<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[ ] 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
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction
applies:
............................................................
2) Aggregate numer of securities to which transaction
applies:
............................................................
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth
the amount on which the filing fee is calculated and
state how it was determined):
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4) Proposed maximum aggregate value of transaction:
............................................................
5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
[Letterhead]
March 11, 1997
DEAR STOCKHOLDER:
You are cordially invited to attend the 1997 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 16, 1997, 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. You will
be asked to elect six directors and to act upon proposals to
change the name of the Corporation, to increase the authorized
shares of Common Stock, to approve the Senior Executive Annual
Incentive Plan and to approve the 1997 Equity Incentive Plan.
State Street's goal is to be the leading servicer of
institutional investors worldwide. Each of these proposals is
designed to help achieve this goal in competitive global markets.
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,
/s/Marshall N. Carter
<PAGE>
[letterhead]
NOTICE OF 1997 ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of
STATE STREET BOSTON CORPORATION:
The 1997 Annual Meeting of Stockholders of State Street Boston
Corporation will be held on Wednesday, April 16, 1997, at 10:00
a.m., Eastern Time, at 225 Franklin Street, Fifth Floor, Boston,
Massachusetts, for the following purposes:
1. To elect six directors, each for a three-year term;
2. To consider and take action on a proposed amendment to
the Restated Articles of Organization of the Corporation
to change the name of the Corporation from State Street
Boston Corporation to State Street Corporation;
3. To consider and take action on a proposed amendment to
the Restated Articles of Organization of the Corporation
to increase the number of authorized shares of Common
Stock from 112,000,000 to 250,000,000 and to authorize
the issuance from time to time of the authorized and
unissued shares of the Corporation by the Board of
Directors;
4. To approve the Senior Executive Annual Incentive Plan.
5. To approve the 1997 Equity Incentive Plan; and
6. To act upon such other business as may properly come
before the meeting and any adjournments thereof.
Stockholders of record at the close of business on February
28, 1997 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,
John R. Towers
Secretary
March 11, 1997
<PAGE>
STATE STREET BOSTON CORPORATION
225 Franklin Street, Boston, Massachusetts 02110
PROXY STATEMENT
This proxy statement, and the accompanying proxy, which are
scheduled to be sent to stockholders beginning on March 11, 1997,
are furnished in connection with the solicitation by the Board of
Directors of State Street Boston Corporation (the "Corporation") of
proxies for the 1997 Annual Meeting of Stockholders of the
Corporation to be held on April 16, 1997 and at any adjournments
thereof. The Board of Directors has fixed the close of business on
February 28, 1997 as the record date for determining the
stockholders entitled to notice of and to vote at the meeting. On
the record date __,___,___ 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, by telephone and other means of
communication 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 Corporation 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 &
Co., Inc. to aid in the solicitation of proxies. The cost of such
services is $_____, plus expenses.
The Corporation's Annual Report, including financial
statements for the year ended December 31, 1996, is being mailed to
stockholders together with this proxy statement.
ELECTION OF DIRECTORS
In accordance with Massachusetts law, the By-laws of the
Corporation provide 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. The exact number of directors is to be
determined by vote of the Board of Directors. Pursuant to the
By-laws, at a meeting on December 19, 1996, the Board of Directors
fixed the number of directors at 17, effective with the 1997 Annual
Meeting.
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 six 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
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 1997 ANNUAL MEETING
CLASS I
I. MACALLISTER BOOTH DIRECTOR SINCE 1990
Retired Chairman, President and Chief Executive Officer of
Polaroid Corporation, a manufacturer of instant image recording
products. Mr. Booth, age 65, 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 Inroads National Board of Directors, 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
James E. Robison Professor of Business Administration at the
Harvard University Graduate School of Business Administration. Mr.
Cash, age 49, has been a faculty member of the Harvard Business
School since 1976. He is a director of Cambridge Technology
Partners, Inc., The Chubb Corporation, Knight-Ridder, Inc., Tandy
Corporation and WinStar Communications. He received a B.S. degree
in mathematics 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 63,
received an A.B. 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
a trustee 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. He is
a member of the American Law Institute.
ARTHUR L. GOLDSTEIN Director since 1995
Chairman and Chief Executive Officer of Ionics, Incorporated,
an international company involved in the purification and treatment
of water. Mr. Goldstein, age 61, is a director of Cabot
Corporation. He is a member of the National Academy of Engineering
and a member of the visiting committees at Harvard Business School
and Harvard School of Public Health. He is a trustee of the
California Institute of Technology and the Massachusetts General
Physician's Organization, Inc., an overseer of the Boston Museum of
Science and is a director of Jobs for Massachusetts, Inc. and the
Massachusetts High Technology Council. Mr. Goldstein received a
B.S. degree in chemical engineering from Rensselaer Polytechnic
Institute, a masters degree from the University of Delaware and an
M.B.A. from Harvard University.
DAVID B. PERINI Director since 1980
Chairman and Chief Executive Officer of Perini Corporation, a
construction and real estate development company. Mr. Perini, age
59, 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 awards from the
National Conference of Christians and Jews, the Italian American
Charitable Society and received the 1994 Ralph Lowell Distinguished
Citizen Award. Mr. Perini is a trustee of 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 64, 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, the John F. Kennedy Library Foundation, Jobs for
Massachusetts, a member of the National Business Roundtable, The
Business Council, the Defense Policy Advisory Committee on Trade
(DPACT), the President's Export Council, the advisory committee of
the American Red Cross, the Armed Services YMCA of the United
States and the Armed Forces Communications and Electronics
Association. He is a graduate of Northeastern University and holds
honorary doctorates from Northeastern University, Merrimack College
and Bentley College.
DIRECTORS SERVING UNTIL THE 1998 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 69, 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 Houghton Mifflin
Company, Dead River Company, Inso Corporation, Markem Corporation
and Cerion Technologies. He is past director and chairman of the
Federal Reserve Bank of Boston. Mr. Baute received B.A. and M.S.
degrees from Dartmouth College.
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 57, 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 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.
ALFRED POE DIRECTOR SINCE 1994
Former President of Meal Enhancement Group and Corporate Vice
President of Campbell Soup Company, a food manufacturing company.
Mr. Poe, age 48, joined Campbell Soup Company in 1991. From 1982
to 1991, Mr. Poe was with Mars, Inc. and held various sales and
marketing assignments in the United States and the United Kingdom.
He is a member of the board of directors of LEAD (Leadership,
Education and Development) Program for minority students and the
Executive Leadership Council. Mr. Poe holds a B.S. degree from
Polytechnic Institute of Brooklyn and an M.B.A. from the Harvard
Graduate School of Business.
DAVID A. SPINA DIRECTOR SINCE 1989
President and Chief Operating Officer of the Corporation since
1995. Mr. Spina, age 54, joined State Street in 1969 as a credit
analyst. He was elected executive vice president in 1982 and vice
chairman in 1992. Mr. Spina held the positions of chief financial
officer and treasurer from 1977 to 1992. Mr. Spina is head of
State Street's custody business, which consists of custody,
recordkeeping and related services for institutional investors,
including marketing, customer service, systems and technology
groups. He is a director of the Metropolitan Boston Housing
Partnership, Inc., a member of the Boston Coordinating Committee,
a member of the executive committee of the Massachusetts Taxpayers
Foundation, Inc., chairman of the board of trustees of the Dana
Hall School and a member of the Banker's Roundtable. Mr. Spina is
Chairman Emeritus of the Massachusetts Housing Investment
Corporation and a former director of the Massachusetts Bankers
Association. Mr. Spina holds a B.S. degree from the College of the
Holy Cross and an M.B.A. from Harvard University. He was an
officer in the United States Navy from 1964 to 1969, serving a
combat tour of duty in Vietnam.
ROBERT E. WEISSMAN DIRECTOR SINCE 1989
Chairman, Chief Executive Officer and Director of Cognizant
Corporation, one of three companies resulting from the
restructuring of The Dun & Bradstreet Corporation, which provides
commercial data services, since November 1996. Mr. Weissman, age
56, joined Dun & Bradstreet in 1979. He became Chairman on April
1, 1995 and 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 1999 ANNUAL MEETING
Class III
TENLEY E. ALBRIGHT, M.D. DIRECTOR SINCE 1993
Physician and surgeon. Dr. Albright's concentration in
medicine and health sciences stems from her specialty of general
surgery. Following 23 years in private practice of surgery, Dr.
Albright, age 61, founded and became chairman of a clinical
diagnostic research laboratory. She has been Chairman of Western
Resources, Inc., a holding company of varied assets with plans for
a research and development park and a senior care facility, since
1994. She serves on the board of directors of The West Company,
the Whitehead Institute for Biomedical Research, and is a member of
the Board of Regents of the National Library of Medicine, National
Institutes of Health, the corporation of Woods Hole Oceanographic
Institution, New England Baptist Hospital, the Massachusetts
Society for Medical Research, and the Board of Visitors of the
Harvard Medical Institute for Research and Education. Dr. Albright
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, State University of New
York at Cortland, Springfield College and Lasell College. Dr.
Albright won the Gold Medal in figure skating at the 1956 Olympics
in Cortina, Italy. She serves as a spokesperson for the American
Red Cross, Massachusetts Bay Chapter.
MARSHALL N. CARTER DIRECTOR SINCE 1991
Chairman and Chief Executive Officer of the Corporation.
Prior to joining State Street in 1991, Mr. Carter, age 56, 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
Euroclear in Brussels and the Federal Reserve Bank of Boston. 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. Mr. Darehshori, age 60,
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 and to his present position in 1990. 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 and the Massachusetts Business
Roundtable. He is a trustee of Wellesley College and the WGBH
Educational Foundation. He is a member of the National Executive
Board of the National Conference of Christians and Jews and the
Dana-Farber National Advisory Council for the Women's Cancers
Program. Mr. Darehshori also serves on the boards of the Boston
Public Library Foundation and the Boston Symphony Orchestra.
CHARLES F. KAYE DIRECTOR SINCE 1979
Chairman, Transportation Investments, Incorporated, a lessor
and asset manager of intermodal transportation equipment. Mr.
Kaye, age 69, 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 Intermodal 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 61, joined EG&G in 1972
and was elected president and director in 1986. He is a director
of Nashua Corporation, New England Electric System and Eagle
Industry Co. Ltd. He serves on the boards of trustees of Marquette
University and George Washington University. 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
President, Premier Enterprises and National Director - Utility
Marketing of Central States Indemnity Co. of Omaha since January,
1997. From 1994 to 1996, Mr. Reznicek, age 60, was dean of the
College of Business Administration of Creighton University. From
1987 to 1990, he was president and chief operating officer of
Boston Edison Company. 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 California Energy Company, Guarantee
Mutual Life Company, Stone & Webster Incorporated and CSG Systems
International.
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 7 meetings during
1996 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. Each member of the
Board of the Corporation, except Mr. Poe, Mr. Reznicek and Mr.
Weissman, is also a member of the Board of Directors of the Bank.
The Board of Directors of the Bank held 12 meetings during 1996.
Each member of the Executive Committee and 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 is authorized to exercise such powers
of the Board of Directors as may be legally delegated, including
the review and approval of policies for the extension of credit,
investment of the Corporation's assets and financial management; to
monitor activities under these policies and report to the Board,
and to act on behalf of the Board on recurring matters and between
meetings under specific delegations. Its members are Charles F.
Kaye, Chair, Joseph A. Baute, Marshall N. Carter, Truman S. Casner
and David A. Spina. During 1996, the Committee held 14 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, monitors communication with
external auditors and bank regulatory authorities and recommends
the selection of the Corporation's independent auditors. The
Committee is composed of Joseph A. Baute, Chair, Tenley E.
Albright, James I. Cash, Jr. and John M. Kucharski. During 1996,
the Committee held 9 meetings.
The EXECUTIVE COMPENSATION COMMITTEE oversees the compensation
system for the Corporation's executive officers and non-management
directors. The Committee consists of Robert E. Weissman, Chair, I.
MacAllister Booth, Nader F. Darehshori, Charles F. Kaye, Charles R.
LaMantia and Bernard W. Reznicek. During 1996, the Committee held
5 meetings.
The NOMINATING COMMITTEE, which held 2 meetings during 1996,
is composed of I. MacAllister Booth, Chair, Marshall N. Carter,
Arthur L. Goldstein, David B. Perini, Dennis J. Picard and Alfred
Poe. The Committee recommends nominees to the boards 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 employees of the Corporation or the
Bank 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 at
their election in shares of Common Stock of the Corporation or in
cash, plus a fee of $1,500 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 1996 through March 1997. In 1996, all outside
directors elected to receive their annual retainer in Common Stock.
Under a plan effective January 1, 1995, non-employee directors
with at least five years' service are eligible for a retirement
benefit equal to their annual retainer at retirement, payable
monthly for a period equal to the length of service of the director
on the Board up to a maximum of ten years. No retirement benefits
were paid in 1996.
BENEFICIAL OWNERSHIP OF SHARES
MANAGEMENT
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,
1997. None of the nominees, other directors or executive officers
owned beneficially as much as 1% of the outstanding shares of
Common Stock. The nominees, other directors and executive officers
in the aggregate beneficially owned _._% of the Corporation's
Common Stock.
AMOUNT AND NATURE
OF BENEFICIAL
NAME OWNERSHIP
Tenley E. Albright, M.D. 7,701(1)
A. Edward Allinson 101,000(2)
Joseph A. Baute 7,317(3)
I. MacAllister Booth 4,588
Dale L. Carleton 72,651(2)
Marshall N. Carter 88,705(2)
James I. Cash, Jr. 3,872
Truman S. Casner 6,194(4)
Nader F. Darehshori 5,194
Arthur L. Goldstein 982
Charles F. Kaye 30,422
John M. Kucharski 3,486
Charles R. LaMantia 2,752(4)
Nicholas A. Lopardo 117,010(2)(4)
David B. Perini 16,812
Dennis J. Picard 4,534
Alfred Poe 1,622
Bernard W. Reznicek 4,836
David A. Spina 377,972(2)(5)
Robert E. Weissman 5,872
All of the above and other
executive officers as a group
(25 persons) 982,073(2)(4)
___________________
(1) Includes 3,199 shares held in trust for a family member
pursuant to a trust of which Dr. Albright is a co-trustee and
1,100 shares owned by a family member 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,
60,000; Mr. Carleton, 44,288; Mr. Carter, 46,400; Mr. Lopardo,
111,422; Mr. Spina, 153,000, and the group, 504,158.
(3) Includes 200 shares owned by a member of Mr. Baute's family
with respect to which he disclaims beneficial ownership.
(4) Includes shares as to which voting power is shared, as
follows: Mr. Casner, 2,000; Dr. LaMantia, 500; Mr. Lopardo,
5,488, and the group, 9,418.
(5) Includes 20,000 shares owned by a member of Mr. Spina's family
with respect to which he disclaims beneficial ownership.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
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 and the New York Stock Exchange. Executive officers and
directors are required by 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
1996 all Section 16(a) filing requirements applicable to its
executive officers and directors were met.
CERTAIN TRANSACTIONS
During 1996 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 or other
unfavorable features. The Bank and other subsidiaries of the
Corporation have used products or services of Dun & Bradstreet with
which Mr. Weissman, a director, was associated during 1996.
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 I. MacAllister Booth, Nader F. Darehshori, Charles F.
Kaye, Charles R. LaMantia, Bernard W. Reznicek and Robert E.
Weissman, Chair. No present or former officer of the Corporation
or the Bank served as a member of the Committee.
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 management and securities processing capabilities
to support the investment strategies of our customers worldwide.
The Corporation's goal is to be the leading company serving
institutional investors worldwide. The Corporation's executive
compensation program is designed to attract and retain superior
executives, to focus these individuals on achieving the
Corporation's objectives and to reward executives for meeting
specific short-term and long-term performance targets. The
compensation program places emphasis on challenging performance
goals, business growth and sustainable real growth in earnings per
share. Sixteen executives participated in the executive
compensation program in 1996. The chairman and chief executive
officer, the president, and executive vice presidents are
considered executives for this purpose.
The Executive Compensation Committee is comprised entirely of
independent, non-employee directors. The Committee develops,
reviews and recommends to the Board of Directors for its approval,
strategic compensation plans for executives 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 significant compensation
opportunities which are directly related to the 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 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. Other
individuals who manage business units or have corporate functional
or staff responsibilities 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. In addition to executives,
many senior officers who make significant contributions to the
Corporation participate in the Corporation's stock option plan and
in a variety of annual incentive plans. 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 and measurable business
goals.
The Committee met five times in 1996 and reported its
activities to the Board of Directors. In conjunction with its
annual comprehensive review of the executive compensation program,
the Committee engaged its own independent compensation consultant.
The consultant worked for the Committee in reviewing the executive
compensation program, in reviewing a reference group of public
companies against which the Corporation's executive compensation,
financial performance and total return to stockholders was
compared, and in considering modifications to existing plans. The
Committee, with assistance from its independent consultant,
validated a group of companies as a reference group against which
to compare compensation practices and competitive levels of
compensation. This group includes large U.S. bank holding
companies, selected technology-based companies engaged in servicing
businesses and 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 units- - are appropriate for a
program that supports the Corporation's business strategy, provides
competitive compensation and creates value for stockholders. The
Committee, however, determined that revisions to the Senior
Executive Annual Incentive Plan were needed based upon competitive
data supplied by the independent compensation consultant. A new
plan, which will increase the bonus opportunity for participants in
the plan, is being submitted to stockholders for approval at this
year's annual meeting. In addition, the 1997 Equity Incentive Plan
was approved by the Board of Directors for submission to
stockholders at this year's annual meeting. This plan will replace
the 1994 Stock Option and Performance Unit Plan. The new plan will
provide for additional forms of stock compensation which are not
available under the 1994 plan and will give the Executive
Compensation Committee additional discretion in determining the
terms and conditions of stock and stock based grants as well as
expand the potential performance measures which the Committee may
elect to use for performance awards. More information on these
plans is provided below in this report and elsewhere in this proxy
statement.
The elements of the Corporation's executive compensation
currently consist of base salary, annual bonus, performance units
and stock options. These are integrated components where salary
and bonus reflect one year results, performance units reflect two
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 reported for 1996 to the Corporation's chief executive
officer, Mr. Carter, and chief operating officer, Mr. Spina, are
discussed below.
BASE SALARIES
Base salaries for executives are determined by subjectively
evaluating the responsibilities of the position, the strategic
value of the position to State Street, and the experience and
performance of the individual. No specific formula is used to set
base salaries. The Committee determined that it is appropriate for
executive salary levels to be near the median of the reference
group.
Annual salary adjustments are determined by reviewing market
compensation data, considering the overall scope of each position
and its strategic importance to State Street, the performance of
the Corporation, an evaluation of the individual's performance and
the length of time since the last salary increase. The Committee
also considers the range of salary increases which are awarded to
all employees of the Corporation. With respect to the base salary
granted to Mr. Carter and Mr. Spina, the Committee reviewed all of
the factors noted above including data supplied by the compensation
consultant on market levels of pay for the chief executive officer
and chief operating officer at companies in the reference group.
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 slightly above the median.
ANNUAL BONUSES
The Corporation's executives are eligible for annual cash
bonuses under the provisions of the Senior Executive Annual
Incentive Plan. At its meeting in December 1995, the Committee
established performance targets for 1996 under the Senior Executive
Annual Incentive Plan. This plan provides that if maximum annual
targets are achieved, the award to the chief executive officer
would be a maximum of 75% of 1996 salary paid, the award to the
chief operating officer would be a maximum of 60% of salary paid,
and the award to other participants would be a maximum of 50% of
1996 salary paid.
The Committee believes that consistent double digit increases
in earnings per share and a consistent return on equity in the 18%
range produces superior performance that will be reflected in the
Corporation's stock price. Annually, the Committee reviews one
year and five year earnings per share and return on equity
performance data for the reference group as well as other companies
represented in the S&P Financial Index. The Corporation's total
return to stockholders for the one and five year period as compared
to the S&P Financial Index is also reviewed.
In establishing the targets for the annual incentive plan, the
Committee considers the data noted above along with the
Corporation's long-term financial goals, the specific financial
goals for the following year, and the business environment in which
the Corporation is operating. Aggregate competitive data showing
the level of bonus awards for executives in the reference group of
companies is also considered. The Committee then establishes the
measures that will be used, the weighting of the measures, and
specific performance targets at which various levels of bonus will
be earned.
The 1996 performance targets were based on return on equity
and earnings per share. Each goal was weighted 50%. Performance
targets for 1996 were established at a minimum target of 14% return
on equity and a maximum target of 18% return on equity. The
earnings per share targets were established at a minimum target of
$2.77 and a maximum target of $3.65. The Plan provided that no
bonus would be paid for performance at or below the minimum
targets, performance at or above the maximum targets would result
in 100% of the bonus being paid, and payout levels were established
for specific performance points between the minimum and maximum
targets.
At its meeting in February 1997, the Committee reviewed
information supplied by the Corporation's independent auditors and
certified that the Corporation achieved an 18.1% return on equity
and earned $3.56 per share in 1996. This equates to 100% of the
maximum potential bonus award for the return on equity target and
99% of the maximum potential bonus award for the earnings per share
target. The Committee approved a bonus for Mr. Carter equal to
74.5% of his 1996 salary paid. Mr. Spina's bonus was 59.6% of
salary paid. Bonuses to the other participants in the plan who
received bonuses averaged 49.7% of the total 1996 salaries paid to
those receiving bonuses.
At its meetings in December 1996, the Committee recommended
that the Board of Directors approve a new Senior Executive Annual
Incentive Plan. This plan is being submitted to shareholders for
approval at this year's annual meeting and is described in detail
elsewhere in this proxy statement. The new plan has been designed
to make the Corporation's plan more competitive and to give the
Committee greater choice in the performance measures which can be
used. Under this plan the Committee would assign each executive a
minimum, target and maximum bonus award, stated as a percent of
salary. The Committee has determined that if the plan is approved
by the stockholders, the minimum award for Mr. Carter for 1997 will
be 0% of salary, the target bonus award will be 90% of salary and
the maximum award will be 180% of salary. The minimum bonus for
Mr. Spina will be 0% of salary, the target bonus award will be 80%
of salary and the maximum will be 160% of salary. The minimum
bonus awards for other members of the executive group will be 0% of
salary and the target bonus awards will range from 50% of salary to
65% of salary with maximums at two times the target percent. Any
bonus earned is subject to reduction by the Executive Compensation
Committee. Under the new plan, the maximum bonus payable to any
single participant is limited to $2.5 million and the Committee may
provide that some portion or all of any award payment be made in
shares of common stock of the Corporation in lieu of cash.
All awards will be made after certification by the Executive
Compensation Committee that the established performance goals have
been met.
PERFORMANCE UNITS
Performance units represent a contingent right to a cash
payment, based on the price of the Corporation's stock, in the
event the Corporation meets specified performance goals over a
specified time period following the grant. Performance units have
been granted to the Corporation's executives once every two years
or at the time an officer joined the executive group.
Under the 1994 Stock Option and Performance Unit Plan, the
performance measures used for determining the number of shares
earned covered a measurement period of two years and included one
or more of an earnings per share target, a return on equity target,
and a total return to stockholders target.
In December 1993, executives were granted performance units by
the Board of Directors for the 1995-1996 performance period. The
size of the grants was determined based upon data supplied by the
independent compensation consultant and represented long-term
incentive opportunity at approximately the seventy-fifth
percentile for companies in the reference group. This grant
included 30,000 performance units granted to Mr. Carter and 20,000
performance units granted to Mr. Spina.
At its meeting in December 1994, the Committee established
performance targets for the 1995-1996 performance period for these
performance units. Forty percent of the performance units granted
were tied to a return on equity target, 40% of the performance
units granted were tied to an earnings per share target and 20% of
the performance units granted were tied to a total return to
stockholders target.
After the end of the two year performance period, December 31,
1996, a cash payment was calculated based on the number of
performance units earned times the market value of the
Corporation's common stock at the end of the performance period.
For this purpose, market value is defined as the value of a share
of common stock equal to the average daily high and low prices on
the last ten days of the performance period. In this way, the
final cash value of the performance units relates directly to both
corporate financial performance in determining how many units are
earned and stock price appreciation in determining the cash value
of the shares earned.
At its meeting in February 1997, the Executive Compensation
Committee reviewed certified data confirming that 90% of the units
with a return on equity target were earned, 91% of the units with
an earnings per share target were earned and 100% of the units with
a total return to stockholders target were earned. The Committee
determined that Mr. Carter had earned 27,666 units of the 30,000
units he had been granted and that Mr. Spina had earned 18,444
units of the 20,000 units he had been granted. Based upon the
average high and low prices of the Corporation's common stock
during the last ten trading days of 1996, the Committee approved
payment of $1,776,583 to Mr. Carter and $1,184,335 to Mr. Spina.
At its meeting in December 1996, the Executive Compensation
Committee granted performance units under the 1994 plan to the
executive group. This grant included 40,000 performance units
granted to Mr. Carter and 25,000 performance units granted to Mr.
Spina. The size of the grants was determined based upon data
supplied by the independent compensation consultant and represents
long-term incentive opportunity at approximately the seventy-fifth
percentile for companies in the reference group. These grants have
a two year performance period covering the years 1997 and 1998. At
its meeting in February 1997, the Committee established performance
targets for the 1996-1997 performance period for these grants.
Forty percent of the performance units granted will be tied to a
return on equity target, 40% of the performance units granted will
be tied to earnings per share target and 20% of the performance
units granted will be tied to a total return to stockholders
target.
STOCK OPTIONS
Stock options are granted to executives every two years or at
the time an officer joins the executive group. The size of option
grants is determined based upon a target level of long-term
incentive opportunity at approximately the seventy-fifth percentile
for companies in the reference group. In targeting long-term
incentive opportunity, the Committee relied upon data supplied by
the independent compensation consultant, which took into account
the performance units which were being granted at the same time.
At its meeting in December of 1996, the Committee granted Mr.
Carter options to purchase 150,000 shares and Mr. Spina options to
purchase 80,000 shares. The exercise price of options is equal to
the market price of the shares at the time of the grant and the
options become exercisable in equal installments over a three year
period.
Because 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. The Committee views stock option grants
as a part of the executive's total compensation package for the
period covered by the grant. Therefore, 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.
1997 EQUITY INCENTIVE PLAN
The performance units and stock options granted to executives
in 1996, were granted under the 1994 Stock Option and Performance
Unit Plan which was approved by stockholders at the 1994 Annual
Meeting. The Board of Directors is recommending that the
stockholders approve the 1997 Equity Incentive Plan which will
replace the 1994 plan. In addition to stock options and
performance awards, the new plan will allow for additional forms of
stock and stock based grants including stock, restricted stock,
unrestricted stock and deferred stock, to be made to key employees
of the Corporation. It will provide the Executive Compensation
Committee with additional flexibility in determining performance
measures and other terms and conditions of any award under the
plan.
TAX LAW
Section 162(m) of the Internal Revenue Code generally
precludes the Corporation from taking federal income tax deductions
for compensation in excess of $1,000,000 per year for the Chief
Executive Officer and any of its four other highest paid executive
officers, if those individuals are employed on the last day of the
tax year. 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 executive compensation program against
the standards for qualifying for the tax deduction. Awards under
the 1994 Stock Option and Performance Unit Plan and the Senior
Executive Annual Incentive Plan have been designed to qualify as
performance-based compensation, with the intended result that the
deduction of compensation under these plans, including compensation
from the exercise of options or from performance units, would not
be affected by the Section 162(m) deduction limits. The new Senior
Executive Annual Incentive Plan and the 1997 Equity Incentive Plan,
which stockholders are being asked to approve at this year's annual
meeting, have also been designed to permit qualification of awards
as performance-based compensation. A portion of a bonus earned in
1996 under the State Street Global Advisors' Incentive Plan did not
qualify for the federal income tax deduction under Section 162(m).
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
Nader F. Darehshori
Charles F. Kaye
Charles R. LaMantia
Bernard W. Reznicek
Robert E. Weissman, Chair
<PAGE>
EXECUTIVE COMPENSATION
Shown below is information concerning the annual and long term
compensation paid by the Corporation and its subsidiaries,
including the Bank, to the chief executive officer and the four
other most highly compensated executive officers of the Corporation
(the "Named Executive Officers") for the periods shown.
<TABLE>
SUMMARY COMPENSATION TABLE
Long Term Compensation
----------------------
Annual Compensation Awards Payouts
<CAPTION>
Securities
Name Other Underlying
and Annual Options/ LTIP All Other
Principal Salary Bonus Compensa- SARs Payout Compensa-
Position Year ($) ($) tion($) (#) ($)(1) tion($)(2)
- -------- ---- ------ ------ -------- ---------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Marshall N.
Carter
Chairman and 1996 862,000 , 0 150,000 1,772,196 4,750
Chief Executive 1995 750,004 455,627 0 None 0 4,620
Officer 1994 725,004 494,813 0 120,000 985,846 4,620
David A. Spina(3)
President and 1996 606,250 , 0 80,000 1,181,464 4,750
Chief Operating 1995 550,003 267,301 0 25,000 0 4,620
Officer 1994 537,503 244,563 0 80,000 684,687 4,620
Nicholas A.
Lopardo (4) 1996 487,500 , 0 36,000 590,732 4,750
Executive Vice 1995 450,002 957,251 0 None 0 4,620
President 1994 425,002 661,610 0 50,000 0 4,620
A. Edward
Allinson (5) 1996 450,000 , 0 30,000 886,098 4,750
Executive Vice 1995 450,002 283,001 0 None 0 4,620
President 1994 450,002 293,250 0 50,000 502,590 4,620
Dale L. Carleton 1996 387,500 , 0 36,000 886,098 4,750
Executive Vice 1995 343,752 139,220 0 None 0 4,620
President 1994 312,502 142,188 0 50,000 255,889 4,620
</TABLE>
- --------------------------
(1) Long term compensation payouts reflect performance shares
earned in accordance with the attainment of performance
targets for the _ year period, 199_-199_, and paid in cash
equal to the fair market value of the Corporation's Common
Stock at the end of the performance period.
(2) Reflects the Corporation's contributions to the Salary
Savings Program in 1996.
(3) Mr. Spina was elected President and Chief Operating Officer
on December 21, 1995.
(4) Includes bonuses from the Corporation's Senior Executive
Annual Incentive Plan and from the State Street Global
Advisors' Incentive Plan. Mr. Lopardo also received an
award of 44,000 shares of the Corporation's Common Stock in
1996 under the Global Advisors Equity Compensation Plan.
In general, such shares will be delivered at the end of 10
years and will vest in 20% installments in years 6 through
10, subject to earlier delivery under certain
circumstances.
(5) Includes compensation received by Mr. Allinson of $100,750
in 1994, $100,750 in 1995 and $___,___ in 1996 as Chairman
of Boston Financial Data Services, Inc. which is 50% owned
by the Corporation.
<TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation
Individual Grants for Option Term (2)
- ------------------------------------------------------ ----------------------
(a) (b) (c) (d) (e) (f) (g)
Percent
Number of of Total
Securities Options/
Underlying SARs
Options/ Granted to Exercise
SARs Employees or Base Expira-
Granted in Fiscal Price tion
Name (#)(1) Year ($/Sh) Date 5%($) 10%($)
- ----- -------- -------- -------- ------- ----- -------
<S> <C> <C> <C> <C> <C> <C>
Marshall N. Carter 150,000 16.27 63.50 12/18/06 5,990,000 15,180,000
David A. Spina 80,000 8.68 63.50 12/18/06 3,195,000 8,096,000
Nicholas A. Lopardo 36,000 3.90 63.50 12/18/06 1,438,000 3,643,000
A. Edward Allinson 30,000 3.25 63.50 12/18/06 1,198,000 3,036,000
Dale L. Carleton 36,000 3.90 63.50 12/18/06 1,438,000 3,643,000
____________________
</TABLE>
(1) Options become exercisable in 33 1/3% installments over a
three year period commencing December 19, 1997.
(2) Gains are reported net of the option exercise price, but
before taxes associated with exercise. These amounts
represent certain assumed rates of appreciation only, as
set by the Securities and Exchange Commission. The
actual value, if any, that the Named Executive Officer
may realize from these options will depend solely on the
gain in stock price over the exercise price when the
options are exercised.
<TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
<CAPTION>
Value of Number Unexercised
of Securities Under- In-the-Money
lying Unexercised Options/SARS at
Options/SARs at December 31, 1996
December 31, 1996(#) ($)(1)
------------------- --------------------
Shares Value
Acquired on Realized Excer- Unexer- Exer- Unexer-
Name Exercise(#) ($)(2) sable cisable cisable cisable
- ---- ----------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Marshall N.
Carter 113,600 3,630,938 46,400 222,000 1,721,000 2,835,375
David A. Spina None 0 153,000 148,000 6,445,063 2,280,250
Nicholas A.
Lopardo None 0 111,422 66,000 5,384,467 1,140,000
A. Edward
Allinson None 0 60,000 60,000 2,595,000 1,130,625
Dale L. Carleton 8,484 276,033 44,288 66,000 1,877,674 1,140,000
- ----------------------
</TABLE>
(1) Represents the difference between the fair market value of
the stock on December 31, 1996 ($65.0625) and the exercise
price of the stock options.
(2) Represents the difference between the fair market value of
the stock at the time of the exercise and the exercise
price of the stock options.
<TABLE>
LONG-TERM INCENTIVE PLAN AWARDS TABLE
LONG-TERM INCENTIVE PLANS-AWARDS IN LAST FISCAL YEAR
<CAPTION>
Estimated Future Payouts Under
Non-Stock Price Based Plans
------------------------------
(a) (b) (c) (d) (e) (f)
Number of Performance or
Shares, Units Other Period
or Other Until Matura- Threshold Target Maximum
Name Rights (#) tion or Payout ($ or #) ($ or #) ($ or #)
- --------- ------------- -------------- --------- -------- --------
<S> <C> <C>
Marshall N. Carter 40,000 1997-1998
David A. Spina 25,000 1997-1998
Nicholas A. Lopardo 12,000 1997-1998
A. Edward Allinson 0
Dale L. Carleton 12,000 1997-1998
- -----------------------
</TABLE>
(1) 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>
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
cumulative total return of the S&P 500 Index and the S&P Financial
Index for the period of five fiscal years which commenced December
31, 1991 and ended December 31, 1996, assuming $100 invested in the
Corporation's Common Stock and in each index on December 31, 1991
and assuming reinvestment of dividends. The S&P Financial Index is
a publicly available measure of 67 of the Standard & Poor's 500
companies, representing 31 banking companies, 19 insurance
companies and 17 financial services companies.
[insert graph here]
1991 1992 1993 1994 1995 1996
State Street
Boston Corporation
Total Return 100 138 120 93 149 217
S&P 500 Index
Total Return 100 108 118 120 165 203
S&P Financial Index
Total Return 100 123 137 132 204 275
<PAGE>
RETIREMENT BENEFITS
As of January 1, 1990, the benefit formula under the
Corporation's defined benefit plan (the "Retirement Plan") was
changed to a cash balance formula. An account balance was
established for each participant equal to the then 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 of base
salary 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, based on 30 years of service, is equal
to a benefit of 50% of final average pay minus 50% of the estimated
Social Security benefit. For periods of service of less than 30
years, the benefit is reduced pro rata.
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.
Under federal law, an employee's benefits under a qualified
retirement plan are limited to certain maximum amounts. On October
1, 1987, the Corporation adopted a supplemental retirement plan, as
amended (the "1987 Supplemental Plan") to supplement the benefits
under the Retirement Plan by payment of additional retirement
benefits out of general funds of the Corporation. Each of the
Named Executive Officers is included in the 1987 Supplemental Plan.
Effective as of January 1, 1995 the Corporation adopted a
supplemental defined benefit pension plan (the "1995 Supplemental
Plan") to provide certain key employees with retirement benefits
and encourage the continued employment of such employees with the
Corporation. The 1995 Supplemental Plan provides for the payment
of additional annual benefits upon retirement at age 65 (or a
proportionately reduced amount in the event of retirement on or
after the age of 55 but prior to the age of 65), calculated as a
straight life annuity, equal to 50% of such participant's final
average earnings (highest average of any 5 consecutive years'
earnings, as defined therein, during the last 10 years of
employment) less annual benefits paid to such participant from the
Retirement Plan, the 1987 Supplemental Plan and other retirement
income payable to such participant under other plans of the
Corporation or other of the participant's employers. Such benefits
are subject to forfeiture in the event that the participant's
employment with the Corporation terminates for any reason prior to
reaching age 55 or completing 10 full years of employment with the
Corporation. In addition, such benefits shall terminate if the
participant engages in certain competitive activities within two
years of termination.
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. In addition, the Carter Letter Agreement (as
defined below) provides, among other things, that the forfeiture
and termination provisions relating to the 1995 Supplemental Plan
will be deemed inapplicable in the event that (i) Mr. Carter's
employment is terminated for reasons other than voluntary
resignation, death or malfeasance before July 23, 2001 and (ii) he
is not eligible for the severance benefits set forth in the change
of control arrangements described below. See - "Termination of
Employment and Change of Control Arrangements".
Final average earnings include annual base salary plus any
annual cash incentive compensation awards only. As of December 31,
1996, the credited years of service for each of the Named Executive
Officers were as follows: Mr. Carter, 4; Mr. Spina, 23; Mr.
Lopardo, 8; Mr. Allinson, 12, and Mr. Carleton, 17. Current
compensation covered by the Retirement Plan as of December 31, 1996
for each of the Named Executive Officers was as follows: Mr.
Carter, $1,205,627; Mr. Spina, $817,301; Mr. Lopardo, $1,332,251;
Mr. Allinson, $632,251, and Mr. Carleton, $489,220.
The estimated annual aggregate benefits (which are not subject
to a deduction for Social Security), assuming a single life
annuity, payable upon normal retirement under the final average pay
formula to the Named Executive Officers assuming each continues to
be employed by the Corporation until age 65 at his annual base
salary and cash incentive compensation at December 31, 1996 are as
follows: Mr. Carter, $602,814; Mr. Spina, $408,651; Mr. Lopardo,
$666,126; Mr. Allinson, $314,275, and Mr. Carleton, $244,610.
TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL ARRANGEMENTS
The Corporation has employment agreements with Messrs. Carter,
Spina, Lopardo, Allinson and Carleton which become operative
following a change of control of the Corporation, as defined in the
employment agreements. The employment agreements continue in
effect while the executive officers are employed by the Corporation
until December 31, 1997 with provision for automatic renewal, and
remain in effect for a period of two years after a change of
control. If the employment of the executive officers is terminated
following a change of control, or if Mr. Carter's or Mr. Spina's
employment is terminated voluntarily within thirty days of the six
month period following a change of control, or within thirty days
of the twelve month period following a change of control for the
other Named Executive Officers they would become entitled to
various benefits under the employment agreements, including payment
of three times the executive officers' base salary and bonus,
unless the executive officers' employment were terminated by the
Corporation for cause or by the executive officers without good
reason as defined in the agreement. If the executive officers had
been terminated on December 31, 1996, they would have been entitled
to receive the following amounts as severance pay: Mr. Carter,
$__________ Mr. Spina, $_________; Mr. Lopardo, $_________; Mr.
Allinson, $_________, and Mr. Carleton, $_________. The
Corporation will make additional payments in an amount such that
after the payment of income and excise taxes, the executive officer
will be in the same after tax position as if no excise tax under
Section 4999 of the Internal Revenue Code had been imposed. Each
of the outstanding agreements pursuant to which stock options and
performance units were granted to Messrs. Carter, Spina, Lopardo,
Allinson and Carleton by the Corporation contains provisions for
acceleration of stock options and payment of performance units
following a change of control. A change of control is defined in
the agreements to include the acquisition of 25% 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 entered into a letter agreement with Mr.
Carter (the "Carter Letter Agreement") that provides for severance
pay equal to two years' salary and bonus if (i) his employment is
terminated for reasons other than voluntary resignation, death or
malfeasance before July 23, 2001, and (ii) he is not eligible for
the severance benefits set forth in the change in control
arrangements described above. In such circumstances, for purposes
of determining the amount payable to Mr. Carter pursuant to the
1995 Supplemental Plan (i) the forfeiture and termination
provisions described above will be deemed inapplicable, and (ii)
the benefits otherwise payable thereunder will be reduced by
multiplying such amounts by a fraction, the numerator of which is
the number of whole calendar months Mr. Carter was employed by the
Corporation and the denominator of which is 120. Such payments
shall terminate in the event that Mr. Carter becomes employed by
one of the top five master trust or custody banks or one of the top
five mutual fund custodians within two years of termination (the
"Non-Competition Clause"). The Carter Letter Agreement also
provides that in the event of a change in control of the
Corporation and termination of Mr. Carter's employment under
circumstances which entitle him to receive a severance payment
pursuant to the change in control arrangements described above the
1995 Supplemental Plan will be modified in the manner set forth
above (except that the Non-Competition Clause will be inapplicable)
and Mr. Carter will be provided with a benefit equivalent in value
to that which he would receive had his employment with the
Corporation continued an additional three years.
On December 6, 1996, the Corporation established an Executive
Compensation Trust (the "Trust") to provide a source for payments
required to be made to participants, including Messrs. Carter,
Spina, Lopardo, Allinson and Carleton, under the 1987 Supplemental
Plan, the 1995 Supplemental Plan and to Mr. Carter pursuant to the
Carter Letter Agreement. The Trust has been partially funded in
the amount of $1,000,000. The Trust is revocable until a change of
control occurs, at which time it becomes irrevocable. A change of
control is defined to include the acquisition of 25% 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.
AMENDMENT OF THE RESTATED ARTICLES OF ORGANIZATION TO CHANGE THE
NAME OF THE CORPORATION
On December 19, 1996, the Board of Directors approved the
submission to the stockholders of an amendment of the Corporation's
Restated Articles of Organization to change the name of the
Corporation from "State Street Boston Corporation" to "State Street
Corporation".
The Corporation combines information technology with banking,
trust, investment management and securities processing capabilities
to support the investment strategies of its customers worldwide.
The Corporation is a financial services and investment management
company with substantial opportunities for growth globally.
The Corporation has been steadily expanding its operations
outside the United States. Today, the Corporation has offices in
15 countries and settles securities in 72 markets. The name of the
Corporation has gained distinctive recognition over the years as a
financial institution dedicated to its customers' needs.
The Board believes it is appropriate at this time to adopt
"State Street Corporation" as the name of the Corporation to
enhance its image of serving institutional investors worldwide and
extend its global reach at the same time that it maintains its ties
to the marketplace which it has been serving since 1792.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
FOR THIS PROPOSAL TO AMEND THE RESTATED ARTICLES OF ORGANIZATION TO
CHANGE THE NAME OF THE CORPORATION TO STATE STREET CORPORATION.
(ITEM 2 ON PROXY CARD)
AMENDMENT OF THE RESTATED ARTICLES OF ORGANIZATION TO INCREASE
THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
On December 19, 1996, the Board of Directors approved the
submission to the stockholders of an amendment to the Corporation's
Restated Articles of Organization to increase the authorized Common
Stock of the Corporation from 112,000,000 shares, $1 par value, to
250,000,000 shares, $1 par value, and authorize the Board to issue
from time to time authorized and unissued shares of the
Corporation.
As of February 28, 1997, there were outstanding ____________
shares of Common Stock and ______________ shares were held in the
treasury. Of the __________ authorized and unissued shares on that
date, ______________ shares were reserved for issuance pursuant to
options granted under the Corporation's stock option plans and for
the State Street Global Advisors Equity Compensation Plan,
5,000,000 shares were reserved for the 1997 Equity Incentive Plan,
subject to the approval of the plan by the stockholders, and
_______________ shares were reserved for issuance pursuant to the
7 3/4% Convertible Subordinated Debentures due 2008.
While the Board of Directors has not authorized or taken any
action with respect to the issuance of shares covered by the
proposal to increase the number of authorized share of Common Stock
and has no current agreement, arrangement, or understanding with
respect to the issuance of any such shares, the Board is currently
contemplating a stock split (to be effected by a one-for-one stock
dividend) of the outstanding Common Stock. The Board's decision to
approve a stock dividend will be based upon market and other
factors deemed relevant by the Board from time to time. The number
of currently authorized but unissued and unreserved shares of
Common Stock would be insufficient to accomplish a stock split of
any significant size. Although there can be no assurance that a
stock dividend will be authorized, the contemplation of a stock
dividend was an important factor the Board considered in proposing
an increase in the number of authorized shares.
The Board of Directors believes that it is advisable to have
the authorized shares of Common Stock in excess of those shares
outstanding (including, if authorized, the additional Common Stock
provided for in this proposal) available for general corporate
purposes, such as financings, acquisitions, stock splits, stock
dividends and the employee benefit plans. The continued
availability of shares of Common Stock provides the Corporation
with the flexibility to take advantage of various opportunities as
they arise.
The additional shares of Common Stock to be authorized by the
amendment will be identical to the shares of Common Stock now
authorized and outstanding and will carry Preferred Share Purchase
Rights. The increase in authorized shares will not affect the
terms, or the rights of holders, of existing shares of Common
Stock. Depending on the circumstances, any subsequent issuance of
Common Stock could have a dilutive effect on existing stockholders
by decreasing the percentage ownership in the Corporation (for
voting, distributions and other purposes) represented by existing
shares of Common Stock. Holders of Common Stock have no preemptive
rights.
The additional shares of Common Stock as well as the
previously authorized Preferred Stock, the employment, stock option
and performance unit agreements discussed above, the Rights
Agreement and certain provisions of the By-laws establishing
procedures for stockholders to bring proposals or nominations
before stockholders' meetings, the classified Board, restrictions
on the calling of special stockholder meetings and stockholder
action by written consent could, under some circumstances, be used
to make a change in control of the Corporation more difficult On
September 15, 1988, the Board of Directors established a Rights
Agreement (subsequently amended as of September 20, 1990) and
pursuant thereto declared a dividend of one preferred share
purchase right for each outstanding share of Common Stock. Under
certain conditions, a right may be exercised to purchase one two-hundredth
share of a new series of participating preferred stock at
an exercise price of $75, subject to adjustment. The rights become
exercisable if a party acquires or obtains the right to acquire 20%
or more of the Corporation's Common Stock or after commencement or
public announcement of an offer for 20% or more of the
Corporation's Common Stock. When exercisable, under certain
conditions, each right also entitles the holder thereof to purchase
shares of Common Stock of either the Corporation or of the acquiror
having a market value of two times the then current exercise price
of the right.
Although the Corporation has no immediate plans to issue
additional shares of Preferred Stock or Common Stock, the Board of
Directors would have sole discretion to issue uncommitted shares of
Common Stock from time to time to effect the stock split discussed
above or for any other corporate purpose, including in reaction to
any unsolicited acquisition proposal, without further action by the
stockholders subject to requirements of corporate law and the New
York Stock Exchange and other exchanges on which the Corporation's
Common stock is listed. The Board is also authorized to issue
shares of Preferred Stock without stockholder approval and any
Preferred Stock issued would be senior to Common Stock with respect
to dividends, liquidation rights and/or other attributes.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
FOR THIS PROPOSAL TO AMEND THE RESTATED ARTICLES OF ORGANIZATION TO
PROVIDE FOR AN INCREASE IN THE AUTHORIZED NUMBER OF SHARES OF THE
CORPORATION'S COMMON STOCK FROM 112,000,000 TO 250,000,000 AND TO
AUTHORIZE THE ISSUANCE OF AUTHORIZED AND UNISSUED SHARES OF THE
CORPORATION FROM TIME TO TIME BY THE BOARD OF DIRECTORS. (ITEM 3 ON
PROXY CARD)
APPROVAL OF THE SENIOR EXECUTIVE ANNUAL INCENTIVE PLAN
The Executive Compensation Committee (the "Committee") and the
Board of Directors have approved and recommend for stockholder
approval the Senior Executive Annual Incentive Plan (the "Annual
Incentive Plan"). The Annual Incentive Plan provides additional
incentive to Senior Executives to achieve targeted levels of
achievement. The Annual Incentive Plan is intended as a successor
plan to the incentive plans for senior executives previously
approved by the stockholders to provide more flexibility to the
Committee to help achieve the Corporation's goal of being the
leading servicer of institutional investors worldwide. Principal
changes include additional performance goals, an increase in the
maximum award level, and a provision that a portion of any payments
made under the Annual Incentive Plan may be made in stock of the
Corporation.
Stockholders are being asked to approve the Annual Incentive
Plan so that compensation under the Annual Incentive Plan may be
deductible by the Corporation under Section 162(m) of the Internal
Revenue Code. For a more complete discussion of Section 162(m),
see the Report of the Executive Compensation Committee at page __.
Approval by stockholders of the Annual Incentive Plan and
certification by the Committee that targeted performance has been
achieved shall be a condition to the rights of senior executives to
receive any benefits under the Annual Incentive Plan.
The following is a description of the Annual Incentive Plan:
ELIGIBLE PARTICIPANTS
The Chief Executive Officer, the President and such other key
executives as the Committee may designate participate in the Annual
Incentive Plan. To receive an award with respect to a calendar
year, a participant must generally be an employee of the
Corporation, or one of its subsidiaries, on December 31 of such
year. If, however, an individual is no longer an employee of the
Corporation or one of its subsidiaries at the time awards are
approved by the Committee, the Committee in its discretion may
cause any award otherwise payable under the terms of the Annual
Incentive Plan to be forfeited. The Corporation has approximately
_______ executives who are eligible to participate.
PERFORMANCE GOALS
Corporate achievement of performance goals determines whether,
and the extent to which, a participant earns his or her award. The
goals are based on any combination of: earnings per share, return
on equity, total shareholder return, revenue growth, operating
leverage and market share. No payments under an award will be made
under the Annual Incentive Plan unless the performance goals are
met or exceeded.
AWARDS
The Committee may provide for varying levels of payment under
an award depending on whether performance goals have been met or
exceeded. No more than $2,500,000 shall be payable under an award
to any one individual for any award year. All payments shall be
made in cash except that the Committee may provide that a certain
portion of the payment be made in stock of the Corporation issued
pursuant to the 1997 Equity Incentive Plan which the stockholders
are also being asked to approve at the Annual Meeting. A
participant may elect to have all or a portion of an award deferred
under deferral rules which may be established by the Committee.
All awards will be made only after certification by the
Committee that the performance goals have been achieved.
ADMINISTRATION
The Committee has complete discretion to construe and
administer the Annual Incentive Plan and to determine eligibility
to participate, the performance goals, achievement of the
performance goals, the amount of payment to be made under an award
and to do everything else necessary to carry out the Annual
Incentive Plan.
AMENDMENT AND TERMINATION
The Committee may amend the Annual Incentive Plan or the
awards, provided that any amendments must be consistent with
qualification under Section 162(m). The Committee may terminate
the Annual Incentive Plan at any time.
The awards which would be payable in the future under the
Annual Incentive Plan cannot be determined because the payment of
such awards would be contingent upon attainment of the pre-established
performance goals and the actual award may reflect
exercise of the Committee's discretion to reduce the award
otherwise payable upon achievement of the performance goals. For
a description of and amounts paid under the Senior Executive Annual
Incentive Plan for 1996, see the Annual Bonuses section of the
Report of the Executive Compensation Committee and the Summary
Compensation Table.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
FOR ADOPTION OF THE SENIOR EXECUTIVE ANNUAL INCENTIVE PLAN. (ITEM
4 ON PROXY CARD)
APPROVAL OF THE 1997 EQUITY INCENTIVE PLAN
On December 19, 1996, the Board of Directors of the
Corporation adopted the 1997 Stock Incentive Plan (the "1997 Plan")
and recommended its approval by the stockholders. The 1997 Plan is
designed to advance the interests of the Corporation and its
stockholders by granting key employees of the Corporation and its
subsidiaries, non-employee directors and other key persons, stock
and stock-based awards (collectively, the "Awards"), including
stock options; restricted and unrestricted stock; rights to receive
cash or stock in connection with achievement of performance goals
("Performance Awards"); tax-offset payments, or rights to receive
cash or stock in respect of increases in the value of the Common
Stock ("SARs"). The Board believes that the Corporation's stock
option plans have contributed to the progress of the Corporation by
providing incentives to persons key to its success. Intense
competition among business firms for executives and other key
persons makes it important for the Corporation to maintain an
effective compensation program in order to continue to attract,
motivate, and retain persons necessary to further the Corporation's
growth. Competing compensation programs of other companies make it
important that the Corporation's program continues and has maximum
flexibility. The Board believes that the 1997 Plan will assist the
Corporation in meeting the competitive situation created by the
varied compensation programs of other companies. The 1997 Plan is
intended to replace the 1994 Stock Option and Performance Unit
Plan, and upon approval of the 1997 Plan no additional grants will
be made under the existing plan.
The following is a summary of the principal features of the
1997 Plan. This summary is qualified in its entirety by the
complete text of the 1997 Plan as set forth in Exhibit A of this
proxy statement.
SUMMARY OF THE 1997 PLAN
ADMINISTRATION; ELIGIBLE PERSONS. The 1997 Plan is
administered by a Committee of the Board of Directors (which
currently is the Executive Compensation Committee) consisting of no
fewer than two directors. During such times as the Common Stock is
regulated under the Securities Exchange Act of 1934 (the "1934
Act") (and except as the Board otherwise determines), all members
of the Committee shall be "non-employee" directors within the
meaning of Rule 16b-3 under the 1934 Act and "outside directors" as
that term is used in Section 162(m) of the Internal Revenue Code.
All members of the Committee serve at the pleasure of the Board of
Directors.
The Committee has full power, subject to the 1997 Plan, to
grant awards at such time or times as it chooses, determine the
size, type, and terms of any award, waive compliance with award
terms, and amend, cancel, and regrant awards (except that persons
eligible to participate in the 1997 Plan will be those key
employees of the Corporation and its subsidiaries and other key
persons or entities, including non-employee directors, who are in
a position to make significant contributions to the success of the
Corporation and its subsidiaries, as selected from time to time by
the Committee.) Approximately ______________ persons are eligible
to participate in the 1997 Plan.
SHARES SUBJECT TO THE 1997 PLAN. Under the 1997 Plan, an
aggregate of 4,000,000 shares of Common Stock of the Corporation is
authorized for issuance. The maximum number of shares for which
any individual may be granted options or stock appreciation rights
under the 1997 Plan during a calendar year is in each case 500,000.
The maximum number of shares (or their equivalent fair market value
in cash) that may be delivered to any individual under performance
awards made under the 1997 Plan is 250,000. (The 4,000,000,
500,000, and 250,000 amounts are subject to adjustment upon certain
occurrences.) No Awards may be made under the 1997 Plan after
December 18, 2006.
STOCK OPTIONS. The 1997 Plan permits the granting of stock
options that qualify as incentive stock options under Section
422(b) of the Internal Revenue Code ("incentive options" or "ISOs")
and stock options that do not so qualify ("nonstatutory options").
The option exercise price of each option shall be determined by the
Committee in its discretion but may not be less than the fair
market value of the Common Stock on the date the option is granted.
The term of each option will be fixed by the Committee but may
not exceed 10 years from the date of grant. On February 28, 1997,
the closing price of the Common Stock on the New York Stock
Exchange, as reported in The Wall Street Journal, was $______.
The Committee will determine at what time or times each option
may be exercised. Options may be made exercisable in installments,
and the exercisability of options may be accelerated by the
Committee.
The option exercise price of options granted under the 1997
Plan must be paid in cash or, if the Committee so determines, by
delivery of shares of unrestricted Common Stock (including by
attestation of ownership), by delivery of an unconditional broker's
undertaking to deliver the exercise price, or a combination of such
methods of payment.
In the event of termination of employment by reason of
retirement permitted by a retirement plan, disability, or death,
except as the Committee may otherwise determine, an option may
thereafter be exercised in accordance with its terms for a period
ending one year after the last installment of the option becomes
exercisable or one year following retirement, death, or disability,
if later, subject to the stated term of the option.
If an optionee terminates employment for any reason other than
retirement permitted by a retirement plan, disability, or death, or
if a service relationship of a Participant other than an employee
terminates for any reason, except as the Committee may otherwise
determine, his or her options will remain exercisable, to the
extent then exercisable, for three months (or if the Participant
dies within such 3-month period, for one year) following
termination, subject to the stated term of the option.
STOCK APPRECIATION RIGHTS. The Committee may also grant stock
appreciation rights entitling the holder upon exercise to receive
an amount in any combination of cash or shares of Common Stock (as
determined by the Committee), measured in whole or in part by
reference to the appreciation since the date of grant in the value
of the shares of Common Stock covered by such right. Stock
appreciation rights may be granted separately from or in tandem
with the grant of an option. Each tandem stock appreciation right
terminates upon the termination or exercise of any accompanying
option.
In addition to stock appreciation rights exercisable at the
discretion of the holder, the Committee may also determine in its
sole discretion that, if so requested by an option holder, the
Corporation will pay the optionee, in cancellation of the related
option, any combination of cash or Common Stock, equal to the
difference between the fair market value of the shares covered by
the option and the exercise price.
Based on current accounting and reporting standards, there
would be a charge to earnings with respect to any stock
appreciation rights which have been granted, based upon the amount
of appreciation, if any, in the market value of the shares covered
under the rights, and there would be a credit to earnings, to the
extent of previously recognized charges for appreciation, for
decline in the market value of such shares. Based on current
accounting and reporting standards, applicable charges and credits
would commence with the granting of stock appreciation rights,
based on market appreciation or depreciation and would continue to
be recorded quarterly until the exercise, surrender, or termination
of the rights.
RESTRICTED STOCK AND UNRESTRICTED STOCK. The Committee may
also award shares of Common Stock subject to such conditions and
restrictions as the Committee may determine ("Restricted Stock").
The Committee may require that recipients of Restricted Stock enter
into a Restricted Stock award agreement with the Corporation
setting forth the terms and conditions of the award, or may
establish the terms and conditions of the award in some other
manner. The Committee may at any time waive the restrictions and
conditions applicable to a Restricted Stock award. Shares of
Restricted Stock are non-transferable and except as otherwise
provided by the Committee, if a participant who holds shares of
Restricted Stock terminates employment for any reason other than
death or disability prior to the lapse or waiver of the
restrictions, the Corporation will have the right to require the
forfeiture or repurchase of the shares in exchange for the amount,
if any, which the participant paid for them. Except as determined
by the Committee, Restricted Stock will vest (i.e., become free of
restrictions under the 1997 Plan) in the event of death or
disability. Prior to the lapse of restrictions on shares of
Restricted Stock, the participant will have all rights of a
shareholder with respect to the shares, including voting and
dividend rights, subject only to the conditions and restrictions
generally applicable to Restricted Stock.
The Committee may also grant shares (for a purchase price not
less than par value) which are free from any restrictions under the
1997 Plan ("Unrestricted Stock"). Unrestricted Stock could be
issued in recognition of past services or in other circumstances
where the Committee determines the grant to be in the best
interests of the Corporation.
Restricted Stock or Unrestricted Stock may be issued under the
1997 Plan in payment of awards under the Annual Incentive Plan
described above.
DEFERRED STOCK. The Committee may also make Deferred Stock
awards under the 1997 Plan. These are awards entitling the
recipient to receive shares of Common Stock in one or more
installments at a future date or dates, as determined by the
Committee. Receipt of Deferred Stock may be conditioned on such
matters as the Committee shall determine, subject to acceleration
in the Committee's discretion. Except as otherwise determined by
the Committee all such rights to which a participant is not
irrevocably entitled will terminate upon the participant's
termination of employment.
PERFORMANCE AWARDS. The Committee may also award Performance
Awards entitling the recipient to receive shares of Common Stock or
cash in such combinations as the Committee may determine, up to a
maximum of 250,000 shares (or their equivalent value in cash) to
any individual over the life of the 1997 Plan. Payment of the
Performance Award may be conditioned on achievement of individual,
corporate, departmental or other performance goals and will be
subject to such other conditions as the Committee shall determine.
Except as otherwise determined by the Committee, rights under a
Performance Award will terminate upon a participant's termination
of employment.
Performance Awards under the 1997 Plan that are intended to
qualify as performance-based compensation under Section
162(m)(4)(C) of the Internal Revenue Code ("exempt awards") must
provide for payment solely upon attainment of one or more
objectively determinable performance goals established by the
Committee (in accordance with the rules under Section 162(m) of the
Internal Revenue Code) based on one or more of the following
performance criteria: (i) return on equity, (ii) earnings per
share, (iii) the Corporation's total shareholder return during the
performance period compared to the total shareholder return of a
generally recognized market reference (e.g., the S&P 500 or the S&P
Financial Index), (iv) revenue growth, (v) operating leverage, or
(vi) market share. To the extent consistent with the exemption
rules under Section 162(m) of the Internal Revenue Code, the
Committee may provide that performance goals will be adjusted to
eliminate the effect of extraordinary items (as determined in
accordance with generally accepted accounting principles) or
changes in the Common Stock by reason of a stock dividend, stock
split, extraordinary dividend or similar event.
SUPPLEMENTAL GRANTS. In connection with Awards under the 1997
Plan, the Committee may at any time grant to a participant the
right to receive a cash payment in up to the amount estimated to be
necessary to cover federal, state, and local income taxes with
respect to such Award and with respect to the cash payment itself.
ADJUSTMENTS FOR STOCK DIVIDENDS, MERGERS, ETC. The Committee
is required to make appropriate adjustments in connection with
outstanding Awards to reflect stock dividends, stock splits, and
similar events, including distributions to stockholders other than
normal cash dividends. In the event of a merger, acquisition,
disposition, or similar corporate transaction or a material change
in law or accounting principles or practices, the Committee in its
discretion may also provide for appropriate adjustments. No
adjustments will be made to the extent they would adversely effect
the ISO or Section 162(m) qualification or Awards.
Except as provided by the Committee at time of grant, in the
event of a consolidation or merger in which the Corporation is not
the surviving corporation or which results in the acquisition of
substantially all of the outstanding Common Stock by a single
person or entity or by a group of persons and/or entities acting in
concert, or in the event of the sale or transfer of substantially
all of the Corporation's assets or a dissolution or liquidation of
the Corporation, unvested Awards and Awards not yet exercisable
will be forfeited unless the Committee makes the Award vested and
free of restrictions (and exercisable, if the Award requires
exercise) or, in the case of a participant who will be employed by
or otherwise providing services to a surviving or acquiring entity,
provide for assumption of the award by such entity or for the grant
of a substitute award. In all events, in the event of a "Change of
Control" (as defined in the 1997 Plan) of the Corporation, options
and SARs shall become exercisable, Restricted Stock shall vest, and
holders of Performance Awards shall be entitled to a cash payment
in such amount as shall be specified in the award. After such a
Change of Control, options and SARs shall remain exercisable
following a termination of employment or other service relationship
(other than in the event of death, retirement or disability) for
seven months or until the expiration of the original term of the
award if earlier. Neither the Committee nor the Board may impose
additional conditions on exercise or otherwise amend an award
without the holder's written consent. Stock may be substituted for
cash in certain circumstances where cash payments would result in
adverse accounting treatment.
CERTAIN TAX PAYMENTS. The Corporation will withhold
applicable taxes from any cash payment made pursuant to an Award.
In the case of Awards involving Common Stock, the Committee may
require the participant to remit an amount equal to the required
tax withholding or make other arrangements satisfactory to the
Committee for the payment of such taxes. The Committee may permit
shares to be withheld from an Award, or may permit the participant
to deliver shares, with a value equal to the required withholding.
In the case of an ISO, the Committee may require that the
participant agree to provide for withholding taxes if a withholding
obligation arises at time of exercise or in the future.
TRANSFERABILITY OF AWARDS. In general, Awards under the 1997
Plan are nontransferable except in the event of death. However,
the Committee in its discretion may permit transfers to other
persons or entities.
NONCOMPETITION, ETC. The Committee may provide in connection
with any Award that the participant's rights to enjoyment of the
Award or to any cash or Common Stock deliverable under the
Award be conditioned upon the participant's agreeing (on terms
determined by the Committee) not to compete with the Corporation
and its subsidiaries, not to disclose confidential information, and
not to solicit employees, advisors or business from the Corporation
and its subsidiaries.
AMENDMENT AND TERMINATION. The Committee may at any time
amend or discontinue the 1997 Plan or amend awards for the purpose
of satisfying changes in the law or for any other lawful purpose.
However, no such action shall adversely affect any rights under
outstanding awards without the holder's consent. Moreover, any
amendment requiring stockholder approval for purposes of satisfying
any then-applicable incentive stock option rules or Section 162(m)
rules shall be subject to such stockholder approval to the extent
then required.
FEDERAL INCOME TAX CONSEQUENCES
The Corporation is advised that under the federal income tax
laws as now in effect, the income tax consequences associated with
stock options awarded under the 1997 Plan are, in summary, as
follows:
INCENTIVE OPTIONS. No ordinary taxable income is realized by
the optionee upon the grant or exercise of an ISO. If no
disposition of shares issued to an optionee pursuant to the
exercise of an ISO is made by the optionee within two years from
the date of grant or within one year after the transfer of such
shares to the optionee, then (a) upon sale of such shares, any
amount realized in excess of the option price (the amount paid for
the shares) will be taxed to the optionee as a long-term capital
gain and any loss allowed for tax purposes will be long-term
capital loss, and (b) no deduction will be allowed to the
Corporation. The exercise of an ISO will, however, increase the
optionee's alternative minimum taxable income and may result in
alternative minimum tax liability for the optionee.
If shares of Common Stock acquired upon the exercise of an ISO
are disposed of by the optionee prior to the expiration of the two-year
or one-year holding periods described above (a "disqualifying
disposition"), generally (a) the optionee will realize ordinary
income in the year of disposition in an amount equal to the excess
(if any) of the fair market value of the shares at exercise (or, if
less, the amount realized on a sale of such shares) over the option
price thereof, and (b) the Corporation will be entitled to deduct
such amount. Any further gain recognized will be taxed as short-term
or long-term capital gain and will not result in any deduction
by the Company. Special rules may apply where all or a portion of
the exercise price of the ISO is paid by tendering shares of Common
Stock. A disqualifying disposition will eliminate the alternative
minimum taxable income adjustment associated with the exercise of
the ISO if it occurs in the same calendar year as the year in which
the adjustment occurred.
If an ISO is exercised at a time when it no longer qualifies
for the tax treatment described above, the option is treated as a
nonstatutory option. Generally, an ISO will not be eligible for
the tax treatment described above if it is exercised more than
three months following termination of employment (one year
following termination of employment, in the case of termination by
reason of permanent and total disability), except in certain cases
where the ISO is exercised after the death of the optionee.
Options otherwise qualifying as ISOs will also be treated for
federal income tax purposes as nonstatutory options to the extent
they (together with other ISOs held by the optionee) first become
exercisable in any calendar year for shares having a fair market
value, determined at the time of the option grant, exceeding
$100,000.
NONSTATUTORY OPTIONS. With respect to nonstatutory options
under the 1997 Plan, no income is realized by the optionee at the
time the option is granted. Generally, (a) at exercise, ordinary
income, subject (in the case of options granted to an employee) to
withholding, is realized by the optionee in an amount equal to the
difference between the option price and the fair market value of
the shares on the date of exercise, and a corresponding deduction
will be available to the Corporation, and (b) any gain or loss
recognized upon a later sale is treated as capital gain or loss,
either short-term or long-term depending on the applicable holding
period for the sale.
CERTAIN LIMITATIONS. Section 162(m) of the Internal Revenue
Code limits to $1 million the deduction a public corporation may
claim for remuneration paid to any of its five top officers,
subject to a number of exceptions and special rules. Eligible
performance-based compensation is exempt from this limit. The
Corporation intends that compensation associated with the exercise
of stock options (and stock appreciation rights) awarded under the
1997 Plan will qualify for this performance-based exemption.
The Internal Revenue Code also limits the amount of
compensation that may be paid without penalty in connection with a
change in control. In general, if the total of an individual's
change-in-control related compensation equals or exceeds three
times his or her average annual taxable compensation (determined,
in general, over the five calendar year period preceding the
calendar year in which the change in control occurs), change-in-control
related payments in excess of that annual average are
nondeductible and subject to an additional 20% tax. In making this
determination, some portion or all of the value of options and
other awards granted or accelerated in connection with a change in
control may be required to be taken into account.
The foregoing discussion is provided for the information of
stockholders and does not purport to be a complete description of
the federal tax consequences in respect of option transactions
under the 1997 Plan, nor does it describe state or local tax
consequences.
GRANTS UNDER THE 1997 PLAN
The table below sets forth information with respect to
Restricted Stock Awards granted to date under the 1997 Plan,
conditioned upon stockholder approval of the 1997 Plan.
1997 EQUITY INCENTIVE PLAN
Name and Position Number of Units
----------------- -------------
Executive Group
Non-Executive Officer Employee Group
Except as described in the preceding paragraph, no
determination has been made as to which individuals may in the
future receive options or rights under the 1997 Plan; as to the
number of shares, up to the maximum limit provided in the 1997
Plan, to be covered by any such options or rights to a single
individual; or as to the number of individuals to whom such options
or rights will be granted.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
FOR ADOPTION OF THE 1997 EQUITY INCENTIVE PLAN. (ITEM 5 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
1997 Annual Meeting will be counted by persons appointed by the
Corporation to act as tellers for the meeting.
The six nominees for election as directors at the 1997 Annual
Meeting who receive a plurality of the votes properly cast for the
election of directors shall be elected directors. The affirmative
vote of a majority of all shares outstanding and entitled to vote
is required to approve Items 2 and 3 of the accompanying Notice of
1997 Annual Meeting of Stockholders. The affirmative vote 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 4 and 5 of the
accompanying Notice of 1997 Annual Meeting of Stockholders,
although in order to list the shares issuable under Item 5 on the
New York Stock Exchange, the total votes cast on Item 5 must
represent over 50% in interest of all shares entitled to vote on
the Item.
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. Abstentions,
withheld votes and broker non-votes will not be counted as votes
cast and will have the effect of a vote against Items 2 and 3.
In the event that sufficient votes in favor of the proposals
set forth in Items 2, 3, 4 or 5 of the Notice of 1997 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 the proposal. 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 in the event
that such persons believe that further solicitation of proxies will
result in approval of the proposal. They will vote against any
such adjournment those proxies required to be voted against the
proposal and will not vote any proxies that direct them to abstain
from voting on the proposal.
RELATIONSHIP WITH INDEPENDENT AUDITORS
The Board of Directors, upon the recommendation of the
Examining and Audit Committee, has selected Ernst & Young LLP as
independent auditors for the Corporation for the year ending
December 31, 1997. It is expected that representatives of Ernst &
Young LLP will be present at the Annual Meeting to respond to
appropriate questions and will have the opportunity to make a
statement if they so desire.
PROPOSALS AND NOMINATIONS BY STOCKHOLDERS
Stockholders who wish to present proposals at the 1998 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 11, 1997 for
inclusion in the proxy materials circulated by the Board of
Directors relating to the 1998 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 1998 Annual Meeting must be
delivered to the Secretary of the Corporation no earlier than
January 16, 1998 and no later than February 15, 1998 unless the
date of the 1998 Annual Meeting is advanced by more than thirty
(30) days or delayed by more than sixty (60) days from the
anniversary date of the 1997 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 11, 1997
<PAGE>
EXHIBIT A
STATE STREET BOSTON CORPORATION
1997 EQUITY INCENTIVE PLAN
1. PURPOSE
The purpose of this Equity Incentive Plan (the "Plan") is to
advance the interests of State Street Boston Corporation (the
"Company") and its subsidiaries by enhancing their ability to
attract and retain employees and other persons or entities who are
in a position to make significant contributions to the success of
the Company and its subsidiaries through ownership of shares of the
Company's common stock ("Stock").
The Plan is intended to accomplish these goals by enabling the
Company to grant Awards in the form of Options, Stock Appreciation
Rights, Restricted Stock or Unrestricted Stock Awards, Deferred
Stock Awards, Performance Awards, or Supplemental Grants, or
combinations thereof, all as more fully described below.
2. ADMINISTRATION
Unless otherwise determined by the Board of Directors of the
Company (the "Board"), the Plan will be administered by a
Committee of the Board designated for such purpose (the
"Committee"). The Committee shall consist of at least two
directors. A majority of the members of the Committee shall
constitute a quorum, and all determinations of the Committee shall
be made by a majority of its members. Any determination of the
Committee under the Plan may be made without notice or meeting of
the Committee by a writing signed by a majority of the Committee
members. During such times as the Stock is registered under the
Securities Exchange Act of 1934 (the "1934 Act"), except as the
Board may otherwise determine all members of the Committee shall be
"non-employee directors" within the meaning of Rule 16b-3
promulgated under the 1934 Act and "outside directors" within the
meaning of Section 162(m)(4)(C)(i) of the Internal Revenue Code of
1986, as amended (the "Code").
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The Committee will have authority, not inconsistent with the
express provisions of the Plan and in addition to other authority
granted under the Plan, to (a) grant Awards at such time or times
as it may choose; (b) determine the size of each Award, including
the number of shares of Stock subject to the Award; (c) determine
the type or types of each Award; (d) determine the terms and
conditions of each Award; (e) waive compliance by a holder of an
Award with any obligations to be performed by such holder under an
Award and waive any terms or conditions of an Award; (f) amend or
cancel an existing Award in whole or in part (and if an award is
canceled, grant another Award in its place on such terms and
conditions as the Committee shall specify), except that the
Committee may not, without the consent of the holder of an Award,
take any action under this clause with respect to such Award if
such action would adversely affect the rights of such holder; (g)
prescribe the form or forms of instruments that are required or
deemed appropriate under the Plan, including any written notices
and elections required of Participants (as defined below), and
change such forms from time to time; (h) adopt, amend and rescind
rules and regulations for the administration of the Plan; and (i)
interpret the Plan and decide any questions and settle all
controversies and disputes that may arise in connection with the
Plan. Such determinations and actions of the Committee, and all
other determinations and actions of the Committee made or taken
under authority granted by any provision of the Plan, will be
conclusive and will bind all parties. Nothing in this paragraph
shall be construed as limiting the power of the Committee to make
adjustments under Section 7.3 or Section 8.6.
3. EFFECTIVE DATE AND TERM OF PLAN
The Plan will become effective on the date on which it is
approved by the stockholders of the Company. Awards may be made
prior to such stockholder approval if made subject thereto. No
Award may be granted under the Plan after December 18, 2006, but
Awards previously granted may extend beyond that date.
4. SHARES SUBJECT TO THE PLAN
Subject to adjustment as provided in Section 8.6 below, the
aggregate number of shares of Stock that may be delivered under the
Plan will be 4,000,000. If any Award requiring exercise by the
Participant for delivery of Stock terminates without having been
exercised in full, or if any Award payable in Stock or cash is
satisfied in cash rather than Stock, the number of shares of Stock
as to which such Award was not exercised or for which cash was
substituted will be available for future grants.
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Subject to Section 8.6(a), the maximum number of shares of
Stock as to which Options or Stock Appreciation Rights may be
granted to any Participant in any one calendar year is 500,000,
which limitation shall be construed and applied consistently with
the rules under Section 162(m) of the Internal Revenue Code.
Stock delivered under the Plan may be either authorized but
unissued Stock or previously issued Stock acquired by the Company
and held in treasury. No fractional shares of Stock will be
delivered under the Plan.
5. ELIGIBILITY AND PARTICIPATION
Each key employee of the Company or any of its subsidiaries
(an "Employee") and each other person or entity (including without
limitation non-Employee directors of the Company or a subsidiary of
the Company) who, in the opinion of the Committee, is in a position
to make a significant contribution to the success of the Company or
its subsidiaries will be eligible to receive Awards under the Plan
(each such Employee, person or entity receiving an Award, "a
Participant"). A "subsidiary" for purposes of the Plan will be a
corporation in which the Company owns, directly or indirectly,
stock possessing 50% or more of the total combined voting power of
all classes of stock.
6. TYPES OF AWARDS
6.1. OPTIONS
(a) Nature of Options. An Option is an Award giving the
recipient the right on exercise thereof to purchase Stock.
Both "incentive stock options," as defined in Section 422(b)
of the Internal Revenue Code of 1986, as amended (the "Code") (any
Option intended to qualify as an incentive stock option being
hereinafter referred to as an "ISO"), and Options that are not
ISOs, may be granted under the Plan. ISOs shall be awarded only to
Employees. An Option awarded under the Plan shall be a non-ISO
unless it is expressly designated as an ISO at time of grant.
(b) Exercise Price. The exercise price of an Option will
be determined by the Committee subject to the following:
(1) The exercise price of an Option shall not be less
than 100% of the fair market value of the Stock subject to the
Option, determined as of the time the Option is granted.
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(2) In no case may the exercise price paid for Stock
which is part of an original issue of authorized Stock be less
than the par value per share of the Stock.
(c) Duration of Options. The latest date on which an Option
may be exercised will be the tenth anniversary of the day
immediately preceding the date the Option was granted, or such
earlier date as may have been specified by the Committee at the
time the Option was granted.
(d) Exercise of Options. An Option will become exercisable
at such time or times, and on such conditions, as the Committee may
specify. The Committee may at any time and from time to time
accelerate the time at which all or any part of the Option may be
exercised. Any exercise of an Option must be in writing, signed by
the proper person and delivered or mailed to the Company,
accompanied by (1) any documents required by the Committee and (2)
payment in full in accordance with paragraph (e) below for the
number of shares for which the Option is exercised.
(e) Payment for Stock. Stock purchased on exercise of an
Option must be paid for as follows: (1) in cash or by check
(acceptable to the Company in accordance with guidelines
established for this purpose), bank draft or money order payable to
the order of the Company or (2) if so permitted by the Committee at
or after the grant of the Option or by the instrument evidencing
the Option, (i) through the delivery (including by attestation of
ownership) of shares of Stock which have been outstanding for at
least six months (unless the Committee approves a shorter period)
and which have a fair market value equal to the exercise price,
(ii) by delivery of an unconditional and irrevocable undertaking by
a broker to deliver promptly to the Company sufficient funds to pay
the exercise price, or (iii) by any combination of the foregoing
permissible forms of payment.
(f) Discretionary Payments. If (i) the market price of
shares of Stock subject to an Option (other than an Option which is
in tandem with a Stock Appreciation Right as described in Section
6.2 below) exceeds the exercise price of the Option at the time of
its exercise, and (ii) the person exercising the Option so requests
the Committee in writing, the Committee may in its sole discretion
cancel the Option and cause the Company to pay in cash or in shares
of Common Stock (at a price per share equal to the fair market
value per share) to the person exercising the Option an amount
equal to the difference between the fair market value of the Stock
which would have been purchased pursuant to the exercise
(determined on the date the Option is canceled) and the aggregate
exercise price which would have been paid.
A-4
6.2. STOCK APPRECIATION RIGHTS.
(a) Nature of Stock Appreciation Rights. A Stock
Appreciation Right or SAR is an Award entitling the holder on
exercise to receive an amount in cash or Stock or a combination
thereof (such form to be determined by the Committee) determined in
whole or in part by reference to appreciation, from and after the
date of grant, in the fair market value of a share of Stock. SARs
may be based solely on appreciation in the fair market value of
Stock or on a comparison of such appreciation with some other
measure of market growth such as (but not limited to) appreciation
in a recognized market index. The date as of which such
appreciation or other measure is determined shall be the exercise
date unless another date is specified by the Committee.
(b) Grant of Stock Appreciation Rights. Stock Appreciation
Rights may be granted in tandem with, or independently of, Options
granted under the Plan.
(1) Rules Applicable to Tandem Awards. When Stock
Appreciation Rights are granted in tandem with Options, (a)
the Stock Appreciation Right will be exercisable only at such
time or times, and to the extent, that the related Option is
exercisable and will be exercisable in accordance with the
procedure required for exercise of the related Option; (b) the
Stock Appreciation Right will terminate and no longer be
exercisable upon the termination or exercise of the related
Option, except that a Stock Appreciation Right granted with
respect to less than the full number of shares covered by an
Option will not be reduced until the number of shares as to
which the related Option has been exercised or has terminated
exceeds the number of shares not covered by the Stock
Appreciation Right; (c) the Option will terminate and no
longer be exercisable upon the exercise of the related Stock
Appreciation Right; and (d) the Stock Appreciation Right will
be transferable only with the related Option.
A-5
(2) Exercise of Independent Stock Appreciation Rights.
A Stock Appreciation Right not granted in tandem with an
Option will become exercisable at such time or times, and on
such conditions, as the Committee may specify. The Committee
may at any time accelerate the time at which all or any part
of the Right may be exercised.
Any exercise of a Stock Appreciation Right must be in writing,
signed by the proper person and delivered or mailed to the Company,
accompanied by any other documents required by the Committee.
6.3. RESTRICTED AND UNRESTRICTED STOCK.
(a) Grant of Restricted Stock. Subject to the terms and
provisions of the Plan, the Committee, at any time and from time to
time, may grant shares of Restricted Stock in such amounts and upon
such terms and conditions as the Committee shall determine subject
to the restrictions described below.
(b) Restricted Stock Agreement. The Committee may require,
as a condition to an Award, that a recipient of a Restricted Stock
Award enter into a Restricted Stock Award Agreement, setting forth
the terms and conditions of the Award. In lieu of a Restricted
Stock Award Agreement, the Committee may provide the terms and
conditions of an Award in a notice to the Participant of the Award,
on the Stock certificate representing the Restricted Stock, in the
resolution approving the Award, or in such other manner as it deems
appropriate.
(c) Transferability and Other Restrictions. Except as
otherwise provided in this Section 6.3, the shares of Restricted
Stock granted herein may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated until the end of
the applicable period or periods established by the Committee and
the satisfaction of any other conditions or restrictions
established by the Committee (such period during which a share of
Restricted Stock is subject to such restrictions and conditions is
referred to as the "Restricted Period").
Except as the Committee may otherwise determine under Section
7.1 or Section 7.2 below, if a Participant retires or suffers a
Status Change (as defined at Section 7.2(a) below) for any reason
during the Restricted Period, the Company may purchase the shares
of Restricted Stock subject to such restrictions and conditions for
the amount of cash paid by the Participant for such shares;
provided, that if no cash was paid by the Participant such shares
of Restricted Stock shall be automatically forfeited to the Company
without consideration.
A-6
During the Restricted Period with respect to any shares of
Restricted Stock, the Company shall have the right to retain in the
Company's possession the certificate or certificates representing
such shares.
(d) Removal of Restrictions. Except as otherwise provided
in this Section 6.3, a share of Restricted Stock covered by a
Restricted Stock grant shall become freely transferable by the
Participant upon completion of the Restricted Period, including the
passage of any applicable period of time and satisfaction of any
conditions to vesting. The Committee, in its sole discretion,
shall have the right at any time to waive all or any part of the
restrictions and conditions with regard to all or any part of the
shares held by any Participant.
(e) Voting Rights, Dividends and Other Distributions. During
the Restricted Period, Participants holding shares of Restricted
Stock granted hereunder may exercise full voting rights and shall
receive all regular cash dividends paid with respect to such
shares. Except as the Committee shall otherwise determine, any
other cash dividends and other distributions paid to Participants
with respect to shares of Restricted Stock including any dividends
and distributions paid in shares shall be subject to the same
restrictions and conditions as the shares of Restricted Stock with
respect to which they were paid.
(f) Unrestricted Stock. The Committee may, in its sole
discretion, sell to any Participant shares of Stock free of
restrictions under the Plan for a price which is not less than the
par value of the Stock.
(g) Notice of Section 83(b) Election. Any Participant making
an election under Section 83(b) of the Code with respect to
Restricted Stock must provide a copy thereof to the Company within
10 days of filing such election with the Internal Revenue Service.
(h) Shares delivered under Senior Executive Annual Incentive
Plan. In the case of an award under the Company's Senior Executive
Annual Incentive Plan which is payable in shares of Stock, the
holder of such award shall be deemed a Participant hereunder and
any such Shares shall be treated as having been sold to the
Participant as Unrestricted Stock or Restricted Stock hereunder (or
as Deferred Stock under Section 6.4, if delivery is deferred) for
a price equal to the cash payment under the award in lieu of which
the Stock is being delivered under the Award.
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6.4. DEFERRED STOCK.
A Deferred Stock Award entitles the recipient to receive
shares of Stock to be delivered in the future. Delivery of the
Stock will take place at such time or times, and on such
conditions, as the Committee may specify. The Committee may at any
time accelerate the time at which delivery of all or any part of
the Stock will take place. At the time any Award described in this
Section 6 is granted, the Committee may provide that, at the time
Stock would otherwise be delivered pursuant to the Award, the
Participant will instead receive an instrument evidencing the
Participant's right to future delivery of Deferred Stock.
6.5. PERFORMANCE AWARDS; PERFORMANCE GOALS.
(a) Nature of Performance Awards. A Performance Award
entitles the recipient to receive, without payment, an amount in
cash or Stock or a combination thereof (such form to be determined
by the Committee) subject to the attainment of performance goals.
Performance goals may be related to personal performance, corporate
performance, departmental performance or any other category of
performance established by the Committee. The Committee will
determine the performance goals, the period or periods during which
performance is to be measured and all other terms and conditions
applicable to the Award.
(b) Other Awards Subject to Performance Condition. The
Committee may, at the time any Award described in this Section 6 is
granted, impose the condition (in addition to any conditions
specified or authorized in this Section 6 or any other provision of
the Plan) that performance goals be met prior to the Participant's
realization of any vesting, payment or benefit under the Award.
Any such Award made subject to the achievement of performance goals
(other than an Option or SAR granted with an exercise price not
less than fair market value) shall be treated as a Performance
Award for purposes of Section 6.5(c) below. However, an award
under the Company's Senior Executive Annual Incentive Plan shall
not be considered a Performance Award for purposes of this Plan.
A-8
(c) Limitations and Special Rules. No more than an aggregate
of 250,000 shares of Stock (or their equivalent fair market value
in cash) may be delivered to any Participant under Performance
Awards made from and after the effective date of the Plan and prior
to December 19, 2006. In the case of any Performance Award
intended to qualify for the performance-based remuneration
exception described at Section 162(m)(4)(C) of the Code and the
regulations thereunder (an "exempt award"), the Committee shall in
writing preestablish one or more specific, objectively determinable
performance goal or goals (based solely on one or more qualified
performance criteria) no later than ninety (90) days after the
commencement of the period of service to which the performance
relates (the "performance period") (or at such other time as is
required to satisfy the conditions of Section 162(m)(4)(C) of the
Code and the regulations thereunder). For purposes of the
preceding sentence, a qualified performance criterion is any of the
following determined (to the extent relevant) on either a
consolidated or business-unit basis: (i) return on equity,
(ii) earnings per share, (iii) the Company's total shareholder
return during the performance period compared to the total
shareholder return of a generally recognized market reference
(e.g., the S & P 500 or the S & P Financial Index); (iv) revenue
growth; (v) operating leverage; or (vi) market share. To the
extent consistent with qualification of an exempt award under
Section 162(m)(4)(C) of the Code and the regulations thereunder,
the Committee may provide that performance goals be adjusted in
order to eliminate the effect of extraordinary items (as determined
in accordance with generally accepted accounting principles) or
changes in the Stock by reason of an event described in Section
8.6(a).
6.6. SUPPLEMENTAL GRANTS.
In connection with any Award, the Committee may at the time
such Award is made or at a later date, provide for and grant a cash
award to the Participant ("Supplemental Grant") not to exceed an
amount equal to (1) the amount of any Federal, state and local
income tax on ordinary income for which the Participant may be
liable with respect to the Award, determined by assuming taxation
at the highest marginal rate, plus (2) an additional amount on a
grossed-up basis intended to make the Participant whole on an
after-tax basis after discharging all the Participant's income tax
liabilities arising from all payments under this Section 6. Any
payments under this subsection (b) will be made at the time the
Participant incurs or is expected to incur Federal income tax
liability with respect to the Award.
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7. EVENTS AFFECTING OUTSTANDING AWARDS
7.1. DEATH, RETIREMENT OR DISABILITY.
If the employment of an Employee Participant terminates by
reason of death, 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
("retirement"), or disability as determined (subject to such
additional rules as the Committee may prescribe) in accordance with
the long term disability plan of the Company and its subsidiaries
covering the Participant or, if there is no such plan, in
accordance with a determination of disability by the Social
Security Administration ("disability"), the following will apply
except as the Committee may otherwise determine:
(a) All Options and Stock Appreciation Rights held by the
Participant or a transferee immediately prior to such termination
of employment, whether or not then exercisable, may be exercised by
the Participant or such transferee (or if the Option or SAR was
held by the Participant at death, by the Participant's executor or
administrator or the person or persons to whom the Option or Right
is transferred by will or the applicable laws of descent and
distribution), in accordance with the terms of the Option or SAR or
on such accelerated basis as the Committee may determine, during
the period that ends on the later of (i) one year after death, or
(ii) one year after the Option or SAR, or the last installment of
such Option or SAR if there is more than one, first becomes
exercisable. In no event, however, shall an Option or Stock
Appreciation Right remain exercisable beyond the latest date on
which it could have been exercised without regard to this Section
7.
(b) In the case of termination of employment occurring by
reason of death or disability, all Restricted Stock held by the
Participant immediately prior to such termination of employment
shall be vested. In the case of termination of employment
occurring by reason of retirement, all Restricted Stock held by the
Participant immediately prior to retirement must be transferred to
the Company (and, in the event the certificates representing such
Restricted Stock are held by the Company, such Restricted Stock
will be so transferred without any further action by the
Participant) in accordance with Section 6.3(c) above.
(c) Any payment or benefit under a Deferred Stock Award,
Performance Award, or Supplemental Grant to which the Participant
was not irrevocably entitled prior to termination of employment
will be forfeited and the Award canceled as of the time of such
termination of employment.
A-10
7.2. OTHER TERMINATION OF SERVICE.
If a Participant who is an Employee ceases to be an Employee
for any reason other than death, retirement, or disability (as
defined at Section 7.1 above), or if there is a termination of the
consulting, service or similar relationship in respect of which a
non-Employee Participant was granted an Award hereunder (such
termination of the employment or other relationship being
hereinafter referred to as a "Status Change"), the following will
apply except as the Committee may otherwise determine:
(a) All Options and Stock Appreciation Rights held by the
Participant (or if the Option or Right was previously transferred,
by the transferee) that were not exercisable immediately prior to
the Status Change shall terminate at the time of the Status Change.
Any Options or Rights that were exercisable immediately prior to
the Status Change will continue to be exercisable for a period of
three months, and shall thereupon terminate; provided, that if the
Participant should die within such three-month period, the Option
or Right shall be exercisable (to the extent it was exercisable
immediately prior to death) for a period of one year following the
Status Change. In no event, however, shall an Option or Stock
Appreciation Right remain exercisable beyond the latest date on
which it could have been exercised without regard to this Section
7.
(b) All Restricted Stock held by the Participant at the time
of the Status Change must be transferred to the Company (and, in
the event the certificates representing such Restricted Stock are
held by the Company, such Restricted Stock will be so transferred
without any further action by the Participant) in accordance with
Section 6.3(c) above.
(c) Any payment or benefit under a Deferred Stock Award,
Performance Award, or Supplemental Grant to which the Participant
was not irrevocably entitled prior to the Status Change will be
forfeited and the Award canceled as of the date of such Status
Change.
A-11
(d) For purposes of this Section 7.2, in the case of a
Participant who is an Employee, a Status Change shall not be deemed
to have resulted by reason of (i) a sick leave or other bona fide
leave of absence approved for purposes of the Plan by the
Committee, so long as the Employee's right to reemployment is
guaranteed either by statute or by contract, or (ii) a transfer of
employment between the Company and a subsidiary or between
subsidiaries, or to the employment of a corporation (or a parent or
subsidiary corporation of such corporation) issuing or assuming an
option in a transaction to which section 424(a) of the Code
applies.
7.3 CERTAIN CORPORATE TRANSACTIONS.
Except as otherwise provided by the Committee at the time of
grant, in the event of a consolidation or merger in which the
Company is not the surviving corporation or which results in the
acquisition of substantially all the Company's outstanding Stock by
a single person or entity or by a group of persons and/or entities
acting in concert, or in the event of the sale or transfer of
substantially all the Company's assets or a dissolution or
liquidation of the Company (a "covered transaction"), the following
rules shall apply:
(a) Subject to paragraph (b) below, all outstanding Awards
requiring exercise will cease to be exercisable, and all other
Awards to the extent not fully vested (including Awards subject to
conditions not yet satisfied or determined) will be forfeited
except as required under Section 7.4 below, as of the effective
time of the covered transaction, provided that the Committee may in
its sole discretion (but subject to Section 7.4 below in the case
of a covered transaction that constitutes a Change of Control), on
or prior to the effective date of the covered transaction, (1) make
any outstanding Option and Stock Appreciation Right exercisable in
full, (2) remove the restrictions from any Restricted Stock, (3)
cause the Company to make any payment and provide any benefit under
any Deferred Stock Award, Performance Award or Supplemental Grant,
and (4) remove any performance or other conditions or restrictions
on any Award; or
(b) With respect to an outstanding Award held by a
participant who, following the covered transaction, will be
employed by or otherwise providing services to an entity which is
a surviving or acquiring entity in the covered transaction or an
affiliate of such an entity, the Committee may at or prior to the
effective time of the covered transaction, in its sole discretion
and in lieu of the action described in paragraph (a) above, arrange
to have such surviving or acquiring entity or affiliate assume any
Award held by such participant outstanding hereunder or grant a
replacement award which, in the judgment of the Committee, is
substantially equivalent to any Award being replaced.
A-12
7.4. 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; Effect on Other
Awards. All Options and SARs outstanding as of the date such
Change of Control is determined to have occurred and which are
not then exercisable shall (prior to application of the
provisions of Section 7.3 above, in the case of a Change of
Control that also constitutes a covered transaction) become
exercisable to the full extent of the original grant, all
shares of Restricted Stock which are not otherwise vested
shall vest, and holders of Performance Awards 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 shall be entitled at the time of such Change of
Control to receive a cash payment per Performance Award equal
to such amount, if any, as shall be specified in the Award.
(2) Restriction on Application of Plan Provisions
Applicable in the Event of Termination of Employment. After
a Change of Control (but subject to Section 7.3 above),
Options and SARs shall remain exercisable following a
termination of employment or other service relationship (other
than termination 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.
(3) 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, share of
Restricted Stock, Deferred Stock award or Performance Award,
or amend the terms of the Plan in any manner adverse to the
holder thereof, without the written consent of such holder.
A-13
Notwithstanding the foregoing, if any right granted pursuant
to this Paragraph 7.4 would make a Change of Control transaction
ineligible for pooling of interests accounting under applicable
accounting principles that but for this Paragraph 7.4 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 7.4 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
25% 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 7.4; 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
A-14
(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 50% 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,
25% 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.
A-15
8. GENERAL PROVISIONS
8.1. DOCUMENTATION OF AWARDS.
Awards will be evidenced by such written instruments, if any,
as may be prescribed by the Committee from time to time. Such
instruments may be in the form of agreements to be executed by both
the Participant and the Company, or certificates, letters or
similar instruments, which need not be executed by the Participant
but acceptance of which will evidence agreement to the terms
thereof.
8.2. RIGHTS AS A STOCKHOLDER, DIVIDEND EQUIVALENTS.
Except as specifically provided by the Plan, the receipt of
an Award will not give a Participant rights as a stockholder; the
Participant will obtain such rights, subject to any limitations
imposed by the Plan or the instrument evidencing the Award, only
upon the issuance of Stock. However, the Committee may, on such
conditions as it deems appropriate, provide that a Participant will
receive a benefit in lieu of cash dividends that would have been
payable on any or all Stock subject to the Participant's Award had
such Stock been outstanding. Without limitation, the Committee may
provide for payment to the Participant of amounts representing such
dividends, either currently or in the future, or for the investment
of such amounts on behalf of the Participant.
8.3. CONDITIONS ON DELIVERY OF STOCK.
The Company will not be obligated to deliver any shares of
Stock pursuant to the Plan or to remove restriction from shares
previously delivered under the Plan (a) until all conditions of the
Award have been satisfied or removed, (b) until, in the opinion of
the Company's counsel, all applicable Federal and state laws and
regulation have been complied with, (c) if the outstanding Stock is
at the time listed on any stock exchange or The Nasdaq National
Market, until the shares to be delivered have been listed or
authorized to be listed on such exchange or market upon official
notice of notice of issuance, and (d) until all other legal matters
in connection with the issuance and delivery of such shares have
been approved by the Company's counsel. If the sale of Stock has
not been registered under the Securities Act of 1933, as amended,
the Company may require, as a condition to exercise of the Award,
such representations or agreements as counsel for the Company may
consider appropriate to avoid violation of such Act and may require
that the certificates evidencing such Stock bear an appropriate
legend restricting transfer.
A-16
If an Award is exercised by the Participant's legal
representative or transferee, the Company will be under no
obligation to deliver Stock pursuant to such exercise until the
Company is satisfied as to the authority of such representative.
8.4. TAX 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 (the "withholding
requirements").
In the case of an Award pursuant to which Stock may be
delivered, the Committee will have the right to require that the
Participant 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 Stock. If and to
the extent that such withholding is required, the Committee may
permit the Participant 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, Stock having a value calculated to satisfy the withholding
requirement. The Committee may make such share withholding
mandatory with respect to any Award at the time such Award is made
to a Participant.
If in connection with the exercise of an ISO the Committee
determines that the Company could be liable for withholding
requirements with respect to the exercise or with respect to a
disposition of the Stock received upon exercise, the Committee may
require as a condition of exercise that the person exercising the
ISO agree (a) to provide for withholding under the preceding
paragraph of this Section 8.4, if the Committee determines that a
withholding responsibility may arise in connection with tax
exercise, (b) to inform the Company promptly of any disposition
(within the meaning of section 424(c) of the Code) of Stock
received upon exercise, and (c) 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.
A-17
8.5. Nontransferability of Awards.
Unless otherwise permitted by the Committee, no Award (other
than an Award in the form of an outright transfer of cash or
Unrestricted Stock) may be transferred other than by will or by the
laws of descent and distribution, and during a Participant's
lifetime an Award requiring exercise may be exercised only by the
Participant (or in the event of the Participant's incapacity, the
person or persons legally appointed to act on the Participant's
behalf). The Committee may in its discretion permit transfers to
other persons or entities.
8.6. Adjustments in the Event of Certain Transactions.
(a) In the event of a stock dividend, stock split or
combination of shares, recapitalization or other change in the
Company's capitalization, or other distribution to common
stockholders other than normal cash dividends, after the effective
date of the Plan, the Committee will make any appropriate
adjustments to the maximum number of shares that may be delivered
under the Plan under the first paragraph of Section 4 above and to
the limits described in the second paragraph of Section 4 and in
Section 6.5(c).
(b) In any event referred to in paragraph (a), the Committee
will also make any appropriate adjustments to the number and kind
of shares of stock or securities subject to Awards then outstanding
or subsequently granted, any exercise prices relating to Awards and
any other provision of Awards affected by such change. The
Committee may also make such adjustments to take into account
material changes in law or in accounting practices or principles,
mergers, consolidations, acquisitions, dispositions or similar
corporate transactions, or any other event, if it is determined by
the Committee that adjustments are appropriate to avoid distortion
in the operation of the Plan; provided, that adjustments pursuant
to this sentence shall not be made to the extent it would cause any
Award intended to be exempt under Section 162(m)(4)(C) to fail to
be so exempt.
(c) In the case of ISOs or Awards intended to satisfy the
performance-based remuneration exception under Section 162(m)(4)(C)
of the Code, the adjustments described in (a) and (b) will be made
only to the extent consistent with continued qualification of the
option under Section 422 of the Code (in the case of an ISO) or
Section 162(m) of the Code.
A-18
8.7. EMPLOYMENT RIGHTS, ETC.
Neither the adoption of the Plan nor the grant of Awards will
confer upon any person any right to continued retention by the
Company or any subsidiary as an Employee or otherwise, or affect in
any way the right of the Company or subsidiary to terminate an
employment, service or similar relationship at any time. Except as
specifically provided by the Committee in any particular case, the
loss of existing or potential profit in Awards granted under the
Plan will not constitute an element of damages in the event of
termination of an employment, service or similar relationship even
if the termination is in violation of an obligation of the Company
to the Participant.
8.8. NONCOMPETITION RESTRICTIONS, ETC.
The Committee may provide in connection with any Award that
the Participant's rights to enjoyment of the Award or to any cash
or Stock deliverable under the Award be conditioned upon the
Participant's agreeing not to compete with the Company and its
subsidiaries, not to disclose confidential information, and not to
solicit employees, advisors or business from the Company and its
subsidiaries, the terms of any such agreement or undertaking to be
determined by the Committee.
8.9. DEFERRAL OF PAYMENTS.
The Committee may agree at any time, upon request of the
Participant and subject to such rules as the Committee may
determine, to defer the date on which any future payment under an
Award will be made.
8.10. PAST SERVICES AS CONSIDERATION.
Where a Participant purchases Stock under an Award for a price
equal to the par value of the Stock the Committee may determine
that such price has been satisfied by past services rendered by the
Participant.
A-19
9. EFFECT, AMENDMENT AND TERMINATION
Neither adoption of the Plan nor the grant of Awards to a
Participant will affect the Company's right to grant to such
Participant awards that are not subject to the Plan, to issue to
such Participant Stock as a bonus or otherwise, or to adopt other
plans or arrangements under which Stock may be issued to Employees.
The Committee may at any time or times amend the Plan or any
outstanding Award for any purpose which may at the time be
permitted by law, or may at any time terminate the Plan as to any
further grants of Awards, provided that (except to the extent
expressly required or permitted by the Plan) no such amendment
will, without the approval of the stockholders of the Company,
effectuate a change for which stockholder approval is required in
order for the Plan to continue to qualify for the award of ISOs
under section 422 of the Code or for the award of performance-based
compensation under Section 162(m) of the Code, nor shall any such
amendment adversely affect the rights of a holder of an Award
without such holder's consent.
A-20
<PAGE>
[STATE STREET LOGO]
State Street Boston Corporation
225 Franklin Street
Boston, Massachusetts 02101
<PAGE>
PROXY PROXY
STATE STREET BOSTON CORPORATION
ANNUAL MEETING OF STOCKHOLDERS - APRIL 16, 1997
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of State Street Boston Corporation
(the "Corporation") hereby appoints Susanne G. Clark, Evalyn
Lipton Fishbein and Claire A. Fusco (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 16, 1997 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 ENVELOPE
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.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- ------------------------------- -------------------------------
- ------------------------------- -------------------------------
- ------------------------------- -------------------------------
- ------------------------------- -------------------------------
<PAGE>
1. Election of Six Directors:
[x]PLEASE MARK VOTES AS IN FOR ALL
THIS EXAMPLE FOR WITHHOLD EXCEPT
[ ] [ ] [ ]
Each of these matters is fully I.Booth J.Cash, Jr. T.Casner
described in the Notice of and A.Goldstein D.Perini D.Picard
Proxy Statement for the Meeting, If you do not wish your shares
receipt of which is hereby voted "FOR" one or more
acknowledged. THE BOARD OF nominees, mark the "FOR ALL
DIRECTORS RECOMMENDS THAT YOU EXCEPT" box and strike a line
GRANT AUTHORITY FOR THE ELECTION through the nominee(s) name.
OF DIRECTORS AND THAT YOU VOTE Your shares will be voted for
FOR ITEMS 2, 3, 4 AND 5. THE the remaining nominee(s).
SHARES REPRESENTED BY THIS PROXY
WILL BE VOTED IN ACCORDANCE 2. Proposal to Approve the
WITH THE SPECIFICATIONS MADE. Amendment of the Restated
IF NO SPECIFICATION IS MADE, THE Articles of Organization to
PROXY WILL BE VOTED IN ACCORDANCE Change the Name of the
WITH THE BOARD OF DIRECTORS' Corporation
RECOMMENDATIONS. FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Proposal to Approve the
Amendment of the Restated
RECORD DATE SHARES: Articles of Organization to
Increase the Number of
Authorized Shares of Common
Stock
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
REGISTRATION 4. Proposal to Approve the
Senior Executives Annual
Incentive Plan
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
5. Proposal to Approve the 1997
Equity Incentive Plan
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
6. In their discretion, the
Proxies are authorized to
Please be sure to sign and date vote upon such other business
this Proxy. as may properly come before
the meeting or any
Date adjournments thereof.
-----------
Mark box at right if comments
- ------------------------------- or address change have been [ ]
Stockholder Co-owner noted on the reverse side of
signs here signs here this card.
- -----------------------------------------------------------------
STATE STREET BOSTON CORPORATION
DEAR STOCKHOLDER:
You are cordially invited to attend the 1997 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 16, 1997, 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. You will be asked
to elect six directors and to act upon proposals to change the
name of the Corporation, to increase the authorized shares of
Common Stock, to approve the Senior Executives Annual Incentive
Plan and to approve the 1997 Equity Incentive Plan. State
Street's goal is to be the leading servicer of institutional
investors worldwide. Each of these proposals is designed to help
achieve this goal in competitive global markets. 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
