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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT /X/ FILED BY A PARTY OTHER THAN THE REGISTRANT / /
- - --------------------------------------------------------------------------------
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
UST Corp.
(Name of Registrant as Specified In Its Charter)
UST Corp.
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act
Rule 0-11 (Set forth the amount on which the filing fee is calculated and
state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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[LOGO]
UST CORP.
40 COURT STREET
BOSTON, MASSACHUSETTS
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 16, 1995
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 16th day of May, 1995 at 10:00 o'clock in the forenoon for the
following purposes:
1. To elect five Directors of the Company, each of whom will serve for a
three-year term;
2. To ratify and approve amendments to 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 as well as to effect certain other
changes;
3. To ratify and approve a new Stock Option Plan for certain Directors; and
4. To transact any other business which may properly come before the
meeting, or any adjournment thereof.
The close of business on March 31, 1995 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, 1995.
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
[Sig]
Eric R. Fischer, Clerk
April 20, 1995
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[LOGO]
UST CORP.
40 COURT STREET
BOSTON, MASSACHUSETTS
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 16, 1995
April 20, 1995
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 16, 1995, and at any adjournments thereof, for the
purposes set forth in the foregoing Notice of Annual Meeting.
The close of business on March 31, 1995 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.
The financial statements for the Company for the fiscal year ended December
31, 1994, together with corresponding figures for the previous fiscal year, are
contained in the Annual Report to UST Corp. Stockholders for the year ended
December 31, 1994, which was mailed to stockholders prior to, or simultaneously
with, the mailing hereof. Certain additional information concerning the Company
which supplements the Annual Report to Stockholders is included as Exhibit C
hereto.
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 five
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 under the Plan as well as to affect certain other
changes; and (iii) "for" the new Stock Option Plan for certain Directors. The
enclosed Proxy confers discretionary authority on the persons named therein (or
their substitutes) to act on any other business which may properly come before
the meeting. 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 as well as representatives of Morrow & Co., professional proxy
solicitors, may solicit Proxies by personal interview, by telephone or by
telecopy. Employees and Directors of the Company will not receive additional
compensation for such efforts, and Morrow & Co. is expected to receive
approximately $6,000, plus out-of-pocket expenses, for such solicitation. 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, except that votes cast by employees of the
Company and/or its subsidiaries shall be held confidential.
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As of March 31, 1995, the Company had outstanding 17,679,804 shares of
common stock, $0.625 par value per share ("Common Stock"), each entitled to one
vote. A majority, or 8,839,903 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 as is fixed by the Directors, divided into
three classes as nearly equal in number as possible, serving staggered
three-year terms. The Board of Directors has fixed the number of Directors at
eighteen (18). One of the six positions on the Board of Directors to be elected
at this meeting will remain vacant. The Board of Directors will have the power
to fill that vacancy or to change the size of the Board at any time. The Board
of Directors, following the recommendation of the Nominating Committee, has
recommended the following five nominees (all of whom are currently Directors) to
fill the five positions, each of whom, if elected, will hold office for a
three-year term until the 1998 annual meeting of stockholders and until his
successor is chosen and qualified. Unless otherwise specified, Proxies will be
voted in favor of the five nominees' 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 of those one or more
individuals.
POSITIONS (IN ADDITION TO DIRECTOR OF THE COMPANY),
COMMITTEE MEMBERSHIPS AND
NAME (AGE) DIRECTOR SINCE OFFICES WITH THE COMPANY AND ITS SUBSIDIARIES
- - --------------------------- -------------- ---------------------------------------------------
Robert L. Culver (46) 1993 Chairman, Audit Committee and Member, Compensation
Committee; Director USTrust
Neal F. Finnegan (57) 1993 President and Chief Executive Officer of the
Company and Chairman, President and Chief
Executive Officer of USTrust; Chairman of the
Executive Committee of United States Trust
Company; Member, Nominating Committee
Walter A. Guleserian (63) 1985 Chairman, Community Reinvestment Committee;
Member, Nominating Committee; Director USTrust
Wallace M. Haselton (73) 1971 Member, Oversight and Compensation Committees;
Director USTrust
Paul D. Slater (60) 1980 Chairman, Compensation and Asset Quality
Committees; Director USTrust
Mr. Culver is Senior Vice President and Treasurer of Northeastern
University in 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 UST Corp. Mr. Finnegan is also Chairman, President and
Chief Executive Officer of USTrust and Chairman of the Executive Committee of
United States Trust Company. 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 1983 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. 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.
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's Executive Officers and Directors to file reports of
ownership and changes in ownership with the Securities and
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Exchange Commission. Executive Officers and Directors are required by 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 1994, all such
filing requirements applicable to its Executive Officers and Directors were
complied with by such individuals.
There are currently thirteen Directors of the Company, one Director whose
election remains subject to bank regulatory approval, and four vacancies on the
Board.
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
- - ------------------------- -------------- ---------------------------------------- --------------
Domenic Colasacco (46) 1990 Executive Vice President of the Company 1997
and Chairman and President of United
States Trust Company
Brian W. Hotarek (48) 1994 Director, USTrust 1996
Francis X. Messina (65) 1988 Member, Compensation Committee; 1997
Director, USTrust
Vikki L. Pryor (41)* 1995 Director, USTrust*; Member, Community 1996
Reinvestment Committee
Gerald M. Ridge (65) 1982 Member, Oversight and Asset Quality 1996
Committees; Vice Chairman, USTrust
William Schwartz (61) 1981 Vice Chairman of the Board of Directors 1996
of the Company; Chairman, Oversight
Committee and Member, Executive
Committee
Samuel B. Sheldon (75) 1969 Member, Oversight and Executive 1997
Committees
James V. Sidell (64) 1967 Chairman of the Executive Committee of 1997
the Company; Director, USTrust and
United States Trust Company
Michael J. Verrochi (55) 1974 Member, Oversight, Executive and 1996
Nominating Committees; Director, USTrust
<FN>
- - ---------------
* subject to regulatory approval
Mr. Colasacco is Executive Vice President of the Company and Chairman and
President of United States Trust Company. Mr. Hotarek has been Senior Vice
President, Real Estate and Development for the Stop & Shop Supermarket Company
since 1990. Mr. Messina serves as President of Wildwood Estates of Braintree,
Inc. (real estate development, management and leasing) and as President of F.X.
Messina Construction Corp. (general contracting and construction). Ms. Pryor is
Senior Vice President, Operations and Systems for Blue Cross Blue Shield of
Massachusetts in Boston, Massachusetts. Prior to joining Blue Cross Blue Shield
in 1993, Ms. Pryor served as Director of Credit Insurance Products and
Operations for the Sears, Discover, and Sears Mortgage Corporation Division of
Allstate Life Insurance Company. As noted above, Ms. Pryor's election remains
subject to receipt of regulatory approval from The Federal Reserve Bank of
Boston. Mr. Ridge is Vice Chairman of USTrust and President of Blue Hill
Cemetery. Mr. Schwartz is Vice President/Academic Affairs (Chief Academic
Officer) of Yeshiva University in New York City. He also serves as 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., Viacom International, Inc., (diversified media,
publishing and entertainment holding companies) and of W.C.I. Steel, Inc. (steel
manufacturer). 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 President of Pomme Frite, Inc. in Cambridge,
Massachusetts. Prior to April 1, 1993, Mr. Sidell was President and Chief
Executive Officer of the Company. Mr. Verrochi serves as Executive Vice
President of Browning-Ferris
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Industries, Inc. (waste management); Director of Ref-Fuel, Inc. (refuse to
energy); President of Monadnock Mountain Spring Water Inc. and President and
Director of Abita Spring Water Company, Inc. and Emerald Valley Water
Corporation (producers of bottled water); Vice President and Treasurer of VRT
Corp. (real estate development and construction); Treasurer of Marshfield
Insurance Co., Inc.; President of Universal Construction Inc.; President of Park
Properties, Inc. (parking facility); 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 is or
are not available for election at the Annual Meeting, Proxies in the
accompanying form may be voted for a substitute nominee or nominees, as well as
(in the absence of contrary instructions) for the balance of those named herein.
The Board of Directors has no reason to 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,
Nominating Committee, Asset Quality 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 with
respect to internal controls and compliance 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 seven meetings of the Audit Committee during 1994.
Mr. Culver serves as Chairman of the Committee and Messrs. David Engelson (a
Director of UST Bank/Connecticut), Arthur Gillis (a Director of United States
Trust Company), Sydney Miller (a Director of USTrust and United States Trust
Company), and Gordon Weiner (a Director of USTrust) also currently serve on the
Audit Committee.
In 1992, the Company established an Oversight Committee whose members are
Mr. Schwartz (Chairman) and Messrs. Haselton, Ridge, Sheldon and Verrochi. Mr.
Eric R. Fischer, Executive Vice President, General Counsel and Clerk of the
Company, serves as Secretary to the Oversight Committee. This Committee, which
held twelve meetings in 1994, 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.
The Compensation Committee has four members, Mr. Slater (Chairman) and
Messrs. Culver, Haselton and Messina. The Committee considers and, when
appropriate, makes determinations or recommendations to the Board regarding
employee and Director compensation (including employee and Director stock
compensation) matters. The Committee met eight times in 1994.
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 was one meeting of the
Nominating Committee during 1994. Messrs. Verrochi (Chairman), Finnegan, Robert
Coard (a Director of USTrust), and Guleserian 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 on or before December 26, 1995 for the 1996
Annual Meeting and include sufficient biographical material to permit an
appropriate evaluation.
In 1990, the Company established a Community Reinvestment Committee whose
current members are Mr. Guleserian (Chairman) and Messrs. Coard, Alan
DerKazarian and Edward Sullivan (Directors of USTrust), Messrs. Stanley Shuman
and Arthur Snyder (Directors of United States Trust Company). Messrs. Walter
Huskins and Paul Ambrose (Directors of UST Bank/Connecticut) also serve as
members of this Committee. Subject to receipt of regulatory clearance, Ms. Pryor
will also serve on this Committee. Representatives of UST Bank/Connecticut
report periodically to the Committee. The Committee held six meetings in 1994.
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. Schwartz, Sheldon and Verrochi. The Executive Committee
is authorized to act 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 1994.
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 sixteen times in 1994. It is chaired by Mr. Slater and its
members include Mr. Ridge and Ms. Barbara Sidell, Mr. Donald Dolben and Mr.
Sullivan (Directors of USTrust).
During 1994, there were thirteen 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
1994 was $15,000. In addition, in 1994, 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 Chairman who receives
$500 per meeting and $500 per diem for work on
committee matters when a meeting is not held)
iv) Compensation Committee $250 per meeting (except Chairman who receives
$500 per meeting and $500 per diem for work on
committee matters when a meeting is not held)
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 December 19, 1989 and who is
not an employee of the Company) was granted an option to acquire 5,250 shares of
the Company's Common Stock at $6.07 per share pursuant to the 1989 Directors'
Stock Option Plan. The foregoing options, all of which were exercised prior to
their expiration, would have expired on March 18, 1995. The Board of Directors
has approved, subject to stockholder ratification and approval (see Notice Item
No. 3), a plan which would grant additional stock options to the outside
Directors of the Company and USTrust.
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Instead of receiving a retainer or meeting fees, in 1994 Mr. Ridge received
$45,000 for services performed in his capacity as Vice Chairman of USTrust.
In addition to the foregoing, Mr. James Breiner, a former Director of the
Company, who retired on February 28, 1995, received compensation in the amount
of $20,314 for services performed as Chairman of the Board of UST
Bank/Connecticut.
Mr. Paul M. Siskind, who resigned as Chairman of the Board of the Company
on October 18, 1994, received $92,022 for services performed in his capacity as
Chairman of the Board of the Company in 1994. As an officer and employee, Mr.
Siskind did not receive any of the Director's fees described above.
The Company also maintains a deferred compensation program which covers
Directors of the Company and Directors of any subsidiary of the Company whose
Board of Directors elects to participate. Under this program, Directors may
elect to defer all or any portion of their Directors' meeting fees and annual
stipend. Each participant is treated as a general, unsecured creditor of the
Company and has the right to receipt of his other deferred compensation upon
termination of Director status. Payments of the deferred amounts are made in
shares of Common Stock of the Company.
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
$10.25 price, which was the closing price of the Common Stock for December
31,1994, 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
SALARY BONUS AWARD(S) OPTIONS/ COMPENSATION
YEAR $ $ ($)(A) SARS(#) ($)(B)
---- --------- --------- ---------- ---------- -------------
Neal F. Finnegan,(C)...................... 1994 $ 314,748 -- $ 50,002(C) 200,000 $ 1,607
President and Chief Executive Officer 1993 $ 264,808 $ 40,000 $517,500 150,000(C) $ 2,250
of the Company 1992 -- -- -- -- --
Domenic Colasacco,(D)..................... 1994 $ 238,254 $ 575,000 -- -- $ 1,607
Executive Vice President/Trust and 1993 $ 236,092 $ 579,287 -- -- $ 2,247
Asset Management of the Company; 1992 $ 224,914 $ 453,077 -- -- $ 3,000
Chairman and President,
United States Trust Company
Walter E. Huskins, Jr.,(E)................ 1994 $ 213,050 -- $123,000 76,000 $ 1,607
Executive Vice President/Administration 1993 $ 86,515 -- -- -- --
of the Company 1992 -- -- -- -- --
Robert T. McAlear,(F)..................... 1994 $ 212,450 -- $ 92,250 30,300 $ 1,607
Executive Vice President/ 1993 $ 211,916 -- -- -- $ 1,837
Controlled Loans of the Company 1992 $ 200,490 -- -- -- $ 1,177
Kathie S. Stevens,(G)..................... 1994 $ 202,611 -- $ 20,500 63,000 $ 1,607
Executive Vice President and Senior 1993 $ 200,327 $ 15,000 -- -- $ 1,900
Lending Officer of the Company 1992 $ 165,847 -- $ 90,000 10,000 $ 2,057
<FN>
- - ---------------
(A) The 1994 values reflect a Common Stock closing price of $10.25 on November
29, 1994, the date the awards to Ms. Stevens and Messrs. Huskins and
McAlear were made. With respect to Mr. Finnegan's 1994 award see footnote C
below. The 1993 values reflect a Common Stock closing price of $8.625 on
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April 20, 1993, the date the award to Mr. Finnegan was made. The 1992
values reflect a Common Stock closing price of $8.75 on August 18, 1992,
the date the award was made to Ms. Stevens. As of December 31, 1994 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, 1994
---------------------------
TOTAL
NUMBER AGGREGATE
OF RESTRICTED MARKET
NAME SHARES HELD VALUE
---- ------------- ---------
Neal F. Finnegan..................................... 40,000 $ 410,000
Domenic Colasacco.................................... 4,200 $ 43,050
Walter E. Huskins, Jr. .............................. 8,000 $ 82,000
Robert T. McAlear.................................... 6,000 $ 61,500
Kathie S. Stevens.................................... 4,666 $ 47,827
<FN>
These shares are forfeitable to the Company and subject to restrictions on
transfer. Upon grant the recipient has full voting and dividend rights with
respect to all shares granted. Other than the January 1995 grant to Mr.
Finnegan described in footnote C below, the shares of Restricted Stock vest
over periods which vary from two to five years, subject to acceleration in
the event of a "change of control" of the Company. The grants to Messrs.
Huskins, McAlear and Ms. Stevens vest over periods of approximately two
years and two months. The grant to Mr. Finnegan of 5,195 shares shown in
the Summary Compensation Table for 1994 and described in footnote C below
is not reflected on the table above and vested in approximately 60 days.
The other grants to Mr. Finnegan vest over three years.
(B) The amounts reported for 1994 for each of the named Executive Officers
consist of (i) allocations under the Company's Employee Stock Ownership
Plan to Mr. Finnegan of $1,301, Mr. Colasacco of $1,301, Mr. Huskins of
$1,301, Mr. McAlear of $1,301 and Ms. Stevens of $1,301 and (ii)
allocations under the Company's Profit-Sharing Plan to Mr. Finnegan of
$306, Mr. Colasacco of $306, Mr. Huskins of $306, Mr. McAlear of $306 and
Ms. Stevens of $306.
(C) The Company entered into a three year 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 stock-based compensation
described herein. See "Employment Agreements." The $50,002 Restricted Stock
award to Mr. Finnegan reported for 1994 was paid in early 1995, but was
intended to compensate him for his performance in 1994. The award was based
on a price per share of common stock of $9.625 per share which reflects the
closing price of the Company's common stock on December 20, 1994.
(D) Through June 30, 1994, Mr. Colasacco had an incentive arrangement pursuant
to which he received a percentage of pre-tax income, as defined, of the
Asset Management Division of United States Trust Company. As of January 1,
1995, the Company and USTC, subject to regulatory approval, entered into a
two and one-half year Employment Agreement with Mr. Colasacco which is
described under "Employment Agreements". Although the Employment Agreement
was entered into as of January 1, 1995, the revised revenue sharing
arrangement was effective as of July 1, 1994.
(E) Mr. Huskins entered into a two-year Employment Agreement dated October 24,
1994. This arrangement was in effect in 1994. See "Employment Agreements".
(F) Mr. McAlear entered into an Employment Agreement with the Company and
USTrust dated July 11, 1990 which currently runs year-to-year with a
six-month notice period. This arrangement was in effect in 1994. See
"Employment Agreements".
(G) Ms. Stevens does not have an Employment Agreement with the Company or its
subsidiaries.
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STOCK-BASED COMPENSATION
The Stock Compensation Plan originally adopted in 1992, as amended to date,
provides for granting of Incentive Stock Options, Nonqualified Stock Options and
Restricted Stock Awards 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
Notice Item 2 below. The most recent amendments to the Plan are being presented
to the stockholders for approval under Notice Item 2 below.
The following table provides details regarding stock options granted to the
named Executive Officers in 1994 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
1994 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 1994
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(D)
GRANTED EMPLOYEES PRICE DATE EXPIRATION -----------------------------
(#) IN 1994 ($/SH.) ($/SH.)(C) DATE 0% 5% 10%
---------- ---------- -------- --------- ---------- --- -------- --------
Neal F. Finnegan....... 200,000(A) 27.36% $ 9.00 $9.00 07/19/96 $ 0 $283,725 $595,800
Domenic Colasacco...... 0 -- -- -- -- -- -- --
Walter E. Huskins, Jr.. 76,000(B) 10.40% $ 9.75 $9.75 02/06/00 $ 0 $116,800 $245,271
Robert T. McAlear...... 30,300(B) 4.15% $ 9.75 $9.75 02/06/00 $ 0 $ 46,566 97,786
Kathie S. Stevens...... 63,000(B) 8.62% $ 9.75 $9.75 02/06/00 $ 0 $ 96,821 $203,317
<FN>
- - ---------------
(A) Options vest over two years, 50% on each anniversary date of the date of grant.
(B) Options fully vested on date of grant.
(C) Closing price of Common Stock of the Company on the date of grant.
(D) Realizable value represents the difference between the assumed stock price
at the expiration date and the exercise price.
The following table shows stock option exercises by the named Executive
Officers during 1994, 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, 1994. 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 $10.25.
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AGGREGATED OPTION EXERCISES IN 1994 AND
YEAR-END 1994 OPTION VALUES
VALUE OF
NUMBER OF UNEXERCISABLE UNEXERCISED, IN-THE-
OPTIONS HELD AT MONEY, OPTIONS AT FISCAL
SHARES FISCAL YEAR END YEAR END
ACQUIRED VALUE --------------------------- ---------------------------
ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- -------- ----------- ------------- ----------- -------------
Neal F. Finnegan......................... -- $ -- 175,000 175,000 $ 218,750 $ 218,750
Domenic Colasacco........................ -- $ -- 2,520 1,680 $ 10,530 $ 840
Walter E. Huskins, Jr.................... -- $ -- 76,000 -- $ 38,000 $ 0
Robert T. McAlear........................ -- $ -- 42,900 3,150 $ 75,422 $ 13,163
Kathie S. Stevens........................ -- $ -- 75,190 9,360 $ 85,386 $ 23,700
RETIREMENT BENEFITS
The following table presents the years of service to the Company and the
1994 remuneration covered by the Company's Pension Plan and Supplemental
Retirement Benefits Plan for the five Executive Officers with regard to whom
information is provided in the Executive Compensation Table.
CURRENT
YEARS OF SERVICE COVERED REMUNERATION
---------------- --------------------
Neal F. Finnegan............................. 2 $300,675
Domenic Colasacco............................ 21 $225,375
Walter E. Huskins, Jr. ...................... 1 $200,000
Robert T. McAlear............................ 4 $203,900
Kathie S. Stevens............................ 9 $191,500
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 Sections 415 and 401(a)(17) 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 a
Supplemental Retirement Benefits Plan adopted by the Board of Directors. As of
December 31, 1994, Messrs. Finnegan and Colasacco were the only individuals
named in the Summary Compensation Table covered by the Supplemental Retirement
Benefits Plan.
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COMPENSATION COMMITTEE REPORT
COMPENSATION PHILOSOPHY
This Report reflects the Company's compensation philosophy and resulting
actions taken by the Company for 1994, 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, (except as noted below with respect to the key executives of
USTC's Asset Management Division) 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. Mr. Colasacco and the
other key executives of USTC's Asset Management Division are compensated
primarily through a cash-based, revenue sharing arrangement which is generally
based upon gross revenues earned by the Division. See "Employment Agreements"
below with respect to Mr. Colasacco's Employment Agreement.
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.
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.
This trend continued in 1994 as the Company completed the selection of its
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 the Standard & Poor's 500 Index, the Keefe,
Bruyette & Woods ("KBW") New England Bank Index, the Dow Jones Equity Market
Index and the Dow Jones Regional Banks, East Index.
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13
The following is a discussion of the Compensation Committee's bases for Mr.
Finnegan's compensation reported for 1994, and its general policies with respect
to the other executive officers named in the Summary Compensation Table. Mr.
Finnegan served as Chief Executive Officer throughout 1994.
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 was and continues to be within the
range of base salaries for Chief Executive Officers of other similarly-sized
bank holding companies.
With respect to the compensation of the other executive officers named in
the Summary Compensation Table, the Compensation 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. Finnegan received a 5,195 share Restricted Common Stock bonus in early
1995 to reflect his performance in 1994 (and which is reflected in the Summary
Compensation Table), based upon a subjective determination of the Compensation
Committee, considering in particular Mr. Finnegan's success in reducing the
nonperforming assets of the Company in 1994. No profit-sharing grant under the
UST Corp. Employee Savings Plan (other than the distribution of forfeitures) was
made to any employee by the Board of Directors in 1994.
1994 STOCK AWARDS
The Company's Stock Compensation Plan, approved by stockholders in 1992,
permits the granting of several different types of stock-based awards. The
Company's 1989 Restricted Stock Bonus Award Program permits the granting of
awards of restricted stock. To date, only stock options have been granted to
certain Executive Officers and key employees under the 1992 Stock Compensation
Plan; all awards of restricted stock have been made under the 1989 Restricted
Stock Bonus Award Program. 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 January 1994, the Company also granted Mr. Finnegan options for
200,000 shares of Common Stock. In 1995, the Company granted Mr. Finnegan an
additional 5,195 shares of Restricted Common Stock (see "Bonus Award", above).
Other than the 5,195 shares of Restricted Common Stock granted in 1995, the
compensation awarded to Mr. Finnegan was negotiated by the Company in connection
with Mr. Finnegan's assumption of his duties as President and Chief Executive
Officer of the Company and his entry into his April 1993 Employment Agreement
with the Company. See "Employment Agreements."
REPRICING STOCK OPTIONS AND RELATED COMPENSATION COMMITTEE REPORT
In December 1989, April 1990, April 1991, and December 1994, the Board of
Directors of the Company authorized an option substitution program permitting
employees to surrender options with an option price of more than $14.29, $10.00,
$6.07, and $9.75, respectively, in exchange for new options. Outstanding options
for 149,331, 513,817, 516,502, and 273,500 shares, respectively, were exchanged
under the program. Options were exchanged on a one-for-one basis at an option
price of $14.29, $10.00, $6.07, and $9.75, respectively, per share, the fair
market value of the Company's Common Stock on the date of authorization. The new
options vest over periods of up to five years.
The Company granted options in early 1994 at fair market value exercise
prices to a group of its most senior executives, all of whom were and are
members of the Executive Policy Committee. Later in 1994, options grants were
made to certain managers who report to and are supervised by Executive Policy
Committee members. During the intervening period, the market price of the
Company's Common Stock
11
14
declined. In order to motivate highly the senior managers and to enable both
levels of managers to work from the same base exercise price, the Compensation
Committee decided to reprice the Executive Policy Committee members' early 1994
options to the same lower exercise price granted to managers who report to them.
Accordingly, in December 1994 all of the foregoing options were priced at $9.75
per share.
Provided below is a table setting forth all options held by present or
former executive officers repriced by the Company during the past ten years. In
some cases the options disclosed have been repriced more than once and,
therefore, the aggregate number of options indicated for an officer may be
greater than the actual total number of options he or she was granted.
TEN-YEAR OPTION/SAR REPRICINGS
LENGTH OF
ORIGINAL
NUMBER OF OPTION
SECURITIES MARKET PRICE EXERCISE TERM
UNDERLYING OF STOCK AT PRICE REMAINING
OPTIONS/SARS TIME OF AT TIME OF NEW AT DATE OF
REPRICED OR REPRICING OR REPRICING OR EXERCISE REPRICING OR
AMENDED AMENDMENT AMENDMENT PRICE AMENDMENT
NAME DATE (#) ($) ($) ($) (MONTHS)
- - ------------------------------------------ -------- ------------ ------------ ------------ -------- -------------
Finnegan, Neal F.......................... -- -- -- -- -- --
President and Chief Executive Officer
Colasacco, Domenic........................ 04-23-90 4,200 $10.0000 $12.3810 $10.0000 7
Executive Vice President of the Company, 04-16-91 4,200 $ 6.0714 $10.0000 $ 6.0710 47
and Chairman and President of USTC
Huskins, Jr., Walter E.................... 12-06-94 7,700 $ 9.7500 $12.8750 $ 9.7500 0
Executive Vice President 12-06-94 22,300 $ 9.7500 $12.8750 $ 9.7500 0
12-06-94 46,000 $ 9.7500 $12.5000 $ 9.7500 0
McAlear, Robert T......................... 04-16-91 15,750 $ 6.0714 $ 9.5238 $ 6.0714 51
Vice Chairman, USTrust and Executive 12-08-94 6,200 $ 9.7500 $12.8750 $ 9.7500 0
Vice President of the Company 12-06-94 4,100 $ 9.7500 $12.8750 $ 9.7500 0
12-06-94 20,000 $ 9.7500 $12.5000 $ 9.7500 0
Stevens, Kathie S......................... 12-19-89 4,200 $14.2857 $16.9048 $14.2857 21
Executive Vice President 12-19-89 2,100 $14.2857 $18.0952 $14.2857 36
04-23-90 4,200 $10.0000 $14.2857 $10.0000 55
04-23-90 2,100 $10.0000 $14.2857 $10.0000 55
04-16-91 6,300 $ 6.0714 $10.0000 $ 6.0714 47
12-06-94 5,300 $ 9.7500 $12.8750 $ 9.7500 0
12-06-94 19,700 $ 9.7500 $12.8750 $ 9.7500 0
12-06-94 38,000 $ 9.7500 $12.5000 $ 9.7500 0
Armstrong, Katherine C.................... 04-16-91 2,100 $ 6.0714 $16.9048 $ 6.0714 5
Senior Vice President 04-16-91 1,050 $ 6.0714 $18.0952 $ 6.0714 19
04-16-91 525 $ 6.0714 $14.2857 $ 6.0714 43
12-06-94 7,100 $ 9.7500 $12.8750 $ 9.7500 0
12-06-94 3,200 $ 9.7500 $12.8750 $ 9.7500 0
12-06-94 9,000 $ 9.7500 $12.5000 $ 9.7500 0
Clarke, George T.......................... 12-19-89 2,100 $14.2857 $20.3619 $14.2857 39
Senior Vice President and Controller 12-19-89 1,050 $14.2857 $16.1905 $14.2857 48
04-23-90 2,100 $10.0000 $14.2857 $10.0000 55
04-23-90 1,050 $10.0000 $14.2857 $10.0000 55
04-16-91 3,150 $ 6.0714 $10.0000 $ 6.0714 47
Fischer, Eric R........................... 04-23-90 21,000 $10.0000 $12.8571 $10.0000 8
Executive Vice President/General Counsel 04-23-90 2,100 $10.0000 $14,2857 $10.0000 54
04-16-91 23,100 $ 6.0714 $10.0000 $ 6.0714 47
12-06-94 5,500 $ 9.7500 $12.8750 $ 9.7500 0
12-06-94 4,800 $ 9.7500 $12.8750 $ 9.7500 0
12-06-94 13,000 $ 9.7500 $12.5000 $ 9.7500 0
Gorin, Norman W........................... 12-19-89 10,500 $14.2857 $18.8095 $14.2857 24
Senior Vice President 12-19-89 2,625 $14.2857 $18.0952 $14.2857 36
04-23-90 2,625 $10.0000 $14.2857 $10.0000 55
04-23-90 10,500 $10.0000 $14.2857 $10.0000 55
04-23-90 2,625 $10.0000 $14.2857 $10.0000 55
04-16-91 15,750 $ 6.0714 $10.0000 $ 6.0714 47
Hunt, James K............................. 12-06-94 7,400 $ 9.7500 $13.3750 $ 9.7500 0
Executive Vice President/Treasurer/CFO 12-06-94 17,600 $ 9.7500 $13.3750 $ 9.7500 0
12
15
LENGTH OF
ORIGINAL
NUMBER OF OPTION
SECURITIES MARKET PRICE EXERCISE TERM
UNDERLYING OF STOCK AT PRICE REMAINING
OPTIONS/SARS TIME OF AT TIME OF NEW AT DATE OF
REPRICED OR REPRICING OR REPRICING OR EXERCISE REPRICING OR
AMENDED AMENDMENT AMENDMENT PRICE AMENDMENT
NAME DATE (#) ($) ($) ($) (MONTHS)
- - ------------------------------------------ -------- ------------ ------------ ------------ -------- -------------
Lerner, Linda J........................... 12-19-89 2,100 $14.2857 $20.3691 $14.2857 39
Senior Vice President 12-19-89 2,625 $14.2857 $16.9048 $14.2857 49
04-23-90 2,625 $10.0000 $14.2857 $10.0000 55
04-23-90 2,100 $10.0000 $14.2857 $10.0000 55
04-23-90 2,625 $10.0000 $14.2857 $10.0000 55
04-16-91 7,350 $ 6.0714 $10.0000 $ 6.0714 47
12-06-94 7,000 $ 9.7500 $12.8750 $ 9.7500 0
12-06-94 3,300 $ 9.7500 $12.8750 $ 9.7500 0
12-06-94 9,000 $ 9.7500 $12.5000 $ 9.7500 0
Sullivan, Kenneth L....................... 12-19-89 10,500 $14.2857 $16.1905 $14.2857 48
President, UST Data Services 04-23-90 5,250 $10.0000 $14.2857 $10.0000 55
04-23-90 10,500 $10.0000 $14.2857 $10.0000 55
04-16-91 15,750 $ 6.0714 $10.0000 $ 8.0714 47
12-08-94 6,200 $ 9.7500 $12.8750 $ 9.7500 0
12-08-94 4,100 $ 9.7500 $12.8750 $ 8.7500 0
12-08-94 2,000 $ 9.7500 $12.5000 $ 9.7500 0
Brooks, William C......................... 04-23-90 6,300 $10.0000 $16.9048 $10.0000 16
Former Senior Vice President/CFO 12-19-89 2,100 $14.2857 $18.0952 $14.2857 36
04-23-90 2,100 $10.0000 $14.2857 $10.0000 55
04-16-91 8,400 $ 6.0714 $10.0000 $ 6.0714 47
Healey, Harry W........................... 04-23-90 4,200 $10.0000 $12.3810 $10.0000 7
Former Executive Vice President
Morse, Alan R............................. 04-23-90 5,250 $10.0000 $14.2857 $10.0000 55
Former Chairman of the Board of USTC 04-16-91 5,250 $ 6.0714 $10.0000 $ 6.0714 47
Morse, Frank A............................ 04-23-90 4,200 $10.0000 $12.3810 $10.0000 7
Former President, UST Bank/CT 12-19-89 6,300 $14.2857 $16.9048 $14.2857 21
12-19-89 2,100 $14.2857 $18.0952 $14.2857 36
04-23-90 2,100 $10.0000 $14.2857 $10.0000 55
04-23-90 6,300 $10.0000 $14.2857 $10.0000 55
04-23-90 2,100 $10.0000 $14.2857 $10.0000 55
04-16-91 14,700 $ 6.0714 $10.0000 $ 6.0714 47
Shediac, Theodore M....................... 04-23-90 2,625 $10.0000 $14.2857 $10.0000 55
Former Chairman of the Board of USTrust 04-16-91 2,265 $ 6.0714 $10.0000 $ 6.0714 47
04-16-91 15,750 $ 6.0714 $ 9.5238 $ 6.0714 51
Sidell, James V........................... 04-23-90 5,250 $10.0000 $11.4286 $10.0000 59
Former President of the Company 04-16-91 5,250 $ 6.0714 $10.0000 $ 6.0714 47
Siskind, Paul M........................... 04-23-90 5,250 $10.0000 $11.4286 $10.0000 59
Former Chairman of the Board 04-16-91 5,250 $ 6.0714 $10.0000 $ 6.0714 47
of the Company
Sullivan, Quinlan J....................... 04-16-91 6,300 $ 6.0714 $ 8.2540 $ 6.0714 0
Former Executive Vice President 04-23-90 5,250 $10.0000 $14.2857 $10.0000 55
04-16-91 6,250 $ 6.0714 $10.0000 $ 6.0714 47
Truslow, Robert G......................... 04-23-90 31,500 $10.0000 $10.1206 $10.0000 4
Former President, USTC 04-23-90 5,250 $10.0000 $14.2857 $10.0000 55
04-16-91 36,750 $ 6.0714 $10.0000 $ 6.0714 47
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 accordingly amended the
Stock Compensation Plan, imposing a per-employee limit on annual grants, which
was approved by the Company's Stockholders at the 1994 Annual Meeting. The
Compensation Committee has caused all of the Company's employee benefit plans to
be reviewed with respect to this matter and it appears that the short-term
impact of this law on the Company is not likely to be material. The Compensation
Committee is monitoring the impact of this law on an annual basis, taking into
consideration both the benefits of favorable tax treatment for the Company, and
the necessity for the Compensation
13
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Committee to have the discretion to take appropriate steps to further its
executive compensation philosophy and honor existing contractual obligations.
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
Wallace M. Haselton
Francis X. Messina
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1994, the following persons served for a portion or all of the year
on the Compensation Committee: Robert L. Culver, Wallace M. Haselton, Francis X.
Messina, and Paul D. Slater.
Officers and Directors 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 or its
subsidiaries during 1994. In addition to loan transactions and other customer
transactions, during the past fiscal year the Company and its subsidiaries have
used 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, 1994, loans to Director Messina or to his affiliated
companies in the amount of approximately $14 million were characterized as
Substandard, in the Company's internal risk rating profile. Such loans, at their
highest point in 1994, aggregated approximately $25 million. 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. 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%.
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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 Keefe, Bruyette & Woods ("KBW") New England Bank
Index, the Standard & Poor's 500 Index ("S&P 500"), the Dow Jones Equity Market
Index and the Dow Jones Regional Banks, East Index. The Dow Jones Regional
Banks, East Index is comprised of approximately 15 of the largest regional banks
headquartered in the Mid-Atlantic and New England states. The KBW New England
Bank Index is comprised of approximately 18 commercial and savings banks located
within the five New England states and ranging in asset size from approximately
$400 million to $3 billion. The Company has decided to include comparisons to
this index, which only first became available in 1994, because it provides a
closer comparison to the Company as it is entirely an index of smaller New
England banks and bank holding companies with similar geographical, size and
market characteristics. Most banks that use the KBW New England Bank Index also
compare themselves to the S&P 500. Total return values for these indices were
calculated based on cumulative total return values, assuming reinvestment of
dividends.
COMPARISON OF FIVE-YEAR CUMULATIVE RETURN
Among UST Corp., Standard Poor's 500 Index
KBW New England Bank Index
Dow Jones Equity Market Index
and Dow Jones Regional Banks, East Index
Fiscal Year Ending December 31
1989 1990 1991 1992 1993 1994
UST Corp. $100.00 $50.00 $ 51.00 $ 70.00 $ 78.00 $ 75.00
Standard & Poor's 500 $100.00 $97.00 $126.00 $136.00 $149.00 $149.00
KBW New England Bank Index $100.00 $50.00 $ 88.00 $155.00 $207.00 $208.00
Dow Jones Equity Market Index $100.00 $96.00 $127.00 $138.00 $152.00 $153.00
Dow Jones Regional Banks, East Index $100.00 $56.00 $103.00 $149.00 $156.00 $150.00
15
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EMPLOYMENT AGREEMENTS
Mr. Finnegan, President and Chief Executive Officer of the Company, 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
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 the exercise prices
shown in the tables above. In addition, in January 1995, as noted above, Mr.
Finnegan was granted 5,195 additional shares of Restricted Common Stock. 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 (i) to terminate this Agreement and receive a
payment equal to 100% of his "base amount" as defined under Section 280G(b)(3)
of the Internal Revenue Code or, (ii) 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. Colasacco, Executive Vice President of the Company and Chairman and
President of USTC, has entered into an Employment Agreement with USTC and joined
in by the Company, dated as of January 1, 1995, which remains subject to
regulatory approval. The Employment Agreement has a two and one-half year
original term and (unless terminated by Mr. Colasacco by giving the Company and
USTC six months prior notice) successive six month renewal terms thereafter. In
the event, however, that a Triggering Event or change in ownership of USTC or
the Company (as defined in the Employment Agreement) occurs during the original
term or a renewal term, a new, approximately three-year term will be triggered
and Mr. Colasacco will receive in exchange for an extension of his employment
period and the related noncompetition agreement, the portion allocated to him of
a Formula Payment, as defined in the Employment Agreement, based upon USTC's
Asset Management Division's revenues during the year preceding the Triggering
Event. Mr. Colasacco's current base salary is $225,375 per annum. Under the
Employment Agreement, the key managers of the Asset Management Division of USTC,
currently five in number, will receive an aggregate share of the Division's
revenues and will determine as a group the share of revenues allocated to
individual managers, including Mr. Colasacco. The key manager group, subject to
generation of adequate revenues, is also empowered to change Mr. Colasacco's
base annual salary.
Mr. Huskins, Executive Vice President/Administration of the Company,
entered into a two-year Employment Agreement with the Company, dated October 24,
1994. Under the terms of the Employment Agreement, Mr. Huskins is paid a base
salary of $200,000 per annum, is eligible for discretionary bonuses and is
entitled to fringe benefits available to senior executives. Since joining the
Company in 1993, Mr. Huskins has also received an aggregate of 12,000 shares of
Restricted Common Stock and aggregate options to purchase 76,000 shares of the
Company's Common Stock at an average purchase price of $9.75 per share. Under
the terms of the Employment Agreement, Mr. Huskins has also agreed to certain
noncompetition and confidentiality provisions. In addition, under the Employment
Agreement, in the event there is a change-of-control of the Company (as defined
in the Employment Agreement) and Mr. Huskins is not offered continued employment
in a similar position with the successor entity, Mr. Huskins will be entitled to
a severance payment equal to two times his then current annual base salary plus
his cash bonus for the then most recent year.
Mr. McAlear, Executive Vice President/Controlled Loans of the Company and
Vice Chairman of USTrust, entered into an Employment Agreement with the Company,
dated July 11, 1990. The Employment Agreement currently runs year-to-year and is
terminable on each August 31, but only upon six months' prior written notice of
termination given by the Company. Under the terms of the Employment Agreement,
Mr. McAlear is paid a base salary of $200,000 per annum, is eligible for
discretionary bonuses and is entitled to fringe benefits available to senior
executives. Since joining the Company in 1990, Mr. McAlear has also received an
aggregate of 9,000 shares of Restricted Common Stock and aggregate options to
purchase 46,050
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shares of the Company's Common Stock at an average purchase price of $8.4919 per
share. Under the terms of the Employment Agreement, Mr. McAlear has also agreed
to certain noncompetition and confidentiality provisions. In addition, under the
Employment Agreement, in the event there is a change-of-control of the Company
(as defined in the Employment Agreement) and Mr. McAlear is not offered
continued employment in a similar position with the successor entity, Mr.
McAlear will be entitled to a severance payment equal to two times his then
current annual base salary plus his cash bonus for the then most recent year.
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 1994.
APPROVAL OF AMENDMENTS TO THE COMPANY'S
STOCK COMPENSATION PLAN
(NOTICE ITEM 2)
The Board of Directors by vote on November 15, 1994 adopted, subject to
approval by the stockholders, an amendment and restatement of the Company's
Stock Compensation Plan (as amended and restated, the "Stock Compensation
Plan"). Stockholders are being requested to approve the Stock Compensation Plan
at the Annual Meeting. THE FOLLOWING SUMMARY OF THE STOCK COMPENSATION PLAN IS
QUALIFIED IN ITS ENTIRETY BY THE FULL TEXT OF THE STOCK COMPENSATION PLAN THAT
APPEARS AS EXHIBIT A ATTACHED TO THIS PROXY STATEMENT.
The Stock Compensation Plan provides for the granting of Incentive Stock
Options (ISOs), Nonqualified Stock Options (nonstatutory options or NSOs), and
Restricted Stock Awards, or a combination of the foregoing, and is administered
by the Compensation Committee of the Board of Directors. The Stock Compensation
Plan is intended to encourage officers and other key employees of the Company
and its subsidiaries who are responsible for or contribute to the growth and/or
profitability of the business of the Company or its subsidiaries to expend
special efforts to increase stockholder value. As of December 31, 1994,
approximately 870 employees were eligible to receive awards under the Stock
Compensation Plan. On April 7, 1995, the closing price of the Company's Common
Stock was $10.875.
Shares of Common Stock issued under the Stock Compensation Plan may be
authorized but previously unissued shares, or treasury shares. The maximum
number of shares reserved and available for awards made under the Stock
Compensation Plan in any calendar year is equal to 1 1/4% of the total number of
shares of Common Stock outstanding as of the beginning of that year (increased
by 350,000 for 1994), plus any unused portion of the annual limit from prior
years, including years prior to the 1994 amendment and restatement. No more than
1,000,000 shares of Common Stock may be issued pursuant to the exercise of ISOs.
Also, no participant in the Stock Compensation Plan may be awarded, in any
calendar year, beginning in 1995, stock options covering more than 175,000
shares. (For 1994, an aggregate limit per individual grant of 400,000 shares
applied with respect to awards of all types under the Stock Compensation Plan.)
For purposes of the 175,000 share annual grant limit, the repricing of a stock
option is treated as a new award. The 175,000 share annual grant limit is
intended to comply with Section 162(m)(4)(C) of the Internal Revenue Code (the
"Code") (which generally exempts from the tax-deduction limitations of Section
162(m) certain performance-based compensation), and is to be construed
accordingly. The share limits described above, and the terms of awards, are
subject to adjustment in the event of certain mergers, stock dividends, or other
changes in the corporate structure affecting the Common Stock and in certain
other cases, subject to continued qualification of the Stock Compensation Plan
and awards under relevant provisions of the Code. In the event a stock option
awarded under the Stock Compensation Plan expires or is otherwise terminated
without being exercised, or shares of Restricted Stock awarded under the Stock
Compensation Plan are forfeited, the shares of Common Stock underlying such
stock option or the forfeited shares of Restricted Stock, as the case may be,
will again be available for issuance in connection with future awards under the
Stock Compensation Plan.
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STOCK OPTIONS
The Stock Compensation Plan permits awards of both ISOs and NSOs. Stock
options granted under the Stock Compensation Plan are NSOs unless specifically
designated as ISOs. ISOs granted under the Stock Compensation Plan are
nontransferable (other than by will or the laws of descent and distribution);
NSOs are transferable only to the extent permitted by the Committee and
consistent with continued exemption under Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). The exercise
price of ISOs cannot be less than the fair market value of the Common Stock on
the date of grant. The maximum term of any stock option granted under the Stock
Compensation Plan is ten years. Subject to these limitations, the exercise price
and term of stock options granted under the Stock Compensation Plan are fixed by
the Committee. The Committee likewise determines when stock options will be
exercisable and may accelerate the exercisability of options at any time. The
exercise price of stock options granted under the Stock Compensation Plan may be
paid in cash or by check, by the surrender of previously acquired shares of
Common Stock, by the delivery of irrevocable instructions to the participant's
broker to deliver promptly the amounts of sales proceeds required to pay the
exercise price, or by any combination of these methods.
In general, stock options granted under the Stock Compensation Plan expire
(to the extent not yet exercisable) upon termination of the participant's
employment for any reason. Any remaining portion of the participant's option
remains exercisable for up to an additional year in the event of disability or
death, or an additional three months in other cases, unless the participant was
terminated for cause. However, no portion of a stock option may be exercised
beyond its original term.
RESTRICTED STOCK
The Committee may also grant Restricted Stock Awards under the Stock
Compensation Plan. Except as otherwise determined by the Committee, shares of
Restricted Stock are forfeitable to the Company if the participant's employment
terminates prior to the lapsing of the restrictions specified in connection with
the award. Awards may include, without limitation, restrictions that lapse with
the passage of time and restrictions that lapse upon the attainment of specified
performance objectives. The Committee will determine the terms of Restricted
Stock Awards, including the price (if any) to be paid for the shares and other
relevant terms. During the restricted period, a participant has the right to
vote his or her shares of Restricted Stock and to receive any dividends or
distributions on those shares.
OTHER
In the event of a change of control of the Company, as defined, outstanding
stock options will become exercisable and outstanding shares of Restricted Stock
will become free of restrictions. Unless provision is made in connection with
the transaction for the substitution of options, holders of stock options
awarded under the Stock Compensation Plan will have the right, in connection
with the change of control, to relinquish their stock options in exchange for an
amount equal to the difference between the "change of control price" and the
option exercise price. For this purpose, the "change of control" price for NSOs
will be the highest transaction price paid over the 60-day period culminating in
the change of control, and for ISOs will be fair market value on the date of the
change of control.
Participants must make arrangements satisfactory to the Company for the
payment of withholding taxes due in connection with the vesting or exercise of
awards.
The Board of Directors may amend or discontinue the Stock Compensation Plan
at any time. Amendments are subject to stockholder approval to the extent
necessary to preserve the qualification of the Stock Compensation Plan under the
Code or under Rule 16b-3 promulgated under the Exchange Act. Consistent with the
terms of the Stock Compensation Plan, the Committee may amend the terms of any
award, subject to participant consent if the amendment would impair the
participant's rights under the award.
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FEDERAL INCOME TAX EFFECTS
The following description summarizes the federal income tax consequences
associated with stock options granted under the Stock Compensation Plan.
A participant will not have taxable income at the time of grant or exercise
of an ISO, although the exercise of an ISO may in some cases result in liability
for the alternative minimum tax. If the participant sells shares acquired upon
exercise of an ISO after holding the shares for at least one year after exercise
and at least two years from date of grant, any gain or loss recognized upon the
sale will be a long-term capital gain or loss. No deduction will be available to
the Company. If the participant disposes of the shares before either of these
holding periods has been met, he or she will have ordinary income at the time of
disposition equal, in general, to the amount by which the fair market value of
the shares at time of exercise exceeded the exercise price. The Company may
claim a corresponding deduction. If the shares are sold for more than their
value at exercise, the additional gain will be taxed as capital gain (long-term
or short-term depending on how long the shares have been held). With some
exceptions, if the shares are sold for less than what they were worth at time of
exercise, the participant's ordinary income (and the deduction available to the
Company) will be limited to the total gain on sale, if any.
A participant who is granted an NSO will have no taxable income at the time
of grant but will realize income (wages) subject to withholding in connection
with the exercise of the option. A corresponding deduction will be available to
the Company. In general, the income and deduction associated with exercise will
be taken into account at time of exercise and will equal the excess of the fair
market value of the Stock at that time over the exercise price. However, in the
case of a participant subject to Section 16(b) of the Exchange Act who exercises
an NSO within six months of the date of grant, the income associated with
exercise will be realized and measured six months after the date of grant unless
the participant makes an election to recognize such income immediately. The
availability of a deduction will be similarly deferred. If a participant who has
exercised an NSO later sells shares acquired upon exercise, any gain or loss
recognized in the sale will be a capital gain or loss (long-term or short-term
depending on how long the shares have been held) for which the Company and its
subsidiaries will not be entitled to a deduction.
Section 162(m) of the Code limits to $1 million the deduction a public
corporation may claim for annual remuneration paid to any of its top five
officers. The deduction limitation is subject to a number of exceptions,
including an exception for performance-based compensation. Stock options granted
under the Stock Compensation Plan are intended to qualify for the
performance-based exception to the Section 162(m) limitation. Restricted Stock
Awards under the Stock Compensation Plan do not qualify for the exception.
The deduction the Company may claim in connection with the exercise or
vesting of awards under the Plan may be limited in the event of special vesting
upon a change of control of the Company, or in the event awards are deemed to
have been granted in connection with such a change of control.
RECOMMENDATION OF YOUR BOARD OF DIRECTORS "FOR" THIS PROPOSAL
The Board of Directors believes that the approval of the amended and
restated Stock Compensation Plan will promote the interests of the Company and
the stockholders and help the Company and its subsidiaries to attract and retain
qualified employees. Accordingly, the Board of Directors recommends that the
stockholders vote "FOR" the proposal to approve the amended and restated Stock
Compensation Plan. Proxies solicited by the Board of Directors will be so voted
unless stockholders specify otherwise.
To approve the amended and restated Stock Compensation Plan, the vote of
holders of a majority of the shares present or represented and entitled to vote
on the proposal at the meeting is required. An abstention will have the effect
of a vote against the proposal, while a broker non-vote (i.e., shares held by
brokers or nominees as to which (i) instructions have not been received from the
beneficial owners and (ii) the broker or nominee does not have the discretionary
authority to vote on a particular matter) will have no effect on the outcome.
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OPTION GRANTS UNDER STOCK COMPENSATION PLAN
As of March 17, 1995, options for the purchase of a total of 901,900 shares
of Common Stock were outstanding under the Plan (of which 465,860 were
exercisable as of such date), and an additional 229,864 shares remained
available for grant in 1995 under the Plan. The closing price of the Company's
Common Stock at March 17, 1995 was $10.875 per share. The following table sets
forth information as of March 17, 1995, 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) each of
the nominees for election as a director, (iii) all current executive officers of
the Company as a group, (iv) all current 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. To date, no options have been
granted based upon the proposed amendments to the Plan.
OPTIONS
NAME AND POSITION (SHARES)
----------------- --------
Neal F. Finnegan........................................................... 350,000
President and Chief Executive Officer of the Company; Chairman, President
and Chief Executive Officer of USTrust
Domenic Colasacco.......................................................... --
Executive Vice President of the Company; Chairman and President, USTC
Walter E. Huskins, Jr...................................................... 76,000
Executive Vice President/Administration of the Company, USTrust and UST
Bank/Connecticut
Robert T. McAlear.......................................................... 30,300
Executive Vice President/Controlled Loans of the Company; Vice Chairman
of USTrust
Kathie S. Stevens.......................................................... 67,000
Executive Vice President and Senior Lending Officer of the Company and of
USTrust
Robert L. Culver........................................................... --
Walter A. Guleserian....................................................... --
Wallace M. Haselton........................................................ --
Paul D. Slater............................................................. --
All current executive officers as a group.................................. 627,600
All current directors of the Company, excluding executive officers, as a
group.................................................................... --
All employees of the Company, excluding executive officers, as a group..... 274,300
APPROVAL OF 1995 STOCK OPTION PLAN FOR DIRECTORS
(NOTICE ITEM 3)
The Company's 1995 Stock Option Plan for Directors (the "Director Option
Plan") was adopted by the Board of Directors of the Company on March 21, 1995.
As noted above, the 1989 Director Stock Option Plan expired on March 18, 1995.
The Director Option Plan is designed to advance the Company's interest by
enhancing its ability and the ability of its largest subsidiary bank to attract
and retain non-employee directors and to align the interests of those directors
more closely with stockholders. Stockholders of the Company are being requested
to approve the Director Option Plan at the Annual Meeting. The following summary
of the Director Option Plan is qualified in its entirety by the full text of the
Director Option Plan that appears as Exhibit B attached to this Proxy Statement.
Pursuant to the Director Option Plan, directors eligible to receive option
grants under the Plan ("eligible directors") shall be (a) those directors
(including honorary but not including emeritus directors) of the Company who are
not employees of the Company or of any subsidiary of the Company, and (b) those
directors (not including honorary or emeritus directors) of USTrust who are not
employees of the Company or of any subsidiary of the Company. For currently
serving eligible directors the grant will be made on the date of
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the 1995 Annual Meeting. Individuals elected to serve as eligible directors in
the future will receive a grant at the annual meeting of shareholders at which
they are elected or, in the case of any eligible director elected by the board,
at the annual meeting of shareholders immediately following such election. The
number of shares subject to each grant will be as follows: (i) 7,500 in the case
of an eligible director (other than an honorary director of the Company) who
serves both as a director of the Company and as a director of USTrust; (ii)
5,100 in the case of an eligible director who serves as a director of the
Company (other than an honorary director of the Company) but who does not serve
as a director of USTrust; (iii) 4,500 in the case of an eligible director who
serves as an honorary director of the Company; and (iv) 3,000 in the case of any
eligible director who is a director of USTrust but who does not serve (other
than as an honorary director of the Company) as a director of the Company. An
eligible director who is described in both (iii) and (iv) will thus be eligible
to receive 7,500 options. The following directors are currently the only
eligible directors and, assuming continued eligibility and approval of the
Director Option Plan by the shareholders, and with respect to Ms. Pryor and Mr.
Sidell, subject to regulatory clearance, would receive options as follows:
Messrs. Culver, Guleserian, Haselton, Hotarek, Messina, Miller, Ridge, Sidell,
Slater, and Verrochi and Ms. Pryor and Ms. Sidell: options for 7,500 shares
each; Messrs. Schwartz and Sheldon: options for 5,100 shares each; and Messrs.
Coard, DerKazarian, Dolben, Guzovsky, Sullivan, and Weiner: options for 3,000
shares each.
The exercise price of each option will be the fair market value of the
Common Stock on the date of grant. The exercise price may be paid in cash or
check acceptable to the Company, by tendering shares of Common Stock, by
delivering an undertaking by a broker to deliver promptly sufficient funds to
pay the exercise price, or by any combination of the foregoing. Each option will
be non-transferable except upon death, will expire five (5) years after the date
of grant and will become exercisable on the third anniversary of the date of
grant. However, the option may become exercisable earlier than the third
anniversary of the date of grant in the following cases: upon a change in
control, retirement at or after age 65, or permanent disability, or in
installments upon attainment of specified share-price targets, as follow: as to
one-third of the shares if the Common Stock maintains a value over ten
consecutive trading days that is at least $3.00 higher than the grant-date
value; as to an additional one-third of the shares if the Common Stock maintains
a value over ten consecutive trading days that is at least $6.00 higher than the
grant-date value; and as to the remainder of the shares if the Common Stock
maintains a value over ten consecutive trading days that is at least $9.00
higher than the grant-date value. If the director's service as a director
terminates for any reason other than death, retirement at or after age 65, or
permanent disability, any unvested portion of his or her option will immediately
expire. Any vested options will remain exercisable for a period of one year
following retirement (at or after age 65) or permanent disability or three
months following other termination of the individual's status as a director,
except that the vested portion of any option will remain exercisable for one
year following death. In no event, however, will any option granted under the
Director Option Plan remain exercisable beyond the fifth anniversary of the date
of grant. Upon a merger in which the Company is not the surviving corporation or
that results in the acquisition of all of the Company's stock or a sale of all
or substantially all of the Company's assets, or a dissolution or liquidation of
the Company, all options not at the time exercisable will become immediately
exercisable and will terminate upon the consummation of the transaction. A total
of 150,000 shares of Common Stock has been reserved for issuance under the
Director Option Plan, subject to adjustment for stock splits and similar events.
FEDERAL INCOME TAX EFFECTS
For federal income tax purposes, options under the Director Option Plan are
treated as nonstatutory options, not as "incentive stock options." An eligible
director will not have taxable income at time of grant but will realize income
(and the corporation for which he or she serves as a director will in general be
entitled to claim a deduction) in connection with the exercise of the option. In
general, the income and deduction associated with exercise will be taken into
account at time of exercise and will equal the excess of the fair market value
of the Common Stock at that time over the exercise price. If a director who has
exercised an option under the Director Option Plan later sells shares acquired
upon exercise, any gain or loss recognized in the sale will be a capital gain or
loss (long-term or short-term depending on how long the shares have been held)
for which the Company and its subsidiaries will not be entitled to a deduction.
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RECOMMENDATION OF YOUR BOARD OF DIRECTORS "FOR" THIS PROPOSAL
The Board of Directors believes that the adoption of the Director Option
Plan will promote the interests of the Company and the stockholders and help the
Company and its largest subsidiary bank to attract and retain qualified
non-employee directors. Accordingly, the Board of Directors has approved the
adoption of the Director Option Plan and recommends that the stockholders vote
"FOR" the proposal to adopt the Director Option Plan. Proxies solicited by the
Board of Directors will be so voted unless stockholders specify otherwise.
To approve the Director Option Plan, the vote of holders of a majority of
the shares present or represented and entitled to vote on the proposal at the
meeting is required. An abstention will have the effect of a vote against the
proposal, while a broker non-vote (i.e., shares held by brokers or nominees as
to which (i) instructions have not been received from the beneficial owners and
(ii) the broker or nominee does not have the discretionary authority to vote on
a particular matter) will have no effect on the outcome.
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
April 20, 1995, there were 10 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."
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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
NAME (AGE) ONE OF THE COMPANY'S SUBSIDIARIES)
---------- --------------------------------------------------------------
*Neal F. Finnegan (57) President and Chief Executive Officer and Director of the
Company and Chairman, President and Chief Executive Officer of
USTrust; Chairman of the Executive Committee of USTC
*Walter E. Huskins, Jr. (55) Executive Vice President/Administration of the Company,
USTrust and UST Bank/Connecticut; Chairman and President of
UST Leasing Corporation; Director, UST Bank/Connecticut
*Domenic Colasacco (46) Executive Vice President/Trust and Asset Management of the
Company and Chairman and President of USTC
*Eric R. Fischer (49) Executive Vice President, General Counsel and Clerk of the
Company and Executive Vice President, General Counsel and
Secretary of USTrust and USTC
*James K. Hunt (51) Executive Vice President, Treasurer, and Chief Financial
Officer of the Company and USTrust
*Linda J. Lerner (50) Senior Vice President/Human Resources of the Company, USTrust
and USTC
*Robert T. McAlear (52) Executive Vice President/Controlled Loans of the Company and
Vice Chairman and Director of USTrust
*Kathie S. Stevens (44) Executive Vice President and Senior Lending Officer of the
Company and Executive Vice President, Senior Lending Officer
and Director of USTrust
*Kenneth L. Sullivan (58) Senior Vice President/Operations of the Company and President,
UST Data Services Corp.
*Katharine C. Armstrong (50) Senior Vice President/Credit Administration of the Company and
of USTrust
George T. Clarke (48) Senior Vice President and Controller of the Company
<FN>
- - ---------------
* Member, Executive Policy Committee
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 Chairman, President and Chief Executive Officer of USTrust and a
Director and Chairman of the Executive Committee of USTC.
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. Huskins also serves as
a Director of UST/Conn and as Chairman of the Board and President of UST Leasing
Corporation.
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
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Vice President of USTC. He also directs the trust and 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, and as Assistant
Secretary of UST Bank/Conn.
Mr. Hunt was elected Executive Vice President, Treasurer and Chief
Financial Officer of the Company and of USTrust in July 1994. Prior to joining
the Company, Mr. Hunt served as Executive Vice President at Peoples Bancorp of
Worcester, Inc., Worcester, Massachusetts, from August 1987 through May 1994.
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. McAlear was elected Executive Vice President/Controlled Loans of the
Company in 1994. He has served as Vice Chairman and Director 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. Stevens was elected Executive Vice President and Senior Lending Officer
and a Director 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.
Mr. Sullivan has served as Senior Vice President/Operations of the Company
since 1994 and President of UST Data Services Corp. since he joined the Company
in 1988. In those capacities, 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.
Ms. Armstrong was named Senior Vice President/Credit Administration of the
Company and USTrust in February 1994. She has served in the credit
administration and credit risk control functions of USTC from 1985 until the end
of 1992. At that time, she assumed similar responsibilities at USTrust. Ms.
Armstrong is the Chairman of the Senior Credit Committee of the Company, USTrust
and UST Bank/Connecticut.
Mr. Clarke was elected Senior Vice President and Controller of the Company
in 1994. Prior to 1994 he served as Vice President and Controller of the Company
since 1988. Before joining the Company, Mr. Clarke was Deputy Comptroller of The
First National Bank of Boston.
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.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon the recommendation of the Audit Committee, has
selected the firm of Arthur Andersen LLP, independent public accountants, as
auditors of the Company for 1995. 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 LLP have served as the Company's independent
auditors since its organization in 1967.
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Representatives of Arthur Andersen LLP 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 18, 1995, there were, to the knowledge of the Company, no
stockholders who beneficially owned more than five percent of the Company's
Common Stock.
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 18,
1995:
AMOUNT AND NATURE OF PERCENT OF
NAME BENEFICIAL OWNERSHIP(1) CLASS(1)
---- ----------------------- ----------
Domenic Colasacco............................. 34,301(2) *
Robert L. Culver.............................. 165 *
Neal F. Finnegan.............................. 431,019(3) 2.43%
Walter A. Guleserian.......................... 6,297 *
Wallace M. Haselton........................... 81,676 *
Brian W. Hotarek.............................. 325(4) *
Walter E. Huskins, Jr. ....................... 89,023(5) *
Robert T. McAlear............................. 56,058(6) *
Francis X. Messina............................ 408,592(7) 2.31%
Vikki L. Pryor................................ 0(8) *
Gerald M. Ridge............................... 48,867(9) *
William Schwartz.............................. 6,750(10) *
Samuel B. Sheldon............................. 24,250(11) *
James V. Sidell............................... 700,899(12) 3.96%
Paul D. Slater................................ 120,377(13) *
Kathie S. Stevens............................. 84,981(14) *
Michael J. Verrochi........................... 187,804(15) 1.06%
ALL DIRECTORS AND OFFICERS AS A GROUP
(23 persons)................................ 2,468,718(16) 13.96%
<FN>
- - ---------------
* Less than 1%.
(1) Information as to the interests of the respective executive officers,
directors and nominees has been furnished in part by them. As of March 18,
1995, 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.
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28
[FN]
(2) Mr. Colasacco's wife beneficially owns an additional 5,589 shares and his
three daughters own 500 shares each of the Company's Common Stock as to
which Mr. Colasacco disclaims any beneficial interest. The number of shares
reported includes 3,360 shares which Mr. Colasacco has the present right to
acquire through the exercise of stock options, 4,200 shares which remain
subject to forfeiture as Restricted Stock pursuant to the Company's Stock
Compensation Plan, and 8,111 shares held for Mr. Colasacco's benefit under
the Company's Employee Stock Ownership Plan.
(3) Includes 40,000 shares of Common Stock which remain subject to forfeiture
as Restricted Stock pursuant to the Company's Stock Compensation Plan and
an aggregate of 350,000 shares which Mr. Finnegan has the present right to
acquire through the exercise of stock options. Also includes 314 shares
held for Mr. Finnegan's benefit under the Company's Employee Stock
Ownership Plan.
(4) Includes 25 shares held by an investment club of which Mr. Hotarek is a
member.
(5) Includes an aggregate of 76,000 shares which Mr. Huskins has the present
right to acquire through the exercise of stock options, 8,000 shares which
remain subject to forfeiture as Restricted Stock pursuant to the Company's
Stock Compensation Plan, and 123 shares held for Mr. Huskins's benefit
under the Company's Employee Stock Ownership Plan.
(6) Includes an aggregate of 46,050 shares which Mr. McAlear has the present
right to acquire through the exercise of stock options, 6,000 shares which
remain subject to forfeiture as Restricted Stock pursuant to the Company's
Stock Compensation Plan, and 803 shares held for Mr. McAlear's benefit
under the Company's Employee Stock Ownership Plan.
(7) See discussion covering "Compensation Committee Interlocks and Insider
Participation" above.
(8) Ms. Pryor acquired 97 shares of the Company's Common Stock after March 18,
1995, but prior to joining the Board of Directors.
(9) Includes 3,242 shares owned by Gerald M. Ridge Corp. of which Mr. Ridge is
President.
(10) All 6,750 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 679,336 shares held directly. Also includes 21,563 shares held for
Mr. Sidell's benefit under the Company's Employee Stock Ownership Plan.
Does not include any 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 C. 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) 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.
(14) Includes an aggregate of 77,500 shares which Ms. Stevens has the present
right to acquire through the exercise of stock options, 4,666 shares of
Common Stock which remain subject to forfeiture as Restricted Stock
pursuant to the Company's Stock Compensation Plan and 1,469 shares held for
Ms. Stevens's benefit under the Company's Employee Stock Ownership Plan.
(15) Includes 36,611 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.
(16) The amount includes 708,495 shares of Common Stock subject to exercisable
outstanding stock options and also includes 38,120 shares held by the
Company's subsidiary, United States Trust Company, as trustee under the
Company's Employee Stock Ownership Plan and allocated to such directors and
officers. The total number of shares held in the Company's Employee Stock
Ownership Plan and allocated to all employees with United States Trust
Company as record owner is 388,991.
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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 26, 1995, except that if the
next year's annual meeting date is changed by more than 30 calendar days from
the regularly scheduled date, May 21, 1996, the Company must receive such a
proposal within a reasonable time before the Board of Directors makes its proxy
solicitation.
ADDITIONAL FINANCIAL INFORMATION
ANNUAL REPORT
A copy of the Company's Annual Report to Stockholders for the year ended
December 31, 1994, which includes financial statements, has been previously
mailed or mailed simultaneously herewith to all Stockholders. The Annual Report
is not to be regarded as proxy soliciting material.
10-K REPORT
A copy of the Company's Annual Report to the SEC on Form 10-K for the year
ended December 31, 1994 will be made available at the Meeting and may be
obtained without charge by any Stockholder upon written request addressed to
Eric R. Fischer, Executive Vice President, General Counsel and Clerk, 40 Court
Street, Boston, Massachusetts 02108.
By Order of the Board of Directors
ERIC R. FISCHER
CLERK
Dated: April 20, 1995
Boston, Massachusetts
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30
EXHIBIT A
UST CORP.
STOCK COMPENSATION PLAN
SECTION 1: PURPOSE; DEFINITIONS
The UST CORP. STOCK COMPENSATION PLAN (the "Plan") was established in 1992
to enable UST CORP. and its Subsidiaries to reward officers and other key
employees so as to encourage them to expend special efforts to increase
shareholder value. The amended and restated Plan set forth herein is a
continuation of the Plan as originally adopted and shall be effective as
provided at Section 10 below. Awards under the Plan as herein amended and
restated which are made prior to the stockholder approval described in Section
10 shall be subject to such approval.
For purposes of the Plan, the following terms shall be defined as set forth
below:
(a) "BOARD" means the Board of Directors of the Company.
(b) "CHANGE OF CONTROL" and "CHANGE OF CONTROL PRICE" have the
meanings set forth in Section 8.
(c) "CODE" means the Internal Revenue Code of 1986, as amended from
time to time, or any successor thereto.
(d) "COMMITTEE" means the committee appointed by the Board to
administer the Plan in accordance with Section 2.
(e) "COMPANY" means UST Corp., a corporation organized under the laws
of the Commonwealth of Massachusetts, and any successor corporation.
(f) "DISABILITY" means permanent and total disability as determined
under the Company's disability program.
(g) "DISINTERESTED PERSON" has the meaning set forth in Rule 16b-3
under the Securities Exchange Act of 1934 as applicable to the Company on
the date of reference.
(h) "ELIGIBLE EMPLOYEE" means an employee of the Company or any
Subsidiary as described in Section 4.
(i) "FAIR MARKET VALUE" means, as of any given date, the average of
the high and low trading prices of the Stock on the NASDAQ National Market
System on such date, or if the Stock did not trade on such date, on the
next preceding day on which trades were made.
(j) "INCENTIVE STOCK OPTION" means any Stock Option intended to
qualify as an "incentive stock option" within the meaning of Section 422 of
the Code.
(k) "NON-QUALIFIED STOCK OPTION" means any Stock Option that is not an
Incentive Stock Option.
(l) "PARTICIPANT" means any Eligible Employee selected by the
Committee to receive grants under the Plan.
(m) "RESTRICTED STOCK" means Stock awarded pursuant to Section 6 that
is subject to restrictions which lapse upon the satisfaction of performance
and/or service criteria specified by the Committee.
(n) "STOCK" means the common stock of the Company.
(o) "STOCK OPTION" means any option to purchase shares of Stock
granted pursuant to Section 5.
(p) "SUBSIDIARY" means any corporation in which the Company owns,
directly or indirectly 50% or more of the total combined voting power of
all classes of stock of such corporation.
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SECTION 2: ADMINISTRATION
The Plan shall be administered by a Committee composed of not fewer than
two members of the Board, all of whom are Disinterested Persons. Members of the
Committee shall be appointed by the Board and shall serve at the pleasure of the
Board.
The Committee shall have the power and authority, in its discretion:
(i) to select Participants from among those employees of the Company
and the Subsidiaries who are Eligible Employees;
(ii) to determine whether and to what extent Stock Options, Restricted
Stock, or any combination of the foregoing, are to be granted to Eligible
Employees hereunder;
(iii) to determine the number of shares of Stock to be covered by each
such award granted hereunder;
(iv) to determine the terms and conditions, not inconsistent with the
terms of the Plan, of any award granted hereunder; and
(v) to determine the terms and conditions of any written instruments
evidencing Stock Options, Restricted Stock, or any combination of the
foregoing awarded under the Plan.
The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable; to interpret the terms and provisions of the
Plan and any award issued under the Plan (and any agreements relating thereto);
and to otherwise supervise the administration of the Plan.
All decisions made by the Committee pursuant to the provisions of the Plan
shall be final and binding on all persons, including the Company and the
Participants.
SECTION 3: STOCK SUBJECT TO PLAN
Subject to adjustment in accordance with the third and fourth paragraphs of
this Section 3, the maximum number of shares of Stock reserved and available for
awards made under the Plan in any calendar year shall be equal to (i) 1 1/4% of
the total number of shares of Stock outstanding as of the beginning of that
year, plus (ii) any unused portion of the annual limit for prior years. In
determining the number of shares available in 1994 and any carryover from 1994,
the number of shares determined under (i) above for 1994 shall be increased by
350,000. Notwithstanding the foregoing, no more than 1,000,000 shares of Stock
in the aggregate (subject to adjustment under the third and fourth paragraphs of
this Section 3) may be issued pursuant to the exercise of Incentive Stock
Options under the Plan.
Subject to adjustment in accordance with the fourth paragraph of this
Section 3, no Participant may be awarded, in any calendar year, Stock Options
covering more than 175,000 shares.*
For purposes of the immediately preceding sentence, the repricing of a
Stock Option shall be treated as a new award and shall count against the
specified share limit. The provisions of this paragraph and of the proviso set
forth in the immediately following paragraph shall apply to awards of Stock
Options under the Plan only to the extent required in order for Stock Options
under the Plan to qualify for the performance-based compensation exception
described in Section 162(m)(4)(C) of the Code.
To the extent that a Stock Option expires or is otherwise terminated
without being exercised, or shares of Restricted Stock are forfeited, the shares
of Stock underlying such Stock Option or the forfeited shares of Restricted
Stock, as the case may be, shall again be available for issuance in connection
with future awards under the Plan; provided, that any such future award of a
Stock Option (if made to the same Participant and in the same year as the award
of the expired or terminated Stock Option) shall count against the annual per-
Participant Stock Option award limit described in the preceding paragraph.
- - ---------------
* For 1994, the per individual limit is 400,000 shares applicable to all awards
under the Plan.
A-2
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In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, or other change in corporate structure
affecting the Stock, the Committee shall make an appropriate adjustment in (i)
the aggregate number of shares of Stock reserved for issuance under the Plan or
for which awards may be made under the Plan, and (ii) the number and Option
Price of shares of Stock subject to outstanding Stock Options granted under the
Plan; provided, that the number of shares of Stock subject to any award shall
always be a whole number. The Committee may make other substitutions or
adjustments, but no such substitution or adjustment shall be effective if it
would cause any Stock Option previously granted to an individual described in
Section 162(m)(3) of the Code to fail to qualify for the performance-based
compensation exception prescribed by Section 162(m)(4)(C) of the Code; and
further provided, that no such substitution or adjustment shall be effective,
without the Participant's consent, if it would cause the Incentive Stock Options
status of any Stock Option held by the Participant to be impaired.
Shares issued pursuant to Plan awards may consist in whole or in part of
authorized and unissued shares or of treasury shares.
SECTION 4: ELIGIBILITY
Officers and other key employees of the Company or Subsidiaries who are
responsible for or contribute to the growth and/or profitability of the business
of the Company or its Subsidiaries shall be eligible to be granted awards
hereunder. The Participants under the Plan shall be selected from time to time
by the Committee from among those Eligible Employees, and the Committee shall
determine the number of shares of Stock covered by each award.
SECTION 5: STOCK OPTIONS
Stock Options may be granted alone, in addition to or in combination with
other awards granted under the Plan. Any Stock Option granted under the Plan
shall be in such form as the Committee may from time to time approve, and the
provisions of Stock Option awards need not be the same with respect to each
Participant. Recipients of Stock Options shall enter into a stock option
agreement with the Company, in such form as the Committee shall determine, which
agreement shall set forth, either expressly or by incorporation of the terms of
the Plan, among other things, the Option Price, the term of the Stock Option and
provisions regarding exercisability of the Stock Option granted thereunder.
Stock Options granted under the Plan may be of two types: (i) Incentive
Stock Options and (ii) Non-Qualified Stock Options. The Committee shall have the
authority to grant any Participant Incentive Stock Options, Non-Qualified Stock
Options, or both types of Stock Options. Only those Stock Options specifically
designated as Incentive Stock Options shall be treated as such; all other Stock
Options shall be treated as Non-Qualified Stock Options.
Stock Options granted under the Plan shall be subject to the following
terms and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee may determine:
(a) OPTION PRICE. The Option Price per share of Stock purchasable
under a Stock Option shall be determined by the Committee at the date of
grant but in the case of an Incentive Stock Option shall be not less than
100% of the Fair Market Value of the Stock on such date.
(b) OPTION TERM. The term of each Stock Option shall be fixed by the
Committee, but no Stock Option shall be exercisable more than ten years
after the date such Stock Option is granted.
(c) EXERCISABILITY. Stock Options shall be exercisable at such time
or times and subject to such terms and conditions as shall be determined by
the Committee at or after grant. If the Committee may accelerate the
exercisability of a Stock Option at any time, to such extent as it may
determine.
(d) TIMING AND METHOD OF EXERCISE. The exercise of a Stock Option
shall be accomplished by giving written notice of exercise to the Company
specifying the number of shares of Stock to be purchased, accompanied by
payment in full of the Option Price in cash or check, by surrender of other
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33
shares of Stock which have been held by the Participant for six months or
more (or for such other period as the Committee may determine) and which
have a value equal to the Option Price of the shares of Stock as to which
the Stock Option is being exercised, by delivery of a properly executed
exercise notice together with irrevocable instructions to the Participant's
broker to deliver promptly to the Company the amount of sale proceeds
required to pay the Option Price, or by any combination of the foregoing.
The Company shall, prior to the delivery of any shares of Stock subject to
an exercise, make arrangements for the payment of withholding taxes, if
any, as provided in Section 9(d).
(e) NON-TRANSFERABILITY OF OPTIONS. No Incentive Stock Option shall
be transferable by the Participant otherwise than by will or by the laws of
descent and distribution, and all Incentive Stock Options shall be
exercisable, during the Participant's lifetime, only by the Participant.
Nonqualified Stock Options shall be transferable (i) only to the extent, if
any, determined by the Committee, and (ii) in the case of any such Stock
Option the grant of which is intended to be exempt under Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended, only to
the extent, if any, that transferability is permitted (consistent with such
exemption) by such Rule.
(f) TERMINATION BY REASON OF DEATH. If a Participant's employment
with the Company or any Subsidiary terminates by reason of death, any Stock
Option held by the Participant at time of death may thereafter be
exercised, to the extent exercisable immediately prior to death (or on such
accelerated basis as the Committee shall determine at or after grant), by
the legal representative of the estate or by the legatee of the Participant
under the will of the Participant, for a period of one year (or such
shorter period as the Committee shall specify at grant) from the date of
such death or until the expiration of the stated term of such Stock Option,
whichever period is shorter.
(g) TERMINATION BY REASON OF DISABILITY. If a Participant's
employment with the Company or any Subsidiary terminates by reason of
Disability, any Stock Option held by such Participant may thereafter be
exercised to the extent it was exercisable at the time of such termination
(or on such accelerated basis as the Committee shall determine at or after
grant), for a period of one year (or such shorter period as the Committee
shall specify at grant) from the date of such termination of employment or
until the expiration of the stated term of such Stock Option, whichever
period is shorter, provided, however, that, if the Participant dies within
such one-year period (or such shorter period as the Committee shall specify
at grant), any unexercised Stock Option held by such Participant shall
thereafter be exercisable to the extent to which it was exercisable at the
time of death for a period of one year (or such shorter period as the
Committee shall specify at grant) from the time of such death or until the
expiration of the stated term of such Stock Option, whichever period is
shorter.
(h) OTHER TERMINATION. Except as otherwise provided in this Section
5, unless otherwise determined by the Committee, if a Participant's
employment with the Company or any Subsidiary terminates for any reason
other than death or Disability, the Stock Option may thereafter be
exercised to the extent it was exercisable at the time of such termination
(or on such accelerated basis as the Committee shall determine at or after
grant) for the lesser of three months from the date of termination or until
the expiration of such Stock Option's term; provided, that if the
Participant's employment is terminated for cause, all Stock Options then
held by the Participant shall terminate immediately.
SECTION 6: RESTRICTED STOCK
(a) GENERAL. Restricted Stock may be issued either alone or in addition to
other awards granted under the Plan. The Committee shall determine the Eligible
Employees to whom, and the time or times at which, grants of Restricted Stock
will be made; the number of shares of Stock to be awarded; the price, if any, to
be paid by the recipient of Restricted Stock; any performance objectives
applicable to Restricted Stock awards; the date or dates on which restrictions
applicable to such Restricted Stock shall lapse during the Restricted Period (as
defined at Section 6(c)(i) below); and all other conditions of the Restricted
Stock awards. The performance objectives, if any, to which a grant of Restricted
Stock may be subject may include, without limitation, objectives based on the
performance of the Company, the performance of one or more Subsidiaries, the
performance of one or more divisions or other business segments, personal
performance, or external
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performance measures, all as determined by the Committee. The Committee may also
condition the grant of Restricted Stock upon the exercise of Stock Options or
upon such other criteria as the Committee may determine. The provisions of
Restricted Stock awards need not be the same with respect to each recipient.
(b) AWARDS AND CERTIFICATES. The prospective recipient of an award of
shares of Restricted Stock shall not have any rights with respect to such award,
unless and until such recipient has executed an agreement evidencing the award
(a "Restricted Stock Award Agreement") and has delivered a fully executed copy
thereof to the Company, within a period of 60 days (or such other period as the
Committee may specify) after the award date. The stock certificate or
certificates issued in respect of shares of Restricted Stock shall be registered
in the name of the Participant and shall bear an appropriate legend referring to
the terms, conditions, and restrictions applicable to such award, substantially
in the following form:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions
(including forfeiture) of the UST Corp. Stock Compensation Plan
and a Restricted Stock Award Agreement entered into between the
registered owner and UST Corp. Copies of such Plan and Agreement
are on file in the offices of UST Corp."
The Committee may require that the stock certificates evidencing such shares of
Stock be held in the custody of the Company until the restrictions thereon shall
have lapsed, and that, as a condition of any Restricted Stock award, the
Participant shall have delivered a stock power, endorsed in blank, related to
the Stock covered by such award.
(c) RESTRICTIONS AND CONDITIONS. The shares of Restricted Stock awarded
pursuant to this Section 6 shall be subject to the following restrictions and
conditions:
(i) Subject to the provisions of the Plan and the Restricted Stock
Award Agreement, during such period as may be set by the Committee
commencing on the grant date (the "Restricted Period"), the Participant
shall not be permitted to sell, transfer, pledge or assign shares of
Restricted Stock awarded under the Plan. In the case of a Restricted Stock
award providing for the lapsing of restrictions only upon the attainment of
performance related goals, the Restricted Period shall be deemed to
continue until such performance related goals have been met. Within these
limits, the Committee may provide for the lapse of restrictions in
installments and may accelerate or waive such restrictions in whole or in
part based on such factors and such circumstances as the Committee may
determine, including, but not limited to, the attainment of performance
related goals, the Participant's termination of employment, death or
Disability, or the occurrence of a "Change of Control" as defined in
Section 8 below.
(ii) Except as provided in clause (c)(i) above, the Participant shall
have, with respect to the shares of Restricted Stock, all of the rights of
a stockholder of the Company, including the right to vote the shares and
the right to receive any dividends thereon. Certificates for shares of
unrestricted Stock shall be delivered to the Participant as soon as
practicable after the Restricted Period expires without such shares of
Stock having been forfeited. The Company's obligation to deliver vested
shares of Stock upon the expiration of the Restricted Period (whether in
the normal course or on an accelerated basis as described in the preceding
paragraph) shall be subject to the Company's being satisfied that
arrangements for the payment of withholding taxes, if any, as provided in
Section 9(d) have been made.
(iii) Subject to the provisions of the Restricted Stock Award
Agreement and this Section 6, upon termination of employment for any reason
during the Restricted Period, all shares of Stock still subject to
restriction shall be forfeited by the Participant, and the Participant
shall only receive the amount, if any, paid by the Participant for such
Restricted Stock.
SECTION 7: AMENDMENT AND TERMINATION
The Board may amend, alter, or discontinue the Plan at any time; provided,
that no such amendment or alteration shall be effective without the approval of
the stockholders to the extent that stockholder approval is required to preserve
the qualification of the Plan under Section 162(m)(4)(C) or Section 422 of the
Code or its exemption under Rule 16b-3 promulgated under the Securities Exchange
Act of 1934, as amended. The
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35
Committee may, consistent with the terms of the Plan, prospectively or
retroactively amend the terms of any previously granted award. In no event,
however, shall any amendment or alteration (whether affecting the Plan generally
or particular awards) impair the rights of any Participant under any then
outstanding award without the consent of such Participant.
SECTION 8: CHANGE OF CONTROL
The following acceleration and valuation provisions shall apply in the
event of a "Change of Control" as defined in this Section 8:
(a) As of the date of the "Change of Control":
(i) any Stock Options awarded under the Plan not previously
exercisable and vested shall become fully exercisable and vested;
(ii) the restrictions applicable to any Restricted Stock awarded
under the Plan shall lapse and such shares shall be deemed fully vested;
and
(iii) any Participant to whom a Stock Option shall have been
granted shall have the right (subject to any legal limitations
applicable to such Stock Option, including any limitations required to
preserve the qualification under Section 422 of the Code of any such
Stock Option that is an Incentive Stock Option) to receive in respect of
such Stock Option, and in extinguishment thereof, for each share of
Stock subject to such Stock Option an amount equal to the excess of (x)
the "Change of Control Price" (as defined in paragraph (c) of this
Section 8) of the securities, cash or other property, or combination
thereof, which would be received in connection with the transaction
giving rise to the Change of Control in respect of a share of Stock,
over (y) the Option Price of such Stock Option, unless provision is made
in connection with such transaction for the substitution for such Stock
Option of new options of the successor corporation or parent thereof,
with appropriate adjustments as to the number and kind of shares and the
per share Option Price as provided in Section 3 hereof.
(b) For purposes of paragraph (a) of this Section 8, a "Change of
Control" shall be deemed to have occurred if:
(i) any "person," as such term is used in Sections 13(d) and 14(d)
of the Securities and Exchange Act, (the "Exchange Act") (other than the
Company, any trustee or other fiduciary holding securities under an
employee benefit plan of the Company, or any company owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company), is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing
25% or more of the combined voting power of the Company's then
outstanding securities;
(ii) during any period of two consecutive years (not including any
period prior to the execution of the Plan), individuals who at the
beginning of such period constitute the Board, and any new director
(other than a director designated by a person who has entered into an
agreement with the Company to effect a transaction described in clause
(i), (iii) or (iv) of this Section 8(b)) whose election by the Board or
nomination for election by the Company's stockholders was approved by a
vote of at least two-thirds ( 2/3) of the directors then still in office
who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved
(hereinafter referred to as "Continuing Directors"), cease for any
reason to constitute at least a majority thereof;
(iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a
merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) more than 80% of the combined
voting power of the voting securities of the Company or such surviving
entity
A-6
36
outstanding immediately after such merger or consolidation; provided,
however, that a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no
"person" (as hereinabove defined) acquires more than 25% of the combined
voting power of the Company's then outstanding securities shall not
constitute a Change of Control of the Company; or
(iv) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets.
(c) For purposes of this Section 8, "Change of Control Price" means
the higher of (i) the highest price per share paid or offered in any
transaction related to a Change of Control of the Company or (ii) the
highest price per share paid in any transaction reported on the exchange on
which the Stock is traded at any time during the sixty-day period preceding
the Change of Control, as determined by the Committee; provided, however,
that, in the case of Incentive Stock Options such price shall not be the
higher of the foregoing items (i) and (ii), but shall be the Fair Market
Value of the securities, cash or other property, or combination thereof,
which would be received in connection with the transaction on the date of
such Change of Control.
SECTION 9: GENERAL PROVISIONS
(a) The Committee may require each person purchasing shares of Stock
pursuant to a Stock Option to represent to and agree with the Company in writing
that such person is acquiring the shares of Stock without a view to distribution
thereof. The certificates for such shares of Stock may include any legend which
the Committee deems appropriate to reflect any restrictions on transfer.
(b) All certificates for shares of Stock delivered under the Plan shall be
subject to such stock-transfer orders and other restrictions as the Committee
may deem advisable under the rules, regulations, and other requirements of the
Securities and Exchange Commission, any stock exchange upon which the Stock is
then listed, and any applicable Federal or state securities law, and the
Committee may cause a legend or legends to be put on any such certificates to
make appropriate references to such restrictions.
(c) Nothing contained in the Plan shall prevent the Board from adopting
other or additional compensation arrangements, subject to stockholder approval
if such approval is required; and such arrangements may be either generally
applicable or applicable only in specific cases. The adoption of the Plan shall
not confer upon any employee of the Company or any Subsidiary any right to
continued employment with the Company or a Subsidiary, as the case may be, nor
shall it interfere in any way with the right of the Company or a Subsidiary to
terminate the employment of any of its employees at any time.
(d) Each Participant shall, no later than the date as of which the value of
an award first becomes includible in the gross income of the Participant for
Federal income tax purposes, pay to the Company, or make arrangements
satisfactory to the Company regarding payment of, any Federal, state, or local
taxes of any kind required by law to be withheld with respect to the award. The
obligations of the Company under the Plan shall be conditional on such payment
or arrangements and the Company (and, where applicable, its Subsidiaries) shall,
to the extent permitted by law, have the right to deduct any such taxes from any
payment of any kind otherwise due to the Participant.
(e) No member of the Board or the Committee, nor any officer or employee of
the Company acting on behalf of the Board or the Committee, shall be personally
liable for any action, determination, or interpretation taken or made in good
faith with respect to the Plan, and all members of the Board or the Committee
and each and any officer or employee of the Company acting on their behalf
shall, to the extent permitted by law, be fully indemnified and protected by the
Company in respect of any such action, determination or interpretation.
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SECTION 10: EFFECTIVE DATE OF PLAN
The Plan as herein amended and restated shall be effective on the date it
is adopted by the Board, subject to the approval by the Company's stockholders
within twelve months of the date it is adopted by the Board.
SECTION 11: TERM OF PLAN
No Stock Option or Restricted Stock award shall be granted under the Plan
on or after November 14, 2004, but awards granted prior to said date may extend
beyond that date.
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EXHIBIT B
UST CORP.
1995 STOCK OPTION PLAN FOR DIRECTORS
1. PURPOSE
The purpose of this 1995 Stock Option Plan for Directors (the "Plan") is to
advance the interests of UST Corp. (the "Company") by enhancing the ability of
the Company and certain of its subsidiaries to attract and retain non-employee
directors who are in a position to make significant contributions to the success
of the Company and to reward directors for such contributions through ownership
of shares of the Company's common stock (the "Stock").
2. ADMINISTRATION
The Plan shall be administered by a committee (the "Committee") of the
Board of Directors (the "Board") of the Company designated by the Board for that
purpose. The Committee shall have authority, not inconsistent with the express
provisions of the Plan, (a) to issue options granted in accordance with the
formula set forth in this Plan to such directors as are eligible to receive
options; (b) to prescribe the form or forms of instruments evidencing options
and any other instruments required under the Plan and to change such forms from
time to time; (c) to adopt, amend and rescind rules and regulations for the
administration of the Plan; and (d) to interpret the Plan and to decide any
questions and settle all controversies and disputes that may arise in connection
with the Plan. Such determinations of the Committee shall be conclusive and
shall bind all parties. Transactions under this plan are intended to comply with
all applicable conditions of Rule 16b-3 or its successors under Section 16 of
the Securities Exchange Act of 1934 (the "Exchange Act"). To the extent any
provision of the Plan or action by the Committee fails to so comply, it shall be
deemed null and void, to the extent permitted by law and deemed advisable by the
Committee.
3. EFFECTIVE DATE AND TERM OF PLAN
The Plan shall become effective on the date on which the Plan is approved
by the Board of Directors of the Company, subject to approval by the
stockholders of the Company. No option shall be granted under the Plan after the
completion of ten years from the date on which the Plan was adopted by the
Board, but options previously granted may extend beyond that date.
4. SHARES SUBJECT TO THE PLAN
(a) Number of Shares. Subject to adjustment as provided in Section 4(c),
the aggregate number of shares of Stock that may be delivered upon the exercise
of options granted under the Plan shall be 150,000. If any option granted under
the Plan terminates without having been exercised in full, the number of shares
of Stock as to which such option was not exercised shall be available for future
grants within the limits set forth in this Section 4(a).
(b) Shares to be Delivered. Shares delivered under the Plan shall be
authorized but unissued Stock or previously issued Stock acquired by the Company
and held in treasury. No fractional shares of Stock shall be delivered under the
Plan.
(c) Changes in Stock. In the event of a stock dividend, stock split or
combination of shares, recapitalization or other change in the Company's capital
stock, after the effective date of the Plan, the number and kind of shares of
stock or securities of the Company subject to options then outstanding or
subsequently granted under the Plan, the maximum number of shares or securities
that may be delivered under the Plan, the exercise price, the "prescribed
number" specified in Section 6(a), and other relevant provisions shall be
appropriately adjusted by the Committee, whose determination shall be binding on
all persons.
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5. ELIGIBILITY FOR OPTIONS
Directors eligible to receive option grants under the Plan ("Eligible
Directors") shall be (a) those directors (including honorary but not including
emeritus directors) of the Company who are not employees of the Company or of
any subsidiary of the Company, and (b) those directors (not including honorary
or emeritus directors) of USTrust who are not employees of the Company or of any
subsidiary of the Company.
6. TERMS AND CONDITIONS OF OPTIONS
(a) Number of Options. On the date of the annual meeting of stockholders
at which this Plan is approved by stockholders each individual then an Eligible
Director shall be awarded on such date an option covering shares of Stock equal
in number to the "prescribed number" as hereinafter defined. Thereafter, on the
date of each subsequent annual meeting, there shall be awarded to each
individual elected at such meeting to serve as an Eligible Director and to each
other Eligible Director (if any) elected to office since the last annual meeting
by the board of directors of the corporation on which he or she serves as a
director, but excluding any Eligible Director who has previously been granted
options under this Plan, an option covering the prescribed number of shares of
Stock. For purposes of this paragraph, the "prescribed number" is: (i) 7,500 in
the case of any Eligible Director (other than an honorary director of the
Company) serving as a director both of the Company and of USTrust; (ii) 5,100 in
the case of any Eligible Director (other than an honorary director of the
Company) serving as a director of the Company but not serving as a director of
USTrust; (iii) 4,500 in the case of any Eligible Director serving as an honorary
director of the Company; and (iv) 3,000 in the case of any Eligible Director
serving as a director of USTrust but not serving as a director of the Company
(other than as an honorary director of the Company). The "prescribed number" for
an Eligible Director described in both (iii) and (iv) shall be 7,500.
(b) Exercise Price. The exercise price of each option shall be 100% of the
fair market value per share of the Stock on the date the option is granted. In
no event, however, shall the option price be less, in the case of an original
issue of authorized stock, than par value per share. For purposes of this
paragraph, the fair market value of a share of Stock on any date shall be the
average of the high and low prices of the Stock on the NASDAQ National System on
such date, or if the Stock did not trade on such date, on the next preceding day
on which trades were made.
(c) Duration of Options. The latest date on which an option may be
exercised (the "Final Exercise Date") shall be the fifth anniversary of the date
the option was granted.
(d) Exercise of Options.
(1) Each option shall become exercisable as follows: (A) to the extent
of one-third ( 1/3) of the shares covered by the option, on the earliest
testing date (as hereinafter defined) on which the per-share fair market
value of the Stock is at least three dollars ($3.00) higher than on the
date of grant; (B) to the extent of an additional one-third ( 1/3) of the
shares, on the earliest testing date on which the per-share fair market
value of the Stock is at least six dollars ($6.00) higher than on the date
of grant; and (C) to the extent of an additional onethird ( 1/3) of the
shares, on the earliest testing date on which the per-share fair market
value is at least nine dollars ($9.00) higher than on the date of grant.
For purposes of the preceding sentence, a "testing date" with respect to
any per-share dollar value is the last day of any period of ten consecutive
trading days (commencing after the date on which the Plan is approved by
the stockholders of the Company) on each day of which the per-share fair
market value of the Stock equaled or exceeded such dollar value; provided,
that a date shall not be considered a "testing date" for purposes of
determining the exercisability of an option under this paragraph if the
director to whom the option was awarded ceased to be a director of the
Company and its subsidiaries prior to the testing date. In all events, each
option shall become fully exercisable on the third anniversary of the date
of grant provided the Eligible Director to whom the option was awarded is
still a director on such anniversary. For purposes of the preceding
sentence, the following rules of construction shall apply: (A) with respect
to any option grants described in Section 6(a)(iii), an Eligible Director
described therein shall be treated as ceasing to be a director when he or
she is no longer an Eligible Director described in Section 5(a); (B) with
respect to any option grants described in Section 6(a)(iv), an Eligible
Director described therein shall be treated
B-2
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as ceasing to be a director when he or she is no longer an Eligible
Director described in Section 5(b); and (C) with respect to any option
grants described in Section 6(a)(i) or Section 6(a)(ii), an Eligible
Director described therein shall be treated as ceasing to be a director
when he or she ceases to be a director of the Company or becomes an
honorary or emeritus director of the Company.
In addition to and not in limitation of the foregoing, each option
outstanding at the time of a
"Change of Control" as hereinafter defined shall become fully exercisable
upon the Change in Control. A "Change of Control" shall be deemed to have
occurred if:
(i) any "person," as such term is used in Sections 13(d) and 14(d)
of the Securities and Exchange Act, (the "Exchange Act") (other than the
Company, any trustee or other fiduciary holding securities under an
employee benefit plan of the Company, or any company owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company), is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing
25% or more of the combined voting power of the Company's then
outstanding securities;
(ii) during any period of two consecutive years (not including any
period prior to the adoption of the Plan), individuals who at the
beginning of such period constitute the Board, and any new director
(other than a director designated by a person who has entered into an
agreement with the Company to effect a transaction described in clause
(i), (iii) or (iv) of this Section 6(d)(1)) whose election by the Board
or nomination for election by the Company's stockholders was approved by
a vote of at least two-thirds ( 2/3) of the directors then still in
office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved
(hereinafter referred to as "Continuing Directors"), cease for any
reason to constitute at least a majority thereof;
(iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a
merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) more than 80% of the combined
voting power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation;
provided, however, that a merger or consolidation effected to implement
a recapitalization of the Company (or similar transaction) in which no
"person" (as hereinabove defined) acquires more than 25% of the combined
voting power of the Company's then outstanding securities shall not
constitute a Change of Control of the Company; or
(iv) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets.
(2) Any exercise of an option shall be in writing, signed by the
proper person and delivered or mailed to the Company, to the attention of
the Company's General Counsel, accompanied by (i) any documentation
required by the Committee and (ii) payment in full for the number of shares
for which the option is exercised.
(3) The Committee shall withhold from the number of shares otherwise
issuable to the individual upon exercise a number of shares with a fair
market value equal to any federal, state, or local withholding tax
requirements due upon the exercise of the option.
(4) If an option is exercised by the executor or administrator of a
deceased director, or by the person or persons to whom the option has been
transferred by the director's will or the applicable laws of descent and
distribution, the Company shall be under no obligation to deliver Stock
pursuant to such exercise until the Company is satisfied as to the
authority of the person or persons exercising the option.
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(e) Payment for and Delivery of Stock. Stock purchased under the Plan shall
be paid for in one or a combination of the following forms of payment: (i) by
cash or by check (acceptable to the Company in accordance with guidelines
established for this purpose), bank draft or money order payable to the order of
the Company, (ii) by delivery of shares of Stock (which, in the case of shares
of Stock acquired from the Company, have been outstanding for at least six
months) having a fair market value on the last business day preceding the date
of exercise equal to the purchase price, or (iii) by delivery of a properly
executed exercise notice together with irrevocable instructions to the option
holder's broker to deliver promptly to the Company the amount required to pay
the exercise price.
An option holder shall not have the rights of a stockholder with regard to
awards under the Plan except as to Stock actually received by him or her under
the Plan.
The Company shall not be obligated to deliver any shares of Stock (A)
until, in the opinion of the Company's counsel, all applicable federal and state
laws and regulations have been complied with, and (B) if the outstanding Stock
is at the time listed on any stock exchange, until the shares to be delivered
have been listed or authorized to be listed on such exchange upon official
notice of issuance, and (C) until all other legal matters in connection with the
issuance and delivery of such shares have been approved by the Company's
counsel. If the sale of Stock has not been registered under the Securities Act
of 1933, as amended, the Company may require, as a condition to exercise of the
option, such representations or agreements as counsel for the Company may
consider appropriate to avoid violation of such Act and may require that the
certificates evidencing such Stock bear an appropriate legend restricting
transfer.
(f) Nontransferability of Options. No option may be transferred other than
by will or by the laws of descent and distribution, and during an Eligible
Director's lifetime an option may be exercised only by him or her.
(g) Retirement; Disability. If an Eligible Director retires as a director
of the Company and its subsidiaries (i) at or after 65, or (ii) by reason of
permanent disability whenever occurring, all options held by the retired or
disabled Eligible Director, to the extent not otherwise exercisable, shall
become exercisable. The Eligible Director's options shall remain exercisable for
one year from retirement (subject to paragraph (i) below) or for the remainder
of their original five-year option term if less, and then shall terminate to the
extent not previously exercised.
(h) Other Termination. If an Eligible Director's service as a director
terminates for any reason other than retirement under (g) above or death, all
options held by the director that are not then exercisable shall terminate.
Options that are exercisable on the date of termination shall continue to be
exercisable for a period of three months (subject to paragraph (i) below) or for
the remainder their original five-year term if less, and then shall terminate to
the extent not previously exercised. For the purposes of this paragraph (h): (A)
with respect to any option grants described in Section 6(a)(iii), an Eligible
Director described therein shall be treated as having terminated when he or she
ceases to be an Eligible Director described in Section 5(a) (other than by
reason of retirement under paragraph (g) above, or death); (B) with respect to
any option grants described in Section 6(a)(iv), an Eligible Director described
therein shall be treated as having terminated when he or she ceases to be an
Eligible Director described in Section 5(b) (other than by reason of retirement
under paragraph (g) above, or death); and (C) with respect to any option grants
described in Section 6(a)(i) or Section 6(a)(ii), an Eligible Director described
therein shall be treated as having terminated when he or she ceases to be a
director of the Company (other than by reason of retirement under paragraph (g)
above, or death) or becomes an honorary or emeritus director of the Company.
(i) Death. If an Eligible Director's service as a director of the Company
and its subsidiaries terminates by reason of death, all options held by the
Eligible Director which were not then exercisable shall be treated as having
become exercisable immediately prior to death. If an Eligible Director dies at
any time while holding exercisable options (including options treated as having
become exercisable by reason of the preceding sentence), all such options may be
exercised by his or her executor or administrator, or by the person or persons
to whom the option is transferred by will or the applicable laws of descent and
distribution, at any time within one year after the director's death or during
the remainder of the original five-year option term if less.
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After completion of that one-year (or shorter) period, such options shall
terminate to the extent not previously exercised.
(j) Mergers, etc. In the event of a consolidation or merger in which the
Company is not the surviving corporation or which results in the acquisition of
substantially all the Company's outstanding Stock by a single person or entity
or by a group of persons and/or entities acting in concert, or in the event of a
sale or transfer of substantially all of the Company's assets or a dissolution
or liquidation of the Company, all options hereunder will terminate; provided,
that 20 days prior to the effective date of any such merger, consolidation,
sale, dissolution, or liquidation, all options outstanding hereunder that are
not otherwise exercisable shall become immediately exercisable.
7. EFFECT, DISCONTINUANCE, CANCELLATION, AMENDMENT, TERMINATION AND
EFFECTIVENESS
Neither adoption of the Plan nor the grant of options to a director shall
affect the Company's right to grant to such director options that are not
subject to the Plan, to issue to such directors Stock as a bonus or otherwise,
or to adopt other plans or arrangements under which Stock may be issued to
directors.
The Committee may at any time terminate the Plan as to any further grants
of options. The Committee may at any time or times amend the Plan for any
purpose which may at the time by permitted by law; provided, that except to the
extent expressly required or permitted by the Plan, no such amendment will,
without the approval of the stockholders of the Company, effectuate a change for
which stockholder approval is required in order for the Plan to continue to
qualify under Rule 16b-3 promulgated under Section 16 of the Exchange Act.
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EXHIBIT C
SUPPLEMENTAL INFORMATION CONCERNING THE COMPANY
GENERAL DESCRIPTION OF THE COMPANY'S BUSINESS
UST Corp. (the "Company"), a bank holding company registered with the Board
of Governors of the Federal Reserve System (the "Federal Reserve Board"), was
organized as a Massachusetts business corporation in 1967. The Company is
subject to examination by, and is required to file reports with, the
Commissioner of Banks of the Commonwealth of Massachusetts (the "Massachusetts
Commissioner"). The Company's banking subsidiaries are USTrust and United States
Trust Company ("USTC"), each headquartered in Boston and each a Massachusetts
trust company, and UST Bank/Connecticut ("UST/Conn"), headquartered in
Bridgeport, a Connecticut trust company. All of the common stock of USTrust,
USTC, and UST/Conn is issued to and owned by the Company. In addition, the
Company owns, indirectly through its banking subsidiaries, all of the
outstanding stock of three active nonbanking subsidiaries, all Massachusetts
corporations: UST Leasing Corporation, UST Data Services Corp. and UST Capital
Corp.
The Company engages in one line of business, that of providing financial
services through its banking and nonbanking subsidiaries. A broad range of
financial services is provided principally to individuals and small-and
medium-sized companies in New England including those located in low- and
moderate-income neighborhoods. In addition, an important component of the
Company's financial services is the provision of trust and money management
services to professionals, corporate executives, nonprofit organizations, labor
unions, foundations, mutual funds and owners of closely-held businesses in the
New England region.
As of the close of business on December 31, 1994, the Company's total
assets were approximately $1.8 billion and USTrust, the lead bank, had over $1.7
billion or 94% of the Company's consolidated assets.
MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS
The common stock of the Company is traded over the counter and its price is
quoted on the NASDAQ National Market System. During the period January 1, 1993,
to December 31, 1994, the range of bid prices was as follows:
1994 1993
-------------------------- --------------------------
LOWEST BID HIGHEST BID LOWEST BID HIGHEST BID
---------- ----------- ---------- -----------
1st quarter........................... 10 1/2 13 1/2 8 3/4 12 1/2
2nd quarter........................... 12 5/8 14 3/8 7 3/8 9 1/2
3rd quarter........................... 11 1/4 13 1/2 7 1/2 10 7/8
4th quarter........................... 8 3/4 11 3/4 10 1/4 12
Such over-the-counter market quotations reflect inter-dealer prices,
without retail markup, markdown or commission and may not represent actual
transactions.
The number of holders of record of common stock of the Company was 2,059 at
January 31, 1995.
There were no dividends declared during 1994 and 1993.
Future dividends will depend upon the financial condition and earnings of
the Company and its subsidiaries, their need for funds and other factors,
including applicable government regulations and regulatory consent.
In connection with the $20 million senior debt private placement
transaction of August 1986 of which $8 million currently remains outstanding the
Company agreed not to make dividend payments in excess of 60% of cumulative net
earnings since December 31, 1985 plus $7 million. The Company does not expect
that this provision will adversely affect its ability to pay future dividends
which it deems appropriate.
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SELECTED FINANCIAL DATA CONCERNING THE COMPANY
UST CORP. CONSOLIDATED SUMMARY OF SELECTED FINANCIAL DATA(1)
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------
1994 1993 1992 1991 1990
----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
Earnings Data:
Interest income.................................. $ 132,312 $ 140,628 $ 157,024 $ 221,493 $ 272,949
Interest expense................................. 40,213 47,944 68,970 134,640 181,850
----------- ----------- ----------- ----------- -----------
Net interest income.............................. 92,099 92,684 88,054 86,853 91,099
Provision for possible loan losses............... 23,125 64,258 41,893 53,712 43,663
----------- ----------- ----------- ----------- -----------
Net interest income after provision for possible
loan losses.................................... 68,974 28,426 46,161 33,141 47,436
Noninterest income............................... 30,334 36,723 42,359 43,636 25,575
Noninterest expense.............................. 92,511 97,510 96,172 89,322 72,812
----------- ----------- ----------- ----------- -----------
Income (loss) before income taxes................ 6,797 (32,361) (7,652) (12,545) 199
----------- ----------- ----------- ----------- -----------
Applicable income taxes (benefit)................ 2,051 (12,261) (2,931) (4,598) (1,667)
----------- ----------- ----------- ----------- -----------
Net income (loss)................................ $ 4,746 $ (20,100) $ (4,721) $ (7,947) $ 1,866
=========== =========== =========== =========== ===========
Per share data(2):
Net income (loss)................................ $ .27 $ (1.31) $ (.34) $ (.58) $ .14
Cash dividends declared.......................... -- -- -- $ .15 $ .60
Weighted average common shares outstanding......... 17,780,032 15,362,251 13,984,190 13,793,617 13,564,369
Consolidated Average Balances(4):
Total assets..................................... $ 1,881,429 $ 2,042,567 $ 2,270,874 $ 2,696,992 $ 2,864,771
Loans............................................ 1,274,090 1,422,497 1,570,206 1,776,261 1,865,423
Deposits......................................... 1,527,113 1,635,178 1,826,738 2,172,984 2,081,321
Funds borrowed(3)................................ 192,115 244,775 268,519 350,367 560,936
Stockholders' investment......................... 152,256 143,149 147,440 150,193 159,559
Consolidated Ratios:
Net income (loss) to average
total assets................................... .25% (.98)% (.21)% (.30)% .07%
Net income (loss) to average stockholders'
investment..................................... 3.12 (14.04) (3.20) (5.29) 1.17
Average stockholders' investment to average
total assets................................... 8.09 7.01 6.49 5.57 5.57
Net chargeoffs to average loans.................. 1.86 3.64 2.67 2.23 1.41
Reserve for possible loan losses to period end
loans.......................................... 4.89 4.67 3.36 2.99 1.90
Average earning assets to average total assets... 93.45 92.40 90.62 90.65 90.95
Not
Dividend Payout Ratio............................ meaningful 428.57
<FN>
- - ----------------
(1) This information should be read in connection with Management's Discussion
and Analysis of Financial Condition and Results of Operations on pages 13 to
29 of the Company's Annual Report to the SEC on Form 10-K with particular
reference to Credit Quality and Reserve for Possible Loan Losses.
(2) The Company declared a 5% stock dividend to holders of record on September
30, 1991. All prior share and per share data have been adjusted to reflect
this transaction.
(3) Includes federal funds purchased, repurchase agreements, short-term and
other borrowings.
(4) Average balances do not include the effect of fair value adjustments under
SFAS No. 115 "Accounting for Certain Investments in Debt and Equity
Securities."
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/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
WITH- FOR ALL
FOR HOLD EXCEPT
1.) Election of Directors. / / / / / /
ROBERT L. CULVER, NEAL F. FINNEGAN, WALTER A. GULESERIAN
WALLACE M. HASELTON AND PAUL D. SLATER
NOTE: If you do not wish your shares voted "FOR" a particular Nominee,
mark the "For All Except" box and strike a line through that particular
Nominees name. Your shares will be voted for the remaining Nominees.
2.) Authorizing the Proxies to vote in favor of amendments to the Comany's
Stock Compensation Plan to increase the number of shares of the Company's
Common Stock that may be granted under the Plan and to effect certain
other changes.
FOR AGAINST ABSTAIN
/ / / / / /
3.) Authorizing the Proxies to vote in favor of a new Stock Option Plan for
certain Directors.
FOR AGAINST ABSTAIN
/ / / / / /
In their discretion, consider and act upon such other matters as may
properly come before the meeting.
RECORD DATE SHARES:
REGISTRATION
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Please be sure to sign and date this Proxy. Date
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Shareholder sign here Co-owner sign here
Mark box at right if address change has been noted on the reverse / /
side of this card.
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DETACH CARD DETACH CARD
UST CORP.
Dear Shareholder:
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. Those are discussed in detail
in the enclosed proxy materials.
Your vote counts, and you are stongly 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 Shareholders, May 16,
1995.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
UST Corp.
47
UST CORP.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF UST CORP.
The undersigned stockholder of UST Corp., a Massachusetts corporation (the
"Company"), hereby constitutes and appoints William Schwartz, Eric R. Fischer
and James K. Hunt, 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, all the shares of
Common Stock of the Company held of record by the undersigned on March 31, 1995
at the Annual Meeting of Stockholders of the Company, to be held on Tuesday,
May 16, 1995, and at any adjournments thereof.
THE 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.
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PLEASE VOTE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN ENCLOSED ENVELOPE.
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Please sign this Proxy exactly as your name appears on the books of the
Company. Joint owners should each sign personally. Trustees and other
fiduciaries should indicate the capacity in which they sign, and where more
than one name appears, a majority must sign. If a corporation, this signature
should be that of an authorized officer who should state his or her title.
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HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
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