event that any payments received by the executives in
connection with a change of control are subject to the excise tax imposed upon
certain change of control payments under federal tax laws, the agreements
provide for an additional payment sufficient to restore the executive to the
same after-tax position he would have been in if the excise tax had not been
imposed.
OVERSTROM EMPLOYMENT AGREEMENT. In connection with the Shawmut Merger, Mr.
Overstrom entered into an employment agreement with Fleet which provides for:
(i) an annual salary equal to those of the other vice chairmen of Fleet; (ii)
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). The employment agreement is for a one-year term, and is subject
to extension for an additional one-year period on each successive anniversary of
the Shawmut Merger unless Fleet gives notice of nonrenewal at least 60 days
prior to such anniversary.
In April 1997, the Fleet Board approved amendments to Mr. Overstrom's employment
agreement to induce Mr. Overstrom to remain in Fleet's employ. The amended
agreement requires Fleet to credit to an account on the books of the Corporation
an amount ("Deferral Amount") equal to certain benefits Mr. Overstrom would have
been entitled to receive under his original agreement if he had terminated his
employment as of April 17, 1997 for any reason other than death, cause (as
defined in the agreement) or disability (as defined in the agreement). The
Deferral Amount ($7,370,952) includes (i) his base salary in effect as of April
17, 1997, multiplied by three ($1,575,000); (ii) the highest annual and
long-term bonuses awarded to and earned by Mr. Overstrom during the three fiscal
years ended December 31, 1996, multiplied by three ($3,791,057); and (iii) the
value of Mr. Overstrom's Shawmut split-dollar insurance benefit ($2,004,895).
Payment of the Deferral Amount is deferred until Mr. Overstrom's actual
termination date, and the Deferral Amount will be credited during the deferral
period with interest at Fleet National Bank's prime rate, as in effect from time
to time. The provisions of Mr. Overstrom's original employment agreement which
entitle him to coverage or credited service, as applicable, based on Fleet's
employee benefit plans (or certain Shawmut plans) remain in effect. The amended
employment agreement also effected an amendment to Mr. Overstrom's severance
agreement that entitles him to the benefits described above even if Mr.
Overstrom's actual termination date occurs after a change of control of Fleet.
24
<PAGE>
Any benefits payable to Mr. Overstrom under the severance agreement shall be
reduced by an amount equal to the benefits payable to him pursuant to his
amended employment agreement. In the event that any payments received by Mr.
Overstrom in connection with the employment agreement (other than interest
earned on the Deferral Amount) 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 Chairman and Chief Executive Officer 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, 1997 of approximately $644,213 (the highest amount outstanding
since January 1, 1997 having been $658,733), including loans aggregating
$188,928 which are nonperforming and were originally made pursuant to the
Gilbane Partnership's commitment to fund certain contingencies relating to the
apartment complex. FRE has refinanced the current portion of the loans with a
five-year term loan which bears interest at a fixed rate of 9.76% per annum and
matures on December 15, 1999. In addition, Fleet National Bank leases space from
the Partnership in the shopping center for a branch bank at an annual cost of
approximately $18,708.
A subsidiary of Fleet is a partner in several partnerships with certain other
parties, including subsidiaries of, and limited partnerships organized by,
Gilbane to construct and manage the Fleet Center in Providence, Rhode Island
("Providence Fleet Center"), and to rehabilitate an adjacent structure. One of
the partnerships has constructed a parking garage on land it is leasing from
Fleet National Bank. 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, 1997, the
amount remaining unpaid under the loan was $51,181,570 (the highest amount
outstanding since January 1, 1997 having been $51,811,594). The loan presently
carries an interest rate of 8.5% per annum plus a contingent interest feature
that serves to enhance FRE's yield. The loan closed and was fully funded on
December 31, 1992. Fleet and Fleet National Bank have leased space in the
building for a total annual rental of approximately $3,246,564.
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.
A Fleet subsidiary is an investor in a limited partnership (the "Partnership")
that invests principally in targeted businesses in the financial services
industry. Joel B. Alvord, a Fleet director, is a majority equity
25
<PAGE>
owner of the limited liability company which serves as the general partner of
the Partnership. The Fleet subsidiary has committed to invest up to $10,000,000
as a limited partner participant.
A Fleet subsidiary pays for the lease on a New York Stock Exchange, Inc. seat
that is owned by Thomas C. Quick, a Fleet director, and is leased to an employee
of the Fleet subsidiary. The same Fleet subsidiary also pays for the leases of
its employees for three additional New York Stock Exchange, Inc. seats that are
owned by members of Mr. Quick's family. Each of the four leases provides for an
annual rent of $160,000, is for a one-year term and is renewed automatically
unless terminated with sixty days' notice.
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 four
other members of the Human Resources and Planning Committee are Messrs.
Hardymon, Collins, O'Connor and Tregurtha. Mr. Murray also serves on the Board
of Directors and the compensation committee of CVS Corporation. Mr. Ryan, Vice
Chairman and Chief Operating Officer of CVS Corporation, serves on the Fleet
Board.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Fleet believes that during 1997 all Section 16(a) filing requirements
applicable to its directors and executive officers were complied with except
that (a) Paul J. Choquette, Jr. inadvertently failed to report on a timely basis
his wife's sale, on behalf of her son, of 300 shares of Common Stock; (b) H. Jay
Sarles and Michael R. Zucchini each inadvertently failed to report on a timely
basis gifts of 100 shares and 216 shares, respectively, of Common Stock; and (c)
Bradford R. Boss and a family trust for which he serves as trustee each
inadvertently failed to report on a timely basis the trust's holding of 17,000
shares of Common Stock when the shares first became reportable in 1991.
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,
1998, 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,
1997 were furnished at customary rates.
The ratification of the selection of independent auditors requires the
affirmative vote of a majority of Common Stock, present in person or represented
by proxy, and entitled to vote thereon at the Annual Meeting when there is a
quorum.
THE FLEET BOARD RECOMMENDS A VOTE "FOR" THIS PROPOSAL, WHICH IS IDENTIFIED AS
PROPOSAL 2 ON THE ENCLOSED PROXY
26
<PAGE>
1999 STOCKHOLDER PROPOSALS
Proposals of stockholders for next year's proxy statement must be received by
November 2, 1998. 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 1997 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 2, 1998
27
<PAGE>
FLEET FINANCIAL GROUP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL
P MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 15, 1998, OR ANY ADJOURNMENTS
THEREOF. THE SHARES REPRESENTED HEREBY WILL BE VOTED AS DIRECTED BY THE
R STOCKHOLDER(S).
O The undersigned hereby appoints William Barnet, III, Robert J. Matura and
Michael B. Picotte, jointly and severally with full power of substitution to
X each, as proxies for and on behalf of the undersigned, to attend the Annual
Meeting of Stockholders of Fleet Financial Group, Inc., to be held at the
Y World Trade Center Boston, 164 Northern Avenue, Boston, Massachusetts, on
Wednesday, April 15, 1998, at 11:00 a.m., or any adjournments thereof, and
to vote as directed below all stock of this Company which the undersigned
would be entitled to vote if personally present.
By acceptance, the proxies named above agree that this Proxy will be voted
in the manner directed by the stockholder giving this Proxy. If no
directions are specified, the Proxy will be voted FOR the election of all 9
nominees for Director, and FOR the ratification of the selection of KPMG
Peat Marwick LLP as independent auditors for the fiscal year ending December
31, 1998, all as set forth on the reverse. Discretionary authority is hereby
conferred as to all other matters which may properly come before the meeting
or any adjournments thereof. This Proxy, if properly executed and delivered,
will revoke all other Proxies.
NOMINEES FOR DIRECTOR:
Three-Year Term: Joel B. Alvord, Bradford R. Boss, Stillman B. Brown,
Kim B. Clark, James F. Hardymon, Arthur C. Milot,
Lois D. Rice, and John R. Riedman
Two-Year Term: Marian L. Heard
(continued on reverse side)
<PAGE>
Please mark your
X votes as in this
example.
The Proxy when properly executed will be voted in the manner directly herein by
the undersigned stockholder. If no direction is made, this Proxy will be voted
FOR all nominees, and FOR Proposal 2.
<TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES AND FOR PROPOSAL 2.
FOR AGAINST FOR AGAINST ABSTAIN
<S> <C> <C> <C> <C> <C> <C>
1. ELECTION OF / / / / 2. PROPOSAL to ratify the / / / / / /
DIRECTORS. selection of KPMG
(See Reverse) Peat Marwick LLP as
independent auditors for the
fiscal year ending
December 31, 1998.
VOTE AGAINST THE FOLLOWING NOMINEES ONLY
________________________________________
PLEASE DATE, SIGN AND MAIL THIS PROXY CARD IN THE ACCOMPANYING
ENVELOPE.
NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
Please sign EXACTLY as name(s) appear hereon. When signing
as administrator, attorney, executor, guardian or trustee,
please give your full title. If the signer is a corporation
or partnership, please sign full corporate or partnership
name by any authorized officer or person. If shares are held
jointly, each joint owner should sign.
___________________________________________
___________________________________________
SIGNATURE(S) DATE
</TABLE>
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DETACH AND RETURN PROXY CARD
FLEET FINANCIAL GROUP, INC.
ANNUAL MEETING OF STOCKHOLDERS
APRIL 15, 1998
WORLD TRADE CENTER BOSTON
164 NORTHERN AVENUE
BOSTON, MASSACHUSETTS
11:00 A.M.
