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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
UST CORP.
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(Name of Registrant as Specified in Its Charter)
UST CORP.
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
N/A
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(2) Aggregate number of securities to which transaction applies:
N/A
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
N/A
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(4) Proposed maximum aggregate value of transaction:
N/A
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/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
N/A
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(2) Form, Schedule or Registration Statement No.:
N/A
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(3) Filing Party:
N/A
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(4) Date filed:
N/A
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1/Set forth the amount on which the filing fee is calculated and state how it
was determined.
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UST CORP.
40 COURT STREET
BOSTON, MASSACHUSETTS
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 17, 1994
Notice is hereby given that the Annual Meeting of Stockholders of UST Corp.
(the "Company") will be held at 40 Court Street, Boston, Massachusetts, on
Tuesday the 17th day of May, 1994 at 10:00 o'clock in the forenoon for the
following purposes:
1. To elect six Directors of the Company, each of whom will serve for a
three-year term;
2. To amend the Company's Stock Compensation Plan, to increase the number
of shares of the Company's Common Stock that may be granted under the
Plan in 1994 by 350,000 additional shares; and
3. To amend the Company's Restated Articles of Organization to grant to the
Directors the authority to make, amend, or repeal the Company's By-laws;
4. To transact any other business which may properly come before the
meeting, or any adjournment thereof.
The close of business on March 31, 1994 has been fixed as the record date
for determination of stockholders entitled to notice of, and to vote at, the
Annual Meeting of Stockholders. The books for the transfer of stock will not be
closed. This Notice and Proxy Statement will first be mailed to stockholders on
or about April 20, 1994.
If you do not expect to be present personally at the Annual Meeting of
Stockholders, please sign, date and return the enclosed Proxy in the enclosed
addressed envelope.
By order of the Board of Directors
Eric R. Fischer, Clerk
April 20, 1994
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UST CORP.
40 COURT STREET
BOSTON, MASSACHUSETTS
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 17, 1994
April 20, 1994
This Proxy Statement is furnished in connection with the solicitation of
Proxies to be used at the Annual Meeting of Stockholders of UST Corp. (the
"Company") to be held on May 17, 1994 and at any adjournments thereof, for the
purposes set forth in the foregoing Notice of Annual Meeting.
The close of business on March 31, 1994 has been fixed as the record date
for the determination of stockholders entitled to notice of, and to vote at, the
Annual Meeting, and at any adjournment thereof. If, by the time of the Annual
Meeting, sufficient proxies have been received to take action with respect to
some but not all of the three specific items listed on the Notice, it is the
present intention of the Board of Directors of the Company to take action with
respect to those items at the Annual Meeting, as described below in this Proxy
Statement, and then to adjourn the Annual Meeting to a later date for action on
such other item(s), permitting the solicitation of additional proxies for such
items(s) in the interim.
The financial statements of the Company for the fiscal year ended December
31, 1993, together with corresponding figures for the previous fiscal year, are
contained in the Annual Report to the Securities and Exchange Commission on Form
10-K for the year ended December 31, 1993 which was mailed to stockholders prior
to, or simultaneously with, the mailing hereof.
Proxies in the form enclosed are solicited by the Board of Directors of the
Company. Any stockholder giving a Proxy in the enclosed form has the power to
revoke it at any time before it is exercised. A stockholder's right to revoke
his Proxy is not limited by, or subject to, compliance with any specified formal
procedure. He may revoke his Proxy by attending the meeting and voting in
person. Proxies in such form, if received in time for voting and not revoked,
will be voted at the Annual Meeting in accordance with the directions of the
stockholders. Where a choice is not so specified, the shares represented by a
properly executed Proxy will be voted (i) "for" the election of the six nominees
for Director positions listed therein; (ii) "for" the Amendment to the Company's
Stock Compensation Plan to increase the number of shares of Common Stock that
may be granted in 1994 under the Plan by 350,000 additional shares; and (iii)
"for" the Amendment to the Company's Restated Articles of Organization which
will grant the Directors authority to make, amend or repeal the By-laws. Where
no choice is specified with respect to the grant of authority to act on any
other business which may properly come before the meeting, the named Proxies may
exercise such discretion. Where such authority is withheld, such shares will not
be voted on any other matters. The Board of Directors does not know of any
matters which will be brought before the meeting other than those specifically
set forth in the Notice of Annual Meeting. Should another matter, however,
properly come before the meeting, it is intended that the persons named in the
enclosed form of Proxy, or their substitutes acting thereunder, will vote on
such matter in accordance with their best judgment.
The Company will bear all expenses in connection with the solicitation of
Proxies, including the preparing, assembling and mailing of the Proxy Statement.
Solicitation will be initially by mail, but employees and directors of the
Company may solicit proxies by personal interview, by telephone or by telecopy
without additional compensation therefor. In addition, the Company has retained
William Morrow & Company to assist in the solicitation of proxies. The fees of
William Morrow & Company are expected to aggregate approximately $10,000 (plus
reasonable out-of-pocket expenses). The Company will also provide persons,
firms, banks and corporations holding shares in their names, or in the names of
their nominees, which in either case are beneficially owned by others, with
proxy material for transmittal to such beneficial owners and reimburse such
record holders for their reasonable expenses in so doing. Confidential voting
procedures will not be used in connection with the Annual Meeting.
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As of March 7, 1994, the Company had outstanding 17,411,800 shares of
common stock, $0.625 par value per share ("Common Stock"), each entitled to one
vote. A majority, or 8,705,901 of such shares, constitutes a quorum for the
Annual Meeting. There are no outstanding shares of Preferred Stock of the
Company.
PERSONS TO BE NOMINATED BY MANAGEMENT
FOR ELECTION AS DIRECTORS
(NOTICE ITEM 1)
Section 50A of Chapter 156B of the Massachusetts General Laws provides for
a Board of Directors of such number, to be fixed by the directors, as is a
multiple of three, serving staggered three-year terms. The Board of Directors
has fixed the number of Directors at eighteen (18). The Board of Directors,
following the recommendation of the Nominating Committee, has recommended the
following six nominees (four of whom are currently Directors) to fill the six
positions, each of whom, if elected, will hold office for a three-year term
until the 1997 annual meeting of stockholders and until his or her successor is
chosen and qualified. The appointment as directors, if elected, of
and is subject to regulatory approval.
If elected, these two persons will take office upon such regulatory approval.
Unless otherwise specified, Proxies will be voted in favor of their election as
Directors. Pursuant to the By-Laws of the Company, Directors will be elected by
a plurality of the votes cast at the Meeting. Thus, shares for which authority
to vote for one or more nominees is withheld will have no effect on the
election.
POSITIONS (IN ADDITION TO
DIRECTOR OF THE COMPANY),
COMMITTEE MEMBERSHIPS AND
NAME (AGE) DIRECTOR SINCE OFFICES WITH THE COMPANY AND ITS SUBSIDIARIES
---------- -------------- ---------------------------------------------
Domenic Colasacco (45) 1990 Executive Vice President of the Company and Chairman
and President of United States Trust Company
Francis X. Messina (64) 1988 Director, USTrust; Member Compensation and Nominating
Committees
Samuel B. Sheldon (74) 1969 Member, Executive and Oversight Committees
James V. Sidell (63) 1967 Chairman of the Executive Committee of the Company;
Director, USTrust and United States Trust Company
Mr. Colasacco is Executive Vice President of the Company and Chairman and
President of United States Trust Company. Mr. Messina serves as President of
Wildwood Estates of Braintree, Massachusetts (real estate development,
management and leasing) and as President of F.X. Messina Construction Corp.
(general contracting and construction). Mr. Sheldon is a retired businessman who
before his retirement served as President of Mark Fore Industries, a division of
Beatrice Foods Company. Mr. Sidell is the Chairman of the Executive Committee of
the Company and president of Pomme Frite, Inc. in Cambridge, Massachusetts.
Prior to April 1, 1993, Mr. Sidell was President and Chief Executive Officer of
the Company. [ is... is ...]
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
Executive Officers and Directors to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Executive Officers and
Directors are required by the SEC regulations to furnish the Company with copies
of all Section 16(a) forms they file. Based solely upon its review of the copies
of such forms and certain certifications received by it, the Company believes
that, during 1993, all such filing requirements applicable to its Executive
Officers and Directors were complied with by such individuals.
There are currently fifteen Directors of the Company and three vacancies on
the Board. Moreover, Mr. Falcone's term will end at the Annual Meeting and he
will not seek reelection. The election of and
would fill two of these four directorships. Accordingly, after the
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Annual Meeting there would be two vacancies, which may be filled by the Board of
Directors. The Company has agreed that Fox-Pitt, Kelton N.V. ("FPK"), which
assisted the Company in raising approximately $22 million in capital overseas in
August 1993, will have the right to designate, subject to Board approval, one
director. To date, FPK has not proposed any designate to the Company.
The following table sets forth certain information about those Directors of
the Company whose terms of office do not expire at the Annual Meeting and who
consequently are not nominees for re-election at the Annual Meeting:
POSITIONS (IN ADDITION TO DIRECTOR OF THE
COMPANY),
COMMITTEE MEMBERSHIPS AND
OFFICES WITH THE COMPANY AND ITS TERM OF OFFICE
NAME (AGE) DIRECTOR SINCE SUBSIDIARIES WILL EXPIRE
---------- -------------- ----------------------------------------- --------------
James M. Breiner (74) 1987 Chairman, UST Bank/Connecticut; Member, 1996
Executive and Asset Quality Committees
Robert L. Culver (45) 1993 Member, Audit and Compensation Committees 1995
Neal F. Finnegan (56) 1993 President and Chief Executive Officer of 1995
the Company; Member, Nominating Committee
Walter A. Guleserian (62) 1985 Chairman, Nominating Committee and 1995
Member, Asset Quality and Community
Reinvestment Committees
Wallace M. Haselton (72) 1971 Chairman, Audit Committee and Member, 1995
Nominating Committee
Gerald M. Ridge (64) 1982 Chairman, Community, Committee; Member, 1996
Asset Quality Committee; Vice Chairman,
USTrust
William Schwartz (60) 1981 Chairman of the Company; Vice Chairman of 1996
the Board of the Company; Member
Oversight Committee and Executive
Committee
Paul M. Siskind (78) 1967 Chairman of the Board of the Company; 1996
Chairman, Oversight Committee and Member,
Executive Committee
Paul D. Slater (59) 1980 Chairman, Compensation and Asset Quality 1995
Committees
Michael J. Verrochi (54) 1974 Member, Executive Committee and Member, 1996
Oversight Committee, Director, USTrust
Mr. Breiner is Chairman of the Board of UST Bank/Connecticut. He is also
Chairman of the Board of First Connecticut Small Business Investment Co. ("First
Connecticut"), a financial services company whose shares of common stock are
publicly traded. First Connecticut's plan of reorganization was confirmed by the
federal bankruptcy court on January 9, 1992. Mr. Culver is Senior Vice President
and Treasurer of Northeastern University, Boston, Massachusetts. Prior to 1991,
Mr. Culver was a partner in the accounting firm of Coopers & Lybrand. Mr.
Finnegan is President and Chief Executive Officer of the Company and USTrust.
Prior to joining the Company, Mr. Finnegan served as Executive Vice President in
charge of Private Banking at Bankers Trust Company, New York, New York. During
the period from 1986 to 1988, he was President and Chief Operating Officer of
the Bowery Savings Bank, based in New York City. From 1982 to 1986, Mr. Finnegan
was Vice Chairman of Shawmut Corporation. Mr. Finnegan serves as Vice Chairman
of the Board of Trustees of Northeastern University. Mr. Guleserian is Chairman
of the Board of Commander Properties, Inc. which does business under the name of
the Sheraton Commander Hotel, Cambridge, Massachusetts. Mr. Haselton, a retired
banker, was formerly Chairman of the Board of Key Bancshares of Maine, Inc., a
bank holding company. Mr. Ridge is Vice Chairman of USTrust and President and
Treasurer of Blue Hill Cemetery. Mr. Schwartz is Vice President/Academic Affairs
at Yeshiva University in New York City. He also serves as Chairman of the
Company and Vice Chairman of the Board of Directors of the Company. Mr. Schwartz
is of counsel to the New York City law firm of Cadwalader, Wickersham & Taft.
Mr. Schwartz is also a Director of Viacom, Inc. and Viacom International, Inc.
(diversified media holding companies). Mr. Siskind, formerly Dean and Professor
of Law at Boston University School of Law, is
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Chairman of the Board of Directors of the Company. Mr. Slater is a private
investor who previously served as the Chairman and Chief Executive Officer of
The Slater Company, a real estate and finance firm based in Boston,
Massachusetts. Mr. Verrochi serves as Vice President and as a Director of
Browning-Ferris Industries, Inc. (waste management); Treasurer of Blue Hills
Spring Water Co., Inc. (producer of bottled water); Vice President and Treasurer
of VRT Corp. (real estate development and contracting); Treasurer of Heritage
Corp. (manufacturing); and as a trustee of several real estate trusts.
Except as indicated above, each Director has been employed during the past
five years in his respective positions.
In case any person or persons named herein for election as a Director are
not available for election at the Annual Meeting, Proxies in the accompanying
form (in the absence of contrary instructions) may be voted for a substitute
nominee or nominees, as well as for the balance of those named herein. The Board
of Directors has no reason to know or believe that any of the nominees for
election as Directors will be unavailable.
OTHER INFORMATION ABOUT THE BOARD AND ITS COMMITTEES
The Company's Board of Directors has an Audit Committee, Oversight
Committee, Compensation Committee, Nominating Committee, Community Reinvestment
Committee, Executive Committee and Asset Quality Committee. Members of each
committee consist of Directors of the Company except that the Audit Committee
and Community Reinvestment Committee also include Directors of banking
subsidiaries of the Company.
The Audit Committee reviews examinations of the Company and its
subsidiaries that are conducted by regulatory agencies, reviews the results of
audits of the Company and its subsidiaries by internal audit staff and
independent auditors, and monitors implementation of recommendations that may be
made from time-to-time. It also reviews risks related to litigation against the
Company and the activities and reports of the internal loan review department of
the Company and its subsidiaries. There were six meetings of the Audit Committee
during 1993. Messrs. Haselton and Sydney Miller, (a Director of USTrust and
United States Trust Company) serve as Co-Chairmen of the Committee and Messrs.
Culver, Arthur Gillis (United States Trust Company) and David Engleson (UST
Bank/Connecticut) also currently serve on the Audit Committee.
In 1992 the Company established an Oversight Committee whose members are
Mr. Siskind (Chairman) and Messrs. Schwartz, Sheldon and Verrochi. Mr. Fischer
serves as Secretary to the Oversight Committee. This Committee, which held ten
meetings in 1993, monitors the Company's compliance with the provisions of the
bank regulatory agreements and orders under which the Company and two of its
banking subsidiaries are operating and oversees the corporate organization of
the Company and the responsibilities delegated to Executive Officers. The
Oversight Committee is authorized to act on behalf of and to exercise the powers
of the full Board of Directors when the Board is not in session, except as
limited by Massachusetts law.
In 1993, the Company changed the composition of the Compensation Committee
from a Committee consisting of all outside Directors of the Company to one
consisting of three members, Mr. Slater (Chairman) and Messrs. Culver and
Messina. The Committee considers and, when appropriate, makes recommendations to
the Board regarding employee and Director compensation and benefit matters. The
Committee met three times in 1993.
The Nominating Committee recommends candidates to fill vacancies on the
Boards of Directors of the Company and its subsidiaries, as well as a slate of
Directors of the Company for election by stockholders at the Annual Meeting. Its
activities also include evaluation of the size and composition of the Boards of
Directors of the Company and its subsidiaries. There were three meetings of the
Nominating Committee during 1993. Messrs. Guleserian (Chairman), Finnegan,
Haselton, Messina and Verrochi currently serve on the Nominating Committee.
The Nominating Committee considers candidates for Director of the Company
recommended by stockholders of the Company. Stockholders desiring to suggest
candidates should advise Eric R. Fischer,
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Executive Vice President, General Counsel and Clerk of the Company in writing at
40 Court Street, Boston, MA 02108, and include sufficient biographical material
to permit an appropriate evaluation.
In 1990 the Company established a Community Reinvestment Committee whose
current members are Mr. Ridge (Chairman) and Mr. Guleserian and Messrs. Robert
Coard and Edward Sullivan (USTrust) and Messrs. Stanley Shuman and Arthur Snyder
(United States Trust Company). Representatives from UST/Conn report periodically
to the Committee. The Committee held three meetings in 1993. The Community
Reinvestment Committee reviews the Company's activities to ascertain whether the
Company's banking subsidiaries are taking appropriate actions to assess and to
help to meet the credit-related needs of the local communities served by the
Company's banking subsidiaries.
The current Members of the Company's Executive Committee are Mr. Sidell
(Chairman) and Messrs. Breiner, Schwartz, Sheldon, Siskind and Verrochi. The
Executive Committee acts in an advisory capacity to management and the Board
with respect to marketing, customer relations, promotional issues and certain
credit-related matters. The Executive Committee held no meetings in 1993.
In 1993, the Board established an Asset Quality Committee to oversee
management's efforts to reduce the level of the Company's non-performing assets.
The Committee met eight times in 1993. It is chaired by Mr. Slater and its
members include Messrs. Breiner, Guleserian and Ridge.
During 1993, there were 13 meetings of the Board of Directors of the
Company. No Director attended fewer than 75% of the aggregate number of meetings
of the Board of Directors and of the committees of the Board of Directors on
which he served.
DIRECTOR'S FEES AND OTHER COMPENSATION
Directors of the Company who are not otherwise full time officers or
employees of the Company or any of its subsidiaries are paid a fee of $250 for
each meeting of the Company's Board they attend, plus an annual stipend which in
1993 was $15,000. In addition, in 1993, Directors (other than full-time
employees of the Company) received the following additional committee fees:
(i) Oversight Committee $1,000 per month
(ii) Nominating Committee $500 per meeting
(iii) Audit Committee $250 per meeting (except Chairmen who receive
$1,000 per meeting)
(iv) Compensation Committee $250 per meeting (except Chairman who receives
$500 per meeting)
(v) Asset Quality Committee $250 per meeting (except Chairman who receives
$500 per meeting)
(vi) CRA Committee $250 per meeting (except Chairman who receives
$500 per meeting)
(vii) Executive Committee $250 per meeting (except Chairman who receives
$500 per meeting)
Moreover, each Director (who was a Director on January 1, 1990 and who is
not an employee of the Company) has been granted an option to acquire 5,250
shares of the Company's Common Stock at $6.07 per share pursuant to the
Directors' Stock Option Plan.
In addition to the foregoing in 1993: Mr. Ridge received $42,467 for
services performed in his capacity as Vice Chairman of USTrust and Mr. Breiner
received compensation in the amount of $20,314 for services performed as
Chairman of the Board of UST Bank/Connecticut. Mr. Siskind received $60,000 for
services performed in his capacity as Chairman of the Board of the Company in
1993 and, as an officer and employee, did not receive any of the director's fees
described above.
DIRECTOR'S STOCK OPTION PLAN
The Company established a Director's Stock Option Plan ("Directors' Plan")
in 1990 which was amended in 1991. Under the Directors' Plan, Directors of the
Company who are not full-time employees of
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the Company or its subsidiaries ("Outside Directors") and who were directors on
January 1, 1990 received non-tax qualified options to purchase 5,250 shares of
Common Stock of the Company at an exercise price of $6.07. The Directors' Plan,
which received stockholder approval in both 1990 and 1991, is intended to align
the interests of the Outside Directors with those of the Company's stockholders
and to encourage ownership in the Company by Outside Directors because the
continued service of each Outside Director is important to the Company's
success. A total of 63,000 shares of the Company's Common Stock (after
adjustment for the 5% stock dividend paid on October 15, 1991) may be issued
under the Directors' Plan. As of April 1, 1994, options with respect to 10,500
shares had been exercised.
COMPENSATION OF EXECUTIVE OFFICERS
The tables that appear below, together with the accompanying text and
footnotes, provide information on compensation and benefits for the named
Executive Officers, as determined by requirements of the Securities and Exchange
Commission ("SEC"). Except for the information regarding individual stock option
exercises, all the data regarding values for stock options and grants of
Restricted Stock are hypothetical in terms of the amounts that an individual may
or may not receive because such amounts are contingent on continued employment
with the Company and the price of the Common Stock. All year-end values shown in
these tables for outstanding stock options and restricted shares reflect a
$10.625 price, which was the closing price of the Common Stock for December 31,
1993, as reported in the "NASDAQ" section of the Eastern Edition of The Wall
Street Journal.
The following table displays compensation information for the past three
fiscal years for each of the named Executive Officers:
SUMMARY COMPENSATION TABLE
LONG TERM
------------------------
COMPENSATION AWARDS
------------------------
ANNUAL COMPENSATION RESTRICTED SECURITIES
------------------- STOCK UNDERLYING ALL OTHER
NAME AND SALARY BONUS AWARD(S) OPTIONS/ COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($)(A) SARS(#) ($)(B)
------------------ ---- ------ ----- ---------- ---------- ------------
Neal F. Finnegan,(C)............................. 1993 $264,808 $ 40,000 $519,000 150,000(C) $2,250
President and Chief Executive Officer 1992 -- -- -- -- --
of the Company 1991 -- -- -- -- --
Domenic Colasacco,(D)............................ 1993 $236,092 $535,671 -- -- $2,247
Executive Vice President of the Company, 1992 $224,914 $453,077 -- -- $3,000
Chairman and President, 1991 $225,530 $310,801 -- 4,200 $5,153
United States Trust Company
Theodore M. Shediac,(E).......................... 1993 $255,468 $ 28,500 -- -- $2,350
Chairman, USTrust 1992 $231,690 $ 28,500 $ 43,750 5,000 $3,036
1991 $229,405 $ 28,500 -- 18,375 $5,153
Kathie S. Stevens,............................... 1993 $200,327 $ 15,000 -- -- $1,900
Executive Vice President and Senior 1992 $165,847 -- $ 90,000 10,000 $2,057
Lending Officer, USTrust 1991 $149,349 -- -- 11,500 $3,406
Eric R. Fischer,................................. 1993 $186,502 $ 15,000 -- -- $1,850
Executive Vice President, 1992 $173,103 -- $ 21,875 -- $2,204
General Counsel and Clerk of the Company 1991 $170,556 -- -- 23,100 $4,018
Robert G. Truslow,(F)............................ 1993 $248,656 -- -- -- $ 0
Former President, USTrust 1992 $211,827 -- $ 87,500 -- $2,787
1991 $203,397 -- -- -- $4,577
Frank A. Morse,(G)............................... 1993 $218,060 -- -- -- $ 0
Former President, UST Bank/Connecticut 1992 $201,642 -- -- -- $2,631
1991 $202,328 -- -- 14,700 $4,577
James V. Sidell,(H).............................. 1993 $329,784 -- -- -- $ 0
Chairman of the Executive Committee and 1992 $377,779 -- -- -- $3,169
Former President and Chief Executive 1991 $377,952 -- -- 5,250 $5,283
Officer of the Company
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[FN]
(A) The 1993 values reflect a Common Stock closing price of $8.65 on April 20,
1993, the date the award was made. The average closing price on the award
dates for the 1992 grants was $8.75. There were no grants in 1991. As of
December 31, 1993 each of the named Executive Officers held the following
number of shares of Restricted Stock having the corresponding year-end
market value:
AS OF DECEMBER 31, 1993
-------------------------
TOTAL NUMBER AGGREGATE
OF RESTRICTED MARKET
NAME SHARES HELD VALUE
---- ------------- ---------
Neal F. Finnegan....................................... 60,000 $637,500
Domenic Colasacco...................................... 0 $ 0
Theodore M. Shediac.................................... 3,334 $ 35,424
Kathie S. Stevens...................................... 6,667 $ 70,838
Eric R. Fischer........................................ 1,667 $ 17,712
Robert G. Truslow...................................... 0 0
Frank A. Morse......................................... 0 0
James V. Sidell........................................ 0 0
These shares are forfeitable to the Company and subject to restrictions on
transfer. The shares of Restricted Stock vest over periods which vary from
three to seven years, subject to acceleration in the event of a "change of
control" of the Company. The 1993 award of 60,000 shares to Mr. Finnegan
vests over three years with one-third vesting on each of the first, second
and third anniversaries of the date of grant. Upon grant the recipient has
full voting and dividend rights with respect to all shares granted.
(B) The amounts reported for 1993 for each of the named Executive Officers
consist of (i) allocations under the Company's Employee Stock Ownership
Plan to Mr. Finnegan of $2,025, Mr. Colasacco of $2,022, Mr. Shediac of
$2,115, Ms. Stevens of $1,710, and Mr. Fischer of $1,655 and (ii)
allocations under the Company's Profit-Sharing Plan to Mr. Finnegan of
$225, Mr. Colasacco of $225, Mr. Shediac of $235, Ms. Stevens of $190 and
Mr. Fischer of $185.
(C) The Company entered into an Employment Agreement with Mr. Finnegan, dated
as of April 1, 1993, pursuant to which Mr. Finnegan receives a base salary
of $300,000 and received substantial stock-based compensation described
herein. In addition to the 150,000 options listed in the table, Mr.
Finnegan received an additional 250,000 options granted on January 3, 1994.
See "Employment Agreements."
(D) Mr. Colasacco has an incentive arrangement pursuant to which he receives a
percentage of pre-tax income, as defined, of the Asset Management Division
of United States Trust Company. This arrangement was in effect in 1993.
(E) The cash bonuses paid to Mr. Shediac were agreed to by the Company in
writing in 1990. The Company expects to enter into a Separation Agreement,
which is subject to regulatory approval, with Mr. Shediac during the first
half of 1994. See "Employment Agreements."
(F) The Company has entered into a Separation Agreement with Mr. Truslow. See
"Employment Agreements."
(G) The Company has entered into a Separation Agreement with Mr. Morse. See
"Employment Agreements."
(H) Mr. Sidell became Chairman of the Executive Committee and ceased being
President and Chief Executive Officer of the Company on April 1, 1993.
Effective July 1, 1993 he entered into a Transition Agreement with the
Company which provides, among other matters, that, subject to Mr. Sidell's
fulfillment of certain covenants and agreements, he will receive a
consulting fee during the three year period ending on June 30, 1996 which
will be paid at the rate of $250,000 per annum. Of the total salary amount
shown for Mr. Sidell for 1993, $125,003 consists of consulting fees. See
"Employment Agreements."
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STOCK-BASED COMPENSATION
The Stock Compensation Plan adopted in 1992 provides for granting of
Incentive Stock Options, Nonqualified Stock Options, Restricted Stock Awards and
Performance Shares or a combination of the foregoing as a means through which
the Company may attract and retain highly qualified officers and attract and
encourage able persons to enter into and remain in its employ. The Plan is
designed to encourage key employees of the Company and its subsidiaries to
acquire and maintain stock ownership, thereby strengthening their commitment to
the welfare of the Company and promoting the identity of interests between
shareholders and key employees. For further information regarding this plan, see
Item 2 below.
The following table provides details regarding stock options granted to the
named Executive Officers in 1993 under the Stock Compensation Plan. In addition,
in accordance with SEC rules, this table shows hypothetical gains on a pre-tax
basis or "option spreads" that would exist for the respective options granted in
1993 for the named Executive Officers. These gains are based on assumed rates of
annual compound stock price appreciation of 0%, 5% and 10% from the date the
options were granted over the full option term.
OPTION GRANTS IN 1993
INDIVIDUAL GRANTS
-----------------------------------------------------------
NUMBER OF % OF POTENTIAL REALIZABLE VALUE
SECURITIES TOTAL MARKET AT ASSUMED ANNUAL RATES
UNDERLYING OPTIONS VALUE ON OF STOCK PRICE APPRECIATION
OPTIONS GRANTED TO EXERCISE GRANT FOR OPTION TERM(C)
GRANTED EMPLOYEES PRICE DATE EXPIRATION ----------------------------
NAME (#)(A) IN 1993 ($/SH.) ($/SH)(B) DATE 0% 5% 10%
---- ---------- ---------- -------- --------- ---------- ------- ------- --------
Neal F. Finnegan... 40,000 26.67% $ 7.50 $ 8.625 07/19/96 $45,000 $47,288 $ 99,300
50,000 33.33% $ 8.00 $ 8.625 07/19/96 $31,250 $63,050 $132,400
10,000 6.67% $ 9.00 $ 8.625 07/19/96 -- $14,186 $ 29,970
20,000 13.33% $10.00 $ 8.625 07/19/96 -- $31,525 $ 66,200
30,000 20.00% $12.00 $ 8.625 07/19/96 -- $56,745 $119,160
Domenic Colasacco.. -0-
Theodore M.
Shediac.......... -0-
Kathie S.
Stevens.......... -0-
Eric R. Fischer.... -0-
Robert G.
Truslow.......... -0-
Frank A. Morse..... -0-
James V. Sidell.... -0-
<FN>
- ---------------
(A) Options vest over two years, 50% on each anniversary date of the date of
grant.
(B) Closing price of Common Stock of the Company on the date of grant.
(C) Realizable value represents the difference between the assumed stock price
at the expiration date and the exercise price.
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The following table shows stock option exercises by the named Executive
Officers during 1993, including the aggregate value realized upon exercise.
"Value realized upon exercise" represents the excess of the closing price of the
Common Stock on the date of exercise over the exercise price. In addition, this
table includes the number of shares remaining unexercised by both "exercisable"
(i.e., vested) and "unexercisable" (i.e., unvested) stock options as of December
31, 1993. Also reported are the values of "in-the-money" options which represent
the positive spread between the exercise price of any such existing stock
options and the year-end price of the Common Stock of $10.625.
AGGREGATED OPTION EXERCISES IN 1993 AND YEAR-END 1993 OPTION VALUES
VALUE OF
NUMBER OF UNEXERCISABLE UNEXERCISED, IN-THE MONEY,
OPTIONS HELD AT
SHARES FISCAL YEAR END OPTIONS AT FISCAL YEAR END
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
Neal F. Finnegan......................... -0- $ -0- -0- 150,000 $-0- $ 285,000
Domenic Colasacco........................ -0- $ -0- 1,680 2,520 $ 7,650 $ 11,475
Theodore M. Shediac...................... -0- $ -0- 12,025 11,350 $52,203 $ 41,469
Kathie S. Stevens........................ -0- $ -0- 7,880 13,670 $30,775 $ 41,819
Eric R. Fischer.......................... -0- $ -0- 13,860 9,240 $63,113 $ 42,075
Robert G. Truslow........................ 36,750 $185,719 -0- -0- $-0- $ -0-
Frank A. Morse........................... -0- $ -0- 14,700 -0- $66,938 $ -0-
James V. Sidell.......................... -0- $ -0- 5,250 -0- $23,906 $ -0-
RETIREMENT BENEFITS
The following table presents the years of service to the Company and the
1993 remuneration covered by the Company's Pension Plan for the eight Executive
Officers with regard to whom information is provided in the Executive
Compensation Table.
YEARS OF SERVICE COVERED REMUNERATION
---------------- --------------------
Neal F. Finnegan........................... 1 $225,000
Domenic Colasacco.......................... 20 224,700
Theodore M. Shediac........................ 14 235,000
Kathie S. Stevens.......................... [8] 190,000
Eric R. Fischer............................ 9 185,000
Robert G. Truslow.......................... 9 162,994
Frank A. Morse............................. 26 201,875
James V. Sidell............................ [35] 192,156
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The following table reflects annual single life annuity retirement benefits
payable (before deduction for Social Security benefits) to persons in specified
"final average" base salary and years of service classifications.
YEARS OF SERVICE
-------------------------------------
BASE SALARY 15 20 25 AND OVER
----------- -------- -------- -----------
$100,000................................. $ 30,000 $ 40,000 $ 50,000
125,000................................. 37,500 50,000 62,500
150,000................................. 45,000 60,000 75,000
175,000................................. 52,500 70,000 87,500
200,000................................. 60,000 80,000 100,000
225,000................................. 67,500 90,000 112,500
250,000................................. 75,000 100,000 125,000
300,000................................. 90,000 120,000 150,000
400,000................................. 120,000 160,000 200,000
450,000................................. 135,000 180,000 225,000
To the extent that benefits cannot be provided under the Pension Plan or
certain other retirement plans of the Company because of the limitations imposed
by Section 415 of the Internal Revenue Code on the amount of such benefits
payable, any balance of benefits otherwise payable under such Plans will be
provided by the Company to eligible officers pursuant to an Excess Benefits Plan
adopted by the Board of Directors in 1983. Furthermore, to the extent that
benefits cannot be provided under the Profit Sharing Plan, Employee Stock
Ownership Plan, Pension Plan and Excess Benefits Plan because of the limitations
imposed by Section 415 and/or 401(a)(17) of the Internal Revenue Code on the
amounts of benefits payable, the Company may provide such additional benefits to
eligible officers, designated by the Board of Directors pursuant to a
Supplemental Retirement Benefits Plan adopted by the Company in 1989. As of
December 31, 1993, Messrs. Finnegan, Sidell and Colasacco were the only
individuals named in the Summary Compensation Table covered by the Supplemental
Retirement Benefits Plan.
COMPENSATION COMMITTEE REPORT
COMPENSATION PHILOSOPHY
This Report reflects the Company's compensation philosophy and resulting
actions taken by the Company for 1993, as shown in the various compensation
tables above. The Compensation Committee either approves or recommends to the
Board of Directors payment amounts and award levels for Executive Officers of
the Company and its affiliates. Directors who were also Executive Officers did
not participate in votes concerning their own remuneration or plans under which
they were eligible to receive any benefits.
Compensation of Executive Officers of the Company has been designed
generally to (i) compensate officers based upon corporate, business unit and
individual performance; (ii) motivate key senior officers to achieve strategic
business initiatives and reward them for their achievement; (iii) provide salary
arrangements which are comparable to those of the Company's competitors, as
described below under "Salary"; and (iv) align the interests of executives with
the long-term interests of stockholders through award opportunities that can
result in the ownership of Common Stock. The Committee does not at present,
however, have any specific target level of Common Stock ownership.
Generally, as an executive's level of responsibility increases, a greater
portion of potential total compensation tends to be based upon performance
incentives and less on salary and employee benefits, often causing greater
variability in the individual's absolute compensation level from year to year.
Generally, the higher one rises in the organization, the greater the mix of
compensation shifts to reliance on the Common Stock through stock-based awards.
Specific compensation and award levels, however, are not determined by any
specific formulas, but rather by the Compensation Committee, using its
discretion and considering subjective criteria.
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At present, executive compensation generally is comprised of salary, cash
bonuses (in years in which the Company has, in the discretion of the
Compensation Committee, satisfactory net earnings or the individual executive
has made an unusual and meaningful contribution to the Company but without
applying any specific formula), cash incentive compensation payments, long-term
incentive opportunities in the form of stock options and restricted stock and
other "fringe" benefits. Certain increases or additions to executive
compensation require prior regulatory approval under the Company's Regulatory
Agreement with the Federal Reserve Bank of Boston and the Massachusetts
Commissioner of Banks.
In 1993, Mr. Sidell ceased to be Chief Executive Officer and was replaced
by Mr. Finnegan who was recruited from outside of the Company and who, prior to
his arrival at the Company, held no economic interest in the Company's
securities. Because of the foregoing, the Compensation Committee granted
substantial stock compensation to Mr. Finnegan in 1993 and increased the
emphasis of its compensation philosophy upon aligning the economic interests of
the most senior Executive Officers with those of the Company's stockholders. It
is expected that this trend will continue in 1994 as the Company completes the
selection of its new senior management group.
GENERAL BACKGROUND
As indicated in the Five-Year Stockholder Return comparison, which is found
at the end of the discussion of Compensation of Executive Officers, the
five-year performance (including reinvestment of dividends) of the Company's
Common Stock has lagged behind both the Dow Jones Equity Market Index ("DJ
Equity Index") and the Dow Jones Regional Bank, East Index ("DJ Banks East
Index"). For the most recent one-year period, however, the increase in total
return of the Company's Common Stock was 12.3% compared to increases of 9.9% and
4.6% for the DJ Equity Index and the DJ Banks East Index respectively.
The following is a discussion of the Compensation Committee's bases for Mr.
Finnegan's and Mr. Sidell's compensation reported for 1993, and its general
policies with respect to the other executive officers named in the Summary
Compensation Table. Mr. Finnegan began his service as Chief Executive Officer on
April 1, 1993 and Mr. Sidell ceased being Chief Executive Officer on April 1,
1993.
SALARY
The Company entered into an Employment Agreement with Mr. Finnegan as of
April 1, 1993. The Employment Agreement set Mr. Finnegan's base salary at
$300,000. Based upon salary surveys provided to the Compensation Committee, and
a certificate provided by the Company's independent employee benefit and
compensation consultants, this base salary is within the range of base salaries
for Chief Executive Officers of other similarly-sized bank holding companies.
Pursuant to a Transition Agreement, Mr. Sidell entered into a three year
consulting arrangement with the Company as of July 1, 1993. The Transition
Agreement provides, among other things, that Mr. Sidell, unless he breaches one
of several negotiated covenants and agreements, receive consulting fees at the
rate of $250,000 per annum through June 30, 1996. The Company's independent
employee benefits and compensation consultants also certified that the
Transition Agreement with Mr. Sidell met applicable banking safety and soundness
standards. During the period from April 1, 1993 through June 30, 1993, while the
terms of the Transition Agreement was being negotiated, Mr. Sidell received base
salary at the rate of $250,000 per annum.
With respect to the compensation of the other executive officers named in
the Summary Compensation Table, the Executive Committee, in addition to other
criteria, utilizes industry salary surveys of approximately 35 similarly-sized
regional and national bank holding companies in order to determine the range of
base salaries for various positions. As a general rule, the Committee has aimed
to set executive officer salaries in the 50th to 75th percentile of the range of
salaries for comparable positions in this group.
BONUS AWARD
Mr. Sidell received no cash bonus and no profit-sharing grant was made to
any employee by the Board of Directors in 1993. Mr. Finnegan received a $40,000
cash bonus in early 1994 to reflect his performance in
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1993, based on a subjective determination of the Compensation Committee,
considering in particular Mr. Finnegan's success in raising capital for the
Company in 1993. After the determination by the Compensation Committee of the
aggregate amount to be contributed by the Company to the Employee Stock
Ownership Plan (300,000 shares of Common Stock), the fixed allocation provisions
resulted in modest grants to Mr. Finnegan and all other employees in 1993 under
the Plan.
1993 STOCK AWARDS
The Company's Stock Compensation Plan, approved by Stockholders in 1992,
permits the granting of several different types of stock-based awards. To date,
two types of awards, stock options and restricted stock, have been granted to
certain Executive Officers and other key employees. Mr. Finnegan was granted an
aggregate of 150,000 options to acquire Common Stock and 60,000 shares of
Restricted Common Stock during 1993. In addition, the Company agreed to grant
Mr. Finnegan options for 200,000 shares of Common Stock. This amount was
negotiated with Mr. Finnegan in connection with his hiring by the Company. See
Employment Agreement.
LIMITATION ON DEDUCTIBILITY OF EXECUTIVE COMPENSATION
The Internal Revenue Code was amended in 1993 to disallow deductions on
annual compensation in excess of $1,000,000 for certain executives of public
companies, beginning in 1994. The Compensation Committee has not yet conducted a
formal review of the potential impact of this new law on the Company and
therefore does not intend, at this time, to amend existing plans or take any
other actions in response to this new law, other than its amendment to the Stock
Compensation Plan, imposing a per-employee limit on annual grants, discussed in
Item 2 below. Based on a preliminary review, it appears that, the short-term
impact of this new law on the Company is not likely to be material. The
Compensation Committee plans to monitor the impact of this new law on an annual
basis, taking into consideration both the benefits of favorable tax treatment
for the Company, on the one hand, and the necessity for the Compensation
Committee to have the discretion to take appropriate steps to further its
executive compensation philosophy and honor existing contractual obligations, on
the other hand.
This Report was submitted by the Compensation Committee which is comprised
of the following Directors, none of whom are full-time employees of the Company
or any of its subsidiaries:
Paul D. Slater, Chairman
Robert L. Culver
Samuel B. Sheldon
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1993, the following persons served for a portion or all of the year
on the Compensation Committee: James M. Breiner, Robert L. Culver, Louis T.
Falcone, Charles M. Goldman, Walter A. Guleserian, Wallace M. Haselton, Francis
X. Messina, Gerald M. Ridge, William Schwartz, Samuel Sheldon, Paul D. Slater,
and Michael J. Verrochi.
Officers, Directors and stockholders of the Company, and their associates,
are customers of the Company and its subsidiaries and, as such, may have
obtained loans and loan commitments in excess of $60,000. All such loans and
loan commitments outstanding since the beginning of the last fiscal year, other
than as noted below, were made in the ordinary course of business by the
Company's banking subsidiaries and on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with other persons and did not involve more than the normal risk of
collectability or present other unfavorable terms.
The members of the Compensation Committee, and their respective associates,
may have had an interest in certain transactions involving the Company's other
affiliates during 1993. In addition to loan transactions and other customer
transactions, during the past fiscal year the Company and its subsidiaries have
used
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products or services of, and have had other transactions with various
organizations with which officers and Directors of the Company are affiliated.
The amounts involved have in no case been material in relation to the business
of the Company and its subsidiaries and it is believed that they have not been
material in relation to the business of such other organizations or to the
individuals concerned. It is expected that in the future the Company and its
subsidiaries will continue to have transactions similar to those described in
this paragraph.
At December 31, 1993, loans to Director Messina or to his affiliated
companies in the amount of approximately $25 million were characterized as
Substandard, in the Company's internal risk rating profile. Of such $25 million,
$2.5 million represented a loan made jointly to Director Messina and Director
Falcone, which loan was paid in full in 1993. Under the Company's definition,
Substandard Assets are characterized by the distinct possibility that some loss
will be sustained if the credit deficiencies are not corrected. However, the
Substandard classification does not necessarily imply ultimate loss for each
individual asset so classified. Subsequent to December 31, 1993, $6.3 million of
these loans were repaid. All loans to Director Messina are variable rate loans.
Interest rates on these loans range from USTrust's base rate plus 1/2% to its
base rate plus 1%.
Certain apparent and inadvertent violations of the insider lending
provisions (and related lending limit provisions) of Regulation O of the FRB
related to extensions of credit by USTrust to Director Francis X. Messina, a
member of the Compensation Committee, have led the FDIC to require that
corrective action be taken and to advise USTrust that the FDIC may consider the
imposition of civil money penalties with respect to such matters. No FDIC
representative has suggested to USTrust or the Company that there was any
willful or intentional misconduct on the part of USTrust, Director Messina or
USTrust's other institution-affiliated parties in connection with these matters.
To address these issues, USTrust and Director Messina have undertaken a
program to reduce the aggregate balance of Mr. Messina's outstanding loans from
USTrust and to improve the collateral support for the remaining outstanding loan
balance. The elements of this program have been communicated to and reviewed by
the FDIC. In furtherance of the program, since late 1993, the outstanding
principal of the aggregate loans to Director Messina and his related interests
has been reduced by more than $11 million from approximately $30 million to less
than $19 million, and such loans are now below all applicable lending limits. To
date, the Company has incurred no losses with respect to any of these loans,
although they are characterized as "Substandard" in the Company's internal risk
rating profile, and all such loans are current as to both principal and
interest.
There has been no further action taken by any bank regulatory agency to
date. The FDIC has the authority to levy civil money penalties of various
amounts for violations of law or regulations, orders and written conditions and
agreements, which, depending upon the nature and severity of the violations, may
be, in situations where conduct has been egregious, as high as $1 million per
day for the period during which such violation continues. In connection with the
apparent violations described above, the FDIC has the authority to impose
penalties on any of USTrust, its Board of Directors, officers of the Bank,
Director Messina personally, "institution-affiliated parties" of USTrust or any
combination thereof.
While it is not possible to predict with certainty the probability of
penalties being assessed, the person or persons upon whom any penalty would be
assessed or the amounts of any such penalties, were they to be assessed,
management of the Company believes that it is unlikely that this matter will
have a material adverse effect on its financial condition or results of
operations. Consequently, no provision in respect of penalties has been made in
the Company's Consolidated Financial Statements.
The law firm of Widett, Slater & Goldman, P.C. of which Charles M. Goldman,
a former Director of the Company, was a member, rendered legal services as
special counsel to the Company and its subsidiaries during 1993. Mr. Goldman is
the brother-in-law of Director Siskind. Mr. Goldman is now a member of the law
firm of Sullivan & Worcester. The law firm of Cadwalader, Wickersham & Taft, of
which William Schwartz, a Director of the Company, is of counsel, rendered legal
services as special counsel to the Company and its subsidiaries during 1993.
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FIVE-YEAR STOCKHOLDER RETURN COMPARISON
The following table compares the total return on the Company's Common Stock
over the last five years to the DJ Equity Index and the DJ Banks East Index. DJ
Banks East Index is comprised of approximately 15 of the largest regional banks
headquartered in the Mid-Atlantic and New England States. Total return values
for these indices were calculated based on cumulative total return values,
assuming reinvestment of dividends.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG UST CORP., DOW JONES EQUITY MARKET INDEX AND
BANKS, EAST INDEX
FISCAL YEAR ENDING DECEMBER 31
DOW JONES
DOW JONES REGIONAL
MEASUREMENT PERIOD EQUITY MAR- BANKS, EAST
(FISCAL YEAR COVERED) UST CORP. KET INDEX INDEX
1988 100.00 100.00 100.00
1989 93.00 131.00 102.00
1990 46.00 126.00 57.00
1991 47.00 167.00 106.00
1992 65.00 181.00 152.00
1993 73.00 199.00 159.00
EMPLOYMENT AGREEMENTS
Mr. Finnegan has an Employment Agreement with the Company dated as of April
1, 1993, which has been amended twice to reflect additions to and changes in the
terms of his stock compensation. The Employment Agreement has a three year term
and provides that Mr. Finnegan will serve as Chief Executive Officer of the
Company. Mr. Finnegan is paid a base salary of $300,000 per annum, is eligible
for discretionary cash bonuses and is entitled to fringe benefits available to
senior executives. Mr. Finnegan has received under the Employment Agreement, as
amended, 60,000 shares of Restricted Common Stock which vest over a three-year
period and an aggregate of 350,000 options to acquire the Company's Common stock
at an average exercise price of approximately [$9.00] per share. Mr. Finnegan
has agreed to a non-competition provision in the Agreement. In the event of a
Change-in-Control of the Company during the term of the Employment Agreement,
Mr. Finnegan may elect to terminate this Agreement and receive a payment equal
to 150% of his "base amount" as defined under Section 280G(b)(3) of the Internal
Revenue Code or, should his termination be involuntary, to sue for damages.
Should Mr. Finnegan have any unvested shares of Restricted Stock or stock
options at the time of a Change-in-Control, the higher the per share price paid
by the acquiror in the Change-in-Control, the greater the number of shares and
rights held by Mr. Finnegan which will be accelerated.
Mr. Sidell entered into a Transition Agreement with the Company whereby he
agreed to terminate his employment with the Company as of June 30, 1993, to
continue his role as a Director of the Company, USTC and USTrust, and to serve
as a consultant for three years and as Chairman of the Executive Committee of
the Company. Subject to Mr. Sidell's fullfillment of the obligations summarized
below, during the three year
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consulting period which began June 1, 1993, he will receive consulting fees paid
at the rate of $250,000 per annum, medical and life insurance benefits and
certain other incidental benefits. When Mr. Sidell reaches age 65 (which would
occur near the end of his consulting term), Mr. Sidell would also receive
supplemental retirement benefits. In consideration of the foregoing, Mr. Sidell
has agreed, among other items, (i) to promote the policies and practices of the
Company as adopted and interpreted by the Company's Board of Directors and its
Chief Executive Officer; (ii) to refrain from purchases of the Company's equity
securities pursuant to a standstill provision; (iii) to refrain from competing
with the Company; (iv) to renounce certain claims; and (v) to perform certain
other agreements and covenants.
The Company and Mr. Shediac are completing negotiations concerning the
terms of a Separation Agreement. The Separation Agreement will remain subject to
regulatory approval. Mr. Shediac is currently on leave of absence and it is
contemplated that the Separation Agreement will provide for his termination of
employment to occur on June 30, 1994, and for him to receive salary continuation
and other benefits in an aggregate value of approximately $390,000.
Mr. Morse entered into a Separation Agreement with the Company and
UST/Connecticut pursuant to the terms of which Mr. Morse's employment with the
Company and its affiliates terminated on November 28, 1993. Pursuant to the
Separation Agreement, Mr. Morse received (i) salary continuation payments in the
amount of approximately $267,000; (ii) a payment of $8,500 to cover certain
costs of medical insurance, (iii) $20,000 paid directly to an outplacement
consultant of Mr. Morse's choice, and (iv) certain other incidental benefits.
The Board of Directors also agreed to accelerate the vesting of options to
acquire 5,880 shares of the Company's Common Stock. In consideration of the
foregoing, Mr. Morse agreed not to solicit for one year customers or employees
of the Company or its affiliates. Mr. Morse also delivered to the Company a
release from claims related to his employment.
Mr. Truslow entered into a Separation Agreement with the Company and
USTrust pursuant to the terms of which Mr. Truslow's employment with the Company
and its affiliates terminated on August 31, 1993. Pursuant to this Separation
Agreement, Mr. Truslow received (i) salary continuation payments in the amount
of approximately $253,000; (ii) a payment of $5,000 to cover certain costs of
medical insurance; (iii) $20,000 paid directly to an outplacement consultant of
Mr. Truslow's choice; and (iv) certain other incidental benefits. The Board of
Directors also agreed to accelerate the vesting of options to acquire 14,700
shares of the Company's Common Stock and of 6,667 shares of the Company's
Restricted Common Stock.
CERTAIN TRANSACTIONS AND INDEBTEDNESS
As described above under "Compensation Committee Interlocks and Insider
Participation," the Company and its subsidiaries had certain lending and other
transactions and relationships with directors, officers and 5% stockholders of
the Company, and their associates, during 1993.
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PROPOSED AMENDMENT TO STOCK COMPENSATION
PLAN TO AUTHORIZE THE GRANT OF 350,000
ADDITIONAL SHARES OF THE COMPANY'S COMMON STOCK
(NOTICE ITEM 2)
The Board of Directors, by vote adopted on March 15, 1994, adopted, subject
to ratification by the stockholders, an amendment to the 1992 Stock Compensation
Plan (the "Plan") which would increase the maximum amount of shares of the
Company's Common Stock that may be subject to awards in 1994 by 350,000
additional shares. If the 350,000 shares or any portion thereof are unused in
1994, they would become available for distribution in subsequent years, as would
the existing allocation for 1994, described in the next sentence. The Plan, as
adopted in 1992, limits the number of shares available for grants in any year
under the Plan to 1.25% of the total number of shares of the Company's Common
Stock outstanding on January 1 of the applicable year, plus any shares which are
available from unused allocations from prior years. At the time of adoption,
neither the Board nor the stockholders knew that there would be a change in the
Chief Executive Officer from Mr. Sidell to Mr. Finnegan in 1993. In order to
attract Mr. Finnegan to accept the Chief Executive Officer position with the
Company in 1993, the Company entered into an Employment Agreement with Mr.
Finnegan whereby he received an aggregate of 350,000 stock options under the
Plan. As a result, the Company used most of its 1993 and 1994 grant allocations
under the Plan to compensate Mr. Finnegan. In order to enable the Board of
Directors to provide appropriate stock incentives to other key executives, the
Board recommends that the stockholders vote "FOR" this item.
The Stock Compensation Plan adopted in 1992 provides for granting of
Incentive Stock Options, Nonqualified Stock Options, Restricted Stock Awards and
Performance Shares or a combination of the foregoing as a means through which
the Company may attract and retain highly qualified officers and attract and
encourage able persons to enter into and remain in its employ. The Plan is
administered by the Compensation Committee of the Board of Directors. The Plan
is designed to encourage key employees of the Company and its subsidiaries to
acquire and maintain stock ownership, thereby strengthening their commitment to
the welfare of the Company and promoting the identity of interests between
shareholders and key employees.
As of December 31, 1993, approximately 870 employees were eligible to
receive grants under the Plan.
The Plan provides that shares of the Company's Common Stock issued pursuant
thereto may be authorized and unissued stock or treasury stock. In no event will
the aggregate number of shares available for grants under the Plan in any year
exceed 1.25% of the total number of shares of the Company's outstanding shares
as of January 1 of that year, plus (if the proposed amendment is adopted)
350,000 additional shares for grants in 1994, plus any shares which are
available from unused allocations (including any portion of such 350,000
additional shares not used in 1994) from prior years. The number of shares
issuable is subject to adjustment due to stock dividends, stock splits or other
changes in capitalization of the Company. Shares of stock covered by expired or
terminated Stock Options, Restricted Stock Awards or Performance Shares may be
used for subsequent awards under the Plan. Moreover, the Plan has been amended
by the Board of Directors to add an additional limitation, prohibiting any
employee from receiving aggregate option, restricted stock or performance share
grants or awards in any year exceeding 400,000 shares of Common Stock.
STOCK OPTIONS
The Plan permits awards of Stock Options, which may be Incentive Stock
Options ("ISOs") or Nonqualified Stock Options, to be made to employees. ISOs
that are granted shall have an exercise price at least equal to the fair market
value of the Company's Common Stock on the date of grant, and shall have a term
fixed by the Committee, and shall have a term of not more than ten years from
the date of grant. Options granted under the Plan may not be transferred except
by will or the laws of descent or distribution and shall be exercisable (not
prior to six months from the date of grant) in accordance with the terms
established by the Committee. The total purchase price of any shares of the
Company's Common Stock purchased on the exercise of Stock Options must be paid
either in cash on the date of exercise of the Option, in shares of the Company's
Common Stock having a fair market value equal to such purchase price, or in a
combination of
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cash and stock. The aggregate fair market value of shares of the Company's
Common Stock subject to ISOs granted to any employee which first became
exercisable in any calendar year may not exceed $100,000.
Stock Options may be exercised during varying periods of time after an
employee's termination of employment, depending upon the reason for the
termination of employment. All Stock Options may be exercised at any time prior
to the expiration date of the Options or within one year following death or
disability, whichever period is shorter, provided, however, that in the case of
ISOs the favorable tax treatment available under Section 422 of the Internal
Revenue Code, as amended, will not be available if such Options are not
exercised within the required statutory time period. If employment is terminated
for reasons other than death or disability, stock Options may be exercised at
any time prior to the expiration date of the Options or within three months
following such termination of employment, whichever period is shorter, provided,
however, that the Committee may extend such period from three months to one
year. Stock Options may only be exercised to the extent that they were
exercisable at the date of termination of employment, and in no event may a
stock Option be exercised after the expiration of its term.
RESTRICTED STOCK AWARDS
The Compensation Committee may also grant Restricted Stock Awards that
result in shares of the Company's Common Stock being issued to a Company
participant, subject to restrictions against disposition during a restricted
period established by the Compensation Committee. During the restricted period,
a participant has the right to vote the shares of restricted stock and to
receive dividends and distributions thereon subject to the same restrictions as
the Restricted Stock. If a participant terminates employment during the
restricted period, all shares still subject to the award's restrictions will be
forfeited and returned to the Company, subject to the right of the Committee to
waive or modify such restrictions in the event of termination of employment for
any reason.
PERFORMANCE SHARES
The Plan also permits the Compensation Committee to make grants of
Performance Shares contingent upon the Company's (or one of its units)
attainment of specified performance objectives over a specified performance
measurement period. A Performance Share is equivalent to one share of the
Company's Common Stock. No Performance Shares have been issued to date.
Performance objectives may relate to such financial and other objectives of
the Company (or one of its units) as the Compensation Committee shall determine.
The amount earned in respect to an award of Performance Shares will vary with
the extent to which a particular performance goal is achieved by a particular
participant. Payment of the earned portion of an award will be made as soon as
administratively practicable after the end of the performance measurement
period. Payment with respect to an award will be made in shares of the Company's
Common Stock.
FEDERAL INCOME TAX CONSEQUENCES
The grant of an ISO or a Nonqualified Stock Option will not result in
income for the participant or in an income tax deduction for the Company.
The exercise of a Nonqualified Stock Option will generally result in
taxable income to the participant and a deduction for the Company, in each case
measured by the difference between the purchase price and the fair market value
of the shares of the Company's Common Stock at the time of exercise at which
time income tax withholding will be required.
The exercise of an ISO will not result in income for the participant if the
participant (a) does not dispose of the shares of the Company's Common Stock
within two years after the date of grant and one year after exercise and (b) is
an employee of the Company or one of its subsidiaries from the date of grant
until six months before the exercise. If these requirements are met, the tax
basis of the shares upon later disposition will be the purchase price. Any gain
will be taxed to the participant as long-term capital gain and the Company will
not be entitled to a deduction. The excess of the market value on the exercise
date over the
17
20
purchase price is an item of tax preference, potentially subject to the
alternative minimum tax. If the participant disposes of the shares prior to the
expiration of either of the holding periods, the participant will recognize
taxable income and the Company will be entitled to a deduction equal to the
lesser of (i) the fair market value of the shares on the exercise date minus the
purchase price or (ii) the amount realized on disposition minus the purchase
price. Any gain greater than the taxable income portion will be treated as long
term or short term capital gain.
The grant of Restricted Stock should not result in income for the
participant or in a deduction for the Company for Federal income tax purposes,
assuming the shares are subject to restrictions resulting in a "substantial risk
of forfeiture", as intended by the Company. Generally, a participant will
realize taxable income when the restrictions lapse. The amount of such income
will be the value of the shares of the Company's Common Stock on that date.
Dividends paid on the shares of the Company's Common Stock and received by the
participant during the restricted period would also be taxable income to the
participant. In all cases, the Company will be entitled to a tax deduction to
the extent that, and at that time that, the participant realizes taxable income
at which time income tax withholding will be required.
The grant of a Performance Share will not result in income for the
participant or in a deduction for the Company. Upon the receipt of shares of the
Company's Common Stock in payment of a Performance Share, the participant will
generally recognize taxable income and the Company will be entitled to a
deduction measured by the fair market value of the shares. Income tax
withholding will be required.
CHANGE IN CONTROL PROVISIONS
In the event that the Company is a party to a merger or consolidation
agreement, (ii) 50% or more of the combined voting power of the Company's then
outstanding securities is beneficially owned by a corporation, other person or
group, or (iii) there is a change in control (as otherwise defined in the Plan)
of the Company, unless the Board of Directors otherwise directs by resolution
adopted prior thereto, all stock Options awarded or granted under the Plan
generally become immediately exercisable, the restricted periods with respect to
Restricted Stock Awards shall expire and all incomplete performance measurement
periods for Performance Shares shall be treated as though they had ended as of
the date of the most recently completed full fiscal year and the Committee shall
determine the amount of awards to be paid to participants.
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OPTION GRANTS UNDER STOCK COMPENSATION PLAN
As of March 7, 1994, options for the purchase of a total of 483,600 shares
of Common Stock were outstanding under the Plan (of which 120,340 were
exercisable as of such date, and options or other awards to purchase an
additional 82,980 shares remained available for grant under the Plan.) The
closing price of the Company's Common Stock at March 7, 1994 was $12.125 per
share. The following table sets forth information as of March 7, 1994, with
respect to stock options which have been received since the Stock Compensation
Plan was adopted by the Company by (i) each of the Company's Chief Executive
Officer and the other executive officers of the Company named in the Summary
Compensation Table, (ii) all executive officers of the Company as a group, (iii)
each of the nominees for election as a director, (iv) all directors of the
Company other than those who are executive officers, as a group, and (v) all
employees of the Company, excluding executive officers, as a group.
OPTIONS
NAME (SHARES)
---- --------
Neal F. Finnegan........................................... 350,000
Domenic Colasacco.......................................... -0-
Theodore M. Shediac........................................ 5,000
Kathie S. Stevens.......................................... 35,000
Eric R. Fischer............................................ 10,300
Robert G. Truslow.......................................... -0-
Frank A. Morse............................................. -0-
James V. Sidell............................................ -0-
Francis X. Messina......................................... -0-
Samuel B. Sheldon.......................................... -0-
------------------------------.............................
------------------------------.............................
All executive officers as a group.......................... 473,600
All directors of the Company, excluding executive officers,
as a group............................................... -0-
All employees of the Company, excluding executive officers,
as a group............................................... 10,000
The affirmative vote of the holders of a majority of the shares of Common
Stock present, in person or by proxy, is required to ratify the adoption and
approval by the Board of Directors of the amendments to the Company's Plan. In
this connection, abstentions and broker non-votes will have the same effect as
negative votes. If the proposal to ratify the amendments to the Plan is not
approved at the Meeting, the Company's 1992 Stock Compensation Plan, as
previously adopted by the Board of Directors and ratified by the stockholders in
1992, will remain in full force and effect.
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EXECUTIVE OFFICERS OF THE COMPANY
EXECUTIVE POLICY COMMITTEE
In 1987, the Board of Directors of the Company created an Executive Policy
Committee which is the primary management forum of the Company for all strategic
and policy decisions. All decisions of the Executive Policy Committee are
subject to the review and approval of the Board of Directors of the Company. The
Executive Policy Committee has been directed by the Board of Directors to make
recommendations to the Board concerning adoption of policies, strategies and
programs concerning the following, among other matters: (a) acquisitions and
dispositions of corporate entities, assets and/or investments; (b) the issuance
of equity and/or debt; (c) engaging in new business activities; (d) the hiring,
termination, training and motivation of senior management; (e) the development
of marketing programs concerning financial services; (f) improvements to
operations, service delivery and implementation of procedures for cost control;
(g) improvements to the financial reporting and financial control systems; (h)
improvements to the business information systems; and (i) improvements
concerning risk management and legal and regulatory compliance programs. As of
March 25, 1994, there were 11 members of the Executive Policy Committee. The
members of the Committee are identified and the background of each Committee
member is set forth below under "Executive Officers."
EXECUTIVE OFFICERS
The names and ages of the executive officers of the Company and each
executive officer's position with the Company and its subsidiaries are listed
below. Each such executive officer is elected annually by the Directors of the
Company (or the Directors of the applicable subsidiary of the Company) and
serves until his or her successor is duly chosen and qualified or until his or
her earlier death, removal or disqualification.
POSITIONS AND OFFICES WITH THE COMPANY (AND/OR
WHERE
APPROPRIATE, POSITION WITH ONE OF THE COMPANY'S
NAME, (AGE) SUBSIDIARIES)
----------- -----------------------------------------------
*Neal F. Finnegan (56)............ President and Chief Executive Officer and
Director of the Company
William Schwartz (61)............ Chairman of the Company and Vice Chairman of the
Board of Directors of the Company
Paul M. Siskind (79)............. Chairman of the Board of Directors of the
Company
*Walter E. Huskins, Jr. (54)...... Executive Vice President/Administration of the
Company
*Domenic Colasacco (45)........... Executive Vice President of the Company and
Chairman and President of USTC
*Eric R. Fischer (48)............. Executive Vice President, General Counsel and
Clerk of the Company and Executive Vice
President, General Counsel and Secretary of
USTrust and USTC
*William C. Brooks (57)........... Senior Vice President, Treasurer, and Chief
Financial Officer of the Company
*Linda J. Lerner (49)............. Senior Vice President/Human Resources of the
Company
*Theodore M. Shediac (54)......... Chairman of the Board, USTrust
*Kathie S. Stevens (43)........... Executive Vice President and Senior Lending
Officer, USTrust
*Kenneth L. Sullivan (57)......... President, UST Data Services Corp.
*Robert T. McAlear (51)........... Vice Chairman, USTrust
*Katherine C. Armstrong (48)...... Senior Vice President/Credit Administration of
the Company
George T. Clarke (47)............ Vice President and Controller of the Company
P. Clarke Dwyer (62)............. Senior Vice President/Loan Review of the Company
- ---------------
*Member, Executive Policy Committee
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The following sets forth the principal occupation during the past five
years of each of the executive officers of the Company.
Mr. Finnegan has served as President and Chief Executive Officer of the
Company since April 1993. During the prior five years, Mr. Finnegan was
Executive Vice President in charge of Private Banking at Bankers Trust Company,
New York, New York. From 1986 to 1988, Mr. Finnegan was President and Chief
Operating Officer of Bowery Savings Bank in New York City. From 1982 to 1986 he
was Vice Chairman of Shawmut Corporation in Boston. Mr. Finnegan also serves as
Vice Chairman of the Board of Trustees of Northeastern University. Mr. Finnegan
is also a Director, President and Chief Executive Officer of USTrust and a
Director and Chairman of the Executive Committee of USTC.
Mr. Schwartz has served as Chairman of the Company since April 1993. Mr.
Schwartz has been Vice Chairman of the Board of Directors of the Company since
1981. Mr. Schwartz is Vice President/Academic Affairs at Yeshiva University and
is of counsel to the New York law firm of Cadwalader, Wickersham & Taft. Mr.
Schwartz formerly served as Dean of Boston University School of Law.
Mr. Siskind has served as Chairman of the Board of the Company since 1967.
He was Chief Operating Officer of the Company from 1976 through 1984 and General
Counsel of the Company in 1984 and 1985. From 1966 through 1976, Mr. Siskind
served as Dean of Boston University School of Law.
Mr. Huskins was elected Executive Vice President / Administration of the
Company in August 1993. Mr. Huskins is also responsible for the leasing and
retail banking activities of the Company. Prior to joining the Company, Mr.
Huskins served as President, Sterling Protection Company, Watertown, MA
(security systems) from 1990 to 1993 and as Vice Chairman of Chancellor
Corporation, Boston, MA (leasing) from 1977 to 1989.
Mr. Colasacco was elected Executive Vice President and a Director of the
Company in 1990. In 1993, he was also elected Chairman of the Board and
President of USTC. Prior to that time, he served as an Executive Vice President
of USTC. He also directs the asset management and investment activities of the
Company and its subsidiaries. Mr. Colasacco has been an officer of the Company
or of one of its subsidiaries since 1974.
Mr. Fischer was elected Executive Vice President, General Counsel and Clerk
of the Company in 1992. Prior to 1992, he served as Senior Vice President,
General Counsel and Assistant Clerk of the Company. Before joining the Company
in 1986, he served as Assistant General Counsel of Bank of Boston Corporation
and its principal subsidiary, The First National Bank of Boston. Mr. Fischer is,
and has been since 1984, a member of the faculty of the Morin Center for Banking
Law Studies of Boston University School of Law. He also serves as Executive Vice
President, General Counsel and Secretary of USTC and USTrust, as a Director and
Clerk of UST Leasing Corporation, as Clerk of UST Data Services Corp. and UST
Capital Corp. and as Assistant Secretary of UST Bank/Connecticut.
Mr. Brooks has been a Senior Vice President of the Company since 1984 and
Treasurer since 1980. He is Chairman of the Asset and Liability Management
Committee of the Company. In addition, he serves as a Director of UST Data
Services Corp. and as a Director and Treasurer of UST Leasing Corporation. Mr.
Brooks has been an officer of the Company since 1967.
Ms. Lerner has served as Senior Vice President of the Company since she
joined the Company in 1988. She directs the Human Resources activities of the
Company. Prior to her joining the Company, Ms. Lerner served in a similar
capacity for the Provident Institution for Savings in Boston.
Mr. Shediac was elected Chairman of the Board of USTrust in 1993. Prior to
that time, he served as President of USTrust. His primary responsibilities
involve the retail banking operations of the Company's banking subsidiaries. Mr.
Shediac has been an officer of the Company or its subsidiaries since 1980.
Ms. Stevens was elected Executive Vice President and Senior Lending Officer
of USTrust in 1993. Since joining the Company in 1985 and until 1993, Ms.
Stevens served in the commercial banking function of USTC as Senior Vice
President from 1985 through 1990 and as Executive Vice President from 1990 until
1993.
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Mr. Sullivan has served as President of UST Data Services Corp. since he
joined the Company in 1988. In that capacity, he has responsibility for the data
processing and information systems of the Company as well as for its operations
activities. Prior to 1988, Mr. Sullivan served as Executive Vice President of
Operations with BayBanks Systems, Inc. in Waltham, MA.
Mr. McAlear has served as Vice Chairman of USTrust since he joined the
Company in 1990. His primary responsibilities involve the supervision of the
controlled loan and real estate lending and workout functions of USTrust and the
Company. Prior to 1990, Mr. McAlear served as an Executive Vice President in the
lending area of the Bank of New England.
Ms. Armstrong was named Senior Vice President / Credit Administration of
USTrust in February 1994. She has served in the credit administration and credit
risk control functions of USTrust since she joined the Company in 1985. Ms.
Armstrong is the Chairman of the Senior Credit Committee of the Company, USTrust
and UST Bank/Connecticut.
Mr. Clarke has served as Vice President and Controller of the Company since
1988. Prior to joining the Company, Mr. Clarke was Deputy Comptroller of The
First National Bank of Boston.
Mr. Dwyer was elected Senior Vice President / Chief Loan Review Officer of
the Company in August 1993. Prior to joining the Company, Mr. Dwyer served as
Senior Vice President / Loan Workout at First New Hampshire Bank, Manchester,
NH, from 1990 through mid-1993. Prior to 1990, Mr. Dwyer was Senior Vice
President of Corporate Credit Review at Shawmut Bank, N.A. in Boston, MA.
There are no arrangements or understandings between any executive officer
and any other person pursuant to which he or she was selected as an executive
officer.
PROPOSED AMENDMENT OF THE COMPANY'S RESTATED ARTICLES
OF ORGANIZATION TO GRANT TO THE DIRECTORS
THE AUTHORITY TO MAKE, AMEND OR REPEAL
THE COMPANY'S BY-LAWS
(NOTICE ITEM 3)
The Board of Directors, by vote adopted on March 15, 1994, has recommended
the adoption by the stockholders of an amendment of the Company's Restated
Articles of Organization, as amended and in effect on the date hereof (the
"Restated Articles of Organization"), which would grant to the directors the
authority to amend the Company's By-laws, with certain exceptions. The proposed
amendment would add the following provision to Article 6 of the Restated
Articles of Organization:
"The directors of this Corporation may make, amend or repeal the By-laws of
the Corporation, in whole or in part, except with respect to any provision
thereof which by law or the By-laws requires action by the stockholders"
The Massachusetts Business Corporation Law reserves to the stockholders the
power to make, amend or repeal the Company's By-laws. This proposal would not
limit such rights. The proposal would give the directors concurrent authority to
make, amend or repeal the Company's By-laws, but only to the extent such
authority is granted in the Company's Restated Articles of Organization, as set
forth above.
The Board believes that it is in the best interest of the Company to grant
such power to the directors so that the directors have the flexibility to change
the By-laws from time to time to respond to changing circumstances. For example,
if the directors determine to change the duties of an officer of the Company, or
to create a committee of directors with authority to take certain actions, the
directors could amend the By-laws to effect such determination, without the
delay and expense associated with a special meeting of stockholders. The
proposal may have certain anti-takeover effects, since the Board of Directors
will generally be able to adopt, amend or repeal By-laws without the approval of
the stockholders.
In no case will the directors have the authority to make, amend or repeal
any provision of the By-laws which by law, the Restated Articles or Organization
or the By-laws requires action by stockholders. For
22
25
example, the directors could not add to the indemnification rights in the
By-laws without approval by stockholders. However, the directors would have the
authority to make, amend or repeal By-law provisions adopted by the stockholders
unless such action was prohibited by law, the Restated Articles of Organization
or the By-laws. In addition, if this proposal is approved, directors would have
the authority to make or amend By-law provisions which, at least in the judgment
of some, adversely affect the rights of stockholders, and to repeal By-law
provisions which benefit stockholders, unless such action was prohibited by law,
the Restated Articles of Organization or the By-laws.
The stockholders would continue to have the right to change the By-laws,
including the right to change a provision of the By-laws enacted by the
directors. In order to have a proposed By-law amendment included in the
Company's proxy statement for an upcoming stockholder meeting, however, the
proposing stockholder would, as at present, have to comply with the stockholder
proposal rule of the Securities and Exchange Commission (Rule 14a-8), including
the advance notice requirement described below under "Stockholder Proposals",
and certain other conditions.
RECOMMENDED VOTE
The affirmative vote of two-thirds of the shares of Common Stock
outstanding and entitled to vote at the Meeting is required to approve this
proposal. In this connection, abstentions and broker non-votes will have the
same effect as negative votes. The Board of Directors believes that this
proposed amendment to the Restated Articles of Organization is in the best
interest of the Company and recommends a vote "FOR" this proposal.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon the recommendation of the Audit Committee, has
selected the firm of Arthur Andersen & Co., independent certified public
accountants, as auditors of the Company for the next fiscal year. The Company
has been advised by such firm that neither it nor any member or associate of
such firm has any relationship with the Company or with any of its affiliates
other than as independent accountants and auditors. Arthur Andersen & Co. have
served as the Company's independent auditors since its organization in 1967.
Representatives of Arthur Andersen & Co. will be present at the Annual
Meeting, will have an opportunity to make any statement they may desire to make,
and will be available to answer appropriate questions from stockholders.
ACTION TO BE TAKEN -- OTHER BUSINESS
(NOTICE ITEM 4)
As of the date of this Proxy Statement, the Board of Directors does not
intend to present to the meeting any business other than the three specific
items listed in the notice, and it has not been informed of any business
intended to be presented by others. Should any other matters, however, properly
come before the meeting, the persons named in the enclosed Proxy will take
action, and vote Proxies, in accordance with their judgment on such matters.
Action may be taken on the business to be transacted at the meeting on the
date specified in the notice of meeting or on any date or dates to which such
meeting may be adjourned.
SECURITY OWNERSHIP OF MANAGEMENT
As of March 7, 1994, there were, to the knowledge of the Company, no
stockholders who beneficially owned more than five percent of the Company's
Common Stock.
23
26
The following table shows the number of shares and percentage of the
Company's Common Stock beneficially owned by each director and nominee for
director, each executive officer named in the Summary Compensation Table above
and by all directors and officers of the Company as a group, as of March 7,
1994:
AMOUNT AND NATURE OF PERCENT OF
NAME BENEFICIAL OWNERSHIP(1) CLASS(1)
---- ----------------------- ---------
James M. Breiner............................ 107,722 *
Domenic Colasacco........................... 54,803(2) *
Robert L. Culver............................ 0 *
Neal F. Finnegan............................ 260,187(3) *
Eric R. Fischer............................. 36,795(4) *
Walter A. Guleserian........................ 5,354 *
Louis T. Falcone............................ 382,135(5) 2.19%
Wallace M. Haselton......................... 75,616 *
Francis X. Messina.......................... 407,542(6) 2.34%
Frank A. Morse.............................. 36,291(7) *
Gerald M. Ridge............................. 47,817(8) *
Theodore M. Shediac......................... 54,245(9) *
William Schwartz............................ 5,775(10) *
Samuel B. Sheldon........................... 44,379(11) *
James V. Sidell............................. 778,946(12) 4.47%
Paul M. Siskind............................. 163,840(13) *
Paul D. Slater.............................. 119,327(14) *
Kathie S. Stevens........................... 53,533(15) *
Robert G. Truslow........................... 41,962(16) *
Michael J. Verrochi......................... 186,754(17) 1.07%
------------------------------..............
------------------------------..............
All Directors and Officers as a group (27
persons) 3,330,898(18) 19.13%
<FN>
- ---------------
* Less than 1%.
(1) Information as to the interests of the respective executive officers and
directors has been furnished in part by them. As of March 7, 1994, all such
shares are held of record unless otherwise indicated. The inclusion of
information concerning shares held by or for their spouses, children or by
trusts or corporations in which they have an interest does not constitute
an admission by such persons of beneficial ownership thereof. Unless
otherwise indicated, all persons have sole voting and dispositive power as
to all shares they are shown as owning. With respect to the directors, each
Director of the Company as of January 1, 1990 who was not also an officer
of the Company, has received options to purchase 5,250 shares of Common
Stock of the Company at a price of $6.07 per share pursuant to the
Company's Directors' Stock Option Plan. Eighty percent of each grant is
exercisable within 60 days of the May 17, 1994 scheduled date of the
Meeting.
(2) Mr. Colasacco's wife beneficially owns an additional 189 shares of the
Company's Common Stock as to which Mr. Colasacco disclaims any beneficial
interest. The number of shares reported includes 7,983 shares held for Mr.
Colasacco's benefit under the Company's Stock Ownership Plan.
(3) Includes 60,000 shares of Common Stock awarded as Restricted Stock pursuant
to the Company's Stock Compensation Plan and an aggregate of 175,000 shares
which Mr. Finnegan has the present right to acquire through the exercise of
stock options. Also includes 187 shares held for Mr. Finnegan's benefit
under the Company's Stock Ownership Plan.
(4) Includes an aggregate of 28,780 shares which Mr. Fischer has the present
right to acquire through the exercise of stock options, 3,333 shares which
remain subject to forfeiture as Restricted Stock pursuant to
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27
the Company's Stock Compensation Plan, and 1,840 shares held for Mr.
Fischer's benefit under the Company's Stock Ownership Plan.
(5) Does not include 10,321 shares held by Mr. Falcone's wife and an aggregate
of 56,219 held directly by Mr. Falcone's son or in trusts as to which Mr.
Falcone's son is the trustee or custodian.
(6) See discussion covering "Compensation Committee Interlocks and Insider
Participation" above.
(7) Includes 10,000 shares held by Mr. Morse's spouse and 11,591 shares held
for Mr. Morse's benefit under the Company's Stock Ownership Plan.
(8) Includes 3,242 shares owned by Gerald M. Ridge Corp. of which Mr. Ridge is
President.
(9) Includes 14,700 shares of Common Stock which Mr. Shediac has the present
right to acquire and 6,234 shares held for Mr. Shediac's benefit under the
Company's Stock Ownership Plan.
(10) All 1,575 shares are held jointly with Mr. Schwartz's wife.
(11) Does not include an aggregate of 14,277 shares held by Mr. Sheldon's two
sons, who are adults, and as to which shares Mr. Sheldon disclaims any
beneficial interest.
(12) Includes 757,386 shares held directly. Also includes 21,560 shares held for
Mr. Sidell's benefit under the Company's Stock Ownership Plan. Does not
include 614,727 shares of Common Stock beneficially owned by Mr. Sidell's
former spouse, Barbara C. Sidell, as to which Mr. Sidell disclaims any
beneficial ownership. Also does not include 53,306 shares owned by the
daughters and grandchildren of James V. Sidell and Barbara Sidell, as to
which shares Mr. Sidell disclaims any beneficial ownership. Furthermore,
does not include an aggregate of 1,463 shares of Common Stock held by Mr.
Sidell's wife Louisa Kasdon-Sidell and Mr. Sidell's stepchildren, both of
whom are minors, as to all of which Mr. Sidell disclaims any beneficial
ownership.
(13) Includes 9,702 shares held by Mr. Siskind's wife and 59,977 shares held by
Mr. Siskind in a fiduciary capacity with both voting and dispositive
powers.
(14) Does not include 74,369 shares owned by Mr. Slater's sister as to which
shares Mr. Slater disclaims beneficial ownership. The number of shares
reported are held by Mr. Slater and his wife as tenants by the entirety.
(15) Includes an aggregate of 42,190 shares which Ms. Stevens has the present
right to acquire through the exercise of stock options, 3,333 shares of
Common Stock which remain subject to forfeiture as Restricted Stock
pursuant to the Company's Stock Compensation Plan and 1,343 shares held for
Ms. Steven's benefit under the Company's Stock Ownership Plan.
(16) Includes 15,750 shares held by Mr. Truslow's spouse and 2,020 shares held
for Mr. Truslow's benefit under the Company's Stock Ownership Plan.
(17) Includes 31,361 shares held of record, 81,200 shares held by an affiliated
realty trust and 69,993 shares held by a corporation of which Mr. Verrochi
is President.
(18) The amount includes 427,525 shares of Common Stock subject to exercisable
outstanding stock options and also includes 406,157 shares held by the
Company's subsidiary, United States Trust Company, as trustee under the
Company's Stock Ownership Plan and allocated to such directors and
officers.
STOCKHOLDER PROPOSALS
Any stockholder of the Company may present a proposal for consideration at
future meetings of the stockholders of the Company. Any proposal for
consideration at next year's meeting of stockholders must be received by the
Company at its principal executive offices, 40 Court Street, Boston,
Massachusetts 02108, Attention: Eric R. Fischer, Executive Vice President,
General Counsel and Clerk, no later than December 29, 1994, except that if the
next year's annual meeting date is changed by more than 30 calendar days from
the regularly scheduled date, May 16, 1995, the Company must receive such a
proposal within a reasonable time before the Board of Directors makes its proxy
solicitation.
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28
ADDITIONAL FINANCIAL INFORMATION
Stockholders desiring additional information about the Company and its
operations should refer to the Company's Annual Report to the Securities and
Exchange Commission on Form 10-K for the fiscal year ended December 31, 1993, a
copy of which constitutes a portion of the Annual Report to Stockholders mailed
prior to or with this Proxy Statement.
By Order of the Board of Directors
----------------------------------
ERIC R. FISCHER
CLERK
Dated: April 20, 1994
Boston, Massachusetts
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29
UST CORP.
Proxy For Annual Meeting of Stockholders
This proxy is solicited on behalf of the Board of Directors
The undersigned stockholder of UST Corp., a Massachusetts corporation (the
"Company"), hereby constitutes and appoints Paul M. Siskind, Neal F. Finnegan
and Eric R. Fischer, and each of them, his attorneys and Proxies (with full
power of Substitution in each), and hereby authorizes them to represent the
undersigned and to vote, as designated on the reverse side, all the shares of
Common Stock of the Company held of record by the undersigned on March 31, 1994
at the Annual Meeting of Stockholders of the Company to be held on
Tuesday, May 17, 1994 and at any adjournments thereof.
This proxy when properly executed will be voted in the manner directed herein
by the undersigned holder. If no direction is made, this Proxy will be
voted for Proposals 1, 2 and 3.
Comments/Address Change:______________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
30
x PLEASE MARK VOTES AS IN THIS EXAMPLE.
1. Election of Directors With- For All 2. Authorizing the Proxies to vote For Against Abstain
For Hold Except in favor of an amendment to the / / / / / /
/ / / / / / Company's Stock Compensation
Plan to authorize the grant of 350,000
Domenic Colasacco, Francis X. Messina, additional shares of the Company's
Samuel B. Sheldon, James V. Sidell Common Stock under the
foregoing Plan.
INSTRUCTION: To withhold authority to vote for
any individual nominee, mark the "For All Except" 3. Authorizing the Proxies to vote For Against Abstain
box and write that nominee's name on the line in favor of an amendment to the / / / / / /_
provided below. Company's Restated Articles of
Organization to permit the Directors
__________________________________________________ to make, amend or repeal the Company's
By-laws.
RECORD DATE SHARES:
Mark box at right if comments or address / /
change has been noted on reverse side of card
In their discretion, the Proxies are
authorized to vote upon other business as may
come before the Meeting.
(Signature) x: _______________________________ Date:
(Signature) x: _______________________________ Date:
Note: Please sign exactly as name appears hereon. Joint owner should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
31
UST CORP.
Dear Stockholder:
Please take note of the important information enclosed with this Proxy
Ballot. There are a number of issues related to the management and
operation of your Company that require your immediate attention and
approval. These are discussed in detail in the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to
vote your shares.
Please mark the boxes on the proxy card to indicate how your shares shall
be voted. Then sign the card, detach it and return your proxy vote in the
enclosed postage paid envelope. Your vote must be received prior to the
Annual Meeting of Stockholders, May 17, 1994.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
UST Corp.