RAYMOND JAMES FINANCIAL, INC.
880 Carillon Parkway
St. Petersburg, Florida 33716
(727) 567-1000
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
February 17, 200516, 2006
To the Shareholders of Raymond James Financial, Inc.:
The Annual Meeting of Shareholders of Raymond James Financial, Inc. will be held at the Raymond James Financial Center, 880 Carillon Parkway, St. Petersburg, Florida, on Thursday, February 17, 200516, 2006 at 4:30 p.m. for the following purposes:
1. | To elect ten nominees to the Board of Directors of the Company. |
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2. | To approve the Senior Management Incentive Plan for the Company's executive officers. |
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3. | To ratify the appointment of KPMG LLP by the Audit Committee of the Board of Directors of KPMG LLP as the Company's independent auditors.registered public accounting firm. |
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4. | To approve amendment of the Company's Articles of Incorporation to increase the authorized shares of common stock to 180 million shares, $.01 par value. |
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5. | To approve the 2005 Restricted Stock Plan. |
Shareholders of record as of the close of business on December 21, 200420, 2005 will be entitled to vote at this meeting or any adjournment thereof. Information relating to the matters to be considered and voted on at the Annual Meeting is set forth in the Proxy Statement accompanying this Notice.
| By order of the Board of Directors, |
| /s/ BARRY AUGENBRAUN |
| Barry Augenbraun, Secretary |
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January 7, 200513, 2006 | |
YOUR VOTE IS IMPORTANT TO THE COMPANY.If you do not expect to attend the meeting in person, please vote on the matters to be considered at the meeting by completing the enclosed proxy and mailing it promptly in the enclosed envelope, or by telephone or internet vote. |
TABLE OF CONTENTS |
| | Page |
Proxy Statement | 1 |
Shareholders Sharing the Same Last Name and Address | 1 |
Electronic Access to Corporate Governance Documents | 2 |
Electronic Access to Proxy Materials and Annual Report; Internet Voting | 2 |
Shareholders Entitled to Vote and Principal Shareholders | 2 |
Proposal 1: Election of Directors | 4 |
Information Regarding Board and Committee Structure | 6 |
Outside Director Stock Options | 7 |
Section 16(a) Beneficial Ownership Reporting Compliance | 7 |
Report of the Audit Committee of the Board of Directors | 7 |
Corporate Governance, Nominating and Compensation Committee Report on Executive Compensation | 9 |
Summary Compensation Table | 12 |
Stock Options | 13 |
Comparative Stock Performance | 14 |
Transactions with Management and Directors | 15 |
Equity Compensation Plan Information | 16 |
Proposal 2: To Ratify the Appointment by the Audit Committee of the Board of Directors of KPMG LLP as the Company’s Independent Registered Public Accounting Firm | 17 |
Fees Paid to Independent Registered Public Accounting Firm | 17 |
Other Matters | 18 |
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation of proxies on behalf of the Board of Directors of Raymond James Financial, Inc. (the "Company") for the Annual Meeting of Shareholders to be held on February 17, 200516, 2006 at 4:30 p.m., or any adjournment thereof. These proxy materials were mailed out on or about January 17, 2006, to all shareholders entitled to vote at the meeting.
If the accompanying proxy form is completed, signed and returned, the shares represented thereby will be voted at the meeting. Delivery of the proxy does not affect theyour right to attend the meeting. However, if your shares are held in the name of a bank, broker or other holder of record, you must obtain a proxy from the holder of record, executed in your favor, to be able to vote at the meeting. Otherwise, your shares will be voted in the manner in which you instructed the record holder of your shares.
The affirmative voteIf you are a shareholder of a majorityrecord, you may revoke your proxy at any time prior to the close of the polls at the Annual Meeting by submitting a later dated proxy to the Secretary of the Company, or delivering a written notice of revocation to the Secretary, at Raymond James Financial, Inc. 880 Carillon Parkway, St. Petersburg, Florida, 33716. If you hold shares through a bank, broker or other holder of record, you must contact that entity to revoke any prior voting instructions.
Each share of the Company's common stock represented atoutstanding on the meeting, either in person or by proxy,record date will be requiredentitled to one vote on each matter. The ten nominees for election as directors who receive the most votes “for” election will be elected. Ratification of any nominee, or the ratification orappointment of the Company's independent registered public accounting firm and approval of any proposal or other business that may properly come before the meeting exceptwill each require that the votes cast favoring the action exceed the votes cast opposing the action.
For election of directors, withheld votes, abstentions and broker non-votes do not affect whether a nominee has received sufficient votes to be elected. For the purpose of determining whether the shareholders have approved matters other than the election of directors, withheld votes, abstentions and broker non-votes do not have the same effect as a negative vote. Shares represented at the Annual Meeting in person or by proxy are counted for actionquorum purposes, even if they are not voted on item 4, which will require approvalany matter. Please note that banks and brokers that have not received voting instructions from their customers may vote their customers’ shares on the election of directors and the holdersratification of a majority ofKPMG LLP as the outstanding shares of common stock.Company's independent registered public accounting firm.
A copy of the Company's Annual Report is being furnished to each shareholder together with this proxy statement. The cost of all proxy solicitation will be paid by the Company.
Internet VotingSHAREHOLDERS SHARING THE SAME LAST NAME AND ADDRESS
Most
In accordance with notices that certain banks and brokerage firms sent to certain shareholders, shareholders who share the same last name and address are receiving only one copy of recordthe Company’s annual report and proxy statement, unless they have notified the Company that they want to continue receiving multiple copies. This practice, known as “householding,” is designed to reduce duplicate mailings and save significant printing and postage costs as well as natural resources.
If you received a choicehousehold mailing this year and you would like to have additional copies of voting over the internet, by telephone, Company’s annual report and/or by using a traditional proxy card. Please checkstatement mailed to you, or you would like to opt out of this practice for future mailings, please contact the Corporate Secretary at (727) 567-1000 or write to him care of Raymond James Financial, Inc., 880 Carillon Parkway, St. Petersburg, FL 33716. We will promptly send additional copies of the annual report and/or proxy statement upon receipt of such request.
Householding for bank and brokerage accounts is limited to accounts within the same bank or brokerage firm. For example, if you and your proxy card orspouse share the information forwarded bysame last name and address, and you and your bank, broker or other holderspouse each have accounts containing Raymond James Financial stock at two different brokerage firms, your household will receive two copies of recordthe Company’s annual meeting materials—one from each brokerage firm. To reduce the number of duplicate sets of annual meeting materials your household receives, you may want to see which options are available to you.
Electronictake advantage of the Company’s electronic access program. See “Electronic Access to Proxy Materials and Annual ReportReport; Internet Voting.”
ELECTRONIC ACCESS TO CORPORATE GOVERNANCE DOCUMENTS
The Company also makes available on its internet site at http://www.raymondjames.com under “About Our Company - Inside Raymond James - Corporate Governance” a number of the Company’s corporate governance documents. These include: the Corporate Governance Principles, the charters of the Audit Committee and the Corporate Governance, Nominating and Compensation Committee of the Board of Directors, the Senior Financial Officers’ Code of Ethics and the Codes of Ethics for Employees and the Board of Directors. Printed copies of these documents will be furnished to any shareholder who requests them. The information on the Company’s website is not incorporated by reference into this proxy statement.
ELECTRONIC ACCESS TO PROXY MATERIALS AND ANNUAL REPORT; INTERNET VOTING
This notice of Annual Meeting and Proxy Statement and the 20042005 Annual Report are available on our Internet site at http://www.raymondjames.com.the Company’s internet site. If you are a shareholder of record and would like to view future proxy statements and annual reports over the Internet instead of receiving copies in the mail, follow the instructions provided when you vote over the Internet. If you hold your shares through a bank, broker, or other holder, check the information provided by that entity for instructions on how to elect to view future proxy statements and annual reports electronically in lieu of receiving copies and how to vote your shares over the Internet. Opting to receiveaccess your proxy materials online saves usthe Company the cost of producing and mailing these materials to your home or office and gives you an automatic link to the proxy voting site.
TABLE OF CONTENTSMost shareholders of record have a choice of voting over the internet, by telephone, or by using a traditional proxy card. Please check your proxy card or the information forwarded by your bank, broker or other holder of record to see which options are available to you.
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| Page
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Proxy Statement | i |
Internet Voting | i |
Electronic Access to Proxy Materials and Annual Report | i |
Shareholders Entitled to Vote and Principal Shareholders | 1 |
Proposal 1: Election of Directors | 2 |
Information Regarding Board Structure | 4 |
Outside Director Stock Options | 5 |
Section 16(a) Beneficial Ownership Reporting Compliance | 5 |
Report of the Audit Committee of the Board of Directors | 5 |
Corporate Governance, Nominating and Compensation Committee Report on
Executive Compensation
| 7 |
Proposal 2: To Approve the Senior Management Incentive Plan For the Company’s Executive Officers | 9 |
Summary Compensation Table | 11 |
Stock Options | 12 |
Comparative Stock Performance | 13 |
Transactions with Management and Directors | 13 |
Equity Compensation Plan Information | 14 |
Proposal 3: To Ratify the Appointment by the Audit Committee of the Board of Directors of KPMG LLP as the Company’s Independent Auditors | 15 |
Fees Paid to Independent Auditors | 16 |
PROPOSAL 4: To ApproveAmendment of the Company's Articles Of Incorporation to Increase the Authorized Shares of Common Stock to 180 Million Shares, $.01 Par Value. | 16 |
PROPOSAL 5: To Approve2005 Restricted Stock Plan | 17 |
Other Matters | 17 |
Exhibit A: Senior Management Incentive Plan | 18 |
Exhibit B: 2005 Restricted Stock Plan | 23 |
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SHAREHOLDERS ENTITLED TO VOTE
AND
PRINCIPAL SHAREHOLDERS
Shareholders of record at the close of business on December 21, 200420, 2005 will be entitled to notice of, and to vote at, the Annual Meeting. As of December 21, 2004,20, 2005, there were 74,285,53076,542,681 shares of common stock outstanding and entitled to vote. Shareholders are entitled to one vote per share on all matters.
The following table sets forth, as of December 20, 2005 information with respect toregarding the common stockbeneficial ownership of the Company's common shares by each person known by the Company to own beneficially more than 5% of the shares of the Company's common stock, each Director, the Company's Chief Executive Officer and ofthe four other highest paid executive officers (the "Named Executive Officers"), and all Executive OfficersDirectors and Directorsexecutive officers as a group as of December 21, 2004:group.
| | | | Beneficially | | | Percent |
Name | | Address | | Owned Shares | | | of Class |
| | | | | | | |
Thomas A. James | | 880 Carillon Parkway | | 10,050,127 | (1) (2) | | 13.5% |
| | St. Petersburg, | | | | | |
| | Florida 33716 | | | | | |
| | | | | | | |
Private Capital Management, L.P. | | 8889 Pelican Bay Blvd. Suite 500 Naples, Florida 34108 | | 7,060,331 | (3) | | 9.5% |
| | | | | | | |
Robert A. James Trust | | 1201 Pacific Ave, | | 5,044,020 | | | 6.8% |
| | Suite 150 | | | | | |
| | Tacoma, WA 98702 | | | | | |
| | | | | | | |
All Executive Officers | | | | | | | |
and Directors as a Group | | - | | 11,690,772 | (1) | | 15.7% |
(22 Persons) | | | | | | | |
| | Beneficially | | | Percent |
Name | | Owned Shares | | | of Class |
| | | | | |
Private Capital Management, L.P. | | 7,213,283 | (1) | | 9.4% |
Earnest Partners LLC | | 6,436,001 | (2) | | 8.4% |
Robert A. James Trust | | 5,044,020 | | | 6.6% |
| | | | | |
Thomas A. James, Chairman, CEO, Director | | 9,963,731 | (3) (4) | | 13.0% |
Angela M. Biever, Director | | 7,893 | | | * |
Jonathan A. Bulkley, Director | | 21,977 | (3) | | * |
Francis S. Godbold, Vice Chairman, Director | | 447,856 | (3) | | * |
H. William Habermeyer, Jr., Director | | 1,700 | | | * |
Chet Helck, President, COO, Director | | 117,056 | (3) | | * |
Dr. Paul W. Marshall, Director | | 14,063 | (3) | | * |
Paul C. Reilly, Director | | 275 | | | * |
Kenneth A. Shields, Chairman RJ Ltd., Director | | 152,976 | (3)(5) | | * |
Hardwick Simmons, Director | | 15,000 | | | * |
Adelaide Sink, Director | | 7,000 | | | * |
Richard K. Riess, Executive Vice President | | 61,582 | (3) | | * |
Jeffrey E. Trocin, Executive Vice President | | 97,827 | (3) | | * |
All Executive Officers | | | | | |
and Directors as a Group | | 11,519,404 | (3) | | 15.1% |
(23 Persons) | | | | | |
* Less than one percent.
(1) Based on information contained in Form 13F-HR filed with the SEC on November 14, 2005. Private Capital Management, L.P. is the beneficial owner of these shares of common stock held in accounts managed for clients.
(2) Based on information contained in Form 13F-HR/A filed with the SEC on November 14, 2005. Earnest Partners LLC is the beneficial owner of these shares of common stock held in accounts managed for clients.
(3) Includes shares credited to Employee Stock Ownership Plan accounts and shares which can be acquired within sixty days of record date through the exercise of stock options.
(2)(4) Includes 377,262277,262 shares owned by the Robert A. and Helen James' Annuity Trust, of which Thomas A. James is a remainder beneficiary and for which Raymond James Trust Company West, a wholly-ownedwholly owned subsidiary of the Company, serves as trustee. Excludes shares held by two trusts, of which he is not a beneficiary: 5,044,020 shares owned by the Robert A. James Trust and 169,759138,959 shares owned by the James' Grandchildren's Trust, for both of which Raymond James Trust Company West serves as trustee, and both of which have as beneficiaries other James family members. Thomas A. James disclaims any beneficial interest in these two trusts.
(3) Based on information contained(5) Includes 84,994 Exchangeable shares that were issued January 2, 2001 in Form 13F-HR filedconnection with the SEC on November 15, 2004. Private Capital Management, L.P. is the beneficial owneracquisition of theseGoepel McDermid, Inc. They are exchangeable into shares of the Company's common stock held in accounts managed for clients.on a one-for-one basis.
PROPOSAL 1: ELECTION OF DIRECTORS
The Company's Board of Directors presently consists of seven independent directors and four management directors. All of the present members of the Board of Directors have been proposed for re-election by the Corporate Governance, Nominating and Compensation Committee of the Board of Directors except for Harvard Hill,Jonathan Bulkley, who is retiring from the Board of Directors.Directors in accordance with the term and age limitations in the Company's Corporate Governance Principles.
The ten directors to be elected are to hold office until the Annual Meeting of Shareholders in 20062007 and until their respective successors shall have beenelected.been elected. All of the nominees, with the exception of Ms. Adelaide Sink,Mr. Paul C. Reilly, were elected by the shareholders on February 12, 2004,16, 2005, to serve as Directors of the Company until the Annual Meeting of Shareholders in 2005; Ms. Sink2006; Mr. Reilly was elected as a Director effective January 2, 2006 by the Board of Directors on October 12, 2004.December 1, 2005.
It is intended that proxies received will be voted to elect the nominees named below. Should any nominee decline or be unable to accept such nomination to serve as a directorDirector due to events which are not presently anticipated, discretionary authority may be exercised by the holder of the proxies to vote for a substitute nominee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING NOMINEES:
| | | | Principal Occupation (1), | | | | | | | | |
| | | | Directorships and | | Director | | | | Principal Occupation (1) and | | Director |
Nominee | | Age | | Security Ownership | | Since | | Age | | Directorships | | Since |
| | | | | | | | | | | | |
Angela M. Biever* | | 51 | | General Manager, Intel New Business Corp. since 2000; Director, Intel Capital from 1999 to 2000; Independent Consultant, working with a leading Internet Services Provider from 1997 to 1998; Various senior management positions with First Data Corporation, an information and transaction processor from 1991 to 1997, beginning as Senior Vice President, Finance and Planning and culminating as Executive Vice President, Integrated Services Division; Vice President, American Express Company from 1987 to 1991. Chairperson of the Audit Committee. | | 1997 | | 52 | | General Manager, Intel New Business Initiatives since 2000; Director, Intel Capital from 1999 to 2000; Independent Consultant, working with a leading Internet Services Provider from 1997 to 1998; Various senior management positions with First Data Corporation, an information and transaction processor from 1991 to 1997, beginning as Senior Vice President, Finance and Planning and culminating as Executive Vice President, Integrated Services Division; Vice President, American Express Company from 1987 to 1991. Chairperson of the Audit Committee. | | 1997 |
| | | | Common shares owned 10,224 (.01%): | | | | | | | | |
Francis S. Godbold | | | 62 | | Vice Chairman of Raymond James Financial, Inc. ("RJF"); Director and Officer of various affiliated entities. Executive Vice President of Raymond James & Associates, Inc. ("RJA"), a wholly owned subsidiary of the Company. | | 1977 |
| | | | | | | | | | | | |
Jonathan A. Bulkley* | | 70 | | Bulkley Consulting LLC since 1999; Managing Director, Barents Group LLC (emerging markets/capital markets development consulting) from 1992 to 1999; President and CEO, Charterhouse Media Group (investment banking) from 1988 to 1992; President and CEO Jesup & Lamont Securities Group, Inc. (securities broker-dealer) from 1987 to 1988; Prior to 1986, President and CEO of Moseley, Hallgarten, Estabrook & Weeden Inc. (securities broker-dealer). Director of Raymond James International Holdings, Inc., a wholly owned subsidiary of the Company.Lead Director andmember of the Audit Committee and Audit Committee Financial Expert. | | 1986 | |
| | | | Common shares owned: 25,827 (.03%) | | | |
H. William Habermeyer, Jr.* | | | 63 | | President and CEO, Progress Energy Florida since 2000; Vice President, Carolina Power & Light from 1993 to 2000; U.S. Navy from 1964 to 1992 - retired a Rear Admiral. Member of the Audit Committee. | | 2003 |
| | | | | | | | |
Francis S. Godbold | | 61 | | Vice Chairman of Raymond James Financial, Inc. ("RJF"); Director and Officer of various affiliated entities. Executive Vice President of Raymond James & Associates, Inc. ("RJA"), a wholly owned subsidiary of the Company. | | | 1977 | |
| | | | Common shares owned: 557,467 (.75%) (2) | | | | | | | | | |
| | | | | | | | | | | Principal Occupation (1) and | | Director |
H. William Habermeyer, Jr.* | | 62 | | President and CEO, Progress Energy Florida since 2000; Vice President, Carolina Power & Light from 1993 to 2000; U.S. Navy from 1964 to 1992 - retired a Rear Admiral. Member of the Audit Committee. Common shares owned: 1,700 (0.00%) | | | 2003 | |
Nominee | | | Age | | Directorships | | Since |
| | | | | | | | | | | | | |
Chet Helck | | 52 | | President and Chief Operating Officer of RJF since 2002; Executive Vice President of Raymond James Financial Services, Inc. ("RJFS"), a wholly owned subsidiary of the Company from 1999 to 2002; Senior Vice President, RJFS from 1997 to 1999. Director of RJFS, RJA and Raymond James Investment Services, Ltd., an affiliate of the Company. | | | 2003 | | 53 | | President and Chief Operating Officer of RJF since 2002; Executive Vice President of Raymond James Financial Services, Inc. ("RJFS"), a wholly owned subsidiary of the Company from 1999 to 2002; Senior Vice President, RJFS from 1997 to 1999. Director of RJFS and RJA. | | 2003 |
| | | | Common shares owned: 65,263 (.09%) (2) | | | | | | | | | |
| | | | | | | | |
Thomas A. James | | 62 | | Chairman of the Board and Chief Executive Officer of RJF; Chairman of the Board of RJA. Director and Officer of various affiliated entities. Past Chairman of the Securities Industry Association. Director of Outback Steakhouse, Inc. | | | 1965 | | 63 | | Chairman of the Board and Chief Executive Officer of RJF. Director and Officer of various affiliated entities. Past Chairman of the Securities Industry Association. Director of Outback Steakhouse, Inc. and Chairman of its Audit Committee. | | 1965 |
| | | Common shares beneficially owned: 10,050,127 (13.5%) (2) (3) | | | | |
| | | | | | | | | | | | | |
Dr. Paul W. Marshall* | | 62 | | The MBA Class of 1960 Professor of Management Practice at Harvard Graduate School of Business Administration since 1996; Chairman and CEO of Rochester Shoe Tree Co., Inc. from 1992 to 1997; Chairman of Corporate Governance, Nominating and Compensation Committee. | | | 1993 | | 63 | | The MBA Class of 1960 Professor of Management Practice at Harvard Graduate School of Business Administration since 1996; Chairman and CEO of Rochester Shoe Tree Co., Inc. from 1992 to 1997; Chairman of Corporate Governance, Nominating and Compensation Committee. | | 1993 |
| | | | Common shares owned: 14,062 (.02%) | | | | | | | | | |
Paul C. Reilly* | | | 51 | | Chairman and CEO, Korn Ferry International since 2001. CEO, KPMG International 1998 to 2001. Prior to being named to that position, Past Vice Chairman Financial Services of KPMG L.L.P., the United States member firm of KPMG International. | | 2006 |
| | | | | | | | | | | | | |
Kenneth A. Shields | | 56 | | Chairman and Chief Executive Officer of Raymond James Ltd. ("RJ Ltd."), a wholly owned subsidiary of the Company (formerly Goepel McDermid Inc.) and predecessor Company since 1996 (a Canadian brokerage firm). Past Chairman of the Investment Dealers Association of Canada; Director of TimberWest Forest Corp.; Trustee, Mercer International Inc.; Member of the Canadian Accounting Standards Oversight Council; Director of the Council for Business and the Arts in Canada. Common shares owned: 81,170 (.11%) Exchangeable shares owned: 84,994 (.11%)(2) (4) | | | 2001 | | 57 | | Chairman and Chief Executive Officer of Raymond James Ltd. ("RJ Ltd."), a wholly owned subsidiary of the Company (formerly Goepel McDermid Inc., a Canadian brokerage firm) and predecessor Company from 1996 to January 31, 2006. Effective February 1, 2006, will continue as Chairman of RJ Ltd. Past Chairman of the Investment Dealers Association of Canada; Director of TimberWest Forest Corp.; Trustee, Mercer International Inc.; Director of the Council for Business and the Arts in Canada. | | 2001 |
| | | | | | | |
| | | | | Principal Occupation (1) and | | Director |
Nominee | | | Age | | Directorships | | Since |
| | | | | | | | | | | | | |
Hardwick Simmons* | | 64 | | Chairman and CEO of the NASDAQ Stock Market from 2001 to 2003; President and CEO of Prudential Securities from 1990 to 2001; President, Shearson Lehman Brothers - Private Client Group, from 1983 to 1990, Past Chairman of the Securities Industry Association; Past Director of the NASD. Member of Corporate Governance, Nominating and Compensation Committee. | | | 2003 | | 65 | | Director, The National Research Exchange since 2005; Director, Lions Gate Entertainment Corp. since 2005; Chairman and CEO of the NASDAQ Stock Market from 2001 to 2003; President and CEO of Prudential Securities from 1990 to 2001; President, Shearson Lehman Brothers - Private Client Group, from 1983 to 1990, Past Chairman of the Securities Industry Association; Past Director of the NASD. Member of Corporate Governance, Nominating and Compensation Committee. | | 2003 |
| | | | Common shares owned: 15,000 (.02%) | | | | | | | | | |
| | | | | | | | |
Adelaide Sink* | | 56 | | President, Bank of America, Florida Banking Division from 1993 to 1997 and 1998 to 2000; Director, Republic Bankshares from 2002 to 2004; Director, First Advantage Corp. St. Petersburg, FL from 2003 to present. Member of the Corporate Governance, Nominating and Compensation Committee. Common shares owned: 7,000 (.01%) | | | 2004 | | 57 | | President, Bank of America, Florida Banking Division from 1993 to 1997 and 1998 to 2000; Director, Republic Bankshares from 2002 to 2004; Director, Raymond James Bank, FSB since 2004; Director, First Advantage Corp. since 2003; Member of the Corporate Governance, Nominating and Compensation Committee. | | 2004 |
* | Determined to be independent directors under New York Stock Exchange standards; see "Information Regarding Board and Committee Structure" below. |
(1) | Unless otherwise noted, the nominee has had the same principal occupation and employment during the last five years. |
(2) | Includes shares credited to their Employee Stock Ownership Plan accounts, including estimated fiscal 2004 ESOP allocations, and shares which can be acquired within sixty days of the record date through the exercise of stock options. |
(3) | See footnotes under the Principal Shareholders' Ownership table. |
(4) | Exchangeable shares issued January 2, 2001 in connection with the acquisition of Goepel McDermid, Inc. They are exchangeable into shares of the Company's common stock on a one-for-one basis. |
Information Regarding Boardand Committee Structure
The Board of Directors held four regular meetings and twoone telephone meetingsmeeting during fiscal 2004.2005. All directors attended at least 75% of the meetings held during the year.
The current standing Committees of the Board of Directors are the Audit Committee, and the Corporate Governance, Nominating and Compensation Committee. The Corporate Governance, Nominating and Compensation Committee met four times and held one telephone meeting during the fiscal year. Each member of this Committee participated in all of the meetings held during his/her tenure during the fiscal year. The Audit Committee met four times and held fourseven telephone meetings during the fiscal year. All Committee members attended at least 75% of the meetings held during the year. The activities of the Committees are set out in their reports below.
The Company has a Nominating Committee, comprised of three independent Directors (four directors since the election of Ms. Sink to the Committee on October 12, 2004) as determined under New York Stock Exchange rules, which also serves as the Corporate Governance and Compensation Committee. This Committee identifies potential nominees to the Board of Directors, including candidates recommended by management, and reviews their qualifications and experience. Candidates for board membership are expected to demonstrate high standards of integrity and character and offer important perspectives on some aspect of the Company's business based on their own business experience. The Company has not paid any third party a fee to assist in the process of identifying and evaluating candidates. The Chart er of the Committee is available at the Company's website:www.raymondjames.com/corporate_governance.htm.
This Committee has not adopted any specific process or policy for considering nominees put forward by shareholders and has never been requested to consider such a nominee.
The Nominating Committee has determined that the Directors identified as Independent Directors have no businessmaterial relationship with the Company that would impair their independence. In that connection, the Committee considered that
the Company purchases its electric power needs from Progress Energy Florida, of which William Habermeyer, Jr. is President and CEO, and determined that the nature of this business relationship did not constitute any impairment of independence.
The Committee also considered that it paid Korn Ferry International, of which Paul C. Reilly is Chairman and CEO, recruiting fees of $218,000 during fiscal 2005 and determined that these fees did not result in any impairment of his independence.
Shareholders may communicate with directors of the Company by writing to them at the Company's headquarters, or by contact through the Company's website. Communications addressed to the Board of Directors will be reviewed by the Secretary of the Company and directed to them for their consideration.consideration if appropriate.
It is the Company's policy that directors attend the Annual Meeting of Shareholders; at the Annual Meeting of Shareholders on February 12, 2004,17, 2005, all of the Company's Directors at that date were present.
Independent Directors receive an $18,000 annual retainer, a $2,500 attendance fee for each regular meeting, $250 for each telephone meeting and a $500 attendance fee for Committee service. The Lead Director and the Audit Committee Chair each receive a $22,000 annual retainer, and the Chairman of the Corporate Governance, Nominating and Compensation Committee receives a $20,000 annual retainer. Management Directors do not receive any additional compensation for service as Directors.
Jonathan Bulkley, who is retiring from the Board of Directors in accordance with the term and age limitations of the Company's Corporate Governance Principles, has served as Lead Director for the Independent Directors. A new Lead Director will be selected at the meeting of the Board of Directors following the Annual Meeting of Shareholders.
Outside Director Stock Options
There is a non-qualified stock option plan for the Company's outside Directors covering 569,532 shares of the Company's common stock. These options, 50,62428,312 of which were outstanding at September 24, 2004,30, 2005, are exercisable at prices ranging from $12.29$16.53 to $25.60$30.50 at various times through February 2009.2008. Outside directors are generally granted 1,500 options each per year.
Section 16(a) Beneficial Ownership Reporting Compliance
Tim Eitel, an executiveJonathan H. Bulkley, a Director of the Company, filed an amendeda late Form 54 on January 23, 2004November 18, 2005 reflecting a delinquent filing for the sale of 8,0003,000 shares of the Company's common stock in March 2003.on November 14, 2005. Jeffrey E. Trocin, an officer of the Company, filed a late Form 5 on November 22, 2005, reflecting the purchase of 213 shares and 189 shares of the Company's common stock acquired through the Employee Stock Purchase Plan on June 2, 2005 and September 2, 2005, respectively.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee of the Board of Directors consists of Angela Biever (Chairperson), Jonathan A. Bulkley and H. William Habermeyer. This Committee conducts its activities pursuant to a written charter approved by the Board of Directors, which is reviewed annually and was last revised by the Board of Directors on November 29, 2004. The Committee serves as the principal agent of the Board of Directors in fulfilling the Board's oversight responsibilities with respect to the Company's financial reporting, the qualifications and independence of the independent auditors,registered public accounting firm, the Company's systems of internal controls and the Company's procedures for establishing compliance with legal and regulatory requirements.
The Charter of the Audit Committee provides that the Audit Committee is responsible for the appointment, compensation and oversight of the work of the independent auditorsregistered public accounting firm and must approve in advance any non-audit work to be performed by the independent auditors.registered public accounting firm. The Audit Committee has not established any general pre-approval procedures, but instead reviews each proposed engagement to determine whether the provision of services is compatible with maintaining the independence of the independent auditors.registered public accounting firm. During fiscal 2004,2005, the Committee approved a total of $12,000approximately $16,000 for services performed by
the Company'sCompany’s independent auditors,registered public accounting firm, KPMG LLP, under the "de minimis"“de minimis” exception to Section 202 of the Sarbanes Oxley Act, , representing 1% of the total fees paid to them.
In addition to four regularly scheduled meetings during the course of the year, members of the Audit Committee held fourseven telephone meetings, generally to review with management and representatives of KPMG LLP the Company's quarterly financial results prior to release to the public.
Members of the Committee have reviewed and discussed with management and with representatives of KPMG LLP the integrated audit of the consolidated financial statements and internal control over financial reporting for fiscal 20042005. The consolidated financial statements for fiscal 2005 are contained in the Company's Annual Report on Form 10-K. In addition, the Committee reviewed with the independent auditorsregistered public accounting firm the matters required to be discussed by
Statement on Auditing Standards No. 61, Communication with Audit Committees, as amended. The Committee also received the written disclosures and the letter from KPMG LLP required by Independence Standards Board Standard No. 1 and discussed with KPMG LLP their independence from the Company and its management, in accordance with applicable regulatory requirements, and considered their independence in connection with any non-audit services provided. The Audit Committee also reviewed with KPMG LLP the critical accounting policies and practices followed by the Company and certain written communications between KPMG LLP and the management of the Company.
In May, 2004 the chief accountant of the Securities and Exchange Commission advised the American Institute of Certified Public Accountants ("AICPA") that he did not concur with the treatment of certain contingent fee engagements which the AICPA had considered to be consistent with its standards for auditor independence. The Company's auditors had been relying on the AICPA interpretation in advising the Company that their independence was not impaired by the performance of a contingent fee engagement relating to certain state tax services during fiscal 2003 and 2004 (see "Principal Auditing Firm Fees" below). Following a meeting with the staff of the SEC by representatives of the major accounting firms, KPMG advised the Audit Committee that it proposed to restructure the compensation rela ting to this engagement to eliminate any contingent aspect, and to establish a fixed fee for the remainder of the engagement. The Committee approved the restructuring of the fee for this engagement and concurred with KPMG's assessment that, because they had relied in good faith on an interpretation of the AICPA that was generally recognized in the accounting profession, there had been no impairment of KPMG's independence with respect to the conduct of these engagements.
Based on the reviews and discussions referred to above, and in reliance on the representations of management and the independent auditors'registered public accounting firm's report with respect to the financial statements, the Committee recommended to the Board of Directors that the audited financial statements be included in the Company's Annual Report on Form 10-K for fiscal 20042005 for filing with the Securities and Exchange Commission. The Board of Directors approved the recommendation.
Management is responsible for the Company's financial statements and the financial reporting process, including the Company's system of internal controls. The Company's independent auditors areregistered public accounting firm is responsible for performing an independentthe integrated audit of the Company's consolidated financial statements and internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board and issuing a reportreports on the Company's consolidated financial statements.statements and the effectiveness of internal control over financial reporting.
The Audit Committee members are not professional accountants or auditors, and their functions are not intended to duplicate or to certify the activities of management and the independent auditors.registered public accounting firm. The Audit Committee serves a board-level oversight role, in which it provides advice, counsel and direction to management and the auditorsindependent registered public accounting firm on the basis of the information it receives, discussions with management and the auditors,independent registered public accounting firm, and the experience of the Audit Committee's members in business, financial and accounting matters. In its oversight role, the Committee relies on the work and assurances of the Company's management, which has the primary responsibility for financial statements and reports, and of the independent auditors,registered public accounting firm, who, in their report, express an opinion on the conformity of th ethe Company's annual financial statements with accounting principles generally accepted in the United States of America.
Jonathan A. Bulkley, who is retiring from the Board of Directors, has served as the Audit Committee Financial Expert. A new Audit Committee Financial Expert will be designated at the meeting of the Board of Directors following the Annual Meeting of the Shareholders.
Angela M. Biever, Chairperson |
Jonathan A. Bulkley |
H. William Habermeyer, Jr. |
|
December 6, 200419, 2005 |
CORPORATE GOVERNANCE, NOMINATING AND COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
Overview and Philosophy
The Corporate Governance, Nominating and Compensation Committee reviews corporate compensation and benefit plan policies, as well as the structure and amount of all compensation for executive officers of the Company. This Committee consists of Dr. Paul W. Marshall (Chairman), Harvard H. Hill, Jr., Hardwick Simmons and since October 12, 2004, Adelaide Sink.
The Committee's goal is to establish and maintain compensation policies that will enable the Company to attract, motivate and retain high-quality executives and to ensure that their individual interests are aligned with the long-term interests of the Company and its shareholders. In doing so, individual performance, the compensation of executives of similar firms and the Company's financial results are considered.
The Company's objectives are met through a compensation package which includes four major components - base salary, annual bonus (including restricted stock), stock option awards and retirement plan contributions.
For senior management of the Company, the cash and restricted stock compensation components (base salary and annual bonus) are heavily weighted toward annual bonus. These bonuses are generally based on formulas related to the profits of an individual subsidiary/department or the profits of the Company as a whole (see Proposal 2 below). A portion of these bonuses can be withheld based on subjective performance evaluation by the Committee. In certain instances, the Committee may award additional discretionary amounts provided that such awards, if any, will not affect federal income tax deductibility under Section 162 (m) of the Internal Revenue Code. The emphasis on profit-based compensation serves two functions: it encourages executives to be conscious of the "bottom line" and it keeps th ethe Company's base salary structure at a modest level, which is advantageous to the firm given the cyclical nature of the securities industry. In prior years, these bonuses were generally based on formulas related solely to the profits of the specific subsidiary/department managed by an executive. For fiscal 2006, the Committee has determined to give greater emphasis to the Company's overall performance in determining bonus payments for senior management. Accordingly, the Committee has reduced by approximately 25% the percentage of bonus to be awarded based on specific subsidiary/department performance and has established a bonus pool equal to .75% of the Company's total pre-tax profit (the “Company Performance Bonus Pool”). Bonus awards will be allocated from that pool to members of senior management based on the Committee's assessment of each person's contribution to overall firm profits. The Committee does not believe that this change will result in any net increase in the total bonus awards compared to the awards as computed under the prior formula. A portion of any bonus can be withheld based on subjective performance evaluation by the Committee. The bonus formulas for fiscal 2006 approved by the Compensation Committee follow this report.
The Company issues restricted shares of Company stock in lieu of cash for 10%up to 20% of bonus amounts in excess of $250,000. TheseThe number of restricted shares were issued atfor fiscal 2004 bonuses was determined using a 20% discount from market value at the date of grant. For fiscal year 2005 bonuses, the number of restricted shares issued to members of the Company's Operating Committee was determined based upon the market value at the date of grant through calendar year 2004. Futureand the number of restricted shares will be issued atto other employees was determined using a 10% discount from the market value at the date of grant. The shares are restricted from sale during a three year vesting period.
The third component of the compensation package, incentive and non-qualified stock option awards, is designed, along with the restricted stock, to provide a direct link between the long-term interests of executives and shareholders. Options are granted every two years to key management employees. From time to time special awards may be granted when a special situation exists, as inducements when employees are hired, or if job performance or a change in job duties warrants. It is the Company's policy to maintain the number of outstanding options at less than ten percent of the Company's outstanding shares. During the past five years the number of outstanding options has represented between 5% and 8% of the Company's outstanding shares.
The fourth component of the compensation package is Company contributions to various retirement plans, which are based on compensation levels and years of service. The Company maintains three qualified retirement plans: a profit sharing plan, an employee stock ownership plan and a 401(k) plan. Contributions to the profit sharing and employee stock
ownership plans, if any, are dependent upon the overall profits of the Company. Since inception of the 401(k) plan in 1987, the Company has matched a portion of the first $1,000 contributed annually by employees to their 401(k) accounts. The plan currently provides for the Company to match 100% of the first $500 and 50% of the next $500 of compensation deferred by each participant annually. These three plans are offered to all full-time employe esemployees who meet the length of service and minimum hours worked requirements (six months forspecified in the 401(k) plan and one year for the other two plans).plans. The Company also maintains a non-qualified long term incentive plan for executive officers. Eligibility of executive officers is restricted to those who meet certain compensation levels set annually by the Committee and approved by the Board of Directors. The vesting schedule of this plan is designed to encourage long-term employment with the firm. Contributions to this plan on behalf of executive
officers are also dependent upon the Company's earnings.
In addition, the Company has an employee stock purchase plan which allows employees to purchase shares of the Company's common stock on four specified dates throughout the year at a 15% discount from the market value, subject to certain limitations, including a one-year holding period. Finally, certain key employees of the Company have participated in limited partnership arrangements in which the Company makes non-recourse loans to these employees for two thirds of the purchase price per unit. The loans, plus interest, are intended to be paid back from the earnings of the partnerships. The partnerships, Raymond James Employee Investment Fund I, L.P. and Raymond James Employee Investment Fund II, L.P., are invested in several affiliated and unaffiliated private equity limited partnerships . (See "Transactions with Management and Directors" below).
Compensation of the Chief Executive Officer
In keeping with the general compensation philosophy outlined above, Mr. James' base salary for calendar 20052006 will be $285,000,$300,000, a 4.4%5.3% increase over his 20042005 compensation of $273,000.$285,000. Mr. James' salary is subject to an annual review, as is true of all employees. It was last adjusted in November 2003,2004, effective January 1, 2004.2005.
In determining the bonus offered to Mr. James for fiscal 20042005 the Committee considered many factors, including the following:
* | Given the business environment: |
| - The Company’s performance relative to its peer group; |
| - The Company’s performance relative to its budget; and |
| - The Company’s performance relative to its long-term objectives. |
* | The compensation of the chief executive officers of other similar firms. |
Dr. Paul W. Marshall, Chairman |
Harvard H. Hill, Jr.Hardwick Simmons |
Hardwick SimmonsAdelaide Sink |
|
November 29, 2004January 6, 2006 |
|
PROPOSAL 2:TOAPPROVE THE SENIOR MANAGEMENT INCENTIVE PLAN FOR THE COMPANY'S EXECUTIVE OFFICERS.
Since the Internal Revenue Code was amended to set limitations on compensation to executives, the Company has submitted to shareholders for approval each year the performance criteria for compensation of the Company's executive officers in accordance with Section 162(m) of the Code. In November, 2004, the Corporate Governance, Nominating and Compensation Committee decided to submit to shareholders for approval a plan that would authorize the Compensation Committee to set these criteria each year. The Committee believes that this approach is consistent with the most widely followed practice at other public companies.
Under the Plan, the Committee will establish performance goals for awards for each senior executive, including the Company's chief executive officer. The Committee anticipates that the practice they will follow with respect to establishing performance goals, and the nature of those goals, will be consistent with the practice followed in prior years, and will be based on contributions to pre-tax profits. However, the Committee does have the authority under the Plan to consider other criteria, such as total shareholder return, total shareholder return compared to peers, other financial returns, attainment of cost reduction targets, success in recruitment of financial advisors, customer growth and employee satisfaction. The formulas adopted by the Committee may include or e xclude certain items such as losses from discontinued operations, extraordinary gains or losses, and foreign currency impact. The Committee has the discretion to reduce or withhold a portion of the amount of any award as determined under the compensation formula.
The maximum amount that may be paid to any executive will not exceed $5,000,000 in any given year.
As has been true in prior years, bonus awards that exceed $250,000 will contain a component of restricted stock as follows:
Amount of Award | | Percentage to be Paid in Stock |
$250,000 - $500,000 | | 10% of the amount in excess of $250,000. |
$500,000 - $1,000,000 | | 15%. of the amount in excess of $500,000. |
$1,000,000 or more | | 20% of the amount in excess of $1,000,000. |
These shares must be held for three years before they vest. Under the Plan, these shares will be valued at market value on the date of the bonus payment instead of 80% of market value as had been the Company's prior practice. The Committee may increase or decrease the portions of awards to be made in shares of the Company's stock.
While approval of the Plan will eliminate the need for an annual vote of shareholders with respect to proposed compensation criteria, the Committee will continue to provide an explanation of the criteria to be used for the five highest compensated executive officers in the Company's proxy statements. The criteria approved by the Committee for fiscal 2005 are set out in the following table and will be implemented by the Committee if the plan is approved.
The Board of Directors can amend the provisions of the Plan from time to time, except for changes to the material terms of the Plan, consisting of the business criteria for awards, the maximum amount payable under the Plan, and the eligible employees under the Plan, which must be approved by the Company's shareholders.
A copy of the Plan is annexed to this proxy statement as Exhibit A.
An affirmative vote of the majority of those shareholders present and voting by proxy will be required for approval of the Plan.
The Board of Directors Recommends a Vote for the Approval of the Plan.
Fiscal 2006 Bonus Formulas for Executive Officers as Approved by the Compensation Committee |
| | | | Percent for Calculation
|
Executive Officer | | Basis | | Of Bonus
|
| | | | |
Thomas A. James | | Total1.1% of total Company pre-tax profitsprofits. | | 1.1% |
Chairman and Chief Executive Officer - RJF | | | | |
Chet Helck President and Chief Operating Officer - RJF | | Total0.83% of total PCG pre-tax profits per PCG Contribution Report*.; plus, participation in the Company Performance Bonus Pool. | | 1.1% |
| | | | |
Richard G. Averitt, III Chairman and Chief Executive Officer - RJFS | | Pre-tax0.83% of pre-tax profits of RJFS per PCG Contribution Report **; plus, participation in the Company Performance Bonus Pool. | | 1.1% |
| | | | |
Richard K. Riess Executive Vice President - RJF | | Pre-tax3.2% of pre-tax profits of Eagle Asset Management, Inc. (“Eagle”), plus, | | 4.25% |
| | Pre-tax | |
| | 2.25% of pre-tax profits of Heritage Asset Management, Inc., and RJA's Asset Management Services division and Awad Asset Managementdivision; plus, participation in the Company Performance Bonus Pool. | | 3.0% |
| | | |
Van C. Sayler Senior Vice President, Fixed Income - RJA | | A portion of the pre-tax profits of RJA's Fixed Income department equal to: 6.0% on the first $16 million of such profits, plus, 3.75% on such profits exceeding $16 million; plus, participation in the Company Performance Bonus Pool. | |
| | | |
Jeffrey E. Trocin Executive Vice President, Equity Capital Markets Group - RJA | | Pre-taxA portion of the pre-tax profits of RJA's Equity Capital Markets, including international institutional equity sales:sales equal to:
First6.0% on the first $16 million of such profits, plus, 3.75% on such profits exceeding $16 million; Profits exceeding $16 millionplus, participation in the Company Performance Bonus Pool
| | 8.0%
6.0%
|
| | | | |
Van C. Sayler
Senior Vice President,
Fixed Income - RJA
| | Pre-tax profits of RJA's Fixed Income department:
First $20 million
Profits exceeding $20 million
| | 7.0%
5.0%
|
| | | | |
Dennis W. Zank President - RJA | | Pre-tax2.1% of the pre-tax profits of RJA
per PCG contribution report*; Plus plus, participation in the Company Performance Bonus Pool. | | 2.7%
|
| | | | |
* The PCG Contribution Report adjusts the Private Client Group financial statement pre-tax profits for items related to the private client group sales force, primarily a credit for interest income on cash balances arising from private clients, and also includes adjustments to actual clearing costs, a portion of mutual fund revenues and expenses, credit for
correspondent clearing, insurance agency and certain asset management profits, accruals for benefit expenses, profits generated by certain private client support operations and other adjustments as approved by the Compensation Committee.adjustments. These adjustments may include or exclude items to measure specific objectives, such as losses from discontinued operations, extraordinary, unusual or nonrecurring gains and losses, the cumulative effect of accounting changes, acquisitions or divestitures, and foreign exchange impacts.
SUMMARY COMPENSATION TABLE
The following table sets forth certain information with respect to the remuneration earned during the last three fiscal years by the Chief Executive Officer and each of the four other most highly compensated executive officersNamed Executive Officers of the Company.
| | | | | | Long-Term | | | | | | | Long-Term | |
| Annual Compensation | Restricted Stock (3) | Stock Option | All Other | Annual Compensation | Restricted Stock (2) | Stock Option | All Other |
Name | Year | Salary | Cash Bonus (1) | | Commissions | Shares | $ | Awards | Compen- sation (2) | Year | Salary | Cash Bonus (1) | | Commissions | Shares | $ | Awards | Compensation (3) |
Thomas A. James | 2004 | $271,000 | $1,900,000 | | $214,063 | 14,400 | $437,472 | - | $58,343 | 2005 | $285,000 | $2,100,000 | | $ 39,506 | 10,663 | $399,969 | - | $244,174 |
Chairman and CEO | 2003 | 263,250 | 1,300,013 | | 243,886 | 10,040 | 249,984 | - | 38,810 | 2004 | 271,000 | 1,900,000 | | 214,063 | 14,400 | 437,472 | - | 58,343 |
| 2002 | 258,000 | 900,000 | | 323,522 | 5,906 | 125,000 | - | 30,136 | 2003 | 263,250 | 1,300,013 | | 243,886 | 10,040 | 249,984 | - | 38,810 |
| | | | | | | | | | | | | | | |
Kenneth A. Shields | | 2005 | $224,747 | $1,484,962 | | - | - | $1,634,521 (4) |
Chairman and CEO - RJ Ltd. | | 2004 | 217,596 | 837,692 | | - | - | 12,000 | 817,261 (4) |
| | 2003 | 196,143 | 326,904 | | - | - | - |
| | | | | | | | |
Jeffrey E. Trocin | 2004 | $228,750 | $2,580,000 | | $47 | 21,395 | $649,980 | 12,000 | $58,643 | 2005 | $240,000 | $2,644,000 | | $37 | 14,289 | $535,980 | - | $33,840 |
Executive VP, - Equity - | 2003 | 214,250 | 531,100 | | 34 | 1,752 | 43,625 | - | 33,720 | |
Capital markets Group - RJF | 2002 | 182,000 | 958,790 | | 35 | 7,726 | 205,867 | 15,000 | 17,008 | |
| | | | | | | | | |
Chet Helck | 2004 | $253,750 | $1,180,000 | | 377 | 6,994 | $212,478 | 12,000 | $58,578 | |
President and COO | 2003 | 250,000 | 760,613 | | 330 | 3,785 | 94,234 | 75,000 | 61,712 | |
| 2002 | 150,000 | 602,502 | | 427 | 2,805 | 59,373 | 9,000 | 55,544 | |
Executive VP, Equity | | 2004 | 228,750 | 2,580,000 | | 47 | 21,395 | 649,980 | 12,000 | 58,643 |
Capital Markets Group - RJA | | 2003 | 214,250 | 531,100 | | 34 | 1,752 | 43,625 | - | 33,720 |
| | | | | | | | | | | | | | | | |
Richard K. Riess | 2004 | $228,750 | $1,110,000 | | - | 6,171 | $187,475 | 12,000 | $58,707 | 2005 | $240,000 | $1,128,000 | | - | 4,185 | $156,979 | - | $114,757 |
President and CEO of Eagle | 2003 | 216,250 | 691,774 | | - | 3,174 | 79,033 | - | 33,763 | 2004 | 228,750 | 1,110,000 | | - | 6,171 | 187,475 | 12,000 | 58,707 |
Executive VP of RJF | 2002 | 190,000 | 687,516 | | - | 3,690 | 78,105 | 15,000 | 30,629 | 2003 | 216,250 | 691,774 | | - | 3,174 | 79,033 | - | 33,763 |
Managing Director, | | | | | | | | | | | | | | | |
Asset Management | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Richard G. Averitt, III | 2004 | $229,524 | $920,000 | | $589 | 4,320 | $131,242 | 12,000 | $58,685 | |
President and CEO of RJFS | 2003 | 225,000 | 645,021 | (4) | 820 | 2,760 | 68,724 | 37,500 | 40,152 | |
Chet Helck | | 2005 | $266,000 | $1,100,000 | | $269 | 3,998 | $149,965 | - | $46,521 |
President and COO | | 2004 | 253,750 | 1,180,000 | | 377 | 6,994 | 212,478 | 12,000 | 58,578 |
| 2002 | 175,308 | 538,754 | | 1,217 | 2,141 | 45,307 | 9,000 | 28,274 | 2003 | 250,000 | 760,613 | | 330 | 3,785 | 94,234 | 75,000 | 61,712 |
| | | | | | | | | | | | | | | |
(1) In accordance with the bonus formulas approved by the Compensation Committee for fiscal 2005 in accordance with the Senior Management Compensation Plan approved at the annual meetingsAnnual Meeting of Shareholders on February 17, 2005 and bonus formulas approved by the shareholders on February 12, 2004 and February 13, 2003.
(2) Beginning with fiscal 2000, the Company began granting restricted stock as part of the annual bonus to highly compensated employees. Under this Stock Bonus Plan, 617,334 shares have been granted related to fiscal years 2005, 2004 and 2003. Dividends are paid to the holders of the stock. The shares vest three years from the date of grant. Because the shares of restricted stock are valued at full market value in this table, rather than the 80% of market value when awarded during 2003 and February 14, 2002, except as noted in (4).2004, the total of cash bonus and restricted stock may exceed the bonus award computed under the formula.
(3) This column includes the amount of the Company's contributions to its 401(k) Plan, Profit Sharing Plan, Employee Stock Ownership Plan, Long Term Incentive Plan and other miscellaneous taxable income as reported on the employees W-2.
(3) Beginning with fiscal 2000, the Company began granting restricted stock as part of the annual bonus to highly compensated employees. Under this Stock Bonus Plan, 547,031 shares have been granted(4) Represents retention payments related to fiscal years 2004, 2003 and 2002. Dividendsthe acquisition of Goepel McDermid, Inc. in January 2001. There are no such additional amounts to be paid toin the holders of the stock. The shares vest three years from the date of grant. Under this plan, 1) Mr. James holds 30,345 shares, 2) Mr. Trocin holds 32,873, 3) Mr. Helck holds 13,583 shares, 4) Mr. Riess holds 13,035, and 5) Mr. Averitt holds 9,220 shares. Because the shares of restricted stock are valued at full market value in this table, rather than the 80% of market value when awarded, the total of cash bonus and restricted stock may exceed the bonus award computed under the formula.
(4) Amount exceeds the bonus amount generated by the bonus formula approved at the annual meeting of the shareholders on February 13, 2003 by approximately $50,000.future.
Stock Options
The following tables containtable contains information concerning options exercised by the executive officers included in the Summary Compensation Table during the fiscal year. No options were granted to and exercised by, the executive officers included in the Summary Compensation Table during the fiscal year.
Aggregate Option Grants in Exercises During
Last Fiscal Year and Year-end Value
| | | | Value of |
| | | Number of | Unexercised |
| | | Unexercised | In-the-Money |
| | | Options at | Options at |
| Shares | | Sept. 30, 2005 | Sept. 30, 2005 |
| Acquired | Value | (Exercisable/ | (Exercisable/ |
Name | on Exercise | Realized | Unexercisable) | Unexercisable) |
Kenneth A. Shields | - | - | 93,000/39,000 | $842,160/$334,030 |
Jeffrey E. Trocin | 9,000 | $137,970 | 9,000/18,000 | $97,080/$147,760 |
Richard K. Riess | 9,750 | $153,008 | 9,000/18,000 | $97,080/$147,760 |
Chet Helck | 7,500 | $120,975 | 3,720/92,279 | $40,127/$971,485 |
Name | Granted in | % of Total Options Granted | Exercise Price | Expiration | Potential Realizable Value at Assumed Annual Rates of Stock Appreciation for Option Term (2) |
| Fiscal Year | (#)(1) | ($/share) | Date | 5% | 10% |
Richard G. Averitt, III | 12,000 | 0.78% | $25.20 | 2/4/2009 | $83,548 | $184,618 |
Chester B. Helck | 12,000 | 0.78% | $25.20 | 2/4/2009 | $83,548 | $184,618 |
Richard K. Riess | 12,000 | 0.78% | $25.20 | 2/4/2009 | $83,548 | $184,618 |
Jeffrey E. Trocin | 12,000 | 0.78% | $25.20 | 2/4/2009 | $83,548 | $184,618 |
(1) | All of these options were granted on December 4, 2003. The options vest 60% after three years, an additional 20% after four years and the remaining 20% after five years. |
(2) | Potential realized values represent the future value, net of exercise price, of the options granted if the Company's stock price were to appreciate by 5% and 10% during each year of the awards' five-year life. |
Comparative Stock Performance
The graph below compares the cumulative total shareholder return for the common sharesstock of the Company for the last five fiscal years with the cumulative total return on the Standard & Poor's 500 Index ("S&P 500"), the stock price index for peer group of regional investment brokerage firms and for the Dow Jones US securities brokersInvestment Services Index over the same period (assuming an investment of $100 in each on October 1, 1999September 30, 2000 and the reinvestment of all dividends).
Name | 1999 | 2000 | 2001 | 2002 | 2003 | 2004 | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 |
Raymond James Financial, Inc. | 100.00 | 167.51 | 139.78 | 140.95 | 191.43 | 192.60 | 100.00 | 83.45 | 84.14 | 114.28 | 114.98 | 154.74 |
Standard & Poor's | 100.00 | 113.28 | 83.13 | 66.10 | 82.22 | 93.63 | |
Dow Jones US Securities Brokers | 100.00 | 183.87 | 101.67 | 83.99 | 118.50 | 122.81 | |
Standard & Poor's 500 | | 100.00 | 73.38 | 58.35 | 72.58 | 82.65 | 92.78 |
Dow Jones US Investment Services | | 100.00 | 55.29 | 45.68 | 64.45 | 66.79 | 88.02 |
TRANSACTIONS WITH MANAGEMENT AND DIRECTORS
As described in the Report on Executive Compensation,In 1998, as a retention vehicle, the Company has extended non-recourse loansloan commitments to approximately 84 employees for investments in the Raymond James Employee Investment Fund I, L.P., including the following executive officers: Richard G. Averitt, Jeffrey P. Julien, Richard K. Riess, Van C. Sayler, Jeffrey E. Trocin and Dennis W. Zank. Committed loan amounts to these individuals range from $40,000 to $160,000 plus interest per person, with outstanding balances ranging from $23,560$24,976 to $94,230$99,905 at September 24, 2004.30, 2005.
In addition,Similarly in 2001, the Company has extended non-recourse loansloan commitments to approximately 75 employees for investments in Raymond James Employee Investment Fund II, L.P; including Barry Augenbraun, Richard G. Averitt, Tim Eitel, Chet B. Helck, Thomas A. James, Jeffrey P. Julien, Paul L. Matecki, Van C. Sayler, Jeffrey E. Trocin, and Dennis W. Zank. Committed loan amounts to these individuals range from $66,667 to $200,000 plus interest per person, with outstanding balances of $25,761$26,931 to $77,280$80,794 at September 24, 2004.30, 2005.
All of the foregoing loan commitments were entered into prior to the passage of the Sarbanes-Oxley Act (the “Act”) in 2002. Under the Act, the Company is permitted to complete the funding of those commitments.
The Company, in the ordinary course of its business, makes bank loans to, and holds bank deposits for certain of its officers and directors and also extends margin credit in connection with the purchase of securities to certain of its officers
and directors who are affiliated with one of the Company's broker-dealers, as permitted under the Sarbanes-Oxley Act of 2002.Act. These transactions have been made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with non-affiliated persons, and do not involve more than normal risk of collectibility or present other unfavorable features. The Company also, from time to time and in the ordinary course of its business, enters into transactions involving the purchase or sale of securities as principal from, or to, directors, officers and employees and accounts in which they have an interest. These purchases and sales of securities on a principal basis are effected on substantially the same terms as similar transactions with unaffiliated thir dthird parties.
Thomas A. James permits the Company to display over 1,6501,500 pieces from his nationally known art collection throughout the Raymond James home office complex, without charge to the Company. The art collection is a marketing attraction for businesses and other organizations, and the Company provides regular tours for clients and local schools, business groups and nonprofit organizations. In return, the Company bears the cost of insurance and the salaries of three staff persons who serve as curators for the collection and conduct business tours. The total cost to the Company for these services during fiscal 20042005 was approximately $196,000.$190,000.
Under the Company's By-Laws, Directors and OfficersIn connection with his proposed service as a Director of the Company, are entitled to indemnification against certain claims. In August, 2004 the Board of Directors approved a form ofPaul Reilly has entered into an indemnification agreement for Directors (including those who are officers of the Company) which provides specific procedures for implementation of these indemnification rights, and most of the Company's directors have executed these agreements.
H. William Habermeyer is the chief executive officer of Progress Energy Florida, from whomwith the Company purchases its electric power service for its St. Petersburg campusin the form executed by other Directors in fiscal 2004. In fiscal 2005, the Company paid $218,000 in recruiting/placement fees to Korn Ferry International, of which Paul C. Reilly is Chairman and certain branch locations; during fiscal 2004 the company's energy bill was approximately $2.4 million.CEO.
Huntington James and Courtland James, the sonsa son of Thomas James, areis the Company's Director of Human Resources. Huntington James, a son of Thomas James, is employed in a non-executive positionsposition by the Company, as is the son-in-law of Francis S. Godbold.
EQUITY COMPENSATION PLAN INFORMATION
The following table includes stock options and restricted stock that can be issued pursuant to one of the Company's eight stock-based compensation plans. The table below does not include equity compensation plans that meet the qualification requirements of Section 401(a) of the Internal Revenue Code, namely the Profit Sharing Plan and Employee Stock Ownership Plan. It does not include the 2005 Restricted Stock Plan to be considered by shareholders at this meeting.
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans |
Equity compensation plans approved by shareholders (1) | 3,582,357 | $20.85 | 6,282,649 | 2,933,470 | $22.47 | 7,297,664 |
Equity compensation plans not approved by shareholders (2) | 1,846,248 | $21.14 | 3,319,741 | 1,766,644 | $22.40 | 2,919,448 |
Total | 5,428,605 | $20.95 | 9,602,390 | 4,700,114 | $22.45 | 10,217,112 |
(1) The Company has threefour plans that were approved by shareholders,shareholders: the 1992 and 2002 Incentive Stock Option Plans, and the 2003 Employee Stock Purchase Plans.
Plan and the 2005 Restricted Stock Plan.
(2) The Company has fivefour active plans that were not required to be approved by shareholders,shareholders: three non-qualified option plans and twoone restricted stock plans.plan.
The material features of the Company's equity compensation plans which have not been approved by security holdersshareholders are, as required by the SEC rules, described below. These descriptions do not purport to be complete and are qualified in their entirety by reference to the plan documents which are included as exhibits to the Company's Annual Report on Form 10-K for the fiscal year ended September 24, 2004.30, 2005.
Under one of the Company's non-qualified stock option plans, the Company may grant options for up to 3,417,188 shares of common stock to independent contractor Financial Advisors. Options are exercisable five years after grant date provided that the Financial Advisors are still associated with the Company. Under the Company's second non-qualified stock option plan, the Company may grant options for up to 569,532 shares of common stock to the Company's outside directors. Options vest over a five-yearthree-year period from grant date provided that the directorDirector is still serving on the Board of the Company. Under the Company's third non-qualified stock option plan, the Company may grant options for up to 1,687,500 shares of common stock to key management personnel. Option terms are specified in individual agreements and expire on a date no later than the tenth anni versaryanniversary of the grant date. Under all plans, the exercise price of each option equals the market price of the Company's stock on the date of grant and an option's maximum term is 10 years.
NeitherTwo of the Company's restricted stock nor stock bonus planplans were not approved by shareholders. Under the 19992003 Restricted Stock Plan the Company is authorized to issue up to 1,500,000 restricted shares of common stock to employees and independent contractors. Awards under this plan may be granted by various departments of the Company in connection with initial employment or under various retention plans for individuals who are responsible for a contribution to the management, growth and/or profitability of the Company. These shares are forfeitable in the event of voluntary termination. The compensation cost is recognized over the vesting period of the shares and is calculated as the market value of the shares on the date of grant. If the 2005 Restricted Stock Plan is approved by shareholders at this meeting, the 1999 Res tricted Stock Plan will be terminated.
The Company's 1999 Stock Bonus Plan authorizesauthorized the Company to issue up to 1,500,000 restricted shares to officers and certain other employees in lieu of cash for 10% to 20% of annual bonus amounts in excess of $250,000. Under the plan the restricted stock was granted at a 20% discount in determining the number of shares to be granted through calendar year 2004. Future grants will be at market value at the day of grant.
The shares are generally restricted for a three year period, during which time the shares are forfeitable in the event of voluntary termination. The compensation cost is recognized over the three year vesting period based on the market value of the shares on the date of grant. This plan has been replaced by the 2005 Stock Bonus Plan which has substantially the same terms and was approved by shareholders in February 2005.
PROPOSAL 3:2: | TO RATIFY THE APPOINTMENT BY THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS OF KPMG LLP AS THE COMPANY'S INDEPENDENT AUDITORSREGISTERED PUBLIC ACCOUNTING FIRM |
The Audit Committee of the Board of Directors has selected KPMG LLP as the Company's independent auditorsregistered public accounting firm for the fiscal year ending September 30, 2005,2006, and the Board of Directors has directed that management submit the appointment of the independent auditorsregistered public accounting firm for ratification by the shareholders at the annual meeting.Annual Meeting. KPMG LLP has served as the Company's independent auditorsregistered public accounting firm since 2001. Representatives of KPMG LLP are expected to be present at the annual meeting.Annual Meeting. They will have an opportunity to make a statement at the annual meetingAnnual Meeting and will be available to respond to appropriate questions.
Neither the Company's By-Laws nor other governing documents or law require shareholder ratification of appointment of KPMG LLP as the Company's independent auditors.registered public accounting firm. However, the Audit Committee of the Board of Directors recommended, and the Board of Directors is, submitting the appointment of KPMG LLP to the shareholders for ratification as a matter of good corporate practice. If the shareholders fail to ratify the appointment, the Audit Committee will reconsider whether or not to retain that firm. Even if the appointment is ratified, the Audit Committee in its discretion may direct the
appointment of a different independent auditorsregistered public accounting firm at any time if it determines that such a change would be in the best interests of the Company and its shareholders.
The affirmative voteRatification of the holders of a majority of the shares present in person or represented by proxy and entitled to vote at the annual meeting will be required to ratify the appointment of KPMG LLP.LLP will require that the votes cast favoring the appointment exceed the votes cast opposing it.
FEES PAID TO INDEPENDENT AUDITORSREGISTERED PUBLIC ACCOUNTING FIRM
The following table shows information about fees paid by Raymond James Financial, Inc. to KPMG LLP.LLP related to the fiscal years indicated. All fees were approved by the Audit Committee (see discussion in Report of the Audit Committee).
| 2004 | | 2003 | 2005 | | 2004 |
Audit fees(a) | $947,757 | | $725,332 | $1,655,605 | | $947,757 |
Audit - related fees(a)(b) | 87,877 | | 38,751 | 28,140 | | 87,877 |
Tax fees(b)(c) | 157,756 | | 182,642 | 141,906 | | 157,756 |
All other fees | 4,663 | | 7,200 | - | | 4,663 |
(a) | The significant increase in audit fees in 2005 were largely attributable to KPMG LLP’s initial report on internal controls related to Section 404 of the Sarbanes-Oxley Act. |
(b) | Audit related fees includein 2004 included services related to the review of the Company's documentation of internal controls pursuant to Section 404 of the Sarbanes-Oxley Act and attest services related to specific items. Audit related fees in 2005 included various minor matters. |
(b)(c) | Tax fees include fees related to the preparation of Canadian tax returns, consultation on various tax matters and the final payment of $64,000 in 2004 and $129,682 in 2003 related to the statesupport during income tax review project discussed in the Report of the Audit Committee.audit or inquiries. |
The Board Of Directors Recommends A Vote For This Proposal
PROPOSAL 4:TOAPPROVE AMENDMENTTHE BOARD OF THE COMPANY'S ARTICLES OF INCORPORATION TO INCREASE THE AUTHORIZED SHARES OF COMMON STOCK TO 180 MILLION SHARES, $.01 PAR VALUE.
At December 21, 2004 the Company had outstanding shares of 74,285,530, of a total authorized shares of 100 million. The Board of Directors has determined that it would be advisable for the Company to amend the Articles of Incorporation to increase the total authorized shares to 180 million shares, $.01 par value.
These shares will be available to fund existing stock option and restricted stock plans, as well as for use in connection with possible future acquisitions and stock splits. The Company has no present plans for the use of the additional authorized shares. During the past 10 years, the Board of Directors has approved four three-for-two stock splits, which has resulted in increases in the number of outstanding shares each time. In view of that history, the Board of Directors has determined that it would be prudent to authorize additional shares so as to make possible stock splits in the future, should the Board of Directors consider that to be in the best interest of shareholders.
There can be no assurance that any such stock splits will be authorized in the future.
DIRECTORS RECOMMENDS A favorable vote of the holders of a majority of the Company's outstanding stock is required for approval of this proposal.
The Board of Directors Recommends a Vote For This Proposal.VOTE FOR THIS PROPOSAL
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PROPOSAL 5:TO APPROVE THE 2005 RESTRICTED STOCK PLAN
Under the Company's 1999 Restricted Stock Plan, the Company is authorized to issue up to 1.5 million restricted shares of common stock to employees and independent contractor financial advisors. At December 21, 2004, approximately 1,121,541 shares had been awarded under this plan. Awards are made in connection with the initial employment of individuals or, under retention plans, for individuals who are determined by management to be responsible for a significant contribution to the growth and/or profitability of the Company.
The Board of Directors has determined that the growth of the Company and the need to continue to attract employees and provide for retention of valuable employees warrants the increase in the number of shares available to 1.5 million. Accordingly, the Board of Directors has proposed that shareholders approve the 2005 Restricted Stock Plan, which will replace the existing 1999 Plan, which will be terminated and the remaining 378,459 shares available for issuance will be eliminated.
The 2005 Restricted Stock Plan will have substantially the same terms as the 1999 Plan. Awards of restricted stock under the Plan will be determined by the Compensation Committee based upon recommendations from management. The shares of restricted stock will be valued at the market price on the date of the award. The restrictions regarding disposition of shares will be governed by the terms of the award and may vary for each participant; generally, however, shares awarded under the Plan will not vest until three years after the date of the award, except in the event of death or disability. Upon Retirement of a participant, a portion of the award may vest based upon the years of service of the participant.
A copy of the Plan is annexed as Exhibit B to this proxy statement.
While the benefits that will be awarded under the Plan are not determinable at this time, a total of 172,149 shares were granted under the 1999 Restricted Stock Plan during fiscal 2004, of which none were granted to the Company's executive officers. During fiscal 2004 restricted shares were granted to certain executive officers under a separate Stock Bonus Plan.
Approval of the Plan will require the affirmative vote of the holders of a majority of shares present and voting by proxy.
The Board of Directors Recommends a Vote For This Proposal.
OTHER MATTERS
Proposals which shareholders intend to present at the 20062007 Annual Meeting of Shareholders must be received by the CompanyCompany’s Secretary no later than September 1, 200515, 2006 to be eligible for inclusion in the proxy material for that meeting or otherwise submitted at the meeting.
Management knows of no matter to be brought before the meeting which is not referred to in the Notice of Meeting. If any other matters properly come before the meeting, it is intended that the shares represented by proxy will be voted with respect thereto in accordance with the judgment of the persons voting them.
By Order of the Board of Directors,
/s/ Barry Augenbraun, Secretary
January 7, 200513, 2006