SCHEDULE 14A INFORMATION
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§Section 240.14a-12
STATE STREET CORPORATION
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[STATE STREET LOGO]
[State Street Logo]
Marshall N. Carter
Chairman and Chief Executive Officer
March 10, 199812, 1999
DEAR STOCKHOLDER:
You are cordially invited to attend the 19981999 Annual Meeting
of Stockholders of State Street Corporation. The meeting will be
held in the Enterprise Room at 225 Franklin Street, Boston,
Massachusetts on Wednesday, April 15, 1998,21, 1999, at 10:00 a.m. Your
Board of Directors and management look forward to greeting those
stockholders able to attend.
The notice of meeting and proxy statement which follow
describe the business to be conducted at the meeting. You will
be asked to elect sixfive directors. THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE DIRECTORS NOMINATED.
Your vote is very important. Whether or not you plan to
attend the meeting, please carefully review the enclosed proxy
statement. Then complete, sign, date and mail promptly the
accompanying proxy in the enclosed return envelope. To be sure
that your vote will be received in time, please return the proxy
at your earliest convenience.
We look forward to seeing you at the Annual Meeting so that
we can update you on our progress. Your continuing interest is
very much appreciated.
Sincerely,
/s/Marshall N. Carter
State Street Corporation
225 Franklin Street
Boston, MA 02110-2804
[STATE STREET LOGO]
[State Street Logo]
NOTICE OF 19981999 ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of
STATE STREET CORPORATION:
The 19981999 Annual Meeting of Stockholders of State Street
Corporation will be held on Wednesday, April 15, 1998,21, 1999, at 10:00
a.m., Eastern Time, at 225 Franklin Street, Fifth Floor, Boston,
Massachusetts, for the following purposes:
1. To elect sixfive directors, each for a three-year term;
and
2. To act upon such other business as may properly come
before the meeting and any adjournments thereof.
Stockholders of record at the close of business on February
27, 199826, 1999 are entitled to notice of and to vote at the meeting and
any adjournments thereof.
PLEASE MARK, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE
ENVELOPE PROVIDED FOR YOUR USE. FURNISHING THIS PROXY WILL NOT
AFFECT YOUR RIGHT TO REVOKE THIS PROXY OR TO VOTE IN PERSON
SHOULD YOU ATTEND THE MEETING.
If your stock is held in the name of a bank or broker, you
may have the choice of voting over the Internet or by telephone.
Follow the instructions on the form you receive from your bank or
broker.
If you plan to attend the meeting, you should bring a form
of personal identification with you. If your stock is held in
the name of a bank or broker, you should bring an account
statement or letter from your bank or broker indicating that you
owned State Street Corporation Common Stock as of February 26,
1999.
By Order of the Board of Directors,
Maureen Scannell Bateman
Secretary
March 10, 199812, 1999
State Street Corporation
225 Franklin Street
Boston, MA 02110-2804
STATE STREET CORPORATION
225 Franklin Street, Boston, Massachusetts 02110
PROXY STATEMENT
This proxy statement, and the accompanying proxy, which are
scheduled to be sent to stockholders beginning on March 10, 1998,12, 1999,
are furnished in connection with the solicitation by the Board of
Directors of State Street Corporation (the "Corporation") of
proxies for the 19981999 Annual Meeting of Stockholders of the
Corporation to be held on April 15, 199821, 1999 and at any adjournments
thereof. The Board of Directors has fixed the close of business
on February 27, 199826, 1999 as the record date for determining the
stockholders entitled to notice of and to vote at the meeting.
On the record date 161,012,794160,883,337 shares of Common Stock of the
Corporation were outstanding and entitled to be voted at the
meeting.
All shares represented by properly executed proxies, if such
proxies are received in time and not revoked, will be voted at
suchthe meeting in accordance
with any specifications thereonas specified or, if no specifications are made,
proxies will be voted in accordance with the recommendations of
the Board of Directors. Each share of Common Stock is entitled
to one vote.vote on each matter. Any proxy may be revoked at any time
before it is voted by notifying the Secretary in writing, by
executing and returning to the Corporation a later dated proxy or
by notifying the Secretary at the meeting and voting in person.
Stock held by State Street Bank and Trust Company, as trustee of
the Corporation's Salary Savings Program on account of
participants in such program, will be voted by the trustee in
accordance with written instructions from the participants, and
where no instructions are received, as the trustee deems proper.
The Corporation will bear the cost of soliciting proxies.
The solicitation of proxies will be made primarily by mail.
Proxies may also be solicited personally, by telephone and other
means of communication by regular employees of the Corporation
and its principal subsidiary, State Street Bank and Trust Company
(the "Bank"), without any additional remuneration and at minimal
cost. The Corporation intends to request banks, brokerage
houses, custodians, nominees and fiduciaries to forward
soliciting material to their principals and to obtain
authorization for the execution of proxies. In addition, the
Corporation has retained MacKenzie Partners,Morrow & Co., Inc. to aid in the
solicitation of proxies. The costCorporation has agreed to pay
Morrow & Co., Inc. a fee of such services is $8,500, plus expenses.
The Corporation's Annual Report, including financial
statements for the year ended December 31, 1997,1998, is being mailed
to stockholders together with this proxy statement.
ELECTION OF DIRECTORS
In accordance with Massachusetts law, the By-laws of the
Corporation provide for the classification of the Board into
three classes of directors as nearly equal in number as possible,
each class serving a three-year term, with one class of directors
to be elected at each annual meeting of stockholders for the term
specified and to continue in office until their successors are
elected and qualified. The exact number of directors is to be
determined by vote of the Board of Directors. Pursuant to the
By-laws, at a meeting on December 18, 1997,17, 1998, the Board of
Directors fixed the number of directors at 18,17, effective with the
19981999 Annual Meeting. As a result, five directors are to be
elected at the meeting as Class III directors. There are
currently 1918 directors of the Corporation. David B. Gruber and Diana Chapman Walsh were electedCorporation, six of whom are Class
II directors by the Board on September 18, 1997. Joseph A. Baute,III directors. Charles F. Kaye, a Class IIIII director, will be
retiring from the Board at the expiration of his present term.
It is intended that, unless contrary instructions are given,
shares represented by proxies solicited by the Board of Directors
will unless contrary instructions are given, be voted for the election of the sixfive nominees listed below
as directors, to serve for a three
yearthree-year term expiring at the
Annual Meeting to be held in 2001.2002. Although the Board of
Directors does not contemplate that any nominee will be
unavailable for election, in the event that vacancies occur
unexpectedly, such shares may be voted for substitute nominees,
if any, as may be designated by the Board of Directors.
Information relating to each nominee for election as director and
for each continuing director, including his or her period of
service as a director of the Corporation, principal occupation
and other biographical material is shown below.
DIRECTORS TO BE ELECTED AT THE 19981999 ANNUAL MEETING
ClassCLASS III
TENLEY E. ALBRIGHT, M.D. DIRECTOR SINCE 1993
Physician and surgeon. Dr. Albright's concentration in
medicine and health sciences stems from her private practice of
general surgery for over 23 years. Dr. Albright, age 63, is
Chairman of Western Resources, Inc., a holding company of varied
assets with plans for a research and development park and a
senior care facility. She is chairman of the Board of Regents of
the National Library of Medicine, National Institutes of Health,
and serves on the board of directors of West Pharmaceutical
Services, Inc., the Whitehead Institute for Biomedical Research
and the Massachusetts Society for Medical Research. She is a
member of the corporation of Woods Hole Oceanographic Institution
and New England Baptist Hospital and a member of the Harvard
Medical School Information Technology Committee and serves on the
Board of Visitors of the Harvard Medical Institute for Research
and Education. Dr. Albright graduated from Harvard Medical
School after attending Radcliffe College and has received
honorary degrees from Williams College, Hobart and William Smith
Colleges, Russell Sage College, New England School of Law,
Chatham College, State University of New York at Cortland,
Springfield College and Lasell College. Dr. Albright won the
Gold Medal in figure skating at the 1956 Olympics in Cortina,
Italy. She recently received the Research! America Advocacy
Award.
MARSHALL N. CARTER DIRECTOR SINCE 1991
Chairman and Chief Executive Officer of the Corporation.
Prior to joining State Street in 1991, Mr. Carter, age 58, was
with Chase Manhattan Bank for 15 years, the last three years as
head of global securities services. He served as a Marine Corps
officer in Vietnam for two years where he was awarded the Navy
Cross and Purple Heart and had international affairs service as a
White House Fellow. Mr. Carter is a member of the board of
directors of AlliedSignal Inc. and the American Bankers
Association. Mr. Carter holds a degree in civil engineering from
the U.S. Military Academy at West Point and masters degrees from
the Naval Postgraduate School and George Washington University.
NADER F. DAREHSHORI DIRECTOR SINCE 1990
Chairman of the Board, President and Chief Executive Officer
of Houghton Mifflin Company, publisher. Mr. Darehshori, age 62,
served as College Division vice president and manager of Houghton
Mifflin's midwestern sales region from 1984 until he was promoted
to vice president and director of the College Division in 1986.
In 1987 he was elected senior vice president, College Division.
He was promoted to executive vice president and then to vice
chairman in 1989 and to his present position in 1990. Mr.
Darehshori has served as a director of Houghton Mifflin Company
since 1989 and is chairman of its executive committee. He is a
director of CGU Insurance Group and chairman of the Massachusetts
Business Roundtable. He is a trustee of Wellesley College, the
WGBH Educational Foundation and the Dana-Farber Cancer Institute.
Mr. Darehshori also serves on the board of the Boston Public
Library Foundation.
JOHN M. KUCHARSKI DIRECTOR SINCE 1991
Chairman of the Board of EG&G, Inc., which provides
scientific and technological products and services worldwide.
Mr. Kucharski, age 63, joined EG&G in 1972 and was elected
president and director in 1986. He is a director of Nashua
Corporation and New England Electric System. He serves on the
boards of trustees of Marquette University and George Washington
University. He is also a member of the president's council and
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the advisory council to the College of Engineering of Marquette
University. Mr. Kucharski holds a B.S. degree from Marquette
University, a J.D. degree from George Washington University and
is a member of the District of Columbia Bar Association.
BERNARD W. REZNICEK DIRECTOR SINCE 1991
President, Premier Group, a construction company, and
National Director, Utility Marketing of Central States Indemnity
Co. of Omaha, an insurance company specializing in credit card
and utility payment protection for consumers, since January 1997.
Mr. Reznicek, age 62, also serves on the board of directors of
Central States Indemnity Co. of Omaha. From 1994 to 1996, he was
dean of the College of Business Administration of Creighton
University. From 1987 to 1990, he was president and chief
operating officer of Boston Edison Company. In 1990, he became
chief executive officer, and in 1992, he was elected chairman of
Boston Edison. Prior to joining Boston Edison, he was president
and chief executive officer of Omaha Public Power District. Mr.
Reznicek holds a B.S. degree from Creighton University and an
M.B.A. from the University of Nebraska. He serves on the boards
of CalEnergy Company, Guarantee Life Insurance Company, Stone &
Webster Incorporated and CSG Systems International, Inc.
DIRECTORS SERVING UNTIL THE 2000 ANNUAL MEETING
CLASS I
I. MACALLISTER BOOTH DIRECTOR SINCE 1990
Retired Chairman, President and Chief Executive Officer of
Polaroid Corporation, a manufacturer of instant image recording
products. Mr. Booth, age 67, joined Polaroid in 1958 as a
supervisor in the Film Division. He is a director of John
Hancock Mutual Life Insurance Company and Western Digital
Corporation, past chairman of Inroads National Board of Directors
and a member of the board of trustees of Eye Research Institute.
He received B.S. and M.B.A. degrees from Cornell University.
JAMES I. CASH, JR. DIRECTOR SINCE 1991
James E. Robison Professor of Business Administration at
Harvard University. Dr. Cash, age 51, has been a faculty member
of the Harvard Business School since 1976. He is a director of
Cambridge Technology Partners, Inc., The Chubb Corporation,
Knight-Ridder, Inc., General Electric Company, Tandy Corporation
and WinStar Communications, Inc. He received a B.S. degree in
mathematics from Texas Christian University and M.S. and Ph.D.
degrees in computer science and management information systems
from Purdue University.
TRUMAN S. CASNER DIRECTOR SINCE 1990
Partner in the law firm of Ropes & Gray. Mr. Casner, age
65, received an A.B. degree from Princeton University in 1955 and
an LL.B. from Harvard Law School in 1958. He served as law clerk
to Chief Justice Wilkins of the Massachusetts Supreme Judicial
Court and joined Ropes & Gray in 1959, becoming a partner in
1968. He is a trustee of the Museum of Science, Boston, a
director of the Massachusetts Business Roundtable, chairman of
the corporation and past president of Belmont Hill School and a
member of the corporation of Woods Hole Oceanographic
Institution. He is a member of the American Law Institute.
ARTHUR L. GOLDSTEIN DIRECTOR SINCE 1995
Chairman and Chief Executive Officer of Ionics,
Incorporated, an international company involved in the
purification and treatment of water. Mr. Goldstein, age 63, is a
director of Cabot Corporation. He is a member of the National
Academy of Engineering and its Industry Advisory Board and a
member of the visiting committee
- 3 -
at Harvard School of Public Health. He is a trustee of the
California Institute of Technology and the Massachusetts General
Physicians' Organization, Inc. and a director of Jobs for
Massachusetts, Inc. and the Massachusetts High Technology
Council. Mr. Goldstein received a B.S. degree in chemical
engineering from Rensselaer Polytechnic Institute, an M.S. in
chemical engineering from the University of Delaware and an
M.B.A. from Harvard Business School.
DAVID B. PERINI DIRECTOR SINCE 1980
Chairman and Director of Perini Corporation, a construction
and real estate development company. Mr. Perini, age 61, holds a
B.S. degree from the College of the Holy Cross and received a
J.D. degree from Boston College Law School in 1962. He joined
Perini Corporation in 1962. He is a director of GZA
Geoenvironmental Technologies, Inc. He has received awards from
the National Conference of Christians and Jews and the Italian
American Charitable Society and received the 1994 Ralph Lowell
Distinguished Citizen Award and the Boston Bar Foundation's 1998
Public Service Award. Mr. Perini is a trustee of St. John's
Preparatory School.
DENNIS J. PICARD DIRECTOR SINCE 1991
Chairman of Raytheon Company, a diversified,
technology-based international company. Mr. Picard, age 66,
joined Raytheon in 1955 and held engineering and management
assignments leading to his election as president and director in
1989 and as chairman and chief executive officer in 1991. He is
a member of the National Academy of Engineering and its Industry
Advisory Board, and a fellow of the American Institute of
Aeronautics and Astronautics and the Institute of Electrical and
Electronic Engineers. Mr. Picard is a trustee of Northeastern
University and Bentley College, a corporator of Emerson Hospital,
a director of the Discovery Museums and the John F. Kennedy
Library Foundation, a member of the National Business Roundtable,
The Business Council, the Defense Policy Advisory Committee on
Trade (DPACT), the President's Export Council, the President's
National Security Telecommunications Advisory Council and the
Armed Forces Communications and Electronics Association. He is a
graduate of Northeastern University and holds honorary doctorates
from Northeastern University, Merrimack College and Bentley
College.
DIRECTORS SERVING UNTIL THE 2001 ANNUAL MEETING
CLASS II
DAVID P. GRUBER Director sinceDIRECTOR SINCE 1997
Chairman, Chief Executive Officer and Director of
Wyman-Gordon Company, a manufacturer of forging, investment
casting and composite airframe structures for the commercial
aviation, commercial power and defense industries, since 1997.
Mr. Gruber, age 56,57, joined Wyman-GordonWyman- Gordon in 1991 as president and
chief operating officer, became a director in 1992 and president
and chief executive officer in 1994. Mr. Gruber began his career
with General Tire and Rubber Company. From 1978 to 1991 he was
with Norton Company, including serving as vice president of
Advanced Ceramics, from 1987 to 1991. He is a member of the
board of trustees of Manufacturers' Alliance for Productivity and
Innovation.Innovation and chairman of the Worcester Polytechnic Institute
Mechanical Engineering Advisory Committee. Mr. Gruber has a B.S.
degree from Ohio State University.
CHARLES R. LAMANTIA Director sinceDIRECTOR SINCE 1993
PresidentChairman and Chief Executive Officer of Arthur D. Little,
Inc., which provides management, technology and environmental
consulting services. Dr. LaMantia, age 58,59, was president and
chief operating officer of
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Arthur D. Little Inc. from 1986 to 1988. Prior to rejoining Arthur D.
Little in 1986, he was president of Koch Process Systems, Inc.
From 1977 to 1981, Dr. LaMantia was vice president in charge of
Arthur D. Little's services to the chemical, metals and energy
industries, having assumed that position after 10 years on the
firm's consulting staff. He is a member of The Conference Board
and the Massachusetts Business Roundtable. Dr. LaMantia received
B.A., B.S., M.S. and Sc.D. degrees from Columbia University and
attended the Advanced Management Program at Harvard Business
School.
ALFRED POE Director sinceDIRECTOR SINCE 1994
Chief Executive Officer of MenuDirect Corporation, a direct
home delivery prepared food service, since 1997. Mr. Poe, age
49,50, was formerly the president of the Meal Enhancement Group and
Corporate Vice President of the Campbell Soup Company which he joined
in 1991. From 1982 to 1991, he was with Mars, Inc. and held
various sales and marketing assignments in the United States and
the United Kingdom. He is a member of the board of directors of
B&G Foods, Inc., the LEAD (Leadership, Education and Development)
Program for minority students and the Executive Leadership
Council. Mr. Poe holds a B.S. degree from Polytechnic Institute
of Brooklyn and an M.B.A. from the Harvard Graduate School of
Business.
DAVID A. SPINA Director sinceDIRECTOR SINCE 1989
President and Chief Operating Officer of the Corporation,
since 1995. Mr. Spina, age 55,56, joined State Street in 1969 as a
credit analyst. He was elected executive vice president in 1982
and vice chairman in 1992. Mr. Spina held the positions of chief
financial officer and treasurer from 1977 to 1992. As Chief
Operating Officer, Mr. Spina oversees the transaction processing
and information systems of the Corporation and technology and
systems development. In addition, he manages the Corporation's
investor services businesses,business, which consistconsists of custody,
recordkeeping and related information services for institutional
investors including marketing, customer service, operations,
systems and technology development.worldwide. He is a director of the Metropolitan
Boston Housing Partnership, Inc., chairman of the Massachusetts
Taxpayers Foundation, Inc., trustee and a director of the Dana Hall SchoolUnited Way of
Massachusetts Bay and a member of the Banker's
Roundtable.Metropolitan Boston Housing
Partnership, Inc. Mr. Spina is Chairman Emeritus of the
Massachusetts Housing Investment Corporation and a former director of the Massachusetts Bankers
Association.Corporation. Mr. Spina holds a
B.S. degree from the College of the Holy Cross and an M.B.A. from
Harvard University. He was an officer in the United States Navy
from 1964 to 1969, serving a combat tour of duty in Vietnam.
2
DIANA CHAPMAN WALSH Director sinceDIRECTOR SINCE 1997
President of Wellesley College, since 1993.College. Prior to becoming President
of Wellesley College, Dr. Walsh, age 53,54, was professorProfessor and
Chairman of the Department of Health and Social WelfareBehavior at the
Harvard School of Public Health. She serves on the board of
directors of the Consortium on Financing Higher Education and is a memberas
chair of the American Council on Education Commission on
International Education. She is a trustee of Amherst College.
Dr. Walsh received a B.A. degree from Wellesley College, M.S. and
Ph.D. degrees from Boston University and Doctor of Humane
Letters, honorus causa, from Boston University and Deree College,
American College of Greece.
ROBERT E. WEISSMAN Director sinceDIRECTOR SINCE 1989
Chairman, Chief Executive Officer and Director of Cognizant Corporation,IMS Health
Incorporated, which provides information systemsto the pharmaceutical
and commercial data services,healthcare industries, since 1996.June 1998. IMS Health is a
spin- off from Cognizant isCorporation, one of three companies
resulting from the restructuring of The Dun & Bradstreet
Corporation. Mr. Weissman, age 57,58, joined Dun & Bradstreet in
1979. He became Chief Executive Officerchief executive officer in 1994 and Chairmanchairman in
1995. He became chairman, chief executive officer and director
of Cognizant Corporation in 1996.
- 5 -
Mr. Weissman is a director of GartnerGroup, Inc. and Nielsen
Media Research Inc. He is a member of the Institute of
Management Accountants, the Society of Manufacturing Engineers,
the Institute of Electrical and Electronic Engineers, The
Business Roundtable, the Committee for Economic Development and
The U.S.-Japan Business Council and is a trusteevice chairman of the
Corporation of Babson College. Mr. Weissman received a degree in
Business Administration from Babson College in 1964.
DIRECTORS SERVING UNTIL THE 1999 ANNUAL MEETING
Class III
TENLEY E. ALBRIGHT, M.D. Director since 1993
Physician and surgeon. Dr. Albright's concentration in medicine and
health sciences stems from her specialty of general surgery. Following 23
years in private practice of surgery, Dr. Albright, age 62, founded and became
chairman of a clinical diagnostic research laboratory. She is Chairman of
Western Resources, Inc., a holding company of varied assets with plans for a
research and development park and a senior care facility, since 1994. She
serves on the board of directors of The West Company and the Whitehead
Institute for Biomedical Research, and is a member of the Board of Regents of
the National Library of Medicine, National Institutes of Health, the
corporation of Woods Hole Oceanographic Institution, New England Baptist
Hospital, the Massachusetts Society for Medical Research, and the Board of
Visitors of the Harvard Medical Institute for Research and Education. Dr.
Albright graduated from Harvard Medical School after attending Radcliffe
College and has received honorary degrees from Williams College, Hobart and
William Smith Colleges, Russell Sage College, New England School of Law,
Chatham College, State University of New York at Cortland, Springfield College
and Lasell College. Dr. Albright won the Gold Medal in figure skating at the
1956 Olympics in Cortina, Italy.
MARSHALL N. CARTER Director since 1991
Chairman and Chief Executive Officer of the Corporation. Prior to
joining State Street in 1991, Mr. Carter, age 57, was with Chase Manhattan
Bank for 15 years, the last three years as head of global securities
services. He served as a Marine Corps officer in Vietnam for two years where
he was awarded the Navy Cross and Purple Heart and had international affairs
service as a White House Fellow. Mr. Carter is a member of the board of
directors of Euroclear in Brussels and the Federal Reserve Bank of Boston.
Mr. Carter holds a degree in civil engineering from the U.S. Military Academy
at West Point and masters degrees from the Naval Postgraduate School and
George Washington University.
3
NADER F. DAREHSHORI Director since 1990
Chairman of the Board, President and Chief Executive Officer of Houghton
Mifflin Company, publisher. Mr. Darehshori, age 61, served as College
Division vice president and manager of Houghton Mifflin's midwestern sales
region from 1984 until he was promoted to vice president and director of the
College Division in 1986. In 1987 he was elected senior vice president,
College Division. He was promoted to executive vice president and then to
vice chairman in 1989 and to his present position in 1990. Mr. Darehshori has
served as a director of Houghton Mifflin Company since 1989 and is chairman of
its executive committee. He is a director of Commercial Union Corporation and
the Massachusetts Business Roundtable. He is a trustee of Wellesley College,
the WGBH Educational Foundation and the Boston Symphony Orchestra. He is a
member of the Dana-Farber National Advisory Council for the Women's Cancers
Program. Mr. Darehshori also serves on the board of the Boston Public Library
Foundation.
CHARLES F. KAYE Director since 1979
Chairman, Transportation Investments, Incorporated, a lessor and asset
manager of intermodal transportation equipment. Mr. Kaye, age 70, is a
graduate of St. Thomas University and received a J.D. degree from Boston
College Law School. He was senior partner of the firm of Kaye, Sheldon and
Barton and special counsel to the Massachusetts Institute of Technology before
joining XTRA Corporation in 1967 as a director and general counsel. Mr. Kaye
became vice chairman in 1970 and served as chairman, president and chief
executive officer of XTRA from 1973 to 1990. Mr. Kaye is a trustee of Bentley
College and Lawrence Academy, a member of the Visiting Committee of the
Massachusetts General Hospital, chairman of the Alpha Omega Foundation and
town moderator of Littleton, Massachusetts. He has been the recipient of the
Association of American Railroads annual Intermodal Man of the Year Award and
the Air Force Association Distinguished Service Award.
JOHN M. KUCHARSKI Director since 1991
Chairman of the Board and Chief Executive Officer of EG&G, Inc., which
provides scientific and technological products and services worldwide. Mr.
Kucharski, age 62, joined EG&G in 1972 and was elected president and director
in 1986. He is a director of Nashua Corporation and New England Electric
System. He serves on the boards of trustees of Marquette University and
George Washington University. He is also a member of the president's council
and the advisory council to the College of Engineering of Marquette
University. Mr. Kucharski holds a B.S. degree from Marquette University, a
J.D. degree from George Washington University and is a member of the District
of Columbia Bar Association.
BERNARD W. REZNICEK Director since 1991
President, Premier Group, since 1996, and National Director, Utility
Marketing of Central States Indemnity Co. of Omaha, since 1997. From 1994 to
1996, Mr. Reznicek, age 61, was dean of the College of Business Administration
of Creighton University. From 1987 to 1990, he was president and chief
operating officer of Boston Edison Company. In 1990, he became chief
executive officer, and in 1992, he was elected chairman of Boston Edison,
serving until 1994. Prior to joining Boston Edison, he was president and
chief executive officer of Omaha Public Power District. Mr. Reznicek holds a
B.S. degree from Creighton University and an M.B.A. from the University of
Nebraska. He serves on the boards of CalEnergy Company, Guarantee Life
Company, Stone & Webster Incorporated and CSG Systems International.
4
DIRECTORS SERVING UNTIL THE 2000 ANNUAL MEETING
Class I
I. MACALLISTER BOOTH Director since 1990
Retired Chairman, President and Chief Executive Officer of Polaroid
Corporation, a manufacturer of instant image recording products. Mr. Booth,
age 66, joined Polaroid in 1958 as a supervisor in the Film Division. He is a
director of John Hancock Mutual Life Insurance Company, Western Digital
Corporation, past chairman of Inroads National Board of Directors and a member
of the board of trustees of Eye Research Institute. He received B.S. and
M.B.A. degrees from Cornell University.
JAMES I. CASH, JR. Director since 1991
James E. Robison Professor of Business Administration at the Harvard
University Graduate School of Business Administration. Dr. Cash, age 50, has
been a faculty member of the Harvard Business School since 1976. He is a
director of Cambridge Technology Partners, Inc., The Chubb Corporation,
Knight-Ridder, Inc., General Electric Company, Tandy Corporation and WinStar
Communications. He received a B.S. degree in mathematics from Texas Christian
University and M.S. and Ph.D. degrees in computer science and management
information systems from Purdue University.
TRUMAN S. CASNER Director since 1990
Partner in the law firm of Ropes & Gray. Mr. Casner, age 64, received an
A.B. degree from Princeton University in 1955 and an LL.B. from Harvard Law
School in 1958. He served as law clerk to Chief Justice Wilkins of the
Massachusetts Supreme Judicial Court and joined Ropes & Gray in 1959, becoming
a partner in 1968. He is a trustee of the Museum of Science, Boston, chairman
of the corporation and past president of Belmont Hill School, a member of the
corporation of Woods Hole Oceanographic Institution and a director of the
Massachusetts Business Roundtable. He is a member of the American Law
Institute.
ARTHUR L. GOLDSTEIN Director since 1995
Chairman and Chief Executive Officer of Ionics, Incorporated, an
international company involved in the purification and treatment of water.
Mr. Goldstein, age 62, is a director of Cabot Corporation. He is a member of
the National Academy of Engineering and its Industry Advisory Board and a
member of the visiting committees at Harvard Business School and Harvard
School of Public Health. He is a trustee of the California Institute of
Technology and the Massachusetts General Physician's Organization, Inc., a
director of Jobs for Massachusetts, Inc. and the Massachusetts High Technology
Council. Mr. Goldstein received a B.S. degree in chemical engineering from
Rensselaer Polytechnic Institute, an M.S. in chemical engineering from the
University of Delaware and an M.B.A. from Harvard Business School.
DAVID B. PERINI Director since 1980
Chairman of Perini Corporation, a construction and real estate
development company. Mr. Perini, age 60, holds a B.S. degree from the College
of the Holy Cross and received a J.D. degree from Boston College Law School in
1962. He joined Perini Corporation in 1962. He has received awards from the
National Conference of Christians and Jews and the Italian American Charitable
Society and received the 1994 Ralph Lowell Distinguished Citizen Award. Mr.
Perini is a trustee of St. John's Preparatory School.
5
DENNIS J. PICARD Director since 1991
Chairman and Chief Executive Officer of Raytheon Company, a diversified,
technology-based international company. Mr. Picard, age 65, joined Raytheon
in 1955 and held engineering and management assignments leading to his
election as president and director in 1989. He is a member of the National
Academy of Engineering and its Industry Advisory Board, a fellow of the
American Institute of Aeronautics and Astronautics and a fellow of the
Institute of Electrical and Electronic Engineers. Mr. Picard is a trustee of
Northeastern University and Bentley College, a corporator of Emerson Hospital,
a director of the Discovery Museums, the John F. Kennedy Library Foundation,
Jobs for Massachusetts, a member of the National Business Roundtable, The
Business Council, the Defense Policy Advisory Committee on Trade (DPACT), the
President's Export Council, the President's National Security
Telecommunications Advisory Council, the advisory committee of the American
Red Cross, the Armed Services YMCA of the United States and the Armed Forces
Communications and Electronics Association. He is a graduate of Northeastern
University and holds honorary doctorates from Northeastern University,
Merrimack College and Bentley College.
GENERAL INFORMATION
The Board of Directors has the overall responsibility for
the conduct of the business of the Corporation. Of the present 1918
directors 17currently in office, 16 are outside directors and 2 are
executive officers of the Corporation. The Board of Directors
held 64 meetings during 19971998 and each of the directors attended
75% or more of the total of all meetings of the Board and of the
committees of the Board on which each director served during the
year. Each member of the Board of the Corporation, except Mr.
Cash, Mr. Poe, Mr. Reznicek and Mr. Weissman, is also a member of the Board
of Directors of the Bank. The Board of Directors of the Bank
held 12 meetings during 1997.1998. Each member of the Executive
Committee and the Examining and Audit Committee of the
Corporation is also a member of the corresponding committee of
the Bank, and members customarily hold joint meetings of both
committees.
The Board of Directors has the following committees to
assist it in carrying out its responsibilities:
The EXECUTIVE COMMITTEE is authorized to exercise all the
powers of the Board of Directors asthat may be legally delegated to
it by the Board in the management and direction of the business
and affairs of the Corporation, including without limitation the
review and approval of policies for the extension of credit,
investment of the Corporation's assets and financial management;management,
and to monitor activities under these policies and report
periodically to the Board. Its members are Charles F. Kaye,
Chair, Joseph A.
Baute,Chair; James I. Cash; Marshall N. Carter,Carter; Truman S. Casner, and
David A. Spina. During 1997,1998, the Committee held 1312 meetings.
The EXAMINING AND AUDIT COMMITTEE oversees the operation of
a comprehensive system of internal controls to ensure the
integrity of the Corporation's financial reports and compliance
with laws, regulations and corporate policies,policies; monitors
communication with external auditors and bank regulatory
authoritiesauthorities; and recommends the selection of the Corporation's
independent auditors. The Committee is composed of Joseph A. Baute, Chair,John M.
Kucharski, Chair; Tenley E. Albright, and I. MacAllister Booth and John M. Kucharski.Booth.
During 1997,1998, the Committee held 8 meetings.
The EXECUTIVE COMPENSATION COMMITTEE overseessets and administers
policies which relate to the compensation system for the
Corporation's executive officers and non-management directors.other incentive programs of
the Corporation. The Committee consists of Robert E. Weissman,
Chair,Chair; I. MacAllister Booth,Booth; Nader F. Darehshori,Darehshori; Charles F.
Kaye,Kaye; Charles R. LaMantia, and Bernard W. Reznicek. During 1997,1998,
the Committee held 5 meetings.
6
The NOMINATING COMMITTEE, which held 32 meetings during 1997,1998,
is composed of I. MacAllister Booth, Chair,Chair; Marshall N. Carter,Carter;
Arthur L. Goldstein,Goldstein; David B. Perini,Perini; Dennis J. Picard, and
Alfred Poe. The Committee recommends nominees to the boards of
the Corporation and the Bank. In carrying out its responsibility
of finding the best qualified directors, the Committee will
consider proposals from a number of sources, including
recommendations for nominees submitted upon timely written notice
to the Secretary of the Corporation by stockholders.
- 6 -
COMPENSATION OF DIRECTORS
Directors who are also employees of the Corporation or the
Bank receive no compensation for serving as directors or as
members of committees. Directors who are not employees of the
Corporation or the Bank received an annual retainer of $25,000,$35,000,
payable at their election in shares of Common Stock of the
Corporation or in cash, plus a fee of $1,500 for each meeting of
the Board of Directors and each committee meeting attended, as
well as travel accident insurance and reimbursement for travel
expenses, and 260an award of 251 shares of deferred stock payable
when the director leaves the Board or retires, for the period
April 19971998 through March 1998.1999. In 1997,1998, all outside directors
elected to receive their annual retainer in shares of Common
Stock. On July 1, 1998, two of the Directors, who joined the
Board in September 1997, received a prorated award of 137
deferred shares for the 1997-1998 period.
Under a plan effective January 1, 1995, non-employee
directors with at least five years' service arewere eligible for an
annual retirement benefit equal to their annual retainer at
retirement, payable for a period equal to the length of service
of the director on the Board, up to a maximum of ten years. On
March 19, 1998, the Non-employee Directors' Retirement Plan was
terminated, and directors with five or more years of service with
the Corporation were allowed to maintain their accrued benefits
pursuant to the Plan or to transfer the value of the accrued
benefits into a deferred stock account. Directors with less than
five years of service had their accrued benefits automatically
transferred into a deferred stock account. One of the directors
elected to maintain his accrued benefits pursuant to the Plan.
Future accruals under the Non-employee Directors' Retirement Plan
have been replaced with annual deferred stock awards equal, in
each case, to the number of shares of the Common Stock of the
Corporation determined by dividing $7,000 by the current share
price.
- 7 -
BENEFICIAL OWNERSHIP OF SHARES
MANAGEMENT
The table below sets forth the number of shares reported to the
Corporation of the
Common Stock of the Corporation beneficially owned (as determined
under the rules of the Securities and Exchange Commission) by
each nominee for Class II Director, and for each Class I and Class III Director,director, the chief executive officer and the four other
most highly compensated executive officers and by those persons
and other executive officers as a group as of the close of
business on February 1, 1998.1999 based on information furnished by
each person. None of the nominees,
other directors or executive officers
individually owned beneficially as much as 1% of the outstanding
shares of Common Stock. The nominees, other
directors and executive officers in
the aggregate beneficially owned 1.52%1.53% of the Corporation's
Common Stock.
Amount and Nature
of Beneficial
Name Ownership
-----AMOUNT AND NATURE
OF BENEFICIAL
NAME OWNERSHIP
---- -----------------
Tenley E. Albright, M.D. 16,344(1)(7)
Joseph A. Baute 15,720(2)18,581(1)(7)
I. MacAllister Booth 10,118(7)12,992(7)
Dale L. Carleton 189,782(3)199,276(2)
Marshall N. Carter 245,370(3)(4)279,431(2)(3)
James I. Cash, Jr. 8,686(7)11,439(7)
Truman S. Casner 13,365(5)16,259(4)(7)
Nader F. Darehshori 9,523(7)9,156(7)
Arthur L. Goldstein 2,906(7)4,632(7)
David P. Gruber 1,2752,440(7)
Charles F. Kaye 61,786(7)39,965(7)
John M. Kucharski 7,914(7)10,577(7)
Charles R. LaMantia 7,446(5)9,683(4)(7)
Ronald E. Logue 98,019(3)44,494(2)
Nicholas A. Lopardo 355,930(3)334,572(2)(5)(7)
David B. Perini 20,359(7)23,313(7)
Dennis J. Picard 10,010(7)12,637(7)
Alfred Poe 4,186(7)6,188(7)
Bernard W. Reznicek 10,614(7)13,277(7)
David A. Spina 852,344(3)770,381(2)(6)
Diana Chapman Walsh 8752,040(7)
Robert E. Weissman 12,686(7)15,833(7)
All of the above and other
executive officers as a group
(28(29 persons) 2,452,430(3)(5)
- --------------------2,465,814(2)(4)(7)
______________________
(1) Includes 6,398 shares held in trust for a family member
pursuant to a trust of which Dr. Albright is a co-trustee and
2,200 shares owned by a family member with respect to which she
disclaims beneficial ownership.
(2) Includes 400 shares owned by a member of Mr. Baute's family with respect
to which he disclaims beneficial ownership.
(3) Includes shares which may be acquired within 60 days through
the exercise of stock options as follows: Mr. Carleton, 133,056;136,574;
Mr. Carter, 102,000;100,020; Mr. Logue, 11,422; Mr. Lopardo, 252,280; Mr. Logue, 70,892;189,374; Mr.
Spina, 402,400,265,200, and the group, 1,349,700.
(4)1,202,782.
(3) Includes 113,370149,411 shares held jointly and 30,000 shares owned
by a member of Mr. Carter's family with respect to which he
disclaims beneficial ownership.
(5)(4) Includes shares as to which voting power isand investment
power are shared, as follows: Mr. Casner, 4,000; Dr. LaMantia,
2,000; Mr. Lopardo, 10,976,2,000, and the group, 19,976.9,655.
(5) Includes 129,578 shares held jointly and 15,620 shares held
in a charitable lead trust of which Mr. Lopardo is a co-trustee
and members of Mr. Lopardo's family have a remainder interest
with respect to which he disclaims beneficial ownership.
(6) Includes 40,000 shares owned by a member of Mr. Spina's
family with respect to which he disclaims beneficial ownership.
(7) Includes 260 shares ofheld in deferred stock.stock accounts as follows:
Dr. Albright, 2,019; Mr. Booth, 2,656; Mr. Cash, 2,535; Mr.
Casner; 2,605; Mr. Darehshori, 2,605; Mr. Goldstein, 1,508; Mr.
Gruber, 687; Mr. Kaye; 611; Mr. Kucharski, 2,445; Dr. LaMantia,
2,019; Mr. Lopardo, 2,171; Mr. Perini, 3,105; Mr. Picard, 2,409;
Mr. Poe, 1,784; Mr. Reznicek, 2,445; Dr. Walsh, 687; Mr.
Weissman, 2,929, and the group, 39,388.
- 8 -
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934
requires the Corporation's executive officers and directors to
file initial reports of ownership and reports of changes in
ownership of the Common Stock of the Corporation with the
Securities and Exchange Commission and the New York Stock
Exchange. Executive officers and directors are required by
regulations to furnish the Corporation with copies of all Section
16(a) forms which they file.
Based on a review of the copies of such forms furnished to
the Corporation and written representations from the
Corporation's executive officers and directors, the Corporation
believes that in 19971998 all Section 16(a) filing requirements
applicable to its executive officers and directors were met.
The initial report on Form 3 of Dr. Diana Chapman Walsh, although
timely filed, did not report 400 shares held in trust, and Dr. Walsh filed an
amended Form 3.
CERTAIN TRANSACTIONS
During 19971998 certain directors and executive officers of the
Corporation and the Bank, and various corporations and other
entities associated with such directors, were customers of the
Bank and its affiliates and had ordinary business transactions
with the Bank.Bank and its affiliates. The transactions include loans
and commitments made in the ordinary course of the Bank's
business and on substantially the same terms, including interest
rate and collateral, as those prevailing at the time for
comparable transactions with unrelated persons with no more than
normal risk of collection nor did they present other unfavorable
features. During 1997,1998, the Bank and other subsidiaries of the
Corporation have used products or services of Cognizant CorporationGartnerGroup, Inc.
and a subsidiary of Ionics, Incorporated, with which two of the
directors of the Corporation were associated. Additional
transactions of this nature may be expected to take place in the
ordinary course of business in the future. Ropes & Gray, a law
firm of which Mr. Casner, a director of the Corporation, is a
partner, was retained by the Corporation to handle certain legal
matters during the past year. It is anticipated that the firm
will continue to provide legal services in the current year.
No executive officer of the Corporation is allowed to borrow
from the Bank other than through the use of a reserve account
with limits of up to $20,000 as allowed by Massachusetts law and
at the same interest rate paid by the public.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Corporation's Executive Compensation
Committee are I. MacAllister Booth, Nader F. Darehshori, Charles
F. Kaye, Charles R. LaMantia, Bernard W. Reznicek and Robert E.
Weissman, Chair. None of these individuals is or has been an
officer or employee of the Corporation or the Bank.
- 9 -
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
The Executive Compensation Committee of the Board of
Directors (the "Committee") furnishes the following report on
Executive Compensation.
POLICY
State Street combines information technology with banking,
trust, investment management and securities processing
capabilities to support the investment strategies of our
customers worldwide. The Corporation's goal is to be the leading
company serving institutional investors worldwide. The
Corporation's executive compensation program, by providing
competitive pay and aligning executive compensation with the
Corporation's business strategy, is designed to attract and
retain superior executives, to focus these individuals on
achieving the Corporation's objectives and to reward executives
for meeting specific short-term and long-term performance
targets. The executive compensation program places emphasis on
challenging performance goals, business growth and sustainable
real growth in earnings per share. By including stock basedstock-based
compensation plans withinas a major part of the compensation strategy,
State Street links closely the goals of stockholders and
executives. Nineteen executives participated in the executive
compensation program in 1997.1998. The chairman and chief executive
officer, the president and chief operating officer, the vice
chairmen, and executive vice presidents are considered executives
for this purpose.
The principles of State Street's compensation strategy are
applied throughout the Corporation. Since executives of the
Corporation have the greatest opportunity to influence long-termlong- term
performance, a greater proportion of their compensation is linked
to the achievement of long-termlong- term financial goals and to stock
price. Other individuals who manage business units or have
corporate functional or staff responsibilities have a significant
opportunity to influence the Corporation's results, and a sizable
portion of their total compensation is related to the achievement
of financial goals of both the respective business unit and the
Corporation. In addition to executives, many officers and
managers who make significant contributions to the Corporation
participate in the Corporation's equity incentive programs and in
a variety of annual incentive plans.
In line
with competitive practices, State Street also offers specific bonus
opportunities to individuals who have specialized sales, trading or investment
responsibilities. Outstanding performance by these specialists is rewarded
with bonuses linked directly to the attainment of challenging and measurable
business goals.
The Executive Compensation Committee is comprised entirely
of independent, non-employee directors.non- employee directors, each of whom also
qualifies as an "outside director" for purposes of Section 162(m)
of the Internal Revenue Code. The Committee is responsible for
setting and administering policies which relate to executive
compensation, other incentive programs and the equity incentive
programs of the Corporation. The Committee on an annual basis
reviews and evaluates the Corporation's executive compensation
program.
The Committee met five times in 19971998 and reported its
activities to the Board of Directors. In conjunction with its
annual comprehensive review and evaluation of the executive
compensation program, the Committee engaged its own independent
compensation consultant. The consultant worked for the Committee
in reviewing the executive compensation program, in reviewing a
reference group of public companies against which the
Corporation's executive compensation, financial performance and
total stockholder return to stockholders was compared, and in considering
modifications to existing plans. The Committee, with assistance
from its independent consultant, validated this group of
companies as a reference group against which to compare
compensation practices and competitive levels of compensation.
This group includes large U.S. bank holding companies, selected technology-basedfinancial
services companies engaged in servicing
businesses and believed to be competing with the Corporation for the same
caliber of executive talent, and New England bank holding companies.
10
The Committee believes that the Corporation's most direct
competitors for executives are not necessarily the same companies
that would be included in a peer group established to compare
stockholder returns.
- 10 -
Therefore, the reference companies used for comparative
compensation purposes contain some overlap with, but are not
identical to, the companies in the S&P Financial Index used for
performance comparison under "Stockholder Return Performance
Presentation". in this proxy statement.
The elements of the Corporation's executive compensation
program currently consist of base salary, annual bonus,
performance units,awards, stock options and restricted stock awards.
These are integrated components where salary and bonus reflect
one yearone-year results, performance unitsawards reflect two yeartwo-year results and
stock options and restricted stock awards reflect long-term stock
price appreciation. As a result of its 19971998 review, the
Committee has determined that the fundamental elements of this
compensation plan are appropriate for a program that supportsis intended
to support the Corporation's business strategy, providesprovide
competitive compensation and createscreate value for stockholders. The
Committee's policies with respect to each of these elements,
including the bases for the compensation reported for 19971998 to the
Corporation's chief executive officer, Mr. Carter, and chief
operating officer, Mr. Spina, are discussed below.
BASE SALARIES
The Committee recommends to the Board of Directors the base
salary of Mr. Carter and Mr. Spina and reviews the salaries of
the other executives. Base salaries for executives are
determined by subjectively evaluating the responsibilities of the
position, the strategic value of the position to State Street,
and the experience and performance of the individual. No
specific formula is used to set base salaries. The Committee has
determined however, that to be competitive it is appropriate for
State Street's executive salary levels to be near the median of
the reference group.
Annual salary adjustments are determined by reviewing market
compensation data and subjectively considering the overall scope
of each position and its strategic importance to State Street,
the performance of the Corporation, an evaluation of the
individual's performance and the length of time since the
individual's last salary increase.adjustment. The Committee also
considers the range of salary increases which are awarded to all
employees of the Corporation. With respect to the base salary
granted to Mr. Carter and Mr. Spina for 1998, the Committee
reviewed all of the factors noted above including data supplied
by the compensation consultant on market levels of pay for the
chief executive officer and chief operating officer at companies
in the reference group and the recent performance of the
Corporation, including specifically earnings per share and return on equity
under the leadership of Mr. Carter and Mr. Spina. No particular
weight was applied to any single factor in making the Committee's
determination. WhenAs compared to salaries paid to chief executive
officer and chief operating officer positions in the reference
group, Mr. Carter's salary wasand Mr. Spina's salary were slightly
above the median.
ANNUAL BONUSES
The Corporation's executives are eligible for annual cash
bonuses under the provisions of the Senior Executive Annual
Incentive Plan which was approved at the 1997 annual meeting of
stockholders. The terms of the plan provide that the Committee
assign to each executive a minimum, target and maximum bonus
award opportunity, stated as a percent of salary. The levels of
bonus opportunity assigned to each executive are determined by
reviewing competitive compensation data supplied by the
compensation consultant, the level of responsibility of each
executive and the strategic importance of the executive's
position to the Corporation. At its meeting in December of 1996,1997 meeting, the
Committee assigned a range of bonus opportunity for Mr. Carter
for 19971998 at a minimum award of 0% of salary, a target award of
90% of salary and a maximum award of 180% of salary.
11
The minimum
bonus opportunity for Mr. Spina was established at 0% of salary,
the target award was 80% of salary and the maximum award was 160%
of salary. The actual level of bonus earned is based upon
achievement of
- 11 -
specific performance targets established by the Committee.
Annually the Committee reviews one and five year earnings per
share and return on equity data for the reference group as well as for other companies represented in the S&P Financial
Index.group. The
Corporation's total stockholder return to stockholders for the one and five year
period as compared to the S&P Financial Index is also reviewed.
In establishing targets for the annual incentive plan, the
Committee considers this data along with the Corporation's
long-term financial goals, the specific financial goals for the
following year, and the business environment in which the
Corporation is operating. The Committee then establishes the
measures that will be used, the weighting of the measures and the
specific performance targets at which various levels of bonus
will be earned.
The 19971998 performance targets were based on earnings per
share and return on equity. The Committee approvedestablished a
performance/payout schedule which identified various objective
earnings per share and return on equity levels at which specific
awards would be earned. The Committee further specified that
amounts earned in excess of the target award level would be paid
in equivalent shares of the Corporation's common stock.
At its meeting in February 1998,1999, the Committee certified
that specific performance goals had been achieved and approved a
total bonus payment for 19971998 of $1,372,275$895,372 for Mr. Carter and
$834,600$500,000 for Mr. Spina. Bonuses for other participants in the
plan receiving bonuses totaled $5,284,306$3,618,456 for the year.
In all cases, amounts earned over target amounts were paid in shares of
the Corporation's common stock.
PERFORMANCE UNITSAWARDS/EQUITY AWARDS
Long-term compensation is provided to executives in the form
of both performance unitsawards and equity awards.
Performance unitsAwards - Performance awards represent a
contingent right to a cash payment, based upon the price of the
Corporation's common stock, in the event the Corporation meets
specified performance goals over a specified time period
following the grant. Performance unitsawards have been granted to the
Corporation's executives once every two years or at the time an
officer joined the executive group. At its meeting in December 1996, the Executive CompensationPerformance award payments,
if any, are made every two years.
The Committee granted performance units under the 1994 Stock Option and Performance Unit
Planawards to the executive
group.group in December 1996. These grants included 80,000 performance
unitsawards granted to Mr. Carter and 50,000 performance awards
granted to Mr. Spina. These grants had a two-year performance
period covering the years 1997 and 1998. The Committee
established objective performance targets for the 1997-1998
performance period for these grants. Performance awards are
earned based on targets tied to a combination of measures, based
upon return on equity, earnings per share and total stockholder
return. In February 1999, the Committee certified data
confirming that 100% of the performance awards had been earned
for the two-year period. The Committee determined that Mr.
Carter and Mr. Spina had earned all of the awards each had been
granted. Based upon the average high and low prices of the
Corporation's common stock during the last ten trading days of
1998, the Committee approved payment of $5,658,000 to Mr. Carter
and $3,536,250 to Mr. Spina.
A new group of performance awards was granted under the 1997
Equity Incentive Plan to the executive group in December 1998.
This grant included an award of 127,000 units grantedto Mr. Carter and
an award of 67,800 units to Mr. Spina. The size of thethese grants
was determined based upon subjective factors, including primarily
the perceived importance of the executive's contribution to the
success of the Corporation, similar to the subjective factors
considered in setting base salary, and a target level of
long-term incentive opportunity based upon data supplied by the
Committee's compensation consultant with respect to the reference
group. These grants have a two yeartwo-year performance period covering
the years 19971999 and 1998. At its meeting in February 1997, the2000. The Committee also established
performance targets for the 1997-19981999-2000 performance period for
these grants. Performance units areawards will be earned based on
- 12 -
objective targets tied to a combination of measures based upon
return on equity, earnings per share and total return to
stockholders measures.stockholder
return. At the end of the two yeartwo-year performance period, December
31, 1998,2000, a cash payment will be calculated based upon the number
of performance unitsawards earned, if any, times the market value of
the Corporation's common stock at the end of the performance
period. In this way, the final cash value of the performance
unitsawards relates directly to both corporate financial performance
in determining how many unitsawards are earned and stock price
appreciation in determining the cash value of the units earned.
STOCK OPTIONS
Typically,Stock Options - Prior to 1998, stock options arewere granted to
executives every two years or at the time an officer joinsjoined the
executive group, although the Committee has the authority to
grant options at any time and has made additional grants in
conjunction with new responsibilities assumed by members of the
executive group. In 1998, the Committee decided to change this
practice and to grant options annually. The Committee
12
selects
the executives to receive options and sets the size of option
awards based upon subjective factors, including primarily the
perceived importance of the executive's contribution to the
success of the Corporation, similar to the subjective factors
considered in setting base salary,salary; a target level of long-term
incentive opportunity based upon data supplied by the
compensation consultant with respect to the reference group, and
upon the amount of and value of the performance unitsawards which arewere
granted concurrently.concurrently or in the prior year. The exercise price of
options is equal to the market price of the shares at the time of
the grantoption grants. The options have a ten-year life and the options become
exercisable in equal installments over a three
yearthree-year period.
Because stock options are granted at market price, the value of
the stock options is wholly dependent upon an increase in the
Corporation's stock price. The Committee views stock option
grants as a part of the executive's total compensation package
for the period covered by the grant, and therefore, the amount of stock
options outstanding at the time of a new grant or granted in
prior years does not serve to increase or decrease the size of
the new grant.
At its meeting in December 1996,1998, the Committee granted Mr.
Carter options to purchase 300,000137,800 shares and Mr. Spina options
to purchase 160,000110,200 shares based upon a subjective review of all of the
factors noted above; no particular weight was applied to any
single factor in making the Committee's determination.
RESTRICTED STOCKRestricted Stock - Restricted stock awards are used to
recruit, motivate and retain high potential individuals.
Typically, awards are made to individuals who are not members of
the executive group. Occasionally the Committee will grant
restricted stock to members of the executive group as part of a
recruitment package or based upon subjective factors, to reward
what is perceivedconsidered to be exceptional performance. One memberFour members
of the executive group received restricted stock awards under
the 1997 Equity Incentive Plan in 1998, including an award of
20,000 shares to Mr. Carter granted in 1997.recognition of the
strategic leadership he has provided to the Corporation since he
was appointed chief executive officer in 1992. The award wasawards were
made without payment from the recipient and providesprovided for a
restrictedrestriction period of one year.ten months.
TAX LAW
Section 162(m) of the Internal Revenue Code generally
precludes the Corporation from taking federal income tax
deductions for compensation in excess of $1,000,000 per year for
the Chief Executive Officer and any of its four other highest
paid executive officers, if those individuals are employed on the
last day of the tax year. Performance-basedGenerally, however, performance-based
compensation that satisfies the requirements of Section 162(m) is
not
however, generally subject to the deduction limit, provided certain
requirements of Section 162(m) are satisfied.. The
Committee reviewed all elements of the executive compensation
program against the standards for qualifying for the tax
deduction. Stock option and performance unit awards under the
1994 Stock Option and Performance Unit Plan and under the 1997
Equity Incentive Plan and awards under the Senior Executive
Annual Incentive Plan have been designed to qualify as
performance-basedperformance- based compensation, with the intended result that
the deduction of compensation under these plans,
- 13 -
including compensation from the exercise of options or from
performance units,awards, would not be affected by the Section 162(m)
deduction limits. A portion of a
bonus earned in 1997 under the State Street Global Advisors Incentive Plan did
not qualify for the federal income tax deduction pursuant to Section 162(m).
The restricted stock award wasawards were not intended
to qualify for exemption from the Section 162(m) limits; as a result, the deductibility of all or a portion
of the compensation provided by this award may be limited under Section
162(m).limits.
In administering the executive compensation program, the
Committee will continue to consider whether the deductibility of
compensation will be limited under Section 162(m) and, in
appropriate cases, will strive to structure such compensation so
that any such limitation will not apply.
13
CONCLUSION
Through the program described above, the Corporation's
executive compensation is linked directly to the Corporation's
performance, growth in stockholder value and each executive's
contribution to those results. As the Corporation's business
changes, particularly in light of its efforts to expand globally,
and with the increasingly competitive and complex business and
regulatory environment, the continuing assessment of the
compensation structure and goals is required to assure that
compensation incentives remain consistent with stockholder
interest and closely tied to continuing growth in stockholder
value.
Submitted by,
I. MacAllister Booth
Nader F. Darehshori
Charles F. Kaye
Charles R. LaMantia
Bernard W. Reznicek
Robert E. Weissman, Chair
- 14 -
EXECUTIVE COMPENSATION
Shown below is information concerning the annual and long
term compensation paid by the Corporation and its subsidiaries,
including the Bank, to the chief executive officer and the four
other most highly compensated executive officers of the
Corporation (the "Named Executive Officers") for the periods
shown.
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------- ---------------------------------------------
AWARDS PAYOUTS
---------------------------- -------
NAME OTHER RESTRICTED SECURITIES ALL OTHER
AND ANNUAL STOCK UNDERLYING LTIP COMPEN-
PRINCIPAL SALARY BONUS COMPENSA- AWARDS OPTIONS PAYOUTS SATION
POSITION YEAR ($) ($)(1) TION($)(3) ($)(1) (#)(2) ($)(3) ($)(4)
- --------- ---- ------ ------ --------- --------- ------- --------------- ---------
Marshall N. CarterCarter(5)
Chairman and 1998 976,265 895,372 0 1,201,250 137,800 5,658,000 4,800
Chief Executive 1997 937,517 1,372,275 0 0 None 0 4,750
Chief Executive Officer 1996 862,500 640,406 0 0 300,000 1,772,196 4,750
Executive Officer 1995 750,004 455,627 0 None 0 4,620
David A. Spina(5)Spina
President and 1998 668,758 500,000 0 0 110,200 3,536,250 4,800
Chief Operating 1997 643,767 834,600 0 0 None 0 4,750
Chief Operating Officer 1996 606,250 360,113 0 0 160,000 1,181,464 4,750
Operating Officer 1995 550,003 267,301Nicholas A. 1998 525,003 664,663 0 50,000 0 4,620
Nicholas A.49,600 1,697,400 4,800
Lopardo(6) 1997 500,019 1,576,775 0 25,000 0 4,750
Lopardo (6) 1996 487,500 1,171,313 0 72,000 590,732 4,750
Vice Chairman 1995 450,002 957,251 0 None 0 4,620
Dale L. Carleton(7) 1997 437,504 469,463 0 25,000 0 4,750
Vice Chairman 1996 487,500 1,171,313 0 0 72,000 590,732 4,750
Dale L. Carleton(7) 1998 525,003 344,663 0 300,313 49,600 1,697,400 4,800
Vice Chairman 1997 437,504 469,463 0 0 25,000 0 4,750
1996 387,500 191,813 0 0 72,000 886,098 4,750
1995 343,752 139,220 0 None 0 4,620
Ronald E. Logue 1998 493,767 328,261 0 300,313 49,600 1,697,400 4,800
Executive Vice 1997 437,522 469,463 0 0 15,000 0 4,750
Executive VicePresident 1996 381,250 188,719 0 72,000 738,415 4,750
President 1995 325,000 131,626 0 None 0 4,62072,000 738,415 4,750
- -------------------------------
(1) Bonuses earned in excess of the targets established pursuant to the
Senior Executive Annual Incentive Plan wereDividend equivalents are paid in sharescash on all restricted
stock awards. Based on the fair market value of the
Corporation's Common Stock calculated atwhich vested on December 1, 1998
($68.6875) the fair market valueaggregate number and values of all restricted
stock award holdings on February 19,
1998 ($60.0625), as follows:such date were 20,000 shares and
$1,373,750 for Mr. Carter received $855,000 in cashCarter; 5,000 shares and $517,275 in shares; Mr. Spina received $520,000 in cash and $314,600 in
shares; Mr. Lopardo received $325,000 in cash and $196,625 in shares;$343,438 for
Mr. Carleton, received $292,500 in cash and $176,963 in5,000 shares and $343,438 for Mr. Logue
received $292,500 in cash and $176,963 in shares.Logue.
(2) Reflects a two-for-one stock split effective April 1997.
(3) Long term compensation payouts reflect performance units
earned in accordance with the attainment of performance
targets for the 2 year period,two-year periods, 1995-1996 and 1997-1998,
and paid in cash equal to the fair market value of the
Corporation's Common Stock at the end of each of the
performance period.periods.
(4) Reflects the Corporation's contributions to the Salary
Savings Program.
(5) Bonus earned in excess of the target established for
Mr. SpinaCarter pursuant to the Senior Executive Annual Incentive
Plan was elected Presidentpaid in shares of the Corporation's Common Stock
calculated at the fair market value on February 18, 1999
($72.9688), as follows: $886,543 in cash and Chief Operating Officer on December
21, 1995.$8,829 in
shares.
(6) Includes bonuses from the Corporation's Senior Executives
Annual Incentive Plan and from the State Street Global
Advisors Incentive Plan. Elected Vice Chairman on December
18, 1997; previously was Executive Vice President prior
thereto.President.
(7) Elected Vice Chairman on December 18, 1997; previously was
Executive Vice President
prior thereto.President.
- 15 -
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation for
Individual Grants Option Term(2)
- ---------------------------------------------------------- --------------------
(a) (b) (c) (d) (e) (f) (g)
Percent
Number of of Total
Securities Options
Underlying Granted to Exercise
Options Employees or Base
Granted In Fiscal Price Expiration
Name (#)(1) Year ($/Sh) Date 5$($) 10%($)
- ---- ---------- ---------- -------- ---------- ----- ------
Marshall N. Carter None --- --- --- --- ---137,800 6.1 67.4375 12/16/2008 5,844,000 14,810,000
David A. Spina None --- --- --- --- ---110,200 4.9 67.4375 12/16/2008 4,674,000 11,844,000
Nicholas A. Lopardo 25,000 1.9 $56.2549,600 2.2 67.4375 12/17/07 884,000 2,241,00016/2008 2,104,000 5,331,000
Dale L. Carleton 25,000 1.9 $56.2549,600 2.2 67.4375 12/17/07 884,000 2,241,00016/2008 2,104,000 5,331,000
Ronald E. Logue 15,000 1.1 $56.2549,600 2.2 67.4375 12/17/07 531,000 1,345,00016/2008 2,104,000 5,331,000
- -----------------------------------------
(1) Options become exercisable in 33 1/3% installments over a
three yearthree-year period commencing December 18, 1998.17, 1999. No SARs
were granted.
(2) Gains are reported net of the option exercise price, but
before taxes associated with exercise. These amounts
represent certain assumed rates of appreciation only, as set
by the Securities and Exchange Commission. The actual
value, if any, that the Named Executive Officer may realize
from these options will depend solely on the gain in stock
price over the exercise price when the options are
exercised.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
VALUE OF
UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY
UNDERLYING UNEXERCISED OPTIONS AT
OPTIONS AT DECEMBER 31, 19971998
DECEMBER 31, 1997(1)1998(1) ($)(2)
---------------------- ------------------
SHARES VALUE
ACQUIRED ON REALIZED EXER- UNEXER- EXER- UNEXER-
NAME EXERCISE(#) ($)(3) CISABLE CISABLE CISABLE CISABLE
- ---- ----------- -------- ------- ------- ------- -------
Marshall N. Carter 92,800 3,539,000 150,000 294,000 4,781,000 9,404,000148,980 6,080,164 148,020 284,800 6,509,765 6,840,960
David A. Spina None --- 402,400 199,600 17,457,000 6,657,000232,000 13,802,942 265,200 215,000 12,681,544 5,065,861
Nicholas A. Lopardo 15,044 773,200 252,280 112,520 11,854,000 3,043,00065,000 3,664,762 239,374 110,026 12,919,826 2,389,455
Dale L. Carleton None --- 133,056 112,520 5,659,000 3,043,00048,576 2,630,670 136,574 110,026 6,419,340 2,389,455
Ronald E. Logue None --- 118,240 94,932 4,590,000 2,657,00051,760 1,954,146 113,652 97,360 5,246,764 1,963,027
- ---------------------------------------------
(1) Reflects a two-for-one stock split effective April 1997.
(2) Represents the difference between the fair market valueclosing price of the
stock on December 31, 19971998 ($58.09375)70.125) and the exercise price of
the stock options.
(3) Represents the difference between the fair market value of
the stock at the time of the exercise and the exercise price of
the stock options.
- 16 -
LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR
(a) (b) (c)
NUMBER OF PERFORMANCE OR
SHARES, UNITS OTHER PERIOD
OR OTHER UNTIL MATURA-
NAME RIGHTS (#) TION OR PAYOUT(1)
- ---- ------------- -----------------
Marshall N. Carter 127,000 1999-2000
David A. Spina 67,800 1999-2000
Nicholas A. Lopardo 32,000 1999-2000
Dale L. Carleton 32,000 1999-2000
Ronald E. Logue 32,000 1999-2000
- -------------------
(1) The performance units are earned based on the Corporation's
performance during the performance period. The performance
period is two fiscal years, and the last day of the second fiscal
year of the performance period is the maturity date. Performance
units to the extent earned are payable at maturity in cash equal
to the fair market value of the Corporation's Common Stock at the
end of the performance period. See Summary Compensation Table,
LTIP Payouts, for payments under the plan for the performance
period 1997-1998.
- 17 -
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the cumulative
total stockholder return on the Corporation's Common Stock to the
cumulative total return of the S&P 500 Index and500Indexand the S&P Financial
Index for the period of five fiscal years which commenced
December 31, 1992December31, 1993 and ended December 31, 1997,1998, assuming $100
invested in the Corporation's Common Stock and in each index on
December 31, 19921993 and assuming reinvestment of dividends. The
S&P Financial Index is a publicly available measure of 71 of the
Standard & Poor's 500 companies, representing 3332 banking
companies, 20 insurance companies and 1819 financial services
companies.
Comparison of Five-Year Cumulative Total Return
[GRAPH]
YEAR ENDED DECEMBER 31[performance graph]
1992 1993 1994 1995 1996 1997Year Ended December 31
1993 1994 1995 1996 1997 1998
State Street Corporation Total Return $100 $ 87 $ 68 $108 $157 $28678 $124 $181 $329 $399
S&P 500 Index Total Return 100 110 112 153 189 252101 139 171 229 294
S&P Financial Index Total Return 100 111 107 165 223 33097 149 201 298 332
17
- 18 -
RETIREMENT BENEFITS
As of January 1, 1990, the benefit formula under the
Corporation's defined benefit plan (the "Retirement Plan") was
changed to a cash balance formula. An account balance was
established for each participant equal to the then present value
of the participant's benefit earned to date. Each year this
account balance is increased by interest at a specified rate and
a contribution credit equal to a percentage of the participant's
base salary for the calendar year exclusive of overtime, bonuses
or other extraordinary benefits or allowances. The percentspercentages
of base salary are 4.0% for the first year of participation
increasing to 11.25% for the thirtieth year, and zero thereafter.
Employees who were participants on December 31, 1989 will receive
the greater of their account balance or the benefit derived from
the "grandfathered" formula if the participant retiresthey retire from the plan. The
grandfathered formula, based on 30 years of service, is equal to
a benefit of 50% of final average pay minus 50% of the estimated
Social Security benefit. For periods of service of less than 30
years, the benefit is reduced pro rata.
Employees are enrolled in the Retirement Plan following the
completion of one year of service and attainment of the age of
21. The normal retirement age is 65, although earlier retirement
options are available. The Retirement Plan has a five-year
vesting provision, and participants who are vested will receive
their account balancebalances or annuity equivalent annuities if they leave the
employ of the Corporation or the Bank before retirement.
Under federal law, an employee's benefits under a qualified
retirement plan are limited to certain maximum amounts. On October 1, 1987, theThe
Corporation has adopted a supplemental retirement plan, as
amended (the "1987 Supplemental Plan") to supplement the benefits
under the Retirement Plan by payment of additional retirement
benefits out of general funds of the Corporation. Each of the
Named Executive Officers is included in the 1987 Supplemental
Plan.
Effective as of January 1, 1995 the Corporation adopted a
supplemental defined benefit pension plan (the "1995 Supplemental
Plan") to provide certain key employees with retirement benefits
and encourage the continued employment of such employees with the
Corporation. The 1995 Supplemental Plan provides for the payment
of additional annual benefits upon retirement at age 65 (or a
proportionately reduced amount in the event of retirement on or
after the age of 55 but prior to the age of 65), calculated as a
straight life annuity, equal to 50% of such participant's final
average earnings (highest average of any 5 consecutive years'
earnings, as defined therein, during the last 10 years of
employment) less annual benefits paid to such participant from
the Retirement Plan, the 1987 Supplemental Plan and other
retirement income payable to such participant under other plans
of the Corporation or other of the participant's employers. Such
benefits are subject to forfeiture in the event that the
participant's employment with the Corporation terminates for any
reason prior to reaching age 55 or completing 10 full years of
employment with the Corporation. In addition, such benefits
shall terminate if the participant engages in certain competitive
activities within two years of termination. In June 1998 the
Supplemental Plan was amended primarily to define earnings to
exclude annual incentive payments, except those under the Senior
Executive Annual Incentive Plan, to permit participants to choose
payment in instalments over 5, 10 or 15 years and to provide for
an administrative review procedure for claims and appeals as
required by ERISA. Each of the Named Executive Officers
is includedparticipates in the 1995 Supplemental Plan.
Under an agreement dated March 5, 1992, Mr. Carter will
receive an additional pension contribution as a percentpercentage of
base compensation calculated as if a contribution had been made
to the Retirement Plan of 7.50% in the first year and 3.75% in
each of the next 15 years. In addition, the Carter Letter
Agreement (as defined below) provides, among other things, that
the forfeiture and termination provisions relating to the 1995
Supplemental Plan will be deemed inapplicable in the event that
(i) Mr. Carter's employment is terminated for reasons
- 19 -
other than voluntary resignation, death or malfeasance before
July 23, 2001 and (ii) he is not eligible for the severance
benefits set forth in the change of control arrangements
described below. See - "Termination of Employment and Change of
Control Arrangements".
18
Final average earnings include annual base salary plus any
annual cash incentive compensation awards only. As of December
31, 1997,1998, the credited years of service for each of the Named
Executive Officers were as follows: Mr. Carter, 5;6; Mr. Spina,
24;25; Mr. Lopardo, 9;10; Mr. Carleton, 18;19; and Mr. Logue, 6.7. Current
compensation covered by the Retirement Plan as of December 31,
19971998 for each of the Named Executive Officers was as follows:
Mr. Carter, $1,540,406;$2,322,291; Mr. Spina, $985,121;$1,484,616; Mr. Lopardo,
$1,671,329;$2,101,775; Mr. Carleton, $591,821;$994,463, and Mr. Logue, $588,727.$944,471.
The estimated annual aggregate benefits (which are not
subject to a deduction for Social Security), assuming a single
life annuity, payable upon normal retirement under the final
average pay formula to the Named Executive Officers assuming each
continues to be employed by the Corporation until age 65 at his
annual base salary and cash incentive compensation at December
31, 19971998 are as follows: Mr. Carter, $770,203;$1,161,146; Mr. Spina,
$492,561;$742,308; Mr. Lopardo, $835,665;$1,050,888; Mr. Carleton, $295,911;$497,232, and
Mr. Logue, $294,364.$472,236.
TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL ARRANGEMENTS
The Corporation has employment agreements with Messrs.
Carter, Spina, Lopardo, Carleton and Logue which become
operative following a change of control of the Corporation, as
defined in the employment agreements. The employment agreements
continue in effect while thethese executive officers are employed by
the Corporation until December 31, 1997 with provision for
automatic renewal, and remain in effect for a period of two years
after a change of control. If the employment of theany of these
executive officers is terminated following a change of control,
or if Mr. Carter's or Mr. Spina's employment is terminated
voluntarily within thirty days of the six monthsix-month period following
a change of control, or within thirty days of the twelvetwelve- month
period following a change of control for the other Named
Executive Officers, theysuch executive officer would become entitled
to various benefits under thehis employment agreements,agreement, including
payment of three times the executive officers'officer's base salary and
bonus, unless the executive officers'officer's employment werewas terminated
by the Corporation for cause or by the executive officersofficer without
good reason as defined in the agreement. If the executive
officers each had been terminated on December 31, 1997,1998, they
would have been entitled to receive the following amounts as
severance pay: Mr. Carter, $6,966,873;$5,641,140; Mr. Spina, $4,453,848;$3,661,200;
Mr. Lopardo, $6,230,373;$3,508,989; Mr. Carleton, $2,758,389;$2,608,989; and Mr. Logue,
$2,758,461.$2,484,831. The Corporation will make additional payments in
an amountamounts such that after the payment of income and excise taxes,
the executive officerofficers will be in the same after taxafter-tax position as
if no excise tax under Section 4999 of the Internal Revenue Code
had been imposed. Each of the outstanding agreements pursuant to
which stock options and performance units were granted to Messrs.
Carter, Spina, Lopardo, Carleton and Logue by the Corporation
contains provisions for acceleration of vesting of stock options
and payment of performance units following a change of control.
A change of control is defined in the agreements to include the
acquisition of 25% or more of the Corporation's then outstanding
stock or other change of control as determined by regulatory
authorities, a significant change in the composition of the Board
of Directors, merger or consolidation by the Corporation without
certain approvals of the Board of Directors, and the sale of
a majoritysubstantially all of the Corporation's assets.
The Corporation entered into a letter agreement with Mr.
Carter (the "Carter Letter Agreement") that provides for
severance pay equal to two years' salary and bonus if (i) his
employment is terminated for reasons other than voluntary
resignation, death or malfeasance before July 23, 2001, and (ii)
he is not eligible for the severance benefits set forth in the
change inof control arrangements described above. In such
circumstances, for
- 20 -
purposes of determining the amount payable to Mr. Carter pursuant
to the 1995 Supplemental Plan (i) the forfeiture and termination
provisions described above will be deemed inapplicable, and (ii)
the benefits otherwise payable thereunder will be reduced by
multiplying such amounts by a fraction, the numerator of which is
the number of whole calendar months Mr. Carter was employed by
the Corporation and the denominator of which is 120. Such
payments shall terminate in the event that Mr. Carter becomes
employed by one of the top five master 19
trust or custody banks or
one of the top five mutual fund custodians within two years of
termination (the "Non-Competition Clause"). The Carter Letter
Agreement also provides that in the event of a change inof control
of the Corporation and termination of Mr. Carter's employment
under circumstances whichthat entitle him to receive a severance
payment pursuant to the change inof control arrangements described
above the 1995 Supplemental Plan will be modified in the manner
set forth above (except that the Non-Competition Clause will be
inapplicable), and Mr. Carter will be provided with a benefit
equivalent in value to that which he would receivehave received had his
employment with the Corporation continued an additional three
years.
The Corporation has an Executive Compensation Trust (the
"Trust") to provide a source for payments required to be made to
participants, including Messrs. Carter, Spina, Lopardo, Carleton,
and Logue, under the 1987 Supplemental Plan and the 1995
Supplemental Plan and to Mr. Carter pursuant to the Carter Letter
Agreement. The Trust has been partially funded in the
amountand has total
assets of $5,000,000.$10,371,000 as of December 31, 1998. The Trust is
revocable until a change of control occurs, at which time it
becomes irrevocable. A change of control is defined to include
the acquisition of 25% or more of the Corporation's then
outstanding stock or other change of control as determined by
regulatory authorities, a significant change in the composition
of the Board of Directors, merger or consolidation by the
Corporation without certain approvals of the Board of Directors,
and the sale of a majoritysubstantially all of the Corporation's assets.
VOTE REQUIRED
The sixfive nominees for election as directors who receive a
plurality of the votes properly cast for the election of
directors at the Annual Meeting, a quorum being present, shall be
elected directors. Consistent with state law and under the
Corporation's By-laws, a majority of the shares entitled to vote
at the Annual Meeting, present in person or represented by proxy,
constitutes a quorum. Votes cast by proxy or in person at the
Annual Meeting will be counted by persons appointed by the
Corporation to act as tellers for the meeting.
The tellers will count shares represented by proxies that
withhold authority to vote for a nominee for election as a
director only as shares that are present and entitled to vote for
purposes of determining the presence of a quorum. None of the
withheld votes will be counted as votes "for" a director. As a
result, none of the withheld votes will have any effect on the
outcome of the voting on the election of directors (assuming a
quorum is otherwise present).
RELATIONSHIP WITH INDEPENDENT AUDITORS
The Board of Directors, upon the recommendation of the
Examining and Audit Committee, has selected Ernst & Young LLP as
independent auditors for the Corporation for the year ending
December 31, 1998.1999. It is expected that representatives of Ernst
& Young LLP will be present at the Annual Meeting to respond to
appropriate questions and will have the opportunity to make a
statement if they so desire.
- 21 -
PROPOSALS AND NOMINATIONS BY STOCKHOLDERS
Stockholders who wish to present proposals at the 19992000
Annual Meeting of Stockholders for inclusion in the Corporation's
proxy material for that meeting must submit such proposals, by
following the procedures prescribed in Rule 14a-8 under the
Securities Exchange Act of 1934 and the Corporation's By-laws, to
the Secretary of the Corporation on or before November 10, 199815, 1999
for inclusion in the proxy materials circulated by the Board of
Directors relating to the 19992000 Annual Meeting.
20
Pursuant to the By-laws of the Corporation, proposals of
business and nominations for directors other than those to be
included in the Corporation's proxy statement and form of proxy
may be made by stockholders of record entitled to vote at the
meeting if notice is timely given and if the notice contains the
information required by the By-laws. Except as noted below, to
be timely a notice with respect to the 19992000 Annual Meeting must
be delivered to the Secretary of the Corporation no earlier than
January 15, 199917, 2000 and no later than February 15, 19992000 unless the
date of the 19992000 Annual Meeting is advanced by more than thirty
(30) days or delayed by more than sixty (60) days from the
anniversary date of the 19981999 Annual Meeting in which event the
By-laws provide different notice requirements. In the event the
Board of Directors nominates a New Nominee (as defined)defined in the
By-laws) a stockholder's notice shall be considered timely if
delivered not later than the 10th day following the date on which
public announcement (as defined)defined in the By-Laws) is first made of
the election or nomination of such New Nominee. Any proposal of
business or nomination should be mailed to: Secretary, State
Street Corporation, 225 Franklin Street, Boston, Massachusetts
02110.
OTHER MATTERS
The Board of Directors does not know of any other matters
whichthat may be presented for action at the meeting. Should any
other business come before the meeting, the persons named on the
enclosed proxy will, as stated therein, have discretionary
authority to vote the shares represented by such proxies in
accordance with their best judgment.
The Board of Directors would like to have you attend the
meeting in person. Please, however, mark, date, sign and return
the enclosed proxy as promptly as possible in any event. If you
attend the meeting, you may nonetheless vote in person by ballot
if you desire.
March 10, 1998
21
[STATE STREET LOGO]
State Street Corporation
225 Franklin Street
Boston, MA 02110-2804
PROXY PROXY12, 1999
SSBCM/PS/99
- 22 -
STATE STREET CORPORATION
Annual Meeting of Stockholders - April 15, 199821, 1999
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of State Street Corporation (the
"Corporation") hereby appoints Susanne G. Clark, Evalyn Lipton Fishbein, and Claire A.
Fusco and Karen A. Wharton (each with power to act without the
others and with power of substitution) proxies to represent the
undersigned at the Annual Meeting of Stockholders of the
Corporation to be held on April 15, 199821, 1999 and at any adjournments
thereof, with the power the undersigned would possess if
personally present, and to vote, as designated, all shares of
Common Stock of the Corporation which the undersigned may be
entitled to vote at said Meeting, hereby revoking any proxy
heretofore given.
To vote in accordance with the Board of Directors'
recommendations just sign and date the other side; no boxes need
to be checked.
PLEASE VOTE, DATE, AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE.
Please sign this proxy exactly as your name(s) appear(s) on the
books of the Corporation. Joint owners should each sign
personally. Trustees and other fiduciaries should indicate the
capacity in which they sign, and where more than one name
appears, a majority must sign. If a corporation, this signature
should be that of an authorized officer who should state his or
her title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- ------------------------ --------------------------
- ------------------------ --------------------------
- ------------------------ --------------------------
- ------------------------ --------------------------
[x] PLEASE MARK VOTES AS IN THIS
EXAMPLE
1. Election of SixFive Directors:
EXAMPLE
- ---------------------------------------------------------------- FOR ALL FOR ALL
STATE STREET CORPORATION NOMINEES WITHHOLD EXCEPT
- ---------------------------------------------------------------- [ ] [ ] [ ]
The matters to come before D. Gruber C. LaMantia A. Poe
the meeting are fully described D. Spina D. Walsh R. Weissman
in the Notice of and Proxy
Statement for the meeting,T. Albright J. Kucharski
M. Carter B. Reznicek
N. Darehshori
Mark box at right if an address INSTRUCTION: If you do not wish
change or comment has been your shares
receipt of which is hereby voted "FOR" one or
noted on the reverse side of more
acknowledged. THE SHARES nominee(s), mark the "For
this card. [ ] All
REPRESENTED BY THIS PROXY WILL Except" box and strike a
line BE VOTED IN ACCORDANCE WITH THE through the name(s) of the
SPECIFICATIONS MADE. IF NO nominee(s). Your shares will
SPECIFICATION IS MADE, THE PROXYRECORD DATE SHARES: be voted for the remaining
WILL BE VOTED FOR THE ELECTION OF nominee(s).
DIRECTORS AS SET FORTH IN ITEM 1.
2. In their discretion, the
Proxies are authorized to
RECORD DATE SHARES:
vote upon such other business
as may come before the
meeting or any adjournments
REGISTRATION thereof.
The matters to come before the
meeting are fully described in
the Notice of and Proxy
Statement for the meeting,
receipt of which is hereby
acknowledged. THE SHARES REPRE-
Please be sure to sign and date SENTED BY THIS PROXY WILL BE
this Proxy. VOTED IN ACCORDANCE WITH THE
-------------- SPECIFICATIONS MADE. IF NO
Date Mark box at right if an
address change or comment [ ]NO SPECIFICATION IS MADE, THE
PROXY WILL BE VOTED FOR THE
- -------------------------------------- has been noted on the-------------------------------- ELECTION OF DIRECTORS AS SET
Stockholder Co-owner reverse side of this card.FORTH IN ITEM 1.
signs here signs here
DETACH CARD DETACH CARD
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STATE STREET CORPORATION
DEAR STOCKHOLDER:
You are cordially invited to attend the 19981999 Annual Meeting
of Stockholders of State Street Corporation. The meeting will be
held in the Enterprise Room at 225 Franklin Street, Boston,
Massachusetts on Wednesday, April 15, 1998,21, 1999, at 10:00 a.m. Your
Board of Directors and management look forward to greeting those
stockholders able to attend.
The notice of meeting and proxy statement which follow
describe the business to be conducted at the meeting. You will
be asked to elect six directors. THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE DIRECTORS NOMINATED.
Your vote is very important. Whether or not you plan to
attend the meeting, please carefully review the enclosed proxy
statement. Then complete, sign, date and mail promptly the
accompanying proxy in the enclosed return envelope. To be sure
that your vote will be received in time, please return
the proxy at your earliest convenience.
We look forward to seeing you at the Annual Meeting so that
we can update you on our progress. Your continuing interest is
very much appreciated.
Sincerely,
Marshall N. Carter
Chairman and Chief Executive Officer