-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NJDy41SqtQLLvd+dlkTLt24AAn3fgyTdTVsG6IVp1ceLHCOkZmVBlPbBgysglH20 m9OeyW416JlsIteb20zBhg== 0001005150-97-000124.txt : 19970429 0001005150-97-000124.hdr.sgml : 19970429 ACCESSION NUMBER: 0001005150-97-000124 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970310 FILED AS OF DATE: 19970311 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BANKERS TRUST NEW YORK CORP CENTRAL INDEX KEY: 0000009749 STANDARD INDUSTRIAL CLASSIFICATION: 6022 IRS NUMBER: 136180473 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-05920 FILM NUMBER: 97554122 BUSINESS ADDRESS: STREET 1: 280 PARK AVE CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 2122502500 MAIL ADDRESS: STREET 1: 280 PARK AVENUE CITY: NEW YORK STATE: NY ZIP: 10017 FORMER COMPANY: FORMER CONFORMED NAME: BT NEW YORK CORP DATE OF NAME CHANGE: 19671107 DEF 14A 1 FORM DEFINITIVE 14-A SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 Filed by the Registrant /X/ Filed by a Party other than the Registrant /_/ Check the appropriate box: /_/ Preliminary Proxy Statement /X/ Definitive Proxy Statement /_/ Definitive Additional Materials /_/ Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12 BANKERS TRUST NEW YORK CORPORATION ________________________________________________________________________________ (Name of Registrant as Specified In Its Charter) ________________________________________________________________________________ (Name of Person(s) Filing Proxy Statement) Payment of Filing Fee (Check the appropriate box): /_/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(j)(2). /_/ $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3). /_/ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. 1) Title of each class of securities to which transaction applies: _____________________________________________________________________________ 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:* _____________________________________________________________________________ 4) Proposed maximum aggregate value of transaction: _____________________________________________________________________________ /_/ 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 No. ______________________________________ 3) Filing party: ___________________________________________________________ 4) Date filed: _____________________________________________________________ ___________ *Set forth the amount on which the filing fee is calculated and state how it was determined. [LOGO OMITTED] FRANK N. NEWMAN, CHAIRMAN OF THE BOARD March 10, 1997 Dear Stockholder: You are cordially invited to attend the Annual Meeting of Stockholders, to be held at 3:00 P.M. on Tuesday, April 15, 1997, at One Bankers Trust Plaza (130 Liberty Street), New York, New York. We are asking you to vote for the election of directors, for the ratification and appointment of the independent auditor and for the approval of the 1997 Stock Option and Stock Award Plan, as described in the attached Notice of Meeting and Proxy Statement. These matters, together with three stockholder proposals that may be brought before the meeting, are more fully described in the accompanying Proxy Statement. For the reasons set forth in the Proxy Statement, your Board of Directors and Management recommend a vote FOR items 1, 2 and 3 and AGAINST items 4, 5, and 6, as set forth in the enclosed proxy card. It is important that your shares be represented at the meeting, whether or not you are able to personally attend. Accordingly, I urge you to sign and date the enclosed proxy card and return it in the enclosed envelope as promptly as possible. Thank you for your interest in the Corporation's affairs. Sincerely, /s/ Frank Newman [LOGO OMITTED] NOTICE OF ANNUAL MEETING OF STOCKHOLDERS APRIL 15, 1997 The Annual Meeting of Stockholders of Bankers Trust New York Corporation (a New York corporation) will be held at One Bankers Trust Plaza (130 Liberty Street), New York, New York, on Tuesday, April 15, 1997, at 3:00 P.M., for the following purposes: 1. to elect directors; 2. to ratify the appointment of KPMG Peat Marwick LLP as the independent auditor for 1997; 3. to approve the 1997 Stock Option and Stock Award Plan; and 4. to consider and act upon three stockholder proposals, if introduced at the meeting, as described in the attached Proxy Statement; and to transact such other business as may properly come before the meeting or adjournments thereof. The Board of Directors has fixed the close of business on February 28, 1997, as the time as of which stockholders of record of Bankers Trust New York Corporation who are entitled to notice of and to vote at such meeting shall be determined. By order of the Board of Directors /s/ James T. Byrene, Jr. JAMES T. BYRNE, JR. Secretary 280 Park Avenue New York, New York 10017 March 10, 1997 ---------- YOUR VOTE IS IMPORTANT WE ENCOURAGE YOU TO COMPLETE, DATE, SIGN AND PROMPTLY RETURN YOUR PROXY CARD IN THE ENCLOSED ENVELOPE, REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE MEETING. PROXY STATEMENT This statement is submitted in connection with the solicitation of proxies by and on behalf of the Board of Directors and Management of Bankers Trust New York Corporation (the "Corporation"), 280 Park Avenue, New York, New York 10017, for the Annual Meeting of Stockholders on April 15, 1997, or adjournments thereof (the "Annual Meeting"). There were outstanding at the close of business on the record date, February 28, 1997, 78,112,085 shares of the common stock of the Corporation (the "Common Stock") entitled to vote at this meeting, each share being entitled to one vote. Only stockholders whose names appear of record on the books of the Corporation at that time will be entitled to vote at the Annual Meeting. The presence, in person or by proxy, of the holders of a majority of the shares entitled to vote constitutes a quorum for the Annual Meeting. This Proxy Statement and the enclosed proxy card were mailed commencing on or about March 10, 1997. If a stockholder is a participant in the Corporation's Dividend Reinvestment and Common Stock Purchase Plan, the proxy card sent to such participant will represent both the number of shares registered in the participant's name and the number of shares (excluding fractional shares) credited to the participant's Dividend Reinvestment Plan account as of the record date, and all such shares will be voted in accordance with the instructions on the proxy card. Proxies marked as abstaining will be treated as present for purposes of determining a quorum for the Annual Meeting, but will not be counted as voting in respect of any matter as to which abstinence is indicated. Proxies returned by brokers as "non-votes" on behalf of shares held in street name because beneficial owners' discretion has been withheld as to one or more matters on the agenda for the Annual Meeting will be treated as present only for purposes of determining a quorum for the Annual Meeting; such shares will not be counted for any purpose as to the matters for which a non-vote is indicated on the broker's proxy. PART I. ELECTION OF DIRECTORS The directors of the Corporation are elected annually to serve until the next Annual Meeting of Stockholders and until their respective successors have been elected and duly qualified. Directors are elected by a plurality of the votes cast. It is intended that the shares represented by the enclosed proxy will be voted for each of the nominees listed herein unless authority to vote for the election of directors is withheld. In the event that any of such nominees unexpectedly shall be unable to serve as a director, it is intended that the enclosed proxy will be voted for such person or persons as shall be nominated by the Board's Committee on Directors. Jon M. Huntsman, who has served as a director of the Corporation and Bankers Trust Company, its principal subsidiary (the "Bank"), since 1991, will not stand for reelection at the Annual Meeting. Following are the nominees, all of whom are currently directors of the Corporation and were elected to their present terms of office at the 1996 Annual Meeting of Stockholders, except for Donald L. Staheli and Paul A. Volcker, who were elected as directors of the Corporation and Bankers Trust Company in July and September, 1996, respectively. Information concerning each of the nominees, showing the year when first elected as a director, the age, principal occupation and principal affiliations, is as follows:
Nominees And Year Each Became A Director Principal Occupation And Other Information - - -------------------------- --------------------------------------------------------------------------------------- DIRECTOR OF VARIOUS CORPORATIONS. Director of Bankers Trust Company. Retired senior vice president and director, International Business Machines Corporation. Also a director of Computer Task Group, Phillips Petroleum Company, Caliber Systems, Inc. (formerly Roadway Services, Inc.), Rohm and Haas Company and Tig Holdings; Chairman emeritus of Amherst College; and chairman of the Colonial Williamsburg Foundation. Age 68. George B. Beitzel 1977 DIRECTOR, INSTITUTE FOR ADVANCED STUDY. Director of Bankers Trust Company. Chairman, Committee on Science, Engineering and Public Policy of the National Academies of Sciences and Engineering & the Institute of Medicine; member, National Academy of Sciences, American Academy of Arts and Sciences and American Philosophical Society; member and chairman of the Nominations Committee and Committee on Science and Engineering Indicators, National Science Board; and trustee of North Carolina School of Science and Mathematics and the Woodward Academy. Former member of the board of directors, Research Triangle Institute. Age 58. Phillip A. Griffiths 1994 CHAIRMAN EMERITUS, J.C. PENNEY COMPANY, INC. Director of Bankers Trust Company. Also a director of Exxon Corporation, Halliburton Company, Warner-Lambert Company, The Williams Companies, Inc. and the National Retail Federation. Age 61. William R.Howell 1986 SENIOR PARTNER, AKIN, GUMP, STRAUSS, HAUER & FELD, LLP, ATTORNEYS-AT-LAW, WASHINGTON D.C. AND DALLAS, TEXAS. Director of Bankers Trust Company. Former president of the National Urban League, Inc. Also a director of American Express Company, Dow-Jones, Inc., J.C. Penney Company, Inc., Revlon Group Incorporated, Ryder System, Inc., Sara Lee Corporation, Union Carbide Corporation and Xerox Corporation; and a trustee of Brookings Institution, The Ford Foundation and Howard University. Age 61. Vernon E. Jordan, Jr. 1972 2 Nominees And Year Each Became A Director Principal Occupation And Other Information - - -------------------------- --------------------------------------------------------------------------------------- RETIRED CHAIRMAN AND CHIEF EXECUTIVE OFFICER, PHILIP MORRIS COMPANIES INC. Director of Bankers Trust Company. Also a director of The News Corporation Limited and Sola International Inc., and chairman of WPP Group plc. Age 70. Hamish Maxwel 1984 CHAIRMAN OF THE BOARD, CHIEF EXECUTIVE OFFICER AND PRESIDENT OF THE CORPORATION AND BANKERS TRUST COMPANY. Director of Bankers Trust Company. Former deputy secretary of the United States Treasury and former vice chairman of the board and director of BankAmerica Corporation and Bank of America NT&SA. Also a director of Carnegie Hall. Age 54. Frank N. Newman 1995 INVESTOR. Director of Bankers Trust Company. Former co-chief executive officer of Time Warner Inc. Also a director of Boston Scientific Corporation and Xerox Corporation. Age 57. N.J. Nicholas Jr. 1989 CHAIRMAN AND CHIEF EXECUTIVE OFFICER, THE PALMER GROUP. Director of Bankers Trust Company. Former Dean of The Wharton School, University of Pennsylvania and former chief executive officer of Touche Ross & Co. (now Deloitte & Touche). Also a director of Allied-Signal Inc., Federal Home Loan Mortgage Corporation, GTE Corporation, The May Department Stores Company and Safeguard Scientifics, Inc.; member, advisory board of the Controller General of the United States; and a trustee, the University of Pennsylvania. Age 62. Russell E. Palmer 1988 3 Nominees And Year Each Became A Director Principal Occupation And Other Information - - -------------------------- --------------------------------------------------------------------------------------- CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER, CONTINENTAL GRAIN COMPANY. Director of Bankers Trust Company. Also a director of ContiFinancial Corporation, Prudential Life Insurance Company of America, Fresenius Medical Care, A.g., America-China Society, National Committee on United States-China Relations and the New York City Partnership; chairman of the U.S.-China Business Council, Council on Foreign Relations and the National Advisory Council of Brigham Young University's Marriott School of Management; vice chairman of The Points of Light Foundation; and a trustee of the American Graduate School of International Management. Age 65. Donald L. Staheli 1996 FORMER VICE PRESIDENT, THE EDNA MCCONNELL CLARK FOUNDATION (A CHARITABLE FOUNDATION). Director of Bankers Trust Company. Also a director of CVS Corporation and of the Community Foundation for Palm Beach and Martin Counties, and a trustee emerita of Cornell University. Age 68. Patricia Carry Stewart 1977 VICE CHAIRMAN OF THE CORPORATION AND BANKERS TRUST COMPANY. Director of Bankers Trust Company. Also a director of Alicorp S.A., Northwest Airlines, Private Export Funding Corp., the New York State Banking Board and St. Lukes-Roosevelt Hospital Center; a partner of New York City Partnership; and chairman, Wharton Financial Services Center. Age 61. George J. Vojta 1992 DIRECTOR OF VARIOUS CORPORATIONS. Director of Bankers Trust Company. Former Chairman and Chief Executive Officer of Wolfensohn & Co., Inc. and former Chairman of the Board of Governors of the Federal Reserve System. Also a director of the American Stock Exchange, Nestle S.A., Prudential Insurance Company and UAL Corporation; chairman of Group of 30; North American Chairman of the Trilateral Commission; co-chairman of Bretton Woods Committee and U.S./Hong Kong Economic Cooperation Committee; director of American Council on Germany, the Aspen Institute, Council on Foreign Relations, and The Japan Society; trustee of The American Assembly; and member of Senior Advisory Board of The Arthritis Foundation. Age 69. Paul A. Volcker 1996
4 SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
NAME OF BENEFICIAL AMOUNT AND NATURE PERCENT OF TITLE OF CLASS OWNER OF BENEFICIAL OWNERSHIP(1,2) CLASS(3) - - ---------------- ------------------------ ------------------------------------ ------------- Common Stock ... Beitzel, George B. 6,465 (D) 6,000 (I)(As Trustee) Common Stock ... Daniel, Richard H. 53,305 (D)(4,5) Common Stock ... de Balmann, Yves C. 197,327 (D)(4,5,6) Common Stock ... Doherty, R. Kelly 159,386 (D)(4,5,6) 1,753 (I)(EBP) Common Stock ... Griffiths, Phillip A. 1,400 (D) Common Stock ... Howell, William R. 2,275 (D) Common Stock ... Huntsman, Jon R. 17,400 (D) Common Stock ... Jordan, Vernon E. Jr. 7,185 (D) Common Stock ... Maxwell, Hamish 5,714 (D) Common Stock ... Newman, Frank N. 95,854 (D)(4,5) Common Stock ... Nicholas, N.J. Jr. 3,100 (D) Common Stock ... Palmer, Russell E. 3,600 (D) Common Stock ... Staheli, Donald L. 600 (D) Common Stock ... Stewart, Patricia C. 5,900 (D) Common Stock ... Virtue, James E. 114,196 (D)(4,5) Common Stock ... Vojta, George J. 341,951 (D)(4,5) 43 (I)(EBP) Common Stock ... Volcker, Paul A. 291,354 (D) Common Stock ... Directors and Executive 2,547,598 (D)(7) 3.1% Officers as a group 6,000 (I)(As Trustee) 9,735 (I)(EBP)
(1) Ownership as of February 28, 1997. Shares of common stock have been rounded to the nearest full share. (2) As denoted next to share amount: (D) represents shares directly held; (I) represents shares indirectly held; and (EBP) represents shares held in the Corporation's Qualified Employee Benefit Plans and/or in the Corporation's Employee Stock Ownership Plan. (3) Based on February 28, 1997, outstanding securities of 78,112,085 and exercisable options of 3,507,159, the number of shares of Common Stock owned by any member of Management constitutes less than 1% of the total outstandings of the class. (4) Includes options now exercisable and those that become exercisable within 60 days for the following: Daniel--20,000; de Balmann--95,000; Doherty--55,000; Newman--50,000; Virtue--58,000; and Vojta--161,864. (5) Includes vested (non-forfeitable) shares which are mandatorily deferred for 5 years (commencing with the end of the performance year) under PEP (as defined on page 10), a component of the 1991 and 1994 Stock Option and Stock Award Plans, for the following: Daniel--23,305; de Balmann--100,834; Doherty--102,892; Newman--45,854; Virtue--26,196; and Vojta--80,984. (6) Includes vested (non-forfeitable) shares which are deferred for three years (commencing with the end of the performance year) under EPP (as defined on page 11) for the following: de Balmann--1,493; and Doherty--1,493. (7) Includes 1,114,864 options that will be exercisable within 60 days and 844,271 vested shares under PEP. 5 SECTION 16 BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), requires the Corporation's executive officers and directors and holders of more than 10% of the Corporation's Common Stock to file initial reports of ownership and reports of changes in ownership of the Common Stock with the Securities and Exchange Commission ("SEC"). Executive officers, directors and holders of more than 10% of the Common Stock are required by SEC regulations to furnish the Corporation with copies of all such forms. Based on a review of the copies of such forms furnished to the Corporation and written representations from the Corporation's executive officers and directors, the Corporation believes that in 1996 all Section 16(a) requirements applicable to its executive officers and directors were met. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
(3) (1) (2) AMOUNT AND NATURE OF (4) TITLE OF NAME AND ADDRESS OF BENEFICIAL PERCENT OF CLASS BENEFICIAL OWNER OWNERSHIP CLASS -------------------------------- -------------------- ---------------- Common Stock The Capital Group Companies, Inc. 5,704,800(a) 7.0% 333 South Hope Street Los Angeles, CA 90071 Common Stock Putnam Investments, Inc. 4,273,401(b) 5.3% One Post Office Square Boston, MA 02109
(a) In a Schedule 13G filed under the Exchange Act, The Capital Group of Companies, Inc. disclosed that, as of December 31, 1996, it had sole investment power with respect to all of said shares and sole voting power with respect to 153,200 of said shares; that the shares were acquired in the ordinary course of business, were not acquired for the purpose of, and do not have the effect of, changing or influencing the control of the Corporation; and that the shares were not acquired in connection with or as a participant in any transaction having such purpose or effect. (b) In a Schedule 13G filed under the Exchange Act, Putnam Investments, Inc. disclosed that, as of December 31, 1996, it had shared investment power with respect to all of said shares and shared voting power with respect to 36,000 of said shares; that the shares were acquired in the ordinary course of business, were not acquired for the purpose of, and do not have the effect of, changing or influencing the control of the Corporation; and that the shares were not acquired in connection with or as a participant in any transaction having such purpose or effect. INTEREST OF DIRECTORS AND EXECUTIVE OFFICERS AND THEIR ASSOCIATES IN TRANSACTIONS WITH THE CORPORATION Some of the Corporation's directors and executive officers and their associates, including affiliates and related interests, are customers of the Corporation and/or subsidiaries of the Corporation and some of the Corporation's directors and executive officers and their associates, including affiliates and related interests, are directors or officers of, or investors in, corporations or members of partnerships or have an interest in other entities which are customers of the Corporation and/or such subsidiaries. As such customers, they have had transactions in the ordinary course of business with the Corporation and/or such subsidiaries, including borrowings, all of which were on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and did not involve more than normal risk of collectibility or present other unfavorable features. During 1996, the law firm of Akin, Gump, Strauss, Hauer & Feld, LLP, of which Vernon E. Jordan, Jr. is a senior partner, performed legal services for a subsidiary of the Corporation, for which that firm was paid its usual and customary fees, and is expected to perform services for a subsidiary in 1997. 6 In June of 1996, Paul A. Volcker, who became a member of the Board of Directors of the Corporation and the Bank on September 16, 1996, entered into a consulting arrangement with the Corporation. Pursuant to the arrangement, Mr. Volcker was paid a consultancy fee of $500,000 for the year ended December 31, 1996. In addition, up to $200,000 was made available for setting up an office and for hiring an assistant. Fees for subsequent years will be mutually agreed upon at the beginning of each such year. Under the terms of the consulting arrangement, Mr. Volcker agreed that he would not become an officer, director or partner of an existing investment or commercial banking firm engaged in significant merger and acquisition activities or having more than $25 million in capital. Also, he would not associate with any newly established company engaging in substantial merger and acquisition activities other than in conjunction with the Corporation. After December 31, 1996, and prior to June 30, 1998, Mr. Volcker will not join any investment or commercial banking firm with capital of $100 million or more and in significant competition with the Corporation. In the event that he does participate in another firm, he further agreed to make a good faith effort to refer clients to the Corporation for the execution of merger and acquisition or financing transactions. EXTENSION OF DIRECTORS AND OFFICERS LIABILITY INSURANCE POLICY The Directors and Officers Liability Insurance Policy, which the Corporation has maintained since June 1, 1972, was extended on June 1, 1996 to July 1, 1997. This policy will reimburse the Corporation and/or any of its subsidiaries for certain payments they may be required to make in indemnifying their directors and officers, and covers directors and officers against certain liabilities and expenses for which they may not or cannot be indemnified by the Corporation. The policy also includes coverage for a director or an officer who serves as a director of a non-subsidiary corporation at the request of the Corporation. The policy is written by National Union Fire Insurance Company of Pittsburgh and other independent insurance companies at an annual premium of $2,820,472. No sums were paid by the insurers under this policy in 1996. COMMITTEES OF THE BOARD OF DIRECTORS The Corporation and the Bank each maintains the Board Committees described below. Included with the descriptions are the number of times each Committee met during 1996 and a list of the current members of each such Committee: EXECUTIVE COMMITTEE (ALSO FUNCTIONS AS THE DIVIDEND COMMITTEE) -- 1 MEETING. The Executive Committee has the authority to act for the Board of Directors, except when the Board is in session and subject to certain statutory limitations on its authority. The Committee also considers and acts on matters which do not require full Board consideration and approval and, upon the request of Management, it considers some matters on a preliminary basis before their submission for full Board consideration or approval. This Committee also serves as the Dividend Committee, in which capacity its sole function is to declare and set aside contractually required dividends (such as those declared from time to time on preferred stock issues) which may become due during the periods between scheduled Board meetings. Current Members: Frank N. Newman, Chair; George B. Beitzel; William R. Howell; Vernon E. Jordan, Jr.; Hamish Maxwell; Russell E. Palmer; and Patricia C. Stewart. HUMAN RESOURCES COMMITTEE -- 6 MEETINGS. The Human Resources Committee is comprised entirely of independent outside directors. The function of the Committee is to review and evaluate, in comparison with the Corporation's competitors, the Corporation's performance and the executives' actual compensation and benefits and their share ownership. The Committee is updated periodically with information provided to the Corporation by independent compensation and benefit consultants and is responsible for approving and monitoring those policies which support corporate strategic objectives and govern both cash compensation and stock ownership programs. Key aspects of this process require the Committee to compare the Corporation's pay practices to its long-term goals and assess ways in which compensation incentives support the creation of value for the Corporation's stockholders. Current Members: William R. Howell, Chair; Phillip A. Griffiths; Hamish Maxwell; Donald L. Staheli; and Patricia C. Stewart. 7 AUDIT COMMITTEE -- 7 MEETINGS. The Audit Committee, comprised entirely of independent outside directors, is appointed annually by the Board of Directors to oversee the accounting, reporting and audit practices established by Management. The Committee, which meets at least quarterly, monitors the effectiveness and quality of the system of internal accounting policies, standards and controls designed to insure the accurate and efficient reporting of financial activities, safeguarding of assets, proper exercise of fiduciary powers and compliance with laws and regulations. The Committee meets regularly with Management, the internal auditors, the internal credit auditors and the independent auditors (the "Auditors") and reports regularly to the Board of Directors on its activities and such other matters as it deems necessary. The Auditors have free access to the Audit Committee without the presence of Management. Current Members: George B. Beitzel, Chair; Phillip A. Griffiths; N.J. Nicholas Jr.; Russell E. Palmer; and Donald L. Staheli. COMMITTEE ON DIRECTORS -- 4 MEETINGS. The Committee on Directors is comprised entirely of independent outside directors. The Committee is responsible for nominating directors and reviewing the effectiveness and procedures of the Board, the Board Committees and corporate governance. The Committee also has the responsibility to make recommendations regarding these issues to the Board. The Committee will consider a director nominee recommended by a stockholder by a written notification to it, not later than 90 days in advance of the Annual Meeting of Stockholders in care of the Secretary of the Corporation, of the name of such person with appropriate biographical data and that person's written consent to submission of his or her name to the Committee for its consideration. Current Members: Hamish Maxwell, Chair; George B. Beitzel; Jon M. Huntsman (through 4/15/97); Vernon E. Jordan, Jr.; and N.J. Nicholas Jr. COMMITTEE ON PUBLIC RESPONSIBILITY AND CONCERN -- 2 MEETINGS. The function of the Committee on Public Responsibility and Concern is to review policy and audit the performance of the Corporation in the discharge of its social responsibilities, which include, but are not limited to, the Corporation's Equal Opportunity and Vendor Outreach programs, community reinvestment activities, contributions program and its political action committee. Current Members: Vernon E. Jordan, Jr., Chair; N.J. Nicholas Jr.; Patricia C. Stewart; George J. Vojta; and Paul A. Volcker. FIDUCIARY COMMITTEE (ESTABLISHED IN DECEMBER 1996). The function of the newly established Fiduciary Committee is to review the quality and effectiveness of the organizational structure of the trust and fiduciary business units of the Corporation and the Bank and its subsidiaries to ensure the proper exercise of fiduciary policies. In addition, the Committee will monitor the activities of management fiduciary committees appointed from time to time by the Board of Directors and review the effective implementation of policies, practices and procedures to prevent conflicts of interest or improper interrelation between the administration of the fiduciary and banking functions of the Bank. Current Members: Patricia C. Stewart, Chair; Jon M. Huntsman (through 4/15/97); Vernon E. Jordan, Jr.; Russell E. Palmer; and Paul A. Volcker. TRANSACTION AUTHORIZATION COMMITTEE (ESTABLISHED IN OCTOBER 1996). The function of the newly established Transaction Authorization Committee, which is comprised of the Chief Executive Officer and a Vice Chairman, is to act for the Board of Directors to approve certain transactions, including securitizations. Current Members: Frank N. Newman, Chair; and George J. Vojta. In addition to the Committee meetings shown above, there were 10 regularly scheduled and 2 special meetings of the Board of Directors during 1996. Director attendance at Board meetings averaged 93% during the year; aggregate attendance at Committee meetings also averaged 93%. Meeting attendance was below 75% for Jon M. Huntsman and Vernon E. Jordan, Jr. COMPENSATION OF NON-OFFICER DIRECTORS Each director who is not also an officer receives an annual retainer, which in 1996 amounted to $50,949, comprised of cash and the fair market value of 400 shares of Common Stock received in that year. For each Board meeting and Executive Committee meeting he or she attends, a non-officer director 8 receives a fee of $1,000. Each such director who is a member of the Human Resources Committee, the Committee on Public Responsibility and Concern, the Fiduciary Committee, or the Committee on Directors receives a fee of $1,000 for each Committee meeting he or she attends and the Chairman of each of those committees receives an additional annual fee of $3,000. The Chairman of the Audit Committee receives an annual fee of $15,000 and its other members receive an annual fee of $7,500. Members of the Audit Committee do not receive meeting fees. No fees are paid to members of the Transaction Authorization Committee. Travel and out-of-pocket expenses of the directors in connection with their attendance at Board or Committee meetings are either paid for or reimbursed by the Corporation. From time to time, the Corporation has requested certain directors to participate in client meetings and to give presentations on behalf of the Corporation. In connection with these engagements, the Corporation has reimbursed the director for his or her out-of-pocket expenses and, in some cases, paid a speaking fee. Directors may elect to defer receipt of all or a portion of their directors' fees into an interest-bearing account or into Common Stock equivalents until they leave the Board, at which time a cash only payment would be made in a lump sum or in annual installments over a period not to exceed 10 years. Until paid, deferred fees accrue interest at the same rate as the yield on one-year Treasury bills, adjusted on a quarterly basis or, if deferred for Common Stock equivalents, dividend equivalents are credited on the share equivalents and are treated as investments in additional share equivalents or fractional share equivalents. Upon retirement, a director who has served at least 10 years as a non-officer director receives an annual payment of $20,000 for life. If service is less than 10 years, but more than five years, the benefit is prorated. Upon a Change of Control of the Corporation (as defined on page 24), all deferred fees would be paid immediately to these directors. 1997 HUMAN RESOURCES COMMITTEE REPORT ON EXECUTIVE COMPENSATION The Human Resources Committee of the Board of Directors (the "Committee") is comprised entirely of outside directors, none of whom is a former or current officer or employee of Bankers Trust New York Corporation or its subsidiaries (for purposes of this report, the "Corporation"). Following directly after this report is a discussion of other relationships between the Committee members and the Corporation, entitled "Compensation Committee Interlocks and Insider Participation." The Committee is authorized by the Board to approve all compensation actions for the Chief Executive Officer, members of the Management Committee and other executive and senior officers designated by the Chairman ("Key Officers"). In addition, the Committee is authorized to review and approve bonus funding and spending for all annual plans. The Committee is also charged with administering the Corporation's stock option and stock award plans. During 1996, the Committee met six times to review and evaluate executive compensation and benefit programs, including information periodically provided to the Corporation by independent compensation and benefit consultants. COMPENSATION POLICIES The Committee's executive compensation policies are designed (a) to attract and retain the best individuals available in each area of global financial services in which the Corporation competes, (b) to motivate and reward such individuals based on corporate, business unit, team and individual performance, (c) to align executives' and stockholders' interests through equity-based incentives which reward the creation of shareholder value and (d) to provide compensation opportunities that are fair and competitive, as well as cost-effective and tax-efficient. In implementing its policies, the Committee evaluates the Corporation's performance, usually over a 3 to 5 year period, rather than considering a single year when external economics and business conditions may produce results not indicative of management performance. Key Officer pay, including that of the Chief Executive Officer, is determined and administered by the Committee on the basis of total compensation, rather than as separate free-standing components. 9 The determination of Key Officer total compensation begins with an evaluation by the Committee of the Corporation's annual and long-term performance compared to a total of eight investment and commercial banks (The Bear Stearns Companies Inc., The Chase Manhattan Bank Corporation, Citicorp, Merrill Lynch & Co. Inc., J.P. Morgan & Co. Incorporated, Morgan Stanley Group, Inc., PaineWebber Group, Inc. and Salomon Inc), which, through the end of fiscal year 1996, were regarded as a peer group of the Corporation (the "Peer Group"). A key determinant of overall levels of compensation is the pay practices of the Peer Group. While the positioning of Key Officer compensation within the Peer Group varies from year to year based on performance, in past years such positioning has averaged at approximately the 50th percentile. As part of its evaluation process, the Committee considers quantitative as well as qualitative factors without assigning uniform relative weights. The Corporation's performance relative to the Peer Group is assessed using the following factors: level, quality, consistency and growth of earnings, return on equity and total stockholder return. The Committee also considers prevailing economic conditions and business opportunities available to firms in the financial services industry. In addition, the Committee recognizes that the Corporation's long-term success is dependent on its key resource -- highly talented individuals -- whom it must attract and retain in an extremely competitive environment. Therefore, in arriving at each Key Officer's total compensation level, the Committee evaluates the individual's long-term commitment and contribution to the overall performance of the Corporation. In addition, the Committee takes into account such factors as leadership and technical skills, future potential, teamwork, recruiting and other management contributions to the Corporation. The Committee exercises its judgment in setting an appropriate balance of current cash and equity within each individual's compensation package to reflect the Corporation's commitment to increasing stockholder value through significant management stock ownership. As noted above, the Committee's strategy is to maximize the effectiveness, as well as the tax-efficiency, of the Corporation's executive compensation programs. Therefore, the Committee's policy is to preserve corporate tax deductions attributable to executive compensation while maintaining the flexibility to take actions that it deems to be in the best interests of the Corporation and its stockholders but which may not necessarily qualify for full tax deductibility under Section 162(m) or other Sections of the Internal Revenue Code. COMPENSATION COMPONENTS Salary has represented approximately 5% to 10% of Key Officers' total compensation in the past. Key Officer salary levels are determined by the Committee based on its determination of appropriate pay for the responsibilities involved. Although reviewed annually by the Committee for appropriateness, salary levels are not generally adjusted each year. Partnership Equity Plan ("PEP") Awards are a type of grant made under the Corporation's Stock Option and Stock Award Plans. PEP Awards are granted in the form of performance units, the value of which is determined by a quantitative formula directly related to financial performance of the Corporation. The formula produces a schedule that assigns a dollar value to performance units based on various levels of net income of the Corporation (i.e., the higher the Corporation's net income, the higher the value of the units for that performance year). Prior to or at the beginning of each year, the Committee reviews the formula in the context of the Corporation's strategic direction and current business conditions. If deemed appropriate by the Committee, the performance formula is revised at that time. Also, prior to or at the beginning of the year, and based on the sole discretion of the Committee, the number of performance units granted to each participant under PEP is fixed. In determining the number of units granted, the Committee considers each participant's level of responsibility, individual performance and contributions to the long-term success of the Corporation without assigning uniform relative weights. The number of units awarded multiplied by the unit value results in a dollar amount that is converted into book-entry shares ("Plan Shares") issued at an annual average price of the Common Stock. 10 Under the terms of the PEP, Plan Shares are deferred for five years. While deferred, Plan Shares are credited with the greater of the Corporation's primary earnings per share or dividend per share; share credits may be paid currently in cash, deferred into additional Plan Shares, or a combination of current cash and Plan Shares, as determined by the Committee. At the end of the deferral period, all Plan Shares are distributable in Common Stock. Employee Stock Options are generally granted without reference to present holdings of unexercised options or appreciation thereon. Individual share grant levels are reviewed annually and are periodically adjusted by the Committee to reflect a number of factors, including the individual's current responsibilities and contributions to the long-term success of the Corporation. Annual Bonus. As discussed above, the Committee uses a total compensation approach in determining appropriate pay levels for each Key Officer. At the end of each performance year, the annual bonus award is determined with reference to the factors outlined above and by taking into consideration the value of all other components of the individual's compensation package. Annual bonuses may be paid in cash, stock, or a combination of cash and stock, as determined by the Committee. Bonuses are funded from a formula pool based on annual corporate net income under the Incentive Bonus Plan for Corporate Officers. The Committee fixes specific bonus awards based on its evaluation of an individual's annual performance and contributions to the Corporation. As in 1995, the stock portion of the 1996 annual bonus award was granted in the form of Equity Participation Plan ("EPP") shares. EPP shares are deferred book-entry shares. While deferred, such shares earn the greater of the Corporation's primary earnings per share or dividend per share, which amount is paid quarterly in cash, and vest at a rate of one-third per year. Long-Term Incentive Plan. As part of a special incentive to attract, retain and motivate approximately 35 senior executives of the Corporation, with particular emphasis on increasing the share price of the Common Stock, the Committee adopted a long-term incentive plan (the "Partnership for One-hundred Plan" or "POP"), a special stock-based incentive program. In determining the size of each participant's grant, the Committee assessed corporate and individual performance based on the same standards used to determine annual incentive awards, with grant levels varying accordingly. Under POP, participants were granted units which would have been valued at $4 when the price of the Common Stock equaled $76 and would have increased by $4 for each additional $1 increase in the stock price, up to $100. At the time POP was adopted, the Common Stock was trading at $67. In light of the recent volatility in the stock market, the Committee, in December 1996, when the stock price was approximately $85, amended POP with the approval of the participants to reduce the fluctuations in the Corporation's earnings as a result of the variable compensation accounting treatment accorded to POP. The amended plan provides for a cash payout of $41.25 per unit (determined with reference to the value of the Common Stock on December 13, 1996), to be made in equal installments on or about the 1st of January in 1999, 2000 and 2001. As an additional incentive, if the stock price trades at or above $100 on or before December 31, 1997, one-fourth of the total award will be paid out on or about January 1, 1998 . If the Common Stock price equals or exceeds $100 per share before December 31, 2000, interest at prime plus 1% will immediately begin accruing on all remaining installments until paid. 1996 CHIEF EXECUTIVE OFFICER COMPENSATION ACTIONS Mr. Newman was employed in September 1995 as a Senior Vice Chairman of the Corporation. His employment contract at that time provided for minimum compensation in 1996 which consisted of a base salary of $500,000, a PEP award of 60,000 units, a stock option grant of 50,000 shares, and a guaranteed bonus of $2,000,000. In view of his new positions and additional responsibilities as Chairman, Chief Executive Officer and President, as well as his outstanding 1996 performance, the Committee awarded total compensation in excess of these minimum contractual amounts. Mr. Newman's current annual base salary is $900,000. He was granted a PEP award of 100,000 units for 1996, which resulted in an award of 35,854 Plan Shares. As noted above, the value of the units was 11 based on the Corporation's net income under a formula established by the Committee at the beginning of the performance year. Mr. Newman also was awarded a stock option grant of 80,000 shares. On the basis of his performance and that of the Corporation, and after taking into consideration the above components awarded earlier in the year, the Committee awarded Mr. Newman a 1996 bonus, as follows: $3,500,000 in cash and $1,500,000 in EPP shares. When this bonus is combined with his salary paid in 1996 and PEP award as noted above, the mix of compensation was 51.5% in the form of equity in the Corporation and 48.5% in cash. Effective January 1, 1996, Mr. Newman was also granted 100,000 units under the long-term incentive plan, Partnership for One-hundred Plan. The Committee deems its compensation actions for Mr. Newman to be appropriate, in view of his successful efforts in improving the financial performance of the Corporation in 1996, his leadership in fostering a client-focused environment, and the successful resolution of outstanding corporate issues. Based on advice from outside compensation consultants, Mr. Newman's 1996 compensation is expected to position the Corporation at approximately the 50th percentile in total compensation for CEOs in the Peer Group for 1996. CONCLUSION Through the compensation program described above, a very significant portion of Key Officer compensation is linked directly to individual and corporate performance and stock price appreciation. As the Corporation moves forward to create stockholder value in the future, the Committee will continue to monitor and evaluate its strategy for Key Officer compensation. The Human Resources Committee* William R. Howell, Chair Phillip A. Griffiths Hamish Maxwell Donald L. Staheli Patricia C. Stewart COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The Human Resources Committee (the "HR Committee") currently consists of the following persons: Phillip A. Griffiths, William R. Howell, Hamish Maxwell, Donald L. Staheli and Patricia C. Stewart, all of whom are non-officer directors and none of whom is an employee or former or current officer of the Corporation or its subsidiaries. Some of the directors who are members of the HR Committee and their associates, including affiliates and related interests, from time to time may be customers of the Corporation and/or subsidiaries of the Corporation and some of these directors and their associates, including affiliates and related interests, from time to time may be directors or officers of, or investors in, corporations or members of partnerships or have an interest in other entities which are customers of the Corporation and/or such subsidiaries. As such customers, they have had transactions in the ordinary course of business with the Corporation and/or such subsidiaries, including borrowings, all of which were on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and did not involve more than normal risk of collectibility or present other unfavorable features. - - ---------- *Messrs. Griffiths' and Staheli's terms on the Committee commenced January 1, 1997, and Mr. Huntsman's term on the Committee expired on December 31, 1996. 12 I. SUMMARY COMPENSATION TABLE ($000 OMITTED)
LONG-TERM COMPENSATION ------------------------------------ ANNUAL COMPENSATION AWARDS ----------------------------------------- ------------------------------------ BONUS RESTRICTED SHARES ALL OTHER EXECUTIVE CASH + STOCK = TOTAL STOCK AWARDS UNDERLYING COMPENSATION (a) YEAR SALARY (b) (c) BONUS (d) OPTIONS (e) (f) - - -------------------------------- ------- --------- ---------- ---------- ----------- --------- ------------ ------------- FRANK N. NEWMAN ................ 1996 $825.0 $3,507.1 $4,592.4 $ 8,099.5 $ -- 80,000 $1,341.7 CHAIRMAN, CHIEF EXECUTIVE ..... 1995 138.9 500.0 665.0 1,165.0 -- 100,000 222.2 OFFICER & PRESIDENT RICHARD H. DANIEL .............. 1996 320.8 1,950.0 2,410.1 4,360.1 645.0 80,000 585.3 EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER & CONTROLLER YVES C. DE BALMANN ............. 1996 287.5 2,507.1 4,319.3 6,826.4 -- 60,000 292.4 SENIOR VICE PRESIDENT R. KELLY DOHERTY ............... 1996 287.5 2,507.1 4,319.3 6,826.4 -- 60,000 299.2 SENIOR VICE PRESIDENT JAMES E. VIRTUE ................ 1996 250.0 5,007.1 6,546.2 11,553.3 -- 50,000 120.2 SENIOR VICE PRESIDENT
(a) Of the named Executive Officers, only Mr. Newman (who was employed in September 1995) had Executive Officer status with the Corporation prior to 1996. (b) Includes annual bonus and profit-driven benefit payable in cash from the PartnerShare Plan, the Corporation's qualified defined contribution plan. For Mr. Daniel, the amount includes a signing bonus of $350,000, as part of his employment agreement. (c) Includes the value of book-entry shares awarded by formula based on corporate earnings under PEP. Under the plan, shares vest at the end of the performance year and are deferred for five additional years. While deferred, shares are credited with the greater of the Corporation's primary earnings per share or dividend per share. The dividend equivalent portion is paid currently in cash and the balance is deferred into additional shares. Dividend equivalents on book-entry shares are paid at the same rates as are paid on the Common Stock and are not included in the above totals. No dividend equivalents were paid in 1996 on the 1996 Awards. Also includes the value of book-entry shares awarded under EPP as part of the annual bonus. Under this plan, shares are deferred and vest in equal installments over three years. While deferred, shares earn the greater of the Corporation's primary earnings per share or dividend per share. Share earnings are paid in cash quarterly. For 1996, the value of the PEP Awards and the value of the EPP Awards, respectively, for each of the named executive officers are as follows: Newman--$3,092,419 and $1,500,000; Daniel--$2,010,072 and $400,000; de Balmann--$2,319,314 and $2,000,000; Doherty--$2,319,314 and $2,000,000; Virtue--$1,546,209 and $5,000,000. (d) The number and the value of restricted stock holdings at the end of 1996 are: Daniel--10,000 shares, value $862,500 and Virtue--30,000 shares, value $2,587,500. Mr. Daniel's 10,000 shares of restricted stock, which were granted to him as part of his employment agreement, vest on the third anniversary of the grant date, and Mr. Virtue's 30,000 shares of restricted stock will vest on the second anniversary of the grant date (12/19/97). The other named executive officers did not hold any shares of restricted stock at the end of 1996. For these purposes, the stated values of restricted stock holdings are based on the closing sales price of the Common Stock on 12/31/96, and does not give effect to the diminution of value attributable to the restrictions on such stock. Dividends are paid quarterly on the restricted stock. (e) As part of his employment agreement, Mr. Daniel was granted 20,000 stock options, which are included in the above total. (f) Includes the Corporation's primary earnings per share less cash dividends ("net E.P.S. credits") earned on the pre-1996 PEP Awards, net E.P.S. credits on pre-1996 EPP portion of annual bonuses, and non-elective company contributions to defined contribution plans. For 1996, net E.P.S. credits earned on pre-1996 PEP Awards, net E.P.S. credits earned on the pre-1996 EPP portion of annual bonuses and non-elective contributions to defined contribution plans, respectively, for each of the above named executive officers are as follows: Newman--$22,018, $0, $189,000; Daniel--$0, $0, $70,000; de Balmann--$203,600, $9,761, $79,000; Doherty--$210,453, $9,761, $79,000; Virtue--$21,922, $29,284, $69,000. Also included for Mr. Daniel is an additional $60,000 contribution to his ADCAP account (as defined on page 15) made as part of his employment agreement. Net E.P.S. credits on the 1996 PEP Awards and EPP portion of annual bonuses begin in 1997. Does not include life insurance premiums paid under a plan that is available generally to all employees and the annual premium for which is under $25,000 for any one of the named executive officers. The amount shown for Messrs. Newman and Daniel includes reimbursements for relocation expenses of $1,130,691 and $455,287, respectively. 13 II. OPTIONS/SAR GRANTS TABLE(a) OPTIONS/SAR GRANTS IN LAST FISCAL YEAR % OF TOTAL NUMBER OF OPTIONS SECURITIES GRANTED TO UNDERLYING EMPLOYEES GRANT DATE OPTIONS IN FISCAL EXERCISE EXPIRATION PRESENT NAME GRANTED(b) YEAR PRICE(c) DATE(d) VALUE(e) ------------ ------------ ---------- ------------ ------------ F.N. Newman..... 80,000 2.36% $76.4375 6/18/06 $1,100,700 R.H. Daniel ... 60,000 1.77 76.4375 6/18/06 825,525 20,000 0.59 64.5625 2/1/06 196,270 Y.C. de Balmann. 60,000 1.77 76.4375 6/18/06 825,525 R.K. Doherty ... 60,000 1.77 76.4375 6/18/06 825,525 J.E. Virtue..... 50,000 1.48 76.4375 6/18/06 687,938 - - ---------- (a) No SARs were granted during 1996. (b) Reflects awards granted as Incentive Stock Options and Non-qualified Stock Options on 6/18/96 by the Corporation to the Chief Executive Officer and each of the other named executive officers and the stock options granted to Mr. Daniel on 2/1/96 on 20,000 shares as part of his employment agreement. Incentive Stock Options are granted to the maximum extent allowable under tax rules. All option grants in general become exercisable one year after grant with accelerated exercisability upon a Change of Control (as defined on page 24). (c) The exercise price was equal to the fair market value of the Common Stock on the date of grant. (d) Nonqualified Stock Options have a term of ten years and one day. Incentive Stock Options have a term of ten years. Both are subject to earlier termination upon certain events related to termination of employment. (e) The grant date present values are calculated under a modified Black-Scholes Model, which is a mathematical formula used to value options traded on stock exchanges. The assumptions used in calculating the above options' grant date present values include the Stock's expected volatility of 22.72% with respect to the grant made on 6/18/96 and 25.75% with respect to the grant made on 2/1/96, risk-free rate of return of 6.61% with respect to the grant made on 6/18/96 and 5.46% with respect to the grant made on 2/1/96, projected dividend yield of 5.23% with respect to the grant made on 6/18/96 and 6.20% with respect to the grant made on 2/1/96, projected time to exercise (7 years) and a 5% adjustment for non-transferability and risk of forfeiture during vesting period. The projected dividend yield is provided solely for purposes of complying with the rules and regulations of the SEC and should not be viewed as an indication of the Corporation's dividend yield in the future. No assurance can be given as to the Corporation's future dividend yield. III. OPTION EXERCISES AND YEAR END VALUE TABLE AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
NUMBER OF SHARES VALUE OF UNEXERCISED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS SHARES VALUE OPTIONS AT FISCAL YEAR END AT FISCAL YEAR END(b) NAME ACQUIRED REALIZED(a) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE - - ---------------- ---------- --------------- ---------- ------------- ----------- ------------- F.N. Newman ... 0 $ 0 50,000 130,000 $ 859,375 $1,644,375 R.H. Daniel ... 0 $ 0 0 80,000 $ 0 $1,022,500 Y.C. de Balmann. 70,000 $1,762,650 95,000 60,000 $1,739,688 $ 588,750 R.K. Doherty .. 65,000 $1,222,188 75,000 60,000 $1,258,438 $ 588,750 J.E. Virtue ... 2,000 $ 59,750 58,000 50,000 $1,200,875 $ 490,625
- - ---------- (a) Market value of underlying Common Stock at exercise minus option's strike price. (b) Market value of underlying securities at year end minus option price. The value of unexercised in-the-money stock options at 12/31/96, shown above are presented pursuant to SEC rules. The actual amount, if any, realized upon exercise of stock options will depend upon the market value of the Common Stock less the exercise price per share of Common Stock underlying the stock option at the time the stock option is exercised. There is no assurance that the values of unexercised in-the-money stock options reflected in the table will be realized. 14 IV. LONG-TERM INCENTIVE PLANS TABLE LONG-TERM INCENTIVE PLANS AWARDS IN LAST FISCAL YEAR(a) PERFORMANCE PERIOD NUMBER UNTIL MATURATION PAYOUT NAME OF UNITS OR PAYOUT AMOUNTS ---- -------- --------- ------- F.N. Newman..... 100,000 January 1, 2001 $4,125,000 R.H. Daniel ... 70,000 January 1, 2001 $2,887,500 Y.C. de Balmann 80,000 January 1, 2001 $3,300,000 R.K. Doherty .. 80,000 January 1, 2001 $3,300,000 J.E. Virtue ... 80,000 January 1, 2001 $3,300,000 - - ---------- (a) Under POP, as initially adopted effective 1/1/96, each unit awarded thereunder was valued at $4 when the Common Stock price reached $76 per share and increased by $4 for each additional dollar of Common Stock price appreciation up to $100. The units were to vest in equal installments on the third, fourth and fifth anniversaries of the award, except that if the Common Stock price reached $100 per share, each unit became immediately payable. In December 1996, when the stock price was approximately $85, the POP was amended to provide for a cash payout of $41.25 per unit (determined with reference to the value of the Common Stock on 12/13/96). The units will now vest and be paid in cash in equal installments on or about the first of January 1999, 2000 and 2001 subject to an accelerated payout of one-fourth of the cash value of the units on or about 1/1/98 if the Common Stock price equals or exceeds $100 per share before 12/31/97. In addition, if the Common Stock price equals or exceeds $100 per share before December 31, 2000, interest at prime plus 1% will immediately begin accruing on all remaining installments until paid. See "1997 Human Resources Committee Report on Executive Compensation--Compensation Components--Partnership for One-hundred Plan." EMPLOYMENT AGREEMENTS The Corporation has an employment agreement with Frank N. Newman, who was employed in 1995 as a Senior Vice Chairman of the Corporation, and was subsequently named Chairman, Chief Executive Officer and President. Under the employment agreement, Mr. Newman is entitled in 1996 and 1997 to a minimum annual base salary of $500,000, a minimum annual bonus of $2,000,000 and $2,500,000, respectively, as well as 50,000 stock options and 60,000 PEP units in each year. Mr. Newman will be entitled to the compensation provided by the employment agreement unless he is terminated prior to December 31, 1997, for "gross misconduct". All of the compensation payable to him under the employment agreement will be paid and all unvested compensation will vest upon occurrence of a "Change of Control" of the Corporation (as defined on page 24). In connection with his employment, the Corporation provides Mr. Newman with a car and driver. On January 10, 1996, the Corporation entered into an employment agreement with Richard H. Daniel. Under the terms of the agreement, at the start of his employment, Mr. Daniel was to receive a one-time signing bonus of $350,000, 60,000 POP units, 20,000 stock options, 10,000 shares of restricted stock and a $60,000 credit to his Additional Capital Accumulation Plan ("ADCAP") account under the Corporation's Supplemental Retirement Plan. Under the employment agreement, Mr. Daniel is entitled to receive in each of 1996 and 1997 a minimum annual base salary of $350,000; a minimum bonus of $1,000,000, a minimum award of 40,000 stock options, a minimum award of 50,000 PEP units and a $70,000 contribution to his ADCAP account. In the event Mr. Daniel's employment is terminated (i) other than for "Cause" (as defined below), (ii) by Mr. Daniel for Good Reason (as defined below), (iii) by Mr. Daniel within one year following a Change of Control (as defined on p. 24) or (iv) as a result of death or disability, Mr. Daniel will receive any accrued but unpaid salary and bonus; prior to February 1, 2001, a cash payment equal to the product of (x) his base salary plus the average cash bonuses previously paid to him and (y) two (which is subject to proportionate reduction after February 1, 1999); prior to February 2001, the immediate vesting of stock options, restricted stock, PEP units and POP units; and up to two years of medical, dental and similar benefits. In the event Mr. Daniel's employment is terminated by the Corporation for Cause or Mr. Daniel terminates his employment for other than Good Reason (other than during a one-year period following a Change of Control), Mr. Daniel is entitled 15 to receive all accrued but unpaid salary and bonus. "Cause" is defined in the employment agreement as (i) conviction of a felony or commission of an act rising to the level of a felony, including, but not limited to, fraud, or (ii) Mr. Daniel's willful and continuing refusal or failure to substantially perform his duties for the Corporation, but not ineffectiveness or incompetence in the performance of his duties or a bona fide disagreement over corporate policy. "Good Reason" is defined in the employment agreement as any material breach by the Corporation of its obligations under the employment agreement, including, without limitation, any material reduction in Mr. Daniel's duties, authority, status or responsibilities (whether or not accompanied by a change in title) or any requirement that Mr. Daniel report to any person other than the Corporation's Chief Executive Officer. Mr. Daniel is also entitled to reimbursement of his relocation expenses, including a $100,000 relocation allowance. CHANGE OF CONTROL ARRANGEMENTS Pursuant to the Corporation's Change of Control Severance Plan, upon termination of employment by the Corporation without "Cause" or by the executive officer for "Good Reason" (as such terms are defined in the Change of Control Severance Plan) during the 2-year period immediately following a "Change of Control" of the Corporation (as defined on p. 24), each of the named executive officers would be entitled to receive a severance benefit equal to three times the sum of such executive officer's base salary and the greater of average annual bonus paid during the 3-year period immediately preceding the Change of Control or annual bonus paid in the year immediately preceding the Change of Control. Such severance benefits may not exceed $7.5 million. Under the Corporation's stock option and stock award plans, upon a Change of Control, all stock options become exercisable and all deferred stock, restricted stock and other stock-based awards become vested and immediately payable. Similarly, upon a Change of Control, the POP units become vested and immediately payable. For Messrs. Newman and Daniel, such severance benefits, if greater than the severance benefits provided by the employment agreement, would be paid in the event of a termination of employment following a Change of Control in lieu of severance under their employment agreements. In the event any of the named executive officers is subject to the 20% excise tax under Section 4999 of the Code, such individual would be reimbursed in an amount sufficient to offset such excise tax unless such reimbursement could be avoided by reducing the severance payments received by the named executive officer by an amount that is less than 10% of his severance payments. The Change of Control Severance Policy also provides that, contingent on a change of control, the named executive officers would be entitled to certain welfare benefits for up to 3-years following termination. COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN TO STOCKHOLDERS The Human Resources Committee has revised the Peer Group of companies that it intends to use in evaluating the 1997 performance of the Corporation. The Bank of New York has been added to the Peer Group because it is of approximately similar size and participates in many of the same businesses as the Corporation. Conversely, Citicorp, The Chase Manhattan Bank Corporation, Morgan Stanley Group Inc. and PaineWebber Group, Inc. have been excluded from the Peer Group. Citicorp and The Chase Manhattan Bank Corporation are far larger in size than the Corporation. Moreover, each has, to a significant degree, a large retail component. Similarly, after its prospective merger with Dean Witter, Discover, Morgan Stanley Group Inc. will be a far larger entity than the Corporation, as well as one that has, to a significant degree, a large retail component. PaineWebber Group, Inc. was removed from the Peer Group because of its primary focus on retail customers. 16 COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN TO STOCKHOLDERS [GRAPHIC OMITTED]
COMPOUND ANNUAL 1991 1992 1993 1994 1995 1996 RETURN RATE -------- -------- -------- -------- -------- -------- --------------- Bankers Trust .. $100.0 $112.6 $135.7 $100.6 $128.8 $176.0 12.0% Old Peer Group*. 100.0 125.5 159.4 149.4 231.3 347.3 28.3% New Peer Group** 100.0 111.6 134.6 117.8 170.2 239.4 19.1% S&P 500......... 100.0 107.6 118.4 120.0 165.0 202.9 15.2%
Notes: o Total return to stockholders is stock price appreciation of a hypothetical $100 investment on December 31, 1991, with all dividends reinvested. o Peer Group companies annually weighted based on 1992 through 1996 market capitalization at the beginning of each year. o Bankers Trust and New and Old Peer Group returns calculated based on dividend reinvestment on payment dates. o S&P 500 information obtained from S&P CompuStat Services, Inc. o All data as of 12/31/96. * Companies in Old Peer Group are: The Bear Stearns Companies Inc. The Chase Manhattan Bank Corporation Chemical Banking Corporation (1991 -- 1995 only) Citicorp Merrill Lynch & Co. Inc. J.P. Morgan & Co. Incorporated Morgan Stanley Group Inc. PaineWebber Group, Inc. Salomon Inc ** Companies in New Peer Group are: The Bank of New York The Bear Stearns Companies Inc. Merrill Lynch & Co. Inc. J.P. Morgan & Co. Incorporated Salomon Inc Sources: Bloomberg Data Service The Value Line Investment Survey CompuServe Data Service Dow Jones Data Service Standard & Poor's Stock Guide 17 PENSION PLAN The following table shows the estimated annual pension benefits payable at normal retirement age to a covered participant who has attained the earnings and years of service classifications indicated, under the Corporation's tax-qualified defined benefit pension plan ("Pension Plan") based upon "Covered Compensation" and "Credited Service", as such terms are defined below. Benefits shown below are computed as a single life annuity and are not subject to reduction for Social Security or other offset amounts. AVERAGE FINAL YEARS OF CREDITED SERVICE SALARY --------------------------------------------------- ---------------- 15 20 25 30 35 OR MORE --------- --------- --------- --------- ---------- $100,000............ $21,000 $28,000 $35,000 $42,000 $49,000 $125,000............ $26,250 $35,000 $43,750 $52,500 $61,250 $150,000 and above . $31,500 $42,000 $52,500 $63,000 $73,500 A participant's Covered Compensation is his or her average final salary. "Average Final Salary" under the Pension Plan is the average annual salary, as reported in the Summary Compensation Table, during the 60 consecutive calendar months in the last 120 calendar months of a participant's Credited Service yielding the highest average annual salary (subject to certain limitations on salary under the Internal Revenue Code with respect to tax-qualified plans). Covered Compensation does not include any other compensation included in the Summary Compensation Table. Credited Service under the Pension Plan is the number of years and months worked for the Corporation and certain of its subsidiaries after attaining age 21 and completing one year of service and is limited to 35 years. As of December 31, 1996, the years of Credited Service for Messrs. Newman, Daniel, de Balmann, Doherty and Virtue under the Pension Plan (in completed years), was 0, 0, 7, 13 and 7 respectively. Messrs. de Balmann, Doherty and Virtue are fully vested; Messrs. Newman and Daniel, who have been employed by the Corporation for less than five years, are not vested. PART II. RATIFICATION OF APPOINTMENT OF THE INDEPENDENT AUDITOR The Board of Directors, upon the recommendation of its Audit Committee, comprised entirely of independent outside directors, which reviewed the professional competence and audit program of the firm of KPMG Peat Marwick LLP ("KPMG"), certified public accountants, has appointed KPMG as the independent auditor for 1997, subject to stockholder approval. KPMG succeeds the firm of Ernst & Young LLP ("E&Y"), which served as the independent auditor for the Corporation and its principal subsidiary, Bankers Trust Company, since 1987. The audit reports of E&Y on the Corporation's financial statements for the past two years were unqualified, and in the last two years there were no disagreements with E&Y with respect to accounting principles or practices, financial statement disclosure or auditing scope or procedure or other events reportable pursuant to the rules and regulations of the SEC. Representatives of E&Y and KPMG will be present at the Annual Meeting. They will have the opportunity to make statements if they desire to do so and will be available to respond to appropriate questions. Ratification of the appointment of KPMG as the independent auditor would require an affirmative vote of a majority of the votes cast by the holders of the Common Stock at the Annual Meeting. THE BOARD OF DIRECTORS AND MANAGEMENT RECOMMEND THAT THE STOCKHOLDERS RATIFY THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE INDEPENDENT AUDITOR FOR 1997. THIS IS IDENTIFIED AS ITEM 2 ON THE ENCLOSED PROXY CARD. 18 PART III. APPROVAL OF THE 1997 STOCK OPTION AND STOCK AWARD PLAN The Board of Directors (the "Board") adopted on February 18, 1997, subject to approval by the Corporation's stockholders, a proposed Bankers Trust New York Corporation 1997 Stock Option and Stock Award Plan (the "Plan") in the form set forth in Appendix A hereto. The Board believes that adoption of the Plan will provide the Corporation with an effective means of retaining, attracting and motivating key employees of the Corporation and its subsidiaries whose performance is of great importance to the continued development of the Corporation. The Plan, in the judgment of the Board, will enhance the Corporation's position in the highly competitive market for executive talent. For these reasons, the Board concluded that the Plan should be recommended to the stockholders for approval at the Annual Meeting. Without stockholder approval, the Plan will not become effective. Features of the Plan are outlined below but the outline is qualified in its entirety by reference to the full text of the Plan itself, which is attached hereto as Appendix A. Generally, the provisions of the Plan are similar to the provisions of the plan which was approved by the Corporation's stockholders on April 19, 1994 (the "1994 Plan"), and which by its terms permits no further awards after April 21, 1998. As compared to the 1994 Plan, this Plan provides for a larger number of shares allocated for the purposes of equity compensation (increased from 15 million to 20 million). The Board has authorized a stock repurchase program to satisfy the awards to be granted under the Plan and under prior stock option and stock award plans. The authorization includes the 20 million shares that are subject to the proposed Plan. The Corporation intends to satisfy awards under the Plan through the issuance of treasury shares acquired in open market purchases. The continuation of stock plans, in the judgment of the Board, is in the best interest of the stockholders. The plans are consistent with the business strategy of the Corporation, aid in retention of employees by requiring significant deferral of current compensation and are integrated into the Corporation's total pay philosophy. The Board anticipates that the plans will continue to be administered in a non-dilutive manner. The Plan permits the granting during a period of four years from the date of stockholder approval of the Plan of (1) nonqualified stock options ("NQSOs"), (2) incentive stock options ("ISOs"), (3) restricted stock awards, (4) deferred stock awards and (5) other awards of stock and other awards that are valued in whole or in part by reference to, or are otherwise based on, Stock ("other Stock-based Awards") (each of the foregoing being an "Award" and collectively, the "Awards"). Since the eligibility for awards, and the amount of any award, is determined by the Committee (as defined below under "Administration"), future benefits under the Plan are not currently determinable. However, in light of the similar nature of the Plan to the 1994 Plan, there does not appear to be any reason to believe that the awards granted in 1996 to the named executive officers would have been increased had they been made under the proposed Plan. The Board may amend, alter or discontinue the Plan at any time and in any manner; provided, however, that no amendment, alteration, or discontinuance shall be made (i) which would materially and adversely affect the rights of an Awardee under an Award theretofore granted without the Awardee's consent, or (ii) without the approval of the stockholders, if such approval is required under applicable law or stock exchange rule or in order for the Plan to continue to comply with Section 162(m) of the Code. SECURITIES SUBJECT TO THE PLAN The total number of shares of stock available for distribution under the Plan is 20 million. Available shares shall consist in whole or in part of authorized and unissued shares or treasury shares, except that treasury shares must be used in the case of Awards consisting of restricted stock. If any shares that have been optioned cease to be subject to option because the option has expired or been can- 19 celed or has been deemed to have been expired or canceled, or if any shares subject to any restricted stock, deferred stock or other Stock-based Award are forfeited or such Award otherwise terminates without actual or deemed delivery of such shares, such shares shall again be available for distribution. In the event of any merger, reorganization, consolidation, recapitalization, stock dividend, extraordinary cash or property dividend or other change in corporate structure affecting the stock, such adjustment shall be made in the aggregate number of shares which may be distributed under the Plan (including the annual maximum number of shares that may be granted to any individual), in the number and/or option price of shares subject to the outstanding options granted under the Plan, in the number of shares subject to restricted stock, deferred stock or other Stock-based Awards granted under the Plan as may be determined to be appropriate by the Committee; provided that the number of shares subject to any Award shall always be a whole number; and provided, further, that with respect to ISOs, no such adjustment shall be authorized to the extent that such adjustment would cause the Plan to violate Section 422(b)(1) of the Internal Revenue Code (the "Code") or any successor provision thereto. In addition, subject to the limitations provided in the Plan, the Committee is authorized to make adjustments in the terms and conditions of, and performance criteria relating to, Awards in recognition of unusual or non-recurring events (including, without limitation, events described in this paragraph) affecting the Corporation or the financial statements of the Corporation, or in response to changes in applicable laws, regulations or accounting principles. ELIGIBILITY Officers and other key employees of the Corporation and its subsidiaries who are responsible for the management, growth and protection of the business of the Corporation and its subsidiaries are eligible to be granted Awards under the Plan. The Committee will select from among those eligible the officers and other key employees to whom Awards may from time to time be granted. The Plan provides no specific minimum number of shares with respect to which Awards may be granted to any individual. The annual maximum number of shares that may be granted to any individual from all types of Awards made under the Plan is one million shares, subject to adjustment as described above. ADMINISTRATION The Plan is administered by a committee of the Board (the "Committee"). The members of the Committee serve at the pleasure of the Board and may be removed or replaced by the Board at its discretion. The Committee may also have other duties, as would be the case if the Board should designate the Corporation's Human Resources Committee (or a successor thereto) to act as the Committee under the Plan. Unless otherwise determined by the Board, each member of the Committee shall be a "non-employee director" within the meaning of Rule 16b-3 under the Exchange Act and an "outside director" within the meaning of Section 162(m) of the Code. The Committee has the authority to grant to eligible employees Awards pursuant to the provisions of the Plan, to interpret its provisions and those of any Award agreement issued thereunder and to supervise the administration of the Plan. The Committee has the authority to select the officers and other key employees of the Corporation and its subsidiaries to whom Awards are to be granted, to determine the number of shares to be covered by each Award so granted, to determine the terms and conditions (not inconsistent with the provisions of the Plan) of any Awards so granted thereunder, and to certify the attainment of performance goals, if applicable, as required by Section 162(m) of the Code. All decisions made by the Committee shall be final, conclusive, and binding on all parties, except that Awards made by the Committee to the officers of the Corporation named in its proxy materials are subject to Board ratification. Except in the case of employees subject to Section 16 of the Exchange Act, the Committee may authorize the Chief Executive Officer to select Awardees and grant Awards under this Plan on its behalf. The right of an Awardee to exercise or receive a grant or settlement of an Award, and the timing thereof, may be subject to such performance conditions as may be specified by the Committee. Performance awards granted to persons the Committee expects will, for the year in which a deduction 20 arises, be among the Chief Executive Officer and the four other most highly compensated executive officers (the "named executive officers"), will, if so intended by the Committee, be subject to provisions that should qualify such Awards as "performance-based compensation" not subject to the limitation on tax deductibility by the Corporation under Section 162(m) of the Code. The performance goals to be achieved as a condition of payment or settlement of a performance award will consist of (i) one or more business criteria and (ii) a targeted level or levels of performance with respect to such business criteria. In the case of performance awards intended to meet the requirements of Section 162(m) of the Code, the business criteria used must be one of those specified in the Plan, although for other participants the Committee may specify any other criteria. The business criteria specified in the Plan are: (1) pre-tax or after-tax earnings per share; (2) revenues; (3) cash flow; (4) cash flow return on investment; (5) return on net assets, return on assets, return on investment, return on capital, return on equity, return on average common equity; (6) economic value added; (7) operating margin; (8) net income, pre-tax earnings, pre-tax earnings before interest, depreciation and amortization, pre-tax operating earnings after interest expense and before incentives, service fees, extraordinary or special items, and operating earnings; (9) total stockholder return, with or without dividends reinvested; and (10) any of the above goals as compared to the performance of a published or special index deemed applicable by the Committee, including, but not limited to, the Standard & Poor's 500 Stock Index or a group of comparator companies. In granting performance awards, the Committee may establish unfunded award "pools," the amounts of which will be based upon the achievement of a performance goal or goals using one or more of the business criteria described in the preceding paragraph. During the first 90 days of a fiscal year or performance period or such other period as required or permitted under Section 162(m) of the Code, the Committee will determine who will potentially receive performance awards for that fiscal year or performance period, either out of the pool or otherwise. After the end of each fiscal year or performance period, the Committee will determine the amount, if any, of the pool, the maximum amount of potential performance awards payable to each participant in the pool, and the amount of any potential performance award otherwise payable to a participant. The Committee may, in its discretion, determine that the amount payable as a final performance award will be increased or reduced from the amount of any potential Award, but may not exercise discretion to increase any such amount intended to qualify under Section 162(m) of the Code. Subject to the requirements of the Plan, the Committee will determine other performance award terms, including the required levels of performance with respect to the business criteria, the corresponding amounts payable upon achievement of such levels of performance, termination and forfeiture provisions, and the form of settlement. STOCK OPTIONS The purchase price per share of stock purchasable under a stock option will be determined by the Committee, but may not be less than 100% of the fair market value of the stock on the date of grant of such option. The term of each option shall be fixed by the Committee, but no ISO shall be exercisable after the expiration of ten years from the date the ISO is granted and no NQSO shall be exercisable after the expiration of ten years and one day from the date such NQSO is granted. Options shall be exercised at such time or times as determined by the Committee at or subsequent to the grant of such options. Payment of the stock option purchase price shall be made in cash, or, at the discretion of the Committee (and in the case of ISOs, if permitted under the terms of the option), in whole or in part, in the form of shares of unrestricted stock of the Corporation already owned by the Awardee, or, in the case of an NQSO, in restricted stock or deferred stock subject to an Award (based on the fair market value of the stock on the date the option is exercised, as determined by the Committee). Except as otherwise authorized by the Committee, in the case of transfers to immediate family members (and/or trusts or partnerships established exclusively for such immediate family members), no option granted 21 under the Plan shall be transferable by the Awardee, otherwise than by will or by the laws of descent and distribution, and during the lifetime of the Awardee, such option shall be exercisable only by such Awardee. Stock options may be granted either alone or in addition to other Awards under the Plan. Except in the case of termination of employment because of death or permanent disability, or in the case of a Change of Control (as defined on page 24), or as otherwise determined by the Committee, no stock option shall be exercisable during the twelve-month period ending on the day before the first anniversary date of the granting of the option. In the cases of death, retirement, or permanent disability, or as otherwise determined by the Committee, stock options may be exercised after termination of employment, but only within the specified period, as follows: (a) In the case of permanent disability, stock options may be exercised within three years after termination of the Awardee's employment with the Corporation or any of its subsidiaries; (b) In the case of the death of an Awardee while still in the employ of the Corporation or any of its subsidiaries, stock options may be exercised within fifteen months after the date of death; (c) In the case of an employee who dies within the three-year period following termination of employment by reason of retirement or permanent disability, stock options may be exercised within twelve months following the date of death; and (d) In the case of an Awardee whose employment is terminated by the Corporation other than for disciplinary reasons (Cause), as defined in the Company Policies section of the Corporation's Employee Handbook, the period within which to exercise any unvested stock option granted under the Plan as of the termination date may be extended for a period up to twelve months, as determined by the Committee or its designee, in order for the option to vest. To qualify for preferential tax treatment, ISOs must be exercised within three months after retirement or within one year after termination of employment on account of permanent disability. In the event of termination of service by reason of retirement or permanent disability, if an ISO is exercised after the expiration of such period, the option will thereafter be treated, for purposes of the Plan, as an NQSO. Under no circumstances may any option be exercised after the expiration of the initial term of the option. RESTRICTED STOCK Shares of restricted stock may be granted either alone or in addition to other Awards under the Plan. The Committee shall determine the officers and key employees of the Corporation and its subsidiaries to whom, and the time or time at which, grants of restricted stock will be made, the number of shares to be awarded, the time or times within which the Awards may be subject to forfeiture, and all other conditions of the Awards. The provisions of the Awards need not be the same with respect to each recipient. The prospective recipient of an Award of shares of restricted stock shall not, with respect to such Award, be deemed to have become an Awardee, or to have any rights with respect to such Award, until each such recipient executes an agreement evidencing the Award, delivers a fully executed copy thereof to the Corporation, and otherwise complies with the then applicable terms and conditions of the Award. Each Awardee shall be issued a certificate with respect to shares of restricted stock awarded under the Plan. Such certificate shall be registered in the name of the Awardee, and shall bear an appropriate legend referring to the terms, conditions and restrictions applicable to such Award. The stock certificate, appropriately legended, evidencing shares of restricted stock will be held in custody of the Corporation until the restrictions thereon have lapsed and the Awardee has satisfied all tax liabilities in connection with the Award. 22 Except as otherwise required by the applicable award agreement, recipients of Awards under the Plan are not required to make any payment other than taxes due or provide consideration other than the rendering of services. Shares of restricted stock awarded pursuant to the Plan shall be subject to the following restrictions and conditions (except to the extent provided in the Plan and described below under "Change of Control"): (i) Subject to the provisions of the Plan, during a period set by the Committee commencing with the date of Award (the "restriction period"), the Awardee shall not be permitted to sell, transfer, pledge, or assign shares of restricted stock awarded under the Plan. Within these limits, the Committee may provide for the lapse of such restrictions in installments where deemed appropriate. (ii) Except as provided in the Plan, the Awardee shall have, with respect to the shares of restricted stock, all of the rights of a shareholder of the Corporation, including the right to vote the shares, and the right to receive any cash dividends. The Committee may permit or require the payment of cash dividends to be deferred and, if the Committee so determines, reinvested in additional restricted stock or otherwise reinvested. Certificates for shares of unrestricted stock shall be delivered to the Awardee promptly after, and only after, the restriction period expires. (iii) Subject to the provisions of paragraph (iv) below, upon termination of employment for any reason during the restriction period, all shares still subject to restriction shall be forfeited by the Awardee and reacquired by the Corporation. (iv) In the event of an Awardee's retirement, permanent disability or death, or in cases of special circumstances, the Committee may, upon finding that a waiver would be in the best interests of the Corporation, waive in whole or in part any remaining restrictions with respect to such Awardee's shares of restricted stock. DEFERRED STOCK AWARDS The Committee may award the right to receive stock that is not to be distributed to the Awardee until after a specified deferral period ("deferred stock") and the Awardee may elect further deferral subject to Committee approval. Such deferred stock Awards may be issued either alone or in addition to other Awards under the Plan. The Committee will determine the officers and key employees of the Corporation to whom deferred stock shall be awarded, the number of shares of deferred stock to be awarded, or a formula specified by the Committee by which the number of shares to be awarded is determined. The Committee shall also determine the duration of the period or period(s) (together with any period of further deferral elected by the Awardee and approved by the Committee, the "deferral period") during which deferred stock Awards may be subject to deferral (including elective deferral) and forfeiture, and all other conditions of such Awards in addition to those described below. The provisions of such Awards need not be the same with respect to each Awardee. Except as otherwise required by the applicable Award agreement, recipients of deferred stock Awards under the Plan are not required to make any payment other than taxes due or provide consideration other than the rendering of services. The Committee may provide for a minimum payment at the end of the applicable deferral period based on a percentage of the fair market value on the date of the grant of the number of shares covered by the Award. Deferred stock awarded pursuant to the Plan shall be subject to certain conditions, including, but not limited to the following: (i) Subject to the provisions of the Plan, the shares to be issued pursuant to the Award may not be sold, assigned, transferred, pledged, or otherwise encumbered during the deferral period. Within these limits, the Committee may provide for the lapse of such restrictions in installments where deemed appropriate. (ii) Amounts equal to any dividends declared and/or any other amounts deemed earned with respect to the stock subject to deferral will be paid to the Awardee directly, deferred into additional shares or some combination thereof, all as determined by the Committee. 23 (iii) During the deferral period, all or a portion of the deferred stock may be subject to risk of forfeiture by the Awardee as determined by the Committee. (iv) In the event of the Awardee's retirement, permanent disability or death during the deferral period, or in cases of special circumstances, the Committee may, upon its finding that a waiver would be in the best interests of the Corporation, waive in whole or in part any or all remaining deferral limitations with respect to such Awardee's deferred stock. OTHER STOCK-BASED AWARDS The Committee may grant, either alone or in addition to stock options, restricted stock, and/or deferred stock, other awards that are valued in whole or in part by reference to, or are otherwise based on stock ("other Stock-based Awards"), including without limitation, performance shares, dividend equivalents and convertible debentures. Subject to the provisions of the Plan, the Committee shall determine the officers and key employees of the Corporation and its subsidiaries to whom other Stock-based Awards are to be made, the time or times at which such Awards are to be made, the size of such Awards and all other conditions of such Awards, including any restrictions, deferral periods or performance requirements. The Committee may also provide for the grant of stock upon the completion of a specified performance period. The provisions of such Awards need not be the same with respect to each Awardee, and shall be subject to certain conditions, including, but not limited to the following: (i) Subject to the provisions of the Plan and except as otherwise determined by the Committee, the shares or interests in shares subject to Awards may not be sold, assigned, transferred, pledged or otherwise encumbered prior to the date on which the shares are issued, or, if later, the date on which any applicable restriction, performance or deferral period lapses. (ii) Subject to the provisions of the Plan and the Award agreement, as determined by the Committee at the time of the Award, the recipient shall have the right to receive currently or on a deferred basis interest or dividends, their equivalents, or such other amounts with respect to the number of shares, or interests therein covered by the Award, as determined by the Committee, and the Committee may provide that such amounts or portion thereof (if any), shall be deemed to have been reinvested in additional stock or otherwise reinvested. (iii) The Awards shall be subject to such forfeiture provisions as are set forth in the Award agreement, as the Committee shall determine. (iv) In the event of the Awardee's retirement, permanent disability or death, or in cases of special circumstances, the Committee may, upon finding that a waiver would be in the best interests of the Corporation, waive in whole or in part any or all remaining limitations imposed with respect to such other Stock-based Award. (v) Unless otherwise determined by the Committee, no other Stock-based Award in the nature of a purchase right shall be transferable by the Awardee other than by will or by the laws of descent and distribution, and such purchase rights shall be exercisable during the Awardee's lifetime only by the Awardee. CHANGE OF CONTROL A Change of Control is defined generally as (i) the acquisition of 20% or more of the outstanding voting securities of the Corporation by an individual, entity, or group, other than from the Corporation; (ii) a change in the majority of the board of directors of the Corporation that is not approved by at least a majority of the current directors and those directors similarly approved ("incumbent directors"); (iii) the consummation of a merger, consolidation or similar transaction involving the Corporation, unless immediately following such transaction: (A) more than 60% of the voting power of the resulting corporation's voting securities are represented by the Corporation's voting securities that were outstanding immedi 24 ately prior to the transaction, (B) no person becomes the beneficial owner of 20% or more of the outstanding voting securities of the resulting corporation and (C) at least a majority of the board of directors of the resulting corporation were incumbent directors of the Corporation at the time of the approval of the transaction by the Corporation's board of directors; or (iv) the sale or disposition of all or substantially all of the assets of the Corporation or a liquidation of the Corporation. Upon a Change of Control, all options granted under existing Plans would vest and become immediately exercisable. In the case of a company-initiated termination other than for disciplinary reasons as defined in the Company Policies section of the Corporation's Employee Handbook ("Cause"), or by voluntary resignation of the Awardee, in either case within eighteen months following a Change of Control, any stock options held by the Awardee may be exercised by the Awardee until the earlier of six months and one day after such termination or expiration of such options in accordance with their terms. In addition, in the case of restricted stock, deferred stock or other Stock-based Awards, the restriction and deferral periods immediately lapse and the subject shares of or interests in stock become fully vested, and such shares of or interests in stock shall be delivered immediately to the Awardee. TAX ASPECTS OF STOCK OPTIONS UNDER THE U.S. INTERNAL REVENUE CODE The following is a general summary of the U.S. Federal income tax consequences of the grant and exercise of stock options to the optionee and the Corporation. This summary is not intended to provide tax advice to optionees. Incentive Stock Options. ISOs granted under the Plan will be subject to the provisions of the Internal Revenue Code. There is no income tax upon grant of an ISO. If shares of Common Stock are issued to an optionee pursuant to an ISO granted as described above, and if no disqualifying disposition of such shares is made by such optionee within one year after the transfer of such shares to such optionee, or within two years after the date of grant, (a) no income will be realized by the optionee at the time of the grant of the option, (b) no income, for regular income tax purposes, will be realized by the optionee at the date of exercise, (c) upon sale of such shares, any amount realized in excess of the option price will be taxed to the optionee, for regular income tax purposes, as a long-term capital gain and any loss sustained will be a long-term capital loss, and (d) no deduction will be allowed to the Corporation for Federal income tax purposes. However, if a disposition takes place before the end of such holding periods, then, generally, 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 the time of exercise (or, if less, the amount realized on the disposition of the option shares) over the exercise price thereof, and the Corporation will be entitled to deduct an amount equal to such income. Upon exercise of an ISO, the optionee may be subject to alternative minimum tax. Nonqualified Stock Options. There is no income tax upon grant of an NQSO. With respect to NQSOs granted to optionees under the Plan, (a) no income is realized by the optionee at the time the option is granted, (b) at exercise, ordinary income is realized by the optionee in an amount equal to the excess of the fair market value of the shares on the date of exercise over the option price (the amount paid for the shares), and the Corporation receives a tax deduction for the same amount, and (c) on disposition, appreciation or depreciation after the date of exercise is treated as either short-term or long-term capital gain or loss, depending on the holding period for such shares. The affirmative vote of the holders of a majority of all outstanding shares of Common Stock entitled to vote thereon will be required for approval of this Plan. THE BOARD OF DIRECTORS AND MANAGEMENT RECOMMEND THAT THE STOCKHOLDERS APPROVE THE 1997 STOCK OPTION AND STOCK AWARD PLAN DESCRIBED ABOVE. THIS IS IDENTIFIED AS ITEM 3 ON THE ENCLOSED PROXY CARD. The closing price of the Common Stock on the New York Stock Exchange on February 28, 1997, was $90.75 per share. 25 PART IV. STOCKHOLDER RESOLUTIONS The Corporation has been informed by certain stockholders that they plan to submit resolutions at the Annual Meeting. The Board of Directors and Management believe that adoption of these resolutions is not in the best interests of the Corporation and recommend a vote AGAINST each of them. An affirmative vote of a majority of the votes cast by holders of the Common Stock at the Annual Meeting would be required for the adoption of these resolutions, which are set forth below: STOCKHOLDER PROPOSAL RELATING TO TERM LIMITS FOR BOARD MEMBERS Mrs. Evelyn Y. Davis, Watergate Office Building, 2600 Virginia Avenue N.W., Washington, DC 20037, the owner of 100 shares, has stated her intention to submit the following resolution: "RESOLVED: That the stockholders of Bankers Trust recommend that the Board take the necessary steps so that future outside directors shall not serve for more than six years. "REASONS: The President of the U.S.A. has a term limit, so do Governors of many states. "Newer directors may bring in fresh outlooks and different approaches with benefits to all shareholders. "No director should be able to feel that his or her directorship is until retirement." THE BOARD OF DIRECTORS AND MANAGEMENT RECOMMEND THAT THE STOCKHOLDERS VOTE AGAINST THIS PROPOSAL, WHICH IS IDENTIFIED AS ITEM 4 ON THE ENCLOSED PROXY CARD, FOR THE FOLLOWING REASONS: POSITION OF THE BOARD OF DIRECTORS AND MANAGEMENT One of the guidelines consistently followed by the Committee on Directors of the Board of Directors in considering the selection of nominees for election or re-election to the Board is the availability of persons of long experience with the affairs of the Corporation. An arbitrary limit on service would deprive the Corporation of the benefits of the judgment and contributions of directors acting on the basis of their accumulated knowledge and experience in the Corporation's affairs gained through years of service. Accordingly, the Board of Directors and Management recommend a vote AGAINST this proposal. STOCKHOLDER PROPOSAL RELATING TO CUMULATIVE VOTING Mr. John J. Gilbert and Mrs. Margaret R. Gilbert, of 29 East 64th Street, New York, NY 10021-7043, who own 108 shares and 200 shares, respectively, have stated their intention to submit the following resolution: "RESOLVED: That the stockholders of Bankers Trust New York Corporation, assembled in annual meeting in person and by proxy, hereby request the Board of Directors to take the steps necessary to provide for cumulative voting in the election of directors, which means each stockholder shall be entitled to as many votes as shall equal the number of shares he or she owns multiplied by the number of directors to be elected, and he or she may cast all of such votes for a single candidate, or any two or more of them as he or she may see fit." "REASONS: Continued very strong support along the lines we suggest were shown at the last annual meeting when 16,812,958 shares, approximately 28.5% of the vote cast (a large increase over the previous year), were cast in favor of this proposal. The vote against included 11,716,901 unmarked proxies. "A California law provides that all state pension holdings and state college funds, invested in shares, must be voted in favor of cumulative voting proposals, showing increasing recognition of the importance of this democratic means of electing directors. 26 "The National Bank Act provides for cumulative voting. In many cases companies get around it by forming holding companies without cumulative voting. Banking authorities have the right to question the capability of directors to be on banking boards. In many cases authorities come in after and say the director or directors were not qualified. We were delighted to see the SEC has finally taken action to prevent bad directors from being on boards of public companies. The SEC should have hearings to prevent such persons becoming directors before they harm investors. "We think cumulative voting is the answer to find new directors for various committees. Some recommendations have been made to carry out the CERES 10 points. The 11th should be, in our opinion, having cumulative voting and ending staggered boards. "Many successful corporations have cumulative voting. Example, Pennzoil defeated Texaco in that famous case. Ingersoll-Rand also having cumulative voting won two awards. FORTUNE magazine ranked it second in its industry as "America's Most Admired Corporations" and the WALL STREET TRANSCRIPT noted "on almost any criteria used to evaluate management, Ingersoll-Rand excels." In 1994 and 1995 they raised their dividend. "Lockheed-Martin, as well as VWR Corporation, now have a provision that if anyone has 40% or more of the shares cumulative voting applies, it applies at the latter company. "In 1995 American Premier adopted cumulative voting. Allegheny Power System tried to take away cumulative voting, as well as put in a stagger system, and stockholders defeated it, showing stockholders are interested in their rights. "If you agree, please mark your proxy for this resolution; otherwise, it is automatically cast against it, unless you have marked to abstain." THE BOARD OF DIRECTORS AND MANAGEMENT RECOMMEND THAT THE STOCKHOLDERS VOTE AGAINST THIS PROPOSAL, WHICH IS IDENTIFIED AS ITEM 5 ON THE ENCLOSED PROXY CARD, FOR THE FOLLOWING REASONS: POSITION OF THE BOARD OF DIRECTORS AND MANAGEMENT For the twelfth consecutive year, stockholders of Bankers Trust New York Corporation in 1996 rejected this cumulative voting proposal. Cumulative voting invites the potential for a minority of stockholders to elect directors who will promote their special interests, rather than the greater interests of the Corporation and the stockholders at large. Election of such individuals would necessarily result in a factional Board of Directors to the detriment of the Corporation and, ultimately, its stockholders. It is important that the Board of Directors be comprised of a cohesive group of experienced, knowledgeable and talented individuals who clearly are working for the benefit of all of the Corporation's stockholders. Accordingly, the Board of Directors and Management recommend a vote AGAINST this proposal. STOCKHOLDER PROPOSAL RELATING TO MERGER OF THE CORPORATION AND ITS SUBSIDIARIES Mr. John Jennings Crapo, of P.O. Box 151, Cambridge, MA 02140-0002, who owns 122 shares, has stated his intention to submit the following resolution: "RESOLVED: Immediately prior to the approbation by the Board of Directors ("our Board") of BANKERS TRUST NEW YORK CORPORATION ("BTNYC") of any merger of BTNYC or subsidiary of it with another entity, part of a subsidiary with another entity, in each instance our Board is requested to present to stockholders of BTNYC as a shareholder proposal the proposal to merge for shareholder ratification by Stockholders of BTNYC. 27 "Each proposal it is requested shall contain a balanced presentation of the arguments in FAVOR and AGAINST said merger. "'Merger' for purpose of this proposal it is requested shall include friendly takeover, purchase of Corporation individually by a group or another entity, hostile takeover or hostile bid, White Knight overtures, but shall not exclude identical or similar demeanor which is described by other speech." "REASONS: 1978-1994 (inclusive) there have been 1,576 bank failures per statistics [of the] Federal Deposit Insurance Corporations. 1977 there were no banks assisted or closed. 1978 seven banks were assisted or closed: least number of seventeen years in question. 1988 the assisted or closed banks of 221 was the most. Ninety-two is average 1978-1994. "Events in banking industry in recent years emphasize necessity of all stockholders carefully scrutinizing acquisitions. "Stockholders at Stockholder Meeting I'm positive shall have other worthy reasons, too, why this proposal may be adopted by BTNYC Stockholders." THE BOARD OF DIRECTORS AND MANAGEMENT RECOMMEND THAT THE STOCKHOLDERS VOTE AGAINST THIS PROPOSAL, WHICH IS IDENTIFIED AS ITEM 6 ON THE ENCLOSED PROXY CARD, FOR THE FOLLOWING REASONS: POSITION OF THE BOARD OF DIRECTORS AND MANAGEMENT Under the Business Corporation Law of the State of New York, which governs the Corporation (the "Business Corporation Law"), normally, stockholders owning two-thirds of all of the Corporation's outstanding stock entitled to vote thereon must approve any plan through which the Corporation would merge with another, unrelated entity. In that context, proponent's proposal is superfluous. Proponent goes further, however, in that he would have stockholders run the ordinary business of the Corporation. The Corporation currently has over 400 subsidiaries organized under the laws of over 40 different jurisdictions worldwide, the existence of which enable the Corporation to maximize its legal, tax, accounting and regulatory objectives in the most efficient manner possible. To achieve those objectives and in the conduct of the ordinary business operations of the Corporation, Management from time to time deems it in the best interest of the Corporation to consummate a transaction by means of a merger (as opposed to a purchase or sale of assets or stock) to effect an immaterial acquisition or disposition. Proponent's proposal would require that the Corporation's Board of Directors bring each of these business transactions before a meeting of the stockholders for approval. This would waste large amounts of the Corporation's monetary assets, due to the preparation, solicitation and distribution of proxy statements required prior to each such meeting, as well as the valuable time of the Board of Directors, Management and the Corporation's stockholders. The Business Corporation Law specifies that business of a corporation shall be managed by its board of directors. The effect of proponent's proposal would be to usurp the Board's legally mandated responsibility to manage the business operations of the Corporation and impose that responsibility on the Corporation's stockholders. Accordingly, the Board of Directors and Management recommend a vote AGAINST this proposal. PART V. OTHER MATTERS Management does not know of any other matters that may be presented. If other matters should properly come before the Annual Meeting, or adjournments thereof, it is the intention of the persons named in the enclosed proxy to vote the stock represented by them in accordance with their best judgment pursuant to the discretionary authority included in the proxy. The cost of soliciting proxies will be paid by the Corporation. In addition to solicitation by mail, proxies may be solicited personally or by telephone, telegram or telecopier by regular employees of the Corporation and its subsidiaries. Brokerage houses and other custodians, nominees and fiduciaries will 28 be requested to forward solicitation materials to their principals and the Corporation will reimburse them for the expense of doing so. Kissel-Blake Inc., New York, New York, has been retained to aid in the solicitation of proxies for a fee of $17,500 plus out-of-pocket expenses. Any stockholder executing the enclosed form of proxy may revoke it at any time before it is exercised. A proxy may be revoked by delivering to the Corporation a written revocation or a duly executed proxy bearing a later date or by attending the Annual Meeting and voting in person. Where the stockholder specifies a choice with respect to any matter to be acted upon, the shares represented by the proxy will be voted in accordance with such specifications. If not otherwise specified in the proxy, the shares will be voted in the election of directors for the nominees listed in Part I, for ratification of the appointment of the independent auditor, as described in Part II, and for ratification of the 1997 Stock Option and Stock Award Plan, as described in Part III, and will be voted against each of the stockholder proposals described in Part IV. If a duly executed proxy card is not returned, the shares cannot be voted except by voting in person or by a duly executed proxy presented at the Annual Meeting. STOCKHOLDER PROPOSALS FOR THE 1998 ANNUAL MEETING OF STOCKHOLDERS A stockholder proposal must be received by the Corporation by November 11, 1997, to be eligible for inclusion in the Proxy Statement for the 1998 Annual Meeting of Stockholders. By order of the Board of Directors /s/James T. Byrne, Jr. JAMES T. BYRNE, JR. Secretary 29 THIS PAGE INTENTIONALLY LEFT BLANK 30 APPENDIX A BANKERS TRUST NEW YORK CORPORATION 1997 STOCK OPTION AND STOCK AWARD PLAN SECTION 1. PURPOSE OF THE PLAN. The Committee shall also interpret the provisions of the Plan and any The purpose of the 1997 Stock Option Award issued under the Plan (and any and Stock Award Plan (the "Plan") is agreements relating thereto) and to aid Bankers Trust New York supervise the administration of the Corporation and its subsidiaries Plan. (the "Corporation") in securing and retaining officers and other key (b) The Committee shall: (i) employees of outstanding ability and select the officers and the key to motivate such employees to exert employees of the Corporation and its their best efforts on behalf of the subsidiaries to whom Awards may from Corporation and its subsidiaries. In time to time be granted hereunder; addition, the Corporation expects (ii) determine whether incentive that it will benefit from the added stock options (under Section 422 of interest which the respective the Code), nonqualified stock Awardees (as hereinafter defined) options, restricted stock, deferred will have in the welfare of the stock, or other Stock-based Awards, Corporation as a result of their or a combination of the foregoing, ownership or increased ownership of are to be granted hereunder; (iii) the common stock of the Corporation determine the number of shares to be (the "Stock" or the "Common Stock"). covered by each Award granted hereunder; (iv) determine the terms SECTION 2. ADMINISTRATION. and conditions, not inconsistent with the provisions of the Plan, of (a) The Board of Directors of the any Award granted hereunder Corporation (the "Board") shall (including but not limited to any designate a committee (the restriction and forfeiture condition "Committee") who shall serve at the on such Award and/or the shares of pleasure of the Board. The Committee Stock (as hereinafter defined) may also have other duties, as would relating thereto); (v) determine be the case if the Board should whether, to what extent and under designate the Corporation's Human what circumstances Awards may be Resources Committee (or a successor settled in cash; (vi) determine thereto) to act as the Committee whether, to what extent and under under the Plan. Unless the Board what circumstances Stock and other determines otherwise, each member of amounts payable with respect to an the Committee shall be a Award under the Plan shall be "non-employee director" within the deferred either automatically or at meaning of Rule 16b-3 of the the election of the Awardee; (vii) Securities Exchange Act of 1934 (the determine whether, to what extent "Exchange Act") and an "outside and under what circumstances option director" within the meaning of grants and/or other Awards under the Section 162(m) of the Internal Plan are to be made, and operate, on Revenue Code of 1986 (the "Code"), a tandem basis; and (viii) to the as the same may be amended from time extent appropriate, certify to time. The Committee shall have attainment of performance goals as full power and authority, subject to required by Section 162(m) of the ratification by the Board by Code. Except in the case of resolutions not inconsistent with employees subject to Section 16 of the provisions of the Plan, to grant the Exchange Act or Section 162(m) to eligible employees pursuant to of the Code, the Committee may the provisions of the Plan (i) stock authorize the Chief Executive options to purchase shares, (ii) Officer to select awardees and grant restricted stock, (iii) deferred awards under the Plan on its behalf. stock, or (iv) any other Stock-based Awards (as hereinafter defined) (c) All decisions made by the permitted hereunder (each of the Committee pursuant to the provisions foregoing being an "Award" and of the Plan and related orders or collectively, the "Awards"). resolutions of the Board (as and to the extent permitted hereunder) shall be final, A-1 conclusive and binding on all assets, return on assets, return persons, including the individuals on investment, return on capital, granted Awards under the Plan return on equity, return on ("Awardees"), the Corporation, its average common equity; (6) stockholders and employees. economic value added; (7) operating margin; (8) net income, pre-tax earnings, pre-tax (d) If the Committee determines earnings before interest, that an Award described in Sections depreciation and amortization, 6, 7, or 8 to be granted to any per- pre-tax operating earnings after son who is designated by the Commit- interest expense and before tee as likely to be a "covered em- incentives, service fees, ployee" should qualify as "performa- extraordinary or special items, nce-based compensation" for purposes and operating earnings; (9) total of Section 162(m) of the Code, the stockholder return with or grant, exercise and/or settlement of without dividends reinvested; and such Award (a "Performance Award") (10) any of the above goals as shall be contingent upon achievement compared to the performance of a of preestablished performance goals published or special index deemed and other terms set forth below: applicable by the Committee, including, but not limited to, (i) Performance Goals Generally. the Standard & Poor's 500 Stock The performance goals for Index or a group of comparator such Performance Awards shall companies. consist of one or more business criteria and a (iii) Performance Period; Timing for targeted level or levels of Establishing Performance Goals. performance with respect to Achievement of performance goals each of such criteria, as in respect of such Performance specified by the Committee Awards shall be measured over a consistent with this Section performance period specified by 2(d). Performance goals shall the Committee. Performance goals be objective and shall shall be established not later otherwise meet the than 90 days after the beginning requirements of Section of any performance period 162(m) of the Code and applicable to such Performance regulations thereunder, Awards, or at such other date as including the requirement may be required or permitted for that the level or levels of "performance-based compensation" performance targeted by the under Section 162(m) of the Code. Committee result in the achievement of performance (iv) Performance Award Pool. The goals being "substantially Committee may establish a uncertain." The Committee may Performance Award pool, which determine that such shall be an unfunded pool, for Performance Awards shall be purposes of measuring the granted, exercised and/or Corporation's performance in settled upon achievement of connection with Performance any one performance goal or Awards. The amount of such that two or more of the Performance Award pool shall be performance goals must be based upon the achievement of a achieved as a condition to performance goal or goals based grant, exercise and/or on one or more of the business settlement of such criteria set forth in Section Performance Awards. 2(d)(ii) hereof during the given Performance goals may differ performance period, as specified for Performance Awards by the Committee in accordance granted to any one Awardee or with Section 2(d)(iii) hereof. to different Awardees. The Committee may specify the amount of the Performance Award (ii) Business Criteria. One or pool as a percentage of any of more of the following such business criteria, a business criteria for the percentage thereof in excess of a Corporation, on a threshold amount, or as another consolidated basis, and/or amount which for specified subsidiaries or business units of the Corporation (except with respect to the total stockholder return and earnings per share criteria), shall be used by the Committee in establishing performance goals for such Performance Awards: (1) pre-tax or after-tax earnings per share; (2) revenues; (3) cash flow; (4) cash flow return on investment; (5) return on net A-2 need not bear a strictly the number of shares subject to mathematical relationship to restricted stock, deferred stock or such business criteria. other Stock-based Awards granted under the Plan as may be determined (v) Settlement of Performance to be appropriate by the Committee; Awards; Other Terms. provided that the number of shares Settlement of such subject to any Award shall always be Performance Awards shall be a whole number; and provided further in cash, Stock, or a that, with respect to incentive combination of cash and stock options, no such adjustment Stock, at the discretion of shall be authorized to the extent the Committee. The Committee that such adjustment would cause the may reduce the amount of a Plan to violate Section 422(b)(1) of settlement otherwise to be the Code or any successor provision made in connection with such thereto. In addition, subject to the Performance Awards, but may limitations provided in Sections 7, not exercise discretion to 10 and 12(e), the Committee is increase any such amount authorized to make adjustments in payable to a "covered the terms and conditions of, and employee" in respect of a performance criteria relating to, Performance Award subject to Awards in recognition of unusual or this Section 2(d). The nonrecurring events (including Committee shall specify the without limitation, events described circumstances in which such in this paragraph) affecting the Performance Awards shall be Corporation or the financial paid or forfeited in the statements of the Corporation, or in event of termination of response to changes in applicable employment by the Awardee laws, regulations and accounting prior to the end of a principles. performance period or settlement of Performance SECTION 4. ELIGIBILITY. Awards. Where applicable, prior to any Award, the Officers and other key employees of Committee shall certify the Corporation and its subsidiaries attainment of performance who are responsible for the goals for the specified management, growth, profitability or period thereon. protection of the business of the Corporation or its subsidiaries are SECTION 3. STOCK SUBJECT TO THE PLAN. eligible to be granted Awards under the Plan. The Awardees under the Except as otherwise provided by this Plan shall be selected from time to Section 3 and subject to Section time by the Committee from among 12(e), the total number of shares of those eligible. the Common Stock available for distribution under the Plan is 20 For the purposes of the Plan, a million. Such shares may consist, in subsidiary of the Corporation shall whole or in part, of authorized and be any corporation which at the time unissued shares or treasury shares, qualifies as a subsidiary thereof except that treasury shares must be under the definition of "subsidiary used in the case of restricted corporation" in Section 424(f) of stock. If any shares that have been the Code. optioned cease to be subject to option, or if any shares subject to SECTION 5. STOCK OPTIONS. any restricted stock, deferred stock or any other Stock-based Award Any stock option granted under the granted hereunder are forfeited or Plan shall be in such form as the such Award otherwise terminates Committee may from time to time without the actual or deemed approve. Any such option shall be delivery of such shares, such shares subject to the following terms and shall again be available for conditions and shall contain such distribution under the Plan. additonal terms and conditions, not inconsistent with the provisions of the Plan as the Committee shall In the event of any merger, deem desirable. reorganization, consolidation, recapitalization, stock dividend, (a) Option Type. Each option extraordinary cash or property shall state whether it will or will dividend, or other change in not be treated as an incentive corporate structure affecting the stock option. Stock, such adjustment shall be made in the aggregate number of shares (b) Option Price. The purchase which may be delivered under the price per share of the Stock Plan, in the number and/or option purchasable under a stock option price of shares subject to shall be determined by the outstanding options granted under Committee, but the Plan, pursuant to this Section 3, and/or A-3 will not be less that 100% of the der paragraph (iii), shall not fair market value of the Stock on constitute a Change of Control; the date of the grant of the option, or as determined in accordance with procedures established by the (ii) Individuals who, as of April Committee. 15, 1997, constitute the Board (the "Incumbent Directors") cease (c) Option Period. The term of for any reason to constitute at each stock option shall be fixed by least a majority of the Board, the Committee, but no incentive provided that any individual stock option shall be exercisable becoming a director subsequent to after the expiration of 10 years April 15, 1997, whose election, from the date the option is granted or nomination for election by the and no nonqualified stock option Corporation's stockholders, was shall be exercisable after the approved by a vote of at least a expiration of 10 years and one day majority of the Incumbent from the date the option is granted. Directors then on the Board (either by a specific vote or by (d) Exercisability. Stock options approval of the proxy statement shall be exercisable at such time or of the Corporation in which such times as determined by the Committee person is named as a director, at or subsequent to grant. Unless without written objection to such otherwise determined by the nomination) shall be an Incumbent Committee at or subsequent to grant, Director; provided, however, that no stock option shall be exercisable no individual initially elected during the twelve month period or nominated as a director of the ending on the day before the first Corporation as a result of an anniversary date of the granting of actual or threatened election the option, except as provided in contest with respect to directors paragraphs (g), (h) or (i) of this or as a result of any other Section 5; provided, however, that actual or threatened solicitation notwithstanding the foregoing, from of proxies or consents by or on and after a Change of Control (as behalf of any person other than hereinafter defined) all stock the Board shall be an Incumbent options outstanding as of the Change Director; or of Control shall become immediately exercisable to the full extent of (iii) The consummation of a the original Award. reorganization, merger, consolidation, statutory share As used herein, "Change of Control" exchange or similar form of shall mean the occurrence of one of corporate transaction involving the following events: the Corporation or any of its subsidiaries that requires the (i) The acquisition, other than approval of the Corporation's from the Corporation, by any stockholders for such transaction individual, entity or group or the issuance of securities in (within the meaning of such a transaction (a "Business Section 13(d)(3) or 14(d)(2) Combination"), unless immediately of the Exchange Act, as in following such Business effect on April 15, 1997) of Combination: (A) more than 60% of beneficial ownership (within the total voting power of (x) the the meaning of Rule 13d-3 corporation resulting from such promulgated under the Business Combination (the Exchange Act as in effect on "Surviving Corporation"), or (y) April 15, 1997) of 20% or if applicable, the ultimate more of the combined voting parent corporation that directly power of the then outstanding or indirectly has beneficial voting securities of the ownership of 100% of the voting Corporation entitled to vote securities eligible to elect generally in the election of directors of the Surviving directors (the "Corporation Corporation (the "Parent Voting Securities"); Corporation"), is represented by provided, however, that any Corporation Voting Securities acquisition (A) by the that were outstanding immediately Corporation or its prior to such Business subsidiaries, (B) by any Combination (or, if applicable, employee benefit plan (or is represented by shares into related trust) sponsored or which such Corporation Voting maintained by the Corporation Securities were con- or any of its subsidiaries, (C) by any underwriter temporarily holding securities pursuant to an offering of such securities, or (D) pursuant to a Non-Qualifying Transaction un- A-4 verted pursuant to such result of the acquisition of the Business Combination), (B) no Corporation Voting Securities by the person (other than an Corporation which, by reducing the employee benefit plan or number of shares of Corporation related trust sponsored or Voting Securities outstanding, maintained by the Surviving increases the percentage of shares Corporation or the Parent beneficially owned by such person; Corporation) is or becomes provided, that if a Change of the beneficial owner, Control would occur as a result of directly or indirectly, of such an acquisition by the 20% or more of the total Corporation (if not for the voting power of the operation of this sentence), and outstanding voting securities after the Corporation's acquisition eligible to elect directors such person becomes the beneficial of the Parent Corporation owner of additional shares of (or, if there is no Parent Corporation Voting Securities that Corporation, the Surviving increases the percentage of Corporation) and (C) at least Corporation Voting Securities a majority of the members of beneficially owned by such person, the board of directors of the then a Change of Control shall Parent Corporation (or, if occur. there is no Parent Corporation, the Surviving Corporation) following the (e) Method of Exercise. Stock consummation of the Business options may be exercised in whole or Combination were Incumbent in part by giving written notice of Directors at the time of the exercise to the Corporation Board's approval of the specifying the number of shares to execution of the initial be purchased. Such notice shall be agreement providing for such accompanied by payment in full of Business Combination (any the purchase price. The Committee Business Combination which may authorize payment in whole or in satisfies all of the criteria part of the purchase price to be specified in (A), (B) and (C) made in unrestricted stock already above shall be deemed to be a owned by the Awardee, or, in the "Non-Qualifying case of a nonqualified stock option, Transaction"); or in restricted stock or deferred stock subject to an Award hereunder (iv)The sale or other (based upon the fair market value of disposition of all or the stock on the date the option is substantially all of the exercised, as determined by the assets of the Corporation or Committee, or in any other manner a liquidation of the approved by the Committee). The Corporation. Committee may authorize such payment at or after grant, except that in Anything herein to the contrary the case of an incentive stock notwithstanding, with respect to any option, any right to make payment in Awardee, a Change of Control shall unrestricted stock already owned not be deemed to have occurred if must be included in the option at such Change of Control results from the time of grant. No shares of or arises out of a purchase or other Stock shall be issued until full acquisition of the Corporation, payment therefor has been made. directly or indirectly, by a Subject to paragraph (k) of this corporation or other entity in which Section 5, an Awardee shall have the such Awardee has or obtains a direct right to dividends and other rights or indirect equity interest of a shareholder with respect to immediately prior to, or in shares subject to the option when connection with, such Change of the Awardee has given written notice Control; provided, however, that the of exercise, has paid in full for limitation contained in this such shares and, if requested, has sentence shall not apply in respect given the representation described of any direct or indirect equity in paragraph (a) of Section 12. interest in a corporation or other entity (a) which equity interest is (f) Nontransferability of less than 1% of such entity's equity Options. Except as provided in this interests, or (b) which is received paragraph, no stock option shall be by such Awardee without the transferable by the Awardee Awardee's concurrence or consent, as otherwise than by will or by the a result of or in connection with a laws of descent and distribution, purchase or other acquisition of the and such option shall be Corporation by such corporation or exercisable, during the Awardee's other entity. lifetime, only by the Awardee. The Committee may authorize all or a Notwithstanding the foregoing, a portion of the options to be granted Change of Control shall not be to all or select employees deemed to occur solely because any person acquires beneficial ownership of 20% or more of the Corporation Voting Securities as a A-5 on terms which permit transfer by stated period of the option, such optionee to (i) the spouse, whichever period is the shorter, at children or grandchildren of the which time the stock option shall optionee ("Immediate Family terminate; provided, however, that, Members"), (ii) a trust or trusts if the Awardee dies within such for the exclusive benefit of such three-year period, any unexercised Immediate Family Members, or (iii) stock option held by such Awardee an entity in which such Immediate shall thereafter be exercisable to Family Members are the only holders the extent to which it was of equity interests, provided that, exercisable at the time of death for unless otherwise determined by the a period of twelve months from the Committee, (x) there may be no date of the Awardee's death or for consideration for any such transfer, the stated period of the option, (y) the stock option agreement whichever period is the shorter. pursuant to which such options are granted must be approved by the (i) Other Termination. Unless Committee, and must expressly otherwise determined by the provide for transferability in a Committee at or after grant, if an manner consistent with this Section Awardee's employment terminates for 5, and (z) subsequent transfers of any reason other than death, transferred options shall be permanent disability, or retirement, prohibited except those in the stock option shall thereupon accordance with paragraph (g) of terminate; provided, however, that this Section 5. Following transfer, if such termination is by action of any such options shall continue to the Corporation, other than for be subject to the same terms and disciplinary reasons, as defined in conditions as were applicable the Company Policies section of the immediately prior to transfer, Corporation's Employee Handbook provided that for purposes of ("Cause"), the exercise period Section 4 hereof, the term "Awardee" within which to exercise any shall be deemed to refer to the unvested stock options outstanding transferee. The events of as of the date of termination may be termination of employment of Section extended for a period of up to 12 5 hereof shall continue to be months following the termination applied with respect to the original date, as determined by the Committee Awardee, following which the options or its designee, in order to allow shall be exercisable by the such options to vest; provided, transferee only to the extent and further, that if such termination is for the periods specified in this by action of the Corporation, other Section 5. than for Cause, or by voluntary resignation of the Awardee, in (g) Termination by Death. Except either case within 18 months to the extent otherwise provided by following a Change of Control, any the Committee at or after the time stock options held by the Awardee of grant, if an Awardee's employment may be exercised by the Awardee by the Corporation and/or any of its until the earlier of six months and subsidiaries terminates by reason of one day after such termination or death, the stock option shall vest expiration of such stock options in and all outstanding options shall accordance with their terms. thereafter be immediately exercisable in full by the legal (j) Option Buyout. The Committee representative of the estate or by may at any time repurchase an option the legatee of the Awardee under the with the consent of the Awardee, will of the Awardee, for a period of based on such terms and conditions fifteen months from the date of such as the Committee shall establish and death or until the expiration of the communicate to the Awardee at the stated period of the option, time such offer is made. whichever is shorter, at which time the stock option shall terminate. (k) Form of Settlement. The Committee may provide, at the time (h) Termination by Reason of of grant, that the shares to be Permanent Disability. Except to the issued upon an option's exercise extent otherwise provided by the shall be in the form of restricted Committee at or after the time of stock or deferred stock, or may grant, if an Awardee's employment by reserve, other than with respect to the Corporation and/or any of its incentive stock options, the right subsidiaries terminates by reason of to so provide after the time of permanent disability, any stock grant. option held by such Awardee shall vest, and shall thereafter be SECTION 6. RESTRICTED STOCK. immediately exercisable in full for a period of three years from the (a) Stock and Administration. date of such termination of Shares of restricted stock may be employment or the expiration of the issued either alone or in A-6 addition to stock options, deferred dorsed in blank, relating to the stock or other Stock-based Awards stock covered by such Award. granted under the Plan. The Committee shall determine the (c) Restrictions and Conditions. officers and key employees of the The shares of restricted stock Corporation and its subsidiaries to awarded pursuant to the Plan shall whom, and the time or times at be subject to the following which, grants of restricted stock restrictions and conditions: will be made, the number of shares to be awarded, the time or times (i) Subject to the provisions of within which such Awards may be the Plan during a period set subject to forfeiture, and all other by the Committee commencing conditions of the Awards. The with the date of such Award provisions of restricted stock (the "restriction period"), Awards need not be the same with the Awardee shall not be respect to each recipient. permitted to sell, transfer, pledge, or assign shares of (b) Awards and Certificates. the restricted stock awarded prospective recipient of an Award of under the Plan. Within these shares of restricted stock shall limits, the Committee may not, with respect to such Award, be provide for the lapse of such deemed to have become an Awardee, or restrictions in installments to have any rights with respect to where deemed appropriate. such Award, until and unless such recipient shall have executed an (ii)Except as provided in agreement or other instrument paragraph (c)(i) of this evidencing the award and delivered a Section 6, the Awardee shall fully executed copy thereof to the have with respect to the Corporation, and otherwise complied shares of restricted stock, with the then applicable terms and all the rights of a conditions, and then: shareholder of the Corporation, including the (i) Such Awardee shall be issued right to vote the restricted a stock certificate in stock, and the right to respect of shares of receive any dividends or restricted stock awarded distribution. The Committee under the Plan. Such may permit or require the certificate shall be payment of cash dividends to registered in the name of the be deferred and, if the Awardee, and shall bear an Committee so determines, appropriate legend referring reinvested in additional to the terms, conditions, and shares of restricted stock or restrictions applicable to otherwise reinvested. such Award, substantially in Certificates for shares of the following form: unrestricted stock shall be delivered to the Awardee "The transferability of this promptly after, and only certificate and the shares of after, the period of stock represented hereby are restriction shall expire subject to the terms and without forfeiture in respect conditions (including of such shares of restricted forfeiture) of the Bankers stock. Trust New York Corporation 1997 Stock Option and Stock (iii) Subject to the provisions Award Plan and an Agreement of paragraph (c)(iv) or entered into between the (c)(v) of this Section 6, registered owner and Bankers upon termination of Trust New York Corporation. employment for any reason Copies of such Plan and during the restriction Agreement are on file in the period, all shares still offices of Bankers Trust New subject to restriction shall York Corporation, 130 Liberty be forfeited by the Awardee Street, New York, NY 10006." and reacquired by the Corporation. (ii)The Committee shall require that the stock certificates (iv) In the event of an Awardee's evidencing such shares be retirement, permanent held in custody by the disability, or death, or in Corporation until the cases of special restrictions thereon shall circumstances, the Committee have lapsed and shall may, in its sole discretion, require, as a condition of when it finds that a waiver any restricted stock Award, would be in the best that the Awardee shall have interests of the Corporation, delivered a stock power, en- waive in whole or in A-7 part any or all of remaining may be subject to a risk of restrictions with respect to forfeiture during all or such such Awardee's shares of portion of the Deferral Period or restricted stock. Elective Deferral Period as determined by the Committee. At (v) Notwithstanding anything in the expiration of the Deferral the foregoing to the Period and Elective Deferral contrary, upon a Change of Period, share certificates shall Control any and all be delivered to the Awardee, or restrictions on restricted the Awardee's legal stock shall lapse, regardless representative, in a number equal of the restriction period to the number of shares covered established by the Committee, by the deferred stock Award. and all such restricted stock shall become fully vested and (ii) Amounts equal to any dividends nonforfeitable and promptly declared and/or any other amounts distributed. deemed earned (such as credits based on the Corporation's SECTION 7. DEFERRED STOCK AWARDS. primary earnings per share) will be paid to the Awardee directly, (a) Stock and administration. deferred into additional shares Awards of the right to receive Stock or some combination thereof, all that are not to be distributed to as determined by the Committee. the Awardee until after a specified deferral period (such Award and the (iii) In the event of the Awardee's deferred Stock delivered thereunder retirement, permanent disability hereinafter as the context shall or death during the Deferral require, the "deferred stock") may Period (or Elective Deferral be made either alone or in addition Period, where applicable), or in to stock options or restricted stock cases of special circumstances, or other Stock-based Awards granted the Committee may, when it finds under the Plan. The Committee shall that a waiver would be in the determine the officers and key best interest of the Corporation, employees of the Corporation and its waive in whole or in part any or subsidiaries to whom deferred stock all of the remaining deferral shall be awarded, the number of limitations imposed hereunder shares of deferred stock to be with respect to any or all of the awarded or a formula by which the Awardee's deferred stock. number of shares of deferred stock Anything in the Plan to the to be awarded is determined. The contrary notwithstanding, upon Committee shall also determine the the occurrence of a Change of duration of the period (the Control, the Deferral Period and "Deferral Period") during which, and the Elective Deferral Period with the conditions under which, receipt respect to each deferred stock of stock will be deferred, and the Award shall expire immediately terms and conditions of the Award in and all share certificates addition to those contained in relating to such Awards shall be paragraph (b) of this Section 7. The delivered promptly to each Committee may provide for a minimum Awardee or the Awardee's legal payment at the end of the applicable representative. Deferral Period based on a stated percentage of the fair market value (iv) Prior to completion of the on the date of grant of the number Deferral Period, an Awardee may of shares covered by a deferred elect to further defer receipt of stock Award. The provisions of the Award for a specified period deferred stock Awards need not be or until a specified event (the the same with respect to each "Elective Deferral Period"), recipient. subject in each case to the approval of the Committee and (b) Terms and Conditions. under such terms as are Deferred stock Awards made pursuant determined by the Committee. to this Section 7 shall be subject to the following terms and (v) Each Award under this Section 7 conditions: shall be confirmed by a deferred stock agreement or other (i) Subject to the provisions of instrument executed by the the Plan, the shares to be Corporation and by the Awardee. issued pursuant to a deferred stock Award may not be sold, assigned, transferred, pledged or otherwise encumbered during the Deferral Period (or Elective Deferral Period (defined below), where applicable), and all or a portion of which A-8 SECTION 8. OTHER STOCK-BASED AWARDS. been reinvested in additional Stock or otherwise (a) Stock and Administration. reinvested. Other awards of the Stock and other Awards that are valued in whole or (iii) Any Awards under this in part by reference to, or are Section 8 and any Stock otherwise based on, the Stock covered by any such Award may ("other Stock-based Awards"), be forfeited to the extent so including (without limitation) provided in the Award performance shares, dividend agreement, as determined by equivalents, and convertible the Committee. debentures, may be granted either alone or in addition to other Awards (iv) In the event of the Awardee's granted under the Plan. Subject to retirement, permanent the provisions of the Plan, the disability or death, or in Committee shall have sole and cases of special complete authority to determine the circumstances, the Committee officers and key employees of the may, when it finds that a Corporation and/or any of its waiver would be in the best subsidiaries to whom and the time or interests of the Corporation, times at which such other waive in whole or in part any Stock-based Awards shall be made, or all of the remaining the number of shares of Stock to be limitations imposed hereafter awarded pursuant to such other (if any) with respect to any Stock-based awards, and all other or all Awards under this conditions of the other Stock-based Section 8. Anything in the Awards. The Committee may also Plan to the contrary provide for the grant of Stock upon notwithstanding, any the completion of a specified limitations imposed with performance period. The provisions respect to any Award under of other Stock-based Awards need not this Section 8, including any be the same with respect to each provision providing for the recipient. forfeiture of any Award under any circumstance, shall (b) Terms and Conditions. Other terminate immediately upon a Stock-based Awards made pursuant to Change of Control and the this Section 8 shall be subject to number of shares or interests the following terms and conditions: in the Stock subject to such Award shall be delivered to (i) Subject to the provisions of the Awardee (or, in the case the Plan, and except as of an Award with respect to otherwise determined by the which such number is not Committee, shares or determinable, such number of interests in shares subject shares or interests in the to Awards made under this Stock as is determined by the Section 8, may not be sold, Committee and set forth in assigned, transferred, the terms of such Award). pledged or otherwise encumbered prior to the date (v) Each Award under this Section on which the shares are 8 shall be confirmed by an issued, or, if later, the agreement or other date on which any applicable instrument. restriction, performance or Deferral Period lapses. (vi) Unless otherwise determined by the Committee, no other (ii)Subject to the provisions of Stock-based award in the the Plan and the Award nature of a purchase right agreement, the recipient of shall be transferable by the Awards under this Section 8 Awardee otherwise than by shall be entitled to receive, will or by the laws of currently or on a deferral descent and distribution, and basis, interest or dividends such purchase rights shall be or interest or dividend exercisable during the equivalents or such other Awardee's lifetime only by amounts with respect to the the Awardee. number of shares or interests therein covered by the SECTION 9. TRANSFER, LEAVE OF AB- Awards, as determined at the SENCE, ETC. time of the Awards by the Committee, and the Committee For the purposes of the Plan (a) a may provide that such amounts transfer of an employee from the or portion thereof (if any), Corporation to a subsidiary or as determined by the affiliate of the Corporation whether Committee shall be deemed to or not incorporated, or vice versa, have or from one subsidiary or affiliate, whether or not incorporated, to another, (b) a leave of absence, duly authorized in writing A-9 by the Corporation for sickness, or SECTION 12. GENERAL PROVISIONS. for any other purpose approved by the Corporation if the period of (a) The Committee may require such leave does not exceed each Awardee purchasing shares eighty-four days, and (c) a leave of pursuant to an Award under the Plan absence in excess of eighty-four to represent to and agree with the days, duly authorized in writing by Corporation in writing that such the Corporation, provided the Awardee is acquiring the shares employee's right to employment is without a view to distribution guaranteed either by statute or by thereof. The certificate for such contract, shall not be deemed a shares may include any legend which termination of employment. the Committee deems appropriate to reflect any restrictions on SECTION 10. AMENDMENTS AND transfer. TERMINATION. (b) All certificates for shares The Board may amend, alter or of Stock delivered under the Plan discontinue the Plan at any time and pursuant to any Award shall be in any manner; provided, however, subject to such stock-transfer that no amendment, alteration, or orders and other restrictions as the discontinuance shall be made (i) Committee may deem advisable under which would materially and adversely the rules, regulations, and other affect the rights of an Awardee requirements of the Securities and under an Award theretofore granted Exchange Commission, any stock without the Awardee's consent, or exchange upon which the Stock is (ii) without the approval of the then listed, and any applicable stockholders, if such approval is Federal or state securities law, and required under applicable law or the Committee may cause a legend or stock exchange rule or in order for legends to be put on any such the Plan to continue to comply with certificates to make appropriate Section 162(m) of the Code. reference to such restrictions. The Committee may amend the terms of (c) Awards granted under the Plan any Award theretofore granted, may, in the discretion of the prospectively or retroactively, but Committee, be granted either alone no such amendment shall materially or in addition to, in tandem with, and adversely affect the rights of or in substitution for, any other any Awardee without such Awardee's Awards granted under the Plan. consent. Notwithstanding the Awards granted in addition to or in foregoing, the Board or the tandem with other Awards may be Committee may amend the Plan or granted either at the same time as terms of any outstanding Award held or at a different time from the by a person then subject to Section grant of such other Awards. The 16 of the Exchange Act without the exercise price of any option or the consent of any Awardee in order to purchase price of any other preserve exemptions under said Stock-based Award in the nature of a Section 16 which are or become purchase right granted in available from time to time under substitution for outstanding Awards rules of the Securities and Exchange or in lieu of any other right to Commission. payment by the Corporation shall be the fair market value (as determined SECTION 11. UNFUNDED STATUS OF PLAN. by the Committee) of shares at the date such substitute Awards are The Plan is intended to constitute granted or shall be such fair market an "unfunded" plan for incentive and value at the date reduced to reflect deferred compensation. With respect the fair market value (as determined to any payments not yet made to an by the Committee) of the Awards or Awardee by the Corporation, nothing other right to payment required to contained herein shall give any such be surrendered by the Awardee as a Awardee any rights that are greater condition to receipt of the than those of a general creditor of substitute Award. The exercise price the Corporation. The Committee may of any option or the purchase price authorize the creation of trusts or of any other Stock-based Award in other arrangements to meet the the nature of a purchase right obligations created under the Plan retroactively granted in tandem with to deliver Stock or payments in lieu outstanding Awards shall be either of or with respect to Awards the fair market value of shares at hereunder; provided, however, that the date of grant of later Awards or the existence of such trusts or the fair market value (as determined other arrangements is consistent by the Committee) of shares at the with the unfunded status of the date of grant of earlier Awards. Plan. A-10 (d) Nothing contained in the Plan income tax purposes, pay to the shall prevent the Board from Corporation, or make arrangements adopting other or additional satisfactory to the Committee compensation arrangements, subject regarding payment of, any U.S. to stockholder approval if such Federal, state, local or foreign approval is required; and such taxes of any kind required by law to arrangements may be either generally be withheld with respect to the applicable or applicable only in Stock subject to such Award and the specific cases. Corporation and its subsidiaries shall, to the extent permitted by (e) The maximum number of shares law, have the right to deduct any that may be granted in any calendar such taxes from any payment of any year to any Awardee from all types kind otherwise due to the Awardee. of Awards under Sections 5 through 8 Anything contained herein to the is one million shares, subject to contrary notwithstanding, the adjustment as provided in Section 3. Committee may authorize acceptance of Stock received in connection with SECTION 13. TAXES. the Award or option being taxed or otherwise previously acquired in (a) If any Awardee properly satisfaction of withholding elects, within thirty days following requirements. the date on which an Award is granted, to include in gross income (c) If and to the extent for Federal income tax purposes an authorized by the Committee, the amount equal to the fair market Corporation or any of its value (on the date of grant of the subsidiaries are authorized to Award) of the Stock subject to the withhold from any distribution of Award, such Awardee shall make Stock relating to any Award granted arrangements satisfactory to the under the Plan, or to receive shares committee to pay to the Corporation, from the Awardee, and to pay the in the calendar quarter of such value of such Stock to the Award, any Federal, state, or local appropriate taxing authority, in taxes required to be withheld with order to satisfy obligations of the respect to such shares. If such Awardee for the payment of U.S. Awardee shall fail to make such tax Federal, state, local or foreign payments as are required, the taxes of any kind in connection with Corporation and its subsidiaries such Award (including but not shall, to the extent permitted by necessarily limited to amounts law, have the right to deduct any required to be withheld by the such taxes from any payment of any Corporation). kind otherwise due to the Awardee. SECTION 14. EFFECTIVE DATE OF THE (b) Any Awardee who does not or PLAN. cannot make the election described in paragraph (a) of this Section 13 The Plan shall be effective on with respect to an Award, shall, no the date it is approved by the vote later than the date as of which the of the holders of a majority of all value of the Award first becomes outstanding shares of Common Stock includible in the gross income of entitled to vote thereon. the Awardee for Federal SECTION 15. TERM OF PLAN. No Awards shall be granted pursuant to the Plan after April 15, 2001, but Awards theretofore granted may extend beyond that date. A-11 [LOGO] Bankers Trust New York Corporation Proxy Solicited by the Board of Directors for the Annual Meeting of Stockholders--April 15, 1997 FRANK N. NEWMAN and GEORGE J. VOJTA (collectively, the "Proxies"), or either of them, with full power of substitution, are hereby appointed proxies to vote all shares of stock of Bankers Trust New York Corporation (the "Corporation") that the undersigned is entitled to vote at the Annual Meeting of Stockholders of the Corporation to be held at One Bankers Trust Plaza (130 Liberty Street), New York, New York, April 15, 1997, at 3:00 P.M., or adjournments thereof, with all powers the undersigned would possess if personally present, for the election of directors, and on each of the other matters described in the Proxy Statement, hereby revoking any proxy heretofore given. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE STOCKHOLDER. IF NO DIRECTION IS GIVEN, SUCH SHARES WILL BE VOTED FOR ITEMS 1, 2 AND 3 AND AGAINST ITEMS 4, 5 AND 6. In their discretion, the Proxies, or either of them, are authorized to vote upon such other business as may come properly before the meeting. Please mark and date the proxy and sign your name on the reverse side. (Continued, and to be dated and signed, on the reverse side) BANKERS TRUST NEW YORK CORPORATION PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. This proxy, when properly executed, will be voted in the manner described herein. If no direction is made, this proxy will be voted FOR the election of directors and FOR items 2 and 3 and AGAINST items 4, 5 and 6. The Board of Directors Recommends a Vote FOR items 1, 2 and 3. 1. ELECTION OF DIRECTORS: George B. Beitzel, Phillip A. Griffiths, William R. Howell, Vernon E. Jordan, Jr., Hamish Maxwell, Frank N. Newman, N.J. Nicholas Jr., Russell E. Palmer, Donald L. Staheli, Patricia Carry Stewart, George J. Vojta and Paul A. Volcker. ` FOR ALL FOR WITHHOLD EXCEPT* / / / / / / - - ------------------------------------------------- *(Except nominee(s) written above.) THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSALS AS TO 2. Ratification of the Appointment of the Independent Auditor. FOR AGAINST ABSTAIN / / / / / / 3. Approval of the 1997 Stock Option and Stock Award Plan. / / / / / / THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE PROPOSALS AS TO 4. Term Limits for Board Members. FOR AGAINST ABSTAIN / / / / / / 5. Cumulative Voting. / / / / / / 6. Any Merger of the Corporation or its Subsidiaries. SIGNATURE(S) SHOULD CONFORM EXACTLY WITH NAME(S) SHOWN ABOVE. IF SIGNING FOR ESTATE, TRUST, CORPORATION OR PARTNERSHIP, TITLE OR CAPACITY SHOULD BE STATED. IF SHARES ARE HELD JOINTLY EACH JOINT HOLDER SHOULD SIGN. ______________________________________________________ SIGNATURE ______________________________________________________ SIGNATURE ______________________________________________________ DATE - - -------------------------------------------------------------------------------- DETACH HERE IMPORTANT THIS IS YOUR PROXY CARD PLEASE SIGN AND RETURN YOUR PROXY CARD PROMPTLY. [LOGO] Bankers Trust New York Corporation -----END PRIVACY-ENHANCED MESSAGE-----