<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Ragen MacKenzie Group Incorporated
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
[LOGO OF RAGEN MACKENZIE APPEARS HERE]
December 18, 1998
Dear Shareholder:
You are cordially invited to attend the 1999 Annual Meeting of Shareholders
of Ragen MacKenzie Group Incorporated (the "Annual Meeting") to be held at
1:30 p.m. on Thursday, January 28, 1999, at Benaroya Hall, 200 University
Street, Seattle, Washington.
At the Annual Meeting, the shareholders will be asked to elect four
directors with terms to expire at the 2000 Annual Meeting of Shareholders and
four directors with terms to expire at the 2001 Annual Meeting of
Shareholders. The accompanying Notice of 1999 Annual Meeting of Shareholders
and Proxy Statement describe the matter to be presented at the Annual Meeting.
The Board of Directors unanimously recommends that shareholders vote for the
election of the nominated directors.
Whether or not you plan to attend the Annual Meeting, we hope that you will
ensure that your stock is represented by marking, signing, dating and
returning your proxy card in the enclosed envelope as soon as possible. Your
stock will be voted in accordance with the instructions you have given in your
proxy card. You may, of course, attend the Annual Meeting and vote in person
even if you have previously returned your proxy card.
Sincerely,
/s/ LESA A. SROUFE
Lesa A. Sroufe
Chairman of the Board and
Chief Executive Officer
IMPORTANT
A proxy card is enclosed. All shareholders are urged to complete and mail
the card promptly. The enclosed envelope for return of the proxy card requires
no postage if mailed in the United States. Any shareholder attending the
Annual Meeting may personally vote on all matters that are considered, in
which event the signed proxy will be revoked.
IT IS IMPORTANT THAT YOU VOTE YOUR STOCK
<PAGE>
[LOGO OF RAGEN MACKENZIE APPEARS HERE]
NOTICE OF 1999 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 28, 1999
To the Shareholder:
The 1999 Annual Meeting of Shareholders of Ragen MacKenzie Group Incorporated
(the "Annual Meeting") will be held at Benaroya Hall, 200 University Street,
Seattle, Washington, at 1:30 p.m. on Thursday, January 28, 1999, for the
following purpose:
To elect four directors with terms to expire at the 2000 Annual Meeting of
Shareholders and four directors with terms to expire at the 2001 Annual
Meeting of Shareholders.
The Board of Directors has fixed December 11, 1998 as the record date for
determining shareholders entitled to receive notice of and to vote at the
Annual Meeting or any adjournment or postponement thereof. Only shareholders of
record at the close of business on that date will be entitled to notice of and
to vote at the Annual Meeting.
ALL SHAREHOLDERS ARE INVITED TO ATTEND THE ANNUAL MEETING IN PERSON, BUT EVEN
IF YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING, PLEASE MARK, SIGN, DATE AND
RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE IN THE POSTAGE-PAID
ENVELOPE PROVIDED TO ENSURE YOUR REPRESENTATION. SHAREHOLDERS ATTENDING THE
ANNUAL MEETING MAY VOTE IN PERSON EVEN IF THEY HAVE PREVIOUSLY SENT IN A PROXY
CARD.
By Order of the Board of Directors,
/s/ V. LAWRENCE BENSUSSEN
V. Lawrence Bensussen
Senior Vice President, Chief
Financial
Officer and Secretary
Seattle, Washington
December 18, 1998
<PAGE>
RAGEN MACKENZIE GROUP INCORPORATED
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON THURSDAY, JANUARY 28, 1999
GENERAL
The enclosed proxy is solicited by the Board of Directors of Ragen MacKenzie
Group Incorporated, a Washington corporation (the "Company"), for use at the
1999 Annual Meeting of Shareholders of the Company (the "Annual Meeting") to
be held at 1:30 p.m. on Thursday, January 28, 1999, at Benaroya Hall, 200
University Street, Seattle, Washington, and at any adjournment or postponement
thereof.
The Company's principal offices are located at 999 Third Avenue, Suite 4300,
Seattle, Washington 98104. This Proxy Statement and the accompanying proxy
card are being mailed to the shareholders of the Company on or about December
18, 1998.
OUTSTANDING SECURITIES AND VOTING RIGHTS
Only holders of record of the Company's common stock, par value $0.01 per
share (the "Common Stock"), at the close of business on December 11, 1998 will
be entitled to vote at the Annual Meeting. On that date the Company had
13,273,340 shares of Common Stock outstanding. Each share of Common Stock is
entitled to one vote at the Annual Meeting. Holders of Common Stock are not
entitled to cumulate votes in the election of directors. Under applicable law
and the Company's Articles of Incorporation and Bylaws, if a quorum is present
at the Annual Meeting, the eight nominees for election to the Board of
Directors who receive the greatest number of votes cast for the election of
directors by the shares present in person or represented by proxy shall be
elected directors. A majority of the outstanding shares of Common Stock
present in person or represented by proxy constitutes a quorum for the
transaction of business at the Annual Meeting. In the election of directors,
an abstention will have no effect on the outcome. Abstentions will be included
in determining whether a quorum is present at the Annual Meeting. There can be
no broker nonvotes on this matter since brokers who hold shares for the
accounts of their clients have discretionary authority to vote such shares
with respect to the election of a director.
PROXY VOTING
Shares for which proxy cards are properly executed and returned will be
voted at the Annual Meeting in accordance with the directions noted thereon,
or, in the absence of directions to the contrary, will be voted "FOR" the
election of the nominees to the Board of Directors named on the following
pages. The Company does not expect any matter other than the election of
directors will be brought before the Annual Meeting. If, however, other
matters are properly presented, the persons named as proxies will vote in
accordance with their discretion with respect to such matters.
REVOCATION
Any shareholder giving a proxy may revoke it at any time before it is voted
by delivering to the Secretary of the Company a written notice of revocation
or a duly executed proxy card bearing a later date, or by attending the Annual
Meeting and voting in person.
PROPOSAL: ELECTION OF DIRECTORS
Eight directors will be elected at the 1999 Annual Meeting and will be
divided into two classes to hold office for either one or two year terms, as
specified below. Following the Annual Meeting, elections of directors
<PAGE>
will be staggered, and directors will be elected to serve for two-year terms.
Each director elected will continue in office until his or her successor has
been elected and qualified. Biographical information regarding each of the
nominees for the Board of Directors is set forth below. Unless otherwise
instructed, the persons named as proxies on the accompanying proxy card intend
to vote shares represented by properly executed proxies for such nominees.
Although the Board of Directors anticipates that the eight nominees will be
available to serve as directors of the Company, if any of them should be
unwilling or unable to serve, the persons named as proxies will vote for the
election of such substitute nominee or nominees as may be designated by the
Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH NOMINEE.
NOMINEES FOR ELECTION--CLASS I--TERMS EXPIRE AT 2000 ANNUAL MEETING
Kirby L. Cramer, age 62, has served as a director of the Company since June
1998. Mr. Cramer is Chairman Emeritus of Hazleton Laboratories Corporation and
a Trustee Emeritus and former President of the University of Virginia's
Colgate Darden Graduate School of Business Administration's Board of Trustees.
Mr. Cramer is also past Chairman of the Advisory Board of the School of
Business Administration of the University of Washington and Chairman of the
Major Gifts Committee of the University of Washington Foundation. He also
serves on the boards of directors of Immunex Corporation, Unilab, Inc., The
Commerce Bank of Washington, Landec Corporation, Northwestern Trust Company
and SonoSite, Inc. Mr. Cramer is a graduate of Northwestern University and the
University of Washington and completed the Advanced Management Program at
Harvard Business School. In addition, Mr. Cramer has an honorary Doctor of Law
degree from James Madison University and is a Chartered Financial Analyst.
John L. MacKenzie, age 62, has served as a director of the Company since
April 1998. He has served as a director of Ragen MacKenzie Incorporated, a
wholly owned subsidiary of and predecessor to the Company ("RMI"), since
joining RMI in November 1988, and served as President of RMI from November
1988 until November 1990. Mr. MacKenzie holds a bachelor's degree in
accounting from the University of Iowa.
Peter B. Madoff, age 53, has served as a director of the Company since June
1998. Since 1965, Mr. Madoff has served as Senior Managing Director of Bernard
L. Madoff Investment Securities. Mr. Madoff serves on the boards of directors
of the Cincinnati Stock Exchange and the National Securities Clearing
Corporation and, from 1993 until 1994, served as the Vice Chairman of the
Board of Directors of the National Association of Securities Dealers, Inc. He
holds a bachelor's degree from Queens College and a law degree from Fordham
Law School.
Robert J. Mortell, Jr., age 53, has served as President, Chief Operating
Officer, Treasurer and a director of the Company since April 1998. He has
served as a director of RMI since RMI's incorporation in 1987, and as
President and Chief Operating Officer of RMI since April 1996. Mr. Mortell
served as RMI's Co-Chief Operating Officer from 1990 to April 1996 and as
Chief Financial Officer from 1987 until July 1996. Mr. Mortell holds a
bachelor's degree in finance from Seattle University.
NOMINEES FOR ELECTION--CLASS II--TERMS EXPIRE AT 2001 ANNUAL MEETING
Arthur W. Harrigan, Jr., age 54, has served as a director of the Company
since June 1998. Mr. Harrigan was a partner of the law firm Lane Powell Moss &
Miller from 1975 until 1985 and, since January 1986, has been a partner of the
law firm Danielson Harrigan & Tollefson LLP. Mr. Harrigan holds a bachelor's
degree from Harvard College and a law degree from Columbia Law School, and is
a fellow of the American College of Trial Lawyers.
Gregory B. Maffei, age 38, has served as a director of the Company since
June 1998. Mr. Maffei has served as Chief Financial Officer of Microsoft
Corporation ("Microsoft") since July 1997. He joined Microsoft in April 1993,
where he served as Director of Business Development and Investments until
April 1994, Treasurer from April 1994 to June 1996 and Vice President
Corporate Development from July 1996 to July 1997. Mr. Maffei holds a
bachelor's degree from Dartmouth College and a master's degree in business
administration from Harvard Business School, where he was a Baker Scholar. Mr.
Maffei also serves on the boards of directors of Cort Business Services
Corporation and SkyTel Corp.
2
<PAGE>
Mark A. McClure, age 46, has served as Executive Vice President and a
director of the Company since April 1998. He has served as the Executive Vice
President and as a director of RMI since November 1996. Mr. McClure has been a
retail account executive since joining RMI in June 1994, and has served as the
director of the Regional Branch Offices since June 1996. Mr. McClure served as
Senior Vice President of RMI from June 1994 to November 1996. Mr. McClure was
a Vice President and retail account executive with Kidder, Peabody and Co., a
stock brokerage firm, from 1976 to 1994, and served as an Assistant Manager
from January 1987 to June 1994. Mr. McClure holds a bachelor's degree in
business from Washington State University.
Lesa A. Sroufe, age 41, has served as Chief Executive Officer and Chairman
of the Board of the Company since April 1998. She has served as a director of
RMI since joining RMI in November 1988. Since February 1998, Ms. Sroufe has
served as RMI's Chief Executive Officer. Prior to such time, she served as
RMI's Director of Research. Ms. Sroufe also served as Senior Vice President of
RMI from November 1988 until November 1996 and as Executive Vice President
from November 1996 until February 1998. Ms. Sroufe holds a bachelor's degree
in business from the University of Washington and is a Chartered Financial
Analyst.
COMPENSATION OF DIRECTORS
Directors who are employees of the Company or RMI receive no additional
compensation for their services as directors. The Company pays each
nonemployee director $5,000 per year plus reimbursement of expenses incurred
in connection with his or her service as a director. In addition, the Company
grants a nonqualified stock option to purchase 25,000 shares of Common Stock
to each nonemployee director on the date the director is first appointed or
elected to the Company's Board of Directors, which grant fully vests on the
first anniversary of the date of grant. Beginning with the Annual Meeting, the
Company also will grant a fully vested nonqualified stock option to purchase
5,000 shares of Common Stock to each nonemployee director immediately
following each annual meeting of shareholders.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
During 1998, there were five meetings of the Board of Directors. Each
director attended at least 75% of the meetings of the Board of Directors and
of each committee of which he or she was a member.
The Board of Directors has established an Audit Committee and a Compensation
Committee. The Audit Committee reviews the functions of the Company's
management and independent auditors pertaining to the Company's consolidated
financial statements and will perform such other related duties and functions
as are deemed appropriate by the Audit Committee and the Board of Directors.
The members of this committee are Arthur W. Harrigan, Jr. and Peter B. Madoff.
The Audit Committee met once in fiscal 1998. The Compensation Committee
determines officer and director compensation and administers the Company's
compensation plans. The members of the Compensation Committee are Kirby L.
Cramer and Gregory B. Maffei. The Compensation Committee did not meet in 1998,
but did act by unanimous written consent.
3
<PAGE>
BENEFICIAL OWNERSHIP OF SHARES
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of December 7, 1998 by (i) each person or
entity known by the Company to beneficially own more than 5% of the Common
Stock, (ii) each director of the Company, (iii) each officer of the Company for
whom compensation information is given in the Summary Compensation Table in
this Proxy Statement, and (iv) all directors and executive officers as a group.
Except as otherwise indicated, the Company believes that the beneficial owners
of the Common Stock listed below, based on information furnished by such
owners, have sole voting and investment power with respect to such shares.
<TABLE>
<CAPTION>
NUMBER OF
SHARES PERCENTAGE
BENEFICIALLY OF SHARES
NAME AND ADDRESS OWNED OUTSTANDING
---------------- ------------ -----------
<S> <C> <C>
John L. MacKenzie ................................... 977,625 7.3%
c/o Ragen MacKenzie Group Incorporated
999 Third Avenue, Suite 4300
Seattle, WA 98104
Lesa A. Sroufe....................................... 262,500 2.0
Robert J. Mortell, Jr................................ 441,776 3.3
Mark A. McClure...................................... 121,100 *
V. Lawrence Bensussen................................ 105,000(1) *
Stanley G. Freimuth.................................. 554,675 4.2
Kirby L. Cramer...................................... 0 *
Arthur W. Harrigan, Jr............................... 2,000 *
Peter B. Madoff...................................... 0 *
Gregory B. Maffei.................................... 0 *
All Directors and Executive Officers
as a group (9 persons).............................. 1,910,001 14.4
</TABLE>
- --------
* Less than 1%
(1) Includes 2,138 shares held in UGMA accounts by Mr. Bensussen's children.
Mr. Bensussen is the custodian of these accounts.
4
<PAGE>
EXECUTIVE COMPENSATION
COMPENSATION SUMMARY
The following table sets forth certain information with respect to
compensation paid by the Company (including its predecessor, RMI) for the
fiscal year ended September 25, 1998 and by RMI for the fiscal-year ended
September 26, 1997 to (i) the Chief Executive Officer, (ii) the other three
most highly compensated executive officers of the Company during fiscal 1998,
and (iii) Stanley G. Freimuth, who served as Chief Executive Officer of RMI
for a portion of fiscal 1998 (collectively, the "Named Executive Officers").
No other employee of the Company who held office at September 25, 1998 met the
definition of "executive officer" within the meaning of the executive
compensation rules of the Securities and Exchange Commission (the "SEC").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------------ ------------
OTHER ANNUAL SECURITIES ALL OTHER
NAME AND FISCAL SALARY BONUS COMMISSIONS COMPENSATION UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR ($)(1) ($)(1) ($)(1) ($)(2) OPTIONS (#) ($) (3)
------------------ ------ -------- -------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Lesa A. Sroufe, ........ 1998 $297,670 $150,000 -- $14,025 -- $ 900
Chief Executive Officer 1997 $263,876 $364,000 35,000 $ 882
Robert J. Mortell, Jr... 1998 $397,670 $100,000 -- -- -- $ 900
President, Chief 1997 $397,875 $328,000 -- -- -- $ 900
Operating Officer and
Treasurer
Mark A. McClure......... 1998 $ 97,670 $150,000 $196,159 $ 4,797 -- $20,875
Executive Vice 1997 $147,875 $280,000 $214,691 8,750 $ 4,058
President
V. Lawrence Bensussen... 1998 $122,930 $145,000 -- $ 5,409 35,000 $ 639
Senior Vice President, 1997 $123,475 $120,000 -- -- $ 499
Chief Financial Officer
and Secretary
Stanley G. Freimuth..... 1998 $ 0 $436,606 $636,026 $15,346 -- $22,312
1997 $ 9,000 $888,670 $979,406 -- $ 3,579
</TABLE>
- --------
(1) The following amounts were voluntarily deferred in 1998 pursuant to the
Company's Deferred Compensation Plan (the "Deferred Compensation Plan"):
Ms. Sroufe, $56,100; Mr. McClure, $19,186; Mr. Bensussen, $30,910; and Mr.
Freimuth, $61,383. Such amounts are included in "Salary," "Bonus," and
"Commissions" as applicable. The Deferred Compensation Plan is described
in footnote 2 below.
(2) Under the Deferred Compensation Plan, amounts deferred are allocated to
accounts that are credited with future gains and losses, as if actually
invested in either Common Stock or short-term U.S. Treasury securities.
Amounts deferred are allocated to these accounts at a discount ranging
from 15% to 25% from the average trading price of the Common Stock or
short-term U.S. Treasury securities during the five trading days preceding
the allocation date. The following discount rates were provided under the
Deferred Compensation Plan: Ms. Sroufe, 25%; Mr. McClure, 25%; Mr.
Bensussen, 17.5%; and Mr. Freimuth, 25%. The amounts shown as "Other
Annual Compensation" reflect the dollar value of such discounts. The
Company's executive officers and employees whose compensation exceeded or
equaled $100,000 in the prior year, or is expected to equal or exceed
$100,000 in the then-current year are eligible to participate in the
Deferred Compensation Plan. Eligible employees are permitted to defer a
portion of their compensation (ranging from 15% of compensation for
employees who earn at least $100,000, up to 25% of compensation for
employees who earn at least $500,000). Eligible employees make an
irrevocable election to have a specified percentage of compensation
deferred during six month periods beginning on each January 1 and July 1,
and to have such amounts allocated at the end of the six-month period to
accounts that are credited with future gains and losses, as if actually
invested as of the end of the deferral period in either Common Stock or
short-term U.S. Treasury securities. The amounts deferred vest two years
following the date they are allocated to an investment account. Amounts
allocated to the stock equivalent account are settled in shares of Common
Stock. Other deferred amounts are settled in cash.
5
<PAGE>
(3) Represents premiums paid by the Company and RMI for life insurance for the
benefit of the Named Executive Officers. The amounts shown for Mr. McClure
and Mr. Freimuth also include $19,975 and $21,412, respectively, for
fiscal year 1998, and $3,210 and $2,675, respectively, for fiscal year
1997, in cash payments made upon the exercise of stock options in amounts
equal to the difference between the exercise price and a price
contractually agreed upon by the Company and the Named Executive Officer.
Option Grants in Fiscal 1998
The following table sets forth information regarding stock options granted
to the Named Executive Officers during the fiscal year ended September 25,
1998.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
NUMBER OF PERCENT OF STOCK PRICE
SECURITIES TOTAL OPTIONS EXERCISE APPRECIATION FOR
UNDERLYING GRANTED TO PRICE OPTION TERM(2)
OPTIONS GRANTED EMPLOYEES IN ($/SHARE) EXPIRATION --------------------
NAME (#) FISCAL YEAR (1) DATE 5% ($) 10% ($)
---- --------------- ------------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Lesa A. Sroufe.......... -- -- -- -- -- --
Robert J. Mortell, Jr... -- -- -- -- -- --
Mark A. McClure......... -- -- -- -- -- --
V. Lawrence Bensussen... 35,000 4.69% $14.125 10/21/01 $ 87,300 $ 185,300
Stanley G. Freimuth..... -- -- -- -- -- --
</TABLE>
- --------
(1) All options were granted at fair market value on the date of grant.
(2) The assumed rates of growth are prescribed by the SEC for illustrative
purposes only and are not intended to forecast or predict future stock
prices.
Option Exercises in Fiscal 1998 and Fiscal Year-End Option Values
The following table sets forth information regarding option exercises by the
Named Executive Officers during the fiscal year ended September 25, 1998 and
their options outstanding at fiscal year-end.
AGGREGATED OPTION EXERCISES IN FISCAL 1998 AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
ACQUIRED OPTIONS AT IN-THE-MONEY OPTIONS AT
ON VALUE FISCAL YEAR-END (#) FISCAL YEAR-END ($)(1)
EXERCISE REALIZED ------------------------- -------------------------
NAME (#) ($)(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Lesa A. Sroufe.......... 7,000 $22,510 0 0 0 0
17,500 $57,675
35,000 $66,850
Robert J. Mortell, Jr... 0 0 0 0 0 0
Mark A. McClure......... 28,000 $92,280 0 0 0 0
8,750 $16,713
V. Lawrence Bensussen... 7,000 $23,070 0 35,000 0 0
Stanley G. Freimuth..... 17,500 $56,275 0 0 0 0
14,000 $46,140
1,925 $ 6,344
</TABLE>
- --------
(1) Amounts equal the closing price of the Common Stock on September 25, 1998
($10.3125 per share), less the option exercise price, multiplied by the
number of shares exercisable or unexercisable.
(2) "Value Realized" represents the fair value of the underlying securities on
the exercise date minus the exercise price of such options.
6
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following report on executive compensation is submitted by the
Compensation Committee of the Board of Directors, which was formed in June
1998 at the time of the Company's June 23, 1998 initial public offering (the
"IPO"). The members of the Compensation Committee are Kirby L. Cramer and
Gregory B. Maffei, neither of whom is a current officer of the Company or its
affiliates. The Compensation Committee did not meet during the fiscal year
ended September 25, 1998, but did act by written consent. The Compensation
Committee is responsible, among other things, for establishing and
implementing the Company's compensation program for its executive officers.
OVERVIEW
For the 1997 and 1998 fiscal years, the principal components of the
Company's executive compensation program were (1) base salary, (2) an annual
incentive compensation program, and (3) a long-term incentive compensation
program. With the exception of the fiscal 1998 performance bonuses, the
compensation paid to the Named Executive Officers in the 1997 and 1998 fiscal
years was established by the Company's Chief Executive Officer prior to the
formation of the Compensation Committee. For the 1998 fiscal year, performance
bonuses earned by certain of the Named Executive Officers were approved by the
Board of Directors and paid in October 1998, based on the recommendations of
the Chief Executive Officer to the Compensation Committee, which reviewed the
bonuses in early October.
Since the IPO, the Compensation Committee has reviewed the Company's
compensation programs, including the compensation of the Company's executive
officers. The Compensation Committee has preliminarily concluded that
substantial changes should be implemented to achieve the Company's objective
of providing an attractive, competitive compensation structure that increases
shareholder value. To this end, the Compensation Committee has determined that
a greater portion of the compensation paid to each executive should be
comprised of equity incentives and other incentive-based compensation. The
incentive-based compensation would be directly linked to established goals for
individual and Company performance. The Compensation Committee believes that
this change will promote shareholder value by tying financial rewards directly
to objective measures of performance, as well as the value of the Company's
Common Stock.
Compensation of the Company's Chief Executive Officer has been and will
continue to be based on the same general criteria applicable to the Company's
other executive officers. With respect to any individual executive, the
Compensation Committee intends to structure compensation in a manner that
takes into consideration the executive's level of responsibility and
individual performance, as well as the Company's overall performance. The
Compensation Committee also intends to consider each executive's contribution
to the Company's long-term success.
OBJECTIVES
The Compensation Committee's objective is to establish a compensation program
that supports the following goals:
. Attracting and retaining dedicated, qualified and experienced executives
by providing a compensation package that is competitive with those
offered by other financial services firms;
. Motivating executive officers to improve the Company's strategic and
financial performance by tying compensation directly to performance in
these areas; and
. Promoting shareholder value by providing incentives that are directly
linked to Company performance and the value of the Company's Common
Stock.
7
<PAGE>
COMPONENTS OF FISCAL 1998 COMPENSATION
Base Salary
Members of the Company's executive committee, consisting of Lesa A. Sroufe,
Robert J. Mortell, Jr. and Mark A. McClure, are compensated for their
management service from a base salary compensation pool, which historically
has been administered by the Chief Executive Officer, but is now administered
by the Compensation Committee. The base salary pool provides a fixed amount of
total base salary compensation for the eligible group of executive officers,
which is then divided among the members of the eligible group based on
objective and subjective criteria. In the fiscal year ended September 25,
1998, base salaries for the members of the Company's executive committee
totaled $800,000. In fiscal 1998, Mr. Freimuth, who served on the executive
committee for only a portion of the year, did not receive a base salary; Mr.
Freimuth earned commissions from his management of client accounts and
separate compensation for his management of the Company's Bellevue, Washington
office. Mr. McClure earned commissions from his management of client accounts
in addition to his base salary. Mr. Bensussen's base salary was established
separately by Ms. Sroufe.
The Compensation Committee has determined that each executive officer's base
salary should be reduced in future fiscal years and that base salaries should
comprise a smaller portion of each executive's total compensation.
Annual Incentive Compensation
Members of the Company's executive committee also are entitled to
participate in the Company's executive performance bonus plan (the "Bonus
Plan"). The Bonus Plan provides for a bonus pool from which awards may be paid
to executive committee members. The maximum amount to be included in the award
pool for any year will equal a percentage of adjusted pretax net income of the
Company for the year, before providing for incentive compensation and
extraordinary items ("Pool Income"). In fiscal 1998, per the formula
established in 1997, the maximum award pool available to executives consisted
of 10% of Pool Income, if any, from $8,000,000 to $10,000,000; 9% of Pool
Income, if any, from $10,000,000 to $20,000,000; 8% of Pool Income, if any,
from $20,000,000 to $30,000,000; and 7% of Pool Income, if any, in excess of
$30,000,000. At the conclusion of the fiscal year, the award pool is allocated
among the executive committee members. In no event is the percentage of the
award pool allocated to any participant to exceed 50% of the award pool.
For the 1998 fiscal year, the Chief Executive Officer made recommendations
to the Compensation Committee and the Board regarding bonuses, and in October
1998 the Board approved and paid bonuses earned during the 1998 fiscal year
per Ms. Sroufe's recommendations. The bonuses actually paid for the 1998
fiscal year pursuant to the Bonus Plan were lower than the amounts available
in the pool, and the pool was further reduced to adjust for the departure of
Mr. Freimuth as an executive committee member in February 1998. Awards made
under the Bonus Plan for the 1997 and 1998 fiscal years are reflected in the
Summary Compensation Table. Mr. Bensussen's 1998 cash bonus was determined
separately by Ms. Sroufe.
In the future, the Compensation Committee intends to establish criteria that
it deems appropriate for awards under the Bonus Plan, which may or may not be
tied to pretax operating income of the Company.
Long-Term Incentive Compensation
1998 Stock Incentive Compensation Plan. Although the Company has not
routinely used stock option and other equity-based awards to compensate the
Company's executive officers, the Compensation Committee intends in the future
to implement an award program as part of each executive officer's compensation
package. The Compensation Committee believes that, when combined with awards
under the Bonus Plan, these equity-based incentives will motivate executive
officers to attain the highest levels of performance by providing for
financial rewards through appreciation of the Company's Common Stock.
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The Company's 1998 Stock Incentive Compensation Plan (the "1998 Plan")
permits the Compensation Committee to make awards of stock options and
restricted stock to its executive officers and selected employees. The
Compensation Committee has the discretion to establish the vesting schedule
and exercise price associated with any award under the 1998 Plan, although
grants typically have a two- or three-year vesting schedule, and options
typically have an exercise price equal to the fair market value of the
Company's Common Stock on the date of grant. The Compensation Committee
believes that because the value of equity-based awards under the 1998 Plan is
dependent upon the increase in market value of the Company's Common Stock,
awards under the 1998 Plan can provide a long-term incentive for executive
officers to remain with the Company and to strive to enhance shareholder value
by increasing the market value of the Company's Common Stock.
Deferred Compensation Plan. The Company has adopted the Deferred
Compensation Plan for the Company's executive officers and employees whose
compensation (including salary, bonus and commissions) equaled or exceeded
$100,000 in the prior year, or is expected to equal or exceed $100,000 in the
then-current year. Eligible employees are permitted to defer a portion of
their compensation (ranging from 15% of compensation for employees who earn at
least $100,000 to 25% of compensation for employees who earn at least
$500,000). Eligible employees can make an irrevocable election to have a
specified percentage of compensation deferred during six-month periods
beginning on each January 1 and July 1, and to have such amounts allocated at
the end of the six-month deferral period to accounts that will be credited
with future gains and losses as if actually invested as of the end of the
deferral period in either the Company's Common Stock or short-term U.S.
Treasury securities. The amounts deferred are allocated to the chosen
"investment account" at a discount that ranges from 15% to 25% from the
average trading price of the Company's Common Stock or short-term U.S.
Treasury securities, as the case may be, during the five trading days
preceding the allocation date. The amounts deferred vest two years following
the date they are allocated to the chosen investment account. Amounts
allocated to stock equivalent accounts are settled in shares of the Company's
Common Stock. Other deferred amounts are settled in cash.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The compensation of the Company's Chief Executive Officer historically has
been established according to the same criteria applicable to all executive
officers. The Compensation Committee believes that this will continue to be
the case in future periods. As with other executive officers, the Company has
considered and will continue to consider the Chief Executive Officer's
individual performance and level of responsibility in addition to overall
company performance. The Compensation Committee believes that the overall
compensation of the Company's Chief Executive Officer has been appropriate in
light of individual and Company performance and the compensation paid to chief
executive officers of comparable companies.
FUTURE EXECUTIVE COMPENSATION STRUCTURE
Except for the reduction in the base salaries, the Compensation Committee
has not yet made specific determinations with respect to the compensation
package for the Company's executive officers for the 1999 fiscal year.
Although the Compensation Committee plans to ensure that a greater portion of
each officer's compensation is comprised of equity and cash bonus incentives,
it has not established the actual amounts of incentive-based compensation that
each executive may be eligible to receive.
When making executive compensation decisions for the 1999 fiscal year, the
Compensation Committee intends to evaluate information regarding compensation
paid to similarly situated executive officers of comparable firms, including
survey information regarding compensation of executives of certain firms that
are members of the peer group referenced in the Stock Performance Graph. In
addition, the Compensation Committee may seek advice from independent
compensation consultants as to alternatives that will promote the Company's
business and compensation objectives.
9
<PAGE>
Section 162(m) of the Internal Revenue Code of 1986, as amended, includes
potential limitations on the deductibility for federal income tax purposes of
compensation in excess of $1 million paid or accrued with respect to any of the
Company's Named Executive Officers. Qualifying performance-based compensation
is not subject to the deduction limit if certain requirements are met. The
Compensation Committee does not anticipate there will be any such nondeductible
compensation in the foreseeable future.
THE COMPENSATION COMMITTEE
Kirby L. Cramer
Gregory B. Maffei
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STOCK PRICE PERFORMANCE GRAPH
The graph set forth below compares the cumulative total return on the
Company's Common Stock with the cumulative total return of a sub-index of the
Media General Industry Group Index of Regional Investment Brokerage Firms,
which is comprised of twelve publicly traded regional investment brokerage
firms selected by, and including, the Company (the "Peer Group Index"), and the
Standard & Poor's 500 Index for the period beginning on the date of the
Company's IPO on June 23, 1998 and ending on September 25, 1998. The graph
assumes an initial investment of $100 in each and assumes the reinvestment of
any dividends. Stock price performance shown in the Performance Graph for the
Common Stock is historical and not necessarily indicative of future price
performance.
<TABLE>
<CAPTION>
Measurement Period RAGEN PEER GROUP S&P 500
(Fiscal Year Covered) MACKENZIE INDEX GROUP
- ------------------- ---------- --------- ----------
<S> <C> <C> <C>
Measurement Pt- 6/23/1998 $100.00 $100.00 $100.00
6/30/1998 $107.08 $102.27 $100.00
7/31/1998 $ 92.04 $ 96.58 $ 98.94
8/31/1998 $ 70.80 $ 67.01 $ 84.63
9/25/1998 $ 73.01 $ 75.08 $ 90.05
</TABLE>
11
<PAGE>
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL
ARRANGEMENTS
EMPLOYMENT CONTRACTS
Mark A. McClure, the Company's Executive Vice President, is employed by RMI
pursuant to an employment agreement, dated June 16, 1994, as amended by an
addendum dated June 3, 1997 (the "McClure Agreement"). Under the McClure
Agreement, which is effective until his employment is terminated, Mr. McClure
is compensated on a commission basis for his activities as a broker. In
addition, Mr. McClure is obligated to commit 75% to 80% of his time to
management efforts at RMI, for which he is to be compensated with a base
salary of $100,000 per year. The McClure Agreement provides that RMI may
terminate Mr. McClure's employment for "cause," as defined in the McClure
Agreement.
CHANGE-IN-CONTROL ARRANGEMENTS UNDER OPTION PLANS
The vesting of stock options, stock appreciation rights and restricted stock
awards outstanding or granted in the future under the Company's 1998 Stock
Incentive Compensation Plan, RMI's 1996 Stock Option Plan, RMI's 1993 Stock
Option Plan and RMI's 1989 Stock Option Plan and deferred compensation under
the Deferred Compensation Plan may accelerate upon the occurence of certain
corporate transactions, including (i) a merger or consolidation of the Company
in which it is not the surviving corporation or pursuant to which shares of
Common Stock are converted into cash, securities or other property (other than
a merger or consolidation in which holders of the Company's outstanding
securities immediately before such transaction own at least two-thirds of the
outstanding voting securities of the capital stock of the surviving
corporation following such transaction), (ii) a sale, lease, exchange or other
transfer of all or substantially all of the Company's assets (other than a
transfer to a majority-owned subsidiary), (iii) the Company's liquidation or
dissolution, or (iv) the acquisition by a person, within the meaning of
Section 3(a)(9) or Section 13(d)(3) of the Securities Exchange Act of 1934, of
a majority of the Company's outstanding voting securities.
CERTAIN TRANSACTIONS
Brooks G. Ragen, a founder of RMI's predecessor, RMI's former Chairman and
Chief Executive Officer and a large shareholder of the Company, has entered
into a 36-month agreement that commenced upon effectiveness of the IPO
pursuant to which he intends to establish and be employed by a newly formed
company that will serve as a correspondent of RMI. A correspondent is an
independent broker-dealer that contracts with RMI to clear and execute
securities transactions on behalf of the correspondent's customers on a fully
disclosed basis, and to maintain possession or control of all account assets
of the correspondent's customers. Mr. Ragen will leave the employ of the
Company on December 31, 1998. The Company believes that in connection with Mr.
Ragen's departure, Mr. Ragen or his new company intends to hire in addition to
Mr. Ragen seven current or former employees of RMI, one of whom is a
registered broker. Mr. Ragen and his current client service team's production
accounted for approximately $2.9 million (2.9%) and $2.8 million (3.2%) of
RMI's total revenues in the fiscal years 1998 and 1997, respectively, and it
is estimated that Mr. Ragen's activities accounted for a similar percentage of
net income during those periods.
Teresa A. James, John L. MacKenzie's daughter, has been employed by the
Company since August 1992. For fiscal 1998, Teresa A. James received
compensation of $111,659. William R. Mortell, Robert J. Mortell, Jr.'s son,
has been employed by the Company since February 1994. For fiscal 1998, William
R. Mortell received compensation of $77,500. Cameron B. Ragen, Brooks Ragen's
son, has been employed by the Company since September 1994. For fiscal 1998,
Cameron Ragen received compensation of $147,751. The Company believes that the
terms of their employment were at least as favorable to the Company as would
have been obtained in arm's-length dealings with unrelated third parties.
12
<PAGE>
Peter B. Madoff is Senior Managing Director of Bernard L. Madoff Investment
Securities ("BMIS"), which is one of several third-party firms that execute
orders to purchase or sell securities at the request of the Company. Payments
to the Company by BMIS in connection with such services were $268,000 for
fiscal 1998.
Arthur W. Harrigan, Jr. is a partner of the law firm Danielson Harrigan &
Tollefson LLP, which the Company retained in fiscal 1998 in connection with
certain matters relating to its reorganization and IPO.
Robert J. Mortell, Jr. participated in the Company's 1997 Share Repurchase
Plan, pursuant to which RMI redeemed from Mr. Mortell 8,800 shares of common
stock of RMI on April 14, 1997 for $50,336 (the book value of the shares as of
the end of the Company's fiscal quarter preceding redemption). Under the 1997
Share Repurchase Plan, Mr. Mortell received a cash payment in fiscal 1998, in
the amount of $64,240, representing the difference between the book value of
his RMI shares at the time of redemption and the initial public offering price
of the Common Stock. The cash payment was made in settlement pursuant to the
terms of the 1997 Share Repurchase Plan of a previously issued stock
appreciation right relating to Mr. Mortell's RMI shares.
The Company, in the ordinary course of its business, extends credit to
margin accounts in which certain of its officers and directors may have an
interest. These extensions of credit have been made on substantially the same
terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with nonaffiliated persons, and do not
involve more than a normal risk of collectibility or present other unfavorable
terms. From time to time and in the ordinary course of its business, the
Company also enters into transactions involving the purchase or sale of
securities as principal from, or to, directors, officers and employees and
accounts in which they have an interest. Such purchases and sales are effected
on substantially the same terms as similar transactions with unaffiliated
third parties.
During fiscal 1998, John L. MacKenzie's aggregate compensation from the
Company was $429,520. During fiscal 1998, Brooks G. Ragen's aggregate
compensation from the Company was $635,327.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, and persons who own more than
10% of a registered class of the Company's securities, to file with the SEC
initial reports of ownership and reports of changes in ownership of Common
Stock and other equity securities of the Company. Officers, directors and
greater-than-10% shareholders are required by SEC regulation to furnish the
Company with copies of all Section 16(a) forms they file.
One report required to be filed by V. Lawrence Bensussen was inadvertently
filed two days late, and another report required to be filed by Gregory B.
Maffei was inadvertently filed one day late. To the Company's knowledge, based
solely on a review of the copies of such reports furnished to the Company and
written representations that no other reports were required, the Company
believes that, during the fiscal year ended September 25, 1998, all other
officers, directors and greater-than-10% shareholders complied with all
Section 16(a) filing requirements.
AUDITORS
The Company has selected Deloitte & Touche LLP to continue as its
independent public accountants for the fiscal year ending September 24, 1999.
Representatives of Deloitte & Touche LLP are expected to attend the Annual
Meeting and will have an opportunity to make a statement or to respond to
appropriate questions from shareholders.
13
<PAGE>
EXPENSES OF SOLICITATION
The accompanying proxy is solicited by and on behalf of the Board of
Directors, and the entire cost of such solicitation will be borne by the
Company. Solicitation may be by personal interview, telephone, telegram,
facsimile transmission or messenger by directors, officers and other employees
of the Company without special compensation. The Company will reimburse
persons holding shares of Common Stock in their names or in names of nominees,
but not owning such shares beneficially, such as banks, brokerage houses and
other custodians, nominees and fiduciaries, for their reasonable expenses in
forwarding solicitation materials.
OTHER MATTERS
The Company knows of no other matters that are likely to be brought before
the Annual Meeting. If, however, other matters properly come before the Annual
Meeting, the persons named as proxies in the enclosed proxy card or their
substitutes will vote such proxy in accordance with their discretion with
respect to such matters.
PROPOSALS OF SHAREHOLDERS
Proposals of shareholders to be considered for inclusion in the Proxy
Statement and proxy card for the 2000 Annual Meeting of Shareholders must be
received by the Secretary of the Company by August 19, 1999.
In addition, the Company's Bylaws include advance notice provisions that
require shareholders desiring to bring nominations or other business before an
annual shareholder meeting to do so in accordance with the terms of the
advance notice provisions. These advance notice provisions require that, among
other things, shareholders give timely written notice to the Secretary of the
Company regarding such nominations or other business. To be timely, a notice
must be delivered to the Secretary at the principal executive offices of the
Company no more than 90 days and no less than 60 days prior to the anniversary
of the previous year's annual meeting.
Accordingly, a shareholder who intends to present a proposal at the 2000
Annual Meeting without inclusion of the proposal in the Company's proxy
materials must provide written notice of the nominations or other business
they wish to propose to the Secretary no earlier than October 30, 1999 and no
later than November 29, 1999. The Company reserves the right to reject, rule
out of order, or take other appropriate action with respect to any proposal
that does not comply with these and other applicable requirements.
ANNUAL REPORT ON FORM 10-K
A copy of the Company's combined Annual Report to Shareholders and Annual
Report on Form 10-K for the fiscal year ended September 25, 1998 accompanies
this Proxy Statement. An additional copy will be furnished without charge to
beneficial shareholders or shareholders of record upon request to Naomi A.
Reed, Ragen MacKenzie Group Incorporated, 999 Third Avenue, Suite 4300,
Seattle, Washington 98104.
14
<PAGE>
Please mark [X]
your vote
as indicated
in this
example
FOR all nominees WITHHOLD AUTHORITY
except as modified to to vote for all
the contrary below. nominees listed below.
1. Election of Directors: [_] [_]
(INSTRUCTIONS: To withhold authority to vote for any individual strike a line
through the nominee's name below.)
The Board of Directors recommends a vote for the election of the following
directors:
Class I: Class II:
Kirby L. Cramer Arthur W. Harrigan, Jr.
Peter B. Madoff Gregory B. Maffei
John L. MacKenzie Mark A. McClure
Robert J. Mortell, Jr. Lesa A. Sroufe
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE SHAREHOLDER
IN THE SPACE PROVIDED. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR
THE ELECTION OF THE NOMINEES OF THE BOARD OF DIRECTORS.
Signature(s) ______________________________________________ Date _______________
Please sign exactly as your name appears hereon. Attorneys, trustees, executors
and other fiduciaries acting in a representative capacity should sign and give
their titles. An authorized person should sign on behalf of corporations,
partnerships, associations, etc. and give his or her title. If your shares are
held by two or more persons, each person must sign. Receipt of the notice of
mailing and the proxy statement is hereby acknowledged.
<PAGE>
PROXY
RAGEN MACKENZIE GROUP INCORPORATED
This Proxy is solicited by the Board of Directors for the Annual Meeting of
Shareholders - January 28, 1999
The undersigned hereby appoint(s) Lesa A. Sroufe and V. Lawrence Bensussen
and each of them as proxies with full power of substitution, to represent and
vote as designated all shares of Common Stock of Ragen MacKenzie Group
Incorporated held by record by the undersigned on December 11, 1998 at the
annual meeting of shareholders of Ragen MacKenzie Group Incorporated to be held
at Benaroya Hall, 200 University Street, Seattle, Washington, at 1:30 p.m.,
local time, on Thursday, January 28,1999, with authority to vote upon the matter
listed below and with discretionary authority as to any other matters that may
properly come before the meeting or any adjournment or postponement thereof.
IMPORTANT - PLEASE DATE AND SIGN ON THE OTHER SIDE
