SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934 (Amendment No. ____)
Filed by the Registrant [ x ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement [ ] Confidential for Use of the Commission Only
[ ] Definitive Proxy Statement (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
Kinnard Investments, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1) or
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3)
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing:
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
KINNARD INVESTMENTS, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 15, 1996
TO THE SHAREHOLDERS OF KINNARD INVESTMENTS, INC.
The 1996 Annual Meeting of Shareholders of Kinnard Investments, Inc. will
be held at the Minneapolis Convention Center, Room 208 CD, 1301 Second Avenue
South, Minneapolis, Minnesota, at 3:30 p.m. (Minneapolis time) on Wednesday, May
15, 1996, for the following purposes:
1. To set the number of members of the Board of Directors at six (6).
2. To elect members of the Board of Directors.
3. To adopt Restated Articles of Incorporation of the Company.
4. To amend the Company's Bylaws relating to quorum and
adjournment of shareholder meetings, number and term of office
of directors and filling of vacancies on the Board and to add
a bylaw providing special director removal procedures.
5. To take action on any other business that may properly come before the
meeting or any adjournment thereof.
Accompanying this Notice of Annual Meeting is a Proxy Statement, form of
Proxy and the Company's Annual Report to Shareholders for the year ended
December 31, 1995.
Only Shareholders of record as shown on the books of the Company at the
close of business on April 1, 1996, will be entitled to vote at the Meeting or
any adjournment thereof. Each Shareholder is entitled to one vote per share on
all matters to be voted on at the Annual Meeting.
Please note that whether you own one or many shares, it is important that
your shares of Common Stock be represented at the Annual Meeting. Therefore,
please complete, date and sign the enclosed form of Proxy and mail it promptly
in the enclosed envelope.
Dated: April 12, 1996 BY ORDER OF THE BOARD OF DIRECTORS
Minneapolis, MN
Gerald M. Gifford
Secretary
<PAGE>
KINNARD INVESTMENTS, INC.
Annual Meeting of Shareholders
May 15, 1996
PROXY STATEMENT
The accompanying Proxy is solicited by the Board of Directors of Kinnard
Investments, Inc. (the "Company") for use at the Annual Meeting of Shareholders
of the Company to be held Wednesday, May 15, 1996, at the location and for the
purposes set forth in the Notice of Annual Meeting, and at any adjournment
thereof.
The cost of soliciting Proxies, including the preparation, assembly and
mailing of the Proxies and soliciting material, as well as the cost of
forwarding such material to the beneficial owners of stock, will be borne by the
Company. Directors, officers and regular employees of the Company may, without
compensation other than their regular remuneration, solicit Proxies personally
or by telephone.
Any shareholder giving a Proxy may revoke it at any time prior to its use
at the Annual Meeting by giving written notice of such revocation to the
Secretary or other officer of the Company or by filing a new written Proxy with
an officer of the Company. Personal attendance at the meeting is not, by itself,
sufficient to revoke a Proxy unless written notice of the revocation or a
subsequent Proxy is delivered to an officer before the revoked or superseded
Proxy is used at the meeting.
Proxies not revoked will be voted in accordance with the choice specified
by shareholders by means of the ballot provided on the Proxy for that purpose.
Proxies which are signed but which lack any such specification will, subject to
the following, be voted in favor of the proposals set forth in the Notice of
Meeting and in favor of the number and slate of directors proposed by the Board
of Directors and listed herein. If a shareholder abstains from voting as to any
matter, then the shares held by such shareholder shall be deemed present at the
Meeting for purposes of determining a quorum and for purposes of calculating the
vote with respect to such matter, but shall not be deemed to have been voted in
favor of such matter. Abstentions, therefore, as to any proposal will have the
same effect as votes against such proposal. If a broker returns a "non-vote"
proxy, indicating a lack of voting instruction by the beneficial holder of the
shares and a lack of discretionary authority on the part of the broker to vote
on a particular matter, then the shares covered by such non-vote shall be deemed
present at the Meeting for purposes of determining a quorum but shall not be
deemed to be represented at the Meeting for purposes of calculating the vote
required for approval of such matter.
The mailing address of the principal executive office of the Company is
Kinnard Financial Center, 920 Second Avenue South, Minneapolis, Minnesota 55402.
The Company expects that this Proxy Statement, the related Proxy and Notice of
Meeting will first be mailed to Shareholders on April 12, 1996.
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<PAGE>
OUTSTANDING SHARES AND VOTING RIGHTS
The Board of Directors of the Company has fixed April 1, 1996, as the
record date for determining shareholders entitled to vote at the Annual Meeting.
Persons who were not shareholders on such date will not be allowed to vote at
the Annual Meeting. At the close of business on April 1, 1996, _________ shares
of the Company's Common Stock, par value $.02, were issued and outstanding. The
Common Stock is the only outstanding class of capital stock of the Company
entitled to vote at the Annual Meeting. Each share of Common Stock is entitled
to one vote on each matter to be voted upon at the meeting. Holders of Common
Stock are not entitled to cumulative voting rights.
PRINCIPAL SHAREHOLDERS AND MANAGEMENT SHAREHOLDINGS
The following table provides information concerning persons known to the
Company to be the beneficial owners of more than 5% of the Company's outstanding
Common Stock as of April 1, 1996, and sets forth the number of shares of Common
Stock beneficially owned by each director and nominee for director of the
Company, by each executive officer of the Company named in the Summary
Compensation table, and by all directors and executive officers (including the
named individuals) as a group, as of the same date:
<TABLE>
<CAPTION>
Shares Percent
Name and Address Beneficially of
of Beneficial Owner Owned (1) Class (2)
- ------------------- ------------ ---------
<S> <C> <C>
John G. Kinnard and 823,851 (3) ____%
Company, Incorporated
Employee Stock Owner-
ship Plan and Trust
920 Second Ave. S.
Minneapolis, MN 55402
Robert S. Spong 239,187 (4)(12) ___%
261 Wexford Heights Drive
New Brighton, MN 55112
Thomas E. Moore 216,051 (5) ___%
111 West Elmwood Place
Minneapolis, MN 55419
Gerald M. Gifford 114,519 (6)(12) ___%
17320 138th Ave. No.
Dayton, MN 55327
Stephen H. Fischer 118,762 (7) ___%
3950 Enchanted Lane
Mound, MN 55364
Andrew J. O'Connell 70,731 (8)(12) ___%
4013 Roanoke Circle
Golden Valley, MN 55422
Thomas J. Mulvaney 62,131 (9) ___%
2488 Hillside
White Bear Lake, MN 55110
Hilding C. Nelson 61,015 (10) ___%
1235 Yale Place
Unit 1410
Minneapolis, MN 55403
James W. Hansen 35,500 (11) *
26 Highway 96 E.
Dellwood, MN 55110
All Directors and Executive
Officers as a Group
(7 persons) 855,765 (12) ____%
</TABLE>
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<PAGE>
*Less than one per cent
(1) Unless otherwise indicated, each person named or included in the group has
sole power to vote and sole power to direct the disposition of all shares
listed as beneficially owned by him.
(2) Shares not outstanding but deemed beneficially owned by virtue of the
individual's right to acquire them as of April 1, 1996, or within sixty
(60) days of such date are treated as outstanding only when determining the
percent of the class owned by such individual and when determining the
percent owned by the group.
(3) Such shares are held in trust for the benefit of participants in the John
G. Kinnard and Company, Incorporated Employee Stock Ownership Plan and
Trust (the "ESOP"). The participants have voting power over shares held by
the ESOP which have been allocated to their accounts, and the Trustees vote
shares, if any, which have not been allocated to participants' accounts.
(4) Includes 17,297 shares held by Mr. Spong's wife and 11,437 shares allocated
to his account under the ESOP.
(5) Includes 10,000 shares which may be purchased pursuant to options which
were exercisable as of April 1, 1996, or will become exercisable within
sixth (60) days of such date and 1,232 shares allocated to Mr. Moore's
account under the ESOP.
(6) Includes 20,600 shares which may be purchased pursuant to options which
were exercisable as of April 1, 1996, or will become exercisable within
sixty (60) days of such date, and 8,919 shares allocated to Mr. Gifford's
account under the ESOP.
(7) Includes 13,750 shares which may be purchased pursuant to options which
were exercisable as of April 1, 1996, or will become exercisable within
sixty (60) days of such date, and 4,983 shares allocated to Mr. Fischer's
account under the ESOP.
(8) Includes 24,000 shares which may be purchased pursuant to options which
were exercisable as of April 1, 1996, or will become exercisable within
sixty (60) days of such date, and shares allocated to the ESOP accounts of
Mr. O'Connell (18,267 shares) and his wife (4,240 shares).
(9) Includes 10,538 shares allocated to Mr. Mulvaney's account under the ESOP.
(10) Includes 12,500 shares which may be purchased pursuant to options which
were exercisable as of April 1, 1996 or within sixty (60) days of such
date.
(11) Includes 5,000 shares which may be purchased pursuant to options which were
exercisable as of April 1, 1996, or will become exercisable within sixty
(60) days of such date. Does not include 2,500 shares which will become
purchasable by such individual on May 15, 1996 pursuant to an automatic
option grant under the Company's 1990 Stock Option Plan if such individual
is re-elected as a director of the Company.
(12) Includes 85,850 shares which may be purchased pursuant to options which
were exercisable as of April 1, 1996, or will become exercisable within
sixty (60) days of such date, and 49,078 shares allocated to executive
officers' accounts under the ESOP. Does not include shares held in the
Company's 401(k) plan (over which participants have no voting or
dispositive power) for Gerald M. Gifford (21,784 shares), Andrew J.
O'Connell (45,997 shares) and Robert S. Spong (72,621 shares).
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<PAGE>
ELECTION OF DIRECTORS
(Proposals #1 and #2)
General Information
The Bylaws of the Company provide that the number of directors shall be not
less than the minimum required by law (which is one) and that in accordance with
such requirement the number of directors to be elected for the ensuing year
shall be determined by the shareholders at each annual meeting. The Board of
Directors recommends that the number of directors be set at six and that six
directors be elected. Unless otherwise instructed, the Proxies will be so voted.
Under applicable Minnesota law, approval of the proposal to set the number
of directors at six, as well as the election of each nominee, requires the
affirmative vote of the holders of the greater of (1) a majority of the voting
power of the shares represented in person or by proxy at the Annual Meeting with
authority to vote on such matter, or (2) a majority of the voting power of the
minimum number of shares that would constitute a quorum for the transaction of
business at the Annual Meeting.
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<PAGE>
In the absence of other instructions, the Proxies will be voted for each of
the following individuals. If elected, such individuals will serve until the
next annual meeting of shareholders or until their successors shall be duly
elected and shall qualify. All of the nominees are members of the present Board
of Directors. If, prior to the Annual Meeting of Shareholders, it should become
known that any one of the following individuals will be unable to serve as a
director after the Annual Meeting by reason of death, incapacity or other
unexpected occurrence, the Proxies will be voted for such substitute nominee(s)
as is selected by the Board of Directors. Alternatively, the Proxies may, at the
Board's discretion, be voted for such fewer number of nominees as results from
such death, incapacity or other unexpected occurrence. The Board of Directors
has no reason to believe that any of the following nominees will be unable to
serve.
Current Position(s) Principal Occupation(s) Director
Nominee Age With Company During Past Five Years Since
Hilding C. 57 Chairman and Chairman of the Company October 1979
Nelson Director since October 1995. From
June 1995 to October 1995,
acting President and
Chief Executive Officer
of and consultant to
Pet Food Warehouse, Inc.
(retail pet food and
supplies). From September
1988 to present, private
investor. From July 1987 to
September 1988, President
of Lund International
Holdings, Inc. (manufacturer
of automotive accessories).
From September 1985 to July 1987,
private investor. From
April 1978 to September 1985,
President of Multaplex
Corporation (manufacturer of
circuit boards).
Robert S. 61 Director Senior Vice President of May 1981
Spong JGK.
-5-
<PAGE>
James W. 41 Director President of Rehab One, November
Hansen Inc. (physician 1990
management company) since
January 1994. Vice
President of Center for
Diagnostic Imaging from
September 1992 to January 1994.
From January 1987 to
September 1992, Senior Vice
President and General
Manager, Pension Division, of
Washington Square Capital, Inc.
(financial services firm).
From September 1984 to January
1987, Vice President of Apache
Corporation (oil and gas
exploration).
Stephen H. 52 Director Treasurer of the Company February
Fischer since February 1993, Chief 1991
Executive Officer of
PrimeVest Financial
Services, Inc. ("PFS")
since March 1992, and
President and Chief
Financial Officer of PFS
since August 1986. From
1981 to August 1986,
President and Treasurer of
IRI Securities Corp.
(securities broker/dealer).
Thomas E. 53 Director Executive Vice President of December
Moore JGK since December 1993 1993
and Chairman of the Board
of JGK since October 1995.
For more than five years
prior thereto, President and
Chief Executive Officer of
Moore, Juran and Company, Inc.
Andrew J. 41 Director Investment Executive with July
O'Connell JGK since 1978. Senior 1994
Vice President of JGK since
May 1992 and Director of
JGK since May 1985. Vice
President of JGK from May
1984 to May 1992.
-6-
<PAGE>
Board and Committee Meetings
The Board of Directors has the following Committees: Compensation, Stock
Option, Audit, Nominations and Executive. The Compensation Committee reviews and
recommends compensation for officers and directors of the Company, consists of
Messrs. Nelson and Hansen and met five times during 1995. The Audit Committee
reviews with the Company's independent accountants the annual financial
statements and the results of the annual audit, temporarily consists solely of
Mr. Hansen and met six times during 1995. The Nominations Committee, which was
established in September 1995 and consists of Messrs. Hansen and Nelson, reviews
and recommends nominations of candidates for director. The Nominations Committee
met informally several times since its appointment and is engaged in a search
for additional outside directors. The Nominations Committee will consider
nominees recommended by Company shareholders. Such recommendations should be
submitted in writing to the Secretary of the Company and should include a
biography of the nominee.
Directors Fees
Under current compensation plans, the Company pays the directors who are
not employees of the Company or a subsidiary, for their services as directors of
the Company, the sum of $750 per month plus $500 per regular board meeting and
$250 per special board and each committee meeting attended.
In addition, under the Company's 1990 Stock Option Plan, each nonemployee
director automatically receives, upon re-election to the Board each year, an
option to purchase 2,500 shares of the Company's Common Stock at a price equal
to the fair market value of the Company's Common Stock as defined in the Plan.
On May 18, 1995 the Company granted options to purchase 2,500 shares to Messrs.
Hansen and Nelson, each of whom was re-elected as a director at the 1995 annual
meeting of shareholders, at an option price of $3.55 per share.
Since the resignation of the Company's former chief executive officer,
Hilding C. Nelson has served as Chairman of the Board and a member of the
Executive Committee, for which he is being compensated at the rate of $2,750 per
month plus $500 per regular Board meeting attended and cash compensation based
on time expended on Company business; however, during such period he is not
receiving other directors fees or the nonemployee director automatic stock
option grant described above.
-7-
<PAGE>
Certain Relationships and Related Transactions
Andrew J. O'Connell, Thomas E. Moore and Robert S. Spong, directors of the
Company, are employees of JGK. They earned in 1995 commissions, other
compensation and benefits from JGK, on the same bases and under the same
policies as other employees, in the aggregate amounts of $614,074, $302,947 and
$202,292, respectively. Under a program applicable to all of JGK's investment
executives based on their individual production, a five year option was granted
to Mr. O'Connell in January 1995 to purchase 7,500 shares of the Company's
Common Stock at $3.58 per share, and options were granted to Messrs. O'Connell
and Moore during the current fiscal year to purchase 12,500 and 10,000 shares,
respectively, at $4.04 per share.
Certain directors and officers of the Company (and members of the immediate
families of such persons) maintain margin accounts with JGK and have margin
account indebtedness outstanding from time to time. All such indebtedness is
incurred in the ordinary course of business and on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons and do not involve more than normal
risk of collectibility or present other unfavorable features.
ADOPTION OF RESTATED ARTICLES OF INCORPORATION
(Proposal #3)
The Board of Directors proposes that the Company's Articles of
Incorporation (the "Existing Articles") be restated (that is, amended in their
entirety) in order to (i) combine into one document prior amendments to the
Articles and (ii) reflect changes in corporate practice and procedure consistent
with the new Minnesota Business Corporation Act (the "Act"). The proposed
Restated Articles of Incorporation (the "Restated Articles") are set forth in
Appendix A to this proxy statement.
The Existing Articles provide that amendments thereto may be adopted by the
affirmative vote of the holders of at least a majority of the total voting power
of all shares authorized under the Articles to vote. Because the Restated
Articles are silent in that regard, if they are adopted the provisions of the
Act will apply to any future proposed amendments. Pursuant to the Act,
amendments to the Restated Articles may be adopted by the affirmative vote of a
majority of the voting power of the shares present or represented at a meeting
at which the amendment is to be considered.
The Existing Articles provide that each holder of shares of Common Stock is
entitled to one vote for each share so held. Since the Existing (and Restated)
Articles give the Board of Directors authority to establish other classes and
series of shares and to determine the rights and preferences of such other
classes and series, the Restated Articles make it clear that holders of a class
of non-voting or restricted-voting stock created by the Board will not be
entitled to vote except as otherwise provided by law or in the terms of the
shares.
- 8 -
<PAGE>
Except for the changes set forth above, no changes of substance from the
Existing Articles would, in the opinion of the Company and its counsel, be
effected by the proposed Restated Articles.
Vote Required
The Board of Directors recommends that shareholders vote "FOR" adoption of
the Restated Articles. Adoption of the Restated Articles requires the
affirmative vote of a least a majority of the outstanding shares of Common Stock
of the Company.
AMENDMENT OF BYLAWS
(Proposal #4)
The Bylaws of the Company are subject to amendment by either the
shareholders or the Board of Directors, and the Board of Directors has adopted
Restated Bylaws to reflect changes in corporate practice and procedure
consistent with the new Minnesota Business Corporation Act (the "Act"). The Act
provides, however, that the Board may not amend a bylaw fixing a quorum for
meetings of shareholders, prescribing procedures for removing directors or
filling vacancies on the board, or fixing the number of directors or their
classifications, qualifications or terms of office (other than a bylaw
increasing the number of directors).
Because of wording changes proposed to be made to such provisions, the
Board requests that the shareholders amend the existing bylaw provisions
relating to quorum for shareholders meetings, procedures for filling vacancies
on the Board and fixing the number of directors. The existing and proposed
provisions are set forth on Appendix B to this proxy statement.
Vote Required
The Board of Directors recommends that shareholders vote "FOR" adoption of
the amendments to the Bylaws. Adoption of such amendments requires the
affirmative vote of the greater of (i) a majority of the shares represented at
the meeting with authority to vote on such matter and (ii) a majority of the
voting power of the minimum number of shares that would constitute a quorum for
the transaction of business at the meeting.
EXECUTIVE COMPENSATION
Compensation Committee Report on Executive Compensation
Compensation Committee Interlocks and Insider Participation. The
Compensation Committee of the Board of Directors is composed of an outside
director, James W. Hansen, and a second director, Hilding C. Nelson, who also
serves as Chairman of the Board. The Committee is responsible for developing and
making recommendations to the Board with respect to the compensation to be paid
to the Chief Executive Officer of the Company and to the other principal
executive officers of the Company and its two operating subsidiaries.
- 9 -
<PAGE>
Overview and Philosophy. The Company's executive compensation program is
comprised of base salaries, annual cash bonuses, long-term incentive
compensation in the form of stock options, and various benefits, including
participation in the Company's pension plan and employee stock ownership plan
("ESOP"), both of which are generally available to all employees of the Company
and have contribution formulas which are related to the Company's performance
and vesting schedules which reward long-term service to the Company.
The Company entered into an employment agreement with Stephen H. Fischer in
connection with the Company's acquisition of PFS in 1991. The agreement is for a
term of five years and Mr. Fischer's compensation is established annually by the
Compensation Committee on the same basis as for other principal executive
officers.
The Company has followed a policy of paying annual base salaries which are
less than the industry's average as reported by the Securities Industry
Association and relying on annual cash bonuses and long-term incentive
compensation to retain executive officers. The Compensation Committee believes
long-term incentives enhance the concept of ownership which emphasize profits
and directly ties executive compensation to shareholder value. Annual cash
bonuses and long-term stock option incentives are tied to the profitability of
the Company and are not awarded if the Company fails to achieve a profitable
year or if goals are not met.
Compensation. The Company has continued the compensation policies and
practices initiated in 1992 which have included moderate increases during
profitable periods and reductions during unprofitable periods. On January 1,
1995 JGK implemented 5% reductions in base salaries to reduce expenses and
reflect the loss sustained in 1994. The reduction was eliminated prospectively
on July 1 after the Company had achieved two profitable quarters.
For 1995, bonuses were paid from a pool established by each operating
subsidiary the gross amount of which was determined primarily on the basis of
return on equity at the beginning of the fiscal year in excess of a minimum
amount. Participants in each subsidiary's bonus pool included some individuals
who are not considered to be executive officers of the Company and are not
included in the compensation table below. Allocation of the bonus pool of each
subsidiary was recommended by the chief executive officer or management
committee of each subsidiary to the Compensation Committee.
Long-term compensation in the form of stock options was awarded in February
of 1996 based on the Company's financial performance in 1995 and the level of
responsibility of the individual officer. Performance was judged on the basis of
achievement of budgeted goals.
Contributions to the Company's pension plan and ESOP are determined for
executive officers on the same basis as for all other employees. Annual
contributions to the pension plan are made at the rate of 5% of total
compensation paid during the year subject to IRS limitations. Contributions to
the ESOP are made at the discretion of the Company's Board of Directors.
The Company provides medical and insurance benefits to its executive
officers which are generally available to all Company employees. Some executive
officers of the Company participate in the Company's employee stock purchase
plan which is also generally available to all employees and to which the Company
does not contribute. The amount of perquisites allowed to executive officers, as
determined in accordance with the rules of the Securities and Exchange
Commission, did not exceed 10% of salary for 1995.
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<PAGE>
Chief Executive Officer Compensation. Mr. Mulvaney served as chief
executive officer of JGK and KII in 1995 until September when he resigned. His
base salary and other compensation in 1995 were determined in accordance with
the policies as described above as applicable to all executive officers. In
September of 1995 Mr. Mulvaney resigned all positions with the Company and its
affiliates and the Company agreed to continue to pay his salary through December
31, 1996 and over a period of time severance compensation and benefits as
reported in the table below.
Summary. Base salary increases in 1995 were moderately less than in 1994
reflecting the 5% reduction until the Company had achieved two profitable
quarters. Bonuses were paid (except to Mr. Mulvaney who left mid-year) and ESOP
contributions were made for 1995 based on the Company's profitability. Options
were granted to remaining executives for 1995 because budgeted objectives were
exceeded. The Compensation Committee believes compensation paid for 1995
generally reflected the Company's financial performance.
James W. Hansen
Hilding C. Nelson, Members of the Compensation Committee
Summary Compensation Table
The following table sets forth certain information regarding compensation
earned during each of the Company's last three fiscal years by the former Chief
Executive Officer of the Company and by each of the Company's other executive
officers whose salary and bonus compensation exceeded $100,000 for fiscal 1995.
- 11 -
<PAGE>
<TABLE>
<CAPTION>
Long Term Compensation
-------------------------------------------
Awards Payouts
Annual Compensation
-----------------------------------------
Securities
Restricted Underlying LTIP All Other
Name and Principal Fiscal Stock Options Payouts Compensa-
Position Year Salary ($) Bonus ($) Other(1) Awards ($) /SARs (#)(3) ($) tion ($)
- ------------------------ - ------ ---------- --------- ------ ---------- --------- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Thomas J. Mulvaney, 1995 $146,250 -0- $395,025 (2) None None None $12,209(4)
Former Chairman of 1994 147,566 -0- 7,393 None None None 7,500
the Board, President 1993 123,550 213,658 8,284 None 3,500 None 22,697
and Chief Executive
Officer of KII and
JGK
Gerald M. Gifford, 1995 92,885 166,501 335 None 10,000 None 12,638(5)
Secretary of KII and 1994 99,740 -0- 396 None None None 6,092
Executive Vice 1993 85,552 128,195 6,470 None 2,100 None 20,128
President of JGK
Stephen H. Fischer, 1995 120,000 35,000 8,621 None 5,000 None 12,6385
Treasurer of KII and 1994 120,000 15,000 7,483 None None None 7,370
President and Chief 1993 113,041 59,000 15,262 None 1,250 None 16,650
Executive Officer of
PFS
</TABLE>
(1) Amount reflects commission income except as described in footnote 2.
(2) Includes $393,750 in severance compensation.
(3) All options were granted subsequent to the close of the fiscal year for
which the award was made.
(4) Amount reflects Company contributions to the Pension Plan
and ESOP of $7,475 and $4,734, respectively.
(5) Amount reflects Company contributions to the Pension Plan and ESOP of
$7,500 and $5,138, respectively.
Option/SAR Grants During 1995 Fiscal Year
No options were granted to the named executive officers during fiscal 1995;
however, as noted above, options were granted in 1996 based on the achievement
of performance objectives for fiscal 1995. The Company has not granted any stock
appreciation rights.
Option/SAR Exercises During 1995 Fiscal
Year and Fiscal Year End Option/SAR Values
The following table provides information related to options exercised by
the named executive officers during the 1995 fiscal year and the number and
value of options held at fiscal year end. The table does not include options
awarded on the basis of fiscal 1995 performance because such options were
granted in 1996.
- 12 -
<PAGE>
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
Shares FY-End (#) FY-End ($)
Acquired on Value Exercisable/ Exercisable/
Name Exercise (#) Realized($)(1) Unexercisable Unexercisable(1)
- ---- ------------ ------------- ------------- --------------
<S> <C> <C> <C> <C>
Thomas J. Mulvaney 9,000 $13,680 0/0 $ 0/0
Gerald M. Gifford 0 0 16,600/0 $ 9,870/0
Stephen H. Fischer 0 0 8,750/0 $ 0/0
</TABLE>
1 Based on the difference between the closing price of the Company's Common
Stock as reported by Nasdaq on the date of exercise or at fiscal year end,
as the case may be, and the option exercise price.
Stock Performance Chart
The following chart compares the yearly percentage change in the cumulative
total shareholder return on the Company's Common Stock during the five fiscal
years ended December 31, 1995 with the cumulative total return on the Nasdaq
Composite Index and the Nasdaq Financial Index. The comparison assumes $100 was
invested on December 31, 1990 in the Company's Common Stock and in each of the
foregoing indices and assumes reinvestment of dividends.
<TABLE>
<CAPTION>
Dec. 90 Dec. 91 Dec. 92 Dec. 93 Dec. 94 Dec 95
<S> <C> <C> <C> <C> <C> <C>
Kinnard $100.00 $275.00 $329.81 $337.89 $133.58 $260.79
Investments,
Inc.
Nasdaq $100.00 $160.56 $186.87 $214.51 $209.69 $296.30
Composite
Index
Nasdaq $100.00 $154.74 $221.32 $257.23 $257.83 $375.64
Financial
Index
</TABLE>
- 13 -
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANT
The accounting firm of Deloitte & Touche LLP has served as independent
auditors for the Company since April 1992 and has been selected by the Board of
Directors to continue for the current fiscal year. Representatives of Deloitte &
Touche LLP are expected to be present at the Annual Meeting, will be given an
opportunity to make a statement regarding financial and accounting matters of
the Company if they so desire, and will be available at such meeting to respond
to appropriate questions from the Company's shareholders.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own more than ten percent of
the Company's Common Stock, to file with the Securities and Exchange Commission
initial reports of ownership and reports of changes in ownership of Common Stock
and other equity securities of the Company. Officers, directors and greater than
ten percent shareholders ("Insiders") are required by SEC regulation to furnish
the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based on a review of the copies of such reports
furnished to the Company, during the fiscal year ended December 31, 1995, all
Section 16(a) filing requirements applicable to Insiders were complied with
except that one report covering one transaction was filed late by each of Andrew
J. O'Connell and Hilding C. Nelson.
SHAREHOLDER PROPOSALS
Any appropriate proposal submitted by a shareholder of the Company and
intended to be presented at the annual meeting in calendar year 1996 must be
received by the Company by December 13, 1996, to be includable in the Company's
proxy statement and related proxy for the 1997 annual meeting.
OTHER BUSINESS
Management knows of no other matters to be presented at the meeting. If any
other matter properly comes before the meeting, the appointees named in the
Proxies will vote the Proxies in accordance with their best judgment.
- 14 -
<PAGE>
ANNUAL REPORT TO SHAREHOLDERS
A copy of the Company's Annual Report to Shareholders for the fiscal year
ended December 31, 1995, accompanies this Notice of Annual Meeting and Proxy
Statement. No part of such Annual Report is incorporated herein and no part
thereof is to be considered proxy soliciting material.
FORM 10-K
THE COMPANY WILL PROVIDE AT NO CHARGE A COPY OF THE ANNUAL REPORT ON FORM
10-K, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, TO ANY BENEFICIAL
OWNER OF SHARES ENTITLED TO VOTE AT THE ANNUAL MEETING. PLEASE ADDRESS YOUR
REQUEST TO THE ATTENTION OF THE CORPORATE SECRETARY, KINNARD INVESTMENTS, INC.,
KINNARD FINANCIAL CENTER, 920 SECOND AVENUE SOUTH, MINNEAPOLIS, MINNESOTA 55402.
YOUR REQUEST MUST CONTAIN A REPRESENTATION THAT AS OF APRIL 1, 1996, YOU WERE A
BENEFICIAL OWNER OF SHARES ENTITLED TO VOTE AT THE ANNUAL MEETING OF
SHAREHOLDERS.
Dated: April 12, 1996
Minneapolis, MN
- 15 -
<PAGE>
KINNARD INVESTMENTS, INC.
PROXY FOR ANNUAL MEETING
May 15, 1996
The undersigned hereby appoints HILDING C. NELSON and GERALD M. GIFFORD,
and each of them, with full power of substitution, his or her Proxies to
represent and vote, as designated below, all shares of the Common Stock of
Kinnard Investments, Inc. registered in the name of the undersigned at the 1996
Annual Meeting of Shareholders of the Company to be held at the Minneapolis
Convention Center, Room 208 CD, 1301 Second Avenue South, Minneapolis,
Minnesota, at 3:30 p.m., Minneapolis time, on May 15, 1996, and at any
adjournment thereof. The undersigned hereby revokes all proxies previously
granted with respect to such Meeting.
The Board of Directors recommends that you vote FOR each proposal.
1. Set the number of directors at six (6).
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. Elect directors. (Nominees: H. Nelson, R. Spong, J. Hansen,
S. Fischer, T. Moore, A. O'Connell)
[ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY to vote
above (except those for all nominees
whose names have been listed above
written on the line below)
-----------------------------------------------------
3. Adopt Restated Articles of Incorporation.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Adopt amendments to sections of the Company's Bylaws relating to
quorum and adjournment of shareholder meetings, number and term of
office of directors and filling of vacancies on the Board and to
add a bylaw providing special director removal procedures.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. Other Matters. In their discretion, the Proxies are authorized to
vote upon such other business as may properly come before the
meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO
DIRECTION IS GIVEN FOR A PARTICULAR PROPOSAL, WILL BE VOTED FOR SUCH PROPOSAL.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
Date , 1996
-----------------------------
-----------------------------------------------------------
-----------------------------------------------------------
PLEASE DATE AND SIGN ABOVE exactly as name appears at the
left, indicating, where proper, official position or
representative capacity. For stock held in joint tenancy,
each joint owner should sign. 153597
<PAGE>
APPENDIX A
RESTATED
ARTICLES OF INCORPORATION
OF
KINNARD INVESTMENTS, INC.
ARTICLE 1.
NAME
1.1. Name. The name of the corporation shall be Kinnard Investments, Inc.
ARTICLE 2.
REGISTERED OFFICE
2.1. Registered Office. The location and post office address of the registered
office of the corporation in this state shall be 920 Second Avenue South,
Minneapolis, Hennepin County, Minnesota 55402.
ARTICLE 3.
CAPITAL STOCK
3.1. Authorized Shares. The aggregate number of shares the corporation has
authority to issue shall be 25,000,000 shares, consisting of 7,500,000
shares of Common Stock, par value $.02, 1,000,000 shares of Preferred Stock
and 16,500,000 undesignated shares. The Board of Directors of the
corporation is authorized, by resolution adopted and filed in the manner
provided by law, (i) to establish such series of Preferred Stock with such
designation, rights and preferences as the Board shall determine and (ii)
to establish from the undesignated shares one or more classes or series of
shares, to designate each such class or series (which may include but is
not limited to designation as additional Common or Preferred Stock), and to
fix the relative rights and preferences of each such class or series.
ARTICLE 4.
SHAREHOLDERS
4.1. Preemptive Rights. No holder of any stock of the corporation shall have any
preemptive right to subscribe for or purchase his proportionate share of
any stock of the corporation now or hereafter authorized or issued.
4.2. Voting Rights. At each meeting of the shareholders and with respect to any
matter upon which the shareholders shall have a right to vote, each holder
of record of shares of Common Stock shall be entitled to one (1) vote for
each share of Common Stock so held (except that if a class of non-voting or
restricted-voting common stock is issued, holders of such shares shall not
be entitled to vote except as allowed by law or by the corporation's
designation of the rights of holders of such shares). No shareholder shall
have the right to cumulate his votes for the election of directors and
there shall be no cumulative voting for any purpose whatsoever.
ARTICLE 5.
DIRECTORS
5.1. Number.The management of the corporation shall be vested in a Board of
Directors. The number of directors shall be fixed by the Bylaws and may be
altered by amending the Bylaws but shall never be less than required by
law.
5.2. Limitation of Director Liability. To the fullest extent permitted by the
Minnesota Business Corporation Act as the same exists or may hereafter be
amended, a director of this corporation shall not be personally liable to
the corporation or its shareholders for monetary damages for breach of
fiduciary duty as a director. Any repeal or modification of this Article by
the shareholders of the corporation shall be prospective only and shall not
adversely affect any limitation on the personal liability of a director of
the corporation existing at the time of such repeal or modification.
<PAGE>
ARTICLE 6.
BYLAWS
6.1. Bylaws. The Board of Directors is expressly authorized to make and alter
Bylaws of this corporation, in the manner provided in the Bylaws, subject
to the power of the shareholders to change or repeal such Bylaws and
subject to any other limitations on such authority provided by the
Minnesota Business Corporation Act.
ARTICLE 7.
MISCELLANEOUS
7.1. Ratification by Shareholders. Any contract, act or transaction of the
corporation or of the directors may be ratified by a vote of a majority of
the voting power of the shares present and entitled to vote or other
minimum required by law, and such ratification shall, so far as permitted
by law, be as valid and as binding as though ratified by every shareholder
of the corporation.
7.2. Indemnification of Directors, Officers, Employees and Agents. Except as
otherwise provided in the Bylaws, directors, officers, employees and agents
of the corporation shall be indemnified to the maximum extent permitted by
the Minnesota Business Corporation Act, as from time to time amended, for
expenses and liabilities arising by reason of their position with, or by
acts in such capacities on behalf of, the corporation or another
corporation which they may serve at the request of the corporation.
7.3. Inapplicability of Minnesota Control Share Acquisition Statute. Section
302A.671 of the Minnesota Statues Annotated (entitled "Control Share
Acquisitions") shall not apply to this corporation.
<PAGE>
APPENDIX B
Existing Bylaw Provisions
Quorum and Adjourned Meetings. The holders of twenty-five percent (25%) of
all shares outstanding and entitled to vote, represented either in person or by
proxy, shall constitute a quorum for the transaction of business at any annual
or special meeting of the shareholders. In case a quorum is not present at any
meeting, those present shall have the power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, until the requisite
number of voting shares shall be represented. At such adjourned meeting at which
the required amount of voting shares shall be represented, any business may be
transacted which might have been transacted at the original meeting.
Number, Term and Qualifications. At each annual meeting the shareholders
shall determine the number of directors, which shall not be less than the
minimum required by law; provided, that between annual meetings the authorized
number of directors may be increased by the shareholders or by the Board of
Directors or decreased by the shareholders. Each director at each annual meeting
of shareholders shall be elected for a term of one (1) year and shall hold
office until his successor is elected and qualified, or until his resignation or
removal as provided by statute.
Vacancies. Vacancies on the Board of Directors shall be filled by the
remaining members of the Board, through less than a quorum; provided that newly
created directorships resulting from an increase in the authorized number of
directors shall be filled by two-thirds (2/3) of the directors serving at the
time of such increase. Persons so elected shall be directors until their
successors are elected by the shareholders, who may make such election at their
next annual meeting or at any special meeting duly called for that purpose.
Proposed Bylaw Provisions
Quorum. The holders of twenty-five percent (25%) of the voting power of the
shares entitled to vote at a meeting, represented either in person or by proxy,
shall constitute a quorum for the transaction of business at any regular or
special meeting of the shareholders. If a quorum is present when a duly called
or held meeting is convened, the shareholders present may continue to transact
business until conclusion of the meeting, even though the withdrawal of any
shareholders originally present leaves less than the proportion or number
otherwise required for a quorum.
Adjournment of Meetings. In case a quorum is not present at any meeting,
those present shall have the power to adjourn the meeting from time to time,
without notice other than announcement at the meeting, until the required number
of voting shares shall be represented.
<PAGE>
At such adjourned meetings at which the required number of voting shares shall
be represented, any business may be transacted which might have been transacted
at the original meeting. If any meeting becomes deadlocked in that neither a
motion to conclude the meeting nor a motion to adjourn the meeting to another
date or time passes, the presiding chairman has the power to declare the meeting
either be concluded or be adjourned to another date or time.
Number, Term and Qualifications. At each annual meeting the shareholders
shall determine the number of directors, which shall not be less than the
minimum required by law; provided, that between annual meetings the authorized
number of directors may be increased by the shareholders or by the Board of
Directors or decreased by the shareholders. Each director at each annual meeting
of shareholders shall be elected for a term of one (1) year and shall hold
office until his successor is elected and qualified, or until his resignation or
removal as provided by statute. Number of Directors. At each regular meeting of
shareholders, the shareholders shall determine the number of directors, which
shall not be less than the minimum required by law. Between regular meetings of
shareholders, the authorized number of directors may be increased by the
shareholders or by the board of directors or decreased by the shareholders. No
decrease in the number of directors pursuant to this section shall cause any
director than in office to be removed until the expiration of his or her term.
Election of Directors and Term of Office. At each regular meeting of
shareholders, elections shall be held for directors. Each director shall serve
for a term that expires at the next regular meeting of shareholders. A director
shall hold office until the term expires and until a successor is elected and
has qualified, or until the earlier death, resignation, removal or
disqualification of the director. Vacancies. Vacancies on the Board of Directors
shall be filled by the remaining members of the Board, through less than a
quorum; provided that newly created directorships resulting from an increase in
the authorized number of directors shall be filled by two-thirds (2/3) of the
directors serving at the time of such increase. Persons so elected shall be
directors until their successors are elected by the shareholders, who may make
such election at their next annual meeting or at any special meeting duly called
for that purpose. Vacancies. Vacancies on the board of directors may be filled
by the affirmative vote of a majority of the remaining directors, even though
less than a quorum, except that vacancies on the board resulting from newly
created directorships may be filled by the affirmative vote of two-thirds of the
directors serving at the time of the increase. A director so elected shall serve
for a term that expires at the next regular or special meeting of the
shareholders. A director so elected shall hold office until the term expires and
until a successor is elected and has qualified, or until the earlier death,
resignation, removal or disqualification of the director.
Removal of Directors. Directors may be removed as follows:
Minnesota Business Corporations Act. Directors may be removed by the
procedures specified in the Minnesota Business Corporations Act, as amended.
Automatic Removal if not Re-elected. If, in an election by shareholders, a
current director does not receive sufficient votes in favor of his or her
re-election and no other person receives sufficient votes in the elections to
fill the position, the current director shall automatically be removed as a
director at the conclusion of the meeting in which the election occurred and the
position shall be vacant until otherwise filled. However, if elections result in
no one receiving sufficient votes to be elected or re-elected as director, the
current board shall continue to serve until a successor for at least one
directorship position is elected and qualified.
