<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
U.S. TRUST CORPORATION
(Name of Registrant as Specified in Its Charter)
U.S. TRUST CORPORATION
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $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 transactions applies:
--------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
--------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------------------------
/ / 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 registrations 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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---------------
1 Set forth the amount on which the filing fee is calculated and state how
it was determined.
<PAGE> 2
U.S. TRUST CORPORATION
114 WEST 47TH STREET, NEW YORK, NEW YORK 10036
(212) 852-1000
U.S. TRUST
Notice of
Special Meeting
of Shareholders
October 24, 1995
A Special Meeting of Shareholders of U.S. Trust Corporation (the
"Corporation") will be held on Tuesday, October 24, 1995 at 10
A.M., New York time, at the office of United States Trust
Company of New York (the "Trust Company"), 114 West 47th Street,
New York, New York, in the Auditorium on the first floor, for
the following purposes:
1 To elect nineteen directors, seven to hold office for a term
expiring in 1998, six to hold office for a term expiring in
1997, six to hold office for a term expiring in 1996, and, in
each case, until their successors have been elected and
qualified;
2 To consider and act upon a proposal to ratify the appointment
of Coopers & Lybrand as independent auditors for the Corporation
and its consolidated subsidiaries for the year 1995;
3 To consider and act upon a proposal to approve the 1995 Stock
Option Plan;
4 To consider and act upon a proposal to approve the Executive
Incentive Plan; and
5 To consider and act upon such other matters as may properly
come before the meeting or any adjournment thereof.
Only shareholders of record at the close of business on
September 15, 1995 are entitled to notice of and to vote at the
meeting and at any adjournment thereof.
Dated: September 18, 1995
Carol A. Strickland
Secretary
SHAREHOLDERS ARE REQUESTED TO MARK,
SIGN, DATE AND RETURN THE PROXY
SUBMITTED HEREWITH IN THE RETURN
ENVELOPE PROVIDED. THE GIVING OF
SUCH PROXY WILL NOT AFFECT A
SHAREHOLDER'S RIGHT TO REVOKE SUCH
PROXY OR TO VOTE IN PERSON SHOULD
THE SHAREHOLDER LATER DECIDE TO
ATTEND THE MEETING.
<PAGE> 3
U.S. TRUST CORPORATION
Proxy
Statement
GENERAL INFORMATION
The reorganization of U.S. Trust Corporation (the "Reorganization") approved by
shareholders of "Old" U.S. Trust Corporation at a Special Meeting held on March
22, 1995 to accomplish the sale of U.S. Trust's securities processing businesses
to The Chase Manhattan Corporation ("Chase") became effective September 2, 1995.
U.S. Trust's core businesses -- asset management, private banking, special
fiduciary, corporate trust and other non-processing businesses -- were
transferred to "New" U.S. Trust Corporation (the "Corporation"). All the shares
of the Corporation were spun-off to the shareholders of "Old" U.S. Trust
Corporation on a share-for share basis in a non-taxable transaction. "Old" U.S.
Trust Corporation, which included only the securities processing businesses, was
then merged into Chase with the shareholders of "Old" U.S. Trust Corporation
receiving .68 of a share of Chase common stock for each share of "Old" U.S.
Trust and cash in lieu of any fractional shares.
All references to the Corporation and its wholly-owned subsidiary, the Trust
Company, contained in these proxy materials which relate to dates prior to
September 1, 1995 concern the predecessor corporations, "Old" U.S. Trust
Corporation and "Old" United States Trust Company of New York (together, "Old
U.S. Trust"). All references which relate to later dates are to the new entities
("New U.S. Trust").
This proxy statement is furnished in connection with the solicitation of proxies
by the Board of Directors of the Corporation to be used at the Special Meeting
of Shareholders (the "Meeting") of the Corporation and at any adjournment
thereof. The Meeting will be held on October 24, 1995, at the time and place and
for the purposes set forth in the accompanying Notice of Special Meeting of
Shareholders. Shares represented by properly executed proxies, if such proxies
are received in time for the Meeting and are not revoked, will be voted at the
Meeting in accordance with the instructions thereon, or if no instructions are
given, such shares will be voted as follows: for the election of directors, for
the ratification of the appointment of the Corporation's independent auditors,
for the approval of the 1995 Stock Option Plan, for the approval of the
Executive Incentive Plan, and in the discretion of the proxies on any other
matters to come before the Meeting. A proxy may be revoked by a shareholder at
any time prior to the time the
1
<PAGE> 4
shares are actually voted. Proxies may be revoked either by written notice to
the Corporation, by submission of a subsequent proxy or by voting in person at
the Meeting.
The approximate date on which this proxy statement and the accompanying form of
proxy are being sent to shareholders is September 18, 1995.
The Board of Directors has fixed the close of business on September 15, 1995 as
the record date for the determination of shareholders entitled to notice of and
to vote at the Meeting. On the record date, there were 9,734,938 Common Shares
of the Corporation outstanding and entitled to be voted at the Meeting.
BENEFICIAL OWNERSHIP
The following table contains information as of the close of business on
September 5, 1995 concerning (i) those persons known to management of the
Corporation to be the beneficial owners of more than 5% of the Corporation's
outstanding Common Shares, (ii) the beneficial ownership of the Corporation's
outstanding Common Shares by United States Trust Company of New York (a
wholly-owned subsidiary of the Corporation) and its affiliates, and (iii) the
beneficial ownership of the Corporation's outstanding Common Shares by each
director, each executive officer named in the Summary Compensation Table and all
directors and executive officers as a group (beneficial ownership involves sole
voting and dispositive power unless otherwise indicated):
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
TITLE OF CLASS BENEFICIAL OWNER OWNERSHIP OF CLASS
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Shares (par 401(k) Plan and ESOP of United 1,397,816 shares (in a 14.36
value States Trust Company of New York fiduciary capacity)(1)
$1 per share and Affiliated Companies
114 West 47th Street New York,
New York 10036
GeoCapital Corporation 628,450 shares 6.46
767 Fifth Avenue (with sole dispositive
New York, New York 10153 power)(2)
David S. Gottesman 496,800 shares 5.10
437 Madison Avenue (with sole voting and
New York, New York 10022 dispositive power)(3)
United States Trust Company 370,131 shares (in 3.80
of New York and Affiliated fiduciary and agency
Companies capacities)(4)
114 West 47th Street
New York, New York 10036
H. Marshall Schwarz 197,544(5)
Jeffrey S. Maurer 92,408(5)(6)
Frederick B. Taylor 67,106(5)(6)(7)
John M. Deignan 16,270(5)
Paul K. Napoli 32,753(5)
Eleanor Baum 1,062(8)
Samuel C. Butler 24,548(8)(9)
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
TITLE OF CLASS BENEFICIAL OWNER OWNERSHIP OF CLASS
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Peter O. Crisp 3,581(8)
Daniel P. Davison 48,195(6)
Philippe de Montebello 1,900
Paul W. Douglas 13,006(8)
Antonia M. Grumbach 1,400
Frederic C. Hamilton 30,925
Peter L. Malkin 1,300
Orson D. Munn 6,400(10)
Philip L. Smith 5,900
John H. Stookey 10,900
Richard F. Tucker 4,217(8)
Carroll L. Wainwright, Jr. 3,700(6)
Robert N. Wilson 4,050
Ruth A. Wooden 764(8)
All directors and executive 604,428(5)(8) 5.86
officers as a group (numbering
24 persons)
</TABLE>
--------------------------------------------------------------------------------
(1) These shares consist of 1,121,517 shares allocated to the individual
accounts of participants in the 401(k) Plan and ESOP (the "Plan"), who have
voting and dispositive power over such shares, and 276,299 shares which have not
been allocated to participant accounts, as to which shares United States Trust
Company of New York (the "Trust Company"), as Trustee of the Plan, may be deemed
to have voting and dispositive power.
(2) Information herein with respect to GeoCapital Corporation ("GCC") has been
obtained from GCC and from GCC's filings with the Securities and Exchange
Commission pursuant to Section 13(g) of the Securities Exchange Act of 1934 by
GCC, a registered investment advisor, and Barry K. Fingerhut and Irwin Lieber,
by reason of their ownership interest in GCC. Such filing further discloses that
the shares were acquired in the ordinary course of business and were not
acquired for the purpose of and do not have the effect of changing or
influencing the control of the Corporation and were not acquired in connection
with or as a participant in any transaction having such purpose or effect.
(3) Information herein with respect to David S. Gottesman has been obtained from
Mr. Gottesman's filing with the Securities and Exchange Commission pursuant to
Section 13(d) of the Securities Exchange Act of 1934. Such filing further
discloses that First Manhattan Co., of which Mr. Gottesman is a general partner,
holds 17,445 shares in accounts of clients as to which Mr. Gottesman disclaims
beneficial ownership. Such filing further discloses that Mr. Gottesman acquired
these shares solely for investment purposes.
(4) The Trust Company and its affiliates, including the Corporation (together
"U.S. Trust"), have sole voting power as to 16,171 of such shares, shared voting
power as to 42,152 of such shares, sole dispositive power as to 198,355 of such
shares and shared dispositive power as to 171,776 of such shares. The 276,299
shares held in the Plan which have not been allocated to participant accounts as
described in footnote 1, and as to which U.S. Trust may have sole voting and
dispositive power, are not included. As a matter of policy, U.S. Trust votes
shares held in an agency capacity only as directed by its customers, and where
it holds shares as a co-fiduciary,
3
<PAGE> 6
votes such shares as directed by the other co-fiduciaries. Shares held by U.S.
Trust as sole fiduciary are not voted unless specific voting instructions are
given by a donor or beneficiary pursuant to the governing trust instrument.
(5) Includes shares attributable to deferred awards under the 1989 Stock
Compensation Plan and Predecessor Performance Plans as follows: Mr. Schwarz
148,419 shares, Mr. Maurer 55,134 shares, Mr. Taylor 20,649 shares, Mr. Deignan
10,670 shares, and Mr. Napoli 17,225 shares. See "Compensation of Executive
Officers."
(6) Includes 2,500 shares owned by Mr. Maurer's wife, 638 shares held in trust
by Mr. Maurer's wife for their children, 10,254 shares owned by Mr. Davison's
wife, 3,989 shares owned by Mr. Taylor's wife, and 300 shares owned by Mr.
Wainwright's wife, with respect to which the director in each case disclaims
beneficial ownership.
(7) Includes 270 shares held in a trust of which Mr. Taylor is sole trustee and
in which he has a beneficial interest.
(8) Includes shares attributable to deferred awards under the Board Members'
Deferred Compensation Plan as follows: Dr. Baum 662 shares, Mr. Butler 16,672
shares, Mr. Crisp 2,781 shares, Mr. Douglas 11,069 shares, Mr. Tucker 792
shares, and Ms. Wooden 464 shares.
(9) Includes 1,250 shares held in a trust of which Mr. Butler is trustee and
5,703 shares held in a trust in which he has a beneficial interest.
(10) Includes 1,700 shares held in a trust of which Mr. Munn is trustee.
Other than as set forth above, management of the Corporation is aware of no
person who, on the record date, was the beneficial owner of more than 5% of the
Corporation's outstanding Common Shares.
VOTES REQUIRED
Each of the Corporation's Common Shares is entitled to one vote upon each matter
to come before the Meeting. The election of directors is by a plurality of the
votes cast. Ratification of the appointment of the Corporation's independent
auditors requires the affirmative vote of a majority of the votes cast. Approval
of the 1995 Stock Option Plan requires the affirmative vote of a majority of all
outstanding shares. Approval of the Executive Incentive Plan requires the
affirmative vote of a majority of the shares present or represented at the
Meeting.
I ELECTION OF DIRECTORS
Nineteen directors of the Corporation are to be elected at the Meeting, seven to
serve until the annual meeting of shareholders in 1998, six to serve until the
annual meeting of shareholders in 1997, six to serve until the annual meeting of
shareholders in 1996, and, in each case, to serve until their successors have
been elected and qualified.
The Corporation anticipates that the nominees named herein will be available for
election, but if any nominee should be unable to serve, shares represented by
proxies will be voted for an additional nominee to be designated by the Board of
Directors unless the Board reduces the number of directors. All of the nominees
are now directors of the Corporation. All directors of the Corporation are
directors of the Trust Company and serve parallel terms on both Boards.
The following table contains information as to the nominees for election as
directors of the Corporation, including name, age, principal occupation,
selected biographical information, and all other positions and offices, if any,
held by each of them with the Corporation and the Trust Company. The table also
shows the year since which each nominee has been continuously a director of the
Corporation or of Old U.S. Trust.
4
<PAGE> 7
Nominees
<TABLE>
<CAPTION>
FIRST
PRINCIPAL OCCUPATION AND BECAME
NAME (AGE) BUSINESS EXPERIENCE DIRECTOR
<S> <C> <C> <C>
------------------------------------------------------------------------------------------------
TERM EXPIRES IN 1998
Samuel C. Butler (65) Partner in Cravath, Swaine & 1972
Moore (law firm)
Mr. Butler joined the law firm of Cravath, Swaine & Moore in 1956 and was elected a partner of
the firm in 1960. He is also a director of Ashland Inc., Millipore Corporation and GEICO
Corporation. Mr. Butler is a trustee of the New York Public Library and of the Culver
Educational Foundation.
Paul W. Douglas (69) Retired Chairman of the Board 1978
of The Pittston Company (coal
mining, transportation and
security services)
Mr. Douglas retired as chairman of the board and chief executive officer of The Pittston Company
in September 1991. Prior to joining Pittston in January 1984, he had been associated with
Freeport-McMoRan Inc. following the merger of Freeport Minerals Company and McMoRan Oil and Gas
Company in April 1981. Formerly, he was director of the internal finance section of the ECA
Mission to France. Mr. Douglas is also a director of MacMillan Bloedel Limited of Vancouver,
B.C., New York Life Insurance Company, Phelps Dodge Corporation and South American Gold and
Copper Co. He is a trustee of The International Center for the Disabled and of St.
Luke's-Roosevelt Hospital and of the Nature Conservancy of New York State.
Orson D. Munn (70) Chairman and Director of Munn, 1982
Bernhard & Associates, Inc.
(investment advisory firm)
Mr. Munn was senior vice president and chief investment officer of Madison Fund, Inc. from May
1981 through February 1983 and was president of Orson Munn, Inc. from February 1983 until the
organization of Munn, Bernhard & Associates, Inc. in November 1990. Previously, he was
president of Piedmont Advisory Corporation and, upon its merger in 1980 with Lexington
Management Corporation, performed the duties of vice chairman and chief investment officer.
Earlier, Mr. Munn was associated with Wood Walker & Co. for 20 years, serving as chief executive
officer of the company from 1972 to 1974. Mr. Munn is a trustee of the Waterfowl Research
Foundation and is a former member of the Financial Advisory Committee of the Garden Club of
America, a former trustee of the Village of Southampton and a former director of numerous
charities.
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
FIRST
PRINCIPAL OCCUPATION AND BECAME
NAME (AGE) BUSINESS EXPERIENCE DIRECTOR
<S> <C> <C> <C>
------------------------------------------------------------------------------------------------
H. Marshall Schwarz (58) Chairman of the Board and 1977
Chief Executive Officer of the
Corporation and the Trust
Company
Mr. Schwarz joined the Trust Company in 1967 after a seven-year association with Morgan Stanley
& Co. In 1972, he was elected a senior vice president and head of the Banking Division. He was
elected executive vice president and chief operating officer of the Trust Company's Bank Group
in 1977 and chief operating officer of the Asset Management Group in 1979. Mr. Schwarz served as
president of the Corporation and the Trust Company from June 1986 through January 1990 and
became chairman and chief executive officer effective February 1, 1990. He is also a director of
Atlantic Mutual Companies and Bowne & Co., Inc. Mr. Schwarz is chairman of the board of the
American Red Cross in Greater New York and a director of the United Way of New York City. He is
a trustee of Teachers College-Columbia University, Milton Academy and the Camille and Henry
Dreyfus Foundation, Inc.
Philip L. Smith (61) Corporate Director and Trustee 1987
Mr. Smith was chairman of the board and director of the Golden Cat Corporation from November
1990 to July 1, 1995. He was chairman of the board, president and chief executive officer of
The Pillsbury Company from August 1988 through January 1989. Formerly, he had been associated
with General Foods Corporation for over 20 years, serving in his final position as chairman of
General Foods and director of Philip Morris Companies, Inc. Mr. Smith is also a director of
Whirlpool Corporation and Ecolab Corporation.
Carroll L. Wainwright, Jr. (69) Consulting Partner in Milbank, 1981
Tweed, Hadley & McCloy (law
firm)
Mr. Wainwright joined the law firm of Milbank, Tweed, Hadley & McCloy in 1952. After serving as
assistant counsel to the Governor of New York from 1959 through 1960, he returned to the firm,
becoming a partner in 1963, a senior partner in 1986 and consulting partner in 1991. Mr.
Wainwright is a trustee of the American Museum of Natural History, trustee and vice chairman of
The Cooper Union for the Advancement of Science and Art and trustee and former president of The
Boys' Club of New York. He is also an adjunct professor at Washington and Lee University Law
School, a trustee of the Edward John Noble Foundation, and member of the Distribution Committee
of The New York Community Trust.
Ruth A. Wooden (49) President & Chief Executive 1994
Officer of The Advertising
Council, Inc. (not-for-profit
public service advertising)
Ms. Wooden became president and chief executive officer of The Advertising Council in August
1987. Prior to joining The Advertising Council, she was employed with NW Ayer, Inc. for eleven
years. Ms. Wooden serves as a trustee of The Edna McConnell Clark Foundation and of St. Luke's
Roosevelt Hospital Center. She is vice chair of CARE, USA and an advisor to the Columbia
Health Sciences Advisory Council and the Columbia University School of Public Health Advisory
Council.
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
FIRST
PRINCIPAL OCCUPATION AND BECAME
NAME (AGE) BUSINESS EXPERIENCE DIRECTOR
<S> <C> <C> <C>
------------------------------------------------------------------------------------------------
TERM EXPIRES IN 1997
Peter O. Crisp (63) General Partner of Venrock 1992
Associates (venture capital
limited partnership)
Mr. Crisp has been general partner of Venrock Associates since 1969. He is also a director of
Apple Computer, Inc., American Superconductor Corporation, Evans & Sutherland Computer Corp.,
Long Island Lighting Company, Inc., Thermedics Inc., Thermo Electron Corp., Thermo Power
Corporation and ThermoTrex Corp. Mr. Crisp serves as vice chairman of Memorial Sloan-Kettering
Cancer Center, and is a member of the Board of Managers of Memorial Hospital for Cancer and
Allied Diseases and Sloan-Kettering Institute for Cancer Research. He is a trustee of North
Shore University Hospital and of The Teagle Foundation.
Daniel P. Davison (70) Retired Chairman of the Board 1979
of the Corporation and the
Trust Company
Mr. Davison was chairman of the board of Christie, Manson & Woods International, Inc. from
February 1990 to January 1, 1994. He served as president of the Corporation and the Trust
Company from the spring of 1979 until June 1, 1986, as chief executive officer from January 1,
1981 through January 1990 and as chairman of the board from February 1, 1982 until his
retirement in February 1990. Prior to joining U.S. Trust, he was associated with Morgan Guaranty
Trust Company for 23 years, serving as corporate secretary, general manager of its London
office and, in his final position, as executive vice president in charge of the National Bank
Division. Mr. Davison is also a director of The Atlantic Companies, Burlington Northern, Inc.,
Christies International, plc and Prime Property Inc. He is a trustee and treasurer of the
Florence Gould Foundation. Mr. Davison is also vice chairman of The Nature Conservancy and
trustee of The Cooper Union for the Advancement of Science and Art.
Antonia M. Grumbach (51) Partner in Patterson, Belknap, 1991
Webb & Tyler (law firm)
Ms. Grumbach joined the law firm of Patterson, Belknap, Webb & Tyler in 1971 and became a
partner of the firm in 1979. She is currently serving as managing partner of the firm. She is
vice chairman of the board of trustees of Teachers College -- Columbia University, and a
trustee of Milton Academy, the CUNY Graduate Center Foundation, the William T. Grant Foundation
and The Henfield Foundation. Ms. Grumbach also served as an initial member of the Board of
Advisors of the New York University program on philanthropy and the law.
Frederic C. Hamilton (67) Chairman of the Board, 1972
President and Chief Executive
Officer of Hamilton Oil
Company, Inc. (international
petroleum company)
Mr. Hamilton serves as chairman of the board, president and chief executive officer of Hamilton
Oil Company, Inc., chairman of the board of BHP Petroleum, and chairman of the board of Tejas
Gas Corporation. He is also a director of the American Petroleum Institute and a member of the
National Petroleum Council. Mr. Hamilton is chairman of the Denver Art Museum Foundation and of
the Denver Art Museum, and a trustee of the Boys' Club Foundation and the Boy Scouts of America
Denver Area Council.
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
FIRST
PRINCIPAL OCCUPATION AND BECAME
NAME (AGE) BUSINESS EXPERIENCE DIRECTOR
<S> <C> <C> <C>
------------------------------------------------------------------------------------------------
Jeffrey S. Maurer (48) President of the Corporation 1989
and the Trust Company
Mr. Maurer joined the Trust Company in 1970 and was made manager of the Asset Management and
Private Banking Group in 1988. He was elected senior vice president in November 1980,
executive vice president in May 1986 and president effective February 1990 and was designated
chief operating officer in December of 1994. Mr. Maurer is a trustee of Alfred University, a
director and treasurer of The Children's Health Fund, a director of The Hebrew Home for the
Aged, a member of the Advisory Board of The Salvation Army of Greater New York and chairman of
the Commerce and Industry Division of the Greater New York Israel Bond Campaign.
Richard F. Tucker (68) Retired Vice Chairman of the 1983
Board of Mobil Corporation
(petroleum and chemicals)
Mr. Tucker joined Mobil Corporation in 1961 and retired as vice chairman in May 1991. He was a
director of Mobil from 1971, and president and chief operating officer of Mobil Oil
Corporation from 1986 until his retirement. Mr. Tucker is also a director of The Perkin-Elmer
Corporation. He is trustee emeritus of Cornell University and a life member of the Board of
Overseers of Cornell Medical College. He is also a trustee of the Aldrich Museum of Contemporary
Art, The Teagle Foundation and the Norwalk Hospital. Mr. Tucker is a member of the National
Academy of Engineering, The Council on Foreign Relations, Inc. and the Woods Hole Oceanographic
Institution.
TERM EXPIRES IN 1996
Eleanor Baum (55) Dean of Engineering at 1994
The Cooper Union for the
Advancement of Science & Art
Eleanor Baum became dean of engineering at Cooper Union in 1987. Prior to that, she was dean at
Pratt Institute in Brooklyn and worked as an engineer in the aerospace industry. Dr. Baum is
also a director of Allegheny Power Systems and Avnet, Inc. She is president of the American
Society for Engineering Education and serves on the Board of Governors of the New York Academy
of Sciences. She is trustee of the Accreditation Board for Engineering & Technology, is a
commissioner of the Engineering Workforce Commission, and an advisory board member at Duke
University, Rice University and the U.S. Merchant Marine Academy. She is executive director of
the Cooper Union Research Foundation and a fellow of the Institute of Electrical & Electronic
Engineers.
Philippe de Montebello (59) Director of the Metropolitan 1983
Museum of Art
Mr. de Montebello has been associated with the Metropolitan Museum of Art since 1963, serving as
associate curator for European paintings from 1963 to 1969, vice director for curatorial and
educational affairs from 1974 to 1977 and as director since 1978. In the interim of his duties
at the Metropolitan, Mr. de Montebello served as director of the Museum of Fine Arts in Houston
from 1969 to 1974. He is a member of the Advisory Board of the Skowhegan School of Painting and
Sculpture and the Columbia University Advisory Council-Departments of Art History and
Archaeology. Mr. de Montebello is a trustee of the New York University Institute of Fine Arts
and the American Federation of Arts.
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
FIRST
PRINCIPAL OCCUPATION AND BECAME
NAME (AGE) BUSINESS EXPERIENCE DIRECTOR
<S> <C> <C> <C>
------------------------------------------------------------------------------------------------
Peter L. Malkin (61) Chairman of Wien, Malkin & 1992
Bettex (law firm)
Mr. Malkin joined the predecessor law firm of Wien, Malkin & Bettex in 1958 and became a partner
in the firm in 1962. He is also chairman of W & M Properties, Inc. and is a general partner in
the ownership of several New York City buildings, including the Empire State Building, the
Graybar Building, the Lincoln Building, 1185 Avenue of the Americas, and One Penn Plaza. Mr.
Malkin is founding chairman of the Grand Central Partnership and of the 34th Street Partnership,
a director of the New York City Chamber of Commerce & Industry, a member of the New York City
Partnership, a member of the Board of Overseers of Harvard College and a director and member of
the Executive Committee of Lincoln Center for the Performing Arts.
John Hoyt Stookey (65) Chairman of Quantum Chemical 1989
Corporation (petrochemicals
and propane)
Mr. Stookey served as president of Quantum Chemical from 1975 to 1993 when Quantum was acquired
by Hanson Industries, Inc. He continues as chairman of the board of Quantum, a position he has
held since 1986. As Chairman of Quantum, Mr. Stookey served from 1989 to 1993 as an executive
officer of Petrolane Incorporated, Petrolane Finance Corp. and QJV Corp., affiliates of Quantum,
which companies were reorganized on July 15, 1993 under the U.S. Bankruptcy Code. Prior to
joining Quantum, Mr. Stookey was president of Wallace Clark Incorporated from 1969 to 1975 and
served as the U.S. Representative to both private and public banks in Mexico. He is also a
director of Cypress AMAX Minerals Co., ACX Technologies Inc. and Chesapeake Corporation. Mr.
Stookey is the founder and president of The Berkshire Choral Institute and of Landmark
Volunteers, and trustee of the Glimmerglass Opera, Berkshire School, The Clark Foundation and
The Robert Sterling Clark Foundation.
Frederick B. Taylor (53) Vice Chairman of the Board and 1989
Chief Investment Officer of
the Corporation and the Trust
Company
Mr. Taylor joined the Trust Company in 1966. In 1980, he was elected a senior vice president
and, in 1986, he was elected an executive vice president of the Corporation and chairman,
Investment Policy of the Trust Company. Mr. Taylor was elected vice chairman and chief
investment officer effective February 1990. He is a member of the New York Society of Security
Analysts and the Association for Investment Management and Research. Mr. Taylor serves on the
board of counselors of White Plains Hospital and on the senior advisory board of the New York
Chapter of the Arthritis Foundation.
Robert N. Wilson (55) Vice Chairman of the Board of 1991
Johnson & Johnson (health care
products)
Mr. Wilson joined Johnson & Johnson in 1964. He was appointed to the Executive Committee in 1983
and was elected to the board of directors in 1986. Mr. Wilson has been vice chairman of the
board of directors of Johnson & Johnson since 1989. He is a member of the Board of Directors of
the Pharmaceutical Research and Manufacturers Association, of the Alliance for Aging Research,
of the World Wildlife Fund and The Georgetown College Foundation, Inc. He also serves as a
trustee of the Museum of American Folk Art and is a member of the Trilateral Commission. He is a
director of The James Black Foundation in London, England.
</TABLE>
9
<PAGE> 12
REPORTS OF BENEFICIAL OWNERSHIP
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act") and
rules of the Securities and Exchange Commission (the "Commission") thereunder
require the Corporation's directors and officers to file with the Commission
reports of their beneficial ownership and changes in beneficial ownership of the
Corporation's Common Shares. Personnel of the Corporation generally prepare
these reports for the directors and officers on the basis of information
furnished by them to such personnel. Based on such information and written
representations by the directors and officers that certain reports were not
required, the Corporation believes that all reports required by Section 16(a) of
the Exchange Act and the rules of the Commission thereunder to be filed by its
directors and officers during 1995 were timely filed except for the initial
statements of beneficial ownership on Form 3 for the initial directors (Messrs.
Schwarz, Maurer and Taylor), for each of the executive officers and for Richard
S. Brinkmann, Comptroller.
DIRECTORS' COMMITTEES;
BOARD AND COMMITTEE MEETINGS
The Board of Directors of the Corporation and the Board of Directors of the
Trust Company (together, the "Boards") each has, among others, a standing
Executive Committee, a standing Audit Committee (in the case of the Trust
Company, known as the Examining & Audit Committee) and a standing Compensation
and Benefits Committee. The Executive Committees of the Boards are composed of
Mr. Schwarz (the Committee Chairman) and six other Board members, all of whom
are appointed annually. The Executive Committees have the power to act for their
respective Boards when such Boards are not in session and each Executive
Committee also serves as a nominating committee. The Executive Committees will
consider nominees for director recommended by shareholders who submit the names
of recommended nominees and supporting reasons for such recommendations in
writing to the Secretary of the Corporation or the Trust Company. In addition to
Mr. Schwarz, the members of both Executive Committees are currently Messrs.
Butler, Davison, Douglas, Maurer, Stookey and Wainwright.
The Audit Committee of the Board of Directors of the Corporation and the
Examining & Audit Committee of the Board of Directors (together, "the Audit
Committee") provide the Boards with an independent review of the Corporation's
and the Trust Company's accounting policies, the adequacy of financial controls
and the reliability of financial information reported to the public. The Audit
Committee also conducts examinations of the affairs of the Corporation and the
Trust Company as required by law or as directed by the Boards, supervises the
activities of the internal Auditor and reviews the services provided by the
independent auditors. (See "Ratification of Appointment of Independent Auditors"
for the names of the members of the Audit Committee, who are appointed
annually.)
The Compensation and Benefits Committees of the Boards (together, the
"Compensation Committee") determine compensation and benefits for
officer-directors, review salary and benefits changes for other senior officers
and review employee benefit plans under the Employee Retirement Income Security
Act of 1974 and other employee benefit plans. The members of the Compensation
Committee (who are appointed annually) are currently Messrs. Smith (the
Committee Chairman), Hamilton, Tucker and Wilson, and Ms. Wooden. (See
"Compensation Committee Interlocks and Insider Participation" below for the
names of the members of the 1994 Compensation Committee.)
Since the organization of the Corporation and the Trust Company earlier in 1995,
the Executive Committees of the Boards have met once and the Compensation
Committee has met three times. There have been no meetings of the Audit
Committee.
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<PAGE> 13
The Board of Directors of the Corporation has held three meetings in 1995 and
the Board of Directors of the Trust Company has held one meeting. No member of
the Board of the Corporation or of the Trust Company attended in 1995 fewer than
75% of the aggregate of (1) the total number of meetings of the Boards
(including the Boards of Old U.S. Trust) held during the period for which he or
she has been a director and (2) the total number of meetings held by all
committees on which he or she served.
DIRECTORS' COMPENSATION
Each director of the Corporation who is not also an officer of the Corporation
or of the Trust Company receives a retainer fee of $15,000 per year and an
attendance fee of $1,000 for each meeting attended of the Board of Directors of
the Corporation, of the Board of Directors of the Trust Company, of the
Executive Committee of each Board and of the committees of the Board of
Directors of the Trust Company other than those mentioned below. If the Boards
or the Executive Committees of the Corporation and the Trust Company meet on the
same day, only one fee is paid to a director for attendance at both meetings.
Under the Stock Plan for Non-Officer Directors, each director of the Corporation
who is not also an officer of the Corporation or of the Trust Company receives
200 Common Shares of U.S. Trust Corporation each February as an additional part
of his or her annual retainer fee.
The Chairman of the Audit Committee receives an annual retainer of $12,500 and
each member of such Committee receives an annual retainer of $10,000. The
Chairman of the Compensation Committee receives an annual retainer of $10,000
and each member of such Committee receives an annual retainer of $7,000. All
directors are reimbursed for travel and other out-of-pocket expenses incurred by
them in attending board or committee meetings.
Under the Board Member's Deferred Compensation Plan of the Corporation (the
"Board Deferred Plan"), directors who are not also officers of the Corporation,
the Trust Company or other subsidiaries of the Corporation ("Eligible Board
Members") may elect to defer any or all of their cash compensation (including
meeting attendance fees) for services rendered as directors of the Corporation,
or of the Trust Company or as members of any Board committee. An Eligible Board
Member (i) allocates his or her deferred compensation between an interest
account and a phantom share unit account (at least 50% of deferred amounts must
be allocated to phantom share units), and (ii) designates the portion of his or
her interest account which is to be credited with earnings based on each of the
rates of return available under the Board Deferred Plan. Currently, there are
six available rates of return: the Trust Company's prime rate and rates of
return matching the rates of return on five of the investment funds available
under the Trust Company's 401(k) Plan and ESOP. Deferred compensation is
converted into phantom share units by dividing the dollar amount of such
compensation by the market value of one Common Share at the time of conversion.
Phantom share units earn Common Share dividend equivalents which are converted
into additional phantom share units on the basis of the market value of a Common
Share on the relevant dividend payment date.
Payouts of amounts held for the account of an Eligible Board Member under the
Board Deferred Plan are made in ten annual installments commencing in the year
following the year in which the Eligible Board Member ceases to be a director of
the Corporation or of the Trust Company. Payouts of interest account balances
are made in cash, and payouts with respect to phantom share units consist of one
Common Share for each whole phantom share unit.
Directors who are not officers of the Corporation or of the Trust Company who
retire from the Board at age 72 with 10 or more years of Board service
(including service on the Boards of Old U.S. Trust) are paid an annual
retirement benefit for life equal to the annual retainer as a Board member
received in his or her last full year of Board membership. Directors with less
than 10 years of service who retire at age 72 and directors with 15 or more
years of service who retire
11
<PAGE> 14
prior to age 72 are paid the same annual benefit for the lesser of the number of
years he or she served on the Board or for life.
Under a Stock Option Plan for Non-Employee Directors of Old U.S. Trust (the
"Directors Plan"), a maximum of 125,000 Common Shares of the Corporation were
reserved for grants of options to members of the Board of Directors who were not
full-time employees (the "Non-Employee Directors"). Each person who either was a
Non-Employee Director at the time of the adoption of the Directors Plan in April
1989 or who subsequently became a Non-Employee Director had been granted an
option to purchase 5,000 Common Shares.
Options granted under the Directors Plan were granted for a period of ten years.
The exercise price per share was the fair market value, as defined in the
Directors Plan, of a Common Share on the date of grant. Each option became
exercisable in three equal, cumulative installments on each of the first three
anniversary dates of the date the option was granted.
As a result of the Reorganization, all options under the Directors Plan that
were not exercised before the effective time of the Reorganization were
cancelled in return for a cash payment equal to the excess of the aggregate
Determined Value (as defined in the Directors Plan) of the Common Shares subject
to the option over the aggregate option exercise price of such Common Shares.
COMPENSATION OF EXECUTIVE OFFICERS
Compensation Committee Interlocks and Insider Participation
During 1994, the following non-employee directors served as members of the
Compensation Committee: Mr. Philip L. Smith (the Committee Chairman), Mr. Peter
O. Crisp, Mr. Frederic C. Hamilton, Mr. Richard F. Tucker, Mr. Robert N. Wilson
and Ms. Ruth A. Wooden. (See "Transactions with Directors and Executive
Officers" below.)
Report on Executive Compensation
The Compensation Committee is responsible for the administration of U.S. Trust's
executive compensation program, with oversight review by the Boards of Directors
of the Corporation and of the Trust Company. The Compensation Committee
determines salary, bonus, stock options and other benefits for senior officers
of U.S. Trust, in each case (other than the Chief Executive Officer) upon the
recommendation of the Chief Executive Officer.
COMPENSATION STRATEGY AND PROGRAM. U.S. Trust is committed to attracting,
motivating and encouraging long-term employment of high-caliber,
service-oriented individuals. The Compensation Committee expects and seeks
excellence in performance and uses the compensation program as a means to reward
superior achievement. The Compensation Committee manages compensation to support
the long-term interests of U.S. Trust and its shareholders by adhering to the
following basic strategic principles:
- Compensation at all levels will be competitive with comparable
organizations and will reward employees on the basis of their performance
and contribution to U.S. Trust.
- U.S. Trust's benefits package will be competitive and designed to
encourage a career commitment to U.S. Trust.
- Total incentive compensation paid will be based on overall corporate
performance; individual and unit performance will determine the
allocation of the total among selected participants.
- As an employee moves up at U.S. Trust, a larger proportion of his or her
total compensation will be incentive compensation which will be
influenced in large part by the
12
<PAGE> 15
market value of U.S. Trust Common Shares. Incentive compensation at the
executive officer level may exceed by several times the executive's base
salary, while for the great majority of employees, incentive compensation
is unlikely to exceed their base salary. One-half or more of each
executive officer's incentive compensation (including stock options) is
likely to be measured in terms of the value of U.S. Trust Common Shares.
- U.S. Trust encourages employee ownership of U.S. Trust Common Shares and
has therefore established an ESOP and other stock-based incentive
compensation plans. The Compensation Committee believes that the
performance of U.S. Trust is best when employees think like owners.
Acceptance of U.S. Trust's ownership philosophy is a requirement for
advancement to senior management positions; senior management will be
expected over time to build and maintain significant ownership positions
in U.S. Trust Common Shares. However, prior to 1995, the Committee had
not established any specific minimum targets of stock ownership for any
of U.S. Trust's executive officers.
Salaries are administered to provide a level of base compensation that is
competitive with that available at other high caliber institutions. Annual
salary increases generally reflect improved individual performance, increased
responsibilities and changes in the competitive marketplace. These factors
involve subjective judgments made by the Compensation Committee and are not
weighted. For competitive comparisons in 1994, the Committee particularly
considered companies in the peer group used for the performance graph below. In
general, salaries of U.S. Trust's CEO and the other executive officers named in
the Summary Compensation Table below ranked at or somewhat below the median of
salaries paid to executives in comparable positions at the peer group companies.
However, the Compensation Committee had not adopted any policy requiring that
the salaries of these officers be set so as to achieve any specific relationship
to the levels of executive officer salaries at the peer group companies.
Annual incentive compensation for 1994 was paid under the 1990 Annual Incentive
Plan (the "Annual Plan") based on the attainment of annual corporate and
personal performance objectives. As to the corporate performance objectives for
1994, the Compensation Committee determined that the size of the pool available
for awards would be a percentage, from 25% to 110%, of the potential award pool,
depending on the level of the Corporation's absolute return on equity (ROE) for
1994. The Committee also determined that for this purpose, the Corporation's ROE
for 1994 would be adjusted to eliminate the effect of the extraordinary charges
to earnings required to be recognized in connection with the Reorganization. The
adjusted ROE formula resulted in an award pool equal to 87.5% of the potential
pool for 1994 awards. Individual Annual Plan awards were based on the
Compensation Committee's assessment of personal achievement of objectives by
members of management, such as attainment of long-term goals for their business
units, client satisfaction, new business development and results achieved in
relation to budget. Arithmetic criteria were not used in determining the amount
of individual awards under the Annual Plan or the amount of base compensation
payable to senior officers.
Long-term incentive compensation for U.S. Trust's executive officers in 1994 was
granted in the form of performance share units, and in the form of stock options
that provide for an exercise price equal to the fair market value of U.S. Trust
Common Shares at the time of grant. The size of each executive officer's stock
option award was not based on arithmetic criteria but rather was based on the
Compensation Committee's assessment of the individual's potential long-term
contribution to U.S. Trust's results, taking into account the number of options
and shares currently held by that individual. Executive officers generally were
and are strongly encouraged to hold shares obtained through the exercise of
stock options consistent with U.S. Trust's commitment to substantial stock
ownership by its executives.
13
<PAGE> 16
Performance share units, which are phantom shares of U.S. Trust Corporation
stock, were granted annually under the 1989 Stock Compensation Plan. From 0% to
100% of the units so granted were earned over a three-year performance cycle
based on achievement of earnings and ROE goals (both in absolute terms and in
relation to other banking organizations). The value of awards to executives was
based on the number of performance share units earned and the value per share of
U.S. Trust's Common Shares during the last month of the performance cycle.
Dividend equivalents were paid and reinvested in additional performance share
units during the performance cycle. The number of performance share units
initially granted was based on a guideline percentage of salary, divided by the
stock price at the time of grant. The guideline percentage used for this purpose
was 60% in the case of the CEO, and 45% to 55%, in the case of the other named
executive officers. The performance share earn out for the 1992-94 cycle was
100% of the initial grant amount reflecting 100% achievement of goals for
absolute growth in earnings per share, absolute ROE, and relative ROE
performance against peers. In measuring U.S. Trust's performance, the Committee
adjusted actual results to eliminate the effect of the extraordinary charges to
1994 earnings related to the Reorganization and the gain on the sale of the
Corporation's partnership interest in Financial Technologies International L.P.
The Committee took no action during 1994 to establish a policy with respect to
the payment of compensation to U.S. Trust's executive officers of amounts that
qualify for tax deductibility under the $1 million limit on deductible
compensation under section 162(m) of the Internal Revenue Code. The Committee
deferred taking action, in part, because the compensation payable to Mr. Schwarz
and each of the other named executive officers for 1994 was not expected to
exceed (and in fact did not exceed) the amount deductible under section 162(m).
In addition, because of Old U.S. Trust's intended disposition of its securities
processing businesses to Chase, the Committee believed it would be premature to
establish a policy regarding section 162(m) before executive compensation
programs had been established for New U.S. Trust. As indicated below, a new
program of executive compensation has been established for New U.S. Trust.
However, the Committee has deferred taking action to establish a policy
regarding section 162(m) until some time in early 1996, in part, because the
compensation payable by New U.S. Trust for 1995 to Mr. Schwarz and the other
named executive officers is not expected to exceed the amount deductible by New
U.S. Trust under section 162(m). In addition, the Committee believes that it
will be better able to determine the appropriateness of a policy regarding
section 162(m) if the matter is considered in the context of establishing
executive compensation for New U.S. Trust's first full year of normal
operations, after the special circumstances of the Reorganization will no longer
be a factor and after New U.S. Trust has had some period of actual financial
results of operation.
As a result of the Reorganization, all holders of stock options then
outstanding, including the named executive officers, became entitled to receive
payments from Old U.S. Trust to cash out their stock options. Similarly, as a
result of the Reorganization, all participants in Old U.S. Trust's Annual
Incentive Plan (a predecessor to the Annual Plan), including certain of the
named executive officers, became entitled to receive payments to cash out the
unpaid balance of their previously deferred awards under that Plan. The
Committee believed that payment of the foregoing amounts was appropriate whether
or not fully deductible by Old U.S. Trust under section 162(m), in view of the
special circumstances that were present as a result of the Reorganization, and
the fact that in each case these amounts were payable pursuant to plan
provisions that antedated the enactment of section 162(m).
CEO COMPENSATION FOR 1994. The salary paid in 1994 to H. Marshall Schwarz,
Chairman and Chief Executive Officer ("CEO"), was $547,308. Mr. Schwarz's salary
reflected the Compensation Committee's review of competitive and internal
compensation levels, as well as its belief that executive compensation should be
influenced by both short and long-term operating results and should reflect both
short and long-term incentives rather than salary alone.
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<PAGE> 17
Mr. Schwarz also received an award for 1994 under the Annual Plan and earned a
performance share award for the 1992-94 cycle. The amounts of these awards to
Mr. Schwarz were determined in the manner indicated in the above descriptions of
these incentive compensation programs. In addition, he was granted a
nonqualified stock option for 15,000 Common Shares at an exercise price of
$51.25 per share, the market price of U.S. Trust Common Shares on January 25,
1994, the date of the grant.
The foregoing report on executive compensation deals with compensation paid in
1994 by Old U.S. Trust. The differences in compensation strategy and programs
between Old U.S. Trust and New U.S. Trust are as follows:
1. No further awards (including grants of performance share units described
below) will be made under the 1989 Stock Compensation Plan, nor will any
further awards for periods after the Reorganization be made under the
Annual Plan. Shareholders are being asked to approve a new stock option
plan and a new executive incentive plan as the key elements of executive
compensation. See "Approval of 1995 Stock Option Plan" and "Approval of
Executive Incentive Plan" below.
2. In furtherance of the Corporation's stock ownership philosophy for
senior management, the Compensation Committee has for the first time
established specific target levels of stock ownership for each of U.S.
Trust's executive officers. In the case of the named executive officers,
the target levels of ownership, which are expected to be achieved over a
period of time, are stock having a value of eight times salary for
Messrs. Schwarz, Maurer and Taylor and six times salary for Messrs.
Deignan and Napoli.
3. U.S. Trust will no longer compare its financial performance to a group
of peer banks but will instead focus on the attainment of internal
financial goals in determining payouts under its incentive plans.
4. The performance measure to be used in measuring financial performance
under the Corporation's incentive plans will be earnings per share
(EPS); under the Annual Plan maintained by Old U.S. Trust, return on
equity (ROE) was the measuring statistic.
In summary, the Compensation Committee believes it has a comprehensive and
competitive executive compensation program with an appropriate balance between
salary and short and long-term incentives and with an emphasis on stock-based
compensation. It intends to continue this emphasis in the future.
Respectfully submitted,
Philip L. Smith, Chairman
Peter O. Crisp
Frederic C. Hamilton
Richard F. Tucker
Robert N. Wilson
Ruth A. Wooden
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<PAGE> 18
The following table sets forth the compensation paid or accrued during 1994,
1993 and 1992 to the CEO and the four other most highly compensated executive
officers of New U.S. Trust for services rendered in all capacities to the
Corporation and to the Trust Company and their affiliates.
Summary Compensation Table
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
------------------------- ------------------------------
AWARDS PAYOUTS
OTHER -------------------- ---------
ANNUAL RESTRICTED STOCK LONG-TERM ALL OTHER
COMPEN- STOCK OPTION INCENTIVE COMPEN-
SALARY BONUS SATION AWARDS AWARDS PAYOUTS SATION(1)
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (#) (#) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------
H.M. Schwarz 1994 547,308 257,635 0 0 15,000 465,099 33,177
Chairman, CEO 1993 517,308 304,135 0 0 10,000 545,015 89,641
1992 485,192 305,740 0 0 0 221,688 28,451
J.S. Maurer 1994 401,539 169,923 0 0 10,000 316,316 23,913
President, COO 1993 381,538 205,923 0 0 6,000 370,669 61,175
1992 359,423 212,029 0 0 15,000 150,617 20,737
F.B. Taylor 1994 371,539 151,423 0 3,500 9,000 262,554 21,428
Vice Chairman, 1993 351,539 187,423 0 0 5,000 307,670 48,860
Chief Investment 1992 329,423 183,529 0 0 12,000 126,057 18,527
Officer
J.M. Deignan 1994 287,846 110,358 0 0 3,000 187,538 14,392
Executive Vice 1993 274,808 126,260 0 0 3,000 202,184 12,888
President 1992 259,808 112,010 0 0 6,000 84,112 12,040
P. K. Napoli 1994 272,846 111,358 0 0 3,000 173,286 17,046
Executive Vice 1993 257,769 136,230 0 0 3,000 188,996 13,740
President 1992 240,808 127,960 0 0 7,500 78,243 12,990
</TABLE>
--------------------------------------------------------------------------------
(1) See following table for identification and amounts of components.
The following table lists for each of the named executive officers the payments
that comprise the "All Other Compensation" amounts for 1994 found in the Summary
Compensation Table.
All Other Compensation
<TABLE>
<CAPTION>
EMPLOYER SUPPLEMENTAL EARNINGS ON
CONTRIBUTION ESOP DEFERRED
TO ESOP(1) AMOUNT(2) AWARDS(3) TOTAL
NAME YEAR ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------
H.M. Schwarz 1994 7,500 19,865 5,812 33,177
J.S. Maurer 1994 7,500 12,577 3,836 23,913
F.B. Taylor 1994 7,500 10,007 2,851 21,428
J.M. Deignan 1994 7,500 6,892 0 14,392
P. K. Napoli 1994 7,500 6,142 3,404 17,046
</TABLE>
--------------------------------------------------------------------------------
(1) Represents the amount of the employer contribution made to the ESOP portion
of the 401(k) Plan and ESOP on behalf of each of the named executive officers
for the year indicated.
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<PAGE> 19
(2) Represents the amount of the employer contribution, otherwise required under
the ESOP portion of the 401(k) Plan and ESOP, that could not be made to the Plan
on behalf of the named executive officers for the years indicated due to certain
limitations imposed under the Internal Revenue Code of 1986 (the "Code
Limitations"). This amount is credited to the officer's account under the
Corporation's Executive Deferred Compensation Plan, and payment is deferred
until termination of the officer's employment.
(3) Represents that portion of the interest accrued on certain previously
deferred incentive plan cash awards which is "above market" interest as defined
in the rules of the Securities and Exchange Commission.
STOCK OPTIONS. The following table sets forth certain information concerning
options granted during 1994 to the executive officers named in the Summary
Compensation Table, including potential gains that these officers would realize
under two stock price growth-rate assumptions compounded annually. Under the 5%
growth-rate assumption, the indicated values would be realized if the stock
price reached $83.48 per share at the end of the option term (10 years from
grant). Correspondingly, under the 10% growth-rate assumption, the indicated
values would be realized if the stock price reached $132.93 per share.
Option Grants in 1994
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE
AT ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM(1)
--------------------------------------------------- ---------------------
NUMBER OF EXERCISE
SECURITIES % OF TOTAL PRICE PER
UNDERLYING OPTIONS SHARE
OPTIONS GRANTED TO (MARKET
GRANTED EMPLOYEES PRICE AT
(# OF IN DATE OF EXPIRATION
NAME SHARES) FISCAL YEAR GRANT)($) DATE(2) 5% ($) 10% ($)
<S> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------
H.M. Schwarz 15,000 7.7% 51.25 01/25/04 483,450 1,225,200
J.S. Maurer 10,000 5.1% 51.25 01/25/04 322,300 816,800
F.B. Taylor 9,000 4.6% 51.25 01/25/04 290,070 735,120
J.M. Deignan 3,000 1.5% 51.25 01/25/04 96,690 245,040
P.K. Napoli 3,000 1.5% 51.25 01/25/04 96,690 245,040
--------------------------------------------------------------------------------------------------
</TABLE>
(1) Annual growth-rate assumptions are prescribed by rules of the Securities and
Exchange Commission and do not reflect actual or projected price appreciation of
U.S. Trust Corporation Common Shares.
(2) Options granted in 1994 were exercisable in four equal, cumulative
installments in each of the first through fourth anniversary dates of the date
of grant (January 25, 1994). As a result of the Reorganization, each of the
options in this table, to the extent it had not been exercised or cancelled
prior to the Effective Time of the Reorganization, was cancelled as of the
Effective Time, and with respect to each option so cancelled, the holder thereof
became entitled to receive a lump-sum cash payment in an amount equal to the
excess of the aggregate Determined Value of the Common Shares subject to the
option over the aggregate exercise price of such Common Shares. See "Change in
Control Provisions" below.
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<PAGE> 20
The following table discloses the aggregated stock option exercises for each of
the named executive officers in the fiscal year ended December 31, 1994. It also
shows the number of vested and unvested unexercised options and the value of
vested and unvested unexercised in-the-money options as of December 31, 1994.
Aggregated Option Exercises in 1994 and Year-End Option Values
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES YEAR-END(#) YEAR-END($)(2)
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE(#) REALIZED($)(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
<S> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------------------
H.M. Schwarz 5,500 176,875.00 58,500/35,000 1,643,550/629,025
J.S. Maurer 2,300 81,075.00 39,450/31,250 1,095,142/587,602
F.B. Taylor 2,550 89,887.50 30,950/25,500 845,800/458,137
J.M. Deignan 1,000 24,000.00 5,750/13,250 152,905/213,955
P.K. Napoli 1,500 52,875.00 6,750/14,250 175,590/237,270
----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Aggregate market value on the date(s) of exercise less aggregate exercise
price.
(2) Total value of unexercised options is based on the difference between
aggregate market value of U.S. Trust Corporation Common Shares at $63.50 per
share, the closing price on December 30, 1994, and aggregate exercise price.
PERFORMANCE SHARE UNITS. The 1989 Stock Compensation Plan (the "Stock Plan")
provided for the grant of performance share units which were earned over a
3-year "Performance Cycle" to the extent that pre-established performance goals
for the Corporation were met. Except for any portion of an earned award that an
officer had previously elected to defer, earned awards were paid as soon as
practicable after the close of the Performance Cycle. Awards that were not
deferred were paid in a combination of cash and the Corporation's Common Shares,
as the Compensation Committee determined, but at least 50% of a non-deferred
award was paid in the Corporation's Common Shares. Deferred awards were either
converted to "phantom share units" ("PSUs") or credited to the "Interest
Portion" of the officer's account under the Stock Plan, as the officer elected,
but at least 50% of any deferred award was converted to PSUs.
Earnings are credited to the Interest Portion of a deferred award at the Trust
Company's prime rate, or at a rate of return matching the rate of return on any
one or more of the investment funds available for investment of the 401(k)
portion of employees' accounts under the 401(k) Plan and ESOP other than the
U.S.T. Corp. Stock Fund, as the officer may select from time to time. The "PSU
Portion" of an officer's deferred award is credited, as of the date of each
dividend payment on the Corporation's Common Shares, with dividend equivalents
in the form of additional PSUs.
Payments with respect to deferred awards are made in 10 annual installments
commencing in the year following the officer's retirement or other termination
of employment. Payments with respect to the PSU Portion of a deferred award are
made in the form of the Corporation's Common Shares, and payments with respect
to the Interest Portion of a deferred award are made in cash.
Performance share units were also awarded to officers of the Corporation and the
Trust Company and their subsidiaries under two predecessor plans: the 1988
Long-Term Performance Plan of U.S. Trust Corporation and the Long-Term
Performance Plan of U.S. Trust Corporation (collectively, the "Predecessor
Performance Plans"). The provisions of the Predecessor Performance Plans are
substantially the same as those applicable to the performance share unit
18
<PAGE> 21
feature of the Stock Plan. No Performance Cycles remain in progress under the
Predecessor Performance Plans. However, deferred awards remain outstanding under
these plans, in the form of PSUs and account balances that are credited with
interest under substantially the same provisions as described above in the case
of the "Interest Portion" of deferred awards under the Stock Plan.
Each performance share unit and each PSU credited to an officer under the Stock
Plan and the Predecessor Performance Plans represents one Common Share of the
Corporation, but constitutes only a "phantom" share. It entitles the holder to
be credited with dividend equivalents and to receive one Common Share of the
Corporation for each such unit to the officer's credit when distributions are
made to the officer from the plan, but it does not otherwise entitle the officer
to any of the rights of a holder of the Common Shares.
The following table sets forth certain information concerning long-term
incentive awards granted during 1994 to the executive officers named in the
Summary Compensation Table.
Long-Term Incentive Awards Granted In 1994
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS OF PERFORMANCE SHARE
NUMBER OF PERFORMANCE UNITS
PERFORMANCE PERIOD UNTIL -----------------------------------------------
NAME SHARE UNITS(#) PAYOUT THRESHOLD(#)(1) TARGET(#)(2) MAXIMUM(#)(2)
<S> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------
H.M. Schwarz 6,042 3 years 3,021 6,042 6,042
J.S. Maurer 4,076 3 years 2,038 4,076 4,076
F.B. Taylor 3,420 3 years 1,710 3,420 3,420
J.M. Deignan 2,394 3 years 1,197 2,394 2,394
P.K. Napoli 2,257 3 years 1,129 2,257 2,257
-----------------------------------------------------------------------------------------------
</TABLE>
(1) Assumes minimum number of performance share units earned in each performance
goal for 1994-96 performance cycle.
(2) Assumes all specified performance targets are reached.
As a result of the Reorganization, the performance goals established for the
1995 and 1996 Performance Cycles were deemed to have been met in full, and all
performance share units awarded to each officer for each of the 1995 and 1996
Performance Cycles were deemed to be fully earned and payable to the officer if
he or she remains in employment with the Corporation or its affiliates until the
end of such Performance Cycle or if he or she leaves such employment before the
end of such Performance Cycle as a result of retirement or termination due to
staff reductions associated with the Reorganization. The following table shows,
for each executive officer named in the Summary Compensation Table, the number
of performance share units awarded for the 1995 and 1996 Performance Cycles
(increased to reflect the issuance of additional performance share units as
payment for Common Share dividend equivalents credited to outstanding
performance share units) that were deemed to be fully earned and payable to the
executive officer as a result of the Reorganization:
<TABLE>
<CAPTION>
PERFORMANCE PERFORMANCE
SHARE SHARE
UNITS FOR UNITS FOR
NAME 1995 CYCLE 1996 CYCLE
--------------------------------------------- ------------- -------------
<S> <C> <C>
H.M.Schwarz.................................. 6,592 6,274
J.S. Maurer.................................. 4,472 4,232
F.B. Taylor.................................. 3,736 3,551
J.M. Deignan................................. 2,660 2,523
P.K. Napoli.................................. 2,469 2,379
</TABLE>
To the extent awards for the 1995 and 1996 Performance Cycles become payable to
participants, including the named executive officers, in the form of Common
Shares or PSUs, the number of
19
<PAGE> 22
Common Shares to be distributed or PSUs to be credited to participants with
respect to such awards will be adjusted, in accordance with a conversion formula
contained in the Stock Plan, to reflect the Reorganization. All PSUs, and all
Benefit Equalization Units ("BEUs"), standing to the credit of participants,
including the named executive officers, with respect to previously deferred
awards under the Stock Plan were converted, as of the closing date of the
Reorganization, into an adjusted number of PSUs and BEUs in accordance with a
similar conversion formula contained in the Stock Plan.
PERFORMANCE GRAPH. The graph below compares the annual change in the cumulative
total return on U.S. Trust Common Shares with the annual change in the
cumulative total returns of the Standard & Poor's Composite -- 500 Stock Index
and a group of Old U.S. Trust peer companies. The peer companies are banking
organizations selected on the basis of their similarity to Old U.S. Trust in
having a high percentage of revenues from fees generated by personal trust
business and other fee-based services. The peer group consists of The Bank of
New York Company, Inc., Bankers Trust New York Corporation, Boatmen's
Bancshares, Inc., Comerica Incorporated, CoreStates Financial Corp, Fleet
Financial Group Inc., Key Corp, Mellon Bank Corporation, Mercantile
Bancorporation Inc., Mercantile Bankshares Corporation, J.P. Morgan & Co.,
Incorporated, NBD Bancorp, Inc., Northern Trust Corporation, PNC Financial Corp,
State Street Boston Corporation, Sun Trust Banks, Inc. and Wilmington Trust
Company.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG U.S. TRUST, S&P 500 AND BANK PEER GROUP**
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) U.S. TRUST S&P 500 PEER GROUP
<S> <C> <C> <C>
1989 100.0 100.0 100.0
1990 87.9 96.9 88.1
1991 127.3 126.3 149.7
1992 151.2 135.9 180.2
1993 166.3 149.5 186.1
1994 209.2 151.5 169.5
</TABLE>
* Assumes that the value of the investment in U.S. Trust Common Shares, the S&P
500 index and the peer group was $100 on December 31, 1989, and that all
dividends were reinvested.
** The return of each member of the peer group has been weighted according to
its respective stock market capitalization.
RETIREMENT BENEFITS. Each of the executive officers named in the Summary
Compensation Table is a participant in The Employees' Retirement Plan of United
States Trust Company of New York and Affiliated Companies (the "Retirement
Plan"). The Retirement Plan is a defined benefit pension plan which is tax
qualified under Section 401(a) of the Internal Revenue Code. The Retirement Plan
provides for payment of a pension in an annual amount equal to a specified
20
<PAGE> 23
percentage (based on the length of a participant's credited service up to a
maximum of 35 years) of the participant's average base salary for his highest
five consecutive years of base salary during the last ten plan years prior to
retirement or other termination of employment, reduced by a portion of the
participant's annual Social Security benefit. The table below shows the
estimated annual pension payable under the Retirement Plan's benefit formula
upon retirement at age 65 to persons in specified remuneration and
years-of-service classifications who have elected to receive their pensions
under a straight life annuity option. The amounts shown do not reflect
reductions which would be made to offset Social Security benefits.
<TABLE>
<CAPTION>
HIGHEST CONSECUTIVE ESTIMATED ANNUAL PENSION FOR
FIVE-YEAR REPRESENTATIVE
AVERAGE BASE SALARY YEARS OF CREDITED SERVICE
----------------------------------------------------------------------------------------------
35 OR
15 20 25 30 MORE
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$200,000 $ 67,500 $ 90,000 $100,000 $110,000 $120,000
250,000 84,375 112,500 125,000 137,500 150,000
300,000 101,250 135,000 150,000 165,000 180,000
350,000 118,125 157,500 175,000 192,500 210,000
400,000 135,000 180,000 200,000 220,000 240,000
450,000 151,875 202,500 225,000 247,500 270,000
500,000 168,750 225,000 250,000 275,000 300,000
550,000 185,625 247,500 275,000 302,500 330,000
600,000 202,500 270,000 300,000 330,000 360,000
----------------------------------------------------------------------------------------------
</TABLE>
The table below sets forth the number of years of credited service and the
average base salary, in each case as of the end of 1994, that would be taken
into account in determining the pension payable under the Retirement Plan's
benefit formula to each of the executive officers named in the Summary
Compensation Table.
<TABLE>
<CAPTION>
AVERAGE
YEARS BASE
NAME OF SERVICE SALARY
---------------------------------------------------------------------------------------------
<S> <C> <C>
H.M. Schwarz 27.9 $496,000
J.S. Maurer 24.5 366,000
F.B. Taylor 28.6 337,000
J.M. Deignan 7.0 263,400
P.K. Napoli 11.0 246,400
---------------------------------------------------------------------------------------------
</TABLE>
The amount of compensation taken into account in determining each executive
officer's pension under the Retirement Plan's formula, as shown in the third
column of the table above, represents the average of the rates of base salary in
effect for such officer as of the last day of each of the years 1990 through
1994. In the case of each such officer, the base salary amounts so taken into
account for the years 1992, 1993 and 1994 differ from the amounts shown in the
"Salary" column of the Summary Compensation Table for these years, in that the
latter amounts represent the base salary actually earned by the officer during
each such year, rather than the rate of base salary in effect for the officer at
the end of that year.
The pension amounts otherwise payable from the Retirement Plan are subject to
reduction to the extent necessary to comply with the applicable Code
Limitations. However, in the case of each executive officer named in the Summary
Compensation Table, any pension amount otherwise payable under the Retirement
Plan's benefit formula that cannot be paid to such officer from the Retirement
Plan because of the Code Limitations will be paid to the officer under the
Corporation's Benefit Equalization Plan.
21
<PAGE> 24
CHANGE IN CONTROL PROVISIONS. Various compensation and benefit plans maintained
by New U.S. Trust, under which the executive officers named in the Summary
Compensation Table are covered, contain provisions pursuant to which payment of
the benefits provided under the plan would be accelerated in the event of a
"change in control" of the Corporation (as defined in such plans), unless the
Board of Directors otherwise determines prior to the date of the change in
control (or not later than 45 days thereafter in certain circumstances). As
defined in each of such plans, a "change in control" means that any of the
following events has occurred: (i) 20% or more of the Common Shares have been
acquired by any person (as defined by Section 3(a)(9) of the Securities Exchange
Act of 1934) other than directly from the Corporation; (ii) there has been a
merger or equivalent combination after which 49% or more of the voting stock of
the surviving corporation is held by persons other than former shareholders of
the Corporation; or (iii) 20% or more of the directors elected by shareholders
to the Board of Directors of the Corporation are persons who were not nominated
by the Board of Directors or Executive Committee of the Board of Directors in
the most recent proxy statement of the Corporation.
Specifically, upon such a change in control (a) the restrictions applicable to
all restricted stock previously awarded under the Stock Plan and all restricted
units awarded under the Executive Incentive Plan would lapse, and a cash payment
would be made for each share of restricted stock and each restricted unit equal
to the Determined Value (as defined in such plans) of a Common Share of the
Corporation; (b) the non-vested portion of all stock options granted under the
1995 Stock Option Plan and held by current officers or former officers whose
employment terminated by reason of retirement would become vested and
immediately and fully exercisable; (c) each stock option granted under the 1995
Stock Option Plan would be cancelled, and each holder of such cancelled option
(other than a holder of an option granted less than six months prior to the
change in control who is an executive officer subject to Section 16 of the
Securities Exchange Act of 1934) would be entitled to receive a cash payment
equal to the excess of the Determined Value (as defined in the 1995 Stock Option
Plan) of the Common Shares subject to such option over the aggregate purchase
price of such Common Shares under the terms of the option; (d) all performance
share units awarded under the Stock Plan for any performance cycle in which the
change in control occurs would become immediately payable in full, and a cash
payment would be made for each such performance share unit in an amount equal to
the Determined Value (as defined in the Stock Plan) of a Common Share of the
Corporation; (e) all previously deferred awards of performance share units under
the Stock Plan would become immediately payable in the form of a cash payment in
an amount equal to the sum of the Interest Portion (as defined in the Stock
Plan) of such awards and the Determined Value (as defined in the Stock Plan) of
the number of Common Shares of the Corporation corresponding to the number of
units included in the Phantom Share Unit Portion (as defined in the Stock Plan)
of such awards; (f) all benefit equalization units previously granted under the
Stock Plan (a form of phantom share unit) would become immediately payable in
the form of a cash payment in an amount equal to the Determined Value (as
defined in the Stock Plan) of the number of Common Shares of the Corporation
corresponding to the number of benefit equalization units credited to the
participant; (g) all awards under the Executive Incentive Plan for the year in
which the change in control occurs would be deemed to have been earned in full
and to the maximum extent, and would be immediately payable in the form of a
cash payment; (h) the balance of each participant's account under the Executive
Deferred Compensation Plan would become immediately payable in the form of a
cash payment; and (i) the supplemental pension benefits provided for any officer
under the Benefit Equalization Plan and, in the case of Messrs. Schwarz, Maurer
and Taylor, under the supplemental pension agreements between such officers and
the Corporation, would become immediately payable upon the "involuntary
termination" (as defined in such plan and agreements) of such officer's
employment following a change in control, in the
22
<PAGE> 25
form of a cash payment in an amount equal to the single sum actuarial equivalent
of the officer's supplemental pension benefits.
The Retirement Plan provides that if that plan is terminated within four years
after the occurrence of a change in control, any surplus funding in the plan
would be applied (subject to the Code Limitations and other tax qualification
requirements applicable to the Retirement Plan) to provide pro rata increases in
the accrued pension benefits of all qualified participants in the Retirement
Plan, including the executive officers named in the Summary Compensation Table.
In addition, under the 1990 Change in Control and Severance Policy for Top Tier
Officers, each of the executive officers named in the Summary Compensation Table
would be entitled to receive severance benefits in the event of any such
officer's involuntary termination of employment within two years following a
change in control. In such event, each such officer would be entitled to receive
a cash payment in an amount equal to the sum of (a) two times such officer's
then current annual base salary, (b) two times the average of the highest three
of the previous five years' awards to such officer under the Executive Incentive
Plan and the Annual Plan and (c) 26 times such officer's then current weekly
base salary.
The Reorganization constituted a "change in control" for purposes of certain
plans maintained by Old U.S. Trust. Specifically, the Reorganization was so
treated with respect to all options granted under Old U.S. Trust's option plans
other than incentive stock options granted before October 27, 1987, with the
following consequences:
(a) each incentive stock option granted under the Stock Plan which was not
fully exercisable was accelerated, so that the holder thereof was entitled
to exercise such option immediately before the Effective Time of the
Reorganization (the "Effective Time") with respect to any or all of the
Common Shares then subject to the option;
(b) each option granted under the Stock Plan and predecessor option plans,
to the extent it had not expired or had not been exercised or cancelled
prior to the Effective Time, was cancelled as of the Effective Time; and
(c) with respect to each option so cancelled, the holder thereof became
entitled to receive a cash payment in an amount equal to the excess of (i)
the Determined Value (as defined below) of the Common Shares subject to the
option, over (ii) the aggregate exercise price for such shares.
In accordance with the provisions of the Stock Plan and predecessor option
plans, the "Determined Value" of the Common Shares subject to each option so
cancelled was determined by multiplying (i) the greater of (A) the highest bid
price of a Common Share during the 12-month period ending on the day immediately
preceding the closing date of the Reorganization, and (B) the Transaction Value
per Common Share, multiplied by (ii) the number of Common Shares subject to such
option. The "Transaction Value" per Common Share was defined as the sum of (x)
the product of the number of shares of Chase common stock into which each Common
Share was converted in the Reorganization, multiplied by an amount equal to the
10-day average of the daily average of the high and low prices for Chase common
stock as reported for New York Stock Exchange composite transactions on each of
the 10 trading days immediately preceding the last business day before the
closing date of the Reorganization, and (y) an amount equal to the 10-day
average of the daily average of the high bid and low asked prices for a Common
Share of the Corporation in the over-the-counter market as reported by the
National Quotation Bureau Incorporated on a "when-issued" basis on each of the
10 trading days immediately preceding the closing date. The application of the
foregoing formula resulted in a Determined Value of $81.375 per share for the
Common Shares subject to the options so cancelled.
23
<PAGE> 26
Set forth below is a table showing, for each executive officer named in the
Summary Compensation Table, the total number of shares subject to options
(exercisable and unexercisable) for which the officer became entitled to receive
a cash payment upon the Reorganization, the range of exercise prices under such
options, and the number of such option shares that were not exercisable prior
to, but became exercisable as a result of, the Reorganization:
<TABLE>
<CAPTION>
NO. OF OPTION
RANGE OF SHARES THAT
TOTAL NO. OF EXERCISE PRICE BECAME EXERCISABLE
NAME OPTION SHARES PER SHARE ON REORGANIZATION
----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
H.M.Schwarz 78,000 $30.75 - $53.88 21,250
J.S. Maurer 56,000 $30.75 - $53.88 17,250
F.B. Taylor 41,000 $30.75 - $53.88 15,250
J.M. Deignan 19,000 $27.75 - $53.88 6,750
P.K. Napoli 12,000 $38.00 - $53.88 7,125
------------- --------
Total 206,000 $27.75 - $53.88 67,625
============== ==================
----------------------------------------------------------------------------------------------
</TABLE>
The Reorganization also constituted a "change in control" as defined in, and for
purposes of, Old U.S. Trust's Annual Incentive Plan ("AIP"). Accordingly,
previously accrued benefits under the AIP became immediately payable at the
Effective Time, and each participant in the AIP became entitled to receive a
cash payment in an amount equal to his or her account balance under the plan.
The amounts of the account balances, as of such date, that became so payable in
the case of the executive officers named in the Summary Compensation Table
(other than Messrs. Schwarz and Deignan, who had no account balances under the
AIP) are as follows:
<TABLE>
<S> <C>
J.S. Maurer $ 151,621.16
F.B. Taylor 112,669.22
P.K. Napoli 134,529.79
------------
Total $ 398,820.17
============
</TABLE>
BENEFIT PROTECTION TRUSTS. The Corporation has established the U.S. Trust
Corporation Benefits Protection Trust I and the U.S. Trust Corporation Benefits
Protection Trust II, and the Trust Company has established the United States
Trust Company of New York and Affiliated Companies Executives Benefits
Protection Trust, for the purposes of assisting the Corporation and the Trust
Company in meeting their obligations under certain of the benefit and
compensation plans maintained by them. The U.S. Trust Corporation Benefits
Protection Trust I also will cover benefits payable under the Board Deferred
Plan with respect to the "Interest Portion" of a board member's deferred amounts
under that plan.
Upon the occurrence of a change in control, the trust funds would be used to
make benefit payments to the officers and board members in accordance with the
provisions of the applicable plans and the trust agreements. However, at all
time prior to payment to the officers and board members, all assets held in the
trusts will remain subject to the claims of the Corporation's and the Trust
Company's respective creditors.
The trusts are intended to qualify as "grantor trusts" within the meaning of the
Code, with the consequence that the Corporation and the Trust Company will be
treated as owners of all of the assets and income of the trusts for federal
income tax purposes. No contributions have been made to the trusts as yet.
24
<PAGE> 27
DIRECTORS, TRUSTEES AND OFFICERS LIABILITY INSURANCE
Pursuant to Section 726(d) of the New York Business Corporation Law and Section
7024(d) of the New York Banking Law, the Corporation and the Trust Company
hereby report that on August 1, 1995, policies of directors and officers
liability insurance in the aggregate amount of $50,000,000 were obtained for a
three-year term with Lloyd's of London, St. Paul Mercury Insurance Company,
Columbia Casualty Insurance Company, Reliance Insurance Company, Gulf Insurance
Company, Chubb Custom Insurance Company, Greater American Insurance Company and
Executive Risk Specialty Insurance Company at a total cost of $989,724.00
covering all directors and officers of the Corporation and the Trust Company and
affiliated companies serving at any time during the term of the policies.
TRANSACTIONS WITH DIRECTORS AND EXECUTIVE OFFICERS
Some of the Corporation's directors are customers of the Trust Company and some
of the directors are officers of corporations or members of partnerships which
are customers of the Trust Company. As such customers, they have had
transactions in the ordinary course of business with the Trust Company,
including borrowings, all of which were on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons and did not involve more than normal
risk of collectibility or present other unfavorable features. In the ordinary
course of business, the Trust Company uses the products or services of a number
of organizations with which directors of the Corporation are affiliated as
officers or partners. It is expected that the Trust Company and the Corporation
will in the future have transactions with organizations with which directors of
the Corporation are affiliated as officers or partners. The law firm of Cravath,
Swaine & Moore, of which Mr. Samuel C. Butler is a partner, the law firm of
Patterson, Belknap, Webb & Tyler, of which Ms. Antonia M. Grumbach is a partner,
the law firm of Wien, Malkin & Bettex, of which Mr. Peter L. Malkin is a
partner, and the law firm of Milbank, Tweed, Hadley & McCloy, of which Mr.
Carroll L. Wainwright, Jr. is a consulting partner, performed legal services for
the Corporation or the Trust Company in 1994.
II RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Subject to shareholder approval, the Boards of Directors of the Corporation and
of the Trust Company have appointed Coopers & Lybrand, certified public
accountants, as independent auditors for the year 1995. Coopers & Lybrand have
served as independent auditors for the Trust Company for many years and have
served as independent auditors for the Corporation since its inception in 1977.
In their capacity as independent auditors for the year 1994, Coopers & Lybrand
performed the following services: audited the consolidated financial statements
of the Corporation and the statement of condition of the Trust Company and of
certain of the subsidiaries of the Corporation and the Trust Company, the
separate financial statements of the Trust Company's employee benefit plans as
required by the Employee Retirement Income Security Act of 1974 and the separate
monthly financial statements of the Pooled Pension and Profit Sharing Trust
Funds and Discretionary Trust Funds administered by the Trust Company; conducted
limited reviews of the quarterly financial information that is reported to
shareholders; and conducted special internal accounting control reviews of
assets held or managed by the Trust Company for others.
The members of the Audit Committee are currently Messrs. Stookey (the Committee
Chairman), de Montebello, Douglas, Smith and Wilson.
25
<PAGE> 28
Representatives of Coopers & Lybrand will be present at the Meeting with the
opportunity to make a statement if they wish to do so. They also will be
available to respond to appropriate questions.
III APPROVAL OF 1995 STOCK OPTION PLAN
The Board of Directors of the Corporation has adopted, effective September 1,
1995, subject to the approval of the shareholders, the 1995 Stock Option Plan of
U.S. Trust Corporation (the "Option Plan"). The Corporation currently has no
stock option plan for its employees, since none of the option plans of Old U.S.
Trust were transferred to the Corporation or the Trust Company in connection
with the Reorganization.
The Board of Directors and the Committee believe, based on their experience with
the option plans of Old U.S. Trust, that substantial benefits will accrue to the
Corporation from the granting of stock options to its senior officers. Such
options help to attract and retain persons of ability as employees and to
motivate such persons to exert their best efforts on behalf of the Corporation.
Options also encourage such persons to acquire a proprietary interest in the
Corporation through stock ownership and thereby afford them a greater incentive
to enhance the value of the Common Shares through their own efforts.
The Committee believes that the Corporation's performance is best when its
employees think like owners. Acceptance of this ownership philosophy is a
requirement for advancement to senior management positions. It is expected that
senior management will build and maintain over time significant ownership
positions in the Common Shares. The grant of stock options is a key element of
this philosophy.
The following is a general summary of the terms of the Option Plan. Such summary
is qualified in its entirety by reference to the text of the Option Plan, which
is attached to this proxy statement as Appendix A.
Purpose
The purpose of the Option Plan is to advance and promote the interests of the
Corporation and its affiliated companies by encouraging and enabling their
officers to acquire Common Shares. The Option Plan is intended as a means of
attracting and retaining outstanding management and promoting a close identity
of interest between management and the Corporation's shareholders.
Common Shares Available for Options
The Option Plan authorizes the grant of options to purchase a maximum of 850,000
Common Shares in the aggregate. The Common Shares to be distributed under the
Option Plan may be authorized and unissued shares, shares held in the
Corporation's treasury, or shares purchased by the Corporation on the open
market. If any option shall expire or the non-vested portion of any option shall
be forfeited, the number of Common Shares no longer subject to such option will
be available for new grants of options under the Option Plan. If options are
cancelled upon a change in control (see "Change in Control" below), the number
of Common Shares no longer subject to such options will not again become
available for new grants.
In the event of any change in the Common Shares by reason of any stock dividend,
recapitalization, reorganization, merger or exchange of shares, or any rights
offering to purchase Common Shares at a price substantially below fair market
value, or any similar change affecting the Common Shares, the number and kind of
shares issuable upon exercise of options under the Option Plan, and the purchase
price per share of each such option, will be appropriately adjusted
26
<PAGE> 29
consistent with such change in such manner as the Committee, in its sole
discretion, may deem equitable.
Grants of Options
Officers of the Corporation or any of its affiliated companies at or above the
rank of Vice President are eligible to be granted stock options under the Option
Plan. The Committee selects the officers who will be granted options and
determines the number of Common Shares covered under each option, the price at
which such shares may be purchased, the time or times when the option may be
exercised, and such other terms and conditions to be included in the option as
are not inconsistent with the provisions of the Option Plan. Currently, there
are approximately 475 persons who are eligible to be granted awards under the
Option Plan, including all five of the named executive officers.
The maximum term of any option granted under the Option Plan is ten years from
the date of grant, and the per share exercise price of any option may not be
less than the fair market value of a Common Share on the date of grant of the
option, as determined by the Committee. The total number of Common Shares with
respect to which options may be granted to any one person during any calendar
year may not exceed 100,000 Common Shares.
Exercise of Options
The Committee may require that an option granted under the Option Plan vest and
become exercisable only after the optionee has remained in the employ of the
Corporation and its affiliated companies for such period of time after the date
of grant as is specified in the option, and that the option vest and become
exercisable in installments.
If an optionee's employment terminates as a result of retirement, the optionee
may thereafter exercise the vested portions of his or her options at any time or
from time to time during a five-year period after the date of retirement, and
during such five-year period unvested option installments will continue to vest
as provided under the terms of the option. If the retired optionee should die
prior to the end of the five-year period, the portion of each of his or her
options which is unvested on the date of death will be forfeited (unless the
Committee in its sole discretion determines otherwise), and the vested portion
may be exercised by the optionee's designated beneficiary at any time or from
time to time until the date on which the option expires by its terms or, if
sooner, until the second anniversary of death. If an optionee's employment
terminates for any reason other than retirement, the portions of such optionee's
options which are unvested on the date of termination will be forfeited (unless
the Committee in its sole discretion determines otherwise), and the vested
portions may be exercised at any time or from time to time until the option
expires by its terms or, if sooner, until (a) the second anniversary of
termination by reason of death, (b) the first anniversary of termination as a
result of permanent disability, or (c) the 90th day following termination for
any other reason. If an optionee whose employment terminates as a result of
permanent disability should die prior to the end of the above mentioned first
anniversary, the portion of each of his or her options which are then vested may
be exercised by the optionee's designated beneficiary at any time or from time
to time until the date on which the option expires by its terms or, if sooner,
until the second anniversary of death.
If the Committee so determines, any option granted under the Option Plan may
provide that the optionee's right to exercise the option may be forfeited if the
Committee determines that: (i) the optionee has committed fraud, embezzlement or
other act of dishonesty involving the Corporation or any of its affiliated
companies, (ii) the optionee's employment is terminated for cause, (iii) the
optionee has at any time furnished, divulged or used any information of a
proprietary nature owned by the Corporation or any of its affiliated companies
that is in the
27
<PAGE> 30
nature of confidential business information or trade secrets, other than as
required in the course of his or her employment by the Corporation or any of its
affiliated companies, (iv) the optionee has at any time induced or attempted to
induce any officer of the Corporation or any of its affiliated companies to
terminate such officer's employment with the Corporation or any of its
affiliated companies; (v) the optionee has at any time induced or attempted to
induce any customer of, or any other person or entity having business relations
with, the Corporation or any of its affiliated companies to terminate or curtail
such relationship with the Corporation or any of its affiliated companies; or
(vi) the optionee has at any time engaged in any other conduct directly and
materially detrimental to the business of the Corporation or any of its
affiliated companies.
Payment of the option exercise price may be made in cash or in such other
consideration as the Committee deems appropriate, including (i) Common Shares
already owned by the optionee having a total fair market value at the time of
exercise equal to the exercise price, and (ii) a combination of cash and Common
Shares.
Change in Control
In the event of a "change in control" of the Corporation (as defined above under
the caption "Compensation of Executive Officers -- Change in Control
Provisions"), the non-vested portions of all options held by current officers,
or former officers whose employment terminated by reason of retirement, will
become vested and immediately and fully exercisable, and such optionees will be
given an opportunity to exercise such options at such time prior to the
effective time of the change in control, and in accordance with such procedures,
as the Committee shall determine in its discretion. Each outstanding option not
exercised as of the effective time of the change in control will be cancelled,
and the optionee will be entitled to receive a cash payment equal to the excess
of the "Determined Value" of the Common Shares subject to such option over the
aggregate purchase price of such Common Shares under the terms of the option,
provided that no such cash payment will be made with respect to options granted
less than six months prior to the change in control to executive officers
subject to Section 16 of the Securities Exchange Act of 1934. Determined Value
is defined in the Option Plan as the highest price per Common Share paid in
connection with any change in control or, in certain circumstances, the "average
market value" of a Common Share during a 30-day period ending on the day
preceding the occurrence of the change in control.
Tax Consequences
Options granted under the Option Plan are either incentive stock options meeting
the requirements set forth in section 422 of the Internal Revenue Code ("ISOs")
or options which do not qualify as ISOs ("nonqualified options"). For federal
income tax purposes, assuming that the Common Shares acquired by the holder of
an ISO are not disposed of within two years from the date the option was granted
or one year from the date the option was exercised, the Corporation receives no
deduction either upon the grant or the exercise of an ISO or upon a subsequent
sale of the shares by the optionee. The optionee realizes no income for regular
federal income tax purposes either at the time of the grant or the time of
exercise of the ISO. Instead, the optionee realizes income or loss only upon his
or her subsequent sale of the option shares, and the optionee's income, in the
amount of any excess of the sale price over the option exercise price, will be
taxed as long-term capital gain.
If, however, the shares are disposed of within either of the two- and one-year
periods mentioned above (a "disqualifying disposition"), the excess, if any, of
the fair market value of the shares on the date of exercise over the option
exercise price will be treated as ordinary income to the optionee in the year of
the disqualifying disposition. In addition, if a disqualifying disposition is
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<PAGE> 31
for more than the fair market value of the shares on the date of exercise, the
excess of the amount realized over the fair market value will be treated as a
short-term or long-term capital gain realized by the optionee, depending upon
the length of time the shares are held. If a disqualifying disposition is for
less than the fair market value of such shares on the date of exercise, the
amount treated as ordinary income realized by the optionee will be limited to
the excess of the amount realized over the option exercise price, and if the
disqualifying disposition is for less than the option exercise price, the
optionee will realize no ordinary income, but rather a short-term or long-term
capital loss, depending upon the length of time the shares are held, equal to
the difference between the option exercise price and the amount realized. The
Corporation will be entitled, in the year of a disqualifying disposition, to a
deduction equal to the amount that the optionee must treat as ordinary income.
In the case of a nonqualified option, the optionee does not realize any taxable
income upon the grant of the option. Upon exercise of a nonqualified option, the
optionee realizes ordinary income in an amount generally measured by the excess,
if any, of the fair market value of the shares on the date of exercise over the
option exercise price. The Corporation will be entitled to a deduction in the
same amount as the ordinary income realized by the optionee. Upon the sale of
such shares, the optionee will realize short-term or long-term capital gain or
loss, depending upon the length of time the shares are held. Such gain or loss
will be measured by the difference between the sale price of the shares and the
market price of the shares on the date of exercise.
Rights of Optionees
An optionee's rights under the Option Plan will not be subject in any manner to
anticipation, alienation, sale or other transfer, or garnishment by creditors of
the optionee or his or her beneficiary.
Neither the Option Plan nor any action taken thereunder will confer upon any
optionee any right to be retained in the employment of the Corporation or any of
its affiliated companies. An optionee will not have any rights of a shareholder
with respect to any Common Shares that are subject to his or her options until
such shares are issued to the optionee upon exercise of such options.
Amendment or Termination
Except as to matters that in the opinion of the Corporation's legal counsel
require shareholder approval, any provision of the Option Plan may be modified
as to a particular optionee by an individual agreement approved by the
Corporation's Board of Directors. The Board of Directors may, with prospective
or retroactive effect, amend, suspend or terminate the Option Plan or any
portion thereof at any time, provided that (i) no amendment that would
materially increase the cost of the Option Plan to the Corporation may be made
by the Board of Directors without the approval of the shareholders of the
Corporation, and (ii) no amendment, suspension or termination of the Option Plan
can deprive any optionee of any rights to options previously granted under the
Option Plan without his or her written consent. Any amendment that the Board of
Directors would be permitted to make may also be made by the Committee where
appropriate to facilitate the administration of the Option Plan or to comply
with applicable law or any applicable rules and regulations of government
authorities.
Options Granted
By action taken by the Committee pursuant to the Option Plan, on September 5,
1995, options were granted to 221 officers to purchase a total of 277,400 Common
Shares (the "Regular Grant"), and a special supplemental grant of options was
made to 24 of these officers to purchase a total of 220,000 Common Shares (the
"Special Grant"). Each of the foregoing options was granted subject to the
approval of the Option Plan by the Corporation's shareholders at the
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<PAGE> 32
Meeting, which approval will constitute ratification by the shareholders of such
grants. The following table sets forth information with respect to the options
so granted:
<TABLE>
<CAPTION>
NUMBER OF SHARES UNDER
OPTION
---------------------------
REGULAR SPECIAL TOTAL
GRANT GRANT GRANT
------- ------- -------
<S> <C> <C> <C>
H. MARSHALL SCHWARZ............................................. 20,000 50,000 70,000
Chairman and Chief Executive Officer
JEFFREY S. MAURER............................................... 15,000 37,500 52,500
President and Chief Operating Officer
FREDERICK B. TAYLOR............................................. 12,000 30,000 42,000
Vice Chairman and Chief Investment Officer
JOHN M. DEIGNAN................................................. 6,000 9,000 15,000
Executive Vice President
PAUL K. NAPOLI.................................................. 6,000 9,000 15,000
Executive Vice President
All executive officers as a group............................... 77,000 162,500 239,500
(8 persons)
All other officers as a group (213 officers other than executive
officers)..................................................... 200,400 57,500 257,900
</TABLE>
Each of the options under the Special Grant, and each of the options under the
Regular Grant that were awarded to officers who are participants in the
Corporation's Executive Incentive Plan (see below), will be treated as an ISO to
the maximum extent permitted under the applicable provisions of section 422 of
the Code. The remaining portion of each such option, and each option granted to
officers who are not participants in the Corporation's Executive Incentive Plan,
will be treated as a nonqualified option.
Each of the options under the Regular Grant and the Special Grant will expire on
September 5, 2005. Each option under the Regular Grant will vest and become
exercisable in four equal, cumulative annual installments, on each of the first
through the fourth anniversaries of the date of grant, and all of the Common
Shares subject to each such option may be purchased at a price of $41.375 per
share, representing the average of the per share high and low prices for Common
Shares on September 5, 1995, as quoted on the NASDAQ National Market System.
Each option under the Special Grant will vest and become exercisable on the
fifth anniversary of the date of grant, and all of the Common Shares subject to
each such option may be purchased at a price of $49.65 per share, representing
120% of the average of the per share high and low prices for Common Shares on
September 5, 1995, as quoted on the NASDAQ National Market System. On September
8, 1995, the closing price of a Common Share, as quoted on the NASDAQ National
Market System, was $43.75.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE APPROVAL OF
THE 1995 STOCK OPTION PLAN.
IV APPROVAL OF EXECUTIVE INCENTIVE PLAN
The Board of Directors of the Corporation has adopted, effective September 1,
1995, subject to the approval of the shareholders, the Executive Incentive Plan
of U.S. Trust Corporation (the "Incentive Plan"). The Incentive Plan, like the
Option Plan described above, will further the Corporation's stock ownership
philosophy for senior management. The Incentive Plan is being submitted to the
shareholders for their approval because the Plan provides for payment of awards
in part in the form of "Restricted Units" and, eventually, in the form of Common
Shares. Shareholder approval of the Incentive Plan will exempt the receipt by
executive officers of
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<PAGE> 33
Restricted Units and Common Shares thereunder from Section 16(b) of the
Securities Exchange Act of 1934.
The Incentive Plan is intended as a replacement, for top level executive
officers of the Corporation and its affiliated companies, of the 1990 Annual
Incentive Plan of United States Trust Company of New York and Affiliated
Companies (the "Annual Plan"). The Company has adopted a 1995 Annual Incentive
Plan for the other participants in the Annual Plan. No awards have been or will
be made under the Annual Plan with respect to any period after the
Reorganization.
The following is a general summary of the terms of the Incentive Plan. Such
summary is qualified in its entirety by reference to the text of the Incentive
Plan, which is attached to this proxy statement as Appendix B.
Purpose
The purpose of the Incentive Plan is to (i) encourage greater focus on
performance among the key executives of the Corporation and its affiliated
companies by relating a significant portion of their total compensation to the
achievement of annual financial and strategic objectives, and (ii) to promote on
the part of such executives an increased level of ownership of the Common Shares
of the Corporation by providing for a significant portion of their awards under
the Incentive Plan to be paid in the form of Common Shares.
Participation
Participation in the Incentive Plan is limited to those officers of the
Corporation and its affiliated companies whom the Committee, in its sole
discretion, selects to participate in the Incentive Plan. The Committee may
select as a participant any officer who, in the sole judgment of the Committee,
has made, and is expected to continue to make, contributions that are critical
to the success of the Corporation and its affiliated companies and to the growth
of their businesses.
Any person who has been selected as a participant for any year will continue to
be a participant in the Incentive Plan for each subsequent year during the
period of his or her employment, subject to the Committee's right to terminate
such individual's participation in the Incentive Plan as of any year commencing
after the date on which the Committee makes its determination to terminate such
individual's participation.
Currently, there are 37 persons who are eligible to participate in the Incentive
Plan, including all five of the named executive officers.
Awards
At the start of a calendar year, the Committee will establish (i) the corporate
performance goals (the "Performance Goals") which will apply in determining the
awards for such year, (ii) the aggregate dollar amount that will be available
for awards for such year if such Performance Goals are achieved (the "Target
Awards Pool"), and (iii) the percentages of the Target Awards Pool that will in
fact be available for awards for the year based on the level of achievement of
such Performance Goals, which percentages may be greater than 100% if the
Performance Goals are exceeded and less than 100% if the Performance Goals have
not been fully achieved (the "Actual Awards Pool").
The Performance Goals established for a year will be based upon achievement of a
specified level of earnings per share of the Corporation and/or upon such other
corporate objectives as the Committee may determine. The Committee has the
authority at any time to adjust the Performance Goals for a year as it deems
equitable in recognition of (i) extraordinary or
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<PAGE> 34
nonrecurring events during such year, (ii) changes in applicable accounting
rules or principles, or changes in the Corporation's methods of accounting
during such year (or in the methods of accounting of any other corporation whose
performance is relevant to any award under the Incentive Plan), (iii) a
reorganization, recapitalization, stock split, merger, rights offering, or any
other change in the capital structure of the Corporation (or of any other such
corporation), or (iv) such other events, changes, occurrences, conditions or
circumstances as in the Committee's judgment would warrant such adjustment.
The Committee will determine the amount of the Target Awards Pool as a
percentage or percentages of the aggregate base salary earned for the year by
all participants, either individually or by categories of participants. The
Committee may also apply such percentage or percentages to other current or
deferred compensation and determine the year for which such deferred
compensation shall be counted.
At the end of a year, the Committee will determine the extent to which the
Performance Goals for such year have been met and, based thereon, the amount of
the Actual Awards Pool. The Committee will also determine the amount of the
award, if any, earned by each participant for the year, based on the level of
the participant's achievement of the goals and objectives established for the
participant at the start of the year. In the case of all participants other than
the Chief Executive Officer, the individual goals for each year will be set, and
the participant's performance relative to such goals will be measured, by the
Committee based upon the recommendations of the Chief Executive Officer.
The Committee may make awards to participants in an aggregate amount less than
the amount of the Actual Awards Pool. The Committee may also allocate any
portion of the Actual Awards Pool for use in making special additional awards to
particular participants.
Payment of Awards
The amount payable with respect to a participant's award for any year will be
the total amount of the award earned by the participant, reduced by the sum of
(i) the amount of any employer contribution to be made on behalf of such
participant to the ESOP portion of the 401(k) Plan and ESOP for such year, and
(ii) the supplemental ESOP contribution amount to be credited to the
participant's account under the Executive Deferred Compensation Plan for such
year, in either case with respect to the base salary of such participant that
was taken into account in determining the Target Awards Pool for that year.
The amount payable with respect to a participant's award, as so determined, will
be paid partly in cash (the "Cash Portion") and partly in the form of Restricted
Units (the "Restricted Units Portion"), in such percentages as the Committee in
its discretion shall determine. The Restricted Units Portion generally must
equal at least 25%, and may not exceed 33 1/3%, of the total amount so payable
with respect to the participant's award. However, the total number of Restricted
Units that may be granted in connection with the payment of awards under the
Incentive Plan for any year may not exceed 80,000 Restricted Units; and the
Committee is authorized, in its discretion, to reduce the 25% minimum referred
to in the preceding sentence, to the extent necessary for this limit not to be
exceeded.
A Restricted Unit is a unit of measurement equivalent to one Common Share, with
none of the attendant rights of a shareholder of such share. The number of
Restricted Units to be granted to a participant with respect to the Restricted
Units Portion of such participant's award shall be determined by dividing the
amount of the Restricted Units Portion by the "Average Market Value" of one
Common Share on the date on which the Committee makes its determination of the
awards earned by participants for the year in question. The Average Market Value
on such
32
<PAGE> 35
date is the average of the high and low prices for a Common Share on such date,
as quoted on the NASDAQ National Market System.
The grant of Restricted Units with respect to the Restricted Units Portion of a
participant's award for any year will be evidenced by a written agreement
between the Corporation and the participant. In addition to including such other
terms and conditions as the Committee may require, the agreement shall
(i) specify the number of Restricted Units granted to the participant;
(ii) provide for such Restricted Units to become vested on the fifth
anniversary of the date of grant, or if earlier, on the date of the
participant's death, disability or retirement at age 65 (the "Vesting Date"
for the participant's Restricted Units);
(iii) provide for the forfeiture of the participant's Restricted Units
in the event of his or her termination of employment prior to the Vesting
Date for such Restricted Units for any reason other than the participant's
death, disability or retirement at age 65, except to the extent the
Committee in its discretion otherwise determines;
(iv) require that payment with respect to the participant's Restricted
Units be made in the form of Common Shares as soon as practicable after the
Vesting Date for such Restricted Units;
(v) permit the participant to elect to defer payment with respect to
such Restricted Units upon such terms and conditions as are set forth in
such agreement; and
(vi) provide for the participant to be credited with an additional
number of Restricted Units in respect of dividends paid on the Common
Shares during the period from the date of grant to the date on which
payment with respect to the participant's Restricted Units is made in full.
The Cash Portion of a participant's award for any year shall be paid in the form
of a single lump sum cash payment as soon as practicable after the end of such
year, except (i) to the extent that the participant has elected, under the
applicable provisions of the 401(k) Plan and ESOP, to have an amount equal to
any part of such Cash Portion contributed to the 401(k) Plan and ESOP on the
participant's behalf and/or (ii) to the extent that the participant has elected,
under the applicable provisions of the Executive Deferred Compensation Plan, to
defer any part of such portion of such award.
Common Shares Available for Awards
The number of Common Shares that may be distributed with respect to Restricted
Units granted under the Incentive Plan is limited to 120,000 Common Shares, plus
a number of Common Shares equal to the total number of additional Restricted
Units credited to participants with respect to dividends paid on Common Shares.
In the event that any Restricted Units initially granted or thereafter credited
to a participant shall be forfeited, the number of Common Shares no longer
payable with respect to the Restricted Units so forfeited will thereafter be
available for new grants of Restricted Units under the Incentive Plan.
The Common Shares distributed under the Incentive Plan may be authorized and
unissued shares, shares held in the treasury of the Corporation, or shares
purchased on the open market by the Corporation at such time or times and in
such manner as it may determine.
In the event of any change in the Common Shares by reason of any stock dividend,
recapitalization, reorganization, merger or exchange of shares or any rights
offering to purchase Common Shares at a price substantially below fair market
value, or any similar change affecting the Common Shares, the number and kind of
shares represented by Restricted Units will be
33
<PAGE> 36
appropriately adjusted consistent with such change in such manner as the
Committee, in its sole discretion, may deem equitable.
Change in Control
Upon the occurrence of a "change in control" (as defined above under the caption
"Compensation of Executive Officers -- Charge in Control Provisions"), all
Performance Goals and individual goals and objectives with respect to the year
in which the change in control occurs (the "Year of Change") will be deemed to
have been attained to the full and maximum extent, and the Actual Awards Pool
for the Year of Change will be determined by multiplying the Target Awards Pool
for such year by the highest percentage thereof established by the Committee for
determining the amount of the Actual Awards Pool for such year.
Unless another formula shall have been designated by the Committee prior to the
change in control, each participant will be allocated a portion of the Actual
Awards Pool for the Year of Change equal to the amount of such Actual Awards
Pool multiplied by a fraction, the numerator of which is the portion of the
anticipated annual compensation of the participant which was taken into account
by the Committee in determining the Target Awards Pool for the Year of Change,
and the denominator of which is the sum of all such amounts.
As soon as practicable following the change in control, all awards which are
deemed to have been earned to the full and maximum extent upon the occurrence of
the change in control will be payable in full in single cash lump sums, reduced
by any taxes required to be withheld and by the amount of any employer
contributions to be made on behalf of participants to the ESOP portion of the
401(k) Plan and ESOP for the Year of the Change. No awards so payable shall be
forfeitable on account of a Participant's termination of employment upon or
following the change in control.
All Restricted Units granted or credited to a participant that had not
previously become vested will become vested upon the occurrence of the change in
control. The Corporation will make payment to each participant with respect to
all of the Restricted Units standing to his or her credit at the time of the
change in control. The amount to be paid to each participant will be determined
by multiplying the aggregate number of Restricted Units then standing to the
participant's credit by the "Determined Value" of one Common Share. Determined
Value is the highest price per Common Share paid in connection with a change in
control or, in certain circumstances, the "average market value" of a Common
Share during a 30-day period ending on the day preceding the occurrence of the
change in control. All amounts payable to participants, reduced by any taxes
required to be withheld, shall be paid to such participants as soon as
practicable following the change in control.
Rights of Participants
A participant's rights to payments under the Incentive Plan will not be subject
in any manner to anticipation, alienation, sale or other transfer, or
garnishment by creditors of the participant or his or her beneficiary.
Neither the Incentive Plan nor any action taken thereunder gives any participant
any right to be retained in the employment of the Corporation or any of its
affiliated companies, and no participant will have the right, by virtue of
having been selected as a participant in the Incentive Plan, to be automatically
entitled to receive an award for any year.
Amendment or Termination
The Board of Directors may, with prospective or retroactive effect, amend,
suspend or terminate the Incentive Plan or any portion thereof at any time,
provided that no amendment, suspension
34
<PAGE> 37
or termination of the Incentive Plan shall deprive any participant of any rights
to awards previously made under the Incentive Plan without his or her written
consent. Any amendment that the Board of Directors would be permitted to make
pursuant to the preceding sentence may also be made by the Committee where
appropriate to facilitate the administration of the Incentive Plan or to comply
with applicable law or any applicable rules and regulations of government
authorities, provided that the cost of the Incentive Plan to the Corporation and
its affiliated companies is not materially increased thereby.
Awards granted
Subject to the approval of the Incentive Plan by the shareholders of the
Corporation, the Committee has established a 1995 awards program under the
Incentive Plan for the period beginning on September 1, 1995, and ending on
December 31, 1995. The Target Awards Pool established by the Committee for this
period will be $2,800,000. The Committee has established as the Performance Goal
for this period a target level of earnings per share of the Corporation. If the
earnings per share of the Corporation for this period differ from this
Performance Goal, an amount greater or less than the Target Awards Pool will be
available for awards for the period based upon percentages of the Target Awards
Pool established by the Committee prior to the start of the period. Thus, at a
maximum, 110% of the Target Awards Pool will be available for awards if the
earnings per share of the Corporation for this period exceed the Performance
Goal, and, at a minimum, 30% of the Target Awards Pool will be available for
awards if the earnings per share of the Corporation for this period are less
than the Performance Goal.
The following table sets forth certain information concerning the estimated
dollar value of threshold, target and maximum awards payable for 1995 under the
Incentive Plan. The Committee has determined that amounts payable with respect
to the awards earned by each of the Corporation's executive officers (including
the named executive officers) will be paid 66.7% in cash and 33.3% in Restricted
Units. In the case of all other officers, the portion of the awards that will be
paid in Restricted Units will vary from 25% to 33 1/3% of the officer's total
award.
<TABLE>
<CAPTION>
ESTIMATED EARNED AWARDS*
-------------------------------------
THRESHOLD TARGET MAXIMUM
$ $ $
--------- --------- ---------
<S> <C> <C> <C>
H. MARSHALL SCHWARZ..................................... 80,000 290,000 320,000
Chairman and Chief Executive Officer
JEFFREY S. MAURER....................................... 55,617 203,666 224,816
President and Chief Operating Officer
FREDERICK B. TAYLOR..................................... 55,617 203,666 224,816
Vice Chairman and Chief Investment Officer
JOHN M. DEIGNAN......................................... 32,033 118,833 131,233
Executive Vice President
PAUL K. NAPOLI.......................................... 32,033 118,833 131,233
Executive Vice President
All executive officers as a group....................... 325,816 1,198,249 1,322,882
(8 persons)
All other employees as a group (29 officers other than 379,005 1,499,668 1,659,762
executive officers).....................................
</TABLE>
---------------
* Amounts in the table are net of reductions equal to anticipated employer ESOP
contributions and supplemental ESOP contributions, as described above under
the caption "Payment of Awards," and assume the full achievement of all
individual performance goals.
35
<PAGE> 38
In addition to awards earned for 1995 under the Incentive Plan, all participants
in the Incentive Plan (including the named executive officers) will also be
eligible for awards under the 1990 Plan for the period from January 1, 1995 to
the date as of which the Reorganization became effective.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE APPROVAL OF
THE EXECUTIVE INCENTIVE PLAN.
V MISCELLANEOUS
OTHER MATTERS
The management of the Corporation does not know of any matters to be presented
at the Meeting other than those specifically set forth in the Notice of Special
Meeting of Shareholders. If any other matters properly come before the Meeting
or any adjournment thereof, the persons named in the accompanying form of proxy
and acting thereunder will vote in accordance with their best judgment with
respect to such matters.
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the 1996 Annual Meeting of
Shareholders must be received by the Corporation for possible inclusion in the
proxy statement and form of proxy relating to the 1996 meeting by December 18,
1995.
COST OF SOLICITATION
The expense of soliciting proxies will be borne by the Corporation. In addition
to the use of the mails, proxies may be solicited by personal interview, by
telephone, by facsimile or by telegraph. It is anticipated that banks, brokerage
firms and other institutions, nominees and fiduciaries will be requested to
forward the soliciting material to beneficial owners and to obtain
authorizations for the execution of proxies; and, if they in turn so request,
the Corporation will reimburse such banks, brokerage firms and other
institutions, nominees and fiduciaries for their expenses in forwarding such
material. Officers and regular employees of the Corporation and the Trust
Company also may solicit proxies without additional remuneration therefor. The
Corporation has retained Morrow & Co., Inc., New York, New York, to aid in the
solicitation of proxies for an estimated fee of $5,500.
Dated: September 18, 1995
Carol A. Strickland
Secretary
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<PAGE> 39
APPENDIX A
1995 STOCK OPTION PLAN
OF U.S. TRUST CORPORATION
AS ADOPTED EFFECTIVE SEPTEMBER 1, 1995
1. PURPOSE
The purpose of the 1995 Stock Option Plan of U.S. Trust Corporation is to
advance and promote the interests of U.S. Trust Corporation and its Affiliated
Companies by encouraging and enabling their officers to acquire common shares of
U.S. Trust Corporation. The Plan is intended as a means of attracting and
retaining outstanding management and promoting a close identity of interest
between management and U.S. Trust Corporation's shareholders.
2. DEFINITIONS
As used herein, the following terms shall have the following meanings:
"AFFILIATED COMPANIES" shall mean United States Trust Company of New York,
and each other direct or indirect subsidiary of the Corporation.
"BENEFICIARY" shall mean the person or persons designated by an Eligible
Employee in accordance with Section 9 to exercise any Option, or to receive any
amount, payable under the Plan upon the Eligible Employee's death.
"BOARD OF DIRECTORS" shall mean the Board of Directors of the Corporation.
"CHANGE IN CONTROL" shall mean that any of the following events has
occurred:
(i) 20% or more of the Common Shares has been acquired by any person (as
defined by Section 3(a)(9) of the Securities Exchange Act of 1934)
other than directly from the Corporation;
(ii) there has been a merger or equivalent combination after which 49% or
more of the voting shares of the surviving corporation is held by
persons other than former shareholders of the Corporation; or
(iii) 20% or more of the directors elected by shareholders to the Board of
Directors are persons who were not nominated by the Board of
Directors or the Executive Committee of the Board of Directors in
the most recent proxy statement of the Corporation;
provided, however, that notwithstanding anything in the Plan to the contrary, no
Change in Control shall be deemed to have occurred, and no rights arising upon a
Change in Control as provided in Sections 5(e)(v) or 5(i) shall exist, to the
extent that the Board of Directors so directs by resolution adopted prior to the
Change in Control, or not later than 45 days after the Change in Control if the
percentage of Common Shares acquired or directors elected under clause (i) or
(iii) of the foregoing definition of Change in Control shall be at least 20% but
less than 25%. Any resolution of the Board of Directors adopted in accordance
with the provisions of this definition directing that a Change in Control shall
be deemed not to have occurred for purposes of this Plan and that Sections
5(e)(v) or 5(i) or either of such Sections shall not become effective, may be
rescinded or countermanded at any time with or without retroactive effect.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
"COMMITTEE" shall mean the Compensation and Benefits Committee of the Board
of Directors.
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"COMMON SHARES" shall mean the common shares ($1.00 par value per share) of
the Corporation.
"CORPORATION" shall mean U.S. Trust Corporation.
"DETERMINED VALUE" shall mean (i) the highest price per Common Share paid
in connection with any Change in Control (including, without limitation, prices
paid in any subsequent merger or combination with any entity that acquires
control of the Corporation), or (ii) in the case of a Change in Control
occurring as a result of an event described in clause (iii) of the definition of
a Change in Control contained in this Section 2, the Average Market Value of a
Common Share during the 30-day period ending on the day preceding the occurrence
of such Change in Control. For this purpose, the "Average Market Value" of a
Common Share during such period shall mean the average of the mean between the
per-share high and low prices for the Corporation's Common Shares on each day
during such period, as quoted on the NASDAQ National Market System, or, if the
Corporation's Common Shares are not traded on such system, on such other
securities market or securities exchange on which such shares are traded as the
Committee shall determine.
"ELIGIBLE EMPLOYEE" shall mean any officer of the Corporation or any of its
Affiliated Companies at or above the rank of Vice President.
"INCENTIVE STOCK OPTION" shall mean an option to purchase Common Shares
that qualifies as an incentive stock option within the meaning of section 422 of
the Code.
"NONQUALIFIED STOCK OPTION" shall mean an option to purchase Common Shares
that does not qualify as an Incentive Stock Option.
"OPTION" shall mean an Incentive Stock Option or a Nonqualified Stock
Option granted to an Eligible Employee under the Plan.
"OPTION HOLDER" shall mean any Eligible Employee to whom an Option has been
granted, or with respect to any Option held by an Eligible Employee at the date
of his or her death, the Eligible Employee's Beneficiary.
"PLAN" shall mean the 1995 Stock Option Plan of U.S. Trust Corporation, as
set forth herein and as amended from time to time.
"RETIREMENT" shall mean an Eligible Employee's termination of employment
with the Corporation and its Affiliated Companies for any reason other than
death if, as of the date of the Eligible Employee's termination of employment,
(i) the Eligible Employee has attained age 65 or (ii)(A) the sum of
Participant's age and the number of his or her "Years of Service", as defined in
the 401(k) Plan and ESOP of United States Trust Company of New York and
Affiliated Companies, is at least equal to 80, and (B) the Committee has
consented to treating such termination of employment as a "Retirement" for
purposes of the Plan.
"VESTED PORTION" and "NON-VESTED PORTION" shall mean, respectively, with
respect to any Option as of any date, the portion of such Option that is
exercisable on such date, and the portion of such Option that is not exercisable
on such date, under the terms of the Plan and the Option.
3. MAXIMUM NUMBER OF COMMON SHARES AVAILABLE FOR OPTIONS
Notwithstanding any other provision of the Plan, the aggregate number of
Common Shares that may be issued pursuant to Options granted under the Plan
shall be limited to 850,000 Common Shares. In the event any Option granted under
the Plan shall expire or the Non-Vested Portion of any Option shall be
forfeited, the number of Common Shares no longer subject to such Option shall be
available for new grants of Options under the Plan. In the event of a
cancellation of an Option as provided in Section 5(i), the number of Common
Shares as to which such Option was canceled shall
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not again become available for use under the Plan. The limitation provided under
this Section 3 shall be subject to adjustment as provided in Section 6.
The Common Shares distributed under the Plan may be authorized and unissued
shares, shares held in the treasury of the Corporation, or shares purchased on
the open market by the Corporation at such time or times and in such manner as
it may determine.
4. GRANT OF OPTIONS
Subject to the provisions of the Plan, the Committee shall determine and
designate from time to time those Eligible Employees to whom Incentive Stock
Options, or Nonqualified Stock Options, or both, are to be granted and the
number of Common Shares that may be purchased under each Option so granted;
provided, however, that (i) the aggregate fair market value (determined at the
time the Option is granted) of the Common Shares with respect to which Incentive
Stock Options are exercisable for the first time by any Eligible Employee during
any calendar year (under all incentive stock option plans of the Eligible
Employee's employer corporation and its parent and subsidiary corporations)
shall not exceed $100,000; and (ii) the total number of Common Shares with
respect to which Options may be granted to any Eligible Employee during any
calendar year shall not exceed 100,000 Common Shares.
No Incentive Stock Option may be granted under this Plan after the
expiration of 10 years from the Effective Date of the Plan specified in Section
16, unless the shareholders of the Corporation shall have approved an extension
of the period for granting Incentive Stock Options under this Plan beyond such
date.
5. TERMS AND CONDITIONS OF OPTIONS
Each Option granted under the Plan shall be evidenced in writing in a form
approved by the Committee, and shall contain the following terms and conditions,
and such other terms and conditions as the Committee may deem appropriate:
(a) OPTION TERM. Each Option shall specify the period during which
the Option may be exercised (the "Option Term"). The Option shall provide
that the Option shall expire at the end of the Option Term. The Committee
may extend the Option Term, provided, however, that in the case of any
Option that the Committee previously determined to constitute an Incentive
Stock Option, no such extension shall be made to the extent it would
disqualify the Option as an Incentive Stock Option. In no case shall the
Option Term, including any such extensions, end later than (i) ten years
from the date of grant, or (ii) in the case of Incentive Stock Options
granted to an Eligible Employee who, at the time the Incentive Stock Option
is granted, owns shares possessing more than 10 percent of the total
combined voting power of all classes of shares of his or her employer
corporation or of its parent or subsidiary corporation (a "Ten Percent
Shareholder"), five years from the date of grant.
(b) PURCHASE PRICE. The price per Common Share at which Common Shares
subject to any Option may be purchased shall be determined by the Committee
at the time any Option is granted, and shall be not less than (i) the fair
market value, or (ii) in the case of Incentive Stock Options granted to a
Ten Percent Shareholder, 110 percent of the fair market value (but in no
event less than the par value) of a Common Share on the date the Option is
granted, as determined by the Committee.
(c) EXERCISE OF OPTION. Except as otherwise provided under the Plan,
no part of any Option may be exercised until the Eligible Employee to whom
the Option was granted shall have remained in the employ of the Corporation
or any of its Affiliated Companies for such period after the date on which
the Option is granted as the Committee may specify in the Option, and the
Option may provide for exercisability in installments.
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(d) PAYMENT OF PURCHASE PRICE UPON EXERCISE. Each Option shall
provide that the purchase price of the Common Shares as to which an Option
shall be exercised shall be paid to the Corporation at the time of exercise
either in cash or in such other consideration as the Committee deems
appropriate, including, but not limited to, Common Shares already owned by
the Option Holder having a total fair market value, as determined by the
Committee, equal to the purchase price, or a combination of cash and Common
Shares having a total fair market value, as so determined, equal to the
purchase price. The Committee in its sole discretion may also provide that
the purchase price may be paid by delivering a properly executed exercise
notice in a form approved by the Committee together with irrevocable
instructions to a broker to promptly deliver to the Corporation the amount
of the applicable sale or loan proceeds to pay the purchase price.
(e) EXERCISE IN THE EVENT OF TERMINATION OF EMPLOYMENT OR CHANGE IN
CONTROL. In the event an Eligible Employee's employment with the
Corporation and its Affiliated Companies should terminate, or if a Change
in Control should occur, Options granted to the Eligible Employee may be
exercised in accordance with the following provisions:
(i) If an Eligible Employee's employment terminates as a result of
Retirement, such Eligible Employee shall be entitled to exercise
each Option held by the Eligible Employee at the date of his or
her termination of employment (A) with respect to the Vested
Portion of such Option, at any time or from time to time during
his or her Post-Termination Exercise Period (as defined below)
and (B) with respect to the Non-Vested Portion of such Option, at
any time or from time to time on or after the date or dates
during the Eligible Employee's Post-Termination Exercise Period
on which such portion of the Option becomes exercisable under the
terms of the Option. If such Eligible Employee should die prior
to the end of his or her Post-Termination Exercise Period, the
Non-Vested Portion, if any, of each Option held by the Eligible
Employee at the date of his or her death shall cease to be
exercisable, and shall be forfeited, as of such date; and the
Vested Portion of each such Option may be exercised by the
Eligible Employee's Beneficiary at any time or from time to time
after the Eligible Employee's death until the earlier of the
second anniversary of such date or the date on which the Option
Term for such Option expires.
(ii) If an Eligible Employee's employment terminates for any reason
other than Retirement, the Non-Vested Portion of each Option
held by the Eligible Employee at the date of his or her
termination of employment shall cease to be exercisable, and
shall be forfeited, as of such date; and the Eligible Employee
may exercise the Vested Portion of each such Option at any time
and from time to time during his or her Post-Termination
Exercise Period. If an Eligible Employee whose employment has
terminated as a result of permanent disability should die before
the end of his or her Post-Termination Exercise Period, the
Vested Portion of each Option held by the Eligible Employee at
the date of his or her death shall continue to be exercisable by
the Eligible Employee's Beneficiary at any time or from time to
time after the date of the Eligible Employee's death until the
earlier of the second anniversary of such date or the date on
which the Option Term for such Option expires.
(iii) Notwithstanding the foregoing, the Committee may, in its sole
discretion, determine that any part or all of the Non-Vested
Portion of any Option held by an Eligible Employee at the date
of his or her termination of employment shall not be forfeited,
and may continue to be exercised by the Eligible Employee (or in
the event of his or her death by his or her Beneficiary) for
such period after such date and prior to the expiration of the
Option Term for such Option, as the Committee shall specify in
such determination.
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(iv) For purposes of the foregoing, an Eligible Employee's
Post-Termination Exercise Period shall mean the period beginning
on the date of his or her termination of employment and ending
(A) on the fifth anniversary of such date, if the Eligible
Employee's employment has terminated as a result of Retirement,
(B) on the second anniversary of such date, if the Eligible
Employee's employment has terminated as a result of his or her
death, (C) on the first anniversary of such date, if the Eligible
Employee's employment has terminated as a result of his or her
permanent disability, (D) on the 90th day following such date, if
the Eligible Employee's employment has terminated for any reason
other than Retirement, death or permanent disability.
Notwithstanding the foregoing, an Eligible Employee's
Post-Termination Exercise Period with respect to any Option shall
end no later than the date on which the Option Term for such
Option expires.
(v) Notwithstanding any other provision herein to the contrary (but
subject to the proviso contained in the definition of "Change in
Control" in Section 2), upon the occurrence of a Change in
Control, the Non-Vested Portion of any Option held by an Eligible
Employee who is in the employ of the Corporation or any of its
Affiliated Companies on the date on which such Change in Control
occurs, and the Non-Vested Portion of any Option held on such
date by any Eligible Employee whose employment terminated prior
to such date as a result of Retirement, shall become immediately
and fully exercisable.
(f) NONTRANSFERABILITY OF OPTIONS. Any Option granted to an Eligible
Employee under the Plan shall be nontransferable and may be exercised
during the Eligible Employee's lifetime only by the Eligible Employee.
(g) INVESTMENT REPRESENTATION. Each Option may provide that, upon
demand by the Committee for such a representation, the Option Holder shall
deliver to the Committee, at the time of any exercise of an Option or
portion thereof, a written representation that the shares to be acquired
upon such exercise are to be acquired for investment and not for resale or
with a view to the distribution thereof. Upon such demand, delivery of such
representation prior to the delivery of any Common Shares issued upon
exercise of an Option shall be a condition precedent to the right of the
Option Holder to purchase any Common Shares. In the event certificates are
delivered for any Common Shares with respect to which such an investment
representation has been obtained, the Committee may cause a legend or
legends to be placed on such certificates to make appropriate reference to
such representation and to restrict transfer in the absence of compliance
with applicable federal or state securities laws.
(h) OTHER OPTION PROVISIONS. Each Option may contain such other
provisions, not inconsistent with the provisions of the Plan, as the
Committee may, from time to time, determine. Without limiting the
foregoing, the Committee may require an Eligible Employee to agree, as a
condition to receiving an Option, that part or all of any Options
previously granted to such Eligible Employee be terminated; and the
Committee may include in any Option provisions under which the Option
(including the Vested Portion thereof) may be canceled by the Corporation
at any time, and the Eligible Employee's right to exercise the Option will
thereupon be forfeited, in the event that the Committee determines that:
(i) the Eligible Employee has committed fraud, embezzlement or other act of
dishonesty involving the Corporation or any of its Affiliated Companies,
(ii) the Eligible Employee's employment has been terminated as a result of
discharge for cause, (iii) the Eligible Employee has at any time furnished
or divulged to any other person, corporation or business entity, or has
himself or herself used, any information of a proprietary nature owned by
the Corporation or any of its Affiliated Companies that is in the nature of
confidential business information or trade secrets, other than as required
in the course of his or her employment by the Corporation or any of its
Affiliated Companies, (iv) the Eligible Employee has at any time induced or
attempted to
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induce any officer of the Corporation or any of its Affiliated Companies to
terminate such officer's employment with the Corporation or any of its
Affiliated Companies; (v) the Eligible Employee has at any time induced or
attempted to induce any customer of, or any other person or entity having
business relations with the Corporation or any of its Affiliated Companies
to terminate or curtail such relationship with the Corporation or any of
its Affiliated Companies; or (vi) the Eligible Employee has at any time
engaged in any other conduct directly and materially detrimental to the
business of the Corporation or any of its Affiliated Companies. Each Option
shall also specify that the Option granted thereunder shall be subject to
all applicable provisions of the Plan.
(i) CANCELLATION OF OPTIONS UPON A CHANGE IN CONTROL. Upon the
occurrence of a Change in Control, all Options that have not been fully
exercised, or that have not expired or that have not been forfeited, prior
to the date of such Change in Control shall be cancelled. In the event of
any such cancellation, the Corporation's obligation in respect of each such
Option shall be discharged by payment to the Eligible Employee of a single
cash lump sum (reduced by any taxes withheld pursuant to Section 8) in an
amount equal to the excess, if any, of the Determined Value of the Common
Shares subject to the Option or portion thereof so cancelled over the
aggregate purchase price of such shares as set forth in the Option;
provided, however, that no such payment shall be made with respect to any
Option granted less than six months prior to the date of such Change in
Control to any Eligible Employee who is subject to Section 16 of the
Securities Exchange Act of 1934. All such amounts shall be payable as soon
as practicable following the Change in Control. In the case of any such
Option that is to become exercisable in full upon the occurrence of a
Change in Control pursuant to Section 5(e)(v) above, the holder of such
Option shall be provided an opportunity to exercise such option at such
time prior to the time the Change in Control becomes effective, and in
accordance with such procedures, as the Committee shall determine in its
discretion.
6. CERTAIN ADJUSTMENTS TO PLAN SHARES
In the event of any change in the Common Shares by reason of any stock
dividend, recapitalization, reorganization, merger, consolidation, split-up,
combination or exchange of shares, or any rights offering to purchase Common
Shares at a price substantially below fair market value, or any similar change
affecting the Common Shares, the number and kind of shares available for the
grant of Options, and the number and kind of shares subject to outstanding
Options and the purchase price per share thereof shall be appropriately adjusted
consistent with such change in such manner as the Committee, in its sole
discretion, may deem equitable to prevent substantial dilution or enlargement of
the rights granted to, or available for, Option Holders hereunder. Any
adjustment of an Incentive Stock Option pursuant to this Section shall be made
only to the extent it would not constitute a "modification" of such Option
within the meaning of section 424(h)(3) of the Code. The Committee shall give
notice to each Option Holder of any adjustment made pursuant to this Section
and, upon such notice, such adjustment shall be effective and binding for all
purposes.
7. LISTING AND QUALIFICATION OF COMMON SHARES
The Corporation, in its discretion, may postpone the issuance, delivery,
distribution or release of Common Shares upon any exercise of an Option until
completion of such stock exchange listing or other qualification of such shares
under any state or federal law, rule or regulation as the Corporation may
consider appropriate, and may require any Option Holder to make such
representations and furnish such information as it may consider appropriate in
connection with the issuance or delivery of the shares in compliance with
applicable laws, rules and regulations.
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8. TAXES
The Corporation or any of its Affiliated Companies may make such provisions
and take such steps as it may deem necessary or appropriate for the withholding
of all federal, state and local taxes required by law to be withheld with
respect to Options granted under the Plan and the exercise thereof including,
but not limited to (i) deducting the amount so required to be withheld from any
other amount then or thereafter payable to an Option Holder, and/or (ii)
requiring an Option Holder to pay to the Corporation or any of its Affiliated
Companies the amount so required to be withheld as a condition of the issuance,
delivery, distribution or release of any Common Shares.
9. DESIGNATION AND CHANGE OF BENEFICIARY
Each Eligible Employee to whom an Option has been granted shall file with
the Committee a written designation of one or more persons as the Beneficiary
who shall be entitled to exercise any Options, or to receive any amount, payable
under the Plan upon his or her death. An Eligible Employee may, from time to
time, revoke or change his or her Beneficiary designation without the consent of
any previously designated Beneficiary by filing a new designation with the
Committee. The last such designation received by the Committee shall be
controlling; provided, however, that no designation, or change or revocation
thereof, shall be effective unless received by the Committee prior to the
Eligible Employee's death, and in no event shall it be effective as of a date
prior to such receipt. If at the date of an Eligible Employee's death, there is
no designation of a Beneficiary in effect for the Eligible Employee pursuant to
the provisions of this Section 9, or if no Beneficiary designated by the
Eligible Employee in accordance with the provisions hereof survives to exercise
any Options that become exercisable, or to receive any amount that becomes
payable, under the Plan by reason of the Eligible Employee's death, the Eligible
Employee's estate shall be treated as the Eligible Employee's Beneficiary for
all purposes.
10. PAYMENTS TO PERSONS OTHER THAN OPTION HOLDER
If the Committee shall find that any Option Holder to whom any amount, or
any Common Shares, is payable under the Plan is unable to care for his or her
affairs because of illness, accident or legal incapacity, then if the Committee
so directs, such amount, or such Common Shares, may be paid to such Option
Holder's spouse, child or other relative, an institution maintaining or having
custody of such person, or any other person deemed by the Committee to be a
proper recipient on behalf of such Option Holder, unless a prior claim therefor
has been made by a duly appointed legal representative of the Option Holder. Any
payment made under this Section 10 shall be a complete discharge of the
liability of the Corporation with respect to such payment.
11. RIGHTS OF OPTION HOLDERS
An Option Holder's rights and interests under the Plan shall be subject to
the following provisions:
(a) An Option Holder shall have the status of a general unsecured
creditor of the Corporation with respect to his or her right to receive any
payment under the Plan. The Plan shall constitute a mere promise by the
Corporation to make payments in the future of the benefits provided for
herein. It is intended that the arrangements reflected in this Plan for the
making of any payment required to be made hereunder shall be treated as
unfunded for tax purposes, as well as for purposes of any applicable
provisions of Title I of ERISA.
(b) An Option Holder's rights to any payment under the Plan shall not
be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment, or garnishment by creditors of
the Option Holder or his or her beneficiary.
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(c) Neither the Plan nor any action taken hereunder shall be construed
as giving any Option Holder any right to be retained in the employment of
the Corporation or any of its Affiliated Companies.
(d) An Option Holder shall not have any rights as a shareholder with
respect to any Common Shares that are subject to any Option held by the
Option Holder prior to the date as of which such shares are issued to the
Option Holder pursuant to his or her exercise of such Option.
12. ADMINISTRATION
The Plan shall be administered by the Committee. A majority of the members
of the Committee shall constitute a quorum. The Committee may act at a meeting,
including a telephone meeting, by action of a majority of the members present,
or without a meeting by unanimous written consent. In addition to the
responsibilities and powers assigned to the Committee elsewhere in the Plan, the
Committee shall have the authority, in its discretion but subject to the
provisions of the Plan, to:
(i) select the Eligible Employees to whom Options are to be granted;
(ii) determine the number of shares to be covered by each Option
granted, the time or times when and the manner in which each Option
may be exercised, and the purchase price per share at which each
Option shall be exercised;
(iii) determine whether an Option that is granted to an Eligible Employee
shall constitute a Nonqualified Stock Option or an Incentive Stock
Option;
(iv) amend any Option, with the consent of the Option Holder;
(v) establish from time to time guidelines or regulations for the
administration of the Plan, interpret the Plan, cause appropriate
records to be established, and make all determinations and take all
other actions considered necessary or advisable for the
administration of the Plan.
All decisions, actions or interpretations of the Committee under the Plan
shall be final, conclusive and binding upon all parties.
No member of the Committee shall be personally liable by reason of any
contract or other instrument executed by such member or on his or her behalf in
his or her capacity as a member of the Committee nor for any mistake of judgment
made in good faith, and the Corporation shall indemnify and hold harmless each
member of the Committee, and each employee, officer, director or trustee of the
Corporation or any of its Affiliated Companies to whom any duty or power
relating to the administration or interpretation of the Plan may be allocated or
delegated, against any cost or expense (including counsel fees) or liability
(including any sum paid in settlement of a claim with the approval of the Board
of Directors) arising out of any act or omission to act in connection with the
Plan unless arising out of such person's own fraud or bad faith.
13. AMENDMENT OR TERMINATION
Except as to matters that in the opinion of the Corporation's legal counsel
require shareholder approval, any provision of the Plan may be modified as to an
Option Holder by an individual agreement approved by the Board of Directors. The
Board of Directors may, with prospective or retroactive effect, amend, suspend
or terminate the Plan or any portion thereof at any time; provided, however,
that (i) no amendment that would materially increase the cost of the Plan to the
Corporation may be made by the Board of Directors without the approval of the
shareholders of the Corporation and (ii) no amendment, suspension or termination
of the Plan shall deprive any Option Holder of any rights to Options previously
granted under the Plan without his or her written consent. Any amendment that
the Board of Directors would be permitted to make pursuant to the
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preceding sentence may also be made by the Committee where appropriate to
facilitate the administration of the Plan or to comply with applicable law or
any applicable rules and regulations of government authorities.
14. SUCCESSOR CORPORATION
The obligations of the Corporation under the Plan shall be binding upon any
successor corporation or organization resulting from the merger, consolidation
or other reorganization of the Corporation, or upon any successor corporation or
organization succeeding to substantially all of the assets and business of the
Corporation. The Corporation agrees that it will make appropriate provision for
the preservation of Option Holders' rights under the Plan in any agreement or
plan which it may enter into or adopt to effect any such merger, consolidation,
reorganization or transfer of assets.
15. GOVERNING LAW
The Plan shall be governed by and construed in accordance with the laws of
the State of New York, without reference to the principles of conflicts of law
thereof.
16. EFFECTIVE DATE
The Plan shall be effective as of September 1, 1995, subject, however, to
approval by the holders of a majority of the outstanding Common Shares of the
Corporation entitled to vote thereon at the first meeting of the Corporation's
shareholders to be held after September 1, 1995. The Committee may grant Options
as provided herein prior to such shareholder approval, subject to such approval
being obtained at such first meeting.
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APPENDIX B
EXECUTIVE INCENTIVE PLAN
OF U. S. TRUST CORPORATION
AS ADOPTED EFFECTIVE SEPTEMBER 1, 1995
1. PURPOSE
The purpose of the Executive Incentive Plan of U.S. Trust Corporation is to
(i) encourage greater focus on performance among the key executives of U.S.
Trust Corporation and its Affiliated Companies by relating a significant portion
of their total compensation to the achievement of annual financial and strategic
objectives, and (ii) to promote on the part of such executives an increased
level of ownership of the Common Shares of the Corporation by providing for a
significant portion of their awards under the Plan to be paid in the form of the
Corporation's Common Shares.
The provisions of the Plan under which payment with respect to Restricted
Units granted to a Participant may be deferred are intended to constitute an
unfunded plan of deferred compensation for "a select group of management or
highly compensated employees" within the meaning of Sections 201(2), 301(a)(3)
and 401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA").
2. DEFINITIONS
As used herein, the following terms shall have the following meanings:
"AFFILIATED COMPANIES" shall mean United States Trust Company of New York,
and each other direct or indirect subsidiary of the Corporation.
"AVERAGE MARKET VALUE" shall mean, with respect to one Common Share as of
any date or with respect to any period, the mean between the per-share high and
low prices for the Corporation's Common Shares on such date, or the average of
the mean between such prices on each day during such period, as quoted on the
NASDAQ National Market System, or, if the Corporation's Common Shares are not
traded on such system, on such other securities market or securities exchange on
which such shares are traded as the Committee shall determine.
"AWARD" shall mean a payment earned by a Participant in accordance with the
provisions of the Plan.
"BENEFICIARY" shall mean the person or person designated by a Participant
in accordance with Section 11 to receive any amount, or any Common Shares,
payable under the Plan upon the Participant's death.
"BOARD OF DIRECTORS" shall mean the Board of Directors of the Corporation.
"CHANGE IN CONTROL" shall mean that any of the following events has
occurred:
(i) 20% or more of the Corporation's Common Shares has been acquired by
any person (as defined by Section 3(a)(9) of the Securities Exchange
Act of 1934) other than directly from the Corporation;
(ii) there has been a merger or equivalent combination after which 49% or
more of the voting shares of the surviving corporation is held by
persons other than former shareholders of the Corporation; or
(iii) 20% or more of the directors elected by shareholders to the Board of
Directors are persons who were not nominated by the Board of
Directors or the Executive Committee of the Board of Directors in
the most recent proxy statement of the Corporation;
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provided, however, that notwithstanding anything in the Plan to the contrary, no
Change in Control shall be deemed to have occurred, and no rights arising upon a
Change in Control as provided in Section 9 shall exist, to the extent that the
Board of Directors so directs by resolution adopted prior to the Change in
Control, or not later than 45 days after the Change in Control if the percentage
of Common Shares acquired or directors elected under clause (i) or (iii) of the
foregoing definition of Change in Control shall be at least 20% but less than
25%. Any resolution of the Board of Directors adopted in accordance with the
provisions of this definition directing that a Change in Control shall be deemed
not to have occurred for purposes of this Plan and that Section 9 shall not
become effective, may be rescinded or countermanded at any time with or without
retroactive effect.
"COMMITTEE" shall mean the Compensation and Benefits Committee of the Board
of Directors.
"COMMON SHARES" shall mean the common shares ($1.00 par value per share) of
the Corporation.
"CORPORATION" shall mean U.S. Trust Corporation.
"DETERMINED VALUE" shall mean (i) the highest price per Common Share paid
in connection with any Change in Control (including, without limitation, prices
paid in any subsequent merger or combination with any entity that acquires
control of the Corporation), or (ii) in the case of a Change in Control
occurring as a result of an event described in clause (iii) of the definition of
a Change in Control contained in this Section 2, the Average Market Value of a
Common Share during the 30-day period ending on the day preceding the occurrence
of such Change in Control.
"ESOP CONTRIBUTION" shall mean the ESOP Contribution as defined under the
401(k) Plan.
"EXECUTIVE DEFERRED COMPENSATION PLAN" shall mean the Executive Deferred
Compensation Plan of U.S. Trust Corporation.
"401(K) PLAN" shall mean the 401(k) Plan and ESOP of United States Trust
Company of New York and Affiliated Companies.
"PARTICIPANT" shall mean an officer of the Corporation or any of its
Affiliated Companies who is selected to participate in the Plan.
"PLAN" shall mean the Executive Incentive Plan of U.S. Trust Corporation,
as set forth herein and as amended from time to time.
"PLAN YEAR" shall mean, initially, the period beginning on September 1,
1995 and ending on December 31, 1995, and thereafter, each calendar year.
"RESTRICTED UNIT" shall mean a unit of measurement equivalent to one Common
Share, with none of the attendant rights of a shareholder of such share,
including, without limitation, the right to vote such share and the right to
receive dividends thereon, except to the extent otherwise specifically provided
herein.
3. MAXIMUM NUMBER OF COMMON SHARES OF STOCK AVAILABLE FOR AWARDS
Notwithstanding any other provision of the Plan, the number of Common
Shares that may be distributed with respect to Restricted Units granted under
the Plan shall be limited to 120,000 Common Shares, plus a number of Common
Shares equal to the total number of additional Restricted Units credited to
Participants with respect to dividends paid on Common Shares pursuant to the
terms of the agreements evidencing their grants, as provided in Section
6(d)(vii). In the event that any Restricted Units initially granted or
thereafter credited to a Participant shall be forfeited, the number of Common
Shares no longer payable with respect to the Restricted Units so forfeited shall
thereupon be released and shall thereafter be available for new grants of
Restricted Units under the Plan. The limitation provided under this Section 3
shall be subject to adjustment as provided in Section 7.
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The Common Shares distributed under the Plan may be authorized and unissued
shares, shares held in the treasury of the Corporation, or shares purchased on
the open market by the Corporation at such time or times and in such manner as
it may determined. The Corporation shall be under no obligation to acquire
Common Shares for distribution to Participants before payment in Common Shares
is due.
4. PARTICIPATION
Participants in the Plan shall be limited to those officers of the
Corporation and its Affiliated Companies who the Committee, in its sole
discretion, selects to participate in the Plan.
The Committee may select as a Participant for any Plan Year, any officer
who, in the sole judgment of the Committee, has made contributions in the past,
and who is expected to continue to make contributions in the future, that are
critical to the success of the Corporation and its Affiliated Companies and to
the growth of their business.
Any person who has been selected as a Participant for any Plan Year shall
continue to be a Participant in the Plan for each subsequent Plan Year during
the period of his or her employment, subject, however, to the Committee's right
to terminate such individual's participation in the Plan as of any Plan Year
commencing after the date on which the Committee makes its determination to
terminate such individual's participation.
5. AWARDS
Awards for any Plan Year shall be made in accordance with the following
provisions:
(a) At the start of the Plan Year, the Committee shall establish (i)
the corporate performance goals (the "Performance Goals") which will apply
in determining the Awards for such year, (ii) the aggregate amount that
will be available for Awards for such year if such Performance Goals are
achieved (the "Target Awards Pool"), and (iii) the percentages of the
Target Awards Pool that will in fact be available for Awards for the year
based on the level of achievement of such Performance Goals, which
percentages may be greater than 100% if the Performance Goals are exceeded
and less than 100% if the Performance Goals have not been fully achieved
(the "Actual Awards Pool").
(b) The Performance Goals established for the year shall be based upon
achievement of a specified level of earnings per share of the Corporation
and/or upon such other corporate objectives as the Committee shall
determine. The Committee shall have the authority at any time to adjust the
Performance Goals, or performance measurement standards, for the Plan Year
as it deems equitable in recognition of (i) extraordinary or nonrecurring
events experienced by the Corporation (or by any other corporation whose
performance is relevant to the determination of the amount of any Award
hereunder) during the Plan Year, (ii) changes in applicable accounting
rules or principles or changes in the Corporation's (or in any other such
corporation's) methods of accounting during the Plan Year, (iii) the
occurrence of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, merger, consolidation, rights offering, or
any other change in the capital structure of the Corporation (or of any
other such corporation), or (iv) such other events, changes, occurrences,
conditions or circumstances as in the Committee's judgment, shall warrant
such adjustment.
(c) The Committee shall determine the amount of the Target Awards Pool
as a percentage or percentages of the aggregate base salary earned for the
year while a Participant of all Participants, either individually or by
categories of Participants, provided that the Committee may, in its sole
discretion, also apply such percentage or percentages to other current or
deferred compensation and determine the year for which such deferred
compensation shall be counted.
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(d) At the end of the Plan Year, the Committee shall determine the
extent to which the Performance Goals for the year have been met and, based
thereon, the amount of the Actual Awards Pool. The Committee shall also
determine the amount of the Award, if any, earned by each Participant for
the year, based on the level of the Participant's achievement of the goals
and objectives established for the Participant at the start of the Plan
Year. In the case of all Participants other than the Chief Executive
Officer, the individual goals for each Plan Year shall be set, and the
Participant's performance relative to such goals will be measured, by the
Committee based upon the recommendations of the Chief Executive Officer.
(e) The Committee may, in its discretion, make Awards to Participants
in an aggregate amount less than the amount of the Actual Awards Pool. The
Committee may also, in its discretion, allocate any portion of the Actual
Awards Pool for use in making special additional Awards to particular
Participants.
(f) An individual who is a Participant for less than a full year shall
receive such portion of an Award, if any, for that year as the Committee
shall determine.
6. PAYMENT OF AWARDS
The amount payable hereunder to a Participant with respect to an Award
earned for any Plan Year shall be determined in accordance with the following
provisions:
(a) The amount payable with respect to a Participant's Award for a
Plan Year shall be the total amount of the Award earned by the Participant,
reduced by the sum of (i) the amount of any ESOP Contribution to be made on
behalf of the Participant under the 401(k) Plan for the "Plan Year" (as
defined in the 401(k) Plan) corresponding to such Plan Year, and (ii) the
Supplemental ESOP Contribution amount to be credited to the Participant's
account under the Executive Deferred Compensation Plan for such Plan Year,
in either case with respect to the base salary of such Participant that was
taken into account in determining the Target Awards Pool for that Plan
Year.
(b) The amount payable with respect to a Participant's Award, as
determined under (a) above, shall be payable partly in cash and partly in
the form of Restricted Units (the portions so payable are hereinafter
referred to, respectively, as the "Cash Portion", and the "Restricted Units
Portion", of the Participant's Award), in such percentages as the Committee
in its discretion shall determine; provided, however, that the Restricted
Units Portion shall be equal to at least 25%, and shall not exceed 33 1/3%,
of the total amount so payable with respect to the Participant's Award.
Notwithstanding the foregoing, the 25% minimum referred to in the preceding
sentence shall be reduced in such manner as the Committee shall determine
in its discretion, to the extent necessary in order for the aggregate
number of Restricted Units granted with respect to Awards made to
Participants hereunder for any Plan Year not to exceed 80,000 Restricted
Units.
(c) The number of Restricted Units to be granted to a Participant with
respect to the Restricted Units Portion of the Participant's Award shall be
determined by dividing the amount of the Restricted Units Portion by the
Average Market Value of one Common Share on the date on which the Committee
makes its determination of the Awards earned by Participants for the Plan
Year in question.
(d) The grant of Restricted Units with respect to the Restricted Units
Portion of a Participant's Award for any Plan Year shall be evidenced by a
written agreement between the Corporation and the Participant in a form
approved by the Committee. In addition to including such other terms and
conditions as the Committee may require, the agreement shall
(i) specify the number of Restricted Units granted to the Participant,
and the date of grant;
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(ii) provide for such Restricted Units to become vested on the fifth
anniversary of the date of grant, or if earlier, on the date of
the Participant's death, disability or retirement at age 65 (the
"Vesting Date" for the Participant's Restricted Units);
(iii) provide for the forfeiture of the Participant's Restricted Units
in the event of his or her termination of employment prior to the
Vesting Date for such Restricted Units for any reason other than
the Participant's death, disability or retirement at age 65,
except to the extent the Committee in its discretion otherwise
determines;
(iv) require that payment with respect to the Participant's Restricted
Units be made in the form of Common Shares;
(v) provide for such payment to be made as soon as practicable after
the Vesting Date for such Restricted Units;
(vi) permit the Participant to elect to defer payment with respect to
such Restricted Units upon such terms and conditions as are set
forth in such agreement; and
(vii) provide for the Participant to be credited with an additional
number of Restricted Units in respect of dividends paid on the
Corporation's Common Shares during the period from the date of
grant to the date on which payment with respect to the
Participant's Restricted Units is made in full.
(e) The Cash Portion of a Participant's Award for any Plan Year shall
be paid in the form of a single lump sum cash payment as soon as
practicable after the end of such Plan Year, except to the extent that the
Participant (i) has elected, under the applicable provisions of the 401(k)
Plan, to have any part of such portion of such Award reduced, and to have
an amount equal to such part contributed to the 401(k) Plan on the
Participant's behalf and/or (ii) has elected, under the applicable
provisions of the Executive Deferred Compensation Plan, to defer any part
of such portion of such Award.
(f) With respect to that part of the Cash Portion of any Award that is
subject to a Participant's election under the 401(k) Plan, an amount equal
to such part of the Cash Portion shall be contributed to the 401(k) Plan on
behalf of the Participant; and thereupon, the obligation of the Corporation
and its Affiliated Companies with respect to payment of such part of the
Cash Portion of the Award shall be fully discharged. However, no such
contribution shall be made to the extent it would cause any limitation
applicable under the 401(k) Plan to be exceeded.
(g) With respect to that part of the Cash Portion of any Award that is
subject to a Participant's election under the Executive Deferred
Compensation Plan, the obligation of the Corporation and its Affiliated
Companies under this Plan with respect to payment of such part of the Cash
Portion of the Award shall be fully discharged upon the crediting of such
part of the Cash Portion of the Award to the Participant's account under
the Executive Deferred Compensation Plan in accordance with the applicable
provisions of such Plan.
(h) All liabilities in respect of the Cash Portion of Awards earned by
Participants under the Plan shall be discharged by the respective
Affiliated Companies employing such Participants.
7. CERTAIN ADJUSTMENTS TO PLAN SHARES
In the event of any change in the Common Shares by reason of any stock
dividend, recapitalization, reorganization, merger, consolidation, split-up,
combination or exchange of shares, or any rights offering to purchase Common
Shares at a price substantially below fair market value, or any similar change
affecting the Common Shares, the number and kind of shares represented by
Restricted Units shall be appropriately adjusted consistent with such change in
such manner as the Committee, in its sole discretion, may deem equitable to
prevent substantial dilution or enlargement
B-5
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of the rights granted to, or available for, the Participants hereunder. The
Committee shall give notice to each Participant of any adjustment made pursuant
to this Section and, upon such notice, such adjustment shall be effective and
binding for all purposes.
8. LISTING AND QUALIFICATION OF COMMON SHARES
The Corporation, in its discretion, may postpone the issuance, delivery, or
distribution of Common Shares pursuant to a grant of Restricted Units until
completion of such stock exchange listing or other qualification of such shares
under any state or federal law, rule or regulation as the Corporation may
consider appropriate, and may require any Participant or Beneficiary to make
such representations and furnish such information as it may consider appropriate
in connection with the issuance or delivery of the shares in compliance with
applicable laws, rules and regulations.
9. CHANGE IN CONTROL
Notwithstanding any other provision in the Plan to the contrary (but
subject to the proviso contained in the definition of "Change in Control" in
Section 2), upon the occurrence of a Change in Control, the following provisions
shall apply.
(a) All Performance Goals and individual goals and objectives with
respect to the Plan Year in which the Change in Control occurs (the "Year
of Change") shall be deemed to have been attained to the full and maximum
extent, and the Actual Awards Pool for the Year of Change shall be
determined by multiplying the Target Awards Pool for such year by the
highest percentage thereof established by the Committee under Section
5(a)(iii) for determining the amount of the Actual Awards Pool for such
year.
(b) Unless another formula shall have been designated by the Committee
prior to the Change in Control, each Participant shall be allocated a
portion of the Actual Awards Pool for the Year of Change, as determined
under (a) above, equal to the amount of such Actual Awards Pool, multiplied
by a fraction, the numerator of which is the portion of the anticipated
annual compensation of the Participant which was taken into account by the
Committee in determining the Target Awards Pool for the Year of Change, and
the denominator of which is the sum of all such amounts.
(c) As soon as practicable following the Change in Control, all Awards
which are deemed to have been earned to the full and maximum extent upon
the occurrence of the Change in Control shall be payable in full in single
cash lump sums, reduced by any taxes withheld pursuant to Section 10 and by
the amount of any ESOP Contributions to be made on behalf of Participants
under the 401(k) Plan for the Year of the Change.
(d) No Awards payable in accordance with this Section shall be
forfeitable on account of a Participant's termination of employment upon or
following the Change in Control.
(e) All Restricted Units granted or credited to a Participant that had
not previously become vested shall become vested upon the occurrence of the
Change in Control.
(f) The Corporation shall make payment to each Participant with
respect to all of the Restricted Units standing to his or her credit at the
time of the Change in Control, including all Restricted Units subject to
any deferral elections made by the Participant as provided in Section
6(d)(vi). The amount to be paid to each Participant shall be an amount
determined by multiplying the aggregate number of Restricted Units then
standing to the Participant's credit by the Determined Value of one Common
Share. All amounts payable to Participants pursuant to this Section 9(f),
reduced by any taxes withheld pursuant to Section 10, shall be paid to such
Participants as soon as practicable following the Change in Control.
B-6
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10. TAXES
The Corporation or any of its Affiliated Companies may make such provisions
and take such steps as it may deem necessary or appropriate for the withholding
of all federal, state and local taxes required by law to be withheld with
respect to amounts payable under the Plan including, but not limited to (i)
deducting the amount so required to be withheld from any other amount then or
thereafter payable to a Participant or Beneficiary, (ii) reducing the payment
otherwise required to be deferred pursuant to a Participant's election under
Section 6 (d)(vi) with respect to his or her Restricted Units, by the amount so
required to be withheld with respect to such deferred payment, and/or (iii)
requiring a Participant or Beneficiary to pay to the Corporation or any of its
Affiliated Companies the amount so required to be withheld as a condition of the
issuance, delivery, or distribution of any Common Shares. The Committee may
permit such amount to be paid in Common Shares previously owned by the
Participant, or a portion of the Common Shares that otherwise would be
distribution to such Participant in respect to his or her vested Restricted
Units, or a combination of cash and such Common Shares.
11. DESIGNATION AND CHANGE OF BENEFICIARY
Each Participant shall file with the Committee a written designation of one
or more persons as the Beneficiary who shall be entitled to receive any amount,
or any Common Shares, payable under the Plan upon his or her death. A
Participant may, from time to time, revoke or change his or her Beneficiary
designation without the consent of any previously designated Beneficiary by
filing a new designation with the Committee. The last such designation received
by the Committee shall be controlling; provided, however, that no designation,
or change or revocation thereof, shall be effective unless received by the
Committee prior to the Participant's death, and in no event shall it be
effective as of a date prior to such receipt. If at the date of a Participant's
death, there is no designation of a Beneficiary in effect for the Participant
pursuant to the provisions of this Section 11, or if no Beneficiary designated
by the Participant in accordance with the provisions hereof survives to receive
any amount, or any Common Shares, payable under the Plan by reason of the
Participant's death, the Participant's estate shall be treated as the
Participant's Beneficiary for purposes of the Plan.
12. PAYMENTS TO PERSONS OTHER THAN PARTICIPANT
If the Committee shall find that any person to whom any amount, or any
Common Shares, is payable under the Plan is unable to care for his or her
affairs because of illness, accident or legal incapacity, then, if the Committee
so directs, any payment due to such person may be paid to such person's spouse,
child or other relative, an institution maintaining or having custody of such
person, or any other person deemed by the Committee to be a proper recipient on
behalf of such person, unless a prior claim for payment of such amount, or
payment of such Common Shares, has been made by a duly appointed legal
representative of such person. Any such payment shall be a complete discharge of
the liability of the Corporation or the applicable Affiliated Company therefor.
13. RIGHTS OF PARTICIPANTS
A Participant's rights and interests under the Plan shall be subject to the
following provisions:
(a) A Participant shall have the status of a general unsecured
creditor of the Corporation with respect to his or her right to receive any
payment under the Plan. The Plan shall constitute a mere promise by the
Corporation or the applicable Affiliated Company to make payments in the
future of the benefits provided for herein. It is intended that the
arrangements reflected in this Plan be treated as unfunded for tax
purposes, as well as for purposes of any applicable provisions of Title I
of ERISA.
B-7
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(b) A Participant's rights to payments under the Plan shall not be
subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment, or garnishment by creditors of
the Participant or his or her Beneficiary.
(c) Neither the Plan nor any action taken hereunder shall be construed
as giving any Participant any right to be retained in the employment of the
Corporation or any of its Affiliated Companies.
(d) No Participant shall have the right, by virtue of having been
selected as a Participant in the Plan, to be automatically entitled to
receive an Award for any Plan Year.
(e) No Award shall be considered as compensation under any employee
benefit plan of the Corporation or any of its Affiliated Companies, except
as specifically provided in any such plan or as otherwise determined by the
Board of Directors.
14. ADMINISTRATION
The Plan shall be administered by the Committee. A majority of the members
of the Committee shall constitute a quorum. The Committee may act at a meeting,
including a telephone meeting, by action of a majority of the members present,
or without a meeting by unanimous written consent. In addition to the
responsibilities and powers assigned to the Committee elsewhere in the Plan, the
Committee shall have the authority, in its discretion, to establish from time to
time guidelines or regulations for the administration of the Plan, interpret the
Plan, and make all determinations considered necessary or advisable for the
administration of the Plan.
All decisions, actions or interpretations of the Committee under the Plan
shall be final, conclusive and binding upon all parties.
No member of the Committee shall be personally liable by reason of any
contract or other instrument executed by such member or on his or her behalf in
his or her capacity as a member of the Committee nor for any mistake of judgment
made in good faith, and the Corporation shall indemnify and hold harmless each
member of the Committee, and each employee, officer, director or trustee of the
Corporation or any of its Affiliated Companies to whom any duty or power
relating to the administration or interpretation of the Plan may be delegated,
against any cost or expense (including counsel fees) or liability (including any
sum paid in settlement of a claim with the approval of the Board of Directors)
arising out of any act or omission to act in connection with the Plan unless
arising out of such person's own fraud or bad faith.
15. AMENDMENT OR TERMINATION
The Board of Directors may, with prospective or retroactive effect, amend,
suspend or terminate the Plan or any portion thereof at any time, provided,
however, that no amendment, suspension or termination of the Plan shall deprive
any Participant of any rights to Awards previously made under the Plan without
his or her written consent. Any amendment that the Board of Directors would be
permitted to make pursuant to the preceding sentence may also be made by the
Committee where appropriate to facilitate the administration of the Plan or to
comply with applicable law or any applicable rules and regulations of government
authorities, provided that the cost of the Plan to the Corporation and its
Affiliated Companies is not materially increased thereby.
16. SUCCESSOR CORPORATION
The obligations of the Corporation under the Plan shall be binding upon any
successor corporation or organization resulting from the merger, consolidation
or other reorganization of the Corporation, or upon any successor corporation or
organization succeeding to substantially all of the assets and business of the
Corporation. The Corporation agrees that it will make appropriate provision for
the preservation of Participants' rights under the Plan in any agreement or plan
which
B-8
<PAGE> 56
it may enter into or adopt to effect any such merger, consolidation,
reorganization or transfer of assets.
17. GOVERNING LAW
The Plan shall be governed by and construed in accordance with the laws of
the State of New York.
18. EFFECTIVE DATE
The Plan shall be effective as of September 1, 1995, subject, however, to
approval by the holders of a majority of the outstanding Common Shares of the
Corporation present or represented at the first meeting of the Corporation's
shareholders to be held after September 1, 1995.
B-9
<PAGE> 57
U.S. TRUST U.S. TRUST CORPORATION
STOCK FUND VOTING INSTRUCTION
VOTING INSTRUCTION SOLICITED BY BOARD OF DIRECTORS FOR SPECIAL MEETING OF
SHAREHOLDERS UNITED STATES TRUST COMPANY OF NEW YORK, 114 WEST 47TH STREET,
NEW YORK, NEW YORK
TUESDAY, OCTOBER 24, 1995, 10:00 A.M. NEW YORK TIME
The undersigned, a Member of the Employees 401 (k) Plan & ESOP of
United States Trust Company of New York and Affiliated Companies (the "Plan"),
hereby instructs United States Trust Company of New York as Trustee of the Plan
to vote, either in person or by proxy, the number of Common Shares of the
Corporation represented by my interest in the Stock Fund in accordance with the
terms of the Plan upon the nominees for Director (S.C. Butler, P.W. Douglas,
O.D. Munn, H.M. Schwarz, P.L. Smith, C.L. Wainwright, R.A. Wooden, P.O.
Crisp, D.P. Davison, A.M. Grumbach, F.C. Hamilton, J.S. Maurer, R.F. Tucker,
E. Baum, P. deMontebello, P.L. Malkin, J.H. Stookey, F.B. Taylor and R.N.
Wilson), upon the other matters shown on the reverse side, which are described
in the Proxy Statement, and upon all other matters which may come before the
Special Meeting of Shareholders of U.S. Trust Corporation, or any
adjournment thereof.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES
(SEE REVERSE SIDE).
/X/ PLEASE MARK YOUR VOTE WITH AN X.
1. Election of Directors FOR WITHHELD
/ / / /
For, except vote withheld from the following nominee(s) named on the reverse
side:
-------------------------------------------------------------------------------
2. Ratify selection of Independent Accountants
FOR AGAINST ABSTAIN
/ / / / / /
3. Approval of the 1995 Stock Option Plan
FOR AGAINST ABSTAIN
/ / / / / /
4. Approval of the Executive Incentive Plan
FOR AGAINST ABSTAIN
/ / / / / /
5. On any other matters that may come before the meeting
IN THE DISCRETION
OF THE TRUSTEE
OR ITS PROXIES ABSTAIN
/ / / /
-------------------------------------------------------------------------------
SIGNATURE(S) PLEASE MARK, SIGN, DATE AND RETURN THIS DATE
PROXY PROMPTLY USING THE ENCLOSED ENVELOPE.
<PAGE> 58
U.S. TRUST
U.S. TRUST CORPORATION
PROXY
PROXY SOLICITED BY BOARD OF DIRECTORS FOR SPECIAL MEETING OF SHAREHOLDERS
UNITED STATES TRUST COMPANY OF NEW YORK,
114 WEST 47TH STREET, NEW YORK, NEW YORK
TUESDAY, OCTOBER 24, 1995, 10:00 A.M. NEW YORK TIME
The undersigned appoints WILLIAM M. THROOP, JR. and EDWARD B. PENNFIELD or
either of them, each with power of substitution, to attend the Annual Meeting
of Shareholders of U.S. Trust Corporation and to vote the Common Shares the
undersigned would be entitled to vote if personally present upon the nominees
for Director (S.C. Butler, P.W. Douglas, O.D. Munn, H.M. Schwarz, P.L. Smith,
C.L. Wainwright, R.A. Wooden, P.O. Crisp, D.P. Davison, A.M. Grumbach, F.C.
Hamilton, J.S. Maurer, R.F. Tucker, E. Baum, P. deMontebello, P.L. Malkin,
J.H. Stookey, F.B. Taylor and R.N. Wilson), upon the other matters on the
reverse side, which are described in the Proxy Statement, and upon all other
matters which may come before the Special Meeting of Shareholders of U.S.
Trust Corporation, or any adjournment thereof.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES
(SEE REVERSE SIDE) BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS RECOMMENDATIONS. YOUR SHARES CANNOT BE
VOTED UNLESS YOU SIGN AND RETURN THIS PROXY.
(SEE REVERSE SIDE)
/X/ Please mark your
vote with an X.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1-5
This proxy will be voted "FOR" Items 1-2 if no choice is specified.
1. Election of FOR WITHHELD 2. Ratify selection of FOR AGAINST ABSTAIN
Directors / / / / Independent Accountants / / / / / /
For, except vote withheld from the following nominees(s)
named on the reverse side:
--------------------------------------------------------
3. Approval of the 1995 Stock Option Plan
FOR AGAINST ABSTAIN
/ / / / / /
4. Approval of the Executive Incentive Plan
FOR AGAINST ABSTAIN
/ / / / / /
5. On any other matters that may come before the meeting
IN THE DISCRETION
OF THE TRUSTEE
OR ITS PROXIES ABSTAIN
/ / / /
-------------------------------------------------------------------------------
SIGNATURE(S) PLEASE MARK, SIGN, DATE AND RETURN THIS DATE
PROXY PROMPTLY USING THE ENCLOSED ENVELOPE.
NOTE: Please sign exactly as your name or names appear hereon. Please add your
title if you are signing as Attorney, Administrator, Executor, Guardian,
Trustee or in any other representative capacity.
<PAGE> 59
U.S. TRUST U.S. TRUST CORPORATION
ESOP VOTING INSTRUCTION
VOTING INSTRUCTION SOLICITED BY BOARD OF DIRECTORS FOR SPECIAL MEETING OF
SHAREHOLDERS UNITED STATES TRUST COMPANY OF NEW YORK, 114 WEST 47TH STREET,
NEW YORK, NEW YORK
TUESDAY, OCTOBER 24, 1995, 10:00 A.M. NEW YORK TIME
The undersigned, a Member of the Employees' 401 (k) Plan & ESOP of
United States Trust Company of New York and Affiliated Companies (the "Plan"),
hereby instructs United States Trust Company of New York as Trustee of the Plan
to vote, either in person or by proxy, the number of Common Shares of the
Corporation allocated to my account in the ESOP Stock Fund which I am entitled
to vote in accordance with the terms of the Plan upon the nominees for Director
(S.C. Butler, P.W. Douglas, O.D. Munn, H.M. Schwarz, P.L. Smith, C.L.
Wainwright, R.A. Wooden, P.O. Crisp, D.P. Davison, A.M. Grumbach, F.C.
Hamilton, J.S. Maurer, R.F. Tucker, E. Baum, P. deMontebello, P.L. Malkin,
J.H. Stookey, F.B. Taylor and R.N. Wilson), upon the other matters shown on the
reverse side, which are described in the Proxy Statement, and upon all other
matters which may come before the Special Meeting of Shareholders of U.S.
Trust Corporation, or any adjournment thereof.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES
(SEE REVERSE SIDE).
/X/ Please mark your vote with an X.
1. Election of Directors FOR WITHHELD
/ / / /
For, except vote withheld from the following nominees(s) named on the
reverse side:
--------------------------------------------------------------------------------
2. Ratify selection of Independent Accountants
FOR AGAINST ABSTAIN
/ / / / / /
3. Approval of the 1995 Stock Option Plan
FOR AGAINST ABSTAIN
/ / / / / /
4. Approval of the Executive Incentive Plan
FOR AGAINST ABSTAIN
/ / / / / /
5. On any other matters that may come before the meeting
IN THE DISCRETION
OF THE TRUSTEE
OR ITS PROXIES ABSTAIN
/ / / /
-------------------------------------------------------------------------------
SIGNATURE(S) PLEASE MARK, SIGN, DATE AND RETURN THIS DATE
PROXY PROMPTLY USING THE ENCLOSED ENVELOPE.
<PAGE> 60
U.S. Trust
PERFORMANCE
INTEGRITY
QUALITY
U.S. TRUST
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
U.S. Trust
PERFORMANCE
INTEGRITY
QUALITY
U.S. TRUST
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
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U.S. TRUST CORPORATION IS AN INVESTMENT MANAGEMENT COMPANY WITH FIDUCIARY AND
BANKING POWERS. THROUGH ITS PRINCIPAL SUBSIDIARY, UNITED STATES TRUST COMPANY
OF NEW YORK, AND SELECTED OFFICES NATIONWIDE, U.S. TRUST SERVES AFFLUENT
INDIVIDUALS, FAMILIES AND INSTITUTIONS. ESTABLISHED IN 1853, U.S. TRUST
MAINTAINS A HEADQUARTERS FACILITY AT 114 WEST 47TH STREET IN NEW YORK CITY.
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<TABLE>
<CAPTION>
Contents
<S> <C>
To Our Shareholders 1
Personal Investment
Management and
Related Services 5
Other Businesses 14
Avoiding Investment
Black Holes 16
Investment Performance 18
U.S. Trust Officers 19
</TABLE>
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INVESTMENT PERFORMANCE
In the past year, U.S. Trust's investment professionals continued to produce
excellent results for our clients. Following a difficult year for the markets
in 1994, during which we achieved the important goal of preserving and
protecting our clients' wealth, the first half of 1995 was marked by bull
markets in both equities and bonds.
As of June 30, 1995, U.S. Trust's Discretionary Account Composite, which
includes equity accounts aggregating more than $300 million over which we have
total discretion, has posted a 10-year annualized return of 16.50% versus
14.67% for the S&P 500 and 14.07% for INDATA, an industry composite. Our
Managed Account Universe, totaling over $11 billion in domestic and
international equities, has generated an annualized return of 14.97% over the
past 10 years.
A number of the UST Master equity mutual funds have outperformed the S&P 500
over the past 12 months. Compared to an S&P 500 return of 26.01% (and an INDATA
median of 23.47%), the UST Master Productivity Enhancers Fund returned 32.39%;
the Early Life Cycle Fund, 30.21%; the Communication & Entertainment Fund,
28.97%; and the Global Competitors Fund, 26.35%.
On the fixed-income side, our Pooled Fixed Income Fund earned a 13.05% return
over the 12 months ended June 30, 1995, versus 12.76% for the Lehman
Government/Corporate Fund. The UST Master Long-Term Tax-Exempt Fund returned
13.46%, ranking number one out of 201 funds in its Lipper Analytical Services
category. The UST Master New York Intermediate-Term Tax-Exempt Fund also ranked
first among 21 funds in its Lipper category with a return of 8.98%, while the
UST Master Intermediate-Term Tax-Exempt Fund ranked third out of 103 funds and
returned 8.81%. Among taxable funds, the UST Master Managed Income Fund ranked
eighth out of 74 funds in its Lipper category, with a 14.33% return.
International markets, in general, have underperformed U.S. markets over the
past year. Our International Fund for Trusts returned 2.46% over the 12 months
ending June 30, 1995, versus an increase of 0.84% for the Financial Times
Index. Our UST Master Pan-European Fund posted a return of 13.74%.
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TO OUR SHAREHOLDERS
This is an exciting moment in our corporate history as a restructured U.S.
Trust Corporation--focused exclusively on investment management, private
banking and fiduciary services--emerges, following the recently completed sale
of our securities processing businesses to The Chase Manhattan Corporation.
This important strategic move represents a return to U.S. Trust's roots as the
nation's oldest investment management and trust company, and going forward it
enables us to concentrate on our most profitable business--investment
management--which offers very attractive growth prospects. With this major
transaction behind us, we are eager to take advantage of the many opportunities
that await a streamlined and more tightly focused U.S. Trust, which is profiled
in this booklet.
We completed the sale of our securities processing businesses--institutional
custody, mutual funds servicing and unit trust--in September of this year. The
proceeds from the sale--$363.5 million in Chase stock--went directly to our
shareholders tax-free. In addition, shareholders received stock in the new U.S.
Trust Corporation on a share-for-share basis. We made the decision to sell
these businesses because they would have diverted resources away from the
future growth and expansion of our more profitable investment management and
related businesses and in order to realize a substantial increase in
shareholder value.
Today, we continue to have the advantage of the strong franchise we have built
in our investment management, private banking and fiduciary services businesses
which U.S. Trust has been in since the 1850's. We hold leadership positions in
all of the businesses in which we now compete and enjoy a well-established
reputation for professional expertise and performance. And now we will be able
to concentrate all our management attention and corporate resources on these
businesses. We have negotiated a service agreement with Chase whereby they will
provide data processing and operational services for our businesses at a
considerable cost saving. The downsizing which we have accomplished as a result
of the transaction will reduce our corporate overhead and infrastructure. In
addition, the sale of the securities processing businesses has significantly
decreased the risks associated with the operation of our businesses.
U.S. Trust's investment management and related services will now generate
approximately 85% of our revenues. The bulk of these services are provided to
affluent individuals and families who account for $23 billion of our $41.2
billion in assets under management. The number of individuals and families in
the U.S. with over $200,000 in income or more than $1 million in investable
assets continues to increase more than 15% annually, making this a very
attractive market going forward. Moreover, the owners of less than one-third of
these assets currently use professional investment managers. Our goal is not
only to participate in the continuing growth of our market, but also to
increase our overall market share.
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A key element in our approach to the affluent market, which differentiates us
from our numerous competitors, is to meet all the financial needs of our
clients through our unique ability to offer a full range of investment
management services, as well as private banking, financial, estate and tax
planning and trust services. This is also a fundamental strategy to attract
investment assets.
Another important strategy for growth in our personal investment management
business will be to continue our selective geographic expansion into areas
where wealth is concentrated. In the immediate future, these efforts will be
aimed primarily at expanding our presence in those regions where we are already
established: California, Connecticut, Florida, New Jersey, Texas, the Pacific
Northwest and the greater New York City region. In the coming year, we are
opening offices in Greenwich, Connecticut and Garden City, Long Island.
A strong sales effort is also important to the growth of our investment
management business in both the personal and institutional markets, and we have
devoted considerable resources to building a professional sales force in recent
years, as well as to instilling a sales culture throughout the entire
organization.
Superior investment performance will continue to be integral to the success of
our business in the future. We have compiled an enviable record, consistently
outperforming the major indices and the majority of our competitors in both
equity and fixed-income investing while meeting our clients' objectives, in
individually managed accounts and pooled funds.
Pooled funds enable us to profitably provide our investment expertise to
smaller individual and institutional clients. Our UST Master Fund family of
mutual funds (soon to be renamed the Excelsior Funds) is the investment vehicle
for our popular Wealth Management Account for individuals with a minimum of
$250,000 to invest. We are currently exploring methods of broadening the
distribution of our mutual funds, and we also plan to introduce a new 401(k)
product this fall that will use a subset of these funds.
In both our corporate trust and special fiduciary services businesses, which
are based on our long-standing fiduciary expertise, we are among the leading
firms nationwide. We consistently rank among the 10 largest corporate trustees
in the country, reflecting our independence and our ability to build long-term
relationships. In special fiduciary services, we are known for serving large
complex employee benefit plans and dominate this segment of the market.
Exciting opportunities for growth abound for U.S. Trust, and we are even more
strongly positioned now to take advantage of them. We will continue to manage
our business with an ownership perspective and to place great emphasis on being
responsive to clients' needs and building long-term relationships. As in the
past, our talented and dedicated employees will play a vital role in our future
success. As we move forward into this new era, the principles which have guided
U.S. Trust since its founding in 1853 remain unchanged: a firm commitment to
performance, integrity and quality in all that we do.
H. Marshall Schwarz
Chairman and Chief Executive Officer
Jeffrey S. Maurer
President and Chief Operating Officer
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AVOIDING INVESTMENT BLACK HOLES
In the recent past, we have witnessed in quick succession the appearance of an
impressive array of "investment black holes:" market-shaking events that
quickly and mercilessly extract staggering losses from investors. Among the
most notable have been the bankruptcy of Orange County, the fall of the Mexican
peso and ensuing precipitous decline of emerging markets, huge losses in
derivatives, the collapse of several hedge funds and the fall of Barings. Even
in bull markets there are investment black holes. In fact, bull markets help to
generate the excitement that leads to black holes.
Although they might seem to be a new phenomenon, investment black holes have
always been around. Think of the tulip bulb mania in 17th century Holland or
the Florida Land Boom of the 1920's which contributed to the Great Depression.
While initially they provided tremendous upside, disaster followed. There has
never been a shortage of opportunities for speculators seeking excessive
returns to lose their shirts. What is different today is that readily available
credit and the proliferation of derivatives have made it easier for speculators
to leverage the size of their bets (and their losses).
To avoid investment black holes, it is important to understand the difference
between investing and speculating. As noted investor and author Benjamin Graham
said, "An investment operation is one which, upon thorough analysis, promises
safety of principal and an adequate return. Operations not meeting these
requirements are speculative."
Quite simply, investors get caught in black holes by overconcentrating in an
investment without appreciating the underlying risks involved.
Clearly, it is vital to intelligent investing to correctly assess the level of
risk associated with various investments. In-depth knowledge and experience of
markets and investments, solid research and thorough credit analysis are
essential to accurately assess investment risks. However, there is no
substitute for good judgment.
Investors should also be objective about how much risk they are willing to
assume. Most individual investors dislike losing money on their investments
much more than they like making it. If you ask them, "How much money are you
willing to lose?," the answer is usually a resounding "None."
Our investment job at U.S. Trust is to understand a client's objectives and
risk tolerance. We then take steps to maintain an acceptable level of risk in
that individual's portfolio. Or, to take a more positive view, we take
appropriate risks to earn attractive returns and avoid losses from uncontrolled
risks.
A fundamental strategy for managing investment risk is diversification. Applied
properly to an individual portfolio, this strategy includes diversification of
asset classes, individual investments and risks. But even with a diversified
portfolio, it is important to guard against what economist and consultant Peter
Bernstein calls "seatbelt risk." Bernstein points out that research shows that
the probability of automobile accidents increases when people wear
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seatbelts, because they take risks they would never take without the seatbelt.
For example, investors should not be seduced by whatever is doing well in their
portfolios and shift too much money into it. A diversification "seatbelt" is
not a guarantee against loss. As Bernstein says, "diversification promises only
one thing: not every thing in your portfolio is going to lose value at the same
time or to the same degree."
A rigorous valuation process is essential to controlling risk. At U.S. Trust we
have developed a system of strategies and themes that enables us to find
companies that represent fundamental, underlying investment value that has not
yet been adequately recognized by the market. This approach not only finds
value investment opportunities, but also protects against inadvertent
concentration in stocks with similar characteristics. We also try to be
slightly contrarian in our outlook. Investors must avoid being carried away by
crowd psychology--a hallmark of investment manias that become black holes.
Often investors fall victim to black holes by trying to time the market. As
Graham said, this is one of the primary distinctions between an investor and a
speculator: "The speculator's primary interest lies in anticipating and
profiting from market fluctuations; the investor's primary interest lies in
acquiring and holding suitable securities at suitable prices." Attempting to
predict market movements is usually futile. Market gains generally occur in
comparatively short bursts. For example, experience has shown that stocks held
for an average of 1-1/2 years gain the bulk of their returns in a 60-day
period. Similarly, getting out of a market at the first hint of trouble is
usually impossible; first hints go unnoticed or are not believed.
It is also important for investors to be realistic about what is a reasonable
return to expect without taking undue risks. Many people become victims of
investment black holes by reaching for excessive returns. We do not recommend
using leverage or derivatives in portfolios to enhance returns. As we have seen
so vividly in the recent past, this is a double-edged sword. It is wise to be
skeptical of extravagant claims regarding investment returns. Investment
professionals who are incented to maximize returns may be willing to place big
bets--with other people's money. They also are not very tax sensitive, no doubt
to their clients' ultimate dismay. We think that through tax-efficient
investing it is possible to outperform the market over time; that is our goal
and that is what we have consistently achieved. We do not believe that we, or
anyone else, have a magic wand that will double market returns.
Finally, investors must be ever-vigilant. Investment black holes are always
there, but we do not know exactly where until we see other investors start to
disappear into them. Keep your eyes open (and your seatbelt fastened)!
Frederick B. Taylor
Vice Chairman and Chief Investment Officer
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PERSONAL INVESTMENT MANAGEMENT
AND RELATED SERVICES
Since our founding in 1853, U.S. Trust's principal business has been providing
investment management, private banking and fiduciary services to affluent
individuals and their families. Today, this is one of the fastest growing
markets for financial services in the U.S. The top two percent wealthiest
households, with $200,000 in income or $1 million in investable assets,
currently numbers 2.1 million with a total of $4.2 trillion in assets and is
projected to grow at more than 15% annually over the next decade. Less than
one-third of these assets are professionally managed. Furthermore, we are about
to experience the largest intergenerational transfer of wealth in the nation's
history: an estimated $5 trillion over the next 20 years. By the year 2000,
alone, $1 trillion is expected to be handed down.
U.S. Trust is in the enviable situation of being in a growth market and also of
being uniquely positioned to capitalize on this opportunity. As the nation's
oldest investment management and trust company, we have unequaled experience in
serving this market. Together with our competitive investment performance, we
offer a comprehensive array of services required to manage the financial
affairs of the affluent. Our in-depth professional expertise and our ability to
deliver the quality service demanded by this market equip us well to take
advantage of the opportunities before us.
OUR MARKET
U.S. Trust serves a wide range of affluent individuals--from the nation's
wealthiest families to those with a minimum of $250,000 to invest. In all of
our relationships with our clients we strive to become their key financial
advisor, helping to identify their financial objectives and find creative
solutions to their evolving situation. We focus on the entire family's needs,
involving multiple generations when appropriate. Because we offer a complete
array of related services--private banking, financial, estate and tax planning,
and trust services--in addition to our core investment management capabilities,
we are generally able to meet all of our clients' wealth management needs. The
majority of our clients have $2 million to $50 million in assets. We provide
them with balanced accounts and specialized investment management services, and
they are able to make full use of our related services as well.
We have always served as financial advisor to the nation's wealthiest families,
and today we have relationships with more than 300 families who have a net
worth of over $50 million. These ultra-affluent families need a sophisticated
financial advisor who can craft customized solutions for their particular
situation. U.S. Trust offers them a broad array of tax-efficient investments,
as well as non-traditional investment opportunities, such as venture capital.
Our nationally recognized CTC Consulting affiliate can assist in developing
investment policy and in selecting and monitoring investment managers. We
provide a powerful master custody service with flexible reporting and
accounting capabilities. We offer flexibility when serving as trustee for
family assets--from serving as investment manager directly, to monitoring a
group of outside managers, to managing a business held in trust or a
controlling block of family stock. As a strategic financial advisor, we can
provide comprehensive counsel ranging from tax and estate issues to succession
planning for family businesses. And we have unparalleled experience and
expertise in the management of family foundations.
Another important segment of our market is individuals in their wealth
accumulation years--those with $250,000 to $2 million in financial assets. We
want to reach this generally younger market before they form loyalties to other
advisors. Furthermore, as a recent U.S. Trust Survey of Affluent Americans
indicated, affluent "baby boomers" are now saving 23% of their after-tax
income. Our Wealth Management Account, which allows individuals to invest
through our family of proprietary mutual funds, has been very successful in
attracting this market. In addition, our private banking services often provide
the introduction to U.S. Trust for these individuals.
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In order to capitalize on the opportunities presented by our growing market, we
have increased the resources devoted to business development and marketing. We
have more than tripled the sales force in New York City and our regional
offices to 45 in the past several years. In addition, we have worked to instill
a sales culture throughout the entire organization, including offering a
generous sales incentive program. Our national and local advertising continues
to target affluent individuals and families seeking professional investment
management for the first time.
OUR SERVICES
The foundation of our services for individuals is investment management. U.S.
Trust offers a full range of investment options, including balanced portfolios
as well as specialized investment services such as fixed-income portfolios,
international investments, and alternative investments. Recently, we
established the UST Private Equity Investors Fund to pursue venture capital and
private investment opportunities. With a required minimum investment of $15,000
from qualified investors, the fund expands the accessibility of this type of
alternative investment to many more of our clients. We also offer a variety of
investment styles, including high-quality growth stocks through Campbell,
Cowperthwait & Co., a small-cap stock fund and structured investments. As of
June 30, 1995, personal assets under management stood at $23 billion.
U.S. Trust currently employs over 180 investment professionals. Within the
framework of our overall investment strategies and themes, individual portfolio
managers throughout the organization are given a great deal of autonomy. We
value creativity, diverse opinions and new ideas and insights. Our investment
professionals are incented on the basis of the long-term performance of their
portfolios. We also have top-notch investment research capabilities and believe
firmly in hands-on research. We like to visit the companies we invest in and
"kick the tires." In addition, senior managers of numerous corporations
regularly meet with our investment professionals at U.S. Trust.
While the bulk of the assets we manage are in individually managed accounts, we
also offer a variety of pooled funds. Our Wealth Management Account, our
investment advisory service that utilizes our UST Master Fund family of 25
mutual funds (soon to be renamed the Excelsior Funds), continued its successful
growth over the last 12 months. We now have 1,350 Wealth Management Accounts in
New York, up from 900 in 1993 and representing $810 million in assets, an
increase of 35%. The average account size is $600,000. The UST Master Funds now
have $3.1 billion of assets. These funds are managed by the same investment
professionals who manage our individual portfolios, and their performance has
been excellent.
Part of what differentiates U.S. Trust is the full range of related services we
offer in addition to comprehensive investment management services. These
include private banking, trust and fiduciary services, estate and tax planning,
financial planning, custody, insurance services and consolidated recordkeeping.
We are able to offer our clients comprehensive and coordinated investment and
financial advice regarding almost any aspect of their financial lives.
Our estate planning services have continued to be in demand, and we were named
to executorships representing $1.2 billion of assets in 1994, including several
major estates. In most cases where we are named as executor, we are also named
as trustee for the assets involved. Our tax planning business, which is based
in New York, also had an excellent year. And our personal custody assets
increased 21% to $6.3 billion at June 30, 1995, from June 30, 1994.
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Our private banking business has experienced steady growth in the past 12
months with total loans increasing $65 million to $1.2 billion as of June 30,
1995. The loan quality of our total portfolio remains exceptionally high with
annualized net loan recoveries, as a percentage of total average loans at June
30, 1995, amounting to six basis points. Residential mortgages are the
principal credit product for our private banking clients. During the 12 months
ended June 30, 1995, residential mortgages increased 7% to $853 million.
Frequently, securing a mortgage is a client's first experience with U.S. Trust,
and it leads to the development of a broader relationship. One-third of our new
asset management business comes from private banking clients. U.S. Trust
provides private banking services through four offices in New York City and to
clients of our regional affiliates in California, Connecticut, Florida, New
Jersey and Texas.
NATIONAL EXPANSION
Further expansion into areas throughout the U.S. where personal wealth is
concentrated continues to be a major strategy for the future growth of our
personal investment management business. In the next few years, we plan to
continue our efforts to broaden our presence in those regions where we are
already established, as well as to opportunistically enter new areas of wealth
concentration.
CONNECTICUT, NEW JERSEY, NEW YORK
U.S. Trust continues to expand its local presence in affluent areas surrounding
its New York City headquarters. We recently acquired the individual account
business of J. & W. Seligman and Co. and purchased J. & W. Seligman Trust
Company, which collectively represent almost $800 million of assets under
management. Seligman's clients, located primarily in the New York City area,
fit the U.S. Trust client profile well, and we will be able to provide them
with our full array of related services.
U.S. Trust of Connecticut, headquartered in Stamford, had an excellent first
full year in business, becoming profitable after only 18 months. The local
market has been very receptive to a quality organization committed to the
community. U.S. Trust of Connecticut now has more than $900 million in assets
under management. A second office is currently planned for Greenwich, and we
have expanded our business development efforts into the greater Hartford area.
U.S. Trust of New Jersey in Princeton is successfully establishing its presence
in this attractive market. The company currently has $740 million in assets
under management. With its newly added lending capabilities, the company now
has a loan portfolio of $20 million, primarily residential mortgages.
Early next year, we will open a full-service office on Long Island in the
Garden City area, bringing our services closer to that affluent market.
CALIFORNIA
U.S. Trust of California has continued its strong growth with assets under
management increasing 24% to $2.1 billion from June 30, 1994, to June 30, 1995.
Assets under supervision rose 10% to $38 billion. In 1994, revenues increased
27%. The company's private banking business also showed major gains with loans
up 44% and deposits up 30%.
Our Los Angeles headquarters moved to new, larger space in early 1995 to
accommodate the company's recent and planned growth. The personal trust and
estate business has also begun to realize its potential. We have been
cultivating a referral network and building a will file since 1988 and have
recently been named executor for several substantial estates.
During its first full year in operation, our new Costa Mesa office received an
outstanding reception from the Orange County community which welcomed a quality
institution focused on the affluent market. Growth was encouraging both in the
investment management and private banking business.
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U.S. Trust of California has now established a strong infrastructure on which
to build its future expansion. With the financial services industry in
California still recovering from a decade of change, U.S. Trust, with its
stability and firm commitment to our businesses, continues to enjoy new
opportunities as the state's economy moves toward recovery.
FLORIDA
U.S. Trust of Florida enjoyed a very successful year in 1994, with revenues
increasing 18%. From June 30, 1994 to June 30, 1995, assets under management
were up 25% to $1.46 billion, while assets under administration increased to $2
billion.
Our Boca Raton sales office became a full-service office in mid-1994 and
experienced immediate success in the investment management and trust business.
We are currently in temporary space in Boca Raton while we build a new office
that will meet our needs in the revitalized downtown area. The Boca market,
which is now the fastest growing affluent market in Florida, will increasingly
need our services.
Our office in Naples had an excellent year in new business in 1994, more than
doubling revenues and increasing assets under management by 17%. Our private
banking business in Naples also did well, with loans increasing 34% and
deposits up 36%.
We introduced our Wealth Management Account in Florida in 1994, and it is
producing steady growth. We also opened a new sales office in Vero Beach this
year. Competition in Florida continues to be intense, but U.S. Trust's
reputation is well-established in this attractive market.
PACIFIC NORTHWEST
In its first full year as an affiliate, U.S. Trust of the Pacific Northwest,
formerly Capital Trust Company, recorded solid increases in revenues which more
than doubled. As of June 30, 1995, the company had $1.4 billion of assets under
management.
In 1994, the company devoted considerable resources to broadening its personal
wealth management capabilities, adding portfolio management and trust services.
Drawing on its established expertise in the institutional investment arena,
U.S. Trust of the Pacific Northwest will provide the administrative and
operational support for U.S. Trust's new 401(k) product.
CTC Consulting, our investment consulting affiliate which is headquartered in
Portland, continued to build its reputation as an advisor to high net worth
families and other taxable investors.
TEXAS
Buoyed by strong investment performance, U.S. Trust of Texas's assets under
management climbed 28% from June 30, 1994, to June 30, 1995, to $790 million.
Revenues increased 21% in 1994.
The company experienced solid new business growth in both the personal asset
management and trust business. This year, U.S. Trust of Texas moved to new
offices in Dallas, doubling its space to accommodate its expanding business.
INSTITUTIONAL
INVESTMENT
MANAGEMENT
Approximately $6.7 billion of U.S. Trust's assets under management are
institutional assets, representing an important segment of our investment
management business.
For large institutional clients, U.S. Trust manages domestic and international
equity, fixed-income, money market and balanced portfolios. Our clients in this
$3.2 trillion market include corporate, public and Taft-Hartley retirement
plans and insurance companies, as well as endowments, foundations and other
non-profit organizations--some of which are associated with our family wealth
business. For equity investments, we offer these clients our unique blend of
value and growth strategies that has produced a competitive long-term
investment performance track record. Among our structured investment products
are several especially attractive for institutional clients with taxable trusts
seeking to minimize tax liabilities. We are currently exploring ways to expand
our capabilities to meet the growing need of this market for additional
distinct investment alternatives.
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U.S. Trust offers smaller institutional clients a variety of pooled investment
vehicles, utilizing 31 UST Master and Excelsior mutual funds. Pooled funds
enable us to cost effectively serve smaller clients and broaden the
distribution of our investment management expertise. In the near future, we
will introduce an asset allocation account for institutional clients, which
will invest via our mutual funds and will offer a variety of asset allocation
models tailored to clients' investment objectives.
We are also developing a new 401(k) product which will be launched this fall.
We have designed a bundled 401(k) product for small, medium and large plans.
U.S. Trust will provide investment management and administrative services for
the product, which will include third-party recordkeeping and an employee
education component. The 401(k) market in the U.S. currently stands at $600
billion and is growing at 15% annually. We expect our institutional asset
allocation account will be especially attractive to small and medium-size
401(k) plans.
To further enhance the distribution of our mutual funds, a new distributor was
recently hired for the UST Master Funds--Federated Investors. We will market
the funds to broker/dealers, regional banks, bank trust departments and
financial planners.
U.S. Trust provides a full line of brokerage services to institutional clients
through its broker/dealer subsidiary, UST Securities. Since it was established
in 1992, UST Securities has tripled its revenues and in 1994, traded $3.1
billion of securities. The firm offers the advantages of an independent trader
with competitive pricing and quality execution.
SPECIAL FIDUCIARY SERVICES
U.S. Trust is one of the few financial institutions with particular expertise
in investment, fiduciary and consulting services for employee benefit plans
that invest in major blocks of employer stocks.
We specialize in providing these services to large complex plans and currently
serve as discretionary trustee to over 30 clients with $12 billion of assets
under management.
The use of employer stock ownership plans, or ESOPs, has increased in the past
decade. U.S. Trust has been a pioneer in developing new roles for these plans
and in establishing the standards for independent fiduciaries who oversee them.
As fiduciary for employee benefit plans that acquire, sell or hold employer
stock, U.S. Trust makes investment management decisions. At the same time, we
act as an independent trustee to protect the interests of plan beneficiaries,
often in situations where there are inherent conflicts-of-interest, such as
mergers, management buy-outs, hostile takeovers, proxy contests or tender
offers.
With our combined investment management and fiduciary expertise, U.S. Trust is
uniquely qualified to provide these services and enjoys a national reputation
as a leader in this field.
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CORPORATE TRUST
Since 1855, U.S. Trust has been one of the nation's leading corporate trustees,
providing trust, agency and related services to public and private
corporations, municipalities and financial institutions.
We continue to rank among the 10 largest corporate trustees in the U.S. with
over $175 billion in trusteed, agency and bond immobilization assets at June
30, 1995, an increase of 13% over June 30, 1994. Fees and commissions rose 15%
in 1994.
In the traditional bond indenture business, we have built numerous solid
long-term relationships which generate a considerable amount of recurring
business. Clients value our unmatched experience in the business, our
professional expertise and our superior systems capabilities. In particular,
our ability to handle the complex debt instruments being developed today is
important to our success. Our independence, which averts conflicts-of-interest,
is also a major asset in this market, where we are often chosen as successor
trustee following a default or bankruptcy.
U.S. Trust has been the leading trustee in New York State and among the top
three nationally for new municipal long-term debt issues for the past four
years. In 1994, we handled 88 new tax-exempt issues, representing $6 billion of
principal. We have targeted states and municipalities who are repeat issuers,
and we are able to offer them attractive pricing and excellent service,
resulting in additional business.
Providing support for complicated new types of securities continues to be the
fastest-growing segment of our corporate trust business. State-of-the-art
technology is essential, and U.S. Trust has developed unique PC-based systems
to meet our clients' needs.
Another attractive area of our corporate trust business is our bond
immobilization services. Growth has been strong with the par value of accounts
increasing to $37.8 billion as of June 30, 1995.
Although most of our corporate trust business emanates from our New York
headquarters, our California and Texas offices have made increasingly important
contributions to the growth of the business in recent years. And we will soon
open an office in Boca Raton.
While other institutions are abandoning the corporate trust business, we
believe that it continues to offer good growth potential for U.S. Trust, and
the declining number of participants creates greater opportunities for us.
<PAGE> 74
U.S. TRUST OFFICERS
OFFICE OF THE CHAIRMAN
H. MARSHALL SCHWARZ
Chairman and
Chief Executive Officer
JEFFREY S. MAURER
President and
Chief Operating Officer
FREDERICK B. TAYLOR
Vice Chairman and
Chief Investment Officer
MANAGEMENT COMMITTEE
H. MARSHALL SCHWARZ
Chairman and
Chief Executive Officer
JEFFREY S. MAURER
President and
Chief Operating Officer
FREDERICK B. TAYLOR
Vice Chairman and
Chief Investment Officer
JOHN M. DEIGNAN
Executive Vice President
JOHN C. HOVER II
Executive Vice President
PAUL K. NAPOLI
Executive Vice President
KENNETH G. WALSH
Executive Vice President
JOHN L. KIRBY
Senior Vice President, Treasurer
and Chief Financial Officer
INVESTMENTS
FREDERICK B. TAYLOR
Vice Chairman and
Chief Investment Officer
PERSONAL INVESTMENT
PAUL K. NAPOLI
Executive Vice President
SENIOR VICE PRESIDENTS
-------------------------------
John J. Apruzzese
Richard L. Bayles
Junius C. Davenport III
Fay Gambee
Ian B. MacCallum, Jr.
Harvey A. Seline
Ronald C. Steele
Glenn Switzer
David A. Tillson
David J. Williams
Harold P. Wilmerding
VICE PRESIDENTS
-------------------------------
John H. Bell, Jr.
William A. Brigham
Maria L. Brisbane
Robert R. Burn
Diana Chaney
Katherine T. Ellis
Timothy W. Evnin
Frank A. Farano
Donald C. Johannemann
Thomas E. McCrann
Deborah S. Newcomb
C. Hooker O'Malley
Dorothy H. Osborn
Wendy S. Popowich
Gregory M. Salkow
Victor Sapuppo
Roger F. Schaefer
Jay B. Springer
Jonathan L. Stanley
Barbara A. Tarmy
Leigh H. Weiss
George C. Whiteley III
EQUITY TRADING
Hugh F. McCay
Senior Vice President
VICE PRESIDENTS
-------------------------------
Gregory J. Cavallo
Edward G. Margetis
John Rendinaro
Nancy M. Zollner
INVESTMENT TECHNOLOGIES
Renee L. Cook
Vice President
FIXED INCOME INVESTMENTS
KENNETH J. MCALLEY
Executive Vice President
SENIOR VICE PRESIDENTS
-------------------------------
Gary N. Gildersleeve
Henry M. Milkewicz
G. Michael O'Neil III
VICE PRESIDENTS
-------------------------------
Frank Butto
John J. Hayes III
James J. Holihan
Phyllis E. King
John D. McGrath
Frances A. Panetta
INSTITUTIONAL INVESTMENT,
SALES AND ADMINISTRATION
STEPHEN J. DARBY, JR.
Executive Vice President
SENIOR VICE PRESIDENTS
-------------------------------
Richard J. Burns, Jr.
Allen G. Oechsner
Harry C. Rowney
Bruce Tavel
P. Ross Taylor III
VICE PRESIDENTS
-------------------------------
Michael P. Boland
James A. Goble
Rick T. Lancia
Joseph J. Martino
Maureen Mitchell
Charles E. Rabus
Pamela C. Scott
Helen K. Sheng
Cyril M. Theccanat
Kathleen C. Walsh
Alison G. Wilson
ALTERNATIVE INVESTMENT
David I. Fann
Vice President
VICE PRESIDENT
-------------------------------
Douglas A. Lindgren
ECONOMICS
Thomas W. Synnott III
Senior Vice President
VICE PRESIDENT
-------------------------------
Nora C. Mirshafii
RESEARCH
Edith A. Cassidy
Senior Vice President
VICE PRESIDENTS
-------------------------------
William G. Becker
Joan Ellis
Ronald A. Fisher
John F. Gordon, Jr.
Robert C. Hodgson
Michael E. Hoover
Lynn M. Thompson
<PAGE> 75
U.S. TRUST OFFICERS
PERSONAL ASSET
MANAGEMENT AND
PRIVATE BANKING
JOHN C. HOVER II
Executive Vice President
CLIENT SERVICES
Loraine B. Tsavaris
Senior Vice President
CLIENT SERVICES MANAGEMENT
Barry C. Waldorf
Senior Vice President
SENIOR VICE PRESIDENT
-------------------------------
Theodorus V. W. Cushny
VICE PRESIDENTS
-------------------------------
Helmer W. Arizmendy
Richard F. Bishop
Sandra T. Cargill
Keith C. Dolin
Marci S. Douglas
Marie A. Giangolano
Marjorie V. Hollingsworth
Harriet F. Leahy
Lee Paula Miller
Laurie A. Rising
John M. Sartorius, Jr.
Robert Y. Simmons
Edward B. Sullivan
FOUNDATIONS AND
ENDOWMENTS
Robert P. Connor
Senior Vice President
VICE PRESIDENTS
-------------------------------
Linda A. Franciscovich
Patrick H. Hughes
Edward C. Klein
PERSONAL CUSTODY
Arthur M. Baisley
Senior Vice President
VICE PRESIDENTS
-------------------------------
Anthony P. Fradella
Lea Paine Highet
Rosemary Long
Denise M. Lopez
PRIVATE CLIENT SERVICES
Gerald J. Calder
Senior Vice President
VICE PRESIDENTS
-------------------------------
Robert S. Bridges
John B. Carey, Jr.
Rose Ann Frank
Brian R. Fry
Thomas J. Gill
Ludmila K. Golad
Lisa M. Hartman
Theodore D. Hickey
Michael C. Jones
Paula Laliberte
James G. McIlroy
Alison C. Peeler
Donna H. Romer
A. John Wright
NATIONAL ATTORNEY
DEVELOPMENT
Susan Porter
Senior Vice President
PERSONAL CONSULTING
SERVICES
Paul R. Gordon
Senior Vice President
ESTATE ADMINISTRATION AND
TRUST SETTLEMENT
S. Jeanne Hall
Senior Vice President
VICE PRESIDENTS
-------------------------------
Laurence D. Edelman
Susan K. Foster
George P. Ligotti
Elizabeth E. Mackie
Gail W. Marcus
Glenn M. Troost
Michael J. Zaccardi
ESTATE PLANNING
Anthony P. Marshall
Senior Vice President
VICE PRESIDENTS
-------------------------------
Blanche Lark Christerson
Mazelle H. Cole
Nancy S. Gabel
FINANCIAL COUNSELING
Robert S. Stolar
Vice President
VICE PRESIDENTS
-------------------------------
Dirk R. Dreux IV
Kelly Hanratty
TAX COUNSEL
John R. Gregg
Vice President
TAX COMPLIANCE
John R. Granelli
Vice President
VICE PRESIDENTS
-------------------------------
James F. Bittel
Robert B. Kang
TAX CONSULTING
Edward P. Peller
Senior Vice President
VICE PRESIDENTS
-------------------------------
Thomas J. Brady
Debra A. Feeks
Jay N. Frankel
Richard J. Funk
Cynthia R. Fusillo
Mark S. Halpern
Kathleen S. Healy
Nancy P. Miele
Edward W. Poreba
Peter M. Samon
Vincent A. Scalice, Jr.
Lori B. Weigel
SOFTWARE PRODUCTS
William P. Cleary
Vice President
VICE PRESIDENT
-------------------------------
Nicole S. Splitter
20
<PAGE> 76
U.S. TRUST OFFICERS
PERSONAL SALES
Richard E. Foley
Senior Vice President
VICE PRESIDENTS
-------------------------------
Nicholas J. Bertha III
Robert Karson
Lisa M. Marcus
Edward J. McDermott, Jr.
Janet N. Otto
Angelina M. Painter
William J. Porter, Jr.
Kary D. Presten
Thor Thors, Jr.
Sheila S. Traub
Yvonne D. Tropp
Rachael M. Weinberger
PRIVATE BANKING
David L. Vollmayer
Senior Vice President
SENIOR VICE PRESIDENTS
-------------------------------
Thomas C. Clark
Geraldine M. McNamara
VICE PRESIDENTS
-------------------------------
Juliet N. Alexander
Peter E. Battaglia
Carl D. Beale
William S. Brady
Jeffrey B. Bruce
Donald P. Casler
P. Christopher Cieszko
Barbara L. Collins
Owen P. Condon
Cheryl A. Everts
Martin J. Feely
Wendy M. Grace
Mitchell K. Higgins
Stephen T. Kelly
Rosalie Lanzana
Judith A. Lazar
Karen P. LoSchiavo
Susan J. Marcus
Susanne Matera
Stanley A. Matuszewski
Lisa W. Murray
Barbara A. O'Connell
Dorothy S. Oertel-Albright
Judith A. Oliver
Budharapu R. K. Rao
Sarah W. Rose
Frederick W. Rosenbauer, Jr.
R. Peter Schoenenberger
Michael J. Seymour
Christine M. Simpson
Stephen R. Smith
Christine G. Stives
Karen B. Unger
Harold Valvik
TRUST ADMINISTRATION, REAL
ESTATE, CLOSELY HELD
BUSINESSES, OIL AND GAS
Stuart K. Aisenbrey
Senior Vice President and
Senior Trust Officer
VICE PRESIDENTS
-------------------------------
Steven S. Kirkpatrick
Robert H. Swinton, Sr.
Joseph A. Tricarico
CAMPBELL, COWPERTHWAIT
& CO.
WILLIAM G. CAMPBELL
Chairman and
Chief Executive Officer
JAMES B. COWPERTHWAIT
President
EXECUTIVE VICE PRESIDENT
-------------------------------
Anthony L. Adams
VICE PRESIDENTS
-------------------------------
Diane M. Englert
Karen M. Japngie
Timothy M. O'Neil
U.S. TRUST COMPANY OF
CALIFORNIA, N.A.
FRANKLIN E. ULF
Chairman and
Chief Executive Officer
GREGORY F. SANFORD
President
PORTFOLIO MANAGEMENT
MANAGING DIRECTOR AND
CHIEF INVESTMENT OFFICER
-------------------------------
Robert M. Raney
SENIOR VICE PRESIDENTS
-------------------------------
John S. DeGroot
Lois G. Ingham
Jean V. Keatley
VICE PRESIDENTS
-------------------------------
Gary H. Arakawa
Stephen J. Dutka
Emmanuel Labrinos
Paul A. Woods
INVESTMENT RESEARCH
SENIOR VICE PRESIDENT
-------------------------------
Byron B. Snider
TRUST AND FIDUCIARY SERVICES
EXECUTIVE VICE PRESIDENT
-------------------------------
Charles E. Wert
SENIOR VICE PRESIDENTS
-------------------------------
Robert S. Cummings
John C. Westwater
VICE PRESIDENTS
-------------------------------
Bill B. Betz
Terry J. Colberg
Maxine E. Harris
Dennis M. Kunisaki
Eivor Nilsson
Kim E. Wilkinson
FINANCE AND ADMINISTRATION
VICE PRESIDENTS
-------------------------------
Dwight D. Liu
Teresa A. Rolley
Karen L. Yamamoto
CORPORATE TRUST AND AGENCY
SENIOR VICE PRESIDENT
-------------------------------
Sandra H. Leess
VICE PRESIDENTS
-------------------------------
Albert J. Edwards
Sandee Parks
Stuart M. Weiss
PRIVATE BANKING
SENIOR VICE PRESIDENT
-------------------------------
William R. Barrett, Jr.
VICE PRESIDENTS
-------------------------------
Margie Eddy-Forbes
Teresa McCann
Thomas J. Nieto
Thomas J. Spratt
BUSINESS DEVELOPMENT
Mark K. Talt
Vice President
VICE PRESIDENTS
-------------------------------
Kurt A. Brimberry
Gerald L. Goodwin
Paul E. Miller
Mimi Ryan
Kevin M. Schmeits
Gregory G. Zappas
21
<PAGE> 77
U.S. TRUST OFFICERS
COSTA MESA OFFICE
R. CLIFFORD CARPER
Senior Vice President and
Managing Director
VICE PRESIDENTS
-------------------------------
Maureen E. Gallogly
John T. Harrington
Jill A. Pletcher
James G. Stephen
Gary L. Van Arnam
J. Christopher Walsh
Nella A. Webster
UST FIDUCIARY SERVICES, LTD.
FRANKLIN E. ULF
Chairman and
Chief Executive Officer
CHARLES E. WERT
President
SENIOR VICE PRESIDENT
-------------------------------
Norman Goldberg
U.S. TRUST COMPANY
OF CONNECTICUT
FREDERICK S. WONHAM
Chairman
W. MICHAEL FUNCK
President and
Chief Executive Officer
INVESTMENTS
William V. Ferdinand
Executive Vice President and
Senior Investment Officer
SENIOR VICE PRESIDENTS
-------------------------------
Robert H. Hogan
Walter R. Seibert, Jr.
VICE PRESIDENTS
-------------------------------
John J. Knox III
Deirdre M. Ryan
Marsha J. Scott
CLIENT SERVICE
VICE PRESIDENTS
-------------------------------
Roger N. Katen
Jeffrey T. Osmun
BUSINESS DEVELOPMENT
VICE PRESIDENTS
-------------------------------
Theresa A. Jacobsen
Robert A. Penney
Peggy P. Steiner
U.S. TRUST COMPANY
OF FLORIDA
TROWBRIDGE CALLAWAY III
Chairman and
Chief Executive Officer
PALM BEACH OFFICE
HOWARD E. N. WILSON
Regional President
SENIOR VICE PRESIDENTS
-------------------------------
Felix J. Chmiel
Norton V. Coyle, Jr.
Thurlow A. West
VICE PRESIDENT, SECRETARY
AND TREASURER
-------------------------------
Herbert I. Deitsch
VICE PRESIDENTS
-------------------------------
Ann Cavanaugh
John H. Chamberlain
Sergio I. de Araujo
James V. Dowling
M. Lidy Mata
Timothy S. O'Neil
Irene P. Teresi
Robert W. Whalen II
Jody G. Zirn
BOCA RATON OFFICE
CHARLES J. FRANKEL III
Managing Director
VICE PRESIDENTS
-------------------------------
Elizabeth D. Fletcher
John R. George
Charles L. Womack
NAPLES OFFICE
CARL A. HARNISH
Regional President
VICE PRESIDENTS
-------------------------------
D. Bruce Berkinshaw
Edward J. DenDooven
Samuel F. Hinkle, Jr.
William R. MacIlvaine
Peter A. Schaedel
U.S. TRUST COMPANY
OF NEW JERSEY
MATURIN L. DELAFIELD
Chairman
ASHTON HARVEY
President
MANAGING DIRECTORS
-------------------------------
Edward P. Bromley, Jr.
Joseph A. Gallagher
Joseph E. Hanlon
SENIOR VICE PRESIDENT
-------------------------------
Brian J. Keeney
VICE PRESIDENTS
-------------------------------
James H. Caulfield
David F. Davis
Karen P. Francois
Frederick L. Gaskin
Alisa B. Jaffe
Susan J. Keck
Yuki Moore Laurenti
Leonard LoDico
Dee E. Patberg
Marie A. Russo
U.S. TRUST OF THE
PACIFIC NORTHWEST
RALPH C. RITTENOUR, JR.
Chairman and
Chief Executive Officer
DOUGLAS F. ADAMS
President and
Chief Operating Officer
CHARLES J. SWINDELLS
Vice Chairman
NANCY L. JACOB
Executive Vice President
SENIOR VICE PRESIDENTS
-------------------------------
Marcia A. Bennett
Stephen C. Brink
VICE PRESIDENTS
-------------------------------
Kimberley A. Benson
Linda Davis
Grant Lowes
M. Wakefield Mack
April D. Sanderson
N. Lynn Sarkowsky
Marvin D. Vukovich
22
<PAGE> 78
U.S. TRUST OFFICERS
CTC CONSULTING
NANCY L. JACOB
Chairman and
Chief Executive Officer
RALPH C. RITTENOUR, JR.
President
VICE PRESIDENTS
-------------------------------
Beverly J. DeRouchey
Garbis P. Mechigian
Thomas N. Oglesby
U.S. TRUST COMPANY
OF TEXAS, N.A.
PETER J. DENKER
Chairman
WILLIAM J. GOODWIN
President
SENIOR VICE PRESIDENT AND
TRUST OFFICER
-------------------------------
Bradley A. Carson
VICE PRESIDENTS
-------------------------------
Leon F. Andrus
Nathan O. Finke
Eugene M. McCullagh
Roderick M. Riggins
CORPORATE TRUST AND AGENCY
VICE PRESIDENT
-------------------------------
John C. Stohlmann
PRIVATE BANKING
SENIOR VICE PRESIDENT
-------------------------------
Alfred B. Childs
VICE PRESIDENT
-------------------------------
Diana H. Brown
UST SECURITIES CORP.
ASHTON HARVEY
Chairman
ROBERT J. SIMPKINS, JR.
President
VICE PRESIDENTS
-------------------------------
Robert A. Bucich
William P. Livesey
Frederic A. Todd
Kenneth G. Tower
Steven W. Volk
Bernard A. Whalen
POOLED INVESTMENT AND
INSTITUTIONAL SERVICES
KENNETH G. WALSH
Executive Vice President
CORPORATE TRUST AND AGENCY
SENIOR VICE PRESIDENTS
-------------------------------
Gerard F. Ganey
Gus Kourkoulis
Kevin T. O'Brien
Pat Santivasci
VICE PRESIDENTS
-------------------------------
Gerard F. Facendola
Eric C. Fischer
John M. Guiliano
James F. Logan
James J. McGinley
Thomas Musarra
James C. O'Regan
Kenneth W. Soderstrom
Stephen V. Vaccarello
Herbert W. Weber
Louis P. Young
Joan R. Zaborowsky
MUTUAL FUNDS AND POOLED
INVESTMENTS
MARKETING AND SALES
Peter P. Capaccio
Vice President
ADMINISTRATION
Brian F. Schmidt
Vice President
VICE PRESIDENTS
-------------------------------
Frank D. Bruno
Robert D. Cummings
NATIONAL 401(K) PLANS
Mary L. Vitale
Vice President
VICE PRESIDENTS
-------------------------------
Martha A. Kirwin
Stephen A. Martin
EMPLOYEE BENEFIT AND
RETIREMENT SERVICES
Robert J. Moriarty
Vice President
VICE PRESIDENT
-------------------------------
Joseph Marcello
UST FINANCIAL SERVICES
H. Roderick Lloyd-Williams
Vice President
SPECIAL FIDUCIARY
Schuyler V. Grant
Senior Vice President
ASSET ALLOCATION
AND OPERATIONS
VICE PRESIDENTS
-------------------------------
Gary R. Flyge
Thomas J. Lavin
OPERATIONS AND SUPPORT
SERVICES
JOHN M. DEIGNAN
Executive Vice President
VICE PRESIDENT
-------------------------------
Sajid Syed
COMPUTER SERVICES
Joel Abramowitz
Executive Vice President
SENIOR VICE PRESIDENTS
-------------------------------
Alfredo Catignani
Bernard W. Edelstein
Charlotte Schirrippa
23
<PAGE> 79
U.S. TRUST OFFICERS
VICE PRESIDENTS
-------------------------------
Norman F. Acocella
Peter Anselmo
Michael A. Casale
John J. Cleary
T Hardy
Lillian Hoffman
Andrew C. Huemmer
Alvaro R. Jinete
Anthony J. Kalian
William E. Keddy
Robert W. Kochan
James F. Lennon
Edith M. Manchenko
Scott Manville
Jose G. Morales
Richard P. O'Toole
Louis Sofo
HUMAN RESOURCES
Patricia W. McGuire
Senior Vice President
VICE PRESIDENTS
-------------------------------
Edward K. Brady
David Cantos
Carolyn C. Connolly
Robert F. D'Amore
Patricia C. Nocero
Peter P. Shultz
HEALTH SERVICES
Ralph A. Baer, MD
Senior Vice President and
Medical Director
VICE PRESIDENT
-------------------------------
Maureen A. Kane, RN
GENERAL SERVICES
Richard E. Morgan, Jr.
Senior Vice President
VICE PRESIDENTS
-------------------------------
John J. Barrett
Brian K. Hyland
Maureen A. Nugent
BANK OPERATIONS
Jeffrey P. Evans
Senior Vice President
VICE PRESIDENTS
-------------------------------
Brenda Burlington
Michael K. Mitchell
John Tan
SECURITIES SERVICES LIAISON
Raquel Levy
Senior Vice President
VICE PRESIDENTS
-------------------------------
George H. Penny
Francis A. Roggemann
ASSET MANAGEMENT
SERVICES
Camille C. Rosano
Vice President
VICE PRESIDENT
-------------------------------
Lisa Lenza
FINANCE
JOHN L. KIRBY
Senior Vice President, Treasurer
and Chief Financial Officer
TREASURY AND OTHER
BANKING SERVICES
David F. Quinn
Senior Vice President
TREASURY
SENIOR VICE PRESIDENT
-------------------------------
Douglas B. Gearhart
VICE PRESIDENT
-------------------------------
George C. Lang, Jr.
INSTITUTIONAL BANKING SERVICES
John F. Simmons
Senior Vice President
VICE PRESIDENTS
-------------------------------
Richard Cristiano
Jean L. Still
RISK POLICY OFFICE
Sonam W. Atuk
Senior Vice President
VICE PRESIDENT
-------------------------------
Joan M. Collins
COMPTROLLER
Richard E. Brinkmann
Senior Vice President and
Comptroller
VICE PRESIDENTS
-------------------------------
Vincent J. Cona
Joseph M. Juliano
John F. Kearney
John D. Montgomery
Ralph A. Rossi
Mario Saggese
Michael T. Scarpinato
George S. Spira
Dianne Tiongson
James J. Witkowski
Robert J. Zwirz
AUDIT
RAYMOND M. LI
Senior Vice President
VICE PRESIDENTS
-------------------------------
Eileen J. Daly
Charles R. Modugno
Michael J. Murphy
Wayne T. Sluscavage
GENERAL COUNSEL
MAUREEN SCANNELL BATEMAN
Senior Vice President and
General Counsel
VICE PRESIDENTS
-------------------------------
Susan Jacobi
Anastasia McLaughlin
Ronald A. Schwartz
Frank Hugh Scifo
CORPORATE SECRETARY
CAROL A. STRICKLAND
Senior Vice President and
Corporate Secretary
MARKETING AND
CORPORATE
COMMUNICATIONS
MARTHA L. DINERSTEIN
Senior Vice President
VICE PRESIDENTS
-------------------------------
Linda M. Hallidy
Allison Cooke Kellogg
Amy B. Rossman
Ann M. Thibodeau
24
<PAGE> 80
BOARD OF DIRECTORS
Eleanor Baum
Dean, School of Engineering,
The Cooper Union for the Advancement
of Science and Art
Samuel C. Butler
Partner,
Cravath, Swaine & Moore
Peter O. Crisp
General Partner,
Venrock Associates
Daniel P. Davison
Retired Chairman of the Board
Philippe de Montebello
Director,
Metropolitan Museum of Art
Paul W. Douglas
Retired Chairman of the Board,
The Pittston Company
Antonia M. Grumbach
Partner,
Patterson, Belknap, Webb & Tyler
Frederic C. Hamilton
Chairman of the Board,
President and Chief Executive Officer,
Hamilton Oil Company, Inc.
Peter L. Malkin
Chairman,
Wien, Malkin & Bettex
Jeffrey S. Maurer
President and Chief Operating Officer
Orson D. Munn
Chairman and Director,
Munn, Bernhard & Associates, Inc.
H. Marshall Schwarz
Chairman and Chief Executive Officer
Philip L. Smith
Corporate Director and Trustee
John H. Stookey
Chairman,
Quantum Chemical Corporation
Frederick B. Taylor
Vice Chairman and
Chief Investment Officer
Richard F. Tucker
Retired Vice Chairman of the Board,
Mobil Corporation
Carroll L. Wainwright, Jr.
Consulting Partner,
Milbank, Tweed, Hadley & McCloy
Robert N. Wilson
Vice Chairman,
Johnson & Johnson
Ruth A. Wooden
President and Chief Executive Officer,
The Advertising Council, Inc.
HONORARY DIRECTORS
OF UNITED STATES TRUST
COMPANY OF NEW YORK
Edwin D. Etherington
President Emeritus,
Wesleyan University
Tom Killefer
Chairman and President Emeritus
<PAGE> 81
ADDRESSES
U.S. Trust Corporation
114 West 47th Street
New York, NY 10036
OFFICES
New York
United States Trust Company
of New York
114 West 47th Street
New York, NY 10036
(212) 852-1000
111 Broadway
New York, NY 10006
(212) 374-4050
11 West 54th Street
New York, NY 10019
(212) 887-0400
100 Park Avenue
New York, NY 10017
(212) 599-5600
770 Broadway
New York, NY 10003
(212) 420-6100
California
U.S. Trust Company
of California, N.A.
515 So. Flower Street
Suite 2700
Los Angeles, CA 90071
(213) 861-5000
600 Anton Boulevard
Suite 150
Costa Mesa, CA 92626
(714) 438-3600
Connecticut
U.S. Trust Company
of Connecticut
225 High Ridge Road
Stamford, CT 06905
(203) 352-4400
Florida
U.S. Trust Company
of Florida
132 Royal Palm Way
Palm Beach, FL 33480
(407) 659-1550
765 Seagate Drive
Naples, FL 33940
(813) 566-8400
One Ocean Plaza
Suite 300
One South Ocean Boulevard
Boca Raton, FL 33432
(407) 338-3510
New Jersey
U.S. Trust Company
of New Jersey
Five Vaughn Drive
CN 5209
Princeton, NJ 08543
(609) 987-2300
Oregon
U.S. Trust Company
of the Pacific Northwest
4380 SW Macadam Avenue
Suite 450
Portland, OR 97201
(503) 228-2300
Texas
U.S. Trust Company
of Texas, N.A.
2001 Ross Avenue
Suite 2700
Dallas, TX 75201
(214) 754-1200
SUBSIDIARIES
Campbell, Cowperthwait & Co.
20 West 55th Street
New York, NY 10019
(212) 887-0800
CTC Consulting
4380 SW Macadam Avenue
Suite 450
Portland, OR 97201
(503) 228-4300
UST Fiduciary Services, Ltd.
1300 Eye Street NW #1080 East
Washington, DC 20005
(202) 326-7510
UST Securities Corp.
Five Vaughn Drive
CN 5209
Princeton, NJ 08543
(609) 734-7788
<PAGE> 82
U.S. TRUST CORPORATION FOUNDATION
A listing of the charitable grants made by the foundation in 1994 is available
by writing to the Corporate Secretary's Office, U.S. Trust Corporation, 114
West 47th Street, New York, NY 10036.
DIVIDEND REINVESTMENT SERVICE
Shareholders interested in participating in U.S. Trust's Dividend Reinvestment
Plan may obtain information by writing to the Corporate Secretary's Office,
U.S. Trust Corporation, 114 West 47th Street, New York, NY 10036.
FORM 10-K
U.S. Trust Corporation's yearly report to the Securities and Exchange
Commission (Form 10-K) will be furnished free of charge to shareholders who
write to the Public Relations Department, U.S. Trust Corporation, 114 West 47th
Street, New York, NY 10036.
U.S. Trust is a member of the Federal Reserve System, the Federal Deposit
Insurance Corporation and the New York Clearing House Association.
The following are registered service marks of United States Trust Company of
New York:
U.S. Trust
United States Trust Company
United States Trust
United States Trust Company of New York
Design: Hewson Design Associates, Inc. NYC Photography: Kelly/Mooney
<PAGE> 83
H. MARSHALL SCHWARZ (RIGHT), CHAIRMAN AND CHIEF EXECUTIVE OFFICER, AND
JEFFREY S. MAURER, PRESIDENT AND CHIEF OPERATING OFFICER
U.S. TRUST'S MANAGEMENT COMMITTEE (LEFT TO RIGHT) VICE CHAIRMAN AND CHIEF
INVESTMENT OFFICER FREDERICK B. TAYLOR, PRESIDENT JEFFREY S. MAURER, CHAIRMAN
H. MARSHALL SCHWARZ, EXECUTIVE VICE PRESIDENT PAUL K. NAPOLI, EXECUTIVE VICE
PRESIDENT JOHN C. HOVER II, EXECUTIVE VICE PRESIDENT JOHN M. DEIGNAN, SENIOR
VICE PRESIDENT JOHN L. KIRBY, AND EXECUTIVE VICE PRESIDENT KENNETH G. WALSH
SENIOR VICE PRESIDENT EDITH A. CASSIDY (RIGHT), HEAD OF INVESTMENT RESEARCH AT
U.S. TRUST, AND VICE PRESIDENT DAVID I. FANN (ON SCREEN IN FOREGROUND), HEAD OF
ALTERNATIVE INVESTMENTS, TRY OUT STATE-OF-THE-ART VIDEOCONFERENCING EQUIPMENT
DEMONSTRATED BY ROBERT BOLDER (FOREGROUND), CHIEF EXECUTIVE OFFICER, AND
MATTHEW FELDMAN (STANDING IN REAR), CHIEF TECHNOLOGY OFFICER, OF MOSAIC
TECHNOLOGIES INFORMATION, A POTENTIAL VENTURE CAPITAL INVESTMENT FOR THE NEW
UST PRIVATE EQUITY INVESTORS FUND, INC.
U.S. TRUST OFFERS A FULL RANGE OF INVESTMENT OPTIONS TO INDIVIDUALS AND
FAMILIES. U.S. TRUST OF CALIFORNIA'S CHIEF INVESTMENT OFFICER ROBERT M. RANEY
(LEFT) AND CHAIRMAN FRANKLIN E. ULF MEET WITH INVESTMENT MANAGEMENT CLIENTS
BRONYA AND ANDREW GALEF IN THEIR HOME TO REVIEW THEIR PORTFOLIO.
RESIDENTIAL MORTGAGES ARE THE PRINCIPAL CREDIT PRODUCT OF OUR PRIVATE BANKING
BUSINESS. CHARLES J. FRANKEL III (LEFT), HEAD OF U.S. TRUST OF FLORIDA'S BOCA
RATON OFFICE, TALKS WITH PRIVATE BANKING CLIENTS ROSEMARY AND JOSEPH ERDMAN
OUTSIDE THEIR HOME.
U.S. TRUST OFFERS A BROAD ARRAY OF SPECIALIZED SERVICES TO ASSIST IN MANAGING
FAMILY WEALTH, INCLUDING CONSULTING ADVICE ON CLOSELY HELD BUSINESS INTERESTS.
LORAINE TSAVARIS, HEAD OF CLIENT SERVICES, VISITS THE MCGLYNN FAMILY'S BAKERY
IN MINNEAPOLIS, MINNESOTA, SHORTLY AFTER COMPLETING THE FAMILY'S BUSINESS
SUCCESSION PLAN. FROM LEFT, SONS THOMAS, MICHAEL AND DANIEL AND THEIR FATHER,
BURT.
U.S. TRUST RECENTLY ACQUIRED THE INDIVIDUAL ACCOUNT BUSINESS OF J. & W.
SELIGMAN AND CO. INC., IN NEW YORK CITY. SELIGMAN CLIENT CHRIS SCHABACKER
(LEFT) MEETS WITH U.S. TRUST SENIOR PORTFOLIO MANAGER JUNIUS C. DAVENPORT III
(FORMERLY WITH SELIGMAN) AND VICE PRESIDENT KELLY HANRATTY, FINANCIAL PLANNING,
TO LEARN ABOUT ADDITIONAL SERVICES AVAILABLE FROM U.S. TRUST.
VICE CHAIRMAN AND
CHIEF INVESTMENT OFFICER
FREDERICK B. TAYLOR
<PAGE> 84
U.S. Trust Corporation
114 West 47th Street
New York, NY 10036
Copyright 1994, USA TODAY. Reprinted by permission.
Copyright 1995, USA TODAY. Reprinted by permission.
Copyright 1995, Los Angeles Times. Reprinted by permission.
Copyright 1994/5, by The New York Times. Reprinted by permission.
Copyright 1994, The Chicago Tribune. Reprinted by permission.
Copyright 1995, The Chicago Tribune. Reprinted by permission.
Copyright 1994, Newsday. Reprinted by permission.
Copyright 1995, Newsday. Reprinted by permission.
<PAGE> 85
[CHART]
<TABLE>
<CAPTION>
90 91 92 93 94 6/30/95
<S> <C> <C> <C> <C> <C>
116.5 128.3 148.1 171.1 192.9 101.1
</TABLE>
FEES AND COMMISSIONS
(DOLLARS IN MILLIONS)
On a pro-forma basis
[CHART]
<TABLE>
<CAPTION>
90 91 92 93 94 6/30/95
<S> <C> <C> <C> <C> <C>
17.1 20.3 24.8 30.3 31.1 41.2
</TABLE>
Special Fiduciary Assets
ASSETS UNDER MANAGEMENT
(DOLLARS IN BILLIONS)
[CHART]
<TABLE>
<CAPTION>
90 91 92 93 94 6/30/95
<S> <C> <C> <C> <C> <C>
9.96 11.13 11.39 14.57 18.38 11.38
</TABLE>
ASSET MANAGEMENT
NEW BUSINESS GROWTH
RECURRING FEE INCOME
(DOLLARS IN MILLIONS)
[CHART]
<TABLE>
<CAPTION>
90 91 92 93 94 6/30/95
<S> <C> <C> <C> <C> <C>
711.4(1) 901.8(1) 1286.3(1) 1641.6(1) 1829.5(1) 2133.4(1)
693.0(2) 841.9(2) 987.8(2) 1177.0(2) 1283.5(2) 1458.1(2)
415.6(3) 499.4(3) 547.1(3) 1356.4(3) 1430.9(3) 1405.9(3)
(4) (4) (4) 588.4(4) 639.0(4) 789.3(4)
Total 1,820.0 2,243.1 2,821.2 4,763.4 5,182.9 5,786.7
</TABLE>
(1) U.S. Trust of California*
(2) U.S. Trust of Florida
(3) U.S. Trust of the Pacific Northwest
(4) U.S. Trust of Texas
*Does not include Special Fiduciary Assets
U.S. TRUST REGIONAL AFFILIATES
TOTAL ASSETS UNDER MANAGEMENT
(DOLLARS IN MILLIONS)
[CHART]
<TABLE>
<CAPTION>
90 91 92 93 94 6/30/95
<S> <C> <C> <C> <C> <C>
109.6 121.5 134.6 152.2 159.6 175.9
</TABLE>
PAR VALUE OF CORPORATE
TRUSTEESHIPS, AGENCY
RELATIONSHIPS AND BOND
IMMOBILIZATION
(DOLLARS IN BILLIONS)
[CHART]
Discretionary
Account Composite Equity
Cumulative Return
79 83 87 91 6/30/95
1500
1000
500
Discretionary Account Composite
S&P 500
INDATA Median
(Industry composite)
[CHART]
UST Master Long-Term
Tax-Exempt Fund
Cumulative Return
86* 89 92 6/30/95
300
250
200
150
Long-Term Tax-Exempt Fund
Lipper General Municipal Index
*Inception February 5, 1986
