(BC Ziegler Logo) THE ZIEGLER
COMPANIES, INC.
March 22, 1999
215 North Main Street
West Bend, WI 53095-3317
Telephone: (414) 334-5521
To Our Shareholders,
I am pleased to invite you to attend the 1999 Annual Meeting of Shareholders of
The Ziegler Companies, Inc. to be held on Monday, April 19, 1999 at 10:00 a.m.
at the West Bend Old Courthouse Square Museum, 320 South 5th Avenue, West Bend,
Wisconsin.
Whether or not you attend the Annual Meeting, I hope that you read this Proxy
Statement carefully, and vote as soon as possible. Early voting 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.
Thank you for your interest and participation in the affairs of the Company.
Sincerely,
/s/ Peter D. Ziegler
Peter D. Ziegler
Chairman, President
and Chief Executive Officer
THE ZIEGLER COMPANIES, INC.
215 NORTH MAIN STREET
WEST BEND, WISCONSIN 53095
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
-----------------------
MONDAY, APRIL 19, 1999
TO THE SHAREHOLDERS OF THE ZIEGLER COMPANIES, INC.
The Annual Meeting of shareholders of The Ziegler Companies, Inc. will be held
on Monday, April 19, 1999 at 10:00 A.M. (Central Daylight Time) at the West Bend
Old Courthouse Square Museum, 320 South 5th Avenue, West Bend, Wisconsin.
1. To elect three directors for a term of three years and a fourth
director to complete a two year term in a newly created directorship
position;
2. To vote on a proposal to ratify the retention of Arthur Andersen LLP
as auditors for 1999; and
3. 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 1, 1999 will be
entitled to vote at the meeting and any adjournments thereof. Only shareholders
of record at the close of business on that date will be entitled to vote. 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.
A copy of the 1998 Annual Report to Shareholders and a Proxy Statement
accompany this Notice.
By Order of the Board of Directors,
/s/ S. Charles O'Meara
S. Charles O'Meara
Secretary
March 22, 1999
215 North Main Street
West Bend, Wisconsin 53095
THE ZIEGLER COMPANIES, INC.
215 NORTH MAIN STREET
WEST BEND, WISCONSIN 53095
--------------------------
March 22, 1999
PROXY STATEMENT
1999 ANNUAL MEETING OF SHAREHOLDERS, MONDAY, APRIL 19, 1999
This Proxy Statement is being solicited on behalf of the Board of
Directors of The Ziegler Companies, Inc. (the "Company") on or about March 22,
1999, for use at the 1999 Annual Meeting of the shareholders to be held at the
West Bend Old Courthouse Square Museum, 320 South 5th Avenue, West Bend,
Wisconsin, at 10:00 A.M. (Central Daylight Time), on Monday, April 19, 1999, and
at any adjournments of the meeting.
Each share of the Company's Common Stock, par value $1.00 ("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 Bank Milwaukee, N.A.,
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 Annual 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.
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 1, 1999 are entitled to vote at the
meeting. As of that date, the Company's issued and outstanding voting
securities consisted of 2,465,581 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 December 31, 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>
Name and Address of Amount and Nature of
Title of Class Beneficial Owner Beneficial Ownership Percent of Class
- ---------------- -------------------- --------------------- ----------------
<S> <C> <C> <C>
Common Stock Peter R. Kellogg(1)<F1> 401,050 16.3%
120 Broadway
New York, New York
New West Investors, L.P.(2)<F2> 208,200 8.4%
800 West State Street
Doylestown, Pennsylvania
</TABLE>
(1)<F1> Mr. Peter R. Kellogg, Senior Managing Director, Spear, Leeds &
Kellogg, 120 Broadway, New York, New York, beneficially owns an
aggregate of 401,500 shares of the Company's Common Stock. Of those
shares, 101,500 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. Mr. Kellogg is a director of the Company.
(2)<F2> Based on information filed by New West Investors, L.P. ("New West"),
800 West State Street, Suite 103, Doylestown, Pennsylvania, on
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 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,
nominees and executives of the Company as a group, all as of December 31, 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>
Amount and Nature Percent
Title of Class Name of Beneficial Owner of Beneficial Ownership(3)<F6>(4)<F7> of Class
- -------------- ------------------------ ------------------------------------- --------
<S> <C> <C> <C>
Common Stock Donald A. Carlson, Jr. 12,987 *<F3>
John C. Frueh 1,350 *<F3>
Richard J. Glaisner 27,834 1.1%
John R. Green 2,811 *<F3>
Peter R. Kellogg(1)<F4> 401,050 16.3%
Geoffrey G. Maclay, Jr.(3)<F6> 10,000 *<F3>
Stephen A. Roell 1,250 *<F3>
Dennis A. Wallestad 5,100 *<F3>
Frederick J. Wenzel 900 *<F3>
Bernard C. Ziegler III (2)<F5> 38,308 1.6%
Peter D. Ziegler(2)<F5>(3)<F6> 25,120 1.0%
--------
All directors and
executive officers as a group TOTAL 526,710 21.3%
*<F3>Less than 1% of the outstanding shares
- ------------------------
</TABLE>
(1)<F4> Shares shown include an aggregate of 300,000 shares of Common Stock to
which Mr. Kellogg, a director, disclaims beneficial ownership.
(2)<F5> 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 custodial accounts for minors as to which serve as custodians,
in the amount indicated: Mr. Peter D. Ziegler (2,800) (custodian,
sole voting and investment power) and (9,250) (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 directors disclaim
beneficial ownership of these shares other than sole or shared voting
and investment power as indicated.
(3)<F6> Includes shares of Common Stock which, as of December 31, 1998, were
subject to outstanding stock options exercisable within 60 days as
follows: Mr. P.D. Ziegler, 10,667 shares; Mr. D.A. Carlson, 3,150
shares, Mr. G.G. Maclay, Jr., 10,000 shares; Mr. D.A. Wallestad, 5,000
shares; and stock options for all directors and Named Officers as a
group, 38,817 shares. Includes shares held in deferred stock plan --
Mr. J.C. Green (1,106.18) and Mr. B.C. Ziegler III (1,106.18).
(4)<F7> Except as otherwise indicated in the previous footnotes, all stock
ownership is direct.
ELECTION OF DIRECTORS
The Board of Directors consists of nine members, of whom three members
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. D. A.
Carlson, S. A. Roell, and B. C. Ziegler III for terms expiring in 2002 and for
Mr. R. J. Glaisner for a new directorship for a term expiring in 2001.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR MESSRS. D. A. CARLSON, JR.,
S. A. ROELL, B. C. ZIEGLER III, AND R. J. GLAISNER.
Directors are elected by a plurality of the votes cast by the Company's
shareholders at a meeting at which a quorum is present. Page 2 of this Proxy
Statement provides a fuller statement regarding the effect of shareholder voting
at the Annual Meeting.
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 below.
NOMINEES FOR ELECTION
<TABLE>
Name, Age, Principal Occupation Director of Company or a Subsidiary
and Public Directorships(1)<F8> Thereof Continuously Since
------------------------------ ---------------------------
<S> <C>
CLASS OF 1999 (NOMINEE)
(Term will expire in 2002)
Donald A. Carlson, Jr., Age 51 1998
Senior Managing Director of the
Health Care and Senior Living Investment
Banking Group of B.C. Ziegler and Company,
a subsidiary of the Company.
Stephen A. Roell, Age 49 1996
Senior Vice President and Chief
Financial Officer, Johnson Controls, Inc.,
Milwaukee, Wisconsin.
Bernard C. Ziegler III, Age 49 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 64 1976
President, Aegis Group, Inc., Pittsburgh,
Pennsylvania, a firm specializing in acquisition
and management of manufacturing and
distributing companies.
John R. Green, age 54 1994
Partner, Green Manning & Bunch, Denver, Colorado,
a private investment banking firm.
NOMINEE
- -------
Richard J. Glaisner, age 56 --
Senior Managing Director, Zielger Investment
Group of B.C. Ziegler and Company, a subsidiary
of the Company; Director; Principal Preservation
Portfolios, Inc., and TCF National Bank, Wisconsin.
CLASS OF 2001
- -------------
(Term will expire in 2001)
Peter D. Ziegler, Age 49 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 68(1)<F8> 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 56 1995
Senior Managing Director, Spear, Leeds & Kellogg,
a specialist firm on the New York Stock Exchange; Director,
Interstate/Johnson Lane, Inc.
</TABLE>
- ------------------------
(1)<F8> 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. Richard J. Glaisner was previously Senior Managing Director of
Glaisner, Schilffarth, Grande & Schnoll, Ltd., a securities firm acquired
by the Company on July 1, 1997.
Messrs. P. D. Ziegler and B. C. Ziegler III (who are first cousins) and
trust or custodian accounts as to which either Mr. P. D. Ziegler or Mr. B. C.
Ziegler III serve as co-trustee or custodian collectively own beneficially 2.9%
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 four of the most highly compensated executive officers of the Company
serving as such during 1998, and whose compensation exceeded $100,000 (the
"Named Officers").
The tables on the following pages provide information concerning the
granting and exercise of options during 1998 with respect to each of the Named
Officers, and the fiscal year-end value of unexercised options held by each
Named Officer.
SUMMARY COMPENSATION TABLE
<TABLE>
Long-Term Compensation
-----------------------
Annual Compensation Awards Payouts
------------------- ------ -------
Securities Long-
Underlying Term
Restricted Options/Stock Incentive
Other Annual Stock Appreciation Plan All Other
Name and Principal Salary Compensation Award Rights Payouts Copensation
Position Year ($) Bonus(1)<F9> ($)(2)<F10> ($)(3)<F11> (SAR's)(#)(4)<F12> ($)(5)<F13> ($)(6)<F14>
- ----------------- ---- -------- ------------ --------- ----------- --------------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
P. D. Ziegler 1998 200,000 None None None None None 13,906
President and 1997 200,000 None 6,385 78,000 2,260 None 15,297
Chief Exec. Officer 1996 200,000 None 2,920 None None None 14,487
D. A. Carlson, Jr. 1998 161,982 228,570 None 2,643 None None 19,183
Senior Managing 1997 157,264 250,000 1,406 None 3,150 27,257 15,295
Director, B.C. 1996 151,215 100,000 None None None 29,437 14,470
Ziegler and Company
R. J. Glaisner 1998 120,000 372,010 None None None None 2,244
Senior Managing 1997 120,000 168,026 None None None None 2,117
Director, B.C.
Ziegler and Company
G. G. Maclay, Jr. 1998 119,600 40,000 None None None None 10,032
President and 1997 115,000 33,200 None None None None 13,717
Chief Exec. 1996 108,955 8,200 None None 10,000 None 50,660
Officer, Ziegler
Asset Management, Inc.
D.A. 1998 132,500 110,000 None None None None 9,660
Wallestad(7)<F15> 1997 88,141 35,000 None None None None 480
Sr. Vice President-
Chief Financial Officer
</TABLE>
- ----------------------
(1)<F9> Includes bonus and, if applicable, commissions.
(2)<F10> Value realized upon exercise of stock options.
(3)<F11> Mr. P. D. Ziegler received 4,000 shares of restricted stock in
lieu of a cash bonus in 1997 and the entire amount is included
in the 1997 amount at the market value price of $19-1/2 (on the
date of the grant). The restricted stock vests over a three year
term. The aggregate restricted stock owned by Donald A. Carlson,
Jr. initially consisted of 8,669 shares. 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. The above
calculation uses the average of bid and ask on the date of vesting
($20.44). Dividends are paid on all restricted stock.
(4)<F12> 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.
(5)<F13> 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.
(6)<F14> Payments included under the Ziegler Growth Retirement Plan a defined
contribution qualified plan with a 401(k) component (Mr. P.D. Ziegler,
$11,400; Mr. D.A. Carlson, $11,400; Mr. G.G. Maclay, $9,247; and
Mr. D.A. Wallestad, $8,816); under the profit sharing plan of GS2
Securities, Inc., a subsidiary of the Company suring 1998 (Mr. R.J.
Glainser, $1,400); premiums paid by the Company for term life
insurance and long-term disability insurance (Mr. P.D. Ziegler, $946;
Mr. D.A. Carlson, $946; Mr. R.J. Glaisner, $844; Mr. G.G. Maclay,
$785; and Mr. D.A. Wallestad, $844), and dividends received on account
of restricted stock (Mr. P.D. Ziegler $1, 560 and Mr. D.A. Carlson
$6,837).
(7)<F15> Mr. Wallestad ceased employment with the Company in February
1999.
<TABLE>
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
Potential Realizable
Value at Assumed Annual Rates
of Stock Price Appreciation for
for Option Term
-------------------------------
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise or Market Price
Options/SARs Employees in Base Price on Date of Expiration
Name Granted(#)(1)<F16> Fiscal Year (S/Sh) Grant Date 5% 10%
- ----- -------------- --------- ------ ----- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Peter D. Ziegler 15,000 7% $19.375 $19.375 08-28-03 $160,125 $394,575
Donald A. Carlson, Jr. 15,000 7% $19.375 $19.375 08-28-03 $160,125 $394,575
Geoffrey G. Maclay, Jr. --- --- --- --- --- --- ---
Richard J. Glaisner 15,000 7% $19.375 $19.375 08-28-03 $160,125 $394,575
Dennis Wallestad(2)<F17> 15,000 7% $19.375 $19.375 08-28-03 $160,125 $394,575
- ---------------------
</TABLE>
(1)<F16>All options granted in 1998 were pursuant to the Company's 1998
Stock Incentive Plan.
(2)<F17>Mr. Wallestad ceased employment with the Company in February 1999
and forfeited options for 15,000 shares.
ORGANIZATION AND COMPENSATION COMMITTEE
The Organization and Compensation Committee of the Board of Directors
is comprised of non-employee directors, and is responsible for establishing
compensation policies for the Company's executive officers, setting the
amount of annual compensation for these officers, approving the Company's
discretionary deposit to the Company's defined contribution retirement
plan, and overseeing generally the compensation policies for securities
professionals employed by the firm.
The competition for qualified and talented employees within the
industry is significant and a critical component of the Committee's role is
adopting compensation policies which enable the Company to attract and
retain the necessary professionals to carry on the Company's business. The
Company adopted the 1998 Stock Incentive Plan ("1998 Plan") as part of a
strategy to focus senior management on the long term performance of the
Company, and to encourage key employees to remain with the firm. In
keeping with industry custom, the Company also provides short-term
incentives to certain employees in the form of year-end bonuses, which may
constitute a major portion of a particular employee's annual compensation.
The annual compensation of the Company's chief executive, Peter D.
Ziegler, consists of a preset base salary, and an incentive bonus which is
determined by the Committee after the close of the Company's fiscal year.
Mr. Ziegler's base salary is determined on subjective grounds, based on
such factors as the responsibilities associated with his position, and the
size and complexity of the Company's operations. Mr. Ziegler's base
compensation for 1999 was set at $250,000 by the Committee.
The current policies which affect the annual incentive bonus of the
chief executive offer were established in 1998. Under those policies, the
maximum bonus for which Mr. Ziegler could qualify is 100% of his base
salary, which was $200,000 in 1998. One half of the incentive bonus is
derived from a formula which is based on the Company's return on equity.
For 1998, no incentive bonus amount was awarded on this basis. The other
one half of Mr. Ziegler's incentive bonus is awarded in the discretion of
the Committee. In light of the loss sustained by the Company as a result
of 1998 operations, no incentive bonus amount was awarded on account of
discretionary factors.
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, the margins associated which the particular revenue stream, and
net contributions to the Company's annual financial performance. In some
circumstances, these executives may also be awarded additional bonus
amounts, based on the Company's financial performance as a whole, or other
specific factors. With respect to executive officers who do not head or
participate in revenue-producing divisions or segments of the Company, the
CEO informs the Committee of his recommendations 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. In general, the Committee approved the
CEO's recommendations in arriving at 1998 compensation for the other
executive officers who are named in the compensation table in this Proxy
Statement.
Additionally, the Committee reviewed and approved a profit sharing
contribution for eligible employees of 4% of eligible compensation.
In August of 1998, the Committee considered and approved the first
grant of incentive stock options under the 1998 Plan. Based on management's
recommendations, approximately 200,000 options were awarded to key employees
of the firm. The options granted in 1998 were all structured in a similar
fashion, with a ten year term and an extended period before the option vests,
typically eight years. The options provide for early vesting only if the
Company achieves certain performance targets, or a change of control of the
Company occurs. The option grants are intended to focus senior management
and key employees on the long term performance of the Company as a whole,
and to foster the retention of personnel. As part of the grant, Peter D.
Ziegler received options to purchase 15,000 shares of the Company's
common stock.
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.
McDonald & Company Investments, Piper Jaffray Companies Inc. and Rodman &
Renshaw Capital Group appeared as components of the industry specific index
for years 1993 through 1997, but were omitted in 1998. McDonald & Company
Investments and Piper Jaffray Companies Inc. were acquired by other
entities. Rodman & Renshaw Capital Group filed for bankruptcy and was
delisted from the New York Stock Exchange. The firms contained within the
index of publicly held regional brokerage firms are:
Advest Group Inc. Legg Mason Inc.
Dain Rauscher Corporation Morgan Keegan Inc.
First Albany Companies Inc. Raymond James Financial Corporation
Interstate/Johnson Lane Inc. Scott & Stringfellow Financial
Jefferies Group Inc. Stifel Financial Corporation
Kinnard Investments Inc.
Ziegler $100 $94 $111 $120 $151 $141
S&P 500 $100 $76 $109 $152 $271 $246
Regionals $100 $101 $139 $171 $229 $294
COMPENSATION OF DIRECTORS
Directors not employed by the Company received the following
compensation in 1998 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. Effective in
1999, directors will be paid their entire annual retainer in the form of
Common Stock. 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, 1998, the Board of Directors
met six times. Each director attended all of the meetings of the Board,
with the exception of Messrs. P.R. Kellogg and S. A. Roell who each attended
83% of the Board meetings. Each director attended all meetings of committees
of the Board on which the director served, with the exception of Mr. S.A.
Roell, who attended 75% of the Organization and Compensation Committee
meetings held.
COMMITTEES OF THE BOARD OF DIRECTORS
The Audit Committee of the Board of Directors during 1998 was composed
of John C. Frueh (Chairman), Peter R. Kellogg and Bernard C. Ziegler III,
none of whom is an officer or employee of the Company. The Committee met
twice in 1998. 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 Organization and Compensation Committee of the Board of Directors
during 1998 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 1998, the Compensation Committee met four
times. The Committee reviewed the overall compensation policies, approved
the Company's annual compensation program, considered and approved option
grants, and determined compensation for the chief executive officer of the
Company.
SELECTION OF INDEPENDENT AUDITORS
The Board of Directors proposes the adoption of a resolution approving
the Board of 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 1998: 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 2000 must do so no later than
November 25, 1999. The inclusion of any proposal will be subject to
applicable rules of the Securities and Exchange Commission. Pursuant to
Rule 14a-4, any Rule 14a-4 submissions will need to be submitted by
February 5, 2000 and the Company may use its discretion in voting proxies
with respect to the shareholder proposal not included in the Proxy
Statement for the 2000 Annual Meeting unless the Company receives such
notice prior to February 5, 2000.
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
1998 calendar year and written representations made to the Company, the
management of the Company believes that during 1998, 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 that
a 1993 grant of options for Messrs. P.D. Ziegler, J.C. Wagner, J.C. Vredenbregt
and S.C. O'Meara were not reported until the 1998 calendar year end Form 5
filing. D.A. Wallestad, the Company's former Senior Vice President and Chief
Financial Officer failed to timely report a 1997 grant of options until the
filing of a 1998 calendar year Form 5 and Messrs. B.C. Ziegler III and
Green failed to timely report the receipt of certain shares received in
1996, 1997 and 1998 as partial payment of the annual directors' fees.
Following a complete review of past filing, the Company has implemented
additional procedures to assist in compliance with the Section 16 rules.
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 to approve Arthur Andersen
LLP as the Company's independent accountants.
The Company's 1998 Annual Report, although not a part of this Proxy
Statement, is enclosed. Copies of the Company's Form 10-K and other
filings are available, without charge, from the Company.
By Order of the Board of Directors,
/s/ S. Charles O'Meara
S. Charles O'Meara
Secretary
