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Excelsior
Income Shares, Inc.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 4, 1996
The Annual Meeting of Shareholders of Excelsior Income Shares, Inc. (the
"Company") will be held in the North Room (11th floor), at 114 West 47 Street,
New York, N.Y. 10036, on Thursday, April 4, 1996, at 11:00 a.m., New York City
time, for the following purposes:
(1) To elect eight directors to hold office until the next Annual
Meeting and until their respective successors shall have been duly elected
and qualified.
(2) To consider and act upon the continuance of the Investment Advisory
Agreement between the Company and United States Trust Company of New York.
(3) To consider and act upon the selection by the Board of Directors of
Coopers & Lybrand LLP as auditors for the fiscal year ending December 31,
1996.
(4) To transact such other business as may properly come before the
Meeting or any adjournment thereof.
Shareholders of record as of the close of business on February 16, 1996, are
entitled to vote at the Meeting or any adjournment thereof.
Robert D. Cummings
Secretary
New York, New York
February 29, 1996
WHETHER OR NOT YOU INTEND TO ATTEND THE MEETING, PLEASE FILL IN, DATE, SIGN AND
RETURN THE ENCLOSED FORM OF PROXY IN THE ENCLOSED PREPAID ENVELOPE.
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<PAGE>
EXCELSIOR INCOME SHARES, INC.
114 West 47th Street
New York, New York 10036
PROXY STATEMENT
GENERAL
This statement is furnished in connection with the solicitation of proxies
by the Board of Directors of Excelsior Income Shares, Inc. (the "Company"), for
use at the Annual Meeting of its shareholders, to be held in the North Room
(11th floor), at 114 West 47th Street, New York, N.Y. 10036, on Thursday, April
4, 1996, at 11:00 a.m., New York City time. The proxy statement and proxy are
being mailed to shareholders on approximately February 29, 1996.
Any person giving a proxy has power to revoke it at any time prior to its
exercise by executing a superseding proxy or by submitting a notice of
revocation to the Secretary of the Company. All properly executed and unrevoked
proxies received in time for the Meeting will be voted at the Meeting, or any
adjournment thereof, in accordance with the instructions contained therein. If
no instructions are given, the persons named as proxies will vote the shares
represented thereby for the election as directors of those nominees named
herein, to approve the continuance of the Investment Advisory Agreement between
the Company and United States Trust Company ofNew York and to ratify the
selection of Coopers & Lybrand LLP as auditors for the fiscal year ending
December 31, 1996.
The cost of solicitation, including postage, printing and handling and the
expenses incurred by brokerage houses, custodians, nominees and fiduciaries in
forwarding proxy material to beneficial owners, will be borne by the Company.
The solicitation is to be made primarily by mail, but may be supplemented by
telephone calls made by regular personnel of the Company who will be paid no
additional compensation in connection therewith.
As of the close of business on February 16, 1996, the record date for the
determination of shareholders entitled to notice of and to vote at the Annual
Meeting or any adjournment thereof, 2,188,391 shares of Common Stock, par value
$.01 per share, of the Company were outstanding. Each share is entitled to one
vote at the Annual Meeting. To the knowledge of the Company, no person is the
beneficial owner of more than 5% of the Company's outstanding shares.
ELECTION OF DIRECTORS
It is the intention of the persons named as proxies in the accompanying form
of proxy to vote at the Annual Meeting for the election of the nominees named
below as directors of the Company to serve until the next Annual Meeting and
until their successors are elected and qualified. If any such nominee should be
unable to serve, an event not now anticipated, the persons named as proxies will
vote for such other nominee as may be proposed by management.
Information Concerning Nominees
The following table sets forth the ages, positions and offices with the
Company, principal occupation or employment during the past five years and other
directorships, if any, of each nominee.
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<TABLE>
<CAPTION>
Positions and Offices Principal Occupation
Name Age with the Company or Employment; other Directorships
---- --- ---------------- ----------------------------------
<S> <C> <C> <C>
Townsend Brown, II* 65 Director since 1992 President and CEO of the Company since 1992.
Attorney. Senior Vice President of United
States Trust Company of New York 1978 to
1992.
Manning E. Case 79 Director since 1980 Chairman Cybermedix, Inc. since 1987.
George T. Conklin, Jr. 81 Director since 1988 Director, Guardian Life Insurance Company of
America; Chairman and Director, Guardian Park
Avenue Fund; Director: Guardian Insurance and
Annuity Company, Inc.; Guardian Cash Fund,
Guardian Stock Fund and Guardian Bond Fund;
Trustee: Guardian Cash Management Trust;
Guardian U.S. Government Trust.
Edwin A. Heard 69 Director since 1989 President and CEO of the Company 1989 to
1992, Director, Royal Life Insurance Company
of New York since 1988; Vice Chairman and
Treasurer, United States Trust Company of New
York, 1976 to 1988.
James J. O'Leary 81 Director since 1973 Economic Consultant to United States Trust
Company of New York from 1979 to 1991.
Director: Guardian Life Insurance Company of
America, National Bureau of Economic
Research.
Perry W. Skjelbred 48 Director since 1993 Founder, CEO, Enterprise Capital Inc. 1993.
Founder, CEO, American Infrastructure, Inc.
1989 to 1993. Senior Vice President and Chief
Investment Officer NATIONAR, Inc. 1986 to
1989. Director: Enterprise Capital, Inc.,
Medical Marketing Group, Inc.
Philip J. Tilearcio 42 Director since 1993 Investor.
Kenneth G. Walsh* 47 Director since 1993 Attorney. Executive Vice President United
States Trust Company of New York.
</TABLE>
For purposes of describing the business experience of Messrs. Brown, Heard
and Walsh, United States Trust Company of New York and U.S. Trust Corporation
may be deemed to be "affiliates" of the Company by virtue of the contractual
relationships with the Company. See "Continuance of Advisory Agreement".
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*Such director is an "interested person" of the Company within the meaning
of the Investment Company Act of 1940 because he is an officer of the Company.
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The Board of Directors has a standing Audit Committee consisting of Mr.
Manning E. Case, Mr. George T. Conklin, Jr., Dr. James J. O'Leary, Mr. Perry W.
Skjelbred and Mr. Philip J. Tilearcio, none of whom is an "interested person" of
the Company within the meaning of the Investment Company Act of 1940. The Audit
Committee held one meeting during the year ended December 31, 1995. The
functions performed by the Audit Committee include making recommendations with
respect to engaging and discharging the Company's independent auditors,
reviewing with the Company's independent auditors the plan and results of the
annual examination of the Company's financial statements, reviewing the scope
and results of the Company's procedures for internal auditing, reviewing the
independence of the Company's auditors, considering the range of audit fees and
reviewing the adequacy of the Company's system of internal accounting controls.
The Company's Board of Directors held five meetings during the year ended
December 31, 1995.
Information Concerning Executive Officers
The following table sets forth the ages, positions and offices with the
Company and principal occupation or employment during the past five years of
each of the Company's executive officers.
<TABLE>
<CAPTION>
Positions and Offices Principal Occupation
Name Age with the Company or Employment
---- --- ---------------- -------------
<S> <C> <C> <C>
Townsend Brown II 65 Director, President and Director, President and Chief Executive
Chief Executive Officer Officer of the Company.
since April 9, 1992
Robert D. Cummings 51 Secretary and Treasurer Manager of the Common Trust Fund Department
since April 9, 1992 of United States Trust Company of New York
since 1980, Vice President since April 1987.
Henry M. Milkewicz 56 Vice President since Senior Vice President of the Fixed Income
April 5, 1990 Investment Division of United States Trust
Company of New York since April, 1990, Vice
President from February, 1985, to April,
1990.
</TABLE>
For purposes of describing the business experience of Messrs. Cummings and
Milkewicz, United States Trust Company of New York may be deemed to be an
"affiliate" of the Company by virtue of the contractual relationships with the
Company described below. See "Continuance of Advisory Agreement".
The Company's executive officers were re-elected on April 6, 1995, to serve
until the meeting of the Board of Directors scheduled to take place immediately
after the Annual Meeting of the Company's shareholders on April 4, 1996, and
until their successors are elected and qualified.
Compensation of and Transactions with Executive Officers and Directors
The following table sets forth information concerning all compensation paid
by the Company to the group indicated for services in all capacities to the
Company during the year ended December 31, 1995.
Number of Persons Capacities Cash
in Group in which served Compensation
-------- --------------- ------------
Three All Executive Officers $47,680
All directors were paid a prorated basic fee of $5,000 per year, $300 for
each Board meeting attended and $100 for each Audit Committee meeting attended.
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During 1995, the Company paid investment advisory fees in the total amount
of $197,392 to United States Trust Company of New York.
Security Ownership of Officers and Directors and Nominees
The following table sets forth information as of December 31, 1995, with
respect to beneficial ownership of the Company's Common Stock, par value $.01
per share, by directors individually and officers and directors as a group.
Name of Individual Number of Shares Percent
or Number of and Nature of of
Persons in Group Beneficial Ownership Class
---------------- -------------------- -----
Townsend Brown II 1,100(1)(2) (4)
Manning E. Case 100(1)(2) (4)
George T. Conklin, Jr. 100(1)(2) (4)
Edwin A. Heard 1,800(1)(2) (4)
James J. O'Leary 100(1)(2) (4)
Perry W. Skjelbred 1,000(1)(2) (4)
Philip J. Tilearcio 100(1)(2) (4)
Kenneth G. Walsh 100(1)(2) (4)
All Officers, Directors
as a group (eight) 4,400 (of record)(1) (4)
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(1)None of these shares is beneficially owned based upon a right to acquire
beneficial ownership within 60 days.
(2)Sole voting and sole investment power.
(3)Shared voting and shared investment power with spouse.
(4)Amount does not exceed 1%.
CONTINUANCE OF ADVISORY AGREEMENT
United States Trust Company of New York (the "Adviser") provides investment
advisory and administrative services to the Company pursuant to an Investment
Advisory Agreement dated April 7, 1989 (the "Advisory Agreement"). The
continuance of the Advisory Agreement was approved by a majority vote of
shareholders of the Company at the Annual Meeting of Shareholders on April 7,
1994. The Board of Directors of the Company, including all the directors who are
not "interested persons" (as defined in the Investment Company Act of 1940) of
the Company, at a meeting held on January 29, 1996, approved the continuance of
such Agreement and voted that the continuance be submitted for approval to the
shareholders of the Company.
Under the Advisory Agreement, the Adviser would formulate a continuing
program for the management of the assets and resources of the Company, provide a
full range of advice and recommendations, including recommendations regarding
specific securities to be purchased or sold by the Company, and obtain and
evaluate statistical, economic and other research information with respect to
the economy, businesses, securities markets and types of securities, all in
conformity with the Company's investment objectives and policies. In addition to
providing investment advisory services, the Adviser, at its own expense, would
provide portfolio trading facilities and make available to the Company
appropriate executive, investment, clerical and other personnel as well as
computer and other services for the conduct of its investment business and the
administration of its affairs. The Adviser would compensate all Company
personnel and officers (other than the President) and those Company directors
who are officers or employees of the Adviser. The Adviser at its expense would
also provide the Company with office space and facilities and business equipment
and pay the cost of keeping the Company's books and records.
For the services rendered and the expenses assumed by the Adviser under the
Advisory Agreement, the Company would pay the Adviser an annual fee at the rate
of 0.5% of the Company's net asset value up to and including
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$100,000,000, 0.4% of such net asset value over $100,000,000 up to and including
$200,000,000 and 0.3% of such net asset value over $200,000,000. The investment
advisory fee would be computed quarterly on the basis of the net asset value as
of last day of each quarter. The Company's net asset value as of December 31,
1995, was $41,452,164.
The Company would be responsible for the payment of all its expenses which
are not specifically assumed by the Adviser under the Advisory Agreement.
However, in the event in any year the sum of the Company's expenses (including
the Adviser's investment advisory fee but excluding interest, taxes and
brokerage commissions relating to the purchase or sale of portfolio securities,
the Company's expenses of future public offerings of its shares and
extraordinary expenses beyond the control of the Adviser) were to exceed 1-1/2%
of the average value of the Company's net assets during such year up to
$30,000,000 plus 1% of the average value of the Company's net assets during such
year in excess of $30,000,000, the Adviser would be obligated to reimburse the
Company promptly for such excess expenses. In addition, under the Advisory
Agreement, the Adviser would not be responsible for any mistake in judgment or
in any event whatsoever except for lack of good faith or for any conduct on the
part of the Adviser constituting a breach of fiduciary duty involving personal
misconduct in respect of the Company, so long as such judgment or other event
does not constitute wilful malfeasance, bad faith, gross negligence in the
performance of the Adviser's duties or reckless disregard of its obligations and
duties under the Advisory Agreement.
The Advisory Agreement continues in effect from year to year provided such
continuance is specifically approved at least annually (i) by the vote of a
majority of the Company's outstanding voting securities, as defined in the
Investment Company Act of 1940, entitled to vote at the Annual Meeting or by its
Board of Directors and (ii) by the vote of a majority of the directors of the
Company who are not parties to the contract or "interested persons" (as defined
in the Investment Company Act of 1940) of the Company, or the Adviser. The
Advisory Agreement is terminable on 60 days' written notice by any party thereto
and will terminate automatically if assigned.
The Advisory Agreement reserves to the Adviser all rights to the use of the
term "Excelsior" and the symbol used by the Company, which appears on the Notice
of Annual Meeting. The Advisory Agreement further provides that if the Adviser
(or an organization which has succeeded to the business of the Adviser) ceases
to be the investment adviser to the Company, the Company will cease to use in
its name the term 'Excelsior', or any name suggesting that the Company is or has
been advised by the Adviser, and the use of such symbol.
The foregoing description of the Advisory Agreement does not purport to be
complete but contains a summary of the material provisions thereof. Any
shareholder who desires a copy of the Advisory Agreement may obtain a copy by
mailing a request therefor to the Company.
Shareholder approval of the continuance of the Advisory Agreement requires
the affirmative vote of the holders of (i) 67% of the Company's voting
securities, as defined in the Investment Company Act of 1940, present and
entitled to vote at the Annual Meeting, if the holders of more than 50% of the
Company's outstanding voting securities are present or represented by proxy at
the Annual Meeting or (ii) a majority of the Company's outstanding voting
securities. whichever is less.
The Board of Directors recommends a vote in favor of the continuance of the
Advisory Agreement.
Investment Adviser
The Adviser provides a variety of specialized financial and fiduciary
services to high net worth individuals, institutions and corporations. On
December 31, 1995, the United States Trust Company had total assets of $2,195
million, total deposits of $1,779 million, and capital of $155 million. The
Trust Company had responsibility for the investment management of clients'
assets having a market value of approximately $23.5 billion on December 31,
1995. The trustees of the Adviser, who are also Board members of U.S.
Trust Corporation, and their principal occupations are as follows:
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<PAGE>
Name Principal Occupation
- ---- --------------------
Eleanor Baum Dean of Engineering at The Cooper Union for the
Advancement of Science & Art
Samuel C. Butler Partner in Cravath, Swaine & Moore.
Peter L. Crisp General Partner of Venrock Associates
Daniel P. Davison Retired Chairman of the Board of Christie, Manson
& Woods International, Inc.
Philippe de Montebello Director of the Metropolitan Museum of Art.
Paul W. Douglas Retired Chairman of the Board and Chief Executive
Officer of The Pittston Company.
Antonia M. Grumbach Partner in Patterson, Belknap, Webb & Tyler.
Frederic C. Hamilton Chairman of the Board, President and Chief
Executive Officer of Hamilton Oil Corporation.
Peter L. Malkin Chairman of Wien, Malkin & Beltex.
Jeffrey S. Maurer President.
Orson D. Munn Chairman and Director of Munn, Bernhard &
Associates, Inc.
H. Marshall Schwarz Chairman of the Board and Chief Executive Officer.
Philip L. Smith Corporate Director and Trustee.
John H. Stookey Chairman of the Board and President of Quantum
Chemical Corporation.
Frederick B. Taylor Vice Chairman and Chief Investment Officer.
Richard F. Tucker Retired Vice Chairman of the Board of Mobil
Corporation.
Carroll L. Wainwright, Jr. Of Counsel to Milbank, Tweed, Hadley & McCloy.
Robert N. Wilson Vice Chairman of the Board of Johnson & Johnson.
Ruth A. Wooden President & Chief Executive Officer of The
Advertising Council, Inc.
The address of the Adviser and all its trustees is 114 West 47th Street, New
York, NY 10036. Townsend Brown II, a director and President of the Company, is
the beneficial owner of 3,000 common shares of U.S. Trust Corporation, Dr.
O'Leary, a director of the Company, is the beneficial owner of 1,639 common
shares, and Mr. Heard, a director of the Company, is the beneficial owner of
8,994 common shares of that company. The Adviser renders investment advisory and
related services to clients other than the Company, including other investment
companies, with similar or different investment objectives and policies.
The Adviser is a wholly-owned subsidiary of U.S. Trust Corporation which was
incorporated on December 5, 1977 and which is located at 114 West 47th Street,
New York, N.Y. 10036.
Brokerage Commissions on Portfolio Transactions
In accordance with the Company's investment policies, its investments are in
debt securities, which are generally traded through dealers acting for their own
account as principals and not as brokers; no brokerage commissions are payable
in such transactions. During 1995, all portfolio transactions were with
principals. During 1995 the Company's portfolio turnover rate was 23.43%.
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APPOINTMENT OF AUDITORS
The Audit Committee of the Board of Directors has recommended and the Board
of Directors of the Company, including a majority of those directors who are not
"interested persons" of the Company, has selected Coopers & Lybrand LLP to act
as auditors for the Company for the fiscal year ending December 31, 1996.
Coopers & Lybrand LLP has no material direct or indirect financial interest in
the Company. This selection is subject to the approval of the shareholders of
the Company at the Annual Meeting. Management expects that representatives of
Coopers & Lybrand LLP will be present at the Annual Meeting with the opportunity
to make a statement if they desire to do so and to respond to appropriate
questions.
During the year ended December 31, 1995 Coopers & Lybrand LLP was engaged by
the Company: (1) to examine its financial statements as of December 31, 1995;
(2) to assist and consult with the Company in connection with the preparation of
the Company's reports on Forms N-SAR and N-2 for filing with the Securities and
Exchange Commission; and (3) to assist and consult with the Company on tax
matters.
The ratification of Coopers & Lybrand LLP as auditors of the Company
requires the affirmative vote of the holders of (i) 67% of the Company's voting
securities, as defined in the Investment Company Act of 1940, present and
entitled to vote at the Annual Meeting, if the holders of more than 50% of the
Company's outstanding voting securities are present or represented by proxy at
the Annual Meeting or (ii) a majority of the Company's outstanding voting
securities, whichever is less.
The Board of Directors recommends a vote in favor of the ratification of
Coopers & Lybrand LLP as auditors.
OTHER MATTERS
The management knows of no business to be brought before the Annual Meeting
except as mentioned above. If, however, any other matters properly come before
the Annual Meeting, the persons named in the enclosed form of proxy intend to
vote on such matters in accordance with their best judgment.
DEADLINE FOR SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the Company's Annual
Meeting of Shareholders to be held in April 1997, must be received by the
Company, at its principal executive offices, by December 2, 1996, for inclusion
in the Company's Proxy Statement and form of proxy relating to that meeting.
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