DEF 14A

SCHEDULE 14A

(RULE 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.__)

Filed by the registrant
Filed by a party other than the registrant

Check the appropriate box:

	Preliminary proxy statement.
	Confidential, for use of the Commission only (as permitted by Rule 14a-6(e)(2)).
	Definitive proxy statement.
	Definitive additional materials.
	Soliciting material under Rule 14a-12.

STATE STREET 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):

	No fee required.
	Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

1)	Title of each class of securities to which transaction applies:
2)	Aggregate number of securities to which transaction applies:
3)	Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):
4)	Proposed maximum aggregate value of transaction:
5)	Total fee paid:

	Fee paid previously with preliminary materials.
	Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.

(1)	Amount Previously Paid:
(2)	Form, Schedule or Registration Statement No.:
(3)	Filing Party:
(4)	Date Filed:

David A. Spina
Chairman and Chief Executive Officer

 

March 11, 2002

DEAR STOCKHOLDER:

     We cordially invite you to attend the 2002 Annual Meeting of Stockholders of State Street Corporation. The meeting will be held in the Enterprise Room at 225 Franklin Street, Boston, Massachusetts, on Wednesday, April 17, 2002, at 10:00 a.m.

     Details regarding admission to the meeting and the business to be conducted are more fully described in the accompanying Notice of Annual Meeting and Proxy Statement.

     Your vote is very important. Whether or not you plan to attend the meeting, please carefully review the enclosed proxy statement. Then complete, sign, date and mail promptly the accompanying proxy in the enclosed return envelope. To be sure that your vote will be received in time, please return the proxy at your earliest convenience.

     We look forward to seeing you at the Annual Meeting so that we can update you on our progress. Your continuing interest is very much appreciated. 

Sincerely,

PLEASE NOTE:  Stockholders should be aware of the increased security at public facilities in Boston.  If you plan to attend the meeting, please allow additional time for registration and security clearance.  You will be asked to present a vaild, picture identification such as a driver's license or passport.  If you own your shares through a bank or brokerage accoutn, or through some other nominee, you must bring proof of ownership (for details, see Meeting Admission in the Notice of 2002 Annual Meeting of Stockholders).  Public parking is no longer availalbe at State Street's headquarters.  Public parking facilities available nearby include the Garage at Post Office Square (entrance on Pearl Street opposite Le Meridien Hotel) and the Garage at 150/160 Federal Street (entrance on High Street opposite 99 High Street).

 State Street Corporation
225 Franklin Street
Boston, MA 02110-2804

NOTICE OF 2002 ANNUAL MEETING OF STOCKHOLDERS

Time	10:00 a.m., Eastern Time
Date	Wednesday, April 17, 2002
Place	225 Franklin Street, Fifth Floor, Boston, Massachusetts
Purpose	1.	To elect five directors;
	2.	To vote on an amendment to the 1997 Equity Incentive Plan to increase the number of shares available for issuance under the plan;
	3.	To approve the amended performance goals under the 1997 Equity Incentive Plan;
	4.	To vote on a stockholder proposal to request the directors to redeem the outstanding rights under our Rights Agreement;
	5.	To vote on a stockholder proposal to exempt the Board of Directors from Massachusetts General Laws, Chapter 156B, Section 50A(a); and
	6.	To vote on a stockholder proposal, if properly raised at the meeting, to amend the By-Laws applicable to the Audit Committee and independent auditors, self-dealing and interlocking directorships.
Record Date	The directors have fixed the close of business on February 28, 2002 as the record date for determining stockholders entitled to notice of and to vote at the meeting.
Meeting Admission	For security clearance at public facilities in Boston you will be asked to present a valid picture identification such as a driver’s license or passport. If your State Street stock is held in a brokerage account or by a bank or other nominee, you are considered the beneficial owner of shares held in street name, and these proxy materials are being forwarded to you by your broker or nominee. Your name does not appear on the list of stockholders. If your stock is held in street name, you should also bring with you a letter or account statement showing that you were the beneficial owner of the stock on the record date in order to be admitted to the meeting.
Voting by Proxy	Please submit a proxy as soon as possible so your shares can be voted at the meeting. You may submit your proxy by mail. If your stock is held in the name of a broker, bank or other nominee, you may have the choice of instructing the record holder as to the voting of your shares over the Internet or by telephone. Follow the instructions on the form you receive from your broker or bank.

	By Order of the Board of Directors,
	Maureen Scannell Bateman
March 11, 2002	Secretary

State Street Corporation
225 Franklin Street
Boston, MA 02110-2804

STATE STREET CORPORATION
225 Franklin Street, Boston, Massachusetts 02110

PROXY STATEMENT
GENERAL INFORMATION

When was this proxy statement and the accompanying proxy scheduled to be sent to stockholders?

     This proxy statement and accompanying proxy are scheduled to be sent to stockholders beginning on March 11, 2002.

Who is soliciting my vote?

     The Board of Directors of State Street Corporation ("State Street") is soliciting your vote for the 2002 Annual Meeting of Stockholders.

How many votes can be cast by all stockholders?

        325,194,120 shares of Common Stock of State Street are outstanding and entitled to be voted at the meeting. Each share of Common Stock is entitled to one vote on each matter.

How do I vote?

        You may vote in person at the Annual Meeting or by proxy without attending the meeting. To vote by proxy please mark, date, sign and return the enclosed proxy in the enclosed envelope. If you vote by the enclosed proxy your shares will be voted at the meeting in accordance with your instructions or as provided in the proxy. If you do not give any instructions, your shares will be voted by the persons named in the proxy in accordance with the recommendations of the Board of Directors given below.

        If your stock is held in the name of a broker, bank or other nominee, you may have the choice of voting your shares over the Internet or by telephone. Follow the instructions on the form you receive from your broker or bank.

        To vote in person bring a form of personal identification with you. If your stock is held by a broker, bank or other nominee, bring an account statement or a letter from the record holder indicating that you own the shares as of the record date and first obtain from the record holder a proxy issued in your name.

        Participants in State Street’s Salary Savings Program will receive a voting direction form separately. State Street Bank and Trust Company, as trustee, will vote in accordance with written instructions from the participant and, where no instructions are received, the shares will be voted in accordance with the trust documents.

What are the Board’s recommendations on how to vote my shares?

    The Board of Directors recommends a vote:

• FOR election of the five directors (page 3)

• FOR the amendment to increase the authorized shares under the 1997 Equity Incentive Plan (page 20)

• FOR the approval of the amended performance goals under the 1997 Equity Incentive Plan (page 26)

• AGAINST a stockholder proposal to request the directors to redeem the outstanding rights under our Rights Agreement (page 26)

• AGAINST a stockholder proposal to exempt the Board of Directors from Massachusetts General Laws, Chapter 156B, Section 50A(a) (page 28)

• AGAINST a stockholder proposal to amend the By-Laws applicable to the Audit Committee and directors (page 31)

Who pays the cost for soliciting proxies?

        State Street will pay the cost of our proxy solicitor. The solicitation of proxies will be made primarily by mail. State Street has retained Morrow & Co., Inc. to aid in the solicitation of proxies for a fee of $10,000, plus expenses. Proxies may also be solicited personally, by telephone, fax and e-mail by employees of State Street and its principal subsidiary, State Street Bank and Trust Company (the "Bank"), without any additional remuneration. State Street will reimburse brokers, banks, custodians, other nominees and fiduciaries for forwarding these materials to their principals and for obtaining the authorization for the execution of proxies.

Can I change my vote?

        You may revoke your signed proxy at any time before it is voted by notifying the Secretary in writing, by returning a signed proxy with a later date, or by attending the meeting and voting in person. If your stock is held in street name, you must contact your broker or nominee for instructions as to how to change your vote.

What vote is required to approve each item?

        The five nominees for election as directors who receive a plurality of the shares voted for election of directors shall be elected directors (Item 1). The affirmative vote of a majority of all shares present in person or represented by proxy at the meeting and entitled to vote is necessary to approve the amendments under the 1997 Equity Incentive Plan (Items 2 and 3), and the stockholder proposal to request the directors to redeem the outstanding rights under our Rights Agreement (Item 4), although in order to list the shares issuable under Item 2 on the New York Stock Exchange, the total votes cast on Item 2 must represent over 50% in interest of all shares entitled to vote on the Item. The affirmative vote of 66 2/3% of all shares outstanding and entitled to vote is necessary to exempt the Board of Directors from Massachusetts General Laws, Chapter 156B, Section 50A(a) (Item 5). The affirmative vote of a majority of all shares outstanding and entitled to vote is necessary to approve the stockholder proposal to amend the By-Laws applicable to the Audit Committee and directors (Item 6).

How is the vote counted?

        Votes cast by proxy or in person at the Annual Meeting will be counted by the persons appointed by State Street to act as tellers for the meeting. A majority of the shares entitled to vote at the Annual Meeting constitutes a quorum. The tellers will count shares represented by proxies that withhold authority to vote for a nominee for election as a director only as shares that are present and entitled to vote for purposes of determining the presence of a quorum. None of the withheld votes will be counted as votes "for" a director. Shares properly voted to "abstain" on a particular matter are considered as shares that are entitled to vote for the purpose of determining a quorum but are treated as having voted against the matter.

        If you hold shares through a broker, bank or other nominee, generally the nominee may vote the shares for you in accordance with your instructions. Stock exchange and NASD rules prohibit a broker from voting shares held in a brokerage account on some proposals (a "broker non-vote") if the broker does not receive voting instructions from you. Under these rules, a broker may not vote in its discretion on Items 4, 5 and 6. Shares that are subject to a broker non-vote are counted for determining the quorum but as not entitled to vote on the particular matter, so without voting instructions a broker non-vote could occur on Item 4, Item 5 and Item 6. This will have no effect on whether the required vote has been received on Item 4, but will have the effect of the shares being voted against approval of Item 5 and Item 6.

Could other matters be decided at the Annual Meeting?

        We do not know of any other matters that may be presented for action at the meeting. Should any other business come before the meeting, the persons named on the enclosed proxy will have discretionary authority to vote the shares represented by such proxies in accordance with their best judgment.

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What happens if the meeting is postponed or adjourned?

        Your proxy may be voted at the postponed or adjourned meeting. You will still be able to change your proxy until it is voted.

ELECTION OF DIRECTORS

        In accordance with Massachusetts law and State Street’s By-Laws, the Board is divided into three classes of directors. Each class has a term of three years. Each director serves until his or her term expires and until his or her successor is duly elected and qualified. The Board determines the number of directors. There are currently 18 directors. Gregory L. Summe was appointed by the Board as a Class III director on June 21, 2001. Nicholas A. Lopardo, a Class III director, retired from the Board effective August 1, 2001. John M. Kucharski and Bernard W. Reznicek, each a Class III director, will be retiring from the Board at the expiration of their current term.

        Pursuant to the By-Laws, at a meeting on December 20, 2001, the Board of Directors fixed the number of directors at 16, effective at the time of the 2002 Annual Meeting. Five directors are to be elected at the meeting as Class III directors. Each of the nominees for election as a Class III director is currently a director. Diana Chapman Walsh, a Class II director, was designated as a Class III director by the Board at its December 20, 2001 meeting, effective April 16, 2002, in order to make the classes of directors as nearly equal in number as possible.

        It is intended that, unless you give contrary instructions, shares represented by proxies solicited by the Board of Directors will be voted for the election of the five nominees listed below as directors. We have no reason to believe that any nominee will be unavailable for election at the Annual Meeting. In the event that one or more nominees is unexpectedly not available to serve, proxies may be voted for another person nominated as a substitute by the Board, or the Board may reduce the number of directors to be elected at the Annual Meeting. Information relating to each nominee for election as director and for each continuing director, including his or her period of service as a director of State Street, principal occupation and other biographical material is shown below.

The Board of Directors unanimously recommends that you vote
FOR
each of these nominees for director. (Item 1 on your proxy card)

DIRECTORS TO BE ELECTED AT THE 2002 ANNUAL MEETING

Class III Nominees with Terms Expiring in 2005

TENLEY E. ALBRIGHT, M.D. Director since 1993

        Physician and surgeon. Dr. Albright, age 66, is Chairman of Western Resources, Inc., a holding company of varied real estate assets. She is consultant to and formerly chairman of the Board of Regents of the National Library of Medicine at National Institutes of Health. She is a director of West Pharmaceutical Services, Inc., the Whitehead Institute for Biomedical Research and the Massachusetts Society for Medical Research. She is a member of the corporation of Woods Hole Oceanographic Institution and New England Baptist Hospital and a member of the Harvard Medical School Information Technology Committee and serves on the Board of Visitors of the Harvard Medical Institute for Research and Education. Dr. Albright graduated from Harvard Medical School and Radcliffe College.

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NADER F. DAREHSHORI Director since 1990

        Chairman, President and Chief Executive Officer of Houghton Mifflin Company, publisher, a division of Vivendi Universal Publishing. Mr. Darehshori, age 65, is a director of OneBeacon Insurance Group and chairman of the Boston Public Library Foundation. He is a trustee of Wellesley College, the WGBH Educational Foundation and the Dana-Farber Cancer Institute. Mr. Darehshori also serves on the boards of the Massachusetts Business Roundtable and the Association of American Publishers.

RONALD E. LOGUE Director since 2000

        President and Chief Operating Officer of State Street since December, 2001. He was elected Vice Chairman in 1999 and Chief Operating Officer in May 2000. Prior to that time, Mr. Logue, age 56, headed State Street’s Global Investor Services Group. He is responsible for State Street’s $6 trillion asset-servicing business, which provides custody, accounting, administration, global cash management, credit, risk management, investment operations outsourcing and other services to institutional investors worldwide. Mr. Logue joined State Street in 1990 as head of the Mutual Fund Custody Division. Mr. Logue is a director of the Metropolitan Boston Housing Partnership and co-chair of the Leadership Division of the United Way. He received B.S. and M.B.A. degrees from Boston College.

GREGORY L. SUMME Director since 2001

        Chairman, Chief Executive Officer and President of PerkinElmer, Inc., a global technology company which provides products and systems to the life sciences, analytical instruments, and optoelectronics markets. Prior to joining PerkinElmer in 1998, Mr. Summe, age 45, was with AlliedSignal, serving successively as the president of general aviation avionics, aerospace engines and the automotive products group. Prior to that he was general manager of commercial motors at General Electric and a partner at McKinsey & Co. Mr. Summe serves as a director of TRW, Inc., a trustee of the Fessenden School and a member of the Singapore-US Business Council. He holds B.S. and M.S. degrees in electrical engineering from the University of Kentucky and the University of Cincinnati and an M.B.A. from the Wharton School of the University of Pennsylvania.

DIANA CHAPMAN WALSH Director since 1997

        President of Wellesley College. Prior to becoming President of Wellesley College, Dr. Walsh, age 57, was Professor and Chairman, Department of Health and Social Behavior, at the Harvard School of Public Health. She serves on the board of directors of the Consortium on Financing Higher Education and as chair of the American Council on Education Commission on International Education. She is a trustee of Amherst College. Dr. Walsh received a B.A. degree from Wellesley College, M.S. and Ph.D. degrees from Boston University and Doctor of Humane Letters, honorus causa, from Boston University and Deree College, American College of Greece.

CONTINUING DIRECTORS WITH TERMS EXPIRING IN 2003

Class I

I. MACALLISTER BOOTH Director since 1990

        Retired Chairman, President and Chief Executive Officer of Polaroid Corporation, a manufacturer of instant image recording products. Mr. Booth, age 70, is a director of Western Digital Corporation and past chairman of the national board of directors of INROADS. He received B.S. and M.B.A. degrees from Cornell University.

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TRUMAN S. CASNER Director since 1990

        Of counsel to the law firm of Ropes & Gray. Mr. Casner, age 68, received an A.B. degree from Princeton University in 1955 and an LL.B. from Harvard Law School in 1958. He served as law clerk to Chief Justice Wilkins of the Massachusetts Supreme Judicial Court and joined Ropes & Gray in 1959, becoming a partner in 1968 and of counsel in 2002. He is a trustee of the Museum of Science, Boston, chairman of the corporation and past president of Belmont Hill School, and a member of the corporation of Woods Hole Oceanographic Institution. He is a member of the American Law Institute.

ARTHUR L. GOLDSTEIN Director since 1995

        Chairman and Chief Executive Officer of Ionics, Incorporated, an international company involved in the purification and treatment of water. Mr. Goldstein, age 66, is a director of Cabot Corporation. He is a member of the National Academy of Engineering and its Industry Advisory Board. He is a trustee of California Institute of Technology, Massachusetts General Physicians’ Organization, Inc. and Dana-Farber/Partners Cancer Care, Co-Chair of the Committee on Industrial Relations and Ventures of Partners HealthCare, and a director of Partners HealthCare System, Inc., Jobs for Massachusetts, Inc. and the Massachusetts High Technology Council. Mr. Goldstein received a B.S. degree in chemical engineering from Rensselaer Polytechnic Institute, an M.S. in chemical engineering from the University of Delaware and an M.B.A. from Harvard Business School.

DENNIS J. PICARD Director since 1991

        Chairman Emeritus of Raytheon Company, with products and services in commercial and defense electronics and business and special mission aircraft. Mr. Picard, age 69, joined Raytheon in 1955 and retired in 1999. He is a member of the National Academy of Engineering, president and an honorary fellow of the American Institute of Aeronautics and Astronautics and a life fellow of the Institute of Electrical and Electronic Engineers. Mr. Picard is a trustee of Northeastern University, a director of the Discovery Museums and a member of the Business Council. He is a graduate of Northeastern University and holds honorary doctorates from Northeastern University, Merrimack College and Bentley College.

RICHARD P. SERGEL Director since 1999

        President, Chief Executive Officer and Director of National Grid U.S.A. since 1999, the successor to New England Electric System (NEES), an electric power provider. Mr. Sergel, age 52, joined NEES in 1978. He is a director of National Grid Group plc, New England Power Company, Edison Electric Institute, Jobs for Massachusetts and the Greater Boston Chamber of Commerce and a trustee of the Worcester Art Museum. Mr. Sergel received a B.S. degree from Florida State University, an M.S. from North Carolina University and an M.B.A. from the University of Miami. He served in the United States Air Force.

DAVID A. SPINA Director since 1989

        Chairman and Chief Executive Officer of State Street since January 1, 2001. Prior to that date Mr. Spina, age 59, was President and Chief Executive Officer. He joined State Street in 1969 and has held a variety of positions with State Street, including chief operating officer, chief financial officer and treasurer. He is chairman of the United Way of Massachusetts, vice chairman of the Massachusetts Taxpayers Foundation, Inc., a director of Jobs for Massachusetts, a corporator of the Dana Hall School and chairman emeritus of the Massachusetts Housing Investment Corporation. Mr. Spina holds a B.S. degree from the College of the Holy Cross and an M.B.A. from Harvard University. He was an officer in the United States Navy from 1964 to 1969 serving a tour of duty in Vietnam.

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CONTINUING DIRECTORS WITH TERMS EXPIRING IN 2004

Class II

DAVID P. GRUBER Director since 1997

        Retired Chairman, Chief Executive Officer and Director of Wyman-Gordon Company, a manufacturer of forging, investment casting and composite airframe structures for the commercial aviation, commercial power and defense industries. Mr. Gruber, age 60, joined Wyman-Gordon in 1991 and retired in 1999. He is a member of the board of trustees of Manufacturers’ Alliance for Productivity and Innovation, chairman of the Worcester Polytechnic Institute Mechanical Engineering Advisory Committee and a member of the board of directors of Novelos Therapeutics Inc. and Worcester Municipal Research Bureau. He has a B.S. degree from Ohio State University.

LINDA A. HILL Director since 2000

        Wallace Brett Donham Professor of Business Administration at Harvard University. Dr. Hill, age 45, is faculty chair, Leadership Initiative and Young Presidents’ Organization Presidents’ Seminar. She is a member of the board of directors of Cooper Industries, the boards of trustees of the Rockefeller Foundation, Bryn Mawr College and the Children’s Museum, Boston, and the board of overseers of the Beth Israel Deaconess Medical Center. Dr. Hill received an A.B. degree in psychology from Bryn Mawr College, an M.A. in educational psychology from the University of Chicago and a Ph.D. in behavioral sciences from the University of Chicago.

CHARLES R. LAMANTIA Director since 1993

        Retired Chairman and Chief Executive Officer of Arthur D. Little, Inc., which provides management, technology and environmental consulting services. Dr. LaMantia, age 62, is a member of the board of Marathon Technologies and the advisory board of StoneGate Partners, IntellectExchange and several non-profit research and educational institutions. Dr. LaMantia received B.A., B.S., M.S. and Sc.D. degrees from Columbia University and attended the Advanced Management Program at Harvard Business School.

ALFRED POE Director since 1994

        Private Investor pursuing startups in the functional food business. Mr. Poe, age 53, was chief executive officer of MenuDirect Corporation, a direct home delivery prepared food service from 1997 to 1999. From 1991 to 1996 he was a corporate vice president of Campbell Soup Company and president of the Meal Enhancement Group. He is a member of the board of directors of Polaroid Corporation, B&G Foods, Inc. and the Executive Leadership Council. Mr. Poe holds a B.S. degree from Polytechnic Institute of Brooklyn and an M.B.A. from the Harvard Graduate School of Business.

ROBERT E. WEISSMAN Director since 1989

        Chairman, Shelburne Investments. Mr. Weissman, age 61, was formerly the Chairman and Chief Executive Officer of IMS Health Incorporated, a provider of information to the pharmaceutical and healthcare industries. He is a director of Pitney Bowes, Inc. and Cognizant Technology Solutions Corp. Mr. Weissman is a member of the Listed Company Advisory Committee of the New York Stock Exchange and a member of the board of trustees of Babson College and the advisory board of Broadview Capital. He received a degree in Business Administration from Babson College.

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General Information

        The Board of Directors has the overall responsibility for the conduct of our business. Of the 18 directors currently in office, 16 are outside directors and 2 are executive officers of State Street. The Board of Directors held 6 meetings during 2001 and each of the directors attended 75% or more of the total of all meetings of the Board and of the committees of the Board on which each director served during the year. Each member of the Board, except Mr. Poe, Mr. Reznicek and Mr. Weissman, is also a member of the Board of Directors of the Bank. The Board of Directors of the Bank held 11 meetings during 2001. Each member of State Street’s Executive Committee and the Examining and Audit Committee is also a member of the corresponding committee of the Bank, and members customarily hold joint meetings of both committees.

        The Board of Directors has the following committees to assist it in carrying out its responsibilities:

        The EXECUTIVE COMMITTEE is authorized to exercise all the powers of the Board of Directors that may be legally delegated to it by the Board in the management and direction of the business and affairs of State Street, including the review and approval of policies for the extension of credit, investment of assets and financial management, and monitoring activities under these policies. The Committee reports periodically to the Board. Its members are Truman S. Casner, Chair; I. MacAllister Booth; David P. Gruber; Charles R. LaMantia, and David A. Spina. During 2001, the Committee held 12 meetings.

        The EXAMINING AND AUDIT COMMITTEE oversees the operation of a comprehensive system of internal controls designed to ensure the integrity of State Street's financial reports and compliance with laws, regulations and corporate policies; monitors communication with external auditors and bank regulatory authorities, and recommends the selection of the independent auditors. Its members are John M. Kucharski, Chair; Tenley E. Albright; I. MacAllister Booth, and Charles R. LaMantia. During 2001, the Committee held 8 meetings.

        The EXECUTIVE COMPENSATION COMMITTEE sets and administers policies which relate to the compensation system for State Street's executive officers and other incentive programs of State Street. Its members are Robert E. Weissman, Chair; I. MacAllister Booth; Nader F. Darehshori; Bernard W. Reznicek, and Richard P. Sergel. None of these individuals is or has been an officer or employee of State Street or the Bank. During 2001, the Committee held 6 meetings.

        The NOMINATING COMMITTEE recommends nominees for directors of State Street and the Bank. In carrying out its responsibility of finding the best qualified directors, the Committee will consider proposals from a number of sources, including recommendations for nominees submitted upon timely written notice to the Secretary of State Street by stockholders. Its members are Arthur L. Goldstein, Chair; Dennis J. Picard; Alfred Poe, and Diana Chapman Walsh. During 2001, the Committee held 2 meetings.

Compensation of Directors

        Directors who are also employees of State Street or the Bank do not receive any compensation for serving as directors or as members of committees. Directors who are not employees of State Street or the Bank received an annual retainer of $50,000, payable at their option in shares of Common Stock of State Street or in cash, plus a fee of $1,500 for each meeting of the Board of Directors and each committee meeting attended, as well as travel accident insurance and reimbursement for travel expenses, and an award of 956 shares of deferred stock payable

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when the director leaves the Board or retires, for the period April 2001 through March 2002. For this period, all outside directors elected to receive their annual retainer in shares of Common Stock. The directors may elect to defer either 50% or 100% of all fees and compensation payable during any calendar year pursuant to State Street’s Deferred Compensation Plan for Directors. Three directors have elected to defer compensation.

BENEFICIAL OWNERSHIP OF SHARES

Management

        The table below sets forth the number of shares of Common Stock of State Street beneficially owned (as determined under the rules of the Securities and Exchange Commission) by each director, the chairman and chief executive officer and the four other most highly compensated executive officers and by the group consisting of those persons and other executive officers as of the close of business on February 1, 2002 based on information furnished by each person. None of the individuals owned beneficially as much as 1% of the outstanding shares of Common Stock. The group in the aggregate beneficially owned 1.267% of the outstanding shares.

Name	Amount and Nature of Beneficial Ownership
Tenley E. Albright, M.D.	48,314	(1)(7)
Maureen Scannell Bateman	135,523	(2)
I. MacAllister Booth	28,050	(3)(7)
Truman S. Casner	38,512	(4)(7)
Nader F. Darehshori	19,023	(7)
Arthur L. Goldstein	14,767	(7)
David P. Gruber	10,353	(7)
Timothy B. Harbert	348,900	(2)(7)
Linda A. Hill	2,380	(7)
John M. Kucharski	26,709	(7)
Charles R. LaMantia	22,251	(5)(7)
Ronald E. Logue	372,004	(2)(7)
Dennis J. Picard	30,826	(7)
Alfred Poe	17,895	(7)
Bernard W. Reznicek	23,039	(7)
Richard P. Sergel	5,270	(7)
David A. Spina	2,183,696	(2)(6)
Gregory L. Summe	1,634	(7)
John R. Towers	272,157	(2)(7)
Diana Chapman Walsh	9,585	(7)
Robert E. Weissman	37,275	(7)
All of the above and other executive officers as a group (23 persons)	4,139,994	(2)(7)

_________________

(1) Includes 14,417 shares held in trust for a family member pursuant to a trust of which Dr. Albright is a co-trustee and 8,400 shares owned by a family member with respect to all of which shares she disclaims beneficial ownership.

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(2)	Includes shares which may be acquired within 60 days through the exercise of stock options as follows: Ms. Bateman, 126,468; Mr. Harbert, 164,438; Mr. Logue, 270,134; Mr. Spina, 1,177,334; Mr. Towers, 256,134, and the group, 2,434,678.
(3)	Includes 3,200 shares held in trust for the benefit of family members with respect to which shares Mr. Booth disclaims beneficial ownership.
(4)	Includes 8,000 shares as to which Mr. Casner has sole investment power and shared voting power.
(5)	Includes 4,000 shares as to which Mr. LaMantia has shared voting power and investment power.
(6)	Includes 84,000 shares owned by members of Mr. Spina's family with respect to which shares he disclaims beneficial ownership.
(7)	Includes shares held in deferred stock accounts as follows: Dr. Albright, 6,923; Mr. Booth, 8,232; Mr. Casner, 8,126; Mr. Darehshori, 8,126; Mr. Goldstein, 5,873; Mr. Gruber, 5,523; Mr. Harbert, 156,754; Dr. Hill, 1,206; Mr. Kucharski, 7,799; Dr. LaMantia, 6,923; Mr. Logue, 37,750; Mr. Picard, 7,724; Mr. Poe, 6,441; Mr. Reznicek, 7,799; Mr. Sergel, 4,488; Mr. Summe, 819; Mr. Towers, 3,524; Dr. Walsh, 4,187; Mr. Weissman, 11,467, and the group, 304,496.

Section 16(a) Beneficial Ownership Reporting Compliance

        Section 16(a) of the Securities Exchange Act of 1934 requires State Street's directors and certain of its officers to send reports of their ownership and of changes in ownership of the Common Stock to the Securities and Exchange Commission and the New York Stock Exchange. Based on State Street’s review of the reports it has received, State Street believes that all of its directors and officers complied with all reporting requirements applicable to them with respect to transactions in 2001.

Certain Relationships and Related Transactions

        During 2001 certain directors and executive officers of State Street, and various corporations and other entities associated with such directors, were customers of the Bank and its affiliates and had ordinary business transactions with the Bank and its affiliates. The transactions include loans and commitments made in the ordinary course of the Bank's business and on substantially the same terms, including interest rate and collateral, as those prevailing at the time for comparable transactions with unrelated persons with no more than normal risk of collection nor did they present other unfavorable features. During 2001, the Bank and other subsidiaries of State Street have used products or services of a subsidiary of Ionics, Incorporated, with which one of the directors of State Street was associated. Additional transactions of this nature may be expected to take place in the ordinary course of business in the future. Ropes & Gray, a law firm of which Mr. Casner, a director of State Street, was a partner and is now of counsel, was retained by State Street to handle certain legal matters during the past year. It is anticipated that the firm will continue to provide legal services in the current year.

REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE

        The Executive Compensation Committee of the Board of Directors (the "Committee") furnishes the following report on Executive Compensation.

Policy

        State Street combines information technology with financial expertise to provide sophisticated investors with an integrated range of products and services spanning the investment cycle. Our goal is to be the leading

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company serving sophisticated investors worldwide. The executive compensation program, by providing competitive pay and aligning executive compensation with our business strategy, is designed to attract and retain superior executives, to focus these individuals on achieving State Street's objectives and to reward executives for meeting specific short-term and long-term performance targets. The executive compensation program places emphasis on challenging performance goals, business growth and sustainable real growth in earnings per share. By including stock-based compensation plans as a major part of the compensation strategy, we link closely the goals of stockholders and executives. Twenty-nine executives participated in the executive compensation program in 2001. The chairman and chief executive officer, the president and chief operating officer, vice-chairmen and the executive vice presidents were considered executives for this purpose.

        The principles of the executive compensation strategy are applied throughout State Street. Because executives have the greatest opportunity to influence long-term performance, a greater proportion of their compensation is linked to the achievement of long-term financial goals and to stock price. Other individuals who manage business units or have corporate functional or staff responsibilities have a significant opportunity to influence State Street's results, and a sizable portion of their compensation is related to the achievement of financial goals of both the respective business unit and State Street as a whole. In addition to executives, many officers and managers who make significant contributions participate in the equity incentive programs and in a variety of annual incentive plans.

        The Committee is comprised entirely of independent, non-employee directors, each of whom also qualifies as an "outside director" for purposes of Section 162(m) of the Internal Revenue Code. The Committee is responsible for setting and administering policies which relate to executive compensation, equity incentive programs and other incentive programs. The Committee on an annual basis reviews and evaluates the executive compensation program.

        The Committee met six times in 2001 and provided reports to the Board of Directors about its activities at each of these meetings. In conjunction with its annual review and evaluation of the executive compensation program, the Committee engaged its own independent compensation consultant. The consultant worked for the Committee in reviewing the executive compensation program, in reviewing a reference group of public companies against which State Street’s executive compensation and financial performance was compared, and in considering modifications to existing plans. The Committee, with assistance from its independent consultant, validated this group of companies as a reference group against which to compare compensation practices and competitive levels of compensation. This group includes large U.S. bank holding companies and U.S.-based financial services companies.

        The Committee believes that State Street's most direct competitors for executives are not necessarily the same companies that would be included in a peer group established to compare stockholder returns. Therefore, the reference companies used for comparative compensation purposes contain some overlap with, but are not identical to, the companies in the S&P Financial Index used for performance comparison under "Stockholder Return Performance Presentation" in this proxy statement.

        The elements of the executive compensation program currently consist of base salary, annual bonus, performance awards, stock options, deferred stock awards and restricted stock awards. These are integrated components where salary and bonus reflect one-year results, performance awards reflect two-year results, and stock options, deferred stock awards and restricted stock awards reflect long-term stock price appreciation. As a result of its 2001 review, the Committee has determined that the fundamental elements of this compensation plan

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are appropriate for a program that is intended to support State Street's business strategy, provide competitive compensation and create value for stockholders. The Committee's policies with respect to each of these elements, including the basis for the compensation reported for 2001 to Mr. Spina, are discussed below.

Base Salaries

        The Committee recommended to the Board of Directors the base salary of Mr. Spina and Mr. Logue, both of whom were members during 2001 of the Board of Directors, and reviewed the salaries of the other executives. Base salaries for executives are determined by subjectively evaluating the responsibilities of the position, the strategic value of the position to State Street, and the experience and performance of the individual. No specific formula is used to set base salaries. The Committee has determined, however, that to be competitive it is appropriate for State Street’s executive salary levels to be near the median of the reference group. Annual adjustments, if any, to base salary levels are determined by reviewing market compensation data and subjectively considering the overall scope of each position and its strategic importance, the performance of State Street, an evaluation of the individual’s performance, and the length of time since the individual’s last salary adjustment. The Committee also considers the range of salary increases which are awarded to all employees.

        With respect to the base salary granted to Mr. Spina for 2001, the Committee reviewed all of the factors noted above, including data supplied by the compensation consultant on market levels of pay for the chief executive officer at companies in the reference group and the performance of State Street, specifically earnings per share and return on equity, under the leadership of Mr. Spina. No particular weight was applied to any single factor in making the Committee’s determination. As compared to salaries paid to the chief executive officer position in the reference group, Mr. Spina’s salary was slightly above median.

Annual Bonuses

        Executives are eligible for annual cash bonuses under the provisions of the Senior Executive Annual Incentive Plan, which was approved at the 2001 annual meeting of stockholders. Each year the Committee assigns to each executive a minimum, target and maximum bonus award opportunity, stated as a percent of salary. The levels of bonus opportunity assigned to each executive are determined by reviewing competitive compensation data supplied by the compensation consultant, the level of responsibility of each executive and the strategic importance of the executive’s position. At its December 2000 meeting, the Committee assigned a range of bonus opportunity for Mr. Spina for 2001 at a minimum award of $0, and a maximum award of $2,500,000. The actual level of bonus earned is based upon achievement of specific predetermined performance targets established by the Committee. Annually, the Committee reviews State Street’s earnings per share growth, return on equity performance, revenue growth and total stockholder return for the one- and five-year period as compared to the S&P Financial Index. In establishing performance targets for the annual incentive plan, the Committee considers this data along with State Street’s long-term financial goals, the specific financial goals for the following year and the business environment in which State Street is operating. The Committee then establishes the measures that will be used (based on the measures available under the Senior Executive Annual Incentive Plan), the weighting of the measures and the specific performance targets at which various levels of bonus will be earned.

        The 2001 performance targets established by the Committee were based on earnings per share and return on equity. The Committee established a performance/payout schedule which identified various objective earnings per share and return on equity levels at which specific awards would be earned.

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        At its meeting in February 2002, the Committee certified that specific performance goals had been achieved and approved a total bonus payment for 2001 of $1,687,500 for Mr. Spina, $750,000 in cash and the balance in stock options covering 53,600 shares. Bonuses for other participants in the plan receiving bonuses totaled $997,000 in cash and stock options covering 71,200 shares for the year. Bonuses for all 29 executives in the program totaled $4,547,500 in cash and stock options covering 324,700 shares for the year.

        Federal law and regulations provide that in order to qualify for a tax deduction (See Tax Law at the end of this report), compensation in excess of $1 million to a public corporation’s top executive officers must qualify as performance-based compensation. In order to qualify as exempt performance-based compensation, bonuses must be earned under a plan, the material terms of which have been approved by stockholders. In general, the performance measures under such a plan must be reapproved by stockholders every five years. The Senior Executive Annual Incentive Plan was approved by stockholders at the 2001 Annual Meeting.

Performance Awards/Equity Awards

        Longer term compensation is provided to executives in the form of both performance awards and equity awards. Described elsewhere in this proxy statement are amendments to the 1997 Equity Incentive Plan to increase the number of shares under the plan and to approve amended performance goals, which stockholders are being asked to approve at the 2002 Annual Meeting. If approved, the amendment to the 1997 Equity Incentive Plan will be in effect for awards beginning in the 2002 plan year, and for performance awards beginning in the 2003-2004 plan year.

        Performance Awards. Performance awards represent a contingent right to a cash payment, based upon the price of State Street’s stock, in the event State Street meets specified performance goals over a specified time period following the grant. Performance awards have been granted to executives once every two years or at the time an individual joined the executive group. Performance award payments, if any, are made every two years.

        The Committee granted performance awards under the 1997 Equity Incentive Plan to the executive group in December 2000. This grant included an award of 145,200 units to Mr. Spina. Additional grants were made in September 2001 to four individuals who joined the executive group. All of these grants had a two-year performance period covering the years 2001 and 2002. The Committee established performance targets for the 2001-2002 performance period for these grants, tied to a combination of financial measures, based upon return on equity, earnings per share and total stockholder return.

        As soon as practicable after the end of the two-year performance period ending December 31, 2002, a cash payment will be calculated based upon the number of performance awards earned, if any, times the market value of State Street’s Common Stock at the end of the performance period. In this way, the final cash value of the performance awards relates directly to both corporate financial performance in determining how many awards are earned and stock price appreciation in determining the cash value of the units earned.

        Stock Options. Stock options are granted to executives annually, although the Committee has the authority to grant options at any time and has in the past made additional grants in conjunction with new responsibilities assumed by members of the executive group. The Committee selects the executives to receive options and sets the size of option awards based upon subjective factors, including: the perceived importance of the executive’s contribution to the success of State Street, similar to the subjective factors considered in setting base salary; a target level of long-term incentive opportunity with respect to the reference group, based upon data supplied by

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the compensation consultant, and the amount of and annual value of the two-year performance awards which were granted to the respective executive in that year or in the prior year. The exercise price of options is equal to the market price of the shares at the time of the grant. The options have a ten-year life and become exercisable in equal installments over a three-year period. Because stock options are granted at market price, the value of the stock options is dependent upon an increase in the price of State Street stock. The Committee views stock option grants as a part of the executive’s annual total compensation package. The amount of stock options outstanding at the time of a new grant or granted in prior years does not serve to increase or decrease the size of the new grant.

        At its meeting in December 2001 the Committee granted Mr. Spina options to purchase 400,000 shares, based upon a review of all of the factors noted above; no particular weight was applied to any single factor in making the Committee’s determination.

        Deferred and Restricted Stock. Deferred and restricted stock awards are used to recruit, motivate and retain high-potential individuals. Typically, deferred and restricted stock awards are made to individuals who are not members of the executive group. However, the Committee may grant deferred and restricted stock to members of the executive group as part of a recruitment package or based upon subjective factors to reward what is considered to be exceptional performance. Two members of the executive group received deferred stock and none received restricted stock under the 1997 Equity Incentive Plan in 2001. The awards were made without payment from the recipients.

Tax Law

        Section 162(m) of the Internal Revenue Code generally precludes State Street from taking federal income tax deductions for compensation in excess of $1,000,000 per year for the chief executive officer and any of its four other highest paid executive officers, if those individuals are employed as officers on the last day of the tax year. Generally, however, performance-based compensation that satisfies the requirements of Section 162(m) is not subject to the deduction limit. The Committee reviewed all elements of the executive compensation program against the standards for qualifying for the tax deduction. Stock option and performance awards under the 1997 Equity Incentive Plan and awards under the Senior Executive Annual Incentive Plan have been designed to qualify as performance-based compensation, with the intended result that the deduction of compensation under these plans, including compensation from the exercise of options or from performance awards, would not be affected by the Section 162(m) deduction limits. The deductibility of a portion of a bonus earned in 2001 under the State Street Global Advisors Incentive Plan was limited by Section 162(m).

        The restricted stock awards are not intended to qualify for exemption from the Section 162(m) limits.

        In administering the executive compensation program, the Committee will continue to consider whether the deductibility of compensation may be limited under Section 162(m) and, in appropriate cases, may structure such compensation so as to minimize or avoid the effect of those limitations.

Conclusion

        Through the program described above, executive compensation is linked directly to State Street's performance, growth in stockholder value and each executive's contribution to those results. As State Street’s business changes, particularly in light of our global expansion, and with the increasingly competitive

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and complex business and regulatory environment, the continuing assessment of the compensation structure and goals is required to assure that compensation incentives remain competitive, consistent with stockholder interest and closely tied to continuing growth in stockholder value.

1648:
	Submitted by,
	Robert E. Weissman, Chair
	I. MacAllister Booth
	Nader F. Darehshori
	Bernard W. Reznicek
	Richard P. Sergel

REPORT OF THE AUDIT COMMITTEE

        The Examining and Audit Committee (the "Audit Committee") of the Board of Directors, which consists entirely of directors who meet the independence and experience requirements of the New York Stock Exchange, has furnished the following report:

        On behalf of State Street’s Board of Directors, the Audit Committee oversees the operation of a comprehensive system of internal controls designed to ensure the integrity of State Street’s financial reports and compliance with laws, regulations and corporate policies.

        Consistent with this oversight responsibility, the Audit Committee has reviewed and discussed with management the audited financial statements for the year ended December 31, 2001. Ernst & Young LLP, State Street's independent auditors, issued their unqualified report dated January 16, 2002 on State Street's financial statements.

        The Audit Committee has also discussed with Ernst & Young LLP the matters required to be discussed by AICPA Statement on Auditing Standards No. 61, "Communication with Audit Committees". The Audit Committee has also received the written disclosures and the letter from Ernst & Young LLP required by Independence Standards Board Standard No. 1, "Independence Discussions with Audit Committees", and has conducted a discussion with Ernst & Young LLP relative to its independence. The Audit Committee has considered whether Ernst & Young LLP’s provision of non-audit services is compatible with its independence.

        Based on these reviews and discussions, the Audit Committee recommended to the Board of Directors that State Street's audited financial statements for the year ended December 31, 2001 be included in State Street’s Annual Report on Form 10-K for the fiscal year then ended.

Submitted by,

John M. Kucharski, Chair

Tenley E. Albright, M.D.

I. MacAllister Booth

Charles R. LaMantia

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EXECUTIVE COMPENSATION

        The table below shows information concerning the annual and long term compensation paid by State Street and its subsidiaries, including the Bank, to the chairman and chief executive officer and the four other most highly compensated executive officers of State Street (the "Named Executive Officers") for the periods shown.

Summary Compensation Table

					Long Term Compensation
	Annual Compensation				Awards		Payouts
Name and Principal Position	Year	Salary      ($)	Bonus     ($)(1)	Other Annual Compensation           ($)	Restricted Stock Awards      ($)(2)	Securities Underlying Options      (#)(3)	Long Term Incentive Payouts      ($)	All Other Compensation          ($)(4)
David A. Spina Chairman and Chief Executive Officer	2001 2000 1999	983,369 821,276 701,266	1,687,500 1,168,200 741,967	0 0 0	0 0 0	400,000 250,800 200,000	0 8,385,029 0	29,501 24,638 13,050
Ronald E. Logue President and Chief Operating Officer (5)	2001 2000 1999	733,355 644,196 545,019	1,600,000 702,100 425,612	0 0 0	1,962,056 0 0	257,600 156,400 133,200	0 3,957,536 0	22,001 19,326 4,800
John R. Towers Vice Chairman and Chief Administrative Officer	2001 2000 1999	579,175 491,694 393,758	675,000 486,750 266,005	0 0 0	0 0 0	161,000 88,600 69,800	0 3,091,825 0	5,100 14,751 8,400
Timothy B. Harbert Executive Vice President	2001 2000 1999	585,273 489,250 392,528	337,500 1,459,400 677,570	0 0 0	879,213 1,507,050 0	128,800 54,200 25,000	0 1,113,057 0	17,558 5,100 8,317
Maureen Scannell Bateman Executive Vice President and General Counsel	2001 2000 1999	485,011 430,010 379,262	339,750 379,960 237,742	0 0 0	0 0 0	61,200 56,700 50,000	0 1,545,913 0	14,550 12,900 8,175

(1)	Includes cash bonuses in the following amounts: Mr. Spina, $750,000; Mr. Logue, $400,000; Mr. Towers, $300,000; Mr. Harbert, $150,000, and Ms. Bateman, $151,000, and stock options in lieu of cash covering shares in the amounts as follows: Mr. Spina, 53,600 shares; Mr. Logue, 28,600 shares; Mr. Towers, 21,400 shares; Mr. Harbert, 10,700 shares, and Ms. Bateman, 10,800 shares, each at an exercise price of $49.705 per share, exercisable on February 21, 2004, and subject to the condition of continued service with State Street through that date. These stock options were granted in 2002 and therefore do not appear in the table below. Mr. Logue also received a separate cash bonus in the amount of $700,000 in 2001.
(2)	Dividends are paid on Restricted Stock Awards and dividend equivalents are paid on Deferred Stock Awards. Includes awards to Mr. Logue of 37,750 shares of deferred stock at a value of $1,962,056 based on the closing price of State Street’s Common Stock on December 20, 2001 and Mr. Harbert of 22,222 shares of deferred stock at a value of $879,213 based on the closing price of State Street’s Common Stock on September 20, 2001. Based on the fair market value of State Street’s Common Stock on December 31, 2001, the aggregate number and value of all restricted and deferred stock holdings on such date were 37,750 shares and $1,972,438 for Mr. Logue, and 162,754 shares and $8,503,897 for Mr. Harbert.
(3)	Reflects a two-for-one stock split effective April, 2001. Does not include the bonus stock options referred to in footnote (1) above.
(4)	Reflects State Street's contributions of $5,100 to the Salary Savings Program and company credits to the State Street Corporation 401(k) Restoration and Voluntary Deferral Plan as follows: Mr. Spina, $24,401; Mr. Logue, $16,901; Mr. Harbert, $12,458, and Ms. Bateman, $9,450.
(5)	Elected President on December 1, 2001; previously was Vice Chairman.

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        These tables provide information with respect to option grants to and option exercises by the Named Executive Officers in 2001 and the value of the options held by them as of December 31, 2001.

Option Grants in Last Fiscal Year

Individual Grants
Name	Number of Securities Underlying Options Granted (#)(1)	Percent of Total Options Granted to Employees in Fiscal Year	Exercise or Base Price ($/Sh)	Expiration Date	Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Term (2)
					5%($)	10%($)
David A. Spina	400,000	7.2%	51.975	12/20/2011	13,074,719	33,133,906
Ronald E. Logue	257,600	4.6%	51.975	12/20/2011	8,420,119	21,338,235
John R. Towers	161,000	2.9%	51.975	12/20/2011	5,262,575	13,336,397
Timothy B. Harbert	128,800	2.3%	51.975	12/20/2011	4,210,060	10,669,118
Maureen Scannell Bateman	61,200	1.1%	51.975	12/20/2011	2,000,432	5,069,488

(1)	Options become exercisable in 33 1/3% installments over a three-year period commencing December 20, 2002. No SARs were granted.
(2)	Gains are reported net of the option exercise price, but before taxes associated with exercise. These amounts represent certain assumed rates of appreciation only, as set by the Securities and Exchange Commission. The actual value, if any, that the Named Executive Officer may realize from these options will depend on the gain in stock price over the exercise price when the options are exercised.

Aggregated Option Exercises in Last Fiscal Year and
Fiscal Year-End Option Values

Name	Number of Securities Underlying Options Exercised (#)	Value Realized ($)	Number of Securities Underlying Unexercised Options at December 31, 2001 (1)		Value of Unexercised In-the-Money Options at December 31, 2001 ($)(2)
			Exercisable	Unexercisable	Exercisable	Unexercisable
David A. Spina	--	--	1,177,334	633,866	36,602,205	1,283,945
Ronald E. Logue	--	--	270,134	406,266	4,125,760	852,695
John R. Towers	--	--	256,134	263,332	5,755,406	974,599
Timothy B. Harbert	--	--	164,438	173,266	4,647,447	182,159
Maureen Scannell Bateman	--	--	126,468	119,832	2,226,714	310,307

(1)	Reflects a two-for-one stock split effective April, 2001.
(2)	Represents the difference between the closing price of the stock on December 31, 2001 ($52.25) and the exercise price of the stock options.

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STOCKHOLDER RETURN PERFORMANCE PRESENTATION

        The graph presented below compares the cumulative total stockholder return on State Street's Common Stock to the cumulative total return of the S&P 500 Index and the S&P Financial Index for the five fiscal years which commenced January 1, 1997 and ended December 31, 2001. The cumulative total stockholder return assumes the investment of $100 in State Street's Common Stock and in each index on December 31, 1996 and assumes reinvestment of dividends. The S&P Financial Index is a publicly available measure of 72 of the Standard & Poor's 500 companies, representing 26 banking companies, 22 insurance companies, 22 diversified financial services companies and 2 real estate companies.

	1996	1997	1998	1999	2000	2001
State Street Corporation	$100	$182	$221	$232	$397	$336
S&P 500 Index	100	133	172	208	189	166
S&P Financial Index	100	148	165	172	216	196

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RETIREMENT BENEFITS

        Since January 1, 1990, the principal benefit formula under State Street's defined benefit plan (the "Retirement Plan") has been a cash balance formula. Under the cash balance formula, each participant has an account that is increased annually by interest at a specified rate and a contribution credit equal to a percentage of the participant's base salary for the calendar year. The contribution credit percentages are 4.0% for the first year of participation increasing to 11.25% for the thirtieth year and zero thereafter. Prior to 2001 eligible compensation consisted of base salary. Effective January 1, 2001, eligible compensation also includes overtime, bonuses and commissions. In the case of participants with benefits accrued prior to January 1, 1990, the cash balance account included an opening balance equal to the then present value of the participant’s accrued benefit. In general, participants who were employees on December 31, 1989 will receive the greater of their account balance or the benefit derived from a "grandfathered" formula if they retire from the plan. For a participant with 30 years of service, the grandfathered formula is equal to a benefit of 50% of final average pay minus 50% of the estimated Social Security benefit. For periods of service of less than 30 years, the benefit is reduced pro rata.

        Employees are enrolled in the Retirement Plan following the completion of one year of service and attainment of age 21. The normal retirement age is 65, although earlier retirement options are available. The Retirement Plan has a five-year vesting provision, and participants who are vested will receive their account balances or equivalent annuities if they leave the employ of State Street or the Bank before retirement.

        In order to comply with federal tax rules, the Retirement Plan limits the benefit that a participant may receive and the amount of compensation that may be taken into account for any participant in any year. State Street has adopted a supplemental retirement plan, as amended (the "1987 Supplemental Plan") to supplement the benefits under the Retirement Plan by payment of additional retirement benefits out of general funds of State Street. Each of the Named Executive Officers is included in the 1987 Supplemental Plan.

        State Street has also adopted a supplemental defined benefit pension plan (the "1995 Supplemental Plan") to provide certain key employees with retirement benefits and encourage the continued employment of such employees with State Street. In general, the 1995 Supplemental Plan provides for the payment of an annual benefit upon retirement at age 65 (or a reduced amount in the event of retirement at or after the age of 55 but prior to the age of 65), calculated as a straight life annuity, equal to 50% of such participant's final average earnings (highest average of any 5 consecutive years' earnings, as defined therein, during the last 10 years of employment) less annual benefits paid to such participant from the Retirement Plan, the 1987 Supplemental Plan and other retirement income payable to such participant under other pension plans of State Street or former employers of the participant. These benefits are subject to forfeiture in the event that the participant's employment with State Street terminates for any reason prior to reaching age 55 or completing 10 full years of employment with State Street. In addition, such benefits terminate if the participant engages in certain competitive activities within two years of termination. For certain participants, the 1995 Supplemental Plan also contains special benefits provisions that may apply in lieu of or in addition to the general provisions of the 1995 Supplemental Plan. Each of the Named Executive Officers participates in the 1995 Supplemental Plan. Under an agreement dated December 8, 1997, Ms. Bateman is entitled to receive additional supplementary pension benefits calculated consistent with the 1995 Supplemental Plan but with an earnings replacement percentage of 25% after five years of service, with an additional 5% for each additional year of service up to ten, after which Ms. Bateman would be covered by the regular 1995 Supplemental Plan formula.

        As of December 31, 2001, the credited years of service for each of the Named Executive Officers were as follows:   Mr. Spina, 28; Mr. Logue, 10; Mr. Harbert, 13; Mr. Towers, 17, and Ms. Bateman, 3. Current

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compensation covered by these retirement arrangements as of December 31, 2001 for each of these Named Executive Officers was as follows: Mr. Spina, $2,068,224; Mr. Logue, $1,402,132; Mr. Towers, $1,036,782; Mr. Harbert, $939,408, and Ms. Bateman, $839,968.

        The estimated annual aggregate benefits (which are not subject to a deduction for Social Security), expressed as a single life annuity, payable upon normal retirement to the Named Executive Officers assuming each continues to be employed by State Street until age 65 at his or her annual base salary and cash incentive compensation at December 31, 2001 are as follows: Mr. Spina, $1,034,112; Mr. Logue, $701,066; Mr. Towers, $518,391; Mr. Harbert, $469,704, and Ms. Bateman, $419,984.

Termination of Employment and Change of Control Arrangements

        State Street has employment agreements with Messrs. Spina, Logue, Towers, Harbert and Ms. Bateman which become operative following a change of control of State Street, as defined in the employment agreements. The employment agreements continue in effect while these executive officers are employed by State Street and remain in effect for a period of two years after a change of control. If the employment of any of these executive officers were to be terminated involuntarily, other than for cause or by reason of disability, following a change of control, the Named Executive Officers would become entitled to various benefits under the employment agreement, including payment of three times the executive officer's base salary and bonus. A termination by the executive officer for good reason, as defined in the agreement, following a change of control also results in entitlement to these benefits. The agreements provide that voluntary termination within a thirty-day window period following a specified number of months after a change of control will be treated for these purposes as a termination for good reason. If the executive officers each had been terminated in a qualifying termination on December 31, 2001, they would have been entitled to receive the following amounts as severance pay: Mr. Spina, $6,504,696; Mr. Logue, $4,326,348; Mr. Towers, $3,215,250; Mr. Harbert, $6,253,224, and Ms. Bateman, $2,609,904. The employment agreements also entitle the executive officers to additional gross-up payments to make up for taxes that may be imposed under the change-of-control payment excise tax provisions of the Internal Revenue Code. Each of the outstanding agreements pursuant to which stock options and performance awards were granted to Messrs. Spina, Logue, Towers, Harbert and Ms. Bateman by State Street also contains provisions for acceleration of vesting of stock options and payment of performance awards following a change of control.

        Ms. Bateman’s December 8, 1997 agreement also provides that in the event that her employment is terminated by her or by State Street without cause prior to December 2002, she will be entitled to severance benefits equal to one year’s salary plus bonus and to an annual benefit, calculated as a straight life annuity, of 20% of base salary and target bonus.

        State Street has an Executive Compensation Trust (the "Trust") to provide a source for payments required to be made to participants, including Messrs. Spina, Logue, Towers, Harbert and Ms. Bateman under the 1987 Supplemental Plan and the 1995 Supplemental Plan. The Trust has been partially funded in the amount of $28,832,323.The Trust is revocable until a change of control occurs, at which time it becomes irrevocable.

        A change of control is defined in the agreements to include the acquisition of 25% or more of State Street's then outstanding stock or other change of control as determined by regulatory authorities, a significant change in the composition of the Board of Directors, a merger or consolidation by State Street or the sale of substantially all of State Street's assets without certain approvals of the Board of Directors.

19

APPROVAL OF AN AMENDMENT INCREASING THE NUMBER OF SHARES AVAILABLE
UNDER THE 1997 EQUITY INCENTIVE PLAN

        On December 20, 2001, the Executive Compensation Committee of the Board of Directors (the "Committee") adopted, and the Board approved, subject to stockholder approval, an amendment to the 1997 Equity Incentive Plan, as amended ("1997 Plan") increasing the number of shares available under the 1997 Plan by 15,000,000 (less than 5% of total outstanding shares) to a total of 46,800,000 (adjusted to reflect the 2001 stock split).

        The Board approved the increase in the number of shares reserved for issuance under the 1997 Plan to ensure that State Street is able to continue to make awards at levels determined to be appropriate by the Committee and to meet the competitive situation created by the varied compensation programs of other companies.

        Under the 1997 Plan, an aggregate of 31,800,000 shares of Common Stock of State Street is currently authorized for issuance. The maximum number of shares for which any individual may be granted options or stock appreciation rights under the 1997 Plan during a calendar year is in each case 1,600,000. The maximum number of shares (or their equivalent fair market value in cash) that may be delivered to any individual under performance awards made under the 1997 Plan is 1,000,000. (The 31,800,000, 1,600,000 and 1,000,000 amounts are subject to adjustment upon certain occurrences and have been adjusted to reflect the 2001 stock split.) The maximum number of shares of Restricted Stock that may be delivered under the Plan will not exceed 25% of the total number of shares authorized for issuance. No awards may be made under the 1997 Plan after December 18, 2006.

        As of February 1, 2002 an aggregate of 5,399,718 shares of State Street’s Common Stock had been issued under the 1997 Plan, awards covering an additional 19,325,685 shares were outstanding and held by an aggregate of 3,859 individuals, and 7,074,597 shares (plus any shares that become available for awards under the 1997 Plan if awards outstanding on February 1, 2002 lapse or terminate) were available for future awards under the 1997 Plan.

        Under the 1997 Plan, options have been granted to the Named Executive Officers, all current executive officers as a group, and all employees as a group (excluding the executive officers) in the amounts as follows: David A. Spina, Chairman and Chief Executive Officer, 1,071,200; Ronald E. Logue, President and Chief Operating Officer, 676,400; John R. Towers, Vice Chairman and Chief Administrative Officer, 486,400; Timothy B. Harbert, Executive Vice President, 235,400; Maureen Scannell Bateman, Executive Vice President and General Counsel, 246,300; all current executive officers as a group, 3,007,599, and all employees as a group, 19,688,347.

        The 1997 Plan is designed to advance the interests of State Street and its stockholders by granting key employees of State Street and its subsidiaries, non-employee directors and other key persons, stock and stock-based awards (collectively, the "Awards"), including stock options; restricted and unrestricted stock; deferred stock; rights to receive cash or stock in connection with achievement of performance goals ("Performance Awards"); tax-offset payments, or rights to receive cash or stock in respect of increases in the value of the Common Stock ("SARs").

• The 1997 Plan is broad-based. Approximately 3,300 persons are eligible to participate in the Plan.

• The increase in the number of shares available under the 1997 Plan for which approval is sought is less than 5% of the total outstanding shares of State Street’s Common Stock.

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• The 1997 Plan does not permit repricing of options once such options are granted.

• The maximum number of shares of restricted stock will not exceed 25% of the total number of shares authorized for issuance.

        The Board of Directors believes that State Street's stock option plans have contributed to the progress of State Street by providing incentives to persons key to its success. Intense competition among business firms for executives and other key persons makes it important for State Street to maintain an effective compensation program in order to continue to attract, motivate and retain persons necessary to further State Street's growth. Competing compensation programs of other companies make it important that State Street's program continues and has maximum flexibility. The Board believes that the 1997 Plan has assisted State Street in meeting the competitive situation created by the varied compensation programs of other companies.

        No determination has been made as to which individuals may in the future receive options or rights under the 1997 Plan, as to the number of shares, up to the maximum limit provided in the Plan, to be covered by any such options or rights to a single individual, or as to the number of individuals to whom such options or rights will be granted. The proceeds received by State Street from the sale of stock pursuant to the Plan will be used for the general purposes of State Street, or in the case of the receipt of payment in shares of Common Stock, as the Board of Directors may determine, including redelivery of shares upon exercise of options.

Summary of the 1997 Plan

        The following is a summary of the principal features of the 1997 Plan:

        Administration; Eligible Persons. The 1997 Plan is administered by a Committee of the Board of Directors (which currently is the Executive Compensation Committee). During such times as the Common Stock is registered under the Securities Exchange Act of 1934 (the "1934 Act") (and except as the Board otherwise determines), the Committee shall consist of at least two members who are "non-employee" directors within the meaning of Rule 16b-3 under the 1934 Act and "outside directors" as that term is used in Section 162(m) of the Internal Revenue Code. All members of the Committee serve at the pleasure of the Board of Directors. If the Committee includes members who are not non-employee directors or outside directors, the Committee shall be deemed to have acted through a subcommittee consisting solely of its non-employee and outside director members.

        The Committee has full power, subject to the 1997 Plan, to grant awards at such time or times as it chooses, determine the size, type and terms of any award, waive compliance with award terms, and amend, cancel and re-grant awards. The Committee may delegate authority to officers of State Street to grant Awards to non-executive officers. Approximately 3,300 persons are eligible to participate in the 1997 Plan.

        Stock Options. The 1997 Plan permits the granting of stock options that qualify as incentive stock options under Section 422(b) of the Internal Revenue Code ("incentive options" or "ISOs") and stock options that do not so qualify ("nonstatutory options"). The option exercise price of each option shall be determined by the Committee in its discretion but may not be less than the fair market value of the Common Stock on the date the option is granted. Once granted, an option cannot be repriced.

        The term of each option is fixed by the Committee but may not exceed 10 years from the date of grant. On February 28, 2002 the closing price of the Common Stock on the New York Stock Exchange, as reported in The Wall Street Journal, was $50.70.

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        The Committee determines at what time or times each option may be exercised. Options may be made exercisable in installments, and the exercisability of options may be accelerated by the Committee.

        The option exercise price of options granted under the 1997 Plan must be paid in cash or, if the Committee so determines, by delivery of shares of unrestricted Common Stock (including by attestation of ownership), by delivery of an unconditional broker's undertaking to deliver the exercise price, or by a combination of such methods of payment.

        In the event of termination of employment by reason of retirement permitted by a retirement plan, disability or death, except as the Committee may otherwise determine, an option may thereafter be exercised in accordance with its terms for a period ending one year after the last installment of the option becomes exercisable or one year following retirement, death or disability, if later, subject to the stated term of the option.

        If an optionee terminates for any reason other than retirement permitted by a retirement plan, disability, or death, except as the Committee may otherwise determine, his or her options will remain exercisable, to the extent then exercisable, for three months (or if the participant dies within such three-month period, for one year) following termination, subject to the stated term of the option.

        Stock Appreciation Rights. The Committee may also grant stock appreciation rights entitling the holder upon exercise to receive an amount in any combination of cash or shares of Common Stock (as determined by the Committee), measured in whole or in part by reference to the appreciation since the date of grant in the value of the shares of Common Stock covered by such right. Stock appreciation rights may be granted separately from or in tandem with the grant of an option. Each tandem stock appreciation right terminates upon the termination or exercise of any accompanying option.

        Restricted Stock and Unrestricted Stock. The Committee may also award shares of Common Stock subject to such conditions and restrictions as the Committee may determine ("Restricted Stock"). The Committee may require that recipients of Restricted Stock enter into a Restricted Stock Award agreement with State Street setting forth the terms and conditions of the Award or may establish the terms and conditions of the Award in some other manner. The Committee may at any time waive the restrictions and conditions applicable to a Restricted Stock Award. Shares of Restricted Stock are non-transferable and except as otherwise provided by the Committee, if a participant who holds shares of Restricted Stock terminates for any reason other than death or disability prior to the lapse or waiver of the restrictions, State Street will have the right to require the forfeiture or repurchase of the shares in exchange for the amount, if any, which the participant paid for them. Except as determined by the Committee, Restricted Stock will vest (i.e., become free of restrictions under the 1997 Plan) in the event of death or disability. Prior to the lapse of restrictions on shares of Restricted Stock, the participant will have all rights of a stockholder with respect to the shares, including voting and dividend rights, subject only to the conditions and restrictions generally applicable to Restricted Stock.

        The Committee may also grant shares (for a purchase price not less than par value) which are free from any restrictions under the 1997 Plan ("Unrestricted Stock"). Unrestricted Stock could be issued in recognition of past services or in other circumstances where the Committee determines the grant to be in the best interests of State Street.

        Restricted Stock or Unrestricted Stock may be issued under the 1997 Plan in payment of Awards under the Senior Executive Annual Incentive Plan described in the Report of the Executive Compensation Committee.

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        Deferred Stock. The Committee may also make awards under the 1997 Plan entitling the recipient to receive shares of Common Stock in one or more installments at a future date or dates, as determined by the Committee ("Deferred Stock"). Receipt of Deferred Stock may be conditioned in such manner as the Committee shall determine, subject to acceleration in the Committee's discretion. Except as otherwise determined by the Committee all such rights to which a participant is not irrevocably entitled will terminate upon the participant's termination of employment.

        Performance Awards. The Committee may also award Performance Awards entitling the recipient to receive shares of Common Stock or cash in such combinations as the Committee may determine, up to a maximum of 1,000,000 shares (or their equivalent value in cash) to any individual over the life of the 1997 Plan. Payment of the Performance Award may be conditioned on achievement of individual, corporate, departmental or other performance goals and will be subject to such other conditions as the Committee shall determine. Except as otherwise determined by the Committee, rights under a Performance Award will terminate upon a participant's termination.

        Performance Awards under the 1997 Plan that are intended to qualify as performance-based compensation under Section 162(m)(4)(C) of the Internal Revenue Code ("exempt awards") must provide for payment solely upon attainment of one or more objectively determinable performance goals established by the Committee (in accordance with the rules under Section 162(m) of the Internal Revenue Code) based on one or more of the following performance criteria: (i) return on equity, (ii) earnings per share, (iii) State Street's total stockholder return during the performance period compared to the total stockholder return of a generally recognized market reference (e.g., the S&P 500 or the S&P Financial Index), (iv) revenue growth, (v) operating leverage, or (vi) market share. To the extent consistent with the exemption rules under Section 162(m) of the Internal Revenue Code, the Committee may provide that performance goals will be adjusted to eliminate the effect of extraordinary items (as determined in accordance with generally accepted accounting principles) or changes in the Common Stock by reason of a stock dividend, stock split, extraordinary dividend or similar event.

        Supplemental Grants. In connection with Awards under the 1997 Plan, the Committee may at any time grant to a participant the right to receive a cash payment in up to the amount estimated to be necessary to cover federal, state and local income taxes with respect to such Award and with respect to the cash payment itself.

        Adjustments for Stock Dividends, Mergers, etc. The Committee is required to make appropriate adjustments in connection with outstanding Awards to reflect stock dividends, stock splits and similar events, including distributions to stockholders other than normal cash dividends. In the event of a merger, acquisition, disposition or similar corporate transaction or a material change in law or accounting principles or practices, the Committee in its discretion may also provide for appropriate adjustments. No adjustments will be made to the extent they would adversely affect the ISO or Section 162(m) qualification of Awards.

        Except as provided by the Committee at time of grant, in the event of a consolidation or merger in which State Street is not the surviving corporation or which results in the acquisition of substantially all of the outstanding Common Stock by a single person or entity or by a group of persons and/or entities acting in concert, or in the event of the sale or transfer of substantially all of State Street's assets or a dissolution or liquidation of State Street, unvested Awards and Awards not yet exercisable will be forfeited unless the Committee makes the Award vested and free of restrictions (and exercisable, if the Award requires exercise) or, in the case of a

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participant who will be employed by or otherwise providing services to a surviving or acquiring entity, provide for assumption of the Award by such entity or for the grant of a substitute Award. In all events, in the event of a "Change of Control" (as defined in the 1997 Plan) of State Street, options and SARs shall become exercisable, Restricted Stock and Deferred Stock shall vest, and holders of Performance Awards shall be entitled to a cash payment in such amount as shall be specified in the Award. After such a Change of Control, options and SARs shall remain exercisable following a termination of employment or other service relationship (other than in the event of death, retirement or disability) for seven months or until the expiration of the original term of the Award if earlier, and neither the Committee nor the Board may impose additional conditions on exercise or otherwise amend an Award without the holder's written consent.

        Certain tax payments. State Street will withhold applicable taxes from any cash payment made pursuant to an Award. In the case of Awards involving Common Stock, the Committee may require the participant to remit an amount equal to the required tax withholding or make other arrangements satisfactory to the Committee for the payment of such taxes. The Committee may permit shares to be withheld from an Award, or may permit the participant to deliver shares, with a value equal to the required withholding. In the case of an ISO, the Committee may require that the participant agree to provide for withholding taxes if a withholding obligation arises at time of exercise or in the future.

        Transferability of Awards. In general, Awards under the 1997 Plan are nontransferable except in the event of death. However, the Committee in its discretion may permit transfers to other persons or entities of any Award except an ISO award.

        Noncompetition, etc. The Committee may provide in connection with any Award that the participant's rights to enjoyment of the Award or to any cash or Common Stock deliverable under the Award be conditioned upon the participant's agreeing (on terms determined by the Committee) not to compete with State Street and its subsidiaries, not to disclose confidential information, and not to solicit employees, advisors or business from State Street and its subsidiaries.

        Amendment and Termination. The Committee may at any time amend or discontinue the 1997 Plan or amend Awards for the purpose of satisfying changes in the law or for any other lawful purpose. However, no such action shall adversely affect any rights under outstanding Awards without the holder's consent. Moreover, any amendment requiring stockholder approval for purposes of satisfying any then-applicable incentive option rules or Section 162(m) rules shall be subject to such stockholder approval to the extent then required.

Federal Income Tax Consequences

        State Street is advised that under the federal income tax laws as now in effect, the income tax consequences associated with stock options awarded under the 1997 Plan are, in summary, as follows:

        Incentive Options. No ordinary taxable income is realized by the optionee upon the grant or exercise of an ISO. If no disposition of shares issued to an optionee pursuant to the exercise of an ISO is made by the optionee within two years from the date of grant or within one year after the transfer of such shares to the optionee, then (a) upon sale of such shares, any amount realized in excess of the option price (the amount paid for the shares) will be taxed to the optionee as a long-term capital gain and any loss allowed for tax purposes will be long-term capital loss, and (b) no deduction will be allowed to State Street. The exercise of an ISO will, however, increase the optionee's alternative minimum taxable income and may result in alternative minimum tax liability for the optionee.

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        If shares of Common Stock acquired upon the exercise of an ISO are disposed of by the optionee prior to the expiration of the two-year or one-year holding periods described above (a "disqualifying disposition"), generally (a) the optionee 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 a sale of such shares) over the option price thereof, and (b) a corresponding deduction will be available to State Street. Any further gain recognized will be taxed as short-term or long-term capital gain and will not result in any deduction by State Street. Special rules may apply where all or a portion of the exercise price of the ISO is paid by tendering shares of Common Stock. A disqualifying disposition will eliminate the alternative minimum taxable income adjustment associated with the exercise of the ISO if it occurs in the same calendar year as the year in which the adjustment occurred.

        If an ISO is exercised at a time when it no longer qualifies for the tax treatment described above, the option is treated as a nonstatutory option. Generally, an ISO will not be eligible for the tax treatment described above if it is exercised more than three months following termination of employment (one year following termination of employment, in the case of termination by reason of permanent and total disability), except in certain cases where the ISO is exercised after the death of the optionee. Options otherwise qualifying as ISOs will also be treated for federal income tax purposes as nonstatutory options to the extent they (together with other ISOs held by the optionee) first become exercisable in any calendar year for shares having a fair market value, determined at the time of the option grant, exceeding $100,000.

        Nonstatutory Options. With respect to nonstatutory options under the 1997 Plan, no income is realized by the optionee at the time the option is granted. Generally, (a) at exercise, ordinary income, subject (in the case of options granted to an employee) to withholding, is realized by the optionee in an amount equal to the difference between the option price and the fair market value of the shares on the date of exercise, and a corresponding deduction will be available to State Street, and (b) any gain or loss recognized upon a later sale is treated as capital gain or loss, either short-term or long-term depending on the applicable holding period for the sale.

        Certain Limitations. Section 162(m) of the Internal Revenue Code limits to $1 million the deduction a public corporation may claim for remuneration paid to any of its five top officers, subject to a number of exceptions and special rules. Eligible performance-based compensation is exempt from this limit. State Street intends that compensation associated with the exercise of stock options (and stock appreciation rights) awarded under the 1997 Plan will qualify for this performance-based exemption.

        The Internal Revenue Code also limits the amount of compensation that may be paid without penalty in connection with a change of control. In general, if the total of an individual's change-of-control related compensation equals or exceeds three times his or her average annual taxable compensation (determined, in general, over the five calendar-year period preceding the calendar year in which the change in control occurs), change-of-control related payments in excess of that annual average are nondeductible and subject to an additional 20% tax. In making this determination, some portion or all of the value of options and other awards granted or accelerated in connection with a change of control may be required to be taken into account.

The Board of Directors unanimously recommends that you vote
FOR
the amendment increasing the number of shares available under the 1997 Equity Incentive Plan.
(Item 2 on your proxy card)

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APPROVAL OF THE PERFORMANCE GOALS UNDER THE 1997 EQUITY INCENTIVE PLAN

        On December 20, 2001, the Executive Compensation Committee of the Board of Directors (the "Committee") adopted, and the Board approved, subject to stockholder approval, an amendment to the 1997 Equity Incentive Plan, as amended (the "1997 Plan") to provide that the performance goals under the 1997 Plan used in connection with performance awards intended to qualify under Section 162(m) of the Internal Revenue Code are to be based on one or more of the following performance criteria: (i) return on equity, (ii) earnings per share, (iii) State Street’s total stockholder return during the performance period compared to the total stockholder return of a generally recognized market reference (e.g., the S&P 500 or the S&P Financial Index), (iv) revenue growth, (v) market share, (vi) earnings, or (vii) revenue. The effect of the action by the Committee and the Board, subject to stockholder approval of the amended performance goals, was to add earnings per share and revenue as criteria and to eliminate operating leverage as a criteria. To the extent consistent with Section 162(m), the Committee may provide for performance-goal adjustments to eliminate the effects of extraordinary or other non-recurring events or changes in the stock by reason of a stock dividend, stock split or certain similar events.

        A description of the 1997 Plan is set forth above. The Board believes that the 1997 Plan has assisted State Street in meeting the competitive situation created by the varied compensation programs of other companies.

The Board of Directors unanimously recommends that you vote
FOR
approval of the performance goals under the 1997 Equity Incentive Plan.
(Item 3 on your proxy card)

STOCKHOLDER PROPOSALS

STOCKHOLDER PROPOSAL NO. 1 (Item 4 on your proxy card)

        The Amalgamated Bank LongView Collective Investment Fund, located at 11-15 Union Square, New York, New York 10003, has submitted the proposal set forth below for inclusion in the proxy statement. The proponent has confirmed that it owns 96,160 shares of Common Stock, has held at least $2,000 worth of State Street stock for more than a year, and plans to hold its shares through the date of the annual meeting. The text of the proposal and supporting statement, as furnished to us by the proponent, are as follows:

SHAREHOLDER PROPOSAL

RESOLVED: That the shareholders of State Street Corporation ("State Street" or the "Company") request the Board of Directors (the "Board") to redeem the shareholder rights previously issued and not to adopt or extend any rights agreement unless such adoption or extension has been approved by the affirmative vote of the holders of a majority of shares present and voting on the matter.

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SUPPORTING STATEMENT

In 1988 the Board issued certain shareholder rights pursuant to a "rights agreement" of the type commonly known as a "poison pill." In 1998 the Board adopted a replacement rights agreement, which is set to expire in 2008. In both instances the Board acted without obtaining the approval of shareholders.

In our view, the Company’s rights agreement is a type of anti-takeover device, which can injure shareholders by reducing management accountability and adversely affecting shareholder value. We believe that rights issued under this agreement have the effect of discouraging or thwarting an unwanted takeover of the Company.

Although management and the Board should have appropriate tools to ensure that all shareholders benefit from any proposal to acquire the Company, we do not believe that the future possibility of a takeover justifies the unilateral imposition of such a poison pill. At a minimum, we believe that shareholders should have the right to vote on the necessity of such a powerful tool, which could be used to entrench existing management.

Other features of State Street’s corporate governance also reduce management accountability to shareholders. Currently, the Board is divided into three classes of directors serving staggered three-year terms. Once elected, directors may only be removed "for cause." Having a classified board and "for cause" removal of directors makes it harder for shareholders to change the composition of the board.

According to the Proxy Voting Policy of the Company’s asset management division, State Street Global Advisors, State Street "generally, although not always, votes in support of...mandates that shareholder-rights plans be put to a vote or repealed." According to these guidelines, "our proxy voting policy and procedures are designed to ensure that our clients receive the best possible returns on their investments." State Street shareholders deserve the same consideration.

A 2001 study by researchers at Harvard Business School and the University of Pennsylvania’s Wharton School created a corporate governance index for 1,500 firms and studied the relationship between that index (which took into account, among other things, whether a company has a poison pill) and firm performance from 1990 to 1999. The study found that good corporate governance was significantly positively correlated with firm value.

The Council of Institutional Investors, an organization of over 120 pension funds whose assets exceed $1.5 trillion, has called for shareholder approval of poison pills. In recent years, various companies including McDermott International, Columbia/HCA and Bausch & Lomb have been willing to redeem outstanding rights or seek shareholder approval for their poison pill rights plans. We believe that State Street should follow suit.

RECOMMENDATION OF THE BOARD OF DIRECTORS

        Rights plans are designed to strengthen the ability of a board of directors, in the exercise of its fiduciary duties, to maximize stockholder value and protect stockholders and employees from unfair and abusive takeover tactics. That is why more than 2,300 companies, including more than sixty percent of the companies in the S&P 500 Index, have adopted some kind of rights plan.

        The Board believes that rights plans neither prevent unsolicited proposals from being made nor prevent companies from being acquired at prices that are fair and equitable.

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        A study of takeover data from 1992 through 1996 by Georgeson & Company, a nationally recognized proxy solicitation and investor relations firm, found that the presence of a rights plan neither increased the likelihood of a defeat of an unsolicited takeover proposal nor reduced the likelihood of a company becoming a takeover target. In fact, the study found that the premiums paid to acquire companies with rights plans averaged eight percentage points higher than premiums for companies without such plans. Similarly, two studies by J. P. Morgan & Co. showed that average premiums to an acquired firm’s pre-offer market price were greater for firms with rights plans than for those without.

        State Street’s Board believes it has demonstrated that entrenchment is not an objective of its policies and practices and that its actions have been consistently in favor of returning value to stockholders. As evidence, the return on stockholders’ equity of State Street has been between 18 percent and 20 percent in each of the past five years. As the performance graph on page 17 indicates, a $100 investment by a stockholder in 1996 in State Street stock has returned a value of $336 at the end of 2001, as compared to $166 for the S&P 500 Index and $196 for the S&P Financial Index. Further, an analysis of data provided by Research Insight of all publicly-held companies with net income in fiscal year 2000 in excess of $200 million indicates that only 14 companies have achieved 15 years of consecutive earnings-per-share growth. Of those, State Street has the sixth-highest compound annual growth over those fifteen years.

        The Board suggests that stockholders should vote on this proposal not in the abstract nor in accordance with the general studies cited by the proponent, but rather as it applies to State Street, a company with a track record of superior returns and stockholder value.

        Pursuant to the terms of our Rights Plan, the Board may redeem, and in fact would see it as its fiduciary duty to redeem, the rights issued under the Rights Plan to permit an acquisition that adequately reflects State Street’s long-term value and is in the best interests of the stockholders.

        The Board believes that a rights plan is appropriately within the scope of responsibilities of the Board of Directors, acting in accordance with its duties to the stockholders. Redeeming the rights would remove an important tool that the Board would exercise only in cases where it deems that action is in the best long-term interest of its stockholders. The Board therefore believes that any decision to redeem the rights should be made in the context of a specific acquisition proposal.

The Board of Directors unanimously recommends that you vote
AGAINST
this stockholder proposal. (Item 4 on your proxy card)

STOCKHOLDER PROPOSAL NO. 2 (Item 5 on your proxy card)

        Patrick Jorstad, of 1851 North Scott Street, #156, Arlington, Virginia 22209, owner of 215 whole shares of Common Stock as of February 28, 2002, has submitted the proposal set forth below for inclusion in the proxy statement. The text of the proposal and supporting statement, as furnished to us by the proponent, are as follows:

Shareholder Proposal for 2002 Annual Meeting of
Stockholders of State Street Corporation

Pursuant to the provisions of the Massachusetts General Laws, chapter 156B, section 50A(b)(i), the shareholders of State Street Corporation elect to exempt the Corporation’s Board of Directors from the

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provisions of section 50A(a), and to organize the Corporation’s Board of Directors instead in accordance with the provisions of chapter 156B, section 50.

Supporting Statement

The structural change advocated by this proposal is intended to restore a number of powers that State Street shareholders traditionally enjoyed prior to the Massachusetts Legislature’s enactment of section 50A in 1990. The application of that new section stripped State Street shareholders of the right to set the number of directorships, curtailed the ability of the shareholders to remove directors, and stripped the shareholders of the right to fill vacancies in directorships when they occurred.

The ability to set the size and composition of the Board of Directors is a fundamental mechanism by which shareholders of publicly-traded corporations are able to protect their investment, manifest their will, and ensure that the Board of Directors is responsive to that will.

In the opinion of the proponent, the current structure lends itself to interlocking board relationships, lack of independence, lack of appropriate oversight over the Corporation’s executive management, lack of disclosure to the shareholders, and lucrative self-dealing transactions among the directors. Because most of the current directors were first appointed to the Board by their colleagues between annual meetings – rather than first nominated and submitted to the shareholders at an annual meeting via the proxy process – they are more beholden to each other than to the shareholders, in the proponent’s opinion.

Perhaps realizing that the enactment of section 50A constituted such a dramatic departure from traditional shareholder rights under American common law, the Massachusetts Legislature included a provision permitting shareholders of publicly-traded Massachusetts corporations to opt to return to the previous organizational structure. That is precisely what this proposal seeks to do.

The proponent urges institutional shareholders to consult with legal counsel to gain a complete understanding of just how peculiar section 50A is, when compared to other states’ corporate statutes. The proponent also urges all State Street shareholders – whether institutional or individual – to contact him with any questions concerning the legislative history of the enactment of section 50A.

Notably, Massachusetts Corporation Law and Practice, Southgate & Glazer – compiled by attorneys at Ropes & Gray, the Corporation’s external counsel, states that under section 50A "...the number of directors may be fixed only by the board, directors may be removed by stockholders only for cause, and any vacancies resulting from an increase in the number of directors or otherwise may be filled only by directors then in office." Southgate & Glazer also notes that "Section 50A has not yet been tested in the courts."

For more information on this proposal in particular, and on corporate governance issues in general, State Street shareholders are urged to visit the following websites:

http://www.shareholdersonline.com

http://www.thecorporatelibrary.com

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RECOMMENDATION OF THE BOARD OF DIRECTORS

        State Street, a Massachusetts corporation, was organized as a bank holding company in 1970. It conducts business principally through its subsidiary, State Street Bank and Trust Company, which traces its beginnings to the founding of the Union Bank in Massachusetts in 1792. The charter under which the Bank now operates was authorized by a special act of the Massachusetts legislature in 1891. State Street’s Board of Directors has been organized consistent with Section 50A since the adoption of that section of the Massachusetts corporate law by the Massachusetts legislature in 1990, and our By-Laws were amended in 1990 to be consistent with the new section.

        The Board believes that the organization of the Board of Directors consistent with Section 50A and as provided in our By-Laws, in place for the last 12 years, has helped preserve a long-term focus by our directors for the benefit of our stockholders. For instance, over the 5-year period ended December 31, 2001, the price of State Street’s stock on a split-adjusted basis has increased over 223%, compared to an increase of only about 55% for the S&P 500 Index and 80% for the S&P Financial Index over the same period.

        The Board does not believe that Section 50A causes the interests of the Board to diverge from those of stockholders or interferes with the responsiveness of the Board to the stockholders. The Board believes that the protections embodied in Section 50A promote a reasonable sense of stability that enables the Board to maintain a long-term focus and contributes to the Board’s ability to successfully recruit directors from among the most qualified candidates.

        The proponent’s suggestion that Section 50A lends itself to a "lack of independence" among members of the Board is simply inconsistent with the facts. The State Street Board is currently composed of 18 directors, 16 of whom are independent, non-employee directors. We believe that the Board’s nominating committee has been diligent in recruiting director-nominees who represent diversity and substantial achievement in their personal and professional backgrounds. Similarly, the Board does not believe its ability to appoint directors to fill vacancies contributes to a lack of accountability to stockholders, as no director can continue to serve without facing regular stockholder elections. For the last five years, State Street directors elected at each of the annual meetings of stockholders have received an affirmative vote of not less than 98.2% of the shares voting at that particular time.

        Consistent with encouraging a long-term view and with aligning director incentives with stockholder interests, all State Street directors elect to receive 100% of their annual directors’ retainer fees in State Street stock.

        The Board believes that the organization of the Board under Section 50A and its current By-Laws is consistent with promoting the continuity of leadership, a focus on long-term strategic goals, and the alignment of the Board’s interests with those of stockholders that has benefited State Street and its stockholders to date.

The Board of Directors unanimously recommends that you vote
AGAINST
this stockholder proposal. (Item 5 on your proxy card)

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STOCKHOLDER PROPOSAL NO. 3 (Item 6 on your proxy card)

        Patrick Jorstad, of 1851 North Scott Street, #156, Arlington, Virginia 22209, owner of 215 whole shares of Common Stock as of February 28, 2002, on his own behalf and on behalf of Mr. Jim Mulvey of 397 Main Street, #2, Charlestown, Massachusetts 02129, who is stated to be the owner of 150 shares of Common Stock; Mr. David Smith of 1851 North Scott Street, #156, Arlington, Virginia 22209, who is stated to be the owner of 10 shares of Common Stock, and Mr. Todd Wesche of 105 Governor Winthrop Road, Somerville, Massachusetts 02145, who is stated to be the owner of 67 shares of Common Stock, have submitted the proposal set forth below. The text of the proposal, as furnished to us by the proponents, is as follows:

Shareholder Proposal of Other Business
2002 Annual Meeting of Stockholders
State Street Corporation (NYSE:STT)

Resolved, by the shareholders of State Street Corporation, that the Corporation’s By-laws shall be, and hereby are to be, amended to include the following new sections under Article II ("Directors"):

Article II, Section 10a. Audit Committee and Independent Auditors. There shall be an Audit Committee of the Board of Directors. The Audit Committee shall be composed entirely of non-employee directors. Working together with the Corporation’s independent auditors, the Audit Committee shall certify in writing to the full Board of Directors the completeness and integrity of each quarterly and annual report of this Corporation. In selecting the Corporation’s independent auditors, the Board of Directors shall select auditors who are unaffiliated with any business entity that provides other services to the Corporation, including – but not limited to – consulting services. For the purposes of this section, affiliated business entities are those that share a common parent.

Article II, Section 11. Full Disclosure of Interested and Self-Dealing Transactions. The Board of Directors shall, in each year’s annual report and in each year’s proxy statement, provide full and detailed disclosure of the nature, extent, and value of any and all interested and self-dealing transactions between the Corporation and each director (and/or each director’s affiliates, as defined within the Securities Exchange Act of 1934, as amended, or successor Act).

Article II, Section 12. Interlocking Directorships Prohibited. To ensure undivided loyalty to the shareholders, no two or more directors of the Corporation may serve together simultaneously on the Board of Directors of any other corporation. No person who has served together with any director of this Corporation on the Board of Directors of any other corporation within the prior three years shall be eligible as a candidate for director of this Corporation until such three-year exclusionary period has elapsed.

RECOMMENDATION OF THE BOARD OF DIRECTORS

        While the Board of Directors recognizes that the provisions set forth in the proposal are largely addressed by our Audit Committee Charter and regulatory requirements, the Board recommends a vote against the proposal. As discussed in more detail in the Audit Committee Report set forth in this proxy statement, among other important duties it is the Audit Committee’s responsibility to oversee the integrity of State Street’s financial reports and the independence and performance of State Street’s internal and external auditors. The Audit Committee also has adopted policies for preapproval of non-audit work that is performed by State Street's

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outside auditors and reviews any services that may impair the independence of the outside auditors. State Street has adopted an Audit Committee Charter which sets forth the broad obligations and responsibilities of the Committee. As required by the Audit Committee Charter, the members of the Audit Committee must meet the independence and experience requirements of the New York Stock Exchange.

This proxy statement contains the disclosure as required under the Securities Exchange Act of 1934 of any material transactions that exist between any director and the company. The Exchange Act also requires disclosure of any director interlocks, and our Board has a policy of reviewing any director interlocks that exist among the State Street directors. None of State Street’s directors currently serves on a for-profit board with another director.

The By-Law proposal is unnecessary to the extent it merely seeks to re-enforce these policies, and if adopted it could place an undue constraint on the Board’s ability to adapt State Street’s Audit Committee Charter and practices to the evolving landscape of best practices. The By-Law proposal is inadvisable to the extent it places undue restrictions that go beyond general best practices standards. It is also inadvisable to the extent it could be interpreted as imposing an obligation on Audit Committee members to themselves certify the completeness and accuracy of the company’s financial statements. This is the responsibility of management and the independent auditor, not the responsibility of the Audit Committee, and not within the practical limits of what an independent audit committee could accomplish.

The Board of Directors unanimously recommends that you vote
AGAINST
this stockholder proposal. (Item 6 on your proxy card)

RELATIONSHIP WITH INDEPENDENT AUDITORS

        The Board of Directors, upon the recommendation of the Examining and Audit Committee, has selected Ernst & Young LLP as independent auditors for State Street for the year ending December 31, 2002. Ernst & Young LLP acted as independent auditors for State Street for the year ended December 31, 2001. We expect that representatives of Ernst & Young LLP will be present at the Annual Meeting to respond to appropriate questions, and they will have the opportunity to make a statement if they desire.

        Fees to State Street and its subsidiaries for professional services rendered by Ernst & Young LLP during 2001 were as follows: Audit Fees: $.8 million; Audit-Related Fees: $2.2 million; Financial Information Systems Design and Implementation Fees: $0, and All Other Fees: $3.9 million. All other fees consisted principally of expatriate and corporate tax services. In connection with the advisory or custodial services State Street provides to mutual funds, exchange traded funds, and other collective investment vehicles, State Street from time to time selects, and in limited circumstances employs, outside accountants to perform audit and other services for the investment vehicles. In such cases, State Street typically uses a request-for-proposal process which has resulted in the selection of various outside auditors, including Ernst & Young LLP. Fees paid to Ernst & Young in such circumstances are not included in the totals provided above.

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PROPOSALS AND NOMINATIONS BY STOCKHOLDERS

        Stockholders who wish to present proposals for inclusion in State Street's proxy materials for the 2003 Annual Meeting of Stockholders may do so by following the procedures prescribed in Rule 14a-8 under the Securities Exchange Act of 1934 and State Street's By-Laws. To be eligible, the stockholder proposals must be received by the Secretary of State Street on or before November 11, 2002.

        Under State Street's current By-Laws, proposals of business and nominations for directors other than those to be included in State Street's proxy materials following the procedures described in Rule 14a-8 may be made by stockholders entitled to vote at the meeting if notice is timely given and if the notice contains the information required by the By-Laws. Except as noted below, to be timely a notice with respect to the 2003 Annual Meeting must be delivered to the Secretary of State Street no earlier than January 17, 2003 and no later than February 18, 2003 unless the date of the 2003 Annual Meeting is advanced by more than thirty (30) days or delayed by more than sixty (60) days from the anniversary date of the 2002 Annual Meeting in which event the By-Laws provide different notice requirements. In the event the Board of Directors nominates a New Nominee (as defined in the By-Laws) a stockholder's notice shall be considered timely if delivered not later than the 10th day following the date on which public announcement (as defined in the By-Laws) is first made of the election or nomination of such New Nominee. Any proposal of business or nomination should be mailed to: Secretary, State Street Corporation, 225 Franklin Street, Boston, Massachusetts 02110.

OTHER MATTERS

        The Board of Directors does not know of any other matters that may be presented for action at the meeting. Should any other business come before the meeting, the persons named on the enclosed proxy will, as stated therein, have discretionary authority to vote the shares represented by such proxies in accordance with their best judgment.

        State Street's Annual Report, including financial statements for the year ended December 31, 2001, is being mailed to you together with this proxy statement.

March 11, 2002

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State Street Corporation
225 Franklin Street
Boston, MA 02110-2804 SSBCM/PS/02

STATE STREET CORPORATION

Annual Meeting of Stockholders - April 17, 2002

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints Elizabeth L. Corse, Evalyn Lipton Fishbein and Claire A. Fusco or any of them, with full power of substitution, as proxies to vote all shares of Common Stock of State Street Corporation which the undersigned is entitled to vote at the Annual Meeting of Stockholders of State Street Corporation to be held at 225 Franklin Street, Boston, Massachusetts 02110 on April 17, 2002 at 10:00 a.m., or at any adjournment thereof, as indicated on the reverse side, and in their discretion on any other matters that may properly come before the meeting or any adjournment thereof.

To vote in accordance with the Board of Directors' recommendations just sign and date the other side; no boxes need to be checked.

Nominees for Class III Director whose term expires in 2005: T. Albright, N. Darehshori, R. Logue, G. Summe, D. Walsh

PLEASE MARK, DATE, AND SIGN ON REVERSE SIDE AND RETURN PROMPTLY IN ENCLOSED ENVELOPE.

Please sign this proxy on the reverse side exactly as your name(s) appear(s) on the books of State Street Corporation. Joint owners should each sign personally. Trustees and other fiduciaries should indicate the capacity in which they sign, and where more than one name appears, a majority must sign. If a corporation, this signature should be that of an authorized officer who should state his or her title.

HAS YOUR ADDRESS CHANGED?	DO YOU HAVE ANY COMMENTS?
___________________________________________ ___________________________________________ ___________________________________________	___________________________________________ ___________________________________________ ___________________________________________

STATE STREET CORPORATION

DEAR STOCKHOLDER:

We cordially invite you to attend the 2002 Annual Meeting of Stockholders of State Street Corporation. The meeting will be held in the Enterprise Room at 225 Franklin Street, Boston, Massachusetts, on Wednesday, April 17, 2002, at 10:00 a.m.

Details regarding admission to the meeting and the business to be conducted are more fully described in the accompanying Notice of Annual Meeting and Proxy Statement.

Your vote is very important. Whether or not you plan to attend the meeting, please carefully review the enclosed proxy statement. Then complete, sign, date and mail promptly the accompanying proxy in the enclosed return envelope. To be sure that your vote will be received in time, please return the proxy at your earliest convenience.

We look forward to seeing you at the Annual Meeting so that we can update you on our progress. Your continuing interest is very much appreciated.

Sincerely,

David A. Spina
Chairman and Chief Executive Officer

PLEASE NOTE:  Stockholders should be aware of the increased security at public facilities in Boston.  If you plan to attend the meeting, please allow additional time for registration and security clearance.  You will be asked to present a vaild, picture identification such as a driver's license or passport (for details, see 'Meeting Admission' in the Notice of 2002 Annual Meeting of Stockholders).  Public parking is no longer available at State Street's headquarters.  Public parking facilities available nearby include the Garage at Post Office Square (entrance on Pearl Street opposite Le Meridien Hotel) and the Garage at 150/160 Federal Street (entrance on High Street opposite 99 High Street).

Detach Here

	PLEASE MARK VOTES AS IN THIS EXAMPLE		..	The Board of Directors recommends a vote FOR Items 1, 2 and 3.
			1.	Election of Five Directors. (see reverse side for list of nominees)	For all    Nominees			Withhold
STATE STREET CORPORATION			..		____________________ Instructions:  To withhold authority to vote for any individual nominee, write that nominee's name in the space provided above.
This proxy, when properly executed, will be voted in the manner indicated by the undersigned stockholder. If no direction is given, this proxy will be voted FOR Items 1, 2 and 3 and AGAINST Items 4, 5 and 6.			2.	To vote on an amendment to the 1997 Equity Incentive Plan to increase the number of shares available for issuance under the plan.		FOR	AGAINST	ABSTAIN
Mark box at right if address change or comment    has been noted on the reverse side of this card.			3.	To approve the amended performance goals under the 1997 Equity Incentive Plan.		FOR	AGAINST	ABSTAIN
			..	The Board of Directors recommends a vote AGAINST Items 4, 5 and 6.
In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting or any adjournments thereof.			4.	To vote on a stockholder proposal to request the directors to redeem the outstanding rights under our Rights Agreement.		FOR	AGAINST	ABSTAIN
Please be sure to sign and date this Proxy.			5.	To vote on a stockholder proposal to exempt the Board of Directors from Massachusetts General Laws, Chapter 156B, Section 50A(a).		FOR	AGAINST	ABSTAIN
			6.	To vote on a stockholder proposal, if properly raised at the meeting, to amend the By-Laws applicable to the Audit Committee and independent auditors, self-dealing and interlocking directorships.		FOR	AGAINST	ABSTAIN
Stockholder signs here:   ___________________________  Date:____________			Co-owner signs here: ______________________________   Date:______________

STATE STREET CORPORATION

Annual Meeting of Stockholders -- April 17, 2002

Dear State Street Corporation Salary Savings Program Participant:

The Annual Meeting of Stockholders of State Street Corporation will be held on April 17, 2002. Enclosed is the 2001 Annual Report, Notice of 2002 Annual Meeting of Stockholders and the Proxy Statement containing information about the proposals to be voted on by stockholders at the meeting. Voting on corporate matters is an important benefit you have as a participant in the State Street Corporation Stock Fund of the Salary Savings Program.

As a Plan participant, you may direct the Trustee on how to vote the shares of State Street Corporation allocated to your account. If you do not provide instructions to the Trustee, the Trustee will vote your shares in accordance with the Salary Savings Program Plan and Trust Documents.

Please place an X in the appropriate boxes on the reverse side of this Voting Instruction Form, sign and date the Form, and return it as soon as possible in the enclosed postage paid envelope. The Trustee must receive your Voting Instruction Form no later than Friday, April 12, 2002 for your vote to be counted. You may not provide your voting direction at the Annual Meeting; you must direct your vote in advance to the Trustee. Your vote will be held in confidence by the Trustee.

Because your voice is important, you are strongly encouraged to direct the Trustee on how to vote your shares. Your vote will contribute toward the future of our Corporation. If you have any questions, please call the GHR Customer Service at 617-985-8040, or, internally at ext. 5-8040, or e-mail to "GHR-Customer-Service."

Sincerely,

STATE STREET BANK AND TRUST COMPANY, TRUSTEE

To be completed, signed and dated on reverse side.
Please fold completed form and mail it
in its entirety to the Trustee in the envelope provided.

STATE STREET CORPORATION
Annual Meeting of Stockholders -- April 17, 2002

DIRECTION TO THE TRUSTEE

        As a participant in the Salary Savings Program, I hereby direct State Street Bank and Trust Company, as Trustee, to vote as follows the shares of State Street Corporation common stock allocated to my account at the Annual Meeting of Stockholders to be held on April 17, 2002, and any adjournments thereof.

        Each of the matters to come before the meeting is fully described in the Notice of and Proxy Statement for the meeting, receipt of which is hereby acknowledged. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU GRANT AUTHORITY FOR THE ELECTION OF DIRECTORS AND THAT YOU VOTE FOR ITEMS 2 AND 3 AND AGAINST ITEMS 4, 5 AND 6. THE SHARES REPRESENTED BY THIS DIRECTION WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS. IF NO SPECIFICATION IS MADE, THE TRUSTEE SHALL VOTE THE SHARES ALLOCATED TO YOUR ACCOUNT IN ACCORDANCE WITH THE SALARY SAVINGS PROGRAM AND TRUST DOCUMENTS.

Nominees for Class III Director whose term expires in 2005:  T. Albright, N. Darehshori, R. Logue, G. Summe, D. Walsh

Please mark your vote as indicated in this example. 

The Board of Directors recommends a vote FOR Items 1, 2 and 3.					The Board of Directors recommends a vote AGAINST Items 4, 5 and 6.
Item 1 -	Election of Five Directors (See above for list of nominees)	For all Nominees	Withhold	For all Except	Item 4 -	To vote on a stockholder proposal to request the directors to redeem the outstanding rights under our Rights Agreement.	FOR	AGAINST	ABSTAIN
INSTRUCTION:  If you do not wish your shares voted "FOR" one or more of the nomiees, mark the "FOR ALL EXCEPT" box and strike a line through the name(s) of the nominee(s) listed above.  Your shares will be voted for the remaining nominee(s).					Item 5 -	To vote on a stockholder proposal to exempt the Board of Directors from Massachusetts General Laws, Chapter 156B, Section 50A(a).	FOR	AGAINST	ABSTAIN
Item 2 -	To vote on an amendment ot the 1997 Equity Incentive Plan to increase the number of shares available for issuance under the plan.	FOR	AGAINST	ABSTAIN	Item 6 -	To vote on a stockholder proposal, if properly raised at the meeting, to amend the By-Laws applicable to the Audit Committee and independent auditors, self-dealing and interlocking directorships.	FOR	AGAINST	ABSTAIN
Item 3 -	To approve the amended performance goals under the 1997 Equity Incentive Plan.	FOR	AGAINST	ABSTAIN
Dated:  ____________________________, 2002					In its discretion, the Trustee is authorized to vote upon such other business as may properly come before the meeting or any other adjournments thereof.
___________________________________________ Participant NOTE:  Please sign exactly as your name appears hereon.

THIS DIRECTION IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.

EX-99

STATE STREET CORPORATION
1997 EQUITY INCENTIVE PLAN

Amended Through December 20, 2001

1. PURPOSE

        The purpose of this Equity Incentive Plan (the "Plan") is to advance the interests of State Street Corporation (the "Company") and its subsidiaries by enhancing their ability to attract and retain employees and other persons or entities who are in a position to make significant contributions to the success of the Company and its subsidiaries through ownership of shares of the Company's common stock ("Stock").

        The Plan is intended to accomplish these goals by enabling the Company to grant Awards in the form of Options, Stock Appreciation Rights, Restricted Stock or Unrestricted Stock Awards, Deferred Stock Awards, Performance Awards, or Supplemental Grants, or combinations thereof, all as more fully described below.

2. ADMINISTRATION

        Unless otherwise determined by the Board of Directors of the Company (the "Board"), the Plan will be administered by a committee of the Board designated for such purpose (the "Committee"). During such time as the Stock is registered under the Securities Exchange Act of 1934, as amended (the "1934 Act"), except as the Board may otherwise determine, the Committee shall consist of at least two members who are both "non-employee directors" within the meaning of Rule 16b-3 promulgated under the 1934 Act and "outside directors" within the meaning of Section 162(m)(4)(C)(i) of the Internal Revenue Code of 1986, as amended (the "Code"). If the Committee includes members who are not non-employee directors or outside directors as so defined, it shall act and shall be deemed to have acted through a subcommittee consisting solely of its non-employee and outside director members.

        The Committee will have authority, not inconsistent with the express provisions of the Plan and in addition to other authority granted under the Plan, to (a) grant Awards to such eligible persons and at such time or times as it may choose; (b) determine the size of each Award, including the number of shares of Stock subject to the Award;(c) determine the type or types of each Award; (d) determine the terms and conditions of each Award; (e) waive compliance by a holder of an Award with any obligations to be performed by such holder under an Award and waive any terms or conditions of an Award; (f) amend or cancel an existing Award in whole or in part (and if an Award is canceled, grant another Award in its place on such terms and conditions as the Committee shall specify), except that the Committee may not,

without the consent of the holder of an Award, take any action under this clause with respect to such Award if such action would adversely affect the rights of such holder; (g) prescribe the form or forms of instruments that are required or deemed appropriate under the Plan, including any written notices and elections required of Participants (as defined below), and change such forms from time to time; (h) adopt, amend and rescind rules and regulations for the administration of the Plan; and (i) interpret the Plan and decide any questions and settle all controversies and disputes that may arise in connection with the Plan. Such determinations and actions of the Committee, and all other determinations and actions of the Committee made or taken under authority granted by any provision of the Plan, will be conclusive and will bind all parties. Nothing in this paragraph shall be construed as limiting the power of the Committee to make adjustments under Section 7.3 or Section 8.6.

        The Committee may delegate to any officer or officers of the Corporation the authority to exercise the authority described at clauses (a) through (g) of the preceding paragraph with respect to any Award to a person who at the time of the Award is not and in the reasonable determination of the officer or officers exercising such authority with respect to such Award is not expected to be an executive officer of the Company or a person otherwise described in Section 162(m)(3) of the Code or the regulations thereunder.

3. EFFECTIVE DATE AND TERM OF PLAN

        The Plan will become effective on the date on which it is approved by the stockholders of the Company. Awards may be made prior to such stockholder approval if made subject thereto. No Award may be granted under the Plan after December 18, 2006, but Awards previously granted may extend beyond that date.

4. SHARES SUBJECT TO THE PLAN

        Subject to adjustment as provided in Section 8.6 below, the aggregate number of shares of Stock that may be delivered under the Plan will be 46,800,000. If any Award requiring exercise by the Participant for delivery of Stock terminates without having been exercised in full, or if any Award payable in Stock or cash is satisfied in cash rather than Stock, the number of shares of Stock as to which such Award was not exercised or for which cash was substituted will be available for future grants.

        Subject to Section 8.6(a), the maximum number of shares of Stock as to which Options or Stock Appreciation Rights may be granted to any Participant in any one calendar year is 1,600,000, which limitation shall be construed and applied consistently with the rules under Section 162(m) of the Internal Revenue Code. The maximum number of shares of Restricted Stock that may be delivered under the Plan shall not exceed 25% of the total number of shares authorized for issuance.

        Stock delivered under the Plan may be either authorized but unissued Stock or previously issued Stock acquired by the Company and held in treasury. No fractional shares of Stock will be delivered under the Plan.

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5. ELIGIBILITY AND PARTICIPATION

        Each key employee of the Company or any of its subsidiaries (an "Employee") and each other person or entity (including without limitation non-Employee directors of the Company or a subsidiary of the Company) who, in the opinion of the Committee, is in a position to make a significant contribution to the success of the Company or its subsidiaries will be eligible to receive Awards under the Plan (each such Employee, person or entity receiving an Award, "a Participant"). A "subsidiary" for purposes of the Plan will be a corporation in which the Company owns, directly or indirectly, stock possessing 50% or more of the total combined voting power of all classes of stock. A "subsidiary" for purposes of the Plan will be a corporation or other entity whose employees would be treated as employees of a subsidiary of the Company for purposes of the rules promulgated under the Securities Act of 1933, as amended, with respect to the use of Form S-8. Options intended to be "incentive stock options" as defined in Section 422(b) of the Code (any Option intended to qualify as an incentive stock option being hereinafter referred to as an "ISO") may be granted only to an individual who is, at the time of grant, an employee of the Company or of a corporation that would be treated as a subsidiary of the Company under Section 424(f) of the Code.

6. TYPES OF AWARDS

6.1 Options

        (a) Nature of Options. An Option is an Award giving the recipient the right on exercise thereof to purchase Stock.

        Both ISOs and options that are not ISOs may be granted under the Plan. ISOs shall be awarded only to Employees. An Option awarded under the Plan shall be a non-ISO unless it is expressly designated as an ISO at time of grant.

        (b) Exercise Price. The exercise price of an Option will be determined by the Committee subject to the following:

        (1) The exercise price of an Option shall not be less than 100% of the fair market value of the Stock subject to the Option, determined as of the time the Option is granted. In no event shall the exercise price of an option, once granted, be lowered through a repricing of the option. For purposes of the preceding sentence, "repricing" shall include an amendment to the exercise price of an existing option or the cancellation of an option followed by a regrant at a lower exercise price, but shall not include an assumption or replacement described in Section 7.3(b) or an adjustment to the exercise price of an option described in the first sentence of Section 8.6(b).

        (2) In no case may the exercise price paid for Stock which is part of an original issue of authorized Stock be less than the par value per share of the Stock.

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        (c) Duration of Options. The latest date on which an Option may be exercised will be the tenth anniversary of the day immediately preceding the date the Option was granted, or such earlier date as may have been specified by the Committee at the time the Option was granted.

        (d) Exercise of Options. An Option will become exercisable at such time or times, and on such conditions, as the Committee may specify. The Committee may at any time and from time to time accelerate the time at which all or any part of the Option may be exercised. Any exercise of an Option must be in writing, signed by the proper person and delivered or mailed to the Company, accompanied by (1) any documents required by the Committee and (2) payment in full in accordance with paragraph (e) below for the number of shares for which the Option is exercised.

        (e) Payment for Stock. Stock purchased on exercise of an Option must be paid for as follows: (1) in cash or by check (acceptable to the Company in accordance with guidelines established for this purpose), bank draft or money order payable to the order of the Company or (2) if so permitted by the Committee at or after the grant of the Option or by the instrument evidencing the Option, (i) through the delivery (including by attestation of ownership) of shares of Stock which have been outstanding for at least six months (unless the Committee approves a shorter period) and which have a fair market value equal to the exercise price, (ii) by delivery of an unconditional and irrevocable undertaking by a broker to deliver promptly to the Company sufficient funds to pay the exercise price, or (iii) by any combination of the foregoing permissible forms of payment.

6.2.    Stock Appreciation Rights.

        (a) Nature of Stock Appreciation Rights. A Stock Appreciation Right or SAR is an Award entitling the holder on exercise to receive an amount in cash or Stock or a combination thereof (such form to be determined by the Committee) determined in whole or in part by reference to appreciation, from and after the date of grant, in the fair market value of a share of Stock. SARs may be based solely on appreciation in the fair market value of Stock or on a comparison of such appreciation with some other measure of market growth such as (but not limited to) appreciation in a recognized market index. The date as of which such appreciation or other measure is determined shall be the exercise date unless another date is specified by the Committee.

        (b) Grant of Stock Appreciation Rights. Stock Appreciation Rights may be granted in tandem with, or independently of, Options granted under the Plan.

        (1) Rules Applicable to Tandem Awards. When Stock Appreciation Rights are granted in tandem with Options, (a) the Stock Appreciation Right will be exercisable only at such time or times, and to the extent, that the related Option is exercisable and will be exercisable in accordance with the procedure required for exercise of the related Option; (b) the Stock Appreciation Right will terminate and no longer be exercisable upon the termination or exercise of the related Option, except that a Stock Appreciation Right granted with respect to less

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than the full number of shares covered by an Option will not be reduced until the number of shares as to which the related Option has been exercised or has terminated exceeds the number of shares not covered by the Stock Appreciation Right; (c) the Option will terminate and no longer be exercisable upon the exercise of the related Stock Appreciation Right; and (d) the Stock Appreciation Right will be transferable only with the related Option.

        (2) Exercise of Independent Stock Appreciation Rights. A Stock Appreciation Right not granted in tandem with an Option will become exercisable at such time or times, and on such conditions, as the Committee may specify. The Committee may at any time accelerate the time at which all or any part of the Right may be exercised.

        Any exercise of a Stock Appreciation Right must be in writing, signed by the proper person and delivered or mailed to the Company, accompanied by any other documents required by the Committee.

6.3.    Restricted and Unrestricted Stock.

        (a) Grant of Restricted Stock. Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant shares of Restricted Stock in such amounts and upon such terms and conditions as the Committee shall determine subject to the restrictions described below.

        (b) Restricted Stock Agreement. The Committee may require, as a condition to an Award, that a recipient of a Restricted Stock Award enter into a Restricted Stock Award Agreement, setting forth the terms and conditions of the Award. In lieu of a Restricted Stock Award Agreement, the Committee may provide the terms and conditions of an Award in a notice to the Participant of the Award, on the Stock certificate representing the Restricted Stock, in the resolution approving the Award, or in such other manner as it deems appropriate.

        (c) Transferability and Other Restrictions. Except as otherwise provided in this Section 6.3, the shares of Restricted Stock granted herein may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable period or periods established by the Committee and the satisfaction of any other conditions or restrictions established by the Committee (such period during which a share of Restricted Stock is subject to such restrictions and conditions is referred to as the "Restricted Period").

        Except as the Committee may otherwise determine under Section 7.1 or Section 7.2 below, if a Participant retires or suffers a Status Change (as defined at Section 7.2(a) below) for any reason during the Restricted Period, the Company may purchase the shares of Restricted Stock subject to such restrictions and conditions for the amount of cash paid by the Participant for such shares; provided, that if no cash was paid by the Participant such shares of Restricted Stock shall be automatically forfeited to the Company without consideration.

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        During the Restricted Period with respect to any shares of Restricted Stock, the Company shall have the right to retain in the Company's possession the certificate or certificates representing such shares.

        (d) Removal of Restrictions. Except as otherwise provided in this Section 6.3, a share of Restricted Stock covered by a Restricted Stock grant shall become freely transferable by the Participant upon completion of the Restricted Period, including the passage of any applicable period of time and satisfaction of any conditions to vesting. The Committee, in its sole discretion, shall have the right at any time to waive all or any part of the restrictions and conditions with regard to all or any part of the shares held by any Participant.

        (e) Voting Rights, Dividends and Other Distributions. During the Restricted Period, Participants holding shares of Restricted Stock granted hereunder may exercise full voting rights and shall receive all regular cash dividends paid with respect to such shares. Except as the Committee shall otherwise determine, any other cash dividends and other distributions paid to Participants with respect to shares of Restricted Stock including any dividends and distributions paid in shares shall be subject to the same restrictions and conditions as the shares of Restricted Stock with respect to which they were paid.

        (f) Unrestricted Stock. The Committee may, in its sole discretion, sell to any Participant shares of Stock free of restrictions under the Plan for a price which is not less than the par value of the Stock.

        (g) Notice of Section 83(b) Election. Any Participant making an election under Section 83(b) of the Code with respect to Restricted Stock must provide a copy thereof to the Company within 10 days of filing such election with the Internal Revenue Service.

        (h) Shares delivered under Senior Executive Annual Incentive Plan. In the case of an award under the Company's Senior Executive Annual Incentive Plan which is payable in shares of Stock, the holder of such award shall be deemed a Participant hereunder and any such Shares shall be treated as having been sold to the Participant as Unrestricted Stock or Restricted Stock hereunder (or as Deferred Stock under Section 6.4, if delivery is deferred) for a price equal to the cash payment under the award in lieu of which the Stock is being delivered under the Award.

6.4.    Deferred Stock.

        A Deferred Stock Award entitles the recipient to receive shares of Stock to be delivered in the future. Delivery of the Stock will take place at such time or times, and on such conditions, as the Committee may specify. The Committee may at any time accelerate the time at which delivery of all or any part of the Stock will take place. At the time any Award described in this Section 6 is granted, the Committee may provide that, at the time Stock would otherwise be delivered pursuant to the Award, the Participant will instead receive an instrument evidencing the Participant's right to future delivery of Deferred Stock.

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6.5.    Performance Awards; Performance Goals.

        (a) Nature of Performance Awards. A Performance Award entitles the recipient to receive, without payment, an amount in cash or Stock or a combination thereof (such form to be determined by the Committee) subject to the attainment of performance goals. Performance goals may be related to personal performance, corporate performance, departmental performance or any other category of performance established by the Committee. The Committee will determine the performance goals, the period or periods during which performance is to be measured and all other terms and conditions applicable to the Award.

        (b) Other Awards Subject to Performance Condition. The Committee may, at the time any Award described in this Section 6 is granted, impose the condition (in addition to any conditions specified or authorized in this Section 6 or any other provision of the Plan) that performance goals be met prior to the Participant's realization of any vesting, payment or benefit under the Award. Any such Award made subject to the achievement of performance goals (other than an Option or SAR granted with an exercise price not less than fair market value) shall be treated as a Performance Award for purposes of Section 6.5(c) below. However, an Award under the Company's Senior Executive Annual Incentive Plan shall not be considered a Performance Award for purposes of this Plan.

        (c) Limitations and Special Rules. No more than an aggregate of 1,000,000 shares of Stock (or their equivalent fair market value in cash) may be delivered to any Participant under Performance Awards made from and after the effective date of the Plan and prior to December 19, 2006. In the case of any Performance Award intended to qualify for the performance-based remuneration exception described at Section 162(m)(4)(C) of the Code and the regulations thereunder (an "exempt award"), the Committee shall in writing preestablish one or more specific, objectively determinable performance goal or goals (based solely on one or more qualified performance criteria) no later than ninety (90) days after the commencement of the period of service to which the performance relates (the "performance period") (or at such other time as is required to satisfy the conditions of section 162(m)(4)(C) of the Code and the regulations thereunder). For purposes of the preceding sentence, a qualified performance criterion is any of the following determined (to the extent relevant) on either a consolidated or business-unit basis: (i) return on equity; (ii) earnings per share; (iii) the Company's total shareholder return during the performance period compared to the total shareholder return of a generally recognized market reference (e.g., the S & P 500 or the S & P Financial Index); (iv) revenue growth; (v) market share; (vi) earnings; or (vii) revenue. To the extent consistent with qualification of an exempt award under Section 162(m)(4)(C) of the Code and the regulations thereunder, the Committee may provide that performance goals be adjusted in order to eliminate the effect of extraordinary or other non-recurring events or changes in the Stock by reason of an event described in Section 8.6(a).

6.6.    Supplemental Grants.

        In connection with any Award, the Committee may at the time such Award is made or at a later date, provide for and grant a cash award to the Participant ("Supplemental Grant") not to

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exceed an amount equal to (1) the amount of any Federal, state and local income tax on ordinary income for which the Participant may be liable with respect to the Award, determined by assuming taxation at the highest marginal rate, plus (2) an additional amount on a grossed-up basis intended to make the Participant whole on an after-tax basis after discharging all the Participant's income tax liabilities arising from all payments under this Section 6. Any payments under this subsection (b) will be made at the time the Participant incurs or is expected to incur Federal income tax liability with respect to the Award.

7. EVENTS AFFECTING OUTSTANDING AWARDS

7.1.    Death, Retirement or Disability.

        If the employment of an Employee Participant terminates by reason of death, retirement at or after the normal or early retirement age under any retirement plan or supplemental retirement agreement maintained by the Company or any subsidiary ("retirement"), or disability as determined (subject to such additional rules as the Committee may prescribe) in accordance with the long term disability plan of the Company and its subsidiaries covering the Participant or, if there is no such plan, in accordance with a determination of disability by the Social Security Administration ("disability"), the following will apply except as the Committee may otherwise determine:

        (a) All Options and Stock Appreciation Rights held by the Participant or a transferee immediately prior to termination of employment by reason of retirement or disability, whether or not then exercisable, may be exercised by the Participant or such transferee, in accordance with the terms of the Option or SAR or on such accelerated basis as the Committee may determine, during the period that ends on the later of (i) one year after the date of such termination of employment, or (ii) one year after the Option or SAR, or the last installment of such Option or SAR if there is more than one, first becomes exercisable. All Options and SARs held by the Participant or a transferee prior to termination of employment by reason of death, whether or not then exercisable, may be exercised by (i) the Participant’s executor or administrator or the person or persons to whom the Option or SAR is transferred by law or the applicable laws of descent and distribution, if the Option or SAR was held by the Participant at death, or (ii) by the Participant’s transferee, if the Option or SAR was held by such transferee at the Participant’s death, in either case during the period that ends one year after the date of death. In no event, however, shall an Option or SAR remain exercisable beyond the latest date on which it could have been exercised without regard to this Section 7.

        (b) In the case of termination of employment by reason of death or disability, all Restricted Stock held by the Participant immediately prior to such termination of employment shall be vested and the right to receive any payment or benefit under any Deferred Stock Award then held by the Participant shall be vested and accelerated. In the case of termination of employment by reason of retirement, all Restricted Stock held by the Participant immediately prior to retirement must be transferred to the Company (and, in the event the certificates representing such Restricted Stock are held by the Company, such Restricted Stock will be so transferred without any further action by the Participant) in accordance with Section 6.3(c) above

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and all of the Participant’s rights under any Deferred Stock Award, other than rights to any payment or benefit to which the Participant had become irrevocably entitled prior to retirement, will be forfeited.

        (c) Any payment or benefit under Performance Award, or Supplemental Grant to which the Participant was not irrevocably entitled prior to termination of employment will be forfeited and the Award canceled as of the time of such termination of employment.

7.2.    Other Termination of Service.

        Except as provided at Section 7.2(d) below, if a Participant who is an Employee ceases to be an Employee for any reason other than death, retirement, or disability (as defined at Section 7.1 above), or if there is a termination of the consulting, service or similar relationship in respect of which a non-Employee Participant was granted an Award hereunder (such termination of the employment or other relationship being hereinafter referred to as a "Status Change"), the following will apply except as the Committee may otherwise determine:

        (a) All Options and Stock Appreciation Rights held by the Participant (or if the Option or Right was previously transferred, by the transferee) that were not exercisable immediately prior to the Status Change shall terminate at the time of the Status Change. Any Options or Rights that were exercisable immediately prior to the Status Change will continue to be exercisable for a period of three months, and shall thereupon terminate; provided, that if the Participant should die within such three-month period, the Option or Right shall be exercisable (to the extent it was exercisable immediately prior to death) for a period of one year following the Status Change. In no event, however, shall an Option or Stock Appreciation Right remain exercisable beyond the latest date on which it could have been exercised without regard to this Section 7.

        (b) All Restricted Stock held by the Participant at the time of the Status Change must be transferred to the Company (and, in the event the certificates representing such Restricted Stock are held by the Company, such Restricted Stock will be so transferred without any further action by the Participant) in accordance with Section 6.3(c) above.

        (c) Any payment or benefit under a Deferred Stock Award, Performance Award, or Supplemental Grant to which the Participant was not irrevocably entitled prior to the Status Change will be forfeited and the Award canceled as of the date of such Status Change.

        (d) For purposes of this Section 7.2, in the case of a Participant who is an Employee, a Status Change shall not be deemed to have resulted by reason of (i) a sick leave or other bona fide leave of absence approved for purposes of the Plan by the Committee, so long as the Employee's right to reemployment is guaranteed either by statute or by contract, or (ii) a transfer of employment between the Company and a subsidiary or between subsidiaries, or to the employment of a corporation (or a parent or subsidiary corporation of such corporation) issuing or assuming an Option in a transaction to which Section 424(a) of the Code applies. Except as the Committee may otherwise determine, a Participant who ceases to be an Employee but in

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connection therewith continues to provide consulting or advisory services to the Company or its subsidiaries, or who ceases to be a consultant or advisor to the Company or its subsidiaries but in connection therewith becomes an Employee, will not be deemed to have suffered a Status Change until such time as he or she ceases to provide services to the Company and its subsidiaries in any of such capacities (whether as an Employee, consultant or advisor). Except as the Committee may otherwise determine, if a subsidiary by which a Participant is employed or to which he or she is providing services ceases to be a subsidiary (by sale, disposition or otherwise), the Participant will thereupon be treated as having suffered a Status Change unless, in connection with such event, he or she continues to be employed by or continues otherwise to provide services to the Company or its continuing subsidiaries.

7.3    Certain Corporate Transactions.

        Except as otherwise provided by the Committee at the time of grant, in the event of a consolidation or merger in which the Company is not the surviving corporation or which results in the acquisition of substantially all the Company's outstanding Stock by a single person or entity or by a group of persons and/or entities acting in concert, or in the event of the sale or transfer of substantially all the Company's assets or a dissolution or liquidation of the Company (a "covered transaction"), the following rules shall apply:

        (a) Subject to paragraph (b) below, all outstanding Awards requiring exercise will cease to be exercisable, and all other Awards to the extent not fully vested (including Awards subject to conditions not yet satisfied or determined) will be forfeited except as required under Section 7.4 below, as of the effective time of the covered transaction, provided that the Committee may in its sole discretion (but subject to Section 7.4 below in the case of a covered transaction that constitutes a Change of Control), on or prior to the effective date of the covered transaction, (1) make any outstanding Option and Stock Appreciation Right exercisable in full, (2) remove the restrictions from any Restricted Stock, (3) cause the Company to make any payment and provide any benefit under any Deferred Stock Award, Performance Award or Supplemental Grant, and (4) remove any performance or other conditions or restrictions on any Award; or

        (b) With respect to an outstanding Award held by a Participant who, following the covered transaction, will be employed by or otherwise providing services to an entity which is a surviving or acquiring entity in the covered transaction or an affiliate of such an entity, the Committee may at or prior to the effective time of the covered transaction, in its sole discretion and in lieu of the action described in paragraph (a) above, arrange to have such surviving or acquiring entity or affiliate assume any Award held by such Participant outstanding hereunder or grant a replacement award which, in the judgment of the Committee, is substantially equivalent to any Award being replaced.

7.4.    Change of Control Provisions.

        (a) Impact of Event. Notwithstanding any other provision of the Plan to the contrary, in the event of a Change of Control:

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        (1) Acceleration of Options and SARs; Effect on Other Awards. All Options and SARs outstanding as of the date such Change of Control is determined to have occurred and which are not then exercisable shall (prior to application of the provisions of Section 7.3 above, in the case of a Change of Control that also constitutes a covered transaction) become exercisable to the full extent of the original grant, all shares of Restricted Stock which are not otherwise vested shall vest, and holders of Performance Awards granted hereunder as to which the relevant performance period has not ended as of the date such Change of Control is determined to have occurred shall be entitled at the time of such Change of Control to receive a cash payment per Performance Award equal to such amount, if any, as shall be specified in the Award.

        (2) Restriction on Application of Plan Provisions Applicable in the Event of Termination of Employment. After a Change of Control (but subject to Section 7.3 above), Options and SARs shall remain exercisable following a termination of employment or other service relationship (other than termination by reason of death, disability (as determined by the Company) or retirement) for seven (7) months following such termination or until expiration of the original terms of the Option or SAR, whichever period is shorter.

        (3) Restriction on Amendment. In connection with or following a Change of Control, neither the Committee nor the Board may impose additional conditions upon exercise or otherwise amend or restrict an Option, SAR, share of Restricted Stock, Deferred Stock Award or Performance Award, or amend the terms of the Plan in any manner adverse to the holder thereof, without the written consent of such holder.

        (b) Definition of Change of Control. For purposes of the Plan, a "Change of Control" shall mean the happening of any of the following events:

        (1) An acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 25% or more of either (x) the then outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (y) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); excluding, however, the following acquisitions of Outstanding Company Common Stock and Outstanding Company Voting Securities: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (iv) any acquisition by any Person pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (3) of this Section 7.4; or

        (2) Individuals who, as of the effective date of the Plan, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual who becomes a member of the Board subsequent to such effective date, whose election, or nomination for election by the Company's stockholders, was approved by a vote of at least a majority of directors then comprising the Incumbent Board shall be

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considered as though such individual were a member of the Incumbent Board; but, provided further, that any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board shall not be so considered as a member of the Incumbent Board; or

        (3) Consummation by the Company of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company ("Business Combination"); excluding, however, such a Business Combination pursuant to which (i) all or substantially all of the individuals and entities who are the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination own, directly or indirectly, more than 50% of, respectively, the outstanding shares of common stock, and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (ii) no Person (other than any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or such corporation resulting from such Business Combination) will beneficially own, directly or indirectly, 25% or more of, respectively, the outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the outstanding voting securities of such corporation entitled to vote generally in the election of directors except to the extent that such ownership existed with respect to the Company prior to the Business Combination and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

        (4) The approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

8.    GENERAL PROVISIONS

8.1.    Documentation of Awards.

        Awards will be evidenced by such written instruments, if any, as may be prescribed by the Committee from time to time. Such instruments may be in the form of agreements to be executed by both the Participant and the Company, or certificates, letters or similar instruments, which need not be executed by the Participant but acceptance of which will evidence agreement to the terms thereof.

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8.2.    Rights as a Stockholder, Dividend Equivalents.

        Except as specifically provided by the Plan, the receipt of an Award will not give a Participant rights as a stockholder; the Participant will obtain such rights, subject to any limitations imposed by the Plan or the instrument evidencing the Award, only upon the issuance of Stock. However, the Committee may, on such conditions as it deems appropriate, provide that a Participant will receive a benefit in lieu of cash dividends that would have been payable on any or all Stock subject to the Participant's Award had such Stock been outstanding. Without limitation, the Committee may provide for payment to the Participant of amounts representing such dividends, either currently or in the future, or for the investment of such amounts on behalf of the Participant.

8.3.    Conditions on Delivery of Stock.

        The Company will not be obligated to deliver any shares of Stock pursuant to the Plan or to remove restriction from shares previously delivered under the Plan (a) until all conditions of the Award have been satisfied or removed, (b) until, in the opinion of the Company's counsel, all applicable Federal and state laws and regulation have been complied with, (c) if the outstanding Stock is at the time listed on any stock exchange or The NASDAQ National Market, until the shares to be delivered have been listed or authorized to be listed on such exchange or market upon official notice of notice of issuance, and (d) until all other legal matters in connection with the issuance and delivery of such shares have been approved by the Company's counsel. If the sale of Stock has not been registered under the Securities Act of 1933, as amended, the Company may require, as a condition to exercise of the Award, such representations or agreements as counsel for the Company may consider appropriate to avoid violation of such Act and may require that the certificates evidencing such Stock bear an appropriate legend restricting transfer.

        If an Award is exercised by the Participant's legal representative or transferee, the Company will be under no obligation to deliver Stock pursuant to such exercise until the Company is satisfied as to the authority of such representative.

8.4.    Tax Withholding.

        The Company will withhold from any cash payment made pursuant to an Award an amount sufficient to satisfy all federal, state and local withholding tax requirements (the "withholding requirements").

        In the case of an Award pursuant to which Stock may be delivered, the Committee will have the right to require that the Participant or other appropriate person remit to the Company an amount sufficient to satisfy the withholding requirements, or make other arrangements satisfactory to the Committee with regard to such requirements, prior to the delivery of any Stock. If and to the extent that such withholding is required, the Committee may permit the Participant or such other person to elect at such time and in such manner as the Committee provides to have the Company hold back from the shares to be delivered, or to deliver to the Company, Stock having a value calculated to satisfy the withholding requirement. The

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Committee may make such share withholding mandatory with respect to any Award at the time such Award is made to a Participant.

        If in connection with the exercise of an ISO the Committee determines that the Company could be liable for withholding requirements with respect to the exercise or with respect to a disposition of the Stock received upon exercise, the Committee may require as a condition of exercise that the person exercising the ISO agree (a) to provide for withholding under the preceding paragraph of this Section 8.4, if the Committee determines that a withholding responsibility may arise in connection with the exercise, (b) to inform the Company promptly of any disposition (within the meaning of Section 424(c) of the Code) of Stock received upon exercise, and (c) to give such security as the Committee deems adequate to meet the potential liability of the Company for the withholding requirements and to augment such security from time to time in any amount reasonably deemed necessary by the Committee to preserve the adequacy of such security.

8.5.    Nontransferability of Awards.

        No ISO nor, except as the Committee may otherwise determine, any other Award (other than an Award in the form of an outright transfer of cash or Unrestricted Stock) may be transferred other than by will or by the laws of descent and distribution or exercised, during the Participant’s lifetime, other than by the Participant (or, in the event of the Participant’s incapacity, the person or persons legally appointed to act on the Participant’s behalf). The Committee in its discretion may permit transfers of Awards other than ISOs to other persons or entities.

8.6.    Adjustments in the Event of Certain Transactions.

        (a)    In the event of a stock dividend, stock split or combination of shares, recapitalization or other change in the Company's capitalization, or other distribution to common stockholders other than normal cash dividends, after the effective date of the Plan, the Committee will make any appropriate adjustments to the maximum number of shares that may be delivered under the Plan under the first paragraph of Section 4 above and to the limits described in the second paragraph of Section 4 and in Section 6.5(c).

        (b) In any event referred to in paragraph (a), the Committee will also make any appropriate adjustments to the number and kind of shares of stock or securities subject to Awards then outstanding or subsequently granted, any exercise prices relating to Awards and any other provision of Awards affected by such change. The Committee may also make such adjustments to take into account material changes in law or in accounting practices or principles, mergers, consolidations, acquisitions, dispositions or similar corporate transactions, or any other event, if it is determined by the Committee that adjustments are appropriate to avoid distortion in the operation of the Plan; provided, that adjustments pursuant to this sentence shall not be made to the extent it would cause any Award intended to be exempt under Section 162(m)(4)(C) to fail to be so exempt.

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        (c) In the case of ISOs or Awards intended to satisfy the performance-based remuneration exception under Section 162(m)(4)(C) of the Code, the adjustments described in (a) and (b) will be made only to the extent consistent with continued qualification of the option under Section 422 of the Code (in the case of an ISO) or Section 162(m) of the Code.

8.7.    Employment Rights, Etc.

        Neither the adoption of the Plan nor the grant of Awards will confer upon any person any right to continued retention by the Company or any subsidiary as an Employee or otherwise, or affect in any way the right of the Company or subsidiary to terminate an employment, service or similar relationship at any time. Except as specifically provided by the Committee in any particular case, the loss of existing or potential profit in Awards granted under the Plan will not constitute an element of damages in the event of termination of an employment, service or similar relationship even if the termination is in violation of an obligation of the Company to the Participant.

8.8.    Noncompetition Restrictions, Etc.

        The Committee may provide in connection with any Award that the Participant's rights to enjoyment of the Award or to any cash or Stock deliverable under the Award be conditioned upon the Participant's agreeing not to compete with the Company and its subsidiaries, not to disclose confidential information, and not to solicit employees, advisors or business from the Company and its subsidiaries, the terms of any such agreement or undertaking to be determined by the Committee.

8.9.    Deferral of Payments.

        The Committee may agree at any time, upon request of the Participant and subject to such rules as the Committee may determine, to defer the date on which any future payment under an Award will be made.

8.10.    Special Terms for Non-U.S. Participants

        The Committee may establish special rules under the Plan (which may be, but need not be, consistent with the rules applicable to Participants and Awards generally) for Awards to Participants employed by or otherwise providing services to non-U.S. subsidiaries; provided, that no such special rules shall be established without the approval of the stockholders of the Company to the extent they would be ineffective without such stockholder approval if accomplished as an amendment to the Plan pursuant to Section 9.

9. EFFECT, AMENDMENT AND TERMINATION

        Neither adoption of the Plan nor the grant of Awards to a Participant will affect the Company's right to grant to such Participant awards that are not subject to the Plan, to issue to

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such Participant Stock as a bonus or otherwise, or to adopt other plans or arrangements under which Stock may be issued to Employees.

        The Committee may at any time or times amend the Plan or any outstanding Award for any purpose which may at the time be permitted by law, or may at any time terminate the Plan as to any further grants of Awards, provided that (except to the extent expressly required or permitted by the Plan) no such amendment will, without the approval of the stockholders of the Company, effectuate a change for which stockholder approval is required in order for the Plan to continue to qualify for the award of ISOs under Section 422 of the Code or for the award of performance-based compensation under Section 162(m) of the Code, nor shall any such amendment adversely affect the rights of a holder of an Award without such holder's consent.

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