UST INC, DEF 14A, 1995-03-23

UST INC
DEF 14A, 1995-03-23
TOBACCO PRODUCTS

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<PAGE> 1

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 sec.240.14a-11(c) or sec.240.14a-12

UST INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

UST INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.

/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).

/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (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:

<PAGE> 2

UST

100 West Putnam Avenue
Greenwich, Connecticut 06830

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

March 24, 1995

To the Stockholders of UST:

The 1995 Annual Meeting of Stockholders of UST Inc. (the "Company") will be held
at the Cole Auditorium of the Greenwich Library, 101 West Putnam Avenue,
Greenwich, Connecticut, on Tuesday, the 2nd day of May 1995, at 10:00 a.m.,
Eastern Daylight Saving Time, for the following purposes:

(1) to elect three directors for terms of three years each;

(2) to approve the UST Inc. Nonemployee Directors' Stock Option Plan;

(3) to ratify and approve the selection of independent auditors of the
accounts of the Company for the year 1995;

(4) to consider and act upon two stockholder proposals, if presented by the
proponents; and

(5) to consider and act upon such other business as may properly come
before the meeting.

Stockholders of record at the close of business on March 9, 1995 will be
entitled to vote at the meeting. The approximate date of mailing of this Proxy
Statement is March 24, 1995.

JONATHAN P. NELSON,
Secretary

IMPORTANT

WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON,
PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN
IT PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
<PAGE> 3

UST
100 WEST PUTNAM AVENUE
GREENWICH, CONNECTICUT 06830

PROXY STATEMENT

SOLICITATION OF PROXY

The enclosed proxy is solicited by the Board of Directors (the "Board") of UST
Inc. (the "Company") for use at the Annual Meeting of Stockholders to be held
May 2, 1995, including any adjournment thereof (the "Annual Meeting"). Whether
or not you plan to attend the Annual Meeting, the Board respectfully requests
the privilege of voting on your behalf and urges you to sign, date and return
the enclosed proxy. By doing so you will, unless such proxy is subsequently
revoked by you, authorize the persons named therein, or any of them, to act on
your behalf at the Annual Meeting.

Any stockholder who submits a proxy may revoke it by giving a written notice of
revocation to the Secretary or, before the proxy is voted, by submitting a duly
executed proxy bearing a later date.

ATTENDANCE AND PROCEDURES AT ANNUAL MEETING

Attendance at the Annual Meeting will be limited to stockholders of record,
beneficial owners of Company common stock ("Common Stock") entitled to vote at
the meeting having evidence of ownership, a duly appointed proxy holder with the
right to vote of an absent stockholder (one proxy holder per absent
stockholder), and invited guests of the Company. Any person claiming to be the
proxy holder of an absent stockholder must, upon request, produce written
evidence of such authorization. In addition, management will require all signs,
banners, placards, cameras and recording equipment to be left outside the
meeting room.

ACTION TO BE TAKEN AT MEETING

1. Three directors will be elected to serve for terms of three years each and
until their respective successors are elected and qualified.

2. A resolution will be offered to approve the UST Inc. Nonemployee Directors'
Stock Option Plan.

3. A resolution will be offered to ratify and approve the selection of
independent auditors of the accounts of the Company for the year 1995.

4. The Company has been advised that two resolutions will be offered by
stockholders.

Your authorized proxies will vote FOR the election of the individuals herein
nominated for directors, the resolution regarding approval of the nonemployee
directors' stock option plan and the resolution regarding the auditors, and
AGAINST the stockholders' resolutions, unless you designate otherwise. A proxy
designating how it should be voted will be voted accordingly.

1
<PAGE> 4

PROPOSAL NO. 1

ELECTION OF DIRECTORS

The Certificate of Incorporation provides for the election of one-third (as
nearly as may be) of the Board annually.

The Board, upon recommendation of the Nominating and Compensation Committee,
nominated the three directors standing for election at the Annual Meeting for
terms expiring at the Annual Meeting of Stockholders to be held in 1998. Mr.
Albert H. Leader, a long-time director of the Company, will retire from the
Board at the expiration of his current term of office and, accordingly, is not
standing for reelection at the Annual Meeting. The Board currently consists of
eleven members and, with the retirement of Mr. Leader, shall be reduced to ten
at the Annual Meeting.

Directors are elected by a plurality of the votes cast. "Plurality" means that
the nominees who receive the largest number of votes cast "For" are elected as
directors, up to the maximum number of directors to be chosen at the Annual
Meeting. Consequently, any shares not voted "For" a particular nominee as a
result of a direction to withhold or a broker nonvote will not affect the
outcome of the vote.

Set forth in Table I below is certain information with respect to each person
nominated by the Board and each person whose term of office as a director will
continue after the Annual Meeting, including the number of shares of Common
Stock beneficially owned by such person as of January 31, 1995.
Pursuant to a reorganization approved by stockholders at the 1987 Annual
Meeting, United States Tobacco Company became a wholly owned subsidiary of the
Company. For periods prior to May 5, 1987, all titles of officers stated in
Table I below relate to offices held in United States Tobacco Company.

TABLE I

<TABLE>
<CAPTION>
NAME OF NOMINEE*
OR DIRECTOR BUSINESS HISTORY
----------------- ----------------
<S> <C> <C>
LOUIS F. BANTLE Mr. Bantle has served as Chairman Emeritus since
December 1, 1993, the date of his retirement as
Age 66 Chairman of the Board and Chief Executive Officer.
He had served as Chairman of the Board since April
[PHOTO] Shares beneficially owned: 4, 1973 and was elected Chief Executive Officer on
Outstanding shares -- 2,339,579 June 18, 1985. Mr. Bantle had served in the
Shares subject to options capacity of chief executive officer since April 4,
-- 240,000 1973. He also served as President from January 1,
1973 to June 17, 1985 and from December 11, 1989 to
Present term expires 1996 September 26, 1990.

Director since 1967

------------------------------------------------------------------------------------------------------------------
</TABLE>

2
<PAGE> 5

<TABLE>
<CAPTION>
NAME OF NOMINEE*
OR DIRECTOR BUSINESS HISTORY
---------------- ----------------
<S> <C> <C>
*JOHN J. BUCCHIGNANO Mr. Bucchignano has served as Executive Vice
President and Chief Financial Officer since October
[PHOTO] Age 47 7, 1991. Mr. Bucchignano served as Senior Vice
President and Controller from September 27, 1990 to
Shares beneficially owned: October 6, 1991, and as Controller from August 1,
Outstanding shares -- 131,088 1987 to September 26, 1990.
Shares subject to options
-- 330,000

Nominated for term to expire 1998

Present term expires 1995

Director since 1993

------------------------------------------------------------------------------------------------------------------

JAMES W. CHAPIN Mr. Chapin retired on December 1, 1994. He
currently serves as Of Counsel to the Company. Mr.
[PHOTO] Age 65 Chapin had served as Executive Vice President and
General Counsel since September 25, 1991, and as
Shares beneficially owned: Senior Vice President and General Counsel from
Outstanding shares -- 392,305 January 1, 1981 to September 24, 1991.
Shares subject to options
-- 490,000

Present term expires 1996

Director since 1994

------------------------------------------------------------------------------------------------------------------

EDWARD H. DEHORITY, JR. Mr. DeHority is a retired certified public
accountant and attorney. He was employed by Ernst &
[PHOTO] Age 64 Young LLP from 1958 to 1988. He served as the
firm's National Partner in charge of Client
Shares beneficially owned: Relations from 1972 to 1978 and the managing
Outstanding shares -- 2,272 partner of the Stamford, Connecticut office from
Shares subject to options 1978 to 1987.
-0-

Present term expires 1997

Director since 1990

------------------------------------------------------------------------------------------------------------------
</TABLE>

3
<PAGE> 6

<TABLE>
<CAPTION>
NAME OF NOMINEE*
OR DIRECTOR BUSINESS HISTORY
----------------- ----------------
<S> <C> <C>
VINCENT A. GIERER, JR. Mr. Gierer has served as Chairman of the Board and
Chief Executive Officer since December 1, 1993 and
[PHOTO] Age 47 has served as President since September 27, 1990.
Mr. Gierer also served as Chief Operating Officer
Shares beneficially owned: from September 27, 1990 to November 30, 1993 and as
Outstanding shares -- 512,848 Executive Vice President and Chief Financial
Shares subject to options Officer from February 17, 1988 to September 26,
-- 731,400 1990.

Present term expires 1997

Director since 1986

------------------------------------------------------------------------------------------------------------------

P.X. KELLEY General Kelley has served as Vice Chairman of
Cassidy & Associates, a Washington D.C. government
[PHOTO] Age 66 relations firm, since January 1989. He served as
General, United States Marine Corps from 1981 to
Shares beneficially owned: 1987 and retired as Commandant of the Marine Corps
Outstanding shares -- 3,500 in 1987. He also served as a member of the Joint
Shares subject to options Chiefs of Staff from 1983 until his retirement in
-0- 1987. General Kelley also serves as a director of
Allied-Signal, Inc., GenCorp Inc., London Insurance
Present term expires 1996 Group, PHH Corporation, Saul Centers, Inc., Sturm,
Ruger & Company, Inc. and Wackenhut Corporation.
Director since 1992

------------------------------------------------------------------------------------------------------------------

*RALPH L. ROSSI Mr. Rossi retired on July 1, 1993. He served as
Vice Chairman from August 29, 1984 until the date
[PHOTO] Age 66 of his retirement.

Shares beneficially owned:
Outstanding shares -- 882,639
Shares subject to options
-- 475,000

Nominated for term to expire 1998

Present term expires 1995
Director since 1973

------------------------------------------------------------------------------------------------------------------
</TABLE>

4
<PAGE> 7

<TABLE>
<CAPTION>
NAME OF NOMINEE*
OR DIRECTOR BUSINESS HISTORY
---------------- ----------------
<S> <C> <C>
SPENCER R. STUART Mr. Stuart has been an independent management
consultant since 1974 when he retired as Chairman
[PHOTO] Age 72 of the Board and Chief Executive Officer of Spencer
Stuart and Associates. He continues as Honorary
Shares beneficially owned: Chairman of that firm. From June 1990 through April
Outstanding shares -- 46,725 1992, Mr. Stuart served as a management consultant
Shares subject to options to the investment banking division of Dean Witter
-0- Financial Services Group and as Chairman of the
Dean Witter Council of Management Advisors. Mr.
Present term expires 1997 Stuart is a director of Enhance Financial Services
Group, Asset Guaranty Inc. and Asset Guaranty
Director since 1977 Reinsurance Company. Mr. Stuart also serves as an
Advisory Director of Keystone America Group Funds
and Keystone Custodian Funds.

------------------------------------------------------------------------------------------------------------------

JOSEPH R. TADDEO Mr. Taddeo has served as Executive Vice President
and President of United States Tobacco Company
[PHOTO] Age 50 since September 27, 1990. Mr. Taddeo also served as
Senior Vice President of United States Tobacco
Shares beneficially owned: Company from June 23, 1988 to September 26, 1990.
Outstanding shares -- 185,620
Shares subject to options
-- 425,000

Present term expires 1996

Director since 1990

------------------------------------------------------------------------------------------------------------------

*JOHN P. WARWICK Mr. Warwick is a marketing consultant to Warwick,
Baker & Fiore Inc. ("WBF"), a New York based
[PHOTO] Age 69 advertising agency. Mr. Warwick served WBF as
Chairman of the Board from 1965 through March 20,
Shares beneficially owned: 1991, the date of his retirement, and as Chief
Outstanding shares -- 10,140 Executive Officer from 1964 through 1986.
Shares subject to options
-0-

Nominated for term to expire 1998

Present term expires 1995

Director since 1991

------------------------------------------------------------------------------------------------------------------
</TABLE>

5
<PAGE> 8

Messrs. Bucchignano, Rossi and Warwick are now directors and will serve for the
terms indicated, subject, with respect to Mr. Bucchignano, to the provisions of
his Employment Agreement (see "Other Compensation," below) unless waived by the
Company. Your proxy, unless otherwise marked, will be voted for the above
nominees for such terms. In the event that any nominee is not available for
election at the time of the meeting or any adjournment thereof, an event which
is not anticipated, your proxy may be voted for a substitute nominee and will be
voted for the other nominees named above.

As of January 31, 1995, all directors and reporting officers as a group
beneficially owned 5,268,674 shares and had options to acquire 5,075,400 shares,
which together represented approximately 5.1% of the aggregate of the
outstanding Common Stock including options held by all such persons. No officer
or director beneficially owned more than 1% of the aggregate amount of the
outstanding Common Stock including options held by the respective person, except
for Mr. Bantle, who owns approximately 1.3%.

The Board held nine meetings during 1994.

COMMITTEES OF THE BOARD

The Company has an Audit Committee and a Nominating and Compensation Committee.
The Audit Committee is currently comprised of the following members, each
independent of management: Edward H. DeHority, Jr. -- Chairman, P.X. Kelley and
Spencer R. Stuart. The Audit Committee, which met four times during 1994,
reviews and acts upon or reports to the Board with respect to various auditing
and accounting matters, including the selection of the Company's independent
auditors, the accounting and financial practices and controls of the Company,
audit procedures and findings, and the nature of services to be performed for
the Company by, and the fees to be paid to, the independent auditors. The
Nominating and Compensation Committee, which met ten times during 1994, is
currently comprised of the following members, each independent of management:
P.X. Kelley -- Chairman, Edward H. DeHority, Jr., Albert H. Leader, Spencer R.
Stuart and John P. Warwick. This committee's responsibilities are to cover
nominating matters, including the recommendation of nominees to the Board and
the size and composition of the Board and its committees, in addition to
officers' compensation and management succession matters. The Nominating and
Compensation Committee considers recommendations from stockholders for Board of
Director candidates. The recommendations should be submitted in writing to the
Secretary at the Company's office.

COMPENSATION OF EXECUTIVE OFFICERS

The tables, graph and descriptive information set forth below are intended to
comply with the Securities and Exchange Commission regulations for executive
compensation requirements applicable to, among other reports and filings, annual
proxy statements. This information is being furnished with respect to the
Company's Chief Executive Officer ("CEO"), its four most highly compensated
current executive officers other than the CEO, and a former executive officer
who retired on December 1, 1994, each of whose salary and bonus exceeded
$100,000 for the most recent fiscal year (collectively, the "Named Executive
Officers").

6
<PAGE> 9

TABLE II

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------------ ------------
AWARDS
------------
SECURITIES
NAME AND SALARY BONUS UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR ($) ($) OPTIONS (#) COMPENSATION ($)(1)
- ----------------------------------------- ------ ---------- --------- ------------ -------------------
<S> <C> <C> <C> <C> <C>
VINCENT A. GIERER, JR. 1994 560,000 1,850,046 120,000 9,000
Chairman of the Board, 1993 560,000 1,536,091 50,000 14,150
Chief Executive Officer 1992 560,000 1,300,827 100,000 13,732
and President

ROBERT E. BARRETT 1994 275,000 650,012 80,000 7,500
Executive Vice President and 1993 275,000 490,408 30,000 11,949
President -- UST Enterprises Inc. 1992 275,000 400,222 100,000 11,443

JOHN J. BUCCHIGNANO 1994 275,000 800,015 50,000 9,000
Executive Vice President 1993 274,039 580,254 40,000 14,150
and Chief Financial Officer 1992 250,000 505,426 100,000 13,732

JAMES W. CHAPIN(2) 1994 308,423 875,009 50,000 12,333
Executive Vice President 1993 330,000 700,797 30,000 13,921
and General Counsel 1992 330,000 599,768 50,000 13,732

HARRY W. PETER III 1994 275,000 600,011 50,000 9,000
Executive Vice President and 1993 275,000 512,870 30,000 14,150
President -- UST International Inc. 1992 275,000 425,291 100,000 13,097

JOSEPH R. TADDEO 1994 400,000 1,300,016 95,000 9,000
Executive Vice President 1993 400,000 1,067,259 50,000 14,150
and President -- United 1992 400,000 900,411 130,000 13,732
States Tobacco Company
</TABLE>

(1) Amounts represent Company matching contributions to the Employees' Savings
Plan, as well as $3,333 earned by Mr. Chapin in his capacity as Of Counsel
for the month of December.

(2) Mr. Chapin retired on December 1, 1994.

7
<PAGE> 10

TABLE III

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION> GRANT DATE
INDIVIDUAL GRANTS VALUE
----------------------------------------------------------------- -----------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE OR GRANT DATE
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION PRESENT
NAME GRANTED (#)(1) FISCAL YEAR $/SHARE DATE VALUE $ (2)
- ---------------------------------- -------------- ------------ ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Vincent A. Gierer, Jr. ........... 70,000 4.1 27.81 6/21/04 594,300
50,000 2.9 27.88 11/16/04 406,500
Robert E. Barrett................. 50,000 2.9 27.81 6/21/04 424,500
30,000 1.8 27.88 11/16/04 243,900
John J. Bucchignano............... 50,000 2.9 27.81 6/21/04 424,500
James W. Chapin................... 50,000 2.9 27.81 6/21/04 424,500
Harry W. Peter III................ 50,000 2.9 27.81 6/21/04 424,500
Joseph R. Taddeo.................. 60,000 3.5 27.81 6/21/04 509,400
35,000 2.1 27.88 11/16/04 284,550
</TABLE>

(1) Options granted in 1994 expire in ten years and generally become exercisable
ratably over a three year period following the date of grant subject to
acceleration of exercisability upon a change in control of the Company.

(2) Amounts based on the modified Black-Scholes option pricing model, using the
following material assumptions and adjustments: exercise price equal to the
fair market value of the underlying stock on the date of grant, ten year
option term, interest rate representing the interest rate on a U.S. Treasury
security with a maturity date corresponding to that of the option term,
volatility calculated using daily stock prices for a one year period prior
to grant date, and dividends at a rate of $1.12 per share, representing
annualized dividends paid with respect to a share of common stock as of the
date of grant. There is no assurance the value realized by an optionee will
be at or near the value estimated by the modified Black-Scholes option
pricing model. Should the stock price not rise over the option price,
optionees will realize no gain.

TABLE IV

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT FISCAL YEAR-END IN-THE-MONEY OPTIONS
ACQUIRED ON VALUE (#) AT FISCAL YEAR-END ($)
EXERCISE REALIZED --------------------------- ---------------------------
NAME (#) $ EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Vincent A. Gierer, Jr. .......... 1,000 4,188 578,800 152,600 6,776,613 81,800
Robert E. Barrett................ -0- -0- 190,700 99,300 349,913 48,963
John J. Bucchignano.............. 10,000 162,188 254,000 76,000 1,120,750 64,875
James W. Chapin.................. -0- -0- 490,000 -0- 6,025,625 -0-
Harry W. Peter III............... -0- -0- 280,700 69,300 1,306,350 48,963
Joseph R. Taddeo................. -0- -0- 297,400 127,600 1,061,638 81,175
</TABLE>

8
<PAGE> 11

TABLE V

PENSION TABLE

<TABLE>
<CAPTION>
YEARS OF SERVICE
----------------------------------------------------------------------------------
REMUNERATION 5 10 15 20 25 30 35
- ------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 200,000.................................. $ 21,140 $ 42,280 $ 63,419 $ 84,559 $ 105,699 $ 126,839 $ 147,978
300,000.................................. 32,140 64,280 96,419 128,559 160,699 192,839 224,978
400,000.................................. 43,140 86,280 129,419 172,559 215,699 258,839 301,978
500,000.................................. 54,140 108,280 162,419 216,559 270,699 324,839 378,978
600,000.................................. 65,140 130,280 195,419 260,559 325,699 390,839 455,978
700,000.................................. 76,140 152,280 228,419 304,559 380,699 456,839 532,978
800,000.................................. 87,140 174,280 261,419 348,559 435,699 522,839 609,978
900,000.................................. 98,140 196,280 294,419 392,559 490,699 588,839 686,978
1,000,000................................. 109,140 218,280 327,419 436,559 545,699 654,839 763,978
1,100,000................................. 120,140 240,280 360,419 480,559 600,699 720,839 840,978
1,200,000................................. 131,140 262,280 393,419 524,559 655,699 786,839 917,978
</TABLE>

The Pension Table sets forth information for determining the estimated annual
retirement benefits payable as a life annuity to the Named Executive Officers
under the Company's defined benefit plans pursuant to which benefits are
determined by final compensation and years of service (the "Retirement Plans").
Compensation for purposes of the Retirement Plans means the highest three year
average compensation (salary and 25% of bonus) in the ten year period
immediately preceding retirement. For 1994, the three year average compensation
covered by the Retirement Plans for each of the Named Executive Officers was as
follows: Mr. Gierer, $873,047; Mr. Barrett, $372,005; Mr. Bucchignano, $379,102;
Mr. Chapin, $478,547, Mr. Peter, $377,219 and Mr. Taddeo, $601,268. As of
December 31, 1994, the credited years of service under the Retirement Plans were
approximately as follows: Mr. Gierer, 17 years; Mr. Barrett, 4 years; Mr.
Bucchignano, 10 years; Mr. Chapin, 20 years; Mr. Peter, 7 years and Mr. Taddeo,
13 years. Pension Table calculations assume retirement on December 31, 1994 and
take into account offsets for social security benefits.

The Named Executive Officers also participate in a supplemental retirement plan
(the "Supplemental Plan"). The formula by which benefits are determined under
the Supplemental Plan is as follows: the greater of 100% of the accrued benefit
under the Retirement Plans or 40% of the executive's highest compensation
(salary plus 25% of bonus) paid during any of the three consecutive twelve month
periods within the thirty-six months immediately preceding retirement (for
retirement at age 50), increasing in constant whole percentage increments to the
greater of 110% of such accrued benefit or 50% of such compensation (for
retirement at age 60 or thereafter), less amounts payable under the Retirement
Plans. The estimated annual benefits (or, in the case of Mr. Chapin, the actual
annual benefits) payable as a life annuity at normal retirement age (assuming
compensation and ser-

9
<PAGE> 12

vice as of December 31, 1994) under the Supplemental Plan for each of the Named
Executive Officers (after taking into account reductions for benefits under the
Retirement Plans) are approximately as follows: Mr. Gierer, $153,527, Mr.
Barrett, $166,629, Mr. Bucchignano, $128,560, Mr. Chapin, $48,069, Mr. Peter,
$145,173 and Mr. Taddeo, $167,169.

COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION

The Nominating and Compensation Committee (the "Committee") and the Stock Option
Committee each consists of five independent, nonemployee directors. The role of
the Committee, among other things, is to review or approve, as appropriate, (i)
the broad compensation policy of the Company with respect to its executives,
including all current executive officers ("Executive Officers"), and (ii) the
various components of the total compensation of the Executive Officers. The role
of the Stock Option Committee is generally to administer the Company's stock
option plans and review and approve stock option grants thereunder.

COMPENSATION POLICY

The Committee believes that strong leadership combined with the continuing
development of its highly qualified management team have been key elements in
the Company's superior financial performance over the years. In the Committee's
view, the Company's compensation programs, which provide appropriate incentives
and rewards to Executive Officers for outstanding performance, have been and
will continue to be essential to the Company's ability to attract, retain and
motivate the most highly qualified executives, thereby enhancing the ability of
the Board of Directors to meet its primary obligation to stockholders of the
Company -- maximizing stockholder value through consistent growth and
profitability. The Committee also believes that meaningful participation in the
Company's success is the most effective means of compensating its Executive
Officers. Accordingly, it has been the Committee's long-standing policy to link
a substantial portion of overall compensation to the Company's performance. Less
than half of total compensation is fixed in the form of base salary while the
remainder of total compensation (bonus and stock options) is variable and
dependent upon the earnings and operating results of the Company and the market
price of Common Stock.

In order to ensure that the Company's compensation programs provide proper
incentives for outstanding performance, while at the same time ensuring that the
major portion of total compensation is dependent on Company performance, the
Committee has adopted an objective for the Company's compensation programs that
total compensation for the Company's officers should fall approximately in the
75th percentile of a comparator group composed of a cross section of other high
performance companies but only if warranted by Company performance. The
Committee believes that the objective established for the Company's total
compensation programs reflects the unique nature of the Company's products and
the need to attract talented executives who can direct growth in a challenging
environment. The Committee directed an independent consultant to construct a
group of comparator companies from their database, which resulted in the
identification of 12 companies who, like the Company, meet the following
criteria as of the end of 1993: (i) one year return on equity greater than 20%;
(ii) five year return on equity greater than 20%; and (iii) five year compound
growth for earnings per share greater than 10%. One of the twelve

10
<PAGE> 13

comparator group companies is in the S&P Tobacco Index (see performance graph,
below).

Relevant data to be included in the independent consultant's report for any year
does not become fully available until after the close of that year. Accordingly,
the Committee uses compensation data drawn from this report as a guide in
determining the total compensation to be provided to the Company's Executive
Officers for the year following the year to which the report relates. Thus, for
example, in determining total 1994 compensation for Executive Officers, the
Committee was aware that, based upon the data provided in the independent
consultant's 1994 report, total 1993 compensation for each of the Company's
Executive Officers fell below the 75th percentile of compensation for comparable
executives in the comparator group. Implementation of the Committee policy is
thus subject to review and adjustment each year in light of information set
forth in the latest consultant's report.

Although the Committee's only established target level is the 75th percentile as
the goal for total compensation, in analyzing where total compensation falls in
relation to the comparator group, the Committee is cognizant of where each
component of compensation falls in relation to the same component of
compensation for executives in the comparator group. In this connection, the
Committee noted that 1993 salaries and long-term compensation each fell below
the 75th percentile of the analogous 1993 compensation for executives in the
comparator group and that 1993 short-term incentive compensation was above this
percentile.

The 1993 shortfall in long-term compensation was due, in part, to the fact that,
during 1993, the Company reduced stock option awards to all employees, including
Executive Officers. In fact, for Executive Officers, long-term incentive
compensation ranged between 62% and 86% below the 75th percentile of long-term
incentive compensation for executives in the comparator group. It became clear
to the Committee that short-term incentive compensation constituted too high a
percentage of total compensation and long-term incentive compensation
constituted too low a percentage of total compensation. The Committee decided to
change this distribution of incentives and to do so gradually over time.
Accordingly, the Committee will slightly increase aggregate option awards each
year to officers. In 1994, this resulted in 65% of the total options awarded
being granted to officers, rather than the 50% of option awards historically
granted to officers. (Conversely, only 44% of ICP awards was made to officers in
1994, as opposed to the 50% of ICP awards historically made to officers.) The
Committee, in conjunction with the Stock Option Committee, also determined that
there could be two annual stock option grants -- (i) a regular stock option
grant, the size of which would be based upon a number of factors, as discussed
below, and (ii) a special grant at year end designed to reward outstanding
performance.

Current tax legislation imposes an annual, individual limit of $1 million on the
deductibility of the Company's compensation payments to certain Executive
Officers, commencing in 1994. Specified compensation is excluded for this
purpose, including so-called performance-based compensation. In response to this
legislation, the Committee has determined to preserve, to the maximum extent
practicable, the deductibility of all compensation payments to Executive
Officers.

The Company's compensation program has three principal components, each
described more fully below: annual base salaries, short-term incentives
consisting of annual bonuses awarded under the

11
<PAGE> 14

Company's Incentive Compensation Plan ("ICP") and long-term incentives
consisting of the grant of stock options under the Company's current and former
stock option plans (the "Option Plans"). Both the ICP and the Option Plans have
been approved by stockholders. The ICP is directly linked to Company performance
through earnings, while the long-term incentive plan reflects the Company's
performance through changes in the market price of Common Stock.

Set forth above in the Summary Compensation Table (Table II) is the compensation
of Named Executive Officers for the years 1994, 1993 and 1992. The Committee
notes that the Company's performance in each of those years reached record
levels for net earnings, primary earnings per share and dividends. For the past
three years, net earnings increased approximately 11%, 12%, and 18%,
respectively; primary earnings per share increased approximately 15%, 15%, and
19%, respectively; and dividends per share increased approximately 17%, 20%, and
21%, respectively.

SPECIFIC COMPONENTS OF COMPENSATION PROGRAM

Salary. Base salaries for the Executive Officers are the component of the total
compensation package that is least related to Company performance. In keeping
with the Company's emphasis on performance-related compensation, base salaries
of the Executive Officers as a group constituted approximately 26% of their 1994
cash compensation and only approximately 17% of their total 1994 compensation
(including the long-term component discussed below), leaving 83% of such
compensation "at risk." Base salaries of Executive Officers had not been
increased from January 1, 1992 to December 31, 1994, except in the case of two
current Executive Officers who received increases (in one case in 1993 and in
the other case in 1993 and 1994) in connection with their promotions.

ICP. The ICP formula, which was approved by stockholders, provides each year for
an aggregate fund based upon fixed percentages of consolidated earnings (before
income taxes and incentive compensation), as specified in the ICP, so long as
earnings exceed a threshold percentage of stockholders' equity and cash
dividends have been declared and paid for the year. Up to 50% of the fund may be
allocated by the ICP Committee among a group of 39 officers, including all
Executive Officers ("Fund A"). Allocations to each of the Executive Officers
must be approved by the Committee. Effective for 1994, the ICP provides that the
Chief Executive Officer will not be permitted to receive more than 15% of Fund A
and no other Executive Officer will be permitted to receive more than 12% of
Fund A. These percentages govern the maximum amounts that may be allocated to
each Executive Officer and are not subject to increase. The Committee has,
however, the authority to make awards of any amount provided that they are equal
to or less than the indicated maximum percentages.

The ICP Committee recommends to the Committee the amount of ICP awards for
Executive Officers and the Committee decides whether to accept or alter such
recommendations. The Committee's policy in this regard has generally been to
approve an ICP award for each Executive Officer, expressed as a percentage of
Fund A and subject to the percentage limits described above, that corresponds to
a dollar amount determined as follows: With respect to any year in which the
Company's net earnings equal or exceed the prior year's results, the Committee
generally awards an executive a bonus that is at least equal to the executive's
bonus for the immediately preceding

12
<PAGE> 15

year. If the executive has been promoted to a position of greater responsibility
with an increase in salary, the bonus is generally increased commensurately. The
extent to which an Executive Officer's bonus increases or decreases is designed
to achieve an overall percentage change in the Executive Officer's total cash
compensation (salary and bonus) for the year which is commensurate with the
higher of the percentage change in the Company's net earnings for such year or
the percentage change in the Company's earnings per share.

For the Chief Executive Officer, the correlation between the percentage change
in total cash compensation and the percentage change in net earnings (or
earnings per share) is most direct. For other Executive Officers, the
correlation is less direct: In making ICP awards to other Executive Officers,
the Committee also takes into account (i) the relationship between the
executive's aggregate cash compensation and that of the Chief Executive Officer
and (ii) the performance of the segment of the Company for which the executive
is responsible, where applicable.

In considering the specific awards to the Executive Officers, the Committee
noted that overall Company performance was superior in 1994. Specifically, the
Company's net earnings were approximately $388 million, an increase of
approximately 11% over the prior year; the Company's primary earnings per share
were $1.87, an increase of approximately 15% over the prior year; and the
Company's return on average stockholders' equity for 1994 was approximately 94%.
In determining 1994 ICP awards, the Committee was aware that the percentage
increase in ICP distributions to all Named Executive Officers from 1993 to 1994
(24%) was greater than the increase in earnings per share (15%). The Committee
noted, however, that in view of the fact that salaries of the Named Executive
Officers in general had not been increased between January 1, 1992 and December
31, 1994 (see "Salary," above), the increase in aggregate cash compensation paid
to Named Executive Officers for 1994 (17%) was approximately the same as the
increase in earnings per share (15%).

Based on the Company's performance for 1994, the aggregate ICP fund for 1994
increased by approximately 16% over the prior year. The 1994 ICP fund represents
4.97% of total earnings before taxes and provision for incentive compensation
and was distributed to 1,718 employees, including the Executive Officers. The
ICP awards made to the Executive Officers as a group constituted approximately
74% of their cash compensation for 1994 and approximately 50% of their total
compensation for 1994 (including the long-term component discussed below).

Option Plans. The long-term incentive component of executive compensation, as
noted above, is equity-based and consists of the award of stock options to the
Executive Officers (as well as many other employees of the Company) under the
Option Plans. Stock options represent compensation that is tied to the Company's
stock price for periods of up to 10 years (the period during which such options
may be exercised). Stock options are granted with an exercise price equal to the
fair market value of shares of Common Stock on the date of grant, and the
optionee will realize value from grant only if the market value of such shares
increases.

Long-term equity-based compensation serves the Committee's overall compensation
policy as follows: it is variable (not fixed); its value is performance-related,
based upon the market price of Common Stock; and it provides an additional
incentive to executives to take into account the

13
<PAGE> 16

Company's long-term goals and plans. In addition, because salary is generally
fixed and changes in ICP awards will generally correlate with changes in net
earnings or earnings per share of the Company, stock options are the component
of overall compensation that provides the Committee with the greatest degree of
flexibility in attempting to attain its targeted compensation objective with
respect to Executive Officers.

As noted above, the Committee found the aggregate 1993 compensation of each of
its Executive Officers to be below the targeted 75th percentile of 1993
compensation for comparable executives in the comparator group and was cognizant
that the long-term component of executive compensation was significantly below
the 75th percentile. Because of the importance of the long-term component of
compensation and because long-term compensation represented only 20% of overall
1993 compensation for Executive Officers, the Committee believes that gradual
increases in this component is the most appropriate means of achieving the
targeted level for overall compensation.

In determining the size of regular option grants to Executive Officers, the
Stock Option Committee considers the following factors, without assigning any
particular weight to any factor: (i) the position and performance of the
executive, (ii) the grant date present value (Black-Scholes) of the award
compared with the value of awards to comparable executives, (iii) attaining the
Committee's targeted goal for aggregate compensation, and (iv) the importance of
long-term compensation, as discussed above. It does not consider the size, in
the aggregate, of all previous option grants made to an Executive Officer. In
determining whether to make a special option grant to one or more Executive
Officers and the size of such grants, the Stock Option Committee considers
factors (iii) and (iv) above, as well as the outstanding performance of the
Executive Officers.

Individual grants to the Named Executive Officers for 1994 are set forth on
Table III. A special 1994 option grant was made subsequent to the regular 1994
grant, in order to reflect services, in addition to normal operating
responsibilities, rendered to the Company during 1994 by certain Executive
Officers and other employees relating to the increased attention received by the
Company as a manufacturer of tobacco products. In this regard, the Stock Option
Committee and the Committee (which further approves each grant of options to the
Executive Officers) determined that, in view of (i) the historically low level
of long-term compensation provided to the Executive Officers as a percentage of
their overall compensation, and (ii) the fact that aggregate 1993 compensation
for these officers fell below the targeted compensation objective, the grant of
stock options to these officers was a particularly appropriate means to reward
their special services and to further the Committee's compensation objectives.

1994 COMPENSATION OF CHIEF EXECUTIVE OFFICER

While Mr. Gierer's base salary did not increase over the prior year, his 1994
ICP award increased approximately 20% over that of 1993. In June of 1994, Mr.
Gierer was granted stock options for 70,000 shares, and, as part of the special
grant referred to above, in November of 1994 he was granted stock options for an
additional 50,000 shares. For 1994, 16% of Mr. Gierer's total compensation was
attributable to base salary, 54% to his ICP award and 30% to his stock option
grants (utilizing the valuation method used in Table III above).

14
<PAGE> 17

ICP. As discussed above, percentage changes in the CEO's overall cash
compensation from the prior year will generally correlate directly to percentage
changes in the Company's net earnings or earnings per share from such year. The
Committee therefore awarded Mr. Gierer the amount set forth in Table II above,
which resulted in an increase in his aggregate 1994 cash compensation of
approximately 15% over that of 1993 (essentially equivalent to the 15% increase
in 1994 earnings per share).

Stock Options. Mr. Gierer's total compensation for 1993 fell significantly
below the 75th percentile of 1993 compensation of comparable executives in the
comparator group. The Committee determined that a gradual increase in the size
of option grants would be the most appropriate means of increasing the total
compensation of all Executive Officers (including Mr. Gierer) to the targeted
level. In view of this consideration, and to reflect his first full year as
chief executive officer and reward the special services rendered by Mr. Gierer,
as described above, Mr. Gierer received 1994 option grants for an aggregate of
120,000 shares. His 1993 stock option grant was for an aggregate of 50,000
shares.

NOMINATING AND COMPENSATION
COMMITTEE

P. X. Kelley, Chairman

Edward H. DeHority, Jr.

Albert H. Leader

Spencer R. Stuart

John P. Warwick

STOCK OPTION COMMITTEE

John P. Warwick, Chairman

Edward H. DeHority, Jr.

P.X. Kelley

Albert H. Leader

Spencer R. Stuart

15
<PAGE> 18

COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN(1)
FOR THE YEAR ENDED DECEMBER 31, 1994

Among UST Inc., S&P Tobacco Index & S&P 500 Index

<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) UST Inc. S&P Tobacco S&P 500
<S> <C> <C> <C>
1989 100 100 100
1990 124 127 97
1991 228 194 126
1992 229 193 136
1993 206 151 150
1994 215 166 152
</TABLE>

(1) Assumes $100 invested on 12/31/89 and held through 12/31/94. Total return
assumes reinvestment of dividends.

16
<PAGE> 19

OTHER COMPENSATION

The Company is party to employment agreements with Messrs. Gierer (4 years),
Bucchignano (3 years) and Taddeo (3 years) which set forth the terms and
conditions of such officers' employment and termination of employment with the
Company. The stated initial terms of the agreements are generally automatically
extended, subject to expiration at age 65. In particular, the agreements provide
that such officers will be entitled to certain severance benefits if the Company
terminates their employment for any reason other than death, disability or
"cause" or if the officer terminates his employment for "good reason," including
termination following a "change in control of the Company" (as such terms are
defined in the agreements). The benefits consist principally of the continuation
over the term remaining in the officer's employment agreement or, if greater,
three years, of an annual amount equal to the sum of the officer's base salary
and the highest ICP payment made to the officer in any of the preceding three
years. In the event of a termination based on a change in control, the ICP taken
into account for this purpose would be limited to an amount equal to 75% of base
salary, the multiple would in all cases be three and the benefits would be paid
in a lump sum. The Company would also maintain all welfare benefit plans in
effect for the officer's continued benefit or provide substantially equivalent
benefits for three years (or, if greater, the number of years remaining in the
term of the agreement). In addition, the Company would pay certain other damages
resulting from the termination. In the event that any payments made pursuant to
the agreement in connection with a change in control are subjected to the excise
tax imposed under the federal tax laws, the Company would increase each such
officers' severance payment as necessary to restore the officer to the same
after-tax position he would have had if the excise tax had not been imposed. In
addition, such agreements provide that any such officer shall resign as Director
upon his termination of employment for any reason. Based upon current salary
levels, the approximate lump-sum value of the severance payments, exclusive of
the effect of state and local taxes, that would have been payable to the
aforementioned executive officers if their employment had terminated on December
31, 1994 following a change in control would be as follows: Mr. Gierer, $3.2
million; Mr. Bucchignano, $1.4 million and Mr. Taddeo, $2.1 million.

COMPENSATION OF DIRECTORS

The monthly retainer for all nonemployee directors has been $5,000 since January
1, 1993 for their services as directors, including committee assignments.
Nonemployee directors are reimbursed for reasonable expenses incurred by them in
connection with performance of their services to the Company as members of the
Board of Directors or committees. Employee directors receive no additional
compensation for their services as directors.

The Company maintains the UST Nonemployee Directors' Retirement Plan (the
"Directors' Plan"), a nonqualified, nonfunded plan that generally applies to
nonemployee members of the Board whose service as such includes periods
beginning on or after January 1, 1988, and whose service equals or exceeds 36
months. Under the terms of the Directors' Plan, an eligible director will
receive one-twelfth of 75% of his highest annual compensation (excluding
consulting fees) each month, beginning at age 65 (or such later date upon which
occurs his termination of service) and continuing over a period equal to his
period of service. Payments cease upon death.

17
<PAGE> 20

The Company also makes available to its nonemployee directors up to $12,500
annually in tax and financial planning services, as well as coverage under its
group life insurance and accidental death and dismemberment policies.

In addition, the Company has adopted the UST Directors' Supplemental Medical
Plan (the "Directors' Medical Plan"), a self-insured medical reimbursement plan
that generally applies to nonemployee members of the Board. The Directors'
Medical Plan provides for an additional $7,500 of annual coverage for each
participant for reasonable, medically related expenses above the participant's
basic medical plan coverage. Coverage continues upon a participant's retirement
from the Board for a period equal to the participant's period of service on the
Board. The Company has also determined to provide additional coverage to Mr.
Leader for certain medically related expenses incurred in excess of amounts
covered by the Directors' Medical Plan.

The Company has also adopted, subject to the approval of the Company's
stockholders at the Annual Meeting (see Proposal No. 2, below), the UST Inc.
Nonemployee Directors' Stock Option Plan (the "Plan"). The Plan provides for an
annual, automatic grant of an option to purchase 1,500 shares of Common Stock on
the first business day following each annual meeting, beginning in 1995, to each
member of the Board who is not then an employee of the Company. Options will be
granted with an exercise price per share equal to the fair market value per
share of Common Stock on the date the option is granted and will first become
exercisable six months after the date of grant. The option exercise period will
expire ten years after the date of grant and will not be affected by a
participant's cessation of membership on the Board.

INDEBTEDNESS

Since January 1, 1994, none of the Company's directors, Executive Officers,
nominees for election as directors or certain relatives or associates of such
persons has been indebted to the Company in an aggregate amount in excess of
$60,000 except as noted below in Table VI, which represents unpaid balances on
loans made pursuant to stock option exercises under the terms of the UST Inc.
1982 Stock Option Plan (the "1982 Plan"), which has expired with respect to the
grant of options, as previously approved by stockholders. Unpaid balances on
such loans are secured by the pledging of the shares with the Company and by the
optionee's personal installment promissory note bearing interest at a rate not
to exceed 9% per annum. With respect to options granted after August 29, 1984,
the 1982 Plan, as amended, requires that installment notes bear interest at the
minimum rate required under the Internal Revenue Code, as amended.

18
<PAGE> 21

TABLE VI

<TABLE>
<CAPTION>
INDEBTEDNESS
LARGEST AGGREGATE AS OF
INDEBTEDNESS DURING 1994(1) FEBRUARY 10, 1995(1)
--------------------------- --------------------
1982 PLAN 1982 PLAN
--------------------------- --------------------
<S> <C> <C>
Vincent A. Gierer, Jr. ........................ $ 1,576,839 $1,306,289
Chairman of the Board,
Chief Executive Officer
and President

Robert E. Barrett.............................. 553,617 517,356
Executive Vice President

John J. Bucchignano............................ 682,443 672,040
Director, Executive Vice President
and Chief Financial Officer

James W. Chapin................................ 1,223,355 939,337
Director, formerly
Executive Vice President
and General Counsel

Harry W. Peter III............................. 515,510 471,486
Executive Vice President

Joseph R. Taddeo............................... 445,117 383,747
Director, Executive
Vice President

Richard H. Verheij............................. 76,687 67,031
Senior Vice President
and General Counsel
</TABLE>

(1) Interest rates on loans range from approximately 5% to approximately 9%.

PROPOSAL NO. 2

A Proposal to Approve the Nonemployee Directors' Stock Option Plan

The Board, on September 22, 1994, adopted, subject to stockholder approval, the
UST Inc. Nonemployee Directors' Stock Option Plan (the "Plan"). The Plan is
intended, in the aggregate, to increase the alignment of the interests of
nonemployee members of the Board with the interests of stockholders of the
Company by providing further opportunity for ownership of Common Stock, and to
increase their incentive to contribute to the success of the Company's business
through the grant of stock options ("Options"). In its consideration of the
Plan, the Board relied upon the recommendations of an independent compensation
consultant, which found the Plan to be competitive and reasonable.

This summary is qualified by reference to text of the Plan, a copy of which is
attached hereto as Exhibit A.

19
<PAGE> 22

DESCRIPTION OF PRINCIPAL FEATURES OF THE PLAN

Stock Available for Options; Eligibility

Subject to stockholder approval, 200,000 shares of Common Stock are reserved for
issuance under the Plan, subject to adjustment as provided in the Plan.
Currently, there are eight nonemployee members of the Board, each of whom is
eligible to participate in the Plan. Members of the Board who are also employees
of the Company are not eligible to participate in the Plan. Only options that do
not qualify as "incentive stock options" within the meaning of Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code"), may be granted under
the Plan.

Administration

The Plan is administered by the Nominating and Compensation Committee of the
Board. The Plan is intended to comply with Rule 16b-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as such Rule may be
amended from time to time ("Rule 16b-3"), and is, in particular, designed to
preserve the status of Plan participants as "disinterested persons" within the
meaning of Rule 16b-3.

Grant of Options

The Plan provides that, on the first business day following the 1995 and each
subsequent annual meeting of stockholders of the Company, each eligible director
will automatically be issued an Option to purchase 1,500 shares of Common Stock.
Options will be granted at an option price equal to the fair market value of a
share of Common Stock on the date of grant.

Exercise of Options

Options will become exercisable six (6) months following the date of grant. Each
Option will expire ten years following the date of grant. The Option price must
be paid in full in cash upon exercise. If for any reason during the term of an
unexercised and unexpired Option, the eligible director ceases to be a voting
member of the Board, such Option may be exercised in accordance with its terms
until the expiration of the Option.

Effective Date and Term of Plan; Amendment and Termination

No Option may be granted under the Plan following the tenth anniversary of the
effective date of the Plan, which shall be the date on which stockholders of the
Company approve the adoption of the Plan. The Board may amend or terminate the
Plan in whole or in part except that the provisions setting forth the terms of
the automatic grant of Options may not be amended more than once every six
months, and, to the extent required by Rule 16b-3, no amendment will be
effective without the approval of the stockholders of the Company.

Transferability

No Option may be assigned or transferred except by will or the laws of descent
and distribution. During the life of a director an Option may be exercisable
only by the director.

Fair Market Value

On February 10, 1995, the fair market value of a share of Common Stock was
$30.25. The following chart sets forth the name, position, and grant information
for currently eligible directors.

20
<PAGE> 23

UST INC. NONEMPLOYEE DIRECTORS' STOCK
OPTION PLAN

<TABLE>
<CAPTION>
NUMBER OF
SHARES
UNDERLYING
EACH ANNUAL
GRANT OF
NAME AND POSITION OPTIONS
- -------------------------------- -----------
<S> <C>
Louis F. Bantle, Director....... 1,500
James W. Chapin, Director....... 1,500
Edward H. DeHority, Jr.,
Director...................... 1,500
P.X. Kelley, Director........... 1,500
Ralph L. Rossi, Director........ 1,500
Spencer R. Stuart, Director..... 1,500
John P. Warwick, Director....... 1,500
</TABLE>

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

An option holder will not generally be taxed upon the grant of an option.
Rather, at the time of exercise of such Option, the option holder will generally
recognize ordinary income for federal income tax purposes in an amount equal to
the excess of the then fair market value of the shares purchased over the Option
price. The Company will generally be entitled to a tax deduction at the time
when, and in the amount that, the participant recognizes ordinary income.

The discussion set forth above of certain federal income tax consequences with
respect to Options that may be granted pursuant to the Plan is for general
information only and does not take into account the specific facts or
circumstances that may apply to a particular award recipient. A participant may
also be subject to foreign, state, and local income or other taxes.

The following resolution will be offered at the meeting:

"RESOLVED, that the UST Inc. Nonemployee Directors' Stock Option Plan, as
adopted subject to stockholder approval by the Board of Directors on September
22, 1994, be, and it hereby is, ratified, confirmed and approved by the
stockholders of the Company."

The Board recommends that stockholders vote FOR the foregoing resolution
(Proposal No. 2). Your appointed proxies will vote your shares FOR Proposal No.
2 unless you instruct otherwise in the proxy form.

The affirmative vote of a majority of the shares of Common Stock present in
person or by proxy is required to adopt this proposal. In accordance with
Delaware law, abstentions will, while broker nonvotes will not, be treated as
present for purposes of the preceding sentence.

PROPOSAL NO. 3

A Proposal to Ratify and Approve the Selection of Independent Auditors of the
Accounts of the Company and its Consolidated Subsidiaries for the Year 1995.

The Board has selected the firm of Ernst & Young LLP, Certified Public
Accountants, as independent auditors of the accounts of the Company and its
consolidated subsidiaries for the year 1995. Ernst & Young LLP has been serving
the Company and its subsidiaries in this capacity for many years. The Board's
selection was made upon the unanimous recommendation of its Audit Committee.

In connection with its audit of the Company's 1994 financial statements, Ernst &
Young LLP read the Company's periodic reports which were filed with the
Securities and Exchange Commission, discussed quarterly financial information
included in the Company's quarterly financial statements and met with the Audit
Committee. Ratification of the selection of the Company's independent auditors
is not required by any statute or regulation to which the Company is subject or
by the Company's By-Laws. If the stockholders do not ratify the selection of
Ernst & Young LLP,

21
<PAGE> 24

the selection of independent auditors will be reconsidered by the Board.

Representatives of Ernst & Young LLP are expected to be present at the Annual
Meeting, will have an opportunity to make a statement if so desired and will be
available to respond to appropriate questions.

The following resolution will be offered at the meeting:

"RESOLVED, that the Board of Directors' selection of Ernst & Young LLP as
independent auditors of the accounts of the Company and its consolidated
subsidiaries for the year 1995 be, and it hereby is, ratified, confirmed and
approved by the stockholders of the Company."

The Board recommends that stockholders vote FOR the foregoing resolution
(Proposal No. 3). Your appointed proxies will vote your shares FOR Proposal No.
3 unless you instruct otherwise in the proxy form.

PROPOSAL NO. 4

The Company has been advised that John Slade, M.D., a record holder of 64
shares, whose address is 166 Montgomery Road, Skillman, New Jersey 08558-2005,
initial filer with the Mercy Health Services, a beneficial holder of 4,777
shares, whose address is 34605 Twelve Mile Road, Farmington Hills, Michigan
48331-3221, and Sisters of Mercy of the Americas, a beneficial holder of 396
shares, whose address is 29000 Eleven Mile Road, Farmington Hills, Michigan
48336, intend to introduce at the Annual Meeting the following resolution and
supporting statement, which are printed verbatim:

WHEREAS Skoal Bandit, Skoal Classic and Copenhagen brands of moist snuff are
being advertised without accompanying warning labels on caps, t-shirts and other
utilitarian objects in apparent violation of federal regulations;

- -- A licensee of the Company sells t-shirts, caps, insulated can holders, and
other items to the public with the slogan "Skoal Bandit Racing" but with no
warning label;

- -- "Skoal Bandit Racing" is a service mark owned by United States Tobacco Sales
and Marketing Company, Inc. The phrase refers to the NASCAR Winston Cup stock
car racing team the Company sponsors for Skoal Bandit brand moist snuff. The
major purpose of this sponsorship is to promote Skoal Bandit brand moist snuff
to the public;

- -- The same licensee of the Company sells t-shirts, caps, post cards, bumper
stickers, license plates, and other items to the public which bear images of the
Skoal Bandit NASCAR Winston Cup stock car clearly depicting the brand name and
the bandit symbol, yet these items carry no warning label;

- -- The same licensee of the Company also sells similar items to the public which
bear images of the Skoal Classic NASCAR Winston Cup stock car clearly depicting
the brand name, yet none of these items carry a warning label;

- -- Regulations of the Federal Trade Commission require that mentions of brands
of chewing tobacco and moist snuff on items such as caps and t-shirts, insulated
can holders, bumper stickers and license plates be accompanied by prominent
warning labels;

- -- Children find promotional items for tobacco products attractive. For
instance, 39% of tenth graders in Perth Amboy, New Jersey reported

22
<PAGE> 25

owning promotional items connected to tobacco products in 1992, and 30% of
12 - 17 year olds in a national survey conducted by Gallup International in 1992
reported owning at least one such item.

RESOLVED that shareholders request that the Board adopt the following
policy, to be put into effect as soon as possible but not later than January 1,
1996: All advertising and promotion for our Company's moist snuff brands,
including all uses of the Company's brand names and associated symbols for moist
snuff products used in connection with sponsorships of all sorts, shall include
clear, effective and prominent warnings of the hazards caused by these products.

SUPPORTING STATEMENT

Federal regulations require that promotional items for moist snuff brands such
as t-shirts, caps, insulated can holders, license plates and bumper stickers
carry warning labels. The Company has licensed the use of its moist snuff brand
names and associated symbols for use on items which do not carry a warning of
any sort. These apparent violations of federal regulations are especially
worrisome because adolescents, among whom moist snuff use is epidemic, find
items such as these attractive.

If you believe that promotional items for the Company's moist snuff brands
should carry warning labels, please vote "yes" for this resolution.

COMPANY'S RESPONSE

The Board recommends that stockholders vote AGAINST the foregoing resolution
(Proposal No. 4).

The initial filer of this proposal has submitted other proposals to the Company
in the past either alone or with another anti-tobacco activist, which have been
overwhelmingly defeated. In addition, the Proponents presented a virtually
identical proposal at last year's annual meeting, which received the affirmative
vote of less than 4% of the shares voting.

The Board continues to believe that this proposal is not in the best interests
of the Company or its stockholders and urges stockholders to vote AGAINST it.

Advertising of the Company's products is extensively regulated on the federal,
state and local levels and the Company complies with those regulations. In
particular, since 1986, all Company advertising for smokeless tobacco brands has
been regulated by the Federal Trade Commission (the "FTC") pursuant to the
Comprehensive Smokeless Tobacco Health Education Act of 1986, 15 U.S.C. 4001
(the "Act"). In addition, in 1987 and 1991, the FTC adopted regulations to
implement the warning requirements of the Act, which provide for warning
requirements in advertisements and warning requirements for utilitarian objects
for "personal use" that "display the brand name, logo, or selling message of any
smokeless tobacco product." The FTC regulations specify how the required warning
must appear "in a conspicuous and prominent location," in "conspicuous and
legible type," and be "clearly visible."

The Company has and will continue to comply with the requirements of the
comprehensive regulatory scheme governing advertising for smokeless tobacco
products promulgated by Congress and the FTC, as well as the requirements of
state and local regulatory authorities. Accordingly, the Company believes that
the adoption of the policy referred to in the foregoing resolution is neither
necessary nor appropriate and, if implemented as contemplated by the proposal,
could require the Company to adopt policies which conflict with the existing
regulatory framework mandated by federal law.

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<PAGE> 26

Your appointed proxies will vote your shares AGAINST Proposal No. 4 unless you
instruct otherwise in the proxy form.

The affirmative vote of a majority of shares of Common Stock present in person
or by proxy is required to adopt this proposal. In accordance with Delaware law,
abstentions will, while broker nonvotes will not, be treated as present for
purposes of the preceding sentence.

PROPOSAL NO. 5

The Company has been advised that Mr. Craig A. Masback, a beneficial owner of
100 shares, whose address is 3107 South Street, N.W., Washington, DC 20007,
intends to introduce at the Annual Meeting the following resolution and
supporting statement, which are printed verbatim:

WHEREAS:
Since 1987 Latino agricultural employees of Stimson Lane Wine and Spirits Ltd, a
UST Inc. Washington state-based winery subsidiary, have requested that the
company negotiate in good faith a collective bargaining agreement with their
union representative, the United Farm Workers of Washington AFL-CIO (UFW,
AFL-CIO). Stimson Lane has negotiated contracts with the union that represents
its primarily white cellar workers.

WHEREAS:
Stimson Lane agricultural employees and their representative, UFW, AFL-CIO, have
called a boycott of Chateau Ste. Michelle, Columbia Crest and other Stimson Lane
wines to induce the company to negotiate in good faith a collective bargaining
agreement. UFW, AFL-CIO has announced the possibility of a boycott of all UST
products.

WHEREAS:
The boycott has received endorsements from the Washington Association of
Churches, the Washington State Labor Council, AFL-CIO, the Washington
Environmental Council, and the Washington State Democratic Party. Scores of
retail outlets, the Washington state ferry system, and the country of Sweden
have removed Stimson Lane wines. Artists such as Willie Nelson have cancelled
concerts at the winery.

WHEREAS:
In 1992, UST paid $134,000 to vineyard employees who alleged wrongful discharge
based on their union activities. The company has employed management consultants
to eliminate labor strife in the vineyards, two of whom were associated with
violence used against farm workers in California.

RESOLVED: The shareholders request that the Board of Directors form a committee
to assess the actual and potential economic and public relations costs of the
UFW, AFL-CIO boycott of UST products and provide a complete report and policy
recommendations to the Board and shareholders.

SUPPORTING STATEMENT

For decades, UST has bargained collectively with unions that represent their
employees to attain peaceful, productive workplaces. Since 1987 Stimson Lane, a
UST winery subsidiary, has denied this right to its agricultural labor force.

The winery's refusal to bargain in good faith with its agricultural employees'
union representative has resulted in serious economic and public relations
costs, including a growing international consumer boycott. In contrast,
agricultural labor accounts for approximately 2% of the total cost of
wine-making.

As shareholders, we are concerned that the costs associated with the refusal to
bargain collectively exceed those associated with a collective bargaining
agreement with the UFW, AFL-CIO.

24
<PAGE> 27

We are also concerned that UST is promoting a racially-based double standard by
negotiating with the authorized representative of the white wine cellar
employees but refusing to do the same with the representative of its Latino
agricultural employees.

We believe this assessment should include the following:

- - Policy on collective bargaining for agricultural and non-agricultural
employees.

- - Wages of non-supervisory agricultural employees and how these compare with
wages at other UST production facilities.

- - Lost revenue in Europe and North America attributable to boycott.

- - Public relations costs attributable to boycott.

- - Cost of agricultural labor consultants.

- - Litigation costs attributable to boycott.

- - Potential cost of AFL-CIO and Canadian Labor Congress boycott endorsement.

- - Potential cost of boycott of all UST products.

COMPANY'S RESPONSE

The Board recommends that stockholders vote AGAINST the foregoing resolution
(Proposal No. 5).

The Board believes that this proposal is not in the best interests of the
Company or its stockholders and urges stockholders to vote AGAINST it.

The proposal requests the Company to assess the costs of a boycott of its
products by, among others, the UFW and to provide a report on such assessment.
The Board believes that preparing such a report as requested by this proposal
would be inappropriate and not constitute a proper use of the Company's
resources. In addition, the proposal contains a number of assertions which the
Company believes are inaccurate.

The Company's Stimson Lane subsidiary is presently involved in a dispute with
the UFW relating to the UFW's desire to represent certain agricultural workers
at the Stimson Lane facilities in eastern Washington. While the Company and its
subsidiaries are committed to fair employment and have entered into collective
bargaining agreements with a number of different unions, Stimson Lane does not
believe it would be appropriate to enter into discussions with the UFW
concerning a collective bargaining agreement unless and until the UFW is elected
as the representative of the agricultural workers pursuant to a fair and
impartial election. As the Company has previously stated, the Company's Stimson
Lane subsidiary had been actively engaged in discussions with the UFW to
establish appropriate procedures for the holding of a free and fair election.
This is especially important since agricultural workers are not covered by the
National Labor Relations Act and the State of Washington has no legislation
setting forth the procedures for selecting a union to represent agricultural
workers.

While the Company believes that its Stimson Lane subsidiary is being boycotted
unfairly, the Company does not believe that the boycott has had any material
impact on Stimson Lane's results of operations. The wineries are operating at
near capacity and 1994 was another record year for Stimson Lane. Rather, in the
Company's judgment, the proposal is being submitted as a pressure tactic in
support of the UFW. The Company strongly believes that stockholder proposals are
not the right means for resolving labor matters and, accordingly, that adoption
of this proposal would not be in the best interests of either the agricultural
workers or the Company's stockholders.

Your appointed proxies will vote your shares AGAINST Proposal No. 5 unless you
instruct otherwise in the proxy form.

25
<PAGE> 28

INFORMATION RESPECTING PROXIES

Your shares are registered in the name and manner shown on the enclosed form of
proxy. Please sign the proxy in the same manner. It is not necessary for you to
indicate the number of shares you hold.

Expenses incurred in connection with the solicitation of proxies for the meeting
will be borne by the Company. In addition to solicitation by mail, arrangements
may be made pursuant to which brokers, bank nominees and other institutional
holders of record will distribute at the Company's expense proxies and proxy
material to the appropriate beneficial owners, and assistance in the
solicitation of proxies from such holders of record will be rendered by
Georgeson & Company, Inc., Wall Street Plaza, New York, New York, for a fee of
approximately $20,000.

STOCKHOLDER PROPOSALS

If a stockholder wishes to submit a proposal for inclusion in the Proxy
Statement prepared for the 1996 Annual Meeting of Stockholders, such proposal
must be received by the Secretary at the Company's office no later than November
24, 1995.

In addition, the By-Laws provide that only such business as is properly brought
before the Annual Meeting will be conducted. For business to be properly brought
before the meeting or nominations to be properly made at the Annual Meeting by a
stockholder, notice must be received by the Secretary at least 50, but not more
than 75, days prior to the Annual Meeting and such notice must provide certain
requisite information. A copy of the By-Laws may be obtained by writing to the
Secretary.

OTHER BUSINESS

The Board knows of no other business which will come before the meeting. If any
other business shall properly come before the meeting, including any proposal
submitted by a stockholder which was omitted from this Proxy Statement in
accordance with the applicable provisions of the federal securities laws, your
authorized proxies will vote thereon in accordance with their best judgment.

VOTING STOCK

As of March 9, 1995, the record date for the 1995 Annual Meeting, the
outstanding stock of the Company entitled to vote consisted of 195,868,736
shares of Common Stock (each entitled to one vote).

Appearance at the meeting in person or by proxy of the holders of Common Stock
entitled to cast 97,934,369 votes is required for a quorum.

By Order of the Board of Directors,

JONATHAN P. NELSON
Secretary

26
<PAGE> 29

EXHIBIT A

UST INC.

NONEMPLOYEE DIRECTORS' STOCK OPTION PLAN

1. PURPOSE

1.1 The UST Inc. Nonemployee Directors' Stock Option Plan (the "Plan") is
intended, in the aggregate, to increase the alignment of the interests of
nonemployee members of the Board of Directors (the "Board") of UST Inc. (the
"Company") with the interests of stockholders of the Company by providing
further opportunity for ownership of the Company's common stock ("Stock"), and
to increase their incentive to contribute to the success of the Company's
business through the grant of nonstatutory stock options entitling the holder to
purchase shares of Stock on the terms and conditions set forth herein
("Options").

1.2 The Plan is intended to comply with Rule 16b-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as such Rule may be
amended from time to time ("Rule 16b-3"), and shall be construed to so comply.

2. ADMINISTRATION

2.1 The Plan shall be administered by the Nominating and Compensation Committee
of the Board (the "Committee").

2.2 The Committee may make such rules and establish such procedures for the
administration of the Plan as it deems appropriate to carry out the purpose of
the Plan, provided that the Committee shall have no discretion with respect to
the grantee, amount, price or timing of any option grant. The interpretation and
application of the Plan or of any rule or procedure, and any other matter
relating to or necessary to the administration of the Plan, shall be determined
by the Committee, and any such determination shall be final and binding on all
persons.

3. SHARES OF STOCK

3.1 Shares Reserved. Subject to adjustment as provided in Section 3.2 hereof, a
maximum of 200,000 shares of Stock shall be reserved for issuance in accordance
with the terms of the Plan. Shares of Stock that may be issued upon the exercise
of Options under the Plan may either be authorized and unissued shares or issued
shares that have been reacquired by the Company. If an Option granted under the
Plan is surrendered, expires, lapses or for any other reason ceases to be
exercisable in whole or in part, then, to the extent permitted under Rule 16b-3,
the shares that were subject to any such Option, but as to which the Option
ceases to be exercisable, shall again be available for grant under the Plan.

3.2 Capital Adjustments. In the event of a reorganization, recapitalization,
stock split, stock dividend, combination of shares, merger, consolidation or a
similar corporate transaction, the maximum number or class of shares available
under the Plan, and the number or class of shares of Stock to be delivered
hereunder upon the exercise of Options, and the price of which Options may be
exercised, as appropriate, shall be proportionately adjusted to reflect any such
transaction.
<PAGE> 30

4. GRANT OF OPTIONS

4.1 Annual Grant. On the first business day following the 1995 annual meeting
of stockholders of the Company, each member of the Board who is not then an
employee of the Company or any subsidiary of the Company (an "Eligible
Director") shall automatically be issued an Option pursuant to the Plan to
purchase 1,500 shares of Stock. Thereafter, on the first business day following
the annual meeting of stockholders of the Company held in each year subsequent
to 1995 and prior to the termination of the Plan, each Eligible Director shall
automatically be issued an Option pursuant to the Plan to purchase 1,500 shares
of Stock. The day on which options are granted pursuant to this Section 4.1
shall hereinafter be referred to as the "Date of Grant." Options shall be
granted at an option price equal to the Fair Market Value of Stock on the Date
of Grant (the "Option Price"). For purposes of the Plan, "Fair Market Value" of
a share of Stock on any given day shall be the average of the high and low sales
prices per share of Stock as reported on the New York Stock Exchange Composite
Tape for such date, or if there was no trading of Stock on such date, for the
next preceding date on which there was such trading.

4.2 Terms and Conditions of Options.

(a) Each Option shall first become exercisable on the date that is six
months following the Date of Grant. Each Option shall cease to be
exercisable on the date that is ten years following the Date of Grant (the
"Expiration Date").

(b) Each grant of an Option shall be evidenced by a stock option
agreement in such form and not inconsistent with the Plan as the Committee
may approve from time to time.

(c) Options shall be exercised by written notice to the Treasurer of
the Company in such form as is from time to time prescribed by the
Committee and by the payment in full, in cash, of the aggregate Option
Price of the shares of Stock for which the Option is being exercised. To
the extent that an Option is not exercised by an optionee when it becomes
initially exercisable, it shall not expire but shall be carried forward and
shall be exercisable until the expiration of the exercise period. Partial
exercise shall be permitted from time to time, provided that exercises
shall be in multiples of one hundred shares of Stock.

(d) If for any reason during the term of an unexercised and unexpired
Option, the Eligible Director shall cease to be a voting member of the
Board, such Option may be exercised by the Eligible Director (or, in the
event of his death, by his estate) until the Expiration Date. An Option
that is not exercisable at the time of the termination of such Eligible
Director's status as a voting member of the Board shall become exercisable,
according to its terms, on the date that is six months following the Date
of Grant.

5. EFFECTIVE DATE; STOCKHOLDER APPROVAL; TERM OF PLAN

5.1 The Plan, which was adopted by the Board on September 22, 1994, is subject
to approval by the stockholders of the Company at the 1995 annual meeting and
shall be effective on the date of such approval.

2
<PAGE> 31

5.2 The Plan shall remain in effect until all Options granted under the Plan
have been satisfied by the issuance of shares, or terminated under the terms of
the Plan, provided that no Options may be granted after the tenth anniversary of
the effective date of the Plan.

6. AMENDMENT; TERMINATION

6.1 The Board may at any time and from time to time alter, amend, suspend, or
terminate the Plan in whole or in part; provided, however, that the provisions
of Section 4.1 shall not be amended more than once every six months, other than
to comport with changes in the Internal Revenue Code of 1986, as amended, the
Employee Retirement Income Security Act, as amended, or the rules thereunder;
and further provided, however, that to the extent required by Rule 16b-3, no
amendment shall be effective without the approval of the stockholders of the
Company. The termination or any modification or amendment of the Plan shall not,
without the consent of a director, affect his or her rights under an Option.

7. MISCELLANEOUS

7.1 Options granted hereunder shall not be assignable or transferable by the
director except by will or by the laws of descent and distribution. During the
life of the director, an Option shall be exercisable only by the director.

7.2 Each Option shall be subject to the requirement that, if at any time the
Committee shall determine that the listing, registration or qualification of the
shares subject to such Option upon any securities exchange or under any state or
federal law, or the consent or approval of any government regulatory body, is
necessary or desirable as a condition of, or in connection with, the granting of
such Option or the issue or purchase of shares thereunder, such Option may not
be exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Committee.

7.3 Nothing in the Plan shall be construed as conferring any right upon any
director to continue as a member of the Board.

7.4 The Plan and all rights hereunder shall be construed in accordance with and
governed by the laws of the State of Delaware.

3
<PAGE> 32

-----------------------------
[UST LOGO]
-----------------------------

NOTICE OF 1995 ANNUAL MEETING
AND PROXY STATEMENT

-----------------------------
[UST LOGO]
-----------------------------

100 WEST PUTNAM AVENUE
GREENWICH, CONNECTICUT 06830

<PAGE> 33
P
R UST
O
X ANNUAL MEETING OF STOCKHOLDERS -- MAY 2, 1995
Y
The undersigned hereby appoints JOHN J. BUCCHIGNANO, JONATHAN P. NELSON
and RICHARD H. VERHEIJ, or any of them, with full power of substitution,
attorneys and proxies to vote all shares of Common Stock of UST Inc. which the
undersigned is entitled to vote at the Annual Meeting of Stockholders to be
held at the Cole Auditorium of the Greenwich Library, 101 West Putnam Avenue,
Greenwich, Connecticut, on Tuesday, the 2nd day of May 1995, at 10:00 a.m., and
at any and all adjournments thereof, on the matters listed on the reverse side
which are set forth in the accompanying Proxy Statement.

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1,2 AND 3 AND AGAINST PROPOSALS 4 AND 5.

SEE REVERSE
SIDE

<PAGE> 34

/X/ Please mark votes as in this example.

If no direction is given, this proxy will be voted FOR proposals 1, 2 and 3 and
AGAINST proposals 4 and 5.

The Board of Directors recommends a vote FOR proposals 1, 2 and 3:

1. Election of Directors.
Nominees: J.J. Bucchignano, R.L Rossi, J.P. Warwick

FOR WITHHELD
ALL FROM ALL
NOMINEES NOMINEES

/ / / /

FOR all nominees, except vote withheld from the following:

- ---------------------------------------------------------

2. To approve the Nonemployee Directors' Stock Option Plan.

FOR AGAINST ABSTAIN

/ / / / / /

3. To ratify and approve Ernst & Young LLP as independent auditors of the
Company for the year 1995.

FOR AGAINST ABSTAIN

/ / / / / /

The Board of Directors recommends a vote AGAINST the following stockholder
proposals 4 and 5.

4. Stockholder Proposal

FOR AGAINST ABSTAIN

/ / / / / /

5. Stockholder Proposal

FOR AGAINST ABSTAIN

/ / / / / /

And in their discretion, upon such other business as may properly come before
the meeting.

MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT / /

MARK HERE IF YOU PLAN TO ATTEND THE MEETING / /

Please sign exactly as name appears hereon. If signing for trusts, estates or
corporations, capacity or title should be stated. If shares are owned jointly,
both owners must sign. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS.

Signature: __________________________________ Date ___________

Signature: __________________________________ Date ___________
<PAGE> 35

UST EMPLOYEES' SAVINGS PLAN

The Annual Meeting of the Stockholders of UST will be held on May 2, 1995, and
the Company is soliciting your vote.

As a participating employee in the UST Employees' Savings Plan, YOU MUST GIVE
THE TRUSTEE UNDER THE PLAN VOTING INSTRUCTIONS on the enclosed instruction card
if you wish to vote the shares of the Company's common stock in your Savings
Plan. The Trustee cannot vote your shares without instructions from you.
Accordingly, a Notice of the 1995 Annual Meeting and Proxy Statement,
instruction card, and 1994 Annual Report are enclosed.

Please note that, as described in the Proxy Statement, the Board of Directors
recommends a vote FOR Proposals 1, 2, and 3 and AGAINST Proposals 4 and 5.
Your instruction is very important to the Company.

Please complete, sign, and date the instruction card and return it in the
envelope provided as soon as possible. Please be sure to complete, sign, date,
and return any other proxy cards that your receive in the separate envelopes
provided.

<PAGE> 36

UST

ANNUAL MEETING OF STOCKHOLDERS -- MAY 2, 1995

EMPLOYEES' SAVINGS PLAN

The undersigned hereby directs Wachovia Bank of North Carolina, N.A. as
Trustee of the UST Employees' Savings Plan to vote in person or by proxy all
shares of Common Stock of UST Inc. allocated to the undersigned's account at
the Annual Meeting of Stockholders to be held at the Cole Auditorium of the
Greenwich Library, 101 West Putnam Avenue, Greenwich, Connecticut, on Tuesday,
the 2nd day of May 1995, at 10:00 a.m., and at any and all adjournments
thereof, on the matters listed on the reverse side which are set forth in the
accompanying Proxy Statement.

THE SHARES REFLECTED ON THIS INSTRUCTION CARD WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE, THE SHARES
REFLECTED ON THIS INSTRUCTION CARD WILL BE VOTED FOR PROPOSALS 1, 2 AND 3 AND
AGAINST PROPOSALS 4 AND 5.

SEE REVERSE
SIDE

/X/ PLEASE MARK VOTES AS IN THIS EXAMPLE.

If no direction is given, the shares reflected on this Instruction Card will be
voted FOR proposals 1, 2 and 3 and AGAINST proposals 4 and 5.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3:

1. Election of Directors.

NOMINEES: J.J. Bucchignano, R.L. Rossi, J.P. Warwick

/ / FOR ALL NOMINEES / / WITHHELD FROM ALL NOMINEES

For all nominees except vote withheld from the following:

/ /
-----------------------------------------------------------------------------
2. To approve the Nonemployee Directors' Stock Option Plan.

/ / FOR / / AGAINST / / ABSTAIN

3. To ratify and approve Ernst & Young LLP as independent auditors of the
Company for the year 1995.

/ / FOR / / AGAINST / / ABSTAIN

THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE FOLLOWING STOCKHOLDER
PROPOSALS 4 AND 5:

4. Stockholder Proposal

/ / FOR / / AGAINST / / ABSTAIN

5. Stockholder Proposal

/ / FOR / / AGAINST / / ABSTAIN

And in their discretion, upon such other business as may properly come before
the meeting.

MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT / /

Please sign exactly as name appears hereon. If signing for trusts or estates,
capacity or title should be stated.

Signature: Date
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