~BALT01A:43427:1:|02/28/95
4807-400024
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. 2 )
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
T. ROWE PRICE ASSOCIATES,
INC.
(Name of Registrant as Specified in Charter)
Alvin M. Younger, Jr.,
Secretary
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
|X | $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-
6(i)(1), or 14a-6(i)(2).
| | $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
| | Fee computed on the 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 statement no.:
(3) Filing party:
(4) Date filed:
YOUR VOTE IS IMPORTANT-PleaseIMPORTANT--Please execute and return the enclosed proxy
promptly, whether or not you plan to attend the
T. Rowe Price Annual Meeting of Stockholders.
[LOGO OF T.ROWE PRICE]
T. ROWE PRICE ASSOCIATES, INC.
100 East Pratt Street
Baltimore, Maryland 21202
Notice Of Annual Meeting Of StockholdersNOTICE OF ANNUAL MEETING OF STOCKHOLDERS
April 6, 199512, 1996
Notice is hereby given that the Annual Meeting of Stockholders of T. Rowe
Price Associates, Inc. (the "Company") will be held at 100 East Pratt Street,
12th Floor, Baltimore, Maryland, on April 6, 1995,12, 1996 at 10:00 a.m. for the
following purposes:
(1) To elect eleven14 directors of the Company;
(2) To consider and act upon a proposed charter amendment to effect a
two-for-one stock split and a proportional increase in the authorized
Common Stock of the Company;Stock;
(3) To consider and act upon athe proposed charter amendment
to authorize a class of undesignated Preferred Stock;
(4) To consider and act upon a proposed performance-linked
Executive1996 Stock Incentive Compensation Plan;
(5) To consider and act upon a proposed 1995 Director Stock
Option Plan; and
(6)(4) To consider and act upon such other business as may properly come
before the meeting.
February 6, 199512, 1996 was fixed by the Board of Directors as the record date
for determination of stockholders entitled to notice of and to vote at the
meeting or any adjournments thereof.
BY ORDER OF THE BOARD OF DIRECTORS
Alvin M. Younger, Jr.
Secretary
Baltimore, Maryland
March 1, 19954, 1996
PROXY STATEMENT
INTRODUCTION
This proxy statement and the accompanying proxy are furnished to
stockholders of T. Rowe Price Associates, Inc. (the "Company") in connection
with the solicitation of proxies by the Company's Board of Directors to be used
at the annual meeting of stockholders described in the accompanying notice and
at any adjournments thereof. The purpose of the meeting is to elect directors of
the Company, to consider and act upon amendmentsa proposed charter amendment to the Company's chartereffect a
two-for-one stock split and to effect a proportional increase in the authorized
Common Stock of the Company, and to authorize an undesignated class of Preferred
Stock, to consider and act upon athe proposed performance-linked
Executive1996 Stock
Incentive Compensation Plan, to consider and act upon a
proposed 1995 Director Stock Option Plan, and to consider and act upon such other business as may properly
come before the meeting. This proxy statement and the accompanying proxy are
first being sent to stockholders on or about March 1, 1995.4, 1996.
The record of stockholders entitled to notice of and to vote at the annual
meeting was taken as of the close of business on February 6, 1995.12, 1996. At that date
there were outstanding and entitled to vote 28,620,23928,519,079 shares of Common Stock,
par value $.20 per share.share, held by approximately 2,400 stockholders of record. In
the election of directors, each share is entitled to cast one vote for each
director to be elected; cumulative voting is not permitted. For all matters
except the election of directors, each share is entitled to one vote. Directors
are elected by a plurality of the votes cast by the holders of shares of Common
Stock at a meeting at which a quorum is present. For purposes of the election of
directors, abstentions and broker non-votes are not considered to be votes cast
and do not affect the plurality vote required for directors. TheApproval of the
proposed charter amendments requireamendment requires the affirmative vote of a majority of the
total number of shares of Common Stock outstanding, and approval of the proposed compensation plans require1996
Stock Incentive Plan requires the affirmative vote of athe majority of the votes
cast.cast at the meeting. In the discussion of each of thesethe proposals included in this proxy
statement, the effect of abstentions and broker non-votes is discussed. Article
EIGHTH, Section 3 of the charter of the Company limits the voting rights of
certain persons and groups owning in excess of 15% of the Company's Common
Stock. The Company does not believe that such provision will be applicable to
any stockholders at the 19951996 annual meeting, but will apply such provision if
circumstances require.
The cost of soliciting proxies and preparing the proxy materials will be
borne by the Company. In order to ensure that sufficient shares of Common Stock
are represented at the meeting, the Company has retained the services of
Georgeson & Company, Inc. to assist it in soliciting proxies for a fee of $8,000$7,000
plus reimbursement for out-of-pocket expenses. In addition, theThe Company also will request
securities brokers, custodians, nominees, and fiduciaries to forward
solicitation material to the beneficial owners of stock held of record and will
reimburse them for their reasonable out-of-pocket expenses in forwarding such
solicitation material. In addition to solicitation of proxies by Georgeson &
Company, Inc., proxies may be solicited personally or by telephone or telegram
by directors, officers, and employees of the Company or its subsidiaries without
additional compensation to them.
The Board of Directors has selected George J. Collins and George A. Roche
to act as proxies with full power of substitution. Any stockholder executing a
proxy has the power to revoke the proxy at any time before it is voted. This
right of revocation is not limited or subject to compliance with any formal
procedure. Any stockholder may attend the meeting and vote in person whether or
not the stockholder has previously given a proxy.
Stockholder proposals intended to be presented at the 1996
annual meeting must be received by the Company for inclusion in
the Company's proxy statement and proxy relating to that meeting
by November 2, 1995.
ELECTION OF DIRECTORS
TheEffective at the time of the annual meeting, the number of directors will
be increased to 14 persons, and the entire Board of Directors of the Company will be elected to
hold office until the next annual meeting of stockholders and until their
respective successors are elected and have qualified. All elevenEleven of the 14 nominees
currently serve as directors of the Company. The three nominees who are not
directors currently serve as managing directors of the Company.
Carter O. Hoffman, a director of the Company since 1973 and an employee
since 1961, and Thomas H. Broadus, Jr., a director of the Company since 1979 and
an employee since 1966, are retiring as directors at the time of the annual
meeting. Mr. Hoffman has been an equity and fixed income portfolio manager and
has had a long and significant impact on the Company's corporate policies and
financial management functions. Mr. Broadus has been a significant contributor
as an equity portfolio manager to the firm's growth in both our private account
and mutual fund businesses. The Board of Directors, on behalf of the Company,
wishes to express its appreciation for their many contributions to the Company
during their years of service as directors and as employees and for their
continued advice and counsel.
It is intended that all proxies received, unless otherwise indicated, will
be voted for the election of the persons named in the following table, to serve
until the next annual meeting of stockholders and until their respective
successors are duly elected and have qualified. If any nominee should become
unable or unwilling to serve, the proxies will be voted for the election of such
person as may be designated by the Board of Directors to replace such nominee.
Information Concerning Nominees
The following table presents information concerning persons nominated by
the Board of Directors for election as directors of the Company. Except as
indicated, the nominees have been officers of the organizations named below as
their principal occupations or of affiliated organizations for more than five
years. Positions of the nominees as trustees, directors, or principal officers
of the T. Rowe Price Mutual Funds (including those Funds organized as trusts and
referred to herein as the "Price Funds") and of certain other affiliated
registered investment companies are also indicated. Stock ownership information
is reported as of the record date.
Age, principal occupation, directorships with public
companies,
Name of Nominee and beneficial ownership of Common Stock
Name of Nominee (percent of class)
Thomas H. Broadus, Jr. Mr. Broadus is 57 years old and has
been a director of the Company since 1979, a managing director
since 1989, a vice president between 1971 and 1989, and an
employee since 1966. He is president and a director of the Blue
Chip Growth Fund and a trustee of the Equity Income Fund.
341,702 shares (1.17%) (6)- --------------------------------------------------------------------------------
George J. Collins Mr. CollinsMr.Collins is 5455 years old and has been a director of
the Company since 1980, president and chief executive
officer since 1984, a managing director since 1989, a
vice president between 1975 and 1984, and an employee
since 1971. He is a director or trustee of 1920 equity
and fixed income funds within the Price Funds. Of
these, he is chairman of 14 funds and president of one
fund. (1)(2)(5)
905,460924,460 shares (3.09%(3.13%) (7)(6
- --------------------------------------------------------------------------------
James E. Halbkat, Jr. Mr. HalbkatMr.Halbkat is 6061 years old and has been a director of
the Company since 1979. He is President of U.S. Monitor
Corporation, a provider of public response systems.
(3)(4)(5)
12,000 shares *
Carter O. Hoffman Mr. Hoffman is 67 years old and has been
a director of the Company since 1973, a managing director since
1989, a senior vice president between 1980 and 1989, a vice
president between 1966 and 1980, and an employee since 1961. He
is chairman of the Prime Reserve Fund and a director of two other
Price Funds.
213,600 shares * (8)14,000 shares* (7)
- --------------------------------------------------------------------------------
Henry H. Hopkins Mr. HopkinsMr.Hopkins is 5253 years old and has been a director of
the Company since 1987, a managing director since 1989,
a vice president between 1976 and 1989, and an employee
since 1972.
310,884317,484 shares (1.06%(1.08%) (8)
- --------------------------------------------------------------------------------
James A.C. Kennedy Mr. Kennedy is 42 years old, is a nominee for director,
and has been director of the Equity Research Division
of the Company since 1987, a managing director of the
Company since 1990, a vice president between 1981 and
1990, and an employee since 1978. He is a director of
the Mid-Cap Growth Fund.
317,081 shares (1.07%) (9)
- --------------------------------------------------------------------------------
(see notes on page 4)pages 4-5)
John H. Laporte Mr. Laporte is 50 years old, is a nominee for director,
and has been a managing director of the Company since
1989, a vice president between 1978 and 1989, and an
employee since 1976. He is a director of nine equity
funds within the Price Funds. Of these, he is chairman
of three funds and president of four funds.
486,999 shares (1.65%) (10)
- --------------------------------------------------------------------------------
Richard L. Menschel Mr. Menschel is 62 years old and has been a director of
the Company since 1995. He is a limited partner of The
Goldman Sachs Group, L.P., an investment banking firm.
0 shares (11)
- --------------------------------------------------------------------------------
William T. Reynolds Mr. Reynolds is 47 years old, is a nominee for
director, and has been director of the Fixed Income
Division since 1994, a managing director of the Company
since 1990, a vice president between 1983 and 1990, and
an employee since 1981. He is a director or trustee of
10 fixed income funds within the Price Funds. Of these,
he is chairman of three funds and president of six
funds.
220,986 shares* (12)
- --------------------------------------------------------------------------------
James S. Riepe Mr. Riepe is 5152 years old and has been a director of
the Company since 1981, a managing director since 1989,
a vice-presidentvice president between 1981 and 1989, and director of
the investment services divisionInvestment Services Division and an employee since
1981. He is chairman of four of the 3739 Price Funds on
which he serves as a director or trustee and is
chairman of New Age Media Fund, Inc., and
is president and a director of CUNA Mutual Funds, Inc. He is also a
director of Rhone-Poulenc Rorer, Inc., a
pharmaceuticals company. (1)(2)
684,139681,939 shares (2.34%(2.31%) (10)(13)
- --------------------------------------------------------------------------------
George A. Roche Mr. Roche is 5354 years old and has been a director of
the Company since 1980, chief financial officer since
1984, a managing director since 1989, a vice president
between 1973 and 1989, and an employee since 1968. He
is president and a director of the New Era Fund and
serves as a director of two other Price funds. (1)(2)
702,396726,796 shares (2.40%(2.46%) (11)(14)
- --------------------------------------------------------------------------------
John W. Rosenblum Mr. Rosenblum is 5152 years old and has been a director
of the Company since 1991. He is the Tayloe Murphy
Professor at the Darden Graduate School of Business
Administration ("the Darden(the "Darden School"), University of
Virginia, and was Dean of the Darden School from 1983
to 1993. He is also a director of Chesapeake
Corporation, a manufacturer of paper products; Cadmus
Communications Corp., a provider of printing and
communication services; Comdial Corp., a manufacturer
of telephone systems for businesses; and Cone Mills
Corporation, a textiles producer.producer; and Providence
Journal Company, a publisher of newspapers and owner of
broadcast television stations. (3)(4)
1,000 shares *5,000 shares* (15)
- --------------------------------------------------------------------------------
(see notes on pages 4-5)
Robert L. Strickland Mr. Strickland is 6364 years old and has been a director
of the Company since 1991. He is Chairman of Lowe's
Companies, Inc., a retailer of specialty home supplies,
and is a director of Hannaford Bros. Co., a food
retailer. (1)(3)(4)
2,000 shares *6,000 shares* (16)
- --------------------------------------------------------------------------------
M. David Testa Mr. Testa is 5051 years old and has been a director of
the Company since 1981, a managing director since 1989,
a vice president between 1976 and 1989, and an employee
since 1972. Mr. Testa has also served as chairman of
Rowe Price-Fleming International, Inc. since 1979. He
is president and a director of the Equity Series and is
a director or trustee of 1314 other Price Funds. He
serves as chairman of five of these Funds. (1)(2)(5)
369,697394,442 shares (1.26%(1.34%) (12)(17)
- --------------------------------------------------------------------------------
Philip C. Walsh Mr. Walsh is 7374 years old and has been a director of
the Company since 1987. He is a consultant to Cyprus
Amax Minerals Company, the successor by merger to
Cyprus Minerals Company. (3)(4)(5)
2,000 shares *6,000 shares* (18)
- --------------------------------------------------------------------------------
Anne Marie Whittemore Mrs. Whittemore is 49 years old and has been a director
of the Company since 1995. She is a partner in the law
firm of McGuire, Woods, Battle & Boothe, L.L.P. and
serves as a director of Owens & Minor, Inc., a
distributor of medical and surgical supplies; USF&G
Corporation, an insurance company; the James River
Corporation of Virginia, a manufacturer of paper
products; and Albemarle Corporation, a manufacturer of
specialty chemicals.
200 shares*
- --------------------------------------------------------------------------------
Beneficial ownership
of Common Stock by all
directors and executive
officers as a group
(22(27 persons) 5,782,6416,245,632 shares (19.74%(21.16%) (13)
* Indicates(19)
- --------------------------------------------------------------------------------
*Indicates holdings of less than 1 percent.
(see notes on page 4)
(1) Member of the Executive Committee of the Board of Directors.
(2) Member of the Management Committee of the Board of Directors.Directors
(3) Member of the Audit Committee of the Board of Directors.
(4) Member of the Executive Compensation Committee of the Board of
Directors.
(5) Member of the Nominating Committee of the Board of Directors.
(6) Includes 20,80058,800 shares which may currently be acquired
by Mr. Broadus upon the exercise of stock options. Also includes
20,000 shares held by a charitable foundation of which Mr.
Broadus is an executive officer, 75,904 shares owned by family
members, and 24,000 shares held in trusts for members of Mr.
Broadus's immediate family. Does not include an aggregate of
140,000 shares held in trusts for family members of two other
directors of the Company of which trusts Mr. Broadus is a
co-trustee. Mr. Broadus disclaims beneficial ownership of all
shares held in trusts.
(7) Includes 39,800 shares which may currentlypresently be acquired by Mr. Collins
upon the exercise of stock options. Also includes 67,602 shares owned
by a family member and as to which Mr. Collins disclaims beneficial
ownership.
(8)(7) Includes 14,000 shares owned by a family member and as
to which Mr. Hoffman disclaims beneficial ownership.
(9) Includes 45,4004,000 shares which may currentlypresently be acquired by Mr. Halbkat
upon the exercise of stock options.
(8) Includes 54,000 shares which may presently be acquired by Mr. Hopkins
upon the exercise of stock options.
(10)(9) Includes 27,60090,756 shares which may currentlypresently be acquired by Mr. Kennedy
upon the exercise of stock options.
(10) Includes 75,800 shares which may presently be acquired by Mr. Laporte
upon the exercise of stock options. Also includes 50,000 shares owned
by a member of Mr. Laporte's family and 38,496 shares held in trusts
for members of Mr. Laporte's family, as to which Mr. Laporte disclaims
beneficial ownership.
(11) During 1995, Goldman, Sachs & Co. performed services for the Company,
including securities brokerage services. Mr. Menschel did not share in
any payment for these services.
(12) Includes 38,412 shares which may presently be acquired by Mr. Reynolds
upon the exercise of stock options. Also includes 4,400 shares owned
by members of Mr. Reynolds' family, as to which Mr. Reynolds disclaims
beneficial ownership.
(13) Includes 42,400 shares which may presently be acquired by Mr. Riepe
upon the exercise of stock options. Also includes 20,00090,000 shares ownedheld
by a member of Mr. Riepe's family and 70,000
shares heldor in trusts for members of Mr. Riepe's family, as to which Mr.
Riepe disclaims beneficial ownership. Also includes
42,000ownership, and 41,000 shares held in a
charitable foundation of which Mr. Riepe
is a trustee and as tofor which Mr. Riepe has voting and disposition
power.
(11)(14) Includes 19,20032,200 shares which may currentlypresently be acquired by Mr. Roche
upon the exercise of stock options and 200,000 shares held by or in
trusts for members of Mr. Roche's family and as to which Mr. Roche
disclaims beneficial ownership.
(12)(15) Includes 27,3004,000 shares which may currentlypresently be acquired by Mr. Rosenblum
upon the exercise of stock options.
(16) Includes 4,000 shares which may presently be acquired by Mr.
Strickland upon the exercise of stock options.
(17) Includes 34,000 shares which may presently be acquired by Mr. Testa
upon the exercise of stock options and 80,000 shares held in trusts
for members of Mr. Testa's family and as to which Mr. Testa disclaims
beneficial ownership.
(13)(18) Includes 678,4924,000 shares which may currentlypresently be acquired by Mr. Walsh
upon the exercise of stock options.
(19) Includes 1,002,784 shares which may presently be acquired by all
directors and executive officers as a group upon the exercise of stock
options.
Unless otherwise indicated in the foregoing notes, the individuals named
above have sole voting and disposition powers over the shares beneficially owned
by them.
Information Regarding the Board of Directors and Certain Committees
During 1994,1995, there were sixseven meetings of the Board of Directors of the
Company. Each director who served for the entire year attended at least 75% of
the combined total number of meetings of the Board and Board committees of which
he was a member. The Board of Directors of the Company has an Audit Committee,
an Executive Compensation Committee, and a Nominating Committee.
The Audit Committee meets with the Company's independent accountants to
review the Company's audited financial statements, to review whether
satisfactory accounting procedures are being followed by the Company and whether
internal accounting controls are adequate, to inform itself with regard to non-auditnon-
audit services performed by the independent accountants, and to review fees
charged by the independent accountants. The Audit Committee also recommends to
the Board of Directors the selection of independent accountants. The directors
designated in note (3) aboveon the previous page are members of the Audit Committee,
which met on four occasions.occasions during 1995.
As described in the report of the Executive Compensation
Committee,beginning on page 8, the Executive Compensation
Committee establishes the compensation for certain executive officers of the
Company and generally reviews benefits and compensation for all officers and
employees. It also administers the Company's stock optionincentive and stock purchase
plans.plans and the Company's Executive Incentive Compensation Plan. The directors
designated in note (4) aboveon the previous page are members of this Committee and
met five times.seven times during 1995.
The Nominating Committee advises the Board of Directors with respect to the
selection and nomination of individuals to serve as directors of the Company.
The directors designated in note (5) on the previous page are members of the
Nominating Committee, and
met on two occasions.which held one meeting in 1995. Nominations for director
which are presented to the Nominating Committee by stockholders are considered
in light of the needs of the Company as well as the nominee's individual
knowledge, experience, and background.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Summary Compensation Table. The following table sets forth certain
information concerning the compensation for the last three completed fiscal years of the chief
executive officer and the four executive officers of the Company who, in
addition to the chief executive officer, received the highest compensation
during 1994.
SUMMARY COMPENSATION TABLE
Long-Term All Other
Annual Compensation(1) Compensation Awards Compensation (4)
Name and Securities Underlying
Principal Position Year Salary Bonus (2) Options Granted(#)(3)
________________ _____ ______ ________ ___________________
George J. Collins 1994 $325,000 $1,250,000 -0- $22,500
President, Chief Exec- 1993 290,008 750,000 35,000 30,000
utive Officer and 1992 265,000 500,000 12,000 30,000
Managing Director
James S. Riepe 1994 275,000 1,250,000 -0- 22,500
Managing Director 1993 248,750 750,000 30,000 30,000
1992 230,000 500,000 24,000 30,000
George A. Roche 1994 275,000 1,250,000 -0- 22,500
Chief Financial Officer 1993 248,750 750,000 30,000 30,000
and Managing Director 1992 230,000 500,000 24,000 30,000
M. David Testa 1994 275,000 1,250,000 300,000 26,625
Managing Director 1993 248,750 750,000 30,000 33,731
1992 230,000 500,000 24,000 33,450
Brian C. Rogers 1994 250,000 810,000 25,000 26,250
Managing Director 1993 220,833 400,000 24,000 33,312
1992 190,000 350,000 30,000 32,8501995.
SUMMARY COMPENSATION TABLE
Long-Term All Other
Annual Compensation (1) Compensation Awards Compensation (4)
- ------------------------------------------------------------------------------------------------------
Name and Securities Underlying
Principal Position Year Salary Bonus (2) Options Granted (#)(3)
- ------------------ ---- ------ --------- -----------------------
George J. Collins 1995 $325,000 $1,300,000 -0- $24,000
President, Chief Exec- 1994 325,000 1,250,000 -0- 22,500
utive Officer and 1993 290,008 750,000 35,000 30,000
Managing Director
- ------------------------------------------------------------------------------------------------------
James S. Riepe 1995 275,000 1,300,000 100,000 22,500
Managing Director 1994 275,000 1,250,000 -0- 22,500
1993 248,750 750,000 30,000 30,000
- ------------------------------------------------------------------------------------------------------
George A. Roche 1995 275,000 1,300,000 100,000 24,000
Chief Financial Officer 1994 275,000 1,250,000 -0- 22,500
and Managing Director 1993 248,750 750,000 30,000 30,000
- ------------------------------------------------------------------------------------------------------
M. David Testa 1995 275,000 1,300,000 -0- 26,625
Managing Director 1994 275,000 1,250,000 300,000 26,625
1993 248,750 750,000 30,000 33,731
- ------------------------------------------------------------------------------------------------------
John H. Laporte 1995 250,000 1,300,000 25,000 26,250
Managing Director 1994 250,008 800,000 20,000 26,250
1993 220,833 550,000 24,000 33,312
- ------------------------------------------------------------------------------------------------------
(1) No officer named in the Summary Compensation Table received any
perquisites and other personal benefits the aggregate amount of which
exceeded the lesser of either $50,000 or 10% of the total annual
salary and bonus reported for 19941995 in the Summary Compensation Table.
(2) Bonuses are generallyfor 1995 were paid pursuant to the Company's Executive
Incentive Compensation Plan. For 1993 and 1994, bonuses were
determined by the Executive Compensation Committee based upon
individual, group, and corporate performance and are allocated and paid at year end.performance. Bonuses are discretionary and vary
significantly from year to year and among eligible employees. In recent years, bonuses have
comprised a significant portion of compensation. Payment of the
portion of the 1994 cash bonus payable to each person named in
the Summary Compensation Table that would not be deductible in
1994 has been deferred until such time as these payments are
fully deductible for federal income tax purposes or the Executive
Compensation Committee otherwise determines to effect these
payments. See
"Report of the Executive Compensation Committee."
(3) The number of shares subject to options have been adjusted in
accordance with the terms of the options for the two-for-one stock
split effective at the close of business on November 30, 1993.
(4) Included in other compensation is a $22,500, $30,000$22,500, and $30,000
contribution for 1995, 1994, 1993 and 1992,1993, respectively, for each of the
named individuals to the Company's tax-qualified profit sharing plan,
which provides retirement benefits based on the investment performance
of each participant's account under the plan. Also includes $1,500 in
directors fees paid by a wholly owned subsidiary of the Company to
each of Mr. Collins and Mr. Roche in 1995 and $4,125, $3,731$4,125, and
$3,450$3,731 in employer matching contributions under the Company's 1986
Employee Stock Purchase Plan for Mr. Testa forin 1995, 1994, 1993 and 1992,1993,
respectively, and $3,750, $3,312$3,750, and $2,850$3,312 in employer matching
contributions under the Company's 1986 Employee Stock Purchase Plan
for Mr. Rogers forLaporte in 1995, 1994, 1993 and 1992,1993, respectively.
Option Grants Table. The following table sets forth certain information
relating to options granted to purchase shares of Common Stock of the Company.
Options generally become exercisable inon the first through fifth anniversaries of
the date of grant, with the exception of the 1994 option award to Mr. Testa and
the 1995 option awards to Mr. Roche and Mr. Riepe, which become exercisable on
the third through fifth anniversaries of the date of grant. TheIn December 1995,
the Executive Compensation Committee (the "Committee") adopted amendments to all
existing option agreements under the Company's 1986, 1990, and 1993 Stock
Incentive Plans provideproviding that such options and any options granted in the
rightfuture to exercise options may be acceleratedcurrent option holders will become exercisable in full for a period of
one year following certain specified changes in control of the Company or
approval by the Company.
Any decisionBoard of Directors of certain transactions leading to changes in
control, subject to the ability of the Committee to rescind such acceleration of
exercisability for a specified period following any triggering event. In
addition, the Company's stock option plans provide the Committee with broad
discretion to accelerate options held by executive officers
will be made in the sole discretionexercisability of the Executive Compensation
Committee on such terms and conditions as this Committee
determines to be appropriate under the circumstances.
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
Number of Potential Realizable Value at
Securities Percent of Assumed Annual Rates
of Stock Price
Underlying Total Options Exercise or
Appreciation for Option Term (2)
____________________________________
Options Granted in Base Price Expiration
Name Granted (#) Fiscal Year (Per Share)(1) Date 0%(3) 5% 10%
George J. Collins 0 0 N/A N/A $0 $ 0 $ 0
James S. Riepe 0 0 N/A N/A 0 0 0
George A. Roche 0 0 N/A N/A 0 0 0
M. David Testa 300,000 24.4 $32.25 11/10/04 0 6,084,600
15,419,400
Brian C. Rogers 25,000 2.0 32.25 11/10/04 0 507,050
1,284,950options.
OPTION GRANTS IN LAST FISCAL YEAR
Number of Percent of Potential Realizable Value at
Securities Total Options Assumed Annual Rates of Stock Price
Underlying Granted to Exercise or Appreciation for Option Term (2)
Options Employees in Base Price Expiration ---------------------------------------
Name Granted (#) Fiscal Year Per Share(1) Date 0%(3) 5% 10%
- -----------------------------------------------------------------------------------------------------------------------
George J. Collins 0 0% N/A N/A $0 $ 0 $ 0
James S. Riepe 100,000 8.2% $52.25 10/31/05 0 3,286,000 8,327,000
George A. Roche 100,000 8.2% 52.25 10/31/05 0 3,286,000 8,327,000
M. David Testa 0 0% N/A N/A 0 0 0
John H. Laporte 25,000 2.0% 52.25 10/31/05 0 821,500 2,081,750
- --------------------------------------------------------------------------------
The 5% and 10% assumed rates of stock price appreciation used to calculate
potential gains to optionees are mandated byprovided pursuant to the rules of the
Securities and Exchange Commission. To put these hypothetical gains into
perspective, the following additional information is being provided.
Number of Potential Realizable Value at
Securities Percent of Assumed Annual Rates of Stock Price
Underlying Total Options Exercise or Appreciation for Option Term (2)
___________________________________
Options Granted in Base Price Expiration
Name Granted (#) Fiscal Year (Per Share)(1) Date 0%(3) 5% 10%
All Stockholders(4) N/A N/A N/A N/A 0 $582,319,443
$1,475,695,431
Potential Gain to
Named Executives as a
Percentage of Potential
All Stockholders Gain N/A N/A N/A N/A N/A 1.13% 1.13%
Number of Percent of Potential Realizable Value at
Securities Total Options Assumed Annual Rates of Stock Price
Underlying Granted to Exercise or Appreciation for Option Term (2)
Options Employees in Base Price Expiration --------------------------------------------
Name Granted (#) Fiscal Year Per Share(1) Date 0%(3) 5% 10%
- ----------------------------------------------------------------------------------------------------------------------------
All Stockholders(4) N/A N/A N/A N/A 0 $940,135,542 $2,382,382,429
- ----------------------------------------------------------------------------------------------------------------------------
Potential Gain to
Named Executives as a
Percentage of
Potential All
Stockholders Gain N/A N/A N/A N/A N/A .79% .79%
- ---------------------------------------------------------------------------------------------------------------------------
(1) Options were granted at 100% of fair market value on the date of
grant.
(2) The dollar amounts set forth under these columns are the result of
calculations of assumed annual rates of stock price appreciation from
November 11, 19941, 1995 (the date of grant of the 19941995 option awards) to
November 10, 2004October 31, 2005 (the date of expiration of such options) of 0%, 5%,
and 10%, the latter two assumed rates being required under the rules
of the Securities and Exchange Commission. Based on these assumed
annual rates of stock price appreciation of 0%, 5%, and 10%,
respectively, the Company's stock price at November 10, 2004October 31, 2005 is
projected to be $32.25,
$52.532,$52.25, $85.11, and $83.648,$135.52, respectively. These
assumptions are not intended to forecast future appreciation of the
Company's stock price. Indeed, the Company's stock price may increase
or decrease in value over the time period set forth above. The
potential realizable value computation does not take into account
federal or state income tax consequences of option exercises or sales
of appreciated stock.
(3) Optionees will not realize value under their 19941995 option grants
without a stock price appreciation which will benefit all
stockholders.
(4) The number of shares subject to options granted in 19941995 is not
included in the number of shares outstanding used to calculate potential
realizable value at the assumed annual rates of stock price
appreciation of 0%, 5%, and 10%, respectively.
Aggregated Option Exercises and Fiscal Year-End Option Values Table. The
following table sets forth certain information concerning the exercise of stock
options, the number of unexercised options, and the value of unexercised options
at the end of 19941995 for the executive officers whose compensation is reported in
the Summary Compensation Table. Value is considered to be, in the case of
exercised options, the difference between the exercise price and the market
price on the date of exercise and, in the case of unexercised options, the
difference between the exercise price and market price on December 31, 1994.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL
YEAR END OPTION VALUES
Number of Secur-
ities Underlying Value of Unexercised
Unexercised Options "In-the-Money" Options
at December 31, 1994 at December 31, 19941995.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Number of Secur-
ities Underlying Value of Unexercised
Unexercised Options "In-the-Money" Options
at December 31, 1995 at December 31, 1995
Shares Acquired Value (Exercisable/ (Exercisable/
Name on Exercise (1) Realized Unexercisable)(1) Unexercisable)(2)
- ----------------------------------------------------------------------------------------------------------
George J. Collins N/A N/A 58,800/ 28,200 $1,995,200/$667,425
James S. Riepe 9,600 $460,200 42,400/131,600 1,208,700/ 802,050
George A. Roche 11,400 498,900 32,200/131,600 879,750/ 802,050
M. David Testa 17,700 636,856 34,000/331,600 937,800/5,902,050
John H. Laporte 20,000 774,375 75,800/ 68,200 2,459,438/ 975,000
- ----------------------------------------------------------------------------------------------------------
(1) Realized Unexercisable) (1)
Unexercisable) (2)
George J. Collins N/A N/A 39,800/47,200
$627,725/$360,150
James S. Riepe 4,800 $110,700 27,600/56,000
275,250/530,000
George A. Roche 8,600 153,525 19,200/56,000
166,050/530,000
M. David Testa 11,100 250,219 27,300/356,000
295,881/530,000
Brian C. Rogers 11,000 222,375 94,800/88,000
1,553,438/709,312
(1) All share and per share figures have been adjusted in accordance with the terms of
the options for the two-for-one stock split effective at the close of
business on November 30, 1993.
(2) An "In-the-Money" option is an option for which the option price of
the underlying stock is less than the market price at December 31,
1994,1995, and all of the value shown reflects stock price appreciation
since the granting of the option.
Compensation of Directors. Directors who are also officers do not receive
directors' fees. Each independent director who served for the entire year
received a $50,000 retainer for his 19941995 services as a director and memberboard committee member. The
fee paid to each of Mr. Menschel and Mrs. Whittemore, who served on the Board of
Directors for part of the various committeesyear, was $25,000.
Pursuant to the 1995 Directors Stock Option Plan approved by stockholders
on which he serves.
Executive Compensation Committee InterlocksApril 6, 1995, each of Mr. Halbkat, Mr. Rosenblum, Mr. Strickland, and Insider
ParticipationMr.
Walsh received options to purchase 4,000 shares of Common Stock at $38.375 per
share (the last reported sale price on April 6, 1995), and each of Mr. Menschel
and Mrs. Whittemore received options to purchase 2,000 shares of Common Stock at
$45.75 per share (the last reported sale price on September 18, 1995).
During 1994,1995, Philip C. Walsh (Chairman), James E. Halbkat, Jr., John W.
Rosenblum, and Robert L. Strickland served as members of the Executive
Compensation Committee. No director or executive officer of the Company is a
director or executive officer of any other corporation that has a director or
executive officer who is also a director or board committee member of the
Company.
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEEReport of the Executive Compensation Committee
The Executive Compensation Committee of the Board of Directors (the
"Committee"), comprisedcomposed solely of the independent directors named below, is
responsible to the Board and by extension to the stockholders for: (i)
determination of the compensation of the chief executive officer and the other
managing directors who are also members of the Company's Management Committee
(collectively, the "Senior Executive Officers") as well as the other officers; (ii) administration of the
Company who are
also directors; (ii)Company's Executive Incentive Compensation Plan (the "Incentive Plan"); (iii)
administration of the Company's stock incentive plans as required by Rule 16b-3
under the Securities Exchange Act of 1934;1934 as amended; and (iii)(iv) review and
approval of the compensation policies and general levels of compensation for the
Company's remaining managing directors and other key-employees,key employees, for whom
individual compensation decisions are made by a management-level compensation
committee.
The Committee recognizes that the investment management and securities
industries are highly competitive and that experienced professionals have
significant career mobility. Its members believe that the ability to attract,
retain, and provide appropriate incentives for the highest quality professional
personnel is essential to retain the Company's competitive position in the
mutual fund and investment management industry, and thereby seek to provide for
the long-term success of the Company in the interests of its stockholders.
The Committee believes that competitive levels of cash compensation,
together with equity incentive programs that are consistent with stockholder
interests, are necessary for the motivation and retention of the Company's
professional personnel. The Company's compensation programs are keyed to
achievement, as determined by the Committee, of short- and long-term performance
goals.
During 1994,1995, base salaries for each of the individuals named in the table
on page 56 (the "Named Officers") were unchanged from the annual levels
established during 1993 (which levels, in the case of each of the Senior
Executive Officers, had not previously been changed since the Company's initial
public offering in 1986). Consistent with compensation practices generally
applied in the investment management and other financial services industries
with which the Company competes for talent, base salaries for the Named Officers
are intended to form a relatively low percentage (substantially below 50%) of
total cash compensation. The annual discretionary cash bonus has been the
principal means of rewarding the Named Officers for individual
and group performance and, in recent years, has beencompensation with the major componentportion of cash compensation.
Atcompensation intended to
be derived from payments made under the Incentive Plan, provided, of course,
that the performance goals established under the Incentive Plan are met or
exceeded.
In 1995, the Committee and the Board of Directors recommended, and the
stockholders approved, the Incentive Plan. The Incentive Plan establishes a pool
(the "Incentive Pool") which relates incentives to the Company's Income before
Income Taxes and Minority Interests for that year ("Adjusted Earnings"), subject
to a requirement that a threshold ratio of net income to average stockholders'
equity (the "Threshold ROE") is attained. The Incentive Pool, subject to
reduction based on the Threshold ROE target, is computed as follows:(1) for
Adjusted Earnings up to $25 million, 5% of Adjusted Earnings; (2) for Adjusted
Earnings above $25 million to $50 million, an additional 7% of Adjusted
Earnings; and (3) for Adjusted Earnings above $50 million, an additional 8% of
Adjusted Earnings. Thus, the Incentive Plan establishes a maximum cumulative
Incentive Pool of $3,000,000 plus 8% of Adjusted Earnings over $50 million. For
purposes of the Incentive Plan, Threshold ROE for the year is the ratio of
annual net income (excluding the effect of extraordinary items under generally
accepted accounting principles) to average stockholders' equity for the year.
The Threshold ROE that must be attained to permit the maximum cumulative
Incentive Pool to be fully payable under the Incentive Plan is 20%. If the
Company's Threshold ROE is less than 20% but at least 10%, for each full
percentage point shortfall the maximum cumulative Incentive Pool is reduced by
five percentage points. If the Company's Threshold ROE falls below 10%, there
shall be no Incentive Pool, and no bonus payment will be made from the Incentive
Pool for that fiscal year.
As contemplated by the Incentive Plan, the Committee at the outset of 1994,1995
designated seven executive officers (the chief executive officer, the Company's Boardthree
other Senior Executive Officers, and three other managing directors) as eligible
to participate in the Plan for 1995. The Committee also determined that each
particular participant would be eligible to receive a specified percentage of
Directorsthe available Incentive Pool. In accordance with the Incentive Plan, the
Committee reviewed the requirements established a specific earnings target relative to three years
average growth ratesby the Plan for determining
incentive awards and a corresponding target bonus pool
available foralso determined and certified that each of the Plan's
performance goals had been satisfied before it approved and permitted payment of
bonuses pursuant to a significant numberthe Plan. Hence, the Committee expects that all payments
pursuant to the Incentive Plan will be fully deductible in accordance with
Section 162(m) of the Company's professional staff. AtInternal Revenue Code of 1986, as amended, and all other
compensation payable to the endNamed Executive Officers for 1995 performance
similarly will be fully deductible.
The Committee determined to award each of the year, theSenior Executive Officers
incentive compensation in each case in an amount of the aggregate bonus pool was substantially increased
above the initial target bonus pool to reflect the fact that the
Company's performance during the year substantially exceeded the
initial earnings target.
The Executive Compensation Committee first determined the
portion of the aggregate bonus pool to be made available to the
persons (otherless than the Named Officers) eligible to receive
awards from the aggregate bonus pool. The Committee then
determined individual bonus awards for the Named Officersfull amount that
would be made available frompermitted to be paid under the remainderIncentive Plan. In making its
determinations, the Committee noted that the Company had achieved record
revenues, earnings, and earnings per share and had attained a return on equity
substantially in excess of the aggregate bonus
pool. In making bonus awards to all participants, the Company and
theThreshold ROE. The Committee recognized that market and competitive forces
require compensation levels for a significant percentage of the
Company's investment and other professional staff sufficient to
prevent loss of promising personnel to direct competitors or
other participants in the investment and financial services
markets.
In addition to its primary consideration of the quantitative
factors described above, the Executive Compensation Committeealso gave significant
consideration to a series of specific, qualitative performance factors that it
believed reflected the NamedSenior Executive Officers' performance but were not
capable of precise measurement. The qualitative factors were considered for purposes
of determining both the aggregate amount of the bonus pool to be
made available as well as individual bonus awards. For 1994, the
principal qualitative factors which the Committee assessed in
determining the incentive compensation of the Senior Executive
Officers includedmeasurement, including relative investment performance,
marketing effectiveness, management of corporate assets, expense control, and
corporate infrastructure development. These qualitative
factors were not accorded specific weightings, and were applied
by the Executive Compensation Committee as appropriate to take
into account the responsibilities of the Senior Executive
Officers. The Committee determined that the Senior
Executive Officers as a teameach had demonstrated outstandingsuperior long-term management
performance in these areas. In the view of the
Committee, this performance could have justified a significant
further increaseHowever, in the bonus pool over and above the amount
previously determined duedetermining executive officer
compensation relative to the strong quantitative performance,
butCompany's general compensation policies as well as
general industry compensation trends, the Committee determined to make no further upward
adjustments.award the
Senior Executive Officers incentive compensation less than the full amounts
payable under the Plan. In making these determinations, the Committee noted that
the Company may be required to pay out a greater portion or all of the incentive
pool in a year when financial performance might not be as strong in order to
maintain a competitive compensation structure and thus retain key personnel. In
the case of Mr. Rogers,Laporte, the principal factor
weighed was the superior investment performanceNamed Officer who is not one of the portfoliosSenior
Executive Officers, a portion of the incentive compensation reported in the
Summary Compensation Table represents payments other than from the Incentive
Pool (as contemplated by the Incentive Plan) and was based on the Committee's
evaluation of the operating performance and qualitative factors of the domestic
small-cap equity management functions for which Mr. Rogers wasLaporte is responsible.
In light of the decision to recommend for stockholder
approval a performance-based incentive plan for years beginning
in 1995, as described on pages 13 to 15, the Committee determined
to defer payment of the portion of the cash bonus payable to each
of the Named Officers that would be non-deductible in 1994 until
such time as these payments are fully deductible or the Committee
otherwise determines to effect the payments. Assuming stockholder
ratification of this incentive plan, the deferred portion of the
1994 bonus will be paid in 1995. Thus, no portion of compensation
payable to the Named Executive Officers for 1994 performance is
expected to be non-deductible.
In establishing the compensation of the Named Officers, the Committee took
into account the fact that the four Senior Executive Officers constituted the
Company's senior management team during 19941995 and thus had broad Company-wide
management responsibilities as well as line operating responsibilities. Each of
these individuals has been a member of the Company's Management Committee since
1984. A larger base salary for Mr. Collins reflected the additional
responsibilities inherent in his position as chief executive officer. The levels of 1994 bonus
compensation reflected attainment by the Company of record
operating income and earnings per share, in each case
substantially in excess of initial targets, as well as
consistently favorable performance relative to specific
qualitative performance factors discussed above. Subject to
the considerations regarding the long-term contributions of Mr. Testastock option awards described below, the four
Senior Executive Officers were viewed as making generally equivalent
contributions to 19941995 performance. In the case of Mr. Rogers,Laporte, the Executive Compensation Committee
took into consideration the strong investment performance and growth in assets
under management of the Company's Equity Income
Fund,domestic small-cap equity management
operations, of which Mr. RogersLaporte is the chief portfolio manager,in charge, and the fact that this fund is one of the largest of the Price Funds and
an important contributorfunds under
Mr. Laporte's general supervision are major contributors to Company revenues.
In recent years, equity incentive awards in1995, the form ofCommittee determined to make stock option grants have been directed primarily to officers
including certain managing directors other than the Senior
Executive Officers. Individual awards have been based on
evaluation of the same individual and group performance goals
that form the basis of bonus awards. Preliminary option
determinations for key employees other than managing directors
are made by a management-level compensation committee, subject to
review and approval by the Executive Compensation Committee.
In 1994, the Executive Compensation Committee made a stock
option award to Mr. TestaRoche
and Mr. Riepe each covering 300,000100,000 shares of Common Stock at the closing Nasdaq price on the date of grant ($32.25$52.25 per share). Thisshare.
These option award wasawards were significantly greater than prior
option awards andthat had been
made in the past, with the exception of Mr. Testa's 300,000 share option award
in 1994. Each of these awards was made,based on the basisstrong long-term performance of
past performance,the Company during these individuals' service as members of the Company's
Management Committee, as reflected by the nearly nine-fold increase in the value
of a share of the Company's Common Stock purchased at the time of the Company's
initial public offering in April 1986, as well as the total market value of the
Company measured from the Company's initial public offering through the end of
1995. Each of these individuals was viewed by the Committee to providehave made unique
long-term contributions in addition to their collective contributions as members
of the Company's senior management team-Mr. Roche to the Company's financial
management and equity portfolio management functions, Mr. Riepe to the Company's
mutual fund business, and, as previously stated, Mr. Testa with a strong incentive to continue to provide
the Company with similar contributions for the foreseeable
future. In making this award, the Executive Compensation
Committee specifically recognized the unique contribution of Mr.
Testa over a long number of years to the creation, growth, and
leadership of the Company's
international investment management
business, which was a major contributor to the Company's
investment management asset and revenue growth in 1994 and a very
significant contributor in recent prior years. The Committee also
considered Mr. Testa's significant contributions to leadership in
restructuring the Company's equity management function, which has
enjoyed consistently favorable investment performance recently.
In order to minimize the dilutive effect of option awards, the
Executive Compensation Committee made no option awards during
1994 to the other Senior Executive Officers.
In making this option award, the Committee's intention, in
recognizing superior past long-term performance, was to provide
an additional incentive to Mr. Testa to continue this performance
for a significant period in the future and to reinforce the
Company's policies to base compensation awards to its executive
officers largely on performance.operations. To solidify the link of the
award to Mr. Testathese considerable
awards to long-term future performance, the option awards to Mr. Testa's
option award,Roche and Mr.
Riepe, which expires in November 2004, becomesexpire on October 31, 2005, become exercisable in three equal
annual installments commencing in November 1997.1998. This three-year delay before initial
vesting commences is longer than the vesting period established for otherin stock option
grants awarded to other key employees in recent years.1995 but is consistent with Mr. Testa's
1994 option grant.
In determining option awards,administering the Executive CompensationCompany's compensation programs for executive
officers, the Committee receives the advice of its independent compensation
consultants concerning cash compensation and option award practices of other
public companies, including companies which compete with the Company for talent.
As noted above, the Executive Compensation Committee
determined during 1994 to design a bonus plan for years
commencing January 1, 1995 that is intended to permit full
deductibility of compensation to Named Officers. As a result, the
Company's proposed Executive Incentive Compensation Plan,
included on pages 13 to 15 of this proxy statement, has been
recommended to stockholders for approval at the 1995 annual
meeting.
The Executive Compensation Committee has compared the Company's compensation levels to relevant
publicly available data for the investment management, securities, and other
financial service industries and has found the Company's compensation levels to
be competitive. Certain of these companies are included in the CRSP Total Return
Index for Nasdaq Financial Stocks shown in the Stock Performance Chart which follows this report.below.
The Company believes it competes for executive talent with a large number of
investment management, securities, and other financial services companies, some
of which are privately owned and others of which have significantly larger
market capitalizationscapitalization than the Company. The practice of the Company and the Executive
Compensation
Committee is to review available compensation data from a large universe of
financial services companies. The Executive Compensation Committee receives the assistance of anits
independent compensation consulting firm in reviewing and
analyzing this datacomparing and determining executive
compensation and policies. TheIn reviewing this data, the Committee's goal is to
maintain compensation programs which are competitive and, where performance justifies,
abovewith averages within the
financial services industry compensationbut are neither significantly higher nor lower than
these averages.
The Executive Compensation Committee believes that 19941995 compensation levels
disclosed in this proxy statement are reasonable and appropriate in light of the
Company's very strong results
relative to the Company's financial and qualitative performance
targets.investment performance.
Philip C. Walsh, Chairman
James E. Halbkat, Jr.
John W. Rosenblum
Robert L. Strickland
___________
STOCK PERFORMANCE CHART
As part of the proxy statement disclosure requirements mandated by the
Securities and Exchange Commission, the Company is required to provide a
five-year comparison of the cumulative total stockholder return on its Common
Stock with that of a broad equity market index and either a published industry
index or a Company-constructed peer group index.
The following chart compares the yearly percentage change in the cumulative
total stockholder return on the Company's Common Stock during the five years
ended December 31, 19941995 with the cumulative total return on the CRSP Total
Return Index for the Nasdaq Stock Market (US Companies), the CRSP Total Return
Index for Nasdaq Financial Stocks, and the S&P 500 Stock Index. The comparison
assumes $100 was invested on December 31, 19891990 in the Company's Common Stock and
in each of the foregoing indices and the reinvestment of dividends.
There can be no assurance as to future trends in the cumulative total
return of the Company's Common Stock or of the following indices. The Company
does not make or endorse any predictions as to future stock performance.
LINEGRAPH withLINE CHART WITH TABLE
(1) The CRSP Total Return Index for the Nasdaq Stock Market (US Companies)
is an index comprising all domestic common shares traded on the Nasdaq
National MarketMarket(registered trademark) and the Nasdaq Small-Cap
Market.Small Cap
Marketsm. The CRSP Total Return Index for Nasdaq Financial Stocks is
an index comprising all financial company American Depository
Receipts, domestic common shares, and foreign common shares traded on
the Nasdaq National MarketMarket(registered trademark) and the Nasdaq Small-Cap Market,Small
Cap Marketsm, and represents SIC Codes 60 through 67. The Company will
provide the names of companies included in this index upon the written
request of any stockholder. Such request should be directed to the
secretary of the Company. These indices were prepared for Nasdaq by
the Center for Research in Securities Prices ("CRSP") at the
University of Chicago and distributed to Nasdaq-listed companies to
assist them in complying with proxy rule disclosure requirements. The
Company has not independently verified the computation of these total
return indices.
(2) Total return performance for the S&P 500 Index provided by Standard &
Poor's.
PROPOSED CHARTER AMENDMENTSAMENDMENT TO EFFECT A TWO-FOR-ONE STOCK SPLIT AND
A PROPORTIONAL INCREASE IN THE AUTHORIZED COMMON STOCK
AND CREATE A CLASSSHARES OF UNDESIGNATED PREFERREDCOMMON STOCK
The Board of Directors of the Company has adopted resolutions declaring
advisable and recommending to the Company's stockholders for their approval two separate amendmentsan
amendment to the Company's charter. The first amendment provides forcharter effecting a two-for-one split of the
Company's outstanding Common Stock and a proportional increase ofin the authorized
shares of Common Stock from 48,000,000 shares100,000,000 to 100,000,000200,000,000 shares. The second amendment provides for the
creation of a class of 20,000,000 shares of undesignated
Preferred Stock which would be subject to classification and
reclassification by the Board of Directors without stockholder
approval. The text of the
proposed amendmentsamendment is included in the form of Articles of Amendment attached
hereto as Exhibit A. The termsBoard of Directors believes that the stock split will
be beneficial to the trading market for the Company's Common Stock by reducing
the per share trading price and increasing the number of publicly traded shares.
If the amendment is adopted, the split will become effective as of the
close of business on April 12, 1996 and stockholders of record as of that date
(the "record date") will receive one share of Common Stock for each share held
as of the record date. Certificates representing such shares will be distributed
on April 30, 1996. Participants in the Company's Employee Stock Purchase Plan
will be entitled to receive additional full and fractional shares for each full
and fractional share owned by them as of the April 12 record date, and options
outstanding under the Company's existing stock option and stock incentive plans
will be proportionally adjusted. Similarly, it is expected that the dividend
payable per share in subsequent quarters will be adjusted to reflect the effect
of the split.
It is likely that the per share trading price of the Common Stock on the
Nasdaq National Market(registered trademark) will be reduced to approximately
one-half of the trading price immediately before the stock split and that this
will occur upon the close of business on the April 30 payment date. The cost
basis of pre-split shares shall be allocated pro rata among the pre-split shares
and the split shares received in respect of those particular pre-split shares.
The new shares will be deemed to have been held for the same period of time as
the pre-split shares to which they relate. The Company has been advised by
counsel that, under current federal tax law, the distribution of additional
shares will not result in taxable income or loss.
Following stockholder adoption of the proposed class of Preferred Stock provides
that the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications and
terms and conditions of redemption thereof (collectively, the
"Limitations and Restrictions") may be determined by the Board of
Directors of the Company prior to the issuance of such stock. As
such, the Board of Directors of the Company will, in the event of
the approval of this proposal by the Company's stockholders, be
entitled to authorize the creation and issuance of 20,000,000
shares of Preferred Stock in one or more series with such
Limitations and Restrictions as may be determined in the Board's
sole discretion, with no further authorization by stockholders
required for the creation and issuance thereof.
The additionalamendment, approximately
119,610,000 shares of Common Stock will be available for issuance in excess of
outstanding post-split Common Stock approximating 57,040,000 shares and Preferredthe
approximately 23,350,000 post-split shares reserved for issuance under the
Company's various existing and proposed employee benefit plans. The proportion
of shares available for possible future issuance to total authorized Common
Stock will remain exactly the same before and after the split. At the present
time, there are no agreements, understandings, or arrangements for the
authorized but unissued Common Stock, other than the existing and proposed
employee stock plans (see the proposed 1996 Stock Incentive Plan description
beginning on page 14).
The amendment does not change the proportion of the authorized Common Stock
to the shares of Common Stock outstanding or reserved for issuance, as described
above. The authorized shares of Common Stock in excess of the outstanding and
reserved shares could be issued, in many cases without stockholder approval, for
a variety of corporate purposes, including the raising of additional capital to
support expansion of the Company's growth, either through internally-generatedinternally generated
growth or through acquisitions, and stock issuances in connection with the
acquisition of other business organizations, employee incentive plans, and stock
splitssplit-ups and recapitalizations of the Company's
capital structure.stock dividends. Management of the Company is cognizant of the
trends toward consolidation in the investment management industry and believes
there may be enhanced prospects for growth through acquisition in the future.
Consistent with these trends, the Company from time to time reviews various acquisition prospectsconsiders possible
acquisitions and periodically engages in discussions regarding such possible
acquisitions. Currently, the Company is not a party to any agreements or
understandings regarding any material acquisitions
that would require issuance of any shares authorized by the
proposed charter amendments.acquisitions. In addition, acquisitions involving
stock issuances above certain enumerated thresholds would require stockholder
approval under applicable rules of the Nasdaq Stock Market and in some
circumstances Maryland law.
The Board of Directors is required to make any determination to issue
shares of Common Stock or Preferred Stock based on its judgment as to the best interests of the
stockholders and the Company. Although the Board of Directors has no present
intention of doing so, it could issue shares of Common Stock or Preferred
Stock that could depending on the terms of such series, make
more difficult or discourage an attempt to obtain control of the Company by
means of merger, tender offer, proxy contest, or other means. When, in the
judgment of the Board of Directors, this action will be in the best interestinterests of
the stockholders and the Company, such shares could be used to create voting or
other impediments or to discourage persons seeking to gain control of the
Company. Such shares could be privately placed with purchasers favorable to the
Board of Directors in opposing such action. The Board of Directors could also authorize holders of a
series of Preferred Stock to vote either separately as a class or
with the holders of the Company's Common Stock on any merger,
sale or exchange of assets by the Company or any other
extraordinary corporate transaction. The issuance of new shares could
also be used to dilute the stock ownership of a person or entity seeking to
obtain control of the Company should the Board of Directors consider the action
of such entity or person not to be in the best interests of the stockholders and
the Company.
In
addition, the shares of Preferred Stock could be issued if the
Board of Directors were to adopt a stockholder rights plan in
order to protect stockholders in the event of an unsolicited
attempt to acquire the Company which the Board of Directors does
not believe to be in the best interests of the Company's
stockholders. The Company has no present plans to issue shares of
Preferred Stock or to adopt a stockholder rights plan.
Accordingly, the terms of any Preferred Stock subject to this
proposal cannot be stated or estimated with respect to any or all
of the Preferred Stock authorized.
Recommendation of the Board of Directors; Vote Required
The Board of Directors believes the increase in the
authorized Common Stock and the creation of the Preferred Stock
are in the best interests of the Company and its stockholders and
has declared the amendments advisable. Stockholders are required
under Securitiesadvisable and Exchange Commission rules to consider the
two amendments separately. The Board of Directors recommends a vote "FOR"
thean amendment to the Company's charter to increase
from 48,000,000 to 100,000,000 shareseffecting a two-for-one split of the
authorizedCompany's outstanding Common Stock and "FOR"a proportional increase in the amendment to the Company's charter to authorize
20,000,000authorized
shares of a new class of undesignated Preferred Stock.Common Stock from 100,000,000 to 200,000,000 shares. The affirmative
vote of a majority of the total number of shares of Common Stock outstanding
will be required for adoption of each
of the two amendments. Abstentionsamendment. Accordingly, abstentions and
broker non-votes will have the same effect ofas a vote against each of the amendments. The
proposals are independent such that failure to adopt one proposal
will not affect adoption of the other proposal.
PROPOSED EXECUTIVE INCENTIVE COMPENSATION PLAN
On February 13, 1995, the Executive Compensation Committee
recommended toamendment.
Proxies solicited by the Board of Directors adoptionwill be voted in favor of the
Executiveamendment unless stockholders specify otherwise.
PROPOSED 1996 STOCK INCENTIVE PLAN
The Company's 1996 Stock Incentive Compensation Plan (the "Incentive Plan"). The Board of
Directors adopted the Incentive Plan on February 13, 1995,
subject to stockholder approval. The following is the text of the
Incentive Plan:
Purpose and Effects of Incentive Plan. The Incentive Plan is
intended to assure that the cash compensation of the chief
executive officer ("CEO""Plan") and the other executive officers whose
compensation is required to be reported in the Company's annual
proxy statement will be fully deductible for federal income tax
purposes, notwithstanding the $1,000,000 annual limitation on
certain types of compensation imposed by Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"). The
Incentive Plan ties directly the incentive compensation payable
to the CEO and certain other executive officers to attainment of
specific financial performance targets. Thus, incentive
compensation payments will be further aligned with the interests
of all stockholders.
Participation. The Participants in the Incentive Plan shall
be the CEO, the members of the Company's Management Committee,
and certain other executive officers of the Company designated at
the outset of the fiscal yearwas recommended by the
Executive Compensation Committee of the Board of Directors (the "Committee"), which
Committee is comprised solely of independent directors. At
February 13, 1995, the Company had 18 managing directors, seven
(7) of whom have been designated by the Executive Compensation
Committee to be Participants. Amounts payable from the Incentive
Pool (computed in accordance with the following paragraph)
established under the Incentive Plan are in addition to, and not
in substitution for, base salaries, which are reviewed by the
Committee annually at approximately mid-year. Unless otherwise
determined by the Executive Compensation Committee in its sole
discretion (which may be made on a case-by-case basis), the CEO
and each member of the Management Committee are eligible to
receive annual bonuses from the Incentive Pool only. Other
Participants will be eligible for other incentive compensation
based upon the operating performance and enumerated qualitative
factors, as evaluated by the Executive Compensation Committee
with the input of management, of the business unit for which such
Participant is responsible, in addition to amounts payable from
the Incentive Pool.
Establishment of Incentive Pool under the Incentive Plan.
The Incentive Plan establishes a maximum Incentive Pool payable
to the Participants under the Incentive Plan in the aggregate for
any fiscal year of the Company. The Incentive Pool is determined
under the formula described below which relates incentives to the
Company's annual Income before Income Taxes and Minority
Interests for that year ("Adjusted Earnings"), subject to a
requirement that a threshold ratio of net income to average
stockholders' equity for the fiscal year (the "Threshold ROE") is
attained. The Incentive Pool, subject to reduction if required by
the next paragraph, will be computed on a cumulative basis as
follows: (1) for Adjusted Earnings up to $25 million, 5% of
Adjusted Earnings will be available under the Incentive Pool,
establishing a maximum Incentive Pool of $1,250,000; (2) for
Adjusted Earnings above $25 million to $50 million, an additional
7% of Adjusted Earnings will be available under the Incentive
Pool, establishing a maximum cumulative Incentive Pool of
$3,000,000; and (3) for Adjusted Earnings above $50 million, an
additional 8% of Adjusted Earnings will be available under the
Incentive Pool, establishing a maximum cumulative Incentive Pool
of $3,000,000 plus 8% of Adjusted Earnings over $50 million.
The ROE is defined under the Incentive Plan as the ratio of
annual net income (excluding the effect of extraordinary items
under generally accepted accounting principles) to average
stockholders' equity for the year. The Threshold ROE that must be
attained to permit the maximum cumulative Incentive Pool to be
fully payable under the Incentive Plan is 20%. If the Company's
ROE for the fiscal year is less than 20% but at least 10%, for
each full percentage point shortfall the maximum cumulative
Incentive Pool is reduced by five percentage points. Thus, if the
ROE is 15%, three-quarters (75%) of the maximum cumulative
Incentive Pool shall be payable, and if the ROE is 10%, one-half
(50%) of the maximum cumulative Incentive Pool shall be payable.
If the Company's ROE falls below 10% for any fiscal year, there
shall be no Incentive Pool and no bonus payment will be made from
the Incentive Pool for that fiscal year.
Payments under the Incentive Plan. The maximum share of the
Incentive Pool payable to any Participant is limited to 40%. The
actual amount paid from the Incentive Pool for any fiscal year
may be less but not greater than the maximum amount available for
payment from the Incentive Pool, based on the formula for that
year, and the Executive Compensation Committee shall have sole
and exclusive discretion to reduce the share or amount payable to
any Participant from the Incentive Pool.
Prior to the payment of any amounts from the Incentive Pool
for any fiscal year, the Executive Compensation Committee shall
certify in writing (to the extent required by, and as defined in,
any applicable IRS Regulations) that the Threshold ROE and
Adjusted Earnings goals and any other material terms used to
determine amounts payable from the Incentive Pool were in fact
satisfied. For this purpose, approved minutes of the Executive
Compensation Committee shall be treated as a written
certification and no other separate written certification shall
be required. All amounts payable from the Incentive Pool shall be
paid in cash as soon as practicable after such certification.
The Incentive Plan permits the Executive Compensation
Committee to make a determination that the Threshold ROE and
Adjusted Earnings have been attained so as to permit payment of
awards under the Incentive Plan, in whole or in part, prior to
the conclusion of the year. For these purposes, the Executive
Compensation Committee is permitted to rely on the Company's most
recently available internal interim financial statements
(containing such adjustments and accruals as are required under
generally accepted accounting principles), which may be adjusted,
if and to the extent permitted by applicable law, regulations and
interpretations, to take into account the Company's projected
results of operations for the remainder of the year based on
available data concerning assets under management in mutual fund
and investment advisory accounts and other appropriate
adjustments.
The actual amounts that will be paid to Participants from
the Incentive Pool for 1995 and future years are not currently
determinable, as such amounts will depend upon the Company's
results of operations and return on average equity and the
Executive Compensation Committee's determination of the share or
amount of the maximum cumulative Incentive Pool to be paid to
each Participant. Similarly, since the Incentive Plan was not in
effect for 1994 or prior years, it is not possible to determine
the amounts under the Incentive Plan which would have been
received by the Participants from a hypothetical Incentive Pool
for 1994 or prior years. For 1994, the maximum amount payable to
any single Participant would have been approximately $3.5 million
and the amount payable to each Participant, assuming equal
incentive awards utilizing the entire Incentive Pool to five
participants, would have been approximately $1.7 million. The
bonus awards for 1994 performance and prior years since the
Company's initial public offering have been considerably less
than the amounts payable had the Incentive Plan been in place for
those years.
Amendments or Termination. The Incentive Plan may be amended
or terminated at any time at the sole discretion of the Board of
Directors. No amendment of the Incentive Plan may increase the
amount available under the Incentive Pool or increase the
allocation of benefits between Participants from the Incentive
Pool without the requirement of a vote of the stockholders. The
Incentive Plan will automatically terminate in the event of the
repeal of Section 162(m) of the Code or other change in the law
that would eliminate the requirement for a written,
performance-based plan to provide full deductibility of incentive
payments for federal income tax purposes.
Recommendation of the Board of Directors; Vote Required
The Board of Directors recommends a vote "FOR" approval of
the Incentive Plan. The affirmative vote of a majority of the
votes cast at the meeting will be required to approve the
Incentive Plan. Accordingly, abstentions and broker non-votes
will not be considered to be votes cast and will have no effect
on the outcome of the matter.
PROPOSED 1995 DIRECTOR STOCK OPTION PLAN
The Company's 1995 Director Stock Option Plan (the "Director
Plan") was approved by the Board of
Directors on February 13,
1995, subject to stockholder approval.7, 1996. A copy of the Director Plan is attached hereto as Exhibit
B, and the following summary description is qualified by reference to the Director Plan.
The purpose of the Director Plan is to provide Non-Employee Directors
with an equityincentive to employees and to encourage
capital accumulation and stock ownership by key employees in order to increase
their proprietary interest in the CompanyCompany's success.
No options or awards have been granted or made under the Plan in order1996. For
information concerning 1995 grants under the Company's 1990 and 1993 Stock
Incentive Plans, which are similar to attractthe proposed Plan, see the Option Grants
Table on page 7. The Committee has not considered what awards will be made under
the Plan, and, retain well-qualified individualsconsequently, the number of shares that will be covered by any
such awards or the persons to servewhom awards will be made cannot be determined.
In addition, there are 9,710 and 1,434,600 shares of Common Stock reserved
for issuance under the Company's 1990 Stock Incentive Plan (the "1990 Plan") and
1993 Stock Incentive Plan (the "1993 Plan"), respectively, as Non-Employee
Directors and to further alignwhich options
or stock appreciation rights have not been granted. Authority to make awards
under the interests of Non-Employee
Directors1990 Plan will be terminated upon stockholder approval of the Company with those1996
Plan; authority to make awards under the 1993 Plan will continue in effect
following stockholder approval of the stockholders1996 Plan. Information concerning
outstanding grants under these and prior plans is contained in the Company's
Annual Report to Stockholders.
The Plan will be effective as of the
Company.April 12, 1996, subject to stockholder
approval, and authority to grant options will remain in effect until February 6,
2006.
Number of Shares
The Director Plan provides that 70,0004,000,000 shares of the Company's Common Stock,
which number is subject to adjustment to reflect certain subsequent stock
changes such as stock dividends, stock splits, and share exchanges, will be
available for the granting of stock options, stock appreciation rights, and
stock awards, from time to time, to key employees (including officers and
directors who are employees) of the Company and its subsidiaries. If the
two-for-one stock split is approved at the times contemplated byannual meeting, the Director Plan to Non-Employee Directorswould then
cover 8,000,000 shares of the Company.Company's Common Stock. If an option or stock
appreciation right expires before its exercise, a stock appreciation right is
exercised for cash, a stock award is forfeited, or shares are tendered as
consideration for the exercise of any option or award, the shares may again be
subject to options.awards.
Administration; Eligibility
The Directorselection of the participants in the Plan shalland the term of awards
granted to each participant will be administereddetermined by the Board of
Directors of the Company; provided that, in administering the
Director Plan, the Board of Directors shall have no discretion
regarding the price, timing, or amount of optionsCommittee, which may
delegate authority to be granted
under the Director Plan. Onlymake awards to persons who are not subject to Section 16
of the Securities Exchange Act of 1934 (the "1934 Act") to a committee of
officers. Key employees, including those who are officers and directors of the
Company or any ofand its affiliates or subsidiaries,
("Non-Employee Directors") are eligible to participate inbe selected to receive awards
under the
Director Plan.
Stock Options
The Committee may grant either incentive stock options qualified with
respect to be granted underSection 422 of the Director Plan areInternal Revenue Code of 1986, as amended (the
"Code"), or options not qualified under any section of the Code ("non-qualified
options") and will. Incentive stock options may be granted at not less than 100% of the
fair market value of the underlying Common Stock, and non-qualified stock
options may be granted at not less than 75% of the fair market value of the
underlying Common Stock. The Committee's practice has been to award all options
at not less than 100% of the fair market value of the underlying Common Stock on
the date of grant. As to each Non-Employee Director in office as of April 6,
1995, the Director Plan provides for the grant of an option to
purchase 4,000 shares of Common Stock at the close of business on
April 6, 1995 and an option to purchase 2,000 shares of Common
Stock at the close of business on the last Thursday of the month
during each succeeding year in which the annual meeting of
stockholders is held, subject to a maximum individual award of
options to purchase 10,000 shares of Common Stock. All current
directors have been in office for at least three years, and this
initial award recognizes, in part, prior service and
contributions.
As to each subsequently elected Non-Employee Director, the
Director Plan provides for the grant of an option to purchase
2,000 shares of Common Stock as of the close of business on the
date of the first regular meeting of directors held on or after
the Director's initial election, and an option to purchase 2,000
shares of Common Stock at the close of business on the last
Thursday of the month during each succeeding year in which the
annual meeting of stockholders is held, subject to a maximum
individual award of options to purchase 10,000 shares of Common
Stock.
Each option granted under the Plan shall become exercisable
in full one year after the initial grant, but shall not be
exercisable as to any shares prior thereto. Upon exercise, the option price is to be paid in full in
cash, at the discretion of the Committee, in shares of the Company's Common Stock
previously owned by the option holder or acquired upon the option exercisesexercise
having a market value on the date of exercise equal to the aggregate option
price, or in a combination thereof. No stock optionthereof, or in any other method that the Committee may
be exercised afterallow.
Options granted under the earlier to occur of: (i) the expiration of 10 years after the
date such option was granted; or (ii) five years after a
Non-Employee Director ceases to be a Director for any reason,
during which period any installments of options whichPlan shall first become exercisable may thereafter be exercised. Inat least one
year after grant and shall expire not more than 10 years from the case of
death,date the
option is granted. The Committee may in its discretion provide that an option
may not be exercised by a deceased Director's
estate or heirs for such five year period.
Amendments; Term of Plan
This Director Plan may be amended, suspended, terminated or
reinstated, in whole or in part for any period or periods of time
specified and may accelerate the time at which an option may be exercised.
Stock Appreciation Rights
The Committee may grant stock appreciation rights which provide the grantee
the right to receive a payment (in cash, Common Stock, or a combination of both)
equal to the difference between the fair market value of a specific number of
shares of Common Stock on the grant date and the fair market value of such
shares on the date of exercise. Stock appreciation rights may, in the discretion
of the Committee, be granted separately or in tandem with options or other
awards under the Plan.
Stock Awards
Awards of shares of Common Stock may be issued with or without payment of
consideration by the participant. An award of stock may be denominated in shares
of stock, units of stock, or stock equivalent units and may be paid in cash,
Common Stock, or a combination thereof. All or part of any stock award may be
subject to conditions and restrictions, which the Committee shall specify.
"Book Value" Shares
Incentive and non-qualified stock options, stock appreciation rights, and
stock awards may also relate to "Book Value Shares." Book Value Shares are
shares of Common Stock which have voting, dividend, and liquidation rights but
are not transferable except to the Company and are subject to valuation and
adjustment in certain circumstances, as described in the Plan.
Amendments
The Committee, at any time byand from time to time, may alter, amend,
suspend, or discontinue the BoardPlan or alter or amend any and all options, stock
appreciation rights, and stock awards under the Plan. In addition, no such
action may be taken which adversely affects the rights of Directors; provided, however,a participant in any
option, stock, or right that any provisionshas been granted under the Plan without the
participant's consent. Under current rules of this
Directorthe Securities and Exchange
Commission applicable to persons who are subject to Section 16 of the 1934 Act,
no such action may be taken without stockholder approval which materially
increases the benefits to participants under the Plan, regardingmaterially increases the
amount and price
number of optionsshares to be awarded to Non-Employee Directors andissued, materially extends the timingperiod for granting of
awards or that may be deemedmaterially modifies the requirements as to set forth a formula that determines the
amount, price, and timing of awards, may not be amended more than
once every six months, other than to comport with any changes in
the Code, the Employee Retirement Income Security Act of 1974, as
amended, or the rules under such statutes; and, provided further,
however, that no such amendment shall become effective without
the approval of the stockholders of the Company to the extenteligibility. Likewise,
stockholder approval is required in order to comply with Rule
16b-3under the Code for amendments increasing the
number of the Securities Exchange Act of 1934, as amended. No
optionshares which may be grantedissued under the Plan after April 30, 2002.and the category of
individuals eligible for awards to the extent awards are intended to qualify as
incentive stock options.
Federal Income Tax Consequences
The following is a general summary of the current Federalfederal income tax treatment of
the stock awards, incentive stock options, non-qualified stock options, stock
appreciation rights, and stock awards to be granted under the Director Plan based upon
the current provisions of the Code and regulations promulgated thereunder.
Incentive Stock Options. Incentive stock options under the Plan are
intended to meet the requirements of Section 422 of the Code. No tax
consequences result from the grant of the option. If an option holder acquires
stock upon the exercise, no income will be recognized by the option holder for
ordinary income tax purposes (although the difference between the option
exercise price and the fair market value of the stock subject to option may
result in alternative minimum tax liability to the option holder) and the
Company will be allowed no deduction as a result of such exercise, if the
following conditions are met: (a) at all times during the period beginning with
the date of the granting of the option and ending on the day three months before
the date of such exercise, the option holder is an employee of the Company or of
a subsidiary; and (b) the option holder makes no disposition of the stock within
two years from the date the option is granted nor within one year after the
stock is transferred to the option holder. In the event of a sale of such stock
by the option holder after compliance with these conditions, any gain realized
over the price paid for stock will ordinarily be treated as long-term capital
gain, and any loss will be treated as long-term capital loss, in the year of the
sale.
If the option holder fails to comply with the employment or holding period
requirements discussed above, the option holder will recognize ordinary income
in an amount equal to the lesser of (i) the excess of the fair market value of
the stock on the date the option was exercised over the exercise price or (ii)
the excess of the amount realized upon such disposition over the exercise price.
If the option holder is treated as having received ordinary income because of
his failure to comply with either condition above, an equivalent deduction will
be allowed to the Company in the same year.
Non-Qualified Stock Options. No tax consequences result from the grant of
the option. An option holder who exercises a non-qualified stock option with
cash will generally realize compensation taxable as ordinary income in an amount
equal to the difference between the option price and the fair market value of
the shares on the date of exercise, and the Company will be entitled to a
deduction from income in the salesame amount. The option holder's basis in such
shares will be the fair market value on the date exercised, and upon disposition ofwhen the shares
the option holder will recognizeare disposed of, capital gain or loss, either long-term or short-term, will be
recognized depending on the holding period of the shares.
Recommendation of the Board of Directors; Vote Required
The Board of Directors recommends a vote "FOR" approval of the Director Plan. The affirmative
vote of a majority of the votes cast at the meeting will be required to approve
the
Director Plan. Accordingly, abstentions and broker non-votes will not be considered
to be votes cast and will have no effect on the outcome of the matter. Proxies
solicited by the Board of Directors will be voted in favor of approval of the
Plan unless stockholders specify otherwise.
CERTAIN OWNERSHIP OF THE COMPANY'S COMMON STOCK
A Schedule 13G dated February 8, 1995 states that Ariel
Capital Management, Inc. ("Ariel"), an investment advisor
registered under the Investment Advisers ActThe Company has no knowledge at this time of 1940,any individual or entity
owning, beneficially owns 1,640,340 sharesor otherwise, 5% or more of the Company'soutstanding Common Stock
or approximately 5.74% of the shares outstanding on that date.
The Schedule states that these shares are owned by various
investment advisory clients of Ariel and were acquired in the
ordinary course of business and not for the purpose of changing
or influencing control of
the Company.
The address of Ariel is
307 North Michigan Avenue, Chicago, Illinois 60601.
COMPLIANCE WITH SECTION 16(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Mr. Peter Van Dyke, a Managing Director of the Company,
acquired indirect beneficial ownership of 4,000 shares of Common
Stock on February 4, 1994 as a result of his appointment as
co-trustee of a revocable trust for the benefit of his mother.
Through inadvertence, this event was not reported on a Form 3
until October 11, 1994.
SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors, pursuant to the recommendation of its Audit
Committee, has selected Price Waterhouse LLP, independent accountants, to
examine the financial statements of the Company for the year 1995.1996. This firm has
served as independent accountants of the Company since 1985. A partner of the
firm will be present at the annual meeting and available to respond to
appropriate questions and will have an opportunity to make a statement if he
desires to do so.
In 1994,1995, Price Waterhouse performed various professional services for the
Company, including completion of the examination of financial statements of the
Company for 1993,1994, preliminary work on the examination for 1994,1995, and preparation
of corporate tax returns. Price Waterhouse also examines the financial
statements of approximately 46%almost one-half of the Price Funds as well asand other sponsored investment
products.
The Audit Committee of the Board of Directors of the Company approved the
audit services provided by Price Waterhouse and the related fees and took into
consideration the non-audit services provided by Price Waterhouse. The Committee
considered the possible effect of these non-audit services on the independence
of Price Waterhouse and concluded there was no material effect upon their
independence.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 1997 annual meeting
must be received by the Company for inclusion in the Company's proxy statement
and proxy relating to that meeting by November 4, 1996.
OTHER MATTERS
The Board of Directors of the Company knows of no other matters to be
presented for action at the meeting other than those mentioned above. However,
if any other matters properly come before the meeting, it is intended that the
persons named in the accompanying proxy will vote on such other matters in
accordance with their judgment of the best interests of the Company.
___________
Exhibit A
T. ROWE PRICE ASSOCIATES, INC.
ARTICLES OF AMENDMENT
T. Rowe Price Associates, Inc., a Maryland corporation, having its
principal office in Baltimore City, Maryland (which is hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: The charter of the Corporation is hereby amended by:
Changing and reclassifying each of the shares of Common Stock (par value
$.20 per share) of the Corporation, which is issued at the close of business on
the effective date of this amendment, into two shares of such Common Stock (par
value $.20 per share) and by transferring from the account designated "capital
in excess of par value" to the extent available and then from the account
designated "retained earnings" to the common stock account $.10 for each share
of Common Stock outstanding immediately after the change and reclassification,
such change and reclassification to be made as a two-for-one split of the issued
and outstanding shares and not as a stock dividend, and in connection therewith
there shall be issued one additional share of Common Stock for each such share
thereof which is issued and outstanding at such effective date.
SECOND: Article SIXTH, Paragraph (a) of the charter of the Corporation is
hereby amended to read in its entirety as follows:
SIXTH: (a) The total number of shares of stock of all classes of
capital stock (par value $.20 per share) which the Corporation has
authority to issue is 120,000,000220,000,000 shares of capital stock (par value $.20 per share), amounting in aggregate par value
to $24,000,000,$44,000,000, of which 100,000,000200,000,000 shares (par value $.20 per share), amounting in aggregate par
value to $20,000,000$40,000,000 are classified as "Common Stock" and 20,000,000 shares (par value $.20 per share)
amounting in aggregate par value to $4,000,000 are classified as "Preferred
Stock."
(b) The following is a description of the preferences,
conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and
conditions of redemption of the Common Stock and the Preferred
Stock of the Corporation:
COMMON STOCK
(1) The Common Stock shall not be subject to classification
or reclassification by the Board of Directors, and shall have the
rights and terms hereinafter specified, subject to the terms of
any other stock provided in the charter pursuant to
classification or reclassification by the Board of Directors or
otherwise in accordance with law.
(2) Subject to the provisions of Article EIGHTH Section (3)
of the charter of the Corporation, each share of Common Stock
shall have one vote, and, except as otherwise provided in respect
of any Preferred Stock, the exclusive voting power for all
purposes shall be vested in the holders of the Common Stock.
(3) Subject to the provisions of law and any preferences of
any Preferred Stock, dividends, including dividends payable in
shares of another class of the Corporation's stock, may be paid
on the Common Stock of the Corporation at such time and in such
amounts as the Board of Directors may deem advisable.
(4) In the event of any liquidation, dissolution or winding
up of the Corporation, whether voluntary or involuntary, the
holders of the Common Stock shall be entitled, after payment or
provision for payment of the debts and other liabilities of the
Corporation and the amount to which the holders of any Preferred
Stock shall be entitled, to share ratably in the remaining net
assets of the Corporation.
PREFERRED STOCK
(5) The Board of Directors shall have authority to classify
and reclassify any unissued shares of Preferred Stock by fixing
or altering in any one or more respects from time to time before
issuance the preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends, qualifications
or terms or conditions of redemption of such shares of stock;
provided, that the Board of Directors shall not classify or
reclassify any of such shares into shares of the Common Stock, or
into any class or series of stock (i) which is not prior to the
Common Stock either as to dividends or upon liquidation and (ii)
which is not limited in some respect either as to dividends or
upon liquidation. Subject to the foregoing, the power of the
Board of Directors to classify and reclassify any of the shares
of Preferred Stock shall include, without limitation, subject to
the provisions of the charter, authority to classify or
reclassify any unissued shares of such stock into a class or
classes of preferred stock, preference stock, special stock or
other stock, and to divide and classic shares of any class into
one or more series of such class, by determining, fixing, or
altering one or more of the following:
(a) The distinctive designation of such class or series and
the number of shares to constitute such class or series; provided
that, unless otherwise prohibited by the terms of such or any
other class or series, the number of shares of any class or
series may be decreased by the Board of Directors in connection
with any classification or reclassification of unissued shares
and the number of shares of such class or series may be increased
by the Board of Directors in connection with any such
classification or reclassification, and any shares of any class
or series which have been redeemed, purchased, otherwise acquired
or converted into shares of Common Stock or any other class or
series shall become part of the authorized capital stock and be
subject to classification and reclassification as provided in
this Section.
(b) Whether or not and, if so, the rates, amounts and times
at which, and the conditions under which, dividends shall be
payable on shares of such class or series, whether any such
dividends shall rank senior or junior to or on a parity with the
dividends payable on any other class or series of Preferred
Stock, and the status of any such dividends as cumulative,
cumulative to a limited extent or non-cumulative and as
participating or non-participating.
(c) Whether or not shares of such class or series shall
have voting rights, in addition to any voting rights provided by
law and, if so, the terms of such voting rights.
(d) Whether or not shares of such class or series shall
have conversion or exchange privileges and, if so, the terms and
conditions thereof, including provision for adjustment of the
conversion or exchange rate in such events or at such times as
the Board of Directors shall determine.
(e) Whether or not shares of such class or series shall be
subject to redemption and, if so, the terms and conditions of
such redemption, including the date or dates upon or after which
they shall be redeemable and the amount per share payable in case
of redemption, which amount may vary under different conditions
and at different redemption dates; and whether or not there shall
be any sinking fund or purchase account in respect thereof, and
if so, the terms thereof.
(f) The rights of the holders of shares of such class or
series upon the liquidation, dissolution or winding up of the
affairs of, or upon any distribution of the assets of, the
Corporation, which rights may vary depending upon whether such
liquidation, dissolution or winding up is voluntary or
involuntary and, if voluntary, may vary at different dates, and
whether such rights shall rank senior or junior to or on a parity
with such rights of any other class or series of stock.
(g) Whether or not there shall be any limitations
applicable, while shares of such class or series are outstanding,
upon the payment of dividends or making of distributions on, or
the acquisition of, or the use of moneys for purchase or
redemption of, any stock of the Corporation, or upon any other
action of the Corporation, including action under this Section,
and, if so, the terms and conditions thereof.
(h) Any other preferences, rights, restrictions, including
restrictions on transferability, and qualifications of shares of
such class or series, not inconsistent with law and the charter
of the Corporation.
(6) For the purposes hereof and of any articles
supplementary to the charter providing for the classification or
reclassification of any shares of Preferred Stock or of any other
charter document of the Corporation (unless otherwise provided in
any such articles or document), any class or series of stock of
the Corporation shall be deemed to rank:
(a) prior to another class or series either as to dividends
or upon liquidation, if the holders of such class or series shall
be entitled to the receipt of dividends or of amounts
distributable on liquidation, dissolution or winding up, as the
case may be, in preference or priority to holders of such other
class or series;
(b) on a parity with another class or series either as to
dividends or upon liquidation, whether or not the dividend rates,
dividend payment dates or redemption or liquidation price per
share thereof be different from those of such others, if the
holders of such class or series
of stock shall be entitled to receipt of dividends or
amounts distributable upon liquidation, dissolution or winding
up, as the case may be, in proportion to their respective
dividend rates
or redemption or liquidation prices, without preference or
priority over the holders of such other class or series; and
(c) junior to another class or series either as to
dividends or upon liquidation, if the rights of the holders of
such class or series shall be subject or subordinate to the
rights of the holders of such other class or series in respect of
the receipt of dividends or the amounts distributable upon
liquidation, dissolution or winding up, as the case may be.
SECOND:THIRD: (a) As of immediately before the amendment the total
number of shares of stock of all classes which the Corporation
has authority to issue is 48,000,000 shares, of which no shares
are Preferred Stock (par value $.20 per share) and 48,000,000
shares are Common Stock (par value $.20 per share).
(b) As amended the total number of
shares of stock of all classes which the Corporation has authority to issue is
120,000,000 shares, of which 20,000,000 shares are Preferred Stock (par value
$.20 per share) and 100,000,000 shares are Common Stock (par value $.20 per
share).
(b) As amended the total number of shares of stock of all classes which the
Corporation has authority to issue is 220,000,000 shares, of which 20,000,000
shares are Preferred Stock (par value $.20 per share) and 200,000,000 shares are
Common Stock (par value $.20 per share).
(c) The aggregate par value of all shares having a par value is $9,600,000$24,000,000
before the amendment and $24,000,000$44,000,000 as amended.
(d) The shares of stock of the Corporation are divided into
classes, and the description, as amended, of each class,
including the preferences, conversion andor other rights, voting powers,
restrictions, limitations as to dividends, qualifications, and terms and
conditions of redemption is set
forth above in Article FIRST.
___________of each class of capital stock of the Corporation has
not been changed by this Amendment.
Exhibit B
T. ROWE PRICE ASSOCIATES, INC.
PROPOSED 1995 DIRECTOR1996 STOCK OPTIONINCENTIVE PLAN
1. PURPOSES OF THE DIRECTOR PLAN:
T. Rowe Price Associates, Inc.PURPOSE:
This 1996 Stock Incentive Plan (the "Company""Plan") has adopted
the 1995 Director Stock Option Plan for Non-Employee Directors
(the "Director Plan") to provide for the issuanceis intended as an employment
incentive and an encouragement of options to
purchase sharescapital accumulation and stock ownership by
key employees of the Company and of its Subsidiaries (as defined below) in order
to increase their proprietary interest in the Company's Common Stock, par value $.20 per
sharesuccess. This Plan
authorizes options, stock appreciation rights, and stock awards (each referred
to as an "award"). Options may be either incentive stock options intended to
qualify as such under Section 422 of the Internal Revenue Code of 1986, as
amended (the "Stock""Code"), asor non-qualified stock options not intended to qualify
under any section of the Code. Awards may be granted separately or in tandem
with other awards.
2. ADMINISTRATION:
The Plan shall be administered by a means of long-term compensation for
members ofcommittee appointed by the Board of
Directors of the Company in order(the "Committee") composed of at least two directors
who are disinterested persons within the meaning of Rule 16b-3 under the
Securities Exchange Act of 1934 (the "1934 Act") or any successor provisions.
The Company's Executive Compensation Committee is hereby initially designated as
the Committee. The Committee may delegate to provide Non-Employee Directors with an equity interest in the
Company, to attract and retain well-qualified individuals to
serve as Non-Employee Directors, and to further align the
interestsa committee of Non-Employee Directorsofficers of the
Company with thoseany or all of its duties under the Plan pursuant to such conditions or
limitations as the Committee may establish, except only the Committee may make
any determination regarding employees who are subject to Section 16 of the stockholders1934
Act.
The interpretation and construction by the Committee of any provisions of
the Company. For purposes of this Plan Non-Employee Directors are persons who are not employeesor any agreements with respect to awards issued under it and any
determination by the Committee pursuant to any provision of the CompanyPlan or any of its affiliates or subsidiaries.
2. ADMINISTRATION:
The Director Plansuch
agreement shall be administered byfinal and conclusive. No member of the Board of Directors or
the Committee shall be liable for any action or determination made in good
faith, nor for any matter as to which the Company's charter limits the liability
of directors. Such members shall be entitled to indemnification and
reimbursement in the manner provided in the Company's charter or by-laws and
under any directors' and officers' liability insurance coverage which may be in
effect from time to time.
With respect to persons subject to Section 16 of the Company; provided that, in administering1934 Act, transactions
under this Plan are intended to comply with all applicable conditions of Rule
16b-3 or its successors under the Director Plan,1934 Act. To the Board of Directors shall have no discretion
regarding the price, timing, or amount of options to be granted
hereunder.
3. STOCK SUBJECT TO OPTION:
The Company will reserve 70,000 authorized but unissued
sharesextent any provision of the
Stock for issuancePlan or action by the Committee fails to so comply, it shall be deemed null and
delivery undervoid, to the Director
Plan, subject to adjustment as provided in paragraph 6 hereof. If
any unexercised option terminates for any reason, shares ofextent permitted by law and deemed advisable by the Stock covered thereby shall become available for grant again.
4.Committee.
3. ELIGIBILITY:
The individuals who shall be eligible to participate in the DirectorPlan shall, as
the Committee shall determine from time to time, be such key employees of the
Company, including officers who are also directors, or of any corporation (a
"Subsidiary") in which the Company has a proprietary interest by reason of stock
ownership or otherwise. No individual shall be eligible to receive awards under
the Plan for more than an aggregate of 800,000 shares of Common Stock (prior to
giving effect to the stock split presented for action at the Company's 1996
annual meeting of stockholders) over the term of the Plan.
4. AWARD OF OPTIONS:
The Committee, at any time and from time to time, may authorize the
granting of options under this Plan to any individual eligible to receive the
same. Options shall be granted under this Plan at such times, for such number of
shares, and subject to such conditions as the Committee shall determine.
5. AWARD OF STOCK APPRECIATION RIGHTS:
The Committee, at any time and from time to time, may authorize the
granting of stock appreciation rights under this Plan. Stock appreciation rights
shall be granted under the Plan at such times, for such number of shares of
Common Stock, and subject to such conditions, including limitations as to the
amount which may be received upon exercise, as the Committee shall determine.
The term "stock appreciation right" shall mean the right to receive from the
Company, upon exercise thereof without payment to the Company, an amount up to
the difference between the fair market value on the exercise date of the total
number of Ordinary Shares, or the value (based on Book Value Per Share) on the
exercise date of the total number of Book Value Shares for which the stock
appreciation right is exercised, less the exercise price of such stock
appreciation right. The amount payable by the Company upon exercise of a stock
appreciation right may be paid in cash, in stock, or in any combination of cash
and stock. No fractional shares shall be issued under this section.
6. STOCK AWARDS:
The Committee, at any time and from time to time, may authorize the
issuance of stock at no cash cost, or for such payment as the Committee shall
determine, to any individual eligible to participate in the Plan. An award of
stock may be denominated in shares of stock, units of stock, convertible
debentures, or stock equivalent units, and may be paid in stock, in cash, or in
a combination of stock and cash. All or part of any stock award may be subject
to conditions and restrictions established by the Committee.
7. STOCK:
The stock subject to the options, stock appreciation rights, stock awards,
and other provisions of the Plan shall be all Non-Employee Directorsshares of the Company.
5. TERMS AND CONDITIONS OF OPTIONS:
OptionsCompany's authorized but
unissued Common Stock. The term "Common Stock" may mean either Ordinary Shares
or Book Value Shares (as such terms are defined hereinafter). Subject to
adjustment in accordance with the provisions of Paragraph 8(h) hereof, the total
number of shares of Common Stock on which options or stock appreciation rights
may be granted or stock awards may be made under the Director Plan are intendedshall not exceed
4,000,000 shares of Common Stock (prior to giving effect to the stock split
presented for action at the Company's 1996 annual meeting of stockholders);
provided that, except for purposes of determining the number of shares which may
be non-statutoryissued pursuant to incentive stock options, not qualifyingshares tendered as consideration
for the exercise of any option or other award, shares subject to any stock
appreciation right or award settled in cash, shares subject to the unexercised
portion of any outstanding option or stock appreciation right which expires, is
canceled, or is terminated for any reason, and shares issued under any sectiona stock award
which subsequently are forfeited in accordance with the terms of the Internal Revenue Code of 1986, as amended (the "Code"). Allrelated
stock options grantedagreement may again be subject to awards under the Director PlanPlan.
The terms "Ordinary Shares" and "Book Value Shares" shall have the
following meanings. "Ordinary Shares" means shares of the Company's Common Stock
for which there is a generally recognized trading market and which are freely
transferable. "Book Value Shares" means shares of the Company's Common Stock
which shall be authorized for issuance and which shall have the same voting,
dividend, and liquidation rights as Ordinary Shares, except that they shall not
be transferable (whether or not the stock option or stock appreciation rights
agreements are then in effect) except to the Company and except that they shall
be subject to the repurchase provisions set forth in the stock option
agreements.
8. TERMS AND CONDITIONS OF AGREEMENTS:
All awards granted pursuant to the Plan shall be evidenced by agreements in
such form as the Committee shall, from time to time, approve. The Committee may,
from time to time, modify or amend any such agreement. Such agreements shall
comply with and be subject to the following provisions:terms and conditions, to the extent
applicable:
(a) Option Price. TheMedium of Payment for Option: Upon exercise of an option, the
option price shall be payable (i) in United States dollars in cash or by
certified check, bank draft, or money order payable to the order of the
Company; (ii) through the delivery or withholding of shares of Common Stock
of the Company (which may be either Ordinary Shares or Book Value Shares,
or a combination of both) with a value equal to the total option price;
(iii) by a combination of the methods described in (i) and (ii); or (iv)
through such other means as the Committee may allow. Shares of Common Stock
delivered in payment of the option exercise price per share with respectmay, in the discretion of
the Committee, be previously acquired shares or shares acquired upon
exercise of the option. To the extent permitted by law, the Company or a
Subsidiary may make or guarantee loans to eachoptionees to assist in the
payment of the exercise price.
(b) Number and Kind of Shares: The agreement shall state the total
number and kind of shares of Common Stock to which it pertains. The
agreement shall provide that Book Value Shares shall be subject to
repurchase by the Company, as described in such agreement, and that such
shares shall not be assignable or transferable.
(c) Option Price: The option price for Ordinary Shares covered by an
incentive stock option granted hereunder shall be not less than 100% of the
fair market value, as determined by the Committee, of the
Stocksuch Shares on the
date of the granting of the incentive stock option. The option is granted. For purposes hereof,price for
Ordinary Shares covered by non-qualified stock options granted hereunder
shall be not less than 75% of the fair market value, as determined by the
Committee, of such Shares on the date of the granting of the non-qualified
stock option. The "fair market value" for Ordinary Shares for purposes of
this Plan shall be (i) the last reported sale price inof the Nasdaq National Market (or any other recognized securities market
on which theCommon Stock is traded if not then traded on
the Nasdaq National Market)Market(registered trademark) on the date the award is
granted or, if none, for the preceding day for which there was a last
reported sale price; or (ii) if the Ordinary Shares are listed on a
national securities exchange, the last quoted sale price on such exchange
on the date on which the award is granted or, if none, for the next
preceding day for which there was a last quoted sale price; or (iii) if the
Common Stock is not quoted on the Nasdaq National Market(registered
trademark) or listed on a national securities exchange, the mean between
the bid and asked prices in the over-the-counter market on the date of grant,the
award or, the next succeeding
business day on which the Nasdaq National Market (or such other
market) is open for business and reports an actual transaction in the Company's Stock. Ifabsence of such quotations or if the Common Stock is not
thenpublicly traded, such other price as shall be determined by the Committee
to be the fair market value.
The option price for any Book Value Shares covered by an incentive
stock option shall be not less than the "Book Value Per Share" on any
recognized market,the
"Fiscal Quarter Date" coincident with or immediately preceding the date of
the granting of the option, which the Committee believes in good faith to
be the fair market value of such Shares on the date of grant. The option
price for any Book Value Share covered by a non-qualified stock option
shall be not less than 75% of "Book Value Per Share" on the "Fiscal Quarter
Date" coincident with or immediately preceding the date of the granting of
the option. The term "Book Value Per Share" as of any given date means the
common stockholders' equity, as stated in the consolidated financial
statements of the Company, as at the Fiscal Quarter Date coincident with or
immediately preceding such given date, divided by the sum of the number of
shares of the Company's Common Stock outstanding and the number of common
stock equivalents as of such Fiscal Quarter Date (which calculation shall
be made before giving effect to the sale or repurchase of Book Value Shares
on such Fiscal Quarter Date); provided, however, that the Book Value Per
Share, for the purpose of calculating the repurchase price per share only,
may be adjusted to such an extent as may be determined by the Board of
Directors of the Company to preserve the benefit of the arrangement for the
participants and the Company, if in accordancethe opinion of the Board of Directors,
after consultation with applicable federal
income taxthe Company's independent accountants, changes in
the Company's accounting policies, acquisitions, or other unusual or
extraordinary items have disproportionately and securities regulations.
(b) Option Grants.
(i)materially affected the
number of shares of the Company's Common Stock outstanding or the Company's
common stockholders' equity. The term "Fiscal Quarter Date" means March 31,
June 30, September 30, or December 31 of any year or such other dates as
the Company may, from time to time, elect as the end dates of the fiscal
quarters of the Company.
(d) Term of Options and Stock Appreciation Rights: No option or stock
appreciation right may be exercised before the first anniversary of the
date on which it was granted. Each Non-Employee Directoroption and stock appreciation right
granted under the Plan shall expire not more than 10 years from the date it
is granted.
(e) Limitation on Incentive Stock Options: To the extent that the
aggregate fair market value (determined at the time the option is granted)
of the Ordinary Shares or the Book Value Shares with respect to which
incentive stock options are exercisable for the first time by an option
holder during any calendar year (under this Plan, and to the extent
required by Section 422(d) of the Code, under all other plans of the
Company and its subsidiary corporations as defined in office on April 6, 1995Section 424(f) of the
Code, including without limitation the 1986 Stock Incentive Plan, the 1990
Stock Incentive Plan, and the 1993 Stock Incentive Plan) exceeds $100,000
(or such other limitation as may be specified by the Code), such options
shall be granted antreated as non-qualified stock options.
(f) Replenishment of Options: The terms of a stock option grant may
provide, or may be amended by the Committee to purchase 4,000 shares of Stock atprovide, for the close of business on April 6, 1995 and an option to purchase
2,000 shares of Stock at the close of business on the last
Thursday of the month during each succeeding year in which the
annual meeting of stockholders is held, subject to a maximum
individual award of options to purchase 10,000 sharesa
new option when the exercise price has been paid by delivery or withholding
of Common
Stock.
(ii) Each Non-Employee Director initially elected as a
director after April 6, 1995 shall be granted an option to
purchase 2,000 shares of Common Stock asto the Company, provided that such replenishment
feature shall be limited to any extent required by rules, regulations, or
interpretations under the 1934 Act with respect to any particular grant in
the case of an option holder who is or becomes subject to Section 16 of the
close1934 Act. Any new option grant, which would automatically occur without any
further corporate action, would cover not more than the number of business
onshares
tendered with the dateexercise price set at the then fair market value of such
shares.
(g) Acceleration or Waiver: In the first regular meetingcase of directors held on or
after the date of the participant's initial election
as a director and an option to purchase 2,000 shares of
Stock as of the close of business on the last Thursday of the
month during each succeeding year in which the annual meeting of
stockholders is held, subject to a maximum individual award of
options to purchase 10,000 shares of Stock.
(c) Exercise of Options.
(i) Each option granted under this Plan shall becomeor stock
appreciation right not immediately exercisable in full one year after the initial grant, but shall
not be exercisable asor any stock award
subject to any shares prior thereto. Except as
providedrestriction or condition, the Committee may in paragraph (ii) below, full payment for shares
acquired shall be made in cash or by certified check at or prior
toits
discretion accelerate the time that an option, or any part thereof, is exercised.
The participant will have no rights as a stockholder until the
shares as toat which the option has been exercised are issued by
the Company.
(ii) Shares of the Company's Stock with a value equal to the
exercise price or a combination of cash and Stock with a value
equal to the exercise price may be used as payment for shares
acquired.
(d) Term of Option. No stock optionappreciation
right granted hereunder may be exercised after
the earlier to occur of: (i) the expiration of 10 years after the
date such option was granted; or (ii) five years after the
Non-Employee Director ceases to be a director forwaive, in whole or in part, any
reason,
during which period any installments which first become
exercisable may thereafter be exercised.
(e) Options Nonassignable and Nontransferable. Each option
and all rights thereunder shall not be assignablerestriction or transferable
during the Director's life, but may be transferred by will or
pursuantcondition with respect to the laws of descent and distribution to the extent
permitted under applicable federal securities and tax laws.
6. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION:award.
(h) Recapitalization: The aggregate number of shares of stockOrdinary Shares and Book
Value Shares on which option
awards under the Director Plan may be granted to persons
participating under the Director Plan, the number of shares thereof covered by each
award, the price per share thereof in each award, and any numerical
limitations contained herein relating to awards shall all be
proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock of the Company resulting from a subdivision
or consolidation of shares or other capital adjustment, or the payment of a
stock dividend or other increase or decrease in such shares, effected
without receipt of consideration by the Company; provided, however, that
any fractional shares resulting from any such adjustment shall be
eliminated. In the case of other changes in the Company's capitalization,
adjustments shall be made to the extent determined by the Board of DirectorsCommittee as
necessary or appropriate to reflect the transaction and as permitted under
applicable securities and tax laws.transaction.
If the Company shall be the surviving or resulting corporation in any
merger or consolidation, any award granted hereunder shall pertain to and
apply to the securities to which a holder of the number of shares of Common
Stock subject to the award would have been entitled; but a dissolution or
liquidation of the Company, or a merger or consolidation in which the
Company is not the surviving or resulting corporation, shall cause every
award outstanding hereunder to terminate, except that the surviving or
resulting corporation may, in its absolute and uncontrolled discretion,
tender awards with respect to its shares on terms and conditions, both as
to the number of shares and otherwise, which shall substantially preserve
the rights and benefits of any award then outstanding hereunder.
7. EFFECTIVE DATEIn the event of a change in the Company's Common Stock which is
limited to a change in the designation thereof to "Capital Stock" or other
similar designation, or to a change in the par value thereof, or from par
value to no par value, without increase in the number of issued shares, the
shares resulting from any such change shall be deemed to be Common Stock
within the meaning of the Plan.
(i) Assignability: No award granted under this Plan shall be
assignable or transferable except by will or by the laws of descent and
distribution or as otherwise permitted under Rule 16b-3 under the 1934 Act.
Notwithstanding this limitation, the Committee may expressly provide in an
agreement (or in any amendment to any agreement) that an award may be
transferred to one or more members of a participant's immediate family or a
trust or partnership primarily for the benefit of such person, provided
there is no consideration paid for such transfer.
9. AWARDS IN SUBSTITUTION FOR STOCK OPTIONS GRANTED BY OTHER CORPORATIONS:
Awards may be granted under the Plan from time to time in substitution
for awards held by employees of corporations who become or are about to
become key employees of the Company or a Subsidiary as the result of a
merger or consolidation of the employing corporation with the Company or a
Subsidiary, or the acquisition by the Company or a Subsidiary of the assets
of the employing corporation, or the acquisition by the Company or a
Subsidiary of stock of the employing corporation as the result of which it
becomes a Subsidiary. The terms and conditions of the substitute awards so
granted may vary from the terms and conditions set forth in this Plan to
such extent as the Committee at the time of grant may deem appropriate to
conform, in whole or in part, to the provisions of the awards in
substitution for which they are granted.
10. TERM AND EFFECTIVENESS OF THE DIRECTOR PLAN:
The Director Plan shall become effective upon its adoptionon the date it receives approval by
the Boardaffirmative votes of Directors and subsequent approval bythe holders of a majority of the votes cast in personCommon Stock of
the Company present, or by proxyrepresented, and entitled to vote at a meeting duly
held in accordance with applicable law. No award shall be granted pursuant
to this Plan after February 6, 2006.
11. AMENDMENTS:
The Board of Directors, from time to time, may alter, amend, suspend,
or discontinue this Plan or alter or amend any and all awards granted or
made hereunder except as required under the Code with respect to incentive
stock options or under the Rules and Regulations of the stockholdersSecurities and
Exchange Commission with respect to persons subject to Section 16 under the
1934 Act; and provided further that no action may be taken, without the
consent of a participant under the Plan who holds an award under this Plan,
which adversely affects the rights of such person in such award.
12. APPLICATION OF FUNDS:
The proceeds received by the Company held within 12 monthsfrom the issuance of Common Stock
pursuant to awards under the actionPlan will be used for general corporate
purposes.
13. CERTAIN TAX MATTERS:
Whenever under the Plan shares of Common Stock are to be delivered or
become subject to tax, the Company may require as a condition of delivery
or otherwise that the grantee remit an amount sufficient to satisfy all
federal, state, and other governmental withholding tax requirements related
thereto. The Company may, to the extent specified by the Committee in the
applicable agreement or otherwise, withhold shares of Common Stock to be
delivered with respect to a stock award or upon exercise of an option or
stock appreciation right to satisfy such withholding tax requirements. In
the event a disqualifying disposition is made, the person making such
disposition shall remit to the Company an amount sufficient to satisfy all
federal, state, and other withholding taxes thereby incurred. In lieu of or
in addition to the foregoing, the Company shall have the right to withhold
such sums from compensation otherwise due to the grantee.
T. ROWE PRICE ASSOCIATES INC.
-----------------------------
Revocable Proxy Solicited on Behalf of the Board of Directors
described above.
8. TERMINATION DATE:
No options may be granted under-------------------------------------------------------------
THE UNDERSIGNED STOCKHOLDER of T. Rowe Price Associates, Inc. hereby
appoints George J. Collins and George A. Roche the Director Plan after
April 30, 2002. Subjectlawful attorneys and proxies
of the undersigned with full power of substitution to paragraph 5(d), options granted before
April 30, 2002 undervote, as designated on the
Director Plan may be exercised after
that date in accordance with their terms.
9. AMENDMENT:
This Director Plan may be amended, suspended, terminated or
restated, in whole or in part,reverse side, all shares of Common Stock of the Corporation which the
undersigned is entitled to vote at any time by the BoardAnnual Meeting of Directors; provided, however, that any provisions of this Plan
regarding the amount and price of optionsStockholders to be awarded to
Non-Employee Directorsheld
on Friday, April 12, 1996, at 10:00 a.m., at 100 East Pratt Street, Baltimore,
Maryland 21202, and the timing of awards, or that which
may be deemed to set forth a formula that determines the amount,
price, and timing of awards may not
be amended more than once every six months, other than to
comport with any changes in the Code, the Employee Retirement
Income Security Act of 1974, as amended, or the rules under such
statutes; and, provided further, however, that no such amendment
shall become effective without the approval of the stockholders
of the Company to the extent stockholder approval is required in
order to comply with Rule 16b-3 of the Securities Exchange Act of
1934.
10. COMPLIANCE WITH LAWS AND REGULATIONS:
The grant, holding and vesting of all options under the
Director Plan shall be subject toat any and all requirementsadjournments thereof with respect to the
matters set forth on the reverse side and restrictions that may,described in the opinionNotice of Annual
Meeting and Proxy Statement dated March 4 , 1996, receipt of which is
hereby acknowledged.
This Proxy, when properly completed and returned, will be voted in the
Board,manner directed herein by the undersigned stockholder, IF NO DIRECTION IS GIVEN,
THIS PROXY WILL BE VOTED "FOR" THE ITEMS LISTED ON THE REVERSE SIDE.
(Continued and to be necessarydated and signed on the reverse side)
T. ROWE PRICE ASSOCIATES, INC.
P.O. BOX 11370
NEW YORK, NY 10203-0370
- --------------------------------------------------------------------------------
(Reverse side of proxy card)
(1) ELECTION OF DIRECTORS
[ ] FOR all nominees listed below
[ ] WITHHOLD authority to vote for all nominees listed
*EXCEPTIONS
George J. Collins, James E. Halbkat, Jr., Henry H. Hopkins, James A.C. Kennedy,
John H. Laporte, Richard L. Menschel, William T. Reynolds, James S. Riepe,
George A. Roche, John W. Rosenblum, Robert L. Strickland, M. David Testa, Philip
C. Walsh and Anne Marie Whittemore.
(INSTRUCTION: To withhold authority for any individual nominee, mark the
"Exceptions" box and strike a line through that nominee's name.)
(2) TO APPROVE AN AMENDMENT TO THE COMPANY'S CHARTER TO EFFECT A
TWO-FOR-ONE STOCK SPLIT AND EFFECT A PROPORTIONAL INCREASE IN THE
AUTHORIZED COMMON STOCK.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
--- ------- -------
(3) TO APPROVE THE PROPOSED 1996 STOCK INCENTIVE PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
--- ------- -------
(4) IN THEIR DISCRETION, the proxies are authorized to vote upon such
other business as may properly come before the meeting or advisable for the purposes of complying withat any
statute, rule
or regulation of any governmental authority, or any agreement,
policy or rule of any stock exchange or other regulatory
organization governing any market on which the Stock is traded.
11. MISCELLANEOUS:
(a) Expenses. The Company shall bear all expensesadjournment thereof.
Please date and costs
in connection with the administration of the Director Plan.
(b) Applicable Law. The validity, interpretation and
administration of this Plan and any rules, regulations,
determinations or decisions made hereunder, and the rights of any
and all persons having or claiming to have any interest herein or
hereunder, shall be determined exclusively in accordance with the
laws of the State of Maryland, without regardsign exactly as your name
appears to the choice of
laws provisions thereof.
(c) Headings. The headings herein are for reference
purposes onlyleft. When signing as a
fiduciary, representative or corporate officer,
give full title as such. If you receive more
than one proxy card, please sign and shall not affect the meaningreturn all
cards received.
Dated:_________________________________________
_______________________________________________
Signature
_______________________________________________
Signature if held jointly
Votes MUST be indicated (x) in Black or
interpretation
of the Director Plan.
(d) Notices. All notices or other communications made or
given pursuant to this Director Plan shall be in writing and
shall be sufficiently made or given if hand-delivered or mailed
by certified mail, addressed to any Non-Employee Director at the
address contained in the records of the Company or to the Company
at its principal office.
(e) Federal Securities Law Requirement. Awards granted
hereunder shall be subject to all conditions required under Rule
16b-3 to qualify the award for any exception from the provisions
of Section 16(b) of the Securities Exchange Act of 1934 available
under that Rule.
___________
Blue ink.
PLEASE SIGN, DATE, AND RETURN
THE PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.