To Our Shareholders:
I am pleased to invite you to attend the Annual Meeting of Shareholders of
The Ziegler Companies, Inc. to be held on Monday, April 20, 1998 at 10:00
a.m. at the West Bend Inn in West Bend, Wisconsin.
The agenda for this year's meeting includes a proposal for the adoption of
an equity incentive plan for executives and key employees of the Company,
which your Board of Directors considers especially important to increasing
the future profitability of your Company. The Proxy Statement describes the
proposal in detail.
Whether or not you attend the Annual Meeting, I hope that you read this
Proxy Statement carefully, and vote as soon as possible. This will help
save your Company the expense of follow-up letters to shareholders who have
not responded. Your vote as a shareholder is important, regardless of the
number of shares held.
Sincerely,
Peter D. Ziegler
Chairman, President & CEO
<PAGE>
THE ZIEGLER COMPANIES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Monday, April 20, 1998
TO THE SHAREHOLDERS OF THE ZIEGLER COMPANIES, INC.:
The annual meeting of shareholders of The Ziegler Companies, Inc., will be
held on Monday, April 20, 1998 at 10:00 A.M. (Central Daylight Time) at the
West Bend Inn, 2520 West Washington Street, West Bend, Wisconsin.
1. To elect three directors for a term of three years, and a
fourth director to fill the remaining term of a retiring
director;
2. To approve a new equity-based incentive compensation
program for key employees of the Company;
3. To vote on a proposal to ratify the retention of Arthur
Andersen LLP as auditors for 1998; and
4. To transact any other business which may properly come
before the meeting, or any adjournments thereof.
Shareholders of record at the close of business on March 6, 1998 will be
entitled to vote at the meeting and any adjournments thereof. If you plan
to attend the meeting in person, and you are a shareholder whose shares are
not registered in your own name, please bring to the meeting either (i) the
original of the voting form sent to you by your broker with this Notice of
Annual Meeting and Proxy Statement, or (ii) other written evidence of your
beneficial ownership of shares on the record date, signed by a
representative of the record owner.
A PROXY AND PROXY STATEMENT ARE ENCLOSED. YOUR VOTE
IS IMPORTANT. TO ASSURE YOUR REPRESENTATION AT THIS
MEETING, PLEASE FILL IN THE ENCLOSED PROXY, WHICH IS
SOLICITED BY THE BOARD OF DIRECTORS, SIGN EXACTLY AS
YOUR NAME APPEARS AND RETURN PROMPTLY. SHAREHOLDERS
WHO EXECUTE PROXIES RETAIN THE RIGHT TO REVOKE THEM
AT ANY TIME BEFORE THEY ARE VOTED.
By Order of the Board of Directors,
/s/ Janine R. Yovanovich
Janine R. Yovanovich
Corporate Secretary
March 25, 1998
215 North Main Street
West Bend, Wisconsin 53095
<PAGE>
<PAGE>
THE ZIEGLER COMPANIES, INC.
215 North Main Street
West Bend, Wisconsin 53095
March 25, 1998
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS, MONDAY, APRIL 20, 1998
This proxy statement is being solicited on behalf of the Board of Directors
of The Ziegler Companies, Inc. (the "Company") on March 25, 1998, for use at
the annual meeting of the shareholders to be held at the West Bend Inn, 2520
West Washington Street, West Bend, Wisconsin, at 10:00 A.M., (Central
Daylight Time) on Monday, April 20, 1998, and at any adjournments of the
meeting.
Each share of the Company's Common Stock ("Common Stock") outstanding on the
record date is entitled to one vote. Any person giving a proxy in the form
accompanying this Proxy Statement may revoke it at any time before its
exercise. The proxy may be revoked by filing a written statement of
revocation with the transfer agent, Firstar Trust Company, or by attendance
at the annual meeting and election to vote in person.
A majority of the votes entitled to be cast by shares entitled to vote,
represented in person or by proxy, constitutes a quorum for action on a
matter at the Meeting. Directors are elected by a plurality of the votes
cast by the holders of shares entitled to vote in the election at a meeting
at which a quorum is present. A "plurality" means that the individuals who
receive the largest number of votes are elected as directors up to the
maximum number of directors to be elected at the meeting. Shares for which
authority is withheld to vote for director nominees and broker non-votes
(i.e., proxies from brokers or nominees indicating that such persons have
not received instructions from the beneficial owners or other persons
entitled to vote shares as to a matter with respect to which the brokers or
nominees do not have discretionary power to vote) are considered present for
purposes of establishing a quorum but will have no effect on the election of
directors except to the extent that the failure to vote for a director
nominee results in another nominee receiving a larger number of votes.
Votes attempted to be cast against a candidate are not given legal effect
and are not counted as votes cast in an election of directors.
If a quorum exists, the affirmative vote of the holders of a majority of the
shares cast at the Meeting, in person or by proxy, will be required for
approval of The Ziegler Companies, Inc. 1998 Stock Incentive Plan (the "1998
Plan"), provided that the total vote cast on the 1998 Plan represents over
50% of the shares entitled to vote thereon. Because abstentions and broker
non-votes are not considered to be votes cast, neither will have an effect
on the vote so long as enough votes are cast to satisfy the 50% requirement
set forth above.
The Company will bear the entire cost of preparing, printing and mailing
this Proxy Statement and accompanying proxy. Copies of solicitation
material will be furnished to brokerage firms, fiduciaries and custodians to
forward to beneficial owners of the common stock held in the names of such
nominees.
Only shareholders of record on March 6, 1998 are entitled to vote at the
meeting. As of that date, the Company's issued and outstanding voting
securities consisted of 2,425,183 shares of Common Stock, each having one
vote per share.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table indicates the persons who, as of March 6, 1998, were
known by the Company to be the beneficial owners of more than 5% of any
class of the Company's voting securities. The following information is
based on reports on Schedule 13D, as amended, filed with the Securities and
Exchange Commission or other reliable information. To the best of the
Company's knowledge, all shareholdings represent shares actually owned, and
do not include shares which the designated person has the right to acquire.
<TABLE>
<CAPTION>
Amount and Nature
Title of Name and Address of Beneficial Percent
Class of Beneficial Owner Ownership of Class
<S> <C> <C> <C>
Common Stock Peter R. Kellogg (1) 400,600 16.51%
$1.00 Par Value 120 Broadway
New York, New York
New West Investors, 208,200 8.58%
L.P. (2)
800 West State Street
Doylestown, Pennsylvania
</TABLE>
(1) Mr. Peter R. Kellogg, Senior Managing Director, Spear, Leeds & Kellogg,
120 Broadway, New York, New York, beneficially owns an aggregate of
400,600 shares of the Company's Common Stock. Of those shares, 100,600
shares were owned by Mr. Kellogg personally, and 150,000 shares were
owned by I.A.T. Reinsurance Syndicate, Ltd. ("IAT"), a Bermuda
corporation of which Mr. Kellogg is the sole holder of voting stock. In
addition, Mr. Kellogg may be deemed to be the indirect beneficial owner
of 100,000 shares of Common Stock held by his wife, and 50,000 shares of
Common Stock held by the Peter R. and Cynthia K. Kellogg Foundation, by
virtue of his shared disposition and voting power. The aggregate number
of shares of Common Stock, with respect to which Mr. Kellogg may be
deemed to be the beneficial owner is 400,600 shares.
(2) Based on information filed by New West Investors, L.P. ("New West"), 800
West State Street, Suite 103, Doylestown, Pennsylvania, in Schedule 13D,
as amended through Amendment 3 filed February 5, 1998, with the
Securities and Exchange Commission. Mr. Gerald J. Gagner is the sole
general partner of New West with voting and dispositive control over the
securities held in New West's investment portfolio. Mr. Gagner may be
considered to beneficially own the shares of Common Stock of the Company
that are owned of record by New West. None of the limited partners of
New West has any voting or dispositive control over such securities.
According to Schedule 13D, as amended, filed by New West, the shares
were purchased for investment purposes only.
The following table sets forth information concerning the shares of equity
securities of the Company beneficially owned by (i) the executive officers
of the Company named in the Summary Compensation Table, (ii) each director
of the Company and each nominee for director of the Company and (iii) by the
directors and Named Officers of the Company as a group, all as of March 6,
1998. Except as indicated below, no person owns in excess of 1% of the
outstanding shares of any class of the Company's equity securities. Unless
otherwise noted, each person has sole voting and investment power with
respect to the number of shares indicated.
<TABLE>
<CAPTION>
Amount and Nature
Title of Name of of Beneficial Percent
Class Beneficial Owner Ownership (3)(4) of Class
<S> <C> <C> <C>
Common Stock Peter R. Kellogg (1) 400,600 16.51%
$1.00 Par Value Bernard C. Ziegler III (2) 37,806 1.55%
Peter D. Ziegler (2)(3) 33,430 1.37%
Patrick D. J. Kenny (2) 18,018
S. Charles O'Meara (3) 15,700
Donald A. Carlson, Jr. (3) 12,987
Geoffrey G. Maclay, Jr. (3) 10,000
John C. Wagner (3) 3,110
John R. Green 1,704
John C. Frueh 1,100
Frederick J. Wenzel 900
Stephen A. Roell 800
</TABLE>
All directors and
named executive officers as a group TOTAL 536,155
TOTAL PERCENT OF CLASS 22.10%
(1) Shares shown include an aggregate of 300,000 shares of Common Stock to
which such nominee and director disclaims beneficial ownership. Such
shares are beneficially owned in the amounts indicated: Mr. Kellogg
(300,000).
(2) Shares shown include an aggregate of 34,064 shares of Common Stock which
are held in trusts of which nominees and directors are trustees or in
custodian accounts for minors as to which directors serve as custodians,
in the amount indicated: Mr. Peter D. Ziegler (3,400) (custodian, sole
voting and investment power) and (8,650) (co-trustee, shared voting and
investment power); Mr. Kenny (822) (custodian, sole voting and
investment power) and (11,392) (co-trustee, shared voting and investment
power); and Mr. Bernard C. Ziegler III (7,350) (custodian, sole voting
and investment power) and (2,450) (co-trustee, shared voting and
investment power). These nominees and directors disclaim beneficial
ownership of these shares other than sole or shared voting and
investment power as indicated.
(3) Includes shares of Common Stock which, as of March 6, 1998, were subject
to outstanding stock options exercisable within 60 days as follows: Mr.
P. D. Ziegler, 9,260 shares; Mr. Carlson, 3,150 shares, Mr. O'Meara,
15,200 shares; Mr. Maclay, 10,000 shares; Mr. Wagner, 3,150 shares; and
stock options for all directors and Named Officers as a group, 40,760
shares.
(4) Except as otherwise indicated in the previous footnotes, all stock
ownership is direct.
ELECTION OF DIRECTORS
The Board of Directors consists of eight members, of whom two or three
members, as the case may be, are elected each year to serve for terms of
three years or until their successors are elected. Proxies may be voted for
the election of Messrs. P. D. Ziegler, F. J. Wenzel, and P. R. Kellogg for
terms expiring in 2001, and for the election of Donald A. Carlson, Jr. to a
term expiring in 1999. Mr. Carlson was nominated by the Board of Directors
to fill the vacancy created by Patrick D. J. Kenny's resignation, which will
be effective as of the day before the annual meeting.
Directors are elected by a plurality of the votes cast by the Company's
shareholders at a meeting at which a quorum is present. See page 2 of this
Proxy Statement for a fuller statement regarding the effect of shareholder
voting at the annual meeting. Under Wisconsin law, cumulative voting for
directors is permitted, but is not presently provided for in the Company's
Articles of Incorporation.
Biographical summaries of those nominees for director who presently sit on
the Board of Directors, as well as for the other incumbent directors, are
found on the following page. A biographical summary of Mr. Carlson follows
the information about incumbent board members.
<PAGE>
NOMINEES FOR ELECTION
Director of Company
Name, Age, Principal Occupation or a Subsidiary Thereof
and Public Directorships (1) Continuously Since
Class of 1998 (Nominees)
(Term will expire in 2001)
Peter D. Ziegler, Age 48 1986
President and Chief Executive Officer
of the Company; Director, West Bend
Mutual Insurance Company, West Bend,
Wisconsin; Director, Trustmark Insurance
Company, Lake Forest, Illinois
Frederick J. Wenzel, Age 67 (1) 1993
Professor of Medical Practice Management,
University of St. Thomas Graduate School of
Business, Minneapolis, Minnesota; Advisor to
the President, Marshfield Clinic, Marshfield,
Wisconsin, a multi-specialty medical clinic
Peter R. Kellogg, Age 55 1995
Senior Managing Director, Spear, Leeds & Kellogg,
a specialist firm on the New York Stock Exchange;
Director, Interstate/Johnson Lane, Inc.
Class of 1999 (Nominee)
(Term will expire in 1999)
Donald A. Carlson, Jr., Age 50 1998
President and Chief Executive Officer of
Ziegler Securities, the investment banking
division of B. C. Ziegler and Company
DIRECTORS CONTINUING IN OFFICE
Class of 1999
(Term will expire in 1999)
Stephen A. Roell, Age 48 1996
Vice President and Chief Financial Officer,
Johnson Controls, Inc., Milwaukee, Wisconsin
Bernard C. Ziegler III, Age 48 1993
President, Ziegler/Limbach, Inc.,
West Bend, Wisconsin, a business development
and management firm
Class of 2000
(Term will expire in 2000)
John C. Frueh, Age 63 1976
President, Aegis Group, Inc., Pittsburgh,
Pennsylvania, a firm specializing in
acquisition and management of manufacturing
and distributing companies
John R. Green, age 53 1994
Partner, Green Manning & Bunch, Denver,
Colorado, a private investment banking firm
(1) Each of the nominees and directors has been in his principal occupation
for the past five years or longer with the following exceptions:
Mr. Wenzel served as Executive Director of the Marshfield Clinic
from August 1976 to June 1993. Mr. Wenzel was Executive Vice
President and Chief Executive Officer of the Medical Group
Management Association in Englewood, Colorado from 1993 to 1996.
Mr. D. A. Carlson, Jr. will stand for election as a Director of the Company
to fill a partial term which will expire in 1999. Mr. Carlson has served in
the capacity of President and Chief Executive Officer of the Ziegler
Securities Division of B. C. Ziegler and Company since 1987. He has worked
in various capacities in sales, investment banking and management positions
at ZSD and its predecessor corporation since 1975.
Messrs. P. D. Ziegler and B. C. Ziegler III (who are first cousins) and
trusts or custodian accounts as to which either Mr. P. D. Ziegler or Mr. B.
C. Ziegler III serve as co-trustee or custodian own beneficially 2.93% of
the outstanding common stock of the Company.
EXECUTIVE COMPENSATION
The Summary Compensation Table on the following page discloses the
compensation for the past three years of the Company's Chief Executive
Officer and the four most highly compensated executive officers of the
Company other than the Chief Executive Officer who were serving as such
during 1997, and whose compensation exceeded $100,000 (the "Named
Officers").
The tables on the following pages provide information concerning the
granting and exercise of options during 1997 with respect to each of the
Named Officers, and the fiscal year-end value of unexercised options held by
each Named Officer.
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term Compensation
Annual Compensation Awards Payouts
Securities
Underlying
Options/ Long-
Stock Term
Other Apprecia- Incen- All
Name Annual Restricted tion tive Other
and Compensa- Stock Rights Plan Compensa-
Principal Salary Bonus tion Award (SAR's) Payouts tion
Position Year ($) ($) ($)(1) ($) (2) (#) (3) ($) (4) ($)(5)
<S> <C> <C> <S> <C> <C> <C> <S> <C>
P. D. Ziegler 1997 200,000 None 6,385 78,000 2,260 None 15,297
President and 1996 200,000 None 2,920 None None None 14,487
Chief Exec. Officer 1995 171,600 50,000 None None 2,120 None 15,206
D. A. Carlson, Jr. 1997 157,264 250,000 1,406 None 3,150 27,257 15,295
President, Chief Exec. 1996 151,215 100,000 None None None 29,437 14,470
Officer and Treasurer,
Ziegler Securities
Division
G. G. Maclay, Jr. 1997 115,000 33,200 None None None None 13,717
President and Chief 1996 108,955 8,200 None None 10,000 None 50,660
Executive Officer,
Ziegler Asset Manage-
ment, Inc.
S. C. O'Meara 1997 112,487 22,500 1,167 None 1,200 None 11,887
Sr. Vice President 1996 108,160 22,500 None None None None 11,519
and General Counsel 1995 104,000 22,500 None None 1,170 None 10,472
J. C. Wagner 1997 109,200 17,000 None None 1,150 None 11,803
Sr. Vice President- 1996 105,000 27,500 None None None None 11,107
Retail Sales 1995 100,000 20,000 None None 1,110 None 10,431
</TABLE>
(1) Value realized upon exercise of stock options.
(2) Mr. Ziegler received 4,000 shares of restricted stock in lieu of a cash
bonus for 1997. The restricted stock vests over a three year term. The
valuation of the shares is based on market values on the date of the
award. The aggregate restricted stock owned by the CEO and all Named
Officers consists of 8,669 shares owned by Donald A. Carlson, Jr.,
having a value on December 31, 1997 of $182,591. 8,000 shares of this
total were granted on January 26, 1994, and vest at a rate of 20% of
the total number of shares of Restricted Stock granted commencing on the
first day after the fifth anniversary of the Date of Grant and
continuing on the same date each year thereafter, such that all shares
of Restricted Stock will be fully vested on the first day after the
ninth anniversary of the Date of Grant; and 669 shares of this total
were granted on January 27, 1995, and vest at a rate of 20% of the total
number of shares of Restricted Stock granted commencing on the first day
after the first anniversary of the Date of Grant, and continuing on the
same date each year thereafter, such that all shares of Restricted Stock
will be fully vested on the first day after the fifth anniversary of the
Date of Grant. Dividends are paid on all restricted stock.
(3) Mr. Maclay's award for 1996 is a nonstatutory stock option for 10,000
shares, at an exercise price of $18.57 per share, for a term of ten
years from the date of grant. The balance of the awards noted in the
column reflect awards granted under the Company's 1989 Employees' Stock
Purchase Plan ("1989 Plan"). In general, the 1989 Plan provides that
all full-time employees of the Company and its designated subsidiaries
who have been employed for at least two years are granted an option to
purchase 10 shares of common stock for each $1,000 of compensation
earned in the calendar year preceding the year of grant. The purchase
price upon exercise is 85% of the fair market value of the shares of
Common Stock on the date of exercise.
(4) Mr. Carlson's long term incentive payout consists of payment of deferred
compensation paid in lieu of cash bonus on account of investment banking
services performed in prior years.
(5) Payments by B. C. Ziegler and Company under the Ziegler Growth Retirement
Plan, a defined contribution qualified plan, with a 401(k) component
(Mr. Ziegler, $14,350; Mr. Carlson, $14,350; Mr. Maclay, $12,953; Mr.
O'Meara, $11,136; and Mr. Wagner, $11,066, and premiums paid by the
Company for term life insurance and long-term disability insurance (Mr.
Ziegler, $947; Mr. Carlson, $945; Mr. Maclay, $764; Mr. O'Meara, $751;
and Mr. Wagner, $737).
<PAGE>
<TABLE>
<CAPTION>
AGGREGATED OPTION/STOCK APPRECIATION RIGHT (SAR)
EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES
Value of
Number of Unexercised
Securities In-the-Money
Underlying Options/SARs
Unexercised at
Options/SARs at December 31, 1997
December 31, 1997 ($)
Number of Value
Shares Acquired Realized
Name on Exercise ($) Exercisable/Unexercisable Exercisable/Unexercisable
<S> <C> <C> <C> <C>
Peter D. Ziegler 2,120 $ 6,385 9,260 / -0- $39,481 / $ -0-
Donald A. Carlson, Jr. 500 $ 1,406 3,150 / -0- $ 9,952 / $ -0-
Geoffrey G. Maclay, Jr. -0- $ - 0 - 10,000 / -0- $24,925 / $ -0-
S. Charles O'Meara 400 $ 1,167 15,100 / -0- $80,600 / $ -0-
John C. Wagner -0- $ - 0 - 2,000 / -0- $33,250 / $ -0-
</TABLE>
<TABLE>
<CAPTION>
OPTIONS / SAR GRANTS IN LAST FISCAL YEAR
% of
Total
Number Options/SARs
of Granted Market
Securities to Exercise Price Potential Realizable Value
Underlying Employees or on at Assumed Annual Rates of
Options/ in Base Date Stock Price Appreciation
SARs Fiscal Price of Expiration for Option Term
Name Granted (1) Year ($/Sh) Grant Date 0% 5% 10%
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Peter D. Ziegler 2,260 1.75% - $18.00 04-30-99 $ 6,102 $ 6,407 $ 6,712
Donald A. Carlson, Jr. 3,150 2.43% - $18.00 04-30-99 $ 8,505 $ 8,930 $ 9,355
Geoffrey G. Maclay, Jr. - - - - - - - -
S. Charles O'Meara 1,200 .92% - $18.00 04-30-99 $ 3,240 $ 3,402 $ 3,564
John C. Wagner 1,150 .89% - $18,00 04-30-99 $ 3,105 $ 3,260 $ 3,415
</TABLE>
(1) All options granted in 1997 were pursuant to the Company's 1989 Employees'
Stock Purchase Plan ("1989 Plan"). Effective May 1, 1997, the
Company's Board of Directors renewed an option grant under the 1989
Plan for a two year term to all full-time employees of the Company and
designated subsidiaries who have been employed for at least two years.
The option grant entitles eligible employees to purchase ten shares of
Common Stock for each $1,000 of compensation earned in the calendar
year immediately prior to the option grant, at an exercise price equal
to 85% of the fair market value of the Common Stock on the date options
are exercised.
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Stephen A. Roell, a director of the Company, and a member of its
Organization and Compensation Committee, serves as Vice President and Chief
Financial Officer of Johnson Controls, Inc., a corporation for which R.
Douglas Ziegler served as director until November 1997, when he resigned due
to that corporation's policy regarding director age limitations.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors is responsible for
establishing policies regarding the compensation of the Company's executive
officers, and for setting the amount of annual compensation for these
officers. As is customary in the securities industry, a significant portion
of executive compensation may be represented by a bonus, or other form of
incentive compensation.
The annual compensation of Peter D. Ziegler, the Chief Executive Officer of
the Company, consists of a preset base salary and an incentive bonus which
is determined following the close of each fiscal year of the Company. Under
the Committee's existing policies, the maximum bonus for which Mr. Ziegler
could qualify is 100% of his base salary, which was $200,000 in 1997. The
base salary is set subjectively without formal guidelines, but taking into
account the CEO's base compensation for prior years, and the size and
complexity of the Company's operations. One-half of the incentive bonus
component is derived from a formula which is based on the Company's return
on equity over the preceding year. For 1997, the Company's financial
performance did not reach the threshold for any bonus amount based on the
formula, and accordingly, Mr. Ziegler received no bonus compensation on
account of the Company's return on equity. The other half of Mr. Ziegler's
incentive bonus is awarded in the discretion of the Committee, based on
subjective factors which the Compensation Committee determines and
communicates to the CEO. With respect to the discretionary component, the
Committee awarded Mr. Ziegler a restricted stock grant of 4,000 shares,
which vests over a three-year term.
The Company compensates executive officers other than the CEO who have
direct revenue-producing responsibilities with fixed salary and formula-
based incentives. Applicable formulas focus on matters such as gross
revenue, margin and net contribution to the Company's annual financial
performance. In some circumstances, these executives may also be awarded
additional bonus amounts, based on the Company's profitability as a whole,
or on other specific factors. With respect to executive officers who do not
head revenue-producing divisions or segments of the Company, the CEO informs
the Committee of his recommendation for annual salary and bonus. The
factors considered by the CEO are subjective, based on his perception of the
individual's performance, the Company's overall performance, and other
factors. The Compensation Committee approved the CEO's recommendations in
arriving at 1997 compensation for the executive officers other than the CEO
who are named in the compensation table in this proxy statement.
After consultation with the CEO and the Board of Directors, the Compensation
Committee decided to disregard the two large non-recurring expenses
(settlement of litigation arising from a 1989 underwriting, and the write-
off of a loan and pool of receivables owned by the Company) in setting
compensation, bonus and discretionary retirement plan contribution levels
throughout the Company, because the legal settlement related to events which
were considerably removed in time from 1997 operations, and because the
operational responsibility for the pool of receivables was quite
concentrated within the management group.
The Compensation Committee also evaluated the Company's 1998 Stock Incentive
Plan ("Plan") which is recommended by management for approval at the Annual
Meeting of Shareholders. The Committee reported favorably on the Plan to
the Board of Directors, for the primary reasons that stock-based
compensation programs are essential for retaining key employees, and these
programs tend to align the interests of key employees with the long-term
interests of shareholders.
At the Board of Directors meeting in January 1998, the duties of the
Compensation Committee were expanded, and now include nominating candidates
to serve as directors on the Company's Board, and reviewing and addressing
ongoing governance issues. The Committee has been renamed the Organization
and Compensation Committee, effective for 1998.
COMPENSATION COMMITTEE
John R. Green, Chairman
Stephen A. Roell
Frederick J. Wenzel
<PAGE>
PROPOSAL TO APPROVE THE ZIEGLER COMPANIES, INC.
1998 STOCK INCENTIVE PLAN
On March 10, 1998, the Company's Board of Directors adopted The
Ziegler Companies, Inc. 1998 Stock Incentive Plan (the "1998 Plan"), subject
to approval by the Company's shareholders at their 1998 Annual Meeting. A
copy of the 1998 Plan in the form adopted by the Board of Directors is
attached as Appendix A to this Proxy Statement. If the 1998 Plan is
approved by the shareholders of the Company, no further awards or grants
will be made under The Ziegler Company, Inc. 1993 Employees' Stock Incentive
Plan, although options granted under that plan (and prior plans) will remain
in effect until they have been exercised or have expired and such options
shall be administered in accordance with their terms and in accordance with
the plan under which they were granted.
If a quorum exists, the affirmative vote of the holders of a majority
of the shares cast at the Meeting in person or by proxy, will be required
for approval of The Ziegler Companies, Inc. 1998 Stock Incentive Plan,
provided that the total votes cast on the 1998 Stock Incentive Plan
represent over 50% of the shares entitled to vote thereon. Because
abstentions and broker non-votes are considered to be votes cast, neither
will have an effect on the vote so long as enough votes are cast to satisfy
the 50% requirement set forth above.
The Board of Directors recommends that Company shareholders vote FOR
approval of the 1998 Plan.
The 1998 Plan replaces the Company's existing 1993 Stock Incentive
Plan as described above. The 1993 Stock Incentive Plan authorized 200,000
shares of the Company's stock to be issued in the form of options and other
awards. As of March 10, 1998, only 125,430 of the available shares under
the 1993 Stock Incentive Plan had been made subject to grants. Subject to
shareholder approval of the 1998 Plan, existing grants under the 1993 Stock
Incentive Plan will remain outstanding and in effect according to their
terms, and the authority to issue awards with respect to the remaining
74,570 will be extinguished.
The principal objectives of the 1998 Plan are to provide incentive for
the key employees and qualified directors of the Company and its
subsidiaries to improve corporate performance on a long-term basis, and to
attract and retain key employees and directors. The Board of Directors
believes that granting options and other stock awards to officers, other
key employees and directors enhances the Company's ability to retain,
attract and provide incentives to individuals necessary for the success of
the Company. The primary objective of the 1998 Plan is to link the vesting
of long-term incentives of key employees to increasing shareholder returns.
The 1998 Plan grants considerable discretion to the Company's Organization
and Compensation Committee (the "Committee") to structure options, Stock
Appreciation Rights, and restricted stock awards in ways which will result
in alignment of the interest of key employees and shareholders.
Although the 1998 Stock Incentive Plan does not restrict the
Committee's discretion, it is the intention of the Board of Directors that
the Committee utilize the authorization to issue up to 435,000 shares of
Common Stock primarily in the form of options which vest over time only if
certain benchmarks for measuring the Company's performance are met. It is
expected by the Committee that the performance benchmarks will be
established at the time of option grants, and attainment of vesting by
employees will be determined by the Committee following the close of each
fiscal year during which performance-based options are in effect. The 1998
Plan does not contain preset formulas or matrices in order to afford the
Committee the flexibility to fashion appropriate incentives for the earning
of awards over the remaining life of the 1998 Plan.
Principal Terms of the 1998 Plan
Under the 1998 Plan, incentive stock options, nonqualified stock
options, restricted stock and stock appreciation rights (each, an "Award")
may be granted to any regular salaried employee or any director of the
Company or a subsidiary of the Company who, in the sole opinion of the
Committee, contributes significantly to the growth and success of the
Company or a subsidiary; provided that any director of the Company who is
not also an employee of the Company shall not be eligible to receive an
incentive stock option. Such eligible participants in the 1998 Plan shall
be referred to as "Eligible Participants."
The total number of shares of Common Stock available for issuance
under the 1998 Plan may not exceed four hundred thirty-five thousand
(435,000) shares, although no Eligible Participant may be granted an Award
or Awards covering more than 43,500 shares of Common Stock in any calendar
year. These stock thresholds are subject to adjustment in the event of a
stock split, stock distribution or other capital event, as described in the
1998 Plan.
Shares available for an Award under the 1998 Plan may be either
authorized but unissued or reacquired shares of Common Stock. Shares
subject to, but not issued under, an option or stock appreciation right
which expires, terminates, is cancelled or forfeited for any reason under
the 1998 Plan and shares of restricted stock which have been forfeited
before the grantee has received any benefit of ownership (such as dividends)
shall again become available for the granting of Awards under the 1998 Plan.
The 1998 Plan is administered by the Committee of the Board of
Directors of the Company. The Committee shall be constituted so as to
permit the 1998 Plan to comply with the provisions of Section 162(m) of the
Code and to afford 1998 Plan participants an exemption for 1998 Plan
transactions pursuant to Rule 16b-3 under the Securities Exchange Act of
1934. The Committee is empowered to adopt such rules, regulations and
procedures and take such other action as it deems necessary or proper for
administration of the 1998 Plan, including any modification, extension or
renewal of any Award granted thereunder. The Committee has the authority to
interpret the provisions of the 1998 Plan, which interpretations shall be
final and conclusive. Specifically, the Committee is empowered, subject to
any contrary provisions of the 1998 Plan, to designate the persons to whom
Awards shall be granted, to grant Awards in such form and amount as the
Committee shall determine, to impose such limitations, restrictions and
conditions upon any such Award as the Committee shall deem appropriate, and
to waive in whole or in part any limitations, restrictions or conditions
imposed upon any such Award as the Committee shall deem appropriate. The
Board of Directors may also amend, modify, suspend or terminate the 1998
Plan from time to time; provided, however, that no such action can be taken
without shareholder approval if required by applicable law. Furthermore,
subject to the terms and conditions of the 1998 Plan, the Committee may
modify, extend or renew outstanding Awards granted under the 1998 Plan,
accept the surrender of outstanding options (to the extent not theretofore
exercised), reduce the exercise price of outstanding options and authorize
the granting of new options in substitution therefor (to the extent not
theretofore exercised); provided, however, that no such modification of an
Award (either directly or through modification of the 1998 Plan) shall,
without the consent of the grantee, alter or impair any rights of the
grantee under the Award.
Stock Options
Stock Options ("Options") may be granted to Eligible Participants at
any time as determined by the Committee (subject to the volume limitations
set forth above). Options granted under the 1998 Plan may be either
"Incentive Stock Options" under Section 422 of the Code or options that are
not intended to qualify as Incentive Stock Options ("Nonqualified Stock
Options"). Each Option must be evidenced by an agreement between the
Company and the grantee which must contain the terms and conditions required
by the 1998 Plan and such other terms and conditions not inconsistent
therewith as the Committee may deem appropriate.
The exercise price of an Option granted under the 1998 Plan is
determined by the Committee; provided, however, that in the case of an
Incentive Stock Option, the exercise price may not be less than 100% of the
Fair Market Value of the Common Stock (as defined in the 1998 Plan) when the
Option is granted; and provided further that the Committee may grant a
Nonqualified Stock Option with an exercise price of less than 100% of the
Fair Market Value of the Common Stock on the condition that the grantee
makes a cash payment to the Company on the date of grant of at least the
difference between the Fair Market Value and the option price (i.e., the sum
of the cash payment and the exercise price must be equal to or in excess of
the Fair Market Value of the Common Stock on the date of grant).
For purposes of the 1998 Plan, an Option is considered as having been
granted on the date on which the Committee authorized its grant (unless the
Committee has designated a later grant date). Options granted under the
1998 Plan may be exercisable at such times and subject to such restrictions
and conditions as the Committee in each instance approves, but no Option may
be exercisable until at least six months have elapsed from the date of grant
(except in the case of death or disability) or prior to shareholder approval
of the 1998 Plan. The period of exercisability may not exceed 10 years from
the date the Option is granted and Options must be exercised while grantee
is employed by the Company (or a subsidiary) or within three months after
termination of employment, unless such termination is caused by death or
disability, in which case the optionee has one year after such termination
within which to exercise. Without limiting the generality of the foregoing,
the Committee may condition the exercise of stock options upon the
attainment of specified levels of revenue, earnings per share, net income,
return on equity, return on sales, stock price, costs, individual
performance measures or such other factors or criteria as the Committee
shall determine.
An Option may be exercised in whole or in part from time to time as
specified in the Option agreement by the grantee giving a written notice of
exercise to the Company specifying the number of shares to be purchased,
accompanied by payment in full of the exercise price. The exercise price
may be paid either (i) in cash, (ii) by check, or (iii) with the approval of
the Committee, through delivery of shares of Common Stock which have been
beneficially owned by the grantee, the grantee's spouse or both of them for
a period of at least six months prior to the exercise ("Delivered Stock"),
or (iv) through a combination of cash and Delivered Stock. Delivered Stock
is valued at its Fair Market Value as of the date of the exercise. The
holder of an Option shall not have any rights as a shareholder with respect
to the shares subject to the Option until certificates evidencing such
shares are delivered to him or her.
Special provisions are contained in the 1998 Plan covering a merger,
consolidation or reorganization of the Company with another corporation in
which the Company is not the surviving corporation. In that circumstance,
the Committee may, subject to the approval of the Board of Directors of the
Company or the Board of Directors of any corporation assuming the
obligations of the Company under the 1998 Plan, take action regarding each
outstanding unexercised option to either (i) substitute on an equitable and
economically equivalent basis an appropriate number of shares of the
surviving corporation for the shares of Common Stock covered by the Option,
or (ii) cancel the Option and provide for a payment to the optionee of an
amount equal to the cash value of the Option (determined in accordance with
the provisions of the 1998 Plan). In addition, the 1998 Plan permits
Options to be granted to new Eligible Participants who become such as a
result of the Company's acquisition of property or stock from an unrelated
corporation in substitution for options granted to such Eligible
Participants by their former employer.
Restricted Stock
The Committee, at any time, may grant Awards of restricted stock under
the 1998 Plan; provided, however, that no more than 20,000 shares of
restricted stock may be granted in the aggregate during any calendar year.
The Committee may condition the grant of restricted stock (or the exercise
of options) upon the attainment of specified levels of revenue, earnings per
share, net income, return on equity, return on sales, stock price, costs,
individual performance measures or such other factors or criteria as the
Committee shall determine. The provisions of various restricted stock
Awards (or option grants) need not be identical; provided, however, that
such restricted stock Awards shall be subject to the following terms and
conditions: (i) until all applicable restrictions lapse, the grantee shall
not be permitted to sell, assign, transfer, pledge, or otherwise encumber
the shares of restricted stock; (ii) the grantee shall have all of the
rights of a shareholder of the Company with respect to the shares of
restricted stock (including the right to vote the shares and the right to
receive any cash dividends); (iii) unless otherwise provided in the
applicable restricted stock agreement or pursuant to (iv) below, all shares
of restricted stock shall be forfeited by the grantee upon termination of
employment; (iv) in the event of a hardship or other special circumstances
under which a grantee's employment is involuntarily terminated (other than
for cause), the Committee may waive in whole or in part any or all remaining
restrictions attendant to shares of restricted stock held by such grantee;
(v) upon the lapse of all applicable restrictions, unlegended certificates
for such shares shall be delivered to the grantee; and (vi) each Award shall
be subject to the terms of a restricted stock agreement. All grantees of
restricted stock shall be issued a certificate in respect of such shares,
registered in such grantee's name and bearing an appropriate legend. In its
discretion, the Committee may require that the certificates evidencing such
shares of restricted stock be held in custody by the Company until the
restrictions thereon have lapsed.
Stock Appreciation Rights
Stock Appreciation Rights ("SARs") may be granted alone or in addition
to other Awards under the Plan. The Committee shall determine the Eligible
Participants to whom and the time or times at which SAR grants will be made.
The Committee shall have complete discretion to determine the number of
shares to which each SAR applies and the terms and conditions of the SARs
granted under the Plan; provided that the exercise price of an SAR shall not
be less than 100% of the Fair Market Value of Company Stock on the date the
SAR is granted. Without limiting the generality of the foregoing, the
Committee may condition the exercise of Stock Appreciation Rights upon the
attainment of specified levels of revenue, earnings per share, net income,
return on assets, return on sales, customer satisfaction, stock price,
costs, individual performance measures or such other factors or criteria as
the Committee shall determine. Each SAR grant shall be evidenced by an
agreement that shall contain the terms and conditions of the SAR Award. The
provisions of each SAR Award need not be the same with respect to each
recipient.
An SAR may be exercised in whole or in part from time to time as
specified in the SAR agreement by giving written notice of the exercise to
the Company, specifying the number of shares with respect to which the SAR
is being exercised. Upon exercise of an SAR, a Grantee shall be entitled to
receive from the Company an amount determined by multiplying: (a) the
difference between the Fair Market Value of the Company Stock on the date of
exercise over the exercise price; times (b) the number of shares with
respect to which the SAR is exercised. At the discretion of the Committee,
the payment upon SAR exercise may be in cash, in shares of Company Stock of
equivalent value or in some combination thereof.
Term of 1998 Plan
The 1998 Plan will terminate 10 years after its effective date (i.e.,
April 20, 2008), except as to Awards then outstanding, which Awards shall
remain in effect until they have been exercised, the restrictions have
lapsed or the Awards have expired or been forfeited.
General Terms
The Company may require, as a condition to the exercise of an Award or
the issuance of an unrestricted stock certificate, that the grantee
concurrently pay to the Company any taxes which the Company is required to
withhold by reason of such exercise or lapse of restrictions. Such payment
may be made either in cash or, at the discretion of the Committee, and
subject to all applicable rules and regulations, through shares of Delivered
Stock or shares of stock withheld from the Award having a Fair Market Value
equal to the amount of the tax obligation. No Award granted under the 1998
Plan shall be transferable by a grantee other than by will or the laws of
descent and distribution; provided, however, that the Committee, in its
discretion but in accordance with Internal Revenue Service guidance, may
grant Nonqualified Stock Options that are transferable, without payment of
consideration, to family members of the grantee or to trusts or partnerships
for such family members.
As of the date hereof, there are no outstanding Options or shares of
restricted stock under the 1998 Plan and no shares of Common Stock have been
issued upon the exercise of Options granted under the 1998 Plan.
Furthermore, the number of grants to be made in the future to current
executive officers and key employees is subject to the discretion of the
Committee and cannot be determined at this time. On March 13, 1998, the
closing price of the Common Stock on the American Stock Exchange was
$23.125.
Federal Tax Consequences
An Eligible Participant realizes no taxable income at the time an
Option is granted under the 1998 Plan. An Eligible Participant generally
realizes no taxable income at the time of an Award of restricted stock, so
long as the restricted stock is not vested. Stock is vested for this
purpose if it is either transferable or is not subject to a substantial risk
of forfeiture. An Eligible Participant realizes no taxable income at the
time a Stock Appreciation Right is granted under the 1998 Plan.
With regard to Incentive Stock Options, no income is recognized by an
Eligible Participant upon transfer to him of shares pursuant to his exercise
of an Incentive Stock Option. In order to avail himself of this tax
benefit, the Eligible Participant must make no disposition of the shares so
received before he has held such shares for at least one year and at least
two years have passed since he was granted the Option. Assuming compliance
with this and other applicable tax provisions, an Eligible Participant will
realize long-term capital gain or loss when he disposes of his shares,
measured by the difference between the exercise price and the amount
received for the shares at the time of disposition. If an Eligible
Participant disposes of shares acquired by exercise of an Incentive Stock
Option before the expiration of the above-noted periods, any amount realized
from such disqualifying disposition will be taxable as ordinary income in
the year of disposition to the extent the lessor of (a) the Fair Market
Value of the shares on the date the Option was exercised, or (b) the amount
realized upon such disposition, exceeds the exercise price. Any amount
realized in excess of the Fair Market Value on the date of exercise is
treated as long-term or short-term capital gain, depending upon the holding
period of the shares. If the amount realized upon such disposition is less
than the exercise price the loss will be treated as long-term or short-term
capital loss, depending upon the holding period of the shares. For purposes
of the alternative minimum tax, the Eligible Participant will recognize
income upon the transfer of shares to him pursuant to the exercise of an
Incentive Stock Option in an amount equal to the difference between the Fair
Market Value of the shares at the time of exercise and the exercise price.
With regard to Nonqualified Stock Options, ordinary income generally
is realized by the Eligible Participant at the time of his exercise of an
Option. The amount of income is generally equal to the difference between
the exercise price and the Fair Market Value of the shares on the date of
exercise. Tax withholding is currently required on such income. When an
Eligible Participant disposes of shares acquired upon the exercise of a
Nonqualified Stock Option, any amount received in excess of the Fair Market
Value of the shares on the date of exercise will be treated as long-term or
short-term capital gain, depending upon the holding period of the shares,
and if the amount received is less than the Fair Market Value of the shares
on the date of exercise, the loss will be treated as long-term or short-term
capital loss, depending upon on the holding period of the shares.
With regard to restricted stock, ordinary income is realized by an
Eligible Participant at the time that such restricted stock vests. The
amount of income is generally equal to the excess of the Fair Market Value
of the shares at the time of vesting over the purchase price for such
shares, if any. Tax withholding is required on such income. When an
Eligible Participant disposes of restricted stock, any amount received in
excess of the Fair Market Value of the shares on the date of vesting will be
treated as long-term or short-term capital gain, depending upon the holding
period of the shares, and if the amount received is less than the Fair
Market Value on the date of vesting, the loss will be treated as long-term
or short-term capital loss, depending on the holding period of the shares.
Dividends paid on restricted stock which has not vested and which has not
been the subject of an election under Section 83(b) of the Code are treated
as compensation income. Section 83(b) of the Code permits the Eligible
Participant to elect, not more than 30 days after the date of grant of the
restricted stock, to include as ordinary income the difference between the
Fair Market Value of the restricted stock on the date of grant and the
purchase price of the restricted stock, if any. If no Section 83(b)
election is made, then the ordinary income inclusion occurs on the date the
restricted stock becomes vested and the amount of such inclusion will be the
spread between the Fair Market Value of the restricted stock and the
purchase price for the restricted stock at the time of vesting, if any.
With regard to Stock Appreciation Rights, ordinary income is realized
by the Eligible Participant at the time of his exercise of the Stock
Appreciation Right. The amount of income is equal to the amount received by
the Eligible Participant from the Company. Tax withholding is currently
required on such income.
If an Eligible Participant pays the exercise price of an Option by
tendering other vested shares then owned by the Eligible Participant, the
difference between the Fair Market Value and adjusted basis of the tendered
shares will not produce a taxable gain or loss to the Eligible Participant;
however, the Eligible Participant's tax basis for an equal number of
acquired shares will be the same as the Eligible Participant's tax basis for
the tendered shares. The remaining acquired shares will have an original
tax basis equal to the sum of the amount paid in cash, if any, plus any
amount that the optionee is required to recognize as income as a result of
the exercise of the Option.
No deduction will be allowed to the Company for federal income tax
purposes at the time of the grant or exercise of any Incentive Stock Option.
At the time of a disqualifying disposition by an Eligible Participant, the
Company will be entitled to a deduction for the amount taxable to the
Eligible Participant as ordinary income. The Company will be entitled to a
deduction for federal income tax purposes at the same time and in the same
amount as the Eligible Participant is considered to have realized ordinary
income in connection with the exercise of a Nonqualified Stock Option or
Stock Appreciation Right and the grant of restricted stock, assuming
compliance with Section 162(m) of the Code.
The foregoing discussion is based upon presently applicable provisions
of the federal income tax laws, and thus is subject to change if and when
such laws change.
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on the
Company's Common Stock, based on the market price of the Common Stock and
assuming reinvestment of dividends, with the cumulative total return of
companies on the Standard & Poor's 500 Stock Index and an index compiled by
the Company of publicly held regional brokerage firms. Alex Brown, Inc.
appeared as a component of the industry specific index for years 1993
through 1996, but was omitted for 1997 because it was acquired by another
entity. The firms contained within the index of publicly held regional
brokerage firms are:
Advest Group Inc. McDonald & Company Investments
Dain Rauscher Corporation Morgan Keegan Inc.
First Albany Companies Inc. Piper Jaffray Companies Inc.
Interstate/Johnson Lane Inc. Raymond James Financial Corporation
Jefferies Group Inc. Rodman & Renshaw Capital Group
Kinnard Investments Inc. Scott & Stringfellow Financial
Legg Mason Inc. Stifel Financial Corporation
<TABLE>
<CAPTION>
12-31-93 12-31-94 12-31-95 12-31-96 12-31-97
<S> <C> <C> <C> <C> <C>
Ziegler $110 $103 $122 $132 $166
S&P 500 $110 $111 $153 $189 $251
Regionals $132 $101 $143 $201 $358
</TABLE>
Assumes $100 invested on December 31, 1992.
<PAGE>
COMPENSATION OF DIRECTORS
Directors not employed by the Company received the following compensation in
1997 for their services: (a) $11,000 annual retainer, one half paid in
cash, the other half paid in shares of common stock of the Company; (b) $500
for each board meeting attended and (c) $500 for each committee meeting
attended. Directors may elect to defer all or part of compensation earned
following the date of such election. Deferred amounts, plus interest, are
paid in annual installments over a three year period beginning no later than
the year after retirement from the Board of Directors. Directors who are
employed by the Company or any of its subsidiaries do not receive any fees
or retainer related to their services as directors.
MEETINGS OF THE BOARD OF DIRECTORS
During the fiscal year ended December 31, 1997, the Board of Directors met
seven times. Each director attended all of the meetings of the Board, with
the exception of Messrs. J. R. Green, P. R. Kellogg, and F. J. Wenzel who
attended 85% of the Board meetings held, and Mr. S. A. Roell, who attended
57% of the Board meetings held. Each director attended all meetings of
committees of the Board on which the director served, with the exception of
Mr. F. J. Wenzel, who attended 66% of the committee meetings held.
COMMITTEES OF THE BOARD OF DIRECTORS
The Audit Committee of the Board of Directors during 1997 was composed of
John C. Frueh (Chairman), Peter R. Kellogg, Patrick D. J. Kenny and Bernard
C. Ziegler III, none of whom is an officer or employee of the Company. The
Committee met twice in 1997. The Audit Committee meets with the independent
auditors to review the plan for and results of the annual audit, to review
the range of audit fees, and to discuss financial reporting policies and
practices and the system of internal control. Non-audit services and fees
are also reviewed. The Committee meets with the internal auditor to review
its activities during the year and the planned activities for the ensuing
year. The Committee recommends the engagement of the independent auditors
to the Board of Directors.
The Compensation Committee of the Board of Directors during 1997 was
composed of John R. Green (Chairman), Stephen A. Roell and Frederick J.
Wenzel, Directors of the Company who are not officers or employees of the
Company. During 1997, the Compensation Committee met three times. The
Committee reviewed the overall compensation policy, approved the Company's
annual compensation program, adopted a new committee charter, and determined
compensation for the chief executive officer of the Company. The new
committee charter changed the name of this committee to the Organization and
Compensation Committee.
At a Board of Directors meeting held on January 21, 1998, the Board revised
and expanded the responsibilities of the Compensation Committee, and renamed
it the Organization and Compensation Committee. The Organization and
Compensation Committee will be a standing committee of the Board, comprised
of no fewer than three independent directors. It will provide
recommendations to the Board about corporate governance matters, the agenda
for the Board's consideration, nominations for the election of directors,
and other matters. It will also review compensation for the chief executive
officer and executive officers, and will review the chief executive
officer's performance at least annually.
The Compensation Committee, at its meeting held on January 15, 1998,
recommended to the Board the four nominees, namely Messrs. Ziegler, Wenzel,
Kellogg and Carlson, for election to the Company's Board of Directors.
SELECTION OF INDEPENDENT AUDITORS
The Board of Directors proposes the adoption of a resolution approving the
Directors' decision to continue the employment of Arthur Andersen LLP as
auditors for the Company. If the shareholders fail to ratify such
selection, the Board will reconsider it. Representatives of Arthur Andersen
LLP will be present at the shareholders' meeting with the opportunity to
make a statement if they desire to do so, and to respond to appropriate
questions. Arthur Andersen LLP performed the following audit services for
the Company during 1997: audits of the annual consolidated financial
statements of the Company and its subsidiaries.
SHAREHOLDERS PROPOSALS
Any shareholder who wishes to submit a proposal for inclusion in the proxy
materials to be distributed by the Company in connection with the Annual
Meeting of Shareholders to be held in 1999 must do so no later than November
19, 1998. The inclusion of any proposal will be subject to applicable rules
of the Securities and Exchange Commission.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on a review of statements of beneficial ownership and of
changes therein furnished to the Company during and with respect to the 1997
calendar year and written representations made to the Company, the
management of the Company believes that during 1997, its executive officers,
directors and beneficial owners of more than 10% of the Company's common
stock met Section 16(a) requirements on a timely basis, except a report
covering Donald A. Carlson's acquisition of 500 shares was filed late.
OTHER MATTERS
The matters referred to in the notice of meeting and in the proxy statement
are, as far as the Board of Directors now knows, the only matters which will
be presented for consideration at the meeting. If any other matters
properly come before the meeting, the persons named in the accompanying form
of proxy will vote on them in accordance with their best judgment.
All shares represented by duly executed proxies will be voted for the
election of the nominees named above as directors, unless authority to vote
for the proposed slate of directors or any individual director has been
withheld. With respect to the other proposals to be considered, all shares
will be voted for or against, or not voted, as specified on each proxy. If
no choice is indicated, a proxy will be voted for adoption of the Company's
1998 Stock Incentive Plan and to approve Arthur Andersen LLP as the
Company's independent accountants.
The Company's 1997 Annual Report, although not a part of this proxy
statement, is enclosed.
By Order of the Board of Directors,
/s/ Janine R. Yovanovich
Janine R. Yovanovich
Corporate Secretary
<PAGE>
APPENDIX A
THE ZIEGLER COMPANIES, INC.
1998 STOCK INCENTIVE PLAN
I. INTRODUCTION
1.01 Purpose. This plan shall be known as The Ziegler Companies,
Inc. 1998 Stock Incentive Plan (the "1998 Plan" or the "Plan"). The purpose
of the Plan is to provide incentive for key employees of The Ziegler
Companies, Inc. and its Subsidiaries to improve corporate performance on a
long-term basis, and to attract and retain key employees and qualified
directors.
1.02 Effective Date. The effective date of the 1998 Plan shall be
April 20, 1998, subject to approval of the 1998 Plan by the shareholders of
The Ziegler Companies, Inc. at the 1998 annual meeting. Any Awards granted
prior to such shareholder approval shall be expressly conditioned upon such
shareholder approval of the Plan.
1.03 Effect on Prior Plans. If the 1998 Plan is approved, no further
awards or grants will be made under The Ziegler Company, Inc. 1993
Employees' Stock Incentive Plan. Options granted under that plan will
remain in effect until they have been exercised or have expired. The
options shall be administered in accordance with their terms and in
accordance with the plan under which they were granted.
II. PLAN DEFINITIONS
2.01 Definitions. For Plan purposes, except where the context
clearly indicates otherwise, the following terms shall have the meanings set
forth below:
(a) "Award" shall mean the grant of any form of stock option,
restricted stock or stock appreciation right.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(d) "Committee" shall mean the Organization and Compensation
Committee of the Board, as described in Section 4.01.
(e) "Company" shall mean The Ziegler Companies, Inc., a Wisconsin
corporation.
(f) "Company Stock" shall mean Common Stock of the Company and such
other stock and securities as may be substituted therefor
pursuant to Section 3.02.
(g) "Eligible Participant" shall mean any regular salaried employee
of the Company or a Subsidiary who satisfies all of the
requirements of Section 5.01 and any director of the Company;
provided, however that any director of the Company who is not
also an employee of the Company shall not be eligible to receive
an incentive stock option.
(h) "Fair Market Value" on any date shall mean, with respect to
Company Stock, if the stock is then listed and traded on a
registered national securities exchange, or is quoted in the
NASDAQ National Market System, the mean of the high and low sale
prices recorded in composite transactions as reported in the
Wall Street Journal (Midwest Edition). In the absence of
reported sales on such date, or if the stock is not so listed or
quoted, but is traded in the over-the-counter market, "Fair
Market Value" shall be the mean of the closing bid and asked
prices for such shares on such date as reported in the Wall
Street Journal (Midwest Edition), or, if not so reported as
obtained from a bona fide market maker in such shares.
(i) "Grantee" shall mean any person who has been granted an Award
under the Plan.
(j) "Option Period" shall mean the period of time provided pursuant
to Section 6.04 within which a stock option may be exercised.
(k) "Subsidiary" shall mean any corporation now or hereafter in
existence in which the Company owns, directly or indirectly, a
voting stock interest of more than fifty percent (50%).
III. SHARES SUBJECT TO OPTION
3.01 Available Shares. The total number of shares of Company Stock
that may be issued under the Plan, shall in the aggregate not exceed four
hundred thirty-five thousand (435,000) shares. Shares subject to and not
issued under an option or stock appreciation right which expires,
terminates, is canceled or forfeited for any reason under the Plan and
shares of restricted Company Stock which have been forfeited before the
Grantee has received any benefits of ownership, such as dividends from the
forfeited shares, shall again become available for the granting of Awards.
3.02 Changes in the Number of Available Shares. If any stock
dividend is declared upon the Company Stock, or if there is any stock split,
stock distribution, dividend in partial liquidation, or other
recapitalization of the Company, the aggregate number and kind of shares
which may thereafter be offered under the Plan shall, in the discretion of
the Committee, be proportionately and appropriately adjusted and the number
and kind of shares then subject to options granted to employees under the
Plan and the per share option price therefor shall be proportionately and
appropriately adjusted, without any change in the aggregate purchase prices
to be paid therefor.
IV. ADMINISTRATION
4.01 Administration by the Committee. The Plan shall be administered
by the Organization and Compensation Committee of the Board, or such other
committee of the Board as the Board may from time to time determine. The
Committee shall be constituted so as to permit the Plan to comply with the
provisions of Rule 16b-3 under the Securities Exchange Act of 1934 (or any
successor rule) and Section 162(m) of the Code.
4.02 Committee Powers. The Committee is empowered to adopt such
rules, regulations and procedures and take such other action as it shall
deem necessary or proper for the administration of the Plan and, in its
discretion, may modify, extend or renew any option theretofore granted. The
Committee shall also have authority to interpret the Plan, and the decision
of the Committee on any questions concerning the interpretation of the Plan
shall be final and conclusive. The Committee may consult with counsel, who
may be counsel for the Company, and shall not incur any liability for any
action taken in good faith in reliance upon the advice of counsel. The
Committee may adopt such procedures and subplans as are necessary or
appropriate to permit participation in the Plan by Eligible Participants who
are foreign nationals or employed outside of the United States.
Subject to the provisions of the Plan, the Committee shall have full
and final authority to:
(a) designate the persons to whom Awards shall be granted;
(b) grant Awards in such form and amount as the Committee shall
determine;
(c) impose such limitations, restrictions and conditions upon any
such Award as the Committee shall deem appropriate, and
(d) waive in whole or in part any limitations, restrictions or
conditions imposed upon any such Award as the Committee shall
deem appropriate.
V. PARTICIPATION
5.01 Eligibility. Key employees and directors of the Company and its
Subsidiaries (including officers and employees who may be members of the
Board) who, in the sole opinion of the Committee, contribute significantly
to the growth and success of the Company or a Subsidiary shall be eligible
for Awards under the Plan. From among all such Eligible Participants, the
Committee shall determine from time to time those Eligible Participants to
whom Awards shall be granted. No Eligible Participants may be granted an
Award or Awards covering more than 43,500 shares of Company Stock in any
calendar year. No Eligible Participant shall have any right whatsoever to
receive an Award unless so determined by the Committee.
5.02 No Employment Rights. The Plan shall not be construed as
conferring any rights upon any person for a continuation of employment, nor
shall it interfere with the rights of the Company or any Subsidiary to
terminate the employment of any person or to take any other action affecting
such person.
VI. STOCK OPTIONS
6.01 General. Stock options granted under the Plan may be in the
form of incentive stock options (within the meaning of the Code) or
nonqualified stock options. Each option granted under the Plan shall be
evidenced by a stock option agreement between the Company and the Grantee
which shall contain the terms and conditions required by this Article VI,
and such other terms and conditions, not inconsistent herewith, as the
Committee may deem appropriate in each case. Without limiting the
generality of the foregoing, the Committee may condition the exercise of
stock options upon the attainment of specified levels of revenue, earnings
per share, net income, return on equity, return on sales, stock price,
costs, individual performance measures or such other factors or criteria as
the Committee shall determine. The provisions of option grants need not be
the same with respect to each recipient.
6.02 Option Price. The price at which each share of Company Stock
covered by an option may be purchased shall be determined in each case by
the Committee and set forth in each stock option agreement. In no event
shall such price be less than one hundred percent (100%) of the Fair Market
Value of the Company Stock when the option is granted. Notwithstanding the
foregoing, the Committee may grant nonqualified stock options with an option
price of less than 100% of the Fair Market Value of the Company Stock on the
condition that the Grantee make a cash payment to the Company on the date of
grant of at least the difference between the Fair Market Value of the
Company Stock and the option price (i.e., the sum of the cash payment and
the option price must be equal to or in excess of the Fair Market Value of
the Company Stock on the date of grant). Employees who own, directly or
indirectly, within the meaning of Code Section 425(d), more than 10% of the
voting power of all classes of stock of the Company or any parent or
subsidiary corporation shall not be eligible to receive an incentive stock
option hereunder unless the purchase price per share under such option is at
least 110% of the Fair Market Value of the stock subject to the option and
such option by its terms is not exercisable after the expiration of five (5)
years from the date such option is granted.
6.03 Date Option Granted. For purposes of the Plan, a stock option
shall be considered as having been granted on the date on which the
Committee authorized the grant of the option, except where the Committee has
designated a later date, in which event the later date shall constitute the
date of grant of the option; provided, however, that in either case notice
of the grant of the option shall be given to the employee within a
reasonable time.
6.04 Period for Exercise. Each stock option agreement shall state
the period or periods of time within which the option may be exercised by
the Grantee, in whole or in part, which shall be the period or periods of
time as may be determined by the Committee, provided that:
(a) No option granted under this Plan may be exercised until at
least six months have elapsed from the date of grant (except in
the case of death or disability) or prior to shareholder
approval of the Plan,
(b) No Option Period for an incentive stock option may exceed ten
(10) years from the date the option is granted, and
(c) Options must be exercised while the Grantee is employed by the
Company or a Subsidiary or within three months after termination
of employment, or if termination is caused by death or
disability, within one year after such termination.
(d) Unless permitted by the Committee, no option may be exercised by
an employee who has been terminated for cause, as determined by
the Committee; and no option shall vest after termination of
employment for any reason.
6.05 Special Rule for Incentive Stock Options. For so long as
Section 422 (or any successor provision) of the Code so provides, the
aggregate Fair Market Value (determined as of the date the incentive stock
option is granted) of the number of shares with respect to which incentive
stock options are exercisable for the first time by a Grantee during any
calendar year shall not exceed One Hundred Thousand Dollars ($100,000) or
such other limit as may be required by the Code.
6.06 Method of Exercise. Subject to Section 6.04, each option may be
exercised in whole or in part from time to time as specified in the stock
option agreement. Each Grantee may exercise an option by giving written
notice of the exercise to the Company, specifying the number of shares to be
purchased, accompanied by payment in full of the purchase price therefor.
The purchase price may be paid in cash, by check, or, with the approval of
the Committee, by delivering shares of Company Stock which have been
beneficially owned by the Grantee, the Grantee's spouse, or both of them for
a period of at least six months prior to the time of exercise ("Delivered
Stock") or a combination of cash and Delivered Stock. Delivered Stock shall
be valued at its Fair Market Value determined as of the date of exercise of
the option. No Grantee shall be under any obligation to exercise any option
hereunder. The holder of an option shall not have any rights of a
stockholder with respect to the shares subject to the option until such
shares shall have been delivered to him or her.
6.07 Merger, Consolidation or Reorganization. In the event of a
merger, consolidation or reorganization with another corporation in which
the Company is not the surviving corporation, the Committee may, subject to
the approval of the Board of Directors of the Company, or the board of
directors of any corporation assuming the obligations of the Company
hereunder, take action regarding each outstanding and unexercised option
pursuant to either clause (a) or (b) below:
(a) Appropriate provision may be made for the protection of such
option by the substitution on an equitable basis of appropriate
shares of the surviving corporation, provided that the excess of
the aggregate Fair Market Value of the shares subject to such
option immediately before such substitution over the exercise
price thereof is not more than the excess of the aggregate fair
market value of the substituted shares made subject to option
immediately after such substitution over the exercise price
thereof; or
(b) The Committee may cancel such option. In such event, the
Company, or the corporation assuming the obligations of the
Company hereunder, shall pay the employee an amount of cash
(less normal withholding taxes) equal to the excess of the
highest Fair Market Value per share of the Company Stock during
the 60-day period immediately preceding the merger,
consolidation or reorganization over the option exercise price,
multiplied by the number of shares subject to such option.
6.08 Substitute Options. Notwithstanding the provisions of Sections
6.02 and 6.03 above, in the event that the Company or a Subsidiary
consummates a transaction described in Section 424(a) of the Code (e.g., the
acquisition of property or stock from an unrelated corporation), persons who
become Eligible Participants on account of such transaction may be granted
options in substitution for options granted by their former employer. If
such substitute options are granted, the Committee, in its sole discretion
and consistent with Section 424(a) of the Code, may determine that such
substitute options shall have an exercise price less than one hundred (100%)
of the Fair Market Value of the shares on the grant date.
VII. RESTRICTED STOCK
7.01 Administration. Shares of restricted stock may be issued either
alone or in addition to other Awards granted under the Plan; provided that a
maximum of 20,000 shares of restricted stock may be granted in any calendar
year. The Committee shall determine the Eligible Participants to whom and
the time or times at which grants of restricted stock will be made, the
number of shares to be awarded, the time or times within which such Awards
may be subject to forfeiture and any other terms and conditions of the
Awards. The Committee may condition the grant of restricted stock upon the
attainment of specified levels of revenue, earnings per share, net income,
return on equity, return on sales, stock price, costs, individual
performance measures or such other factors or criteria as the Committee
shall determine. The provisions of restricted stock Awards need not be the
same with respect to each recipient.
7.02 Awards and Certificates. Each individual receiving a restricted
stock Award shall be issued a certificate in respect of such shares of
restricted stock. Such certificate shall be registered in the name of such
individual and shall bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such Award, substantially in the
following form:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) of The Ziegler Companies, Inc. 1998 Stock Incentive Plan
and a Restricted Stock Agreement. Copies of such Plan and Agreement
are on file at the offices of The Ziegler Companies, Inc."
The Committee may require that the certificates evidencing such shares be
held in custody by the Company until the restrictions thereon shall have
lapsed and that, as a condition of any restricted stock Award, the Grantee
shall have delivered a stock power, endorsed in blank, relating to the
Company Stock covered by such Award.
7.03 Terms and Conditions. Shares of restricted stock shall be
subject to the following terms and conditions:
(a) Until the applicable restrictions lapse, the Grantee shall not
be permitted to sell, assign, transfer, pledge or otherwise
encumber shares of restricted stock.
(b) The Grantee shall have, with respect to the shares of restricted
stock, all of the rights of a stockholder of the Company,
including the right to vote the shares and the right to receive
any cash dividends. Unless otherwise determined by the
Committee, cash dividends shall be automatically paid in cash
and dividends payable in Company Stock shall be paid in the form
of additional restricted stock.
(c) Except to the extent otherwise provided in the applicable
Restricted Stock Agreement and (d) below, all shares still
subject to restriction shall be forfeited by the Grantee upon
termination of a Grantee's employment for any reason.
(d) In the event of hardship or other special circumstances of a
Grantee whose employment is involuntarily terminated (other than
for cause), the Committee may waive in whole or in part any or
all remaining restrictions with respect to such Grantee's shares
of restricted stock.
(e) If and when the applicable restrictions lapse, unlegended
certificates for such shares shall be delivered to the Grantee.
(f) Each Award shall be confirmed by, and be subject to the terms
of, a Restricted Stock Agreement.
VIII. STOCK APPRECIATION RIGHTS
8.01 SAR Grants. Stock Appreciation Rights ("SARs") may be granted
alone or in addition to other Awards under the Plan. The Committee shall
determine the Eligible Participants to whom and the time or times at which
SAR grants will be made. The Committee shall have complete discretion to
determine the number of shares to which each SAR applies and the terms and
conditions of the SARs granted under the Plan; provided that the exercise
price of an SAR shall not be less than 100% of the Fair Market Value of
Company Stock on the date the SAR is granted. Without limiting the
generality of the foregoing, the Committee may condition the exercise of
stock appreciation rights upon the attainment of specified levels of
revenue, earnings per share, net income, return on assets, return on sales,
customer satisfaction, stock price, costs, individual performance measures
or such other factors or criteria as the Committee shall determine. Each
SAR grant shall be evidenced by an agreement that shall contain the terms
and conditions of the SAR Award. The provisions of each SAR Award need not
be the same with respect to each recipient.
8.02 Method of Exercise. An SAR may be exercised in whole or in part
from time to time as specified in the SAR agreement. Each Grantee may
exercise an SAR by giving written notice of the exercise to the Company,
specifying the number of shares with respect to which the SAR is being
exercised.
8.03 Payment of SAR Amount. Upon exercise of an SAR, a Grantee shall
be entitled to receive from the Company an amount determined by multiplying:
(a) the difference between the Fair Market Value of the Company Stock on the
date of exercise over the exercise price; times (b) the number of shares
with respect to which the SAR is exercised. At the discretion of the
Committee, the payment upon SAR exercise may be in cash, in shares of
Company Stock of equivalent value or in some combination thereof.
IX. WITHHOLDING TAXES
9.01 General Rule. Pursuant to applicable federal and state laws,
the Company is or may be required to collect withholding taxes upon the
exercise of an Award or the lapse of stock restrictions. The Company may
require, as a condition to the exercise of an Award or the issuance of a
stock certificate, that the Grantee concurrently pay to the Company (either
in cash or, at the request of Grantee but in the discretion of the Committee
and subject to such rules and regulations as the Committee may adopt from
time to time, in shares of Delivered Stock) the entire amount or a portion
of any taxes which the Company is required to withhold by reason of such
exercise or lapse of restrictions, in such amount as the Committee or the
Company in its discretion may determine.
9.02 Withholding from Shares to be Issued. In lieu of part or all
of any such payment, the Grantee may elect, subject to such rules and
regulations as the Committee may adopt from time to time, or the Company may
require that the Company withhold from the shares to be issued that number
of shares having a Fair Market Value equal to the amount which the Company
is required to withhold.
9.03 Special Rule for Insiders. Any such request or election (to
satisfy a withholding obligation using shares) by an individual who is
subject to the provisions of Section 16 of the Securities Exchange Act of
1934 shall be made in accordance with the rules and regulations of the
Securities and Exchange Commission promulgated thereunder.
X. GENERAL
10.01 Nontransferability. No Award shall be transferable by a Grantee
otherwise than by will or the laws of descent and distribution, provided
that in accordance with Internal Revenue Service guidance, the Committee, in
its discretion, may grant nonqualified stock options that are transferable,
without payment of consideration, to family members of the Grantee or to
trusts or partnerships for such family members. The Committee may also
amend outstanding stock options to provide for such transferability.
10.02 General Restriction. Each Award shall be subject to the
requirement that if at any time the Board or the Committee shall determine,
in its discretion, that the listing, registration, or qualification of
securities upon any securities exchange or under any state or federal law,
or the consent or approval of any government regulatory body, is necessary
or desirable as a condition of, or in connection with, the granting of such
Award or the issue or purchase of securities thereunder, such Award may not
be exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or obtained free
of any conditions not acceptable to the Board or the Committee.
10.03 Expiration and Termination of the Plan. The Plan will terminate
ten (10) years after the effective date of the Plan, except as to Awards
then outstanding under the Plan, which Awards shall remain in effect until
they have been exercised, the restrictions have lapsed or the Awards have
expired or been forfeited. The Plan may be abandoned or terminated at any
time by the Board of Directors of the Company, except with respect to any
Awards then outstanding under the Plan.
10.04 Amendments. The Board may from time to time amend, modify,
suspend or terminate the Plan; provided, however, that no such action shall
be made without shareholder approval where such change would be required in
order to comply with Rule 16b-3 under the Securities Exchange Act of 1934
(or any successor rule) or the Code. Subject to the terms and conditions
and within the limitations of the Plan, the Committee may modify, extend or
renew outstanding Awards granted under the Plan, accept the surrender of
outstanding options (to the extent not theretofore exercised), reduce the
exercise price of outstanding options, or authorize the granting of new
options in substitution therefor (to the extent not theretofore exercised).
Notwithstanding the foregoing, no modification of an Award (either directly
or through modification of the Plan) shall, without the consent of the
Grantee, alter or impair any rights of the Grantee under the Award.
10.05 Construction. Except as otherwise required by applicable
federal laws, the Plan shall be governed by, and construed in accordance
with, the laws of the State of Wisconsin.<PAGE>
<PAGE>
THE ZIEGLER COMPANIES, INC. - SHAREHOLDERS' PROXY
ANNUAL MEETING - APRIL 20, 1998 AND ADJOURNMENTS
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
The undersigned having received the Notice of Annual Meeting and Proxy
Statement dated March 25, 1998, and the Annual Report of 1997, hereby appoints
S. A. Roell and B. C. Ziegler III, and each of them, as proxy with power of
substitution, hereby revoking any previous proxies, to vote for the
undersigned at the Annual Meeting of Shareholders of The Ziegler Companies,
Inc. (the "Company") on April 20, 1998, and any adjournments thereof, as
follows:
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO
DIRECTION IS INDICATED, WILL BE VOTED FOR ALL NOMINEES AND IN FAVOR OF
PROPOSALS 2 AND 3.
1. ELECTION OF DIRECTORS:
1 - Peter D. Ziegler 2 - Frederick J. Wenzel
3 - Peter R. Kellogg 4 - Donald A. Carlson, Jr.
FOR all nominees listed to the left (except as specified
below).
WITHHOLD AUTHORITY to vote for all nominees listed to the
left.
(Instructions: To withhold authority to vote for any indicated
nominee, write the number(s) of the nominee(s) in the box provided
to the right.)
2. FOR AGAINST ABSTAIN the approval of The Ziegler
Companies, Inc. 1998 Stock Incentive Plan.
3. FOR AGAINST ABSTAIN continued employment by the
Company of Arthur Andersen LLP, as auditors.
4. In their discretion, upon any other business which may come before
the meeting.
DATE NO. OF SHARES
Signature(s) in Box
Please sign exactly as name appears hereon. If signed as
attorney, executor, administrator, trustee or guardian,
please give full title as such. If shares are held in two
or more names, all persons so named must sign. A proxy on
behalf of a corporation should be signed in its name by a
duly authorized officer.
Check appropriate box
Indicate changes below:
Address Change? Name Change?
