SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No. )
Filed by Registrant [X]
Filed by a Party other than Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
STATE STREET BOSTON CORPORATION
_________________________________________________
(Name of Registrant as Specified in its Charter)
___________________________________________
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[X] $125 per Exchange Act Rules 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 which transaction
applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:*
4) Proposed maximum aggregate value of transaction:
* Set forth the amount on which the filing is calculated
and state how it was determined.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form
or Schedule and the date of its filing.
1) Amount previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
Notes: The fee was wired to Mellon Bank account on 3/10/94.
March 15, 1994
DEAR STOCKHOLDER:
You are cordially invited to attend the 1994 Annual Meeting
of Stockholders of State Street Boston Corporation. The meeting
will be held in the Enterprise Room at 225 Franklin Street,
Boston, Massachusetts on Wednesday, April 20, 1994, at 10:00 a.m.
Your Board of Directors and management look forward to greeting
those stockholders able to attend.
The notice of meeting and proxy statement which follow
describe the business to be conducted at the meeting. In
addition to a proposal to elect directors, you will be asked to
approve the new 1994 Stock Option and Performance Unit Plan,
which will replace the two existing plans, and to approve the
performance goals under the Senior Executives Annual Incentive
Plan. State Street's goal is to be the leading global servicer
of financial assets. To help achieve this goal in competitive
global markets, State Street's executive compensation program is
designed to link executive compensation directly to the
Corporation's performance, growth in stockholder value and the
contribution of the executives to those results. THE BOARD OF
DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THESE
PROPOSALS.
Your vote is very important. Whether or not you plan to
attend the meeting, please carefully review the enclosed proxy
statement. Then complete, sign, date and mail promptly the
accompanying proxy in the enclosed return envelope. To be sure
that your vote will be received in time, please return the proxy
at your earliest convenience.
We look forward to seeing you at the Annual Meeting so that
we can update you on our progress. Your continuing interest is
very much appreciated.
Sincerely,
Marshall N. Carter
Chairman and
Chief Executive Officer<PAGE>
<PAGE>
NOTICE OF 1994 ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of
STATE STREET BOSTON CORPORATION:
The 1994 Annual Meeting of Stockholders of State Street
Boston Corporation will be held on Wednesday, April 20, 1994, at
10:00 a.m., Eastern Time, at 225 Franklin Street, Fifth Floor,
Boston, Massachusetts, for the following purposes:
1. To elect five directors, each for a three-year term;
2. To approve the 1994 Stock Option and Performance Unit
Plan;
3. To approve the performance goals under the Senior
Executives Annual Incentive Plan; and
4. To act upon such other business as may properly come
before the meeting.
Stockholders of record at the close of business on February
28, 1994 are entitled to notice of and to vote at the meeting and
any adjournments thereof.
PLEASE MARK, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE
ENVELOPE PROVIDED FOR YOUR USE. FURNISHING THIS PROXY WILL NOT
AFFECT YOUR RIGHT TO REVOKE THIS PROXY OR TO VOTE IN PERSON
SHOULD YOU ATTEND THE MEETING.
By Order of the Board of Directors,
Robert J. Malley
Secretary
March 15, 1994
<PAGE>
<PAGE>
STATE STREET BOSTON CORPORATION
225 Franklin Street, Boston, Massachusetts 02110
PROXY STATEMENT
This Proxy Statement, which is scheduled to be sent to
stockholders beginning on March 15, 1994, is furnished in
connection with the solicitation by the Board of Directors of
State Street Boston Corporation (the "Corporation") of proxies
for the 1994 Annual Meeting of Stockholders of the Corporation to
be held on April 20, 1994 and at any adjournments thereof. The
Board of Directors has fixed the close of business on February
28, 1994 as the record date for determining the stockholders
entitled to notice of and to vote at the meeting. On the record
date 76,111,410 shares of Common Stock of the Corporation were
outstanding and entitled to be voted at the meeting.
All shares represented by properly executed proxies, if such
proxies are received in time and not revoked, will be voted at
such meeting in accordance with any specifications thereon or, if
no specifications are made, proxies will be voted in accordance
with the recommendations of the Board of Directors. Each share
of Common Stock is entitled to one vote. Any proxy may be
revoked at any time before it is voted by notifying the Secretary
in writing, by executing a later dated proxy or by notifying the
Secretary at the meeting and voting in person.
The Corporation will bear the cost of soliciting proxies.
The solicitation of proxies will be made primarily by mail.
Proxies may also be solicited personally and by telephone by
regular employees of the Corporation and its principal
subsidiary, State Street Bank and Trust Company (the "Bank"),
without any additional remuneration and at minimal cost. The
Board of Directors intends to request banks, brokerage houses,
custodians, nominees and fiduciaries to forward soliciting
material to their principals and to obtain authorization for the
execution of proxies. In addition, the Corporation has retained
D.F. King and Co. to aid in the solicitation of proxies. The
cost of such services is $9,000, plus expenses.
ELECTION OF DIRECTORS
The By-laws of the Corporation provide that there shall be a
Board of not less than 3 nor more than 30 directors, the exact
number to be determined by vote of the Board of Directors, and,
in accordance with Massachusetts law, for the classification of
the Board into three classes of directors as nearly equal in
number as possible, each class serving a three-year term, with
one class of directors to be elected at each annual meeting of
stockholders for the term specified and to continue in office
until their successors are elected and qualified. Pursuant to
the By-laws, at a meeting on December 16, 1993, the Board of
Directors fixed the number of directors at 16, effective with the
1994 Annual Meeting. There are currently 17 directors of the
Corporation.
Tenley E. Albright, M.D., was elected a Class III director
and Charles R. LaMantia was elected a Class II director on
September 16, 1993. In accordance with the Corporation's
retirement policy for directors, George H. Kidder, a Class I
Director, is not standing for reelection. Nannerl O. Keohane, a
Class II Director, resigned on September 16, 1993, upon her
appointment as president of Duke University.
It is intended that shares represented by proxies solicited
by the Board of Directors will, unless contrary instructions are
given, be voted for the election of the five nominees listed
below as directors. Although the Board of Directors does not
contemplate that any nominee will be unavailable for election, in
the event that vacancies occur unexpectedly, such shares may be
voted for such substitute nominees, if any, as may be designated
by the Board of Directors. Information relating to each nominee
for election as director and for each continuing director,
including his or her period of service as a director of the
Corporation, principal occupation and other biographical material
is shown below.
DIRECTORS TO BE ELECTED AT THE 1994 ANNUAL MEETING
Class I
I. MACALLISTER BOOTH DIRECTOR SINCE 1990
Chairman, President and Chief Executive Officer of Polaroid
Corporation, a manufacturer of instant image recording products.
Mr. Booth, age 62, joined Polaroid in 1958 as a supervisor in the
Film Division. He is also a director of Western Digital
Corporation, Jobs for Massachusetts and The Conference Board,
chairman of the board of INROADS/Boston, Inc., a member of the
board of trustees of Eye Research Institute and a corporator of
Emerson Hospital of Concord, Massachusetts. He received B.S. and
M.B.A. degrees from Cornell University.
JAMES I. CASH, JR. DIRECTOR SINCE 1991
The James E. Robison Professor of Business Administration
and Chairman of the MBA program at the Harvard University
Graduate School of Business Administration. Mr. Cash, age 46,
has been a faculty member of the Harvard Business School since
1976. He is a director of Tandy Corporation. He received a B.S.
degree from Texas Christian University and M.S. and Ph.D. degrees
in computer science and management information systems from
Purdue University.
TRUMAN S. CASNER DIRECTOR SINCE 1990
Partner in the law firm of Ropes & Gray. Mr. Casner, age
60, received a B.A. degree from Princeton University in 1955 and
an LL.B from Harvard Law School in 1958. He served as law clerk
to Chief Justice Wilkins of the Massachusetts Supreme Judicial
Court and joined Ropes & Gray in 1959, becoming a partner in
1968. He is an overseer of the Museum of Science, Boston,
chairman of the corporation and past president of Belmont Hill
School and a member of the corporation of Woods Hole
Oceanographic Institution and Sea Education Association. He is a
member of the American Law Institute and a fellow of The American
Bar Foundation.
DAVID B. PERINI DIRECTOR SINCE 1980
Chairman and President of Perini Corporation, a construction
and real estate development company. Mr. Perini, age 56, is also
a director of New England Telephone Company. He holds a B.S.
degree from the College of the Holy Cross and received a J.D.
degree from Boston College Law School in 1962. He joined Perini
Corporation in 1962. He has received merit awards from the
National Conference of Christians and Jews and the Italian
American Charitable Society. Mr. Perini is a trustee of the
College of the Holy Cross and St. John's Preparatory School.
DENNIS J. PICARD DIRECTOR SINCE 1991
Chairman and Chief Executive Officer of Raytheon Company, a
diversified, technology-based international company, since 1991.
Mr. Picard, age 61, joined Raytheon in 1955 and held engineering
and management assignments leading to his election as president
and director in 1989. He is a member of the National Academy of
Engineering and its Industry Advisory Board, a fellow of the
American Institute of Aeronautics and Astronautics and a fellow
of the Institute of Electrical and Electronic Engineers. Mr.
Picard is a trustee of Northeastern University and Bentley
College, a corporator of Emerson Hospital, a director of the
Discovery Museums, a member of the National and Massachusetts
Business Roundtables, the Defense Policy Advisory Committee on
Trade (DPACT), the advisory committee of the Armed Services YMCA
of the United States and the Armed Forces Communications and
Electronics Association. He is a member of the Algonquin Club of
Boston and the Commercial Club of Boston. He is a graduate of
Northeastern University and holds honorary doctorates from
Northeastern University, Merrimack College and Bentley College.
DIRECTORS SERVING UNTIL THE 1995 ANNUAL MEETING
Class II
JOSEPH A. BAUTE DIRECTOR SINCE 1990
Consultant to Markem Corporation, which provides systems and
services to mark customer products, since June 1993. Mr. Baute,
age 66, was for many years the Chairman and Chief Executive
Officer of Markem Corporation. He joined Markem in 1954 and held
engineering, sales and marketing positions until 1968 when he
became vice president and chief operating officer for Markem-USA,
Markem U.K. and Markem Europa. He was elected president and
director of Markem Corporation in 1973, chief executive officer
in 1977 and chairman in 1979. He is a director of Nashua
Corporation, Houghton Mifflin Company, Dead River Company and The
Keene Clinic. He is an overseer of the Boston Museum of Science
and past director and chairman of the Federal Reserve Bank of
Boston. Mr. Baute received B.A. and M.S. degrees from Dartmouth
College.
LOIS D. JULIBER DIRECTOR SINCE 1991
Chief Technological Officer of Colgate-Palmolive Company, a
consumer product company, since 1992. She was President of
Colgate-Palmolive, Far East Division, from 1988 through 1991.
From 1973 to 1988, she was employed by General Foods Corporation
as a vice president. Ms. Juliber, age 45, holds a B.A. degree
from Wellesley College and received an M.B.A. degree from Harvard
University in 1973. She is a trustee of Brookdale Foundation and
a member of the Committee of 200.
CHARLES R. LAMANTIA DIRECTOR SINCE 1993
President and Chief Executive Officer of Arthur D. Little,
Inc., which provides management, technology and environmental
consulting services. Dr. LaMantia, age 54, was president and
chief operating officer of Arthur D. Little, Inc. from 1986 to
1988. Prior to rejoining Arthur D. Little in 1986, he was
president of Koch Process Systems, Inc. From 1977 to 1981, Dr.
LaMantia was vice president in charge of Arthur D. Little's
services to the chemical, metals and energy industries, having
assumed that position after 10 years on the firm's consulting
staff. He is a member of the board of governors of the New
England Medical Center, a member of The Conference Board and the
Massachusetts Business Roundtable and an overseer of WGBH and the
Boston Museum of Science. Dr. LaMantia received B.A., B.S., M.S.
and Sc.D. degrees from Columbia University and attended the
Advanced Management Program at Harvard Business School.
DAVID A. SPINA DIRECTOR SINCE 1989
Vice Chairman of the Corporation. Mr. Spina, age 51, joined
State Street in 1969 as a credit analyst. He served as State
Street's Chief Financial Officer and Treasurer from 1977 through
1992. Mr. Spina was elected Executive Vice President in 1982 and
Vice Chairman in 1992. Mr. Spina is responsible for the
development of corporate management functions and oversees the
integration of major support functions with the Corporation's
business units. He is chairman of Massachusetts Housing
Investment Corporation, a director of the Metropolitan Boston
Housing Partnership, Inc. and treasurer and trustee of the Dana
Hall School. Mr. Spina holds a B.S. degree from the College of
the Holy Cross and an M.B.A. degree from Harvard University.
ROBERT E. WEISSMAN DIRECTOR SINCE 1989
President, Chief Executive Officer and Director of The Dun &
Bradstreet Corporation, provider of information services. Mr.
Weissman, age 53, joined Dun & Bradstreet in 1979. He became
Chief Executive Officer on January 1, 1994. He is a member of
the Institute of Management Accountants, the Society of
Manufacturing Engineers, the Institute of Electrical and
Electronic Engineers, The Business Roundtable, the Committee for
Economic Development and The U.S.-Japan Business Council and is a
trustee of Babson College. Mr. Weissman received a degree in
Business Administration from Babson College in 1964.
DIRECTORS SERVING UNTIL THE 1996 ANNUAL MEETING
Class III
TENLEY E. ALBRIGHT, M.D. DIRECTOR SINCE 1993
Chairman, Vital Sciences, Inc., which was founded to provide
diagnostic testing for cancer and cardiovascular diseases.
Before founding Vital Sciences, Inc., Dr. Albright, age 58,
practiced as a general surgeon. She is a member of the board of
The West Company, a member of Harvard Medical School Visiting
Committee of the Board of Overseers, a member of the board of
directors of the Whitehead Institute for Biomedical Research, a
member of the corporation of Woods Hole Oceanographic Institution
and New England Baptist Hospital and chairman of the selection
panel of the President's Commission on White House Fellows -
northeast region. She graduated from Harvard Medical School
after attending Radcliffe College and has received honorary
degrees from Williams College, Hobart and William Smith Colleges,
Russell Sage College, New England School of Law, Chatham College
and State University of New York at Cortland. Dr. Albright won
the Gold Medal in figure skating at the 1956 Olympics in Cortina,
Italy.
MARSHALL N. CARTER DIRECTOR SINCE 1991
Chairman, President and Chief Executive Officer of the
Corporation. Prior to joining State Street in 1991, Mr. Carter,
age 53, was with Chase Manhattan Bank for 15 years, the last
three years as head of global securities services. He served as
a Marine Corps officer in Vietnam for two years where he was
awarded the Navy Cross and Purple Heart and had international
affairs service as a White House Fellow. Mr. Carter is a member
of the board of directors of the National Securities Clearing
Corporation and Euroclear in Brussels, the co-chairman of the
U.S. Working Group for the Group of Thirty and a member of the
Federal Advisory Council of the Board of Governors of the Federal
Reserve System. Mr. Carter holds a degree in civil engineering
from the U.S. Military Academy at West Point and masters degrees
from the Naval Postgraduate School and George Washington
University.
NADER F. DAREHSHORI DIRECTOR SINCE 1990
Chairman of the Board, President and Chief Executive Officer
of Houghton Mifflin Company, publisher, since 1990. Mr.
Darehshori, age 57, served as college division vice president and
manager of Houghton Mifflin's midwestern sales region from 1984
until he was promoted to vice president and director of the
college division in 1986. In 1987 he was elected senior vice
president, college division. He was promoted to executive vice
president and then to vice chairman in 1989. Mr. Darehshori has
served as a director of Houghton Mifflin Company since 1989 and
is chairman of its executive committee. He is a director of
Commercial Union Corporation, the Boston Public Library
Foundation, the Rabbi Marc H. Tanenbaum Foundation and the
Massachusetts Business Roundtable and is chairman of the Business
Roundtable's education task force. He is a trustee of Wellesley
College, the New England Aquarium and the WGBH Foundation. He is
a member of the comparative and world literature committee of the
National Council of Teachers of English, the Conference Board,
the national corporate committee of the United Negro Fund, the
Dana Farber national advisory council and the national executive
board of the National Conference of Christians and Jews. Mr.
Darehshori also serves on the boards of overseers of the Wien
International Scholarship Program at Brandeis University, the New
England Conservatory of Music, the Boston Symphony Orchestra and
the Museum of Science.
CHARLES F. KAYE DIRECTOR SINCE 1979
President, Transportation Investments, Incorporated, a
lessor and asset manager of intermodel transportation equipment,
since 1990. Mr. Kaye, age 66, is a graduate of St. Thomas
University and received a J.D. degree from Boston College Law
School. He was senior partner of the firm of Kaye, Sheldon and
Barton and special counsel to the Massachusetts Institute of
Technology before joining XTRA Corporation in 1967 as a director
and general counsel. Mr. Kaye became vice chairman in 1970 and
served as chairman, president and chief executive officer of XTRA
from 1973 to 1990. Mr. Kaye is a trustee of Bentley College and
Lawrence Academy, a member of the Visiting Committee of the
Massachusetts General Hospital, chairman of the Alpha Omega
Foundation and town moderator of Littleton, Massachusetts. He
has been the recipient of the Association of American Railroads
annual Intermodel Man of the Year Award and the Air Force
Association Distinguished Service Award.
JOHN M. KUCHARSKI DIRECTOR SINCE 1991
Chairman of the Board, President and Chief Executive Officer
of EG&G, Inc., which provides scientific and technological
products and services worldwide. Mr. Kucharski, age 57, joined
EG&G in 1972 and was elected president and director in 1986. He
is a director of Nashua Corporation, New England Electric System,
Eagle Industry Co. Ltd. and the Massachusetts High Technology
Council, Inc. He serves on the boards of trustees of Marquette
University, George Washington University and the National
Security Industrial Association. He is also a member of the
president's council and the advisory council to the College of
Engineering of Marquette University. Mr. Kucharski holds a B.S
degree from Marquette University, a J.D. degree from George
Washington University and is a member of the District of Columbia
Bar Association.
BERNARD W. REZNICEK DIRECTOR SINCE 1991
Chairman and Chief Executive Officer of Boston Edison
Company, a utility company. From 1987 to 1990, Mr. Reznicek, age
57, was president and chief operating officer of Boston Edison.
In 1990, he became Chief Executive Officer, and in 1992, he was
elected Chairman. Prior to joining Boston Edison, he was
president and chief executive officer of Omaha Public Power
District. Mr. Reznicek holds a B.S. degree from Creighton
University and an M.B.A from the University of Nebraska. He
serves on the boards of Guarantee Mutual Life Company, Father
Flanagan's Boys' Home and the John F. Kennedy Library Foundation
and is chairman of the New England Power Pool (NEPOOL) executive
committee, a director of the New England Council, Inc., the
Electric Transportation Coalition, the Association of Edison
Illuminating Companies, the American Nuclear Energy Council and
the Edison Electric Institute. Mr. Reznicek also serves on the
Board of Overseers of the Museum of Fine Arts, Boston, the Boston
Museum of Science and the Wang Center and is a trustee of the New
England Aquarium.
GENERAL INFORMATION
The Board of Directors has the overall responsibility for
the conduct of the business of the Corporation. Of the present
17 directors, 15 are outside directors and 2 are executive
officers of the Corporation. The Board of Directors held 5
meetings during 1993, and each of the directors attended 75% or
more of the total of all meetings of the Board and of the
committees of the Board on which each director served during the
year, except Lois D. Juliber and David B. Perini, each of whom
attended 71% of the meetings. Each member of the Board of the
Corporation is also a member of the Board of Directors of the
Bank, except Ms. Juliber and Mr. Weissman. The Board of
Directors of the Bank held 12 meetings during 1993. Each member
of the Executive Committee and of the Examining and Audit
Committee of the Corporation is also a member of the
corresponding committee of the Bank, and members customarily hold
joint meetings of both committees.
The Board of Directors has the following committees to
assist it in carrying out its responsibilities:
The EXECUTIVE COMMITTEE reviews and approves policies for
the extension of credit, investment of the Corporation's assets
and financial management; monitors activities under these
policies and reports to the Board, and acts on behalf of the
Board on recurring matters and between meetings under specific
delegations. Its members are George H. Kidder, Chair, Marshall
N. Carter, Nader F. Darehshori, Charles F. Kaye, Bernard W.
Reznicek and David A. Spina. During 1993, the Committee held 13
meetings.
The EXAMINING AND AUDIT COMMITTEE oversees the operation of
a comprehensive system of internal controls to ensure the
integrity of the Corporation's financial reports and compliance
with laws, regulations and corporate policies and monitors
communication with external auditors and bank regulatory
authorities. The Committee is composed of Joseph A. Baute,
Chair, James I. Cash, Jr., Truman S. Casner and John M.
Kucharski. During 1993, the Committee held 8 meetings.
The EXECUTIVE COMPENSATION COMMITTEE oversees the
compensation system for the Corporation's executive officers and
non-management directors. The Committee consists of Dennis J.
Picard, Chair, I. MacAllister Booth, Charles F. Kaye and Robert
E. Weissman. During 1993, the Committee held 7 meetings.
The NOMINATING COMMITTEE, which held 2 meetings during 1993,
is composed of I. MacAllister Booth, Chair, Marshall N. Carter,
Lois D. Juliber and David B. Perini. The Committee recommends
nominees for directors of the Corporation and the Bank. In
carrying out its responsibility of finding the best qualified
directors, the Committee will consider proposals from a number of
sources, including recommendations for nominees submitted upon
timely written notice to the Secretary of the Corporation by
stockholders.
COMPENSATION OF DIRECTORS
Directors who are also officers of the Corporation receive
no compensation for serving as directors or as members of
committees. Directors who are not employees of the Corporation
or the Bank received an annual retainer of $22,000, payable in
shares of the Common Stock of the Corporation or in cash, plus a
fee of $1,250 for each meeting of the Board of Directors and each
committee meeting attended, as well as travel accident insurance
and reimbursement for travel expenses, for the period April 1993
through March 1994. In 1993, all outside directors received
their annual retainer in Common Stock.
BENEFICIAL OWNERSHIP OF SHARES
The table below sets forth the number of shares of Common
Stock of the Corporation beneficially owned by each nominee for
Class I Director, the Class II and Class III Directors, the chief
executive officer and the four other most highly compensated
executive officers and by those persons and other executive
officers as a group as of the close of business on February 1,
1994. None of the nominees, directors or executive officers
owned beneficially as much as 1% of the outstanding shares of
Common Stock. The nominees, directors and executive officers in
the aggregate beneficially owned 1.6% of the Corporation's Common
Stock.
Amount and Nature
of Beneficial
Name Ownership
---- -----------------
Tenley E. Albright, M.D. 4,012(1)
A. Edward Allinson 61,000(2)
Joseph A. Baute 4,190(3)
I. MacAllister Booth 2,815
Marshall N. Carter 46,200(2)
James I. Cash, Jr. 2,099
Truman S. Casner 4,421(4)
Nader F. Darehshori 2,421
Lois D. Juliber 2,099
Charles F. Kaye 21,149
George H. Kidder 42,349(5)
John M. Kucharski 1,713
Charles R. LaMantia 979(6)
Nicholas A. Lopardo 65,280(2)
David B. Perini 15,671
Dennis J. Picard 1,561
Bernard W. Reznicek 2,213
Norton Q. Sloan 35,000
David A. Spina 429,572(2)(7)
Robert E. Weissman 4,099
All of the above and other
executive officers as a group
(33 persons) 1,208,601(2)(6)
___________________
(1) Includes 2,533 shares held in trust for a family member
pursuant to a trust of which Dr. Albright is a co-trustee
with respect to which she disclaims beneficial ownership.
(2) Includes shares which may be acquired within 60 days through
the exercise of stock options as follows: Mr. Allinson,
56,000; Mr. Carter, 44,800; Mr. Lopardo, 65,180; Mr. Spina,
229,600, and the group, 606,960.
(3) Includes 200 shares owned by a member of Mr. Baute's family
with respect to which he disclaims beneficial ownership.
(4) Includes 2,000 shares with respect to which Mr. Casner
shares voting and investment power.
(5) Includes 6,000 shares with respect to which Mr. Kidder
shares voting power with a co-trustee under an indenture of
trust.
(6) Includes shares in which voting power is shared as follows:
Dr. LaMantia, 500 and the group, 1,930.
(7) Includes 20,000 shares owned by a family member with respect
to which Mr. Spina disclaims beneficial ownership.
The Corporation does not know of any persons who may be
deemed to own more than 5 percent of the Corporation's Common
Stock.
Section 16(a) of the Securities Exchange Act of 1934
requires the Corporation's executive officers and directors to
file initial reports of ownership and reports of changes in
ownership of the Common Stock of the Corporation with the
Securities and Exchange Commission ("SEC"). Executive officers
and directors are required by SEC regulations to furnish the
Corporation with copies of all Section 16(a) forms which they
file.
Based on a review of the copies of such forms furnished to
the Corporation and written representations from the
Corporation's executive officers and directors, the Corporation
believes that in 1993 all Section 16(a) filing requirements
applicable to its executive officers and directors were met,
except that the initial report on Form 3 of Dr. Tenley E.
Albright did not timely report shares held in trust for an adult
family member with respect to which she disclaims beneficial
ownership.
CERTAIN TRANSACTIONS
During 1993 certain directors and executive officers of the
Corporation and the Bank, and various corporations and other
entities associated with such directors, were customers of the
Bank and its affiliates and had ordinary business transactions
with the Bank. The transactions include loans and commitments
made in the ordinary course of the Bank's business and on
substantially the same terms, including interest rate and
collateral, as those prevailing at the time for comparable
transactions with unrelated persons with no more than normal risk
of collection. The Bank and other subsidiaries of the Corporation
have used products or services of Dun & Bradstreet with which Mr.
Weissman, a director, is associated. Additional transactions of
this nature may be expected to take place in the ordinary course
of business in the future. Ropes & Gray, a law firm of which Mr.
Casner is a partner, was retained by the Corporation to handle
certain legal matters during the past year. It is anticipated
that the firm will continue to provide legal services in the
current year.
No executive officer of the Corporation is allowed to borrow
from the Bank other than through the use of a reserve account
with limits of up to $20,000 as allowed by Massachusetts law and
at the same interest rate paid by the public.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Corporation's Executive Compensation
Committee are Dennis J. Picard, Chair, I. MacAllister Booth,
Charles F. Kaye and Robert E. Weissman. No present or former
officer of the Corporation or the Bank served as a member of the
Committee. Furthermore, no executive officer of the Corporation
served as a director of any entity, one of whose directors or
executive officers served on the Corporation's Board or the
Committee.
EXECUTIVE COMPENSATION
Shown below is information concerning the annual and long
term compensation paid by the Corporation and its subsidiaries,
including the Bank, with respect to 1993, 1992 and 1991 to the
chief executive officer and the four other most highly
compensated executive officers of the Corporation (the "Named
Executive Officers").
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS(1) PAYOUTS
OTHER SECURITIES ALL
NAME ANNUAL UNDERLYING OTHER
AND COMPEN- OPTIONS/ LTIP COMPEN-
PRINCIPAL SALARY BONUS SATION SARS PAYOUTS SATION
POSITION YEAR ($) ($) ($) (#) ($)(2) ($)(3)
- --------- ---- ------ ----- ------- ---------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Marshall N. Carter(4) 1993 643,753 450,000 0 None 0 23,497
Chairman, President 1992 625,003 375,000 0 None 650,906 20,364
and Chief Executive 1991 232,886 230,000(5) 0 112,000 0 12,238
Officer
David A. Spina 1993 493,752 300,000 0 None 0 74,497
Vice Chairman 1992 475,003 250,000 0 None 1,156,791 71,364
1991 400,002 225,000 0 None 0 60,238
Nicholas A. Lopardo(6)1993 347,919 470,000 0 None 0 15,497
Executive Vice 1992 316,252 503,000 0 None 0 14,364
President 1991 282,501 386,100 0 None 0 13,238
A. Edward Allinson(7) 1993 450,002 280,000 0 None 0 17,497
Executive Vice 1992 406,002 303,000 0 None 1,154,274 17,364
President 1991 376,252 300,000 0 None 0 15,238
Norton Q. Sloan 1993 321,252 160,000 0 None 0 17,497
Executive Vice 1992 304,999 153,000 0 None 798,271 16,364
President 1991 283,749 145,000 0 None 0 15,238
__________________________________
(1) Reflects a two-for-one stock split effective April 1992.
(2) Long term compensation payouts reflect performance shares earned in
accordance with the attainment of maximum performance targets for the
three year period, 1990-1992, and paid in cash equal to the fair market
value of the Corporation's Common Stock at the end of the performance
period.
(3) Includes the Corporation's contributions to the Salary Savings Program of
$4,497 in 1993, $4,364 in 1992 and $4,238 in 1991, plus accruals under
the Supplemental Executive Retirement Plan: Mr. Carter $19,000 in 1993,
$16,000 in 1992 and $8,000 in 1991; Mr. Spina $70,000 in 1993, $67,000
in 1992 and $56,000 in 1991; Mr. Lopardo $11,000 in 1993, $10,000 in 1992
and $9,000 in 1991; Mr. Allinson $13,000 in 1993, $13,000 in 1992 and
$11,000 in 1991, and Mr. Sloan, $13,000 in 1993, $12,000 in 1992 and
$11,000 in 1991.
(4) Mr. Carter became Chairman on January 1, 1993. He joined the Corporation
in July 1991 as President and became Chief Executive Officer on January
1, 1992.
(5) Includes a special sign-on cash bonus received by Mr. Carter in the
amount of $100,000 when he joined the Corporation.
(6) Includes bonuses from the Corporation's Annual Incentive Plan and from
the State Street Global Advisor's Incentive Plan.
(7) Includes a cash bonus received by Mr. Allinson of $100,000 in each of the
years 1991-1993 as chief executive officer of Boston Financial Data
Services, Inc. which is 50% owned by the Corporation.
</TABLE>
Shown below is information with respect to the exercise of
stock options to purchase the Corporation's Common Stock by the
Named Executive Officers during 1993 and the fiscal year-end
value of unexercised options held by the Named Executive Officers
granted in prior years under the 1984 Stock Option Plan which
expired in 1989, the 1985 Stock Option and Performance Share Plan
which expired in 1992, the 1989 Stock Option Plan and the 1990
Stock Option and Performance Share Plan.
<TABLE>
AGGREGATED OPTION/SAR EXERCISES IN THE LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNDER- UNEXERCISED
LYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
DECEMBER 31, 1993 DECEMBER 31, 1993
SHARES (#)(1) ($)(2)
ACQUIRED VALUE ----------------- -----------------
ON EXER- REALIZED EXER- UNEXER- EXER- UNEXER-
NAME CISE (#) ($)(3) CISABLE CISABLE CISABLE CISABLE
- ---- -------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Marshall N. Carter None 0 44,800 67,200 473,200 709,800
David A. Spina None 0 229,600 46,400 5,834,396 794,600
Nicholas A. Lopardo 100 2,716 57,982 47,020 1,386,426 1,087,191
A. Edward Allinson 4,000 83,750 56,000 40,000 1,078,000 770,000
Norton Q. Sloan 45,200 1,112,550 15,600 31,200 267,150 534,300
___________________________
(1) Reflects a two-for-one stock split effective April 1992.
(2) Represents the difference between the exercise price of the stock options
and the market value of the stock on December 31, 1993 ($37.50).
(3) Represents the difference between the exercise price of the stock options
and the market value of the stock at the time of the exercise.
</TABLE>
Shown below is information with respect to a grant of
performance units to the Named Executive Officers subject to
stockholder approval.
LONG-TERM INCENTIVE PLANS-AWARDS IN LAST FISCAL YEAR
NUMBER OF PERFORMANCE OR
SHARES, UNITS OTHER PERIOD
OR OTHER UNTIL MATURA-
NAME RIGHTS (#) TION OR PAYOUT
--------------- --------------
Marshall N. Carter (1) 30,000 1995-1996
David A. Spina (1) 20,000 1995-1996
Nicholas A. Lopardo (1) 10,000 1995-1996
A. Edward Allinson (1) 15,000 1995-1996
Norton Q. Sloan (1) 15,000 1995-1996
________________________
(1) The performance units were granted in December 1993 under
the 1994 Stock Option and Performance Unit Plan, which is
discussed later in this Proxy Statement, subject to
stockholder approval of the plan. The performance units
are earned based on the Corporation's performance during
the performance period. The performance period is two
fiscal years, and the last day of the second fiscal year
of the performance period is the maturity date.
Performance units, to the extent earned, are payable at
maturity in cash equal to the fair market value of the
Corporation's Common Stock at the end of the performance
period.
<PAGE>
<PAGE>
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
The Executive Compensation Committee of the Board of
Directors furnishes the following report on Executive
Compensation.
POLICY
State Street combines information technology with banking,
trust, investment and securities processing capabilities to
support the investment strategies of our customers worldwide.
The Corporation's goal is to be the leading global servicer of
financial assets. The Corporation's executive compensation
program is designed to attract and retain superior executives, to
focus these individuals on achieving the Corporation's goals and
objectives and to reward executives for meeting specific short-
and long-term performance goals. It has been the practice of the
Corporation to tie significant amounts of the executive
compensation to achievement of specific financial targets. The
compensation program places emphasis on challenging performance
goals, business growth and sustainable real growth in earnings
per share.
The Executive Compensation Committee is comprised entirely
of independent, non-employee directors. The Committee develops
and reviews and, with respect to officer-directors, recommends to
the Board of Directors for approval, strategic compensation plans
for executive officers of the Corporation. The plans are
designed to align executive compensation with the Corporation's
business strategy and to attract and retain high caliber
executives. The program provides for significant compensation
opportunities which are directly related to achievement of
challenging long-term goals and growth in the Corporation's stock
price. By including stock-based compensation plans within the
compensation strategy, State Street links closely the goals of
stockholders and executives.
The principles of this compensation strategy are applied
throughout the Corporation. Since senior executives of the
Corporation have the greatest opportunity to influence long-term
performance, a greater proportion of their compensation is linked
to the achievement of long-term financial goals and to stock
price. Individuals who manage business units or have corporate
functional or staff responsibility have a significant opportunity
to influence the Corporation's results, and a sizable portion of
their total compensation is related to the achievement of
financial goals of both the unit and the Corporation. Many of
these individuals have also participated in the Corporation's
stock option plan. State Street also offers specific bonus
opportunities to individuals who have specialized sales, trading
or investment responsibilities. Outstanding performance by these
specialists is rewarded with bonuses linked directly to the
attainment of challenging measurable business goals.
The Committee met seven times during the year and reported
its activities to the Board of Directors. In 1993, in
conjunction with its annual comprehensive review of the executive
compensation program, the Committee engaged an independent
compensation consultant. The consultant worked directly with the
Committee in reviewing the executive compensation program,
selecting a peer group of public companies to which to compare
the Corporation's executive compensation, financial performance
and total return to stockholders and recommending modifications
to existing plans. As part of this review, the Committee, with
assistance from the independent consultant, selected a group of
companies as a reference group to which to compare compensation
practices. This reference group included large U.S. bank holding
companies, selected other technology-based companies engaged in
servicing businesses believed to be competing with the
Corporation for the same caliber of executive talent, and New
England bank holding companies.
The Committee believes that the Corporation's most direct
competitors for executives are not necessarily the same companies
that would be included in a peer group established to compare
stockholder returns. Therefore, the reference companies used for
comparative compensation purposes contain some overlap with, but
are not identical to, the companies in the S&P Financial Index
used for performance comparison under "Stockholder Return
Performance Presentation."
As a result of its reviews, the Committee determined that
the fundamental elements of the compensation plan, salary, bonus,
stock options and performance shares/units are well balanced in a
program that supports the Corporation's business strategy,
provides competitive compensation and creates value for
stockholders. The Committee determined that some modifications
to the compensation plans were desirable to increase the bonus
opportunity for the chief executive officer as indicated by
competitive information and to expand the number of performance
measures under the Senior Executives Annual Incentive Plan. In
addition, the Committee recommended that the performance measures
for the Corporation's performance shares/units program be
expanded and that the cycles for issuance of performance units
and stock options be changed. The details of the
recommendations, which were approved by the Board of Directors,
are described in the following sections of this report, in the
Senior Executives Annual Incentive Plan and the 1994 Stock Option
and Performance Unit Plan which State Street's stockholders are
being asked to approve at this year's annual meeting.
The elements of the Corporation's executive compensation
consist of base salary, annual bonus, performance shares/units
and stock options. These are complementary components where
salary and bonus reflect one-year results, performance
shares/units reflect multi-year results and stock options reflect
long-term stock price appreciation. The Executive Compensation
Committee's policies with respect to each of these elements,
including the bases for the compensation awarded in 1993 to the
Corporation's Chief Executive Officer, Mr. Carter, are discussed
below.
BASE SALARIES
Executive officers are defined as individuals with policy
making responsibility. At the end of 1993, 13 individuals were
designated as executive officers of the Corporation.
Base salaries for executive officers are determined by
evaluating the responsibilities of the position and the
experience of the individual. No specific formula is used to set
base salaries. The Committee determined that it is appropriate
for executive officer salary levels to be near the median of the
reference group.
Annual salary adjustments are determined by evaluating the
performance of the Corporation and of each executive officer and
by taking into account any new responsibilities. The Committee
also considers the range of salary increases which are awarded to
all employees in the Corporation. In reviewing individual
performance, the Committee considers the views of Mr. Carter with
the respect to other executive officers. With respect to the
base salary granted to Mr. Carter for 1993, the Committee
reviewed a comparison of base salaries of chief executive
officers of other companies, using a group of reference
companies, the range of increases granted to individuals at all
levels in the Corporation, and the assessment by the Committee
and the Board of Mr. Carter's individual performance in 1992. No
particular weight was applied to any single factor in making the
Committee's determination. When compared to salaries paid to
chairman of the board and chief executive officer positions in
the reference group, Mr. Carter's salary was below the median.
ANNUAL BONUSES
The Corporation's executive officers are eligible for annual
cash bonuses. For the 1993 Annual Incentive Plan, the minimum
earnings threshold for the grant of any bonus awards was $1.57
per share, equal to a 12% return on stockholders' equity. The
earnings threshold for the grant of maximum bonus awards was set
at $2.41 per share equal to an 18% return on stockholders'
equity. Given the Corporation's recent financial performance and
business mix, the Committee concluded that it is appropriate to
expect that a 12% ROE be achieved before any bonus is paid.
The Committee also believes that an 18% ROE is an
appropriate level for maximum bonus attainment. It places State
Street's performance among the top performers of comparable
companies, provides a very competitive return for stockholders
and leaves management with the flexibility to make long-term
expenditures and investments that will foster continued growth in
the business. The most recent competitive survey reviewed by the
Committee reflected year end 1992 performance of the reference
companies. The average one-year return on equity for these
companies was 17.4% and the median was 16.3%. The average one-
year return on equity for the bank holding companies in the
reference group was 16.2% and the median was 15.8%. Among the
bank holding companies in the reference group, 33.3% achieved a
one-year return on equity of 18% or higher and 10.0% generated a
one-year return on equity of less than 12%.
The bonus pool for executive officers other than the chief
executive officer in 1993 was allocated among the individual
executive officers based on individual performance. The bonus
pool for these executive officers was 50% of their aggregate base
salaries. This level was designed to place the bonus pool near
the median of the cash bonus opportunities for the reference
companies. The Committee increased the bonus opportunity for Mr.
Carter in 1993 from 60% to 75% to bring it closer to the median
of the reference companies. In 1993, the Corporation earned
$2.33 per share equal to 17.4% return on equity, or 91% of the
maximum bonus target. The Committee recommended a bonus for Mr.
Carter equal to 69% of his salary. Payment of the recommended
amount was approved by the Board of Directors.
The Committee determined that the performance measures used
for the annual bonus for executive officers should be expanded to
include an earnings per share target as well as a return on
equity target for 1994. These changes are reflected in the
Senior Executives Annual Incentive Plan, which is described
elsewhere in this Proxy Statement.
PERFORMANCE SHARES/PERFORMANCE UNITS
Performance shares have been granted to the Corporation's
executive officers once every two years or at the time an officer
joined the executive group. The size of the grants are
determined based on a target level of long-term incentive
opportunity near the median for companies in the reference group.
The performance shares represent a contingent right to a cash
payment in the event the Corporation meets specified performance
goals over a specified time period following the grant.
Historically, payments have been made with respect to all the
performance shares in a given grant (i.e., all the shares in the
grant were "earned") if the Corporation achieved an 18% return on
equity over the three-year period following the grant. The
number of shares in a grant that were earned declined to no
shares at 12% return on equity. In calculating the shares
earned, a simple average of the return on equity for each of the
three years of the performance period has been used. At the end
of the three years, a cash payment is calculated based on the
number of performance shares earned times the market value of the
Corporation's common stock at the end of the performance period.
In this way, the potential value of the performance shares
relates directly to both corporate financial performance in
determining how many shares are earned and stock price
appreciation in determining the cash value of the shares earned.
In December 1991, executive officers were granted
performance shares having a nominal value at the time of the
grant equal to between 96% and 109% of annual salary and bonus.
This is equivalent to 48% to 54.5% on an annual basis. The
December 1991 grant included 35,692 performance shares granted to
Mr. Carter. These performance shares will be earned in full if
the maximum average annual return on equity target (18%) for 1992
through 1994 is met, declining proportionately to no shares
earned if the average annual return on equity is 12% or less.
Because performance shares are granted only once every two years,
performance share payouts (if earned) are also made only once
every two years.
The Committee has recommended a number of revisions to the
performance share program starting in 1994. The new plan, which
was approved by the Board of Directors of the Corporation, is
named the 1994 Stock Option and Performance Unit Plan and is
described in detail in this Proxy Statement. Stockholders are
being asked to approve this plan. Under the new plan,
performance shares will be renamed performance units to describe
more accurately this compensation vehicle. Performance units
granted every two years will have a measurement period of two
years rather than three years. The purpose of this change is to
simplify the plan. The number of performance measures used for
determining the number of shares earned will be expanded to
include an earnings per share target and a total return to
stockholder target in addition to a target for return on equity.
This revision is intended to link more effectively the payment of
performance units to multiple factors which may build stockholder
value.
In December 1993, executive officers were granted
performance units by the Board of Directors having a nominal
value at the time of grant equal to between 46% and 166% of
annual salary and bonus. This is equivalent to 23% to 84% on an
annual basis. The December 1993 grant included 30,000
performance units granted to Mr. Carter. The grants were made
under the 1994 Stock Option and Performance Unit Plan and are
subject to stockholder approval of the Plan at this year's annual
meeting. These performance units will be earned in full if the
maximum earnings per share, return on equity and total return to
stockholder targets for 1995 and 1996 are met.
STOCK OPTIONS
Stock options are granted to the Corporation's executive
officers based on annual salary and bonus. Stock option grants
to executive officers were made once every five years, most
recently in June 1990 or at the time an officer joined the
executive group. Because the grants were made for a five-year
period, the 1990 stock options were granted on a number of shares
having a market price at the time of grant equal to 400% to 500%
of each executive's annual salary plus bonus. Stock option
grants were determined based upon a target level of long-term
incentive opportunity which is near the median for companies in
the reference group. The exercise price of the stock options is
equal to the market price of the shares at the time of the grant
and the options become exercisable at the rate of 20% per year
over the five-year period. Because Mr. Carter joined the
Corporation subsequent to the June 1990 grant, his grant of
options was prorated to options on 112,000 shares of stock having
a market price at the time of grant equal to 360% of his annual
salary plus bonus.
Since the stock options are granted at market price, the
value of the stock options is wholly dependent upon an increase
in the Corporation's stock price. It is the policy of the
Committee not to reset option exercise prices once they have been
established. Because the Committee views stock option grants as
a part of the executive officer's total compensation package for
the period covered by the grant, the amount of stock options
outstanding at the time of a new grant or granted in prior years
does not serve to increase or decrease the size of the new grant.
The Committee is recommending that beginning in 1995, stock
options be issued to executive officers every two years. This
will allow for performance to be recognized more frequently. The
1994 Stock Option and Performance Unit Plan set forth in this
Proxy Statement, which stockholders are being requested to
approve, permits this change.
RECENT TAX CHANGES
The Omnibus Budget and Reconciliation Act of 1993 resulted
in the addition of Section 162(m) of the Internal Revenue Code.
Beginning in 1994, Section 162(m) limits the Corporation's
federal income tax deduction to $1,000,000 per year for
compensation to any of its five highest paid executive officers.
Performance-based compensation is not, however, generally subject
to the deduction limit, provided certain requirements of Section
162(m) are satisfied. The Committee reviewed all elements of the
program against the standards for qualifying for the tax
deduction and determined that awards under the 1994 Stock Option
and Performance Unit Plan and the Senior Executives Annual
Incentive Plan should be designed to qualify for the performance-
based deduction.
CONCLUSION
Through the programs described above, the Corporation's
executive compensation is linked directly to the Corporation's
performance, growth in stockholder value and each executive's
contribution to those results. As the Corporation's business
changes, particularly in light of its efforts to expand globally,
and with the increasingly competitive and complex business and
regulatory environment, the continuing assessment of the
compensation structure and goals is required to assure that
compensation incentives remain consistent with stockholder
interest and closely tied to continuing growth in stockholder
value.
Submitted by,
I. MacAllister Booth
Charles F. Kaye
Dennis J. Picard, Chair
Robert E. Weissman
<PAGE>
<PAGE>
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the cumulative
total stockholder return on the Corporation's Common Stock to the
total return of the S&P 500 Index and the S&P Financial Index for
the period of five fiscal years commencing December 31, 1988 and
ended December 31, 1993, assuming $100 invested in the
Corporation's Common Stock and in each index and assuming
reinvestment of dividends. The S&P Financial Index is a publicly
available measure of 56 of the Standard & Poor's 500 companies,
representing 29 banking companies, 15 insurance companies and 12
financial services companies.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
YEAR ENDED DECEMBER 31
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
1988 1989 1990 1991 1992 1993
State Street Boston
Corporation
Total Return 100 151 137 255 352 306
S&P 500 Index
Total Return 100 132 128 166 179 197
S&P Financial Index
Total Return 100 132 104 156 193 214
</TABLE>
<PAGE>
<PAGE>
RETIREMENT BENEFITS
As of January 1, 1990, the benefit formula under the
Corporation's retirement plan (the "Retirement Plan") was changed
to an account based formula. An account balance was established
for each participant equal to the present value of the
participant's benefit earned to date. Each year this account
balance is increased by interest at a specified rate and a
contribution credit equal to a percentage of the participant's
base salary for the calendar year exclusive of overtime, bonuses
or other extraordinary benefits or allowances. The percents are
4.0% for the first year of participation increasing to 11.25% for
the thirtieth year, and zero thereafter. Employees who were
participants on December 31, 1989 will receive the greater of
their account balance or the benefit derived from the
"grandfathered" formula, if the participant retires from the
plan. The grandfathered formula is the participant's accrued
benefit at June 30, 1989 adjusted for future salary increases,
plus 1.5% of final average pay times years of service since June
30, 1989. No more than 30 years of service are taken into
account.
Employees are enrolled in the Retirement Plan following the
completion of one year of service and attainment of the age of
21. The normal retirement age is 65, although earlier retirement
options are available. The Retirement Plan has a five-year
vesting provision, and participants who are vested will receive
their account balance or annuity equivalent if they leave the
employ of the Corporation or the Bank before retirement.
Sections 401(a)(17) and 415 of the Internal Revenue Code of
1986, as amended, limit the annual benefits which may be paid
from a tax-qualified retirement plan. As permitted by the
Employee Retirement Income Security Act of 1974, the Corporation
has adopted a supplemental plan which provides for the payment
out of general funds of the Corporation of any benefits
calculated under provisions of the Retirement Plan which may be
above the limits under applicable sections of the Internal
Revenue Code. Each of the Named Executive Officers is included
in the supplemental plan. The supplemental plan provides for the
funding through a trust of retirement benefits following a change
of control. The trust is currently unfunded.
The following table sets forth the estimated annual benefits
(which are not subject to a deduction for Social Security),
assuming a single life annuity, payable upon retirement under the
final average pay formula to participants who retire during 1993
in the following remuneration and years-of-service
classifications:
PENSION PLAN TABLE
Final Average Years of Service
Annual --------------------------------------------------
Salary 15 20 25 30 35
- ------------- -- -- -- -- --
$100,000 $ 22,500 $ 30,000 $ 37,500 $ 45,000 $ 45,000
300,000 67,500 90,000 112,500 135,000 135,000
500,000 112,500 150,000 187,500 225,000 225,000
700,000 157,500 210,000 262,500 315,000 315,000
900,000 202,500 270,000 337,500 405,000 405,000
Final average annual salary includes base salary only. Mr.
Carter is not eligible for the final average pay formula. His
retirement benefit is discussed below. The other Named Executive
Officers have been credited with years of service under the
Retirement Plan as of December 31, 1993 as follows: Mr. Spina,
20; Mr. Lopardo, 5; Mr. Allinson, 9, and Mr. Sloan, 7. Current
compensation covered by the Retirement Plan as of December 31,
1993 for each of the Named Executive Officers, except Mr. Carter,
was as follows: Mr. Spina, $500,000; Mr. Lopardo, $350,000; Mr.
Allinson, $450,000, and Mr. Sloan, $325,000.
Mr. Carter's age 65 estimated benefit at current
compensation under the account based formula of the Retirement
Plan (including benefits under the supplemental plan) is $76,500.
He has been credited with one year of service under the
Retirement Plan as of December 31, 1993. Under an agreement
dated March 5, 1992, Mr. Carter will receive an additional
pension contribution as a percent of base compensation calculated
as if a contribution had been made to the Retirement Plan of
7.50% in the first year and 3.75% in each of the next 15 years.
His additional age 65 estimated benefit resulting from the
agreement at current compensation is $65,900. Under an agreement
dated September 14, 1990, Mr. Allinson will receive an aggregate
benefit (including benefits under the Retirement Plan and the
supplemental plan) which, when expressed as a single life
annuity, equals $100,000 per year for benefits commencing at age
65, reduced for earlier commencement down to $67,000 per year for
a benefit commencing at age 60. His age 65 estimated benefit
resulting from the agreement is $55,000. Under an agreement
dated March 1, 1987, Mr Sloan may receive supplemental pension
payments which will bring total pension payments received by him,
including regular pension payments from the Corporation and
payments from his former employer, up to the amount he would have
received had he commenced employment with the Corporation in
1964, such payments to also include amounts he would have
received but for legislative limits on qualified pension plans.
TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL ARRANGEMENTS
The Corporation has termination agreements with Messrs.
Carter, Spina, Lopardo, Allinson and Sloan which obligate them to
remain in the employ of the Corporation during the pendency of
any change of control proposal in consideration for the payment
by the Corporation to such officers of two years annual salary
and certain other benefits (including the acceleration of
outstanding stock options and performance shares) if the
employment of such officers with the Corporation terminates for
any reason other than death, disability or normal retirement of
the officer during a period of two years following a change of
control of the Corporation. If the Named Executive Officers had
been terminated on December 31, 1993, they would have been
entitled to receive the following amounts as severance pay: Mr.
Carter, $1,300,000; Mr. Spina, $1,000,000; Mr. Lopardo, $700,000;
Mr. Allinson, $900,000, and Mr. Sloan, $650,000, and the
acceleration of outstanding stock options and performance shares.
Any payments including the value of the acceleration of stock
options and performance shares to the Named Executive Officers
would have been reduced to the extent they were not deductible by
the Corporation for federal income tax purposes under Section
280G of the Internal Revenue Code. A change of control is
defined to include the acquisition of 20% or more of the
Corporation's then outstanding stock or other change of control
as determined by regulatory authorities, a significant change in
the composition of the Board of Directors, merger or
consolidation by the Corporation without certain approvals of the
Board of Directors, and the sale of a majority of the
Corporation's assets. The Corporation also has an agreement with
Mr. Carter that provides for severance pay equal to eighteen
months' salary if his employment is terminated for reasons other
than voluntary resignation, death or malfeasance before July 22,
1996.
RELATIONSHIP WITH INDEPENDENT AUDITORS
The Board of Directors, upon the recommendation of the
Examining and Audit Committee, has selected Ernst & Young as
independent auditors for the Corporation for the year ending
December 31, 1994. It is expected that representatives of Ernst
& Young will be present at the Annual Meeting to answer questions
and will have the opportunity to make a statement if they so
desire.
APPROVAL OF 1994 STOCK OPTION AND PERFORMANCE UNIT PLAN
BACKGROUND
On December 16, 1993, the Board of Directors of the
Corporation adopted the 1994 Stock Option and Performance Unit
Plan (the "1994 Plan") and recommended its approval by the
stockholders. The 1994 Plan is designed to advance the interests
of the Corporation and its stockholders by granting stock
options, stock appreciation rights ("SARs") and performance units
to certain officers of the Corporation, thereby providing them
with an incentive to devote their full abilities and industry to
the success of the Corporation's businesses. The 1994 Plan
combines and replaces both the 1989 Stock Option Plan and the
1990 Stock Option and Performance Share Plan, and upon approval
of the 1994 Plan, it is intended that no additional grants will
be made under the 1989 and 1990 Plans. Options, SARs and
performance units awarded under the 1994 Plan are, in general,
intended to qualify for the performance-based exception to
Section 162(m) of the Internal Revenue Code of 1986, as amended,
(the "Code"), which beginning in 1994 limits the deduction the
Corporation may claim for compensation paid to certain executive
officers to $1 million per year, subject to certain exceptions.
See "Certain Federal Income Tax Aspects," below.
The following is a summary of the principal features of the
1994 Plan. This summary is qualified in its entirety by the
complete text of the 1994 Plan as set forth in Exhibit A of this
Proxy Statement.
SUMMARY OF THE PLAN
Administration; The Committee. The 1994 Plan is
administered by the Executive Compensation Committee (the
"Committee") of the Board of Directors. The 1994 Plan requires
that the Committee be composed solely of three or more members of
the Board of Directors who are both "outside directors" under
Section 162(m) of the Code and who are disinterested persons
within the meaning of Rule 16b-3 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). The current members of
the Committee are Messrs. Booth, Kaye, Picard and Weissman, none
of whom are eligible for awards under the 1994 Plan.
The 1994 Plan authorizes the Committee to designate the
officers to whom and the times at which stock options, SARs and
performance units will be granted, the number of shares subject
to each grant, and to determine the terms of the grants. The
Board of Directors, upon the recommendation of the Committee,
approves all grants to officers who are also directors of the
Corporation.
Shares Subject to the 1994 Plan; "Per-Executive" Limitation.
The maximum number of shares of the Common Stock of the
Corporation which may be issued under the 1994 Plan is 3,500,000
shares, subject to adjustment in the event of stock dividends,
stock splits, recapitalizations, mergers or similar transactions.
The maximum number of performance units that may be issued under
the 1994 Plan is 1,000,000. To the extent consistent with the
provisions of the Code, shares subject to an option that
terminates without exercise (other than an option that terminates
by reason of the exercise of an accompanying SAR) shall again be
available for the purposes of the 1994 Plan, and if payment is
not made with respect to performance units issued under the 1994
Plan, the shares subject to the performance units shall again be
available for the purposes of the 1994 Plan.
No participant shall be entitled to grants of options or
options/SARs covering more than an aggregate of 500,000 shares
over the term of the 1994 Plan. No participant shall be entitled
to grants of performance units covering more than 250,000 units
over the term of the 1994 Plan, unless the Committee determines
that such units are not intended to qualify for the performance-
based exception to Section 162(m). Each of the foregoing
limitations is subject to adjustment in the event of stock
dividends, stock splits, recapitalizations and similar corporate
transactions.
Participants. Any salaried officer who, in the
determination of the Committee, is in a position to contribute
importantly to the success of the Corporation may participate in
the 1994 Plan. The Corporation has approximately 500 salaried
officers eligible to participate.
Options. The 1994 Plan authorizes the grant of stock
options, which may be either options intended to qualify as
incentive stock options, as defined in Section 422(b) of the
Code, or options not intended to so qualify ("non-qualified
options"). The Committee will determine the option price, term
and manner of exercise of each option granted, but the option
price may not be less than the fair market value of the Common
Stock on the date of grant. No option may have a term greater
than ten years, and, in general, an option may not first become
exercisable earlier than one year after the date of grant. The
Committee may provide that options be exercisable in installments
and may also accelerate the exercise date of options that have
been outstanding for more than 6 months. Certain other
restrictions apply in connection with the award of options
intended to qualify as incentive stock options.
Unless otherwise determined by the Committee, an option may
in general be exercised by the payment of the option price in
cash, by the surrender of shares of Common Stock having a fair
market value equal to the option price, or by a combination of
cash and stock, or by irrevocable instructions to a broker to pay
the purchase price to the Corporation.
SARs. The Committee may also grant non-transferable SARs in
conjunction with the grant of options. Upon exercise of a SAR
and the surrender of the related option, the holder will receive
an amount in any combination of cash or shares of Common Stock
(as determined by the Committee) equal to the excess of the fair
market value of a share of Common Stock on the date the SAR is
exercised over the option price specified in the related stock
option, multiplied by the number of shares covered by the option.
A SAR will terminate upon the exercise or termination of the
related option unless earlier terminated by the Board. The
Committee may authorize the acceleration of SARs that have been
outstanding for at least six months.
Performance Units. A performance unit entitles the
recipient to receive in cash an amount equal to the fair market
value of a share of Common Stock at the end of a specified
performance period, provided that established performance targets
have been achieved. The 1994 Plan provides for certain limits on
the award and terms of performance units, in order that a
performance unit may qualify for the performance-based exception
to Code Section 162(m). In particular, the Committee must
establish in writing "performance goals." Under the terms of the
1994 Plan, performance goals may be established with respect to
any or all of the following three performance measures: return
on equity, earnings per share, and total stockholder return as
compared to a standard market reference. The Committee will also
establish in writing the period over which targeted performance
will be measured (a "performance period"), which may be of any
duration between one and five fiscal years. In any given
performance period, no participant may have the opportunity to
earn performance units in excess of 250,000 units (subject to
adjustment in the event of certain stock or corporate
transactions).
Prior to payment in respect of any performance unit, the
Committee must certify that targeted performance has been
achieved. The Committee, however, retains the discretion to
reduce or eliminate any payment in respect of performance units,
even after targeted performance has been achieved.
Termination of Employment. In general, if an optionee's
employment with the Corporation terminates by reason of normal or
early retirement, death or disability, an option or SAR remains
exercisable in accordance with its terms and may be exercised by
the optionee or his or her legal representative until the later
of one year after the last installment becomes exercisable, or
one year after the optionee's employment with the Corporation
terminates. If an optionee's employment terminates for any other
reason, the optionee may exercise outstanding options or SARs
within three months from the date of such termination to the same
extent, if any, that they were exercisable immediately prior to
such termination. In no event, however, may any option or SAR be
exercised after ten years from the date of grant.
In the event a participant who has been awarded performance
units terminates employment for any reason prior to the end of a
performance period, such participant's performance units will be
forfeited unless the Committee approves payment, to the extent
consistent with Code Section 162(m), of such performance units in
whole or in part.
Change of Control. The 1994 Plan provides for certain
changes in the terms of awards in the event of a change of
control, as defined on page A-9 of the 1994 Plan. In general, in
the event of a change of control, (1) options and SARs held by
optionees who are subject to Section 16 of the Exchange Act or
have termination agreements with the Corporation will become
immediately exercisable, (2) options may be settled for cash
based on the increase in the value of the shares of Common Stock
covered by the option from the option grant date to the change of
control, (3) SARs may be settled only in cash, (4) options and
SARs shall remain exercisable for seven months following
termination of employment, (5) restrictions are imposed on the
rights of the Committee to amend the terms of certain awards, and
(6) payments under awards are based on a "change of control"
price, which may differ from the actual fair market value of a
share of Common Stock on the date an award is exercised. See
Fair Market Value; Spread page A-10 of the 1994 Plan. Payment of
performance units following a change of control held by
participants who are subject to Section 16 of the Exchange Act or
have termination agreements with the Corporation would be made on
a pro rata basis with respect to designated performance periods.
Amendment and Termination. The Board of Directors may at
any time amend, suspend or terminate the 1994 Plan, except that
without stockholder approval no amendment may (1) effect any
change inconsistent with the qualification of performance-based
compensation under the Code (unless the Committee determines that
awards are not intended to qualify), (2) effect any change that
would cause the Plan to fail to qualify for the award of
incentive stock options under the Code, (3) effect any change
inconsistent with Section 16 of the Exchange Act, or (4)
adversely affect the rights or obligations under any option
theretofore granted without the optionee's consent. Unless the
1994 Plan is earlier terminated, no awards may be made under the
1994 Plan after April 30, 1999.
Accounting Treatment. Ordinarily, under present accounting
rules which are presently being reconsidered, neither the grant
nor the exercise of stock options awarded under the 1994 Plan
will result in a charge against the Corporation's earnings. The
grant of SARs will result in interim charges against the
Corporation's earnings over the period during which those rights
become exercisable and thereafter until such rights are exercised
to the extent that the current market value of such rights
exceeds the fair market value of such rights on the date of
grant, with a final computation being made at the time of
exercise. Payment for performance units will result in a charge
against the Corporation's earnings.
CERTAIN FEDERAL INCOME TAX ASPECTS
THE FOLLOWING IS ONLY A GENERAL SUMMARY OF THE FEDERAL
INCOME TAX EFFECTS TO THE PARTICIPANT AND THE CORPORATION OF
OPTIONS, SARS AND PERFORMANCE UNITS GRANTED UNDER THE 1994 PLAN.
THERE ARE A NUMBER OF SPECIAL TAX RULES WHICH MAY BE APPLICABLE
UNDER CERTAIN CIRCUMSTANCES. THE DISCUSSION IS BASED ON THE
PROVISIONS OF THE CODE, REGULATIONS, PROPOSED REGULATIONS AND
RULINGS THEREUNDER, AS IN EFFECT ON THE DATE OF THIS PROXY
STATEMENT, ALL OF WHICH ARE SUBJECT TO CHANGE AT ANY TIME. THIS
SUMMARY DOES NOT ADDRESS STATE, LOCAL OR NON-U.S. TAXATION OF
AWARDS UNDER THE 1994 PLAN, WHICH MAY DIFFER SIGNIFICANTLY FROM
FEDERAL INCOME TAX RULES AND REGULATIONS.
Incentive Options. The grant of an incentive option does
not produce taxable income to the optionee. If an optionee
exercises an incentive option while the optionee is employed or
within three months following termination of employment (twelve
months in the case of employment termination because of permanent
disability), or after the optionee's death if the optionee dies
during such periods, exercise of the option will also not produce
taxable income to the optionee. The exercise of an incentive
option, however, may result in the imposition of the alternative
minimum tax ("AMT"), as described in more detail below.
The following description assumes that the employment
requirements described above have been met. If an optionee
acquires shares under an incentive option and sells such shares
more than two years from the date of grant of the option and more
than one year after the date of exercise, any gain or loss on
sale will be a long-term capital gain or loss. If the stock is
disposed of before the end of the two- and one-year statutory
holding periods, then, in general, the optionee will have
ordinary income at time of disposition equal to the difference
between the exercise price and the fair market value of the stock
on the date of exercise, with any additional gain recognized upon
disposition treated as a capital gain (short-term or long-term
depending on how long the shares have been held). If the
optionee sells the stock within these holding periods for less
than the fair market value of the stock at time of exercise,
then, in general, the ordinary income realized by the optionee at
time of sale will be limited to the gain realized on the sale.
Incentive options granted after December 31, 1986 will be
treated for tax purposes as non-qualified options to the extent
that the aggregate fair market value of the stock with respect to
which such options, in the aggregate, are exercisable for the
first time by an individual during any calendar year exceeds
$100,000. For purposes of the preceding sentence, fair market
value is determined as of the time of grant of the option.
Exercise of an incentive option increases the optionee's
alternative minimum taxable income ("AMTI") by an amount equal,
in general, to the excess of the fair market value of the shares
acquired under the option over the option price. This increase
may result in an AMT liability to the optionee.
Non-qualified options. The grant of a non-qualified stock
option will not result in any taxable income to the optionee.
Upon exercise of such an option, the excess of the fair market
value of the acquired stock on the date of exercise over the
option price is taxable to the optionee as ordinary income and is
subject to tax withholding. When an optionee sells shares
acquired pursuant to the exercise of a non-qualified option, the
optionee will realize a capital gain or loss, long-term or short-
term, depending on how long the shares have been held.
SARs. An optionee will realize no income upon the grant of
a SAR. When the optionee exercises the SAR, the optionee will
generally recognize ordinary income, subject to withholding, in
an amount equal to the amount of cash received plus the fair
market value of any stock received.
Performance Units. The grant of a performance unit will not
be taxable to the officer in the year of grant nor at any time
prior to payment for the unit. The receipt of cash by an officer
in payment for a performance unit will be taxable as ordinary
income, subject to withholding, in the year of receipt.
Tax Consequences to the Corporation. In general and subject
to the limitations described below, the Corporation is entitled
to a deduction in respect of awards under the 1994 Plan at the
time and to the extent that a Plan participant has ordinary
income. However, if an optionee satisfies the requisite one- and
two-year holding periods applicable in the case of incentive
stock options and thereby recognizes only capital gain or loss
upon sale of stock, the Corporation will not be entitled to any
deduction (even if the optionee has alternate minimum tax
liability).
Under Section 162(m) of the Code, starting in 1994 a
publicly traded corporation may not deduct more than $1 million
for remuneration paid to any of its five highest paid executive
officers. Some types of remuneration are not subject to this
limit, including certain performance-based pay. In order to
qualify for the performance-based pay exemption, remuneration
must, among other things, be paid pursuant to a plan the material
terms of which, including the performance goals, are disclosed to
stockholders and approved by a majority vote of the stockholders.
It is intended, in general, that compensation income
attributable to stock options, SARs and performance units granted
under the 1994 Plan qualify for exemption from the $1 million
deduction limitation. The IRS has issued proposed rules under
Code Section 162(m) (the "Proposed Rules") interpreting the
statutory requirements applicable to exempt performance-based
remuneration. The Proposed Rules, which are subject to change,
would require among other things that the performance targets
applicable to performance-based awards under the 1994 Plan be
preestablished by the Committee based on the performance measures
set forth in the 1994 Plan and described above, and that the
Committee certify that the preestablished targets have been
satisfied before payment is made.
Under the so-called "golden parachute" provisions of the
Code, certain awards vested or paid in connection with a change
of control may also be non-deductible to the Corporation and may
be subject to an additional 20% federal excise tax. Non-
deductible "parachute payments" will in general reduce the $1
million limit on deductible compensation described above.
GRANTS UNDER THE PLAN
In December 1993, performance units aggregating 197,500
units under the 1994 Plan were granted to thirteen officers,
subject to stockholder approval of the 1994 Plan. The
performance period for these grants is the two-year period 1995
and 1996 and the specific performance targets will be determined
by the Committee prior to January 1, 1995 (or at such later date
as may be permitted consistent with the rules applicable to
performance-based compensation under Code Section 162(m)).
Grants were made as follows:
NEW PLAN BENEFITS UNDER 1994 PLAN
DOLLAR VALUE NUMBER OF
NAME ($)(1) UNITS
- ---- ------------ ---------
Marshall N. Carter 1,140,000 30,000
Chairman, President
and Chief Executive Officer
David A. Spina 760,000 20,000
Vice Chairman
Nicholas A. Lopardo 380,000 10,000
Executive Vice President
A. Edward Allinson 570,000 15,000
Executive Vice President
Norton Q. Sloan 570,000 15,000
Executive Vice President
Executive Group 7,505,000 197,500
(13 including the above)
Non-Executive Officers
Employee Group (2) 0 0
__________________________
(1) Based on the market value of the Corporation's Common
Stock at the time of the grant ($38). Any payments will
be based upon attainment of performance targets at the
then current stock price as described above.
(2) No stock options have been awarded under the 1994 Plan.
During 1993, options for 145,030 shares of Common Stock
were awarded to participants in the 1989 Stock Option Plan
at an exercise price of $45.3125.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR
APPROVAL OF THE 1994 STOCK OPTION AND PERFORMANCE UNIT PLAN (ITEM
2 ON PROXY CARD).
APPROVAL OF THE PERFORMANCE GOALS UNDER THE SENIOR EXECUTIVES
ANNUAL INCENTIVE PLAN
The Senior Executives Annual Incentive Plan (the "Annual
Incentive Plan") provides additional incentive to Senior
Executives to achieve targeted levels of earnings per share and
return on equity.
Stockholders are being asked to approve the performance
goals with respect to compensation payable under the Annual
Incentive Plan in order that such compensation may be deductible
by the Corporation under Section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code") as qualified performance-
based compensation. For a more complete discussion of Section
162(m) of the Code, see the Report of the Executive Compensation
Committee at page 17 and the discussion under Certain Federal
Income Tax Aspects of the 1994 Plan at page 24. Approval by
stockholders and certification by the Committee that targeted
performance has been attained shall be a condition to the rights
of senior executives to receive any benefits under the Annual
Incentive Plan.
ELIGIBLE PARTICIPANTS
The Chief Executive Officer and Senior Executives designated
by the Executive Compensation Committee participate in the Plan.
To receive an award, a participant must be an employee of the
Corporation, or one of its subsidiaries, at the time awards are
approved by the Executive Compensation Committee.
PERFORMANCE GOALS
Corporate achievement of two targets determines whether, and
the extent to which, a participant earns his or her bonus award.
The targets are based on earnings per share and return on equity.
Each target is specified as a range. No bonus will be paid under
the Annual Incentive Plan for performance below the minimum
targets. Performance at or above the maximum targets will result
in 100% of the bonus being paid, and performance between the
minimum and maximum targets will result in a prorated bonus being
paid, subject in each case to reduction by the Executive
Compensation Committee.
BONUS AWARDS
If maximum targets are achieved, the award to the Chief
Executive Officer will be a maximum of 75% of 1994 salary and the
award to other participants will be a maximum of 50% of 1994
salary. Awards will be reduced pro rata if performance is between
the minimum and maximum performance targets, with performance in
respect of the earnings-per-share target and performance in
respect of the return-on-equity target each weighted 50% in
determining the overall bonus to be paid. For example, if the
earnings-per-share maximum were achieved, but the return-on-
equity minimum were not achieved, each participant would receive
a maximum of 50% of his or her bonus award under the Plan.
Similarly, if earnings-per-share performance and return-on-equity
performance were each midway between the respective minimum and
maximum targets, each participant would receive a maximum of 50%
of his or her bonus award under the Plan. The Executive
Compensation Committee may, however, reduce or eliminate the
compensation otherwise payable upon the attainment of targeted
performance for any one or more of the participants.
All awards will be made in cash after certification by the
Executive Compensation Committee that the proposed awards conform
to the performance targets.
NEW PLAN BENEFITS UNDER
THE SENIOR EXECUTIVES ANNUAL INCENTIVE PLAN
NAME AND POSITION MAXIMUM BENEFIT ($)
- ----------------- -------------------
Marshall N. Carter 536,250
Chairman, President and
Chief Executive Officer
David A. Spina 275,000
Vice Chairman
Nicholas A. Lopardo 192,500
Executive Vice President
A. Edward Allinson 247,500
Executive Vice President
Norton Q. Sloan 178,750
Executive Vice President
Executive Group 2,571,250
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
FOR APPROVAL OF THE PERFORMANCE GOALS UNDER THE SENIOR EXECUTIVES
ANNUAL INCENTIVE PLAN (ITEM 3 ON PROXY CARD).
VOTE REQUIRED
Consistent with state law and under the Corporation's By-
laws, a majority of the shares entitled to be cast on a
particular matter, present in person or represented by proxy,
constitutes a quorum as to such matter. Votes cast by proxy or
in person at the 1994 Annual Meeting will be counted by persons
appointed by the Corporation to act as tellers for the meeting.
The five nominees for election as directors at the 1994
Annual Meeting who receive the greatest number of votes properly
cast for the election of directors shall be elected directors.
The affirmative vote of the holders of a majority of the
outstanding shares of Common Stock present in person or
represented by proxy at the meeting and entitled to vote is
necessary to approve the action proposed in Items 2 and 3 of the
accompanying Notice of 1994 Annual Meeting of Stockholders.
The tellers will count the total number of votes cast "for"
approval of Items 2 and 3 for purposes of determining whether
sufficient affirmative votes have been cast. The tellers will
count shares represented by proxies that withhold authority to
vote for a nominee for election as a director or that reflect
abstentions and "broker non-votes" (i.e., shares represented at
the meeting held by brokers or nominees as to which (i)
instructions have not been received from the beneficial owners or
persons entitled to vote and (ii) the broker or nominee does not
have the discretionary voting power on a particular matter) only
as shares that are present and entitled to vote on the matter for
purposes of determining the presence of a quorum. Neither
abstentions nor broker non-votes have any effect in the election
of directors. With respect to Items 2 and 3, abstentions will
have the effect of a vote against the matter while broker non-
votes will have no effect on the matter.
In the event that sufficient votes in favor of the proposals
set forth in Items 2 and 3 of the Notice of 1994 Annual Meeting
of Stockholders are not received by the time of the meeting or
any adjournment thereof, the persons named as proxies may propose
one or more adjournments of the meeting to permit further
solicitation of proxies with respect to either or both proposals.
Any such adjournment will require the affirmative vote of the
majority of the shares voted on the question in person or by
proxy at the session of the meeting to be adjourned. The persons
named as proxies will vote in favor of such adjournment those
proxies which they are entitled to vote in favor of the proposal
or proposals in the event that such persons believe that further
solicitation of proxies will result in approval of the proposal
or proposals. They will vote against any such adjournment those
proxies required to be voted against the proposal or proposals
and will not vote any proxies that direct them to abstain from
voting on such proposal or proposals.
PROPOSALS AND NOMINATIONS BY STOCKHOLDERS
Stockholders who wish to present proposals at the 1995
Annual Meeting of Stockholders for inclusion in the Corporation's
proxy material for that meeting must submit such proposals to the
Secretary of the Corporation on or before November 15, 1994 for
inclusion in the proxy materials circulated by the Board of
Directors relating to the 1995 Annual Meeting.
Pursuant to the By-laws of the Corporation, proposals of
business and nominations for directors other than those to be
included in the Corporation's proxy statement and form of proxy
may be made by stockholders of record entitled to vote at the
meeting if notice is timely given and if the notice contains the
information required by the By-laws. Except as noted below, to
be timely a notice with respect to the 1995 Annual Meeting must
be delivered to the Secretary of the Corporation no earlier than
January 19, 1995 and no later than February 20, 1995 unless the
date of the 1994 Annual Meeting is advanced by more than thirty
(30) days or delayed by more than sixty (60) days from the
anniversary date of the 1995 Annual Meeting in which event the
By-laws provide different notice requirements. In the event the
Board of Directors nominates a New Nominee (as defined) a
stockholder's notice shall be considered timely if delivered not
later than the 10th day following the date on which public
announcement (as defined) is first made of the election or
nomination of such New Nominee. Any proposal of business or
nomination should be mailed to: Secretary, State Street Boston
Corporation, 225 Franklin Street, Boston, Massachusetts 02110.
OTHER MATTERS
The Board of Directors does not know of any other matters
which may be presented for action at the meeting. Should any
other business come before the meeting, the persons named on the
enclosed proxy will, as stated therein, have discretionary
authority to vote the shares represented by such proxies in
accordance with their best judgment.
The Board of Directors would like to have you attend the
meeting in person. Please, however, mark, date, sign and return
the enclosed proxy as promptly as possible in any event. If you
attend the meeting, you may nonetheless vote in person by ballot
if you desire.
March 15, 1994
EXHIBIT A
STATE STREET BOSTON CORPORATION
1994 STOCK OPTION AND PERFORMANCE UNIT PLAN
1. Purpose
The purpose of the 1994 Stock Option and Performance Unit
Plan (the "Plan") is to advance the interests of State Street
Boston Corporation and its Subsidiaries (the "Company") and its
stockholders by authorizing the grant of Stock Options, Stock
Appreciation Rights ("SARs") and Performance Units to certain
Officers of the Company, thereby providing them with an incentive
to devote their full abilities and industry to the success of the
Company's business. Both Options intended to qualify as
incentive stock options (as defined in Section 422(b) of the
Internal Revenue Code of 1986, as amended (the "Code"))
("Incentive Stock Options"), and Options not intended to so
qualify ("Nonqualified Options") may be granted under the Plan.
2. Units Subject to the Plan
The number of shares of the Company's common stock, par
value $1.00 per share (the "Common Stock"), that may be issued
under the Plan shall not exceed three million five hundred
thousand (3,500,000) shares, which is the number of shares to be
reserved for issuance under the Plan. The number of Performance
Units that may be issued under the Plan shall not exceed one
million (1,000,000). To the extent consistent with continued
qualification of the Plan under Section 422 of the Code and the
performance-based remuneration provisions of Section 162(m) of
the Code and the regulations thereunder, if any Option granted
under the Plan shall terminate for any reason without having been
exercised in full, the balance of the shares theretofore subject
thereto shall again be available for the purposes of the Plan,
except that such shares shall not be so available whenever such
Option has been surrendered as a result of the exercise of a
related SAR. To the extent consistent with qualification of the
Plan under the performance based remuneration provisions of
Section 162(m) of the Code and the regulations thereunder, if
payment is not made for any reason with respect to any
Performance Units, the shares theretofore subject to the
performance shall again be available for the purposes of the
Plan. The number of shares of Common Stock and Performance Units
is subject to adjustment in accordance with Paragraph 10.
3. Administration
A. The Committee. The Plan shall be administered by the
Executive Compensation Committee of the Board of Directors of the
Company (the "Committee"). The Committee shall be composed
solely of three or more members of the Board of Directors who are
"outside directors" under Section 162(m)(4)(C)(i) of the Code,
and who are disinterested persons within the meaning of Rule
16b-3 of the Exchange Act.
B. Committee Authority. Subject to the express provisions
of the Plan, the Committee shall have the authority, in its
discretion, to grant Options and SARs to Officers of the Company,
to determine the number of shares covered by each such Option, to
identify whether such Option is intended to qualify as an
Incentive Stock Option, to determine the number of SARs and
Performance Units to be granted, and to determine the terms of
each such grant. In making such determinations, the Committee
shall take into account the nature of the services rendered by
the respective Officers, their present and potential
contributions to the Company's success and such other factors as
the Committee in its discretion shall deem relevant. Subject to
the express provisions of the Plan, the Committee shall also have
authority to interpret the Plan, to prescribe, amend and rescind
rules and regulations relating to its administration, to
determine the terms and provisions of the respective granting
agreements or other documents (which need not be identical in
respect of each Officer) and to make all other determinations
necessary or advisable for the administration of the Plan. The
"non-Officer Directors" of the Board of Directors shall approve
all grants (and the terms thereof) to Officers who are directors
of the Company upon recommendation of the Committee. For
purposes of the Plan, a Director is a non-Officer Director if he
or she is both an "outside director" within the meaning of Code
Section 162(m)(4)(C)(i) and a "disinterested person" within the
meaning of Rule 16b-3 of the Exchange Act.
4. Eligibility and Limitations
Individuals eligible to receive awards under this Plan shall
be such salaried officers as the Committee shall determine are in
positions to contribute importantly to the success of the Company
("Officers"). No Officer shall be entitled to grants of (a)
Options (including related SARs), whether or not exercised, in
excess of an aggregate of five hundred thousand (500,000) shares
over the term of the Plan, or (b) Performance Units intended to
qualify for the performance-based exception to Section 162(m) of
the Code in excess of an aggregate of two hundred fifty thousand
(250,000) units over the term of the Plan, subject in each case
to the provisions of Paragraph 10.
5. Stock Options
A. Option Price. The purchase price of the Common Stock
under each Option shall be determined by the Committee, but shall
be not less than the Fair Market Value as of the date of the
grant of the Option.
B. Exercise of Option. Subject to Paragraphs 8 and 14
hereof, an Option granted under the Plan shall become exercisable
in whole or in part not less than one year after the date of
grant and thereafter may be exercised in whole or in part at any
time before it terminates according to the terms of the Option or
under the provisions of the Plan. The Committee may, in its
discretion, provide in the Option agreement for exercise in
specific installments after the end of one year from the date of
grant. In no case may an Option be exercised as to less than 50
shares at any one time, except when the number of remaining
shares it covers is less than 50. The Committee shall be
authorized to establish the manner and the effective date of the
exercise of an Option. During an Optionee's lifetime, an Option
may be exercised only by the Optionee or the Optionee's guardian
or legal representative.
C. Forms of Payment. In lieu of a cash payment to exercise
an Option in whole or in part, an Optionee may tender shares of
the Common Stock of the Company held for at least six months (or
such other period as the Committee may approve) with a Fair
Market Value equal to the exercise price of the Option being
exercised. Unless the Committee determines otherwise, payment
for any shares subject to an Option may also be made by
delivering a properly executed exercise notice to the Company,
together with a copy of irrevocable instructions to a broker to
deliver promptly to the Company the amount of sale or loan
proceeds to pay the purchase price, and, if required, the amount
of any federal, state, local or foreign withholding taxes. To
facilitate the foregoing, the Company may enter into agreements
for coordinated procedures with one or more brokerage firms.
D. Termination of Option. No Option may be exercised to
any extent after the Option terminates in any of the following
ways:
1. Each Option shall terminate upon exercise of such
Option or related SAR in the manner provided in the Plan.
2. Each Option shall terminate on the date to be
determined by the Committee, which shall in no event be later
than 10 years from the date of the Option grant.
3. Unless otherwise provided by the Committee, if an
Officer's employment terminates by reason of death, disability
(as determined by the Company), or retirement at or after the
normal or early retirement age under any retirement plan or
supplemental retirement agreement maintained by the Company or
any Subsidiary prior to exercise, expiration, surrender or
cancellation of the Option or any related SAR, the Option and the
related SAR shall remain exercisable after the date of such
termination of employment in accordance with the applicable
Option agreement whether or not such Option was exercisable at
the time of such termination, and the Option or the related SAR
may be exercised by the Officer or the person or persons to whom
the Officer's rights shall pass by will or by the applicable laws
of descent or distribution at such time and to the same extent
that the Option or related SAR would have been exercisable had
the Officer's employment not terminated; provided, however, that,
unless otherwise provided, the Option shall terminate on the
later of (i) one (1) year after the Option first becomes
exercisable (if the Option is exercisable in one installment) and
one (1) year after the last installment first becomes exercisable
(if the Option is exercisable in more than one installment), and
(ii) one (1) year after the termination of employment.
Unless otherwise determined by the Committee, if an
Officer's employment terminates for any reason other than death,
disability (as determined by the Company) or retirement prior to
exercise, expiration, surrender or cancellation of the Option or
the related SAR, (i) each such Option and related SAR not then
exercisable shall terminate, (ii) each Option and the related SAR
that is exercisable on the date of termination of employment
shall terminate three (3) months from the date of such
termination of employment, and (iii) if the Officer dies within
the three-month period described in (ii), the Option and the
related SAR shall expire one (1) year after the date of the
Officer's termination, during which period the Option or the SAR
may be exercised at any time by the person or persons to whom the
Officer's rights shall pass by will or by the applicable laws of
descent or distribution, but only to the extent it was
exercisable on the date of such termination. In no event,
however, may the provisions of this Paragraph 5D(3) cause an
Option or related SAR to be exercised after the expiration date
set out in the applicable Option or SAR agreement.
6. Stock Appreciation Rights
A. Grant of SARs. SARs may be granted under the Plan upon
such terms and conditions as the Committee may prescribe,
provided that a SAR may be granted only in connection with an
Option granted under the Plan. The holder of a SAR shall have a
right to receive the Spread on the date on which the SAR is
exercised.
B. Exercise of SARs.
1. SARs shall be exercisable at such time or times as
may be determined by the Committee and, in each case, at such
time as the related Option is exercisable, provided that a SAR
shall not be exercisable prior to the time the related Option
could be exercised.
2. During an Officer's lifetime, a SAR may be
exercised only by the Officer or the Officer's guardian or legal
representative and only upon surrender of the related Option.
Shares covered by such surrendered Options shall not be available
for granting further Options under the Plan.
3. The Committee may impose other conditions upon the
exercise of a SAR, including but not limited to a condition that
the SAR may be exercised only in accordance with the rules and
regulations adopted by the Committee from time to time. Such
rules and regulations may govern the right to exercise SARs
granted prior to the adoption or amendment of such rules and
regulations as well as SARs granted thereafter. Without limiting
the foregoing, the Committee may specify that SARs may be
exercised by the holder or may be exercised automatically by the
occurrence of an event, by the passage of time, or in any other
way.
C. Forms of Payment for SARs. Upon the exercise of a SAR
and the surrender of the related Option, the Company shall give
to the person exercising such SAR an amount equivalent to the
Spread in cash, in shares of the Company's Common Stock, or in a
combination thereof, as the Committee shall determine.
Determination as to form of payment may be made at the time of
granting the SAR, or any time thereafter, and may be changed from
time to time.
D. Limitation on Payments for SARs. Subject to Paragraph
6C above, the Committee may from time to time recommend, subject
to Board approval, the maximum amount of cash or stock which may
be given upon exercise of SARs in any year. Any such limitation
on payments may be changed by the Committee from time to time
with the approval of the non-Officer Directors of the Board
provided that no such change shall require the holder to return
to the Company any amount theretofore received upon the exercise
of SARs.
E. Termination of SARs. Unless otherwise terminated by the
Committee, a SAR will terminate upon the termination of the
related Option.
F. Amendment, Suspension or Termination of SARs by the
Board. Prior to or other than directly in connection with a
Change of Control, the non-Officer Directors of the Board may at
any time amend, suspend or terminate any SARs theretofore granted
under the Plan, provided that the terms of any SAR after any
amendment shall conform to the provisions of the Plan.
7. Performance Units
A. Grant of Performance Units. Performance Units may be
granted by the Company under the Plan to Officers upon such terms
and conditions as the Committee may determine consistent with
this Paragraph 7. With respect to each grant of Performance
Units, the Committee shall establish in accordance with Code
Section 162(m), if applicable, the following:
1. The total number of Performance Units an Officer
shall have the right to earn during the Performance Period. The
maximum number of Performance Units that may be granted to any
Officer in any grant intended to qualify for the
performance-based exception to Section 162(m) with respect to any
Performance Period shall, subject to the provisions of Paragraph
10, not exceed two hundred fifty thousand (250,000), which is the
total number of Performance Units available to him or her over
the term of the Plan, and in no event shall the total number of
Performance Units awarded to all Officers exceed the aggregate
number of Performance Units available under Paragraph 2.
2. The commencement date and the duration of a
Performance Period. Except as otherwise provided by the
Committee, the Performance Period shall be two fiscal years, and
the last day of the second fiscal year of any Performance Period
shall be the Maturity Date. In no case, however, shall a
Performance Period be shorter than one fiscal year or longer than
five fiscal years.
3. Performance Factors and Targets. An Officer will
earn Performance Units based on the Company's performance during
the Performance Period. Performance shall be measured based on
one or more of the following Factors: (a) return on equity, (b)
earnings per share, and (c) the Company's total shareholder
return during the Performance Period compared to the total
shareholder return of a market reference (e.g., the Standard &
Poors 500, the Standard & Poors Financial Index). In connection
with the grant of Performance Units, the Committee shall
establish in writing specific Performance Targets in respect of
each Factor; the relative weight to be accorded achievement of
each Performance Target, and the market reference that will be
used for purposes of (c) above. To the extent consistent with
Section 162(m), the Committee may provide in the terms of an
award that return on equity and earnings per share be adjusted in
order to eliminate the effect of extraordinary items.
Extraordinary items are those items treated as extraordinary in
accordance with generally accepted accounting principles.
B. Value of Performance Units. The value of one
Performance Unit at Maturity Date shall be equal in value to the
Fair Market Value of one share of Common Stock at said time,
subject to any maximum value specified at the time of the grant.
C. Form of Payment for Performance Units. Payment for
Performance Units shall be made in cash equal to the Fair Market
Value of a share of Common Stock after certification by the
Committee consistent with Section 162(m) of the Code that the
payment conforms to the Performance Targets and any other
material terms of the grant. At the discretion of the Committee,
payment for Performance Units may be made in a lump sum or in
installments. Upon the election of the Officer, made prior to
January 1 of the year in which the Maturity Date occurs, payment
for Performance Units may be deferred upon such terms and
conditions as the Committee may prescribe. Amounts deferred at
the discretion of the Committee or in accordance with an election
by an Officer shall earn interest annually at a rate equal to the
effective yield to maturity on the 360-day Treasury bills with an
issue date initially closest to the March 31st following the
Maturity Date and with issue dates closest to March 31 of each
succeeding year. In no event, however, shall the interest
payable with respect to deferred Performance Unit payments be
greater than the maximum interest rate, if any, permitted by
Section 162(m) of the Code, the regulations thereunder or
interpretations thereof.
D. Termination of Performance Units. Except as provided in
Paragraph 7C or in Paragraph 14, in the event that, prior to the
end of the relevant Performance Period, the employment of an
Officer holding Performance Units terminates for any reason, the
Performance Units held by him or her shall be forfeited in their
entirety, except that such Performance Units may be paid in whole
or in part to such former employee or the person or persons to
whom his or her rights under the Performance Units shall pass by
will or by the applicable laws of descent and distribution, but
only when, if and to the extent that the Committee shall so
determine, consistent with Section 162(m) of the Code, if
applicable; provided, however, that any payment for such
Performance Units, as so determined, may be adjusted to take into
account the time between the date the Officer's employment so
terminated and the end of the Performance Period.
8. Acceleration and Cancellation
With respect to any Option or SAR that has been outstanding
for at least six months, the Committee may, subject to the
approval of the non-Officer Directors of the Board, but not
without the consent of the Officer, (a) authorize the
acceleration of any Option or SAR, and (b) authorize the
cancellation of all or any portion of an Officer's Option
(whether or not the Option is then exercisable) and the payment
to such Officer of the Spread determined on the date of
cancellation, such payment to be made in shares of the Company's
Common Stock valued at the Fair Market Value.
9. Use of Proceeds
Proceeds from the sale of stock pursuant to Options granted
under the Plan shall constitute general funds of the Company.
10. Adjustments Upon Changes in Stock
In the event the outstanding shares of Common Stock shall be
changed into or exchanged for any other class or series of
capital stock or cash, securities or other property pursuant to a
recapitalization, reclassification, merger, consolidation,
combination or similar transaction, then each Option shall
thereafter become exercisable and each Performance Unit adjusted
for the number and/or kind of capital stock and/or the amount of
cash, securities or other property so distributed, into which the
shares of Common Stock subject to the Option would have been
changed or exchanged had the Option been exercised, or the
payment for the Performance Unit would have been made, in full
prior to such transaction, provided that, if the kind or amount
of capital stock or cash, securities or other property received
in such transaction is not the same for each outstanding share of
Common Stock, then the kind or amount of capital stock or cash,
securities or other property for which the Option shall
thereafter become exercisable shall be the kind and amount so
receivable per share by a plurality of the shares of Common
Stock, and provided further that if necessary, the provisions of
the Option or Performance Unit shall be appropriately adjusted so
as to be applicable, as nearly as may be, to any shares of
capital stock, cash, securities or other property thereafter
issuable or deliverable upon exercise of the Option or payment of
the Performance Unit. Appropriate adjustments shall also be made
in the terms of SARs to reflect such changes and to modify any
other terms of outstanding Performance Units on an equitable
basis, including modifications of Performance Targets and changes
in the length of Performance Periods.
11. Non-transferability
Unless otherwise provided by the Committee, Options, SARs or
Performance Units granted under the Plan may not be transferred
except by will or the laws of descent and distribution.
12. Conditions of Grants
In the event that the employment of an employee holding any
unexercised Option or SAR or any unearned Performance Units shall
terminate, the rights of such employee to such Options, SARs or
Performance Units shall be subject to the conditions that until
any such Option or SAR is exercised or any such Performance Unit
is earned, he or she shall (a) not engage, either directly or
indirectly, in any manner or capacity as advisor, principal,
agent, partner, officer, director, employee, member of any
association, or otherwise, in any business or activity which is
at the time competitive with any business or activity conducted
by the Company or any of its direct or indirect subsidiaries, and
(b) be available, unless the participant shall have died, at
reasonable times for consultations at the request of the
Company's management with respect to phases of the business with
which the participant was actively connected during his or her
employment. In the event that either of the above conditions is
not fulfilled, the individual shall forfeit all rights to any
unexercised Option or SAR or any unearned Performance Unit held
as of the date of the breach of condition. Any determination by
the Board of Directors that an individual is, or has, engaged in
a competitive business or activity as aforesaid or has not been
available for consultations as aforesaid shall be conclusive.
Notwithstanding anything herein to the contrary, this Paragraph
12 shall be inapplicable following a Change of Control.
13. No Loans to Holders of Options
The Company may not directly or indirectly lend money to any
individual for the purpose of assisting such individual to
acquire or carry shares of Common Stock issued upon the exercise
of Options granted under the Plan.
14. Change of Control Provisions
A. Impact of Event. Notwithstanding any other provision of
the Plan to the contrary, in the event of a Change of Control:
1. Acceleration of Options and SARs. Any Options and
SARs outstanding as of the date such Change of Control is
determined to have occurred, held by Optionees subject to Section
16 of the Exchange Act and Optionees who are parties to
termination agreements with the Company, and which are not then
exercisable shall become exercisable to the full extent of the
original grant. Holders of Performance Units granted hereunder
as to which the relevant Performance Period has not ended as of
the date such Change of Control is determined to have occurred
who are subject to Section 16 of the Exchange Act and holders who
are parties to termination agreements with the Company shall be
entitled at the time of such Change of Control to receive a cash
payment per Performance Unit equal to the Fair Market Value of a
share of the Company's Common Stock in the manner provided
herein, on a pro rata basis, as measured by (a) the Company's
performance against the Performance Target(s) in effect with
respect to such Performance Unit awards as are outstanding at the
time of the Change of Control and (b) the time elapsed over the
Performance Period.
2. Optional Cash-Out. During the 60-day period from
and after a Change of Control, with respect to an Option that is
unaccompanied by a SAR, an Optionee subject to Section 16 of the
Exchange Act shall, unless the Committee shall determine
otherwise at the time of grant, have the right, in lieu of the
payment of the full Option price of the shares of Common Stock
being purchased under the Option and by giving written notice to
the Company in form satisfactory to the Committee, to elect
(within such 60-day period) to surrender all or part of the
Option to the Company and to receive in cash an amount equal to
the Spread on the date of exercise multiplied by the number of
shares of Common Stock granted under the Option as to which the
right granted by this Paragraph 14A(2) shall have been exercised;
provided, however, that if the Change of Control is within six
months of the date of grant of a particular Option to an Optionee
who is subject to Section 16 of the Exchange Act no such election
shall be made by such Optionee with respect to such Option prior
to six months from the date of grant. However, if the end of
such 60-day period from and after a Change in Control is within
six months of the date of grant of an Option held by an Optionee
who is subject to Section 16 of the Exchange Act and the Optionee
so elects, such Option shall be cancelled in exchange for a cash
payment to the Optionee, effected on the day which is six months
and one day after the date of grant of such Option, as the case
may be, equal to the Spread multiplied by the number of shares of
Common Stock granted under the Option.
3. Requirement of Cash Settlement. A SAR related to
an Option that does not qualify as an Incentive Stock Option
which is exercised during the 60-day period from and after a
Change of Control (i) held by an Optionee subject to Section 16
of the Exchange Act and which was granted at least six months
prior to the date of exercise pursuant hereto, or (ii) held by an
Optionee who is not subject to Section 16 of the Exchange Act
shall be settled solely for cash at the Spread.
4. Restriction on Application of Plan Provisions
Applicable in the Event of Termination of Employment. After a
Change of Control, Options and SARs shall remain exercisable
following a termination of employment other than by reason of
death, disability (as determined by the Company) or retirement
for seven (7) months following such termination or until
expiration of the original terms of the Option or SAR, whichever
period is shorter.
5. Restriction on Amendment. In connection with or
following a Change of Control, neither the Committee nor the
Board may impose additional conditions upon exercise or otherwise
amend or restrict an Option, SAR or Performance Unit, or amend
the terms of the Plan in any manner adverse to the holder
thereof, without the written consent of such holder.
Notwithstanding the foregoing, if any right granted pursuant
to this Paragraph 14A would make a Change of Control transaction
ineligible for pooling of interests accounting under applicable
accounting principles that but for this Paragraph 14A would
otherwise be eligible for such accounting treatment, the
Committee shall have the authority to substitute stock for the
cash which would otherwise be payable pursuant to this Paragraph
14A having a Fair Market Value equal to such cash.
B. Definition of Change of Control. For purposes of the
Plan, a "Change of Control" shall mean the happening of any of
the following events:
1. An acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act) (a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 20%
or more of either (x) the then outstanding shares of common stock
of the Company (the "Outstanding Company Common Stock") or (y)
the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Company Voting
Securities"); excluding, however, the following acquisitions of
Outstanding Company Common Stock and Outstanding Company Voting
Securities: (i) any acquisition directly from the Company, (ii)
any acquisition by the Company, (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained
by the Company or any corporation controlled by the Company or
(iv) any acquisition by any Person pursuant to a transaction
which complies with clauses (i), (ii) and (iii) of subsection (3)
of this Paragraph 14B; or
2. Individuals who, as of the effective date of the
Plan, constitute the Board (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board; provided,
however, that any individual who becomes a member of the Board
subsequent to such effective date, whose election, or nomination
for election by the Company's stockholders, was approved by a
vote of at least a majority of directors then comprising the
Incumbent Board shall be considered as though such individual
were a member of the Incumbent Board; but, provided further, that
any such individual whose initial assumption of office occurs as
a result of either an actual or threatened election contest (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated
under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person
other than the Board shall not be so considered as a member of
the Incumbent Board; or
3. Consummation by the Company of a reorganization,
merger or consolidation or sale or other disposition of all or
substantially all of the assets of the Company ("Business
Combination"); excluding, however, such a Business Combination
pursuant to which (i) all or substantially all of the individuals
and entities who are the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination own,
directly or indirectly, more than 60% of, respectively, the
outstanding shares of common stock, and the combined voting power
of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of
the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result
of such transaction owns the Company or all or substantially all
of the Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (ii) no Person (other than any
employee benefit plan (or related trust) sponsored or maintained
by the Company or any corporation controlled by the Company or
such corporation resulting from such Business Combination) will
beneficially own, directly or indirectly, 20% or more of,
respectively, the outstanding shares of common stock of the
corporation resulting from such Business Combination or the
combined voting power of the outstanding voting securities of
such corporation entitled to vote generally in the election of
directors except to the extent that such ownership existed with
respect to the Company prior to the Business Combination and
(iii) at least a majority of the members of the board of
directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of
the execution of the initial agreement, or of the action of the
Board, providing for such Business Combination; or
4. The approval by the stockholders of the Company of a
complete liquidation or dissolution of the Company.
C. Fair Market Value; Spread. Notwithstanding any
provision herein to the contrary, during the 60-day period from
and after a Change of Control, "Fair Market Value" for purposes
of (i) a SAR which is related to an Option that does not qualify
as an Incentive Stock Option, (ii) a Performance Unit, or (iii)
determinations under Paragraph 14A shall mean the higher of (A)
the highest average of the reported daily high and low prices (as
quoted in The Wall Street Journal or if The Wall Street Journal
shall no longer publish such quotes, a newspaper having a
national circulation) per share of the Common Stock during the
60-day period prior to the first date of actual knowledge by the
Board of Directors of the Company of a Change of Control and (B)
if the Change of Control is the result of a transaction or series
of transactions described in Paragraph 14B(1) or (3), the highest
price per share of the Common Stock paid in such transaction or
series of transactions (which in the case of Paragraph 14B(1)
shall be the highest price per share of the Common Stock as
reflected in a Schedule 13D filed by the person having made the
acquisition); provided, however, that with respect to an Optionee
who is subject to Section 16 of the Exchange Act, if the Change
in Control is within 240 days of the date of grant of an Option
or SAR, then the Fair Market Value shall be in all cases the Fair
Market Value of the Common Stock determined on the date such
Option or SAR is exercised without regard to this Paragraph 14C.
For purposes of the Plan during the 60-day period from and
after a Change of Control, "Spread" means, with respect to a
share of Common Stock, the excess of the Fair Market Value as
defined in this Paragraph 14C over the Option exercise price.
15. Amendment, Suspension and Termination of Plan
The Board of Directors may at any time suspend or terminate
the Plan and may amend it from time to time in such respects as
the Board may deem advisable in order that Options, SARs and
Performance Units granted thereunder shall conform to any change
in, or interpretation of, applicable laws or regulations, or in
any other respect the Board may deem to be in the best interests
of the Company; provided, however, that no such amendment shall,
without stockholder approval either before or after Board action
(i) effectuate any change inconsistent with the qualification of
awards as performance-based under Code Section 162(m) (unless the
Committee determines that awards affected by such changes are not
intended to qualify for the performance-based exception to
Section 162(m) of the Code) or (ii) effectuate any other change
for which stockholder approval is required in order for the Plan
to continue to qualify for the award of Incentive Stock Options
under Section 422 of the Code and to continue to qualify under
Rule 16b-3 promulgated under Section 16 of the Exchange Act.
Unless the Plan shall theretofore have been terminated by the
Board of Directors, no awards may be granted under the Plan after
April 30, 1999 and provided, further, that in connection with or
following a Change of Control the Board of Directors may not
suspend or terminate the Plan or amend the Plan in any manner
adverse to the holder of an Option, SAR or Performance Unit
hereunder without the written consent of such holder. Awards
granted prior to that time may extend beyond that date according
to Plan provisions and award terms. No Option, SAR or
Performance Unit may be granted during any suspension or after
termination of the Plan. No amendment, suspension or termination
of the Plan shall, without the Optionee's consent, adversely
affect the rights or obligations under any Option theretofore
granted to him or her under the Plan. Except as provided above
in Paragraph 14 and this Paragraph 15, any rights or obligations
with respect to SARs or to Performance Units may be suspended or
terminated, and rights or obligations with respect to SARs may be
altered, without the consent of the holder.
16. Definitions and Other General Provisions
A. Board of Directors. The term "Board of Directors" or
"Board" means the Board of Directors of State Street Boston
Corporation.
B. Exchange Act. The term "Exchange Act" shall mean the
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
C. Fair Market Value. For all periods other than during
the 60-day period from and after a Change of Control, the term
"Fair Market Value", when used in connection with Options and
related SARs, means the value of a share of Common Stock equal to
the average of the high and low prices on the date of the grant
or the date of the exercise (whichever date is applicable), and
when used in connection with Performance Units, means the value
of a share of Common Stock equal to the average of the high and
low prices on the ten trading days preceding the commencement of
the Performance Period or the Maturity Date of the Performance
Unit, or the value as determined by any other valuation method
the Committee may establish. During the 60-day period from or
after a Change of Control, "Fair Market Value" shall have the
meaning specified in Paragraph 14.
D. Option. The term "Option" means the right to purchase
a share of the Company's Common Stock under the Plan.
E. Person. "Person" shall mean any individual, group,
corporation, partnership, company or other entity.
F. Spread. For all periods other than during the 60-day
period from and after a Change of Control, the term "Spread"
means the excess of the Fair Market Value of a share of the
Company's Common Stock over the option exercise price specified
in the related Option. During the 60-day period from or after a
Change of Control, "Spread" shall have the meaning specified in
Paragraph 14.
G. Subsidiary. The term "Subsidiary" shall mean any
corporation, domestic or foreign other than the Company, of which
50% or more of the total combined voting power of all classes of
stock is held by the Company or a subsidiary or subsidiaries
thereof.
H. Shares to be Delivered. The Common Stock issued under
the Plan may consist either in whole or in part of shares of the
Company's authorized but unissued Common Stock or shares of the
Company's authorized and issued Common Stock reacquired by the
Company and held in its treasury. No fractional shares of Common
Stock shall be issued, and the Committee shall determine whether
cash shall be given in lieu of such fractional shares or whether
and how such fractional shares shall be eliminated.
I. Employment. Options granted under the Plan shall not
be affected by any change of employment so long as the holder
continues to be an eligible employee of the Company. The Option
agreements may contain such provisions as the Committee shall
approve with reference to the effect of approved leaves of
absence. Nothing in the Plan or in any grant pursuant to the
Plan shall confer on any individual any right to continue in the
employ of the Company or interfere in any way with the right of
the Company to terminate the holder's employment at any time.
J. Grants. Nothing contained in the Plan or in any
resolution adopted by the Board of Directors, the Committee, or
any other committee of the Board, or the holders of Common Stock
of the Company or any action, except the specific granting of
Options, SARs or Performance Units, shall constitute the granting
of any award under the Plan. The granting of an award pursuant
to the Plan shall take place as recommended by the Committee and
approved by the non-Officer Directors of the Board with respect
to Officers who are directors and by the Committee with respect
to other Officers. Awards will be evidenced by written
instruments. Such instruments may be in the form of agreements
to be executed by both the Officer and the Company, or
certificates, letters or similar instruments, which need not be
executed by the Officer but acceptance of which will evidence
agreement to the terms thereof.
K. Rights as a Stockholder. The holder of an Option or a
SAR or a person granted Performance Units shall have none of the
rights of a stockholder with respect to the related stock until
such stock has been issued to the holder.
L. Withholding. The Company will withhold from any cash
payment made pursuant to an award an amount sufficient to satisfy
all federal, state and local withholding tax requirements. In
the case of an award pursuant to which Common Stock may be
delivered, the Committee will have the right to require that the
Officer or other appropriate person remit to the Company an
amount sufficient to satisfy the withholding requirements, or
make other arrangements satisfactory to the Committee with regard
to such requirements, prior to the delivery of any Common Stock.
If and to the extent that such withholding is required, the
Committee may permit the Officer or such other person to elect at
such time and in such manner as the Committee provides to have
the Company hold back from the shares to be delivered, or to
deliver to the Company, Common Stock having a value, taken at
Fair Market Value, calculated to satisfy the withholding
requirement.
If at any time an Incentive Stock Option is exercised the
Committee determines that the Company could be liable for
withholding requirements with respect to a disposition of the
Common Stock received upon exercise, the Committee may require as
a condition of exercise that the person exercising the Incentive
Stock Option agree (i) to inform the Company promptly of any
disposition (within the meaning of Section 424(c) of the Code) of
Common Stock received upon exercise, and (ii) to give such
security as the Committee deems adequate to meet the potential
liability of the Company for the withholding requirements and to
augment such security from time to time in any amount reasonably
deemed necessary by the Committee to preserve the adequacy of
such security.
M. Other Plans. The adoption of the Plan shall not
preclude the adoption by appropriate means of any other stock
option or other incentive plan for employees.
17. Employees Abroad
Options granted hereunder to Officers of the Company, or a
Subsidiary, who reside outside the United States shall, at the
discretion of the Committee, be subject to such additional terms
and conditions as may be necessary or appropriate to qualify as
an approved share option under the applicable laws and
regulations of the country of residence.
18. Effectiveness of the Plan
The effective date of the Plan is December 16, 1993, the
date of its adoption by the full Board subject to stockholder
approval within 12 months after approval by the Board. Options,
SARs and Performance Units may be granted prior to stockholder
approval of the Plan but subject to such approval. If
stockholder approval of the Plan is not obtained within said
period the Plan shall terminate and any Options, SARs and
Performance Units granted shall be null and void.
PROXY
STATE STREET BOSTON CORPORATION
ANNUAL MEETING OF STOCKHOLDERS - APRIL 20, 1994
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of State Street Boston
Corporation (the "Corporation") hereby appoints Marsha Hanson,
Susanne G. Clark and Evalyn Lipton Fishbein (each with power to
act without the others and with power of substitution) proxies to
represent the undersigned at the Annual Meeting of Stockholders
of the Corporation to be held on April 20, 1994 and at any
adjournments thereof, with all the power the undersigned would
possess if personally present, and to vote, as designated, all
shares of Common Stock of the Corporation which the undersigned
may be entitled to vote at said Meeting, hereby revoking any
proxy heretofore given.
TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS'
RECOMMENDATIONS JUST SIGN AND DATE THE OTHER SIDE; NO BOXES NEED
TO BE CHECKED.
PLEASE VOTE, DATE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY
IN ENCLOSED ENVELOPER.
Please sign this proxy exactly as your name appears on the
books of the Corporation. Joint owners should each sign
personally. Trustees and other fiduciaries should indicate the
capacity in which they sign, and where more than one name
appears, a majority must sign. If a corporation, this signature
should be that of an authorized officer who should state his or
her title.
Have your address changed? Do you have any czomments?
______________________________ _______________________________
______________________________ _______________________________
______________________________ _______________________________
______________________________ _______________________________
PAGE
<PAGE>
1. Election of Five Directors:
[X] PLEASE MARK VOTES AS IN FOR ALL
THIS EXAMPLE FOR WITHHOLD EXCEPT
[ ] [ ] [ ]
Each of these matters is fully I. BOOTH J. CASH T. CASNER
described in the Notice of and D. PERINI D. PICARD
Proxy Statement for the Meeting, If you do not wish your
receipt of which is hereby shares voted "FOR" one or
acknowledged. THE BOARD OF more nominees, mark the
DIRECTORS RECOMMENDS THAT YOU "FOR ALL EXCEPT" box and
GRANT AUTHORITY FOR THE ELECTION strike a line through the
OF DIRECTORS AND THAT YOU VOTE FOR nominee(s) name. Your
ITEMS 2 AND 3. THE SHARES REPRE- shares will be voted for
SENTED BY THIS PROXY WILL BE VOTED the remaining nominee(s).
IN ACCORDANCE WITH THE
SPECIFICATIONS MADE. IF NO 2. Proposal to approve the
SPECIFICATION IS MADE, THE PROXY 1994 Stock Option and
WILL BE VOTED IN ACCORDANCE Performance Plan.
WITH THE BOARD OF DIRECTORS' FOR AGAINST ABSTAIN
RECOMMENDATIONS. [ ] [ ] [ ]
3. Proposal to approve the
RECORD DATE SHARES: performance goals under the
Senior Executives Annual
Incentive Plan.
FOR AGAINST ABSTAIN
REGISTRATION [ ] [ ] [ ]
4. In their discretion, the
Proxies are authorized to
vote upon such other
Please be sure to sign and business as may properly
date this Proxy. come before the meeting or
any adjournments thereof.
____________________ Date:______
(Stockholder) Mark box at right if
comments or address change
____________________ Date:______ have been noted on the [ ]
(Co-owner) reverse side of this card.
- ----------------------------------------------------------------
DETACH CARD
STATE STREET BOSTON CORPORATION
DEAR STOCKHOLDER:
You are cordially invited to attend the 1994 Annual Meeting
of Stockholders of State Street Boston Corporation. The meeting
will be held in the Enterprise Room at 225 Franklin Street,
Boston, Massachusetts on Wednesday, April 20, 1994, at 10:00 a.m.
Your Board of Directors and management look forward to greeting
those stockholders able to attend.
The notice of meeting and proxy statement which follow
describe the business to be conducted at the meeting. In
addition to a proposal to elect directors, you will be asked to
approve the new 1994 Stock Option and Performance Unit Plan,
which will replace the two existing plans, and to approve the
performance goals under the Senior Executives Annual Incentive
Plan. State Street's goal is to be the leading global servicer
of financial assets. To help achieve this goal in competitive
global markets, State Street's executive compensation program is
designed to link executive compensation directly to the
Corporation's performance, growth in stockholder value and the
contribution of the executives to those results. THE BOARD OF
DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THESE
PROPOSALS.
Your vote is very important. Whether or not you plan to
attend the meeting, please carefully review the enclosed proxy
statement. Then complete, sign, date and mail promptly the
accompanying proxy in the enclosed return envelope. To be sure
that your vote will be received in time, please return the proxy
at your earliest convenience.
We look forward to seeing you at the Annual Meeting so that
we can update you on our progress. Your continuing interest is
very much appreciated.
Sincerely,
Marshall N. Carter
Chairman and Chief Executive
Officer
