SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No. )
Filed by Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
STATE STREET BOSTON CORPORATION
_________________________________________________
(Name of Registrant as Specified in its Charter)
___________________________________________
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction
applies:
_______________________________________________________
(2) Aggregate number of securities which transaction
applies:
_______________________________________________________
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth
the amount on which the filing fee is calculated and
state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
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previous filing by registration statement number, or the
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Notes: The fee was wired to Mellon Bank account on 3/9/95.
[M. CARTER'S STATE STREET LETTERHEAD]
March 14, 1995
DEAR STOCKHOLDER:
You are cordially invited to attend the 1995 Annual Meeting of
Stockholders of State Street Boston Corporation. The meeting will
be held in the Enterprise Room at 225 Franklin Street, Boston,
Massachusetts on Wednesday, April 19, 1995, at 10:00 a.m. Your
Board of Directors and management look forward to greeting those
stockholders able to attend.
The notice of meeting and proxy statement which follow
describe the business to be conducted at the meeting. In addition
to a proposal to elect directors, you will be asked to approve the
Senior Executives Annual Incentive Plan and the performance goals
under the Plan. State Street's goal is to be the leading global
servicer of financial assets. To help achieve this goal in
competitive global markets, State Street's executive compensation
program is designed to link executive compensation directly to the
Corporation's performance, growth in stockholder value and the
contribution of the executives to those results. THE BOARD OF
DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THESE PROPOSALS.
Your vote is very important. Whether or not you plan to
attend the meeting, please carefully review the enclosed proxy
statement. Then complete, sign, date and mail promptly the
accompanying proxy in the enclosed return envelope. To be sure
that your vote will be received in time, please return the proxy at
your earliest convenience.
We look forward to seeing you at the Annual Meeting so that we
can update you on our progress. Your continuing interest is very
much appreciated.
Sincerely,
Marshall N. Carter
[STATE STREET LETTERHEAD]
NOTICE OF 1995 ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of
STATE STREET BOSTON CORPORATION:
The 1995 Annual Meeting of Stockholders of State Street Boston
Corporation will be held on Wednesday, April 19, 1995, at 10:00
a.m., Eastern Time, at 225 Franklin Street, Fifth Floor, Boston,
Massachusetts, for the following purposes:
1. To elect six directors, each for a three-year term;
2. To approve the Senior Executives Annual Incentive Plan
and the performance goals under the Plan; and
3. To act upon such other business as may properly come
before the meeting.
Stockholders of record at the close of business on February
28, 1995 are entitled to notice of and to vote at the meeting and
any adjournments thereof.
PLEASE MARK, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE
ENVELOPE PROVIDED FOR YOUR USE. FURNISHING THIS PROXY WILL NOT
AFFECT YOUR RIGHT TO REVOKE THIS PROXY OR TO VOTE IN PERSON SHOULD
YOU ATTEND THE MEETING.
By Order of the Board of Directors,
John R. Towers
Secretary
March 14, 1995
STATE STREET BOSTON CORPORATION
225 Franklin Street, Boston, Massachusetts 02110
PROXY STATEMENT
This Proxy Statement, which is scheduled to be sent to
stockholders beginning on March 14, 1995, is furnished in
connection with the solicitation by the Board of Directors of State
Street Boston Corporation (the "Corporation") of proxies for the
1995 Annual Meeting of Stockholders of the Corporation to be held
on April 19, 1995 and at any adjournments thereof. The Board of
Directors has fixed the close of business on February 28, 1995 as
the record date for determining the stockholders entitled to notice
of and to vote at the meeting. On the record date 82,518,160
shares of Common Stock of the Corporation were outstanding and
entitled to be voted at the meeting.
All shares represented by properly executed proxies, if such
proxies are received in time and not revoked, will be voted at such
meeting in accordance with any specifications thereon or, if no
specifications are made, proxies will be voted in accordance with
the recommendations of the Board of Directors. Each share of
Common Stock is entitled to one vote. Any proxy may be revoked at
any time before it is voted by notifying the Secretary in writing,
by executing a later dated proxy or by notifying the Secretary at
the meeting and voting in person.
The Corporation will bear the cost of soliciting proxies. The
solicitation of proxies will be made primarily by mail. Proxies
may also be solicited personally and by telephone by regular
employees of the Corporation and its principal subsidiary, State
Street Bank and Trust Company (the "Bank"), without any additional
remuneration and at minimal cost. The Board of Directors intends
to request banks, brokerage houses, custodians, nominees and
fiduciaries to forward soliciting material to their principals and
to obtain authorization for the execution of proxies. In addition,
the Corporation has retained D.F. King and Co. to aid in the
solicitation of proxies. The cost of such services is $9,000, plus
expenses.
ELECTION OF DIRECTORS
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 15, 1994, the Board of Directors
fixed the number of directors at 17, effective with the 1995 Annual
Meeting. There are currently 17 directors of the Corporation.
Alfred Poe was elected a Class II director on June 16, 1994.
It is intended that shares represented by proxies solicited by
the Board of Directors will, unless contrary instructions are
given, be voted for the election of the six nominees listed below
as directors. Although the Board of Directors does not contemplate
that any nominee will be unavailable for election, in the event
that vacancies occur unexpectedly, such shares may be voted for
substitute nominees, if any, as may be designated by the Board of
Directors. Information relating to each nominee for election as
director and for each continuing director, including his or her
period of service as a director of the Corporation, principal
occupation and other biographical material is shown below.
DIRECTORS TO BE ELECTED AT THE 1995 ANNUAL MEETING
CLASS II
JOSEPH A. BAUTE Director since 1990
Consultant to Markem Corporation, which provides systems and
services to mark customer products, since June 1993. Mr. Baute,
age 67, was for many years the chairman and chief executive officer
of Markem Corporation. He joined Markem in 1954 and held
engineering, sales and marketing positions until 1968 when he
became vice president and chief operating officer for Markem-USA,
Markem U.K. and Markem Europa. He was elected president and
director of Markem Corporation in 1973, chief executive officer in
1977 and chairman in 1979. He is a director of Nashua Corporation,
Houghton Mifflin Company, Dead River Company and Infosoft
International. He is past director and chairman of the Federal
Reserve Bank of Boston. Mr. Baute received B.A. and M.S. degrees
from Dartmouth College.
LOIS D. JULIBER Director since 1991
President of Colgate-Palmolive, North America since 1994 and
a corporate officer of Colgate-Palmolive Company, a consumer
products company. She was chief technological Officer of Colgate-
Palmolive from 1992 through 1994 and president of the Far East
division, from 1988 through 1991. From 1973 to 1988, she was
employed by General Foods Corporation as a vice president. Ms.
Juliber, age 46, holds a B.A. degree from Wellesley College and an
M.B.A. degree from Harvard University. She is a trustee of the
Brookdale Foundation and Wellesley College and a member of the
Committee of 200.
CHARLES R. LAMANTIA Director since 1993
President and Chief Executive Officer of Arthur D. Little,
Inc., which provides management, technology and environmental
consulting services. Dr. LaMantia, age 55, was president and chief
operating officer of Arthur D. Little, Inc. from 1986 to 1988.
Prior to rejoining Arthur D. Little in 1986, he was president of
Koch Process Systems, Inc. From 1977 to 1981, Dr. LaMantia was
vice president in charge of Arthur D. Little's services to the
chemical, metals and energy industries, having assumed that
position after 10 years on the firm's consulting staff. He is a
member of the board of governors of the New England Medical Center,
a member of The Conference Board and the Massachusetts Business
Roundtable and an overseer of WGBH and the Boston Museum of
Science. Dr. LaMantia received B.A., B.S., M.S. and Sc.D. degrees
from Columbia University and attended the Advanced Management
Program at Harvard Business School.
ALFRED POE Director since 1994
President of Meal Enhancement Group and Corporate Vice
President of Campbell Soup Company, a food manufacturing company.
Mr. Poe, age 46, joined Campbell Soup Company in 1991. From 1982
to 1991, Mr. Poe was with Mars, Inc. and held various sales and
marketing assignments in the United States and the United Kingdom.
He is a member of the board of directors of Imaging Technologies
Corporation and LEAD. Mr. Poe holds a B.S. degree from Polytechnic
Institute of Brooklyn and an M.B.A. from the Harvard Graduate
School of Business.
2
DAVID A. SPINA Director since 1989
Vice Chairman, Treasurer and Chief Financial Officer of the
Corporation. Mr. Spina, age 52, joined State Street in 1969 as a
credit analyst. In 1977, he was appointed Treasurer and Chief
Financial Officer. Mr. Spina was elected Executive Vice President
in 1982 and Vice Chairman in 1992. Mr. Spina is responsible for
the development of corporate management functions and oversees the
integration of major support functions with the Corporation's
business units. He is chairman of Massachusetts Housing Investment
Corporation, a director of the Metropolitan Boston Housing
Partnership, Inc., chairman of the board of trustees of the Dana
Hall School, a member of Boston's Coordinating Committee and a
member of the Banker's Roundtable. Mr. Spina holds a B.S. degree
from the College of the Holy Cross and an M.B.A. degree from
Harvard University. He was an officer in the United States Navy
from 1964 to 1969.
ROBERT E. WEISSMAN Director since 1989
President, Chief Executive Officer and Director of The Dun &
Bradstreet Corporation, provider of information services. Mr.
Weissman, age 54, joined Dun & Bradstreet in 1979. He became Chief
Executive Officer on January 1, 1994. He is a member of the
Institute of Management Accountants, the Society of Manufacturing
Engineers, the Institute of Electrical and Electronic Engineers,
The Business Roundtable, the Committee for Economic Development and
The U.S.-Japan Business Council and is a trustee of Babson College.
Mr. Weissman received a degree in Business Administration from
Babson College in 1964.
DIRECTORS SERVING UNTIL THE 1996 ANNUAL MEETING
CLASS III
TENLEY E. ALBRIGHT, M.D. Director since 1993
Chairman, Western Resources, Inc., a company which plans to
develop a research and development park and a senior care facility,
since 1994. Following 23 years in the private practice of general
surgery, Dr. Albright, age 59, founded and became chairman of a
clinical research laboratory. She is a member of the board of
directors of The West Company and the Whitehead Institute for
Biomedical Research and a member of the corporation of Woods Hole
Oceanographic Institution and New England Baptist Hospital. She
graduated from Harvard Medical School after attending Radcliffe
College and has received honorary degrees from Williams College,
Hobart and William Smith Colleges, Russell Sage College, New
England School of Law, Chatham College and State University of New
York at Cortland. Dr. Albright won the Gold Medal in figure
skating at the 1956 Olympics in Cortina, Italy.
MARSHALL N. CARTER Director since 1991
Chairman, President and Chief Executive Officer of the
Corporation. Prior to joining State Street in 1991, Mr. Carter,
age 54, 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, the co-chairman of the U.S.
Working Group for the Group of Thirty and a member of the Federal
Advisory Council of the Board of Governors of the Federal Reserve
System. Mr. Carter holds a degree in civil engineering from the
U.S. Military Academy at West Point and masters degrees from the
Naval Postgraduate School and George Washington University.
3
NADER F. DAREHSHORI Director since 1990
Chairman of the Board, President and Chief Executive Officer
of Houghton Mifflin Company, publisher, since 1990. Mr.
Darehshori, age 58, served as college division vice president and
manager of Houghton Mifflin's midwestern sales region from 1984
until he was promoted to vice president and director of the college
division in 1986. In 1987 he was elected senior vice president,
college division. He was promoted to executive vice president and
then to vice chairman in 1989. Mr. Darehshori has served as a
director of Houghton Mifflin Company since 1989 and is chairman of
its executive committee. He is a director of Commercial Union
Corporation and the Massachusetts Business Roundtable. He is a
trustee of Wellesley College and the WGBH Foundation. He is a
member of the national executive board of the National Conference
of Christians and Jews and the Dana Farber National Advisory
Council for the Women's Cancer Program. Mr. Darehshori also serves
on the boards of the Boston Public Library Foundation, the Boston
Symphony Orchestra and the New England Conservatory of Music.
CHARLES F. KAYE Director since 1979
President, Transportation Investments, Incorporated, a lessor
and asset manager of intermodal transportation equipment, since
1990. Mr. Kaye, age 67, is a graduate of St. Thomas University and
received a J.D. degree from Boston College Law School. He was
senior partner of the firm of Kaye, Sheldon and Barton and special
counsel to the Massachusetts Institute of Technology before joining
XTRA Corporation in 1967 as a director and general counsel. Mr.
Kaye became vice chairman in 1970 and served as chairman, president
and chief executive officer of XTRA from 1973 to 1990. Mr. Kaye is
a trustee of Bentley College and Lawrence Academy, a member of the
Visiting Committee of the Massachusetts General Hospital, chairman
of the Alpha Omega Foundation and town moderator of Littleton,
Massachusetts. He has been the recipient of the Association of
American Railroads annual Intermodal Man of the Year Award and the
Air Force Association Distinguished Service Award.
JOHN M. KUCHARSKI Director since 1991
Chairman of the Board, President and Chief Executive Officer
of EG&G, Inc., which provides scientific and technological products
and services worldwide. Mr. Kucharski, age 59, joined EG&G in 1972
and was elected president and director in 1986. He is a director
of Nashua Corporation, New England Electric System and Eagle
Industry Co. Ltd. He serves on the boards of trustees of Marquette
University and George Washington University. He is also a member
of the president's council and the advisory council to the College
of Engineering of Marquette University. Mr. Kucharski holds a B.S
degree from Marquette University, a J.D. degree from George
Washington University and is a member of the District of Columbia
Bar Association.
BERNARD W. REZNICEK Director since 1991
Dean, College of Business Administration, Creighton
University, since July 1994. From 1987 to 1990, Mr. Reznicek, age
58, was president and chief operating officer of Boston Edison Co.
In 1990, he became chief executive officer, and in 1992, he was
elected chairman. Prior to joining Boston Edison, he was president
and chief executive officer of Omaha Public Power District. Mr.
Reznicek holds a B.S. degree from Creighton University and an M.B.A
from the University of Nebraska. He serves on the boards of Boston
Edison Co., Guarantee Mutual Life Company, Omaha Chamber of
Commerce, Father Flanagan's Boys' Home, Better Business Bureau and
the John F. Kennedy Library Foundation. Mr. Reznicek also serves
on the board of overseers of the Museum of Fine Arts, Boston and
the Wang Center and is a trustee of the New England Aquarium.
4
DIRECTORS SERVING UNTIL THE 1997 ANNUAL MEETING
CLASS I
I. MACALLISTER BOOTH Director since 1990
Chairman, President and Chief Executive Officer of Polaroid
Corporation, a manufacturer of instant image recording products.
Mr. Booth, age 63, joined Polaroid in 1958 as a supervisor in the
Film Division. He is also a director of Western Digital
Corporation, Jobs for Massachusetts and The Conference Board,
chairman of Inroads National Board of Directors, a member of the
board of trustees of Eye Research Institute and a corporator of
Emerson Hospital of Concord, Massachusetts. He received B.S. and
M.B.A. degrees from Cornell University.
JAMES I. CASH, JR. Director since 1991
James E. Robison Professor of Business Administration and
Chairman of the MBA program at the Harvard University Graduate
School of Business Administration. Mr. Cash, age 47, has been a
faculty member of the Harvard Business School since 1976. He is a
director of Tandy Corporation. He received a B.S. degree from
Texas Christian University and M.S. and Ph.D. degrees in computer
science and management information systems from Purdue University.
TRUMAN S. CASNER Director since 1990
Partner in the law firm of Ropes & Gray. Mr. Casner, age 61,
received a B.A. degree from Princeton University in 1955 and an
LL.B from Harvard Law School in 1958. He served as law clerk to
Chief Justice Wilkins of the Massachusetts Supreme Judicial Court
and joined Ropes & Gray in 1959, becoming a partner in 1968. He is
a trustee of the Museum of Science, Boston, chairman of the
corporation and past president of Belmont Hill School and a member
of the corporation of Woods Hole Oceanographic Institution. He is
a member of the American Law Institute and a fellow of The American
Bar Foundation.
DAVID B. PERINI Director since 1980
Chairman and President of Perini Corporation, a construction
and real estate development company. Mr. Perini, age 57, 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 serves on the board of overseers of the
Tufts University School of Medicine. He has received awards from
the National Conference of Christians and Jews, the Italian
American Charitable Society and received the 1994 Ralph Lowell
Distinguished Citizen Award. Mr. Perini is a trustee of the
College of the Holy Cross and St. John's Preparatory School.
DENNIS J. PICARD Director since 1991
Chairman and Chief Executive Officer of Raytheon Company, a
diversified, technology-based international company, since 1991.
Mr. Picard, age 62, joined Raytheon in 1955 and held engineering
and management assignments leading to his election as president and
director in 1989. He is a member of the National Academy of
Engineering and its Industry Advisory Board, a fellow of the
American Institute of Aeronautics and Astronautics and a fellow of
the Institute of Electrical and Electronic Engineers. Mr. Picard
is a trustee of Northeastern University and Bentley College, a
corporator of Emerson Hospital, a director of the Discovery
Museums, a member of the National and Massachusetts Business
Roundtables, the Defense Policy Advisory Committee on Trade
(DPACT), the President's Export Council, the advisory committees of
the American Red Cross, the Armed Services YMCA of the United
States and the Armed Forces Communications and Electronics
Association. He is a member of the Algonquin Club of Boston and
the Commercial Club of Boston. He is a graduate of Northeastern
University and holds honorary doctorates from Northeastern
University, Merrimack College and Bentley College.
5
GENERAL INFORMATION
The Board of Directors has the overall responsibility for the
conduct of the business of the Corporation. Of the present 17
directors, 15 are outside directors and 2 are executive officers of
the Corporation. The Board of Directors held 6 meetings during
1994 and each of the directors attended 75% or more of the total of
all meetings of the Board and of the committees of the Board on
which each director served during the year, except Mr. Kucharski
who attended 71% of the meetings. Each member of the Board of the
Corporation is also a member of the Board of Directors of the Bank,
except Ms. Juliber, Mr. Poe, Mr. Reznicek and Mr. Weissman. The
Board of Directors of the Bank held 12 meetings during 1994. Each
member of the Executive Committee, the Examining and Audit
Committee and the Executive Compensation Committee of the
Corporation is also a member of the corresponding committee of the
Bank, and members customarily hold joint meetings of both
committees.
The Board of Directors has the following committees to assist
it in carrying out its responsibilities:
The EXECUTIVE COMMITTEE reviews and approves policies for the
extension of credit, investment of the Corporation's assets and
financial management; monitors activities under these policies and
reports to the Board, and acts on behalf of the Board on recurring
matters and between meetings under specific delegations. Its
members are Nader F. Darehshori, Chair, Marshall N. Carter, Charles
F. Kaye, Truman S. Casner and David A. Spina. During 1994, the
Committee held 12 meetings.
The EXAMINING AND AUDIT COMMITTEE oversees the operation of a
comprehensive system of internal controls to ensure the integrity
of the Corporation's financial reports and compliance with laws,
regulations and corporate policies and monitors communication with
external auditors and bank regulatory authorities. The Committee
is composed of Joseph A. Baute, Chair, Tenley E. Albright, James I.
Cash, Jr. and John M. Kucharski. During 1994, the Committee held
8 meetings.
The EXECUTIVE COMPENSATION COMMITTEE oversees the compensation
system for the Corporation's executive officers and non-management
directors. The Committee consists of Robert E. Weissman, Chair, I.
MacAllister Booth, Charles F. Kaye and Charles R. LaMantia. During
1994, the Committee held 5 meetings.
The NOMINATING COMMITTEE, which held 2 meetings during 1994,
is composed of I. MacAllister Booth, Chair, Marshall N. Carter,
Lois D. Juliber, David B. Perini and Dennis J. Picard. The
Committee recommends nominees for directors of the Corporation and
the Bank. In carrying out its responsibility of finding the best
qualified directors, the Committee will consider proposals from a
number of sources, including recommendations for nominees submitted
upon timely written notice to the Secretary of the Corporation by
stockholders.
COMPENSATION OF DIRECTORS
Directors who are also officers of the Corporation receive no
compensation for serving as directors or as members of committees.
Directors who are not employees of the Corporation or the Bank
received an annual retainer of $22,000, payable in shares of the
Common Stock of the Corporation or in cash, plus a fee of $1,250
for each meeting of the Board of Directors and each committee
meeting attended, as well as travel accident insurance and
reimbursement for travel expenses, for the period April 1994
through March 1995. In 1994, all outside directors received their
annual retainer in Common Stock.
6
BENEFICIAL OWNERSHIP OF SHARES
MANAGEMENT
The table below sets forth the number of shares of Common
Stock of the Corporation beneficially owned by each nominee for
Class II Director, the Class I and Class III Directors, the chief
executive officer and the four other most highly compensated
executive officers and by those persons and other executive
officers as a group as of the close of business on February 1,
1995. None of the nominees, directors or executive officers owned
beneficially as much as 1% of the outstanding shares of Common
Stock. The nominees, directors and executive officers in the
aggregate beneficially owned 1.6% of the Corporation's Common
Stock.
AMOUNT AND NATURE
OF BENEFICIAL
NAME OWNERSHIP
---- -----------------
Tenley E. Albright, M.D. 4,747(1)
A. Edward Allinson 81,000(2)
Joseph A. Baute 5,945(3)
I. MacAllister Booth 3,400
Marshall N. Carter 72,200(2)
James I. Cash, Jr. 2,684
Truman S. Casner 5,006(4)
Nader F. Darehshori 4,006
Lois D. Juliber 2,684
Charles F. Kaye 29,234
John M. Kucharski 2,298
Charles R. LaMantia 1,564(5)
Nicholas A. Lopardo 87,902(2)
David B. Perini 15,818
Dennis J. Picard 3,346
Alfred Poe 434
Bernard W. Reznicek 3,198
Norton Q. Sloan 38,800(2)
David A. Spina 317,772(2)(6)
Robert E. Weissman 4,684
All of the above and other
executive officers as a group
(34 persons) 1,281,324(2)(5)(6)
___________________
(1) Includes 2,533 shares held in trust for a family member
pursuant to a trust of which Dr. Albright is a co-trustee with
respect to which she disclaims beneficial ownership.
(2) Includes shares which may be acquired within 60 days
through the exercise of stock options as follows: Mr. Allinson,
73,500; Mr. Carter, 67,200; Mr. Lopardo, 87,802; Mr. Spina, 92,800;
Mr. Sloan, 15,600, and the group, 610,776.
(3) Includes 200 shares owned by a member of Mr. Baute's
family with respect to which he disclaims beneficial ownership.
(4) Includes 2,000 shares with respect to which Mr. Casner
shares voting and investment power.
(5) Includes shares in which voting power is shared as
follows: Dr. LaMantia, 500, and the group, 7,930.
(6) Includes 20,000 shares owned by a family member with
respect to which Mr. Spina disclaims beneficial ownership, and the
group, 20,072.
7
OTHER STOCK OWNERSHIP
The following table indicates the persons known to the
Corporation to be the owners of more than 5 percent of the
Corporation's Common Stock:
Name and Address of Shares Beneficially Percent
Beneficial Owner Owned of Class
------------------- ------------------- --------
Cooke & Bieler, Inc. 5,387,731(1) 7.0%
1700 Market Street
Philadelphia, PA 19103
_____________________
(1) Cooke & Bieler, Inc., an investment advisor, has sole power
to vote or direct the vote of 4,118,300 of such shares and sole
power to dispose or to direct the disposition of 5,091,631 of such
shares.
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 ("SEC"). Executive officers and directors are required
by SEC regulations to furnish the Corporation with copies of all
Section 16(a) forms which they file.
Based on a review of the copies of such forms furnished to the
Corporation and written representations from the Corporation's
executive officers and directors, the Corporation believes that in
1994 all Section 16(a) filing requirements applicable to its
executive officers and directors were met, except for one
inadvertent late filing of a Form 4 by Messrs. Cash, Darehshori,
and Weissman; two inadvertent late filings of a Form 4 by Mr.
Reznicek; and an inadvertent late filing of a Form 5 by Ronald E.
Logue and Robert J. Malley.
CERTAIN TRANSACTIONS
During 1994 certain directors and executive officers of the
Corporation and the Bank, and various corporations and other
entities associated with such directors, were customers of the Bank
and its affiliates and had ordinary business transactions with the
Bank. The transactions include loans and commitments made in the
ordinary course of the Bank's business and on substantially the
same terms, including interest rate and collateral, as those
prevailing at the time for comparable transactions with unrelated
persons with no more than normal risk of collection. The Bank and
other subsidiaries of the Corporation have used products or
services of Dun & Bradstreet with which Mr. Weissman, a director,
is associated. Additional transactions of this nature may be
expected to take place in the ordinary course of business in the
future. Ropes & Gray, a law firm of which Mr. Casner is a partner,
was retained by the Corporation to handle certain legal matters
during the past year. It is anticipated that the firm will continue
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 $20,000 as allowed by Massachusetts law and at the
same interest rate paid by the public.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Corporation's Executive Compensation
Committee are I. MacAllister Booth, Charles F. Kaye, Charles R.
LaMantia and Robert E. Weissman, Chair. No present or former
officer of the Corporation or the Bank served as a member of the
Committee. Furthermore, no executive officer of the Corporation
served as a director of any entity, one of whose directors or
executive officers served on the Corporation's Board or the
Committee.
8
EXECUTIVE COMPENSATION
Shown below is information concerning the annual and long term
compensation paid by the Corporation and its subsidiaries,
including the Bank, with respect to 1994, 1993 and 1992 to the
chief executive officer and the four other most highly compensated
executive officers of the Corporation (the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------- ------------
AWARDS PAYOUTS
--------- -------
OTHER SECURITIES ALL
ANNUAL UNDERLYING OTHER
COMPEN- OPTIONS/ LTIP COMPEN-
NAME AND SALARY BONUS SATION SARS PAYOUTS SATION
PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)(1) ($)(2)
------------------ ---- ------ ----- ------- ---------- ------- ------
Marshall N. Carter(3) 1994 725,004 494,813 0 120,000 985,846 32,620
Chairman, President 1993 643,753 450,000 0 None 0 23,497
and Chief Executive 1992 625,003 375,000 0 None 650,906 20,364
Officer
David A. Spina 1994 537,503 244,563 0 80,000 684,687 82,620
Vice Chairman, 1993 493,752 300,000 0 None 0 74,497
Treasurer and Chief 1992 475,003 250,000 0 None 1,156,791 71,364
Financial Officer
Nicholas A. Lopardo(4)1994 425,002 661,610 0 50,000 0 17,620
Executive Vice 1993 347,919 470,000 0 None 0 15,497
President 1992 316,252 503,000 0 None 0 14,364
A. Edward Allinson(5) 1994 450,002 293,250 0 50,000 502,590 19,620
Executive Vice 1993 450,002 280,000 0 None 0 17,497
President 1992 406,002 303,000 0 None 1,154,274 17,364
Norton Q. Sloan(6) 1994 336,252 152,994 0 None 378,586 19,620
Executive Vice 1993 321,252 160,000 0 None 0 17,497
President 1992 304,999 153,000 0 None 798,271 16,364
____________________
(1) Long term compensation payouts reflect performance shares
earned in accordance with the attainment of performance targets for
the three year period, 1992-1994, and paid in cash equal to the
fair market value of the Corporation's Common Stock at the end of
the performance period.
(2) Includes the Corporation's contributions to the Salary
Savings Program of $4,620 in 1994, $4,497 in 1993 and $4,364 in
1992, plus accruals under the Supplemental Executive Retirement
Plan: Mr. Carter $28,000 in 1994, $19,000 in 1993 and $16,000 in
1992; Mr. Spina $78,000 in 1994, $70,000 in 1993 and $67,000 in
1992; Mr. Lopardo $13,000 in 1994, $11,000 in 1993 and $10,000 in
1992; Mr. Allinson $15,000 in 1994, $13,000 in 1993 and $13,000 in
1992, and Mr. Sloan, $15,000 in 1994, $13,000 in 1993 and $12,000
in 1992.
(3) Mr. Carter became Chairman on January 1, 1993. He joined
the Corporation in July 1991 as President and became Chief
Executive Officer on January 1, 1992.
(4) Includes bonuses from the Corporation's Senior Executives
Annual Incentive Plan and from the State Street Global Advisors'
Incentive Plan.
(5) Includes a cash bonus received by Mr. Allinson of $100,000
in each of the years 1992-1993 and $100,750 in 1994 as Chairman of
Boston Financial Data Services, Inc. which is 50% owned by the
Corporation.
(6) Mr. Sloan retired on December 31, 1994.
9
Shown below is information with respect to grants of stock
options to the Named Executive Officers during 1994 pursuant to the
1994 Stock Option and Performance Unit Plan, which are reflected in
the Summary Compensation Table on page 9. No stock appreciation
rights were granted under the Plan in 1994.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM (2)
-------------------------------------------------------- ---------------------
(a) (b) (c) (d) (e) (f) (g)
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS/
UNDER- SARs
LYING GRANTED EXERCISE
OPTIONS/ TO OR
SARs EMPLOYEES BASE EXPIRA-
GRANTED IN FISCAL PRICE TION
NAME (#)(1) YEAR ($/SH) DATE 5%($) 10%($)
---- ---------- --------- ------- -------- --------- ---------
Marshall N. Carter 120,000 13.77% 28.9375 12/14/04 2,379,300 5,845,500
David A. Spina 80,000 9.18 28.9375 12/14/04 1,586,200 3,897,000
Nicholas A. Lopardo 50,000 5.74 28.9375 12/14/04 991,375 2,435,625
A. Edward Allinson 50,000 5.74 28.9375 12/14/04 991,375 2,435,625
____________________
(1) Options become exercisable in 20% installments over a five
year period commencing December 31, 1995.
(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 SEC. The
actual value, if any, that the Named Executive Officers may realize
from these options will depend solely on the gain in stock price
over the exercise price when the options are exercised.
Shown below is information with respect to the exercise of
stock options to purchase the Corporation's Common Stock by the
Named Executive Officers during 1994 and the fiscal year-end value
of unexercised options held by the Named Executive Officers granted
in prior years under the 1984 Stock Option Plan which expired in
1989, the 1985 Stock Option and Performance Share Plan which
expired in 1992, the 1989 Stock Option Plan and the 1990 Stock
Option and Performance Share Plan.
AGGREGATED OPTION/SAR EXERCISES IN THE LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
NUMBER OF VALUE OF
SECURITIES UNDER- UNEXERCISED
LYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARs AT OPTIONS/SARs AT
DECEMBER 31, 1994 DECEMBER 31, 1994
SHARES (#)(1) ($)(2)
ACQUIRED VALUE ----------------- -----------------
ON EXER- REALIZED EXER- UNEXER- EXER- UNEXER-
NAME CISE (#) ($)(3) CISABLE CISABLE CISABLE CISABLE
---- -------- -------- ------- ------- ------- -------
Marshall N. Carter None 0 67,200 164,800 113,736 38,924
David A. Spina 160,000 4,137,723 92,800 103,200 766,064 166,916
Nicholas A. Lopardo None 0 82,380 72,622 1,232,605 294,270
A. Edward Allinson None 0 73,500 70,000 762,930 192,225
Norton Q. Sloan 15,600 254,475 15,600 15,600 128,778 128,778
______________________
(1) Reflects a two-for-one stock split effective April 1992.
(2) Represents the difference between the exercise price of the
stock options and the fair market value of the stock on December
31, 1994 ($28.63).
(3) Represents the difference between the exercise price of the
stock options and the fair market value of the stock at the time of
the exercise.
10
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
The Executive Compensation Committee of the Board of Directors
furnishes the following report on Executive Compensation.
POLICY
State Street combines information technology with banking,
trust, investment and securities processing capabilities to support
the investment strategies of our customers worldwide. The
Corporation's goal is to be the leading global servicer of
financial assets. The Corporation's executive compensation program
is designed to attract and retain superior executives, to focus
these individuals on achieving the Corporation's objectives and to
reward executives for meeting specific short- and long-term
performance targets. The compensation program places emphasis on
challenging performance goals, business growth and sustainable real
growth in earnings per share.
The Executive Compensation Committee is comprised entirely of
independent, non-employee directors. The Committee develops and
reviews and, with respect to officer-directors, recommends to the
Board of Directors for approval, strategic compensation plans for
executive officers of the Corporation. The plans are designed to
align executive compensation with the Corporation's business
strategy and to attract and retain high caliber executives. The
program provides significant compensation opportunities which are
directly related to the achievement of challenging long-term goals
and growth in the Corporation's stock price. By including stock-
based compensation plans within the compensation strategy, State
Street links closely the goals of stockholders and executives.
The principles of this compensation strategy are applied
throughout the Corporation. Since senior executives of the
Corporation have the greatest opportunity to influence long-term
performance, a greater proportion of their compensation is linked
to the achievement of long-term financial goals and to stock price.
Individuals who manage business units or have corporate functional
or staff responsibilities have a significant opportunity to
influence the Corporation's results, and a sizable portion of their
total compensation is related to the achievement of financial goals
of both the unit and the Corporation. Many of these individuals
also participate in the Corporation's stock option plan. State
Street also offers specific bonus opportunities to individuals who
have specialized sales, trading or investment responsibilities.
Outstanding performance by these specialists is rewarded with
bonuses linked directly to the attainment of challenging measurable
business goals.
The Committee met five times in 1994 and reported its
activities to the Board of Directors. In conjunction with its
annual comprehensive review of the executive compensation program,
the Committee engaged its own independent compensation consultant.
The consultant worked for the Committee in reviewing the executive
compensation program, reviewing a peer group of public companies
with which to compare the Corporation's executive compensation,
financial performance and total return to stockholders and
considering modifications to existing plans. The Committee, with
assistance from the independent consultant, validated a group of
companies as a reference group with which to compare compensation
practices. This reference group includes large U.S. bank holding
companies, selected other technology-based companies engaged in
servicing businesses believed to be competing with the Corporation
for the same caliber of executive talent, and New England bank
holding companies.
The Committee believes that the Corporation's most direct
competitors for executives are not necessarily the same companies
that would be included in a peer group established to compare
11
stockholder returns. Therefore, the reference companies used for
comparative compensation purposes contain some overlap with, but
are not identical to, the companies in the S&P Financial Index used
for performance comparison under "Stockholder Return Performance
Presentation."
As a result of its reviews, the Committee determined that the
fundamental elements of the compensation plan, salary, bonus, stock
options and performance shares/units are well balanced in a program
that supports the Corporation's business strategy, provides
competitive compensation and creates value for stockholders. The
Committee confirmed the 1993 compensation design changes and
determined that the bonus opportunity for the vice chairman should
be increased from 50% of salary to 60% of salary in 1995 as
indicated by competitive information. This recommendation, which
was approved by the Board of Directors, is included in the Senior
Executives Annual Incentive Plan which State Street's stockholders
are being asked to approve at this year's Annual Meeting.
The elements of the Corporation's executive compensation
consist of base salary, annual bonus, performance shares/units and
stock options. These are complementary components where salary and
bonus reflect one year results, performance shares/units reflect
multi-year results and stock options reflect long-term stock price
appreciation. The Executive Compensation Committee's policies with
respect to each of these elements, including the bases for the
compensation awarded in 1994 to the Corporation's Chief Executive
Officer, Mr. Carter, are discussed below.
BASE SALARIES
Executive officers are defined as individuals with policy
making responsibility. At the end of 1994, 15 individuals were
designated as executive officers of the Corporation.
Base salaries for executive officers are determined by
evaluating the responsibilities of the position, the strategic
value of the position to State Street, and the experience of the
individual. No specific formula is used to set base salaries. The
Committee determined that it is appropriate for executive officer
salary levels to be near the median of the reference group.
Annual salary adjustments are determined by evaluating the
performance of the Corporation and of each executive officer and by
taking into account each executive's responsibilities. The
Committee also considers the range of salary increases which are
awarded to all employees in the Corporation. In reviewing
individual performance, the Committee considers the views of Mr.
Carter with respect to other executive officers. With respect to
the base salary granted to Mr. Carter for 1994, the Committee
reviewed a comparison of base salaries of chief executive officers
of other companies, using the group of reference companies, the
range of increases granted to individuals at all levels in the
Corporation, and the assessment by the Committee and the Board of
Mr. Carter's individual performance in 1993. No particular weight
was applied to any single factor in making the Committee's
determination. When compared to salaries paid to chairman of the
board and chief executive officer positions in the reference group,
Mr. Carter's salary was below the median. After considering the
factors noted above, the Committee and the Board of Directors
increased Mr. Carter's salary from $650,000 to $750,000 effective
April 1, 1994.
ANNUAL BONUSES
The Corporation's executive officers are eligible for annual
cash bonuses under the provisions of the Senior Executives Annual
Incentive Plan. At its meeting in February 1994, the Committee
12
established performance targets and maximum bonus awards under the
Senior Executives Annual Incentive Plan. The 1994 performance
targets were based on return on equity and earnings per share.
Each goal was weighted 50%. Performance targets for 1994 were
established at a minimum target of 12% return on equity and a
maximum target of 18% return on equity. The earnings per share
targets were established at a minimum target of $1.79 and a maximum
target of $2.78. The Plan provided that no bonus would be paid for
performance below the minimum targets, performance at or above the
maximum targets would result in 100% of the bonus being paid, and
performance between the minimum and maximum targets would result in
a prorated bonus being paid, subject in each case to reduction by
the Executive Compensation Committee.
The Plan approved by the Committee further provided that if
maximum annual targets are achieved, the award to the chief
executive officer would be a maximum of 75% of 1994 salary paid and
the award to other participants would be a maximum of 50% of 1994
salary paid.
At its meeting in February 1995, the Committee reviewed
information supplied by the Corporation's independent auditors and
certified that the Corporation achieved a 17.5% return on equity
and earned $2.68 per share in 1994. This equates to 92% of the
maximum potential bonus award for the return on equity target and
90% of the maximum potential bonus award for the earnings per share
target. The Committee approved a bonus for Mr. Carter equal to 68%
of his 1994 salary paid. Bonuses to the other participants in the
plan who received bonuses averaged 45% of the total 1994 salaries
paid to those receiving bonuses.
The Committee believes that a consistent earnings level
representing an 18% ROE is an appropriate target for maximum bonus
attainment. It places State Street's performance among the top
performers of comparable companies, provides a very competitive
return for stockholders and leaves management with the flexibility
to make long-term expenditures and investments that will foster
continued growth in the business. The most recent survey reviewed
by the Committee reflected year-end 1993 performance of the
reference companies. For the four-year period 1990-1993, the
average return on equity for these companies was 15.2% and the
median was 14.6%. The average return on equity for the bank
holding companies in the reference group was 12.7% and the median
was 14.5%. Among bank holding companies in the reference group,
20% achieved a four-year average return on equity of greater than
18% and 40% generated a four-year average return on equity of less
than 12%.
At its meetings in December 1994 and February 1995, the
Committee adopted a new plan and established performance targets
and maximum bonus awards for the Senior Executives Annual Incentive
Plan which will be in effect in 1995 and subsequent years. This
plan which is subject to stockholder approval at this year's annual
meeting is similar to the 1994 plan and provides that corporate
achievement of two equally weighted targets will determine whether,
and the extent to which, a participant earns his or her bonus
award. The targets are based on earnings per share and return on
equity. Each target is specified as a range. No bonus will be
paid for performance below minimum targets. Performance at or
above the maximum targets will result in 100% of the bonus being
paid and performance between the minimum and maximum targets will
result in a prorated bonus being paid, subject in each case to
reduction by the Executive Compensation Committee.
If maximum targets are achieved, the maximum award to the
chief executive officer will be 75% of the current year's salary
paid, the maximum award to the vice chairman will be 60% of current
year's salary paid and the maximum award to all other participants
will be 50% of current year's salary paid. The maximum bonus
payable to any single participant is limited to $1.5 million.
13
All awards will be made in cash after certification by the
Executive Compensation Committee that the established performance
goals have been met.
PERFORMANCE SHARES/PERFORMANCE UNITS
Performance shares have been granted to the Corporation's
executive officers once every two years or at the time an officer
joined the executive group. The size of the grants is determined
based on a target level of long-term incentive opportunity near the
median for companies in the reference group. The performance
shares represent a contingent right to a cash payment in the event
the Corporation meets specified performance goals over a specified
time period following the grant. Historically, payments have been
made with respect to all the performance shares in a given grant
(i.e., all the shares in the grant were "earned") if the
Corporation achieved an 18% return on equity over the three-year
period following the grant. The number of shares in a grant that
were earned declined to no shares at 12% return on equity. In
calculating the shares earned, a simple average of the return on
equity for each of the three years of the performance period has
been used. At the end of the three years, a cash payment is
calculated based on the number of performance shares earned times
the market value of the Corporation's common stock at the end of
the performance period. For this purpose, market value is defined
as the value of a share of common stock equal to the average daily
high and low prices on the last ten trading days of the performance
period. In this way, the potential value of the performance shares
relates directly to both corporate financial performance in
determining how many shares are earned and stock price appreciation
in determining the cash value of the shares earned.
In December 1991, executive officers were granted performance
shares with a three-year performance period. These shares had a
nominal value at the time of the grant equal to between 96% and
109% of annual salary and bonus. The December 1991 grant included
35,692 performance shares granted to Mr. Carter. The plan called
for these performance shares to be earned in full if the maximum
average annual return on equity target (18% for 1992 through 1994)
was met declining proportionately to no shares earned if the
average annual return on equity was 12% or less. For the three
years ending 1994, the Corporation's average annual return on
equity was, 18.1% for 1992, 17.4% for 1993, and 17.5% for 1994.
The three-year average was 17.7% representing 95% of the maximum
target. In February 1995, the Committee determined that Mr. Carter
had earned 33,907 shares of the 35,692 shares he had been granted
and approved payment of $985,846 to Mr. Carter.
The Committee recommended a number of revisions to the
performance share program starting in 1994. Under the 1994 Stock
Option and Performance Unit Plan, which was approved by
stockholders at the 1994 annual meeting, performance shares have
been renamed performance units to describe more accurately this
compensation vehicle. Performance units granted every two years
will have a measurement period of two years rather than three
years. The purpose of this change is to simplify the plan. The
number of performance measures used for determining the number of
shares earned has been expanded to include an earnings per share
target and a total return to stockholders target in addition to a
target for return on equity. This revision is intended to link
more effectively the payment of performance units to multiple
factors which may build stockholder value.
In December 1993, executive officers were granted performance
units by the Board of Directors having a nominal value at the time
of grant equal to between 46% and 166% of annual salary and bonus.
This is equivalent to 23% to 84% on an annual basis. The size of
the grants was determined based upon data supplied by the
independent compensation consultant and represents long-term
incentive opportunity which is near the median for companies in the
reference group. The December 1993 grant included 30,000
performance units granted to Mr. Carter. These grants have a two-
year performance period for the years 1995 and 1996.
14
At its meeting in December 1994, the Committee established
performance targets for the 1995-1996 performance period for these
performance units. Forty percent of the performance units granted
will be tied to a return on equity target, 40% of the performance
units granted will be tied to an earnings per share target and 20%
of the performance units granted will be tied to a total return to
stockholders target. A minimum and maximum target has been
established for the return on equity target and the earnings per
share target. For the return on equity target, performance for
each of the two years 1995 and 1996 will be averaged to determine
achievement of the target. A minimum and maximum earnings per
share target for the two years 1995 and 1996 combined has been
established. In each case no units will be earned for performance
below the minimum target. Performance at or above the maximum
target will result in 100% of the units being earned, and
performance between the minimum and maximum targets will result in
a prorated percentage of units being earned. For the total return
to stockholders target, the Committee has determined levels of
performance at which 0%, 50% and 100% of the units will be earned.
Performance achieved in each year of the two-year period will be
averaged to determine the number of performance units earned.
Therefore, if in 1995 the Corporation achieves the 50% level of
performance and in 1996 it achieves the 100% level of performance,
75% of the performance units which are tied to this measure will be
earned.
STOCK OPTIONS
Prior to 1994, stock options were granted once every five
years to the Corporation's executive officers based on annual
salary and bonus. In 1993, the Committee determined that stock
options should be granted every two years to recognize performance
more frequently. Accordingly, stock options were granted to
executive officers in December 1994. The size of these grants was
determined based upon a target level of long-term incentive
opportunity which is near the median for companies in the reference
group. In targeting long-term incentive opportunity, the Committee
relied upon data supplied by the independent compensation
consultant, which took into account the performance units which had
been granted in 1993. Mr. Carter was granted options to purchase
120,000 shares.
The exercise price of options is equal to the market price of
the shares at the time of the grant and the options become
exercisable in equal installments over a five-year period.
Since the stock options are granted at market price, the value
of the stock options is wholly dependent upon an increase in the
Corporation's stock price. It is the policy of the Committee not
to reset option exercise prices once they have been established.
Because the Committee views stock option grants as a part of the
executive officer's total compensation package for the period
covered by the grant, the amount of stock options outstanding at
the time of a new grant or granted in prior years does not serve to
increase or decrease the size of the new grant.
RECENT TAX CHANGES
The Omnibus Budget and Reconciliation Act of 1993 resulted in
the addition of Section 162(m) of the Internal Revenue Code.
Beginning in 1994, Section 162(m) limits the Corporation's federal
income tax deduction to $1,000,000 per year for compensation to any
of its five highest paid executive officers. Performance-based
compensation is not, however, generally subject to the deduction
limit, provided certain requirements of Section 162(m) are
satisfied. The Committee reviewed all elements of the program
against the standards for qualifying for the tax deduction, and
awards under the 1994 Stock Option and Performance Unit Plan and
the Senior Executives Annual Incentive Plan have been designed to
qualify for the performance-based deduction.
15
CONCLUSION
Through the programs described above, the Corporation's
executive compensation is linked directly to the Corporation's
performance, growth in stockholder value and each executive's
contribution to those results. As the Corporation's business
changes, particularly in light of its efforts to expand globally,
and with the increasingly competitive and complex business and
regulatory environment, the continuing assessment of the
compensation structure and goals is required to assure that
compensation incentives remain consistent with stockholder interest
and closely tied to continuing growth in stockholder value.
Submitted by,
I. MacAllister Booth
Charles F. Kaye
Charles R. LaMantia
Robert E. Weissman, Chair
16
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the cumulative total
stockholder return on the Corporation's Common Stock to the
cumulative total return of the S&P 500 Index and the S&P Financial
Index for the period of five fiscal years commencing December 31,
1989 and ended December 31, 1994, assuming $100 invested in the
Corporation's Common Stock and in each index and assuming
reinvestment of dividends. The S&P Financial Index is a publicly
available measure of 60 of the Standard & Poor's 500 companies,
representing 31 banking companies, 15 insurance companies and 14
financial services companies.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
[PERFORMANCE GRAPH]
1989 1990 1991 1992 1993 1994
State Street Boston
Corporation
Total Return 100 91 170 234 203 157
S&P 500 Index
Total Return 100 97 126 136 150 152
S&P Financial Index
Total Return 100 79 118 146 162 157
17
RETIREMENT BENEFITS
As of January 1, 1990, the benefit formula under the
Corporation's defined benefit plan (the "Retirement Plan") was
changed to a cash balance formula. An account balance was
established for each participant equal to the then present value of
the participant's benefit earned to date. Each year this account
balance is increased by interest at a specified rate and a
contribution credit equal to a percentage of the participant's base
salary for the calendar year exclusive of overtime, bonuses or
other extraordinary benefits or allowances. The percents of base
salary are 4.0% for the first year of participation increasing to
11.25% for the thirtieth year, and zero thereafter. Employees who
were participants on December 31, 1989 will receive the greater of
their account balance or the benefit derived from the
"grandfathered" formula, if the participant retires from the plan.
The grandfathered formula, based on 30 years of service, is equal
to a benefit of 50% of final average pay minus 50% of the estimated
Social Security benefit. For periods of service of less than 30
years, the benefit is reduced pro rata.
Employees are enrolled in the Retirement Plan following the
completion of one year of service and attainment of the age of 21.
The normal retirement age is 65, although earlier retirement
options are available. The Retirement Plan has a five-year vesting
provision, and participants who are vested will receive their
account balance or annuity equivalent if they leave the employ of
the Corporation or the Bank before retirement.
Sections 401(a)(17) and 415 of the Internal Revenue Code of
1986, as amended, limit the annual benefits which may be paid from
a tax-qualified retirement plan. As permitted by the Employee
Retirement Income Security Act of 1974, the Corporation has adopted
a supplemental plan which provides for the payment out of general
funds of the Corporation of any benefits calculated under
provisions of the Retirement Plan which may be above the limits
under applicable sections of the Internal Revenue Code. Each of
the Named Executive Officers is included in the supplemental plan.
The supplemental plan provides for the funding through a trust of
retirement benefits following a change of control. The trust is
currently unfunded.
The following table sets forth the estimated annual benefits
(which are not subject to a deduction for Social Security),
assuming a single life annuity, payable upon retirement under the
final average pay formula to participants who retire during 1994 in
the following remuneration and years-of-service classifications:
PENSION PLAN TABLE
Years of Service
Final Average --------------------------------------------------
Annual Salary 15 20 25 30 35
------------- -- -- -- -- --
$100,000 $ 22,500 $ 30,000 $ 37,500 $ 45,000 $ 45,000
300,000 72,500 96,700 120,800 145,000 145,000
500,000 112,500 163,300 204,200 245,000 245,000
700,000 172,500 230,000 287,500 345,000 345,000
900,000 222,500 296,700 370,800 445,000 445,000
Final average annual salary includes base salary only. Mr.
Carter and Mr. Allinson are not eligible for the final average pay
formula. Their retirement benefits are discussed below. The other
Named Executive Officers have been credited with years of service
under the Retirement Plan as of December 31, 1994 as follows: Mr.
Spina, 21; Mr. Lopardo, 6, and Mr. Sloan, 8. Current compensation
18
covered by the Retirement Plan as of December 31, 1994 for each of
the other Named Executive Officers was as follows: Mr. Spina,
$540,000; Mr. Lopardo, $425,000, and Mr. Sloan, $335,000.
Mr. Carter's age 65 estimated benefit at current compensation
under the account based formula of the Retirement Plan (including
benefits under the supplemental plan) is $85,500. He has been
credited with 2 years of service under the Retirement Plan as of
December 31, 1994. Under an agreement dated March 5, 1992, Mr.
Carter will receive an additional pension contribution as a percent
of base compensation calculated as if a contribution had been made
to the Retirement Plan of 7.50% in the first year and 3.75% in each
of the next 15 years. His additional age 65 estimated benefit
resulting from the agreement at current compensation is $73,700.
Mr. Allinson's age 65 estimated benefit at current
compensation under the account based formula of the Retirement Plan
(including benefits under the supplemental plan) is $45,000. He
has been credited with 10 years of service under the Retirement
Plan as of December 31, 1994. Under an agreement dated September
14, 1990, Mr. Allinson will receive an aggregate benefit (including
benefits under the Retirement Plan and the supplemental plan)
which, when expressed as a single life annuity, equals $100,000 per
year for benefits commencing at age 65, reduced for earlier
commencement down to $67,000 per year for a benefit commencing at
age 60. His age 65 estimated benefit resulting from the agreement
is $55,000.
Commencing January 1, 1995, Mr. Sloan, who retired on December
31, 1994, will receive supplemental pension payments under an
agreement dated March 1, 1987 which will bring total pension
payments received by him, including regular pension payments from
the Corporation and payments from his former employer, up to the
amount he would have received had he commenced employment with the
Corporation in 1964, such payments to include amounts he would have
received but for legislative limits on qualified pension plans.
His annual retirement benefit from the Corporation is $72,948.12.
TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL ARRANGEMENTS
The Corporation has termination agreements with Messrs.
Carter, Spina, Lopardo and Allinson (and Mr. Sloan prior to his
retirement) which obligate them to remain in the employ of the
Corporation during the pendency of any change of control proposal
in consideration for the payment by the Corporation to such
officers of two years annual salary and certain other benefits
(including the acceleration of outstanding stock options and
performance shares) if the employment of such officers with the
Corporation terminates for any reason other than death, disability
or normal retirement of the officer during a period of two years
following a change of control of the Corporation. If the Named
Executive Officers had been terminated on December 31, 1994, they
would have been entitled to receive the following amounts as
severance pay: Mr. Carter, $1,500,000; Mr. Spina, $1,100,000; Mr.
Lopardo, $900,000; Mr. Allinson, $900,000, and Mr. Sloan, $680,000,
and the acceleration of outstanding stock options and performance
shares/units. Any payments including the value of the acceleration
of stock options and performance shares/units to the Named
Executive Officers would have been reduced to the extent they were
not deductible by the Corporation for federal income tax purposes
under Section 280G of the Internal Revenue Code. A change of
control is defined to include the acquisition of 20% or more of the
Corporation's then outstanding stock or other change of control as
determined by regulatory authorities, a significant change in the
composition of the Board of Directors, merger or consolidation by
the Corporation without certain approvals of the Board of
Directors, and the sale of a majority of the Corporation's assets.
The Corporation also has an agreement with Mr. Carter that provides
for severance pay equal to eighteen months' salary if his
employment is terminated for reasons other than voluntary
resignation, death or malfeasance before July 22, 1996.
19
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, 1995. It is expected that representatives of Ernst &
Young will be present at the Annual Meeting to answer questions and
will have the opportunity to make a statement if they so desire.
APPROVAL OF THE SENIOR EXECUTIVES ANNUAL INCENTIVE PLAN AND THE
PERFORMANCE GOALS UNDER THE PLAN
The Executive Compensation Committee and the Board of
Directors have approved and recommend for stockholder approval the
Senior Executives Annual Incentive Plan (the "Annual Incentive
Plan") and the performance goals under the Annual Incentive Plan.
The Annual Incentive Plan provides additional incentive to Senior
Executives to achieve targeted levels of earnings per share and
return on equity and sets maximum award levels for each
participant. The performance goals are the same as the performance
goals under the 1994 plan which were approved by the stockholders
at last year's annual meeting.
It is intended that the Annual Incentive Plan and the
performance goals will be in effect for 1995 and thereafter.
Stockholders are being asked to approve the performance goals so
that compensation under the Plan may be deductible by the
Corporation under Section 162(m) of the Internal Revenue Code. For
a more complete discussion of Section 162(m), see the Report of the
Executive Compensation Committee at page 15. Approval by
stockholders of the performance goals and certification by the
Committee that targeted performance has been attained shall be a
condition to the rights of senior executives to receive any
benefits under the Annual Incentive Plan.
The following is a description of the Annual Incentive Plan:
ELIGIBLE PARTICIPANTS
The Chief Executive Officer and members of the Executive
Operating Group participate in the Plan. To receive an award with
respect to a calendar year, a participant must generally be an
employee of the Corporation, or one of its subsidiaries, on
December 31 of such year. If, however, an individual is no longer
an employee of the Corporation or one of its subsidiaries at the
time awards are approved by the Executive Compensation Committee,
the Committee in its discretion may cause any award otherwise
payable under the terms of the Annual Incentive Plan to be
forfeited.
PERFORMANCE GOALS
Corporate achievement of two goals determines whether, and the
extent to which, a participant earns his or her bonus award. The
goals are based on earnings per share and return on equity. Each
goal is specified as a range. No bonus will be paid under the
Annual Incentive Plan for performance below the minimum goals.
Performance at or above the maximum goals will result in 100% of
the bonus being paid, and performance between the minimum and
maximum targets will result in a prorated bonus being paid, subject
in each case to reduction by the Executive Compensation Committee.
The formula for proration and the weight accorded such performance
goal in determining the annual bonus to be paid will be established
by the Executive Compensation Committee.
20
BONUS AWARDS
If maximum targets are achieved, the Plan provides that the
award to the Chief Executive Officer will be a maximum of 75% of
base salary received during the performance period, the award to
the Vice Chairman will be a maximum of 60% of base salary received
during the performance period and the award to other participants
will be a maximum of 50% of base salary received during the
performance period. In no event, however, will an annual award to
any single participant exceed $1.5 million. Awards will be reduced
pro rata if performance is between the minimum and maximum
performance targets, with performance in respect of the earnings-
per-share target and performance in respect of the return-on-equity
target each weighted in determining the overall bonus to be paid.
For example, if the earnings-per-share maximum were achieved, but
the return-on-equity minimum were not achieved, and the Executive
Compensation Committee had established that the return-on-equity
goal and the earnings-per-share were each to be weighted 50% in
determining the overall bonus to be paid, each participant would
receive a maximum of 50% of his or her bonus award under the Plan.
Similarly, if earnings-per-share performance and return-on-equity
performance were each midway between the respective minimum and
maximum targets and the Executive Compensation Committee had
established that the return-on-equity goal and the earnings-per-
share were each to be weighted 50% in determining the overall bonus
to be paid, each participant would receive a maximum of 50% of his
or her bonus award under the Plan. The Executive Compensation
Committee may, however, reduce or eliminate the compensation
otherwise payable upon the attainment of targeted performance for
any one or more of the participants.
All awards will be made in cash after certification by the
Executive Compensation Committee that the specified levels of
performance goals have been achieved.
The awards which would have been paid or that would be payable
in the future under the Annual Incentive Plan cannot be determined
because the payment of such awards would be contingent upon
attainment of the pre-established performance goals, the maximum
amount of such awards would depend on the Corporation's earnings
per share and return on equity, subject to the maximum amount
stated above, and the actual incentive award may reflect exercise
of the Executive Compensation Committee's discretion to reduce the
incentive award otherwise payable upon attainment of the
performance goals. For a description of and amounts paid under the
1994 Senior Executives Annual Incentive Plan, see the Annual
Bonuses section of the Report of the Executive Compensation
Committee and the Summary Compensation Table.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR
ADOPTION OF THE SENIOR EXECUTIVES ANNUAL INCENTIVE PLAN AND THE
PERFORMANCE GOALS UNDER THE PLAN. (ITEM 2 ON PROXY CARD).
VOTE REQUIRED
Consistent with state law and under the Corporation's By-laws,
a majority of the shares entitled to be cast on a particular
matter, present in person or represented by proxy, constitutes a
quorum as to such matter. Votes cast by proxy or in person at the
1995 Annual Meeting will be counted by persons appointed by the
Corporation to act as tellers for the meeting.
The six nominees for election as directors at the 1995 Annual
Meeting who receive the greatest number of votes properly cast for
the election of directors shall be elected directors. The
affirmative vote of the holders of a majority of the outstanding
shares of Common Stock present in person or represented by proxy at
the meeting and entitled to vote is necessary to approve the action
proposed in Item 2 of the accompanying Notice of 1995 Annual
Meeting of Stockholders.
21
The tellers will count the total number of votes cast "for"
approval of Item 2 for purposes of determining whether sufficient
affirmative votes have been cast. The tellers will count shares
represented by proxies that withhold authority to vote for a
nominee for election as a director or that reflect abstentions and
"broker non-votes" (i.e., shares represented at the meeting held by
brokers or nominees as to which (i) instructions have not been
received from the beneficial owners or persons entitled to vote and
(ii) the broker or nominee does not have the discretionary voting
power on a particular matter) only as shares that are present and
entitled to vote on the matter for purposes of determining the
presence of a quorum. Neither abstentions nor broker non-votes
have any effect in the election of directors. With respect to Item
2, abstentions will have the effect of a vote against the matter
while broker non-votes will have no effect on the matter.
In the event that sufficient votes in favor of the proposal
set forth in Item 2 of the Notice of 1995 Annual Meeting of
Stockholders are not received by the time of the meeting or any
adjournment thereof, the persons named as proxies may propose one
or more adjournments of the meeting to permit further solicitation
of proxies with respect to the proposal. Any such adjournment will
require the affirmative vote of the majority of the shares voted on
the question in person or by proxy at the session of the meeting to
be adjourned. The persons named as proxies will vote in favor of
such adjournment those proxies which they are entitled to vote in
favor of the proposal in the event that such persons believe that
further solicitation of proxies will result in approval of the
proposal. They will vote against any such adjournment those
proxies required to be voted against the proposal and will not vote
any proxies that direct them to abstain from voting on the
proposal.
PROPOSALS AND NOMINATIONS BY STOCKHOLDERS
Stockholders who wish to present proposals at the 1996 Annual
Meeting of Stockholders for inclusion in the Corporation's proxy
material for that meeting must submit such proposals to the
Secretary of the Corporation on or before November 14, 1995 for
inclusion in the proxy materials circulated by the Board of
Directors relating to the 1996 Annual Meeting.
Pursuant to the By-laws of the Corporation, proposals of
business and nominations for directors other than those to be
included in the Corporation's proxy statement and form of proxy may
be made by stockholders of record entitled to vote at the meeting
if notice is timely given and if the notice contains the
information required by the By-laws. Except as noted below, to be
timely a notice with respect to the 1996 Annual Meeting must be
delivered to the Secretary of the Corporation no earlier than
January 19, 1996 and no later than February 18, 1996 unless the
date of the 1996 Annual Meeting is advanced by more than thirty
(30) days or delayed by more than sixty (60) days from the
anniversary date of the 1995 Annual Meeting in which event the
By-laws provide different notice requirements. In the event the
Board of Directors nominates a New Nominee (as defined) a
stockholder's notice shall be considered timely if delivered not
later than the 10th day following the date on which public
announcement (as defined) is first made of the election or
nomination of such New Nominee. Any proposal of business or
nomination should be mailed to: Secretary, State Street Boston
Corporation, 225 Franklin Street, Boston, Massachusetts 02110.
OTHER MATTERS
The Board of Directors does not know of any other matters
which may be presented for action at the meeting. Should any other
business come before the meeting, the persons named on the enclosed
22
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 14, 1995
23
[STATE STREET LOGO]
State Street Boston Corporation
225 Franklin Street
Boston, Massachusetts 02101
PROXY PROXY
STATE STREET BOSTON CORPORATION
ANNUAL MEETING OF STOCKHOLDERS - APRIL 19, 1995
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of State Street Boston Corporation (the
"Corporation") hereby appoints Susanne G. Clark, Evalyn Lipton
Fishbein and Claire A. Fusco (each with power to act without the
others and with power of substitution) proxies to represent the
undersigned at the Annual Meeting of Stockholders of the
Corporation to be held on April 19, 1995 and at any adjournments
thereof, with all the power the undersigned would possess if
personally present, and to vote, as designated, all shares of
Common Stock of the Corporation which the undersigned may be
entitled to vote at said Meeting, hereby revoking any proxy
heretofore given.
TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS
JUST SIGN AND DATE THE OTHER SIDE; NO BOXES NEED TO BE CHECKED.
PLEASE VOTE, DATE, AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN
ENCLOSED ENVELOPE.
Please sign this proxy exactly as your name appears on the books of
the Corporation. Joint owners should each sign personally.
Trustees and other fiduciaries should indicate the capacity in
which they sign, and where more than one name appears, a majority
must sign. If a corporation, this signature should be that of an
authorized officer who should state his or her title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
________________________________ _______________________________
________________________________ _______________________________
________________________________ _______________________________
1. Election of Six Directors:
[X] PLEASE MARK VOTES AS IN FOR ALL
THIS EXAMPLE FOR WITHHOLD EXCEPT
[ ] [ ] [ ]
Each of these matters is fully J. BAUTE, L. JULIBER, C. LAMANTIA
described in the Notice of and D. SPINA and R. WEISSMAN
Proxy Statement for the Meeting, If you do not wish your
receipt of which is hereby shares voted "FOR" one or
acknowledged. THE BOARD OF more nominees, mark the
DIRECTORS RECOMMENDS THAT YOU "FOR ALL EXCEPT" box and
GRANT AUTHORITY FOR THE ELECTION strike a line through the
OF DIRECTORS AND THAT YOU VOTE FOR nominee(s) name. Your
ITEM 2. THE SHARES REPRESENTED shares will be voted for
BY THIS PROXY WILL BE VOTED the remaining nominee(s).
IN ACCORDANCE WITH THE
SPECIFICATIONS MADE. IF NO 2. Proposal to approve the
SPECIFICATION IS MADE, THE PROXY Senior Executives Annual
WILL BE VOTED IN ACCORDANCE Incentive Plan and the
WITH THE BOARD OF DIRECTORS' performance goals under
RECOMMENDATIONS. the Plan.
FOR AGAINST ABSTAIN
RECORD DATE SHARES: [ ] [ ] [ ]
3. In their discretion, the
Proxies are authorized to
vote upon such other
business as may properly
come before the meeting or
Please be sure to sign and date any adjournments thereof.
this Proxy.
____________________ Date:______
(Stockholder) Mark box at right if
comments or address change
____________________ Date:______ have been noted on the [ ]
(Co-owner) reverse side of this card.
----------------------------------------------------------------
DETACH CARD
STATE STREET BOSTON CORPORATION
DEAR STOCKHOLDER:
You are cordially invited to attend the 1995 Annual Meeting of
Stockholders of State Street Boston Corporation. The meeting will
be held in the Enterprise Room at 225 Franklin Street, Boston,
Massachusetts on Wednesday, April 19, 1995, at 10:00 a.m. Your
Board of Directors and management look forward to greeting those
stockholders able to attend.
The notice of meeting and proxy statement which follow describe the
business to be conducted at the meeting. In addition to a proposal
to elect directors, you will be asked to approve the Senior
Executives Annual Incentive Plan and the performance goals under
the Plan. State Street's goal is to be the leading global servicer
of financial assets. To help achieve this goal in competitive
global markets, State Street's executive compensation program is
designed to link executive compensation directly to the
Corporation's performance, growth in stockholder value and the
contribution of the executives to those results. THE BOARD OF
DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THESE PROPOSALS.
Your vote is very important. Whether or not you plan to attend the
meeting, please carefully review the enclosed proxy statement.
Then complete, sign, date and mail promptly the accompanying proxy
in the enclosed return envelope. To be sure that your vote will be
received in time, please return the proxy at your earliest
convenience.
We look forward to seeing you at the Annual Meeting so that we can
update you on our progress. Your continuing interest is very much
appreciated.
Sincerely,
Marshall N. Carter
Chairman and Chief Executive Officer