SCHEDULE 14A
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 (S)
240.14a-11(c) or (S) 240.14a-12
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¨
Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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Mellon Financial Corporation
(Name of Registrant as Specified In Its
Charter)
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
x
No fee required.
¨
Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
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(1) Title of each class of
securities to which transaction applies:
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(2) Aggregate number of
securities to which transaction applies:
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(3) Per unit price or
other underlying value of transaction computed pursuant to Exchange Act
Rule 0-11 (set forth the amount on which the filing fee is calculated and
state how it was determined):
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(4) Proposed maximum
aggregate value of transaction:
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¨
Fee paid previously with preliminary
materials.
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¨
Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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(1) Amount Previously
Paid:
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(2) Form, Schedule or
Registration Statement No.:
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Notes:
Mellon
[LOGO OF MELLON FINANCIAL CORP.]
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Mellon Financial Corporation
One Mellon Center
Pittsburgh, PA 15258-0001
March 8, 2000
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Dear Shareholder:
You are cordially invited to attend the Annual Meeting of
Shareholders of Mellon Financial Corporation in Pittsburgh on Tuesday, April
18, 2000, at 10:00 A.M. Further information about the meeting and the
matters to be considered is contained in the formal Notice of Annual Meeting
and Proxy Statement on the following pages.
It is important that your shares be represented at this meeting.
Whether or not you plan to attend, we hope that you will sign, date and
return your Proxy promptly in the enclosed envelope. Completing and
returning the enclosed Proxy will not limit your right to vote in person or
to attend the meeting.
Sincerely,
/s/ Martin G. McGuinn
Martin G. McGuinn
Chairman and Chief Executive Officer
[LOGO OF MELLON FINANCIAL CORP]
Mellon
One Mellon Center
Pittsburgh, Pennsylvania 15258-0001
Notice of Annual Meeting of Shareholders
To the Shareholders:
On Tuesday, April 18, 2000, Mellon Financial Corporation (the
Corporation) will hold its 2000 Annual Meeting of Shareholders
on the 10th Floor of the Union Trust Building, 501 Grant Street, Pittsburgh,
Pennsylvania. The meeting will begin at 10:00 A.M.
Only shareholders of record at the close of business on February 11,
2000, can vote at this meeting or any adjournments that may take place. At
the meeting we will consider and act upon the following:
1.
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The election of
directors;
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2.
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A proposal to amend the
Corporations Long-Term Profit Incentive Plan (1996);
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3.
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A proposal to adopt the
Mellon Financial Corporation Employee Stock Purchase Plan;
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4.
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The ratification of the
appointment of KPMG LLP as independent public accountants of the
Corporation for the year 2000; and
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5.
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Such other business as may
properly come before the meeting.
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Enclosed are a Proxy Statement, a form of Proxy, an addressed return
envelope and the Corporations 1999 Annual Report (which consists of
the 1999 Summary Annual Report and 1999 Financial Annual Report). All
shareholders, whether or not they expect to be present at the meeting, are
requested to mark, sign and date the Proxy and to return it in the addressed
envelope promptly. Shareholders who plan to attend the meeting in person are
also requested to complete and return the reservation form which appears at
the end of the Proxy Statement. Shareholders who attend the meeting may, if
they wish, vote in person even though they have previously returned their
Proxy.
By Order of the Board of Directors
/s/ Carl Krasik
Carl Krasik
Secretary
March 8, 2000
[LOGO OF MELLON FINANCIAL CORP]
Mellon
One Mellon Center
Pittsburgh, Pennsylvania 15258-0001
Proxy Statement
March 8, 2000
The Board of Directors of Mellon Financial Corporation (the
Corporation) is soliciting the enclosed Proxy from you for the
Corporations Annual Meeting of Shareholders scheduled to be held on
Tuesday, April 18, 2000. Proxies are being solicited from holders of the
Corporations common stock, par value $0.50 per share (the Common
Stock). Holders of Common Stock are entitled to one vote for each
share held and are not entitled to cumulative voting.
If you properly sign, date and return your Proxy, the shares of
Common Stock it covers will be voted as you direct on the Proxy. If you
choose to sign, date and return your Proxy without marking it to provide
voting directions, the shares it covers will be voted at the annual meeting
in accordance with the recommendations of the Board of Directors as follows:
Proxy Item 1FOR the election as directors of the nominees of the Board
of Directors set forth below; Proxy Item 2-FOR the proposal to amend
the Long-Term Profit Incentive Plan (1996); Proxy Item 3-FOR the
approval of the Mellon Financial Corporation Employee Stock Purchase Plan;
and Proxy Item 4FOR ratification of the appointment of KPMG LLP as
independent public accountants of the Corporation for the year 2000. You may
revoke your Proxy at any time prior to the annual meeting by writing to the
Secretary of the Corporation and stating that you are revoking your
previously filed Proxy. If you attend the annual meeting, you may choose to
vote in person even though you have previously returned a signed Proxy. If
you attend the meeting and vote in person, your Proxy will be considered to
have been revoked.
Unless you direct otherwise on your Proxy, the persons appointed in
the Proxy to vote at the annual meeting may vote or act in accordance with
their judgment on any other matters properly presented for action at the
meeting. If a broker or nominee voting a Proxy limits the number of shares
voted on a proposal or indicates that shares are not voted on a proposal,
such non-votes will not be voted on the proposal and will not be
counted in determining the number of affirmative votes required for
approval.
The close of business on Friday, February 11, 2000, has been set by
the Board of Directors as the record date for the determination of
shareholders entitled to notice of and to vote at the annual meeting or any
adjournment of that meeting. As of that date, the Corporation had
outstanding 498,240,576 shares of Common Stock. Proxies, ballots and voting
tabulations that identify individual holders of Common Stock are held in
confidence by the Corporations transfer agent. Individual votes will
not be disclosed to the Corporation by the transfer agent except as may be
necessary to meet legal requirements, in the case of a contested proxy
solicitation or as may be requested by the particular shareholder. The
distribution of these proxy materials, consisting of the Notice of Annual
Meeting, the Proxy Statement and the Proxy, together with the Corporation
s 1999 Annual Report (consisting of the 1999 Summary Annual Report and
1999 Financial Annual Report), is expected to commence on or about March 8,
2000.
ELECTION OF DIRECTORS (Proxy Item 1)
The By-Laws of the Corporation provide that the directors will serve
in three classes, as nearly equal in number as possible, with each class of
directors serving a staggered, three-year term of office. At each annual
meeting of shareholders, a class consisting of approximately one-third of
the Corporations directors is elected to hold office for a term
expiring at the annual meeting held in the third year following the year of
their election and until their successors have been duly elected and
qualified. The By-Laws also provide that the Corporations Board of
Directors shall consist of such number of directors as shall be fixed from
time to time by a majority vote of the full Board of Directors. The Board of
Directors has fixed the number of directors at 17, effective with the 2000
Annual Meeting of Shareholders, and five directors will be elected to the
class of directors whose terms end in 2003. Burton C. Borgelt, Carol R.
Brown, Christopher M. Condron, Seward Prosser Mellon and Mark A. Nordenberg,
all of whom are currently serving as directors of the Corporation, have been
nominated for election at this years annual meeting. Frank V. Cahouet
and George W. Johnstone currently serve as directors in the class whose term
expires in 2000, and they are not standing for reelection. Dwight L.
Allison, Jr., currently serving in the class whose term expires in 2002, has
announced his intention to retire from the Board of Directors effective with
the 2000 Annual Meeting of Shareholders.
Any vacancies in the Board of Directors resulting from death,
retirement, resignation, disqualification, removal from office or other
cause, as well as any vacancy resulting from an increase in the number of
directors that occurs between annual meetings of shareholders, will be
filled by a majority vote of the remaining directors then in office.
Directors so chosen to fill vacancies will hold office until the expiration
of the term of the class to which they have been elected.
The shares of Common Stock represented by the enclosed Proxy will be
voted FOR the election of the nominees named below, unless the Proxy is
marked as directed to withhold authority to vote for one or more of the
nominees. If one or more of the nominees is unable or unwilling to serve as
a director, the persons named in the Proxy will vote for the election of
such substitute nominee, if any, as shall be named by the Nominating
Committee of the Board of Directors. The Board of Directors has no reason to
believe that any of the nominees will be unable or unwilling to serve as a
director, as each of the nominees has expressed a willingness to serve if
elected.
Biographical Summaries of Nominees and Directors
Information regarding the nominees for election at this years
annual meeting, as well as information regarding the continuing directors
whose terms expire in 2001 and 2002, is set forth below. Each of the
nominees except for Mr. Condron and Mr. Nordenberg was previously elected by
the shareholders at the Corporations 1997 annual meeting of
shareholders. Mr. Condron and Mr. Nordenberg were elected by the Board of
Directors in 1998.
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NOMINEES FOR
DIRECTORTERM EXPIRES 2003
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Burton C.
Borgelt |
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Director Since 1991 |
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Age 67 |
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Retired (1996) Chairman
and Chief Executive Officer, Dentsply
International, Inc. (manufacturer of dental products). Mr. Borgelt is also a
director of Dentsply International, Inc. and DeVlieg-Bullard, Inc. He serves
on the Corporations Community Responsibility Committee and Trust and
Investment Committee. |
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Carol R. Brown |
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Director Since 1992 |
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Age 66 |
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President, The Pittsburgh
Cultural Trust (cultural and economic growth
organization). Mrs. Brown serves on the Corporations Community
Responsibility Committee (Vice Chairman) and Human Resources
Committee. |
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Christopher M.
Condron |
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Director Since 1998 |
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Age 52 |
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President and Chief
Operating Officer of the Corporation (1999) and of
Mellon Bank, N.A. (Mellon Bank). From 1998 to 1999, Mr. Condron
served
as President and Chief Operating Officer of Mellon Bank and as Vice
Chairman of the Corporation. From 1994 to 1998, Mr. Condron was Vice
Chairman of the Corporation and of Mellon Bank. He serves on the
Corporations Executive Committee. |
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Seward Prosser
Mellon |
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Director Since 1972 |
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Age 56 |
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President and Chief
Executive Officer, Richard K. Mellon and Sons
(investments) and Richard King Mellon Foundation (philanthropy). |
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Mark A.
Nordenberg |
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Director Since 1998 |
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Age 51 |
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Chancellor, University of
Pittsburgh (major public research university). Mr.
Nordenberg served as the Interim Chancellor of the University of Pittsburgh
from 1994 to 1996. He serves on the Corporations Community
Responsibility Committee. |
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DIRECTORS
TERM EXPIRES 2001
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Jared L. Cohon |
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Director Since 1998 |
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Age 52 |
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President, Carnegie Mellon
University (private co-educational research
university). From 1992 to 1997, Dr. Cohon served as Dean of the School of
Forestry and Environmental Studies at Yale University. Dr. Cohon is also a
director of American Standard Companies Inc. He serves on the
Corporations Audit Committee. |
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Ira J. Gumberg |
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Director Since 1989 |
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Age 46 |
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President, Chief Executive
Officer and director, J.J. Gumberg Co. (real
estate investment and development). Mr. Gumberg is also a director of Jo-
Ann Stores, Inc. He serves on the Corporations Executive Committee,
Audit
Committee and Trust and Investment Committee (Chairman). |
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Edward J.
McAniff |
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Director Since 1994 |
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Age 65 |
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Of Counsel to O
Melveny & Myers (full service law firm), where Mr. McAniff
was a partner from 1970 through January 31, 1999. Mr. McAniff is also
Visiting Professor of Law, University of Oregon Law School and Adjunct
Professor of Law, UCLA Law School (major public university law schools).
He serves on the Corporations Community Responsibility Committee and
Trust and Investment Committee. |
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Martin G.
McGuinn |
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Director Since 1998 |
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Age 57 |
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Chairman and Chief
Executive Officer of the Corporation (1999) and of
Mellon Bank. From 1998 to 1999, Mr. McGuinn served as Chairman and
Chief Executive Officer of Mellon Bank and as Vice Chairman of the
Corporation. From 1990 to 1998, Mr. McGuinn was Vice Chairman of the
Corporation and of Mellon Bank. He serves as Chairman of the
Corporations Executive Committee. |
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David S.
Shapira |
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Director Since 1986 |
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Age 58 |
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Chairman, Chief Executive
Officer and director, Giant Eagle, Inc. (retail
grocery store chain). Mr. Shapira is also a director of Equitable Resources,
Inc. He serves on the Corporations Executive Committee, Audit Committee
(Chairman), Technology Committee and Trust and Investment
Committee. |
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Joab L. Thomas |
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Director Since 1993 |
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Age 67 |
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President Emeritus (1995),
The Pennsylvania State University (major public
research university). Dr. Thomas serves on the Corporations Human
Resources Committee and Technology Committee. |
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DIRECTORS
TERM EXPIRES 2002
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J. W. Connolly |
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Director Since 1989 |
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Age 66 |
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Retired Senior Vice
President, H. J. Heinz Company (food manufacturer).
Mr. Connolly serves on the Corporations Executive Committee, Audit
Committee, Human Resources Committee and Nominating Committee
(Chairman). |
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Charles A.
Corry |
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Director Since 1991 |
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Age 68 |
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Retired (1995) Chairman
and Chief Executive Officer, USX Corporation
(energy and steel). Mr. Corry is also a director of USX Corporation and
GenCorp. He serves on the Corporations Executive Committee, Audit
Committee, Human Resources Committee (Chairman) and Nominating
Committee (Vice Chairman). |
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Pemberton
Hutchinson |
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Director Since 1989* |
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Age 68 |
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Retired Chief Executive
Officer, Westmoreland Coal Company (coal mining
company). Mr. Hutchinson is also a director of Westmoreland Coal Company
and Teleflex Incorporated. He serves on the Corporations Community
Responsibility Committee, Nominating Committee and Trust and
Investment Committee (Vice Chairman). |
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Served as a director of
The Girard Company from 1977 until its merger with the Corporation in
1983.
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Rotan E. Lee,
Esquire |
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Director Since 1993 |
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Age 50 |
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Chief Executive Officer of
Total Health Care Plan, Inc. (a Medicaid managed
health care organization). From 1998 to 1999, Mr. Lee was Vice President
and General Counsel, Scheur Management Group (operations management
and consulting to the health care industry). In 1999, Mr. Lee was also Of
Counsel to Katz, Ettin, Levine, Kurzweil, Weber & Scialabbu, P.C. (full
service law firm). From 1998 to 1999, Mr. Lee was Vice President, Hugh
Wood, Inc. (insurance brokerage firm). From 1997 to 1998, Mr. Lee served
as the Chairman of Talleyrand Atlantic, LLC (strategic planning company-
information technology). From 1996 to 1997, Mr. Lee was a partner with
Sherr, Joffe & Zuckerman, P.C. (full service law firm). From 1994 to
1996,
Mr. Lee served as Chief Operating Officer of RMS Technologies, Inc.
(information technology). He serves on the Corporations Community
Responsibility Committee and Trust and Investment Committee. |
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Robert
Mehrabian |
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Director Since 1994 |
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Age 58 |
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President, Chief Executive
Officer and Director, Teledyne Technologies
Incorporated (advanced industrial technologies). From 1997 to 1999, Dr.
Mehrabian served as Executive Vice President and Segment Executive,
Aerospace, Electronics and Industrial, of Allegheny Teledyne Incorporated
(specialty metals and diversified businesses). Through mid-1997, Dr.
Mehrabian served as President of Carnegie Mellon University (private co-
educational research university). Dr. Mehrabian is also a director of
Allegheny Teledyne Incorporated, BEI Technologies, Inc. and PPG
Industries, Inc. He serves on the Corporations Executive Committee,
Audit
Committee (Vice Chairman) and Technology Committee (Chairman). |
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Wesley W. von
Schack |
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Director Since 1989 |
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Age 55 |
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Chairman, President and
Chief Executive Officer, Energy East Corporation
(energy services company). Prior to 1996, Mr. von Schack served as
Chairman, President and Chief Executive Officer of DQE (energy services
company). Mr. von Schack is also a director of Energy East Corporation,
New York State Electric & Gas Corporation and RTI International Metals,
Inc. He serves on the Corporations Executive Committee, Community
Responsibility Committee (Chairman), Human Resources Committee (Vice
Chairman), Nominating Committee and Technology Committee. |
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Action by Shareholders
The five nominees receiving the highest number of votes cast at the
annual meeting by all holders of shares of Common Stock will be elected as
directors for terms expiring in 2003. A vote indicated as withheld from a
nominee will not be cast for such nominee but will be counted in determining
the presence of a quorum.
With respect to the election of directors (Proxy Item 1), the
Board of Directors recommends a vote FOR the election of all
nominees.
THE BOARD AND ITS COMMITTEES; DIRECTORS
COMPENSATION
The Board of Directors held 12 regular meetings during 1999. Each
incumbent director attended at least 75 percent of the aggregate number of
meetings of the Board and of the committees of which he or she was a member
during the period served in 1999. With the exception of the Executive
Committee, all Board committees are composed of directors who are not
officers of the Corporation.
The committees of the Board
of Directors and a general description of their respective duties
follow:
Executive Committee
The Executive Committee has the power and authority of the Board of
Directors to manage the affairs of the Corporation between meetings of the
Board. The Committee also reviews significant corporate matters and
recommends action as appropriate to the Board. The Executive Committee met
five times during 1999.
Audit Committee
The Audit Committee oversees the credit policies, accounting
practices, auditing policies, controls and other material financial matters
of the Corporation and its subsidiaries. It provides a channel, independent
of management, through which reports are made to the Board with respect to
auditing and all related matters. The Head of the Corporations
Auditing Department meets with the Committee at each meeting of the
Committee and the Corporations independent public accountants meet
with the Committee at least quarterly, with and without representatives of
management present, to review accounting, auditing and financial reporting
matters, including the review of audit plans. The Committee is also
responsible for receiving and reviewing the examination reports of the
Corporation by federal bank regulatory authorities, other than those reports
which are reviewed by the Trust and Investment Committee or the Community
Responsibility Committee. The Corporations independent public
accountants are appointed by the Board of Directors upon the Committee
s recommendation and ratified by the shareholders. The Audit Committee
met eight times during 1999.
Nominating Committee
The Nominating Committee recommends to the Corporations Board
and to the Boards of its various significant subsidiaries such as Mellon
Bank, Mellon Bank (DE) National Association, Mellon Bank (MD) National
Association, Mellon United National Bank, Mellon 1st Business Bank, Boston
Safe Deposit and Trust Company (collectively the Banks), The
Boston Company and The Dreyfus Corporation, candidates for nomination for
election as directors of the Corporation and of those respective
entities.
The Committee considers nominees recommended by shareholders for
election as directors of the Corporation. To make such a recommendation, a
shareholder should submit in writing the name, address and qualifications of
the proposed nominee to the Secretary of the Corporation, One Mellon Center,
Room 4826, Pittsburgh, Pennsylvania 15258-0001. In addition, Article 2,
Section 4 of the Corporations By-Laws sets forth specific procedures
that, if followed, enable any shareholder entitled to vote in the election
of directors to make nominations directly at a meeting of shareholders.
Those procedures include a requirement for written notice to the Corporation
at least 90 days prior to the anniversary date of the previous years
annual meeting of shareholders. For the Corporations annual meeting to
be held in 2001, the notice deadline under the By-Law will be January 18,
2001.
The Committee also reviews and recommends to the Corporations
Board and the Boards of its various significant subsidiaries policies
relating to (a) practices and responsibilities of the Boards and their
various committees and (b) the components of directors compensation.
The Nominating Committee met three times during 1999.
Human Resources Committee
The Human Resources Committee establishes the compensation and
benefits of the Chairman and Chief Executive Officer, the President and
Chief Operating Officer and such other senior officers of the Corporation
and its subsidiaries as it decides. The Committee also generally advises and
assists management in implementing programs designed to assure the selection
and development of key personnel and reviews reports regarding the operation
and administration of the Corporations employee benefit plans. The
Committee administers the Corporations Profit Bonus Plan and Long-Term
Profit Incentive Plan (1996), including the making of awards thereunder. The
Committee met nine times during 1999.
Trust and Investment Committee
The Trust and Investment Committee has general oversight
responsibility for the review and periodic audits of the trust and
investment activities of the Corporations subsidiaries and
administration of all assets held in a fiduciary capacity. It receives and
reviews examination reports and acts as a channel independent of management
through which auditing and bank examination reports regarding trust and
investment activities are presented to the Banks Boards of Directors.
It is responsible for overseeing the administration of fiduciary
responsibilities for the non-bank subsidiaries of the Corporation. It also
has general oversight responsibilities for the trust departments of the
Banks. The Committee met six times during 1999.
Community Responsibility Committee
The Community Responsibility Committee has general oversight
responsibility for the Corporations policy concerning overall
compliance with the Community Reinvestment Act (CRA) and Fair
Lending laws. In addition, the Committee has specific responsibilities for
reviewing the Corporations overall policy and goals concerning CRA and
Fair Lending activities, monitoring each Banks compliance and
reviewing the report of the Corporations contributions program. The
Committee reviews the examination reports of the Corporation and the Banks
by regulatory authorities concerning CRA and Fair Lending compliance and
renders a report to the Board with respect to these matters. The Committee
met three times during 1999.
Technology Committee
The Technology Committee has general oversight responsibility for the
role of technology and its use throughout the Corporation. It advises and
assists management in the formulation and implementation of operating and
strategic plans designed to take full advantage of existing and emerging
technology. It monitors the performance of technology throughout the
Corporation. The Committee met four times during 1999.
Directors Compensation
Each director of the Corporation who does not receive a salary from
the Corporation or one of its subsidiaries currently receives a monthly
retainer of $2,292 and, in addition, a fee of $1,200 for each meeting at
which such director renders services to the Corporation, including meetings
of shareholders, the Board of Directors or any committee of the Board on
which he or she serves, and separate meetings (if any) with senior
management of the Corporation at which services are rendered. In addition,
each director who serves as a Committee Chairman receives an annual retainer
of $4,500. Effective April 1, 2000, the monthly retainer will be increased
to $2,500. The monthly retainer was last increased in 1997. The directors
also serve as the Board of Directors of Mellon Bank and are paid a fee of
$700 for attending meetings of that Board on a day when the Corporation
s Board of Directors does not meet. Non-employee directors may defer
all or a portion of their fees pursuant to the terms of the Corporation
s 1990 Elective Deferred Compensation Plan for Directors and Members
of the Advisory Board (the Directors Deferred Compensation Plan
), which pays interest at a rate based on the 120-month moving average
rates on 10-year Treasury Notes, plus a premium based on years of
service.
In addition, non-employee directors receive stock option grants under
the Corporations Stock Option Plan for Outside Directors (1989) (the
Directors Option Plan), a formula plan under which options to
purchase Common Stock are granted each year on the third business day
following the Corporations annual meeting of shareholders. Directors
(if any) elected between annual meetings receive an option grant covering a
prorated number of shares but with all other terms identical to those
options granted on the regular grant date. All options have a term of 10
years from the regular grant date, become fully exercisable one year from
the regular grant date, and have an exercise price equal to the closing
price of the Common Stock on the New York Stock Exchange on the regular
grant date. If the directors service ceases for any reason other than
death, disability or completion of term of service, options that have not
become exercisable are forfeited. Options that have become exercisable
remain exercisable throughout their 10-year term, regardless of whether the
optionee is a director at the time of exercise. In April 1999, each
director, except Messrs. McGuinn and Condron,
was granted an option covering 3,000 shares of Common Stock at an exercise
price of $36.2813 per share (numbers have been adjusted pursuant to the
terms of the Directors Option Plan to reflect the Corporations
two-for-one Common Stock split distributed in May 1999 (the Common
Stock Split)).
The Corporation has sponsored a Directors Retirement Plan
paying a monthly benefit equal to the monthly retainer in effect at the time
the director retired from the Board. The benefit would be payable over a
period equal to the lesser of the directors total months of service on
the Board or 120 months. Non-employee directors who served on the Board for
five years became entitled to receive this benefit on retirement. The
benefits payable under the Plan were informally funded with life insurance
and were not expected to result in any material cost to the Corporation. The
Plan has been amended to provide that (1) retired outside directors who were
receiving Plan retirement benefits prior to February 15, 2000 will continue
to receive such payments, (2) all outside directors currently serving on the
Board or Advisory Board will receive in the second quarter of 2000 a lump
sum payment to their Directors Deferred Compensation Plan account (or a lump
sum payment in cash if they do not participate in the Directors Deferred
Compensation Plan) equal to the present value of their accrued benefit under
the Plan without regard to the minimum service requirement, and such persons
will receive no other payments under the Plan, and (3) outside directors
joining the Board after February 15, 2000 will not be entitled to receive a
benefit under the Plan.
As part of its overall program to promote charitable giving, the
Corporation has established a Directors Charitable Giving Program
which is informally funded by Corporation-owned life insurance policies on
the directors. Under the program, upon a directors death the
Corporation will donate up to an aggregate of $250,000 over a 10-year period
to one or more qualifying charitable organizations designated by the
director. A director must have served on the Board for three years to be
eligible to participate. The program is not expected to result in any
material cost to the Corporation.
As a further part of its overall program to promote charitable
giving, the Corporation has established a Directors Charitable
Matching Gift Program. Under this Program, the Corporation will match on a
1:1 basis donations by directors to qualifying charitable organizations up
to a maximum of $5,000 per director per year.
ADVISORY BOARD
The Corporations Advisory Board provides general policy advice
and assistance on various business matters to the Board and management of
the Corporation. Advisory Board members participate in meetings and other
activities of the Board of Directors and Committees of the Board but are not
entitled to vote or take part in any formal action by the Board or
Committees of the Board. In 1999, the Board of Directors revised the
Corporations Board Policies to express an intention to phase out the
Advisory Board over time. Under revised Board Policies, any person (1) who
had reached age 65 at December 31, 1999 but who has not reached age 72 at
the time of his or her election to the Advisory Board and (2) who has served
on the Corporations Board of Directors is eligible for election or
reelection by the Board of Directors to the Advisory Board. In lieu of
service on the Advisory Board, such eligible persons may elect to receive
upon retirement from the Board a lump sum payment equal to the estimated
present value of two years of Advisory Board compensation. Advisory Board
members receive the same compensation, including option grants, as members
of the Board of Directors. The lump sum payment would be made to their
Directors Deferred Compensation Plan account or in cash if they do not
participate in the Directors Deferred Compensation Plan.
Information concerning the only current member of the Advisory Board
follows:
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Andrew W. Mathieson
Advisory Board Since 1999
Retired Executive Vice President, Richard K. Mellon and Sons
(investments). Mr. Mathieson served on the Corporations Board from 1981
through 1999.
|
|
BUSINESS RELATIONSHIPS AND RELATED TRANSACTIONS
Certain directors and executive officers of the Corporation and their
associates were customers of and had transactions with one or more of the
Banks or other subsidiaries of the Corporation in the ordinary course of
business during 1999. Similar transactions may be expected to take place in
the future. Loans and commitments included in such transactions were made 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 collectibility, nor did
they present other unfavorable features. The Banks, in the ordinary course
of business, also engage in purchases and sales of government and municipal
securities and in other money market transactions with certain directors and
executive officers of the Corporation and their associates. In addition, the
Banks and other subsidiaries act as fiduciaries under various employee
benefit plans of and as investment managers to certain customers, officers
of which are directors of the Corporation and of Mellon Bank.
During 1999, the purchase of goods and services, or the lease of
property, by the Corporation, the Banks or other subsidiaries of the
Corporation in the ordinary course of business included transactions with
various director-related companies. The amounts involved in these
transactions were in no case material in relation to the business of the
Corporation. It is also believed that the amounts involved in such
transactions, as well as the transactions themselves, were not material in
relation to the business of any such director-related company and that no
director had a material interest in any such transaction. The law firm of O
Melveny & Myers performed legal services for the Corporation
during 1999. Edward J. McAniff, a director of the Corporation, is Of Counsel
to OMelveny & Myers. The amounts paid by the Corporation to O
Melveny & Myers were not material to the Corporation or, it is
believed, to OMelveny & Myers. During 1999, the law firm of Katz,
Ettin, Levine, Kurzweil, Weber & Scialabbu, P.C., for which Rotan E.
Lee, a director of the Corporation, was Of Counsel, also performed legal
services for the Corporation. The amounts paid by the Corporation to Katz,
Ettin, Levine, Kurzweil, Weber & Schialabbu were not material to the
Corporation or, it is believed, to the law firm.
BENEFICIAL OWNERSHIP OF
STOCK
Directors, Nominees and Executive Officers
The following table sets forth, as of February 11, 2000, the amount
of the Corporations Common Stock beneficially owned by each incumbent
director, each nominee and each executive officer named in the Summary
Compensation Table appearing on page 13 and by all incumbent directors,
nominees and executive officers of the Corporation as a group. Except as
otherwise indicated, sole voting power and sole investment power with
respect to the shares shown in the table are held either by the individual
alone or by the individual together with his or her spouse.
Name |
|
Common Stock
Owned
Beneficially (1)(2) |
|
Dwight L. Allison,
Jr |
|
35,760 |
(3) |
Burton C.
Borgelt |
|
83,632 |
|
Carol R. Brown |
|
48,464 |
|
Frank V.
Cahouet |
|
3,313,958 |
(4) |
John T. Chesko |
|
178,503 |
|
Jared L. Cohon |
|
3,156 |
|
Christopher M.
Condron |
|
272,987 |
(5) |
J.W. Connolly |
|
98,864 |
|
Charles A.
Corry |
|
80,980 |
|
Steven G.
Elliott |
|
699,037 |
|
Ira J. Gumberg |
|
212,536 |
|
Pemberton
Hutchinson |
|
16,900 |
|
George W.
Johnstone |
|
16,716 |
|
Rotan E. Lee |
|
31,812 |
|
Jeffery L.
Leininger |
|
210,244 |
|
Edward J.
McAniff |
|
39,934 |
|
Martin G.
McGuinn |
|
775,109 |
(6) |
Robert
Mehrabian |
|
44,636 |
|
Seward Prosser
Mellon |
|
482,056 |
|
Mark A.
Nordenberg |
|
2,756 |
|
Keith P.
Russell |
|
134,761 |
|
David S.
Shapira |
|
97,580 |
|
Joab L. Thomas |
|
66,540 |
|
Wesley W. von
Schack |
|
123,580 |
(7) |
Directors, Nominees and
Executive Officers as a group (28 persons) |
|
7,593,675 |
|
(1)
|
On February 11, 2000, none
of the individuals named in the above table beneficially owned more than
1% of the Corporations outstanding shares of Common Stock. On that
date, all the directors, nominees and executive officers as a group owned
beneficially approximately 1.5% of the Corporations outstanding
Common Stock.
|
(2)
|
The amounts shown include
the following amounts of Common Stock which the indicated individuals and
group have the right to acquire within 60 days of February 11, 2000,
through the exercise of stock options granted pursuant to the Corporation
s stock option plans: Mr. Allison, 18,760; Mr. Borgelt, 71,032; Ms.
Brown, 20,012; Mr. Cahouet, 1,105,648; Mr. Chesko, 91,333; Dr. Cohon,
2,556; Mr. Condron, 8,081; Mr. Connolly, 84,980; Mr. Corry, 60,980; Mr.
Elliott, 123,800; Mr. Gumberg, 60,980; Mr. Hutchinson, 3,000; Mr.
Johnstone, 14,620; Mr. Lee, 31,212; Mr. Leininger 69,600; Mr. McAniff,
33,440; Mr. McGuinn, 143,141; Dr. Mehrabian, 38,636; Mr. Mellon, 72,980;
Mr. Nordenberg, 2,556; Mr. Russell 12,400; Mr. Shapira, 84,980; Dr.
Thomas, 28,112; Mr. von Schack, 72,980; and all directors, nominees and
executive officers as a group, 2,325,398 shares.
|
(3)
|
Of these shares, 17,000
are held in a trust for Mr. Allisons benefit. Mr. Allisons son
is the sole trustee for the trust, and Mr. Allison has no voting or
investment control over such shares.
|
(4)
|
Of these shares, 1,100,000
are held in trust for Mr. Cahouets wife. Mellon Bank is the sole
trustee for Mrs. Cahouets trust, and Mr. Cahouet has no voting or
investment control over such shares. Mr. Cahouet disclaims beneficial
ownership of all such shares.
|
(5)
|
Of these shares, 25,000
are held by Mr. Condrons wife. Mr. Condron disclaims beneficial
ownership of such shares.
|
(6)
|
Of these shares, 28,000
are held by Mr. McGuinns wife. Mr. McGuinn disclaims beneficial
ownership of such shares.
|
(7)
|
Of these shares, 1,156 are
held by Mr. von Schacks wife. Mr. von Schack disclaims beneficial
ownership of such shares.
|
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total
shareholder return on the Corporations Common Stock, based on the
market price of the Common Stock and assuming reinvestment of dividends,
with the cumulative total return of companies on the KBW 50 Index and the
Standard & Poors 500 Stock Index. The KBW 50 Index, available from
Keefe, Bruyette & Woods, Inc., is a market-capitalization-weighted
bank-stock index made up of 50 of the nations most important banking
companies including all money-center and most major regional banks. The
Corporation is included in the KBW 50 Index.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
Among S&P 500 Index, KBW 50 Index and Mellon Financial
Corporation
GRAPH APPEARS HERE
|
|
December
31,
|
|
|
1994
|
|
1995
|
|
1996
|
|
1997
|
|
1998
|
|
1999
|
Mellon Financial
Corporation |
|
100 |
|
184 |
|
253 |
|
443 |
|
514 |
|
519 |
S&P 500
Index |
|
100 |
|
138 |
|
168 |
|
226 |
|
290 |
|
351 |
KBW 50 Index |
|
100 |
|
161 |
|
228 |
|
334 |
|
361 |
|
345 |
*
|
Assumes that the value of
the investment in the Corporations Common Stock and each index was
$100 on December 31, 1994 and that all dividends were
reinvested.
|
EXECUTIVE
COMPENSATION
Summary Compensation Table
The following table shows the compensation for the past three years
of each of the Corporations six most highly compensated officers,
including the chief executive officer (the named executive officers
).
|
|
|
|
|
|
|
|
|
|
Long-Term
Compensation
|
|
|
Annual
Compensation
|
|
Awards
|
|
Payouts
|
Name and
Principal Position
|
|
Year
|
|
Salary($)
|
|
Bonus(1)($)
|
|
Other Annual
Compensation
($)
|
|
Restricted
Stock Awards
($)(1)(2)(3)(4)
|
|
Securities
Underlying
Options(5)
|
|
LTIP
Payouts
($)(6)
|
|
All Other
Compensation
($)(7)
|
MARTIN
G. MC
GUINN
|
|
1999 |
|
$729,167 |
|
$1,200,000 |
|
|
$9,600 |
|
$1,440,141 |
|
|
112,141 |
|
$1,578,929 |
|
$248,138 |
Chairman and Chief |
|
1998 |
|
679,167 |
|
1,050,000 |
|
|
4,500 |
|
950,907 |
|
|
420,432 |
|
528,632 |
|
50,815 |
Executive Officer |
|
1997 |
|
404,167 |
|
487,500 |
|
|
1,800 |
|
1,020,594 |
|
|
56,514 |
|
482,219 |
|
23,641 |
|
CHRISTOPHER
M. CONDRON
|
|
1999 |
|
664,584 |
|
1,080,000 |
|
|
6,223 |
|
1,300,647 |
|
|
131,230 |
|
1,279,594 |
|
246,370 |
President and Chief |
|
1998 |
|
637,500 |
|
975,000 |
|
|
3,500 |
|
919,238 |
|
|
375,984 |
|
619,510 |
|
24,542 |
Operating Officer |
|
1997 |
|
500,000 |
|
487,500 |
|
|
5,400 |
|
1,020,594 |
|
|
52,000 |
|
486,203 |
|
17,104 |
|
STEVEN
G. ELLIOTT
|
|
1999 |
|
508,334 |
|
|
(8) |
|
3,311 |
|
2,160,770 |
(8) |
|
61,800 |
|
1,184,185 |
|
168,189 |
Senior Vice Chairman |
|
1998 |
|
445,833 |
|
675,000 |
|
|
3,400 |
|
537,031 |
|
|
341,850 |
|
504,157 |
|
36,275 |
and Chief Financial Officer |
|
1997 |
|
400,000 |
|
450,000 |
|
|
2,100 |
|
1,004,938 |
|
|
1,624 |
|
482,219 |
|
23,269 |
|
KEITH
P. RUSSELL
|
|
1999 |
|
400,000 |
|
412,500 |
|
|
-0- |
|
173,379 |
|
|
-0- |
|
434,313 |
|
11,242 |
Vice Chairman |
|
1998 |
|
400,000 |
|
450,000 |
|
|
875 |
|
193,532 |
|
|
110,692 |
|
504,155 |
|
12,630 |
|
|
1997 |
|
400,000 |
|
412,500 |
|
|
600 |
|
989,282 |
|
|
-0- |
|
482,219 |
|
6,695 |
|
JOHN
T. CHESKO
|
|
1999 |
|
322,917 |
|
375,000 |
|
|
3,641 |
|
157,472 |
|
|
-0- |
|
262,071 |
|
14,694 |
Vice Chairman and |
|
1998 |
|
300,000 |
|
309,375 |
|
|
3,042 |
|
133,713 |
|
|
74,400 |
|
110,667 |
|
13,102 |
Chief Risk Officer |
|
1997 |
|
218,750 |
|
225,000 |
|
|
637 |
|
911,001 |
|
|
64,000 |
|
58,928 |
|
4,046 |
|
JEFFERY
L. LEININGER
|
|
1999 |
|
322,917 |
|
375,000 |
|
|
3,197 |
|
157,472 |
|
|
-0- |
|
401,177 |
|
38,548 |
Vice Chairman |
|
1998 |
|
300,000 |
|
337,500 |
|
|
3,155 |
|
147,788 |
|
|
74,400 |
|
437,194 |
|
21,709 |
|
|
1997 |
|
231,250 |
|
225,000 |
|
|
3,208 |
|
911,001 |
|
|
-0- |
|
105,703 |
|
17,276 |
(1)
|
Bonus awards are generally
payable 75% in cash and 25% in restricted shares of the Common Stock or
deferred share awards equivalent to restricted shares. In calculating the
number of restricted shares or, beginning in 1999, deferred share awards
to be awarded as the non-cash portion of the bonus awards, the value of
the non-cash portion of the award was divided by the per share fair market
value of the Common Stock on the grant date with the result multiplied by
125% to take into account the financial impact of the restrictions placed
on the stock or award. The restrictions generally prevent transfer or sale
of the stock or award for a three year period and subject the shares or
award to forfeiture in the event the executive terminates his employment
with the Corporation during that three year period, other than through
retirement. Deferred share awards represent the Corporations promise
to pay the number of shares of Common Stock covered by the award to the
executive at a later date elected by the executive. The executive may
elect to take a greater portion of his bonus in restricted stock or
deferred share awards, with the number of shares or awards covered by such
awards determined as described above. The aggregate market value of such
restricted stock or deferred share awards on the award date is disclosed
as Long-Term Compensation under Restricted Stock Awards
.
|
(2)
|
In 1999 Messrs. McGuinn,
Condron and Elliott received grants of performance accelerated restricted
stock in the following respective share amounts: 26,500, 24,000, 19,500.
The shares are restricted against transfer and will only be earned prior
to the expiration of seven years from the date of grant if performance
goals established by the Human Resources Committee of the Board of
Directors are met. The performance goals require that for years after 1998
both earnings per share and return on common equity targets must be met.
If the performance goals for a particular year are met, the restrictions
against transfer will then lapse as to one-third of the amount granted to
each executive. The executive has full voting rights with respect to the
shares, and dividends are payable at the same rate and at the same time as
paid to other holders of the Corporations Common Stock. In January
of 2000, the Committee certified that the performance goals for 1999 were
achieved and the restrictions against transfer lapsed for one-third of
each executives award.
|
(footnotes continued on next page)
(3)
|
Except for the 34,000
shares of transitional restricted stock granted to each of Mr. McGuinn,
Mr. Condron, Mr. Elliott, Mr. Russell, Mr. Chesko and Mr. Leininger in
1997 and deferred share awards granted in 1999, dividends are paid on the
awards disclosed in the table at the same rate and at the same time as
dividends are paid on all other outstanding shares of the Corporation
s Common Stock. Dividends on the transitional restricted stock,
which are paid at the same rate as the dividend on all other outstanding
shares of the Common Stock, are withheld by the Corporation during the
period the restrictions are in effect and will be released and paid to the
executive upon derestriction of the shares. Dividend equivalents are also
paid on the deferred share awards at the same rate and at the same time as
the dividends on the Common Stock, but are withheld by the Corporation
until the payout date elected by the executive.
|
(4)
|
The number and value of
the aggregate restricted stock of each of the named officers at the end of
1999 were as follows: Mr. McGuinn85,700/$2,919,156; Mr. Condron
84,700/$2,885,094; Mr. Elliott73,700/$2,510,406; Mr. Russell
51,200/$1,744,000; Mr. Chesko43,000/$1,464,688; Mr. Leininger
44,800/$1,526,000. The restricted stock was valued using the Common
Stocks December 31, 1999 closing price of $34.0625 per share in the
New York Stock Exchange Composite Transactions.
|
(5)
|
Numbers have been adjusted
to reflect the Common Stock Split.
|
(6)
|
Long-Term Incentive Plan
Payouts, in the form of deferred cash incentive awards, were also paid in
January of 2000 in connection with the exercise of accelerated stock
options, including payments to Messrs. McGuinn, Condron, Elliott, Russell,
Chesko and Leininger of $1,365,188, $1,279,595, $950,636, $485,364,
$519,769 and $638,675, respectively. To the extent applicable, these
January, 2000 payments will be recorded as 2000 LTIP Payouts in the
Summary Compensation Table included in next years Proxy
Statement.
|
(7)
|
Includes for 1999 for
Messrs. McGuinn, Condron, Elliott, Russell, Chesko and Leininger,
respectively, the following compensation amounts: (i) the portion of
interest accrued (but not currently paid or payable) on deferred
compensation above 120% of the applicable federal long-term rate at the
maximum rate payable under the Corporations Elective Deferred
Compensation Plan for Senior Officers, $59,438, $42,419, $80,707, -0-,
$2,678, $31,535; (ii) matching contributions under the Corporations
Retirement Savings Plan, a 401(k) plan, $3,000, $3,000, $3,000, $3,000,
$3,000, $3,000; (iii) the present value of the economic benefit to the
executive from corporate premiums paid to purchase split dollar life
insurance contracts under the Mellon Bank Senior Executive and Optional
Life Insurance Plans, $183,000, $199,051, $83,182, $6,992, $8,266, $3,113;
and (iv) cash paid to the executive equal to his imputed income under the
Mellon Bank Senior Executive Life Insurance Plan, $2,700, $1,900, $1,300,
$1,250, $750, $900.
|
(8)
|
Mr. Elliott was awarded a
bonus of $1,175,000 which he elected to receive in the form of deferred
share awards. These awards are reflected in the Restricted Stock
Awards column. If he had not made this election, he would have
received (i) $881,250 as the cash portion of his bonus and (ii) a
restricted stock grant as the non-cash portion of his bonus calculated as
set forth in footnote (1) above.
|
Option Grants in 1999
Shown below is information on grants of stock options pursuant to the
Corporations Long-Term Profit Incentive Plan (1996) (the Option
Plan) during 1999. The Option Plan is administered by the Human
Resources Committee of the Board of Directors, which has authority to
determine the individuals to whom options are granted and the terms of all
grants thereunder. No stock appreciation rights were granted in 1999. In the
event of a change in control of the Corporation, as defined in the Option
Plan, all the option grants shown below would become immediately
exercisable.
|
|
Individual
Grants
|
Name
|
|
Number of
Securities Underlying
Options Granted
|
|
Percent of Total
Options Granted to
Employees in 1999
|
|
Exercise
Price (per
share) ($)
|
|
Expiration
Date
|
|
Grant Date
Present
Value ($)(5)
|
MARTIN
G. MC
GUINN
|
|
8,400 |
(1) |
|
.2% |
|
$33.25 |
|
1/20/09 |
|
$80,652 |
|
|
58,000 |
(2)(4) |
|
1.4% |
|
35.4375 |
|
5/17/09 |
|
549,586 |
|
|
14,369 |
(3)(4) |
|
.3% |
|
34.125 |
|
10/17/06 |
|
132,876 |
|
|
31,172 |
(3)(4) |
|
.7% |
|
37.25 |
|
10/22/08 |
|
347,543 |
|
|
CHRISTOPHER
M. CONDRON
|
|
6,300 |
(1) |
|
.1% |
|
33.25 |
|
1/20/09 |
|
60,489 |
|
|
17,312 |
(3)(4) |
|
.4% |
|
33.1875 |
|
11/20/05 |
|
140,958 |
|
|
52,000 |
(2)(4) |
|
1.2% |
|
35.4375 |
|
5/17/09 |
|
492,732 |
|
|
26,249 |
(3)(4) |
|
.6% |
|
37.75 |
|
10/22/08 |
|
294,693 |
|
|
6,635 |
(3) |
|
.2% |
|
37.25 |
|
2/23/03 |
|
47,700 |
|
|
7,485 |
(3)(4) |
|
.2% |
|
37.25 |
|
10/17/06 |
|
75,555 |
|
|
15,249 |
(3) |
|
.4% |
|
37.25 |
|
10/20/04 |
|
133,406 |
|
|
STEVEN
G. ELLIOTT
|
|
18,400 |
(1) |
|
.4% |
|
33.25 |
|
1/20/09 |
|
176,666 |
|
|
43,400 |
(2)(4) |
|
1.0% |
|
35.4375 |
|
5/17/09 |
|
411,242 |
(1)
|
Numbers have been adjusted
pursuant to the terms of the Option Plan to reflect the Common Stock
Split. Option becomes exercisable annually in thirds beginning on 1/21/01.
Transferable to immediate family members and entities for their
benefit.
|
(2)
|
Option may not be
exercised before 5/18/00 and becomes exercisable as indicated when the
closing price of the Common Stock on the New York Stock Exchange has
achieved or exceeded the following prices for 20 consecutive trading days:
25% at $44.2969 per share; 50% at $53.1563; 75% at $62.0157; and 100% at
$70.875. Option becomes exercisable in full on 5/18/06 if the stock prices
have not been achieved by that date. Transferable to immediate family
members and entities for their benefit.
|
(3)
|
These reload option grants
become exercisable three years after their grant date; provided, however,
that if the option holder sells any of the shares acquired on exercise of
the underlying option before such date, the entire reload option will
expire. Transferable to immediate family members and entities for their
benefit. The reload option grants shown above would become exercisable as
follows: Mr. McGuinn10/25/2002, 10/28/2002; Mr. Condron
1/22/2002, 10/28/2002, 10/28/2002, 10/28/2002,
10/28/2002.
|
(4)
|
Reload option rights are
attached, and reload options will be automatically granted on exercise
when the exercise price is paid by delivering or withholding shares of
Common Stock; provided the closing price of the Common Stock on the New
York Stock Exchange on the date of exercise exceeds the exercise price by
at least 25 percent. Reload options have an exercise price equal to the
closing price of the Common Stock on their grant date and the same
expiration date as the underlying option. Reload option rights are not
transferable.
|
(5)
|
Based on the Black-Scholes
model adapted for use in valuing executive stock options. There is no
assurance the value realized by an executive will be at or near the value
estimated by the Black-Scholes model. The actual value, if any, an
executive may realize will depend on the excess of the stock price over
the exercise price on the date the option is exercised. In determining the
Black-Scholes value, the following underlying assumptions were used: (i)
stock price volatility represents the standard deviation of the Common
Stock over the three-year period prior to grant of the option (i.e., from
26.72% to 26.79%); (ii) dividend yield represents the cumulative dividends
per share for the 12-month period prior to grant of the option, divided by
the average monthly price of the Common Stock over the same period (i.e.,
from 2.25% to 2.78%); (iii) the risk-free rate of return represents the
average weekly yield on 10-year Treasury Notes over the 52-week period
prior to grant of the option as derived from the Value Line Investment
Report (i.e., from 5.13% to 5.40%); (iv) option term represents the period
from the date of grant of each option to the expiration of the term of the
option; (v) vesting restrictions are reflected by reducing the value of
the option determined by the Black-Scholes model by 4% for each full year
of vesting restrictions (8% to 22% for 1999 grants); (vi) reload options
are valued assuming that the option holder does not sell any of the shares
acquired on exercise of the underlying option before the vesting date of
the reload option.
|
Aggregated Option/SAR Exercises in 1999 and Year-End Option
Values
The following table shows information with respect to the exercise of
stock options during 1999 by each of the named executive officers and the
value of unexercised options on December 31, 1999. No SARs are currently
outstanding.
|
|
Shares
Acquired on
Exercise
|
|
Value
Realized
($)(1)
|
|
Number of
Securities
Underlying Unexercised
Options at Year-End
|
|
Value of
Unexercised
In-the-Money Options
at Year-End ($)(2)
|
Name
|
|
|
|
Exercisable
|
|
Unexercisable
|
|
Exercisable
|
|
Unexercisable
|
MARTIN
G. MC
GUINN
|
|
138,501 |
|
$1,790,502 |
|
138,422 |
|
550,384 |
|
$3,367,769 |
|
$2,662,858 |
|
CHRISTOPHER
M. CONDRON
|
|
159,606 |
|
2,359,941 |
|
4,177 |
|
533,721 |
|
62,054 |
|
2,706,648 |
|
STEVEN
G. ELLIOTT
|
|
65,843 |
|
1,022,104 |
|
117,125 |
|
391,525 |
|
2,109,747 |
|
1,614,471 |
|
KEITH
P. RUSSELL
|
|
80,334 |
|
1,658,548 |
|
35,066 |
|
132,292 |
|
475,388 |
|
919,250 |
|
JOHN
T. CHESKO
|
|
16,332 |
|
272,803 |
|
91,333 |
|
107,584 |
|
1,673,187 |
|
912,709 |
|
JEFFERY
L. LEININGER
|
|
105,670 |
|
2,210,247 |
|
69,600 |
|
113,800 |
|
1,163,600 |
|
1,326,800 |
(1)
|
The Value Realized
is equal to the difference between the option exercise price and
the fair market value of the Common Stock on the New York Stock Exchange
on the date of exercise.
|
(2)
|
The Value of
Unexercised In-the-Money Options at Year-End is equal to the
difference between the option exercise price and the Common Stocks
December 31, 1999 closing price of $34.0625 per share on the New York
Stock Exchange.
|
Pension Plan Table
The following table sets forth the estimated annual benefits payable
on a single-life annuity basis on retirement at age 65 pursuant to the
retirement plans of the Corporation and Mellon Bank to participating
employees, including officers, in specified compensation and
years-of-service classifications. The credited years of service for Messrs.
McGuinn, Condron, Elliott, Russell, Chesko and Leininger are, 19, 22, 13, 8,
26 and 28, respectively. Benefits are determined based upon average base
salary for the five years of highest compensation during the 10 years
preceding retirement.
Average Annual
Base Salary |
|
Estimated Annual
Pension for Representative Years of Credited
Service
|
|
10 |
|
15 |
|
20 |
|
25 |
|
30 |
|
35 |
|
$
200,000 |
|
$ 28,000 |
|
$ 42,500 |
|
$ 56,500 |
|
$ 70,500 |
|
$ 84,500 |
|
$ 99,000 |
300,000 |
|
43,000 |
|
65,000 |
|
86,500 |
|
108,000 |
|
129,500 |
|
151,500 |
400,000 |
|
58,000 |
|
87,500 |
|
116,500 |
|
145,500 |
|
174,500 |
|
204,000 |
500,000 |
|
73,000 |
|
110,000 |
|
146,500 |
|
183,000 |
|
219,500 |
|
256,500 |
600,000 |
|
88,000 |
|
132,500 |
|
176,500 |
|
220,500 |
|
264,500 |
|
309,000 |
700,000 |
|
103,000 |
|
155,000 |
|
206,500 |
|
258,000 |
|
309,500 |
|
361,500 |
800,000 |
|
118,000 |
|
177,500 |
|
236,500 |
|
295,500 |
|
354,500 |
|
414,000 |
900,000 |
|
133,000 |
|
200,000 |
|
266,500 |
|
333,000 |
|
399,500 |
|
466,500 |
1,000,000 |
|
148,000 |
|
222,500 |
|
296,500 |
|
370,500 |
|
444,500 |
|
519,000 |
Payment of the amounts shown in the table is subject to annual
limitations imposed by the Internal Revenue Code on tax-qualified plans. To
the extent the benefits set forth above exceed these limitations, benefits
will be paid pursuant to nonqualified supplemental plans maintained by the
Corporation and Mellon Bank.
Supplemental Retirement Agreements With Named Executive
Officers
In order to attract and motivate senior executives and to encourage
such executives to remain with the Corporation and its affiliates, the
Corporation has provided certain named executive officers with retirement
and/or death benefits, as described below, supplementing those available
under the retirement plans described above.
Messrs. McGuinn, Condron and Elliott
Under the terms of their employment agreements (discussed below),
Messrs. McGuinn, Condron and Elliott will each be entitled to receive an
unfunded supplemental retirement benefit upon the later of termination of
employment or attainment of age 60, with a reduced benefit available at age
55. The supplemental benefit calculated on an unreduced 50% joint and
survivor basis would be a monthly amount equal to the named executives
Final Average Compensation multiplied by a Service
Percentage and reduced by the total monthly amount of benefits
provided under all retirement plans maintained by the Corporation and Mellon
Bank. Final Average Compensation generally means 1/12th of the
sum of the executives base salary and any bonus award earned for the
calendar year within the final three full calendar years of the executive
s employment by the Corporation which produces the highest amount.
Service Percentage generally means 2.0% for each full or partial
year of employment the named executive has completed with the Corporation or
with a prior employer if treated as credited service with the Corporation.
If the named executives termination of employment were due to his
death prior to the commencement of the payment of the supplemental benefits,
his spouse would be entitled to a pre-retirement death benefit, payable in
the form of a lifetime annuity, equal to the benefit that would have been
payable had he retired immediately prior to death assuming election of a 50%
joint and survivor annuity, but without any early payment reduction. Based
on 1999 compensation, and assuming retirement at age 65, supplemental annual
retirement benefits payable to each of these three named executives are
estimated as follows: Mr. McGuinn$945,000; Mr. Condron
$1,127,000; Mr. Elliott$624,000.
Employment Agreements with Named Executive
Officers
Mr. McGuinn
In connection with Mr. McGuinns appointment as the Chairman and
Chief Executive Officer of the Corporation and Mellon Bank, Mr. McGuinn
entered into an employment agreement with the Corporation with a term
lasting until January 31, 2001. The employment agreement provides for an
annual base salary of $700,000, subject to annual increases, participation
in all of the Corporations executive compensation and other benefit
programs and perquisites appropriate to Mr. McGuinns position,
including club memberships, physical examinations and personal financial
planning services, and the supplemental retirement benefits described above.
The agreement provides that if, during the term of the agreement, Mr. McGuinn
s employment is terminated by the Corporation other than for cause or
in the event of a constructive discharge (a) he will receive full salary and
benefits until the expiration of the agreements term or, if
termination occurs within 12 months of the end of the term, for a period no
less than the shorter of (i) 12 months or (ii) until the date Mr. McGuinn
commences full-time employment with another employer, (b) he will receive
for each calendar year or portion of a year remaining in the term of the
agreement an amount equal to the highest bonus received by him for any of
the three years preceding his termination, (c) all outstanding stock
options, other than stock options granted with deferred cash incentive
awards, and restricted stock, other than performance-based awards, will
become immediately vested and (d) all outstanding stock options with
associated deferred cash incentive awards and performance-based restricted
stock will remain outstanding and become exercisable and payable as if Mr.
McGuinn had remained employed. If Mr. McGuinns employment is
terminated for cause or if he terminates his employment for reasons other
than a constructive discharge, permanent disability, retirement or death, he
will receive any benefits that have vested prior to such termination under
the supplemental retirement provisions of his employment agreement or under
the terms of the Corporations generally applicable employee benefit
plans.
Mr. Condron
In connection with Mr. Condrons appointment as the President
and Chief Operating Officer of the Corporation and Mellon Bank, Mr. Condron
entered into an employment agreement with the Corporation with a term
lasting until January 31, 2001. The employment agreement provides for an
annual base salary of $650,000, subject to annual increases, participation
in all of the Corporations executive compensation and other benefit
programs and perquisites appropriate to Mr. Condrons position,
including club memberships, physical examinations and personal financial
planning services, and the supplemental retirement benefits described above.
The agreement provides that if, during the term of the agreement, Mr. Condron
s employment is terminated by the Corporation other than for
cause or in the event of a constructive discharge (a) he will receive full
salary and benefits until the expiration of the agreements term or, if
termination occurs within 12 months of the end of the term, for a period no
less than the shorter of (i) 12 months or (ii) until the date Mr. Condron
commences full-time employment with another employer, (b) he will receive
for each calendar year or portion of a year remaining in the term of the
agreement an amount equal to the highest bonus received by him for any of
the three years preceding his termination, (c) all outstanding stock
options, other than stock options granted with deferred cash incentive
awards, and restricted stock, other than performance-based awards, will
become immediately vested and (d) all outstanding stock options with
associated deferred cash incentive awards and performance-based restricted
stock will remain outstanding and become exercisable and payable as if Mr.
Condron had remained employed. If Mr. Condrons employment is
terminated for cause or if he terminates his employment for reasons other
than a constructive discharge, permanent disability, retirement or death, he
will receive any benefits that may have vested prior to such termination
under the supplemental retirement provisions of his employment agreement or
under the terms of the Corporations generally applicable employee
benefit plans.
Mr. Elliott
In connection with Mr. Elliotts appointment as Senior Vice
Chairman of the Corporation and Mellon Bank, Mr. Elliott and the Corporation
entered into an employment agreement with a term lasting until January 31,
2001. The employment agreement provides for an annual base salary of
$450,000, subject to annual increases, participation in all of the
Corporations executive compensation and other benefit programs and
perquisites appropriate to Mr. Elliotts position, including club
memberships, physical examinations and personal financial planning services,
and the supplemental retirement benefits described above. The agreement
provides that if, during the term of the agreement, Mr. Elliotts
employment is terminated by the Corporation other than for cause or in the
event of a constructive discharge (a) he will receive full salary and
benefits until the expiration of the agreements term or, if
termination occurs within 12 months of the end of the term, for a period no
less than the shorter of (i) 12 months or (ii) until the date Mr. Elliott
commences full-time employment with another employer, (b) he will receive
for each calendar year or portion of a year remaining in the term of the
agreement an amount equal to the highest bonus received by him for any of
the three years preceding his termination, (c) all outstanding stock
options, other than stock options granted with deferred cash incentive
awards, and restricted stock, other than performance-based awards, will
become immediately vested and (d) all outstanding stock options with
associated deferred cash incentive awards and performance-based restricted
stock will remain outstanding and become exercisable and payable as if Mr.
Elliott had remained employed. If Mr. Elliotts employment is
terminated for cause or if he terminates his employment for reasons other
than a constructive discharge, permanent disability, retirement or death, he
will receive any benefits that may have vested prior to such termination
under the supplemental retirement provisions of his employment agreement or
under the terms of the Corporations generally applicable employee
benefit plans.
Change in Control Severance AgreementsSenior
Officers
The Corporation has entered into change in control severance
agreements (the Agreements) with the Chairman, each of the other
named executive officers and certain other senior officers of the
Corporation. The purpose of the Agreements is to secure the continued
service and dedication of the executives in the event of an actual or
threatened Change in Control (as defined in the Agreements). Each Agreement
becomes operative only upon both a Change in Control and the subsequent
termination of employment of the executive in accordance with the terms of
the Agreement. Payments under the Agreements are in full settlement of all
other severance payments which may otherwise be payable to the executive
under any other severance plan or agreement of the Corporation, including
the employment agreements described above and the Displacement Program and
Change in Control Severance Pay Resolution described below. The following
discussion summarizes the key provisions of the Agreements covering the
Chairman and each other named executive officer. If the employment of any of
the named executive officers is terminated during the three-year period
following a Change in Control of the Corporation, either by the Corporation
other than for Cause (as defined in the Agreements) or by the executive for
Good Reason (as defined in the Agreements, including the termination of
employment by the executive for any reason during the 30-day period
commencing one year after the date of such Change in Control), the executive
will be entitled to receive: (a) a lump sum cash amount equal to such
executives unpaid salary and bonus amounts which have become
payable and have not been deferred, plus a pro-rata portion of such executive
s annual bonus for the fiscal year of termination of employment; (b)
severance pay in a lump sum cash amount equal to three times the sum of (i)
the executives highest annual rate of base salary during the 12-month
period immediately prior to his termination of employment and (ii) the
executives highest annual incentive bonus earned during the last three
completed fiscal years of the Corporation; (c) continuation of medical,
dental, accident, disability and life insurance benefits for the executive
and his dependents for a period of three years following the executive
s date of termination of employment; and (d) three additional years of
service credit under all non-qualified retirement plans and excess benefit
plans in which the executive participated as of his date of termination. If
the executives date of termination is within three years of the
earliest date on which such termination could be considered a Retirement (as
defined in the Agreements), the benefits described in (b), (c) and (d) in
the preceding sentence will be reduced accordingly. In the event that
payments related to a Change in Control of the Corporation to any executive
under the Agreements or otherwise are subject to the excise tax under
Section 4999 of the Internal Revenue Code, the Corporation will generally
provide the executive with an additional amount sufficient to enable the
executive to retain the full amount of his Change in Control benefits as if
the excise tax had not applied, unless a reduction in such Change in Control
related payments by less than 5% would result in the excise tax not being
imposed on such executive, in which case payments under the Agreement shall
be reduced (but not below zero) to the amount that could be paid to such
executive without giving rise to such excise tax.
Change in Control BenefitsOther Employees
Displacement Program
Under the Corporations Displacement Program, eligible salaried
employees of the Corporation may receive certain benefits if their
employment with the Corporation is terminated due to technological changes
or other business reasons not related to individual performance. Such
benefits may include temporary assignments, placement assistance, benefits
continuation and/or severance payments based upon years of service. The
program is subject to revision or termination at the Corporations
discretion; provided, however, that it may not be changed to reduce benefits
payable upon a displacement occurring within three years following a change
in control of the Corporation, unless such change to the program was adopted
at least 12 months prior to the occurrence of the change in
control.
Change in Control Arrangements
All eligible salaried employees who are terminated within three years
after a change in control (as defined) of the Corporation, other than for
good cause, and under circumstances that would entitle them to benefits
under the Displacement Program, would also be entitled to 12 months of base
salary and benefit continuation under the Corporations Change in
Control Severance Pay Resolution. In addition, for 10 years after the
occurrence of a change in control of the Corporation, no plan merger or
coverage extension involving Mellon Banks tax-qualified retirement
plan will be permitted if it would cause the plans assets to fall
below 125% of its liabilities, and employees age 50-54 on the date of the
change in control will become eligible for early retirement under this
Mellon Bank plan, on or after age 55, on the same basis as employees who are
age 55. These benefits may not be reduced unless such change was adopted at
least 12 months prior to the occurrence of the change in
control.
A change in control will generally occur for purposes of the
Displacement Program, the Change in Control Severance Pay Resolution and the
tax-qualified retirement plan upon approval by the Corporations
shareholders of a business combination or merger involving the Corporation
unless immediately following such transaction the surviving corporation
meets each of the following requirements: (a) the surviving corporation owns
consolidated assets of the Corporation with an aggregate book value equal to
more than 50% of the book value of the Corporations consolidated total
assets prior to the transaction, (b) more than 50% of the total voting power
of the surviving corporation is held by the Corporations shareholders
immediately prior to the transaction, (c) at least a majority of the members
of the board of directors of the surviving corporation were directors of the
Corporation prior to the merger, and (d) no person is the beneficial owner
of 15% or more of the total voting power of the surviving
corporation.
COMPENSATION COMMITTEE
REPORT
Introduction
The Corporations Human Resources Committee (the Committee
) is composed entirely of independent outside directors. Among the
Committees duties are the responsibility for establishing and
reviewing the compensation and benefits of the senior managers of the
Corporation and its subsidiaries, including the compensation of the Chairman
and the other named executive officers. The Committee actively advises and
assists management in formulating and implementing policies designed to
assure the selection, development and retention of key
personnel.
Under the guidance of the Committee, the Corporations
compensation policies are designed to accomplish the goal of managing the
Corporation towards increased profitability and shareholder value.
Accordingly, two principles underlying the Corporations compensation
policy for all senior managers, including the Chairman and the other named
executive officers, are (i) aligning the financial interests of senior
managers with those of the Corporations shareholders and (ii) paying
for corporate and individual performance. These principles are reflected in
the structure of the Corporations compensation program for senior
managers, which consists of three basic components: base salary, annual
awards under the Profit Bonus Plan (the Bonus Plan) and awards
under the Long-Term Profit Incentive Plan (1996) (the Option Plan
). Through this structure, the Committee places emphasis on the
at risk elements of compensation for senior managers. Base
salaries are generally set somewhat below the market, and the incentive
components of the Bonus Plan and the Option Plan are relied on to achieve a
competitive compensation package. There was no change in 1999 in the
Corporations overall compensation policy for senior
managers.
Awards under the Corporations incentive plans are tied to
corporate, business unit and individual performance. The accomplishment of
the goals and objectives of the Corporations operating and strategic
plans is the basis for making awards under the Bonus Plan and the Option
Plan and, except where performance goals have been set under the Option
Plan, there is no formal weighting of various factors. Together, the plans
provide the Committee with the flexibility to grant awards in a manner that
is believed by the Committee to encourage managers to continually focus on
building high quality profitability and long-term shareholder value. Under
the Option Plan, deferred cash incentive awards payable in the amount of an
options exercise price may be awarded in connection with an option
grant. In the event the exercisability of the related option is accelerated,
the deferred cash incentive award becomes payable and must be used by the
executive to pay the options exercise price upon exercise. Deferred
cash incentive awards will only be payable if the Corporation achieves
certain pre-established performance goals. Performance goals are based on
maintenance of or changes in one or more of the following objective business
criteria: earnings or earnings per share; return on equity, assets or
investment; revenues; expenses; stock price; market share; charge-offs; or
non-performing assets. The Committee may apply its discretion, where the
goals have been met, only to decrease the preestablished amount of the
award. These requirements have been imposed so that the amounts paid to
executive officers under such awards will qualify for the performance
based compensation exception to the cap on deductibility of executive
compensation under Section 162(m) of the Internal Revenue Code of 1986 (the
Code).
Base Salary
In 1999, base salaries were increased for a number of the Corporation
s senior managers, including five of the named executive officers. In
considering recommendations for increases in the base salaries of these
senior managers, the Committee reviewed the performance of each officer
against various objectives, including performance against the business plans
to date for 1999 for those lines of business for which he was responsible.
The Corporations business plans and the elements thereof applicable to
its various lines of business include financial performance targets such as:
income, expenses, asset quality, operating margin, return on assets and
return on equity. In addition to such evaluations, the Committee compared
the recommended increases to compensation data based on a survey of
comparable executive officers of 16 other financial institutions similar to
the Corporation in terms of size and/or the mix of its lines of business.
These comparative financial institutions are included within the KBW 50
Index used for the Performance Graph on page 12.
Mr. McGuinns base salary was set at $750,000, effective June 1,
1999. In setting this amount, the Committee considered the Corporation
s performance against its business plan for 1999 to date, the
Corporations achievement of strategic goals and the Corporations
total returns to shareholders in terms of share price appreciation and
dividends and Mr. McGuinns contributions towards these achievements.
The Committee also reviewed compensation data based on a survey of
comparable chief executive officers of 23 other broad-based financial
institutions similar to the Corporation in terms of its various lines of
business. Of these comparative financial institutions, 15 are included
within the KBW 50 Index used for the Performance Graph on page 12. The
remaining companies represent broader-based institutions that are not
included in the KBW 50 Index. Based upon the results of such evaluation and
review, Mr. McGuinns base salary was set at approximately the 50th
percentile of the relevant peer group of chief executive officers. Mr.
McGuinn is entitled to annual review of his base salary by the Committee
under the terms of his employment contract with the Corporation (See
Employment Agreements with Named Executive Officers on pages 18
through 19).
Mr. Condron and Mr. Elliott received increases to their base salaries
in 1999. Their increases were based on the survey of 23 broad-based
financial institutions referred to in the preceding paragraph for Mr.
McGuinn. Mr. Condron and Mr. Elliott are entitled to an annual review of
their base salaries by the Committee under the terms of their employment
contracts with the Corporation. (See Employment Agreements with Named
Executive Officers on pages 18 through 19.)
Option Plan Awards
In 1999, the Committee reviewed the long-term incentive component of
total compensation for Messrs. McGuinn, Condron and Elliott and awarded them
additional stock options and restricted stock grants. In conducting its
review, the Committee considered the comparative compensation data mentioned
above. Based on the comparative compensation data reviewed by the Committee,
the value of the at risk component of compensation represented
by these options and restricted stock grants, coupled with the Corporation
s annual cash compensation (measured in terms of base salary and cash
bonus), will achieve the needed competitive positioning of the Corporation
s senior executive compensation package while creating a significant
incentive for the executives and aligning their financial interests with
those of the Corporations shareholders. The number of options and
restricted stock previously granted to each executive was considered in
determining the number of shares covered by each award.
In May of 1999, Messrs. McGuinn, Condron and Elliott received grants
of stock options, which will only become exercisable prior to the expiration
of seven years from the date of grant if the target prices for the Common
Stock are achieved. The options will become exercisable as indicated when
the closing price for the Common Stock on the New York Stock Exchange has
achieved the following levels for at least 20 consecutive trading days: 25%
at $44.2969; 50% at $53.1563; 75% at $62.0157; and 100% at $70.875. (See
footnote 2 to the table for Options Grants in 1999 on page
15.)
In May of 1999, Messrs. McGuinn, Condron and Elliott also received
grants of performance accelerated restricted stock. The shares are
restricted against transfer for seven years and will only be earned prior to
the expiration of seven years from the date of grant if performance goals
established by the Committee are met. The performance goals require that for
years after 1998 both earnings per share and return on common equity targets
must be met. If the performance goals are met for a particular year, the
restrictions against transfer will then lapse as to one-third of the amount
granted to each executive. The executive has full voting rights with respect
to the shares, and dividends are payable at the same rate and at the same
time as paid to other holders of the Corporations Common Stock. In
January of 2000, the Committee certified that the performance goals for 1999
were achieved and the restrictions against transfer lapsed for one-third of
each executives award. (See footnote 2 to the Summary
Compensation Table on page 13.)
The Committee reviews the performance of senior managers annually and
within its discretion considers whether the exercise date for certain
previously granted options should be accelerated. As provided for in the
Option Plan, the exercise of these accelerated options is intended to
include the payout of a deferred cash incentive award to the optionee in an
amount equal to the exercise price for such options. The optionee must use
the cash award to pay the option exercise price of such accelerated options.
Such acceleration, and payment of the attendant deferred cash incentive
awards, are a significant element of the incentive component of total
compensation for the Corporations senior managers. As discussed above,
the payment of deferred cash incentive awards is tied to the achievement of
preestablished corporate level performance goals. Accordingly, in February
of 1998,
the Committee adopted performance goals applicable to the calendar year 1998
which required certain levels of core net income available to Common Stock
or earnings per share of Common Stock or core return on common equity to be
achieved in order for a set percentage of the outstanding deferred cash
incentive awards to be earned. In January of 1999 the Committee certified
the achievement of the performance goals for 1998. As a result, deferred
cash incentive awards were paid to Mr. McGuinn and each of the other named
executive officers in an amount not exceeding one-third of their deferred
cash incentive awards. These awards are disclosed in the LTIP Payouts column
on the Summary Compensation Table on page 13. Similarly, in February of
1999, the Committee adopted performance goals applicable to the calendar
year 1999 which required the achievement of certain levels of net income
available to Common Stock or earnings per share of Common Stock or return on
common equity. In January of 2000, the Committee certified the performance
goals for 1999 to have been achieved. As a result, deferred cash incentive
awards were paid to Mr. McGuinn and each of the other named executive
officers in an amount not exceeding one-third of their deferred cash
incentive awards.
Bonus Plan Awards
The Committee considered and approved bonus awards for 1999 for the
Corporations senior managers, including Mr. McGuinn and the other
named executive officers, which were generally payable 75% with cash and 25%
with restricted shares of the Corporations Common Stock. In connection
with making awards under the Corporations Bonus Plan for 1999, the
Committee again examined the performance of its senior managers. This review
focused on the individual performance of each officer for full year 1999 and
on the Corporations overall performance in achieving the objectives of
its 1999 operating plan and taking significant steps in the execution of its
strategic plan. Each officer was evaluated based in significant measure upon
performance in the following areas: Shared Values, Leadership Priorities,
Mellon Third Century Initiatives, Business Synergy Initiatives, Risk
Management and Financial Performance (income, expenses, asset growth,
operating margin and return on capital). In determining Mr. McGuinns
Bonus Plan award for 1999, the Committee evaluated him within the context of
the year experienced by the Corporation in terms of achieving the objectives
of its 1999 operating plan, as well as his leadership in planning and
implementing strategic and operating initiatives designed to increase the
long-term value of the Corporations franchise. In recognition of Mr.
McGuinns leadership during 1999, a year that saw the Corporation
report record earnings, he received a Bonus Plan award of
$1,600,000.
Deductibility of Executive Compensation
Section 162(m) of the Code limits the deductibility of executive
compensation for officers of public companies. Section 162(m) generally
disallows the ordinary business expense deduction to compensation in excess
of $1,000,000 paid to a companys chief executive officer and each of
the next four most highly compensated executive officers. As discussed
above, the Option Plan has been designed to allow the Committee, in its
discretion, to grant incentive compensation awards that qualify for the
ordinary business expense deduction as performance based compensation
under Section 162(m).
The Corporation and the Committee continue to examine the issue of
deductibility of executive compensation within the context of the overall
operation of the Corporations compensation plans and will consider
what additional actions should be taken, if any, to operate the compensation
plans in a tax effective manner. The Committee examines particularly
carefully any compensation proposal or program if there is a reasonable
likelihood that the Corporation would lose a deduction as a consequence of
its adoption.
The foregoing report is presented by the Human Resources Committee of
the Board of Directors.
Charles A. Corry, Chairman |
|
Joab L. Thomas |
Carol R. Brown |
|
Wesley W. von Schack, Vice
Chairman |
J. W. Connolly |
|
|
APPROVAL OF AMENDMENTS
TO THE LONG-TERM PROFIT INCENTIVE PLAN (1996) (Proxy Item 2)
Proposed Amendments
Upon the recommendation of the Human Resources Committee (the
Committee), the Board of Directors has adopted, subject to
shareholder approval, the following amendments to the Long-Term Profit
Incentive Plan (1996) (the Option Plan):
1.
|
An increase of 14,000,000
in the total number of shares of Common Stock reserved for issuance
pursuant to awards, including 6,500,000 additional shares for issuance as
restricted stock;
|
2.
|
Deletion of the
requirement that awards be granted under the Option Plan only to full-time
employees;
|
3.
|
Inclusion of new Section
3.5 prohibiting the repricing of option awards; and
|
4.
|
Technical amendments to
the language describing retirement and disability to reflect current
corporate practices.
|
Reasons for the Amendments
The Board of Directors believes that in order to continue to attract,
retain and reward valuable personnel, it is important for the Corporation to
be able to grant long-term, stock-based incentive compensation awards to its
key employees. On February 11, 2000, options covering approximately
21,900,000 shares of Common Stock were outstanding of which approximately
13,600,000 were exercisable. In addition, approximately 1,700,000 shares of
restricted stock were then outstanding. Under the Option Plans current
limitations, approximately 14,600,000 shares of Common Stock remained
available for future awards, of which approximately 1,500,000 shares could
be issued as restricted stock awards. In order to continue to provide
long-term, stock-based incentives to the Corporations key employees,
it is now recommended that the authorized shares available under the Plan be
increased by 14,000,000 shares, including an additional 6,500,000 shares
that may be granted as restricted stock awards.
Under the Plan as adopted in 1996, awards could be granted covering
up to 4,000,000 shares of restricted stock (as adjusted for stock splits in
1997 and 1999). Of that total, approximately 1,500,000 shares remain
available for future grants. The Corporation for a number of years has
utilized restricted stock to pay a percentage of the annual bonus awards for
key employees whose base salaries are $125,000 or greater. Recently, the
Corporation has permitted senior officers to elect to receive a higher
percentage of their annual bonus award in restricted stock. These
bonus-related grants normally vest three years after grant.
In 1999, the Corporation began issuing performance-based restricted
stock as long-term incentive compensation, a compensation device not
contemplated when the 4,000,000 restricted share limit was set in 1996. The
Corporation has found these awards to be a highly desired, effective
technique for both incenting executives and aligning their interests with
those of the Corporations shareholders. The types of performance goals
the Corporation has utilized and may utilize in the future are described
below under Authorized Awards-Performance Goals. Typically,
restrictions on transferability of these awards lapse after seven years, but
the restrictions can lapse earlier (for example, over a three-year period)
if specified performance goals are achieved. Performance-based restricted
stock that vests after seven years, whether or not the performance goals
have been met, does not qualify for exclusion from the limitations on
deductibility in Section 162(m) of the Internal Revenue Code of 1986, as
amended (the Code). The Board of Directors believes that the use
of restricted stock, both as part of the annual bonus award and as an
important part of long-term incentive compensation, is a powerful device to
align the interests of key employees with those of shareholders. To permit
continued use of this compensation technique, the Board of Directors has
proposed that the limitation on the number of shares that may be granted as
restricted stock be increased.
Upon approval of the amendments, given the number of awards currently
outstanding, there will be approximately 28,600,000 shares available for
future awards, including approximately 8,000,000 shares available for the
issuance of restricted stock awards.
In addition, the Board of Directors recommends that the eligibility
requirements of the Option Plan be revised to provide that grants may be
made to part-time as well as full-time employees. This
reflects the changing nature of work arrangements today and the Corporation
s efforts to become an employer of choice and continue to attract the
best qualified workers.
The Board of Directors also proposes that the Option Plan be amended
to explicitly prohibit the repricing of option awards after they have been
granted. The Option Plan is currently silent on the issue of repricing. The
Corporation has not repriced options granted under the Option Plan and has
no intention of doing so. However, the Corporation does understand that this
issue is important to many of its shareholders, and so the Board of
Directors proposes to amend the Option Plan to explicitly prohibit option
repricing.
Finally, the Board of Directors recommends that certain technical
changes be adopted to the language describing retirement and disability,
where such language appears in the Option Plan, to conform to current
corporate usage.
The description of the Option Plan set forth below is a summary, does
not purport to be complete and is qualified in its entirety by reference to
the provisions of the Option Plan as proposed to be amended, a copy of which
is attached hereto as Exhibit A.
Description of Amended Plan
Purposes. The purposes of the Option
Plan are to promote the growth and profitability of the Corporation and its
affiliates by providing officers and other key executives with incentives to
achieve long-term corporate objectives, to attract and retain officers and
other key executives of outstanding competence, and to provide such key
employees with an equity interest in the Corporation.
Administration. The Option Plan is
administered by the Human Resources Committee of the Board of Directors (the
Committee), each member of which shall at the time of any action
under the Plan be a disinterested person as then defined under
Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the
Exchange Act), and an outside director as then
defined under Section 162(m) of the Internal Revenue Code of 1986, as
amended (the Code). The Committee has the authority under the
Option Plan, among other things, to grant awards, prescribe limitations,
restrictions and conditions upon awards, adopt, amend and rescind rules and
regulations and interpret the Option Plan.
Participation. The Committee may grant
awards under the Option Plan to any eligible employee. Eligible employees
include any corporate officer, key executive, administrative or professional
employee of the Corporation or any of its affiliates. Affiliates of the
Corporation include any corporation, limited partnership or other
organization in which the Corporation owns, directly or indirectly, 50% or
more of the voting power. In practice, awards have been granted to a group
of approximately 2,500 employees, including employees who are considered to
have a high potential for contributing to the future success of the
Corporation.
Authorized Shares. The aggregate number
of shares of Common Stock reserved for issue under the Option Plan on and
after the effective date of the proposed amendment will be approximately
50,500,000 shares of which approximately 8,000,000 may be issued as
restricted stock. The definitive aggregate number of shares reserved for
issue under the Option Plan and the definitive number of shares that may be
issued as restricted stock, to be set forth in Section 3.4(a) of the Option
Plan, will be determined as of the close of business on April 18, 2000, the
date of proposed approval of the amendments to the Option Plan. These totals
will cover (i) approximately 21,900,000 shares to be issued pursuant to
outstanding and unexercised options and (ii) approximately 28,600,000 shares
for future awards, including approximately 8,000,000 shares which may be
issued as restricted stock awards. To the extent that shares of restricted
stock or shares of Common Stock covered by deferred share awards outstanding
as of April 18, 2000 are surrendered or forfeited to the Corporation, such
shares will again be available for issuance by the Committee in addition to
the shares covered by the share limitations set forth above.
The limitation on restricted stock awards will also apply to deferred
share awards, which are similar to restricted stock awards. See
Authorized AwardsRestricted Stock and Deferred Share Awards.
For purposes of determining how many shares have been issued under
the Option Plan, the following will be counted against the total number of
shares of Common Stock reserved for issuance: (i) shares actually issued
upon exercise of an option, except that when options are exercised by the
delivery of shares of Common Stock (including withholding shares on
exercise) the charge against the total is limited to the net new shares of
Common Stock issued; (ii) shares actually issued upon exercise of a
stock appreciation right, (iii) shares actually issued upon payment of a
performance unit, (iv) shares of Common Stock that are granted as restricted
stock and shares covered by a deferred share award. Shares of Common Stock
that are subject to an option which for any reason either terminates
unexercised or expires, except by reason of exercise of a related stock
appreciation right, and shares of restricted stock or shares covered by a
deferred share award that are surrendered or forfeited to the Corporation
will again be available for issuance under the Option Plan. Shares of Common
Stock issued pursuant to awards may be newly issued shares, shares which
have been reacquired by the Corporation and are held in treasury or shares
held by an employee stock benefit trust. On February 11, 2000, the closing
price of a share of Common Stock in the New York Stock Exchange Composite
Transactions was $31.4375.
Adjustments. The Option Plan provides
that if there is any change in the Common Stock by reason of any stock
split, stock dividend, spin-off, split-up, spin-out, recapitalization,
merger, consolidation, reorganization, combination or exchange of shares, or
any other similar transaction, the number and kind of shares available for
grant or subject to or granted pursuant to an outstanding award and the
price thereof, and any other numeric limitations under the Option Plan,
shall be appropriately adjusted by the Committee or the Board of
Directors.
Amendments. The Committee or the Board
may at any time terminate or amend the Option Plan as it may deem advisable.
Any such action may be taken without the approval of the Corporations
shareholders, but only to the extent that shareholder approval is not
required by applicable law or regulation, or the rules of any stock exchange
on which the Common Stock is listed. The termination or amendment of the
Plan shall not, without the consent of a participant, adversely affect such
participants rights under an award previously granted.
Change of Control. Upon the occurrence
of a Change in Control Event, as defined under the Option Plan, outstanding
options and SARs (unless expressly provided otherwise in the agreement) will
become fully exercisable, restrictions placed upon restricted stock and
deferred share awards will lapse, and if provided in the agreement
evidencing the award, outstanding deferred cash incentive awards will become
payable.
Authorized Awards
Performance Goals. Performance goals
shall be established by the Committee in connection with the grant of
performance units and deferred cash incentive awards and may be established
in connection with the grant of restricted stock and deferred share awards.
Performance goals shall be established by the Committee in compliance with
Section 162(m) of the Code covering a performance period set by the
Committee and based on maintenance of or changes in one or more of the
following objective business criteria: earnings or earnings per share;
return on equity, assets or investment; revenues; expenses; stock price;
market share; charge-offs; or non-performing assets. Performance goals may
be applicable to a business unit or to the Corporation as a whole and need
not be the same for each type of award or for each individual receiving the
same type of award. The Committee may retain the discretion to reduce (but
not to increase) the portion of any award which will be earned based on
achieving performance goals.
Stock Options and SARs. Stock options
may be granted as nonqualified options or incentive stock options qualified
under Section 422 of the Code. Options are granted with terms not exceeding
10 years from the date of grant and generally become exercisable pursuant to
a vesting schedule set at the time of grant, although the Committee retains
the discretion to accelerate exercisability. The exercise price for any
option may not be less than 100% of the fair market value per share of the
Common Stock on the date of grant. The exercise price of an option,
including required withholding taxes, may be paid by a participant in cash
or in shares of Common Stock, including shares that are withheld at the
direction of the participant upon exercise of the option. Where the exercise
price is paid in shares of Common Stock, the shares, or an equivalent number
of shares where shares are withheld, must have been owned by the participant
for six months or longer prior to delivery to the Corporation.
Reload option rights may be awarded in conjunction with any grant of
options and entitle the participant upon exercise of that option through the
delivery or withholding of shares of Common Stock, to automatically be
granted on the date of such exercise a new reload option for a number of
shares not greater than the number of shares delivered or withheld,
including shares delivered or withheld in payment of the exercise price and
withholding taxes. Reload options have an exercise
price not less than the fair market value of the Common Stock on the date of
grant, an expiration date not later than the expiration date of the original
option and other terms that are permissible for the grant of any other stock
option under the Option Plan. Reload option rights may be granted in
conjunction with reload options. Reload option rights outstanding under the
Option Plan provide that reload options will only be issued if the closing
price of the Common Stock on the New York Stock Exchange on the date of
exercise exceeds the exercise price by at least 25 percent. Outstanding
reload options vest in full three years after their date of
grant.
Stock appreciation rights (SARs), which may be granted in
tandem with options or on a stand-alone basis, entitle participants to
receive upon exercise the difference between the fair market value on the
date of exercise of the shares of Common Stock subject to the SAR and the
designated base price. The base price for any SAR may not be less than 100%
of the fair market value per share of the Common Stock on the date of grant.
In the sole discretion of the Committee, the Corporation may pay all or any
part of its obligation arising out of a SAR exercise in cash, shares of
Common Stock or some combination thereof.
Both options and SARs are generally exercisable for two years after
termination of employment after age 55 with five years of credited
employment with the Corporation or termination of employment due to death or
disability, to the extent that they were exercisable upon termination of
employment. If termination of employment occurs after the occurrence of a
Change in Control Event and is without cause, as defined in the
Option Plan, options and SARs remain exercisable for one year thereafter.
Otherwise, options and SARs will generally terminate on termination of
employment unless otherwise determined by the Committee and provided in the
option or SAR agreement. The Committee has the authority to grant longer
post-employment exercise periods, including through the remaining term of
the option. However, no option or SAR may be exercised after the end of its
original term. The maximum number of shares of Common Stock available for
grants of options or SARs to any one participant under the Option Plan
during a calendar year may not exceed 4,000,000 shares. This maximum
limitation shall be interpreted and applied in a manner consistent with
Section 162(m) of the Code.
Deferred Cash Incentive Awards.
Deferred cash incentive awards may be granted in conjunction with
all or any part of an option either at the time the option is granted or at
any time thereafter during the term of the option. Except in the event of
death, disability or the occurrence of a Change in Control Event, any
deferred cash incentive award only becomes earned and payable if the
Corporation achieves performance goals which are established for a
performance period (which must be a calendar year or longer) by the
Committee in compliance with Section 162(m) of the Code. A deferred cash
incentive award entitles the participant to receive from the Corporation at
the time the related option is exercised an amount of cash equal to the
exercise price of the option (i.e., the fair market value of the Common
Stock subject to the option on the date of grant). Under no circumstances
may a deferred cash incentive award be applied to any purpose other than the
payment of the exercise price of a properly exercised related option. No
participant may in any calendar year receive payment of deferred cash
incentive awards with respect to options for more than 3,000,000 shares of
Common Stock. The Committee may reduce (but not increase) the amount
payable, provided the applicable performance goals have been
met.
Performance Units. Performance units
represent the right of a participant to receive shares of Common Stock or
cash at a future date upon the achievement of performance goals which are
established for a performance period (which may be less or more than one
calendar year) by the Committee in accordance with Section 162(m) of the
Code. In the sole discretion of the Committee, the Corporation may pay all
or any part of its obligation under a performance unit in (i) cash, (ii)
shares of Common Stock or (iii) cash and shares of Common Stock. No more
than $1,000,000 may be paid in cash or fair market value of Common Stock
(valued no later than three days after the date the Committee certifies the
achievement of the performance goals) under all performance units paid to
any one participant during a calendar year. The Committee may reduce (but
not increase) the amount payable under any performance unit, provided the
applicable performance goals have been met.
Restricted Stock and Deferred Share Awards.
Restricted stock awards cover shares of Common Stock which are
registered in the participants name upon grant. The participant
generally enjoys all the incidents of stock ownership with respect to such
shares, including the right to receive cash dividends and to vote the
shares. However, the participant may not sell, transfer, assign or otherwise
encumber
or dispose of the shares until the restrictions have lapsed. The lapse of the
restrictions may be conditioned on the fulfillment of one or more employment
or performance-based conditions, which may or may not include the
achievement of performance goals which are established for a performance
period (which may be less or more than one calendar year) by the Committee
in accordance with Section 162(m) of the Code. No individual may in any one
calendar year receive payment of a performance-based restricted stock award
granted in compliance with Section 162(m) of the Code covering more than
400,000 shares of Common Stock. Transfer restrictions will also generally
lapse upon death, disability, termination after age 55 with five years of
credited employment with the Corporation and the occurrence of a Change in
Control Event. Deferred share awards may be elected by participants in place
of grants of restricted stock and represent the Corporations promise
to deliver shares of Common Stock to the participant on a deferred payment
date elected by the participant. They cover the same number of shares of
Common Stock as the surrendered or foregone restricted stock award and are
subject to the same aggregate and individual limitations applicable under
the Option Plan to restricted stock awards. A deferred share award will have
terms designed to be the same, as nearly as practicable, as the terms of the
restricted stock award it replaces, including the payment of dividend
equivalents in place of dividends.
Plan Benefits
The selection of participants who receive awards under the Option
Plan, and the size and type of awards are generally determined by the
Committee in its discretion. Such future grants are not presently
determinable, and it is not possible to predict the benefits or amounts that
will be received by or allocated to particular individuals or groups in
2000.
The following table shows, as of February 11, 2000, deferred cash
incentive awards granted under the Option Plan but not yet accelerated by
the Committee upon achieving performance goals and the number of stock
options previously granted and outstanding under the Option Plan which carry
reload option rights.
Option Plan
|
|
Options With Deferred
Cash Incentive Awards
|
|
Options With
Reload Option Rights*
|
Name and Position
|
|
Number
of Shares
|
|
Maximum
Dollar Value
|
|
Number of Shares
|
MARTIN
G. MC
GUINN
|
|
53,668 |
|
$1,341,518 |
|
447,460 |
Chairman and Chief
Executive Officer |
|
|
|
|
|
|
|
CHRISTOPHER
M. CONDRON
|
|
38,500 |
|
$1,012,718 |
|
399,676 |
President and Chief
Operating Officer |
|
|
|
|
|
|
|
STEVEN
G. ELLIOTT
|
|
40,333 |
|
$
950,636 |
|
281,289 |
Senior Vice Chairman and
Chief Financial Officer |
|
|
|
|
|
|
|
KEITH
P. RUSSELL
|
|
47,530 |
|
$1,138,435 |
|
88,602 |
Vice Chairman |
|
|
|
|
|
|
|
JOHN
T. CHESKO
|
|
50,220 |
|
$1,271,913 |
|
121,600 |
Vice Chairman and Chief
Risk Officer |
|
|
|
|
|
|
|
JEFFERY
L. LEININGER
|
|
53,800 |
|
$1,183,887 |
|
94,400 |
Vice Chairman |
|
|
|
|
|
|
|
EXECUTIVE
OFFICER
GROUP
(10) |
|
354,967 |
|
$8,917,333 |
|
1,612,684 |
|
NON
-EXECUTIVE
OFFICER
GROUP
|
|
312,652 |
|
$8,501,951 |
|
9,071,623 |
*
|
Reload options will be
automatically granted on exercise when the exercise price is paid by
delivering or withholding shares of Common Stock; provided the closing
price of the Common Stock in the New York Stock Exchange Composite
Transactions on the date of exercise exceeds the exercise price by at
least 25 percent. Reload options have an exercise price equal to the
closing price of the Common Stock on their grant date and the same
expiration date as the underlying option.
|
Federal Income Tax Consequences
The following discussion summarizes the Federal income tax
consequences to participants who may receive grants of awards under the
Option Plan. The discussion is based upon interpretations of the Code in
effect as of January 1, 2000, and regulations promulgated thereunder as of
such date.
Nonqualified Stock Options. For Federal
income tax purposes, no income is recognized by a participant upon the grant
of a nonqualified stock option under the Option Plan. Upon the exercise of
an option, however, compensation taxable as ordinary income will be realized
by the participant in an amount equal to the excess of the fair market value
of a share of Common Stock on the date of such exercise over the exercise
price times the number of shares exercised. A subsequent sale or exchange of
such shares will result in gain or loss measured by the difference between
(i) the exercise price, increased by any compensation reported upon the
participants exercise of the option, and (ii) the amount realized on
such sale or exchange. Such gain or loss will be capital in nature if the
shares were held as a capital asset and will be long-term if such shares
were held for more than one year. Reload options are treated as nonqualified
stock options for purposes of this discussion.
The Corporation is entitled to a deduction (subject to the provisions
of Section 162(m) of the Code) for compensation paid to a participant at the
same time and in the same amount as the participant is considered to have
realized compensation by reason of the exercise of an option.
Incentive Stock Options. No taxable
income is realized by the participant upon the grant or exercise of an
incentive stock option. If shares of Common Stock are issued to a
participant pursuant to the exercise of an incentive stock option granted
under the Option Plan, and if no disqualifying disposition of such shares is
made by such participant within two years after the date of grant or within
one year after the transfer of such shares to a participant, then (a) upon
sale of such shares, any amount realized in excess of the option price will
be taxed to such participant as a long-term capital gain and any loss
sustained will be a long-term capital loss, and (b) no deduction will be
allowed to the Corporation for Federal income tax purposes. Upon exercise of
an incentive stock option, the participant may be subject to alternative
minimum tax on certain items of tax preference. If shares of Common Stock
acquired upon the exercise of an incentive stock option are disposed of
prior to the expiration of the two-years-from-grant/one-year-from-transfer
holding period, generally (a) the participant will realize ordinary income
in the year of disposition in an amount equal to the excess (if any) of the
fair market value of the shares at exercise (or, if less, the amount
realized on the disposition of the shares) over the option price thereof,
and (b) the Corporation will be entitled to deduct such amount (subject to
the provisions of Section 162(m) of the Code). Any further gain or loss
realized will be taxed as short-term capital gain or loss, as the case may
be, and will not result in any deduction by the Corporation. If an incentive
stock option is exercised at a time when it no longer qualifies as an
incentive stock option, the option is treated as a nonqualified stock
option.
Stock Appreciation Rights. No taxable
income is recognized by a participant upon the grant of a SAR under the
Option Plan. Upon the exercise of a SAR, however, compensation taxable as
ordinary income will be realized by the participant in an amount equal to
the cash received upon exercise, plus the fair market value on the date of
exercise of any shares of Common Stock received upon exercise. Shares of
Common Stock received on the exercise of a SAR will be eligible for capital
gain treatment, with the capital gain holding period commencing on the date
of exercise of the SAR. The Corporation is entitled to a deduction (subject
to the provisions of Section 162(m) of the Code) for compensation paid to a
participant at the same time and in the same amount as the participant is
considered to have realized compensation by reason of the exercise of a
SAR.
Restricted Stock. Awards of restricted
stock will not result in taxable income to the participant or a tax
deduction to the Corporation for Federal income tax purposes at the time of
grant. A recipient of restricted stock generally will be subject to tax at
ordinary income rates on the fair market value of the Common Stock at the
time the restricted stock is no longer subject to forfeiture. However, a
recipient who so elects under Section 83(b) of the Code within 30 days of
the date of the grant will have ordinary taxable income on the date of the
grant equal to the fair market value of the restricted stock as if such
shares were unrestricted and could be sold immediately. If the restricted
stock subject to such election is forfeited, the Internal Revenue Service
takes the position that the recipient will not be entitled to any deduction,
refund or loss for tax purposes with respect to the forfeited shares. Upon
sale of the restricted stock after the forfeiture period has expired, the
holding period to determine whether the recipient has long-term or
short-term capital gain or loss begins when the restriction
period expires and the tax basis will be equal to the fair market value of the
shares on that date. However, if the recipient timely elects to be taxed as
of the date of the grant, the holding period commences on the date of the
grant and the tax basis will be equal to the fair market value of the
restricted shares on the date of the grant as if such shares were then
unrestricted and could be sold immediately. The award of shares of
restricted stock which are subject to the achievement of performance goals
will not result in taxable income to the participant or a tax deduction to
the Corporation for Federal income tax purposes at the time of grant. A
recipient of such an award generally will be subject to tax at the same time
and in the same manner as applicable to recipients of restricted shares as
described above. The Corporation is entitled to a deduction (subject to the
provisions of Section 162(m) of the Code) for compensation paid to a
participant at the same time and in the same amount as the participant is
considered to have realized compensation by reason of the lapse of
restrictions on an award of restricted stock or an election under Section
83(b) of the Code.
Performance Units. The Federal income
tax consequences of performance units will depend on how such awards are
structured. Generally, the Corporation will be entitled to a deduction
(subject to the provisions of Section 162(m) of the Code) with respect to
such awards only to the extent that the recipient realizes compensation
income in connection with such awards. It is anticipated that such awards
will usually result in compensation income to the recipient in some
amount.
Deferred Cash Incentive Awards. No
taxable income is realized by a participant upon the grant of a deferred
cash incentive award in connection with the grant of an option. A deferred
cash incentive award can only be used to pay the exercise price of the
related option. A participant recognizes compensation income related to the
deferred cash incentive award after the related option has vested and the
Committee has certified 1) the achievement of the performance goals related
to the deferred cash incentive award and 2) the amount of the deferred cash
incentive award to be paid. The amount of compensation income a participant
recognizes is equal to the option exercise price. Generally, the Corporation
will be entitled to a deduction with respect to such awards only to the
extent that the recipient recognizes compensation income in connection with
such award.
Deferred Share Awards. The election of
a deferred share award permits the participant to defer the receipt of
taxable income until the time the shares of Common Stock are delivered to
the participant, usually after retirement. The participant will then
generally be subject to tax at ordinary income rates on the fair market
value of the shares at their payout election date. The Corporation will be
entitled to a deduction (subject to the provisions of Section 162(m) of the
Code) for compensation paid to a participant at the same time and in the
same amount as the participant is considered to have realized compensation
by reason of the delivery of the Common Stock.
Limits on Deductions. Under Section
162(m) of the Code, the deductible amount of compensation paid to the Chief
Executive Officer and the four other most highly paid executive officers of
the Corporation in the year for which a deduction is claimed by the
Corporation (including its subsidiaries) is limited to $1,000,000 per
person, except that compensation that is performance-based will be excluded
for purposes of calculating the amount of compensation subject to this
$1,000,000 limitation. The ability of the Corporation to claim a deduction
for compensation paid to any other executive officer or employee of the
Corporation (including its subsidiaries) is not affected by this
provision.
The Corporation has structured the Option Plan so that any
compensation for which the Corporation may claim a deduction in connection
with the exercise of nonqualified stock options and SARs, the disposition by
an optionee of shares acquired upon the exercise of incentive stock options
and payments made pursuant to performance units and deferred cash incentive
awards will be performance-based within the meaning of Section 162(m) of the
Code. Grants of restricted stock may or may not be performance-based, and
therefore any amounts for which the Corporation may claim a deduction may or
may not be subject to the limitations on deductibility in Section 162(m) of
the Code. Restricted stock grants that cliff-vest after seven years, whether
or not related performance goals have been met, will not be
performance-based within the meaning of Section 162(m).
Action by Shareholders
The Board of Directors believes that the above described amendments
to the Option Plan are appropriate and consistent with the Corporation
s objectives of attracting and retaining officers and key executives
of outstanding competence and providing incentives for such employees to
improve the long-range profitability of the Corporation. Accordingly, the
Board believes that approval of the amendments to the Option Plan by the
Corporations shareholders is in the best interests of the Corporation
and its shareholders.
Approval of the proposed amendments to the Option Plan requires the
affirmative vote of a majority of the votes cast on the proposal at the
Annual Meeting by the holders of Common Stock voting in person or by proxy.
The Pennsylvania Business Corporation Law provides that an abstention is not
a vote cast. Therefore, an absention will not have the effect of a vote for
or against the proposal and will not be counted in determining the number of
votes required for approval, though it will be counted in determining the
presence of a quorum.
With respect to Proxy Item 2, the Board of Directors recommends a
vote FOR approval of the amendments to the Long-Term Profit Incentive Plan
(1996) described above.
APPROVAL OF ADOPTION OF
THE MELLON FINANCIAL CORPORATION EMPLOYEE STOCK PURCHASE PLAN (Proxy Item
3)
The Mellon Financial Corporation Employee Stock Purchase Plan (the
Plan) was adopted, subject to shareholder approval, by the Board
of Directors on February 15, 2000. The Board of Directors recommends that
the shareholders vote FOR approval of adoption of the
Plan.
The principal features of the Plan are summarized below. The summary
is qualified in its entirety by the full text of the Plan, which is set
forth as Exhibit B to the Proxy Statement.
General
The purposes of the Plan are to provide an opportunity for employees
of the Corporation and its subsidiaries to purchase shares of Common Stock
of the Corporation and thereby have an additional incentive to contribute to
the prosperity of the Corporation. The purchase of shares will occur through
quarterly offerings financed by payroll deductions.
The aggregate number of shares which may be issued and sold under the
Plan is 10,000,000 shares of Common Stock, subject to proportionate
adjustment in the event of stock splits and similar events.
Administration
The Plan will be administered by the Human Resources Committee (the
Committee) of the Board of Directors. The Committee will have
the power to interpret the Plan and to prescribe rules, regulations and
procedures in connection with the operations of the Plan.
Eligibility of Employees
All full-time employees of the Corporation and any subsidiary
designated by the Committee are eligible to participate in the Plan,
provided that the Committee may (a) permit part-time employees to
participate and (b) impose an eligibility period of up to two years
employment with the Corporation. It is estimated that as of January 31, 2000
the number of employees who would have been eligible to participate in the
Plan was approximately 27,000.
No employee will be eligible to participate in the Plan during a
Purchase Period if the employee owns shares which, when added to the maximum
number of shares the employee may purchase under the Plan and any
outstanding stock options, would exceed 5% of the voting power or value of
the Corporations outstanding stock.
Purchase Periods and Payroll Deductions
It is anticipated that there will be quarterly Purchase Periods for
the purchase of Common Stock under the Plan, with the first Purchase Period
under the Plan to begin on March 1, 2001. The Committee has the power to
change the number or duration of the Purchase Periods, but no Purchase
Period may be longer than 27 months, and no Common Stock may be sold under
the Plan after February 28, 2011.
An eligible employee may participate in the Plan during any Purchase
Period by filing a payroll deduction authorization by the enrollment
deadline established for the Purchase Period. A Participant may authorize a
payroll deduction of between 1% and 15%, in whole percentages, of the
employees basic rate of compensation to be deducted for each pay
period ending during the Purchase Period and credited to a stock purchase
account to be applied at the end of the Purchase Period to the purchase of
Common Stock. Unless otherwise elected prior to the enrollment deadline, an
employee who is a participant in the Plan at the end of the Purchase Period
will automatically be enrolled for the succeeding Purchase Period at the
same level of payroll deductions. No interest will be credited on payroll
deductions. An employee may decrease or discontinue payroll deductions at
any time during a Purchase Period but may not increase payroll deductions
after the Purchase Period enrollment deadline. If an employee discontinues
payroll deductions, future payroll deductions are terminated, but
accumulated payroll deductions remain in the Plan for the purchase of Common
Stock at the end of the Purchase Period.
Purchase of Common
Stock
The purchase price of shares of Common Stock purchased under the Plan
will be the lower of (a) 85% of the fair market value of the Common Stock as
of the first day of the Purchase Period or (b) 85% of the fair market value
of the Common Stock as of the last day of the Purchase Period. Fair market
value for this purpose will generally be the closing price per share of the
Common Stock as reported in the New York Stock Exchange Composite
Transactions for the day for which fair market value is to be determined. On
February 11, 2000, the fair market value of a share of the Corporation
s Common Stock, as so computed, was $31.4375.
On the last day of the Purchase Period, the balance in each
participating employees stock purchase account will automatically be
applied to the purchase of a number of whole and fractional shares of Common
Stock equal to the balance in the account divided by the purchase price.
After the end of the Purchase Period, all shares purchased under the Plan
will be deposited directly to an account established in the name of the
employee with ChaseMellon Shareholder Services.
The maximum number of shares which may be purchased by any employee
for any Purchase Period is limited to the lesser of (a)(1) $25,000 divided
by the fair market value of a share of Common Stock as of the first day of
the Purchase Period, reduced by (2) the number of shares purchased by the
employee during any previous Purchase Periods ending in the same calendar
year or (b)(1) 25% of the employees basic rate of compensation for the
Purchase Period, divided by (2) 85% of the fair market value of a share of
Common Stock on the first day of the Purchase Period. Any amount not applied
to the purchase of shares because of these limitations will be refunded to
the employee.
Termination of Employment
Participation in the Plan will terminate as of the date of
termination of employment of a participating employee, whether by death,
retirement, disability or otherwise. In the event of a participating employee
s termination of employment on or before the last day of a Purchase
Period, payroll deductions will be terminated, no shares will be purchased
for the employee at the end of the Purchase Period and the balance in the
employees stock purchase account will be paid as soon as practicable
to the employee or, in the event of death, to the employees
estate.
Amendment and Termination
The Board of Directors may amend, terminate or suspend the Plan at
any time, provided that without shareholder approval no amendment may (a)
increase the total number of shares which may be issued and sold under the
Plan or (b) modify the requirements for eligibility except as provided in
the Plan.
Unless sooner terminated by the Board, the Plan will terminate on
February 28, 2011.
Federal Income Tax Consequences
The following is a brief summary of the principal Federal income tax
consequences under present law of the purchase of shares of Common Stock
under the Plan and certain dispositions of shares acquired under the Plan.
This discussion is based upon interpretations of the Code in effect as of
January 1, 2000, and regulations promulgated thereunder as of such
date.
For Federal income tax purposes, participants in the Plan are viewed
as having been granted a stock option on the first day of a Purchase Period
and as having exercised the stock option by the automatic purchase of shares
under the Plan on the last day of the Purchase Period. A participant will
not recognize taxable income either at the time of grant of the option (that
is, the first day of a Purchase Period) or on the date of exercise of the
option (that is, the last day of a Purchase Period). As described below, a
participant will generally recognize taxable income only upon disposition of
Common Stock acquired under the Plan or upon death.
With limited exceptions including a disposition upon death, if a
participant disposes of shares of Common Stock acquired under the Plan by
sale, gift or otherwise within the later of two years from
the first day of the Purchase Period in which the shares were acquired or
within one year from the last day of such Purchase Period (that is, makes a
disqualifying disposition), the participant will recognize
ordinary income in the year of such disqualifying disposition equal to the
amount by which the fair market value of the stock on the last day of such
Purchase Period exceeded the purchase price of the shares. The amount of
such ordinary income will be added to the participants basis in the
shares, and any additional gain or resulting loss recognized on the
disqualifying disposition of the shares after such basis adjustment will be
a capital gain or loss.
With limited exceptions, if the participant disposes of shares of
Common Stock acquired under the Plan more than two years after the first day
of the Purchase Period during which the shares were acquired and more than
one year after the last day of such Purchase Period, the participant will
recognize ordinary income in the year of such disposition equal to the
lesser of (i) the excess of the fair market value of the shares on the date
of disposition over the purchase price of the shares or (ii) 15 percent of
the fair market value of the shares on the first day of such Purchase
Period. The amount of such ordinary income will be added to the participant
s basis in the shares, and any additional gain recognized on the
disposition of the shares after such basis adjustment will be a capital
gain. If the fair market value of the shares on the date of disposition is
less than the purchase price, no ordinary income will be recognized, and any
loss recognized will be a capital loss.
If the participant still owns the shares of Common Stock acquired
under the Plan at the time of the participants death, regardless of
the period for which the participant has held the shares, the lesser of (i)
the excess of the fair market value of the shares on the date of death over
the purchase price of the shares or (ii) 15 percent of the fair market value
of the shares on the first day of the Purchase Period during which the
shares were acquired will constitute ordinary income in the year of
death.
The Corporation or one of its subsidiaries will generally be entitled
to a deduction in the year of a disqualifying disposition equal to the
amount of ordinary income recognized by the participant as a result of the
disqualifying disposition. In all other cases, no deduction with respect to
options granted or shares of Common Stock issued under the Plan is allowed
the Corporation or one of its subsidiaries.
Action by Shareholders
Approval of the adoption of the Plan requires the affirmative vote of
a majority of the votes cast on the proposal at the annual meeting by the
holders of Common Stock voting in person or by proxy. Under the Pennsylvania
Business Corporation Law, an abstention is not a vote cast. Therefore, an
abstention will not have the effect of a vote for or against the proposal
and will not be counted in determining the number of votes required for
approval, though it will be counted in determining the presence of a
quorum.
With respect to Proxy Item 3, the Board of Directors recommends a
vote FOR approval of the adoption of the Mellon Financial Corporation
Employee Stock Purchase Plan.
RATIFICATION OF
INDEPENDENT PUBLIC ACCOUNTANTS (Proxy Item 4)
The Board of Directors, at its February 15, 2000 meeting, appointed
KPMG LLP as independent public accountants of the Corporation for the year
ending December 31, 2000. KPMG LLP served as the Corporations
independent public accountants for the year ended December 31, 1999.
Although the appointment of independent public accountants is not required
to be approved by shareholders, the Board of Directors believes shareholders
should participate in such selection through ratification. If the
shareholders fail to ratify KPMG LLP as the independent public accountants,
the Board of Directors will reconsider its selection. Representatives of
KPMG LLP will be present at the annual meeting with an opportunity to make a
statement if they so desire and will be available to respond to appropriate
questions.
Action by Shareholders
Adoption of the proposal requires the approval of a majority of the
votes cast at the annual meeting by all holders of Common Stock. The
Pennsylvania Business Corporation Law provides that an abstention is not a
vote cast. Therefore, an abstention will not have the effect of a vote for
or against the proposal and will not be counted in determining the number of
votes required for approval, though it will be counted in determining the
presence of a quorum.
With respect to the ratification of independent public accountants
(Proxy Item 4), the Board of Directors recommends a vote FOR ratification of
the appointment of KPMG LLP as independent public accountants of the
Corporation for the year ending December 31, 2000.
OTHER BUSINESS
The Board of Directors does not know of any other business that may
be presented for consideration at the 2000 annual meeting, other than one
proposal submitted by a shareholder that has been omitted from this Proxy
Statement in accordance with the rules of the Securities and Exchange
Commission. If such shareholder proposal or any other business should
properly come before the meeting, it is the intention of those named in the
Proxies solicited hereby to vote the shares represented by such Proxies in
accordance with their judgment on such matters.
DEADLINES FOR SHAREHOLDER PROPOSALS
Article One, Section 6 of the By-Laws of the Corporation requires
that any shareholder of the Corporation intending to present a proposal for
action by the shareholders at an annual meeting must give written notice of
the proposal, containing specified information, to the Secretary of the
Corporation not later than the notice deadline contained in the By-Law. This
notice deadline will generally be 90 days prior to the anniversary date of
the Corporations proxy statement for the previous years annual
meeting. For the Corporations annual meeting to be held in 2001, the
notice deadline under the By-Law is December 8, 2000. A copy of the By-Law
may be obtained by written request to the Secretary at the address given
below.
The By-Law mentioned above will not change the deadline for a
shareholder requesting inclusion of a proposal in the Corporations
proxy statement pursuant to Securities and Exchange Commission Rule 14a-8 or
affect a shareholders right to present for action at an annual meeting
any proposal so included. Rule 14a-8 requires that notice of a shareholder
proposal requested to be included in the Corporations proxy materials
pursuant to that Rule must generally be furnished to the Corporation not
later than 120 days prior to the anniversary date of the Corporations
proxy statement for the previous years annual meeting. For the
Corporations annual meeting to be held in 2001, shareholder proposals
to be considered for inclusion in the proxy statement under Rule 14a-8 must
be received by the Corporation no later than November 8, 2000.
All shareholder proposals should be submitted in writing to the
Secretary of the Corporation, One Mellon Center, Room 4826, Pittsburgh,
Pennsylvania 15258-0001.
SECTION 16(a) BENEFICIAL
OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Corporations executive officers and directors, and
persons who own more than 10% of a registered class of the Corporation
s equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission (the SEC)
and the New York Stock Exchange. Executive officers, directors and greater
than 10% shareholders are required by SEC regulation to furnish the
Corporation with copies of all Section 16(a) forms they file. Based solely
on its review of the copies of such forms received by the Corporation, or
written representations from certain reporting persons that no Form 5s
were required for those persons, the Corporation believes that, for 1999,
all such filing requirements were met.
PROXY SOLICITATION
The cost of solicitation of proxies for the 2000 annual meeting will
be borne by the Corporation. In addition to solicitation by mail, regular
employees of the Corporation may solicit proxies by telephone or personal
interview. Brokerage houses and other custodians, nominees and fiduciaries
will be requested to forward soliciting material to the beneficial owners of
Common Stock held of record by such persons and will be reimbursed by the
Corporation for their expenses. In addition, the Corporation has retained D.
F. King & Co., Inc., 77 Water Street, New York, New York 10005 to aid in
the solicitation of proxies from brokers, banks, other nominees and
institutional holders. A fee of $7,000 plus expenses will be paid to D.F.
King & Co. for its services.
By Order of the Board of Directors
Carl Krasik
Secretary
March 8, 2000
EXHIBIT A
(Language to be inserted is underlined and
language to be deleted is enclosed in brackets.)
MELLON FINANCIAL CORPORATION
LONG-TERM PROFIT INCENTIVE PLAN (1996)
I. Purposes
The purposes of this Long-Term Profit Incentive Plan (1996), as
amended and restated, are to promote the growth and profitability of Mellon
Financial Corporation (Corporation) and its Affiliates, to
provide officers and other key executives of the Corporation and its
Affiliates with the incentive to achieve long-term corporate objectives, to
attract and retain officers and other key executives of outstanding
competence, and to provide such officers and key executives with an equity
interest in the Corporation.
II. Definitions
The following terms shall have the meanings shown:
2.1 Affiliate
shall mean any corporation, limited partnership or other organization
in which the Corporation owns, directly or indirectly, 50% or more of the
voting power.
2.2 Award
shall mean Options, SARs, Performance Units, Restricted Stock, Deferred
Share Awards and Deferred Cash Incentive Awards, as defined in and granted
under the Plan.
2.3 Board of
Directors shall mean the Board of Directors of the
Corporation.
2.4 Change in
Control Event shall mean any of the following events:
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(a)
The occurrence with respect to the Corporation of
a control transaction, as such term is defined in Section 2542
of the Pennsylvania Business Corporation Law of 1988, as of August 15,
1989; or
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(b)
Approval by the stockholders of the Corporation of
(i) any consolidation or merger of the Corporation where either (x) the
holders of voting stock of the Corporation immediately before the merger
or consolidation will not own more than 50% of the voting shares of the
continuing or surviving corporation immediately after such merger or
consolidation or (y) the Incumbent Directors immediately before the merger
or consolidation will not hold more than 50% (rounded to the next whole
person) of the seats on the board of directors of the continuing or
surviving corporation, or (ii) any sale, lease or exchange or other
transfer (in one transaction or a series of related transactions) of all
or substantially all the assets of the Corporation; or
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(c)
A change of 25% (rounded to the next whole person)
in the membership of the Board of Directors within a 12-month period,
unless the election or nomination for election by stockholders of each new
director within such period (i) was approved by the vote of 85% (rounded
to the next whole person) of the directors then still in office who were
in office at the beginning of the 12-month period and (ii) was not as a
result of an actual or threatened election with respect to directors or
any other actual or threatened solicitation of proxies by or on behalf of
any person other than the Board of Directors. As used in this Section 2.4,
the term Incumbent Director means as of any time a director of
the Corporation (x) who has been a member of the Board of Directors
continuously for at least 12 months or (y) whose election or nomination as
a director within such period met the requirements of clauses (i) and (ii)
of the preceding sentence.
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2.5 Code
shall mean the Internal Revenue Code of 1986, as amended, and any successor
statute of similar import, and regulations thereunder, in each case as in
effect from time to time. References to sections of the Code shall be
construed also to refer to any successor sections.
2.6 Committee
shall mean the Human Resources Committee of the Board of Directors,
or any successor committee.
2.7 Common Stock
shall mean Common Stock of the Corporation.
2.8 Deferred
Cash Incentive Award shall mean an Award granted pursuant to Article
VII of the Plan.
2.9 Deferred
Share Award shall mean an Award granted pursuant to Article VIII,
Section 8.7, of the Plan.
2.10 Fair Market
Value shall mean the closing price of a share of Common Stock in the
New York Stock Exchange Composite Transactions on the relevant date, or, if
no sale shall have been made on such exchange on that date, the closing
price in the New York Stock Exchange Composite Transactions on the last
preceding day on which there was a sale.
2.11 Incentive
Stock Option shall mean an option qualifying under Section 422 of the
Code granted by the Corporation.
2.12 Options
shall mean rights to purchase shares of Common Stock granted pursuant
to Article IV of the Plan.
2.13 Participant
shall mean an eligible employee who is granted an Award under the
Plan.
2.14 Performance
Goals shall mean goals established by the Committee in compliance with
Section 162(m) of the Code covering a performance period set by the
Committee and based on maintenance of or changes in one or more of the
following objective business criteria: earnings or earnings per share;
return on equity, assets or investment; revenues; expenses; stock price;
market share; charge-offs; or non-performing assets. Performance Goals shall
be established by the Committee in connection with the grant of Performance
Units and Deferred Cash Incentive Awards and may be established in
connection with the grant of Restricted Stock. Performance Goals may be
applicable to a business unit or to the Corporation as a whole and need not
be the same for each of the foregoing types of Awards or for each individual
receiving the same type of Award. The Committee may retain the discretion to
reduce (but not to increase) the portion of any Award which will be earned
based on achieving Performance Goals.
2.15 Performance
Units shall mean units granted pursuant to Article VI of the
Plan.
2.16 Plan
shall mean the Mellon Financial Corporation Long-Term Profit Incentive Plan
(1996), as amended and restated.
2.17 Reload
Option Rights and Reload Options shall have the meanings
set forth in Article IV of the Plan.
2.18 Restricted
Stock shall mean any share of Common Stock granted pursuant to Article
VIII of the Plan.
2.19 Rule 16b-3
shall mean Rule 16b-3 promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended from time
to time, or any successor rule.
2.20 SAR
shall mean any stock appreciation right granted pursuant to Article V of the
Plan.
III. General
3.1
Administration.
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(a)
The Plan shall be administered by the Committee,
each member of which shall at the time of any action under the Plan be (i)
a non-employee director as then defined under Rule 16b-3 and
(ii) an outside director as then defined under Section 162(m)
of the Code.
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(b)
The Committee shall have the authority in its sole
discretion from time to time: (i) to designate the employees eligible to
participate in the Plan; (ii) to grant Awards under the Plan; (iii) to
prescribe such limitations, restrictions and conditions upon any such
Award as the Committee shall deem appropriate; and (iv) to interpret the
Plan, to adopt, amend and rescind rules and regulations relating to the
Plan, and to make all other determinations and take all other action
necessary or advisable for the implementation and administration of the
Plan. A majority of the Committee shall constitute a quorum, and the
action of a majority of members of the Committee present at any meeting at
which a quorum is present, or acts unanimously adopted in writing without
the holding of a meeting, shall be the acts of the Committee.
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(c)
All actions of the Committee shall be final,
conclusive and binding upon the Participant. No member of the Committee
shall be liable for any action taken or decision made in good faith
relating to the Plan or any Award thereunder.
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3.2 Eligibility.
The Committee may grant Awards under the Plan to any [full
time] corporate officer, key executive, administrative or professional
employee of the Corporation or any of its Affiliates. In granting such
Awards and determining their form and amount, the Committee shall give
consideration to the functions and responsibilities of the employee, his or
her potential contributions to profitability and to the sound growth of the
Corporation and such other factors as the Committee may deem
relevant.
3.3 Effective and
Expiration Dates of Plan. The amended and restated
Plan shall become effective on the date (herein referred to as the
effective date) approved by the holders of a majority of the
shares present or represented and entitled to vote at the 1996 Annual
Meeting of Shareholders of the Corporation. No Award shall be granted after
December 31, 2005, except that Reload Options may be granted pursuant to
Reload Option Rights then outstanding.
3.4 Aggregate and
Individual Limitations on Awards.
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(a)
The aggregate number of shares of Common Stock
reserved for issue under the Plan on and after April 18, 2000 [its
effective date] shall not exceed 50,500,000*
[58,400,000] shares, subject to adjustments pursuant to Section 9.7. No
more than 8,000,000** [4,000,000] shares of Common
Stock may be issued as Restricted Stock on and after April 18,
2000. Shares of Common Stock which may satisfy Awards granted under
the Plan may be either authorized and unissued shares of Common Stock or
authorized and issued shares of Common Stock held in the Corporation
s treasury or issued and outstanding shares of Common Stock held by
any employee stock benefit trust established by the
Corporation.
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(b)
For purposes of paragraph (a) of this Section 3.4,
shares of Common Stock that are actually issued upon exercise of an Option
shall be counted against the total number of shares reserved for issuance,
except that when Options are exercised by the delivery of shares of Common
Stock the charge against the shares reserved for issuance shall be limited
to the net new shares of Common Stock issued. In addition to shares of
Common Stock actually issued pursuant to the exercise of Options, there
shall be deemed to have been issued under the Plan a number of shares of
Common Stock equal to (i) the number of shares issued pursuant to SARs
which shall have been exercised pursuant to the Plan, (ii) the number of
Performance Units which shall have been paid in shares of Common Stock
pursuant to the Plan and (iii) the number of shares of Restricted Stock
which shall have been granted pursuant to the Plan. For purposes of
paragraph (a) of this Section 3.4, the payment of a Deferred Cash
Incentive Award shall not be deemed to result in the issuance of any
shares of Common Stock in addition to those issued pursuant to the
exercise of the related Option.
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(c)
For purposes of paragraph (a) of this Section 3.4,
any shares of Common Stock subject to an Option which for any reason
either terminates unexercised, or expires except by reason of the exercise
of a related SAR, and any shares of Restricted Stock granted under this
Plan or any shares of Common Stock covered by a Deferred Share Award which
are surrendered or forfeited to the Corporation (including shares of
Restricted Stock or Deferred Share Awards outstanding as of April 18,
2000), shall again be available for issuance under the
Plan.
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(d)
The maximum number of shares of Common Stock
available for grants of Options or SARs to any one Participant under the
Plan during a calendar year shall not exceed 4,000,000 shares. The
limitation in the preceding sentence shall be interpreted and applied in a
manner consistent with Section 162(m) of the Code. To the extent
consistent with Section 162(m) of the Code, a Reload Option (A) shall be
deemed to have been granted at the same time as the original underlying
Option grant and (B) shall not be deemed to increase the number of shares
covered by the original underlying Option.
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3.5 Cancellation
and Reissuance of Options. The Committee will not
permit the repricing of Options by any method, including by cancellation and
reissuance.
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* The
definitive number will be the sum of (i) 14,000,000 and (ii) the number of
shares available for awards or subject to outstanding awards
(approximately 36,500,000 as of February 11, 2000) as of the close of
business on April 18, 2000.
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**
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The definitive number will
be the sum of (i) 6,500,000 and (ii) the number of shares available for
restricted stock awards (approximately 1,500,000 as of February 11, 2000)
as of the close of business on April 18, 2000.
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IV. Options
4.1 Grant.
The Committee may from time to time, subject to the provisions
of the Plan, in its discretion grant Options to Participants to purchase for
cash or shares of Common Stock the number of shares of Common Stock allotted
by the Committee. In the discretion of the Committee, any Options or
portions thereof granted pursuant to this Plan may be designated as
Incentive Stock Options. The aggregate Fair Market Value (determined as of
the time the Incentive Stock Option is granted) of Common Stock and any
other stock of the Corporation or any parent, subsidiary or affiliate
corporation with respect to which such Incentive Stock Options are
exercisable for the first time by a Participant in any calendar year under
all plans of the Corporation, its subsidiaries and affiliates shall not
exceed $100,000 or such sum as may from time to time be permitted under
Section 422 of the Code. The Committee shall also have the authority, in its
discretion, to award reload option rights (Reload Option Rights)
in conjunction with the grant of Options with the effect described in
Section 4.7. Reload Option Rights may be awarded either at the time an
Option is granted or, except in the case of Incentive Stock Options, at any
time thereafter during the term of the Option.
4.2 Option Agreements.
The grant of any Option shall be evidenced by a
written Stock Option Agreement executed by the Corporation and
the Participant, stating the number of shares of Common Stock subject to the
Option evidenced thereby and such other terms and conditions of the Option
as the Committee may from time to time determine.
4.3 Option Price.
The option price for the Common Stock covered by any
Option granted under the Plan shall in no case be less than 100% of the Fair
Market Value of said Common Stock on the date of grant. Except as otherwise
provided in the Stock Option Agreement, the option price of an Option may be
paid in whole or in part by delivery to the Corporation of a number of
shares of Common Stock having a Fair Market Value on the date of exercise
equal to the option price or portion thereof to be paid; provided, however,
that no shares may be delivered in payment of the option price of an Option
unless such shares, or an equivalent number of shares, shall have been held
by the Participant (or other person entitled to exercise the Option) for at
least six months prior to such delivery.
4.4 Term of Options.
The terms of each Option granted under the Plan
shall be for such period as the Committee shall determine, but for not more
than 10 years from the date of grant thereof. Each Option shall be subject
to earlier termination as provided in Sections 4.6 and 5.4
hereof.
4.5 Exercise of
Options. Each Option granted under the Plan shall be
exercisable on such date or dates during the term thereof and for such
number of shares of Common Stock as may be provided in the Stock Option
Agreement evidencing its grant. Pursuant to the terms of the Stock Option
Agreement or otherwise, the Committee may change the date on which an
outstanding Option becomes exercisable; provided, however, that an exercise
date designated in a Stock Option Agreement may not be changed to a later
date without the consent of the holder of the Option. Notwithstanding any
other provision of this Plan, unless expressly provided to the contrary in
the applicable Stock Option Agreement, all Options granted under the Plan
shall become fully exercisable immediately and automatically upon the
occurrence of a Change in Control Event.
4.6 Termination of
Employment. Except as otherwise provided in the Stock
Option Agreement:
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(a)
If termination of employment of a Participant
occurs on or [is due to retirement] after age 55 and the
Participant is credited with at least five years of employment with
[with the written consent of] the Corporation or an Affiliate, the
Participant shall have the right to exercise his or her Options within the
period of two years after such termination [retirement], to the
extent such Options were exercisable at the time of such
termination [retirement]; provided, however, that such
post-termination[-retirement] exercise period may be extended by
action of the Committee for up to the full term of such
Options.
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(b)
If a Participant shall die while employed by the
Corporation or an Affiliate or within a period following termination of
employment during which the Option remains exercisable under paragraphs
(a), (c) or (d) of this Section 4.6, his or her Options may be exercised
to the extent exercisable by the Participant at the time of his or her
death within a period of two years from the date of death by the executor
or administrator of the Participants estate or by the person or
persons to whom the Participant shall have transferred such right by will
or by the laws of descent and distribution.
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(c) If termination of employment of a
Participant is by reason of the [total and permanent] disability of the
Participant covered by a long-term disability plan of the
Corporation or an Affiliate then in effect, the Participant shall have the
right to exercise his or her Options within the period of two years after
the date of termination of employment, to the extent such Options were
exercisable at the time of termination of employment.
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(d)
In the event the employment of a Participant is
terminated by the Corporation or an Affiliate without cause within two
years after the occurrence of a Change in Control Event, the Participant
shall have the right to exercise his or her Options within one year after
the date such termination occurred, to the extent such Options were
exercisable at the time of such termination of employment. For purposes of
this paragraph, without cause shall mean any termination of
employment where it cannot be shown that the employee has (i) willfully
failed to perform his or her employment duties for the Corporation or an
Affiliate, (ii) willfully engaged in conduct that is materially injurious
to the Corporation or an Affiliate, monetarily or otherwise, or (iii)
committed acts that constitute a felony under applicable federal or state
law or constitute common law fraud. For purposes of this paragraph, no act
or failure to act on the Participants part shall be considered
willful unless done, or omitted to be done, by him or her not
in good faith and without reasonable belief that his or her action or
omission was in the best interest of the Corporation or
Affiliate.
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(e)
In the event all employment of a Participant with
the Corporation or an Affiliate is terminated for any reason other than as
stated in the preceding paragraphs (a) - (d), his or her Options shall
terminate upon such termination of employment.
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(f)
Notwithstanding the foregoing, in no event shall
an Option granted hereunder be exercisable after the expiration of its
term.
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4.7 Reload Option
Rights. Reload Option Rights if awarded with respect
to an Option shall entitle the original grantee of the Option (and unless
otherwise determined by the Committee, in its discretion, only such original
grantee), upon exercise of the Option or any portion thereof through
delivery of shares of Common Stock, automatically to be granted on the date
of such exercise an additional Option (a Reload Option) (i) for
that number of shares of Common Stock not greater than the number of shares
delivered by the Participant in payment of the option price of the original
Option and any withholding taxes related thereto, (ii) having an option
price not less than 100% of the Fair Market Value of the Common Stock
covered by the Reload Option on the date of grant of such Reload Option,
(iii) having an expiration date not later than the expiration date of the
original Option so exercised and (iv) otherwise having terms permissible for
the grant of an Option under the Plan. Subject to the preceding sentence and
the other provisions of the Plan, Reload Option Rights and Reload Options
shall have such terms and be subject to such restrictions and conditions, if
any, as shall be determined, in its discretion, by the Committee. In
granting Reload Option Rights, the Committee, may, in its discretion,
provide for successive Reload Option grants upon the exercise of Reload
Options granted hereunder. Unless otherwise determined by the Committee, in
its discretion, Reload Option Rights shall entitle the Participant to be
granted Reload Options only if the underlying Option to which they relate is
exercised by the Participant during employment with the Corporation or any
of its Affiliates. Except as otherwise specifically provided herein or
required by the context, the term Option as used in this Plan shall include
Reload Options granted hereunder.
V. SARs
5.1 Grant.
SARs may be granted by the Committee as stand-alone SARs or in
tandem with all or any part of any Option granted under the Plan. SARs which
are granted in tandem with an Option may be granted either at the time of
the grant of such Option or, except in the case of an Incentive Stock
Option, at any time thereafter during the term of such Option.
5.2 SAR Agreements.
The grant of any SAR shall be evidenced by the
related Stock Option Agreement or by a written Stock Appreciation
Rights Agreement executed by the Corporation and the Participant,
stating the number of shares of Common Stock covered by the SAR, the base
price of a stand-alone SAR and such other terms and conditions of the SAR as
the Committee may from time to time determine. The base price for
stand-alone SARs (the base price) shall be such price as the
Committee, in its sole discretion, shall determine but shall not be less
than 100% of the Fair Market Value per share of the Common Stock covered by
the stand-alone SAR on the date of grant.
5.3 Payment.
SARs shall entitle the Participant upon exercise to
receive the amount by which the Fair Market Value of a share of Common Stock
on the date of exercise exceeds the option price of any tandem Option or the
base price of a stand-alone SAR, multiplied by the number of shares in
respect of which the SAR shall have been exercised. In the sole discretion
of the Committee, the Corporation may pay all or any part of its obligation
arising out of a SAR exercise in (i) cash, (ii) shares of Common Stock or
(iii) cash and shares of Common Stock. Payment shall be made by the
Corporation as soon as practicable after the date of exercise.
5.4 Exercise of Tandem
Award. If SARs are granted in tandem with an Option
(i) the SARs shall be exercisable at such time or times and to such extent,
but only to such extent, that the related Option shall be exercisable, (ii)
the exercise of the related Option shall cause a share for share reduction
in the number of SARs which were granted in tandem with the Option; and
(iii) the payment of SARs shall cause a share for share reduction in the
number of shares covered by such Option.
5.5 Termination of
Employment. Except as otherwise provided in the Stock
Appreciation Rights Agreement:
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(a)
If termination of employment of a Participant
occurs on or [is due to retirement] after age 55 and the
Participant is credited with at least five years of employment with
[with the written consent of] the Corporation or an Affiliate, the
Participant shall have the right to exercise his or her stand-alone SARs
within the period of two years after such retirement, to the extent such
SARs were exercisable at the time of retirement; provided, however, that
such post-retirement exercise period may be extended by action of the
Committee for up to the full term of such SARs.
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(b)
If a Participant shall die while employed by the
Corporation or an Affiliate thereof or within a period following
termination of employment during which the SARs remain exercisable under
paragraphs (a), (c) or (d) of this Section 5.5, his or her stand-alone
SARs may be exercised to the extent exercisable by the Participant at the
time of his or her death within a period of two years from the date of
death by the executor or administrator of the Participants estate or
by the person or persons to whom the Participant shall have transferred
such right by will or by the laws of descent and distribution.
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(c)
If termination of employment of a Participant is
by reason of the [total and permanent] disability of the Participant
covered by a long-term disability plan of the Corporation or an
Affiliate then in effect, the Participant shall have the right to exercise
his or her stand-alone SARs within the period of two years after the date
of termination of employment, to the extent such SARs were exercisable at
the time of termination of employment.
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(d)
In the event all employment of a Participant with
the Corporation or an Affiliate is terminated without cause within two
years after the occurrence of a Change in Control Event, the Participant
shall have the right to exercise his or her stand-alone SARs within one
year after the date such termination occurred, to the extent such
stand-alone SARs were exercisable at the time of such termination of
employment. For purposes of this paragraph, without cause
shall have the meaning provided in Section 4.6(d).
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(e)
In the event all employment of a Participant with
the Corporation or an Affiliate is terminated for any reason other than as
stated in the preceding paragraphs (a) - (d), his or her stand-alone SARs
shall terminate upon such termination of employment.
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(f)
Notwithstanding the foregoing, in no event shall a
stand-alone SAR granted hereunder be exercisable after the expiration of
its term.
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VI. Performance Units
6.1 Grant.
The Committee may from time to time grant one or more
Performance Units to eligible employees. Performance Units shall represent
the right of a Participant to receive shares of Common Stock or cash at a
future date upon the achievement of Performance Goals which are established
by the Committee.
6.2 Performance Unit
Agreements. The grant of any Performance Unit shall
be evidenced by a written Performance Unit Agreement, executed
by the Corporation and the Participant stating the
amount of cash and/or number of shares of Common Stock covered by the
Performance Unit and such other terms and conditions of the Performance Unit
as the Committee may determine, including the performance period to be
covered by the award and the Performance Goals to be achieved.
6.3 Payment.
After the completion of a performance period, performance
during such period shall be measured against the Performance Goals set by
the Committee. If the Performance Goals are met or exceeded, the Committee
shall certify that fact in writing in the Committee minutes or elsewhere and
certify the amount to be paid to the Participant under the Performance Unit.
In the sole discretion of the Committee, the Corporation may pay all or any
part of its obligation under the Performance Unit in (i) cash, (ii) shares
of Common Stock or (iii) cash and shares of Common Stock. Payment shall be
made by the Corporation as soon as practicable after the certification of
achievement of the Performance Goals.
6.4 Termination of
Employment. To be entitled to receive payment under a
Performance Unit, a Participant must remain in the employment of the
Corporation or an Affiliate through the end of the applicable performance
period; except that this limitation shall not apply where a Participant
s employment is terminated by the Corporation or an Affiliate without
cause (as defined in Section 4.6(d)) following the occurrence of a Change in
Control Event.
6.5 Maximum Cash
Payment. The maximum amount that may be paid in cash
or in Fair Market Value of Common Stock (to be valued no later than three
days after the date the Committee certifies the achievement of the
Performance Goals) under all Performance Units paid to any one Participant
during a calendar year shall in no event exceed $1,000,000.
VII. Deferred Cash Incentive
Awards
7.1 Granting of
Deferred Cash Incentive Awards. Deferred Cash
Incentive Awards, as hereafter described, may be granted in conjunction with
all or any part of any Option (other than an Incentive Stock Option) granted
under the Plan, either at the time of the grant of such Option or at any
time thereafter during the term of such Option.
7.2 Deferred Cash
Incentive Agreements. Deferred Cash Incentive Awards
shall entitle the holder of an Option to receive from the Corporation an
amount of cash equal to the aggregate exercise price of all Options
exercised by such Participant in accordance with the terms of a written
Deferred Cash Incentive Agreement executed by the Corporation
and the Participant. Deferred Cash Incentive Agreements shall specify the
conditions under which Deferred Cash Incentive Awards become payable, the
conditions under which Deferred Cash Incentive Awards are forfeited and any
other terms and conditions as the Committee may from time to time determine.
Under no circumstances may a Deferred Cash Incentive Award be applied to any
purpose other than the payment of the exercise price of a properly exercised
related Option.
7.3 Pre-established
Performance Goals.
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(a)
Except in the event of (i) death,
(ii) [total and permanent] disability of the Participant covered by
a long-term disability plan of the Corporation or an Affiliate then
in effect or (iii) the occurrence of a Change in Control Event, any
Deferred Cash Incentive Award shall only be earned and become payable if
the Corporation achieves Performance Goals which are established for a
calendar year or longer period by the Committee. After the completion of a
performance period, performance during such period shall be measured
against the Performance Goals set by the Committee. If the Performance
Goals are met or exceeded, the Committee shall certify that fact in
writing in the Committee minutes or elsewhere.
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(b)
The amount payable to a Participant upon achieving
the Performance Goals set by the Committee for the Deferred Cash Incentive
Award shall be equal to the option price of the related Option, which
shall be the Fair Market Value of the shares of Common Stock subject to
the Option on the date the Option is granted. No individual may in any
calendar year receive payment of Deferred Cash Incentive Awards with
respect to Options for more than 3,000,000 shares of Common
Stock.
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VIII. Restricted Stock
8.1 Award of
Restricted Stock. The Committee may from time to
time, subject to the provisions of the Plan and such other terms and
conditions as it may prescribe, grant one or more shares of Restricted Stock
to eligible employees. In the discretion of the Committee, shares of
Restricted Stock may be granted alone, in addition to or in tandem with
other Awards granted under the Plan and/or cash awards made outside of the
Plan.
8.2 Restricted Stock
Agreements. Each award of Restricted Stock under the
Plan shall be evidenced by a written Restricted Stock Agreement executed by
the Corporation and the Participant in such form as the Committee shall
prescribe from time to time in accordance with the Plan.
8.3 Restrictions.
Shares of Restricted Stock issued to a Participant may not
be sold, assigned, transferred, pledged, hypothecated or otherwise disposed
of, except by will or the laws of descent and distribution, for such period
as the Committee shall determine, beginning on the date on which the Award
is granted (the Restricted Period). The Committee may also
impose such other restrictions and conditions on the shares or the release
of the restrictions thereon as it deems appropriate, including the
achievement of Performance Goals established by the Committee. In
determining the Restricted Period of an Award, the Committee may provide
that the foregoing restrictions shall lapse with respect to specified
percentages of the awarded shares on specified dates following the date of
such Award or all at once.
8.4 Stock Certificate.
As soon as practicable following the making of an
award, the Restricted Stock shall be registered in the Participants
name in certificate or book-entry form. If a certificate is issued, it shall
bear an appropriate legend referring to the restrictions and it shall be
held by the Corporation on behalf of the Participant until the restrictions
are satisfied. If the shares are registered in book-entry form, the
restrictions shall be placed on the book-entry registration. Except for the
transfer restrictions, and subject to such other restrictions, if any, as
determined by the Committee, the Participant shall have all other rights of
a holder of shares of Common Stock, including the right to receive dividends
paid with respect to the Restricted Stock and the right to vote such shares.
As soon as is practicable following the date on which transfer restrictions
on any shares lapse, the Corporation shall deliver to the Participant the
certificates for such shares, provided that the Participant shall have
complied with all conditions for delivery of such shares contained in the
Restricted Stock Agreement or otherwise reasonably required by the
Corporation.
8.5 Termination of
Employment.
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(a)
Unless expressly provided to the contrary in the
applicable Restricted Stock Agreement, all restrictions placed upon
Restricted Stock shall lapse immediately upon (i) termination of the
Participants employment with the Corporation or an Affiliate if, and
only if, such termination is by reason of the Participants death,
[total and permanent] the disability of the Participant covered by
a long-term disability plan of the Corporation or an Affiliate then
in effect or (except where Performance Goals have been set for the Award)
if such termination occurs on or [retirement] after age 55
and the Participant is credited with at least five years of employment
with the [with the written consent of the] Corporation or an Affiliate
or (ii) the occurrence of a Change in Control Event. In addition, the
Committee may in its discretion (except where Performance Goals have been
set for the Award) allow restrictions on Restricted Stock to lapse prior
to the date specified in a Restricted Stock Agreement.
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(b)
Except as otherwise provided in the Restricted
Stock Agreement, upon the effective date of a termination for any reason
not specified in paragraph (a) of this Section 8.5, all shares then
subject to restrictions immediately shall be forfeited to the Corporation
without consideration or further action being required of the Corporation.
For purposes of this paragraph (b), the effective date of a Participant
s termination shall be the date upon which such Participant ceases
to perform services as an employee of the Corporation or any of its
Affiliates, without regard to accrued vacation, severance or other
benefits or the characterization thereof on the payroll records of the
Corporation or Affiliate.
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8.6 Maximum Award.
The compensation payable to a Participant upon
achieving any Performance Goals set by the Committee for Restricted Stock
shall be equal to the Fair Market Value
of a share of Common Stock for each share of Restricted Stock that is granted.
No individual Participant may in any one calendar year receive payment of a
Restricted Stock Award (where Performance Goals have been set for the Award)
covering more than 400,000 shares of Common Stock.
8.7 Deferred Share
Award.
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(a)
A Deferred Share Award shall entitle the
Participant to receive from the Corporation a number of shares of Common
Stock on a deferred payment date specified by the Participant.
Participants shall be entitled to elect a Deferred Share Award as
permitted by the Committee (a Deferred Share Award Election
).
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(b)
Except as otherwise provided by the Committee, a
Deferred Share Award Election (i) may be offered only with respect to a
potential Restricted Stock Award or an outstanding Restricted Stock Award
with at least one year to derestriction, (ii) shall have derestriction
conditions identical as nearly as practicable to those of the Restricted
Stock Award, (iii) shall specify a payment commencement date and form,
which may occur no earlier than January 1 of the year following
termination of employment on or after age 55 with five credited years of
employment with the Corporation or an Affiliate and no later than January
1 of the year following age 70, in one lump sum payment or in equal annual
payments over 5 or 10 years; provided, however, that payment following
derestriction of the Award upon a termination of employment prior to age
55 or on or after age 55 with less than five years of credited employment
with the Corporation or an Affiliate shall be made in a lump sum payment
no later than March 1 of the year following such termination of
employment.
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(c)
Except as otherwise provided by the Committee, a
Deferred Share Award shall entitle the Participant to receive dividend
equivalents payable no earlier than the date payment is elected for the
Deferred Share Award. Dividend equivalents shall be calculated on the
number of shares covered by the Deferred Share Award as soon as
practicable after the date dividends are payable on the Common
Stock.
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(d)
A Deferred Share Award shall be evidenced by a
written Deferred Share Award Agreement executed by the Corporation and the
Participant in such form as the Committee shall prescribe from time to
time in accordance with the Plan.
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(e)
Deferred Share Awards shall be subject to the same
aggregate and individual limitations set under the Plan for Restricted
Stock Awards and shall be subject to adjustment as provided in Section
9.7.
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IX. Miscellaneous
9.1 General
Restriction. Each Award under the Plan shall be
subject to the requirement that, if at any time the Committee shall
determine that any listing or registration of the shares of Common Stock or
any consent or approval of any governmental body, or any other agreement or
consent is necessary or desirable as a condition of the granting of an Award
or issuance of Common Stock or cash in satisfaction thereof, such Award may
not be consummated unless such requirement is satisfied in a manner
acceptable to the Committee.
9.2 Non-Assignability.
No Award under the Plan shall be assignable or
transferable by a Participant, except by will or by the laws of descent and
distribution or by such other means as the Committee may approve from time
to time. During the life of the Participant, such Award shall be exercisable
only by such Participant or by such other persons as the Committee may
approve from time to time.
9.3 Withholding Taxes.
Whenever the Corporation proposes or is required to
issue or transfer shares of Common Stock under the Plan, the Corporation
shall have the right to require the Participant to remit to the Corporation
an amount sufficient to satisfy any federal, state, local or other
withholding tax requirements prior to the delivery of any certificate for
such shares. Whenever under the Plan payments are to be made in cash, such
payments shall be net of an amount sufficient to satisfy any federal, state,
local or other withholding tax requirements.
9.4 No Right to
Employment. Nothing in the Plan or in any agreement
entered into pursuant to it shall confer upon any Participant the right to
continue in the employment of the Corporation or an Affiliate or affect any
right which the Corporation or an Affiliate may have to terminate the
employment of such Participant.
9.5 Non-Uniform
Determinations. The Committees determinations
under the Plan (including without limitation its determinations of the
employees to receive Awards, the form, amount and timing of such Awards, the
terms and provisions of such Awards and the establishment of performance
goals and performance periods) need not be uniform and may be made by it
selectively among employees who receive, or are eligible to receive, Awards
under the Plan, whether or not such persons are similarly
situated.
9.6 No Rights as
Shareholders. Participants as such shall have no
rights as shareholders of the Corporation, except as provided in Section
8.4, unless and until shares of Common Stock are registered in their
name.
9.7 Adjustments of
Stock. If there is any change in the Common Stock by
reason of any stock split, stock dividend, spin-off, split-up, spin-out,
recapitalization, merger, consolidation, reorganization, combination or
exchange of shares, or any other similar transaction, the number and kind of
shares available for grant under the Plan or subject to or granted pursuant
to an Award and the price thereof, or other numeric limitations under the
Plan, as applicable, shall be appropriately adjusted by the Committee or the
Board.
9.8 Amendment or
Termination of the Plan. The Committee or the Board
may at any time terminate the Plan or any part thereof and may from time to
time amend the Plan as it may deem advisable. Any such action of the
Committee or the Board may be taken without the approval of the Corporation
s shareholders, but only to the extent that such shareholder approval
is not required by applicable law or regulation, including specifically Rule
16b-3, or the rules of any stock exchange on which the Common Stock is
listed. The termination or amendment of the Plan shall not, without the
consent of the Participant, adversely affect such Participants rights
under an Award previously granted.
9.9 Awards to Foreign
Nationals and Employees Outside the United States. To
the extent the Committee deems it necessary, appropriate or desirable to
comply with foreign law or practice and to further the purpose of the Plan,
the Committee may, without amending the Plan, (i) establish special rules
applicable to Awards granted to Participants who are foreign nationals, are
employed outside the United States, or both, including rules that differ
from those set forth in this Plan, and (ii) grant Awards to such
Participants in accordance with those rules.
9.10 Previously
Granted Awards. Awards outstanding on the
effective date [of shareholder approval] of this amended and restated
Plan shall continue to be governed by and construed in accordance with the
Plan as in effect prior to the effective date [amendment and
restatement]; except that outstanding Deferred Cash Incentive Awards shall
be subject to the limitations of new Section 7.3(a) and (b) of the Plan and,
to the extent required by Section 162(m) of the Code, a grant of a Reload
Option shall be subject to the limitation of new Section 3.4(d) of the
Plan.
April 2000
EXHIBIT B
MELLON FINANCIAL CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
1. Purpose.
The purpose of this Plan is to provide an opportunity for Employees
of Mellon Financial Corporation (the Company) and its Designated
Subsidiaries, to purchase Common Stock of the Company and thereby to have an
additional incentive to contribute to the prosperity of the Company. It is
the intention of the Company that the Plan qualify as an Employee
Stock Purchase Plan under section 423 of the Internal Revenue Code of
1986, as amended (the Code), although the Company makes no
undertaking nor representation to maintain such qualification. In addition,
this Plan authorizes the grant of options and issuance of Common Stock which
do not qualify under section 423 of the Code pursuant to sub-plans adopted
by the Committee designed to achieve desired tax or other objectives in
particular locations outside the United States.
2. Definitions.
2.1 Board
shall mean the Board of Directors of the Company.
2.2 Code
shall mean the Internal Revenue Code of 1986, of the U.S.A., as
amended.
2.3 Committee
shall mean the Human Resources Committee of the Board, including any
successor committee, or such other committee of the Board as the Board may
from time to time appoint to administer the Plan.
2.4 Common Stock
shall mean the Common Stock of the Company, or any stock into which
such Common Stock may be converted.
2.5 Company
shall mean Mellon Financial Corporation, a Pennsylvania
corporation.
2.6 Designated
Subsidiary shall mean any Subsidiary which has been designated by the
Committee as eligible to participate in the Plan with respect to its
Employees.
2.7 Eligible
Compensation shall mean the basic rate of cash remuneration of an
Employee as it appears on the books and records of the Company or a
Designated Subsidiary for services rendered to the Company or a Designated
Subsidiary, determined prior to any contractual reductions, including, but
not limited to, those related to contributions under a qualified cash
or deferred arrangement (as determined under Section 401(k) of the
Code and its applicable regulations) or under a cafeteria plan
(as defined under Section 125 of the Code and its applicable regulations),
or reductions for qualified transportation benefits under Code Section
132(f), excluding bonuses, overtime pay, and all other forms of special pay.
Compensation shall be determined before deferrals to any executive deferred
compensation plan, but shall not include amounts received from any executive
deferred compensation plan. The Committee shall have the authority to
determine, and to approve the inclusion or deletion of any or all forms of
compensation (such as overtime or commissions) in or from the definition of,
Eligible Compensation and may change the definition on a prospective basis,
subject, however, to Code section 423(b)(5).
2.8 Employee
shall mean an individual classified as an employee by the Company or
a Designated Subsidiary on the payroll records of the Company or the
Designated Subsidiary during the relevant Purchase Period.
2.9 Fair Market
Value shall mean the closing price of a share of Common Stock in the
New York Stock Exchange Composite Transactions on the relevant date, or, if
no sale shall have been made on such exchange on that date, the closing
price in the New York Stock Exchange Composite Transactions on the last
preceding day on which there was a sale.
2.10 Offering
Date shall mean the first business day of each Purchase
Period.
2.11 Participant
shall mean a participant in the Plan as described in Section 4 of the
Plan.
2.12 Plan
shall mean this Mellon Financial Corporation Employee Stock Purchase
Plan.
2.13 Purchase
Date shall mean the last business day of each Purchase
Period.
2.14
Purchase Period shall mean a
three-month, six-month or other period as determined by the Committee
pursuant to Section 5.2; provided that in no event shall the duration of any
Purchase Period exceed 27 months.
2.15 Subsidiary
shall mean any subsidiary corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company, as described in
Code section 424(f).
3. Eligibility.
Any Employee regularly employed on a full-time basis by the Company
or by any Designated Subsidiary on an Offering Date shall be eligible to
participate in the Plan with respect to the Purchase Period commencing on
such Offering Date, provided that the Committee may (1) permit part-time
employees to participate pursuant to criteria and procedures established by
the Committee and/or (2) impose an eligibility period of up to two years
employment with the Company and/or a Designated Subsidiary with
respect to participation on any prospective Offering Date. An Employee shall
be considered employed on a full-time basis unless his or her customary
employment is 20 hours or less per week or not more than five months per
calendar year. No Employee may participate in the Plan if immediately after
an option is granted the Employee owns or is considered to own (within the
meaning of Code section 424(d)), shares of capital stock, including stock
which the Employee may purchase by conversion of convertible securities or
under outstanding options granted by the Company, possessing 5% or more of
the total combined voting power or value of all classes of stock of the
Company or of any of its Subsidiaries. All Employees who participate in the
Plan shall have the same rights and privileges under the Plan except for
differences which are consistent with Code section 423(b)(5); provided,
however, that Employees participating in a sub-plan adopted pursuant to
Section 13 which is not designed to qualify under Code section 423 need not
have the same rights and privileges as Employees participating in the Code
section 423 Plan. The Committee may impose restrictions on eligibility and
participation of Employees who are officers and directors to facilitate
compliance with federal or state securities laws or foreign
laws.
4. Participation And
Withdrawal.
4.1 Enrollment.
An Employee who is eligible to participate in the
Plan in accordance with Section 3 may become a Participant beginning with
the first pay period ending in a Purchase Period by filing, during the
enrollment period prior to an applicable Offering Date prescribed by the
Committee, a completed payroll deduction authorization and Plan enrollment
form provided by the Company or by following an interactive voice response (
IVR), electronic or other enrollment process as prescribed by
the Committee. Unless otherwise determined by the Committee, an Employee who
does not follow the prescribed procedures to enroll on or before the
enrollment deadline preceding the Offering Date for a Purchase Period may
not participate in the Plan with respect to that Purchase Period.
Participation may be conditioned on an eligible Employees consent to
transfer and process personal data and on acknowledgment and agreement to
Plan terms and other specified conditions not inconsistent with the
Plan.
4.2 Payroll
Deductions.
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(a)
An eligible Employee may authorize payroll
deductions at the rate of any whole percentage of the Employees
Eligible Compensation, not to exceed 15% or such greater percentage as
specified by the Committee. The Committee may provide for a separate
election (of a different percentage) for a specified item or items of
Eligible Compensation, including specified bonus payments, if any. All
payroll deductions may be used by the Company for any corporate purpose,
and the Company shall not be obligated to segregate such payroll
deductions unless required under local law. No interest shall be paid or
credited to the Participant with respect to such payroll deductions except
where required by local law as determined by the Committee. A separate
bookkeeping account for each Participant shall be maintained by the
Company under the Plan, and the amount of each Participants payroll
deductions shall be credited to such account. A Participant may not make
any additional payments into such account. Payroll deductions made with
respect to employees paid in currencies other than U.S. dollars shall be
converted to U.S. dollars as of each Purchase Date using the then
applicable exchange rate, as determined by the Committee or its delegate;
provided, however, that the Committee may determine, with respect to any
Purchase Period, that payroll deductions shall be converted to U.S.
dollars based on an average or median exchange rate applicable for the
relevant Purchase Period.
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(b) Subject to such limitations, if any, as
prescribed by the Committee, a Participant may prospectively decrease his
or her rate of payroll deductions at any time by filing a new payroll
deduction authorization and Plan enrollment form or by following IVR,
electronic or other procedures prescribed by the Committee. A Participant
may not increase his or her rate of payroll deductions during a Purchase
Period but may increase such rate only effective on the first payroll date
following the next Purchase Date by filing a new payroll deduction
authorization and Plan enrollment form or by following IVR, electronic or
other procedures prescribed by the Committee. If a Participant has not
followed such procedures to change the rate of payroll deductions, the
rate of payroll deductions shall continue at the originally elected rate
throughout the Purchase Period and future Purchase Periods unless reduced
to reflect a change by the Committee in the maximum permissible
rate.
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4.3
Withdrawal.
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(a)
Under procedures established by the Committee, a
Participant may discontinue payroll deductions under the Plan at any time
during a Purchase Period by completing and filing a new payroll deduction
authorization and Plan enrollment form with the Company or by following
IVR, electronic or other procedures prescribed by the Committee. If a
Participant has not followed such procedures to discontinue the payroll
deductions, the rate of payroll deductions shall continue at the
originally elected rate throughout the Purchase Period and future Purchase
Periods unless reduced to reflect a change by the Committee in the maximum
permissible rate.
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(b)
If a Participant discontinues participation during
a Purchase Period, his or her accumulated payroll deductions will remain
in the Plan for purchase of shares as specified in Section 6 on the
following Purchase Date, but the Participant will not again participate
until he or she re-enrolls in the Plan.
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4.4 Termination of
Employment. In the event any Participant
terminates employment with the Company or any Subsidiary for any reason
(including death) prior to the expiration of a Purchase Period, the
Participants participation in the Plan shall terminate, and all
amounts credited to the Participants account shall be paid to the
Participant or the Participants estate without interest (except where
required by local law). Whether a termination of employment has occurred
shall be determined by the Committee or its delegate. The Committee also may
establish rules regarding when leaves of absence or changes of employment
status (e.g., from full-time to part-time) will be considered to be a
termination of employment, and the Committee may establish termination of
employment procedures for this Plan which are independent of similar rules
established under other benefit plans of the Company and its
Subsidiaries.
5. Offering.
5.1 Authorized
Shares. (a) The maximum number of shares of
Common Stock which may be issued pursuant to the Plan shall be 10,000,000
shares. The shares which may be issued under the Plan may be either
authorized but unissued shares or treasury shares or partly each, as
determined from time to time by the Board. If on any Purchase Date the
number of shares otherwise purchasable by Participants is greater than the
number of shares then remaining available under the Plan, the Committee
shall allocate the available shares among the Participants in such manner as
it deems fair and which complies with the requirements of Code section 423
for employee stock purchase plans.
5.2 Purchase
Periods. Each Purchase Period shall be determined
by the Committee. Unless otherwise determined by the Committee, (i) the
duration of each Purchase Period shall be three months, (ii) the first
Purchase Period shall commence March 1, 2001; and (iii) subsequent Purchase
Periods shall run consecutively after the termination of the preceding
Purchase Period. The Committee shall have the power to change the
commencement date or duration of future Purchase Periods, without
shareholder approval, and without regard to the expectations of any
Participants.
5.3 Grant of
Options. On the Offering Date for each Purchase
Period, each eligible Employee who has elected to participate as provided in
Section 4.1 shall be granted an option to purchase the number of shares of
Common Stock which may be purchased with the payroll deductions to be
accumulated in an account maintained on behalf of such Employee assuming (1)
payroll deductions throughout the Purchase Period at a rate of 25% (or such
other percentage as determined by the Committee) of the Employees
Eligible Compensation as of the Offering Date and (2) a purchase price equal
to the Designated Percentage (as defined in Section 5.4) of Fair Market
Value as of the Offering Date. Notwithstanding the preceding
sentence:
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(a) The number of shares which may be
purchased by any Participant on the first Purchase Date to occur in any
calendar year may not exceed the number of shares determined by dividing
$25,000 by the Fair Market Value of a share of Common Stock on the
Offering Date for the Purchase Period ended on such Purchase Date;
and
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(b)
The number of shares which may be purchased by a
Participant on any subsequent Purchase Date in the same calendar year
shall not exceed the number of shares determined by performing the
calculation below:
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Step One: Multiply the number of shares
purchased by the Participant on each previous Purchase Date in the same
calendar year by the Fair Market Value of a share of Common Stock on the
Offering Date for the Purchase Period ended on such Purchase
Date.
Step Two: Subtract the amount(s) determined
in Step One from $25,000.
Step Three: Divide the remainder amount
determined in Step Two by the Fair Market Value of a share of Common Stock
on the Offering Date for the Purchase Period ending on the Purchase Date for
which the calculation is being performed. The quotient thus obtained is the
maximum number of shares which may be purchased by the Participant on such
Purchase Date.
5.4 Purchase
Price. The option price for each option shall be
85% (the Designated Percentage) of the lower of: (i) the Fair
Market Value of the Common Stock on the Offering Date on which an option is
granted or (ii) the Fair Market Value on the Purchase Date on which the
Common Stock is purchased. The Committee may change the Designated
Percentage with respect to any future Purchase Period, but not below 85%,
and the Committee may determine with respect to any prospective Purchase
Period that the option price shall be the Designated Percentage of the Fair
Market Value of the Common Stock on the Purchase Date.
5.5 $25,000
Limitation. Notwithstanding any other provision
of the Plan to the contrary, no Employee participating in the Code section
423 Plan shall be granted an option which permits the Employees rights
to purchase Common Stock under the Plan and all Code section 423 employee
stock purchase plans of the Company and its Subsidiaries to accrue at a rate
which exceeds $25,000 in Fair Market Value of Common Stock (determined at
the time such option is granted) for each calendar year in which such option
is outstanding at any time. The preceding sentence shall be interpreted so
as to comply with Code section 423(b)(8).
6. Purchase of
Stock.
Subject to Section 4.4, on each Purchase Date, a Participants
option shall be exercised automatically for the purchase of that number of
full and fractional shares of Common Stock which the accumulated payroll
deductions credited to the Participants account at that time shall
purchase at the applicable price specified in Section 5.4. To the extent an
option is not so exercised on the Purchase Date, the option shall not accrue
and shall terminate.
7. Payment And
Delivery.
Unless and until otherwise determined by the Committee, all shares
purchased under the Plan shall be deposited directly to an account
established in the name of the Participant with ChaseMellon Shareholder
Services LLC (CMSS). Upon the exercise of an option on each
Purchase Date, the Company or CMSS shall deliver (by electronic or other
means) to the Participant a record of the Common Stock purchased. The
Committee may require or permit shares purchased under the Plan to be
deposited directly with any other broker or agent designated by the
Committee, and the Committee may utilize electronic or automated methods of
share transfer.
The Committee may require that shares purchased under the Plan be
retained with CMSS (or any such other broker or agent) for a designated
period of time (and may restrict dispositions during that period) and/or may
establish other procedures to permit tracking of disqualifying dispositions
of such shares or to restrict transfer of such shares. The Committee may
also require that shares purchased under the Plan shall automatically
participate in a dividend reinvestment plan or program maintained by the
Company.
The Company shall retain the amount of payroll deductions used to
purchase Common Stock as full payment for the Common Stock, and the Common
Stock shall then be fully paid and non-assessable.
No Participant shall have any voting, dividend, or other shareholder rights
with respect to shares subject to any option granted under the Plan until
the shares subject to the option have been purchased and delivered to the
Participant as provided in this Section 7.
8. Recapitalization.
8.1 If after the grant
of an option, but prior to the purchase of Common Stock under the option,
there is any increase or decrease in the number of outstanding shares of
Common Stock because of a stock split, stock dividend, combination or
recapitalization of shares subject to options, the number of shares to be
purchased pursuant to an option, the share limit of Section 5.3 and the
maximum number of shares specified in Section 5.1 shall be proportionately
increased or decreased, the terms relating to the purchase price with
respect to the option shall be appropriately adjusted, and the Committee
shall take any further actions which, in the exercise of its discretion, may
be necessary or appropriate under the circumstances.
8.2 The Board or the
Committee, if it so determines in the exercise of its sole discretion, also
may adjust the number and kind of shares specified in Section 5.1, as well
as the price per share covered by each outstanding option, the number of
shares subject to any individual option and the share limit of Section 5.3,
in the event the Company effects one or more reorganizations,
recapitalizations, spin-offs, split-ups, rights offerings or reductions of
shares of its outstanding Common Stock.
8.3 The determinations
of the Board or the Committee under this Section 8 shall be conclusive and
binding on all parties.
9. Merger, Liquidation, Other Company
Transactions.
9.1 In the event of
the proposed liquidation or dissolution of the Company, the Purchase Period
then in progress will terminate immediately prior to the consummation of
such proposed liquidation or dissolution, unless otherwise provided by the
Board in its sole discretion, and all outstanding options shall
automatically terminate and the amounts of all payroll deductions will be
refunded without interest to the Participants.
9.2 In the event of a
proposed sale of all or substantially all of the assets of the Company, or
the merger or consolidation of the Company with or into another corporation,
then in the sole discretion of the Board, (1) each option shall be assumed,
or an equivalent option shall be substituted, by the successor corporation
or parent or subsidiary of such successor corporation or (2) a date
established by the Board on or before the date of consummation of such
merger, consolidation or sale shall be treated as a Purchase Date, and all
outstanding options shall be deemed exercised on such date.
10. Transferability.
Options granted to Participants may not be voluntarily or
involuntarily assigned, transferred, pledged, or otherwise disposed of in
any way, and are exercisable during the Participants lifetime only by
the Participant. Any attempted assignment, transfer, pledge, or other
disposition shall be null and void and without effect. If a Participant in
any manner attempts to transfer, assign or otherwise encumber his or her
rights or interest under the Plan, other than as permitted by the Code, such
act shall be treated as an election by the Participant to discontinue
participation in the Plan pursuant to Section 4.3.
11. Amendment or Termination of the
Plan.
11.1 The Plan shall
continue until February 28, 2011, unless previously terminated in accordance
with Section 11.2.
11.2 The Board may, in
its sole discretion, insofar as permitted by law, terminate or suspend the
Plan, or revise or amend it in any respect whatsoever, except that, without
approval of the shareholders, no such revision or amendment shall (a)
increase the number of shares subject to the Plan, other than an adjustment
under Section 8 of the Plan or (b) modify the requirements as to eligibility
for participation in the Plan except as otherwise specified in this
Plan.
12. Administration.
The Committee will have the authority and responsibility for the
day-to-day administration of the Plan, the authority and responsibility
specifically provided in this Plan and any additional duties, responsibility
and authority delegated to the Committee by the Board, which may include any
of the functions assigned to the Board in this Plan. The Committee may
delegate to one or more individuals the day-to-day administration of the
Plan. The Committee shall have full power and authority to promulgate any
rules and regulations which it deems necessary for the proper administration
of the Plan, to interpret the provisions and supervise the administration of
the Plan, to make factual determinations relevant to Plan entitlements and
to take all action in connection with administration of the Plan as it deems
necessary or advisable. Decisions of the Board and the Committee shall be
final and binding upon all Participants. Any decision reduced to writing and
signed by all of the members of the Committee shall be fully effective, as
if it had been made at a meeting of the Committee duly held. The Company
shall pay all expenses incurred in the administration of the Plan. No Board
or Committee member shall be liable for any action or determination made in
good faith with respect to the Plan or any option granted
hereunder.
13. Committee Rules For Foreign
Jurisdictions.
13.1 The Committee may
adopt rules or procedures relating to the operation and administration of
the Plan to accommodate the specific requirements of local laws and
procedures. Without limiting the generality of the foregoing, the Committee
is specifically authorized to adopt rules and procedures regarding handling
of payroll deductions, payment of interest, conversion of local currency,
payroll tax, withholding procedures and handling of stock or stock
certificates which vary with local requirements.
13.2 The Committee may
also adopt sub-plans applicable to particular Subsidiaries or (to the extent
consistent with Code section 423) locations, which sub-plans may be designed
to be outside the scope of Code section 423. The rules of such sub-plans may
take precedence over other provisions of this Plan, with the exception of
Section 5.1, but unless otherwise superseded by the terms of such sub-plan,
the provisions of this Plan shall govern the operation of such
sub-plan.
14. Compliance with Legal and Exchange
Requirements.
The Company shall not be under any obligation to issue Common Stock
upon the exercise of any option unless and until the Company has determined
that: (i) it and the Participant have taken all actions required to register
the Common Stock under the Securities Act of 1933, or to perfect an
exemption from the registration requirements thereof; (ii) any applicable
listing requirement of any stock exchange on which the Common Stock is
listed has been satisfied; and (iii) all other applicable provisions of
state, federal and applicable foreign law have been satisfied.
15. Governmental
Approvals.
This Plan and the Companys obligation to sell and deliver
shares of its stock under the Plan in any jurisdiction shall be subject to
the approval of any governmental authority required in connection with the
Plan or the authorization, issuance, sale, or delivery of stock hereunder in
such jurisdiction.
16. No Enlargement Of Employee
Rights.
Nothing contained in this Plan shall be deemed to give any Employee
the right to be retained in the employ of the Company or any Subsidiary or
to interfere with the right of the Company or any Subsidiary to discharge
any Employee at any time. It is not intended that any rights or benefits
provided under this Plan shall be considered part of normal or expected
compensation for purposes of calculating any severance, resignation,
redundancy, end of service payments, bonuses, long service awards, pension,
retirement or similar payments.
17. Withholding
Taxes.
In the event that the Company or any Subsidiary is required to
withhold any Federal, state, local or foreign taxes in respect of any
compensation or other income realized by the Participant, the Company or
such Subsidiary may deduct from any payments of any kind otherwise due to
such
Participant, including without limitation the proceeds of any sale of Common
Stock for the account of the Participant, the aggregate amount of such
Federal, state, local or foreign taxes required to be withheld. If such
payments are insufficient to satisfy such Federal, state, local or foreign
taxes, the Participant will be required to pay to the Company or such
Subsidiary, or make other arrangements satisfactory to the Company or such
Subsidiary regarding payment to the Company or such Subsidiary of, the
aggregate amount of any such taxes.
18. Governing Law.
This Plan shall be governed by and construed in accordance with the
laws of the Commonwealth of Pennsylvania, without regard to conflicts of law
principles.
19. Severability.
If any provision of the Plan shall be held illegal or invalid in any
jurisdiction, such illegality or invalidity shall not affect the remaining
provisions of the Plan in such jurisdiction, or any provision of the Plan in
any other jurisdiction, and the Plan shall be construed and applied in such
jurisdiction as if the invalid provision had never been contained
herein.
20. Effective Date.
This Plan shall be effective February 15, 2000, the date of its
adoption by the Board, subject to approval of the shareholders of the
Company at the 2000 Annual Meeting.
Reservation Form for Mellon Financial Corporation Annual Meeting
of Shareholders
Admission cards will be forwarded to shareholders whose reservation
forms are received by April 5, 2000. All other admission cards will be
provided at the check-in desk at the meeting.
I expect to attend the Annual Meeting at 10:00 A.M., on April 18,
2000, in Pittsburgh, PA.
Name
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(Please Print) |
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Address
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(Please Print) |
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(Please complete and return in the enclosed envelope if you
plan
to attend the Annual Meeting)
[LOGO OF MELLON FINANCIAL CORPORATION]
This Proxy is solicited on behalf of the Board of Directors of the
Corporation.
The undersigned hereby appoints Carl Krasik, William E. Marquis and
Ann M. Sawchuck, or any of them, each with full power of substitution as
attorneys and proxies of the undersigned to vote all Mellon Financial
Corporation Common Stock of the undersigned at the Annual Meeting of
Shareholders of the Corporation to be held on Tuesday April 18, 2000, at
10:00 A.M., on the 10th floor of the Union Trust Building, 501 Grant Street,
Pittsburgh, Pennsylvania, and at any adjournment of such meeting, as fully
and effectually as the undersigned could do if personally present, and
hereby revokes all previous proxies for said meeting. Where a vote is not
specified, the proxies will vote the shares represented by this Proxy FOR
the election of all nominees for director and FOR Proxy Items 2, 3 and 4 and
will vote in their discretion on such other matters that may properly come
before the meeting.
This Proxy is solicited on behalf of the Board of Directors of the
Corporation, and may be revoked prior to its exercise. The Board of
Directors recommends votes FOR the election of all nominees for director and
FOR Proxy Items 2, 3 and 4.
(Continued, and to be signed and dated, on reverse
side)
FOLD AND DETACH HERE
Where a vote is not specified, the proxies will vote shares
represented by this Proxy FOR the election of directors and FOR Proxy Items
2, 3 and 4 and will vote in their discretion on such other matters that may
properly come before the meeting.
Please mark your votes as indicated in this example
X
Proxy Item 1
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The election of
directors |
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FOR
all nominees
listed herein
(except as withheld
in space provided) |
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WITHHOLD
AUTHORITY
to vote for all
nominees
listed herein |
Nominees: Burton C. Borgelt, Carol R. Brown, Christoper M. Condron,
Seward Prosser Mellon and Mark A. Nordenberg.
(Instructions: To withhold authority to vote for any individual
nominee, write that nominees name in the space provided
below.)
Note: A vote FOR the election of directors
includes discretionary authority to vote for a substitute if any nominee is
unable to serve or for good cause will not serve.
Proxy Item 2Proposal to amend the Corporations
Long-Term Profit Incentive Plan (1996).
FOR AGAINST
ABSTAIN
Proxy Item 3Proposal to adopt the Mellon Financial
Corporation Employee Stock Purchase Plan.
FOR AGAINST
ABSTAIN
Proxy Item 4Ratification of appointment of KPMG LLP as
independent public accountants.
FOR AGAINST
ABSTAIN
Please date and sign exactly as name appears hereon. When signing as
attorney, executor, administrator, trustee, guardian. etc., full title as
such should be shown. For joint accounts, each joint owner should sign. If
more than one trustee is listed, all trustees should sign, unless one
trustee has power to sign for all.
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(Signature of
Shareholder)
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(Signature of
Shareholder)
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FOLD AND DETACH HERE