<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
The Bank of New York Company, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
LOGO 48 Wall Street, New York, N.Y. 10286
================================================================================
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
TO THE SHAREHOLDERS OF
THE BANK OF NEW YORK COMPANY, INC.
Notice is hereby given that the Annual Meeting of Shareholders of The Bank of
New York Company, Inc. (the "Company") will be held at The Bank of New York, 48
Wall Street, New York, New York, 11th floor, on Tuesday, May 12, 1998, at 10:00
a.m., local time, for the following purposes:
1. To elect fifteen directors to hold office until the next Annual Meeting
of Shareholders and until their respective successors have been elected
and qualified;
2. To ratify the appointment by the Board of Directors of Ernst & Young LLP
as the Company's independent public accountants for the current fiscal
year;
3. To approve an amendment to Article FOURTH of the Certificate of
Incorporation to increase the number of authorized shares of Common
Stock (par value $7.50 per share) from 800,000,000 shares to
1,600,000,000 shares;
4. To approve the 1999 Long-Term Incentive Plan of The Bank of New York
Company, Inc.;
5. To consider a shareholder proposal relating to cumulative voting rights;
6. To consider a shareholder proposal relating to political contributions;
7. To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on March 16, 1998 as the
time as of which shareholders of the Company entitled to notice of and to vote
at the meeting shall be determined.
It is important that your shares be represented at the Annual Meeting. PLEASE
COMPLETE, DATE, SIGN AND MAIL THE ENCLOSED PROXY CARD PROMPTLY IN THE RETURN
ENVELOPE PROVIDED, REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE ANNUAL MEETING,
SO THAT YOUR VOTE MAY BE RECORDED.
We hope you will be able to attend.
By order of the Board of Directors,
THOMAS A. RENYI PHEBE C. MILLER
Chairman of the Board Secretary
March 31, 1998
<PAGE> 3
LOGO 48 Wall Street, New York, N.Y. 10286
================================================================================
PROXY STATEMENT
This Proxy Statement is submitted in connection with the solicitation of proxies
for the Annual Meeting of Shareholders ("Annual Meeting") by the Board of
Directors of The Bank of New York Company, Inc. (the "Company"). The Board of
Directors has fixed the close of business on March 16, 1998 as the Record Date.
Only shareholders whose names appeared on the books of the Company at the close
of business on the Record Date will be entitled to notice of and to vote at the
Annual Meeting or any adjournment thereof. The outstanding voting stock of the
Company on the Record Date was shares of Common Stock ($7.50
par value) ("Common Stock"), each share being entitled to one vote. Three
officers of the Company have been designated as the proxies to vote shares at
the Annual Meeting in accordance with the instructions on the proxy card. The
Company's By-laws provide that the presence at the Annual Meeting of the holders
of a majority of the shares of the Company entitled to vote at such meeting
constitutes a quorum for the transaction of business.
A Notice of Annual Meeting and a form of proxy are enclosed. Each proxy
submitted will be voted as directed, but if not otherwise specified, proxies
solicited by the Board of Directors will be voted for the election as directors
of those nominees named in this Proxy Statement, for ratification of the
appointment of Ernst & Young LLP as the Company's independent public
accountants, for the approval of the proposed amendment to the Company's
Certificate of Incorporation to increase the Company's authorized shares of
Common Stock, for the approval of the 1999 Long-Term Incentive Compensation Plan
of the Company (the "1999 LTIP") (a copy of which appears as Exhibit A to this
Proxy Statement) and against the shareholder proposals set forth in Items 5 and
6 of the form of proxy. Should any nominee for director named in this Proxy
Statement become unable or unwilling to accept nomination or election, which is
not anticipated, it is intended that the persons acting as proxies will vote for
the election of such other person, if any, as the Board of Directors may
recommend.
A PLURALITY OF THE VOTES CAST IS SUFFICIENT TO ELECT DIRECTORS AND A MAJORITY OF
THE VOTES CAST IS SUFFICIENT TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP, TO
ADOPT THE 1999 LTIP AND TO ADOPT THE SHAREHOLDER PROPOSALS. THE VOTE OF THE
HOLDERS OF A MAJORITY OF ALL OUTSTANDING SHARES ENTITLED TO VOTE THEREON IS
SUFFICIENT TO APPROVE THE AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO
INCREASE THE AUTHORIZED SHARES OF COMMON STOCK.
FOR PURPOSES OF DETERMINING THE VOTES CAST WITH RESPECT TO ANY MATTER PRESENTED
FOR CONSIDERATION AT THE ANNUAL MEETING, ONLY THOSE CAST "FOR" OR "AGAINST" ARE
COUNTED. PURSUANT TO NEW YORK LAW, ABSTENTIONS, BROKER "NON-VOTES" (OR VOTES
"WITHHELD" IN THE ELECTION OF DIRECTORS) WILL NOT BE COUNTED. A BROKER NON-VOTE
MEANS THAT A BROKER, BANK OR OTHER NOMINEE HOLDING COMPANY SHARES HAS NOT
RECEIVED VOTING INSTRUCTIONS FROM THE SHAREHOLDER WITHIN TEN DAYS OF THE MEETING
AND THE BROKER, BANK OR NOMINEE CANNOT VOTE THE SHARES. NEW YORK STOCK EXCHANGE
(THE "NYSE") RULES ALLOW BROKERS, BANKS AND OTHER NOMINEES TO VOTE SHARES HELD
BY THEM ON MATTERS THAT THE NYSE DETERMINES TO BE ROUTINE, EVEN THOUGH THE
BROKER, BANK OR NOMINEE HAS NOT RECEIVED INSTRUCTIONS FROM THE SHAREHOLDER.
The management of the Company knows of no matters which are to be presented for
consideration at the Annual Meeting other than those specifically described in
the Notice of Annual Meeting of Shareholders, but if other matters are properly
presented, it is the intention of the persons designated as proxies to vote on
them in accordance with their judgment.
Each shareholder has the right to revoke a proxy at any time before it is voted.
A proxy may be revoked by filing with the Secretary of the Company a written
revocation or a duly executed proxy bearing a later date. Any shareholder may
attend the Annual Meeting and vote in person whether or not a proxy was
previously submitted.
This Proxy Statement and the accompanying form of proxy are first being sent to
shareholders on or about March 31, 1998.
<PAGE> 4
The cost of soliciting the proxies to which this Proxy Statement relates will be
borne by the Company. In addition to the use of the mails, proxies may be
solicited in person or by telephone or telegram by officers and regular
employees of the Company and its subsidiaries who will not be specifically
compensated therefor. The Company has engaged Morrow & Co. to assist in the
solicitation of proxies for a fee of $10,000 plus reimbursement for
out-of-pocket expenses. The Company will also reimburse brokers or other persons
holding shares in their names or in the names of their nominees for their
reasonable out-of-pocket expenses in forwarding proxies and proxy material to
the beneficial owners of such shares.
BOARD OF DIRECTORS AND DIRECTOR COMPENSATION
The Company is a bank holding company whose principal subsidiary is The Bank of
New York (the "Bank"). The Company and the Bank are incorporated under the laws
of the State of New York. The interests of shareholders are represented by the
Board of Directors, which oversees the business and management of the Company.
Information concerning the members of the Board of Directors who are standing
for reelection is set forth below under the caption "Nominees for Election as
Directors." This solicitation of proxies is intended to give all shareholders a
chance to vote for the persons who are to be their representatives in the
governance of the Company.
In accordance with New York law, the Company's By-laws set forth the Board's
responsibilities and establish various corporate authorizations. The By-laws
also deal with the organization of the Board, which is described below. The
Board has the power to amend the By-laws.
Directors are elected to serve until the next annual meeting of shareholders and
until their successors have been elected and qualified. Mr. Edward L. Hennessy,
Jr. is retiring from the Board and will not stand for reelection.
During 1997, the Board of Directors of the Company met a total of 13 times. Each
incumbent director attended at least 75% of the aggregate number of meetings of
the Board of Directors and the committees thereof on which such director served
during 1997. The Board of the Bank, which during 1997 included all the members
of the Board of Directors of the Company, held a regular meeting each month.
The Board of Directors of the Company has appointed several committees which
have responsibility for particular corporate matters. There follows a
description of each committee and its functions, including certain information
concerning the directors standing for reelection who serve on such committee.
The Board of Directors of the Company has a Nominating Committee whose members
during 1997 were Messrs. Chaney (Chairman), Hennessy, Malone and Morley. The
Nominating Committee is willing to consider nominations for future election to
the Board, and shareholders may submit in writing the names and qualifications
of proposed nominees to the Secretary of the Company. The Nominating Committee
met two times during 1997.
The Board of Directors of the Company has an Executive Committee whose members
during 1997 were Messrs. Bacot (Chairman), Barth, Chaney, Gomory, Griffith,
Hennessy, Kogan, Miller, Papageorge and Renyi, and Ms. Rein. The Executive
Committee has the full authority of the Company's Board of Directors, except for
limitations relating to major corporate matters. The Executive Committee met
once in 1997.
The Board of Directors of the Company annually appoints an Audit Committee,
comprising directors who are not officers of the Company, to consider relevant
accounting matters arising in such year. Messrs. Gomory (Chairman), Biondi,
Chaney, Hennessy, Kogan, Luke, and Ms. Rein, served on the Audit Committee
during 1997. The duties of the Audit Committee include reviewing examinations
made by the regulatory authorities, reviewing and approving the program of the
internal auditor, recommending to the Board of Directors the selection of
independent public accountants, reviewing audited financial statements presented
to shareholders and the soundness of internal accounting controls, and reporting
its findings to the Board of Directors. The Audit Committee met five times in
1997.
The Board of Directors of the Company has a Compensation and Organization
Committee, comprising directors who are not officers of the Company, whose
members during 1997 were Messrs. Morley (Chairman), Chaney, Kogan, Malone,
Miller and Sells. The Compensation and Organization Committee is responsible for
matters of executive compensation and administration of the Company's incentive
compensation plans. The Compensation and Organization Committee met five times
during 1997.
The Board of Directors of the Company has a Pension Committee whose duties are
to ascertain that the retirement plans of the Company are in compliance with the
Employee Retirement Income Security Act of
2
<PAGE> 5
1974, to review the investments in the trust funds of the plans and to report to
the Board on these matters. Messrs. Barth (Chairman), Luke and Morley and Ms.
Rein served on the Pension Committee during 1997. The Pension Committee met two
times during 1997.
During 1997, each director who was not an officer of the Company or its
subsidiaries received an annual retainer of $30,000 and 1,200 shares of Common
Stock. In addition, each director who was not an officer of the Company or its
subsidiaries received a fee of $1,800 for each meeting of the Board and any
committee which the director attended. The Chairman of the Audit Committee
received an additional annual retainer fee of $7,000, the Chairman of the
Compensation and Organization Committee received an additional annual retainer
fee of $5,000 and the Chairmen of the other Committees of the Board each
received an additional annual retainer fee of $3,000. A director who serves on
the Boards of both the Company and the Bank receives only one retainer. If the
Boards of the Company and the Bank meet on the same day, only one fee is paid
for attendance at both meetings.
Officers of the Company and its subsidiaries do not receive any compensation for
service on the Boards of the Company or its subsidiaries, or the committees
thereof.
Under the Deferred Compensation Plan for Non-Employee Directors of The Bank of
New York Company, Inc. (the "Directors' Deferred Compensation Plan"), each
director who is not an officer of the Company or any of its subsidiaries may
elect to defer payment of the director's retainer and meeting fees. In
accordance with the director's election, pursuant to the terms of the Directors'
Deferred Compensation Plan, deferral of the retainer and meeting fees are
allocated to accounts on the Company's books corresponding to the investment
funds under the Company's profit-sharing plan; the accounts are adjusted to
reflect the investment performance of such funds. All payments are made in cash,
except that payment is made in shares of Common Stock with respect to amounts
allocated to the Common Stock fund. The Directors' Deferred Compensation Plan
contains provisions for the payment of each director's account balance upon such
director's termination following a change of control (as defined in the
Directors' Deferred Compensation Plan). The Directors' Deferred Compensation
Plan is not funded and payments are made from the Company's general assets.
The Bank of New York Company, Inc. Retirement Plan for Non-Employee Directors
(the "Directors' Retirement Plan") provides retirement benefits to a director
who retires from the Board after attaining age 60 or becoming disabled, and
serving for at least five years, provided the director is not an employee or
former employee entitled to retirement benefits under a retirement plan of the
Company or its subsidiaries for services as an employee. The amount of the
retirement benefit is equal to 50% of the director's annual cash retainer,
increased by 10% for each additional year of service in excess of five years of
service and subject to a maximum benefit of 100% of such retainer. If the
director retires from the Board after attaining age 70, the retirement benefit
is paid for the director's life; otherwise, it is paid for a number of years
equal to the director's years of service on the Board (but in no event after the
death of the director). The Directors' Retirement Plan contains provisions for
the payment of each director's account balance upon such director's termination
following a change of control (as defined in the Directors' Retirement Plan).
The Directors' Retirement Plan is not funded and payments are made from the
Company's general assets.
ELECTION OF DIRECTORS
Unless contrary instructions are given, the persons designated as proxies intend
to vote on behalf of shareholders for the election of the nominees listed in the
following pages. If any nominee shall unexpectedly become unable or unwilling to
accept nomination or election, the persons designated as proxies intend to vote
on behalf of shareholders for the election of such other person, if any, as the
Board of Directors may recommend. The directors elected will hold office until
the next annual meeting and until their successors have been elected and
qualified.
NOMINEES FOR ELECTION AS DIRECTORS
The following pages show each nominee for election as a director, his or her
age, his or her principal occupation during the past five years, certain other
directorships and trusteeships held, the year in which he or she became a
director, and his or her holdings of Common Stock as of March 16, 1998.
All nominees who are presently serving as directors were elected to their
present term of office by the shareholders.
3
<PAGE> 6
The following information has been furnished by the nominees.
<TABLE>
<CAPTION>
NOMINEE,
YEAR ELECTED A DIRECTOR PRINCIPAL OCCUPATION
AND SECURITIES OWNED(1) AND OTHER INFORMATION
- --------------------------------------------------------------------------------------
- ------------------------
<S> <C>
PHOTO Retired; Formerly Chairman and Chief Executive Officer of
J. CARTER The Bank of New York Company, Inc. and Chairman of The Bank
BACOT of New York
1975
COMMON SHARES: Chairman of The Bank of New York Company, Inc. from 1982 to
1,081,961 February, 1998 and Chief Executive Officer from 1982 through
June, 1997. Chairman of The Bank of New York from 1982 to
February, 1998 and Chief Executive Officer from 1982 through
1995. Director of Associates First Capital Corp., The Bank
of New York, Centennial Insurance Company, Phoenix Home Life
Mutual Insurance Company, Time Warner, Inc., Woolworth
Corporation, The Philharmonic-Symphony Society of New York,
Inc. and the Josiah Macy, Jr. Foundation. Trustee of
Atlantic Mutual Insurance Company. Life Trustee and Chairman
Emeritus of Hamilton College. Vice Chairman and Director of
United Way of New York City. Member of Council on Foreign
Relations, Economic Club of New York and New York City
Partnership, Inc. Age 65.
PHOTO Retired; Formerly Chairman and Chief Executive Officer of
RICHARD BARTH Ciba-Geigy Corporation
1989
COMMON SHARES: Chairman of Ciba-Geigy Corporation from July, 1990 to
16,978 December, 1996; President and Chief Executive Officer of
Ciba-Geigy Corporation from 1986 to April, 1996. Director of
The Bank of New York, Bowater Incorporated, Imclone Systems
Incorporated and Novartis Corporation (successor to
Ciba-Geigy Corporation). Trustee of Committee for Economic
Development and Chairman of the Board of Trustees of New
York Medical College. Member of the American, New York and
New Jersey Bar Associations. Age 66.
PHOTO Chairman and Chief Executive Officer of Universal Studios,
FRANK J. diversified entertainment operator
BIONDI, JR.
1995 Chairman and Chief Executive Officer of Universal Studios
COMMON SHARES: since April, 1996. President and Chief Executive Officer of
3,842 Viacom, Inc. from 1987 to January 1996. President and Chief
Executive Officer of Viacom International, Inc. from 1987 to
January 1996. Director of The Bank of New York, Seagram
Cos., Ltd., USA Networks, Inc., Vail Resorts, Leake and
Watts Services and the Museum of Television & Radio. Trustee
of Princeton University and Claremont Graduate School. Age
53.
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
NOMINEE,
YEAR ELECTED A DIRECTOR PRINCIPAL OCCUPATION
AND SECURITIES OWNED(1) AND OTHER INFORMATION
- --------------------------------------------------------------------------------------
- ------------------------
<S> <C>
PHOTO Chairman and Chief Executive Officer of Tiffany & Co.,
WILLIAM R. international designers, manufacturers and distributors of
CHANEY jewelry and fine goods
1989
COMMON SHARES: Chairman and Chief Executive Officer of Tiffany & Co. since
23,800 1984. Director of The Bank of New York, Tiffany & Co., The
Tinker Foundation Incorporated and Provident Holdings, Inc.
Trustee of Atlantic Mutual Insurance Companies. Chairman of
the Fifth Avenue Association. Age 65.
PHOTO President of Alfred P. Sloan Foundation, Inc., private
RALPH E. foundation
GOMORY
1981 President of Alfred P. Sloan Foundation, Inc. from 1989 to
COMMON SHARES: present. Senior Vice President for Science and Technology of
48,000 International Business Machines Corporation from 1985 to
1989. Director of Ashland Inc., The Bank of New York, The
Washington Post Company, Lexmark International, Inc. and
Polaroid Corp. Member of the National Academy of Sciences
and the National Academy of Engineering. Age 68.
PHOTO Vice Chairman of The Bank of New York Company, Inc. and of
ALAN R. The Bank of New York
GRIFFITH
1990 Vice Chairman of The Bank of New York Company, Inc. and of
COMMON SHARES: The Bank of New York since December 1994. Senior Executive
366,762 Vice President of The Bank of New York Company, Inc. and
President and Chief Operating Officer of The Bank of New
York from June, 1990 to December, 1994. Director of The Bank
of New York and Downtown Lower Manhattan Association.
Trustee of Lafayette College, The ALS Association, The
Chesapeake Bay Foundation and the U.S. Council for
International Business. Member of the Bankers Roundtable.
Age 56.
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
NOMINEE,
YEAR ELECTED A DIRECTOR PRINCIPAL OCCUPATION
AND SECURITIES OWNED(1) AND OTHER INFORMATION
- --------------------------------------------------------------------------------------
- ------------------------
<S> <C>
PHOTO President and Chief Executive Officer of Schering-Plough
RICHARD J. Corporation, manufacturer of pharmaceutical and consumer
KOGAN products
1996
COMMON SHARES: President and Chief Executive Officer of Schering-Plough
2,400 Corporation since January 1996. President and Chief
Operating Officer from 1986 to 1995. Director of The Bank of
New York, Colgate-Palmolive Company, Schering-Plough
Corporation and the Board of Overseers of the Stern School
of Business at New York University. Member of the Council on
Foreign Relations. Age 56.
PHOTO Chairman, President and Chief Executive Officer of Westvaco
JOHN A. Corporation, manufacturer of paper, packaging and specialty
LUKE, JR. chemicals
1996
COMMON SHARES: Chairman, President and Chief Executive Officer of Westvaco
2,200 Corporation since 1996. President and Chief Executive
Officer since 1992. Director of Arkwright Mutual Insurance
Co., The Bank of New York, Westvaco Corporation, American
Forest and Paper Association, The Americas Society, Inc. and
United Negro College Fund. Trustee of Lawrence University,
and The Tinker Foundation. Age 49.
PHOTO Chairman and Chief Executive Officer of Tele-Communications,
JOHN C. Inc., cable television multiple system operator
MALONE
1986 Chairman of Tele-Communications, Inc. since November 1996
COMMON SHARES: and Chief Executive Officer since January, 1994. President
13,800 from January, 1994 to March, 1997. Chief Executive Officer
of TCI Communications, Inc. from March 1992 to October, 1994
and President from 1973 to October, 1994. Director of The
Bank of New York, CATO Institute, Discovery Communications,
Inc., Tele-Communications, Inc., Tele-Communications
International, Inc. and Black Entertainment Television. Age
57.
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
NOMINEE,
YEAR ELECTED A DIRECTOR PRINCIPAL OCCUPATION
AND SECURITIES OWNED(1) AND OTHER INFORMATION
- --------------------------------------------------------------------------------------
- ------------------------
<S> <C>
PHOTO Chief Executive Officer and Publisher of Our World News, LLC
DONALD L.
MILLER Chief Executive Officer and Publisher of Our World News, LLC
1977 since November, 1995. Vice President - Employee Relations,
COMMON SHARES: Dow Jones and Company, Inc. from 1986 to 1995. Director of
32,770 The Bank of New York, Schering-Plough Corporation, The
Jackie Robinson Foundation and Associated Black Charities.
Trustee of Pace University. Age 66.
PHOTO Retired; Formerly Chairman and Chief Executive Officer of
H. BARCLAY Stauffer Chemical Company
MORLEY
1976 Chairman of Stauffer Chemical Company from 1977 to 1985;
COMMON SHARES: Chief Executive Officer from 1974 to 1985. Director of The
40,120 Bank of New York and Schering-Plough Corporation. Age 68.
PHOTO Senior Executive Vice President of The Bank of New York
DENO D. Company, Inc. and The Bank of New York
PAPAGEORGE
1997 Chief Financial Officer of The Bank of New York from 1981 to
COMMON SHARES: May 1997 and Senior Executive Vice President since 1982.
314,870 Senior Executive Vice President of The Bank of New York
Company, Inc. since 1988. Director of The Bank of New York.
Member of The Bankers Roundtable, Institute of Chartered
Accountants of Manitoba and New York Clearing House CHIPCo
Board. Age 59.
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
NOMINEE,
YEAR ELECTED A DIRECTOR PRINCIPAL OCCUPATION
AND SECURITIES OWNED(1) AND OTHER INFORMATION
- --------------------------------------------------------------------------------------
- ------------------------
<S> <C>
PHOTO Senior Executive Vice President, Metropolitan Life Insurance
CATHERINE A. Company, insurance and financial services
REIN
1981 Senior Executive Vice President - Business Services Group
COMMON SHARES: and Corporate Development and Services of Metropolitan Life
22,189 Insurance Company from February 1998 to present. Executive
Vice President-Corporate Development and Services from 1989
to January 1998. Senior Vice President from 1988 to 1989.
Director of Corning Incorporated, The Bank of New York,
General Public Utilities Corp., New England Investment
Companies, Inc. and Inroads/New York City, Inc. Trustee
Emeritus of the National Urban League and Trustee of the New
York University Law Center Foundation. Age 54.
PHOTO Chairman, President and Chief Executive Officer of The Bank
THOMAS A. of New York Company, Inc. and The Bank of New York
RENYI
1992 Chairman of The Bank of New York Company, Inc. and The Bank
COMMON SHARES: of New York since February 1998. Chief Executive Officer of
286,226 The Bank of New York Company, Inc. since July 1997.
President of The Bank of New York Company, Inc. since March
1992. Chief Executive Officer of The Bank of New York since
January 1996 and President since December, 1994. Chief
Operating Officer of The Bank of New York from December,
1994 to January, 1996. Vice Chairman of The Bank of New York
from 1992 to 1994. Director of The Bank of New York.
Director and Treasurer of New York Bankers Association.
Member of the Board of Governors of Rutgers, The State
University. Trustee, Fisher House Foundation. Member, The
New York Botanical Garden's Board of Managers. Member of the
Bankers Roundtable. Age 52.
PHOTO Retired; Formerly Chairman and Chief Executive Officer of
HAROLD E. Woolworth Corporation
SELLS
1986 Chairman and Chief Executive Officer, Woolworth Corporation
COMMON SHARES: from 1989 to July, 1993; Chairman and Chief Executive
15,800 Officer, F. W. Woolworth Co. from 1987 to 1989. Director of
The Bank of New York and Opportunity Village Retarded
Association of Nevada Foundation. Age 69.
</TABLE>
- --------------------------------------------------------------------------------
(1) Includes shares held individually or jointly with others or by a family
trust, or in the name of a bank, broker or nominee for the individual's
account.
8
<PAGE> 11
SECURITY OWNERSHIP BY MANAGEMENT
The following table indicates the beneficial ownership of the Company's Common
Stock as of March 16, 1998, by (1) each of the directors (including all nominees
for reelection), (2) the chief executive officers and the other four most highly
compensated executive officers and (3) all directors and executive officers of
the Company as a group, based upon information supplied by each of the directors
and officers. No director or officer currently holds any shares of the Company's
Preferred Stock.
<TABLE>
<CAPTION>
SHARES THAT MAY BE
SHARES OF ACQUIRED WITHIN
COMMON STOCK 60 DAYS BY PERCENT OF
BENEFICIALLY EXERCISE OF OPTIONS COMMON
NAME OF BENEFICIAL OWNER OWNED AND WARRANTS TOTAL STOCK(1)
------------------------ ------------ ------------------- --------- ----------
<S> <C> <C> <C> <C>
J. Carter Bacot................... 1,081,961 842,308 1,924,269
Richard Barth..................... 16,978 16,978
Frank J. Biondi, Jr............... 3,842 3,842
William R. Chaney................. 23,800 4,000 27,800
Ralph E. Gomory................... 48,000 48,000
Alan R. Griffith.................. 366,762 527,212 893,974
Gerald L. Hassell................. 198,424 301,996 500,420
Edward L. Hennessy, Jr............ 17,400 17,400
Richard J. Kogan.................. 2,400 2,400
John A. Luke, Jr.................. 2,200 2,200
John C. Malone.................... 13,800 13,800
Donald L. Miller.................. 32,770 32,770
H. Barclay Morley................. 40,120 40,120
Deno D. Papageorge................ 314,870 674,748 989,618
Catherine A. Rein................. 22,189 22,189
Thomas A. Renyi................... 286,226 841,948 1,128,174
Harold E. Sells................... 15,800 15,800
Bruce W. Van Saun................. 25,500 25,500
All Directors and Executive
Officers of the Company, as a
Group (a total of 26 persons,
including those named above).... 3,098,087 4,130,983 7,229,070 %
</TABLE>
- ---------------
(1) All percentages are less than 1% of the Company's outstanding shares of
Common Stock except as indicated.
9
<PAGE> 12
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following tables present information concerning compensation for the chief
executive officers and the four most highly compensated executive officers of
the Company for services in all capacities to the Company and its subsidiaries
during the years indicated.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------------------ ------------------------------------
AWARDS PAYOUTS
----------------------- ----------
SECURITIES
NAME AND OTHER RESTRICTED UNDERLYING
PRINCIPAL ANNUAL STOCK OPTIONS LTIP ALL OTHER
POSITION YEAR SALARY($) BONUS(1)($) COMPENSATION($) AWARDS($) SARS(#) PAYOUTS($) COMPENSATION(2)($)
--------- ---- ---------- ----------- --------------- ---------- ---------- ---------- ------------------
(A) (B) (C) (D) (E) (F) (G) (H) (I)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
J. Carter Bacot(3)... 1997 $1,292,693 $7,009,375 -- $ -- 250,000 -- $192,675
1996 1,050,000 4,293,750 -- -- 240,000 -- 167,014
1995 1,047,116 3,684,375 -- -- 200,000 -- 166,393
- -----------------------------------------------------------------------------------------------------------------------------------
Thomas A. Renyi(4)... 1997 752,308 4,768,750 -- -- 200,000 -- 111,713
Chairman, President 1996 650,000 2,520,000 -- -- 140,000 -- 103,390
and Chief Executive 1995 553,270 1,855,000 -- -- 100,000 -- 87,917
Officer
- -----------------------------------------------------------------------------------------------------------------------------------
Alan R. Griffith..... 1997 467,308 2,409,375 -- -- 70,000 -- 69,663
Vice Chairman 1996 417,692 1,428,750 -- -- 70,000 -- 66,439
1995 390,000 1,194,375 -- -- 70,000 -- 61,973
- -----------------------------------------------------------------------------------------------------------------------------------
Deno D. Papageorge... 1997 560,769 2,891,250 -- -- 80,000 -- 83,595
Senior Executive 1996 536,923 1,702,500 -- -- 80,000 -- 85,404
Vice President 1995 460,000 1,421,250 -- -- 80,000 -- 73,097
- -----------------------------------------------------------------------------------------------------------------------------------
Gerald L. Hassell.... 1997 390,000 2,067,578 -- -- 60,000 -- 58,113
Senior Executive 1996 320,000 1,115,625 -- -- 60,000 -- 50,900
Vice President of 1995 319,231 876,563 -- -- 50,000 -- 50,728
The Bank of New York
- -----------------------------------------------------------------------------------------------------------------------------------
Bruce W. Van Saun.... 1997 226,154 525,000 -- 1,137,938(5) 15,000 -- --
Executive Vice 1996 -- -- -- -- -- -- --
President of The 1995 -- -- -- -- -- -- --
Bank of New York
</TABLE>
- ---------------
(1) The bonus amounts for 1997 consist of cash bonuses of $2,500,000, 1,300,000,
675,000, 810,000, 550,000 and 525,000 awarded to Messrs. Bacot, Renyi,
Griffith, Papageorge, Hassell and Van Saun respectively, and the value on
December 31, 1997, of performance share awards made under the Company's 1993
Long-Term Incentive Plan, the vesting of which was based on 1997
performance. The number of shares which vested and the value thereof on
December 31, 1997, for the following Named Executive Officers are shown
below.
<TABLE>
<CAPTION>
Value as of
Shares Vested December 31,
on December 31, 1997 of Shares
1997 Pursuant Vested Pursuant
to Awards Made to Awards Made
in January 1997 in January 1997
--------------- ---------------
<S> <C> <C>
Bacot.................................................. 78,000 $4,509,375
Renyi.................................................. 60,000 3,468,750
Griffith............................................... 30,000 1,734,375
Papageorge............................................. 36,000 2,081,250
Hassell................................................ 26,250 1,517,578
</TABLE>
(2) The items included under column (i) for 1997 consist of the following: (1)
annual Company contributions on behalf of the named employees under the
Company's profit-sharing plan, amounting to $186,692, $108,231, $67,500,
$81,000, and $56,308 and for Messrs. Bacot, Renyi, Griffith, Papageorge, and
Hassell respectively, and (2) annual allocations under the Company's
employee stock ownership plan for the accounts of Messrs. Bacot, Renyi,
Griffith, Papageorge and Hassell of $5,983, $3,482, $2,163, $2,595 and
$1,805 respectively.
(3) Mr. Bacot was Chairman and Chief Executive Officer of the Company through
June 30, 1997 and Chairman of the Company up until his retirement on
February 7, 1998.
(4) Mr. Renyi was President of the Company through June 30, 1997, President and
Chief Executive Officer of the Company from July 1, 1997 through February 6,
1998 and effective February 7, 1998 is Chairman, President and Chief
Executive Officer of the Company.
(5) As of December 31, 1997, Mr. Van Saun has 25,500 restricted shares
outstanding with an aggregate market value of $1,474,219. Mr. Van Saun's
employment commenced May 14, 1997.
10
<PAGE> 13
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
--------------------------------------------------- POTENTIAL REALIZABLE VALUE AT
NUMBER OF % OF TOTAL ASSUMED ANNUAL RATES OF
SECURITIES OPTIONS/SARS EXERCISE STOCK PRICE APPRECIATION FOR
UNDERLYING GRANTED TO OR BASE 10-YEAR OPTION TERM(2)
OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION ------------------------------
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
---- ------------ ------------ -------- ---------- ------------- --------------
(A) (B) (C) (D) (E) (F) (G)
<S> <C> <C> <C> <C> <C> <C>
Bacot................ 250,000 6.8% $34.5000 2/7/03(3) $5,424,216 $13,746,029
Renyi................ 200,000 5.5 34.5000 1/14/07 4,339,373 10,996,823
Griffith............. 70,000 1.9 34.5000 1/14/07 1,518,781 3,848,888
Papageorge........... 80,000 2.2 34.5000 1/14/07 1,735,749 4,398,729
Hassell.............. 60,000 1.6 34.5000 1/14/07 1,301,812 3,299,047
Van Saun............. 15,000 .4 44.6250 6/10/07 420,966 1,066,811
</TABLE>
- ---------------
(1) For Messrs. Bacot, Renyi, Griffith, Papageorge and Hassell, all options were
granted on January 14, 1997. For each of these officers except Mr. Bacot,
2,898 of the indicated options are incentive stock options and become
exercisable on January 14, 2001; the balance of the options are
non-qualified stock options and became exercisable on January 14, 1998. For
Mr. Bacot, all indicated options are non-qualified stock options and became
exercisable on January 14, 1998.
Mr. Van Saun's option shares were granted on June 10, 1997. 8,960 shares are
incentive stock options and become exercisable 25% per year over four years
from the grant date; 6,040 shares are non-qualified stock options and become
exercisable on June 10, 1998.
(2) The dollar amounts under these columns are the result of calculations at the
5% and 10% rates set by the Securities and Exchange Commission and therefore
are not intended to forecast possible future appreciation, if any, in the
Company's stock price. The Company did not use an alternative formula for a
grant date valuation, as the Company is not aware of any formula which will
determine with reasonable accuracy a present value based on future unknown
or volatile factors.
(3) At grant, Mr. Bacot's stock option grant expired on 1/14/07. Upon his
retirement, the expiration date was adjusted to 2/7/03.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING
UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS IN-THE-MONEY OPTIONS/
AT FY-END(#) SARS AT FY-END($)
--------------------- ----------------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
---- --------------- ----------- --------------------- ----------------------
(A) (B) (C) (D) (E)
<S> <C> <C> <C> <C>
Bacot................ 601,768 $23,193,265 818,282/264,414 $33,851,887/$6,461,449
Renyi................ 24,000 915,000 637,154/218,846 27,933,948/ 5,452,052
Griffith............. 20,000 533,124 473,894/ 88,846 21,240,128/ 2,421,427
Papageorge........... 52,000 1,556,372 613,154/ 98,846 27,705,948/ 2,654,552
Hassell.............. 37,812 1,267,807 252,390/ 78,846 10,926,426/ 2,188,302
Van Saun............. 0 0 0/ 15,000 0/ 197,813
</TABLE>
11
<PAGE> 14
COMPENSATION AND ORGANIZATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION FOR
1997
PRINCIPLES AND PROGRAM
The Company's executive compensation program is a pay for performance program.
It is designed to:
- motivate executives to enhance shareholder value with compensation
plans that tie reward to Company performance; and,
- target executive compensation at a level to ensure the Company's
ability to attract and retain superior executives.
The Compensation and Organization Committee of the Board of Directors, which is
composed entirely of outside directors, has the responsibility for the design,
implementation and administration of the Company's executive compensation
program.
To meet the above objectives, the program, which has both cash and equity
elements, consists of base salary, an annual cash incentive bonus, share grants
and stock options. In determining executive compensation, the Compensation and
Organization Committee evaluates both the total compensation package and its
individual elements. As part of its review, the Committee considers compensation
data concerning the Company's key competitors developed by independent
compensation consultants. Key competitors include banks in the peer group used
for the five-year comparison of total shareholder return. It is expected that
total compensation will vary annually based on Company and individual
performance. The Compensation and Organization Committee and the management of
the Company believe that compensation should be based both on short-term and
long-term measurements and be directly and visibly tied to Company performance,
thus introducing substantial risk in the payout levels.
In evaluating the Company's 1997 financial performance, the Compensation and
Organization Committee considered a variety of factors. Most noteworthy was 1997
being the fifth consecutive year of record results. Net income was $1,104.1
million, the highest in the Company's history, and an 8.3% increase over the
$1,019.7 million reported in 1996. Earnings per fully diluted common share were
a record $2.71, 12.9% higher than the $2.40 in 1996. The Company also achieved a
record level of return on average common equity. ROE was 22.13% in 1997 compared
with 19.98% in 1996. The Company's 1997 performance also reflected strong growth
in fee income and continued tight control of operating expenses. The result was
an efficiency ratio of 50.2%, once again among the best of any major bank in the
United States. Capital levels remained strong and well in excess of the
regulatory minimums for a "well-capitalized" bank. The Company's quarterly
common stock dividend was raised twice in 1997; 9.1% or $.02 on January 4th and
8.3% or $.02 on October 14th to a record annual level of $1.04 per share. The
price of a common share of stock rose 71.3% from the end of 1996 to year-end
1997 outperforming the Dow Jones Industrial Average and the Standard & Poor's
500, Money Center Bank and Regional Bank indexes.
Following is a description of the elements of executive compensation and a
review of Mr. Renyi's compensation levels for 1997, as they relate to the
Company's performance:
BASE SALARY
Base salary levels for executive officers are determined by the Compensation and
Organization Committee of The Bank of New York (the "Bank"), which comprises the
same members as the Compensation and Organization Committee of the Company. The
Committee assesses a number of factors in fixing the base salary of the
executive officers (including the five most highly compensated) such as the
level of responsibility of the particular position, compensation levels for
positions of comparable responsibility at key competitors, the individual's
performance, the Company's overall financial performance, and the business and
inflationary climate. In considering base salary levels, the Committee considers
all of these factors without giving specific weight to any one factor.
Base salary levels of executive officers are reviewed every quarter by the
Compensation and Organization Committee; individual increases generally occur
every two years, but are occasionally awarded more frequently in exceptional
cases, as when an individual is promoted to a new position with greater
responsibility. Because of the substantial risk in the payout levels of the
long-term incentive plan, the Compensation and Organization Committee believes
that base salary levels for the named executives should be at or above median
for the peer group. Mr. Renyi's base salary is set near the median level of
12
<PAGE> 15
the comparison group. Mr. Renyi's base salary was increased from $650,000 to
$800,000 in 1997 upon his promotion to Chief Executive Officer of the Company.
Performance evaluations of other executive officers are reviewed with the
Compensation and Organization Committee by the Chief Executive Officer.
Independent compensation consultants are used to confirm that the salary levels
at the Company are within the range of the Company's key competitors. To ensure
that compensation policy for the top executive officers is consistent with
overall Company financial performance and executive compensation strategies, the
Committee reviews the compensation awarded to approximately 50 of the Bank's
most highly compensated executives.
ANNUAL CASH INCENTIVES
The annual cash incentive is designed to provide a short-term (one-year)
incentive to executive officers based on a subjective evaluation of their
individual contribution to Company financial performance for the year. Cash
incentives to four of the executive officers named in the Summary Compensation
Table are determined based on performance against pre-established corporate
goals. If performance goals are not met, awards are scaled down against target,
or eliminated. Heads of major business units and other key officers are eligible
for incentive payments. Incentive awards are made after each year's results are
known pursuant to the 1994 Management Incentive Compensation Plan (the "1994
Plan"), under which aggregate awards generally may not exceed 10% of the amount
by which net income exceeds 7% of average shareholders' equity for the plan
year. Although the 1994 Plan provides for a minimum aggregate award of $100,000,
as a matter of policy, no awards are made pursuant to the Plan unless net income
exceeds 7% of average shareholders' equity for the plan year. Upon
recommendation of the Compensation and Organization Committee, Board approval is
required for executive officer incentive payments.
In the case of Mr. Renyi, his bonus for 1997 was determined pursuant to goals
that were established at the beginning of 1997. Net income was the performance
basis for the award and the results indicated that his payout would be at the
maximum, 200% of base salary.
SHARE GRANTS
The Compensation and Organization Committee strongly endorses the use of
performance shares as an important component of long-term incentive compensation
for the most senior management of the Company. Performance share earnouts
fluctuate based on Company results against pre-established goals over designated
performance periods.
Restricted share grants are made to other executive officers. Restricted shares
vest over time without regard to performance goals but provide an incentive to
recipients to remain employed with the Company and to contribute to overall
Company performance and the enhancement of shareholder value.
In 1997, performance share grants were made covering performance for calendar
years 1997, 1998 and 1999. Shares granted with a performance period equal to the
1997 calendar year, earned out at 150% of granted shares due to performance
exceeding pre-established goals. Mr. Renyi earned 60,000 shares based on a grant
of 40,000 shares. The value of these shares is included in the Bonus column of
the Summary Compensation Table, and related footnote.
STOCK OPTION GRANTS
Stock options are designed to provide long-term (ten-year) incentives and
rewards tied to the price of the Company's Common Stock. Given the fluctuations
of the stock market, there is not always a direct correlation between stock
price performance and financial performance. The Compensation and Organization
Committee believes that stock options, which provide value to participants only
when the Company's shareholders benefit from stock price appreciation, are an
important component of the Company's executive compensation program. The number
of options currently held by an officer is not a factor in determining
individual grants, and the Compensation and Organization Committee has not
established any target level of ownership of Company Common Stock by the
Company's officers. However, retention of shares of Company stock by officers is
encouraged.
Stock option grants were made pursuant to the 1993 Long-Term Incentive Plan (the
"1993 LTIP"). During 1997, approximately 600 key officers received stock option
grants including all executive officers. The number of option shares granted is
based on a subjective evaluation of an individual's contribution to Company
financial performance, his/her position and salary level in the Company and
competitive
13
<PAGE> 16
compensation data. Stock options are issued annually at an exercise price equal
to 100% of the fair market value of the Company's Common Stock on the date of
grant. Vesting terms for stock options are shown in the footnotes to the
Option/SAR Grants in Last Fiscal Year table on page 11; the term of the options
is ten years from the grant date.
The outside consultant used by the Compensation and Organization Committee has
confirmed that Mr. Renyi's long-term incentive opportunity, which includes stock
options and performance shares, is consistent with practices at other key
competitors and should be targeted at the median levels of grants at peer
companies. Accordingly, Mr. Renyi was awarded 200,000 option shares during 1997.
Under Section 162(m) of the Internal Revenue Code of 1986 (the "Code"), the
Company will not be able to take tax deductions for employee remuneration to the
named executives to the extent such remuneration exceeds $1 million and is not
based on performance as defined in Section 162(m) of the Code. The Company has
modified its incentive compensation plans, has obtained and will continue to
seek the necessary shareholder approvals and has established the requisite
performance measurements to insure that compensation paid under those plans will
be deductible. In order to maintain the desired degree of management flexibility
to award compensation based upon individual performance, compensation which does
not qualify for the deduction may also be paid.
By: The Compensation and
Organization Committee,
December 31, 1997
William R. Chaney
Richard J. Kogan
John C. Malone
Donald L. Miller
H. Barclay Morley
Harold E. Sells
14
<PAGE> 17
THE BANK OF NEW YORK COMPANY, INC.
COMPARISONS OF FIVE-YEAR TOTAL SHAREHOLDER RETURN
<TABLE>
<CAPTION>
'THE BANK OF
MEASUREMENT PERIOD NEW YORK CO.,
(FISCAL YEAR COVERED) INC.' PEER GROUP S&P 500
<S> <C> <C> <C>
12/31/92 100.00 100.00 100.00
12/31/93 109.17 122.37 110.03
12/31/94 115.21 119.52 111.48
12/31/95 201.12 197.00 153.33
12/31/96 287.26 290.20 188.55
12/31/97 503.85 385.88 251.43
</TABLE>
Value of assumed $100 investment on December 31, 1992 in The Bank of New York
Company, Inc. Common Stock, in the Standard & Poor's 500 Stock Index or in the
Peer Company Group Index. Dividends are reinvested.
PEER COMPANY GROUP
BankAmerica Corporation
Bankers Trust New York Corporation
The Chase Manhattan Corporation(3)
Chemical Banking Corporation(3)
Citicorp
Continental Bank Corporation(1)
First Chicago NBD Bancorp(2)
First Interstate Bancorp(4)
J.P. Morgan and Co. Incorporated
Wells Fargo and Company
(1) Continental Bank Corporation was acquired by BankAmerica Corporation in 1994
and has therefore been deleted from the Peer Company Group as of 12/31/93.
(2) Reflects the Merger of First Chicago Corporation with NBD Bancorp effective
12/1/95. The 1995 performance for this stock was calculated based on returns
accruing to holders of the common stock of First Chicago Corporation as of
January 1, 1995.
(3) Chemical Banking Corporation acquired The Chase Manhattan Corporation and
changed the name to The Chase Manhattan Corporation effective 4/1/96. 1996
performance for The Chase Manhattan Corporation (new) reflects returns
accruing to holders of the common stock of Chemical Banking Corporation as
of January 1, 1996. 1996 performance for the Chase Manhattan Corporation
(old) reflects returns accruing to holders of the common stock of The Chase
Manhattan Corporation as of January 1, 1996.
(4) First Interstate Bancorp was acquired by Wells Fargo and Company effective
4/1/96. 1996 performance calculations for First Interstate Bancorp reflect
returns accruing to holders of First Interstate Bancorp common stock as of
January 1, 1996.
EMPLOYMENT AGREEMENTS AND RELATED MATTERS. The executive officers named in the
Summary Compensation Table on page 10 of this Proxy Statement are currently
parties to the agreements described below.
EMPLOYMENT AGREEMENTS. The agreements for Messrs. Bacot and Papageorge (the
"Agreements") generally provide that in the event that, within two years after a
Change in Control (as defined below) of the Company, such executive officer
either receives or gives notice that his employment will terminate for any
reason, either voluntarily or involuntarily, other than because of death,
disability, willful misconduct or retirement under the Company's Retirement
Plan, such termination will not become effective until the earlier of (i) five
years from the date of the Change in Control, (ii) death, (iii) an election to
take early or
15
<PAGE> 18
disability retirement benefits and (iv) age 65 (such period being referred to
hereinafter as the "Termination Period"). During the Termination Period, such
employee will not be required to perform any services and, in general, will be
entitled to (i) compensation at an annual rate equal to 100% of the highest rate
of base and incentive pay paid during the 36 months prior to the commencement of
the Termination Period, including payment under employee benefit plans, subject
to reduction for amounts earned from other employment, and (ii) continued
coverage (or the equivalent thereof) under all pension and insurance plans
offered to regular salaried employees. For purposes of such coverage, the annual
rate of compensation provided for in the Agreements, before reduction for other
amounts earned, will be used as the basis for determining the level of benefits
under any such plan, including the Company's Retirement Plan. In addition, at
the commencement of the Termination Period, unless otherwise provided by
applicable law or regulation, such executive officers will become fully vested
in, and any installments not then due or exercisable will become accelerated and
due or exercisable under, any stock options, performance awards or other
deferred compensation (including interest thereon) granted to such executive
officers prior to the commencement of the Termination Period. (As noted below,
in the event of a Change in Control the 1988 and 1993 Long-Term Incentive Plans
provide for vesting or exercisability, as applicable, for awards of stock
appreciation rights, performance shares and restricted stock; the 1988 Long-Term
Incentive Plan also provides for exercisability of stock options; and the 1993
Long-Term Incentive Plan also provides for a cash payment with respect to the
portion of a stock option which is not fully exercisable.) The Agreements may be
terminated by the Company at any time upon nine months' notice, provided that no
such termination will be effective if a Change of Control has occurred. For
purposes of the Agreements, a "Change in Control" is deemed to have taken place
(i) if The Bank of New York becomes a "subsidiary" of any "company" (as such
terms are defined in the Bank Holding Company Act of 1956) (provided that this
clause (i) shall not be applicable to corporate reorganizations in which the
present stockholders of the Company retain their approximate ownership
interest), or (ii) any person (including a corporation, partnership or other
group) files a Notice of Change in Control under the Change in Bank Control Act
of 1978 with respect to the Company or The Bank of New York, such Notice is not
disapproved or withdrawn and such person subsequently acquires 25% or more of
the voting securities of the Company or The Bank of New York. As of January 1,
1998, the annual rate of compensation payable under the terms of the Agreements
to Messrs. Bacot and Papageorge would be $8,273,585 and $3,479,310,
respectively. Mr. Bacot's agreement terminated when he retired on February 7,
1998.
SEVERANCE AGREEMENTS. The Severance Agreements for Messrs. Renyi, Griffith,
Hassell and Van Saun (the "Severance Agreements") generally provide that in the
event that, within 24 months following a "Change in Control" (as defined below)
of the Company, such an executive officer either (i) receives notice that his
employment will terminate for any reason other than death, retirement, Cause or
Disability (as defined in the Severance Agreements) or (ii) gives notice that
his employment will terminate for Good Reason (as defined in each Severance
Agreement), such executive officer will be provided with severance pay in an
amount equal to 2.99 times the "annualized includable compensation for the base
period" (as defined in the Internal Revenue Code). However, the Severance
Agreements limit the amount of such payments so that they will not be subject to
an excise tax as "excess parachute payments" (as defined in the Internal Revenue
Code).
The Severance Agreements for Messrs. Renyi, Griffith and Hassell provide that in
the event of a termination qualifying such executive officer for severance pay,
the officer will be provided with severance pay in an amount, if greater than
the severance pay described in the preceding paragraph, equal to 3 times the
officer's average annual base salary plus bonus paid during the 36 months
immediately preceding the month in which the Change in Control occurs, plus the
lump sum actuarial equivalent of the additional benefit which the executive
officer would have received under the Company's Retirement, Excess Benefit and
Supplemental Executive Retirement Plans if his employment had continued for 3
additional years and he continued to receive salary and bonus payments equal to
the annual salary in effect and the last bonus paid, immediately prior to the
Change in Control. Should the executive be subject to the excise tax on "excess
parachute payments" as a result of such payment and payments under other plans
due to a Change in Control, an additional payment will be made to restore the
after-tax severance payment to the same amount which the executive would have
retained had the excise tax not been imposed.
The Severance Agreements, which commenced on July 8, 1997, supersede any
previous Severance Agreements and shall continue in effect until December 31,
1999. Thereafter, they are automatically renewed each January 1st for
consecutive one year periods unless terminated by either party on
16
<PAGE> 19
90 days prior notice, provided, that notwithstanding any such notice, the
Severance Agreements will continue in effect for 24 months after a Change in
Control which occurs during the term or any renewal thereof. As of January 1,
1998, the severance payable under the Severance Agreements was $13,542,457 for
Mr. Renyi, $7,658,252 for Mr. Griffith, $5,323,029 for Mr. Hassell and $729,251
for Mr. Van Saun.
OTHER EMPLOYEE BENEFIT MATTERS. In July 1994 Messrs. Bacot and Papageorge
entered into Tax Reimbursement Agreements with the Company. The Tax
Reimbursement Agreements provide that if any payments to be made to either of
Messrs. Bacot and Papageorge for compensation or benefits pursuant to the
Agreements are subject to the excise tax on excess parachute payments, the
Company will pay to such officer an amount such that the net amount retained by
him, after deduction of any federal, state and local income tax, employment tax
and excise tax shall be equal to the total amount payable pursuant to the
Agreements as if the excise tax had not applied. Mr. Bacot's agreement
terminated when he retired on February 7, 1998.
Under the 1988 Long-Term Incentive Plan, in the event of a Change in Control (as
defined below), (i) all stock options shall become exercisable in full, (ii) all
stock appreciation rights which have been outstanding for at least six months
shall become exercisable in full, (iii) all performance shares shall be deemed
to be earned in full and all performance shares granted in the form of share
units shall be paid in cash, and (iv) the restrictions applicable to all shares
of restricted stock shall lapse and such shares shall be deemed fully vested and
all restricted stock awards granted in the form of share units shall be paid in
cash. Furthermore, any holder of an award who is deemed by the Compensation and
Organization Committee to be a statutory officer ("insider") for purposes of
Section 16 of the Securities and Exchange Act of 1934 (the "Exchange Act"),
shall be entitled, in lieu of the exercise of any stock option, to obtain a cash
payment in an amount equal to the difference between the option price of such
stock option and (x) in the event the Change in Control is the result of a
tender offer or exchange offer for the Common Stock, the final offer price per
share paid for the Common Stock, or such lower price as the Compensation and
Organization Committee may determine with respect to any incentive stock option
to preserve its incentive stock option status, multiplied by the number of
shares of Common Stock covered by such stock option, or (y) in the event the
Change in Control is the result of any other occurrence, the aggregate value of
the Common Stock covered by the stock option, as determined by the Compensation
and Organization Committee at such time. The Compensation and Organization
Committee may, in its discretion, include such further provisions and
limitations in any agreement documenting such awards as it may deem equitable
and in the best interests of the Company.
Under the 1993 Long-Term Incentive Plan, in the event of a Change in Control (as
defined below), (i) all stock appreciation rights which have not been granted in
tandem with stock options and which have been outstanding for at least six
months shall become exercisable in full, (ii) all performance shares shall be
deemed to be earned in full and all performance shares granted in the form of
share units shall be paid in cash, and (iii) the restrictions applicable to all
shares of restricted stock shall lapse and such shares shall be deemed fully
vested and all restricted stock awards granted in the form of share units shall
be paid in cash. Furthermore, any person who has been granted a stock option
which is not exercisable in full shall be entitled, in lieu of the exercise of
the portion of the stock option which is not exercisable, to obtain a cash
payment in an amount equal to the difference between the option price of such
stock option and (x) in the event the Change in Control is the result of a
tender offer or exchange offer for the Common Stock, the final offer price per
share paid for the Common Stock, or such lower price as the Compensation and
Organization Committee may determine with respect to any incentive stock option
to preserve its incentive stock option status, multiplied by the number of
shares of Common Stock covered by such portion of the stock option, or (y) in
the event the Change in Control is the result of any other occurrence, the
aggregate value of the Common Stock covered by such portion of the stock option,
as determined by the Compensation and Organization Committee at such time.
The Company entered into a trust agreement with an independent trustee in 1988
to establish a trust (the "Trust") to provide for the payment of amounts due to
Messrs. Bacot and Papageorge upon a Change in Control (as defined in the
Agreements) of the Company. The terms of the Trust provide for the payment to
Messrs. Bacot and Papageorge of the full amounts payable to them pursuant to
their employment agreements described above, including all annual compensation
payments due and any retirement benefits payable to them thereunder. The Trust
is revocable at any time at the option of the Company prior to a Change in
Control. After the occurrence of a Change in Control, the Trust will become
irrevocable and will be used for the exclusive purpose of providing benefits to
such persons. The Trust is
17
<PAGE> 20
funded by the deposit of an irrevocable letter of credit in the amount of $44
million issued by an entity unaffiliated with the Company.
The Company entered into a second trust agreement with an independent trustee in
1993 to establish a trust (the "Second Trust") to provide for the payment of
amounts due to Messrs. Renyi, Griffith, Hassell and Van Saun (and certain other
senior executives) upon a Change in Control (as defined below) of the Company.
The terms of the Second Trust provide for the payment to Messrs. Renyi,
Griffith, Hassell and Van Saun (and certain other senior executives) of the
severance pay payable to them pursuant to their Severance Agreements described
above. The Second Trust also provides for the payment of amounts due to
participants under the Company's Supplemental Executive Retirement Plan and
Excess Benefit Plan which include Messrs. Renyi, Griffith, and Hassell (and
certain other senior executives). The Second Trust is revocable at any time at
the option of the Company prior to a Change in Control. After the occurrence of
a Change in Control, the Second Trust will become irrevocable and will be used
for the exclusive purpose of providing benefits to such persons. The Second
Trust is funded by the deposit of an irrevocable letter of credit in the amount
of $78 million issued by an entity unaffiliated with the Company.
The Company entered into a third trust agreement with an independent trustee in
1994 to establish a trust (the "Third Trust") to provide for amounts due to
Messrs. Bacot and Papageorge upon a Change in Control (as defined below) of the
Company. The terms of the Third Trust provide for the payment to Messrs. Bacot
and Papageorge of the tax reimbursement payments payable to them under the terms
of the Tax Reimbursement Agreements described above. The Third Trust is
revocable at any time at the option of the Company prior to a Change in Control.
After the occurrence of a Change in Control, the Third Trust will become
irrevocable and will be used for the exclusive purpose of providing benefits to
such persons. The Third Trust is funded by the deposit of an irrevocable letter
of credit in the amount of $21 million issued by an entity unaffiliated with the
Company.
CHANGE IN CONTROL. A "Change in Control" for purposes of the Severance
Agreements of Messrs. Renyi, Griffith, Hassell and Van Saun, the Second and
Third Trusts, the Supplemental Executive Retirement Plan and Excess Benefit
Plan, the 1984 Stock Option Plan, the 1988 Long-Term Incentive Plan and the 1993
Long-Term Incentive Plan is deemed to occur if (A) any "person" (as such term is
defined in Section 3(a)(9) and as used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), excluding the
Company or any of its subsidiaries, a trustee or any fiduciary holding
securities under an employee benefit plan of the Company or any of its
subsidiaries, an underwriter temporarily holding securities pursuant to an
offering of such securities or a corporation owned, directly or indirectly, by
stockholders of the Company in substantially the same proportion as their
ownership of the Company, is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing 25% or more of the combined voting power of the Company's
then outstanding securities ("Voting Securities"); or (B) during any period of
not more than two years, individuals who constitute the Board as of the
beginning of the period and any new director (other than a director designated
by a person who has entered into an agreement with the Company to effect a
transaction described in clause (A) or (C) of this sentence) whose election by
the Board or nomination for election by the Company's shareholders was approved
by a vote of at least two-thirds ( 2/3) of the directors then still in office
who either were directors at such time or whose election or nomination for
election was previously approved, cease for any reason to constitute a majority
thereof; or (C) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the Voting Securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into Voting Securities of the
surviving entity) at least 60% of the combined voting power of the Voting
Securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation, or the shareholders of the Company approve a plan
of complete liquidation of the Company or any agreement for the sale or
disposition by the Company of all or substantially all of the Company's assets.
18
<PAGE> 21
PENSION BENEFITS
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE
------------------------------------------------------------------------------
REMUNERATION 15 20 25 30 35 40
------------ -------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
$ 100,000........... $ 24,750 $ 33,000 $ 40,800 $ 48,300 $ 55,800 $ 63,300
200,000........... 49,500 66,000 81,600 96,600 111,600 126,600
300,000........... 74,250 99,000 122,400 144,900 167,400 189,900
400,000........... 99,000 132,000 163,200 193,200 223,200 253,200
500,000........... 123,750 165,000 204,000 241,500 279,000 316,500
600,000........... 148,500 198,000 244,800 289,800 334,800 379,800
700,000........... 173,250 231,000 285,600 338,100 390,600 443,100
800,000........... 198,000 264,000 326,400 386,400 446,400 506,400
900,000........... 222,750 297,000 367,200 434,700 502,200 569,700
1,000,000........... 247,500 330,000 408,000 483,000 558,000 633,000
1,100,000........... 272,250 363,000 448,800 531,300 613,800 696,300
1,200,000........... 297,000 396,000 489,600 579,600 669,600 759,600
1,300,000........... 321,750 429,000 530,400 627,900 725,400 822,900
1,400,000........... 346,500 462,000 571,200 676,200 781,200 886,200
1,500,000........... 371,250 495,000 612,000 724,500 837,000 949,500
1,600,000........... 396,000 528,000 652,800 772,800 892,800 1,012,800
1,700,000........... 420,750 561,000 693,600 821,100 948,600 1,076,100
1,800,000........... 445,500 594,000 734,400 869,400 1,004,400 1,139,400
1,900,000........... 470,250 627,000 775,200 917,700 1,060,200 1,202,700
2,000,000........... 495,000 660,000 816,000 966,000 1,116,000 1,266,000
2,100,000........... 519,750 693,000 856,800 1,014,300 1,171,800 1,329,300
2,200,000........... 544,500 726,000 897,600 1,062,600 1,227,600 1,392,600
2,300,000........... 569,250 759,000 938,400 1,110,900 1,283,400 1,455,900
2,400,000........... 594,000 792,000 979,200 1,159,200 1,339,200 1,519,200
2,500,000........... 618,750 825,000 1,020,000 1,207,500 1,395,000 1,582,500
2,600,000........... 643,500 858,000 1,060,800 1,255,800 1,450,800 1,645,800
2,700,000........... 668,250 891,000 1,101,600 1,304,100 1,506,600 1,709,100
2,800,000........... 693,000 924,000 1,142,400 1,352,400 1,562,400 1,772,400
2,900,000........... 717,750 957,000 1,183,200 1,400,700 1,618,200 1,835,700
3,000,000........... 742,500 990,000 1,224,000 1,449,000 1,674,000 1,899,000
3,100,000........... 767,250 1,023,000 1,264,800 1,497,300 1,729,800 1,962,300
3,200,000........... 792,000 1,056,000 1,305,600 1,545,600 1,785,600 2,025,600
3,300,000........... 816,750 1,089,000 1,346,400 1,593,900 1,841,400 2,088,900
3,400,000........... 841,500 1,122,000 1,387,200 1,642,200 1,897,200 2,152,200
</TABLE>
Individuals listed in the Summary Compensation Table on page 10 had the
following covered compensation, and years of credited service as of December 31,
1997, respectively: J. Carter Bacot, $3,363,270, 37 years; Thomas A. Renyi,
$1,768,526, 26 years; Alan R. Griffith, $1,040,000, 31 years; Deno D.
Papageorge, $1,249,231, 28 years; Gerald Hassell, $851,410, 21 years; and Bruce
Van Saun $0 and 0 years. Covered compensation consists of the average of the
three highest consecutive years of combined salary and bonus paid in the last
ten years, and corresponds to those amounts indicated in column (c) and the cash
portion of the amounts indicated in column (d) of the Summary Compensation
Table.
For Messrs. Bacot, Renyi, Griffith, Papageorge and Hassell, the Pension Plan
Table sets forth the estimated annual pension benefit in the form of a straight
life annuity payable at normal retirement age before reduction for Social
Security benefits.
19
<PAGE> 22
DIRECTORS' AND OFFICERS' LIABILITY INSURANCE
The Company has purchased directors' and officers' liability and corporate
reimbursement insurance, covering all directors and officers of the Company and
all subsidiaries, from the following underwriters: National Union Fire Insurance
Company of Pittsburgh, PA.; Lloyd's of London; XL Insurance Company Limited;
Corporate Officers and Directors Assurance Ltd.; and ACE Insurance Company Ltd.
These policies are dated December 1, 1997 at a total premium expense for a one
year period of $1,159,500, which was paid by the Company.
CERTAIN TRANSACTIONS
In the ordinary course of business, the Company and certain of its subsidiaries
have had, and expect to continue to have, banking and fiduciary transactions
with a number of their directors and executive officers and their associates and
members of their immediate families. Such transactions are all on bases
comparable to similar transactions with others who are not within such group.
Certain of the Company's executive officers and directors and members of their
immediate families are customers of the Company and its subsidiaries, and
certain of the Company's executive officers and directors are executive
officers, directors or beneficial owners of 10 percent or more of any class of
equity securities of corporations, or members of partnerships, which are
customers of or suppliers to the Company and its subsidiaries. As such customers
or suppliers, their transactions were in the ordinary course of business. Such
customer transactions include borrowings, all of which were made in the ordinary
course of business and on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable transactions with
others and did not involve more than a normal risk of collectability or present
any other unfavorable features.
During 1997, John C. Malone, a director of the Company, was also president and
chief executive officer and a holder of more than 10 percent of the equity
securities of Tele-Communications, Inc. The Company made loans to
Tele-Communications, Inc. and certain of its affiliated companies during 1997
and the largest aggregate amount of indebtedness outstanding at any one time
during 1997 was approximately $374 million net of loans participated to the
Bank. As of January 31, 1998 approximately $274 million, net of loans
participated to the Bank, was outstanding to Tele-Communications, Inc. and its
affiliates. In addition to the loans made by the Company, bank subsidiaries of
the Company made loans to Tele-Communications, Inc. and certain of its
affiliated companies. All of these loans were made for a variety of corporate
purposes and bear interest at market rates of interest based on various interest
rate indices.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on a review of the copies of reports furnished to the Company and
written representations that no other reports were required, the Company
believes its executive officers and directors have complied with all applicable
Section 16(a) filing requirements.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information as of December 31, 1997
concerning persons which to the knowledge of the Company had beneficial
ownership of more than 5% of the voting securities indicated.
<TABLE>
<CAPTION>
TITLE OF NAME AND AMOUNT AND NATURE OF PERCENT
CLASS ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
- -------- --------------------------------------------- -------------------- --------
<C> <S> <C> <C>
Common
Stock FMR Corp.(1) 36,975,656 shares 9.82%
82 Devonshire Street
Boston, Massachusetts 02109
Common
Stock The Capital Group Companies, Inc. and 20,500,000 shares 5.4%
Capital Research and Management Company(2)
333 South Hope Street
Los Angeles, CA 90071
</TABLE>
20
<PAGE> 23
- ---------------
(1) FMR Corp. through subsidiaries had the sole dispositive power with respect
to all of the reported shares and sole power to vote 4,850,657 of such
shares. Edward C. Johnson, 3rd, Chairman of FMR Corp., and members of the
Edward C. Johnson, 3rd family and trusts for their benefit may be deemed to
be a beneficial owner of the shares owned beneficially by FMR Corp.
(2) Capital Research and Management Company, an investment advisor and a wholly
owned subsidiary of The Capital Group Companies, Inc. had the sole
dispositive power with respect to all of the reported shares. The Capital
Group Companies, Inc. may be deemed to be a beneficial owner of the shares
owned beneficially by Capital Research and Management Company.
PROPOSAL TO RATIFY THE APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, acting upon the recommendation of the Audit Committee,
has appointed Ernst & Young LLP to serve as the Company's independent public
accountants for the year 1998, and the shareholders will be asked to ratify such
appointment at the Annual Meeting. In 1997 the fees paid to Ernst & Young LLP
for all services, including their work in connection with registration
statements, tax compliance and operational procedures, were approximately $3.6
million.
Representatives of Ernst & Young LLP are expected to attend the Annual Meeting,
to have an opportunity to make a statement, if they desire to do so, and to be
available to respond to appropriate questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU MARK YOUR PROXY FOR THE
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS.
AMENDMENT TO ARTICLE FOURTH OF CERTIFICATE OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK.
It is proposed by the Board of Directors, pursuant to a resolution adopted March
10, 1998, that the first paragraph of Article FOURTH of the Company's
Certificate of Incorporation be amended to increase the authorized Common Stock
(par value $7.50 per share) from 800,000,000 shares to 1,600,000,000 shares so
as to read as follows:
"FOURTH: The aggregate number of shares which the Corporation shall have the
authority to issue is one billion six hundred and ten million (1,610,000,000) of
which one billion six hundred million (1,600,000,000) shares (par value $7.50
per share) shall be designated as Common Stock; five million (5,000,000) shares,
without par value, shall be designated as Preferred Stock; and five million
(5,000,000) shares (par value $2.00 per share) shall be designated as Class A
Preferred Stock."
As of March 16, 1998 the Company had outstanding an aggregate of
shares of Common Stock.
The Board of Directors believes that it is advisable to have additional shares
of Common Stock available for issuance for general corporate purposes including,
but not limited to, the raising of capital through the sale of Common Stock and
other securities or rights convertible into or exercisable for Common Stock,
stock dividends, stock splits, acquisitions and shareholder and employee plans.
Although the Company has no present plans to issue additional shares of Common
Stock (or other securities or rights) (other than pursuant to existing
shareholder and employee plans or outstanding convertible securities), the
authorization of such shares will enable the Company to act promptly if
appropriate circumstances arise which require the issuance of such shares.
The authorization of additional shares of Common Stock will not, by itself, have
any effect on the rights of the holders of existing Common Stock. Depending on
the circumstances, any issuance of additional shares of Common Stock could
affect the existing holders of shares of Common Stock by diluting the voting
power and earnings per share of the Common Stock. The Company's shareholders do
not have preemptive rights to subscribe for, purchase or receive shares of the
authorized capital stock of the Company.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU MARK YOUR PROXY FOR THE
AMENDMENT TO THE CERTIFICATE OF INCORPORATION.
21
<PAGE> 24
PROPOSAL TO APPROVE THE COMPANY'S 1999 LONG-TERM INCENTIVE PLAN
The Board of Directors adopted the Company's 1999 Long-Term Incentive Plan (the
"1999 LTIP") on March 10, 1998, subject to the approval of shareholders. The
purpose of the 1999 LTIP is to promote the long-term financial interests of the
Company, including its growth and performance, by encouraging its employees and
the employees of its subsidiaries to acquire an ownership position in the
Company, enhancing its ability to attract and retain employees of outstanding
ability and providing employees with an interest in the Company parallel to that
of the Company's shareholders. The Company continues to maintain its 1993
Long-Term Incentive Plan (the "1993 LTIP"). No grants will be made pursuant to
the 1993 LTIP after December 31, 1998 so long as the 1999 LTIP is approved by
shareholders at the Annual Meeting. The following summary of the principal terms
of the 1999 LTIP is qualified in its entirety by reference to the complete text
of the 1999 LTIP set forth in Exhibit A to this Proxy Statement.
General. Under the 1999 LTIP, the Company may grant employees stock options
(either incentive stock options within the meaning of Section 422 of the Code or
nonstatutory stock options), performance shares and restricted stock
(collectively, the "awards"). The 1999 LTIP is administered by the Compensation
and Organization Committee (the "Committee" or the "Compensation Committee"),
which is authorized to select employees of the Company and its subsidiaries to
receive awards, determine the type of awards to be made, determine the number of
shares of Common Stock or share units subject to any award and determine the
other terms and conditions of such awards to the extent not provided for in the
1999 LTIP. Subject to limits it may establish, the Committee may delegate such
authority with respect to employees other than those considered to be Covered
Employees under the 1999 LTIP (including the Chief Executive Officer and
employees whom the Committee considers likely to be among the four most other
highly compensated executive officers for the year in which an award is made or
payable) and other employees who are subject to Section 16 of the Exchange Act.
All employees of the Company and its subsidiaries who have demonstrated
significant management potential or who have the capacity for contributing in a
substantial measure to the successful performance of the Company, as determined
by the Compensation Committee, are eligible to receive awards under the 1999
LTIP. The Compensation Committee may also deem other employees of the Company
and its subsidiaries eligible to receive awards of nonstatutory options under
the 1999 LTIP. While such criteria are subjective in nature, based on its
experience to date under the 1993 LTIP, the Company currently estimates that
approximately 1,000 employees are likely to be eligible to receive awards each
year under the 1999 LTIP. In addition, a special grant of stock options to
purchase 50 shares was made to a broad group of employees in January 1998;
approximately 12,000 employees are eligible for this grant.
It is not possible to determine the benefits or amounts to be received under the
1999 LTIP because all amounts to be received will be based solely on future
performance. The following table presents the benefits and amounts that would
have been received by or allocated to the chief executive officers and the four
other most highly compensated executive officers of the Company, all current
executive officers as a group, all current directors who are not executive
officers as a group and all employees including all current officers who are not
executive officers as a group, under the 1999 LTIP if it had been in effect in
1997, based on the Company's performance in 1997.
<TABLE>
<CAPTION>
PERFORMANCE SHARES(1) STOCK OPTIONS RESTRICTED STOCK
----------------------- -------------------------- -----------------------
DOLLAR NUMBER OF NUMBER OF EXERCISE PRICE DOLLAR NUMBER
VALUE UNITS SHARES PER SHARE VALUE OF SHARES
----------- --------- --------- -------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
J. Carter Bacot(2)........... $ 1,794,000 52,000 250,000 $34.50 $ 0 0
Thomas A. Renyi(3)........... $ 4,140,000 120,000 200,000 $34.50 $ 0 0
Alan R. Griffith............. $ 2,070,000 60,000 70,000 $34.50 $ 0 0
Vice Chairman
Deno D. Papageorge........... $ 2,484,000 72,000 80,000 $34.50 $ 0 0
Senior Executive Vice
President
Gerald L. Hassell............ $ 1,811,250 52,500 60,000 $34.50 $ 0 0
Senior Executive Vice
President of The Bank of
New York
Bruce W. Van Saun............ $ 0 0 15,000 $44.625 $ 1,137,938 25,500
Executive Vice President of
The Bank of New York
Executive Officer Group...... $13,955,250 404,500 935,000 $34.50-44.625 $ 2,793,938 73,500
(including identified
officers)
</TABLE>
22
<PAGE> 25
<TABLE>
<CAPTION>
PERFORMANCE SHARES(1) STOCK OPTIONS RESTRICTED STOCK
----------------------- -------------------------- -----------------------
DOLLAR NUMBER OF NUMBER OF EXERCISE PRICE DOLLAR NUMBER
VALUE UNITS SHARES PER SHARE VALUE OF SHARES
----------- --------- --------- -------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Non-Executive Officer
Director Group............. $ 0 0 0 $0 $ 0 0
Non-Executive Officer
Employee Group............. $ 0 0 2,718,750 $34.50-47.50 $29,938,450 713,300
</TABLE>
- ---------------
(1) An individual earns performance shares based on the performance of the
Company. Performance shares granted during 1997 are earned based on Company
performance during calendar years 1997, 1998 and 1999 and are generally
subject to a two year restriction on sale after vesting.
(2) Mr. Bacot was Chairman and Chief Executive Officer of the Company through
June 30, 1997 and Chairman of the Company until his retirement on February
7, 1998. Performance shares granted to Mr. Bacot in 1997 are earned based on
the performance of the Company during calendar year 1997.
(3) Mr. Renyi was President of the Company through June 30, 1997, President and
Chief Executive Officer of the Company from July 1, 1997 through February 6,
1998 and effective February 7, 1998 is Chairman, President and Chief
Executive Officer of the Company.
The maximum aggregate number of shares of Common Stock which are available for
the grant of awards under the 1999 LTIP shall not exceed 35,000,000 shares of
Common Stock, adjusted for any stock dividend or split, recapitalization, merger
or any similar change. Notwithstanding the foregoing, in no event shall (x) more
than 30,000,000 shares of Common Stock be available in the aggregate for the
issuance of Common Stock pursuant to incentive stock options granted under the
1999 LTIP, or (y) more than 10,500,000 shares of Common Stock be available for
the issuance of Common Stock pursuant to performance shares or restricted stock
awards.
At January 1, 1998, the number of outstanding shares of Common Stock (including
treasury shares) was [ ]. On March [ ], 1998, the closing price of the
Common Stock on the NYSE was [$ ] per share.
Stock Options. Stock options entitle the holder to purchase shares of Common
Stock at a per share price determined by the Compensation Committee which price
will not be less than the closing price of Common Stock on the NYSE ("Fair
Market Value") on the date of grant. Stock options will be exercisable for such
period as is determined by the Compensation Committee, but in no event may
options be exercisable after 10 years from the date of grant. The Compensation
Committee may permit an employee who has received a grant of nonstatutory stock
options to transfer the options, subject to such terms and conditions specified
by the Compensation Committee, to the employee's spouse and issue (including
adopted and step-children) or to a trust for the benefit of the employee and
such family members. No employee may receive stock option grants for more than
750,000 shares of Common Stock during any calendar year.
Upon the grant or exercise of an incentive stock option, no income will be
realized by the optionee for Federal income tax purposes and the Company will
not be entitled to any deduction. If the Common Stock acquired upon exercise is
not disposed of within the one-year period beginning on the date of the transfer
of the Common Stock to the optionee, nor within the two-year period beginning on
the date of the grant of the option, any gain or loss realized by the optionee
upon the disposition of such shares will be taxed as long-term capital gain or
loss. In such event, no deduction will be allowed to the Company. If the Common
Stock is disposed of within the one-year or two-year periods referred to above,
the optionee will realize ordinary income at the time of disposition in an
amount equal to the excess of the Fair Market Value of the Common Stock on the
date of exercise (or, if less, the net proceeds of the disposition) over the
exercise price, and the Company will be entitled to a corresponding deduction.
Upon the grant of a nonstatutory option, no income will be realized by the
optionee for Federal income tax purposes, and the Company will not be entitled
to any deduction. Upon the exercise of such an option, the optionee will realize
ordinary income in the amount by which the Fair Market Value of the Common Stock
at the time of exercise exceeds the exercise price, and the Company will be
entitled to a corresponding deduction. The Compensation Committee may permit an
optionee to satisfy the Company's obligation to withhold required taxes upon the
exercise of a nonstatutory option by having the Company retain the number of
shares of Common Stock, the Fair Market Value of which is equal to the required
withholding amount.
23
<PAGE> 26
Performance Shares. Performance share awards consist of a grant of actual
shares of Common Stock or share units having a value equal to an identical
number of shares of Common Stock. The number of shares of Common Stock or share
units to which the holder is entitled is based upon performance conditions of
the Company over a performance period (which in no event may be less than 12
months) as determined by the Compensation Committee. Performance share awards
may provide the holder with dividends or dividend equivalents and voting rights
prior to vesting. The Compensation Committee will determine whether performance
shares granted in the form of share units shall be paid in cash, Common Stock or
a combination thereof.
Awards of performance shares to the Chief Executive Officer and the employees
whom the Compensation Committee considers likely to be among the four most
highly compensated executive officers for the year in which an award is made or
payable shall, except to the extent determined otherwise by the Compensation
Committee, be subject to performance conditions. The conditions must be
established within 90 days after the start of the performance period and be
based on the achievement by the Company or, if applicable, a business unit of a
specified target operating income, net income, earnings per share, return on
assets, return on equity, any combination of the foregoing, or on the
achievement of a targeted shareholder return. The Compensation Committee may
reduce or eliminate an award of performance shares to such officers,
notwithstanding the achievement of a specified target. The maximum number of
performance shares subject to any award to such an officer is 300,000 for each
12 months during the performance period; to the extent the award is paid in cash
the maximum is the cash value of such shares at the closing price on the Common
Stock's last trading day on the New York Stock Exchange (the "NYSE") during the
period. If such an officer terminates employment for any reason during the
period, the award will be payable to the extent determined by the Compensation
Committee if the performance conditions are achieved.
Restricted Stock. Restricted stock awards consist of a grant of actual shares
of Common Stock or share units having a value equal to an identical number of
shares of Common Stock. Restricted stock awards may provide the holder with
dividends or dividend equivalents and voting rights prior to vesting. The
Compensation Committee will determine whether restricted stock granted in the
form of share units shall be paid in cash, Common Stock or a combination
thereof. The employment conditions and the length of the period for vesting of
restricted stock awards are established by the Compensation Committee at the
time of grant. A restricted period of not less than 3 years shall apply to all
Common Stock or share units subject to restricted stock awards; a shorter period
may apply with respect to up to [10%] of the total shares of Common Stock or
share units available for grant under the 1999 LTIP.
Change in Control. In the event of a "Change in Control" (as defined on page
18, above), (i) all restrictions applicable to restricted stock shall lapse and
all such restricted stock shall be deemed fully vested, (ii) all performance
shares shall be deemed to be earned in full, and (iii) all stock options shall
become exercisable in full.
The 1999 LTIP or any portion thereof may be amended, suspended or terminated by
the Board of Directors at any time, provided that no amendment shall be made
without stockholder approval if such approval is necessary for the 1999 LTIP to
continue to comply with Rule 16b-3 under the Exchange Act. Unless terminated
earlier by the Board of Directors, the term of the 1999 LTIP will expire on
December 31, 2003.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU MARK YOUR PROXY FOR THE
ADOPTION OF THE 1999 LONG TERM INCENTIVE PLAN.
SHAREHOLDER PROPOSALS
SHAREHOLDER PROPOSAL WITH RESPECT TO CUMULATIVE VOTING
John J. and Margaret R. Gilbert, 29 East 64th Street, New York, New York
10021-7043, who are the owners of record of 1,328 and 1,344 shares,
respectively, of the Common Stock of the Company and both executors U/W Lewis D.
Gilbert for 660 shares, both representing an additional family interest of 1,470
shares, have informed the Company that they intend to present the following
proposal at the Annual Meeting:
"RESOLVED: that the stockholders of Bank of New York Company, Inc.,
assembled in annual meeting in person and by proxy, hereby request the
Board of Directors to take the steps necessary to provide for cumulative
voting in the election of directors, which means each stockholder shall be
entitled to as many votes as shall equal the number of shares he or she
owns multiplied by the
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<PAGE> 27
number of directors to be elected, and he or she may cast all of such votes
for a single candidate, or any two or more of them as he or she may see
fit."
PROPONENTS' STATEMENT IN SUPPORT OF RESOLUTION:
"Continued very strong support along the lines we suggest were shown at the last
annual meeting when 26.4%, an increase over the previous year, 2,171 owners of
66,736,345 shares, were cast in favor of this proposal. The vote against
included 1,634 unmarked proxies.
"California law still requires that unless stockholders have voted not to have
cumulative voting they will have it. Ohio also has the same provision.
"The National Bank Act provides for cumulative voting. In many cases companies
get around it by forming holding companies without cumulative voting. Banking
authorities have the right to question the capability of directors to be on
banking boards. In many cases authorities come in after and say the director or
directors were not qualified. We were delighted to see the SEC has finally taken
action to prevent bad directors from being on boards of public companies. The
SEC should have hearings to prevent such persons becoming directors before they
harm investors.
"Many successful corporations have cumulative voting. Example, Pennzoil defeated
Texaco in that famous case. Texaco's recent problems might have also been
prevented with cumulative voting, getting directors on the board to prevent such
things. Ingersoll-Rand, also having cumulative voting, won two awards. Fortune
magazine ranked it second in its industry as "America's Most Admired
Corporations" and the Wall Street Transcript noted "on almost any criteria used
to evaluate management, Ingersoll-Rand excels." In 1994 and 1995 they raised
their dividend.
"Lockheed-Martin, as well as VWR Corporation now have a provision that if anyone
has 40% or more of the shares cumulative voting applies; it does apply at the
latter company.
"In 1995, American Premier adopted cumulative voting. Alleghany Power System
tried to take away cumulative voting, as well as put in a stagger system of
electing directors, and stockholders defeated it, showing stockholders are
interested in their rights. Hewlett Packard, a very successful company, also has
cumulative voting.
"If you agree, please mark your proxy for this resolution; otherwise it is
automatically cast against it, unless you have marked to abstain."
MANAGEMENT RECOMMENDS A VOTE AGAINST THIS PROPOSAL FOR THE FOLLOWING REASONS:
At the 1997 Annual Meeting, 73.6% of the votes cast were voted against this
proposal. The Board of Directors continues to believe firmly that cumulative
voting would not be in the best interests of the Company or its shareholders.
This system would enable the holders of relatively small numbers of shares to
elect one or more directors to represent their particular interests on the
Board. Cumulative voting introduces the possibility of partisanship among Board
members and could impair their ability to work together and function as a
cohesive unit. This factor might also discourage qualified individuals from
accepting an invitation to serve on the Board. To be effective, the Board of
Directors must be totally attentive to the collective best interests of all
shareholders and must not be responsive to the special concerns of a particular
group. Under present procedure an individual can be elected to the Board only by
receiving a plurality of the votes cast. The Board of Directors believes that
this system has worked well, is in the best interests of all shareholders and
should remain in effect.
ACCORDINGLY, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU MARK YOUR
PROXY AGAINST ADOPTION OF THE SHAREHOLDER PROPOSAL.
SHAREHOLDER PROPOSAL WITH RESPECT TO POLITICAL CONTRIBUTIONS
Mrs. Evelyn Y. Davis, Watergate Office Building, 2600 Virginia Avenue, N.W.,
Suite 215, Washington, D.C. 20037, who is the owner of 668 shares of the Common
Stock of the Company, has advised the Company that she intends to present the
following proposal at the Annual Meeting:
RESOLVED: "That the stockholders of Bank of New York assembled in
Annual Meeting in person and by proxy, hereby recommend that the
Corporation affirm its political non-partisanship. To this end the
following practices are to be avoided:
"(a) The handing of contribution cards of a single political party to an
employee by a supervisor.
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<PAGE> 28
"(b) Requesting an employee to send a political contribution to an
individual in the Corporation for a subsequent delivery as part of a
group of contributions to a political party or fund raising committee.
"(c) Requesting an employee to issue personal checks blank as to payee for
subsequent forwarding to a political party, committee or candidate.
"(d) Using supervisory meetings to announce that contribution cards of one
party are available and that anyone desiring cards of a different
party will be supplied one on request to his supervisor.
"(e) Placing a preponderance of contribution cards of one party at mail
station locations."
PROPONENT'S STATEMENT IN SUPPORT OF RESOLUTION:
REASONS: "The Corporation must deal with a great number of
governmental units, commissions and agencies. It should maintain scrupulous
political neutrality to avoid embarrassing entanglements detrimental to its
business. Above all, it must avoid the appearance of coercion in
encouraging its employees to make political contributions against their
personal inclinations. The Troy (Ohio) News has condemned partisan
solicitation for political purposes by managers in a local company (not
Bank of N.Y.). And if the Company did not engage in any of the above
practices, to disclose this to ALL shareholders in each quarterly report."
"If you AGREE, please mark your proxy FOR this resolution."
MANAGEMENT RECOMMENDS A VOTE AGAINST THIS PROPOSAL FOR THE FOLLOWING REASONS:
The Board of Directors believes that adoption of this proposal would not be in
the best interests of the Company or its shareholders, and that the resolution
is unnecessary and administratively burdensome.
The Company is already required to comply with numerous federal and state laws
and regulations governing political contributions. As authorized by federal law,
the Company sponsors a political action committee supported solely by voluntary
contributions from employees. This provides an opportunity for employees to
support candidates and public officials whose views are consistent with the
Company's long-term legislative and regulatory goals regarding the financial
services industry or the communities served by the Company and its subsidiaries.
Policies and procedures have been established by the Company to ensure that such
employee contributions are entirely voluntary.
The Company strongly believes that federal and state regulations, along with its
own policies and procedures, adequately address the issues raised by the
proposal.
ACCORDINGLY, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU MARK YOUR
PROXY AGAINST ADOPTION OF THE SHAREHOLDER PROPOSAL.
FUTURE SHAREHOLDER PROPOSALS
In accordance with the rules of the Securities and Exchange Commission,
shareholders who intend to present proposals at the 1999 Annual Meeting of
Shareholders must submit such proposals in time for them to be received by the
Company on or before November 30, 1998, for inclusion in the Company's Proxy
Statement and form of proxy relating to that meeting.
PHEBE C. MILLER
Secretary
March 31, 1998
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<PAGE> 29
EXHIBIT A
THE BANK OF NEW YORK COMPANY, INC.
1999 LONG-TERM INCENTIVE PLAN
1. PURPOSE. The purpose of the 1999 Long-Term Incentive Plan of The Bank of
New York Company, Inc. (the "Plan") is to promote the long term financial
interests of The Bank of New York Company, Inc. (the "Company"), including its
growth and performance, by encouraging employees of the Company and its
subsidiaries to acquire an ownership position in the Company, enhancing the
ability of the Company and its subsidiaries to attract and retain employees of
outstanding ability, and providing employees with an interest in the Company
parallel to that of the Company's stockholders.
2. DEFINITIONS. The following definitions are applicable to the Plan:
"Award" shall mean an award determined in accordance with the terms of the Plan.
"Board of Directors" shall mean the Board of Directors of the Company.
"Committee" shall mean the Compensation and Organization Committee of the Board
of Directors.
"Common Stock" or "Stock" shall mean the common stock of the Company.
"Covered Employee" means, at the time of an Award (or such other time as
required or permitted by Section 162(m) of the Internal Revenue Code) (i) the
Company's Chief Executive Officer (or an individual acting in such capacity),
(ii) any employee of the Company or its subsidiaries who, in the discretion of
the Committee for purposes of determining those employees who are "covered
employees" under Section 162(m) of the Internal Revenue Code, is likely to be
among the four other highest compensated officers of the Company for the year in
which an Award is made or payable, and (iii) any other employee of the Company
or its subsidiaries designated by the Committee in its discretion.
"Exchange Act" shall mean the Securities Exchange Act of 1934.
"Fair Market Value" shall mean, per share of Stock, the closing price of the
Stock on the New York Stock Exchange (the "NYSE") on the applicable date, or, if
there are no sales of Stock on the NYSE on such date, then the closing price of
the Stock on the last previous day on which a sale on the NYSE is reported.
"Participant" shall mean an employee of the Company or its subsidiaries who is
selected by the Committee to participate in the Plan.
3. SHARES SUBJECT TO THE PLAN. Subject to adjustment as provided in Section 15
of this Plan, the number of shares of Stock which shall be available for the
grant of Awards under the Plan shall not exceed 35,000,000. Notwithstanding
anything contained herein to the contrary, in no event shall (x) more than
30,000,000 shares of Stock be available in the aggregate for the issuance of
Stock pursuant to incentive stock options granted under the Plan, or (y) more
than 10,500,000 shares of Stock be available in the aggregate for the issuance
of Stock pursuant to performance shares or restricted stock granted under the
Plan. The shares of Stock issued under the Plan may be authorized and unissued
shares or treasury shares, as the Company may from time to time determine.
Shares of Stock subject to an Award under the Plan that, in whole or in part,
expires unexercised or that is forfeited, terminated or cancelled or is paid in
cash in lieu of Stock, shares of Stock surrendered or withheld from any Award
under the Plan to satisfy a Participant's income tax withholding obligation and
shares of Stock owned by the Participant that are tendered to pay for the
exercise of a stock option under the Plan shall thereafter again be available
for grant under the Plan.
4. ADMINISTRATION. The Plan shall be administered by the Committee. A majority
of the Committee shall constitute a quorum, and the acts of a majority shall be
the acts of the Committee.
Subject to the provisions of the Plan, the Committee (i) (or its delegate,
within limits established by the Committee, with respect to non-Covered
Employees and employees who are not subject to Section 16 of the Exchange Act)
shall select the Participants, determine the type of Awards to be made to
Participants, determine the shares or share units subject to Awards, and (ii)
shall have the authority to interpret the Plan, to establish, amend, and rescind
any rules and regulations relating to the Plan, to determine the terms and
provisions of any agreements entered into hereunder, and to make all other
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<PAGE> 30
determinations necessary or advisable for the administration of the Plan. The
Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or in any Award in the manner and to the extent it
shall deem desirable to carry it into effect. The determinations of the
Committee in the administration of the Plan, as described herein, shall be final
and conclusive.
5. ELIGIBILITY. All employees of the Company and its subsidiaries who have
demonstrated significant management potential or who have the capacity for
contributing in a substantial measure to the successful performance of the
Company, as determined by the Committee, are eligible to be Participants in the
Plan. In addition, the Committee may from time to time deem other employees of
the Company or its subsidiaries eligible to participate in the Plan to receive
awards of nonstatutory stock options.
6. AWARDS. Awards under the Plan may consist of: stock options (either
incentive stock options within the meaning of Section 422 of the Internal
Revenue Code or nonstatutory stock options), performance shares, and restricted
stock grants. Awards of performance shares and restricted stock may provide the
Participant with dividends or dividend equivalents and voting rights prior to
vesting (whether based on a period of time or based on attainment of specified
performance conditions).
7. STOCK OPTIONS. The Committee shall establish the option price at the time
each stock option is granted, which price shall not be less than 100% of the
Fair Market Value of the Common Stock on the date of grant. Stock options shall
be exercisable for such period as specified by the Committee, but in no event
may options be exercisable for a period of more than ten years after their date
of grant. The option price of each share as to which a stock option is exercised
shall be paid in full at the time of such exercise. Such payment shall be made
in cash, by tender of shares of Common Stock owned by the Participant valued at
Fair Market Value as of the date of exercise, subject to such guidelines for the
tender of Common Stock as the Committee may establish, in such other
consideration as the Committee deems appropriate, or by a combination of cash,
shares of Common Stock and such other consideration. In no event may any
Participant receive stock options with respect to more than 750,000 shares of
Stock in any calendar year.
8. PERFORMANCE SHARES. Performance shares may be granted in the form of actual
shares of Stock or share units having a value equal to an identical number of
shares of Stock. In the event that a stock certificate is issued in respect of
performance shares, such certificate shall be registered in the name of the
Participant but shall be held by the Company until the time the performance
shares are earned. The performance conditions and the length of the performance
period shall be determined by the Committee but in no event may a performance
period be less than twelve months. The Committee shall determine in its sole
discretion whether performance shares granted in the form of share units shall
be paid in cash, Stock, or a combination of cash and Stock.
Awards of performance shares to a Covered Employee shall (unless the Committee
determines otherwise) be subject to performance conditions based on the
achievement (i) by the Company or a business unit of a specified target
operating or net income or return on assets, (ii) by the Company or a business
unit of specified target earnings per share or return on equity, (iii) of a
targeted total shareholder return or (iv) any combination of the conditions set
forth in (i) and (ii) above. If an Award of performance shares is made on such
basis, the Committee shall establish the relevant performance conditions within
90 days after the commencement of the performance period (or such later date as
may be required or permitted by Section 162(m) of the Internal Revenue Code).
The Committee may, in its discretion, reduce or eliminate the amount of payment
with respect to an Award of performance shares to a Covered Employee,
notwithstanding the achievement of a specified performance condition. The
maximum number of performance shares subject to any Award to a Covered Employee
is 300,000 for each 12 months during the performance period (or, to the extent
the Award is paid in cash, the maximum dollar amount of any such Award is the
equivalent cash value of such number of Shares at the closing price on the last
trading day of the performance period). For purposes of the immediately
preceding sentence, "trading day" shall mean a day in which the Shares are
traded on the New York Stock Exchange. An Award of performance shares to a
Participant who is a Covered Employee shall (unless the Committee determines
otherwise) provide that in the event of the Participant's termination of
employment prior to the end of the performance period for any reason, such Award
will be payable only (A) if the applicable performance conditions are achieved
and (B) to the extent, if any, as the Committee shall determine.
9. RESTRICTED STOCK. Restricted stock may be granted in the form of actual
shares of Stock or share units having a value equal to an identical number of
shares of Stock. In the event that a stock
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<PAGE> 31
certificate is issued in respect of restricted stock, such certificate shall be
registered in the name of the Participant but shall be held by the Company until
the end of the restricted period. The employment conditions and the length of
the period for vesting of restricted stock shall be established by the Committee
at time of grant. A restricted period of not less than three years shall apply
to shares of Stock subject to restricted stock grants under the Plan, except
that a restricted period of less than three years may apply to such grants with
respect to up to ten percent (10%) of the total shares of Stock available for
the grant of Awards under the Plan. The Committee shall determine in its sole
discretion whether restricted stock granted in the form of share units shall be
paid in cash, Stock, or a combination of cash and Stock.
10. AWARD AGREEMENTS. Each Award under the Plan shall be evidenced by an
agreement setting forth the terms and conditions, as determined by the
Committee, which shall apply to such Award, in addition to the terms and
conditions specified in the Plan.
11. CHANGE IN CONTROL. In the event of a Change in Control, as hereinafter
defined, (i) all restrictions applicable to restricted stock shall lapse and all
such restricted stock shall be deemed fully vested, (ii) all performance shares
shall be deemed to be earned in full, and (iii) all stock options shall become
exercisable in full. The Committee may, in its discretion, include such further
provisions and limitations in any agreement documenting such Awards as it may
deem equitable and in the best interests of the Company.
A "Change in Control" shall be deemed to occur if (A) any "person" (as such term
is defined in Section 3(a)(9) and as used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), excluding the
Company or any of its subsidiaries, a trustee or any fiduciary holding
securities under an employee benefit plan of the Company or any of its
subsidiaries, an underwriter temporarily holding securities pursuant to an
offering of such securities or a corporation owned, directly or indirectly, by
stockholders of the Company in substantially the same proportion as their
ownership of the Company, is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing 25% or more of the combined voting power of the Company's
then outstanding securities ("Voting Securities"); or (B) during any period of
not more than two years, individuals who constitute the Board of Directors of
the Company as of the beginning of the period and any new director (other than a
director designated by a person who has entered into an agreement with the
Company to effect a transaction described in clause (A) or (C) of this sentence)
whose election by the Board of Directors of the Company or nomination for
election by the Company's shareholders was approved by a vote of at least two
thirds ( 2/3) of the directors then still in office who either were directors at
such time or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority thereof; or (C) the
shareholders of the Company approve a merger or consolidation of the Company
with any other corporation, other than a merger or consolidation which would
result in the Voting Securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into Voting Securities of the surviving entity) at least 60% of the
combined voting power of the Voting Securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation, or the
shareholders of the Company approve a plan of complete liquidation of the
Company or any agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets.
12. WITHHOLDING. The Company shall have the right to deduct from any payment
to be made pursuant to the Plan the amount of any taxes required by law to be
withheld therefrom, or to require a Participant to pay to the Company such
amount required to be withheld prior to the issuance or delivery of any shares
of Stock or the payment of cash under the Plan. The Committee may, in its
discretion, permit a Participant to elect to satisfy such withholding obligation
by having the Company retain the number of shares of Stock whose Fair Market
Value equals the amount required to be withheld. Any fraction of a share of
Stock required to satisfy such obligation shall be disregarded and the amount
due shall instead be paid in cash to the Participant.
13. NONTRANSFERABILITY. No Award shall be assignable or transferable, and no
right or interest of any Participant shall be subject to any lien, obligation or
liability of the Participant, except by will or the laws of descent and
distribution. Notwithstanding the immediately preceding sentence, the Committee
may, subject to the terms and conditions it may specify, permit a Participant to
transfer any nonstatutory stock options granted to him pursuant to the Plan to
one or more of his immediate family members or to trusts established in whole or
in part for the benefit of the Participant and/or one or more of such
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<PAGE> 32
immediate family members. During the lifetime of the Participant, a nonstatutory
stock option shall be exercisable only by the Participant or by the immediate
family member or trust to whom such stock option has been transferred pursuant
to the immediately preceding sentence. For purposes of the Plan, (i) the term
"immediate family" shall mean the Participant's spouse and issue (including
adopted and step children) and (ii) the phrase "immediate family members and
trusts established in whole or in part for the benefit of the Participant and/or
one or more of such immediate family members" shall be further limited, if
necessary, so that neither the transfer of a nonstatutory stock option to such
immediate family member or trust, nor the ability of a Participant to make such
a transfer shall have adverse consequences to the Company or the Participant by
reason of Section 162(m) of the Internal Revenue Code.
14. NO RIGHT TO EMPLOYMENT. No person shall have any claim or right to be
granted an Award, and the grant of an Award shall not be construed as giving a
Participant the right to be retained in the employ of the Company or its
subsidiaries. Further, the Company and its subsidiaries expressly reserve the
right at any time to dismiss a Participant free from any liability, or any claim
under the Plan, except as provided herein or in any agreement entered into
hereunder.
15. ADJUSTMENT OF AND CHANGES IN STOCK. In the event of any change in the
outstanding shares of Common Stock by reason of any stock dividend or split,
recapitalization, merger, consolidation, spinoff, combination or exchange of
shares or other corporate change, or any distributions to common shareholders
other than regular cash dividends, the Committee may make such substitution or
adjustment, if any, as it deems to be equitable, as to the number or kind of
shares of Common Stock or other securities issued or reserved for issuance
pursuant to the Plan and to outstanding Awards. 16. AMENDMENT. The Board of
Directors may amend, suspend or terminate the Plan or any portion thereof at
anytime, provided that no amendment shall be made without stockholder approval
if such approval is necessary in order for the Plan to continue to comply with
Rule 16b-3 under the Exchange Act.
17. EFFECTIVE DATE. The Plan shall be effective as of January 1, 1999, subject
to its approval by shareholders of the Company. Subject to earlier termination
pursuant to Section 16 of this Plan, the Plan shall have a term of five years
from its effective date.
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<PAGE> 33
THE BANK OF NEW YORK COMPANY, INC.
48 WALL STREET, NEW YORK, NY 10286
PROXY
THIS PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Robert J. Goebert, Robert E. Keilman
and Deno D. Papageorge as proxies each with the power to appoint his substitute
and hereby authorizes each of them to represent and to vote, as designated on
the reverse hereof, all the shares of Common Stock of The Bank of New York
Company, Inc. held of record by the undersigned on March 16, 1998 at the Annual
Meeting of Shareholders to be held on May 12, 1998 or any adjournment thereof.
UNLESS OTHERWISE SPECIFIED, THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE
VOTED FOR THE ELECTION OF ALL NOMINEES FOR DIRECTORS, FOR PROPOSAL (2), FOR
PROPOSAL (3), FOR PROPOSAL (4), AGAINST PROPOSAL (5) AND AGAINST PROPOSAL (6).
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS
AS MAY COME BEFORE THE MEETING.
THE BANK OF NEW YORK COMPANY, INC.
P.O. BOX 11001
NEW YORK, N.Y. 10203-0001
Please complete, sign and date this proxy on the reverse side and return it
promptly in the accompanying envelope.
<PAGE> 34
THE
BANK OF
NEW
YORK
COMPANY, INC.
48 Wall Street, New York, N.Y. 10286
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of
The Bank of New York Company, Inc.
Notice is hereby given that the Annual Meeting of Shareholders of The Bank of
New York Company, Inc. (the "Company") will be held at The Bank of New York, 48
Wall Street, New York, N.Y., 11th floor, on Tuesday, May 12, 1998, at 10:00
a.m., local time, for the following purposes:
1. To elect fifteen directors to hold office until the next Annual
Meeting of Shareholders and until their respective successors have
been elected and qualified;
2. To ratify the appointment by the Board of Directors of Ernst &
Young LLP as the Company's independent public accountants for the
current fiscal year;
3. To approve an amendment to Article FOURTH of the Certificate of
Incorporation to increase the number of authorized shares of
Common Stock (par value $7.50 per share) from 800,000,000 shares
to 1,600,000,000 shares;
4. To approve the 1999 Long-Term Incentive Plan of The Bank of New
York Company, Inc.;
5. To consider a shareholder proposal relating to cumulative voting
rights;
6. To consider a shareholder proposal relating to political
contributions;
7. To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on March 16, 1998 as the
time as of which shareholders of the Company entitled to notice of and to vote
at the meeting shall be determined.
It is important that your shares be represented at the Annual Meeting. PLEASE
COMPLETE, DATE, SIGN AND MAIL THE ENCLOSED PROXY CARD PROMPTLY IN THE RETURN
ENVELOPE PROVIDED, REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE ANNUAL MEETING,
SO THAT YOUR VOTE MAY BE RECORDED.
We hope you will be able to attend.
By order of the Board of Directors,
/s/ Thomas A. Renyi /s/ Phebe C. Miller
Thomas A. Renyi Phebe C. Miller
Chairman of the Board Secretary
March 31, 1998
MANAGEMENT RECOMMENDS A VOTE FOR PROPOSALS 1, 2, 3 AND 4:
<TABLE>
<CAPTION>
For Withhold Exceptions*
<S> <C> <C> <C>
1. ELECTION OF DIRECTORS:
Nominees: Messrs. Bacot, Barth, Biondi,
Chaney, Gomory, Griffith, Kogan, Luke,
Malone, Miller, Morley, Papageorge,
Ms. Rein, Messrs. Renyi and Sells
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO
VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE
"EXCEPTIONS*" BOX AND WRITE THAT NOMINEE'S
NAME ON THE FOLLOWING BLANK LINE.)
Exceptions*____________________________
For Against Abstain
2. Ratification of Auditors.
For Against Abstain
3. Approval to Increase Authorized Shares.
For Against Abstain
4. Approval of the 1999 Long-Term Incentive
Plan.
MANAGEMENT RECOMMENDS A VOTE AGAINST PROPOSALS 5 AND 6:
For Against Abstain
5. Shareholder Proposal regarding Cumulative
Voting Rights to be accorded to shareholders.
For Against Abstain
6. Shareholder Proposal relating to political
contributions.
</TABLE>
Address Change and/or Comments Mark Here
Please sign exactly as the name appears hereon. If stock is held in names of
joint owners, each should sign.
Dated ____________________________, 1998
________________________________________
Signature of Shareholder(s)
________________________________________
Signature of Shareholder(s)
SIGN, DATE AND RETURN THE VOTING INSTRUCTION CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
VOTES MUST BE INDICATED (X) IN BLACK OR BLUE INK.