<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
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Merrill Lynch & Co., Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
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Notes:
<PAGE>
LOGO
Merrill Lynch
[ART APPEARS HERE]
1998 PROXY STATEMENT
--------------------
Notice of the Annual
Meeting of Stockholders
to be held April 14, 1998
Merrill Lynch & Co., Inc.
Conference and Training Center
Plainsboro, New Jersey
<PAGE>
GRAPHICS APPENDIX LIST
PAGE WHERE
GRAPHIC
APPEARS DESCRIPTION OF GRAPHIC OR CROSS REFERENCE
- --------------------------------------------------------------------------------
Cover Sphere with Merrill Lynch Bull Logo in gold
superimposed within such sphere.
- --------------------------------------------------------------------------------
<PAGE>
LOGO
Merrill Lynch
- -------------------------------------------------------------------------------
March 5, 1998
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders to be
held at 10:00 A.M., local time, on Tuesday, April 14, 1998, at the Merrill
Lynch Conference and Training Center, Plainsboro, New Jersey.
Information regarding the business of the meeting is set forth in the Notice
of Annual Meeting and Proxy Statement that follows this letter. There will be
an opportunity for stockholders to ask questions about our business and to
comment on any aspect of company affairs properly brought before the meeting.
We cannot stress strongly enough that your vote is important, regardless of
the number of shares you own. After you have read the Notice of Annual Meeting
and Proxy Statement, and even if you plan to attend the meeting, please
complete and return promptly the enclosed form of proxy to ensure that your
shares will be represented. A return envelope is enclosed for your
convenience.
Since mail delays may occur, it is important that the proxy be returned well
in advance of the meeting. You may revoke your proxy at any time before it is
exercised. Accordingly, you should sign and return your proxy even if you
think you may decide to attend the meeting and vote your shares in person.
Merrill Lynch will admit to the meeting stockholders of record, persons
holding proof of beneficial ownership or who have been granted proxies, and
any other persons that Merrill Lynch, in its sole discretion, may elect to
admit.
We look forward to receiving your vote and seeing you at the meeting. If you
need directions to the meeting, or have a disability that may require special
assistance, please contact our Corporate Secretary, Gregory T. Russo, at 100
Church Street, 12th Floor, New York, NY 10080-6512.
Sincerely,
/s/ David H. Komansky /s/ Herbert M. Allison, Jr.
DAVID H. KOMANSKY HERBERT M. ALLISON, JR.
Chairman of the Board and President and Chief Operating
Chief Executive Officer Officer
<PAGE>
LOGO
Merill Lynch
- -------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD APRIL 14,
1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of MERRILL
LYNCH & CO., INC. ("Merrill Lynch"), a Delaware corporation, will be held on
Tuesday, April 14, 1998, at 10:00 A.M., local time, at the Merrill Lynch
Conference and Training Center, 800 Scudders Mill Road, Plainsboro, New
Jersey, for the following purposes:
(1) To elect five directors to the Board of Directors to hold office for a
term of three years;
(2) To consider a proposed amendment to Merrill Lynch's Certificate of
Incorporation to increase the authorized number of shares of Common
Stock, par value $1.33 1/3 per share, from 500,000,000 to
1,000,000,000;
(3) To consider a stockholder proposal; and
(4) To transact such other business as properly may come before the Annual
Meeting and any adjournment thereof.
Only holders of Common Stock of record on the books of Merrill Lynch at the
close of business on February 24, 1998 are entitled to notice of, and to vote
at, the Annual Meeting and any adjournment thereof. A list of such
stockholders will be available from April 3, 1998 until prior to the meeting,
as required by law, at the offices of Merrill Lynch Asset Management L.P.
located at 800 Scudders Mill Road, Plainsboro, New Jersey. This list will also
be available at the Annual Meeting. The stock transfer books of Merrill Lynch
will not be closed.
Public notice of the date of the Annual Meeting was previously included in
Merrill Lynch's Quarterly Report on Form 10-Q for the quarter ended September
26, 1997 filed with the Securities and Exchange Commission (the "SEC") on
November 7, 1997, and in Merrill Lynch's Report to Shareholders for the first
half of 1997 mailed to shareholders on August 26, 1997.
By Order of the Board of Directors
GREGORY T. RUSSO
Secretary
New York, New York
March 5, 1998
STOCKHOLDERS ARE URGED TO VOTE, SIGN, AND DATE THE ENCLOSED FORM OF PROXY AND
TO RETURN IT IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES.
The Proxy Statement for the Annual Meeting follows this page. Except for those
who have previously received copies, included with this Proxy Statement and
Notice is Merrill Lynch's 1997 Annual Report containing financial and other
information which has also been filed with the SEC. Also enclosed is Merrill
Lynch's 1997 Annual Review, which is not considered proxy soliciting material.
<PAGE>
LOGO
Merrill Lynch
- -------------------------------------------------------------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
APRIL 14, 1998
This Proxy Statement is furnished in connection with the solicitation on
behalf of the Board of Directors of Merrill Lynch & Co., Inc., a Delaware
corporation ("Merrill Lynch"), of proxies from those holders of Merrill Lynch
Common Stock, par value $1.33 1/3 per share (the "Common Stock"), eligible to
vote at the forthcoming Annual Meeting of Stockholders, and at any adjournment
thereof, on the matters set forth in the foregoing Notice of Annual Meeting of
Stockholders. The Annual Meeting will be held on Tuesday, April 14, 1998, at
10:00 A.M., local time, at the Merrill Lynch Conference and Training Center,
800 Scudders Mill Road, Plainsboro, New Jersey.
BENEFICIAL OWNERS
The Board of Directors has fixed the close of business on February 24, 1998 as
the record date for determining those stockholders entitled to notice of, and
to vote at, the Annual Meeting and at any adjournment thereof. On that date,
there were 342,397,704 shares of Common Stock outstanding (excluding treasury
shares). Holders of Common Stock are entitled to one vote per share. Holders
of a majority of the shares of Common Stock entitled to vote at the Annual
Meeting, present in person or by proxy, constitute a quorum. To the knowledge
of Merrill Lynch, except as provided below, no person is the beneficial owner
of more than 5% of the outstanding shares of Common Stock.
BENEFICIAL OWNERSHIP TABLE
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME AND ADDRESS OF BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP OF CLASS(1)
------------------- ----------------- -----------
STATE STREET BANK AND TRUST COMPANY, TRUSTEE
("STATE STREET")
225 Franklin Street
Boston, Massachusetts 02110
<S> <C> <C>
Merrill Lynch & Co., Inc. Employee Stock
Ownership Plan (the "ESOP").................................. 31,132,868(2) 9.1%
Other Merrill Lynch employee benefit plans.................... 18,180,339(3) 5.3%
Other......................................................... 4,331,152(4) 1.3%
AXA-UAP AND RELATED PARTIES, INCLUDING THE EQUITABLE
COMPANIES INCORPORATED
787 Seventh Avenue
New York, New York 10019...................................... 18,751,149(5) 5.5%
</TABLE>
<PAGE>
Footnotes to Beneficial Ownership Table
(1) Percentages are calculated based on the Common Stock outstanding as of
February 24, 1998.
(2) Information concerning the amount and nature of the beneficial ownership
of the Common Stock is as of February 24, 1998. As of that date,
28,811,009 shares of Common Stock held by the ESOP were allocated to
participants (representing 8.4% of the outstanding shares of Common
Stock), and 2,321,859 shares of Common Stock held by the ESOP were
unallocated (representing .7% of the outstanding shares of Common Stock).
Participants have the right to direct the voting of allocated shares by
State Street as a co-trustee of the ESOP. Subject to the provisions of the
ESOP trust agreement, State Street is obligated to vote unallocated shares
and allocated shares for which it has not received directions in the same
proportion that allocated shares for which it has received directions are
voted. The trust agreement also contains provisions regarding the
allocation, vesting, and disposition of shares.
(3) Information concerning the amount and nature of the beneficial ownership
of the Common Stock is as of February 24, 1998. Participants have the
right to direct the voting of shares of Common Stock by State Street as a
co-trustee of these plans. Subject to the provisions of the trust
agreements relating to these employee benefit plans, State Street is
obligated to vote shares for which it has not received directions in the
same proportion that allocated shares for which it has received directions
are voted. The trust agreements also contain provisions regarding the
disposition of shares.
(4) Information concerning the amount and nature of the beneficial ownership
of the Common Stock is as of December 31, 1997 and was supplied by means
of a Schedule 13G Information Statement by State Street. As trustee or
discretionary advisor for various personal trust accounts and various
collective investment funds for employee benefit plans and other index
accounts not affiliated with Merrill Lynch, State Street has sole voting
power over 3,938,952 of such shares, sole dispositive power over 4,326,282
of such shares, shared voting power over 1,900 of such shares, and shared
dispositive power over 4,780 of such shares.
(5) Information concerning the amount and nature of the beneficial ownership
of the Common Stock is as of December 31, 1997 and was supplied by means
of a Schedule 13G Information Statement by AXA-UAP and certain related
parties thereto, including The Equitable Companies Incorporated
("Equitable Companies"). The parent holding companies of the Equitable
Companies are (i) AXA-UAP, a French insurance holding company that owns a
majority interest in the Equitable Companies and that also owns other AXA-
UAP entities owning the Common Stock and (ii) a group of four French
mutual insurance companies (the "Mutuelles AXA Group") that own a majority
interest in AXA-UAP. Each of AXA-UAP and the Mutuelles AXA Group may be
deemed to have sole dispositive power over 18,750,942 of the shares of
Common Stock, sole voting power over 11,556,131 of such shares, shared
voting power over 1,886,100 of such shares, and shared dispositive power
over 207 shares. The Schedule 13G indicates that 18,733,639 shares of
Common Stock are beneficially owned by the Equitable Companies through its
subsidiaries as follows: (i) 17,285,862 shares acquired solely for
investment purposes on behalf of client discretionary investment advisory
accounts by Alliance Capital Management L.P., which has sole dispositive
power over all of such shares, sole voting power over 10,117,011 of such
shares, and shared voting power over 1,866,300 of such shares; (ii)
1,437,800 shares held for investment purposes by The Equitable Life
Assurance Society of the United States, which has sole dispositive power
over all of such shares, sole voting power over 1,419,400 of such shares,
and shared voting power over 18,400 of such shares; (iii) 2,417 shares
held for investment purposes by Donaldson, Lufkin & Jenrette Securities
Corporation, which has sole dispositive and voting power over 2,210 shares
and shared dispositive power over 207 shares; (iv) 7,560 shares acquired
solely for investment purposes on behalf of client discretionary
investment advisory accounts by Wood, Struthers & Winthrop Management
Corp., which has sole dispositive power over all such shares and shared
voting power over 1,400 of such shares. The Schedule 13G notes that each
of the above subsidiaries of the Equitable Companies operates under
independent management and makes independent decisions.
2
<PAGE>
VOTING REQUIREMENTS AND OTHER INFORMATION ABOUT THE MEETING
The vote required for the election of directors is a plurality of the votes of
the shares of Common Stock represented at the Annual Meeting in person or by
proxy and entitled to vote. The affirmative vote of a majority of the
outstanding shares of Common Stock is required for the adoption of the
proposed amendment to Merrill Lynch's Certificate of Incorporation to increase
the authorized number of shares of Common Stock as described herein (the
"Proposed Amendment"). The vote required for the approval of a stockholder
proposal as described herein (the "Stockholder Proposal") and all other
matters is the affirmative vote of a majority of the shares of Common Stock
represented at the Annual Meeting in person or by proxy and entitled to vote.
All shares of Common Stock represented by valid proxies received pursuant to
this solicitation and not revoked will be voted in accordance with the choices
specified. Where no specification is made with respect to any item submitted
to a vote, such shares will be voted FOR the election as directors of Merrill
Lynch of the five persons named under the caption Election of Directors--
Nominees for Election to the Board of Directors, FOR the Proposed Amendment to
Merrill Lynch's Certificate of Incorporation and AGAINST the Stockholder
Proposal. Since the proxy confers discretionary authority to vote upon other
matters that properly may come before the meeting, shares represented by
signed proxies returned to Merrill Lynch will be voted in accordance with the
judgment of the person or persons voting the proxies on any other matters that
properly may be brought before the meeting. Merrill Lynch's by-laws require
prior notification of a stockholder's intent to submit any business to the
meeting. The deadline for such notification has passed and no such
notification has been received.
With regard to the election of directors, votes may be cast in favor of the
specific candidates or withheld; votes that are withheld will have no effect
on the outcome of the election. With regard to other types of matters
requiring stockholder action, votes may be cast in favor or against, or a
stockholder may abstain. Abstentions will be counted as shares that are
represented at the meeting and entitled to vote. Abstentions on the Proposed
Amendment of Merrill Lynch's Certificate of Incorporation will have the effect
of a negative vote. Abstentions on the Stockholder Proposal will have the
effect of a negative vote.
Under the rules of the New York Stock Exchange, Inc. ("NYSE"), brokers who
hold shares in street name for customers have the authority to vote on certain
items in the event that they have not received instructions from beneficial
owners. Brokers other than Merrill Lynch's subsidiary, Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("MLPF&S"), that do not receive instructions are
entitled to vote on the election of directors and the Proposed Amendment of
Merrill Lynch's Certificate of Incorporation. Under NYSE policy, if MLPF&S
does not receive instructions as to these matters, it is entitled to vote
shares held by it on behalf of customers only in the same proportion that the
shares voted by all other record holders are voted. With respect to the
Stockholder Proposal, neither MLPF&S nor any other broker may vote shares held
for customers without specific instructions from such customers. Under
applicable Delaware law, a broker non-vote will have no effect on the outcome
of the vote on the election of directors or the Stockholder Proposal. In the
case of the Proposed Amendment of Merrill Lynch's Certificate of
Incorporation, a broker non-vote will have the effect of a negative vote.
The execution of a proxy will not affect a stockholder's right to attend the
Annual Meeting and to vote in person. A stockholder who executes a proxy may
revoke it at any time before it is exercised at
3
<PAGE>
the meeting by giving proper written notice to Darryl W. Colletti, Assistant
Secretary of Merrill Lynch, at 100 Church Street, 12th Floor, New York, NY
10080-6512, or by filing another proxy.
It is the policy of Merrill Lynch that all proxies, ballots, and voting
materials that identify the votes of specific stockholders be kept
confidential and not be disclosed to Merrill Lynch, its affiliates, directors,
officers, or employees, subject to limited exceptions, including (i)
disclosure to vote tabulators and inspectors of election, (ii) disclosure
required by law, (iii) where a stockholder expressly requests disclosure, (iv)
in the context of a bona fide dispute as to the authenticity of the proxy,
ballot or vote, and (v) disclosure of aggregate vote totals at or in
connection with the relevant meeting of stockholders. This policy does not
apply in the event of a contested election for directors, the attempted
removal of directors, any solicitation of proxies in connection with a merger
or business combination, or a solicitation of proxies by anyone other than the
Board of Directors. The policy is not intended to prohibit stockholders from
voluntarily disclosing their votes to Merrill Lynch or the Board of Directors
or to impair the free and voluntary communication between Merrill Lynch and
its stockholders.
The expenses involved in the preparation of proxy materials and the
solicitation on behalf of the Board of Directors of proxies for the Annual
Meeting will be borne by Merrill Lynch. In addition to the solicitation of
proxies by mail, solicitation may be made by certain directors, officers, and
other employees of Merrill Lynch or of its subsidiaries in person or by
telephone or other means of communication, for which no additional
compensation will be paid, and will be made by Georgeson & Co., Inc. for which
a fee of $22,000 plus expenses will be paid. Merrill Lynch will reimburse
brokers, including MLPF&S, and other nominees for costs incurred by them in
mailing soliciting materials to the beneficial owners of the Common Stock in
accordance with the rules of the NYSE.
The accounting firm of Deloitte & Touche LLP has been selected by the Board of
Directors, upon the recommendation of the Audit and Finance Committee of the
Board of Directors, as the independent public accountants of Merrill Lynch and
its subsidiaries during the 1998 fiscal year. Representatives of Deloitte &
Touche LLP are expected to be present at the Annual Meeting with the
opportunity to make a statement, if they desire to do so, and to answer
stockholders' questions.
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes. Each class serves for a
three-year term and one class of directors is elected each year.
The Board of Directors proposes the election as directors of the five persons
named below under Nominees for Election to the Board of Directors. These
persons are to hold office for a term of three years ending in 2001. The
remaining nine directors named below will continue to serve in accordance with
their previous elections. The biographical information presented for the
director nominees and for the directors continuing in office is based upon
information received from the nominees and directors. Unless otherwise
indicated, the offices listed are offices of Merrill Lynch.
It is intended that shares of Common Stock represented by proxies received in
response to this Proxy Statement will be voted FOR the election of the
nominees listed below unless otherwise directed by stockholders in their
proxies. While it is not anticipated that any of the nominees will be unable
to take office, if that is the case, such shares will be voted in favor of
such other person or persons proposed by the Board of Directors.
4
<PAGE>
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
FOR A THREE-YEAR TERM EXPIRING IN 2001
HERBERT M. ALLISON, JR. (54) DIRECTOR SINCE 1997
President and Chief Operating Officer since April 1997; Executive Vice
President, Corporate and Institutional Client Group from January 1995 to
April 1997; Executive Vice President, Investment Banking Group from May 1993
to January 1995; Executive Vice President, Finance and Administration from
October 1990 to April 1993.
EARLE H. HARBISON, JR. (69) DIRECTOR SINCE 1987
Chairman of the Board of Harbison Corporation, a manufacturer of molded
plastic products, since September 1993; Chairman of the Executive Committee
of Monsanto Company ("Monsanto"), a provider of chemical and agricultural
products, pharmaceuticals, sweeteners, industrial process controls, and man-
made fibers, from January 1993 to August 1993; President and Chief Operating
Officer of Monsanto from May 1986 to December 1992. Mr. Harbison serves as a
director of Harbison Corporation, Angelica Corporation, Mutual of America,
National Life Insurance Company, and RightCHOICE Managed Care, Inc.
WILLIAM R. HOOVER (68) DIRECTOR SINCE 1995
Chairman of the Executive Committee of Computer Sciences Corporation ("CSC"),
a provider of information technology consulting, systems integration and
outsourcing to industry and government, since March 1997 and Consultant
since March 1995; Chairman of the Board of CSC from November 1972 to March
1997; President of CSC from November 1969 to March 1995; Chief Executive
Officer of CSC from November 1972 until March 1995. Mr. Hoover serves as a
director of CSC, Eltron International, Inc., Rofin-Sinar Technologies Inc.,
and Storage Technology Corporation.
ROBERT P. LUCIANO (64) DIRECTOR SINCE 1989
Chairman of the Board of Schering-Plough Corporation, a health and personal
care products company, since January 1984; Chief Executive Officer of
Schering-Plough Corporation from February 1982 to January 1996. Mr. Luciano
serves as a director of Schering-Plough Corporation, AlliedSignal Inc., and
C. R. Bard, Inc.
DAVID K. NEWBIGGING (64) DIRECTOR SINCE 1996
Chairman of the Board of Equitas Holdings Limited, the parent company of a
group of reinsurance companies, since 1995; Chairman of the Board and Senior
Managing Director of Jardine, Matheson & Co. Limited, a Hong Kong-based
international trading, industrial and financial services group, from 1975 to
1983; Chairman of the Board of Rentokil Group PLC, an international support
services group based in the United Kingdom, from 1987 to 1994. Mr.
Newbigging serves as the Chairman of Faupel Trading Group PLC, the Deputy
Chairman of Friends' Provident Life Office and Benchmark Group PLC and as a
director of United Meridian Corporation and Wah Kwong Shipping Holdings Ltd.
5
<PAGE>
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
WITH TERMS EXPIRING IN 1999
JILL K. CONWAY (63) DIRECTOR SINCE 1978
Visiting Scholar, Massachusetts Institute of Technology since 1985; President
of Smith College from July 1975 to June 1985. Mrs. Conway serves as a
director of Allen Telecom Inc., Arthur D. Little, Inc., Colgate-Palmolive
Company, and NIKE, Inc.
GEORGE B. HARVEY (66) DIRECTOR SINCE 1993
Corporate Director; Chairman of the Board of Pitney Bowes Inc., a provider of
mailing, office and logistics systems and management and financial services,
from 1981 to December 1996; President and Chief Executive Officer of Pitney
Bowes Inc. from 1983 to May 1996. Mr. Harvey serves as a director of
Massachusetts Mutual Life Insurance Company, The McGraw-Hill Companies,
Inc., and Pfizer Inc.
DAVID H. KOMANSKY (58) DIRECTOR SINCE 1995
Chairman of the Board since April 1997; Chief Executive Officer since
December 1996; President and Chief Operating Officer from January 1995 to
April 1997; Executive Vice President, Debt and Equity Markets Group from May
1993 to January 1995; Executive Vice President, Debt Markets Group from June
1992 to April 1993.
JOHN L. STEFFENS (56) DIRECTOR SINCE 1997
Vice Chairman of the Board and Head of U.S. Private Client Group since April
1997; Executive Vice President, Private Client Group from October 1990 to
April 1997.
WILLIAM L. WEISS (68) DIRECTOR SINCE 1993
Corporate Director; Chairman Emeritus of Ameritech Corporation ("Ameritech"),
a provider of communications and information services; Chairman of the Board
of Ameritech from 1983 to April 1994; Chief Executive Officer of Ameritech
from 1983 to December 1993. Mr. Weiss serves as a director of Abbott
Laboratories, The Quaker Oats Company, and Tenneco Inc.
6
<PAGE>
WITH TERMS EXPIRING IN 2000
W.H. CLARK (65) DIRECTOR SINCE 1995
Corporate Director; Chairman of the Board of Nalco Chemical Company
("Nalco"), a producer of specialty chemicals, from 1984 to 1994; Chief
Executive Officer of Nalco from 1982 to 1994; President of Nalco from 1984
to 1990. Mr. Clark serves as a director of Bethlehem Steel Corporation, Fort
James Corporation, Millenium Chemicals Inc., NICOR Inc., Ultramar Diamond
Shamrock Corporation, and USG Corporation.
STEPHEN L. HAMMERMAN (60) DIRECTOR SINCE 1985
Vice Chairman of the Board since April 1992; General Counsel since October
1984; General Counsel of MLPF&S from March 1981 to June 1996.
AULANA L. PETERS (56) DIRECTOR SINCE 1994
Partner in the law firm of Gibson, Dunn & Crutcher since 1988 and from 1980
to 1984; Commissioner of the U.S. Securities and Exchange Commission from
1984 to 1988. Mrs. Peters serves as a director of Callaway Golf Company,
Minnesota Mining and Manufacturing Company (3M), Mobil Corporation, and
Northrop Grumman Corporation.
JOHN J. PHELAN, JR. (66) DIRECTOR SINCE 1991
Corporate Director; Senior Adviser to the Boston Consulting Group since
October 1992; Member of the Council on Foreign Relations since 1988;
President of the International Federation of Stock Exchanges from January
1991 to January 1993; Chairman and Chief Executive Officer of New York Stock
Exchange, Inc. from May 1984 to December 1990. Mr. Phelan serves as a
director of Eastman Kodak Company, Metropolitan Life Insurance Company, and
Sonat Inc.
---------------------
William O. Bourke, age 70, has served as a director since 1987 and will
continue to serve as a director until after the Annual Meeting. Mr. Bourke was
Chairman of the Board of Reynolds Metals Company, a producer of aluminum
products, from April 1988 to May 1992 and Chief Executive Officer of that
company from April 1986 to May 1992. Mr. Bourke also serves as a director of
Sonat Inc.
7
<PAGE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the 1997 fiscal year, the Board of Directors met nine times.
In addition to an Executive Committee, the Merrill Lynch Board of Directors
has standing Audit and Finance, Management Development and Compensation, and
Nominating Committees.
The Audit and Finance Committee is comprised of Mr. Bourke, its Chairman,
Messrs. Clark, Harvey, Hoover and Newbigging, and Mrs. Peters. This committee
held seven meetings during the 1997 fiscal year. This committee performs the
following functions, among others: monitoring Merrill Lynch's system of
internal accounting controls and overseeing and evaluating the internal audit
function; recommending the appointment and monitoring the performance,
independence, and fees of Merrill Lynch's independent public accountants and
monitoring the professional services they provide; reviewing the scope of the
annual audit with the independent public accountants and reviewing their
reports with management; reviewing Merrill Lynch's annual consolidated
financial statements; overseeing Merrill Lynch's corporate funding policy,
securities offerings, financial commitments and related policies; and
monitoring compliance with risk management and compliance policies and
procedures.
The Management Development and Compensation Committee is comprised of Mrs.
Conway, its Chairwoman, and Messrs. Harbison, Luciano, Phelan and Weiss. This
committee held nine meetings during the 1997 fiscal year. This committee
performs the following functions, among others: reviewing and recommending
employee compensation programs, policies, and practices, including salary,
cash incentive, long-term incentive compensation, stock purchase, retirement,
and health and welfare programs; making grants under the Merrill Lynch Long-
Term Incentive Compensation Plan and other stock-based compensation plans;
discharging the responsibilities described below under the caption Management
Development and Compensation Committee Report on Executive Compensation; and
reviewing management development programs and executive succession plans.
The Nominating Committee is comprised of Mr. Harbison, its Chairman, Mrs.
Conway, and Mr. Luciano (who are voting members) and Mr. Komansky (who is a
non-voting member). This committee did not meet during the 1997 fiscal year
but did conduct discussions over the course of the year. This committee
performs the following functions: identifying potential candidates to serve on
the Board of Directors with a view toward a desirable balance of expertise
among Board members and making recommendations to the Board relating to the
membership of committees of the Board and nominees to fill vacancies on the
Board. The Nominating Committee will consider nominees recommended by
stockholders. Those wishing to submit recommendations for the 1999 Annual
Meeting of Stockholders should write to Gregory T. Russo, Secretary, Merrill
Lynch & Co., Inc., 100 Church Street, 12th Floor, New York, NY 10080-6512.
8
<PAGE>
BENEFICIAL OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table contains certain information regarding beneficial
ownership of Common Stock and Common Stock-linked units by each director,
director nominee, and executive officer named in the Summary Compensation
Table herein as well as by all current directors and executive officers as a
group. All information is provided as of February 24, 1998.
<TABLE>
<CAPTION>
COMMON STOCK
COMMON STOCK(1) UNITS(2)
--------------- ------------
<S> <C> <C>
Herbert M. Allison, Jr. .................... 1,810,228(3)(4) 33,304
William O. Bourke .......................... 10,226(4) 679
W.H. Clark ................................. 5,154 1,697
Jill K. Conway ............................. 7,839 1,697
Thomas W. Davis ............................ 504,401(3) 33,322
Stephen L. Hammerman ....................... 1,196,445(3)(5) 22,776
Earle H. Harbison, Jr. ..................... 7,093(4) 1,017
George B. Harvey ........................... 7,081 1,697
William R. Hoover .......................... 5,290 1,697
David H. Komansky .......................... 1,910,159(3) 43,846
Robert P. Luciano .......................... 8,971 1,697
David K. Newbigging ........................ 5,981 2,434
E. Stanley O'Neal .......................... 250,004(3) 32,188
Aulana L. Peters ........................... 2,978 6,333
John J. Phelan, Jr. ........................ 8,971 1,697
John L. Steffens ........................... 2,111,376(3) 31,480
William L. Weiss ........................... 5,572 1,357
All Merrill Lynch directors and executive
officers as a group ....................... 11,368,143(3)(4)(5) 310,131
</TABLE>
- ----------------
(1) All nominees, directors, and executive officers have sole investment power
and sole voting power over all shares of Common Stock listed, except as
indicated in notes 3, 4, and 5 below. No individual director, director
nominee, or executive officer beneficially owned in excess of 1% of the
outstanding Common Stock. The group consisting of all directors and
executive officers of Merrill Lynch beneficially owned approximately 3.3%
of the outstanding Common Stock.
The beneficial ownership information shown in this table for the following
individuals and for the group consisting of all directors and executive
officers of Merrill Lynch includes the indicated number of shares of Common
Stock deliverable at the end of the deferral period applicable to Deferred
Stock Units issued under the Merrill Lynch Deferred Unit and Stock Unit
Plan for Non-Employee Directors and applicable to Stock Units issued under
the Merrill Lynch Program for Deferral of Stock Option Gains for a Select
Group of Eligible Employees: Mr. Komansky (104,092); Mr. Allison
(138,790); Mr. Bourke (226); Mrs. Conway (1,131); Mr. Harbison (453); Mr.
Luciano (1,131); Mr. Newbigging (1,481); Mr. Phelan (1,131); and all
directors and executive officers of Merrill Lynch as a group (248,435).
These shares are not included for the purpose of calculating the
percentages set forth in the first paragraph of this note 1 as they cannot
be acquired within 60 days of February 24, 1998.
9
<PAGE>
Footnotes to Directors and Executive Officers Beneficial Ownership Table
(2) Consists of units linked to the value of the Common Stock but payable in
cash at the end of a restricted or deferral period, including Restricted
Units issued under the Merrill Lynch Long-Term Incentive Compensation Plan,
Deferred Stock Units issued under the Merrill Lynch Deferred Unit and Stock
Unit Plan for Non-Employee Directors, and Stock Units issued under both the
Merrill Lynch Fee Deferral Plan for Non-Employee Directors and under the
Merrill Lynch Program for Deferral of Stock Option Gains for a Select Group
of Eligible Employees.
(3) The beneficial ownership information in the table shown for the following
individuals and for the group consisting of all directors and executive
officers of Merrill Lynch includes the indicated number of shares of Common
Stock that may be purchased upon the exercise (presently or within 60 days
of February 24, 1998) of stock options granted under the Merrill Lynch
Long-Term Incentive Compensation Plan: Mr. Allison (1,275,120); Mr. Davis
(252,298); Mr. Hammerman (807,936); Mr. Komansky (1,328,072); Mr. O'Neal
(165,800); and Mr. Steffens (1,128,240); and all directors and executive
officers of Merrill Lynch as a group (7,120,646).
(4) The beneficial ownership information shown for Messrs. Allison, Bourke,
and Harbison excludes shares held by the wives of these individuals (13,800
shares in the case of Mr. Allison, 400 shares in the case of Mr. Bourke,
and 4,000 shares in the case of Mr. Harbison). Each has expressly
disclaimed beneficial ownership of the shares held by his wife. Beneficial
ownership for the group consisting of all directors and executive officers
of Merrill Lynch excludes these amounts and excludes 4,728 shares held by
the wife of an executive officer as to which such officer has expressly
disclaimed beneficial ownership.
(5) The beneficial ownership information shown for Mr. Hammerman includes
36,000 shares held in trusts as to which Mr. Hammerman has shared voting
and investment power. The beneficial ownership information shown for the
group consisting of all directors and executive officers of Merrill Lynch
reflects these above-mentioned shares and also includes the following
shares: 2,069 shares held by charitable foundations as to which an
executive officer has shared voting and investment power; 2,832 shares held
in custodial accounts as to which an executive officer has sole voting and
investment power; 2,400 shares held in custodial accounts as to which this
same executive officer has shared voting and investment power; and 3,600
shares as to which an executive officer has sole voting and investment
power pursuant to a power-of-attorney.
10
<PAGE>
MERRILL LYNCH PROPOSAL
AMENDMENT TO MERRILL LYNCH'S CERTIFICATE OF INCORPORATION
The Board of Directors recommends the adoption by the stockholders of an
amendment to Article IV of Merrill Lynch's Certificate of Incorporation to
increase the number of shares of Common Stock that may be issued to
1,000,000,000 shares (the "Proposed Amendment"). The Certificate of
Incorporation presently authorizes the issuance of 525,000,000 shares, of
which 500,000,000 shares may be Common Stock, having a par value of $1.33 1/3
per share, and 25,000,000 shares may be Preferred Stock, having a par value of
$1.00 per share.
Although Merrill Lynch has no present understandings, agreements, or specific
plans concerning the issuance of any of the additional shares to be authorized
by the Proposed Amendment, the Board of Directors believes it to be in the
best interests of Merrill Lynch, and has therefore proposed and declared
advisable, that the Certificate of Incorporation be amended to increase the
number of authorized shares of Common Stock, par value $1.33 1/3 per share, to
1,000,000,000 shares and, consequently, to increase the total number of shares
of capital stock to 1,025,000,000. The Board has directed that this amendment
be submitted to a vote of stockholders at the Annual Meeting.
Of the share capital currently authorized, 342,397,704 shares of Common Stock
and 42,500 shares of Preferred Stock were outstanding on February 24, 1998.
The Board of Directors believes that the increase in Merrill Lynch's
authorized shares of Common Stock will provide for flexibility in future
planning, including for future capital-raising activities. If the Certificate
of Incorporation is amended, the additional shares will be available for
issuance to obtain funds for present and future operations, for use in
connection with acquisitions of businesses or properties, for issuance in
connection with stock dividends or "stock splits", and for any other proper
corporate purpose. The Board of Directors does not intend to seek further
stockholder approval prior to the issuance of any additional shares in future
transactions unless required by law, by Merrill Lynch's Certificate of
Incorporation, by the rules of any stock exchange on which the Common Stock
may be listed, or unless Merrill Lynch deems it advisable to do so. Common
Stock would only be issued if the Board of Directors makes the determination
that such issuance would be favorable to, and in the best interests of,
Merrill Lynch and its stockholders. Any issuance of additional shares of
Common Stock of Merrill Lynch could dilute the equity of the outstanding
shares of Common Stock.
The newly authorized shares of Common Stock will have voting and other rights
identical to those of the currently authorized shares of Common Stock. Under
Merrill Lynch's Certificate of Incorporation, holders of Common Stock do not
have preemptive rights.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THIS PROPOSED
AMENDMENT.
11
<PAGE>
STOCKHOLDER PROPOSAL
Mrs. Evelyn Y. Davis, Watergate Office Building, 2600 Virginia Ave., N.W.,
Suite 215, Washington, D.C. 20037, holding 400 shares of Common Stock, has
given notice of her intention to propose the following resolution at the
Annual Meeting:
RESOLVED: "That the stockholders of Merrill Lynch, assembled in Annual
Meeting in person and by proxy, hereby request the Board of Directors to
take the necessary steps to provide for cumulative voting in the election
of directors, which means each stockholder shall be entitled to as many
votes as shall equal the number of shares he or she owns multiplied by the
number of directors to be elected, and he or she may cast all of such votes
for a single candidate, or any two or more of them as he or she may see
fit."
The following statement has been submitted by Mrs. Davis in support of the
resolution:
REASONS: "Many states have mandatory cumulative voting, so do National
Banks."
"In addition, many corporations have adopted cumulative voting."
"Last year the owners of 57,211,470* shares, representing approximately
22.5% of shares voting, voted FOR this proposal."
"If you AGREE, please mark your proxy FOR this resolution."
---------------------
FOR THE REASONS STATED BELOW, THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST
THE ADOPTION OF THIS STOCKHOLDER PROPOSAL.
This proposal, which has been submitted by this proponent to Merrill Lynch's
Annual Meetings of Stockholders for the thirteenth time, has been consistently
opposed by the Board of Directors and has been defeated by stockholders by a
substantial majority of the votes cast on each occasion.
As previously discussed in past statements in opposition, the Board of
Directors opposes this proposal because it believes that it is contrary to the
best interests of all of the stockholders. Under the General Corporation Law
of Delaware, Merrill Lynch's state of incorporation, the general rule is that
each director must be elected by a plurality of the votes of the shares
present in person or represented by proxy. Cumulative voting is permissible
only if specifically provided for in a corporation's certificate of
incorporation. Many public companies, including a substantial majority of the
thirty companies included in the Dow Jones Industrial Average, do not provide
for cumulative voting.
The Board of Directors believes that the current method of voting at
stockholders' meetings that is based on plurality of the votes cast better
serves the interests of the stockholders of Merrill Lynch as a whole. The
election of directors by plurality vote is consistent with the view that a
board of directors is accountable to stockholders generally.
- --------
* Adjusted for the two-for-one Common Stock split, effected in the form of a
100% stock dividend, paid on May 30, 1997.
12
<PAGE>
In contrast, cumulative voting may enhance the ability of those seeking to
support a special interest group to elect one or more directors representing
the interests of that group. Any directors so elected may view themselves as
representatives of the special interest group that elected them and under an
obligation to represent that group's interests, regardless of whether the
furtherance of those interests would benefit all stockholders generally. This
could tend to promote adherence to more narrow interests rather than those of
stockholders at large.
In addition, the use of cumulative voting and the resulting election of
directors who represent particular groups of stockholders may create a risk of
promoting factionalism among members of the Board of Directors and may,
therefore, undermine their ability to work together effectively. In its
September 1997 Statement on Corporate Governance, The Business Roundtable
reported that the adoption of cumulative voting is generally not recommended
for large publicly-owned corporations because of the concerns of promoting
special interests and the potential for factionalism. It is for these reasons
that the Board of Directors regards the proposed change in voting method as
being contrary to the best interests of Merrill Lynch stockholders.
13
<PAGE>
MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION OVERVIEW
Merrill Lynch is a leader in an industry characterized by intense competition
for clients, market share and executive talent. To build on its past success
and uphold its status as a world-class company, Merrill Lynch must rely on
leaders who possess the ability to excel in the current environment of
industry consolidation and market globalization. To attract, retain and
motivate this caliber of leader, Merrill Lynch's executive compensation
program is designed to provide strong incentives to achieve levels of results
that create superior shareholder value. This link between company performance
and shareholder value is made explicit in the compensation program by varying
the annual cash incentive award (cash bonus) and the stock-based incentive
award (stock bonus) of executives directly with changes in Merrill Lynch's
financial results.
POLICIES AND PROCESS
GENERAL
On behalf of the Board of Directors, the Management Development and
Compensation Committee (the "MDCC") oversees all executive officer
compensation programs and plans, including the determination and approval of
base salaries, cash bonuses and stock-based bonuses. The MDCC is comprised of
five directors who have never been employees of Merrill Lynch and who are not
eligible to participate in any of the MDCC-administered compensation programs
or plans.
Each year, the MDCC conducts a broad review of Merrill Lynch's executive
compensation programs to ensure that they are aligned with Merrill Lynch's
long-term strategic and financial goals, annual financial plans, and other
short-term objectives. As part of this review, the MDCC assesses the impact of
changes in laws and regulations on the compensation programs for executive
officers. The MDCC has access to advice and counsel from independent third
parties. The MDCC also reviews executive management compensation with the
other non-employee members of the Board of Directors.
TOTAL COMPENSATION
The three elements of total compensation for Merrill Lynch executives are base
salary, cash bonus, and stock bonus. The MDCC has balanced these components of
executive pay to provide Merrill Lynch's top executives with a powerful
incentive to maximize the long-term shareholder value of Merrill Lynch.
BASE SALARIES
The MDCC typically reviews executive officer base salaries every three to four
years based on factors determined at that time. In consideration of
significant executive officer succession changes, salaries were reviewed by
the MDCC for 1997. Salary increases were recommended by the MDCC to, and were
approved by, the Board of Directors effective April 15, 1997. Base salary
adjustments were made
14
<PAGE>
for those executives who experienced significant changes in responsibilities.
These adjustments to base salaries were made within the context of the total
compensation opportunity offered to executive officers. Base salaries continue
to be managed so that the principal compensation opportunity is derived from
the cash bonus and stock bonus awards.
INCENTIVE COMPENSATION
Merrill Lynch's incentive awards to executive officers are based on a
shareholder-approved formula that complies with the regulations of the
Internal Revenue Service regarding the tax deductibility of executive
compensation in excess of $1 million. This performance goal formula is used to
determine the annual cash bonus and stock bonus of the Chief Executive Officer
(the "CEO") by increasing or decreasing the prior year's cash and stock bonus
formula amounts by the average year over year percentage change in Merrill
Lynch's Net Income and Return on Equity ("ROE"). The cash bonus and stock
bonus formula amounts for all other executive officers are established as a
percentage of the CEO's formula bonus amounts. These percentages, 80% for the
Chief Operating Officer (the "COO") and 70% for other executive officers,
reflect the relative responsibility and accountability of these individuals in
relation to that of the CEO. This approach provides an incentive for
executives to work towards both a high return on stockholders' equity and
growth in profits.
The MDCC retains the discretion to determine actual awards that are less than
the formula amounts for each executive based on an assessment of each
executive's performance. Performance factors taken into consideration include:
contribution to financial results, productivity, expense and risk control,
product innovation, quality of client service, management development,
succession planning, workforce diversity, and strategic planning. The MDCC
also considers the extent to which individuals take a leadership role in
exemplifying and fostering Merrill Lynch's principles of Client Focus, Respect
for the Individual, Teamwork, Responsible Citizenship, and Integrity. These
factors are considered collectively by the MDCC and are not weighted in any
particular order of importance. Because compensation levels are based on
Merrill Lynch's financial performance and the individual executive officer's
performance, compensation is not targeted to specific competitive levels.
CASH BONUS. Merrill Lynch's cash bonus program provides a direct incentive for
executive officers to improve the financial performance of Merrill Lynch. For
the 1997 performance year, the COO received 80%, and the executive officers
named in the Summary Compensation Table received between 61% and 67%, of the
CEO's cash bonus formula amount.
STOCK BONUS. Stock-based incentive awards are a fundamental component of the
total compensation awarded each year to members of executive management. While
the amount of the stock bonus is determined based on the financial results of
Merrill Lynch for the performance year, the ultimate value of the stock bonus
is dependent on future stock price performance. As such, the stock bonus,
which consists of restricted shares, restricted units (throughout the
remainder of this report referred to as "Restricted Shares/Units") and Stock
Options, aligns executive and stockholder financial interests and provides an
appropriate balance between short-term goals and long-term strategic planning.
The COO received 80%, and the executive officers named in the Summary
Compensation Table received 65%, of the CEO's stock bonus formula amount for
the 1997 performance year.
15
<PAGE>
Executive officers are also eligible to participate in broad-based plans
offered generally to Merrill Lynch employees, such as the 401(k) savings and
investment plan, retirement plans, and various health and welfare insurance
plans.
APPROVAL PROCESS
Consistent with the executive compensation policies discussed above, the MDCC
assesses the performance of the CEO and of all other executive officers and
determines awards of Restricted Shares/Units and Stock Options, and approves
and recommends the annual cash and stock bonuses of the CEO, COO, Vice
Chairmen, and Executive Vice Presidents of Merrill Lynch to the Board of
Directors for approval.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER FOR 1997 PERFORMANCE
The 1997 performance year cash and stock bonuses for the CEO were determined
in accordance with the performance goals referred to above.
Merrill Lynch's Net Income in 1997 was $1,867 million which is an 18.8%
increase from $1,572 million in 1996. Merrill Lynch's ROE in 1997 was 26.8%,
which is identical to the 26.8% ROE achieved in 1996. The average change in
these two performance measures, rounded to the nearest whole percentage point,
represents an increase of 9%. As a result, the CEO's 1996 formula cash bonus
of $6,501,320 and his 1996 formula stock bonus of $3,040,940 were both
increased by the 9% average change in the performance measures to produce a
1997 formula cash bonus of $7,086,439 and a 1997 formula stock bonus of
$3,314,625. The MDCC awarded the CEO the full formula cash bonus and the full
formula stock bonus in recognition of his contribution to Merrill Lynch's 1997
financial results as well as the other factors listed above under Incentive
Compensation.
The dollar value of the stock bonus is split equally between Restricted
Shares/Units and Stock Options. The actual number of Restricted Shares/Units
awarded was calculated by dividing the dollar value to be paid in Restricted
Shares/Units ($1,657,312) by the average fair market value ($68.77) of a share
of Common Stock over the twenty business days preceding January 20, 1998, the
date the MDCC met to review executive stock awards. The number of Stock
Options awarded for 1997 performance was calculated by dividing the dollar
value to be paid in Stock Options ($1,657,312) by the same price of Common
Stock used to determine the Restricted Share/Unit grants, and multiplying the
result by four. The multiple of four options to one share/unit is used because
the Black-Scholes value of a Merrill Lynch Stock Option, taking into account
the non-marketability of employee stock options, has over time averaged
approximately 25% of the value of a share of Common Stock.
The MDCC determined Mr. Komansky's base salary for 1997 to be $700,000
effective April 15, 1997.
16
<PAGE>
SUMMARY
The CEO's compensation for performance in 1997, valued using the methodology
explained above when approved in January 1998, consisted of:
<TABLE>
<CAPTION>
RESTRICTED
SALARY ANNUAL BONUS SHARES/UNITS* STOCK OPTIONS* TOTAL
------ ------------ ------------- -------------- -----------
<S> <C> <C> <C> <C>
$700,000 $7,086,439 $1,657,312 $1,657,312 $11,101,063
</TABLE>
- ---------------------
* The value of these awards is based on the average fair market value ($68.77)
of a share of Common Stock over the twenty business days preceding January
20, 1998, the date the MDCC met to review these awards. These amounts differ
from the amounts shown in the Summary Compensation Table under the column
headed "Restricted Stock Awards" and from the amounts shown in the table
entitled Option Grants Made in Last Fiscal Year under the column headed
"Grant Date Present Value" because the amounts in those tables are required
to be based on grant date Common Stock prices.
MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE
JILL K. CONWAY, CHAIR
EARLE H. HARBISON, JR.
ROBERT P. LUCIANO
JOHN J. PHELAN, JR.
WILLIAM L. WEISS
----------------
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the MDCC are named above. None of these individuals was an
officer or employee of Merrill Lynch or any of its subsidiaries and no
"compensation committee interlocks" existed during the 1997 fiscal year.
17
<PAGE>
COMPENSATION TABLES AND OTHER INFORMATION
The following tables set forth information with respect to the Chief
Executive Officer and the four other most highly compensated executive
officers of Merrill Lynch.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS(1)
------------------------ ---------------------
RESTRICTED
STOCK SECURITIES
NAME AND PRINCIPAL AWARDS UNDERLYING ALL OTHER
POSITION(2) YEAR SALARY BONUS(1) (3)(4)(5) OPTIONS(6) COMPENSATION(7)
------------------ ---- -------- ---------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
David H. Komansky ...... 1997 $642,424 $7,086,439 $1,524,325 96,395 $ 39,771
Chairman of the Board
and 1996 500,000 5,201,056 1,250,266 118,890 73,127
Chief Executive Officer 1995 300,000 3,715,040 969,472 935,470 42,635
Herbert M. Allison, Jr.
....................... 1997 $471,212 $5,669,151 $1,219,460 377,120 $ 38,621
President and Chief 1996 400,000 4,200,000 925,039 87,970 68,607
Operating Officer 1995 300,000 3,000,000 725,300 101,350 27,759
Thomas W. Davis......... 1997 $268,333 $4,300,000 $ 988,724 62,525 $576,811
Executive Vice
President
E. Stanley O'Neal....... 1997 $268,333 $4,300,000 $ 988,724 62,525 $ 23,383
Executive Vice
President
John L. Steffens........ 1997 $400,000 $4,750,000 $ 988,724 62,525 $120,634
Vice Chairman 1996 400,000 4,200,000 925,039 87,790 447,098
1995 400,000 2,900,000 725,300 101,350 220,761
</TABLE>
- --------
(1) Awards were made in January or February of the succeeding fiscal year for
performance in the year indicated.
(2) On April 15, 1997, Mr. Komansky became Chairman of the Board, Mr. Allison
became President and Chief Operating Officer, Mr. Steffens became Vice
Chairman, and Messrs. Davis and O'Neal became Executive Vice Presidents.
Mr. Komansky served as Chief Executive Officer for the entire fiscal year.
Mr. O'Neal became Chief Financial Officer of Merrill Lynch effective March
1, 1998. No 1995 or 1996 compensation information is reported for Messrs.
Davis and O'Neal because they were not executive officers in these years.
(3) Awards were split equally between Restricted Shares and Restricted Units.
All awards have been valued for this table using closing prices of Common
Stock on the Consolidated Transaction Reporting System on the dates of
grant of such awards; the closing price on the last trading day prior to
February 1, 1998, the effective date of the grant for performance in 1997,
was $63.25. All Restricted Shares and Restricted Units vest three years
following grant and the Restricted Shares are restricted from
transferability for an additional two years after vesting. Restricted
Shares are shares of Common Stock that convey to the holder all the rights
of a stockholder except that they
18
<PAGE>
Footnotes to Summary Compensation Table Continued
are restricted from being sold, transferred, or assigned for a period of
time after they are granted. Restricted Units are similar to Restricted
Shares but are payable in cash at the end of the three-year vesting period
and do not convey voting rights.
(4) During the applicable vesting and/or restricted periods, dividends are
paid on Restricted Shares and dividend equivalents are paid on Restricted
Units. Such dividends and dividend equivalents are equal in amount to the
dividends paid on shares of Common Stock.
(5) The number and value of Restricted Shares and Restricted Units held by
executive officers named in the table as of December 26, 1997 are as
follows: Mr. Komansky (48,598 shares and 48,596 units--$6,584,894); Mr.
Allison (40,468 shares and 40,464 units--$5,483,143); Mr. Davis (48,608
shares and 48,606 units--$6,586,249); Mr. O'Neal (41,534 shares and 41,532
units--$5,627,722); and Mr. Steffens (40,468 shares and 40,464 units--
$5,483,143). These amounts do not include Restricted Shares and Restricted
Units awarded in 1998 for performance in fiscal year 1997.
(6) In the case of Mr. Allison, the 1997 amount includes a grant of 300,000
Stock Options made by the MDCC to recognize Mr. Allison's increased
accountability for creating shareholder value following his appointment as
President and Chief Operating Officer on April 15, 1997.
(7) Amounts shown for 1997 consist of the following: (i) contributions made in
1997 by Merrill Lynch to accounts of employees under the Merrill Lynch
401(k) Savings & Investment Plan (including, where applicable, cash payments
made because of limitations imposed by the Internal Revenue Code)--Mr.
Komansky ($1,500); Mr. Allison ($1,500); Mr. Davis ($1,500); and Mr.
Steffens ($1,500); (ii) allocations made in 1997 by Merrill Lynch to
accounts of employees under the defined contribution retirement program--Mr.
Komansky ($33,021); Mr. Allison ($33,021); Mr. Davis ($21,013); Mr. O'Neal
($12,008); and Mr. Steffens ($36,023); and (iii) distributions received in
1997 on investments by the named executives of their own personal funds in
Merrill Lynch-sponsored employee partnerships--Mr. Komansky ($5,250); Mr.
Allison ($4,100); Mr. Davis ($554,298); Mr. O'Neal ($11,375); and Mr.
Steffens ($83,111).
19
<PAGE>
STOCK OPTION GRANTS MADE IN LAST FISCAL YEAR(1)
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS EXERCISE
UNDERLYING GRANTED TO PRICE GRANT DATE
OPTIONS EMPLOYEES IN PER EXPIRATION PRESENT
NAME GRANTED FISCAL YEAR SHARE DATE(2) VALUE(3)
---- ---------- ------------ -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
David H. Komansky....... 96,395 0.8% $62.00 1/26/2008 $1,929,880
Herbert M. Allison, Jr.. 77,120 0.6 62.00 1/26/2008 1,543,984
300,000(4) 2.4 62.00 1/26/2008 6,006,161
Thomas W. Davis......... 62,525 0.5 62.00 1/26/2008 1,251,784
E. Stanley O'Neal....... 62,525 0.5 62.00 1/26/2008 1,251,784
John L. Steffens........ 62,525 0.5 62.00 1/26/2008 1,251,784
</TABLE>
- --------
(1) Includes awards made in January 1998 for performance in 1997. Awards made
in January 1997 for performance in 1996 are excluded (which awards, for
Messrs. Komansky, Allison, and Steffens, were reflected in Merrill Lynch's
1997 Proxy Statement).
(2) All Stock Options are exercisable as follows: 20% after one year, 40%
after two years, 60% after three years, 80% after four years, and 100%
after five years.
(3) Valued using a modified Black-Scholes option pricing model. The exercise
price of each Stock Option ($62.00) is equal to the average of the high
and low prices on the Consolidated Transaction Reporting System of a share
of Common Stock on January 26, 1998, the date of grant. The assumptions
used for the variables in the model were: 28.03% volatility (which is the
volatility of the Common Stock for the 36 months preceding grant); a 5.81%
risk-free rate of return (which is the yield as of the date of grant on a
U.S. Treasury Strip (zero-coupon bond) maturing in February 2008, as
quoted in The Wall Street Journal); a 1.29% dividend yield (which was the
dividend yield on the date of grant); and a 10-year option term (which is
the term of the option when granted). A discount of 25% was applied to the
option value yielded by the model to reflect the non-marketability of
employee stock options. The actual gain that executives will realize on
their Stock Options will depend on the future price of the Common Stock
and cannot be accurately forecast by application of an option pricing
model.
(4) This grant was made by the MDCC to recognize Mr. Allison's increased
accountability for creating shareholder value following his appointment as
President and Chief Operating Officer on April 15, 1997.
AGGREGATED STOCK OPTION EXERCISES MADE IN LAST FISCAL YEAR
AND FISCAL YEAR-END STOCK OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END(1)
ACQUIRED ON VALUE ------------------------------ -------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- -------------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David H. Komansky ...... 220,000 $14,398,750(2) 1,048,963 969,105 $55,654,171 $38,528,146
Herbert M. Allison, Jr.. 160,000 9,727,500(2) 1,169,019 270,889 66,845,317 10,683,840
Thomas W. Davis......... 0 0 196,994 164,826 9,825,311 6,224,483
E. Stanley O'Neal....... 0 0 122,594 144,598 6,117,109 5,317,206
John L. Steffens........ 0 0 1,022,139 270,889 57,527,387 10,683,840
</TABLE>
- --------
(1) This valuation represents the difference between $67.75, the closing price
on December 26, 1997 on the Consolidated Transaction Reporting System of a
share of Common Stock, and the exercise prices of these Stock Options.
(2) This valuation represents the difference between the average of the high
and low prices on the Consolidated Transaction Reporting System on the
date of exercise of a share of Common Stock, and the exercise prices of
the Stock Options exercised. Mr. Komansky and Mr. Allison have elected to
defer the gain received upon the exercise of certain Stock Options (net of
shares withheld for taxes) pursuant to the Merrill Lynch Program for
Deferral of Stock Option Gains for a Select Group of Eligible Employees
and continue to hold 104,092 and 138,790 Stock Units, respectively, which
are payable in Common Stock.
20
<PAGE>
PENSION PLAN ANNUITY
In 1988, the Merrill Lynch defined benefit pension plan (the "Pension Plan")
was terminated, and a group annuity contract to pay the Pension Plan benefits
to the vested participants was purchased from Metropolitan Life Insurance
Company with a portion of the terminated Pension Plan trust assets. This
annuity is payable at normal retirement (generally age 65) or at an early
retirement age in a reduced amount. Merrill Lynch participates in the
actuarial experience and investment performance of these annuity assets under
an agreement with Metropolitan Life Insurance Company.
Under the arrangement described above, the executive officers named in the
Summary Compensation Table will be eligible to receive an annuity upon
retirement. Those retiring at age 65 with at least 10 years of Pension Plan
participation will receive up to the annual statutory maximum applicable to
the year in which the annuity payments are made, which, during 1998, is
$121,333 (for those born between 1938 and 1954). These limits are adjusted
periodically by the Internal Revenue Service for increases in the cost of
living. The compounded annual growth rate of these cost of living increases
has been 3.4% since 1988, the year indexing began. Effective for 1995 and
later years, however, the cost of living adjustment calculation is subject to
rounding rules. The annuity payments, if payable as straight life annuities,
will not exceed the following annual amounts for the following executive
officers: Mr. Komansky ($103,655); Mr. Allison ($81,543); Mr. Davis ($85,015);
Mr. O'Neal ($5,679); and Mr. Steffens ($227,963). These amounts reflect an
offset for estimated social security benefits in accordance with the
provisions of the terminated Pension Plan.
SUPPLEMENTAL ANNUITY AGREEMENT
Merrill Lynch has entered into an annuity agreement with Mr. Komansky,
effective January 27, 1997, to provide for supplemental defined benefit
annuity payments to him and his surviving spouse. Estimated amounts payable to
Mr. Komansky (when combined with retirement benefits from other sources
described in the paragraph below), assuming payment in the form of a straight
life annuity upon retirement at age 60 or thereafter, can be calculated using
the following table based on his highest consecutive five-year average
compensation and his years of service:
<TABLE>
<CAPTION>
HIGHEST
CONSECUTIVE 5- YEARS OF SERVICE
YEAR AVERAGE --------------------------------
COMPENSATION 29 32 36
-------------- ---------- ---------- ----------
<S> <C> <C> <C>
$3,250,000.................................... $1,178,125 $1,300,000 $1,462,500
3,750,000.................................... 1,359,375 1,500,000 1,620,000
4,250,000.................................... 1,540,625 1,620,000 1,620,000
4,750,000.................................... 1,620,000 1,620,000 1,620,000
5,250,000.................................... 1,620,000 1,620,000 1,620,000
</TABLE>
21
<PAGE>
As of December 26, 1997, Mr. Komansky's highest consecutive five-year average
compensation was approximately $3.8 million and he had approximately 29 years
of service. The annuity is payable if Mr. Komansky retires at the age of 60 or
thereafter or dies while employed by Merrill Lynch. The annual amount of his
annuity will be equal to 1.25% of his highest consecutive five-year average
compensation (excluding stock-based compensation and certain non-recurring
cash compensation awards) multiplied by years of service up to age 65, as
reduced by Mr. Komansky's Pension Plan annuity described above and the
combined annuity value at retirement of his account balances attributable to
Merrill Lynch contributions to the Merrill Lynch 401(k) Savings & Investment
Plan and the Retirement Accumulation Plan, and to the allocations under the
ESOP and as further reduced by 50% of the annual social security retirement
benefit amount he would receive upon retirement at age 65. The amount of his
annuity, however, together with the combined annuity value described above,
cannot exceed $1,620,000 if payable as a straight life annuity or a 10-year
certain and life annuity, or $1,370,000 if payable as a 50% or 100% joint and
survivor life annuity, in each case subject to a semi-annual adjustment for
inflation until commencement of payment. The payment will be made monthly in
the form of a life annuity or, subject to reductions, a 10-year certain and
life annuity, or a 50% or 100% joint and survivor life annuity. The survivor
benefits, if applicable, are payable only to a spousal beneficiary.
SEVERANCE AGREEMENTS
Merrill Lynch has severance agreements with certain members of executive and
senior management. These agreements provide for payments and other benefits if
there is a Change in Control (as defined below) of Merrill Lynch, and the
employee's employment is subsequently terminated by Merrill Lynch or its
successor without "Cause" or by the employee for "Good Reason", including a
detrimental change in responsibilities or a reduction in salary or benefits.
The term of each agreement does not exceed three years, which term is
automatically extended each year for an additional year until notice to the
contrary is given to the employee. Under each agreement, the employee will
receive a lump sum payment equal to the lesser of 2.99 times the employee's
average annual W-2 compensation for the five years immediately preceding the
year of the termination of employment or 2.99 times the employee's average
annual salary, bonus, and the grant value of stock-based compensation for the
five years immediately preceding the year of the termination of employment.
The employee shall also receive: (i) a lump sum payment approximating the
value of life, disability, accident, and medical insurance benefits for 24
months after termination of employment, and an amount sufficient to cover any
income taxes payable thereon; (ii) a lump sum payment equal to the retirement
contribution, and an amount sufficient to cover any income taxes payable
thereon, that the employee would have been eligible to receive from Merrill
Lynch under the terms of the Merrill Lynch retirement program (which consists
of the Retirement Accumulation Plan and the ESOP, and any applicable Merrill
Lynch contributions to the Merrill Lynch 401(k) Savings & Investment Plan, or
any successor program or plan that may be in effect at the time of the Change
in Control), such amount to be determined as if the employee were fully vested
thereunder and had continued after the date of termination to be employed for
an additional 24 months at the employee's highest annual rate of compensation
during the 12 months immediately preceding the date of termination for
purposes of determining the basic contributions and any applicable
supplemental contributions; and (iii) any legal fees and expenses incurred as
a result of the employee's termination of employment.
22
<PAGE>
Under the terms of the agreements, a "Change in Control" of Merrill Lynch
means: (i) any change in control of a nature required to be reported under the
SEC's proxy rules; (ii) the acquisition by any person of the beneficial
ownership of securities representing 30% or more of the combined voting power
of Merrill Lynch's then outstanding voting securities; (iii) a change in the
composition of the Board of Directors such that, within a period of two
consecutive years, individuals who at the beginning of such two-year period
constituted the Board of Directors and any new directors elected or nominated
by at least 3/4 of the directors who were either directors at the beginning of
the two-year period or were so elected or nominated, cease for any reason to
constitute at least a majority of the Board of Directors; or (iv) the
liquidation of all or substantially all of the assets of Merrill Lynch. In
addition, if Merrill Lynch enters into an agreement, the consummation of which
would result in a Change in Control, then a Change in Control shall be deemed
to have occurred with respect to any participant's termination without "Cause"
or for "Good Reason" occurring after the execution of such agreement and, if
such agreement expires or is terminated prior to consummation of the Change in
Control, before such expiration or termination.
Subject to certain limitations contained in the severance agreements, any
payments thereunder would be in addition to amounts payable under certain
stock-based plans, including the Merrill Lynch Long-Term Incentive
Compensation Plan which, in the event of a Change in Control (as defined in
that agreement), provide for early vesting and payment if an employee is
terminated without cause or leaves for good reason.
COMPENSATION OF DIRECTORS
Those Merrill Lynch directors who are not full-time employees of Merrill Lynch
or an affiliated corporation receive monthly cash payments at a rate of
$35,000 per year in base compensation and receive transportation to meetings
or reimbursement of reasonable travel expenses incurred to attend the
meetings. In addition, non-employee directors receive $15,000 per year for
service as members, and $25,000 per year for acting as chairperson, of the
Audit and Finance Committee and the MDCC. The director chairing the Nominating
Committee receives $6,000 per year for providing this service. The other
members of the Nominating Committee receive no additional fee for being
members of this Committee.
Under the Merrill Lynch Fee Deferral Plan for Non-Employee Directors, non-
employee directors may defer all or a portion of their base compensation and
committee and chair fees until a specified later date or until after
retirement. At the option of the participant, deferred fees (i) may be
credited with a return based on the performance of selected mutual funds (or,
in the case of fees deferred in 1998, a return based upon the performance of a
Merrill Lynch-sponsored employee partnership) or (ii) may be represented by
Common Stock equivalents that are credited with dividend equivalents equal to
dividends declared on the Common Stock. All distributions under the Fee
Deferral Plan are payable in cash.
Under the Merrill Lynch Non-Employee Directors' Equity Plan (the "Equity
Plan"), each non-employee director who commenced service prior to October 1996
received an initial grant of restricted stock upon commencement of Board
service or, in the case of directors in service at the inception of the Equity
Plan, on November 4, 1992. The number of shares of restricted stock granted
was based on a grant value of $50,000, provided that grants to directors
scheduled to retire prior to the fifth Annual Meeting subsequent to grant were
reduced proportionately. Restricted stock granted under the Equity Plan
23
<PAGE>
vests and becomes transferable in equal annual installments on the date of
each of the five Annual Meetings subsequent to grant (or, in the case of a
director scheduled to retire earlier, such lesser number of Annual Meetings
remaining until retirement). Unvested shares may not be transferred, assigned,
pledged, or otherwise encumbered, and if Board service ends prior to scheduled
retirement for any reason other than death, unvested shares are forfeited. In
all other respects, holders of restricted stock under the Equity Plan have the
same rights as holders of Common Stock, including the right to vote and
receive dividends. The Equity Plan was terminated in October 1996 and no
further grants will be made thereunder.
The Merrill Lynch Deferred Unit and Stock Unit Plan for Non-Employee Directors
(the "Unit Plan") has replaced the Equity Plan described above. The Unit Plan
provides for grants of Deferred Units (representing Merrill Lynch's obligation
to pay an amount in cash equal to the value of one share of Common Stock at
the end of the deferral period) and Deferred Stock Units (representing Merrill
Lynch's obligation to deliver one share of Common Stock at the end of the
deferral period). Under the Unit Plan, each non-employee director receives an
initial grant of Deferred Units and Deferred Stock Units upon commencement of
Board service and additional grants of Deferred Units and Deferred Stock Units
at the beginning of the month following the fifth Annual Meeting subsequent to
the most recent grant of Deferred Units or Deferred Stock Units, as
applicable. Directors in service at the inception of the Unit Plan received
their initial Deferred Unit grants in August 1996 and receive their initial
Deferred Stock Unit grants at the beginning of the month following the date
that their most recent grants of restricted stock under the Equity Plan become
fully vested. The grant value of each grant of Deferred Units or Deferred
Stock Units is $50,000, except that grants to directors scheduled to retire
prior to the fifth Annual Meeting subsequent to grant are reduced
proportionately. Deferred Units and Deferred Stock Units are payable in cash
and Common Stock, respectively, at the end of a five-year deferral period or
upon earlier cessation of service provided that payments are prorated if Board
service ends prior to scheduled retirement for any reason other than death.
Participants in the Unit Plan have the option to defer payment of Deferred
Units and Deferred Stock Units, and, in the case of Deferred Units, may choose
to index their return after the initial five-year deferral period to the
performance of selected mutual funds. Deferred Units and Deferred Stock Units
are non-transferable and carry no voting rights, but they receive dividend
equivalents that are credited in the form of additional Deferred Units or
Deferred Stock Units, as applicable.
Each non-employee director who has served for five years (or has reached age
65 with at least one year of service), and who thereafter ceases to serve for
any reason other than removal for cause, is eligible to receive a pension
benefit. The beneficiary(ies) or estate of each non-employee director is
entitled to receive a death benefit in the event of such director's death
during his or her term. Both such benefits are based upon the annual base
compensation at the time of the director's cessation of service or death
(currently $35,000) plus the annual grant value of stock-based compensation
for non-employee directors at the time of the director's cessation of service
or death (currently $20,000), and the director's age and length of service.
Although the amount and method of payment of each such benefit cannot be
determined until the time of entitlement, it will not, on an annualized basis,
exceed an amount equal to the sum of the annual base compensation for non-
employee directors at the time of the director's cessation of service or death
plus the annual grant value of stock-based compensation for non-employee
directors at the time of the director's cessation of service or death.
24
<PAGE>
Merrill Lynch offers comprehensive medical insurance benefits to non-employee
directors and eligible family members, which are comparable to those offered
to Merrill Lynch employees generally except that these benefits are provided
on a non-contributory basis and with differences in deductible, coinsurance,
and lifetime benefits. Merrill Lynch also offers life and business travel
insurance benefits to non-employee directors.
From time to time, non-employee directors are offered the option of investing
their own personal funds in certain Merrill Lynch-sponsored employee
partnerships. The distributions on such investments received in 1997 by
persons who were non-employee directors participating during 1997 were as
follows: Earle H. Harbison, Jr. ($8,375) and Aulana L. Peters ($500).
CERTAIN TRANSACTIONS
Since the beginning of the 1997 fiscal year, certain directors and executive
officers of Merrill Lynch and associates of such persons were, from time to
time, indebted to Merrill Lynch as customers in connection with margin account
loans, mortgage loans, revolving lines of credit, and other extensions of
credit by Merrill Lynch's subsidiaries. These transactions were in the
ordinary course of business and they were substantially on the same terms
(including as to interest rates and collateral provisions) as those prevailing
at the time for comparable transactions with other persons, except that for
some credit products, the interest rates charged were the same as the lowest
of the interest rates charged to other persons or were the same as those
charged to Merrill Lynch employees. In addition, these transactions did not
involve more than the normal risk of collectibility and did not present other
unfavorable features. Directors, officers, and employees of Merrill Lynch are
entitled to receive certain discounts or waivers of fees or commissions for
products and services offered by subsidiaries of Merrill Lynch.
From time to time since the beginning of the 1997 fiscal year, Merrill Lynch
and certain of its subsidiaries have engaged in transactions in the ordinary
course of business with the beneficial owners of more than 5% of the
outstanding shares of Common Stock, State Street and AXA-UAP and related
parties, including the Equitable Companies and certain of their respective
affiliates. Such transactions were on substantially the same terms as those
prevailing at the time for comparable transactions with other persons.
Since the beginning of the 1997 fiscal year, Merrill Lynch, through certain of
its subsidiaries, has from time to time performed, in the ordinary course of
its business, investment banking, financial advisory, and other services for
certain corporations with which certain of its directors are affiliated.
From time to time since the beginning of the 1997 fiscal year, legal services
were performed by the law firm of Gibson, Dunn & Crutcher for business
activities of, and litigation matters on behalf of, Merrill Lynch and its
affiliates and for mutual funds advised by affiliates of Merrill Lynch. Aulana
L. Peters, a director, is a partner of this law firm.
25
<PAGE>
In each of the foregoing stockholder derivative actions, damages in an
unspecified amount are sought on behalf of Merrill Lynch.
The directors (other than Messrs. Clark, Hoover, and Newbigging) have been
named as defendants in stockholder derivative actions, commenced on December
5, 1994 and now consolidated, purportedly brought on behalf of Merrill Lynch
in the Supreme Court of the State of New York, New York County. These actions
allege, among other things, breach of fiduciary duties in connection with
Merrill Lynch's business activities with the Orange County Treasurer-Tax
Collector. This consolidated action has been dismissed and an appeal is
pending.
In stockholder derivative actions, commenced October 11, 1991 and now
consolidated, purportedly brought on behalf of Merrill Lynch in the Supreme
Court of the State of New York, New York County, all current directors who
were also directors at the time of the transactions described in this
paragraph have been named as defendants. The plaintiffs allege, among other
things, breach of fiduciary duties in connection with a series of year-end
securities transactions between subsidiaries of Merrill Lynch and Guarantee
Security Life Insurance Company during the period from 1984 to 1988. The
consolidated action has been dismissed and an appeal is pending.
26
<PAGE>
PERFORMANCE GRAPH
The following performance graph compares the performance of the Common Stock
for Merrill Lynch's last five fiscal years to that of the S&P 500 Index, the
S&P Financial Index, and an index based on the common stock of the following
nine companies: A.G. Edwards, Inc., Bankers Trust New York Corporation, The
Bear Stearns Companies Inc., The Charles Schwab Corporation, Morgan Stanley,
Dean Witter, Discover & Co., J.P. Morgan & Co. Incorporated, Lehman Brothers
Holdings Inc., Paine Webber Group Inc., and The Travelers Inc. (the "Peer
Group"). The graph assumes that the value of the investment in Common Stock and
each of the three named indexes was $100 at December 25, 1992, and that all
dividends were re-invested. Points on the graph represent the performance as of
the last Friday in December of the specified year, the day of Merrill Lynch's
fiscal year-end. Stock price performances shown on the graph are not
necessarily indicative of future price performances.
[GRAPH APPEARS HERE]
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
Merrill Lynch $100 $142 $123 $180 $303 $493
S&P 500 Index 100 110 111 152 191 240
S&P Financial Index 100 112 108 166 231 318
Peer Group* 100 126 107 170 244 373
- --------
* In 1997, Morgan Stanley Group Inc. and Salomon Inc were eliminated from the
peer group shown in prior years' proxy statements as both were merged with
other companies and stock price and dividend information relating to them no
longer exist as of year-end 1997.
27
<PAGE>
OTHER MATTERS
The Board of Directors knows of no business that will be presented for
consideration at the Annual Meeting other than those items stated in the
Notice of Annual Meeting of Stockholders. Should any other matters properly
come before the Annual Meeting or any adjournment thereof, shares represented
by the enclosed form of proxy, if signed and returned, will be voted in
accordance with the judgment of the person or persons voting the proxies.
STOCKHOLDER PROPOSALS FOR THE 1999 ANNUAL MEETING
In accordance with the rules of the SEC, stockholder proposals intended to be
presented at the 1999 Annual Meeting of Stockholders of Merrill Lynch must be
received by Merrill Lynch at its principal executive offices not later than
November 5, 1998 in order to be included in Merrill Lynch's Proxy Statement
and form of proxy relating to that meeting.
By Order of the Board of Directors
GREGORY T. RUSSO
Secretary
28
<PAGE>
LOGO
Merrill Lynch
Merrill Lynch & Co., Inc.
World Financial Center
North Tower
New York, NY 10281-1332
<PAGE>
MERRILL LYNCH & CO., INC. PROXY ANNUAL MEETING-APRIL 14, 1998
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints David H. Komansky, Stephen L. Hammerman and
E. Stanley O'Neal, and each of them individually, as proxies, with power of
substitution, to vote, as specified herein, all
the shares of Common Stock of Merrill Lynch &
Co., Inc. held of record by the undersigned at
the close of business on February 24, 1998, at
the Annual Meeting of Stockholders to be held
on April 14, 1998, and at any adjournment
thereof and, in their discretion, upon other
matters that properly may come before the
meeting.
THE SHARES REPRESENTED BY THIS PROXY WILL BE
VOTED IN ACCORDANCE WITH INSTRUCTIONS GIVEN ON
THE REVERSE OF THIS CARD. IF THIS PROXY IS
SIGNED AND RETURNED WITHOUT SPECIFIC
INSTRUCTIONS AS TO ANY ITEM OR ALL ITEMS, IT
WILL BE VOTED FOR THE ELECTION OF 5 DIRECTORS,
FOR PROPOSAL (2), AND AGAINST STOCKHOLDER
PROPOSAL (3). THE UNDERSIGNED HEREBY REVOKES
ANY PROXY HERETOFORE GIVEN IN RESPECT OF THE
SAME SHARES OF STOCK.
__________________________________________ _________________________
(Signature of Stockholder) (Date)
__________________________________________ _________________________
(Signature of Stockholder) (Date)
PLEASE VOTE ON THE REVERSE OF THIS CARD. Sign, date and return this card
promptly using the enclosed envelope. Sign exactly as name appears above. Each
joint tenant should sign. When signing as attorney, trustee, etc., give full
title.
<PAGE>
________________________________________________________________________________
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR PROPOSALS (1) AND (2).
________________________________________________________________________________
(1) The election to the Board
of Directors of the 5 nominees
named below for a term of 3 years
[ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY
(except as marked to the to vote for all
contrary below) nominees listed
Herbert M. Allison, Jr., Earle H. Harbison, Jr., William R. Hoover,
Robert P. Luciano and David K. Newbigging
(2) The amendment of the Certificate FOR AGAINST ABSTAIN
of Incorporation to increase the [ ] [ ] [ ]
authorized shares
________________________________________________________________________________
THE BOARD OF DIRECTORS RECOMMENDS A
VOTE AGAINST STOCKHOLDER PROPOSAL (3).
________________________________________________________________________________
(3) Institute cumulative voting FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Instruction: To withhold authority to vote for one or more individual nominees,
write the name(s) of such person(s) here: ______________________________________
(To be signed on the other side)
